Conflicts of Duty with former Client
The House was asked as to the duties of the respondent accountants (KPMG). KPMG had information confidential to a former client, the appellant, which might be relevant to instructions which they then accepted from the Brunei Investment Agency, of which Prince Jefri had been chairman, to investigate the whereabouts of certain assets suggested to have been used by Prince Jefri for his own benefit.
Held: The House granted an injunction restraining KPMG from acting for the Agency. The burden was on KPMG to show that there was no risk of the information coming into the possession of those within KPMG acting for the Agency. Though KPMG had tried to erect a Chinese wall, this was ad hoc and within a single department; further the two teams involved – one which had acted for Prince Jefri and the one which was acting for the Agency – contained large and rotating memberships of persons accustomed to working with each other.
A solicitor has an absolute duty to his clients, and to former clients, to protect their confidence and could not later act for an opponent. An accountant providing litigation support is bound by the same duties, an information barrier, a so-called Chinese Wall, erected within the firm is liable to be insufficient. The duty extends beyond that of refraining from deliberate disclosure, and includes the duty not to put the client at risk: ‘ . . a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. A man cannot without the consent of both clients act for one client while his partner is acting for another in the opposite interest. His disqualification has nothing to do with the confidentiality of client information. It is based on the inescapable conflict of interest which is inherent in the situation.’ and (Lord Millett) ‘I prefer simply to say that the court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial.’
Lord Millett said: ‘It is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (1) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (2) that the information is or maybe relevant to the new matter in which the interests of the other client is or may be adverse to his own’.
Lord Browne-Wilkinson Lord Hope of Craighead Lord Clyde Lord Hutton Lord Millett
Times 20-Apr-1999, [1998] UKHL 52, [1999] 2 AC 222, [1999] 1 All ER 517, [1999] 2 WLR 215
House of Lords, Bailii
England and Wales
Citing:
Rejected – B and Others Russell McVeagh McKenzie Bartleet and Co v Auckland District Law Society, Gary J Judd PC 19-May-2003
(New Zealand) Solicitors resisted requests to disclose papers in breach of legal professional privilege from their professional body investigating allegations of professional misconduct against them.
Held: The appeal was allowed. The . .
Appeal from – Bolkiah v KPMG (A Firm) CA 22-Oct-1998
When considering whether an accountancy firm could be permitted to conduct an investigation on behalf of solicitors acting in a matter acting against a client for whom it still held confidential information, the court could find a balance between . .
Criticised – Rakusen v Elliss, Munday and Clark 1912
A firm of solicitors had two partners, who did business separately without having any knowledge of the affairs of each other’s clients. The plaintiff consulted one partner in an action for wrongful dismissal a company. He changed his solicitors and . .
Cited – Kelly v Cooper and Another PC 25-Nov-1992
There was a dispute between a client and an estate agent in Bermuda. The client sued the estate agent for damages for breach of duty in failing to disclose material information to him and for putting himself in a position where his duty and his . .
Cited – In Re A Firm of Solicitors ChD 9-May-1995
A solicitor moving from a firm acting on one side of a dispute to the firm on the other side must be able to show that no conflict of interest would arise. The court should intervene unless it is satisfied that there is no risk of disclosure. It . .
Cited by:
Cited – Koch Shipping Inc v Richards Butler (a Firm) CA 22-Jul-2002
The claimants in an arbitration sought orders with regard to a solicitor who had moved to the opponent’s firm of solicitors, but who came with privileged knowledge of the claimant’s business dealings. She offered undertakings, but the claimant . .
Cited – Marks and Spencer plc v Freshfields Bruckhaus Deringer (A Firm) ChD 2-Jun-2004
The claimant sought an injunction preventing the respondent form of solicitors acting for a client in a bid for the claimant, saying that the firm was continuing to act for it, and that a conflict of interest arose.
Held: Though the . .
Cited – Marks and Spencer Group Plc and Another v Freshfields Bruckhaus Deringer CA 3-Jun-2004
The defendant firm of solicitors sought leave to appeal against an injunction requiring them not to act for a client in making a bid to take over the business of the claimant, a former client of the firm.
Held: Leave was refused. The appeal . .
Cited – Young, Young, Irby v Robson Rhodes and Frank Attwood ChD 30-Mar-1999
Where a merger was proposed between two accountancy firms, who had provided litigation support services to opposing sides in a case, it was necessary to separate the two halves most rigorously including physical separation in order to ensure no . .
Cited – In Re a Firm of Solicitors TCC 16-Jul-1999
A firm of architects sought an order to prevent the defendants instructing a firm of solicitors including a solicitor who had been a partner in a firm representing them is earlier similar matters. The solicitor had personally been involved in . .
Cited – Ratiu, Karmel, Regent House Properties Ltd v Conway CA 22-Nov-2005
The claimant sought damages for defamation. The defendant through their company had accused him acting in such a way as to allow a conflict of interest to arise. They said that he had been invited to act on a proposed purchase but had used the . .
Cited – GUS Consulting Gmbh v Leboeuf Lamb Greene and Macrae CA 26-May-2006
The claimant brought an action to restrain the lawyer defendants from acting in arbitration for having previously acted for other parties.
Held: The claimant’s appeal for an injunction failed. Following Bolkiah, the burden on the defendants . .
Cited – British Sky Broadcasting Group Plc and Another v Virgin Media Communications Ltd and others CA 6-Jun-2008
The parties were involved in litigation concerning allegations of anti-consumer practices. It was agreed that commercially sensitive documents should be exchanged, but the terms protecting the confidences could not be agreed. The parties were also . .
Cited – Davies v Davies CA 4-Mar-1999
The marriage was unhappy. The wife consulted briefly but did not instruct a solicitor, Mr Tooth. Some 7 years later as divorce proceedings were considered, the husband did instruct Mr Tooth. She sought to prevent him acting, but then wanted to . .
Cited – Winters v Mishcon De Reya ChD 15-Oct-2008
The claimant sought an injunction to prevent the defendant firm of solicitors acting for his employers against him. He said that they possessed information confidential to him having acted for him in a similar matter previously. The solicitors . .
Cited – Home Office v Tariq SC 13-Jul-2011
(JUSTICE intervening) The claimant pursued Employment Tribunal proceedings against the Immigration Service when his security clearance was withdrawn. The Tribunal allowed the respondent to use a closed material procedure under which it was provided . .
Cited – Caterpillar Logistics Services (UK) Ltd v Huesca De Crean QBD 2-Dec-2011
The claimant sought an order to prevent the defendant, a former employee, from misusing its confidential information said to be held by her. Her contract contained no post employment restrictions but did seek to control confidential and other . .
Cited – Singla v Stockler and Another ChD 10-May-2012
The claimant appealed against the striking out of his action for an injunction against the defendant solicitors to restrain them for action for a person, saying that whilst there had been no formal retainer, they had informally advised him. The . .
Cited – Albion Plc v Walker Morris (A Firm) CA 19-Mar-2006
The court was asked whether defendant firm of solicitors should be prevented from acting for potential conflict of interest. They sought leave to appeal an order restraining them from acting. They had acted in two similar matters for the client . .
Approved – Davies v Davies CA 2000
The wife had objected to the instruction by her former husband of a solicitor who had been instructed by her some seven years previously. She withdrew her objection, but the court now considered an appeal as regards costs.
Held: The court . .
Cited – ZS v FS (Application To Prevent Solicitor Acting) FD 24-Oct-2017
Discosure of Confidences must be at risk
H sought to restrain W’s solicitors from acting. The firm was one of six firms approached to consider representing H, and he now said that certain matters had been diviluged to the firm.
Held: The legal principles were clear, and it was for H . .
Lists of cited by and citing cases may be incomplete.
Legal Professions, Information
Leading Case
Updated: 05 December 2021; Ref: scu.78470