Law Institute Journal tallies the score on Spincode

I have never understood what it is about Justice Brooking’s extended obiter on the fiduciary duty of loyalty in Spincode¬† Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501 which prompted such apoplexy. I would have thought that the second most obvious conflict of duties (after acting concurrently for two opposing parties) would be to swap sides in the one dispute. I think it is in fact this: people hear “duty of loyalty” and think “I can’t act against anyone I’ve ever acted for? No way!” But the only content of the duty of loyalty is not to “take up the cudgels against a former client in the same or a closely related matter”. What’s not to like about such a proposition? Nevertheless, it is a substantial departure from the House of Lords’s position and finds little favour in NSW.

In the latest Law Institute Journal (80: 11 LIJ 35) Russell Cocks and Elizabeth Klein have tabulated the cases which have considered Spincode into a neat little table by state. They suggest the duty is enthused over in Victoria and explicitly rejected in NSW, ACT, Queensland, South Australia, Tasmania, and the Federal Court, with tentative enthusiasm having been expressed in WA, and in different Federal Court, Queensland and NSW cases. The tabulation seems a little quixotic, in that Rothschild v Mullins, “a case which considered Spincode in passing, but did not lead to any definitive view on its application” turns up in the table in the column devoted to cases involving “explicit rejection of Spincode“.

The bit of the judgment which now gets referred to as “Spincode” was purely obiter. The search should be for precedent on the subject, since the vast majority of decision makers are likely to regard another state’s Supreme Court’s ratio as more persuasive than their own state’s Supreme Court’s obiter. It would be interesting to know whether any of the cases in Cocks & Klein’s table were decided by reference to something other than the real chance of the misuse in favour of the new client of confidential information belonging to the former client. What is clear from Cocks & Klein’s necessarily brief descriptions of the cases is that many of them were not. I analysed the cases a few years ago and seem to recall thinking that a case had been decided by reference to the duty of loyalty. That is, a solicitor had been restrained from acting by reference to that duty despite the fact he or she did not possess any relevant confidential information.

The Victorian cases are:

  • Edmonds v Donovan
  • Kalenik v Apostolidis
  • Village Roadshow Ltd v Blake Dawson Waldron
  • Equuscorp v Acehand
  • Sent v John Fairfax Publishing Pty Ltd
  • Australian Liquor Marketers v Tasman Liquor Traders Pty Ltd
  • Adam 12 Holdings v Eat & Drink Holdings Pty Ltd
  • Pinnacle Living Pty Ltd v Elusive Image Pty Ltd.

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