New South Wales Court of Appeal CITATION: PELL v HODGES [2007] NSWCA 234 HEARING DATE(S): 21/08/2007 JUDGMENT DATE: 5 September 2007 JUDGMENT OF: Tobias JA at 1; Basten JA at 2; Handley AJA at 7 DECISION: 1. Appeal allowed with costs; 2. Decision of Latham J of 22 June set aside; 3. In lieu thereof order that the Notice of Motion of 14 March 2006 be dismissed with costs, and that orders be made in accordance with prayers 1 and 2 of the Notice of Motion of 6 April 2006; 4. The respondent to have a certificate under the Suitors Fund Act for the costs of the appeal. CATCHWORDS: TORTS – MEDICAL NEGLIGENCE – FAILURE TO WARN – EXTENSION OF TIME FOR SERVICE – EXPIRATION OF LIMITATION PERIOD - PROCEDURE – STATEMENT OF CLAIM – EXTENSION OF TIME FOR SERVICE – EXPIRATION OF LIMITATION PERIOD – EXERCISE OF DISCRETION LEGISLATION CITED: Suitors Fund Act Uniform Civil Procedure Act Franklin House Ltd v ANI Corporation Ltd (2/11/94 Windeyer J unreported) CASES CITED: Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597 Tolcher v Gordon [2005] NSWCA 135, 53 ACSR 442 PARTIES: Dr Malcolm Pell - Appellant Lynda Maree Hodges - Respondent FILE NUMBER(S): CA 40423/06 COUNSEL: G. Curtin and D. Jenkins - Appellant M. Cranitch SC and B. Bradley - Respondent SOLICITORS: Ebsworth & Ebsworth, Sydney - Appellant Commins Hendriks, Wagga Wagga - Respondent LOWER COURT JURISDICTION: Supreme Court LOWER COURT FILE NUMBER(S): SC 20263/04 LOWER COURT JUDICIAL OFFICER: Latham J LOWER COURT DATE OF DECISION: 22/06/2007 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40423/06 TOBIAS JA BASTEN JA HANDLEY AJA 5 September 2007 DR MALCOLM PELL v LYNDA MAREE HODGES TORTS – MEDICAL NEGLIGENCE – FAILURE TO WARN – EXTENSION OF TIME FOR SERVICE – EXPIRATION OF LIMITATION PERIOD PROCEDURE – STATEMENT OF CLAIM – EXTENSION OF TIME FOR SERVICE – EXPIRATION OF LIMITATION PERIOD – EXERCISE OF DISCRETION The respondent issued a statement of claim against the appellant for medical negligence shortly before the limitation period expired but did not serve it before it ceased to be valid after 4 months. She applied for an extension under UCP 1.12 sixteen months later. The primary judge granted the application because the respondent had a legitimate interest in the prosecution of her claim. HELD: 1. The discretion to grant an extension of time under UCP 1.12 is unfettered. The defendant did not have a prima facie right to retain the benefit of the expiry of the limitation period, nor did the plaintiff have a prima facie right to an extension because of a legitimate interest in the prosecution of her case. The primary judge erred by not giving reasons why, on balance, the interest of the plaintiff outweighed that of the defendant. Tolcher v Gordon [2005] NSWCA 135, 53 ACSR 442, applied. 2. The Court of Appeal therefore had to re-exercise the discretion. 3. A relevant factor was the unexplained delays in not filing the statement of claim until shortly before the expiry of the limitation period and in failing to serve it or to apply for an extension of time before it expired. An inference was available that there were deliberate decisions at various times not to proceed with the claim. 4. An extension of time should be refused. ORDERS 1. Appeal allowed with costs. 2. Decision of Latham J of 22 June set aside. 3. In lieu thereof order that the Notice of Motion of 14 March 2006 be dismissed with costs, and that orders be made in accordance with prayers 1 and 2 of the Notice of Motion of 6 April 2006. 4. The respondent to have a certificate under the Suitors Fund Act for the costs of the appeal. ***** IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40423 OF 2006 TOBIAS JA BASTEN JA HANDLEY AJA 5 September 2007 DR MALCOLM PELL v LYNDA MAREE HODGES Judgment 1 TOBIAS JA: I agree with Handley AJA. 2 BASTEN JA: I agree with the orders proposed by Handley AJA and, subject to one qualification, with his Honour's reasons. 3 The qualification relates to the reference by the primary judge to "the plaintiff's legitimate interest in the prosecution of her claim of 'failure to warn'": Judgment, [13]. I do not think that her Honour was merely referring to her interest in seeking a procedural indulgence to have her case heard on its merits. Rather, I think that she intended to refer to the fact, noted at [11], that she had a reasonably arguable claim in respect of a "failure to warn", which was not dependent upon expert medical opinion which had not been forthcoming. 4 However, even that understanding does not assist the plaintiff. As Latham J noted at [11], the lack of need for medical evidence with respect to such a claim tended to highlight the absence of a satisfactory explanation for the delay. In addition, although the pleading alleged that the plaintiff was advised there were "no problems with such surgery", the report of Dr Matheson who had not seen the plaintiff but did have notes from (presumably) her solicitor, referred to the apparent fact that "she was warned of memory problems" (Report, 7 February 2006, pp 1-2). He further stated (at p 3): "By Ms Hodge's [sic] own say so she was warned of possible memory problems but claims they were played down." 5 In the absence of any express explanation, the Court is entitled to infer that her own evidence would be unlikely to support the failure to warn case, at least in the absolute manner in which it was pleaded. Further, given the comparative risks of proceeding with the procedure and not proceeding, as explained by Dr Matheson, one can anticipate she would have difficulties in relation to causation and loss. 6 Doubts as to the merits of case, particularly on a factual issue turning on the evidence of the plaintiff, will rarely provide a basis for the indulgence sought in the present case. Indulgence for delay is more likely to be forthcoming in a professional negligence case in which the injury involved brain damage, at least where there is a plausible claim of connection between the injury and the delay. However, that it not this case, on the evidence presented to the primary judge. 7 HANDLEY AJA: This appeal by leave challenged the decision of Latham J. on 22 June 2006 to extend the time for service of an amended statement of claim in an action for medical negligence against the appellant, a neurosurgeon. The original statement of claim had been issued on 28 July 2004 and ceased to be valid for service on 29 November 2004. The action came to the appellant's notice when the respondent served an application under UCPR 1.12 to extend the time for service. The judge ordered service of an amended statement of claim, together with a statement of experts' reports, on or before 28 July 2006. 8 The evidence before the primary judge was within a very small compass. The plaintiff relied on two affidavits by her solicitor dealing with some of the history, two expert medical reports obtained on her behalf, and the statement of claim, and there was an affidavit from the defendant's solicitor which also dealt with some of the history, and extracts from two letters to the plaintiff from her former solicitors. 9 The statement of claim alleged that a CT scan of the plaintiff taken for a supposed dental problem revealed a left lateral ventricular tumour which was confirmed by MRI studies. The plaintiff was referred to the defendant who saw her on 18 July 2001. He advised her to have a stereotactic CT guided biopsy. He is alleged to have told her that "there would not be any problems with such a procedure and would only involve an overnight stay" (sic). The plaintiff underwent this procedure on 3 August 2001 and suffered brain damage which caused severe impairment of her short-term memory. 10 The particulars of negligence in the statement of claim included three relating to the procedure and the defendant's advice that she should undergo it, and two relating to his failure to warn her of the risks. The Judge struck out two of the particulars relating to the procedure and it was common ground that she should have struck out the third. This left: "(b) Advising the Plaintiff that there was 'no problems with such surgery' (sic); (d) failing to warn the plaintiff that there was a risk of suffering brain injury whilst performing the stereotactic biopsy". 11 A statement of experts' reports was not filed with the statement of claim as required by SCR Pt.14C r6 for cases in the Professional Negligence List. However a DCM document was filed which only came to notice when the Court examined the Common Law Division file. It alleged that the defendant advised the plaintiff that the operation was "without problems" and "safe". It also alleged that if the plaintiff had been warned that the procedure was likely to cause brain damage she would not have undertaken it as it could have been avoided. The schedule referred to a report of Dr P. Rawling of 16 December 2003, reports and letters of the defendant between 25 July 2001 and 23 July 2003, a report of Wagga Medical Imaging MRI 15 May 2001 and other documents not presently relevant. None of these are before the Court. 12 A statement of experts' reports was filed on 14 March 2006 with the Notice of Motion under UCPR 1.12. This referred to reports from Dr Teo of 29 July 2004 and Dr Matheson of 7 February 2006 and asserted that the defendant advised the plaintiff on 18 July 2001 "that there would not be any risks associated with such a procedure". 13 Dr Teo referred to "the relative safety of such an operation" and continued: "It would have been reasonable for the neurosurgeon to have told the patient that the risks of such a procedure were low. The literature would support this. Furthermore it is incumbent upon the surgeon to inform the patient of the more common complications that result from surgery in this area. These complications are failure to secure a diagnosis, infection (including meningitis), haemorrhage that could result in stroke or death, seizures, damage to the surrounding brain that could result in paralysis down the right side of the body, loss of memory, loss of vision, changes in personality and episodes of rage. This is not an exhaustive list … I tell all my patients, especially those with a tumour in an eloquent area such as this, that there are many more possible adverse outcomes but it would be impossible to list them all … I would be critical of a colleague if he did not warn the patient of the risks of surgery … comprehensive medical management includes a level of communication that is reasonable, compassionate and directed at an appropriate level so that the patient is informed and comfortable with their decision-making. I am unable and unwilling to pass judgement on this neurosurgeon regarding his level of communication." 14 Dr Matheson in his report said: "As far as her presentation is concerned, I am not sure that this is asymptomatic as Dr Dudley reports. If we go to Dr Pell's report of the 25th July 2001 he reported that she saw a dentist because of tingling on the side of her face, around her eye, difficulty with speech, and talking out the side of her mouth. This led to her having a CT scan which diagnosed this tumour. However, it did seem that she remained asymptomatic after that time … I cannot make any comment on what was or was not said to Ms Hodges other than to note that she was warned of memory problems but the reality of the situation is that one would tell a patient who is going to have a stereotactic biopsy that this is a low-risk procedure but not a zero risk procedure and does have a small incidence of disastrous bleeding and even death, never mind memory loss. Patients with lesions in this region are at threat of specific memory problems as it is sitting not far above the hypothalamus. If it does cause hydrocephalus that can also cause memory problems … I think it reasonable to say that a woman presenting with a tumour like this, which may or may not have been asymptomatic would be offered a diagnostic procedure by way of a stereotactic biopsy and I consider that to be acceptable medical practice, and indeed the correct one. One of the strong arguments against a wait-and-see policy is the possibility of these lesions obstructing the foramen of Monro and causing an acute hydrocephalus which not only leads to brain damage and memory loss but can also result in the death of the patient. Thus there are risks in not proceeding as well as the risks in proceeding. The next comment to make is concerning what should or should not have been told to the patient. The patient should have been warned that there are occasional disastrous risks in this procedure. By Ms Hodge's own say-so she was warned of possible memory problems but claims they were played down. I can make no comment on that … It is my view that a wait-and-see approach in this case would have been inappropriate but an arguable form of treatment … The matter of the adequacy of her consent I cannot specifically address other than to state that such a procedure should not be undertaken without warning the patient of the disastrous as well as less disastrous complications that can definitely occur from the procedure that balances out against the risk that Ms Hodges runs without treatment." 15 The first affidavit of Geoffrey Potter sworn 22 November 2005 set out the history after he took over the case for the plaintiff on 18 March that year. He said that the statement of claim had not been served "as the plaintiff was awaiting an expert's report on liability." He did not receive the file from the previous solicitors until early July. He recorded his unsuccessful attempts between July and November to arrange a conference between Mr Cranitch SC and Dr Teo. The affidavit was presumably filed pursuant to a Registrar's direction. 16 Mr Potter's second affidavit of 14 March 2006 stated that the plaintiff's first solicitors in Wagga advised her in November 2004 "that they did not have … experts' reports to file in compliance with the Supreme Court Rules." He said the plaintiff then instructed Maurice Blackburn Cashman of Melbourne but in February 2005 "was advised … that they were unable to assist her in the matter." 17 On 29 March 2005 Mr Potter received instructions to proceed with investigations on the basis that he believed there to be reasonable prospects of success. He attempted between April 2005 and January 2006 to arrange a conference with Dr Teo without success because of the Doctor's heavy schedule. He then retained Dr Matheson. Having obtained the latter's report he received instructions to proceed with the case on 13 March 2006. 18 He concluded by stating that an extension of time for service was sought "due to the delay encountered by the plaintiff in obtaining experts' reports" and he confirmed this in cross-examination. 19 The defendant's solicitors served a notice to produce seeking copies of correspondence from the plaintiff's former solicitors. Production of two letters was ultimately sought on the basis that legal professional privilege had been waived. The plaintiff's counsel offered to produce parts of these letters and this offer was accepted. 20 The extract from the letter of Walsh & Blair of November 2004 referred to counsel's oral advice that "given three neurosurgeons have formed a view adverse to our interests it would be unlikely that we would obtain satisfactory medico-legal opinion". 21 The extract from the letter from Maurice Blackburn Cashman of February 2005 stated "taking into account that there are three other neurosurgeons who have provided negative opinions we could not recommend that you litigate this case." 22 Although the statement of claim included an allegation of failure to warn there was no evidence of the advice (if any) that either firm gave the plaintiff about this part of the case. It is reasonably clear that both firms were advising the plaintiff that she did not have worthwhile prospects of success on the other aspects of the case as pleaded. Maurice Blackburn Cashman clearly advised that the case as a whole was not worth pursuing, and there is no explanation for their advice not to proceed with her failure to warn case. 23 The Court does not know what ultimate advice Walsh & Blair gave the plaintiff in November 2004 but they cannot have overlooked the failure to warn case. They too may have advised that the whole case be dropped. 24 It is reasonable to infer that Dr Teo's report was the best available but it does no more than leave open the possibility of a failure to warn case. Thus by February 2005 the plaintiff had received advice from two firms of solicitors and one barrister based on the reports of at least three neurosurgeons that she did not have a worthwhile case except possibly for a failure to warn. In these circumstances it might be thought unreasonable that she did not proceed with the failure to warn case if she had advice which supported this course. The rest of her case was in no better shape when the matter came before Latham J. in June 2006. 25 The Judge said that there was some material on which a failure to warn case might proceed, that this "may not substantially depend on expert opinion", but that underscored the defendant's complaint that the delay in serving that part of the statement of claim had not been explained. She doubted whether a change of solicitors and some difficulty in obtaining experts' reports, without more, amounted to a satisfactory explanation for the delay. 26 She concluded by saying that she had been "somewhat reluctantly persuaded" that the plaintiff's "legitimate interest in the prosecution of her claim of failure to warn" justified the exercise of the discretion in her favour. 27 It is not clear what the primary judge meant by her reference to "the plaintiff's legitimate interest". The plaintiff had the interest of every plaintiff seeking a procedural indulgence who wants their case heard on its merits, but this cannot be decisive because it would eliminate the discretion and make an extension a matter of course. 28 The plaintiff's legitimate interest in the prosecution of her claim is balanced by the defendant's legitimate interest in the claim not being prosecuted when the application is made 19 months after the expiration of the limitation period. 29 UCP r.1.12 enables the Court to extend any time fixed by the rules even on an application made after the time has expired. The statement of claim became stale before the commencement of the Uniform Civil Procedure Act but cl.10 of Sch.6 contains appropriate transitional provisions. 30 The discretion conferred by UCP r.1.12 is not in terms fettered, but a plaintiff seeking an extension of time must establish a proper or adequate reason for this being granted: Franklin House Ltd v ANI Corporation Ltd (2/11/94 Windeyer J unreported); Kleinwort Benson Ltd v Barbrak Ltd [1987] AC 597, 622-3. Proof is required of a satisfactory explanation for the delay. 31 In Tolcher v Gordon [2005] NSWCA 135, 53 ACSR 442 Tobias JA, who gave the principal judgment, held (p.457, para [78]) that a defendant did not have a prima facie right to retain the benefit of the expiry of the limitation period because that would fetter the otherwise unfettered discretion relevant in that case. By parity of reasoning it would also be an unjustified fetter on this discretion to accord any prima facie right to a plaintiff because of her legitimate interest in the prosecution of her case. 32 While a defendant has no prima facie right to retain the benefit of the expiry of the limitation period this is a relevant factor: Tolcher v Gordon (above) at 443 para [3], 453, paras [56], [60], but the Judge did not refer to it as such. 33 While the absence of any reference to a relevant matter does not necessarily bespeak error, in my judgment, it does in this case. If the Judge had referred to this matter as a relevant factor she would have had to explain why, on balance, the legitimate interest of the plaintiff outweighed that of the defendant, but she did not do so. 34 The significance of this matter to her Honour's decision is emphasised by her statement that she doubted "whether a change of solicitors and some difficulty in obtaining expert reports, without more, amounts to a satisfactory explanation for the delay." She had previously pointed out that the failure to warn case did not substantially depend on expert opinion, and that the delay in obtaining such reports was the only reason advanced in support of the application. 35 Her Honour presumed latent prejudice to the defendant in respect of the other allegations in the statement of claim, but said nothing about such prejudice in relation to the allegation of failure to warn although no doubt some prejudice would have to be presumed. There was no evidence of any actual prejudice. 36 In my judgment the errors previously identified caused her Honour's exercise of the discretion to miscarry and this Court must re-exercise it. 37 Under the SCR the general rule was that a statement of claim was valid for service for 12 months: Pt.7, r.7(1), but in the Professional Negligence List the period was four months: Pt.14C r.7. Although the statement of claim was not endorsed for this list, cases such as the present are automatically included: Pt.14C r.3(1)(a). 38 The relevant Practice Note, No. 104, provided in para 7 that the statement of claim should be served promptly, and para 17 provided: "It may be anticipated that, on an application for extension of the time for service of the statement of claim under Part 14C r.7, an order will not be made unless reasonable efforts have been made to serve the statement of claim." 39 In Tolcher v Gordon (above) Hodgson JA said at 443 par [3]: "…an important aspect of the public policy behind the limitation period is that potential defendants should be made aware of claims against them within a reasonable time; so that … delay in service of such proceedings, in contravention of the rules, is particularly serious if it occurs after the expiration of a three-year limitation period. A [person] who does not commence proceedings until just before expiry of the limitation period should … be especially diligent in pursuing prompt service of the proceedings." 40 This was a minority view and the majority (Ipp and Tobias JJA) considered that the relevant principles were those applicable to a want of prosecution case, not a limitation case (paras [90], [91], [95], [96], [103]). Accordingly delay within the limitation period prior to the filing of the statement of claim was held to be irrelevant in exercising the discretion to set aside an automatic dismissal for want of prosecution. 41 In that case the plaintiff decided to proceed if litigation funding could be obtained, and filed the statement of claim shortly before the expiration of the limitation period. Funding was obtained two months later, and attempts at service were then made without success because the defendant was not at his country property. 42 The present case is essentially different. The defendant was still in practice and there would be no difficulties in effecting service. The plaintiff's problem was that she had not decided whether to proceed and if so on what basis. In these circumstances, in my opinion, the case is a limitation case and not a want of prosecution case within the reasoning in Tolcher v Gordon (above). Essentially the plaintiff wanted more time within which to decide whether she would proceed with her case. 43 The limitation period of three years is intended to provide a reasonable time for a plaintiff who has suffered personal injuries to seek and obtain appropriate medical and legal advice and to decide whether legal proceedings are justified. It was not suggested that her injuries contributed to the delay. 44 In these circumstances delay within the limitation period is also relevant to the exercise of the discretion to extend time for service of proceedings. A plaintiff who issues proceedings just before the limitation period and only then has the merits of the case investigated should not have any expectation of obtaining an extension of time to enable investigations to continue. There should also be no expectation that time spent in this way after the statement of claim has been issued, especially after it has become stale, will be accepted as an adequate explanation for such delays. Her case is not improved if investigations were carried out with reasonable diligence, but proved negative. 45 Proceedings for professional negligence differ from the general run of personal injury cases as they affect the defendant personally and his or her professional reputation. One may reasonably infer that considerations such as this prompted the reduction in the time for service of the statement of claim for cases in the Professional Negligence List and the warnings in the Practice Direction. 46 The plaintiff made no attempt to explain the delay prior to the filing of the statement of claim. Dr Teo's report is dated the day following the issue of the statement of claim but presumably Walsh & Blair already knew something of its contents when they commenced the proceedings. The date the plaintiff first consulted Walsh & Blair is not known although the Judge inferred that this may not have happened until she lost her position with the Education Department at the end of 2002. 47 The DCM document referred to a report of Dr Rawling of 16 December 2003 and he may be one of the three neurosurgeons referred to in the solicitors' correspondence. However the date or dates of the other report or reports are not known nor does the Court know whether the other reports dealt with the failure to warn case. 48 The statement of claim, the DCM document, and the statement of experts' reports assert that the defendant's advice was entirely positive and that no warning was given. 49 There has been no explanation of the reason why Walsh & Blair did not serve the statement of claim within the four months, except their advice to the plaintiff that they did not have experts' reports to file as required by the Supreme Court Rules. However this was not true in respect of the failure to warn case as this was supported, so far as necessary, by Dr Teo's report, and as the judge pointed out this case would ultimately turn on a question of fact and not substantially on expert opinion. Thus there has been no explanation for the delay at that stage in proceeding with the failure to warn case. An available inference is that the plaintiff's instructions did not support such a case. 50 Dr Teo's report discussed the duty to warn in general terms without any reference to the plaintiff's instructions as to what had actually happened. However Dr Matheson was instructed that the plaintiff had been warned of "possible memory problems" which necessarily involves brain damage and this is what happened. 51 These matters strengthen the inference that the statement of claim was not served before Walsh & Blair withdrew from the case in November 2004 because the failure to warn case was seen to be weak and a wider case was not supported by experts' reports. This inference is further strengthened by the advice from Maurice Blackburn Cashman. 52 The delays after Mr Potter was consulted in March 2005 have been explained, but there has not been a full or adequate explanation for the delays from the end of 2002 when inferentially Walsh & Blair were consulted until March 2005. Indeed the evidence suggests that decisions not to proceed were made on advice in June and November 2004 and February 2005. 53 In Kleinwort Benson (above) Lord Brandon considered the English case law dealing with extensions of time under similar rules of court. He identified (at 615-6) three categories of cases, the first where the application for extension is made when the writ is still valid and before the limitation period has expired, the second where the application is made when the writ is still valid but the limitation period has expired and the third where the application is made after the writ has ceased to be valid and the limitation period has expired. He said at 623: "Good reason is necessary for an extension in both Category (2) cases and Category (3) cases. But in Category (3) cases the applicant for an extension has an extra difficulty to overcome, in that he must also give a satisfactory explanation for his failure to apply for extension before the validity of the writ expired." 54 There has been no explanation for the failure to apply for an extension of time within the four months allowed for service. This expired on 29 November 2004 and an inference is available that this deadline caused Walsh & Blair to send the letter that has been partly disclosed. An inference is also available that there was a deliberate decision taken at that time not to apply for an extension of time. 55 For these reasons I would, on a re-exercise of the discretion, refuse an extension of time. The following orders should be made: 1. Appeal allowed with costs. 2. Decision of Latham J of 22 June set aside. 3. In lieu thereof order that the Notice of Motion of 14 March 2006 be dismissed with costs, and that orders be made in accordance with prayers 1 and 2 of the Notice of Motion of 6 April 2006. 4. The respondent to have a certificate under the Suitors Fund Act for the costs of the appeal. ********** 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.