Nikolaidis v Satouris

presentation: Counsel: Mr J T Svehla/Mr I Leong - Applicants Mr J C Kelly SC/Mr D A Lloyd - Respondents

Solicitors: Self-represented Applicants Meridian Lawyers - Respondents File Number(s): 2014/497735 Decision under appeal Date of Decision: 21 March 2014 Before: Finnane QC DCJ File Number(s): DC 2013/12780

Judgment 1BEAZLEY P: I have had the advantage of reading in draft the reasons of Barrett JA. I agree with his Honour's reasons and his proposed orders. 2BARRETT JA: The principal question in this case is whether advocate's immunity from suit may be relied on by a lawyer sued upon the statutory cause of action created by s 68 of the Fair Trading Act 1987 (NSW) as it stood before the extensive amendments made by the Fair Trading Amendment (Australian Consumer Law) Act 2010 (NSW). 3At the time relevant to the case before the Court, s 68 of the Fair Trading Act was in these terms: "A person who suffers loss or damage by conduct of another person that is in contravention of a provision of Part 3, 4, 5 (section 43 excepted), 5A, 5B, 5C, 5D, 5E, 5F or 5G may recover the amount of the loss or damage from the other person or from any person involved in the contravention, in a court of competent jurisdiction." 4Among the provisions in Part 5 was s 42(1): "A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."

The District Court proceedings 5The respondents were, at material times, solicitors practising in partnership. The applicant retained them to act for him in defending litigation brought against him by one Brice and to prosecute a cross-claim against Brice. In circumstances which it is not necessary to describe, the applicant found himself in a position where he considered himself to have no sensible alternative but to settle the litigation by paying an agreed sum (and costs) to Brice. The settlement was effected by orders made by consent. The applicant consented to judgment against him for $50,000 (plus $50,000 costs) on Brice's claim and to dismissal of his cross-claim with costs as agreed or assessed. The applicant took the view that failure of the respondents to protect his interests had forced him into that situation. He therefore sued them in the District Court claiming damages for breach of a duty of care in negligence, breach of a contract of retainer and contravention of s 42(1) of the Fair Trading Act. 6The respondents, in answer to the whole of the applicant's claims, pleaded that they were "not liable as alleged or at all on the basis of the advocate's immunity from suit". 7On 21 March 2014, his Honour Judge Finnane QC ordered that the applicant's statement of claim be struck out "as an abuse of process". He held that every allegation made in the statement of claim "was in relation to something intimately connected with work in court" and that litigation of the pleaded claims would necessarily proceed on the basis that the applicant could have succeeded against Brice. As a result, there would be an attempt to relitigate issues that had already been determined by the consent orders and to prove relevant facts even though the applicant had agreed to settle the case and pay costs. 8The judge proceeded on the basis that advocate's immunity from suit operated to preclude the bringing of proceedings "for negligence or for damages arising from statutory proceedings [sic; scil: 'provisions']". As to the statutory cause of action based on s 42(1) and s 68 of the Fair Trading Act, his Honour regarded the matter as governed by Young v Hones (No 2) [2013] NSWSC 1429, a decision of Garling J he described as "plainly correct and beyond argument".

Grounds of appeal 9The applicant seeks leave to appeal against the order of dismissal made by Finnane DCJ. Argument as on appeal was heard with argument on the leave application. 10The applicant puts forward grounds of appeal challenging the decision on advocate's immunity not only as it relates to the Fair Trading Act claim but also in relation to the negligence (and breach of retainer) aspects. In the course of argument, however, Mr Svehla of counsel, who appeared for the applicant, sought to agitate only the grounds concerned with the statutory cause of action (plus a ground, to be mentioned presently, concerning wasted costs). 11It is in this way that the principal question in this Court became that to which I referred at the outset. 12Certain matters should be recorded as not called into question by the applicant, namely, that, in examining the primary judge's decision, this Court should work on the basis that the grounds of appeal are to be approached on the assumption that all allegations in the District Court statement of claim could be made out; that the legal services rendered by the respondents were provided "in trade or commerce" as referred to in s 42(1) of the Fair Trading Act; and that, for the purposes of advocate's immunity, a determination by consent orders stands on the same footing as determination by orders made after trial. I mention these matters because the second and third may be considered unsettled and to emphasise that no controversy about them arises for consideration here.

The parties' contentions 13The applicant's submission that advocate's immunity does not extend to proceedings brought on the statutory cause of action created by s 68 of the Fair Trading Act proceeds in this way: (a) it is the legislature that has created the prohibition imposed in s 42(1); (b) that prohibition is binding on all persons; (c) it is the legislature that has created the right of recovery provided for in s 68; and (d) if any person contravenes the prohibition in a way that occasions loss or damage as referred to in s 68, the person is, by statute, subjected to the monetary liability that s 68 imposes and may be sued accordingly. 14The applicant regards the matter as one of statutory construction and says that, since the statute creates a right of action, the entitlement to sue that it confers (by the words "may recover ... in a court of competent jurisdiction") must be recognised and given effect to regardless of any inhibition that might otherwise be derived from general law principles. 15The respondents say that this approach to construction fails to accommodate the principle of legality - that is, the "presumption that, in the absence of unmistakeable and unambiguous language, the legislature has not intended to interfere with basic rights, freedoms and immunities": Lacey v Attorney General of Queensland [2011] HCA 10; 242 CLR 573 at [43] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ citing Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at 384 per McHugh, Gummow, Kirby and Hayne JJ. The principle of legality is, it is submitted, a binding rule of statutory construction requiring a presumption to be made that Parliament does not intend to exclude the operation of a fundamental principle of law unless it says so: Baker v Campbell [1983] HCA 39; 153 CLR 52 at 104-5 per Brennan J. 16It follows, according to the respondents, that the indemnity from suit afforded to advocates by the common law is not be curtailed or displaced by a widely expressed statutory prohibition that does not indicate in unambiguous language an intention of abrogating it. 17The appellant's response is that the principle of legality is concerned with fundamental common law rights and that advocate's immunity from suit is not a fundamental common law right.

The nature of the immunity 18It is necessary to go at once to the decision of the High Court in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1. In that case, Gleeson CJ, Gummow, Hayne and Heydon JJ accepted (at [31]) that, as stated by Mason CJ in Giannarelli v Wraith [1988] HCA 52; 165 CLR 543 at 554-555, the relevant immunity "must rest on considerations of public policy" and on "the injury to the public interest that would arise in the absence of immunity" quoting Starke J in Gibbons v Duffell [1932] HCA 26; 47 CLR 520 at 529. The factor held to be determinative in Gianarelli v Wraith was "the adverse consequences for the administration of justice which would flow from the re-litigation in collateral proceedings for negligence of issues determined in the principal proceedings". The plurality in D'Orta-Ekenaike added: "The significance of the reference to the administration of justice is of fundamental importance to the proper understanding of the immunity and its foundation." 19The judgment continued: "To adopt the language found in the cases considering Ch III of the Constitution, the central concern of the exercise of judicial power is the quelling of controversies. Judicial power is exercised as an element of the government of society and its aims are wider than, and more important than, the concerns of the particular parties to the controversy in question, be they private persons, corporations, polities, or the community as personified in the Crown or represented by a Director of Public Prosecutions. No doubt the immediate parties to a controversy are very interested in the way in which it is resolved. But the community at large has a vital interest in the final quelling of that controversy. And that is why reference to the 'judicial branch of government' is more than a mere collocation of words designed to instil respect for the judiciary. It reflects a fundamental observation about the way in which this society is governed." 20After surveying developments in other countries, the plurality said (at [84]) that to remove advocate's immunity "would make a significant inroad upon what we have earlier described as a fundamental and pervading tenet of the judicial system". They then said (at [85]): "No sufficient reason is proffered for reconsidering the Court's decision, in Gianarelli, that an advocate is immune from suit whether for negligence or otherwise in the conduct of a case in the court."

21The respondents place particular emphasis on the words "or otherwise" in this passage. 22As Beazley P observed in Donellan v Woodland [2012] NSWCA 433 at [163]: "The importance of the decision in D'Orta-Ekenaike is that it establishes that the judicial function in quelling disputes, that is, the principle of finality, centrally underlies the immunity." 23It follows that the reach of the immunity is likely to be commensurate with the principle of finality that lies at its heart.

Dicta relevant to the principal question 24The question whether advocate's immunity applied to a claim for statutory compensation for misleading conduct under s 42 of the Fair Trading Act arose in Yates Property Corp Pty Ltd v Boland (1997) 145 ALR 169. Branson J was of the opinion that it did. In coming to that conclusion, Branson J applied the principle of statutory construction that legislation is presumed not to interfere with fundamental common law rights or principles unless the intention to do so is manifest. 25When that case eventually went to the High Court (Boland v Yates Property Corp Pty Ltd [1999] HCA 64; 74 ALJR 209), there was no occasion to consider whether the immunity applies to causes of action other than negligence. But Callinan J offered the following opinion on the matter (at [364]-[365]): "The respondent's case against the lawyers purported to be not only in negligence but also in deceptive conduct and breach of the Fair Trading Act. Subsequently a further claim for breach of fiduciary duty was somewhat unconvincingly articulated. All were rejected by Branson J. The last three as I have earlier suggested probably owed their assertion in this case to a perception that the immunity might only apply to a claim in negligence. Such a perception is not well founded." 26Gaudron J, by contrast, expressed an opinion that advocate's immunity is confined to claims in negligence and goes to the existence of a duty of care - a proposition not, I think, sustainable in light of D'Orta-Ekenaike v Victoria Legal Aid. 27In both Gray v Morris [2004] QCA 5; [2004] 2 Qd R 118 and Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85, the question whether the immunity applied to statutory claims of the kind relevant to the present case was said to be unsettled. The earlier of these also pre-dated D'Orta-Ekenaike v Victoria Legal Aid. More recently, however, the issue has received attention in this Court in Young v Hones [2014] NSWCA 337 but again in circumstances where it was not necessary for the court to decide it. It is instructive to quote what was said by Ward JA at [172]-[175]: "The lawyer respondents submit (and I agree) that in the absence of unmistakeable and unambiguous language it must be presumed that the legislature did not intend to exclude the operation of a fundamental principle of law such as common law immunity (referring to Lacey v Attorney-General (Qld) [2011] HCA 10; 242 CLR 573 at 591-592 [43]; Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at 384 [78] and Coco v The Queen [1994] HCA 41; 179 CLR 427 at 437). I agree that there is nothing in the statutory provisions on which Ms Young relies that evinces an intention to abrogate advocate's immunity from suit at common law. Such a conclusion is consistent with the analysis of Callinan J in Boland v Yates at [363]-[365] and the decision of Bell J in Goddard Elliott (a firm) v Fritsch [2012] VSC 87 at [834]-[838]. In the latter case, s 9 of the Fair Trading Act 1985 (Vic) was held not to abrogate advocate's immunity. There is no reason in principle why advocate's immunity from suit should not apply where the proceedings include statutory causes of action of the kind here raised. The conduct is the same as that relied upon for the claims in negligence and the consequence in terms of the finality of proceedings if the immunity does not apply is the same. Witness immunity from suit has been specifically held to extend to claims under the Trade Practices Act (in Commonwealth v Griffiths at [121]). Having regard to the importance of consistency between the immunities, I agree with the respondents' submission that there is no reason why the same approach would not be adopted with respect to the advocate's immunity from suit. Had it been necessary for the determination of this appeal, I would have concluded that advocate's (and witness) immunity is available as a defence to the statutory causes of action pleaded against the respective respondents." 28Three first instance decisions should be mentioned. The first is Goddard Elliott (a firm) v Fritsch [2012] VSC 87 to which Ward JA referred. In that case, Bell J, in obiter dicta, referred to the presumption that, in the absence of unmistakable and unambiguous language, the legislature has not intended to interfere with basic rights, freedoms or immunities. The judgment continued (at [838]): "The immunity of advocates comes within this interpretative principle. Advocates personally have the immunity in the public interest. It could not be taken away by legislation without the language being unmistakable and unambiguous. Section 9 of the Fair Trading Act was enacted into Victoria's general system of law, which includes that immunity. The legislation does not exhibit a manifest intention to abrogate the immunity and it does not have that effect." 29Second, in Young v Hones (No 2) (the decision from which the appeal already mentioned was brought), Garling J said (at [163]): "As a matter of principle, the immunity applies to claims made for damages arising from statutory causes of action, including s 42 of the Fair Trading Act 1987: Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; 74 ALJR 209 at [363]-[365]; MacRae v Stevens [1996] Aust Torts Reports 81-405." 30(I am not sure that the reference here to this Court's decision in MacRae v Stevens [1996] Aust Torts Reports 81-405 is apposite). 31Third, in NT Pubco Pty Ltd v Strazdins [2014] NTSC 8, Hiley J expressed an obiter opinion that advocate's immunity applies regardless of the source and nature of the cause of action asserted against the advocate for work having the necessary connection with proceedings in court. 32It can thus be seen that the weight of opinion, albeit in obiter dicta, favours the view that advocate's immunity from suit is relevant not only to proceedings framed in negligence and extends also to statutory causes of action.

Discussion 33Section 68 of the Fair Trading Act, as in force at the relevant time, created a right to recover the amount of relevant loss or damage "in a court of competent jurisdiction". The legislature thus entrusted to the judicial branch of government all questions concerning contravention, causation and quantum, making it clear that a court was to determine these matters in the exercise of its judicial function. Necessarily implied were a requirement and a concession that the determination was to be made in accordance with the procedures and principles that govern proceedings in which one person resorts to a court to recover loss or damage and another person has the right to defend the claim. 34Assume the following facts. A client, being of the view that his or her lawyers have acted wrongfully, sues them in a particular court. The client's statement of claim pleads causes of action in damages for breach of a common law duty of care and breach of the contract of retainer. After a trial, there is verdict and judgment for the defendant lawyers. The client then commences fresh proceedings against the lawyers in the same court alleging precisely the same facts but pleading the statutory cause of action based on s 42(1) and s 68 of the Fair Trading Act and claiming recovery of loss or damage suffered by contravention of 42(1). 35In that assumed situation, the defendant lawyers would promptly resort to one (or both) of two allied principles: first, that a party may be estopped from raising a claim which the party could have litigated in a previous proceeding if it was unreasonable for the claim not to have been so litigated; and, second, that a party may not be permitted to misuse or abuse the process of the court by seeking to raise before it an issue that could and should have been raised in a previous proceeding. The preoccupation, in each case, is with ensuring the integrity of the judicial process as a means of producing finality in the quelling of disputes and of doing so efficiently and justly. 36The particular principles represent two central aspects of the judicial function. If the legislature places resolution of a particular species of controversy within the province of a court, it does so in the knowledge and with the expectation that the court will bring to bear the whole of its jurisdiction, including those principles. 37In the assumed circumstances outlined, therefore, there could be no conceivable quarrel with the proposition that the defendant lawyers, when sued a second time, could call in aid the particular aspects of jurisdiction with a view to halting the subsequent action and causing the claim based on the Fair Trading Act provisions to be dismissed without trial. 38In the same way, the principle of finality, as it underlies advocate's immunity, is a part of the court's jurisdiction that relevant defendants may call in aid. Advocates do not enjoy the immunity because they are somehow a deserving group. The concern is not with a right, freedom or immunity of advocates as advocates, whether "fundamental" or of some lesser order. The shield afforded to advocates is no more than a by-product of the court's concern to secure the aspect of justice that is represented by the finality principle and in that way to protect the integrity of the judicial process. 39The power to adjudicate that s 68 of the Fair Trading Act gives to a court of competent jurisdiction is a power to adjudicate in exercise of the court's judicial function and in accordance with the principles of just determination that are part and parcel of the operation of the judicial branch of government. Protection of the finality of litigation through recognition and effectuation of the advocate's immunity from suit is part of the operation of the judicial branch of government. 40The Commonwealth Parliament, when deciding whether to invest State courts with federal jurisdiction, must take those courts as existing judicial organs in the condition in which it finds them: Le Mesurier v Connor [1929] HCA 41; 42 CLR 481. The legislature of a State, when investing the State's courts with particular jurisdiction, will also be regarded as taking those courts as existing judicial organs in the condition in which it finds them unless it clearly specifies otherwise. 41There is nothing in the Fair Trading Act provisions relevant to this case indicating that a court to which the power to determine claims is given should proceed otherwise than in accordance with the general principles of just adjudication administered by it. 42The immunity under discussion is immunity from civil suit. It is not immunity from liability as such. That, coupled with the fact that the immunity has its roots in public policy, means that it is not an absolute immunity. Meadow v General Medical Council [2006] EWCA Civ 1390, [2007] QB 462, a case concerning the allied immunity of witnesses, illustrates the way in which the similar public policy underpinning that immunity may yield to a competing public policy. It was there held that immunity from suit of an expert medical witness in relation to evidence given by him in legal proceedings did not extend to immunity from disciplinary or fitness to practise proceedings. Those proceedings have the purpose of protecting the public by ensuring that persons who are not fit to practise do not do so; and it was regarded as wrong in principle for the court to limit the powers of an inquiry into fitness to practice by extending the immunity from civil suit to such an inquiry.

Wasted costs 43One of the grounds of appeal in the draft notice of appeal upon which the applicant will rely if leave is granted (ground 7) is as follows: "The Appellants' causes of action in the Appellants' Claim are for negligence, breach of contract and misleading and deceptive conduct under the Fair Trading Act 1978 (NSW) for which the Appellants seek damages, being wasted costs. The basis for the Appellants' Claim is that the Appellants settled the Brice proceedings at the hearing after rulings on evidence were made, whereby the judge in the Brice proceedings made consent orders, wherein Mrs Brice succeeded in her claim against the Appellants, together with an order for specified amount of costs, and the Appellants' cross claim against Mrs Brice was also dismissed, with an order that the Appellants pay Mrs Brice's costs, by consent. The Appellants: (a) contend that D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 at [70] and [83] did not decide that the advocate's immunity from suit applied to wasted costs where there had not been a hearing, reasons for judgment and orders, but where as a consequence of the conduct (acts or omissions) of the advocate/legal practitioner, the client/party to the litigation negotiated and agreed to consent orders which were then made which disposed of the proceeding by final orders, including orders for costs; (b) contend that the decisions in this Court in Symonds v Vass [2009] NSWCA 139; 257 ALR 689 at [115] - [116], Attard v James Legal Pty Ltd [2010] NSWCA 311 at [19] to [28], Day v Rogers [2011] NSWCA 124 at [131] - [132], Donnellan v Woodland [2012] NSWCA 433 at [181] - [184] and [188] are incorrect; (c) accept that his Honour in the Court below was bound by these decisions; (d) accept that this Court is bound by these decisions; (e) require leave of the High Court of Australia to argue that these decisions of this Court incorrectly applied D'Orta; and (f) contend that if the High Court of Australia grants such leave and the Appellants succeed on appeal then the advocate's immunity from suit will not apply to all causes of action in the Appellant's statement of claim in the Court below." 44The second of the passages in the joint judgment in D'Orta-Ekenaike v Victoria Legal Aid referred to in para (a) of this ground of appeal is as follows ([83]): "[A]t first sight it might be thought that seeking to recover wasted costs would not cut across any principle of finality. But it is necessary to recall that the general rule is that costs follow the event. To challenge the costs order, therefore, will often (even, usually) involve a direct or indirect challenge to the outcome on which the disposition of costs depended. For the reasons given earlier, that should not be permitted lest a dispute about wasted costs become the vehicle for a dispute about the outcome of the litigation in which it is said that the costs were wasted." 45Paragraphs (b), (c) and (d) of this ground of appeal assert that three decisions of this Court are "incorrect" but accept that those decisions were binding on the primary judge and are binding on this Court. That concession led to a submission by counsel for the respondents that, since no ground for distinguishing the three earlier decisions has been put forward, there is a complete answer to the ground of appeal and a grant of leave to appeal would therefore be futile. 46It is open to this Court to depart from its earlier decisions - but only if it concludes that those earlier decisions are clearly or plainly wrong and if other expectations of restraint identified in Gett v Tabet [2009] NSWCA 76; 254 ALR 504 at [296]ff are observed. Essential to any such conclusion, however, is reasoned argument by the party alleging error with a view to demonstrating that error. The present applicant has elected not to advance any such argument. The result must be that leave to appeal on the particular aspect is refused, with the Court noting, as a purely formal matter, the applicant's submission that the three earlier cases were, as to the paragraphs identified, wrongly decided.

Conclusions 47The applicant eventually did not press the contention that the activities of the respondent lawyers at issue in the District Court proceedings were not so intimately connected with the advocate's role in the Brice proceedings as to attract the immunity. There should accordingly be no grant of leave to appeal with respect to the grounds of appeal confined to that matter. 48As to the ground of appeal concerning wasted costs, leave to appeal should be refused for the reasons just stated. 49The remaining grounds of appeal concerning advocate's immunity and the Fair Trading Act claims raise matters of general importance warranting a grant of leave to appeal. However, for the reasons I have stated, the primary judge was, in my opinion, correct in his conclusion that advocate's immunity applies to preclude the bringing of suit on those causes of action, with the result that the appeal should be dismissed. 50I propose orders as follows: 1.In relation to ground 1, ground 3, ground 6 (as it relates to the matters in grounds 1, 3 and 7) and ground 7 in the applicant's amended draft notice of appeal, refuse leave to appeal. 2.Direct that the applicant do within fourteen days file a notice of appeal in the form of his amended draft notice of appeal, excluding ground 1, ground 3, ground 6 (as it relates to the matters in grounds 1, 3 and 7) and ground 7. 3.In relation to ground 2, ground 4 and ground 6 (as it relates to the matters in grounds 2 and 4) as set out in the applicant's amended draft notice of appeal, grant leave to appeal and dismiss the appeal. 4.Order that the applicant pay the respondents' costs of the proceedings in this Court. 51WARD JA: I agree with Barrett JA.

Amendments 13 February 2015 - In [46] the words "by Allsop P" deleted 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: 13 February 2015