PSAL Ltd v Galilee

[2013] TASSC 74

[2013] TASSC 74

COURT:                  SUPREME COURT OF TASMANIA

CITATION:              PSAL Ltd v Galilee & Ors [2013] TASSC 74

PARTIES:  PSAL LTD (ACN 118 825 120)
  v

GALILEE, Ralph Owen

TRADING UNDER THE NAME OR STYLE OF GALILEE SOLICITORS

GALILEE, Ralph Owen

FABIAN, Paul Christian,

BOOTH, Bradley Donald

OWENS, Luke Kenneth

LUMLEY, Mark Andrew

`TRADING UNDER THE NAME OR STYLE OF GALILEE SOLICITORS

GUNSON, Christopher James

FILE NO:  479/2013
DELIVERED ON:  10 December 2013
DELIVERED AT:  Hobart
HEARING DATE:  4 December 2013
JUDGMENT OF:  Holt AsJ

CATCHWORDS:

Professions and Trades – Lawyers – Duties and Liabilities – Counsel and Client – Negligence – Immunity from suit – Out-of-court work – Advice concerning whether to defend proceedings – Whether advice affecting conduct of the case in court.

Aust Dig Professions and Trades [1150]

Procedure – Supreme Court Procedure – Tasmania – Practice under Rules of Court – Pleadings – Generally – Striking out – Failure to disclose a reasonable cause of action – Claim against barrister – Whether unsustainable – Advocate's immunity.

Supreme Court Rules 2000 (Tas), r259.

Aust Dig Procedure [272]

REPRESENTATION:

Counsel:
           Plaintiff:  C Coulson
           Third defendant:  M E O'Farrell SC
Solicitors:
           Plaintiff:  Michael Sing Lawyers
           Third defendant:  Hunt & Hunt

Judgment Number:  [2013] TASSC 74

Number of paragraphs:  11

Serial No 74/2013
File No 479/2013

PSAL LTD (ACN 118 825 120) v RALPH OWEN GALILEE TRADING UNDER THE NAME OR STYLE OF GALILEE SOLICITORS AND
RALPH OWEN GALILEE, PAUL CHRISTIAN FABIAN, BRADLEY DONALD BOOTH, LUKE KENNETH OWENS, MARK ANDREW LUMLEY TRADING UNDER THE NAME OR STYLE OF GALILEE SOLICITORS
AND CHRISTOPHER JAMES GUNSON

REASONS FOR JUDGMENT  HOLT AsJ

10 December 2013

1. Insofar as is relevant for present purposes, the plaintiff's statement of claim is as follows.  Proceedings were instituted against the plaintiff in the Federal Court on 17 December 2010.  On 20 December 2010 the third defendant, a barrister, was engaged to advise and represent the plaintiff in the proceedings.  The third defendant advised that the proceedings were without merit.  The plaintiff lost the case.  Gunns Ltd v Balani Pty Ltd and PSAL Ltd (2011) FCA 431. The third defendant advised that an appeal would have good prospects of success. An appeal was brought. It was unsuccessful. Balani Pty Ltd and PSAL Ltd v Gunns Ltd (2011) FCAFC 153. It is alleged that the advice was negligent and resulted in loss to the plaintiff, including wasted legal costs. The plaintiff claims damages.

1. The third defendant has applied to have the statement of claim struck out as failing to disclose a reasonable cause of action.  The asserted basis being that by reason of the immunity from suit which applies to barristers, and which applies in respect of the acts or omissions of a solicitor, which if committed by an advocate, would be immune from suit, operates to deprive the plaintiff of rights in respect of the negligent conduct alleged. 

1. Although the immunity no longer exists in a number of jurisdictions including in the United Kingdom (Arthur JS Hall & Co v Simons [2002] 1 AC 615) and in New Zealand (Lai v Chamberlains (2007) 2 NZLR 7), it has survived in Australian common law. D'Orta-Ekenaike v Victorian Legal Aid (2005) 223 CLR 1.

1. The immunity not only includes conduct in the court room, but also extends to "work done out of court which leads to a decision affecting the conduct of the case in court".  Giannarelli v Wraith (1988) 165 CLR 543 at 560, affirmed in D'Orta at par[86].  In Giannarelli Mason CJ continued at p560 to say in respect of preliminary work: 

"I would agree with McCarthy P in Rees v Sinclair (1974) 1 NZLR 180, at p187 where his Honour said:

'... the protection exists only where the
particular work is so intimately connected with the
conduct of the cause in Court that it can fairly be
said to be a preliminary decision affecting the way
that cause is to be conducted when it comes to a
hearing'.

This persuasive statement of the limits of the immunity was indorsed by four members of the House of Lords in Saif Ali [1980] AC at pp215, 224, 232, 236.  The statement is all the more important in that it acknowledges the existence and the limits of the immunity in a country where the legal profession is fused."

1. In D'Orta Gleeson CJ, Gummow, Hayne and Heydon JJ held that the principle of finality, which underpins the immunity, operates even in the case of claims confined to wasted costs arising from negligent advice.  The judgment at par[83] contains the following:

"Again, at first sight it might be thought that seeking to recover wasted costs would not cut across any principle of finality. But it is necessary to recall that the general rule is that costs follow the event. To challenge the costs order, therefore, will often (even, usually) involve a direct or indirect challenge to the outcome on which the disposition of costs depended. For the reasons given earlier, that should not be permitted lest a dispute about wasted costs become the vehicle for a dispute about the outcome of the litigation in which it is said that the costs were wasted."

1. Counsel for the plaintiff submits that advice confined to whether to defend a claim or appeal an adverse decision may not be covered by the immunity.  The facts would have to be ascertained before a decision could be made as to whether the advice given in the particular case was concerned with the way a cause is conducted when it comes to a hearing.  Accordingly, it was submitted that, this is not an appropriate case for summary termination of the plaintiff's claim.

1. Counsel referred to Coshott v Barry [2009] NSWCA 34 as an example of a case where the initial advice of an advocate was not protected by the immunity. Coshott was an appeal from a decision in which a claim against a solicitor for failing to advise that the relief sought in a proceeding should be confined to an order for the taking of accounts in common form as between mortgagee and mortgagor was rejected for a number of reasons including, that the solicitor had the benefit of the advocate's immunity.  Ipp JA, with whom Beazley JA and Campbell JA agreed, said at par[62]:

"In my opinion, this finding by his Honour went too far. Mr Coshott’s case was that Mr Barry breached his duty to advise virtually from the inception of the retainer. Such an alleged failure would be too far removed from the actual conduct of the trial to be covered by the doctrine of advocate’s immunity. I do not think that, when the retainer commenced, a failure to advise as alleged could be regarded, properly, as leading to a decision affecting the conduct of the case in court (Giannarelli v Wraith [1988] HCA 52; (1988) 165 CLR 543 at 560 per Mason CJ). The period from the time the retainer commenced to the trial itself was too long for the requisite connection to the conduct of the case in court to be established."

1. As to the appropriateness of determining claims, such as the present claim, on ascertained facts rather than assumed facts or pleadings counsel referred to Symonds v Vass (2009) 257 ALR 689. There Giles JA, with the agreement of Beazley JA, said at pars[39], [40] and [42]:

"… There may be questions of pre-commencement work, of failure to carry out decisions, of advice as to prospects and of need for judicial determination. On ascertained facts, questions of that kind arising in the present case could be decided. But there should be ascertained facts.

It may not be easy to see a clear line between work done prior to the commencement of proceedings, such as advice on the prospects of success or on appropriate defendants and causes of action, and the conduct of the proceedings. It may not be easy, more particularly, to see a clear line between work done in the course of the proceedings and advice given in relation to compromise. Work done prior to commencement of proceedings can lead to decisions as to their conduct, and work done leading to decisions as to their conduct is likely to underpin advice in relation to compromise. More widely, work done leading to decisions as to the conduct of the proceedings is likely to govern whether the client is advised about preparedness for a hearing or about prospects as the hearing looms, and what advice is given. But there can not be excluded negligent failure in these respects which does not satisfy the statement(s) of the test. Deciding the application of the immunity requires a clear understanding of what occurred and clear findings of the respect or respects in which there was negligence on the part of the lawyer.

…

Courts are ordinarily, and properly, astute to come to decisions upon facts as found, and not upon assumed facts. The old procedure of demurrer operated, not always satisfactorily, on precisely pleaded allegations, but a notional demurrer cannot resolve the appeal. On a notional strike-out the high standard of unarguability for which General Steel Industries Inc v Cmr for Railways (NSW) (1964) 112 CLR 125 ; [1965] ALR 636; [1964] HCA 69 is conventionally cited is not achieved. As Ipp JA has pointed out, with reference to Keefe, fine distinctions should not be drawn and the immunity cannot be circumvented by the construction of allegations of damage. Fully appreciating that, in my opinion it cannot properly be determined on appeal that advocate’s immunity applies so as to provide a complete defence to the appellants’ claim against the respondent."

1. In Donnellan v Woodland [2012] NSWCA 433 Beazley JA considered some propositions which had been set out by Harrison J in Dansar Pty Ltd v Pagotto (2008) NSWSC 112. In particular, her Honour considered a proposition that a failure to advise that proceedings were hopeless would always fall outside the immunity. She said at pars[197] and [208]:

"There is a clear jurisprudential distinction between a statement of principle and the application of principle. This case involves the application of a legal principle laid down by the High Court. Its application to a given case may be contestable and, in a given outcome, not necessarily obvious. Like snowflakes, no two cases are identical.

Harrison J's reasons are not, of course, binding on this Court. Although respect is to be given to a reasoned decision of a superior court judge, I am unable, with respect to his Honour's opinion, to find myself to be in agreement with them. In my opinion, D'Orta-Ekenaike does not stand for the second and third propositions advanced by his Honour for the reasons I have already explained."

1. It would only be in the event that it is clear, regardless of the evidence which might be presented at trial, that the immunity applies, should the claim be struck out as failing to disclose a reasonable cause of action.  In Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 by Kirby J said at pars[137] and [138]:

"A particular consideration should be taken into account at the threshold. It is one that is enlivened by the way in which the issue comes before this Court. Because the appellant has not yet had a trial, at which all of its evidence might be adduced, and because the respondents assert an entitlement to an immediate termination of the action, the issue in the appeal should be approached in a settled and well established way.

If there is any reasonable prospect that the appellant might be able to make good a cause of action, it is not proper for a court, in effect, to terminate the appellant's action before trial.  Where the law is uncertain, and especially where it is in a state of development, it is inappropriate to put a plaintiff out of court if there is a real issue to be tried. The proper approach in such cases is one of restraint. Only in a clear case will answers be given, and orders made, that have the effect of denying a party its ordinary civil right to a trial. This is especially so where, as in many actions for negligence, the factual details may help to throw light on the existence of a legal cause of action - specifically a duty of care owed by the defendant to the plaintiff. The parties consented to the course adopted. However, this Court owes its duty to the law. Its decision in this case affects persons other than the parties." [Footnotes omitted]

1. This is not an appropriate case for summary termination on the pleadings.  The application to have the statement of claim struck out as failing to disclose a reasonable cause of action is dismissed.