Stillman v Rusbourne [2015] NSWCA 410

HEADNOTE

[This headnote is not to be read as part of the judgment]

In 2006 the applicant and Goldfields Crushing and Screening Pty Ltd (“GCS”), of which the applicant was a director and shareholder, were named as defendants in proceedings brought by Coast to Country Crushing and Screening Pty Ltd (“CCCS”) in the Equity Division of the Supreme Court. The applicant and GCS engaged the respondents, who practise in partnership as a firm of solicitors, to advise and represent them in the proceedings. On 11 July 2007 a court appointed mediation took place. Following this mediation, and on the advice of the respondents, the applicant and GCS accepted an offer of settlement proffered by CCCS. The applicant and GCS were unable to fulfil the terms of the resultant Deed of Settlement; in November 2007 GCS was placed into liquidation and the applicant’s estate sequestrated in July 2008.

In 2013 the applicant commenced proceedings against the respondents, alleging that they had been negligent in their advice and representation in the course of the mediation. On 3 June 2014, pursuant to Uniform Civil Procedure Rules 2005 (NSW) 13.4, an order that the proceedings be dismissed was made on the basis that they disclosed no reasonable cause of action. The Court held that the “conduct complained of was work leading to the conduct of the case in court” and was therefore subject to “advocates’ immunity”: Stillman v Rusbourne [2014] NSWSC 730. The applicant sought leave to appeal against this decision.

Held

Gleeson JA and Simpson JA, refusing leave to appeal:

(1)   That the work done by the respondents fell within orthodox understandings of the advocate’s immunity being work that led to a settlement and thus affected the conduct of the case in court: Gleeson JA at [11]; Simpson JA at [19].

D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1; Giannarelli v Wraith [1988] HCA 52; 165 CLR 543; Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335

(2)   While mediation does not, of itself, involve the exercise of judicial power, it is a step in the process towards the exercise of judicial power, which is exercised when judgment is entered.

Basten JA, dissenting:

(3)   Advocates’ immunity is rooted in the fundamental need of the administration of justice for finality of judicial determination of controversies between parties. In the present case, consent orders were entered prior to commencement of a trial, reflecting a settlement reached by the parties out of court; the judicial determination of the controversy on its merits did not take place. There was no justification for extending advocates’ immunity to the conduct of the respondents in the course of the mediation which lead to the settlement: [8]; [17]; [30]; [47].

D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12 applied.

Chamberlain v Ormsby t/as Ormsby Flower [2005] NSWCA 454; Donellan v Watson (1990) 21 NSWLR 335 followed.

Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 distinguished.

Civil Procedure Act 2005 (NSW), s 91 referred to.

Basten JA:

7 There is no difficulty in articulating the test to be applied in the present case: the problem lies in its application. The immunity has a core and a penumbra. At the core is the conduct of the trial; that is, conduct undertaken in court. The penumbra may be understood to include all that conduct which occurs out of court but which is “so intimately connected with the conduct of the cause in Court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing.” That language, derived from the judgment of McCarthy P in the New Zealand Court of Appeal in Rees v Sinclair, [5] was adopted by Mason CJ in Giannarelli. [6] There was no departure from that test in D’Orta-Ekenaike, the joint reasons adopting the terminology of Mason CJ that the immunity extends to work done in court and to “work done out of court which leads to a decision affecting the conduct of the case in court.” [7] Brennan J, agreeing with the Chief Justice, referred to “the making of preliminary decisions affecting the way in which the case is to be conducted when it comes to a hearing.” [8]

Gleeson JA:

52 It can be accepted that there are similarities and also one difference between the present facts and the circumstances in Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 (Jackson Lalic) at [37] (Bathurst CJ; Meagher and Ward JJA agreeing), where this Court accepted that advice concerning settlement given in the course of a final hearing falls within the scope of the advocates’ immunity. The difference is that in Jackson Lalic there was a temporal connection between the work involved in advising on a settlement and the actual trial itself. The advice was given during the luncheon adjournment on the first day of the hearing and on the evening of that day.

53 Nonetheless and importantly, in Jackson Lalic the final hearing did not proceed to its ultimate conclusion. The proceedings were terminated by the terms of a consent order which provided for a verdict and judgment for a specified amount and an agreement to not to enforce that judgment if a lesser sum was paid by a specified date.

54 While the temporal connection in Jackson Lalic between that work and the actual trial itself served to highlight the intimate connection between the two, the statements of Mason CJ and Brennan J in Giannarelli v Wraith [1988] HCA 52; 165 CLR 543 at 560 (Mason CJ) and 579 (Brennan J) make clear that the advocates’ immunity does not depend upon demonstrating such a temporal connection.

55 Negligently advising a settlement of proceedings is a recognised category of work involving a preliminary decision affecting the way in which the case is to be conducted when it comes to a hearing: D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 233 CLR 1 at [154] (McHugh J), citing Biggar v McLeod [1978] 2 NZLR 9. This is because it involves the question of the continuation or termination of the litigation: Biggar v McLeod at 14 (Richardson J).

56 That Biggar v McLeod, like Jackson Lalic, differs from the present case because it also involved negligently advising a settlement during the conduct of the hearing is not, of itself, a sufficient distinction. In both of those cases, like the present, the fresh proceedings against the legal practitioner involved a re-agitation of the issues raised in the earlier litigation. Thus it was fundamental to the claim that the consent judgment entered following the settlement was wrong and the incorrect result due to the negligence of the legal practitioner. As Bathurst CJ said in Jackson Lalic (at [41]) “[t]his necessarily involves consideration of the issues raised in the earlier litigation to determine whether in fact the applicant’s advice was negligent”.

57 I do not regard Donellan v Watson (1990) 21 NSWLR 335 as requiring a different result and I respectfully disagree with the contrary view expressed by Basten JA.

58 Donellan v Watson was an unusual case. A settlement of appeal proceedings had deprived the clients of benefits obtained at first instance. The settlement was contrary to the clients’ instructions. It was not contended that the order made was wrong. Mahoney JA (with whom Waddell AJA agreed) held (at 337) that there was no collateral attack on the order and that the rationale of the reasons for the advocates’ immunity did not apply. His Honour accepted (at 338) that ordinarily, a compromise, even if consensus is reached out of court, is within the advocates’ immunity. However the case before him involved negligence in failing to carry an authorised compromise into effect.

59 As Bathurst CJ observed in Jackson Lalic (at [46]), the settlement in that case, unlike Donellan v Watson, was within the authority of the applicant. Accordingly, the fresh proceedings against the legal practitioner involved a re-agitation of the issues raised in the earlier litigation, unlike the position in Donellan v Watson. It was in that sense that the proceedings in Jackson Lalic offended against the principle of finality of litigation: Jackson Lalic at [41]They involved a collateral attack on the judgment which had been entered by consent. That falls squarely within the rationale of the advocates’ immunity as presently stated by the High Court.

Simpson JA

71 In my opinion, the circumstances in Jackson Lalic are indistinguishable from the present. I am unpersuaded that s 91 of the Civil Procedure Act 2005 (NSW) has any bearing on the issues to be determined. I am unpersuaded that the fact that Jackson Lalic involved a settlement in the course of final hearing is a relevant distinguishing factor. Court appointed mediation is a recognised step in the process of litigation in the Supreme Court. It is not to the point that the mediation itself did not involve the exercise of judicial power. It was a step in the process towards the exercise of judicial power, which in fact was exercised when (presumably) judgment was entered in accordance with the first term of the Deed of Settlement.

David Cormack – Brisbane Barrister & Mediator

 

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