Eder v Malouf Solicitors
[2012] NSWDC 8
•15 February 2012
District Court
New South Wales
Medium Neutral Citation: Eder v Malouf Solicitors [2012] NSWDC 8 Hearing dates: 30/01/12-03/02/12 Decision date: 15 February 2012 Jurisdiction: Civil Before: Elkaim SC DCJ Decision: Verdict for the defendant with costs
Catchwords: Professional negligence. Loss of chance to have a case for a loss of chance. Legislation Cited: Civil Liability Act 2002
Legal Profession Act 1987
Limitation Act 1969
Trade Practices Act 1974Cases Cited: Arturi v Zupps Motors Pty Ltd (1980) 33 ALR 243
Johnson v Perez (1988) 166 CLR 351
Kitchen v Royal Air Forces Association & Ors [1958] 2 All ER 241Category: Principal judgment Parties: Herbert Eder (Plaintiff)
Malouf Solicitors (Defendant)Representation: S Bliim (Plaintiff)
M T McCulloch SC (Defendant)
Milne Berry Berger & Freedman (Plaintiff)
Wotton & Kearney (Defendant)
File Number(s): 2008/00318894 Publication restriction: No
Judgment
The plaintiff was born in Austria on xx xx 1945. There is little information about his activities in Austria but he seems to have lived in Australia since 1977. There is also little detail of his life in Australia other than that he was self-employed as a roofer, lagger and air conditioning fitter from 1960. He has not worked since November 1993. His average taxable income in the previous 3 years was $33,153.67. He now describes himself as a disabled pensioner.
The plaintiff says his life since early 1994, including his not working, has been dictated by the effects of an injury he suffered on 9 January 1994. On this date he had purchased a can of sausage and vegetable soup from the Coles supermarket at Merrylands.
Later in the day he heated the contents of the can in a microwave. He then began to consume the soup. Very shortly he felt "something hard and sharp" lodge in his throat. He found it difficult to breathe and could not dislodge the obstruction. He tried to vomit but did not succeed. He panicked and lay down on the kitchen floor. He then drank some vinegar that led him to vomit into a sink. He looked at the contents of the food he had thrown up and found what he described as "yellow coloured wooden splinters each approximately 2cm long" . Later testing disclosed the splinters to be " hardened carrot ".
The next day the plaintiff sought medical attention. The real problem has been a psychiatric reaction that continues to the present. Within a month of the injury he was diagnosed as a " depressed psychometer retarded patient " and prescribed anti-depressant medication (Dr Ali, 14 February 1994, Exhibit F).
The proceedings before me are the third action that has arisen from the consumption of the soup. The first was a case brought in the District Court against Southern Country Food Australia Pty Limited ("SCF") and Coles Myer Limited ("Coles"). The pleadings are in Exhibit G. SCF was the alleged manufacturer of the soup. Coles owned the supermarket in which it was purchased. These proceedings ended on 18 August 1997 with verdicts, by consent, for the defendants against the plaintiff.
The second set of proceedings, also in the District Court, was commenced against the Estate of John R Marsden and Others trading as Marsdens Solicitors and Barristers ("Marsdens") on 14 August 2003. Marsdens had acted for the plaintiff in the suit against SCF and Coles. These proceedings came to an end on 18 July 2007 when her Honour Judge Truss found that they had been commenced outside the limitation period prescribed by Section 14 of the Limitation Act 1969. The proceedings had been started by Malouf Solicitors ("Maloufs") on the plaintiff's behalf.
The third set of proceedings (the current case) was started on 5 September 2008. The defendant is Maloufs, which is said to have been negligent in its conduct of the claim against Marsdens.
The plaintiff is therefore suing Maloufs for not properly pursuing his claim against Marsdens who had in turn been negligent in dealing with the case against SCF and Coles. In other words the plaintiff is alleging a loss of chance to have an action for a loss of chance to recover damages caused by the injuries he suffered on 9 January 1994.
Most of the evidence was presented in affidavit form. A number of objections were taken to parts of the plaintiff's affidavits. The passages that I struck out have a line drawn through them.
The plaintiff was cross-examined on his affidavits. The deponents of the defendant's affidavits were not cross-examined. The defendant called an additional witness, Mr Woods, whose evidence in chief had not been reduced to affidavit form.
Assuming success for the plaintiff on each step I think the following issues arise in (reverse) chronological order:
(a) Was Maloufs negligent?
(b) What damages would the plaintiff have recovered at the agreed notional date of the trial in the action against Marsdens? The notional trial date was agreed as being 26 August 2007.
(c) The issue of damages includes consideration of the following:
(i) Was Marsdens negligent in its dealings with the plaintiff?
(ii) Would Marsdens have been liable in damages, assuming negligence, having regard to whether the plaintiff could establish he had lost a chance to successfully sue SCF and Coles?
(iii) What damages, at the agreed notional trial date of 9 January 1999, would have been recovered against SCF and/or Coles?
(d) What discount should be applied to any damages established against Maloufs, to reflect the loss of chance?
Because of the conclusion I have reached that Maloufs was not negligent there is no strict need to address the other issues. However in fairness to the parties and in case I am wrong in my conclusion about Maloufs I intend to also deal with the plaintiff's chances of success had his case against Marsdens been 'in time' and finally the plaintiff's chances of success in the original litigation against Coles and SCF. I do not intend to assess the plaintiff's damages for reasons I give below.
Before embarking on the above issues I think it necessary to state my conclusions on the plaintiff's reliability as a witness. I specifically use the word "reliability" rather than credit because I think my following comments are more a reflection on the weight that can be put on Mr Eder's evidence than an assessment of honesty.
The defendant submitted that the plaintiff should simply not be believed. It was said that cross-examination had comprehensively destroyed his credit. The plaintiff submitted that I should take into account his language difficulties and " lack of sophistication " before reaching any conclusion.
I certainly accept that the plaintiff does not have a sophisticated knowledge of the law. He is obviously not however an unintelligent man. Although he spoke with an accent his use of the English language was fluent and always understandable. There is nothing to suggest he has ever needed an interpreter in any of his dealings with lawyers. I also note that he has been involved in the legal process since 1994. He has consulted solicitors, dealt with Legal Aid and also with the Legal Services Commissioner.
I also appreciate that his affidavits were obviously settled by lawyers who used more technical language than might have been used by the plaintiff. On one occasion he told me that he did not really understand some of the language attributed to him (T 106.8). He also said he had read the affidavits before swearing them. I endeavoured to ensure he had the opportunity to read his affidavit material before he gave answers arising from their contents.
Nevertheless he gave a number of answers under cross-examination that plainly contradicted his affidavit evidence. Here are some important examples:
(a) In paragraph 39 of Exhibit A the plaintiff states that he did not receive a letter from Marsdens dated 27 February 1997. When he was shown the letter (Exhibit 1) he said he had received it (T 95.40 and T 97.35)
(b) In paragraph 41 of Exhibit A the plaintiff stated that Mr Marsden insisted he give approval to withdraw from the litigation proceedings and that he reluctantly signed a "typed up document" . This document is not in evidence but more importantly, under cross-examination, the plaintiff said the purpose of the letter as explained to him by Mr Marsden concerned issues with Legal Aid and the Legal Services Commissioner and did not concern the future of the legal proceedings (T 114.3).
(c) In addition, in paragraph 41 the plaintiff stated that he gave his approval for the District Court claim to be discontinued. In evidence he said that Mr Marsden had told him on 3 July 1997 that his case would remain "alive" (T 128.13).
(d) In paragraph 42 the plaintiff stated that the signature on the bottom right hand corner of Annexure K is not his signature. His counsel had said this was the position during opening discussions (T 55.29). When taken to the annexure the plaintiff said it was his signature (T 104.31 and 105.30).
(e) In paragraph 44 the plaintiff referred to a letter dated 4 July 1997 said to have been sent by Marsdens confirming Mr Eder's instructions taken the day before. He stated, "I say categorically that I did not receive such a letter from Marsdens" . Under cross-examination the plaintiff said that he could not say if it was received or not (T 140.49).
(f) The plaintiff said that he was not informed of his right to appeal from the refusal of Legal Aid until some months after July 1997. Even taking into account the postal error that occurred it is clear that he had this knowledge before 3 July 1997 and was also aware of the reason Legal Aid had been refused (see Exhibits 2 and 3).
As mentioned above, the only other person to give oral evidence was Mr Harry Woods, now a barrister. He worked as a solicitor for Marsdens from 1994 to late 1997. He mostly did criminal work but did have some civil files in 1996 and 1997. He was based in Campbelltown but visited other Marsdens' offices from time to time. Besides the above facts his memory of anything relevant to the current matter was virtually non-existent. He did not remember the plaintiff, he did not remember the facts of the case or the file and a perusal of Exhibit 7 did not jog his memory. In addition he could not recall the practices at the firm in respect of meetings with clients, taking notes or recording daily events.
I express no criticism of Mr Woods in saying that his oral evidence was of little assistance in determining the issues. The only positive assistance he could provide was in identifying the whole of the handwriting, besides the plaintiff's signature, on page 20 of Exhibit 7, as his own.
It is also important that no suggestion was made to Mr Woods that the contents of Exhibit 7 had been manufactured or created to give a false reading of the dealings between Marsdens and the plaintiff.
Despite Mr Woods' absence of memory, the contents of Exhibit 7 do give rise to a number of clear inferences and findings, some of which contradict the plaintiff's evidence. These include the following:
(a) I am satisfied that Mr Woods did deal with the file from 30 January 1997.
(b) His dealing with the file included meeting the plaintiff on 25 February 1997 (Exhibit 7, page 4), corresponding with the plaintiff (for example Exhibit 7, page 5), corresponding with counsel (Exhibit 7, page 8) and perusing the file and forming an opinion about it (Exhibit 7, page 3).
(c) In addition I am satisfied that Mr Woods wrote the document at page 20 and witnessed the plaintiff's signature.
(d) I am also satisfied that Mr Woods confirmed the plaintiff's instructions to discontinue the proceedings (page 21) and that he spoke to the plaintiff on 15 July 1997 in accordance with the file note on page 27.
It is possible that the plaintiff's lack of reliability has been exacerbated by the many years that have passed since some of the relevant events occurred. In addition, his obvious obsession with, and belief in, his cause may have influenced his recollection of past events. In his report of 15 December 2011 Dr Oen, a psychiatrist, stated:
"At interview he was a very loquacious and loud talking man. His mood was moderately depressed but his affect reactive, agitated at times and forceful. There was no psychomotor retardation or neglect. The content of his thought reflected his preoccupation with his change in lifestyle and personality. He was keen to tell me about the injustices that he felt had been done to him by the lawyers and the manufacturers of the food product. He was not overtly deluded or suicidal." (Exhibit F).
A final point I would like to make about the plaintiff arises from his allegations of the injuries he continues to suffer as a result of choking. Counsel for the plaintiff (T 3.25 and 224.20) said the physical injuries had resolved. This is consistent with the plaintiff's facsimiles to Maloufs in June 2004 (Exhibit 6, pages110 and 112 of the annexure). However in paragraph 5 of his affidavit of 16 March 2010 (Exhibit E) the plaintiff has a list of the consequences still existing in 2010. There is no medical evidence to support the non-psychological injuries. While I cannot exclude the possibility that the complaints of physical injury are a product of a psychiatric injury the continuing complaints do not reflect well on the plaintiff's reliability especially in the light of the concession by his own counsel.
For these reasons I do not find the plaintiff to have been dishonest, as advocated by the defendant, but rather find him unreliable. The result is that I do not accept his evidence where it is controversial unless corroborated by other independent acceptable evidence.
Was Maloufs negligent?
Maloufs was alleged to be negligent in two respects:
(a) Filing the proceedings against Marsdens out of time, and
(b) Omitting to include in the proceedings against Marsdens certain allegations of misconduct (paragraph 5.33 of the Amended Statement of Claim).
The second of the allegations against Marsdens was effectively abandoned because it could not succeed unless the limitation allegation was successful. It was therefore acknowledged by the plaintiff that the case against Maloufs rose or fell with the result of the allegation that Maloufs was negligent in allowing the limitation period to expire before filing proceedings against Marsdens.
The judgment of Judge Truss describes the limitation issue. The judgment is Annexure HE 11 in Exhibit D.
The Statement of Claim against Marsdens had been filed on 14 August 2003. The plaintiff had submitted, before Judge Truss, that the earliest date on which the cause of action could have accrued was 18 August 1997 when orders were filed in the District Court bringing to an end the proceedings against SCF and Coles. The defendant (Marsdens) contended that the cause of action had accrued on 8 August 1997 because this was the date when enforceable consent orders had been executed by all the concerned parties. Her Honour favoured the defendant's argument thus rendering the proceedings out of time by some 6 days (paragraph 18 of the judgment).
Her Honour also specifically rejected an alternate argument raised by the plaintiff that there had been a continuing duty on the part of Marsdens to act on behalf of the plaintiff after 8 August 2007 and that breach of this duty necessarily extended the limitation period to six years from the date of accrual of the action arising from the later breach. Her Honour described the plaintiff's argument in paragraph 21 of her judgment. Her Honour also rejected an argument that the plaintiff had been under a disability that had suspended the running of the limitation period.
In the course of her judgment her Honour said:
"However it is incumbent upon solicitors when commencing proceedings to plead the cause of action fully and be mindful of the relevant limitation provisions." (paragraph 21)
The above quoted passage highlights the allegation now made against Maloufs.
The plaintiff submitted that any firm of solicitors dealing with a client contemplating litigation would immediately be aware of the necessity to check the limitation period. It is unclear precisely what information, at least in respect of dates, was provided by the plaintiff to Mr Martin (the first solicitor he saw at Maloufs) in February 2003 but this only emphasised, said the plaintiff, the need for the solicitors to have conducted proper enquiries to ascertain relevant dates.
The plaintiff further pointed out that Mr Watts, who took over the file in July 2003, was an accredited personal injury specialist who would have been acutely aware of the need to check limitation issues (Exhibit 6, page 1 of the annexure).
Maloufs responded with four points:
(a) It was submitted that the actions of Mr Martin and Mr Watts could not be challenged because they had not been cross-examined on their affidavits.
(b) The correspondence attached to the affidavits of Mr Martin and Mr Watts indicates the efforts made to ascertain the information required.
(c) Counsel was briefed with all the relevant information, updated when necessary and relied upon to provide his opinion.
(d) The fact that counsel's opinion was incorrect did not necessarily mean that Maloufs was negligent if they adopted that opinion.
The plaintiff's response in respect of the absence of cross-examination was that there had been no need to ask the two solicitors questions because their negligence was apparent from their affidavits and no more needed to be put to them.
I disagree with the plaintiff's submissions on this point, for the following reasons:
(a) It is unclear what information, in particular as to dates, the plaintiff gave to the solicitors. The onus is on the plaintiff. The dates known to the solicitors are a vital cog in examining the limitation issue. I think the solicitors should have been challenged on the material they had and what they did with it.
(b) The solicitors, by their affidavits, effectively created a chronology through the various items of correspondence that they entered into with the plaintiff, Legal Aid and counsel. The inadequacy of this correspondence, as alleged by the plaintiff, should have been the subject of challenge.
Despite my finding about the absence of cross-examination I intend to proceed as if Mr Bliim's submissions on this point were correct. I think it would be quite unsatisfactory, especially in a case of this nature, for a result to turn on a forensic decision not to cross-examine.
Based on the plaintiff's affidavit sworn on 30 October 2009 (Exhibit C) and on the affidavits of Mr Martin and Mr Watts (Exhibits 5 and 6 respectively), the plaintiff first consulted Maloufs on 12 February 2003. He first met Mr Martin on 24 February. The plaintiff says he provided Maloufs with an "eight page chronology" . This document is not in evidence. Mr Martin says he received some documents, which were mainly letters from Legal Aid. Mr Martin asked the plaintiff to sign some authorities to get further documents.
What is significantly not clear is whether or not the information provided by the plaintiff in February 2003 included any information about when, and in what circumstances, the proceedings with Coles and SCF had been finalised.
What is clear is that the extent of the retainer was to brief a barrister to advise on the plaintiff's prospects of success against Marsdens. Legal Aid had been granted for this purpose and the correspondence is consistent with the pursuit of information necessary to properly brief the barrister.
Mr Martin sent a brief to a barrister, Mr Terry Lynch, on 6 May 2003. By this time he had received some documents from Legal Aid, which were included in the brief. He did not, however, have any documents from Marsdens. The Marsdens file had been collected by the plaintiff but then subsequently lost by him.
Also on 6 May 2003, Mr Martin wrote to the plaintiff, asking: "If you have any documents at all, then please forward them to us urgently so that we can send them to the barrister for inclusion in his brief" (Exhibit 5, page 13 of the annexure). Further down in the letter is this sentence: " Please understand that our advice and the opinion of Counsel, will be depended (sic) upon the documentation that we have. " This request appears to have produced the mainly medical material sent to Mr Lynch on 12 May 2003 (Exhibit 5, page 15).
Mr Watts took over the file in July 2003. On 22 July 2003 Mr Watts asked Mr Lynch to provide his advice "as a matter of urgency" . Mr Lynch responded by facsimile on 8 August 2003. The facsimile includes this paragraph:
"One matter of significance is the date on which the proceedings commenced by Marsdens were discontinued, if indeed that was ever formally done. The material in the brief does not deal with that. Could you please arrange for an enquiry to be made of the District Court of that date and the relevant terms ascertained as a matter of urgency."
I think it clear from the above passage that Maloufs had not been provided with any documents indicating the date on which the SCF and Coles proceedings had been discontinued.
On 12 August 2003 Mr Watts wrote to the Registrar of the District Court at Parramatta requesting a print out of the earlier proceedings.
In his advice sent by facsimile on 8 August 2003 Mr Lynch emphasised the need to obtain the date the earlier proceedings were discontinued (paragraph 7.1). Mr Lynch must have been provided with the information because in his letter and advice dated 13 August 2003 he wrote: "Mr Eder's right of action against Marsdens, if any, expires on 18.08.2003" (paragraph 8.6).
Acting upon the advice of Mr Lynch a Statement of Claim was filed in the District Court at Parramatta on 14 August 2003 (Exhibit B, Annexure B).
The Civil Liability Act 2002 ("the CLA") applies to the action against Maloufs. Neither party, however, placed their submissions within the scope of this Act, in particular Section 5B. Learned senior counsel for the defendant did not, however, dispute that a duty of care was owed by Maloufs to the plaintiff and he did not dispute the overall applicability of Section 5B. The defendant also did not rely on, nor take the approach provided by, Section 5O. The defendant's case was simply that there had been no breach of the duty.
I think the fundamental issues include what information Malouf's held about the ending of the SCF and Coles proceedings and whether the solicitors took timely steps to obtain information that they did not have, but which was important in order to ascertain the limitation date.
The onus of proof is on the plaintiff. The plaintiff has not established whether any of the information provided to Maloufs gave any indication of the relevant dates. Rather, the inference from the correspondence is that there was no such information. Maloufs did, however, endeavour to obtain the file from Marsdens, obtained documents from Legal Aid and entreated the plaintiff to provide all the information that he had.
Once Mr Lynch requested the court record it was obtained promptly and the information given to Mr Lynch. The absence of the Marsdens file, for which no blame can be attributed to Maloufs, suggests that the background to the finalisation of the proceedings was not available to Maloufs or to Mr Lynch.
Mr Lynch's advice as to the date on which the limitation period expired was ultimately found to be wrong by Judge Truss. There was no appeal from her Honour's decision. That does not mean Mr Lynch's opinion was negligently formed, especially in the absence of any information being available to him about the manner in which the proceedings came to be finalised. The adoption of Mr Lynch's opinion by Maloufs is equally not an indication of any negligence. To the contrary, the solicitors were entitled, in my view, to accept the view of counsel who had been specifically briefed to advise. Moreover, once that advice had been received Maloufs acted, in filing the Statement of Claim, in an expedient manner.
I think I can also assume that had Mr Lynch received the documents he ultimately had before 8 August 2003 his advice about the end of the limitation period would have been no different.
Although the point was not made in submissions, the plaintiff, in paragraph 22 of his affidavit (Exhibit D), notes that the " Observations " to counsel do not include any request to consider the limitation period (annexure HE9). The point is well made by the plaintiff, but I think the request to advise on " reasonable prospects of success " necessarily involves consideration of time limits as evidenced by Mr Lynch actually advising on the urgent need to commence proceedings.
Accordingly, I find against the plaintiff in his allegation that Maloufs was negligent in filing the proceedings against Marsdens outside the limitation period.
I will now turn to the case against Marsdens. The agreed notional trial date for this case is 16 August 2007. Although once again an action for professional negligence I appreciate that the operative issue is now whether the plaintiff lost a chance to sue Marsdens. I am not, therefore, looking at the case against Marsdens on the 'usual' basis of a plaintiff proving his case on a balance of probabilities but rather in the way described by Parker LJ in Kitchen v Royal Air Forces Association & Ors [1958] 2 All ER 241 at page 252:
"The matter remains a mystery, and, were it necessary for this court to decide whether the plaintiff would have succeeded, I, for my part, would have found great difficulty in coming to that conclusion; but, as I understand it, that is not our task. If the plaintiff can satisfy the court that she would have had some prospect of success, then it would be for the court to evaluate those prospects, taking into consideration the difficulties that remained to be surmounted. In other words, unless the court is satisfied that her claim was bound to fail, something more than nominal damages fall to be awarded. ... I cannot say that the claim was bound to fail, and, accordingly, the plaintiff is entitled to something more than nominal damages."
Counsel for the plaintiff submitted that Marsdens had been negligent for two reasons:
(a) Mr Marsden, both in correspondence and in conversation, had told Mr Eder that Mr Cook, a barrister who had provided an opinion, advised that the case against SCF and Coles had difficulties on liability, whereas Mr Cook had actually advised to the opposite effect.
(b) When discussions were held with the plaintiff about the termination of his case, Marsdens did not inform him of the options available to him other than bringing the case to an end.
Although ultimately not put, nor pleaded, as an allegation against Marsdens in negligence, both the plaintiff's affidavit and oral evidence contained an assertion that when the plaintiff saw Mr Marsden on 3 July 1997, Mr Marsden's conduct was such that the plaintiff was overborne to the extent that he signed an authority to discontinue the proceedings. This allegation is contained in paragraph 41 of the plaintiff's affidavit sworn on 9 October 2006 (Exhibit A). I have already highlighted some of the inconsistencies arising from this paragraph and also the plaintiff's apparent total abandonment of the contents of paragraph 42.
The " typed up" document referred to in paragraph 41 is not in evidence. I appreciate that part of the Marsdens file is missing but I have firm doubts as to whether this document ever existed. Its existence is entirely inconsistent with the handwritten authority prepared by Mr Woods (Annexure K to the above affidavit). There would have been absolutely no reason for Mr Woods to prepare this document if a "typed up" authority already existed.
The plaintiff relied on his letter to Mr Watts dated 7 November 2003 to provide corroboration for his allegations against Mr Marsden (Exhibit 6, page 57 of the annexure). The letter is broadly consistent with the plaintiff's oral evidence. Had it been prepared more contemporaneously to July 1997, I think it may have had some force. It was however written some 6 years after the events. I do not see why the plaintiff's reliability would have been any different in 2003 than at present.
Thus although not put as an act of negligence on the part of Marsdens I reject the plaintiff's evidence that he was overborne in such a manner that he involuntarily agreed to discontinue his proceedings on 3 July 1997. I think it worth noting that based on the summary of evidence in Judge Truss' judgment (starting at paragraph 7), the allegation of duress was never put before her Honour. The Statement of Claim against Marsdens also does not mention the alleged duress.
Turning now to the first of the above two allegations against Marsdens, essentially a misrepresentation of Mr Cook's opinion. I think it fair to say that Mr Cook advised that there were good prospects of success on liability against Coles. Mr Delaney (then a barrister) also apparently gave favourable advice but suggested an inadequate estimate of quantum (Exhibit A, paragraph 28).
In paragraph 35 of Exhibit A the plaintiff states that he saw Mr Marsden on 25 February 1997 and Mr Marsden said:
"The case is a mess. Our prospects for success are not good according to the advice I've received from Peter Cook, the Barrister. Legal Aid are stuffing us around. If we don't provide further information about your previous employment to Legal Aid they are not likely to support the case. If we can't get a Legal Aid grant I won't be continuing with the case on a no win no pay basis."
The letter from Marsdens to the plaintiff on 26 February 1997 contains this paragraph:
"We advise that the Learned Barrister, Peter Cook forwarded to us a memorandum of advice dated 6 January. The Learned Barrister has raised serious questions as to your ability to succeed in this matter." (Exhibit A, Annexure G).
Mr Cook's advice, dated 6 January 1997, is at Annexure H to Exhibit A. It contains the following paragraph:
"e) Subject to the qualification that Counsel has not had the opportunity to speak with Mr Eder and test the veracity of his statement, the prospects of this case are very good."
Although it is arguable that the words (both oral and in writing) attributed to Mr Marsden may not be concerned with liability I think it reasonable, on the plaintiff's part, to assert that he was mislead about Mr Cook's view on the merits of the case. There are, however, some very puzzling elements arising from Mr Cook's opinion.
Mr Cook's assumed facts include Coles as the manufacturer of the soup. Mr Cook proceeds on the logical basis that Coles, as manufacturer, would be liable for the production of soup containing "foreign material" .
Mr Cook's advice is dated two days before the Statement of Claim (Exhibit G) was filed containing very different allegations to those assumed by Mr Cook. SCF has now appeared as the manufacturer and Coles becomes liable only under Section 71 of the Trade Practices Act 1974 ("the TPA") and for a somewhat vague allegation of negligence contained in paragraph 15(i) in the Statement of Claim.
In addition Mr Cook's reference to foreign material in the soup is inconsistent with the apparent analysis of the substance found in the soup. The analysis of " hardened carrot " was provided in January 1994, well before Mr Cook was asked to advise. Other than the plaintiff's recollection (in paragraph 24 of Exhibit A) about the analysis there is no other evidence, such as a report, giving any detail about exactly what was in the soup.
There is no evidence to help understand the shift from the facts relied upon by Mr Cook to the contents of the Statement of Claim. It is possible that the explanation lies in the lost Marsdens file. However, I have to assess the case on the basis of the evidence before me albeit at a notional trial date in 2007.
In my view, even if Mr Marsden misrepresented Mr Cook's view about liability that representation did not give rise to any damage because the Statement of Claim, which is the lost action, is predicated on entirely different facts.
Turning now to the second allegation against Marsdens, I think the plaintiff's arguments are stronger.
Although I accept the defendant's submission that Marsdens' retainer was based on the granting of Legal Aid and that the ultimate refusal of Legal Aid was probably caused by counsel not advising in a timely fashion, the fact nevertheless remains that Marsdens (albeit to protect the plaintiff's position) had commenced the proceedings and had therefore taken on a duty to advise the plaintiff in respect of the continuation of his case.
Further, after the rejection of Legal Aid, Marsdens did continue to act by dealing with the defendants (SCF and Coles) and in taking instructions from the plaintiff in relation to the termination of the proceedings.
There is no evidence that, for example, the plaintiff was told that he could represent himself, that he could consult other lawyers or that the rejection of Legal Aid did not of itself signal the termination of the proceedings.
Thus far, in particular on the basis stipulated in Kitchen's case, the plaintiff would appear to have had a chance of success against Marsdens.
The difficulty, however, is that the plaintiff, on my findings, voluntarily consented to, and gave written instructions for, the discontinuance of the proceedings and later, over the telephone, for the entry of verdicts in favour of the respective defendants.
I endeavoured to make it plain at the beginning of this judgment that I found the plaintiff an unreliable witness. I appreciate that in assessing the Marsdens case I must allow for the possibility that he would have been accepted at a notional trial. My view of his reliability, however, is such that I do not think even this possibility arises. This is compounded by the plain evidence contained in what remains of the Marsdens file of correspondence and file notes emphatically contradicting the plaintiff's evidence (Exhibit 7).
In addition is the unusual aspect that quite often the contradiction emanates from within the plaintiff's evidence. I have already pointed out examples of the plaintiff's oral evidence completely contradicting his affidavit evidence. What remains is a document signed by the plaintiff in which he agrees to discontinue his claim. It is to be recalled that the plaintiff, in paragraph 42 of Exhibit A said the signature on the document was not his, yet he said it was his signature under cross-examination (T 104.31 and 105.30).
The document is only concerned with Coles and does not mention SCF. This adds to the mystery I mentioned above as to how SCF came to be a defendant.
However I am satisfied on the basis of the file notes and correspondence at pages 26, 27 and 28 of Exhibit 7 that full and voluntary instructions relevant to both defendants were taken from the plaintiff.
I do not accept the plaintiff's evidence that he did not speak to Mr Woods on 15 July 1997 nor that he did not receive the letter from Marsdens of the same date (Exhibit 7, page 28). The plaintiff's relevant evidence is at T 150.4 onwards.
In addition I have already referred above to the plaintiff's change in his affidavit about " categorically " not receiving the latter dated 4 July 1997 (Exhibit 7, page 21) and his " not denying " he received the letter in his oral evidence (Exhibit A, paragraph 44 compared to T 140.49).
I find that the plaintiff has not lost any chance of a successful suit against Marsdens. I am satisfied that his claim was bound to fail because he had voluntarily consented to termination of the actions against SCF and Coles.
Before leaving the case against Marsdens there are two other matters I would like to comment on. Firstly some support for the case against Marsdens was drawn by the plaintiff from the advice of Mr Lynch dated 13 August 2003. Mr Lynch, however, provided a second advice on 27 June 2004 (Exhibit 6, page 117 of the annexure). Although this advice is mostly concerned with the foreseeability of mental harm Mr Lynch concludes: "... prospects of success are much less than they would have been previously..."
The second point is that the plaintiff submitted that I could take into account in assessing the case against Marsdens that Mr Watts certified, as required by Section 198L of the Legal Profession Act 1987, that in his opinion the case against Marsdens had " reasonable prospects of success ". The submission was that Maloufs could not now say the case against Marsdens was hopeless when there had been a certification in the above terms. It was not suggested there was any form of estoppel, rather that " They can't have their cake and eat it too ." (T 223.26).
I sympathise with the sentiment expressed by Mr Bliim but do not see the certification as preventing me from reaching a different conclusion. The certification must be read in the light of the information that was available to Mr Watts, the impending expiry of the perceived limitation period and the advice he had received from counsel.
I will now consider whether the plaintiff had a chance of success in the proceedings against SCF and Coles. At first sight, as found by Mr Cook and, earlier, by Mr Delaney, the presence of foreign objects in soup which cause a consumer to choke and suffer damage would give rise to liability on the part of the person or company responsible for the dangerous product.
I have already mentioned that the proceedings that were filed were against SCF as manufacturer and Coles as supplier and vendor. The action against Coles was based on an untenable allegation of negligence but also upon breach of Section 71 of the TPA.
I think the action against SCF was bound to fail. I think there is a chance, albeit very slim, that the action against Coles may have succeeded.
I have already mentioned that SCF, for no apparent reason, became a defendant two days after Mr Cook's advice, which had proceeded on the basis that Coles was the manufacturer. There is no evidence that links SCF to the offending can of soup. In addition, I note that in its Defence to the proceedings (part of Exhibit G) SCF denies that it manufactured, packaged or supplied the can of soup. Learned counsel for the plaintiff said that I could take into account that if it eventuated that SCF was not the manufacturer then the true manufacturer would have been identified and the pleadings appropriately amended.
He said any limitation problem could have been addressed by the then applicable District Court Rules allowing for an appropriate amendment (eg Part 17 Rule 4). That may be so but the proceedings against Marsdens complain about the loss of proceedings against Coles and SCF, not against some unknown defendant. It is necessary for me to ascertain if the proceedings that existed had any chance of success. In my view there is absolutely no evidence upon which I could conclude that SCF had anything to do with the can of soup purchased by the plaintiff.
Further the fact that a person chokes when eating a foodstuff does not necessarily condemn the foodstuff. The plaintiff's evidence suggested that the Health Department analysis found "hardened carrot" . There is no analysis report or any other evidence as to what it was upon which the plaintiff choked.
In relation to Coles the single allegation of negligence does not, in my view, have any merit. Counsel for the plaintiff, as I understood him, did not suggest otherwise (T 208.39). He did, however, strongly submit that a breach of the TPA did give rise to a good chance of success.
Section 71 of the TPA concerns implied undertakings of quality and fitness. The implication is that goods supplied will be of merchantable quality. There is a definition of merchantable quality in Section 66(2). Senior counsel for the defendant submitted that this definition was a codification of the law and did not allow for any common law principles to be applied to the definition. This submission does not appear correct to me but I do not think it matters. In my view, if there was evidence of a substance in the soup which was such that it might reasonably lead to a person choking then the soup would not be of merchantable quality both at Common Law and within Section 66.
In this case, however, the evidence does not go beyond " hardened carrot ". It is very difficult to reach any conclusion on merchantability on this description. As I have already said the fact that the plaintiff choked does not, of itself, condemn the soup. Choking can occur in many ways and for many different reasons. An otherwise innocent foodstuff " going down the wrong way " can be responsible.
I think I must, however, consider the possibility that the plaintiff would be accepted in his description of what was in the soup even if it was of vegetable matter. The plaintiff has the benefit of the medical reports that show a persistent complaint of something hard in the soup. This record commences a day after the plaintiff choked when he saw Dr Caladine. This doctor, a general practitioner, was actually shown "a white material" that had allegedly been ingested (Exhibit F, Dr Caladine's report of 22 March 1994). Dr Ali, in his report of 13 October 1995, refers to the plaintiff maintaining his "story on every occasion" and even producing "a piece of timber" . In addition, I think I can take into account the apparent results of the analysis by the Health Department official in Wagga Wagga.
If the plaintiff was accepted about the presence of dangerous material (even if vegetable based) in the soup then I think he would establish that the soup was not of merchantable quality.
This finding would then give rise to a breach of Section 71 of the TPA. That would not, however, lead to the awarding of damages under Section 82.
This was conceded by counsel for the plaintiff who properly referred me to the decision of Brennan J (as he then was) in the Federal Court in Arturi v Zupps Motors Pty Ltd (1980) 33 ALR 243.
It was submitted, however, that damages could still be recovered for a breach of contract based on the implied warranty imported into the contract of sale by Section 71. It was pointed out that the Statement of Claim (Exhibit G, paragraphs 11 to 13) included an alternate claim in contract.
The defendant submitted that Coles could never have been liable because it never had a chance of " intermediate inspection ." This submission is to some degree as vague as the case put by the plaintiff because of the uncertainty of who manufactured the soup and what involvement Coles had in it reaching the shelf.
There is some suggestion that the soup was a Coles " home brand " product. This, for example, is how it was described to Dr Ali (Exhibit F, report dated 13 October 1995). In Exhibit A the plaintiff refers to a can of " Coles Savings Brand sausages and vegetable soup " (paragraph 11).
Whatever the case, if it is accepted that the contract of sale between Coles and the plaintiff included an implied term in the form of a Section 71 warranty then I do not see that Coles not having an opportunity for intermediate inspection would be relevant.
The next issue with the breach of contract allegation is the damages that might have been recoverable. The defendant submitted that if the damages were restricted to the price paid for the can of soup then such a recovery could not be regarded as any form of success.
The plaintiff accepted that damages for breach of contract are normally assessed at the time of breach but submitted that this rule was not inevitable especially when a different approach was required to meet the interests of justice. To this end I was referred to the decision of the High Court in Johnson v Perez (1988) 166 CLR 351. I think the following two passages from the judgment are most applicable. At page 355 Mason CJ said this:
"There is a general rule that damages for torts or breach of contract are assessed as at the date of breach or when the cause of action arises. But this rule is not universal; it must give way in particular cases to solutions best adapted to giving an injured plaintiff that amount in damages which will most fairly compensate him for the wrong he has suffered."
Brennan J said the following at page 371:
"The general rule as to the date at which damages are to be assessed is subject to the principle governing the measure of damages. A plaintiff who has suffered damage as a result of a defendant's tort or breach of contract is entitled to such a sum as will, so far as possible, put him in the same position as he would have been in but for the tort or breach of contract: Wenham v Ella (1972) 127 CLR 454 at 466; Todorovic v Waller (1981) 150 CLR 402 at 412, 442, 463; ; 37 ALR 481; Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39. The time at which damages are assessed must be so fixed as to give effect to the governing principle. In giving effect to that principle, matters occurring after the tort or breach may be excluded from consideration by selecting the date of the tort or breach of contract as the date for assessment; conversely, such matters may be included by selecting the date of the trial as the date for assessment. In either case, it is the governing principle rather than the temporal rule which determines what is to be taken into consideration and what is not. The governing principle applies to the assessment of damages in an action brought by a plaintiff against a solicitor by whose negligence the plaintiff has lost a cause of action in damages for personal injury. An application of the principle requires, first, an appreciation of the plaintiff's actual position in comparison with the position he would have been in but for the solicitor's negligence; and, secondly, an assessment, necessarily expressed as a contemporary dollar amount, of what is needed to put the plaintiff into the position he would have been in but for the tort or breach of contract."
Thus if the plaintiff had been accepted on the presence of the inappropriate material in the soup and he was able to prove injury giving rise to a loss then there was a chance of success in the case against Coles. I would not rate the chance of his success as very high and a substantial discount would need to be made to any damages that might have been assessed.
Had the plaintiff succeeded in establishing liability on the part of Maloufs and in turn a chance of success against Marsdens and (again in turn) against SCF and/or Coles, it would have been necessary to consider damages arising at the two agreed notional trial dates. Because of my findings of failure on at least two of the three qualifying hurdles and especially because of my assessment of the plaintiff as an unreliable witness, I do not intend to assess damages. I accept the defendant's submission that I should not assess damages in this circumstance.
While most of the reasons for not assessing damages do not favour the plaintiff, I also note that the medical reports tendered by the defendant (Exhibit 8) refer to a number of matters that may be seen as having affected the plaintiff's well being, but especially his capacity to work, after his ingestion of the soup. None of these matters were put to the plaintiff in cross-examination and he was given no opportunity to respond to them. If they are relevant their use in any assessment of damages would be unfair to the plaintiff.
The result of my conclusions is that there must be a verdict for the defendant.
There is one final matter I would like to raise. Judgment was reserved on 3 February 2012. On 8 February a large registered envelope addressed to me was received in my chambers. The described sender was the plaintiff. The envelope was not opened. It was sealed in a separate envelope. My associate telephoned plaintiff's counsel and informed him of the receipt and asked him to discuss with the defendant's counsel what actions the parties would like me to take.
The parties apparently consulted each other and the envelope, still sealed, was collected the following day by the plaintiff's solicitors. I do not know what it contained.
The parties should be aware that receipt of the envelope played no part in my decision.
I make the following orders:
(a) Verdict for the defendant.
(b) The plaintiff is to pay the defendant's costs of the action.
I will hear the parties in case any other cost order is sought.
Decision last updated: 15 February 2012
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