Attwells v Jackson Lalic Lawyers Pty Ltd
High Court of Australia · 2016
Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1
A solicitor advises two guarantors to consent to a judgment for $3.4 million, when their real liability is $1.86 million. The solicitor says the advocate's immunity ends the case before negligence is even asked. Does it?
What happened?
The first appellant and Ms Lord guaranteed a company's debts to a bank. The bank sued them on the guarantee, and the trial opened before Rein J in the Supreme Court of New South Wales. On the opening day the bank certified that the amount owing under the guarantee was $1,856,122 ([9]). Counsel for the guarantors then reported a settlement: judgment would be entered against the guarantors and the company for the company's full indebtedness of about $3.4 million, and the bank would not enforce it if the guarantors paid $1.75 million by 19 November 2010 ([10]).
The consent order for judgment was made, and the Court noted the non-enforcement agreement. The guarantors did not pay in time, and an attempt to set the settlement aside as a penalty failed ([11]). The first appellant and his assignee then sued the guarantors' solicitor, alleging negligence in advising them to consent to judgment in those terms and in failing to advise them of its effect ([12]). The parties agreed facts, and on the separate question the solicitor relied on the advocate's immunity as a complete answer ([13]).
What did the Court decide?
By a majority of five to two the appeal was allowed. The separate question whether the claim was defeated because the defendant was immune from suit was answered "No" ([63]). The Court of Appeal's contrary answer was set aside. The Court did not decide whether the solicitor was negligent or whether any loss was caused. It said that the decision of the Court of Appeal, "while it stands, precludes any investigation of the strengths and weaknesses of the appellants' claim" ([26]).
There were three judgments: the joint reasons of French CJ, Kiefel, Bell, Gageler and Keane JJ ([1]-[63]), the reasons of Nettle J ([64]-[73]) and the reasons of Gordon J ([74]-[132]). Nettle and Gordon JJ would have dismissed the appeal.
Proposition
What is the principle?
French CJ, Kiefel, Bell, Gageler and Keane JJ declined to reconsider Giannarelli and D'Orta, but held that the test those cases state "is not satisfied where the work of the advocate leads to an agreement between parties to litigation to settle their dispute" ([5]). The immunity attaches to the advocate's participation in the quelling of a controversy by judicial power, so the connection required is "a functional connection" between the advocate's work and the judge's decision ([5]). In their words ([6]):
> "in order to attract the immunity, advice given out of court must affect the conduct of the case in court and the resolution of the case by that court."
A "merely historical" connection, in which one event precedes another as a necessary condition of it, is not enough ([49]). Advice to settle is connected to the case only in that sense, and the immunity "does not extend to negligent advice which leads to the settlement of a claim in civil proceedings" ([45]). The same reasoning meant the immunity was not engaged merely because the parties' agreement was embodied in consent orders ([6]). The joint reasons found that the consent order and the Court's notation "reflected an agreement of the parties for the payment of money in circumstances where no exercise of judicial power determined the terms of the agreement or gave it effect as resolving the dispute" ([62]).
Two limits belong to the holding. First, the majority acknowledged "many cases where, although the parties have agreed upon the terms of the order which a court is asked to make, the making of the order itself requires the resolution of issues by the exercise of judicial power", giving settlements of representative proceedings and compromises on behalf of a person under a legal incapacity as examples, and said "[i]t is not necessary to consider such cases here" ([61]). Second, the joint reasons did not decide whether the immunity attaches only to the kinds of decision a lawyer may make without instructions from the client ([45]).
Nettle J agreed that advice to enter a settlement wholly out of court does not attract the immunity ([67]). He would have held it applied where the settlement provides for a consent order that determines the parties' rights and liabilities, because a claim that the advice was negligent would call in question the court's order ([68]-[71]). Gordon J reached the same result: the consent judgment was the final quelling of a controversy by the exercise of judicial power, and the claim was a direct challenge to finality ([108]-[111], [126]-[127]).
Why does this case matter?
Because winning the immunity point is only the first step. A defence to a negligence claim is not the claim, and the Court itself noted the "measure of opacity" in the pleaded case on negligence and causation ([22]). A solicitor sued over settlement advice can still defend on breach, causation and loss.
It is also a split decision, five Justices to two. The joint reasons are the Court's holding, and the dissenting reasoning should be presented as dissent, not as a competing statement of the law.
And it is not a decision about the duty to the court. That duty was left where it was; what the Court confined is the immunity.
Exam and application relevance
Start from what the claimant says went wrong, and ask whether proving it would require showing that a court's determination was wrong. Advice given before a contested hearing to settle on terms, where the agreement alone fixes the parties' rights, falls on the Attwells side of the line. A problem that has the court itself deciding something, such as approving a compromise for a person under a legal incapacity or a representative proceeding, is where the Court expressly did not decide, so say that the point is open rather than assigning it an answer.
Do not say that the immunity was abolished: the majority refused to reconsider D'Orta and Giannarelli ([5]). Do not say the Court held that the solicitor was negligent. The test at [6] is in the joint reasons, which are the Court's holding. Nettle and Gordon JJ dissented on how the immunity applied to a consent judgment, and their reasons are dissent.
Check your understanding
1. Which passage of Giannarelli and D'Orta did the joint reasons treat as the authoritative test, and why did they say the settlement advice in this case did not satisfy it? 2. What did the joint reasons say about a settlement of a representative proceeding, and how does that affect what you can say about it in an answer? 3. Nettle J and Gordon J would both have dismissed the appeal. On what kind of settlement did Nettle J agree with the majority, and where did he part from it? 4. After this decision, what must a claimant still prove, and what did the Court say about the strength of the claim in this case?