The High Court has granted an injunction restraining a former in-house solicitor from acting in proceedings against her former employer, saying that even if she was aware of the danger of disclosing confidential information, she might still subconsciously use it.
His Honour Judge Curran QC, sitting as a High Court judge, said it was “of the highest importance to the administration of justice” that as a solicitor in possession of confidential and privileged information “should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest”.
The case saw the claimants Western Avenue Properties Ltd (WAPL) and Kalpesh Patel seek the injunction against Sadhana Soni, who was their in-house lawyer for 11 months before setting up her own firm, Denning Sotomayor.
During that time, she dealt with freehold land owned by the company on Western Avenue in West London, and also acted for Mr Patel in successfully defending him from allegations of fraud.
After she left, she was approached to act for the Thukral family – former owners of WAPL – in possible litigation over the shares in the company and also the land on Western Avenue.
Before agreeing, Ms Soni contacted the Solicitors Regulation Authority’s ethics department for advice. After a telephone call, she told the Thukrals that she could act, but only if they signed a document described as a waiver, although of what was not disclosed.
Ms Soni then sought the SRA’s advice in writing. This said that, if she did not need to use WAPL’s confidential information, she could act.
But the SRA emphasised that that she would be obliged to disclose to the Thukrals any relevant and material information she had as a consequence of acting for WAPL and Mr Patel; but she could not do this because of her duty of confidentiality to them.
Outcome O (4.3) of the SRA Code of Conduct requires that where these two duties come into conflict the duty of confidentiality takes precedence, and the SRA said “we would usually advise that you should not act for the new client”.
The judge accepted that Ms Soni had the claimants’ confidential information, to the disclosure of which they had not consented.
“In my judgment it is not necessary for the claimants to particularise each and every item of such information in order to establish the point, nor would it have been practicable for them to have done so.”
The question was then whether or not the information “is or may be relevant to the dispute or disputes between the claimants and the Thukrals”.
HHJ Curran said: “Although the burden of proof is on the claimants, it is not a heavy one. Lord Millett [in the leading case of Bolkiah v KPMG  2 AC 222] said it may often be obvious, and in my view in the instant case it is…
“Insofar as Ms Soni attempted to deal with the problem by the execution of the (undisclosed) ‘waiver’ document by the Thukrals, it was suggested at the hearing that there may be significant potential difficulties over the validity of such a document.
“However, even if the document were valid, there remains the continuing risk to which the ethics adviser at the SRA wisely drew to Ms Soni’s attention, ‘[the] risk is that you will subconsciously use confidential information to the advantage of the Thukral family’.”
He said the court should intervene unless satisfied that there was no risk of disclosure.
“Once the claimants have established that the defendants are in possession of information which was imparted in confidence, as in my judgment they have, then, as the defendants are proposing to act for the Thukrals, who have an interest adverse to the claimants in a matter to which the information is or may be relevant, the evidential burden shifts to the defendants to show that there is no risk that the information will come into the possession of the Thukrals.”
The judge found that Ms Soni had not done this, despite her “conscientious attempt to resolve the ethical difficulties”.
“I accept [her counsel’s] point that Ms Soni is well aware of the continuing professional obligations in respect of confidentiality and legal professional privilege, and I see the force of the point that seeking guidance from the SRA made it improbable that she would have entertained any conscious intention of breaching her professional obligations.
“The difficulty is that none of that avoids or even reduces the risk of subconscious use of confidential information… In my judgment the claimants have established the right to obtain the injunction which they seek.”