The latest from the High Court: July 2016

Advocate’s immunity

Legal practitioners – negligence – advocate’s immunity from suit

In Attwells v Jackson Lalic Lawyers [2016] HCA 16 (4 May 2016) the High Court found that advocate’s immunity did not extend to negligent advice given by a solicitor that resulted in a settlement and consent orders. Guarantors had guaranteed payment of the liabilities of a company to a bank up to $1.5 million. The company defaulted on its obligations to the bank and owed the bank approximately $3.4 million. The bank’s action was settled on terms that judgment be entered for the bank against the guarantors for the full $3.4 million, not only the $1.5 million limit of their liability. The guarantors could, however, pay a reduced amount ($1.75 million) in discharge of their obligations. The appellants brought proceedings alleging that the settlement followed from negligent advice given by the solicitors. The solicitors sought to rely on the immunity. A majority of the High Court held that the immunity continues to be recognised in Australia, but that it did not extend to the circumstances of this case. The Court confirmed its decisions in Giannarelli v Wraith (1988) 165 CLR 543 and D’Orta-Ekenaike v Victorian Legal Aid (2005) 223 CLR 1.

The Court said that the required connection is between the work and the manner in which the case is conducted (at [5]). 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’ (at [6]). The work must contribute to the exercise of judicial power in quelling the controversy between the parties (at [38]). It does not prevent a negligence claim against a lawyer which contributes to a settlement just because there is litigation in the background. It does not cover ‘advice which does not move the case in court toward a judicial determination’ (at [39]). Rather, it covers work with an ‘intimate connection’ to the conduct of the case, affecting an outcome by judicial decision (at [46]). The Court drew a distinction between a historical connection (eg advice precedes determination, so is connected to it) and a functional connection (the outcome is directly affected by the advice) (at [49]).

In this case, the immunity did not cover the advice given on settlement and an action in negligence could be brought. The fact that consent orders had been filed with the Court did not alter that analysis (at [59]). French CJ, Kiefel, Bell, Gageler and Keane JJ jointly; Nettle J and Gordon J dissenting separately. Appeal from the Court of Appeal (NSW) allowed.