FNPF Invetsments Ltd v Venture Capital Partners (Fiji) Ltd [2012] FJHC 1156; HBC99.2011 (8 June 2012)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 99 of 2011

BETWEEN:

FNPF INVESTMENTS LIMITED
a limited liability company having its registered office
at Level 4, Provident Plaza 2, 33 Ellery Street, Suva Fiji.
PLAINTIFF

AND:

VENTURE CAPITAL PARTNERS (FIJI) LTD
a limited liability company having its registered office
at 14 Kimberly Street, Suva in Fiji.
1ST DEFENDANT

AND:

DINESH SHANKAR
237 Ratu Sukuna Road, Nasese Suva, Fiji,
Company Director.
2ND DEFENDANT

BEFORE : Master Deepthi Amaratunga

COUNSELS : Mr. D.Sharma for the Plaintiff

Mr. F. Haniff and Mr. R. Krishna for the Defendant

Date of Hearing : 8th March, 2012, and 21st February, 2012

Date of Ruling : 8th June, 2012

RULING

1. INTRODUCTION
   

1. The Plaintiff being a subsidiary of the FNPF filed this action seeking damages from 1st and 2nd Defendants for investing in ventures which were non profitable, in violation of management agreement between Plaintiff and 1st Defendant, thus incurring substantial loss to the Plaintiff. The claim is based on investment management agreement and the alleged failure of the Defendants to perform due diligence as per the management agreement and or failure to advise as 'professional investment managers', in terms of the investment management agreement that was entered into between the Plaintiff and 1st Defendant, which was terminated in 2010. The Plaintiff allege substantial loss to its fund due to alleged failure of the Defendants to exercise due diligence as 'investment managers' of its fund, and or violations of investment management agreement. The Defendants have acknowledged the service through its solicitors, namely Munro Leys. The 1st Defendant has already filed their statement of defence through its solicitors Munro Leys and the same solicitors have filed summons seeking strike out of the 2nd Defendant from the statement of claim. Before the determination of the said summons, the Plaintiff's solicitors filed the present application. This is an application made by the Plaintiff to recuse the law firm of Munro leys (hereinafter referred to as the Firm) from acting for the Defendants in this matter. The application is made by way of interpartes summons supported by an affidavit in support made by Investment Analyst of the Plaintiff. The said application for recusal is based on a previous legal opinion sought from the Firm to FNPF as to their investments in 'venture capital', more specifically whether Section 7 of the FNPF Act permits investment in 'venture capital'. Though the query was such, the Firm reframed the issue as to whether FNPF Investment Limited (the Plaintiff)'s investment policy is contradictory to the agreement with the Venture Capital Partner Limited (the 1st Defendant). After the said opinion was communicated there is no evidence of any relationship between the Firm and FNPF and or the Plaintiff and it is admitted that neither FNPF nor the Plaintiff (FNPF Investment Limited) are presently clients of the Firm. So, the recusal is made on the basis of their previous engagement and the opinion, submitted on 16th July, 2007, relating to the investment management agreement between the Plaintiff and 1st Defendant. The action before me is based on the alleged breach of the provisions regarding the investment criteria in the said agreement, by the 1st and 2nd Defendants. The Firm submitted their opinion as to the legality of the said agreement and whether the said agreement was in conformity with the investment policy of the Plaintiff, but now the claim is against the 1st and 2nd Defendants for the alleged breaches of the said agreement and more specifically failure to adhere to the investment criteria set out in the second schedule and the reporting obligations contained in the third schedule, investing in blatant violation of the single venture exposure percentage of 15% and other violations of the said investment management agreement between the Plaintiff and the 1st Defendant. The allegation of the Plaintiff, is that the Firm is in possession of confidential information of the Plaintiff in relation to the issue of investment management agreement and reasons for obtaining such an opinion from the Firm two years after the entering into the agreement when all the investments alleged in this action has already made with the advice of 1st Defendant. The Plaintiff was unable to produce or name any specific confidential material, but stated that the subject matter in issue is the management agreement and the investment criteria laid down and alleged non compliance by the Defendants. The Defendant state that since they do not have any confidential material and the Plaintiff was unable to refer to such material that is confidential, the recusal should be rejected. The sole reason for recusal is not the possession of confidential information and the burden of proof for the party seeking recusal is not heavy. The court can infer possession of confidential information from the facts and circumstances and any doubt should be in favour of the Plaintiff if the risk of possession of confidential information is real.
   

2. FACTS AND ANALYSIS
   

2. The FNPF which is a statutory body sought legal opinion from the Firm as to whether Section 7 of the FNPF Act (predecessor to FNPF Decree of 2011) permitted investment in venture capital funds. This was specifically in regard to a management agreement entered between the Plaintiff and 1st Defendant, who acted as the investment manager of the Plaintiff's fund.
   
3. FNPF is a statutory body established under section 3 of the Fiji National Provident Fund Act (Cap. 219) .The Fiji National Provident Fund Decree (No 52) of 2011 presently regulates FNPF. Under the said Decree FNPF Act (Cap 219) was fully repealed, but FNPF continued to be a statutory body under the said decree though the provisions contained therein has now changed, which is irrelevant to the issue before me. The Plaintiff is a limited liability company having its registered office at Level 4, Provident Plaza 2, 33 Ellery Street, Suva, Fiji and the relationship between the Plaintiff and the former client of the Firm, is not averred in the affidavits in support of this recusal.
   

100. PRELIMINARY ISSUE
     

4. The actual relationship between the Plaintiff and the FNPF is not clearly mentioned by the Plaintiff, this is vital component to ascertain the nexus between FNPF and the Plaintiff as the previous engagement was with FNPF. The Defendants have taken this objection and the submissions of the Defendants are silent on this important issue.
   
5. Though the Firm has taken this as an objection, I do not think that the relationship between the two entities, though not specifically averred in the affidavits of the Plaintiff, can be a ground for dismissal of this recusal application, as contended by the Firm.
   
6. The affidavit in opposition sworn by Richard Naidu at paragraph 4 expressly admit that the FNPF as the parent company of the Plaintiff and states as follows
   

'4. I am required to depose to certain matters of fact which concern Munro Ley's relationship with FIL (Plaintiff)'s parent entity, Fiji National Provident Fund (FNPF).' (The emphasis added)

7. Since the Firm has admitted that its former client FNPF is the parent company of the Plaintiff, I do not wish to deliberate on the contention that failure to reveal the relationship of FNPF and the Plaintiff, would be a ground for dismissal of the present application.
   
8. It is admitted fact as per paragraph 4 of the Firm's partner Richard Naidu's affidavit that Plaintiff is a subsidiary of FNPF. The exact nature of the relationship, namely the percentage of shareholding, is not material for the application for recusal, as the Defendant has admitted that the Plaintiff's parent company is FNPF, and that establishes the required nexus between the Plaintiff and FNPF for whom the Firm opined in relation to the investment management agreement between the Plaintiff and the 1st Defendant, which is under scrutiny in this action. I reject the preliminary objection of the Firm, as to the non disclosure of relationship between the Plaintiff and the FNPF by the Plaintiff, for the recusal as it is already admitted fact as per the affidavit of Richard Naidu.
   
9. The Firm advised the FNPF by their 'Memorandum of Advice' dated 25th July, 2007 signed by Richard Naidu, a Partner of the Firm and Neha Basawiya an Associate of the Firm. Both are lawyers of the said the Firm and the said law firm consist of number of lawyers. I do not have either the organization structure or the number of the lawyers involved in the Firm but it is admitted that they are subject to the provisions contained in the Legal Practitioner's Decree 2007. The organization structure is vital to determine the issue of 'Chinese wall' in the organization when determination of conflict as held in Jefri Bolkiah v KPMG [1999] 2AC 222.
   

4. Existence of 'Chinese Wall'
   

'Chinese walls' are widely used by financial institutions in City of London and elsewhere. They are the favoured technique for managing the conflicts of interest which arise when financial business is carried on by a conglomerate. (Prince Jefri Bolkiah v KPMG [1999] 2AC 222 at 239.

10. I do not have evidence of such practice being adopted in law firms, but since it is a management practice firmly established in UK as far back as 1999 where even the Financial Service Authority of UK has recognized the effectiveness, there is no reason why it cannot or should not be practiced by any organization that encounter issues of conflicts of interest, in their carrying out of usual business, including a law firm depending on the cost of establishing and maintaining such management practice and the frequency of issues of conflict that are encountered by such organization. The Law Commission of UK (1992)(Law.Com.No 124) has dealt with the management practice of 'Chinese Wall' and laid down the organizational arrangements that are indicated in Jefri Bolkiah v KPMG [1999] 2AC 222 at( 239 paragraphs c, d, e). Neither side in their submissions relied on this issue, but since both sides cited Jefri Bolkiah v KPMG [1999] 2AC 222 without reference to the issue of 'Chinese Wall', I think that at least I need to ascertain the existence of such management practice in the Firm on the available evidence and I have come to conclusion that there is none.
    
11. The following affidavits have been filed in the Recusal Application:
    
    • (a) Affidavit of Mr. Josua Satava, Investment Analyst Officer of Plaintiff, sworn on 4 November 2011 and filed herein in support of the Recusal Application
      

(b) Affidavit of Mr. Richard Naidu, a partner of Munro Leys, sworn on 20 December 2011 and filed herein in response to the affidavit of Mr. Satava.

12. The FNPF sought legal opinion from the Firm as to whether Section 7 of the FNPF Act permitted investment in venture capital funds. Without issuing an opinion on that issue, which is a legal interpretation of Section 7 in relation to the FNPF Act (predecessor to FNPF Decree 2011) and the interpretation of the word 'venture capital',the Firm reframed the said strictly legal opinion in answering the issue to include Plaintiff and the 1st Defendant and the investment management agreement that is the crux of the claim in this action.
    
13. No reason given for such deviation from the opinion sought by the FNPF, neither party stressed on that point, and the affidavit of Richard Naidu is completely silent on that that vital component and the submissions made by the parties were of little assistance as to the reasons for the said deviation.
    
14. This is a vital issue as when a purely a legal interpretation was sought, by FNPF which is admittedly the parent company of the Plaintiff regarding its investment in venture capital and whether the Section 7 of the repealed FNPF Act's compliance of such investments, it is unlikely that, the Firm on its own volition had reframed the opinion which also necessitated the Firm to consider the facts of evidence including the investment management agreement and investment criteria contained in that agreement, terms of which the claims in this action are based.
    
15. The reframing of the opinion is complete overhaul of the opinion that was initially sought by the FNPF and why such an complete overhaul was needed has not been explained by Richard Naidu, a partner of the Firm and also the main signatory of to the said 'Memorandum of Advice' who should have the complete knowledge of the reasons for reframing of the opinion. If a reframing of opinion is done the reasons for that should generally be included in the said opinion and there is no such reason stated in the said opinion.
    
16. The deponent of the affidavit in support was apparently not a person who was directly involved in the said issue at that time as he has stated in his affidavit 'I do not know the Second Defendant personally and do not profess to have been involved in the investments when they were first approved'. The affidavit in support was sworn by him in his present capacity as Investment Analyst of the Plaintiff, and under the circumstances the best person to reveal the reasons for such a complete deviation from initial request, is Richard Naidu. Richard Naidu's affidavit needs more elaboration as to the reasons of the reframing of the query of the FNPF as he was directly involved in the issuance of advice and reframing of the initial query of FNPF, at that time. It is vital some explanation is given, considering the nature of the change of the initial query of FNPF to the Firm.
    
17. The legal opinion sought by FNPF is regarding an interpretation of the Section 7 of the FNPF Act (predecessor to the FNPF Decree 2011) and whether the investment in 'venture capital' is permitted in terms of the said provision of the statute.
    
18. If the Firm answered to the said query, the opinion would have confined strictly to the interpretation of Section 7 of the repealed FNPF Act and the interpretation of the word 'venture capital' and in the opinion of the Firm, whether such investments in venture capital violates the investment instruments permitted by the FNPF Act. But, strangely this was not what the ultimate opinion addressed as the query was reframed, by the Firm. When an opinion is sought, reframing of the initial query cannot be done without a valid ground and also the consent of all the parties concerned. The Firm in its memorandum of opinion without stating any reason reframed the query and then discussed the reframed query.
    
19. Why the Firm, completely jettisoned such a strictly legal opinion sought by the Plaintiff's parent company regarding its obligation and reframed the query by doing so included the Plaintiff and Defendant and the relationship between the two entities that were not even clients of the Firm at that time, needs further elaboration, but I have not been submitted with such materials.
    
20. There would have been a very good reason for the Firm, to deviate from the strictly and comparatively easier, legal advice that confined only to the interpretation of Section 7 of the repealed FNPF Act and the word 'venture capital' to a one which is far more complex and included the investment management agreement that is the crux of the claims in the present litigation and also included the Plaintiff, who was not the client of the Firm at that time. But by this reframing of the opinion clearly covered the relationship between the Plaintiff and the 1st Defendant and the investment management agreement between them.
    
21. While answering the initial strictly legal query of FNPF, the Firm in its Memorandum of Advice has reframed the query as follows
    
    1. Do the 1st Defendant's arrangements (i.e. the investment management agreement between the Plaintiff and the 1st Defendant) breach Plaintiff's investment policy?
       
    2. Does the FNPF's participation in and investment in the nature of venture capital breach Section 7 of the FNPF Act?
       
22. The said Memorandum of Advice was addressed to the Viliame Vodanivalu, Executive Manager, of FNPF and this communication is classified as 'confidential and legally privileged.'
    
23. The Firm is stating that the Plaintiff was never a client of them, and the Plaintiff has failed to establish the relationship between the Plaintiff and the FNPF, who was the former client of the Firm. The contention of the Firm cannot hold water, as I have referred in this ruling the affidavit of Richard Naidu admits that FNPF as the parent company of the Plaintiff.
    
24. The Firm has redrafted the opinion of the FNPF to provide an opinion on the investment policy of the Plaintiff and its propriety as to the investment management agreement with the Defendant. So on the evidence available to me, the said review of the investment policy of the Plaintiff was done by the Firm, with the approval of the FNPF. This would have done either on instigation of FNPF and or by the Firm, on material available to them and the requirement of FNPF as the parent company of Plaintiff to obtain such an opinion.
    
25. The Legal Practitioners Decree 2009 (the Decree) regulates the legal profession in Fiji. The Schedule to the Decree sets out "Rules of Professional Conduct and Practice". The following Rules are relevant to the present application:
    

"Chapter 1 – Relations with Clients

1.1. A practitioner shall not abuse the relationship of confidence and trust with a client.

1.2. A party (this is an error and should read "a practitioner") shall not act for more than one party in the same matter without the prior consent of all parties.

1.3. On becoming aware of a conflict of interest between clients a practitioner shall forthwith:

(a) Advice all clients involved in the matter of the situation

(b) Continue acting for all clients only with the consent of all clients and only if no actual conflict has occurred

(c) Decline to act further for any party where so acting would disadvantage any one or more of the clients.

1.4. Information received by a practitioner from or on behalf of a client is confidential and shall not be communicated to others save with the client's consent or where so required by law.

1.5. Where a practitioner has received information from or on behalf of a client, a practitioner shall not thereafter act for another client in circumstances where the practitioner's receipt of such information may result in detriment to the first mentioned client."(emphasis is added)

26. The contention of the Firm is that they are not in possession of any confidential materials of the Plaintiff, hence there is no conflict of interest and for that the Firm relies on the case of Jefri Bolkiah v KPMG [1999] 2AC 222.
    
27. At the outset the conflict and recusal cannot depend solely on the issue of confidential information. The issue of confidential information is only one reason for recusal. This is what Justice Calanchini (as his lordship then was) held in Bano v Rashid [2010] FJHC 273; HBC218.2009 (26 March 2010) and I quote that in full since neither side made submission on this.
    

"Furthermore, there is recent authority indicating that the principle goes further than this restricted view that rests on confidential information and its possible misuse. The Court of Appeal of the Victorian Supreme Court in Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 at page 521 para 52 stated:

"... the danger of misuse of confidential information is not the sole touchstone for intervention where a solicitor acts against a former client. That danger can and usually will warrant intervention, but it is not the only ground. There are two other possible basis for an interdict. In the first place it may be said to be a breach of duty for a solicitor to take up the cudgels against a former client in the same or a closely related matter."

28. In Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501at 525 (para 60) indicates three grounds of recusal and stated as follows
    

'... against this firm of solicitors on three independent bases: first, the danger of misuse of confidential information, secondly, breach of the fiduciary's duty of loyalty; thirdly, the desirability of restrain the solicitors as officer of the court."

29. The submissions were confined mainly to the issue of the breach of confidentiality and neither side relied on other two grounds which I will deal later in this ruling.
    

5. CONFIDENTIALITY
   

30. A lawyer is precluded from acting for more than one party and any information received by a practitioner from or on behalf of a client is confidential and shall not communicated to others without the consent of the client.
    
31. The Defendants contention is that they are not in possession of any confidential information and the Plaintiff has failed to detail the confidential information that they are in possession. The Firm has even offered the perusal of their file regarding the previous engagement with FNPF.
    
32. The affidavit in support at paragraph 9 of the Satavu Affidavit, states:
    

"Our concern is that Munro Leys were in possession of our confidential documents and were made privy to the reasons why we were worried about the Management Agreement in 2007 ..."

33. Perhaps, this may be all what the deponent of the affidavit in support could swear, as he was not involved in the opinion of the Firm at that time. Whether this would suffice for recusal on the issue of confidentiality has to be decided depending on all the circumstances of the case.
    
34. In Bano v Rashid [2010] FJHC 273; HBC218.2009 (26 March 2010) Justice Calanchini (as his lordship then was) analysed a similar averment that did not specify any specific confidential information and even more vague, in a recusal application and held in favour of recusal and held:
    

"The Plaintiff states that any fees that are owed to the firm are owed by her daughter for representation by Kumar in her divorce proceedings.

In paragraph 14 the Plaintiff states:

"14. That I am however concerned that Mr. Sunil Kumar by representing the 1st Defendant has acted against my best interests since I was his client prior to the 1st Defendant notwithstanding that he had represented me in my other legal matters. I also have disclosed privileged information which is confidential and I believe he could use his information against me in any case and this would weaken and prejudice my case."

No further details were provided in relation to any of the claims made in that paragraph. It is not clear whether the reference to confidential information was a reference to information concerning the vehicle and issues arising under the agreements with both the Defendants or was a reference to information concerning her unrelated legal matters.' (emphasis added)

In conclusion his lordship held

'On the balance of probabilities I am satisfied that Kumar is in possession of information which is confidential to the Plaintiff. Kumar has admitted acting for her in two matters, albeit unrelated, and I have concluded that he was requested to give advice and did give advice to the Plaintiff concerning issues involving the vehicle. I am satisfied that during the course of the retainer and when she requested advice from Kumar, the Plaintiff disclosed confidential information. I also find as an inescapable inference that at least some of that confidential information is or may be relevant to the matter in which the interests of the First Defendant as the new or present client are adverse to the Plaintiff's interests as the former client.' (emphasis is mine)

In the analysis his lordship applied the cases of Jefri Bolkiah v KPMG [1999] 2AC 222 and Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 and inferred that at least 'some of the confidential' information would have revealed, though not certain as to the nature of information. What is needed is to prove an inference in favour of recusal and the burden of proof is not a heavy burden.

35. In Jefri Bolkiah v KPMG [1999] 2AC 222 at p 227 in the concurring speech of Lord Hope of Craighead stated
    

'A solicitor is under a duty not to communicate to others any information in his possession which is confidential to the former client. But the duty extends well beyond that of refraining from deliberate disclosure. It is the solicitor's duty to ensure that the former client is not put at risk that confidential information which the solicitor has obtained from that relationship may be used against him in any circumstance.

Particular care is needed if the solicitor agrees to act for new client who has or who may have, and interest which is in conflict with the of the former client.....He is entitled to insist that measures be taken by the solicitor which will ensure that he is not exposed to the risk of careless, inadvertent, or negligent disclosure of the information to the new client by the solicitor, his partners in the firm, its employees or anyone else for whose acts the solicitor is responsible.

It may be very difficult, after the event to prove how and when the information got out, by whom and to whom it was communicated and with what consequences. In that situation everything is likely to depend on the measures which are in place to ensure that there is no risk that the information will be disclosed. If the court is not satisfied that the measure will protect the former client against the risk, the proper course will be for the grant an injunction." (i.e. grant of recusal) (emphasis is added)

36. Accordingly, if there is any doubt as to the protection of former client from the disclosure of confidential information from the solicitor, the court has to hold in favour of the client and even inadvertent disclosureby an employee of the solicitors needs to be prevented by appropriate orders. So, the confidentiality is not only confined to solicitors but to any person whom the solicitors are responsible. The burden of proof in a recusal application is, as always, with the person who is making the application, namely the ex-client, the burden is not a heavy one, for obvious reasons as stated by Lord Hope of Craighead in the passage quoted above. Lord Millett's judgment dealt with the issue of confidentiality extensively.
    
37. Jefri Bolkiah v KPMG [1999] 2AC 222 Lord Millett at p 235 held:
    

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. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercises, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which mustbe proved or inferred from the circumstances of the case. In this respect also we court not in my opinion to follow the jurisprudence of the United States.' (emphasis is added)

38. If the possession of confidential information can be inferred from the circumstances there is no need of proving such a fact by the Plaintiff at this time, it should also be noted that the burden of proof is also not a heavy one. Applying the threshold that was applied by Justice Calanchini in Bano v Rashid [2010] FJHC 273; HBC218.2009 (26 March 2010) in the proper analysis of the facts I can infer that the Firm is in possession of confidential information, and there is a real risk of confidential information being in possession with the Firm.
    
39. The parent company of the Plaintiff namely FNPF, was provided with an opinion regarding the investment management agreement that entered between the Plaintiff and 1st Defendant, this opinion was sought long after the said agreement was entered into and executed and all of the alleged 'bad' or 'questionable' investments were made while the 1st Defendant was the 'investment manager'of its fund. The alleged investments in breach of investment criteria, were made during the period of 2005 – 2007 and the parent company of the Plaintiff, sought the opinion from the Firm as regard to investments in venture capitals in pursuant to the management agreement also in latter part of 2007.
    
40. This infers some doubt as to the manner the 1st Defendant has acted and advised the Plaintiff and also its effect on the parent company FNPF, as to the depletion of the Plaintiff's fund without required rate of return and payment of substantial amounts to the 1st Defendant as management fees out of the said fund and the plight of the fund that was in control with Plaintiff and the 1st Defendant. The FNPF being the parent company would have concerned over its funds in the hand of Plaintiff, which was managed by 1st Defendant. The inference is heavily in favour of the Plaintiff that some confidential information would have communicated in the manner the investment advice is given at that time by the Defendants and or in the manner the investments were made in ventures which were inherently non profitable in breach of the investment criteria contained in management agreement. To think otherwise is not only highly improbable but also unrealistic. The undisclosed reason for reframing of the query of the FNPF, may also be the revelation of such confidential information regarding the investments carried out on the advice of the 1st Defendant, prior to 2007. The danger of risk of revelation of confidential information in the process is real. Justice Calanchini in Bano v Rashid [2010] FJHC 273; HBC218.2009 (26 March 2010) and Lord Millet have applied much stricter approach in the analysis of facts to arrive at their respective conclusions.
    
41. Lord Millett has analyzed the 'Degree of risk' at p236 and after analysis of law in various cases decided at that time, held that 'The clear trend of the authorities is towards a stricter approach'.
    

'It is in any case difficult to discern any justification in principle for a rule which exposes a former client without his consent to any avoidable risk, however slight, that information which he has imparted in confidence in the course of a fiduciary relationship may come into the possession of a third party and be used to his disadvantage. Where in addition the case for strict approach is unanswerable. Anything less fails to give effect to the policy on which legal professional privilege is based. It is of overriding importance for the proper administration of justice that a client should be able to have completed confidence that what he tells his lawyer will remain secret.'

At p 237

'I prefer simply to say that the court should intervene unless it is satisfied that there is no risk of disclosure.'(emphasis is added)

42. In the application of the ratio in Bano v Rashid [2010] FJHC 273; HBC218.2009 (26 March 2010) it is clear that the application for recusal of the Firm should be granted on the issue of confidentiality of information as the risk of revelation of confidential information by the Firm is real in the proper analysis of material before me.
    
43. The only ground for recusal is not the risk of the confidential information being revealed as held in Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501at 525. The said position was accepted and applied by His lordship Justice Calanchini (as he then was) in Bano v Rashid [2010] FJHC 273; HBC218.2009 (26 March 2010) and stated 'Furthermore, there is recent authority indicating that the principle goes further than this restricted view that rests on confidential information and its possible misuse. The Court of Appeal of the Victorian Supreme Court in Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 at page 521 ...'
    

6. Breach of Fiduciary's Duty of Loyalty and the Desirability of Restraining the Solicitors as Officers of the Court.
   

Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 513 paragraph 35 it was held :

'In 1999 the House of Lords rejected the suggestion that a former client could prevent a solicitor from action for another by invoking something other than the need to protect confidential information...' and this was in reference to Lord Millet's speech in Jefri Bolkiah v KPMG [1999] 2AC 222

Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 at page 521 para 52 stated:

"... the danger of misuse of confidential information is not the sole touchstone for intervention where a solicitor acts against a former client. That danger can and usually will warrant intervention, but it is not the only ground. There are two other possible basis for an interdict. In the first place it may be said to be a breach of duty for a solicitor to take up the cudgels against a former client in the same or a closely related matter."

The ratio of the Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 is already part of Fiji law as it has been accepted in the case of Bano v Rashid [2010] FJHC 273; HBC218.2009 (26 March 2010).

In the judgment of Brooking JA in Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 at p511 stated

'This seems to suggest that the fact that the solicitor had discharged himself was relevant but not conclusive.'

It is clear that the contention that the Plaintiff or its parent company not being a client at this moment is not a reason for rejection of recusal.

44. In Spincode Pty Ltd –v- Software Pty Ltd and Others [2001] VSCA 248; (2001) 4 VR 501 at 511 paragraph 32 it was further held by Brooking JA as
    

'Since the earliest days of attempts to prevent solicitors from acting against their former client it has been recognized that a basis-I use the indefinite article advisedly- of the jurisdiction is that which the court has over solicitors as its officers. Sir Samuel Romilly, for Lord Clinton, said that there were two heads of jurisdiction irreparable injury which supports an injunction and in addition the general jurisdiction over an officer of the court.'

Further at paragraph 37 held

' .... I have already drawn attention to court, the jurisdiction of the court to restrain the solicitor is an officer of the court, the jurisdiction of the court to restrain the solicitor is an officer of the court, the jurisdiction of the court to restrain the solicitor from acting may be founded not only on the general power which a court exercising equitable jurisdiction has to grant injunctions for the protection of a right but also on the control which a court may exercise over its own officers....'

At paragraph 38 it was further stated

'There is a good deal of authority for the view that a solicitor, as an officer of the court, may be prevented from acting against a former client even though a likelihood of danger of misuse of confidential information is not shown.

At p 515 it was stated

'...In upholding the declaration the court founded itself on the inherent jurisdiction of the court to control its own processes and so prevent a practitioner from acting in relation to litigation in a way which would cause reasonable members of the community to lose confidence in the judicial system. Shortly after that decision was given a judge of the High Court of New Zealand, Thomas J similarly rested his judgment on the principle of protecting the integrity of the judicial process. In Black v Taylor Richardson J referred to Canadian decisions on whether an appearance of impropriety could justify ascertaining a practitioner from acting in litigation.

The two New Zealand decision were considered by Mandie J in Grimwade v Mcagher. His honour adopted statements of principle in them and retrained counsel from acting for the plaintiff in a proceeding in order, as he said at 455, "to ensure the due administration of justice and to protect the integrity of the judicial process and in order not only the justice be done but be manifestly and undoubtedly be seen to be done". Mandie J considered that a fair minded reasonably informed member of the public would conclude that the proper administration of justice required that the counsel concerned be prevented from appearing in the action because of real risk of lack of objectivity and conflict of interest any duty.' (emphasis is added and reference omitted)

45. The agreement between the Plaintiff and the 1st Defendant was entered in 2005 and when the Plaintiff's parent company was provided with a legal opinion in 2007 on the investment management agreement between the Plaintiff and 1st Defendant was entered and all the alleged 'questionable' investments are also made. The confidential information relating to such investments prior to 2007 would have been divulged and the very reason for seeking such an opinion and the reframing of the opinion by the Firm would have eventuated under the circumstances prevailed at that time.
    
46. Plaintiff's parent company, FNPF and to the Firm who were acting as legal advicer to the issue has submitted a opinion on 16th July, 2007. In the absence of any reason for reframing the opinion by the Firm, the inference is that it was done with the concurrence of the Plaintiff's parent company FNPF. In such a situation it is highly likely that at least the investments that were already made in pursuant to the professional advice of the 1st Defendant would have been discussed or revealed. It is highly unlikely that such information is not discussed and or revealed by FNPF, when the said opinion was sought two years after the execution of the agreement.
    
47. There is an obligation on the part of the Firm not to utilize the information that was revealed and or obtained during its previous engagement with the parent company of the Plaintiff regarding the investment management agreement. If the recusal of the Firm is not allowed, there is not only the risk of any confidential information being utilized fro the present litigation, but there is every likelihood that the 'latter can overshadow the former in importance'.(p 516 Brooking JA, Spincode Pty Ltd –v- Software Pty Ltd and Others, (supra)).
    
48. The Plaintiff's parent company is not presently a client of the Firm and the loyalty to the Plaintiff and or its parent company may overshadow the interests of the present clients, who are the Defendants in this case.
    
49. In p 516 Brookding JA, Spincode Pty Ltd –v- Software Pty Ltd and Others, (supra) quoted Professor Finn's book 'Conflict of Interest Loyalty' by Brooking JA
    

'Loyalty's effect is twofold. First if the fiduciary is being remunerated by either or both of the parties, the "conflict of duty interest" theme in the fiduciary's obligation requires him to disclose to each claim that he is being remunerated by the other. Secondly, much more importantly until each client agrees to the contrary or unless there is a legally acknowledged custom to the contrary each client is entitled to, and is entitled to assume that he has, the undivided loyalty of the fiduciary he has engaged. The rule here is simple and inexorable. "Fully informed consent apart, and agent cannot lawfully place himself in a position in which he owes a duty to another which is inconsistent with his duty to his principal"

50. In the circumstances, as analysed in this ruling earlier it is fiduciary's duty as well as the duty as the officer of the court to refrain the Firm from providing advice to the Defendants in this action. Such restraint is not only necessary but essential to safeguard the interest of the Plaintiff as well as in the interest of the fairness, justice and transparency.
    

7. CONCLUSION
   

51. The Plaintiff was not a client of the Firm, but its parent company had been and the Firm in its memorandum advice dated 16th July, 2007 has specifically addressed the 'arrangement' between the Plaintiff and the 1st Defendant including the management agreement and investment criteria. By this time the alleged investments upon which this action is based on have already been made. The claims are for alleged breach of investment criteria contained in the management agreement between the Plaintiff and the 1st Defendant. There is no specific confidential information that was mentioned in its affidavit in support. However in the interests of fairness, justice and transparency, the Firm cannot under the circumstances continue to act for the any of the Defendants. The application for recusal of the Firm is granted. The costs of the application are to be costs in the cause.
    

8. FINAL ORDERS
   

1. The Plaintiff's application to recuse Defendants' solicitors Munro Leys, is granted.
2. Cost of this application for recusal will be cost in the cause.
   

Dated at Suva this 8th day of June, 2012.

Master Deepthi Amaratunga
High Court, Suva