Aldag v Eistis

Other alleged omissions were failure to provide proper costing for alternatives to the work (although I note the trial judge appears to have accepted the evidence on this from the plaintiff's expert) and providing an expert report that attracted the criticism that it did (although I note the trial judge accepted the findings on slip resistance). These are not omissions.

The respondent would have been well advised to obtain a report from the Bureau of Meteorology to see if it had been raining. However, reading the trial judge's comments, it would appear that this certificate was somewhat equivocal, in that there had been rain in the area. Failure to obtain a report of this kind should not attract the grave consequences of an order under this section. Complaints of this nature are essentially a counsel of perfection.

I am satisfied the respondent did not omit to obtain vital evidence necessary for the success of the plaintiff's case.

The applicant draws my attention to Basten JA's statement at [17] that the Act's purpose is to discourage practitioners from bringing before the court "claims based upon a legal principle which is not reasonably arguable". As I have set out below, I do not consider that Sved ( Woollahra Municipal Council v Sved (1996) 40 NSWLR 101) was so unarguable that the claim should not have been brought.

The trial judge held that his finding for the defendant on the issue of liability:

"makes unnecessary an examination of the point of law that was raised as to whether a duty of care cannot apply in these circumstances by reason of the Court of Appeal in Woollahra Municipal Council v Sved (1996) 40 NSWLR 101. During the currency of the case at about the end of the third day I queried what the duty of care might be on a person who is the owner or occupier of premises to a visitor who came upon those premises not in his ownership but in an ownership two or three removed down the track".

As the trial judge goes on to note, Mr Jones responded to his inquiry by taking him to Sved and submitting that by reason of this decision "it is not open to me to hold that there is a duty of care." The trial judge then queried:

"whether that would extend to the case of personal injury with somebody coming on the premises later and my attention was drawn to a passage in the judgment of Justice Clarke at 132B where his Honour, referring to the High Court decision of Bryan v Maloney , observed. The Court then expressed its view that a relationship of proximity existed between Bryan and Mrs Manion both as to physical damage and mere economic loss. They went on to hold that the distinction between the two was essentially technical in the present circumstances."

In oral submissions, Mr Jones developed this point further, asserting that the later High Court decision of Woolcock Street Investments Pty Ltd v CDG Pty Ltd and Anor (2004) 216 CLR 515 is substantially in conflict with Bryan v Maloney and that the decisions of Gleeson CJ and McHugh J substantially modify the principles enunciated in Bryan .

The respondent's evidence was that his inquiries as to the legal basis upon which these proceedings were brought were to search Austlii for Bryan v Maloney , a case he was already familiar with, but that he did not perform a search to see if this decision had subsequently been overruled, not followed or distinguished in subsequent decisions. Mr Eistis said in his evidence that as far as he knew, this decision was still good law, and he relied upon it as the basis for bringing an action against the person who had built the steps.

The applicant submits that the respondent should have made proper inquiries as to any qualifications upon the decision of Bryan v Maloney , that such research would have led him to Sved and that the principles enunciated in Sved meant that the plaintiff's case was hopeless.

The significance of a claim in tort involving physical injury to the person, as opposed to pure economic loss, was explained by the Court of Appeal in Guiney v Australand Holdings Ltd & Ors; Castlehaven Sales No 2 (trading as Castlehaven Realtors & Ors v Guiney & Ors [2008] NSWCA 44 at [78] - [81] as follows:

"78 There are other matters germane for close examination. These are carefully treated with in Voli v Inglewood Shire Council (1963) 110 CLR 74 at 84-88. As Windeyer J observed (at 87) when harm enures, the problem for a Court is whether the proximate cause of it was the negligence of the person who made the faulty thing, or the negligence of a person who was to examine, test, or treat it, or the combined negligence of both persons. On occasion:

"if separate and independent acts or omissions of several persons have directly contributed to cause an injury, the first wrongdoer does not necessarily escape liability by proving that, though he was to blame, the injury would not have occurred but for the later negligence of another person.... Essentially the problem is one of remoteness; and of finding the cause of the damage in a particular case , not according to some philosophical concept of causation, but 'to fix liability on some responsible person'."

79 The present proceedings involved ordinary physical injury to the appellant caused by an act able to be sheeted home to the first respondent. This is generally a settled area of the law of negligence where depending upon the particular facts, a duty of care will be seen to arise: cf Bryan v Maloney (1995) 182 CLR 609 (at 617) per Mason CJ, Deane and Gaudron JJ. Their Honours (at 623) drew attention to the need to distinguish between relationships with respect to physical injury to person or property and relationships with respect to mere economic loss.

80 More recently in Woolcock Street Investments Pty Ltd v CDG Pty Ltd and Anor (2004) 216 CLR 515 (' Woolcock '), McHugh J at [66] likewise drew attention to the significance of distinguishing between ordinary physical injury to a person and cases concerning mere economic loss. Woolcock dealt only with economic loss.

81 The evidence before the trial judge in the present proceedings whilst plainly posing some difficulties, ultimately established a duty of care that was breached by the first respondent with respect to the defects which had led to the injury. The finding receives substantial support by reason of the above-described pleading admission."

I do not accept the submissions of the applicant that the same test applies to personal injury claims as for claims of pure economic loss. Claims for personal injury are often brought against the occupier and/or builder; none of the personal injury claims brought against builders, so far as I am aware, refer to Sved.

Nor do I accept the submission that the claim against the applicant, as the builder of the steps, was so hopeless that any claim should have been brought against the occupier. There are real liability problems, where the occupier is a landlord such as the Defence Housing Corporation, where there is danger that is not obvious, such as the use of the wrong glass in the door in Jones v Bartlett (2000) 205 CLR 166. This is particularly the case where the discovery of such defects can only be ascertained by an expert as opposed to the usual inspection that would be made by a landlord or other occupier upon purchase of the property.

This was never an easy case on liability, but that does not mean that a "clear" case has been made out of the kind giving rise to an order under section 348. The respondent gave careful consideration to these matters, including reading Voli v Inglewood Shire Council , as he has set out in his affidavit.

To spend more time analysing the legal basis of the claim would be to fall into the trap warned against by Basten JA in Fowler at [84]. The dangers of "satellite litigation" judgments on costs canvassing complex questions of law are self-evident. Whether or not Sved was a complete answer to the claim is not really the issue. The respondent conscientiously did his best to ascertain the identity of the defendant to sue in the proceedings, prepared his case to a reasonable standard and, notwithstanding the trial judge's rejection of the evidence and complaints about the quality of the witnesses and alleged omissions in the evidence, did what was reasonably necessary to put the case before the court. It has been said that the level of conduct necessary to satisfy the test is a "low threshold" ( Litmus Australia Pty Ltd v Canty [2006] NSWSC 196 at [55] per Barrett J); such a test will not be satisfied by "inexact proofs, indefinite testimony or indirect references" ( Briginshaw at 362). This, in my view, extends to legal research on arguments of some novelty.

"Joining a party to litigation in circumstances where there is a clear basis to recover damages, but the identity of those involved in relevant events is uncertain, is a matter for anxious consideration. The fact that a solicitor, with the advice of counsel, gives such anxious consideration (as was clearly done in the present case) is not a reason for mulcting the solicitors in costs because, at the end of the day, the decision to join the additional party is seen to be wrong."

In that case, Basten JA considered it relevant to the setting aside of the order that any finding against the solicitor required "extensive examination of affidavit evidence and cross-examination of a solicitor" (at [84]). That is the case here and the fact that such detailed analysis is required is itself a matter which provides cause for doubts about the propriety of such an order.

As was the case in Whyked and Fowler , the respondent gave anxious consideration to who should be sued for the undoubtedly serious injuries (requiring surgery - see Exhibit A and B) the plaintiff suffered. He responded promptly and appropriately to correspondence from the solicitors for the occupier and builder. He briefed counsel for the hearing and when Sved was raised for the first time (on the third day of the trial, according to the trial judge) he discussed this with counsel. I note Basten JA's comments about failure to seek an order against counsel at [87], but in the present case this has very limited relevance.

In this case, as in Fowler , the adverse inference the applicant asks me to draw as to the respondent's credibility is that his subjective beliefs are untenable. I accept the respondent's evidence that he would not have acted for the plaintiff if he had not believed the plaintiff had grounds for bringing his claim. I also consider, notwithstanding the trial judge's adverse findings as to credit, that there were reasonable grounds for bringing such a claim.

If I were to find that the facts established by the evidence before the trial court do not form a basis for a reasonable belief in the plaintiff's success, I retain a discretion as to whether or not to make an order: Eurobodalla Shire Council v Wells at [28].

In Eurobodalla , Ipp JA saw "no redeeming feature in this case", such as a question of difficult law. All his Honour saw was a total failure to take account of the needs to prove the facts necessary to support the cause of action.

That is not the case here. First of all, the issues of law concerning liability of the defendant have a degree of complexity, and involve consideration of issues of liability not commonly encountered in personal injury litigation (see Whyked at [183]). Secondly, as was also the case in Whyked at [182], the solicitor was diligent in the performance of the retainer. He carefully considered and rejected two other potential defendants. (I note the applicant's argument that the respondent should have pursued the occupier but reject it for the reasons set out in the respondent's written submissions). Thirdly, the case failed because of credit findings, and personal injury litigation, more than any other litigation, tends to depend upon findings that the trial judge makes as to the credit of witnesses. The Court of Appeal has expressed views about reliance upon credit, as opposed to objectively provable facts, in District Court judgments. A finding about the credit of a witness by a judge is not as capable of accurate measurement by a legal practitioner as, for example, the discovery of information that contradicts a vital part of the evidence.

One of the matters raised during the application was the fact that the defendant did not have insurance for the work that he carried out. I have great sympathy for the defendant, but failure to obtain insurance for the building work he carried out is not a reason for making a costs order I would not otherwise make. It may be a factor relevant to the exercise of discretion, had I determined to make such an order, but I do not propose to do so.

Finally, I must have regard to the warnings concerning the policy behind this litigation which are contained in all of the judgments in this section. The legislation was intended to have a "chilling" effect, but the administration of justice should not be impaired by a too liberal exercise of these comparatively new powers. The grave consequences to which legal practitioners are exposed clearly indicate that the question of discretion, like the construction of the section and the application of the jurisdiction should be no wider than is clearly required by the statute.

Accordingly, if I had made such a finding, I would decline to exercise my discretion to make the orders sought.

The parties have asked for liberty to apply in relation to costs issues and I accordingly reserve the issue of costs.

1. Notice of Motion dismissed. 2. Costs reserved. 3. Liberty to apply re costs. 4. Exhibits retained until further order.

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