Introduction
The New South Wales Court of Appeal (NSWCA) recently considered the standard of care required of a solicitor when certifying and filing pleadings in circumstances where a client’s case ultimately proves unsuccessful.
In Victorian Xray Group (Dandenong) Pty Ltd v Anthony Mark Malouf t/as Malouf Solicitors [2026] NSWCA 5, the NSWCA held that a solicitor does not breach their duty of care merely because the pleadings they certified later failed.
The relevant question is whether a solicitor exercising reasonable care ought to have concluded, on the material available to them at the time of filing, that the pleadings were hopeless and doomed to fail.
The NSWCA confirmed this threshold is a high one.
Background
Three Victorian medical imaging companies (VXG Dandenong, VXG Boronia and VXG Balwyn) (collectively, VXG), of which Mr White was a director and guarantor, contracted with Philips Healthcare (Philips) pursuant to service agreements (the Agreements) entered into with each individual company.
Due to non-payment of amounts outstanding under the Agreements, Philips terminated each of the Agreements on 8 September 2016 and commenced separate District Court proceedings against each company, joining Mr White as a defendant in his capacity as guarantor.
VXG and Mr White (together, the Appellants) were represented by a solicitor (the Appellants’ solicitor) in the various District Court proceedings and an appeal described as follows:
- The Balwyn District Court proceedings;
- The Balwyn appeal;
- The Dandenong proceeding; and
- The Boronia proceedings.
As part of those proceedings the Appellants’ solicitor certified and filed defences, a notice of intention to appeal, a notice of appeal, an amended notice of appeal, a statement of claim and a crossclaim.
The Appellants were unsuccessful in the appeal and various proceedings, with the exception of the Boronia proceedings, which settled before hearing.
The Appellants later brought claims against their solicitor in negligence arising from his conduct in the proceedings with Philips, alleging that but for the Appellants’ solicitor’s acts of certifying and filing the relevant originating documents and pleadings, the Appellants would not have incurred the legal costs associated with the Philips proceedings.
In order to succeed in their claim, it was necessary for the Appellants to prove the Appellants’ solicitor certified originating documents and pleadings when he ought not, with the counterfactual being that the Appellants would have otherwise never defended the proceedings.
Accordingly, the determination in these proceedings against the Appellants’ solicitor involved consideration of whether the Appellants’ solicitor ought to have considered the Philips proceedings were hopeless and doomed to fail at any material time.
In the first instance, the Appellants’ solicitor was successful before the Supreme Court of New South Wales. The Appellants subsequently appealed the decision to the NSWCA.
Key issues
The key issue on appeal continued to turn on whether a solicitor exercising reasonable care would have concluded at any relevant time the pleadings were “hopeless” and “doomed to fail”.
The decision
The NSWCA dismissed the appeal, holding that on the material available to the Appellants’ solicitor at the time he filed each relevant Court document, a solicitor exercising reasonable care would not have concluded that the defences or the appeal were doomed to fail.
The various proceedings and appeal were examined in detail, save for the Boronia proceedings where the NSWCA found the defence was not doomed to fail after a relatively short analysis.
Balwyn DC proceedings
The primary issue in the Balwyn proceedings involved whether the Appellants’ solicitor ought to have known the proceedings were hopeless and doomed to fail at the time of filing the defence.
In support of that position, the Appellants argued that:
- The Agreements contained a clause that prevented oral variations to the agreement (an ‘Entire Agreement’ clause);
- Oral variations to the Agreements would have required ‘clear and specific words’; and
- The evidence available to the Appellants’ solicitor at the time, even taken at its highest, would never have met the necessary threshold to amend the respective Agreements in light of the Entire Agreement clause.
In undertaking an analysis of that position, the NSWCA focused on the knowledge of the Appellants’ solicitor and had regard to the following matters:
- The Appellants’ solicitor correctly identified to the Appellants at the time of receiving instructions for the defence that the defence did not need to plead evidence, but it would be necessary to obtain that evidence, which relied on another individual’s recollection;
- The Appellants’ solicitor advised the Appellants that a barrister would be needed, but such advice was ignored and the Appellants’ solicitor was instructed to proceed with the defence;
- In any event, it would not have been known to the Appellants’ solicitor that the Balwyn DC proceedings were hopeless or doomed to fail; and
- The Appellants’ solicitor’s indication of the problems facing the Appellants in the proceedings did not evidence the fact he lacked a belief the proceedings had a viable defence.
Balwyn Appeal
In respect of the Balwyn appeal, the Appellants relied heavily on a statement in the reasons for the underlying judgement to allege that “the appeal was defeated on a single question”, and “by the time the notice of intention to appeal had come around, that question should have been asked by the solicitor”.
The NSWCA rejected this amounted to negligence, noting that:
- The submission is based on an answer given many months after the notice of intention to appeal had been filed;
- The situation facing the solicitor at the time when the notice of intention to appeal was filed was very different;
- Counsel had advised filing the notice without delay as a protective measure; and
- Counsel’s substantive advice, received after the notice of appeal had been filed, did not advise there was no arguable basis and “never formed the view that the appeal was hopeless”.
Dandenong proceedings
In the Dandenong proceedings, a successful application was made to set aside the default judgement, in which the Appellants’ solicitor relied on an affidavit from Mr White.
In the proceedings against the Appellants’ solicitor, the Appellants sought to rely on negative comments made by the trial judge in the Dandelong proceedings in respect of Mr White’s affidavit in order to establish the Appellants’ solicitor’s negligence.
The NSWCA did not accept the Appellants’ submission, reasoning that the trial judge was analysing the state of the evidence at a later point time, namely at trial.
In addition, the NSWCA found that Mr White’s affidavit served some purpose in the form of setting aside the default judgement.
The NSWCA was also reluctant to find that an affidavit, prepared for that particular application and in circumstances of urgency, should bear against the Appellants’ solicitor in a separate proceeding unrelated to that application.
Conclusion
In each of the underlying proceedings, for the various factual reasons summarised above, the NSWCA concluded the Appellants’ solicitor had not breached his duty of care.
The NSWCA focused on the high bar to establish that a solicitor ought to have concluded, prior to filing or certifying a Court document, the case was hopeless and doomed to fail.
Practical takeaways for practitioners and insurers
The key takeaways from the decision are as follows:
- When assessing a professional negligence claim against a solicitor, carefully consider how the negligence allegation is framed as it determines the counterfactual.
Alleging the proceedings were hopeless and doomed to fail establishes a certain counterfactual that demands a correspondingly high evidentiary threshold.
A more tempered allegation of negligence is easier to establish but may produce a counterfactual so complicated that ostensibly recoverable damages are substantially diminished or even entirely lost.
By way of an example, in this case, the Appellants framed their negligence allegation as being that, had their solicitor advised the proceedings were hopeless, they would have immediately accepted that advice and thereby avoided incurring any further legal costs. On that basis, the Appellants quantified their damages as all further legal costs subsequently incurred.
The NSWCA relevantly observed that if in the counterfactual the advice given was anything less than the proceedings were hopeless, it would “raise a series of questions” that undermine the ability to establish causation and, in turn, quantify damages.
Here, the NSWCA queried:
- What the Appellants would have done upon receipt of such advice;
- Their attitude to the litigation;
- Their desired outcome of the proceedings;
- Their disposition to follow legal advice;
- Whether they would have turned to another lawyer;
- Whether they would have instructed the Appellants’ solicitor to obtain more and better information.
The NSWCA found that the “answers to these questions involved the likelihood of the Appellants incurring further costs after the dates on which the relevant court documents were filed”.
- There is an important distinction between what a party can plead and what evidence may ultimately be available. The fact a pleading may later lack evidentiary support does not necessarily mean the pleading was always hopeless and doomed to fail; and
- What ultimately matters is the material in front of a solicitor at the time they file or certify the document or pleading. A later assessment of the relevant document does not necessarily retrospectively prove it was hopeless and doomed to fail at the time it was filed or certified if there was available at the time sufficient instructions and evidence to support the pleading.
