Solicitors for the Plaintiff: Dobson Mitchell and Allport

Solicitors for the Defendants: Murdoch Clarke Cosgrove and

CRAWFORD J The plaintiff sues the defendant, a firm of solicitors, in negligence and for breach of a contractual duty, based on a failure to advise her that upon settlement in June 1990 of her claim for damages for personal injuries she would be precluded from obtaining a social security benefit or pension until 23 July 1992.

2.On about 18 September 1986 the plaintiff was injured in the course of her employment as a nurse's aid and in about August 1987 she retained the defendant as her solicitors to act on her behalf to institute proceedings to recover damages from her employer in respect of those injuries. At all material times Mr C P R Hill, a partner in the firm, was the legal practitioner who acted for her. He caused an action to be instituted. It was defended by the employer.

3. Mr Hill gave evidence that he now has no recollection of most of the conversations he had with the plaintiff and others. But he made, or caused to be made, entries on his file in which he recorded the substance of much of those conversations and I am satisfied that insofar as he did so the entries are accurate. For many of my findings of fact I have relied on his file. Where there is a conflict between his notes and entries and the evidence of the plaintiff I prefer to rely on the entries particularly because they are contemporaneous records and I am satisfied that Mr Hill was a witness of the truth. Although I had no reason to doubt that the plaintiff believed that she was telling the truth when she related conversations and other events, there were a number of occasions during her evidence which raised considerable doubts in my mind as to the accuracy of her recollection. In addition she had a tendency to reconstruct conversations, although I do not say dishonestly.

4. The plaintiff was in receipt of what is commonly called weekly workers' compensation until the statutory limit under the Workers' Compensation Act 1927 was reached on 15 March 1990. Workers' compensation then terminated. That caused her much distress for the amount of "weekly compensation" was about $1,000 each fortnight (according to a note made by Mr Hill) and she owed money to a credit union and on bankcard and had other debts and financial commitments. On 21 March she telephoned Mr Hill who noted that she was tearful. The plaintiff's evidence was that Mr Hill advised her to seek payment of sickness benefits from the Department of Social Security and I find that he did. He did not dispute that he may have done so. On about 23 March she applied to the Department and shortly after commenced to receive sickness benefits, the effective date for the commencement of which was fixed at 16 March 1990 and the amount being $249.50 per fortnight (according to a note made by Mr Hill). Her income was therefore much less than before and she experienced considerable financial embarrassment.

5. On 29 March 1990 the plaintiff and Mr Hill spent about forty minutes discussing her financial problems, following which Mr Hill communicated with a bank and a credit union in an endeavour to arrange relief from the plaintiff's financial responsibilities until her claim for damages had been resolved. On 2 April the employer's solicitor told Mr Hill that an offer in settlement "won't be too long forthcoming". On 23 April the plaintiff telephoned Mr Hill complaining that she could not afford $36.40 per fortnight which the Department of Social Security had informed her would be deducted from her sickness benefit in repayment of a debt she owed for unemployment benefits overpaid many years before. At her request Mr Hill contacted the Department in an effort to have the matter reconsidered and if possible to have the Department wait for payment until the damages claim had been settled.

6. During the last week of April and up until 23 May Mr Hill telephoned the employer's solicitors a number of times in an attempt to expedite the making of an offer of settlement. The plaintiff continued to experience financial pressure and spoke to Mr Hill about that on more than one occasion. On 23 May the employer's solicitors informed Mr Hill that a letter offering $120,000 plus costs was on the way. Mr Hill informed the plaintiff of that on the same day. She was aware by then that out of the damages she would have to repay the Department of Social Security whatever she had received by way of sickness benefits and she knew that upon settlement of the claim her entitlement to sickness benefit would determine. I will return later to her belief in that regard. She also believed that she would be physically unable to earn income from employment at any time in the future. She was renting her Glenorchy home from the Director of Housing and she was keen to purchase it. Mr Hill advised her on 23 May to contact the housing services of the Department of Community Services to ascertain what the purchase would cost. On 24 May the letter offering $120,000 plus costs was received by Mr Hill. On 29 May the plaintiff wrote to the housing services seeking a valuation of the house for the purposes of sale to her.

7. On 30 May Mr Hill spent about 1 1/2 hours with the plaintiff concerning the offer of settlement and as a result, on the same day, he telephoned the employer's solicitor with a counter offer of $135,000 intending it to be inclusive of costs. The employer's solicitor telephoned back shortly after to say that they could settle for $135,000 plus costs. The claim was therefore settled, the plaintiff's costs being agreed at $4,000. On 31 May Mr Hill telephoned the Department of Social Security to advise of the settlement and had it confirmed to him that the sickness benefits which had been paid since March would be repayable because, in the words of Mr Hill's entry, "the preclusion period starts the date Workers' Comp payments ceased". To 17 May she had been paid $1,029.50 and a further payment of $260 was to be received by her shortly. On 5 June Mr Hill was informed by the employer's solicitors that a joint memorandum for consent judgment had been sent to him and they had written to their client for a settlement cheque. The joint memorandum was received by Mr Hill on 6 June and following signature it was despatched to the court that day.

8.A major evidential issue at the trial concerned whether the plaintiff received a two page letter dated 1 June 1990 from the Department of Social Security, the body of which contained 50 lines of type, and which informed her inter alia that as a result of the settlement she would not be eligible to receive a pension, benefit or allowance until 23 July 1992. Her evidence was that no such letter was received by her and that the only letter she received from the Department at about the relevant time was one containing three or four lines advising that payment of her sickness benefit would terminate on a specific date. She said the letter was received by her before she received the final payment of sickness benefit and it gave notice that payments would cease either on 30 April or 31 May, she could not remember which because her memory of dates was unclear. The last payment was in fact made for a period ending on 31 May and it follows from her evidence that the letter from the Department to which she was referring would have been received by her a few days before. She produced no such letter and could not account for its loss other than to say that she may have given it to Mr Hill. She said that she reacted to the letter by telephoning Mr Hill and going to see him. Mr Hill advised her to ask her son Stan to provide her with financial assistance for a little while. She was adamant in evidence that she received no other written advice from the Department of Social Security at about that time. I have no hesitation in concluding, on the balance of probabilities, that the plaintiff did not receive a letter from the Department in such simple terms and I find instead that she received the two page letter which was addressed to her at her home. There are a number of reasons for this finding.

9. By consent copies of documents from the file of the Department of Social Security were admitted in evidence. They did not include a letter of the nature described by the plaintiff but among them were copies of a number of departmental letters and notices dated 1 June which included the two page letter to which I have referred. It is an agreed fact in this case that in the ordinary course of business of the Department it was the practice for a letter such as the two page letter to be posted to the plaintiff at her home at 11 Barrett Street, Glenorchy. On the bottom of the first page of the Department's copy of the letter is a handwritten note stating, "copy of garnishee from DRV sent too." I interpret that as a reference to another document in the file, probably one which purports to be a notice under the Social Security Act 1947, s162 demanding payment of $700.31 (which I assume was the outstanding amount still due from the plaintiff's unemployment benefits overpaid many years before). There can be no great confidence that it was sent to the plaintiff along with the two page letter but it probably was for that would explain Mr Hill's entry of 7 June recording that she had telephoned saying inter alia that she "has got notices from them", the "them" clearly referring to the Department and the plurality of the word "notices" being significant. That entry is most persuasive of the fact that the two page letter was received by her.

10. Also in evidence is the defendant's file which includes a number of documents originating from the Department. They are:

1 A letter from the Department to Mr Hill, purporting to be signed

on 4 June 1990, attaching a copy of the notice under s162 dated 1

June 1990 demanding payment of $700.31. The letter bears a receipt

stamp dated 5 June 1990 which, upon the basis of Mr Hill's evidence

of the defendant's practice concerning incoming mail, enables me to

find that it and its attached notice were received by the defendant

on 5 June in one envelope.

2 A letter from the Department dated 1 June 1990 addressed to

"Shirley D Hutt, C/0- Piggott Wood and Baker" advising of the

requirement that she repay $1,289.50 for sickness benefits paid to

her and advising that attached was a notice formally requesting

payment. The letter also bears a receipt stamp dated 5 June which

I find establishes that the letter was received by the defendant in

a separate envelope to that containing the letter in par1 above.

3 A document dated 1 June 1990 identically addressed as that in

par2 and purporting to be a notice under s153(2) advising inter

alia that it had been determined that the plaintiff was liable to

pay the Commonwealth $1,289.50. I find that it was received by the

defendant in the same envelope containing the document in par2.

4 A photocopy of the two page letter to which I have previously

referred and which was addressed to the plaintiff at her home. I

find that it is a photocopy for two reasons. Firstly, the

letter-head is in a slightly lower position on the page than is the

case with the other letters. Secondly, a photocopy of a staple

appears in the top left corner. I find that the photocopy was sent

by the Department to the defendant for information purposes,

probably in the same envelope as the documents in pars2 and 3 above

and that the original was posted to the plaintiff. I repeat my

finding that the plaintiff received the original.

11 The letter which the plaintiff received from the Department explained that under PtXVII of the Social Security Act a lump sum payment period had been calculated as a result of the settlement of her claim for "compensation". It explained how that period had been calculated and that it commenced on 16 March 1990 and would end on 23 July 1992. It further explained that during that period she would not be eligible to receive unemployment benefit, sickness benefit, invalid pension and other specified benefits, pensions and allowances. It also explained that during that period (which in future I will refer to as the preclusion period) she had already been paid $1,289.50 specifically for the period 23 March to 31 May 1990 and that sum was recoverable by the Department from her lump sum settlement. The letter informed her that if she thought the decision was wrong the author of the letter could tell her how to get an independent review of the decision and how to appeal and he or she could also tell her about her rights under the Freedom of Information Act. It also informed her that the Department provided a financial information service to give information that would help current and future pensioners improve their standard of living in retirement by using their own money to their best advantage. I am unable to find whether the plaintiff read the letter in its entirety and to what extent she understood it. However I find that to some extent she found herself in a state of confusion because the advice on the letter concerning the preclusion period was at odds with advice she had been given by her medical practitioner, Dr Roberts.

12. Of particular significance is Mr Hill's entry of 7 June 1990 which was in these terms:

"Mrs Hutt rang and we spoke for 8-9 minutes and I explained to her

the position re the claim and the fact the memorandum had gone to

the Court we should have a cheque within the time anticipated. We

spoke about social security and she is going to come and see me

about that because she is (sic) has got notices from them and her

discussions with the doctor and he is going to put her on the

invalid pension etc."

13. I find that the plaintiff did not go to see Mr Hill to discuss her position with social security. There is no entry to that effect on the defendant's file and if she had sought advice from Mr Hill I have no doubt that he would have caused her to understand the effect of the preclusion period. He was aware of it.

14. Dr Roberts had been the plaintiff's doctor since 1977. He had been providing medical certificates to enable her to receive payments of sickness benefit. The plaintiff gave evidence that she was unable to recall discussing with him about going onto the invalid pension but it is clear from Mr Hill's entry that she did so. It was also confirmed by Dr Roberts' evidence that he advised her that once she had received her settlement she would be entitled to receive the invalid pension due to her physical disability.

15. I find that the plaintiff did not effectively address her mind further to the question of her entitlement to a pension or benefit. A major reason for this can I think be found in what was for her an exciting circumstance, the imminent receipt of a substantial sum of money, and her thoughts would have been directed to what she would do with it. Further to this it was clear from her evidence, notwithstanding the advice she may have received from Dr Roberts, that she did not expect to receive financial assistance from the Department of Social Security for a long time to come but instead expected to maintain herself out of the settlement.

16. The plaintiff gave evidence-in-chief and was cross-examined at length about her state of mind from about June to October 1990 concerning her possible return to financial assistance from the Department of Social Security and I accept her evidence. In June 1990 she knew that her sickness benefit had been terminated. Because the amount of the settlement was considerable she did not expect to be claiming a pension or benefit for a number of years but intended instead to maintain herself. The thought of receiving social security in the future did not enter her mind. She did not expect to claim it for at least two years and did not worry about it. She expected to put a substantial part of the settlement money aside for her own maintenance which would be supplemented with board payments from her son. Her state of mind can be seen in her answer to a question in cross-examination concerning whether she went to the Department of Social Security to ascertain her future eligibility before she started spending the money. Her answer was:

"No, sir, 'cause I knew they stopped it because of me compensation.

I knew it was no use going near 'em till I ever had to which I

thought would be years to come so naturally I didn't go near them.

I don't know how they operate."

17. In another passage of her evidence she said that when she received the settlement money she knew that the sickness benefit "was gone ... because of compensation". She agreed with the proposition that she did not ask Mr Hill "how long it would be before your sickness benefits would be restored" by saying:

"We didn't worry about it ... it never come up ... no, no - why

would I? I'm sorry. I mean, I thought with the payout then, and

the money - well that day in the office I spose I didn't think I'd

be claiming off 'em for years - with that much money. Because we

didn't know then how much the house would be either, so naturally I

thought well, I've probably got enough to pay the house and have

plenty to live for a couple of years - on that day of the cheques I

would have ... its a lot of money."

The defendant's counsel then put to her that she thought she would have enough to live on for a couple of years and she replied:

"Oh easily. I had no time for social security. You know what I

mean? I thought - it was the furthest from me mind because I

thought I probably wouldn't claim for a couple of years, so I never

ever worried about them. I had enough money to keep myself."

18. Judgment for the plaintiff for $135,000 plus $4,000 costs was entered on 14 June 1990. The settlement cheque was received by the defendant on 20 June. In the course of a telephone conversation that day it was resolved by the plaintiff and Mr Hill that out of her share of the proceeds he would repay what was due to the Department of Social Security and she would pay her creditors. She would call on Mr Hill later that day to collect what was due to her and before doing so she would check with financial institutions for the best interest rates available for investment. Having done that she attended on Mr Hill and he gave her two cheques, one for $100,000 and the other for $30,010.19. He sent $1,989.81 to the Department of Social Security in discharge of her obligations there. I presume that the balance of the settlement was applied by Mr Hill in payment of his firm's costs and certain out of pockets. The plaintiff was happy with these arrangements. According to Mr Hill's entry their conversation included a discussion about investment of her money and she told him that she had not received a response from the housing services concerning her interest in purchasing her home. Their meeting that day lasted approximately three quarters of an hour and no doubt much was discussed which was not recorded in Mr Hill's entry and which was not related in evidence by either of them. Mr Hill has no personal recollection of the conversation. The plaintiff gave evidence that she told Mr Hill that she would "put the $100,000 in the high interest place for the time being until we thought out what to do, and the $30,000 would pay debts and all, get rid of them fast because they were really putting the pressure on." Although I cannot find that they discussed the likelihood of her resuming receipt of a Social Security pension or benefit some time in the future, there can be no doubt that in the minds of both of them they did not expect that would occur for a considerable length of time and in particular she did not expect to do so for at least two years.

19. Within four months of receiving the $130,010.19 the plaintiff spent it all. Of that sum $100,000 was initially deposited and $4,138.56 interest was earned. On 24 October 1990 she withdrew the balance in the deposit account, then amounting to $84,564.38 and applied it to the purchase of her home. She was then left without funds.

20. The housing services file reveals that a letter dated 21 June 1990 was sent to her advising that the home was not available for sale. She made representations to the housing services and to the Minister for Community Services and the decision was reversed. On 10 August a letter was sent to her offering the house for sale for $81,000.00. She signed a form which was dated 24 September accepting that offer. Mr Hill forwarded that form to the housing services on that day. He then passed the responsibility for completing the purchase on behalf of the plaintiff to another solicitor in his firm. Settlement of the sale was completed between 24 and 26 October.

21. At some time between June and September the plaintiff and Mr Hill had a conversation about the purchase of the house. She had thoughts of borrowing $20,000 of the purchase price so that she would have about $20,000 in cash available to her in reserve. Mr Hill persuaded her not to do so because the interest on the borrowed money would exceed the interest she would earn on the money retained. I find that the plaintiff did not explain to Mr Hill that she would have nothing left if she paid for the house nor that she had any expectation of applying for social security.

22. When in September 1990 the plaintiff decided to purchase the house notwithstanding that it would take all the money she had left, she must have believed that she could turn to social security as a source of income once the purchase was completed. I have little doubt that Dr Roberts had encouraged her to believe that, for it was confirmed by his evidence, by what she said to Mr Hill on 7 June 1990 and by what she said to an employee of the Department of Social Security on 26 October 1990 (which was recorded as "she said her doctor wanted to put her onto the Invalid Pension").

23. On 26 October 1990 the plaintiff went to the Department of Social Security to apply for a pension and was told that she would not qualify until July 1992. She was very upset and had difficulty believing it. On about 29 October she spoke to Mr Hill by telephone. He apologised to her for not advising about the preclusion period. The version of that conversation given by the plaintiff in evidence was I believe an unconscious reconstruction and I do not accept all of it. I do not accept that he told her that the two page letter of 1 June addressed by the Department to her at her home had been sent to him by mistake, nor do I accept that he said he had not bothered reading the relevant part of it. He did tell her that a copy of the letter had been sent to him and that it contained advice about the preclusion period. He offered to assist with the provision of a loan through his firm to be secured by a mortgage over her home.

24. In the pleadings it is admitted that the defendant owed the plaintiff a duty of care. That I think is an admission of the existence of a duty under the law of negligence. It is also admitted in the pleadings that it was a term of the retainer by the plaintiff of the defendant to act on her behalf in relation to her injuries and to institute proceedings to recover damages in respect of those injuries from her employer, that the defendant would exercise reasonable care as her solicitors. That is an admission of a duty under the contract between them.

25. The admitted tortious duty of care takes the court only a short way for, as was said by Brennan J in Hawkins v Clayton (1988) 164 CLR 539 at 549, "that description is not adequate to bring out the nature of the duty which the plaintiff must establish". Counsel for the defendant in his closing address submitted that the duties owed by the defendant to the plaintiff in tort and under the contract were identical. I am not convinced that they were, but there is no need to determine that question on this occasion.

26. There is no evidence that the defendant was retained by the plaintiff to advise her of the effect of the receipt of damages on her entitlement to social security, but that consideration alone is not sufficient to defeat her claim. This kind of question was addressed by Deane J in Hawkins v Clayton (supra) at 579:

"The relationship of solicitor and client is, as has been seen, a

relationship of proximity which ordinarily involves the combination

of those elements with respect to foreseeable loss which may be

caused to the client by the performance of professional work. It

is a relationship of proximity of a kind which may well give rise

to a duty of care on the part of the solicitor which requires the

taking of positive steps, beyond the specifically agreed

professional task or function, to avoid a real and foreseeable risk

of economic loss being sustained by the client. Whether the

solicitor-client relationship does give rise to a duty of care

requiring the taking of such positive steps will depend upon the

nature of the particular professional task or function which is

involved and the circumstances of the case."

In that passage Deane J was referring to a duty which may exist to take positive steps, that is to say a duty not to make omissions so to avoid economic loss to another.

27. In the context of reliance, as a criterion of proximity in the law of negligence, Gaudron J at 596 made the point that although the duty of care had come to be expressed in cases in terms of the exercise of care in the giving of information and the breach had come to be expressed in terms of negligent misstatement, "the duty which is asserted is, in essence, a duty to exercise reasonable care to give reliable information, information on which the other might rely as the basis for making an informed decision." Gaudron J was dealing with circumstances involving an omission to give information. She continued:

"Thus a relationship of proximity may be constituted by the

reasonable expectation of a person (including a reasonable

expectation that would arise if he turned his mind to the subject)

that the other person will provide relevant information or give

reliable information, if that expectation is known or ought

reasonably to be known by the person against whom the duty is

asserted. Of course, the foreseeability of the risk of injury is

necessarily relevant to a consideration of the reasonableness of

expectation."

28. In an action against a solicitor for negligence resulting in financial loss Ruttan J in Tracy v Atkins (1977) 83 DLR (3d) 46 at 54 considered a submission by the defendant that liability could exist only for an act or statement of commission, but not omission where no advice had been given at all. He rejected this and said that "failure to give advice or direction when the circumstances called for such, it is as much a breach of duty as when wrong advice is tendered".

29. The standard of care to be observed by a person with some special skill or competence is that of the ordinary skilled person exercising and professing to have that special skill. Cook v Cook [1986] HCA 73; (1986) 162 CLR 376 at 383-4; Papatonakis v Australian Telecommunications Commission [1985] HCA 3; (1985) 156 CLR 7 at 36; Rogers v Whitaker [1992] HCA 58; (1982) 109 ALR 625 at 631. It is for the courts to adjudicate on what is the appropriate standard of care.

30. The breaches of the duties which are alleged by the plaintiff against the defendant are two-fold. Firstly, there is the failure of the defendant to advise her of the notice it had received from the Department of Social Security that as a consequence of receipt of the settlement monies she would be precluded from any form of pension or social security benefit until 23 July 1992. Secondly, there is the failure of the defendant to advise the plaintiff at or around the time of the settlement of the effect that the receipt by her of a lump sum in settlement of her claim would have on her entitlement to receive a benefit or pension. These alleged breaches therefore raise the proposition that Mr Hill was under a duty to the plaintiff to pass on to her the information he had received from the Department of Social Security concerning the preclusion period and that also, or in any event, he was under a duty to advise her of the law concerning the preclusion period and how it would apply to her.

31. I am not persuaded that the defendant breached the duty of care it owed the plaintiff by failing to pass on the information it had received from the Department, particularly the information which was contained in the photocopy Mr Hill had received of the two page letter dated 1 June 1990 from the Department which was addressed to her at her home. A solicitor in the circumstances of Mr Hill was entitled to believe that she had received that letter, the basis for that belief being supported by her statement to Mr Hill on 7 June that she had received notices from the Department. It would have been apparent to Mr Hill from his dealings with her that she knew full well that her present entitlement to a pension or benefit would terminate on settlement of her damages claim and that she would be required to repay the sickness benefits she had received since March. It would also have been apparent to him that for at least some time to come she expected to support herself out of the damages and not from social security. There being reasonable grounds for believing that she had received from the Department written advice that a preclusion period would operate until 23 July 1992 and an explanation as to how it would operate, it is not reasonable to expect that a solicitor in Mr Hill's position would have passed on to her his copy of the letter she had already received.

32. But I find that upon being informed by the plaintiff on 7 June 1990 that her doctor was going to put her on the invalid pension, Mr Hill had a duty to ensure that she understood the advice she had received from the Department and that she understood that by reason of the settlement she would be disentitled to social security until 23 July 1992. He should have been alerted that there was a real risk that the plaintiff did not understand her legal position concerning social security, that she might conduct her financial affairs on the assumption that she would be entitled to an invalid pension when that was not the case and that she might suffer some form of economic loss as a result.

33. I have not overlooked that according to the note made by Mr Hill of the conversation of 7 June the plaintiff foreshadowed that she would see him about social security. He was entitled to expect that she would do so in the near future. It may be inferred that in the excitement of receiving the damages she overlooked seeking advice from him about social security thereafter. But notwithstanding that she did not seek it, I am not persuaded that Mr Hill was relieved of the duty to provide the advice she needed. Advice that the law would absolutely prohibit the receipt by her of any form of social security until 23 July 1992 and that any suggestion she had received from her doctor that she might be entitled to a pension should be put out of her mind could be provided to her in a few words. A risk of economic loss to her was foreseeable by a solicitor in the position of Mr Hill. It was not far-fetched or fanciful and it could have been removed by Mr Hill without difficulty or inconvenience. See Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 at 48.

34. I therefore hold that the defendant breached its duty of care to the plaintiff by failing to advise her at or around the time of the settlement of the effect that the receipt by her of the damages would have on her continuing entitlement to receive a benefit or pension from the Department of Social Security.

35. The damage suffered by the plaintiff was substantially the result of her own fault. She failed to read or to read with sufficient care the letter from the Department of 1 June 1990. If she had done so it should have been apparent to her that the law would prevent her from receiving social security until July 1992. I find, based on Mr Hill's note of their conversation of 7 June, that at least to some extent she realized that there was a conflict between the advice she had received from the Department and the advice she had received from her doctor. She believed that she had need of some advice concerning her future entitlement to social security. Notwithstanding that she told Mr Hill that she would seek his advice she did not do so. When comparing her share of the responsibility for her damage with that of Mr Hill I also have regard to the fact, which I find, that by the conclusion of their meeting on 20 June 1990 she gave Mr Hill the impression that in the immediately foreseeable future she expected to maintain herself exclusively out of the damages sum and the interest which would be earned from the investment of most of it. I hold that the plaintiff's share in the responsibility for her damage is equal to that of the defendant and that her total damages should be reduced by 50 per cent.

36. Upon settlement of her claim for damages the plaintiff received a capital sum of $130,010.19 and between its receipt on 20 June 1990 and 24 October 1990 interest of $4,138.56 was earned by her, total receipts being therefore $134,148.75. The evidence accounted for the following expenditure by her:

Debts paid by the plaintiff on settlement in June 1990:

Bankcard $6,395.87

Fitzgeralds a/c 274.55

Savings and Loans Credit Union

(in her son's name but the debt

was incurred for her benefit) 5,200.00

Bankcard (in her son's name but

the debt was incurred for her) 2,005.48

Island State Credit Union 800.00 $14,675.90

Payments to or for her son's benefit in return for his generosity

to her:

Fitzgeralds a/c 241.76

Gift to son 5,000.00

Later repaid by son 2,000.00 3,000.00 3,241.76

Expenditure on improvements to and maintenance on her home:

Awnings, flyscreens and security

doors 4,500.00

Glass extension at back 2,500.00

Painting inside and out 1,300.00

Repairs by plumber to burst

water pipe 350.00

Garden improvements including

scoria, 2 concrete swans, fruit

trees and new lawns 500.00 9,150.00

Paid on settlement of purchase of the house 84,760.15

Furniture, furnishings and equipment for the house:

Washing machine 350.00

Lawnmower 500.00

Manchester 1,000.00

Carpets and curtains 800.00

Loungesuite, lamp and video

cabinet 1,630.00

Refrigerator/freezer, wall unit

and secondhand television 1,000.00 5,280.00

Plaintiff's trip to Sydney to visit her mother for 3 weeks:

Plaintiff's airfares 350.00

Spending on herself 500.00 850.00

Son's airfare 350.00

Son's spending money 250.00 600.00

Expenditure on Sydney relatives:

Mother - hairdresser 65.00

heater 70.00

Niece - cassette player100.00

clothes 300.00

Nephew - car 1,500.00

Plus miscellaneous expenditure

not explained 5,000.00 6,450.00

$123,557.81

Expenditure over that four month period which was not accounted for by the plaintiff was therefore $10,500 in round figures. No doubt some of that was spent on rent and general living expenses.

37. Upon the plaintiff learning at the end of October 1990 that she would not be eligible for social security until July 1992, Mr Hill offered to arrange a loan to provide her with funds in the meantime. He intended that any loan would be secured with a mortgage over her unencumbered home. She did not respond to that offer. Her explanation in evidence was that she did not want to mortgage her home. Instead she turned initially to her bankcard facility to maintain herself, mainly by drawing cash when needed. She commenced to use her bankcard account in this way on 26 October 1990 when it had an existing debit of $535.26. Her credit limit on the bankcard was $6000 and she reached the limit in September 1991.

38. In March 1991 her son obtained a personal loan of $3,500 from Savings and Loans Credit Union to provide her with further funds. In May 1991 he obtained a further personal loan of $2,500 from that credit union for her benefit. By September 1991 the funds provided by those loans had been exhausted. The credit union then agreed to advance her son up to $20,000, the advance being secured by way of mortgage over her home. On 16 September 1991 substantial drawings on that facility were made. $5,983.01 was drawn and paid to the plaintiff's bankcard account to satisfy its debit. $5,813.17 was paid in discharge of her son's liability on the personal loans. Two other drawings totally $2,700 were made that day and thereafter until May 1992 $350 was drawn each fortnight. The Credit Union agreed to advance a further $2,300 in about July 1992.

39. In October 1991 the plaintiff commenced once again to draw on her bankcard account which had ceased to be in debit the previous month. She reached the $6000 credit limit once again in April 1992. In March 1992 her son gave her the use of his bankcard facility. His credit limit was $2000 and by September 1992 that limit had been reached by the plaintiff.

40. All of the borrowings to which I have referred incurred interest charges, taxes and fees and regular repayments were required. Some of the money borrowed was applied to make those repayments. The evidence at the time of the trial showed the following debt situation:

Plaintiff's bankcard debit at 14 September 1992 $5,958.31

Her son's bankcard debit at 23 September 1992 $1,996.84

Savings and Loans mortgage loan at 30 September 1992 $20,664.54

Total: $28,619.69

41. The evidence revealed that the following interest, taxes and fees had been incurred:

Plaintiff's bankcard to 14 September 1992 $1,512.36

Her son's bankcard to 23 September 1992 $188.41

Savings and Loans (all loans) to 30 September 1992 $4,777.76

Total $6,478.53

42. The plaintiff gave evidence that if she had known that she would have no entitlement to social security until July 1992, she would have retained $100,000 earning interest in a bank and maintained herself out of that interest and out of payments received from her son for board. She clearly accepted that the balance of the damages would have been expended by her in repayment of outstanding debts, on a trip to Sydney and on other things. She maintained however that she would not have spent as much as she in fact did on items such as improvements to her home, furniture, clothing and gifts. She further maintained that she would not have purchased her home when she did because she would have needed to retain the $100,000 for its earning capacity. She accepted that once she commenced to receive an income from other sources, she may well have purchased it. Counsel for the defendant submitted that as it is departmental policy not to sell a house such as that of the plaintiff, because it is not in what is commonly known as a housing department area, she would not have purchased it once July 1992 arrived. However the same policy existed in 1990 and she was able to persuade the Minister to authorise the sale then. There is therefore every reason to expect that she could have done so at a later time.

43. Counsel for the defendant also submitted that it should not be accepted that the plaintiff would have retained $100,000 on investment if she had known of the preclusion period. This submission was based particularly on her evidence that by the end of August 1990, when she had a little over $85,000 left invested, the thought of returning to social security for financial support had not entered her head. The answer to this submission however is that the plaintiff was not aware of the need to have enough upon which she could live until July 1992. If that had been impressed in her mind the need for careful financial planning would have been apparent. I accept her evidence on this matter as an appropriate basis for assessing damages.

44. I assess the plaintiff's damages for financial loss including the following items.

45. This item includes interest, taxes and fees paid on money borrowed by her. The evidence showed that to various dates in September 1992 these costs amounted to $6,478.53 and I assess the likely further costs to the date of judgment in the sum of $3,200, making a total of $9,678.53. However in this regard I allow only $9,000 because I am satisfied that the plaintiff failed to take reasonable steps to mitigate her loss. Notwithstanding that Mr Hill offered to arrange a loan, which would have been at a much lower rate of interest, she initially used her bank card and to a substantial extent she relied on it and the bankcard of her son thereafter, thereby incurring a much greater rate of interest than she could have obtained elsewhere. It is unreasonable that the defendant should be required to bear the full extent of her borrowing costs in these circumstances.

46. This item includes notional income on $100,000 on the assumption that the plaintiff would have invested that sum and not purchased her house until July 1992. After reducing it by the amount of income tax she would have had to pay on the income and by the amount of rental she would have paid for her house I allow $14,904.79.

47. This item includes payments made by the plaintiff for rates, land tax and insurance on her house which she would not have paid if she had continued to rent. I assess $2,390.73.

48. Damages for financial loss are therefore assessed at $26,295.52. Counsel for the plaintiff submitted that there should be included in the damages a sum representing money she would not have spent on gifts to members of her family and on renovations to her home and other items. I am not persuaded that it is reasonable to do so. Much of her expenditure between June and September 1990 would have been incurred in any event and a significant part of it was spent on capital items the benefit of which she enjoys and will continue to enjoy. I am satisfied that if she had realized the effect of the preclusion period she would eventually have purchased her house anyway and she would have spent the balance of the capital sum on items similar to those on which she in fact spent it.

Damages for Distress 49. Prior to learning in October 1990 that she would be without income until July 1992, the plaintiff was severely affected by physical injury previously sustained. She was prone to headaches, severe neck pain, altered sensations in her arms, pain in her legs and had other physical problems. Upon learning that she would be without income for the next 21 months she became depressed. She became easily upset and tended to break down and cry for no reason apparent to her. She lost weight. She suffered severe headaches, worse and more frequent than would otherwise have been the case. Her sleep at night became interrupted. Her depression and distress worsened her experiences of pain which arose from her pre-existing physical defects.

50. After listening to both the plaintiff's medical practitioner, Dr Roberts, and to the defendant's expert, Dr Pargiter, I am not satisfied that her condition can correctly be labelled as post-traumatic stress syndrome as claimed by Dr Roberts. But she has been in a state of depression which has materially affected her life since October 1990 and she is entitled to be awarded a sum of money for it as part of her damages. Clarke v Shire of Gisborne [1984] VicRp 77; (1984) VR 971. Once she has adjusted her financial affairs, which have been thrown into disarray by the defendant's breach of duty, these consequences will pass. The sum of $7,000 will be included in the damages under this head.

51. I therefore assess damages in the sum of $33,295.52. After allowing for the plaintiff's responsibility for her damages there will be judgment in her favour against the defendant for $16,647.76, being one half.