Liability of principal for acts of solicitor
87 It is useful to have regard to the conceptual areas relevant to this issue. The relationship between a principal and a solicitor potentially attracts both the application of the law of agency as well as the tortious law of vicarious liability. It may also attract the application of contract law and of statutory provisions. It also raises the question whether a solicitor, as an officer of the court, is subject to the application of any branch of the law on the same basis as others who are not officers of the Court.
88 Vicarious liability arising in tort has the consequence that if a servant commits a tort in the course of his employment, the employer is liable regardless of whether he himself has committed a tort: "every act which is done by a servant in the course of his duty is regarded as done by his master's orders, and consequently is the same as if it were the master's own act…": Bartonshill Coal Co v McGuire (1858) 3 Macq 300 at 306. There is no such liability in the case of an independent contractor: see generally R P Balkin and J L R Davis, Law of Torts (Butterworths, 1991) pp 791-798.
89 There may be cases where vicarious liability can also arise where the status of an employee is irrelevant. F Trindade and P Cane, The Law of Torts in Australia (Oxford University Press, 1993) pp 708‑714 list categories of strict liability, employers' duties, occupiers hospitals, bailees, property developers, public authorities and dangerous activities as areas within such cases can arise. As is pointed out in that text (at 715) the concept of an agent in the law of tort, where it is used to indicate one person acting with the authority of another so that the agent may be either a servant or an independent contractor or neither, overlaps with the concepts relevant to the determination of vicarious liability. The basic rule there stated is that where the liability is sought to be attached to an employer, the notion of agency is useful only if the act was outside the scope of the servant's employment. Where the liability is sought to be attached to an independent contractor, the notion of agency might be used to create exceptions to the basic rule of no liability: see Trindade and Cane at 715. Balkin and Davis at 798, however, contend that the category of agent has no relevance in the context of vicarious liability and that the law of torts is concerned only to know in any particular case whether or not the person seeking to fix the liability on another is a servant, although the authors accept that the tort of deceit affords an important exception.
90 In Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Co‑operative Insurance Co of Australia Ltd (1931) 46 CLR 41 the High Court by majority held that a canvasser and agent under an agreement who had made defamatory statements concerning another assurance company had acted as a representative of the appellant company so that that company should be considered as conducting the negotiations in person and was liable for the slanders uttered by the agent. Dixon J at 48 accepted that in most cases in which a tort is committed in the course of the performance of work for the benefit of another person, that person cannot be vicariously responsible if the actual tortfeasor is not his servant and he has not directly authorised the doing of the act which amounts to a tort. However he continued (at 48‑49):
"But a difficulty arises when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity. In this very case the "agent" has authority to obtain proposals for and on behalf of the appellant;… but I think that in performing these services for the Company, he does not act independently, but as a representative of the Company, which accordingly must be considered as itself conducting the negotiation in his person. The rule which imposes liability upon a master for the wrongs of his servant committed in the course of his employment is commonly regarded as part of the law of agency: indeed, in our case-law the terms principal and agent are employed more often than not although the matter in hand arises upon the relation of master and servant. But there is, I believe, no case which distinctly decides that a principal is liable generally for wrongful acts which he did not directly authorize, committed in the course of carrying out his agency by an agent who is not the principal servant or partner, except, perhaps, in some special relations, such as solicitor and client, and then within limitations." (Emphasis added).
It is against this background that the submissions for the parties require consideration.
91 For the appellants it is submitted that it has been suggested in a decision of this Court that a solicitor's acts, omissions or state of mind cannot be attributed to the solicitor's client so as to amount to contempt: Re Modern Wood Craft Pty Ltd (In Liquidation) (1997) 75 FCR 245 at 253. In that case the liquidator of a company sought a finding of contempt of the court by officers of the company in respect of their failure under the Corporations Law to file affidavits about the company's examinable affairs within the period ordered. This had occurred in circumstances where the officers had received legal advice that they were not obliged to file the affidavits. Lindgren J at 253 stated that a finding of contempt was to be made in relation to the alleged contemnors themselves who must be shown to have failed to comply without reasonable excuse. He did not think that for that purpose the conduct of the solicitors was to be attributed to the officers. That point, however, is not developed by further reference to authority and was apparently not argued more fully.
92 Support is also sought to be found for that view in The Swan Brewery Co Pty Ltd v Newman and Gwilym (unreported, Supreme Court of Western Australia, Murray J, 2 September 1998.) That was a case relating to a liquidator and involved the application of the requisite standard of proof beyond reasonable doubt to the circumstances of the case. I find it of no assistance to the resolution of this appeal.
93 It is then said for the appellants that the approach taken by Lindgren J in Re Modern Wood Craft was consistent with decisions in which, absent the employer/employee relationship, the courts have refused to attribute the contempt of A to B where B is a party who has a legal relationship with A. Cited in support is Hayden where the NSW Court of Appeal, as previously stated, did not consider the Minister was liable in respect of a subpoena of which he had no knowledge directed to the "proper officer".
94 For the appellants it is also said that the decision of the House of Lords in Heatons is not authority for the proposition that a solicitor's omissions which breach the court's orders are a contempt by the solicitor's clients. In Heatons it was held that shop stewards representing dock workers had implied authority to take industrial action so that the Industrial Court was fully entitled to conclude the union, through those stewards, had been guilty of an unfair industrial practice and to issue orders restraining its continuance. In the course of his speech delivering the joint opinion of their Lordships, Lord Wilberforce said (at 99-100):
"No new development is involved in the law relating to the responsibility of a master or principal for the act of a servant or agent. In each case the test to be applied is the same: was the servant or agent acting on behalf of, and within the scope of the authority conferred by, the master or principal? Hewitt v Bonvin [1940] 1 K.B. 188 and Launchbury v Morgans, post, p. 127. Usually a servant, as compared with an agent, has a wider authority because his employment is more permanent and he has a larger range of duties as he may have to exercise discretion in dealing with a series of situations as they arise. The agent in an ordinary case is engaged to perform a particular task on a particular occasion and has authority to do whatever is required for that purpose but has no general authority.
…
But there are cases in which an agent who is not a servant does have authority of considerable generality. He may be elected or appointed to some office or post for a substantial period and he may have to perform acts of several classes on behalf of the principal and he may have to exercise a discretion in dealing with a series of situations as they arise. The position of such an agent and the scope of his authority are very similar to those of a servant.
The question in this appeal is whether the respondents are liable for their shop stewards' acts which constitute unfair industrial practices. Liability for tortious acts is outside the scope of this appeal: it may be a closely connected subject, but what is said here does not necessarily apply to it, because it is not under consideration."
I accept the further submissions for the appellants that Heatons case is not authority which assists here. The shop stewards in Heatons were for practical purposes part of the union and taken to be under its control. It was a case concerned with agents and not with servants. But the same principle was applied by Lord Wilberforce at 99-100 to both. It was on that basis held in the later case of Director-General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456 that disobedience to an injunction by the servants of a company, acting in the course of their employment, amounted to contempt of court by the employing company unless the conduct of the employees could be described as merely casual or accidental and unintentional. That Heatons and Pioneer Concrete considered the application of the relevant principles to corporations is confirmed for example by reference to Z Bank v D One & Ors [1994] 1 Lloyds Law Reports 656 at 661.
95 For the appellants it is also contended that as a matter of legal policy there is no point in extending the law so as to impose liability for contempt upon a solicitor's innocent principal. It is sufficient, it is said, that the punishment or the ability to punish the defaulting solicitor vindicates the deponent's rights as well as the Court's authority. Additionally, it is submitted that because a solicitor is subject to professional sanctions, the imposition of a sanction on an innocent client does nothing to avoid the risk of repetition of non-compliance by lawyers.
96 The case for the appellants refers also to P S Atiyah "Vicarious Liability in the Law of Torts" (Butterworths, 1967) p 142 where the view is expressed that this type of vicarious liability is anomalous and ought not to be extended. At 140 the author expresses the view that attempts to hold a client vicariously liable for the acts of his solicitor in different sorts of cases have rarely met with success. The text is also a useful source of authorities relating to vicarious liability arising in respect of solicitors.
97 For the moving parties it is contended that it would be hard on them to know what went on as between the solicitor and the clients. Consequently it is submitted for them that there are sound reasons of legal policy why they should be able to hold the principals liable and not be put to an election.
98 Furthermore, it is submitted that corporate parties can only act through a solicitor. Consequently it is said the relationship between the corporation and the solicitor is akin to that recognised in Heatons and Pioneer Concrete in relation to corporations. This submission is supported by reference to the finding of the primary judge that the confidentiality order was made as against the parties and not only against the solicitor. I have already distinguished Heatons case.
99 Heatons case brings with it particular difficulties due to the wide meaning given to the term agent - cf Colonial Mutual Life at 50 - and the unclear basis on which the law of agency applies in this field. As recognised by Dixon J in Colonial Mutual at 49, solicitors stand in a special and particular relationship to their principal particularly because of the duties which they owe as an officer of the Court. It is appropriate in my view, in the absence of some more general clarification of the application of the conceptual streams to which I have referred, to resolve this issue of the appeal, if possible, by reference to decided cases on vicarious liability and/or agency so far as it applies specifically in relation to solicitors.
100 Examination of the cases cited in Atiyah show the following, as the examination of the text itself makes apparent. Liability by a client for the acts of a solicitor has been accepted from early times where the solicitor, in the course of issuing process on behalf of that client, has created a liability to a third party by reasoning of some illegality. The reasons for judgement in Jarmain v Hooper (1843) 6 M & G 827 state the principles and some authorities in the following manner:
"As to the defendant Heenan, the only question in his case is, whether he is bound by the act of his attorney, in giving the directions to the sheriff to take the goods of the plaintiff. The attorney has the general conduct of the cause; he is the only person with whom the sheriff has communication: and, in taking a step essentially necessary for the benefit of the client, that is, for the obtaining the fruit of his judgment, we think he cannot be held to have acted beyond his authority, though he has miscarried in its execution. And, when it is argued that he cannot be his agent in giving false information, the answer is, that, if his agent to do the particular act, the client must stand to the consequences if he act inadvertently or ignorantly; as in Parsons v Lloyd (3 Wils, 341), where trespass was held maintainable against the client, for causing the plaintiff to be arrested under a writ which was afterwards set aside for irregularity. It was argued, in that case, that suing out the writ was the immediate act of the attorney, that he had not been retained to sue out a void or an irregular writ, and that it was therefore not within the scope of his authority. But it was answered by De Grey C.J., that "the act of the attorney is the act of his client;" and by Gould J., "the plaintiff should have employed a more skilful and diligent attorney; for the act of the attorney, in point of law, is the act of the party, his client". And see McManus v Crickett, 1 East, 106; Croft v Alison, 4 B. & Ald. 590; Gregory v Piper, 9 B. & C. 591, 4 Mann. & Ryl 500; Lyons v Martin, 8 A. & E. 512, 3 N. & P. 509; Attorney General v Siddon, 1 Tyrwh. 41, 1 C. & J. 220."
In Collette v Foster (1857) 2 H & N 356 Baron Watson said:
"I have always understood, that where a party employs an attorney, and judgment is obtained and execution issued, and that execution set aside on the ground of irregularity, then the client is liable for any act of trespass under that process. The writ is a justification to the officer but not to the party. The attorney who has gone beyond his duty becomes responsible with his client. An attorney is a peculiar kind of agent; in the Court he is put in the place and stead of the client, and is authorized to take proceedings on his behalf; but the client, who rarely knows what proceedings the attorney takes, is responsible. This principle has been so long settled and laid down in the books that I do not wish it to be understood that I entertain the slightest doubt upon this subject. …"
101 In Smith v Keal [1882] 9 QB D 340 the Court of Appeal distinguished Jarmain v Hooper on the ground that it was not within the scope of the implied authority of a solicitor of a judgment creditor issuing a fi fa to direct the sheriff to seize particular goods. In the course of so doing however Jessel MR said:
"In the first place it is clear that on principle a man is liable for another's tortious act if he expressly directs him to do it, or if he employs that other person as his agent, and the act complained of is within the scope of the agent's authority. I agree that the Court ought to be very careful how it extends the doctrine "respondent superior". It has been carried in our law very far indeed. I think quite far enough. If I had to enact a law upon the subject, I doubt whether I should carry it so far. What we have to find out is what is the extent of the authority of a solicitor who is employed by a plaintiff in an action. Now it is clear that it is no part of his duty to interfere with the sheriff in the performance of his duty. …"
Atiyah at 140 states "it is still very questionable whether there is any such general principle as Jessel, M.R. here enunciated." Other cases, however, have treated the particular case of vicarious liability as not in question and accepted it as resting on the principle of agency: Morris v Salberg [1889] 22 QB D 614; Lee v Rumilly (1891) 55 JP 519; Clissold v Cratchley [1910] 2 KB 244. Reference to the judgment of Lord Esher MR in Morris v Salberg at 619 shows that both in that case and in Smith v Keal the Court of Appeal had declined to overrule Jarmain v Hooper.
102 The cases previously referred to have all addressed instances relating to the issue of legal process, although the references as to principle in them are more widely based. Atiyah expresses the view (at 140) that "[a]ttempts to hold a client vicariously liable for the acts of his solicitor in different sorts of cases have rarely met with success". A number of decisions are referred to by him.
103 In Rhodes v Moules [1895] 1 Ch 236 the possibility was recognised that a client of a solicitor could be held liable for fraud. Likewise he refers to Egginton v Lichfield Corporation (1855) 5 E & B 100 where client liability would exist when a solicitor is instructed to take criminal proceedings on the client's behalf where the solicitor persists with the proceedings after facts have come to light showing them to be groundless.
104 More to the point is the decision in Burnes v Pennell (1849) 2 HL Cass 497. The question which arose there was whether a company was bound by the communications of its law agent respecting its commercial affairs and commercial prosperity made during the course of negotiating a settlement. It was held that the company was not so bound because the law agent was not acting within the scope of his authority from the directors. As stated by Lord Campbell at 519‑520 "he was employed by them only as a lawyer, to demand and sue for a debt due from a shareholder; and he had no authority to make any disclosure respecting the concerns or the condition of the company to a stranger who contemplated the purchase of shares in the company".
105 In contrast there are decisions involving instances where a trustee or executor has deposited moneys with a solicitor which the solicitor has misappropriated. In those instances the general principles relating to breach of trust have been applied to determine the liability of a trustee or executor: In re Sheppard [1911] 1 Ch 50; In re Vickery [1931] 1 Ch 572; Speight v Gaunt (1883) 9 App. Cas. 1; Re Mitchell (1884) 54 LJ Ch 342; Thorne v Heard and Marsh [1895] AC 495.
106 In the absence of any decisive authority on the point in issue on this appeal it is appropriate to cite the conclusion reached by Atiyah at 141.
"Is it possible to explain the basis on which a principal is held liable for torts committed by a solicitor in the light of the authorities so far mentioned? As already indicated there are a number of different possibilities, several of which have already been referred to. First, it is arguable that these cases are illustrations of a general principle of vicarious liability for agents, and undoubtedly there are many dicta such as those cited from Smith v Keal above which support this view. Secondly, it is arguable that the cases merely illustrate the narrower proposition that a principal is liable for the consequences (including trespasses) of a statement which his agent makes on his behalf when acting within the scope of his authority. Thirdly, it can be said that these cases are merely historical anomalies, and that no general conclusions can be drawn from them. In Lee v Rumilly (1891), 55 J.P. 519, C.A. Kay, L.J., seems to suggest (at p. 519) a fourth possibility, namely that liability rests on a non-delegable duty, but this only explains the fi fa. cases."
Atiyah examined the issue in 1967. The Court has not been taken to any authorities of further assistance subsequent to that date nor have my researches disclosed such.
107 The precise point raised by the appeal does not appear to be presently the subject of binding authority. The Court is therefore left to reason out the issue without applicable precedent but with regard to the range of authority previously referred to. Approaching the matter in that light I consider the following to be the position on the issue at law:
1. A solicitor is an officer of the Court.
2. A solicitor is the agent of his or her principal.
3. The scope of the solicitor's authority as an agent is to undertake those matters which flow from the retainer subject to limitations requiring special authority for certain expenses of pledging the principals credit: Cordery's Law Relating to Solicitors (Butterworths (8th ed), 1988) p. 76-77. The solicitor is authorised to act as his or her principal's agent in all matters (not falling within an exception) which may reasonably be expected to arise for decision in the course of proceedings: Cordery at 83.
4. Where a Court makes an order directed to the parties to preserve confidentiality of documents by requiring certain steps to be taken, the solicitor has the authority to act to ensure compliance with such order.
5. Where the order is made by a court the solicitor, as an officer of the court, is obliged to give effect to the terms of the order on behalf of the principals to whom the order is directed.
6. An omission by a solicitor to comply with such an order lies outside the scope of the authority given by the principal to the solicitor. Alternatively there is an implied condition in the authority that the solicitor will act lawfully.
7. An omission is distinguishable from a step taken in excess of authority where the solicitor is generally authorised to act.
8. An omission by a solicitor to comply with an order of court in those circumstances being outside the authority of the retainer given by the principal cannot create a liability in the principal. Furthermore, being contrary to the solicitor's duty to the court, it attracts the discipline of the court and so does not lack sanction.
9. Such a conclusion is consistent with what was said by Dixon J in Colonial Mutual at 48‑49. In effect the conclusion is that an omission by a solicitor as an officer of the court to carry out an order of the court is not within the limited circumstances where a principal is liable for an unauthorised act of the principal's solicitor agent.
108 In my opinion this is the basis upon which the appeal should be resolved.
Conclusion
109 It follows I consider the appeal should be allowed.
I certify that the preceding fifty‑two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice R D Nicholson