Dib v Regtop

[2006] NSWCA 380

New South Wales

Court of Appeal

CITATION:	DIB by her tutor HABIB DIB v REGTOP [2006] NSWCA 380 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	6 December 2006
JUDGMENT DATE:	20 December 2006
JUDGMENT OF:	Beazley JA at 1; Ipp JA at 2; McColl JA at 3
DECISION:	1.Grant leave to appeal. 2.Notice of Appeal to be filed within fourteen days. 3. Appeal allowed. 4.Orders of Balla DCJ of 10 February 2006 set aside. 5.Extend the time for the appellant’s application under Pt 12 r 4C(4) of the District Court Rules to seek an order rescinding the deemed dismissal of her action to 3 August 2005. 6. Pursuant to District Court Rules Pt 12 r 4C(4) rescind the deemed dismissal order of 1 January 1998. 7.Set aside McLachlan DCJ’s orders of 18 July 1996. 8.Direct that the action be listed for direction in the District Court on a date convenient to that Court and notified to the parties. 9.Respondent to pay the appellant’s costs of the application in the District Court from 30 August 2005. 10.Respondent to pay the appellant’s costs of the appeal and application for leave to appeal and have a certificate under the Suitors’ Fund Act 1951 if otherwise qualified.
CATCHWORDS:	PROCEDURE - appellant’s motor accident proceedings deemed dismissed on 1 January 1998 by virtue of Pt 12 r 4C District Court Rules 1973 - application in August 2005 for extension of limitation period to apply to rescind deemed dismissal and if successful, to rescind deemed dismissal - HELD - whether to rescind deemed dismissal turns on what is fair and just as between parties - - principles applicable in applications to extend limitation periods must be applied cautiously in an application focusing on what is appropriate to do justice between the parties - prejudice to both parties relevant - no actual prejudice to respondent - MENTAL HEALTH - uncontradicted expert evidence before the primary judge that since at least September 1994 appellant incapable of managing her own affairs because afflicted by a form of schizophrenia - respondent concedes no personal responsibility for delay could be attributed to appellant - matter handled by inexperienced solicitors - primary judge concluded appellant had not demonstrated her mental disability explained delay HELD - primary judge’s exercise of discretion miscarried because she gave no, or insufficient, weight to appellant’s mental disability - appellant’s ability to pursue her proceedings with the diligence the law attributes to the reasonable person must have been gravely compromised by her mental disability - PROCEDURE - Pt 12 r 4C omitted from District Court Rules as part of civil procedure reforms effected in August 2005 - motion to extend time to apply to rescind deemed dismissal filed before omission but heard after - consideration of jurisdiction to grant relief HELD - substantive right in existence at time Pt 12 r 4C(4) omitted to have deemed dismissal order reconsidered and determined by the District Court protected by s 30 of the Interpretation Act 1987 - consideration of transitional provisions in Schedule 6 to Civil Procedure Act 2005 - COSTS - costs of application before primary judge - whether to be borne by appellant HELD - costs should follow the event - respondent’s opposition to application to rescind deemed dismissal “wholly unreasonable”. (D)
LEGISLATION CITED:	Civil Procedure Act 2005 District Court Act 1973 Interpretation Act 1987 Protected Estates Act 1983 Suitors’ Fund Act 1951 Corporations Act 2001 (Cth) District Court Rules 1973 District Court Amendment (Uniform Civil Procedure) Rule 2005 Uniform Civil Procedure Rules 2005
CASES CITED:	Andresakis & Skouteris t/as Andresakis & Associates v Alexus Holdings Pty Ltd [2006] NSWCA 294 Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 Design and Survey Neon Pty Ltd v Davies [2004] NSWCA 274 Esber v The Commonwealth [1992] HCA 20; (1992) 174 CLR 430 Falconer v Laird [2003] NSWCA 114 Fisher v Madden [2002] NSWCA 28; (2002) 54 NSWLR 179 Gordon v Tolcher in his capacity as liquidator of Senafield Pty Ltd (In liquidation) [2006] HCA 62 Harding v Bourke [2000] NSWCA 60; (2000) 48 NSWLR 598 Holt v Wynter (2000) 49 NSWLR 128 Itex Graphix Pty Ltd v Elliott [2002] NSWCA 104; (2002) 54 NSWLR 207 Micallef v ICI Australia Operations Pty Ltd & Anor [2001] NSWCA 274 Stollznow v Calvert [1980] 2 NSWLR 749 Wilson v Kochate Pty Ltd t/as Caradon Ski Park [2003] NSWCA 25 Witten v Lombard Australia Ltd (1968) 88 WN (Pt 1) (NSW) 405
PARTIES:	Adele Dib by her tutor Habib Dib - Appellant Paul Dylan Regtop - Respondent
FILE NUMBER(S):	CA 40336/06
COUNSEL:	C T Barry QC with J R K Pryde - Appellant M A Elkhaim SC with A J Stone - Respondent
SOLICITORS:	Carroll & O'Dea -- Appellant McCourts Solicitors - Respondent
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC 3342/94
LOWER COURT JUDICIAL OFFICER:	Balla J
LOWER COURT DATE OF DECISION:	10 February 2006

CA 40336/06
DC 3342/94

BEAZLEY JA
IPP JA
McCOLL JA

Wednesday 20 December 2006

ADELE DIB by her tutor HABIB DIB v PAUL DYLAN REGTOP

Judgment

1 BEAZLEY JA: I agree with McColl JA

2 IPP JA: I agree with McColl JA.

3 McCOLL JA: This is an application for leave to appeal and appeal which have been heard concurrently. The judgment under challenge is a decision of Balla DCJ dismissing the claimant’s Notice of Motion filed on 3 August 2005 seeking an extension of time pursuant to District Court Rules 1973 Pt 3 r 2 to bring an application under DCR Pt 12 r 4C(4) to rescind the deemed dismissal of the proceedings and, if granted, to rescind that deemed dismissal.

4 Leave to appeal should be granted as the primary judge’s exercise of discretion manifestly miscarried in a manner requiring this Court to intervene.

5 Part 12 r 4C provided, in substance, that if as at 1 January 1998 an action which had been commenced before 1 January 1996 by the lodging of an ordinary statement of claim, had not been disposed by judgment or final order, but had been adjourned, and remained adjourned on 1 January 1998, the action was “on that date deemed to be dismissed.”

6 The appellant’s District Court proceedings, which were commenced in 1992, were deemed dismissed by virtue of that rule on 1 January 1998. The appellant has sought on at least two prior occasions to have the matter reinstated. The respondent has opposed each application. It has conceded that no personal fault for the events surrounding the deemed dismissal can be attributed to the appellant. This is no doubt because there was uncontradicted expert evidence before the primary judge, led by the appellant, that since at least September 1994 she has been incapable of managing her own affairs because she was afflicted by a form of schizophrenia.

7 In my view there should be an extension of time for the appellant to bring her application to rescind the deemed dismissal, and the deemed dismissal should be rescinded.

Legislative framework

8 Until 15 August 2005 DCR Pt 12 r 4C relevantly provided:

“ Dismissal of dormant actions commenced before 1.1.96

(1) This rule applies to actions which were commenced before 1 January 1996:

(a) by the lodging of an ordinary statement of claim; or

(b) by the lodging of a statement of liquidated claim and in which notice of grounds of defence has been filed,

which have not been disposed of by judgment or final order.

…

(3) If:

(a) an action to which this rule applies has been adjourned;

(b) the adjournment is not to a specified date or a specified sittings for hearing, directions or other purpose, or to any ‘Not Ready List’ maintained in accordance with Practice Note No 33; and

(c) the action remains so adjourned on 1 January 1998, the action is on that date deemed to be dismissed.

(4) The Court may if it thinks fit by order rescind a dismissal which is deemed to have occurred through the operation of this rule if application for the order is made before 1 July 1998, and where such an order is made the Court shall give directions as to the future conduct of the action.”

9 The effect of deeming the action to be dismissed was that the outcome was that which would have obtained had there been a dismissal by Court order: see Gordon v Tolcher in his capacity as liquidator of Senafield Pty Ltd (In liquidation) [2006] HCA 62 at [24]. “Dismissal” was defined in Pt 1 r 4(1) as follows:

“dismiss , in relation to any proceedings, means finally dispose of the proceedings, but (except where the proceedings consist of an appeal to the Court) without prejudice to any right to commence fresh proceedings seeking the same, or substantially the same, relief.”

10 The effect of the definition of “dismissal” is that Pt 12 r 4C did not purport to affect the substantive rights of litigants in the District Court, but, at its highest “regulates the pursuit of those rights by the dismissed action in that court”; the time limit in r 4C(4) is capable of extension by resort to DCR Pt 3 r 2 nunc pro tunc: see Harding v Bourke [2000] NSWCA 60; (2000) 48 NSWLR 598 at [16], [25] per Mason P (Meagher and Heydon JJA agreeing).

11 As I have said the appellant’s Motion was filed on 3 August 2005. It was heard in January 2006 and decided on 10 February 2006. During this period, on 15 August 2005, the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 came into force.

12 Part 12 of the District Court Rules was omitted from those Rules as part of the civil procedure reforms by Sch 1 [44] of the District Court Amendment (Uniform Civil Procedure) Rule 2005 which took effect on 15 August 2005: NSW Government Gazette No 81, 1 July 2005 at p 3405, 3411. It was, accordingly not in force when the Motion was heard and decided. The question therefore arises as to what jurisdiction the primary judge was purporting to exercise when entertaining the Motion, an issue to which her Honour adverted, but did not resolve.

13 Part 12 r 4C(4) conferred jurisdiction on the District Court to grant relief by rescinding a deemed dismissal, and, in turn conferred a “right” on the appellant to apply for that order: Fisher v Madden [2002] NSWCA 28; (2002) 54 NSWLR 179 at [12] per Meagher JA. Once she exercised that right by filing the Motion prior to 15 August 2005, she had a substantive right, in existence at the time Pt 12 r 4C(4) was omitted from the District Court Rules, to have the deemed dismissal order reconsidered and determined by the District Court. In the absence of contrary intention that right was protected by s 30 of the Interpretation Act 1987: Esber v The Commonwealth [1992] HCA 20; (1992) 174 CLR 430 (at 440-441) per Mason CJ, Deane, Toohey and Gaudron JJ.

14 Section 30 relevantly provides that the amendment or repeal of a statutory rule does not affect the previous operation of the statutory rule or anything duly commenced under it, affect any right acquired under the statutory rule, or affect any legal proceeding in respect of any such right, which may be continued as if the statutory rule had not been amended or repealed. No contrary intention appeared in the amending rule, which is an “instrument” for the purposes of s 30 and, the Motion could be continued as if Pt 12 r 4C(4) had not been omitted.

15 The second possibility, and that advocated by the parties in written submissions filed after the hearing of the appeal, turns on Schedule 6, Savings, Transitional and Other Provisions, to the Act. Clause 10 of Schedule 6 provides:

“ 10 General saving

Subject to this Schedule and the regulations:

(a) anything begun before the commencement of this Act under a provision of the old legislation for which there is a corresponding provision in this Act or the uniform rules may be continued and completed under the old legislation as if this Act had not been enacted, and

(b) subject to paragraph (a), anything done under a provision of the old legislation for which there is a corresponding provision in this Act or the uniform rules (including anything arising under paragraph (a)) is taken to have been done under the corresponding provision of this Act or the uniform rules, as the case requires.”

16 Clause 2, Sch 6, relevantly defines “the old legislation” to mean the “District Court Act 1973 … and the rules of Court made under [that Act], as in force immediately before the commencement of this clause”.

17 There is no definition of “corresponding” in the Civil Procedure Act (cf s 1371 Corporations Act 2001 (Cth)), however it is sufficient to apply its dictionary definition of “to be similar or analogous; the equivalent in function”: Macquarie Dictionary.

18 There is no precise equivalent to Pt 12 r 4 in the Uniform Civil Procedure Rules, however the following provisions appear to sufficiently correspond with that rule to attract cl 10(a) of Schedule 6. UCPR 36.16 relevantly provides:

“ 36.16 Further power to set aside or vary judgment or order
(cf SCR Part 40, rule 9).

(1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order.

(2) The court may set aside or vary a judgment or order after it has been entered if:

…
(b) the judgment or order has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, …”

19 There is no suggestion that the deemed dismissal order was ever entered, however, even if it had been UCPR 36.16(2) would apply. Accordingly, the appellant’s Motion having been filed before the commencement of the Civil Procedure Act, under a provision of the District Court Rules for which there is a corresponding provision in the uniform rules, the Motion may be continued and completed under the old legislation.

20 During the hearing of the appeal some concern was expressed about UCPR 36.16(3) which appeared to preclude the court from setting aside an order which dismissed proceedings. However on further consideration I am satisfied that that rule confers an independent power and does not, as its prefatory phrase makes clear, limit the operation of UCPR 36.16(1) or (2).

Statement of the Case

21 On 13 December 1992, when aged 18, the appellant was injured in a motor vehicle accident. A CT brain scan taken within three days of the accident demonstrated a 1.5 x 1cm diameter intracerebral haematoma in the medial aspect of her left temporal lobe. The respondent admitted liability by letter dated 30 December 1993.

22 On 14 June 1994, the appellant commenced proceedings in the District Court to recover damages in respect of the injuries she sustained in the accident. Defences were filed in May and June 1995. From August 1995 a solicitor employed in the practice of which George Hovan was the principal had carriage of the matter.

23 In April 1995 the respondent wrote to the appellant’s solicitor noting that they had made an offer to settle the matter in December 1993 to which it did not appear the appellant had made any further counter offer, advised that the respondent wished “settlement negotiations to continue and in the absence of a counter offer has instructed us to put a further offer of $15,000 plus costs but inclusive of all accounts paid by our client.” The letter asked that the appellant’s instructions be obtained. The appeal papers do not disclose whether there was a reply to that letter.

24 Part 12 r 4A particulars were filed on 26 May 1995 on which date a praecipe for trial was also filed.

25 In November 1995 Dr Andrew Robertson, a consultant psychiatrist, advised the appellant’s solicitors that the appellant was suffering from a “schizophrenia-like psychosis” which appeared to have developed since the motor vehicle accident. He also expressed the view that “the possible connection between her brain injury and the development of her psychotic illness is quite difficult to estimate with any certainty at the present time.” Dr Robertson’s report was served on the respondent on 18 December 1995. On 17 April 1996 Dr Robertson wrote to the appellant’s solicitors advising that it was his “firm opinion” that she was “suffering from a schizophrenic illness”. Again he advised that “the evidence for a causal relationship between the closed head injury and the subsequent development of schizophrenia is by no means clear.” Dr Robertson’s report was served on the respondent on 10 May 1996.

26 In January 1996 the respondent filed a Notice of Motion seeking an order that the proceedings be dismissed for want of prosecution. For reasons it is unnecessary to explore that motion did not come before the District Court until 23 May 1996 on which occasion it was dismissed by consent with an order that the appellant pay the respondent’s costs and file an amended statement of particulars pursuant to Part 12 on or before 4 July 1996. The matter was adjourned for a status conference on 18 July 1996.

27 A handwritten note on the court file on 18 July 1996 recorded that there was no appearance by either party at 9.52am and “action struck out”. It appears that that order was made by McLachlan DCJ. A further note made the same day records that counsel appeared for the appellant at 2pm, that there was no appearance for the respondent but that McLachlan DCJ declined to vacate his earlier order but gave:

“Leave to approach my associate to have matter listed on short notice on condition that both parties are ready for a hearing date; the Plaintiff having put the Defendant in the position of being ready for a hearing date and being able to meet the case claimed. Plaintiff to notify Mr McCourt personally within 7 days from today.” (emphasis in original).

Mr McCourt was the respondent’s solicitor.

28 The appellant’s solicitors wrote to Mr McCourt on 23 July 1996 and advised him of McLachlan DCJ’s orders.

29 In 1996 the respondent’s solicitors made several appointments with a Dr Rawling to examine the appellant, but those appointments had to be rescheduled apparently because the appellant was in hospital.

30 In January 1997 Mr Ayoub, a newly admitted solicitor, took over carriage of the appellant’s file. He was, regrettably, unaware of the provisions of DCR Pt 12 r 4C as, too, was Mr Hovan who specialised in criminal law. In January 1997 Mr Ayoub spoke with the appellant for about 45 minutes. He next appears to have spoken to her in December 1997 when he arranged to speak with her again at 3pm the following day. He made five unsuccessful attempts to call her that day and another on 5 December 1997.

31 By virtue of Pt 12 r 4C the proceedings were deemed to have been dismissed on 1 January 1998. It does not appear that the District Court notified the parties of the deemed dismissal and, so far as the evidence reveals, the appellant’s legal representatives did not become aware of it for another two years. There is no suggestion that the appellant personally became aware of the deemed dismissal.

32 Mr Ayoub continued to prepare the matter. In July 1998 he finally obtained new contact details for the appellant. He also appears to have been briefing counsel throughout that period and advised same in November 1998 that:

“… the matter is still on foot and … will eventually receive a hearing date.”

33 In February 1999 an amended Pt 9 r 27 statement was served on the respondent’s solicitors without apparently eliciting any comment.

34 In 1999 further steps were taken to prepare the matter for hearing: medical reports were sought and advice obtained from counsel.

35 On 16 August 1999 a file note on the solicitor’s file recorded a telephone call apparently made to the District Court and that:

“… on 18.07.1996 Judge McLachlan granted leave to have the matter listed for hearing and there was no application and listing subsequent to that.”

36 In March 2000 the appellant’s solicitors wrote to the respondent’s solicitors advising:

“… we are taking steps to bring the matter to a conclusion. In perusing the file we note that we do not have a legible copy of our client’s personal injury claim form and request that you furnish a copy to us.”

37 On 30 March 2000 the respondent’s solicitors responded advising that the proceedings had been dismissed pursuant to DCR Pt 12 r 4C in that:

“i. These proceedings as of 1 January 1998 were adjourned and not adjourned to any specified date or sittings or in any ‘not ready’ list maintained in accordance with Practice Note 33;

ii. no application was made to rescind the deemed dismissal before 1 July 1998.

Accordingly, that is the end of the matter.”

38 Thereafter, although a fairly prompt advice was received from counsel to the effect that application should be made to rescind the dismissal, little appears to have happened in the matter until August 2001 when the appellant’s file was transferred to a new firm of solicitors, Andrew Fegent & Co. Mr Fegent does not appear to have appreciated the fact that the proceedings had been deemed dismissed as of 1 January 1998 either for, on 5 November 2001, he served an amended Pt 9 r 27 statement. The respondent’s solicitors then advised him of the deemed dismissal.

39 In December 2001, he filed a notice of motion to restore the matter to the list. That motion was unsuccessful, as, too was another filed in April 2002 seeking to rescind the deemed dismissal. It is unnecessary to explore the reasons for their failure.

40 Mr Fegent met the appellant about four times. He described her as very difficult to work with and said she appeared mentally unstable. He had difficulty in obtaining instructions and on several occasions she stormed out of his office. He was in two minds as to whether she was capable of giving instructions and considered “obtaining a psychiatric report and having someone appointed.” He did not take that step.

41 From January 2002 a Mr Capolupo took over carriage of the appellant’s file. In June 2002 he commenced a professional negligence action on her behalf against her former solicitor, George Hovan. The copy of the statement of claim in the appeal papers is difficult to decipher, but appeared to allege among a plethora of particulars of negligence, that Mr Hovan had been negligent in failing to prosecute the motor accident proceedings diligently and in failing to have them reinstated following their deemed dismissal.

42 In November 2003 there was a hearing before Murrell DCJ in the professional negligence proceedings in which Mr Hovan sought leave to file his Notice of Grounds of Defence. In the course of debate before her Honour, Mr Seton, who appeared for Mr Hovan, argued that there had been no deemed dismissal of the proceedings because McLachlan DCJ had not adjourned the matter on 18 July 1996, rather he had struck it out. He submitted accordingly that the threshold requirement for Pt 12 r 4C to attach (that the proceedings had been adjourned and remained adjourned on 1 January 1998) was not satisfied. Accordingly he contended the appellant had not suffered any loss because “the proceedings are still on foot and they are capable of being restored.”

43 Murrell DCJ rejected that submission concluding that the appellant’s motor vehicle proceedings:

“… were dormant because they had been, to use the words in the Macquarie Dictionary, postponed, suspended or transferred. It seems to me that Pt 12 r 4C was designed to catch actions such as the plaintiff’s motor vehicle accident action and that the word adjourned should be interpreted in that context … it is my view that the defendant’s contention of the motor vehicle accident proceedings were not adjourned is unarguable…”

44 Before the primary judge the parties conceded that the action was deemed dismissed pursuant to Pt 12 r 4C(3) on 1 January 1998.

45 When, in due course, the defence was filed in the professional negligence proceedings it appears to have alleged that negligence by Andrew Fegent & Co was a supervening cause of any loss the appellant had suffered. A cross-claim to that effect was also filed against that firm which, in consequence, ceased to act on her behalf. Her current solicitors were then instructed. They briefed senior and junior counsel who advised that a further motion should be brought seeking to rescind the deemed dismissal.

46 The Motion seeking those orders was filed, as I have noted, on 3 August 2005. It was supported by affidavits and seventeen paginated volumes of exhibited material, including expert evidence as to the appellant’s mental condition from two medical practitioners she had consulted since soon after the accident.

47 Dr Goard, a clinical and neuro-psychologist, first saw the appellant in September 1994 and on a number of occasions in the following years. His opinion, as at 15 September 2005, was that she was:

“… highly incapable of managing her own affairs, in a competent and rational manner, during a period from September 1994 onwards and, more particularly, from 1996 onwards.”

48 Counsel for the respondent conceded before the primary judge that the appellant could bring a second application to rescind the deemed dismissal without having appealed from the first unsuccessful rescission application.

49 Dr Robertson, to whom I have earlier referred, expressed the opinion as at 27 July 2005 that he had:

“… no doubt that from 1996 and onwards, Ms Dib was incapable of managing her own affairs in relation to her motor vehicle claim. This was because of a schizophrenic illness, arising from the motor accident of 13 December 1992, and the traumatic brain injury which she suffered in that accident. My description of her mental state in my reports of 16 November 1995 and subsequently can leave no doubt of her incapability.”

50 The respondent did not cross-examine either doctor, or lead any contradictory medical evidence.

The primary judgement

51 The primary judge said she was required to undertake a two step process: first, to decide whether the six month time limit for the bringing of an application to rescind the deemed dismissal should be extended and secondly, whether the deemed dismissal should be rescinded. She directed herself that in relation to each step, “the discretion should be exercised in the interests of justice to achieve what is fair and just” and that “in view of the significant delay since both the date of accident and the date on which the proceedings were dismissed this test will necessarily involve a consideration of whether a fair trial is now possible, bearing in mind that for a trial to be fair it need not be perfect or ideal.”

52 The primary judge said she took the following matters into account in determining whether to exercise the discretion to extend the six month time limit for the bringing of the application to rescind the deemed dismissal:

“A. DELAY

Senior counsel for the plaintiff submitted that I should find that the complexity of the plaintiff's medical condition and its causal relationship to the accident had been too difficult for the plaintiff's solicitors who had been incompetent and inexperienced and this accounted for their failure to properly prosecute the plaintiff's claim which explained the early delay.

In circumstances where a professional negligence action has been commenced against Hovan & Co I do not think it appropriate or necessary to make findings in relation to their competence in their conduct of the plaintiff's claim.

The defendant concedes that the matter was properly conducted up until 1996.

The solicitor's file shows that very little was done from 1996 to the dismissal of the matter in January 1998. It is clear that the solicitors engaged by Mr Hovan were very junior and relatively very inexperienced. It has been conceded that the relevant solicitors did not appreciate that the Rules provided for a deemed dismissal procedure and that they must have believed that the Orders of Judge McLachlan meant that they could have the matter listed for hearing at any time. These matters provide an explanation for the way the matter was handled up to that time and explain the delay until the solicitors were informed by the solicitor for the defendant in March 2000 that the matter had been struck out.

Senior counsel for the plaintiff submitted that the solicitor for the defendant should have informed the solicitor for the plaintiff that these proceedings had been dismissed when he served the amended statement of particulars in February 1999. He invited me to infer that the defendant was then aware that the plaintiff's solicitors did not appreciate that the matter had been struck out and that they accordingly were the cause of the delay until March 2000.

I decline to draw that inference and conclusion. Firstly there was no obligation on the solicitor for the defendant to tell the solicitor for the plaintiff. Secondly I am not persuaded that it is reasonable to conclude that, even if it had occurred, any action would have been taken by the solicitor for the plaintiff bearing in mind that very little happened after they were told in March 2000 and even after an advice and draft Application were received from Mr Terracini SC.

Senior counsel for the plaintiff submitted that the most important explanation for the delay was the plaintiff's incapacity. That incapacity meant that the rules of case management should not apply.

For the purposes of this application it has been shown that the plaintiff currently suffers from severe and disabling schizophrenia. Clearly the aetiology of the condition will be an issue in any claim by the plaintiff for damages.

However I am not persuaded that the plaintiff has shown that the condition was of itself a significant factor in the delay which occurred up until the expiration of the six month time limit for the bringing of an application to rescind the dismissal. I have arrived at this finding for the following reasons:

1. the plaintiff's brother gave evidence in these proceedings. He described the plaintiff's condition as having progressed slowly so that in the past 5 years it had really taken a toll. He agreed that there had been a gradual deterioration over time and that the rate of deterioration had increased in the last couple of years.


2. Mr Hovan gave evidence. Unfortunately he has had no independent recollection of the plaintiff's case. His evidence was based on what he has read in the plaintiff's file.


I am satisfied that Mr Hovan must have dealt personally with the plaintiff's file on some occasions during this period because his reference is on correspondence.

Mr Hovan practised almost exclusively in criminal law. It was his usual practice to do something if he developed concerns about any client's capacity to give proper instructions. The file does not suggest that any such steps were taken.

3. Senior counsel for the plaintiff conceded that there are no contemporaneous documents or other evidence which suggest that the matter did not progress due to any difficulty in obtaining instructions from the plaintiff. The solicitors were informed by the plaintiff in around August 1996 that she had been in hospital for two weeks, she attended a conference on 23 January 1997 and participated in a 45 minute telephone conference. There were two days on which the solicitor could not contact her by telephone.

The matter was then dismissed. There is no note of any activity at all emanating from the plaintiff's firm over the ensuing six months. I accept that it is possible that her mental state might have prevented the plaintiff from calling to check on the progress of her claim but I am not persuaded that there is sufficient evidence for me to give this consideration much weight.

4. Two experts now speak of the plaintiff's incapacity during that period.


Dr Robertson, a psychiatrist, in a report darted 27 July 2005 says that he has "no doubt" that the plaintiff was incapable of managing her affairs from 1996 and onwards. Mr Goard, a neuro-psychologist in a report dated 15 September 2005 said that the plaintiff was highly incapable of managing her own affairs in a competent and rational manner from September 1994 and onwards and more particularly after 1996.

I accept however the submission made by counsel for the defendant that these opinions, prepared for this application, must be read with the contemporaneous reports.

By late 1995 the doctors suspected that the plaintiff had developed schizophrenia. Dr Robertson recommended treatment in November 1995 and spoke to her treating psychologist Mr David Green. Mr Goard saw her in March 1996. He thought she had brain damage and probably a psychosis.
At this stage the doctors were taking histories from the plaintiff who seemed to be able to describe the accident and provide a chronological if not always completely accurate account of the events leading up to the date of the review. This was accompanied by a history of hearing voices and other unusual behaviour which ultimately led to the diagnosis of schizophrenia. For example in June 1996 Dr Skinner said that the plaintiff was able to give a clear and coherent account, that her affect was appropriate and responsive and that during the course of the conversation she had a call on her mobile phone which she seemed to answer appropriately.


I am not persuaded that the plaintiff has shown that her lack of capacity provides a primary explanation for the delay up to the time when the solicitor for the plaintiff became aware that the matter had been dismissed.

However I accept that the plaintiff's disability must have played a role in the ensuing delay.

Unfortunately it is difficult to form any view as to her condition from contemporaneous observations by doctors because there are no medical reports over the period June 1996 to September 1998. In 1998 Mr Goard recorded that when he first saw the plaintiff in 1995 she believed that she was a witch, that she was in a battle with evil, she had turned the evil eye on her dog and became obsessed with "The Concept", being a power throughout the universe which she fended off by praying to God.

However, Mr Goard said, she had recently recovered from that mental torment and was able to engage in a rational discussion. She had held a temporary position in a bank for about three months that year and then had been dismissed. In a later report dated 19 January 2000 he referred to a consultation in April 1999 when the plaintiff was attending a taxation course hoping to become a consultant. When he saw her again in December 1999 she had worked at Victoria Barracks in a managerial position, hiring and firing staff and handling accounts. However she had been told that her work had not been of an acceptable standard and she was dismissed. She also said that she had left because there had been an incident with a member of the Army.

At the same time the reports also refer to the plaintiff talking very quickly, constantly switching from one topic to another and appearing to drift in and out of reality. In 2000 Mr Goard suggested "Where someone appears to drift in and out of reality, it is probably wise, for the time being at least, to have their financial affairs controlled by someone who is competent and responsible. Should she, in due course, reach a point where she is both mentally and emotionally stable, the management of her own finances can be passed over to her."

By December 2001 Dr Robertson described the plaintiff as having a 'gross formal thought disorder as a result of which she would flit from one topic to a quite unrelated topic ... As a result, it was not possible to take a coherent history ... She seemed to have little comprehension of the nature or purpose of the interview. She repeatedly expressed delusions of precognitions (‘premonitions’), but denied delusions of influence. At one stage she appeared to be indicating that thoughts were put into her mind and she asked if this happened to me. Her affect was markedly labile and quite inappropriate at times she would burst into tears for no apparent reason.’

On the other hand, I am not persuaded that the plaintiff's condition played the pivotal role outlined by senior counsel for the plaintiff. It is not evident from any entry in her file. There is no evidence from any solicitor suggesting that her condition precluded them from obtaining instructions for most of the period.

Mr Fegent has extensive experience in personal injury litigation including major claims. He was and is familiar with the need for a client to have legal capacity. He met the plaintiff. He did not, during the period he acted for the plaintiff, take any steps to have a tutor appointed in these proceedings. Mr Capalupo conferred with the plaintiff in March 2002 and thought that the plaintiff appeared quite lucid and able to understand his advice. in October 2003 he believed that the plaintiff was competent to give him instructions in relation to an offer of settlement. I was not taken to any advice from any of the barristers retained by the plaintiff in which any issue was raised as to the plaintiff's capacity.

Apart from her disability, there is no other substantive explanation for the delay which occurred in that lengthy period. In particular there is no explanation for the failure of the solicitor to act after becoming aware that the matter had been dismissed and then receiving an advice from Mr Terracini in May 2000 although Hovan & Co remained the plaintiff's solicitors until at least May 2001.

Mr Fegent took over the matter in October 2001. Initially they acted by filing a Notice of Motion although no supporting evidence was filed. The second attempt was unsuccessful.

Mr Fegent and Mr Capolupo then decided to focus on the professional negligence proceedings .

The current solicitors took over the file in October 2004. This application was filed on 3 August 2005. Obviously some delay was caused by the obtaining of legal advice. I accept however the submission made by counsel for the defendant that this can not account for all of the delay in circumstances where most of the evidence was filed and served well after the filing of the Notice of Motion.

This is not a matter in which there is an express requirement for there to be a full and satisfactory explanation for the whole of the delay. However as senior counsel for the plaintiff conceded the Court obviously ought to be told the reason for any significant delay. I accept the submission made by counsel for the defendant that it is in the interests of the system of justice itself that there be forensic diligence in the pursuit of proceedings.

For the reasons I have already given I am not satisfied that such an explanation has been provided.

B. DELIBERATE DECISION BY THE PLAINTIFF

The decision in ltex Graphix Pty Limited v Elliott [2002] NSWCA 104 is support for the proposition relied on by counsel for the defendant for the period after the commencement of the professional negligence action. The NSW Court of Appeal did hold that a deliberate decision not to pursue a cause of action can be a factor tending against the grant of leave.

However, I am not persuaded that any such decision by the solicitors can be described as a decision made by the plaintiff in view of her mental condition by 2002.

C. UNJUST TO REFUSE

Senior counsel for the plaintiff submitted that there is strong evidence that the plaintiff's schizophrenia was caused by the injury sustained in the motor vehicle accident.

Accordingly it would be manifestly unjust if the defendant, who had caused her schizophrenia, could then rely on her failure to properly prosecute her claim because of that schizophrenia.

The proposition was conceded by the defendant as a matter of law, but the underlying factual matters were not conceded.

I accept the submissions made by counsel for the defendant. Clearly the causation issue is a matter to be determined by the trial Judge. However I accept that, for the purposes of this application, the medical reports tendered in evidence, show a significant divergence of views on the issue of causation. It is common ground that the medical evidence is to the effect that the cause of schizophrenia has not yet been identified. The scientific literature identifies factors which have a relatively high correlation to schizophrenia. The most important are traumatic brain injury, family history and the use of marijuana. All three of these factors apply to the plaintiff.

In addition I also accept that many of those doctors, in arriving at their opinions, have assumed facts which will be strongly in issue at any hearing.

Further, the plaintiff has not shown, for the reasons I have already given, that the failure to prosecute her claim has been caused by her schizophrenia.

I accordingly do not accept this submission by senior counsel for the plaintiff.

D. NO PERSONAL FAULT ON THE PART OF THE PLAINTIFF

It was submitted by senior counsel for the plaintiff and conceded by counsel for the defendant that there was no evidence of any personal fault on the part of the plaintiff.

E. LIMITATIONS ON PROFESSIONAL NEGLIGENCE CLAIM

Clearly, the plaintiff's loss of an action to claim damages is a significant and relevant consideration. Liability has been admitted by the motor accident insurer and, if the dismissal is rescinded, the matter would proceed as an assessment.

An alternative action has been commenced against the solicitor’s professional negligence insurer. I consider that the possibility of the plaintiff having another cause of action is in itself of little weight.

[Her Honour then considered the damages the plaintiff might recover in the motor vehicle action as opposed to the professional negligence proceedings.]

….. the professional negligence action, if successful, is unlikely to provide the plaintiff with full compensation for the following reasons - the $10,000 excess which the solicitor is unlikely to pay and the policy limit of $1,500,000.

For these reasons I have not taken into account the plaintiff's professional negligence claim.

F. PRIMA FACIE CASE

It is conceded by the defendant that the plaintiff can make out a prima facie case if the medical evidence most favourable to the plaintiff is accepted.

G. FAIRNESS

Counsel for the defendant submitted that in the exercise of the discretion it would not be fair to require the defendant to defend the matter in light of its overall prospects and merits.

It was put that on a brief review of the medical evidence the most likely outcome would be based on the view taken by Dr Bell. Dr Bell was qualified by the plaintiff and the doctor who has been provided with the most accurate and full history. His current opinion is that the injury sustained in the motor vehicle accident aggravated the plaintiff's pre-existing schizophrenia. Counsel for the defendant submitted that any such finding would result in a modest award of non-economic loss.

I do not accept this submission for a number of reasons. Firstly I do not consider it appropriate to make any finding as to the likely outcome on the causation issue. Secondly the defendant to the motor accident claim has admitted liability. In those circumstances the plaintiff is otherwise entitled to an assessment of her damages no matter how complex that exercise might be.

I decline to take this issue into account in the exercise of the discretion.

H. PREJUDICE

Senior counsel for the plaintiff submitted that there was no evidence of any prejudice to the defendant. He submitted that:

· medical records and reports were available;

· the plaintiff had been medically examined at the request of the defendant in 1996;

· the plaintiff's condition had not changed since 1995.

· none of the defendant's doctors had suggested that they had been unable to assess the plaintiff because of the delay;

· all of the evidence of the plaintiff's behaviour immediately before the accident was still available.

Accordingly the matter was in the same state as if the deemed dismissal had been rescinded and the matter heard five years ago.

Senior counsel for the plaintiff submitted that in fact the defendant is in a better position than it would have otherwise have been because it now has the opportunity of cross-examining witnesses whose recollection is likely to be impaired because of the delay thus decreasing the plaintiff's chance of showing the causal nexus between her medical condition and the accident.

It is common ground that the issue of any prejudice is relevant. Firstly there is the presumptive prejudice which flows from delay:
‘The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods ... The enactment of time limitations has been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates." Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo, "what has been forgotten can rarely be shown". So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now "knowing" that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.’ ( Brisbane South Regional Health Authority v Taylor [1996] HCA 25, McHugh J).


Secondly I accept the submission made by counsel for the defendant that, in this case it is likely that there will be actual prejudice to the defendant if the Order is made.

This arises out of the claim for damages for schizophrenia caused by the accident. As I have already said the expert evidence is to the effect that three of the most important factors linked to the onset of that condition are traumatic brain injury, family history and the use of marijuana. The plaintiff has all three. Consequently an accurate history of her mental state and behaviour in the years leading up to the accident will be of great significance in determining whether there is any relationship between the accident and the plaintiff's schizophrenia.

In particular, the reason or reasons for the plaintiff failing the first year of her university course in the months before the accident are likely to be highly relevant to this issue. The evidence from the plaintiff's brother establishes that the records produced are unreliable and will be of no assistance. The fact that her family provided a false excuse to the university is a ground on which the reliability of their evidence in these proceedings can justifiably be questioned.

Counsel for the defendant submitted, and I accept, that as a result of the delay the best witness, the plaintiff, is now unavailable. Between 1998 and 2001 it is likely that she would have been capable of giving evidence although she may have stormed out from time to time. This submission was based on the evidence of Mr Fegent and Mr Capolupo as to their observations of the plaintiff at the time. Currently however she is unco-operative and refused to attend court during the hearing of this application.

Taking all of these matters into account I am not persuaded that the plaintiff has shown that it would be in the interests of justice to extend the six month time limit to bring an application to rescind the deemed dismissal.” (emphasis added).

53 Having reached that conclusion, the primary judge said it was not necessary to decide whether the deemed dismissal itself should be rescinded. The papers do not record an order formally dismissing the Motion but that is plainly what her Honour did.

Submission on appeal

54 The appellant’s basic submissions can be stated succinctly. First, she complains that the primary judge erred in a manner attracting appellate review of an exercise of discretion by applying a test appropriate to an application to extend a limitation period, rather than one which depended upon determining what the demands of justice required between the parties: see Andresakis & Skouteris t/as Andresakis & Associates v Alexus Holdings Pty Ltd [2006] NSWCA 294 (at [77]).

55 She also complains that the primary judge erred in failing to give sufficient weight to the disability from which she was suffering. She argues that the delay for each period until October 2005 was explained by incompetence on the part of her solicitors and her schizophrenia which factors compounded each other.

56 She drew attention to the primary judge’s finding that:

“ … it is possible that her mental state might have prevented the plaintiff from calling to check on the progress of her claim but I am not persuaded that there is sufficient evidence for me to give this consideration much weight.”

57 She submits that in the light of the fact that:

“(i) it is clear from the medical evidence the appellant was under a legal disability from at least September 1994;
(ii) senior counsel had advised in May 2000 that the solicitor should take urgent action;
(iii) notwithstanding that advice, and the fact they had been grossly negligent in the period up to that time, the solicitors took no action over the next ten months to ready the matter;
(iv) the appellant was not represented by a tutor at that time;
(v) the appellant’s brother attempts to speak to her solicitor were countered by a claim of privacy and confidentiality;
and
(vi) the appellant (consistent with her medical condition) declined to permit her brother to have any involvement in the claim”,

the primary judge should have found the overwhelming inference was that it was her schizophrenia which had led her to fail to pursue her solicitors to progress her claim.

58 The appellant also submits that the primary judge erred in substituting her own opinion of the appellant’s medical condition for that of Drs Goard and Robertson. She argues that the primary judge’s findings in relation to her schizophrenia gave undue weight to apparent lucidity and coherence from time to time and insufficient weight to the uncontested medical evidence that she was incapable of managing her affairs from1994 onwards.

59 Finally, the appellant complains that the primary judge erred because she only considered the prejudice to the opponent if the Motion was allowed, but failed to take into account the prejudice she would suffer if she lost her claim without it being heard on the merits: cf Wilson v Kochate Pty Ltdt/as Caradon Ski Park [2003] NSWCA 25 (at [16]) per Ipp JA.

60 The respondent submits that the primary judge did not err in principle and applied legal principles the appellant’s counsel conceded were applicable.

61 He argues that the primary judge was required to consider whether the appellant had provided an explanation for the delay in the proceedings which was both credible and satisfactory and that she had been entitled to conclude that such an explanation had not been provided.

62 The respondent accepts that there was no explanation required for the period up until 1996 when he conceded “the matter ran a fairly ordinary course”. As to the period between 1996 and 2001, however, the respondent submits that the fact little appeared to have been done was due to the incompetent manner in which the matter was handled by the appellant’s solicitors and that there was no evidence that her psychiatric condition had caused or contributed to their incompetence.

63 Insofar as the period after 2001 was concerned, the respondent again submits that there was no evidence that any shortcomings in presenting the two early applications to restore the matter to the list and to set aside the deemed dismissal could be attributed to the appellant’s psychiatric condition, nor that that condition had contributed to the pursuit of the professional negligence proceedings between 2002 and 2005.

64 Insofar as the period 2002-2004 is concerned the respondent, apparently relying upon Itex Graphix Pty Ltd v Elliott [2002] NSWCA 104; (2002) 54 NSWLR 207, submits, in substance, that the appellant chose to pursue alternate relief in the professional negligence proceedings. This submission cannot stand in light of the primary judge’s conclusion that the decision to pursue the professional negligence proceedings could not be attributed to the appellant having regard to her mental condition by 2002.

65 The respondent contends that when, apparently in 2004–2005, the appellant’s current solicitors decided a further application should be made to revive the motor accident proceedings, there was no suggestion that any inability to obtain instructions from the appellant caused or contributed to the delay in presenting that application.

66 The respondent also submits in respect of the appellant’s complaint that the primary judge had failed to give sufficient weight to her schizophrenia, that the appellant had never had a finding against her by the Guardianship Tribunal or the Protective Division of the Supreme Court pursuant to the Protected Estates Act 1983.

67 Finally, the respondent submits that the primary judge was entitled to conclude that he would suffer both presumptive and actual prejudice if the motor vehicle accident proceedings were reinstated. He argues that even though there might be a considerable volume of medical material available, there was a question mark as to its accuracy, a matter of great importance in determining the aetiology of schizophrenia. He submits the primary judge’s conclusion as to actual prejudice was correct. I shall return to the detail of this submission.

Consideration

68 The appellant submits the primary judge erred in exercising her discretion in two respects which, if made out, would attract appellate intervention: that she made an error of legal principle and/or failed to take into account, or gave insufficient weight to, her mental disability; see Micallef v ICI Australia Operations Pty Ltd & Anor [2001] NSWCA 274 (at [45]) per Heydon JA (Sheller JA and Studdert AJA agreeing). I turn first to the question of the legal principles to be applied on a Pt 12 r 4C(4) application.

69 The power to extend time within which an application could be made to rescind the dismissal order in DCR Pt 3 r 2, conferred a remedial discretion to extend time with a view to avoid injustice: Design and Survey Neon Pty Ltd v Davies [2004] NSWCA 274; app. Andresakis & Skouteris t/as Andresakis & Associates v Alexus Holdings Pty Ltd (at [54]).

70 The primary judge said that she should apply the same test in determining whether the six months limit for bringing the application to rescind the dismissal should be extended and, secondly, whether the dismissal should be rescinded. In Falconer v Laird [2003] NSWCA 114 (at [74]) Giles JA (with whom Handley and Beazley JJA agreed) observed that:

“Extension of time to apply for rescission of the deemed dismissal is not the same question as, and not necessarily governed by the same considerations as, rescission of the deemed dismissal.”

71 It is unnecessary to explore the different test which would apply to each exercise. The primary judge approached the issue on the basis, as will appear, of the tests which should have been applied on the substantive rescission application and it is appropriate to consider her decision on that basis.

72 In Falconer v Laird Giles JA also said (at [75]) that “where the discretion conferred by Pt 12 r 4C(4) was not given by content by criteria to be taken into account, the question was what was fair and just.” The same conclusion was reached in Andresakis & Skouteris t/as Andresakis & Associates v Alexus Holdings Pty Ltd (at [77]) where, on an application to set aside a Preliminary Dismissal Order pursuant to DCR Pt 1 r 7A(6), the Court concluded the question whether the proceedings should be reinstated turned on “the demands of justice … between the parties”. DCR Pt 1 r 7A(6) and Pt 12 r 4C(4) both enabled the Court to set aside either a Preliminary Dismissal Order or a deemed dismissal “as/if it thinks fit”. It is, accordingly, appropriate to proceed on the basis that the first test the primary judge identified was correct.

73 The second matter her Honour said “necessarily” had to be taken into account having regard to the “significant delay” since the date of the accident was “whether a fair trial is now possible”. The appellant complains that she erred in principle in this respect in applying a test appropriate to a limitation period extension application.

74 In Falconer v Laird (at [70]) Giles JA observed that:

“… whether there can be a fair trial of an action is not the same question as whether it is fair and just to grant the application. Whether there can be a fair trial of an action is, of course, a material and perhaps decisive consideration in answering the former question …”.

75 The extracts from the primary judge’s reasons I have set out demonstrate she took a range of matters into consideration in determining what was “fair and just”, of which the question whether a fair trial was possible was only one. While singling out the fair trial issue at the outset gave the appearance of suggesting her Honour treated that factor as determinative, a perusal of the judgment belies that impression. In my view, her Honour did not err as a matter of legal principle.

76 I turn to the appellant’s second complaint, that the primary judge failed to take into account, or gave insufficient weight to, her mental disability.

77 Factors such as explanation for the delay in prosecuting the proceedings, the blameworthiness of the appellant and/or her legal representatives, the availability of a secondary cause of action against the appellant’s former legal representatives and the prejudice to the parties were all relevant factors in determining how the Pt 12 r 4C(4) discretion might be exercised: see Andresakis & Skouteris t/as Andresakis & Associates v Alexus Holdings Pty Ltd (at [77]). None are determinative, however, for the “exercise of the Court’s discretion should not be fettered ‘by rigid rules’”: see Witten v Lombard Australia Ltd (1968) 88 WN (Pt 1) (NSW) 405 (at 411-412) per Walsh JA; cited with approval by Moffitt P in Stollznow v Calvert [1980] 2 NSWLR 749 (at 751-752), where the learned President also eschewed confining the exercise of a judicial discretion by “judge made rigid formulae”.

78 Although her Honour referred to each of these considerations, in my view, her discretion miscarried because she gave no, or insufficient, weight to the appellant’s mental disability (and the respondent’s concession that no personal blame for the events which had transpired could be attributed to the appellant) and the prejudice to her of losing the rescission application.

79 Further, in my view, her Honour erred in concluding the respondent had established relevant prejudice to it if the application to rescind the deemed dismissal was granted.

80 The matter can be put in perspective, by extracting her Honour’s critical findings on the delay issue bearing in mind the uncontradicted expert evidence that the appellant lacked the capacity to manage her affairs “from September 1994 onwards”.

81 First, the respondent conceded that the matter was properly conducted until 1996. As to the period 1996 until 2000 her Honour accepted there was an explanation (little was done on the matter by solicitors who were “very junior and relevantly very inexperienced”, did not know about the deemed dismissal procedure and believed the matter could be listed at any time), but rejected the submission that the appellant’s lack of capacity provided a “primary explanation” for the delay up to 2000 when her solicitors became aware of the seemed dismissal. While her Honour accepted it was possible the appellant’s “mental state might have prevented [her] from calling to check on the progress of her claim” she was not satisfied there was “sufficient evidence” to “give this consideration much weight.”

82 This was because notwithstanding the expert evidence, her Honour accepted a submission by counsel for the respondent that Dr Robertson and Dr Goard’s opinions had to be read with the contemporaneous reports and events. Her Honour relied on the absence of any action on Mr Hovan’s part to “do something” as demonstrating he had not developed a concern about the appellant’s capacity to give proper instructions. Having regard to the generally indolent manner in which Mr Hovan handled the matter, including assigning its conduct to the junior and very inexperienced solicitors upon whose conduct the primary judge had already remarked, little could be drawn, in my view, from inaction on his part. More significantly, her Honour did not explain why a solicitor’s failure to appreciate the appellant’s mental capacity outweighed the expert evidence.

83 Her Honour also appears to have regarded the significance of the expert evidence as having diminished weight because during this period (pre-2000):

“… the doctors were taking histories from the plaintiff who seemed to be able to describe the accident and provide a chronological if not always completely accurate account of the events leading up to the date of the review.”

notwithstanding that she also noted:

“This was accompanied by a history of hearing voices and other unusual behaviour which ultimately led to the diagnosis of schizophrenia.”

84 In my view these records did not lessen the weight of the expert evidence. Rather they reinforced the proposition that the appellant’s behaviour fluctuated wildly and, in particular, that she was divorced from reality in significant respects.

85 The primary judge also relied on the fact that the appellant’s brother reported that her condition had deteriorated in the five years prior to the application. In my view that fact provided no cogent reason for not accepting the expert evidence as to the appellant’s mental capacity prior to 2000.

86 It is true, as her Honour noted, that during this period the appellant held down at least two apparently short-term jobs from each of which she had been dismissed. To my mind those dismissals support, rather than detract from the picture of a person afflicted by a mental disability.

87 Her Honour noted, but again appeared to give little or no weight to, the fact that by 2000 the appellant was drifting in and out of reality and Dr Goard suggested at that time, that her affairs should be “controlled by someone who is competent and responsible.”

88 Although the primary judge accepted that the appellant’s disability must have played a role in the delay after 2000 when her solicitor became aware of the deemed dismissal, (noting that Dr Robertson by 2001 described the appellant as having a “gross formal thought disorder”) she concluded, again, that she was not persuaded the appellant’s condition played “the pivotal role outlined by [her] senior counsel.” This was because of the dearth of records in the solicitors’ files “suggesting that [the appellant’s] condition precluded them from obtaining instructions for most of the period,” and the fact that neither Mr Fegent or Mr Capalupo (at least early in the period he was acting for the appellant) took any steps to have a tutor appointed.

89 Again her Honour’s conclusions in this respect were inconsistent with the expert evidence and, too, her earlier finding that:

“Mr Fegent met with the plaintiff about four times. He described the plaintiff as very difficult to work with and said that she appeared mentally unstable. He had difficulty in obtaining instructions and on several occasions stormed out of his office.”

90 To this I would add the fact that in his affidavit Mr Fegent said that while he was handling the appellant’s file he was:

“… in two minds as to whether she was capable of giving instructions and … considered obtaining a psychiatric report and having someone appointed.”

91 Further, at the time Mr Capolupo had conduct of the matter in November 2003, he filed an undertaking from the appellant’s brother to act as her tutor in the professional negligence proceedings.

92 The period 2002–2004 during which the professional negligence proceedings were being pursued can be put to one side as the primary judge concluded that, in view of the appellant’s mental condition by that time, their pursuit could not be considered a deliberate decision by her not to pursue the motor accident proceedings. Accordingly she must have accepted that from at least 2002 the appellant’s mental incapacity meant she was incapable of making a rational decision in relation to the proceedings.

93 Her consideration of the last period of “delay” turns solely, therefore, on what the appellant’s current solicitors did once they assumed conduct of the matter.

94 In this respect, her Honour concluded there was no sufficient explanation for the delay between October 2004 and August 2005 when the Motion was filed, “particularly as most of the evidence and affidavits were filed after the Motion”.

95 At the time the Motion was filed the appellant’s solicitor filed a detailed affidavit describing the appellant’s mental disability, the complexity of the matter, the number of different solicitors who had handled it, the steps she had taken undertaken to seek to contact each of those solicitors (with Mr Hovan being particularly difficult to procure an affidavit from as he was by then in gaol) the briefing of senior and junior counsel and their advice to pursue another rescission motion. The primary judge did not refer to any of that evidence. In my view it provided a satisfactory explanation for the passage of time between late 2004 and the filing of the Motion. The appellant’s solicitors were effectively “in the dark”; the appellant could not tell them what had happened; they had to re-create the events of the previous twelve years by examining the documents, tracking down relevant witnesses and procuring advice from Counsel. The material to be analysed was voluminous. In my view it could not be said that the time that elapsed between late 2004 when the current solicitors were retained and when the Motion was filed was not satisfactorily explained.

96 As this analysis demonstrates, the primary judge appears to have given no weight to the uncontradicted expert evidence that since September 1994 the appellant had been incapable of managing her affairs. This evidence was compelling, coming as it did from two medical practitioners who had been involved in reviewing the appellant’s medical condition since soon after her accident. But even if it was a permissible approach to test the validity of those opinions by reference to contemporary document, those records, too, gave a picture of a person drifting in and out of reality to such an extent that schizophrenia was diagnosed comparatively early in the peace. It may be a matter of debate as to why those medical records did not lead her legal representatives to consider appointing a tutor, but their inaction in this respect does not, in my view, diminish the expert evidence of her inability to manage her affairs throughout the relevant period.

97 Once it was accepted that the appellant’s incapacity had subsisted since September 1994, the inference that her incapacity played a substantial role in the manner in which her motor vehicle accident proceedings were conducted was inevitable. It is not to point, as the respondent submits, that no formal order had been made under the Protected Estates Act. As a person incapable of managing her affairs according to expert evidence, her ability to pursue her proceedings with the diligence the law attributes to the reasonable person must have been gravely compromised.

98 The primary judge also erred, in my view, in giving insufficient weight to the actual prejudice to the appellant if the proceedings were not reinstated. The primary judge referred, in passing, to the fact that “the plaintiff’s loss of an action to claim damages is a significant and relevant consideration”, noted that the professional negligence proceedings were unlikely to provide her with full compensation and, too, that as liability had been admitted, the matter would proceed as an assessment and accepted the appellant was entitled to an assessment of her damages no matter how complex that exercise might be. These matters all told heavily in favour of acceding to the rescission application particularly in circumstances where the respondent acknowledged no personal fault for the delay could be attributed to the appellant.

99 Further the primary judge erred in finding the respondent would suffer prejudice.

100 The first matter of actual prejudice upon which the respondent relied, and which her Honour accepted, depended upon the proposition that determining the aetiology of schizophrenia depended on accurate family histories. The respondent persuaded her Honour that the appellant’s family would not give reliable evidence in this respect. This was because of what was said to have been a false explanation the appellant and her mother had given to university authorities in 1993 at the start of her second year of university, when she sought to overturn her exclusion from her course on the basis of family disruption during her first year of studies. The conclusion that the explanation was false depended upon what the respondent submitted was a “confession” by the appellant in 1996 to a Dr Skinner, a doctor qualified by the respondent, that documents provided to the university in 1993 had been false. It also depended on evidence given by the appellant’s brother in cross-examination to the effect that, fourteen years after the event, his recollection of family relations (at a time when he was 16) did not accord with the account given by his sister and his mother to the university. Both the “confession” and the brother’s evidence were also used to cast doubt on the appellant’s mother’s credit having regard to her involvement in supporting her daughter’s application in 1993.

101 A “confession” to a doctor in 1996 at a time when the appellant was already suffering from a schizophrenia-like psychosis strikes me as inherently unreliable, certainly less reliable than documents she wrote in 1993 at a time when her mental disorder appeared to be in its early stages of development. As to the appellant’s brother’s account of family life, common experience demonstrates that one member of a family’s view of family life, particularly a different gendered member, may differ markedly from another’s. As to the submission about the appellant’s mother’s credibility I agree with the appellant’s submission that it was inappropriate to make an adverse finding in that respect when the appellant’s mother did not give evidence. I would also note that the appellant was one of several siblings. There was no suggestion that none of her siblings or her father would not give reliable family histories.

102 In my view her Honour erred in concluding that the appellant’s family could not give reliable evidence.

103 The next matter of actual prejudice upon which the respondent relied was that by virtue of the delay the appellant herself would most probably be unavailable as a witness. To the extent that is a matter of prejudice, (which I acknowledge it must be) it works both ways. The appellant’s inability to give evidence may make it more difficult for her to establish her case. It is not sufficient, however, to outweigh the overwhelming prejudice she will suffer if her matter is not permitted to proceed to a hearing. The primary judge erred in reaching the contrary conclusion.

104 Finally to the extent her Honour’s apparent finding of presumptive delay depended on applying McHugh J’s judgment in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 that was, in my view, an error. Those statements have particular resonance in applications for an extension of a limitation period where the focus is on whether the time bar should effectively be relaxed, but must be approached cautiously in an application which focuses on what is appropriate to do justice between the parties: see Andresakis & Skouteris t/as Andresakis & Associates v Alexus Holdings Pty Ltd (at [78] – [79]).

105 In my view the primary judge’s exercise of her discretion miscarried in a manner warranting appellate intervention. For the reasons I have given the time in which to consider the application to rescind the deemed dismissal should be extended and the deemed dismissal should be rescinded.

Costs of the application in the court below

106 The appellant seeks an order that the respondent pay her costs of the application before the primary judge on the basis that costs should follow the event: UCPR 42.1.

107 The respondent resists that order on two bases. First he argues by analogy with DCR Pt 39A r 32 that where a party applies for an extension of time then, unless the Court otherwise orders, “the party shall, after the conclusion of the proceedings, pay the costs of and occasioned by the application, or any order made on or in consequence of the application”. That rule appears to reflect the approach adopted in Holt v Wynter (2000) 49 NSWLR 128 where on an application for extension of a limitation period the Court ordered the successful plaintiff to pay the defendant's costs of the application such order not to be enforced prior to final judgment in the action without the leave of the District Court. DCR Pt 39A r 32 was not reproduced in the Uniform Civil Procedure Rules and, in my view, the prima facie principle that costs should follow the event should apply.

108 However the respondent seeks to attract the Court’s discretion to relieve against that prima facie principle because the appellant always needed to seek the court’s indulgence to proceed so that he should not be ordered to pay the costs below unless his conduct in resisting the application was “wholly unreasonable”.

109 In my view that conclusion is open. The respondent admitted liability in 1993. He tried to settle the matter. He was aware of the appellant’s mental condition from at least 1995 when Dr Robertson’s report was served on him. In March 1999 an amended Pt 9 r 27 statement was served on his solicitors without demur. Up until then, it appears, they were proceeding on the basis the matter was being readied for hearing. It does not appear to have occurred to those solicitors until March 2000 that the deemed dismissal provisions applied to the action. At its highest, therefore, at that stage there had been a deemed dismissal in place for just over two years in an action in which the plaintiff was suffering from schizophrenia.

110 While the conduct which should be considered to determine the costs outcome is the conduct in connection with the present application, it is of some relevance to note that the respondent has consistently opposed the applications to have the matter reinstated, a matter which as the foregoing discussion reveals, will have contributed to the difficulties of both parties in dealing with the critical issue of the aetiology of the appellant’s schizophrenia.

111 The appellant’s solicitors filed Dr Robertson’s and Dr Goard’s opinions of the appellant’s mental incapacity on 30 August 2005. From at least that time, if not before, the respondent must have been aware that the delay in the conduct of the matter could not be laid at her feet. The respondent ought not to have opposed the application to reinstate the proceedings.

112 In my view the respondent has not displaced the principle that costs below should follow the event.

Orders

113 The appellant sought orders setting aside McLachlan DCJ’s orders of 18 July 1996. It is appropriate to accede to that submission to ensure there is no further practical obstacle to the matter being listed for hearing.

114 I propose the following orders:

1. Grant leave to appeal.

2. Notice of Appeal to be filed within fourteen days.

3. Appeal allowed.

4. Orders of Balla DCJ of 10 February 2006 set aside.

5. Extend the time for the appellant’s application under Pt 12 r 4C(4) of the District Court Rules to seek an order rescinding the deemed dismissal of her action to 3 August 2005.

6. Pursuant to District Court Rules Pt 12 r 4C(4) rescind the deemed dismissal order of 1 January 1998.

7. Set aside McLachlan DCJ’s orders of 18 July 1996.

8. Direct that the action be listed for direction in the District Court on a date convenient to that Court and notified to the parties.

9. Respondent to pay the appellant’s costs of the application in the District Court from 30 August 2005.

10. Respondent to pay the appellant’s costs of the appeal and application for leave to appeal and have a certificate under the Suitors’ Fund Act 1951 if otherwise qualified.

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29/01/2007 - File number on cover sheet should be 40036/06 - Paragraph(s) Cover sheet