EDELMAN J. This appeal concerns the scope of advocates' immunity from suit. The appellant, Mr Kendirjian, brought a claim against his solicitor (Mr Lepore, the first respondent) and barrister (Mr Conomos, the second respondent). Mr Kendirjian alleged that the respondents were negligent in advising him in relation to an offer for settlement in a proceeding in which they represented him. Mr Kendirjian's allegations included that the respondents advised him that a settlement offer had been made but that they did not advise him of the amount of the offer, and that they rejected the offer as being "too low" without his express instructions. The primary judge granted summary judgment on the basis that the respondents were immune from the alleged liability for negligence. That decision was upheld by the Court of Appeal of the Supreme Court of New South Wales.
Subsequent to the decisions of the primary judge and the Court of Appeal, this Court decided Attwells v Jackson Lalic Lawyers Pty Ltd. In Attwells, a majority of this Court held that the advocates' immunity from suit did not extend to negligent advice which leads to a compromise of litigation by agreement between the parties. As the majority joint judgment explained, by the same reasoning it is difficult to envisage how the immunity could ever extend to advice not to settle a case. Following the decision in Attwells, the first respondent in this matter consented to orders in this Court including allowing the appeal insofar as it related to him. However, the second respondent submitted that the reasoning in Attwells could be distinguished or, alternatively, that part of the decision should be reopened. The reasoning of the majority in Attwells cannot be distinguished in this case. Attwells should not be reopened. The appeal in respect of the second respondent must also be allowed.
The personal injury proceedings and appeal
In November 1999, Mr Kendirjian was injured in a car accident with a car driven by Ms Ayoub. In 2004, he commenced legal proceedings against Ms Ayoub in the District Court of New South Wales. Ms Ayoub admitted liability so the trial concerned only the assessment of damages.
On the first day of the District Court trial, in August 2006, Ms Ayoub's legal representatives made an offer of settlement to the respondents, offering Mr Kendirjian $600,000 plus costs. This offer was not accepted so the trial proceeded. Ultimately, Mr Kendirjian obtained judgment for $308,432.75 plus costs, although on appeal it was common ground that the proper quantum was $10,000 more, when an omission of damage for future domestic help for heavier household tasks was included. An appeal to the Court of Appeal was dismissed with costs. In the Court of Appeal, McColl JA (with whom Beazley JA agreed) observed that Mr Kendirjian's credibility had been at the heart of the issues to be determined at trial. The primary judge had relied substantially upon video recordings of Mr Kendirjian in the years after the accident to conclude that Mr Kendirjian had exaggerated or misstated the extent of his medical condition.
The negligence proceedings against the respondents
In October 2012, Mr Kendirjian commenced proceedings against the respondents in the District Court. His allegations included numerous particulars of negligence in the advice given to him by the respondents. Central to his claim were allegations that the respondents did not advise him of the amount of the settlement offer, "but merely of the fact that an offer had been made". Mr Kendirjian also pleaded that the respondents rejected the offer "absent any express instructions" from him but "based upon the advice of the [second respondent] that the offer ... was 'too low'". Mr Kendirjian alleged that he first discovered the amount of the offer from the solicitor for Ms Ayoub in January 2009. The second respondent's pleaded defence included the plea that either he or the first respondent, or both of them, informed Mr Kendirjian of the settlement offer but that Mr Kendirjian provided instructions to reject the offer and to make a counter-offer of $1.2 million. The second respondent also pleaded that Mr Kendirjian's instructions for the counter-offer were contrary to his advice to make a counter-offer of $800,000 inclusive of costs.
In Mr Kendirjian's claim against the respondents, he sought damages of $312,567.25 plus interest and costs. This was said to have been calculated by subtracting the amount recovered after the personal injury trial from the settlement offer of $600,000 plus costs. Mr Kendirjian's claim against the respondents therefore relied upon the amount awarded by the District Court in the personal injury proceedings in order to quantify the loss that he allegedly suffered. Other particulars of Mr Kendirjian's claim also appeared to rely on the District Court judgment, such as his allegations against each respondent of a failure to advise that the District Court could award damages in an amount lower than the "lower range of $415,984".
The decisions of the District Court and Court of Appeal
The respondents successfully brought an application in the District Court for summary judgment. The District Court held that the respondents were immune from liability in negligence. This conclusion was upheld by the Court of Appeal. Both the District Court and the Court of Appeal relied upon seriously considered obiter dicta in the earlier decision of the New South Wales Court of Appeal in Donnellan v Woodland. In the Court of Appeal in this case, Macfarlan JA (with whom Leeming JA and Bergin CJ in Eq agreed) held that the decision in Donnellan extended to the circumstances of this case, and that the decision in Donnellan was not plainly wrong.
The decision of the Court of Appeal in Donnellan was an appeal from R S Hulme J. That case concerned advice given by a solicitor, Mr Donnellan, to his former client, Mr Woodland, regarding proceedings to obtain a court-imposed drainage easement under s 88K of the Conveyancing Act 1919 (NSW). The easement proceedings failed and Mr Woodland was ordered to pay the costs of the Council, including on an indemnity basis from the date of one of the Council's offers of compromise. The allegations of negligence against Mr Donnellan included that he was negligent in relation to advice concerning offers to compromise the easement proceedings by the Council. The claim of negligence was upheld by the primary judge.
In the Court of Appeal in Donnellan, Beazley JA (with whom Barrett and Hoeben JJA and Sackville AJA agreed) allowed the appeal on the ground that Mr Donnellan had not been negligent. Nevertheless, their Honours also considered that even if Mr Donnellan had been negligent he would have had the benefit of the immunity. The reason given by Beazley JA was that the immunity would attach 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. The immunity was said to apply because the omission or conduct had affected the conduct of the case in court by requiring the case to continue.
A different approach to the same conclusion was taken in Donnellan by Basten JA, who considered it contrary to principle to determine the question of negligence before the issue concerning the immunity because the rationale of the immunity is to avoid the reopening of the dispute, and to avoid a challenge to a final determination involving the exercise of the judicial power of the State. To determine the issue of negligence before the issue concerning immunity could undermine that rationale if the immunity existed. His Honour therefore considered that the immunity attached because, based upon the pleadings rather than the course of trial, Mr Donnellan might have argued that the advice given was reasonable because the orders made were improbable at the date the advice was given, thus casting doubt upon the correctness of the decision.
In applying the decision in Donnellan in this case, Macfarlan JA in the Court of Appeal correctly observed that there is no difference in principle between an allegation that negligent advice was given about the amount of likely damages (as alleged in this case) and an allegation that negligent advice was given to reject an offer of a disclosed amount (as alleged in Donnellan). However, the conclusions of the Court of Appeal in this case and the Court of Appeal in Donnellan, that both instances engage the immunity from suit, are inconsistent with the course of the development of the principle of advocates' immunity.
The decisions in Giannarelli, Attwells and D'Orta
In Giannarelli v Wraith, a majority of this Court upheld the common law immunity from suit of an advocate. In the majority, Mason CJ described the boundaries of the immunity in the following terms:
"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 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.'"
Sixteen years later, in D'Orta-Ekenaike v Victoria Legal Aid, a majority of this Court rejected a submission that the decision of the majority in Giannarelli should be reconsidered. A joint judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ said that there was no reason to depart from the test described in Giannarelli. The joint judgment summarised that test in terms which included work done in court and, quoting from part of the passage above from Mason CJ, "work done out of court which leads to a decision affecting the conduct of the case in court"; or, to express the approach in relation to work done out of court in another way, "'work intimately connected with' work in a court".
A further eleven years later, in Attwells, this Court again unanimously rejected a submission that the immunity should be abolished. The majority declined to extend the immunity to acts or advice of an advocate which do not move litigation towards a determination by a court. In the joint majority reasons, French CJ, Kiefel, Bell, Gageler and Keane JJ reiterated the remarks from the joint judgment in D'Orta that there was no reason to depart from the test described in Giannarelli, and quoted the whole of the passage from Mason CJ set out above.
The joint reasons of the majority in Attwells explained the rationale for the immunity when declining to extend it to compromises. Since the immunity attaches by the "participation of the advocate as an officer of the court in the quelling of controversies by the exercise of judicial power", it followed that the immunity did not extend to advice that leads to a settlement between the parties. Advice leading to a compromise of a dispute cannot lead to the possibility of collateral attack upon a non-existent exercise of judicial power to quell disputes. For this reason, the expression of the test concerning work done out of court which "leads to a decision affecting the conduct of the case in court", or which is "intimately connected with" work in court, is not engaged merely by "any plausible historical connection" between an advocate's work and a client's loss. The test requires that the work bear upon the court's determination of the case. There must be a "functional connection" between the work of the advocate and the determination of the case.
In Attwells, the respondent submitted that an anomaly would arise if the immunity did not extend to negligent advice which leads to a compromise of the proceeding, but did extend to negligent advice not to compromise a proceeding which leads to a judicial decision. The joint reasons of the majority explained that the assumption underlying the respondent's submission was that the immunity would extend to negligent advice not to compromise a proceeding because that advice was intimately connected with the ensuing judicial determination. The joint reasons rejected this assumption on the basis that negligent advice not to compromise a proceeding gives rise only to an historical connection between the advice and the continuation of the litigation. As the joint judgment concluded, the giving of advice either to cease or to continue litigating does not itself affect the judicial determination of a case.
Attwells cannot be distinguished
The primary submission of the second respondent was that the decision in Attwells should be distinguished. He relied upon the reasoning of Macfarlan JA in the Court of Appeal, handed down prior to Attwells, where his Honour said that Mr Kendirjian's negligence action could involve departing from the views expressed in the District Court and Court of Appeal judgments in the personal injury proceedings. The second respondent submitted that a departure from the reasoning in the personal injury proceedings could arise because the respondents might seek to use the adverse findings about Mr Kendirjian's credibility to explain why the judgment awarded was much lower than the settlement offer of $600,000 plus costs.
With respect, the negligence action by Mr Kendirjian against the respondents does not give rise to the possibility of any challenge to the findings of the District Court concerning Mr Kendirjian's credibility or otherwise. From Mr Kendirjian's perspective, he relies on the decision of the District Court in order to prove his alleged loss. From the perspective of the second respondent, issues concerning the reasonableness of advice given will be assessed at the time the advice was given, not at the time of the District Court judgment. The assessment of reasonableness will not involve any consideration of whether the decision of the District Court, affirmed by the Court of Appeal, was right or wrong whether in relation to credibility or otherwise. It was not suggested that any questions of reasonable foreseeability of loss could conceivably lead to a challenge to the reasoning or decision in the District Court. Indeed, nothing in the second respondent's pleaded defence raises any suggestion of a challenge to the reasoning or decision in the District Court.
In oral submissions, senior counsel for the second respondent submitted that the respondents might challenge the credibility of Mr Kendirjian concerning "what [Mr Kendirjian] said to the lawyers about his disability". However, a credibility challenge of that nature, in separate proceedings based on separate evidence, is independent of the different credibility findings by the District Court concerning Mr Kendirjian's evidence in the personal injury proceedings. It does not call any of those findings into question.
For these reasons, the reasoning in the majority joint judgment in Attwells requires that the appeal be allowed.
The application to reopen Attwells
As an alternative to the second respondent's submission that Attwells should be distinguished, he sought to reopen that part of the decision in Attwells where the joint judgment approved the remarks of Mason CJ, which had relied upon the remarks of McCarthy P in Rees v Sinclair. The second respondent submitted that that part of the quotation from Mason CJ in Giannarelli had not been approved by the joint judgment in D'Orta. It followed, he argued, that the scope of the immunity should extend to "work done out of court which leads to a decision affecting the conduct of the case in court" but not work done "affecting the way that cause is to be conducted when it comes to a hearing". The second respondent's submission was based upon the reasoning of Macfarlan JA in the Court of Appeal in this case but, as I have explained, that decision was given prior to Attwells.
The second respondent did not refer to any of the principles commonly considered by this Court when deciding whether to reopen a previous decision. But, in any event, his submission is premised upon an illusory distinction. In relation to work done out of court, there is no real distinction between work done which leads to a decision affecting the conduct of the case in court and work done affecting the way that case is to be conducted at a hearing. A decision affecting the way that a case is conducted is the principal method, or perhaps the only method, by which an advocate affects the conduct of a case in court.
Even if some artificial distinction between these formulations could be drawn, it is not evident in the joint judgment in D'Orta. The passage from Mason CJ, which was quoted in part by the joint judgment in D'Orta, was part of a single paragraph of integrated reasoning explaining why the immunity should not cease at the courtroom door. No submission had been made in D'Orta that some parts of the passage from Mason CJ, such as the words "affecting the conduct of the case", should be accepted but other parts, such as the words two sentences later, "the way that cause is to be conducted", should not. The second respondent's submission that Attwells should be reopened to revisit this point should not be accepted.
Conclusion
On 11 November 2016, this Court made orders by consent to give effect to allowing the appeal in respect of the first respondent and remitting that part of the appeal to the District Court of New South Wales. For the reasons above, the appeal should also be allowed in respect of the second respondent. Corresponding orders should be made in relation to the second respondent as follows: