Hammond v Stern

Judgment 1On 27 February 2001 the appellant suffered a physical injury whilst working on the tunnel for the Airport train line. Due to the negligence of his lawyers, a claim in negligence became statute barred and a claim for a lump sum pursuant to the Workers Compensation Act 1987 (NSW) was foregone. He sued his lawyers for breach of contract and in negligence as a result. As is customary, he fully pleaded the claim for physical injury with regard to which he asserted that his lawyers had been professionally negligent. The claim was eventually settled for less than $100,000. 2A dispute arose as to costs: in short, whether s 338 of the Legal Profession Act 2004 (NSW) limits the amount of costs recoverable because the claim against his lawyers was for damages that "relate to the death of or injury to a person". On 8 August 2011, Harrison AsJ determined that s 338 does operate to limit the costs available to the appellant. By notice of motion the appellant appeals against that ruling, pursuant to r 49.4 of the Uniform Civil Procedure Rules 2005. 3The respondents did not oppose time to institute an appeal being extended to the date of filing of the notice of motion, pursuant to r 49.8(4) of the Uniform Civil Procedure Rules. 4The issue requiring determination by me is this: did her Honour err in ruling that s 338 of the Legal Profession Act applies to the professional negligence claim that was founded on the failure properly to prosecute the rights of the appellant arising from a personal injury? 5The narrow scope of this particular appeal means that it is not necessary for me to discuss in detail the nature of an appeal founded on r 49.4 of the Uniform Civil Procedure Rules from the decision of an Associate Judge of the Supreme Court. I accept the submission of the appellant, unchallenged by the respondents, that in the circumstances there is no practical difference between undertaking a true de novo consideration of the issue in question, and approaching the appeal on the basis of the principles set out in Warren v Coombes (1979) 142 CLR 531 at 553. Accordingly, I will reconsider the question of statutory construction anew, rather than seeking to identify explicit error in the judgment of her Honour. Overview of legislative structure 6Section 338(1) of the Legal Profession Act provides: "If the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows ..." 7For convenience I shall refer to this section as the "costs limitation provision". 8The phrase "personal injury damages" is defined in s 337(1) as having "the same meaning as in Part 2 of the Civil Liability Act 2002". 9In Part 2 of the Civil Liability Act 2002 (NSW), s 11 defines "personal injury damages" as "damages that relate to the death of or injury to a person". 10The term "injury" within that definition is defined in s 11 of the Civil Liability Act as "personal injury" (including impairment of a person's physical or mental condition). 11Therefore, importing the definition of "personal injury damages" into s 338(1) of the Legal Profession Act, the provision reads: "If the amount recovered on a claim for [damages that relate to the death of or [personal] injury to a person] does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows ..." 12It can be seen therefore that an important aspect of my task may be summarised as being to determine the meaning of the phrase "that relate to" in that setting. The submissions of the appellant 13The appellant submitted that the costs limitation provision does not apply to the professional negligence claim. There were two aspects to that submission. The first was a structural analysis of various pieces of legislation. The second concerned the construction of the phrase in question. 14Turning to the first aspect, the claim brought against the respondents for professional negligence had two underlying bases: the loss of statutory workers compensation rights, and the loss of opportunity to recover common law damages. The appellant submitted that the effect of ss 3 and 3B of the Civil Liability Act was to remove the claim for workers compensation rights from the operation of the cost limitation provision. Section 3 of the Civil Liability Act relevantly provides: In this Act: ... damages includes any form of monetary compensation but does not include: ... (c) any payment authorised or required to be made under an insurance policy in respect of the death of, injury to or damage suffered by the person insured under the policy. 15Section 3B of the Civil Liability Act relevantly provides: (1) The provisions of this Act do not apply to or in respect of civil liability (and awards of damages in those proceedings) as follows: ... (g) civil liability for compensation under the Workers Compensation Act 1987, ... 16First, the appellant submitted in short that the foregone lump sum payment pursuant to the Workers Compensation regime cannot be characterised as damages for the purposes of s 11 of the Civil Liability Act. That was founded upon the proposition that such payments are not to be characterised as damages because of the provisions of the Workers Compensation Act. Furthermore, he submitted, in any event s 3(c) of the Civil Liability Act operates to exclude such a payment. 17Secondly, the appellant submitted that, because his claim against his lawyers was, at least in part, founded on their negligence in not obtaining a workers compensation payment, that claim falls within s 3B. As a result, the provisions of the Civil Liability Act do not apply to it, and therefore the claim is not captured by way of the definition in s 11 of the Civil Liability Act. 18Thirdly, the appellant also submitted that, pursuant to the Workers Compensation Act, it is not necessary for a claimant to establish "injury" as defined in s 11 of the Civil Liability Act. That is because the applicable definition contained in s 4 of the Workers Compensation Act is broader than that contained in the Civil Liability Act. He submitted that such a claim may be founded on such things as a permanent impairment or the exacerbation of a disease. 19Fourthly and finally, relying upon what was said with regard to the ancillary issue in New South Wales v Williamson [2012] HCA 57; 87 ALJR 154, the appellant submitted that it is impossible to divide up the settled claim between those underlying bases of it that fell within the definition of "injury" contained in s 11 of the Civil Liability Act and those that did not. Accordingly, he submitted that one should approach the matter on the basis that the settlement was not captured by the costs limitation provision. 20The second aspect of the appellant's case concerned the construction of the phrase "relate to", and the characterisation of the appellant's claim. The appellant submitted that, for a number of reasons, the phrase "relate to" ought be construed narrowly so as to exclude from the definition of "personal injury damages" the sum recovered on his professional negligence claim. 21First, it was submitted that the proper characterisation of the claim against the defendants was as a claim for professional negligence that, stated at its highest, "related in part to a claim that related to personal injury damages". It was submitted that the original injury sustained by the appellant was relevant only as "background or context" to the professional negligence claim, which concerned the breach of duty by the respondents. 22The fact that the method of calculating damages for professional negligence is markedly different from the method that would have been used to calculate damages if the original claim had been pursued successfully was said to support this submission. And attention was drawn to the fact that an award pursuant to the original claim could have been more than the statutory cut-off point of $100,000, even though the settled claim for professional negligence was less; that state of affairs was said to highlight the separate nature of the two claims. 23Secondly, it was submitted that it would be anomalous for costs of proceedings for professional negligence to be limited, based upon the capricious question of the cause of action out of which the lawyer-client relationship arose. It was contended that there is no reason in policy why lawyers being sued for professional negligence should receive favourable treatment by way of a costs limitation provision applying to their successful opponents, merely because the dispute arose out of a retainer to act in a claim for personal injury, as opposed to any other underlying cause of action. 24Thirdly, it was submitted that s 338 of the Legal Profession Act was not intended to incorporate secondary or ancillary claims. Reliance was placed upon the word "claim" in s 338. It was submitted that, if Parliament intended to include secondary actions in the costs limitation provision, it would have used express language to do so. 25Fourthly, it was contended that extending the costs limitation provision to secondary or ancillary claims would require an unwarranted "double-barrelled" construction. The appellant submitted that Parliament did not intend that a claim "that related to a claim that related to personal injury" should be subject to costs limitation. He further submitted that application of this "double-barrelled" construction could result in the damages received by a plaintiff in a professional negligence claim founded on a personal injury being limited twice: first, when the quantum of the original claim if it had been properly prosecuted is assessed, and second, when the costs of the professional negligence claim itself are assessed. It was submitted that there is nothing to suggest that this draconian result was the intention of Parliament. The submissions of the respondents 26In response to the first aspect of the case for the appellant, the respondents submitted that it was inherently erroneous to focus on the underlying claims that were foregone, rather than the professional negligence claim itself, and the damages that arose from it. 27Furthermore, it was submitted that a claim for workers compensation is a statutory entitlement, rather than a claim for the proceeds of an insurance policy. 28Finally, it was said that the fact that it is possible to claim workers compensation pursuant to the Workers Compensation Act without proving an "injury" as defined in the Civil Liability Act was immaterial to the question before me. It was said in short that, on the facts of this case, the appellant undoubtedly suffered a physical injury falling within the definition in the Civil Liability Act, and the damages that he received related to it. 29With regard to the second aspect of the case for the appellant, the respondents submitted that a broad construction of the phrase "relate to" was warranted in this case. 30First, it was submitted that Parliament must be presumed to have chosen the words "relate to" in deliberate preference to words of a more narrow import, such as "for". It was submitted that "for" is utilised at many other locations throughout Part 2 of the Civil Liability Act. For example, s 12(1) provides: This section applies to an award of damages: (a) for past economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or (b) for future economic loss due to the deprivation or impairment of earning capacity, or (c) for the loss of expectation of financial support. [Emphasis added] 31It was submitted that the use of "for" in other sections of Part 2 demonstrates that the use of the broader phrase "relate to" was a deliberate choice on the part of Parliament, and effect must given to that choice. 32Secondly, the respondents contended that the underlying personal injury had a "real and direct connection" to the ultimate professional negligence claim. It was submitted that, on a loss of opportunity suit, the plaintiff must plead (and here did plead) the underlying cause of action that was lost. It was submitted that the personal injury played a central role in the professional negligence proceedings. 33Thirdly, the respondents relied on the underlying purpose of the legislative scheme. They submitted that the costs limitation provision was clearly designed to reduce the costs recoverable by successful plaintiffs in many personal injury cases. Furthermore, it was suggested that there was nothing irrational in Parliament acting to curtail costs in cases that arise indirectly from personal injuries. 34Fourthly, the respondents relied on the decision of the Court of Appeal in Firth v Sutton [2010] NSWCA 90. In that case, Allsop P (with whom Macfarlan and Young JJA agreed) affirmed the application of s 18 of the Civil Liability Act to a determination of interest on damages in a professional negligence suit founded on personal injury. Section 18 is located in Part 2 of the Civil Liability Act, which is expressly stated to apply "to and in respect of an award of personal injury damages": see s 11A of the Civil Liability Act. The respondents submitted that, by applying s 18 to damages awarded on a professional negligence suit, Allsop P impliedly accepted that such damages are capable of characterisation as "personal injury damages". Whilst they accepted the submission of the appellant that the remarks of the learned President were obiter dicta, the respondents submitted that a contrary finding in this case would require a determination by me that that those remarks were wrong or, at the least, that their underlying reasoning could not be applied by analogy to the question before me. 35Fifthly, it was submitted that the recent decisions of the High Court in Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross & Anor [2012] HCA 56; 87 ALJR 131 and New South Wales v Williamson were consistent with the position of the respondents. It was noted that these decisions made clear that the Legal Profession Act merely imports the definition of "personal injury damages" contained in s 11 of the Civil Liability Act, and not the limitations on the application and operation of the Civil Liability Act contained in its other provisions, notably s 11A. 36Finally, the respondents submitted that it may be the case that the proper construction of the phrase in context may lead to "double limitations" of costs in some circumstances; if that is the correct result, so be it. Consideration (i) Some aspects of the two Acts 37In Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355, McHugh, Gummow, Kirby and Hayne JJ said (at 381 [69]): "The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole' ... Thus, the process of construction must always begin by examining the context of the provision that is being construed. [Footnotes omitted]" 38I therefore consider that it is important to examine the legislative framework in which the phrase under consideration is to be found. Such examination must commence with the text of the instrument. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 at [47], Hayne, Heydon, Crennan and Kiefel JJ said: "This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. [Footnotes omitted]" 39The relevant provision is s 338(1) of the Legal Profession Act. That provision is located within Division 9 of Part 3.2 of that Act. Part 3.2 is headed "Costs disclosure and assessment". Section 301 states that the purposes of Part 3.2 are: (a) to provide for law practices to make disclosures to clients regarding legal costs, (b) to regulate the making of costs agreements in respect of legal services, including conditional costs agreements, (c) to regulate the billing of costs for legal services, ... 40Moreover, the purposes of the Legal Profession Act generally are contained in s 3, and are said to be: (a) to provide for the regulation of legal practice in this jurisdiction in the interests of the administration of justice and for the protection of clients of law practices and the public generally. (b) to facilitate the regulation of legal practice on a national basis across State and Territory borders. 41It is apparent from these express legislative statements that the protection of clients and litigants is an important object of the Legal Profession Act and of the costs limitation provision it contains. It is clear that it was the intention of Parliament to provide for a measure of regulation and control in relation to costs recoverable by legal practices. At least in respect of personal injury damages not exceeding $100,000, it can be seen that Parliament intended that costs not be at large. 42Section 337(2) expressly excludes certain costs from being affected by the costs limitation provision in the Legal Profession Act. The exhaustive list of excluded costs are as follows: (a) (Repealed) (b) costs for legal services provided in respect of a claim under the Motor Accidents Act 1988 or Motor Accidents Compensation Act 1999, (c) costs for legal services provided in respect of a claim for work injury damages (as defined in the Workplace Injury Management and Workers Compensation Act 1998), (d) costs for legal services provided in respect of a claim for damages in proceedings of the kind referred to in section 11 (Claims for damages for dust diseases etc to be brought under this Act) of the Dust Diseases Tribunal Act 1989. 43Turning to Part 2 of the Civil Liability Act, it will be observed that there is no express statement of legislative object. Nor is there an express statement of the purposes of the Act generally. However, the scope of Part 2 is set out in s 11A, which states that Part 2 of the Act applies "to and in respect of an award of personal injury damages, except an award that is excluded from the operation of this Part by section 3B". The Part applies regardless of whether the claim is brought in tort, contract, under statute or otherwise: s 11A(2). Section 3B expressly excludes certain types of liability, including liability in respect of certain intentional acts, and liability already covered by other specified legislative schemes (such as certain motor accident and workers compensation claims). (ii) Construing "relate to" 44The words "relate to" appear in countless statutory contexts. No doubt they have been interpreted by courts on many previous occasions. The parties each referred to decisions that have given meaning to that phrase. However, attempting to derive guidance from decisions that have interpreted the words in different contexts can distract from the exercise. 45What is clear from the authorities is that the words, or words of like effect (such as "in respect of"), are capable of broad import: Powers v Maher [1959] HCA 52; 103 CLR 478 at 484-5 per Kitto J; State Government Insurance Office (Queensland) v Crittenden [1966] HCA 56; 117 CLR 412 at 416 per Taylor J; O'Grady v Northern Queensland Co Ltd [1990] HCA 16; 169 CLR 356 at 374 per Toohey and Gaudron J. 46In Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203; 243 ALR 606 at 633 [106], the Court said: "Acts of Parliament frequently use words of wide import which require courts to make constructional choices. They may be words capable of two or more meanings, each of which might make sense in the context in which it appears in the Act. Such a case is one of ambiguity and reference to extrinsic materials may point in the direction of one intended meaning rather than another. Alternatively, words may be used which have an ambulatory significance capable of a wide range of applications. Construction involves determining the limits of that range. Terms such as "in relation to", or "in connection with" raise that kind of problem which, strictly speaking, is not a problem of ambiguity at all. The word "association" falls into this category. It may be read widely enough to pick up many completely innocent connections between people. On the other hand, it may be read narrowly to require some sort of positive involvement in criminal conduct with others. 47The phrase "relate to" denotes a connection or relationship, direct or indirect, between one subject matter and another: see O'Grady at 376 per McHugh J. That is not to say, however, that the phrase warrants a broad reading in every instance. Ultimately, the meaning attaching to the phrase must depend on the context in which it is found: Workers' Compensation Board of Queensland v Technical Products Pty Ltd [1988] HCA 49; 165 CLR 642 at 653-654 per Deane, Dawson and Toohey JJ. 48Neither party submitted that I can gain assistance with regard to this question from cases construing a similar provision in any of the analogues of the Civil Liability Act throughout the States and Territories of Australia. (iii) Recent High Court authority with regard to a related question 49Both parties invited my attention to two recent decisions of the High Court that dealt with similar issues arising out of the same or equivalent legislation. 50In Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross & Anor, the question was whether the definition of "personal injury damages" imported from the Civil Liability Act into the predecessor of the Legal Profession Act was to be construed by reference to the exclusionary provisions of the Civil Liability Act that limited the application of that Act in certain circumstances. The majority answered that question in the negative, holding that the words of the definition were not to be read down by reference to those separate provisions in the Civil Liability Act. 51In New South Wales v Williamson, a similar question arose with regard to the Legal Profession Act as it currently stands. The majority again held that the application or lack of application of the Civil Liability Act in various circumstances plays no role in construction of the definition of "personal injury damages" imported directly from that Act into the Legal Profession Act. In the latter case, all members of the Court held as an ancillary matter that false imprisonment does not fall of itself within the definition of "injury" contained in s 11 of the Civil Liability Act. 52Both parties observed that neither decision is directly on point with regard to the question of the construction of the phrase "that relate to". 53In short, these two decisions are not directly binding with regard to the major question that I must determine. Nevertheless, as a matter of statutory interpretation of the two Acts in question, the majority adopted a strict approach that focused upon the words actually used by Parliament in the definition, rather than a more diffuse consideration of context. And the decisions stand as authority for the proposition that, in construing the definition, one does not take into account the application or lack thereof of the Civil Liability Act by way of a number of separate provisions of that Act. (iv) Determination 54The first aspect of the case for the appellant was based upon s 3 and s 3B of the Civil Liability Act. The submissions concerned the nature of the damages to which the appellant may otherwise have been entitled had his legal representatives advised him appropriately, and contended that they were excluded by s 3 or s 3B. 55This submission may be dealt with shortly. The claims that the appellant would or could have received are, in my respectful opinion, not to the point. The relevant focus is the nature of the damages that he did in fact recover; namely, the damages payable by his lawyers founded upon professional negligence. Section 3 and s 3B do not operate to exclude those damages from the definition of "personal injury damages". 56As well as that, the submission of the appellant was contrary to the approach of the majority in the two decisions of the High Court of Australia that I have discussed. There it was held that the focus must be on the definition contained in the Civil Liability Act, not upon the various provisions of that Act that speak of the application or otherwise of that Act to various causes of action or in various circumstances. 57Finally, I respectfully consider that, because the enquiry is focused upon the damages actually received and not the underlying original claims, the fact that the latter may have had two bases is not to the point. The focus here is upon the claim for damages, not upon characterisation of the underlying cause of action. It follows that I consider that the ancillary determination in New South Wales v Williamson does not avail the appellant. 58In short I reject the first aspect of the submission of the appellant. 59I turn now to the construction of the phrase under consideration. I consider that a claim for professional negligence that arises from a failure properly to prosecute a claim for personal injury is a claim for damages that "relate to the death of or injury to a person". That is so for seven reasons. 60First, Parliament has used a phrase that inherently connotes indirect connection. 61Secondly, the fact that Parliament has used the preposition "for" in other parts of the Civil Liability Act strongly suggests that Parliament intended that a distinction be drawn in this context. 62Thirdly, as a matter of plain language, I consider that one can say that the damages received by the appellant as a result of the settlement of his professional negligence claim "relate to" the personal injury with regard to which his lawyers were negligent. 63Fourthly, in a different but related context within the same statute, the New South Wales Court of Appeal has approached damages in a professional negligence claim founded upon personal injury as being "personal injury damages". Even accepting that that approach is obiter, it remains powerfully persuasive. 64Fifthly, in s 337(1) of the Legal Profession Act, Parliament has expressly and exhaustively excluded various forms of action from the costs limitation provision. If Parliament had intended to exclude claims for professional negligence founded on personal injury (and other derivative claims) from the cost limitation provision, it could easily have done so. 65Sixthly, to the extent that I should consider matters of policy (at least to the extent of avoiding absurd results in statutory interpretation) I do not consider it anomalous for Parliament, having created a costs limitation provision with regard to personal injury claims, to extend that costs limitation provision to professional negligence claims founded on such claims. 66Seventhly, to my mind the underlying personal injury was not merely a matter of background or context. It was the failure competently to enforce the rights of the appellant with regard to his personal injury that led directly to his claim for professional negligence. It is true that the defendants in the professional negligence claim were not the person who injured the appellant. But the fact is that, looking at the matter holistically, the damages obtained in the professional negligence claim were the recompense (to use that word in a non-technical sense) that the appellant ultimately received as a result of the original personal injury. 67It follows that I reject the second aspect of the submissions of the appellant. Conclusion 68In short, I consider that the phrase "damages that relate to the death of or injury to a person" extends to damages recovered in a professional negligence claim founded on failure properly to pursue claims founded upon a personal injury. The damages received by the appellant were such damages. Therefore s 338 of the Legal Profession Act operates to restrict the costs available to the appellant. It follows that I respectfully consider that there was no error in the ruling of her Honour. 69Neither party submitted that costs of the appeal should not follow the event. Orders 70I make the following orders: (1)Pursuant to r 49.8(4) of the Uniform Civil Procedure Rules, time to institute an appeal is extended to the date of the filing of the notice of motion. (2)The appeal is dismissed. (3)The appellant must pay the costs of the respondents of the appeal.