THE INTERACTION BETWEEN THE ADVOCATES IMMUNITY AND CLAIMS FOR COMPENSATION UNDER THE CIVIL PROCEDURE ACT 2010 (VIC)

Transcription

1 THE INTERACTION BETWEEN THE ADVOCATES IMMUNITY AND CLAIMS FOR COMPENSATION UNDER THE CIVIL PROCEDURE ACT 2010 (VIC) Author: Kieran Hickie Date: 27 February, 2014 Copyright 2013 This work is copyright. Apart from any permitted use under the Copyright Act 1968, no part may be reproduced or copied in any form without the permission of the Author. Requests and inquiries concerning reproduction and rights should be addressed to the author c/- or T

2 The interaction between the Advocates Immunity and claims for compensation under the Civil Procedure Act 2010 (Vic) Kieran Hickie Foley s List 1. This paper examines the interaction between the advocates immunity at common law, and the sanction provisions of the Civil Procedure Act 2010 (Vic) (CPA). Those provisions provide, in particular, that barristers and solicitors engaged in civil proceedings in Victoria can be ordered to pay compensation to any person for any financial or other loss materially contributed to by a contravention of an overarching obligation (s 29). The question that arises is whether the advocates immunity might shield a clam for compensation under the CPA. 2. This paper has three purposes first, to examine the application and rationale of the advocates immunity at common law; second, to examine the overarching obligations and sanction provisions of the CPA, including the compensation provision; and third, to investigate how the advocates immunity might interact and apply to the compensation provision. In this regard, the paper will examine whether the CPA has abrogated the immunity, and if not, how the immunity might apply to shield a claim for compensation brought under the CPA. 3. The CPA has important implications for barristers and solicitors acting in civil proceedings in Victorian Courts. It is important for barristers and solicitors (including their insurers) to understand the modern scope and rationale of the advocates immunity, and how the immunity may interact with the overarching obligations and sanction provisions in the CPA. The Advocates Immunity 4. The advocates immunity is a longstanding, common law immunity. 5. At common law, an advocate is immune from suit whether from negligence or otherwise in the conduct of a case in Court, or for work done out of Court which leads to a decision affecting the conduct of the case in Court: D Orta-Ekenaike v Victoria Legal Aid (2005) 225 CLR 1, upholding Giannarelli v Wraith (1988) 165 1

3 CLR The advocates immunity has a very wide scope. 7. The immunity is not confined to negligent acts and omissions that occur within the courtroom. The High Court has considered it artificial in the extreme to draw the dividing line of the immunity at the courtroom door on the basis the preparation of a case cannot be divorced from its presentation in Court. 8. The immunity can extend beyond the courtroom to negligent acts and omissions occurring out of Court. However, to establish out of Court work has the requisite connection with the conduct of the case in Court, it must be established that the out of Court work leads to a decision affecting the conduct of the case in Court, or is work which is intimately connected with the conduct of the case in Court: D Orta-Ekenaike (at [85]). The Court considered that these two tests do not differ in any significant way). 9. In Rees v Sinclair [1974] 1 NZLR 180, McCarthy P (at 187) explained how these tests operate in the following words: Each piece of pretrial work should, however, be tested against one rule: that the protection exists only whether the particular work is so intimately connected with the conduct of the cause in court that it can fairly be said to be a preliminary decision affecting the way that cause is to be conducted when it comes to a hearing. The protection should not be given any wider application than is absolutely necessary in the interests of the administration of justice. 10. On the basis the immunity can apply to in Court and out of Court work, barristers, solicitor-advocates and solicitors can be protected by the immunity. 11. The immunity captures a wide variety of claims made against barristers and solicitors. While the immunity has traditionally captured claims in negligence, the words or otherwise has resulted in Courts extending the immunity to claims for misleading and deceptive conduct under state consumer protection legislation: Goddard Elliot (a firm) v Frisch [2012] VSC 87 (Bell J) (describing the immunity as a general immunity from suit. History and rationale 12. The advocates immunity was imported from English common law by the High Court in Giannarelli v Wraith (1988) 165 CLR 543. The immunity was revisited by the High Court in D-Orta-Ekenaike v Victoria Legal Aid (upholding the 2

4 immunity 6:1, Kirby J dissenting). 13. In Australia, the rationale for the immunity has slightly but importantly shifted over time between the decisions of Giannarelli and D-Orta-Ekenaike. Understanding the rationale for the immunity in Australian common law is important because it may inform how the immunity might apply to a claim for compensation under the CPA. Giannarelli v Wraith 14. In Giannarelli v Wraith (1988) 165 CLR 543, three brothers (the Giannerallis) were charged with perjury after giving evidence at the Royal Commission into the Federated Ship Painters and Dockers Union. At their perjury trial, the Crown tendered into evidence the testimony of the Giannerallis given by them at the Royal Commission. The Giannerallis were convicted of perjury. However, the Giannerallis successfully appealed their convictions on the basis the evidence given by each of them at the Royal Commission was inadmissible in subsequent civil or criminal proceedings (s 6DD of the Royal Commissions Act 1902). 15. The Giannerallis sued their barrister, Wraith, who represented them at their perjury trial in negligence. They claimed Wraith negligently failed to advise them they had a good defence to the perjury charges (on the basis the testimony was inadmissible), and that he had failed to object to the Crown tendering evidence given at the Royal Commission in their perjury trial. 16. The High Court (adopting the English common law position) held that an advocate cannot be sued by his or her own client for negligence in the conduct of a case in Court, or for the out of Court work which is intimately connected with the conduct of the case in Court. The rationale for the immunity was based, in particular, on two main public policy considerations (some other public policy considerations were expressed). Mason CJ explains the two driving public policy considerations in the following words: (a) The peculiar nature of the legal practitioner s duties. Mason CJ considered that because a legal practitioner owes a paramount duty to the Court and duties to the client, which can conflict, an immunity from suit was necessary to avoid legal practitioners becoming the mere agents of their clients in respect of civil proceedings. Mason CJ considered that the risk of liability in 3

5 possible lawsuits might result in legal practitioners acquiescing to pressure from their clients. The risk of lawsuit would result in practitioners not exercising their independent judgment to further their paramount duty to the Court (in preference of advancing the interests of their client for fear of lawsuit). His Honour believed that this would cause litigation to become more lengthy, complex and costly, and have detrimental consequences for the administration of justice. (b) The public interest in the finality of litigation. Mason CJ recognised there was a threat to the public s confidence in the administration of justice if issues the subject of a final judgment or order could be reviewed or re-litigated in collateral proceedings. His Honour held that if collateral attacks to final judgments or orders were permitted in subsequent proceedings (for example, to demonstrate that a different result would have occurred but for negligence), this would undermine the principle of finality of Court judgements and orders. The majority noted that this risk was particularly significant for the criminal justice system, as collateral attacks against findings in criminal proceedings could undermine public confidence in the safety of convictions and sentences. D Orta-Ekenaike v Victoria Legal Aid 17. The advocates immunity was revisited in D Orta-Ekenaike v Victoria Legal Aid (2005) 225 CLR 1. In D Orta-Ekenaike, the appellant (D Orta-Ekenaike) was charged with rape. Prior to the D Orta-Ekenaike s committal hearing, D Orta- Ekenaike received legal advice in relation to a plea from a solicitor employed by Victoria Legal Aid (VLA) and a barrister (McIvor). 18. It was alleged the advice given to D Orta-Ekenaike was that he had no defence to the charge; if he pleaded guilty at the committal he would receive a suspended sentence; if he contested the charge and was found guilty, he would receive a custodial sentence. The advice was confirmed in conference with D Orta-Ekenaike on the morning of his committal hearing. The appellant entered a plea of guilty at his committal hearing, but changed his plea to not guilty at his subsequent arraignment. 19. The case went to trial. At the trial, the Crown tendered evidence of D Orta- Ekenaike s guilty plea he entered at his committal hearing. D Orta-Ekenaike was convicted and sentenced to term of imprisonment. However on appeal D Orta- 4

6 Ekenaike won a retrial. The Court of Appeal held that the trial judge failed to give appropriate instructions to the jury in relation to the evidence of the guilty plea at the committal. At the resulting re-trial, the Crown again sought to tender D Orta-Ekenaike s guilty plea into evidence, however the trial judge ruled the evidence was inadmissible. D Orta-Ekenaike was acquitted. 20. Following his acquittal, D Orta-Ekenaike sued the VLA and McIvor, alleging they among other things negligently advised him in relation to his plea, and failed to advise him that any change to his plea could be used against him in evidence. D Orta-Ekenaike claimed loss and damage, including loss of income resulting from his incarceration. 21. The High Court revisited the doctrine of the advocates immunity in Australian common law, and upheld it by a majority of 6:1 (Kirby J dissenting). However despite upholding the immunity, the High Court shifted the underlying rationale for the immunity away from grounds of public policy, to the legal principle of finality (as distinct to the public interest in finality). 22. The majority of the High Court observed (at [34]) that a central and pervading tenant of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances. In other words, once a controversy is quelled, it cannot be re-litigated except through the established appeals process. The majority held that the legal principle of finality is fundamental to the proper functioning of the Courts, because as the third branch of government the Courts have the responsibility of finally quelling controversies whether of a civil or criminal nature. 23. The majority held that the advocates immunity is a necessary consequence of the need to protect the legal principle of finality. Similar to the reasoning in Giannarelli, the majority explained that the inevitable and essential step of a client demonstrating their advocate was negligent in the conduct of a proceeding would involve the re-litigation of issues finally quelled by a Court in that proceeding. The Court explained (at [84]): To remove the advocates immunity would make a significant inroad upon what we have earlier described as a fundamental and pervading tenant of the judicial system. That inroad should not be created. There may be those who will seek to characterise the result at which the Court arrives in this matter as a case of lawyers looking after their own. But the legal principle which underpins the Court s conclusion is fundamental. Of course, there is always a risk that the determination of a legal controversy is imperfect. And it may be imperfect because of what a party s advocate does or does not do. The law aims at providing the best and safest system of determination that is compatible with human fallibility. But underpinning the system is the need for 5

7 certainty and finality of decision. The immunity of advocates is a necessary consequence of that need. [Citation omitted] 24. The decision by the High Court to retain the immunity was controversial to some. At the time the judgment was delivered, the immunity had been abolished by the House of Lords in the United Kingdom (Arthur J S Hall & Co v Simons [2002] 1 AC 615) and by the Court of Appeal in New Zealand (Lai v Chamberlains [2003] 3 NZLR 291, a decision later affirmed by the New Zealand Supreme Court in Lai v Chamberlains [2007] 2 NZLR 7). Each held the immunity was no longer required in the public interest. Practical application of the immunity 25. The cases that consider the application of the advocates immunity deal with out of Court work. These cases are broadly grouped into the following: (a) Negligent preparation, conduct and management of a proceeding; (b) Negligent settlement of proceedings and negligent advice; (c) Claims for statutory misleading and deceptive conduct. 26. Before considering how the immunity has been applied, it is important to note that there has been some confusion about how the two separate tests relating to out of Court work interact, and how they should be practically applied. 27. In D Orta-Ekenaike, the plurality (at [85]) explained that the two tests work done out of Court which leads to a decision affecting the conduct of the case in Court, and work intimately connected with the conduct of the case in Court do not differ in any significant way. 28. However, in Donnellan v Woodland [2012] NSWCA 433, Beazely JA explains that the combination of the two statements is apt to mislead as each tends to focus attention on different things. Beazley JA explains: [224] Although the plurality [in D Orta] said that the test they had enunciated was not significantly different to the language of intimately connected with the conduct of the case in court the combination of the two statements is apt to mislead as each tends to focus attention on different things. The language of the plurality, at [1], that a practitioner: cannot be sued for negligence in the conduct of a case in court, or for work out of court which leads to a decision affecting the conduct of a case in court focuses, in its second limb, attention upon conduct that leads to a 6

8 decision which has the stated effect. If the first part of the test stated by the plurality is combined with the language of intimate connection, there is a risk, it seems to me, to focus upon how close the connection is, rather than determining whether the conduct led to a decision affecting the conduct of the matter in court. 29. In the following categories of out of Court work, the practical application of the immunity has been closely considered (and at times heavily critiscised) having regard to the conflict within the two applicable tests to our of Court work, and the underlying rationale for the immunity (the legal principle of finality). Preparation, conduct and management of a proceeding 30. A number of cases demonstrate that the advocates immunity broadly applies to negligent acts and omissions in the preparation, conduct and management of proceedings. 31. In Goddard Elliot (a firm) v Fritsch [2012] VSC 87, Bell J held that the solicitors negligent failure to prepare asset valuation, taxation and other evidence required by their barrister for the conduct of the case in Court fell within the ambit of the immunity. His Honour held (at [794]) that the negligent conduct was captured by the immunity on the basis that the pre trial work either led to a decision in, or was intimately connected with, the conduct of the case in Court. 32. In Attard v James Legal Pty Ltd (2010) 80 ACSR 585, the New South Wales Court of Appeal held that the solicitors negligent failure to advise their client that the civil proceedings would be stayed on the basis an administrator had been appointed fell within the ambit of the immunity. Significantly, the Court of Appeal held in this case that the relevant question for a Court is whether the applicable tests are satisfied, and not whether the principle of finality is offended. 33. In Symonds v Vass (2009) 257 ALR 689, the New South Wales Court of Appeal held that the solicitor s negligent failure to properly prepare the plaintiff s case (including by failing to obtain counsel s advice as to the prospects of success and to properly plead and particularise the claim), failure to properly prepare evidence and to failure to properly manage and conduct the proceeding, fell squarely within the scope of the immunity. In this case, the plaintiff claimed loss and damage because they had no choice but to settle the proceeding on terms unsatisfactory to them. The Court explained: [115] The appellants say that, but for the respondent s conduct, there 7

9 would have been a different result. They wish to assert that, if the case had been prepared and presented properly, a different intermediate result (that is, no compromise) and final result (orders other than those made by Dowd J on 28 February 1996) would have been reached. The consequences that have befallen the appellants are, however, consequences flowing from what is a lawful result. The compromise was a lawful contract and the judgement granted by Dowd J was a lawful judgment. [116] I reiterate (because it is so important in the context of this case) that a paradigm case to which advocate s immunity applies is where the client asserts that, if the case had been prepared and presented properly, a different result would have been reached (D-Orta- Ekenaike at [70]). The case put by Mr Bennett on behalf of the appellants is that very case. Thus, the appellants case falls squarely within the test for the advocates immunity laid down in D-Orta- Ekenaike. In my opinion, D Orta-Ekenaike compels the conclusion that the respondent is immune from the appellants suit. 34. The outcomes in some of these decisions have not gone without criticism. In Goddard Elliot (a firm) v Fritsch [2012] VSC 87, Bell J criticised the application of the immunity as having a one size fits all approach particularly where the negligent act or omission precedes the conduct of the case in Court by a lengthy period of time. In Symonds v Vass (2009) 257 ALR 689, Beazley JA described the application of the immunity to the negligent conduct problematic and troubling (at 690). 35. Having regard to the conflict within the two applicable tests, it has been doubted whether the applicable tests extend to negligent omissions. In Symonds v Vass (2009) 257 ALR 689, Beazely JA noted that if the intimate connection test is premised on the notion that some active decision need to be taken to attract the operation of the immunity, it might not extend to negligent omissions. This is because [a]n omission can arise as much from an active decision not to do something, as it can from a failure to turn one s mind to a particular matter (at 690). 36. Judicial doubt about the scope of the immunity was also reflected in MM & R Pty Ltd v Grills [2007] VSC 528. In this case, the plaintiff alleged their solicitors were responsible for significant delay and inaction in the conduct of the proceeding by allowing a critical date to pass. The Court ordered the proceeding be summarily dismissed against the solicitors on the basis of the advocates immunity. In granting leave to the plaintiff to appeal the summary dismissal of the proceeding, Cavanough J doubted the broad application of the immunity in cases of sheer delay and inaction. His Honour said (at [55]): I am not prepared to hold that it is clear beyond argument that the 8

10 [advocates ] immunity precludes any claim at all against a solicitor for conduct which can properly be characterised as sheer delay or mere inaction. In my view it is at least arguable that Gianneralli and D Orta leave room for solicitors (and barristers) to be found liable in negligence for, at least, conduct which can properly be characterised as sheer delay or mere inaction (where action is required). Importantly, as this was an application to seek leave to appeal the summary dismissal of the claim, Cavanough J was not required to consider the substantive question of whether the advocates immunity to the facts of the case. 37. The application of the immunity to the negligent drafting of pleadings was doubted in Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85. In this case, the WA Court of Appeal doubted that the advocates immunity could apply to shield the negligent drafting of a cause of action which was doomed to fail (as a matter of law). The Court of Appeal explained that if the cause of action was doomed to fail, and did fail, then the legal controversy is not capable of being reopened because it never existed in the first place. The Court of Appeal said (at [91]-[92]): It is not difficult to envisage situations where the manner in which a case is pleaded would affect the way the case was conducted in court, so that any claim that an advocate was negligent in failing to plead the case differently would involve re-opening the earlier decision in an endeavour to prove that the result had been different. Where, however, it is alleged that the advocate advised the client to pursue, and pleaded on the client s behalf, a cause of action or a head of damage which as a matter of law was doomed to failure and which duly failed it is not so easy to see that a claim for negligence against the advocate involves the re-opening of the original controversy or touches upon matters which fall within the principles identified by the High Court as underlying the immunity. 38. This reasoning of the WA Court of Appeal in Alpine Holdings has not been followed in the New South Wales Court of Appeal decision in Donnellan v Woodland [2012] NSWCA 433. Negligent settlement of litigation and negligent advice 39. A number of cases demonstrate that the advocates immunity broadly applies to shield negligence claims in relation to settlements. 40. In Goddard Elliot (a firm) v Fritsch [2012] VSC 87, a family law property proceeding between a mentally incapacitated husband and his wife was negligently settled on terms overly generous to the wife. It was alleged that the 9

11 solicitors had negligently failed to ensure the mentally incapacitated husband (their client) had the requisite capacity to give the instructions to settle the proceeding. After giving anxious consideration to the case, Bell J, with great difficulty, concluded that the immunity was so wide it applied to shield the claim for negligence. His Honour described the conclusion as deeply troubling (at [833]). 41. It is important to understand how the application of the immunity to negligent settlements is justified having regard to the underlying rationale of the immunity. In D Orta Ekenaike, McHugh J (at [168]) said that the advocates immunity should only extend to conduct which would require the impugning of a final decision of a court, or cause the re-litigation of matters finally determined by a Court. McHugh J explained where litigation is settled without the need for a final and binding Court determination, the principle of finality is not strictly offended. McHugh J distinguished the negligent settlement of proceedings from the scope of the immunity, saying (at [166]): it is possible to sue a practitioner for the negligent settlement of proceedings or for the negligent loss or abandonment of a cause of action. Such claims lead to the litigation of a primary claim even if that claim can no longer be pursued. These results flow even though there is a public interest in the finality achieved through the promotion of out-of-court dispute settlement. But where a trial has taken place public confidence in the administration of justice is likely to be impaired by the re-litigation in a negligence action of issues already judicially determined. [emphasis added] 42. A number of Courts have questioned whether the immunity can apply to negligence claims in relation to settlements. 43. In Francis v Burnett (2007) 18 VR 98, it was alleged that a solicitor had negligently settled the proceeding without the client s instructions. The plaintiff s claim had been struck out on the basis the advocates immunity applied and was a good defence to the claim. Lasry J granted leave to appeal the decision to strike out the claim, stating (at [36]): where advocates resolve proceedings before trial and there is no quelling of the controversy by the exercise of judicial power involving the determination of the issues in the case, such activities and the work connected with them may fall outside the immunity articulated in D Orta- Ekenaike. 44. A number of cases also demonstrate that the advocates immunity broadly applies to claims of negligence in relation to the provision of advice regarding 10

12 litigation. 45. In Donnellan v Woodland [2012] NSWCA 433, Beazley JA provides a helpful explanation about how the immunity applies to negligent advice. Her Honour states (at [198]): The question is not when the advice was given, but whether the advice given led to a decision affecting the conduct of a case in court. As McHugh J stated, the giving of advice is an integral part of an advocates role. If the giving of advice, or the omission to give advice, led to a decision to continue with the case, or meant that the case was continued because of that omission, such conduct would lead to a decision affecting the conduct of the case in court, namely, its continuance by way of full argument before a judge. 46. In Bott v Carter [2012] NSWCA 89 the negligent failure of a solicitor to inform their client an offer had been received to settle the proceedings (losing the client the opportunity to settle the claim) was held to fall within the ambit of the immunity. 47. In Chamberlain v Ormsby (2005) NSWCA 454, advice was given by a barrister in relation to the potential settlement of a client s workers compensation claim, and the consequences of settlement on the worker s rights. concluded that the barrister was not negligent. The Court However if found negligent, Tobias JA considered that the barrister would be protected by the advocates immunity. Tobias JA said (at [120]) that the advice was critical to the decision of the appellant to accept the settlement, and concluded that it was: difficult to imagine a stronger case than the present where the advice given by the barrister led to the appellant s decision as to the conduct of his case before the Compensation Court or which was more intimately connected with the course of that case including its settlement. Misleading and deceptive conduct 48. In recent times, it has been held that the advocates immunity extends beyond negligence to capture statutory claims of misleading and deceptive conduct. 49. The potential application of the immunity to statutory claims of misleading and deceptive conduct was first considered in Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169. In that case, Branson J considered, in obiter, that the advocates immunity equally applied to shield statutory causes of action under the Fair Trading Act 1987 (NSW), and was not restricted in its operation to claims in tort. 50. Following this case, the application of the immunity to statutory claims of 11

13 misleading and deceptive conduct was not considered until the recent decision of Goddard Elliot (a firm) v Fritsch [2012] VSC In Goddard Elliot, a separate claim was made against the solicitors under the provisions of the Fair Trading Act 1987 (Vic) ( FTA ), claiming the solicitors engaged in misleading and deceptive conduct in relation to the provision of legal advice. In addition to the claims of negligence, Bell J was required to consider whether the advocates immunity (post D Orta-Ekenaike) extended to shield the solicitors from claims of misleading and deceptive conduct under the FTA. 52. Significantly, Bell J held that the immunity not only applied to the claims in negligence, but also extended to the statutory claims of misleading and deceptive conduct under the FTA. To reach this conclusion, Bell J placed significance on the statement of principle in D Orta-Ekenaike (at [85]) that an advocate is immune from suit whether for negligence or otherwise in the conduct of case in court. For this reason, Bell J described the immunity (at [835]) as a general immunity from suit. His Honour noted that this outcome was consistent with the High Court s rationale for the immunity the finality of litigation thus holding that the immunity applies equally to claims in negligence and to other causes of action. 53. In order to reach this conclusion, Bell J had to consider whether the provisions of the FTA abrogated or curtailed the advocates immunity in Victorian law. Applying principles of statutory interpretation to determine the answer to this question, his Honour noted the fundamental presumption that Parliament does not intend to exclude the operation of a fundamental principle of law unless it says so : Baker v Campbell (1983) 153 CLR 52, His Honour cited the following passage from Lacey v Attorney-General of Queensland (2011) 242 CLR 573, where the plurality said (at [43]): The objective of statutory construction was defined in Project Blue Sky Inc v Australian Broadcasting Authority as giving to the words of a statutory provision the meaning which the legislature is taken to have intended them to have. An example of a canon [sic] of construction directed to that objective and given in Project Blue Sky is the presumption that, in the absence of unmistakable and unambiguous language, the legislature has not intended to interfere with the basic rights, freedoms or immunities. That is frequently called the principle of legality. [Citations omitted] 54. Noting the absence of unmistakable and unambiguous language in the FTA evidencing a manifest intention of the Victorian Parliament to abrogate the 12

14 advocates immunity, Bell J held (at [838]) the FTA did not have the effect of abrogating the immunity in Victorian law. 55. Bell J concluded that at the time the FTA was enacted into Victorian law, it was enacted subject to the existing law including the law of the advocates immunity. Consequentially, his Honour held that the provisions of the FTA operated subject to the possible application of the advocates immunity. 56. Having regard to the above analysis, how might the advocates immunity apply to a claim for compensation against a barrister or solicitor under the CPA? Civil Procedure Act 2010 (Vic) 57. The CPA was enacted into Victorian law on 1 January Its enactment was a result of an extensive review of the Victorian civil justice system by the Victorian Law Reform Commission (in the Civil Justice Review). 58. The CPA seeks to reform and modernise the laws, practice, procedure and processes relating to the resolution of civil disputes. It also seeks to redress imbalances in the Victorian civil justice system, and to change the culture of litigation in the State of Victoria. 59. The overarching purpose of the CPA is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute (s 7(1)). Paramount duty and overarching obligations 60. The CPA imposes a paramount duty (s 16) and a series of overarching obligations (ss 17-26) on active and passive participants to civil proceedings. 61. Section 10 of the CPA provides that the paramount duty and overarching obligations apply to: (a) any person (or entity) who is a party to the proceeding; (b) any legal representative of a party (including a barristers); (c) any other representative of a party (eg, litigation guardians); (d) any law practice acting for or on behalf of a party to the proceeding (eg, partners of the responsible partner to a civil proceeding may be bound); (e) any person who provides financial or other assistance to any party to the proceeding (insofar as they exercise any direct or indirect control or influence over the conduct of the civil proceeding, or a party to the civil proceeding). 13

15 This category is non-exhaustive, and in addition to insurers and litigation funders, may broadly extend to company directors and officeholders, trustees (see Walsh & O Meara Builders Pty Ltd v Greater Bendigo Developments Pty Ltd (in liq) [2012] VCC 1809), shareholders, agents, liquidators, receivers, administrators, and executors/executrixes of an estate. There needs to be evidence of actual exercise of control or influence over the conduct of the civil proceeding, or over a party to the civil proceeding. 62. Each person bound has a paramount duty to the Court to further the administration of justice in relation to any civil proceeding in which that person is involved (s 16). Legal practitioners have long been bound by a paramount duty to the Court as officers of the Court, however lay participants to civil proceedings are now similarly bound by a paramount duty through the operation of the CPA. 63. Each person bound must also comply with ten overarching obligations. It has been said that the overarching obligations comprise the components of the paramount duty (Second Reading Speech). For legal practitioners, the Explanatory Memoranda states the overarching obligations are intended to restate and clarify existing standards of conduct for lawyers, including their duty to the Court and to the administration of justice. Some of the obligations will already be familiar to legal practitioners as officers of the Court. 64. The overarching obligations require a person bound to: (a) act honestly at all times in relation to a civil proceeding (s 17); (b) not make any claim (or respond to any claim) which is frivolous, vexations, an abuse of process, or without a proper basis (s 18); (c) not take any step in a proceeding unless there is a reasonable belief the step is necessary to facilitate the resolution or determination of the proceeding (s 19); (d) cooperate with the parties and the Court in connection with the conduct of the proceeding (s 20); (e) not engage in conduct which is misleading and deceptive or likely to mislead or deceive in relation to a civil proceeding (s 21); (f) use reasonable endeavours to resolve the dispute by agreement (using appropriate dispute resolution procedures if appropriate, unless it is not in 14

16 the interests of justice to do so or if only judicial determination is appropriate) (s 22); (g) in the event the dispute cannot be resolved by agreement, to use reasonable endeavours to resolve any issues in dispute by agreement, and to narrow the scope of the remaining issues in dispute (s 23); (h) use reasonable endeavours to ensure legal and other costs incurred in connection with the civil proceeding are reasonable and proportionate to the complexity or importance of the issues in dispute, and the amount in dispute (s 24) (the subject of examination by the Court of Appeal in Yarra Australia Pty Ltd v Oswal [2013] VSCA 337); (i) use reasonable endeavours to act promptly and minimise delay (s 25); (j) disclose to each party to the proceeding, at the earliest possible opportunity, the existence of all documents in the person s possession, custody or control which are reasonably considered critical to the resolution of the dispute (s 26). 65. The paramount duty and overarching obligations apply to all stages of a civil proceeding from the early interlocutory stages, to trial, to any subsequent appeal, and to any appropriate dispute resolution of the proceeding, such as mediation (s 16). 66. The overarching obligations do not override any existing duties or obligations owed by a legal practitioner to the Court, whether arising under the common law, statute or otherwise (s 15). 67. The overarching obligations do not override any duty or obligation owed by a legal practitioner to their client, provided they operate consistently. However in the event of conflict or inconsistency, the overarching obligations must prevail over the legal practitioner s duty to the client to the extent of the inconsistency (s 13(1)). 68. A legal practitioner must comply with the overarching obligations despite any instruction or desire of their client to act contrary to the overarching obligations (s 13(2)). The CPA provides that a legal practitioner is not required to comply with the instructions or wishes of their client to the extent those instructions or wishes are inconsistent with the overarching obligations (s 13(3)). In addition, a legal practitioner must not, by their conduct, cause their client (as a party to a civil proceeding) to contravene the overarching obligations to which the client is 15

17 bound (s 14). Sanctions for contraventions of overarching obligations 69. Section 29 of the CPA gives the Court an extremely wide discretion to make orders in respect of a contravention of an overarching obligation. 70. If satisfied on the balance of probabilities that an overarching obligation has been contravened by a person bound, the Court may make any order it considers appropriate in the interests of justice. These include, but are not limited to: (a) an order that the person pay some or all of the legal costs or other costs or expenses of any person arising from the contravention of the overarching obligation; (b) an order that the legal or other costs or expenses be immediately payable and enforceable; (c) an order that the person compensate any person for any financial or other loss which was materially contributed to by the contravention of the overarching obligation (including interest); (d) an order that the person take steps to remedy the contravention of the overarching obligation; (e) an order that the person not be permitted to take specified steps in the civil proceeding; (f) any other order the Court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligation. 71. A party or a person with a sufficient interest can make an application for a sanction. Section 30 of the CPA provides the mechanics of how a sanction order can be made: (a) The application for a sanction must be made in the Court in which the civil proceeding was, or is being, heard (in accordance with the rules of Court); and (b) The application must be made prior to the finalisation of the civil proceedings to which the application relates (excluding any period for appeals). If an order is made after the finalisation of the civil proceeding to which the 16

18 application relates, the date of making the last order is taken to be the date of finalisation of the proceeding. 72. Importantly, s 31 of the CPA enables a Court to extend the time for an applicant to bring an application after the finalisation of the civil proceeding. However, the Court must be satisfied that the person making the application was not aware of the contravention of the overarching obligation until after the finalisation of the proceeding. 73. The Court of Appeal has recently considered the regime of sanctions under the CPA in Yarra Australia Pty Ltd v Oswal [2013] VSCA 337. The case concerned the possible contravention of the overarching obligations by solicitors and counsel in respect of an appeal regarding security for costs. The Court of Appeal helpfully explained (at [20]) the nature of the sanction regime in the following terms: The Court s powers under s 29 of the Act include the power to sanction legal practitioners and parties for a contravention of their obligations as the heading to Part 2.4 indicates. In our view, these powers are intended to make all those involved in the conduct of litigation parties and practitioners accountable for the just, efficient, timely and cost effective resolution of disputes. Through them, Parliament has given the courts flexible means of distributing the cost burden upon and across those who fail to comply with their overarching obligations. A sanction which redistributes that burden may have the effect of compensating a party. It may take the form of a costs order against a practitioner, an order that requires the practitioner to share the burden of a costs order made against their client or an order which deprives the practitioner of costs to which they would otherwise be entitled. The Act is clearly designed to influence the culture of litigation through the imposition of sanctions on those who do not oberve their obligations. Moreover, the power to sanction is not confined to cases of incompetence or improper conduct by a legal practitioner. Where there is a failure by the practitioner, whether solicitor or counsel, to use reasonable endeavours to comly with the overarching obligations, it will be no answer that the practitioner acted upon the explicit and informed instructions of the client. A sanction may be imposed where, contrary to s 13(3)(b), the legal practitioner acts on the instructions or his or her client in breach of the overarching obligations. 74. Of the sanctions available under the CPA, the one most likely to be of concern to barristers and solicitors (and their insurers) is the compensation provision. On the face of the provision (and in the absence of any authority which has considered and applied the provision), it appears the following elements would need to be established, on the balance of probabilities: (a) the legal practitioner is bound by the overarching obligations; (b) the legal practitioner has contravened one or more of the overarching 17

19 obligations; (c) the applicant seeking the compensation order has incurred financial or other loss; (d) the contravention of the overarching obligation(s) by the legal practitioner materially contributed to the financial or other loss claimed (noting the test of causation seems to be set at a relatively low threshold); and (e) it is in the interests of justice for the Court to make the compensation order in the circumstances. 75. Barristers and solicitors can be justifiably concerned about how far the provision might reach. In Yarra Australia, the Court of Appeal explains that the sanction regime under s 29 provides the Court with broader and more flexible powers than under the Supreme Court (General Civil Procedure) Rules 2005 ( the Rules ) [in respect of costs against legal practitioners] or under its inherent jurisdiction. However the compensation provision appears to go much further than costs jurisdiction against lawyers personally (noting Dixon J in Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd & Ors (No 4) [2013] VSC 14). While it is compensatory (as distinct to punitive) in nature, it remains to be seen what kind of financial or other loss (other than costs) a barrister or solicitor might be liable for under the provision. 76. Take the following hypothetical example. A party to a proceeding settles a claim by executing terms of settlement. The party subsequently becomes dissatisfied with the outcome because they didn t understand the implications of the terms of settlement. The party holds their barrister or solicitor responsible. They claim their barrister or solicitor was negligent and engaged in misleading and deceptive conduct in respect to the terms of settlement (by virtue of representations made or the failure of providing relevant information etc). They claim this conduct caused them loss and damage (such as the loss of the chance to run the litigation, and costs). 77. Having regard to the broad scope of the advocates immunity, it may be likely that any claim brought in negligence or under misleading and deceptive conduct is shielded by the immunity. However, what if the client claims the barrister or solicitor contravened their overarching obligation not to engage in misleading or deceptive conduct and makes a claim for compensation under the CPA? Can the client effectively circumvent the operation of the immunity and claim compensation in this way? Does the advocates immunity apply to shield the 18

20 claim for compensation, on the basis the contravention of the overarching obligation is intimately connected with the conduct of the case in Court? Has the advocates immunity be abrogated by the CPA, or could it be used to defend a claim for compensation under the CPA? 78. In order to determine whether the advocates immunity might apply to shield a claim for compensation under the CPA, we need to determine whether the CPA has abrogated or curtailed the immunity insofar as it applies to civil proceedings in Victoria. 79. To do this, it is necessary to examine the provisions of the CPA as a whole and the intention of the Victorian Parliament in enacting the CPA. Bell J s judgment in Goddard Elliott can provide useful guidance in this regard. When examining the provisions of the CPA as a whole, one must remember the fundamental principle that Parliament will not abrogate or curtail common law rights, freedoms, privileges or immunities without a clear intention to do so (see also Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355). In Coco v The Queen (1994) 179 CLR 427 the majority of the High Court explained: The insistence on express abrogation or curtailment of a fundamental right, freedom or immunity must be understood as a requirement for some manifestation or indication that the legislature has not only directed its attention to the question of the abrogation or curtailment of such basic rights, freedoms or immunities but has also determined upon abrogation or curtailment of them. 80. The CPA does not, by its terms, expressly provide that the advocates immunity is abrogated insofar as it applies to civil proceedings in Victoria. There is no express, unmistakable and unambiguous provision which absolves the advocates immunity. 81. However, it is open to argument that there is, by implication, an unmistakable and unambiguous intention of the Victorian Parliament to abrogate or curtail the advocates immunity having regard to the overarching obligations and the regime of sanctions which apply to a contravention. 82. Unlike consumer protection legislation (which has a broad purpose to protect consumers of goods and services in trade and commerce), the CPA was specifically enacted with an intention to reform the system of civil justice in Victoria. The Court of Appeal in Yarra Australia confirms this by stating that the 19

21 intention of Parliament in enacting the overarching obligations and sanction provisions is to make all those involved in the conduct of litigation parties and practitioners accountable for the just, efficient, timely and cost effective resolution of disputes. There is an unmistakable and unambiguous intention of the Victorian Parliament to ensure participants to civil proceedings in Victoria particularly legal practitioners are held to account by their conduct. 83. In order to give effect to the provisions of the CPA which clearly intends to hold legal practitioners liable for more than just costs it may be that a Victorian Court determines that the advocates immunity has been abrogated or curtailed (insofar as it applies to claims made under the CPA) in order to give effect to the enforcement of binding overarching obligations. 84. However in the absence of express, unmistakeable and unambiguous language in the CPA to abrogate or curtail the immunity, a Court may conclude that the CPA was enacted subject to existing Victorian law including the advocates immunity. 85. If a Court determines that the CPA has abrogated the advocates immunity, this may lead to curious results. The advocates immunity would still presumably apply to legal practitioners engaged in criminal proceedings. Further, it may be that the immunity, insofar as it can apply to tribunal decisions, is not abrogated on the basis the CPA does not apply to tribunal proceedings, such as those in VCAT. Could the advocates immunity shield a claim for compensation under the CPA? 86. If a Court determines that the advocates immunity is not abrogated or curtailed by the provisions of the CPA, could it apply to shield a claim for compensation arising from a contravention of an overarching obligation? 87. It would appear that any contravention of an overarching obligation in respect of the conduct of a civil proceeding would likely fall within the tests set down for the application of the immunity. This is because the act or omission said to contravene the relevant overarching obligation would, in most cases, lead to a decision affecting the conduct of the case in Court, or otherwise be intimately connected with the conduct of the case in Court. 88. If a Victorian Court follows the jurisprudence of the New South Wales Court of Appeal, particularly Attard v James Legal Pty Ltd (2010) 80 ACSR 585 (which 20

22 held the relevant question for a Court is whether the applicable tests are satisfied, and not whether the principle of finality is offended), then barristers and solicitors may be shielded by claims for compensation under the CPA. 89. However, Victorian Courts will be mindful of the need to give effect to the provisions of the CPA, including the compensation provision. The provisions have been enacted for a reason and the Court will no doubt seek to avoid those provisions being rendered toothless or ineffective. In my opinion, it may be that Victoria Courts place more emphasis on the underlying rationale of the immunity the legal principle of finality in applying the immunity to a claim for compensation under the CPA. 90. Under the provisions of the CPA, a party or person with a sufficient interest in the proceeding must make a claim for compensation prior to the finalisation of the civil proceeding. If a claim is made prior to the finalisation of a proceeding (eg before final orders are made), then the legal principle of finality is not offended. It may be that a Victorian Court determines that the advocates immunity, despite its scope, does not apply because the principle of finality is not offended by the application for a compensation order. 91. However if a party or person with a sufficient interest in the proceeding successfully applies for an order extending the time after the finalisation of a proceeding to bring a claim for compensation under the CPA, it may be more likely for a Court to conclude, in those circumstances, that the principle of finality of litigation is offended. It may be more likely that a Court determines the advocates immunity applies. 92. Furthermore, given the advocates immunity applies to claims brought by clients against their legal practitioners, it is unclear how the immunity might apply where person other than the client (eg, a person with a sufficient interest in the proceeding ) makes a claim for compensation under the CPA. It will be interesting to see whether the advocates immunity might be extended to shield these types of claims, noting that Bell J considered in Goddard Elliott that the immunity was a general immunity from suit. 93. However, where the Court on its own motion makes orders for compensation under the CPA without an application being made by a party, it is likely that the advocates immunity will not apply in those circumstances. The advocates immunity does not apply to shield adverse costs orders made against barristers and solicitors under the Rules or pursuant to the Court s inherent jurisdiction, 21