Chambers v Northern Coast Area Health Service

CATCHWORDS : Limitation Act - Statement of Claim not disclosing cause of action - futility of extension of time - whether actual prejudice - effect of availability of alternative action against former solicitors.

Civil Liability Amendment Act 2003 Compensation to Relatives Act 1897 LEGISLATION CITED : Limitation Act 1969 Mental Health Act 1990

Birkett v James [1978] AC 297 Commonwealth v McLean (1997) 41 NSWLR 389 Diaz v Truong (2002) 37 MVR 158 Graham Barclay Oysters Pty Limited & Anor v Ryan (2002) 211 CLR 540 Holt v Wynter (2000) 49 NSWLR 128 Hunter Area Health Service & Anor v Presland [2005] NSWCA 33 CASES CITED : Morrison v Judd (NSWCA, unreported, 10 October, 1995) Parsons v Doukis (2001) 52 NSWLR 163 Purkess v Crittenden (1965) 114 CLR 164 Salido v Nominal Defendant (1993) 32 NSWLR 524 Sydney City Council v Zegarac (1998) 43 NSWLR 195 Watts v Rake (1960) 108 CLR 148

Carole Elaine Chambers - Plaintiff PARTIES : Northern Coast Area Health Service - Defendant

Mr GR Graham/Mr Cheshire - Plaintiff COUNSEL : Mr PR Garling SC/Mr S Woods - Defendant

TD Kelly & Co - Plaintiff SOLICITORS : Frances Allpress - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20322/2004 - Carole Elaine CHAMBERS v NORTHERN COAST AREA HEALTH SERVICE

JUDGMENT 1 Nature of Proceedings This is an application by the plaintiff for an order pursuant to s60C of the Limitation Act 1969 (the Act) to extend the limitation period to 13 September 2004 being the date on which a Statement of Claim was filed on behalf of the plaintiff. 2 Section 60C provides: "60C(1) This section applies to a cause of action, founded on negligence, nuisance or breach of duty, for damages for personal injury, but does not apply to a cause of action arising under the Compensation to Relatives Act 1897. (2) If an application is made to a court by a person claiming to have a cause of action to which this section applies, the court, after hearing such of the persons likely to be affected by the application as it sees fit, may, if it decides that it is just and reasonable to do so, order that the limitation period for the cause of action be extended for such period not exceeding 5 years, as it determines." 3 In addition to the overriding "just and reasonable" test in s60C, the Act sets out other criteria which have to be considered by the court hearing an application under that section. "60E(1) In exercising the powers conferred on it by s60C or 60D, a court is to have regard to all the circumstances of the case and (without affecting the generality of the foregoing), the court is, to the extent that they are relevant to the circumstances of the case, to have regard to the following: (a) the length of and reasons for the delay, (b) the extent to which, having regard to the delay, there is or may be prejudice to the defendant by reason that evidence that would have been available if the proceedings had been commenced within the limitation period is no longer available, (c) the time at which the injury became known to the plaintiff, (d) the time at which the nature and extent of the injury became known to the plaintiff, (e) the time at which the plaintiff became aware of a connection between the injury and the defendant's act or omission, (f) any conduct of the defendant which induced the plaintiff to delay bringing the action, (g) the steps (if any) taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice the plaintiff may have received, (h) the extent of the plaintiff's injury or loss. …"

Factual background 4 Because of the way in which the matter has been argued, it is important to understand the factual background to the plaintiff's claim. 5 The plaintiff is the daughter of the late Roy Chambers and the late Betty Chambers. During 1999 Mr and Mrs Chambers were living in Mummulgum on the Bruxner Highway west of Casino in New South Wales. At various times during 1999 Anthony John Peterson was living on a property next to that occupied by Mr and Mrs Chambers. 6 On 25 August 1999 as a result of his strange and violent behaviour, Anthony Peterson was taken by the police to the Richmond Clinic, a psychiatric establishment conducted by the defendant. Anthony Peterson remained an inpatient of that Clinic until 30 August 1999. 7 On 28 September 1999 Anthony Peterson, as a result of further strange and threatening behaviour, was again taken by police to the Richmond Clinic. He was admitted to the Clinic and remained an inpatient of it until 1 October 1999 when he was discharged. 8 It is alleged that on the evening of 14 October 1999 a representative of the defendant was notified by the sister of Anthony Peterson that he was in a psychotic and dangerous condition. It is alleged that the defendant did nothing as a result of that notification. 9 On the evening of 14-15 October 1999 Anthony Peterson entered the home of Mr and Mrs Chambers and killed them. In due course Anthony Peterson was charged with two counts of murder. On 1 June 2001 he was acquitted on the basis of mental illness. Anthony Peterson is presently in an institution for the criminally insane. 10 The proceedings brought by the plaintiff allege nervous shock and psychiatric injury resulting from the death of her parents. She alleges that she has been unable to work since the death of her parents and claims economic loss from that date. 11 The allegations of duty, breach and causation are set out in para 17 of the Statement of Claim: "17. Such damage to the plaintiff was occasioned to the plaintiff by the negligence of the defendant, its servants and agents. Particulars of Negligence (a) Failure to detain or cause the detention of Peterson. (b) Failure to ensure or attempt to ensure that Peterson remained on medication or treatment to control his psychotic impulses. (c) Failure to evaluate the risks posed to the community in general and/or persons in a position of the deceased in particular by the release into the community of Peterson. (d) Failure to arrange or put in place any follow up treatment or surveillance of Peterson at and about the time of his discharge on 30 August 1999 and 1 October 1999. (e) Releasing Peterson on 1 October 1999 before reaching a diagnosis of his condition. (f) Failure to warn the public authorities of the risks posed to the community by Peterson. (g) Failure to warn the parents of the plaintiff directly or indirectly of the risks to which they were exposed by the release into and/or the presence in the Mummulgum hamlet of Peterson. (gi) Failing to cause or attempt to cause the apprehension of Peterson on the evening of 14 October 1999. (gii) Failing to warn or cause to be warned Peterson's neighbours of the danger to which they were exposed by the presence of Peterson in the area in his then condition on 14 October 1999. (h) Res ips loquitur."

Summary of submissions 12 The plaintiff's position was that the delay was less than two years, that her psychiatric condition in part explained that delay, that the defendant had not suffered any actual prejudice by the delay and that the receipt of incorrect legal advice by the plaintiff fully explained the delay. The plaintiff had only received correct legal advice in 2004. The Statement of Claim had been filed within a reasonable time after receipt of that advice. 13 The defendant's position was that to allow an extension of time would be futile because both the original Statement of Claim and the proposed Amended Statement of Claim failed to disclose a cause of action. The defendant had suffered actual prejudice in that there were causes for the plaintiff's psychiatric condition other than the death of her parents and it was not possible due to the effluxion of time for the defendant to now disentangle the causes of the plaintiff's psychiatric condition. Finally the defendant relied upon what it characterised as a very strong case in professional negligence against the plaintiff's previous solicitors because of their incorrect advice. This indicated that the plaintiff had available alternative rights if the application for an extension of time failed.

Evidence 14 The plaintiff relied upon a number of affidavits. The only deponent to be cross-examined was the plaintiff. It was clear from that material that the plaintiff presently suffers from a reasonably serious psychiatric condition. It was also clear that for at least twelve months before the death of her parents, the plaintiff was suffering from some level of depression and had been receiving counselling on a regular basis. She had been taking Zoloft, an anti-depressant medication, during that twelve months. Exhibit 6 was a letter of 3 June 1999 from Ms Kemp, who was a counsellor with the social work department in Casino. The problems identified by Ms Kemp were: "Ongoing chest infections/sinus Ongoing depression despite having moved away from her parents. Current suicide ideation - 2-3 days per week. Ongoing chronic tiredness and lack of energy and motivation to work on issues. When not at work (works shift work at local club) Carole says she is most inclined to crawl into bed. Recent chest pain after visit to her parents."

A precipitant of some of these problems was conflict with her parents with whom she had been living until December 1998. 15 When these matters were put to the plaintiff in cross-examination her evidence was that while she had a somewhat vague recollection of having sought counselling, she had no real recollection concerning symptoms which she may have complained of. She was surprised to learn that she had been taking Zoloft before the death of her parents. She stressed that her condition had become much worse following their death. 16 It was apparent from the plaintiff's evidence that she had been in regular contact with her previous solicitors, Messrs Colquhuon and Colquhuon, between late 1999 and December 2001. Correspondence passing between them made it clear that whatever be the plaintiff's present mental state, she was well aware of the potential liability of the defendant during those years and understood the advice she was receiving from her solicitors. 17 On the basis of the plaintiff's evidence under cross-examination, and the various documents put to her as part of that process, I am not satisfied that the plaintiff's psychiatric condition between the date when her parents were killed and October 2002 when the three year limitation period expired contributed in part or at all to the delay in a Statement of Claim being issued against the defendant. 18 It is also apparent from the correspondence between the plaintiff and Messrs Colquhuon and Colquhuon that the only causes of action discussed with the plaintiff by those solicitors were a claim for compensation from the Victims of Crime Compensation Tribunal and a claim in negligence under the Compensation to Relatives Act. There is no evidence that Messrs Colquhuon and Colquhuon ever raised with the plaintiff either in writing or in discussions, a claim in negligence against the defendant for nervous shock and psychiatric injury. 19 On 11 December 2001 the plaintiff received the following letter from Messrs Colquhuon and Colquhuon: "We note your advice that you have lodged a Victims' Compensation claim in relation to your parents' deaths. We advise that given you have lodged a claim with the Victims' Compensation Tribunal it would appear there are no other avenues open to you in relation to seeking compensation".

It was common ground that in April 2000 the plaintiff had been paid $50,000 as a result of an application made to that Tribunal. 20 Not surprisingly, after receipt of this letter the plaintiff took no further steps to advance a claim in negligence against the defendant. I am satisfied that this letter explains why proceedings were not brought within the three year limitation period. 21 I am also satisfied on the basis of the correspondence between the plaintiff and Messrs Colquhuon and Colquhuon, particularly the letter of 11 December 2001, that at least prima facie Messrs Colquhuon and Colquhuon appear to have breached their duty to exercise due care and skill in providing advice to the plaintiff concerning possible causes of action against the defendant. In that regard a Statement of Claim (exhibit 7) alleging negligence against Messrs Colquhuon and Colquhuon was filed on behalf of the plaintiff in this Court on 1 August 2005.

Consideration Defendant's submissions 22 The defendant submitted that both the Statement of Claim which had been filed and the Amended Statement of Claim which was foreshadowed were defective in that they failed to disclose a cause of action. The Statement of Claim did not indicate the nature of the duty owed by the defendant and more particularly did not identify to whom that duty was owed, eg to the plaintiff, to her parents or to Anthony Peterson in such a way as might give rise to a derivative action by the plaintiff. The Statement of Claim although referring to failures on the part of the defendant to restrain Anthony Peterson, made no reference to the Mental Health Act and did not indicate whether any reliance was being placed on it and if so in what way. 23 The proposed Amended Statement of Claim additionally relied upon the communication between Mr Peterson's sister and the defendant, which occurred on 14 October 1999 before Mr Peterson's second admission. Since he was not a patient of the defendant at the time, the Statement of Claim did not identify how that contact gave rise to a duty of care and if so what needed to be done to comply with such a duty. 24 There were a number of other deficiencies identified in the Statement of Claim but the above references indicate the nature of the matters relied upon in the defendant's submission. 25 As can be seen from paragraph 17 of the Statement of Claim which is extracted above and which purported to encapsulate the concepts of duty, breach and causation, the Statement of Claim was clearly deficient. I agree that both it and the proposed Amended Statement of Claim fail to disclose a cause of action for the reasons identified by the defendant. 26 It was for that reason that the plaintiff was granted leave to file an Amended Statement of Claim to address those issues. That amended document was filed on the second day of the hearing. 27 It would be fair to say that the Amended Statement of Claim in relation to which leave was granted raises a number of novel concepts of duty owed either to the deceased or to the plaintiff personally. It also specifically relies upon the Mental Health Act as providing an alternative basis for the claim against the defendant. 28 What has to be established by a plaintiff in such applications was considered by the Court of Appeal in Commonwealth v McLean (1997) 41 NSWLR 389 at 394 f-g. The plaintiff need only "claim" to have a cause of action and it is sufficient that the subject of the claim raises a serious question to be tried. 29 Much of the argument on this issue was concerned with the decision of the Court of Appeal in Hunter Area Health Service & Anor v Presland [2005] NSWCA 33. I agree with the submissions of the plaintiff that insofar as reliance upon the Mental Health Act as providing the basis for a cause of action is concerned, that question remains open. Spigelman CJ supported such a proposition and Santow JA expressly limited his decision to the specific and unusual facts of that case. The case involved a claim by the person who carried out a killing against the Health Service for the loss of liberty which he had suffered. 30 I also accept the submissions of the plaintiff that this whole area of the law is in something of a state of flux, as was made clear in Graham Barclay Oysters Pty Limited & Anor v Ryan (2002) 211 CLR 540 at paras 211-213, 230 and 244. I am of the opinion that although there remain a number of significant deficiencies in the Amended Statement of Claim, sufficient has now been pleaded to disclose a cause of action and triable issues sufficient to allow this application to go forward. This is not a strike out application by the defendant. When particulars of the Amended Statement of Claim have been provided there may well be such an application but that is not a matter which is relevant in this application. 31 Because this was a claim for nervous shock, the application of Part 3 of the Civil Liability Act 2002 is attracted, in particular ss 30 and 32. The defendant submitted that it was not at all clear from the Statement of Claim whether the plaintiff could bring herself within either or both those sections. That may well have been true in relation to the original Statement of Claim. The Amended Statement of Claim, however, does on its face come within those sections. The meaning of the words "by the act or omission of the defendant" in the context of this claim certainly raises a triable issue on the question of causation. 32 Reliance was placed by the defendant on s294 of the Mental Health Act as amended by the Civil Liability Amendment Act 2003. That Act took effect on 10 December 2003. There was argument between the parties as to whether the amended form of that Act applied to the events described in the Amended Statement of Claim. 33 Regardless of that question I am of the opinion that the amended s294 of the Mental Health Act does not have the meaning sought to be given to it by the defendant. It appears to go no further than the protection of health care professionals from personal liability in certain situations. It does not operate to exclude liability where a health professional exercises a function in good faith. If I am wrong in that interpretation that interpretation is at the very least arguable and raises a triable issue. Accordingly it could not be said that s294 renders an extension of time in relation to the Amended Statement of Claim futile. 34 The defendant submitted that the plaintiff's responses when cross-examined about mental health problems which predated the death of her parents meant that the defendant would suffer actual prejudice if an extension of time were granted. Such cases as Watts v Rake (1960) 108 CLR 148 and Purkess v Crittenden (1965) 114 CLR 164 impose an evidentiary burden on a defendant seeking to establish a pre-existing disability, to disentangle those matters which it alleged were caused by the accident from those matters which were pre-existing. Because of the responses by the plaintiff that she could not remember these complaints or treatment, the defendant would not be able to discharge that burden. 35 Although the responses of the plaintiff in cross-examination to that line of questioning were somewhat surprising, the defendant does not suffer prejudice in the way described. There is a substantial body of documentary material which supports pre-existing mental problems. The plaintiff cannot explain that material. In those circumstances it seems to me that the defendant will have discharged its evidentiary burden of establishing a pre-existing disability with the plaintiff having the obligation of proving that her mental problems following the death of her parents were different in quality and extent to those which preceded it. 36 There may be some actual prejudice in that if the plaintiff had a better recollection, some of her responses may have assisted the defendant. What is not clear is that the plaintiff's inability to remember these events was due to the effluxion of time rather than the result of the mental problems with which she has been currently diagnosed. Accordingly, although the defendant may have been prejudiced on this issue by the passage of time, the amount of documentary material available, the probable availability of the medical practitioners who authored that material and the nature of the plaintiff's inability to deal with it will not prevent a fair trial taking place. It is, of course, trite law that a "fair trial" does not mean an "ideal trial". 37 The final matter relied upon by the defendant was the existence of an alternative cause of action on behalf of the plaintiff against her previous solicitors. The defendant submitted that this was an important factor against an extension of time being granted since on the evidence before the court the case against the plaintiff's previous solicitors was a strong one. This was confirmed by the fact that such proceedings had actually been commenced by the plaintiff against those solicitors. 38 Reliance was placed on the observations of Kirby P in Morrison v Judd (NSWCA, unreported, 10 October, 1995). In that case Kirby P referred to the opinion of Lord Salmon in Birkett v James [1978] AC 297 that an alternative remedy against negligent solicitors would usually be a relevant consideration. Kirby P said: "My own opinion is identical with that of Lord Salmon in the House of Lords and of Lush Gray and McGarvie JJ in Victoria. The availability of an action against a negligent legal representative is relevant because common sense says that it is so. It means that the litigant, who may be wholly or mainly innocent, is not put out of court without some chance of redress, however difficult that chance may be to enforce. To that extent an injustice, which might otherwise occur to the litigant, may be capable of being avoided. However, precisely because of the kind of difficulties which Smith J listed in Scardamaglia , it is a consideration which "cannot carry much weight"." 39 On that issue counsel for the plaintiff referred the court to Salido v Nominal Defendant (1993) 32 NSWLR 524 at 531D. "In that case the court held that where, as a result of a slip by the plaintiff's solicitors, an action was commenced a few days out of time, the circumstance that the plaintiff would have had a cause of action for negligence against her solicitors did not stand in the way of an extension of time. It was not fair and just to confer on the defendant's insurers a windfall gain as a result of the solicitor's error." 40 Counsel for the plaintiff also referred the court to Diaz v Truong (2002) 37 MVR 158 at [129] where Foster AJA said: "I am also satisfied that, in accordance with authority, little weight should be given to any right of action a claimant may have against their solicitor. This right should not stand in the way of an order extending time, if it is otherwise available." 41 I agree with the submission by the defendant that on the material which has been placed before the court the plaintiff should have little difficulty in establishing breach of duty against her previous solicitors. The effect of the authority to which the court has been referred is that while this consideration is relevant, it is not a factor which of itself is sufficient to prevent an extension of time being granted where other factors justify such an extension. I do not place much significance on the proceedings already commenced against the solicitors. This was an obvious defensive move to prevent such a claim itself becoming statute barred.

Plaintiff's submissions 42 The fact that the submissions on behalf of the defendant have not been made out does not mean that an extension of time should be granted. The discretion conferred is one to grant not to refuse an extension and the plaintiff carries the onus of satisfying the court that an extension should be granted (Parsons v Doukis (2001) 52 NSWLR 163). In order to decide whether the plaintiff has discharged that onus, it is necessary to look at the provisions of s60C and s60E of the Act. 43 The following subsections of s60E(1) are relevant. The length of the delay was approximately twenty three months. Whilst such a delay is significant, in the context of such applications, it is not particularly long. The reason for the delay had nothing to do with any dilatoriness on the part of the plaintiff, but was due to incorrect legal advice provided to the plaintiff by her previous solicitors. 44 Although the plaintiff cannot remember the circumstances in which she was complaining about mental health issues before the death of her parents, there is no evidence that her recollection would have been better had the same questions been addressed to her on or before October 2002. In other words if the defendant has suffered actual prejudice because of this inability on the part of the plaintiff to recollect such events, there is no evidence that this inability was due to the passage of time. Accordingly s60E(1)(b) does not operate against an extension of time being granted. 45 The plaintiff understood from shortly afterwards that she had in fact suffered a psychiatric reaction to the death of her parents. She believed that their death was connected to the conduct of the defendant. In that regard the plaintiff acted reasonably in seeking legal advice at an early point in time and acting in accordance with that legal advice. It was not her fault that the advice which she received was incorrect. 46 On the plaintiff's case she has suffered significant injury and loss in that her life has been profoundly altered since the death of her parents. 47 Having regard to the specific matters referred to in s60E(1) of the Act, those factors clearly favour an extension of time being granted. 48 The final question is that posed by s60C, ie whether in all the circumstances it is just and reasonable to extend time. 49 Another way of looking at that question is whether the plaintiff has satisfied the court that a fair trial is possible from the defendant's point of view. It seems to me that the plaintiff has discharged that onus. The only area of possible prejudice which has been identified by the defendant is the need to disentangle the plaintiff's pre-existing mental problems from those which are alleged to have followed the death of her parents. The evidence of the plaintiff is that she cannot remember much concerning her mental health prior to the death of her parents. On the other hand the defendant has a significant quantity of documentary material relating to that very matter available to it. The authors of that written material also appear to be available. The plaintiff's inability to recall these matters is more likely to disadvantage her rather than the defendant. In any event mere proof of actual prejudice will not dictate the rejection of an application to extend time. (Sydney City Council v Zegarac (1998) 43 NSWLR 195 at 198A, 199C). 50 In Holt v Wynter (2000) 49 NSWLR 128 at [119] the same question was put somewhat differently by Sheller JA: "In my opinion, the effect of the decision of the High Court in Brisbane South Regional Health Authority is that an application for an extension of time under limitation legislation should be refused if the effect of granting the extension would result in significant prejudice to the potential defendant." 51 Any prejudice which has been established by the defendant is of a relatively low level and would not be characterised as "significant prejudice" so as to prevent a fair trial taking place. I am of the opinion that an extension of time should be granted and I extend the limitation period pursuant to s60C of the Act up to and including 14 September 2004.

Costs 52 In relation to costs the plaintiff agreed that she should be responsible for the payment of the costs of this application. The only qualification was in relation to the costs of bringing Lorraine Davidson and Michael Degney to Sydney for the purpose of being cross-examined on their affidavits. It seems that notice was given to the plaintiff that those persons were required for cross-examination and accordingly they came to Sydney for that purpose. The plaintiff's legal advisers were told at 3.30 pm on Monday afternoon that these persons would not be required for cross-examination. The plaintiff wants the defendant to pay the costs of the attendance of those two persons in Sydney. 53 The plaintiff should bear the costs of this application. Not only was the plaintiff seeking an indulgence from the court, but it was necessary for the plaintiff to significantly amend the Statement of Claim during the course of the proceedings. The defendant was entitled to cross-examine Ms Davidson and Mr Degney on their affidavits and had the defendant done so there could be no basis for the plaintiff claiming costs in relation to the attendance of those persons in Sydney. 54 As matters turned out, a decision was made on the day before this matter was due to commence that those persons would not be so required. Although it is unfortunate that this decision was communicated at such a late point in time to the plaintiff's legal advisers, the fact that such a decision was made late should not result in costs sanctions against the defendant. To do so would discourage parties from making proper forensic decisions in such circumstances and would only encourage pointless cross-examination and the lengthening of proceedings for fear that to do otherwise might result in adverse costs consequences. 55 Taking those matters into account and also the nature of the application, ie an extension of the limitation period, it seems to me that the plaintiff should pay the defendant's costs. 56 The orders which I make are as these:-

(1) Leave is granted to the plaintiff to file an Amended Statement of Claim in accordance with the document filed on 17 August 2005.

(2) Pursuant to s60C of the Limitation Act 1969 (as amended) the limitation period for the filing of the Statement of Claim is extended to 14 September 2004.

(3) The plaintiff is to pay the defendant's costs of the application. **********

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