New South Wales Court of Appeal CITATION : Wilkinson v Daley and Anor trading as Colin Daley Quinn & 2 Ors [2004] NSWCA 331 HEARING DATE(S) : 23 July 2004 JUDGMENT DATE : 17 September 2004 JUDGMENT OF : Handley JA at 1; Sheller JA at 38; McColl JA at 39 DECISION : 1. Appeal dismissed with costs.; 2. Cross-appeal allowed in part.; 3. The Judge's order as to the costs of the trial, other than for the adjournments on 3 and 4 September 2002 and the costs of the motion for leave to re-open set aside.; 4. In lieu thereof substitute an order that the defendants pay 40 per cent of the plaintiff's costs of the trial other than the witness expenses for Barry Driver, Gloria Wilkinson and Sonia Zannino.; 5. Cross-appeal otherwise dismissed.; 6. Appellant to pay 75 per cent of the respondents' costs of the appeal and cross-appeal. CATCHWORDS : DAMAGES - solicitor's negligence - original cause of action statute barred - action by former client against solicitors - proof of damage - no evidence of identity of putative defendants - no evidence that judgments against unidentified defendants would have been satisfied - loss not proved - ND LEGISLATION CITED : Victims Support and Rehabilitation Act 1996 Crump v Sharah [1999] NSWSC 884 House v The King (1936) 55 CLR 499 Murphy v Miller (16 October 1998, NSWCA, unreported) CASES CITED : Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394 Perri v Zaitman [1984] VR 314 Redman v Instant Nominees Pty Ltd [1987] WAR 277 Urban Transit Authority v Nweiser (1992) 28 NSWLR 471 Workers' Compensation Board v Riggins (1992) 95 DLR (4th) 279 Samantha Wilkinson (Appellant) PARTIES : Timothy William Daley and Geraldine Anne Daley trading as Colin Daley Quinn (First Respondent) Michael Sommerville (Second Respondent) Ian Ross (Third Respondent) FILE NUMBER(S) : CA 41152/02 COUNSEL : P J Doherty SC/J Anderson (Appellant) D Fagan SC/BMcManus (Respondents) SOLICITORS : Gibson Howlin Lawyers (Appellant) Colin Biggers & Paisley (Respondents) LOWER COURT District Court JURISDICTION : LOWER COURT DC 4100/00 FILE NUMBER(S) : LOWER COURT Solomon DCJ JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41152/02 HANDLEY JA SHELLER JA McCOLL JA 17 SEPTEMBER 2004 SAMANTHA WILKINSON v TIMOTHY WILLIAM DALEY and GERALDINE ANNE DALEY trading as COLIN DALEY QUINN & 2 ORS CATCHWORDS DAMAGES – solicitor's negligence – original cause of action statute barred – action by former client against solicitors – proof of damage – no evidence of identity of putative defendants – no evidence that judgments against unidentified defendants would have been satisfied – loss not proved FACTS The appellant was assaulted by security guards inside and outside a nightclub which traded under the name of Bobby McGee's. She instructed the respondents to act as her solicitors to recover victims compensation and damages but her cause of action for damages became statute barred. She sued the respondents for negligence in handling her common law and statutory claims. The trial Judge awarded damages for loss of her rights under the Victims Support and Rehabilitation Act 1996 but dismissed her claim for damages for loss of her common law rights because she had not proved the identity of the putative defendants or proved that judgments against them would have been satisfied. On appeal HELD: (1) The plaintiff had the onus of proving what she had lost as a result of her solicitors negligence; (2) This required the plaintiff to prove that causes of action against those responsible for the assaults were of some value because there was a chance that judgments against them would have been satisfied; (3) There was no evidence of the identity of the security guards, their employer, or the entity which traded as Bobby McGee's and there was no evidence that judgments against the unidentified defendants would have been satisfied; (4) In such a case there was no evidentiary onus on a defendant to lead evidence that judgments recovered by the plaintiff against unknown persons would not have been satisfied. ORDERS 1. Appeal dismissed with costs. 2. Cross-appeal allowed in part. 3. The Judge's order as to the costs of the trial, other than for the adjournments on 3 and 4 September 2002 and the costs of the motion for leave to re-open set aside. 4. In lieu thereof substitute an order that the defendants pay 40 per cent of the plaintiff's costs of the trial other than the witness expenses for Barry Driver, Gloria Wilkinson and Sonia Zannino. 5. Cross-appeal otherwise dismissed. 6. Appellant to pay 75 per cent of the respondents' costs of the appeal and cross-appeal. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41152/02 HANDLEY JA SHELLER JA McCOLL JA 17 SEPTEMBER 2004 SAMANTHA WILKINSON v TIMOTHY WILLIAM DALEY and GERALDINE ANNE DALEY trading as COLIN DALEY QUINN & 2 ORS Judgment 1 HANDLEY JA: The appellant was assaulted by security guards inside and outside a nightclub known as Bobby McGee's at Darling Harbour on the night of 12 December 1995. She consulted the respondents, a firm of solicitors, in January 1996 and saw an employed solicitor. The police were still investigating the incident and the appellant was advised to await the outcome of those investigations. In May that year she told the employed solicitor she wanted to sue Bobby McGee's. The police decided to take no action. The respondents lodged an application for victim's compensation in December 1997 but did not commence common law proceedings. The appellant's causes of action became statute barred in December 1998 subject to the possibility of an extension of time which was never sought. 2 The claim for victim's compensation was dismissed on 22 January 1999 for lack of evidence, and an appeal was dismissed on 24 August. The appellant commenced these proceedings against her former solicitors on 1 June 2000 alleging negligence in failing to commence common law proceedings in time, in failing to advise her of the necessity to do so, and in conducting her claim for victim's compensation. 3 The action was tried by Solomon DCJ who, in a reserved judgment delivered on 15 November 2002, dismissed the appellant's action, insofar as it sought damages for failure to commence common law proceedings in time. He upheld her claim in relation to victim's compensation and awarded $50,000 damages together with interest. The Judge had earlier refused an application by the appellant for leave to re-open her case. 4 The Judge found that the appellant had lost her common law rights as a result of the negligence of the solicitors but this part of her claim failed because there was no evidence of the identity of any defendant against whom common law proceedings could have been brought or of their financial position or insurance arrangements. Bobby McGee's was of course a business name. 5 The appellant challenged this decision and the decision to refuse leave to re-open. The challenge to the interlocutory decision should be considered first because if it were upheld there would be a new trial. This decision lay in the discretion of the trial Judge, and the considerations which should inform its exercise were considered in Urban Transit Authority v Nweiser (1992) 28 NSWLR 471. It can only be disturbed in accordance with the principles in House v The King (1936) 55 CLR 499, 505. 6 The evidence at the trial closed on 5 September 2002 when counsel for the defendants commenced his address. At any early stage he took the point that the plaintiff had not proved any loss in respect of her common law rights because the identity of the putative defendants had not been established and there was no evidence that they had the resources or insurance arrangements to satisfy any judgment. 7 The Judge indicated to counsel for the plaintiff that this submission appeared to him to have merit. Overnight counsel for the plaintiff discovered Redman v Instant Nominees Pty Ltd [1987] WAR 277 which he referred to the next day. At that stage addresses could not continue and the case was adjourned to 15 October. In the meantime, pursuant to directions, the parties filed written submissions. On the adjourned day counsel for the plaintiff addressed first and sought to overcome the objection. Then at a late stage he applied for leave to re-open and for an adjournment to enable the necessary evidence to be adduced. This was opposed and the matter was adjourned to 17 October. 8 On that day counsel for the plaintiff filed a notice of motion seeking orders that the hearing be adjourned to a date to be fixed, that the plaintiff have leave to issue subpoenas for the production of documents returnable on 12 December and that she have leave to re-open her case. Thus the plaintiff still did not possess the evidence to overcome the deficiencies in her case. 9 The evidence in support of the notice of motion included a business name search of Bobby McGee's Conglomerate, some company and bankruptcy searches, and two statements to the police about events on the night of 12 December 1995. The Judge gave judgment on the motion on 18 October. He said that the plaintiff had failed to demonstrate that she would obtain evidence from her subpoenas to overcome the deficiencies in her case. He refused leave to re-open on discretionary grounds. 10 The application had been made at a very late stage, more than a month after counsel for the defendants had taken the point, and after counsel for the plaintiff had attempted to answer it with legal argument. The proposed timetable involved lengthy delays without any certain outcome. Production of documents to the Court on 12 December would have been only the first step, and in all probability further subpoenas would have been necessary. A trial of the new issue could not have taken place until well into the new year. An order refusing an application for an open ended re-opening along these lines was well within the discretion of the trial Judge. 11 Mr Doherty SC, who appeared for the appellant on the appeal but had not appeared below, did not suggest that there was any evidence at the trial either of the identity of the putative defendants or of their capacity to meet a judgment. His first submission was that the defendants had been bound to specifically plead the point, in accordance with DCR Pt 9 r 9(2)(b), to prevent surprise. His alternative submission was that in the absence of any evidence to the contrary capacity of a putative defendant to meet a judgment was presumed and the defendants had the evidentiary onus on that issue. 12 There can be little doubt that the defendants' submission that the trial took the lawyers acting for the plaintiff by surprise. However the issue had emerged to some extent during the trial. It went to the proof and quantification of the plaintiff's damages on which she had the legal onus of proof and it was open to the defendants on the pleadings. 13 The plaintiff's statement of claim alleged in para 6 that she suffered loss by reason of the solicitors' failure to recover damages for the plaintiff in respect of her injuries. Paragraph 9 alleged that as a result of the matters pleaded the plaintiff has suffered and continued to suffer loss. The defence denied para 6 (para 3) and did not admit para 9 (para 4). The plaintiff therefore was put to proof of her loss. 14 The issues of identity and capacity to meet any judgment were mentioned during the trial. On the first day the Judge asked who employed the security guards and counsel for the plaintiff said "that was never ascertained I don't think … but in any event they were employed at the nightclub …". 15 The identity of the putative defendants was raised again later. The plaintiff identified her assailant as a bouncer at the nightclub (black 202), and the employed solicitor was asked in cross-examination whether he was concerned that an action against a bouncer might not result in an enforceable judgment because of his impecuniosity (205). Later the solicitor was asked whether action could have been brought against the proprietors of Bobby McGee's without naming the bouncers and whether he could have used preliminary discovery to ascertain whether the latter were employed by the nightclub or by a contract security firm (210). Other evidence relevant to the identity of the punitive defendants was given at 180, 202, 207, 208, 211-4, 216-7. Although the lack of identification, and the means of overcoming it, were mentioned, the financial capacity of defendants other than the bouncers was not. 16 The principle was covered by an authoritative dictum from four Justices of the High Court in their joint judgment in Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394 at 404. In the course of discussing the assessment of damages in an action against solicitors who had permitted a client's claim to become statute barred they referred to the need to take account of "the prospects of any judgment given in favour of the plaintiff being satisfied". The trial Judge followed this dictum which was also followed by this Court in Murphy v Miller (16 October 1998, U/R). See also Crump v Sharah [1999] NSWSC 884 [64-8]; and Workers' Compensation Board v Riggins (1992) 95 DLR (4th) 279, decision of the Alberta Court of Appeal. 17 In Perri v Zaitman [1984] VR 314 the plaintiffs, who were assaulted during an armed robbery, sued their solicitors for failing to prosecute proceedings against their assailants who had been sentenced to substantial terms of imprisonment. Before the jury were empanelled the trial Judge was asked to rule on whether evidence was admissible to establish that civil judgments against the assailants may not have been satisfied. Murray J held that the issue was "directly relevant to the actual value of the plaintiffs loss", and that it "would … be unreal to say that the ability … to satisfy the judgments is purely a [collateral] matter. It goes to the very heart of the lost chance" (317). The Judge thought that the defendants might have the evidentiary onus but did not decide that question. 18 In Redman v Instant Nominees Pty Ltd [1987] WAR 277, which affirmed the decision of Burt CJ [1987] WAR 218, the appellants, who were legal practitioners, failed to prosecute an appeal for the respondent against a judgment rejecting its claim for commission on a farm-in of an oil exploration permit. The Chief Justice awarded the respondent substantial damages for the loss of its chance of succeeding on the appeal. The capacity of the original defendant to satisfy any judgment had not been questioned at the trial. The legal practitioners took the point for the first time on appeal. 19 The Full Court rejected the new point. Wallace J said that "if the collectability of an award of damages was placed in issue before a trial Judge the onus would lie upon the plaintiff to satisfy the tribunal of fact thereon" (283-4). Brinsden J held that "the matter was not specifically put in issue", and on one view of the pleadings it was not in issue at all (294). He concluded that "the manner in which this particular case was conducted leads me to the conclusion that [the respondent] was not called upon to lead evidence as to the solvency of [its defendant] and in the absence of evidence to the contrary solvency [was] to be presumed". His Honour actually said "is to be presumed" but he was not enunciating a proposition about all trials but only one about that trial. 20 The underlying transaction was a claim by the client for commission for introducing a farmee to the original defendant who had entered into an enforceable contract to spend $20 million on the development of that defendant's permit (287-8). It is not difficult to see why there would be an evidentiary onus on the legal practitioners to raise the issue of the capacity of the original defendant to meet a judgment. 21 The decision is not authority for any general proposition that the evidentiary onus on such an issue lies on the defendant in every case. If anything the case is authority to the contrary because as Burt CJ had said (227): "… the value of the lost chance is dependent not only upon the chance of the plaintiff succeeding in the action if taken but also upon whether if successful the defendant would have had the means with which to satisfy the judgment". 22 In my judgment the evidentiary onus at the trial, on this issue, did not lie on the respondents because, apart from any other reason, the appellant had failed to establish the identity of the defendants against whom action would have been taken. There will be many cases in which proof of identity will provide some evidence that the proposed action would have been fruitful. No such inference was available to the plaintiff in this case. 23 In these circumstances the appeal against the dismissal of the appellant's claim for loss of her common law rights fails. The appeal must be dismissed with costs. 24 The solicitors filed a cross-appeal against the Judge's award of $50,000 damages for the loss of the plaintiff's rights under the Victims Support and Rehabilitation Act 1996 (the 1996 Act) and against the Judge's order for the costs of the proceedings. 25 The appellant's claim was properly brought under the 1996 Act, although the assault occurred before its commencement, because transitional provisions gave the Act retrospective effect. The claim had been lodged on 11 December 1997, only just in time, unsupported by any medical evidence. On 12 June 1998 the employed solicitor lodged medical reports with the Tribunal. These included a medico-legal report dated 5 June 1996 from a psychiatrist, Dr Elizabeth Scott without any updating reprort from her. The report stated that while there was evidence of post traumatic symptoms immediately after the appellant's injury associated with panic attacks and agoraphobia these appeared to have resolved. The appellant was also said to have a partially resolved major depressive episode (blue 52). 26 On 3 September the Director wrote to the respondents enclosing the assessor's reasons of the previous day which drew attention to evidentiary deficiencies in the claim. The assessor's reasons included (blue 65): "It is clear from reading the medico-legal evidence on file that the applicant has had long standing psychological … problems … that pre-date the incident. Submissions are required from the solicitors for the applicant, together with any further medico-legal evidence they wish to submit to support such, in accordance with clause 4 of Schedule 1 to the Act. This is particularly important." 27 The respondents replied on 27 November 1998 submitting a chronology, a statutory declaration by the appellant, and a copy of the security video, but no further medico-legal report. Unsurprisingly the assessor's decision on 22 January 1999 was adverse and the claim was dismissed (blue 56-8). The assessor specifically noted that none of the medico-legal experts had been asked to update their reports and no further reports had been provided (57). An appeal was lodged but it had no prospects of success since under s 38(3) it had to be determined on the material provided to the assessor. It was dismissed on 25 August 1999 (60-4). 28 The respondents obtained an updated report of 12 May 1999 from Dr Scott which they lodged in support of the appeal but this was too little and too late. This psychiatrist had seen the appellant as her patient during 1997 and 1998 and had seen her again in March 1999 for the purposes of the report. She concluded (85): "Ms Wilkinson developed PTSD, panic disorder and major depression following the assault. These have occurred in association with evidence of a post-concussion syndrome and chronic pain and disability. The majority of her symptoms had improved within a 12 month period. However she describes persisting symptoms associated with impaired ability to cope with stress representing permanent disability and ongoing vulnerability to the development of episodes of anxiety and depression. This would be consistent with category "d" of "shock" described in your letter." 29 The Judge inferred that a report in similar terms could have been obtained in response to the Director's letter of 3 September and lodged with the Tribunal. He was satisfied that if the assessor had been provided with Dr Scott's findings and opinions shortly after 4 September 1998 he would have found that the plaintiff suffered from the compensable injury of shock as described in Schedule 1 of the 1996 Act and had permanent symptoms and disability arising from such injury. On this basis he was also satisfied that the assessor would have awarded the plaintiff $48,000. He would also have awarded $2000 for loss of earnings. 30 At the relevant time the 1996 Act provided four fixed amounts of compensation for shock, the most severe being category (d) which attracted a lump sum award of $48,000. It was common ground that if a victim was assessed as falling within one of these categories the Tribunal had no discretion to award an appropriate amount subject to the maximum. The Tribunal had to award the fixed amount. 31 The cross-appellants challenged this award of $50,000 but once it became clear that the Tribunal had no discretion to award an appropriate amount up to a maximum and that $48,000 was a fixed amount this part of the cross-appeal was seen to be hopeless. The cross-appellant's negligence was clear, causation was established, and on the evidence an award of $48,000 was not only available, it was inevitable. No basis for appellate intervention has been established and this part of the cross-appeal must be dismissed. 32 The other issue on the cross-appeal is the challenge to the Judge's costs order. The defendants were ordered to pay 80 per cent of the plaintiff's costs and 100 per cent of her disbursements other than the expenses of three witnesses called in her case. The Judge also ordered the plaintiff to pay the defendants costs of the motion for leave to re-open and the defendants were ordered to pay the plaintiff's costs, on an indemnity basis, thrown away by the adjournments on 3 and 4 September 2000. There was no challenge to these orders. 33 The plaintiff's claim for the loss of her rights under the 1996 Act, on which she succeeded, was within a fairly narrow compass. Her claim was based largely on documents, the file of the Tribunal, the file of the solicitors, and the opinion of Mr McLaughlin SC. The plaintiff's oral evidence was also needed to prove the assaults and to support the history given to Dr Scott. The bulk of the plaintiff's evidence and that of the first employed solicitor was directed to the claim for loss of the plaintiff's common law rights where the defendants were successful. 34 The plaintiff recovered a verdict for $68,750 which entitled her to an order for costs. However in this case that order had to reflect, in a realistic way, the defendants' success on the larger of the claims which had taken up most of the time at the trial. 35 The Judge's order that the plaintiff recover 80 per cent of her costs ought to have reflected a netting off of orders that the defendants pay 90 per cent of the plaintiff's costs and the plaintiff pay 10 per cent of the defendants' costs. In my judgment this was a wholly erroneous apportionment of the costs of the trial, and making every allowance for the Judge's position of advantage, the order failed to adequately reflect the time taken up by the claim for loss of the plaintiff's common law rights. Moreover there is no apparent justification for the plaintiff having an order for 100 per cent of the counsel's fees recoverable on a party and party assessment, but 80 per cent of the recoverable profit costs. 36 In my judgment the exercise of the Judge's discretion as to costs miscarried and this Court must intervene and re-exercise the discretion. I would set aside the Judge's orders as to costs, other than his orders for the costs of the motion for leave to re-open and the costs thrown away by the adjournments on 3 and 4 September 2002, and order the defendants to pay 40 per cent of the plaintiff's costs of the trial, other than the witness expenses for Barry Driver, Gloria Wilkinson and Sonia Zannino. 37 The following orders should be made: 1. Appeal dismissed with costs. 2. Cross-appeal allowed in part. 3. The Judge's order as to the costs of the trial, other than for the adjournments on 3 and 4 September 2002 and the costs of the motion for leave to re-open set aside. 4. In lieu thereof substitute an order that the defendants pay 40 per cent of the plaintiff's costs of the trial other than the witness expenses for Barry Driver, Gloria Wilkinson and Sonia Zannino. 5. Cross-appeal otherwise dismissed. 6. Appellant to pay 75 per cent of the respondents' costs of the appeal and cross-appeal. 38 SHELLER JA: I agree with Handley JA. 39 McCOLL JA: I agree with Handley JA. ********** Last Modified: 09/20/2004 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.