Matthew Harvey: The High Court on Commercial Law 2016 (Part Two)

23 January 2017

Matthew Harvey: The High Court on Commercial Law 2016 (Part Two)

Originally published as part of Matthew Harvey's The Talk Around Chambers.

Attwells v Jackson Lalic Lawyers Pty Ltd
[2016] HCA 16

Negligence – Advocate’s immunity – Whether the immunity covered advice to settle proceedings by consent orders
On his solicitor’s advice, a client agreed to settle a proceeding, in which he was defending a claim to enforce a guarantee.  In accordance with the agreement, the court made consent orders, requiring the client to pay a particular sum to the plaintiff.  Subsequently, the client commenced a proceeding against his solicitor, claiming he had been given negligent advice to enter into the settlement agreement.  Could the solicitor successfully rely on advocate’s immunity to defeat the claim?
Held:  The Court rejected a submission that advocate’s immunity should be abolished.  By majority, it held that the immunity did not extend to advising to cease litigation, because it was not intimately connected with the conduct of the case so as to affect the outcome by judicial decision.  See French CJ, Kiefel, Bell, Gageler and Keane JJ at [45] and [46].
Comment:  In dissent, Gordon J said that, since the advice led to making final orders giving effect to the settlement agreement, the immunity was available (at [104] – [106] and [111] – [112]).  Nettle J agreed, adding that, since the settlement moved the litigation towards a final determination by the Court, the immunity was available (at [67]).  The dissenting judgments are compelling.  The question remains whether they will affect future judgments in the High Court.

Badenach v Calvert

[2016] HCA 18

Negligence – Solicitor’s duty of care to beneficiary under will – Whether causation established
A testator gave instructions to his solicitor to draft a will giving his estate to the son of his de facto partner.  The will was executed.  The testator subsequently died.  The testator’s daughter made a testator’s family maintenance application.  As a consequence of that litigation, the estate was depleted.  Did the solicitor owe the beneficiary a duty of care arising out of a duty to advise the client how to avoid a possible TFM claim?
Held:  The solicitor in these circumstances was not under an obligation to advise the testator about possible TFM claims, thus he owed no duty of care to the beneficiary.  Furthermore, the beneficiary did not show that the testator would have acted upon advice about possible TFM claims; therefore, he failed to prove causation.  See French CJ, Kiefel and Keane JJ at [32] and [35], Gageler J at [62] and Gordon J at [86] and [97].
Comment:  In Hill v Van Erp (1997) 198 CLR 159, the High Court held that a solicitor owed a beneficiary a duty of care.  In this case, the Court said that such a duty may exist but that it must be co-extensive with the duty to the testator.  See [43] – [49].

Robinson Helicopter Co Inc v McDermott

[2016] HCA 22

Appeals – Trial judge’s findings of fact – When findings can be overturned on appeal
A passenger was badly injured in a helicopter crash.  He brought a claim against the helicopter manufacturer.  The essential question at trial was whether the maintenance manual for the helicopter contained an adequate inspection procedure to detect the defect that caused the crash.  The trial judge held that the manual was adequate for this purpose.  The Queensland Court of Appeal (by majority) held that the manual was inadequate and that the manufacturer was liable in negligence to the passenger.  Was the Court of Appeal justified in overturning the trial judge’s findings of fact?
Held:  ‘[A] court of appeal should not interfere with a judge’s findings of fact unless they are demonstrated to be wrong by “incontrovertible facts or uncontested testimony”, or they are “glaringly improbable” or “contrary to compelling inferences”.’  Here, the trial judge’s findings were not of this nature.  The Court of Appeal should not have overturned the findings.  See French CJ, Bell, Keane, Nettle and Gordon JJ at [43].

Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd

[2016] HCA 26

Collateral contract – promissory estoppel
A landlord offered a tenant a new lease of premises, limited to five years with no option for renewal.  The proposed lease required the tenant to undertake a major refurbishment of the premises.  The tenant was concerned about the cost of refurbishment, so it sought a commitment during negotiations that it could renew the lease for a further five years.  This was not agreed, but the landlord told the tenant that it would be “looked after at renewal time”.  The tenant entered into the lease and, ultimately, undertook the refurbishment.  The landlord gave notice to the tenant to vacate the premises on the expiration of the lease.  Did the statement that the tenant would be “looked after at renewal time” amount to a collateral contract?  Could it found a promissory estoppel?
Held:  The statement did not bind the landlord to offer a further five year lease because it did not have the quality of a contractual promise of any kind (French CJ, Kiefel and Bell JJ at [28]).  The collateral contract was illusory (Keane J at [132] and Nettle J at [198] – [199]).  To found promissory estoppel, the representation must be clear.  The assurance was not capable of conveying to a reasonable person that the tenants would be offered a further lease (French CJ, Kiefel and Bell JJ at [35] and Keane J at [100]).

Paciocco v ANZ Banking Group Ltd

[2016] HCA 28

Contract – Rule against penalties – Whether a late payment charged on a credit card account was a penalty
A customer held a credit card account with a bank.  Under the terms on which credit was given to the customer, the bank charged a late payment fee (of either $35 or $20) against the credit card account, if the customer did not make a monthly payment plus any amount immediately due by a particular date.  Was the late payment fee a penalty?
Held:  The late payment fee was not a penalty.  The fee was not out of all proportion to the bank’s interest in receiving timely payment of the monthly payment (Kiefel J at [69], with French CJ agreeing).  On appeal, there was no challenge to the bank’s evidence that the fee ensured observance by credit card customers which, in turn, reduced the bank’s costs.  Thus, it could not be concluded that the fee had no purpose other than to punish the customer in the event of late payment (Gageler J at [176] and Keane J at [216]).