M Wilson v J Rigg

COUNSEL : (Plaintiff): M K Rollinson (Defendant): G A Sirtes SOLICITORS : (Plaintiff): Carters (Defendant): Mallesons Stephen Jaques CATCHWORDS : LIMITATIONS - whether proceedings against a solicitor, for failing to bring proceedings within time, statute barred - whether any cause of action against the solicitor accrued after the expiration of the earlier limitation period - whether that cause of action accrued when the statute was pleaded or when an application to extend that time was lost - whether a further cause of action accrued for failure to bring an application for extension of time promptly and carefully. LEGISLATION CITED : Motor Accidents Act 1988 Limitation Act 1969 (NSW) Doundoulakis v Antony Sdrinis & Co [1989] VR 781 Gorton v The Commonwealth of Australia (1992) 2 Qd R 603 Hawkins v Clayton (1988) 164 CLR 539 Hetherington v Mirvac Pty Limited [1999] NSWSC 443 Lee v Rogers (1663) 1 Lev. 110 CASES CITED : Ronex Properties v John Laing Construction Ltd [1983] QB 398,404 Sampson v Zucker (NSW Supreme Court, CA, 11 December 1996, unreported) The Commonwealth of Australia v Mewett [1996-1997] 191 CLR 471 Thursby v Warren (1629) Cro. Car. 159 Toomey v Western Aboriginal Legal Service [1999] NSWSC 560 Vulic v Bilinsky (1983) 2 NSWLR 472 DECISION : Verdict and judgment for defendant with costs, including costs of the hearing of the separate question.

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST

No. 020364/98 - Mark Wilson v Jack Rigg HIS HONOUR: 1 On 30 May 1989, the plaintiff was injured in a level crossing accident. In January 1992, he instructed the present defendant, Mr J Rigg, solicitor (hereafter "the solicitor"). Proceedings were instituted against the State Rail Authority (hereafter "the SRA") on 13 September 1994.

2 The Motor Accidents Act 1988 applied (hereafter "the MAA") . Section 52(4) provided as follows: "52(4) A claimant is not entitled to commence proceedings in respect of a claim more than 3 years after the date on which the claim must be made in accordance with section 43 except with the leave of the court in which the proceedings are to be taken."

3 It is common ground that the period of 3 years referred to in s 52(4) expired on 1 July 1992.

4 On 24 November 1994, the SRA filed a defence which included a plea that the plaintiff was "in breach of … s52(4)".

5 On 7 August 1996, the SRA filed a notice of motion for an order that the statement of claim be dismissed or, alternatively, struck out. On 4 November 1996, the plaintiff filed a notice of motion pursuant to s 52(4) for an order that the plaintiff have leave to commence proceedings on 13 September 1994 nunc pro tunc.

6 On 3 June 1997, Master Malpass refused leave and dismissed the plaintiff's motion and dismissed the proceedings.

7 On 24 September 1998, the plaintiff (instructing other solicitors) commenced the present proceedings against the solicitor. Paragraph 5 of the statement of claim in the present proceedings is as follows: "5. In breach of his duty to the Plaintiff in respect of the said claim the Defendant was negligent in that he did not commence proceedings on behalf of the Plaintiff in accordance with the provisions of the Motor Accidents Act and did not commence proceedings within the relevant limitation period. Particulars of Negligence and breach of duty on the part of the Defendant (a) Failure to commence proceedings on behalf of the Plaintiff within the relevant limitation period. (b) Failure to advise the Plaintiff that proceedings had to be commenced within the relevant limitation period. (c) Failure to provide sufficient information in Affidavits used by or on behalf of the Defendant in an Application brought before Master Malpass pursuant to Section 52(4) of the Motor Accidents Act. (d) Delay by the Defendant when he was alerted of the need to obtain leave of the Court following the filing of a defence by the State Rail Authority in November, 1994. (e) Failure to prosecute the Plaintiff's claim for injuries and the Application under Section 52(4) with diligence." (It was agreed at the hearing before me that paragraph 5 and the particulars could be read together as primary assertions, rather than the particulars being limited by the anterior pleading in paragraph 5.)

8 On 2 June 1999 the solicitor filed a defence in the present proceedings which included the following: "6. In defence of the whole of the Statement of Claim, the defendant says that the plaintiff's claim is statute barred by section 14(1) of the Limitation Act 1969 (NSW), as amended."

9 On 22 October 1999, Abadee J ordered, by consent, that there be a separate trial of the issue raised by paragraph 6 of the defence. The separate trial was held before me on 22 and 23 December 1999. I reserved my decision.

10 The question for determination is the date on which the 6 year limitation period under s 14(1) of the Limitation Act 1969 (hereafter "the LA") commenced to run. The solicitor contends that the date is 1 July 1992, with the result that the present proceedings were commenced out of time and are statute barred. The plaintiff contends that the date is 3 June 1997 (when Master Malpass dismissed the proceedings against the SRA) or 24 November 1994 (when the SRA pleaded s 52(4) against the plaintiff), with the result that the present proceedings were not out of time.

11 The determination of this question turns on when the plaintiff suffered damage as a result of the solicitor's failure to commence proceedings against the SRA within the time prescribed by s 52(4), thereby completing his cause of action against the solicitor and setting the limitation period running under the LA.

12 As an alternative to the foregoing approach, the plaintiff contends that he suffered further damage as a result of later breaches of duty by the solicitor, in relation to the application for leave under s 52(4) - see particulars (c), (d) and (e) under paragraph 5 in the statement of claim - giving rise, it is said, to further causes of action which were not statute barred by the LA when the present proceedings were commenced. 13 The claim against the SRA was unaffected by the LA. Section 52(5) of the MAA excluded the operation of that statute. 14 Vulic v Bilinsky (1983) 2 NSWLR 472 is a decision at first instance by Miles J, sitting as a judge of this Court. In that case, the plaintiff sued his former solicitors for damages, alleging negligence in failing to commence proceedings within the limitation period fixed by s 14(1) of the LA. 15 Miles J recognised (at 484-5) that limitation statutes do not operate to bar proceedings unless the statute is pleaded. That is well established: Thursby v Warren (1629) Cro. Car. 159; Lee v Rogers (1663) 1 Lev. 110; Ronex Properties v John Laing Construction Ltd [1983] QB 398, 404. Miles J reasoned from that consideration to the conclusion that the plaintiff did not suffer the damage of losing the benefit of the cause of action sued upon in the anterior proceedings until the LA was pleaded by the defendant in those proceedings. That date, rather than the date of expiration of the limitation period was therefore the date on which the cause of action against the solicitors arose. 16 This reasoning has not been adopted in later cases. Doundoulakis v Antony Sdrinis & Co [1989] VR 781 is a decision of the Full Court of the Supreme Court of Victoria. The Victorian statute provided that an action "shall not be brought" after the expiration of six years from accrual of the cause of action. Ormiston J (at 784) - like Miles J - recognised that statutes of limitation did not operate to bar proceedings unless pleaded. They barred the remedy but not the right. But that, Ormiston J said, was not a relevant distinction because both the right and the remedy were of value. (Indeed, it may be added, the right is of no value without the remedy.) 17 Ormiston J went on to say (at 785): "Howsoever one characterises this conditional immunity and this conditional barring of the plaintiff's remedy, the plaintiff is left with a remedy very different in quality from that which he had before the limitation period expired."

There was no operative provision for extension of time. Ormiston J said (at 785): "(U)pon the expiration of the limitation period on 4 August 1978, the plaintiff was deprived of his remedy against his employer, subject only to the defendant pleading the statute, and to the presently irrelevant power to obtain an extension of that limitation period. That conditionally barred remedy was then substantially less valuable than it previously had been."

And (at 786): "I cannot accept that the plaintiff suffers no damage in the relevant sense unless and until the defendant employer elects to take the defence. Neither the plaintiff nor the negligent solicitors are responsible for that election; it is left to the potential defendant employer. The employer's decision, and its effectuation, only makes certain the damage which the negligent solicitors have brought about……As I have already observed, the appellant had suffered measurable damage the moment the limitation period had expired, in that his remedy had been substantially impaired. The appellant's argument confused two matters, one, the loss of the right of action against the employer and, two, the harm suffered by the plaintiff when the limitation period for that cause of action was allowed to expire. There is no dispute that the right of action was not completely extinguished until either the defence was delivered or judgment in reliance upon that defence was entered for the defendant employer. Nevertheless, damage in the relevant sense does not necessarily require loss of a right, only that the right and the related remedy should have been impaired to some measurable or significant degree."

And (at 787): "If one remembers that it is not essential to show loss of the right of action but only significant impairment of that right, in order to establish that damage has been suffered, then it is not hard to see that the defendant's acts in failing to commence the action within the three year period resulted in significant harm to the plaintiff the moment that period had expired."

I respectfully agree with this approach. 18 I see no material distinction between the formulation in s 52(4) of the MAA ("A claimant is not entitled to commence proceedings …") and the traditional formulation ("No action shall be brought / be maintainable …" or similar wording). The remedy is adversely affected on expiration of the limitation period. The right (the cause of action) is reduced in value. In the present case, the value of the cause of action was reduced by the prospect that the defendant would plead the statute in bar (a virtual certainty) offset by the prospect that an application for leave would succeed. Unless it could be said there was no chance of leave being refused and no loss otherwise flowing from having to apply for leave, the value of the cause of action was diminished and damage was sustained on 1 July 1992. 19 It was not suggested, in the present proceedings, that a prompt application for leave would have been granted with certainty or that the plaintiff would not have been otherwise disadvantaged by having to apply for leave. 20 By s 63 of the LA, the cause of action - and not merely the remedy - is extinguished. Caution must, therefore, be exercised in utilising decisions under that legislation. Nonetheless, there are pertinent observations in those cases. In The Commonwealth of Australia v Mewett [1996-1997] 191 CLR 471, Dawson J said of s 14(1) of the LA (at 507): "Thus s 14(1) does not of itself prevent a statute-barred cause of action from continuing in existence. Of course, the value of the property comprising the cause of action would be affected by the fact that the action was statute-barred and would further be affected by such factors as the likelihood of the limitation defence being pleaded or the likelihood of the limitation period being extended." 21 In Mewett, there were differing opinions as to how and when s 63 of the LA operated to extinguish the cause of action. It is unnecessary to review that debate for the purposes of this judgment. The passage I have quoted from the judgment of Dawson J in Mewett was applied by Hidden J in Toomey v Western Aboriginal Legal Service [1999] NSWSC 560, at [13]. 22 An extensive review of the LA was provided by Wood CJ at CL in Hetherington v Mirvac Pty Limited [1999] NSWSC 443; (1999) Aust Torts Reports 81-514. The proceedings included a claim against the plaintiff's former solicitors for failing to commence proceedings within time against still earlier solicitors. His Honour cited, with apparent approval, those passages in the judgment of Ormiston J in Doundoulakis, to which I have referred, [230-233]. 23 In the present case, a cause of action was completed by the damage suffered when the limitation period under s 52(4) expired on 1 July 1992. The remedy for that cause of action is barred by operation of s 52(4). 24 That leaves for consideration the breaches of duty said to have occurred subsequently. 25 The solicitor continued to act for the plaintiff up to and including the unsuccessful application for leave. It is submitted that there was a continuing duty throughout that time to do what could reasonably be done to obtain leave. The particulars in paras (b) to (e) are said to be breaches of that duty, giving rise to further and independent causes of action which arose not earlier than six years before the present proceedings were commenced. 26 If the plaintiff had commenced the present proceedings within time but without applying for leave pursuant to s 52(4), it may be that he would have been met with a plea of failure to mitigate his loss, and might then have recovered only the value of his claim against the SRA discounted for the chance that an application for leave might have been successful. That, however, is not what occurred in this case, where the same solicitor has acted throughout, and where an application for leave - allegedly late and carelessly prepared - has failed. But for the expiration of the limitation period in relation to the cause of action which accrued on 1 July 1992, the plaintiff would have been entitled to recover as against the solicitor the undiscounted value of his claim against the SRA. A plea of failure to mitigate could not succeed because the plaintiff continued to be dependent on the advice and actions of the solicitor. Put another way, the loss of the value of the claim against the SRA was caused by the solicitor's failure to commence those proceedings within time, and there is nothing to be put in derogation of that. 27 What damage can then be said to have resulted, in the events that have occurred, from the failure by the solicitor to mount an application for leave under s 52(4) promptly and carefully? The answer is that the plaintiff has suffered no additional damage as a result of the alleged later breaches of duty, and no further cause of action can, therefore have arisen. 28 The plaintiff relies on what was said by Deane J in Hawkins v Clayton (1988) 164 CLR 539, at 589-590, concerning the situation where a solicitor's breach of duty has precluded the plaintiff from commencing proceedings against the solicitor within time. I respectfully agree with the treatment of this point by Wood CJ at CL in Hetherington (at 66,022-66,023), applying what was said by Gleeson CJ in Sampson v Zucker (NSW Supreme Court, CA, 11 December 1996, unreported). In those two cases, as in the present case, the conduct of the solicitor, constituting breach of duty, did not effectively preclude the plaintiff from doing anything. I respectfully prefer that approach to the decision of Demack J in Gorton v The Commonwealth of Australia (1992) 2 Qd R 603. 29 The result can be tested in this way. Assume a solicitor fails to commence proceedings within time and ceases to act immediately thereafter, without telling the client he had a cause of action or that he should now make an application for leave. Time to sue the solicitor runs out. The client is statute-barred. Now assume the solicitor, having failed to commence proceedings within time, continues to act, as in the present case, and does as the solicitor is alleged to have done in the present case. Can it be that the client is not statute-barred in the present case, where the solicitor has done something, but is statute-barred in the first case where the solicitor has done nothing? That would be an unreasonable result. A construction of the legislation leading to such a result is unlikely to have been intended and is to be avoided. 30 For these reasons, I decide the separate question as follows. I hold that the plaintiff's claim in the present proceedings is answered in whole by the plea pursuant to s 14(1) of the LA appearing in para 6 of the defence. 31 It follows that there should be a verdict and judgment for the defendant in the proceedings, with costs, including the costs of the hearing of the separate question. **********

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