EL-KALZA v THOMPSON SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, HANDLEY and POWELL JJA 24 April 1995, 18 December 1995 [1995] NSWCA 140 APPEAL AND NEW TRIAL — Interference with Judge's findings of fact — Where based substantially on assessment of witnesses. NEGLIGENCE — Duty of care — Particular relationships — Solicitor and client — Extent of duty when retained in relation to litigation — Whether breach established. Gleeson CJ I have had the advantage of reading in draft form the judgment of Powell JA. I agree with the orders proposed by his Honour and with his reasons for those orders. Handley JA I agree with Powell JA. Powell JA Such problems as arose for determination on the hearing of these proceedings at first instance by Holland AJ, from whose Judgment delivered and the verdict entered by him, on 15th August 1990, this appeal has been brought, and the problems which call for determination on the hearing of this appeal, appear to have been caused substantially, if not entirely, by the fact that the Appellant - who conducted the proceedings at first instance, as he has done on this Appeal, in person - has an unshakeable belief in the correctness of his view of the facts which are said to have given rise to these proceedings, coupled with a total inability to understand, and still less to apply, the principles of law which are relevant to, and call for application to, the cause of action which, in these proceedings, he has sought to propound. The Judgment - which was a reserved one - the correctness of which has been challenged on this appeal was, as one would have expected of Holland AJ, a lengthy one, in which his Honour recorded, and analysed, with great care the evidence which had been tendered on the hearing before him - which hearing continued over some 10 days - in which he recorded, in a manner which I regard as quite unexceptionable, the principles which he was called upon to apply to such facts as he found, and in which he explained the manner - in which I can find no error - he applied those principles to those facts so as to come to the conclusion that there ought to be a verdict in favour of the Respondent in the proceedings which had been brought by the Appellant against him. By way of elaboration on that short statement, I record that, in the course of his Judgment, insofar as they were questions of law, Holland AJ held, and insofar as they were questions of fact, he found: 1. that in the circumstances of which the Appellant complained, the Respondent, who had been retained by the Appellant in connection with certain proceedings in the Family Court of Australia ("the Family Court") owed to the Appellant a duty of care; 2. that that duty of care required of the Respondent that he exercise, with respect to the matter in hand, the reasonable skill and care to be expected of a reasonably competent legal practitioner acting in accordance with the standards normally recognised and followed in his profession; 2 UNREPORTED JUDGMENTS 3. that, in determining, in the instant case, what would constitute reasonable care, one would be obliged to have regard to the circumstances of the particular case, those circumstances including - but not being limited to the client's apparent level of understanding, intelligence and competence, the factual, or legal, complexity of the matter and its urgency, that is, the time within which the task must be performed; 4. that, as the task in hand was the preparation of an Affidavit to serve as proof of facts in the Family Court, which Affidavit was to be sworn by the Appellant, a relevant circumstance was the Appellant's apparent ability to speak of the facts concerned of his own knowledge, his apparent means of knowledge of the subject matter, and his access to any necessary supporting records or other evidence; 5. that, as what were said to be the relevant facts were the subject of considerable dispute between the Appellant - whom his Honour regarded as a quite unreliable witness - and the Respondent, the evidence of the Appellant was to be rejected at any point at which it came into conflict with the evidence of the Respondent. An indication of what were some although not all of the reasons which led his Honour to the view that the Appellant was an unreliable witness, is contained in the following passage in his Judgment (Appeal Book 1009): "What has become clear, in my opinion, is that the plaintiff has indulged in a great deal of reconstruction of events and has endeavoured to mould his evidence to suit the case he wished to make out. That exercise in itself has produced, as n usually does, inconsistencies between present oral testimony and contemporary records as well as leading the court to conclude, as I do, that the plaintiff was not a reliable witness, particularly with respect to matters that appeared not to favour his case." 6. that, given the facts as he found them to be, the Appellant had failed to establish any breach of the duty of care which was owed to him by the Respondent; 7. that, even if the facts had been as the Appellant asserted, but had failed to establish, the Appellant had failed to establish any causal relationship between any breach of duty of care of which he claimed the Respondent had been guilty and the damage which he claimed to have sustained thereby. Given this short and, perhaps, overly simplistic, statement as to the nature of the issues with which Holland AJ was concerned to deal, of the principles which his Honour applied in resolving those issues, of the facts which his Honour found and the reasons which his Honour gave for having done so, I would, in the normal course content myself with saying, that as no appealable error had been demonstrated, I would adopt his Honour's reasons as my own and therefore propose that the appeal be dismissed with costs. However, given the matters to which I referred at the commencement of this Judgment - in particular, the fact that the Appellant has at all times conducted this litigation in person, and his apparently inability to understand the legal principles involved - it is, perhaps, desirable that I record, in a little more detail, the circumstances which are said to have given rise to the proceedings at first instance and the reasons for my view that the appeal should be dismissed with costs. The Appellant, who is now 48 years of age, was born in Egypt in April 1947 and migrated to this country in August 1970 following which he became a naturalised Australian citizen. URJ EL-KALZA v THOMPSON (Powell JA) 3 During 1974 and 1975 the Appellant whilst employed at Vickers Cockatoo Dockyard Pty Ltd ("Vickers") sustained a number of injuries to his back in respect of which injuries he received weekly compensation payments for a limited period. Thereafter, in 1976, the Appellant commenced proceedings in the Workers Compensation Commission of New South Wales ("the Commission") claiming as against Vickers weekly compensation in respect of what he claimed was his continuing incapacity for work as a result of the injuries which he had earlier sustained. The Respondent was retained by the Appellant to act for him as his solicitor in connection with those proceedings. Before those proceedings had come on for hearing, however, the Appellant, in 1976, had married, a son of that marriage being born in January 1978. The Appellant's marriage, which was to be but short-lived, appears to have been a rather stormy one. The parties appear to have separated in August 1978 when the Appellant left, or was locked out of, the home unit at Leichhardt which was then the matrimonial home. Thereafter, the Appellant's former wife, at the Burwood Court of Petty Sessions, obtained an Order awarding her sole custody of the child of the marriage, and, by consent, an Order for maintenance of that child. The proceedings in the Commission appear first to have come before Campbell J (as the Chief Judge of the Compensation Court then was), sitting as a member of the Commission, in September 1979, his Honour's Award of weekly compensation from 1975 to the date of the Award and continuing being made on 10th December 1979. In early January 1980, the solicitors acting for Vickers forwarded to the Respondent's firm a cheque in the sum of $13,196.30, that cheque being intended to cover the arrears of compensation made payable by the Award which Campbell J had earlier made. In the letter accompanying that cheque, the solicitors for Vickers advised the Respondent that the Appellant had requested that future weekly payments be forwarded to him direct by post. Several days later, the Appellant called upon the Respondent and collected the cheque, following which he took it to the George and Market Streets Branch of the Commonwealth Bank where he deposited $196.00 in an existing savings account, $1,000.00 in a cheque account which he opened at the Bank that day, and $12,000.00 in an interest bearing deposit account, all of those accounts being his own name. About a month later the Appellant having procured a "pre-payment" of $600.00 from the interest bearing deposit, then renewed the deposit in the reduced sum of $11,000.00 for the balance of the term of 3 years from 11th January 1980. On 11th April 1980 - by which time, the Appellant, in the absence of his former wife and child, had returned to occupy the former matrimonial home and had continued thereafter to exclude his former wife from the home - the Appellant, acting in person, filed in the Family Court an application for dissolution of marriage, which application was set down for hearing on 2 June 1980. In an application filed in those proceedings the Family Court on 28th May 1980, the Appellant's former wife sought an Order that she be granted exclusive possession of the former matrimonial home - semble pending the hearing of an application for settlement of property in which as it would appear, she sought an Order that the home be transferred to her. That application was opposed by the Appellant who, in a cross-application filed in July 1980, sought an injunction 4 UNREPORTED JUDGMENTS restraining his former wife from approaching the home and interfering with his occupancy of the home until the application for declaration of or alteration of interest in property was finally determined. In support of the Appellant's former wife's application there had been filed an Affidavit sworn by her on 28th May 1980 in which Affidavit she dealt (inter alia) with the Appellant's financial position: A day or two after that Affidavit had been served upon him, the Appellant attended at the Respondent's office and instructed him to act for him in the proceedings in the Family Court. On that day, the Respondent took detailed instructions from the Appellant and on the basis of those instructions prepared an Affidavit which was sworn by the Appellant on 2nd June 1980. On 2nd June 1980, the Family Court pronounced a Decree Nisi dissolving the Appellant's marriage, the balance of the proceedings apparently being adjourned until November 1980. Later in the same week, the Appellant again attended on the Respondent for the purpose of giving instructions in relation to the preparation of a document known as "Form 19 - Statement of Financial Circumstances" ("Form 19") a form of document apparently intended to disclose the respective financial positions of the parties to any proceedings in the Family Court relating to such questions as maintenance, settlement of property and the like. As best as I can judge it, the Respondent appears to have given to the Appellant a blank Form 19 with a request that he fill it in to the best of his ability, any information which the Appellant was unable to supply being later to be provided from the Respondent's records if they permitted him to do so - this, as it would appear, was later done. Although it is not necessary to go into the ultimate detail demonstrating that this was so, it is sufficient to record that each of the Affidavit and the Form 19 failed, in significant respects, accurately to record the Appellant's financial position at the time. Although it was part of the Appellant's case on the hearing before Holland AJ that those omissions arose because of the failure of the Respondent to exercise reasonable care in respect of their preparation, Holland AJ was later to find that the matters in question had been deliberately withheld by the Appellant from the Respondent. It would appear that each of the Affidavit which had been prepared by the Respondent and sworn by the Appellant and the engrossed Form 19 which had been signed by the Appellant was filed in the Family Court on 6th June 1980. In September 1980, the Respondent, on the instructions of the Appellant, caused to be filed in the Common Law Division of the Court, a Statement of Claim seeking to recover as against Vickers, damages for personal injury arising out of one of the incidents which had been the subject of the proceedings in the Commission. Whether or not those proceedings were ever brought on for hearing, and, if so, what was the result is uncertain, as, on the instructions of the Appellant, the Respondent, in May 1981, forwarded his file to Messrs McClellands, solicitors who he had by then instructed to appear for him. The interlocutory applications in the Family Court came before Maxwell J in November 1980 at which time her Honour delivered a Judgment in favour of the Respondent's former wife, the Appellant thus being required, pending the determination of the application for a declaration of title to or settlement of property, to vacate the former matrimonial home and to yield exclusive possession of it to his former wife. URJ EL-KALZA v THOMPSON (Powell JA) 5 The hearing of the principal applications came before Maxwell J in January 1981. On that hearing (inter alia) the Affidavit which had been sworn in June 1980, the Form 19 and several other Affidavits in which the Appellant referred to, and confirmed the accuracy of the information set out in the earlier Affidavit and the Form 19 were relied upon by the Appellant. In the course of the hearing before Maxwell J on this occasion, it became apparent that the material contained in the earlier Affidavit and the Form 19 were false and misleading, a fact which ultimately led her Honour to give the direction to which I will later refer. At the conclusion of that hearing, her Honour delivered a Judgment in which she ordered that the Appellant transfer to his former wife all his right, title and interest in the former matrimonial home and its contents, upon his former wife furnishing to him a mortgage over the property securing payment to him, at the expiration of 3 years, or upon the sale of the property, whichever be the earlier, the sum of $10,000.00. Bearing in mind one of the complaints which the Appellant was later to make in these proceedings, and notwithstanding the direction to which I will later refer, it should be noted that, in the course of her Judgment, Maxwell J, after referring to the false and misleading nature of the material which had been filed on his behalf in the Court, continued: "However, it must be kept clearly in mind that the only relevance of Mr El-Kalza's failure to properly disclose his financial affairs in these proceedings is in the context of this case on the question of credit." Having pronounced the Order to which I have earlier referred, Maxwell J continued: "T have already directed the transcript of the proceedings before me of 7 and 8 January be taken out. I now confirm that direction and I direct also that the transcript of proceedings on 7 November 1980 and this day be also taken out, and I direct that the Registrar of this court, when that transcript is available, refer all papers in the proceedings, including the transcript, to the Attorney-General of the Commonwealth of Australia." Following the delivery of Maxwell J's Judgment, the Appellant retained fresh solicitors who, on his behalf, then filed a Notice of Appeal to the Full Court of the Family Court. That appeal appears to have been dismissed in November 1981, the Orders made by Maxwell J being confirmed. It would appear that, after the papers in the Family Court proceedings had been referred to the Attorney-General for the Commonwealth, they were referred to the Australian Federal Police who in the period between November 1982 and April 1984 carried out an investigation into the matters disclosed. At the conclusion of those investigations, an officer of the Australian Federal Police exhibited two Informations causing Summonses to issue against the Appellant for trial at the Court of Petty Sessions at the St James Centre, each of the Informations alleging that the Appellant had knowingly given false testimony (Crimes Act 1914 (Cth) s35(1)), the particulars in one Information relating to the false information given by the Appellant as to his assets, while the particulars in the other related to the false information given by the Appellant in respect of his income. The trial of the Appellant on those charges took place in October 1984, the Appellant being convicted on the first charge, but acquitted on the second,and being bound over by recognisance in the sum of $1,000.00 to be of good behaviour for 3 years. 6 UNREPORTED JUDGMENTS From the decision of the Magistrate, the Appellant appealed to the District Court, the appeal being heard by Shadbolt DCJ in September 1985, at which time his Honour dismissed the appeal and confirmed the conviction and order of the Magistrate. These proceedings were commenced in May 1986, at which time the Appellant filed a Statement of Claim in which he sought to recover as against the Respondent, damages for professional negligence. The particulars of the negligence charged by the Appellant against the Respondent were in the following form: "The defendant was negligent in his conduct of the business he undertook to perform for the plaintiff that he: (a) Failed to take any adequate precautions to explain, and advice (sic) the Plaintiff how to draft and fill out the form 19 of the statement of financial circumstances. (b) Failed to check the accuracy of the information needed in the form 19 of the financial circumstances. (c) Failed to revise with plaintiff the accuracy of the typed form 19 of the financial circumstances before the proceedings. (d) Failed to warn or advice (sic) the plaintiff of any complications might occur (sic) from given (sic) inaccurate details in the form 19 of the financial circumstances. (e) Required (sic) the plaintiff of the risk to seek advice from other sources at the time of making the initial draft statement of financial circumstances. (f) The defendant failed to check for the plaintiff the annual income for the year ended 31st March, 1980. (g) The defendant failed to check for the plaintiff's bank records. (h) The Defendant failed to include to the Family Court the proceedings pending in the Supreme Court for personal injury sustained by the plaintiff in late 1974. (i) The defendant made an error by stating in affidavit of 2. 6.1980 that the plaintiff was required to repay sickness benefits received from the Government during the time of incapacity. (j) The defendant acted negligently in his conduct of the Family Court proceedings he undertook to perform for the plaintiff. (k) Such negligence on the part of the defendant consisted in failing to file and check the accuracy of the financial circumstances dated 6/6/1980, and affidavit of 2.6.1980. (1) The defendant failed to take all necessary steps to explain, and advice (sic) the plaintiff how to fill out the statement of financial circumstances. (m) The defendant failed to protect, and look after the plaintiff's interests in the proceedings. Further if necessary the plaintiff will rely on the 'res ipsa loquitur' (sic). while the particulars of the damage which the Appellant claimed to have sustained as the result of the negligence charged were in the following terms: "(a) Deformation (sic) to the plaintiff (sic) Reputation, and character. (b) Expose the plaintiff to criticism, accusation, and allegations. (c) Lead the plaintiff to be maliciously prosecuted (sic), and investigated by the authority. (d) Discredit the plaintiff (sic) credibility in the eyes of the law, and the authority. URJ EL-KALZA v THOMPSON (Powell JA) 7 (e) Made the plaintiff vulnerable to all of his affairs, and as well as the entirly (sic) member of the family. Deformation (sic) to be ascertained loss of money in the to be ascertained matrimonial home from the date of the proceedings to date. Full particulars of which shall be supplied before the trial. Further expenses will be increased and will be particularised before the trial. The proceedings came on for hearing before Holland AJ on 7th June 1990, and, as I have earlier recorded, continued for a period of some 10 hearing days. The impression which one obtains from the appeal papers is that, although Holland AJ was at pains to keep the proceedings under control, the proceedings rapidly took on an air of cloud-cuckoo-land. Although a mass of documentary material - occupying some 600 pages or thereabouts in the appeal papers - was placed before Holland AJ, only three witnesses, a Dr Marinucci, who was called - for some purpose which I am quite unable to fathom - by the Appellant at the commencement of his case, the Appellant himself - his evidence in chief and cross-examination in the first instance occupying some 260 pages of the appeal papers and his evidence in chief and cross-examination when, in the course of the submissions for counsel for the Respondent, he sought and was granted leave to re-open occupying a further 20 pages or thereabouts, and the Respondent, whose counsel, in his case, had relied entirely on documentary evidence, called - again for some reason which I am unable to fathom - by the Appellant in his (the Appellant's) case in reply. In the end, as I have earlier recorded, Holland AJ found that the Appellant had failed to establish the case which he had sought to make out and accordingly found a verdict and entered Judgment in favour of the Appellant. The reasons why, in my view, it is inevitable that this Appeal should be dismissed are as follows: 1. In order that the Appellant might succeed in his claim, it was necessary for him, first, to satisfy Holland AJ, on the balance of probabilities, that the facts which, as he would have had it, led (inter alia) to his prosecution and conviction, and to his loss in the proceedings in the Family Court were as he had alleged. In this, as is apparent from what I have earlier recorded, the Appellant failed dismally, a major, if not the only, reason for his doing so being that Holland AJ, for the reasons which I have earlier recorded, regarded him as a thoroughly unreliable witness. The law to be applied in a case such as this thus is clear enough and is sufficiently recorded in the well known - and, no doubt, by now, oft repeated - passage in the joint Judgment of Brennan, Gaudron and McHugh JJ in Devries v Australian National Railways Commission!: "More than once in recent years, this court has pointed out that a finding of act by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's finding depends to any substantial degree on the credibility of a witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably mis-used his advantage' or has acted on evidence which was 'inconsistent with facts introvertibly established by the evidence' or which was 'glaringly improbable". 1. (1992-1993) 177 CLR 472, 479 8 UNREPORTED JUDGMENTS It being clear enough that Holland AJ's findings of fact depended to a substantial degree on the credibility of the Appellant as a witness, and those findings, in my view, not being inconsistent with the facts incontrovertibly established by the evidence or glaringly improbable, his Honour's findings are immune from challenge. 2. Since each of the 20 grounds of appeal upon which the Appellant sought to base his challenge to Holland AJ's Judgment asserted "that his Honour erred to give any or any sufficient weight to the evidence before him" in one or other of the respects assigned, the conclusion that his Honour's findings of fact are, in the circumstances, immune from challenge is sufficient to dispose of this Appeal. However, in fairness to his Honour, I must repeat what I have earlier recorded, namely that not only has no challenge been made to, but in my view, no error could be found in, his Honour's statements of the principles of law which he regarded himself as bound to apply to the facts of the case as he found them to be. The Appeal should be dismissed with costs. Counsel: Appellant: In person Respondent: PR Garling SC and JM Morris Solicitors: Appellant: In person Respondent: Phillips Fox