Lakic v Prior

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST

S CI 2015 00118

BOGDANKA LAKIC	Plaintiff
v
STEPHEN PRIOR	Defendant

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JUDGE:	MACAULAY J
WHERE HELD:	Melbourne
DATE OF HEARING:	8, 9, 10, 11, 12, 15, 16, 17 February 2016
DATE OF JUDGMENT:	30 May 2016
CASE MAY BE CITED AS:	Lakic v Prior
MEDIUM NEUTRAL CITATION:	[2016] VSC 293

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REAL PROPERTY — Caveats — Plaintiff sought removal of a caveat lodged on title to notify an interest under an equitable charge securing payment of fees due to the defendant for legal services — Finding that equitable charge validly obtained — Ground for removal of caveat not made out.

NEGLIGENCE — Solicitor’s negligence — Solicitor missed date for commencement of common law proceedings for plaintiff’s injuries sustained in car accident — Plaintiff successfully sought extension and prosecuted common law claim — Damages awarded for costs incurred in seeking extension of time application.

DAMAGES — Solicitor’s negligence — Damages claimed for pain and suffering, stress, anxiety and damage to health due to solicitor’s actions — Whether stress, anxiety and damage to health is ‘injury’ under s 28 LE of the Wrongs Act 1958 (Vic) such that a certificate or determination of ‘significant injury’ is required as a condition for recovering damages — No determination or certificate obtained under Part VBA of the Wrongs Act 1958 (Vic) — Thomas v Powercor Australia Ltd (Damages ruling) [2011] VSC 586 and Insight Vacations Pty Ltd v Young (2010) 268 ALR 570 considered — Claims dismissed.

SET-OFF — Equitable set-off — Rule 13.14 Supreme Court (General Civil Procedure) Rules 2015 — Whether statutory rule alters substantive law — Whether existing judgment debt in another court could be set off against an entitlement to unliquidated damages — Claim and cross-claim sufficiently connected to permit equitable set-off.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Plaintiff appeared in person
For the Defendant	Mr S McGregor	Obst Legal

TABLE OF CONTENTS

Introduction and issues..................................................................................................................... 1

Procedural matters and rulings on evidence................................................................................. 5

Other accidents.............................................................................................................................. 5
Family-member damages............................................................................................................ 6
Gynaecological injury.................................................................................................................. 6

Findings on credit............................................................................................................................ 11

Chronology of key events.............................................................................................................. 12

October 2002: file record........................................................................................................... 12
September 2005: commencement of 2005 retainer................................................................ 13
21 March 2006: settlement of home help claim...................................................................... 14
15 May 2006: missing the commencement deadline............................................................ 16
13 July 2007: proceeding for s 23A and s 93 applications filed........................................... 17
10 April 2008: the equitable charge......................................................................................... 18
15 April and 9 May 2008: adjournments of the County Court hearing.............................. 20
23 June 2008: TAC ‘walk away’ offer....................................................................................... 21
24 October 2008: trial further adjourned................................................................................ 23
February 2009: failure to attend second appointment with Dr Nathar.............................. 24
23 March 2009: notice of ceasing to act................................................................................... 25
9 December 2010: telephone call.............................................................................................. 26
2011 - 2012:Magistrates’ Court debt proceedings................................................................ 27

Issues for decision............................................................................................................................ 28

(a) Should the caveat be removed?............................................................................................... 28

(b) Does Mr Prior have an advocate’s immunity defence?....................................................... 30

(c). What loss was caused by failure to commence a common law action in time?.............. 33

(d) Did Mrs Lakic suffer any other recoverable loss and damage?........................................ 36

(e). Is Mrs Lakic prevented from claiming personal injury damages?................................... 41

(f). Does Mr Prior have any Limitation of Actions Act defence?............................................. 43

(g) Can Mr Prior’s debt judgment be set off against Mrs Lakic’s damages award?............ 44

Conclusion......................................................................................................................................... 47

HIS HONOUR:

Introduction and issues

With the assistance of an interpreter, Mrs Bogdanka Lakic, a former factory worker who had emigrated from Serbia with her husband in 1995, represented herself before a judge of this court, Rush J, to conduct her claim against the Transport Accident Commission (‘TAC’) for damages for pain and suffering and pecuniary loss arising from injuries she sustained in a motor vehicle accident on 15 May 2000. On 24 June 2014 his Honour gave judgement in favour of Mrs Lakic in the total sum of $838,802.[1]
[1]Lakic v Transport Accident Commission (2014) 67 MVR 183.

Five different firms of solicitors had acted for Mrs Lakic between 2001 and 2013 to progress aspects of her claims for statutory compensation and entitlements and for common law damages arising from the accident. In this proceeding Mrs Lakic sues the fourth of those solicitors, Stephen Prior. She claims damages and other relief alleging various breaches of duty or contract associated with the performance of his retainer between September 2005 and March 2009, and for his later pursuit of his outstanding fees and disbursements.

Early in the retainer an application that Mrs Lakic had made to the Victorian Civil and Administrative Tribunal (‘VCAT’) to review the TAC’s decision to deny her home help payments and the cost of nasal surgery was settled. Mrs Lakic denies she gave instructions for that settlement. Further, no application was commenced on her behalf before 15 May 2006 for the necessary leave she required under s 93 of the Transport Accident Act1986 (Vic) (‘TAA’) to commence a claim for damages at common law arising from the accident. Although Mrs Lakic later obtained an extension of time under s 23A of the Limitation of Actions Act 1958 (Vic) (‘LAA’) to commence such a proceeding, she had to win that extension by prosecuting a contested application in the County Court.

In July 2007 Mr Prior filed a proceeding in the County Court on Mrs Lakic’s behalf. By that proceeding she applied for leave under s 93 of the TAA to bring proceedings for damages for injury she received in the accident on 15 May 2000 (‘s 93 application’) and an extension of time under s 23A of the LAA to commence that proceeding (‘s 23A application’). After the TAC sent to Mr Prior surveillance film it had obtained of Mrs Lakic said to demonstrate far greater capacity for physical movement than she had claimed to possess, Mr Prior gave pessimistic advice to Mrs Lakic about her prospects of success in the upcoming proceeding, then due to be heard on 15 April 2008. He required her to provide him with funds for anticipated disbursements if she wished to proceed. Wanting to proceed, but not having funds to do so at that time, on 10 April 2008 Mrs Lakic signed an equitable charge in favour of Mr Prior over her family home enabling him to lodge a caveat on title to secure payment of his costs and disbursements. As it happened, for a variety of different reasons, the hearing of the County Court proceeding was adjourned on several occasions, eventually being adjourned to 25 May 2009.

In October 2008 and again in February 2009, Mrs Lakic either failed to attend or did not stay to participate in appointments with a psychiatrist Mr Prior had arranged for her to see for medico-legal purposes. Relations between Mrs Lakic and Mr Prior had by then deteriorated. After making a demand for payment of outstanding disbursements he had paid on her behalf and warning that should she fail to pay them he would cease to act, and no money thereafter having been received, Mr Prior filed a notice of ceasing to act on 23 March 2009.

Later, Mr Prior sued Mrs Lakic in the Magistrates’ Court for outstanding fees and disbursements and eventually obtained a judgment for $39,017.39. Enforcement proceedings have yielded no recovery and the amount due under the judgment at the date of trial, with statutory interest, was $72,187.20. Meanwhile, Mrs Lakic retained the fifth firm of solicitors — Victorian Compensation Lawyers (VCL) — who successfully continued the s 23A application and the s 93 application through to completion in the County Court. She obtained favourable judgments from Judge Saccardo on the s 93 application (13 February 2012)[2] and Judge Kings on the s 23A application (18 October 2012)[3] respectively. In or about October 2013 VCL ceased acting for Mrs Lakic and have since sued her for their outstanding fees and disbursements.
[2]Bogdanka Lakic v Transport Accident Commission [2012] VCC 187.
[3]Bogdanka Lakic v Transport Accident Commission [2012] VCC 1530.

The relief Mrs Lakic seeks from Mr Prior is, first, that the caveat be removed from the Titles Office Register and, secondly, damages. She has not applied for the equitable charge to be set aside. Rather, I take her argument to be that because Mr Prior did not continue to act for her through to the completion of her case, he is not entitled to enforce the charge to recover any costs or to maintain the caveat as security for them.

In terms of the damages she seeks, Mrs Lakic makes claims under many heads — in total, for $1,341,486. Some of those heads of damage are for pain and suffering said to have been inflicted by various aspects of Mr Prior’s conduct and by his pursuit of his fees. Other heads relate to alleged wrongs committed by Mr Prior throughout the course of the retainer. Still others relate to alleged losses of entitlements that Mrs Lakic claims she should have recovered, but did not recover, as a result of her accident. Curiously, Mrs Lakic does not make any claim for loss expressly associated with the cost or delay brought about by the necessity to seek an extension under s 23A of the LAA to commence her proceeding. As will appear, Mr Prior fairly and properly conceded that such a claim was at least open to her and sought to meet it. I will consider it as if it had been claimed.

Mr Prior admits that he negligently failed to commence a proceeding on behalf of Mrs Lakic for the 15 May 2000 accident within the time permitted by the LAA. Otherwise he denies all other allegations of negligence or breach of retainer.

Secondly, and in any event, he denies that Mrs Lakic suffered any loss or damage from his admitted negligence or any other claimed negligence in view of the recovery she has made (or can make) under Rush J’s decision and the various costs orders in her favour.

Thirdly, in respect of alleged losses due to the settlement of claims against the TAC at VCAT, he says that he obtained Mrs Lakic’s informed consent to settle those claims. Additionally, he relies upon the defence of advocate’s immunity.

Fourthly, insofar as Mrs Lakic claims damages against him for personal injury, he argues she is precluded from maintaining such claims because she did not first obtain a certificate of significant injury under the Wrongs Act 1958 (Vic) (‘Wrongs Act’).

Fifthly, Mr Prior relies upon defences based on the statutory time limits for commencing action insofar as any claim arose before 15 January 2009 (six years before the filing of the writ) or other pleaded dates.

Finally, he seeks to set off against any liability for damage that he may have towards Mrs Lakic the debt she owes to him under the Magistrates’ Court judgment for his fees and disbursements.

It follows that the issues to be decided in this case are:

(a) Should the caveat over 22 Lucerne Road, Ferntree Gully be removed?

(b) Does Mr Prior have a defence to the settlement of the home help claim under advocate’s immunity?

(c) What loss and damage was caused by the admitted negligence of Mr Prior failing to commence a claim for damages before 15 May 2006 (not actually pleaded)?

(d) Did Mrs Lakic suffer any other loss and damage as a result of some other breach of duty or ‘wrongful’ act on the part of Mr Prior?

(e) Is Mrs Lakic prevented from claiming personal injury damages from Mr Prior’s negligence because she did not first obtain a certificate under the Wrongs Act?

(f) Does Mr Prior have a defence to any and if so what claims under the LAA?

(g) Can Mr Prior’s Magistrates’ Court judgment be set off against Mrs Lakic’s damages and, if so, what is the net result?

Before turning to each question it will be helpful first to make mention of some procedural matters and rulings. Secondly, I will state my findings on matters of credit insofar as they are necessary to explain my findings on disputed issues of facts. Thirdly, I will set out a chronology of key events, identifying the relevant factual issues that need to be resolved when determining the issues for decision.

Procedural matters and rulings on evidence

Mrs Lakic had prepared her own statement of claim, likely translated into English by her son, Boris. Although it contained a history of her relationship with Mr Prior, payments she had made for his services, various complaints she made about his conduct, and a claim for ‘damages … as the court sees fit’, it did not enable the court or the defendant to understand what losses she claimed to have suffered or why she said such losses flowed from Mr Prior’s wrongful conduct.

In a directions hearing before the commencement of the trial, Mrs Lakic was directed to file a document that set out the losses she claimed and provide some form of narrative to describe the connection between each element of loss and some wrong she alleged Mr Prior had committed. The document she filed came to be known as ‘the plaintiff’s narrative’.[4] That document was not permitted to enlarge the nature of her complaints about Mr Prior’s conduct; rather it was a form of particularisation of loss.
[4]Document titled ‘Filed pursuant to the Orders made by His Honour on 15 May 2015’ exhibit 4, tab 2, pp 11-17 (‘plaintiff’s narrative’).

At trial, Mrs Lakic was invited to give, and substantially gave, her evidence by reference to the allegations she made in her statement of claim. At times, Mrs Lakic wished to give evidence on topics that the defendant argued were outside of the scope of the allegations she had made in her statement of claim. As explained below, I either made rulings on those objections at trial or, in one instance, reserved my ruling and will now make and give my reasons for that ruling.

Other accidents

On the first day of the trial, Mrs Lakic sought to amend her statement of claim to add claims for damages against Mr Prior in respect of his alleged failure to pursue relief for injuries she suffered in two other motor vehicle accidents (26 January 2002 and 12 September 2006). I refused Mrs Lakic’s application for reasons I gave during the trial. It follows any damages claimed against Mr Prior in relation to those two accidents are not recoverable in this proceeding.

Family-member damages

Further, Mrs Lakic particularised her claim for damages to include a sum of $200,000 for pain and suffering allegedly suffered by other members of her family.[5] As Mrs Lakic was the only plaintiff in the proceeding, on various occasions throughout the trial I disallowed evidence which Mrs Lakic sought to introduce to establish that category of alleged pain and suffering.
[5]Plaintiff’s narrative, exhibit 4, tab 2, p 17.

Gynaecological injury

Finally, during the trial Mrs Lakic repeatedly sought to introduce evidence concerning disabling gynaecological conditions from which she suffered. Mr Prior repeatedly objected to her leading that evidence. Although not entirely clear, it seemed that Mrs Lakic wished to raise evidence of her gynaecological conditions for two purposes: first, as the potential subject matter of an accident-caused injury for which Mr Prior ought to have pursued a claim in the TAC proceeding, and, secondly, as an injury that was directly caused or aggravated by Mr Prior’s own wrongful conduct toward her.

Mr Prior argued that if any of Mrs Lakic’s motor car accidents caused her gynaecological condition, it was not the first accident of May 2000 and, so, the prospect of recovery of damages for that injury could not be the subject of this proceeding. Additionally, he argued that neither type of claim had been pleaded (ie, neither the loss of a chance to pursue recoverable damages in the TAC proceeding, nor the direct personal injury claim); accordingly he had not prepared to meet any such claim; and were Mrs Lakic be permitted to maintain such a claim in this proceeding he would be unfairly prejudiced. Finally, he argued that in so far as Mrs Lakic wished to maintain a claim that he had caused her to suffer her gynaecological condition, such a claim is a personal injury claim for which she would first need to obtain (but has not obtained) a certificate under the Wrongs Act.

Mrs Lakic produced a significant volume of medical reports which she asserted would establish that her gynaecological condition was caused by her first motor car accident in May 2000 and, so, formed part of the subject matter of her claim which Mr Prior ought to have pursued on her behalf in the TAC proceeding. Rather than delay the trial to read all the medical reports to ascertain whether there was a proper evidentiary foundation for that submission, I decided to receive the evidence of any gynaecological injury subject to objection and rule upon its admissibility in my reasons for decision.

Having now read the medical reports and considered the arguments above, I have decided that the evidence concerning Mrs Lakic’s gynaecological condition is inadmissible for the purpose of maintaining either of the two types of claim described above. I make that ruling for several reasons.

First, Mrs Lakic has not pleaded either claim. She had the opportunity to do so in her statement of claim. And, whether or not it could be regarded as a pleading, the plaintiff’s narrative contained no claim relating to gynaecological injury. So, she did not put Mr Prior on notice of either claim. In my view, Mr Prior would be unfairly prejudiced were he required to have to meet either claim in the running of the trial. As will appear below, the evidence produced by Mrs Lakic suggests that other relevant evidence also exists which Mr Prior could have called if given adequate warning of these claims. That other evidence could at least have assisted Mr Prior in his defence.

As also appears below, other factors make it highly unlikely that Mrs Lakic will suffer any real prejudice by not being able to pursue the two claims I have described: first, because she probably did not lose any opportunity in her TAC proceeding and, secondly, as a matter of law she is unable to bring her direct personal injury type claim in any event. For that reason I would not have permitted her to amend her claim to belatedly include either of her two claims. So, as a matter of pleading, evidence of gynaecological injury is not relevant.

Secondly, Mrs Lakic has not satisfied me there is any proper evidentiary basis to argue that she had an opportunity to claim damages for gynaecological injury sustained in the accident of May 2000.

There is no doubt that Mrs Lakic has suffered from a range of gynaecological complaints since at least 2002. In November 2008 she underwent dilation and curettage, hysterectomy and the insertion of a Milena IUD following a history of treatment by Dr Nina Gaur for heavy menstrual periods (menorrhagia) experienced for some years. Mrs Lakic[6], her husband Zdravko,[7] and her son Boris,[8] all gave evidence in relation to her gynaecological issues, particularly how she had suffered heavy menstrual bleeding brought on by nightmares about her accident. Mrs Lakic claimed that her gynaecological injuries were caused by the first accident (ie, in May 2000), deteriorated after the second accident (January 2002) and had never improved.[9]
[6]Transcript p 89.
[7]Transcript pp 284-5.
[8]Transcript p 325.
[9]Transcript pp 282-3.

The medical reports that Mrs Lakic especially relied upon to establish a causal connection between her gynaecological complaints and the May 2000 motor vehicle accident were those of Dr Nina Gaur (gynaecologist), Dr Piperoglou (psychiatrist), Dr Brkic (general practitioner), Dr Hanson (general practitioner) and Dr Andrew Muir (pain management specialist) and various hospital documents.[10] I read each of those reports.
[10]See ‘Additional information which Justice Macaulay requested on 09/02/2016’ filed 10 February 2016.

Mrs Lakic was first referred to Dr Gaur by her then treating general practitioner, Dr Geoffrey Hanson. In a comprehensive report addressed to Mrs Lakic dated July 18 2015,[11] Dr Hanson recounted that he had been requested to provide a report ‘on [her] state of health, and the effect on [her] health and impairments resulting from road accident injuries sustained in 2000, 2002 and 2006’. Under headings referable to each accident, Dr Hanson set out a summary of his consultations and examinations (and those of other treating doctors at the practice), concluding in each case with a description of the injuries Mrs Lakic sustained in each accident. In relation to the May 2000 accident, the doctor concluded that the injuries sustained were:

Chronic neck, and thoraco-lumbar back strain, resulting in chronic pain syndrome/fibromyalgia. This resulted in: cervicogenic headaches, anxiety/depression, and insomnia.

In relation to the January 2002 accident, the list of injuries sustained were:
Aggravation of the chronic neck and back strain, chronic pain syndrome, fibromyalgia, headaches, anxiety/depression, and insomnia. Facial injuries: TMJD and nasal deviation. Left shoulder strain, and possible adhesive capsulitis. Menorrhagia, requiring D&C and insertion of Mirena. [underlining added].

[11]Exhibit A, volume 1, p 108 ff.

By way of explanation for the last mentioned injuries, Dr Hanson gave this description of the onset of the menorrhagia:

The stress of the accident of 2002 had an effect on the menstrual cycle of Mrs Lakic. Immediately after the accident, she saw that her children had been injured, and that the face of her son Negos was covered in blood. After his accident, as well as having recurring dreams of the accident, Mrs Lakic suffered very heavy menstrual bleeding, presumably caused by the effect of the psychological stress of the accident on her hormones. [He noted gynaecological procedures performed in 2004 and 2008 and continued] … These procedures were performed by gynaecologist Dr Nira Gaur, of Box Hill Hospital.

It was Dr Hanson who first referred Mrs Lakic to Dr Gaur. In a report to Dr Hanson apparently dated 26 February 2002, Dr Gaur thanked the doctor for referring Mrs Lakic to him who, she stated, ‘was in a car accident last year’. She noted that Mrs Lakic had reported that her periods had been very heavy since the accident.

Dr Gaur’s short medical report to Dr Hanson must contain an error of some kind: if she was referring to the accident of May 2000, then the reference to ‘last year’ was incorrect; if she was referring to the accident of a month earlier, then the reference to ‘last year’ was also incorrect. Dr Gaur wrote to Mrs Lakic’s then solicitor (Hounslow & Associates) on 28 November 2003, evidently in answer to a query about which accident she was referring to, and said,

I am not sure if she developed these symptoms after the first or second accident. I did not realise she had two accidents. When I saw her in February 2002 she told me she had a motor car accident the previous year and since then her periods had become very much heavier.

Having regard to the clear and unequivocal account given by the referring general practitioner as to the onset of the condition, I find it is probable that Dr Gaur’s reference to ‘last year’ was either an intended reference to ‘last month’ or was borne of a miscommunication to her as to precisely when the second accident had taken place.

Dr Gaur wrote a letter to Mr Prior dated 23 January 2006[12] stating that she had first seen Mrs Lakic in February 2002. She reported that TAC had declined to pay for a hysteroscopy and laparoscopy because a Professor Pepperell had advised that the problem was not related to ‘her motor car accident’. Dr Gaur did not venture any clear view on cause but merely noted a temporal connection between Mrs Lakic’s ‘motor vehicle accident’ (with the ambiguity as already described) and the onset of heavy periods and stated that in her experience severe stress could upset a woman’s menstrual periods. Mrs Lakic’s material does not include the report from Professor Pepperell.
[12]Exhibit A, volume 1, p 446.

In summary, I am not satisfied from the evidence presented by Mrs Lakic in the trial before me that she suffered any gynaecological injury as a result of the May 2000 accident. In fact, Dr Hanson’s evidence appears to be quite compelling that her heavy periods began as a reaction to the shock of the 2002 accident, and it appears he referred Mrs Lakic onto Dr Gaur quite promptly, as soon as February 2002.

Thirdly, in any event, it is clear that Mrs Lakic made use of the opportunity to pursue her gynaecological injury claim in the trial of the TAC proceeding before Rush J. His Honour heard evidence as to whether Mrs Lakic suffered menstrual dysfunction as a result of the May 2000 accident and concluded he was not satisfied of a causal connection.[13] So, it is not apparent how Mrs Lakic could sensibly argue that she lost the chance to pursue that head of loss by any wrongful conduct on the part of Mr Prior.
[13]Lakic v Transport Accident Commission (2014) 67 MVR 183, 195 [65]–[67].

Fourthly, in so far as Mrs Lakic sought to make a claim for direct gynaecological injury caused by some alleged wrongful conduct on the part of Mr Prior, she is precluded from doing so in the absence of a certificate of significant injury under the Wrongs Act. I discuss this particular issue in greater detail under issue (e) below.

Findings on credit

On her own account, there were many things Mrs Lakic could not remember. Often, she had to rely on a record contained in a small notebook written either by herself or by her husband.[14] Not having an actual memory of many of the critical events, it became apparent to me that Mrs Lakic reconstructed events and details to fit them within the claim she had made against Mr Prior.
[14]Transcript pp 230-1.

For example, as detailed below,[15] it was important for Mrs Lakic to establish that she had not met Mr Prior until the very date when the costs agreement was signed, on 30 September 2005. That was important to make it appear likely she had little or no time to consider what was put to her on that occasion about Mr Prior’s retainer terms. She and her witnesses all insisted that the first time she met Mr Prior was on 30 September. In fact, the objective evidence establishes that an initial meeting occurred, attended by Mr and Mrs Lakic and their son Boris, 24 days earlier at which the retainer terms were discussed. Further a letter confirming those terms was sent to the house on 8 September confirming instructions to act following that meeting. Mrs Lakic and her witnesses flatly refuted that meeting had occurred. In my view Mrs Lakic denied the initial meeting because it did not help her case.
[15]See [49]–[52].

Overall, whether from an unshakeable but misguided conviction that Mr Prior was responsible for all her ills, or because of a more considered strategy, I gained the impression that Mrs Lakic substantially skewed critical facts. I was not convinced that she gave me a true and accurate account of most of the important events I had to consider.

As for each of Mrs Lakic’s supporting witnesses, her husband Zdravko Lakic’s evidence sounded remarkably similar to her own. On some critical events his evidence appeared rehearsed, more likely the product of family discussions reinforcing a particular version but not necessarily according with the truth of the events long since passed. I do not regard Mr Lakic’s version of events as genuinely corroborative. Mrs Lakic’s two sons, Boris and Njegos, were both young at the time of many of these events, and both made honest attempts to tell the truth, although understandably often having no recollection of the events. However, again, where seemingly corroborative of Mrs Lakic’s evidence, the evidence of both was likely affected by family discussions, and I did not find their evidence greatly helpful.

Mr Prior had the benefit of contemporaneous file notes and correspondence. He was not challenged on his evidence that he took notes of attendances, whether by telephone, in the office or out of the office, at or around the time of the event. All of his relevant file notes were produced in evidence. They appear to bear out the practice he described. I can see no reason to doubt the authenticity or general reliability of those file notes. As well as being made contemporaneously with the actual conversation most, if not all, were made in an environment where there was no apparent reason for Mr Prior to consciously misstate the effect of the conversation or the events the note records.

Further, I observed Mr Prior giving evidence. I consider he gave his evidence honestly and in forthright manner. He did not seek to conceal his error in missing the deadline for commencing Mrs Lakic’s claim by 15 May 2006. As he had the benefit of contemporaneous file notes to aid his recollection, I prefer his evidence over Mrs Lakic’s evidence where their evidence was in conflict, especially where a contemporaneous note or a letter existed to support Mr Prior’s account.

Chronology of key events
October 2002: file record

Although both Mr Prior and Mrs Lakic agree that the relevant retainer commenced in or about August or September 2005, Mr Prior has a record of opening a file for Mrs Lakic on 7 October 2002 for a personal injury matter, then closing the file again on 11 September 2003. Mrs Lakic denies having ever met or spoken with Mr Prior before 2005. Little of any substance turns on this early episode. I accept that some contact was made by Mrs Lakic in October 2002 and, as the file note records, she informed Mr Prior that ‘her son’ — most probably her elder son, Boris — would call Mr Prior the following day to ‘discuss her case’. There is nothing to indicate that her son ever did so and the file seems to have been closed about 12 months later with nothing further having occurred.

It is entirely unremarkable that Mrs Lakic would retain no memory more than 13 years later of a single telephone call. But the episode highlights two themes that do assume some importance. The first is the advantage which Mr Prior had in recalling events and details, having kept a written record of his oral and written communications with Mrs Lakic over the course of their professional relationship. Conversely, the episode reveals Mrs Lakic’s understandable difficulty in recalling the details of meetings and conversations that occurred so many years ago. Especially is that difficulty manifest when one also takes into account that there were so many meetings and conversations on the topic of her litigation, not just with Mr Prior but also with other solicitors. Additionally, as Mrs Lakic was so often at pains to stress during the course of the trial, the medications with which she has been prescribed over many years to deal with her physical and psychiatric injuries have affected her memory. Much has been lost to her.

Secondly, this early episode illustrates another theme: that is, the use the parties made of Mrs Lakic’s son Boris as an intermediary in their communications due to Mrs Lakic’s limited ability to communicate in English. In 2002 he was only 11; by 2005 he was 14.

September 2005: commencement of 2005 retainer

Both sides agree that they did meet in August or September 2005. But, again, there is some disagreement about precisely when the first meeting took place, who was present and what was said. This time, that dispute assumes greater importance. Its importance relates to the question concerning the removal of the caveat. Resolution of that question turns in part on the terms upon which Mr Prior was engaged.

For his part, Mr Prior claims that he met with Mrs Lakic on several occasions to explain the basis of the retainer and to have Mrs Lakic sign a costs agreement after explaining its terms to her. Mrs Lakic disputes attending two meetings that Mr Prior recalls — for which he has a file note (6 September 2005), confirmatory letter (8 September 2005) and further file note (26 September 2005) — and denies knowingly signing any costs agreement (despite the fact that her signature appears on it, dated 30 September 2005) or that Mr Prior explained his terms of engagement, as he claims he did. Both parties seem to agree that Mrs Lakic was obliged to pay disbursements in advance and costs as billed after being incurred: in other words, both agree it was not a ‘no win, no fee’ agreement.

Regardless of the terms of the agreement, Mrs Lakic insists that she always paid whatever costs and disbursements she was asked to provide. More importantly, she alleges that by the terms of the retainer Mr Prior was obliged to continue acting for her through to the conclusion of her litigation and that if he failed to do so he was not entitled to recover any unpaid costs. Indeed, on her case, if Mr Prior was to cease to act for whatever reason, he was even obliged to repay such costs as he had been paid.

As becomes clear, it is Mrs Lakic’s position on this issue that lays the basis for her claim to have the caveat removed. Without so describing her claim, in effect Mrs Lakic argued that when Mr Prior ceased acting for her in 2009 he repudiated their agreement and gave up any right to charge or recover legal costs or disbursements. Without any right to charge for legal costs or disbursements, she would argue he had no basis to resort to the equitable charge she (later) signed to secure any unpaid costs and disbursements nor could he maintain the caveat in respect of that charge.

21 March 2006: settlement of home help claim

Immediately before retaining Mr Prior, Mrs Lakic had been represented by a firm of solicitors, Hounslow & Associates (‘Hounslows’), concerning her accident on 15 May 2000. One of the pressing issues at the time Mr Prior took over the conduct of Mrs Lakic’s matter was the prosecution of an appeal at VCAT against the TAC’s refusal to pay for home help services and for nasal surgery. A substantial report had been commissioned and obtained from an occupational therapist (the Evidex report) whose recommendation was that Mrs Lakic required 3.9 hours weekly of personal care and 13.5 hours weekly of domestic care. The nasal surgery was said to be required as a consequence of a second motor vehicle accident, which occurred on 26 January 2002, when Mrs Lakic suffered some facial injuries.

Hounslows had advised Mrs Lakic that persisting with her claim for home help services and nasal surgery was unwise. They advised that the conduct of a proceeding on those issues would carry the risk of exposing her to cross‑examination on a range of matters that may jeopardise her claim for having suffered a serious injury in the 15 May 2000 accident, which was of greater value. A barrister retained by Mr Prior to advise on the merits of her VCAT claim was of the same view.[16] The barrister also thought the occupational therapist’s recommendations were likely to be seen as excessive. Mr Prior shared the same view as the barrister.
[16]Memorandum of advice of Maria Tsikaris dated 3 February 2006, exhibit 4, tab 37.

On 27 February 2006, Mr Prior wrote to Mrs Lakic, in English, wishing to confirm instructions Mrs Lakic had given the barrister in conference in the previous week to the effect that she wished to settle the VCAT appeal. Mr Prior asked her to sign the letter to confirm her instructions. A copy of that letter was translated into the Serbian language. Mrs Lakic’s signature appears on the Serbian version with a handwritten date, 1 March 2006. Mrs Lakic disputes that she knowingly signed that document, or that she ever saw it. In effect, she claims that if it is her genuine signature, the signature must have been obtained by some sort of trick.

Similarly, she says that her signature appearing on a typed release entered between herself and the TAC dated 21 March 2006 (‘TAC release’) must also have been obtained by a trick. By that release she purportedly surrenders her full claim for home help services and payment for nasal surgery in exchange for limited home help entitlements only.

Mr Prior has file notes of meetings with the Lakic family — Mrs Lakic, her husband Zdravko, and Boris— on both 1 March 2006 and 21 March 2006. The occurrence of those meetings and what took place at them was in dispute. Mrs Lakic says that Mr Prior arranged for an appointment on 1 March and requested she bring $3,000 for the costs of lodging her serious injury certificate application, and then arranged another appointment for 21 March 2006 to sign the affidavit in support of the application in an interpreter’s presence. Mr Prior, on the other hand, says the 1 March meeting was to go through the letter relating to the settlement of the home help application, which Mrs Lakic signed on that day, and the meeting on 21 March was to go through the TAC release (which Boris translated), and which Mrs Lakic signed on 21 March 2006. Mr Prior agreed that $3,000 was paid on 1 March to move the matter forward and indirectly therefore for the serious injury application.[17]
[17]Transcript p 448.

Mrs Lakic’s alleged surrender of her VCAT appeal and the circumstances surrounding the signing of the TAC release gives rise to several heads of damage, namely:

·signing of an identified/untranslated documents — $30,000
·negligent advice for signing the Release — $50,000
·recovery of lost payments for home help:
-loss of personal care over 15 years — $109,512
-lost domestic duties over 15 years — $379,080.[18]
[18]Plaintiff’s narrative, pp 11 [3], 12 [4], [6](a), [6](b).

15 May 2006: missing the commencement deadline

Not long after the date of the TAC release, the date for the commencement of any proceeding to claim damages relating to the 15 May 2000 accident came and went without any proceeding being commenced. Mr Prior does not seek to excuse himself for this lapse. Later in 2006 he sought advice from barrister Maria Tsikaris on the merits of bringing a serious injury application for the accident of 15 May 2000, receiving that advice on 8 January 2007. Mr Prior said in evidence that it was around that time that he realised that he had missed the six‑year deadline.

On 17 January 2007, he wrote to the TAC asking them to apply the ‘usual waiver policy’ in respect of the limitation period, given that a request had been made for assessment of impairment as far back as 29 July 2005 by Mrs Lakic’s previous solicitors. By 19 March 2007, TAC wrote stating it was unable to issue a waiver as the request (for a waiver) had been lodged outside the six‑year period. It is not contended by Mr Prior that the TAC was wrong, or that Mrs Lakic had some entitlement to a waiver of the limitation of action requirement.

13 July 2007: proceeding for s 23A and s 93 applications filed

Hence, Mr Prior set about preparing an originating motion and an affidavit in support on the part of Mrs Lakic to be filed in the County Court. The affidavit was sworn by Mrs Lakic on 11 July 2007 and the originating motion filed on 13 July 2007. By her originating motion Mrs Lakic made two applications, namely:

(a) for leave of the court pursuant to s 23A of the LAA for an extension to the period within which an application may be brought (ie, the s 23A application); and

(b) for leave of the court to bring proceedings pursuant to s 93 of the TAA for injuries received in a transport accident on 15 May 2000 on the basis that the plaintiff had suffered serious long‑term impairment or loss of a body function, or severe long‑term mental or severe long‑term behavioural disturbance or disorder (ie, the s 93 application).[19]

[19]Exhibit 4, tabs 62, 64.

At that stage Mrs Lakic said in her affidavit that her application for a serious injury certificate had not been made within six years of the date of the first accident, although a request had been made to the TAC by her former solicitors for an impairment assessment. Because the circumstances of the accident in May 2000 were that an unidentified motorcycle rider had driven in front of Mrs Lakic’s vehicle causing her to veer off the road and strike an embankment, and she had informed the TAC very soon afterwards that the other vehicle involved in the collision could not be identified, she claimed the TAC had suffered no prejudice by the delay in bringing the proceeding.

Mr Prior admitted at trial that he did not advise Mrs Lakic in July 2007 (or any time thereafter) that she may have a claim against him for negligently failing to issue a proceeding on her behalf within the prescribed time.

Mr Prior’s failure to commence proceedings within the prescribed time forms the basis for another head of damage claimed by Mrs Lakic, namely:

·late submission of serious injury application — $50,000.[20]
[20]Plaintiff’s narrative, p 13 [7]. No particulars were supplied, nor was any evidence given, of any specific cost or expense suffered by Mrs Lakic making up this claimed sum.

10 April 2008: the equitable charge

In early January 2008 Mr Prior received the medico-legal report of a rheumatologist engaged by the TAC to investigate Mrs Lakic’s physical injuries derived from the May 2000 accident. The doctor claimed she had no significant injuries saying that her symptoms were now ‘functional’ and assessed her at ‘zero percent’ impairment. Soon after, Mr Prior received a surveillance video from the TAC showing Mrs Lakic, among other things, at a park propelling herself on a merry go round and riding a swing.

Mrs Lakic was informed (through her son and by correspondence) of the report and the film. Arrangements were made for some of her doctors to see the film so they could provide their comments on it, and for a barrister to provide further advice. The hearing of Mrs Lakic’s s 23A application and s 93 application in the County Court had been fixed for 15 April 2008. A preliminary conference with the TAC took place in March 2008 after which Mr Prior sent Mrs Lakic a letter (in English) dated 26 March 2008. In it he expressed the view that without further supportive medical evidence she would be unsuccessful at the upcoming hearing.

After receiving comments from the two doctors who viewed the surveillance film Mr Prior wrote to Mrs Lakic again on 7 April 2008 this time both in English and also in Serbian (after the letter had been translated by a professional interpreter). A conference was arranged at Mr Prior’s office on 10 April 2008 and a Serbian interpreter was booked for the meeting.

Mrs Lakic admits that she received the letters both in English and in Serbian and understood them. The letter informed her that the film had caused one of her doctors (her treating psychiatrist) to change opinion about the severity of Mrs Lakic’s symptoms. It also informed her that the other doctor, her general practitioner, had not changed his view although he was unable to distinguish between the accident in 2000 and the accident in 2002 as the cause of her various impairments. In short, Mr Prior wrote that he thought Mrs Lakic would lose her case. He said that if she wished to proceed he required $6,000 to cover anticipated disbursements. He also estimated the hearing costs would be between $15,000 and $20,000.

Much was in dispute about the meeting that occurred on 10 April. What does not seem to be in any dispute, however, is that on that day Mrs Lakic signed an equitable charge knowing that it was to secure the payment of legal costs and disbursements incurred by Mr Prior in conducting her litigation. She also understood that if she did not pay costs, the equitable charge (referred to generically by Mrs Lakic as ‘the caveat’) would enable Mr Prior to sell her house to recover money owed to him. As I noted earlier, Mrs Lakic does not seek to set aside the charge on any ground such as duress or unconscionability. No doubt that is because, on her own evidence, her trusted Serbian-speaking priest attended the meeting, explained to her in adequate terms that by signing the charge she would be putting up her home as security for her costs liability, and urged her in no uncertain terms not to sign it. Yet, such was her determination to proceed with the case, she chose to sign the charge and did so.

The matters that were in dispute from that meeting related to other issues. The first was whether or not an independent professional interpreter attended the meeting. In the end little turns on that dispute because there is no question that she understood the nature of the advice given and the nature and effect of the charge. However, as Mrs Lakic makes a general claim for damages for Mr Prior’s alleged failure at times to provide professional interpreter services, this dispute can be considered in the context of that head of damages.

More significantly, Mrs Lakic’s argument is that her agreement to sign the charge to secure costs to Mr Prior was only ever given on the basis that he was entitled to costs only if —

(a)he ran the case to conclusion, and
(b)she lost her case (presumably because if she won he would recover costs from the other side).

The resolution of this dispute is discussed in the context of the first of the issues to be decided, namely whether the caveat should be removed.[21]
[21]See issue (a) below.

15 April and 9 May 2008: adjournments of the County Court hearing

The day after she signed the equitable charge, on 11 April 2008, Mrs Lakic was admitted to Maroondah Hospital suffering ‘chronic pain and dizziness’. She was discharged on 15 April 2008. As instructed, Mr Prior sought and obtained an adjournment of the hearing of 15 April and it was refixed for hearing on 9 May 2008. Before the adjourned hearing on 9 May a barrister was briefed and an interpreter was arranged. However, the hearing on 9 May 2008 did not proceed and was further adjourned to 24 October 2008. The reason for the adjournment was a matter of some debate between the parties although it was not evident that the adjournment itself is relied upon as the basis for any specific claim for damages. Mrs Lakic believed the adjournment was necessitated because Mr Prior had not supplied the TAC with the medical records proving her stay at the Maroondah Hospital, between 11 and 15 April 2008. Mr Prior said in evidence that the adjournment was necessitated because on 9 May 2008 Mrs Lakic said for the first time she had been in hospital the previous September, and so it became necessary to obtain evidence of that admission before the case proceeded.

The evidence on this issue was somewhat unclear although Mr Prior’s handwritten file notes made on that day, and his subsequent letter to Mrs Lakic of 20 May 2008, tend to corroborate his version of events. Further, although it seemed to be an issue of some importance to Mrs Lakic at trial, it was difficult to identify what she asserted was the wrongdoing on the part of Mr Prior and, whatever that may have been, and what, if any, loss she suffered as a result of it. No wrongdoing or loss was pleaded. I do not intend to canvass the issue any further.

Additionally, leading up to the hearing fixed for 15 April 2008 the TAC served a notice on Mr Prior requiring Mrs Lakic to produce her passport at the court. Evidently, the TAC wished to investigate her movements overseas at different points in time. As the case was adjourned from time to time so too was the requirement for Mrs Lakic to produce her passport. Mrs Lakic’s trust in Mr Prior appeared to have diminished and she became unwilling to provide the passport to him directly, insisting that she take it to court herself. In this proceeding she has made a claim for $40,000 damages for Mr Prior’s alleged retention of her passport for a period of time. I will revisit the evidence on this matter when I deal with the fourth issue listed for decision below.[22]
[22]See issue (d) below.

23 June 2008: TAC ‘walk away’ offer.

On 23 June 2008, Mr Prior wrote to Mrs Lakic, advising that he had received an offer that Mrs Lakic withdraw her case and bear her own costs in exchange for the TAC’s promise not to pursue her for its costs of her application. The letter informed Mrs Lakic the offer remained open until 4 pm on 30 June 2008. Mr Prior reiterated his previous advice that he believed her case was ‘fraught with difficulties’ and his view that she would not be successful. Mr Prior sought Mrs Lakic’s response.[23] There is no documentary evidence of any response, or of any further action taken in relation to that offer.
[23]Exhibit 4, tab 34.

However, Mrs Lakic alleges that Mr Prior organised a meeting on 23 June 2008 for her to sign a withdrawal of her case. She claims she attended a meeting in the city with her husband, sons and an interpreter. According to her oral evidence she told Mr Prior all about her suffering but he nonetheless asked her to sign the letter of 23 June. When she asked how she would obtain treatment if she signed away her claim, she said: ‘If I cannot have treatment, then all I could do was just to jump through this window and kill myself’. According to her oral evidence, Mr Prior ‘let me know with his arms outstretched, go jump’.[24] At the time of giving her evidence, Mrs Lakic demonstrated a person stretching out their arms (as if toward something) with a shrug of their shoulders. My distinct impression from Mrs Lakic’s evidence, and her gesture, was that she was alleging that Mr Prior gestured in a way that conveyed to her that she should jump out of the window.
[24]Transcript pp 88-91.

Mrs Lakic’s statement of claim makes no such allegation. In her ‘plaintiff’s narrative’, which did not constitute evidence in the case, she gave a different account. In that document she alleged he actually told her ‘kill yourself’. Zradko Lakic gave evidence of the alleged episode. He claimed that after Mrs Lakic became distressed and refused the TAC offer, Mr Prior said she could ‘go back to Bosnia’, and when she said ‘I’m going to kill myself’ Mr Prior said, ‘Go and kill yourself’.[25] Boris Lakic said, of that same incident, when she said she was going to commit suicide, ‘he didn’t really care’.[26] When he was pressed by Mrs Lakic to recall if Mr Prior actually said anything, he said:

… your Honour, … I know when she said something like ... ‘Do you want me to jump outside the window or something’, from memory, I believe he said, ‘Jump’, like he didn’t care.[27]

[25]Transcript p 294.30.

[26]Transcript p 322.1-3.

[27]Transcript p 322.7-11.

Mr Prior gave evidence that he said no such thing, neither that Mrs Lakic should return to Bosnia or that she should jump or kill herself. Indeed, Mr Prior did not accept that any such meeting had taken place. The only meeting around that period was a mediation held with the TAC on 13 March 2008 ahead of the scheduled 15 April hearing date. Documents on his file confirm that such a mediation probably did take place on the date he said.[28]
[28]Exhibit 4, pp 229, 231.

Apart from constituting a quite serious and sinister allegation to level at a professional person, there is little real consequence in this allegation. Mrs Lakic claimed that upon leaving the meeting, it was apparent she bled heavily onto a chair, presumably suggesting that the episode aggravated to her gynaecological condition. The episode may also be said to be relevant to her other stress and personal injury claims, which will be discussed later.

It is possible that Mrs Lakic could (at some stage) have suggested in Mr Prior’s presence that if she did not get her treatment paid for she may as well kill herself. On my observation, she is a person prone to use somewhat emotive language,[29] particularly if stressed. Perhaps, if that was said, Mr Prior did not take that language to be a serious statement of intention, instead taking it to be hyperbole. If such an incident did ever happen, I could accept that Mr Prior may not even have recalled it.
[29]For example, as heard in the recording of the 9 December 2010 telephone call, see below [98].

But, I am far from persuaded that any episode occurred in any of the various ways recounted by Mrs Lakic or her witnesses. Their accounts diverged significantly and I do not feel I can place any reliance upon them. I do not accept that Mr Prior, by words or gesture, suggested that Mrs Lakic should kill herself, go back to Bosnia, or anything of that nature. Had anything like that happened, I have no doubt that Mrs Lakic would have dismissed Mr Prior instantly. Instead, she continued to retain him and, on her evidence, wanted to keep on retaining him.

24 October 2008: trial further adjourned

Mr Prior arranged an appointment for Mrs Lakic to see a psychiatrist, Dr Nathar, to obtain a medico-legal opinion ahead of the adjourned hearing of her s 93 application, then scheduled for 24 October 2008. By then, a further 86 paragraph affidavit of Mrs Lakic had been prepared and sworn, and court books were in the process of being completed.

Mrs Lakic failed to attend the appointment on 16 October 2008 after receiving letters about it from Mr Prior on 1 October and 15 October. According to a file note made by Mr Prior, Mr Lakic telephoned him on the day of the appointment (or perhaps the day before) saying she could not attend due to illness. From his office account Mr Prior paid $308 to Dr Nathar in relation to the missed appointment and another $100 for an interpreter who was engaged for the occasion.

Mrs Lakic did not provide requested funds necessary to brief a barrister for the hearing on 24 October but wanted to proceed regardless. Mr Prior was unprepared to act without a barrister being briefed for the hearing and, despite not having been put in funds to do so, engaged Mr Stephen McCredie of counsel to appear on her behalf. In this letter to Mrs Lakic dated 22 October 2008 Mr Prior set out a summary of a telephone discussion between himself and Mrs Lakic the day before.[30] In it, he explained he had engaged a barrister ‘with great reluctance, and with your welfare in mind’. He also continued:

We again advise you that, in due course, we expect to be paid for the services we have provided to you, whether or not you have won your case for compensation or not (sic). We know you understand this, and acknowledged of the fact (sic) by signing the charge that supports a Caveat lodged on your real estate … We have no doubt that, if you lose this case, your house will need to be sold to pay legal costs.

[30]Exhibit 4, p 350.

It is plainly evident by this stage that there was real tension in the client-solicitor relationship.

A file note[31] on Mr Prior’s file indicates that Mrs Lakic and an interpreter attended a conference with Mr McCredie on 23 October. Mr McCredie and Mrs Lakic attended court on 24 October 2008 but, as it turned out, no judge was available to hear the case and it was further adjourned to 25 May 2009.
[31]Exhibit 4, p 352.

February 2009: failure to attend second appointment with Dr Nathar

By letters to Mrs Lakic dated 30 October 2008, 10 November 2008, 22 January 2009, and 5 February 2009[32] Mr Prior informed Mrs Lakic of a new appointment he had made for her to see Dr Nathar on 12 February 2009, and stressed the importance of her keeping the appointment saying, in one letter, ‘You must attend in order for us to continue to act’.
[32]Exhibit 4, pp 355-8.

Mrs Lakic did attend Dr Nathar’s rooms on 12 February 2009 but refused to see him when it was apparent that no interpreter was in attendance. Evidently, Dr Nathar considered her English to be sufficient and was prepared to proceed but Mrs Lakic was not. Dr Nathar’s invoice records that Mrs Lakic attended, refused to be interviewed without an interpreter, and left of her own accord.[33]
[33]Exhibit 4, p 359.

In evidence, Mr Prior said that Mrs Lakic’s failure to see Dr Nathar on that second occasion was a sign to him of further erosion in the relationship of trust between client and solicitor.

23 March 2009: notice of ceasing to act

Mr Prior sent Mrs Lakic a letter on 26 February 2009.[34] In it he reiterated how important it had been for her to attend the appointment with Dr Nathar. He pointed out that he was substantially out of pocket for disbursements, enclosing a list of those outstanding. Noting that she had refused to pay them when requested, he said he could not go on funding them on her behalf and that unless she paid them within 7 days he would have to cease to act. About a month later, on 23 March 2009, he wrote again advising that as $4,401.05 disbursements remained unpaid he had filed a notice of ceasing to act.
[34]Exhibit 4, p 361.

At trial, Mrs Lakic claimed that she did not know why Mr Prior left her, maintaining she had done everything required of her.[35] Given that Mr Prior later obtained judgment for unpaid costs and disbursements, including it would seem $5,761.65 for outstanding disbursements,[36] it seems at least that Mrs Lakic had not paid for all disbursements as and when required.
[35]Transcript p 103.
[36]Exhibit 4, pp 369-71, 387.

In conjunction with the question concerning the terms of the retainer made on 30 September 2005 and the terms of entering the equitable charge, the events leading up to Mr Prior ceasing to act for Mrs Lakic arguably bear upon the issue of whether the caveat should be removed. That is, as foreshadowed earlier,[37] if, in the circumstances, Mr Prior was obliged to keep acting for Mrs Lakic to trial (as Mrs Lakic contends) and if the caveat only secured costs providing Mr Prior did keep acting until trial, then by Mr Prior ceasing to act he may be disentitled from maintaining the caveat. This issue will be discussed further under issue (a) below.
[37]See above [52].

9 December 2010: telephone call

On or about 9 December 2010 Mrs Lakic obtained a title search of her house and saw that Mr Prior had lodged a caveat over her property based upon the equitable charge she signed on 10 April 2008. She had a telephone conversation with Mr Prior that same day.

Mr Prior recorded the conversation and had a typed transcript made from the recording. Having listened to the recording and read the typed transcript, I do not consider the transcript to be a complete or fully accurate account of what was said. I do not mean to suggest anything untoward by that observation. The conversation was rapid, at times repetitive, and the voice of Mrs Lakic was often difficult to pick up. Although the transcript was tendered, to the extent there is anything of value in the conversation at all, I only rely upon the audio recording.

From the audio recording, several things are clear. First, Mrs Lakic was at pains to say she did not put her signature (to the 'caveat') for her house, she only put her signature for costs. That is, she appeared to deny having signed a charge over her house, only admitting that she had signed an agreement to pay costs. That was not a position that she attempted to maintain at trial.

Secondly, it is evident from the recording that Mrs Lakic was capable of conducting a conversation in English, albeit at a basic level.

Thirdly, when upset, it is clear that Mrs Lakic is capable of extremely vehement, strong and emotive language.

As I understood her, Mrs Lakic relied on the conversation as evidence of her stress induced by the fact that Mr Prior had lodged a caveat on her property. She sought to rely on that evidence, along with other evidence of her stress, to support her claim for damages for mental stress, anguish and physical injury.

2011 - 2012: Magistrates’ Court debt proceedings

Mr Prior obtained a default judgment from the Magistrates’ Court for outstanding costs and disbursements owed to his firm by Mrs Lakic. The judgment was for $39,017.39 plus interests and costs,[38] obtained on 11 February 2011. Mrs Lakic applied for a rehearing but, after several adjournments due to her failures to comply with orders, she ultimately failed to get leave to defend the claim. Additional costs were awarded in favour of Mr Prior in March and May 2012. A warrant to seize property dated 13 November 2012 recorded the total amount owing as at that date at $56,120.67.[39]
[38]Notice of order made on 11 February 2011, exhibit 4, p 391A and in exhibit A, volume 3, p 147.
[39]Exhibit 4, pp 415-8.

Other than demonstrating that Mrs Lakic’s rights to contest Mr Prior’s claim for costs had been exhausted, the course of events in the Magistrates’ Court has little bearing on the issues in the proceeding. Mrs Lakic sought to rely on the events for her own purposes. First, she wished to demonstrate, generally, how vexed she was by Mr Prior pursuing her for costs and how his attempts at recovery had affected her health. Secondly, and for a similar reason, she sought to establish that Mr Prior had requested Court security to intervene on one occasion and how that episode caused her upset and distress. However, the whole of the evidence tended to indicate that Court security was called when Mrs Lakic wished to approach the Judicial Registrar after the decision went against her.[40]

[40]Exhibit A, volume 3, p 409. Mrs Lakic insisted I read this letter even if it contained otherwise privileged advice to her from Victorian Compensation Lawyers: Transcript p 107.

Issues for decision
(a) Should the caveat be removed?

The first question to consider is whether the caveat placed over 22 Lucerne Road, Ferntree Gully should be removed — that is, whether the defendant’s entitlement to lodge a caveat and enforce the equitable charge was confined only to circumstances in which:

(a) Mrs Lakic went to court and lost her case (such that there were no costs recovered from the other side); or

(b) the defendant continued to represent Mrs Lakic through to the completion of her litigation for serious injury/common law damages.

In summary, for reasons that follow, I find that the equitable charge was validly obtained, the caveat claimed a valid interest, the right to lodge and enforce the caveat was not confined to the circumstances Mrs Lakic alleged, and no ground has been made out for its removal.

By caveat registered on title 8 May 2008,[41] Mr Prior claims an interest as chargee pursuant to an equitable charge dated 10 April 2008. The equitable charge signed by Mrs Lakic on that date[42] charged the relevant land with payment of all legal costs, counsels’ fees and disbursements which Mr Prior had incurred or may incur in providing legal services in connection with Mrs Lakic’s County Court proceedings.
[41]Exhibit A, volume 3, pp 81, 124.
[42]Exhibit A, volume 3, pp 79-80.

On the question of the terms of the costs agreement and basis for charging, I prefer the evidence given by Mr Prior, supported by his contemporaneous files notes, to that of Mrs Lakic and her witnesses. I find that the terms of the retainer were adequately explained to Mrs Lakic in September 2005 and that she knowingly signed the costs agreement. Further, I reject any suggestion that there was some express stipulation, at that time or later (for example, at the date of signing the equitable charge), that Mr Prior would only be entitled to his costs if he completed the case or if Mrs Lakic lost at court.[43] However, it was an express term of the costs agreement that, upon request, any anticipated disbursements were required to be paid immediately.[44]
[43]The express terms of costs agreement dated 30 September 2005 included that Mrs Lakic pay disbursements in advance and professional costs 30 days from being billed in arrears (see exhibit B).
[44]Exhibit A, volume 3, pp 22-3, clause 3.

In breach of the costs agreement, Mrs Lakic failed over a period of time to pay anticipated or incurred disbursements; in particular, counsels’ fees and costs incurred to Dr Nathar and the interpreter. At the same time, it is evident that, whether from some lack of trust in Mr Prior or for some other reason, Mrs Lakic was refusing to cooperate with reasonable requests made by Mr Prior (such as to attend and participate in the appointment with Dr Nather) and to accept his reasonable legal advice (such as to engage counsel for the hearing on 24 October 2008). Her refusal to do so was frustrating the ability of Mr Prior to properly represent her interests.

Generally speaking, a solicitor is not entitled to unilaterally terminate a retainer unless there is ‘reasonable cause’ or ‘just cause’, involving a breach or repudiation of the retainer.[45] In my view, for a combination of reasons, Mr Prior did have reasonable or just cause to terminate the retainer in March 2009 based upon Mrs Lakic’s repudiation of the retainer and the evident breakdown of the important ingredients of trust and confidence necessary for the services to be properly performed.
[45]Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249, 254 [3] per McPherson JA (with whom Jerrard JA and Douglas J agreed).

Having rendered legal services and incurred disbursements until the time of lawful termination of the retainer, Mr Prior was entitled to recover his accrued entitlements under the retainer. He was not, as Mrs Lakic would have it, disentitled to his costs and disbursements for not continuing to act since the reason for him not continuing to act was her own repudiation of the retainer agreement. As the Magistrates’ Court judgment verifies, Mrs Lakic continues to owe Mr Prior money for legal costs and disbursements arising from his performance of legal services in connection with the County Court proceedings. Accordingly, the equitable charge continues to secure the payment of those monies and the caveat remains a valid notification of that interest.

(b) Does Mr Prior have an advocate’s immunity defence?

Mr Prior relied upon two defences to the proposition that he was liable to Mrs Lakic for failing to pursue her claim for home help in the proceeding at VCAT. First, he maintains that Mrs Lakic gave informed consent to the settlement of that claim. Secondly, and in any event, he claims the benefit of advocate’s immunity as propounded in cases such as Giannarelli v Wraith[46] and D’Orta-Ekenaike v Victoria Legal Aid.[47] In the period between the conclusion of the trial and the delivery of these Reasons, the High Court handed down its decision in Attwells v Jackson Lalic Lawyers Pty Ltd.[48] That decision concerned the application of advocates’ immunity in relation to an alleged breach of duty when giving advice connected to the settlement of a claim, seemingly pertinent to the defence raised in this proceeding.
[46](1988) 165 CLR 543.
[47](2005) 223 CLR 1.
[48][2016] HCA 16 (‘Attwells’).

I decided not to invite submissions from the parties regarding the impact of Attwells on the issues in this case. Because of the clear view I have taken of the case against Mr Prior on the factual questions, as discussed below, it is not necessary to decide whether the defence of advocate’s immunity remains open to Mr Prior in this matter.

The details surrounding the settlement of the home help claim are set out at paragraphs 53 to 58 above. In short, Mrs Lakic’s allegation is that, in breach of her instructions, Mr Prior arranged for her appeal against TAC’s refusal to pay for home helps services to be compromised on the terms of the release made on 21 March 2006. Mrs Lakic bears the onus of establishing that the compromise was entered without her instructions and that, but for the compromise, she would have achieved more valuable entitlements.

Mrs Lakic denies signing the letter of 27 February 2006 from Mr Prior, translated into the Serbian language, by way of confirming her instructions to settle the appeal. She says further that if the signature on the letter is indeed her signature, it was obtained by some trick, as was her purported signature on the TAC release.

Mrs Lakic has estimated value of lost personal care and domestic duties to be a total of $488,592.

Dealing first with the letter, initially Mrs Lakic said that she did not sign it.[49] Under cross examination she appeared to acknowledge that it was her signature on the letter, but said she did not know how it came to be there.[50]
[49]Transcript pp 52-3.
[50]Transcript p 189.

Mr Prior said he and Ms Tsikaris of counsel advised Mrs Lakic during a conference on 21 February 2006 to settle the claim and that Mrs Lakic accepted the advice and gave instructions to settle.[51] In the letter, Mr Prior confirmed those instructions in writing[52] and had the letter translated into Serbian.[53] He believed he had sent it to Mrs Lakic before a conference on 1 March to discuss it. Mr Prior gave evidence that he had organised for the letter to be translated into Serbian because the home help claim was clearly important to Mrs Lakic, and he wanted to ensure there could be no misunderstanding and to safeguard himself against Mrs Lakic later saying she did not give the instructions to settle.[54]
[51]Transcript pp 368-9; see also [55] above.
[52]Letter dated 27 February 2006, exhibit 4, p 133.
[53]Exhibit 1 (Serbian version of letter of 27 February 2006).
[54]Transcript pp 369-70.

A file note dated 1 March 2006 supports Mr Prior’s version of events. It recorded that Mr Prior met with Mr and Mrs Lakic and their son Boris on that day and that they ‘understand it will at worst be discontinued with no benefit and legal costs but we will try to get as much as we can’.[55]
[55]File note dated 1 March 2006, exhibit 4, p 135.

Mrs Lakic’s signature appears on the Serbian translation of the letter next to a handwritten date of 1 March 2006. Mr Prior gave evidence that he did not write dates in the form of the date written on the document (eg, as ‘01.03.06’ for 1 March 2006) but that it reflected Mrs Lakic’s method for writing dates.[56]
[56]Transcript pp 366, 371.

I accept Mr Prior’s evidence regarding Mrs Lakic’s instructions to settle, and that she signed the letter. I find that Mrs Lakic did give informed instructions to settle. However, I think Mr Prior is mistaken in believing that the letter as translated into Serbian was sent to Mrs Lakic before she attended his office on 1 March—probably only the English version of it was. But I find that Mrs Lakic signed the translated letter on 1 March having had the opportunity to read and understand it at Mr Prior’s office. I reject the allegation that Mrs Lakic was tricked into placing her signature on it.

Coming now to the TAC release dated 21 March, Mrs Lakic’s evidence on this topic was inconsistent. Initially she said that she signed the release, but denied knowing what it was, saying ‘it’s most likely that I did sign that document, without an interpreter, believing that it was an application for a serious injury certificate and I believe I was tricked’.[57] Later, under cross examination, she denied ever seeing a document titled ‘release’ until August 2012 when her file was being transferred to VCL.[58]
[57]Transcript p 60. See also p 57.
[58]Transcript p 208.

Mr Prior’s evidence was that he met with Mrs Lakic, Mr Lakic and Boris to explain the terms of the TAC release, with Boris interpreting the release for Mrs Lakic.[59] Mr Prior’s evidence is supported by a file note dated 21 March 2006.[60] Mr Prior recalled Mrs Lakic signing the TAC release and he was her witness for it.[61]
[59]Transcript pp 371-2.
[60]File note dated 21 March 2006, exhibit 4, p 138.
[61] Release dated 21 March 2006, exhibit 4, tab 44.

I accept Mr Prior’s evidence and find that Mrs Lakic understood the terms of the TAC release and knowingly signed it. Of course, having accepted that Mrs Lakic voluntarily signed the letter of 1 March which, in turn confirmed she had given instructions in conference with a barrister to settle the appeal, makes it easier to accept Mr Prior’s account of what happened in relation to the release. But, in any event, I find that Mrs Lakic’s evidence concerning the circumstances of how her signature came to be on the release entirely unsatisfactory.

In conclusion, because I find that Mrs Lakic gave informed instructions to settle the home help claim as set out in the letter of 27 February 2006, and knowingly entered into the TAC release, it is unnecessary for me to decide whether Mr Prior has a defence to settlement of the home help claim under advocate’s immunity.

I should add that Mrs Lakic made no attempt to establish the value of her chance to do better than what she obtained in the compromise had she proceeded with her appeal. She appeared to assume that but for settling the case she would, of necessity, have succeeded and that TAC would have been compelled to pay the amounts she now claims as damages against Mr Prior. Of course, no such assumption can be made. The evidence was that TAC had rejected her claim; Hounslow’s had advised she should settle; Ms Tsikaris advised she should settle, and Mr Prior advised she should settle. Upon settling the claim she retained the payments that had been made to date and she was to receive a limited amount of further payments. There was no evidence to establish she was likely to do any better or to establish the value of any chance she had to do so.

She fails on this element of her claim.

(c) What loss was caused by failure to commence a common law action in time?

Unless the TAC determined the degree of her injury was 30 per cent or more or issued a certificate consenting to her bringing proceedings, neither of which it did, then to commence her common law claim Mrs Lakic always had to make a s 93 (serious injury) application to a court.[62] However, but for Mr Prior’s negligence, she would not have had to bring her s 23A application. It follows that the additional cost of that application, and any other compensable loss caused by the additional delay, is recoverable as damages. The question as to the measure of those damages are a little more complicated.
[62]Transport Accident Act 1986 (Vic) ss 93(2), (3), (4).

VCL charged Mrs Lakic $51,093.45 for solicitor/client costs in relation to the s 23A application.[63] Mr Prior said that if he had completed the application, his professional costs and disbursements would have been about $26,000.[64] He argued that I should infer that Mrs Lakic had been overcharged. Even if that were so — and I make no finding that she was — that would not relieve Mr Prior, as the wrongdoer, of liability for the costs Mrs Lakic incurred, acting reasonably, to avoid a greater loss. Mr Prior did not satisfy me that Mrs Lakic acted unreasonably by engaging VCL to continue her s 23A application.
[63]Exhibit 4, tab 183.
[64]Transcript p 389.

At the date of trial, it was evident that Mrs Lakic had still not paid VCL its costs and disbursements as VCL was seeking to recover them by action in the County Court. However, there being no evidence to establish that she is not liable for them, I am satisfied that Mr Prior is liable to compensate her for the amount she has been charged, namely $51,093.45.

Theoretically, it was open to Mrs Lakic to establish that some component of the costs which Mr Prior charged her, and for which she is liable under the Magistrates’ Court judgment, was not recoverable by him because it was referable to the s 23A application. She might have claimed compensation for having incurred liability to that extent. But Mrs Lakic did not establish what component, if any, was attributable to the s 23A application, nor argue that I should award damages for that component of the Magistrates’ Court debt. In any event, it is well possible that her rights and entitlements in respect of that debt have merged in the judgment. Allowing compensation now for such a component of the costs would be tantamount to recognising a counterclaim against Mr Prior’s claim for debt when leave to defend the claim for debt was sought and lost. I foresee real problems with that case. No argument was advanced before me either way on such an element of damage. Given that no argument was made, that no figure was identified, and the problems I have foreshadowed, I do not intend to give any further consideration to that matter or make any allowance for it.

In ordering that the limitation period be extended, Judge Kings made an order that there be ‘no order as to costs’.[65] The effect of that order was that neither party had any obligation to pay the other party’s costs of that application. So, Mrs Lakic has no additional liability to TAC for its costs which she can claim against Mr Prior; but neither does she have any source of indemnity in respect of her liability to VCL which might reduce the damages payable by Mr Prior. Similarly, the costs order in favour of Mrs Lakic made by Rush J does not provide Mrs Lakic with any indemnity in respect of the costs of the s 23A application.
[65]The orders of Judge Kings and Justice Rush were not produced in evidence. However, after the conclusion of the trial, and with the consent of both parties signified by emails to my associate, copies of the orders were obtained to assist me in determining damages.

Leaving aside the costs incurred, there was no evidence of any specific financial loss caused by the delay in concluding the common law proceeding, resulting from the need to bring the s 23A application. Quantifying that period of delay involves some assumptions. The originating motion for both the s 93 application and the s 23A application was filed on 13 July 2007, the s 93 application was heard on 31 January 2012 and granted on 13 February 2012, and the s 23A application was heard on 10 August 2012 and granted on 18 October 2012. The common law claim was then heard from 28 May 2014. Mrs Lakic was represented by her new solicitors, VCL, almost immediately upon Mr Prior ceasing to act.

Allowing for the period between the conclusion of the s 93 application and the conclusion of the s 23A application, but otherwise assuming that a similar length of time would have occurred between the grant of leave to commence a common law action and the commencement of the trial of that proceeding, the delay produced by the s 23A application was in the order of 6 months. No evidence was lead that enables me to quantify any specific loss occasioned by that period of delay.

Turning to other possible losses caused by the s 23A application, it could be argued that additional psychological distress was caused by the delay. Although Mrs Lakic gave no evidence of any particular trauma or distress caused by the delay itself, she did, however, claim a general sum of $50,000 for the late submission of the serious injury application,[66] and gave a multitude of evidence in relation to distress caused by the various events. I intend to discuss any claimed losses of that nature under issue (e) below.[67]
[66]Plaintiff’s narrative, [7].
[67]See [148] ff below.

(d) Did Mrs Lakic suffer any other recoverable loss and damage?

Including the damages for failure to commence a common law action before 15 May 2006, Mrs Lakic claims sums totalling $1,341,486 said to arise out of alleged wrongful acts of Mr Prior.[68] These sums are listed in the following table:
[68]These amounts are extracted from the plaintiff’s narrative. Note: the total sum appearing in the narrative ($1,335,786) is arithmetically incorrect.

No.

Damage

Amount

1.

Signing of unidentified/untranslated documents

$30,000

2.

Being ‘tricked’ to sign the release of the TAC claim

$50,000

3.

Recovery of lost payments for home help:

·     Lost personal care over 15 years

·     Lost domestic duties over 15 years

$109,512

$379,080

4.

Late submission of serious injury application

$50,000

5.

Execution of the Equitable Charge and Caveat

$120,000

6.

Failure to return passports

$40,000

7.

Being asked to lie in court

$50,000

8.

Failure to provide professional interpreters

$20,000

9.

Return of various disbursements

$15,194

10.

Refusal to remove caveat

$2,000

11.

Inability to deal with house due to caveat

$120,000

12.

Costs associated with moving (nb: item not in included in plaintiff’s total)

$5,700

13.

Pain and suffering

$150,000

14.

Pain and suffering of family

$200,000

PLAINTIF’S TOTAL

$1,335,786

ACTUAL TOTAL

$1,341,486

Putting aside damages for Mr Prior’s admitted negligence for not lodging a common law claim within time (item 4) which I have already covered earlier, I can deal with most of the claims described in this table briefly.

The amounts claimed items 5, 10, 11 and 12 all relate to the execution of the equitable charge and subsequent registration of the caveat. I have already discussed and made findings on those matters. Given the equitable charge was validly obtained, and the caveat was and remains validly registered, Mrs Lakic is not entitled to damages for the execution of the charge (item 5) or for Mr Prior’s refusal to remove the caveat (item 10). Similarly, Mrs Lakic’s inability to deal with her house due to the caveat (item 11) and the incurrence of costs associated with moving (item 12), stem from lawful enforcement measures related to the Magistrates’ Court debt for legal costs and the equitable charge securing payment of those costs.[69] As no wrong has been committed, Mrs Lakic is not entitled to compensatory damages in relation to those items.
[69]Mrs Lakic’s evidence was, in effect, that the family moved premises to avoid the execution of enforcement proceedings for the Magistrates’ Court debt.

Items 2 and 3 relate to the circumstances of the settlement of the VCAT appeal in March 2006. I have rejected Mrs Lakic’s allegations of breach of duty so she has no entitlement to those damages.

While Mrs Lakic did not specify the precise documents in respect of which she claims the amount in item 1, I take this item to refer to the signing of the costs agreement, the TAC release, and letter of 27 February 2006 from Mr Prior to Mrs Lakic. In each case I have found the documents were signed by Mrs Lakic without breach of duty or other wrongdoing on the part of Mr Prior. Mrs Lakic has no entitlement to that item of alleged damage.

Item 6 concerns Mr Prior’s alleged failure to return passports. On the evidence, I find that TAC issued a notice to produce her passport but Mrs Lakic refused to provide it directly to Mr Prior. She insisted on providing it to the court directly.[70] Mr Prior did not recall ever being in possession of the passport.[71] I am not satisfied that Mr Prior ever had the passport and, so, could not have failed to return it to Mrs Lakic. In any event, no damage has been proven for it being out of Mrs Lakic’s possession, if it was out of her possession. No damages are awarded in relation to this claim.
[70]Transcript pp 375-6.
[71]Transcript pp 423-5.

Item 7 (being asked to lie in court) appears to relate to a conference on 23 October 2008 arranged by Mr Prior between Mrs Lakic and barrister Stephen McCredie ahead of the hearing in the County Court the following day. She claimed that Mr McCredie, in effect, asked her to falsify her account to the court of what had occurred in May 2000. I am far from satisfied that Mr McCredie made any such request. Given my view of Mrs Lakic’s credit, I would need some form of independent corroboration to be satisfied of such a serious allegation. Moreover, she did not allege that Mr Prior asked her to lie or was somehow responsible for what counsel is alleged to have said to her. It could hardly be inferred on principles of agency that such a request be imputed to Mr Prior as any sort of principal. No damage was proven even had it been said. Accordingly, I award no damages under item 7.

With respect to item 8, Mrs Lakic claims $20,000 in respect of Mr Prior’s alleged failure to arrange for an interpreter at her medical appointment with Dr Nathar and on other unspecified occasions.[72] In my view, there is nothing in this complaint. Dr Nathar was prepared to see Mrs Lakic without an interpreter in February 2009. Having heard Mrs Lakic converse with Mr Prior in English in the recording of their conversation on 9 December 2010, I am not satisfied that she suffered any loss by the absence of an interpreter when the doctor felt competent and was willing to proceed with the appointment. On other occasions, Mrs Lakic routinely used her son Boris as an interpreter at both medical and legal appointments. On his own evidence, Boris said he could ‘probably translate most things clearly.’[73] In respect of the equitable charge and caveat, Fr Cedomir provided interpretation services on that occasion and gave evidence, when called by Mrs Lakic, that he explained to Mrs Lakic the consequences of putting a caveat on her home and advised her against it.[74]
[72]Plaintiff’s narrative, [16].
[73]Transcript p 317.
[74]Transcript p 165.

In short, even if there were occasions when Mr Prior was obliged by his duty to Mrs Lakic to provide an interpreter and failed to do so — and I make no such finding — no actual loss has been shown to flow from such a failure. No damages are awarded for item 8.

In item 9, Mrs Lakic claims the return of monies paid to Mr Prior totalling $15,194. Mrs Lakic has already had her chance to dispute such fees at the Magistrates’ Court proceedings. In my view, she is estopped from claiming compensation for payment of those amounts in this proceeding. In any event, Mr Prior was entitled to the disbursements he had incurred under the costs agreement which I have found was entered validly, and he was not disentitled to his costs and disbursements by reason of him ceasing to act in March 2009. In other words, even apart from the Magistrates’ Court proceeding, Mrs Lakic has not established any basis for him having to return the money paid.

Item 14 is rejected on the basis that Mrs Lakic’s family members are not parties to the proceeding and cannot claim damages.[75]
[75]See [21] above.

Finally, I come to Item 13. This item concerns a general claim for damages totalling $150,000 for ‘stress and damage to health’[76] allegedly caused by Mr Prior. The amount sought as damages under this item would embrace any damages for which Mrs Lakic could be entitled for any stress, anxiety or harm to her health caused by the need for her to conduct a s 23A application, and for any consequent delay in bringing her common law action, as mentioned in paragraph 132 above. But, in addition to that stress, Mrs Lakic has claimed to have suffered multiple other stresses due to Mr Prior’s alleged wrongful conduct, such as the stress associated with the Magistrates’ Court proceeding and associated enforcement proceedings or the reaction to the so-called ‘go jump’ statement.
[76]Plaintiff’s narrative, p 16.

Apart from the possible stress she suffered in connection with the bringing of the s 23A application, and perhaps the associated additional six month delay in prosecuting the common law action, I have rejected Mrs Lakic’s arguments that any other stress was caused by some breach of duty or other wrongful conduct on Mr Prior’s part. So, on my findings on liability, the only stress and mental anguish for which Mr Prior could possibly be liable would be the stress and anguish occasioned by that application and any consequential delay for the common law action.

However, Mrs Lakic did not give evidence of any particular stress or anxiety or anguish associated with the need to bring the s 23A application. Nor did she give such evidence in relation to the added delay of some six months in being able to prosecute her common law action compared with what may have been the case had she not had to obtain an extension of time. Although, perhaps, a degree of anxiety, sense of frustration or inconvenience might be assumed as an expected consequence, the lack of particular evidence of some impact upon her well-being produced by those events is problematic for Mrs Lakic. As I have made clear, Mrs Lakic claimed to have suffered stress and anxiety from other causes that did not involve any wrongdoing on Mr Prior’s part and for which she has no entitlement to recovery. Distilling some measure of stress or anxiety from those acts or omissions which were wrongful, in the absence of any evidence that they in fact caused her some such reaction, is difficult.

In any event, as I explain more fully in the section below, damages of this type are damages for non-economic loss for injury within the meaning of Part VBA of the Wrongs Act. So, its provisions apply. Mrs Lakic has not satisfied the requirements under Part VBA of the Wrongs Act to first obtain a certificate of or a determination that she has suffered a ‘significant injury’. Having not satisfied the Act’s threshold provisions to make a claim of this kind, she is not entitled to any award for this item.

(e) Is Mrs Lakic prevented from claiming personal injury damages?

As just observed, Mrs Lakic has claimed general damages of $150,000 for stress and damage to health. She has also claimed compensation for other personal injury, such as pain and suffering, worry, fear, anxiety and damage to health due to particular actions on the part of Mr Prior.[77] I have already decided that none of her claims succeed on the first issue of liability, apart from a claim for stress or ill health stemming from the need to conduct the s 23A application and the consequent delay to her bringing her common law action. Even if other claims had succeeded on liability (including Mrs Lakic’s claims to have suffered gynaecological injury which I have ruled to be irrelevant) for the reasons given below they would not have been recoverable in the proceeding.
[77]Such as, in relation to signing, the TAC release, execution of the equitable charge and caveat, failure to return passports, and in ability to deal with her house due to the caveat and having to move – see plaintiff’s narrative.

Leaving aside whether any such damages can be claimed in the absence of establishing a significant injury (discussed below), there are instances where, drawing an analogy to the contractual principles in Baltic Shipping Co v Dillon,[78] damages for distress and inconvenience have been awarded against solicitors.[79]
[78](1993) 176 CLR 344.
[79]See, for example, Leitch and Ors v Reynolds (2005) Aust Torts Reports 81-806 (‘Leitch’); Avenhouse v Council of the Shire of Hornsby (1998) 44 NSWLR 1 (‘Avenhouse’). Avenhouse was considered prior to the introduction of the Civil Liability Act 2002 (NSW) (‘Civil Liability Act’) and Leitch did not consider specifically consider the application of that Act.

Part VBA of the Wrongs Act concerns recovery of damages for non-economic loss and the threshold that a claimant must reach in relation to recovery of such damages.[80] Section 28 LE provides that:

A person is not entitled to recover damages for non-economic loss in any proceeding in a court in respect of an injury to a person caused by the fault of another person unless the person injured has suffered significant injury.

[80]Wrongs Act s 28LC(1).

‘Injury’ is defined as personal or bodily injury and includes ‘psychological or psychiatric injury’.[81] ‘Non-economic loss’ is defined as meaning pain and suffering, loss of amenities of life or loss of enjoyment of life.[82]
[81]Ibid s 28LB.
[82]Ibid s 28LB.

To establish the existence of a ‘significant injury’, the injured person must either obtain a qualifying assessment from an approved medical practitioner, a certificate of assessment issued under the Part or a determination by a Medical Panel constituted under the Act.[83] Mrs Lakic has none of these. It follows that if the damages she claims for stress, anxiety and damage to her health amounts to damages for ‘non-economic loss … in respect of an injury’ as defined by the above provisions, her failure to establish a significant injury prevents her from recovering such damages.
[83]Ibid s 28LF.

There are number of cases considering what amounts to injury and what can be considered non-economic loss for the purposes of legislation such as the Wrongs Act and its equivalent in NSW, the Civil Liability Act.

In Thomas v Powercor Australia Ltd (Damages ruling) [2011] VSC 586 (‘Thomas’), in the course of distinguishing a claim for damages for inconvenience from one for stress and anxiety, J Forrest J considered a number of New South Wales authorities which analysed provisions of the NSW Civil Liability Act which were closely aligned with the provisions of the Part VBA of the Wrongs Act. Drawing upon that analysis, his Honour concluded:

[A] claim for damages that involves any component of mental distress, anxiety or stress is caught by the definition of injury and therefore Part VBA of the Wrongs Act applies.[84]

[84]Thomas [2011] VSC 586, [116].

In Insight Vacations Pty Ltd v Young[85] the NSW Court of Appeal considered whether damages awarded for disappointment and distress after a holiday was cut short by an injury for which the defendant was held liable were caught by the provisions of Part 2 of the Civil Procedure Act. In substance the question was whether such disappointment and distress amounted to a claim for non-economic loss for personal injury, which in turn included ‘impairment of a person’s physical or mental condition’. Non-economic loss was defined in similar terms to the definition in the Wrongs Act.
[85](2010) 268 ALR 570 (‘Insight Vacations’). The relevant conclusions of the court, for the purposes of this discussion, were not considered in the subsequent decision of the High Court: Insight Vacations Pty Ltd (t/as Insight Vacations) v Young (2011) 243 CLR 149.

Upon an analysis of the provisions of that Act, Basten JA held that matters such as grief, anxiety, distress and disappointment can be elements of pain and suffering or loss of amenities of life, each of which are typically the subject of awards for non-economic loss.[86] Although agreeing, Spigelman CJ preferred to the characterise grief, anxiety, distress and disappointment as elements of pain and suffering within the definition of non-economic loss.[87] In my view the reasoning in NSW, whilst not dealing directly with the cognate provisions to those in Part VBA, supports the conclusion reached by J Forrest J in Thomas. With respect, I also agree with the reasoning.
[86]Insight Vacations (2010) 268 ALR 570, 595 [125].
[87]Ibid, 585 [78].

Adopting and applying the reasoning of J Forrest J, I find that the damages Mrs Lakic claims for pain and suffering, worry, fear, anxiety and damage to health are properly characterised as damages for non-economic loss in respect of an injury for the purposes of Part VBA of the Wrongs Act. Accordingly, even had she proved she suffered such conditions as a consequence of the need to conduct the s 23A application and the consequent additional delay to conducting her common law action, Mrs Lakic is not entitled to recover damages for those conditions.

(f) Does Mr Prior have any Limitation of Actions Act defence?

So far, I have found that Mrs Lakic only succeeds against Mr Prior on her claim for damages arising from his negligent failure to commence a common law action by 15 May 2006. Her only proven loss caused by that negligence is the liability she incurred to VCL for legal costs and disbursements charged to conduct her s 23A extension of time application.

Mr Prior raised a defence under s 5 of the LAA in respect of any claim for damages that accrued prior to 15 January 2009, being six years before the filing of the writ in this proceeding. As Mrs Lakic’s cause of action for damages for the conduct of her s 23A application only arose once she incurred a liability to VCL — at the earliest, in March 2009 — the defence cannot apply. It is not necessary to discuss the possible application of the defence to other claims brought by Mrs Lakic as she has not succeeded on them for other reasons.

(g) Can Mr Prior’s debt judgment be set off against Mrs Lakic’s damages award?

In the result, Mrs Lakic has succeeded on a claim for damages for the sum of $51,093.45 to compensate her for the liability she has incurred to VCL as a consequence of Mr Prior’s admitted negligence. Despite the fact that she has not yet paid any amount to VCL, she is being sued for that sum and will be liable to VCL for interest, at least at the rate provided by statute. Even though her liability to VCL may be for a debt, her claim against Mr Prior is for unliquidated damages arising from his negligence. Pursuant to s 60 of the Supreme Court Act 1986 (Vic), I will allow her damages in the nature of interest calculated on the amount of her liability to VCL from the date of her writ against Mr Prior (15 January 2015).

Mr Prior argued that the debt owed to him by Mrs Lakic for his costs should be set off against any damages awarded to Mrs Lakic, relying upon the decision of Everingham v Mullins[88] in which the Court noted that:

[I]t has long been established that a client is entitled to an equitable set off of damages for solicitor’s negligence against the liquidated claim of the solicitor for his costs.[89]

[88][2000] SASC 448 (‘Everingham’).

[89]Ibid, [21].

Set-off has been provided for in rule 13.14 of the Supreme Court (General Civil Procedure) Rules 2015. That rule was first introduced into the civil procedure rules in 1987 in these terms:

where a defendant has a claim against a plaintiff for the recovery of a debt or damages, the claim may be relied on as a defence to the whole or part of a claim made by the plaintiff for the recovery of a debt or damages and may be included in the defence and set off against the plaintiff’s claim, whether or not the defendant also counterclaims for that debt or damages.

In his highly regarded work, Williams’ Supreme Court Practice,[90] Neil Williams QC commented on the then new rule as follows:

Rule 13.14 changes the practice in relation to pleading a money claim by way of defence to a claim for the recovery of a debt or damages. It provides that where a defendant has a claim against the plaintiff for a debt or damages, the claim may be relied on as a defence to the whole or part of a claim by the plaintiff for a debt or damages and may be included in the defence and set-off against the plaintiff's claim, whether or not the defendant also counterclaims for that debt or damages. The rule abolishes the distinction between set-off and counterclaim in the ordinary case. It allows the defendant to plead by way of defence to a claim for money by the plaintiff any money claim which the defendant has against the plaintiff at the time of pleading. Thus, in many cases the defendant will be able to set-off against the claim of the plaintiff a claim which under the previous rules could not have been introduced except by counterclaim. Then, by analogy with the former practice in relation to set-off, the defendant will be entitled to judgment if the court finds for the defendant in an amount at least equal to the amount which the court holds the defendant is liable to the plaintiff for debt or damages. However, it will still be necessary for the defendant to counterclaim also in order to recover judgment for any excess in his favour.[91]

[90]Since 2009 continued as LexisNexis Butterworths, Civil Procedure: Victoria, editors David Bailey and John K Arthur.

[91]See LexisNexis Butterworths, Civil Procedure: Victoria, vol 1 (at service 279) [13.14.25] (emphasis added).

Rule 13.14 has been said, if not to sweep away previous practice in general disallowing unliquidated money claims to be set off by way of a defence against a claim for a liquidated debt (or vice versa), then at least to make great inroads upon it.[92]
[92]Moffat v Pinewood Resources Ltd (Unreported, Supreme Court of Victoria, Tadgell J, 7 April 1989).

So far as I am aware, there remains uncertainty whether the introduction of r 13.14 had the effect of changing the substantive law.[93] If only a rule of practice, it should not be read as abrogating or interfering with substantive rights. So read, the rule may merely overcome previous procedural limitations but not relieve a defendant of the need to show that an equitable set-off arises on general law principles when a debt claim is raised as a defence to a claim for unliquidated damages, or vice versa.[94]
[93]Rory Derham, Derham on the Law of Set-Off (Oxford University Press, 2010) 42-4 [2.83-4]. See also LU Simon Builders Pty Ltd v HD Fowles [1992] 2 VR 189, 195 (Smith J).
[94]MEK Nominees Pty Ltd v Billboard Entertainment Pty Ltd (1993) V Conv R 54-468 (VSC).

Although I am inclined to think that r 13.14 was intended to and did have the more wide ranging effect that Mr Williams described, given my conclusions below it is unnecessary to decide whether the rule provides a statutory set-off defence where the close connection between the claims necessary to establish an equitable set-off is absent.[95]
[95]Davies J reaches a similar conclusion when considering equitable set off in PGA Group Pty Ltd v Idameneo (No 789) Ltd (formerly Symbion Health Ltd); Peter Gunn v Idameneo (No 789) Ltd (formerly Symbion Health Ltd) [2011] VSC 382, [52].

In determining whether an equitable set-off is allowed, one must consider the nature of the connection between the claims and the closeness of such claims, and whether the connection is sufficient to impeach the plaintiff’s claim.[96] For an equitable set-off to succeed in circumstances like the present it is essential that there be such a connection between the claim and cross-claim that the cross-claim could be said to impeach the claim so as to make it unfair for the claim to be allowed without taking account of the cross-claim.[97]
[96]See Rory Derham The Law of Set-Off (Oxford University Press, 4^th ed, 2010) 81, 93.
[97]The court in Forsyth & Anor (as trustees for the C&S Forsyth Superannuation Fund) v Gibbs [2008] QCA 103 said at [11] that the decision of Piggott v. Williams (where a complaint against a solicitor for negligence was set off against a claim for his fees) ‘affords an example of what is meant when it is said that the claim to set-off must "impeach" or go to "the root of" the plaintiff's claim’.

Here, Mrs Lakic has succeeded in establishing an entitlement to damages from Mr Prior arising from his performance of legal services in the conduct of her claim for damages arising from personal injury sustained in the May 2000 accident. Mr Prior has a judgment debt for the performance of those services, including the very services in respect of which she complains. Mrs Lakic would, on the principles of Everingham’s case, undoubtedly have been able to raise her entitlement to damages as a set-off against Mr Prior’s claim for debt had she done so in the Magistrates’ Court.

In my view the same close connection that would have permitted Mrs Lakic to set her (unliquidated damages) claim off against Mr Prior’s (debt) claim would permit Mr Prior to set the judgment debt off against Mrs Lakic’s claim.

As at 15 February 2016, pursuant to the Magistrates’ Court order of 11 February 2011 Mrs Lakic owed Mr Prior $72,187.20.[98] This judgment debt continues to accrue interest daily pursuant to the Penalty Interest Rates Act 1983 (Vic), applied because of s 100(7) of the Magistrates Court Act 1989.[99] In respect of Mr Prior’s negligence, I would award Mrs Lakic $51,093.45 damages, plus interest pursuant to s 60 of the Supreme Court Act 1986 to be calculated from the date she commenced proceedings, being 15 January 2015.[100] It seems certain on my calculations that the damages to which Mrs Lakic will be entitled will not exceed the amount due and owing to Mr Prior under his judgment.
[98]$39,017.39 compromising unpaid professional fees and disbursements, $9,599.76 costs of enforcement, and interest in the sum of $23,859.38. Interest has been calculated by applying the various penalty interest rates under the Penalty Rate Interest Act 1983 (Vic) from the dates of the orders (11 February 2012 and 10 October 2012) up until 15 February 2016.
[99]My calculations have the total figure up to and including today as $73,504.33 up to and including today’s date [see spreadsheet attached as Schedule 1].
[100]My calculations have the total figure up to and including today as $57,919.75 up to and including today’s date [see spreadsheet attached at Schedule 1].

I would allow Mr Prior to set off so much of the existing debt owed to him by Mrs Lakic (as at the date of judgment, updated for interest) as would expunge the total amount of damages for which Mr Prior is liable to Mrs Lakic (as at the date of judgment, including interest).

Conclusion

The result is that Mrs Lakic has persuaded me that, aside from the set-off of Mr Prior’s judgment debt, she would be entitled to an award of damages as a result of Mr Prior’s negligence. But, I have also held that Mr Prior is entitled to set off the value of the Magistrates’ Court judgment debt against the value of the damages I would otherwise have awarded in Mrs Lakic’s favour. I will hear from the parties in relation to the precise calculations of the amounts to be used for the purpose of the set-off and the appropriate orders that should be made, including orders as to costs.

I will also need to hear from the parties as to appropriate orders to reflect the reality that (a) the amount now due and payable to Mr Prior under his judgment in the Magistrates’ Court will be substantially reduced, and to provide necessary protection to Mrs Lakic against any risk of double recovery; and (b) because of the reduction in the amount of Mrs Lakic’s liability to Mr Prior under the Magistrates’ Court judgment Mrs Lakic has, in effect, been compensated for incurring her liability to VCL in respect of (at least some of) the costs for which she is being sued in the County Court.[101]
[101]That fact may conceivably have a bearing on any judgment that could be awarded in the County Court proceeding, either on VCL’s claim or on any counterclaim or set-off raised by Mrs Lakic.

---

SCHEDULE 1

Mrs Lakic's judgment interest

Penalty interest rates
10.50%	11/08/2014	31/05/2015
9.50%	1/06/2015	15/02/2016

Principal	$51,093.45
Interest from 15/01/2016 to 31/05/2015
Principal		Rate	Days	Total	Rate per day
$51,093.45		10.50%	136	$ 1,998.94	$ 14.70
Interest from 1/06/2015 to today
Principal		Rate	Days	Total	Rate per day
$51,093.45		9.50%	364	$ 4,827.35	$ 13.26

Total interest (to today): $6,826.30

Total figure: $57,919.75

Mr Prior's judgment interest

Total principal
Judgment	$39,017.36
Costs	$1,014.90
Interest	$538.56
Costs on further	$7,757.00
$48,327.82
Previous interest
to 6/10/2013			$12,103.14
to 2/2/2014			$1,562.38
to 10/8/2014			$2,862.60
to 31/5/2015			$4,073.44
to 15/02/2015			$3,257.82
$23,859.38
From 16/02/2016 to today
Total principal		Rate		Days	Total	Rate per day
$48,327.82		9.50%		105	$ 1,317.13	$ 12.54

Total interest (to today): $25,176.51

Total figure: $73,504.33

No.	Damage	Amount
1.	Signing of unidentified/untranslated documents	$30,000
2.	Being ‘tricked’ to sign the release of the TAC claim	$50,000
3.	Recovery of lost payments for home help: · Lost personal care over 15 years · Lost domestic duties over 15 years	$109,512 $379,080
4.	Late submission of serious injury application	$50,000
5.	Execution of the Equitable Charge and Caveat	$120,000
6.	Failure to return passports	$40,000
7.	Being asked to lie in court	$50,000
8.	Failure to provide professional interpreters	$20,000
9.	Return of various disbursements	$15,194
10.	Refusal to remove caveat	$2,000
11.	Inability to deal with house due to caveat	$120,000
12.	Costs associated with moving (nb: item not in included in plaintiff’s total)	$5,700
13.	Pain and suffering	$150,000
14.	Pain and suffering of family	$200,000
PLAINTIF’S TOTAL	$1,335,786
ACTUAL TOTAL	$1,341,486

[2016] VSC 293

30 May 2016