Cairncross v Anderson t/as ERA Legal [2016] NSWSC 1326 | Case summary

Cairncross v Anderson t/as ERA Legal [2016] NSWSC 1326 | Case summary | Zoe

Judgment Introduction

On 17 March 2016, I delivered a judgment in which I explained why I stood over part-heard a notice of motion filed on 2 September 2015 by the defendant, ERA Legal: see Cairncross v Anderson t/as ERA Legal [2016] NSWSC 258.
The notice of motion sought to have the claim of the plaintiff, Ms Tiffany Cairncross, struck out, on the basis that it is doomed to failure, because of the operation of the advocate's immunity from suit (the immunity). I declined to determine the motion at that stage because special leave had been granted by the High Court of Australia in Attwells v Jackson Lalic Lawyers Pty Limited [2015] HCATrans 176, oral submissions had concluded, and the Court had reserved judgment (see Attwells v Jackson Lalic Lawyers Pty Limited [2016] HCATrans 48). I believed it was possible that the immunity could be clarified, reformulated, or even abolished by the ultimate appellate court of this country.
After the judgment of the High Court was handed down on 4 May 2016 in Attwells v Jackson Lalic Lawyers Pty Limited (2016) 90 ALJR 572; [2016] HCA 16 (Attwells), I received further very helpful written and oral submissions from the parties directed specifically towards the effect of that judgment upon my determination. Background
Reference should be made to my first judgment for matters of background, especially at [3]-[7].
It suffices to repeat that the amended statement of claim of Ms Cairncross of 29 June 2015 asserts that ERA Legal was negligent towards her when she was its client, and embroiled in a commercial dispute. The amended statement of claim particularises a number of alleged failings on the part of ERA Legal. As summarised by senior counsel for Ms Cairncross in his written submissions of 8 June 2016 (filed before the second hearing before me), the nub of the claim of Ms Cairncross is the following.
First, ERA Legal advised Ms Cairncross to stop making repayments on a loan, and failed to advise her of the adverse financial consequences of ceasing those repayments.
Secondly, ERA Legal failed to advise Ms Cairncross that she had "Linked Credit Provider Claims", a claim said to be available to her and possessing reasonable prospects of success.
There was no dispute on the part of Ms Cairncross that ERA Legal did indeed appear in court on her behalf as part of defending her interests in the dispute. But it is immediately noteworthy that those appearances were extremely limited. They were as follows.
First, ERA Legal appeared for her in proceedings commenced in this Court on 7 December 2009 (the NSW proceedings). Ms Cairncross was encompassed within the large represented class in those proceedings. The defendant was Bendigo and Adelaide Bank Limited, which was the financial institution that had been assigned and currently held the loan of Ms Cairncross.
As originally formulated, the orders sought in those proceedings may be summarised as follows: that the defendant be restrained from reporting any of the represented class to a credit reference association (and an interim order to the same effect); a declaration that the purported loan agreements were not binding, were void or were unenforceable; orders pursuant to statute that the loan agreements be set aside or declared unenforceable; damages pursuant to statute; and costs.
Subsequently, as the claim proceeded, the orders sought were reformulated in an amended summons of 19 March 2010. They may be summarised as follows: that the defendant be restrained from reporting any of the represented class to a credit reference association (and an interim order to the same effect); a declaration that the defendant acted unconscionably in contravention of statute; and costs.
On 6 April 2010, an "interim settlement agreement" was reached, and this Court made orders of the same date reflecting that agreement. Those orders referred to an undertaking by the defendant that it would not take action to place any of the members of the represented class on a credit list until either two weeks after the conclusion of a hearing of proceedings against the plaintiffs (including Ms Cairncross) for recovery of debt, or further order of the Court, whichever was the earlier. There were also orders in relation to compensation if the primary order was breached; an order that the matter be stood over; and various mechanistic orders.
Ultimately, on 18 June 2012 the proceedings were discontinued by consent. The following orders were made by McDougall J on that occasion: 1. That the Court gives leave to Mr Andrew Richard Clayton to discontinue these proceedings on behalf of himself and all Group Members. 2. That the proceedings be discontinued in their entirety. 3. That each party bear his/her/its own costs of the proceedings. The Court Notes that the Defendant, without admission, gives the following undertaking to each of the persons and entitles listed in the attached Schedule A: Without Admission, Bendigo and Adelaide Bank (BEN) undertakes to each individual or entity listed in Schedule A…(each a Borrower) that it will not, whether by its servants or agents: (a) credit list with any credit reporting agency (Agency); (b) cause to be placed on a credit list maintained by any Agency; (c) authorise, encourage or facilitate any person, including an Agency, to place on a credit list; any Borrower in respect of that Borrower's default on a loan used by the Borrower to invest in a Great Southern managed investment scheme, until the earlier of: (i) the conclusion of the representative proceeding in respect of that Great Southern managed investment scheme in which the Borrower is a group member (a list of applicable representative proceedings is Schedule B…), and only then if the Court does not declare that the relevant loan is unenforceable; or (ii) the conclusion of debt recovery proceedings taken against the Borrower in respect of that loan, and only then if the Court determines that the relevant debt is payable.
The name of Ms Cairncross appeared in Schedule A. Proceedings in the Supreme Court of Victoria that I shall discuss in a moment appeared in Schedule B.
Because the proceedings had been brought as representative proceedings, pursuant to s 173 of the Civil Procedure Act 2005 (NSW), the discontinuance of the proceedings required the approval of his Honour. That approval was duly granted on that day.
The second appearance by ERA Legal for Ms Cairncross was as follows. It appeared for Ms Cairncross in proceedings in the Supreme Court of Victoria that had been commenced on 13 September 2011 (the Victorian proceedings). In the Victorian proceedings, Ms Cairncross was not a party to the proceedings. Rather, she was a group member of the class identified in those proceedings, which were brought pursuant to Pt 4A of the Supreme Court Act 1986 (Vic). It is of central significance that ERA Legal was not the solicitor on the record in those proceedings: an entirely separate firm appeared in the Supreme Court of Victoria and instructed counsel.
ERA Legal did, however, play a "third party" role in those proceedings on behalf of a subset of group members, including Ms Cairncross. That was by way of appearing for an unspecified time period in 2014 on behalf of Ms Cairncross to resist settlement of the proceedings, pursuant to orders made in the Supreme Court of Victoria allowing for group members to file written notices of objection and make submissions. Croft J refused the submissions made by ERA Legal, and in due course approved the settlement: see Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed)(in liquidation) [2014] VSC 516 at [90]-[91].
Those two appearances - appearing in the proceedings in this Court that commenced on 7 December 2009 and concluded by way of discontinuance by consent on 18 June 2012, and appearing for an unspecified time in 2014 in order to resist settlement of a class action in Victoria - are the entirety of the appearances in court undertaken by ERA Legal on behalf of Ms Cairncross. Submissions of ERA Legal
In support of its motion, ERA Legal submitted that the claim must fail because ERA Legal has the benefit of the immunity.
Counsel submitted that the claim of Ms Cairncross is in truth an impugning of the "overall litigation strategy" adopted by ERA Legal. As can be seen, the claim includes the assertion that ERA Legal advised Ms Cairncross to stop making repayments to the lender, with very adverse results for her; ERA Legal submitted that all of that - the provision of the advice, its acceptance and its consequences - should be seen by me as part of that strategy.
It was submitted that, despite the absence of any evidence filed by ERA Legal, or indeed a defence to the claim of Ms Cairncross, I would readily infer that the discontinuance of the NSW proceedings in June 2012 was because of the commencement of the Victorian proceedings in September 2011, and that the forensic history must be analysed globally.
Counsel also submitted that the discontinuance of the NSW proceedings is in a special category, explicitly identified in Attwells, for the purposes of the immunity. That is because statute required that that discontinuance meet the approval of a judge of this Court.
It was accepted that ERA Legal was not the solicitor on the record in the Victorian proceedings, and played no role in the presentation of that case other than preparing evidence, written submissions and oral submissions in the discrete process of resisting a proposed settlement of them. But it was said that that was not fatal to the operation of the immunity, so long as the necessary connection between the conduct in court of ERA Legal and its alleged failings out of court were established.
In short, it was said that the claim of Ms Cairncross is captured by the immunity, is therefore doomed to fail, and therefore should be struck out. Submissions on behalf of Ms Cairncross
Ms Cairncross accepted that Attwells makes it clear that the immunity remains a part of the common law of Australia. She also accepted that, in some circumstances, the immunity can extend to the actions of an advocate outside court.
Her counsel submitted that, if the alleged failings of ERA Legal were sufficiently connected with the appearance work undertaken by it, then the immunity may have a role to play in resistance to her claim. That may include, for example, negligent advice or preparation with regard to the appearance resisting the settlement in the Victorian proceedings, and with regard to any appearances in the NSW proceedings that led to a judicial determination.
Senior counsel submitted, however, that nothing in her claim of negligence against ERA Legal possesses a sufficient connection with those appearances by ERA Legal that would lead to the immunity arising. Indeed, he submitted that, to the extent that ERA Legal is reduced to asserting that advice was given, and things done or not done, as part of a purported "overall litigation strategy", that submission of itself demonstrates that the necessary nexus does not exist.
In short, the submission on her behalf was that, on the evidence before me, I would certainly not be satisfied that the operation of the immunity means that her claim must fail. Determination
It was agreed between the parties that I should take the entirely orthodox approach to the motion spoken of in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69 and many subsequent cases; namely, I should take the case for Ms Cairncross at its highest, and only grant the motion if affirmatively satisfied that her claim is doomed to failure.
Turning to my determination, it is convenient first to set out a number of principles that I derive from the plurality judgment in Attwells. Basal principles
First, the existence of the immunity in Australia is confirmed.
Secondly, the immunity protects an advocate involved in the conduct of litigation in court from suit arising from that conduct: Attwells at [2].
Thirdly, the immunity continues to extend to work done out of court by an advocate, but only to work "which leads to a decision affecting the conduct of the case in court": Attwells at [2]; Giannarelli v Wraith (1988) 165 CLR 543; [1988] HCA 52 at [21]. In other words, it remains the case that no sharp point of distinction is drawn between the work of an advocate inside and outside the courtroom.
Fourthly, however, the extension of the immunity to work done outside the courtroom is strictly limited. In particular, the immunity does not extend "to all work in any way connected to litigation": Attwells at [2]. As Mason CJ said in Giannarelli v Wraith at [21]: Preparation of a case out of court cannot be divorced from presentation in court. The two are inextricably interwoven so that the immunity must extend to work done out of court which leads to a decision affecting the conduct of the case in court. But to take the immunity any further would entail a risk of taking the protection beyond the boundaries of the public policy considerations which sustain the immunity. I would agree with McCarthy P in Rees v Sinclair [footnote omitted] 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."
In D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12 at [86], the plurality of the High Court slightly re-expressed that test as follows: [86] … there is no reason to depart from the test described in Giannarelli as work done in court or "work done out of court which leads to a decision affecting the conduct of the case in court" [footnote omitted] or … "work intimately connected with" work in a court. (We do not consider the two statements of the test differ in any significant way.)
Fifthly, for the immunity to apply to work done out of court, the intimate connection that must exist between the work done in court and the work done out of court must be "a functional connection between the advocate's work and the judge's decision": Attwells at [5]; also see Attwells at [49].
Sixthly, mere connection, whether chronological or otherwise, between work done out of court by an advocate and work done in court, without the requisite functionality of connection or intimacy of connection, will not attract the immunity: Attwells at [49].
Seventhly, the immunity is confined to work done in or out of court that plays a role in the ultimate judicial determination of the litigation: Attwells at [5] and [49]. The rationale underpinning the immunity is founded upon finality of judicial determinations in the sense of making findings of fact or law, and quelling controversies: Attwells at [32]-[35].
Eighthly, for that reason, work done in or out of court resulting in consent orders (and analogous outcomes) does not generally attract the immunity: Attwells at [59].
Ninthly, at [61] of its judgment, the plurality left open the question of the attraction of the immunity to certain kinds of "consent" orders. It can be seen that proceedings in the nature of those concluded before McDougall J fall within that category. The entirety of that paragraph is as follows, with footnotes omitted: [61] It may be acknowledged that there are many cases where, although the parties have agreed upon the terms of the order which a court is asked to make, the making of the order itself requires the resolution of issues by the exercise of judicial power. Examples include where representative proceedings are settled, or where proceedings on behalf of a person under a legal incapacity are to be compromised, or where agreements are made in relation to proceedings under ss 86F, 87 and 87A of the Native Title Act 1993 (Cth). Other examples include the exercise of the judicial discretion to allow an agreement to amend a patent granted under the Patents Act 1900 (Cth), and the compromise of certain debts under ss 477(2A) and 477(2B) of the Corporations Act 2001 (Cth). It is not necessary to consider such cases here.
Applying all of those principles to an example that I gave to both counsel during discussion between Bench and Bar table, my understanding of Attwells is that an advocate who appeared in a criminal trial could not be sued by the convicted accused for negligently cross-examining a DNA evidence expert called by the prosecution who gave evidence inculpating the accused. Nor could the advocate be sued for negligently undertaking or failing to undertake work intimately and functionally connected with that cross-examination, such as failing to advise the solicitor for the applicant to qualify a DNA expert to advise the defence legal team about the subject generally, or perhaps by failing to read enough books about DNA evidence before the cross-examination to permit the advocate to undertake the cross-examination effectively. But the immunity would not extend beyond such work undertaken out of court to other work not functionally and intimately connected with the cross-examination. The foregoing is merely a hypothetical example of the very limited extent to which I accept the immunity extends past the courtroom door and into one's Chambers or office.
To my mind, Attwells has firmly confirmed the circumscribed role that the immunity has to play with regard to work done by an advocate out of court. Application of principle to facts here
Turning first to the role of ERA Legal in the Victorian proceedings, no part of the claim of Ms Cairncross asserts that ERA Legal was negligent in its appearance in court on behalf of Ms Cairncross in resistance to the settlement of those proceedings. Nor does the claim assert that ERA Legal negligently did work out of court that was functionally and intimately bound up with that appearance.
Because no part of the claim of Ms Cairncross is founded upon that appearance or work done out of court that was sufficiently connected with it, the immunity does not arise founded upon that appearance.
Secondly, the simple fact is that ERA Legal was not the solicitor for Ms Cairncross in any sense in the Victorian proceedings other than by way of that highly limited appearance. As I have emphasised, that was the only appearance in the Victorian proceedings made by ERA Legal.
It follows that the role played by ERA Legal in the Victorian proceedings cannot operate to permit the immunity to defeat the claim made by Ms Cairncross.
As for the NSW proceedings, it is true that prima facie they fall within the special category identified by the plurality of the High Court at [61] of Attwells. And it is also true that the law has been left open in that regard by the ultimate appellate court of this country. But that state of uncertainty powerfully militates against me finding that the role of ERA Legal in the NSW proceedings means that the claim of Ms Cairncross is doomed to failure in whole or in part. Indeed, as senior counsel then appearing for Ms Cairncross at the first hearing before me submitted, any uncertainty in the law about the immunity powerfully argues for rejection of the motion, for the reason that I cannot be satisfied that her claim is doomed to fail unless the law is perfectly clear to me.
Thirdly, even accepting (for the sake of argument only) that all of the claims made by Ms Cairncross against ERA Legal can be characterised as pertaining to things done or not done by ERA Legal as part of its "overall litigation strategy", I do not accept that that characterisation assists ERA Legal. As I have sought to demonstrate by distillation of the principles contained in the plurality judgment in Attwells, work done out of court must be functionally and intimately connected with a judicial determination for the immunity to arise. To my mind, it cannot be said that advice allegedly given to a client to discontinue repayment of a loan has that connection; quite the contrary: I interpret what the High Court has said about the very limited extent of the immunity beyond the confines of the courtroom as being to the opposite effect.
To my mind, on the material placed before me, and contrary to the orders sought in the motion, having had the benefit of the elucidation of principle in Attwells, one could perhaps come to the affirmative view that the immunity does not protect any aspect of the claim of Ms Cairncross. But that is not, of course, the determination that I am required to make. Instead, I am simply required to ask myself whether I am satisfied that the immunity has the effect that the claim of Ms Cairncross is doomed to failure. I am not satisfied of that proposition. Accordingly, I propose to dismiss the motion. Costs
The focus at the two hearings was very much upon the parameters of the immunity, both before and after their clarification in Attwells. Senior counsel then appearing for Ms Cairncross at the first hearing indicated that a claim for indemnity costs would be maintained, as would a claim that costs would be payable forthwith. The former proposition was based upon the alleged unarguability of the submissions of ERA Legal; the latter upon the fact that this litigation will take quite some time to resolve, and that Ms Cairncross should not be kept out of her substantial costs of this motion for an extended period of time.
Due to the focus on the substantive question by all counsel involved in this matter, I do not believe that I should resolve the question of costs peremptorily without further assistance from the parties, especially in light of the proposition that indemnity costs should be ordered.
I think that the way forward is for me to reserve the question of costs, but invite no more than five pages of written submissions from each party on that question, to be supplied within two weeks of today, unless agreement about costs is reached between the parties. If either party indicates to my Associate discomfort with me resolving the question in Chambers, a mutually convenient date will need to be found for a short hearing about costs of no more than 30 minutes. I shall not make formal orders with regard to all of that, but rather will rely upon the good sense of highly experienced counsel.
In the meantime, the progress of the matter should not be delayed by that pending question of costs, and I propose that the matter return to the Registrar one week from today. Orders
I make the following orders: 1. The notice of motion of the defendant of 2 September 2015 is dismissed. 2. Costs reserved. 3. The matter is listed for directions before the Common Law Registrar at 9 AM on 27 September 2016.

Cairncross v Anderson t/as ERA Legal

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