Advocates’ Immunity for Settlement Advice

Update, 25 September 2011: Recent American cases on the permissibility of regretted settlement claims for professional negligence are usefully collected at this post on Professor Alberto Bernabe’s Professional Responsibility Blog.  While you’re there, check out the post about the attorney who must show cause why he should not be struck off on account of the impenetrable opacity of his written submissions.  The Federal appeals court who referred him to the stipes described his writing as ‘little more than gibberish’: judgment here.

Original post: The application of the principles of advocates’ immunity has long been unclear in relation to cases where the negligence is said to have led to the acceptance of an unfavourable settlement or the non-acceptance of a favourable settlement. Below is a survey of the cases on point.

There are certainly older cases which have held that advocates’ immunity may apply to advice to settle proceedings, e.g. Kelley v Corston [1997] 4 All ER and Biggar v McLeod [1978] 2 NZLR 9.  As a solicitor, I had several successes in the predecessor to VCAT’s Legal Practice List, the Legal Profession Tribunal, obtaining judgment for the defendant lawyers in regretted settlement suits.

Biggar was a case in which the advice to settle was mid-trial.  Kelley v Corston was a case in which the advice to settle was given after the time for commencement of trial had passed, while the matter was stood down to allow for negotiations.

The leading case on advocates’ immunity is D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1.  It is not easy to understand.  It claims to affirm the previous leading case, Giannarelli v Wraith (1988) 165 CLR 543, but establishes clearly that solicitors are equally entitled to the immunity as barristers in relation to litigation work, and puts a new emphasis on the undesirability of undermining the finality of judicial decisions, except via the orthodox vehicle of appeals as the rationale for the immunity.  A difficulty with the decision is that it seems to contemplate cases where there is no undermining of the finality of a judicial decision as within the immunity.

The application of the immunity to conduct leading to the compromise of a proceeding was touched on only by Justice McHugh in his judgment in D’Orta-Ekenaike which was not joined in by any of the other judges, though he was in the majority as to the outcome of the appeal.  At [154], his Honour said:

‘Work that courts have held was intimately connected with the conduct of a cause includes:

  • Failing to raise a matter pertinent to the opposition of a maintenance application176;
  • Failing to plead or claim interest in an action for damages177;
  • Issuing a notice to admit and making admissions178;
  • Failing to plead a statutory prohibition on the admissibility of crucial evidence179;
  • Negligently advising a settlement.180

 176 Rees v Sinclair [1974] 1 NZLR 180 at 187.

177 Keefe v Marks (1989) 16 NSWLR 713 at 718.

178 Munnings v Australian Government Solicitor (1994) 68 ALJR 169 at 172 per Dawson J; 118 ALR 385 at 390.

179 Giannarelli v Wraith (1988) 165 CLR 543.

180 Biggar v McLeod [1978] 2 NZLR 9.’

Later though, his Honour said:

‘[165] In their joint judgment, Gleeson CJ, Gummow, Hayne and Heydon JJ set out in detail the reasons why adverse consequences for the administration of justice would also be likely to result from the re-litigation in negligence proceedings of issues already decided in a civil or criminal cause. I agree with what their Honours have written on this fundamental issue.

[166] 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. These results flow even though there is a public interest in the finality achieved through the statutes of limitations and the promotion of out-of-court dispute settlement. But where a trial has taken place, as the judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ demonstrates, public confidence in the administration of justice is likely to be impaired by the re-litigation in a negligence action of issues already judicially determined.’

The cases referred to below typically make no reference to the italicized words in the extract from para 166 in the previous paragraph.

There is not really a conflict between the two paragraphs in Justice McHugh’s judgment.  One is simply a recitation of what other courts have done, while the other is an assertion of the law.  On that basis, to the extent that the High Court has considered the question, it seems to me that the asserted law is that it is possible to sue a practitioner for the negligent settlement of proceedings, and there are many cases pre-D’Orta in which solicitors have been sued for such conduct. Having said that, a number of the post-D’Orta cases refer to Justice McHugh citing Biggar v McLeod with apparent approval.

I am unaware of any Australian authority which provides, as a matter of ratio decidendi that advice as to settlement resulting in the compromise of a proceeding is conduct which falls within the test for the immunity.  Conduct resulting in the compromise of a proceeding prevents a trial; it does not affect the conduct of the case at trial, which is the test for the application of the immunity in respect of conduct which occurs outside the court room.

Three Victorian cases I am aware of have touched upon the question since.  They are:

  • O’Connor-Sraj v Lawrence [2005] VCC 1093, a decision of the County Court’s Judge Wodak giving summary judgment to the solicitor defendant and barrister third party, based on the immunity, in a suit for negligently advising settlement.  Austlii has no record of it having been cited since.
  • Frances v Bunnett [2007] VSC 527, a decision of Justice Lasry dismissing the defendant’s application for summary judgment by reference to the immunity.  (Justice Cavanough handed down his decision in MM&R v Grills [2007] VSC 528 on the same day. It was not a case about settlement advice.  Rather, it was an allegation of negligence in allowing the clients to prosecute what a competent solicitor would have realized was a hopeless claim. Justices Lasry and Cavnaough were unaware of the other’s cases.  Justice Cavanough said, in passing:

‘Further, as McHugh J noted in D’Orta, the immunity has been applied in relation to negligently advising a settlement. In Chamberlain v Ormsby (trading as Ormsby Flower), a case decided by the New South Wales Court of Appeal after D’Orta, it was held, obiter, that the immunity applied in relation to advice given by a barrister to an injured worker to accept a settlement of his case before the Compensation Court.’)

  • Naylor v Oakley Thompson [2008] VCAT 1724, a decision of Judge Ross in his capacity as VCAT’s Vice-President, who has since become a Supreme Court judge and VCAT’s President.  He dismissed an application for VCAT’s equivalent of summary judgment by reference to the immunity, in a case in which it was alleged that the lawyer defendants negligently failed to advise the applicant to accept an offer of settlement.

Frances v Bunnett’s facts and the essence of Justice Lasry’s reasoning were conveniently summarised in Naylor v Oakley Thompson, as follows:

‘The plaintiff had engaged the defendant to act on her behalf in relation to an existing proceeding in the County Court. The plaintiff claimed that due to the inattention paid to her case by the defendant she terminated his retainer on 24 March 2000 but, despite the termination of his retainer, the defendant consented to settle the proceedings without having her instructions to do so. Orders were made which gave effect to the agreement that judgment should be entered for the plaintiff in the sum of $108,000. Justice Lasry held that where advocates resolve a proceeding before a judicial determination of the case on its merits it is arguable that such activities and the work connected with them fall outside the immunity. His Honour’s reasons are encapsulated in the following extract from his decision [at [37]]:

“I come to that view because there is a regular reference in the discussion in the High Court to public confidence in the judicial system and its connected public policy of finality. That is the reason why the immunity exists. It does not exist as a primary purpose to protect individual advocates (whether barristers or solicitors) except to the extent that they are an essential participant in the system of justice. It seems to me that if public confidence in the legal system is an important consideration (and the High Court considers it is) then in a case like this it may be argued that public confidence is diminished by the application of the immunity rather than improved by it when a court through the exercise of judicial power has played no contributory role to the quelling of the dispute by deciding the case on its merits.”’

11.  The recent decisions of greatest persuasive value are probably Chamberlain v Ormsby [2005] NSWCA 454,  Symonds v Vass (2009) 257 ALR 689, a decision of the NSW Court of Appeal, and Alpine Holdings Pty Ltd v Feinauer [2007] WASCA 85.

12.  In Chamberlain v Ormsby, a barrister gave advice alleged to have been wrong which was critical to the client’s decision to accept an offer of compromise. The Court said at [120]:

‘His acceptance of that settlement was dependant upon firstly, the advice given by the barrister as to the likelihood of any claim for common law damages exceeding the thresholds and, secondly, the effect that acceptance of permanent loss compensation would have upon his common law rights, such as they were. It is difficult to imagine a stronger case than the present where the advice given by the barrister led to the appellant’s decision as to the conduct of his case before the Compensation Court or which was more intimately connected with the course of that case including its settlement.’

13.  In Symonds v Vass the Court of Appeal allowed an appeal against a decision giving judgment at trial for the defendant on an advocates’ immunity defence.  The trial judge had found that the solicitors negligently caused loss, but that they were immune from suit.  The settlement in that case had been advised by the solicitors and effected 5 weeks into the trial.  The trial judge’s decision on the question of loss was faulty and the Court of Appeal remitted the matter for retrial.  Justice of Appeal Ipp thought that there was no point in doing so because the advocates’ immunity defence was a good one.  The other judges held that the application of the defence depended on findings of fact which should be determined in the new trial, and was otherwise sufficiently questionable in the circumstances as to warrant a retrial.

14.  In Alpine Holdings, solicitors were sued for allegedly negligently advising against accepting a settlement offer.  At first instance, a Master gave summary judgment, on the basis of advocates’ immunity.  On appeal, the unanimous Court of Appeal said at [84]:

‘Having regard to the present state of the authorities, we do not consider it can be said with confidence where the line is to be drawn as to the application of the immunity in relation to advice given in connection with the settlement of legal proceedings.’

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