E-Clear (UK) Plc v Elia 7 ors

A solicitor is not automatically barred from acting against a former client. Restraint is justified where the applicant establishes that the solicitor possesses confidential information, obtained without consent, which is or may be relevant to the new matter and adverse to the applicant’s interests. The burden rests on the applicant, although it is not heavy. Corporate solicitors’ dealings with an individual representing or owning a company do not, without more, establish a solicitor-client relationship with that individual or access to his private financial information. The court must distinguish the professional wisdom of continuing to act from the solicitor’s legal entitlement to do so.

The claimant, a company in liquidation, applied for summary judgment in proceedings involving the defendants. The third defendant applied urgently for an order requiring the claimant’s solicitors, Field Fisher Waterhouse LLP, to cease acting and preventing reliance on a witness statement prepared by a solicitor who had allegedly acted for the first defendant.

The alleged conflict arose from the firm’s earlier work on corporate ventures involving the first defendant and companies associated with him. The central issues were whether the first defendant had been a client of the firm and whether the firm possessed confidential information relevant to the present claim.

1. Application dismissed. Field Fisher Waterhouse LLP was entitled to continue acting for the claimant.
2. The court applied the principles summarised from Bolkiah. The applicant had to establish that the solicitor possessed confidential information belonging to the applicant, to whose disclosure consent had not been given, and that the information was or might be relevant to the new matter in which the other client’s interests were or might be adverse.
3. The burden of proof remained on the third defendant, although it was not heavy. General assertions about the first defendant’s business activities, involvement in the business and indebtedness did not identify confidential information relevant to the present dispute, which concerned the source and timing of payments for a property.
4. The evidence showed that the first defendant was not a client of the solicitors. Confusion had arisen between advice given in a corporate context, involving individuals who represented or owned a company, and advice concerning an individual’s private financial affairs. Those categories could sometimes overlap, but no such overlap was established on the evidence.
5. Even if a solicitor-client relationship had been established, the evidence did not satisfy the confidential-information test. No passage in the claimant’s evidence was identified as revealing a possible breach of confidence. The court therefore declined to restrain the solicitors from acting.