Toomey v WALS

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION No 500054 of 1997 Central West Registry

HIDDEN J Thursday 10 June 1999 Geoffrey Brian Toomey v Western Aboriginal Legal Service Ltd Reasons for judgment

1 At the outset of this judgment I should record that I informed counsel for the parties of my association, as employed solicitor and as counsel, with the original Aboriginal Legal Service throughout the 1970s and of the fact that, in more recent years, I was briefed as counsel on at least one occasion by a solicitor employed by the defendant. (That solicitor is not the person said to have furnished the advice giving rise to these proceedings, with whom I have had no contact.) I was informed that neither party objected to my hearing the matter, at least for the limited purpose for which it was listed before me. 2 On 12 January 1981 the plaintiff suffered spinal injuries when he dived into the Macquarie River near Wellington, striking his head on submerged rocks. As a result he is a quadriplegic. He alleges that his injuries were the result of the negligence of a number of statutory authorities for reasons which, for present purposes, I need not examine. He further alleges that in early 1985 he consulted a solicitor employed by the defendant, who advised him that he had no basis for an action for damages for negligence against anyone. 3 In December 1994 the plaintiff sought advice from other solicitors, who considered that he may have a cause of action. In November 1995 they lodged an application on his behalf to extend the limitation period for that purpose. On 8 December 1995 Master Greenwood granted the application, so as to enable proceedings to be commenced against the statutory authorities to which I have referred. However, those authorities appealed against the Master's decision and that appeal was allowed by Ireland J on 21 February 1997. 4 As a result, the plaintiff has instituted the present proceedings for damages against the defendant, alleging that the original advice that he had no claim arising out of the accident was negligent. The grounds of defence assert that this claim also is statute barred. As I have said, the accident occurred on 12 January 1981 and, as the law then stood, the limitation period for any action arising from it expired on 12 January 1987. It is the defendant's case that any cause of action against it for negligent advice accrued on the following day, 13 January 1987, so that that action itself became statute barred on 13 January 1993. The current proceedings were not commenced until July 1997. 5 The only question I am asked to decide is whether this defence under the Limitation Act 1969 is made out. For this purpose I shall assume that the plaintiff had a good cause of action against one or more of the statutory authorities arising from the accident and that he was negligently advised by a solicitor employed by the defendant, although the defendant concedes neither of those things. 6 The limitation period for bringing an action against the defendant was six years after the cause of action first accrued: s14(1)(b) of the Limitation Act. The critical question is when that course of action accrued. It is not possible to extend the six year period. The only provision for extension of a limitation period is in Part 3, Division 3, which relates only to actions for damages for personal injury. It was those provisions which were relied upon in the application before Master Greenwood and the appeal to Ireland J relating to the original cause of action. The present action is for economic loss arising from the loss of an opportunity to pursue a claim for personal injury: Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394 at 402-3. 7 A cause of action in negligence accrues when damage first occurs: Hawkins v Clayton (1988) 164 CLR 539 per Brennan J (as he then was) at 561, Deane J at 587 and Gaudron J at 599 ff. As Gaudron J observed (at 601), to determine when damage first occurs in actions for economic loss it is necessary to identify precisely the interest said to have been infringed. Her Honour's approach was adopted by other members of the Court in Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514, in the joint judgment at 527 and per Toohey J at 555-6. The Court has rejected any "general overriding qualification" to the effect that a limitation period does not begin to run "until the stage is reached when the plaintiff discovers, or could on reasonable inquiry have discovered, that the loss has been sustained": Wardley per Deane J at 540. 8 Nikolaou and the case which the High Court heard immediately before it, Johnson v Perez (1988-89) 166 CLR 351, were concerned primarily with how damages in actions for professional negligence of this kind should be assessed. It is clear from the judgments in both cases that their Honours considered the plaintiff's loss to have occurred when he was deprived of his opportunity to pursue his claim for damages in the original action. In Johnson v Perez that opportunity was lost when the action was dismissed for want of prosecution. In Nikolaou, as in this case, it was when the action became statute-barred. In the latter case, in the joint judgment at 404, their Honours said: For reasons which are set out in some detail in Johnson v Perez, his Honour should have first focussed on Mr Nikolaou's situation when his claim for damages for personal injuries became statute-barred. He should have assessed damages by reference to the loss at that date of the right to claim damages. 9 The same view had earlier been taken in Doundoulakis v Antony Sdrinis & Co [1989] VR 781, in which it was held that a cause of action against a solicitor for negligently failing to institute proceedings within a limitation period is complete when that period expires. Ormiston J, who gave the leading judgment, referred to the familiar distinction between barring the remedy and barring the right, the right to sue being lost only if the limitation period is pleaded in defence. His Honour said (at 785): It is the barring of the remedy which is critical in a case such as the present, corresponding as it does to the immunity which the defendant then acquires, albeit it is an immunity he may not choose to assert. 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. 10 In that case, the appellant had wished to bring proceedings for personal injury against his employer but claimed that his solicitors had failed to commence the proceedings within time. Ormiston J found that he had "suffered measurable damage the moment the limitation period had expired, in that his remedy had been substantially impaired". His Honour continued (at 786): 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. 11 His Honour concluded (at 787) that the appellant's remedy in the original action was lost "when his unfettered right to sue his employer became statute-barred, subject only to the employer choosing not to rely upon its rights". It was then the damage was suffered and the cause of action against the solicitors was complete. 12 For present purposes it is unnecessary to consider s63(1) of the Limitation Act, the effect of which is that a cause of action in tort is extinguished upon the expiration of the relevant limitation period. In particular, it is unnecessary to enter into the debate whether the plaintiff's original cause of action was extinguished upon expiration of the limitation period, subject to the possibility of revival in the event of a successful application for extension under Part 3, Division 3, or whether it was extinguished only when an extension was refused by the judgment of Ireland J referred to earlier: Commonwealth v Dixon (1988) 13 NSWLR 601 per Hope JA at 609-10; Commonwealth v Mewett (1997) 191 CLR 471 per Dawson J at 507-10, Toohey J at 515-7 and McHugh J at 522-3. 13 Provision in the Act for an application for extension does not alter the fact that, when the limitation period expired, the plaintiff's remedy was "impaired to some measurable or significant degree": Doundoulakis (supra). In Mewett, Dawson J was of the view that s14(1) of the Act bars the remedy but does not extinguish "the underlying cause of action" (at 509). He considered that extinguishment under s63(1) occurred only when an application for extension of time had been refused or the opportunity to make it had passed. Albeit in a different context, some of his Honour's observations (also at 509) are relevant for present purposes: Thus s14(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. 14 Accordingly, the plaintiff's cause of action against the defendant first accrued when his original action became statute-barred. It was then that the limitation period in which to bring the present action began to run, pursuant to section 14(1). 15 Counsel for the plaintiff referred to a passage in the judgment of Deane J in Hawkins v Clayton (at 590), in which his Honour considered that "the reference in s14(1) of the Act to the cause of action first accruing should be construed as excluding any period during which the wrongful act itself effectively precluded the institution of the proceedings". In that context, his Honour referred to the equitable notion that it would be unconscionable to permit reliance upon a limitation provision where a cause of action had been concealed until after the relevant period had expired: see now s55 of the Act. It would be unconscionable for the defendant to rely upon the limitation period in the present case, it was said, because the plaintiff's predicament is entirely the result of the negligent advice he was given by the defendant's employed solicitor in 1985. 16 In Hawkins v Clayton the behaviour of the solicitors was such that the appellant was unaware for some years of the facts upon which an action against them might have been brought. That is not this case. At any time after receiving the solicitor's advice in 1985, the plaintiff could have sought another legal opinion, as he finally did in December 1994. The distinction between Hawkins v Clayton and a case such as the present was drawn in Sampson v Zucker (Court of Appeal, unreported 11 December 1996) per Gleeson CJ at p4ff. In any event, as the Chief Justice observed, the view of Deane J in Hawkins v Clayton was not applied by the other justices of the High Court in that case. 17 The decision of Master Harrison in Grew v Walsh (unreported, 16 October 1997), upon which counsel for the plaintiff also relied, takes the matter no further. That was an application by the defendant solicitor that the plaintiff's action be summarily dismissed or struck out because it was statute-barred. The Master refused the application only because the plaintiff, in a reply to the defence, alleged that the defendant had fraudulently concealed the plaintiff's entitlement to bring an action against him for a significant period of time (s55). The Master concluded that he had an arguable case that there was a period of concealment. No such allegation has been made in the present case. 18 Accordingly, I am satisfied that the defence based upon the Limitation Act is made out. I shall consult counsel about the orders which should be made and, if necessary, hear argument on costs.

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