Kendirjian v Lepore

MACFARLAN JA: On 21 November 1999 Mr David Kendirjian, the applicant, was injured when a vehicle in which he was travelling collided with a vehicle driven by Ms Cheree Ayoub. In 2004 Mr Eugene Lepore, a solicitor and the first respondent, commenced District Court proceedings on Mr Kendirjian’s behalf against Ms Ayoub. Ms Ayoub admitted liability and a five day hearing on the quantum of Mr Kendirjian’s loss was fixed to commence on 30 August 2006 before Delaney DCJ. Mr Lepore briefed Mr Jim Conomos, a barrister and the second respondent, to appear for Mr Kendirjian.

On the first day of the hearing, and after some earlier negotiations, Ms Ayoub’s legal representatives communicated to the respondents an offer to settle the proceedings for $600,000 plus costs.

Mr Kendirjian alleges that the respondents did not advise him of the amount of that settlement offer “but merely of the fact that an offer had been made” and that they rejected the offer “absent any instructions from [Mr Kendirjian], on the basis that it was ‘too low’” (written submissions [5] and [6]).

On 13 October 2006 Delaney DCJ delivered a judgment awarding Mr Kendirjian $308,432.75 in damages. This Court dismissed an appeal on 14 August 2008 ([2008] NSWCA 194). McColl JA (with the concurrence of Beazley JA, as her Honour then was) observed that Mr Kendirjian’s credibility had been “at the heart of the issues” determined by Delaney DCJ and that his Honour had found that Mr Kendirjian “had exaggerated or misstated the extent of his medical condition” and made strong findings adverse to Mr Kendirjian credit (at [95]).

Mr Kendirjian alleges that he only became aware of the amount of the settlement offer in about January 2009 (written submissions [9]). He commenced District Court proceedings against the respondents in October 2012, claiming the difference between the settlement offer and the judgment as damages caused by the respondents’ negligence.

On 16 May 2014 P Taylor SC DCJ, on the present respondents’ motion, ordered that the proceedings be summarily dismissed on the basis that the respondents were immune from suit under the advocates’ immunity principle stated in D’Orta-Ekenaike v Victorian Legal Aid [2005] HCA 12; 223 CLR 1.

Mr Kendirjian seeks leave to appeal to this Court from that decision. His application was heard concurrently with the appeal that would lie if leave were granted. In my view leave should be granted as the decision effectively determined Mr Kendirjian’s rights (see Ex parte Bucknell [1936] HCA 67; 56 CLR 221 at 226), he now being statute barred from commencing any further proceedings in respect of the same alleged cause of action, and because his case on appeal was in my view arguable.

Although leave to appeal should be granted, the appeal should be dismissed for the reasons given below.

Neither party argued that it was inappropriate to determine the efficacy of the respondents’ defence of immunity as a preliminary issue, the appropriate assumption being that Mr Kendirjian would, if the proceedings went to trial, be able to prove the facts upon which he relied in his Amended Statement of Claim. The respondents emphasised that the factual assertions in the Amended Statement of Claim would be contested if the proceedings were allowed to go to trial and the assumption of those assertions’ accuracy was only appropriate for the purpose of the summary dismissal application.

The allegations in the Amended Statement of Claim include the following:

Particulars of the alleged negligence included the following:

The decision in D’Orta-Ekenaike confirmed that an advocate is immune from suit, whether for negligence or otherwise, not only in respect of the conduct of a case in court, but also in respect of “work done out of court which leads to a decision affecting the conduct of the case in court” (quoting Giannarelli v Wraith [1988] HCA 52; 165 CLR 543 at 560 per Mason CJ) or “work intimately connected with” work in a court (D’Orta-Ekenaike [86]). The plurality, in whose judgment these statements of principle appear, did not consider that the statements in respect of out of court work differed in any significant way.

The plurality also referred (at [37]) to Mason CJ’s statement in Giannarelli that the immunity “if it is to be sustained, must rest on considerations of public policy” (at 555) and stated that in Giannarelli:

Their Honours went on to say:

The issue in the present case is whether the respondents’ alleged out of court conduct was sufficiently connected with the District Court hearing before Delaney DCJ to fall within the ambit of the immunity.

Having reviewed relevant case authorities, the primary judge concluded (at [21]):

The applicant relied upon the endorsement in Giannarelli v Wraith of an observation of McCarthy P in Rees v Sinclair [1974] 1 NZLR 180 at 187. At pages 559-600 Mason CJ said the following about the observation:

Wilson J approved the observation (at 571) and Dawson J referred to Rees v Sinclair with apparent approval (at 596). Brennan J expressed his conclusion in terms similar to those of the observation (at 579).

The plurality judgment in D’Orta-Ekenaike did not refer directly to McCarthy P’s observation and did not suggest that the immunity related only to work done which affected “the way” that litigation was conducted. However, in a separate judgment McHugh J stated that the majority in Giannarelli had adopted McCarthy P’s observation as defining the extent of the immunity (at [151]).

The applicant drew particular attention to McCarthy P’s reference to a decision affecting “the way” the case is to be conducted, contending:

As to the principle of finality underlying advocate’s immunity, the applicant submitted:

In oral submissions, the applicant asserted that because the manner in which the hearing before Delaney DCJ was conducted was not “in the slightest degree or kind affected by the wrong, that is, in this case the giving of advice without the disclosure of the offer” (transcript p 9) the finality principle was not infringed. Moreover, because the applicant did not contend that Delaney DCJ’s decision was in any respect incorrect, there would be no attempt at re-litigation of that decision and the principle of finality underlying advocate’s immunity would not be infringed if immunity were denied (transcript p 34).

In my view the appeal should be rejected on the grounds of both authority and principle. I turn first to refer to the principal decisions since D’Orta-Ekenaike.

In Chamberlain v Ormsby [2005] NSWCA 454, Tobias JA (with whom Giles JA agreed) found that a barrister who had given advice that led to the settlement of a damages claim was immune from suit. His Honour said that it was “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” (at [120]). The decision in D’Orta-Ekenaike itself was to similar effect in that the High Court found that lawyers who negligently advised an accused to enter a plea of guilty in criminal proceedings were immune from suit (see [88], [91] and [152]).

In Donnellan v Woodland [2012] NSWCA 433, the respondent succeeded at first instance in recovering damages for the appellant solicitor’s negligence in advising the respondent in relation to court proceedings that the respondent pursued but lost. On appeal, this Court found that the appellant had not been negligent but nevertheless proceeded to deal with his immunity defence.

Beazley JA (as she then was, with whom Barrett and Hoeben JJA and Sackville AJA agreed) addressed two arguments put on behalf of the respondent, Mr Woodland, as follows.

First, in relation to Mr Woodland’s argument that the temporality of the alleged negligent conduct, and the conduct of the proceedings in court, determined whether the immunity was applicable, her Honour said:

If correct, this observation would require Mr Kendirjian’s appeal to be dismissed given it refers to a situation similar to the present, that is, one where negligent advice or an omission to advise leads to the continuation of court proceedings. Because the observation constitutes seriously considered dicta, is not plainly wrong (see Gett v Tabet [2009] NSWCA 76 at [274]-[295]), and is consistent with the other authorities discussed below, the correctness of the observation should be accepted. Contrary to the applicant’s argument, I do not consider that the circumstances alleged in the applicant’s Amended Statement of Claim are materially different to those described in the observation. That pleading (see [10] above) does not allege that the respondents failed to advise the applicant that an offer had been received. Rather, the allegation is that the respondents told the applicant that an offer had been made and did not give proper advice as to the amount of damages that the respondent was likely to receive if the hearing proceeded (see [11] above). This is no different in principle to an allegation that the respondents gave negligent advice to reject an offer of a disclosed amount.

Mr Woodland’s second submission in Donnellan relied on the decisions in Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85 and of Harrison J in Dansar Pty Ltd v Pagotto [2008] NSWSC 112. In the former, the Western Australian Court of Appeal held that advocate’s immunity arguably did not apply to a solicitor’s advice (which was acted upon) to reject an offer of settlement of court proceedings. Beazley JA did not derive any assistance from the decision as, inter alia, the Court had not needed to determine whether advocate’s immunity was in fact available.

In Dansar v Pagotto, Harrison J applied McCarthy P’s observation in Rees v Sinclair (see [17] above) to hold that the relevant immunity was not available where negligent advice related to the termination of proceedings, not to the manner in which they should be conducted. In Donnellan Beazley JA rejected this view and also, implicitly, the proposition said in Alpine to have been arguable (at [208] see [29] above).

The following conclusion of Beazley JA is also inconsistent with Mr Kendirjian’s argument that immunity is not available to the respondents in the present proceedings:

In Attard v James Legal Pty Ltd [2010] NSWCA 311, the alleged negligence was the solicitors’ failure to advise a company in administration that they were acting for in defending a cross-claim that the cross-claimant needed the leave of the Court to proceed. The Court held that the solicitors were immune from a claim for wasted expenses. Giles JA (with whom Beazley JA agreed) pointed out that the solicitors’ alleged negligence resulted in the cross-claim being continued (at [13]). This again bears an analogy to the present case.

In Bott v Carter [2012] NSWCA 89, an unsuccessful plaintiff in a personal injuries claim sued his lawyers for damages for negligence. The alleged negligence related to the lawyers’ conduct of the proceedings including “[f]ailing to engage in settlement discussions” (quoted at [17]). Basten JA (with whom McColl and Whealy JJA agreed) considered that “[t]he only claim which might, on its face, fall outside the scope of the immunity is the complaint that the solicitor failed to respond to the possibility of an offer of settlement, which involves no challenge directly, or indirectly, to the judgment in the District Court” (at [37]). His Honour made three points concerning the inadequacy of the pleading of this claim and continued:

Earlier in his judgment, Basten JA had said the following concerning the doctrine of advocate’s immunity:

This observation was considered in Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 where solicitors were sued for damages for negligent advice to settle court proceedings which led to the entry of judgment by consent. The plaintiffs submitted that the defendants were not immune from suit as the plaintiffs did not seek to call the consent judgment into question. They submitted that the judgment was only relied upon to prove their loss and that the case therefore did not involve re-litigation of the previous proceedings. The plaintiffs further submitted that the observation of Basten JA in Bott at [23] indicated that the defendants were not immune in such circumstances (at [35]). Bathurst CJ (with whom Meagher and Ward JJA agreed) considered that because the advice led to the case being settled it was “intimately connected” with the conduct of the proceedings and the defendants were therefore immune from suit. He continued:

This decision necessitates rejection of Mr Kendirjian’s present argument that the Court should not confine itself to applying the test stated in D’Orta-Ekenaike for application of the immunity (see [20]-[22] above) but should instead consider whether the rationale for that immunity (the principle of finality) is applicable to the present case and, if it is not, should decline to apply the test.

Further authority for the rejection of this approach is to be found in Attard v James Legal where Giles JA (with whom Beazley and Tobias JJA agreed) stated that on his understanding of the law as expounded in D’Orta-Ekenaike “offence to the finality principle in the particular case is not necessary” (at [22]). His Honour considered that the D’Orta-Ekenaike principle was applied regardless of whether re-litigation of an earlier decision would be involved (at [28]-[31]). This accords with my view that, as the High Court has identified the test to be applied, it is not for this Court to fasten on the High Court’s rationale for adoption of the test and not to apply the test to particular cases where it finds the rationale inapplicable.

For the reasons following I do not in any event consider that this is a case to which the rationale is inapplicable.

For Mr Kendirjian’s negligence claim against the respondents to succeed, he would inevitably have had to prove what advice the respondents should have given him as he does not allege that he would have accepted the settlement offer regardless of the respondents’ advice about the amount of damages he should receive. Indeed, his particulars of breach of duty focus on the advice that the respondents should have given in this respect.

His case would therefore involve an examination of, and possibly departure from, the views expressed in the judgments of Delaney DCJ and the Court of Appeal in the personal injury action. The respondents would seek to use the findings concerning Mr Kendirjian’s credibility to explain the fact that the judgment was significantly lower than the settlement offer. In these circumstances it might be held that the amounts awarded were quite different from the amounts that reasonable lawyers in the position of the respondents could have assessed as the appropriate range of damages award (because these lawyers might well not have been able to foresee the attack on Mr Kendirjian’s credibility and its results). This would lead to an apparent conflict between the judgment in the professional negligence action and those in the personal injury action. I therefore consider, contrary to Mr Kendirjian’s submissions, that the role of the personal injury judgment in his professional negligence action would not simply be as an integer in his damages calculation (the amount sought being the difference between the settlement offer and the judgment). Rather, a re-examination of the issues determined in the personal injuries judgment would be required.

This Court reached a similar conclusion in Young v Hones [2014] NSWCA 337 in which damages were claimed on the basis that the appellant’s lawyers’ negligence resulted in Land and Environment Court proceedings being settled. The Court held that the lawyers were immune from suit and Ward JA (with whom Bathurst CJ and Emmett JA agreed) concluded in relation to the appellant’s claim:

I turn now to consider Mr Kendirjian’s reliance on McCarthy P’s formulation in Rees v Sinclair of the test for when out of court work will attract immunity (see [17] above). That formulation described the test as applying where work affects “the way” a case is conducted. Although this was approved in Giannarelli v Wraith, it was not adopted by the plurality in D’Orta-Ekenaike, which is the High Court’s most recent pronouncement on the issue and one that this Court is bound to follow. As noted above, the effect of the pronouncement is that the immunity principle applies to “work done out of court which leads to a decision affecting the conduct of the case in court” and to “work intimately connected with” work in a court. Both formulations sufficiently cover cases such as the present where the alleged negligence was the failure to advise properly in relation to acceptance of a settlement which led to a plaintiff continuing with court proceedings, in particular where a court hearing was in progress. The decision in Donnellan v Woodland confirms that primacy is not to be given to McCarthy P’s reference to “the way” in which a court proceeding is conducted (see [27] above).

I add in conclusion that, contrary to Mr Kendirjian’s contention, the primary judge gave adequate reasons for his decision. The primary judge’s succinct application of the test in D’Orta-Ekenaike sufficed, particularly as his Honour had surveyed the relevant authorities. In any event, success for Mr Kendirjian on this submission would not lead to a re-trial but to a re-visiting of the question of immunity by this Court, which has ultimately occurred anyway, as evidenced by the terms of this judgment.

For the reasons above, I propose the following orders:

LEEMING JA: I agree with Macfarlan JA that leave should be granted but that the appeal should be dismissed. I agree with his Honour’s reasons. I would add the following, which so far as I can see is wholly consistent with those reasons.

A remarkable feature of D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1 is that the test for the reformulated advocates’ immunity, which now rests squarely on considerations based on finality, remains exactly as described in Giannarelli v Wraith [1988] HCA 52; 165 CLR 543 at 560. Relevantly for present purposes, the immunity applies to “work done out of court which leads to a decision affecting the conduct of the case in court”: see D’Orta-Ekenaike at [86]-[87]. That coincidence of outcome illustrates the difference between the way in which rules and principles operate in the legal system.

Prominent in Mr Kendirjian’s submission was the proposition that this appeal was “outside the boundaries set by the informing principle” of finality. In particular, he emphasised that he did not seek to cast doubt upon a single aspect of the conduct of the trial which took place following the rejection of the settlement offer. There is undoubted attraction in the idea that the immunity should not extend more widely than is justified by the principle which gives rise to it. As much is reflected in the concern expressed by Mason CJ in Giannarelli at 560 that the protection not be taken beyond the boundaries of the public policy considerations which sustain the immunity.

But I would not adopt the approach for which Mr Kendirjian contended. I have concluded that his submission conflates principles with rules.

It is one thing to enunciate a “general principle” (or for that matter a “central and pervading tenet”, to use the equivalent language employed in D’Orta-Ekenaike at [34] and [35]) as a justification for a rule. It is another thing to formulate the rule. Within the class of conduct delineated by the formulation of a rule, the justifying general principle may apply with greater or lesser force. As much informs a deal of the reasoning in D’Orta-Ekenaike and is express in the passage of the joint judgment at [81]-[83]. However, the presence or absence of the immunity does not turn on an evaluation of the extent to which the justifying principle is impacted in any particular case. Except in a novel case, it turns instead upon whether the case falls within or outside the rule.

Two additional matters underlie the importance to be accorded to the application of the test in this particular area of the law. The first is that the same principles of finality which underlie the immunity also sustain the desirability of an action being determined on that basis and no other, as Barrett JA observed in Donnellan at [276]-[279]. The second is that those same principles also underlie the facility for these issues being determined summarily if the pleadings are sufficiently clear to permit that to occur. Both these matters turn upon an application of the test, without regard to the underlying general principle which justifies the test.

The rule or test stated in Giannarelli and D’Orta-Ekenaike having been established, courts have determined its application in particular categories of cases for more than a quarter of a century. It is not surprising that there are now few novel cases. It is now clear law that the work done out of court which attracts the immunity includes advice leading to a case being settled. It is also clear law that advice leading to a case not being settled is work done out of court which attracts the immunity. Both are examples of decisions affecting the conduct of the case in court. Those propositions may be seen in Donnellan v Woodland [2012] NSWCA 433 at [198] and [229] which Macfarlan JA has reproduced. Strictly speaking, the passages are obiter, but the principles there stated in the judgment of this Court constituted by five judges of appeal, assembled to determine that very point, should be regarded as settled.

All this means that it is not for an intermediate court of appeal, or for a court at first instance, to seek to derive the metes and bounds of the immunity by reference to what the principle of finality demands, in circumstances where the application to the facts of the test formulated by the High Court is clear.

In the present case, the allegation on which the proceeding was summarily dismissed was that the lawyer failed to communicate the amount of an offer, instead only communicating the fact that it had been made and the opinion that it was “too low”. That was advice leading to a case not being settled. The primary judge correctly regarded that as falling within the immunity.

BERGIN CJ IN EQ: I agree with Macfarlan JA.