A solicitor's duty of confidentiality is the focus of this article. The Singapore courts, in comparison to the English courts, have adopted a narrower definition of this duty, as evidenced by its decision in Alrich Development Pte Ltd v Rafiq Jumabhoy. Also included in this article is a review of the recent case law of both jurisdictions and a clear explanation of the approaches taken by the courts.
Introduction
There is no absolute bar against a solicitor or a firm acting against a former client. However, even though a solicitor's retainer has been determined, he continues to owe the former client a duty to ensure that information provided to him during the course of the retainer and which is confidential remains so. To ensure that the duty of confidentiality is not breached, an injunction may be sought against the solicitor or the firm concerned.
Until recently, the test in England for determining when a court would intervene to restrain the solicitor or a firm from acting was whether there was a reasonable risk of mischief resulting. The locus classicus in a trio of cases establishing this point is the English Court of Appeal's decision in Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831. Since Rakusen, the test was refined in Supasave Retail v Coward Chance [1991] 1 All ER 668 and Re a firm of solicitors [1992] 1 All ER 353. This test was accepted by the Singapore High Court in Alrich Development Pte Ltd v Rafiq Jumabhoy [1994] 3 SLR 1 where Chao Hick Tin J stated:
In my opinion the public interest in the administration of justice is sufficiently safeguarded on the test of 'reasonable anticipation of mischief' or in other words 'reasonable likelihood of mischief'.
Prince Jefri Bolkiah v KPMG (a firm): The Adoption of a Stricter Approach
However, in December 1998, the position in England underwent a change. In Bolkiah v KPMG (a firm) [1999] 2 WLR 215, the House of Lords adopted a stricter test. It held that in determining whether the court should grant an injunction, a two stage test would be adopted.
Firstly, it would be incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish: (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented; and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own.
Once the client can establish this, it is for the solicitor to establish that even if he does continue to act, there is no real risk that the information will be disclosed. Such a risk need not be substantial. The basis for the court to act is the confidentiality of the information imparted, and the House of Lords noted that:
... a fiduciary may not put his own interest or those of another client before those of his principal. In my view no solicitor should, without the consent of his former client, accept instructions unless, viewed objectively, his doing so will not increase the risk that information which is confidential to the former client may come into the possession of a party with an adverse interest.
English Cases Since Bolkiah v KPMG (a firm)
Since Bolkiah v KPMG (a firm), the issue has come before the English High Court in three cases. Each of these will be examined below to see how they have applied the House of Lords' approach in Bolkiah v KPMG (a firm).
Young v Robson Rhodes (a firm)
In Young v Robson Rhodes (a firm) [1999] 3 All ER 524, the plaintiff was part of a syndicate of companies that had commenced actions against the syndicate's auditors. The defendant was the accounting firm which assisted in the action by providing forensic accounting services to the syndicate. Some 15 months after the defendant was appointed, it sought to merge with the syndicate's auditors. The plaintiff brought proceedings seeking to impose undertakings that there would be no contact, whether professional or social, between the persons on the defendant's team assisting with the action against the syndicate's auditors and the members of the syndicate's auditors involved with the same or, failing that, to restrain the merger.
The English High Court considered the case of Bolkiah v KPMG (a firm). It held that where considering the proposed establishment of a Chinese wall or information barrier to prevent or minimise the leakage of confidential information, the approach to be adopted by the court is to ensure that even if there are mistakes, no additional risk of damage is inflicted on the former client. Furthermore, it noted that damaging mistakes can occur when potential disclosers and disclosees are in regular and working contact with one another.
On the other hand, the court rejected the argument the House of Lords in Bolkiah v KPMG (a firm) had indicated, namely, that ad hoc China wall arrangements were unacceptable. The court noted that the crucial question was, 'will the barriers work?' As long as they do, the court would not be concerned with whether they were created before the problem arose or are erected afterwards. However, it further noted that as a question of efficacy, a barrier that was part of the fabric of the institution was more likely to be efficacious than one artificially put in place to meet a one-off problem.
Accordingly, the court held that so long as the members of the two firms involved in the litigation worked alongside or were in regular professional contact, there was a risk of inadvertent leakage of confidential information. It therefore ordered physical separation between the two teams ensuring that they work in different premises and do not have any professional contact with each other. However, it declined to proscribe social contact.
Re a firm of solicitors
Re a firm of solicitors [1999] All ER 1119 was a case where the firm of solicitors ('the Firm') was involved in two concurrent actions. In one, a club had brought an action against its brokers for their negligence in recommending a particular reinsurer ('the broker's proceedings'). The brokers' defence was that the club's managers were themselves negligent in not checking out the reinsurer before entering into a contract with it. Notice was given to the club's managers who served notice on their E&O underwriters, who were represented by the Firm. In the other action, the club had brought proceedings for unpaid release calls against some of its members, who appointed the Firm to act for them ('the members' proceedings'). The solicitors in the Firm acting in the broker's proceedings were wholly different from the solicitors in the Firm acting in the members' proceedings.
It was accepted by the English High Court that the club's managers had provided confidential information to the Firm as part of the broker's proceedings. The club argued that this confidential information was relevant to the members' proceedings because the members could rely on the alleged negligence of the club's managers in the broker's proceedings as part of their defence. While the court considered this link to be tenuous, it held that it was required to look to the future and, accordingly, further held that some of the information provided in the broker's proceedings might in future be relevant to the members' proceedings. However, the court also noted that it was entitled to take into account the weakness of the link in assessing the risk of disclosure.
Having established that relevant confidential information was in the possession of the Firm, the court then went on to consider whether there was a real risk of leakage of that information. The following facts were considered relevant by the court:
On these facts, the court held that there was a clear institutionalised departmental and physical separation: there was no cross-pollination between department, no mixing on a work basis, social contact was limited, documents were held only in hard copy and stored in the offices of the respective departments concerned. Accordingly, it held that there was no real risk of inadvertent disclosure of relevant confidential information.
Halewood International v Addleshaw Booth & Co
In Halewood International v Addleshaw Booth & Co (unreported, 5 November 1999), the plaintiff was the owner of the trade mark 'Lambrini'. The plaintiff had previously commenced proceedings against another party in respect of that party's trade mark, 'Lamfresco' ('the Lamfresco proceedings'), and had instructed a law firm to act for it in that matter. Andrew Robinson had been part of the team of solicitors from that law firm assisting in that matter. Mr Robinson left to join the defendant law firm which was subsequently instructed to act for a consortium that owned the trade mark 'Lambrusco' in proceedings against the plaintiff in respect of its use of the trade mark 'Lambrini' ('the Lambrusco proceedings'). The plaintiff objected to the defendant law firm so acting on the basis that Mr Robinson was in possession of confidential information imparted during the Lamfresco proceedings, which information was relevant to the Lambrusco proceedings.
The English High Court held that, on balance, the defendant law firm was in possession of relevant confidential information. It came to this conclusion notwithstanding its observation that the allegations made as to the type and relevance of confidential information imparted to Mr Robinson had only been made in the most general terms. Furthermore, it had come to this conclusion notwithstanding its observation that:
[a]ny solicitor who acts for a client can, in my view, be said to have some information of [the strategical and tactical approaches adopted by his client, or detailed financial considerations] in relation to his client: in the absence of specific points being relied on, or in the absence of a very long and close connection between the solicitor and the client, it seems to me that it would impinge too greatly on the freedom of other parties to instruct the solicitor, and on the freedom of the solicitor to act in other proceedings, simply to rely on generalised allegations in this context.
In considering the possible leakage of confidential information, the court considered the following facts:
In addition, the court also noted that Mr Robinson had not retained any documents from his previous retainer, and could not currently recall any information in relation to the Lamfresco proceedings.
Based on these facts, the court made the following observations:
Accordingly, the court held that, if Mr Robinson continued to work in the same building as any member of the team working on the Lambrusco proceedings, there was a small but existent risk of something happening which would involve him relaying to a member of that team some confidential information which he had. Accordingly, the court would require that Mr Robinson not work in the same building as the members of the team working on the Lambrusco proceedings, nor should he normally enter that building during the currency of the proceedings.
What Lessons May Be Learnt
The test as to possession of confidential information
The House of Lords had noted in Bolkiah v KPMG (a firm) that:
it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish: (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented; and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. [emphasis added]
In applying this test, the three English decisions have clearly demonstrated just how low the threshold is, in particular in relation to the second limb: whether the information is relevant to the new matter at hand.
In Re a firm of solicitors, the court noted that the link between the confidential information imparted and its relevance to the new matter was very weak. However, the court also stated that it should look to the future and, on this basis, held that some of the information imparted might well be relevant.
In Halewood International v Addleshaw Booth & Co, the court decried the generality of the allegations of confidential information made, but was nevertheless prepared to find that the issue of possession was made out, stating:
Even though I accept that the nature and extent of the consideration of the Lambrusco mark in connection with the Lamfresco litigation is a matter upon which I have not been given any detailed evidence or information, and the extent to which such considerations seem to be relevant to the Lambrusco litigation must be a matter of speculation, it seems to me that there is a real possibility and indeed, albeit it on balance, a probability that something will have been communicated to Mr Robinson which was confidential, which remains confidential, and which might be relevant in the Lamfresco litigation. I accept that such information may not be directly relevant on the question of evidence, but it might be relevant to the Lambrusco litigation in a way which could be prejudicial to the [plaintiff] if it was communicated to the solicitors acting for Lambrusco in the Lambrusco litigation. [emphasis added]
These two cases evince a fairly conservative and cautious approach centering on two foci:
These two foci working in tandem would have the tendency of setting the threshold very low indeed as the two cases demonstrate. Underlying this approach would seem to be a nod towards the fact that the lawyer is a fiduciary of the former client and continues to be such with regards to the information imparted. Accordingly, there should be no opportunity that any advantage can be taken of the information provided in confidence to the extent that it remains so.
The test as to the impregnability of the information barrier/China wall
While the threshold for proving the possession and relevance of confidential information has been set very low, the standard of showing the impermeability of the information barrier or China wall seems to be set fairly high.
While some comfort may be taken from the English High Court's decision (in Young v Robson Rhodes (a firm)) that ad hoc arrangements may prevail, the practical steps required to set up a sufficiently impermeable wall would generate some concern.
In Young v Robson Rhodes (a firm), the court required physical separation between the two teams who were to work in different premises and who were not to have any professional contact with each other. A similar order was made in Halewood International v Addleshaw Booth & Co, where the court ordered that Mr Robinson not work in the same building as the members of the team working on the Lambrusco proceedings and that he should not normally enter that building during the currency of the proceedings. A similar mind set can be evinced in Re a firm of solicitors, where the focus of the court there was on the existing and institutionalised physical and professional separation of both personnel and files.
It would, therefore, seem that notwithstanding the English court's prima facie faith in the members of the legal profession (insofar as it will not question the veracity and good faith behind undertakings provided by them), such undertakings will not of themselves suffice. The concern expressed is that of inadvertent disclosure - the chance remark that might inadvertently tip off a member of the legal team acting for the other side.
Furthermore, the English courts would seem to view such inadvertent
disclosure as a real risk and not one that is merely theoretical, as was noted
by the High Court in both Young v Robson Rhodes (a firm) and Halewood
International
v Addleshaw Booth & Co. In other words, when considering whether a risk
is real or merely theoretical and fanciful, the court seems to have concerned
itself more with the risk of professional contact, going so far as to proscribe
any professional contact whatsoever, rather than with the risk of disclosure per
se (it seemingly being accepted that where there is contact, there will
inevitably arise a risk of disclosure, albeit inadvertent).
One further point bears some comment. The number of persons in possession of the confidential information and who could therefore leak the information would also seem to be relevant. In all three cases, the number of persons involved had a bearing on the establishment and acceptance of the proposed China wall/information barrier. In Young v Robson Rhodes (a firm), the number of accountants involved numbered no more than four (one of whom had already left the firm). In Re a firm of solicitors, it comprised two on each side, and in Halewood International v Addleshaw Booth & Co, just one. As noted by the court in Halewood International v Addleshaw Booth & Co, the task of policing the persons in possession of the confidential information and of ensuring that the relevant persons acting for the adverse party knew who were the persons to avoid would be easier where the group of persons in possession of the confidential information was small. Conversely, as in Bolkiah v KPMG (a firm) itself, where the persons involved in the earlier matter were numerous and involved a shifting and rotating group of personalities, it would be practically impossible to both ascertain who the proscribed group would be, much more to police a sufficiently credible and impermeable cone of silence.
Conclusion
Singapore is in the midst of a reformation of its professional services, from the corporate, banking and financial services to the legal profession. The principles established in Bolkiah v KPMG (a firm) represent a higher professional standard increasingly adopted worldwide. As noted by the House of Lords in Bolkiah v KPMG (a firm), the trend is towards a stricter approach and such is already the case in the United Kingdom, the United States and Canada.
The stricter approach exemplified by the Canadian case of Martin v MacDonald Estate (Gray) [1991] WWR 705 and followed in Bolkiah v KPMG (a firm) was considered by the High Court in Alrich Development Pte Ltd v Rafiq Jumabhoy and eschewed. However, it remains to be seen whether the Singapore court will reconsider its position after Bolkiah v KPMG (a firm).
While one cannot argue against the need to protect information imparted by a client in confidence, or to prevent its misuse, in considering whether the stricter approach exemplified by Bolkiah v KPMG (a firm) and the troika of post-Bolkiah English cases should also represent the position under Singapore law, perhaps some thought should be given to the local context. The smaller size of the legal community in Singapore and the difficulty of proscribing professional contact in a smaller community working in a commercial environment with a high premium placed on space would result in an extremely high cost in imposing Bolkiah type principles and approaches here. Furthermore, in view of these local considerations, the right of the clients to select the lawyer of his choice would also fall victim to a strict Bolkiah approach.
In Alrich Development Pte Ltd v Rafiq Jumabhoy, Chao J observed:
Why should it be irrebuttable that lawyers who work together share each other's confidence?
Chao J's observation strikes to the heart of the linking of professional contact and disclosure evinced by the troika of post-Bolkiah English cases. Why should it be inevitable that there will be inadvertent disclosure even where contact is minimal and discussion of the relevant matters are proscribed? It is suggested that in the Singapore context, the balancing of factors requires either a retention of the approach in Alrich Development Pte Ltd v Rafiq Jumabhoy or an adoption of the Bolkiah approach more tailored to the local context and circumstances.
In the meantime, law firms considering the issue should bear in mind a crucial dictum of Neuberger J in Halewood International v Addleshaw Booth & Co which highlights the importance of ensuring proper conflict checks to nip any potential problem in the bud and which hence bears quoting in full:
If relevant confidential information has already been imparted ... it would be right to grant the injunction sought by [the plaintiff] as the problem faced if the [defendant law firm] were to continue to act would be effectively incurable.
Lim Wee Teck
Rajah & Tann