Rakusen v Ellis, Munday & Clarke
| Jurisdiction | England & Wales |
| Date | 1912 |
| Year | 1912 |
| Court | Court of Appeal |
Injunction - Solicitor - Acting against former Client - Confidential Information - Members of same Firm - Discharge of Solicitor - Firm Name.
M. and C. were the only partners in a firm of solicitors named E. M. & C. and were in the habit of doing business separately and without any knowledge of each other's clients. R. consulted M. with reference to an action for wrongful dismissal which he desired to commence against a company. He then changed his solicitors and issued his writ, and the matter was referred to arbitration, the proceedings in which were still in progress. C. was away at the time and knew nothing of the consultations between R. and M., and whilst the arbitration was going on he was appointed under the name of E. M. & C. to act as solicitor for the company in the arbitration. R. applied for an injunction to restrain E. M. & C. from acting for the company:—
Held, that there was no general rule that a solicitor who had acted for some person either before or after the litigation began could in no case act for the opposite side; the Court must be satisfied in each case that mischief would result from his so acting; that there could be no danger of any breach of confidence if C. acted for the company; and (reversing the decision of Warrington J.) that the injunction must be refused.
APPEAL from a decision of Warrington J.
Prior to February, 1910, Samuel Rakusen, the plaintiff, was carrying on business in co-partnership with his brother Hyman Rakusen. In March, 1910, they sold the business to a company called S. & H. Rakusen, Limited. It was alleged by S. Rakusen that it was part of the arrangement that he should be appointed, and he was in fact appointed, sales manager and traveller for the company at a salary of 550l. a year. In June, 1911, the company gave him three months' notice to determine his employment. He consulted Mr. Munday, a partner in the defendants' firm of Ellis, Munday & Clarke, solicitors, as to his position, had several interviews with him, and gave him much confidential information in regard to the matters in dispute between him and the company. In October, 1911, he changed his solicitors and issued a writ in an action against the company for wrongful dismissal, and the dispute was referred to arbitration. It was stated that the arbitration was now in progress and five sittings had already been held. In March, 1912, Ellis, Munday & Clarke were appointed solicitors to act for the company in the arbitration proceedings. S. Rakusen thereupon commenced proceedings against Ellis, Munday & Clarke, and now applied for an injunction to restrain them from acting for the company in the arbitration.
Messrs. J. H. Munday and P. Clarke were the only two partners in the firm of Ellis, Munday & Clarke, and the evidence shewed that they were in the habit of doing business separately and without any knowledge of each other's clients, and that each of them had the exclusive services of some of their clerks. Clarke had never seen the plaintiff till March 11, 1912, was away for his vacation at the time when the plaintiff consulted Munday, knew nothing whatever about these consultations, and had never seen any of the papers or proceedings therein. On a previous occasion he had acted as solicitor for one of the shareholders of the company, who asked him to appear for him in the arbitration, and eventually, during the progress of the arbitration, he was asked to act for the company, whose solicitors were unable to give the requisite time and attention to the proceedings. The managing director, secretary, and solicitor of the company in a joint affidavit said that the services of Clarke were required by the company and that no confidential information would be given by him to the company, and that they had not communicated with any member of his firm other than Clarke.
When the case came on before Warrington J. two undertakings were offered by the defendants, namely, an undertaking by Munday in no way to act in the arbitration proceedings or say anything about his consultations with the plaintiff, and further an undertaking that Clarke's name should alone appear on the papers as solicitor for the company, and not the name of the firm. In the Court of Appeal the company offered to undertake not to consult Munday in any way.
Warrington J. held that the principle had been laid down that a solicitor, having once been employed to act for a man, should not act against him in the same matter; and although there was no imputation of any kind on Messrs. Munday and Clarke and no danger of their doing anything improper, they must be restrained from acting as the company's solicitors in the arbitration proceedings.
Messrs. Munday and Clarke appealed.
W. H. Cozens-Hardy, for the appellants. A solicitor will be restrained from disclosing information confidentially obtained from a client, but there is no general principle that a solicitor who has acted for a client in a particular matter cannot, under any circumstances, act for the opposite party in the same matter: Cordery on Solicitors, 3rd ed. p. 110. It depends on the circumstances of each case. The Court has also to see that the client's choice of a solicitor is not fettered. Here there is no danger of any information obtained by Munday from Rakusen being handed over to Clarke. The existence of such a principle would work great hardship in small towns where there were few solicitors, especially if the retainer of one partner is considered equivalent to the retainer of the firm. The question is whether there is any danger of the disclosure of secrets: Little v. Kingswood Collieries Co., per Jessel M.R.F1 Warrington J. relied on Earl Cholmondeley v. Lord ClintonF2, where the solicitor had discharged himself in the middle of the litigation; explained by Lord Eldon in Bricheno v. ThorpF3, and in Beer v. Ward.F4 A case for an injunction must be made out: Robinson v. MullettF5; Johnson v. MarriottF6; Davies v. CloughF7; Parratt v. ParrattF8; Rawlinson v. Moss.F9 No ground has been shewn for restraining the appellants or either of them from acting for the company. They always do business separately, and the fact that a client who instructs a firm is entitled to the services of every member of the firm is not conclusive.
Cave, K.C., and Harold Simmons, for Rakusen. There is no personal charge against the appellant firm or any member of it, but we rely on the general principle. The result of the cases is that where a solicitor has acted for a client in any particular matter he cannot subsequently act against him in the same matter, nor can his partner do so. These proceedings are all in the same matter. When a solicitor consents to act for a client he expects to receive his full confidence and learn his secrets, and he is under an implied obligation not to use or put himself in a position to use that confidence to the prejudice of the client. If he agrees to act for a second client that client is also entitled to know all that he as his solicitor knows, and the solicitor is therefore bound not to reveal the secrets of the first client at the same time that it is his duty to tell all he knows to the second client. The Court will take care that its officer does not put himself in such a position. A clerk is in a different position, for there is no contractual relationship between him and the client. We agree that in this case no wrong will be done intentionally, but information may leak out through some of the appellants' clerks, and the principle should be supported. We are not dealing with them as individuals, but as a firm, and we submit that the only safe rule is to forbid such conduct by a firm: Norton v. Cooper.F10 How can we tell whether undertakings are observed? The fact that the solicitor has discharged himself has no bearing on the rule: Hutchins v. HutchinsF11; Biggs v. Head.F12 The judgment in Earl Cholmondeley v. Lord ClintonF13 was not founded on particular facts, but on a general rule.
No reply was called for.
COZENS-HARDY M.R. It is of vast importance that there should be no doubt thrown on the true position of solicitors in matters of this kind or of the jurisdiction of the Court over solicitors. Solicitors have great privileges and they have corresponding duties. Of their privileges a greater instance cannot be furnished than the absolute...
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