Falkingham v Hoffmans (A firm)

[2015] HCATrans 66

[2015] HCATrans 066

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P31 of 2014

B e t w e e n -

BRENT NIGEL FALKINGHAM

Applicant

and

HOFFMANS (A FIRM)

Respondent

Application for special leave to appeal

GAGELER J
KEANE J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO PERTH

ON FRIDAY, 13 MARCH 2015, AT 11.13 AM

Copyright in the High Court of Australia

MR B.L. NUGAWELA:   May it please the Court, I appear for the applicant.  (instructed by Havilah Legal)

MR D.R. CLYNE :  May it please the Court, I appear for the respondent.  (instructed by Tottle Partners)

GAGELER J:   Yes.

MR NUGAWELA:   Thank you, your Honours.  In this loss of opportunity claim to sue a surgeon for his failure to warn, due to the solicitor’s clear or unequivocal breach - in this case the expiry of the limitation period – there are two alternative, we say, preferred approaches to the valuation question which the courts below failed to take.  The first approach, of course, is the notion of legal certainty that arose in Johnson v Perez, where there are no questions of doubt concerning the enforceability or the recoverability of any award of damages against, in this case, the surgeon.

Where there is no question of that and the elements of the cause of action are definitively established, then the High Court considered this to be, or these to be, certain cases, in which case there ought be no discount or only a nominal discount.  So, that is the first preferred approach.

Alternatively, we say, your Honours, that this is a case which is analogous to the Court of Appeal decision in Feletti v Kontoulas [2000] NSWCA 59, where there the Court of Appeal mandated an approach in an almost legally certain case, starting at 100 per cent, and then discounting for aliquot percentages.

GAGELER J:   When you say “mandated an approach”, how was that couched in the judgment?

MR NUGAWELA:   Can I take your Honours to Feletti, starting at 37 – I am sorry, perhaps starting at 27 in the judgment of President Mason.

KEANE J:   We do not seem to have that authority.

GAGELER J:   We do not have that.

MR NUGAWELA:   I will quickly read parts of the relevant reasons.

GAGELER J:   Yes.

MR NUGAWELA:   At 27:

The real issue on liability is causation.  Did the solicitor’s negligence cause the appellant’s failure to file or instruct to be filed a notice of appeal within the 14 day period?  More particularly, did it materially contribute to the appellant’s neglect in this regard (cf March v E & MH Stramare Pty Ltd . . . (Sellars v Adelaide Petroleum NL –

At 28:

The trial judge held that, had the appellant received the advice to which he was entitled, he would probably have lodged or given instructions for lodgement of a notice of appeal . . . I regard it as more probable than not –

This is the quote from the trial judge.

GAGELER J:  Yes.

MR NUGAWELA:

I regard it as more probable than not that had he received appropriate advice he would have given instructions for the lodgement of such a notice within the time limited.

The solicitor challenges that causation finding, and his Honour concludes this at 32:

The trial judge’s favourable conclusion on causation turned in part upon acceptance of the appellant as a witness of truth.  There is also material giving objective support to this conclusion.  As with all causation issues relating to the impact of an omission, there is necessarily an element of hypothesising.  The appellant was anxious to defend his rights . . . There is no direct evidence that the appellant or his barrister considered the prospects of appeal and decided to give up.  The appellant’s sworn evidence was to the contrary.  The rejection of his account of having delivered the signed notice of appeal to the solicitor did not necessarily entail disbelieving him on the alternative case.

So, the solicitor’s cross‑appeal on that point was dismissed.  His Honour then embarked on the next topic, which was “Valuing what the appellant lost: general remarks”, and then noted at 37:

There are types of evidence that will not be regarded as relevant to valuing the lost cause of action (see generally Johnson v Perez . . . However, these qualifications have no bearing on the present matter, because there is nothing to indicate that all of the evidence advanced in the present trial would not have been available to have been advanced in the lost appellant proceedings.

Citing Phillips v Bisley, his Honour said:

But what the trial just cannot do, in my opinion, is shut his or her eyes to the evidence showing the information that was known to or was reasonably obtainable by all litigants –

Then jumping to 57 ‑ ‑ ‑

GAGELER J:   I think the proposition that you are advancing is that this judgment supports starting at 100 per cent and then discounting.  We have not heard that yet, I think.

MR NUGAWELA:   Your Honour has ‑ ‑ ‑

GAGELER J:   I do not take that from any of the passages you have yet read.

MR NUGAWELA:   At 55, his Honour discusses the credibility issue and then spoke about the speculation of the trial judge and, concluding at 65, said that the approach taken by the appellant:

conceded a 10% deduction from a 100% prospect of success.  This is reasonable.  Forensic experience shows that the strongest cases can fail, or may expect to be settled at some discount.

The approach in Feletti, your Honour, we say if not mandated is the approach that could and should have been taken in a case such as this where all of the evidence was available and could have been adduced at the trial.  So, for instance, there is no reason why the surgeon was not called to give evidence ‑ ‑ ‑

KEANE J:   This case was not run as a case involving any Jones v Dunkel style inference.

MR NUGAWELA:   Could not have been run, obviously for reasons that the majority referred to, and it was not taken ‑ ‑ ‑

KEANE J:   So, the situation is that the absence of the surgeon’s evidence simply means that at the trial of the professional negligence case, there was evidence in relation to the failure to warn and the court evaluated that evidence, considered its weight and came to a view that it was not certain to be accepted, that there was a significant prospect that the case may have failed and, on the basis of that approach, your client’s lost opportunity was valued at a 55 per cent chance of success.  Now, in terms of approach in point of principle, what is wrong with the approach that the court below took?

MR NUGAWELA:   At paragraphs 19 and 23 of our amended summary of argument, we set out the matters that the trial judge took into account, we say wrongly ‑ ‑ ‑

KIEFEL J:   And the Court of Appeal upheld you on that.

MR NUGAWELA:   Quite, and the majority simply concluded, despite that, taking a broad brush approach, 55 per cent is about right.  We say if one were to discount the errors made, then how does one arrive as this broad brush approach?  If those negativing matters are matters that ought not to have been taken into account, there is a choice between the approach shown in Feletti and the approach in Johnson v Perez, where in legally certain cases no discount is applied, contrasted with the situation here.

GAGELER J:   Do you advance the case that this is a legal certainty case?

MR NUGAWELA:   We do, in the first instance.

GAGELER J:   Yes, and if you move beyond it being a legal certainty case, given the nature of the evidence that was adduced at trial - you accept that there is some discounting that is to be undertaken - what is it about this case that makes a 45 per cent discount unreasonable?

MR NUGAWELA:   Well, for a start, the omission to warn was a past historical fact, not a past hypothetical event.  The evidence that was there was available to find on a balance of probabilities that there was an omission to warn.  There was no contradiction of the applicant’s evidence; his wife’s evidence.  It was a proposition that was accepted and run at trial that there was an omission to warn.  So, that should not have been a negativing consideration, a speculation on evidence not led that the surgeon might have contradicted him when the clinical notes were not tendered.  That is not a negativing factor.

The other one is, of course, the factual causation point where the trial judge found that it was objectively credible that, had he been warned, the applicant would have delayed the procedure - the Chappel v Hart point.  That is all he needed to do to establish causation on a balance of probabilities.  Unlike a commercial loss of opportunity case where the future probable event has not crystallised here, one has the context of actual injury and an acceptance on the balance of probabilities – a finding that his evidence and his wife’s evidence was objectively credible that he would have postponed the procedure.

That is all he needed to do; it is already established on the balance of probabilities.  If it was a past hypothetical event your Honour Justice Gageler, it perhaps was the only thing that could have been taken into account by the trial judge in reducing the loss of opportunity from 100 per cent down to something smaller.  The other two matters were the actual causation findings in the action against the solicitors, and that is neither a past hypothetical event nor historical fact.  If he failed on that, namely, taking the cause of action to trial, or certainly beyond a point of settlement, then his case would have been dismissed.

GAGELER J:   There is no doubt that a chance was lost.  We are just concerned with the valuation of that chance.

MR NUGAWELA:   Quite so, and the starting point is really determinative of the outcome.  Over here, there was a 55 per cent loss of chance which is a 45 per cent discount on account of matters that we say were erroneously taken into account – see paragraphs 19 and 23 of our summary or argument – and made a huge difference.  Every one per cent that was knocked off amounted to about $6000 in the ultimate award.  The 100 per cent award of $614,000 - a 90 per cent award is in excess of 540.  This litigant had 45 per cent lopped off, we say, in error.

As to the points of public importance, there are several that we outline at Part IV of our summary of argument.  One might be, just because a surgeon or a negligent party is not called, not subpoenaed, went on holiday, was available, could have been called – was available in the Johnson v Perez sense; had died, for instance – could have been subpoenaed, compellable, clinical notes available, not tendered.  Just because a respondent does not take that forensic step should not result in a discount for what that surgeon might have said – speculative.  The court has to decide the matter on the evidence that was presently led before it.

The second matter of course is should there be any discount for past historical fact?  So, the failure to warn was established on the balance of probabilities as a past historical fact.  Why should there be a discount once that threshold is overcome?

KEANE J:   Well, what would one make of the terms in which the conversation about the failure to warn was said to have occurred?  I mean, what does one do about the difficulty – one might say, the improbability, at least in a loose way - of the evidence that the conversation in which the failure to warn occurred was a conversation in which the neurosurgeon said that a divided or severed nerve root would grow back.  Now, that is something that plainly troubled the court in its evaluation of the prospects that your client’s case would have been made out.

MR NUGAWELA:   It did not trouble the majority in the Court of Appeal.  It might have troubled the learned trial judge.  What the majority said of that was to the effect that, if there was evidence led that nerves do not regrow, then that the matter that the trial judge could have taken into account.  There was no such evidence, so the majority eschewed the trial judge’s concern about that issue.

GAGELER J:   Well, to be fair, the majority said at paragraph 71 that:

The judge could, however, properly form the view that the risk of the appellant that the neurosurgeon would have asserted that he gave an adequate warning could not be excluded, and required evaluation.

So the very nature of the evidence, according to the majority, was to raise an issue which would likely be an issue at trial.

MR NUGAWELA:   The general observation there should be read, your Honour Justice Gageler, in the context of the preceding two sentences:

However, when addressing the value of the lost chance for the purpose of assessment of damages as at the date that the hypothetical litigation would likely have gone to trial, the judge was required to have regard to the state of the evidence before him.  In this case, there was no evidentiary foundation for inferring what the ‘likely’ response of the neurosurgeon would be to the failure to warn claim.

GAGELER J:   Yes, and what I read was the qualification to that statement.

MR NUGAWELA:   That is consistent with my answer to your Honour Justice Keane in relation to the nerve regrowth point, where the majority again said this is not something that could have been taken into account.  There was no evidence of that; it was speculative.

KEANE J:   In relation to paragraph 71 that we have just been looking at, do you say there is some error in the approach that is adumbrated there - the approach to evaluation?

MR NUGAWELA:   No, there is not, and that is just in a situation where there is evidence to warrant taking that possibility into account.  In this case, you will have been entirely speculative to use the sense that word is used in Johnson v Perez and Feletti, where there is no testimonial structure to speculate that such a warning might have been given.  That is something that must be removed from the valuation of the loss.  It is something that troubled the majority, whose judgment we do not quarrel with, except when

it comes to 84 where their Honours said, well, taking a broad brush approach, despite all these errors, 55 per cent is good enough.  We say, well, if one takes a Johnson v Perez approach or the Feletti v Kontoulas approach, it would have resulted in a lot less than 55 per cent.  There was just one other matter, your Honour ‑ ‑ ‑

KEANE J:   So that the task for this Court would not be the enunciation of any new principle or development of principle; it would just be doing the evaluation task again?

MR NUGAWELA:   The relief we seek is not a substitution of the assessment of loss of chance.  The relief we seek is the enunciation of the principles should be taken into account in a situation such as this, for instance, where there is a past hypothetical event which the law regards as certain – Malec v Hutton – on the balance of probabilities.  Once that threshold is overcome, one does not go back to discount for the possibility.

GAGELER J:   One values a chance.

MR NUGAWELA:   One values a chance by reference to uncertainties, hypothetical events, not past historical events which the law of causation regards as certain.  This is to be contrasted from those loss of opportunity cases – for commercial loss of opportunity cases where the future possible effect of a wrong has not come to pass; it has not crystallised.  In this situation, the injury has occurred.  The loss is sustained.

GAGELER J:   But what is treated as legally certain is the negligence of the respondent.

MR NUGAWELA:   The omission to warn, for instance, and in this case we see clearly that it infected - wrongly, we say - the valuation exercise, as was the causation findings, both in the first sense and the second sense.  That does not infect, or should not infect, we say, the valuation exercise once the threshold is crossed.  There might be other matters which would have deflated an order of 100 per cent, but those are matters that can be discussed, we say, rather than numerically arrived at by this Court.  Unless there is anything, your Honours, those are our submissions.

GAGELER J:   Thank you, Mr Nugawela.  Mr Clyne, we do not need to hear from you.

The majority in the Court of Appeal of the Supreme Court of Western Australia correctly emphasised that the assessment of the value of the chance that was lost by the applicant through the negligence of the respondent necessarily involved a degree of impression.  The application raises no question of principle suitable for the determination of this Court.  Special leave will be refused with costs.

The Court will now adjourn to reconstitute.

AT 11.33 AM THE MATTER WAS CONCLUDED