The High Court has allowed an appeal against a decision of the New South Wales Court of Appeal on advocates immunity from negligence actions in the context of out of court settlements. ANZ Bank sought to enforce a guarantee of approximately $1.75 million on a loan taken out by the appellants. An employee of the respondent law firm allegedly negligently advised the appellants to settle the claim and also accept liability for a larger amount (approximately $3.4 million) because it ‘would not make any difference’ whether they defaulted for $3.4 million or the lesser sum. The Court of Appeal held that the trial judge should not have refused the appellants’ application to first determine whether that advice would attract advocates’ immunity (see at ff), but also held that the advice would attract that immunity because it led directly to the settlement of the matter, and was thus ‘intimately connected’ with the proceedings (see at ff).
A majority of the Court allowed the appeal. The majority (French CJ, Kiefel, Bell, Gageler and Keane JJ) accepted the appellant’s arguments that scope of the immunity should not be extended to cover negligent advice on the settlement of cases, but rejected the appellant’s arguments that advocate’s immunity should be abolished in its entirety. Abolishing the immunity would require overturning the decisions in D’Orta-Ekenaike v Victoria Legal Aid  HCA 12 and Giannarelli v Wraith  HCA 52, which the majority declined to do for a range of reasons (at –, Gordon J agreeing: at ): because it would generate a legitimate sense of injustice in potential litigants who did not pursue or lost cases on the basis of the law settled by these authorities, that such a change is best left to the legislature, that the questions of the rationale for the scope of the immunity were fully argued in those cases, that no argument of principle or public policy raised in this matter was not addressed in those cases, and that ‘[m]ore importantly’, D’Orta ‘states a rule which is consistent with, and limited by, a rationale which reflects the strong value attached to the certainty and finality of the resolution of disputes by the judicial organ of the State’ (at , and see the explanation for this conclusion at –). Noting that D’Orta and Giannarelli confined the scope of the immunity to conduct contributing to a judicial determination, the majority held that the rationale of the immunity ‘does not extend to advice which does not move the case in court toward a judicial determination’ (at ), at concluded (at ) that:
Once it is appreciated that the basis of the immunity is the protection of the finality and certainty of judicial determinations, it can be more clearly understood that the “intimate connection” between the advocate’s work and “the conduct of the case in court” must be such that the work affects the way the case is to be conducted so as to affect its outcome by judicial decision. The notion of an “intimate connection” between the work the subject of the claim by the disappointed client and the conduct of the case does not encompass any plausible historical connection between the advocate’s work and the client’s loss; rather, it is concerned only with work by the advocate that bears upon the judge’s determination of the case.
The majority then rejected the respondent’s arguments that it would be anomalous for the Court to hold that the immunity did not extend to advice leading to a disadvantageous compromise but did extend to advice not to compromise which led to a judicial decision less beneficial than the rejected compromise offer: this argument wrongly assumes that negligent advice not to settle is ‘intimately connected’ with the later decision of the court: ‘it is difficult to envisage how advice not to settle a case could ever have any bearing on how the case would thereafter be conducted in court, much less how such advice could shape the judicial determination of the case’ (at –, and see ff). The majority also rejected the respondent’s argument that a compromise by consent effectively merged the parties’ rights with the consent judgment and thus went towards a judicial determination that would attract the immunity, because here the substantive content of the rights and obligations under the settlement were determined by the parties without any determination by the court (see –). The majority set aside the orders of the NSWCA and NSWSC, and ordered that the separate question of whether the plaintiffs’ claim was defeated because the defendant was immune from suit be answered ‘no’.
Gordon J (Nettle J agreeing) would have dismissed the appeal. Gordon J focused on whether the settlement involved a ‘final quelling’ of the controversy between the parties by the order of the court, concluding that the advocate’s immunity extended to settlements for two reasons. First, the immunity revolves around finality, which can only be challenged in limited circumstances and stems from the judgment of the court: ‘the pre-existing rights and liabilities of the parties were determined and the controversy was quelled … not only because the advocate advised the client to consent to the controversy being resolved in that manner but because the controversy was quelled by an exercise of judicial power by the court, which made a conclusive, binding and enforceable judgment or order’ (at ). Secondly, Attwells’ challenge is effectively to moderate the effect or affect the result of the final judgment by challenging the bases on which it was entered: for Gordon J, this is an impermissible direct challenge to the finality of the judgment, because while the orders of the court noted the agreement between the parties, more importantly those orders stated the verdict and judgment for ANZ against Attwells and the other appellants (see at –). The respondent firm’s work was done for the final quelling of the proceedings by the court in that order: it was ‘intimately connected with’ work in a court, and thus attracted the immunity (see –). Nettle J agreed with the reasoning of Gordon J, and added observations on the majority’s reading of D’Orta and the policy basis of advocate’s immunity (at ff).
|High Court Judgment|| HCA 16||4 May 2016|
|High Court Documents||Jackson Lalic
|Full Court Hearing|| HCATrans 48||8 March 2016|
|Special Leave Hearing|| HCATrans 176||7 August 2015|
|Appeal from NSWCA|| NSWCA 335||1 October 2014|
|Trial Judgment, NSWSC
|| NSWSC 1510||17 October 2013|