Schrader v Davidson

District Court of NSW|2008-02-07

Introduction

Mr Schrader is the principal of a firm of solicitors which negligently mishandled the work injury damages claim of a client and had to pay out $188,500.00. Contribution for that loss is now sought from the barrister to whom his firm sent a brief. Although the barrister had not formally accepted the brief, or read it, he had cast a cursory glance over the Observations. It was alleged that the barrister should have alerted the solicitors to the mistake that led to the client's loss.

The barrister denied liability and I am required to determine the following issues: · Did a duty of care owed by the barrister to the client arise? · If a duty was owed, did the barrister breach the duty? · If so, did the breach of duty cause any loss? · If so, what amount of contribution by the barrister is just and equitable?

Background 4. The client, Laurence Dickson, was injured in the course of his employment on 12 April 2001. He engaged the firm, Schraders Lawyers, to act for him in respect of his injuries. The principal of that firm was and is Mr Geoffrey Schrader, an experienced personal injury practitioner, who was admitted to practice in 1973 and by the time of these events was a personal injury law specialist accredited by the Law Society of NSW.

Mr Schrader met with the client at his home on 2 May 2001 to obtain instructions. He opened a file and personally handled the client's matter until early June when he delegated conduct of it to his employed solicitor, Jonathon Coyle, who had just been employed to undertake work injury litigation. Mr Coyle was a junior solicitor, having been admitted in 1977, who had previously been employed at McClellands for some 6 years where he had obtained considerable experience in personal injury litigation. Mr Coyle had briefed the barrister whilst at McClellands. Mr Coyle had a meeting with the client on 8 June 2001 and prepared a statement. He then drafted a Statement of Claim, which was filed on 27 June 2001. The proceedings were commenced within the 6-month waiting period required under s 151C(1) of the Workers Compensation Act 1987. Mr Coyle was not at that time aware that proceedings commenced in contravention of s 151C(1) were invalid: Sydney Ports Corporation v Collins [2003] NSWCA 28.

Mr Coyle then arranged to deliver a brief to the barrister, which he received in his chambers in early July 2001. In accordance with the usual practice the brief was placed on the barrister's desk by his secretary. It 'stood out' as unusual because it was not in a folder. The front page of the brief consisted of short Observations. Soon after receiving the brief the barrister looked at the Observations, skimming them to see if there were any special requirements. He noted that a Statement of Claim had been filed and that there was a timetable. It was his evidence that he did not notice the date of injury, not having read the first paragraph of the Observations where that date was recorded. He did, however, note that the Observations did not contain any special request, and he therefore put it aside to read at a later time. As it eventuated, he never read the brief. Nor did he ever send a fee agreement to Schraders.

On 31 August 2001 the barrister was out of chambers, at the Silverwater Remand Centre seeing a client, when he received a phone call from Mr Coyle on his mobile phone. Although it was particularly inconvenient for the barrister, he took some minutes to talk to Mr Coyle, because it was his last day at Schraders and he wanted to leave file notes on his files before leaving. They discussed 6 matters, one being the Dickson brief. The barrister indicated he had not read that brief, although he had noted proceedings had been commenced. Mr Coyle told him it was a work injury matter. In the ensuing discussion the barrister gave Mr Coyle some generic advice about obtaining a liability investigation, a view and photographs, and a medical report. He then said:

"Absent the liability and medical evidence, the matter's obviously not ready for me to see the plaintiff in conference. Send me the outstanding material so I can read it and then get someone to arrange a conference for me to see the plaintiff."

The date of the client's accident was not brought to the barrister's attention in the phone conversation, and the s 151C problem did not surface.

After the departure of Mr Coyle from the firm, Mr Schrader reassumed conduct of the file until some time in October when he delegated it to another employed solicitor. Schraders sent no further material to the barrister, and accordingly no occasion arose for him to read the brief.

If the proceedings commenced on behalf of the client had been discontinued and re-commenced after 22 October 2001, but before 27 November 2001, the client would have suffered no loss. Unfortunately, on 27 November 2001 amendments to the workers compensation legislation took effect, retrospectively limiting the compensation recoverable by way of common law damages.

Ultimately, the proceedings commenced by the Statement of Claim filed on 27 June 2001 were struck out by the court on 4 July 2002 under s 151C, whereby the client suffered the loss which is the subject of these proceedings.

The relationship between Mr Schrader and the barrister 12. The prior dealings between the barrister and the firm of solicitors are relevant to the issues for determination.

The barrister is an experienced and senior practitioner who was called to the Bar in 1982. In 2001 he had a busy common law and criminal law practice with a heavy workload. He was very ordered and disciplined in the conduct of his practice.

He met Mr Schrader in 1982 and developed a strong and enduring professional relationship. Between 1982 and 2001, Schraders briefed the barrister on a regular basis, and he received over 600 personal injury briefs in that 19-year period. The barrister developed a high level of respect for the solicitor's professionalism and found him to be highly motivated and very experienced.

Mr Schrader did not draft statements of claim, and it was his practice to retain members of the bar to do so, and obtain a preliminary advice on liability. Thus, by 2001, briefs delivered to the barrister from Mr Schrader were invariably briefs to advise on evidence and to appear. Similarly, Mr Coyle was not known as a solicitor who drafted statements of claim, and his briefs to the barrister likewise generally involved matters where a statement of claim had already been drafted by another barrister and been the subject of a preliminary advice on liability. This brief was an exception.

The barrister invariably acted for Mr Schrader's clients on a speculative basis, and it was his practice, therefore, to satisfy himself that it was appropriate to accept a brief before entering into a formal retainer by sending a fee agreement. Often, upon reading the brief, he requested further information or documentation before doing so. Only after sending a fee agreement would he then regard himself as formally retained, and arrange a conference with the client.

The close relationship between the two had developed to the point where Mr Schrader rang the barrister every weekday morning on his journey to the office between 5.20am and 5.40am, and they would talk for 20 to 25 minutes. He also often rang the barrister on weekends, and during holidays. They would discuss progress in current matters. The barrister would have anything from 100 to 150 current briefs, and Mr Schrader would bring to his attention any problems he perceived, and identify particular issues on which he wanted specific advice.

In his written statement, the barrister elucidated upon these conversations:

"It was also not uncommon for (Mr Schrader) to give me advance warnings of briefs that he intended forwarding which required urgent attention or analysis…in these circumstances, I always took specific steps to urgently read the brief and understand the issues. Thereafter, without fail, any briefs that were delivered on this basis would be the subject of early morning questions…where he would seek my views…" (2.9).

Thus, in the absence of any advance warning, specific request, or special feature in the Observations to any brief delivered, the barrister dealt with them in accordance with his normal practice. The barrister tried to read briefs within a week of delivery, but against the background of a busy practice, he often took longer. There was, however, a strong level of trust and reliance on Mr Schrader on the basis of their past relationship and the barrister's faith in the solicitor's level of expertise and 'excellent knack of identifying potential problems'.

The evidence did not suggest that the barrister was other than a respected, competent, efficient, careful and reliable counsel.

The Observations in the brief 21. The Observations consisted of one page, which read as follows:

Counsel's instructing Solicitors act for Mr Laurence Andrew Dickson in relation to an injury suffered on 12 April 2001.

CORRESPONDENCE:
Letter from Schrader & Associates to GIO Workers Compensation dated 18 June 2001.
Letter from Schrader & Associates to Labtec Pty Ltd dated 29 June 2001.

PLEADINGS
General List Timetable and Standard Directions No: 6468/01.
Ordinary Statement of Claim and Affidavit of Service filed 27 June 2001.
Statement of Particulars Pursuant to Part 9 Rule 27 filed 27 June 2001.

STATEMENTS
Statement of Laurence Andrew Dickson dated 8 June 2001.
Conference notes dated 2 May 2001.

APPLICANT'S MEDICALS
Clinical notes from Sydney Adventist Hospital dated 30 May 2001.

MISCELLANEOUS
Wage material from Labtec Pty Ltd.

Section 151C of the Workers Compensation Act 1987 (NSW) provided:

(1) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation until 6 months have elapsed since notice of injury was given to the employer.

(2) Despite subsection (1), the person is entitled to commence court proceedings against the employer if either of the following occurs: (a) the employer denies all liability in respect of the injury; (b) the employer admits partial liability in respect of the injury but the person is dissatisfied with the extent to which liability is admitted.

It was the opinion of the expert called on behalf of the solicitor that any barrister practising in common law in New South Wales in 2001 should have been aware that the provisions of s 151C imposed a condition precedent of a procedural nature that must be satisfied prior to the commencement of the proceedings. So much was not in dispute, and indeed was conceded by the barrister in evidence.

It was the solicitor's case that having read the Observations, the barrister should have seen the date of the client's accident which would have alerted him to the possibility of a breach of s 151C having regard to the fact that the Statement of Claim had been filed on 27 June 2001, less than 3 months after the date of injury, and well within the 6 months mandated by s 151C. He should then have advised the solicitor that the proceedings had been commenced in breach of s 151C, and should therefore be discontinued and recommenced on or after 22 October 2001.

In my view, even if the barrister had seen both dates, that of itself would not have put him on notice of the problem, having regard to the provisions of s 151C(2). Perhaps the highest it could be put is that if the barrister had seen the date of injury, it put him on notice of a potential problem as to which he should have read the brief or made further enquiries.

I pause here to record that a case against the barrister based on the telephone conversation on 31 August 2001 between the barrister and Mr Coyle was not pressed against the barrister. Senior counsel for the solicitor made no submissions in that regard. Nor was it ultimately disputed that no formal retainer had arisen. The solicitor's case was limited to a breach of a duty of care arising on or by 31 August 2001, the particulars of negligence being: · Failing to advise that the proceedings had been commenced in breach of s 151C, and should therefore be discontinued and recommenced on or after 22 October 2001. · Failing to read the Observations to the brief. · Failing to notice that the injury occurred on 12 April 2001.

It was submitted on behalf of the solicitor that the barrister did in fact read the Observations such that he could not have failed to note the relevant dates, and that I should not accept his oral evidence on this issue, it being contrary to his written statement (at paragraphs 2.11, 2.12, 5.4, and 5.11. Nowhere in that statement did he say, for example, as he did in cross-examination, that all he noticed was that proceedings had been commenced, and a timetable, but did not see, or did not notice, the date of injury.

I did not regard the oral evidence of the barrister as inconsistent with his written statement. His oral evidence was in amplification of his statement, and his account of having noted there was a Statement of Claim and a Timetable, then 'skimmed' the headings in the Observations looking for any specific requests, but not reading the first paragraph which contained the date of injury, rang true to me as to how a busy practitioner might have proceeded, particularly having regard to the prior relationship between the barrister and solicitor, their practice of regular consultation and the trust and reliance placed on the solicitor's competence and expertise. The barrister impressed me as an honest, straightforward witness, and there was nothing in the way he presented or in any of his evidence that caused me to disbelieve him.

I find, therefore, that the facts and circumstances surrounding the barrister looking at the Observations were as he described. In particular, he did not notice the date of injury. Nor did he notice the date of the Statement of Claim, and he made no connection between the dates such that put him on notice of the problem under s 151C.

Did a duty of care to the client arise, and if so, was there any breach? 30. It was submitted for the barrister that until a retainer has arisen between a barrister and a solicitor there can be no relationship between the client and the barrister, let alone a sufficient proximity of relationship to give rise to a duty of care to the client. In my view that cannot be accepted as an invariable proposition, and where there is a sufficient relationship of proximity and a sufficient foreseeability of loss, a duty of care can arise, even in respect of a matter beyond a retainer: Curnuck v Nitschke [2001] 176 at [8] - [11] and [58] - [59].

Once the brief was delivered to the barrister, which contained sufficient information to put him on notice of the possibility of a problem under s 151C, the potential existed for a sufficient relationship of proximity with the client to arise such as to give rise to a duty of care, having regard to the expertise of the barrister and the vulnerability of the client, irrespective of a retainer.

The question is, therefore, whether the occasion for that proximity of relationship ever arose, and if so, was the duty of care breached.

Such a sufficient relationship of proximity would have arisen if, for example, the barrister read the brief prior to 31 August 2001, or it could be said that a duty to read the brief had arisen prior to 31 August 2001. It was common ground that the barrister did not read the brief, and not ultimately contended that he should have.

Nothing was ever brought to the attention of the barrister that should have alerted him to the s 151C problem. Similarly, in the telephone call on 31 August 2001 the issues upon which the barrister advised were generic, no dates were discussed and there was nothing else in the conversation to alert him to the s 151C problem.

Accordingly, the solicitor's case rests upon the notion that the barrister should have read the Observations, or that in looking at them he should have observed that the date of injury was 12 April 2001, realised there might be a potential problem and made further enquiries, including satisfying himself that the pre-conditions in s 151C(2) did not apply.

I am not satisfied as to any of these propositions. As I have already observed, in my view the barrister's conduct in casting an eye over the Observations to see if there were any specific requests was not unreasonable conduct.

The barrister was never asked to advise on the validity of the proceedings. No particular problem with the brief had been drawn to his attention. No apparent element of urgency attached to the brief. No special or unusual features about the brief were raised in the Observations. Having regard to the prior relationship between the barrister and solicitor, in particular their practice of regular consultation and the trust and reliance placed on the solicitor's competence and expertise, the occasion for him to read the brief had not yet arisen. To expect the barrister to specifically check the date of injury and in effect to second guess the instructing solicitor would be to impose a level of perfection that in my view the law does not require.

I find, therefore, that no sufficient proximity of relationship arose such as to impose a duty of care on the barrister to the client. It follows from my findings that even if a duty of care had arisen, it was not breached by the barrister.

Was there any loss? 39. Senior counsel for the barrister submitted that any damage sustained by the client as a result of any breach of duty by the barrister would have to be assessed by having regard to the client's loss as at 31 August 2001. The loss at that time was nominal, and does not amount to 'the same damage' that the solicitor subsequently became liable for. As at 31 August 2001 any breach of duty by the defendant was capable of cure so as to avoid loss to the client. Thus, the barrister, if liable to the client, was liable for a lesser sum than the solicitor. The solicitor is not, therefore, entitled to any contribution from the barrister.

I disagree with this submission. It seems clear to me that if the barrister had breached a duty of care to the client, the loss caused would be identical to that caused by the negligence of the solicitor.

Apportionment 41. For the sake of completeness, I provide my assessment on the appropriate level of contribution, were that issue to arise.

It was submitted for the solicitor that the barrister should carry the majority of the blame, as he was the practitioner with the experience and expertise, and it was within his capacity to remedy the error and avoid any loss. Mr Coyle, on the other hand was young and inexperienced.

In my view, however, having regard to the totality of the circumstances, any contribution required from the barrister would be minimal. He did not create the problem. He was never asked to advise on the validity of the proceedings. There was simply nothing, other than a date tucked away in a set of scant Observations, to sound any warning. The file was handled not just by Mr Coyle, but also by Mr Schrader. It might be suggested that work injury matters were not his specialty area of practice, but he did after all hold himself out as an accredited personal injury specialist.

In my view, if the barrister had been in breach of any duty, any contribution required of him should only be 15%.

Disposition 45. I enter a verdict for the defendant and direct the entry of judgment accordingly.

I order the plaintiff to pay the defendant's costs, on the ordinary basis, but give either party leave to apply within 7 days if some other order is sought.

The exhibits are to remain in court for a period of 28 days, but may then be returned to the parties.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION: Schrader v Davidson [2008] NSWDC 61

CASES CITED: Curnuck v Nitschke [2001] 176 at [8] - [11] and [58] - [59]. Sydney Ports Corporation v Collins [2003] NSWCA 28

At a glance

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Judgment (58 paragraphs)

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