Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16: Negligent Advice by an Advocate

The High Court has handed down its decision today (4 May 2016) in the case of Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16. The court, by a majority, allowed the appeal from the New South Wales Court of Appeal and held that the advocate’s immunity from suit does not extend to negligent advice given by a lawyer which leads to the settlement of a case by consent order through an agreement between the parties.

Background to the Case

The appellant and another person stood as guarantors for the payment of the liabilities of a company to a bank. The company however did not pay its obligations to the bank and the bank commenced proceedings against the guarantors. The guarantors retained the company’s solicitors, the respondent, to act for them.

The amount owing to the bank by the company was $3.4 million while the guarantors’ liability under the guarantee was limited to $1.5 million. The proceedings were settled on the first day of trial on terms that judgment would be entered against the guarantors and the company for almost $3.4 million. However, the bank would not enforce this amount if the sum of $175 million was paid to the bank before a specified date. The terms of the settlement were reflected in a consent order for judgment in the amount of $3.4 million and the Court's noting of the non-enforcement agreement between the parties.

The guarantors failed to make the payment by the specified date and so instigated proceedings against the respondent law firm. The appellant argued that the respondent had been negligent in advising them to consent to judgment being entered in the terms of the consent orders and in failing to advise them as to the effect of the consent orders. The respondent asserted advocate’s immunity as a defence.

Trial in New South Wales

The trial judge ruled that there was insufficient evidence in relation to the respondent’s negligence and so found that it was unnecessary to address the issue of advocate’s immunity. The Court of Appeal granted leave to appeal and held that the respondent was immune from suit because the negligence proceedings would necessarily involve a re-agitation of the issues raised in the guarantee proceedings.

High Court Appeal

The Court held, by majority, that the respondent was not immune from suit, because the advice to settle the proceedings was not intimately connected with the conduct of the case in court in that it did not contribute to a judicial determination of issues in the case. The Court unanimously declined to reconsider its previous decisions on the advocate's immunity, which confirmed that the immunity extends to "work done out of court which leads to a decision affecting the conduct of the case in court".

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16