Harm v Sharad Chandra Nigam Trading As S C Nigam & Co

[2012] HCATrans 151

[2012] HCATrans 151

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth   No P50 of 2011

B e t w e e n -

YVONNE HARM

Applicant

and

SHARAD CHANDRA NIGAM TRADING AS S C NIGAM & CO

Respondent

Application for special leave to appeal

FRENCH CJ
HEYDON J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO PERTH

ON FRIDAY, 22 JUNE 2012 AT 10.30 AM

Copyright in the High Court of Australia

MR B.W. ASHDOWN:   If your Honours please, I appear for the applicant.  (instructed by Bradford & Co)

MR P.D. QUINLAN, SC:   If your Honours please, I appear for the respondent with MS C.H. THOMPSON.  (instructed by Tottle Partners)

FRENCH CJ:   Thank you.

MR ASHDOWN:   Your Honours, this application involves a claim for economic loss arising out of solicitor’s negligence, and in the court below it was accepted that there was a failure to investigate a claim based upon a failure to warn type case in medical negligence.

FRENCH CJ:   Were not the findings of the Court of Appeal adverse to you on the question of breach?  I mean, that is the argument that is put against you.

MR ASHDOWN:   They were adverse on the question of breach, your Honour, but what we say in respect of that is that it was actually an elevation of the assessment of causation, and specifically the burden of proof in establishing whether there was a potential cause of action in negligence which then affected the question of breach, and we say that that particularly arises out of the majority judgment at paragraph 117, application book page 102.  What we say there is that when the court was assessing the question of the prospects of the case in medical negligence there is a statement there at the foot of page 102 that that assessment in the majority’s view:

depended upon [establishing] whether a court was likely to be satisfied, on the balance of probabilities –

When that is followed through to the assessment of breach, what we say is that the test that was applied was too stringent when one considers the level of satisfaction as to whether in fact there was a cause of action.  What we say is that the dissenting judgment of Justice Murphy is the correct analysis there, that what needs to be shown is that in fact there was a reasonably open or a not improbable cause of action which has been lost, and once that is established on the balance of probabilities there is a case made out that an opportunity has been lost.  Then when we turn to the assessment of those damages we get to the question of possibilities, as the learned trial judge did, and as Justice Murphy did in dissent.

FRENCH CJ:   Can I just track it back just in the way that Justice Newnes approached it and tell me precisely how it is you say his Honour erred?  Let us look at his Honour’s holding at paragraph 138, page 108?  I think that is the first, as it were, non‑breach finding.  He says:

the appellant could not properly have advised the respondent that a claim for damages against Dr Hastwell for her ongoing pain had reasonable prospects of success.  The primary judge erred in finding otherwise.  His Honour also erred in finding that the appellant was negligent in not pursuing the further lines of enquiry to which he referred.

So you have the second sentence there, that there was an error in finding that the appellant was not “negligent in not pursuing the further lines of enquiry”.  Now, how is that finding said to be erroneous in a way which raises a question of principle worthy of a grant of special leave?

MR ASHDOWN:   Your Honour, that finding, we say, arises out of that passage which I took your Honour to at paragraph 117 because the assessment that is undertaken of the strength of the underlying cause of action in medical negligence is one where his Honour Justice Newnes finds that one needs to be satisfied on the balance of probabilities before the solicitor came under an obligation to advise, and in his Honour’s words, that there was “reasonable prospects of success”. 

We say that that is an incorrect test because what ought to have occurred was that there needed to be advice on the availability of the cause of action where it was reasonably open, and by stating it as that the solicitor was not negligent because it did not have reasonable prospects of success sets the burden of proof and the bar on causation too high and it is that tension between the assessment of the prospects of success as a matter of causation and the gist of the action for tort that we say ‑ ‑ ‑

FRENCH CJ:   But the concept of reasonable prospects here in 117 is linked to the question whether a court was likely to be satisfied on the balance of probabilities.  Now, that does not involve a sort of a hypothetical assessment that there would be a finding on the balance of probabilities.  That is consistent, is it not, with a real chance of such a finding, the word “likely” being used there in a broader sense than itself referring to balance of probabilities?

MR ASHDOWN:   Your Honour, the phrase used is capable of two meanings but when one analyses the reasoning that follows over the next couple of pages where his Honour looks at – particularly at paragraph 129, page 106 as to the advice that ought to be given as to the strengths of the case and following, we say that explains the finding at paragraph 138 your Honour has referred to and why the bar is set too high.  The authorities on economic loss point to the fact that it is – so long as there is a valuable opportunity to pursue a case that that analysis that the majority have followed sets the bar too high and the views of the minority with Justice Murphy and the trial judge are the proper analysis.  That is the point of principle which arises out of that passage and the finding.

FRENCH CJ:   Yes.

MR ASHDOWN:   Your Honour, it is also exemplified, in our submission, when one turns to paragraph 148 and that is found ‑ ‑ ‑

FRENCH CJ:   Just before you go to 148, what about ground 2, does that collapse into your first – the finding that ground 2 is made out?

MR ASHDOWN:   Your Honour, at paragraph 142, the finding on ground 2 of appeal that comes out of the assessment of the reasonable prospects of success in the case.  So we say that the finding of the majority on ground 2 essentially follows from the assessment on ground 1 and it is then ‑ ‑ ‑

FRENCH CJ:   Once we get into ground 3 we are into causation.

MR ASHDOWN:   That is correct, your Honour, but where we say the issue of principle and how the issue of causation relates back to ground 1 of the appeal can be found at paragraph 148 on page 110 and there from the fourth line his Honour Justice Newnes makes reference there to the tension.  He says in the trial judge’s findings that the prospect of success were assessed at 40 per cent and that is, we say, highlighting the fact that that tension that he sought to be drawn upon by the majority highlights that they have considered the prospects of success of the medical negligence action too strictly when coming to the question on ground 1.

HEYDON J:   The problem is that if “reasonable prospects of success” means a chance of success which is less than 51 per cent, it is not much comfort to be told that you have reasonable prospects of success.  Would not correct advice be, “You have a chance of winning, but you have a much better chance of losing and copping a costs order into the bargain”?

MR ASHDOWN:   Your Honour is correct.  However, in our assessment, this case called for that advice to be given with respect to the failure to warn case, and that did not occur.  But when one considers the loss of the opportunity, the test is that it is not to be considered so highly.  The opportunity that the client has been denied by the lack of the solicitor’s advice is as to a chance it has some value, and by assessing the risk at 40 per cent of success, or even 60 per cent of failure, does not deny the fact that there is a case there which constitutes an opportunity that the client has

been denied, and we say that is where the causation test ends, and we then move into the assessment of damages, as his Honour Justice Murphy did.

HEYDON J:   Would it not have called for an inquiry into whether the client was likely to act on full advice as distinct from a mere assertion that there were reasonable prospects?

MR ASHDOWN:   Your Honour, in this case, the Court of Appeal, both in the majority at paragraph 149 and his Honour Justice Murphy at paragraph 203 confirmed the trial judge’s finding that the applicant would have pursued such an action if advised of reasonable prospects, and we say that that is a reference to if advised, that it was not without hope.

FRENCH CJ:   This was a person of fairly limited means, was it not, for whom even getting a medical report was a burden?

MR ASHDOWN:   Your Honour, the applicant was, in such circumstances, yes, but that highlights all the more reason why a client should not be denied the opportunity, we say, occurred here in being able to pursue a claim, whether it was to negotiate a settlement or to trial, and when the assessment of prospects is that the case is not wholly hopeless, then an opportunity has been lost, and from there, it is an assessment of the possibility and the proportionality that goes into that loss of chance, which is where those matters sound out, and in this case the trial judge found that there was a 40 per cent loss of opportunity.  Unless there are any further questions from your Honours, that is the case for the applicant.

FRENCH CJ:   Yes, thank you, Mr Ashdown.  Yes, Mr Quinlan.

MR QUINLAN:   May it please your Honours.  The issue of a reasonable prospect of success, which my learned friend has addressed, was not applied by any members of the Court of Appeal in the present case with any distinction in relation to any causation issues.  The reason that all of their Honours in the Court of Appeal analysed the case in relation to a reasonable prospect of success can be found in relation to the findings that their Honours made as to the scope of the retainer.  In that regard, can I take your Honours to the decision of her Honour the learned President at page 75 of the application book, where her Honour, your Honours will see in paragraph 3 of the reasons for decision, begins the discussion of her Honour’s summary with the question of breach depending upon the scope of the retainer, and then her Honour goes, in a sentence which is not sought to be challenged by the applicant, that:

It is clear from the conduct of the parties as a whole that the pursuit of any claim against Dr Hastwell depended on it having (at least) reasonable prospects of success –

which is what leads to her Honour’s identification of the issue in the following paragraph in the last sentence beginning at line 40, to the effect that the solicitor could not be in breach unless at the time the issue of breach arose –

the negligence action had a reasonable prospect of success.

Her Honour makes clear in the following paragraph that this has nothing to do with the issue which my learned friend seeks to agitate which is the fact that something which has less than a 50 per cent chance of success may nevertheless be damage in the sense of being something of value, because her Honour clearly points out that the assessment of the merits of a negligence claim for the purpose of advising a client on whether or not to litigate is separate and distinct from an assessment of the value of the cause of action for assessing loss and damage.

Your Honours, that point and the identification of the issues is picked up in Justice Newnes’ judgment at page 96 of the application book and the relevant passage begins over the page on page 95 at paragraph 87 where his Honour identifies:

The primary question in the present case is whether the appellant should have advised the respondent that she had an arguable cause of action – that is, a claim with reasonable prospects of success –

Now, the importance of that – and this goes to my learned friend’s submission that she should have been advised of prospects which were less than reasonable – can be seen at the end of paragraph 88 where your Honours can see at line 31 on page 96 where his Honour observes – and again not challenged by the proposed grounds of appeal:

I should say that it was never the respondent’s case that she had lost the chance of pursuing a case without reasonable prospects of success for the purposes of obtaining a settlement. 

So that insofar as the question of breach was concerned, it was clearly a matter at the time of the termination of the retainer between the applicant and the respondent whether or not the respondent could then have advised that there were reasonable prospects of success.  The ultimate conclusion is that which, as your Honour the Chief Justice noted, appears at page 108 of the application book at paragraph 138. 

So that, their Honours are there considering and reaching the conclusion, or his Honour Justice Newnes with whom the learned President agreed, that as a result of the material then available to the solicitors they could not have properly provided that advice.  The only relevance of principles of causation – this takes us back to paragraph 117 to which my learned friend placed much emphasis – is that part of the assessment of whether there were reasonable prospects of success against Dr Hastwell necessarily involved the solicitor having to, as his Honour says:

depended, however, upon an assessment of her prospects of proving that the failure to warn of the risk was a cause of the pain from which she was suffering.

Then his Honour then identified the various issues which went with that.  Ultimately, they were simply issues going to the factual question as to whether or not the solicitor could have or ought have advised that there were reasonable prospects of success.  In that respect, the only difference between his Honour Justice Newnes and the learned President who agreed and Justice Murphy is their finding on the factual question as to whether or not in fact there were reasonable prospects of success as at that date.

Your Honours can see the comparison in paragraph 195 of the judgment of Justice Murphy at application book 123.  The second half of that sentence beginning at line 40, indicates that in his Honour Justice Murphy’s view, on the evidence available the:

prospects of success were reasonable –

So ultimately that is the difference between the majority and the minority in the case as to the question of whether or not the solicitor, with the material available to them, could have properly advised that there was a claim for damages with reasonable prospects of success.  There is no point of principle, we submit, between the differences between their Honours, in that regard.  It is important to note, in our respectful submission, that because of the manner in which the majority decided the case in relation to that, what we submit is merely a factual question, their Honours, in the majority, never had to move to the question of whether and what degree of chance of success would qualify for damage, although it is apparent from paragraph 87, which I took your Honours to earlier at page 96, that his Honour Justice Newnes well recognised that:

If the appellant was negligent –

then the question would arise as to whether the respondent lost a claim of some, as opposed to, negligible value.  His Honour in that regard refers to an earlier decision of the Court of Appeal in Hammond Worthington v Da Silva.  The important point we would note about that is that the cases cited therein and Hammond Worthington v Da Silva are the very cases

which my learned friend’s submissions at paragraph 30C identify as being in some tension with this judgment. 

The point we make is that his Honour Justice Newnes clearly recognised where the case would have to go if negligence was established.  The point we then make is that it never got to that point in this case, because of the court’s conclusion as to the extent of the retainer and the fact that that retainer had not been breached because the solicitors were never in a position to advise of a case of reasonable prospects.  Unless there is anything further, your Honours, those are our submissions.

FRENCH CJ:   Thank you, Mr Quinlan.  Yes, Mr Ashdown?

MR ASHDOWN:   Thank you, your Honours.  Your Honours, the Court of Appeal below did identify orthodox principles in the paragraphs that my learned friend has taken you to.  The applicant, however, says that they were departed from when one considers the finding at paragraph 137 on page 108, where as high as the analysis by the majority gets is that there was substantial difficulty facing the respondent and that is taken at a point where, as my learned friend has also referred you to paragraph 195 of the judgment of Justice Murphy on page 123, where those findings differ.

However, what is missing, we say, as a point of principle from the analysis by the majority is, in fact, that analysis set out by Justice Murphy in paragraph 197 at the foot of that page, and then following for the next two pages where the, in fact, prospects of those difficulties are, we say highlighted by the majority as somehow meaning that the underlying case has no prospects when, in fact, there is some prospect and the matter ought to have moved, on a proper application of those principles, through to the assessment of the damages and that is where there is a difference in the majority as compared to the minority, concluding with Justice Murphy at paragraph 203 where his Honour finds that the trial judge was correct that the applicant would, if he had been advised, have taken that chance that was denied.  Unless there is anything further, your Honours?

FRENCH CJ:   Yes, thank you, Mr Ashdown. 

In this matter, in our opinion, the decision of the Court of Appeal in the majority turned upon findings dependent upon the scope of the respondent’s retainer that the respondent had not breached its duty of care to the applicant.  The decision is unattended by sufficient doubt to warrant the grant of special leave.  Special leave will be refused with costs.

AT 11.05 AM THE MATTER WAS CONCLUDED