Limiting the scope of ‘advocate’s immunity’ – Attwells v Jackson Lalic Lawyers Pty Limited [2016] HCA 16
The background facts
Mr Gregory Attwells (Mr Attwells) and Ms Barbara Lord (Ms Lord) were the guarantors of a company loan from ANZ Banking Group Limited (ANZ). After the company defaulted on the loan, ANZ commenced proceedings against Mr Attwells, Ms Lord and the company. The amount of the agreed debt between the parties as at 15 June 2010 was $1,856,122.28. The proceedings were settled when the parties agreed to a consent order dated 16 June 2010 (the Order). The Order was for a judgment in favour of ANZ for an amount of $3,399,347.67. The Order noted a conditional non-enforcement agreement between the parties, which held that ANZ would not enforce the judgment if an amount of $1,750,000.00 was paid by 19 November 2010. When the payment of $1,750,000.00 was not made to ANZ by 19 November 2010, Mr Attwells, Ms Lord and the company became indebted to ANZ for $3,399,347.67.
Mr Attwells brought proceedings against Jackson Lalic Lawyers Pty Ltd (Jackson Lalic), Mr Attwells’ acting solicitors in the proceedings against ANZ. Mr Attwells claimed that Jackson Lalic had acted negligently in advising him to enter into a judgment in favour of ANZ for $3,399,347.67, when the debt, as agreed by both Mr Attwells and ANZ, was only $1,856,122.28.
Jackson Lalic agreed, for the purpose of these proceedings only, that they had acted negligently by providing advice to Mr Attwells to consent to the Order against him. However, they argued that they were entitled to the benefit of advocate’s immunity in respect of their advice and that this was a complete answer to Mr Attwells’ claim. In the Supreme Court of New South Wales, Schmidt J ordered that this issue be decided in separate proceedings1. In the separate proceedings, Harrison J found that it was not appropriate to make a separate order regarding the defence of advocate’s immunity.2 On appeal, Bathurst CJ, Meagher and Ward JJA, held that Harrison J had erred in avoiding ruling and agreed with Jackson Lalic that their advice was covered by the advocate’s immunity principle. As a result, the New South Wales Court of Appeal ruled that Jackson Lalic was immune from suit.3
The issues considered by the High Court
The High Court granted leave to appeal, using this as an opportunity to clarify the scope of advocate’s immunity. On the question of whether Mr Attwells’ claim was entirely defeated because advocate’s immunity applied, the High Court answered no by a majority of 5:2, with Nettle J and Gordon J dissenting. Mr Attwells’ appeal was allowed and the orders of Harrison J were set aside.
In coming to this conclusion the majority of the High Court considered the case of Giannarelli v Wraith4 (Giannarelli) in which it was held that advocate’s immunity extends to work completed ‘out of court which leads to a decision affecting the conduct of the case in court’.5 The majority discussed this application of advocate’s immunity and the confirmation of this application in D’Orta-Ekenaike v Victoria Legal Aid6 (D’Orta). In D’Orta, the boundary of immunity was said to lie where advocacy work was ‘intimately connected’ with court work.
In discussing this application, the majority judgment examined the policy considerations behind advocate’s immunity. They explained that there would be a negative impact on the administration of justice if proceedings were allowed to be re-litigated and discussed the importance of finality in judicial decision-making to the community at large. They agreed that advocate’s immunity played an important role in the administration of justice and the ‘final quelling’ of controversy between persons. The High Court unanimously held that the previous decision of Giannarelli and D’Orta should not be overturned.
However, the majority judgment narrowed the scope of advocate’s immunity stating that the principles in Giannarelli and D’Orta did not extend to negligent advice regarding the settlement of a case. The High Court ultimately concluded that what establishes whether immunity should apply is a ‘functional connection between the advocate’s work and the judge’s decision’.7 The High Court held that advocate’s immunity does not apply to advice that does not help reach a judicial determination in court, but simply leads to an agreement between the parties to settle the dispute. The advice provided by Jackson Lalic to reach a settlement was not considered to contribute to a judicial determination of the case and therefore was held to fall outside the scope of advocate’s immunity.
In their dissenting judgment, Nettle J and Gordon J both said that the type of advice given by Jackon Lalic did contribute to a judicial determination of the case. They argued that if advice results in a settlement, which is then recorded in a consent order, there has been a ‘final quelling of the controversy by the exercise of judicial power’.8 Nettle J and Gordon J argued that reviewing Mr Attwells’ claim would involve reopening the litigation between Mr Atwells and ANZ. They argued that advocate’s immunity should apply to the advice given by Jackson Lalic as the finality of the Order should not be allowed to be challenged. They dissented that the appeal should be dismissed.
Take home message
Solicitors must be aware that advice provided outside of court, that does not affect the conduct of the case in court or the resolution of the case by the judiciary, will not be covered by advocate’s immunity. The ruling in Attwells v Jackson Lalic Lawyers Pty Limited9 provides that a solicitor who gives negligent advice to a client regarding a settlement agreement will not be covered by advocate’s immunity simply because litigation is on foot at the time and the settlement is reflected in a court order. Advice will not be covered by advocate’s immunity if it does not contribute to the conduct of a case or the resolution of a case in a so called ‘functional way’ by the judiciary. This case will have most relevance to the states where parties who resolve judicial disputes do so by way of judgment. Settlements not effected in this way are unlikely to have even been considered to be within the scope of advocate’s immunity.
This article was written by Kate Barrett, Solicitor and David Muir, Partner.
1Attwells v Jackson Lalic Lawyers Pty Ltd [2013] NSWSC 925.
2Attwells v Jackson Lalic Lawyers Pty Limited [2013] NSWSC 1510 at [39].
3Jackson Lalic Lawyers Pty Limited v Attwells [2014] NSWCA 335 at [47].
4(1988) 165 CLR 543.
5(1998) 165 CLR 543 at 560.
6(2005) 223 CLR 1.
7At [5].
8At [126].
9[2016] HCA 16.