WHITE v FORSTER

The reasoning of the primary judge

1. In White v Forster [2014] NSWSC 1767 (Trial Judgment), the primary judge struck out the claim against the solicitor on the basis that the breaches alleged against him were in respect of work done out of court which led to a decision affecting the conduct of a case in court, or work intimately connected with the case in court, and thus subject to the advocates immunity from suit: D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1 (D'Orta) at [86]; Giannarelli v Wraith [1988] HCA 52; 165 CLR 543 (Giannarelli) at 560.
2. His Honour struck out the claim against the barrister on the basis that the proceedings were instituted six years after the cause of action arose and thus were statute-barred: Limitation Act 1969 (NSW) s 14.
3. In relation to the question of the immunity of the solicitor from suit, the primary judge concluded that the particulars boiled down to one fundamental proposition, namely, the solicitor was negligent in suing Mr Thompson personally in debt rather than claiming a proprietary interest in the Somersby property as against Mr Thompson and through him Mrs Thompson.
4. In relation to the claim of negligence arising from the failure to join Mrs Thompson, the primary judge accepted that there were occasions when a failure to sue a person would fall outside the immunity. He said that in each case, it was a matter of applying the test in D'Orta to the evidence.
5. The primary judge distinguished the case from Saif Ali v Sydney Mitchell & Co (1980) AC 198 (Saif Ali). He stated that in that case, the alleged negligence in failing to join a party to the proceedings did not have any connection to the discontinuance of the proceedings against the person initially said to be primarily liable to the plaintiff. He said that by contrast, in the present case, "the only way that the Somersby property could be traced against Mrs Thompson is through Mr Thompson" who had only been sued in debt: Trial Judgment at [65]-[66].
6. The primary judge noted that some of the particulars supplied were framed as a failure to advise the applicants of certain matters. He pointed out, nonetheless, that the case involved what he described as a negligent exercise of "forensic options": Trial Judgment at [69].
7. The primary judge finally stated that although he did not regard it as necessary to demonstrate, the claim against the solicitor and the barrister would involve a collateral attack on the judgment entered in the proceedings determined by Gzell J.
8. The primary judge concluded that the position was so clear that the claim against the solicitor should be struck out. He also stated that had he not been of the view the proceedings should be struck out because of the immunity on what might be described as General Steel principles (General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129), he would have determined the question as "a preliminary substantive question" and reached the same result: Trial Judgment at [88].
9. The primary judge also indicated that if he had reached a contrary conclusion, he would have struck out the claim against the barrister on the same basis as the claim against the solicitor was struck out.
10. However, in relation to the barrister, the primary judge held that the claim was statute-barred. He held that the cause of action arose on 8 December 2005, the date upon which Gzell J delivered his judgment, because on that day the opportunity to bring a proprietary claim ceased to exist. He rejected the submission that the opportunity to bring such a claim was only foreclosed by the orders of Biscoe AJ, stating that an irrevocable election had been made to pursue the claim on the basis of a debt due, such election being made at the latest at the date Gzell J gave judgment. He described the process of account undertaken by Biscoe AJ as a process roughly equivalent to the assessment of damages after a determination of liability.
11. The primary judge also rejected the submission that after the judgment of Gzell J, the applicants could have continued to sue Mrs Thompson on the basis of tracing, relying on the passages from the judgment of Handley AJA in the Court of Appeal, to which I have referred above in par [17].

Was the claim against the barrister statute-barred

1. Section 14 of the Limitation Act 1969, so far as relevant, provides as follows: "14(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims: (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed, (b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty,"
2. It was not in dispute in the present case that the cause of action first accrued when the applicants lost the opportunity to pursue what might be described as a proprietary claim over the Somersby property. The Amended Statement of Claim pleaded, as a head of damage arising from the breach, "Loss of chance of recovery of Joint Venture entitlement funds". In particular, the applicants did not contend that the loss suffered was contingent until such time as Windeyer AJ dismissed the proceedings, to which I have referred in par [17]: c/f Wardley Australia Ltd v The State of Western Australia [1992] HCA 55; 175 CLR 514 at 532.
3. The issue on this application for leave is whether time began to run from the date of the orders made by Gzell J or from the date of the orders made by Biscoe AJ.
4. In their written argument, the applicants accepted that the judgment of Handley AJA explicitly stated that any attempt to bring fresh proceedings, or to amend the existing proceedings to bring a proprietary claim, after the judgment of Gzell J, would have been doomed to fail.
5. However, the applicants submitted that the judgment of Handley AJA did not create an issue estoppel. They submitted that the issue before Gzell J was whether there was any joint venture at all and the relief granted was "as to the nature and extent of the joint venture". The applicants submitted that this did not amount to an election not to bring a proprietary claim against Mrs Thompson
6. Counsel for the applicants referred to the statement by Lord Atkin in United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30 (cited with approval by Handley JA in Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438; 67 NSWLR 457 at [32]), to the effect that where alternative remedies are available, no question of election arises until one or other of the remedies has been brought to judgment. He submitted that the remedy of account was not brought to judgment until the orders were made by Biscoe AJ.
7. The difficulty with that submission is that all that remained, at least after the orders made by Gzell J on 15 December 2005, was the quantification of the amounts due as a result of those orders. As was pointed out by Handley AJA in the Abuse of Process Appeal at [38], rights to a judicial account must be established at trial. Any accounts and inquiries ordered at the trial merely follow consequentially. The judgment of Gzell J finally determined the right to an account.
8. Even if it could be said that that right and a tracing claim were not inconsistent, for the reasons given by Handley AJA in the Abuse of Process Appeal at [48]-[50], the applicants elected to conduct their case before Gzell J on the basis that the withdrawals by Mr Thompson from the joint venture funds created a debt, in respect of which an account should be ordered and they did not make an alternative claim on the basis that the drawings were unauthorised. It was for these reasons that Handley AJA concluded that any claim after the order made by Gzell J, on the alternative basis suggested, would be an abuse of process.
9. Whilst it was submitted that the judgment of Handley AJA did not create an issue estoppel, no suggestion was made that his reasoning, which was concurred in by other members of the Court, was incorrect, much less plainly wrong.
10. In these circumstances, any claim for a proprietary remedy was foredoomed to fail, at least following the orders made by Gzell J on 15 December 2005.
11. It follows that any cause of action against the barrister accrued more than six years prior to the action being commenced against him and the primary judge was correct in concluding that it was statute-barred.
12. The primary judge was correct in ordering that the statement of claim, so far as it sought relief against the barrister, be struck out.

Did the principles of advocates' immunity apply to the claims made in the Statement of Claim

1. This issue only strictly arises in respect of the claims against the solicitor.
2. The applicants' submitted that the negligence alleged was a failure to join Mrs Thompson. They contended that a negligent failure to join a party was not the subject of advocates' immunity, relying on Saif Ali and what was said by McHugh J in D'Orta at [156].
3. It may be accepted that a negligent failure to join a party against whom a person had a cause of action may not be covered by the immunity. This is because such a failure may not be said to relate to work done out of court which leads to a decision affecting the conduct of a case in court or work intimately connected with work in court. The case of Saif Ali is a good example. In that case, proceedings arising out of injuries sustained in a motor vehicle accident had been commenced against the owner of a vehicle, on the basis that the driver was his agent. The legal advisers for the appellant subsequently received advice that the driver may not have been the owner's agent. Notwithstanding, they failed to join the driver. The claim against the owner was subsequently discontinued and the plaintiff left without a remedy.
4. In those circumstances, the House of Lords held that the immunity from suit, which was then held to exist in the United Kingdom, did not apply. The Court held that the failure to join the driver was not intimately connected with the case in Court: Saif Ali at 215-216 per Lord Wilberforce, 222-224 per Lord Diplock. Further, as Lord Diplock pointed out, the determination of the claim against the legal advisers would not involve a reconsideration of issues dealt with in a prior proceeding.
5. In the present case, the reality of the complaint made by the applicants is that in formulating and pursuing the cross-claim in the proceedings, the solicitor failed to advise and bring a proprietary claim in respect of the Somersby property, to which it would be necessary to join Mrs Thompson.
6. Once it is accepted that the real complaint was a failure to pursue a proprietary remedy, it is apparent that the essence of the applicants' claims was that the solicitor and barrister were negligent in advising on the appropriate form of relief. In my opinion, in the circumstances of this case, any such failure was in respect of work done out of court affecting the conduct of the case in court, such that the immunity from suit applies. Although such a claim would have involved the joinder of Mrs Thompson, that was ancillary to the claim for relief, rather than as a result of the applicants having a claim against her independent of the claim against Mr Thompson.
7. The application of the immunity in the present case leads to finality of litigation. The claims against the barrister and solicitor would involve a rehearing of the claim against Mr Thompson on a different basis to that which in fact occurred. As Handley AJA pointed out in the Abuse of Process Appeal at [49], the case before Gzell J was framed on the basis of a claim in debt. Any relitigation of the proceedings on a different basis, if successful, would necessarily impugn the result of the litigation before Gzell J and the final orders of Biscoe AJ. Although this may not be determinative of whether the immunity applies, the fact that proceedings would have that effect supports the conclusion that the decision to seek a remedy of an account, rather than a proprietary remedy, was one made as a result of work done out of court which directly affected the conduct of the case in court.
8. In these circumstances, the primary judge was correct in striking out the Statement of Claim. He was also correct in his conclusion that, had the claim against the barrister not been statute-barred, this claim would have been struck out on the same basis.
9. It is unnecessary to consider the conclusion of the primary judge that even if the case was not one which should be struck out, he would have reached the same conclusion as "a preliminary substantive question".

Conclusion

1. In the result, leave to appeal should be refused. The case involved no issue of principle and no injustice to the applicants resulted from the orders made by the primary judge. I would order that leave to appeal be refused with costs.
2. Since writing the above I note that the High Court has granted leave to appeal for the purpose of considering whether the decisions in Giannarelli and D'Orta should be reconsidered. Although on one view this may provide a reason for deterring the delivery of this judgment, that course is impractical in the present case due to the impending retirement of Emmett JA.
3. McCOLL JA: I agree with Bathurst CJ's reasons and the orders his Honour proposes.
4. EMMETT JA: The applicants, Mr Julian White and Mr Romeo Libut, seek leave to appeal from orders made by a judge of the Common Law Division on 11 December 2014 ordering that proceedings brought by them against the respondents, Mr Reginald Forster (the Solicitor) and Mr Gregory George (the Barrister), be dismissed summarily. In the proceedings, Messrs White and Libut sued the Barrister and the Solicitor for alleged professional negligence in connection with the conduct of earlier proceedings (the 2003 proceedings) involving claims made by Messrs White and Libut against Mr Byron Thompson. The 2003 proceedings arose out of dealings involving Mr Thompson, Messrs White and Libut, and Aerated Concrete, Design and Construction Pty Ltd (ACDC) in relation to a property at Seaforth (the Seaforth property). Messrs White and Libut were the directors and shareholders of ACDC.

Background

1. In 1997, a joint venture agreement was entered into between Messrs Thompson, White and Libut to redevelop and sell the Seaforth property. In 2003, disputes arose between Messrs White and Libut and ACDC, on the one hand, and Mr Thompson, on the other, concerning the nature of their relationship with respect to the development of the Seaforth property. Messrs White and Libut retained Mr Forster as their solicitor. Mr George represented Mr Libut and also provided advice to Mr White.
2. In June 2003, Messrs White and Libut filed cross-claims against Mr Thompson in the 2003 proceedings, calling on him to account for moneys received by him in connection with the joint venture and seeking damages from him. Earlier in 2003, Mr Thompson's wife had entered into a contract to purchase a property at Somersby (the Somersby property). That contract was later novated to Mr and Mrs Thompson as joint purchasers. The sale of the Seaforth property and the purchase of the Somersby property were completed on 15 May 2003. It appears that funds realised from the Seaforth property may have been applied in the payment of part of the purchase price for the Somersby property.
3. On 15 December 2005, for reasons published on 8 December 2005, Gzell J made orders, relevantly, to the effect that a joint venture agreement existed between Messrs White, Libut and Thompson and that an account should be taken in order to determine the relative entitlements of the parties to the profit of the joint venture. Ultimately, orders were made to the effect that Mr Thompson personally owed Messrs White and Libut a substantial sum of money. However, by the time those orders were entered, a sequestration order had been made in respect of the estate of Mr Thompson. It appears that there are no assets against which Messrs White and Libut can enforce the judgment entered against Mr Thompson.
4. Messrs White and Libut then commenced fresh proceedings in the Supreme Court against Mr and Mrs Thompson (the 2008 proceedings). In the 2008 proceedings, Messrs White and Libut sought to have the Somersby property sold and the proceeds used to adjust the accounts between the joint venture parties. Neither the Solicitor nor the Barrister was involved in those proceedings. On 15 October 2009, the 2008 proceedings were dismissed on the basis that Messrs White and Libut had implicitly elected to forego proceedings against the Somersby property in the 2003 proceedings (by proceeding against Mr Thompson personally) and could not now take proceedings against the Somersby property and Mrs Thompson. An appeal to this Court was unsuccessful and special leave to appeal to the High Court was refused.
5. By statement of claim filed on 7 December 2011, Messrs White and Libut commenced the present proceedings against the Solicitor. On 12 March 2013, an amended statement of claim was filed by which the Barrister was joined as a defendant. On 18 October 2013, the Barrister filed a notice of motion seeking dismissal of the proceedings as against him. On 5 November 2013, the Solicitor filed a notice of motion in relevantly identical terms.
6. On 11 December 2014, Button J ordered that the claim against each of the Barrister and the Solicitor be struck out and ordered Messrs White and Libut to pay the costs of the proceedings. On 6 January 2015, Messrs White and Libut filed a notice of intention to appeal from those orders. By summons filed on 11 March 2015, they sought leave to appeal from the orders. A direction has been given that any appeal, if leave be granted, be heard concurrently with the application for leave to appeal.

The Conclusions of Button J

1. Button J considered that, once the judgment of Gzell J had been delivered on 8 December 2005, the Barrister had made an irrevocable election on behalf of Messrs White and Libut to pursue the claim on the basis of a debt owed by Mr Thompson, rather than on the basis of a proprietary interest in the Somersby property. His Honour held that "the clock started running" at the latest on 8 December 2005 and that Messrs White and Libut were therefore required, pursuant to s 14 of the Limitation Act 1969 (NSW), to commence proceedings against the Barrister before 8 December 2011. They did not do so.
2. Button J concluded that, since the proceedings against the Barrister were commenced after the expiration of the limitation period, they were clearly statute-barred and the Barrister was entitled to have the proceedings dismissed summarily. His Honour also held that, if he was wrong in his determination that the claim against the Barrister was statute-barred, it was precluded by advocate's immunity from suit and he would therefore have struck out the claim on that basis.
3. Button J concluded that the proceedings as against the Solicitor were commenced one day before the six-year limitation period expired, namely, on 7 December 2011. Accordingly, his Honour declined to dismiss the claim against the Solicitor summarily because it was not clearly statute-barred.
4. However, Button J considered that the Solicitor was so clearly entitled to rely on advocate's immunity from suit that the claim against the Solicitor should be struck out. His Honour held that the particulars of professional negligence alleged against the Solicitor demonstrated that the bases of the claim against him were either in respect of work done in court or work done out of court that led to a decision that affected the conduct of the case in court. His Honour considered that the particular facts of the case showed that considerations of finality and avoidance of collateral attack would almost inevitably arise if the immunity were not applied. Therefore, his Honour concluded, the claim against the Solicitor was precluded by reason of advocate's immunity. Accordingly, his Honour dismissed the proceedings summarily as against the Solicitor on that ground.
5. Finally, Button J held that, if he was wrong in concluding that the claims against the Barrister and the Solicitor should be dismissed summarily, he would have ordered that the question of the application of advocate's immunity be determined prior to any other issue, under r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW). Had he done so, his Honour would have concluded that the defence of advocate's immunity would have been made out and he would have entered judgment for the Barrister and the Solicitor.

Disposition of the Appeal

1. I have had the advantage of reading in draft form the proposed reasons of the Chief Justice. I agree with his Honour that the primary judge was correct in striking out the statement of claim as against the Solicitor and in concluding that, had the claim against the Barrister not been statute-barred, the claim against him would have been struck out on the same basis.
2. In those circumstances, as the Chief Justice indicates, it is unnecessary to consider the conclusion of the primary judge that his Honour would have reached the same conclusion as "a substantive matter". Nevertheless, in circumstances where his Honour made no findings concerning the defence of advocate's immunity, it is by no means clear how his Honour would have been able to decide the preliminary question on a final basis.
3. I agree with the Chief Justice that the case involves no issue of principle and that no injustice to the applicants resulted from the orders made by the primary judge. Accordingly, I agree that leave to appeal should be refused with costs.

Amendments 22 September 2015 - par [39] change "Aitken" to "Atkin" 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: 22 September 2015