Giuca v Coadys

Supreme Court of Victoria|2000-06-07|Before: Gillard J

Negligence alleged against solicitor in the handling of a County Court proceeding - Action compromised - Alleged failure to obtain evidence and undue pressure to settle - No evidence of negligence - No evidence of lost opportunity - No damage suffered. Proof of lost opportunity - Proceeding dismissed.

This is a proceeding in which the plaintiffs are suing a firm of solicitors for damages for alleged negligence in the prosecution and settlement of a County Court proceeding.

Mr Giovanni and Mrs Carmella Giuca ("the plaintiffs") are a retired couple residing in Maroopna which is near Shepparton in this State.

They are Italians by birth who have resided in this country in excess of 31 years. Mr Giuca's understanding of and the speaking of English could be only described as passable and on occasions it was clear that he failed to comprehend and express himself clearly. Mrs. Giuca did not give evidence but the evidence demonstrated that her understanding of and speaking English was no better than her husband's.

In 1969 they purchased an existing tobacco farm in the King Valley near Myrtleford. The farm comprised 58 acres of which about 20 acres were used for tobacco farming.

They farmed the property growing tobacco until November 1988 when they were evicted because of their inability to pay their debt to a mortgagee.

The defendant, Coadys, (a firm) ("Coadys"), is a firm of solicitors providing a range of legal services.

They were retained by the plaintiffs to prosecute a County Court proceeding in January 1993 when the firm took over another firm from Shepparton which at that stage was conducted by Mr Ross McLinden. Mr McLinden was employed by Coadys from about January 1993 to December 1994 during which time he handled the Giuca matter. From December 1994 an employee solicitor of Coadys, Mr David Andrew, handled the file. He was appointed a partner on 1st July 1995.

The growing of tobacco involves the preparation of the soil in October followed by sowing the crop and ultimately harvesting in late January/February to April the following year. Like most crops it is necessary to guard against the onset of disease by the application of chemicals. It is necessary to prepare the ground for sowing and an important ingredient is the application of fertiliser. The land is prepared in September-October, the plants are planted in October-November, harvesting commences in January and runs through to April. The leaves are progressively picked when they reach a certain stage.

It is important from time to time to leave the fields fallow, rotate the crop or grow an alternative crop to allow them to recover to ensure a successful crop.

In September 1986 the plaintiffs purchased a substantial quantity of fertiliser from The Phosphate Co-operative Company of Australia Limited which trades as Pivot ("Pivot") called T5. The plaintiffs had not used that fertiliser before. It was recommended for use for the growing of tobacco.

Mr Giuca applied the fertiliser to the fields. He planted some 44 acres of tobacco. Mr Giuca observed that the tobacco was not growing as well as it should. It appears that a well-formed well-grown healthy tobacco plant yields some 18-20 leaves which´ are picked at various times. This crop only had some 10 to 12 leaves on each plant some of which were discoloured.

This caused Mr Giuca to seek an answer to his problems and the T5 fertiliser, the soil and tobacco leaves were analysed.

Mr Giuca formed the view that the problem with his crop was caused by the presence of chloride in the fertiliser. He produced in evidence photographs of what the crop looked like and the appearance of the crop did suggest the presence of chloride.

As a result of the problem his crop was reduced from an expected 44,000 kgms of tobacco down to about 27,000 kgms. Mr Giuca accepted that he lost some 4,000 kgms because of the presence of frost in April 1987 and hence his total loss was in the order of 13,000 kgms.

Mr Giuca was obliged by law to sell his crop to the Tobacco Leaf Marketing Board and was subject to a quota. In the 1986-87 season his quota was 31,100 kgms.

He gave evidence that any surplus was stored and used as part of the quota for the following season.

Despite the fact that he believed the fertiliser was responsible, he purchased another quantity of T5 fertiliser from Pivot, in October 1987. However, he raised with the representative of Pivot the suitability of the fertiliser and after discussion he returned the fertiliser and Pivot refunded the price of $5,042.20.

Mr Giuca then made up his own fertiliser by purchasing the ingredients of what he understood T5 comprised of, and used that fertiliser on the 1987-88 crop.

That crop manifested the same problems as the previous year's crop. Again he suffered a downturn in production of the order of one quarter to a third.

The plaintiffs were evicted from their property in November 1988 because of their inability to pay monies due under a mortgage.

The plaintiffs retained a solicitor Mr Nevin in 1987 to assist them with their claim in respect of the loss of crop in April 1987 due to frost and also to generally advise in relation to the alleged defective fertiliser.

In July 1990 they retained another firm of solicitors Messrs Grant and Thompson in Shepparton to assist them with a claim against Pivot. Subsequently Mr Hassett Sali, another solicitor, was retained in September 1992 in respect of the same claim.. Mr Sali ceased practice in March 1993 and Mr Ross McLinden, his partner, took over the file.

In late 1993/early 1994 Coadys took over Mr Ross McLinden's practice and he continued to act for the plaintiffs as an employee until December 1994 when he handed over the file to another employee solicitor, Mr David Andrew.

In October 1992 Sali Partners instituted a proceeding in the County Court at Melbourne on behalf of the plaintiffs against The Phosphate Co-operative Company of Australia Limited as defendant.

In their statement of claim, the plaintiffs alleged that they purchased a quantity of T5 fertiliser from the defendant trading as Pivot in late October 1986 to use on the crop for 1986-87. They alleged there were two conditions of the contract implied by s.19 of the Goods Act 1958 namely that the fertiliser was to be reasonably fit for the purpose of use on the tobacco crop and secondly that the fertiliser would be of merchantable quantity. They went on to allege that both conditions were breached in that the fertiliser contained chloride in excess of appropriate levels. Finally it was alleged that as a result of the breaches of the agreement, the plaintiffs suffered loss and damage in that their tobacco crops in the years 1987 and 1988 had been reduced both in terms of quantity and quality and they claimed unspecified damages.

Discussions to explore settlement took place between the legal representatives of the parties in the last half of 1995. A mediation took place on 23 November 1995.

Offers were made. A conditional offer of $18,500 plus costs was made by Pivot's solicitors at the mediation. It was conditional on authority being granted by a co-insurer. The plaintiffs were advised by their solicitor Mr Andrew and their barrister Mr Tony Lopes that they should settle the proceeding for $18,500 plus costs. Mr Ruskin of counsel who was the mediator also advised the plaintiffs that the offer should be accepted.

It was pointed out to the first plaintiff Mr Giuca, by his barrister and his solicitor Mr Andrew that there was no expert evidence to prove their case and he would be extremely unwise to proceed.

The plaintiffs had been granted Legal Aid but as early as February 1995 the Commission had informed Mr Andrew it would not fund a trial. During the balance of the year the Commission granted aid on a step-by-step basis for inter alia, the mediation with a clear indication it would not fund a trial.

Mr Borghesi, the officer at the Legal Aid Commission handling the matter, informed Mr Andrew on 8 December 1995 that if the plaintiffs did not accept the offer, Legal Aid would not be provided for a trial and instructed Mr Andrew not to provide any services to Mr Giuca other than to communicate any offers.

Mr Giuca was told that there would be no legal aid for the trial, that if he wished to proceed he would have to either provide funds to Coadys to prepare and conduct the trial, or he would have to conduct the trial himself. It is common ground between the parties that the plaintiffs were not in a position to provide funds to conduct a trial and it was clear that owing to their lack of knowledge of the law and their inability to adequately speak and comprehend English, it would be impossible for the plaintiffs to conduct the trial themselves. The trial date which had been fixed for 19 January 1996 was adjourned to 6 May 1996.

By mid-January 1996 the plaintiffs were in a difficult position. They did not wish to accept the offer from Pivot's solicitors. On the other hand they did not have funds to conduct the litigation, Legal Aid would not provide funds for a trial, and they were not in a position to conduct the trial themselves. They had been told by their lawyers that they did not have any expert evidence to establish their case and indeed the evidence they had was contrary to it. They were told to settle.

On 22 March 1996 the solicitors acting for Pivot made a written offer to compromise the proceeding in accordance with Order 26 of the County Court Rules. The offer was to pay the plaintiffs the sum of $18,500 together with their costs on a party-party basis. The offer of compromise remained open for a period of 14 days.

The plaintiffs were again advised by Mr Andrew to settle. They did not wish to do so.

Reluctantly they settled on 3 April 1996. Mr Andrew wisely did not accept the offer until 10 April. The plaintiffs did not take any step to resile from their acceptance during this period.

The plaintiffs were unhappy with the settlement. They were of the opinion that the amount of their damages was far in excess of $18,500 and were convinced in their own mind that the fertiliser was the cause of the poor quality crop.

On 23 September 1998, Felthams solicitors of Shepparton on behalf of the plaintiffs issued a writ against Coadys. The plaintiffs allege that the defendant firm was negligent and in breach of its retainer. In substance it was alleged that the Coadys failed to properly advise the plaintiffs on evidence to prosecute the County Court proceeding, failed to undertake all reasonable inquiries to obtain adequate evidence, unnecessarily exposed the plaintiffs to risk in the proceeding which could have been avoided or minimised and pressured the plaintiffs to compromise the claim.

The defendant firm denied negligence and put the plaintiffs to their proof.

In final submissions, the plaintiffs' case was that the defendant firm through Mr Andrew was negligent in two respects, namely:

(a) that it failed to ascertain and gather evidence which was or should have been available to successfully prosecute the County Court proceeding;

(b) that it exercised undue pressure on Mr Giuca to coerce him into accepting a disadvantageous settlement.

The hearing

During the first day of the hearing, Mr Squirrell of counsel on behalf of the plaintiffs made an allegation that the settlement entered into by the plaintiffs was as a result of undue pressure exerted by Mr Andrew on Mr Giuca and without consultation with Mrs. Giuca. The suggestion was Mr Giuca did not have the authority of his wife to enter into the compromise. This prompted Mr Cawthorn of counsel on behalf of the defendant to object on the ground that the pleadings did not make such an allegation. A successful application was made by Mr Squirrell to amend the statement of claim.

After some days' hearing I made it clear that in my view there was no substance in the allegation as it was clear beyond doubt that Mr Giuca at all times was acting for and on behalf of his wife. Mr Squirrell stated that the plaintiffs would not proceed with the allegation.

After five days' hearing, the Court adjourned the proceeding on Thursday 11 May until the following Monday 15 May.

On 15 May Mr Squirrell informed the Court that he and his solicitor were no longer acting for the plaintiffs as there had been a dispute between them and the plaintiffs did not wish to retain either their solicitors or Mr Squirrell. The proceeding was adjourned until the Wednesday to enable the plaintiffs to make other arrangements. On Wednesday 17 May, Mr Giuca through an interpreter informed the Court that he wished to proceed with the action that he did not have any lawyers at that stage but informed the Court that he could pay for lawyers. He made it clear on that occasion that he objected in the strongest terms to the amendment to the statement of claim made on their behalf by Mr Squirrell. He asserted that Mr Squirrell was not authorised to make the amendment. However as the amendment had in effect been abandoned I informed Mr Giuca that it was of no effect.

That day the defendant opposed any further adjournment but after hearing argument I adjourned the matter for eight days to enable Mr Giuca to make arrangements for the retention of legal practitioners and I ordered the plaintiffs to pay the costs of the two adjournments which I fixed at $4000.

The matter proceeded on 25 May by which time the plaintiffs had retained their former solicitors and Mr Squirrell of counsel.

The plaintiffs undertake the burden in the present proceeding to establish two separate claims.

The first claim is the claim by the plaintiffs against Coadys for negligence. They have to prove on the balance of probabilities that Coadys through Mr Andrew was negligent in the conduct of the litigation not only in respect to his failure to gather adequate evidence but also in pressuring the plaintiffs to settle at an inadequate amount.

The second is the County Court proceeding. It is necessary for the plaintiffs to establish that if the County Court proceeding had gone to trial, they had good prospects of recovering more than $18,500 damages. It is alleged that due to the negligence of Coadys they were denied that opportunity.

To that extent the proceeding involves two separate trials.

The County Court proceeding and its prospects are relevant to the issues of causation and damages in this proceeding. In considering in determining the issues it is necessary to first consider the questions of duty of care, standard and alleged breach and then the prospects in the County Court proceeding if it had been heard.

From the beginning of 1994 until the end of April 1996, the plaintiffs retained the defendant as their solicitors to prosecute the County Court proceeding in the County Court against Pivot. During this time Coadys were bound to exercise reasonable care, skill and knowledge in the prosecution of the County Court proceeding. The standard of care and skill depends upon what the solicitor is employed to do, but he is bound to act as a reasonably competent, careful and diligent solicitor. Part of his duties, when conducting litigation on behalf of a client is to exercise reasonable care and skill in the conduct of settlement negotiations and to advise the client on the merits of any settlement proposal. Many factors come into play when considering an offer of settlement and the solicitor is bound to weigh up all the factors, many of which are imponderable and involve a degree of speculation. A mere error of judgement is unlikely in the circumstances to constitute negligence. There is no doubt that Coadys at all relevant times owed a duty of care to the plaintiffs and to exercise reasonable care, skill and knowledge in the performance of their work for and on behalf of the plaintiffs. The pleadings make a number of allegations of negligence against Coadys and Mr Squirrell in his opening also made a number of allegations of negligence against the defendant, but in final address the acts of alleged negligence were the two earlier referred to.

At the outset it is necessary to state precisely what was the plaintiffs' complaint against Pivot.

They asserted that in October 1986 they purchased the T5 fertiliser to fertilise the soil and tobacco crop on their property. They state that the fertiliser was not fit for the purpose of application to their tobacco crop nor was it merchantable. The particulars provided -

"The tobacco fertiliser purchased contained chloride in excess of appropriate levels."

They asserted they suffered damage. The particulars of damage were expressed in this way -

"Due to the excess concentration of chloride in the fertiliser, the yield and the quality of such yield for the plaintiffs' tobacco crops in the years 1987, 1988 and following had been reduced both in terms of quantity and quality. Further particulars as to loss and damage will be supplied by the plaintiffs upon the receipt of expert opinion as to the same."

No further particulars were provided of the loss and damage save that particulars of special damage were prepared and exchanged at the mediation on a without prejudice basis. The plaintiffs claimed $848,480.00 damages which included $600,000.00 loss for the years subsequent to 1987-1988. In fact they were no longer on the farm after 1987-1988 and there was no evidence supporting this extravagant claim. In addition they claimed $93,150.00 damages for the 1987-1988 crop loss. The T5 fertiliser was not used on that crop.

The claims made were in main without substance.

The evidence clearly demonstrated that if there was any loss it was confined to the tobacco crop of 1986-87.

It is noted that the fertiliser was alleged to contain chloride in excess of appropriate levels.

In order to prove their case the plaintiffs had to establish -

(i) that they purchased the fertiliser from the defendant i.e. Pivot; (ii) that it was a term of the contract of purchase that (a) the fertiliser was to be fit for the purpose, of being used for the growing of tobacco, and/or (b) that the fertiliser was merchantable; (iii) that the vendor Pivot breached the contract by supplying fertiliser which was not fit for the purpose and/or not merchantable; (iv) that the breach of contract caused the plaintiffs damage; (v) quantification of the damage.

The only witness called by the plaintiffs was Mr Giovanni Giuca. He was cross-examined for a number of days.

The only witness called by the defendant was Mr Andrew.

A number of reports of experts which were obtained by the various lawyers acting for the plaintiffs were placed in evidence as being reports that were available to Coadys when conducting the County Court proceeding. However no author of any report was called. It was admitted for the purposes of the present proceeding that three experts were retained who provided reports to the plaintiffs. They were not called.

In the absence of the type of evidence covered by these experts, the Court can only infer from the failure to call them, that their evidence would not have assisted the plaintiffs in the present proceeding.

I am unable to say whether their evidence would have been relevant to the issues in the County Court proceeding or the present proceeding.

Mr Giuca is aged 70 years. He is a robust strong-willed determined man. He was born in Italy and came to this country about 35 years ago. As I have said his English is passable, but just, and accordingly he had to give evidence through an interpreter. He had a tendency to speak both in Italian and English and often had to be asked to speak in Italian. He does have a workable knowledge of the English language and can read and write it in a very rudimentary way. If he could not understand a letter written in English he informed the Court that he would talk to a friend to assist with his understanding.

On occasions he corrected the interpreter and on occasions having had the question asked of him in English responded without waiting for a translation and usually in English.

But having said that due allowance must be made for his age, his lack of English language skills and the passage of time. He did not have the benefit of any notes. To some extent he was clearly wrong in recalling some matters.

In addition I must make due allowance for the standard of interpreting. I formed the view of two interpreters that they had difficulty in interpreting what Mr Giuca said especially as the day wore on. At times the interpreters questioned Mr Giuca before answering. I formed the view that on occasions what was being translated was not verbatim.

Even making due allowances, I formed the view that Mr Giuca was an unsatisfactory witness. He is much obsessed by this case and from time to time demonstrated a degree of paranoia and was quick to suggest conspiracies between persons with whom he had dealt, in relation to the issues in the County Court case.

I am satisfied that he has a good understanding of the issues in this proceeding including those in the County Court case. It was obvious to me that he was aware of what might be described as sensitive matters which reflected on their County Court case. This manifested itself in the way he answered counsel in cross-examination. His modus operandi when asked about what he thought may be sensitive was either to deny it, launch into a long speech more often than not irrelevant to the question hoping to deflect the cross-examiner, or to launch a vitriolic attack upon one of the professionals who assisted him along the way and in particular Mr Andrew.

It was necessary to ask and ask him often, to answer the questions.

I am satisfied on occasions he told deliberate lies to the Court. Indeed it was necessary to adopt the unusual course in the third day of his cross-examination to warn him that he was on oath and that a deliberate untruth could amount to a criminal offence.

He was confronted in cross-examination with a report from Agricultural Research which was obtained late in the piece by his solicitor Mr Andrew, which on any view gave little comfort to the success of his County Court case. He denied ever seeing it prior to settlement. I do not believe him. In cross-examination correspondence was produced in which reference was made to this report and his immediate reaction was that he did not get the correspondence and then said that he did, but many many months later. Unfortunately having backed himself into a corner by reason of the deliberate lie it was necessary to continue it, as he was then confronted with a series of correspondence which referred back to previous correspondence which he denied receiving on the date it bore or soon thereafter.

On one occasion he asserted that he did receive a letter but the one that was shown to him in the witness box contained a paragraph which he said was not in the letter he received. Not surprisingly he could not produce the letter he said he received.

It cannot be overlooked in this context that Mr Giuca obtained documents from Legal Aid on an FOI application and that he has had access to many of the documents relevant to the County Court proceeding and which I have no doubt he has read often. He is well aware of the issues in the County Court proceeding. He has lived with this case for many years.

After three days of cross-examination I formed the opinion that he was one of those witnesses whose evidence would have to be very closely scrutinised before being accepted especially where it was contradicted by contemporaneous documents or by Mr Andrew.

Another matter which reflects upon him is that on occasions he did not lose the opportunity, if it presented itself, to suggest of others, conduct which was unprofessional, dishonest or misleading. He particularly attacked Mr Lopes of counsel and Mr Andrew. In my opinion what he said of these men of a critical nature was either false or grossly exaggerated.

In contrast I am satisfied that Mr Andrew gave his evidence in an honest, forthright and fair manner.

Mr Squirrell submitted that there was one criticism of Mr Andrew and that was that after preparing rough handwritten notes of conversations and conferences he did not always have them typed up in an expanded form. Hence the position was that he had some detailed notes and others which were very rough short notes. It was put that if the notes were not typewritten Mr Andrew was relying very heavily on memory from very scrappy notes. I do not doubt that the observation is correct but nevertheless does not detract from Mr Andrew's honesty or reliability as a witness. Where his notes were incomplete he was relying on his memory but I am satisfied that his memory was good. Much of his evidence was supported by contemporaneous documents.

In so far as Mr Giuca's evidence contradicts the evidence of Mr Andrew, I prefer the latter's evidence.

In order to consider and determine the allegations of negligence against Coadys, it is necessary to consider the County Court proceeding, the services provided by Coadys in prosecuting the claim and the evidence gathered and available for the proceeding. In the County Court proceeding various solicitors acting on behalf of the plaintiffs had obtained reports from various sources concerning the question of chloride in the fertiliser.

No witness was called in relation to the reports in Coadys file, and when considering the allegations of negligence against the firm, it is necessary to consider the evidence that was available at the beginning of 1996. In respect of the allegation that the firm did not investigate and gather evidence to support the plaintiffs' claim in the proceeding, no witness was called before me to give evidence of what would have been available in support of the plaintiffs' case and Mr Squirrell was unable to identify or suggest the source of any evidence that should have been obtained. In final submission, Mr Squirrell conceded that there was no evidence to support the allegation that Coadys failed to ascertain evidence which would have been available in the Pivot proceeding to the effect that T5 fertiliser was defective. The failure to identify any evidence or call a witness to support the allegation in my opinion is fatal to the plaintiffs' case that the defendant firm was negligent in failing to gather all relevant evidence. It is necessary to consider the progress of the County Court proceeding and in particular the evidence that was available.

Turning to the plaintiffs' proof in the County Court proceeding, I am satisfied on the evidence before me that the plaintiffs purchased the fertiliser from the Pivot and that it was an implied term of the contract of purchase that the goods would be fit for the particular purpose and would be merchantable. In other words the evidence persuades me that the plaintiffs have proven the terms implied by s.19(a) and (b) of the Goods Act 1958.

Mr Giuca applied the fertiliser to his 1986-87 crop. I am satisfied on the evidence that his crop was deficient in quantity and quality. That he expected 44 tonnes of good quality tobacco but only harvested 27 tonnes having lost four tonnes to frost in April 1987 which was not due to any fertiliser problem.

He had a quota for the 1986-87 year of 31,100 kgms of tobacco and that if he had have grown the 44 tonnes of tobacco he would have stored the excess tobacco and sold it in the quota for the following year. He therefore suffered a loss of 12,900 kgms.

Mr Giuca was of the opinion that his problem with the crop was due to the presence of excess chloride in his fertiliser.

No direct evidence was called before me on this question. One could not infer on the balance of probabilities from the evidence of Mr Giuca that the problem was caused by chloride. He is not an expert on the composition of fertilisers or the suitability or otherwise of chloride in tobacco crop fertiliser and his opinion that the problems were caused by excess chloride is irrelevant.

There was no evidence that the fertiliser was not fit for the purpose or not of merchantable quality.

There was evidence of analyses of the fertiliser, samples of soil and tobacco leaf from the 1986-87 crop. At best they showed the presence of 1.5% chloride in the fertiliser. Another sample showed a level of 1.3% chloride in the fertiliser. An analysis of five different tobacco leaves showed a percentage of chloride ranging from 0.20% to 0.70%. Soil tests around the same period namely October 1987 showed a low concentration of chloride.

This evidence is found in reports which were obtained by Mr Giuca and his solicitors in 1987 and 1988.

No witness was called to support the reports.

Significantly no witness was called to say that that quantity of chloride in fertiliser would have any deleterious effect upon the growing of tobacco or the end product.

A number of reports were received from experts at the request of Mr. Giuca or his solicitors. Not one of the reports supported his case in respect of breach of contract.

Mr Giuca was well aware of this fact in 1995.

The plaintiffs failed to prove in the present proceeding that Pivot supplied T5 fertiliser in October 1986 in breach of its contract. The reports in Coadys' file did not provide any evidence of breach.

Further there is ample evidence from reports tendered in evidence in the present proceedings being the reports obtained by Mr Giuca and his solicitors during the period 1987 to 1995 that the presence of chloride in the fertiliser of less than 2% would not affect the crop or the quality of the tobacco.

As early as 12 November 1987 Mr M.J. Morgan, the manager of the Ovens Research Station of the Department of Agriculture and Rural Affairs at Myrtleford, wrote a letter to Mr Giuca in which he said -

"I am writing in reply to your letter dated 9 November in which you sought information on the presence of chloride in tobacco fertiliser, specifically T5. It is normal and acceptable for chloride to be present in tobacco fertilisers at levels up to 2%. The fertiliser mixtures contain potassium sulphate and potassium nitrate. The process used to make these components results in a small amount of chloride being present as an impurity in the end product. No fertiliser grade potassium sulphate or potassium nitrate entering Australia is free of chloride. A level of up to 2% chloride in fertiliser will not have any detrimental effect of crop yield or quality. In some instances it may even be beneficial."

There are other reports to the same effect. Significantly, in 1995 the Government was in the process of drafting the Agricultural and Veterinary Chemicals (Fertilisers) Regulations. They were made in 1995 and came into operation on the 1st August 1996 (see Victorian Government Gazette, 1.8.1996 page 2). Pivot's solicitors informed Mr Andrew in late 1995 that it was relying on the proposed regulations.

Regulation 35(4) of the Regulations provided -

"(4) The maximum concentration level of chloride for any fertiliser for use on tobacco crops must not exceed 2.0%.

In my opinion the plaintiff did not establish a case that the vendor Pivot breached its contract on the evidence available to them in March 1996. No evidence was called before me to establish breach. It is necessary to determine whether Mr Giuca's evidence could establish a prima facie case of breach.

Mr Giuca gave evidence that he had been growing tobacco reasonably successfully since 1969, that the year 1986-87 was the first year he used the T5 fertiliser, that the fertiliser contained different coloured ingredients (unexplained as to effect) and that he followed his usual and normal farming practice and therefore sought to draw the conclusion that the fertiliser must be to blame.

In my opinion on the balance of probabilities the Court could not possibly draw that inference in the absence of further evidence. There are many reasons why a crop may be of inferior quality and of lesser quantities than in good years. There are factors such as the poor quality of the soil, the climate, farming practices, diseases and the particular season.

A factor which was extremely relevant to these matters was the fact that Mr Giuca purchased a large quantity of ammonium nitrate in 1986 which Mr Giuca accepted should not be used on tobacco. He initially denied purchasing the chemical and initially denied using it but his answers to interrogatories establishes the contrary. I do not accept his evidence that he did not order or receive the ammonium nitrate and I am satisfied that he used it on the crop. In the light of his admission that it was not appropriate to do so, this may have been a cause of the problems that he experienced.

In addition, according to an application form signed by him his tobacco production in the past had been affected by disease of the soil in the form of yellow dwarf and nematodes.

Indeed he applied to the Farm Recovery Programme Committee for permission not to grow tobacco in the 1984-85 season to allow his soil to recover "for future cropping".

None of the evidence even on the balance of probabilities leads to any inference that the problems associated with the 1986 and 1987 crop were caused by the fertiliser. One can add to the factual matters just stated the fact that in 1987-88 he did not use the T5 fertiliser but experienced much the same problems. The likelihood that the problems in the latter year were due to fertiliser applied in the previous year is extremely remote.

Another matter of significance in considering the issue of breach of contract, is the fact that Mr Tony Judd, the Department of Agriculture expert in the field at the time, who investigated the plaintiffs' problems did not support their case. There was a real prospect he would have been called by Pivot.

In summary the plaintiffs have failed to establish any evidence which would have enabled them to succeed in their County Court proceeding against Pivot.

The plaintiffs allege in this proceeding that the defendant was guilty of negligence in failing to obtain evidence to support their case. Mr Squirrell was unable to identify any evidence which could have been obtained and no evidence was called in this proceeding from any witness in respect to the issues of breach and causation.

In my opinion if it is said that a solicitor is negligent in failing to obtain proper evidence to prove the case it would be necessary to identify the witness, the type of evidence and call a witness to establish the evidence. To merely refer to a report would be inadmissible as hearsay.

But in any event no evidence has been identified, no witness identified, no witness called and in my opinion there is no evidence of negligence by Coadys in respect to this allegation.

Coadys, their predecessors and Mr Giuca had exhausted all avenues.

The reports obtained were from the Department of Agriculture and Rural Affairs for Victoria, and Inland Agriculture Pty. Ltd. dated March 1991, April 1991 and June 1992. There was a report from Hei-Tana Management dated 14 October 1992, another report from the Department of Agriculture dated 16 October 1992 containing a number of reports prepared in 1987 concerning analyses and a letter from SGS Quantum dated 5 May 1993 again enclosing reports.

In addition Mr McLinden, the solicitor, wrote to Mr Giuca on 31 January 1994 stating that he had spoken to a number of persons to determine whether there was any evidence to support Mr Guica's claim and opined the view that there was no evidence that the fertiliser had contaminated the crop.

Mr Andrew on behalf of the plaintiffs persuaded Legal Aid to provide funds to obtain another expert's report and on 8 September 1995 Mr Paul Miller of Agricultural Assessments provided a report which again did not support the plaintiffs' claim.

It was the opinion of Mr Andrew and Mr Tony Lopes of counsel who was briefed to advise the plaintiffs and appear for them in the mediation that they had no evidence to support the allegations of breach of contract and causation.

There was no evidence in the County Court proceeding available to the plaintiffs by March 1996 which established the breach of contract against the defendant Pivot, and no evidence was adduced before me that other admissible evidence was available.

Despite the lack of any evidence of breach of contract by Pivot it was submitted that it was open to the plaintiffs to have proceeded with their case against Pivot on the basis that there was a defect in the fertiliser which must have caused the plaintiffs' problems.

Given that a solicitor owes a duty of care pursuant to his contract of retainer to his client to exercise all due skill and reasonable care in the performance of the retainer, it is my opinion that Mr Andrew would have been negligent in the extreme to have attempted to conduct the case without any evidence of an expert nature.

In my opinion the submission lacks reality bearing in mind that legal aid was not available, the plaintiffs could not have prosecuted the claim themselves and did not have the funds to enable the retainer of either the defendant or some other firm of solicitors to conduct the litigation. Further it cannot be overlooked that the offer of $18,500 was open for a period of 14 days and if not accepted there was the risk that it would not be re-offered later. I do not accept this alternative argument put by Mr Squirrell.

That brings me back to the allegation of undue and unfair pressure being brought to bear on the plaintiffs to settle at a disadvantageous sum.

In final submissions it was accepted by the plaintiffs' counsel that on the evidence before me that there was no legal aid for the County Court trial, that the plaintiffs did not have the financial resources to retain legal practitioners in the proceeding, that the plaintiffs did not have the capacity to run the trial themselves and that there was no evidence that if the offer had not been accepted that it would have been renewed or indeed that any other offer more advantageous to the plaintiffs would have been made at a later point in time.

Further it is conceded that there was nothing improper or negligent on the part of Mr Andrew nor was there any element of undue pressure in continually warning the plaintiffs of the consequences of losing the Pivot proceeding, warning the plaintiffs that there was no Legal Aid funding for the trial and advising the plaintiffs to accept the offer of compromise.

In my opinion all of these concessions were properly made. They are all supported by the evidence in this proceeding. Indeed theere was no basis for any submission to the contrary.

Mr Andrew would have been negligent in failing to warn the plaintiffs of the consequences of losing the Pivot proceeding, and failing to warn them that there was no legal aid for the trial. He would have been careless if he had not advised them to prepare for trial and failed to advise them to accept the offer taking into account the desperate nature of a County Court proceeding.

In my opinion there is no evidence of any negligence against Coadys or Mr Andrew concerning the way Mr Andrew performed the retainer and in particular the preparation, gathering of evidence, consideration of the issues and his advice to settle at the figure offered by Pivot's solicitors. On any view the settlement was an excellent one.

In final address Mr Squirrell identified the alleged negligent conduct of Mr Andrew in respect to settling the case.

It was said that Mr Giuca was pressured into settling the case because both Mr Lopes and Mr Andrew exerted improper pressure by falsely telling him that if they failed in the proceeding, not only would they be ordered to pay the costs of Pivot but they would lose their pensions.

Mr Andrew denied that he ever said such a thing and further stated that if Mr Lopes had said that in his presence he would have corrected him. He did not hear Mr Lopes say such a thing. There is evidence that Mr Lopes did speak to the plaintiffs in Italian from time to time.

Mr Lopes was not a party to this proceeding nor was he called as a witness. He has not been given an opportunity to answer the outrageous allegation that was made against him. I do not accept the evidence of Mr Giuca that he said it. I reject his evidence that Mr Andrew said it. Mr Andrew denied that he said it and I accept his evidence.

As I have found that Mr Andrew did not make any such statement and I do not accept the evidence of Mr Giuca that Mr Lopes said it, the plaintiffs must fail. In any event Mr Andrew or Coadys were not responsible for what counsel said in their absence even if counsel said it, which I do not accept.

In fairness to Mr Andrew who has been the subject of an unsubstantiated charge of professional negligence, it is appropriate to briefly summarise what he did which demonstrates that he acted in a very careful, responsible, caring and professional way in the performance of the retainer.

Mr Andrew took over the file in December 1994. By then the matter had been through the hands of at least three separate solicitors. First, was the firm of Scott Thompson & Cantwell of Shepparton. They received the three reports of Inland Agricultural.

The last report whilst noting that one may assume that some damage has occurred as a consequence of chloride nevertheless went on to say that a more detailed examination would have to be carried out. The report also indicated that the likely level of the loss due to the alleged problem was some $22,295.

On a proper reading of that report it is my view that it does not establish a case for the plaintiffs. The assertion that chloride may have caused some damage is not supported by any evidence.

The plaintiffs then changed solicitors and retained Mr Sali, a solicitor in Shepparton.

Mr Sali on 12 May 1993 wrote to an accountant Mr Barillaro and said inter alia -

"Please talk to Mr and Mrs Giuca and get them to understand the major risk they are taking as now there is no evidence supporting their claim except their own belief."

Mr Ross McLinden, then a partner of Mr Sali, took over the file and wrote to Mr Giuca on 31 January 1994 in which he stated that there was no supporting evidence that the fertiliser had contaminated the crop and suggested an offer of $7,000 including costs be put.

When Mr Andrew took over the file in December 1994 he read through all the reports and not one of them gave any basis for believing that the plaintiffs could succeed and at best their likely quantum was in the range of $22,500.

Mr Andrew informed Mr Giuca in December 1994 that the case was weak and informed him that there was no expert reports which helped the case.

Mr Andrew arranged an informal conference with Pivot's solicitors on 7 March 1995 at which he put an offer of $300,000 plus costs on the instruction of the plaintiffs. Pivot's solicitors counter-offered that each party should bear its own costs and that the proceeding be dismissed.

At this stage Legal Aid was indicating that it was not prepared to fund a trial. Mr Andrew made application to Legal Aid for the funding of another expert's report which was received in September 1995 and this was adverse to the plaintiffs' interests.

Mr Giuca for his part approached others to provide expert evidence. None was of any benefit.

Mr Andrew was able to persuade Legal Aid to fund the costs of a mediation including briefing counsel. Mr Lopes was specifically briefed because of his Italian background.

Mr Lopes had a number of conferences with Mr and Mrs Giuca which went over a number of hours as he endeavoured to explain to them how desperate their case was. They were not prepared to accept his advice. At the mediation Mr Andrew and Mr Lopes in consultation with the mediator expressed the view that the case was indeed desperate and Mr Ruskin the mediator agreed.

An offer of $18,500 plus costs was put but conditional on another insurer agreeing to the settlement. It was the view expressed by Messrs Lopes, Andrew and Ruskin that the plaintiffs should accept the offer.

Mr Lopes gave written advice to Legal Aid in which he expressed the opinion that the case was indeed extremely desperate and that the plaintiffs should accept the offer.

By the end of 1995 it was clear that Legal Aid would not fund the action and Mr Andrew told Mr Giuca on many occasions between 27 November 1995 and 2 April 1996 that there would be no legal aid. He advised the Giucas to settle, he advised them that if they were not prepared to settle they had to prepare the case themselves and that he had exhausted all avenues to obtain evidence.

The offer of compromise was made in March 1996 and again Mr Andrew instructed the Giucas to accept the offer. A number of conversations occurred between them over 2 and 3 April and in the end Mr Giuca agreed to settle and wrote a letter to that effect on 3 April 1996.

Mr Andrew waited until 10 April 1996 before he formally accepted the offer and during this period the plaintiffs did not make any criticism of what he had done.

A number of attacks were made upon Mr Andrew that he revealed that the plaintiffs were on legal aid to the solicitors for the defendant, that he revealed they were in a very difficult financial position and that they did not have the finances to prosecute their claim. Further that he did not take sufficient steps to persuade Legal Aid to provide funding.

Under the Legal Aid Act the Commission is obliged to take into account all matters before providing legal assistance, one being whether the proceeding is likely to be terminated in favour of the assisted person. See s.20(4)(b).

Further under s.31(3) Mr Andrew was obliged to disclose to the Commission any information within his knowledge which would be relevant to the provision of aid.

In my opinion Mr Andrew behaved responsibly in all his dealings with Legal Aid and did his best to obtain legal aid for the plaintiffs. Indeed he obtained assistance for the mediation, for the advice from counsel and the cost of obtaining another expert's report. This was after Legal Aid had made it clear that they were not prepared to fund the proceeding.

In respect of the complaint that he told the defendant's solicitors that the plaintiffs were on legal aid, I dismiss that complaint as being without any substance. Often in litigation the fact that the plaintiff is impecunious is used as a tactic to pressure an offer by a defendant who is prepared to settle on a nuisance basis rather than run a trial, win and not recover costs. As for the question of the plaintiff's impecuniosity, that would have been obvious to Pivot's solicitors for a whole host of reasons including the fact that the plaintiffs were bankrupt in the early 1980s, and were evicted from their farm by a mortgagee claiming a substantial debt. Further it was obvious that the plaintiffs were pensioners.

Much of what Mr Giuca said in this case was driven by his obsession, his paranoia and his dislike of Mr Andrew and some of the other professionals who were engaged from time to time.

The plaintiffs in my opinion were extremely fortunate to have Mr Andrew as their solicitor. He managed to get for them a settlement in a case which they could not have presented and if they had, would have lost with disastrous consequences in the form of an order for costs.

There is not one jot of evidence of negligence. There is not an iota of evidence. There is not even a scintilla of evidence. On the contrary in my opinion Mr Andrew performed his retainer carefully, responsibly and in accordance with the expected standards of a reasonable, competent and skilful solicitor. Indeed he performed services which were beyond the call of duty and at all times did his best for Mr and Mrs Giuca who on any view were extremely difficult clients. Difficult in the sense that they were not prepared to accept the advice of their professional advisers, difficult in that Mr Giuca was satisfied in his own mind that the fault lay with Pivot and could not be in any way persuaded from that view and difficult in that he adopted a bombastic and aggressive view to the litigation.

Further, if the plaintiffs had succeeded in proving negligence against Coadys they would have failed in this proceeding for another reason. The plaintiffs have not proven that the negligence was a cause of any loss.

Their case is that the alleged negligence by Coadys caused them to lose the opportunity to proceed with the County Court proceeding to judgment in which they would have obtained a greater sum than $18,500 or alternatively to secure a better settlement than that amount.

This raises the question as to what the plaintiffs have to prove in the present proceeding in respect of their prospects of successfully prosecuting the County Court proceeding to judgment at a sum greater than $18,500.

Logically the plaintiffs would have to prove that they would have won their County Court proceeding. Because if they could not have won their County Court proceeding then even if the defendant was negligent, they could not prove substantial damages. At best they would be entitled to nominal damages.

There are dicta to that effect. In Rondel v Worsley (1969) 1 A.C. 191, Lord Reid in support of his conclusion that a barrister was immune from action in relation to what he did in court on behalf of a client accepted as one reason for the rule the difficulty of re-trying a proceeding.

"Suppose that, as in the present case, a convicted man sues his counsel. To succeed he must show not only that his counsel was guilty of professional negligence, but also that that negligence caused him loss. The loss would be the fact that he was wrongly convicted by reason of his counsel's negligence. So after the plaintiff's appeal against conviction had been dismissed by the Court of Criminal Appeal, the whole case would in effect have to be re-tried in a civil court where the standard of proof is different. That is something one would not contemplate with equanimity unless there is a real need for it."

See also the observations of Lord Morris of Borthy-Gest at pages 249-251.

In the later case of Saif Ali v. Sydney Mitchell & Co. (1980) A.C. 198, which was concerned with advice given by a barrister in a civil proceeding and the question of immunity Lord Diplock had this to say at page 222 -

"The re-trial of the issue in a previous action, if it depended on oral evidence, would have to be undertaken de novo. This will involve calling anew after a lapse of time witnesses who had been called at the previous trial and eliciting their evidence before a different judge by questions in examination and cross-examination that were not the same as those that had been put to them at the previous trial. The circumstances in which the barrister had made decisions as to the way in which he would conduct the previous trial, and the material on which those decisions were based, could not be reproduced in the re-trial."

The above-mentioned dicta were stated in a context of a trial resulting in a judgment and the enormous difficulties of re-trying the issues at a later time before a different tribunal of fact and with the benefit of hindsight.

The present case is not concerned with a trial which went to judgment.

There are dicta to suggest that it is not necessary in a trial such as the present to have to prove by admissible and relevant evidence the issues in the first trial.

The point is taken up in the famous case of Kitchen v. Royal Air Force Association (1958) 1 W.L.R. 563. In that case the plaintiff's husband was killed in the kitchen of his house. The plaintiff considered that the electricity company responsible for wiring the house was negligent. She approached an Association who referred her case to a firm of solicitors. The solicitors investigated the matter but did not get any independent report from an expert on the cause of the accident.

They allowed the time for a proceeding under the relevant Fatal Accidents Act to run out and the plaintiff sued them in negligence. She was successful against the solicitors.

At page 574 Lord Evershed M.R. dealt with an argument put by the solicitors' counsel to the effect that the plaintiff had to prove in the proceeding that she would have won against the electricity company. He submitted that if she failed in her claim considered as it was as a separate proceeding, then it followed that her damage was no more than nominal.

"If, in this kind of action, it is plain that an action could have been brought, and if it had been brought then it must have succeeded, of course the answer is easy. The damaged plaintiff would then recover the full amount of the damages lost by the failure to bring the action originally. On the other hand, if it be made clear that the plaintiff never had a cause of action, that there was no case which the plaintiff could reasonably ever have formulated, then it is equally plain that the answer is she can get nothing save nominal damages for the solicitor's negligence. I would add, as was conceded by Mr Neil Lawson, that in such a case it is not enough for the plaintiff to say: 'Though I had no claim in law, still, I had a nuisance value which I could have so utilised as to extract something from the other side and they would have had to pay something to me in order to persuade me to go away.' But the present case falls into neither one nor the other of the categories which I have mentioned. There may be cases where it would be quite impossible to try 'the action within the action' as Mr O'Connor asks. It may be that for one reason or another the action for negligence is not brought till, say, 20 years after the event. In the process of time the material witnesses or many of them may have died or become quite out of reach for the purpose of being called to give evidence. In my judgment, what the court has to do (assuming that the plaintiff has established negligence) in such a case as the present is to determine what the plaintiff has by that negligence lost. The question is, has the plaintiff lost some right of value, same chose in action of reality and substance? In such a case, it may be that its value is not easy to determine, but it is the duty of the Court to determine that value as best it can. (Emphases added.)

Parker, L.J. in the same case at page 576 expressed the issue as follows -

"The matter (the cause of the action) remains a mystery and were it necessary for this court to decide whether the plaintiff would have succeeded, I, for my part, would have found great difficulty in coming to that conclusion; but, as I understand it, that is not our task. If the plaintiff can satisfy the court that she would have had some prospect of success, then it would have been for the court to evaluate those prospects, taking into consideration the difficulties that remained to be surmounted. In other words, unless the court is satisfied that a claim would be bound to fail, something more than nominal damages fall to be awarded."

The decision in Kitchen has been often cited, always with approval and has been followed in Australia. See by way of example Johnson v. Perez [1988] HCA 64; (1988) 166 C.L.R. 351.

In Tutunkeff v. Thiele (1975) 11 S.A.S.R. 148 Bray, C.J. considered the question of the evidence in the negligence trial bearing on the issues in the first trial.

"But in so doing is the court restricted to the evidence given in the trial of the action against the solicitor or ought it go further and consider what other evidence not before it might have been given if the statute barred action had come to trial and what are the circumstances not proved before it might have affected the result of that action?

"Mr Fricker, for the plaintiff, contended vigorously that I was only at liberty to assess the plaintiff's chances of success in the lost action on the basis of the evidence before me. In principle I do not think that this is so because what I have to decide is what the plaintiff has lost by the defendant's negligence and what he has lost is what a court would have awarded him in an action by him against his employer, not what I would award if the present action were an action against the employer and there was no other evidence than that before me."

But as his Honour pointed out he had stated in an earlier case of Star Candy (1968) S.A.S.R. 1 at page 30 the following -

"Once the court which tries the negligence action finds it possible to try also the original action within that action, then its decision on the action within the action, as Lord Evershed calls it, decides also whether more than nominal damages can be recovered."

See also the observations in the English decision of Acton v. Pearce & Co. (1997) 3 All E.R. at 909 at pages 930 et seq and Waribay Pty Ltd v Minter Ellison (1991) 2VR 391.

The authorities in my opinion do not lay down any hard and fast rule as to what evidence has to be adduced in the negligence trial on the issue of the likely outcome of the first trial if it had proceeded to judgment. Each case must depend upon its own particular circumstances. In many cases the questions of causation and damages will be clear beyond doubt and readily provable. In other cases this will not be the position and the Court is then bound to consider as best it can the likely outcome of the first proceeding if it had gone through to judgment and make some assessment of the value of the lost opportunity. In some cases the defendant will be able to put in issue that the plaintiff could not possibly have succeeded in the first trial and successfully defend the claim on that basis. If negligence was proven all the plaintiff would recover are nominal damages.

If the plaintiffs had proven negligence against Coadys, in my opinion the plaintiffs have not established that they lost an opportunity of any value.

First, in my opinion the plaintiffs would not have succeeded in the County Court trial, there is absolutely no evidence before me either direct or based upon materials in Coadys' file which would lead to the conclusion that the plaintiffs could have won their County Court proceeding.

Secondly, they did not prove that they lost the opportunity to proceed to a hearing or obtain an offer greater than $18,500 at a later time. The reality was that Legal Aid would not fund the preparation and trial of the proceeding, the plaintiffs did not have any money to conduct the litigation and they could not have conducted the litigation themselves. Mr. Squirrell made reference to the pro bono scheme which is available in this State but there was no evidence as to the nature of the scheme. I am prepared to take judicial notice that there is such a scheme but whether or not a solicitor and barrister would be prepared to prepare this case and appear is another matter. This observation has greater force when it is noted that the County Court trial would have gone for at least five days.

The reality was that the opportunity was just not there to be lost.

There is no evidence that the offer would have been reviewed after the 14 days' period. The evidence does not lead me to the conclusion that a judgment would have been obtained for a sum in excess of $18,500.

In summary, it is my opinion that the plaintiffs have not proven that the defendant firm or Mr Andrew was negligent and further that if negligence had been proven that they suffered any loss.

I conclude by observing that this proceeding should not have been brought. It was issued on the instructions of the plaintiffs. Having been brought once discovery and inspection had been completed it must have been apparent that the plaintiffs case was desperate and lacked substance. Having sought the three experts' reports which one can conclude did not help their case, the proceeding should not have been further prosecuted. The fact was the plaintiffs did not have a case. I have seen and heard enough of Mr Giuca to know that he does not accept the advice of his professional advisers and have little doubt that he wished this proceeding to continue.

It is a very serious matter to allege against any professional person that he or she has been negligent. A proceeding alleging same should not be lightly brought and if issued not lightly continued. There was absolutely no basis for alleging negligence against Mr Andrew or his firm Coadys.

At a glance

Court

Decision date

Before

Source

Judgment (202 paragraphs)

Parties