New South Wales Court of Appeal CITATION: Hamze v Bradstreet [2008] NSWCA 191 HEARING DATE(S): 9 July 2008 JUDGMENT DATE: 18 August 2008 JUDGMENT OF: Hodgson JA at 1; Ipp JA at 2; Handley AJA at 3 DECISION: Appeal dismissed with costs. CATCHWORDS: NEGLIGENCE - solicitor - negligent advice - worker's alternative rights - loss of common law rights - causation - worker's hypothetical decision on receipt of proper advice - trial judge not persuaded worker would have elected to sue at common law LEGISLATION CITED: Workers' Compensation Act 1987 Workplace Injury Management and Workers' Compensation Act 1998 CATEGORY: Principal judgment CASES CITED: Leotta v Public Transport Commission (1976) ALJR 666 Water Board v Moustakas (1988) 180 CLR 491 PARTIES: Fawaz Hamze (Appellant) Michael E Bradstreet (Respondent) FILE NUMBER(S): CA 40307/07 COUNSEL: D Kennedy SC/I Newbrun (Appellant) W C Muddle SC/J Downing (Respondent) SOLICITORS: Kheir & Associates (Appellant) Yeldham Lloyd Associates (Respondent) LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 19911/05 LOWER COURT JUDICIAL OFFICER: Rein DCJ LOWER COURT DATE OF DECISION: 18 April 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40307/07 DC 19911/05 HODGSON JA IPP JA HANDLEY AJA MONDAY 18 AUGUST 2008 FAWAZ HAMZE v MICHAEL E BRADSTREET NEGLIGENCE – solicitor – negligent advice – worker's alternative rights – loss of common law rights – causation – worker's hypothetical decision on receipt of proper advice – trial judge not persuaded worker would have elected to sue at common law HEADNOTE The appellant was injured at work in August 1999 in circumstances which gave rise to rights under the Workers' Compensation Act 1987 and at common law. He consulted the respondent in February 2001 having discharged the solicitors he had retained in October 1999. In June 2001 the solicitor advised against bringing common law proceedings. The appellant did not bring such proceedings and amendments to the Workplace Injury Management and Workers' Compensation Act 1998 which took effect on 27 November 2001 effectively destroyed his common law rights. He sued his solicitor for negligence, claiming for the value of the lost rights. The judge found that the appellant had little prospect of overcoming the existing s 151H threshold for economic loss, and only a 50% chance of overcoming the existing s 151G threshold for non-economic loss. He was not persuaded that the appellant, properly advised, would have commenced common law proceedings in time and entered judgment for the defendant. On appeal HELD: (1) An argument that the solicitor should have obtained copies of additional medical reports held by the workers' compensation insurer could not be raised on appeal the first time; (2) An argument that the solicitor should have advised the appellant to commence common law proceedings because of the prospects of settlement for non-legal reasons was not open on appeal; (3) The judge's finding on causation was protected by the Abalos principle and could not be disturbed. ORDERS Appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40307/07 DC 19911/05 HODGSON JA IPP JA HANDLEY AJA MONDAY 18 AUGUST 2008 FAWAZ HAMZE v MICHAEL E BRADSTREET Judgment 1 HODGSON JA: I agree with Handley AJA. 2 IPP JA: I agree with Handley AJA. 3 HANDLEY AJA: The claimant, the plaintiff below (the worker) sought leave to appeal from the judgment entered by Rein DCJ for the defendant, his former solicitor, in his action against that solicitor for professional negligence. The worker had an appeal as of right, but needs an extension of time of one day which should be granted. 4 The worker, who came to this country from Lebanon, and whose first language is Arabic, was injured on 23 August 1999 in the course of his employment with Sydney Slitting Co Pty Limited. He was feeding steel coil into a cutting machine when his right hand got caught in the rollers. It was common ground that the worker would have no difficulty in establishing a breach by his employer of its duty to provide and enforce a safe system of work, and that he faced a minimal risk of a finding of contributory negligence. 5 In February 2001 the worker retained the solicitor to act for him in relation to his rights at common law and under the Workers' Compensation Act (the Act) arising from this accident to replace solicitors he had retained in October 1999. The solicitor could not obtain the file from the previous solicitors until 30 May. He saw the worker in conference on 5 June. 6 Under s 151D(2) of the Act the worker had to commence common law proceedings within 3 years of his injury, or obtain an extension of time. When he saw the solicitor on 5 June there was still plenty of time to make a decision about the commencement of common law proceedings. 7 Although the worker had a strong case on liability his claim to common law damages could not succeed unless he met the thresholds in ss 151G and 151H. Section 151G(4) denied recovery for non-economic loss unless the worker established an entitlement to more than $36,000 or 17.6% of a most extreme case. 8 Section 151H(2)(a) and (b) denied recovery for economic loss unless the worker established a right to at least 33% of the maximum lump compensation recoverable under s 66(1), or a right to damages of not less than $67,800 for non-economic loss. 9 These sections imposed significant obstacles and on the information available to the solicitor in June 2001 it was not clear that the worker would meet either threshold. There were also other problems. The worker had statutory rights to weekly compensation under s 40, medical expenses, and lump sum compensation under ss 66 and 67. However in June 2001 he had no presently enforceable right to weekly compensation because he was employed on light duties and at his normal wages. He failed to prove a loss of overtime. 10 Section 151A(2) required an injured worker to elect between claims to lump sum compensation under ss 66 and 67, and common law damages for non-economic loss. Section 151A(3) provided that an irrevocable election was made when an injured worker commenced proceedings for damages, or lump sum compensation. 11 Thus the commencement of an action for common law damages involved the loss of any right to lump sum compensation without any certainty that the worker would meet the threshold in s 151G and recover damages for his non-economic loss. The election would not affect his right to weekly compensation or medical expenses but these rights would be lost if he recovered at common law for his economic loss. 12 There could be no suggestion that the solicitor was negligent in June 2001 for failing to advise the worker to commence common law proceedings forthwith. However the situation changed dramatically later that year. Amendments to the Workplace Injury Management and Workers' Compensation Act 1998 which relevantly commenced on 27 November 2001 (the 2001 amendments) made it much more difficult for injured workers to recover common law damages. Under transitional provisions inserted into Schedule 6 of the 1987 Act the 2001 amendments applied to claims for damages for injuries received before that date unless proceedings for their recovery had already been commenced. The worker did not commence common law proceedings before the critical date and it was common ground that the 2001 amendments effectively terminated his common law rights. 13 The negligence alleged against the solicitor was his failure to warn the claimant in October or November that year that the Government intended to drastically reduce the common law rights of workers and if he wished to commence common law proceedings it would be necessary to do so without delay. It was common ground that the intentions of the Government were public knowledge, particularly among solicitors who acted in personal injury cases, well before the 2001 amendments were introduced into the Parliament. It was also common ground that it was public knowledge that the 2001 amendments would not apply to pending actions. 14 The solicitor did not warn the worker and give him the opportunity to commence common law proceedings before the critical date. The worker sued the solicitor for failing to give him appropriate advice in time, claiming for the loss of his common law rights 15 Rein DCJ found that at the conference on 5 June 2001 the solicitor told the worker that only workers' compensation proceedings would be appropriate (para [73]). He also found that this advice was not negligent (para [92]). 16 The judge also found that the solicitor had a duty to explain the situation to the worker so that he could make an informed decision. He found that the solicitor needed to explain (para [93]) the effect of the thresholds in ss 151G and 151H, and that in his, the solicitor's opinion, the worker had little prospect of overcoming the 23.5% threshold for the recovery of economic loss, and a 50% chance of overcoming the 17.6% threshold for non-economic loss. 17 The worker should then have been given "an idea of the monetary effect of possible outcomes" and the risks of adverse orders for costs. He should also have been given an indication of the likely outcome of claims under ss 66 and 67, and a comparison of the benefits and risks of the alternatives open to the worker (para [93]). The solicitor had not given this advice and had breached his duty of care to the worker. 18 The worker was scheduled to have another operation on his right hand later in the year. The judge found that the solicitor should have advised the worker to contact him after the operation. He did not give that advice, and the worker did not contact him prior 27 November 2001. The judge also found that the solicitor should have communicated with the worker once he learned of the pending legislation to warn him, and give him the opportunity of commencing common law proceedings in time, but he did not do so (para [96]). 19 Thus the worker established that the solicitor had breached his duty of care in June and November 2001. The remaining questions were whether these breaches of duty caused, or materially contributed to, the loss of the worker's common law rights on 27 November, and the value of the lost rights. The question of causation turns on the worker's probable reaction to the advice the judge found should have been given to him, and whether he had established on the civil onus that had he been given that advice on either date he would have decided to commence common law proceedings. 20 Expert evidence about the worker's prospects of success in common law proceedings was given by Mr Harrison, a solicitor, and Mr Stanton, a barrister. Both were well-qualified in the field. Mr Harrison thought that the worker had "at least a 50% chance" of meeting the s 151G threshold, but Mr Stanton thought he only had a 50% chance. 21 If that threshold was met Mr Harrison thought that the worker could recover between $20,000 and $41,000 for non-economic loss (para [109.4]). Mr Stanton thought that the likely recovery was $22,160. 22 Mr Harrison thought that the worker was likely to recover $10,000 for his entitlements under ss 66 and 67, based on Dr Dilley's assessment of 11% permanent loss of use, but Mr Stanton said that a 13% finding would only produce $9,750 under s 66 and nothing under s 67 (para [83]). The judge held that the range was from $9,750 to $20,000 (para [109.4]). 23 Mr Harrison thought that the worker had a "very substantial risk" of failing the s 151H threshold, putting his prospects at 40-50%, but in other evidence he offered a more cautious assessment (paras [77], [82], [84]). The judge preferred Mr Stanton's evidence that the worker's prospects were less than 40% (para [82]). 24 The judge reviewed the worker's evidence about what he would have done in the hypothetical situations in June and November 2001, if he had been given appropriate advice, and his attitude to the risks involved, but was not persuaded that the worker would have given instructions to commence common law proceedings. 25 The worker underwent further surgery on 12 October 2001 and his hand remained in plaster for 6 weeks. The operation was not a success, but did not make his condition any worse (blue 2/273). The solicitor was not aware of this information but since the worker's condition did not change the additional information could not have affected his advice or the worker's decision. 26 The judge's finding involved the rejection of the worker's evidence at the trial that, given the appropriate advice, he would have authorised the commencement of common law proceedings before the critical date. The judge's finding was clearly open on the worker's evidence as a whole, and it is protected by the Abalos principle. 27 The direct attack on this finding by Mr Kennedy SC, who appeared for the worker, cannot succeed. The worker's strong preference for a larger lump sum, however understandable, cannot justify the reversal of the finding. Other findings by the judge established that the worker had no realistic prospects of meeting the s 151H threshold and recovering damages for his economic loss, and only a 50% chance of meeting the s 151G threshold and recovering damages for his non-economic loss. 28 The range of recovery for his non-economic loss was between $20,000 and $41,000 while the range under ss 66 and 67 it was between $10,000 and $20,000. The worker therefore faced the certain loss of the latter rights in return for a 50% chance of obtaining between $20,000 and $41,000. This of course also involved a 50% chance of obtaining nothing and having to pay the defendant's costs. The worker said that he would have been concerned about the risk of an order for costs against him. An objective assessment of the risks and prospects of common law proceedings strongly supports the judge's finding. 29 Mr Kennedy attempted to undermine the finding by reference to the rehabilitation reports received by the workers' compensation insurer in March and April 2001 (2/352-5), an x-ray report of 15 November 2000 (1/38) which indicated the presence of minor degenerative changes in the injured wrist, and the report of his treating physiotherapist (2/346-7). On the judge's findings this material was not available to the solicitor (para [34]). 30 Mr Kennedy submitted that the solicitor should have obtained these reports and his advice should have been based on the fuller information they would have provided. This was not a particular of negligence in the statement of claim, it was not covered by the evidence of Mr Harrison, and the solicitor was not cross-examined on this allegation. The point is not available for the first time on appeal. 31 Mr Kennedy also argued that the solicitor, in advising the worker on the benefits of common law proceedings, should have told him that there were prospects of obtaining a favourable settlement from the workers' compensation insurer regardless of the strength of his common law claim. The insurer could be willing to do this to achieve finality and avoid long term liabilities to a 35 year old, partially incapacitated, unskilled worker with limited English, who would otherwise be on its books for 30 years. 32 This allegation was not within the particulars in the statement of claim, nor was it included in Mr Harrison's report, or in his evidence in chief. However it was raised, without objection, during Mr Harrison's re-examination on 28 June 2006. He said in answer to a leading question that the solicitor ought to have informed the worker that if proceedings were commenced settlement was a reasonable prospect in the prevailing culture (black 105). However he then gave the following evidence in further cross examination (106): "Q. Do I take it from what you said … that … it would not have been unreasonable in that situation before the commencement of proceedings, to also decline to give an opinion about likely settlements at that point? A. I think there'd be many solicitors who'd wisely avoid the temptation of that speculation" 33 Mr Harrison gave further evidence on 6 December 2006 on the prospects of settlement and the need to advise the worker about this (black 136-7, 139, 140, 141). By that stage at the latest the point was available to the worker although it was technically outside the statement of claim: Leotta v Public Transport Commission (1976) 50 ALJR 666; Water Board v Moustakas (1988) 180 CLR 491, 497. 34 A breach of professional duty is not established by proof that another competent practitioner would have taken a different view. There may be a range of views reasonably open to a skilled and careful professional. The fact that Mr Harrison would have given this advice, and it would not be "unreasonable" to give it does not establish that the solicitor was negligent in failing to do this. 35 The point was not put to the solicitor in cross-examination and was not raised in final address. Understandably the judge did not deal with it and it is not available now on appeal. 36 The judge's finding that the worker, if properly advised, would not have given instructions for the commencement of common law proceedings, cannot be disturbed. The appeal therefore fails and should be dismissed with costs. ********** 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.