Sadi Mustafa Karabay v Malcolm Carr t/as Forshaws Neill Solicitors & Anor [2012] NSWSC 1386

Supreme Court New South Wales

Medium Neutral Citation: Sadi Mustafa Karabay v Malcolm Carr t/as Forshaws Neill Solicitors & Anor [2012] NSWSC 1386 Hearing dates: 22 August 2011 - 26 August 2011 Decision date: 07 November 2012 Jurisdiction: Common Law Before: Hidden J Decision: Judgment for plaintiff against first defendant Catchwords: PROFESSIONAL NEGLIGENCE - proceedings against two solicitors - dismissal of District Court proceedings for personal injury - one solicitor found liable - assessment of damages Legislation Cited: Civil Liability Act 2002 District Court Rules 1973 Uniform Civil Procedure Rules 2005 Cases Cited: Firth v Sutton [2010] NSWCA 90 Johnson v Perez (1988) 166 CLR 351 Nikolaou v Papasavas (1988-89) 166 CLR 394 Torrac Nominees Pty Ltd v Karabay; UWS Macarthur Sports and Recreation Association Inc v Karabay [2007] NSWCA 96 Category: Principal judgment Parties: Sadi Mustafa Karabay (plaintiff) Malcolm Carr (t/as Forshaws Neill Solicitors) (1st defendant) Ron Egon Kramer (t/as Ron Kramer Associates) (2nd defendant) Representation: Counsel: L Stephens (plaintiff) P Braham SC with M Smith(1st & 2nd defendants) Solicitors: Paul Clough Solicitor (plaintiff) Bruce Alexander Yeldham - Yeldham Price O'Brien Lusk (1st & 2nd defendants) File Number(s): 2008/289658

Judgment 1These are proceedings brought by the plaintiff, Sadi Mustafa Karabay, against two solicitors for professional negligence. The defendants are Malcolm Carr (trading as Forshaws Neill) and Ron Egon Kramer (trading as Ron Kramer Associates). The proceedings arise out of their conduct at different times of an action by him for damages for personal injury. 2In July 1999, Mr Karabay went to the Northern Territory on what was termed a Central Australia Camping Safari organised by UWS Macarthur Sports and Recreation Association Incorporated. The excursion took him to the MacDonnell Ranges Tourist Park at Alice Springs, which was owned and occupied by Torrac Nominees Pty Ltd, trading as MacDonnell Ranges Tourist Park. On 21 July 1999, he was injured while playing basketball at the tourist park. The circumstances of the injury and its sequelae will be examined later in this judgment. 3On 26 June 2002, he commenced proceedings in the District Court against the Sports and Recreation Association, as the organiser of the tour, and Torrac Nominees, as the occupier of the tourist park, alleging that his injury was the result of the negligence of both of them. At that time his solicitor was the first defendant, Mr Carr. In September 2002, directions were made for the preparation of the matter. In January 2003, those directions not having been complied with, Mr Karabay was ordered to show cause why the matter should not be dismissed. On 25 March 2003, cause not having been shown, Acting Judge Boyd-Boland dismissed the proceedings pursuant to the provision then applicable, Pt 18, r 3 of the District Court Rules 1973. (The order his Honour made was that the proceedings were struck out but, in fact, an order under that rule was a dismissal.) 4In April 2005, Mr Carr ceased to act in the matter and it passed into the hands of the second defendant, Mr Kramer. On 21 October 2005, a motion to set aside Acting Judge Boyd-Boland's order was filed in the District Court. In the meantime, on 15 August 2005, the Uniform Civil Procedure Act 2005 came into force, as did the Uniform Civil Procedure Rules, which substantially repealed the District Court Rules. On 31 March 2006, Judge Duck granted the motion, so as to reinstate the proceedings. However, an appeal against that order was successful, and on 2 May 2007 it was set aside: Torrac Nominees Pty Ltd v Karabay; UWS Macarthur Sports and Recreation Association Inc v Karabay [2007] NSWCA 96. 5It is unnecessary to consider the court's decision in detail. It is sufficient to say that the District Court motion of 21 October 2005 had been determined by the application of Pt 1 r7A of the District Court Rules. That rule defined the expression "preliminary dismissal order" and, among other things, provided for an application to set such an order aside. Acting Judge Boyd-Boland's order under Pt 18 r3 was a preliminary dismissal order. Judge Duck noted that, at the time the motion before him was filed in October 2005, Pt 1 r7A was no longer in force because of the introduction of the Uniform Civil Procedure Act and Rules. However, his Honour relied upon a transitional provision in a schedule to the Act to apply the rule. 6It was in this respect that the Court of Appeal found him to be in error. It was held that, because the motion to set aside Acting Judge Boyd-Boland's order had been filed after the Uniform Civil Procedure legislation came into effect, the transitional provision did not preserve Pt 1 r7A for the purpose of the case. It was common ground that there was no equivalent rule in the Uniform Civil Procedure Rules, and that there was no other source of power to set aside the preliminary dismissal order in the Uniform Civil Procedure Act or the Rules. In the result, then, the District Court proceedings had been brought to an end and could not be revived. By then, any fresh proceedings in the District Court would have been statute barred, in this case under the law of the Northern Territory which, it is common ground, was the substantive law applicable to Mr Karabay's claim. 7Put shortly, in the present proceedings the case against Mr Carr, as it was crystallised at the hearing, focused upon his failure to take timely steps to make an application to set aside Acting Judge Boyd-Boland's order dismissing the District Court proceedings. Certain admissions were made by Mr Carr's solicitors in a letter to Mr Karabay's solicitors of 2 March 2011. Because of those admissions, it became unnecessary to consider the circumstances in which the proceedings were dismissed by Acting Judge Boyd-Boland, or why an application to set that order aside was not made promptly. The admissions were that Mr Carr failed promptly and accurately to tell Mr Karabay what had transpired at the show cause hearing on 25 March 2003, and had failed to advise Mr Karabay to take urgent steps to have the matter restored to the list. In the light of these admissions, it was accepted that Mr Carr's liability was established and the matter proceeded against him as one for the assessment of damages. 8Again put shortly, the case against Mr Kramer was that he also had failed to take timely steps to pursue an application to set aside Acting Judge Boyd-Boland's order. The result of that failure was that the District Court proceedings could not be revived, although it is not pleaded against Mr Kramer that he should have been aware that the introduction of the Uniform Civil Procedure legislation would have the effect which the Court of Appeal found it did. Mr Kramer's liability is in issue. 9A statement from Mr Kramer concerning his conduct of the matter is in evidence, together with a volume of accompanying documentary material, and he gave oral evidence. Mr Karabay gave him instructions to take over the carriage of the matter on 12 April 2005. On 19 April he wrote to Mr Carr's firm, Forshaws Neill, seeking their file and undertaking to meet their outstanding costs and disbursements from the amount recovered in the claim. Forshaws Neill responded on 28 April, saying that they were not prepared to make the file available until their bill of costs had been assessed. Further correspondence ensued, and Mr Carr received the file on or about 8 June 2005. 10However, Forshaws Neill's letter of 28 April noted that they were "aware that a notice of motion seeking orders to restore the matter to the list has to be filed and there is urgency about the whole matter." Enclosed with the letter was such a notice of motion, together with supporting affidavits and a cheque for the filing fee. It was explained in the letter that the motion had not been filed because counsel briefed at that time had advised that it should not be filed until all the evidence to be relied upon at the hearing had been served. The view was taken that at the time the motion came to be dealt with it should be clear that Mr Karabay was in a position to proceed to hearing. In particular, evidence needed to be gathered in support of a substantial claim for future economic loss that Mr Karabay wished to pursue but which the author of the letter described as "challenging." 11Mr Kramer was of the same view. On 6 May 2005 he advised Mr Karabay by letter that, while a motion to "restore the matter to the list" should be filed as soon as possible, that should not be done "until we are able to tell the court at the hearing of that motion that the matter is fully prepared and ready to proceed to hearing on your part." It seems that he was later advised to the contrary by counsel whom he engaged. On 21 June he briefed counsel in the matter generally and, in particular, to prepare a motion to set aside the order of Acting Judge Boyd-Boland and any affidavit in support. In the observations in that brief he noted that counsel had "recommended that we apply to restore the matter to the list without delay rather than wait until the matter is ready to proceed to hearing." He went on to observe that the case was not ready to proceed and to note a number of matters about which further evidence was required. 12Like his predecessor, Mr Kramer was troubled about Mr Karabay's claim for future economic loss. It will be necessary to examine that claim later but, in brief, it was that Mr Karabay's injury had put paid to his ambition to become an airline pilot. Prior to the accident he had held a commercial pilot's licence, but had not secured a position with an airline. It was his case that, for reasons which I shall explain later, his injury prevented him from flying certain multi-engine aircraft. Evidence was required about his prospects of having realised his ambition but for that injury. 13To this end, in June 2005 Mr Kramer sought the opinion of an expert with appropriate qualifications and experience in civil aviation, Mr John Chesterfield. He arranged a preliminary conference between Mr Chesterfield and Mr Karabay on 16 June, part of the purpose of which was to ascertain from Mr Chesterfield what information he would need to assess and report upon the proposed claim for diminution in Mr Karabay's earning capacity. Following that conference Mr Chesterfield told Mr Kramer by phone that he thought Mr Karabay would have had good prospects of securing a position as an airline pilot in the future. He recommended that Mr Karabay renew his aviation licence and obtain the necessary medical certificate, saying that this would be necessary for him to make his assessment. Mr Kramer passed this on to Mr Karabay at a conference with him on 24 June 2005, and on the same occasion obtained detailed instructions about the issue so as to prepare a proof of evidence. 14There was a conference with counsel on 25 July 2005. Around that time, in late July, Mr Karabay told Mr Kramer that he had pursued the renewal of his pilot's licence. He had attended a medical examination with a doctor accredited by the Civil Aviation Safety Authority (CASA), and the doctor was to report to that organisation so that the outcome of his renewal application could be determined. That was Dr Graeme Maclarn, who later prepared several reports for the purpose of these proceedings. 15Thereafter, in August, CASA wrote to Mr Karabay to obtain his authority so that reports could be obtained from a doctor who had treated him for his injury and another doctor who had provided a medico-legal assessment in respect of it. That process was delayed because those doctors required pre-payment of the report fee by Mr Karabay. He sent copies of reports by those doctors which were in his possession to CASA. Mr Kramer did not become aware of this correspondence until the end of September. On 6 October he sent copies of the doctors' reports to CASA, expressing the hope that they provided the information that that organisation needed and seeking some indication of when the outcome of the assessment of Mr Karabay's medical fitness might be determined. 16In the meantime Mr Kramer was waiting on counsel to finalise the motion to set aside Acting Judge Boyd-Boland's order and affidavits in support. He briefed that barrister in a number of matters, and in his statement he said that he thought he may have enquired about the progress of this matter in telephone conversations about other matters. On 8 September 2005 he wrote to counsel asking him to settle the documents as soon as possible. He received them on or about 21 September. 17As I have said, the motion and supporting affidavits were filed on 21 October 2005. Mr Kramer took further steps to prepare the matter for hearing after that date, including obtaining reports from Dr Maclarn and from Mr Chesterfield. I shall refer to those reports later. 18For the purpose of the present proceedings, the conduct of the matter by Mr Carr and Mr Kramer was assessed by Mr David Trainor, an experienced solicitor and an accredited specialist in personal injury litigation. Mr Trainor provided a report, which is in evidence. He did not give oral evidence. Set out in the report are the assumed facts upon which it was based. Most of the report is directed to the conduct of Mr Carr. In respect of Mr Kramer, the assumed facts simply record that he was instructed in April 2005, that he appeared to have taken a number of steps "to resurrect the matter", including seeking counsel's opinion, but that no application "to extend the time and bring the matter back before the court was made before 15 August 2005." There is also recorded the fact of the motion having been filed in October 2005, together with its disposition by Judge Duck and by the Court of Appeal. 19Mr Trainor addressed questions concerning the approach of a prudent solicitor to the show cause hearing of 25 March 2003, which were clearly directed to the conduct of Mr Carr. In answer to the question what a prudent solicitor would have done "after the proceedings were struck out", Mr Trainor dealt with the responsibility of both the defendants without distinguishing between them. Among other things, he wrote that it was "incumbent on those acting for the Plaintiff to move quickly in relation to the answering of any outstanding particulars and taking whatever other steps were necessary in order to get the Plaintiff's case back on the rails." He noted that at the time the application to restore the matter was filed, it was "over 2 ½ years from the date of the strike out order." He observed that, although Mr Karabay had been overseas for part of the intervening period, he had been in Australia for "an extensive period of time", and that there was "every opportunity to prepare the matter and file the re-listing application well before October 2005." 20Mr Trainor expressed his conclusion as follows: "If I had been in the shoes of the Defendants I believe that I would have been aware of the need to move as quickly as possible, particularly in circumstances where in effect the Plaintiff was seeking an indulgence from the Court in order to permit the restoration of the matter to the list. I believe that reasonable peer practice would require that steps should have been taken to file the motion for the restoration of the matter to the list well before October 2005. ... In my opinion, the Defendants' conduct in relation to the preparation of the Plaintiff's case, particularly in relation to the Show Cause Hearing and the failure to promptly apply to have the matter restored, fell short of what I believe would be widely accepted as constituting competent professional practice."