WALMSLEY v COSENTINO

Court of Appeal (NSW)|2001-08-16|Before: Priestley JA, Powell JA, Beazley JA

CITATION : WALMSLEY v COSENTINO [2001] NSWCA 403 FILE NUMBER(S) : CA 40715/00 HEARING DATE(S) : 16 August 2001 JUDGMENT DATE : 21 November 2001

PARTIES : Adrian Richard Walmsley (Appellant) Antonio Cosentino (Respondent) JUDGMENT OF : Priestley JA at 1; Powell JA at 2; Beazley JA at 61

LOWER COURT JURISDICTION : District Court LOWER COURT DC 7955/94 FILE NUMBER(S) : LOWER COURT Garling DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40715/00 PRIESTLEY JA POWELL JA BEAZLEY JA

21 November 2001 ADRIAN RICHARD WALMSLEY v ANTONIO COSENTINO

Judgment 1 PRIESTLEY JA: I agree with Powell JA. 2 POWELL JA: This is an appeal from a judgment delivered by Garling DCJ on 30 August 2000, on which day his Honour found a verdict in favour of the Respondent against the Appellant in the sum of $474,478 in proceedings which the Respondent had brought to recover from the Appellant damages in respect of what was claimed to be the Appellant's "professional negligence". 3 The origin of the proceedings was the injuries which the Respondent sustained in a motor vehicle accident in which he was involved on 13 August 1980. On that day the Respondent, who was then just 25 years of age and who was then a self-employed contract tiler by occupation, was driving his utility in a southerly direction along the Princes Highway near Lacey Street, Kogarah when a Mrs Upton, who had been driving her motor vehicle in a northerly direction along Princes Highway, commenced to make a right hand turn from Princes Highway into Lacey Street. As she did so, the left, or near, side portion of Mrs Upton's motor vehicle collided with the right, or off side, front portion of Mr Cosentino's utility. After the collision, Mrs Upton's motor vehicle travelled a further 20 metres and collided with an electric light pole in Lacey Street. At the time of the collision, which appears to have been in the evening, it was dark, the street lights were on, light rain was falling and the road surface was wet. The police traffic report (Exhibit Part B blue AB 385) indicated that it was proposed that Mrs Upton be "breached" for "not make right hand turn with safety". 4 It was the Respondent's case at trial that, as a result of the collision, he sustained injuries to his shoulder and his cervical spine, the sequelae of latter injury being such as significantly to impair his ability to continue to work as a contract tiler. 5 The Respondent who, at the time of the collision, had been living in Dural, appears later to have moved to live in Andrew Thompson Drive McGraths Hill near Windsor High School. In February 1981, or thereabouts, the Respondent retained the Appellant, a solicitor then carrying on practice in premises in George Street Windsor, to act for him in connection with a claim to recover damages in respect of the injuries sustained by him in the collision. Given the date of the collision, it was open to the Respondent to commence proceedings against Mrs Upton to recover damages at any time up to 12 August 1986. 6 It would seem that, having received his instructions, the Appellant sought medical reports from Dr Griffiths, the Respondent's general practitioner and Dr McGrath, an orthopaedic surgeon to whom the Respondent had been referred. At the same time, requests were made with a view to obtaining the Police traffic report and evidence as to the registration of Mrs Upton's motor vehicle and, as well, the Respondent was asked to let the Appellant have an amount on account of disbursements. 7 On 11 August, 1981 the Appellant wrote to the Government Insurance Office, which was apparently the compulsory third party insurer of Mrs Upton's motor vehicle, forwarding a copy of the police traffic accident report, certificates under s 36 of the Motor Vehicles (Third Party Insurance) Act 1942 and the Motor Traffic Act 1909 together with a copy of the report which had been obtained in the mean time from Dr McGrath. 8 Following the receipt from the Government Insurance Office of a request for particulars dated 8 September 1981, the Appellant wrote to the Respondent asking him to communicate with him (the Appellant) in order that he might obtain particulars as to the Respondent's income at the time of the accident as well as particulars of his loss since the accident and likely future economic loss. Nothing apparently having been heard from the Respondent in the mean time, the Appellant again wrote to him in January 1982 again asking the Respondent to communicate with him. 9 Thereafter, matters progressed in what can only be described as a dilatory way, delays being sustained in respect of obtaining information from the Respondent himself, from the Respondent's accountants and from the Respondent's medical advisors, those delays continuing until well into 1984. In the course of his evidence at trial, the Respondent appeared to suggest that, to the extent to which such delays could be attributed to apparent dilatoriness on his part, the delays on his part were due to the fact that he was, at the time, involved in protracted and bitter litigation in the Family Court following the break up of his marriage in 1982, a suggestion which seems difficult to accept, since the Appellant acted for him in connection with those proceedings in the Family Court. 10 Despite the delays which had occurred, and which were to continue, the Appellant did not, at any time prior to August 1986, inform the Respondent of the period within which proceedings on his behalf needed to be commenced if they were not to be time barred. 11 Eventually, in August 1984, the Appellant wrote to the Government Insurance Office forwarding particulars of the out of pocket medical expenses incurred by the Respondent, enclosing copies of the reports which had been obtained from Dr McGrath, Dr Griffiths and a Dr Bosanquet, who had carried out manipulation of the Respondent's spine in 1984 and, as well, enclosing a copy of a letter from the Respondent's accountant together with copies of what were said to be relevant tax returns filed on behalf of the Respondents. That letter produced an offer of settlement in the sum of $16,000, comprising $500 for out of pocket expenses, $4,500 for economic loss, $1,500 for legal fees and $9,500 for general damages. Despite the fact of that offer having been made being conveyed to the Respondent in November 1984 with a request that it be considered by the Respondent and his instructions given in respect of it, no such instructions appear to have been given prior to August 1985, when the Government Insurance Office wrote to the Appellant advising that, if no response to the offer were forthcoming instructions to withdraw the offer would be sought. That letter produced a letter from the Appellant forwarding an up to date medical report and further copies of income tax returns which had been lodged on behalf of the Respondent, but no counter offer was made on behalf of the Respondent. That letter concluded (blue AB 128):- "We are mutually aware that this matter has now been on foot for some five years and that it is we who have been unable to provide you with final information. This has been on the basis that the doctors remain unable to the present time to provide us with a firm prognosis. Nevertheless, our experience in these matters would indicate that it is hardly likely that our client will recover as his situation has hardly improved over the last five years. As a result, if you are not prepared to contemplate a continuing economic loss over a substantial period of time, it will be necessary for us to proceed with proceedings without further delay. In this regard, would you advise whether or not you are prepared to agree to the proceedings taking place in the District Court on an unlimited jurisdiction basis." 12 According to a brief which was delivered to Mr P J Phelan in March 1987, shortly before his elevation to the bench of the District Court, (Blue AB 88-89):- "A further letter was forwarded to the Government Insurance Office on 27 August 1985 and on 3 January, 1986 we were requested to propose a counter offer. Certain information was obtained, also advice from Peter A Gooden and Co, Accountants, and Mr Cosentino was written to on 17 February 1986. Information requested from our client was slow in coming forth and certain discussions took place with him to enable the matter to be submitted to the Government Insurance Office but this information was not able to be submitted prior to August, 1986 and it was felt that proceedings should be commenced, this was done and the statement of claim was served on 7th January, 1987. A defence was subsequently filed." (A draft of that Statement of Claim appears to have been forwarded to counsel to be settled on 8 October 1986 - that is, after the limitation period had expired - and, after it had been settled, was forwarded by the Appellant to his law stationers on 19 December 1986 for filing in the Supreme Court; despite the statement from the brief which I have set out above as to the date of service of the Statement of Claim, a diary note from the Appellant's file (Blue AB 104) seems to indicate that, as at 14 January 1987, the Statement of Claim had not been served). 13 A Statement of Defence, in which it was pleaded that the proceedings were statute barred (see Blue AB 117) was forwarded to the Appellant by the Government Insurance Office on 4 February 1987. 14 Thereafter, on 10 February 1987, the Appellant wrote to the Government Insurance Office requesting that the Defence be withdrawn and the proceedings allowed to continue "in the normal manner". In that letter, the Appellant sought an urgent reply "as, in view of the plea put on by (the Government Insurance Office), the Appellant felt that any other short delay would probably used by (the Government Insurance Office) in opposing any application (the Appellant) would make for an extension of time (an application which, incidentally, (the Appellant) felt would be more than justified in the circumstances of the negotiations, (the Respondent's) medical condition and the circumstances of (the) matter". 15 The brief to Mr. P J Phelan, to which I have earlier referred, was one of two briefs delivered to him in March 1987, the first such brief being delivered on 19 March and the second on 20 March. The nature of the first of those briefs is certainly revealed by the following paragraph from it (Blue AB 91):- "The Government Insurance Office was subsequently written to on 10 February 1987 and no reply has been received to that letter although there have been certain telephone conversations with their officers who have indicated they are prepared to continue to negotiate the matter but it is felt that in view of the defence that has been put on any amount that they would be likely to offer by way of settlement would not be acceptable to our client due to his continuing disability and loss of income. Counsel is requested to advise as to whether, in his opinion, an application for an extension of time is likely to succeed and as to any further or other steps which could be taken in the interests of our client and ourselves and, if appropriate to draft any application and advise as to any supporting affidavits or evidence that may be required, bearing in mind the continued negotiations between the Government Insurance Office and ourselves to arrive at a settlement". (My emphasis) In the second of those two briefs (Blue AB 83) Mr Phelan was asked to advise "as to his thoughts on quantum in connection with (the) matter". 16 In his Memorandum of Advice dated 16 April 1987, Mr Phelan, when dealing with the question of a possible application for an extension of time, after referring to the provisions of ss 57, 58 of the Limitation Act 1969 ("the Act") wrote:- "Regrettably, in the circumstances, I come to the conclusion that the provisions of the Limitation Act do not assist the client - and indirectly my Instructing Solicitor. Facts known were the occurrence of negligence, the identity of the person causing the negligence, and the fact that damages and injury arose, the nature and extent of that injury. Appropriate advice has been taken from one qualified and experienced in the law. As a result of that advice, of course, my Instructing Solicitor is at risk with respect to a negligence suit. It may be that under my Instructing Solicitor's policy of indemnity insurance there are clauses which necessitate disclosure to the insurer when once a risk is observed. My only advice to my Solicitor at this point of time would be to examine the clauses of his contract of insurance to see whether there are any obligations flowing from such contract, the breach of which might lead to a denial by the insurance company to indemnify my Instructing Solicitor. However, not all is lost at this particular point of time, and in spite of the Statute of Limitations I understand that the GIO is quite willing to keep up the discussions with respect to settlement and have gone on albeit intermittently over the years." 17 When, later in his Memorandum of Advice, Mr Phelan came to deal with the question of the likely quantum of damages to which the Respondent might be entitled, he commented upon the paucity of the materials which had been provided to him, particularly with regard to such matters as hospital and medical expenses, past and future economic loss and even the question of non-economic loss. However, in regard to the question of non-economic loss, he observed: "I would therefore see the range of general damages as lying between $20,000 and $30,000 depending upon what the final medical evidence is supposed to be. Interest on that range amounts to a further sum of $4,000 to $6,000. …………… I am sorry to be so imprecise but the material before me does not allow greater precision than that which is expressed above."

18 There was a meeting between the Respondent and the Appellant on 27 April 1987. Of that meeting the Respondent and the Appellant gave differing versions of what was said and done. In the course of his judgment (RAB 26-28) Garling DCJ dealt with the competing versions and resolved them in the following way: "There is only one real area of dispute. There is said to be a meeting on or about 27 April 1987 between the plaintiff and the defendant. At this time the limitation period for the motor vehicle accident claim had expired. Mr Walmsley, the defendant, said that he had a meeting with the plaintiff. He had received advice from Mr Phelan of counsel, gave it to the plaintiff who appeared to read it, and he told the plaintiff he would have to sue him. The advice refers to the claim being out of time and gives the solicitor advice in relation to two differing matters. One relates to the quantum of the claim and the other some advice to the solicitor. The defendant said that he did not tell the plaintiff that he should get separate representation. He agrees he should have. He said he remembers this meeting and what happened after reading a letter which is exhibited and is dated 28 April 1987 and after reading the advice. The plaintiff could not remember seeing Mr Phelan's advice. The plaintiff said at no time did Mr Walmsley tell him that he had to bring proceedings within a six year time period. Mr Walmsley agrees. He agrees he did not tell the plaintiff there was a six year time limit. The plaintiff says at the end he was told he would have to put in a claim against the solicitor. He did not think that meant going to court. The solicitor said he was covered by Law Cover for any claim. The plaintiff said that had he been told he would have gone to see another solicitor. Both the plaintiff and the defendant were good witnesses who did their best to give accurate and truthful evidence. The problem in this case is the time lapse. In relation to the conversation on 27 August (sic) 1987 I prefer the plaintiff's version that he did not seek (sic) the advice of Mr Phelan. Mr Walmsley said his memory came from a reading of a letter and the advice and from reading that concluded that he must have shown it to the plaintiff. However, a close reading of the letter does not reveal that. It refers to the advice Mr Phelan in relation to damages. It is just as consistent that verbal advice as often happens between a solicitor and their client was given, that is, the solicitor advised his client of the advice given by Mr Phelan without asking his client to actually read that advice. It appears to me from the letter that what he gave advice on was the quantum of the claim. He passed that information on to the plaintiff and so the plaintiff I believe did not ever see the written advice as he says. I prefer the memory of the plaintiff in this case. He was very involved in the case. He has good reason to remember it. When the solicitor, being very frank, says that his memory comes from a reading of the letter and as I have said I do not believe that is sufficient to have refreshed his memory to the extent he thinks it has." 19 The letter to which Garling DCJ referred was as follows (Blue AB 91):- "Re: YOUR ACCIDENT We refer to our conference with you on 27th inst and note that you were to consider the advice given by Mr Phelan in connection with this matter as to the amount of damages that you might reasonably expect to receive. We should be glad if you would consider the advice and let us have your further instructions and comments in connection with the matter at your earliest convenience." 20 In his judgment (RAB 28) Garling DCJ continued:- "I must say that the solicitor, Mr Walmsley, was very frank when he gave his evidence. He personally did not back away from his liability. Mr Walmsley, said that he was acting for the plaintiff, attempting to negotiate a settlement with the GIO. He acted for the plaintiff in a number of matters and indeed continued to act for the plaintiff in a number of matters until quite recently. He said they were quite friendly. Mr Walmsley says that he simply forgot to issue or to file the statement of claim. A short time later realised it was out of time. He hoped to be able to settle the case as the GIO had a policy of still negotiating even where the limitation period had expired, if there had been active negotiations underway at the time it expired. He had referred the matter to Mr Phelan and kept trying to negotiate a settlement. There was at one stage an offer of settlement of $16,000, but both the plaintiff and the defendant in this case agreed it was not enough. There was some difficulty in getting accurate wage records from the plaintiff. The matter just seemed to drift on then for a further five years or so." 21 Although it is difficult to determine exactly what happened over the course of that period of five years or so, such materials as are before the court would seem to confirm that the Government Insurance Office did, at the time, have a practice of continuing negotiations after the expiration of a limitation period. Thus, on 29 April 1987 (Blue AB 77), the Government Insurance Office requested particulars of the Respondent's employment history from 1 July 1979 to date, and, after, on June 12, 1987 the Appellant had forwarded to the Government Insurance Office certain information, arrangements were made for the Respondent to be examined by doctors retained on behalf of the Government Insurance Office. The materials which are before the Court do not reveal what, if anything, happened in the following year or so. 22 It would seem, however, that, notwithstanding the increasing delays, the Appellant still retained some hope that, in some way, an extension of time could be obtained by him on behalf of the Respondent. That this was so is indicated by the fact that, in November 1988 (Blue AB 62), another member of the bar was asked to advise whether there was any prospect of an extension of time being obtained, the advice obtained, on that occasion, being that counsel was obliged to agree with the advice of Mr Phelan (Blue AB 44). 23 Undeterred, the Appellant, in December 1988, delivered a brief (blue AB 59-61) to another member of the bar to advise, counsel's advice, given in March 1989 (Blue AB 52-53), on this occasion being:- "There is a basis for pleading a reply to the GIO's defence by alleging confirmation but there are obvious omissions of documents in the brief and the possible omission of further documents which cover a crucial negotiating period in 1984 and could allow an extention (sic) of limitation to enable this statement of claim to fall within time. I shall be glad to discuss this file with you in its entirety if you have some time to spare in the city at a mutually convenient time. In the mean time, I should advise you to notify your insurers of a possible claim. From my recollection the terms of your policy would not allow you to file a reply to their defence without placing your indemnity in jeopardy. However, in presenting your claim to the insurer I have no doubt it would be of considerable assistance to them if you proposed the above defence and supported it with the necessary documents on which it could be pleaded." 24 After a further delay of some two and a half years during which, so far as the materials which are before the Court reveal, nothing happened, (Blue AB 34-37) a brief was delivered to yet another member of the bar to advise. That brief concluded (Blue AB 37):- "Accordingly, he has advised us that he simply wishes to resolve the claim and will be happy to get whatever he can. He further indicated that anything over $20,000.00 would be regarded by him as being more than acceptable. It seems to the writer that we are in a position where the GIO offered $16,000.00 some 7 years ago and that it may not be impossible, with the appropriate approach, for this figure to be negotiated up. Needless to say, the writer feels extremely negative about contacting the GIO after this period of time and particularly in the circumstances surrounding the statutory defence. We should perhaps add that our client previously thought that his claim was worth well in excess of $100,000.00. The situation concerning notification of our insurer remains unchanged and no such notice has been given. We appreciate the ramifications of this. We should be most grateful if Counsel would consider the possibility of an approach being made to the GIO with a view to resolving this matter by further negotiation and we look forward to hearing from him in this regard." 25 Although it seems (Black AB 111) that counsel might, at an earlier stage, have given some informal advice, his formal advice had not been received, nor had the Appellant previously advised the Director of Law Cover of what it was which he intended to tell the Respondent when, on 8 January 1992, there was a meeting between the Respondent and the Appellant at which time, according to the Appellant's evidence, (Black AB 112):- "At the end of the discussion Mr Cosentino said various things to me including that he did not wish to instruct another solicitor: - 'I do not want to instruct another solicitor at this stage. I have been dealing with you for a long time. I want you to pursue that application if its worthwhile. If the worst happens and its not, or it fails, what do I do?' And I said "Then you'll have to sue me". And he said "Well you've got insurance I guess?" And I said "yes"." The Appellant admits that he did not, at that time, inform the Respondent that any proceedings against him by the Respondent, either for breach of retainer or for negligence, would need to be commenced before mid August 1992 if they were not, in their turn, to become time barred. 26 Following the discussion between the Respondent and the Appellant, the Appellant, on 8 January 1992, prepared, and had the Respondent sign, a letter which was in the following terms (Blue AB 30):- "RE: MY ACCIDENT ON 13 AUGUST 1980 I refer to my meeting with you today in connection with this matter. I note your advice to me that the proceedings on my behalf for damages in respect of the injuries I sustained in this accident were commenced by you out of time having been filed on 12 December, 1986. I appreciate your advice that the solicitor for the Government Insurance Office has filed a defence to my claim which relies partly on the Statute of Limitations as the accident was commenced more than 6 years after the accident. I also note that you have advised me as to my instructing another solicitor to now act on my behalf. I do not wish to do this at this time. Accordingly, I instruct you to proceed with the matter with all necessary expedition to both hearing and also for any leave that might be necessary for this action to be brought out of time." 27 In December 1992, counsel, who had been retained in September 1991, but who had, in the mean time, been provided with a copy of the letter signed by the Respondent in January 1992, delivered a Memorandum of Advice (Blue AB 17-22) in which he advised, first, of his agreement with the advice tendered by Mr Phelan as long ago as 1987, and also, of his view that any application to obtain an extension of time would be futile. Counsel attached to his Memorandum of Advice a draft letter to the Government Insurance Office in a final attempt to achieve some satisfactory outcome for the Respondent. 28 That advice appears to have led the Appellant to write to the Director of Law Cover forwarding a copy of counsel's advice and the draft letter and seeking approval for that letter being forwarded to the Government Insurance Office. The Appellant's letter led to a reply (Blue AB 11-12) approving of the letter being sent. 29 On 29 January 1993 (Blue AB 7) the Government Insurance Office broke off negotiations. 30 On 12 February 1993, the Director of Law Cover, having been advised of that fact (Blue AB 6) wrote, to the Appellant (Blue AB 5) (inter alia) as follows:- "You are correct in noting it is necessary to advise your client that it will be necessary for him to instruct another solicitor to pursue his rights. Kindly keep me informed in the event that there are any further developments in the matter." 31 On 15 February 1993, the Appellant wrote to the Respondent as follows (Blue AB 3-4):- "RE YOUR ACCIDENT ON 13 AUGUST 1980 We refer to our conversations with you in connection with this matter late in 1992 and now confirm our advice to you that the GIO has defended the proceedings instituted by us on your behalf by relying on the ground that such proceedings when not commenced within 6 years from the date of the accident and are, as a consequence, statute barred. We further confirm that we have received various advices over the years to the affect that this defence will not succeed, but that there have recently been some High Court decisions which indicate to us that the defence is more likely to succeed than fail. In the event that that were to happen on the hearing of this matter, this means that you would loose (sic) the case and could be liable to GIO for costs. Clearly, that is a most undesirable situation and one which can not be acceptable to you. After speaking with you in connection with the matter, we notified our insurer of the situation in respect of your claim and, with its concurrents (sic) wrote one more letter to the GIO in an endeavour to settle this matter for a reasonable amount. We have recently received a letter from them which declines taking the matter any further. Accordingly, we sincerely regret to advise that there is nothing further that we are able to do to assist you. In the event that you wish to pursue the matter further with a view to recovering a verdict, it will be necessary for you to instruct another solicitor so that he can best advise you as to what should now be done. We appreciate that you have displayed a marked reluctance in the past to seek independent advice and we thank you sincerely for the loyalty that you have shown the writer in this regard. We understand that you have probably not had dealings with any other solicitors since the time you have first known the writer and that you may well have an aversion to consulting with a stranger in this matter. However, we have taken the liberty of discussing it with George Rhodes, Solicitor of 3 Baker, Windsor, telephone (045) 77-3640 and he is happy to assist you. Mr Rhodes is well known to your sister in law Anna and is a solicitor who is experienced in litigation matters. Would you please advise of your wishes in this matter at your earliest convenience." 32 Since, at one stage, Mr Rhodes was joined as a party defendant to the proceedings at first instance (AB 1 - see also Blue AB 544-545), it is clear enough that, following receipt of this letter, the Respondent retained Mr Rhodes to act for him as is it also clear enough that, while so acting, Mr Rhodes retained yet another member of the bar to advise in the matter. 33 The Respondent's present firm of solicitors appears to have been retained at some time prior to May 1994, on which day there was filed in the 1986 proceedings, a Notice of Motion (Blue AB 546) seeking an order:- "1. That the limitation period in respect of the cause of action pleaded in the Statement of Claim filed herein on 22 December 1986 be extended up to an including 22 December 1986." 34 That Notice of Motion, on the hearing of which counsel for the Respondent sought to argue that the letters from the Government Insurance Office to the Appellant dated 17 December 1984 (see para 10 above) and the later letter of 2 August 1985 (see para 10 above) constituted "confirmations" for the purposes of s 54 (2) of the Limitation Act 1969, came before Master Greenwood who, on 1 July 1994, delivered a judgment (Blue AB 547-549) dismissing the motion with costs and, as well, dismissed the proceedings with costs. 35 The proceedings at first instance were commenced in the Supreme Court on 23 December 1994 when there was filed the Statement of Claim to which I have earlier referred. 36 The Defence which was originally filed on behalf of the Appellant contained the following (inter alia) (RAB 6):- "6. The first defendant admits that he failed to commence legal proceedings to recover damages for personal injury in a motor vehicle accident on 13 August 1980 within the time fixed by the statute of limitations but denies that he was negligent. 7. The first defendant denies that he breached his contractual obligation to the plaintiff. …………… 9. The first defendant denies that the plaintiff is entitled to the damages claimed. 10. The first defendant says that if he was negligent as alleged, which is denied, the plaintiff contributed to his own loss. Particulars of contributory negligence (a) failure to provide information as requested; (b) failure to provide instructions; (c) failure to respond to correspondence from the first defendant. 11. The first defendant says that any claim against him is barred by the provisions of the Limitation Act, the time for bringing such a claim as having expired on 13 August 1992." 37 At first there was filed on behalf of the Respondent a reply (RAB 9) which, so far as is relevant, was as follows:- "In answer to paragraph 11 of the First Defendant's Notice of Grounds of Defence the Plaintiff says that the First Defendant fraudulently and/or deceitfully concealed from the Plaintiff the existence of a cause of action which was maintainable by the Plaintiff against the First Defendant." 38 Later, there was filed on behalf of the Respondent an Amended Statement of Claim (RAB 12-15) which, so far as is relevant, was as follows:- "1. At all material times the Plaintiff was a client of the First Defendant and Second Defendants (sic) who were solicitors and who undertook to act for him and to render to him legal advice. ……. 3. It was agreed between the Plaintiff and the First and Second Defendants that in consideration of the Plaintiff becoming their client and paying fees when called upon to so do the First and Second Defendants would act on behalf of the Plaintiff and render to him legal advice. …… 6. The First Defendant was so negligent in the carrying out of his instructions on behalf of the Plaintiff. PARTICULARS OF NEGLIGENCE (a) Failing to issue a Statement of Claim within the 6 year period expiring 13 August 1986. (b) Not issuing a Statement of Claim prior to 13 August 1986. (c) Delay in taking proceedings on behalf of the Plaintiff thus aggravating the effects of his injuries and disabilities. (d) Failing to advise the Plaintiff that in respect of his clause of action against Amelia Upton and/or the GIO, proceedings were required to be instituted within 6 years of the date of the motor vehicle accident otherwise there was a likelihood that they would be defeated by a plea by the GIO pursuant to the Limitation Act. (e) Failing to advise the Plaintiff that he had a cause of action against the First Defendant for negligence in failing to institute proceedings against Amelia Upton and/or the GIO. (f) Failing to advise the Plaintiff that should he wish to sue the First Defendant for negligence he needed to institute these proceedings no later than 12 August 1992. (f)(sic) Failing to advise the Plaintiff that he needed to obtain independent legal advice. 7. In the alternative the First Defendant breached his contractual obligations to the Plaintiff. PARTICULARS OF NEGLIGENCE See particulars of negligence above." 39 The Defence to that Amended Statement of Claim, which was filed on behalf of the Appellant, was, relevantly, as follows (RAB 16-17):- "The first defendant admits that he failed to commence legal proceedings to recover damages for personal injury in a motor vehicle accident on 13 August 1980 within the time fixed by the Statute of Limitations and failed to advise the plaintiff that, in respect of the cause of action against Amelia Upton and/or the GIO, proceedings were required to be instituted within six years of the date of the motor vehicle accident, but otherwise denies the allegation. (a) Admitted. (b) Admitted. (c) The first defendant admits that he failed to commence legal proceedings to recover damages for personal injury in a motor vehicle accident on 13 August 1980 within the time fixed by the statute of limitations, but otherwise denies the allegation. (d) The first defendant admits that he failed to advise the plaintiff that in respect of the cause of action against Amelia Upton and/or GIO, proceedings were required to be instituted within 6 years of the date of the motor vehicle accident otherwise there was a likelihood that they would be defeated by a plea by the GIO pursuant to the Limitation Act but otherwise denies the allegation. (e) Denied. (f) Admitted, except that the first defendant denies the existence of such a duty. (g)(sic)Admitted, except that the first defendant does not admit the existence of such a duty. ………… 11. The first defendant denies that the plaintiff is entitled to the damages claimed. 12. The first defendant says that any claim against him is barred by the provisions of the Limitation Act, the time for bringing such a claim having expired on 13 August 1992. 13. In relation to the whole of the claim, the first defendant says that by no later than 8 January 1992 he had discharged his duty to advise the plaintiff that he may have a cause of action against the first defendant, and that the plaintiff needed to obtain independent legal advice (if a duty to give such advice exists, which is not admitted). 14. Further, in relation to the whole of the claim, any damage which was suffered by the plaintiff after 8 January 1992 (which is not admitted) was caused by the plaintiff's failure to obtain independent legal advice." 40 Whether, before the hearing before Garling DCJ, the Respondent discontinued the proceedings against the other parties defendants who had originally been joined, it is the fact that, on that hearing, the Respondent sought relief only against the Appellant. 41 When, in the course of his judgment, Garling DCJ came to consider the question of liability he wrote (inter alia) as follows (RAB 30):- "The plaintiff argues that the defendant owes the plaintiff a duty of care. Part of that duty of care is to advise the plaintiff that the limitation period in the 1990 (sic) action had expired and that the plaintiff should obtain independent legal advice and that the defendant had a duty to cease to act as he had a conflict of interest. It is not hard to see the conflict of interest and indeed the defendant readily admitted it. All one has to do is turn to that letter I recently referred to about settlement and you can see the huge conflict that was involved. Once the limitation period expired the defendant, in my view, should have done each of those matters I set out above. In fairness he should have declined to further act for the plaintiff as no matter what his good intentions may have been he did always have a conflict, that is, he obviously wanted to see the matter settle and to do the best he could for the plaintiff, but he was doing it with one hand tied behind his back, that is with the knowledge that he could never have commenced an action in a third party matter as it was statute barred." and, later (RAB 31-32), after referring to what was said by Deane J in Hawkins v Clayton ( (1987-1988) 164 CLR 539, 590):- "In this case it is argued that the limitation period does not run whilst the relationship between the plaintiff and the defendant exists. The defendant does not advise the plaintiff that the claim against the GIO is statute barred and that he had to bring action against the solicitor and he had to bring that action by way of a Court case within six years of the other action being statute barred. It is agreed by the defendant that the plaintiff was never told he had to bring it within six years. The defendant on the other hand argues that the limitation period has indeed expired and there is nothing the plaintiff can do about it. The defendant argues that the time begins to run in the cause of action for negligence when the cause of action is complete. It is completed when damage occurs. They rely upon a number of cases including Daundoulakis v Anthony Solrinis and Company (1989) VR 773 at 785 where the Court found that the cause of action against the solicitor for negligently failing to institute proceedings on behalf of his client within the limitation period is complete when the relevant limitation period for bringing the client's cause of action expires."

and, later again (32-34):- "The plaintiff says in reply that each of those decisions differ from this one in that in this one the solicitor continued to act for the plaintiff. The solicitor did not cease to act, advise the plaintiff that he was out of time or advised the plaintiff of the limitation periods and they can be easily distinguished from those other cases. Having considered these matters and the lengthy submissions made, I have concluded that in this case the time did not commence to run, certainly not before the end of 1994 and probably not after that. I am satisfied that the defendant had a duty to the plaintiff to advise the plaintiff firstly that the period of limitation for bringing the case against the GIO had expired. Secondly, that the only way there could be a proper outcome was for the plaintiff to bring proceedings against the solicitor. That the solicitor should have ceased to act. The plaintiff should have been advised to get independent legal advice. The solicitor should have made it quite clear to the plaintiff that he had to bring a claim in a Court and that there was a limitation period of six years. He did none of that he simply continued to act for the plaintiff and I agree with the plaintiff's argument that the limitation period was not running and that the plaintiff issued these proceedings within the limitation period. There can be no dispute that the defendant was negligent. There is only one other matter I need to deal with and that is the amended reply. That reply in effect relies on section 55 of the Limitation Act 1969 and relies on fraud, deceit, concealment. The principles are set out in Seymour v. Seymour (1996) 40 NSWLR at 585 in which the Court said: 'That it must generally involve a consciousness that what is being done is wrong or that to take advantage in a relevant situation involves wrongdoing.' Justice Mahoney said he: '… would regard as a misuse of language and unsound to apply the statutory expression fraudulently in section 55 to any conduct which did not involve some form of dishonesty or moral turpitude.' Having considered this matter I do not believe it falls within the class of actions which are contemplated by section 55. What happened in this matter was that a solicitor had got a matter out of time and then tried to bring the matter to a satisfactory conclusion. In doing so I do not believe that those matters which are set out in section 55 of the Limitation Act become applicable and I would not have found for the plaintiff on the basis of the reply." 42 In the event, as I have earlier recorded, Garling DCJ found a verdict for the Respondent in the sum of $474,478.00 and ordered the Appellant to pay the Respondent's costs and directed the entry of judgment accordingly. 43 In the Notice of Appeal (RAB 40-51) which was filed on behalf of the Appellant, the following grounds of appeal were taken: "1. His Honour erred in holding that time did not commence to run for bringing proceedings against the Appellant before the end of 1994. 2. His Honour erred in holding that the Appellant did not advise the Respondent that the period of limitation for bringing the case against the GIO had expired. 3. His Honour erred in holding that the Appellant did not advise the Respondent that he (the Respondent) would have to sue the Appellant. 4. His Honour erred in holding that the Appellant did not advise the Respondent to obtain independent legal advice. 5. His Honour erred in holding that the Respondent issued the present proceedings within the limitation period. 6. His Honour erred in applying the dictum of Deane J in Hawkins v. Clayton (1988) 164 CLR 539 at 590. 7. His Honour erred in awarding damages for distress. 8. His Honour erred in failing to discover (sic) the damages for future economic loss by 15% for vicissitudes." (Ground 8 was not pressed on the hearing of the appeal (T.21)). 44 It seems to me that there are, essentially, four questions which fall for determination by this Court, they being: (a) when did a cause of action for breach of contract or in negligence for failure to commence proceedings against Mrs. Upton accrue to the Respondent;

(b) when, if at all, did that cause of action become statute barred, a question involving a consideration of: (i) the exception to the general rule suggested by Deane J in Hawkins v. Clayton ((supra) at 590); and (ii) the provisions of s.55 of the Limitation Act 1969;

(c) whether, notwithstanding the fact that, in January 1992, the Appellant informed the Respondent of his right to commence proceedings against him, the facts, first, that the Appellant did not then inform the Respondent of the time limit within which any such action should be brought and, second, that the Appellant continued to act for him until February 1993, that is, some 12½ years after the motor vehicle accident, gave rise to a further cause of action, or to further causes of action, in favour of the Respondent against the Appellant; and

(d) whether, assuming that the Respondent had a cause of action against the Appellant which had not become statute barred, it was open to Garling DCJ to make an award of damages for vexation.

The general rule 45 As a general rule, a relevant limitation period commences to run when the cause of action in relation to which it is said to apply is complete. When that cause of action is one based on negligence, in which case damages are of the essence of the cause of action, the cause of action is not complete until the plaintiff suffers actual damage caused by the defendant's breach of duty. 46 An action for damages against a solicitor, where the defendant is said negligently to have failed to commence proceedings for a claim for personal injury within the statutory period, is a claim for damages for loss of a chance to recover damages for those personal injuries, it following that in such a case the plaintiff sustains loss and, thus, his cause of action accrues when the action becomes statute barred (Doundoulakis v. Antony Sdrinis & Co. [1989] VR 781; Registrar General v. Cleaver (1996) 41 NSWLR 713; Sampson v. Zucker (Court of Appeal, 11 December 1996 (unreported)); Scarcella v. Lettice [2000] NSWCA 289; Cheney & Wilson v. Duncan [2001] NSWCA 197). Subject, therefore, to the relevance of the exception suggested by Deane J to the general rule and of the provisions of s.55 of the Limitation Act 1969, it follows that, on 13 August 1986, a cause of action against the Appellant accrued to the Respondent. The exception suggested by Deane J. 47 The exception to the general rule which has been suggested by Deane J in Hawkins v. Clayton is to be found in the following passage from his Honour's Judgment (supra at 590): "If a wrongful action or breach of duty by one person not only causes unlawful injury to another but, while its effect remains, effectively precludes that other from bringing proceedings to recover the damage to which he is entitled, that other person in doubly injured. There can be no acceptable or even sensible justification of a law which provides that to sustain the second injury will preclude recovery of damages for the first. It would, e.g, be a travesty of justice and common sense if the law provided that a cause of action lay for damages for false imprisonment but then went on to provide that that cause of action would be lost if the false imprisonment continued for six years after the cause of action first accrued. Likewise, it would be a travesty of justice and common sense if the law imposed a duty upon a solicitor to take positive steps to inform a third person of the contents of a document of which the solicitor was alone aware and then provided that any cause of action against the solicitor for damage caused by a negligent failure to perform that duty would be lost if the negligence continued for six years. It is arguable that the notion of unconscionable reliance upon the provisions of a Statute of Limitations which provides the foundation of the long established equitable jurisdiction to grant relief in a case of concealment of a cause of action until after the limitation period has expired (cf. s.55(1) of the Limitation Act) should, by analogy, be extended to cover cases such as these where the wrongful act at the one time inflicts the injury, and while its effect remains, precludes the bringing of an action for damages. It seems to me, however, that the preferable approach is to recognise that it could not have been the legislative intent that the effect of provisions such as s.14(1) of the Limitation Act should be that a cause of action for a wrongful act should be barred by lapse of time during a period in which the wrongful act itself effectively precluded the bringing of proceedings. On that approach, the reference in s.14(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 proceedings." 48 The status to be accorded to the exception suggested by Deane J is, to say the least, unclear, if only because although in Hawkins v. Clayton each of Brennan J and Gaudron J concurred in the order proposed by his Honour, neither agreed with the basis upon which his Honour founded his Judgment, and each of them proceeded upon the basis that no cause of action accrued to Mr. Hawkins until he assumed the office of executor. 49 But even if one assumes that the exception suggested by Deane J is to be regarded as part of the law of Australia, it does not seem to me that that would avail the Respondent in the present case. It was always open to the Respondent, if he were dissatisfied with the apparent lack of progress on the part of the Appellant in processing his claim, to terminate the Appellant's instructions, to seek advice from other solicitors, and to retain them to commence, and to prosecute, proceedings on his behalf. Further, it is clear that, by no later than 8 January 1992, the Appellant had informed the Respondent of his failure to commence proceedings within time and of the fact that the Government Insurance Office had filed a defence to the proceedings which had in fact been commenced on the Respondent's behalf, which defence relied in part on the provisions of the Limitation Act 1969 and had advised the Respondent to instruct another solicitor to act on his behalf, a course of action which, if it had been adopted by the Respondent, would have enabled proceedings to have been commenced against the Appellant before 13 August 1992. Limitation Act 1969 s.55 50 So far as is relevant, s.55 of the Limitation Act 1969 provides: "55(1) Subject to subsection (3) where: … (b) a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed, the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud, deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by him or by a person claiming through him against a person answerable for the fraud, deceit or concealment. (2) Subsection (1) has effect whether the limitation period for the cause of action would, but for this section, expire before or after the date mentioned in that subsection. (3) For the purposes of subsection (1), a person is answerable for fraud, conceit or concealment if, but only if: (a) he is a party to the fraud, deceit or concealment. …" 51 In Seymour v. Seymour (1996) 40 NSWLR 358, to which Garling DCJ referred in the course of his Judgment, Mahoney ACJ wrote (supra (at 372)): "In my opinion, the section is not confined to simply common law fraud. It extends to conduct beyond that. On the other hand, it is not, I think, sufficient merely that for the defendant to take advantage of the statute of limitations would be unconscionable or inequitable in the wide sense of these terms. Terms such as unconscionable and inequitable now are used to describe conduct which, in previous times, would not have fallen within them: see Baumgartner v. Baumgartner (1987) 164 CLR 137 at 147 and Hibberson v. George (1989) 12 Fam LR 725 at 731. Nor, in my opinion, is 'fraudulently' wide enough to include everything which would fall within the description of 'equitable fraud'. Equitable fraud is a doctrine which depends, for this purpose, too much upon nice distinctions which have been drawn in other times: see Snell's Equity, 29th ed (1990) at 550 et seq; Meagher Gummow & Lehane, Equity: Doctrines and Remedies, 3rd ed (1992) at par 1208; and see the discussion in Logue v. Shoalhaven Shire Council [1979] 1 NSWLR 537 at 553. The history of the English legislation was recently reviewed in Sheldon v. RHM Outhwaite (Underwriting Agencies) [1996] 1 AC 102: see eg, at 144, 153. In my opinion, there must be in what is involved a consciousness that what is being done is wrong or that to take advantage of the situation involves wrongdoing. At least, this is so in the generality of cases. (There is in this as in many things the problems of dealing with the person who 'closes his eyes to wrong' or is so lacking in conscience that he is not conscious of his own lack of proper standards.)" 52 In the light of his findings as to the Appellant's motivations, Garling DCJ was, in my view, correct to find that, in the circumstances, the Respondent was not entitled to rely on the provisions of s.55 of the Limitation Act 1969. An additional cause of action or additional causes of action 53 This question arises because of the inclusion in the Amended Ordinary Statement of Claim, as additional particulars of negligence of para. 6(f) (sic) which were as follows: "(f) Failing to advise the plaintiff that should he wish to sue the first defendant for negligence, he needed to institute these proceedings no later than 12 August 1992. (f) Failing to advise the plaintiff that he needed to obtain independent legal advice." in respect of the first of which the Appellant in the grounds of defence to the Amended Statement of Claim admitted the fact, while denying the existence of a duty, and in respect of the second of which the Appellant, while admitting the fact, did not admit the existence of such a duty. 54 In seeking to deny that the matters asserted - and admitted - in those paragraphs constituted a breach of duty on the part of the Appellant, Mr. D.L. Davies SC, who appeared for the Appellant, drew the Court's attention to the recent decision of the High Court in Astley v. Austrust Limited (1998-1999) 197 CLR 1 and, in particular, to that part of the Judgment of Gleeson CJ and McHugh, Gummow and Hayne JJ where their Honours' wrote (supra (at 23)): "The theoretical foundations for actions in tort and contract are quite separate. Long before the imperial march of modern negligence law began, contracts of service carried an implied term that they would be performed with reasonable care and skill. Persons who give consideration for the provision of services expect that those services will be provided with due care and skill. Reliance on an implied term giving effect to that expectation should not be defeated by the recognition of a parallel and concurrent obligation of the law of negligence. The evolution of the law of negligence has broadened the responsibility of professional persons and requires them to take reasonable care and skill even in situations where a contractual relationship cannot be established. But given the differing requirements and advantages of each cause of action, there is no justification in recognising the tortious duty to the exclusion of the contractual duty." as a basis for submitting that the ambit of the duty of care can be no higher than the duty provided for in the contract of retainer and, semble, that, as the contract of retainer related to the bringing of proceedings against Mr. Upton, there could be no duty to advise the Respondent in respect of his rights against the Appellant. 55 Even if one is to assume that the contract of retainer between the Respondent and the Appellant was as Mr. Davies appears to have suggested, it does not follow that an additional duty of care on the part of the Appellant towards the Respondent could not exist given the relationship between them. It is quite clear that duties may be owed by solicitors in a situation in which no contractual relationship exists. Hawkins v. Clayton (supra) was such a case, as also was Hill v. Van Erp ((1996-1997) 188 CLR 159) (see also, Waimond Pty. Ltd. v. Byrne (1989) 18 NSWLR 642; Curnuck v. Nitschke [2001] NSWCA 176, paras. 8 et seq per Davies AJA, 38 et seq per Fitzgerald AJA). 56 In the circumstances, it seems to me that, in failing to advise the Respondent in January 1992 that, if he were to commence proceedings against him, those proceedings would need to be commenced by mid-August 1992, in default of which they in their turn would become time barred, the Appellant failed in the duty to which, by reason of the relationship between himself and the Respondent he was subject. Damages for vexation 57 In his Judgment (RAB 39), Garling DCJ dealt with this aspect of the Respondent's claim as follows: "There is a claim for damages for distress pursuant to the principles in Baltic Shipping v. Dillon (1976) CLR. The plaintiff gave evidence of some distress. The plaintiff clearly would have suffered some distress. It was not a huge matter. It was a matter for which the plaintiff should be compensated and I allow the sum of $5,000.00." 58 In the Written Submissions which were filed on behalf of the Appellant, the matter was dealt with in the following way (Orange AB 12): "19. Damages for distress are not recoverable in the present case. Damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by breach of contract or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom from molestation (Mason CJ with whom Toohey and Gaudron JJ agreed, in Baltic Shipping Company v. Dillon (1993) 176 CLR 344 at 365 and see also McHugh J at 405). 20. There is little authority in relation to claims against solicitors. The English Court of Appeal in one such case ( Hayes v. Dodd [1990] 2 All ER 815) appears to have adopted a similar rule to that in Dillon and held that damages for distress were not recoverable where the solicitor was retained to convey a commercial property." 59 Even if - which may be doubted (see, for example Heywood v. Wellers [1976] QB 446, Farley v. Skinner [2001] 3 WLR 899) - the right to include - in a claim for damages for breach of contract - a claim for damages for vexation is to be limited in the way suggested in the Judgments in the High Court in Baltic Shipping Company v. Dillon (supra), it does not follow that that right is so circumscribed when a claim is made for damages in tort. In Avenhouse v. Hornsby Shire Council (1998) 44 NSWLR 1) Sheller JA, with whom Mason P and Priestley JA agreed, wrote (supra (at 37-38): "The right to recover damages for non-material injury is shortly and usefully discussed in Fleming, Law of Torts 9th Ed (1998) Law Book Co at 285 where the learned author said: 'It used to be thought that damages for non-material injury were allowed only consequential on the physical injury but not damage to property, such for example as grief over the death of a cat or distress and inconvenience over damage to one's home or car. But there has lately been a change: damages for foreseeable worry and anxiety, or physical inconvenience are now being awarded in cases of negligently constructed homes, even business premises, and at least for intentional shooting of pets. Equally in cases of purely economic loss, such as resulting from conversion and misrepresentation.' For damages to be recoverable the vexation must be related to the tortious act or omission complained of, not to the ensuing litigation or the ordinary commercial, professional or private incidents of the complainant's life. Reference was made to the New Zealand Court of Appeal in Mouat v. Clark Boyce [1992] 2 NZLR 559 at 569 where Cooke P remarked that there are many tort, contract or statutory status cases in New Zealand in which foreseeable distress has been an ingredient in the award and (at 573) where Richardson J said: '… there are numerous recent cases in which moderate awards have been made in respect of discomfort and inconvenience and associated anxiety and distress sustained by plaintiffs where damage to buildings has occurred due to carelessness on the part of local body building inspectors.' This appeal in the New Zealand Court of Appeal was from a decision at first instance on a retrial previously ordered by the Court of Appeal when upholding an appeal from an earlier trial. Subsequently, this previous decision of the Court of Appeal was reversed by the Privy Council: Clark Boyce Mouat [1994] 1 AC 428, however, this does not seem to me to affect the authority of the later Court of Appeal decision which attracted no comment or mention in the Privy Council, on the question with which we are here concerned." Then, following a reference to the decisions of this Court in Brickhill v. Cooke [1984] 3 NSWLR 396 and Campbelltown City Council v. Mackay (1989) 15 NSWLR 501, Sheller J continued (supra (at 39)): "Damages for such non pecuniary loss, irrecoverable if claimed alone, may be added if the plaintiff has suffered and the defendant is liable for pecuniary loss."

In the present case, the Appellant has been held liable for pecuniary loss - the loss of a chance to sue Mrs. Upton - and his distress at the delays incurred in the loss of his right to sue Mrs. Upton was, I would have thought, reasonably foreseeable.

Conclusion 60 For these reasons I conclude that the attacks which have been made upon the Judgment of Garling DCJ on the part of the Appellant have all failed, it following, in my view, that the appeal should be dismissed with costs. 61 BEAZLEY JA: I agree with Powell JA. ************

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(1989) 12 Fam LR 725

At a glance

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Judgment (17 paragraphs)

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Cases Cited (12)