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Advocates’ immunity: at once more powerful and narrower than most yet understand

June 23rd, 2016 · No Comments

Advocates’ immunity was, until recently, more powerful than many lawyers were aware. Since the 1 July 2015 introduction of the Legal Profession Uniform Law and the High Court’s May 2016 decision in Attwells v Jackson Lallic Lawyers Pty Limited,[1] however, it may be narrower than many realise. And perhaps not everyone is aware that the immunity these days is very likely peculiar to Australia; it is certainly not a feature of English, American, Canadian, Continental, Indian, South African or New Zealand law.[2]

More powerful than people realised

More than a decade after D’Orta-Ekenaike v Victoria Legal Aid[3] many solicitors were still unaware that they are just as immune as barristers for negligence in litigation, in court and out of court, regardless of whether they are engaged in an advocacy function or not. That has not changed.

Clients have been prevented, by summary judgments based on the immunity, from prosecuting even allegations of forgery by lawyers.[4] The immunity has defeated statutory claims, such as misleading and deceptive conduct claims.[5]

In Fritsch v Goddard Elliott,[6] the Supreme Court found that the solicitors’ negligence at and leading up to a mediation caused their client to settle matrimonial proceedings for a little under $1 million less than competent solicitors would have advised, and would have been achieved at trial. They had negligently failed to get the client’s case ready, and then negligently failed to understand that the client did not have capacity when he instructed them to settle. Justice Bell found that the lawyers were immune from suit, a decision he said he was ‘driven to’ by the (mainly NSW) authorities which he said he found ‘deeply troubling’.[7] He ordered costs against the client and ordered him to pay the solicitors’ fees.

The High Court in Attwells notably vindicated Victorian judges’ reticence in relation to the immunity’s application to negligent settlement advice.[8]

New South Wales’s courts were less reticent. In Kendirjian v Lepore,[9] a man who won $310,000 in his personal injuries suit sued his solicitor and barrister for negligently failing to tell him that the defendant had offered to settle for $600,000. Though he claimed he would have accepted the offer, the lawyers allegedly rejected it without his instructions. The Court upheld the trial judge’s decision to give summary judgment to the defendants on the basis that they were immune from suit. The High Court granted special leave to appeal this decision on 17 June 2016.[10]

In March, the Supreme Court said, in considered dicta, that had it been necessary to decide the question, it would have found that lawyers who failed to tell their solvent client of the date of hearing of a winding-up application, did not brief barristers, appear or prepare or file any papers, were immune from the negligence suit brought against them in respect of that negligence: Dual Homes v Moores Legal.[11] The immunity defence would have succeeded even though the lawyers admitted (at trial) that forgetting to attend court was negligent. (The lawyers lost the case because, though the proximate cause of the company’s unnecessary winding up was the failure to prepare for and appear at the winding up application, the Court found that other negligence by the solicitors prior to the commencement of the winding up proceedings was also a sufficient legal cause of the outcome of the proceedings. Pre-proceedings negligence does not attract the immunity. So pleaders of negligence claims against lawyers ought always to consider whether there are multiple successive causes of loss, the earliest of which might fall outside the immunity.)

Dual Homes and Kendirjian illustrate that sheer inadvertence, even rank cock-ups, are as immune from suit as considered errors in forensic decision making.[12]

Back in 2005, the High Court substantially extended the scope of the immunity in D’Orta-Ekenaike v Victoria Legal Aid[13] whilst narrowing its basis to a single rationale: the fundamental importance of finality in litigation. First it made clear that solicitors were just as immune as barristers, though I was arguing that that was the law long before that case.

Secondly, the Court spoke of ‘finality’ in a special sense which did not necessarily accord with how that concept was understood before the decision, a sense which allowed for the immunity to have application to Mr D’Orta-Ekenaike’s case. His case was perfectly consistent with the courts’ final position in his prosecution.

Mr D’Orta-Ekenaike claimed that his lawyers negligently advised him to plead guilty to rape which, on his instructions, he did not as a matter of law commit because it was a case of mistaken identity. (‘Then, as he put it, “in the motion of having sex” she said “Oh Mick, Mick”. He said, “No, this is not Mick; this is Ryan”.’[14]) He went to jail, appealed successfully, was acquitted on re-trial, and then sued his lawyers for causing his imprisonment.

The majority held that this suit offended the finality principle and threatened good government because the consequence of the intermediate result (the initial conviction on the guilty plea) could not be repaired or expunged on appeal because he had already been to jail.[15] To my mind, this is one of the silliest things the High Court has ever said. That the wrong result could only be remedied by a suit against the professional who negligently caused Mr D’Orta-Ekenaike’s incarceration is an argument against, rather than for, the immunity.

Thirdly, the plurality suggested, in obiter dicta at [69], that all claims for wasted costs offended against the immunity:

‘A client may wish to say that the conduct of the advocate was a cause of the client incurring unnecessary expense. That may be because a costs order was made against the client or because unnecessary costs were incurred in taking a step in the litigation.’

The majority said at [83]:

‘at first sight it might be thought that seeking to recover wasted costs would not cut across any principle of finality. But it is necessary to recall that the general rule is that costs follow the event. To challenge the costs order, therefore, will often (even, usually) involve a direct or indirect challenge to the outcome on which the disposition of costs depended. For the reasons given earlier, that should not be permitted lest a dispute about wasted costs become the vehicle for a dispute about the outcome of the litigation in which it is said that the costs were wasted.’

One can see the logic of this principle in relation to a suit which says ‘You conducted the trial negligently which caused me to lose my case, so I should be relieved of the obligation to pay your fees’. But that case is covered by the immunity anyway which needs no extension to deal with it. It is hard to see why a claim which says ‘You drafted an affidavit about an issue which was irrelevant and did not use it because the barrister told you not to, yet you charged me for it’ ought to be met by an immunity based on the imperative of finality in litigation.

In obedience to this considered dictum of the Court, the Supreme Court occasionally disallowed clients from alleging negligence as a defence to lawyers’ suits for fees in litigation, as they had long been permitted to do previously.[16] The relevance of the D’Orta-Ekenaike iteration of the immunity to costs disputes between lawyers and clients probably went largely unappreciated, however.

Narrower than many yet understand

Since the High Court’s May decision in Attwells v Jackson Lallic Lawyers Pty Ltd[17] and the 1 July 2015 commencement in NSW and Victoria of the Legal Profession Uniform Law, the immunity is likely narrower than many lawyers yet understand.

In Attwells, the High Court seems to have held clearly enough that there can be no immunity where there is no judicial decision on the merits, including where an out of court settlement results in final orders of the Court. Previously, the NSW courts had decided that though the undesirability of impugning the finality of resolved litigation was the sole rationale for the immunity, the immunity could have operation even in a case where there was no attack on finality, so long as the ‘intimately connected’ test for the immunity reaffirmed in D’Orta-Ekenaike’s Case was satisfied.[18]

By contrast, in Attwells, the majority asserted that:

‘the public policy, protective of finality, which justifies the immunity at the same time limits its scope so that its protection can only be invoked where the advocate’s work has contributed to the judicial determination of the litigation.’[19]

This suggests that the blanket immunity previously given to respondents in wasted costs cases has been dispensed with; such cases will be immune according to the same test as every other kind of case. That is so even though the High Court did not disturb the decision in D’Orta-Ekenaike’s Case. The comments about wasted costs were only obiter dicta since Mr D’Orta-Ekenaike’s claim involved no wasted costs arguments.

Mr Attwells alleged that he had been negligently advised to settle his case on terms which were worse than the worst possible result at trial. Though the NSW Supreme Court made consent orders following the settlement which resulted, the High Court held that this was not a ‘judicial determination’ in the sense necessary to found the immunity, so the immunity did not apply.

Since most litigation is settled, and since many negligence claims can be posed without making an attack on the correctness of a judicial determination on the merits in a case which runs to judgment, the immunity will in future be available to lawyers much less often, and aspirant claimants in professional negligence suits will enjoy much greater certainty as to the fate of their suits.

By way of an example of a case where there will be no immunity despite a final judicial decision on the merits, the High Court’s majority in Attwells made clear that the immunity will not defeat a professional negligence suit for compensation for loss of the opportunity to accept a settlement offer more favourable than the result obtained by judgment.[20] (Whether, in these circumstances, the lawyers settle the appeal in Kendirjian v Lepore in which, as noted above, special leave has been granted, remains to be seen.)

So advocates’ immunity will not save lawyers from being sued, in other words, for negligently causing a client to settle for too little. Nor will it save them from a suit in negligence alleging they caused a client to reject what turns out to have been a favourable offer, even after a judicial determination on the merits.[21] And, it probably follows, lawyers can be sued after their clients have failed at trial for failing to advise them to offer to settle the case for a sensible sum.

Abrogation by statute

The immunity’s scope has also been attenuated by two statutes. First, compensation may be awarded under s. 29 of the Civil Procedure Act 2010 against solicitors and barristers involved in litigation for breach by them of the Act’s overarching obligations. There is no apparent reason why a client may not seek such compensation from her own lawyer, though there is no overarching obligation to be competent, so the suit would have to be framed by reference to some other default under the Act. The Supreme Court has found that the Act eroded the immunity.[22]

It may be that O 63 r. 23 of the Supreme Court Rules and like provisions in other State courts’ rules always provided a similar power, the exercise of which could not be stymied by the immunity,[23] but if so, it was well not well known outside of taxations of costs.

Secondly, since 1 July 2015, the Victorian and NSW Legal Services Commissioners have had power to award compensation to clients of negligent lawyers who make complaints about consumer matters[24] under part 5.5 of the Legal Profession Uniform Law.[25] There need not be any allegation of unsatisfactory professional conduct or professional misconduct, let alone any such finding.

Disciplinary tribunals like VCAT’s Legal Practice List have a similar power in disciplinary hearings resulting from the investigation of client complaints about disciplinary matters.[26] Lawyers have never been able to defeat disciplinary prosecutions by reference to the immunity, but what is now clearer is that the immunity cannot defeat a client’s compensation order claim following a successful disciplinary prosecution.

Section 263(1) of the Uniform Law expressly provides that immunity is no answer to a compensation order claim, in a civil or disciplinary (or mixed) complaint.

The Commissioners’ powers to award compensation are limited to awarding compensation of up to $25,000 per complaint, but in circumstances where, for example, lawyers act for more than one party in litigation, and commit more than one act of negligence, a sizeable compensation pool may be attracted by a properly drawn series of complaints.[27] VCAT’s power to award compensation in disciplinary prosecutions is limited to $25,000 per charge unless the complainant and the practitioner agree.

And there is another aspect which has the potential to make the value of a compensation order greater than $25,000 per client per complaint. Section 308(3) says that a compensation order ‘may include an order that the [lawyer] cannot recover or must repay the whole or a specified part of the amount charged to the aggrieved person’. It may be that the Commissioner’s power to make a s. 308(3) order is available only where the lawyer and the client’s dispute puts them less than $10,000 apart, ignoring GST.[28] That does not stop the Commissioner from overseeing the lawyer’s and client’s broader dispute, however, where the total legal costs are $100,000 or less, which of itself will empower clients.[29] A new forum for reasonably small wasted costs claims may be increasingly accessed by clients making a consumer complaint to the Legal Services Commissioner.

In a disciplinary prosecution, the amount of fees and disbursements VCAT can order the lawyer to forfeit or even repay is unlimited, which may prompt more disciplinary complaints complaining of overcharging in the hope that a disciplinary prosecution will eventuate, or will be avoided by the lawyer only on pain of forfeiting or repaying fees.

Insurance

Barristers and most solicitors in Victoria are insured by the LPLC against ‘civil liability’ in respect of which a ‘claim’ is made within a relevant period. ‘Civil liability’ is not defined. ‘Claim’ is defined to mean ‘a demand for, or an assertion of a right to, civil compensation or civil damages in connection with the Firm’s legal practice’. To what extent compensation orders made by the Legal Services Commissioner and by VCAT, and the defence costs associated with such claims, are insured by the LPLC is yet to be resolved.

[1] [2016] HCA 16.

[2] Scott Lang, ‘Deconstructing D’Orta-Ekenaike: A Critique of Justifications Provided for Advocates’ Immunity by the High Court’ (2011) 4 QLSR 47, 63-64.

[3] (2005) 223 CLR 1 at [89]-[91].

[4] Karam v Aloe & Co Pty Ltd [2012] VSC 609.

[5] Goddard Elliott v Fritsch [2012] VSC 87 at [811] applied in Dual Homes Pty Ltd v Moores Legal [2016] VSC 86 at [249].

[6] [2012] VSC 87

[7] At [833].

[8] Consider also Francis v Bunnett (2007) 18 VR 98 and Finch v Arnold Thomas & Becker [2014] VSCA 45.

[9] [2015] NSWCA 132

[10] [2016] HCATrans 141.

[11] [2016] VSC 86.

[12] See also M M & R Pty Ltd v Grills [2007] VSC 528 at [33].

[13] D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1.

[14] R v D’Orta-Ekenaike [1997] VSC 31.

[15] D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at [70].

[16] Maurice Blackburn Pty Ltd v Burmingham [2009] VSC 20; Foster James Pty Ltd v Dalton (2010) 28 VR 204.

[17] [2016] HCA 16

[18] Attard v James Legal Pty Ltd (2010) 80 ACSR 585, 591-592 [28]-[30]; Kendirjian v Lepore [2015] NSWCA 132 at [41] – [42], [50] – [58].

[19] At [5], see also [37], and [52].

[20]At [47] – [53].

[21] See S Warne, ‘Compromise of litigation and lawyers’ liability’ (2002) 10 Torts Law Journal 167.

[22] Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd [2014] VSC 567 at [175].

[23] Karam v Aloe & Co Pty Ltd [2012] VSC 609 at [12]; UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [2004] VSC 105 at [58].

[24] As defined by s. 269(1).

[25] Section 290(2)(e).

[26] Section 302(1)(k).

[27] See S Warne, ‘Advocates’ immunity abolished in Victoria and NSW’, 14 March 2016, The Australian Professional Liability Blog, http://bit.ly/1S0xoku.

[28] Sections 291-292.

[29] Section 291(1).

See also:

Tags: Advocates' Immunity · Barristers' immunity · Civil Procedure Act 2010 (Vic) · Costs Court · Discipline · Insurance · Legal Profession Uniform Law · Legal Services Commissioner · National Profession Uniform Law · negligence as disciplinary breach · Professional fees and disbursements · Taxations · The suit for fees · Wasted costs