Supreme Court New South Wales

• Medium Neutral Citation: White v Forster [2014] NSWSC 1767
• Hearing dates: 22 April 2014
• Decision date: 11 December 2014
• Jurisdiction: Common Law
• Before: Button J

Decision

(1) The claim of the plaintiffs, Julian White and Romeo Libut, against the second defendant, Gregory George, is struck out.

(2) The claim of the plaintiffs against the first defendant, Reginald Forster, is struck out.

(3) The plaintiffs must pay the costs of the first and second defendants in the proceedings before me.

• Catchwords: CIVIL LAW - professional negligence - strike out application - whether proceedings are statute barred pursuant to s 14 of the Limitation Act 1969 - whether defendants are protected from suit by the advocate's immunity - contingent analysis - whether the question of the application of the advocate's immunity should be considered as a separate and preliminary issue
• Legislation Cited: Civil Procedure Act 2005 (NSW), ss 38, 64, 65; Limitation Act 1969 (NSW), s 14; Uniform Civil Procedure Rules (2005), rr 13.4, 28
• Cases Cited: Attard v James Legal Pty Ltd [2010] NSWCA 311; Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937; D'Orta-Ekenaike v Victoria Legal Aid and Another [2005] HCA 12; 223 CLR 1; Donnellan v Woodland [2012] NSWCA 433; NSW Conv R 56-307; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125; Giannarelli v Wraith [1988] HCA 52; 165 CLR 543; Saif Ali v Sydney Mitchell & Co [1980] AC 198; Thompson v White & Anor; ACDC v Thompson [2005] NSWSC 1257; Thompson v White & Ors [2006] NSWCA 350; Thompson v White [2008] NSWSC 1; White & Anor v Thompson & Ors [2009] NSWSC 1103; White & Libut v Thompson & Ors [2011] NSWCA 161; Young v Hones [2013] NSWSC 1429
• Category: Principal judgment
• Parties: Julian John White (First Plaintiff); Romeo Medina Libut (Second Plaintiff); Reginald John Forster (First Defendant); Gregory P George (Second Defendant)
• Representation: Counsel: D P M Ash (First and Second Plaintiff); P Knowles (First Defendant); D J Miller SC (Second Defendant); M Elliott (Second Defendant); Solicitors: Yeldam Price O'Brien Lusk (First Defendant); Moray & Agnew Lawyers (Second Defendant)
• File Number(s): 2011/396151

Judgment

1 By way of an amended statement of claim of 12 March 2013, the plaintiffs have brought proceedings against the first defendant ("the solicitor") and the second defendant ("the barrister") for professional negligence. The defendants have sought to have the proceedings struck out pursuant to r 13.4 of the Uniform Civil Procedure Rules (2005) ("the Rules") on two bases. The first is that the proceedings are statute barred pursuant to s 14 of the Limitation Act 1969 (NSW). The second is that each of them is protected by way of the immunity of an advocate from suit ("the immunity"). If they fail in both of those contentions, they submit that the substantive question of the immunity should be determined as a separate preliminary matter by me, pursuant to r 28.2 of the Rules. If that contention is accepted, they each submit that I should determine that the immunity must lead to a verdict in favour of the defendants, pursuant to r 28.4(2) of the Rules.

2 Counsel for the plaintiffs resists all of those submissions.

3 Accordingly, it is incumbent upon me to determine the following issues. First, is it appropriate to strike out the claim against the barrister on the basis that it is statute barred? Secondly, is it appropriate to strike out the claim against the solicitor on the basis that it is statute barred? Thirdly, if the first issue is determined adversely to the barrister, is it appropriate to strike out the claim against the barrister on the basis of the immunity? Fourthly, if the second issue is determined adversely to the solicitor, is it appropriate to strike out the claim against the solicitor on the basis of the immunity? Fifthly, if the third issue is determined adversely to the barrister, or the fourth issue determined adversely to the solicitor, is it appropriate to deal with the question of the effect of the immunity as a separate preliminary matter in the substantive proceedings? Sixthly, if the fifth issue is determined in favour of the barrister or the solicitor, is it appropriate to enter judgment in favour of either or both of them, on the basis of the immunity?

4 In accordance with the approach of the parties, I shall deal with those issues in the order in which I have summarised them above.

Chronological background

5 It is convenient to set out a very brief chronology of the background to these proceedings. In doing so, for the purpose of the strike out applications (each of which has two limbs), I shall take the case for the plaintiffs at its highest.

6 In 1997, Mr Julian White (the first plaintiff), Mr Romeo Libut (the second plaintiff), and Mr Byron Thompson entered into what was later determined to be a joint venture to redevelop and sell a property in Seaforth ("the Seaforth property"). (The agreement was in fact between Mr Thompson and Aerated Concrete, Design and Construction Pty Ltd ("ACDC"), a corporation of which the two plaintiffs were the directors and shareholders, but nothing turns on that.)

7 In December 2002, Mrs Thompson, the wife of Mr Thompson, purchased property at Somersby ("the Somersby property").

8 In 2003, disputes between the plaintiffs and Mr Thompson about the nature of their relationship with respect to the development became litigious. Both of the plaintiffs retained the solicitor. The barrister represented the second plaintiff. He also provided advice to the first plaintiff.

9 On 3 June 2003, the two plaintiffs (as defendants in proceedings in this Court brought by Mr Thompson) filed cross-claims alleging that the Somersby property was purchased with money misappropriated by Mr Thompson from the joint venture fund. The cross-claims were framed as an action against Mr Thompson calling upon him to "account for" monies to the plaintiffs, and seeking damages from him.

10 A hearing was conducted before Gzell J on a number of dates throughout November 2005. Gzell J reserved his decision on 24 November 2005.

11 On 8 December 2005, Gzell J delivered a judgment in the matter: Thompson v White & Anor; ACDC v Thompson [2005] NSWSC 1257. Final orders were made by his Honour on 15 December 2005. Relevantly for present purposes, those orders were to the effect that a joint venture agreement existed between the three men, and that account should be taken in order to determine the relative entitlements of the parties to the profit of the joint venture.

12 Mr Thompson appealed from that decision to the Court of Appeal. In a decision of 12 December 2006 that Court in effect affirmed the decision of Gzell J: Thompson v White & Ors [2006] NSWCA 350.

13 On 15 January 2008, Biscoe AJ handed down a decision that reflected the accounting exercise called for by the judgment of Gzell J. Final orders were made by Biscoe AJ on 29 February 2008. They were to the effect that Mr Thompson personally owed Mr White and Mr Libut a substantial sum of money: Thompson v White [2008] NSWSC 1.

14 On 8 February 2008, Mr Thompson was declared bankrupt. The result was that Mr White and Mr Libut could not effectively enforce the judgment that they had obtained against Mr Thompson in 2005, or the judgment that they had obtained in January 2008.

15 In October 2009, the plaintiffs brought fresh proceedings in this Court against Mr and Mrs Thompson seeking to have the Somersby property sold and the proceeds used to adjust the accounts between the joint venture parties. By that stage, the solicitor and barrister were not acting for the plaintiffs.

16 In a judgment of 15 October 2009, Windeyer AJ dismissed the proceedings: White & Anor v Thompson & Ors [2009] NSWSC 1103. That was on the basis that any right to bring such a claim had merged in the judgment of Gzell J; pursuing the second claim would result in a judgment that conflicts with that judgment, and was therefore an abuse of process. At [24] and following his Honour said:

[24] There can be no doubt that the two parts of the action in the proceedings before Gzell J and Biscoe AJ were argued and determined on the basis of that the payments from the proceeds of sale of Seaforth so far as they were applied to the Somersby property should be treated as payments to Thompson from the joint venture. They were accounted as such and when taken into account gave rise to a liability in Thompson to the joint venture. It would be no different from a partner overdrawing entitlements being found in a suit for partnership accounts to be liable to the partnership to the extent of the overdrawn account.

[25] The question is whether, having proceeded on that basis and accepted the accounts were to be taken on that basis, the plaintiffs can in another action seek to have the land brought to account as a joint venture asset. If that can be done there can be no doubt there is a possibility and really a certainty of conflicting judgments. To some extent the plaintiffs seek to overcome this problem by seeking what would be a charge over the proceeds of sale of Somersby sufficient to enable the debt Thompson owes to the joint venture to be paid but at the same time requiring any surplus to be added to the controlled moneys account and thereafter to be credited to the joint venture. So far as the first point is concerned, what this really amounts to is an attempt to get security for a judgment debt owed by one venturer to the joint venture partners. So far as the balance is concerned, it would require rewriting of the joint venture accounts.

[26] The plaintiffs stated many times that they had attempted to bring the claim to include the Somersby land before Gzell J and Biscoe AJ but that those judges had said that this was not a matter before them. Nevertheless, Acting Justice Biscoe had allowed a motion to be filed and ultimately Mr White said the plaintiffs accepted a statement made by Palmer J that separate proceedings should be commenced.

[27] I do not think that this is an answer. The accounting action treated the payments towards the Somersby [property] as raising a debt to the extent to which those payments combined with others resulted in an overdrawing. Had an alternative claim been made to have that property included as a joint venture asset then prior to any judgment the plaintiffs would have been required to elect which way they wished to go. Had they sought the judgment which in fact they have obtained they would not have been able to seek judgment on a joint venture claim as there could have been different results. Any rights that they had in connection with the joint venture claim would have merged in the judgment. They are estopped from bringing the joint venture claim here at least as against Mr Thompson. [Emphasis added.]

17 His Honour went on to say:

[36] While a claim for interest in Somersby could have been brought as an alternative claim in the proceedings 2684/03 with the plaintiffs bound to elect between alternative remedies had that been done Mrs Thompson as joint registered proprietor would have had to be joined as a defendant. As any right to bring such a claim against Mr Thompson has now merged in the judgment obtained the plaintiffs ought to be estopped from bringing against Mrs Thompson a claim which if successful, would result in a judgment conflicting with that obtained. That would in my opinion be a clear abuse of process even though an additional party is involved. ...

18 In short, Windeyer AJ held that the plaintiffs, having implicitly elected to forego proceedings against the Somersby property by explicitly proceeding against Mr Thompson, could not subsequently take proceedings against the Somersby property, and against Mrs Thompson.

19 The plaintiffs appealed from the decision of Windeyer AJ to the Court of Appeal. In a judgment of 27 July 2011 that Court dismissed the appeal and confirmed the decision of Windeyer AJ: White & Libut v Thompson & Ors [2011] NSWCA 161. Handley AJA (with whom Basten and Young JJA agreed) said at [48] and following:

[48] The appellants therefore had to plead and litigate their claim to a proprietary interest in Somersby in the 2003 proceedings heard by Gzell J. They could have done this by pleading an alternative claim that Mr Thompson's drawings from joint venture funds were unauthorised and fraudulent (in the equitable sense), so as to give rise to a tracing claim over Somersby. Instead they went to trial on a claim that Mr Thompson's withdrawals created a debt to be treated as such in any accounting that might be ordered. Any tracing claim to Mr Thompson's share in Somersby was barred by the final orders of Gzell J on 15 December 2005, and of the Court of Appeal on 12 December 2006.

[49] This involved an election to treat Mr Thompson's drawings as loans under which beneficial title to the moneys passed to him. He could therefore pass a beneficial title in those moneys to Mrs Thompson.

[50] Any tracing claim against Mrs Thompson's half share depended upon tracing the funds through her husband. Since a tracing claim against him was barred, it was an abuse of process to attempt to trace the funds through him to Mrs Thompson. [Emphasis added.]

20 Special leave to appeal that decision to the High Court of Australia was refused on 26 October 2011.

21 On 7 December 2011, the plaintiffs filed a statement of claim commencing proceedings against the solicitor in this Court for professional negligence.

22 On 12 March 2013, the plaintiffs filed an amended statement of claim that joined the barrister to the professional negligence proceedings. That amended statement of claim contained the following particulars of alleged negligence with regard to the solicitor at [58]:

Particulars of Breach of the First and Second Plaintiff's Retainers and/or Breach of Duty of Care

(i) Failing to adequately advise the Plaintiffs of the nature of the equitable interest of Mrs Thompson in Seaforth;

(ii) Failing to seek a remedy of tracing in all pleadings in proceedings 2685/03 and 5929/03;

(iii) Failing to include Mrs Thompson as a party in proceedings 2685/03 and 5929/03;

(iv) Failing to advise the Plaintiffs of the risk that they would be unable to recover against Mr Thompson should he declare himself bankrupt after judgment; and

(v) Failure to advise the Plaintiffs, then prepare and obtain a lien or charge on Somersby protecting or securing their debt election and Court Ordered and Mr and Mrs Thompson consented equitable interest of the First and Second Plaintiffs in the Somersby property [sic].

23 With regard to the barrister, the amended statement of claim provided the following particulars at [58B]:

(i) The Second Defendant drafted and/or settled the cross claims filed on behalf of the plaintiffs in proceedings 2685 of 2003, being the cross claims in which the plaintiffs allege a failure to plead that the joint venture funds owed to the First and Second Plaintiff's [sic] should be traced into Somersby by way of a proprietary interest by trust or otherwise as per paragraph 52 of this Statement of Claim.

(ii) The Second Defendant drafted and/or settled the Amended Statement of Claims on behalf of ACDC, the First and Second Plaintiffs on or around the 7 November 2005 in which the plaintiffs allege a failure to plead that the joint venture funds owed to the First and Second Plaintiffs should be traced into Somersby by way of a proprietary interest by trust or otherwise as per paragraph 52A of this Statement of Claim.

(iii) The Second Defendant failed to nominate Mrs Thompson as a party to proceedings 2685 of 2003 or 5929 of 2003 as per paragraph 58 of this Statement of Claim.

(iv) The Second Defendant failed to provide the advice or take the steps referred to in paragraph 58 of this Statement of Claim.

(v) The Plaintiffs say further that although the Second Defendant may plead the time bar, he nonetheless remains liable to the extent that any breach of his retainer and duty of care extended beyond six years prior to the filing of this amended claim, including without limitation the allegations in paragraphs 57A [that is, failure to obtain a lien or charge over the Somersby property], 58(iv) and 58(v) of this Statement of Claim.

24 On 18 October 2013, the barrister filed a notice of motion seeking dismissal of the professional negligence proceedings. On 5 November 2013 the solicitor filed a notice of motion in relevantly identical terms. Those motions are the subject of the proceedings before me, and this judgment.

Strike out applications - general principles

25 All parties agreed that the strike out application should be determined on the pleadings, accepting all of the factual allegations as correct, and taking the case for the plaintiffs at its highest: see for example Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937.

26 They also accepted that a court should only strike out a claim at a preliminary stage, not having heard any evidence, if the claim is clearly doomed to failure: General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129.

Is the claim of the plaintiff against the barrister statute barred?

27 Section 14 of the Limitation Act relevantly provides:

14 General

(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:

(a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed,

(b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty,

...

28 All parties accepted that, pursuant to s 14 of the Limitation Act, in order to resist the strike-out application, the plaintiffs must demonstrate that it is reasonably arguable that the cause of action founding the professional negligence proceedings accrued no more than six years before proceedings were commenced.

29 It was not disputed that proceedings against the barrister were commenced on 12 March 2013, when the amended statement of claim joined him in the proceedings. (In oral submissions, counsel for the plaintiffs disavowed reliance on ss 64 and 65 of the Civil Procedure Act 2005 (NSW). He also, whilst not formally abandoning the point, explained that he would not seek to dissuade me from the submission of the barrister that s 38 of the Civil Procedure Act does not aid the plaintiffs.)

30 In other words, if the cause of action of the plaintiffs against the barrister accrued before 12 March 2007, then the proceedings against him are statute barred.

31 Senior counsel for the barrister submitted that the cause of action accrued, and therefore "the clock started to run", on 8 December 2005, when Gzell J handed down his decision, or, at the very latest, on 15 December 2005, when final orders were made by his Honour. He submitted that the delivery of that decision marked the point at which the election of the plaintiffs to pursue the misappropriated money as a debt that had to be accounted for, rather than a fraudulent dealing that gave rise to a tracing claim in equity, became irreversible, and therefore any alleged negligence had been committed.

32 He invited my attention to the passages extracted above from the decision of Windeyer J of 15 October 2009, and from the decision of the Court of Appeal of 27 July 2011.

33 Counsel for the plaintiffs made two submissions to the contrary.

34 The first was that it was not the judgment of Gzell J that foreclosed framing the claim on the basis of tracing rather than on the basis of a debt owed. Rather, it was the judgment of Biscoe AJ that foreclosed that step. In other words, the cause of action available to the plaintiffs did not accrue until 15 January 2008. That means, he submitted, that the six-year limitation has been complied with by the plaintiffs.

35 Secondly, in oral submissions counsel for the plaintiffs submitted that, in truth, there was not a "position of hopelessness" from March 2007 (that is, six years before the barrister was joined in the proceedings). In other words, it was the submission of the plaintiffs that the particulars capture negligence that allegedly took place after March 2007, and therefore within the six year period before the barrister was joined in the proceedings. It was submitted that, during that time, the barrister could have taken steps to proceed against the Somersby property and Mrs Thompson.

36 In support of both submissions, counsel for the plaintiffs drew my attention to the orders made by Gzell J on 15 December 2008, which appear at [7] of the decision of Windeyer J. He submitted that those orders merely determine that a joint venture existed between the parties, and set out its terms; they do not forestall any form of subsequent amendment, or a subsequent application to join Mrs Thompson.

37 I respectfully reject the two submissions made on this question by counsel for the plaintiffs.

38 Once the judgment of Gzell J was delivered on 8 December 2005, I consider that the barrister had made an irrevocable election on behalf of the plaintiffs to pursue the claim on the basis of a debt owed by Mr Thompson, rather than a proprietary interest claimed in the Somersby property. So much is clear from the judgment Windeyer AJ of 2009, affirmed by the Court of Appeal in 2011. It follows that, at the absolute latest, the alleged negligence of which the plaintiffs now complain had crystallised on the morning of the delivery of the judgment. I say that because it is (just barely) conceivable that, if the chambers of Gzell J had been contacted that morning, his Honour may have relisted the matter for further submissions, permitted a completely different claim, and delivered a completely different judgment.

39 I reject the proposition that the delivery of the judgment of Biscoe AJ is the operative date for the purpose of the statute of limitation. To my mind, the process of account was an ancillary exercise that may be roughly equated with determination of quantum after determination of liability. I repeat that my view is that the liability of Mr Thompson to the plaintiffs, and its legal basis, was determined by the judgment of Gzell J on 8 December 2005.

40 For similar but not identical reasons, I reject the submission of the plaintiffs before me that, in the months and years after delivery of the judgment of Gzell J, the barrister could have sued Mrs Thompson on the basis of tracing in order to have access to the Somersby property. Again, the Court of Appeal has made it clear that, once the implicit election to pursue the misappropriated trust moneys as a debt owed by Mr Thompson as opposed to a proprietary interest as against the Somersby property had crystallised by way of the delivery of the judgment of Gzell J, no proceedings could succeed that impugn that election. And as Handley AJA explicitly said, the only basis upon which tracing could occur against Mrs Thompson was through Mr Thompson. And yet, tracing through Mr Thompson would be an abuse of process, again founded upon the implicit election with regard to Mr Thompson upon which the judgment of Gzell J is based.

41 In short, I accept that "the clock started running" at the absolute latest on 8 December 2005, and that the plaintiffs were required, pursuant to s 14 of the Limitation Act, to commence proceedings against the barrister before 8 December 2011. They did not do so.

42 Therefore, proceedings against the second defendant were commenced after the expiry of the limitation period prescribed by s 14 of the Limitation Act. They are, to my mind, clearly statute barred. The result is that the barrister is entitled to have them struck out.

Is the plaintiffs' claim against the solicitor time barred?

43 Counsel for the solicitor adopted a slightly different approach before me from that adopted by senior counsel for the barrister.

44 Proceedings against the first defendant were commenced on 7 December 2011, when the statement of claim of the plaintiffs against him was filed. It can be seen that that is one day within six years from the date of the delivery of the judgment of Gzell J.

45 In answer to the proposition that that chronology means that the claim is not statute barred against him, the solicitor submitted that the date upon which any cause of action of the plaintiffs against the solicitor accrued was on the date Gzell J reserved judgment, not the date upon which his Honour delivered it. In other words, the solicitor submitted that any claim accrued on 4 November 2005, not 8 December 2005. The result is, he submitted, that the claim against the solicitor is indeed statute barred.

46 Counsel for the solicitor submitted that, as a result of the way the case for the plaintiff was conducted, that was the absolute last date on which amendments could have been made to the pleadings in order to pursue a proprietary interest in the Somersby property, rather than a monetary judgment against Mr Thompson.

47 He submitted that putative amendments after the date upon which judgment was reserved would have necessarily constituted a drastic reformulation in the way the case for the plaintiff was put forward, and would have required the joining of a completely new party (Mrs Thompson). Accordingly, although this Court may grant leave to amend any document in the proceedings at any stage pursuant to s 64 of the Civil Procedure Act 2005, he submitted that, as a matter of practical reality, it would not have been open to Gzell J to grant leave to make the amendments after the conclusion of the hearing. He submitted that the fact that Mrs Thompson gave evidence before Gzell J is an additional reason why amendments that joined Mrs Thompson as a party would simply not have been permitted after judgment was reserved and before judgment was delivered.

48 Having said that, with the candour that one enjoys from members of the New South Wales Bar, he accepted that, in light of the very high threshold for summary dismissal pursuant to r 13.4 of the Rules, if I came to the conclusion that there was the slightest prospect that leave to amend could have been granted after the conclusion of the hearing, then I should not strike out the proceedings against the solicitor on this basis.

49 I respectfully reject the fundamental submission of the solicitor. Of course, on the motion, I did not receive evidence (even assuming its admissibility) about the readiness of Gzell J to reopen matters that had been reserved in order to hear further submissions or even amend bases of claims. But, as I have said, all parties agreed that I should, for the purposes of this exercise, take the case of the plaintiffs at its absolute highest. Assessing it in that way, I consider that there is a small possibility, however remote, that his Honour could not only have permitted the proceedings to be reopened after judgment was reserved, but could also have permitted the plaintiffs to alter radically the basis of their claim. For that reason, I maintain the opinion that I expounded with regard to the application of the barrister that the operative time and date for the statute of limitations is the morning of 8 December 2005, and no earlier.

50 It follows that I will not strike out the claim of the plaintiffs against the solicitor on this basis, because it is not clearly statute barred.

Is the solicitor protected by advocate's immunity?

51 Having rejected the submission of the solicitor that the claim of the plaintiffs against him should be struck out on the basis of the statute of limitation, I turn to consider whether it should be struck out on the basis of the immunity.

52 It is now firmly established in Australia that an advocate (whether counsel or solicitor) cannot be sued by his or her client for negligence with regard to the conduct of a case in court, or with regard to work done out of court that leads to a decision affecting the conduct of a case in court: see in particular Giannarelli v Wraith [1988] HCA 52; 165 CLR 543 at [559], [579]; D'Orta-Ekenaike v Victoria Legal Aid and Another [2005] HCA 12; 223 CLR 1 at [25]; and Donnellan v Woodland [2012] NSWCA 433; NSW Conv R 56-307 at [161]-[189], [224].

53 It may be the case, as the plaintiffs submitted, that that test is derived from the earlier judgments of English Courts, including the judgment of Saif Ali v Sydney Mitchell & Co [1980] AC 198. But I do not consider that it is a matter of me seeking to refine or "gloss" the clear and unequivocal test promulgated by the ultimate Court of this nation by reference to judgments of other jurisdictions. Rather, it is simply a matter of me applying the test to the evidence placed before me.

54 And although the main bases for the immunity have been said to be the need for finality in litigation and the desirability of avoiding subsequent collateral attacks on extant judgments, nor is it a matter of me determining whether the cause of action now brought by the plaintiffs would actually have those effects. Again, it is simply a matter of determining whether the new proceedings fall within the test promulgated by the High Court with regard to the operation of the immunity, and therefore cannot be maintained.

55 Although the claim of the plaintiffs is framed in a number of highly particular ways, I consider that, in truth, they boil down to one fundamental proposition: that the solicitor was negligent in suing Mr Thompson personally for an account of profits of the joint venture (with the result that the plaintiffs were left without effective recourse when Mr Thompson went bankrupt), when in truth the solicitor should have claimed a proprietary interest in the Somersby property as against Mr Thompson, and through him Mrs Thompson (thereby permitting the plaintiffs to have effective recompense for their loss by way of a proprietary claim against the Somersby property).

56 I turn to apply the test for the immunity to the particulars of negligence alleged against the solicitor. It is convenient to do so a little out of order.

57 As for (ii), failing to seek a particular remedy in pleadings and proceedings is, to my mind, clearly captured by the immunity.

58 To the extent that I am respectfully able to understand (v), I consider that it is in truth a complaint that the solicitor did not obtain a remedy based upon tracing of the Somersby property, and was negligent in that omission. I consider that that allegation is captured by the immunity as well.

59 As for (iii) (the failure to include Mrs Thompson as a party, and the fact that no proceedings were ever commenced against Mrs Thompson), in oral submissions counsel for the plaintiffs clarified that, in truth, this was the negligent omission that he asserted both the solicitor and the barrister made out of court, and which, he asserted, were not captured by the immunity. He placed substantial reliance upon Saif Ali v Sydney Mitchell & Co.

60 It is quite true that, in that case, the House of Lords held that the immunity did not extend to protect a barrister who had failed to sue a particular person, with the result that his client was left without effective recourse when he had undoubtedly been injured as a result of negligent driving. And it is also true that, in D'Orta-Ekenaike v Victoria Legal Aid and Another, McHugh J (who was in the majority with regard to orders but not a party to the plurality judgment) repeatedly referred to that judgment at 51-52.

61 A number of things may be said about that.

62 The first is that I accept that there will be occasions when a failure to sue a person will fall outside the immunity. There will also be occasions when it will fall within it. It is not the case that there is a hard and fast rule with clearly defined parameters to the effect that it can never fall within the immunity for a lawyer to fail to sue a particular person or body. Rather, in each case, it will be a matter of applying the test to the evidence, and thereby determining whether the proposed claim falls inside or outside the scope of the immunity.

63 Secondly, the facts of Saif Ali v Sydney Mitchell & Co were as follows. The putative plaintiff was injured in a motor vehicle accident whilst he was a passenger in a van being driven by his friend Mr Akram. The driver of the other vehicle was Mrs Sugden. She pleaded guilty to negligent driving, and there seemed to be little doubt that she was personally liable to the plaintiff in negligence. The barrister drafted proceedings on behalf of Mr Akram and the plaintiff against Mr Sugden, who was the insured party, on the basis that Mrs Sugden was acting as the agent of her husband, in that she was driving their children to school. When an insurer became involved in the proceedings against Mr Sugden, it queried whether in truth the plaintiff should sue Mrs Sugden, along with Mr Akram in contributory negligence. In due course, any claim against Mrs Sugden and Mr Akram became statute barred by the effluxion of time. Eventually the proceedings were discontinued against Mr Sugden. The result was that the plaintiff, who undoubtedly had suffered injury as the result of negligence on the part of somebody, was left with no effective claim whatsoever.

64 The House of Lords held that, in those circumstances, the barrister was not protected by the immunity. But that does not, to my mind, avail the plaintiffs in this case.

65 It can be seen that, in that case, the alleged negligence of Mrs Sugden (and the possible alleged negligence of Mr Akram) had no connection with discontinuance of the proceedings against Mr Sugden. In particular, there was no basis upon which a subsequent claim against Mrs Sugden could be said to be precluded because her liability could only be established through Mr Sugden; indeed, the position was, if anything, the reverse: Mrs Sugden was the person who was the primary tortfeasor, and any liability on the part of Mr Sugden could only be established through her.

66 That is not the position here. As Handley AJA demonstrated, the only way that the Somersby property could be traced against Mrs Thompson is through Mr Thompson. And the barrister and solicitor irrevocably elected not to trace through Mr Thompson when Mr Thompson was sued in debt, and that claim succeeded by way of the judgment of Gzell J.

67 In summary, I regard the decision in Saif Ali v Sydney Mitchell & Co as a demonstration of the proposition that some examples of an advocate failing to sue the correct person will fall within the immunity, and some will not. I do not regard the decision in Saif Ali v Sydney Mitchell & Co as commanding the result for which the plaintiffs contended in this case.

68 Returning to the particulars of negligence alleged against the solicitor, it can be seen that (i) and (iv) are framed as failures to advise the plaintiffs of certain matters. The plaintiffs contended before me that a failure to advise is not captured by the immunity.

69 I consider that the framing of the particulars of negligence as including a "failure to adequately advise" about various forensic options does not obscure the underlying complaint: that the solicitor exercised those forensic options negligently. I consider that such a claim is captured by the immunity, at the least on the facts of this case. Were it otherwise, the immunity could be circumvented by the simple mechanism of framing particulars of negligence against a lawyer in terms of advice to his or her clients, rather than in terms of the subject of that advice; namely, decisions affecting proceedings before they commenced, or decisions taken in court after proceedings had commenced. I do not consider that that mechanism can avail the plaintiffs, at least on the facts of this case.

70 In short, the particulars of negligence alleged against the solicitor demonstrate that, in truth, the bases of the claim for professional negligence are either work done in court or work out of court that led to a decision that affected the conduct of the case in court. It follows that the claim is precluded against the solicitor by way of the immunity.

71 Although it is not necessary for it to be demonstrated, the particular facts of this case also show that considerations of finality and avoidance of collateral attack would almost inevitably arise in this case if the immunity were not applied. So much is established, indeed, by the judgment of the Court of Appeal of three years ago. For me to find to the contrary in these proceedings would itself almost certainly constitute a collateral attack on the judgment of that Court.

72 Finally, I consider that the position with regard to the application of the immunity to the claim against the solicitor is so clear that the claim of the plaintiffs against the solicitor should be struck out.

73 It is for the foregoing reasons that I would uphold the application of the solicitor for the claim against him to be struck out on the basis of the immunity.

Contingent analysis - is the barrister protected by advocate's immunity?

74 As against the possibility that I am wrong in my determination that the claim against the barrister should be struck out on the basis that it is clearly statute barred, I shall proceed to consider the application of the immunity to the position of the barrister. Because this is a contingent analysis, I shall be briefer than I would be if I regarded this point as determinative.

75 It can be seen that, although slightly different, the particulars of negligence alleged against the barrister are very similar to those alleged against the solicitor. Again, to my mind they really boil down to an allegation that, in suing Mr Thompson in debt, the barrister negligently chose and pursued the "wrong" cause of action, in the sense of not ensuring that his clients ultimately had an effectual remedy.

76 I shall not repeat the analysis of legal principle that I undertook above in the context of the application of the solicitor. To my mind, the claim of the plaintiffs against the barrister clearly falls within the immunity under consideration. And it does so with sufficient clarity for it to be appropriate for the claim against the barrister to be struck out.

77 It follows that, if I am wrong in my determination that the claim against the barrister is statute barred, I would nevertheless strike out the claim against the barrister on the basis that it is precluded by the immunity.

Contingent analysis - should the question of the immunity be dealt with separately as a preliminary question?

78 I have determined that the immunity precludes the claim against both of the defendants and calls for the claims to be struck out; as against the solicitor, on a primary basis, and, as against the barrister, on a contingent basis.

79 I now turn to consider a further contingency; namely, whether, if it be the case that I am incorrect in my assessment that the claim against the solicitor and barrister should be struck out, I should nevertheless proceed to determine the question of the immunity as a separate preliminary question as part of the substantive hearing.

80 The barrister and the solicitor invited my attention to two recent cases of this Court in which a question regarding the application of the immunity was dealt with separately and prior to the hearing of other issues: Young v Hones [2013] NSWSC 1429 and Attard v James Legal Pty Ltd [2010] NSWCA 311. They submitted that, if I were to reject the applications to strike out the claims, I should not only determine the application of the immunity as a separate question, but also proceed to determine it as a preliminary matter on the hearing of the motion.

81 Counsel for the plaintiffs submitted that the application to determine the question of the immunity separately should be dismissed as it is "not an appropriate vehicle for separate determination" (T 46). In the event that the application were granted, counsel for the plaintiffs opposed me proceeding to determine the question on the occasion of the hearing before me. He submitted that there is some ambiguity in the wording of the relevant orders sought in the two notices of motion as to whether the separate question should be determined forthwith, or on some other occasion. He noted that in Young v Hones the parties consented to Garling J proceeding to determine the question of the application of advocate's immunity: at [167].

82 In oral submissions, however, he accepted that there was "no question of being ambushed at all" if I proceeded to determine the separate question of the immunity immediately, and, if required to do so, was content to rely on the submissions he made in relation to the application for summary dismissal on the basis of the immunity.

83 The parties invited my attention to what was said by Beazley JA (with whom Barrett JA, Hoeben JA and Sackville AJA agreed) in Donnellan v Woodland at [7] and following:

[7] Against that approach is the argument that it may not be possible to determine whether the immunity attaches unless the negligent conduct is identified. Whilst the pleadings are the obvious starting point, they may not sufficiently enable that identification to be made. That was the position in Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85, discussed below. If the correct position is that the immunity should be determined prior to the determination of the question of negligence, an immunity claim ought properly be able to be dealt with on the pleadings by way of a strike out application pursuant to the Uniform Civil Procedure Rules 2005 (UCPR), r 13.4 or r 14.28. This was the view of this Court in Bott v Carter [2012] NSWCA 89, especially at [11]. Bott v Carter itself involved an application to strike out the statement of claim. As the result in Alpine Holdings demonstrated, that may be a contestable result.

[8] When there has been a full hearing of a matter, the practice of the courts appears to have been to determine the negligence claim first and then to determine whether advocates' immunity protects the practitioner from liability for negligence: see, for example, Chamberlain v Ormsby t/as Ormsby Flower [2005] NSWCA 454 and Symonds v Vass [2009] NSWCA 139; 257 ALR 689. In the latter case, on the decision of the majority, the matter was remitted to the Common Law Division because inadequate findings had been made in respect of the negligence claim to enable the Court to determine whether the immunity applied.

[9] For myself, I am not satisfied that there is a single correct approach. Rather, it will depend upon the circumstances of the particular case. If the pleadings on their face alleged negligence in the conduct of litigation falling into one of the three categories of consequence that flow from a practitioner's negligence: see D'Orta-Ekenaike at [70], discussed below at [166], it may be possible that the immunity question can be determined on the basis of the conduct alleged in the pleadings. There is a question, in any event, as to the extent of the reach of the immunity. As Basten JA, at [11], observed in Bott v Carter, "the immunity does not extend to all activities undertaken by legal practitioners, even in relation to disputes which may give rise to litigation". However, not every case will be so clear cut.

84 In the same case, Barrett JA relevantly made the following additional observations:

[276] If the defence of legal practitioner's immunity from suit is available to meet a client's allegation of negligence against a lawyer who acted for the client in litigation, there is much to be said, as a matter of principle, for the proposition that the client's negligence action should be disposed of solely on that ground.

[277] If that course is not followed, there will arguably not be due regard for the principle of finality of litigation to which the High Court attached particular significance in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1. This is because trial of the negligence action on its merits (that is, by reference to the facts and circumstances beyond those going to the availability of the immunity) presents the possibility of findings and conclusions at odds with those in the case in which the lawyer acted for the client.

85 Basten JA, who agreed with the orders proposed by Beazley JA but provided separate reasons, relevantly said:

[259] It was held in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1, that the immunity from proceedings brought by a former client against a legal practitioner alleging negligence (or a related cause of action) in relation to the conduct of litigation depends on the principle of finality. That principle is offended by a reconsideration of the circumstances in which a final judgment has been obtained, otherwise than by way of appeal from, or judicial review of, the earlier proceedings. (There may be other exceptions, such as a challenge to a judgment procured by fraud.) In circumstances where the immunity applies, to address the merit of the claim before considering the defence would be to subvert the very principle upon which the defence is premised.

[260] Against that conclusion, it may be contended that the application of the immunity cannot be addressed until the precise scope of the dispute and the manner of its resolution has been determined. However, the availability of the defence cannot rest upon how the parties run the proceedings. If the defence is available, that must be ascertained from the pleadings and the potential scope of the proceedings so revealed. It is not to be assessed and determined only after the hearing of the merits, with its potential to diminish confidence in the proper administration of justice.

86 To my mind, for the reasons given by Basten JA and Barrett JA in Donnellan v Woodland, there are sound reasons for me determining the question of the immunity as a separate and preliminary matter. To do otherwise would be to run a real risk of the whole purpose of the immunity being undermined.

87 Quite apart from that consideration, I received extensive and learned oral and written submissions from all parties on the question of the immunity with regard to whether the claims of the plaintiffs should be struck out. To my mind, it would make no logistical sense for me, having received these submissions, to decline to determine the substantive question (assuming I am wrong in my determination that the position is so clear with regard to the immunity that the claim should be struck out at the threshold), and to require another judge of this Court to go through the whole of that process again with regard to the identical legal question.

88 It follows that, if I am wrong in my determination that the claims are liable to be struck out because of the immunity, I would turn to determine the effect of the immunity as a preliminary substantive question.

Immunity as a preliminary substantive question?

89 Finally, it is appropriate for me to state whether, if I am wrong in my determination that the effect of the immunity is so clear that the claim should be struck out, I would nevertheless enter a verdict for the solicitor and barrister pursuant to the immunity as a preliminary substantive question.

90 This question does not require lengthy discussion. I have already expressed the view that the question of the immunity is so clear that both claims should be struck out. If I am mistaken in that analysis, I nevertheless consider that the question of the immunity is sufficiently clear for it to be established, as a substantive matter, that the immunity precludes the claims brought by the plaintiffs against both the solicitor and the barrister. It follows that I would enter judgment for the two defendants on each claim.

Conclusion

91 In summary, I strike out the claim against the barrister on the basis that it is statute barred. If I am wrong about that, I would strike it out on the basis of the immunity. If I am wrong about that, I would proceed to determine the immunity as a preliminary substantive question. In doing so, I would enter judgment for the barrister.

92 I do not strike out the claim against the solicitor or on the basis that it is statute barred. I strike it out on the basis of the immunity. If I am wrong about that, I would proceed to determine the immunity as a preliminary substantive question. In doing so, I would enter judgment for the solicitor.

Costs

93 No party submitted that there should be a deviation from the usual rule that costs should follow the event.

Orders

94 I make the following orders:

(1) The claim of the plaintiffs, Julian White and Romeo Libut, against the second defendant, Gregory George, is struck out.

(2) The claim of the plaintiffs against the first defendant, Reginald Forster, is struck out.

(3) The plaintiffs must pay the costs of the first and second defendants in the proceedings before me.

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Decision last updated: 11 December 2014