New South Wales Supreme Court CITATION : McIlraith v Ilkin & anor [2007] NSWSC 911 HEARING DATE(S) : 2 August 2007 JUDGMENT DATE : 23 August 2007 JURISDICTION : Common Law Division JUDGMENT OF : Brereton J DECISION : The claim against the first defendant has no possibility of success. The case is a wholly inappropriate one for the summary jurisdiction. Order that the proceedings as against the first defendant be dismissed, with costs. CATCHWORDS : LEGAL PRACTITIONERS – conduct and discipline – compensation for misconduct – summary supervisory jurisdiction – summary disposal – extent to which negligence is sufficient to attract jurisdiction – negligence must be of a culpable quality, amounting to a "serious dereliction of duty" – whether negligent to express opinion which is erroneous because of incorrect assumption disclosed as such – whether seriously arguable case – whether sufficient case to call for answer – whether case suitable for summary jurisdiction LEGISLATION CITED : (NSW) Legal Profession Act 2004 s 504 (NSW) Supreme Court Act 1970 s 54 Al-Kandari v JR Brown & Co [1988] 1 QB 665 Brimson v Rocla Concrete Pipes Limited [1982] 2 NSWLR 937 Countrywide Bank Incorporation Ltd v Kingston [1990] 1 NZLR 629 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Edwards v Edwards [1958] P 235 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Geoffrey Silver & Drake v Baines [1971] 1 QB 396 John Fox v Bannister, King & Rigbys [1988] 1 QB 925 Kallinicos v Hunt (2005) 64 NSWLR 561 Laferla v Birdon Sands Pty Ltd (2005) Aust Torts Reports 81-786 Malfanti v Legal Profession Disciplinary Tribunal (NSWCA, 23 August 1993, unreported, BC9303657) Marsh v Joseph [1897] 1 Ch 213 CASES CITED : Mauroux v Sociedade Comercial Abel Pereira da Fonseca SARL [1972] 2 All ER 1085 McIlraith v Ilkin (Hidden J, 23 April 2007, unreported) McIlraith v The Institute of Chartered Accountants [2003] NSWSC 208 Myers v Elman [1940] AC 282 Penthouse Publications Limited v McWilliam (NSWCA, 14 March 1991, unreported, BC9102223) R & T Thew Ltd v Reeves (No 2) [1982] QB 1283 Spellson v George (1992) 26 NSWLR 666 Tampion v Anderson [1973] VR 321 Udall v Capri Lighting Ltd [1988] 1 QB 907 United Mining & Finance Corporation Limited v Becher [1910] 2 KB 296 Wade v Licardy (1993) 33 NSWLR 1 Walton v Gardiner (1993) 177 CLR 378 Wickstead v Browne (1992) 30 NSWLR 1 John Howard McIlraith (plaintiff) PARTIES : Alexander Leon Ilkin (first defendant) Suechris Holdings Pty Ltd (second defendant) FILE NUMBER(S) : SC 11667/07 Mr J H McIlraith (in person) COUNSEL : Mr M Bradford (first defendant) Mr J G Ajaka (second defendant) SOLICITORS : Alex Ilkin Pty Ltd, Solicitors (first defendant) Ajaka Gestakovska Lawyers (second defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BRERETON J Thursday, 23 August 2007 11667/07 John Howard McIlraith v Alexander Leon Ilkin JUDGMENT 1 HIS HONOUR: The plaintiff John Howard McIlraith is one of the Owners of Strata Plan 17839, the Owners Corporation in respect of a home unit building at 4 Tuckwell Place, Macquarie Park. He complains that as a result of incorrect legal advice given on 16 February 1998 by the first defendant Alex Ilkin, a solicitor, to the second defendant Suechris Holdings Pty Limited, the managing agent retained by the Owners Corporation, he has suffered, directly and indirectly, various losses. By summons filed on 30 March 2007, he invokes the court's summary supervisory jurisdiction over its officers to claim a compensatory order against Mr Ilkin, and a declaration that Suechris was not authorised to retain certain funds of the Owners Corporation. In order to elucidate the nature of his claim, Mr McIlraith was required to file a statement of claim, and when it became apparent that he pressed the claim for declaratory relief concerning Suechris, to join Suechris as second defendant. Mr Ilkin applies by Notice of Motion filed on 4 May 2007 for the summary dismissal or stay of the proceedings as against him, on the ground that the claim against him cannot possibly succeed. I agree that the claim against Mr Ilkin cannot succeed; and additionally or alternatively, if that claim had any prospect of success, the court's summary supervisory jurisdiction is manifestly inappropriate for its prosecution and resolution. Background 2 In early 1998, Mr Ilkin was the chairman of the executive committee of the Owners Corporation. As managing agent, Suechris – apparently without consultation with the executive committee – included on the agenda for the 1998 annual general meeting of the Owners Corporation, to be held on 16 February 1998, two motions for special levies, one for landscaping work and the other for termite control. Mr McIlraith took objection to Suechris' inclusion of those motions on the agenda, and wrote to Suechris in that respect. Suechris responded on 9 February 1998. On 11 February 1998, Mr McIlraith replied, demanding, inter alia: A written statement addressed to the Executive Committee acknowledging: 1. That you exceeded your authority by including the proposed resolutions numbered 7 and 8 in the Notice of Meeting without consultation or discussion with the Chairman and Treasurer after he had reviewed and approved the financial statements and budget for circulation with the Notice of Meeting, and otherwise the Executive Committee; 2. That you do not have the authority to incur expenditure on behalf of the Owners' Corporation, in the order of $15,000 for pest control, or $8,000 for landscaping without the approval of the Executive Committee, as asserted by you in the paragraph numbered 4 of your letter; and 3. That your authority to exercise powers under your Management Agency Agreement is restricted to routine, recurrent and ordinary transactions and items inherent in the administration of a strata plan which would not ordinarily be referred to the Executive Committee for decision and otherwise those abnormal items or transactions which could reasonably be expected to be ratified by the Executive Committee in due course, having regard to all the circumstances. 3 Mr McIlraith's reply also alleged that one allegation made on behalf of Suechris was "a malicious falsehood, amounting to libel". 4 Suechris, by a letter dated 11 February 1998, which is not available, sought advice from Mr Ilkin, who answered by letter dated 16 February 1998; because it is at the heart of the case I shall set out the relevant parts, despite its length (emphasis added): SP 17839: 4 Tuckwell Place, Macquarie Park Thankyou for your letter of 11 February and the various enclosures therewith. I understand the AGM is this evening and I will now address the matters you raise as well as I can with the short time available . … 2. Special Administrative Fund and Sinking Fund Contributions (a) As I understand the complaint, the concern is that: (i) Motion 7 was included on the notice of the AGM of 16 February to raise $8,000 in regard to retaining walls; (ii) $15,000 in regard eradication of termites, without your office seeking the prior consent or approval or authority of the executive committee or offices of the committee to do so; (b) Section 28(1) of the Strata Schemes Management Act 1996 says the following: "An owners corporation may, by instrument appointing a strata managing agent or some other instrument, delegate to the strata managing agent: (a) all of its functions; (b) any one or more of its functions specified in the instrument; or (c) all of its functions, except those specified in the instrument". In New South Wales most strata managing agents are delegated functions, authorities, powers and duties in accordance with s 28(1)(a) of the Act ie, confer with all the functions of the owners corporation, executive committee plus the chairman, secretary or treasurer. As I understand it , the situation is, the company Suechris Holdings Pty Limited t/as Century 21 Noele Haile Real Estate does hold a complete delegation of power under that section. Unless the resolution initially appointing your company or the agency agreement imposes restrictions or prohibits you from listing motions on the agenda as you think fit and in the interest of the owners corporation , then you are fully entitled at law to go ahead and do what you have done, if you consider it to be in the best interests of the owners corporation and the strata scheme; (b) As you believe there are termite problems which occurred in 1997, and that these problems may still be ongoing, you may well be negligent if you don't draw to the attention of the owners corporation the need to have these matters attended to. Indeed, if the retaining wall is in a dangerous situation and the risk of further termite damage is imminent, then the owners corporation may well succeed in an action of negligence to sue you for failing to draw to their attention these matters; (c) In view of the Agency Agreement I understand you hold , you were therefore legally entitled to go ahead and list motion 7 made on the agenda without the need to get any authority or approval from me to the executive committee, its members or the owners corporation beforehand. Legally, you have the law on your side; (d) As you have indicated in your correspondence, once you have drawn the matter to the attention of the owners corporation at the meeting, the owners can easily pass a resolution to raise no moneys, raise a smaller amount of moneys or take no action at all or indeed raise the moneys you have referred to. It is true that in the earlier years of the Conveyancing (Strata Titles) Act 1961 the procedure in those previous times was for motions to go to the executive committee for vetting first of all and if satisfactory, they would recommend that they be put on the agenda for a general meeting. However that practice has ceased in most strata schemes in New South Wales over say the last 10-15 years but that procedure was never legally required in any event but was a habit that had developed in years gone by, that has now ceased in the main; (e) The comment of Mr McIlraith in his letter of 11 February to you that your powers are restricted to "routine, recurrent and ordinary transactions" do not coincide with what is contained in your agency agreement. It is a fact in my experience that most owners do not read the fine terms of delegation given to a strata manager and would be surprised to learn the extent of power a strata manager has and the unlimited entitlement of a strata manager to spend moneys . In any event, it was not you who was proposing to spend or raise the levy for the $8,000 or $15,000 but rather the owners corporation to consider it. Indeed under the new Act a strata manager is prohibited from raising contributions themselves; As I am in court this day, I have not had the opportunity to read this letter before dispatching it due to the shortage of time and I apologise for any errors that may occur, and if so I am happy to clarify them later. 5 Mr Ilkin admits, for the purpose of these proceedings, that this advice was incorrect insofar as it suggested that Suechris as managing agent had an unlimited entitlement to spend moneys - because the relevant agency agreement in fact limited Suechris' authority. Mr Ilkin also admits, for present purposes, that he had not read the agency agreement, a matter which he says is self-evident from the terms of the letter, including in particular in referring to "the agency agreement I understand you hold". 6 Mr Ilkin's advice was read by one of the officers of the managing agent at the annual general meeting and incorporated in the minutes. Motions 7 and 8 were defeated at the meeting. However, Mr McIlraith complains that the effect of Mr Ilkin's advice being read at the meeting was to discredit Mr McIlraith, who had expressed the contrary view. He subsequently commenced proceedings under Strata Schemes Management Act 1996, Part V, inter alia to remove Suechris as managing agent. Suechris retained Mr Ilkin to prepare its written submissions. After the completion of the proceedings, Suechris appropriated $1,755 on or about 18 January 1999, purportedly for additional management fees incurred in respect of those proceedings. At the Owners Corporation's 1999 annual general meeting, Mr McIlraith contended that Suechris was not entitled to those fees. He claims that Mr Ilkin's erroneous advice facilitated Suechris' alleged misappropriation of the $1,755. 7 Subsequently, Mr McIlraith made disciplinary complaints to the Director General of the Department of Fair Trading against Suechris and its licensee, and against an accountant who had been the auditor of the Owners Corporation. On 8 March 2001, the Institute of Chartered Accountants initiated disciplinary proceedings against Mr McIlraith, alleging that he had engaged in inappropriate conduct towards the auditor, the licensee, and Mr Ilkin. The complaints were found proved by a disciplinary committee, and Mr McIlraith was suspended from membership of the Institute for two years, and required to pay costs. Mr McIlraith's appeal to an Appeals Committee was unsuccessful, but the findings against him were declared void on procedural grounds by this court [McIlraith v The Institute of Chartered Accountants [2003] NSWSC 208]. Mr McIlraith's proceedings against the Institute were concluded on 17 May 2006 by a confidential settlement in which releases were given and Mr McIlraith received a sum of money. 8 Mr McIlraith alleges that Mr Ilkin's incorrect advice has, through that chain of events, caused him loss and injury as follows: · Damage to his reputation; · Exposure to jeopardy in the disciplinary proceedings; · The adverse decisions and orders of the disciplinary committee and appeals committee; · Legal costs (amounting to approximately $30,000) in the appeals committee and Supreme Court proceedings; and · Mental distress and vexation. 9 He also alleges that the owners' corporation suffered loss in the sum of $1,755 being the moneys allegedly misappropriated by Suechris, and interest of $1,413. He claims compensatory, aggravated and exemplary damages, invoking the court's summary supervisory jurisdiction over its officers for that purpose. The supervisory jurisdiction 10 The summary supervisory jurisdiction of the court over its officers is well-established, and it has a compensatory as well as a disciplinary limb. It has several aspects: the summary enforcement of professional undertakings [John Fox v Bannister, King & Rigbys [1988] 1 QB 925; Udall v Capri Lighting Ltd [1988] 1 QB 907; Wade v Licardy (1993) 33 NSWLR 1]; the control of solicitors acting in litigation [cf Kallinicos v Hunt (2005) 64 NSWLR 561]; and the making of costs orders against practitioners [cf Myers v Elman [1940] AC 282]. Although at one stage I entertained the view that the summary jurisdiction was available only in connection with a proceeding already otherwise in the court, I accept that this is not so [Geoffrey Silver & Drake v Baines [1971] 1 QB 396, 475; Fox v Bannister; Udall v Capri Lighting; Wade v Licardy]. 11 Although I accept that the compensatory supervisory jurisdiction is not limited to a case of professional misconduct such as would w arrant striking off or suspension from practice, and may be attracted in a case of breach of professional duty by negligence, something more than "mere" negligence, such that the conduct would attract professional reproof, is required. That negligence of a culpable quality is at least a necessary but sufficient basis for the jurisdiction appears from Marsh v Joseph [1897] 1 Ch 213, in which Lord Russell of Killowen CJ, delivering the judgment of a Court of Appeal constituted by himself, Lindley and A L Smith LJJ, said (at 244): No question of jurisdiction was raised before us, but I think it important to state the principle upon which the Court acts. It is that where negligence or other breach of duty is committed by a solicitor, an officer of the Court, in a matter in which the Court has seizin, the Court may, and, if it can do full justice, will summarily order its officer to make good the loss occasioned by his neglect or breach of duty. 12 His Lordship proceeded to refer (at 245), in the course of exonerating the solicitor, to his not having done "any blame-worthy thing". 13 The requirement for "gross" negligence also appears in the leading case of Myers v Elman. Viscount Maugham said that though the jurisdiction may be exercised where the solicitor is "merely negligent", it ought be exercised only where there had been a serious dereliction of duty; his Lordship used the term "merely negligent" in contrast with "disgraceful or dishonourable conduct", and accompanied by the epithet "of a serious character" (at 290-292): These cases [ White v Washington (1738) Cooke's Practice Cases 152; Fowke v Horabin (1739) Barnes' Notes 11] did not depend on disgraceful or dishonourable conduct by the solicitor, but depended on mere negligence of a serious character, the result of which was to occasion useless costs to the other parties. If, then, as I think, the authorities show that the jurisdiction may be exercised where the solicitor is merely negligent, it would seem to follow that he cannot shelter himself behind a clerk, for whose actions within the scope of his authority he is liable. … But, although, in the view I take, it is not necessary to show that Mr Elman has been guilty of conduct which would justify the punishment of striking him off the rolls or of suspending him from practice, I entirely agree with the contention that the jurisdiction in question ought to be exercised only when there has been established a serious dereliction of duty as a solicitor, either by himself or by his clerks. 14 Lord Atkin referred to "gross negligence" as the test (at 303-304): It is to be noticed that the judge laid down for himself a standard which was perhaps too favourable to the solicitor: 'By misconduct is meant something which would reasonably be regarded as disgraceful or dishonourable by solicitors of good repute; for example, wilfully misleading the court in the conduct of a case.' I think that this is too favourable, for it would appear from the cases that a breach of duty owed to the court committed by gross negligence may lead to the exercise of punitive jurisdiction. 15 Lord Wright referred to "gross neglect" (at 318-9): The cases of the exercise of this jurisdiction to be found in the reports are numerous, and show how the courts were guided by their opinion as to the character of the conduct complained of. The underlying principle is that the court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally, as was said by Abinger CB, in Stephens v Hill [1842] 10 M&W 28. The matter complained of need not be criminal. It need not involve peculation or dishonesty. A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor's duty to ascertain with accuracy may suffice. Thus, a solicitor may be held bound in certain events to satisfy himself that he has a retainer to act, or as to the accuracy of an affidavit which his client swears. It is impossible to enumerate the various contingencies which may call into operation the exercise of this jurisdiction. It need not involve personal obliquity. The term "professional misconduct" has often been used to describe the ground on which the court acts. It would perhaps be more accurate to describe it as conduct which involves a failure on the part of a solicitor to fulfil his duty to the court and to realise his duty to aid in promoting, in his own sphere, the cause of justice. 16 Lord Porter referred (at 338) to the solicitor having been "grossly negligent". 17 That a serious dereliction of duty was required to found the jurisdiction was emphasised in Edwards v Edwards [1958] P 235, in which by Sachs J said that neither an error of judgment, nor an error amounting to mere negligence, would suffice (at 248): Nor is even an error merely because it is of an order which constitutes or is equivalent to negligence. There must be something that amounts, in the words of Lord Maugham to "a serious dereliction of duty", something which justifies according to the other speeches in that case, the use of the word gross. It is not, however, normally necessary to establish mala fides or other obliquity on the part of the solicitors, though it may be that if mala fides is established that might turn the scale in a particular case. 18 The distinction was decisive in Mauroux v Sociedade Comercial Abel Pereira da Fonseca SARL [1972] 2 All ER 1085, in which Megarry J, with reference to the judgment of Sachs J in Edwards v Edwards, said (at 1093) that to invoke the jurisdiction it was insufficient merely to establish negligence, holding that while there had been a breach of a statutory obligation to serve a notice of a grant of legal aid on the opposing party, it amounted to an oversight but not to deliberate or gross misconduct, and was insufficiently grave to fall within the jurisdiction. His Lordship said (at 1093-4): It is plain that there has been a breach of the statutory duty; it is plain that there has been an oversight; but, very properly, it has not been suggested that there has been any deliberate or gross misconduct by the solicitors concerned. In any case, it seems to me that the complaints of lost opportunities made by the defendant company are too speculative to support the jurisdiction under either head. I think that the misconduct is insufficiently grave, and that it falls into the category of being a mere oversight which ought not to be visited with the exercise of the jurisdiction under … Myers v Elman . 19 The "complaints of lost opportunities" were to the effect that, had the relevant notice been given, the defendant might have settled the claim or let judgment be entered by default, since it had no assets within the jurisdiction. 20 In R & T Thew Ltd v Reeves (No 2) [1982] QB 1283, Lord Denning MR, with reference to the above authorities, said of the supervisory compensatory jurisdiction (at 1286): The cases show that it is not available in cases of mistake, error of judgment or mere negligence. It is only available where the conduct of the solicitor is inexcusable and such as to merit reproof. 21 O'Connor LJ, with whom Dunn LJ agreed, said (at 1288): The cases show that such an order ought not to be made unless it is shown that the Thews have suffered loss as a result of serious misconduct by the solicitors in the case. The claim against Mr Ilkin has no possibility of success 22 Mr McIlraith's allegations against Mr Ilkin depend on Mr Ilkin's letter of 11 February 1998. As I have said, Mr Ilkin concedes that insofar as it suggested that the managing agent's authority to disburse funds was unlimited it was incorrect, and that he had not read the agency agreement. Mr Ilkin contends that on the face of the letter the court could only conclude that this was an honest mistake, in the context of advice expressly given "on the run" and accompanied by a caveat that made that clear, which could not possibly attract the kind of reproof that would make a disciplinary remedy appropriate. Mr McIlraith on the other hand submits that the court would – or at least could – find that it was a dishonest mistake, having regard to the circumstance that Mr Ilkin knew that his advice was in response to Mr McIlraith's complaint, and that without having read the agency agreement he proceeded to give advice in circumstances where he ought to have known that it might harm Mr McIlraith's reputation and standing. 23 The test applicable on an application for summary dismissal is not in doubt. Such relief is granted only where the defect in the plaintiff's claim is clearly established [General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125], and is inappropriate if there are serious questions of fact to be determined [Spellson v George (1992) 26 NSWLR 666]. An order will be made only if the claims are absolutely hopeless or there is no possibility of the facts pleaded giving rise to a good cause of action [Walton v Gardiner (1993) 177 CLR 378; Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 90; Tampion v Anderson [1973] VR 321, 325]. In this context a liberal construction should be given to the pleading, so that if the proceedings are to be summarily dismissed the pleading must be beyond saving by legitimate amendment [Penthouse Publications Limited v McWilliam (NSWCA, 14 March 1991, unreported, BC9102223); Brimson v Rocla Concrete Pipes Limited [1982] 2 NSWLR 937, 942]. In short, the applicant for summary dismissal has to show that the case against it is obviously untenable. 24 If factual issues turn on evidence likely to be in the possession of the defendant, that may itself warrant refusal of summary dismissal, at least if it is reasonable to suppose that such evidence may become available in the course of the proceedings [Wickstead v Browne (1992) 30 NSWLR 1]. Although Mr McIlraith did not suggest that further evidence in the possession of Mr Ilkin was likely to be forthcoming that would improve his case, I have nonetheless considered whether, in a case that depends on allegations as to Mr Ilkin's state of mind when he wrote the letter, it would be inappropriate summarily to dismiss the claim when his cross-examination would obviously be a potentially significant matter. The proper resolution of this turns on whether there is a sufficient case to call for an explanation or answer from him, such that he would have to give evidence. As the Court of Appeal said in Malfanti v Legal Profession Disciplinary Tribunal (NSWCA, 23 August 1993, unreported, BC9303657), the obligation of a solicitor to assist a disciplinary authority in professional misconduct proceedings does not require the solicitor to enter the witness box to reply to unsubstantiated allegations incapable of establishing a case of professional misconduct, and there is no reason why a solicitor should not be able to make a no-case submission in disciplinary proceedings. 25 Not every error by a solicitor is negligence, let alone misconduct. A solicitor is not guilty of mere negligence – let alone a "serious dereliction of duty" – by expressing an opinion which is erroneous because an assumption on which it is given is false, at least where the assumption is not unreasonably made and the fact that it is no more than an assumption is disclosed or apparent. The letter is self-evidently a provisional, on-the-run, expression of opinion based on assumptions which were disclosed, given under time constraints, and which admitted the possibility of error. Mr Ilkin was entitled to believe that the audience to which it was directed – Suechris – would understand that, as the letter made it clear. The significant matters are: · Mr Ilkin's advice was given, not to the owners' corporation let alone to Mr McIlraith, but to the managing agent, in the context of a dispute between the managing agent and Mr McIlraith; · It was given under time constraints, and as its terms made clear, was limited and qualified by those time constraints: "I will now address the matters you raise as best I can with the short time available"; · It was given, not with the benefit of having examined the agency agreement, but as its terms made clear upon assumption as to what was in the agency agreement: " As I understand it , the situation is … Suechris … does hold a complete delegation of power …; Unless the resolution initially appointing your company or the agency agreement imposes restrictions …"; "In view of the agency agreement I understand you hold "; · It was given, as its terms made clear, without Mr Ilkin having an opportunity to read it over and under a caveat that there might be errors: "I have not had the opportunity to read this letter before dispatching it due to the shortage of time and I apologise for any errors that may occur, if so I am happy to clarify them later". 26 In my view, having regard to the terms of the letter in the context in which it was written, it does not raise a case of "serious impropriety" or "gross negligence" such as to call for an answer on the part of Mr Ilkin. In my view, on the evidence which Mr McIlraith wishes to adduce, there would be an insufficient case to survive a no-case submission, and Mr Ilkin would not be required to give evidence. Accordingly, I do not consider that the possibility that cross-examination of Mr Ilkin might illuminate his state of mind when he dictated the letter is a reason for declining summary disposal. 27 Nor do I think the position is affected by the circumstance that Mr Ilkin may be taken to have been aware that his advice was being sought in response to allegations made by Mr McIlraith. Solicitors often, indeed usually, advise their clients in the context of a dispute between their client and another party. Necessarily the advice the solicitor gives his or her client may often be different from the advice the other party has, and might if published reflect at least indirectly on the other party's advisor, or on the other party. The circumstance that it might do so does not bring the other party's advisor within the class of those to whom the solicitor owes a duty of care. Generally speaking, a solicitor owes no duty of care to his or her client's opponent [Al-Kandari v JR Brown & Co [1988] 1 QB 665, 672 (Lord Donaldson MR); Laferla v Birdon Sands Pty Ltd (2005) Aust Torts Reports 81-786 (NTSC, Angel J)]. The matter is inappropriate for the Summary Jurisdiction 28 From the earliest days, it has been clear that the summary jurisdiction is discretionary, and the court will not exercise it where it is an inappropriate means for doing justice in the instant case; ordinarily this has been explained in terms that it is to be exercised only in a "clear case", meaning one in which there are not difficult or complex questions of fact to be resolved and in which the question of liability is straight forward. Thus, in the passage already cited from Marsh v Joseph (at 244-5) [see [11] above], it was said that in such a case the court "may and, if it can do full justice, will" summarily order the solicitor to make good the loss: implying that the summary jurisdiction will be exercised only if to do so will enable full justice to be done. In United Mining & Finance Corporation Limited v Becher [1910] 2 KB 296, Hamilton J explained that the court exercised a special control over its officers so that in certain cases they may be called upon summarily to perform their undertakings even in the absence of moral misconduct, but said (at 305): I do not think that … the question whether to resort to the disciplinary jurisdiction or to an action can be decided by mere reference to the speed of the summary jurisdiction or its convenience to one of the parties, if not to both, as compared with an action. 29 In Myers v Elman, Lord Wright (at 319) referred to a similar limitation on te exercise of the summary jurisdiction: This summary procedure may often be invoked to save the expense of an action. Thus, it may, in proper cases , take the place of an action for negligence, or an action for breach of warranty of authority brought by the person named as defendant in the writ. 30 In Geoffrey Silver & Drake v Baines, Lord Denning MR, having referred to another case in which Ungoed-Thomas J had thought the summary procedure inappropriate, pointed to disadvantages of the summary jurisdiction and said (at 402) that it would be exercised only in a clear case: I must say that I agree with Ungoed-Thomas J. This court has from time immemorial exercised a summary jurisdiction over solicitors. They are officers of the court and are answerable to the court for anything that goes wrong in the execution of their office. Even if the solicitor has been guilty of no fault personally, but it is the fault of his clerk, he is accountable for it: see Myers v Elman . This jurisdiction extends so far that, if a solicitor gives an undertaking in his capacity as a solicitor, the court may order him straightaway to perform his undertaking. It need not be an undertaking to the court. Nor need it be given in connection with legal proceedings. … This summary jurisdiction means, however, that the solicitor is deprived of the advantages which ordinarily avail a defendant on a trial. There are no pleadings; no discovery; and no oral evidence save by leave. The jurisdiction should, therefore, only be exercised in a clear case (at 475). 31 His Lordship, having concluded that the undertaking was not in any event one given "in his capacity as a solicitor", continued (at 403): In any case, however, this is not a case in which the court should exercise its summary jurisdiction. The court has a discretion which it will only exercise in a clear case. This is not a clear case. The issue of authority is a very live issue. I should have thought that it was very arguable whether Mr Batts had any implied or ostensible authority. It is quite inappropriate for summary procedure. I would use of this case the words of Bowen LJ in Ex parte Cobeldick (1883) 12 QBD 149 at 151: All that has been shewn has been a case in which the party ought to establish his right by an action at law, and not by appealing to the summary jurisdiction of the court. 32 Widgery LJ agreed with Lord Denning, relevantly adding (at 404): The rules provide that an application of this sort should be made by originating summons, a method which, as is notorious, is not a particularly effective way of deciding disputed questions of fact. Nevertheless the applicant who seeks to invoke the summary procedure must face those handicaps and if at the end of the day he has not made out his case beyond reasonable doubt, then the judge ought to dismiss the application in his discretion. It seems to me that in this case the material supplied to the learned judge was wholly insufficient to enable him to determine an issue which might result in Mr Baines being committed to prison; and if, as Lord Denning MR has said, the result is that this procedure is available only in relatively clear cases, I should myself be perfectly prepared to agree that that is a proper view. 33 Megaw LJ also said that the jurisdiction should not be exercised where justice required that some other procedure be followed (at 405): Let it be assumed for present purposes that the undertaking which is the subject matter of these proceedings is something that could somehow or other be described as an undertaking given on behalf of Mr Baines (if it was given 'on his behalf') in his capacity as a solicitor. That is not the end of the matter, because it is perfectly clear from all the authorities, including the judgment of Hamilton J in the United Mining case, that the fact that a particular undertaking enables the court to take the jurisdiction to deal with the matter in a summary way does not mean that the court has got to deal with the matter in that summary way. There is and there has always been recognised a discretion in the court whether or not the circumstances of the case justify the exercise of this exceptional procedure. … If in any particular case where it is sought to invoke this extraordinary jurisdiction it appears to the court that justice requires that another procedure should be followed rather than this special procedure, then the court must exercise its discretion to refuse to allow this extraordinary procedure to be used. In my judgment in the present case, having regard to the serious and difficult issues which are raised, it would be quite wrong against the will of Mr Baines to allow this matter to be dealt with otherwise than by means of an ordinary action in the court with evidence given orally and with the opportunity for cross-examination. 34 In John Fox v Bannister, King & Rigbys, a two judge bench of the Court of Appeal moderated this approach somewhat. Nicholls LJ said (at 930): There is one final point I should add. Mr. Toulson submitted that to succeed with an application such as this the applicant has to show he has a plain and obvious case, and that where serious or difficult questions are involved, the case is not one appropriate to be dealt with under the court's summary jurisdiction over its officers. I am unable to accept this submission expressed in such wide terms. If this submission were well founded it would mean that if, for example, a dispute arose over whether a solicitor had given an oral undertaking, or had given a written undertaking the only copy of which had been destroyed or lost, the court would be precluded from investigating the matter. That cannot be right. Since the jurisdiction is disciplinary as well as compensatory, the court must be satisfied that there has been misconduct in that there has been a breach of an undertaking given by the solicitor acting professionally. But, in an appropriate case, the court can resolve issues of fact with the assistance of cross-examination of deponents. If necessary, an order for discovery can be made. Again, if there is a dispute about the true construction of a document, the court can resolve that issue having heard argument on it. 35 However, his Lordship added: Moreover, although the court has the means to resolve disputed issues as mentioned above when exercising its summary jurisdiction over solicitors, the court will be careful to ensure that the solicitor defendant is not prejudiced by the course which is being followed in the circumstances of the particular case, and it will exercise the discretion which it has regarding this summary jurisdiction with that in mind. 36 Donaldson MR, having referred to the observations of Lord Denning MR and Megaw LJ in Geoffrey Silver & Drake v Baines, said (at 931): The jurisdiction is indeed "extraordinary," being based upon the right of the court to see that a high standard of conduct is maintained by its officers acting as such: see Cordery on the Law Relating to Solicitors , 7th ed. (1981), p. 116. It is, in a sense, a domestic jurisdiction to which solicitors are only amenable because of their special relationship with the court and it is designed to impose higher standards than the law applies generally. … Its summary character lies not in the burden or standard of proof, although it is only exercisable where there has been a serious dereliction of duty, but in the procedure whereby it is invoked. This is normally by originating summons, although it can be by simple application in an action where the conduct complained of occurred in the course of that action, and will not automatically or usually involve pleadings, discovery or oral evidence, although the court can, in appropriate circumstances, require a definition of the issues (by pleadings or otherwise), discovery and oral evidence. In Geoffrey Silver & Drake v. Baines [1971] 1 QB 396, what I think that the judges were saying was that the court will only exercise this jurisdiction where in the end it is clearly established that there has been a serious dereliction of professional duty by a solicitor as such. 37 The proposition that the jurisdiction would be exercised only in a "clear case" was accepted in the High Court of New Zealand in Countrywide Bank Incorporation Ltd v Kingston [1990] 1 NZLR 629, 639. In this court, Bryson J considered the matter in Wade v Licardy. His Honour accepted that the court had jurisdiction to give summary remedies against solicitors to compel performance of undertakings whether with respect to litigation or otherwise (at 7-9), but referred to the limitations of the summary procedure mentioned in Silver & Drake v Baines, and then said, with reference to Fox v Bannister and Udall v Capri Lighting, that they did not alter the position that the power would be exercised only in a clear case (at 9): These two decisions show an increasing readiness of English courts to allow definition of issues and investigation of disputed matters, but there is no expression in these authorities which draws back from the requirement that the power is to be exercised only in clear cases. 38 His Honour observed that the case before him was one in which it would be very difficult for the plaintiffs to show "a clear case" such that the court's concern for the honesty of its officers should lead it to act summarily, and that there would have to be an extensive hearing in which the facts underlying the giving of the relevant undertaking were fully examined. His Honour said (at 10): When the court is asked by a solicitor to compel another of its officers to comply with an undertaking and to act in a summary way in the interests of honesty, there is no difficulty about standing; it is not the rights of the plaintiff but the concern of the court for the honesty of its officers which gives a solicitor standing to bring a clear case to its attention. However the underlying reasons why the undertaking was given and the rights of persons in whose interests the undertaking was given and accepted may well be of great importance for the question whether non-compliance was dishonest. In a clear case the undertaking must be carried out, in a debateable case all concerned are left to their rights under the general law. In most cases undertakings are given in simple circumstances where the underlying rights are clear; … Where there are completely different accounts of what happened and two irreconcilable stories about the underlying rights neither of which is clearly right or incontrovertibly wrong, it would be imprudent to impose a summary solution. The complexities are such that the outcome could well be that indicated by Widgery LJ in Silver & Drake v Baines . 39 His Honour added that it would be inappropriate to combine, in one litigation, a summary application based on the court's control over honest behaviour of solicitors, with litigation in which the court was asked for remedies on conventional principles. However, rather than summarily dismissing any part of the plaintiff's case, his Honour made procedural directions confining the litigation to an action initially appropriately to be commenced in a division, leaving it open to the plaintiffs to apply if so advised to the Court of Appeal for the exercise of its summary jurisdiction. 40 More than nine years have passed since Mr Ilkin's advice was given. Not only is it far from clear that it involved any breach of professional duty on his part to anyone – so that there would be highly contendable questions, to say the least, of breach of duty - but the nature of Mr McIlraith's claim for damages is such that there would also be very disputable questions in connection with causation, and also very disputable issues as to the recoverability of damages for at least some if not all of the losses which he claims. The case is manifestly not a sufficiently clear one to admit of just disposal under the court's summary supervisory jurisdiction. 41 Moreover, at least prima facie Mr McIlraith is out of time to bring an action in negligence against Mr Ilkin, even if it otherwise had prospects of success. He would also need an extension of time to make a disciplinary complaint under (NSW) Legal Profession Act 2004, s 506. Mr Ilkin may be deprived of these protections, which the law provides against stale complaints – even disciplinary complaints – if Mr McIlraith is permitted to involve the summary supervisory jurisdiction. Given the time that has passed, and the highly disputable nature of Mr McIlraith's claims, I cannot see why Mr Ilkin should be deprived of such protection as these statutes offer. 42 For those reasons, the case is a wholly inappropriate one for the summary jurisdiction. The point has previously been taken that these proceedings are assigned to the Court of Appeal [see McIlraith v Ilkin (Hidden J, 23 April 2007, unreported)]. His Honour retained the proceedings in this division at that stage, in order to enable the nature of the plaintiff's claim to be clarified and ascertained. Despite their allocation to the Court of Appeal, if not removed into the Court of Appeal the proceedings may be continued and disposed of in this division [(NSW) Supreme Court Act 1970, s 54]. Had I concluded that the proceedings ought not be summarily dismissed, it would have been appropriate to remove them into the Court of Appeal for hearing. But having reached a clear view, after thorough argument, that the proceedings cannot succeed, and alternatively are manifestly inappropriate for the summary jurisdiction, there is no utility in prolonging them by removal into the Court of Appeal. Conclusion 43 The compensatory supervisory jurisdiction is not limited to a case of professional misconduct such as would warrant striking off or suspension from practice, and may be attracted in a case of breach of professional duty by negligence, though the negligence must be of a culpable quality, amounting to a "serious dereliction of duty". 44 A solicitor is not guilty of mere negligence – let alone a "serious dereliction of duty" – by expressing an opinion which is erroneous because an assumption on which it is given is false, at least where the assumption is not unreasonably made and the fact that it is no more than an assumption is disclosed or apparent. 45 The facts alleged by Mr McIlraith, on the evidence which he could adduce at trial, could not raise a sufficiently arguable case of serious dereliction of duty against Mr Ilkin to require an answer. In those circumstances it can be said that the case cannot succeed. 46 Moreover, the case is manifestly not a sufficiently clear one to admit of just disposal under the court's summary supervisory jurisdiction. Nor is there sufficient reason why Mr Ilkin should be deprived of the procedural advantages and limitation defences otherwise available by resort to the summary jurisdiction. The case is a wholly inappropriate one for the summary jurisdiction. 47 My orders are: (1) Order that the proceedings as against the first defendant be dismissed. (2) Order that the plaintiff pay the first defendant's costs of the proceedings. 48 I will hear the parties as to what directions should be made in respect of the proceedings as against the second defendant. ********** 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.