Shehata v Hussein [2004] NSWSC 617

New South Wales Supreme Court

CITATION : Shehata v Hussein [2004] NSWSC 617 HEARING DATE(S) : 08/07/04 JUDGMENT DATE : 8 July 2004 JURISDICTION: Equity Division JUDGMENT OF : Barrett J DECISION : Specific performance ordered

CATCHWORDS : EQUITY - specific performance - agreement to compromise litigation - one party refuses to perform - allegation that solicitor exercised duress in causing client to agree to compromise LEGISLATION CITED : Supreme Court Act 1970, s.100 Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Daniels v Pynbland Pty Ltd (No 2) (1985) 4 BPR 9726 CASES CITED : Harvey v Phillips (1956) 95 CLR 235 Holt v Jesse (1876) 3 ChD 177 Savage v Norton [1908] 1 Ch 290 Singh v Secretary of the Department of Family and Community Services [2001] FCA 1281 PARTIES : Nabil Shehata - Plaintiff Faizal Hussein - Defendant FILE NUMBER(S) : SC 6203/03 COUNSEL : Mr S D Kalfas - Plaintiff Defendant in Person SOLICITORS : David Ian Brown - Plaintiff Defendant in Person

IN THE SUPREME COURT REVISED OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

THURSDAY 8 JULY 2004

6203/03 - NABIL SHEHATA v FAIZAL HUSSEIN

JUDGMENT

1 The plaintiff is a medical practitioner. He practices as a surgeon. On an occasion in November 1999, the plaintiff was consulted by the defendant and performed upon the defendant at a medical centre in Auburn a procedure involving draining and treatment of an abscess in the rectal area of the defendant's body. As I shall mention later, the defendant returned to the surgery on the same day and received further treatment from the plaintiff. 2 The defendant, as plaintiff, afterward sued the plaintiff, as defendant, in the District Court alleging negligence in respect of the treatment rendered by the plaintiff. Various offers of compromise were made as the District Court case approached trial. On 7 November 2003, the present defendant's then solicitors, Keddies, faxed to the present plaintiff's solicitor a letter conveying acceptance of an offer of compromise which had emanated from the present plaintiff and entailed a verdict for the present plaintiff with each party paying his own costs. 3 In the proceedings in this court which I have heard today, the plaintiff seeks relief by way of declaration and order for specific performance in respect of the agreement said to have arisen from the defendant's acceptance of that offer of compromise. 4 7th November 2003 was a Friday. The next day, Saturday 8 November 2003, the defendant faxed to Keddies (with a copy also to the plaintiff's solicitor) a document signed by him stating that his solicitors were instructed to send a letter to the plaintiff indicating withdrawal of the acceptance of the offer of compromise and also stating that Keddies no longer acted for him. There was an accompanying covering letter with the copy of this document faxed to the plaintiff's solicitor. 5 On 11 November 2003, the following Tuesday, Mr Tsaousidis, an employed solicitor of the plaintiff's solicitor, telephoned Mr Thornton, the solicitor with Keddies who had had carriage of the matter for the defendant, and told him that he had received a letter from the defendant and described it. Mr Tsaousidis said to Mr Thornton that he intended sending the defendant a letter saying that settlement had been reached and that he was instructed to enforce the settlement agreement if necessary and to seek costs of enforcing it. Mr Thornton said: "You can send it if you like, but you don't have to worry because I have since received instructions to act for Mr Hussein". Mr Thornton also said that Mr Tsaousidis should send over the terms of the settlement and Mr Thornton would sign them. The plaintiff's solicitors sent the terms of settlement to Keddies on 11 November, but they have not been signed. 6 The defendant's evidence is inconsistent with any suggestion that Keddies were retained again by the defendant after 8 November 2003 but, in the end, I do not consider it necessary to go into this as, on all versions of the evidence, Keddies were retained by and acting for the defendant at the time they faxed to the plaintiff's solicitor the letter of 7 November 2003 accepting the offer of compromise. 7 I should say a little more about the treatment administered by the plaintiff to the defendant. The defendant went to the Auburn medical centre complaining of the abscess to which I have referred. The plaintiff drained the abscess and administered related treatment. The defendant in due course left the surgery and proceeded towards his home. On the way home, he became aware of bleeding from the area the plaintiff had treated. There was what he regarded as a large quantity of blood coming from the treated area and he was, quite understandably, highly alarmed and distressed, as were his parents when he arrived home. The defendant was taken back immediately to the plaintiff's surgery and further treatment was administered by the plaintiff. The bleeding was arrested and the defendant again went home. 8 Over time, the wound healed but the defendant says that he has continued to suffer adverse and unpleasant consequences. It is in respect of those consequences that the defendant sued the plaintiff in the District Court alleging negligence in the treatment administered. 9 The plaintiff's case before me is quite straightforward. There is, in the plaintiff's submission, a concluded agreement that was made on 7 November 2003 by means of acceptance by the defendant's solicitors (Keddies) of the offer of compromise previously made by the plaintiff's solicitor. The agreement, the plaintiff says, is of a kind that is capable of specific performance and the defendant should be ordered to perform accordingly. 10 Specific performance is, of course, a discretionary remedy. The matters that the defendant has put before the Court go to the question whether the Court should withhold the exercise of its discretion in favour of the plaintiff in this case. 11 The defendant has confirmed in the witness box that he visited Keddies' office late on the afternoon of 7 November 2003 and was advised by Mr Thornton that, in Mr Thornton's opinion and that of counsel briefed in the District Court proceedings, the defendant would lose the District Court case and would be liable, very likely, for costs of a significant amount. The amount mentioned by the defendant in evidence before me was $40,000, being $20,000 on each side, the assumption being that he would be the losing party, although he says that he regarded one lot of $20,000 as inconsistent with the "no win no fee" arrangement he had with Keddies. Whether it be $40,000 or $20,000, the fact is that the costs sum was, in the particular context of the defendant's circumstances, a sizeable amount. 12 The defendant agrees that Mr Thornton advised him to accept the offer of compromise. The defendant says that he did not want to settle, yet he signed a written instruction or authority to settle. He did this at Mr Thornton's request in circumstances where, as I have said, he says he did not want to do so. He says that he was forced to do so and was left with no choice. He said in the witness box that Mr Thornton "threatened" him, but it became clear in his later evidence that by "threatened" he meant to refer to the advice about the highly probable costs outcome if the claim was dismissed in the District Court, as Mr Thornton's assessment and that of counsel in the case indicated that it would be. In a real sense, any feeling on the defendant's part that he had no choice was no more than a playing out of a practical and inevitable logic. 13 The defendant is obviously intelligent and well able to see where his own interests lie. He has shown this in representing himself today and in cross-examination. I do not accept that he did not know the full implications of his conversation with Mr Thornton at the 7 November 2003 meeting and of the instructions he then gave, even though the meeting took place after ordinary business hours. In my judgment, the defendant was well aware of the very real and significant likelihood that, if he pressed on with the District Court case, he would lose and be exposed to a significant order for costs. I am satisfied also that, despite his protestations of having been pressured, he was appropriately advised of the implications of the expert evidence served by his opponent in the District Court and of the opinion of his own solicitor and counsel that he would not win the case. I refer in this connection to two items in particular. 14 The first is a file note which appears in Keddies' file, which has been put into evidence. It is, on its face, a record of a telephone conversation between Mr Thornton and the defendant on 6 November 2003, the day preceding their relevant meeting. The defendant acknowledges that he spoke with Mr Thornton on the telephone on that day. He says that Mr Thornton telephoned him to ask him to come into Keddies' office to discuss a development of importance and that an appointment was made. The defendant says that the telephone conversation was quite short and involved nothing really beyond what I have just said. 15 The note in the Keddies' file, however, shows something quite different. The note is consistent with Mr Thornton having informed the defendant on the telephone on 6 November that reports of Dr Gatenby and Dr Meagher, served by the plaintiff in the District Court proceedings, indicated no negligence by the plaintiff; that the defendant himself had no evidence from a colo-rectal surgeon in order to deal with the opposing medical evidence; and that the opinion of Mr Thornton and counsel briefed in the matter was: "You lose". The note goes on to suggest that Mr Thornton said to the defendant that he would like to discuss the matter with him on either Friday or Monday, and that an appointment at 2.30 on Monday 10 November was fixed. The defendant has explained that this time was later changed and that he went to the office late on the Friday afternoon. 16 The second particular item to which I refer is also in the Keddies' file. It is a letter dated 10 November 2003 from Mr Thornton to the defendant. It is a report of what Mr Thornton says was discussed at the meeting on 7 November. Among the things said in this letter are as follows: "We then discussed the advice of your barrister, Mr Ken Pryde, dated 5 November 2003, together with the defendant's medical reports as to liability."