Clarke v Beverstock

[1999] NSWCA 473

CITATION:	CLARKE v BEVERSTOCK [1999] NSWCA 473
FILE NUMBER(S):	CA 40918/97
HEARING DATE(S):	18 March 1999 1 September 1999
JUDGMENT DATE:	23 December 1999
PARTIES :	JUSTIN PETER CLARKE v JOHN THOMAS BEVERSTOCK
JUDGMENT OF:	Handley JA at 1; Sheller JA at 38; Giles JA at 39

LOWER COURT JURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S) :	20332/95
LOWER COURT JUDICIAL OFFICER:	Finnane AJ

COUNSEL:	D L Williams/D Banwell (Appellant) R J Colquhoun (Respondent) and Ms D Fitzsimons on 18.3.99
SOLICITORS:	Minter Ellison (Appellant) Robert Johns & Company, Bowal (Respondent)
CATCHWORDS:	NEGLIGENCE - solicitor - rail worker injured at work - settlement of claims for damages and compensation - solicitor sued for negligence in advising settlement - whether evidence supported trial Judge's finding that common law claim had 50:50 chance of success - whether solicitor negligent in negotiating redemption without taking into account s 11(2) entitlement
ACTS CITED:	Workers' Compensation Act 1926
CASES CITED:	Abalos v Australian Postal Commission (1990) 171 CLR 167
DECISION:	Appeal allowed with costs - orders made

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40918/97
CLD 20332/95

HANDLEY JA
SHELLER JA
GILES JA

23 December 1999

JUSTIN PETER CLARKE v JOHN THOMAS BEVERSTOCK

NEGLIGENCE - solicitor - rail worker injured at work - settlement of claims for damages and compensation - solicitor sued for negligence in advising settlement - whether evidence supported trial Judge’s finding that common law claim had 50:50 chance of success - whether solicitor negligent in negotiating redemption without taking into account s 11(2) entitlement The respondent worker brought an action for damages and proceedings for compensation for injuries sustained at work against his employer, the State Rail Authority. In 1991 both proceedings were settled, the compensation claim being redeemed for $37,500 and the common law action for $12,500 inclusive of costs. In 1995 the respondent worker successfully sued his former solicitor for negligence in advising and negotiating the settlement, the trial Judge finding that the worker had a 50:50 chance of succeeding in his common law action, and that the solicitor had been negligent in negotiating the redemption without regard to s 11(2) of the Workers’ Compensation Act 1926. Damages were awarded. The solicitor appealed, and the issues in the appeal were whether the trial Judge’s finding that the worker had a 50:50 success rate could be sustained, whether on the medical evidence the solicitor had been negligent in advising settlement, and whether the solicitor had been negligent in failing to consider the worker’s entitlement under s 11(2).
HELD: allowing the appeal: (1) The common law action had negligible prospects of success, and the solicitor had not been negligent in advising the settlement of the common law action. (2) The solicitor had been negligent in failing to consider the worker’s entitlement under s 11(2) and in negotiating a redemption at only 74% of the maximum figure.

ORDERS

(1) Appeal allowed with costs;
(2) Set aside the judgment of the Common Law Division and in lieu thereof substitute judgment for the plaintiff for $26,701.25 and costs with effect from 10 December 1997;
(3) Costs to be set off;
(4) The respondent to have a certificate under the Suitors Fund Act.

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40918/97
CLD 20332/95

HANDLEY JA
SHELLER JA
GILES JA

23 December 1999

JUSTIN PETER CLARKE v JOHN THOMAS BEVERSTOCK

JUDGMENT

1 HANDLEY JA: Mr Beverstock worked for the State Rail Authority (the SRA) between 1957 and 1991, first as a fettler and then as a flagman on light duties. On 3 November 1989 he commenced proceedings against the SRA in the Compensation Court seeking weekly compensation and s 10 expenses for injuries at work between 1979 and 20 February 1985. In January 1990 he sued the SRA in the Supreme Court for damages arising from an injury at work on 20 February 1985 when he claimed he was knocked down by a trike being driven along a railway line by fellow employees. 2 The compensation proceedings were before the Compensation Court at Queanbeyan on 19 August 1991 and both proceedings were then settled in principle. This involved the redemption of the compensation claim for $37,500 and a common law settlement for $12,500 inclusive of costs. The redemption was approved by Johns CCJ on 12 November 1991 and terms of settlement were filed in the Supreme Court on 19 March 1992. 3 In 1995 the worker sued his former solicitors for negligence in advising and negotiating the settlement. The action was heard by Finnane AJ who found for the plaintiff on 27 August 1997 and entered judgment in his favour for $204,266.80 on 10 December 1997. 4 The Judge held that Mr Clarke (the solicitor) who handled the worker’s common law and compensation claims, had been negligent in advising the settlement. This conclusion was based on findings that the cases should not have been settled until the worker’s medical situation was clear, and until it was known whether Dr Robson and Dr Endrey-Walder would expressly support a causal link between the trike accident and the worker’s back condition. He also found that the solicitor had been negligent in failing to consider the worker’s entitlement under s 11(2) of the Workers’ Compensation Act 1926 to be deemed totally incapacitated if the SRA failed to provide him with work. 5 The Judge found that the worker had a 50:50 chance of succeeding in his common law action. He found in the alternative that the solicitor’s negligence in negotiating the redemption without regard to s 11(2) of the 1926 Act carried damages which he assessed at $26,701.25. 6 The Judge said that the solicitors did not contest the happening of the accident involving the trike, but contended that there was very little prospect of the worker recovering damages because he did not have any time off work after the accident and did not seek medical treatment for it, or complain to any doctor about it until May 1990, over 5 years later. There was therefore a real issue as to the severity of this accident, and whether it could have been a significant cause of the worker’s back condition. 7 The worker said that he did complain to doctors and that he was off work for more than 3 weeks. However the SRA’s sick leave records showed that he was not on sick leave at this time but had been absent for such a period some years before. The Judge found that the worker who was illiterate became confused and uncertain under cross-examination, but said that he was honest, and his confusion was the result of intellectual inadequacy and poor memory. 8 The Judge found that the worker did suffer an accident such as he described in 1985 which caused him noticeable pain in the lumbar area, and that he continued to suffer pain and discomfort referable to this accident. It seemed to him probable that the worker did tell various doctors about this accident but did not make much of it, probably because other conditions, such as his neck problem, were of greater concern. 9 The worker consulted the solicitor at McClellands in October 1989 and told him about the accident. The application for determination filed in the Compensation Court on 3 November alleged an injury to the worker’s back on 20 February 1985. The records produced by the SRA did not include any report of this accident during 1985, but the Judge was unwilling to find that the worker did not make a report, and attributed its absence to his illiteracy and the failure of some person in authority to act on his verbal report. 10 The worker said that he had consulted Dr Hayman after the accident of February 1985, but when the solicitor sought confirmation the doctor said that he had not seen the worker between 1983 and 1988, and the worker had not mentioned this accident until May 1990. Doctors Robson and Williams, who treated the worker after 1985, had not been told about this accident. 11 The Judge reviewed the medical evidence available to the solicitor during the settlement negotiations at Queanbeyan in August 1991. He found that the solicitor did not follow up Dr Robson’s reports of 9 January and 12 August 1991 which indicated that further surgery may be needed, and that the worker’s injury may be related to the trike accident; he referred to a report of Dr Endrey-Walder, which he read as expressing the opinion that the trike accident may have exacerbated the worker’s pre-existing back condition, and two reports of Dr Selby Brown which made no comment on the question of causation but sought further information. He found that the solicitor had not appreciated the significance of Dr Robson’s report of 12 August 1991 and did not tell the worker that he might need further extensive operative treatment. 12 The Judge then revisited some of the issues and made new findings expressed in somewhat different terms to those previously made. He said:

“It is possible that [the worker] did mention this accident to doctors before 1990, but because they were looking at his other medical problems … they may not have noted what he said. He may not have made much of it when he saw the doctors … It seems quite plain that the trike accident occurred and it also seems probable that this accident would have at the least, aggravated the plaintiff’s previous back condition. Medical evidence may well have established to the satisfaction of the court, notwithstanding a lack of medical support for early complaint by the plaintiff, that he did suffer a significant injury to his back as a result of this injury”. (emphasis supplied)

13 The Judge concluded that the solicitor did not give proper consideration to the seriousness of the worker’s injuries, or to either the question of common law liability, or the entitlement of the worker to benefits under s 11(2) of the Act. 14 The solicitor’s appeal challenged the judgment on grounds relevant to both liability and damages, but in view of the conclusions I have reached it will not be necessary to consider all the arguments advanced in support of the appeal. 15 The worker’s claim that he suffered a significant back injury on 20 February 1985 faced many difficulties. He identified this date to the solicitor in October 1989, but had no documentary or independent evidence to support either the accident itself or its date. The SRA had no record of the accident or any claim arising from it before 31 August 1990 (blue AB 111). The worker originally told the solicitor that he had no time off work after the accident but he said at the trial he had been off work for three weeks. The SRA’s records revealed no loss of time during 1985. The worker said that he consulted Dr Burgess and Dr Hayman after this accident but neither doctor had any record of this, and despite regular medical treatment over the ensuing years the first recorded complaint to a doctor was to Dr Hayman in May 1990. 16 It is not self evident that the Judge’s findings about the existence and significance of this accident attract the principles applied in Abalos v Australian Postal Commission (1990) 171 CLR 167, but even if they do, the finding that the worker had a 50:50 chance of success in his common law action against the SRA cannot be sustained. An incident such as that described by the worker may have occurred, but any finding that it caused an injury to the worker’s back of any significance is both glaringly improbable and contrary to facts incontrovertibly established. 17 Some of those facts have already been referred to but routine medical examinations of the worker were conducted on behalf of the SRA at Goulburn on 8 February 1984, 21 February 1985 and 8 February 1986. The report of 21 February 1985, the day after the alleged accident, and a memorandum of 27 February 1985 from the examining doctor indicate that the worker was fit for selected duties, and there is no recorded complaint of a recent injury at work, or of any pain or discomfort caused by such an injury. The report of the worker’s examination on 8 February 1986 contains no reference to an accident at work since the last examination, or any complaint of increased pain or disability due to such an accident. These records establish that no accident of any significance involving the worker’s back occurred between February 1984 and February 1986. 18 The medical evidence available to the solicitors in August 1991 was equally unpromising. Dr Robson’s report of 13 October 1990 refers to a history of the 1985 accident. The worker had had recent discograms which the doctor reviewed but he was “not impressed that there is a lot of pathology shown”. He concluded “this brings me back … to the consideration of the plain x-rays which were described by Mr Hayman and whilst I agree that there are some degenerative changes here there is not really a lot which permits a strongly positive diagnosis associated with the consequences of trauma”. 19 In his two reports of 9 January 1991 Dr Robson said that he believed that the worker’s complaints of pain were genuine and stated that there was good precedent for doing so. (This was documented in memoranda from Dr Robson between 8 July and 13 November 1987 relating to the pathology in the plaintiff’s neck he discovered during surgery on 13 November. See blue AB 13-15.) Dr Robson’s statement however cannot support the worker’s history of the accident in February 1985. Indeed on 13 May 1987 Dr Robson had written to Dr Williams stating “As you are I am sure aware, Mr Beverstock is not a great historian”. His further report of 12 August 1991 was written some 8 weeks after surgery on the worker’s back. He wrote:

“The position is that he is really quite considerably improved … It is only about 8 weeks since operation and this is far too soon to have any long term views on things at all so everything is left I’m afraid still up in the air for me [until] we repeat some x-rays in another few months time, to see how it is looking for fusion. Certainly at the present moment the recent x-rays look very good, but it is too soon to talk about the long term here”.

20    Dr Hayman’s report of 13 November 1990 stated that the worker had not consulted him, at least about any complaint of back pain, between 22 November 1983 and 1 December 1988 and that he saw him again about his back pain on 16 March 1989 and 7 March 1990. The worker did not mention the trike accident to Dr Hayman until May 1990 (AB 53). He concluded his report of 13 November as follows:

“My own opinion regarding Mr Beverstock’s back pain is that over the years he has suffered chronic low back strain because of the heavy nature of his work, the present degenerative changes present on the CT Scan are simply due to degenerative change …”.

21    Dr Endrey-Walder in his report of 1 November 1990 referred to the worker’s history of his accident with the trike, and that he had not lost any time off from work either immediately or since because of his symptoms. The doctor concluded:

“Apart from accepting that he had remained symptomatic … I was unable to find any evidence of functional impairment … his lower back had … remained chronically symptomatic over the years, without being severe enough to prevent him from carrying out his duties as a flagman … I do not believe that he had sustained any structural damage to his spine when hit by the truck, although the incident might indeed have rendered him symptomatic in an area of focal degenerative changes at the L1-2 level, which were clearly long standing and preceded by a considerable time period his actual accident, as witnessed by x-rays performed in August 1979. His symptoms for quite some time now, I would expect, would be much more likely due to these well developed focal changes at one single level than to the injury sustained at work . Having said this, one cannot deny that once an area of degenerative changes in the spine become symptomatic as a consequence of whatever trauma, such symptoms may in some case, remain with the patient in the long term”. (emphasis supplied)

22    Dr Endrey-Walder referred to an x-ray of the worker’s lumbo-sacral spine taken on 26 November 1986 which indicated local, spondylotic changes at L1-2 level with some possible thinning of the inter-vertebral disc at this level and at T12-L1.

23    Dr Williams saw the worker on 25 November 1986 and arranged the x-rays in question, but had noted in his report of 16 August 1991 that at that time the worker’s back did not appear to be a major problem, and his main problem was his headaches. He also saw the worker on 9 February 1987 but was never informed of the accident involving the trike, or any trauma involving the worker’s back which had occurred at work. 24    Dr Selby Brown stated in his report of 23 October 1990, “In regard to his back complaints I would need to have significantly more information made available to make any assessment of him”. In his further report of 25 July 1991 he wrote:

“In relation to Mr Beverstock’s lumbar spine I consider that he requires at least a further 12 months following his recent operation to obtain any clear indication as to the long term result of this surgery”.

25 The medical evidence available to the solicitor in August 1991 therefore did not disclose a case for the worker on the causation issue. Dr Robson had said on 13 October 1990 that “there is not really a lot which permits a strongly positive diagnosis associated with the consequences of trauma”, and he had said nothing more favourable to the worker on this issue in his later opinions, even after the surgery he had performed on the worker’s back in July 1991. 26 Drs Hayman and Endrey-Walder thought that the worker’s back condition was due to degenerative changes and the highest the latter could put it was that the trike accident “might” have rendered him symptomatic. This was hardly helpful because the worker had had back problems since at least 1979. 27 Dr Selby Brown did say on 23 October 1990 that he would need further information, but it was never established that the solicitor could have provided any. The doctor had already been provided with x-rays of the worker’s lumbar spine of 6 August 1979, 31 October 1983, 26 November 1986, and 2 December 1988, and a CAT scan of 15 March 1990. He was provided with all the reports of Dr Hayman and Dr Robson and x-rays of the worker’s lumbar spine of 10 July 1991 before giving his report of 25 July 1991. 28 Dr Selby Brown and Dr Robson in their reports of July and August 1991 had been cautious about the worker’s prognosis following his operation in July, but this cannot provide an independent basis for a finding of negligence against the solicitor in this case. The worker’s common law claim was compromised because it was judged by the solicitor and counsel then briefed for the worker to be weak. If that was a correct evaluation of the claim, negligence cannot be established by showing that the worker’s prognosis was uncertain. 29 The evidence led for the worker on the issue of causation before Finnane AJ in August 1997 was not appreciably different from that available to the solicitor in August 1991. Dr Robson’s reports of 4 May and 24 November 1995 and 5 January 1996, which followed two further surgical procedures on the worker’s back he had performed in 1993 and 1994, took the evidence on causation no further, because he did not even mention that topic. Dr Bornstein in his report of 24 January 1996 also said nothing about causation. Dr Cummine, who was qualified for the solicitor, said in his report of 17 July 1997 that the worker’s back condition was attributable to the nature and conditions of his employment, and not to any specific incident. 30 Dr Endrey-Walder gave oral evidence at the trial. He said in chief that the injury the worker claimed to have suffered “would have symptomatically aggravated his back” and although he did not think that there had been any structural damage, he had no difficulty in “seeing some underlying pre-existing degenerative changes being aggravated and exacerbated”. In cross-examination he said that any aggravation would have been modest and that the worker had a pre-existing degenerative condition “somewhat aggravated by the accident” and this had caused a 5% loss of function in the back. The doctor only saw the plaintiff once in November 1990. His oral evidence was stronger on the issue of causation than his original report (“much more likely to be due to those well developed focal changes .. than to the injury sustained at work”), but was not helpful on quantum, and did not corroborate the evidence of the worker about the accident because his symptoms were consistent with his pre-existing degenerative condition. 31 No other doctor gave oral evidence. Thus the worker’s case on causation was supported by evidence that was substantially the same as that available to the solicitor in August 1991. The inability of the worker to call additional evidence on causation despite the six years which had elapsed since the in principle settlement demonstrates that there had been no lack of diligence by the solicitor in gathering medical evidence. 32 The weakness of the medical evidence for the worker on causation increased his difficulties in persuading a tribunal of fact that the trike accident had occurred, or that it was at all serious. The Judge’s findings about the trike accident and on the causation issue cannot be supported. In my judgment the worker failed to establish that the solicitor was negligent in advising the settlement of his common law action. Indeed in my opinion this advice was correct. The common law action had negligible prospects of success. 33 The situation with respect to the compensation claim is however different. The worker had been employed by the SRA as a flagman on light duties for 12 years since 1979. There was no doubt that he was partially incapacitated for work, and s 11(2) of the 1926 Act continued to apply to his injuries despite its repeal by the 1987 Act. 34 The worker’s claim was redeemed for $37,500. The maximum weekly compensation then payable was $194.60. The Judge found that claims by older workers such as Mr Beverstock were usually redeemed on the basis of 5 years’ purchase. The agreed redemption figure therefore represented 74% of the maximum available for this period. 35 The Judge found that the SRA had made it plain that they wanted the worker to resign from his employment and they made this a term of any settlement. This finding was not challenged. The SRA therefore wanted the worker “off its books” and this was perfectly understandable in view of his continuing rights under s 11(2). If the SRA dismissed the worker and refused to provide him with employment, he would be entitled to a continuing award under s 11(2) on the basis of deemed total incapacity which would continue for life. Section 60A of the 1926 Act added in 1985, which terminated awards at the age of 66, was not retrospective and its effect was continued by s 52(4) of the 1987 Act. The worker was then only 52 and the SRA would have had him on their books either on light duties until he was 65, or under s 11(2) for life. 36 The Judge found that the solicitor failed, in negotiating and advising on the redemption, to consider the worker’s entitlements under s 11(2) and this finding was not challenged. The worker was anxious to receive a lump sum because he had debts which he wished to pay, and he did not wish to remain on weekly compensation. Both parties wished the right to weekly compensation to be redeemed, but the evidence reveals no reason why the solicitor should have advised the worker to accept the redemption at only 74% of the maximum figure. 37 The SRA had disclosed their anxiety to have the worker off their books, and partial incapacity and liability were not in doubt. The worker lost the chance of negotiating a redemption at 100% of the maximum. The Judge implicitly evaluated this chance as a certainty and the solicitor has not persuaded me that this finding and his alternative award were affected by any appealable error. In my judgment the Court should make the following orders:

(1) Appeal allowed with costs;
(2) Set aside the judgment of the Common Law Division and in lieu thereof substitute judgment for the plaintiff for $26,701.25 and costs with effect from 10 December 1997;
(3) Costs to be set off;
(4) The respondent to have a certificate under the Suitors Fund Act.

38    SHELLER JA: I agree with Handley JA. 39    GILES JA: I have had the advantage of reading in draft the judgment of Handley JA. I agree with his Honour in relation to negligence in settling the common law claim, and with his Honour’s reasons. I agree in the result in relation to negligence in settling the compensation claim, for the following reasons. 40    The Judge said that he was -

“ … of the opinion that [the solicitor], when giving advice about the question of redemption, failed to consider the plaintiff’s obvious entitlement to weekly compensation on a total incapacity basis and as a result, failed to give advice to the plaintiff that the redemption proposed was insufficient.
I am of the opinion that the plaintiff, if he had been given this advice, would not have instructed [the solicitor] to proceed with the redemption.”

41    There was no challenge to these findings. Accordingly, it was necessary to evaluate the lost chance of negotiating a redemption on the basis of total incapacity, by capitalising on the SRA’s desire that the worker resign from his employment and the prospect of payment to the worker either for partial incapacity for the next thirteen years or for total incapacity for life if light duties were not offered. 42    In his reasons of 27 August 1997 the Judge invited submissions on damages -

“In my opinion, even if the plaintiff were to be regarded as having had no chance of succeeding in his common law claim, he should have been given advice to settle by way of redemption only on the basis that he was treated as being totally incapacitated because the State Rail Authority made it plain that they wanted him to resign. He should have been advised to instruct his solicitors to amend the claim to seek total incapacity payments and to negotiate only on that basis. I find that the plaintiff would not have settled on the basis he did if the position had been explained to him. I invite counsel to make submissions on what amount would be appropriate. I intend to indicate my findings as to that amount and I will then hear further submissions as to what should follow.”

43    In this passage, as in the passage earlier set out, the Judge’s reference to total incapacity must be read as a reference to prospective deemed total incapacity if the SRA did not offer light duties. There may not then have been a basis for amendment of the claim to seek total incapacity payments. No point was made of this. 44    In his reasons of 10 December 1997 the Judge said -

“If I am correct, the redemption should have been approached on the basis of a full entitlement of $194.60 per week. The process by which the redemption was negotiated was the subject of evidence by [the solicitor] and [counsel]. I accept their evidence that this type of redemption involves an assessment of 5 years of payments to enable a figure to be arrived at and there would be added to that figure an amount for section 16 entitlements and medical expenses. As I accept the evidence concerning this process, I do not need further evidence to tell me what the loss is. It amounts to $20,500.”

45    $20,500 was a purchase of 5 years payments at the full entitlement of $194.60. The solicitor argued that the Judge erroneously assessed the damages as the loss of a certain outcome in the negotiation, not the loss of a chance; that the evidence was insufficient to permit him to assess the damages as he did; and that he gave insufficient reasons. 46    The Judge had explicitly assessed damages in relation to the common law claim as the loss of a chance, and it is unlikely that he approached damages in relation to the compensation claim on a different basis. He clearly took a firm view of the SRA’s desire to get the worker off its books. Although in this appeal the solicitor placed some weight on evidence that the worker wanted a lump sum settlement in order to meet pressing debts, the significance of that to the negotiations had been largely exhausted by the Judge’s finding that the worker would not have settled on the basis he did if the total incapacity situation had been explained to him.

47    The evidence was in fact of a practice of redemption by a purchase of 5 to 7 seven years payments. It was open to the Judge to find that, if the exchange of offers and counter offers somewhat obscurely disclosed in the evidence had from the workers side been on the basis of deemed total incapacity, the SRA would have agreed to an additional $20,500. As Handley JA has said, the Judge implicitly evaluated the chance as a certainty; there was evidence on which he could do so; and while his reasons could have been more ample, the reasoning process can readily enough be seen.

48    I agree with the orders proposed by Handley JA.
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