Kendirjian v Lepore

[2014] NSWDC 66

District Court

New South Wales

Case Title:	Kendirjian v Lepore
Medium Neutral Citation:	[2014] NSWDC 66
Hearing Date(s):	11 and 12 December 2013
Decision Date:	16 May 2014
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	(1) The proceedings be dismissed pursuant to Rule 13.4(1) of the Uniform Civil Procedure Rules 2005. (2) The plaintiff to pay the defendants' costs.
Catchwords:	PROFESSIONAL NEGLIGENCE - barrister and solicitor - litigation - failing to disclose offer of settlement - advocate's immunity from suit - amended pleadings - breach of fiduciary duty - summary dismissal
Legislation Cited:	Civil Liability Act 2002, s 5, s 5D Legal Profession Act 2004, ss 345-349 Uniform Civil Procedure Rules 2005, r 13.4, r 15.4, r 15.10`
Cases Cited:	Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85 Attard v James Legal Pty Ltd [2010] NSWCA 311 Bott v Carter [2012] NSWCA 89 Coshott v Barry [2009] NSWCA 34 Donellan v Watson (1990) 21 NSWLR 335 Donnellan v Woodland [2012] NSWCA 433 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 Giannarelli & Shulkes v Wraith (1988) 165 CLR 543 Hodgins v Cantrill (1997) 26 MVR 481 Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 MacRae v Stevens [1997] ANZ ConvR 129; (1996) Aust Tort Reports 81-405 Symonds v Vass [2009] NSWCA 139 Wallace v Kam [2013] HCA 19 Walton t/as Pitcher Walton & Co v Efato Pty Ltd [2008] NSWCA 86 Young v Hones [2013] NSWSC 1429
Category:	Interlocutory applications
Parties:	David Kendirjian (plaintiff) Eugene Lepore (first defendant) Jim Conomos (second defendant)
Representation
- Counsel:	Mr G Sirtes SC with Mr G Waugh (plaintiff) Mr B McManus (first defendant) Mr J Agius SC (second defendant)
- Solicitors:	Mason Black Lawyers (plaintiff) Colin Biggers & Paisley (first defendant) Carneys Lawyers (second defendant)
File Number(s):	2012/312681
Publication Restriction:	None

JUDGMENT

1. Introduction

1. Eugene Lepore and Jim Conomos acted as solicitor and counsel respectively for David Kendirjian in personal injury proceedings against Cheree Ayoub. The proceedings went to trial on the assessment of damages only. Judgment was given in favour of Mr Kendirjian for a sum he regarded as unsatisfactory, and his appeal was unsuccessful.

2. Mr Kendirjian now sues Mr Lepore and Mr Conomos for damages for negligence. He also sues Mr Lepore in contract. Mr Kendirjian alleges negligent advice concerning the value of his claim and the existence of a settlement offer. Mr Lepore and Mr Conomos seek to have the proceedings dismissed by reason of advocate's immunity. Mr Kendirjian seeks to amend his claim to add causes of action for breach of fiduciary duty.

2. Background

1. In the original proceedings, Mr Ayoub's representatives made an offer to pay $600,000 plus costs to settle the proceedings. This offer was rejected. Ultimately, Mr Kendirjian obtained judgment for $308,432.75 plus costs ("the judgment"). Mr Kendirjian unsuccessfully appealed. Mr Kendirjian asserts that he was not informed about the offer of $600,000 plus costs, was wrongly advised that his claim was worth at least $1.2 million, and lost the difference between the judgment sum and $600,000, together with certain costs orders. Mr Lepore and Mr Conomos deny that Mr Kendirjian was not informed about the offer and also disagree with him about the advice he was given. For present purposes, however, they assert that Mr Kendirjian cannot succeed in any event because of the advocate's immunity from suit. Thus, they submit that the proceedings should be summarily dismissed under Part 13 Rule 4 of the Uniform Civil Procedure Rules 2005 as disclosing no reasonable cause of action. Further, they submit that any amendment to add a claim for breach of fiduciary duty would be futile as the proceedings would still offend the advocate's immunity rule.

2. It follows that the issues that arise in the application are:

   (i)Whether the advocate's immunity extends to advices on settlement and disclosure of offers.

   (ii)Whether pleading a cause of action for breach of fiduciary duty avoids the advocate's immunity.

   (iii)Whether the matter is appropriate for summary dismissal.

3. Analysis

(a) The authoritative principle

1. At common law, an advocate cannot be sued for negligence in the conduct of a case or in work out of court which is intimately connected with the conduct of a case in court: D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at [25]; Giannarelli & Shulkes v Wraith (1988) 165 CLR 543, 560. This immunity extends to acts as well as omissions, and to conduct of solicitors, even instructing solicitors: Attard v James Legal Pty Ltd [2010] NSWCA 311 at [2]. Thus, the immunity has a wide ambit since it precludes re-litigation if, but for the negligence, a different result would be reached even if the client does not seek to overturn the result but uses it as the basis for complaint: Symonds v Vass [2009] NSWCA 139 at [26], Attard at [5]. It includes work done out of court which leads to a decision affecting the conduct of a case in court: Giannarelli at 560; D'Orta-Ekenaike at [86], 91; Attard at [7], [107].

2. Controversies once resolved are not to be reopened except in a few narrowly defined circumstances: D'Orta-Ekenaike at [45]. The principle of finality, although the rationale for the immunity, does not mean that the immunity only applies when there is a challenge to a judicial order. The immunity extends to claims for wasted costs in cases resolved by judicial order: Donnellan v Woodland [2012] NSWCA 433 at [184], [227], [229] (per Beazley JA, see the agreement of Barrett J at [283], Hoeben J at [284] and Sackville AJA at [285]). Beazley JA stated:

   "If the giving of advice, or the omission to give advice, led to a decision to continue with the case, or meant that the case was continued because of that omission, such conduct would lead to a decision affecting the conduct of the case in court, namely, its continuance by way of full argument before a judge."

   (Donnellan v Woodland [2012] NSWCA 433 at [198], see also [229] and [273]. Cf Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85 at [86]-[87]).

(b) Possible contrary authorities

1. In Bott v Carter [2012] NSWCA 89 at [37] (see also [8]), Basten JA (agreed by McColl JA at [1]; Whealy JA at [47]) opined that a:

   "claim which might, on its face, fall outside the scope of the immunity is the complaint that the solicitor failed to respond to the possibility of an offer of settlement, which involves no challenge directly, or indirectly, to the judgment in the District Court."

2. The present case involves an offer of settlement, not merely the possibility of an offer.

3. Basten JA makes four points in respect of this allegation. The first three refer to the inadequate pleadings which do not assist in the present case, and in the fourth his Honour questions whether "an opportunity to settle the matter 'extra-judicially'" would fall outside the immunity since that would likely have produced "a consent judgment which would have been inconsistent with the judgment" already given. Donnellan v Woodland involved a:

   "wasted costs claim...based on the lost opportunity to reach a settlement by a private agreement and was not due to negligence that resulted in the court making a wrong order"

   (at [195]) and thus answers this question in the negative. Further, the comments of Basten JA at [273] in Donnellan v Woodland deny the possibility advanced in Bott at [37] that a wasted costs case could fall outside the immunity.

4. In the result, I do not think the comment of Basten JA in Bott at [37] assists Mr Kendirjian.

5. In the decision of Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85 at [86], Steytler P and Newnes AJA decided that it was "arguable" that advice "in relation to the settlement" was "not connected" with "work done out of court which leads to a decision affecting the conduct of the case in court" reasoning that settlement advice "did not affect the conduct of the [case] in court...except in the general sense that it determined whether or not there was ultimately any litigation to proceed to court". That court likened advice on settlement to advice on prospects before an action and stated, "We do not think it could be suggested in light of the modern authorities that advice of the latter kind would attract the immunity". Why the "general sense" exception was disregarded by the Court of Appeal (WA) is not altogether clear.

6. In Alpine Holdings at [87], the Court of Appeal (WA) also drew a distinction between where the immunity would operate to preclude reopening of earlier litigation, and where the earlier decision "is simply the basis upon which the claim is founded". This distinction is contrary to Symonds at [26] and Attard at [5].

7. Further, both of these bases for the decision in Alpine Holdings are contrary to the decision in Donnellan v Woodland. In Donnellan v Woodland, the Court of Appeal at [202] gained "no assistance" from the decision in Alpine Holdings. To the extent that there is a conflict between the two decisions, stare decisis requires that I follow the court to which appeals lie from my decision.

8. In Coshott v Barry [2009] NSWCA 34, the Court of Appeal observed that the immunity would not have protected the solicitors' negligence in respect of the pleadings for that would be "virtually from the inception of the retainer" (see Donnellan v Woodland at [213]). But the Court in Donnellan v Woodland at [214] recognised that the decision in Coshott might now be "contestable".

9. The Court of Appeal in Donnellan v Woodland considered other cases where the immunity was held not to apply. Beazley JA (at [217]) appeared to disapprove of the decision in MacRae v Stevens [1997] ANZ ConvR 129; (1996) Aust Tort Reports 81-405, commenting that it had been decided before D'Orta-Ekenaike. Even in respect of a 2008 decision, Walton t/as Pitcher Walton & Co v Efato Pty Ltd [2008] NSWCA 86, decided after D'Orta-Ekenaike, Beazley JA in Donnellan v Woodland at [218] commented that "a different outcome, on the current understanding of D'Orta-Ekenaike, would not be surprising".

10. Mr Kendirjian placed particular reliance on the similarly named decision of Donellan v Watson (1990) 21 NSWLR 335 which involved negligence in following instructions regarding settlement. The solicitor was not protected by the immunity. But it likewise suffers from being decided well before D'Orta-Ekenaike. So also was Hodgins v Cantrill (1997) 26 MVR 481 (see at 486).

11. Mr Kendirjian submitted that the law has not changed since Giannarelli was decided. Certainly, the majority in D'Orta-Ekenaike at [1] determined that Giannarelli decided that the immunity extended to "work out of court which leads to a decision affecting the conduct of a case in court". But in Giannarelli, only Mason CJ at 560 so expressed the test. Similar but not identical expressions may be found in the decisions of Brennan J at 586 and Dawson J at 588-589. The other member of the majority, Wilson J, does not directly deal with the matter. It appears that it is the majority in D'Orta-Ekenaike that makes plain what is the authoritative principle.

(c) The ambit of the immunity

1. It is not easy to identify any operative negligence by legal representatives in litigation that does not fall within the immunity as explained in Donnellan v Woodland.

2. The very matter that establishes causation enlivens the immunity. If the negligence did not impact upon the decision of the court, then it was not causative of loss, so the immunity is unnecessary. But if it impacted upon the decision (whether by consent or after a trial), then it is also likely to have led "to a decision affecting the conduct of the case in court", and is therefore within the immunity. At its broadest, the test might suggest that an omission to commence proceedings timeously impacts upon decisions affecting the conduct of a case in court, such as evidence and submissions going to limitation issues or the continuance of the case to a hearing.

3. Further, it is not easy to reconcile the policy behind the immunity with the substantial increase in the ambit of the liability of legal practitioners for wasted costs under ss 345-349 of the Legal Profession Act 2004 (see generally Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153, esp at [83]), but as this was not a matter canvassed by the parties I need not consider it.

4. In my view, any decision not to discuss the settlement offer with Mr Kendirjian or properly advise him was necessarily a decision affecting the conduct of the case in court, namely, "deciding to continue with proceedings" (Donnellan v Woodland at [229]).

(d) Summary judgment

1. The present case involves a summary judgment application, more akin to the strike out application in Alpine Holdings than the final hearing with which Donnellan v Woodland was concerned. This difference does not appear to be irrelevant to the significance the Court of Appeal in Donnellan v Woodland attributed to the decision in Alpine Holdings (see Donnellan v Woodland at [7], [202]). The Court of Appeal recognized in Alpine Holdings that it was "[not] necessary to determine whether advocates' immunity applied". Is it necessary that I determine whether advocate's immunity applies?

2. Basten JA in Donnellan v Woodland (at [262]) opined that the summary dismissal procedure adopted in Bott was the preferred approach in dealing with claims of immunity. However, the other judges did not join in that approach. Beazley P did not think a single approach to all cases was appropriate (see [9]), whereas Barrett JA supported the trial judge disposing of the matter (presumably after a trial on all issues) on the immunity ground alone, if it applied (see [276], [279]). Hoeben JA and Sackville AJA agreed with both Beazley P and Barrett JA.

3. The novel aspects of the case, particularly the non-disclosure of a settlement offer, suggest that the matter should be allowed to proceed to trial for the reasons given in Alpine Holdings. But the case presented by Mr Kendirjian is inconsistent with the approach in Donnellan v Woodland.

4. There is no uncertainty about the facts on this application. The facts asserted by Mr Kendirjian are accepted by Mr Lepore and Mr Conomos for the purpose of the application.

5. Summary dismissal is available if the claim is so clearly untenable that it cannot possibly succeed: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 128-130; [1964] HCA 69 at [8]-[10]. That test is satisfied if Donnellan v Woodland must be applied, as it must in this court.

(e) The amended pleading and breach of fiduciary duty

1. Does the amended pleading make a difference? Bott at [44] suggested that the content of the pleading is determinative (see also Donnellan v Woodland at [260], [262]). However, the question of an alternative claim for breach of fiduciary duty was not considered in Bott or Donnellan v Woodland.

2. The alleged breach of fiduciary duty is the failure by Mr Lepore to disclose the offer and preferring his own interests in having a prolonged hearing. These allegations are inconsistent with the allegation of negligence, since they contemplate a deliberate decision by the solicitor not to reveal the offer to the plaintiff so as to prolong the proceedings. But inconsistent allegations can be pleaded in the alternative, as Mr Kendirjian proposes to do if given leave.

3. The nature of the pleaded fiduciary duty owed by the second defendant is not disclosed, and no breach by him is alleged. This may be an oversight or typographical error. But the pleading remains deficient because of it.

4. Further, the particulars supplied to support the allegation of breach of fiduciary duty by the first defendant appear to allege, but not with clarity, serious misconduct in deliberately choosing to prolong the hearing for his own profit. This allegation supports a need for particulars of the facts from which that mental state may be inferred (see Uniform Civil Procedure Rules 15.4 and 15.10(2)(a)).

5. In the face of the defendants' opposition, I would not grant leave to file the pleading in its current form.

6. Even if the plaintiff were given leave, I do not think the claim overcomes the immunity. The immunity is from suit, not from particular causes of action. A similar issue arose in Young v Hones [2013] NSWSC 1429 at [174]-[175], where Garling J rejected the proposition that the immunity did not extend to breach of fiduciary duty. The defendants also rely upon the comments of McHugh J in D'Orta-Ekenaike at [157] although those comments are concerned with immunity from a suit in negligence. At [26] the majority in D'Orta-Ekenaike held:

   "But, more than that, the question of conflicting duties assumes that the only kind of case to be considered is one framed as a claim in negligence. That is not so. The question is whether there is an immunity from suit, not whether an advocate owes the client a duty of care."

7. "Immunity from suit" precludes an action in negligence, in contract including agency, and for breach of fiduciary duty.

8. To allow the pleading of a different cause of action to avoid the immunity would be to defeat the rationale for the immunity, the need for finality in litigation. Mr Kendirjian cited no authority to establish that a breach of fiduciary duty falls outside the immunity, and he disavowed any allegation of dishonesty. In the circumstances, I propose to follow the decision of Garling J in Young.

(f) A final observation

1. Questions of causation appear to arise in Mr Kendirjian's claim. Whether Mr Kendirjian has suffered "harm" within s 5 of the Civil Liability Act 2002 might be arguable. He has received compensation according to a fair determination by a court, by which he is bound. But he would have received more had he been informed of and accepted the offer.

2. But it is more doubtful whether it is appropriate for liability to extend to that sort of harm, bearing in mind the immunity doctrine, ss 5D(1)(b) and 5D(4) of the Civil Liability Act 2002, Wallace v Kam [2013] HCA 19 at [23] and the judicial determination of what is Mr Kendirjian's fair compensation. It may be that in respect of a negligence claim the proper framework for the analysis of the application of the immunity is s 5D, although this was not the framework adopted by the parties. The different framework would not alter the decision in this case.

4. Conclusion

1. In accordance with Donnellan v Woodland the plaintiff's case must fail, and accordingly I dismiss it pursuant to Rule 13.4 of the Uniform Civil Procedure Rules 2005.

2. The orders of the Court are:

   (1) The proceedings be dismissed pursuant to Rule 13.4(1) of the Uniform Civil Procedure Rules 2005.
   (2) The plaintiff to pay the defendants' costs.

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