New South Wales District Court CITATION: Fowler v La Fontaine & Anor [2007] NSWDC 207 HEARING DATE(S): 20 June 2007 JUDGMENT DATE: 15 October 2007 EX TEMPORE JUDGMENT DATE : 4 October 2007 JURISDICTION: Civil JUDGMENT OF: Nicholson SC DCJ at 1 DECISION: 1. Order 1 sought in the N/M d 30/5/07, and in N/M d. 21/6/07 is refused; 2. Parties have leave to approach my associate to set a time and date to argue the question of costs if they cannot be agreed upon.; 3. Parties have leave to approach the Registrar to set a timetable to finalise pleadings. CATCHWORDS: Civil Law - Notices of Motion - Strike-out of Statement of Claim - Claim of professional negligence by solicitor or barrister - Advocates' immunity - general rule finality of litigation - exceptions. District Court Rules Pt 18 r 3 LEGISLATION CITED: District Court Rules, Pt 9, r 17(1) Evidence Act 1995, s79 D'Orta-Ekenaike v Victoria Legal Aid and Another (2005) 223 CLR 1 General Steel Industries v Commissioner for Railways (1964) 64 CLR 125 CASES CITED: Giannarelli v Wraith (1988) 165 CLR 543 Giannarelli v. The Queen (1983) 154 CLR 212 Keefe v Marks, (1989) 16 NSWLR 713 Raymond John Fowler - Plaintiff/Respondant to both Notices of Motion. PARTIES: Peter Allan La Fontaine - First Defendant/ Applicant to second Notice of Motion Trevor Andrew Hall - Second Defendant/Applicant to first Notice of Motion. FILE NUMBER(S): 4848/2006 Pl: P. Glissan COUNSEL: D1: D. Priestley D2: G. Reynolds SC Rutland's Law Firm SOLICITORS: La Fontaine Solicitors Hall Lawyers JUDGMENT Determination of Notices of Motion 1 In early November 1994 the Plaintiff entered into a contract for sale of the Old Butter Factory at Telegraph Point, north of Port Macquarie. It was a sale involving not only the transfer of real estate, but also the business conducted from those premises. From the Plaintiff's viewpoint that sale did not go well. It was the Plaintiff's view that two of the parties involved, to his detriment, failed to complete the purchase of that property and business at the time of an extended date for completion. He sought redress in the Court, claiming compensation against them. Among the damages he sought was a claim for business or trading losses. 2 The Plaintiff claims he retained and instructed the First Defendant, a legal practitioner practicing as a solicitor in relation to an action he believed he had against the parties who failed to complete, and nine other parties (the Port Macquarie action). It is said those instructions were given on or about 20th September 2001. Almost immediately the First Defendant retained and briefed the Second Defendant, a legal practitioner practicing as a barrister, in relation to the Port Macquarie action. 3 By the following day there was a draft Statement of Claim created by the Second Defendant. Within two weeks a settled Statement of Claim was filed in Court. As events transpired it was the very last day of the six-year limitation period within which the Plaintiff was required to bring his claim. For the next 18 months or so, the two defendants gave advice to the Plaintiff and prepared the Port Macquarie action for hearing. The matter was set down by the Second Defendant for hearing at a special five day sitting at Port Macquarie District Court commencing 26th May 2003. This hearing commenced before Judge Phegan. 4 The hearing did not go well for the Plaintiff, indeed far from it. (This is a topic to which I shall return). The Plaintiff believes the disastrous turn of events occurring before Judge Phegan had its origin in multiple failures of duty to exercise reasonable care in providing legal services to, for and on behalf of him, and in multiple breaches of the terms – implied and expressed - of the retainer each legal practitioner held in the Port Macquarie action. The Plaintiff has now retained and instructed a different firm of solicitors and different counsel in a bid to recover $42,833 plus interest. An analysis of the construct of $42,833 follows. 5 In the course of the Port Macquarie hearing, on 28th May 2003 the Court ordered verdicts against the Plaintiff for the 3rd-10th Defendants by consent, with an apparent understanding that each party would pay its own costs. 6 A Statement of Claim for $42,833 plus interest was filed in this Court on 6th October 2006. $22,000 odd is said to be for costs paid, in part, pursuant to cost orders made by Judge Phegan, nearly $19,000 costs paid to the 11th Defendant of the Port Macquarie action pursuant to Judge Phegan's order. The balance, something less than $2000, is said to be accommodation and motor vehicle expenses incurred by the Second Defendant during the week of the hearing before Judge Phegan in Port Macquarie. 7 It should be observed the nature of costs paid by the Plaintiff are constituted upon differing bases – payments to the various defendants being payments to 3rd parties, arguably pursuant to an order of the Court, on the basis of costs incurred by them on a party/party basis; while the sums paid to the Second Defendant (a party to these proceedings) amount to reimbursements to the Second Defendant of costs the Plaintiff would normally pay as part of his own costs in mounting the action. The question of whether differing principles may apply to the recovery of costs incurred in these differing circumstances will need to be addressed later. 8 On 30th May last the Second Defendant filed a Notice of Motion seeking "the statement of claim in these proceedings on 6 October 2006 be struck out", and costs. An Affidavit in Support of the Notice of Motion makes clear the Second Defendant's application for the strike out is "on the basis that it fails to disclose any viable cause of action as the claim against the second defendant is covered by advocate's immunity." Rather than refer to the parties as "applicant" and "respondent" I shall continue to refer to them as identified in the Statement of Claim. 9 This is the Notice of Motion that came before me on 21st June 2007 for hearing. Mr. G. Reynolds SC appeared for the Second Defendant. Mr. P. Glissan, of counsel, appeared for the Plaintiff. At this hearing Mr. D. Priestley, of counsel, appeared for the First Defendant. His brief was to seek to file, on behalf of his client a motion similar to that filed by the Second Defendant, claiming immunity for his client. The Plaintiff opposed that application. The Second Defendant did not seek to be heard. For reasons given in a judgment by me on that date, I gave leave to the First Defendant to file his Notice of Motion in Court. 10 There was no Affidavit in Support of the First Defendant's motion – but the First Defendant's Motion proceeded generally, and I hope with respect to Mr. Priestley's advocacy, with an "and me too" approach, as he generally supported Mr. Reynolds submissions and added some illustration of application of the immunity claim as applying in the circumstances to solicitors as well as barristers. 11 I am informed, and the Court's file confirms that neither defendant has yet filed a defence. It flows from the absence of a filed defence, the commencement point for determining the merits of the Notice of Motion starts from a notional acceptance of the Plaintiff 's allegations made against both defendants. [see Keefe v Marks, (1989) 16 NSWLR 713 per Priestley JA at p.720 D.] Judge Phegan's View of the Port Macquarie Action 12 His Honour's judgment [Exh A] is one made by him in relation to a stay application advanced on behalf of the Plaintiff in the Port Macquarie action. At this time, the plaintiff having settled with the other defendants, only the First, Second and Eleventh defendants remained parties to the action. There is an opening reference in his Honour's judgment to p.286, which I take to be a page reference in the transcript of proceedings before him, to where some significant aspect of the application for stay and amendment of the Ordinary Statement of Claim made by the Plaintiff's then legal team is captured. Judge Phegan noted: The application comes before me by way of a proposed amendment to paragraph 29 of the plaintiff's already amended Ordinary Statement of Claim, and carries with it an application for a stay in order to allow the plaintiff to put on relevant evidence in support of these amendments…" Exh A, p.1 13 His Honour observed the stay was inevitable in any event because "time has simply outrun the stay application". 14 His Honour observed: The need for an amendment arose out of a matter which was raised relatively early in the course of the hearing concerning the absence of any expert evidence to support a claim for business or trading losses which constituted a major part of the additional damages claimed by the [plaintiff]… …[T]he plaintiff could not succeed on this particular head of damage without the support of expert evidence, and, given the relatively minor amounts associated with other heads of damage sought by the plaintiff and when further allowance was made for the set off which would have to be make with regard to the deposit which the plaintiff has already retained, the matter could not proceed in those circumstances. An amendment to the statement of claim in order to address the situation which faced the plaintiff was foreshadowed and was subsequently crystallized in a document which outlined an alternative to the major head of damage based on interest calculated on the balance of the contract price … from the extended date of completion, … until the subsequent sale of the property…. When the proposed amendment was first tendered, it relied, as later conceded mistakenly, on special condition 3 of the contract, which on a proper interpretation was only applicable in circumstances where the original purchasers completed the contract but at a date later than the date set for completion…. It was therefore further foreshadowed that, as a consequence of that concession, that the proposed amendment would not rely on special condition 3 of the contract, but would rely on general common law principles under which, according to … counsel for the plaintiff, the plaintiff was still entitled to recover an amount of interest calculated on the period in question. The amendments foreshadowed also made further changes to the original claim for damages in paragraph 29 in the amended Ordinary Statement of Claim… I should observe that with the exception of the amount sought for loss on the subsequent sale, none of the other items of damage were ever adequately particularized…. [T]he matter had been made ready for trial on the very clear understanding which was enunciated in correspondence between the solicitors for the various parties, that all of the relevant evidence had been particularized. [see Exh A pp 2 – 4.] 15 It would seem the Plaintiff's application for a stay stood to be determined on the basis of the viability of the claim for interest, and the availability of an alternative claim based on trading losses, which had not been allowed to proceed because of an absence of appropriate expert evidence. 16 His Honour regarded the application being opposed on two bases; firstly neither interest nor trading losses of the kind sought by the Plaintiff were available as a head of damage in an action for breach of the particular contract under consideration; secondly, even if such damages may have been available, the Plaintiff had failed to identify adequately the evidence on which he would rely if the matter were to proceed. The second submission was based, in particular, on the history of the matter. 17 His Honour was of a view that an argument was open that the losses, to be claimed by the foreshadowed amendments, were recoverable. Indeed, his Honour's finding may have been stronger than I have indicated: …In those circumstances as far as the law is concerned I am satisfied that there is extant a right to damages based on interest calculated over the period in question and that that is not itself therefore an impediment to an amendment to the statement of claim along the lines foreshadowed. [see Exh, A p20.] And: …[F]or reasons submitted by [counsel for the plaintiff] the plaintiff ought not to be denied, simply on the grounds of general principle, the opportunity to argue that he is entitled to the recovery of trading losses. In saying that I note that this claim is now couched as an alternative to the claim for interest and therefore that, even if I were to come to a different conclusion, the plaintiff would be entitled to amend to include the claim for interest. [see Exh A, p22.] 18 His Honour then deals with matters the defendants of the Port Macquarie action relied upon as being critical to the exercise of his Honour's discretion, they argued a discretion which should be exercised adversely to the plaintiff. It would appear some are now reflected in the Plaintiff's pleading in the instant case against his then legal advisors. But the biggest obstacles [presented in argument by the defendant] for the plaintiff in this case are not matters of general principle but matters going to the particularization and availability of relevant evidence to support either of those heads of damage… [The history of the matter] is replete with continuing failure on the part of the plaintiff, or those acting for the plaintiff, to first of all meet deadlines imposed by way of directions in the course of preparing the case for trial or failure to recognise the need for particular evidence to support one or more of the heads of damage on which the plaintiff originally relied. …[T]he plaintiff and those acting on the plaintiff's behalf were dilatory in meeting timetables imposed, that, notwithstanding the arrangements which were undertaken prior to the commencement of proceedings this week to have the matter heard as a special fixture, in circumstances where it was made very clear to all parties that they had to be properly prepared for and ready to proceed at the commencement of the special fixture, which meant that they had to have available and have already particularized all of the evidence necessary to support their case, the plaintiff did not meet those conditions. [see Exh A, pp 22 – 25.] 19 His Honour then referred to letters tendered by some defendants and their significance in the matter before him. One in particular was dated 31st January 2006. His Honour noted: In a concluding paragraph the letter said: We also note your [earlier] advice [in answer to our earlier request for clarification] that the plaintiff does not intend to lead expert evidence as to either liability or quantum. In relation to the issue of quantum would you please note that we will object to any evidence of an opinion in relation to both his books of account and claims for loss of profits…. That comment identifies the very problem which arose at the commencement of these proceedings and which has precipitated the long process culminating in this application. The submission on behalf of the defendants is that in the light of that history and in view of the fact that very clear signals were given to those acting for the plaintiff that expert evidence might have been appropriate and might have been necessary in support of the claim for damages for trading loss, the plaintiff proceeded notwithstanding with the consequences that have now followed… 20 His Honour then referred to a submission of the defendants to the Port Macquarie action that problems of the kind identified by his Honour in the judgment may well re-occur. His Honour said: In that respect I have a particular concern with regard to the evidence supporting trading loss. It is acknowledged, to be fair on the plaintiff, and has been since the beginning of this week that that item of damage must be supported by an appropriate expert report. But at this stage, notwithstanding the passage of at least another four days, I have no evidence of any initiative to obtain an expert and to put in train the relevant report. I therefore have no indication of what that report might say. (my emphasis.) Similarly, there is no indication at this stage of any evidence which has been properly identified of what might be called the particulars of the business in which the plaintiff alleges losses were incurred pursuant to the defendant's breach of contract. There is no evidence, for example, which attempts to separately identify what proportion of the purchase price was properly attributable to the business as distinct from the real estate. There is therefore no starting point from which any properly informed judgment could be made about the proportionality of the losses which were subsequently generated as a basis for recovery. 21 His Honour then pointed to a written submission of the Plaintiff's counsel before him which, while submitted in respect of one aspect of the case, might be seen to demonstrate an awareness by counsel of the issues of distinction between the trading losses on the one hand, and the price of the real property being disposed of on the other. The submission was: Whereas a contract for the sale of real property is a contract for the sale of an identifiable and subsisting asset, a contract for the sale of a business is a contract for the sale of a much more dynamic item of property – one that changes its character constantly in the hands of its various holders and whose subjective value is subject to the impact of numerous other factors impacting upon market conditions. These may include changes in customer base, the entering of new competitors, or the diversity of alternative products in the market place. None of these factors are relevant to the sale of real property. 22 His Honour found these submissions "indicate the particular kind of evidence which is likely to be relevant in order to sustain such a claim." His Honour continued: "I have to conclude that what has been presented to me already by way of identification of the material evidence on which the plaintiff proposes to rely is, as it has been from the outset in this respect, seriously deficient. If the application were to proceed solely on the basis of the claim for trading losses, it would not succeed. It can only succeed therefore if I am satisfied that the plaintiff has provided a more acceptable indication of the evidence which he has available to him and on which he proposes to rely for the purposes of supporting the claim for interest. 23 His Honour then reviewed newly revealed evidence from the Plaintiff as to attempts made by him to resell the relevant property from 1 October 1995 in an attempt to identify the evidence he would rely upon in respect of his loss of interest claim. He identified what he saw as some demonstrable deficiencies in the evidence. His Honour then remarked: Notwithstanding these deficiencies, I have come to the conclusion, but only with considerable difficulty, that there is a sufficiently sound evidentiary basis for me to allow the matter to proceed with regard to the claim for loss of interest. 24 His Honour then addressed what he regarded as a number of measures to protect the defendants adequately in the matter before him. These appear to have included a precision in stating the terms of the amendment to the statement of claim; a very strict timetable, full particulars of damages sought, affidavit evidence from expert witnesses in support of those particulars, case management by his Honour, and finally that the matter would not proceed to a hearing unless the costs, which he contemplated would be ordered in favour of the defendants had been paid. 25 His Honour delayed determining finally the question of costs as he explained in the following comments: On the question of costs I think I should say this. I have not yet resolved the appropriate orders that need to be made because I have not at this stage given counsel an adequate opportunity to address me on those matters and I invite counsel to take that matter up after the adjournment. However, I have certainly given the matter very careful consideration and I have already given careful consideration in particular to submissions which were put in very general terms by Mr. Ralston at an earlier stage and to a more limited extent by Mr. Hall. With the assistance of those submissions the parameters of the orders that I have in mind are these, and I am basically inviting counsel to respond to this proposal: that there be an order in favour of the defendants for costs thrown away for four out of the five days of this week. I suggest it be done on that basis because I am satisfied that not all has been lost in the course of this week and that, if and when the matter does resume, that something in the vicinity of a day's worth of hearing before me can be salvaged. But the remaining four days have been effectively lost in dealing with the deficiencies in the plaintiff's statement of claim and in reaching the point which we have now reached and that the defendants ought not to bear the costs of those days . However, I am not satisfied, subject to further submissions, that the order should be made on a solicitor/client basis. It is not a case in my view where there are sufficiently serious indications of misconduct or other impropriety in the conduct of the matter which would justify the more draconian measure envisaged in that order. I also foreshadow that, with regard to the costs ordered against the plaintiff, in view of the history of the matter which is contained in evidence before me and has been more comprehensively addressed from the bar table, both the solicitors and barrister for the plaintiff be called upon to show cause why under the relevant rules of Pt 39A of the rules of this Court those costs should not be borne by them either solely or jointly. 26 His Honour then noted that both solicitors and counsel for the Plaintiff were entitled to have an opportunity to put a case against any such order. 27 His Honour further noted: … Irrespective of the orders that might subsequently be made with regard to the role of the plaintiff's solicitor and counsel, irrespective of who in the end bears the burden of the costs, the matter will not resume by way of a trial unless and until those costs are paid. That in my view is the one point at which such matters are relevant and in my view that is a sufficient measure to protect the defendants as far as that particular aspect of the matter is concerned. 28 The findings and observations made by his Honour Judge Phegan are not findings or observations made by me. They are in evidence before me as findings and observations made by his Honour on the 30th May last year. From that evidence, I am entitled to make my own findings. Assertions of Fact contained in the Statement Of Claim 29 Assertions of fact contained in Particulars to paragraph 9 of the Statement of Claim of relevance to the orders sought in the Notice of Motion include: · 19 March 2002 – Second Defendant conferred with Plaintiff at Port Macquarie and advised him that: he needed to claim his trading losses as damages; to enable Second Defendant to calculate trading losses, Plaintiff needed to provide all his books of account, bank statements and profit and loss statements; and Second Defendant was an accountant and could prepare Plaintiff's claim for trading losses ; (My emphasis.) · 18 April 2002 Second Defendant advised Plaintiff and First Defendant of need to prepare a report on quantification of damages; · 3 May 2002 – Second Defendant advised First Defendant that Plaintiff's particularization of damages was inadequate; Second Defendant would address that issue, and he envisaged that this may require the preparation of an expert report, in due course; 30 Paragraph 19 asserts inter alia the following propositions: On 28 January 2003 Solicitors for the 3rd, 5th & 7th – 10th Defendants advised the First Defendant that: (ii) It remained a mystery whether the Plaintiff intended to lead expert evidence as to professional liability or quantum; (v) if the totality of the Plaintiff's evidence were not filed and served by the next directions hearing, the 3rd,5th, & 7th – 10th Defendants would move the Court to strike out the Plaintiff's claim for want of prosecution. 31 Paragraph 20 asserts inter alia the following propositions: On 30 January 2003 the First Defendant advised the Solicitors for all Defendants, inter alia, that: (i)the Plaintiff did not intend to lead expert evidence as to either liability or quantum ("the no expert evidence advice"); (my emphasis) (ii)all parties had been provided with the benefit of the extensive provision of particulars of the Plaintiff's case in the Statement of Claim and there were no surprises; (iii)The First Defendant expected that there would be no changes to the draft affidavits of the Plaintiff and his particularization as to damages: 32 Paragraph 21 asserts the following propositions: On 31 January 2003 the Solicitors for the 11th Defendant noted the no expert evidence advice and notified the First Defendant that they would object to any evidence of an opinion in relation to both the Plaintiff's books of account and claims for loss of profits. 33 Paragraphs 30 – 32 assert that the Court listed the Port Macquarie action for hearing on 12 May 2003, that the Second Defendant requested the Court to allocate a hearing date by way of special fixture with a minimum 5 day estimate; that it was specially fixed for hearing on 26th May 2003. 34 34.Paragraph 33 asserts the following propositions: On 26th May 2003 the Second Defendant conferred with the Plaintiff at Port Macquarie and advised the Plaintiff that the Port Macquarie action was ready for hearing and the Plaintiff had a good case. 35 Paragraph 40 asserts the following propositions: On 5th August the Plaintiff instructed the Second Defendant and the First Defendant to immediately pay: (i)the costs required to have the 11th Defendant released from the Port Macquarie action, on the basis of a verdict for the 11th Defendant; (ii)the costs of the 1st and 2nd Defendants payable pursuant to the costs order; and (iii)all other costs thrown away to date in the Port Macquarie action ("the costs instructions"). 36 Paragraph 41 asserts the following propositions: Neither Defendant has complied with the costs instructions, or has acted for the Plaintiff since he gave the costs instructions. 37 Paragraph 44 asserts the following propositions: On 16 October 2003 a new Counsel for the Plaintiff informed Phegan DCJ that the Plaintiff intended to commence this action for professional negligence against the Defendants. 38 Paragraph 45 asserts the following propositions: On the basis of such information Phegan DCJ withdrew the show cause invitation, with the intent that such withdrawal should not be construed in any way as indicating a view on his Honour's part on matters that might now be relevant in this action for professional negligence. 39 Paragraph 47 and 48 assert the following propositions: On 27th August 2004 the Plaintiff paid the costs of the 1st & 2nd Defendants of the Port Macquarie action payable pursuant to the costs order. On 11th May 2004 the Plaintiff paid the costs of the 11th Defendant of the Port Macquarie action payable pursuant to the costs order. 40 Paragraph 53 asserts inter alia in the Particulars the following propositions against the Second Defendant: (iv)advising the Plaintiff on 19th March 2002 that the Second Defendant was an accountant and could prepare the Plaintiff's claim for trading losses; (v)failed to ensure that the Plaintiff and/or the First Defendant obtained and served on the Defendants in the Port Macquarie action an expert's report supporting and quantifying the Plaintiff's claim for damages, prior tot the Port Macquarie hearing. Court File records of the finalization of the Port Macquarie action 41 On 30th September 2003 His Honour Judge Phegan noted on the Court file the following Results or Orders made by him: 1.I dismiss proceedings pursuant to Part 18 Rule 3 of the District Court Rules as sought in Clause 1 of Notice of Motion dated 12/9/03. 2.Costs of the N.O.M. & proceeding generally S/O to 16/10/03. 42 On 16th October 2003 His Honour noted the following orders: 1.Order plaintiff to pay 11th Defendant's costs with regard to the whole proceedings on a party/party basis 2.Order for costs in favour of 1st & 2nd Defendants to be paid on a party to party basis. 3.There being no justification in maintaining the requirement to Show Cause, Show Cause is withdrawn. The Second Defendant's Response to the Statement of Claim 43 On 10th November 2006 solicitors for the Second Defendant sought further and better particulars of the Statement of Claim. The Plaintiff's solicitors forwarded an answer to the request for further particulars on 14 February 2007. 44 On 24 April 2007 solicitors for the Second Defendant wrote to the Plaintiff's solicitors: We have been instructed to pursue an application to strike out your client's claim against our client on the basis that it fails to disclose a viable cause of action. Your client's claim against our client centres around alleged errors and omission in the preparation of evidence to be presented in court and the manner in which your client's case was conducted before the court. Our client is therefore protected by advocates' immunity and is immune from suit. Would you please take your client's instructions as to whether he wishes to proceed with this claim…. The Arguments 45 Mr Reynolds argued the Plaintiff's pleadings put the source of duties claimed to be owed by the Second Defendant as stemming only from the barrister's retainer – namely to conduct the Port Macquarie action. He argued the pleadings restricted the Second Defendant's duties to matters immediately and intimately connected with preparing the Port Macquarie action for trial. The Plaintiff's allegation relating to that was that the Second Defendant didn't get the evidence together and didn't get the particulars of trading losses or claim for trading loss ready, timelessly and the end result was that the case couldn't proceed on the allotted day, and had to be adjourned to enable the case to be reformulated. This he said put the case "smack in the middle of the barristers' immunity as articulated by the High Court." 46 From an analysis of Keefe v Marks (ante) and D'Orta-Ekenaike v Victoria Legal Aid and Another (2005) 223 CLR 1, Mr. Reynolds distilled seven areas of professional service where immunity applied to barristers' negligence: ØDrafting pleadings or particulars of pleading Ø Advising in relation to pleading or particulars Ø Advising in relation to evidence to be adduced at hearing Ø Preparing case for hearing Ø Preparing evidence for hearing Ø Conducting case in court Ø Advising in relation to prospects of a current action Ø Failing to conduct the action properly. 47 He then sought to catalogue all relevant portions of the pleadings into one or other of the categories attracting advocates' immunity. 48 Mr. Reynolds also sought to argue that there was a failure to plead reliance upon advice given by the Second Defendant, or loss flowing from that reliance. That is, he argued that the causation issue had not been pleaded by the Plaintiff. 49 Mr. Priestley argued on behalf of the First Defendant, the Statement of Claim against solicitor and barrister was, for all relevant purposes, the same. The Plaintiff's claims of failure against the solicitor were generally identical to those against the barrister. Mr. Priestley's argument was that failings described in the pleadings against the First Defendant would be generally covered by the advocates' immunity. It was argued that no distinction would be drawn between the role of a solicitor and the barrister in the conduct of advising a client, or other aspects of preparation for and presentation of a matter before the court. 50 Mr. Glissan for the plaintiff claimed the pleadings disclosed serious triable issues in respect of the claimed advocates' immunity. *Whether immunity extends to adjournment/stay applications to amend pleadings/particulars and to obtain necessary expert evidence, where case specially fixed for 5 day hearing but does not commence, and no case could be re-litigated? * Whether immunity extends to breach of contract between Plaintiff and either Defendant? * Whether immunity covers breach of express instructions from Plaintiff to either Defendant? * Whether immunity extends to First Defendant when Second Defendant was advocate? * Whether immunity covers particular negligence/breach of contract alleged against each Defendant? * Whether immunity covers breach of Court order by either Defendant on behalf of Defendant? 51 He also argued that a strike-out application is not a proper process for determining such issues in view of likelihood of application for leave to appeal/appeal before all issues were determined and would result in a multiplicity of proceedings. 52 Mr. Glissan's argument was the rationale governing advocates' immunity, namely finality of litigation, did not apply where a case was not actually conducted as a consequence of the negligence of the legal representatives. His argument was there had been no hearing on the merits of the case. He described Judge Phegan's decision as not "even an intermediate outcome". 53 Mr. Glissan claimed the cases did not measure to the stringent test applicable to strike-out applications. Relying upon General Steel Industries v Commissioner for Railways (1964) 64 CLR 125, he argued the test to be met by the defendants was to demonstrate the pleadings disclosed a case that was "so obviously untenable that it cannot possibly succeed", or was "so manifestly faulty that it does not admit of argument". 54 Mr. Glissan sought to point to some matters where the Second Defendant had advised certain things should be done as preparatory matters, but then he and the First Defendant had failed to do or complete those things. Resolving the issues Preliminary Observations 55 Firstly, while I have continued to use the nomenclature "advocates' immunity" used during the hearing before me, having read D'Orta-Ekenaike I have reservations as to whether that phrase accurately describes the nature of the immunity spoken of by the majority in their judgment. Some other phrase such as "finality immunity" would seem more appropriate. 56 Secondly, I note that the Court (Court of Appeal: Keefe v Marks (ante)) which binds me upheld Judge Mahoney's reliance upon District Court Rules, Pt 9, r 17(1) to strike out the appellant's statement of claim upon the basis it was a "pleading … disclosing no reasonable cause of action" where the respondent to the appeal was relying upon advocates' immunity. Unfettered by such authority, for reasons I set out below, I would have held the reliance upon immunity was a matter for pleading. 57 I have referred to the letter written on 24th April 2007 by the Second Defendant's solicitors. Assuming the letter is written so that the paragraphs are conjunctive rather than disjunctive, then the proposition contained in the first sentence misconstrues the nature of an immunity. Where pleadings fail to disclose a viable or reasonable cause of action, the pleadings, for that reason alone, cannot survive. There is, in such a case, hardly a need to apply for immunity. On the other hand where a viable or reasonable cause of action has been disclosed in the pleadings, nonetheless immunity may be available. Immunity may provide to the person relying upon it, an exemption in the face of that viable or reasonable cause of action. 58 Given that immunity is an exemption, rather than a right, it needs to be claimed if it is to be relied upon, rather than waived if it is not to be relied upon. Immunities, when available, are not always claimed. In some circumstances a party may be willing to accept full responsibility for a claimed wrong-doing rather than rely upon an available immunity, provided the claimed wrong-doing is proved to a court's satisfaction. 59 I am comforted in this position by an observation of the majority in D'Orta-Ekenaike that Mason CJ had used the term "immunity" in a sense which assumed that rights and duties might otherwise exist at common law, but the advocates' immunity is sustained on considerations of public policy and injury to the public interest that would arise in the absence of immunity. 60 Be all that as it may, in dealing with this matter I have dealt with it recognizing both defendants have sought to avail themselves of what is described as 'the advocates' immunity" as the principal basis upon which the statement of claim is sought to be struck out. That being so, my assessment of the viability or reasonableness of the statement of claim must, on the authority of Marks, be made recognizing that if the Plaintiff's case as pleaded must attract, without room for argument, immunity then it is to be regarded as one which is unviable or unreasonable. Some matters of unclear detail 61 The basis upon which the Plaintiff chose to discontinue the action has not been disclosed in the pleadings. Nor, was it necessary to disclose it. Whether successful or unsuccessful in any hearing on the merits, the costs for the four (out of five) days of argument before Judge Phegan were to be borne by the Plaintiff. 62 Nor has it been disclosed to me whether the costs paid to the defendants in the Port Macquarie action represented the total costs of the litigation to date, or only the costs thrown away on four of the five days of the special fixture hearing at Port Macquarie. Likewise, the costs paid on account of the Second Defendant's stay in Port Macquarie have not been identified as being cost incurred in respect of four days or five days. In that sense the precise ambit of the Plaintiff's claim, and its dependence upon the ruling of Judge Phegan may need to be spelt out with more precision. I accept that may well have been done in the particulars. 63 It is to be remembered as his Honour left matters on 30th May 2003, he was of a view that subject to amended pleadings and provision of relevant evidence, the claims for loss of interest and, in the alternate for trading losses, were arguable. That is, that a hearing of the Plaintiff's claim and perhaps alternate claim on the merits would become available to the Plaintiff. Given then, appropriate amendment to the pleadings, his Honour regarded success of the application for adjournment as contingent upon him being satisfied that the plaintiff could provide a more acceptable indication of available evidence he (the Plaintiff) proposed to rely upon for the purposes of supporting the claim for interest and relevant expert evidence in support of the alternate claim for trading losses. His Honour was intending to case-manage with a view to ensuring, among other things, those two issues were addressed, so that a hearing on the merits would follow. 64 Putting to one side the costs order his Honour was contemplating making had the matter run, then the costs orders would have normally followed the outcome. The only detriment that could conceivably be sheeted home to the Plaintiff's legal team is, as his Honour determined, the costs of four days thrown away. 65 Thus I have assumed that all of the $42,833 claimed, is confined to losses claimed for the four (out of five) days thrown away on the stay application in May 2003. For the purposes of this judgment I do not regard it as necessary to determine with any precision the precise figure confined to costs related to those four days. Putting to one side for the moment costs related to the four days isolated by his Honour, in the light of his Honour's ruling I do not regard the Plaintiff as being able to argue upon any basis, access to costs relating to the fifth day, or other costs related to the Plaintiff's retainer of the First and Second Defendant. It is likely the Plaintiff does not seek to do so (see Par 38 (ii)). I have assumed that "cost paid…pursuant to the costs order" (Par 56 Particulars of Loss and Damage) means no more than costs related to the four days. 66 The real issue in this case is whether it can survive in the face of the Defendant's reliance upon the advocates' immunity. There is little doubt advocates, as do others involved in the court processes, have available to them an immunity in respect of services they provide that are intimately and immediately connected to their presentation for and before a court. 67 In each of the cited cases relied upon by the defendants, the redress sought by unsatisfied litigant(s) arose after a purported full hearing on the merits of the relevant litigation. In Marks the complaint was that neither prior to the commencement of the hearing, nor during the hearing did counsel direct his mind to the desirability of making on his clients behalf a claim for interest or take the steps necessary to propound such a claim, and the neglect resulted in the court failing to award interest, in circumstances where interest would otherwise have been awarded. (In the instant case, both defendants' minds were specifically directed to obtaining expert evidence on at least four occasions (see Para 9, 3rd May 2002; Para 19, 28th January 2003; Para 20, 30th January 2003; Para 21, 31st January 2003). Their decision not to do so needs to be explored to see if there is an argument available that it falls outside the advocate's immunity otherwise available). 68 In D'Orta-Ekenaike the unsatisfied litigant complained of advice he had received to plead guilty at committal. He followed the advice. However, at trial he pleaded not guilty, only to be haunted by evidence of his early entered guilty plea. The jury found him guilty. Subsequently the appeal court ordered a re-trial. At the re-trial evidence of the guilty plea was not tendered. The jury acquitted him. He sued his trial counsel and solicitors for negligence. 69 In Giannarelli v Wraith (1988) 165 CLR 543 the dissatisfied litigants complained that there was a failure to advise them that they had a good defence to criminal proceedings launched against them and a further failure to object to certain inadmissible evidence tendered by the Crown. The specific evidence was essential to the Crown case, without which the Crown could not have succeeded. The three litigants were convicted, two were incarcerated, one released on bond. The High Court ultimately upheld an appeal of the two incarcerated litigants (see Giannarelli v. The Queen (1983) 154 CLR 212). The Giannarellis sued their trial lawyers and intermediate appeal lawyers for negligence. 70 The instant case differs. Although listed as a special fixture at the Port Macquarie sittings, as events turned out, the hearing was no more than interlocutory. The Plaintiff seeks to argue that the absence of an initial full hearing purportedly on the merits with an initial final decision being made is a point of important distinction in respect of the availability of immunity. Is such an argument open? The answer to that question, as the defendants would have it, turns only upon whether the Plaintiff's complaints relate to work performed by his legal representatives that was intimately and immediately connected with the presentation of court work at the interlocutory hearing or to the intended full hearing. That is, work or services qualifying as one of the seven areas of professional service where advocates' immunity applies. With respect, the answer is not that "black or white". The law to be applied 71 The conclusion that, at common law an advocate cannot be sued by his client for negligence in the conduct of a case, or in work out of court that is intimately connected with the conduct of a case in court has long been the position held in England and Australia. There has, in my view, been a shift in recent times as to the rationale supporting the Australian position. Arguably, in Giannarelli the initial rationale for sustaining advocates' immunity is most easily distilled from the judgment of Mason CJ. He appears to have formulated his policy considerations on two propositions: The first relates to the peculiar nature of the barrister's responsibility when he appears for his client in litigation. The second arises from the adverse consequences for the administration of justice which would flow from the re-litigation in collateral proceedings for negligence of issues determined in the principal proceedings. 72 In D'Orta-Ekenaike the majority also sought to base the immunity upon two propositions. But as can be seen there has been a shift: (a) the place of the judicial system as a part of the governmental structure; and (b) the place that an immunity from suit has in a series of rules all of which are designed to achieve finality in the quelling of disputes by the exercise of judicial power. 73 Accepting, as I must that the immunity is built upon a jurisprudential rationale, it is important to acknowledge the particular rationale I am to apply. It comes from the most recent decision of the High Court in D'Orta–Ekenaike. To the majority in D'Orta-Ekenaike the exercise of judicial power is about the quelling of controversies between parties or litigants regardless of the stature of the litigants. As such it is exercised as an element of the government of society, having aims wider and more important that the concerns of the particular parties to any particular litigation. They noted the importance to the community at large in the final quelling of specific controversies litigated in Courts. The majority's line of reasoning had the judicial power, whether formally separated as it is in the Australian Constitution, or not, as it is at State level as constituting "the third great department of government." 74 Their Honours reasoned that a central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened, except in a few, narrowly defined circumstances. They noted this doctrine prevented a party to proceedings raising in new proceedings against another party to the original proceedings a cause of action or issue that was finally decided in the original proceedings. It was noted there were other rules of law which affect persons other than the parties to the original proceedings, which also had basis in considerations of the need for finality in judicial decisions. "Some of those rules are rules of immunity from suit." 75 In that context they reviewed other immunities from suit. Immunities favouring parties to the litigation, witnesses, judges and juries fell into this category. The majority, in finishing their review of this kind of immunity said: Of that immunity it has been said …that it responds to two related considerations, "to assist full and free access to independent courts for the impartial quelling of controversies, without fear of the consequences" and "the avoidance of the re-agitation by discontented parties of decided cases after the entry of final judgment" other than by appellate processes. That view of the matter reflects the consideration that what is at stake is the public interest in "the effective performance" of its function by the judicial branch of government. 76 The majority noted that an inevitable and essential step in demonstrating an advocate's negligence in the conduct of litigation which caused damage to the client would be the re-litigation of the initial controversy. They reasoned immunity was not to be determined upon some special status that could be accorded to advocates, but, Rather, the central justification for the advocate's immunity is the principle that controversies, once resolved, are not to be reopened except in a few narrowly defined circumstances. This is a fundamental and pervading tenet of the judicial system, reflecting the role played by the judicial process in the government of society. If an exception to that tenet were to be created by abolishing that immunity, a peculiar type of relitigation would arise. There would be relitigation of a controversy (already determined) as a result of what had happened during, or in preparation for, the hearing that had been designed to quell that controversy. Moreover, it would be relitigation of a skewed and limited kind. 77 They also noted that if immunity for judges and witnesses remained, then permitting relitigation of controversies to examine the contribution of the advocate would be an exception to the general rule of finality. 78 Their Honours then analysed what they described as the nature of the discontented litigants' complaint. Their Honours said: In every case the complaint must be that a consequence has befallen the client which has not been, and cannot be, sufficiently corrected within the litigation in which the client was engaged. That consequence may take a number of forms. For the moment, it will suffice to identify what may appear to be the three chief consequences: (a) a wrong final result; (b) a wrong intermediate result; and (c) wasted costs. A client may wish to say that the conduct of the advocate was a cause of the client losing the case because, for example, a point was not taken, or a witness was not called, or evidence was not led. The client may have no appeal, or no remedy on appeal, as, for example, would generally be the case if the evidence not called was available at trial. A client may wish to say, as the applicant does in this case, that the conduct of the advocate (or here, the advocate and VLA) was a cause of the client suffering an intermediate consequence (conviction at the first trial and imprisonment) which was not wholly remedied on appeal. (The conviction was set aside but the client was incarcerated for a time and complains of that and what is said to have been caused by it.) A client may wish to say that the conduct of the advocate was a cause of the client incurring unnecessary expense. That may be because a costs order was made against the client or because unnecessary costs were incurred in taking a step in the litigation. What unites these different kinds of consequence is that none of them has been, or could be, wholly remedied within the original litigation . The final order has not been, and cannot be, overturned on appeal. The intermediate consequence cannot be repaired or expunged on appeal. The costs order cannot be set aside; the costs incurred cannot be recovered from an opposite party. And in every one of these cases, the client would say that, but for the advocate's conduct, there would have been a different result. In particular, leaving cases of wasted costs aside, the client wishes to assert that, if the case had been prepared and presented properly, a different final, or intermediate, result would have been reached. And yet the judicial system has arrived at the result it did. The consequences that have befallen the client are consequences flowing from what, by hypothesis, is a lawful result. So, to take the present case, the imprisonment of which the applicant seeks to complain is lawful imprisonment. In a case where the client would say the wrong final result is reached, the result in fact reached is, by hypothesis, one that was lawfully reached. Whether the lawful infliction of adverse consequences (such, for example, as imprisonment) can constitute a form of damage is a question that may be noted but need not be answered.(my emphasis) Applying the Principles 79 The first controversy litigated in the proceedings before Judge Phegan related, not to the need for an expert witness (all parties agreed one was required) but whether the Plaintiff should be permitted in the circumstances to retain one for the hearing on the merits. The second controversy litigated related, not to the need for an amendment to the statement of claim (again the parties agreed without an amendment the Plaintiff could not succeed) but to whether the Plaintiff should be permitted in the circumstances to amend it. The issue as to where the fault for those particular oversights lay was not an issue other than on the question of costs. What was litigated was the importance to the defendants of the Port Macquarie action, of the past history of the matter and its impact upon his Honour's discretion. On the question of costs, however, the issue of fault was squarely raised, and his Honour deliberately left that question unresolved on the understanding it way well be resolved in other proceedings. 80 Moreover, the plaintiff's argument that the question of immunity, in so far as it relates to interlocutory proceedings or costs orders, is one distinguishable from the examples given in D'Orta-Ekenaike. "Intermediate" is not to be confused with "Interlocutory". "Intermediate" as used by the majority in that case relates to final decisions determined at the intermediate appeal court level. On the other hand, interlocutory decisions are only that, decisions made on an interlocutory basis. Depending upon what thereafter follows an interlocutory decision earlier made in a case may be the subject of review if changed circumstances occur later within that case. Interlocutory decisions are a well recognized exception to the finality rule. 81 The majority in D'Orta- Ekenaike did, however, nominate as one of its three major examples, claimed unnecessary costs as being an issue discontented litigants focused on. As to wasted costs, that notion was picked up by their Honours as an example of matters that would attract immunity. In his submissions, Mr Reynolds identified seven areas of professional service he claimed attracted immunity. However, the reasoning in D'Orta-Ekenaike makes clear, central to the availability of an immunity is the existence of a finality to be protected; for preserving finality of resolution of controversy is the raison d'etre for the immunity. 82 As to the costs paid to 3rd parties, it is to be remembered Judge Phegan said: I have not yet resolved the appropriate orders that need to be made because I have not at this stage given counsel an adequate opportunity to address me on those matters… …I am basically inviting counsel to respond to this proposal: that there be an order in favour of the defendants for cost thrown away for four out of the five days of this week… …I also foreshadow that, with regard to the costs ordered against the plaintiff, in view of the history of the matter … both solicitors and barrister for the plaintiff be called upon to show cause why under the relevant rules … those costs should not be borne by them either solely or jointly. 83 In other words, this case differs from the nature of cases referred to in the majority judgment of D'Orta- Ekenaike. This was a matter that could have been resolved within the hearing before Judge Phegan, but his Honour was advised by the Plaintiff of an intent to cover the same territory in an action against the defendants for professional negligence. Given the issue was one contemplated by the Court, but never the subject of a hearing on the merits, there is clearly an argument available that the concept of finality does not apply to costs. I say that even though the Court file cover sheet forwarded to me by plaintiff's counsel with the consent of the defendants makes clear there were cost orders made in favour of the 1st, 2nd, and 11th defendants to the Port Macquarie action. I acknowledge they are final orders of the Court in that matter. 84 However, the circumstances of their being made and the withdrawal of the Show Cause means there has been no hearing on the merits of an unresolved but significant issue. Indeed it was an issue Judge Phegan was intending and preparing to address his mind to. In that sense the instant case may be distinguishable from the leading cases determining the principle of advocates' immunity. There is an argument available to the plaintiff that the instant case is not caught by the description of the majority: What unites these different kinds of consequence is that none of them has been or could be wholly remedied within the original hearing. 85 Likewise then, the question of whether this is an issue attracting the doctrine of finality may be arguable. If the doctrine of finality does not apply, then the availability of advocates' immunity is also arguably a live issue in those circumstances. Reimbursement of Second Defendant's Expenses 86 The majority judgment in D'Orta-Ekenaike recognised there are exceptions to the rule of finality of litigation. It apparently did not suit their purpose to explore in any detail the exceptions. It seems there may be a number – interlocutory decisions, applications pursuant to a slip rule; appeals of varying categories, re-litigation of a criminal wrong in a civil court (e.g.: O. J. Simpson); re-trial of the same issues in differing jurisdictions –(e.g. Federal/State); and legal professional non-ethical conduct hearings, s,474 Crimes Act 1900 enquiries, and Royal Commissions all readily come to mind as examples. Crucial to the legitimacy of these hearings is that the interests of justice are better served by having them. Significantly in this case, another such exemption from the doctrine of finality is the right of legal practitioners to sue for their fees, albeit in contract. 87 That fact, however, assists in resolving the issue of the plaintiff's claim for costs incurred by him by way of reimbursement of expenses incurred by the First Defendant. Firstly, neither fees nor expenses of the first or second defendants have been the subject of any order made in the Port Macquarie action. They are costs that potentially either or both defendants could have sued for. Any suit by either in respect of fees, or the expenditures of the first defendant may well have raised matters related to conduct of the Special Fixture before Judge Phegan and work done preparing for that the hearing during those days in May 2003. Such a suit would be in contract. 88 Nonetheless, in respect of a suit by a solicitor or barrister for fees, and semble for expenses there is a real issue as to whether finality applies and if it does not there may then be a real issue as to whether advocates' immunity does apply to a suit to recover those costs amounting to some $2,000 plus interest. (My understanding is the right to sue predated the Legal Profession Act 2004.) If a barrister suing for fees and expenses owing to him is entitled to canvass professional services performed or supplied by him in support of his/her claim in contract, then an argument may be open to the plaintiff that a client challenging the payment of those fees is similarly entitled to raise those issues in contract. The significance of that though is that the recovery of fees or expenses, whether by the provider or the client, may well be a matter constituting one of the exceptions to the issue of finality. If it constitutes an exception to the rule of finality in contract, arguably it can also do so at common law. Acts arguably outside the retainer 89 I said I would return to explore whether, in the circumstances of this case, an argument was available that counsel's deliberately taken decision not to advise retaining an expert witness fell outside the advocates' immunity. I do so now. 90 It is to be remembered the alternate claim for trading losses could not proceed because there was no expert witness. Central to that issue was an immediate concession from the Second Defendant made to Judge Phegan that an expert witness was necessary. The asserted and uncontradicted facts in the pleadings against both defendants make allegations in respect of acts by the Second Defendant preparing the Plaintiff's claim for trading losses. I emphasized that aspect of the pleadings when reviewing them. 91 In respect of this matter it is open on the evidence to infer that when the Second Defendant required the plaintiff to provide his books of account, bank statements and profit and loss statements to him, he, being an accountant, could prepare the plaintiff's claim for trading losses. That preparation, if done by the Second Defendant, would need to take the form of evidence of some sort. There is an argument available that in so doing the Second Defendant stepped beyond the role of barrister, for the purpose of assembling evidence, to the role of an expert witness by providing the evidence [see s.79 Evidence Act 1995]. 92 Assuming such an argument was sustainable, it is also arguable that his acting outside his retainer constitutes a breach of duty by him as a barrister, being a breach that does not fit the description of a breach of duty by him in his barristerial role immediately and intimately connected with the hearing, and therefore constitutes a negligent breach of duty not subject to immunity. 93 I have come to a view the defendants cannot succeed on the Notice of Motion. Limitations of this judgment 94 This judgment does not constitute an endorsement of the plaintiff's statement of claim. Nor does it constitute a rejection of the defendants' argument that advocates' immunity applies. All that is being determined is that there appear to be arguments capable of being advanced to meet the "advocates' immunity claimed by the defence. In such a case the drastic remedy of strike out is not available. 95 Both defendants before me appeared to accept that their standing in respect of the advocates' immunity was equal. I have not sought to investigate whether that is so. For example, there may be an argument that in respect of the plaintiff's claim for recovery of expenses incurred by the Second Defendant, the claimed liability of the First Defendant may not be as easily to establish as the claimed liability of the Second Defendant, assuming it can be established. 96 The Second Defendant advanced arguments on issues of causation being inadequately pleaded. Neither the First Defendant nor the Plaintiff addressed those arguments before me. I have not attempted to resolve those issues. The Plaintiff has heard the arguments. He may seek to amend or not in the light of those arguments. Should he fail to amend, the Second Defendant may re-litigate the issue. In the circumstances, I do not regard myself as being part-heard on that argument. 97 My approach has been to deal with the fundament issue raised by the defendants. In resolving the arguments I have focused more in the strike-out application upon the strength of the advocates' immunity argument, rather than a literal consideration of the pleadings. If advocates' immunity was unarguable, then expense would be saved in striking out the matter. If on the other hand, if the question of advocates' immunity was less clear cut, in light of the Plaintiff's resistance to the strike out, I recognized his right to have his pleadings survive (rather than be struck-out for some more technical reason) if only to be later amended by him in the light of my judgment. That will be a matter for the plaintiff. 98 However, the defendants are entitled to have the Plaintiff's pleadings in final form before each needs to address his defence. It seems appropriate to grant the parties leave to approach the Registrar to set a timetable to finalise the pleadings. 99 I have finalised this judgment during my leave. At the conclusion of my leave I will be out on circuit for two weeks, and in the outer metropolitan area for a further period. From 26th November until the end of term I shall be sitting at Parramatta. For that reason I have reserved the question of costs. The parties will have leave to approach me to argue costs, I would suggest once I have returned to Parramatta. Formal Orders 1. Order 1 sought in the Notice of Motion is refused. 2. Parties have leave to approach my Associate to set a time and date to argue the question of costs. 3. Parties have leave to approach the Registrar to set a timetable to finalise pleadings. ******** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.