Judge says finality has overtaken intimate connection as immunity touchstone

A New South Wales District Court judge has handed down an important decision on advocates’ immunity, which is under appeal. The case is Fowler v La Fontaine [2007] NSWDC 207. It is a case which explores what the test for the immunity really is now that the High Court has said ‘it’s all about finality’. The decision on appeal will be important especially in those cases where there is no adjudicated outcome after a contested hearing, such as where there is a discontinuance, or a default judgment, or a striking out consequent upon terms of settlement. The facts, and the relevant bit of the judgment, are set out below.

I find D’Orta-Ekenaike’s Case a difficult one to understand. On the one hand, the majority say it’s all about finality now. That is, if clients were allowed to sue their litigation solicitors, then the fundamental tenet of the third great arm of government — the judiciary — would be undermined. That tenet is that the umpire’s decision is final. There should be an end to controversy. If a client succeeds in saying she would have won the case, or lost less disadvantageously, or won earlier, or not suffered the stigma of being found to have lied on oath, but for her lawyer’s negligence, the judiciary would pronounce that the last decision was wrong, but it would remain binding between the parties. And more generally, litigation could go on forever. From time to time one does see third and fourth generation negligence claims (for example, Louis v G&O’B [2007] VCAT 1997, and my earlier post ‘Man gives up only after suing lawyer for negligence in suing lawyer retained to sue lawyer before that’.)

On the other hand, the majority purported to accept that the touchstone for the immunity is still the intimately connected test from Rees v Sinclair [1974] 1 NZLR 180, adopted by the High Court in Gianarelli v Wraith (1988) 165 CLR 543. That is, whether the conduct in question ‘leads to a decision affecting the conduct of the case in court’ or is ’work intimately connected with work in a court’. The majority in D’Orta-Ekenaike’s Case said the two tests mean the same thing.

The finality test and the intimately connected test are self-evidently not the same. They produce different results most markedly where there is no judicial determination of a controversy, when it might well be said that there is no finality of the kind worthy of protection. There may be good reasons why people should not be allowed to revisit settlements, but the immunity, which is grounded in notions that the umpire’s decision is final, is not the vehicle to achieve that arguably desirable outcome because there is no umpire’s decision. Of course you can get into all sorts of nice arguments about the fact that if the settlement gives rise to consent orders, those orders have the same force and finality as a judgment after a trial. But they have an over-technical ring in the context of a discussion of the immunity.

Despite the fact that Justice McHugh said in his separate reasons in D’Orta-Ekenaike’s Case at [166] that:

‘There is, of course, a greater public interest in maintaining confidence in the administration of criminal rather than civil justice. So, it is possible to sue a practitioner for the negligent settlement of proceedings or for the negligent loss or abandonment of a cause of action. Such claims lead to the litigation of a primary claim even if that claim can no longer be pursued,’

some cases since D’Orta-Ekenaike have applied the law of advocates’ immunity to allegations of negligence in litigation in which there was no adjudicated outcome after a contested hearing by reference to the intimately connected test, as if D’Orta-Ekenaike’s Case merely confirmed Giannarelli’s Case.

What is interesting about Fowler v La Fontaine is that Judge Nicholson refused to strike out the plaintiff’s professional negligence claim, saying that it was arguable that there was no immunity in respect of it, because there was no adjudicated outcome of the matters which were the subject of the negligence claim.

The facts were as follows. The plaintiff sold a business. The purchasers did not complete the sale. The plaintiff sued. The plaintiff’s case was characterised by delays, and missed deadlines. The case came to trial. It went 5 days. The plaintiff applied to amend its statement of claim to add a head of damages for trading losses suffered by the plaintiff. Such a claim required expert evidence which had not been prepared. So the plaintiff also sought an adjournment in which to get together the expert evidence. The trial judge granted the applications, and initially made no order as to costs, but indicated that his tentative views were that the plaintiff’s camp should pay the defendants’ costs of the four out of five days of the trial which were necessary only because of the plaintiff’s camp’s failure to get itself ready for trial in time. He also foreshadowed that he would call on the plaintiff’s solicitor and barrister to show cause why they should not pay the costs personally.

The plaintiff instructed new lawyers, discontinued the proceedings, was ordered to pay the defendant’s costs (presumably by consent, or by operation of the rule associated with discontinuance) and sued his old lawyers, having foreshadowed an intention to the judge in the original case of doing so. When that intention was foreshadowed, the judge withdrew his direction to the solicitors to show cause, content for that question to be decided in a separate professional negligence proceeding, and presumably made the costs orders by consent.

The lawyers defended by reference to the immunity. The Court said at [81]:

‘[The solicitors] identified seven areas of professional service [they] claimed attracted immunity. However, the reasoning in D’Orta-Ekenaike makes clear, [that] central to the availability of an immunity is the existence of a finality to be protected; for preserving finality of resolution of controversy is the raison d’etre for the immunity.’

Judge Nicholson took the view that the finality which was to be preserved was the finality of judgments which occurred after a merits hearing.

Though the court in the original case made final orders in relation to who should pay the defendant’s costs, it seems to have done so by consent and without a hearing, at least in relation to the question which fell to be determined in the professional negligence claim, namely who out of the plaintiff or his lawyers should pay the defendant’s costs. In that circumstance, Judge Nicholson said there was no finality of the kind which warranted protection by the immunity, and he declined to find that the plaintiff’s case was so obviously hopeless because of the immunity defence it should be struck out summarily. So the plaintiff lived to fight another day.

The relevant bit of the judgment is as follows:

The law to be applied
71 The conclusion that, at common law an advocate cannot be sued by his client for negligence in the conduct of a case, or in work out of court that is intimately connected with the conduct of a case in court has long been the position held in England and Australia. There has, in my view, been a shift in recent times as to the rationale supporting the Australian position. Arguably, in Giannarelli the initial rationale for sustaining advocates’ immunity is most easily distilled from the judgment of Mason CJ. He appears to have formulated his policy considerations on two propositions. The first relates to the peculiar nature of the barrister’s responsibility when he appears for his client in litigation. The second arises from the adverse consequences for the administration of justice which would flow from the re-litigation in collateral proceedings for negligence of issues determined in the principal proceedings.

72 In D’Orta-Ekenaike the majority also sought to base the immunity upon two propositions. But as can be seen there has been a shift:

(a) the place of the judicial system as a part of the governmental structure; and
(b) the place that an immunity from suit has in a series of rules all of which are designed to achieve finality in the quelling of disputes by the exercise of judicial power.

73 Accepting, as I must that the immunity is built upon a jurisprudential rationale, it is important to acknowledge the particular rationale I am to apply. It comes from the most recent decision of the High Court in D’Orta–Ekenaike. To the majority in D’Orta-Ekenaike the exercise of judicial power is about the quelling of controversies between parties or litigants regardless of the stature of the litigants. As such it is exercised as an element of the government of society, having aims wider and more important that the concerns of the particular parties to any particular litigation. They noted the importance to the community at large in the final quelling of specific controversies litigated in Courts. The majority’s line of reasoning had the judicial power, whether formally separated as it is in the Australian Constitution, or not, as it is at State level as constituting “the third great department of government.”

74 Their Honours reasoned that a central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened, except in a few, narrowly defined circumstances. They noted this doctrine prevented a party to proceedings raising in new proceedings against another party to the original proceedings a cause of action or issue that was finally decided in the original proceedings. It was noted there were other rules of law which affect persons other than the parties to the original proceedings, which also had basis in considerations of the need for finality in judicial decisions. “Some of those rules are rules of immunity from suit.”

75 In that context they reviewed other immunities from suit. Immunities favouring parties to the litigation, witnesses, judges and juries fell into this category. The majority, in finishing their review of this kind of immunity said:

Of that immunity it has been said …that it responds to two related considerations, “to assist full and free access to independent courts for the impartial quelling of controversies, without fear of the consequences” and “the avoidance of the re-agitation by discontented parties of decided cases after the entry of final judgment” other than by appellate processes. That view of the matter reflects the consideration that what is at stake is the public interest in “the effective performance” of its function by the judicial branch of government.

76 The majority noted that an inevitable and essential step in demonstrating an advocate’s negligence in the conduct of litigation which caused damage to the client would be the re-litigation of the initial controversy. They reasoned immunity was not to be determined upon some special status that could be accorded to advocates, but, rather, 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. This is a fundamental and pervading tenet of the judicial system, reflecting the role played by the judicial process in the government of society. If an exception to that tenet were to be created by abolishing that immunity, a peculiar type of relitigation would arise. There would be relitigation of a controversy (already determined) as a result of what had happened during, or in preparation for, the hearing that had been designed to quell that controversy. Moreover, it would be relitigation of a skewed and limited kind.

    77 They also noted that if immunity for judges and witnesses remained, then permitting relitigation of controversies to examine the contribution of the advocate would be an exception to the general rule of finality.

    78 Their Honours then analysed what they described as the nature of the discontented litigants’ complaint. Their Honours said:

    In every case the complaint must be that a consequence has befallen the client which has not been, and cannot be, sufficiently corrected within the litigation in which the client was engaged. That consequence may take a number of forms. For the moment, it will suffice to identify what may appear to be the three chief consequences: (a) a wrong final result; (b) a wrong intermediate result; and (c) wasted costs.

    A client may wish to say that the conduct of the advocate was a cause of the client losing the case because, for example, a point was not taken, or a witness was not called, or evidence was not led. The client may have no appeal, or no remedy on appeal, as, for example, would generally be the case if the evidence not called was available at trial.

    A client may wish to say, as the applicant does in this case, that the conduct of the advocate (or here, the advocate and VLA) was a cause of the client suffering an intermediate consequence (conviction at the first trial and imprisonment) which was not wholly remedied on appeal. (The conviction was set aside but the client was incarcerated for a time and complains of that and what is said to have been caused by it.)

    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.

    What unites these different kinds of consequence is that none of them has been, or could be, wholly remedied within the original litigation. The final order has not been, and cannot be, overturned on appeal. The intermediate consequence cannot be repaired or expunged on appeal. The costs order cannot be set aside; the costs incurred cannot be recovered from an opposite party. And in every one of these cases, the client would say that, but for the advocate’s conduct, there would have been a different result. In particular, leaving cases of wasted costs aside, the client wishes to assert that, if the case had been prepared and presented properly, a different final, or intermediate, result would have been reached. And yet the judicial system has arrived at the result it did. The consequences that have befallen the client are consequences flowing from what, by hypothesis, is a lawful result. So, to take the present case, the imprisonment of which the applicant seeks to complain is lawful imprisonment. In a case where the client would say the wrong final result is reached, the result in fact reached is, by hypothesis, one that was lawfully reached. Whether the lawful infliction of adverse consequences (such, for example, as imprisonment) can constitute a form of damage is a question that may be noted but need not be answered. (my emphasis)’

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