The New South Wales Court of Appeal has overturned a firm’s bid to restrain a solicitor from acting for a former employee, saying the primary decision would have led to a “deeply troubling outcome” by imposing a “significant restraint of the trade of junior lawyers”.
In the decision handed down on April 16, Justice Anthony Payne, with whom Justices Jeremy Kirk and Christine Adamson agreed, outlined how solicitor Jessica Townsend had been dismissed in January last year from Sydney-based firm Banga Legal, which alleged she had disclosed confidential information and committed other acts of misconduct.
When Ms Townsend challenged her dismissal under the Fair Work Act 2009 (Cth), she was initially represented by Sydney firm Solve Legal, where former solicitor at Banga Legal, Cameron Shamsabad, worked and acted for her. (Mr Shamsabad no longer works for Solve Legal).
Banga Legal principal Samir Banga claimed Mr Shamsabad had obtained “confidential information” about he and his wife when Mr Shamsabad worked at the firm, and likely conveyed that information to Solve Legal.
Banga Legal and Mr Banga filed a motion against Ms Townsend seeking to restrain Solve Legal from acting for her.
In August last year, Justice Anthony McGrath made orders restraining Solve Legal from acting for Ms Townsend, and that Solve Legal pay the costs of the motion.
Justice McGrath determined that the information acquired by Mr Shamsabad was confidential, saying it concerned the “personality and vulnerability” of Mr Banga and his wife, and Mr Banga’s litigation strategy.
He concluded it should be inferred that there was a serious risk that “confidential information” would have been used by Mr Shamsabad for the benefit of Ms Townsend while he was acting for her, and that there was “an obvious conflict of interest”.
In the appeal decision, Justice Payne said it seemed the primary judge “decided the case as a species of preventing misuse of confidential client information … rather than as preventing a breach of duty of confidence owed to a prior employer”.
“It bears emphasis at the outset that the inherent jurisdiction to prevent a lawyer from acting for a client is an extraordinary one which should be used sparingly,” he said.
“It is fundamental to our system of justice that, absent a compelling reason to the contrary, parties be able to choose their own lawyers.”
Justice Payne emphasised that the allegedly confidential information was obtained in an employment context as part of the ordinary exchange of information between a lawyer and a supervising lawyer.
“No client confidential information was involved,” he said.
“It is fundamental to the legal profession that more senior practitioners be involved in the legal training and mentoring, whether formally or informally, of junior lawyers.
“It would be antithetical to the continued existence of the legal profession if junior lawyers availing themselves of supervision or mentoring opportunities were thereby to be precluded from acting in cases involving a lawyer who has provided training or mentoring.”
Justice Payne said what was particularly striking about the case was the lack of evidence of confidential information.
He said observations made by Mr Shamsabad of Mr Banga and his wife in a social setting could not amount to “confidential information”, nor could Mr Banga’s litigation strategy, which he described as subjective “know how”.
“To invoke the extraordinary jurisdiction here engaged to protect against the use of such information is, in effect, to impose a significant restraint of trade on junior lawyers,” he said.
“This would be a deeply troubling outcome that I would strive to avoid.”
He said other errors made by the primary judge included making orders against Solve Legal without the firm being joined to the motion.
Justice Payne pointed out that neither party could refer to a case where it was the allegedly confidential information of a solicitor which was the foundation of a restraint imposed.
“This is for good reason,” he said.
“The extraordinary jurisdiction here engaged should not be used, absent a compelling reason, to protect against the use of information about senior lawyers gained by junior lawyers as part of the ordinary processes of professional legal training and development.
“To do so is, in effect, to impose a significant restraint of trade on junior lawyers.”
The judges granted leave to appeal, set aside the orders of the primary judge and dismissed the motion with costs.
Read the case here.
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