Issuing of creditor's statutory demand

An advocates immunity from suit, as recognised by the High Court in Giannarelli v Wraith (1988) 165 CLR 543 (Giannarelli), is the principle that a lawyer cannot be sued by his or her client for negligence in the conduct of a case in court, or for work done outside the court that is intimately connected with the conduct of a case in court.

Recently in Gregory Ian Attwells & Anor v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16 (Attwells) the High Court clarified that the scope of an advocate’s immunity from suit does not extend to a solicitor providing negligent advice in the settlement of a matter.

In Attwells, Greogory Ian Attwells and Noel Bruce Attwells (Appellants) sued their former solicitors Jackson Lalic Lawyers Pty Ltd (Jackson Lalic Lawyers) for negligent advice which led to the settlement of a dispute related to a personal guarantee the Appellants’ provided to a bank for liabilities of a company. The company’s liabilities, including accrued interest, were approximately $3.4M, whereas the Appellants’ personal liability was capped at $1.75M.

The settlement terms were for a judgment against the Appellants for the full $3.4M subject to an agreement that the bank would not enforce the full amount if the Appellants paid $1.75M by a nominated date. This was reflected in consent orders. The Appellants failed to pay the $1.75M by the nominated date and the bank brought an action to enforce payment of the full $3.4M.

The Appellants alleged that Jackson Lalic Lawyers failed to advise them the effect of the consent orders was that they were indebted to the bank for $3.4M, when their liability to the bank was only ever for the lesser sum of $1.75M.

The Court by majority declined to reconsider the decisions of Giannarelli and D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1, and instead found those decisions to be consistent with the outcome that an advocate’s immunity does not extend to rule out the possibility of a successful claim against a lawyer for negligent advice related to a voluntary settlement between the parties. Specifically, the protection of advocate’s immunity will only be available where there is a judicial determination of issues between the parties. It is not the case that the protection will be available simply because proceedings are on foot. Similarly, the protection will not be available simply because the parties’ embody the settlement agreement in consent orders.

The take home message from Attwells is that lawyers conduct with respect to the conduct of a case, or work done outside of court that is intimately connected with the conduct of a case in court will be protected by advocate’s immunity where there is a judicial determination of issues between the parties to a dispute. The protection however will not automatically be available where proceedings are on foot or because a settlement agreement between parties is embodied in consent orders.

Our Litigation & Risk Management team are experts and can assist in the negotiation of settlements. If you require assistance or any further information contact our office on 02 6215 9100.