In Attwells v White [2023] NSWSC 314 (31 March 2023), the New South Wales Supreme Court dismissed a claim for damages brought against a Sydney silk, Mr Kelly SC, and his instructing solicitor, Mr White, apropos of advice given of prospects of success in a prospective claim against solicitors who had acted for the plaintiff client. Lonergan J found Mr Kelly and his instructing solicitor, Mr White – in contrast with some of the witnesses in the plaintiff’s case, including a solicitor – credible witnesses, finding they had not only given proper advice but had conducted themselves with dignity and care in the defence of the claim for damages made against them. The facts were complex so only excerpts are extracted below.
Lonergan J wrote:
[1] On 18 December 2017 a statement of claim was filed in the District Court of NSW by Noel Attwells (“Noel”), claiming damages against Mr White, a solicitor, and Mr Kelly SC, a barrister, for alleged negligent advice. The advice, given between February 2011 and December 2015 in the case of Mr White, and May 2011 and August 2012 in the case of Mr Kelly, was to the effect that there were reasonable prospects of recovering damages from Jackson Lalic Lawyers (“JLL”), because of the negligent conduct of that firm in prior proceedings.
[2] For the reasons that follow, I have determined the case against Mr White and Mr Kelly fails because first, neither of them breached their duty of care to Noel, (nor to the predecessor plaintiffs, Gregory and Dr Lord), second, there were no “misrepresentations” as alleged or at all, and third, nothing the defendants did or failed to do caused the loss alleged. The claims made in the statement of claim all fail and there will be verdicts for the defendants.
Factual background
[3] The factual and procedural background is necessary to set out in some detail to understand the issues contested in this Court. I have taken this factual background from the affidavit evidence, and where challenged or met with contradictory evidence, I have made my finding of the evidence I accept or prefer in relation to any such issue.
Debt to ANZ
[4] Noel’s brother, Gregory Attwells (“Gregory”) and Gregory’s then partner Dr Barbara Lord (“Dr Lord”) owned properties in Forbes New South Wales. Gregory was also director and shareholder of Willbidgee Beef Pty Ltd (“Willbidgee”) and Feedlot Systems Australia Pty Ltd (“Feedlot”). Willbidgee had acquired water rights and Feedlot was developing a patent relating to the feeding of beef stock.
[5] Gregory and Dr Lord, together with Willbidgee, mortgaged the Forbes properties and water license to the ANZ Bank in 2006. Gregory and Dr Lord entered into a guarantee limited to $1.5 million plus some identified further amounts payable under that guarantee.
[6] In 2008 ANZ and receivers Marsden and Kirk commenced proceedings to recover the money loaned to Gregory, Dr Lord and Willbidgee, and also to obtain possession of the properties, the water licence and other equipment.
[7] In April 2010, JLL were engaged as solicitors for Gregory, Dr Lord and the relevant companies. Robert Harper SC was engaged as Senior Counsel on an unspecified date to appear at the hearing listed on 15 June 2010.
The professionally disgraceful events of 15 June 2010
[8] At the start of the hearing on 15 June 2010, counsel for ANZ tendered a certificate of indebtedness under the personal guarantees in the sum of $1,856,122.28. This figure included the full amount of the guarantee together with interest and enforcement costs.
[9] In his affidavit of 13 April 2013 Gregory sets out that day’s events as follows:
15 June 2010 — Before the Court
[14]I was present in Court at 10am on 15 June 2010 when the Proceedings were called on for hearing before the Honourable Justice Rein. A Mr Newton appeared for the Receivers and ANZ. Mr Faris Shehabi (Mr Shehabi) announced the appearance of Mr Roger Harper SC (Mr Harper) for myself, Jane and Wilbidgee.
[15]I had been introduced to Mr Shehabi by Mr Peter Jackson of Jackson Lalic on or about 15 April 2010. At that time Mr Jackson said to me words to the effect, “May I introduce Faris Shehabi? Faris is employed by us and will be assisting me in the conduct of your matter”.
[16]I first met Mr Harper at 8am on Monday 15 June 2010 when Mr Shehabi took Jane and I to a conference in counsel’s chambers. That conference lasted about an hour.
[17]A short while after the Proceedings were called on for hearing, Justice Rein said to Mr Shehabi words to the effect:
I have received nothing from you Mr Shehabi. There was an order made for the provision of submissions that hasn’t been complied with.
Mr Shehabi replied: “Unfortunately I can’t be of assistance.“
His Honour replied “Yes you can, you can tell me why you haven’t done it. Why should you be heard in this matter? You haven’t complied with orders made by the Court.“
Mr Shehabi replied: “I have no submissions to make.”
Mr Shehabi then sat down.
[19]….
[20]Approximately 15 to 20 minutes after he sat down, Mr Shehabi turned around and handed me a handwritten note. The note contained words to the effect, “l cannot run this case myself and I don’t want to be responsible for what has happened here this morning.“I do not have a copy of that note.
[20]During the course of the hearing before Justice Rein on 15 June 2010, Mr Newton tendered a number of documents, including a certificate of indebtedness in the sum of $1,856,122.28, which became Exhibit C in the Proceedings (the Certificate).
….
[24]Mr Harper arrived at Court at approximately 11:45am on 15 June 2010.
[25]Later that morning, the Court granted us a short adjournment.
[26]During the short adjournment, Mr Harper took Jane and I to a room outside the Court and said words to the effect, “I am going to try to settle this matter. What will you accept” I said, “$1,750,000,00 and six months to pay. The equipment list also needs to be corrected.“The equipment list to which I referred was a list of equipment to be delivered up to the Receivers. I had discussed the topic of errors in the list prepared by the Receivers with Mr Shehabi on previous occasions and with he and Mr Harper at our conference at 8am on 15 June 2010.
[27]After our conversation with Mr Harper in the room outside the Court, Mr Harper left the room for about 10 minutes. He then returned and said to Jane and me, “I can get you the $1,750,000.00, inclusive of costs, but cannot get you the six months.“l replied, “Things are not easy in the finance world at the moment. I need time to get it sorted. “Mr Harper then said, “Okay, leave it with me, I will be back.”
[28]Mr Harper then left the room again. Upon his return he said: “I have improved it a bit, but I cannot get you six months. What if I can get it to the end of November 2010?“ Jane and I both replied “Okay.“ He left the room and returned shortly after.
[29]When Mr Harper returned he said, “I have got you $1,750,000 and until 19 November to pay. Is that OK?“ Jane and I both replied, “OK, if that is the best we can do”. I thought that the $1,750,000 was better than the $1,856 million which had been talked about in Court and the date he mentioned in November should allow us time to borrow the $1,750 million and bring our problems with the ANZ to an end. Mr Harper left the room again. By then, it was after lunch time.
[30]At about 2.30pm, we all went back into Court and Mr Harper said to Justice Rein words to the effect, “We have reached a settlement. We now need to reduce it to writing. “As I understood what was said, Justice Rein said the parties could come back the next morning for orders to be made to give effect to what had been agreed.
[31]Mr Shehabi was present during each of the above conversations and when we all went back into Court at 2.30pm.
[32]There was no mention of a judgment against Jane and me for $3.3 million at any stage. I believed, as a result of what Mr Harper had said to me in the presence of Mr Shehabi, that we had settled for $1,750,000, all up, and Jane and I had until 19 November 2010 to arrange finance and pay that amount. When we came out of Court shortly after 2.30pm, Mr Harper spoke to Mr Shehabi and then left by himself. I did not see him at any time later in the day.
…
[13] Both Gregory and Dr Lord in their respective 2013 affidavits deposed to the fact that they were not given the option of either consenting to judgment for the lesser amount of $1.856 million, (being the extent of their guarantee), or continuing to fight the case in search of a better outcome, or to seek further advice from their counsel Mr Harper.
…
[15] The Consent Orders were made by Rein J on 16 June 2010. The effect of this was that at the conclusion of the ANZ proceedings, Gregory and Dr Lord had a judgment against them personally for an amount of $3,399,347.67, notwithstanding that ANZ had acknowledged to the Court the day before that this personal liability was in fact limited to $1.856 million.
[16] Despite attempts to secure funding, Gregory and Dr Lord were unable to pay the $1.750 million by 19 November 2010.
Gregory and Dr Lord legal advice sought about what to do
[17] In late November 2010 Gregory and Dr Lord made contact with Mr White, solicitor.
[18] On 7 December 2010 Gregory and Dr Lord had a conference with Mr White at his office. Gregory provided the Consent Orders, transcript, pleadings and affidavits in the ANZ proceedings, plus valuations for the relevant properties. Amongst other things, Mr White said to Gregory “Didn’t anyone raise the issue of the limit to the guarantee of about $1.75 million with you?” to which Gregory answered “No”.
[19] On 10 December 2010, Gregory and Mr White attended a conference with Mark Speakman SC. Mr Speakman advised in conference that having regard to the Consent Orders, JLL may be liable in negligence, that the proceedings against JLL would have reasonable prospects of success and that if such proceedings were commenced, it may cause ANZ not to take any recovery action.
[20] An application was made to set aside the Consent Orders. This was heard and dismissed by Pembroke J in February 2011 on the basis that the Consent Orders comprised a present debt, not a penalty: Attwells v Marsden[2011] NSWSC 38 .
[21] An appeal was filed but abandoned on 1 May 2011 (shortly before the hearing), apparently due to the inability to pay for counsel, so the correctness or otherwise of the decision of Pembroke J was not further explored, but Mr Kelly when retained, considered the decision and took the view that it was correct.
[22] In early May 2011, Mr Kelly was contacted by Mr White to see if he was available to advise on an urgent basis given Mr Speakman was no longer available.
[23] On 18 May 2011, a brief to advise was sent to Mr Kelly seeking advice on whether to commence proceedings against JLL. Mr Kelly had at that time been a barrister for 34 years, 18 of those as Senior Counsel.
[24] On 24 May 2011, Mr Kelly and Mr White conferred about the JLL proceedings. Mr White said that Mr Kelly advised him that JLL appeared to have been negligent in preparing the brief to Mr Harper, the preparations for the hearing, their advice to Gregory and Dr Lord before and after the hearing, and their settlement advice. Mr Kelly also advised that damages could include the costs paid by Gregory and Dr Lord, as well as the difference between the limit of their guarantees and the final judgment sum. Mr White recollects that Mr Kelly also said there is a possible claim against Mr Harper but that he did not “have sufficient information at this stage to conclusively advise about that”.
[25] Mr Kelly described the advice he gave in this conference slightly differently, but to similar effect, in his affidavit sworn 5 August 2020:
[17]During the course of the First Conference, Mr White and I had a wide-ranging discussion about the facts referred to in the Brief, as well as the Demands and the Judgment. During that discussion, our attention turned to the reasons for judgment of Justice Pembroke in Attwells v Marsden[2011] NSWSC 38 , …. In that conversation, I said words to the effect, “I think Pembroke J is undoubtedly correct when he says Order 1 (in the Judgment) created an immediate and enforceable debt. What value did the clients get out of the opportunity to refinance at $1.75 million?“ Mr White said words to the effect, “None. They say the $3.3 million judgment debt spoiled their chances.“ I also said words to the effect, “What has happened to the properties and the water rights? Mr White said words to the effect, “The properties are on the market, but I don’t think they have been sold.“
[18]Later in the First Conference, Mr White and I spoke about the sequence of events which took place on 15 June 2010. In that context, I said words to the effect, ‘‘On the facts we have been given, I think breach of retainer and negligence are relatively straight forward. The performance of Jackson Lalic on the day was a professional disgrace. The interesting questions are reliance and damages. Putting aside wasted costs and the problem with the equipment list, the question is whether you have any prospect of recovering the difference between the judgment debt of $3.3 million and the amount the bank certified to be payable under the guarantees. I think that the entry of judgment for an amount over and above the amount proved to be owing has to be taken into account in any loss analysis. What it does is create a real and enforceable debt, which did not previously exist. Comparing before and after, the clients ended up owing about $1.5 million more at the end of the day than they did at the beginning. Did they get anything of value in return for incurring an additional $-1.5 million debt?“ Mr White said words to the effect, “Our instructions they did not. The clients say refinance was impossible”.
[19]On the question of reliance. I said words to the effect, “What would they have done had the solicitor or senior counsel advised them that they could have refused to settle on the terms presented by the bank? Would they have preferred judgment against them for the $1.8 million rather than the $3.3 million plus a chance to get out from under for $1.75 million by refinancing? Mr White said words to the effect, “The clients are adamant. They say they would never have consented to judgment against themselves for $3.3 million, if they had known they could have gone back to court and had judgment entered against them for the amount claimed. What Greg is really angry about is being fitted up with the whole of the company debt when the liability under his personal guarantee was capped. Offers along those lines had been made a few weeks before the hearing and they were rejected.”
[26] Mr Kelly and Mr White agreed that rather than provide a detailed opinion, Mr Kelly would draft a statement of claim and provide a brief note on prospects of success as a more cost — effective approach.
[27] Between 24 and 27 May 2011, Mr White and Mr Kelly exchanged correspondence discussing quantification of damages, the contents of the draft statement of claim and evidence.
[28] On 26 May 2011, Mr Kelly sent an email to Mr White attaching a written Opinion and draft statement of claim. The Opinion stated:
I refer to my brief in the above matter and to our recent conference.
Without reciting the facts and materials briefed, I attach a draft statement of claim which, in my opinion, is supported by the evidence which has been made available to me.
In my opinion, Mr Attwells and Dr Lord have a sound claim for damages against JLL based on the evidence that I have seen.
If a detailed analysis of the issues and the evidence is required, I would be happy to oblige.
[29] On 30 May 2011 Gregory and Dr Lord instructed Mr White to commence proceedings against JLL.
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[32] On 6 June 2011 Mr White filed the statement of claim in the proceedings against JLL which was verified by Gregory and Dr Lord. Relevantly, it pleaded that JLL was retained in April 2010 and that JLL did not exercise reasonable skill, care and diligence in and about discharging the retainer. The particulars of negligence and damage are set out as follows:
[13] In breach of the implied term of the retainer and in breach of duty, the defendant was negligent in the above giving the advice.
Particulars of Negligence
a. Advising the plaintiffs to consent to a judgment against themselves, in favour of the ANZ bank, in the sum of $3,399,347.67, when the plaintiffs did not have a liability to the ANZ bank for $3,399,347.67 or anything like that sum.
b. Advising the plaintiffs to consent to a judgment against themselves, in favour of the ANZ bank, in the sum of $3,399,347.67, when the claims against them in the proceedings, even if wholly upheld against them, would not result in the plaintiffs having a liability to the ANZ bank for $3,399,347.67 or anything like that sum.
c. Advising the plaintiffs that, if they defaulted in payment of the sum of $1,750,000 by 19 November 2010, it would not make any difference if the judgment in favour of the bank was for $3,399,347.67.
d. Failing to advise the plaintiffs that the effect of the Consent Orders was that, if the plaintiffs defaulted in payment of the sum of $1,750,000 by 19 November 2010, there would be a judgment against them for $1,543,225.39 more than the guaranteed amount of $1,856,122.28.
e. Failing to advise the plaintiffs that, if they defaulted in payment of the sum of $1,750,000 by19 November 2010, and the securities were sold by the ANZ bank for a sum in excess of $1,750,000 the ANZ bank would, as a practical matter, be entitled to any excess up to $1,543,225.39 and the plaintiffs would be at risk of being bankrupted for any shortfall against the judgment of $3,399,347.67.
f. Failing to advise the plaintiffs that the value of the claim against them was not $3,399,347.67 but was limited to judgment in favour of the ANZ bank in the guaranteed sum of $1,856,122.28 plus costs plus the value, if any, of the claim for wrongful detention of the goods made the subject of the proceedings.
g. Failing to advise the plaintiffs that no legally binding settlement came into existence unless and until terms of settlement had been signed and, instead of consenting to judgment against them in the sum of $3,399,347.67 and agreeing to the other orders contained in the Consent Order, there were other alternatives they could pursue including making a counter-offer of judgment against them in relation to the guaranteed sum of $1,856,122.28 in lieu of $3,399,347.67 and, failing agreement by the ANZ bank, resuming the hearing.
h. Failing to advise the plaintiffs of the advantages and disadvantages of the alternatives that were available to them instead of signing the Consent Order, including making a counter offer and resuming the hearing.
i. Failing to seek the advice of Senior Counsel on the alternatives that were available to the plaintiffs in the event that the ANZ bank insisted upon judgment against the plaintiffs in the sum of $3,399,347.67.
j. Failing to advise the plaintiffs that they should refuse to consent to a judgment against themselves for an amount which they did not owe.
k. Failing to advise the plaintiffs that they should refuse to consent to orders on conditions over which they did not have control.
l. Failing to advise the plaintiffs that the way the Consent Orders worked, namely, to impose a judgment of $3,399,347.67 upon them in the event that they were unable to refinance or sell the securities before 19 November 2010, was draconian and punitive.
m. Causing the plaintiffs to incur a liability they did not owe.
n. Causing the plaintiffs to be harmed in their credit standing and repute by the entry of a judgment against them-in the sum of $3,399,347.67.
o. Failing to advise the plaintiffs not to sign the Consent Orders.
[14]The breach of the implied term and the breach of duty caused the plaintiffs to suffer loss and damage:
Particulars of Loss and Damage
a. Liability incurred to the ANZ bank: $3,399,347.67
i. Less guaranteed sum: $1,856,122.28
ii. Less value of damages claim: Nil
iii. Less ANZ costs: to be advised
iv. Subtotal (ex costs): $1,543,225.39
b. Costs of defending the proceedings: to be assessed.
[33] On 29 or 30 June 2011, there was a conference attended by Mr White, Mr Kelly and Gregory. Mr Kelly recounts his recollection as follows:
[28]To the best of my recollection, after Mr White introduced me to Mr Greg Attwells during the Second Conference, he said words to the effect, “We have dropped in to up-date you on the properties. Nothing has been sold as yet. I can also give you a copy of the market appraisal I mentioned when we last spoke.“ Mr White then showed me a copy of a letter dated 16 March 2011 from Landmark Forbes, a copy of which is at pages 47 to 48 of JK-1, and said words to the effect, “Landmark puts Wilbidgee at $1.8 to $2 million and Moora Moora at $405,000 to $450,000. On those figures, refinance of $1.75 million is a practical impossibility. There is not enough equity.” Greg Attwells said words to the effect, “The $3.3 million debt killed off any chance we had.“ He also said words to the effect, “We rejected offers of $3.3 million before we went to court. Now we are stuck with an extra $1.5 million debt we never owed.”
[34] Mr White gave a similar account of this conference in his affidavit of 11 September 2020 confirming the conference date was 29 June 2011.
JLL’s lawyers plead advocate’s immunity
[35] On 4 October 2011, JLL filed a Defence to the statement of claim denying liability, denying that any loss was suffered and contending that the claim could not succeed because advocate’s immunity applied.
[36] Shortly after the Defence was filed, Mr Kelly discussed the advocate’s immunity issue with Mr White. Mr Kelly noted the scope of the immunity particularly in respect of settlement negotiations was open to question, and the issue was to be further explored by the NSW Court of Appeal given the outcome of Woodland v Donnellan [2011] NSWSC 777 , a case in which Mr Kelly was briefed by Lawcover to advise on prospects of success of an appeal.
[37] On 1 November 2011 Dr Lord had a sequestration order made against her.
[38] On 22 November 2011 Mr White told Gregory in a letter that “senior counsel’s view all along has been that the prospects of success in the principal claim are very good”. Mr White said that JLL are insured by Lawcover and counsel’s view was that the matter “should be referred to mediation which would limit costs payable by you” and “he believes the insurer will want this matter settled”.
[39] In a file note dated 14 December 2011, Mr White recorded that he spoke to Gregory regarding assigning his rights in the claim to Noel. Gregory advised that he had been speaking to a trustee who advised him that he will get a better deal that way and that assignment is the only way Noel can recover what he has paid out.
[40] On 19 December 2011, Gregory went into voluntary bankruptcy. Gregory told Mr White of this on 22 December 2011.
[41] On 30 January 2012 there was a teleconference between Mr White and Gregory in which Gregory said he had instructed Mr White to speak to Mr Kelly regarding assignment of his rights in the claim against JLL to his brother Noel.
[42] On 8 February 2012 Mr White spoke to Gregory’s trustee in bankruptcy and on 28 February 2012 the trustee agreed to the assignment of the rights in the claim to Noel.
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[51] On 16 July 2012, Noel verified the amended statement of claim. Mr White stated that he explained the amendments to Noel, including telling Noel about the advocate’s immunity defence raised by JLL.
[52] On 16 August 2012 the amended statement of claim verified by both Noel and Gregory, and removing Dr Lord as a party, was filed.
[53] The Defence to the amended statement of claim filed on 31 October 2012 denied negligence, denied causation and maintained the allegations of contributory negligence and failure to mitigate loss as well as pleading advocate’s immunity from suit.
[54] On 18 December 2012 in its judgment in Donnellan v Woodland[2012] NSWCA 433 (Donnellan), the Court of Appeal upheld an appeal on the basis that advocate’s immunity provided the appellant with a complete defence in the circumstances of that particular case. Mr Kelly advised Mr White of this result when next he spoke with him, but advised that it was distinguishable from the plaintiffs’ circumstances.
[55] On 15 and 17 April 2013 there were very long conferences with Mr Kelly focused on preparation of affidavit evidence. Mr White says that Mr Kelly advised in conference attended by Gregory, Noel and Mr White that the Consent Orders and judgment created a “real and enforceable liability for an extra $1.5 million” that “you did not owe”, and the loss is “the judgment of $3.3 million when liability was capped and certified at $1.85 million”, and that the “loss doesn’t come from the bankruptcy — it comes from the judgment — they (JLL) misconceive this. The real issues are contributory negligence and advocate’s immunity”.
“Once the $3.3 million kicked in — our credit rating was fucked”
[56] Mr Kelly’s recollection of those conferences was that there was focus on obtaining instructions for Gregory’s affidavit and settling that affidavit, but that other issues were discussed:
[44]During the course of the Third Conference, a number of topics were discussed by reference to the evidence in the proceedings and the issues raised in the Defence to the Amended Statement of Claim, including reliance, loss, advocate’s immunity, failure to mitigate, contributory negligence and apportionment.
[45]On the question of reliance and loss, I said words to the effect, “The defence misconceives the nature of the loss. The loss was occasioned by you and Dr Lord consenting to judgment for $3.3 million, when the liability you had was capped and certified at $1.8 million. It has nothing to do with your bankruptcy or your capacity to pay. The loss had already occurred by the time you went bankrupt. The judgment created a real and enforceable liability for an extra $1.5 million which you did not owe. If you had been properly advised, you would have at Ieast been alerted to the opportunity to go back to court and agree to judgment for the $1.8 million claimed rather than consent to the $3.3 million the bank was insisting upon. That was a 100% certain opportunity, if you wished to take it up, because you were before the court, the bank had already tendered evidence to prove you owed the $1.8 million figure and all you had to do was say to the court that you did not oppose judgment for the amount claimed. Instead, you ended up with a judgment debt against you for about $1.5 million more than you owed at the beginning of the day — and you got nothing of value in return.“
[46]On the topic of advocate’s immunity, I said words to the effect, “The decision of the Court of Appeal in Donnellan v Woodland was handed down in December last year. The appeal was allowed. That means the defence of advocate’s immunity succeeded, so the solicitor who was said to have been negligent when advising on settlement was held to be immune from suit.“Mr White said words to the effect, “How does that affect our case?“I said words to the effect, “It strengthens the defence of Jackson Lalic but I think the two cases are distinguishable. In Donnellan, the solicitor gave an over optimistic assessment of prospects of success and went on to lose the case and expose his client to indemnity costs. In this case, Jackson Lalic gave advice which effectively changed the position of Greg and Dr Lord from that of guarantors with a capped liability to judgment debtors with a liability for the whole of the company debt. I think we have a better chance to show our settlement was outside the scope of the immunity than Donnellan v Woodland but there will be a real argument about it. The scope of the immunity is a hard fought issue at the moment.“
[47]When the topic of mitigation was discussed, Mr Greg Attwells said words to the effect, “How can they say we should have borrowed the $1.75 million? We tried. Once the $3.3 million kicked in that was the end for us. Our credit rating was fucked.“
[48]When the topics of contributory negligence and apportionment were raised, Mr Greg Attwells said words to the effect, ‘What is that about?“I said words to the effect, “Jackson Lalic is saying you and Dr Lord were careless in looking after your own interests, so you should bear part of the loss. In effect, you agreed to judgment at $3.3 million because you preferred to run the risk that you would be able to refinance $1.75 million. You took that chance, rather than consent to judgment for the amount claimed. They are saying you should not have agreed if you could not borrow the $1.75 million. It was your fault, or partly your fault, so you have to bear part of the loss.“Greg Attwells said words to the effect, “But were relying on our solicitor to protect our interests, he did not tell us we had a choice. We were told we had settled for $1.75 million on 19 November. Then we were told $3.3 million and that figure was non-negotiable.“ I said words to the effect, “They will put to you that you did know, because it is a matter of common sense. The judge will then have to decide if you would have gone ahead, despite what you say now.“ Greg Attwells said words to the effect, “We would not have gone ahead if we had known we had a choice. There is no way I would have agreed to a judgment against me for $3.3 million if I had known I could have only $1.8 million. We rejected offers along those lines a couple of weeks before the court case. I have never owed $3.3 million to anyone.“
[49]Towards the end of that part of our conversation, I said words to the effect, “We need to get an affidavit from Dr Lord to corroborate Greg’s evidence”. Mr White said words to the effect, “Jane lives in Wagga but I will get an affidavit from her.“
[50]I also said words to the effect, “We should consider making an offer of compromise. “Mr White said words to the effect, “I agree’‘. We then spoke about whether and if so in what sum an Offer of Compromise should be made. ln that context, I said words to the effect, “On your evidence, I think you have a sound claim, but the matter is ripe for compromise. The advocate’s immunity defence produces an all or nothing outcome. It is not like contributory negligence where the court can apportion the loss. “Other conversation on that topic, is set out in paragraphs [67], [89] and [90] below. At the end of the Third Conference, the question of how much to offer was left open for further consideration; Mr Attwells’ affidavit was sworn; and a number of other procedural matters were attended to by Mr White, including having Mr Greg Attwells sign a list of documents for discovery.
[57] Mr Kelly denied saying: “Your main case is very strong and you have a very strong chance of winning”, as alleged in Noel Attwells’ affidavit of 12 May 2020. I accept Mr Kelly’s evidence in that regard, over Noel’s evidence. Mr Kelly’s written advice at the time of filing the statement of claim in May 2011 deployed the terminology “a sound claim for damages”. I observed Mr Kelly to be an appropriately conservative senior practitioner who chooses his words with care and with a propensity for understatement.
Separate question?
[58] Once the affidavit evidence was filed, Mr White wrote to Sparke Helmore stating that he would request the Court to make orders that JLL file its evidence by June 2011. Instead, JLL filed their motion for separate question on advocate’s immunity. Obviously this diverted the proceedings down a particular path with submissions and preparation focussing on that issue, rather than a path that would require JLL to expose, or decide that they could not expose, the ugly truth of their appalling incompetence and failures on that day.
[59] On 10 July 2013 Schmidt J acceded to that application.
[60] On 22 November 2013, Sparke Helmore, acting for JLL, sent a Calderbank letter containing JLL’s arguments as to why Noel and Gregory should settle the proceedings for a walk away, each bearing its or their own costs. It comprised 4 pages of argument based on a one dimensional counter-factual scenario concluding that the plaintiffs suffered no loss, because of the collapse of their financial situation, that by November 2013, had become a reality.
[61] This letter was sent in the context of two things: the settlement conference scheduled for 28 November 2013 and the judgment of Harrison J of 14 October 2013: Attwells v Jackson Lalic Lawyers Pty Ltd[2013] NSWSC 1510 .
[62] Harrison J refused the application by JLL to decide, as a separate question, whether Noel and Gregory’s claim was defeated by advocate’s immunity. His Honour was of the view that there was insufficient material information before him which would have a direct bearing on the parameters of application of that immunity to allow him to make the necessary determination. Sparke Helmore had filed a Notice of Intention to Appeal that decision on 13 November 2013.
[63] Sparke Helmore’s letter was a particular style of selective outlining of only some of the issues designed to bully a more vulnerable opponent into settlement. The selective analysis was clearly directed to undermining the plaintiffs’ confidence in their case, despite the fact that JLL had just lost its notice of motion, and still had not filed any evidence from Mr Shehabi acknowledging or attempting to defend his woeful conduct on 15 June 2010 and JLL’s complete failure to properly advise Gregory and Dr Lord on that day.
[64] Whilst the Court of Appeal concluded in Jackson Lalic Lawyers Pty Ltd v Attwells[2014] NSWCA 335 , that advocate’s immunity applied to defeat the plaintiffs’ claim and that Harrison J should have concluded accordingly, the majority of the High Court, comprising French CJ, Kiefel, Bell, Gageler and Keane JJ applied a more nuanced and less doctrinal approach to reach the opposite result: Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1; [2016] HCA 16 :
[5]The abolition of the immunity would require this Court to overrule its decisions in D’Orta and Giannarelli. For the reasons which follow, the appellants’ argument in this regard should be rejected. On the other hand, the appellants’ argument as to the scope of the immunity should be accepted. The authoritative test for the application of the immunity stated in D’Orta and Giannarelli is not satisfied where the work of the advocate leads to an agreement between parties to litigation to settle their dispute. No doubt an advice to cease litigating which leads to a settlement is connected in a general sense to the litigation which is compromised by the agreement. But the intimate connection required to attract the immunity is a functional connection between the advocate’s work and the judge’s decision. As Mason CJ said in Giannarelli, the required connection is between the work in question and the manner in which the case is conducted in court. Both D’Orta and Giannarelli were concerned with claims which impugned a judicial determination to which the allegedly negligent work of the advocate contributed. As will be seen from a closer consideration of the reasoning in D’Orta, the public policy, protective of finality, which justifies the immunity at the same time limits its scope so that its protection can only be invoked where the advocate’s work has contributed to the judicial determination of the litigation.
[6]In short, 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. The immunity does not extend to preclude the possibility of a successful claim against a lawyer in respect of negligent advice which contributes to the making of a voluntary agreement between the parties merely because litigation is on foot at the time the agreement is made. That conclusion is not altered by the circumstance that, in the present case, the parties’ agreement was embodied in consent orders. (emphasis added)
….
[62]In the present case, the consent order and associated notation by the Court 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. The consent order may have facilitated the enforcement of the compromise, but it was the agreement of the parties that settled its terms.
[65] The series of decisions in this case underscores the developing landscape of the common law in respect of advocate’s immunity in those years, particularly regarding the application of the immunity to “out of court” settlement of proceedings. This does not mean that claims should not be filed and fought that potentially raise those issues for resolution. On the contrary, difficult and different factual scenarios can make and change the common law. It would be fundamentally wrong to fail to pursue or fail to advise to pursue professional negligence claims that raise difficult or contentious issues. However counsel are not oracles. The test is reasonable prospects of success.
[66] Nor is it appropriate or acceptable to crumble and capitulate because the other side outlines an argument in opposition to the case pleaded, particularly if it is a letter in the style deployed by Sparke Helmore, that ignores relevant facts and misinterprets the law.
[67] Returning to Sparke Helmore’s November 2013 letter, it was not a persuasive analysis of damage issues, nor did Mr Kelly find it to be so, concluding that it was misconceived and so there was little point attending a settlement conference in the circumstances. Mr White sent a polite email on 25 November 2013 stating that neither he, nor his clients, nor his counsel accepted the overview, conclusions, or assumptions about loss set out in the letter, and that the defendant’s current stance indicated that there was no point incurring the expense and legal fees in participating in a conference, but that the plaintiffs’ team would use the time to formulate an offer of compromise, an entirely appropriate response and one consistent with s 56 of the Uniform Civil Procedure Rules 2005 (NSW) and the overriding purpose rule.
[68] On 28 November 2013 a conference was held with Gregory, Noel and Mr White where settlement was discussed. Mr Kelly deposed to that conference involving a discussion of JLL’s offer, the arguments set out in Sparke Helmore’s letter, discussion of an offer of compromise, and JLL’s application for leave to appeal Harrison J’s decision to the Court of Appeal. In that conference Mr Kelly advised Noel and Gregory to make an offer of compromise of $350,000.00 plus costs and instructions were given to Mr White to do so. To the extent that Noel states in his affidavit that he does not recollect the Sparke Helmore offer and its arguments being discussed, I prefer the evidence of Mr White and Mr Kelly that the letter and its contents were discussed. To the extent Noel says other higher figures were discussed to offer, I prefer the evidence of Mr White and Mr Kelly that no such other amounts were discussed.
[69] On 2 December 2013 an offer of compromise in the sum of $350,000.00 plus costs was forwarded to Sparke Helmore.
[70] Mr Kelly prepared submissions and appeared in response to JLL’s appeal of Harrison J’s decision on 23 July 2014. This was his last retained involvement in the proceedings.
[71] On 10 October 2014 the Court of Appeal’s judgment was delivered, granting JLL leave to appeal, and dismissing the plaintiffs’ proceedings with costs on the basis of the determination as a separate question, that advocate’s immunity from suit applied to defeat the claim.
[72] About this time Mr Kelly was informed by Mr White that Gregory had died and letters of Administration in his estate would be, or had been, granted to Noel.
[73] Two days after the Court of Appeal judgment, Leo Muriniti of LC Muriniti & Associates (“LCM”) contacted Mr White to discuss applying for special leave to appeal to the High Court, stating that he had a similar advocate’s immunity case. Mr Muriniti described in his affidavit sworn 30 September 2021, that he and Mr Newell were “on the lookout” for suitable cases, and that they had identified the Attwells decision as a suitable vehicle to take to the High Court for the purposes of testing the ambit of advocate’s immunity.
[74] On 22 October 2014, Noel, his wife, Kim and Mr White attended a conference with Mr Newell of LCM’s office. Mr Newell conducted work as a solicitor as well as solicitor advocate. There was discussion about the potential for a High Court appeal. Noel instructed Mr White to proceed.
[75] On 24 October 2014, Mr Muriniti sent an urgent letter to Mr White attaching a contingency costs agreement. The agreement confirms retainer on a conditional fee basis “to act as your agents to prepare and conduct a High Court appeal from the decision of the NSW Court of Appeal in Attwells v JLL and all matters incidental thereto”. The plan was that LCM would work as Mr White’s agent, but Mr White would remain the solicitor on the record.
[76] On 26 March 2015, an application for special leave to appeal to the High Court was filed. Mr Muriniti’s bill of costs says this was done by him and Mr White attending the Registrar together,
[77] Mr Newell appeared on the special leave application instructed by Mr Muriniti. Special leave was granted that day, 7 August 2015.
[78] On 26 June 2015 Sparke Helmore sent a further Calderbank letter which made a “walk away” offer on the basis that the plaintiffs withdraw their special leave application, each party bear its own costs. At that stage, given the unsuccessful outcome in the Court of Appeal for the plaintiffs, I understand this offer entailed the forgiving of a significant amount of incurred costs due to JLL of about $230,000.00. Noel confirmed in his evidence that there was a discussion of this offer which involved his wife Kim and Mr Newell at which Mr Newell advised him to reject the offer, to counter-offer $350,000.00 plus costs (which was a repeat of the very same offer advised by Mr Kelly and Mr White and made in November 2013).
[79] On 2 November 2015 Mr White had Noel sign a further deed and costs agreement. This was the day before the day listed for the hearing of the appeal in the High Court. Noel says they met for only minutes at a café but Mr White says the meeting took over an hour and that the agreement and the need for it was explained.
[80] The appeal was listed to be heard in the High Court on 3 November 2015 but was vacated and ultimately heard on 8 March 2016. There was a team of four counsel led by Mr Reynolds SC. The solicitor on the record as instructing was LC Muriniti and Associates.
[81] On 15 December 2015 Mr White’s practising certificate was suspended.
[82] In February 2016, Mr Muriniti discussed with Noel the fact that Mr White’s practising certificate was suspended and therefore he should retain LCM directly and the new fee agreement dated 15 February 2016 was signed. (Noel had the date in his affidavit incorrectly as February 2015). I will return to the circumstances of this later in the judgment.
[83] The judgment of the High Court was published on 4 May 2016, a majority of five deciding the issue in favour of the appellants with orders as follows:
1. Appeal Allowed.
2. Set aside orders 3, 4 and 5 of the Court of Appeal of the Supreme Court of New South Wales made on 1 October 2014 and in their place order that:
(a) the appeal be allowed;
(b) the orders of Harrison J made on 17 October 2013 be set aside, and in their place order that the separate question of whether the plaintiff’s claim is defeated entirely, because the defendant is immune from suit, be answered: “No”.
3. Set aside the orders of the Supreme Court of New South Wales made on 28 October 2014.
4. The respondent pay the appellant’s costs of the proceedings on the separate question in the courts below and of the appeal to this Court.
5. The Law Society of New South Wales pay the costs of the appellants and the respondent occasioned by its intervention in the proceedings.
[84] The acknowledgement during argument by Mr Reynolds that there was a “matter of opacity on the issues of negligence and causation in the appellant’s claim”, was not a comment that should be interpreted as some kind of concession that the negligence case against JLL was weak. It arises from the manner in which the arguments were framed in the High Court on the separate question issue. The agreed facts created some apparent tension in interpretation, but were provided as the factual basis for the question of whether the scope of the immunity extends to “negligent advice which leads to the settlement of a case by agreement between the parties”.
[85] The majority stated the issues for its determination this way:
[25]…. The consent orders and associated agreement appear, on their face, to have created a new charter of rights between the parties. The liability which the guarantors assumed under that new charter was distinctly not their liability under the guarantee. If the guarantors met their liability under the guarantee within the extended time for which the settlement agreement provided, they would be released from all liability to the bank. In return for extra time to pay their true debt, the guarantors agreed to consent to a judgment for the total indebtedness of the company with a collateral agreement that the judgment would not be enforced should the amount they owed under the guarantee be paid within that extended time.
[26]That having been said, the appeal to this Court is concerned solely with whether the advocate’s immunity is, as the respondent contends, a separate and complete answer to the appellants’ claim. This Court has not been invited to hold that the weakness of the appellants’ claim on the issues of negligence and causation of loss is so clear that there is no utility in deciding the issue presented for determination. The decision of the Court of Appeal, while it stands, precludes any investigation of the strengths and weaknesses of the appellants’ claim. The issue as to the effect of the immunity was raised by the respondent, and, the issue having been decided by the Court of Appeal in the respondent’s favour as a complete answer to the appellants’ claim, should be decided by this Court.
[86] That was not an evaluative comment about the strength or otherwise of the negligence case against JLL. It was simply drawing attention to the fact that JLL had not raised, as a separate issue, that the claim on the issues of negligence and causation are hopeless and for that reason there was no utility in deciding the issue presented for determination. Given that JLL were represented by very able and experienced junior and senior counsel, there was no doubt a good reason why that point was not taken.
[87] When Sparke Helmore and Moray and Agnew, (the later subsequently acting for Mr Harper for a brief period), copied each other’s Calderbank letters in November 2016 stating that at [26] of the judgment of the majority in the High Court reveals an opinion that the High Court considered the plaintiff’s negligence case against JLL to be weak, they took out of context the Court’s observations at [25] and [26]. That interpretation is wrong, and illustrative of the style of advocacy deployed by Sparke Helmore in their Calderbank letters.
[88] On 10 June 2016, Sparke Helmore wrote to LCM noting that no action had been taken to “advance the underlying proceedings” in the Supreme Court, (although the ink was barely dry on the High Court’s judgment), and raising the issue that in their view, Mr Harper should be considered to be a concurrent wrongdoer and so should be added to the proceedings as a defendant given the approaching expiration of the limitation period.
[89] The letter also indicated an intention by JLL to plead negligence on the part of Mr Harper in its Defence as a causally relevant basis for reduction of any liability of JLL to the plaintiffs under s 35 of the Civil Liability Act. There is no evidence before me that that amendment to the Defence was ever made.
[90] A “standard costs agreement” dated 14 June 2016 addressed to Noel Attwells was annexed to Mr Muriniti’s affidavit of 30 September 2021. The copy is not signed, but presumably it evidences LCM were in fact retained to act, given the large bill of costs sent to Noel in May 2020 described the work Mr Muriniti (and Mr Newell) had done after 14 June 2016. It described the “work I have been instructed to do” as:
Investigate whether continuing with the Supreme Court proceedings that had been remitted back from the High Court is appropriate and whether there are damages that can be identified and if appropriate and damages are identified, to prosecute the proceedings in the Supreme Court or if it not appropriate to continue with the Supreme Court proceedings because no damage were identified, to negotiate a settlement of the proceedings on the best possible terms.
[91] One blindingly obvious step for LCM to take in response to the 10 June 2016 letter would be to approach the Court for orders requiring the defendant to file and serve its evidence, particularly as it had not done so and was asserting Mr Harper was negligent. Another was to ask Sparke Helmore to provide its proposed Defence, or to explain why the claim Mr Harper was negligent. I cannot understand why none of these steps were taken at that time. The fact that LCM may not have “the file” is not to the point. A simple request that the defendant provide its evidence or draft Defence were basic steps to take. The failure to take any of them at this time, was incompetent.
[92] Instead, four days later, on 14 June 2016, LCM filed an amended statement of claim adding Mr Harper as a defendant. That amended statement of claim makes no changes to the allegations of negligence pleaded by Mr Kelly; indeed, it adopts them as true. It simply adds Mr Harper as a responsible tortfeasor without any real explanation why. There are two other telling features of this step taken by LCM. First, an affidavit verifying the document was signed by Mr Muriniti which stated: “Based on instructions provided to me by the plaintiff I believe the allegations of fact in the statement of claim are true”. Second, there is a certification signed by Mr Muriniti under the Legal Profession Act 2004 (NSW) that “there are reasonable grounds for believing, on the basis of provable facts and a reasonably arguable view of the law, that the claim for damages in these proceedings has reasonable prospects of success”, referencing Clause 4 of Schedule 2 to the Legal Profession Uniform Law Application Act 2014 (NSW). Presumably at that stage Mr Muriniti had taken sufficient instructions and formed a professional opinion that allowed him to swear to those matters. The irony that in this Court Mr Newell, an employee of Mr Muriniti, was putting the opposite to Mr Kelly and Mr White is hard to ignore.
[93] The amended statement of claim was served on Sparke Helmore with a letter inviting a settlement conference “given the admissions made by your client”. Mr Muriniti does not specify in the letter what those admissions were, or when they were made.
[94] On 5 October 2016 Sparke Helmore sent an email letter to Mr Muriniti outlining why in their opinion Gregory can no longer be a plaintiff in the proceedings given his death and the absence of any extant claim given Noel’s position as Administrator of the Estate.
[95] On 12 October 2016 Mr Muriniti advised Sparke Helmore that he was having trouble getting the “whole file” from Mr White and that given Sparke Helmore formed a view that it was appropriate to join Mr Harper, could they please provide documents to assist in explaining their basis for taking that position. This assertion is against the background of having been the solicitor on the record since the beginning of 2016 in the appeal proceedings and June 2016 specifically regarding the Supreme Court proceedings, and the bill of costs appended to Mr Muriniti’s affidavit revealing on a number of occasions in preparation for the High Court appeal being provided with “boxes” of material by Mr White.
[96] On 13 October 2016 Sparke Helmore emailed that they were content to provide their client’s List of Documents and an opportunity for LCM to inspect those documents or obtain a copy. An email on the same day in response by Mr Muriniti gave an undertaking to pay for copying, but there is no correspondence, file note, or anything else in evidence that indicates whether those documents were obtained that way or not, other than an assertion in a letter of 1 November 2016 by Mr Muriniti that he had “resort(ed) to photocopying the Court file and to obtain copies of materials which were the subject of prior discovery from Sparke Helmore” and that “having examined those materials …. we are concerned that there is no evidence that the late Gregory Attwells and his partner suffered any loss in reality”. He then goes on to parrot the Sparke Helmore analysis.
[97] Sparke Helmore’s response to Mr Muriniti’s request for an explanation about Mr Harper was hopelessly inadequate and required follow up by Mr Muriniti, given that there was still no affidavit evidence filed by JLL and no draft Defence produced setting out the negligence JLL asserted on the part of Mr Harper.
[98] Within the List of Documents of JLL were a number of file notes and letters created on or around 15 June 2010, including by Mr Shehabi, as well as correspondence from Mr Harper. Obviously these documents would be relevant to issues of breach of duty but there is nothing in the affidavit by Mr Muriniti explaining what these documents revealed, what was done with these, and what advice Noel was given about them.
[99] There is a file note by Mr Muriniti’s assistant, Dance Petroski, dated 28 October 2016 about a telephone conversation with Mr White. The file note reveals that Mr White was trying to help on the question of joining Mr Harper (which I accept Noel had approached him directly about), and that both he and Mr Kelly were prepared to help.
[100] A letter from Mr White to Mr Muriniti dated 31 October 2016 enclosed an email from Mr Kelly dated 27 October 2016. Mr Kelly’s email stated, amongst other things:
…As discussed, I would be happy to confer on the question of apportionment and damages, if briefed. As to the former, we had no basis to bring a claim against Roger Harper when originally instructed — we were instructed that the junior solicitor gave the impugned advice about the terms of settlement late on the rainy afternoon when the terms came through from the bank; by then Harper had come and gone. If the solicitor knows something that we do not (eg a communication with Harper advising on the terms), they may well be entitled to name him as a joint tortfeasor and if they do and they are successful, our damages against JLL will be apportioned down. Ordinarily, a plaintiff will join a named tortfeasor unless there is some good reason to think the apportionment claim will fail. Is there? I do not know. I have been out of the picture too long and I have not been asked to advise.
As to the latter, the claimed damage, if I recall correctly, is the difference between the judgment debt on the one hand and the lesser judgment which could have been obtained if the solicitor had said, go back to court tomorrow and tell the judge you accept liability for the amount referred to in opening and proved by the bank’s certificate — the correct analysis of damage is loss of opportunity; relevantly, that is loss of opportunity to have the court enter judgment for the much lower sum which the plaintiff had opened and proven by the bank’s certificate. That would have been a 100% certainty because it does not involve any agreement with the bank. But I have not seen the documents for years, so all of that would need to be double checked. …
[101] The responses from Mr Muriniti dated 1 and 3 November 2011 were extraordinary pieces of correspondence. Rather than welcoming assistance from a person qualified and experienced to give it, (particularly Mr Kelly SC), the letters comprised argumentative and aggressive assertions, replete with irrelevancies and ill-informed observations regarding the effect of the legal principles associated with proving loss in negligence claims against legal practitioners. Mr Muriniti also accused Mr White of approaching “his” client Noel “without authority”.
[102] Mr Muriniti, and Mr Newell — assuming he too was working on the matter — seem to have completely missed the point that once the separate question argument was over in May 2016, it was their job to marshall and discuss evidence on loss. The “standard costs agreement” of 14 June 2016 said that is what LCM was retained to do. There is no evidence that they did anything constructive. If they did not know how to do that, or how to frame the arguments to present loss properly and provide the Court with cogent evidence and arguments as to loss in response to the arguments posited by JLL, they should retain counsel who knew how it should be done. Mr White’s suggestion in his email that Mr Newell “may be out of his depth” reflected the reality of the situation. To suggest, as Mr Muriniti does in his letter of 7 November 2016 to Mr White, that the reference to the measure of loss as “lost opportunity” (or “opportunity loss” as Mr Muriniti incorrectly terms it) as “the most threadbare position the writer has encountered in a very long time” demonstrates his total lack of understanding of the relevant principles applicable to loss and damage in legal professional negligence cases.
[103] On 4 November 2016 Mr Muriniti wrote to Sparke Helmore complaining that he had no file and blaming Mr White.
[104] On 4 November 2016 Mr White wrote to Mr Muriniti explaining that Noel had actually contacted him because he was upset about advice LCM had given him about needing to settle the case, and that he had not sought to speak to Noel.
[105] On 7 November 2016, Mr Muriniti wrote to Mr White stating that he had been requesting the file for “several months” and demanding that Mr White articulate why there was a case in damages available to Noel, despite the fact that first, Mr Muriniti himself had verified the amended statement of claim just a few months before, stating that the facts asserted were true and there was such a case available at law, second, Mr Muriniti had done nothing, it seems, to seek advice from counsel experienced in the professional negligence area, third, he had done nothing to make JLL show its evidentiary hand on breach, and fourth, he had completely ignored Mr Kelly’s outline of lost opportunity damages and his offer to assist if retained.
[106] On 8 November 2016, Mr White replied to Mr Muriniti again, attempting to assist.
[107] On 9 November 2016 Sparke Helmore sent another missive to LCM which included the manipulative and inaccurate presentation of [26] of the majority judgment in the High Court in Attwells v JLL as indicating that the High Court had concluded that the case in negligence was weak, and repeating the submissions made back in 2013 about the plaintiff being unable to prove loss.
[108] I interpolate here that if the damage claimed by Gregory and Dr Lord and later, Noel was framed in terms of Gregory and Dr Lord’s “damage” being loss of their properties and/or being made bankrupt and/or the associated financial disaster, the arguments raised by Sparke Helmore would have at least been salient, but loss was never claimed on that basis. It was only ever claimed as damages (that is, a sum of money to be determined but pitched at the difference between the judgment sum and the guarantee sum) for the lost opportunity of avoiding the $3.339 million judgment against Gregory and Dr Lord in circumstances where the guarantee was limited to $1.850 million and where the bank had acknowledged on the court record that was so, plus costs, with, potentially, a claim to be later fleshed out for loss of reputation.
[109] On 11 November 2016 a similar Calderbank letter was sent to Mr Muriniti from Moray and Agnew on behalf of Mr Harper.
[110] On 14 November 2016 Mr Muriniti wrote to Moray and Agnew asking for time.
[111] On 15 November 2016 Mr Muriniti wrote to Mr White demanding advice as to how the damages case was to be proved and threatening to sue him unless he forgoes his costs.
[112] On 16 November 2016 Mr White wrote to Mr Muriniti stating that he had found a box which he would provide. On 17 and 18 November 2016, Mr White provided update emails including that he was going through “mountains of emails” to try and find items that would assist.
[113] On 18 November 2016 Mr Muriniti wrote to Sparke Helmore and Moray and Agnew proposing settlement, indicating that he agreed with their analysis of the loss and damage issues.
[114] On 27 November 2016, Moray and Agnew enclosed consent orders to facilitate settlement and on 23 November 2016 a draft deed was forwarded by Sparke Helmore. It seems that by late November 2016 deeds of settlement and releases against both defendants were signed and executed relying on the advice of Mr Muriniti and/or Mr Newell and no one else.
…
The evidence and my assessment of the credibility of the deponents
[197] The evidence for the plaintiff comprised three affidavits of Noel Attwells, two sworn 12 May 2020, (the shorter affidavit being directed to damages), and one sworn 26 November 2020, also largely directed to the “costs as damages” part of the claim.
[198] Also read and relied upon were three affidavits of Leonardo Carlo Muriniti sworn 30 September 2021, 11 October 2021 and 23 November 2021, and an affidavit of Barbara Jane Lord affirmed 2 December 2020.
[199] Mr Newell also “tendered” paragraphs [17], [18], [19] and [21] of Mr White’s affidavit of 6 August 2020 as “admissions”, but these all relate to the fees proceedings and their relevance to the Professional Negligence proceedings remains opaque.
[200] The first defendant relied on Mr White’s affidavit of 11 September 2020 and the second defendant, Mr Kelly’s affidavit sworn 5 August 2020.
Credibility Noel Attwells
[201] I assessed Noel Attwells as a decent and honourable person who had, in attempting to assist his ill and financially troubled brother in his time of need, been brought into litigation he did not fully understand. I do not suggest that was in any way a result of conduct of the first or second defendant. I consider Noel’s perception of what he was being told was shaped by what he wanted to hear — that is, what the good news might be if all goes well, not what the risks were or how the legal issues were still to be fleshed out and fought.
[202] I believe Noel cannot genuinely recollect what was said to him by Gregory about the claim and its strength as opposed to what was in fact said to him by Mr White and/or Mr Kelly in conference. In any circumstance where there is a direct conflict of recollection between Noel and Mr White or Noel and Mr Kelly, I prefer the evidence of Mr White and/or Mr Kelly.
Leo Muriniti
[203] Mr Muriniti was the next witness called for the plaintiff. I assessed Mr Muriniti to be evasive and disingenuous, giving answers he believed would further the case he was seeking to maintain, rather than giving honest recollections.
[204] I consider the fact that he thought it appropriate to speak to Noel and “suggest to him a recollection” on the first day of hearing about the date a fee agreement was signed by Noel as a different year than he had put in his affidavit, surprising and concerning.
[205] Mr Muriniti’s explanation when questioned about this, that he did not consider there to be a problem with one material witness “reminding” another about some evidence that they did not recall, is extremely troubling. It demonstrates a lack of understanding of the basic ethical conduct required of a solicitor. Mr Muriniti proffered this answer to that question:
… either he remembered or he didn’t. I expected him to truthfully tell me if he remembered. I wasn’t making a suggestion to him, if he couldn’t remember that would be the end of the matter.
[206] To make matters worse, the conversation related to the date of a fee agreement where Mr Muriniti stood to profit because he had asked Noel to backdate the fee agreement by some months (or, as I have concluded, by a year and some months). The fees to be charged by Mr Muriniti and Mr Newell under this new agreement were significantly higher than the rates in the initial agreement.
[207] The other change Mr Muriniti told Noel to make to the fee agreement was also a material one: to remove words in the fee agreement confining “success” to the recovery of damages, against the background of the separate question aspects of the case, where effectively between Mr Muriniti’s engagement in October 2014 and the High Court’s decision in May 2016, damages were not a possible result of the legal issues being fought, confined as they were to advocate’s immunity and whether that immunity could totally defeat the claim.
[208] There were multiple versions of the same signed fee agreement, some dated February 2015 and some dated February 2016. I found Mr Muriniti’s explanation for this situation confusing, concerning and unsatisfactory.
[209] Mr Muriniti would not agree that backdating the fee agreement to October 2014 (which to give context, was the time the work on special leave to appeal and the appeal would have begun), was in effect having Noel “take on a huge potential new exposure”. This was Mr Muriniti’s answer:
I don’t know that I can agree to that; I just don’t know. I never — I didn’t see it that way; I saw it merely as Mr Attwells needing representation since Mr White was no longer on the scene and I was prepared to assist him by representing him, but I had my terms for that. The alternative was he didn’t have a solicitor; he’d have to go somewhere else.
[210] I find this answer disingenuous. The October 2014 fee schedule was $500 per hour with $600 an hour for weekends and $800 an hour for public holidays. The February 2016 “back-dating” increased the October 2014 agreement fees by more than 20%, retrospectively.
[211] The costs disclosure sent by Mr Muriniti to Mr White on 1 February 2016 listed charge-out rates of $500 per hour with $600 for weekends and $800 for public holidays. I do not know why a more expensive hourly rate should apply for weekend or public holiday work. It is an odious practice and should cease.
[212] The back-dated agreement, which I have concluded was in fact signed in February 2016 (given Mr Muriniti claimed this was done in the context of Mr White being suspended from practice which undoubtedly occurred in December 2015) set out an hourly rate of $600 per hour with a weekend rate of $900 per hour and $1200 on public holidays.
[213] Mr Muriniti was unable to give any account of what was discussed with Noel about the effect of this change of rates, nor could he confirm whether he told Noel that even if successful in the High Court, at least one third of the fees were unlikely to be covered by any costs order.
[214] The flavour of self-interest in Mr Muriniti’s conduct in regard to his own firm’s costs, is difficult to ignore.
[215] There is a claim for interest in 54(c) of the amended statement of claim, although bills were only “sent” to Noel on the date his affidavits were sworn being 20 May 2020. Mr Muriniti conceded in cross-examination that there has never been any request that the costs be paid, and they have never in fact been paid. Mr Muriniti conceded, in the face of that history, that the claim for interest on costs was not maintainable.
[216] Regretfully I have concluded that I cannot accept Mr Muriniti as a truthful witness. This has consequences for the acceptance or otherwise of any assertion by him in documents, or any factual assertions, or any assertions regarding or contained in the bills of costs that underpin the “costs as damages” claim, although that head of damages has other, even more fundamental problems to which I will come.
Mr White
[217] Mr White impressed me as truthful. The questioning he was subjected to by Mr Newell was circular and unfocussed. Many irrelevant propositions were put to him. On many occasions propositions were put to him that were inconsistent with the evidence led and tendered by the plaintiff. On other occasions evidence just given by Mr White was misquoted back to him as a lead-in to a question. There was a repeated attempt to suggest to Mr White that he should have refused to accept Gregory and Dr Lord’s account of what they understood and what they were told and not told on 15 June 2010 by Mr Shehabi and Mr Harper. This was repeated sufficiently often to amount to badgering, requiring the Court to intervene. I accept Mr White relied on Mr Kelly’s advice and expertise. It was appropriate to do so in a specialised area of practice such as this.
Mr Kelly’s credibility and basis for the advice he gave
[218] Mr Kelly presented as an impressive and highly credible senior counsel who demonstrated in his evidence a careful, considered and conservative approach.
[219] His approach to the negligence case against JLL, as revealed in his affidavit evidence, was thorough, methodical, sensible and cogent. His oral evidence was dignified, helpful and courteous in the face of poorly constructed, repetitive, obtuse and on occasion, insulting, questioning by Mr Newell.
[220] Mr Kelly’s answers and affidavit evidence demonstrated an appropriate consideration was given to the issues and that the advice given was proper and correct, based on the instructions he had been given.
[221] His approach to the issues, the pleadings, and the conferences with his clients, in particular the methodology in taking instructions and settling the critical affidavit by Gregory, was unassailably ethical and appropriate:
The way the conversation between myself and Mr Greg Attwells went when we got to that topic going through the affidavit, and I should make it clear, I had a draft affidavit provided to me, and I was going through it, in the company of Gary White, and Greg Attwells’ brother, Noel, who was present, when I got to that part of the conversation I was asking him what was said. He was giving me the answer. Where he gave me his answer in first person form I wrote it down. When he strayed from first person form, as people often do, I directed him to go back to it and tell me what was said; I wrote it down. There was no general chat of the variety that you seem to be suggesting.2
….
I was getting from him a narrative and evidence to prove the sequence of events, the facts which led to his signing of the consent. So, in that sense, no, I didn’t look into other wider questions of his understanding of the terms or legal effect of the instrument.3
….
As I took him through the evidence, received detailed instructions in relation to each component of the conversation, I was listening to what he said, writing down what he said, to the extent that he spoke with conviction. The question of my doubting his truthfulness or integrity did not arise because I was there taking detailed instructions from a person who was, to my impression, plainly telling me the truth.4
….
Q I put it to you there was no prospect of a court accepting that Mr Attwells would have foregone the opportunity in the consent orders to refinance his properties by 19 November?
A. I reject that. It’s not a matter for me. I’m performing the role of giving advice on prospects, settling a statement of claim, and then further down the track performing the other tasks that I have indicated. I do not judge matters; nor do I tailor claims or evidence so as to fit anticipated outcomes. I — I settle claim — claims on the basis of instructions and the evidence which is made available to me; and I settle evidence on the basis of what the deponent tells me is true. I do not pass judgment on anyone or anything.5
[222] Mr Kelly’s approach to the potential assessment of damage was available based on his instructions and a reasonable interpretation of the law on loss of opportunity caused by JLL’s negligence.
[223] Mr Kelly’s answers in cross-examination demonstrate a sound grip on the matters of fact and law relevant to assessing whether the claim had reasonable prospects of success:
Q Was evidence of the circumstances that would have attended Mr Greg Attwells, if he accepted the $1.8 million liability, relevant to the claim?
A. You’re asking me for an opinion on that question?
Q Whether that evidence is relevant to the claim?
A. No Because the loss was made by Mr Attwells and Dr Lord. Mr Attwells moving from a position in which the rights he had before the impugned advice was given — those rights relevant to his indebtedness to the ANZ Bank included a cap. After the event, no cap. One sees a change in — in the substantive rights that the person had before and after; and one, in this case, has the advantage of being able to give a value to those rights, a value to the shift in position. The value of the debt with cap was proven by exhibit C, a certificate from the bank that the $1.8 million figure accurate to the nearest cent. The value of the liability after is the $3.3 odd million figure, equally proven. And we have in this case the additional advantage of a judgment of another court; namely the judgment of Justice Pembroke, who made various findings, including findings of extant liability for the $3.3 million figure. It doesn’t matter — that is the mechanism for loss.
The negligence was in steam-rollering the client, and not giving the client the benefit of an opportunity to even consider his alternatives, once there was a critical shift away from an orally agreed but obviously not legally binding settlement of 1.75 million about lunchtime, to the 3.3 million after the sun had gone down. The principles which apply, and which were at the forefront of my mind when I expressed my opinion on reasonable prospects, included several decisions of the Court of Appeal which tell us what it is that a solicitor or other legal practitioner must do at the point of advising a client about settlement.
There’s that Studer v Boettcher case back in the year 2000, which makes it crystal clear that the legal practitioner has to assist the client for the client to make the client’s own decision, by — on an informed and free choice basis. And what Mr Shehabi did was to deny these people any opportunity, however humble, to consider alternatives, by telling them that they had to sign because this had to be handed up tomorrow. It’s the plainest breach of that duty, with the plainest and direct cause and effect, by moving a position — the position of a person from owing 1.8 million to owing 3.3 million. The mere fact that these people were poor, for whatever reason, makes no difference to anything, in my view; because there isn’t one law for the rich and one — one law for the poor.6
and regarding the approach to loss:
Q How do you say that Potts v Miller would have assisted Mr Greg Attwells to recover damages?
A. Well, the — the rule in Potts v Miller is well — is well known, it — it — it tells you that in any case of misrepresentation, innocent or — or — or fraudulent, and equally, for any other reliance based claim, which would include a case for negligent advice, the — the prima facie measure of damages is — is the — the difference between the price paid or payable and the value of the thing received. In this case, the price payable is the additional 1.5 million and the question thus becomes: was any real value received? On my instructions, no real value was received because the — the opportunity to refinance at the $1.75 million figure was utterly valueless.
Amongst other things, there was a judgment on the face of the court record for 3.3 million which — which trashed the — the credit standing, but before you even get to such things, the bottom line is I was instructed that they got nothing of value. If there is an opportunity there which is to be — which may be said to have a value, and the value is proved to the satisfaction of the Court, then that, of course, would come off the value of the price paid or payable. In this case, the price is payable because it’s a — it’s a judgment of the Court. Not just any court, it’s a judgment of the — of the Supreme Court and it’s a judgment which was then made the subject of an application to set it aside, which failed.
So, one has the judgment of Justice Pembroke, finding that it is an actual bet. And we know, of course, from other authority, including Murphy v Overton Investments, to which a reference has been given, that one does suffer loss where a legal — the content of a legal obligation is expanded. In this case, there was a legal — annexed legal obligation capped at 1.8 million, which was expanded to 3.3.7
[224] Mr Newell proposed, (repeatedly), that Mr Kelly should have refused to believe what Gregory told him. Mr Kelly’s response was measured and correct:
Q I’m putting to you that on the basis of that evidence you should have considered that it was highly unlikely that a court would be satisfied that Mr Attwells did not know about the option to return to court and accept a judgment of 1.8 million?
A. I reject that. This evidence isn’t even about his state of knowledge; this evidence is about Mr Shehabi not advising in relation to a number of matters.
Q Yes, but I suggest to you for the alleged omissions to advise to have any significance in a negligence claim, the Court would have to be satisfied that Mr Greg Attwells was not fully aware of the option to go back to court and incur a liability of 1.8 million.
A. The Court would definitely have to have regard when assessing the balance of probabilities to a number of things, including Mr Attwells‘ intellectual capacity; emotional state; state of knowledge; state of general distress and anxiety; the appalling position he found himself in along with Dr Lord at the end of this day, where from beginning to end he was subjected to one of the most disgracefully incompetent performances that one might ever imagine in one’s wildest nightmare might happen to a person faced with a claim against them for millions of dollars by the second- or third-biggest bank in the country.8
[225] Mr Kelly’s approach to Sparke Helmore’s letter in November 2013 was reasonable and appropriate:
Q You held the opinion that this Sparke Helmore’s letter reflected the fact that Sparke Helmore had misconceived Mr Attwells’ claim?
A. No, you’ve got that wrong. What happened was I think it was about 12 November 2013; Sparke Helmore delivered a walkaway-style offer. There was an appointment for a settlement conference. Between the walkaway offer and the settlement conference, this letter arrives and its purpose is obviously to put to Mr Attwells in the firmest, most aggressive terms that Sparke Helmore could muster, all the reasons that they thought were really good reasons why his claim would fail. At the head of the list was this assertion about advocate’s immunity. Following that, there are other matters. This is part of a bargaining process in which the weaker party — Mr Attwells — is sought to be pressured into — into settlement. I regarded the letter as worthy of going straight into the bin; because letters like this — some solicitors write letters like this thinking that a settlement conference is an occasion for intimidation, to see if you can frighten off the other party. Mr Attwells was not — was not for frightening.
The analysis was wrong — indeed, spectacularly wrong — because we all know the ultimate outcome of the advocate’s immunity point. I suggested that rather than waste time and precious costs, because Greg Attwells in particular was in financial difficulty, our time would be better spent composing a — an offer of compromise, and that’s precisely what we did. On 28 November, which was I think the appointed day for the settlement conference.”9
Principles
[226] The claims against the defendants based on negligence and breach of duty of care are determined through the operation of ss 5B, 5D and 5E of the Civil Liability Act:
5B General principles
(1) A person is not negligent in failing to take precautions against a risk of harm unless—
(a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and
(b) the risk was not insignificant, and
(c) in the circumstances, a reasonable person in the person’s position would have taken those precautions.
(2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things)—
(a) the probability that the harm would occur if care were not taken,
(b) the likely seriousness of the harm,
(c) the burden of taking precautions to avoid the risk of harm,
(d) the social utility of the activity that creates the risk of harm.
….
5D General principles
(1) A determination that negligence caused particular harm comprises the following elements—
(a) that the negligence was a necessary condition of the occurrence of the harm (factual causation), and
(b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability).
(2) In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party.
(3) If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent—
(a)the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and
(b) any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest.
(4) For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party.
5E Onus of proof
In proceedings relating to liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation.
[227] Section 5B essentially deals with the issue of breach of duty which is determined by reference to the common law: Adeels Palace Pty Ltd v Moubarek (2009) 239 CLR 420; [2009] HCA 48 at [13] , [23] and [26] .
[228] The risk of harm the defendants needed to address was put in these terms by Ms Horvath:
unless the proceedings had reasonable prospects of success, a person might commence or join in proceedings and thereby suffer economic loss in the form of payment of legal expenses to their solicitor.
[229] This seems to me to be an appropriate formulation of the risk of harm.
[230] Both defendants maintained the position that the action commenced first by Gregory and Dr Lord and later assigned to Noel, had reasonable prospects of success. Mr White’s position was also that he was entitled to and did rely on the advice of Mr Kelly as a specialist senior counsel experienced in that area of practice.
[231] JLL had owed a duty of care to Gregory and Dr Lord to exercise reasonable skill and diligence in the discharge of its retainer. Risk of harm in that case was sustaining loss by way of unfavourable settlement in the event that they did not receive proper advice. That is what occurred.
[232] The breaches of duty of retainer are pleaded in Mr Kelly’s Defence at par 7(d) (reproduced at [195] of this judgment) to the effect that JLL, through Mr Shehabi, advised Gregory and Dr Lord that they had no alternative but to sign the bank’s Consent Orders, failed to advise them of other options such as attempting further negotiations, proceeding with the hearing or consenting to a judgment in accordance with the capped liability of the guarantee or seeking advice from counsel who had been briefed on their behalf.
[233] The obligation of a legal practitioner advising in connection with a settlement is to assist the client to make an informed and free choice between compromise and litigation Donnellan at [96] to [97] per Beazley JA (as her Excellency then was) with whom Basten JA, Barrett JA, Hoeben CJ at CL and Sackville AJA agreed, stressing the importance of the particular circumstances of the case in assessing whether the conduct in relation to settlement negotiations where negligent. (emphasis added)
[234] In assessing whether Mr Kelly breached his duty of care, a barrister is obliged to exercise due care, skill and diligence, bringing to the task the competence and skill reasonably expected of a barrister practicing in that area of expertise. There is only one standard: Heydon v NRMA Ltd(2000) 51 NSWLR 1; [2000] NSWCA 374 at [146] and [362] .
[235] This duty extends to doing what is reasonable in the circumstances: Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18 at [68] and [219] .
[236] In the same territory is the observation by Callinan J in Boland v Yates Property Corp Pty Ltd (1999) 199 CLR 270; [1999] HCA 64 at [310] :
[310]In the last 20 years it is possible to point to many changes in legal thinking in and as a result of decisions of this Court. There are also a number of decisions of this Court on important matters in which different Justices have taken diametrically opposed views. All of this is to highlight the increased difficulty which lawyers face in making decisions as to the way in which to conduct some complex cases and to advise their clients.
…
Decision
[310] As s 5B provides, a person is not negligent in failing to take precautions against a risk of harm unless the risk was foreseeable, was not insignificant and in the circumstances, a reasonable person in the person’s position would have taken those precautions.
[311] The relevant risk of harm was not pleaded, but was stated by Mr Newell in submissions to be “that persons concerned will commit to proceedings and continue with proceedings and be exposed to the risk of an adverse costs order”.
[312] Ms Horvath suggested the risk of harm should be framed as:
unless the proceedings had reasonable prospects of success, a person might commence or join in proceedings and thereby suffer economic loss in the form of payment of legal expenses to their solicitor.
[313] Adopting this as a suitable formulation of the risk of harm I have concluded that the risk was foreseeable, was not insignificant and in the circumstances, the defendants were required to take precautions to guard against that risk of harm. The precautions comprised deploying due care, skill and diligence of a standard reasonably expected of a solicitor and barrister, advising on prospects of success and commencing and maintaining the proceedings until completion and/or termination of their retainers.
[314] I have taken s 5B(2) considerations into account when reaching that view. It is clear harm would occur if care was not taken, and the harm could be serious in terms of financial outcome, and it is an intrinsic part of a solicitor and barrister’s duty of care to be mindful of those matters.
[315] Neither Mr White nor Mr Kelly breached their duty of care to Noel (nor, in my opinion, to Gregory or Dr Lord) at any time in their retainers.
[316] Mr White took appropriate instructions and quickly retained suitable senior counsel. He relied on advice of senior counsel as was proper.
[317] Mr Kelly was diligent, thorough, careful and ethical in his analysis of the issues, approach to the preparation of the initiating and amended statements of claim and the important proofing of Gregory in April 2013. The proceedings had reasonable prospects of success and the pleading in the statement of claim sets out clearly and with precision why that is so.
[318] I find Mr White to have been a credible witness who was diligent and took advice from Mr Kelly and acted on it, except when the special leave application was diverted to LCM, who then took over the running of relevant matters.
[319] I find Mr Kelly to be impressive, reliable, highly credible, competent and considered in his evidence and in the attention that he applied to the claim he was retained to prepare and conduct. He was correct in his assessment of the conduct of JLL and to stand behind the pleading of negligence that he drafted.
[320] The conduct of JLL on 15 June 2010 was in my opinion negligent and appallingly so. On the unchallenged evidence of Gregory and Dr Lord, what occurred that day was a professional disgrace. In my opinion, every allegation of negligence framed by Mr Kelly in the statement of claim has substance.
[321] It was correct, as Mr Kelly stated, to examine the date of loss as the date the Consent Orders were entered. That was when Gregory and Dr Lord lost the opportunity to settle on more favourable terms, including one that was available immediately on the Court record of a debt of $1.5 million less than was entered against them.
[322] Gregory and Dr Lord’s account that they would not have entered into orders that had the effect of an immediate present debt of $3.39 million when they did not have to, should in the absence of any evidence to the contrary, be accepted. I accept that what Mr Shehabi said to them that evening, made them believe they had no choice. In my view a Court was likely to accept that evidence.
[323] I reject the submission of Mr Newell that “they knew everything they needed to know already” and that there was “nothing” Mr Shehabi needed to tell them. Putting aside the fact that this is the man who passed Gregory a note in court, when the case had started and Mr Harper had not turned up, stating that he “did not want to be responsible for anything that happened in court”, he had an obligation to be mindful of the legal effect of the Consent Orders and explain that to his clients and there is no evidence he did that. His explanation was wrong at law -“it makes no difference”, and his failure to provide options and seek assistance and advice from Mr Harper, was shockingly incompetent.
[324] At the point when JLL should have been filing their evidence, JLL applied instead to divert the case down the separate question path.
[325] Investigation and the collating of evidence and argument on loss and damage was “parked” whilst the separate question arguments were dealt with. In light of that shape being imposed on the litigation by the notice of motion filed by JLL, different matters needed to be addressed. Given this situation, appropriate steps were taken at the appropriate times to prepare the matter.
[326] Unfortunately, when the matter came back to the Supreme Court in June 2016 after the High Court appeal, LCM were quick to sign Noel up to a fee agreement, but the evidence reveals none of the basic requirements of inter partes professional negligence litigation preparation was resumed, such as orders for evidence, mediation, preparation of damages evidence or briefing counsel. Instead, in a sad mirroring of the events of 15 June 2010, Noel was pressed into settling his (by this time even stronger case, the advocate’s immunity defence having been killed off), for a walk away position, with no signs of any substantive preparation being carried out by LCM or any advice sought from counsel experienced in the area as to how to pursue the claim properly and to prepare and structure the loss part of the claim.
[327] What caused the “loss” being the four categories of legal fees claimed was not any negligent act or omission of the defendants, because first there were none.
[328] The case falls at the first hurdle.
[329] For the same reasons, s 18 of the Australian Consumer Law case fails as well. There was no misrepresentation because the case had reasonable prospects of success, and there was no obligation to give the strained and irrelevant advice pleaded in the amended statement of claim.
[330] Even if I was wrong about my conclusions on breach of duty and s 18, the case fails on causation, because the plaintiff has not established that any act of the defendants was a necessary condition of the occurrence of the harm.
[331] Nor is it appropriate for the scope of Mr Kelly or Mr White’s liability to extend to the harm allegedly caused, the author of which was either LCM, or LCM acting on instructions apparently given by Noel.
…
[342] The plaintiff’s case fails. There was no breach of duty of care, no misrepresentation, and no causally relevant loss. In any event the loss asserted is not proved and is not maintainable.
…
(emphasis added)
“Being a barrister is a tough, demanding and relentless career. We love the profession and love the ability to help people in their time of need, but who’s helping the helpers?”
A recent article on this topic, first published in the UK Counsel Magazine on 13 March 2023, by Jamil Mohammed, can be read here.
In Legal Professional Board of Tasmania v W [2023] TASFC 1 (17 March 2023), the Full Court of the Supreme Court of Tasmania addressed the character of a solicitor’s conduct in advising the opposing solicitor that if the opposing client withdrew a criminal complaint against his client then a matrimonial dispute between the clients would be settled for a particular sum. Estcourt J – with whom Jago J and Porter AJ agreed – wrote that he did “not have the slightest doubt that it is professional misconduct”, not just unprofessional conduct, to so do.
The Full Court considered Tasmanian analogues of the Legal Profession Act 2007 (Qld), namely:
418 Meaning of unsatisfactory professional conduct
Unsatisfactory professional conduct includes conduct of an Australian legal practitioner happening in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
419 Meaning of professional misconduct
(1)Professional misconduct includes—
(a) unsatisfactory professional conduct of an Australian legal practitioner, if the conduct involves a substantial or consistent failure to reach or keep a reasonable standard of competence and diligence; and
(b) conduct of an Australian legal practitioner, whether happening in connection with the practice of law or happening otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.
(2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the suitability matters that would be considered if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate.
420 Conduct capable of constituting unsatisfactory professional conduct or professional misconduct
(1) The following conduct is capable of constituting unsatisfactory professional conduct or professional misconduct—
(a) conduct consisting of a contravention of a relevant law, whether the conduct happened before or after the commencement of this section;
(b) charging of excessive legal costs in connection with the practice of law;
(c) conduct for which there is a conviction for—
(i) a serious offence; or
(ii) a tax offence; or
(iii) an offence involving dishonesty;
(d) conduct of an Australian legal practitioner as or in becoming an insolvent under administration;
(e) conduct of an Australian legal practitioner in becoming disqualified from managing or being involved in the management of any corporation under the Corporations Act;
(f) conduct of an Australian legal practitioner in failing to comply with an order of a disciplinary body made under this Act or an order of a corresponding disciplinary body made under a corresponding law, including a failure to pay wholly or partly a fine imposed under this Act or a corresponding law;
(g) conduct of an Australian legal practitioner in failing to comply with a compensation order made under this Act or a corresponding law.
(2) Also, conduct that happened before the commencement of this subsection that, at the time it happened, consisted of a contravention of a relevant law or a corresponding law is capable of constituting unsatisfactory professional conduct or professional misconduct.
serious offence means an offence whether committed in or outside this jurisdiction that is—
(a) an indictable offence against a law of the Commonwealth or any jurisdiction, whether or not the offence is or may be dealt with summarily; or
(b) an offence against a law of another jurisdiction that would be an indictable offence against a law of this jurisdiction if committed in this jurisdiction, whether or not the offence could be dealt with summarily if committed in this jurisdiction; or
(c) an offence against a law of a foreign country that would be an indictable offence against a law of the Commonwealth or this jurisdiction if committed in this jurisdiction, whether or not the offence could be dealt with summarily if committed in this jurisdiction.
I do not have the slightest doubt that it is professional misconduct for a lawyer to offer to settle a client’s dispute with another person on the condition that the other person withdraw a criminal complaint that person has made against the client and which is pending before a court.
That is what occurred in the present case, however the learned primary judge, Geason J, found that the conduct amounted only to unsatisfactory professional conduct.
In this appeal the appellant challenges the finding and consequential declaration of unprofessional conduct but does not seek to disturb the other orders made by his Honour.
In February 2018, a client of the respondent was charged with two counts of common assault against his former wife after she had made complaints to Tasmania Police alleging that the respondent had assaulted her. She had taken out a police family violence order against the client for her protection.
On 9 March 2018 the client wrote to the complainant, through the respondent, offering to settle their matrimonial property dispute on terms which included that “all legal pursuits and accusations cease including Tas Police. All matters are then resolved, finalised”.
On 19 March 2018 the client was charged with the crime of perverting justice in breach of s 105 of the Criminal Code Act 1924. The respondent appeared on behalf of his client in the Burnie Magistrates Court in respect of that matter.
All of that notwithstanding, subsequently, on 13 April 2018 and 31 May 2018, the respondent himself wrote to the lawyer acting for the client’s former wife conveying an offer to settle the matrimonial property dispute between the parties on terms expressed to be conditional upon the withdrawal by the former wife of the complaints she had made to Tasmania Police against his client.
Relevantly, the terms “unsatisfactory professional conduct”, and “professional misconduct” are defined in ss 420 and 421 of the Legal Profession Act 2007 (the Act) as follows:
420 Unsatisfactory professional conduct
For the purposes of this Act –
unsatisfactory professional conduct includes conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
421 Professional misconduct
(1) For the purposes of this Act –
professional misconduct includes –
(a) unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b) conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.
(2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the suitability matters that would be considered if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate.”
Section 422 of the Act identifies types of conduct caught by these concepts:
“422 Conduct capable of constituting unsatisfactory professional conduct or professional misconduct
(1) Without limiting section 420 or 421, the following conduct is capable of constituting unsatisfactory professional conduct or professional misconduct:
(a) conduct consisting of a contravention of this Act, the regulations or the legal profession rules;…
(emphasis added)
In essence, in response to an investigation into his conduct by the appellant, the respondent’s explanation was that he was bound by his client’s instructions and those instructions were that the accusations made by his former wife were false.
Such an explanation is no answer to the appellant’s assertion of professional misconduct. In my view, in writing as he did, at the very least, the respondent was guilty of professional misconduct in the form of “unsatisfactory professional conduct …, where the conduct involves a substantial … failure to reach or maintain a reasonable standard of competence and diligence” (Emphasis added), within the meaning of s 421(a) of the Act. I reject the respondent’s submission that his failure was not substantial.
Such a conclusion involves an evaluative exercise, however to my mind the gravity of the attempt to have charges pending before a court withdrawn or undermined justifies a conclusion that the conduct amounts to “substantial failure to reach or maintain a reasonable standard of competence”. Whatever his client’s instructions were and no matter what his belief in those instructions was, the respondent’s conduct had a tendency to prevent or defeat the due course of justice or the administration of the law. I reject the respondent’s submissions to the contrary, notwithstanding that the charge of perverting the course of justice against the respondent’s client was not proceeded with, and the charges against him were dismissed or discontinued.
I also reject the submission made by the respondent that “[t]he Appeal submissions overlook the central element to the practitioners conduct which was that the practitioner failed to realise that there was a limit on the application of Section 131 of the Evidence Act 2001“, (exclusion of evidence of settlement negotiations). Whether or not the respondent believed that evidence of his own or his client’s offers of settlement conditioned upon the withdrawal of the complaints were inadmissible in evidence is hardly to the point. It was the making of those offers, so conditioned, that had a tendency to prevent or defeat the course of justice or the administration of the law.
Nor does it matter that the respondent’s conduct would not have amounted to the commission of a crime because of the lack of the required intention to prevent or defeat justice or the administration of the law. The standard of competence and diligence required of a legal practitioner is to be evaluated on the basis of what a reasonable member of the public would be entitled to expect of the practitioner. The offers, conditioned as they were, fell substantially short of the required standard, whether or not they amounted to a crime.
In reaching that evaluative conclusion I respectfully adopt the approach of Brett J in Legal Profession Board of Tasmania v Barclay [2022] TASSC 14, in which case his Honour said at [11]:
“Although the matter was not the subject of extensive argument before me, I think it is clear that these statutory definitions provide the relevant basis upon which the Court must characterise the practitioner’s conduct. It is clear, in my view, that the definitions are intended to replace any notions of what amounts to unsatisfactory professional conduct or professional misconduct, formulated under the common law and statutory schemes which are no longer in effect. Under the legislative definitions, the first step is to determine whether the conduct amounts to unsatisfactory professional conduct. This involves an evaluative assessment of the conduct, measured against the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner. The second step is to determine whether the unsatisfactory professional conduct amounts to professional misconduct. In making this determination, an assessment must be made as to whether the conduct involved a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence. It is the finding that the relevant failure has been substantial or consistent which is critical to this determination. A further observation which can be made about the legislative scheme incorporated into this legislation is that the standard of competence and diligence required of a legal practitioner is to be evaluated on the basis of what a reasonable member of the public would be entitled to expect of the practitioner. I think that this results in an important shift of emphasis away from the formulation which preceded this legislation, which depended upon what practitioners of good repute and competency would reasonably consider to be conduct which could be described as disgraceful or dishonourable. See for example, A Legal Practitioner v Law Society of Tasmania[2005] TASSC 28, 13 Tas R 448. This change of emphasis in favour of the expectation of a reasonable member of the public, as opposed to other practitioners, is, in my view, entirely consistent with the primary purpose of disciplinary proceedings, which is the ‘protection of the public, the preservation of the reputation of the legal profession and the proper administration of justice’. See my comments at [41] of Legal Profession Board of Tasmania v Lester[2021] TASSC 41. Of course, conduct which falls within those earlier definitions may also inform this Court’s exercise of its inherent jurisdiction, which is preserved by s 510 of the Act, but this is in addition to the statutory definitions, and not instead of them, see Legal Profession Board of Tasmania v Kitto[2019] TASSC 39, 31 Tas R 91, per Blow CJ at [12].”
The learned primary judge reached the view that s 421 was not engaged because “the second limb of s 421 is not satisfied”. In so concluding his Honour accepted a submission made to him by senior counsel for the respondent, Mr McTaggart SC. That is to say that his Honour thought that ss 421(a) and (b) were to be read conjunctively and that professional misconduct could only be found if the conduct justified a finding that “the practitioner is not a fit and proper person to engage in legal practice”. That is not so.
If it were so then there could never be a case in which conduct of a lawyer occurring otherwise than in connection with the practice of law could justify a finding of professional misconduct. If the two paragraphs “must be read conjunctively then personal misconduct not occurring in connection with the practice of law could not be professional misconduct” (Council of the Law Society of New South Wales v Parente [2019] NSWCA 33 per Basten and Meagher JJA at [8] (Emphasis added).
This point was conceded by the respondent on the hearing of the appeal through his counsel Mr McTaggart.
I reject the submissions made by Mr McTaggart that the judgment of Meagher JA in Council of the Law Society of New South Wales v Webb [2013] NSWCA 423 at [22] should be taken as authority for the proposition that consideration of the concept of substantiality in s 421(a) of the Act requires consideration of the questions of the practitioner’s diligence and competence and in those respects his fitness to continue in practice. Such considerations are squarely within the terms of the alternate route to professional misconduct in s 421(b).
Even if the consideration contended for by Mr McTaggart was required, I am of the view that the practitioner’s conduct was sufficiently serious as to in fact raise questions of his competence and diligence and in that respect his fitness to practice. Mr McTaggart did not go so far as to argue that a practitioner must be found to be unfit to continue in practice before a finding of professional misconduct may be made against him or her, only that the learned primary judge ought to have considered the question. Any failure by the learned primary judge to consider this issue was not a determinative error, in all of the circumstances of the respondent’s conduct and his explanations for that conduct.
I would uphold the appeal and set aside the declaration that the respondent is guilty of unprofessional conduct and substitute a declaration that the respondent is guilty of professional misconduct.
To the extent that it might be necessary to now consider the appropriateness of the learned primary judges punitive orders, the Court is satisfied that there is no need to disturb them.
…
(emphasis added)
By parity of reasoning, the same outcome would obtain for a barrister advising a solicitor to adopt such course, or communicating such instructions to an opponent.
Query whether if – hypothetically – the offer made in the above case was the subject of recommendation for acceptance by the opposing solicitor or barrister – whether or not that advice was accepted – or communication of acceptance, that too would constitute professional (or lesser) misconduct. Surely, the same “tendency” referred to in Estcourt J’s reasons at [11] is entailed, albeit perhaps with less comparative culpability.
Views – with reasoning – from the profession are sought by Hearsay apropos of this query, and the above case ratio. The best response – judged by the editor, and to be published anonymously in Hearsay Issue 93 –will attract as a prize a very good bottle of Australian wine from the editor’s cellar.
In Mainland Property Holdings Pty Ltd (Receivers & Managers Appointed) v Naplend Pty Ltd (No 2)[2023] FCA 243 an application was brought by Federal Court applicants to restrain a senior barrister from appearing for the respondent. Such barrister had acted for the applicants in two other disputes that went to mediation the year before. O’Callaghan J refused the injunction finding that the two disputes were wholly unrelated, and otherwise there was no risk of any confidential information having been imparted.
His Honour wrote:
[3] The applicants sought, among other orders, an order to the effect that Mr Daryl Williams AM KC be restrained from acting for the respondents in this proceeding and that written submissions settled by him be removed from the court file. Mr Williams is briefed to represent the respondents in a hearing before a Judicial Registrar tomorrow (22 March 2023), and it is the respondents’ intention for him to rely on that written submission at the hearing.
[4] Although the interlocutory application seeks an order that Mr Williams “be restrained from acting for the respondents in this proceeding”, it was accepted at the hearing that Mr Williams has only been retained to represent the respondents at the hearing before the Judicial Registrar, and not otherwise. Mr SJ Maiden KC (who appeared for the respondents at the hearing of the interlocutory application) is briefed with a junior in the proceeding generally.
[5] The purpose of the hearing before the Judicial Registrar is for him to prepare a referee report pursuant to an order made by the docket judge (McElwaine J).
[6] Broadly speaking, the basis for the applicants’ seeking an order to restrain Mr Williams from acting in this proceeding is that he acted for Mr Mawhinney, and several companies associated with him, at a mediation of two proceedings in the Supreme Court of Victoria in July 2022, and that certain information confidential to Mr Mawhinney, and entities with which he is associated, was disclosed at the mediation.
[7] Mr P Bick KC, who appeared with Mr P Donovan of counsel, advanced two grounds on behalf of the applicants, viz that:
(1) there existed a real and sensible possibility that Mr Williams might misuse the confidential information; and
(2) a fair-minded and reasonably informed member of the public would conclude that the proper administration of justice required that Mr Williams be restrained from acting.
…
[9] Mr Mawhinney is the sole director of the seven applicant corporations. Each has a privately appointed receiver and manager.
[10] The applicants commenced this proceeding against Naplend Pty Ltd, being one of the appointors, and against Naplend’s receivers and managers, Mr Barry Kogan, Mr Jonathan Henry, Mr William Harris, and Mr Anthony Connelly.
[11] M101 Nominees Pty Ltd (in liquidation), another corporation Mr Mawhinney controlled, raised money from investors in private equity ventures by issuing a series of security notes for the purpose of acquiring and developing properties at Mission Beach in Queensland.
[12] M101 Nominees appointed PAG Holdings (Australia) Pty Ltd as the security trustee for the security notes. The applicants guaranteed the obligations of M101 Nominees to PAG and, further and accordingly, the applicants charged their assets and undertakings as security.
[13] Naplend later provided short-term bridging finance to the applicants to assist them in acquiring a series of properties, in exchange for which the applicants charged all of their assets and undertakings (including real property) in Naplend’s favour.
[14] The applicants did not repay the relevant debts when they fell due on 19 August 2020. Accordingly, Naplend appointed receivers over the assets and undertakings of the applicants.
[15] Later, on 9 September 2020, PAG appointed its own receivers over the assets and undertakings of the applicants. Neither PAG, nor the receivers it appointed, are parties to this proceeding.
[16] The applicants’ claims are set out in Mainland Property Holdings Pty Ltd (recs and mgrs apptd) v Naplend Pty Ltd[2022] FCA 1305 at [8] (McElwaine J).
…
[21] Mr Mawhinney, and a number of companies associated with him, were the subject of proceedings brought before the Supreme Court of Victoria. Liquidators of one of the companies associated with Mr Mawhinney brought those proceedings against both that company and Mr Mawhinney in relation to an investment scheme ostensibly run by Mr Mawhinney.
[22] The Supreme Court proceedings were mediated on 6 June and 22 July 2022.
[23] Mr Roberts and Mr Williams both deposed to the relevant events that occurred at the mediation. There was no relevant or fundamental disagreement between them about what occurred.
[24] Mr Roberts deposed relevantly as follows:
8. At the commencement of the mediation [on 22 July 2022], I was present when junior counsel each briefed Mr Williams KC with a summary of the matters the subject of the mediation as well as a broader summary of the IPO Wealth investment scheme and the M Notes investment scheme.
9. Prior to the joint session of the mediation, Mr Williams KC, the two members of junior counsel, Mr Chen, Ms Balen, myself, Mr Mawhinney and Mr Nicholson sat around a large table in a room that had been assigned to us. No other person was present. At this time, the following matters were discussed:
(a) the business model employed by Mr Mawhinney in respect of both the IPO Wealth investment scheme and the M notes managed investment scheme;
(b) Mr Mawhinney’s priorities in respect of the mediation and the Supreme Court Proceedings;
(c) Mr Mawhinney’s vulnerabilities;
(d) Mr Mawhinney’s appetite for risk;
(e) Mr Mawhinney’s concern for his reputation;
(f) the likely use to which Mr Mawhinney might put any assets that came into his control as an outcome of the mediation;
(g) Mr Mawhinney’s access to financing options and his finances and the impact that a settlement of the litigation the subject of the mediation would have on those options. In particular, it was discussed that ending the litigation the subject of the mediation would assist Mr Mawhinney to free up finances that would otherwise have been expended on legal fees.
10. The mediation commenced at 9.20am and concluded at 9.30pm but Mr Williams left the mediation at approximately 3.00pm. Other than brief breaks and for lunch, Mr Williams was in the company of Mr Mawhinney for four to five hours.
11. During the course of the day, I was present when Mr Mawhinney also discussed the following matters in the presence of Mr Williams:
(a) Mr Mawhinney’s views about the conduct of Naplend Pty Ltd and its receivers (who are the Respondents in this proceeding);
(b) the impact of that conduct on investors; and
(c) the status of the process of the sales of properties being undertaken by Naplend Pty Ltd’s receivers.
[25] Mr Williams deposed relevantly as follows:
11. I refer to paragraph 9 of the Roberts affidavit. The description of the discussion I had with Mr Roberts, Mr Mawhinney and others as deposed to in that paragraph is an overstatement of the content of that discussion. In this regard:
(a) The matters referred to in paragraph 9(a) and 9(b) were discussed.
(b) As to paragraphs 9(c) to 9(e) of the Roberts’ Affidavit, the Supreme Court Proceedings included allegations of conduct by Mr Mawhinney and the entities associated with him which were parties to those proceedings which, if made out and reflected in findings by the Court, would reflect poorly on him. It was discussed that an advantage of settlement was to obviate the risk of findings being made which were adverse to Mr Mawhinney and which might harm his reputation. It is difficult to be more specific in response to the generalised description of matters listed in paragraph 9 of the Roberts Affidavit, but to the best of my recollection that is the only extent to which Mr Mawhinney’s “vulnerabilities” or “concern for his reputation” were discussed. I recall no discussion which could be characterised as being about his “appetite for risk”.
(c) I recall no discussion of the kind referred to in paragraph 9(f). It is otherwise difficult to respond when the matter is put in such general terms.
(d) As to paragraph 9(g), there was discussion about the fact that settling would mean that money that would otherwise be spent on legal costs could be freed up for other more productive uses. That is, of course, obvious in any proceeding. I recall no discussion of what those uses may have been.
12. I agree with the contents of paragraph 10 of the Roberts affidavit. When Mr Roberts contacted me at approximately 9.20am on 22 July 2022, I told him that I was only available until 2pm, due to personal commitments. Mr Roberts said words to the effect that he accepted that, because he hoped that that would be all that was required. As things developed, I stayed longer than I had committed for, until almost 3pm, and was late for my personal commitments.
13. I recall no discussion to the effect described at paragraph 11 of the Roberts affidavit. I had never heard of Naplend before being retained in this proceeding for the purpose of the Security Hearing on 8 March 2023. Further, I cannot recall that Naplend, nor the sale of the properties by the receivers appointed by Naplend, had anything to do with the Supreme Court Proceedings.
[26] The proceedings were settled at the conclusion of the mediation and the parties entered into a deed of settlement, which Mr Roberts duly emailed to Mr Williams that evening.
…
[28] The first basis relied upon by the applicants in support of their application to restrain Mr Williams was the risk of misuse of confidential information. As Nettle J said in Sent v John Fairfax Publication Pty Ltd[2002] VSC 429 :
[t]he court will restrain a legal practitioner continuing to act for a party to litigation if a reasonable person informed of the facts might reasonably anticipate a danger of misuse of confidential information of a former client and that there is a real and sensible possibility that the interest of the practitioner in advancing the case in the litigation might conflict with practitioner’s duty to keep the information confidential, and to refrain from using that information to the detriment of the former client.
[29] The parties agreed that answering the following sequence of short-form questions was a convenient way to address the issues in dispute, at least for the purposes of this application:
(1) What is the relevant information?
(2) Is that information confidential?
(3) Does the legal practitioner have possession of that information?
(4) Is the legal practitioner proposing to act “against” the former client in the requisite sense?
(5) Is there a real risk that the confidential information will be relevant?
(6) Is there no real risk of misuse of the confidential information?
[30] It can be accepted, and counsel for the respondents did not dispute, that the relevant confidential information received by Mr Williams from Mr Mawhinney was that information deposed to by Mr Roberts.
[31] It can also be accepted, and again it was not disputed by the respondents, that such information is confidential.
[32] As a general rule, communications between a client and his or her legal representative, for the purposes of giving or obtaining legal advice, have the necessary ingredient of confidentiality, subject to exceptions not relevant here.
[33] I am satisfied that each category of information identified by the applicants retains the requisite character of confidentiality in the circumstances of this case.
[34] I am also satisfied, and again the respondents did not dispute, that Mr Williams is in possession of that confidential information, and that he is proposing to act “against” the applicants at the hearing tomorrow.
[35] I interpolate at this point that I accept the submission made on behalf of the applicants that to the extent that Mr Williams was unable to recall, but did not deny, a number of the matters deposed to by Mr Roberts, that I should accept Mr Roberts’ evidence about such matters.
[36] In my view, however, the application to restrain Mr Williams from representing the respondents at the hearing failed because the answer to the fifth and sixth questions set out above at [29] is “no”, in each case.
For a legal practitioner to be restrained from acting against a former client on the basis of a possible misuse of confidential information, the “possible misuse” must be sufficiently characterised. There must be a sufficient nexus between the confidential information of the former client and the manner in which it is to be misused by the legal practitioner.
[38] The description of the confidential information relied on in this case is of a general nature. Mr Roberts did not descend into detail in describing the business model employed by Mr Mawhinney or the specifics about his priorities in respect of the mediation, his vulnerabilities or his appetite for risk, the precise nature of his concerns about his reputation, his access to financing, Mr Mawhinney’s views about this proceeding and so on. There may be any number of reasons why Mr Roberts did not do so. As Gillard J said in Yunghanns v Elfic Ltd (unreported, Sup Ct, Vic, 3 July 1998) : “the degree of particularity of the confidential information must depend upon all the circumstances. Often, it cannot be identified for fear of disclosure.”
[39] Counsel for the respondents did not cavil with that proposition, but submitted that it was of some significance that Mr Roberts did not say in terms that he was concerned to provide less precision of description, lest he eviscerate the very confidentiality sought to be protected. In my view, however, it is sufficiently obvious that any more detailed description than that which was provided might do that very thing.
[40] In any event, however, even on the assumption that each of the items of confidential information identified and relied upon by the applicants was in fact more fulsomely discussed during the course of the mediation, in my view there could be no nexus between such matters and the task confronting the Judicial Registrar at the hearing. His task at that hearing is to do no more or no less than that which order 4 of the orders made by McElwaine J on 4 November 2022 provided, namely to conduct an “inquiry and report in accordance with the Federal Court Rules 2011 (Cth) the assessment of the security on a party and party basis …”
[41] At that hearing, the Judicial Registrar will have the benefit of affidavit evidence about costs sworn by solicitors representing the respondents, an expert costs report prepared by a costs expert on behalf of the applicants, the submissions referred to above prepared by Mr Williams, and oral submissions.
[42] The inquiry will be akin to the conducting of a hearing in relation to an application for security for costs. It will involve the Judicial Registrar going through the line items of the various steps to be taken in the proceeding, and forming a view in his capacity as a referee about a number of questions, including what amount would represent an appropriate party-party figure in respect of each line item. In that regard, I was told by Mr Maiden that the respondents will rely on two affidavits. The first, affirmed by Mr David McIntosh, a solicitor in the employ of Dentons, the solicitors for the respondents, deposes to the issues in the proceeding and an estimate of the respondents’ costs of defending it. The affidavit contains a schedule with a long list of individual line items in the ordinary way. The second affidavit, sworn by Mr Cameron Steele, also a solicitor in the employ of Dentons, deposes to certain GST implications involved in the litigation. The respondents will rely on an expert costs report by Ms Catherine Dealehr, which is an annexure to her affidavit sworn 6 March 2023. (It is fair to say there is considerable divergence in the outcomes contended for on behalf of the parties).
[43] In my view, as counsel for the respondents submitted, it is difficult to imagine how Mr Williams could consciously or subconsciously invoke any confidential information of the type described above for the purposes of conducting such an exercise before the Judicial Registrar in his capacity as a referee.
…
[50] It follows, in my view, that there is also no real risk of misuse of the confidential information.
[51] It follows that the answer to questions five and six is “no” and that the application to restrain Mr Williams on the first ground contended for must fail.
[52] The applicants also relied on the court’s inherent jurisdiction to ensure the due administration of justice, citing, by way of example, Sent v John Fairfax Publication Pty Ltd[2002] VSC 429 and Grimwade v Meagher[1995] 1 VR 446 .
[53] The submission was put in this way:
The Applicants accept that the jurisdiction of the Court to restrain a practitioner on this basis is “exceptional” and “to be exercised with appropriate caution” [citing Geelong School Supplies Pty Ltd v Dean(2006) 237 ALR 612; [2006] FCA 1404 at [35] (Young J)]. However, the principle that justice is both done and seen to be done is no small matter. Mr Williams KC represented Mr Mawhinney at a mediation. At that mediation, Mr Mawhinney discussed with Mr Williams KC the matters the subject of the dispute in this proceeding. Mr Williams KC now acts for the very party on the other side of that dispute. Regardless of any ability of Mr Williams KC to use that information on the issue of the quantum of security for costs, does that appear just? The principle that justice is both done and seen to be done should be upheld in particular in relation to legal practitioners acting against former clients, perhaps now more than ever. Any public perception that legal practitioners are able to “switch sides” should be eliminated.
[54] As Lee J said in Porter v Dyer(2022) 402 ALR 659; [2022] FCAFC 116 at [116], there is a “potentially difficult question of whether the exceptional course of restraint could be appropriate, even where no real risk of misuse of confidential information was established”. This is not the occasion to explore that potentially difficult question.
[55] In my view, having concluded that there is no real risk that the confidential information in this case would be relevant to the exercise to be performed by the Judicial Registrar, and that there is no real risk of misuse of confidential information, I am not satisfied that the fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that Mr Williams be restrained from acting for the respondents at the hearing on Wednesday.
Order
THE COURT NOTES THAT:
The respondents, and Mr Daryl Williams AM KC, have made an undertaking in terms that: “Mr Williams will not be engaged to participate in settlement discussions with the applicants or their representatives, nor consulted in respect of any such discussions, and will not provide any information to the respondents for the purposes of those discussions”.
THE COURT ORDERS THAT:
The applicants’ interlocutory application, filed on 17 March 2023, be dismissed.
The parties will have leave to file submissions with respect to costs, which submissions shall not exceed three pages in length, by no later than 4.00pm on 27 March 2023.
(emphasis added)
It is now commonplace for barristers to be working with seniors or juniors who have significant parental responsibilities, or to have those responsibilities themselves. There are also far more barristers experiencing the joys and tribulations of pregnancy and the early stages of parenthood while juggling a practice. In this podcast, Kavita Balendra (chair), Kate Juhasz, Haroon Hassan and Megan Caristo discuss how we, as a legal community, can support those with parental responsibilities to best achieve their professional goals.
CPD POINT: This seminar may be eligible for 1 CPD point under State CPD programs. It is the responsibility of the individual member to determine whether CPD points can be earned for an attendance of an event hosted by the ABA, as the mandatory continuing professional development requirements vary between each state and territory. Please refer to your relevant state or territory law society in advance of the event for further information.
