The Supreme Court has granted a permanent injunction to prevent a firm from acting against a former client, over concerns about the use of confidential information.
In a decision delivered in Brisbane on 9 September, Justice Muir ordered Brisbane solicitor Stephen Pyman and his firm CDI Lawyers be restrained from acting or advising Sunshine Coast construction company Chevron Park against Gold Coast builder Groupline Constructions.
Mr Pyman, director principal at CDI Lawyers, handled business and personal matters for builder Scott Widdicombe and his companies Civic and Groupline for 14 years until 2020. Shortly after, Mr Pyman (through CDI) began acting for Chevron against Groupline in a contract dispute.
In April this year, Groupline sought permanent injunctions restraining CDI, or alternatively Mr Pyman, from acting for Chevron (against it) in the matter and any future matters arising from the contract in question.
CDI offered various undertakings to the court to the effect that it would not act for Chevron, and would act in any final adjudication with an Information Barrier in place between it and Mr Pyman.
Groupline, which is claiming more than $3.3 million in damages from Chevron for breach of contract, submitted that the court should reject the undertakings as being unreliable, unsafe and unsound, and make orders for permanent injunctions.
It submitted the need for such relief was underpinned by the notion that there is a “real and sensible” possibility of the misuse of confidential information; or that the continued representation of Chevron (by CDI or Mr Pyman) would adversely affect the appearance of the administration of justice in the court and the integrity of the judicial process, or both.
Mr Pyman and CDI opposed the granting of the injunctions on the basis that there was no real risk of the misuse of confidential information because the adjudication process was a “mere administrative task” and Mr Pyman did not recall any confidential information but would not use it if he did.
They submitted that even if there was a real risk of the misuse of the confidential information, discretionary factors weighed against an injunction because Groupline did not raise a complaint earlier and Chevron would suffer prejudice if it had to engage new solicitors.
They admitted that Mr Pyman came to know confidential information that included how Mr Widdicombe and his companies arranged their affairs, set parameters in building contracts, set profit margins, assessed risks, negotiated payments and approached litigation.
“This admission is made on the basis that Mr Pyman cannot recall any of the confidential information,” Justice Muir said.
“His affidavit evidence is replete with efforts to play down and minimise his engagement with Groupline and attempts to explain why Mr Pyman ‘can’t remember much’.
“But the concession, however qualified, is a crucial one. It remains the case that CDI and Mr Pyman have a continuing obligation to preserve the confidentiality of the confidential information.”
Justice Muir said it had been long recognised that a solicitor, however determined not to make use of confidential information, may subconsciously do so, and that the threshold of the risk of misuse of the information was “extremely low”.
“When assessing the ‘risk’ of misuse, the nature of the confidential information is also relevant. Here the array of confidential information concerns the business, personal and litigation characteristics of the Widdicombe interests gathered over more than a decade and in respect to a whole gamut of building and construction matters: from front-end negotiation and drafting, to superior court proceedings, regulatory and licensing issue and general ‘advice’,” she said.
“It also includes collateral information which is also confidential, in the form of impressions and judgments which CDI and Mr Pyman can make about the people in, and business undertaken by, the Widdicombe interests that is not available to any solicitor who has not acquired the confidential information.
“I am satisfied that the nature of the confidential information is such that the court cannot exclude the real risk that the confidential Information, either consciously or subconsciously, may inform the actions which CDI and Mr Pyman take in performance of their retainer with Chevron to act in any further adjudication.”
Justice Muir said the main problem was “obvious”.
“That is, and as the evidence emerged, whilst I am satisfied that Mr Pyman believes he knows what he does not know, it is more likely that he does not know what he knows,” she said.
She said she was not satisfied the proposed Information Barrier could be effectively implemented or that it would work to sufficiently reduce the risk. This was because many solicitors had already worked on the Chevron dispute with Groupline; there were obvious discrepancies and inconsistencies in evidence about who saw and did what; and there may already have been some unconscious spread of confidential information.
Justice Muir said in relation to a delay by Groupline in seeking relief, “any silence or inaction by Groupline is of little weight”, pointing to reasons including that there was no reason for Groupline to suspect that CDI would act against it for Chevron in any dispute by reason of the earlier dealings.
She concluded the only way to sufficiently reduce the risk of the misuse of confidential information was to permanently restrain CDI and Mr Pyman from continuing to act for Chevron against Groupline, recognising that “such a power should only be used exceptionally”.
“Such an order is obviously necessary, in my view, to ensure the due administration of justice, to protect the integrity of the judicial process and to restrain solicitors from acting in a particular case as part of its supervisory jurisdiction,” she said.
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