New South Wales District Court CITATION: Dianne & Raymond Younan v Keddies Litigation Lawyers [2006] NSWDC 57 HEARING DATE(S): 12 September 2005 to 14 September 2005 JUDGMENT DATE: 15 September 2005 JUDGMENT OF: Murrell SC DCJ DECISION: Verdicts for the Defendant LEGISLATION CITED: Trade Practices Act 1974 CASES CITED: Spadotto & Company Pty Limited (in liq) v Raber, (unreported, 27 October 1995 NSWCA, CA 40425/95) Telstra Corporation Limited v Rea [2002] NSWCA 49 PARTIES: Dianne Younan and Raymond Younan (Plaintiffs) Keddies Litigation Lawyers (Defendant) FILE NUMBER(S): 3791/04; 3792/04 COUNSEL: Mr M G McHugh (Plaintiffs) Mr D Priestley (Defendant) SOLICITORS: Messrs Stacks Goudkamp Lawyers Yeldham & Associates Lawyers Background 1 26 November 1997 was to have been an enjoyable occasion for Mr and Mrs Younan. They were guests at the grand opening of Star City Casino, Darling Harbour. After they had enjoyed dinner, an unexpected incident occurred. They approached a large glass sliding door, intending to walk through to the gambling area. Without warning, the entire door "exploded ", showering glass onto the Younans. They were injured. 2 The Younans sought legal advice from Keddies, a firm of solicitors. Keddies agreed to act on a no win/no pay basis. Keddies instituted proceedings against the Casino as occupier, claiming damages for negligence. The Casino cross-claimed against Leightons Properties Pty Ltd (the developer), which cross-claimed against JML Engineered Facades Pty Ltd (the builder which installed the glass door). 3 In November 2001, the Younans changed solicitors, engaging Stacks. Stacks received the papers on 4 February 2002. The Younans' barrister advised them that they would lose their claim against the Casino. On 27 March 2002, they consented to a verdict for the Casino on the basis that each party pay its own costs. The cross claims were discontinued. 4 On 22 August 2002, JML's solicitors advised Stacks that SGI Architectural Pty Ltd had supplied the glass door. 5 In these proceedings, the Younans claim that, because of Keddies' negligence, in late 2001 the three year limitation period expired for bringing a claim against SGI under s75AD of the Trade Practices Act 1974. Section 75AD enables an injured person to recover damages from the manufacturer/original supplier of goods that have a safety "defect". Issues 6 1. Did the glass shatter because of a defect for which SGI as manufacturer/ original supplier was responsible? 2. When should Keddies have identified the manufacturer / original supplier? 3. When "ought" the Younans "reasonably to have become aware" of the identity of the manufacturer/ original supplier? 4. The extent of Mr Younan's damages. 5. The extent of Mrs Younan's damages. Did the Glass Shatter Because of a Defect for which SGI as Manufacturer/Original Supplier was Responsible? 7 The incident was captured on a security video camera. There was no obvious impact sufficient to cause the glass sliding door to shatter. I accept Mrs Younan's evidence that she heard an explosive sound. Although she was very close to the door, she did not at first realise that it was the door which had "exploded". It is highly likely that the door exploded in an apparently spontaneous fashion. 8 Associate Professor Brungs could not determine the cause of the door's failure. He seemingly excluded impact as the cause. He identified the presence of nickel sulphide in toughened glass as a possible explanation. Nickel sulphide can cause the apparently spontaneous failure of toughened glass panels. 9 While other causes cannot be excluded completely, on the material available in these proceedings, the Younans had good prospects of succeeding on a s 75AD claim against the manufacturer/original supplier of the glass door. 10 However, in these proceedings the only evidence linking SGI to the accident was JML's letter alleging that SGI was the supplier. As JML was the installer, it was a good position to know the identity of its immediate supplier. However, the letter was admitted on a limited basis and is only an allegation about the supplier's identity. More significantly, the letter does not allege, let alone establish that SGI was the manufacturer/original supplier of the glass door. Further investigation may confirm or exclude SGI as the appropriate s75AD defendant. When Should Keddies have Identified the Manufacturer /Original Supplier? 11 Keddies had a duty to exercise the skill which would have been exercised by an ordinarily skilled and reasonably careful personal injury practitioner, particularly as they represented themselves to be accredited personal injury specialists. 12 A competent solicitor would have completed an investigation of the facts surrounding the incident. Because of the unusual nature of the accident, he /she probably would have obtained an expert opinion about why the glass shattered. A competent solicitor would have identified appropriate defendants. If the incident seemed to have been caused by a defect giving rise to a claim under s 75AD of the TP Act, the solicitor would have identified the appropriate manufacturer/original supplier. 13 On or before 27 February1998, the Younans instructed Keddies (para 3, Exhibit 8). It was Keddies' duty to promptly investigate the circumstances of the accident and identify appropriate defendants. As the accident was unusual, it was necessary to obtain an expert's report. 14 In these proceedings, there was evidence from barristers that a proper investigation and the identification of appropriate defendants would take from two months (Mr Toomey,) to 12-18 months (Mr Stanton). Because it accords with common sense and because of his long experience as a solicitor (rather than a barrister), I accept the evidence of Mr Stern that, within six months of being instructed, or by December 1998 at the very latest, Keddies should have completed their investigation (and obtained an expert's report) and identified appropriate defendants, including the s75AD defendant. When Ought the Younans Reasonably to Have Become Aware of the Identity of the Manufacturer/Original Supplier? 15 Relevantly, s 75AO provides that there is a three year limitation period for a s 75AD claim, which commences when the injured person "became aware, or ought reasonably to have become aware of ... the identity of the person who manufactured the action goods". 16 The Younans contend that, as Keddies were their agents, Keddies' knowledge or constructive knowledge is imputed to them. As Keddies ought to have known the identity of the s 75AD defendant by late 1998, that constructive knowledge is imputed to the Younans. The court should not construe the limitation provision so as to allow a wrongdoer to escape liability by relying on its wrong. 17 In relation to such limitation provisions, it is well established that, without more, the knowledge of a solicitor is not capable of being imputed to the solicitor's client. When a solicitor has actual knowledge but fails to impart it to the solicitor's client, the solicitor's knowledge does not become the client's knowledge: Spadotto & Company Pty Limited (in liq) v Raber (unreported, 27 October, 1995, NSWCA, CA 40425/95). Similarly, the expression "ought to have become aware" refers to constructive knowledge that is peculiar to the client : Telstra Corporation Limited v Rea [2002] NSWCA 49. While the Younans left investigation of the matter in the hands of Keddies, there was no obligation on them to make any other inquiry and Keddies' constructive knowledge cannot be imputed to them. 18 In the peculiar circumstances of this case, such a construction of s75AO may mean that a "wrongdoer" escapes liability, but the construction for which the Younans contend would limit the rights of plaintiffs and enable a manufacturer defendants to escape liability by relying upon the negligence of a plaintiff's solicitor. The Extent of Mr Younan's Damages 19 Mr Younan was a defensive witness whose evidence shifted and was confusing. At times, his evidence contradicted the contents of contemporaneous documents. I cannot accept his evidence that the whole glass door fell on his head. He was not knocked to the ground. Further, the video tape of the incident shows that the glass did not merely crack but shattered into very small pieces. Consequently, I do not accept that he sustained a head injury or suffers from postconcussion headaches caused by the impact of a sheet of glass on his head. Except where his evidence is corroborated by reliable medical opinion, I am reluctant to accept the Mr Younan's account of his injuries and disabilities 20 Very soon after the accident, Mr Younan was examined by his general practitioner, who found that he was tender at C6/7. Mr Younan had no time off work, although he maintained that he had to give up a second job. That contention was unsupported by any written record or other corroborating evidence. Dr Wilcox, who was engaged on behalf of the Casino, found no clinical or radiological evidence supporting an orthopaedic injury. In 1999, Dr Davis, who was engaged in behalf of Mr Younan, diagnosed a whiplash injury with some mild permanent impairment. However, Dr Maniam, who was also engaged on behalf of Mr Younan, considered that a musculoligamentous injury of the cervical spine should resolve. By 2001, Dr Maniam thought that a psychiatric opinion should be obtained. Dr Strum, a psychiatrist, reported that Mr Younan suffered a mild adjustment disorder with anxiety and depressed mood. That opinion was reached on the basis of the history given by Mr Younan. Because Mr Younan was an unreliable witness, relying primarily on reports of the general practitioner and Dr Maniam, the only injury of which I am satisfied is a mild soft tissue injury, which would have resolved within two or three years of the accident. 21 Mr Younan asserted that he had forgone a second job as a truck driver because his orthopaedic injuries meant that he could not drive for long periods. I do not accept that Mr Younan had a second job, let alone that he suffered economic loss because he was unable to maintain that job. 22 Mr Younan claimed out-of-pocket expenses of $6,991, an extraordinary sum considering the nature of the injury sustained. That figure was not itemised. 23 I assess that, at a notional trial date of 1 July 2002 (the parties did not greatly differ regarding the likely trial date), Mr Younan would have been awarded $15,000 for general damages (including interest) and $300 for past out-of-pocket expenses. He would not have received any other damages. The Extent of Mrs Younan's Damages 24 Mrs Younan gave evidence that she still experiences neck and shoulder pain and headaches, as well as depression and panic attacks. 25 She presented as a genuine witness. She has given a consistent account of her complaints. That does not mean that they have an organic basis. 26 After the accident, Mrs Younan complained to her general practitioner that she was tender at C5/6 and was tender in both shoulders. Dr Davis, who was engaged on behalf of Mrs Younan, diagnosed a whiplash injury which had aggravated pre-existing degenerative change at C5/6. He had seen an x-ray of the cervical spine taken in March 1998 which showed some early narrowing at C5/6. Dr Maniam (who did not see the x-ray report), reported in 2000 that Mrs Younan's principal problem was psychological in nature. 27 Keddies tendered orthopaedic evidence to the effect that Mrs Younan suffered no orthopaedic disability but appeared to be significantly depressed. Dr Clark, a psychiatrist engaged on behalf of Mrs Younan, said that she had an anxiety disorder and a related panic disorder, which had developed from a post traumatic stress disorder. Her prognosis depended upon her receiving appropriate treatment. Keddies did not rely upon any psychiatric report and did not traverse Dr Clark's opinion. 28 I accept that Mrs Younan suffered a whiplash injury which aggravated pre-existing degenerative change at C5/6, although I consider that her complaints of pain vastly exceed those which can be attributed to the orthopaedic injury. More likely, her complaints reflect her fragile psychological state. She suffered a significant psychiatric injury, which may be permanent. 29 I assess that, at a notional trial date of 1 July 2002, Mrs Younan would have been awarded $50,000 for general damages (including interest), $3107 for past out-of-pocket expenses (this sum was not itemised but is reasonable, having regard to Mrs Younan's injuries) and $3,000 for future out-of-pocket expenses (psychiatric treatment). Conclusion 30 The Younans' claim fails because, on the proper construction of s 75AO of the Trade Practices Act, Keddies' constructive knowledge of the identity of the manufacturer/original supplier is not imputed to the Younans. Consequently, the limitation period for bringing a s75AD claim did not expire while Keddies had conduct of the Younans' case. 31 Had Keddies' constructive knowledge been imputed to the Younans, I infer that the s 75AD defendant would have relied on the limitation period. The Younans' loss would have crystallised in late 2001, before Stacks had effective conduct of the matter. The Younans' loss was the loss of a chance to bring successful proceedings against SGI, or settle proceedings successfully. Although it is not certain that proceedings would have succeeded (or settled successfully) against the appropriate s75AD defendant, and it is very far from certain that SGI was the appropriate s 75AD defendant, there were some prospects of success. I evaluate those prospects at 25% of the damages assessed in paras 23 and 29. 32 On each claim, there is a verdict for the defendants. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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