Australia: PI: Capacity negligence and advocate immunity

Insurance update


On 14 March 2012, Justice Bell of the Victorian Supreme Court handed down his judgment in Goddard Elliott (a firm) v Paul Fritsch [2012] VSC 87, a proceeding issued by a law firm, Goddard Elliott, against its former client, Paul Fritsch.

His Honour's 321 page judgment examines a range of issues, including:

  • whether Goddard Elliott was negligent in taking instructions from Fritsch when he lacked capacity;
  • the immunity of advocates;
  • the rule in Jones v Dunkel; and
  • leading evidence from deceased witnesses.


Goddard Elliott had acted for Fritsch in a property settlement proceeding against his former wife in the Family Court of Australia. The firm had not properly prepared the case such that at commencement of the trial, a three day adjournment was required to fill the preparatory gaps. As the case was about to resume, Fritsch settled at the door of the court on terms that were overly generous to his former wife. Fritsch was mentally ill, having been diagnosed with major depression and chronic post traumatic stress disorder. Both of these conditions were aggravated by stress, such that shortly after the property settlement proceedings were resolved, Fritsch was admitted to a psychiatric hospital.

The firm issued a straightforward claim for Fritsch's outstanding legal fees of $103,931 plus costs.

Fritsch counterclaimed against the firm, his counsel Noel Ackman QC and Clive Rose and his accountant Kevin Ferguson for loss of opportunity arising out of negligence, breach of fiduciary duty, misleading and deceptive conduct and various other causes of action. Fritsch settled with his counsel and Ferguson, but not with Goddard Elliott.

Capacity Negligence

Fritsch argued that Goddard Elliott coerced him into settling on "grossly unfair and inappropriate" terms "in circumstances where he had no or insufficient mental capacity to do so" as his mental illness prevented him from properly instructing his lawyers.

Goddard Elliott alleged that Fritsch had agreed to enter into that settlement, against the recommendations of his barrister, and only after he gave his written authority.

His Honour found that Goddard Elliott was negligent in taking and acting on Fritsch's instructions to settle his case. Goddard Elliott had failed to take into account the medical opinion of Fritsch's treating psychiatrist, which advised that Fritsch's mental illness had rapidly deteriorated, particularly in the period leading to the adjournment and final hearing. His Honour concluded that on the day his case settled, Mr Fritsch was suicidal, very ill and was "not in a fit mental state to be giving instructions, which his lawyers should have known".

Immunity of Advocates

Despite concluding that Goddard Elliott was aware that Fritsch lacked capacity, His Honour found it "deeply troubling" that he was "driven by the binding authorities" to apply advocate's immunity and find that Goddard Elliott was supplied with a complete defence.

Justice Bell found that Goddard Elliott's "capacity negligence" was protected by the wide test of advocates' immunity, "because it occurred in the course of work leading to decisions about, or intimately connected with, the conduct of a case in court".

The Rule in Jones v Dunkel

His Honour applied the rule in Jones v Dunkel (1959) 101 CLR 298 which enables a court to draw an adverse interference from a party's failure to call witnesses which it "might reasonably have been expected" to produce. By failing to call counsel to provide evidence with respect to his conduct during the plaintiff's family law proceedings, His Honour inferred that counsel's evidence would not have assisted Goddard Elliot's case.

Leading Evidence from Deceased Witnesses

Fritsch sought to rely on an affidavit from his father, which was sworn four days prior to his death. Goddard Elliott submitted that such evidence should be excluded as it was not able to be tested by way of cross-examining the deceased witness.

His Honour was unwilling to exclude the affidavit, finding that the probative value of its admissible parts significantly outweighed any prejudice to Goddard Elliott in being unable to cross-examine the deceased. His Honour noted however that the affidavit should be given less weight in light of Goddard Elliot's inability to test the evidence.


His Honour rejected Mr Fritsch's argument with respect to breach of fiduciary duty, misleading and deceptive conduct and coercion against Goddard Elliott.

Goddard Elliott was found to have been negligent and Justice Bell awarded loss of opportunity damages against it of $675,000. However, as Justice Bell found advocates' immunity provided a complete defence for Goddard Elliott, it succeeded in its claim for outstanding fees against the plaintiff.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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