Kendirjian v Lepore

Resolution of the appeal

1. In my view the appeal should be rejected on the grounds of both authority and principle. I turn first to refer to the principal decisions since D'Orta-Ekenaike.
2. In Chamberlain v Ormsby [2005] NSWCA 454, Tobias JA (with whom Giles JA agreed) found that a barrister who had given advice that led to the settlement of a damages claim was immune from suit. His Honour said that it was "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" (at [120]). The decision in D'Orta-Ekenaike itself was to similar effect in that the High Court found that lawyers who negligently advised an accused to enter a plea of guilty in criminal proceedings were immune from suit (see [88], [91] and [152]).
3. In Donnellan v Woodland [2012] NSWCA 433, the respondent succeeded at first instance in recovering damages for the appellant solicitor's negligence in advising the respondent in relation to court proceedings that the respondent pursued but lost. On appeal, this Court found that the appellant had not been negligent but nevertheless proceeded to deal with his immunity defence.
4. Beazley JA (as she then was, with whom Barrett and Hoeben JJA and Sackville AJA agreed) addressed two arguments put on behalf of the respondent, Mr Woodland, as follows.
5. First, in relation to Mr Woodland's argument that the temporality of the alleged negligent conduct, and the conduct of the proceedings in court, determined whether the immunity was applicable, her Honour said: "198 Mr Woodland's first submission does not give proper acknowledgement to this. The question is not when the advice was given, but whether the advice given led to a decision affecting the conduct of a case in court. As McHugh J stated, the giving of advice is an integral part of an advocates' role. If the giving of advice, or the omission to give advice, led to a decision to continue with the case, or meant that the case was continued because of that omission, such conduct would lead to a decision affecting the conduct of the case in court, namely, its continuance by way of full argument before a judge."
6. If correct, this observation would require Mr Kendirjian's appeal to be dismissed given it refers to a situation similar to the present, that is, one where negligent advice or an omission to advise leads to the continuation of court proceedings. Because the observation constitutes seriously considered dicta, is not plainly wrong (see Gett v Tabet [2009] NSWCA 76 at [274]-[295]), and is consistent with the other authorities discussed below, the correctness of the observation should be accepted. Contrary to the applicant's argument, I do not consider that the circumstances alleged in the applicant's Amended Statement of Claim are materially different to those described in the observation. That pleading (see [10] above) does not allege that the respondents failed to advise the applicant that an offer had been received. Rather, the allegation is that the respondents told the applicant that an offer had been made and did not give proper advice as to the amount of damages that the respondent was likely to receive if the hearing proceeded (see [11] above). This is no different in principle to an allegation that the respondents gave negligent advice to reject an offer of a disclosed amount.
7. Mr Woodland's second submission in Donnellan relied on the decisions in Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85 and of Harrison J in Dansar Pty Ltd v Pagotto [2008] NSWSC 112. In the former, the Western Australian Court of Appeal held that advocate's immunity arguably did not apply to a solicitor's advice (which was acted upon) to reject an offer of settlement of court proceedings. Beazley JA did not derive any assistance from the decision as, inter alia, the Court had not needed to determine whether advocate's immunity was in fact available.
8. In Dansar v Pagotto, Harrison J applied McCarthy P's observation in Rees v Sinclair (see [17] above) to hold that the relevant immunity was not available where negligent advice related to the termination of proceedings, not to the manner in which they should be conducted. In Donnellan Beazley JA rejected this view and also, implicitly, the proposition said in Alpine to have been arguable (at [208] see [29] above).
9. The following conclusion of Beazley JA is also inconsistent with Mr Kendirjian's argument that immunity is not available to the respondents in the present proceedings: "229 In my opinion, therefore, the breach of duty his Honour found had been committed by Mr Donnellan relating to the Council's letter of 21 December 2001 was protected by the immunity. On his Honour's findings, the omission to give appropriate advice at that time led to Mr Woodland continuing the proceedings, with the consequent waste of costs. In my opinion, the effect of deciding to continue with proceedings is to make a decision that affects the conduct of the case in court."
10. In Attard v James Legal Pty Ltd [2010] NSWCA 311, the alleged negligence was the solicitors' failure to advise a company in administration that they were acting for in defending a cross-claim that the cross-claimant needed the leave of the Court to proceed. The Court held that the solicitors were immune from a claim for wasted expenses. Giles JA (with whom Beazley JA agreed) pointed out that the solicitors' alleged negligence resulted in the cross-claim being continued (at [13]). This again bears an analogy to the present case.
11. In Bott v Carter [2012] NSWCA 89, an unsuccessful plaintiff in a personal injuries claim sued his lawyers for damages for negligence. The alleged negligence related to the lawyers' conduct of the proceedings including "[f]ailing to engage in settlement discussions" (quoted at [17]). Basten JA (with whom McColl and Whealy JJA agreed) considered that "[t]he only claim which might, on its face, fall outside the scope of the immunity is the complaint that the solicitor failed to respond to the possibility of an offer of settlement, which involves no challenge directly, or indirectly, to the judgment in the District Court" (at [37]). His Honour made three points concerning the inadequacy of the pleading of this claim and continued: "41 Fourthly, it is by no means clear that such a claim, if properly pleaded, would fall outside the immunity, merely by describing it as an opportunity to settle the matter 'extra-judicially'. No particular of loss related specifically to this ground. It would seem unlikely that such a claim could succeed without resulting in a consent judgment which would have been inconsistent with the judgment in fact given in the District Court."
12. Earlier in his judgment, Basten JA had said the following concerning the doctrine of advocate's immunity: "23 … 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."
13. This observation was considered in Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 where solicitors were sued for damages for negligent advice to settle court proceedings which led to the entry of judgment by consent. The plaintiffs submitted that the defendants were not immune from suit as the plaintiffs did not seek to call the consent judgment into question. They submitted that the judgment was only relied upon to prove their loss and that the case therefore did not involve re-litigation of the previous proceedings. The plaintiffs further submitted that the observation of Basten JA in Bott at [23] indicated that the defendants were not immune in such circumstances (at [35]). Bathurst CJ (with whom Meagher and Ward JJA agreed) considered that because the advice led to the case being settled it was "intimately connected" with the conduct of the proceedings and the defendants were therefore immune from suit. He continued: "40 The 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. 41 Second, 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."
14. This decision necessitates rejection of Mr Kendirjian's present argument that the Court should not confine itself to applying the test stated in D'Orta-Ekenaike for application of the immunity (see [20]-[22] above) but should instead consider whether the rationale for that immunity (the principle of finality) is applicable to the present case and, if it is not, should decline to apply the test.
15. Further authority for the rejection of this approach is to be found in Attard v James Legal where Giles JA (with whom Beazley and Tobias JJA agreed) stated that on his understanding of the law as expounded in D'Orta-Ekenaike "offence to the finality principle in the particular case is not necessary" (at [22]). His Honour considered that the D'Orta-Ekenaike principle was applied regardless of whether re-litigation of an earlier decision would be involved (at [28]-[31]). This accords with my view that, as the High Court has identified the test to be applied, it is not for this Court to fasten on the High Court's rationale for adoption of the test and not to apply the test to particular cases where it finds the rationale inapplicable.
16. For the reasons following I do not in any event consider that this is a case to which the rationale is inapplicable.
17. For Mr Kendirjian's negligence claim against the respondents to succeed, he would inevitably have had to prove what advice the respondents should have given him as he does not allege that he would have accepted the settlement offer regardless of the respondents' advice about the amount of damages he should receive. Indeed, his particulars of breach of duty focus on the advice that the respondents should have given in this respect.
18. His case would therefore involve an examination of, and possibly departure from, the views expressed in the judgments of Delaney DCJ and the Court of Appeal in the personal injury action. The respondents would seek to use the findings concerning Mr Kendirjian's credibility to explain the fact that the judgment was significantly lower than the settlement offer. In these circumstances it might be held that the amounts awarded were quite different from the amounts that reasonable lawyers in the position of the respondents could have assessed as the appropriate range of damages award (because these lawyers might well not have been able to foresee the attack on Mr Kendirjian's credibility and its results). This would lead to an apparent conflict between the judgment in the professional negligence action and those in the personal injury action. I therefore consider, contrary to Mr Kendirjian's submissions, that the role of the personal injury judgment in his professional negligence action would not simply be as an integer in his damages calculation (the amount sought being the difference between the settlement offer and the judgment). Rather, a re-examination of the issues determined in the personal injuries judgment would be required.
19. This Court reached a similar conclusion in Young v Hones [2014] NSWCA 337 in which damages were claimed on the basis that the appellant's lawyers' negligence resulted in Land and Environment Court proceedings being settled. The Court held that the lawyers were immune from suit and Ward JA (with whom Bathurst CJ and Emmett JA agreed) concluded in relation to the appellant's claim: "217 … Her claim against the lawyer respondents necessarily involves re-opening the settlement and determining issues (such as the nature of the unauthorised works and their impact) that were resolved by the settlement of the proceedings. To do so would offend the underlying rationale of the immunity invoked by the lawyer respondents."
20. I turn now to consider Mr Kendirjian's reliance on McCarthy P's formulation in Rees v Sinclair of the test for when out of court work will attract immunity (see [17] above). That formulation described the test as applying where work affects "the way" a case is conducted. Although this was approved in Giannarelli v Wraith, it was not adopted by the plurality in D'Orta-Ekenaike, which is the High Court's most recent pronouncement on the issue and one that this Court is bound to follow. As noted above, the effect of the pronouncement is that the immunity principle applies to "work done out of court which leads to a decision affecting the conduct of the case in court" and to "work intimately connected with" work in a court. Both formulations sufficiently cover cases such as the present where the alleged negligence was the failure to advise properly in relation to acceptance of a settlement which led to a plaintiff continuing with court proceedings, in particular where a court hearing was in progress. The decision in Donnellan v Woodland confirms that primacy is not to be given to McCarthy P's reference to "the way" in which a court proceeding is conducted (see [27] above).
21. I add in conclusion that, contrary to Mr Kendirjian's contention, the primary judge gave adequate reasons for his decision. The primary judge's succinct application of the test in D'Orta-Ekenaike sufficed, particularly as his Honour had surveyed the relevant authorities. In any event, success for Mr Kendirjian on this submission would not lead to a re-trial but to a re-visiting of the question of immunity by this Court, which has ultimately occurred anyway, as evidenced by the terms of this judgment.

Conclusion

1. For the reasons above, I propose the following orders: 1. Leave to appeal granted. 2. Direct the applicant to file and serve his Notice of Appeal within seven days of the date of this judgment. 3. Dismiss the appeal. 4. Order the applicant to pay the respondents' costs of the application for leave to appeal and the appeal.
2. LEEMING JA: I agree with Macfarlan JA that leave should be granted but that the appeal should be dismissed. I agree with his Honour's reasons. I would add the following, which so far as I can see is wholly consistent with those reasons.
3. A remarkable feature of D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1 is that the test for the reformulated advocates' immunity, which now rests squarely on considerations based on finality, remains exactly as described in Giannarelli v Wraith [1988] HCA 52; 165 CLR 543 at 560. Relevantly for present purposes, the immunity applies to "work done out of court which leads to a decision affecting the conduct of the case in court": see D'Orta-Ekenaike at [86]-[87]. That coincidence of outcome illustrates the difference between the way in which rules and principles operate in the legal system.
4. Prominent in Mr Kendirjian's submission was the proposition that this appeal was "outside the boundaries set by the informing principle" of finality. In particular, he emphasised that he did not seek to cast doubt upon a single aspect of the conduct of the trial which took place following the rejection of the settlement offer. There is undoubted attraction in the idea that the immunity should not extend more widely than is justified by the principle which gives rise to it. As much is reflected in the concern expressed by Mason CJ in Giannarelli at 560 that the protection not be taken beyond the boundaries of the public policy considerations which sustain the immunity.
5. But I would not adopt the approach for which Mr Kendirjian contended. I have concluded that his submission conflates principles with rules.
6. It is one thing to enunciate a "general principle" (or for that matter a "central and pervading tenet", to use the equivalent language employed in D'Orta-Ekenaike at [34] and [35]) as a justification for a rule. It is another thing to formulate the rule. Within the class of conduct delineated by the formulation of a rule, the justifying general principle may apply with greater or lesser force. As much informs a deal of the reasoning in D'Orta-Ekenaike and is express in the passage of the joint judgment at [81]-[83]. However, the presence or absence of the immunity does not turn on an evaluation of the extent to which the justifying principle is impacted in any particular case. Except in a novel case, it turns instead upon whether the case falls within or outside the rule.
7. Two additional matters underlie the importance to be accorded to the application of the test in this particular area of the law. The first is that the same principles of finality which underlie the immunity also sustain the desirability of an action being determined on that basis and no other, as Barrett JA observed in Donnellan at [276]-[279]. The second is that those same principles also underlie the facility for these issues being determined summarily if the pleadings are sufficiently clear to permit that to occur. Both these matters turn upon an application of the test, without regard to the underlying general principle which justifies the test.
8. The rule or test stated in Giannarelli and D'Orta-Ekenaike having been established, courts have determined its application in particular categories of cases for more than a quarter of a century. It is not surprising that there are now few novel cases. It is now clear law that the work done out of court which attracts the immunity includes advice leading to a case being settled. It is also clear law that advice leading to a case not being settled is work done out of court which attracts the immunity. Both are examples of decisions affecting the conduct of the case in court. Those propositions may be seen in Donnellan v Woodland [2012] NSWCA 433 at [198] and [229] which Macfarlan JA has reproduced. Strictly speaking, the passages are obiter, but the principles there stated in the judgment of this Court constituted by five judges of appeal, assembled to determine that very point, should be regarded as settled.
9. All this means that it is not for an intermediate court of appeal, or for a court at first instance, to seek to derive the metes and bounds of the immunity by reference to what the principle of finality demands, in circumstances where the application to the facts of the test formulated by the High Court is clear.
10. In the present case, the allegation on which the proceeding was summarily dismissed was that the lawyer failed to communicate the amount of an offer, instead only communicating the fact that it had been made and the opinion that it was "too low". That was advice leading to a case not being settled. The primary judge correctly regarded that as falling within the immunity.
11. BERGIN CJ IN EQ: I agree with Macfarlan JA.

Amendments 09 March 2017 - Paragraph numbers edited so that Judgment commences at [1]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 March 2017