Lavars v Gillis and Ors

(Third Defendant) Representation: Counsel: T Faulkner SC with N Roucek (Plaintiff Lavars) L Gyles SC with A Cameron (Defendants)

Solicitors: Laxon Lex Lawyers (Lavars) Kennedys (Defendant) File Number(s): 2017/00077032 Publication restriction: Nil

Judgment

1. This is one of five matters heard together by me. Each plaintiff is a former employee of St George Bank ("SGB") who lost his or her job as a result of SGB's merger with Westpac Banking Corporation ("Westpac") in the period 2008/2010. They each instructed the defendant legal practice to act for him or her in what were essentially actions for the recovery of employment benefits due on termination of employment, damages for wrongful dismissal and, in three of the five cases, damages for deceit, misleading or deceptive conduct, or negligent misstatement. This is putting it broadly. From the legal practice, Mr Michael Gillis was the partner primarily responsible for the conduct of each client's case on which he worked in conjunction with other lawyers in the practice.
2. Proceedings on behalf of the five plaintiffs were brought separately in the Federal Court of Australia as part of a suite of proceedings involving initially as many as 24 plaintiffs and were case-managed together, primarily by Jagot J. At first, SGB was named as respondent in each matter, but later Westpac, which had assumed SGB's liabilities as part of the merger, was substituted. During 2011, 16 of the 24 former employees accepted offers made by Westpac to settle their cases. The five plaintiffs in the present proceedings were part of a group of eight employees who had been unable to settle despite negotiations. Each of them rejected an offer of compromise made by Westpac in December 2011. One of the eight, a Mr Bechelli, settled his case before trial in 2012.
3. The Federal Court proceedings were heard by Griffiths J. Although each plaintiff was successful (Murphy v Westpac Banking Corporation [2014] FCA 1104), the result was not all any of them hoped for. No one succeeded on every head of claim advanced and all for various reasons, which it is unnecessary to detail at this stage, suffered adverse costs orders either at first instance (Murphy v Westpac Banking Corporation (No 2) [2015] FCA 266 ("Murphy (No 2)") or on appeal (Westpac Banking Corporation v Wittenberg (2016) 242 FCR 505; [2016] FCAFC 33).
4. I repeat, of the seven former employees who went to hearing, and on appeal, in the Federal Court, five have sued the solicitors for professional negligence, breach of fiduciary duty, and in some cases misleading or deceptive conduct under statute. Although there are nuances, particularly in relation to the circumstances said to demonstrate the breach of fiduciary duty, the central plank of the case of each plaintiff is that the act or omission constituting negligence or breach of retainer is the failure of the legal practice, and in particular, Mr Gillis, to advise him or her to accept the offer to compromise in December 2011. Again, this is stating it broadly. Each plaintiff also contended that had they been properly advised about prospects of success in the litigation they would have had the opportunity, which they would have taken then to negotiate a somewhat more favourable outcome than represented by the offer to compromise. The central contention in each case is that the advice that ought properly have been given would have led to a settlement and the adverse outcome which befell each of them after the contested hearing in the Federal Court, and appeal to the Full Court, would have been avoided.
5. Although heard together each case is essentially different. All emanate from the same matrix and involve similar claims, but the outcome in each depends upon its own facts. For this reason, I have decided to deal with each matter in a separate judgment. In this first judgment, that is in Ms Lavars's case, I will state the principles of law which are equally applicable to each case and identify other general facts which form the context common to all, but I will focus solely upon my decision in Ms Lavars's case. I will deal with the case then of each of Mr Lawson, Mr Wittenberg, Ms Murphy and Mr Moore in separate judgments. I will refer to the principles of law which I state and apply here without reciting them in the subsequent judgments. As evidence in one case stands as evidence in the others, so far as is relevant to them individually, I will also incorporate by reference findings made in this first judgment without re-evaluating the evidence supporting them.

Principles of law

1. The legal principles governing the duty owed by a legal practitioner to his or her client are not in dispute and no complex analysis or exposition is called for in the circumstances of the case. I have derived the statement of the principles I will apply largely from the analysis of Beazley JA (as she then was) in Donnellan v Woodland [2012] NSWCA 433 ("Donnellan") at [88] - [97]. I acknowledge that to the extent to which Donnellan held that advice about settlement of litigation was covered by a legal practitioner's immunity from suit (Giannarelli v Wraith (1988) 165 CLR 543; [1988] HCA 52), it was disapproved of in Kendirjian v Lepore (2017) 259 CLR 275; [2017] HCA 13 at [25] - [27]. As Edelman J (with whom the other members of the Court agreed) there explained (at [32]), Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1; [2016] HCA 16 establishes that legal practitioners' immunity does not apply because "the giving of advice either to cease or to continue litigating does not itself affect the judicial determination of a case". For this reason it cannot be said that "the particular work" involved in a legal practitioner advising on settlement 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": Giannarelli v Wraith at 559 - 560. However, no criticism was made of her Honour's distillation of the legal principles governing the duty owed by a legal practitioner advising a client on an out of court settlement of litigation.
2. As Beazley JA explained, a legal practitioner owes a duty to a client to take reasonable care to exercise "due care, skill and diligence", bringing to the task required to be performed "the competence and skill that is usual among [practitioners] practising their profession". Her Honour referred, inter alia to Voli v Inglewood Shire Council (1963) 110 CLR 74; [1963] HCA 15 ("Voli") at 84. Voli concerned, inter alia, the legal liability of an architect to third parties to his retainer who were injured as entrants to a building he had negligently designed. But the formulation is generally applicable to all learned professions and others who undertake skilled work.
3. It is well established that concurrent liabilities in both contract and tort may arise in cases of professional negligence. There is implied by law in every contract for the supply of professional services a term of reasonable care which conforms with the standard I have set out by reference to the language of Windeyer J in Voli: Astley v Austrust Limited (1999) 197 CLR 1; [1999] HCA 6 at [47] - [48]. Unlike the duty of care imputed by the law of negligence, the contractual duty can be bargained away or limited if the parties so choose. But there is no suggestion that that has occurred in any of the cases at hand.

Ms Lavars's employment with SGB

1. Ms Lavars commenced employment with SGB in or about September 1998 as an account manager in margin lending. Her letter of appointment provided for termination on 4 weeks' notice or payment in lieu. She enjoyed a successful career with SGB and from 2005 she was a senior manager in the institutional sales section of the Treasury Division of SGB.
2. In addition to her salary Ms Lavars was paid an annual bonus under what was referred to as the Treasury Incentive Plan ("TIP").
3. In May 2008 SGB and Westpac announced their proposed merger. They agreed on a scheme of arrangement which was approved on 17 November 2008 and the merger was completed on 1 March 2010. The new entity thereafter operated as a single institution, even if at the retail level, two banks appeared to continue operation.
4. Following the announcement of the merger proposal, by letter dated 18 June 2008, key staff including Ms Lavars and each of the other plaintiffs were promised a retention incentive payment ("RIP") if certain market performance targets were met by SGB for its corporate financial year ending 30 September 2008 and each employee concerned remained in their employment with SGB as at 13 November 2008. The market performance target, or Earnings per Share Target ("EPS"), stated to the employees concerned was 8% to 10%. In fact, the SGB Board had set the target at 10.1%. About 8.3% was achieved, which was, obviously, within the range stated to the employees, but below the target fixed by the Board. SGB declined to pay the RIP because the EPS achieved was less than 10.1%.
5. As the name suggests, the RIP was offered to retain key staff during the merger process. Otherwise it was natural to expect those employees may look elsewhere to better secure their future careers. It must have been obvious to executives in the Treasury Division, like the plaintiffs, that a single institution would not require two treasuries. To assuage these natural concerns, Westpac also promised each SGB executive would be permitted to "contest" the equivalent position with Westpac.
6. The discrepancy between the Board's EPS position and the stated position, when it came to light while the Federal Court litigation was pending, led to the amendment of the claims brought on behalf of the former treasury employees to claim additional damages for lost opportunity and exemplary or punitive damages based on causes of action framed in deceit, negligent misstatement and under ss 52 and 82 of the Trade Practices Act 1974 (Cth) for misleading or deceptive conduct. Ms Lavars initially joined in these claims but later withdrew them (as did Mr Moore) sometime during 2012. I will make further mention of this topic when dealing with the claims of those employees who persisted with that claim, Mr Wittenberg, Mr Lawson and Ms Murphy.

Ms Lavars Claim at mediation in 2010

1. After consulting Gillis Delaney, proceedings were commenced on Ms Lavars's behalf in the Federal Court on 15 January 2010. Ms Lavars and Westpac engaged in mediation on 24 May 2010, as did other SGB employees for whom the legal practice was acting. The mediations took place at the offices of Westpac's solicitors. Ms Lavars was represented by senior and junior counsel and solicitors from the legal practice. It's necessary to record that Ms Lavars's claim at that stage was made up of the following components: A notice period of 6 months calculated by reference to base salary and bonus: $177,500 Redundancy (or severance pay) calculated in accordance with SGB's policy for a total of 49 weeks at base salary plus bonus: $334,519 Bonus for 2008/2009 period calculated at SGB rates less the assessed Westpac bonus $70,000 RIP $24,000 TOTAL $606,019 Once interest and costs were added the total was: $684,809
2. In response, Westpac maintained: it had been entitled to dismiss Ms Lavars for refusing to accept a lawful direction; that the SGB secondment policy would not apply to her as she had been appointed to a position at Westpac; reasonable notice could not extend beyond 6 February 2010 when she commenced her new employment; that she had received a Westpac bonus while working there and that exhausted her rights to a bonus; and that the target for the RIP of 10.1 percent earnings per share had not been achieved. Alternatively, it was Westpac's position that Ms Lavars was not entitled to an additional six months' notice given that the redundancy, if applicable at all in the circumstances, provided for six weeks' pay in lieu as a component of the redundancy package to which an employee may be entitled. Westpac contended that "pay" in context meant base salary and not entitlements under applicable SGB incentive or bonus schemes. On a Calderbank v Calderbank [1975] 3 All ER 333 basis, Westpac offered Ms Lavars the sum of $85,000 plus costs.
3. The mediation was unsuccessful and on 26 May 2010 "final offers" of $385,000 inclusive of costs was made on behalf of Ms Lavars. On 3 June 2010 under Order 23 of the Federal Court Rules then in force a formal offer of compromise was made on her behalf in the sum of $430,000 including interest, plus costs.
4. Preparation of the matter for trial continued and when reporting to Ms Lavars on 13 August 2010, Mr Gillis stated, "[Westpac] continues to express an interest in settlement of matters. However, there is no guarantee they will make any significant advance on the offer they have previously made to you".

A comment on the conditions of settlement

1. On a somewhat different note, I wish to record that each of the settlement offers made on 10 December 2010, which were not made to the five plaintiffs in this Court, was expressed to be subject to a condition that each of the partners of the legal practice covenant by deed, "not to bring or otherwise aid, abet, counsel or procure the bringing of any claims against … Westpac on behalf of" any former SGB Treasury employee or any SGB former employee whose employment is terminated at any time before the disposition of the claims then current. I fully appreciate that neither Westpac nor its solicitors are parties to or involved in this litigation. They have not had the opportunity to be heard. I can also appreciate Westpac's desire from a purely commercial point of view to bring the litigious fallout of the merger with SGB to an end to avoid being vexed by ongoing employment related claims from former employees for a period of years. However, in my experience, such a stipulation as a condition of compromising litigation is extraordinary. I have been 44 years in the legal profession in one capacity or another. During the whole of my professional life before my appointment as a judge, it is no exaggeration to say, I was involved in some aspect of negotiating the settlement of litigation each working day, frequently involving more than one case. I have never ever been involved in a negotiation where such a demand was made. To say the least, to seek to put such a restraint upon the practice of their profession by solicitors, who are, after all, officers of this Court, is contrary to the public interest in that aspect of the open justice principle concerned with access to justice. As there may be special or exceptional circumstances, of which I cannot conceive, which may have justified such an extraordinary stipulation, I will say nothing more of the matter.

The events of 2011

1. By December 2010, senior counsel had apparently advised on the prospect of amending the Statements of Claim in the various matters to allege the "deceit" causes of action in relation to the discrepancy in the EPS target condition of the RIP involving a claim for exemplary damages. As I have said, initially Ms Lavars was a party to that claim. By email dated 18 February 2011, Mr Gillis advised Ms Lavars that he had consulted with Mr Robert Goot SC, a leading Sydney industrial silk, who considered "on the evidence there was a good prospect of an award for exemplary damages".
2. In May 2011 the suggestion of another attempt at mediation of the outstanding claims was raised, although there seems to have been initial disagreement about the selection of a mediator. In the middle of June, in consultation with counsel, Mr Gillis prepared a schedule of damages for a renewed mediation. It was broadly similar to that prepared for mediation in 2010 with some variation including the reduction of the notice component from six to three months. A claim of $500,000 in exemplary damages and costs in the sum of $115,000 were added bringing the total claim to $1,304,419. There was a delay in the dates for mediation being fixed because Westpac, through their solicitors, wished to put on their evidence before mediation in the expectation that the remaining plaintiffs including Ms Lavars would then be prepared to put "a more realistic offer".
3. In late October 2011, it was agreed that the mediator would be the Honourable Tony Fitzgerald QC and that the mediations would take place over two to three days in early December. The dates were later fixed for 30 November, 1 December and 8 December. Ms Lavars's mediation was listed on the first day. Ms Lavars was represented at the mediation by Mr Goot SC and Mr David O'Dowd of counsel. Mr Gillis and Mr David Collinge from the legal practice also attended to instruct counsel. In total eight matters were to be mediated including the claims for each of the five plaintiffs. The schedule of damages attached to the position paper served for Ms Lavars increased her claim to a little over $2m. Of this, $1m was for exemplary damages and costs had risen to $205,000. Otherwise the components remained more or less the same as the May 2011 figures.
4. In its position paper, Westpac continued to assert that: Ms Lavars had not been seconded, rather she had been allocated a full time permanent position, as I have said, of indefinite duration; the bank was entitled to summarily dismiss Ms Lavars because she repudiated her contract of employment in December 2009; alternatively, any payment due in lieu of notice was included in any redundancy payment, "pay" in context meaning base salary; the conditions for the payment of the RIP, including satisfaction of the EPS had not been met; and the "deceit" claims were bound to fail. Indeed, the only concession from Westpac was that, perhaps contrary to its assertion, only the retention incentive payment had any prospects of success.

The mediation

1. Ms Lavars conferred with Mr Goot SC, Mr O'Dowd, Mr Gillis and Mr Collinge at Mr Goot's chambers at 4:45 p.m. on 29 November 2011. According to Mr Collinge's notes there was a general discussion about the schedule to damages to which I have already referred. There was also a discussion of mediation procedure. Ms Lavars was advised that it was necessary "to play it by ear" at the mediation. Advice would be given as necessary during the day. Ms Lavars recalls Mr Gillis mentioning a figure of around $190,000 for her legal costs. Mr Gillis recalls Mr Goot, who was not called by any party to give evidence, advising Ms Lavars that she had "a very good case". He said that Mr Goot advised Ms Lavars that Westpac had repudiated the contract which she had accepted, and she should be entitled to her redundancy payment and unpaid bonuses including pro rata bonuses for 2008/2009 on the same basis as an SGB employee. Mr Goot said, "I can see no reason why you should not receive your retention incentive and a period of reasonable notice had they complied with their contractual obligations to you". He also advised that the claim for exemplary damages could be included due to what appeared to be SGB "deliberately withholding the true [EPS] target".
2. Mr David O'Dowd of counsel gave evidence but could not recall the substance of the discussion at the conference.
3. Mr Collinge kept what is accepted to be an accurate note of the mediation itself. After Mr Goot outlined Ms Lavars case, counsel for Westpac opened by saying it is an "all or nothing claim", putting the RIP to one side. He described the argument that Ms Lavars was not within SGB's secondment policy as "a reasonably good argument". If that was so, Ms Lavars had clearly repudiated the contact and had no entitlements. The value of the RIP was already covered by the offer previously made. It was strongly contended that there was no fraud involved in the misstatement of the EPS. If the 10.1% target had not been communicated, this was merely a mistake. Counsel insisted that the prospect of the former SGB employees establishing fraud was "negligible" and Westpac would not countenance the payment of hundreds of thousands of dollars for exemplary damages. Counsel for Westpac stated, "We think the fight is over three to four hundred thousand dollars".
4. I have recounted these details to put in context what was said about the issues in the presence of Ms Lavars by her senior counsel and counsel for Westpac. Her awareness of these matters is clearly relevant to her appreciation of her prospects and her assessment of the reasonableness of offers made.

Cross-examination of Mr Gillis

1. In cross-examination Mr Gillis initially agreed that he did not mention the particular offers made at the mediation in his affidavit because he had no "independent recollection" of them (761.26T) and he relied upon the notes taken by Mr Collinge. Mr Gillis was taken through the notes in detail. He agreed that he could not say one way or another from his memory alone whether $675K inclusive was the last offer put by either party at the mediation (764.42T). But he was prepared to agree that the "indication" accorded with his understanding at the time that while Ms Lavars would be happy with $400,000, it was not - my expression - "her bottom line" (765.37T).
2. However, when cross-examined closely about the significance of the offer of compromise served on 2 December 2011, to which I will refer in a moment, Mr Gillis said, "As I sit here today, my recollection was that the offer, the last offer from Westpac at the mediation was a lot closer to the offer of compromise" than $475,000 inclusive of costs (769.45T). However, as the cross-examination progressed I formed the very distinct impression that this was a stray and unreliable recollection based upon a reconstruction founded on what Westpac's solicitor had said about "converting their last offer into an offer of compromise and that's what they did" (783.15 - .50T). It was not suggested, and I am not inferring, that this apparent change in Mr Gillis' evidence was in any way dishonest. But to my mind it was definitely a reconstruction that flowed from what was apparent from the course of the cross-examination that the offer of compromise, when it arrived on 2 December, in the sum of $375,000 plus costs represented an appreciable increase in the "final" offer at mediation as recorded in Mr Collinge's notes.
3. Moreover, Mr Collinge's note was obviously carefully made. It does not record any further offer after Ms Lavars's $675K. He also struck me as a very careful solicitor while giving evidence. I do not regard it as likely that he would have entirely failed to record something so significant as a further "final" offer. Had a counter-offer been made in response to $675K, it would have been conveyed to Ms Lavars and that matter certainly would have been recorded by Mr Collinge.
4. In the upshot, although the parties had moved closer by the end of the mediation, the matter remained unresolved.

Developments in December

1. On 2 December 2011, Westpac served an offer to compromise under Rule 25.01(1) Federal Court Rules 2011 (Cth) in the sum of $375,000 in addition to costs as agreed or assessed, open for acceptance for 14 days after service (Rule 25.05). The offer was sent under cover of an email at 11:08 a.m. on 2 December 2011. On the assumption Westpac was still prepared to pay the sum of $150,000 for party and party costs, I infer that the offer was equivalent to $525K inclusive of costs and represented an increase in the "final" offer made at mediation, viz $475K inclusive. Again, working on the basis that as at 2 December 2011, only two days after the completion of the mediation, Ms Lavars's costs on a solicitor and client basis remained the same, $190K, if accepted, the offer would have left Ms Lavars $335K "in the hand".
2. It had been argued on behalf of Ms Lavars that the offer to compromise should in fact be viewed as effectively $546,000 inclusive of costs because Mr Gillis had advised Ms Lavars, and confirmed in oral evidence, that he was of the view that she would recover 80 to 90 percent of her solicitor and client costs on assessment (or taxation). Taking the higher proportion, recoverable costs then would have been $171K. It followed from this, as I understood the argument, that the offer to compromise was just $30K short of the indication given at the mediation that Ms Lavars was prepared to settle for $575K inclusive of costs.
3. However, I do not regard this approach as realistic. First, despite Mr Gillis's impressive bullishness about the high rate of recovery of Ms Lavars's actual costs on a party and party basis, I doubted, with respect, I could rely upon his assessment with appropriate confidence. Secondly, previous and subsequent events demonstrated Ms Lavars was acutely aware of the significance of the costs issue and was averse to settling on a "plus costs" basis. She would have taken a conservative approach to the costs question. Thirdly, Westpac had made its views clear through its solicitors. If Mr Gillis's view, contrary to my pessimism, was to prevail, it probably would have been necessary to proceed to assessment or taxation, a process involving additional expense, delay and inconvenience for Ms Lavars.
4. In his affidavit of 8 June 2018 (CB 2; Tab 46, p. 497 [86]) Mr Gillis said that he telephoned Ms Lavars at 2:06 p.m. and spoke to her about the offer of compromise for nine and a half minutes. On Mr Gillis's account he informed Ms Lavars of the offer of compromise, describing it as "a slight improvement". He also advised Ms Lavars that he "suspected that Westpac would be prepared to negotiate further if there is an opportunity of wrapping up all matters". He advised her the offer was open until 16 December 2011 and recommended that she attempt to negotiate an increased offer before the expiration of the offer to compromise after 8 December when the remaining matters were listed for mediation. Mr Gillis said that Ms Lavars accepted his advice.

Written advice on offer to compromise

1. On 13 December 2011 at 1:07 p.m. Mr Gillis wrote to Ms Lavars by email attaching a copy of the offer to compromise and providing written advice about it and other matters. In relation to the offer to compromise, Mr Gillis advised as follows (CB 7; Tab 227, p. 2340): "Please find attached an Offer of Compromise served by Westpac in your matter. The offer of compromise is open for acceptance by you until 5:00 p.m. on 16 December 2011 which is 1 hour after your offer expires so you could accept the offer of compromise up until 5:00 p.m. The offer is made on a "plus costs" as agreed or assessed basis. We estimate this order would cover at least 80 - 90% of your actual costs. The effect of the offer of compromise is that if you obtain a verdict less than Westpac have set out in the offer of compromise, you: (i) will not recover any more of your costs incurred beyond the date of the offer; and (ii) will have to pay Westpac's costs incurred after the offer of compromise. We consider the offer of compromise is at the bottom end of the range for settlement of your case. If you are found to be on secondment, the offer is not in the range." The expression "not in the range" should be taken as meaning "below the range."
2. Ms Lavars wrote back on the same day at 2:28 p.m. as follows: "Thanks Michael, Westpac have not stated in the offer what "their agreed or assessed costs" actually are. Previously they were saying $150K but we are at $190K. It is impossible to consider this offer without pre-agreed costs, unless of course you are going to accept the costs that they decide on. Danielle" Mr Gillis took the second paragraph as an attempt by Ms Lavars to obtain a discount on her costs. I do not think this is a fair reading of the email. It should be taken at face value. Ms Lavars was saying that it was impossible for her to consider the offer without knowing what Westpac would then pay for party and party costs because without that information she could not calculate the net proceeds of the settlement that would flow to her. I appreciate Mr Gillis had given his "80 - 90%" advice, but Ms Lavars was obviously seeking practical guidance about how the costs actually affected the net proceeds of the settlement. Perhaps the final clause was irony.

Cross-examination of Ms Lavars

1. Ms Lavars agreed in cross-examination that she understood that if she did not accept the offer to compromise and Westpac obtained a better result, Westpac would not be obliged to pay her legal costs after the date of the offer (182.45T). She also understood that she would have to pay Westpac's costs after the date of the offer (182.50T). She could not agree that those matters had been covered by Mr Goot and Mr O'Dowd at the mediation because her recall was not perfect, and she did not remember the conversations she had with counsel (183.5T). I am satisfied senior and junior counsel did give this advice and she understood it when it was given.
2. When she read Mr Gillis's advice on 13 December 2011, she knew that the offer of $610K made on her behalf "might have given [her] more than $410,000 in [her] hand" (183.22T) (my emphasis). She believed on the basis of the advice she had received that she had "a very solid claim for something in excess of $500,000 plus interest plus costs" (183.40T). But she was prepared to discount that because she knew there were risks with litigation (183.45T). She also agreed that on the assumption that her costs were $190,000, and Westpac were not prepared to pay more than $150,000, the offer of compromise was worth about $335,000 clear (183.50 - 184.1T). When she made the offer of $610,000 inclusive of costs she was not prepared to compromise as low as $335K (184.25T).
3. In her affidavit of 16 February 2018 (CB 2; Tab 45, p. 468) Ms Lavars stated that, notwithstanding what Mr Gillis had advised about the possible costs implications of refusing to accept an offer to compromise, her understanding was, based on the advice she said Mr Gillis had given her, that she only had to win on one point to negative the potential effect of the offer to compromise. She understood the RIP point was very strong. She refused to accept that that was reconstruction. However, I am satisfied that Ms Lavars is mistaken about that matter. Although advice to that effect was later given by Mr Gillis to Ms Lavars in or about April 2012, to which I will return, she could not have had that belief in December 2011 because none of the lawyers advising her had said that to her by then.

The global offer

1. By letter dated, and emailed on, 15 December 2011 (CB 7; tab 229, p. 2346), Westpac's solicitors conveyed counter offers in each of the remaining eight claims, I would infer responding to the offers put by Mr Gillis in his 9 December 2011 letter. This was referred to as the global offer or "one in, all in" offer because among the conditions to which each offer was subject was a condition that "all other offers are accepted by the relevant applicant". 15 December 2011 was a Thursday. How Mr Gillis dealt with the global offer was the main focus of each plaintiff's case in relation to breach of his fiduciary obligations. It was argued by all plaintiffs, that the terms of the offer put Mr Gillis in a position of conflict as some clients may have wished to accept, and others reject, the offer so far as it was made to him or her.
2. For Ms Lavars, the offer was $550,000 inclusive of costs payable on an ETP basis. Westpac's solicitors stated: "Where a settlement is specified to be paid as an ETP, tax will be withheld on the basis that the payment is to be treated as a non-transitional employment termination payment." The offer was expressed to be open for acceptance by 4 p.m. on Monday, 19 December 2011. This was of some significance because it extended beyond the life of the offers to compromise which were fixed to expire at 5 p.m. on Friday, 16 December 2011. If capable of acceptance, assuming no increase in her legal costs, the offer would have netted Ms Lavars $360K.
3. The letter from Westpac's solicitors was received at 8:53 a.m. on 15 December 2011. Mr Gillis said he telephoned each of his clients in turn to obtain his or her instructions. His telephone records demonstrate that he called Ms Lavars at 9:40 a.m. In her affidavit of 16 February 2018, Ms Lavars denies that Mr Gillis telephoned her at all. She implies (CB 2; Tab 45, p. 469) that she was unaware of the correspondence exchanging the offer and Mr Gillis's response to it until 12 August 2016 after she had consulted other solicitors. She states that the first time she had "heard" of an offer "in the vicinity of $550,000 inclusive costs" was during a telephone conversation with Mr Gillis on 21 December 2011 when she was then on holidays on the Gold Coast. During the conversation on 21 December 2011, Ms Lavars says she discussed with Mr Gillis whether Westpac would pay the difference between $550K and $610K. She was advised by Mr Gillis that was a "good approach", which Mr Gillis thought would be accepted. She also says that Mr Gillis described the $550K as "a good offer".

Offer of 21 December 2011

1. As I have indicated above, Mr Gillis did make a further attempt to settle Ms Lavars's claim on 21 December 2011. On that day he wrote to Westpac's solicitors on behalf of four, of the eight, clients, including Ms Lavars, making further offers. On her behalf, he conveyed an offer of $580,000 inclusive of costs on an ETP basis. The offer was left open until 4 p.m. on 23 December 2011, which was the last Friday, and the last business day, before the Christmas break that year. Westpac did not respond, and the offer lapsed.
2. The offer represented an attempt to split the difference between Ms Lavars's last offer of $610K inclusive of costs, and the aspect of the global offer referable to her of $550K inclusive of costs. Both Mr Gillis and Ms Lavars agree that instructions to make that offer were provided by Ms Lavars over the telephone earlier on 21 December 2011. It will be remembered that Ms Lavars was then in Queensland on holidays. There is a disagreement about what was said. It will be necessary to go over some ground covered previously.
3. Ms Lavars account is (Affidavit 16 February 2018, CB 2; Tab 45, p. 469 [109]): "Mr Gillis: Westpac are open to settlement negotiations; they have made an offer in the vicinity of $550,000 inclusive of costs. I think it's a good offer. Ms Lavars: Okay then. Is there any further room to negotiate, maybe to get the difference between that and my $610,000 inclusive offer? Mr Gillis: That sounds like a good approach; I think it'll be accepted."
4. Mr Gillis denied the words attributed to him by Ms Lavars. His version is at (CB 2; Tab 46, pp. 503 - 4 [127]): "Mr Gillis: [Ms Lavars] I think it's worthwhile making one final attempt to try and resolve your matter before Christmas. The one in all in offer to you was $550,000. Your offer of $610,000 inclusive of costs was not accepted by them. I suggest, even though $610,000 was the minimum you would accept, it would be worthwhile to try to meet in the middle, being $580,000. Ms Lavars: OK let's go with that."
5. The real significance of the differences in these accounts is not whether or not Mr Gillis advised Ms Lavars to put another offer in the sum of $580K; which she accepted and upon which instructions he acted only to have the offer ignored by Westpac. There is no dispute about any of those primary facts. The real importance of the difference between them is subsidiary. It is about whether Mr Gillis said to Ms Lavars that the $550K included in the global offer for her was "a good offer". If he believed that and said that then on Ms Lavars case, the advice Mr Gillis gave about the offer to compromise was unreasonable. On the known facts, it represented $525K, if Westpac was still prepared to pay $150K for Ms Lavars's costs. It was only $25K shy of "a good offer". To put it another way, it was only 4.5 percent less than "a good offer". If this was so, as the argument runs, Mr Gillis's advice that the offer to compromise was at the very bottom of the range if Ms Lavars was not on secondment and below the range otherwise was questionable. And probably unreasonable.

Costs advice in April 2012

1. On 21 March 2012, in each outstanding case, now involving seven claimants after Mr Bechelli settled, Westpac's solicitors wrote the following (CB 7; Tab 234, p. 2355): "We are instructed that our client consents to judgment being entered against it on 2 April 2012 [when the matter is next listed before the Federal Court] for the amount of the [RIP] in each of the above proceedings and to orders that our client pay interest at Federal Court rates on the amount of the retention incentive from 13 November 2008, being the payment date for the retention incentive referred to in the letters to the applicants of 18 June 2008." Westpac's solicitor stated that any claim for indemnity costs on that issue would be disputed and given that Calderbank offers and offers to compromise had been made in each of the proceedings, costs should be reserved pending the final outcome of each set of proceedings. Draft short minutes were attached. In Ms Lavars's case the amount of the judgment was for $24,000 and interest.
2. Following receipt of Westpac's solicitor's letter, Mr Gillis emailed Ms Lavars at 10:08 a.m. on Thursday 22 March 2012 stating, inter alia (CB 7; Tab 234, p. 2354), "consenting to a judgment now invalidates their earlier offers of compromise as the offer included the retention payment and was made on the basis they denied liability to pay the retention bonus in the defence".
3. This advice from Mr Gillis formed part of Ms Lavars's formulation of claim against him. Immediately following the receipt of Mr Gillis's email, Ms Lavars wrote (CB 7; Tab 235, p. 2358): "The letter from [Westpac's solicitors] appears to indicate that the Calderbank offer amounts or compromise offers will still be relevant to costs overall. Is this not the case?" Mr Gillis responded on 1 April 2012, perhaps with a degree of syntactical infelicity: "Not when your costs have been incurred unreasonably or without a basis". In context it is tolerably clear that Mr Gillis meant, not when the unreasonable conduct of Westpac had caused Ms Lavars to incur costs.
4. It is clear that this issue continued to be of some concern to Ms Lavars for on 4 June 2013 while judgment in the Federal Court was reserved, she requested by email some clarification about, "one point in my case which keeps me worrying". She referred to the offer to compromise and Westpac's admission of "their fault in not paying the retention bonus" and asked about formal offers "they can use" against her on costs.

Formulation of Ms Lavars's case against the legal practice

1. Mr Faulkner advanced Ms Lavars's case on 3 fronts. The first alleges negligence in the advice given about the offer to compromise of 2 December 2011. The second asserts a failure to act with reasonable care and skill, and breach of fiduciary duty in dealing with the global offer of 15 December 2011. And the third alleges negligence in the advice given in 2012 about the effect of Westpac's concession of the RIP claim on the potency of the offer to compromise. Each of these claims is itself amplified by multiple particulars.

Claim 1

1. So far as "claim 1" is concerned the particulars of negligence are, that a solicitor exercising the usual care and skill of a practitioner professing expertise in employment law: 1. would not have advised Ms Lavars that the offer to compromise was below the range if she was on secondment; 2. would not have advised Ms Lavars that the offer was otherwise "at the bottom end of the range for settlement"; 3. would have provided fuller common law accurate advice about the costs implications of the offer to compromise; and 4. would not have delayed until 13 December 2011 to advise Ms Lavars about the offer when it expired when it was due to expire on 16 December 2011.
2. Although there is no expert evidence led by any party relevant to liability, Ms Lavars argued that reasonable care and skill required the following advice about the offer to compromise: 1. if Ms Lavars was on secondment, the offer was within the proper range for settlement; 2. if not, the offer was better than the most likely result; 3. overall, the offer to compromise "was a good offer"; and 4. Ms Lavars should accept the offer to compromise.

Claim 2

1. Ms Lavars's case in negligence on claim 2 was particularised as follows: 1. Mr Gillis did not give Ms Lavars "any advice" about the quantum of the offer; 2. despite being of the view that the component relevant to Ms Lavars was a "good offer", he did not give this advice to Ms Lavars until after the time for acceptance had expired; 3. Mr Gillis failed to advise Ms Lavars that the matter was within the range; 4. he did not recommend that counsel be consulted; 5. Mr Gillis failed to give advice about the "one in, all in" condition, including whether the condition was in her interests, whether she should attempt to have it removed, and what her options were in dealing with the offer given the "one in, all in" condition; 6. Mr Gillis failed to advise Ms Lavars of a conflict between her interests and the interests of other clients; 7. he failed to advise Ms Lavars that there was a conflict between his duty to her and his duties to each of the other seven clients; 8. failed to recommend she obtain independent advice; 9. Mr Gillis did not advise on her prospects of obtaining a separate settlement with Westpac if she was separately represented; 10. omitted to inform her that the offer expired at 4 p.m. on Monday 19 December 2011; and 11. did not recommend that she take time to consider the offer or speak to the other seven clients who were, after all, former colleagues.
2. The same matters underpinned the claim of breach of fiduciary duty. In particular it was argued that he should not have obtained instructions to reject the offer without disclosing to Ms Lavars the conflict of his duty to her with his duty to other clients to either obtain fully informed consent to continue acting or refer her for independent advice.

Claim 3

1. Regarding claim 3, Ms Lavars submitted that Mr Gillis's advice about the effect of Westpac's concession of the RIP claim was wrong and incorrectly stated the effects of Rule 25.14 Federal Court Rules. A solicitor acting with reasonable care would not have given that advice. It's perhaps important to say at this stage that Ms Lavars's case in this regard is that had she been advised, as she obviously feared, that she remained at risk of an adverse costs order if the result obtained after a hearing was less favourable in financial terms than the offer to compromise, she would have more strongly pursued settlement in December 2011 or sought to re-engage Westpac in settlement in 2012.

The response of the legal practice

1. Mr L.V. Gyles SC, who appeared for the legal practice with Ms A.A. Cameron of counsel, contested each formulation of Ms Lavars's claim. He emphasised that there was no relevant expert evidence establishing any usual practice of competent solicitors in the field of employment law as to the content and nature of the advice to be given to a client in respect of offers of settlement including offers to compromise. He argued there was a limit to the Court's ability to make good this shortfall based upon its corporate experience. He highlighted the conflict between the evidence of Mr Gillis and Ms Lavars. While accepting that Ms Lavars was a generally truthful witness, he argued that the perception of events was affected by hindsight. He submitted that Mr Gillis's evidence, where there was a conflict, should be preferred. I interpolate that I have made findings in relation to salient conflicts already when dealing with the facts of the matter above.
2. Mr Gyles also argued that in assessing the written advice on the offer to compromise provided by Mr Gillis on 3 December 2011 one needs to bear in mind that it was not the only advice Ms Lavars had received about settlement and in particular about the legal effect of offers to compromise. It was important to bear in mind the advice given by Mr Goot SC and Mr O'Dowd at the mediation and the general advice given by Mr Gillis during the crucial period of November/December 2011 with regard to settlement. Mr Gyles also submitted that perfect foresight was not the test and that Mr Gillis's views about prospects were reasonably held. It was important to bear in mind that Ms Lavars was an intelligent, financially savvy client who had a good understanding of her own claim. Mr Gillis did not directly advise Ms Lavars against acceptance of the offer to compromise.
3. Concerning claim 2, Mr Gyles pointed out that on its terms the global offer was not capable of acceptance by any of the eight remaining clients individually. In fact he submitted I should accept that, as Mr Gillis said, each remaining client, including the five plaintiffs, instructed him to reject the component of the offer relevant to him or her.
4. While acknowledging that the solicitor and client relationship may be fiduciary in nature, the circumstances did not demonstrate any conflict either of interest as amongst the clients or of the duties owed individually to each client by Mr Gillis. There may have been a potential for conflict but given the instructions received it did not arise and accordingly there was no breach of any fiduciary duty.

Resolution - Claim 1

1. I accept that when evaluating Ms Lavars's Claim 1, it is inappropriate to focus on Mr Gillis's written advice of 13 December 2011 as though it was the only advice Ms Lavars received relevant to her decision whether or not to accept the offer to compromise. The period from the end of November 2011 to 23 December 2011 was one of relatively intensive settlement negotiations during which Ms Lavars had the benefit of advice from Mr Goot SC, Mr O'Dowd of counsel and Mr Gillis. When Westpac made its "final" offer at mediation of $475K, Mr Goot advised her to consider the offer. Mr O'Dowd advised Ms Lavars to "seriously consider [Westpac's] offer" even if it was not as much as she "might be hoping for". That Westpac had in mind making an offer to compromise was known and the total effect of the advice given by Mr Goot, Mr O'Dowd and Mr Gillis was that if the outcome of the litigation was less favourable than the offer to compromise made, Ms Lavars would not recover her costs after the date of the offer and would be liable for Westpac's costs after that date on an indemnity basis. It was necessarily implicit in this advice that there was a prospect Ms Lavars could do worse than the "final" offer made by Westpac so that those adverse costs consequences might materialise. Logically this advice was given during the discussion about Westpac's "final" offer of $475K. It was that offer that she was being asked to seriously consider. It is true that none of the lawyers told Ms Lavars "to take the money". They were not obliged to in the lawful discharge of their obligations to her. I accept that Ms Lavars understood this advice. Mr Goot specifically checked with her that she did.
2. It also needs to be borne in mind that $475K after the deduction of $190K in solicitor and client costs would have cleared Ms Lavars the sum of $285K. This was a long way short of Ms Lavars's preferred position of $400K "after deduction of [her] costs", even if that was not, as I have said, Ms Lavars's hard and fast bottom line.
3. This was all part of the context in which Mr Gillis recommended, which advice Ms Lavars accepted, a counter-offer of $675K inclusive of costs with the indication that she would accept $575K on the same basis. As I have already said (at [56]) the indication was an attempt to solicit a further offer from Westpac which split the difference between $475K and $675K inclusive of costs.

Not in the range if on secondment

1. "Not in the range if on secondment" as I have said means below the range, it means that the offer to compromise was in Mr Gillis's opinion below the bottom end of the proper range for settlement if the Federal Court were to find that Ms Lavars was on secondment when her employment with SGB was summarily terminated.
2. The figures contained in the Schedule of Damages prepared for the 30 November 2011 mediation including the allowance for exemplary damages of $1m totalled a little over $2m inclusive of costs. As is apparent from what I have said about what happened at the mediation no offer was put to Westpac that included any component for exemplary damages and Westpac made it clear it would not have countenanced this. Ms Lavars's first offer, as I have indicated was for a sum of a little over $1m inclusive of costs. As is common this took Ms Lavars's claims for employment entitlements at their very highest including a claim for interest at a very high rate of 21 percent, which itself totalled $256,812. All of the employment benefits, as I have said, were calculated on the basis that "pay" meant the aggregate of base salary and bonuses.
3. I have also recorded (at [91]) above that, doubtless based on these figures, Mr Gillis believed the range for settlement if Ms Lavars was not on secondment to be $350K to $500K plus costs; and if on secondment $450K to $650K plus costs. Working on $150K for party and party costs, these figures presented a very broad range straddling the secondment issue of $500K inclusive of costs to $800K inclusive of costs. It follows from these figures that in Mr Gillis's view $600K was the bottom of the range for settlement if Ms Lavars was on secondment. If these views were open, bearing in mind a degree of mis-judgment or miscalculation may always affect a forecast of the outcome of the "inescapably chancy", even if others may foresee things differently, it would be difficult to say the advice was "bad or incorrect" because of the negligence of Mr Gillis: Studer v Boettcher at [54], Handley JA. The figures in the schedule of damages propounded Ms Lavars's case in its very best terms. That is to say, the figures were pitched at their highest. Therefore, they undoubtedly depended upon every issue defined by the parties being decided in her favour including the entitlement to both payments in lieu of reasonable notice and redundancy and succeeding on the legal issue of the meaning of "pay".

Bottom end of the range if not on secondment

1. Mr Faulkner pointed out that if Ms Lavars was not on secondment, she was unlikely to have been entitled to the redundancy component of her claim. This is because that aspect depended upon her continuing her employment with SGB and, by the termination of her employment, constructively having been made redundant. Otherwise, if Westpac was correct, her employment had been transferred to Westpac, as it contended, albeit not on a fixed contract, but as Westpac put it, on a contract of indefinite duration. According to Mr Faulkner's argument, allowing interest at Federal Court rates rather than the 21 percent claimed, the maximum Ms Lavars could recover was in the vicinity of $361K, but only if she was fully successful on every point which, even prospectively, was unlikely. Viewed through this lens, the offer to compromise was above the range if Ms Lavars was not on secondment.
2. While there is force in Mr Faulkner's submissions, the range to which Mr Gillis referred is the range for "reasonable settlement", as Mr Faulkner and Mr Roucek acknowledged (at p. 7 [25] of their written submissions). Naturally the starting point for the calculation of the appropriate range for settlement is the likely value of the claim, but it is not the beginning and the end. Calculation of a settlement will involve the factoring in of many imponderables including perhaps an uplift for the prospect of a more favourable outcome, or a discount for the prospect of a less favourable outcome. These competing factors do not logically cancel each other out. There are always imponderables in complex, hard-fought litigation. I am not suggesting that Mr Faulkner's analysis was based on hindsight, but the raw numbers do not necessarily tell the whole story when it comes to assessing prospects for the purpose of calculating the appropriate range for settlement in a multi-issue case. I am not satisfied that viewed prospectively the advice was incorrect. If it was incorrect, it was not negligently so, given the imponderables. My reasoning includes the factual matters I have referred to under the previous heading.

Inadequate advice about costs

1. As I understand Mr Faulkner's argument, the advice about costs was inadequate because it did not fully explain the practical implications of a "plus costs" offer and that this much is made clear by Ms Lavars's email of 13 December 2011 in response to Mr Gillis's written advice stating "it is impossible to consider this offer without pre-agreed costs". Mr Faulkner pointed out that in cross-examination Ms Lavars had explained that her then understanding was that in a plus costs situation, the lawyers for each party "had to agree what [the costs] number was" (187.14T). I am not so sure that the email even considered in the light of Ms Lavars's evidence about it portrays confusion about the legal consequences of acceptance of a "plus costs" offer. She understood, as the terms of the email made clear that there was a difference between the costs she had incurred in bringing the proceedings and the amount that Westpac was obliged to pay for those costs if she was successful. This, of course, is a practical understanding of the difference between solicitor and client costs on the one hand, and party and party costs on the other. I understood her concern to be about the amount of the costs that Westpac would be prepared to pay. She fully appreciated that unless the legal practice was prepared to live with party and party costs only, which she understood they were not, she was uncertain about how much she would receive "in the hand" if she accepted the offer to compromise. Understandably she was unprepared to accept it, or even consider it, without that important information.
2. But it should also be pointed out that Mr Gillis had provided guidance on the issue of party and party costs. He had advised Ms Lavars that he expected she would recover 80% - 90% of her solicitor and client costs. I have already said this advice too was "bullish", but it represented Mr Gillis's genuine view. Obviously, Ms Lavars was looking for greater certainty at a practical, not theoretical level.
3. Perhaps the advice about costs could have been more comprehensive, but again, it was not the only advice about costs in the context of offers to compromise that Ms Lavars received at that time. I will not go over the ground again. Importantly, Mr Gillis's written advice emphasised the variation from the general rule that a successful party may yet be responsible for the unsuccessful party's costs if the outcome for the successful party is less favourable than the amount of the offer to compromise.

Delay

1. The aspect of delay is based upon a submission that I would find that Mr Gillis did not advise Ms Lavars of the making of the offer to compromise until his written advice of 13 December 2011. I have rejected that argument and found that Mr Gillis spoke to Ms Lavars on the afternoon of 2 December 2011 after the offer to compromise had in fact been received. Given Ms Lavars's email of 6 December 2011, notwithstanding the force of the apparent logic of the events, I have accepted that he overlooked informing her that the offer to compromise had in fact been received, although he did discuss settlement with her. Having regard to his evidence in cross-examination at (792.18 - 793.35T; [68] above), I have accepted that Mr Gillis spoke to Ms Lavars about the offer to compromise on 9 December 2018 after the failure of the remaining mediations in the other cases. I infer he mentioned the figure of $375K plus costs, describing it as "a slight improvement". He then discussed with Ms Lavars and obtained her instruction to implement a strategy in an attempt to obtain a better offer than the offer to compromise prior to its expiration leaving the option of the acceptance of it open if no better result was forthcoming.
2. I appreciate, as Mr Faulkner submits, that under Rule 7.1 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) a solicitor has a duty to provide clear and timely advice to his or her client. While the offer to compromise could have been sent to Ms Lavars on 2 December 2011, I would not regard postponing the provision of advice until 9 December 2011 as introducing an aspect of unreasonable delay. Once again it is necessary to view the advice in the overall context of an intensive period of negotiation from end of November to 23 December 2011. I acknowledge that Mr Faulkner does not rely upon "delay" as a particular of negligence sufficient of itself to found a breach of duty (written submissions p. 13 [50)]. Rather he puts it as compounding the other breaches. As I am not satisfied about the other breaches the issue falls away in any event.
3. There is an issue about whether it was reasonable to refer to the increase the offer to compromise represented over the "final" offer at mediation as a "slight improvement". I have rejected Mr Gillis's evidence that the final offer at mediation was more than $475K and closer to the result represented by acceptance of the offer to compromise. As I have already said, on one view, the offer to compromise could be seen as an attempt to split the difference between Westpac's "final" offer and Ms Lavars's "indication" at the mediation. However, on my calculation it represented a probable increase in the order of $50,000, or an increase of about 10.53%, on the "final" offer. Whether an increase of that magnitude is fairly described as "slight" might depend upon one's view as to where the offer to compromise lies in the appropriate range for settlement. Part of the relevant context is that Ms Lavars was not then prepared to accept the offer to compromise if its net proceeds were a sum of $335K.

Causation issues - Claim 1

1. It follows I have rejected each of the particulars of negligence underpinning claim 1. However, it is incumbent on me to set out some contingent findings in relation to the issue of causation lest I am wrong about breach.
2. Mr Faulkner emphasised that the expectation of Ms Lavars's legal team at the mediation on the basis of comments made by Westpac's solicitor was that the offer to compromise when served would be the equivalent of the "final" offer at mediation. In fact, it was an improvement, on my finding, involving an increase of $50,000. Mr Faulkner submitted this was a significant increase in absolute and proportional terms. It is submitted that a solicitor acting with reasonable care and skill would have advised Ms Lavars: 1. the offer was within range if she was found to be on secondment; 2. if she was not found to be on secondment, the offer was better than the likely outcome; 3. overall, the offer was a good offer; and 4. she should accept it. Had that advice been given it was submitted I would infer that Ms Lavars would have accepted Mr Gillis's advice and accepted the offer to compromise. In those circumstances she would not have incurred the economic loss sustained as a result of the adverse outcome, from her point of view, of Westpac's appeal to the Full Court of the Federal Court of Australia decided on 14 March 2016. I will return to this question, but suffice it to say for present purposes that the amount claimed as economic loss on claim 1 is $711,588.82.
3. From these basic facts, which were amplified in considerable detail in written and oral argument, it is submitted that I would be satisfied on the balance of probabilities that Mr Gillis's negligent advice was a necessary condition of the economic loss in fact suffered within s 5D(1)(a) Civil Liability Act, and within the scope of liability for the purpose of s 5D(1)(b) of the same Act. I have no real difficulty with the scope of liability. Had Ms Lavars satisfied me that Mr Gillis's advice was negligent, I would have accepted that it is appropriate that the legal practice's liability in this established area of duty recognised by the law of negligence extend to the losses in fact suffered by her failing to bring the litigation to an end by accepting the offer to compromise on 16 December 2011. The real question relates to causation in fact.
4. There must always be an air of artificiality attending the making of contingent findings about causation based upon particulars of negligence that one has rejected. It is also to be borne in mind that in his written advice Mr Gillis refrained from making a specific recommendation one way or the other about acceptance or rejection, although Ms Lavars's reading of the advice as not recommending acceptance is not unreasonable.

Claim 2 - the global offer

1. I accept that the relationship of solicitor and client is of a fiduciary nature. A fiduciary owes to the person to whom the obligations are due an "overriding duty of undivided loyalty": Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 at [201]. This overriding duty may be infringed where the fiduciary finds himself or herself in a position of conflict between the duty to the client and self-interest. That is not this case. It may also occur where the fiduciary finds himself or herself in the position of conflict between the duty owed to one client and the duty owed to another. The question of possible breach of fiduciary duty in the case of conflicting duties may arise where "… the fiduciary … may be unable to discharge adequately the one obligation without conflicting with the requirement for observance of the other obligation": Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 at 135, Gummow J.
2. In Beach Petroleum NL v Kennedy, the unanimous court referred to Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 ("Farrington"), a conflict of duty and duty case. In that case (at 90) Richardson J said: "A solicitor's loyalty to his client must be undivided. He cannot properly discharge his duties to one whose interests are in opposition to those of another client. If there is a conflict and his responsibilities to one or both he must ensure that he fully discloses the material facts to both clients and obtains their informed consent to his so acting … And there will be some circumstances in which it is impossible, notwithstanding such disclosure for any solicitor to act fairly and adequately for both. But the acceptance of multiple engagements is not necessarily fatal. There may be an identity of interests or the separate clients may have unrelated interests. Such cases seem straightforward so long as it is apparent that there is no actual conflict between duties owed in each relationship."
3. The fiduciary relationship which exists between a solicitor and client co-exists with the retainer and comes to an end upon termination of the retainer: Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 WLR 215 at 224 - 225.
4. However, it needs to be borne in mind that the fiduciary obligations of a solicitor are not co-extensive with his or her duty of care recognised by the law of negligence. On a practical level they may overlap, but they are separate obligations. However, as a practical matter, considering Ms Lavars case in negligence on Claim 2 as summarised by me (at [114] above) it is very difficult to disentangle the fiduciary from the non-fiduciary particulars of breach relied upon.

Negligence - Claim 2

1. The particulars of negligence are set out (at [114]) above. I will not set them out again. As I have already remarked many of the formulations reflect the argument in relation to breach of fiduciary obligations. I can accept that it may be, in a sense, negligent for a solicitor, for example, to fail to inform a client of a relevant conflict or obtain informed consent to continue to act or recommend independent advice because the solicitor, through a want of reasonable care, has failed to recognise the conflict for himself or herself. Even so, particulars (f), (g), (h), (i) and (k) seem more naturally to fall under the rubric of breach of fiduciary duty rather than negligence. Given my findings in relation to breach of fiduciary duty, I think it unnecessary to reconsider those matters through the lens of a case in negligence.
2. It is perhaps apposite to re-cap in summary form the relevant factual context from which the global offer arose. Again, one needs to bear in mind all developments between late November 2011 and 23 December 2011. Following the unsuccessful second tranche of mediations and the receipt of various offers of compromise, Mr Gillis obtained instructions from each of the eight remaining clients to make an offer inclusive of costs expiring just before the expiration on 16 December of some of the offers to compromise. The clients' offers were made in a single letter. It is apparent, to me anyway, that the global offer made at 8:53 a.m. on 15 December 2011 was in response to those offers. In general terms each client's component was on an inclusive of costs basis and represented something of an increase over previous offers to compromise. The "one in, all in" stipulation was a new condition not previously suggested, although Mr Gillis had appreciated that "wrapping up all remaining claims" would have been commercially attractive to Westpac if it could have been achieved.
3. The global offer cut across the strategy implemented by Mr Gillis and he saw the "one in, all in" stipulation as creating real difficulty as a negotiating ploy. From his conversations with each of the clients he probably appreciated some clients would reject their component even if made individually without the stipulation. Much has been made by Ms Lavars (and the other plaintiffs) about the comparative shortness of time over which Mr Gillis obtained instructions from each and all of them to respond to the offer, 55 minutes. But it needs to be borne in mind that Mr Gillis's call did not come entirely out of the blue. There had been an ongoing process of advice, instruction and negotiation over the previous period of approximately two weeks. It was not the first time he had spoken to any client about settlement and not everything previously said had to be said again. Ms Lavars was intelligent and financially savvy.

Causation issues - Claim 2

1. Again, it is necessary to make contingent findings lest my decision on breach is wrong. Mr Faulkner submits that the advice that a solicitor acting with reasonable care and skill would have given about the global offer to Ms Lavars included: 1. $550K was a good offer in the range for settlement; 2. it was in her interest to settle at that figure; 3. the "one in, all in" condition was not in her interest; 4. the "one in, all in" condition gave rise to a possible conflict of duty; 5. it was in her interest to have Westpac waive the condition; 6. Westpac might agree to a separate settlement with her, especially if she was separately represented; 7. she should consult another solicitor for advice; or 8. instruct the competent solicitor to attempt to settle between $610K and $550K with instructions to accept $550K if no better offer was forthcoming.
2. Mr Faulkner argued that Ms Lavars would have accepted this advice had Mr Gillis proffered it and either through him, or through separate representation, Westpac would have agreed to a separate settlement most probably in the sum of $565K. In putting Ms Lavars's case this way, Mr Faulkner pointed out that on the face of it the second letter of 15 December 2011 expressed a willingness to continue negotiations, and the idea that Westpac, as at 15 December 2011, would only settle with Ms Lavars if it could achieve a satisfactory compromise with all eight remaining clients was posturing.
3. Learned senior counsel submitted that "settlement negotiations have their own dynamic and a particular agreement may be achieved at one point in time yet not another" (written submissions, p. 24 [103]). The "trajectory of offers" showed the parties were on a stable and predictable course to achieve agreement. I am asked to infer that an offer of $580K inclusive of costs made separately on behalf of Ms Lavars within the time limited for acceptance of the global offer would have elicited a response of $565K, which Ms Lavars would have accepted.
4. I have rejected the legal practice's argument that Ms Lavars had adopted an inflexible bottom line of $400K in her hand. Her "indication" at the mediation and her offer of $580K of 21 December 2011 prove otherwise.
5. I have already held contingently that as at December 2011, Ms Lavars would not have accepted the offer to compromise. But she was willing to accept less than $400K clear. It is also apparent from the evidence of both of them, that Ms Lavars was prepared to listen to Mr Gillis's advice and indeed so far as the offers of 9 and 21 December 2011 were concerned agreed generally with his approach. Having said that, on the evidence I have preferred, on 9 December 2011 in response to Mr Gillis's request for instructions as to her "minimum" she reiterated her preferred position of $400K. She was not prepared to accept the offer to compromise even at the point of its expiration on 16 December 2011 when no other offer was on the table.

Claim 3 - the 2012 costs advice

1. I am satisfied that the April 2012 costs advice was incorrect and, with respect, negligently so. The details are set out above ([104] - [108]). It will be recalled that the advice was volunteered by Mr Gillis after Westpac's solicitors indicated on 21 March 2012 that Westpac consented to judgment being entered against it for the amount of the RIP in each matter when the matter was next before the court on 2 April 2012. It also agreed to interest at Federal Court rates from 13 November 2008 when the payment became due. I am prepared to infer that there may have been some discussion between Ms Lavars and Mr Gillis earlier in 2012 about the shadow the unaccepted offer to compromise cast over her case. I say this for he appears to have volunteered the advice (set out at [105] above) to the effect that consenting to judgment for part of the claim "invalidates the offers to compromise" because the offers to compromise were made on the basis that liability for the RIP was denied. Not satisfied, Ms Lavars queried the advice and Mr Gillis responded to the effect that denying liability for the RIP was unreasonable conduct of Westpac that had caused Ms Lavars to incur costs.
2. The matter was clearly of ongoing concern to Ms Lavars. In 2013 she said it was "worrying" her and on 4 June 2013, admittedly while judgment in the Federal Court was reserved, Mr Gillis advised Ms Lavars that there was a discretion to award indemnity costs, rather than a discretion to refuse them. He advised that indemnity costs are not "automatic" and "a significant factor" is whether the refusal of the offer was "reasonable". He referred to the failure of Westpac to serve all of its evidence in a timely number and the denial of liability for the RIP.
3. It must be said that even a cursory reading of Rule 25.14 Federal Court Rules clearly demonstrates that where an offer is not accepted by the moving party in the proceedings and that party obtains a judgment that's less favourable than the terms of the offer to compromise: (a) the moving party is not entitled to any costs after 11 a.m. on the second business day after service; and (b) the respondent is entitled to an order that the applicant pay the respondents costs after that time on an indemnity basis (my emphasis). The clear and express language of the rule makes it clear that the entitlement to indemnity costs is automatic where, as here, after the appeal to the Full Court of the Federal Court, Ms Lavars's judgment was adjudged to be "less favourable than the terms of the offer". Under Rule 1.35 the Federal Court has a discretion to make an order that is inconsistent with inter alia Rule 25.14. The type of factors identified by Mr Gillis of course may have some relevance to a decision whether to dispense with Rule 25.14. However, the policy considerations referred to in Maitland Hospital v Fisher [No 2] (see [14] and [21] above), including "the ordinary provision is expected to apply in the ordinary case", also underpin the cognate Federal Court Rule. The distinction between a discretion to award indemnity costs on the one hand, and a discretion to deny them on the other, and the identity of the party carrying the onus of persuasion with respect to the exercise of the discretion, are all important practical considerations. However one looks at it, conceding a small part of a much larger claim does not "invalidate an offer of compromise" in a practical or legal sense.

Conclusions on liability

1. It follows that I am not satisfied that Ms Lavars has made good any of her claims and that judgment must be entered for the legal practice.
2. The legal practice raised a defence of contributory negligence which does not now arise. Three grounds were advanced: failing to follow up with Mr Gillis on her question about costs on 13 December 2011; failing to instruct Mr Gillis to accept the offer to compromise or other offers made by Westpac; and failing to instruct Mr Gillis to pursue settlement after 21 December 2011. I am not persuaded that any of these grounds have been made good. There is no evidence that other than, perhaps, acceptance of the offer to compromise, any of the matters would have made any possible difference to the outcome by averting any part of the loss suffered by Ms Lavars. It must be borne in mind that Mr Gillis did not affirmatively recommend to Ms Lavars acceptance of any of the offers made to her, other than by pointing out the uncertainties of litigation when he spoke to her after 4.00 pm on 16 December 2011 in relation to the imminent expiration of the offer to compromise. Mr Gillis was not obliged to make any recommendation, but in circumstances where he did not it is hardly unreasonable for the lay client to have failed to exercise better foresight of the risk of harm materialising if the offer was rejected than the experienced solicitor retained to advise her. I would have rejected the defence of contributory negligence.
3. It only remains to make contingent findings in relation to quantum lest I am wrong on the liability questions.

Contingent findings on quantum

1. The parties agreed that they should have the opportunity to bring in short minutes and address further argument on the quantum issues after publication of my reasons. But given my liability decision those steps will be unnecessary. Lest I am wrong about this I will allow liberty to apply.
2. Ms Lavars recovered $289,288.45 plus interest after the contested hearing in the Federal Court. On Westpac's application for costs orders reflecting Rule 25.14 (Murphy (No 2)), Griffiths J, applying the Federal Court jurisprudence, held that it was only appropriate to depart from the presumptive position under Rule 25.14 "for proper reasons which, 'in general, only arise in an exceptional case'" (at [20]). His Honour was not satisfied that any of the seven cases, including Ms Lavars's, were exceptional. However, in Ms Lavars's case his Honour decided that the judgment was not less favourable than the offer to compromise because, applying the judgment of North J in Merost Pty Ltd v CPT Custodian Pty Ltd (No 2) [2014] FCA 594 ("Merost v CTP Custodian"), Ms Lavars was entitled to have pre-judgment interest for the whole of the period up to the date of the judgment taken into account. On this basis she recovered more than the offer to compromise and his Honour ordered Westpac to pay the whole of Ms Lavars's party and party costs of and incidental to the proceedings, refusing Westpac's application for costs in accordance with the default position provided for by Rule 25.14.
3. On appeal, Merost v CTP Custodian was overruled (Westpac Banking Corporation v Wittenberg at [322], [334] and [341]). The costs order in Ms Lavars's favour was set aside and instead the Full Court ordered Westpac to pay Ms Lavars's costs of the proceedings on a party and party basis up to and including 11 a.m. 6 December 2011 and Ms Lavars to pay Westpac's costs of the proceedings on an indemnity basis for the period after 11 a.m. on 6 December 2011. The basis of the Full Court's order was that for the purpose of determining whether a judgment is less favourable than an offer to compromise it is necessary to "compare like with like". The comparison required by Rule 25.14 "is between the substantive amount of an offer and the substantive amount of a verdict, with interest only being taken into account to the same date in each case" (Westpac Banking Corporation v Wittenberg at [324] - [325]).

Orders

1. For these reasons my orders are: 1. Judgment for each of the first, second and third defendants against the plaintiff; 2. The plaintiff to pay the defendants' costs; 3. Liberty to apply on short notice.

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: 25 March 2022