Plaintiff v Defendants

Supreme Court of Victoria|2007-12-13|Before: CAVANOUGH J

Tort - Negligence - Lawyers' immunity from suit - Omission over 13 months to object to competency of an appeal - Whether "intimately connected" with work in court - Alleged delay and inaction of solicitors in connection with litigation - Whether covered by immunity - Whether claims should be summarily dismissed.

1 These are two appeals from decisions made by the Senior Master.

2 The plaintiff, a company which took over the practice of a firm of solicitors called Mulcahy, Mendelson & Round, sued four parties as former clients of the firm for unpaid fees. Three of those parties - Kerry Grills, GBRA Radio (Australia) Pty Ltd and Roger Thomas ("the clients") - filed a joint defence together with a counterclaim alleging professional negligence. The counterclaim named five defendants, comprising the plaintiff (which is now in liquidation) together with four other parties being or representing the individual partners of Mulcahy, Mendelson and Round. The five defendants to the counterclaim will be referred to hereafter as "the solicitors". The counterclaim made three distinct claims based on three separate episodes of alleged negligent conduct, though all three were related in terms of subject matter and damage. The solicitors in turn joined a barrister, Ragunath Appudurai, as a third party and claimed indemnity or contribution from him for alleged professional negligence on his part in connection with one of the three episodes of negligent conduct alleged against the solicitors.

3 The solicitors applied to the Senior Master under rules 23(1) and (3) of the Supreme Court (General Civil Procedure) Rules 2005 for the dismissal of the counterclaim insofar as it related to two of the three claims. Each of the two claims concerned acts or omissions connected with litigation, whereas the third did not.

4 The solicitors faced the well known, stringent test for summary dismissal under Order 23. One of the two claims in question survived. It was a claim relating to certain proceedings in the Commonwealth Administrative Appeals Tribunal ("AAT") and in the Federal Court. I will call this the "first claim" because it is set out first in the counterclaim. The first claim was the one in connection with which the solicitors had issued the third party notice against the barrister. So the barrister remained at risk. The claim that was dismissed ("the second claim") related to proceedings in the Supreme Court of Victoria.

5 The Senior Master's orders were made on 27 April 2006. No appeal against them was brought within the time allowed by the Rules. However, some two months later, the barrister applied for summary judgment against the solicitors. The application came before the Senior Master on 11 November 2006. The clients were also represented before the Senior Master, principally in relation to other interlocutory matters. Having heard argument, the Senior Master came to the view that the claim against the barrister was precluded by the immunity from suit dealt with in Giannarelli v Wraith[1] ("Giannarelli") and D'Orta-Ekenaike v Victoria Legal Aid[2] ("D'Orta"). However he expressed concern that this conclusion was probably inconsistent with the decision he had made on 27 April 2006 not to dismiss the corresponding claim against the solicitors. The orders he made on 11 November 2006 included an order (expressed as being made of the Court's own motion) extending the time for the solicitors to appeal to a Judge against the Senior Master's refusal on 27 April 2006 to dismiss the corresponding claim against them.

6 The orders also recited, in "Other Matters", that the Senior Master had refused an oral application made on behalf of the clients on 11 November 2006 for an extension of time for them to appeal against the order made on 27 April 2006 which summarily dismissed the second claim.

7 By a separate order, the Senior Master gave leave to the clients to make certain amendments to their counterclaim, particularly in relation to the first claim. However, because the first claim was now at risk of being dismissed in the event of an appeal to a Judge pursuant to the extension of time, the leave to amend was made conditional, ie it was not to operate if, within the extended period, an appeal to a Judge pursuant to the extension of time was brought in relation to the first claim. The appeals before me do include an appeal in relation to the first claim. So there is at present no operative leave to amend.

8 Having regard to the two notices of appeal from the Senior Master's orders and to the arguments of counsel, the questions I need to decide are as follows:

Should the extension of time to appeal which was granted to the solicitors in relation to the first claim be set aside?
Should the first claim against the solicitors be summarily dismissed?
Should the solicitors' claim for contribution or indemnity against the barrister remain summarily dismissed?
Should the clients have leave to appeal out of time against the order of 27 April 2006 which summarily dismissed the second claim against the solicitors?
If so, should the appeal against the summary dismissal of the second claim be allowed?
What orders should be made in relation to costs?

(5) Yes, in part. However the pleading of the whole of the second claim should be struck out, with limited leave to re-plead and without prejudice to the solicitors' right to apply to have the re-pleaded claim summarily dismissed.

(6) Subject to hearing counsel further, I consider that the clients should pay the solicitors' costs in relation to the first claim; the solicitors should pay the barrister's costs in relation to the third party proceedings; and otherwise the costs should be costs in the cause.

9 It is necessary to say something about the underlying disputes and the underlying litigation out of which the present claims of professional negligence have arisen[3].

10 GBRA Radio (Australia) Pty Ltd ("GBRA") was the corporate vehicle utilised by the abovementioned Roger Thomas, his brother Alan Thomas, the abovementioned Kerry Grills and one Pieter Marchant to hold on their behalf certain radio broadcasting licences ("the licences") issued by the Australian Communications Authority ("the ACA") under the Radiocommunications Act 1992 (Cth).

11 The licences were, in the first place, acquired in the name of Pieter Marchant. Thereafter, they were transferred to GBRA. In general terms, the business plan of the parties involved the use of the licences to broadcast radio programs of particular interest to persons from the United Kingdom.

12 Following a dispute between the parties, in June 1999 Marchant wrote to the ACA without notice to the others seeking to have the licences transferred back to him personally as registered owner. The ACA complied.

13 In or about August 1999, GBRA commenced proceedings in the AAT seeking to reverse the decision of the ACA to transfer the licences back to Marchant. The AAT proceedings were vigorously defended. The ACA and Marchant asserted, among other things, that the AAT had no jurisdiction to review the actions taken by the ACA. In these circumstances, in December 1999, GBRA, Roger Thomas, Alan Thomas and Kerry Grills retained the solicitors. They instructed the solicitors to advise and act for them in relation to their desire and intention to exploit the licences for commercial reward and to protect their interests in that regard, and in particular to represent GBRA in the AAT proceedings.

14 It appears to have been accepted on all sides that the AAT would not be asked to determine the true beneficial ownership of the licences, as distinct from the legal or registered ownership.[4] Perhaps partly for that reason, and in any event in circumstances where they had discovered that Marchant had purported unilaterally to lease out one of the licences for a period of 12 years, in February 2000 GBRA together with Roger and Alan Thomas and Kerry Grills commenced, through the solicitors, a proceeding in this Court seeking injunctions and other relief against Marchant. They obtained a series of short interim injunctions by consent. Then, in May 2000, after a contested hearing, they obtained from Beach J an interlocutory injunction to restrain Marchant from further dealing with or transferring the licences until the trial of the proceeding. Beach J issued "fast track" directions designed to facilitate a final hearing in August or September 2000. However, the matter was not brought on for final hearing at that time[5]. The interlocutory injunction remained on foot throughout the remainder of the year 2000 and into 2001.

15 In the meantime the AAT proceeding was also going ahead. In January 2001 AAT Member Handley decided, after a contested hearing, that the AAT did have jurisdiction to review the ACA's actions. This provoked an appeal by Marchant to the Federal Court, purportedly brought under s 44 of the Administrative Appeals Tribunal Act 1975. The solicitors continued to act for GBRA in the Federal Court.

16 Although Marchant's appeal was commenced in February of 2001 it did not come on for hearing during that year. Meanwhile, in May 2001, Marchant successfully applied to Beach J for a discharge of the interlocutory injunction. This, it is alleged, enabled Marchant to present himself as the sole registered owner of the licences. He wasted no time in dealing with the most significant and valuable licences, "the Melbourne licence" and "the Sydney licence", respectively. He granted to Jim Henry ("Henry") "or his nominee":

(1) The right to use the Melbourne licence and the Sydney licence for a period of 10 years from 16 May 2001; and

(2) The option to take a transfer of the Melbourne licence and the Sydney licence in consideration of the payment of $200,000.

17 Thereafter, Henry nominated WorldAudio Communications Pty Ltd ('WorldAudio') to take the full benefit of his agreement with Marchant in consideration of WorldAudio agreeing to pay Henry a fee of $800,000.

18 Marchant's appeal to the Federal Court was due to be heard by North J in March 2002. Shortly before the hearing date, his Honour's associate contacted both parties referring them to the 1980 decision of the Full Federal Court in Director-General of Social Security v Chaney ("Chaney")[6]. In broad terms, Chaney established that an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 does not lie in respect of a preliminary or interlocutory decision of the AAT as distinct from a final decision. Both parties then acknowledged that Marchant's appeal to the Federal Court was incompetent. North J dismissed it accordingly on 18 March 2002.[7] In due course the AAT proceeding resumed. In September 2002 the President of the AAT, Downes J, determined that the ACA had been in error in transferring the registration of the licences back to Marchant and decided that the transfer should be reversed so that GBRA was shown as the registered owner.[8]

19 GBRA then conducted separate dealings with WorldAudio. Once again, the solicitors were involved on behalf of GBRA. A written agreement was entered into which appeared to grant to WorldAudio an option to acquire each of the Melbourne licence and the Sydney licence for the sum of $500,000 per licence, a total of $1,000,000.

20 GBRA later asserted that the agreement did not have this effect. GBRA resisted a proceeding by WorldAudio in the Supreme Court of New South Wales for specific performance of the alleged option agreement in respect of the Melbourne licence and the Sydney licence. GBRA was unsuccessful and specific performance was ordered against it.[9]

21 The clients now say that the solicitors were negligent in giving advice in relation to the agreement. This is the basis of the third claim in the present proceeding. It does not fall for further consideration by me.

22 The first claim is pleaded in paragraphs 21-34 of the counterclaim. In summary, the clients plead that the solicitors knew or ought to have known of the Chaney principle and so should have advised the clients to take steps at the outset (in or about February 2001) to secure the prompt dismissal of Marchant's appeal as incompetent. They plead that, as a consequence of the solicitors' failure to do so, 13 months were lost during which the licences remained in the name of Marchant, and GBRA was denied the ability to exploit the licences for commercial reward. They claim over $9 million in damages on that basis, together with smaller amounts for wasted legal costs.

23 In the hearing before me, counsel for the clients explicitly acknowledged that, despite the form of the pleading, the clients do not seek to put forward a case that the solicitors actually knew of Chaney or of the principle for which Chaney stands.[10] Quite the opposite. They say the solicitors should have been aware of it but were not.

24 The clients' notice of appeal includes a challenge to the decision of the Senior Master made on 11 November 2006 to grant to the solicitors an extension of time to appeal against his orders of 27 April 2006 pertaining to the first claim.

25 However, at the hearing before me, counsel for the clients did not say anything in support of this challenge. Perhaps he assessed that it would be unwise to do so because the clients themselves needed an extension of time in relation to the orders made against them on 27 April 2006. In any event, the Senior Master had explained why he had seen fit to grant the extension of time (his concern about inconsistency) and nothing was put to me to throw doubt on the validity of that reason or otherwise to indicate that the extension of time was not warranted. In effect, the case was argued before me on the basis that the extension was no longer in issue. Accordingly, the clients' appeal must be dismissed insofar as it relates to the extension of time.

Should the first claim against the solicitors be summarily dismissed?

26 Counsel for the solicitors submitted that it was clear beyond argument that the first claim was precluded by the immunity from suit recognised by the High Court in Giannarelli and D'Orta. I agree.

27 Giannarelli and D'Orta confirm that an advocate is immune from suit, whether for negligence or otherwise, in relation to the conduct of a case in court and in relation to work "intimately connected" with work in court.[11] The "conduct" of a case covers both acts and omissions.[12] Further, D'Orta confirms or establishes that the immunity can extend to solicitors. In particular, where a legal practitioner (whether acting as an advocate, or as a solicitor instructing an advocate) gives advice which leads to a decision which affects the conduct of a case in court, the practitioner cannot be sued for negligence on that account.[13]

28 The clients point out that a claim cannot be summarily dismissed unless it is manifestly untenable or hopeless. They argue that the failure of the solicitors to properly advise as to the incompetency of Marchant's appeal to the Federal Court cannot be said to be "a decision which affects the conduct of a case in court". They say that it had nothing to do with how the case was to be conducted in court, because "if the correct advice had been provided from the outset then there would have been no case to conduct at all". [14] They cite MacRae v Stevens[15], a decision of the New South Wales Court of Appeal, as being "somewhat analogous". They note that, at least initially, the Senior Master had been of the view that the solicitors' failure to obtain the dismissal of the appeal (on the basis that it was incompetent) during a period of months preceding the hearing of the appeal raised a question which "does not appear to fall within previously identified categories of cases 'so intimately connected with the conduct' of the case, as to attract immunity".[16] The Senior Master had proceeded to observe: "It appears to be arguable that the subject matter of the claim, which is of a failure to act promptly, does not attract the immunity".[17]

29 I am prepared to assume that conduct by a legal practitioner which can properly be characterised as a mere failure to act promptly might, in some circumstances, fall outside the immunity, even when it occurs in connection with litigation already on foot. (I will return to this in dealing with the second claim.) However I do not think it is arguable that the real complaint against the solicitors in the present case can properly be characterised in that way.

30 The clients' real complaint is that the solicitors wrongly believed, and wrongly advised the clients, that Marchant's Federal Court appeal had to be responded to on the legal and factual merits of the controversy concerning the jurisdiction of the AAT with respect to the decision of the ACA. In so advising the clients, it simply did not occur to the solicitors (nor, as it turned out, did it occur to anyone else involved in the matter, except Justice North) that there might be an issue about the competency of the appeal to the Federal Court itself. I note in passing[18] that although the appeal itself was incompetent, the Federal Court was not completely bereft of jurisdiction to review the ruling of the AAT. Had the relevant jurisdiction been invoked at any time by Marchant, the Federal Court would have had a discretionary power to review the ruling under s 39B of the Judiciary Act 1903 (Cth) and possibly also under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth). It is not necessary to consider whether, apart from the immunity, the solicitors' conduct involved negligence nor whether it caused the clients' alleged losses. But the omission to advise about the incompetency of the appeal can only be seen as part and parcel of the solicitors' response to and conduct of the appeal on behalf of GBRA. It is not appropriate to characterise the complaint against the solicitors as a complaint about delay on their part or as a complaint about a failure to "act promptly". Delay in achieving the dismissal of the appeal, or in enabling the clients to resume control of the licences, may have been a consequence of the relevant conduct of the solicitors, but that conduct was not itself in the nature of delay or failing to act promptly. The solicitors did not delay in taking any particular step which they were instructed by the clients, or advised by counsel, to take.

31 The present case is not like MacRae v Stevens. In that case a barrister had given clearly negligent advice that a personal injury claim "would have to be brought in Queensland". This was wrong. The claim could have been brought in New South Wales. The bringing of the proceeding in New South Wales would have avoided limitation of actions problems in Queensland. The claim became statute barred. The New South Wales Court of Appeal held that it would be "artificial" to say that the advice about where to issue the proceeding was advice of a kind that "leads to a decision affecting the conduct of the case in court".[19] MacRae v Stevens was referred to by McHugh J in D'Orta.[20] It is not easy to reconcile MacRae with some of the other cases referred to by McHugh J, including, in particular, Keefe v Marks.[21] In any event, MacRae is readily distinguishable from the present case. The advice given by the barrister in MacRae was given only once, prior to the issue of any proceedings. Indeed no proceedings were ever issued. By contrast, in the present case, Marchant had filed and served his notice of appeal in the Federal Court and the solicitors were then called upon to advise GBRA from time to time as to how the appeal should be defended. What occurred thereafter is summarised in a chronology that was put before the Senior Master, and before me, without objection. There were directions hearings. The solicitors briefed a barrister, who later became unavailable. Another barrister, Mr Appadurai, was briefed. Detailed written contentions of fact and law were required to be filed, and were filed, on both sides. The error under which the solicitors were labouring persisted right up until the eve of the trial. The nature and quality of their relevant conduct was the same at the end as it had been at the outset.[22] There was at all times a clear connection, indeed an "intimate connection", between the omission complained of and the way in which the actual hearing was to be conducted.

32 The facts of the present case cannot sensibly be distinguished from those of Giannarelli. In Giannarelli, counsel omitted during the trial and during the intermediate appeal to take the point which eventually succeeded in the High Court. As a result, the clients spent time in custody which they would not otherwise have spent, and incurred wasted legal costs. Now that D'Orta confirms or establishes that both solicitor-advocates and solicitors instructing counsel are covered by the immunity to the same extent as counsel, that coverage must be seen to extend to the omission of the solicitors to take the point in question in the present case.

33 It is true that in MacRae v Stevens Beazley JA made mention of the fact that the barrister's advice as to when the claim should be issued was not referable to tactical reasons, such as seeking to identify a jurisdiction with advantages for the proposed plaintiff, but rather was simply a mistaken piece of advice, attributable to inadvertence. However, in Wilson v Rigg[23], Rothman J held that this feature of MacRae did not support the proposition advanced on behalf of the claimant in Wilson that, in relation to out-of-court work, it was only a "deliberate strategic decision" to which the immunity attached. For reasons he explained elaborately, Rothman J concluded, especially by reference to D'Orta and Keefe v Marks, that whether the conduct in question was deliberate or inadvertent was irrelevant; it mattered only whether the conduct was "intimately connected" to the hearing in court of the cause[24]. Rothman J held that the legal position was sufficiently clear in this regard to warrant the summary dismissal of the relevant claim. I respectfully agree with his Honour's analysis. It is given further significant support by the obiter observations of Branson J in relation to advocates' immunity in Yates v Boland[25] at first instance and by the endorsement of those observations by Gleeson CJ and Callinan J respectively on the appeal to the High Court.[26]

34 I raised with counsel the question whether D'Orta had restricted the immunity to situations in which the proposed attack on the legal practitioner would bring into question the correctness of a previous court decision. Peter Cane has argued that just such an implication should be seen in D'Orta, because the joint majority placed almost the entire weight of justifying the immunity on the "finality argument", i.e. the proposition that allowing clients to sue advocates would derogate from and undermine the principle of the finality of court decisions.[27]

35 Counsel for the clients did not embrace this suggestion. He recognised, as had Peter Cane himself, that the actual outcome in D'Orta was not consonant with any such restriction. To have allowed Mr D'Orta-Ekenaike to sue the legal practitioners who advised him to plead guilty at the committal before the first trial would not have undermined the jury's verdict in the second, ultimate trial.[28] Similarly, the supposed restriction would sit ill with the outcome in Giannarelli, the judgment in which was applied in D'Orta. Further, as McHugh J noted in D'Orta, the immunity has been applied in relation to negligently advising a settlement.[29] In Chamberlain v Ormsby (trading as Ormsby Flower),[30] a case decided by the New South Wales Court of Appeal after D'Orta, it was held, obiter, that the immunity applied in relation to advice given by a barrister to an injured worker to accept a settlement of his case before the Compensation Court.[31]

36 In any event, there is a sense in which allowing the clients' first claim to proceed against the solicitors would undermine the finality of the decision in the Federal Court case. It is not self-evident that, had the Chaney point been raised by the solicitors at an early stage, there would simply have been an earlier decision identical to the decision of North J. As I have already mentioned, at no time during the pendency of Marchant's appeal did the Federal Court lack jurisdiction to review the correctness of the AAT's own jurisdictional ruling. Quite feasibly, had the Chaney point been raised at a different time or before a different judge or with different counsel representing Marchant, the response may have been to seek to convert the appeal into an application under s 39B of the Judiciary Act 1903 or an application under s 5 of the ADJR Act, or simply to issue a fresh proceeding of such a kind.

37 In my view it is clear beyond doubt that the advice complained of was advice which led to a decision about how the case should be conducted in court[32]; and, accordingly, that the advice was "intimately connected" with the conduct of the case in court.[33] It follows that, in my opinion, the first claim against the solicitors must be dismissed. This will involve the removal of paragraphs 21-34 of the counterclaim.

Should the solicitors' claim for contribution or indemnity against the barrister remain summarily dismissed?

38 The solicitors submitted that the clients' first claim against them and the solicitors' own third party claim against the barrister should be treated in exactly the same way. The solicitors' primary position was that the clients' first claim should be summarily dismissed, and I have so held. There was no suggestion of any special facts whereby the barrister, but not the solicitors, might be denied the immunity. Indeed, counsel for the solicitors acknowledged that if the clients' first claim were summarily dismissed the solicitors' appeal against the Senior Master's order dismissing the third party proceeding should itself be summarily dismissed. I will so order. The Senior Master also ordered that the solicitors pay the barrister's costs of the third party proceeding (including the costs of the application to the Senior Master and any costs reserved). Subject to any further submissions, I would also dismiss the solicitors' appeal against that order and I would further order that the solicitors pay the barrister's costs of the relevant appeal.

39 The second claim is pleaded in paragraphs 35-48 of the counterclaim. It is headed "As to the Plaintiff's conduct in the proceedings in the Supreme Court of Victoria". The clients' complaint is confined to the conduct of the solicitors up until 8 May 2001, being the date on which the interlocutory injunction was discharged by Beach J. The pleading of the second claim involves some overlap with the allegations the subject of the first claim.

40 Paragraphs 35-38 of the counterclaim may be summarised as follows. In or about February 2000 GBRA became aware that Marchant had purported to lease out the Sydney licence for a period of 12 years. On or about 26 May 2000[34], the clients applied for and obtained the interlocutory injunction against Marchant. Prior to the interlocutory injunction being granted, the solicitors were aware of certain facts concerning the issuing of shares in an English company, GB Radio Limited ("GB Radio UK") which was the beneficial owner of 94% of the issued shares in GBRA. Despite that knowledge, the solicitors did not advise the clients that, in applying for the injunction, the clients should make further or more specific disclosure of those facts than they had already done.

41 It is desirable to set out the whole of paragraphs 39-48 of the counterclaim (save the lengthy particulars of loss and damage subjoined to paragraph 48)[35]:

"39. In granting the Marchant injunction, the Supreme Court of Victoria imposed on the parties directions as to the expeditious conduct of interlocutory steps ('the fast-track directions').

The fast track directions are recorded in the Orders made by Justice Beach on 26 May 2000. A copy of the Orders will be provided on request.

The Plaintiff failed to conduct the proceedings in the Supreme Court of Victoria on behalf of GBRA and the other Defendants with due diligence and despatch and, in particular, by its inaction failed to ensure that GBRA complied with the 'fast track' directions given by Mr. Justice Beach.
On 6 April 2001, Marchant applied to the Supreme Court seeking to have the Marchant injunction discharged and in doing so relied principally upon:

(a) the alleged failure of the Defendants to comply with the fast-track directions; and

(b) the alleged failure of the Defendants to inform the Court of material circumstances relating to the issue of shares in G.B. Radio.

At no time prior to the hearing of Marchant's application, and despite the knowledge of the Plaintiff of the matters in paragraph 37 above, were the Defendants informed by the Plaintiff of the necessity and/or desirability of filing affidavit material which responded in all necessary detail to the allegations made by Marchant in relation to the issue of shares in G.B. Radio in circumstances where, had such material been filed in Court and relied upon by the Defendants, the Marchant injunction would not, alternatively, might not have been discharged.
On 8 May 2001, Mr Justice Beach discharged the Marchant injunction because:-

(a) GBRA was unable to satisfy the Court that it had not been guilty of delay, when obtaining prompt dismissal of Marchant's appeal (as referred to in paragraphs 26 to 31 above) would have avoided that conclusion;

(b) the fact that GBRA had not complied with the 'fast track' directions of Mr Justice Beach, constituted by inadequate efforts to obtain proper discovery and allowing delays to occur in the interlocutory steps of the proceedings in the Supreme Court;

(c) in his view, GBRA had failed to inform the court of material facts and circumstances relating to the issue of shares in GB Radio UK, which made it inequitable for the injunction to continue against Marchant.

Following the discharge of the Marchant injunction on 8 May 2001, and without the knowledge of GBRA or any of the Defendants, but being able to do so by reason of the discharge of the Marchant injunction, on or about 16 May 2001:

(a) Marchant entered into a Use Agreement with Mr. Jim Henry ('Henry') or his nominee in respect of the Licences for the sum of $2,000 per month for a period of 10 years from 16 May 2001 and which agreement contained an option whereby Marchant purported to grant to Henry or his nominee the option to take a transfer of the Licences for an exercise price of $200,000 payable on receipt of transfer of each of the Licences.

The Use Agreement is in writing and a copy of the Agreement will be provided on request.

(b) Henry entered into a Nomination Agreement with World Audio Group whereby Henry agreed to nominate World Audio Group to assume the obligations of Henry under the Use Agreement referred to in sub-paragraph (a) in consideration of which nomination World Audio Group agreed to pay Henry a fee equivalent to $800,000.

The Nomination Agreement is in writing. A copy of the Nomination Agreement will be provided upon request.

The conduct of the Plaintiff referred to in paragraphs 38, 40 and 42 hereof constituted breaches of the Retainer and breaches of the tortious duties.

(a) the breaches of the Retainer and the Plaintiff's breaches of the tortious duties referred to in paragraph 32 hereof; and

(b) the breaches of the Retainer and the Plaintiff's breach of the tortious duties referred to in paragraph 45 hereof the conduct of Marchant referred to in paragraph 44 hereof could not, alternatively would not, have occurred.

The dissolution of the injunction enabled Marchant to present himself to third parties on or after 8 May 2001 as the registered and lawful proprietor of the Licences, notwithstanding the existence of both the AAT proceeding (which had yet to be heard and determined by the AAT) and the Supreme Court of Victoria proceeding (which had yet to be heard and determined by that Court).

The breaches referred to in paragraph 46 hereof enabled Marchant to engage in the conduct referred to in paragraph 44 hereof, whereas if those breaches had not occurred then:

(a) upon the making of the order of the AAT (in fact made on 24 September 2002) that the ACA re-issue the Licences to GBRA:

(i) GBRA would have been able to commercially exploit the Licences without any competing interest being alleged by any other person;

(ii) GBRA would not have been under any commercial pressure to enter into an agreement with World Audio Group so as to enable GBRA to earn revenue from the commercial exploitation of the Licences; and

(b) GBRA would not have entered into an agreement with the World Audio Group giving it the right to acquire the Licences for $500,000 each, being the consideration specified in the World Audio Agreement referred to in paragraph 55 below.

In consequence of the Plaintiff's breaches of duty as aforesaid, the Defendants have suffered and continue to suffer loss and damage."

42 The particulars of loss assert that GBRA has suffered a loss of over $109 million, or alternatively a loss of approximately $2.6 million, by way of loss of opportunity to exploit the licences commercially, plus amounts for legal costs. They also assert that the individual counterclaimants have suffered losses of substantial salary.

Should the clients have leave to appeal out of time against the order of 27 April 2006 which dismissed the second claim against the solicitors?

43 The clients seek an extension of time to appeal against the order summarily dismissing their second claim, on four broad grounds. First, they say that they decided not to appeal originally because the solicitors had decided not to appeal against the Senior Master's refusal to dismiss the first claim. (As mentioned above, there is some overlap between the two claims.) Second, as soon as the Senior Master, of his own motion, granted the solicitors an extension of time, the clients made their own corresponding application. Third, the clients say that there is merit in their proposed appeal. Fourth, they say that there is no significant prejudice to the solicitors.

44 Without consenting to the extension of time sought by the clients, counsel for the solicitors said little in opposition to it. He did point out that an application to amend the counterclaim had been made by the clients on the basis that the orders of 27 April 2006 would stand, and that both sides had incurred costs in dealing with that application. However I think that this point can be met by an appropriate order as to costs.

45 In my view there is enough in the four grounds combined to indicate that the necessary extension of time should be granted, and I will so order.

Should the appeal against the summary dismissal of the second claim be allowed?

46 Insofar as the second claim is based on the alleged failure of the solicitors to advise the clients that, in applying for the interlocutory injunction, the clients should make further or more specific disclosure of matters concerned with the issuing of shares in GB Radio UK, it is absolutely clear that the immunity applies.

47 I have not found it necessary to set out in terms the lengthy pleadings and particulars relating to the matters concerned with the issuing of the shares, but I should say that the particulars under paragraph 37 include allegations that the solicitors advised the clients to have the relevant information and documents available at the Court on the very day of the hearing of the injunction application; that the clients did so; but that the material was not admitted after Beach J said words to the effect that he already had enough material to decide the application. In these circumstances it is difficult to understand how the solicitors could be criticised at all, but in any event it could not be clearer that the conduct complained of was either conduct in court or conduct "intimately connected" with in-court work.

48 In the end, counsel for the clients acknowledged[36] that he could not place any reliance on the assertion that different advice should have been given as to the disclosures to be made to Beach J in relation to the application for the interlocutory injunction. That component of the allegations contained in paragraphs 35-48 of the counterclaim cannot stand.

49 In fact, in the hearing before me, counsel for the clients confined himself to a single aspect of the second claim, namely alleged "inaction" on the part of the solicitors. In so doing, he concentrated on paragraph 40 and sub-paragraphs 43(a) and (b) of the counterclaim. As indicated above, paragraph 40 alleges that the solicitors failed to conduct the proceedings in this Court "with due diligence and despatch" and in particular that by their "inaction" they failed to ensure that GBRA complied with the "fast track" directions given by Beach J. Sub-paragraph 43(a) alleges that one reason why Beach J discharged the injunction on 8 May 2001 was the inability of GBRA to satisfy his Honour that it had not been guilty of delay, when obtaining prompt dismissal of Marchant's appeal would have avoided that conclusion. Sub-paragraph 43(b) alleges that another reason for the discharge was "that GBRA had not complied with the 'fast track' directions of Mr Justice Beach, constituted by inadequate efforts to obtain proper discovery and allowing delays to occur in the interlocutory steps of the proceedings in the Supreme Court." It will be recalled that the third alleged reason was the non-disclosure on which the clients acknowledge they can no longer rely.

50 By common consent, the reasons for judgment of Beach J for his order of 8 May 2001[37] had been put before Senior Master Mahony and were put before me. By reference to those reasons, the Senior Master had concluded that the sole reason why Beach J had discharged the injunction was the non-disclosure, notwithstanding that in the introductory part of his reasons Beach J had referred to the parties' delay ("notably" that of the clients) and to their failure to adhere to the "fast track" timetable. Before me, counsel for the solicitors supported this conclusion of the Senior Master.

51 Counsel for the clients submitted that the judgment of Beach J left room to argue that his Honour's reasons for discharging the injunction included the alleged delay and non-compliance with directions. And counsel further submitted that, regardless of what may have motivated Beach J in May 2001, the clients wished to be free to try to make out a case that the solicitors should have ensured that the case was ready for a final hearing in August or September 2000 in accordance with the intention of Beach J as at the time of granting the interlocutory injunction.

52 I have read and considered carefully the reasons for judgment of Beach J of 8 May 2001. The matter was dealt with in the busy Practice Court, although I note that judgment was reserved for six days. I agree with counsel for the clients that there is some room (though I would say not very much) to argue that the delay and the non-compliance with directions may each have played a small part in his Honour's decision to discharge the injunction. On the other hand, each may have played a larger part in his Honour's decision not to grant a fresh interlocutory injunction: see para [24] of his Honour's reasons.

53 However, I would not permit the clients to rely on delay in the way they seek to do in sub-paragraph 43(a) of the counterclaim. The allegation in that sub-paragraph is, in substance, merely repetitive of the allegation which founded the first claim against the solicitors, namely the allegation of negligence in the conduct of the AAT/Federal Court proceedings. The claim founded on that allegation being precluded by the immunity (as I have held), it cannot be relied upon in the indirect way pleaded in sub-paragraph 43(a) or at all.

54 That leaves the allegation of delay or inaction in relation to the conduct of the Supreme Court proceedings themselves.

55 I am not prepared to hold that it is clear beyond argument that the immunity precludes any claim at all against a solicitor for conduct which can properly be characterised as sheer delay or mere inaction. Counsel for the solicitors argued that everything done or not done by a solicitor in connection with litigation was protected by the immunity, except in the case of "fraud or reckless indifference, not acting honestly...[or failing to] follow specific instructions"[38]. However he was unable to point to any clear authority for such a sweeping proposition. In my view it is at least arguable that Giannarelli and D'Orta leave room for solicitors (and barristers) to be found liable in negligence for, at least, conduct which can properly be characterised as sheer delay or mere inaction (where action is required).

56 It may frequently be very difficult to isolate or identify an instance of sheer delay or mere inaction. In Feldman v A Practitioner[39], without the benefit of Giannarelli or D'Orta, Bray CJ, speaking of a practitioner who acts as both solicitor and counsel, said[40]:

"If as counsel he advised himself as solicitor at some stage in the pretrial history that there was enough evidence on the topic then, even if he acted negligently, he would be immune from suit. If, however, as solicitor he failed to obtain material which it was within his power to obtain to put before himself as counsel for advice on evidence, or if he failed to obtain such material after being advised by himself as counsel that it was necessary to do so, then it may well be that he would be liable in negligence."

In Yates v Boland[41] Branson J cited this passage and commented:

"Bray CJ expressly recognised the artificiality of the dissection of the work of a practitioner acting both as solicitor and barrister but he considered that the authorities required such a dissection to be made."

In D'Orta[42], McHugh J observed that any barrister who, being briefed to appear, simply failed to turn up to court would be liable; and that a solicitor who, at the last minute, handed over a case in court to another solicitor unfamiliar with the facts would also be liable.

57 Without suggesting that the present case is of such a nature, I would find it surprising if a solicitor who through sheer careless delay or inaction allowed a critical date to pass in the course of a piece of litigation could never in any circumstances be liable to the client for any harm suffered in consequence[43].

58 In any event, as the counterclaim presently stands, the clients' allegations and proposed allegations of pure delay or inaction are not clearly stated or sufficiently particularized. Indeed counsel for the clients acknowledged that, at present, the counterclaim does not sufficiently express the proposed allegation that the solicitors were negligent in not ensuring that the case was ready for a final hearing in August or September 2000[44]. He agreed that the appropriate course may be for the Court to require the clients to provide further particulars and to reserve to the solicitors the right to return to court seeking the dismissal of the claim as further particularised[45].

59 On reflection, it seems to me that the best course is to allow in part the appeal against the summary dismissal of the second claim but nevertheless to order that all of the paragraphs founding that claim, ie paragraphs 35-48, be struck out under r 23.02, with a right to re-plead within a limited period. The re-pleaded claim must exclude what is presently in sub-paragraphs 43(a) and (c) and what is in the corresponding parts of the rest of the present pleading. The liberty to re-plead is confined to the pleading of the proposed claim based on sheer delay or mere inaction (between 26 May 2000 and 8 May 2001) articulated by counsel for the clients in the hearing before me. The solicitors will be at liberty to move under r 23.01 or r 23.03 to dismiss the re-pleaded claim if they be so advised.

60 For the reasons stated I would deal with the substantive issues in the manner indicated in sub-paragraphs 8(1)-(5) above.

61 Subject to hearing from counsel, I would be inclined to deal with costs in the way indicated in sub-paragraph 8(6) above.

62 Because of the complex procedural history of this matter and the number of parties and claims and for other reasons, there is some nicety required in the formulation of the appropriate orders. It was noted during the hearing that the solicitors' notice of appeal does not properly identify the orders of the Senior Master which were intended to be the subject of the appeal in relation to the first claim. I see also that although the clients' notice of appeal seeks leave to appeal out of time against the order of the Senior Master dismissing the second claim it does not in terms include notice of an appeal against that order. I have formulated a set of proposed orders designed to give effect to my conclusions on the substantive issues and to my tentative conclusions as to costs. Proposed order 2 would, I think, provide for the necessary amendment of the solicitors' notice of appeal. Proposed order 9 would, I think, provide for the necessary amendment to the clients' notice of appeal. Subject to any further submissions as to the appropriate form of the orders or as to costs, I would order as follows:

(1) The appeal by the plaintiffs by counterclaim against paragraph 2 of the order made by Senior Master Mahony on 16 November 2006 upon the third party's summons filed on 5 July 2006 (being the paragraph extending the time within which the defendants to counterclaim might file and serve a notice of appeal against certain orders made on 27 April 2006) be dismissed.

(2) The notice of appeal dated 23 November 2006 filed on behalf of the defendants to counterclaim be taken to be amended such that instead of paragraph (a) thereof there is substituted-

"(a) paragraphs 2-4 of the orders made on 27 April 2006;"

(3) The appeal by the defendants to counterclaim against paragraphs 2-4 of the orders made by Senior Master Mahony on 27 April 2006 is allowed and those orders are set aside.

(4) The claim founded on paragraphs 21-34 of the counterclaim is dismissed and judgment is hereby given in respect of that claim in favour of the defendants to counterclaim accordingly.

(5) The costs of the defendants to counterclaim in respect of the claim founded on paragraphs 21-34 of the counterclaim (including their costs of the application for leave to amend made by the defendants/plaintiffs by counterclaim by summons filed on 27 July 2006 and dealt with by Senior Master Mahony on 16 November 2006) shall be paid by the plaintiffs by counterclaim.

(6) The appeal by the defendants to counterclaim against paragraphs 1 and 6 of the order made by Senior Master Mahony on 16 November 2006 upon the third party's summons filed 5 July 2006 (being the paragraphs of that order whereby the third party proceeding was dismissed with costs) is dismissed.

(7) The defendants to counterclaim pay the third party's costs of the relevant appeal.

(8) The plaintiffs by counterclaim have leave to appeal out of time against the judgment given by Senior Master Mahony on 27 April 2006 whereby their claim founded on paragraphs 35-48 of the counterclaim was dismissed ("the said judgment") and also have leave to appeal out of time against the associated order made by the Senior Master on that day reserving the costs of the defendants to counterclaim in respect of that claim ("the said order").

(9) The notice of appeal dated 23 November 2006 filed on behalf of the plaintiffs by counterclaim be taken to include notice of an appeal against the said judgment and the said order; and the time for the filing and serving of the notice of appeal is extended as far as necessary accordingly.

(10) The appeal by the plaintiffs by counterclaim against the said judgment and the said order is allowed in part and both the said judgment and the said order are set aside.

(11) Paragraphs 35-48 of the counterclaim are struck out, with liberty to re-plead, on or before 7 February 2008, to the extent indicated in the Court's reasons for judgment delivered on 13 December 2007 and without prejudice to the right of the defendants to counterclaim to apply for the summary dismissal of the re-pleaded claim.

(12) Save as otherwise provided in these orders, the costs of the proceedings before the Senior Master and the costs of these appeals are costs in the cause.

[3] The outline which follows draws in part on a summary of the background facts set out in a ruling given by Hargrave J on 27 June 2005 in the abovementioned proceeding in this Court (no 4408 of 2000): see [2005] VSC 222 at [10]- [20].

[4] See Re GB Radio Australia Pty Ltd and Australian Communications Authority and Marchant (partly joined) [2002] AATA 919; (2002) 72 ALD 548, 557 [48].

[5] Court records show that the matter was finally disposed of by consent in February 2006.

[9] WorldAudio v GB Radio Pty Ltd [2003] NSWSC 855; WorldAudio v GB Radio (Aust) Pty Ltd [2003] NSWSC 1023.

[11] D'Orta [2005] HCA 12; (2005) 223 CLR 1, 31 [85]-[87].

[13] [2005] HCA 12; (2005) 223 CLR 1, 32 [91]. See also at [168] per McHugh J and at [384] per Callinan J.

[14] Written outline of submissions, para 21.

[16] See para 2 of "Other Matters" in the order of 27 April 2006.

[19] (1996) Aust Torts Reports 81-405 at 63,690 per Beazley JA (with whom Meagher JA agreed); see also at 63,681 per Priestley JA.

[22] Cf Keefe v Marks (1989) 16 NSWLR 713; Boland v Yates [1999] HCA 64; (1999) 167 ALR 575, 670-671 [363] per Callinan J; D'Orta [2005] HCA 12; (2005) 223 CLR 1, 56 [167] per McHugh J.

[24] [2005] NSWSC 1351 at [56] - [64], esp at [62].

[26] Boland v Yates [1999] HCA 64; (1999) 167 ALR 575 at [96]- [97] and [360]-[365]. Branson J had held that the lawyers were not guilty of any negligence or other default. She further held, obiter, that the lawyers would in any event be immune from suit by reason of Giannarelli. Both of those holdings were overturned by the Full Federal Court. The High Court unanimously restored the "no negligence" holding. Both Gleeson CJ and Callinan J, obiter, expressed their agreement with the approach of Branson J in relation to the immunity. Kirby J would have abolished the immunity except for work actually done in court. The other members of the Court did not express a view on the immunity questions. However Gummow J pointed out at [114] that the view of the Full Federal Court in relation to the immunity was no longer of any precedential value or persuasive force.

[27] P. Cane 'The new face of advocates' immunity' (2005) 13 Torts Law Journal 93. See also Chamberlains v Lai [2006] NZSC 70 at [52].

[28] Allowing the suit might arguably have called into question the propriety of the jury's verdict in the first trial, but that verdict itself had already been overturned on appeal.

[29] Biggar v McLeod [1978] 2 NZLR 9. See D'Orta at [154], but compare [156] and [166].

[31] [2005] NSWCA 454 at [5], [120] - [121].

[32] See D'Orta [2005] HCA 12; (2005) 223 CLR 1, 32 [91].

[33] See D'Orta [2005] HCA 12; (2005) 223 CLR 1, 31 [86] per the joint majority; 51-53 [150]-[157] per McHugh J.

[34] As mentioned above, the proceeding itself was commenced in February 2000 and a series of interim injunction were obtained by consent prior to the application for the interlocutory injunction.

[35] The pleading refers to "the Defendants", who include Alan Thomas, but he is not a counterclaimant. It also refers to "the Plaintiff", but, for present purposes this should be treated as a reference to "the solicitors" as defined above.

[37] [2001] VSC 98. His Honour's reasons for granting the interlocutory injunction on 26 May 2000 were also included in the evidentiary material: see [2000] VSC 213.

[43] Compare, however, the observations of Callinan J concerning lawyers' immunity in Boland v Yates, especially at [361], including in particular his Honour's quotation from Keefe v Marks; and see also the remarks of Gleeson CJ in Boland v Yates at [97].

Court (General Civil Procedure) Rules 2005

Appeals Tribunal Act 1975