Keogh & Co Pty Ltd v Pless
[2025] VSC 341
•16 June 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2024 00079
| KEOGH & CO PTY LTD (ACN 151 143 083) T/AS KEOGH & CO | Applicant |
| v | |
| PETER MAXIMILLIAN PLESS (IN HIS CAPACITY AS EXECUTOR OF THE ESTATE OF ROLAND PLESS) | Respondent |
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JUDGE: | Gray J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 20 June 2024 and 25 July 2024 |
DATE OF JUDGMENT: | 16 June 2025 |
CASE MAY BE CITED AS: | Keogh & Co Pty Ltd v Pless |
MEDIUM NEUTRAL CITATION: | [2025] VSC 341 |
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JUDICIAL REVIEW AND APPEALS — Application for leave to appeal from orders of VCAT — Breach of legal services retainer agreement — Failure to provide advice to standard of reasonably competent solicitor regarding risks of continuing to resist freezing order application in Supreme Court proceeding and potential for compromise after initial hearing — Order for repayment by legal practice to client’s deceased estate of some costs relating to later hearing — Appeal on a question of law — Proposed questions and grounds relating to advocates’ immunity from suit — Proposed questions and grounds relating to duty of care and breach — Proposed questions and grounds relating to causation of loss — Proposed grounds relating to apprehension of bias — Some aspects of proposed questions and grounds relating to advocates’ immunity, duty of care, breach and causation exceeded scope of an appeal on a question of law — Leave granted on an arguable question relating to advocates’ immunity and its supporting grounds but appeal dismissed — No real prospect of success on other proposed questions of law or their supporting grounds — Leave otherwise refused — Victorian Civil and Administrative Act 1998 s 148.
LEGAL PRACTITIONERS — Advocates’ immunity from suit — No error in VCAT’s conclusion that advocates’ immunity did not apply — No ‘intimate’ or ‘functional’ connection between legal practice’s negligence and the way the case was presented so as to bear on the manner in which the court determined it — Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1; Kendirjian v Lepore (2017) 259 CLR 275.
NEGLIGENCE — Legal practitioners — Breach of legal services retainer agreement — Failure to provide advice to standard of reasonably competent solicitor regarding risks of continuing to resist freezing order application in Supreme Court proceeding and potential for compromise after initial hearing — Order for repayment by legal practice to client’s deceased estate of some costs relating to later hearing — No error of law relating to advocates’ immunity from suit — No real prospect of establishing error of law in relation to duty of care, breach, and causation of loss.
ADMINISTRATIVE TRIBUNALS — Bias — On second day of VCAT hearing, senior member expressed concerns or preliminary views that new material and arguments a party sought to rely upon would raise the need for findings that might be adverse to the party — Recusal request — Senior member of VCAT refused to recuse himself, giving reasons — No potential basis for reasonable apprehension of possible bias — No error by senior member — Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr JP Wheelahan | Muir Legal |
| For the Respondent | Mr DP Lorbeer | RND Lawyers |
TABLE OF CONTENTS
A. Introduction................................................................................................................................... 1
B. Context............................................................................................................................................. 4
Background facts........................................................................................................................... 4
Overview of the VCAT proceeding.......................................................................................... 11
C. VCAT’s function in a case of this kind................................................................................... 13
D. The claims before VCAT........................................................................................................... 14
E. VCAT’s key reasoning and conclusions................................................................................. 15
F. Applicable principles – appeal on a question of law........................................................... 23
G. Consideration.............................................................................................................................. 24
(a) Advocates’ immunity grounds (questions 1–3 and grounds 1–6)................................. 24
Overview of Keogh & Co’s contentions......................................................................... 24
Applicable principles........................................................................................................ 28
D’Orta (2005)......................................................................................................... 28
Attwells (2016)...................................................................................................... 29
Kendirjian (2017).................................................................................................. 32
Analysis............................................................................................................................... 33
Alleged error regarding ‘intimate’ or ‘functional’ connection (question 1 and grounds 1 and 2).................................................................................. 33
Alleged error regarding Mr Pless Snr’s ‘obdurate instructions’ (question 2 and grounds 3 and 4).................................................................................. 40
Alleged sequencing error (question 3 and grounds 5 and 6)......................... 44
(b) Client instructions grounds (questions 6 and 9 and grounds 11–12, and 17–18)........ 45
Overview of Keogh & Co’s contentions......................................................................... 45
Applicable principles........................................................................................................ 46
Analysis............................................................................................................................... 47
(c) Grounds relating to the scope and breach of the standard of care (questions 7, 8 and 11 and grounds 13–16, 21 and 22)................................................................................................ 58
Overview of Keogh & Co’s contentions......................................................................... 58
Analysis............................................................................................................................... 60
(d) Causation grounds (questions 4, 5 and 10 and grounds 7–10, 19 and 20).................... 66
Overview of Keogh & Co’s contentions......................................................................... 66
Applicable principles........................................................................................................ 67
Analysis............................................................................................................................... 71
Alleged errors regarding first element of causation (if the advice had been given, Mr Pless Snr would have entered into negotiation for a consent order) – questions 4 and 5 and grounds 7–10................................................. 71
Alleged errors regarding VCAT’s conclusion on Wrongs Act s 51(1)(a) – question 10 and grounds 19 and 20........................................................................ 77
(e) Apprehension of bias grounds (question 12 and grounds 23 and 24)........................... 79
Overview of Keogh & Co’s contentions and further context...................................... 79
Applicable principles........................................................................................................ 86
Analysis............................................................................................................................... 87
G. Conclusion and Orders.............................................................................................................. 90
HIS HONOUR:
Has the applicant established that orders made against it by the Victorian Civil and Administrative Tribunal (VCAT)[1] should be set aside for legal error on any one of the questions and grounds framed in the amended notice of appeal?
[1]Pless v Keogh & Co Pty Ltd (Legal Practice) [2023] VCAT 1376 (the VCAT decision).
A. Introduction
The applicant in this proceeding (Keogh & Co) is a legal practice. Keogh & Co entered into a legal services retainer agreement (retainer) with Roland Pless (Mr Pless Snr), in connection with Supreme Court litigation between Mr Pless Snr and his son, who is the respondent in this current proceeding before me (Peter Pless).[2]
[2]In the proceeding in VCAT, Mr Pless Snr alleged that the retainer was partly express (from an email that appears to have been in the tribunal book but was not reproduced in the material before the Court) and partly to be inferred. In the proceeding in VCAT, Keogh & Co admitted that it agreed to represent Mr Pless Snr and also admitted some of the alleged terms of the retainer, but did not otherwise make any admissions as to the form of the retainer.
Later, Mr Pless Snr claimed repayment from Keogh & Co of costs he had paid to it, alleging breach of the retainer. Mr Pless Snr commenced a proceeding in VCAT. Mr Pless Snr died before the completion of the VCAT proceeding. After the death of Mr Pless Snr, Peter Pless became the personal representative of the estate of Mr Pless Snr. In that capacity, Peter Pless continued the VCAT proceeding against Keogh & Co.
During the VCAT proceeding, based on the final iterations of points of claim and defence exchanged by the parties, it was uncontroversial that Keogh & Co was retained to advise Mr Pless Snr in connection with the conduct of the Supreme Court proceeding and would exercise due care and skill in doing so.[3] Mr Pless Snr alleged breaches of the retainer in relation to Keogh & Co’s acts or omissions in the context of two Practice Court hearings, during that Supreme Court proceeding, of an application by summons filed by Peter Pless for a freezing order and an information order against Mr Pless Snr (called in the VCAT decision, the ‘Summons application’).[4] As the learned senior member of VCAT said, ‘At its core, the dispute concern[ed] the alleged failure by the respondent firm to use a document, containing an undertaking, to resolve the Summons application.’[5]
[3]Second Further Amended Points of Claim dated 5 April 2022 (POC) [12](b), (d) and Amended Points of Defence dated 12 October 2022 (APD) [12].
[4]VCAT decision [2].
[5]Ibid [5].
VCAT found that Keogh & Co failed, in the period between the two Practice Court hearings, to advise Mr Pless Snr about the possibility of offering the proposed undertaking to Peter Pless. VCAT found that in this respect Keogh & Co failed to provide its services to the standard of a reasonably competent solicitor and breached its retainer. VCAT decided that this resulted in a loss to Mr Pless Snr’s estate of $37,500,[6] representing part of the legal costs which Mr Pless Snr had paid to Keogh & Co. VCAT ordered Keogh & Co to pay Peter Pless that amount, in his capacity as executor of the estate of Mr Pless Snr.
[6]I assume that the reference in the VCAT decision at [57] to $34,500 is a slip.
Keogh & Co applied to this Court for leave to appeal on questions of law from the orders of VCAT.[7] Leave to appeal depends on whether the Court is satisfied that the appeal would have a real prospect of success.[8] Keogh & Co’s amended notice of appeal raised 12 questions and 24 grounds. I must determine whether any of those grounds has a real prospect of establishing error of law on any of those questions, affecting VCAT’s orders.[9]
[7]Victorian Civil and Administrative Tribunal Act 1998 s 148(1)(b) (VCAT Act).
[8]Ibid s 148(2A), which adopts the same test as Supreme Court Act 1986 s 14C. See also Tucker v Commissioner of State Revenue [2023] VSCA 125, [20]–[21].
[9]VCAT Act s 148(2A).
In my view, Keogh & Co’s questions and grounds may conveniently be arranged into five interrelated themes[10] that raised the following questions for my determination, and which I have answered as follows:
[10]Keogh & Co arranged them differently — into eight topics — in their principal written submissions dated 15 May 2024 (version with corrected formatting of additional paragraph numbers) (May submissions) [3].
(a) Is there a real prospect that VCAT erred in law in its understanding or application of the principles of advocates’ immunity from suit? See questions 1–3, and grounds 1–6, of the amended notice of appeal.
Answer: save as to question 1 and grounds 1 and 2, no, these arguments have no real prospect of success and leave will be refused. As to question 1 and grounds 1 and 2, leave to appeal is granted on the basis that they are arguable. Keogh & Co’s arguments relied on authorities that predate the High Court’s decisions in Attwells[11] and Kendirjian.[12] However, those two decisions have significantly reshaped the understanding of advocates’ immunity in this country. Keogh & Co’s arguments that Attwells and Kendirjian were inapplicable were incorrect. In light of the law as most recently and authoritatively explained by the High Court in those two cases, the appeal on question 1 and grounds 1 and 2 fails and will be dismissed.
[11]Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1; [2016] HCA 16 (Attwells).
[12]Kendirjian v Lepore (2017) 259 CLR 275; [2017] HCA 13 (Kendirjian).
(b) Is there a real prospect that VCAT materially misunderstood or failed to consider two items of evidence of Mr Pless Snr’s instructions in a way that was significant to the decision VCAT had to make? See question 6 and grounds 11 and 12, and question 9 and grounds 17 and 18, of the amended notice of appeal.
Answer: no. The substance of the first item was raised in other material before VCAT and was taken into account. Any failure to specifically consider it was insignificant and immaterial to the decision to be made by VCAT. The second was clearly considered.
(c) Is there a real prospect that VCAT materially erred in law in its understanding or application of the principles relating to duty and breach in negligence? See questions 7, 8 and 11, and grounds 13–16, 21, and 22, of the amended notice of appeal.
Answer: no. The ‘questions of law’ and ‘grounds’ framed by Keogh & Co were not questions of law or alleged errors of law at all, but were merely attempts to dispute VCAT’s factual findings by characterising them as errors of law. The factual findings were open on the material before VCAT and were not reached in a manner contrary to the standard of legal reasonableness.
(d) Is there a real prospect that VCAT erred in law in its understanding or application of the principles of causation of loss? See questions 4, 5 and 10, and grounds 7–10, 19 and 20, of the amended notice of appeal.
Answer: no. The question of whether causation could be made out under s 51(1)(a) of the Wrongs Act 1958 (Wrongs Act) on the material before VCAT was a matter for VCAT’s factual evaluation. The inference chosen by VCAT was open on probative information before it and was not reached unreasonably. VCAT’s reasoning involved choosing between available inferences, and was not mere speculation or conjecture.
(e) Is there a real prospect of a disqualifying appearance of bias — that is, a real prospect that a fair-minded lay observer might apprehend that the learned senior member constituting VCAT might not have brought an impartial mind to the determination of the questions before him? See question 12, and grounds 23 and 24, of the amended notice of appeal.
Answer: no. The words and conduct of the senior member did not in any way raise a potential basis for a reasonable apprehension of possible bias. In the factually complex setting of the case, and having regard to the manner in which the senior member expressed his concerns, the senior member’s words and conduct were incapable of being fairly seen as bespeaking any potential for partiality or prejudgment. The way he expressed his concerns was measured and appropriate.
B. Context
Background facts
As noted by VCAT, the case originated in litigation between Peter Pless and his father Mr Pless Snr, developed into litigation between Mr Pless Snr and his former lawyers, Keogh & Co, and finally Peter Pless took over the litigation against Keogh & Co as executor of Mr Pless Snr’s estate after his death in September 2019.[13]
[13]VCAT decision [1]–[6].
VCAT described the Pless family as follows (I have added emphasis for defined terms used in these reasons):[14]
[14]Ibid [8]–[36] (citations omitted), subject to two modifications: first, in the VCAT decision, the applicant in that proceeding (and respondent in this proceeding) was referred to as ‘Mr Pless’, but I adopt the nomenclature ‘Peter Pless’ to avoid ambiguity; secondly, I have added bolding and some additional terms in bold in the passage, identifying terms that I adopt in the remainder of these reasons. Further excerpts of the VCAT decision in these reasons are subject to the same modifications.
8 Mr Pless Snr was the patriarch of the Pless family. He had emigrated to Australia after the Second World War and, in 1951, established a successful business installing car radios.
9 In 1955, Mr Pless Snr married Ms Carmen Rathey [Mrs Pless]. The couple had two children: [Peter Pless] and Ms Manuela Rathey (also known as Manuela Pless-Bennett) [Ms Rathey].
10 The family lived at 7 Robertson Street, Toorak (‘Toorak Home’), which Mr Pless Snr had purchased in 1960, and on which they built a two-storey family home.
11 When Mrs Pless passed away on 4 January 2014, [Peter Pless] became the executor of Mrs Pless’ estate (as Ms Rathey, who was named in the will as co-executor, declined to prove). At that time:
• [Peter Pless] was living in a unit in Lansell Road, Toorak, which had been purchased by his mother through a company, CPR Pty Ltd (‘CPR’), that she owned and controlled. (The source of the funds for this purchase is discussed further at [14] –[15] below.)
• Ms Rathey occupied the ground floor of the Toorak Home with her son, Mr Anton Pless.
• Mr Pless Snr occupied the first floor of the Toorak Home.
VCAT described the genesis of the dispute and Supreme Court proceeding between Peter Pless and his father, as follows:[15]
[15]Ibid [12]–[22].
12 Over time, the business which Mr Pless Snr had established was expanded to include the installation of air conditioning units in cars, and then air conditioning units and ducted heating for homes and businesses. The business came to be incorporated as Prahran Car Radio Centre Pty Ltd (‘PCRC’) and operated from premises in Commercial Road, Prahran (‘Prahran Property’). That property was owned by Empee Nominees Pty Ltd (‘Empee Nominees’), a company in turn owned by Mr Pless Snr and Mrs Pless in equal shares.
13 In about 1982, Mr Pless Snr sold the PCRC business to [Peter Pless]. Subsequently, in 1989 (and against the wishes of Mrs Pless), Mr Pless Snr arranged to sell the Prahran Property for $5 million.
14 Mrs Pless demanded half the proceeds from the sale and, in late 1996, instructed solicitors to take steps to recover her share of funds from the sale of the Prahran Property. [Peter Pless] suggests that, at the time, she was concerned that she might be left destitute if she was to divorce Mr Pless Snr or that, if she passed away, Mr Pless Snr might pass the family’s wealth to a new girlfriend or wife. Eventually that dispute was resolved and Mrs Pless received a payment from Mr Pless Snr which she put into CPR (and which was used, in part, to fund the purchase of the Lansell Road unit for [Peter Pless]).
15 The Toorak Home had been owned by Mr Pless Snr and Mrs Pless as joint tenants. As a result, Mr Pless Snr became the sole proprietor when Mrs Pless passed away. However, by her will, Mrs Pless left the remainder of her estate (including the remaining funds she had received from the sale of the Prahran Property) to [Peter Pless] and Ms Rathey.
16 After his mother’s death, and based on information provided by his sister, [Peter Pless] formed the view that Mr Pless Snr was holding or controlling cash which he had taken from Mrs Pless’ bank accounts and which properly belonged to her estate. [Peter Pless] engaged accountants to investigate, who opined that Mr Pless Snr had withdrawn ‘sums totalling in excess of $2m from bank accounts in [Mrs Pless’] sole name’ into other accounts in Mr Pless Snr’s name (or companies he controlled).
17 As a result of that report, on 31 January 2015, [Peter Pless] informed Mr Pless Snr that Mrs Pless’ estate would be making a claim against Mr Pless Snr, which was followed by a formal demand for repayment of funds on 16 March 2015.
18 Significantly, a few days prior to the formal demand being made, Mr Pless Snr instructed Keogh & Co to ‘activate’ two trusts, being The Anton Maximillian Pless Bennett Property Trust (‘Property Trust’) and The Anton Maximillian Pless Bennett Trust No. 2. While Mr Pless Snr’s former solicitors had drafted the trust deeds, it was necessary for Keogh & Co to activate the trusts as his former solicitors refused to do so (given the claims which had been made by [Peter Pless]).
19 Subsequently, on 25 March 2015 (a week after the demand had been made), Mr Pless Snr executed a transfer of land to transfer the Toorak Home to Pless Nominees Pty Ltd (‘Pless Nominees’) as trustee of the Property Trust.
20 In his first affidavit, [Peter Pless] explains that he was ‘concerned’ by the transfer of the Toorak Home out of Mr Pless Snr’s name and that, in order to secure the amounts claimed on behalf of the estate of his late mother, he lodged a caveat over the property on 10 September 2015.
21 Mr Pless Snr instructed Keogh & Co to lodge an application for removal of that caveat.
22 The Registrar of Titles notified [Peter Pless] of Mr Pless Snr’s application to remove the caveat on 23 September 2015. [Peter Pless] formed the view that he would not be able to successfully oppose the application and that, in order to secure the amounts claimed for his mother’s estate, he would seek a Freezing Order instead.
This led to Peter Pless commencing a proceeding against his father in the Supreme Court, and making the Summons application for a freezing order and information order against Mr Pless Snr, returnable in the Practice Court. Mr Pless Snr retained Keogh & Co to represent him in that proceeding and respond to the Summons application, which ultimately involved two Practice Court hearings before Riordan J, on 14 October 2015 (the First Court Hearing) and 19 November 2015 (the Second Court Hearing).
The following individuals were relevantly associated with or employed by Keogh & Co at the time:[16]
[16]Ibid [37]–[39].
(a) James (Jim) Keogh, who was the principal of Keogh & Co. Mr Keogh had acted for Mr Pless Snr and his businesses prior to the Supreme Court proceeding, although the details of the work were not clear from the evidence.[17]
(b) John Ferguson, who was employed by Keogh & Co to start work on 13 October 2015. Prior to this, Mr Ferguson worked in the debt recovery section of the Australian Taxation Office and had familiarity with applications for freezing orders and the resolution of freezing orders.[18]
(c) Megan Clark, who was at all material times employed by Keogh & Co but was not actively involved in representing Mr Pless Snr. Mr Pless Snr contacted Ms Clark to discuss the conduct of Keogh & Co.
[17]Ibid [37].
[18]Ibid [38].
After service of the Summons application on Keogh & Co:[19]
[19]Ibid [27]–[28].
27 A meeting was arranged for late afternoon on 13 October 2015 (’13 October Meeting’). … It was at this meeting that Mr Keogh and Mr Ferguson (an employee solicitor at the firm) arranged for Mr Pless Snr to sign the Proposed Undertaking. The Proposed Undertaking was in the following terms:
I, Roland Edward Pless, undertake that I, on my own account and on behalf of Pless Nominees P/L will not dispose, encumber or otherwise deal with the [Toorak Home] until further order of the Court.
28 Given it only applied to the Toorak Home, it is apparent that the Proposed Undertaking was significantly narrower than the Freezing Order sought by [Peter Pless] in the Summons application (i.e. the Freezing Order sought would have applied to all assets of the Defendants and Pless Nominees).
Mr Ferguson told senior counsel for Mr Pless Snr that he got Mr Pless Snr to execute the Proposed Undertaking ‘just in case it gets to that point’. Senior counsel responded ‘I think we will be OK, we won’t need it for now, keep it’.[20]
[20]Ibid [80].
With respect to the First Court Hearing, on 14 October 2015, VCAT noted:[21]
31 … while Riordan J expressed concern as to the actions of Mr Pless Snr – particularly with respect to the transfer of the Toorak Home to Pless Nominees – he ultimately declined to make any substantive orders that day. Instead, Riordan J further adjourned the matter to 19 November 2015 (‘Return Date’), in the expectation that Mr Pless Snr would file an affidavit by that time providing further information concerning the financial arrangements between Mr Pless Snr and his late wife.
[21]Ibid [31].
One of the exchanges that took place during the First Court Hearing between Riordan J and senior counsel for Mr Pless Snr was as follows:[22]
[22]Reformatted court book dated 1 May 2024 (Court book) 398; Tribunal book dated 11 July 2022 (Tribunal book) 166.
HIS HONOUR: Let me express it so you can correct me and put me on the right track. Aren't they saying here that they've got an arguable case that moneys have been moved around in a way which has benefited your client and ultimately they say, at trial, they'll establish that that was wrongful and the estate's entitled to recovery of it.
MR CLARKE: That's their case.
HIS HONOUR: That's their case. Then they say, "And we don't know where that money has gone but since we made the demand, he did something very strange. He took the family home and transferred it to a company", where I think he's the sole shareholder, isn't he?
MR CLARKE: Yes.
HIS HONOUR: "He's the sole shareholder and by doing that, he's now put into the hands of the company the one asset which he knows he has and would be available to satisfy the judgment that we say we'll be entitled to at the end of this proceeding".
MR CLARKE: Yes, Your Honour.
HIS HONOUR: So he's put this third party into a position where that third party can now dispose of it, having got it for nothing.
MR CLARKE: Yes. The - - -
HIS HONOUR: And your client doesn't want to explain what's going on here.
Later in the hearing, his Honour also made the following remarks:[23]
HIS HONOUR: I am concerned by the strange nature of the dealings and the earlier deals which appear to have been for the purpose of avoiding Peter Pless to have access to assets.
MR CLARKE: Yes.
HIS HONOUR: And this action, this strange action and the timing of it being after the demand was made, you would normally be concerned that when a demand is made and persons start gifting away their assets, that that might be for the purpose of avoiding the demand in one fashion or another. But your client hasn't had the opportunity to respond to this and he might have a perfectly reasonable explanation for it.
[23]Court book 400; Tribunal book 168.
His Honour indicated he would give Mr Pless Snr one month to explain these matters.[24] His Honour said he was currently minded and inclined to think, without material and an explanation:[25]
… that there is a prima facie case. …. And, secondly …. there's good grounds for concern your client may dispose or take further action to make this asset, which he's already put beyond his immediate reach, so as a shareholder, further beyond it. But much of that is based on a failure to answer and if your client hasn't been given a proper opportunity, I'm not going to make any orders until your client is given the opportunity.
[24]Court book 407; Tribunal book 175.
[25]Court book 407–408; Tribunal book 175–176.
Immediately following the First Court Hearing, Mr Ferguson sent a report by email to Mr Pless Snr that summarised the arguments that had been made at the First Court Hearing and then said as follows:[26]
In summary, Justice Riordan agreed there was no immediate risk that assets were being dissipated and refused your son's application for freezing orders at this stage. He did not seek or require you to give any undertakings.
However, Justice Riordan indicated that he believed there were serious issues to be tried. He expects you to provide evidence explaining how you and your wife managed your affairs (concerning funds transfers from the various bank accounts) and explaining the circumstances of the transfer of the Robertson St property to Pless Nominees.
The Judge focussed on the transfer of the 7 Robertson St property, and expressed concern it took place so soon after receiving letters of demand from your son's lawyers. It is the only major asset your son is aware of, and the transfer of it at that time was "strange" (in Justice Riordan's words).
However, Justice Riordan decided that you should be given the opportunity to explain the circumstances of the property transfer, and of the funds transfers generally before he makes any further orders.
[26]Court book 419–420.
VCAT found at [32] that significant work was undertaken by Mr Pless Snr’s legal team to prepare the contemplated affidavit, as well as a defence to the substantive Supreme Court proceeding.
VCAT went on to refer to the Second Court Hearing on 19 November 2015, and the finalisation of the Supreme Court proceeding, as follows:[27]
[27]VCAT decision [33]–[36] (citations omitted).
33 At the hearing on the Return Date (‘Second Court Hearing’), Riordan J made a Freezing Order in the following terms (‘Court Freezing Order’):
You must not in any way dispose of, deal with or diminish the value of the [Toorak Home].
34 As with the Proposed Undertaking, it can be observed that because the Court Freezing Order is restricted to dealings with the Toorak Home, the scope of that order is significantly narrower than that which was sought by [Peter Pless] in the Summons application. (On the other hand, it is slightly wider than the Proposed Undertaking in that it also restricted Mr Pless [Snr] from taking steps to ‘diminish the value’ of the Toorak Home.)
35 After the Second Court Hearing, the substantive Supreme Court proceeding continued, finally settling by agreement in December 2016. Under the Deed of Settlement, between Mr Pless Snr, Pless Nominees, [Peter Pless] and Ms Rathey, it was agreed that:
• the Toorak Home was to be subdivided into two separate titles, comprising the ground floor (in which Ms Rathey was living) and the first floor (in which Mr Pless Snr was living);
• the ground floor was to be sold on the open market, with the settlement proceeds to be distributed as to 2/3rds to [Peter Pless] (in his capacity as executor of Mrs Pless’ estate) and 1/3rd to Mr Pless Snr or Pless Nominees; and
• Ms Rathey did not have any proprietary interest in the Toorak Home and would provide vacant possession of the ground floor.
36 At auction, the ground floor of the Toorak Home was passed in below the reserve and, ultimately, was sold by Pless Nominees to [Peter Pless] by contract dated 20 October 2017.
Overview of the VCAT proceeding
Mr Pless Snr commenced the VCAT proceeding against Keogh & Co in October 2018.[28]
[28]Ibid [4].
During the course of the proceeding in VCAT Mr Pless Snr filed at least three iterations of points of claim and amended points of claim, Keogh & Co filed at least two iterations of points of defence and amended points of defence, both parties filed various affidavits, produced documents (in several tranches), and prepared several iterations of tribunal books and supplementary tribunal books. The VCAT proceeding generated 600 pages of transcript of hearing days, including one from which a claim of apprehended bias is said by Keogh & Co to arise.
The transcripts for VCAT hearings on 20 September 2022, 21 September 2022, 31 March 2023, 13 April 2023, and 21 June 2023 were included in the Court book for this proceeding in the Court. I received the Court book into evidence in its entirety. It also appears from the cover page of the VCAT decision that a final hearing took place on 11 August 2023, followed by further written submissions later in August.
Peter Pless, Mr Ferguson, and Mr Keogh each prepared affidavits, which were accepted into evidence subject to two sets of excisions of Mr Keogh’s affidavits.[29] They were each called as witnesses and were cross-examined.
[29]Three affidavits of Peter Pless dated 30 September 2021, 24 June 2022, and 6 April 2023; three affidavits of Mr Keogh dated 15 July 2019, 19 September 2022 (except paragraph 6) and 4 July 2023 (except part of paragraph 4, paragraphs 7-9 and exhibits JMK-2 and -3); an affidavit of Mr Ferguson dated June 2022; and an affidavit of Mr Keogh’s solicitor, Anthony John Muir dated 19 September 2022. Mr Muir was not cross-examined.
The tribunal book in the VCAT proceeding consisted of five separate books — the initial tribunal book and four further supplementary tribunal books, dated between 7 July 2022 and 12 April 2023.
The initial tribunal book, dated 7 July 2022, was 481 pages long and contained 67 documents. This included the final iterations of points of claim and defence, being the second further amended points of claim dated 5 April 2022, the points of defence to the second amended points of claim dated 14 June 2022, further and better particulars to the points of defence dated 14 June 2022 and the reply to amended points of defence dated 24 June 2022. There were clearly previous iterations of at least some of these documents which were not included in the tribunal book or court book. The initial tribunal book also included three affidavits and their exhibits, which included correspondence, invoices, and court documents including submissions, affidavits, transcripts, orders, and the earliest iterations of the points of claim and points of defence.
The first supplementary tribunal book, dated 19 September 2022, was 15 pages long and contained eight documents. These consisted of tax invoices, correspondence, and one set of submissions. The second supplementary tribunal book, dated 20 September 2022, was 39 pages long and contained six documents, being email correspondence, an account statement, and two further affidavits. The third supplementary tribunal book, dated 14 October 2022, was 16 pages long and contained four documents, being a file note and several financial documents. The fourth supplementary tribunal book, dated 12 April 2023, was 36 pages and contained 23 documents including email correspondence, file notes, and an unsworn affidavit.
Keogh & Co raised a claim of apprehended bias on the second day of the hearing, 21 September 2022. On that morning, Mr Ferguson was called to give evidence. Questions arose about a paragraph of Mr Keogh’s affidavit dated 19 September 2022, and about an unpleaded argument on which Keogh & Co sought to rely on the question of causation of loss to Mr Pless Snr, contained in the supplementary tribunal book dated 20 September 2022. I address the context in which the apprehended bias claim arose in more detail at the end of the ‘Consideration’ section of these reasons.
C. VCAT’s function in a case of this kind
Although not addressed in the VCAT decision or by the parties before me, it is relevant to identify the source of VCAT’s power in the proceeding appealed to this Court. In my view, that source was ss 182 and 184 of the Australian Consumer Law and Fair Trading Act 2012.[30]
[30]In Hi-tech Aluminium Windows Pty Ltd v Maric Developments Pty Ltd [2024] VSC 694, Ginnane J found that VCAT had the jurisdiction to hear a case under ss 182 and 184 of the Australian Consumer Law and Fair Trading Act.
Relevantly, ss 182 and 184 of the Australian Consumer Law and Fair Trading Act 2012 empowered VCAT to hear and determine a ‘consumer and trader dispute’,[31] which included a dispute between a purchaser and supplier of services in relation to a supply of services, and included any dispute or claim in negligence save for a claim of personal injury. VCAT was empowered to order the payment of a sum of money by way of damages, or the refund of money paid under a contract, in relation to such a dispute.[32]
[31]See also Albyn Queensland Pty Ltd (atf Bass-Rees Family Trust) v Australian Postal Corp [2024] VSC 584, [24] (Harris J).
[32]It was not suggested that any limitation related to matters arising under a law of the Commonwealth applied here, and I am satisfied that no such limitation applied.
VCAT’s function in the proceeding commenced by Mr Pless Snr was to determine whether Mr Pless Snr (or his estate) was entitled to the repayment of any of the legal fees and costs that had been paid by him to Keogh & Co. VCAT was empowered to order money to be paid or refunded if it was paid as a result of a breach by Keogh & Co of its duty of due care and skill forming part of the retainer, or a breach of a duty of care under the general law of the tort of negligence. Both forms of duty and breach were alleged in the VCAT proceeding.[33] If VCAT determined that Keogh & Co breached its duty to Mr Pless Snr, it then had to decide whether this caused him (and his estate) loss in the form of excess legal costs. Under both the contractual claim and the tortious form of claim in negligence, s 51 of the Wrongs Act governed the question of causation of loss.[34] Section 51 was noted in the VCAT decision at [147].
[33]POC (as to breach of retainer) [12](b) and (d), [20], [21] and [22]; and (as to common law duty of care) [23](b), [24](b) and [25].
[34]Wrongs Act s 44.
The proceeding before VCAT did not involve any process under the Legal Profession Uniform Law (Vic) scheduled to the Legal Profession Uniform Law Application Act 2014 (Vic), such as a costs assessment, complaint, consumer matter, or compensation order.
D. The claims before VCAT
The VCAT decision identified the claims before it as follows:[35]
[35]VCAT decision [40] (citations omitted).
40 As executor of Mr Pless Snr’s estate, [Peter Pless] claims that Keogh & Co breached the terms of its retainer by:
(a) failing to comply with Mr Pless Snr’s instruction that the Proposed Undertaking be conveyed to [Peter Pless’] lawyers to compromise the Summons application (‘Primary Claim’);
(b) failing to advise Mr Pless Snr as to the likely cost of, and his prospects in, opposing the Summons application or as to the alternatives to doing so and the course that Mr Pless Snr ought adopt or, to the extent advice was provided on those matters, failing to do so with due care and skill (‘First Alternative Claim’); or
(c) providing erroneous advice, namely that offering the Proposed Undertaking would have prevented Mr Pless Snr from disposing of any assets he held or controlled (as opposed to being limited to the Toorak Home as drafted) (‘Third Alternative Claim’).
(Additional alternative claims were pleaded under the Australian Consumer Law (Victoria), namely the guarantee in section 60 that services will be rendered with due care and skill, and in respect of misleading and deceptive conduct under section 18 of that legislation. However, as those alternatives were not addressed in the applicant’s oral submissions, and substantially overlap the breach of retainer claims, they are not further discussed in these Reasons.)
The Primary Claim, First Alternative Claim, and Third Alternative Claim were ultimately set out in Mr Pless Snr’s second further amended points of claim dated 5 April 2022.[36] VCAT did not identify a ‘Second Alternative Claim’.
[36]See POC: the Primary Claim is at [15]–[16]; the First Alternative Claim is at [20]; the Third Alternative Claim is at [20A]–[20B].
By his Primary Claim, First Alternative Claim, and Third Alternative Claim, Mr Pless Snr alleged that Keogh & Co’s breach of the retainer resulted in him suffering loss.[37]
[37]POC [18]–[19], [22].
Mr Pless Snr also alleged that Keogh & Co breached a common law duty to exercise reasonable care and skill, causing Mr Pless Snr loss.[38] In effect, this was a claim in tort for negligence.
[38]POC [23]–[25]. This claim was to the same effect as the Primary Claim, First Alternative Claim and Third Alternative Claim: POC [24].
Keogh & Co’s defence to these claims was ultimately set out in its Amended Points of Defence dated 12 October 2022. For present purposes, it need only be noted that the defence:
(a) stated that advocates’ immunity was a complete defence to Peter Pless’ claims;[39]
[39]VCAT decision [42]; APD [19].
(b) denied the allegations set out in the First Alternative Claim, further stating that it did advise Mr Pless Snr about the effect of the Summons Application and alternative courses available;[40]
(c) denied the allegations by Mr Pless Snr regarding its breach of a common law duty to exercise reasonable care and skill;[41]
(d) stated that if Keogh & Co failed to comply with Mr Pless Snr’s instructions, Mr Pless Snr’s estate suffered no loss or damage.[42]
[40]APD [22].
[41]Ibid [27].
[42]Ibid [21A].
E. VCAT’s key reasoning and conclusions
After summarising the claims and defences, the VCAT decision gave an overview of the outcome.[43]
[43]VCAT decision [43]–[64].
In this overview, VCAT explained that it rejected the Primary Claim and the Third Alternative Claim. With respect to the Primary Claim, VCAT was not reasonably satisfied that Mr Pless Snr gave instructions to Keogh & Co in the terms pleaded.[44] With respect to the Third Alternative Claim, VCAT found that all the evidence suggested that Mr Ferguson of Keogh & Co was clear in explaining the scope of the Proposed Undertaking to Mr Pless Snr.[45]
[44]Ibid [44]; see also [187].
[45]Ibid [58].
However, VCAT found that the First Alternative Claim was made out, by reference to Keogh & Co’s conduct or omissions in the period following the First Court Hearing (on 14 October 2015) and before the Second Court Hearing (on 19 November 2015). With respect to the First Alternative Claim, VCAT found that:
(a) Keogh & Co did not have an obligation to advise Mr Pless Snr prior to the First Court Hearing on 14 October 2015 in the manner alleged by him,[46] and in any event, had there been an obligation and breach of any such obligation, it would not necessarily follow that the costs of preparing Mr Pless Snr’s affidavit and attending the Second Court Hearing on 19 November 2015 was caused by that breach.[47]
(b) However, a reasonably competent solicitor would have ‘revisited’ certain remarks made by Riordan J at the First Court Hearing with Mr Pless Snr following the First Court Hearing on 14 October 2015 that showed it to be ‘highly likely’ the judge would make a Freezing Order on the Return Date, and would have advised Mr Pless Snr that the prospects of following a path of seeking consent orders based on the Proposed Undertaking ‘might save him the costs of a contested hearing on the Return Date and at least some of the costs associated with preparing the affidavit’.[48]
(c) Keogh & Co breached its retainer with Mr Pless Snr by failing to provide such advice to him at that time.[49]
[46]Ibid [48].
[47]See also ibid [194].
[48]Ibid [50]–[51].
[49]See also ibid [211].
VCAT further found that, considering the decisions in Attwells,[50] Kendirjian,[51] and Spralja,[52] the defence of advocates’ immunity did not extend to the failure to properly advise as to a settlement out of court, and dismissed the defence.[53]
[50](2016) 259 CLR 1; [2016] HCA 16.
[51](2017) 259 CLR 275; [2017] HCA 13.
[52]Spralja v Bullard & Ors [2018] VCC 437 (Judge Woodward) (Spralja (2018)).
[53]VCAT decision [59]–[61].
VCAT found that, based on the information available, the net loss occasioned by Keogh & Co’s breach of retainer was ‘$34,500’[54] or ‘$37,500’,[55] being the money that would not have been required or paid by Mr Pless Snr if Keogh & Co had not breached its retainer.
[54]Ibid [56]–[57].
[55]Ibid [217]–[219], [226].
VCAT ordered Keogh & Co to pay $37,500 to Peter Pless, in his capacity as executor of the estate of Mr Pless Snr,[56] with interest and costs reserved and to be assessed on the papers following an exchange of submissions.[57]
[56]Ibid order 1, see also [62].
[57]Ibid orders 2–5, see also [63].
The VCAT decision then gave a detailed overview of the evidence,[58] the submissions (including noting a remark by Hasluck J in Mijatovic),[59] the decision in Spralja and the parties’ submissions about it,[60] before turning to the details of its analysis.[61] The analysis closely followed the earlier overview, save that it was structured into five issues, one of which was a question not expressly covered in the earlier overview of the claims.[62] The ratio decidendi (critical reasoning) of VCAT’s decision leading to the orders against Keogh & Co was its reasoning and findings on issue 3, 4 and 5 in the analysis section, which followed the overview set out earlier in the VCAT decision relating to breach of retainer by Keogh & Co as alleged in the First Alternative Claim (described as issue 3), causation and loss (issue 4) and the inapplicability of advocates’ immunity (issue 5).
[58]Ibid [65]–[102].
[59]Ibid [103]–[149]. At [104], VCAT noted May v Mijatovic (2002) 26 WAR 95, [148] (Hasluck J) (Mijatovic).
[60]Spralja (2018); VCAT decision [150]–[169].
[61]VCAT decision [170]–[225].
[62]VCAT decision [170(a)(ii)]: namely, ‘Whether Keogh & Co breached its retainer with Mr Pless Snr … by … failing to clarify his ambiguous instructions as to the use of the Proposed Undertaking’, also referred to as ‘Issue 2’ and addressed in detail at [188]–[198].
VCAT’s detailed reasoning on issue 3, breach of retainer, was relevantly as follows (including original footnotes):
200[At the First Court Hearing] While Riordan J suggested that he was ‘currently minded to think that there [was] a prima facie case’ or ‘serious question to be tried’,[63] and some risk that Mr Pless Snr might ‘dispose or take further action to make [the Toorak Home], which he’s already put beyond his immediate reach, … further beyond it’,[64] he did not consider it necessary to make any interim orders on the basis that:
[63]Transcript of First Court Hearing (TxFCH): TB, 175, 31 (L27–28).
[64]TxFCH: TB, 176, 32 (L2–4).
·Mr Pless Snr had not yet had a proper opportunity to explain matters, particularly the financial arrangements between himself and Mrs Pless;[65]
[65]TxFCH: TB, 176, 32 (L4–7).
·counsel had now been engaged, who could explain the likely consequences of any further action being taken by Mr Pless Snr to dispose of the Toorak Home, such that it ‘would be a brave move’, if the ‘court later felt that it had been misled when it was told there was no intention of disposing of this asset … and subsequently found that in the interim things had occurred’;[66] and
[66]TxFCH: TB, 176.
·given Mr Pless Snr had ‘lots of opportunity to consider these matters and he hasn’t, it appears … disposed of the shares [in Pless Nominees] already [i.e. to put the Toorak Home further beyond his reach], then the risk of him doing so in the next month … would be minimal’.[67]
[67]TxFCH: TB, 178, 34 (L24–27).
201While Mr Ferguson provided a prompt and accurate report of the First Court Hearing to Mr Pless Snr (see [81]), noting that on the Return Date ‘Justice Riordan [would] make a further decision on the freezing orders’, he did not provide any advice as to the likelihood of a Freezing Order being made or the steps that Mr Pless Snr could take to mitigate the costs and risks of a Freezing Order being made. Further, there is nothing to suggest that Mr Ferguson or Mr Keogh provided such advice at any time between the First Court Hearing and the Return Date.
202[Peter Pless] contends that this was ‘an obvious case’ for a freezing order to be made and a competent solicitor would have advised Mr Pless Snr that his prospects of opposing the application for Freezing Orders were ‘poor or problematic at best’, that it would be costly to do so and that he ought offer the Proposed Undertaking to resolve the Summons application (see [113]-[114]). He says this was more so after the First Court Hearing, in light of the concerns expressed by Riordan J (see [115]).
203As discussed at [153], in Spralja, Judge Woodward found that the duty of the lawyers in that case – in acting for Mr Spralja as a defendant in proceedings – included obtaining all information necessary (within the time available) to understand the issues in the proceeding and the strengths and weaknesses of the client’s defence, as well as identifying the range of possible outcomes in the proceeding and advising the client in the context of any settlement proposals.
204Similarly, in Mijatovic, Hasluck J found that the duty of the solicitor in acting for a litigant extended ‘beyond the scope of his instructions’ and included ‘acquaint[ing] his client with any real and foreseeable risks of economic loss’ from the proposed proceeding (see [104]).
205While it may be accepted that there are differences between the present case and each of Spralja (where a settlement offer had been made by the plaintiff) and Mijatovic (where the client instituted the proceedings), the discussion of the broad scope of a lawyer’s duty in representing a client in litigation remains apt.
206Although Riordan J was willing to see if Mr Pless Snr was able to provide a satisfactory explanation for the transfer of funds from Mrs Pless’ account (going to the real issue to be tried in terms of the substantive proceeding) and/or the transfer of the Toorak Home to Pless Nominees (going to the necessity of a Freezing Order), given that:
·Mr Keogh had given effect to the transfer of the Toorak Home from Mr Pless Snr to Pless Nominees, despite being aware of the concerns raised by Mr Pless Snr’s former solicitors (see [18]);
·Mr Ferguson was aware (as he recounted in his 14 October 2015 email) that Riordan J found the timing of that transfer ‘strange’; and
·Mr Ferguson heard the entirety of the exchange between Riordan J and Mr Clarke [senior counsel for Mr Pless Snr] at the First Court Hearing (particularly the matters highlighted at [50]).
I consider that the prospects of the proposed affidavit allaying Riordan J’s concerns and avoiding a Freezing Order being made on the Return Date was (objectively) quite low, with the real question being whether it would be possible to limit any Freezing Order to the Toorak Home or Riordan J would extend it to any other assets of Mr Pless Snr or his related entities.
207I consider that a reasonably competent solicitor would have drawn this to the attention of Mr Pless Snr, either as part of the report of the First Court Hearing or by arranging a meeting with Mr Pless Snr soon thereafter. I also consider that a reasonably competent solicitor would have considered and advised Mr Pless Snr on the likely costs, and as to his options to mitigate those costs, of continuing to defend the Summons application. As in Spralja, the actual advice provided (i.e. in Mr Ferguson’s email of 14 October 2015 (see [81])) was ‘superficial’ and failed to ensure that Mr Pless Snr could [be] given updated instructions on an informed basis (see [154]).
208That there would be complexity (and therefore considerable cost) in preparing the contemplated affidavit (including the need for evidence from Mr Pless Snr’s accountant) would have been apparent from the detailed description of transactions in the statement of claim which had been filed by [Peter Pless][68] as well as the submissions of Mr Black at the First Court Hearing.
209The cost ought to have been foreseeable. However, it can be inferred that communication in this regard was limited. …
210In terms of steps that could have been taken to mitigate the costs, and in circumstances where Mr Pless Snr had already signed the Proposed Undertaking, an obvious option was to offer that to [Peter Pless] to compromise that part of the application relating to the Freezing Order.
211For these reasons, I am satisfied that Keogh & Co breached its retainer with Mr Pless Snr by failing to provide such advice to him following the First Court Hearing.
[68]TB, 92–103.
VCAT’s detailed reasoning on causation, forming part of issue 4,[69] was relevantly as follows (including original footnotes):
[69]Putting causation to one side, VCAT’s quantification of loss is not separately challenged by any question or ground in Keogh & Co’s amended notice of appeal.
212While there is, of course, no direct evidence from Mr Pless Snr as to what he would have done if he had been properly advised at to the likely costs of continuing to defend the Summons application (and as to his options to mitigate those costs), in light of the comments made by Riordan J during the First Court Hearing, I consider it open to find that Mr Pless Snr would have agreed to offer the Proposed Undertaking to [Peter Pless] (in those circumstances) and otherwise taking steps to minimise the extent (and associated cost) of any affidavit to be filed.
213It is true that Mr Pless Snr had made many comments reflecting his extreme dislike for his son (at least at that point of time). It would be fair to say that, at the time, he was clearly unwilling to settle the Supreme Court proceeding on any basis. However, despite his age and language barriers, he had been convinced by Mr Ferguson to sign the Proposed Undertaking to avoid a more onerous Freezing Order. In those circumstances, I am satisfied and find that, if he [had] been properly appraised as to the matters set out in the proceeding section, he would have come round and agreed to offer the Proposed Undertaking to [Peter Pless] with a view to settling the Summons application.
214The assessment of causation and loss is difficult in this matter because there is obviously an interrelationship between the substantive Supreme Court proceeding and the Summons application.
215At the most basic, some of the fees reflected in the relevant Keogh & Co invoices related to the preparation of Mr Pless Snr’s defence to the substantive proceeding. …
216Further, I reject [Peter Pless’] (self-serving) statement[70] that he would simply have accepted the Proposed Undertaking to resolve the Summons application. That evidence is inconsistent with:
[70]Second Pless Affidavit [3].
·the Summons application including applications for both a Freezing Order and the Information Order;
·[Peter Pless’] rejection of a more modest request from Mr Pless Snr to defer the time for filing of his defence in the Supreme Court proceeding (see [99]); and
·the concerns expressed by Mr Black (who represented [Peter Pless] for the Summons applications) in the First Court Hearing about Mr Pless Snr selling the shares in Pless Nominees or taking other steps which might affect the value of the Toorak Home.[71]
[71]TxFCH, 34–36 (L1–11).
217In my view, it can properly be inferred that:
·[Peter Pless] would have wanted to see an affidavit from Mr Pless Snr at least addressing his assets, and the funds he had taken from Mrs Pless’ accounts, before he would be likely to agree to any settlement of the Summons application; and
·the form of the undertaking acceptable to him would have been the subject to some negotiation to be closer to what Riordan J ultimately ordered, e.g. to address indirect dealings with Toorak Home.
218While I find that the breach of retainer caused loss to Mr Pless Snr, I consider that loss is limited to:
·the cost of Keogh & Co drafting, and counsel settling, that part of Mr Pless Snr’s affidavit (and the affidavit of his accountant) directed to defence of the Freezing Order (as opposed to defence of the Supreme Court proceeding);
·the cost of counsel preparing for the hearing in opposition to the Freezing Order (including time spent on researching relevant authorities); and
·the cost of the Second Court Hearing beyond the time it would have taken … to briefly explain the consent orders to Riordan J (if required),[72]
in turn reduced by some costs for Keogh & Co to obtain further information from Mr Pless Snr (i.e. as to his assets and the transactions concerning his wife’s accounts) and the inevitable costs of going back and forth with a proposed offer of settlement and then finalising proposed consent orders to put before the Court.
219There is insufficient information in the invoices rendered by Keogh & Co, or the memorandum of costs from counsel, to precisely isolate the costs identified in the preceding paragraph. Doing the best I can with the information available, I have determined the loss to be $37,500.00. …
[72]Of course, Mr Ferguson was quite familiar with using consent orders to resolve Freezing Order applications.
VCAT’s detailed reasoning on issue 5, advocates’ immunity, was relevantly as follows:
221I accept that the advocates’ immunity applies to work done in Court, as well as any work – whether done by counsel or a solicitor – which is functionally connected with work in Court.
222However, the decisions in Attwell, Kendirjian and Spralja all make clear that the immunity does not extend to advice regarding settling a matter out of Court, including situations where the settlement is given effect to by an order of a Court.
223I do not accept that, because Riordan J did make a Freezing Order at the Second Court Hearing, that the work done by Keogh & Co and Counsel had the ‘functional connection’ with the orders to bring the advocates’ immunity into play. Relevantly, the breach of retainer which I have accepted does not involve consideration of anything said, done or determined by Riordan J at the Second Court Hearing. As such, there is no ‘collateral attack’ on his decision, being the basis for the advocates’ immunity.
224On this point, the case is indistinguishable from Spralja, where Judge Woodward found that the advocates’ immunity did not apply (see [158]).
225For these reasons, I reject that defence.
Finally, in its ‘Conclusion’ section, VCAT relevantly stated:
226 Having regard to the foregoing reasons, I have ordered that Keogh & Co pay [Peter Pless] (in his executorial capacity) the sum of $37,500.00, effectively by way of refund of fees that would not have been required or paid by Mr Pless Snr if Keogh & Co had not breached its retainer in the manner identified at [199] to [211].
VCAT then explained that it would direct a timetable for submissions on interest and costs.
F. Applicable principles – appeal on a question of law
By its amended notice to appeal, the applicant sought leave to appeal to the Court from VCAT’s orders pursuant to s 148 of the VCAT Act. Section 148(1) relevantly provides:
(1) A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding—
…
(b) in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.
The proposed appeal must be limited to questions of law. The identification of a question of law is not merely a precondition to the exercise of a right to appeal, but the subject matter of the appeal itself.[73] The proposed appeal cannot extend to correction of alleged errors of fact, provided the findings were open on the material and were not reached in breach of the standard of legal reasonableness.[74]
[73]Miller v Martin [2021] VSCA 108, [71] (Tate, Niall and Kennedy JJA), citing Patsuris v Gippsland and Southern Rural Water Corporation [2016] VSCA 109, [44] (Garde AJA).
[74]Tanah Merah Vic Pty Ltd v Owners’ Corporation No 1 of PS631436T (2021) 75 VR 1; [2021] VSCA 72, [198] (Beach and Osborn JJA, and Stynes AJA); Miller v Martin [2021] VSCA 108, [72] (Tate, Niall and Kennedy JJA); Heng Yang Developments Pty Ltd v Red Earth Developments (Aust) Pty Ltd [2022] VSC 231, [40]; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332, 362–367 [64]–[76] (Hayne, Kiefel and Bell JJ); [2013] HCA 18.
That said, the limits of the Court’s function in a proceeding under s 148 do not altogether prevent a court from considering mixed questions of fact and law. In some circumstances, it will be permissible to consider whether VCAT erred in law in reaching conclusions on mixed questions of fact and law.[75]
[75]See Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (2014) 45 VR 771, 784 [50] (Warren CJ); Haritos v Federal Commissioner of Taxation (2015) 233 FCR 315, 327–328 [192] (Allsop CJ, Kenny, Besanko, Robertson and Mortimer JJ); [2015] FCAFC 92.
There are many cases in which it has been said that the question of whether primary facts as found fall within a statutory provision properly construed, is a question of law,[76] or (more precisely) is ‘generally’ a question of law.[77] The same applies to a test arising at common law or in equity.[78] But on a close consideration of the authorities it can be seen that this important proposition is subject to various qualifications and exceptions. I return to this topic and examine the authorities in more detail later in these reasons.
[76]Hope v Bathurst City Council (1980) 144 CLR 1, 7 (Mason J); Collector of Customs v Pozzolanic (1993) 43 FCR 280, 287 (Neaves, French and Cooper JJ); Federal Commissioner of Taxation v Trail Bros Steel & PlasticsPty Ltd (2010) 186 FCR 410, 415 [13] (Dowsett and Gordon JJ, Edmonds J agreeing); Vetter v Lake Macquarie City Council (2001) 202 CLR 439, 450 [24] (Gleeson CJ, Gummow and Callinan JJ); Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (2014) 45 VR 771, 783 [48] (Warren CJ), 805–806, [167]–[168] (Whelan JA); the Court of Appeal’s decision in Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (2014) 45 VR 771 was reversed on appeal on different grounds, without affecting the remarks noted here: see (2016) 260 CLR 1, [24]–[27], [69]. Compare this with S v Crimes Compensation Tribunal [1998] 1 VR 83, 89.
[77]Collector of Customs v Pozzolanic (1993) 43 FCR 280, 287 regarding the fifth proposition (Neaves, French and Cooper JJ).
[78]Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1, [24]–[27], [69], relating to an incorrect conclusion that facts as found amounted to the formation of a legally binding agreement.
G. Consideration
As mentioned in the ‘Introduction’ section of these reasons, it is convenient to consider the questions and grounds in the amended notice of appeal by reference to the key themes I have framed in paragraph 7 above. Under the headings of this section that follow, I set out my reasoning and conclusions in response to all the questions raised by Keogh & Co in this proceeding, arranged in those themes.
(a) Advocates’ immunity grounds (questions 1–3 and grounds 1–6)
Overview of Keogh & Co’s contentions
The first question is whether VCAT erred in law in its understanding or application of the principles of advocates’ immunity from suit. In the amended notice of appeal, Keogh & Co claimed that VCAT erred in this respect in three ways:
(a) in misunderstanding and failing to apply the principle that out of court work will attract advocates’ immunity provided there was an ‘intimate connection’ or ‘functional connection’ with the way the case is presented to the court, with specific reference to VCAT’s conclusion that there was no such connection between the failure to advise and the way the case was presented at the Second Court Hearing (amended notice of appeal question 1 and grounds 1 and 2);
(b) in failing to recognise that the immunity should apply to a case regarding impugned failure to advise on settlement if the client had shown himself to be ‘obdurately opposed’ to settlement (amended notice of appeal question 2 and grounds 3 and 4); and
(c) in failing to address the availability of the immunity before addressing the merits of the claim in negligence made against the relevant lawyer (amended notice of appeal question 3 and grounds 5 and 6).
Keogh & Co’s submissions on advocates’ immunity were wide-ranging and in certain respects went beyond the grounds of the amended notice of appeal.
For example, Keogh & Co’s amended notice of appeal asserted error by VCAT in failing to find that there was an intimate connection or functional connection between the impugned conduct of Keogh & Co out of court and the manner in which counsel conducted the matter (only) at the Second Court Hearing. However, Keogh & Co’s submissions also asserted that there was ‘an intimate functional connection between the work out of court which led to a decision affecting the conduct of the case in court at the First [Court] Hearing’.[79]
[79]See, eg, May submissions [32].
With respect to the Second Court Hearing, Keogh & Co submitted that VCAT ought to have ‘additionally found that there was an intimate functional connection between the alleged omission in failing to advise Roland [i.e., Mr Pless Snr] to offer the Proposed Undertaking inter partes to Carmen’s Executor [i.e., Peter Pless] with a view to Roland giving the Proposed Undertaking (or a variation thereof) to Justice Riordan at the Second [Court] Hearing.’ This submission begged the question of what aspect of the presentation of the case was affected.
This point, and Keogh & Co’s other submissions about the impact of the negligent omission on the Second Court Hearing, were elusive. For the reasons I set out in the ‘Analysis’ section below, in my view they did not explain the key point that arose from Attwells and Kendirjian, which is to identify an intimate or functional connection between the alleged out-of-court negligence and the way the case was ultimately presented to the relevant court.
Keogh & Co’s submissions contended in various ways that the negligence claim against Keogh & Co infringed the principle of finality on which advocates’ immunity rests. It was submitted that the negligence claim involved collateral challenges to the exercise of judicial power by Riordan J at the Second Court Hearing. In this regard, Keogh & Co submitted that if the Proposed Undertaking had been offered by Mr Pless Snr, and this had led to a consent disposition at the Second Court Hearing, this would ‘still have led to a decision as to the manner in which the defence of the cause was conducted at the Second Hearing, … invoked the exercise of judicial power… with corresponding distinctly judicial contempt consequences in the event of breach’, and ‘[a]s such the facts of this care are different from the facts [of] Attwells and Spralja where a proceeding [was] discontinued by consent orders and terms of settlement.’[80] Keogh & Co submitted that the findings of VCAT ‘traversed and considered what Riordan J did and determined at the Second [Court] Hearing’ and involved a collateral challenge inconsistent with the finality principle.[81]
[80]May submissions [33]. Also at [57]–[64], citing — for the proposition that the acceptance of the undertaking would have involved an exercise of judicial power — Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150, 165 (Gibbs CJ, Stephen, Mason and Wilson JJ); [1981] HCA 48.
[81]May submissions [63]–[64].
There was also a suggestion in Keogh & Co’s submissions that the negligence findings in some way impugned or were inconsistent with an exercise of power by Riordan J at the First Court Hearing, apparently based on the assertion that his Honour directed the filing and service of an affidavit on that occasion.[82]
[82]Ibid [56], see also perhaps [83] and [89].
Keogh & Co’s submissions[83] referred to authorities on the immunity predating Attwells, including Giannarelli v Wraith,[84] D’Orta-Ekenaike v Victoria Legal Aid,[85] and the New South Wales Court of Appeal’s five member decision in Woodland v Donnellan.[86] In particular, Keogh & Co relied upon an obiter dictum (inessential reasoning) of McHugh J in D’Orta[87] referring to advice that affects the client’s decision directing the course of proceedings, and suggesting that this underpins the application of advocates’ immunity to advice.
[83]Ibid [36]–[40], see also [65]–[82].
[84](1988) 165 CLR 543; [1988] HCA 52 (Giannarelli).
[85](2005) 223 CLR 1; [2005] HCA 12 (D’Orta).
[86]Donnellan v Woodland [2012] NSWCA 433, although incorrectly cited as ‘Woodland v Donnellan [2011] NSWSC 777’, in the May submissions [7]–[9], [73]–[78].
[87]D’Orta [157] (McHugh J).
Keogh & Co submitted that VCAT ought to have distinguished each of Attwells, Spralja[88] and Kendirjian for various reasons. Three key points of distinction were advanced:
[88]Spralja v Bullards [2017] VSCA 32 and Spralja (2018) (together, Spralja).
(a) First, those three cases each involved conduct of commission (of the giving of negligent advice about specific settlement proposals) and not omission.[89]
(b) Second, the principle identified in McHugh J’s obiter dictum in D’Orta noted above (linking negligent advice and consequential instructions about the course of conduct of a proceeding) has never been doubted and should have been applied.[90]
(c) Third, Attwells[91] left open whether the immunity would apply where an order (or other exercise of judicial power) was required to effectuate a settlement.[92] Related to this, Keogh & Co submitted that Judge Woodward’s decision in Spralja[93] relied on the settlement in that case being reached separately from the making of consent orders.[94]
[89]May submissions [65]–[66], [79]–[80], [96].
[90]May submissions [66], [72]–[76], [81].
[91]Attwells [60]–[61].
[92]May submissions [66], [82].
[93]Spralja (2018).
[94]May submissions [51] and [62].
There were many other strands of argument developed on behalf of Keogh & Co that were said to relate to advocates’ immunity,[95] but in my view they were in essence either additional ways of making the points I have summarised above, or they were insufficiently clear or significant to warrant separate treatment in these reasons.
[95]Ibid ‘A. Preliminary Question’ and [1], ‘B. Short Answer’ and [2], ‘D. Preliminary Issue – Order of determination [of] issues’ and [4]–[11], ‘F. Immunity from suit (grounds 1–6)’ and [31]–[35], ‘G. Advocate’s Immunity Principles’ and [36]–[51], ‘H. Roland’s Executor’s wasted costs complaint indirectly collaterally challenges Riordan J’s decision’ and [52]–[56], ‘I. The character of an undertaking requires the exercise of judicial power’ and [57]–[64], ‘J. Attwells and Spralja Distinguished’ and [65]–[82], ‘K. The requisite functional connection and [83]–[89], ‘A. [sic] A judicial opinion is interposed between negligence and loss’ and [90]–[94], and ‘B. [sic] Finality’ and [95]–[97]. Keogh & Co’s ‘Applicant’s Reply’ dated 18 June 2024, ‘A. Advocate’s Immunity’ and [1]–[19], ‘B. Kendirjian Distinguished’ and [20]–[23], ‘C. McHugh J’s judgment in D’Orta is binding authority’ and [24]–[31], and ‘D. Indirect Collateral Attack’ and [32]–[37]; oral submissions of counsel on 20 June 2024 transcript 4–5; 19–20; 39–40; 50–58; 62–64 and on 21 June 2024 transcript 189–196.
Applicable principles
It is convenient to first set out the applicable principles with respect to advocates’ immunity, including in the context of potential compromises and settlements. Following earlier High Court decisions in Giannarelli and D’Orta, in 2016 and 2017 the High Court handed down Attwells and Kendirjian, which both provided significant clarification of the applicable principles and confined the scope of the immunity.
D’Orta (2005)
D’Orta involved advice that led to an accused person pleading guilty in circumstances where the accused later sued his lawyers and alleged the advice was negligent.
The Court by majority rejected an attempt to re-open Giannarelli, confirmed the existence of the immunity, and held that it could apply to a solicitor. A joint judgment was given by a majority comprising Gleeson CJ, Gummow, Hayne and Heydon JJ. McHugh J and Callinan J each gave separate judgments, agreeing with the outcome. Kirby J dissented.
In the course of his separate judgment, McHugh J said (citations omitted):[96]
The applicant sought to distinguish this case from Giannarelli on the basis that it involves a failure to warn in the Rogers v Whitaker sense. That submission must be rejected. The issue is whether the relevant connection with the conduct of the litigation exists, not the form of the negligence. An integral part of the advocate’s role is the giving of advice on the basis of which the client will give instructions that direct the course of proceedings. The advice is critical to and often determinative of the client’s decision. There is no relevant distinction between instructions given on negligent advice and the negligent carrying out of instructions if both are intimately connected with the conduct of litigation.
Attwells (2016)
[96]D'Orta 53 [157].
In Attwells, there was another attempt to re-open the doctrine of advocates’ immunity as stated in Giannarelli. The case concerned allegations of negligent advice given by a legal practice to guarantors of a company’s debt that led to a settlement agreement and consent orders exposing the guarantors to liabilities exceeding the limit of the relevant guarantee. All members of the High Court rejected the submission that the immunity should be abolished. However, the Court made it clear that the immunity should only be recognised to the extent required by its rationale, and that the basis of the immunity is ‘the protection of the finality and certainty of judicial determinations’.[97] For that reason, the immunity did not extend to negligent advice which led to the settlement of a claim in civil proceedings.
[97]Attwells 24 [46] (French CJ, Kiefel, Bell, Gageler and Keane JJ).
In their joint judgment, French CJ, Kiefel, Bell, Gageler and Keane JJ summarised the reasons for this as follows:
5…The authoritative test for the application of the immunity stated in D’Orta and Giannarelli is not satisfied where the work of the advocate leads to an agreement between parties to litigation to settle their dispute. No doubt an advice to cease litigating which leads to a settlement is connected in a general sense to the litigation which is compromised by the agreement. But the intimate connection required to attract the immunity is a functional connection between the advocate’s work and the judge’s decision. …
6… in order to attract the immunity, advice given out of court must affect the conduct of the case in court and the resolution of the case by that court. The immunity does not extend to preclude the possibility of a successful claim against a lawyer in respect of negligent advice which contributes to the making of a voluntary agreement between the parties merely because litigation is on foot at the time the agreement is made. That conclusion is not altered by the circumstance that, in the present case, the parties' agreement was embodied in consent orders.
…
39While the plurality in D’Orta did not state explicitly that advice leading to an out of court settlement was outside the scope of the immunity, it is apparent on a fair reading of their Honours’ reasons that the rationale of the immunity does not extend to advice which does not move the case in court toward a judicial determination.
41… To accept that the immunity extends to advice which leads to a settlement of litigation is to decouple the immunity from the protection of the exercise of judicial power against collateral attack. Such an extension undermines the notion of equality before the law by enlarging the circumstances in which lawyers may be unaccountable to their clients.
…
46Once it is appreciated that the basis of the immunity is the protection of the finality and certainty of judicial determinations, it can be more clearly understood that the ‘intimate connection’ between the advocate’s work and ‘the conduct of the case in court’ must be such that the work affects the way the case is to be conducted so as to affect its outcome by judicial decision. The notion of an ‘intimate connection’ between the work the subject of the claim by the disappointed client and the conduct of the case does not encompass any plausible historical connection between the advocate’s work and the client’s loss; rather, it is concerned only with work by the advocate that bears upon the judge’s determination of the case.
Their Honours noted and dismissed an argument that an ‘anomaly’ arose from this approach, explaining that that argument rested on an erroneous assumption that advice leading to a failure to settle is covered by the immunity:
47The respondent argued that it would be anomalous to hold that the immunity does not extend to advice which leads to a disadvantageous compromise but does extend to negligent advice not to compromise which leads to a judicial decision less beneficial to the client than a rejected offer of compromise. It was argued that in each case the advice is intimately connected with the proceedings. …
48The assumption on which the respondent’s argument depends, that is, that negligent advice not to settle is ‘intimately connected’ with the ensuing judicial decision of the court so as to attract the immunity, is not sound. The respondent cited no authority in support of this assumption. That is not surprising, given that it is difficult to envisage how advice not to settle a case could ever have any bearing on how the case would thereafter be conducted in court, much less how such advice could shape the judicial determination of the case.
Nettle and Gordon JJ dissented in Attwells.
Nettle J accepted that, on a fair reading of D‘Orta, ‘it may be said that the rationale of an advocate’s immunity from suit does not extend to advice unless it is advice which “move[s] the case in court toward a judicial determination”’, however, ‘it does not follow that the immunity may not apply to advice to settle a proceeding or to advice not to settle a proceeding.’[98] Nettle J went on to say ‘where a matter is settled out of court on terms providing for the court to make an order by consent that determines the rights and liabilities of the parties, the settlement plainly does move the litigation toward a determination by the court’.[99] Nettle J said that, where a client entered into a settlement which led to a consent order, ‘in such a case, a claim that the advocate was negligent in advising the defendant to consent to the order would involve a collateral attack on the order’.[100] His Honour went on to consider advice to reject an offer to settle, saying that if accepted such advice would ‘invariably affect the conduct of the case in court’:
… a subsequent claim by the defendant that the advocate was negligent in advising against settlement would call into question whether the advocate had a reasonable basis for so advising. As the majority observe, in principle that might not necessitate establishing that the judgment was wrong. But it would necessitate re-litigation of issues determined at trial, including: the strength of the plaintiff’s case; probably, the appropriate weight to be given to the evidence, taking into account considerations of credibility and reliability of witnesses; and the correct application of legal principle and authority. That is the kind of exercise which D’Orta was calculated to avoid and, in my view, it is not one which should now be sanctioned.[101]
Robertson J in the Federal Court decision of Minister for Immigration and Citizenship v SZRKT[211] stated that the ground of ‘extreme’ illogicality or irrationality is ‘measured against the standard that it is not enough for the question of fact to be one on which reasonable minds may come to different conclusions and against the framework of the inquiry being as to whether or not there has been jurisdictional error on the part of the tribunal’. The principle that ‘extreme’ illogicality or irrationality must be shown for a decision to be vitiated for jurisdictional error based on illogical or irrational findings of fact or reason, was approved by the Full Federal Court in ARG15 v Minister for Immigration and Border Protection.[212]
[211](2013) 212 FCR 99 [148]; [2013] FCA 317.
[212]ARG15 v Minister for Immigration and Border Protection (2016) 250 FCR 109 [47] (Griffiths, Perry and Bromwich JJ); [2016] FCAFC 174.
Likewise, in the present case, reasonable minds could reach different conclusions as to whether Mr Pless Snr ‘would have come round’ to offering the Proposed Undertaking to Peter Pless.
Outside the scope of the fourth and fifth questions (and their supporting grounds) in Keogh & Co’s amended notice of appeal, Keogh & Co’s submissions also addressed various other aspects of VCAT’s findings on causation, contending that they were reached without evidence or in an unreasonable manner.
For example, it was submitted on behalf of Keogh & Co that a number of aspects of causation that went beyond the position of Mr Pless Snr, such as VCAT’s rejection of Peter Pless’ evidence that he would simply have accepted the Proposed Undertaking to resolve the Summons application (VCAT decision [215]–[216]), meant that VCAT’s overall process of reasoning on causation was irrational.[213]
[213]May submissions [128]–[132], where [128(g)–(n)] extended to aspects of the reasoning on causation beyond Mr Pless Snr being persuaded to offer the Proposed Undertaking.
Perhaps it was intended that these submissions be treated as supportive not of the fourth or fifth questions, but of the tenth question in the amended notice of appeal, which I address next.
In any event, to the extent that these challenges were intended to support the fourth and fifth questions, out of abundant caution I note that I am satisfied that they were mere attempts at merits review. I reject them.
Alleged errors regarding VCAT’s conclusion on Wrongs Act s 51(1)(a) – question 10 and grounds 19 and 20
The tenth question of law and grounds 19 and 20 were articulated as follows:
Question of law:
10. Did the Tribunal err in finding the Applicant’s purported failure to advise Roland Pless to proffer the “proposed undertaking” by way of compromise of the Mareva component of Peter Pless's Interlocutory summons was the necessary condition of factual causation under s 51 of the Wrongs Act 1958 (Vic)? {R [51], [55], [195], [196], [208], [212], [218]}
The grounds relied upon are:
19. The Tribunal erred in finding the Applicant’s purported failure to advise Roland Pless to proffer the “proposed undertaking” by way of compromise was a necessary condition of the occurrence of the alleged loss, namely incurring costs in resisting the Mareva component of the summons for the interlocutory summons application under s 51(a) of the Wrongs Act 1958 (Vic). {R [51], [55], [195], [196], [208], [212], [218]}.
20. The Tribunal ought to have found that if Roland Pless had been advised to proffer the “proposed undertaking” to compromise the Mareva component of Peter Pless’s interlocutory application summons before the second hearing, Roland Pless would have incurred the fees he lawfully incurred in resisting Peter Pless's interlocutory summons application, and the fees were not incurred but for the Applicant’s alleged failure to so advise under s 51(a) of the Wrongs Act 1958 (Vic).
Section 51 of the Wrongs Act provides relevantly as follows:
51 General principles
(1) A determination that negligence caused particular harm comprises the following elements—
(a) that the negligence was a necessary condition of the occurrence of the harm (factual causation); and
(b) that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability).
In certain cases, s 51(2) may be available as an alternative to factual causation being determined under s 51(1). However, there was no reliance on s 51(2) in the proceeding before VCAT. It is therefore clear that VCAT was required to apply the test in s 51(1). There was no controversy about the applicability of s 51(1)(b). The controversy in this Court is whether VCAT erred in its findings on causation referrable to the test in s 51(1)(a).
Section 51(1)(a) of the Wrongs Act establishes that the ‘but for’ test of factual causation governed the case: the negligence had to be a necessary factual condition of the occurrence of the harm. Further, the matter of what the injured person would have done if the negligent person had not been negligent, if relevant, is to be determined subjectively in the light of all relevant circumstances under s 51(3) of the Wrongs Act.
On my reading of VCAT’s reasons, this is precisely how VCAT approached its task. Keogh & Co’s contentions to the contrary are essentially conclusory submissions that VCAT made the wrong determination in applying the test in s 51. They are not contentions that VCAT misunderstood that test. The fact that VCAT was conducting a function that was governed by s 51 did not convert its findings of fact to findings that can be challenged on appeal on a question of law; they cannot be challenged unless they were reached without any evidence or contrary to the standard of legal reasonableness.
For the reasons already given with reference to the other causation grounds raised under questions 4 and 5 of the amended notice of appeal, VCAT made no such errors in reaching its conclusion on the first element of the chain of causation — that Mr Pless Snr would have come round to commencing a negotiation with his son based on the Proposed Undertaking.
As already noted, Keogh & Co made various submissions criticising VCAT’s findings as to the remaining links of chain of causation of loss to Mr Pless Snr.[214] Keogh & Co asserted that VCAT’s findings were mere speculation, were not open, were reached irrationally, and were erroneous. Keogh & Co’s criticisms were all attempts to re-contest the merits. I am not satisfied that any of them identifies any error of law.
[214]See in particular May submissions [128(g)–(n)], [130], [142]–[146], [147]–[164].
For these reasons, questions 4, 5 and 10 and grounds 7–10, 19 and 20 have no real prospects of success.
(e) Apprehension of bias grounds (question 12 and grounds 23 and 24)
Overview of Keogh & Co’s contentions and further context
The twelfth question of law and grounds 23 and 24 were put this way:
Question of law:
12. Did the Tribunal err in failing to recuse itself on the basis of a reasonable apprehension of bias? {R [220] fn 257, Transcript 21 September 2022, p 117-131}.
The grounds relied upon are:
23. The Tribunal erred in failing to recuse himself on the basis of a reasonable apprehension of bias. {R [220] fn 257, Transcript 21 September 2022, p 117-131}.
24. The Tribunal ought to have found a fair-minded lay observer might reasonably apprehend that the Tribunal might not bring an impartial mind to resolve the questions raised by the Respondent’s Amended Points of Claim given the Tribunal’s preparedness to adumbrate making findings of dishonesty against the Applicant in the absence of any allegation or any evidence to support any finding of fraud.
I refer briefly to the context in which these grounds arose in paragraph 29 of these reasons, above. As already noted, the grounds relate to a failed application made by Keogh & Co for the learned senior member to recuse himself. VCAT explained the context in which that application was made as follows (including original footnotes):
220.For completeness, I note that, after the hearing commenced (and [Peter Pless] had given his evidence and Mr Ferguson had commenced giving evidence), Keogh & Co sought to produce further documents to show that Mr Pless Snr had paid Keogh & Co’s fees from trust funds and, as such, sought to contend that he had not suffered any loss personally. I did not allow this material to be tendered and/or Keogh & Co to amend its defence. Essentially, this was because:
·the substance of Keogh & Co’s defence had been a bare denial that Mr Pless [Snr] had ‘suffered any losses whether in the amount claimed or in any other amount’;[215]
·on the material before the Tribunal, the only apparent basis for the denial was that it was necessary to file a defence to the substantive proceeding and the affidavit prepared and filed for Mr Pless Snr ‘addressed issues raised by Peter’s substantive claim’.[216] In essence, this was an argument that the work would have had to be undertaken anyway;
·the first time that any contention was raised that ‘Roland’s legal fees were not paid by Roland, but by Pless Nominees’, was in the Respondent’s Outline of Submissions filed on 20 September 2022 (the first day of hearing) and those contentions were not supported by any evidence;
·no attempt was made to amend the points of defence until 12 October 2022 (after [Peter Pless] had given his evidence and Mr Ferguson had given most of his evidence), and those amendments extended well beyond what had been foreshadowed (including identifying a second company from which the funds had been drawn and involving tracing of the source of funds deposited into Mr Pless Snr’s account);[217]
·the amendments included a reference to a file note of Mr Ferguson, which was sought to be included in the Tribunal Book and would have potentially raised issues as to Keogh & Co’s knowledge as to the source of the funds used to pay its accounts;[218] and
·allowing these matters to be raised would have necessarily led to even further delay (and cost),[219] contrary to the Tribunal’s obligation to ‘determine each proceeding with as much speed, as … a proper consideration of the matters before it permit’ (and where the presumption is that parties bear their own costs).[220]
[215]Points of Defence to Second Amended Points of Claim dated 14 June 2022 [21] and [28].
[216]Respondent’s Outline of Submissions dated 20 September 2022 [28].
[217](Proposed) Amended Points of Defence to Second Amended Points of Claim dated 12 October 2022 [21A].
[218]Barnes v Addy (1974) LR 9 Ch App 244. After I raised this matter with the parties, the respondent made an application for recusal based on apprehended bias. I dismissed that application for reasons given at the time.
[219]Noting that the proceeding ran for six full days, when the parties had estimated three days.
[220]VCAT Act s 98(1)(d) (and s 109(1)).
The third last footnote of the above passage notes the recusal application and its dismissal by VCAT for reasons given at the time. The relevant passage of transcript of the VCAT hearing on 21 September 2022 began with a reference to paragraph 6 of the most recent affidavit of Mr Keogh, dated 19 September 2022. That paragraph included the following relevant text:
In regard to the allegation that the estate of Roland Pless has suffered losses a result of the advice given by my firm and the barristers engaged by us, … I confirm that I am advised by John Ferguson and verily believe that all payments made to us by Mr. Pless were from the account of Pless Nominees Pty. Ltd., and hence not paid by Mr. Pless. Hence, Mr. Pless suffered no such losses.
At the hearing, the senior member said:
I wanted to then come back to the further affidavit of Mr Keogh and the paragraph which was in dispute which was paragraph 6. …[221]
[221]VCAT transcript, 21 September 2022, 116.29–31, Court book 1096.
After some discussion with Mr Ferguson, the senior member foreshadowed his ‘preliminary thinking’ that the paragraph should be struck out as it was irrelevant to the defence as pleaded by Keogh & Co, leaving open the possibility that Keogh & Co may amend, but that would need to be supported by some evidence, and Peter Pless would need to have an opportunity to file material in response, and an additional hearing day might be needed. The senior member then made the following additional point:
I suppose the other point is that as I read it, the suggestion is that monies were paid to the Respondent by Mr Pless Senior if I can call him that, out of a company that acted as trustee of a trust.
It would appear that if that intention is pursued and to be made out, it may raise a question about the first or second limbs of the decision in Barnes v Addy …, that is, knowingly in receipt of money in breach of trust.
So it would inevitably require me to make some findings in that regard.
Obviously those findings of themselves won't have any impact in this proceeding, but may have some issues for either Mr Keogh or Mr Ferguson.
So, I don't know whether Mr - - how you want to have an adjournment to discuss those matters with your instructor or how you want to proceed.[222]
[222]VCAT transcript, 21 September 2022, 118.9–24, Court book 1098.
Counsel sought clarification. The senior member then made a clarification as follows, and the following exchange between him and counsel occurred:
MEMBER: Well, as I understand the suggestion from the affidavit of - - obviously it's not been tested and none of that is clear at the moment but the suggestion is that Mr Pless Senior used money from Pless Nominees Pty Ltd which I understand acted as trustee for one or more trusts for his grandson to pay legal fees relating to his own affairs so - -
MR WHEELAHAN: Where the trustee was the non-third-party to the proceeding, Pless Nominees. Is that - - ?
MEMBER: Pless Nominees wasn't a party to the proceeding as I understand it.
MR WHEELAHAN: As a said, non-party - -
MEMBER: A non-party, yes.
MR WHEELAHAN: It's referred to in the transcript as the third non-party. …[223]
[223]VCAT transcript, 21 September 2022, 119.3–7; Court book 1099.
The hearing was adjourned briefly. When it resumed, counsel for Keogh & Co applied for the senior member to excuse or recuse himself, referring to the applicable authorities and making a number of points. These included an argument that the senior member had suggested that serious findings of dishonesty might be made against Mr Ferguson without that allegation having been pleaded in the proceeding, and on that basis the test in the authorities for reasonable apprehension of bias was met.[224]
[224]VCAT transcript, 21 September 2022, 120.18–124.18; Court book 1100–1104.
Counsel for Peter Pless opposed the application for recusal, making submissions that included the following:
All you've done, Member, is identified for my learned friend some considerations that he may take into account.… a reasonable Member of the public watching the proceedings would have understood you to do no more than that. It would not have understood you even to express a preliminary view as to either the outcome of the application to amend, any application to amend the points of defence, and a fortiori, express no view whatsoever about whether or not there was in fact or would likely be a breach of either limb of Barnes v Addy.
…
But even taking my learned friend's point at its very highest, it is well-established in the authorities, very well-established, that expressions of preliminary views are not a proper ground for … [recusal] … .[225]
[225]VCAT transcript, 21 September 2022, 124.21–125.9; Court book 1104–1105.
Counsel for Keogh & Co replied. During his reply submissions counsel referred to prejudgement and the senior member asked for clarification about that point. Counsel responded as follows:
The apprehended bias that prejudges you're potentially shutting the Respondent out of dealing with this point by adumbrating potential findings of a Barns v Addy finding by the Senior Member if the Respondent were to go down its path in the absence of any submission by my learned friend, and in the absence of any pleading to that effect by my learned friend, and in the absence of what the Respondent would say, any evidence that would support such a finding, given that Prahran Car Radio Centre, MP Nominees and Pless Nominees were Respondents to the initial summons, that any money paid out of trust through the conduit of Roland Pless to pay the legal fees of the Respondent, which are the subject of this dispute, appear to be entirely lawful.[226]
[226]VCAT transcript, 21 September 2022, 127.6–9, Court book 1107.
The senior member then noted:
… I was working on the understanding and you pointed me to the summons that Pless Nominees wasn't a party but that might not be the case, but I would take time to consider your application I think.[227]
[227]VCAT transcript, 21 September 2022, 127.20–23, Court book 1107.
After an adjournment, the senior member refused the application, giving reasons.[228] In doing so, after referring to the context including paragraph 6 of Mr Keogh’s affidavit and the question of whether an application to amend Keogh & Co’s points of defence might be made, his ruling included the following (my corrections of obvious mistranscriptions appear in square brackets):
… I further expressed the view that what is stated in the affidavit appears to raise an issue of Barnes v Addy on the first or second limbs, although it might express a view as to which limb might apply. The suggestion from the Respondent is that … apprehended bias is established on the basis that by making those comments I've created a double-bind in terms of potential for findings of dishonesty if the application to amend the points of defence is made. The Applicant says that the Tribunal is only raising matters for consideration by the Respondent as to whether or not to amend the points of defence, do not even amount to a preliminary view but if they are a preliminary view that's not a proper grounds for [recusal].
A reasonable member of the public who is properly informed would understand the context of lengthy discussions at the start of the hearing about how findings about the claim by the Applicant against the Respondent might have impacted on the professional status of Mr Ferguson, and the … view raised in relation to Barnes v Addy was a view that that might be an issue based on what was set out in Mr Keogh's further affidavit.
However, it is also relevant that I foreshadow that the Respondent could apply to amend the points of defence and file evidence in support of that amendment. It's natural that evidence might allay any concerns about Barnes v Addy and no views were expressed about that evidence which is not before the Tribunal. In that sense, I do not consider that a reasonable member of the public could form the view that the conclusion - and I interpolate if any - would not be altered irrespective of the evidence or arguments put forward. That's quoting from the decision of Keating v Morris [2005] QSC 243, [43], and that is cited in Forbes J Justice [in] Tribunal[s] at 15.14. As was indicated in [Re Lusink;] ex parte Shaw … (1980) 55 ALJR 12, there is nothing wrong with the helpful indication of a point of view, which will remain provisional until the proceedings concluded, and that's cited at Forbes at 15.57.
I accept that the Barnes v Addy issue was not raised by the Applicant, but concerns about what the Tribunal might find in relation to this proceeding was put in issue by the Respondent witness. I also accept that my understanding that Pless Nominees was not a party to the summons may have been incorrect, although I think that still raises some issues about understanding what the nature of a third party Respondent was in relation to that proceeding. However, I don't accept that that means that a reasonable and informed Member of the public might reasonably expect that I might not bring an unprejudiced or impartial mind to the defence of the Respondent. For these reasons, the application for [recusal] is dismissed.[229]
[228]VCAT transcript, 21 September 2022, 128.13–131.2, Court book 1108–1111.
[229]VCAT transcript, 21 September 2022, 129.7–131.2; Court book 1109–1111.
The reference to ‘Forbes J Justice [in] Tribunals’ I take to be a reference to Dr JRS Forbes’ well-known text book, and probably the 5th edition.[230] That learned author and the senior member both referred to Re Lusink; Ex parte Shaw.[231] In that case, Murphy J expressed support for judges to be able to give preliminary impressions on issues in the running of trials without being taken to have prejudged them.[232]
[230]JRS Forbes, Justice in Tribunals (The Federation Press, 5th ed, 2019).
[231](1980) 55 ALJR 12.
[232]Ibid 15.
Dr Forbes quoted from a number of other judgments supporting the scope for judicial officers to permissibly express preliminary views and actively engage with parties’ submissions. Wood J in Glynn v Independent Commission Against Corruption stated: ‘[t]here is nothing wrong with a helpful indication of a point of view [which] will remain provisional until the proceedings are concluded.’[233] Brennan, Deane and Gaudron JJ stated more strongly in Vakauta v Kelly that ‘[An adjudicator] who… sat completely silent… with the result that his or her views about the issues, problems and technical difficulties involved in the case remained unknown until they emerged as final conclusions… would not represent a model to be emulated.’[234]
[233]Glynn v Independent Commission Against Corruption (1990) 20 ALD 214, 219 (Wood J).
[234]Vakauta v Kelly (1989) 167 CLR 578, 571 (Brennan, Deane and Gaudron JJ); [1989] HCA 44.
During the hearing in this Court, I asked counsel for Keogh & Co to explain the basis for his contention that it ought to have been plain to VCAT that the trustee in question could draw on the relevant funds. Counsel directed me to a file note of Mr Ferguson dated 15 February 2016, reproduced in the Court book at page 615,[235] which I assume is the file note referred to in the VCAT decision at [220] in connection with Keogh & Co’s application to amend its points of defence on or about 12 October 2022. That document records a conference with Mr Pless Snr and includes the following relevant text:
Discussed amounts claimed, conference with Nasos Kaskani, preliminary view of Counsel that no real defence to RP Family Trust funds paid out in 2013, should have been paid by trustee to Carmen, and remaining amount formed part of her estate - explained difficult to defeat claim, may have to repay. Claims for other amounts are less certain and should be defended. Do not recommend settling over $1m, more likely $400-500k. RP indicates could agree to repay funds associated with UBS Swiss account, nothing else.
Roland asked where money will come from. I explained Peter seeks tracing or unwinding of trust, money would come out of trust and back into his name. RP says need to pay other bills, legal costs from trust. I ask if payment comes from trust, RP says payment from his account, transferred from trust. I ask if loan to RP from trust, RP supposes yes.
[235]Transcript of this proceeding, 25 July 2024, 197–198.
The file note was part of the ‘third supplemental tribunal book’ dated 14 October 2022. There is no basis for thinking that the file note was before VCAT on 21 September 2022, when the recusal application was made and determined. In any event, the contents of the file note are far from clear about what trust and entities would be involved in funding legal costs. For these reasons, the file note must be put to one side in assessing the merits of Keogh & Co’s proposed question 12 and grounds 23 and 24.
Applicable principles
The principles applicable to an application for recusal on grounds of an appearance of potential bias are well settled. Specifically, the learned senior member was required to recuse himself if a fair-minded lay observer might reasonably apprehend that he might not bring an impartial mind to the resolution of the question or questions he was required to decide in the VCAT proceeding.[236] If he was correct in concluding that a reasonable apprehension of bias did not arise in the manner described in the test, he was required to continue to hear the proceeding.[237]
[236]Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, 344–345 [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ) (Ebner); [2000] HCA 63; British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283, 301 [36] (French CJ); [2011] HCA 2; Charisteas v Charisteas (2021) 273 CLR 289, 296–297 [11] (French CJ); [2021] HCA 29; QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 279 CLR 148, 159–160 [26], 163 [37] (Kiefel CJ and Gageler J), 171 [67] (Gordon J), 185 [112], 202 [162] (Edelman J), cf 210 [193] (Steward J, dissenting), 220 [221] (Gleeson J, dissenting), 238 [274] (Jagot J) (QYFM); [2023] HCA 15.
[237]Ebner 348 [19] (Gleeson CJ, McHugh, Gummow and Hayne JJ), 394 [175] (Kirby J). See, eg, QYFM 180 [96] (Gordon J), but see also 190 [129] (Edelman J).
The application of the test logically entails:[238]
[238]QYFM 163 [38] (Kiefel CJ and Gageler J); see also Ebner 345 [8] (Gleeson CJ, McHugh, Gummow and Hayne JJ).
(a) identification of the factor which it is said might lead the tribunal member to resolve the question other than on its legal and factual merits;
(b) articulation of the logical connection between that factor and the apprehended deviation from deciding that question on its merits; and
(c) assessment of the reasonableness of that apprehension from the perspective of a fair-minded lay observer, an assessment that follows from the preceding two steps.[239]
[239]QYFM 171 [67] (Gordon J).
The test is often described as a two-step test, with paragraphs (a) and (b) above comprising the two steps. Once those two steps are considered, the concluding assessment in paragraph (c) can be undertaken.
The hypothetical fair-minded lay observer is ‘a deliberate and necessary construct which tethers the court‘s analysis to the ultimate purpose of maintaining public confidence in the impartiality of the judicial system’. It provides the ‘standard by which the courts address what may appear to the public served by the courts to be a departure from standards of impartiality and independence which are essential to the maintenance of public confidence in the judicial system’.[240]
[240]Ibid [45] (Kiefel CJ and Gageler J), citing Charisteas v Charisteas (2021) 273 CLR 289, 299 [21]; [2021] HCA 29.
The test is to be applied having regard to all the relevant circumstances.[241] The fair‑minded observer is a lay observer, not a lawyer, and will not have a detailed knowledge of the law. However, the knowledge of the fair-minded lay observer will cover the factual and procedural context, and what was said at the hearing.
[241]See, eg, QYFM 172–173 [72] (Gordon J).
Analysis
In my view, it is clear from both the context and the mode in which the senior member expressed his concerns about paragraph 6 of Mr Keogh’s affidavit and the potential for an application to amend of the points of defence, that the senior member would be taken by the fair-minded lay observer to have formed no conclusions and to be simply identifying issues that he thought would have to be addressed. The statements in question were considerably less firmly expressed than the statements in question in Re Lusink; ex parte Shaw. In that case, even quite firmly expressed views were accepted as provisional and incapable of leading to a reasonable appearance of bias.[242]
[242]Re Lusink; Ex parte Shaw (1980) 55 ALJR 12, 14 (Gibbs ACJ).
Counsel for Peter Pless was entirely correct in his submissions that no reasonable apprehension of bias could have arisen from the senior member’s remarks here.
The remarks were made in a factual setting of considerable complexity involving multiple trusts and allegations about the shifting of assets over an extended period, and in the context of a somewhat late application by Keogh & Co to be permitted to raise further arguments and rely on further material. In the context of the case, it was entirely understandable that the senior member did not appreciate that the corporate trustee in question had been joined in some way to the freezing order application, by being made a respondent (although not made a party to the proceeding at the time). Counsel for Keogh & Co only made this point tolerably clear right at the end of his submissions in reply on the recusal application, at which point the senior member — very appropriately — acknowledged that he might not have appreciated that aspect of the facts. Further and more importantly, at all stages of discussion of the matter, the senior member noted that findings on the Barnes v Addy issue that concerned him would be dependent on further evidence.
In that setting, the proper characterisation of VCAT’s conduct was that the senior member raised an issue about some of the material relied upon by Keogh & Co, which showed that Keogh & Co was on notice that its client was paying Keogh & Co’s legal fees from funds withdrawn from a trust. In doing so, the senior member did not appreciate precisely which trust the moneys were withdrawn from. This was entirely understandable in the complex circumstances of the case. There was, moreover, a reasonable basis for VCAT to have been concerned, because the central allegations against Mr Pless Snr in the antecedent Supreme Court proceeding had been that Mr Pless Snr misappropriated money belonging to Mrs Pless and placed it in one of the trusts he controlled.
In raising his concerns, the senior member clearly did not appreciate that there was an argument available to Keogh & Co that the relevant trustee could legitimately draw on the relevant trust assets to pay legal fees it incurred in response to the Summons application, because it was named as a ‘non-party respondent’ in one or more of the documents generated in that litigation.
Neither of these matters would have been clear or obvious to anyone in the role of the senior member. In any event, and no doubt because the facts were unclear, the senior member expressed himself in a measured and matter‑of‑fact manner, without prejudgement of any of the issues.
In the complex setting of the case, nothing said or done by the senior member on these issues was capable of being fairly seen as bespeaking any potential for partiality or prejudgment. Contrary to the submissions made on behalf of Keogh & Co at various stages of the hearing before me, it is clear from the manner in which the senior member expressed himself that he was not making an allegation or accusation,[243] or even expressing a suspicion, against Keogh & Co; rather, he was putting Keogh & Co on notice that if Keogh & Co’s application were allowed, the issue might, depending on evidence that later emerged, lead to adverse findings against Keogh & Co. He made it clear that he was not willing to run the risk of introducing that added complexity into what was, by then, already a disproportionately complex and lengthy matter.
[243]See transcript of this proceeding, 20 June 2025, 118.6–9. This submission was withdrawn during reply submissions: transcript of this proceeding, 25 July 2024, 196.18–21.
Counsel for Keogh & Co submitted that, by identifying an issue that had not been alleged by Peter Pless and expressing a suspicion of dishonest conduct, the senior member might be regarded as showing himself to be potentially partisan against Keogh & Co. I disagree. The member was merely raising concerns in a reasonable, fair and measured manner.
I am satisfied that the member’s ruling refusing to recuse himself was correct, as were the reasons he gave at the time.
Question 12 and grounds 23 and 24 have no prospects of success.
G. Conclusion and Orders
Leave to appeal on question 1 and grounds 1 and 2 of the amended notice of appeal will be granted and the appeal on that question and those grounds dismissed.
Leave to appeal is otherwise refused. None of the other questions or grounds of Keogh & Co’s amended notice of appeal has a real prospect of success.
The proceeding will be dismissed. I will hear the parties on the question of the costs of the proceeding.
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