19 October, 2021
Introduction
When would an advocate and solicitor should not act? Specifically, when one has once acted as solicitor or counsel for a client in a previous engagement, can he or she later act for an adverse party in a case somewhat related to the matters advised or acted for in the previous retainer? This would normally involve balancing the ethical questions of conflict of interests and the right of a litigant to his or her choice of solicitors or counsel.
Court of Appeal case of Dato’ Azizan bin Abdul Rahman v Pinerains Sdn Bhd
In the recent Court of Appeal decision of Dato’ Azizan bin Abdul Rahman v Pinerains Sdn Bhd, the Court has shed some light on the applicable principles and laws pertaining to the law of disqualification in Malaysia.
In this matter, the Respondent (“Pinerains”) sought to disqualify lawyers NN and WWW from acting as counsel for the Appellant (“Azizan”). The grounds of the application are that NN and WWW had previously acted for Ms. Chan, a former director and shareholder of Pinerains in another proceeding (“OS 246”), and that the facts and issues relating to OS 246 are closely related to the subject matter of the present proceedings.
On that premise, it was contended that NN and WWW ought to be barred from acting for Azizan as they are in a position of embarrassment and conflict aside from being in breach of the Legal Profession (Practice and Etiquette) Rules 1978 (“LPR”).
The Court of Appeal was invited to consider several cases pertaining to this issue. Pinerains had relied heavily on the Canadian Supreme Court case of Martin v Gray (MacDonald Estate v Martin)1 which took a comparatively stringent approach.
In Martin, the guiding principle is once it is shown that there existed a previous relationship sufficiently related to the retainer from which the solicitor or counsel is sought to be removed, it should be inferred that certain confidential information was imparted. Burden is on the solicitor sought to be removed to satisfy that no such confidential information was imparted. It is also imperative to consider if the confidential information would be misused.
On the other hand, Azizan relied on the English House of Lords case of Prince Jefri Bolkiah v KPMG (A Firm)2 . In discussing the different basis for the Court’s intervention, the House of Lords differentiated the duty owed by a solicitor to a former client from that owed to an existing client. It was stressed that the fiduciary relationship between a solicitor and client ends with the termination of retainer.
What persists and remains post termination of engagement or solicitor-client relationship is the continuing duty to preserve confidentiality of information imparted during the subsistence of the relationship.
As such, it was held that conflict of interest is a non-issue is this instance. The applicable legal test is there must first exist a former solicitor-client relationship. Then, the party seeking to disqualify must also prove the relevant confidential information alleged to have been conveyed to or possessed by the solicitors. Whether such confidential information was ever imparted is factual.
Simply put, Martin was premised on the existence of conflict of interest whilst Jefri Bolkiah was premised on the existence of confidential information.
Decision of the Court of Appeal
After assessing both the cases above, the Court of Appeal preferred the principles laid down in Jeffri Bolkiah, as adopted in the previous Court of Appeal case of Mirza Mohamed Tariq Beg Mirza HH Beg v Margaret Low Saw Lui3 .
The Court of Appeal agreed with the proposition that fiduciary duty ends with termination of engagement. Therefore, a conflict of interest would no longer be an issue; what matters is whether there is a real risk of disclosure of confidential information. 4
In this regard, the Court of Appeal summarised the position as follows: “[40]
To conclude on this note, we reiterate that the legal principles in Jefri Bolkiah (supra) would apply to the issue of disqualification of counsel. These principles are as follows:
i. there must first be established a former solicitor-client or some fiduciary relationship between NN, WWW and the Respondent;
ii. the Respondent must prove that NN and WWW are in possession of the confidential information which is relevant to the present appeal. The Respondent must place before the Court full particulars of the relevant confidential information that was allegedly disclosed to NN and WWW; and
iii. a strong case must be made out by the Respondent to disqualify NN and WWW from acting as counsel for the Appellants.” On the facts of the case, the Court of Appeal ruled that Pinerains has failed to establish a case to disqualify NN and WWW and dismissed the application. It was held that:
• There was no previous solicitor-client relationship between NN, WWW and Pinerains giving rise to a duty to preserve confidential information; • The information sought to be protected was not confidential;
• The information would not affect the appeal; and
• There was no breach of the LPR.
Conclusion
This recent decision has reaffirmed the fact that it will not be easy for one to disqualify a former solicitor or advocate from acting for an adverse party in a future matter. Conflict of interest or, by extension, the issue of embarrassment is not a good ground to bar a person who had earlier advised a client from acting for the other party against its former client.
The onus is on the party seeking to disqualify to prove that the solicitor or counsel is in possession of confidential information from its former client relevant to the subject matter of the case coupled with a real risk of disclosure of the confidential information.
For further information, please contact:
Caitlin Tan Hui Yi, Shearn Delamore & Co
caitlintan@shearndelamore.com
Endnotes:
1 [1990] 3 SCR 1235.
2 [1999] 2 AC 222.
3 [2009] 4 CLJ 403.
