WOODLAND v DONNELLAN [2011] NSWSC 777 | Case summary

Judgment (7 paragraphs)

[1]

Summary 1RS HULME J: At all material times the Plaintiff and the Second Defendant were the owners of land situate at 2 Panorama Parade, Seaforth. In the matters with which I am concerned the Plaintiff at all times acted on behalf of both and it will be convenient to refer to him without on each occasion referring also to the Second Defendant who has played no significant part in the litigation. 2The Plaintiff obtained conditional Development Approval from Manly Council to subdivide that land. Some of the conditions related to drainage. The Plaintiff sought to meet those conditions by obtaining an easement over adjacent land owned by the Council but the Council refused to grant such an easement. The Plaintiff engaged the First Defendant, a solicitor, who gave advice and then, in early 2000 on behalf of the Plaintiff commenced proceedings against the Council seeking that this Court grant such an easement. There were settlement offers from the Council but the First Defendant advised against accepting them. The proceedings went to hearing. The Plaintiff was unsuccessful. He had to pay his own costs and was ordered to pay the Council's costs including some indemnity costs. On 5 December 2007 he commenced these proceedings against the First Defendant alleging that, in and from December 2001, the Defendant was negligent, in breach of a term of his retainer to exercise reasonable care and skill, and guilty of misleading and deceptive conduct under the Fair Trading Act and seeking damages. 3The First Defendant has defended the proceedings, denying these alleged defaults and also relying on the doctrine of Advocates' Immunity.

[2]

Conclusions 124So far as is presently relevant, s 88K of the Conveyancing Act provides:-

The Court may make an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement.
Such an order may be made only if the Court is satisfied that:- (a) Use of the land having the benefit of the easement will not be inconsistent with the public interest; and (b) The owner of the land to be burdened ... can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement; and (c) All reasonable attempts have been made by the Applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful.
The Court is to provide in the Order for payment ... of such compensation as the Court considers appropriate unless ...
The costs of the proceedings are payable by the Applicant, subject to any order of the Court to the contrary. 125The section became law in December 1995 and at the time of at least some of Mr Donnellan's advice there were only a limited number of cases as to the section's operation. Two, Coles Myer Ltd v Dymocks Book Arcade Ltd [1996] 7 BPR 14,638 and Application of Permanent Trustee Australia Ltd (unreported, Hodgson J, 22 July 1997) [TIPSTAFF CHECK ? (1997) 8 BPR 15,551] may be put aside as not involving any, or any significant, consideration of the "reasonably necessary" requirement or of the topic of costs. 126In Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15,845 Hamilton J, after drawing attention to decisions on an analogous but differently worded Queensland provision, set out the following principles:- (i) One should not interfere readily with the proprietary rights of an owner of land; (ii) The requirement that the easement be "reasonably necessary" does not mean that there must be absolute necessity and the easement may be granted notwithstanding that another means of right of way may exist; (iii) The use of the word "necessary" means that something more than mere desirability or preferability over the alternative means available 127Hamilton J also ordered that the successful plaintiff pay the defendant's costs on an indemnity basis notwithstanding that there was no conduct on the part of the Plaintiff that could be regarded as unreasonable. His Honour's only reasons expressed for doing so were:- Whilst Mr Lindsay SC argues that the defendant will be no better off than if they had accepted the earlier offer of $15,000 together with $5,000 toward costs (bearing in mind the lower amount of the costs they had expended at that point of time), and it follows that the order for costs ought not to be on an indemnity basis, in my view that is the basis on which the order ought to be made. I am told that Simos J made an order for indemnity costs in circumstances not dissimilar in this regard in the Coles Myer case. 128In Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15,795, Windeyer J granted an easement for 6 months so as to enable the plaintiff to erect scaffolding above the defendant's roof to assist in the construction of a building on the plaintiff's land. Before citing Tregoyd Gardens Pty Ltd v Jervis his Honour observed that "'effective use or development' must relate to the relevant zoning and the type of development available for the land so as to give a reasonable return". His Honour accepted that there was at least one method of construction that would enable a building to be erected to the boundary without the easement sought, albeit that this would have involved re-design of the building that the plaintiff desired and construction of which had commenced. 129The successful applicant for the easement was also ordered to pay costs (subject to exceptions in relation to two issues) although Windeyer J gave comfort to the idea that unreasonable behaviour on the part of a defendant to a s 88K application might well result in him not receiving a costs order. 130In 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 8 BPR 15,917, Hodgson J granted easements in order that an inner city building occupying a whole site could be built. One easement was for a gutter to drain rainwater hitting the side of the Plaintiff's building where that wall extended above the height of a building on the Defendant's land. One was for scaffolding in the same general area, albeit the easement was wider. Although the report is not clear I infer that the latter easement was temporary and both of these easements involved space above the roof of the defendant's building. The third easement was to enable a crane used for construction purposes to also swing above the defendant's property. 131Hodgson J observed that "reasonably necessary" does not mean "absolutely necessary" and said:- In my opinion, (1) the proposed easement must be reasonably necessary either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and (2) in order that an easement be reasonably necessary for a use or development, that use or development with the easement must be (at least) substantially preferable to the use or development without the easement. 132His Honour also observed that a development occupying the whole site was financially much preferable to any alternative that did not involve the construction of a multi-storey building or which involved a building not occupying the whole site. Although the Plaintiff was ordered to pay the Defendant's costs, his Honour refused to order that these be on an indemnity basis saying that the terms of s 88K(5) were not such that an indemnity costs order should be made as of course. 133In Hanny v Lewis (1998) 9 BPR 16,205, Young J referred to Tregoyd Gardens Pty Ltd v Jervis and 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 as supporting the proposition that there need not be absolute necessity but mere desirability was not sufficient. His Honour went on to say that one must look to see what is reasonably necessary for the effective use (or one may add, development) of the land and "the tone of the word 'necessary' is getting close to something which is a vital requirement". While accepting that an inclinator, rather than an existing 51 step wooden staircase would be desirable as benefiting the land of the Plaintiff, his Honour refused to grant an easement. 134In Wengarin Pty Ltd v Byron Shire Council (1999) 9 BPR 16,985 it was conceded that the grant of an easement was appropriate, all means of access previously available or contemplated having been eroded and the only questions for the court were whether there were special circumstances so as to mean that no compensation should be ordered or, if there are no special circumstances, what was the quantum of the compensation to be paid. The case is of no assistance here. 135In Katakouzinos and Anor v Roufir Pty Ltd (2000) 9 BPR 17,303, Hodgson J repeated the passage I have quoted above from his Honour's remarks in 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123. His Honour also expressed his adherence to a view expressed in the earlier case that a defendant is not automatically entitled to indemnity costs but that, although the defendant in the case before him had displayed some unreasonableness, that probably was not sufficient to disentitle him to costs. However, his Honour stood the matter over and the report does not record the rate his Honour had in mind in that latter statement. 136In that case an easement for temporary scaffolding for construction of a building that extended to a common boundary was granted, the alternative being a significantly reduced building and delay. 137In Kent Street Pty Ltd v Council of the City of Sydney [2001] NSWSC 268; (2001) 10 BPR 18,757, judgment in which was delivered on 10 April 2001, a building had been erected on an implicit, but erroneous, assumption that an adjacent laneway was a public road. A vehicle entrance, fire exit doors, windows and roof drainage system had been installed and used on that footing. All persons who it was thought might have an interest in the laneway were notified of the proceedings but none appeared. Barrett J, after referring to the remarks in 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 to the effect that "use or development with the easement must be (at least) substantially preferable to the use or development without the easement", observed at [14]:- It would be a very heavy burden indeed for the owner of the plaintiff's property now to have to arrange things so as to avoid using the laneway in the way in which it is currently used. The use of the plaintiff's property with the current arrangements for vehicle access, emergency egress, natural light and roof water drainage must be substantially preferable to its use without those arrangements. 138In Mitchell and Ors v Boutagy and Anor [2001] NSWSC 1045; )2001) 10 BPR 19,187 judgment in which was delivered on 1 November 2001, the local council had imposed, as a condition of development approval to a subdivision, that a drainage easement over an adjoining property be obtained. It was common ground that an easement was reasonably necessary and the issue as submitted for determination was as to the amount of compensation that should be paid. I do not find the case as of assistance here except on the topic of costs as to which Austin J said:- Section 88K(5) states that the costs of the proceedings are to be payable by the applicant subject to any order of the court to the contrary. That, it seems to me, reflects a legislative policy. The policy is that the court should be empowered to require the defendant to grant an easement to the applicant against his or her will, but generally on the basis that the cost of obtaining the easement is to be borne by the applicant. It would only be if there were circumstances of unreasonableness on the defendant's part that the court would exercise its discretion to make an order to the contrary under subs. (5). 139In that case the plaintiff had made an offer of money higher than the defendant was awarded by his Honour. However his Honour held that in relying on a higher valuation the defendant's conduct had not been unreasonable and ordered that the Plaintiff pay the Defendant's costs, but not on an indemnity basis. 140In King v Carr-Gregg [2002] NSWSC 379, judgment in which was delivered on 2 May 2002, Foster AJ granted a drainage easement in favour of one lot over that of a neighbour. In some respects the circumstances were similar to that of Mr Woodland and a principal argument of the defendant in that case was that a pump-out system was a viable alternative and thus that the easement was not reasonably necessary. However Foster AJ rejected that contention not on the basis of the physical limitations or disadvantages of a pump-out system but on the basis that it was unlikely to be acceptable to the local council. Furthermore, in that a drainage pipe which would not significantly change had run through the site of the proposed easement for some years and a formal grant of an easement some years earlier seemed to have been overlooked, the case for a grant was substantially stronger than in Mr Woodland's case. Although Foster AJ found the conduct of the defendant before him to have been somewhat unreasonable, he still ordered the Plaintiff to pay the Defendant's costs, albeit not on an indemnity basis. 141The case contains no significant exposition of the operation of s 88K although Foster AJ did observe: While judicial translations of statutory words can, quite frequently, be of assistance in understanding and applying them in particular fact situations, such translations can never become a substitute for the words of the statute. Indeed, the using of such translations, which have proved helpful in the decision of other cases, may not always be of assistance in cases involving significantly different facts. It must be remembered that the basic question for decision in the present case is whether the granting of the sought for drainage easement is "reasonably necessary" for the use or development of the King property. 142Against this background of the legislation and prior decisions, I turn to the issues that arise. In the first place I should say that there was nothing in the demeanour of any of the witnesses that cast any doubt on their credibility or reliability. Secondly, nor do I see anything in the content of the evidence to cast doubts on the honesty of the evidence given. There are inconsistencies but I am satisfied that they arise from defects in recollection. I have made and must make findings about some of them but I make it clear that in doing so I have acted on the basis of what seem to me to be the inherent probabilities of situations. 143A feature of Mr Donnellan's advice to the Plaintiff during the period between when Mr Donnellan was first consulted in about April 1999 and the hearing that commenced on 13 February 2002, is the absence of any significant attention to the statutory test in s 88K, "reasonably necessary". Certainly the expression in Mr Donnellan's letter of 6 April 1999 "impractical by comparison with" the use of the proposed easement is close in meaning but the letter goes on to suggest a test "that pumping drainage to the road is going to be expensive and awkward to a degree which outweighs any detriment that there might be to the Council in having this easement granted over its property". Such a test is appreciably different, less stringent and introduces a standard, "detriment that there might be to the Council in having the easement granted" that bears no relationship to "reasonable necessity". And while it may well be that the issue of detriment to the Council would be relevant to other aspects of s 88K, the reference to that detriment in the 6 April letter was calculated to mislead. 144Other remarks by Mr Donnellan tend to confirm that he did not appreciate the stringency inherent in the statutory test. Thus in his letter of 14 April 1999 he used the expression "not ... of the same utility ... so that it goes beyond being merely desirable to being something which is necessary". "Preferable alternative" is a term used in Mr Donnellan's letter of 20 April 2001 and he gave evidence to the effect that that letter was consistent with advice he was giving the Plaintiff. 145In April 1999 Mr Donnellan told the Plaintiff that he had a strong case. I have no difficulty in accepting that, subject to any capacity problems in Ross Street, a gravity drain along the easement sought by Mr Woodland may have been preferable and perhaps much preferable to a pump-up to Panorama Parade but that of itself says nothing about reasonable necessity. The cases to which I have referred where easements were granted were all much stronger in the Plaintiffs' favour than was Mr Woodland's and when regard is had to the requirement of "necessity", albeit qualified, the statement that Mr Woodland had a strong case was not only unjustified but very much so. He had a case and, depending on how unattractive a pump out system could have been made to appear, I would not have characterised him as having no chance of success. However, Mr Donnellan's assessment, from which he did not resile, at least prior to the February 2002 hearing was inconsistent with the authorities, unduly optimistic and, in my view, to a degree that was unreasonable. 146For similar reasons, Mr Donnellan's statements in his letter of 14 April 1999, "... we think it is quite likely that the Court would grant the easement for drainage ..." and in the letter of 23 April "...a likelihood that those proceedings will be successful" were also unreasonable. 147The evidence of what Mr Donnellan thought and said during this period on the topic of costs does not all reflect a consistent view. Some evidence suggests that he had the positive opinion that the Plaintiff would be awarded costs; other, that Mr Donnellan went no higher than thinking that there were good grounds to argue that each party would be left to pay his or its own costs. There was evidence of a third view, somewhere between these two. 148While recognising this inconsistency, it seems to me that the effect of Mr Donnellan's advice, and the Plaintiff's understanding of it, was the second of the possibilities mentioned, viz that there were good grounds to argue that each party would be left to pay his or its own costs. That was the view expressed in the conversations of 5 January 2000 and 9 January 2002 and in the letter of 8 January 2002. Of course, the Plaintiff had also been advised that, subject to the court exercising its discretion to the contrary, s 88K required an applicant to pay a respondent's costs. 149I have no difficulty in accepting that on basis of the factors then apparent, there were some grounds for arguing that the Council should be deprived of, or at least a portion of, the costs of a hearing upon the ground that there were no reasonable grounds for opposing an easement that would seem to have no possibility of any significant or practical impact on the use of lot 13 (though Hamilton J, possibly taking account of a later stage of development of the child care centre, seems to have thought otherwise). 150Furthermore, there is nothing in s 88K to suggest that public land should, by that very fact, be treated differently from private land. However, Mr Donnellan seems to have taken no account of the fact that in none of the cases to which reference has been made (and which seem to have included all of which he was aware) was there an order made that each party pay its own costs, much less an order that the defendant pay a successful applicant's costs - and this in circumstances where not all respondents were the examples of pure reasonableness. Undoubtedly Mr Donnellan's opinion was influenced by his view that the Council's conduct was "outrageous" and while the interference with the child care centre may well have been "nonsense", the policy arguments regarded as weak, and the Council's opposition regarded as unreasonable, I can see no basis for the extremity of Mr Donnellan's characterisation. The fact that one or more Council officers were in favour of the easement being granted was of limited weight for it is obvious that others thought differently. 151When regard is had to the costs decisions in the cases to which I have referred, the only reasonable conclusion open was that there was a probability that the Council would not be ordered to pay its own costs. Mr Woodland was not so advised. Most of the costs orders in earlier cases were not on indemnity basis but it is clear that at least Hamilton J (and possibly Simos J) thought that that basis was an appropriate one to use even in the absence of any unreasonable conduct. In these circumstances, Mr Donnellan should have advised the Plaintiff of the possibility and risks that such an approach would be taken against him. It was unreasonable of him not to do so. A fortiori is this so once it became apparent that the proceedings were to be heard by Hamilton J. 152Against the background of these remarks, I turn to the offer from the Council contained in its letter of 21 December 2001. In that the first and third proposals referred to future negotiations, they may have come to nothing but in the circumstances then prevailing there was no possible reason to reject those suggestions. Apart from the topic of compensation mentioned in the first proposal Mr Woodland could not conceivably have hoped to do better in respect of the matters there dealt with than was suggested in that proposal. And on the topic of compensation, the letter of 20 April 2001 makes it apparent that the difference between the parties was but $4,000, an amount that was not large in absolute terms and tends to pale into insignificance when compared with other amounts involved. (We know from Hamilton J's decision that ultimately there was agreement on this topic - in an amount of $4,000.) 153The third proposal, for the grant of an easement by Mr Woodland over the rear of his land in favour of properties to the north, although not precisely defined appears not substantially different from an offer made in Mr Donnellan's letter to Abbott Tout of 10 January to grant an easement "along the south eastern boundaries" of the Plaintiff's property to drain properties to the north. 154The second proposal, whereunder Mr Woodland was asked to pay all of the Council's "legal, valuation and other statutory expenses incurred, associated with the settlement of this matter" was, subject to one matter, no more expensive than an indemnity order for costs at that stage would have been. Certainly, that proposal involved no compromise on the Council's part but, if one accepts that the policy of the legislation was as Austin J observed in Mitchell and Ors v Boutagy and Anor , (and whether or not that decision was generally available prior to Mr Donnellan's reference to it in his letter of 25 January 2002) there was no compelling reason why the Council should have compromised. 155The reservation referred to in the immediately preceding paragraph relates to the issue of the reasonableness of the Council's costs. As a matter of contract law that qualification would have been implied, but the express terms of the proposal certainly provided scope for subsequent argument as to what was encompassed by its terms. 156Subject to that reservation, the Council's offer in the letter of 21 December, at least in its terms, provided Mr Woodland with a real prospect of obtaining the easement he desired on terms no more exacting than he was not unlikely to have had to meet under a Court decision, a decision that was by no means certain to be in his favour. When on 8 January 2002 Mr Donnellan wrote to the Plaintiff enclosing a counter offer he proposed, he gave to the Plaintiff advice. That advice did not extend to pointing out to Mr Woodland the advantages of accepting the Council's offer, and the risks of rejecting it, and did nothing to correct the earlier erroneous advice as to the Plaintiff's prospects of success in his s 88K application. Given that Mr Donnellan had undertaken the task of giving advice at that time, he was under an obligation to advise concerning these matters and to cure the negligence in the advice previously given. 157In his letter of 21 January 2002 Mr Donnellan did provide Mr Woodland with more measured advice although it was still deficient in not advising Mr Woodland of the, at least substantial, risk that he would not succeed in his court proceedings seeking an order for the grant of an easement and, if he failed, would almost certainly have to pay his own and the Council's costs. 158I would not otherwise regard what was said in the letter on the topic of costs as a breach of duty. Certainly Mr Donnellan could have said more on the difference between the "outrageous" conduct of the Council to which he referred and "seriously outrageous conduct" but his remarks to the effect that the s 88K provision on costs was "going to be a difficult prescription to overturn in the absence of seriously outrageous conduct on the part of" the Council was a fair warning of the risks inherent in what s 88K said on the topic of costs. There were also risks in trying to make any agreement with the Council contingent on the Council agreeing that there had been substantial commencement of the subdivision by reason of the construction of a footpath. Such work was not "on the land" the subject of the Development Approval - see Hunter Development Brokerage Pty Ltd v Cessnock City Council (2005) 63 NSWLR 124 - and certainly the matter was not so clearly to be decided in the Plaintiff's favour that its introduction did not add another layer of possible dispute. And there was nothing in the evidence before me to suggest that renewal of development consent would have been unduly difficult to obtain. 159There followed the meeting between Mr Woodland and officers of the Council. The contradictory nature of the evidence concerning events at that meeting and of correspondence at that time raises questions whether at that time there was any prospect of settlement but this is more conveniently left until I turn to the topics of causation and damages. 160Although the Statement of Claim asserted that some oral advice was given between 4 and 13 February 2002, the evidence did not disclose any of significance during this period. Mr Donnellan's written advices to the Plaintiff on 4, 15 and 18 February, in April and in the first half of May to the effect that he should not abandon the proceedings and would obtain an easement reflected a view of the litigation which, as I have indicated above, was unreasonably optimistic. I am not persuaded that Mr Donnellan said on 15 February, as Mr Woodland asserted, that Mr Woodland would "very likely" get his costs. In his letter of 18 February Mr Donnellan used the expression "good chance" and I am not persuaded that he would have expressed the matter more highly three days earlier. (There is also nothing to suggest that Mr Woodland acted on the basis of the more optimistic view.) Nevertheless what I have said above indicates that even the reference to "good chance" was an unduly, and I think, an unreasonably, optimistic view of the likely outcome of the costs question. 161Of course, by at least the latter part of this period counsel had been engaged. Mr Nichols conceded that his view of the costs issue varied during the time he was involved but his evidence never went so far as to concede that he thought the Plaintiff had a good chance. I incline to the view that Mr Donnellan's account in the letter of 18 February 2002 of Mr Nichols' opinion was erroneous but I would be confident not deliberately so. What was written argues for Mr Nichols having said something, carelessly expressed or misunderstood. The evidence as to any conversation in this regard was virtually non-existent and I would not be prepared to find fault on Mr Donnellan's part in attributing to Mr Nichols the view that he did. 162As I have said, Mr Donnellan's response to the letter from Messrs Abbott Tout of 16 May 2002 provides the foundation for the second of the Plaintiff's principal complaints. It is said that Mr Donnellan breached his duty in that he:- Failed to advise that the offer should be accepted, failed to respond promptly with an offer that took out of the picture the 375mm (pipe) requirement that the Council imposed in relation to s 138, and failed to advise the Plaintiff as to the implications of the offer being a "Calderbank" one. 163Before coming to the question of whether there was any breach of duty, I should address the question of whether these failures occurred and if so in what circumstances. In the first place, I am satisfied on the balance of probabilities that Mr Donnellan was in Sydney at the time the letter of 16 May was received in his office at Gosford. The letter to Mr Woodland of the same day provides support for this view. Mr Nichol's evidence tends to indicate that Mr Donnellan must have seen the Abbott Tout letter on 16 May but neither that nor the terms of the letter provide grounds for concluding that Mr Donnellan was at fault for not replying in the 26 hours or so limited by the terms of the letter for reply. In the normal course solicitors have a number of demands on their time in any day: On 17 May Mr Donnellan had obligations in another case. In these circumstances I find it impossible to conclude but his failure to reply within the time limited by Messrs Abbott Tout was unreasonable or any breach of duty. 164The matter is a fortiori when regard is had to the nature of the issues involved in Abbott Tout's offer. The issue of drilling through rock and the installation of a 375mm concrete pipe had been raised for the first time in Abbott Tout's letter of 9 May. The cost and practicality of such matters were not a matter for a solicitor. Mr Donnellan had sought Mr Staniland's views on the topic. The evidence does not make clear whether Mr Donnellan read those views on 16 or 17 May but given their terms, whether or not Mr Donnellan read them, he could not reasonably have advised the Plaintiff to accept the 16 May offer that required the Plaintiff to commit to the pipe and drilling. These requirements were matters that, in the view of Mr Staniland, might not even be possible. Without knowledge that they were, and some knowledge of the cost of such actions, it would have been a breach of Mr Donnellan's duty to advise acceptance of the proposal. It is to be noted that Mr Staniland's view was supported by a contractor some five days later. 165Mr Nichols had expressed the view that the Abbott Tout letter of 16 May was probably not a valid "Calderbank" offer. In my view, it certainly was not. Given the matters just mentioned, it was not unreasonable for the offer not to be accepted in the time limited - See Leichhardt Municipal Council v Green [2004] NSW CA 341 at [46]; Evans Shire Council v Richardson [2006] NSWCA 61 at [26]. Certainly, it was not unreasonable for Mr Nichols to take the view he did. 166In arriving at the conclusions just expressed I do not ignore the decision of Hamilton J to order indemnity costs on the basis of the letter of 16 May and that an application for leave to appeal was refused. I do not find it necessary to say more about his Honour's decision other than that there is no reference therein to the issues of the time limited for acceptance or to the complexities faced by the Plaintiff and Mr Donnellan in consequence of terms of the offer involving drilling and the concrete pipe and his Honour's decision does not incline me to depart from the conclusions I have expressed. 167Another complaint is that the effect of a "Calderbank" letter was not explained to Mr Woodland. I am not persuaded of the factual basis for this complaint. Mr Nichols says an explanation was given on 20 May and a "Calderbank" letter is of such significance that the inherent probabilities favour it having been explained. Mr Woodland no doubt had a great deal on his mind at about that time and, particularly if he was also advised that the letter was probably ineffective as requiring a response within 24 hours, it is easy to understand that Mr Woodland may not have remembered an explanation being given. 168I turn to the complaint that Mr Donnellan failed to respond promptly to the 16 May letter with a counter-offer that omitted the 375mm pipe requirement but otherwise complied with the Council offer. Mr Donnellan did respond with his letter of 19 June and although that may not have been "prompt", the change of tack in putting to one side the s 138 issue does not persuade me that there was any negligence in not sending that letter earlier. 169Furthermore, even though the letter from Mr Donnellan of 19 June and that from Abbott Tout of 3 October 2002 show a common willingness to remove from the proceedings before Hamilton J the s 138 question, there yet remained a great gulf between the parties' respective positions. Mr Donnellan's letter of 19 June offered 20% of the Council's costs up to a maximum of $15,000 whereas Abbot Tout's letter demanded "the Council's costs". I do not see any negligence in Mr Donnellan's conduct at that stage that was not simply a reflection of his earlier views on the prospects of the Plaintiff obtaining an easement and an order for costs. 170I should acknowledge that although the Abbott Tout letters of 16 May and 3 October 2002 go into a great deal of detail as the terms of any easement and also stipulate for some positive covenants relating to it, those matters are of a nature that they are unlikely to have been a sticking point preventing agreement. Otherwise, and apart from the matter of costs, the offers in Mr Donnellan's letter of 19 June and in Abbott Tout's letter of 3 October are very similar. 171In the result, in respect of Mr Donnellan's dealing with the 16 May Abbott Tout letter, I see no breach of his duty to the Plaintiff in the respects alleged in the Statement of Claim 172To summarise, Mr Donnellan was negligent in advising the Plaintiff to the effect that his case for the granting of the easement was strong and in failing to advise that there was a real or substantial risk that the easement would not be granted. Mr Donnellan was negligent also in not advising the Plaintiff that there was a probability that, even if the easement was granted, Mr Woodland would be ordered to pay the Council's costs. This negligence was repeated on a number of occasions when contrary views were expressed. Mr Donnellan was negligent in not advising the Plaintiff that there was a risk that any costs ordered might be on an indemnity basis. 173Turning to the period encompassed by the pleaded defaults and within the limitation period, Mr Donnellan was negligent in not advising the Plaintiff of the advantages of accepting the offer of 21 December 2001 and of the disadvantages in rejecting it. Having undertaken to advise the Plaintiff following receipt of the letter of 21 December, Mr Donnellan failed in his duty by not correcting his earlier wrong and negligent advice. Mr Donnellan was not negligent in his responses following receipt of the Abbott Tout letter of 16 May 2002.

Advocates' Immunity 187It was submitted on behalf of Mr Donnellan that, even if it were found that there were breaches of duty by him that caused or contributed to loss suffered by Mr Woodland, he was not liable to compensate Mr Woodland by reason of the doctrine of advocate's immunity. I disagree. 188In D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 at [86]; (2005) 223 CLR 1 at p31 the majority of the High Court embraced the remarks of Mason CJ in Giannerelli v Wraith (1988) 165 CLR 543 at 560 to the effect that the immunity encompasses work done in court or "work done out of court which leads to a decision affecting the conduct of the case in court" or, to express the same test differently, "work intimately connected with" work in a court. Mason CJ had endorsed remarks of McCarthy P in Rees v Sinclair [1974] 1 NZLR 180 at 187:- ... the protection exists only where the particular work is so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing. 189In D'Orta-Ekenaike v Victoria Legal Aid at [151] McHugh J endorsed the same test. At [45] the majority also said that "the central justification for the advocate's immunity is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances". 190In this case the conduct of the Defendant about which complaint is made was not concerned with how proceedings against the Council should be conducted but whether such proceedings should be conducted, or later, should continue to be conducted, at all. 191Clearly advice not to institute proceedings and which was followed could not sensibly fall within the test "work done out of court which leads to a decision affecting the conduct of the case in court" or "work intimately connected with" work in a court. Nor would the justification for the immunity lead to the conclusion that it did. It is difficult then to see that advice to the opposite effect, viz. to sue, even if also followed, should be protected by the immunity. While it may be said that such advice has a close connection with the proceedings in that the advice may have been a cause of the proceedings being conducted at all, it does not seem to me that, without more, it bears on "the conduct of the case in court" or "on the way that cause is to be conducted". Furthermore, if the High Court had wanted the immunity to extend to all advice that led to litigation, it would have been very easy to say so. Given the emphasis in the passages to which reference has been made to "affecting the conduct of the case in court" or work "intimately connected with work in a court", I find it impossible to regard the immunity as encompassing advice given whether to institute proceedings or not merely because proceedings may be, or in fact are, instituted. The references to "conduct of the case in court" and "intimately" make it clear that mere connection or relationship between the conduct that subject of challenge and any litigation is not sufficient. 192The contrary view, viz. that any advice to sue or that contemplated proceedings would succeed was protected if proceedings ensued would impose a most unsatisfactory conflict of interest on those advising. Assuming advice was followed, if they negligently said, "don't sue" they would not have the immunity: If they said "sue" they would. Such a result cannot be right. 193The result is not as obvious once one comes to consider advice given during the currency of proceedings. Advice simply, "You will succeed if you press on", "Discontinue, the case is hopeless", or something in between, such as "You should accept a verdict for half", much more readily falls within the description of "affecting the conduct of the case in court" or "work intimately connected with" work in court or "affecting the way" a cause is to be conducted. In D'Orta-Ekenaike v Victoria Legal Aid itself the advice the subject of the decision that immunity applied was to the effect that D'Orta-Ekenaike , who had been charged with rape, did not have a defence to the charge, and that if he pleaded guilty he would receive a substantially lesser sentence than if he contested the charge and was found guilty. 194Counsel for the Defendant sought to place the immunity on a wider basis. He submitted that:- The High Court says that the Plaintiff cannot be heard to say that Hamilton J was wrong. The shoe is on the other foot when it comes to the so called second offer, that made late on 16 May 02, for acceptance by close of business on 17 May. Hamilton J found that the offer was capable of acceptance, and that it was unreasonable for Mr Woodland to have failed to accept it. Likewise, and contrary to the opinions of Donnellan and Nichols, Hamilton J held that Council's conduct was not such as to disentitle it to costs. The High Court says that Donnellan cannot be heard to say that Hamilton J was wrong." 195However, this submission takes the matter well beyond what was said in D'Orta-Ekenaike . At [78] the majority drew attention to cases, including assault cases, where issues can be the subject of civil and criminal proceedings and where inconsistent results may ensue, pointing out: [78] ... But in none of those actions was the person who would seek to challenge the outcome reached in some earlier (criminal) proceeding a party to that earlier proceeding. [79] In cases where a client sues an advocate, the client will always have been a party to the proceeding the result in which is challenged. If effect is to be given to the principle that decisions of the courts, unless set aside or quashed, are to be accepted as incontrovertibly correct, it must be applied at least to the parties to the proceeding in which the decision is given. The final outcome of the proceeding, whether "civil" or "criminal" or a hybrid proceeding, must be incontrovertible by the parties to it. [80] If that is right, it follows that no remedy is to be provided if its provision depends upon demonstrating that a different final result should have been reached in the earlier litigation. ... 196Their Honours went on to observe that intermediate results and decisions on costs said to have been wasted should not be treated differently, in the case of costs, "lest a dispute about wasted costs becomes the vehicle for a dispute about the outcome of the litigation in which it is said that the costs were wasted" - see at [83]. 197Earlier, at [77], the majority had embraced remarks to the effect that there is a public need "for decisions of the courts, unless set aside or quashed, to be accepted as incontrovertibly correct". However these remarks must be seen in context. In addition to the assault and other cases to which their Honours themselves referred, it is not uncommon that in the course of argument earlier decisions are suggested to have been wrongly decided. The sorts of cases to which the High Court was directing its attention - see [67] - [70] - were ones where a plaintiff was seeking to say that, but for an advocate's conduct, in an earlier case there would have been a different result. The High Court was not deciding that a person not a party to earlier proceedings was bound by it or, in the circumstances of this case, that because Mr Donnellan might want to say that Hamilton J was wrong in his decision concerning the easement or costs, therefore there is immunity and Mr Woodland cannot sue. This is not a case where the remedy Mr Woodland seeks, as was said by the High Court at [80], "depends upon demonstrating that a different ... result should have been reached in the earlier litigation". 198And though I do not need to decide the issue, it does not seem to me that advice whether to accept or reject the Abbott Tout offer of December 2001 was advice "affecting the conduct of the case in court" or work "intimately connected with work in a court" in any meaningful way. The offer did not refer to the making of orders in Court and although no doubt agreement pursuant to the offer would have resulted in some Court order, be that for the grant of an easement or for dismissal of the proceedings, the nature and circumstances of the advice seem to me to take it outside the breadth of the immunity. 199Attention was drawn to the decision and remarks in Symonds v Vass [2009] NSWCA 139. In that case Giles JA, with whom Beazley relevantly agreed, said at [26]:- The rationale enunciated in D'Orta-Ekenaike v Victoria Legal Aid could bring a wide application of the immunity. Whether the work is negligently performed through act or through omission, and whether or not it leads to an overt decision, there cannot be re-litigation in which it is asserted that, but for the negligence, a different result would have been reached. According to the rationale, it does not matter that the client does not seek to overturn the prior result, but uses it as the basis for complaint . The re-litigation is regarded as challenging a lawful result and so as offending the finality principle, distinguished from challenge by appeal because it would be re-litigation "of a skewed and limited kind" ( D'Orta-Ekenaike v Victoria Legal Aid at [45]). (Emphasis added in submissions) 200It was submitted that "Giles JA made the point that neither the Plaintiff nor Defendant in this case can use Hamilton J's judgment either as a sword or shield. Use of the judgment as a sword, (Hamilton J was right, Donnellan was wrong), invites attack upon the judgment in defence of the allegation. Use of the judgment as a shield, (Hamilton J was right that the first offer did not compel acceptance), invites attack upon the judgment in answer to the defence". 201The decision in Symonds v Vass was that in the absence of proper findings of negligence, the Court was unable to determine whether an advocates' immunity applied in that case. Hence the remarks quoted were obiter. In any event the Plaintiff's claim here is not that, but for the negligence, a different result would have been reached and, at least so far as the decision concerning the easement is concerned, does not invite re-litigation of the proceedings before Hamilton J. It is not a case whether Hamilton J was right or wrong in declining to order an easement in favour of the Plaintiff. Though not pleaded in these terms, the issue on liability in essence is whether the Defendant's advice at particular times fairly reflected the state of the law at those times and included appropriate qualifications concerning any risks. The issue on causation is what would the Plaintiff have done if appropriately advised and how does the result of that compare with the result of the decision of Hamilton J. 202The issue so far as costs is concerned is whether the Defendant's actions or inaction was unreasonable to a degree sufficient to amount to a breach of duty and whether his advice fairly reflected both the law and a reasonable assessment of the circumstances and, again, included appropriate qualifications concerning any risks. 203In D'Orta-Ekenaike at [154] - [156] HcHugh J gave examples of cases where the immunity had been held and not held to exist and counsel made reference to such decisions here. I confess I do not find all of the decisions reconcilable although support for the conclusion at which I have arrived is provided by Dansar Pty Ltd v Pagotto [2008] NSWSC 112. In that case Harrison J held that the immunity did not apply to advice not connected with the conduct of proceedings but to the question of whether or not they should have been brought to an end. His Honour went on to say, at [94]:- ... The present case does not interfere with the principal of finality at all. The decisions in the first proceedings and the second proceedings are not said to have been reached wrongly by any failures on the part of the defendants. It has not become necessary to reconsider those decisions. On the contrary, they are the basis upon which the present proceedings are founded. The plaintiffs contend that if the advice had been appropriately given, the matter would never have reached the stage where there would have been judgments... Similarly, if the appropriate advice had been given, the third proceedings would never have been commenced. Where the principle of finality and the judicial system as part of the governmental structure do not arise, there is no occasion for the application of the doctrine of advocates' immunity: Donellan v Watson (1990) 21 NSWLR 335 at 337, 343, 344 and 347. 204In Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85, there are a number of statements by Steytler P and Newnes AJA along similar lines although the nature of that case was such that no definitive statement by their Honours was required. 205In short the conclusion at which I have arrived is that advocates' immunity does not operate so as to preclude Mr Woodland succeeding in his action against Mr Donnellan for the advice he gave on or about 8 January 2002 and his failure then to correct earlier advice. 206This conclusion made it strictly unnecessary for me to pursue the Plaintiff's further claim in connection with Abbott Tout's letter of 16 May although, as I have said, I do not regard Mr Donnellan's actions consequent on that letter negligent in any of the respects alleged 207In light of what I have said on the topic of the quantum of damages, the orders that seem to me appropriate at this stage are:- (i) Verdict for the Plaintiff in an amount of damages to be assessed; and (ii) Stand the proceedings over for mention with a view to then fixing a date for consideration of the topic of damages.

WOODLAND v DONNELLAN

At a glance

Court

Decision date

Before

Source

Judgment (7 paragraphs)

Parties

Cases Cited (15)

Cited By (3)