High Court of Australia confirms advocates' immunity does not extend to negligent advice on whether to accept or reject an offer of settlement made during settlement negotiations in litigated claims

In Issue

Whether advocates’ immunity extends to negligent advice provided on offers of settlement

The Background

In 1999 Mr Kendirjian was injured in a car accident with a car driven by Ms Ayoub. In 2004 Mr Kendirjian commenced legal proceedings against Ms Ayoub. These concerned assessment of personal injury damages as Ms Ayoub admitted liability.

At a NSW District Court trial in August 2006 Ms Ayoub’s legal representatives offered Mr Kendirjian $600,000 plus costs to settle the claim. The offer was rejected, and the trial proceeded. Mr Kendirjian obtained judgment for $308,432.75. Mr Kendirjian appealed the decision in the NSW Court of Appeal. The appeal was dismissed with costs.

In October 2012 Mr Kendirjian commenced NSW District Court proceedings against his solicitor (Mr Lepore) and barrister (Mr Conomos) alleging they negligently failed to advise him the amount of Ms Ayoub’s settlement offer and, without his express instructions, rejected that offer as “too low”. In his defence, Mr Conomos pleaded either he or Mr Lepore, or both of them, had informed Mr Kendirjian of Ms Ayoub’s settlement offer and were instructed to reject the offer and make a $1.2 million counter offer contrary to Mr Conomos’ advice that a costs-inclusive counter offer of $800,000 be made.

The Decision at Trial

Mr Lepore and Mr Conomos applied successfully to the court for summary judgment on the grounds of advocates’ (barrister or solicitor) immunity from liability in negligence. On appeal that decision was upheld by the NSW Court of Appeal. Mr Kendirjian appealed to the High Court of Australia.

The Issues on Appeal

The principal issue on appeal was whether advocates’ immunity from suit extends to negligent advice provided on offers of settlement.

The Decision on Appeal

By unanimous decision, the full bench of the High Court allowed the appeal.

The High Court found the advice given to Mr Kendirjian to reject Ms Ayoub’s settlement offer was not advice given that would affect the court’s determination of the case, and as such did not engage advocates’ immunity.

In so doing, the High Court affirmed its decision in Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16. This means advocates’ immunity does not extend to lawyers’ work unless it has a “functional” or “intimate” connection with the conduct of the case in a court such that the work “bears upon” the way the case is progressed to a court determination and conducted when heard by the court.

Implications for you

The High Court decision provides a timely reminder of the limits to the protection from suit afforded by advocates’ immunity, and more specifically in relation to advice provided to clients regarding settlement of proceedings.

Kendirjian v Lepore [2017] HCA 13