Chamberlains v Lai

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Chamberlains v Lai
Coat of arms of New Zealand.svg
Court Supreme Court of New Zealand
Full case name Chamberlains v Sun Poi Lai & Hilda Lorraine Lai
Decided 11 September 2006
Transcript(s) http://jdo.justice.govt.nz/jdo/SearchResult.jsp
Court membership
Judge(s) sitting Elias, Gault, Keith, Tipping, Thomas
Keywords
barristerial immunity

Chamberlains v Lai (2006) is an important case which lifted "barristerial immunity" in New Zealand, which had been a feature of New Zealand since the early 1970s.

Background[edit]

Chamberlains (a law firm) represented the Lais' company S and L Lai Limited in defending a claim in excess of $700,000 in the High Court of New Zealand. Near the end of the trial, the judge asked Mr and Mrs Lai whether they would personally guarantee the judgement if their company lost in court. At the advice of their lawyers Chamberlains, they agreed to personally guarantee any judgement should their company lose.

Unfortunately for the Lais, their company eventually lost in court, and judgement was entered against not only the company, but also against both of the Lais personally as well.

Unhappy with this development, the Lais sued Chamberlains for negligence in contract and in tort, as well breach of fiduciary duty, for which Chamberlains filed a defence of "Barristerial immunity", a defence which the Lai’s unsuccessfully asked the High Court to be struck out.

Not put off by this setback, the Lais appealed to the New Zealand Court of Appeal, and won. Chamberlains subsequently filed an appeal with the Supreme Court of New Zealand.

Judgment[edit]

The Supreme Court of New Zealand struck out the defence of "barristerial immunity" in "Lai v Chamberlains" [2006] NZSC 70, meaning the Lai's were able to sue their lawyers for damages. This was based on the earlier decision by the UK House of Lords in Arthur J S Hall & Co (a firm) v Simons. This means that any barrister or solicitor before a Court in New Zealand may be liable in negligence for their actions.

A key issue in this case was whether the striking out of immunity would interfere with finality in the court system. Overall, it was held that existing court powers relating to abuse of process would be sufficient to rein in any discrepancies. It was also held that the lawyer's duty to the court would remain paramount, and the striking out of immunity would not place an undue emphasis on the interests of the client. Elias CJ, in the majority opinion, described the duty to the court as the "rules by which the litigation must be conducted."

The majority opinion was delivered by Elias CJ on behalf of Keith and Gault JJ. Concurrences were delivered by Tipping J and Thomas J.