Spincode Pty Ltd v Look Software Pty Ltd

Facts

Spincode Pty Ltd sought to restrain a firm of solicitors from acting for Look Software Pty Ltd in litigation against Spincode, on the ground that the firm had previously acted for Spincode in related commercial matters and had thereby acquired confidential information. The firm had ceased to act for Spincode before being retained by Look Software. The primary judge declined to grant the injunction, and Spincode appealed to the Court of Appeal.

Issues

1. Whether a solicitor who has acted for a former client owes a continuing duty of loyalty that goes beyond merely protecting confidential information. 2. Whether such a duty, if it exists, can found an injunction restraining a solicitor from acting against a former client even where no misuse of confidential information is alleged or established.

Holding

The Victorian Court of Appeal (Callaway JA, with whom others agreed) held that Australian law recognises a duty of loyalty owed by a solicitor to a former client that is independent of, and broader than, the duty to preserve confidential information, and that breach of that duty may ground an injunction restraining the solicitor from acting adverse to the former client in sufficiently related matters.

Ratio decidendi

A solicitor owes a former client not only a duty to protect confidential information but also a separate duty of loyalty that may, depending on the closeness of the relationship and the degree of connection between the former and current retainers, preclude the solicitor from acting against that former client, regardless of whether any confidential information is actually at risk of disclosure or misuse.

Obiter dicta

Callaway JA expressed the view that the precise boundaries of the duty of loyalty to former clients remained to be developed by the courts on a case-by-case basis, and acknowledged that the existence and scope of such a duty beyond confidentiality had not been definitively settled by the High Court of Australia. His Honour also observed that the concept of 'related matters' for the purpose of the loyalty duty required careful analysis and would not extend to every subsequent engagement touching the same client.

Significance

Spincode is the leading Australian authority for the proposition that solicitors owe former clients a duty of loyalty that is distinct from and extends beyond the duty of confidentiality, a principle that has been widely applied and debated in subsequent professional conduct and conflict-of-interest cases across Australian jurisdictions.

Key authorities

• Mallesons Stephen Jaques v KPMG Peat Marwick Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357considered
• Rakusen v Ellis Munday & Clarke Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831considered
• Bolkiah v KPMG Bolkiah v KPMG [1999] 2 AC 222considered
• David Lee & Co (Lincoln) Ltd v Coward Chance David Lee & Co (Lincoln) Ltd v Coward Chance [1991] Ch 259considered
• Re a Firm of Solicitors Re a Firm of Solicitors [1992] QB 959considered