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Advocate’s immunity for out of court work affirmed again White v Forster [2015] NSWCA 245
23 August, 2015
Author: Melissa Tan
Judgement Date: 25th August, 2015
Citation: White v Forster [2015] NSWCA 245
Jurisdiction: Supreme Court of New South Wales Court of Appeal [1]
In brief
- The Supreme Court of New South Wales Court of Appeal upheld the decision of the Supreme Court in White v Forster [2014] NSWSC 1767 concluding that the solicitor was immune from suit by reason of the advocate’s immunity. The Court of Appeal held that proceedings against the barrister were statute-barred, although had the claim against the barrister not been statute-barred, the barrister would also have been immune from suit by reason of the advocate’s immunity.
- The Court of Appeal confirmed that the alleged failure of the solicitor and barrister in advising the applicants on the appropriate form of relief was in respect of work done out of court affecting the conduct of the case in court, such that the immunity from suit applied.
Background
In 1997, a joint venture agreement was entered into between Byron Thompson (Mr Thompson), Julian White and Romeo Libut (the applicants), and a company owned by the applicants, to develop and sell a property in Seaforth (Seaforth property). In March 2003, Mr Thompson’s wife (Mrs Thompson) contracted to purchase a property in Somersby (Somersby property). That contract was later novated to Mr and Mrs Thompson as joint purchasers. The sale of the Seaforth property and the Somersby property was completed on 15 May 2003. It appears that funds realised from the Seaforth property may have been used to partially pay for the Somersby property.
2003 proceedings
Disputes arose between the applicants and Mr Thompson concerning the nature of their relationship with respect to the development of the Seaforth property. Mr Thompson commenced proceedings against the applicants in the Supreme Court of New South Wales in 2003 (2003 proceedings).The applicants retained Reginald Forster (the solicitor) to advise them in relation to the recovery of funds from Mr Thompson in relation to the joint venture, to prepare a cross-claim in the proceedings brought by Mr Thompson and to advise generally. Gregory George (the barrister), represented Mr Libut of the applicants but also provided advice to Mr White.
In June 2003 the applicants filed cross-claims against Mr Thompson in the 2003 proceedings calling on him to account for moneys received by him in connection with the joint venture and seeking damages from him. The applicants’ claim treated Mr Thompson’s withdrawals as creating a debt. No relief was sought against Mrs Thompson and no claim of a proprietary interest in the Somersby property was made.
On 8 December 2005 Gzell J delivered his judgment and on 15 December 2005 orders were made to the effect that a joint venture agreement existed between the applicants and Mr Thompson. Gzell J ordered that an account should be taken to determine the relative entitlements of the parties to the profit of the joint venture.
On 8 February 2008 Mr Thompson was declared bankrupt. On 29 February 2008 Biscoe AJ made orders in relation to the distribution of profits and Mr Thompson was ordered to pay the applicants a substantial sum of money. However, as Mr Thompson was bankrupt, the applicants could not enforce the judgment against him.
2008 proceedings
In 2008 the applicants commenced fresh proceedings in the Supreme 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 (2008 proceedings). The solicitor and barrister did not act for the applicants in those proceedings.
The 2008 proceedings were subsequently dismissed on the basis that the applicants had implicitly elected to forego proceedings against the Somersby property in the 2003 proceedings (by proceeding against Mr Thompson personally). The Court held that the applicants could not now take proceedings against the Somersby property and Mrs Thompson, which could result in a conflicting judgment and be an abuse of process (Abuse of Process Appeal). An appeal to the Court of Appeal was unsuccessful and special leave to appeal to the High Court was refused.
Professional negligence proceedings
On 7 December 2011 the applicants commenced proceedings against the solicitor. On 12 March 2013 the applicants joined the barrister to the professional negligence proceedings. The breaches of duty pleaded included the failure of the solicitor and barrister to seek a remedy of tracing in the 2003 proceedings, a failure to plead in the cross-claims that the joint venture funds owed to the applicants should be traced into the Somersby property by way of a proprietary interest by trust or otherwise, and a failure to include Mrs Thompson as a party in the 2003 proceedings.
In late 2013 the solicitor and barrister made applications to dismiss the proceedings. On 11 December 2014 the primary judge ordered that the claim against the solicitor be struck out by reason of the application of the advocate’s immunity and ordered that the claim against the barrister be struck out on the basis that it is statute-barred.
The appeal
On 6 January 2015 the applicants sought leave to appeal from the primary judge’s decision.
In relation to the claim against the solicitor, the applicants submitted that the alleged negligence was a failure to join Mrs Thompson and that such a failure to join a party was not the subject of advocate’s immunity pursuant to the decision in Saif Ali v Sydney Mitchell & Co (1980) AC 198 (Saif Ali).
In relation to the claim against the barrister, the issue on appeal was whether time began to run from 8 December 2005, the date of Gzell J’s decision, or from 29 February 2008, the date of the orders made by Biscoe AJ. The applicants accepted that the judgment of Handley AJA in the Abuse of Process Appeal explicitly stated that any attempt to bring fresh proceedings, or to amend the existing proceedings to bring a proprietary claim, after the judgment of Gzell J would have been doomed to fail. However, the applicants submitted that the judgment of Handley AJA did not create an issue estoppel. They submitted that the issue before Gzell J was whether there was any joint venture at all and the relief granted was “as to the nature and extent of the joint venture”. The applicants submitted that this did not amount to an election not to bring a proprietary claim against Mrs Thompson.
Decision
The Court of Appeal unanimously refused leave to appeal and affirmed the primary judge’s decision.
In relation to the claim against the solicitor, Bathurst CJ stated that the real complaint was a failure to pursue a proprietary remedy in respect of the Somersby property, for example, by pleading that Mr Thompson’s drawings from the joint venture funds were unauthorised and fraudulent (in the equitable sense), so as to give rise to a tracing claim over the Somersby property, to which it would be necessary to join Mrs Thompson. As such, the essence of the applicants√ï claims was that the solicitor and barrister were negligent in advising on the appropriate form of relief. In his Honour’s opinion, “in the circumstances of this case, any such failure was in respect of work done out of court affecting the conduct of the case in court, such that the immunity from suit applies.” The joinder of Mrs Thompson was ancillary to the claim for relief, rather than as a result of the applicants having a claim against her independent of the claim against Mr Thompson.
Bathurst CJ accepted that a negligent failure to join a party against whom a person had a cause of action may not be covered by the advocate’s immunity, as was the case in Saif Ali. However, his Honour distinguished the present case from Saif Ali (as did the primary judge). In Saif Ali, the solicitor’s alleged negligence in failing to join a party to the proceedings did not have any connection to the discontinuance of the proceedings on foot. This is distinct from the circumstances of the present case.
Bathurst CJ also stated that the application of the immunity in the present case would lead to finality of litigation. Bathurst CJ concluded that while not necessarily determinative of whether the immunity applies, “the fact that proceedings would have that effect [of finality] supports the conclusion that the decision to seek a remedy of an account, rather than a proprietary remedy, was one made as a result of work done out of court which directly affected the conduct of the case in court.”
In relation to the claim against the barrister, the Court held that the cause of action arose on 8 December 2005 when Gzell J delivered his judgment or at the latest on 15 December 2005 when Gzell J made the orders because from that day the opportunity to bring a proprietary claim ceased to exist. The claim against the barrister commenced on 12 March 2013, more than six years after the limitation expired.
Bathurst CJ opined that the applicants had elected to conduct their case before Gzell J on the basis that the withdrawals by Mr Thompson from the joint venture funds created a debt in respect of which an account should be ordered and they did not make an alternative claim on the basis that the drawings were unauthorised. The judgment of Gzell J on 8 December 2005 finally determined the applicant’s right to an account. Any alternative claim after the order made by Gzell J would be an abuse of process. As such, the primary judge was correct in striking out the claim against the barrister on the basis that it was statute-barred. The Court was also of the opinion that the primary judge was correct in his conclusion that had the claim against the barrister not been statute-barred, it would also have been struck out by reason of the advocate’s immunity.
Implications
This case, like the recent Court of Appeal decisions in Young & Hones [2014] NSWCA 337 and Kendirjian v Lepore [2015] NSWCA 132, confirms the application of the advocate’s immunity to work done out of court which is closely connected with work done in court and which affects the way the case in court is to be conducted.
Interestingly, theHigh Court has granted special leave to appeal the judgment of Jackson Lalic Lawyers Pty Limited v Attwells [2014] NSWCA 335 for the purpose of considering whether the decisions in Giannarelli v Wraith (1988) 165 CLR 543 and D√ïOrta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 should be reconsidered.2 If the High Court follows the footsteps of the House of Lords in the UK and abolishes the advocate’s immunity, this will expose the legal profession to greater scrutiny. It may also result in an increase in professional indemnity insurance premiums.
Until the High Court makes a decision on whether the advocate’s immunity should be retained in Australia, this Court of Appeal decision leaves no doubt that both solicitors and barristers are protected by the advocate’s immunity where work done out of court is intimately connected to the conduct of the case in court.
- ÊBathurst CJ, McColl and Emmett JJA.
- Attwells & Anor v Jackson Lalic Lawyers Pty Limited [2015] HCATrans 176 (7 August 2015).
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