Liprini v McIntyre

Supreme Court of NSW|2016-08-29|Before: Harrison J

Judgment

HER HONOUR: This is a decision concerning costs only.
On 4 June 2015, by short minutes of order signed by the solicitors for all parties, Harrison J ordered that the following questions be decided separately from any other questions and before trial in these proceedings. They are: 1. Is the defence of advocate's immunity a complete answer to the plaintiff's claim against the first to fifth defendants? 2. Is the defence of advocate's immunity a complete answer to any, and if so which, part or parts of the plaintiff's claim against the first to fifth defendants?
If the answer was yes to any of the questions to be separately determined, the first to fifth defendants would seek an order pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") 13.4(1)(b) that the plaintiff's claim against the first to fifth defendants be dismissed in whole or in part, as appropriate, or further or in the alternative, an order pursuant to UCPR 14.28 that the plaintiff's claim be struck out in whole or in part, as appropriate.
The plaintiff is Kevin Liprini. The first to fifth defendants are John McIntyre, Sandra Hale, Jeffrey O'Brien, Danny Simpson and Michael Sommerville respectively. They are solicitors and at the relevant time were carrying on the business of providing legal services practising in partnership under the name Redmond Hale and Simpson. For convenience, I shall refer to the defendants as "the solicitors". The proceedings have been discontinued as against the sixth defendant.
At the hearing on 3 July 2015, the plaintiff relied on the affidavit of his solicitor, David Addinall sworn 5 June 2015. The defendants relied on the affidavit of their solicitor, John Coorey dated 20 April 2015.

Factual background

The following facts are not in dispute. They are as follows.
Kevin Liprini is a former client of the solicitors who acted for him between about June 2005 and 2010.
The original controversy concerned a family dispute between the plaintiff and his brother, Allan Liprini in relation to the estates of their late parents. Allan Liprini was the executor of both estates. For clarity and without meaning any offence, I shall refer to the plaintiff's brother as Allan.
The plaintiff's father (James Liprini) died in 2005 (ASC [2]). In about June 2005, Kevin Liprini (dissatisfied that no provision had been made for him in the will of his father) retained the solicitors to act for him in family provision proceedings against Allan to recover entitlements from his late father's estate (ASC [3]).
On 18 July 2006, the plaintiff commenced family provision proceedings against Allan in relation to his father's estate (ASC [7]).
On 26 November 2006, the plaintiff's mother died and on 9 July 2007 probate was granted (ASC [8]). Allan was also executor of her will.
Between 26 November 2006 and 6 December 2007, the plaintiff retained the solicitors to act for him in a claim for provision from the estate of his late mother (ASC [9]). His father's estate had already been fully distributed (ASC [11B]). His mother's estate had assets of $2,700,000 (ASC [11C]). No proceedings have been commenced against Allan Liprini seeking provision from his late mother's estate (ASC [12]).
On 6 December 2007, the plaintiff and Allan attended a Court ordered mediation which was conducted by Registrar Studdert. The plaintiff was represented at the mediation by the fifth defendant, Mr Sommerville, and Mr Lawson of counsel (ASC [14]). A settlement was reached which was recorded in orders made by the Court. The settlement and orders disposed of the plaintiff's family provision claims against both his father's estate and his mother's estate and provided that provision be made for the plaintiff in the sum of $750,000 plus payment of his costs in the agreed sum of $20,000. The orders relevantly read: "1. Order under section 7 of the Family Provision Act that provision be made in favour of the plaintiff out of the estate of the late James Natale Liprini in the sum of $750,000. 2. That the plaintiffs costs agreed in the sum of $20,000 be paid out of the estate of the late James Natale Liprini in the sum of $750,000. 3. Order that the defendant's cost be paid out of the estate of the late James Natale Liprini on an indemnity basis. The Court notes: A. The above orders were agreed by the parties in contemplation of a claim by the plaintiff against his mother's estate under section 7 of the Family Provision Act. The plaintiff agreed to execute a deed, if called upon to do so, releasing the defendant (as executor or of the estate of his late mother) from any claim under section 7 of the Family Provision Act."
On 10 December 2007, the plaintiff emailed Mr Sommerville, saying: "Hi Michael Thanks for all the work that you and Dan put in. Although it wasn't 50/50 as it should have been, it could have been a long drawn out Battle. At least I can pay off my debts bar about $15,000.00 worth and get on with Life! …" (Aff, Coorey, 20/04/2015, Annexure I, p 48).
On 6 December 2007, short minutes of order were made (ASC [20]). These orders placed no express obligation on Allan to pay the $770,000 by a particular date or to pay interest. The funds were not paid by Allan. Enforcement action was commenced by the plaintiff which Allan resisted (ASC [22] to [28]).
On 11 August 2009, a little over 18 months after the mediation, Nicholas J made the following orders (ASC [28]): (a) a declaration that on its true construction the effect of the orders made on 6 December 2007 that the sums for payment therein would be payable from the father's estate and from the mother's estate and that Allan would be personally liable for the payment of those sums to the plaintiff; (b) an order pursuant to UCPR 54.3 that Allan pay the plaintiff the sum of $770,000; (c) an order that interest would be payable by Allan to the plaintiff from 3 January 2008 in the sum of $67,500; (d) an order that Allan pay the plaintiff's costs of the proceedings, not including the cost of preparation for the alternative grounds of relief not proceeded with at the hearing, on a party/party basis; and (e) each party to pay their own costs of preparation for the alternative grounds of relief not proceeded with at the hearing.
On 3 September 2010, Allan went into bankruptcy (ASC [31]). The plaintiff has only received from Allan's bankrupt estate the sum of $462,498.75 (ASC [34]).
The present proceedings were commenced on 25 November 2013, some seven years after the family provision proceedings were commenced.
The allegations of breach of retainer (and negligence) are found at ASC [37] and are as follows: (i) the solicitors ought to have brought proceedings against Allan in his capacity as executor of the mother's estate before 6 December 2007; (ii) the solicitors ought to have advised the plaintiff that his rights against Allan in his capacity as executor of his mother's estate should only be resolved on terms which permitted the plaintiff to enforce any order against Allan in his personal capacity and within 28 days or a reasonable time and which provided security to the plaintiff from the assets of the mother's estate, and which provided for interest to be paid; (iii) the solicitors ought to have advised the plaintiff that if an agreement of the nature pleaded in (ii) above was not available, he should prosecute his rights against Allan in his capacity as executor of his mother's estate in the court to a hearing, and to seek from the court an order providing security to the plaintiff from the assets of the mother's estate and an order for interest; (iv) instead of giving the advice and doing the things in (i) to (iii) above, the solicitors only brought proceedings against Allan in his capacity as executor of the father's estate and then resolved the plaintiff's rights against Allan in his capacity as executor of his mother's estate; and (v) the solicitors failed to draft the short minutes of order agreed at the mediation so that they clearly imposed obligations on Allan in his personal capacity and clearly imposed a time for Allan to pay and an obligation to pay interest.
The plaintiff claims loss and damage as follows (ASC [44]): "44. As a result of the breaches of contract by the first to fifth defendants pleaded above and the breaches of the duties of care pleaded above by the first to fifth defendants and the breach of warranty of authority pleaded below the plaintiff has suffered loss and damage. PARTICULARS (i) The plaintiff should have obtained a legacy from his mother's estate of at least $770,000 payable within 28 days of 6 December 2007 or another reasonable period of time and an order for interest; (ii) The plaintiff has recovered the sum of $462,498.75 from the trustee in bankruptcy of A Liprini; (iii) The plaintiff claims the lost opportunity of recovering the difference between $770,000 and $462,498.75 plus interest from A Liprini; (iv) The plaintiff incurred unrecoverable solicitor/client legal costs in his proceedings seeking to enforce the orders agreed on 6 December 2007 and in the proceedings seeking to enforce the orders agreed on 6 December 2007 and in the proceedings heard by Nicholas J which he would not have incurred but for the acts and omissions pleaded in paragraphs 37(i)-(iii); (v) In the alternative to (iv) above, the plaintiff incurred unrecoverable solicitor/client legal costs in his proceedings seeking to enforce the orders and in the proceedings heard by Nicholas J which he would not have incurred but for the acts and omissions pleaded in paragraphs 37(iv)-(v)."
There is a separate allegation of breach of warranty of authority (ASC [45] to [46]) as follows: "45. Further or in the alternative, the plaintiff says that the first to fifth defendants in agreeing to the orders at the 6 December 2007 mediation and in asking the court to make those orders acted in breach of their warranty of authority. PARTICULARS (i) The plaintiff repeats paragraphs 17, 18 and 19 above; (ii) The first to fifth defendants held no authority to resolve the plaintiff's claim against A Liprini in his capacity as executor of his mother's estate. 46. In the premises, the first to fifth defendants acted in breach of their warranty of authority in agreeing to the orders on 6 December 2007 and in asking the court to make those orders because they held no authority to resolve to the plaintiff's claim against A Liprini in his capacity as executor of his mother's estate."
The critical point of difference between the parties is whether advocate's immunity arises in the circumstances where no legal proceedings had been brought under s 7 of the Family Provision Act 1982 (NSW) by the plaintiff in relation to the mother's estate when the settlement occurred at mediation.
On 3 July 2015, the defendants' notice of motion filed 20 April 2015 came before me for hearing. Following that hearing, I became aware that the High Court had reserved its decision in the matter of Attwells v Jackson Lalic Lawyers (S161/2015), a case which concerned a defence of advocate's immunity in the context of a settlement of proceedings. My associate advised the parties that I would defer handing down my judgment in this matter pending the determination of the High Court in Attwells v Jackson Lalic Lawyers Pty Ltd.
On 4 May 2016, the High Court delivered judgment in Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16; 331 ALR 1; 90 ALJR 572 ("Attwells"). The High Court reversed the decision of the Court of Appeal in Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335.
On 17 June 2016, following the High Court's decision in Attwells, I made orders that the parties were to file and serve further short submissions addressing the question of whether leave should be granted to reopen and whether any further evidence should be admitted, together with any affidavits setting out the additional material they proposed to rely upon if leave was granted to reopen.
The parties now agree that the questions concerning the applicability of the defence of advocate's immunity are no longer appropriate for separate determination in advance of all other issues so the Court should decline to determine those question and note that the issue will be deferred for consideration and determination by the Court, together with all other issues in the case, at the final hearing of the proceedings.
The plaintiff relied upon the affidavit of his solicitor James Robert Clancy sworn 21 July 2016. The defendants relied upon the affidavit of Victoria Huntington sworn 24 June 2016 and the affidavit of Michael John Sommerville affirmed 24 June 2016.
The outstanding costs for which orders are sought are the costs of the notice of motion filed 20 April 2015 and the half day hearing before me on 3 July 2015.
On 10 August 2016, by email, the parties agreed that it was appropriate for me to determine the question of costs on the papers without the need for a further oral hearing. The parties consented to reopening their cases so that they could file the additional affidavits.
The parties sought the following orders: (1) The orders made by Harrison J on 4 June 2015 be vacated and, in lieu thereof, an order that all issues raised in the pleadings be determined at a final hearing of the proceedings; (2) The costs in respect of the notice of motion filed 20 April 2015, in such terms as I considered appropriate having regard to the parties' submissions; and (3) The proceedings be listed for directions before the Registrar at a date convenient to the court.

Costs

The plaintiff submitted that the defendants should pay his costs. The defendants submitted that the appropriate order for costs is that this Court make an order that the question of costs be reserved for determination at the conclusion of the proceedings when the issue of advocate's immunity has been determined, because only then will the Court be in a position to know which of the parties was successful in relation to advocate's immunity; or alternatively, the costs of the notice of motion filed 20 April 2015 be costs in the cause.

The law

Section 98 of the Civil Procedure Act 2005 (NSW) relevantly reads: "98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and …"
UCPR 42.1 and 42.2 read: "42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. 42.2 General rule as to assessment of costs Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis."

The plaintiff's submissions

The plaintiff submitted that it was the defendants who determined that they wished to have the Court determine the question of advocate's immunity separately and as a result the plaintiff has incurred substantial costs, which will now be wasted.
The plaintiff also submitted that in light of the correspondence between the parties, he was only prepared to agree to the course proposed by the defendants on the basis that the evidence upon which the defendants sought to rely was confined to the evidence in the affidavit of John Coorey dated 20 April 2015. The plaintiff says that the defendant knew or ought to have known, in light of the correspondence, that there was a special leave application before the High Court in Attwells and the Court of Appeal decision in Jackson Lalic Lawyers Pty Ltd v Attwells may be the subject of an appeal in the High Court, if leave was granted, yet pressed on with the motion to have the separate question determined. However, I consider that the plaintiffs should also have known about these applications.
Finally, the plaintiff submitted that in the exercise of the Court's discretion the Court should take into account the disparity between the parties' resources. The plaintiff is impecunious. His only income is a pension amounting to $994.30 per fortnight. After rent of approximately $500 per fortnight, the remainder of his pension is for general living expenses, such as food and bills. The plaintiff's net assets are less than $10,000. He owns no real property. The plaintiff has $10,000, which is all that remains of the settlement sum paid to him by Mr Lawson in these proceedings. The remainder of the settlement sum has been spent on legal fees and the balance of the $10,000 will be required to pay the plaintiff's ongoing costs in these proceedings. The plaintiff has incurred approximately $40,000 in legal fees in relation to the separate determination alone (Aff, Clancy, 21/7/2016, [2] to [5]).

The defendant's submissions

Firstly, the defendants submit that costs usually follow the event, however the "event" has not yet been determined and the parties have agreed that it will only be determined at the end of the proceedings. The defendants say that it is not appropriate for the Court to express any view as to how the issue will ultimately be determined when dealing with costs at this stage.
Secondly, no criticism can be leveled at either the plaintiff or defendants for seeking the preliminary determination of the advocate's immunity issue or agreeing to that course.
Thirdly, there was a real prospect at the time that the advocate's immunity issue could be separately and efficiently determined and otherwise, depending on the outcome, lengthy and costly litigation could be avoided.
Fourthly, none of the parties could reasonably have been expected to possess clairvoyant powers such as to predict the way in which the High Court would decide Attwells. Neither party made submission at the hearing about the special leave application or how it would or could be decided. It was the Court, of its own motion, that informed the parties after judgment had been reserved that the High Court had heard argument in Attwells and that it would defer judgment until after the High Court had determined that case.
Fifthly, the way in which Attwells was decided by the High Court has changed the playing field and the factual matters relevant to determine whether advocate's immunity applies to the particular circumstances of this case and therefore further evidence is now required and the issue is no longer suitable for separate preliminary determination.
Sixthly, none of the parties can be criticised for not predicting that the High Court would pare back the scope of the immunity in the way it has, particularly given the consistent judgments of the Court of Appeal in Kendirjian v Lepore [2015] NSWCA 132; Young v Hones [2014] NSWCA 337 and Jackson Lalic Lawyers Pty Ltd v Attwells.
Seventhly, none of the parties can be criticised for not predicting that the High Court in Attwells would not consider it necessary to further consider the scope of immunity in cases such as this case, where a settlement requires Court approval: see Attwells at [61].
The defendants further submitted that there have been no wasted costs. The advocate's immunity question will remain a live issue in the proceedings and the work that has been undertaken by the parties in the preparation of submissions will remain useful and will likely be utilised at a final hearing and in final submissions and addresses. The defendants submitted that if the Court is of the view that some costs have been wasted, those costs should be limited to the half day hearing on 3 July 2015, although any such wastage was suffered by both parties and the defendant should not bear the costs alone at this stage when the parties agree that the immunity issue should be determined at a final hearing.

Conclusion

Both parties agreed to the determination of the separate questions and in the circumstances neither party can be criticised for that approach. Much of the affidavit material already filed will be relied upon at the full hearing, so in that sense, the time and costs that went into the preparation of these affidavits have not been wasted. Normally I would make an order that costs be costs in the cause as both parties could have been aware of the pending appeal to the High Court and taken that into consideration before pursuing the separate questions. However, in these circumstances, it is my view that justice is best served if the costs are reserved. It is only after the final hearing that it can be determined whether the appropriate order for costs should be costs in the cause or some other order.

The Court orders that: (1) The orders made by Harrison J on 4 June 2015 are vacated and, in lieu thereof, an order that all issues raised in the pleadings be determined at a final hearing of the proceedings. (2) The costs in respect of the notice of motion filed 20 April 2015 and the half day hearing on 3 July 2015 are reserved. (3) The proceedings are listed for directions before the Registrar on 12 September 2016 at 9.00 am. I certify that this and the 13 preceding pages are a true copy of the reasons for judgment herein of the Honourable Associate Justice Harrison. Dated: 29 August 201 Associate

Amendments 30 August 2016 - Coversheet - Citation added

Paragraph [1] of judgment - changed the word "concerns" to "concerning" 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: 30 August 2016

Family Provision Act 1982(NSW)

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