Jackson Lalic Lawyers Pty Limited v Attwells

The reasoning of the primary judge 10The primary judge noted the respondents' submission (repeated in this Court) that as the respondents were only sued for $1.75 million in the guarantee proceedings the issue of the respondents' liability to the bank for anything in excess of that amount was collateral to the issues in the current proceedings and had never been litigated. Thus they submitted the applicant was not covered by the advocates' immunity from suit and in those circumstances, the judgment in the guarantee proceedings was not impugned. 11The primary judge rejected this submission. He pointed out that the respondents did assert the judgment entered was not an accurate reflection of the measure of their liability to the bank. He described the respondents' case as "that they are entitled to damages ... because the judgment is wrong". He pointed out that this raised the spectre of disputed evidence about what transpired in the circumstances and events leading up to the entry of judgment and the respondents' anterior agreement to the consent order. 12The preliminary conclusion of the primary judge was that the losses claimed by the respondents did not fall outside the scope of the advocates' immunity. 13Notwithstanding, as I indicated, the primary judge declined to answer the question. His reasoning was as follows: "[33] Notwithstanding all of the above, there remain at least two related matters that in my opinion are particularly troubling in this case, and which directly intersect with the way in which I am able to dispose of this application. The first matter is the apparent or potential strength of the plaintiffs' allegations that the defendants have been negligent. As I have already commented, the plaintiffs would have been substantially better off if they had simply not defended the proceedings. The predicament that the judgment created for them is difficult to explain but even more difficult to understand. It is also difficult not to have a sense of unease about the possibility that an egregious error may go without the prospect of a remedy. [34] The second matter, however, is that it is not possible in a fair and reasoned way to assert the first without a proper inquiry. As was observed by Beazley and Giles JJ in Symonds v Vass [2009] NSWCA 139, the question of whether advocate's immunity applies in a given case cannot be determined without proper findings of negligence. Whether advocate's immunity applies depends upon a clear understanding of what occurred and of the respect or respects in which there was negligence, which is something that cannot and should not be determined on a hypothetical basis. [35] I acknowledge that the orders made by Schmidt J for this issue to be determined as a separate matter were made by consent. I remain troubled, however, that it is not possible to form a concluded view about whether or not an examination of the plaintiffs' liability to the bank over and above their certified liability as guarantors of the company's obligations will or may 'identify issues which do not involve reagitation' of the judgment entered by consent by Rein J. I have been provided with an expansive statement of agreed facts for my purposes, but the allegations of negligence against the defendants cannot be usefully assessed or determined without considerably more material. Without being exhaustive I can well imagine that such extra material would necessarily include evidence from the plaintiffs with respect to their discussions with and instructions to the defendants, as well as the advice that they received, leading up to and concluding with the settlement." 14The application for leave to appeal, which was heard as a concurrent hearing with the proposed appeal, thus raises three issues. First, whether leave to appeal should be granted. Second, whether the primary judge should have answered the separate question. Third, if so, whether the claim against the applicant fell within the scope of the advocates' immunity from suit. It was not contended that if the Court found in favour of the applicant on the second issue, the third issue should be remitted to the primary judge for his determination.

A preliminary matter 15One difficulty which has arisen in the present case is that apart from his order that the costs of the hearing of the separate question be costs in the cause, the primary judge did not make a specific order declining to answer the separate question. However, the parties agreed that the order made by him should be treated as an order declining to answer the question.

Leave to appeal 16As senior counsel for the respondents pointed out, referring to Adam P Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170 at 177, the appeal involved a matter of practice and procedure in respect of which particular caution should be exercised in granting leave to appeal. However, in the present case, for the reasons I have set out below, I am of the view that the decision of the primary judge was incorrect. Further, a refusal to answer the question leads to injustice to the applicant, exposing it to the costs and expense of litigation which would otherwise be avoided. 17In these circumstances leave to appeal should be given.

Should the primary judge have answered the separate question? 18The separate question was ordered under r 28.2 of the UCPR. The circumstances in which such an order should be made are well established. It is appropriate to exercise the power under the rule where there is a preliminary question of fact or law critical to the disposition of the proceedings, in the sense that if it is decided in one way it will necessarily dispose of them: Carl Zeiss Stiftung v Herbert Smith & Co [1969] 1 Ch 93 at 98. In CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601, it was stated by Kirby P at 606 that the procedure should not be adopted in respect of matters not ripe for determination. In that case it was stated by Kirby P at 606, that a matter is ripe for determination were it is a central issue between the parties and the resolution of the issue will either obviate the necessity for litigation altogether, or substantially narrow the field of controversy. 19The question posed in this case fell within those categories. Both parties correctly acknowledged that an answer in favour of the applicant would finally dispose of the proceedings. Further, the relevant material to determine the question, namely the retainer and the breach said to have occurred, was agreed upon between the parties in the Agreed Facts. Subject to the matters raised by the primary judge, no other material was necessary to determine the issue. In addition, a determination of the advocates' immunity issue by way of a separate question would avoid potential re-litigation of issues raised between the bank and the first respondent in the guarantee proceedings. The central justification for advocates' immunity is the principle that controversies once resolved are not to be opened except in a few narrowly defined circumstances: D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 (D'Orta) at [45]. Dealing with the issue of the advocates' immunity as a separate question assists in the maintenance of this principle. 20The primary judge gave two reasons for declining to answer the question. The first was unease that an egregious error may go without remedy. However, the operation of the advocates' immunity does not depend on the degree of negligence involved. The public interest in the finality of litigation has been held to outweigh consequences to the aggrieved litigant of letting a wrong go without a remedy: D'Orta at [71]-[73]. 21The second reason given by the primary judge was that it was not possible to consider the first matter raised by him without a full and proper inquiry. In that context the primary judge referred to the decision of this Court in Symonds v Vass [2009] NSWCA 139; (2009) 257 ALR 689 (Symonds). 22Symonds concerned a claim for negligence by the appellants against respondent solicitors, consequent upon the respondent acting for the appellants in a claim against a valuer. It was alleged by the appellants that various acts and omissions by the respondent solicitors in conducting the claim against the valuer led to the loss of an opportunity to obtain a better result in those proceedings. There was also a cross-appeal relating to an award for damages in favour of the appellants for what was described as delay and disruption in the proceedings against the valuer. 23All members of the Court agreed that the primary judge had erred in reaching his conclusions on both the matters the subject of the appeal and the cross-appeal. Ipp JA would have dismissed the appeal and allowed the cross-appeal on the basis that the solicitors were immune from suit. The majority, Beazley JA (as her Honour then was) and Giles JA, ordered a new trial but for different reasons. 24Beazley JA considered at [5] that it was uncertain that the advocates' immunity extended to an omission because of a negligent failure of a practitioner to bring his or her mind to a particular matter. Her Honour in the circumstances considered at [8] that there should be a new trial so that the "proper findings of negligence" could be made. Giles JA on the other hand expressed the view at [26] that the advocates' immunity would apply to a negligent omission. However, he concluded that there was insufficient material to determine whether the breaches fell within the scope of the advocates' immunity. He stated that it may not be easy to see a clear line between work done prior to the commencement of proceedings, such as advice on prospects of success or appropriate defendants and causes of action, and the conduct of the proceedings. He stated at [40] that deciding the application of the advocates' immunity requires a clear understanding of what occurred and clear findings of the respect in which there was negligence on the part of the lawyer. 25Notwithstanding the doubts expressed by Beazley JA, it is now clear that the advocates' immunity can extend to a negligent omission. As Beazley JA herself pointed out in Attard v James Legal Pty Ltd [2010] NSWCA 311; (2010) 80 ACSR 585 (Attard) at [2], it is settled that the advocates' immunity extends to an omission: see also Giles JA at [9] and Donnellan v Woodland [2012] NSWCA 433 (Donnellan v Woodland) at [198] per Beazley JA, Hoeben JA and Sackville AJA agreeing. 26It is correct, as Giles JA pointed out in Symonds, that it is necessary to identify the breach which occurred as a precondition to considering the application of the advocates' immunity: see also D'Orta at [65]. In the present case the breaches were set out in both the Amended Statement of Claim and the Agreed Facts. The matter thus did not fall to be determined on what Giles JA described at [42] as a "notional demurrer", but rather as a separate question on agreed facts, a well established means of resolving such an issue: see Bass v Permanent Trustee Company Limited [1999] HCA 9; (1999) 198 CLR 334 at [50]-[52]. 27The respondents also submitted that the approach adopted by the primary judge derived support from statements made by Beazley JA in Donnellan v Woodland at [6]-[9] and by the Court of Appeal of Western Australia in Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85 (Alpine Holdings) at [91]-[92] that it was not always appropriate to determine the issue by way of separate question. In the former case Beazley JA expressed the view at [9] that the correct approach depended on the circumstances of the particular case. However, where the breach is set out clearly in the pleadings and in the facts agreed upon for the purpose of the separate question, there is no reason not to determine the issue in advance of other issues in the proceedings. 28Alpine Holdings was an appeal from an order striking out a claim on the basis of the advocates' immunity. It was held it was arguable the advocates' immunity did not apply. The decision in those circumstances provides no assistance in determining the approach which should have been adopted to the separate question in the present case. 29The respondents also sought to rely on the statement by Basten JA in Bott v Carter [2012] NSWCA 89 (Bott) at [33] that the issue which arises (in a case involving advocates' immunity) is the extent to which issues can be identified which do not involve re-agitation of the earlier proceedings. They submitted that this was the reason the primary judge was correct in saying that a further investigation may identify issues which do not involve re-agitation (primary judgment at [35]). However, there can be no basis for a further investigation in circumstances where the breach is defined clearly and agreed upon and the only question is whether any liability for the breach falls within the scope of the advocates' immunity. 30In these circumstances the primary judge erred in declining to answer the separate question. As the respondents pointed out, the primary judge was entitled to control the manner of disposal of the proceedings before him: Landsal Pty Ltd (In liquidation) v REI Building Society, now the Co-operative Building Society of South Australia [1993] FCA 121; (1993) 41 FCR 421. However his refusal to answer the separate question ordered under r 28 of the UCPR for reasons which were irrelevant to its disposal constituted appellable error in respect of which this Court is entitled to intervene. 31In reaching this conclusion I should not be taken as saying that in every case the question of advocates' immunity is one which should be decided as a preliminary matter, whether by way of an application to strike out the Statement of Claim or as a separate question. Despite the reasons given by Basten JA in Donnellan v Woodland at [259]-[260], that it is desirable to deal with the question in that fashion (having regard to the public interest in finality of litigation referred to in D'Orta as the justification for advocates' immunity), there will be cases when it is inappropriate to do so. Without being exhaustive, these cases may involve disputes as to the extent of the retainer, cases where multiple breaches of the retainer are alleged with some but not others falling within the scope of the advocates' immunity and cases where it is not clear that the breach complained of falls within or outside the scope of such immunity. In such cases it will be for the trial judge to determine how to proceed having regard to the principles set out in ss 56 to 58 of the Civil Procedure Act 2005 (NSW). 32However, in the present case for the reasons set out above, the primary judge erred in declining to answer the separate question.

Does the claim fall within the scope of the advocates' immunity? 33The respondents submitted that the claim fell outside the scope of the advocates' immunity. They submitted that finality is the rationale for the advocates' immunity, stating that the correct approach to the question is to identify the controversy which has been quelled and to determine whether the second set of proceedings infringes the principle of finality. 34The respondents referred to the cases identified by McHugh J in D'Orta at [156] as falling outside the advocates' immunity, namely, failure to advise of possible actions against third parties (Saif Ali v Sydney Mitchell & Co [1980] AC 198 (Saif Ali)), failure to advise commencing proceedings in a particular jurisdiction (MacRae v Stevens (1996) Aust Torts Reports 81-405 (MacRae)) and negligent compromise of appeal proceedings leading to loss of benefits obtained at first instance (Donellan v Watson (1990) 21 NSWLR 335 (Donellan v Watson)). The respondents submitted that the rationale for these cases was that they did not involve any offence to finality at all as the controversy in the initial judgment was not sought to be impeached. 35The respondents submitted that the present case did not call the initial judgment into question. They submitted that the judgment was relied upon to prove the loss and therefore the case did not involve re-litigation of the original proceedings. In making that submission senior counsel for the respondents placed reliance on what was said by Basten JA in Bott at [23]: "[23] A similar reconsideration of basic principle has been undertaken in Australia, but with the result that the doctrine of the advocate's immunity has been retained: D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1. However, the justification is now soundly rooted in a principled approach to the fundamental need in the administration of justice for finality of judicial determination, subject only to constitutional requirements found in the entrenched supervisory jurisdiction of the High Court and State Supreme Courts and statutory provisions for appellate or other forms of review. Those roots (which also form the basis of at least one aspect of abuse of process) will inform the scope of the rule, in particular in relation to pre-trial activities and omissions. The scope of the immunity is no longer to be determined by differences in language but by the tendency of the claim to result in re-litigation of a controversy which has been quelled." 36In D'Orta the plurality stated at [86] that there was no reason to depart from the test for advocates' immunity, described in Giannarelli v Wraith [1988] HCA 52; (1988) 165 CLR 543 (Giannarelli) at 560, as extending to work done in court or work done out of court which leads to a decision affecting the conduct of the case in court. They did not consider there was any difference in stating the latter part of the test as work "intimately connected with work" in court. 37In the present case, in my opinion, the work fell within categories of work done out of court affecting the conduct of the case in court. The alleged breach occurred in advising on settlement of the guarantee proceedings during the luncheon adjournment on the first day of the hearing and more importantly on the evening of that day. The Agreed Facts also state that the consent order the first respondent and Ms Lord were advised to sign were signed on that evening and submitted to the Court on the following day. 38The advice thus led to the case being settled. Put another way it was intimately connected with the conduct of the guarantee proceedings. 39This conclusion is consistent with authority: Biggar v McLeod [1978] 2 NZLR 9 at 12 and 13, Chamberlain v Ormsby t/as Ormsby Flower [2005] NSWCA 454 at [120] per Tobias JA and Donnellan v Woodland at [223]. 40The position is not affected by what was said by Basten JA in Bott at [23]. First, it was made clear in D'Orta that the test remains that stated in Giannarelli although the justification is finality of litigation: D'Orta at [46] and Attard at [8] per Giles JA, Beazley JA agreeing. I do not think in Bott Basten JA was propounding a different test as distinct from making it clear that in cases where it is uncertain that the advocates' immunity applies, consideration of that issue will be informed by its justification. 41Second, the current proceedings do involve a re-agitation of the issues raised in the earlier litigation. It is fundamental to the claim that the judgment entered was wrong and the incorrect result was due to the negligence of the applicant. This necessarily involves consideration of the issues raised in the earlier litigation to determine whether in fact the applicant's advice was negligent. In that sense it offends against the principle of finality of litigation. 42Nor do the cases referred to by McHugh J in D'Orta, as examples of cases where the advocates' immunity did not apply, provide any assistance to the respondents. MacRae involved a failure to advise to bring proceedings in a particular jurisdiction. It was held not to be work affecting the conduct of the case in court. It is quite different to the present case where the advice led directly to the settlement of ongoing proceedings. 43Similarly Saif Ali involved a failure to sue a particular person. The House of Lords, applying the test suggested by McCarthy P in Rees v Sinclair [1974] 1 NZLR 180 at 187 (that for the advocates' immunity to apply work done out of court must be intimately connected with the conduct of the case in court), held that the claim was not covered by the advocates' immunity. By contrast the present case, involving advice on settlement during the course of the proceedings, was intimately connected with those proceedings. 44Donellan v Watson was an unusual case. A solicitor's agent consented to orders settling an appeal contrary to the express instructions of his principal and of the client as to how to settle the proceedings. The settlement effectively deprived the client of benefits obtained at first instance. Mahoney JA held at 337 that there was no collateral attack on the order and held there was thus no advocates' immunity. Importantly however, his Honour also stated at 338 that ordinarily, compromise, even if the consensus be reached out of court, is within the advocates' immunity. He said by contrast the case before him involved negligence in failing to carry an authorised compromise into effect. Waddell AJA agreed with Mahoney JA. 45Handley JA on the other hand decided the case on the basis that the agent was liable for acting in excess of authority which nevertheless bound the principal. On that approach in his Honour's view, the question of the advocates' immunity did not arise. 46Donellan v Watson was decided before the decision of the High Court in D'Orta. It is not necessary, however, to determine whether the decision was correct. Importantly, as Mahoney JA accepted, a consensus reached out of court is generally within the advocates' immunity. The settlement in the present case was within the authority of the applicant. The application of the advocates' immunity in those circumstances is not inconsistent with what was decided in Donellan v Watson. 47For these reasons in my opinion, the applicant is immune from suit in respect of the claim made against it.

Conclusion 48In the result, leave to appeal should be granted and the appeal allowed. I make the following orders: (1)Grant the applicant leave to appeal. (2)Direct the applicant to file a notice of appeal in the form of the draft amended notice of appeal contained in the application book amended to seek orders setting aside the orders of the primary judge made on 17 October 2013. (3)Order that the separate question of whether the plaintiffs' claim is defeated entirely, because the defendants are immune from suit be answered as follows: The advocate's immunity from suit is a complete answer to the claim made by the plaintiffs. (4)Order that judgment be entered for the applicant in the proceedings. (5)Order the respondents pay the applicant's costs of the proceedings in this Court and the Court below but have a certificate under the Suitors' Fund Act 1951 (NSW) if eligible. 49MEAGHER JA: I agree, for the reasons given by the Chief Justice, that leave to appeal should be granted and the appeal allowed. I also agree with the remaining orders that his Honour proposes. 50WARD JA: I agree with Bathurst CJ.

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