Stillman v Rushbourne
[2014] NSWSC 730
•13 June 2014
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Stillman v Rusbourne [2014] NSWSC 730 Hearing dates: 3 June 2014 Decision date: 13 June 2014 Jurisdiction: Common Law Before: Davies J Decision: 1. The proceedings are dismissed pursuant to r 13.4 UCPR;
2. The Plaintiff is to pay the costs of the proceedings.
Catchwords: LEGAL PRACTITIONERS - negligence - immunity from suit - scope of advocate's immunity - advice given at mediation to settle - judgment entered pursuant to settlement - whether work done leading to the conduct of the case in court - whether coercion by solicitor is within the immunity - whether appropriate to deal with immunity on a summary basis Legislation Cited: Conveyancing Act 1919 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Workers Compensation Act 1987 (NSW)Cases Cited: Attard v James Legal [2010] NSWCA 311
Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510
Biggar v McLeod [1978] 2 NZLR 9
Bott v Carter [2012] NSWCA 89
Chamberlain v Ormsby t/as Ormsby Flower [2005] NSWCA 454
D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1
Donnellan v Woodland [2012] NSWCA 433
General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125
Giannarelli v Wraith (1988) 165 CLR 543
Goddard Elliott v Fritsch [2012] VSC 87
Harvey v Phillips (1956) 95 CLR 235
Keefe v Marks (1989) 16 NSWLR 713
NT Pubco Pty Ltd v Strazdins [2014] NTSC 8
Studer v Boettcher [2000] NSWCA 263
Symonds v Vass [2009] NSWCA 139
Romeo v Papalia [2012] NSWCA 221
Young v Hones (No.2) [2013] NSWSC 1429Category: Procedural and other rulings Parties: Trevor James Stillman (Plaintiff)
Peter Edward John Rusbourne (First Defendant)
Matthew Gerard Coates (Second Defendant)
Tiana Victoria Daly (Third Defendant)
Sonja Adriana Fay Daly (Fourth Defendant)
Leanne Kylie Walker (Sixth Defendant)Representation: Counsel:
Solicitors:
A E Maroya (Plaintiff)
M J Darke & Q Rares (Defendants)
McMahons Lawyers (Plaintiff)
K& L Gates (Defendants)
File Number(s): 2013/209760
Judgment
These proceedings concern a claim by a former client of a firm of solicitors. He sues the solicitors on the basis of negligent advice given by them at a mediation which he says caused him to settle proceedings brought against him and his company to their detriment.
The Defendants have applied by Notice of Motion filed 10 February 2014 that the proceedings be dismissed pursuant to r 13.4 Uniform Civil Procedure Rules 2005 (NSW) on the basis that they are protected by advocate's immunity.
The Motion also sought, alternatively, a determination of a separate question concerning whether advocate's immunity was a complete answer to the claim pursuant to r 28.2 UCPR, but that relief was abandoned.
Factual background
The factual background appears partly from the Statement of Claim and partly from an affidavit by the Plaintiff filed in opposition to the Defendants' Motion.
The Plaintiff was a director of a company called Goldfields Crushing and Screening Pty Ltd ("GCS"). He was also the beneficial owner of the shares in that company. GCS had various business arrangements with a company called Coast to Country Crushing and Screening Pty Ltd ("CCCS") concerning the provision of crushing and screening plant and machinery by CCCS to GCS. The Plaintiff and Scott Bereth were the guarantors of the liabilities of GCS to CCCS under an arrangement between those companies for the rental of crushing and screening plant and machinery by GCS.
On 29 April 2006 CCCS commenced proceedings in the Commercial List of the Equity Division of this Court. The claim against GCS was for rental charges amounting to $1,499,270.98 in respect of crushing and screening plant and machinery said to have been used by GCS. A claim was also made against the Plaintiff and Scott Bereth as guarantors for the same sum.
GCS and the Plaintiff retained the Defendants in about July 2006 to represent them and advise them in respect of the claim made against them by CCCS.
Between July 2006 and August 2007 the Defendants provided advice to the Plaintiff and GCS, and drafted various documents including a Commercial List Response. In the course of so doing the Defendants provided detailed advice that the Plaintiff and GCS had a number of meritorious defences to the claim.
On 11 July 2007, there was a court-appointed mediation in relation to the proceedings. The Plaintiff and GCS were represented at the mediation by two solicitors from the Defendants.
The Plaintiff alleges that in the mediation those solicitors failed to refute or challenge the assertions made by the legal representatives of CCCS. It is alleged that towards the end of the mediation the solicitors strongly urged the Plaintiff and GCS to settle the claim on the terms proposed by CCCS. The Plaintiff claims that the advice given at the mediation differed from previous advice given. Ultimately, it is asserted that the solicitors coerced the Plaintiff and GCS to accept the settlement terms proffered by CCCS.
A Deed of Settlement was prepared that provided as follows:
(a) That Judgment be entered by consent against GCS and the Plaintiff for $1,000,000.00;
(b) That $500,000.00 be paid by GCS or the Plaintiff to CCCS by the 31 October 2007;
(c) That 12 instalments each of $41,666.66 be payable on the last day of each month for 12 months by GCS or the Plaintiff to CCCS, commencing on 30 November 2007;
(d) That CCCS should take a lien over 2 pieces of GCS machinery, valued at over $1,200,000.00;
(e) That in the event of any default in the performance of these terms, CCCS would immediately be entitled to enter judgment against GCS and the Plaintiff in the amount of $1,499,270.98, together with interest and costs.
On 31 August 2007 the Plaintiff was seriously physically injured in the course of his employment with GCS with the result that he was not able to perform his ordinary employment duties for a period of 18 months. An immediate result of that accident was that WorkSafe WA closed down work by GCS at its worksite at the OMG Cawse nickel mine and kept it closed for three weeks so that GCS immediately lost a major part of its income.
As a result of all those circumstances GCS was unable to make the first payment of $500,000 on 31 October 2007. The Plaintiff was not personally in the position to make that payment.
Because the payment could not be made the Plaintiff placed GCS into voluntary administration on 31 October 2007.
On 7 November 2007 pursuant to the Deed of Settlement CCCS entered judgment against GCS and the Plaintiff. In addition, CCCS appointed Pitcher Partners as liquidators of the Company shortly after it went into voluntary administration.
CCCS also called upon the Plaintiff to pay the entire sum of $1.8 million owing under the Consent Judgment.
The Plaintiff took advice from a firm of solicitors in Perth to see if he had any ability to set aside the Consent Judgment in the proceedings commenced by CCCS. He was advised that he could not do so.
On 8 July 2008 the Plaintiff's estate was sequestrated.
The issues
The Defendants had initially based their application for summary dismissal on the fact that the Plaintiff had no standing to bring these proceedings because his cause of action had vested in the trustee in bankruptcy. However, it was ascertained shortly before the hearing of the Notice of Motion that the Plaintiff and the trustee had entered into a Deed of Assignment in relation to the cause of action, and such Deed of Assignment purported to have retrospective operation to validate the bringing of the present proceedings. In those circumstances the Defendants confined their application to the ground that advocate's immunity meant that the Plaintiff could not succeed in the proceedings.
The parties agreed that the two issues to be determined on the Notice of Motion were these:
(a) whether the doctrine of advocate's immunity was applicable to the advice to settle and the conduct of the solicitors at the mediation; and
(b) whether it was appropriate for the proceedings to be summarily dismissed by reason of advocate's immunity.
(a) Advice to settle and the immunity
The difficulty attending cases involving advocate's immunity has been identifying what out-of-court work attracts the immunity. Put more specifically, the problem has always been to identify the "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 per Mason CJ.
In D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 the joint judgment said:
[45] ... [T]he central justification for the advocate's immunity is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances. This is a fundamental and pervading tenet of the judicial system, reflecting the role played by the judicial process in the government of society. If an exception to that tenet were to be created by abolishing that immunity, a peculiar type of relitigation would arise. There would be relitigation of a controversy (already determined) as a result of what had happened during, or in preparation for, the hearing that had been designed to quell that controversy. Moreover, it would be relitigation of a skewed and limited kind. No argument was advanced to this Court urging the abolition of judicial or witness immunity. If those immunities remain, it follows that the relitigation could not and would not examine the contribution of judge or witness to the events complained of, only the contribution of the advocate. An exception to the rule against the reopening of controversies would exist, but one of an inefficient and anomalous kind.
...
[65] As foreshadowed in what is written above, particular attention must be directed to whether rules about abuse of process provide a sufficient satisfaction of the principle that controversies, quelled by the application of judicial power, are generally not to be reopened. That requires identification of the nature of the complaint made by a disappointed client who seeks to sue an advocate; next, identification of the premise from which the applicant's argument proceeds; and then, consideration of whether a distinction can or should be drawn between "civil" and "criminal" proceedings, or between challenges to "final" or "intermediate" results. First, what is the nature of the complaint that is made?
The nature of the client's complaint
[66] In every case the complaint must be that a consequence has befallen the client which has not been, and cannot be, sufficiently corrected within the litigation in which the client was engaged. That consequence may take a number of forms. For the moment, it will suffice to identify what may appear to be the three chief consequences: (a) a wrong final result; (b) a wrong intermediate result; and (c) wasted costs.
...
[70] What unites these different kinds of consequence is that none of them has been, or could be, wholly remedied within the original litigation. The final order has not been, and cannot be, overturned on appeal. The intermediate consequence cannot be repaired or expunged on appeal. The costs order cannot be set aside; the costs incurred cannot be recovered from an opposite party. And in every one of these cases, the client would say that, but for the advocate's conduct, there would have been a different result. In particular, leaving cases of wasted costs aside, the client wishes to assert that, if the case had been prepared and presented properly, a different final, or intermediate, result would have been reached. And yet the judicial system has arrived at the result it did. The consequences that have befallen the client are consequences flowing from what, by hypothesis, is a lawful result. ...
...
[91] Because the immunity now in question is rooted in the considerations described earlier, where a legal practitioner (whether acting as advocate, or as solicitor instructing an advocate) gives advice which leads to a decision (here the client's decision to enter a guilty plea at committal) which affects the conduct of a case in court, the practitioner cannot be sued for negligence on that account. [emphasis added]
It is clear, therefore, that advice in advance of the hearing is within the immunity if it "affects the conduct of the case in court". The issue is whether advice leading to settlement is within the immunity. The Plaintiff submitted that it was not.
The Plaintiff first drew attention to what McHugh J said in D'Orta at [166]:
There is, of course, a greater public interest in maintaining confidence in the administration of criminal rather than civil justice. So, it is possible to sue a practitioner for the negligent settlement of proceedings or for the negligent loss or abandonment of a cause of action. Such claims lead to the litigation of a primary claim even if that claim can no longer be pursued. These results flow even though there is a public interest in the finality achieved through the statutes of limitations and the promotion of out-of-court dispute settlement. But where a trial has taken place, as the judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ demonstrates, public confidence in the administration of justice is likely to be impaired by the re-litigation in a negligence action of issues already judicially determined. [emphasis added]
The Plaintiff pointed to the distinction being made in this passage between finality achieved through settlement, even leading to a judgment, and finality through litigation to a judgment after a trial.
With the greatest respect to McHugh J this passage does not sit easily with the surrounding paragraphs of his judgment nor with the agreement those paragraphs appear to express with the joint judgment. Those paragraphs say:
[165] In their joint judgment, Gleeson CJ, Gummow, Hayne and
Heydon JJ set out in detail the reasons why adverse consequences for the administration of justice would also be likely to result from the re-litigation in negligence proceedings of issues already decided in a civil or criminal cause. I agree with what their Honours have written on this fundamental issue.
...
[167] The preservation of finality is a compelling reason why it is not appropriate to construct "allegations of damage in a manner which attempts to relate the harm suffered as a consequence of a barrister's alleged negligence to that aspect of his conduct furthest removed from physically standing up and speaking in Court". If a decision affects the conduct of a case in court, it can be viewed both as a course of conduct lasting from the decision until and including the last opportunity to change that course during the hearing, and as a potential, although unprovable, causative factor in a result. The context in which the decision is made, either physical or temporal, is thus of no relevance. The notion of the "calm of chambers" serves only to identify one factor supporting the restriction of the immunity, in respect of conduct not taking place during court proceedings. It does not follow that a decision, made out of court, and maintained in court, is outside the rationales for the immunity.
[168] Accordingly, the immunity should extend to any work, which, if the subject of a claim of negligence, would require the impugning of a final decision of a court or the re-litigation of matters already finally determined by a court. On that basis, no distinction should be drawn between the role of a solicitor and a barrister in the context of advising a client regarding the entering of a plea in criminal proceedings. If the immunity were applicable to the barrister and not the solicitor in the present case, it would not serve the public policy purpose of preventing the rehearing of the applicant's charge.
However, to the extent that paragraph [166] expresses a different view from the majority judgment, I am bound to follow that majority judgment. Moreover decisions of the Court of Appeal, to which I will shortly refer, are consistent with the majority judgment.
The Plaintiff also pointed to what was said by Giles JA in Symonds v Vass [2009] NSWCA 139 as to the doubt that surrounds advice on settlement. Giles JA said:
[35] In Chamberlain v Ormsby [2005] NSWCA 454 it was held that negligence in advising in relation to a compromise of proceedings was within the immunity. But it has also been held, on strike-out applications, that it is arguable that advice in relation to compromise falls outside the immunity because there is no quelling of the controversy by the exercise of judicial power in the determination of the issues in the case: Francis v Bunnett [2007] VSC 527; (2007) 18 VR 98 (Lasry J); Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85 (Steytler P and Newnes AJA); see also Kelley v Carston [1998] QB 686. Whether for the finality principle it is sufficient that there be a result, although not a result through judicial determination, may not be definitively established, although Biggar v McLeod (1978) 2 NZLR 9 involved a negligently advised settlement.
When Giles JA returned to this question in Attard v James Legal [2010] NSWCA 311 he appeared to accept that compromise fell within the immunity. He said:
[20] What is the offence to finality if the respondents' conduct of
the Orlando proceedings is held to have caused the appellants to incur unnecessary costs? There has not been a judicial determination, although it was not submitted that this took the claim in relation to the Orlando proceedings outside advocate's immunity (I said something of this in Symonds v Vass at [35]). Presumably there has been a court order dismissing the cross-claim with no order as to costs. That is a resolution of the controversy.
In Chamberlain v Ormsby t/as Ormsby Flower [2005] NSWCA 454 counsel advised the client on the morning of the hearing that he should settle his workers compensation proceedings by accepting lump sums under ss 66 and 67 Workers Compensation Act 1987 (NSW). The result was that the client gave up his common law rights. Tobias JA with whom Giles JA agreed) said:
[120] In the present case, the barrister gave the subject advice in the context of advising the appellant as to the effect his acceptance of permanent loss compensation would have upon such common law rights as to damages as he may have had. That advice was critical to the decision of the appellant to accept the settlement that was being offered by the employer's workers' compensation insurer with respect to the appellant's ss66 and 67 claims. His acceptance of that settlement was dependant (sic) upon firstly, the advice given by the barrister as to the likelihood of any claim for common law damages exceeding the thresholds and, secondly, the effect that acceptance of permanent loss compensation would have upon his common law rights, such as they were. It is difficult to imagine a stronger case than the present where the advice given by the barrister led to the appellant's decision as to the conduct of his case before the Compensation Court or which was more intimately connected with the course of that case including its settlement.
[121] It follows that in my opinion even if the barrister was negligent (which in my opinion he was not), he was immune from being sued by either the appellant or the solicitor. Accordingly, the solicitor's cross appeal against the barrister should be dismissed with costs.
It follows, necessarily, that "conduct of the case in court" includes bringing the case to an end by settlement. That conclusion is supported by the decision of the New Zealand Court of Appeal in Biggar v McLeod [1978] 2 NZLR 9. In that case Richardson J said (at 14):
Rees v Sinclair [[1974] 1 NZLR 180] established that pre-trial work is sufficiently connected with the conduct and management of the cause if it involves a preliminary decision affecting the way in which the cause is to be conducted when it comes to a hearing. It follows, a fortiori, that the advice given by a barrister as to the settlement of a cause during the course of the trial and the settling of the terms of a compromise must attract immunity. It is intimately and immediately connected with, and involves the termination of the litigation. In such a case it is not simply that there is a temporal connection between that work and the actual trial itself. The giving of advice as to the compromise of proceedings, involving as it does the question of their continuation or termination, is an inherent feature of the conduct of the cause by counsel.
In Donnellan v Woodland [2012] NSWCA 433 the advice sued upon by the client was given in respect to the prospects of success of a s 88K Conveyancing Act 1919 (NSW) application, potential costs consequences and other offers made by the local council. In that case such advice was given at various stages before the hearing of the application.
In Donnellan v Woodland the plaintiff argued that there was no sufficient temporal connection between the advice given and the conduct of the case in Court. He sought to distinguish a number of earlier decisions including Chamberlain v Ormsby on the basis that the advice that led to the settlement in that case was given on the day of the hearing whereas the advice given to him was at a time more removed than in Chamberlain.
Beazley JA (with whom Barrett JA, Hoeben JJ and Sackville AJA agreed) considered Biggar v McLeod and said at [211] that in that case:
... the immunity was held to apply where a legal practitioner had advised on settlement during the course of a trial. It did not matter that the litigation was brought to an end by settlement and not by way of a determination of the court. This case would therefore support Mr Donnellan's argument, except for the temporal aspect that the settlement offer arose during the course of the trial. However, as I have already indicated, mere temporality is not determinative of whether the immunity applies.
The statement that "temporality is not determinative" followed McHugh J in D'Orta at [167].
Beazley JA reviewed a number of other cases including Chamberlain, Attard and Symonds, and concluded that the cases supported the application of the immunity in relation to the advice given by Mr Donnellan in advance of the hearing.
In my opinion, Donnellan v Woodland makes clear two relevant matters. First, advice leading to settlement is work which leads to the conduct of the case in court. That is because the party agrees to the disposition of the proceedings on the basis of the settlement. The result is a final judgment. Secondly, the fact that the advice was given in advance of the hearing, such as at a mediation, settlement conference or even by an exchange of offers, is irrelevant if the result is a disposition of the proceedings in one of the categories referred to in D'Orta at [66].
In the present case the negligence alleged concerns the change in the advice given at the mediation from that which had been given previously, and the failure to argue strongly for the Plaintiff's position. That negligence was said to lead to the settlement that was so unfavourable to the Plaintiff and ultimately to a final judgment against him. It is difficult, in those circumstances, to distinguish this case from cases such as Chamberlain v Ormsby and Donnellan v Woodland. The alleged negligence was out-of- court conduct but it led to the decision to settle a case in a way that led to the final judgment.
Nothing in the joint judgment in D'Orta suggests that a final judgment entered by consent occupies a different position in terms of the immunity from a judgment obtained after a contested hearing and a judicial determination. The judgment by consent is a final judgment. It cannot subsequently be challenged except for fraud or mistake or by an agreement which is void or voidable: Romeo v Papalia [2012] NSWCA 221 at [79] -[80]. The cause of action has merged in the judgment. Entry of the judgment has quelled the controversy. The party seeking to impugn it cannot do so in the proceedings so finalised. Indeed, at one level, the advice in D'Orta to the client to plead guilty highlights the point that a consent outcome attracts the immunity in the same way as a negligently conducted hearing leading to the same result.
As a matter of principle, therefore, and subject to matters discussed in relation to the second issue below, the advice given and the acts and omissions of the solicitors at the mediation fall within the immunity.
(b) Determination on a strike out application
The Plaintiff argued that it was inappropriate to determine the issue of advocate's immunity on a strike out application. This was because the authorities suggested that it was necessary for the Court to know and understand the whole factual matrix, and that would not be clear until the final hearing.
The Plaintiff relied on what Giles JA said in Symonds in relation to the suggested need to await the evidence at the trial:
[40] 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 cannot 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.
...
[42] 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] HCA 69 ; (1964) 112 CLR 125 is conventionally cited is not achieved. As Ipp JA has pointed out, with reference to Keefe v Marks, 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.
[43] As I have said, it may be that not all the breaches on which the appellants rely would have causal significance. The respondents sought to categorise them in such a way that, in their submission, the breaches would not have caused loss of the opportunity to recover damages from Egan. That too depends, in my view, on a clear understanding of what occurred and of the respect or respects in which there was negligence, and causation also cannot properly be determined on appeal on what amounts to an hypothetical basis.
[44] It may be that in the end it will be held that the appellants' claim is defeated by advocate's immunity. They no doubt will take advice. However, for the reasons above a new trial should be ordered. [emphasis added]
The Plaintiff also relied upon what Harrison J said in Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 1510 at [37]:
[37] It follows that the view that I have expressed, that advocate's immunity does apply in the circumstances of this case, is a view arrived at upon what is predominantly an hypothetical basis. For example, I do not know what evidence might emerge at a final hearing concerning the advice that was sought or given about the settlement, whether relevant matters were adverted to or overlooked, whether the settlement reflected the terms that were explained to the plaintiffs or whether they were explained at all. I have no way of knowing whether the plaintiffs' liability as guarantors for the $1.75M was in some or any way discussed or considered in the course of advice to settle. I have not seen documents from the defendants' file in the original proceedings that may cast light on the issue one way or the other. Despite the preliminary and unfavourable (but admittedly hypothetical) opinion I have formed generally about the defendants' conduct as professional legal advisers to the plaintiffs at the time, it is obvious or at least prudent that I should not attempt to arrive at any final or concluded view on their prima facie liability in negligence, more so that I should not presume to act upon such a view, in order finally to evaluate the advocate's immunity defence. A comprehensive exposure and understanding of the negligence case against defendants' is likely reliably to inform the outcome of the advocate's immunity question, which should not be decided without it.
The Plaintiff pointed also to particulars of negligence (h) and (i) in paragraph 24 of the Statement of Claim to suggest that the matters complained of in those particulars took the matter outside what was protected by the principle of advocate's immunity. That was said to be because coercion by a solicitor was behaviour that was proscribed. The Plaintiff pointed in that regard to what was said in Studer v Boettcher [2000] NSWCA 263 by Fitzgerald JA at [74] and [75] and by Sheller JA at [58].
It is always important when considering an application for summary dismissal to reach a firm view that all of the relevant material is before the Court in terms of allegations that will be made and the evidence that can be led to support the allegations. In some cases it will be inappropriate to come to a view about whether there should be a summary dismissal of the claim or even (as in Atwells) where the issue is being determined as a separate question.
In Donnellan v Woodland the issue arose for consideration whether the trial judge ought to have considered (a) if the Defendant had been negligent in the first place and then gone on to consider whether he was protected by advocate's immunity, or (b) if the latter determination should have been made first.
Beazley JA (with whom Hoeben JA and Sackville AJA agreed) said:
[6] A preliminary question arises as to whether the advocates' immunity issue should be determined prior to any consideration of the other issues raised on the appeal. If, as I understand it to be the case, the principle underlying advocates' immunity is that of finality of litigation: see D'Orta-Ekenaike, there is an argument that a claim brought against a legal practitioner for negligence in the conduct of litigation should be determined, in the first place at least, by reference to the immunity. If the immunity applies, the question whether there is negligence becomes moot. That is another way of saying that the immunity is an immunity from suit.
[7] Against that approach is the argument that it may not be possible to determine whether the immunity attaches unless the negligent conduct is identified. Whilst the pleadings are the obvious starting point, they may not sufficiently enable that identification to be made. That was the position in Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85, discussed below. If the correct position is that the immunity should be determined prior to the determination of the question of negligence, an immunity claim ought properly be able to be dealt with on the pleadings by way of a strike out application pursuant to the Uniform Civil Procedure Rules 2005 (UCPR), r 13.4 or r 14.28. This was the view of this Court in Bott v Carter [2012] NSWCA 89, especially at [11]. Bott v Carter itself involved an application to strike out the statement of claim. As the result in Alpine Holdings demonstrated, that may be a contestable result.
...
[9] For myself, I am not satisfied that there is a single correct approach. Rather, it will depend upon the circumstances of the particular case. If the pleadings on their face alleged negligence in the conduct of litigation falling into one of the three categories of consequence that flow from a practitioner's negligence: see Donnellan v Woodlandat [166], it may be possible that the immunity question can be determined on the basis of the conduct alleged in the pleadings. There is a question, in any event, as to the extent of the reach of the immunity. As Basten JA, at [11], observed in Bott v Carter, "the immunity does not extend to all activities undertaken by legal practitioners, even in relation to disputes which may give rise to litigation". However, not every case will be so clear cut.
Barrett JA also agreed with Beazley JA but said this:
[276] If the defence of legal practitioner's immunity from suit is available to meet a client's allegation of negligence against a lawyer who acted for the client in litigation, there is much to be said, as a matter of principle, for the proposition that the client's negligence action should be disposed of solely on that ground.
[277] If that course is not followed, there will arguably not be due regard for the principle of finality of litigation to which the High Court attached particular significance in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1. This is because trial of the negligence action on its merits (that is, by reference to the facts and circumstances beyond those going to the availability of the immunity) presents the possibility of findings and conclusions at odds with those in the case in which the lawyer acted for the client.
Hoeben JA and Sackville AJA agreed with those remarks also.
Basten JA went further and said:
[259] It was held in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1, that the immunity from proceedings brought by a former client against a legal practitioner alleging negligence (or a related cause of action) in relation to the conduct of litigation depends on the principle of finality. That principle is offended by a reconsideration of the circumstances in which a final judgment has been obtained, otherwise than by way of appeal from, or judicial review of, the earlier proceedings. (There may be other exceptions, such as a challenge to a judgment procured by fraud.) In circumstances where the immunity applies, to address the merit of the claim before considering the defence would be to subvert the very principle upon which the defence is premised.
[260] Against that conclusion, it may be contended that the application of the immunity cannot be addressed until the precise scope of the dispute and the manner of its resolution has been determined. However, the availability of the defence cannot rest upon how the parties run the proceedings. If the defence is available, that must be ascertained from the pleadings and the potential scope of the proceedings so revealed. It is not to be assessed and determined only after the hearing of the merits, with its potential to diminish confidence in the proper administration of justice.
...
[262] The dilemma thus revealed is not an abstract question of principle in the present case. As noted by Beazley JA at [125], the primary judge actually reached a conclusion that Hamilton J had been wrong in a particular respect in assessing costs: [2011] NSWSC 777 at [165]. That finding directly subverted the principle of finality and cast doubt upon an order made by Hamilton J and, as it appears, one which had been the subject of an unsuccessful application for leave to appeal to this Court in the original proceedings. Where the defendant seeks to rely upon the immunity, the principle of finality will often be most efficiently upheld by an application for summary judgment once the pleadings are closed: see, as an example, Bott v Carter [2012] NSWCA 89. (emphasis added)
As noted in Basten JA's judgment, Bott v Carter [2012] NSWCA 89 was a case involving a claim by a client against his solicitor and barrister who appeared in District Court proceedings brought by the client where he was unsuccessful. The Defendant sought summary dismissal relying on advocate's immunity.
Basten JA (with whom McColl JA and Whealy JA agreed) said:
[10] ...[T]he purpose of permitting the appellant to put a reformulated pleading before this Court was not to reopen any question as to the adequacy of the earlier pleadings, but merely to allow this Court to be better informed as to the scope of the impugned conduct. It may further be accepted that if the Court were satisfied that any part of the impugned conduct fell outside the scope of the immunity and raised a cause of action with reasonable prospects of success, the appeal would be allowed and the appellant would be allowed to file a further pleading. However, it is not for this Court to speculate as to the mere possibility of a claim falling outside the area of the immunity; the case is to be decided on the basis of the specific material before the Court.
[11] The issue in dispute was, therefore, the scope of the immunity. Because the immunity does not extend to all activities undertaken by legal practitioners, even in relation to disputes which may give rise to litigation, it is necessary to understand the boundaries of the conduct complained of. Those boundaries are not to be determined as matters of fact, but by reference to the latest draft of a proposed statement of claim. Indeed, it should be emphasised that the assessment to be undertaken is based entirely upon the allegations contained in that document, none of which have been admitted and none of which have been found to have any factual foundation. They are to be understood, so far as they are referred to in these reasons, purely as allegations. The question to be determined by the Court is purely one of law, namely whether any of the allegations, if proved, would be capable of supporting a relevant cause of action.
His Honour then approached the allegations in the Statement of Claim to see if issues could be identified which did not involve re-agitation of the District Court trial and judgment - see at [33].
Basten JA concluded by saying:
[44] The foregoing analysis is based upon an assumption as to the accuracy of the allegations contained in the pleading which was put before this Court for the purpose of argument. That document, which was not before the primary judge, does not demonstrate that his decision to dismiss the proceedings generally was in error. Further, no findings are made or implied as to the truth or accuracy of the allegations.
It may be accepted that the parties in that case addressed on the basis that the question was whether the proposed pleading was capable of supporting a cause of action in negligence against the lawyers and that no factual or discretionary was said to arise - see at [15].
Further support for the view that it is, or may be, sufficient in an appropriate case to rely on the allegations made in the pleadings is to be found in the judgment of Hiley J in the Supreme Court of the Northern Territory in NT Pubco Pty Ltd v Strazdins [2014] NTSC 8 at [102]:
In my opinion in order for a court to decide whether the immunity applies in a particular case, the necessary starting point must be to identify the particular conduct which is alleged to give rise to the cause or causes of action against the lawyer - that is, the conduct that is said to have "led to a decision affecting the conduct of the case in court". This approach is important for several reasons:
(a) it helps one to identify and focus on the particular decision or decisions which are said to have affected the conduct of the case in court, rather than the way in which the particular allegations are formulated;
(b) it focuses attention upon the conduct alleged in the pleadings, rather than on the evidence that has been or might be adduced at trial;
(c) it leads to the conclusion that the immunity is not confined to any particular cause of action.
Hiley J relied for (a) and (b) on what was said by Gleeson CJ in Keefe v Marks (1989) 16 NSWLR 713. It is significant to note that Keefe v Marks was an appeal from an order striking out a Statement of Claim under the then equivalent of r 13.4(1)(b) UCPR. Gleeson CJ (with whom Meagher JA agreed) said (at 717-8):
The statement of claim is expressed in terms which evidence an understanding of the difficulties which might confront the claimant by reason of this immunity, and that no doubt accounts for the pleader's understandable attempt to focus attention upon "the conduct of pre-trial work". However, a reading of the statement of
claim as a whole, and of the particulars of the allegations in it, makes sufficiently clear the nature of the complaint which was being propounded against the opponent.
...
The substance of the complaint that was made against the barrister is, in my view, simple and clear. It is that, having been briefed to act as counsel for Mr Tehfe in his action for damages for personal injuries, he did not at any relevant time, either prior to the commencement of the hearing, or during the hearing, direct his mind to the desirability of making on his client's behalf a claim for interest or take the steps necessary to propound such a claim and that his neglect in that regard produced the result that Master Greenwood failed to award interest and the Court of Appeal declined to intervene. As a consequence, it is alleged, Mr Tehfe did not recover his full entitlement. That, it is claimed, gave rise to a liability on the part of the opponent to Mr Tehfe, and the claimant seeks contribution or indemnity based on the existence of that liability. The question is whether a claim of that nature is within the area of immunity to which reference has earlier been made. Whatever may be the answer to that question, it does not
appear to me that it could depend upon the detail of the evidence adduced at a hearing of the District Court action. Indeed, the relevant principle of immunity would be capricious in its operation if its application in a case such as the present were made to depend upon the precise history or circumstances of the communications and dealings between the barrister and his solicitor and lay client. A rule of law which is said to be based upon considerations of public policy should not depend for its practical operation upon chance. Furthermore, it does not seem to me that a plaintiff can circumvent the immunity, simply by constructing allegations of damage in a manner which attempts to relate the harm suffered as a consequence of a barrister's alleged negligence to that aspect of his conduct furthest removed from physically standing up and speaking in Court. The statement of claim is to be read as a whole, and there is no doubt about what it is the barrister is said to have done that was wrong, or what form of harm befell his client. The barrister's alleged negligence involved a continuing course of conduct, or inaction, which extended up until the conclusion of the hearing before Master Greenwood and manifested itself in a failure to make a claim for interest, and to apply for any necessary amendment to the pleadings in order to enable that claim to be pursued.
...
The substance of the allegation against the opponent is that he was negligent in the way in which he conducted Mr Tehfe's action, and the principle of immunity which applies in such a case cannot be circuvented by drawing fine distinctions between the preparation and the conduct of the case, or between the opponent's failure to advert to the matter of interest while he was in his Chambers and his failure to do so while he was in Court. [emphasis added]
In the present case the complaint is a clear and confined one. The allegations of breach are found in paragraphs 23, 25 and 26 of the Statement of Claim. All of those breaches concern the advice given, and the conduct of the solicitors, at the mediation. Reliance on the advice is pleaded in paragraph 27. Causation is pleaded in paragraph 29. The loss and damage particularised in paragraph 30 is expressly related to the settlement and the judgment entered.
The Plaintiff read his affidavit of 15 April 2014 on the hearing of the Motion. That affidavit sets out in detail in paragraphs 29 to 47 the course of events at the mediation. Paragraphs 50 to 62 set out the course of events leading to the losses claimed by the Plaintiff.
On the basis of what was said in Keefe v Marks, Bott v Carter, Donnellan v Woodland, especially by Basten JA, and Pubco, it would be sufficient to have regard only to the pleading in the Statement of Claim. In the present case the negligence relied upon is said to have been confined entirely to the mediation, the advice there given, and the solicitors' acts and omissions flowing from that advice. The case is an appropriate one to deal with on a summary dismissal application.
However, I also have the evidence the Plaintiff will give to support and make out those allegations. I work on the assumption that all of that evidence will be accepted, as will the allegations in the Statement of Claim. A determination of the issue of advocates immunity cannot "depend upon the detail of the evidence adduced at the ... hearing" assuming that there is more to come. In any event, the Plaintiff was not able to point to any other facts or issues about which evidence might be adduced at a trial.
The position in Symonds v Vass and Attwells was different. In Symonds v Vass the precise breaches by the solicitors were not clearly found or identified. More particularly, it was not clear which breaches were causative of what loss in circumstances where some of the breaches found were said not to be within the immunity - see at [13], [20] - [22], and [43] - [44].
In Attwells Harrison J was asked to determine the separate question of whether the claim was entirely defeated by advocate's immunity on the basis of a statement of agreed facts. His Honour, for reasons set out at [27] - [28], [33] - [35] and [37] made clear that the material he had available was insufficient for determining the matter.
Neither of those decisions stands as authority for any principle that in all cases it is inappropriate to reach a view on the immunity in advance of the trial. The need for more material in each arose from the particular factual substratum.
The Plaintiff's further submission that proscribed behaviour, such as coercion of a client, falls outside the immunity, is said to derive from cases such as Studer v Boettcher and Harvey v Phillips (1956) 95 CLR 235 at 242. In those cases it was made clear that it is no part of the function of a lawyer to coerce the client into a settlement. Such conduct might result in a finding that the lawyer had engaged in unsatisfactory professional conduct or worse.
However, the authorities do not support a conclusion that such conduct takes the matter outside the doctrine of advocates immunity. Indeed, the position is to the contrary.
In D'Orta, the joint judgment said:
[39] From as early as the 16th century, a disappointed litigant could not sue those who had given evidence in the case. That is, the disappointed litigant could not seek to demonstrate that witnesses had given, or parties had suborned, perjured evidence or that witnesses or parties had conspired together to injure that litigant. Nor could the disappointed litigant seek to demonstrate that what was said by the witnesses had defamed that litigant. All such actions were precluded or answered by an absolute privilege. It mattered not how the action was framed. And it mattered not whether the disappointed litigant alleged that the witness had acted deliberately or maliciously. No action lay, or now lies, against a witness for what is said or done in court. It does not matter whether what is done is alleged to have been done negligently or even done deliberately and maliciously with the intention that it harm the person who would complain of it. The witness is immune from suit and the immunity extends to preparatory steps. That the immunity must be pleaded as a defence makes it nonetheless an immunity from suit. As the whole Court said in Lange v Australian Broadcasting Corporation:
"The result [of the defence] is to confer upon defendants, who choose to plead and establish an appropriate defence, an immunity to action brought against them." (footnote omitted)
...
[41] Statements can be found in the cases that the immunity of witnesses serves to encourage "freedom of expression" or "freedom of speech" so that the court will have full information about the issues in the case. Statements also can be found that place the immunity of those who participate in court proceedings on the desirability of avoiding baseless actions being brought against those who were merely discharging their duty, but these considerations are advanced in answer to another kind of argument. As Fry LJ said in Munster v Lamb:
"Why is it that a judge who disgraces his office, and speaks from the bench words of defamation, falsely and maliciously, and without reasonable or probable cause, is not liable to an action? Is not such conduct of the worst description, and does it not produce great injury to the person affected by it? Why should a witness be able to avail himself of his position in the box and to make without fear of civil consequences a false statement, which in many cases is perjured, and which is malicious and affects the character of another?"
The answer proffered (that it is more necessary to prevent the baseless action than provide for the kind of case described) may well suffice to meet the point. But the deeper consideration that lies beneath the principle is that determining whether the complaint made is baseless or not requires relitigation of the matter out of which the complaint arises.
In Young v Hones (No.2) [2013] NSWSC 1429 an issue arose concerning whether advocate's immunity was an answer to a pleading of breach of fiduciary duty and whether, if a lawyer did not act in good faith, advocate's immunity was a defence. Garling J said:
[171] As I have declined to permit the plaintiff to file the proposed Amended Statement of Claim, the issue of whether the advocate's immunity responds to a pleading of a breach of fiduciary duty does not strictly arise. However, counsel for the plaintiff did submit that the immunity only extends to circumstances where the solicitor or barrister is acting in good faith. This submission is founded on Swinfen v Lord Chelmsford (1860) 5 H&N 89; 157 E.R. 1436.
[172] The only judgment in which this aspect of Swinfen's case has been commented upon, that counsel drew attention to, is that of Kennedy J in Del Borrello v Friedmanand Lurie (A firm) [2001] WASCA 348. Neither Wallwark J, nor Murray J, dealt with the question in their judgments. The comments by Kennedy J were obiter because he was satisfied that factually there was no suggestion of bad faith or dishonesty. Kennedy J's acceptance of Swinfen's case was not accompanied by any reasons or elaboration.
[173] Prior to Swinfen's case, Lord Kenyon had held that gross negligence on the part of a barrister attracted the advocate's immunity: Fell v Brown (1791) 1 Peake 131; 170 ER 104.
[174] However, the judgment in Del Borrello preceded D'Orta. In light of the clear statement that the rationale for advocate's immunity is the principle of finality of litigation, and the avoidance of re-litigation of a "skewed and limited kind", it seems to me that there is no basis to confine the availability of the advocate's immunity to only circumstances where the lawyers are found to have acted in good faith. Such a restriction would be inconsistent with immunities granted to witnesses and judges: D'Orta at [37]-[42].
[175] Accordingly, even if the proposed Amended Statement of Claim had been permitted to be filed, I would have found that the pleading of a breach of fiduciary duty was defeated by the pleading of advocate's immunity.
In Goddard Elliott v Fritsch [2012] VSC 87 Bell J held that advocate's immunity applied even where the client did not have the mental capacity to instruct the lawyers. The lawyers were said to have procured the client to enter into a grossly unfair and inappropriate settlement of Family Court property proceedings. This was said to be a breach of their fiduciary duty to the client. Bell J held that the application of the immunity is determined by the substance of the wrong done and not by how it is characterised. His Honour concluded at [833] that the test in D'Orta resulted in the immunity applying even where the client lacked mental capacity provided that the negligence satisfied the test of occurring in the course of work leading to decisions about, or intimately connected with, the conduct of the case in court (at [832]).
Hiley J in Pubco followed Goddard Elliott in holding that characterising conduct as breach of fiduciary duty did not take the matter outside the immunity.
Even assuming particulars (h) and (i) were proved, the conduct involved was what led to the making of the settlement and the entry of the judgment. It falls within the immunity.
Conclusion
In my opinion, taking the allegations at their highest, the conduct complained of was work leading to the conduct of the case in court. Advice leading to a settlement falls within the immunity. Applying the test in General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125, the Defendants have demonstrated that the Plaintiff does not have a reasonable cause of action against the Defendants.
I make the following orders:
1. The proceedings are dismissed pursuant to r 13.4 UCPR;
2. The Plaintiff is to pay the costs of the proceedings.
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Amendments
17 December 2015 - Name of party corrected from Rushbourne to Rusbourne
Decision last updated: 17 December 2015
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