The Incredible Shrinking Immunity

The immunity has many detractors from many quarters. The scope and extent of its operation is difficult to define.

The object of this article is to highlight a number of recent cases which illustrate the boundaries of the immunity and how it is being outflanked or confined.

STATEMENT OF THE RULE

In Australia³ the test of “intimate connection” continues to apply, with the gloss placed on it by the House of Lords in Saif Ali v. Sydney Mitchell & Co⁴. The intimate connection test is that stated by McCarthy P in the New Zealand Court of Appeal in Rees v. Sinclair⁵.

“I cannot narrow the protection to what is done in Court; it must be wider than that and include some pre-trial work. Each piece of pre-trial work should, however, be tested against the one rule; that the protection exists only where the particular work is so intimately connected with the conduct of the cause in Court that it can be fairly said to be a preliminary decision affecting the way the cause is to be conducted when it comes to a hearing. The protection should not be given any wider application than is absolutely necessary in the interests of the administration of justice, and that is why I would not be prepared to include anything which does not come within the test I have stated.”⁶

The gloss in Saif Ali was that the test should not be pedantically construed⁷.

There is no distinction between acts or omissions for the purpose of the test⁸.

THE BASIS OF THE IMMUNITY

The majority judgments in D’Orta restated the basis of the immunity having regard primarily to two matters:-

(a) The place of the judicial system within the structural government;

THE IMMUNITY IN FOCUS RECENTLY

Mathiasz v. Ken Smith and Associates¹¹

The Applicant alleged negligence in relation to the terms of settlement at a pre-proceedings mediation under section 86 of the Retail Leases Act 2003 (Victoria). Much like the various personal injuries pre-proceedings phases in Queensland, such a conference was a prerequisite to the commencement of proceedings. The solicitors attended with counsel, who was not a party to the proceedings. The solicitors raised the advocate’s immunity. The defence failed. The Tribunal was not satisfied that the giving of advice or the not giving of advice in relation to a mediation in a dispute that may or may not result in the issuing of proceedings in a Court or Tribunal was not intimately connected with the conduct of a cause in Court.

This case has particular resonance in Queensland in light of the comments of the Court of Appeal in Watkins v. State of Queensland¹² that the operation of the Personal Injuries Proceedings Act 2002 (“PIPA”) was a regime independent of the common law, designed to avoid litigation and, in certain respects, did not attract legal professional privilege¹³. Applying this reasoning to the pre-proceedings phase in each of the Motor Accident Insurance Act 1994, the PIPA and the Workers Compensation and Rehabilitation Act 2003. The decision in Mathiasz may support the view that there may be no advocate’s immunity in mediations or settlement conferences in the pre-proceedings phase.

FOWLER v. LA FONTAIN¹⁴

A barrister and solicitor were retained by the Plaintiff in proceedings against purchasers of the “Old Butter Factory” at Telegraph Point in New South Wales claiming they had not completed the transaction. The case was allegedly ill prepared. The Trial Judge Phegan DCJ made an order for costs in favour of some of the Defendants and proposed to make a further order for the four days thrown away dealing with the poor state of the preparation of the case including failing to meet deadlines and to recognise the need for particular evidence in support of the heads of damage. In particular there had been a failure to produce particulars of business losses. The Court also proposed to order that the matter would not proceed to trial unless and until the costs were paid.

The Plaintiff subsequently instructed his lawyers to pay the costs. They did not. The proposed costs orders were not made when the Court was informed that proceedings were to be commenced against the solicitor and the barrister in relation to those wasted costs.

Nicholson SC DCJ heard a strike out application in the professional negligence action. His Honour viewed the basis of the immunity as being one concerned with finality. In both D’Orta and Giannarelli, finality had been reached. There was no question of quelling a dispute in what had occurred in Fowler. Even though the majority in D’Orta had pointed out that wasted costs was something that would not attract the immunity, the dispute had not been resolved. As the issue was never the subject of a hearing on the merits, there was no finality.

This decision appears to limit the “intimate connection” test to only those matters which are intimately connected with the conduct of litigation that impugns finality.

THE FAIR TRADING ACT/TRADE PRACTICES ACT DECISIONS

If an advocate may be liable for misleading and deceptive conduct under the TPA or the FTA then the common law immunity may not be applicable¹⁵. As subsection 99(4)(a) of the Queensland FTA requires that the loss and damage suffered as a result of a contravention of section 38 thereof be suffered by a consumer, which requires services to be provided under a contract¹⁶, the use of the FTA (Qld) is limited¹⁷ in respect of barristers, who do not generally provide services under a contract¹⁸. The impact of cost disclosure and cost arrangements required by the Legal Profession Act 2007 (Qld) may foster change but has greater potential in relation to solicitors who rely upon the advocate’s immunity.

By the operation of subsection 6(3) of the Trade Practices Act 1974, the reach of sections 52 and 82 thereof is extended to persons whose conduct involves the use of a postal, telegraphic or telephonic services and, by that means, the TPA might be engaged, and the immunity potentially bypassed¹⁹.

Whether or not a lawyer’s conduct constitutes conduct in trade or commerce for the purposes of the NSW FTA was considered in Prestia v. Aknar²⁰ although the question has not been conclusively decided²¹. In Prestia, Santow J referred to several factors to adopt a narrow interpretation of the expression in trade or commerce in the FTA (NSW) such that not any conduct by a professional would attract the operation of the NSW FTA. In essence it was only those professional activities which of their nature bore a trading or commercial character.

In Walsh and Another v. Cannon and Others²², Harbison J summarily dismissed a case on the basis that when lawyers engaged in professional work they did not engage in trade or commerce as required under the FTA 1989 (Victoria), although that statute does not appear to have an enlarged definition including professional activity. Harbison J relied upon, inter alia, R v. Small Claims Tribunal; Ex Parte Gibson²³ where a dentist practising in his profession did not practise in the field of trade or commerce for the purposes of the Small Claims Tribunal Act. The Court held the essential character or core activities undertaken by the legal professions is not that of trade or commerce although the characterisation of the conduct will always be a matter of fact and degree.

Professional negligence claims, in which the immunity was raised, were permitted to continue to rely, inter alia, on the FTA provisions in Western Australia²⁴. The Western Australian FTA embraces “professional activity” within the concept of “trade or commerce”²⁵ as does subsection 5(1) of the Fair Trading Act 1989 (Qld)²⁶.

In Alpine Holdings Pty Ltd²⁷, it is not clear whether or not any point was taken about whether or not the professional activity concerned fell within the enlarged concept of trade or commerce. The facts were that the Respondent was the Appellants’ solicitor in an action arising out of earlier proceedings by the Appellants against a third person for damages for misleading and deceptive conduct in relation to a lease of certain premises. The Appellants were successful at trial but on appeal the amount of damages was substantially reduced. It was alleged that the provision of certain advice implicitly represented that a report prepared by an accountant quantifying the losses was in accordance with providing legal principles and that there was no alternative or additional formulation of their loss which should be advanced. The Appellants alleged that in prosecuting the claim as originally formulated they incurred waste, expense and costs. Further, it was alleged the Appellants lost the opportunity to take an offer from the Defendant in the original action made after verdict and before the hearing of the appeal. The advice not to take the offer was also alleged to be misleading and deceptive conduct as there was an implied representation that while the appeal would succeed to some extent, there was no reasonable prospect that it would succeed to the extent that the Appellants’ interests would be served by the acceptance of the Defendant’s offer. Both aspects of the claim were struck out at first instance as falling within the immunity. On appeal the case is of some interest (keeping in mind its interlocutory nature), not only because the Court declined to accept certain authorities that suggested that advice in relation to a settlement for trial falls within the immunity, but also as the Court’s reasons suggest the immunity is confined to situations where an earlier judicial decision which has been resolved with finality might be reopened or subject to collateral attack. For present purposes, its relevance, in allowing the appeal and letting the proceeding continue, is the holding that the question of whether the immunity could be raised against the statutory causes of action under the FTA or TPA had not been squarely considered in Australia and was not settled²⁸. The Court observed:- “The questions of how the public policy considerations which ground the immunity are to be reconciled with the operation of [the WA FTA] and the scope of any immunity which limits the operation of the FTA as it applies to the provision of legal services, therefore still awaits determination.”²⁹

CONCLUSION

The “intimate connection” test has been interpreted as being confined to intimate connection with litigation which has achieved finality such that any subsequent action would impugn finality or amount to a collateral attack. Whilst this view, it is submitted, does not wholly accord with the majority judgment in D’Orta, there is academic support³⁰ for interpreting, or re-settling, the immunity in accord with the test identified by McHugh J in D’Orta; viz, that the immunity is limited to any conduct which would require the impugning of a final decision of the Court or the re-litigation of matters already finally determined by the Court³¹.

The application of the immunity to statutory regimes which have at their heart the avoidance of litigation is doubtful. Reasoning from different sources converges to suggest that the immunity may not apply in settlement conferences or mediations in pre-proceedings phases directed by statues dealing with personal injuries and commercial areas, designed to prevent litigation if at all reasonably possible.

Lastly, the impact of statute, such as the FTA in each state and territory, and the TPA, is yet to be finally resolved. The better view is that the core activities of an advocate (barrister or solicitor) protected by the immunity would not be “in trade or commerce” but the two activities are by no means coordinate and, further, as the scope of the immunity potentially retreats, the concept of trade or commerce may enlarge.

Kevin Holyoak

Footnotes

1. (2005) 223 CLR 1.
2. See the dissenting judgment of Kirby J at [346]-[347].
3. See D’Orta at paragraphs [85]-[87]; Giannarelli v. Wraith (1989) 165 CLR 543 at 560 and 596; Boland v. Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 at 228 and 241.
4. [1980] AC 198 at 215.
5. [1974] 1 NZLR 180. Rees v. Sinclair no longer represents the law in New Zealand. Chamberlains v. Lai [2007] 2 NZLR 7 abolished the immunity.
6. Italics added.
7. See also Mason CJ in Giannarelli at 559-560:- “It would be artificial in the extreme to draw the line at the Courtroom door. Preparation of a case cannot be divorced from presentation in Court. The two are inextricably interwoven so that the immunity must extend to work done out of Court which leads to a decision affecting the conduct of the case in Court …”.
8. Smits v. Roach (2006) 227 CLR 423.
9. At paragraph [25].
10. D’Orta at [31]-[42], [84] and [380].
11. [2006] VCAT 416.
12. [2007] QCA 430.
13. Per Keane JA at [67]; see the review of this case in the article in this edition by David Schneidewin.
14. [2007] NSWDC 207.
15. Boland v. Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 per Gaudron J at 229 [106]; cf:- Callinan J at 256 [365].
16. Section 6 of the FTA (Qld).
17. See Gray v. Morris [2004] 2 Qd R 118 at [54].
18. Rondel v. Worsley [1969] 1 AC 191; see Re Sharpe; Ex Parte Donnelly [1998] FCA 6; Shand v. Doyle (1997) ANZ Conveyancing Reports 134; Smith v. McCusker [2000] WASCA 320.
19. Boland v. Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 per Gaudron J at 229; see also Gray v. Morris [2004] 2 Qd R 118 at [53].
20. (1996) 40 NSWLR 165; see also Yates Property Corporation Pty Ltd v. Boland (1997) 145 ALR 169 at 215.
21. Gray v. Morris [2004] 2 Qd R 118 at [53].
22. [2008] VCAT 962.
23. [1973] Qd R 490.
24. Section 6 of the FTA (Qld); Fair Trade Act 1987 (WA); Alpine Holdings Pty Ltd v. Feinauer [2008] WASCA 85.
25. Sections 5 and 22 of the Fair Trading Act 1987 (WA).
26. See also section 4 of the Fair Trading Act 1987 (NSW) and section 4 of the Consumer Affairs and Fair Trading Act (Northern Territory). Note that Victoria, Tasmania, South Australia and the ACT do not embrace professional activity in the definition of “trade or commerce”.
27. (infra).
28. At paragraph [96].
29. At paragraph [97].
30. See for example “Professional Liability in Australia”, 2^nd edition, Thomson Law Book Company at page 601.
31. At [168].