PHILLIPS v BISLEY and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MASON P, MEAGHER JA and DUNFORD AJA 18 February 1997, 18 March 1997 [1997] NSWCA 246 Legal Practitioners — Solicitors — negligence — failure to commence proceedings in time causation damages whether loss suffered Negligence — MVA — jurisdiction of cause of action Limitations of Actions Act 1974 (Qld) The appellant was injured in a MVA in Queensland. The appellant brought proceedings against the first defendant, the driver of the vehicle the appellant was travelling in, in New South Wales. At the time of service the first defendant was temporarily residing in New South Wales and the appellant subsequently received a settlement of $30,000. An action against the second defendant, the driver of the other vehicle involved, was commenced outside the three year limitation period in Queensland and hence was statute barred. The appellant claimed in negligence in the New South Wales District Court against her former solicitors re the failure to commence proceedings in Queensland in time. The trial judge dismissed the claim on the grounds that the appellant had not proved negligence against the respondents (solicitors) giving rise to a loss suffered by the appellant. Held, appeal dismissed: (i) The appellant lost nothing of value through the pleaded negligence of her former solicitors because the evidence demonstrated that there was no viable case against the second defendant. In any event the loss proved arising from the MVA was less than the $30,000 recovered on settlement. Johnson v Perez (1988) 166 CLR 351; Nikolaou v Papasavas, Phillips & Co (1988) 166 CLR 394; Fletcher & Son v Jubb, Booth and Helliwell [1920] 1 KB 275; MacRae v Stevens (1996) Australia Torts Rep 81-405; Kitchen v Royal Air Force Association [1958] 1 WLR 563; applied. Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; Allied Maples Group Ltd v Simmons & Simmons [1995] 4 All ER 907; Yeoman's Executrix v Ferries (1967) SLT 332; referred to. Bennett v Minister of Community We/fare (1992) 176 CLR 408; distinguished. Mason P On 19 June 1985 the appellant was injured in a motor vehicle accident in Queensland. She was a passenger in a van driven by her friend Ms Julie Corby when it collided with a portable house being towed along the Bruce Highway near Rockhampton. The driver of the prime-mover towing the portable house was Mr Norman James. Mr James appears to have been a resident of Queensland at all times. Ms Corby resided in New South Wales until 1989 when she moved to Tasmania. Within a month of the accident the appellant retained Thomas & Bisley, solicitors (the respondents) to act for her in seeking to recover damages. On 11 June 1991 the respondents caused to be issued out of the District Court at Wollongong an Ordinary Statement of Claim suing Ms Corby as the first defendant and Mr James as second defendant. Negligence was alleged against each defendant. In May 1992 the appellant changed her solicitors from the respondents to W G McNally & Co. Then, in October 1992 she changed to Michael E Bradstreet. 2 UNREPORTED JUDGMENTS Since the appellant's causes of action arose outside New South Wales, the jurisdiction of the District Court of New South Wales to determine the action against each of the named defendants depended upon their residence within New South Wales at the time of service: see District Court Act 1973, s47. By 1991 this presented the appellant with real difficulties. Ms Corby had moved her residence from New South Wales to Tasmania in 1989. Fortunately for the appellant, Ms Corby was served when temporarily in Sydney in 1993 and thereafter no objection as to jurisdiction was taken by her or her insurers. As regards Mr James, his residence remained in Queensland, he was never served. and he never submitted to the jurisdiction of the New South Wales District Court. Faced with this. the appellant discontinued her proceedings as against Mr James in 1994. The action continued against Ms Corby and was defended by her statutory insurer. It was fixed for hearing in Wollongong in May 1995 and was settled 3 days before hearing for $30,000 inclusive of costs. The appellant's present claim against ha former solicitors alleges negligence in failing to commence proceedings in Queensland within the 3 year limitation period provided under s11 of the Limitation of Actions Act 1974 (Qld). The loss claimed by the appellant in these proceedings is $22,000 (plus interest). This represents the difference between $52,500, the claimed value of ha loss (made up of general damages of $40,000, past wage loss of $5,000 and costs of $7,500) and $30,000. the sum received upon settlement of the Wollongong proceedings. The appellant failed below. Although there was virtually no contest that failure to issue a timely Queensland writ was negligent, the trial judge (Patten DCJ) held that the appellant had not proved against the respondents negligence giving rise to loss suffered by the appellant. His Honour seems to have concentrated upon whether the appellant had a good cause of action against Ms Corby, treating as subsidiary the question whether she had a good cause of action against Mr James. Nevertheless there are findings on both issues. His Honour concluded that "it seems to me undoubted that sufficient breach of duty of care could have been established against Ms Corby.... The action in my view would plainly have succeeded against her for the full measure of damages proved". The judge found that if he had been assessing damages himself in New South Wales in 1996 a verdict in the order of $50,000 would have been appropriate. I infer that this includes special damages. As regards the potential liability of Mr James, his Honour concluded: Whether or not a case could also have been proved against Mr James was I think a much more difficult question. He was involved in the manoeuvre as a result of a lawfully granted permit. He was accompanied by police vehicles to the front and to the rear and he was travelling, so he said, between 30 and 40 kilometres per hour. Although perhaps one does not need finally to resolve this issue, I agree with Mr Williams counsel for the defendant that it might be said to be unlikely that the plaintiff would have succeeded against Mr James in establishing a breach of duty of care if she had maintained her action against him. The basis upon which the trial judge thought that it might be said to be unlikely that the appellant would have succeeded against Mr James had been set out earlier in his reasons. The house was being transported pursuant to appropriate permission. The vehicle trailing the house was the third vehicle in a convoy the first of which was a pilot vehicle with an orange flashing light, the second of URJ PHILLIPS v BISLEY and ORS (Mason P) 3 which was a police vehicle with a number of flashing blue lights. The third vehicle, the trailer, had a flashing light and a sign "Danger Wide Load" as did the pilot vehicle. The accident was held to have occurred in daylight when there was visibility in a straight stretch of road for 200-300 metres according to the evidence in Mr James' statement which had been put into evidence; and between half to three quarters of a kilometre according to the evidence of Sgt Bond who witnessed the accident and who gave evidence at trial. I do not understand it to be disputed in the Court of Appeal that the respondents were negligent in not commencing a timely action (in Queensland) against Mr James. A legal practitioner in New South Wales retained to recover damages for personal injuries suffered in Queensland ought reasonably to acquaint himself or herself with the limitation law relevant to the client's cause of action in that forum (cf Fletcher & Son v Jubb, Booth and Helliwell [1920] 1 KB 275 at 281) whether or not another forum (such as New South Wales) might have been available. As Beazley JA put it in MacRae v Stevens (1996) Aust Torts Rep 81-405 at p63,689, "there is ample authority that a solicitor is liable for failing to commence proceedings for a client prior to the expiry of any relevant limitations period". How then are issues of causation and damages to be approached? Fortunately the matter has been considered recently by the High Court in Johnson v Perez (1988) 166 CLR 351 and Nikolaou v Papasavas, Phillips & Co (1988) 166 CLR 394. In Nikolaou Wilson, Dawson, Toohey and Gaudron JJ said of the trial judge in that case (at 404): He should have assessed damages by reference to the loss at [the date at which the claim became statute-barred] of the right to claim damages. That loss would ordinarily be quantified by the trial judge taking a broad brush approach to the several matters that in a particular case may require to be resolved - the likely date when in the absence of the negligence of the solicitor the action would have come to trial, the evidence that would or should have been available to the plaintiff at that time, the relevant principles of law then governing the assessment of damages, the question of contributory negligence, and... the prospects of any judgment given in favour of the plaintiff being satisfied. In Johnson, Brennan J said (at 373): The value of the lost cause of action cannot be assessed as though there were a market for doubtful causes of action in damages for personal injury. The value of the lost cause of action is not what a speculator would be prepared to offer the plaintiff as the price of an assignment of the cause of action. The plaintiff's loss being whatever monetary compensation he would have received at the time he would have received it but for his solicitor's negligence, the court must find whether or not he has lost something of value. If he would have failed in the original action, he has lost nothing; if he would have succeeded, he has lost what he would have received at the time he would have received it; if the action would have been compromised, he has lost what he would have been paid in settlement at the time when he would have been paid. Or, if it is doubtful whether or not he would have succeeded in the action and it is, not probable that the action would have been compromised, the court assessing the damages must determine as best it can on the balance of probabilities whether the plaintiff would have succeeded (and, if so, to what extent) or failed. In making that determination, the court may need to estimate the extent to which a successful plaintiff's damages would have been reduced because of contributory negligence. 4 UNREPORTED JUDGMENTS Johnson and Perez were cases where there was no dispute that the plaintiff whose claim was lost by the negligence of the solicitors had lost something of value. However, this is the critical issue in the present case. Nevertheless there is guidance from the High Court as to how a matter such as the present should be approached. Several of the justices cited with approval a well-known passage in the judgment of Lord Evershed MR in Kitchen v Royal Air Force Association [1958] 1 WLR 563 at 574-5; [1958] 2 All ER 241 at 250-1: Tf, in this kind of case, it is plain that an action could have been brought, and, that if it had been brought, it must have succeeded, the answer is easy. The damaged plaintiff then would recover the full amount of the damages lost by the failure to bring the action originally. On the other hand, if it be made c/ear that the plaintiff never had a cause of action, that there was no case which the plaintiff could reasonably ever have formulated, then it is equally plain that she can get nothing save nominal damages for the solicitors' negligence. I would add, as was conceded by counsel for the plaintiff, that in such a case it is not enough for the plaintiff to say: "Though I had no claim in law, still, I had a nuisance value which I could have so utilised as to extract something from the other side, and they would have had to pay something to me in order to persuade me to go away". The present case, however, falls into neither one nor the other of the categories which I have mentioned. There may be cases where it would be quite impossible to try "the action within the action': as counsel for the second defendants asks. It may be that for one reason or another the action for negligence is not brought until, say, twenty years after the event, and in the process of time the material witnesses, or many of them, may have died or become quite out of reach for the purpose of being called to give evidence. In my judgment, assuming that the plaintiff has established negligence, what the court has to do in such a case as the present is to determine what the plaintiff has lost by negligence. The question is: Has the plaintiff lost some right of value, some chose in action of really and substance? In such a case it may be that its value is not easy to determine, but it is the duty of the court to determine that value as best it can. In Johnson and other recent cases, the High Court has emphasised that the court's duty in cases such as the present is to value the plaintiff's lost chance: see also Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 354, 362. The lost chance has value even if the court reviewing the facts with 20:20 hindsight assesses the plaintiff's prospects at less than 50 per cent: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 119; Allied Maples Group Ltd v Simmons & Simmons [1995] 4 All ER 907 at 916, 928. This is because the plaintiff may have lost, through the lawyer's negligence, the prospect of a favourable settlement offer. The critical issue, not clearly addressed in the cases, is how to distinguish between the derisory or "nuisance value" offer which Lord Evershed MR in Kitchen would disregard, and the situation where a case has sufficient "prospects" for the court trying the negligence claim to be able to say that the plaintiff would have been likely to have attracted a valuable offer of settlement (even if worth considerably less than 100% of the plaintiffs actual loss): cf 'Yeoman's Executrix v Ferries (1967) SLT 332. Difficult and elusive though the distinction may be, the court trying the issue of the lawyer's negligence must proceed on the evidence before it. This involves considering the factors mentioned in the passage quoted from Nikolaou, including "the evidence that would or should have been available to the plaintiff at that time" (emphasis added). It also involves looking at the likely response of URJ PHILLIPS v BISLEY and ORS (Mason P) 5 the other party or parties in the lost proceedings (ie those which would, but for the lawyer's negligence, have been prosecuted in a timely way). Among other things this requires the court trying the negligence claim to make due allowance for the fact that a less than well informed or overly cautious lawyer for the defendant faced with a claim in the lost proceedings might have made a valuable settlement offer. But what the trial judge cannot do, in my opinion, is shut his or her eyes to the evidence showing the information that was known to or was reasonably obtainable by all litigants in the lost proceedings pointing towards an objective assessment of the plaintiff's prospects of success in the lost action. Applying these principles, the appellant lost nothing of value through the pleaded negligence of her former solicitors. The evidence before Patten DCJ was reasonably procurable at the time when the appellant's lost Queensland proceedings became statute-barred. That evidence demonstrated that there was no viable case against Mr James; and that the prospect that he would have offered to settle the claim against him was nil. Mr James was travelling slowly under police escort, and in accordance with the permit he held and the directions of the police escort. The mobile home was bulky and obstructive, but it was well lit. It was clearly visible to other drivers on the highway. As the car being driven by Ms Corby approached, evasive action was taken. The evidence led by the appellant at the trial did not in effect challenge this. The appellant said that the flashing lights of the police cavalcade were visible, and that the vehicles in it were travelling at an "average speed". Although she expressed the view that Ms Corby could not have avoided the collision, the appellant was in effect unable to account for it. "It was just too quick, it was just there." She estimated that the car in which she was a passenger was travelling at about 801an per hour. Both she and Sergeant Bond agreed in their evidence that Ms Corby did not slow down before impact. The appellant advanced evidence that the accident occurred at approximately 5.40 5.45am (which would probably have been before daylight, and thus rendered Mr James in breach of the permit requiring him to travel in daylight). However there was a clear conflict of testimony on this issue. Sergeant Bond was firm that the accident occurred later (at 5.59am), when it was daylight. This possibly critical disagreement was resolved by Patten DCJ in favour of the later time. His Honour was clearly entitled to prefer the evidence of Sergeant Bond on the matter. Mr Bradstreet gave evidence of the circumstances in which he advised the appellant to settle against Ms Corby for $30,000. What emerged clearly was that Mr Bradstreet had effectively accepted at face value his client's then assertion that Ms Corby was blameless. On his approach the appellant was fortunate to have got $30,000 out of Ms Corby's insurers. In the court below. Mr Bradstreet adhered to this position, at least until late in his cross-examination. However, his opinion (like that of the appellant) is ultimately of little if any weight in the light of the overwhelming evidence - and findings - that the fault for the accident lay exclusively at the door of Ms Corby. That evidence was accepted by the judge below. In the appeal, the appellant contended that, had timely proceedings been brought (in Queensland) joining both defendants, then the appellant could have given evidence of her injury as a passenger, leaving it in effect to the two defendants to seek to place the blame for the accident on the shoulders of the other. Whatever apportionment of liability might have emerged as between the defendants, this would not have diminished the recovery of full damages by the 6 UNREPORTED JUDGMENTS appellant. It follows, so the argument went, that the appellant's failure to get "full" compensation in the events which occurred is attributable to the respondents' negligence. Reliance was placed on Bennett v Minister of Community Welfare (1992) 176 CLR 408 at 428-30 where McHugh J discusses how to identify whether or not a causal connexion exists between a breach of duty and any harm suffered by the person to whom the duty is owed. The matter is to be approached in a common sense manner, and the claim of causation between breach and damage will only be broken for the purpose of attributing legal responsibility for that damage if there has been an intrusion of a "new cause which disturbs the sequence of events, something which can be described as either unreasonable or extraneous or extrinsic". I do not find the passage cited to be helpful, because Bennett was a case where the party corresponding to the respondents in the present case had been held to be negligent. (The Director of the Department of Community Welfare had failed to take reasonable care to avoid economic loss by a ward in failing to obtain or arrange independent legal advice for the ward, in consequence whereof the ward's cause of action to recover damages for personal injury became statute-barred.) Here, in contrast, the negligence of the respondents is the critical issue. Even assuming that the appellant would have had no difficulty in serving Queensland process upon Ms Corby, this contention of the appellant is ultimately circular, because it assumes that, had Mr James been joined in a timely action. he would have been found liable or at least contributed to a settlement that would have exceeded the $30,000 inclusive figure at which Ms Corby's insurers settled the Wollongong proceedings. The trial judge's findings effectively rejected that possibility. The totality of the evidence certainly does so. This points to a further difficulty with the appellant's case. As indicated previously, she claims $22,000 made up as follows: General damages $40,000 Past wageloss $ 5,000 Costs $ 7.500 $52,500 Less sum recovered in settlement $30.000 $22.500 There is no evidence of lost general damages of $40,000. The finding that a verdict of $50,000 might have been recovered in New South Wales in 1996 is little help, given that the loss occurred when the lost action became statute barred (Johnson at 391). And if the lost chance is to be valued when it was lost, I see no escape from the logic that it must also be valued where it was lost. This was Queensland. The appellant tendered a report from Brisbane solicitors who advised that late 1989 or early 1990 would have been the notional date of trial on the basis that proceedings may not have been instituted not long prior to the expiration of the limitation period. The same advice indicated that general damages in the sum of $22,500 were what the appellant might have expected to recover. I am prepared to assume that a past wage loss of $5,000 was established, URJ PHILLIPS v BISLEY and ORS (Dunford AJA) 7 despite the fairly scant evidence on the subject. If one adds, $5,000 for past wage loss, this is still short of the $30,000 actually recovered. As to costs of $7,500 being a head of damages flowing from negligence in failing to commence timely proceedings in Queensland, I cannot see how this was possible. The respondent's negligence saved the appellant from incurring any irrecoverable portion of the costs that might have been ordered in favour of the appellant in the lost Queensland case. And the respondents can hardly be held responsible for the costs deducted from the all-inclusive settlement of the Wollongong proceedings in the light of the findings about liability, and Mr Bradstreet's evidence as to the circumstances in which the Wollongong proceedings were settled. On this basis the loss proved was less than the $30,000 recovered on settlement of the Wollongong proceedings. This is an independent reason why the appeal should be dismissed. I would dismiss the appeal with costs. Meagher JA I agree with Mason P. Dunford AJA I agree with Mason P. Appeal dismissed with costs. Counsel for the appellant: MJ Williams QC Solicitors for the appellant: Michael Bradstreet Counsel for the respondent: Adm Hewitt Solicitors for the respondent: Minter Ellison