Rosa v Galbally & O'Bryan

SUPREME COURT OF VICTORIA
COURT OF APPEAL

S APCI 2012 0022

HELEN ROSA	Appellant/Cross-Respondent
	v
GALBALLY & O’BRYAN	Respondent/Cross-Appellant

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JUDGES	HARPER and TATE JJA and KYROU AJA
WHERE HELD	MELBOURNE
DATE OF HEARING	13 March 2013
DATE OF JUDGMENT	17 May 2013
MEDIUM NEUTRAL CITATION	[2013] VSCA 116
JUDGMENT APPEALED FROM	Rosa v Galbally & O’Bryan [2012] VSC 3 (Macaulay J)

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TORT — Professional negligence — Solicitors admitted negligence for failing to properly advise client with personal injury claim — Whether that negligence caused loss of chance to appellant to pursue claims for pain and suffering and loss of earning capacity — Value of the loss — Whether in assessing damages trial judge erred by applying unwarranted discount — Whether judge erred in finding that appellant would not have pursued loss of earnings claim even if she had received appropriate legal advice — Whether judge erred in finding that appellant would not work to more advanced age — Appeal allowed.

TORT — Professional negligence — Cross-appeal — Whether trial judge erred by failing to deduct from award of damages solicitor-client costs appellant would have incurred had her personal injuries claim been tried — Appellant incurred significant solicitor and own client costs at trial against solicitor — No deduction warranted — Cross-appeal dismissed.

Johnson v Perez (1988) 166 CLR 351; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 applied.

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Appearances:	Counsel	Solicitors
For the Appellant/Cross Respondent	Mr A G Uren QC with Mr A D B Ingram	Melbourne Injury Lawyers
For the Respondent/Cross Appellant	Mr R P Gorton QC with Mr S A Smith	Wisewould Mahony

HARPER JA:

I agree with Tate JA.

TATE JA:

Introduction

The appellant, Helen Rosa (‘Rosa’), suffered injury as a result of being kicked forcefully in the neck by an elderly patient affected by dementia when she was working as a casual nurse in a geriatric hospital. She retained the respondent, a firm of solicitors, Galbally & O’Bryan (‘Galbally’s’), to advise her about her rights to damages at common law. On their advice, she applied for a certificate from the County Court to enable her to pursue a claim for damages against her employer, Drake Personnel Limited (‘Drake’), both for loss of earning capacity and pain and suffering. In reliance on Galbally’s advice she abandoned the claim for loss of earnings and settled the claim for damages for pain and suffering for $100,000. She later sued Galbally’s for negligently providing that advice.

During the course of the trial, Galbally’s admitted negligence. The real issue at trial was whether Rosa suffered any loss as a result of the admitted negligence and, if so, what was the value of that loss. The trial judge held that Rosa would not have pressed her claim for loss of earnings even had she received appropriate advice from a reasonable and prudent solicitor.[1] He held, however, that the negligence of Galbally’s had caused Rosa the loss of a chance to pursue her common law claim for damages for pain and suffering against Drake.[2] He entered judgment in her favour in the sum of $56,750.[3]

[1]Rosa v Galbally & O’Bryan [2012] VSC 3 (‘Reasons’), [116].

[2]Alternatively, he found that Rosa suffered the loss of a chance to pursue her claim for pain and suffering damages against the operator of the hospital, Southern Health: see further below [15].

[3]Reasons, [124], together with interest in the nature of damages in the sum of $9,420.

The appeal brought by Rosa challenged the award of $56,750 on the ground that it was arrived at in error as a result of a 17.5 per cent discount that was unwarranted. Rosa also challenged the finding of the judge that she would not have pursued her loss of earnings claim on the ground that he ought to have found that, but for the injury, she would have worked to a more advanced age, and for more hours, than he did find.

Galbally’s brought a cross-appeal on the ground that the judge had failed to deduct from the damages he awarded the solicitor/client costs which Rosa would have incurred in pursuing her common law claim, which should have reduced her award by $35,000 to $21,750.

I would allow the appeal and dismiss the cross-appeal.

I set out my reasons.

Rosa’s background and career

Rosa is a woman of 64 years of age who is a registered nurse by occupation. She had a turbulent and abusive childhood and left school at the age of 13 with the intention of becoming a nurse. She commenced her training at Fairfield Infectious Diseases Hospital when aged 15. She obtained her qualification as a registered nurse in 1968 and worked at a variety of different places thereafter. Rosa married in the same year. She was married for 26 years, until 1994. She has three children from that marriage.

When her children were young, she took agency nursing work in addition to part-time work in a nursing home. In 1986, Rosa worked with St John Ambulance on a voluntary basis, with her children learning first-aid. She completed the advanced courses and was eventually appointed a divisional superintendent. She founded a child and youth organisation called ‘Night Squad’ which operated for three years to assist children from disadvantaged or abusive backgrounds and secured the involvement of church and government authorities to provide court support, counselling and in-home family support. This included pulling children off train tracks who had been attempting suicide. Rosa then became involved in providing counselling and pastoral care for young men at Long Bay Prison in New South Wales.

Rosa undertook a welfare studies course at Victoria University. She used her nursing work to fund her studies, graduating in 1999 with a Diploma in Community and Welfare Studies. Her evidence at trial was that in the longer term she intended to undertake community welfare work on a full time basis while maintaining her nursing qualification undertaking a shift ‘here and there’.

She worked briefly at Malmsbury Juvenile Justice, and after that obtained employment with Goulburn Valley Family Care (‘Goulburn’) working in the area of the assessment of children in need of protection by way of providing in-home family support and family counselling. She described this work as:

Going into homes where there were violent environments and holding family mediations or working with adolescents or working with young mums, giving them advice on how to keep their children safe.

The community welfare work was only 20 hours a week but Rosa was looking to expand her welfare work with Goulburn or elsewhere. She was planning to seek full time work and to do some nursing work in Melbourne.

She intended to work to age 69-70 in community welfare work. She said:

I was fit, I was healthy, I didn’t even have a doctor before this. … [I was] very determined [to work on past 65]. I wanted to because I was healthy. I wasn’t on blood pressure tablets – I didn’t have a doctor, I didn’t need a doctor, everything was good. I had medical things that came up from time to time which were fixed and I worked hard on my body to get back to good … [My main reason was] to build up a nest egg for myself when I got old.

In cross-examination she confirmed that the reason for qualifying for welfare work was her desire to work as long as she physically could, and welfare work provided that opportunity:

The reason why I went back to university was to ascertain [scil. 'obtain'] qualifications and gain another certificate which would give me the opportunity to work longer than what a lot of people retire at, welfare you can retire much later with several jobs. … My plan was to work as long as I could doing the job that I wanted to do … I was trying to set myself up for long-term employment, I’m 62 now, another five years, I can’t see that I would have been, given my state of mind or what my health would have been like if it wasn’t for that accident. I can’t see why I wouldn’t have been well enough to work until I was 70. … Seven years, nine years.

From 1994 she was employed as a casual nurse by Drake, which subsequently placed her at a range of facilities including the Kingston Centre, a geriatric hospital facility in Cheltenham operated by Southern Health. By 1999, she worked on average at least 10 hours nursing a week. Either or both Drake and Southern Health would be considered at law as Rosa’s ‘employer’ for the purposes of a negligence claim.[4] They can be collectively referred to as Rosa’s ‘employer’.
[4]Ibid [20].

Apart from her work, Rosa was a very active person, enjoying sport and social activity. She engaged in netball competition, playing as an A Grade player up until the time she was kicked by the dementia patient. She had been a coach of 22 teams over the course of her adult life.[5] She had been an umpire and at one stage was the president of a netball club. She was also involved in a women’s support group in central Victoria. She assisted at the Heathcote Wildlife Shelter to protect animal welfare.
[5]Ibid [49].

In 1997 she formed a relationship with another woman. She became a volunteer radio presenter on a gay community radio station.

Although Rosa was happy and greatly enjoyed her career, her relationship with the other woman broke down in 1999, in unhappy circumstances, for which she had counselling.[6]
[6]There was some unclarity on this issue, the judge reporting Rosa’s evidence to the effect that the counselling was not attributable to the breakdown of that relationship: Reasons, [55].

The injury from the kick by the dementia patient

Rosa attended, as a casual nurse, at the Kingston Centre on 25 June 2000. She commenced her shift at 7.00am. During the handover, she was told by the outgoing shift of nurses that a stroke and dementia-affected patient whom Rosa had not previously nursed was a ‘bit punchy’. Rosa asked about the strategy she should adopt. She was advised to ‘duck’. She was not aware that the patient was prone to kicking.

Whether Rosa looked at the patient’s clinical file was a matter on which she gave evidence. In evidence-in-chief she said she had examined the patient’s file but found no incident reports relating to assaults on other nursing staff. In cross-examination, she said she enquired whether there were any incident reports but was told there were none. She said she had not read, did not remember seeing and in any case was not looking for the nursing care plan (‘the plan’). She was not told that she needed to read the plan. She also accepted during cross-examination that she had no clear recollection of whether she had sought out the clinical file and she did not remember reading the plan but her recollection was hazy. She had not made a complaint about the absence of clinical information.

With the assistance of another nurse and a lifting machine, Rosa got the dementia-affected patient out of bed and into a shower chair, affixing a belt that prevented the patient from slipping out but did not otherwise restrain him. Rosa alone proceeded to shower and dress the patient. While she was kneeling to put the patient’s shoes on his feet, he kicked her suddenly and forcefully in the neck, sending her across the room where she ‘woke up under the basins’ (‘the incident’). She reported what happened to a charge nurse and briefly spoke to a ward doctor before going home. The following day a ward doctor examined Rosa and assessed soft tissue damage.

A subsequent X-ray showed a fracture at C5 level. Rosa ceased work and has since been certified unfit for employment. She experienced depression. She is in receipt of WorkCover payments at 80 per cent of her pre-injury weekly earnings. These will continue until she is 65 on 24 September 2013.

The kick caused the fracture of a vertebra in her neck and a disc prolapse. Rosa suffered severe persisting neck pain and she developed carpal tunnel symptoms. A MRI scan in September 2001 demonstrated minor pre-existing degenerative changes, which were asymptomatic, and thereafter there was significant progressive degenerative change. Although she had carpal tunnel release surgery in 2003, there was no improvement in her symptoms. By the time of the next MRI scan on 9 March 2005, the degenerative change had resulted in the narrowing of the spinal canal with severe bilateral stenosis.

On 29 January 2008 cervical laminectomy surgery was performed but at the later re-examination it was noted by Rosa’s neurosurgeon, Professor Rosenfeld, that although there was some improvement initially, Rosa’s condition again deteriorated and by 2010 she was dropping things from her right hand.

The appellant was examined by another neurosurgeon, Mr Wallace, who gave evidence of the ‘double crush’ effect caused by the spinal cord compression at the time of the incident leading to carpal tunnel symptoms, noting that further neck surgery was unlikely to happen but remained a possibility.

Further details of the injury Rosa suffered and any pre-existing condition are considered below.

Retainer of Galbally’s

In May 2001 Rosa retained Galbally’s in respect of the injury that she sustained as a result of the incident. It was not in dispute that, pursuant to the terms of the retainer, Galbally’s undertook to exercise the care and skill of a reasonably prudent solicitor of ordinary competence. It was also not in dispute that Rosa provided instructions in relation to the injury including observations from her treating medical practitioners. Galbally’s then obtained extensive medical material as to the nature and extent of Rosa’s injury.

As mentioned above, Rosa was advised by Galbally’s to apply to the County Court for leave, pursuant to s 134AB(16)(b) of the Accident Compensation Act 1985, to enable her to pursue a claim against Drake for damages both for pain and suffering and for loss of earning capacity, on the ground that the injury she suffered was a ‘serious injury’. The application was made. Galbally’s later abandoned the application for a certificate to pursue the claim for loss of earning capacity, on Rosa’s behalf. Rosa was granted a certificate by Drake to proceed with a claim for pain and suffering damages. Galbally’s then settled that claim for $100,000. The combined effect of Galbally’s taking these two steps of abandonment and settlement was to bring to an end the entitlement Rosa had against her employer to damages at common law.

The Supreme Court proceeding

In June 2010 Rosa commenced a proceeding in the Supreme Court against Galbally’s for negligently causing her, first, to abandon her claim for loss of earning capacity, and, secondly, to settle her claim for pain and suffering for only $100,000. Rosa claimed that Galbally’s failed to exercise any or due skill, care or diligence in obtaining proper instructions and in obtaining supporting evidence to enable adequate advice to be given as to any cause of action for common law damages available to her. She also claimed that Galbally’s failed to assess adequately the likely quantum of her claim in respect to pain and suffering and loss of earning capacity damages. She alleged that Galbally’s settled her claim prematurely knowing that her neck surgery was forthcoming and before her condition had stabilised. The neck surgery occurred in January 2008, one month after settlement.[7]
[7]The settlement was arrived at on or about December 2007.

In short, Rosa contended that she lost the prospect of an action she would have successfully pursued and in relation to which she would have recovered damages but for the negligence of Galbally’s in abandoning part of her claim, and settling the rest.

Galbally’s denied that its solicitors took the relevant steps without Rosa’s instructions, as she contended. As indicated above, Galbally’s otherwise admitted its negligence.

The judgment below

The live issues at trial were causation and quantification of loss: (1) did the negligence of Galbally’s cause Rosa’s loss? (2) If so, what was the appropriate quantification of that loss? In respect of causation, the trial judge pointed out, correctly, that the issue involved the question of what advice a reasonable and prudent solicitor, having properly obtained evidence, would have given her, and what course Rosa would have taken after that advice was given.[8]
[8]Reasons, [6].

With respect to the issue of quantification of loss, the judge observed that it was necessary to consider what Rosa would have been expected to obtain as an award of damages at a hypothetical personal injuries trial:[9]

Quantification of loss, when it involves loss of a chance, involves particular considerations. Whether she has lost anything of value turns on whether the right of action had more than non-negligible value at the point in time when it was lost.[10] The value of what she has lost depends, at least in the first instance, upon the combined evaluation of her prospects of success on liability and of the award of damages she could have expected to obtain at a hypothetical personal injuries trial.

[9]Ibid [7] (original emphasis).

[10]In support of that proposition the judge relied on Johnson v Perez (1988) 166 CLR 351, 366 (Wilson, Toohey, Gaudron JJ), 371-2 (Brennan J), 389 (Dawson J).

The judge also observed that both the prospects of success and the potential damages that would have been awarded in a hypothetical personal injuries trial were relevant to determining whether Rosa suffered any loss and the extent of that loss:[11]

It will become apparent that each of these considerations (prospects of success and potential damages) is relevant to determine both the existence of loss and the value of loss.[12] And, as will also be seen, the valuation of the lost cause of action (the quantification issue) impacts the assessment of the probable advice she would have been given and the likely course she would have taken (the causation issue).

[11]Reasons, [8].

[12]The judge relied on Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, 340.

This had the effect that, before his Honour, the parties conducted a ‘trial within a trial’. [13]
[13]Reasons, [9].

The judge identified 5 questions that needed to be answered:

(1) What was the likelihood that Rosa would have succeeded on the liability question against her employer?

(2) What was the likelihood that Rosa would have recovered more than $100,000 for pain and suffering [the value of the settlement]?

(3) What was the likelihood that an award of damages for loss of earning capacity would have exceeded her past and future entitlements to weekly payments?

(4) Would Rosa have pursued common law claims for pain and suffering and loss of earning capacity if properly advised?

(5) Having regard to the answers to those questions, if Rosa did lose a chance of value because of Galbally’s negligence, what is the proper award of damages to compensate her for that loss?

(1) Would Rosa have succeeded on liability?

The trial proceeded against the background of an acceptance that at common law an employer owes a non-delegable duty to take reasonable care, and to ensure reasonable care is taken, for the safety of employees by providing proper and adequate means of carrying out work without unnecessary risk of injury. The duty includes an obligation to provide a safe system of work, including establishing, maintaining and enforcing such a safe system; an obligation to provide directions in the performance of work where such directions might reasonably be required to avoid injury; and an obligation to provide adequate supervision to ensure the safe system of work is carried out.[14]
[14]See Czatyrko v Edith Cowan University (2005) 214 ALR 349, 352 [12]; Leighton Contractors Pty Ltd v Fox (2009) 240 CLR 1, 12 [21].

The judge considered that Rosa could and would have made allegations against her employer. The allegations were that her employer, in breach of its duty of care owed to her at common law, failed to provide adequate warning to her of the patient’s punchy, restive and aggressive nature and permitted or required her to shower and dress the patient without adequate assistance.

The judge found that there was a ‘substantial likelihood’ that Rosa would have established liability in negligence on the part of her employer.[15] The judge also found that there was a ‘low likelihood’ that the employer could establish contributory negligence. Quite what was meant by these findings became a central issue of the appeal. He said:[16]

In my view there was a substantial likelihood that Mrs Rosa would have established liability in negligence on the part of her employer in any claim she might have brought against it arising from this incident. I also think there was a low likelihood that her employer would have established any contributory negligence on her part.

[15]He found it unnecessary to consider whether Rosa could have maintained a claim for breach of the Occupational Health and Safety (Manual Handling) Regulations 1999. No contest was taken with respect to this on the hearing of the appeal.

[16]Reasons, [22] (emphasis added).

The judge considered that the focus of the trial would have been on the handover procedure, it not being in dispute that Rosa was a casual nurse who had not nursed the dementia-affected patient before. She was clearly dependent on what she learned from the handover procedure. It was also not in dispute that the hospital was aware of the propensity of the patient to kick. A number of incident reports recorded the patient’s physical aggression. It was recorded in the plan that the patient:[17]

Can become agitated aggressive. Hits and kicks at staff.
Interventions.
Identify triggers for behaviour.
Gentle touch and eye contact.
Two nurses to undress.
If physically [‘striking’ or ‘kicking’ – unclear] don’t address until settled.

[17]Ibid [24].

Given the knowledge of the patient’s aggression, the judge considered that ‘it was plainly deficient – and, in my view, negligently so – for the hospital [employer] [18] simply to warn Mrs Rosa at handover that the patient was “a bit punchy” and that the best strategy was “to duck”.‘[19] He noted that it was not suggested that what occurred at the time of the handover was false and no contradictory evidence was led, the employer claiming that it had provided adequate warning through its system of making available, and requiring nurses to consult, the incident reports and the nursing care plans for the patients they were to attend.
[18]At times the judge referred compendiously to Drake and Southern Health as ‘the hospital’: Reasons, n 16.
[19]Ibid [26] (emphasis added).

As mentioned above, Rosa conceded in cross-examination that her recollection of the handover was ‘hazy’. She also accepted that her recollection might have involved ‘a degree of reconstruction’ on her part.[20] The judge remarked that ‘[w]hether the employer could have called evidence to better clarify what records were accessible to Mrs Rosa in June 2000 is a matter for speculation’.[21]
[20]Ibid [28].
[21]Ibid [29].

His Honour considered that making available the plan was an inadequate system of providing a warning, or directions, to avoid injury. He said:[22]

On the evidence before me I think it is unlikely there would have been much doubt that Mrs Rosa did not actually see the plan. Whether or not it was physically available, say at the nurses’ station in the ward, does not seem to me to be of such critical importance. Having seen the plan and the numerous incident reports pertaining to the particular patient I have a degree of sympathy with Mrs Rosa’s observation that the plan is not the type of document of much practical use to the casual nursing staff but is of more relevance to those responsible for the longer term care of patients. If the hospital’s system of warning nurses of particular hazards rested upon the assumption that casual incoming staff would have the time to locate and peruse the incident reports and any nursing care plan relating to their patients before commencing work on busy wards, then it strikes me that such a system was impractical and inadequate.

[22]Ibid [30] (emphasis added).

The judge went on to conclude that the only evidence of which the court hearing the hypothetical personal injuries trial would have heard was that Rosa was given ‘an incomplete warning’[23] about the patient’s aggressive tendency and ‘cynical advice on strategy (in response to a direct question)’.[24] He considered there was unlikely to be evidence that she had seen a document recording an appropriate strategy or that it would have been readily accessible to her, or alerted to the desirability of having a second nurse available to assist in dressing the patient. He also considered that the provision of an appropriate warning, advice as to an appropriate strategy, and a second nurse to assist ‘would have significantly reduced the prospect of the injury that occurred’.[25] He said:[26]

In my view Mrs Rosa would have enjoyed strong prospects of succeeding in establishing negligence against her employer in any personal injuries action.

[23]Ibid [32].

[24]Ibid [32].

[25]Ibid [33].

[26]Ibid [34] (emphasis added).

On the question of whether Rosa would have been found guilty of contributory negligence, the judge considered, as mentioned above, that the making available of a patient plan, even if readily accessible, was an inadequate system of warning a casual nurse. He further considered that any argument that Rosa was contributorily negligent in not calling for a second nurse and in not being more careful when kneeling down to put on the patient’s shoes and socks ‘bordered on the untenable’.[27] Other than being told the patient was ‘punchy’ there was nothing to warn Rosa that she might be kicked in the neck in the way she was and, as a nurse of considerable experience, she was accustomed to being on guard for her own safety. It simply did not occur to her that she would be kicked. The judge found, assessing both the evidence concerning the handover process and Rosa’s actual handling of the patient, that it was ‘most unlikely that a court would have found that she failed to exercise reasonable care for her own safety within the principles set out in Podrebersek v Australian Iron & Steel Pty Ltd’.[28]
[27]Ibid [36].
[28](1985) 59 ALJR 492, 493. The judge also referred to Mayhew v Lewington’s Transport Pty Ltd [2010] VSCA 202 and Fassbender v HW & MTA Bohlmann [2010] VSCA 204.

In summary, the judge found that there was a ‘substantial likelihood’[29] that Rosa would establish her claim in negligence, in relation to which she had ‘strong prospects’ of success,[30] and that any attempt to establish a case of contributory negligence had a ‘low likelihood’[31] of succeeding, reliance on the plan as a system of warning being ‘impractical and inadequate’,[32] and the suggestion that Rosa ought to have of her own accord enlisted the assistance of a second nurse ‘border[ing] on the untenable’.[33] However, despite these findings, he then proceeded to discount Rosa’s overall prospects of success in the following manner:[34]

In my view, taking into account the competing arguments for and against a finding of negligence against her employer, and for and against a finding of contributory negligence against Mrs Rosa, I think it appropriate to evaluate her overall prospects of success on the question of liability at 82.5 percent. To be clear, the discount of 17.5 percent is intended to reflect the combined risk that, despite my view of the probabilities, Mrs Rosa may not have established negligence against her employer or, if she had, there may have been a finding of some contributory negligence against her.

[29]Reasons, [22].

[30]Ibid [34].

[31]Ibid [22].

[32]Ibid [30].

[33]Ibid [36].

[34]Ibid [39] (emphasis added).

It is this discount, of 17.5 per cent, which the judge applied in relation to the liability in respect of both pain and suffering damages and damages for loss of earnings, which Rosa complained of on the appeal as inconsistent with the judge’s earlier findings.

(2) Would Rosa have recovered more than $100,000 for pain and suffering?

Before the judge, Rosa called evidence from an eminent Queen’s Counsel who had a long history of specialising in personal injuries litigation, Mr Rattray QC, to give evidence of the damages to which she was entitled upon a proper assessment of her pain and suffering, absent any discount for liability. His evidence was expressed in a written opinion. He said:

I believe the Plaintiff [Rosa] would have succeeded in her claim for damages and that there would be no reduction by way of contributory negligence.

His opinion was that an appropriate assessment for general damages was in the region of $200,000 ($100,000 more than the sum for which Galbally’s settled Rosa’s claim). In oral evidence he said those damages might be increased to $230,000 if there was evidence that further neck surgery was required. There was no supporting evidence that additional neck surgery would be required and the judge in effect rejected that likelihood.[35]
[35]The judge said: ‘I do not place high reliance on the argument that Mrs Rosa’s damages should reflect the probability, or even a serious chance, of further neck surgery. Mr Wallace thought it unlikely, and no evidence was called from her present treating surgeon’ (Reasons, [85]).

In response, Galbally’s argued that the primary cause of her inability to work as a nurse and, consequently the onset, or exacerbation, of her depression, was an independent carpal tunnel condition for which her employer was not responsible. It was also argued that Rosa had a pre-existing degenerative condition in her neck that, regardless of the incident in June 2000, would have deteriorated to the point that she would have been taken out of the work force in her 60s in any event. Furthermore, it was submitted that Rosa had a number of other health issues which, independently of the accident, were disabling her from work and productive of some of her depressive condition and which independently caused her pain, suffering and poor quality of life.

Rosa accepted in evidence that she had experienced many health issues. She had her thyroid removed when she was in her late 30’s or early 40’s. She had had counselling for depression and anxiety after an assault upon her in the late 1980’s, and in the late 1990’s and early 2000’s in relation to issues in her marriage and understanding her own sexuality. She had also experienced a pre-cancerous growth leading to the removal of part of her bowel.

The judge observed that there was no evidence that any problems in her hands or symptoms associated with arthritic changes in her neck had manifested themselves before the incident. More specifically, he rejected the argument that the carpel tunnel syndrome was an independent and unrelated cause of her incapacity to work for the first four or five years after the incident.[36] He also rejected Galbally’s argument that Rosa’s dashed expectation of employment as a welfare worker, and associated emotional reaction, was not attributable to the injury Rosa suffered as a result of the incident.[37]
[36]Reasons, [84].
[37]Ibid [84].

The judge examined the medical evidence and made the following observations:

(1) Immediately after the incident Rosa described experiencing severe pain in her neck and nerve pain down her right side which became numbness; she developed pins and needles in her right hand and right foot; she had constant pain in her neck;

(2) Twelve months after the incident the report of her treating neurosurgeon, Professor Rosenfeld, indicated that Rosa described to him severe neck pain and right arm pain, and some memory problems; loss of sensation in her right hand and pain radiating down the right arm from the neck;

(3) A nerve-conduction study in September 2001 revealed evidence of bilateral compression of the median nerve at the level of the wrist which was indicative of bilateral carpal tunnel syndrome; the MRI scan did not reveal any cervical nerve root compression so there was no requirement for neck surgery; there was mild disc desiccation of three discs surrounding C5-6 probably explicable by age alone and difficult to attribute to the incident, although Professor Rosenfeld considered that the significant trauma Rosa had experienced could have accelerated the rate of progression; he considered that: ‘If she had not been kicked in the neck then the neck pain would not have developed as it has’;

(4) Three years after the incident, in 2003, Rosa had a right carpal tunnel decompression operation which did not relieve the right hand and foot numbness, weakness and lack of coordination which she had reported;

(5) In June 2005, Professor Rosenfeld commented on a MRI scan of March 2005 which showed that Rosa had developed ‘severe degenerative changes in her neck, which have narrowed the nerve root outlets, and have compromised the cervical nerve roots … Although she may have had some degenerative changes in her neck prior to the assault … I think there is a significant contribution to her current neck problems from the injury caused by the assault … The degenerative changes have progressed from 2001 to 2005, and although some of this may be a natural tendency to osteoarthritic change, it probably was precipitated by the assault’;

(6) In November 2007 Rosa complained to Professor Rosenfeld of repeated falls and not being able to feel things in her right leg, together with weakness in her right upper and lower limbs; in December 2007 there was evidence of cervical cord compression and Professor Rosenfeld then recommended a cervical laminectomy operation to decompress Rosa’s spinal cord which took place on 29 January 2008;

(7) After initial improvement from the cervical laminectomy, within twelve months Rosa began to experience a grating sensation in her neck; during 2009 her right hand, leg and foot numbness returned and by 2010 she was dropping things from her right hand.

The judge focused upon the relationship between Rosa’s disabling right hand and feet symptoms, her neck injury and the carpal tunnel syndrome. He considered the evidence of Professor Rosenfeld as well as the evidence of another specialist neurosurgeon called by Rosa, Mr Wallace. As mentioned above, Mr Wallace considered that Rosa’s symptoms could be explained by the ‘double crush effect’ caused by spinal cord compression at the time of the incident leading to carpal tunnel syndrome. The double crush effect was described by the judge, referring to the evidence of Mr Wallace, in this way:[38]

[Mr Wallace] said that impingement on the sixth cervical nerve can predispose a person to carpal tunnel syndrome, even for the first time. In her case she began with a congenitally tight cervical canal. He assumed she had no symptomatic C5-6 stenosis prior to the injury because she was playing competitive netball … She then had an injury serious enough to fracture the spinous process but also to injure the soft tissues at the site of the fracture and the spinal cord itself. Those injuries, in his view, would have likely caused impingement on the sixth cervical nerve and produced symptoms in the hands and wrists, in combination with a previously asymptomatic median nerve impingement. Therefore he concluded that the neck injury constituted the major, if not sole, cause of Mrs Rosa’s right arm, wrist and hand problems from the outset.

[38]Ibid [73] (emphasis added).

The judge preferred the evidence of Mr Wallace to the evidence of Professor Rosenfeld as better explaining the relationship between the neck injury and the onset of carpal tunnel syndrome. He said:[39]

Professor Rosenfeld was not asked to explain the seeming coincidence between Mrs Rosa sustaining the severe injury to her neck and, almost simultaneously (within two weeks), experiencing disabling right hand symptoms which had never previously manifested themselves. It strikes me as a matter demanding some explanation. Mr Wallace’s opinion supplies the more satisfactory explanation for that simultaneous occurrence than the otherwise unexplained sudden manifestation of carpal tunnel syndrome after such a serious injury.
Mrs Rosa did suffer right arm (and some right leg) symptoms immediately after her injury. Carpal tunnel surgery did not provide any long term relief to these symptoms. And, cervical nerve root compression was ultimately detected by Professor Rosenfeld in the vicinity Mr Wallace believed it must always have existed. Given these matters, it is most likely that Professor Rosenfeld did not initially detect the subtle evidence of cervical nerve root compression which existed in 2001 and which, in combination with some pre-existing median nerve compression, explained the manifestation of the carpal tunnel syndrome immediately after the injury.

[39]Ibid [76]-[77].

His Honour concluded that the injury sustained as a result of the incident was a cause of Rosa’s incapacity to work:[40]

Accordingly, I am of the view that a cause of Mrs Rosa’s inability to work from the date of the injury to the date of any hypothetical personal injury trial was the injury she sustained to her neck, and its effect in precipitating her right upper limb symptoms. In combination with the debilitating effects of her neck pain, her inability to work both prolonged and exacerbated her anxiety and depression in a substantial way, generally robbing her of a more fulfilling quality of life that she would have enjoyed but for the accident.

[40]Ibid [78].

The judge further concluded that Rosa would have recovered more than $100,000 as damages for pain and suffering. He said:[41]

Taking all matters into consideration I think Mrs Rosa enjoyed a prospect of being awarded higher damages for pain and suffering than that $100,000 she settled for upon her solicitors’ advice. In my view, a more realistic range was $180,000 - $200,000 at the date of a hypothetical trial in mid-2010.

[41]Ibid [86].

Ultimately, he determined to accept a mid-point between $180,000 and $200,000, namely, $190,000 as reflecting the damages Rosa would have been awarded had she pursued her claim at common law for damages for pain and suffering,[42] from which he subtracted the 17.5 per cent discount.[43]
[42]Ibid [124].
[43]Ibid [117].

There was no contest on the appeal as to the sum of $190,000 as an assessment of the pain and suffering damages Rosa would have been awarded hypothetically had she foregone the settlement and maintained her claim.

There was a contest, however, as to the permissibility of the discount the judge applied and the age to which Rosa would have worked but for the incident, and more generally the issue of the loss of her future earnings and future earning capacity. It was in this context that the evidence concerning Rosa’s pre-existing degenerative changes in Rosa’s spine became relevant.

(3) Would damages for loss of earning capacity exceeded weekly compensation?

Before the judge, the parties agreed on a number of factors to assist him in assessing the damages that Rosa might fairly have expected to recover for lost earning capacity as a consequence of the incident:

(1) The date of the notional trial would have been June 2010;

(2) The total weekly payments received by Rosa as at 15 August 2011 (the first day of the trial before the judge) was $284,246.60;

(3) The rate of weekly payments at the same date was $581;

(4) The Fox v Wood[44] component of damages at 30 June 2010 was $36,269;
[44](1981) 148 CLR 438; this is the amount of damages a plaintiff is entitled to recover representing the additional loss occasioned by having to repay the gross amount of workers’ compensation when she had the benefit of only the net amount after tax.

(5) The 6 per cent multiplier for a 61 year old to age 65 is 186.2; and

(6) The 6 per cent multiplier for a 62 year old to age 65 is 143.6.

The parties disagreed, however, on four principal issues:

(1) The starting point for calculating past loss of earnings;

(2) The duration of Rosa’s working life but for the accident;

(3) An appropriate discount for vicissitudes; and

(4) The likely hours per week for which Rosa would have worked in each capacity as a nurse and a welfare worker.

In light of the judge’s rejection of the view that Rosa was independently disabled from working due to her carpal tunnel syndrome at least until June 2003, if not for the whole period following the incident, as had been submitted by Galbally’s, he found that the starting point for calculating past loss of earnings was the date of the incident (25 June 2000) because the injury sustained as a result of the incident was a cause of Rosa’s inability to engage in employment.

With respect to the duration of Rosa’s working life, the judge rejected Rosa’s argument that she would have worked to age 69 or 70. He considered that she would not have worked beyond the age of 65 on the basis of the pre-existing degeneration of her spine, and ultimately that she would not have worked beyond the age of 63 (taking into account that she would have engaged in some work for 12 months after turning 62).[45] He said:[46]

I am not persuaded that Mrs Rosa was likely to work beyond 65 years, as she claims she would have done. Furthermore, Professor Rosenfeld accepted that, even without the injury, her pre-existing disc degeneration and her tendency to arthritic change would have produced disabling neck symptoms which would have taken her out of the workforce. In response to a proposition put in cross-examination that the age of 60 years would be a reasonable estimate of when she would have developed such symptoms, the Professor answered: ‘Yes, in the 60’s more common’. When asked if that would have taken Mrs Rosa out of the work force as a nurse, he answered: ‘Most likely, yes’.

[45]Reasons, [95]-[96].

[46]Ibid [94].

The precise force of Professor Rosenfeld’s evidence was the subject of much debate on the appeal.

The judge also considered that the hours Rosa would have worked beyond the age of 60 would have diminished from age 60 onwards. He considered that a court would most likely have concluded that by age 62 she would have been unable to sustain her nursing career ‘and that it was likely – given her general disposition – her ability to continue in welfare work would also be dwindling’.[47] This latter observation was also contested on the appeal as unsupported by any evidence. He concluded that a court would have allowed Rosa her full past loss of earnings in both capacities (as a nurse and as a welfare worker) until she was approaching 62 in June 2010 but only partial loss of earnings for another 12 months.[48]
[47]Ibid [95].
[48]Ibid [95].

The judge rejected Galbally’s submission that the rate of 30 per cent should be applied for vicissitudes, and also rejected Rosa’s argument that a discount of 15 per cent was more appropriate. He concluded that a discount of 20 per cent was appropriate for vicissitudes because although Rosa may have been somewhat more disposed to interruption in her work for health-related reasons than was common, she was a person willing to battle through adversity.[49]
[49]Ibid [100].

He also considered that it was appropriate to assume that a court would have awarded Rosa damages on the basis that she would generally have worked 20 hours a week in welfare and 10 hours a week in nursing, with a modest allowance to represent the prospect that at times she would have worked some increased hours in the welfare sector. He rejected the view that Rosa would have persuaded a court that she would have worked a full 40 hours a week, that is 30 hours in welfare and 10 in nursing from July 2000 onwards, on the ground that she had not worked full time in any capacity in the years immediately preceding the injury (having worked about 20 hours in welfare and 10 hours in nursing in the 18 months before the incident) and she had only recently qualified for welfare work, in early 1999, having been a part-time student for several years before then.

The judge adopted the figure of $330,000 as the amount that Rosa would likely have been awarded at a notional trial for loss of earnings on the basis of 20 hours welfare work and 10 hours nursing work per week up to 30 June 2010.[50] He added a further $40,000 to represent some additional welfare work undertaken after June 2010 and for the occasional hours in excess of 20 a week worked in welfare, a total of $370,000. He adopted the figure of $46,000 as the loss of superannuation discounted for present value on a base contribution of about $33,000.
[50]The accountancy evidence relied on by Rosa for that breakdown was $335,000 and Galbally’s was $325,000: Reasons, [103].

In this context, the relevant calculation was the following:[51]
[51]Ibid [107].

Loss of earning capacity (past and present) $370,000

plus Loss of superannuation (past and present) $46,000

Sub-total $426,000[52]

minus 20 per cent vicissitudes ($85,200)[53] $341,000[54]

plus Fox v Wood component $36,269

[52]This appears to have been an error in calculation; the actual number ought to have been $416,000.

[53]This number ought to have been 20 per cent of $416,000, namely, $83,200.

[54]This number ought to have been $416,000 minus $83,200 which equals $332,800.

TOTAL$377,269[55]

[55]Taking into account the correct amounts set out above, the actual total comes to $369,069.

To this total the judge subtracted the discount of 17.5 per cent that he had concluded earlier was appropriate to take into account the combined prospect that Rosa might fail to establish negligence, or be found liable for contributory negligence (about $66,023). The result of applying the percentage of 82.5 per cent was to arrive at the figure of about $311,000.[56]
[56]In fact the result of applying the percentage of 82.5 per cent to the sum of $369,069 is $304,482, although nothing turns on these figures.

As mentioned above,[57] and as the judge observed, it had been agreed that by the first day of the trial before the judge, Rosa had received about $284,242.00[58] by way of statutory payments of compensation. She will continue to receive those payments until she is aged 65, on 24 September 2013, so that as at 15 August 2011, she could expect to continue the statutory payments for two years and five weeks. The judge arrived at the figure of $59,849 as the discounted future entitlement to statutory compensation.[59] Accordingly, combining the figure of $59,849 with her past payments of $284,242, as at 15 August 2011 the amount Rosa would have had to repay and would forego would be valued at $344,000. Adjusted to take account of the earlier notional trial date would have reduced the past payments but future payments would be increased to give a total sum of a similar order, about $340,000.[60]

(4) Would Rosa have pursued her common law claims?

[57]See [61].

[58]Reasons, [109]. In fact the agreed figure was $284,246.00, but nothing turns on this.

[59]This was on the basis of a factor of 103 based upon a multiplier of 6 per cent applied to the statutory weekly payments of $581 for the remaining period.

[60]Reasons, [109]-[110].

It ultimately fell on Rosa to prove that but for Galbally’s negligence she would have persisted with her common law claim for damages for loss of earnings and claim for pain and suffering. If she would not have so persisted it could not be concluded that Galbally’s negligence caused her loss. The judge considered that Rosa would have deferred to advice from any hypothetical reasonable and prudent solicitor armed with all the relevant information and instructions.

The judge was not persuaded that Rosa would have pressed her claim for lost earning capacity in the face of the advice which he considered a reasonable and prudent solicitor would have given, as the prospect of Rosa recovering an award of damages for lost earning capacity which exceeded the benefit she derived from her statutory entitlements through to the age of 65 was only marginal with a real prospect she could do worse (being obliged to repay and forego $340,000 and receiving an award of $311,000).[61] A reasonable and prudent solicitor would have advised Rosa to abandon her claim for loss of earnings or only to pursue it if she was prepared to risk being in a worse position than she was already in.
[61]On the adjusted figures, Rosa would have been obliged to repay and forego $340,000 and would have received an award of $304,482. The judge’s reasoning would still apply.

However, in respect of Rosa’s claim for damages for pain and suffering, the judge considered that a reasonable and prudent solicitor would have advised Rosa not to settle for $100,000 but to pursue a higher award because she could recover nearly double that amount, even taking into account the risk of the failure to establish negligence or a finding of contributory negligence.

(5) What damages would reflect Rosa’s loss of a chance?

The judge rejected Galbally’s claim that the sum of $190,000 for pain and suffering damages should not only be discounted by 17.5 per cent but should be discounted further for the benefit of the interest Rosa received from the $100,000 settlement. He also rejected Galbally’s claim that there should be an additional deduction of some $30,000 for probable solicitor/client costs Rosa would have incurred in pursuing her claim in June 2010. He did so on the basis that, from the point of view of fairness, he would have to take into account the solicitor/client costs which Rosa incurred by reason of the proceeding before him and the ‘real possibility’[62] that Rosa would not have needed to pursue her claim through to verdict but may well have recovered a fair sum of compensation by settlement beforehand.
[62]Ibid [121].

The judge concluded that as a result of the negligence of Galbally’s, Rosa suffered the loss of a chance to pursue her common law claim for pain and suffering damages for a sum greater than the sum she received from the settlement. He held that she did not suffer any loss of a chance to pursue a claim for loss of earning capacity because even without Galbally’s negligence she would not have pursued such a claim but would have elected to retain the benefit of her statutory compensation payments.

He assessed the damages Rosa would have been awarded as $190,000 x 82.5 per cent (that is, after the discount of 17.5 per cent, namely, $156,750) minus the $100,000 received by way of settlement to equal $56,750.

The grounds of appeal

Rosa relied on several grounds of appeal. The first three grounds dealt with the alleged error in applying the 17.5 per cent discount.

Ground 1: The judge was wrong to discount by 17.5 per cent the damages to be awarded against Galbally’s having regard to Rosa’s prospects of establishing negligence against Drake and/or Southern Health, or alternatively the risk of a finding of some contributory negligence, against Rosa.

Ground 2: Alternatively, the discount of 17.5 per cent applied to the damages to be awarded against Galbally’s having regard to Rosa’s prospects of establishing negligence against Drake and/or Southern Health, or alternatively the risk of a finding of some contributory negligence against Rosa, was contrary to the evidence or the weight of the evidence.

Ground 3: The judge failed to provide adequate reasons for reducing by 17.5 per cent Rosa’s damages for loss of a chance having found there was a ‘substantial likelihood’ or ‘strong prospects’ of Rosa succeeding in her case in negligence against Drake and/or Southern Health and further that any case against her in contributory negligence was of a ‘low likelihood’ or ‘most unlikely’ or ‘untenable’.

Grounds 4 and 5 were abandoned.[63]
[63]These related to the prospects of Rosa requiring further neck surgery.

The balance of the grounds (Grounds 6-12) were concerned with Rosa’s loss of earnings claim and the question of whether any pre-existing condition would have ‘taken [her] out of the workforce’.[64] These grounds were aimed at the complaint that the judge ought to have concluded that Rosa would have continued successfully with her claim for loss in respect of future earnings had she been properly advised by a reasonable and prudent solicitor.
[64]Reasons, [94].

Ground 6: The assessment by the judge of the value to Rosa of the loss of the chance to claim damages for loss of earnings and loss of earning capacity against Drake and/or Southern Health was contrary to the evidence and the weight of the evidence.

Ground 7: The judge failed to give any or any adequate weight to the establishment by Rosa of a separate career as a welfare worker and further to the fact that Rosa (and witnesses called on her behalf) gave evidence at trial that as at 25 June 2000, she:

(a) was 51 years of age;

(b) was looking to continue in employment until at least 65 and probably 69 or 70 years of age in order to establish a retirement nest egg;

(c) was fit and healthy and in particular suffered no symptoms of any condition affecting her neck or carpal tunnel;

(d) was pursuing welfare work as her primary work and that she was looking to increase her hours of work in this capacity but to work some hours of nursing to maintain her registration;

(e) was actively engaged in nursing employment, the hours of which had increased in the months leading up to such injury;

(f) had in approximately 1999 completed her qualification as a welfare worker;

(g) was qualified to undertake welfare work which would not have involved Rosa exposing her body to physical strain;

(h) was actively engaged in employment as a welfare worker with Goulburn working 20 hours per week;

(i) had changed her place of residence in order to work with Goulburn as a welfare worker;

(j) was in employment with Goulburn, an entity which in the years after the subject inquiry considerably expanded its workforce and employment opportunities which would otherwise have been available for Rosa.

Ground 8: The finding at [102] by the judge that Rosa’s claim for lost employment as a welfare worker with Goulburn was ‘too speculative to assume she would have sustained the number of hours she claimed she wanted to work’ was contrary to the evidence or the weight of the evidence.

Ground 9: The judge was wrong at [94] to find that Professor Rosenfeld had accepted that even without the injury on 25 June 2000, Rosa’s pre-existing disc degeneration and her tendency to arthritic change would have produced disabling neck symptoms that would have taken her out of the workforce.

Ground 10: Alternatively, the finding at [94] by the judge that Professor Rosenfeld had accepted that even without the injury on 25 June 2000, Rosa’s pre-existing disc degeneration and her tendency to arthritic change would have produced disabling neck symptoms which would have taken her out of the workforce was contrary to the evidence or the weight of the evidence.

Ground 11: The judge was wrong in finding at [95] that Rosa’s ability to continue in welfare work would have begun to taper off from the age of 60 and that by June 2010, given her general disposition, Rosa’s ability to continue in welfare work would also have been dwindling, entitling her to a partial loss of earnings for 12 months thereafter.

Ground 12: Alternatively, the finding at [95] by the judge that Rosa’s ability to continue in welfare work would have begun to taper off from the age of 60 and that by June 2010, given her general disposition, Rosa’s ability to continue in welfare work would also have been dwindling, entitling her to a partial loss of earnings for 12 months thereafter, was against the evidence or the weight of the evidence.

The ground of the cross-appeal

Galbally’s relied on a single ground in support of its cross-appeal:

Ground 1: The trial judge erred in holding that, because Rosa would be subject to a liability to pay solicitor/client costs of the proceeding, it was not appropriate to deduct solicitor/client costs which would have been incurred in Rosa’s claim for damages for her injuries.[65]

[65]Galbally’s abandoned a second ground of cross-appeal which challenged the failure by the judge to deduct the interest on the settlement sum received by Rosa.

The submissions on the appeal

It is convenient to consider the submissions made on the appeal by reference to the following three issues:

(1) Did the judge err in applying a discount of 17.5 per cent to the damages Rosa was likely to be awarded, having regard to her prospects of establishing her claim of negligence and her prospects of resisting a finding that she was contributorily negligent? (Grounds 1-3)

(2) Did the judge err in finding that Professor Rosenfeld accepted that Rosa’s pre-existing disc degeneration and her tendency to arthritic change would have produced disabling neck symptoms that would have taken her out of the workforce? (Grounds 9 and 10)

(3) Did the judge err in concluding that the probability that Rosa would have continued in the workforce after the age of 60 would lessen, and in refusing to accept that Rosa would have worked until aged 69 or 70, primarily in welfare work? Did the judge err with respect to the number of hours Rosa would have worked in welfare? (Grounds 7, 8, 11 and 12)

In addition, ground 6 squarely raises the issue of whether the judge was wrong in his conclusion that the negligent conduct of Galbally’s in prematurely advising Rosa to abandon her loss of earnings claim caused her no loss as prudent non-negligent advice would have been to the same effect.

The question of the disposition of the appeal is a matter to which I will return.

(1) Did the judge err in applying a 17.5 per cent discount on liability?

On the appeal Rosa argued that the findings of the judge, identified above, to the effect that she had a ‘substantial likelihood’ and ‘strong prospects’ of establishing negligence and faced a ‘low likelihood’ of any finding of contributory negligence, supported the view that the judge ought to have concluded that a proceeding against her employer must have succeeded, in which case she would be entitled to the full amount of the damages she would have recovered against the employer, without reduction. It was argued that the findings made by the judge meant that there was no real prospect that Rosa would fail to recover.

Rosa’s argument rested on the proposition that if the damages to be awarded are to be less than the full amount sought, the reduction must be referable to some identifiable deficiencies in a plaintiff’s case (for example, a critical witness having died) and not based upon a general observation about the risks of litigation. She argued that here there was no specific deficiency in her case identified by the judge to support the reduction he made. This was a substantive error and rendered his reasons inadequate.

In support of this proposition, Rosa relied on Johnson v Perez[66] in which the High Court examined what approach should be adopted to the assessment of damages for loss of a chance where a plaintiff sues his or her solicitor for losing the benefit of an action that might have successfully been brought. There, the Court set out the principle to be applied to the valuation of the loss of the chose in action – namely, that the value of what is lost is dependent upon a combined evaluation of the prospects of success on liability and the award of damages which would have been obtained in the damages trial.
[66](1988) 166 CLR 351.

In Johnson v Perez the Court referred to the statement of Lord Evershed in Kitchen v Royal Air Force Association[67] where it was made plain that full recovery should be awarded if the original action must have succeeded and nothing if the plaintiff never had a cause of action. Lord Evershed said:[68]

If, in this kind of action, it is plain that an action could have been brought, and if it had been brought that it must have succeeded, of course the answer is easy. The damaged plaintiff then would recover the full amount of the damages lost by the failure to bring the action originally. On the other hand, if it be made clear that the plaintiff never had a cause of action, that there was no case which the plaintiff could reasonably ever have formulated, then it is equally plain that the answer is that she can get nothing save nominal damages for the solicitors’ negligence.

[67][1958] 1 WLR 563 (‘Kitchen’).

[68]Ibid 574-5.

Many cases will not fall into either category. Brennan J, in Johnson v Perez, in referring to Lord Evershed, said:[69]

But, his Lordship said, if it is uncertain whether the plaintiff would have succeeded in the original action –
‘The question is, has the plaintiff lost some right of value, some chose in action of reality and substance? In such a case, it may be that its value is not easy to determine, but it is the duty of the court to determine that value as best it can.’

[69](1988) 166 CLR 351, 372.

Brennan J emphasised that it is where it is doubtful that a plaintiff would have succeeded in the original claim (but not certain that he or she would have failed) then the court must consider, as best it can, what prospects of success the plaintiff had:[70]

The plaintiff’s loss being whatever monetary compensation he would have received at the time he would have received it but for his solicitor’s negligence, the court must find whether or not he has lost something of value. If he would have failed in the original action, he has lost nothing; if he would have succeeded, he has lost what he would have received at the time he would have received it; … Or, if it is doubtful whether or not he would have succeeded in the action and it is not probable that the action would have been compromised, the court assessing the damages must determine as best it can on the balance of probabilities whether the plaintiff would have succeeded (and, if so, to what extent) or failed.

[70]Ibid (emphasis added).

So too, Wilson, Toohey and Gaudron JJ pointed out, by reference to a judgment of Bray CJ in Tutunkoff v Thiele,[71] that if a case neither must have succeeded nor must have failed, it was necessary to engage in the combined evaluation:[72]

It is apparent that Bray C.J., like Lord Evershed M.R., was faced with a dual inquiry, namely, the prospects of success had the plaintiff’s action not been statute barred and the damages to which he was entitled by reason of his solicitor’s negligence.

[71](1975) 11 SASR 148.

[72]Johnson v Perez (1988) 166 CLR 351, 364.

Here, Rosa argued, there was nothing that the judge identified that rendered her claim doubtful. There was nothing to which the judge pointed (for example, a likely finding of contributory negligence) which revealed that Rosa’s prospects of success of establishing negligence should be evaluated at less than certain. By comparison, Kitchen was a case in which it was recognised that ‘it was by no means certain’[73] that the plaintiff would have succeeded in the original action.
[73]Ibid 363 (Wilson, Toohey, Gaudron JJ), 360 (Mason CJ).

In Kitchen the plaintiff’s husband, a member of the Royal Air Force, was electrocuted and killed in the kitchen of his house. The plaintiff considered that this was due to a defect in the control unit of an electric cooker, the wires of which had in 1940 been connected up by the local electricity company. The plaintiff consulted the Royal Air Force Association who sent particulars to a firm of solicitors who allowed the limitation period under the Fatal Accidents Act to run out. Lord Evershed noted that ‘there were difficulties’ with the plaintiff’s case:[74]

The whole case is fraught with mystery and you are almost at a loss to conceive how such a state of things should ever have arisen. But the fact is that it did arise because, unfortunately the husband was killed.

[74]Kitchen [1958] 1 WLR 563, 576.

Lord Parker identified some of the difficulties the plaintiff would have had in establishing negligence on behalf of the local electricity company:[75]

[T]he first question to consider is how this unfortunate man met his death by electrocution. That his left hand was on the tap over the sink is, I think, clear. The tap and pipe were torn away from their proper positions in his convulsions. That his right hand must at the same time come in touch with the control unit is also, I think, clear. It could not have been the cooker itself because this was found to be adequately earthed. Moreover, the plaintiff herself, immediately after the accident, in putting on the kettle, got a slight shock from the control unit. According to the plaintiff, the switch on the control unit was turned off at nights, and since it was found on I think that it seems probable that he was pulling down the switch on the control unit with his right hand at the same time as his left hand was on the tap. Thus he was making himself into a conductor from the control unit to earth. … The matter remains a mystery.[76]

[75]Ibid 576.

[76]The appeal in Kitchen raised the question of whether, assuming that the plaintiff could establish negligence against the solicitors (for allowing the limitations period to expire), she would recover no more than nominal damages against them because she would have had no prospect of success against the local electricity company. Lord Parker said (576-7): ‘If the plaintiff can satisfy the court that she would have some prospect of success, then it would be for the court to evaluate those prospects, taking into consideration the difficulties that remained to be surmounted. In other words, unless the court is satisfied that her claim was bound to fail, something more than nominal damages fall to be awarded’. The Court of Appeal found that the plaintiff had some prospects of success and was entitled to something more than nominal damages. There was no appeal against the award at first instance of damages of £2,000 as against the maximum of £3,000 under the Fatal Accidents Act. Accordingly, the award was not disturbed although it was described as ‘high’ (580) and ‘generous’ (576).

Here, Rosa argued that the judge failed to identify any difficulty in her case that could have provided the rationale for the reduction of 17.5 per cent. There was nothing to derogate from her capacity to establish liability. More specifically, the judge found that the hospital was aware of the dementia-affected patient’s propensity to be aggressive, and specifically to kick.[77] He found that it was negligent of the hospital simply to warn Rosa at handover ‘to duck’,[78] which he described as a ‘cynical advice on strategy’.[79] He rejected any reliance that might have been placed by the employer on the patient incident reports or the plan as providing a warning system of warning nurses of hazards as ‘impractical and inadequate’.[80] He found it very likely that if the employer had provided adequate warnings of the patient’s tendency to kick, adequate advice as to strategy and a second nurse to assist with undressing and redressing, the prospect of the injury occurring would have been significantly reduced.[81]
[77]Reasons, [24].
[78]Ibid [26].
[79]Ibid [32].
[80]Ibid [30].
[81]Ibid [33].

The judge made no findings that would have assisted the hospital in establishing contributory negligence; on the contrary, he found on the evidence of the handover process and Rosa’s actual handling of the patient, in the light of her own experience of being on guard for her own safety, that it was ‘most unlikely that a court would have found that [Rosa] failed to exercise reasonable care for her safety’.[82]
[82]Ibid [37].

Rosa submitted that in order to arrive at any discount for risk the judge was obliged to point to particular uncertainties, evidentiary difficulties or problems she would have faced in establishing particular elements of the cause of action. In assessing the loss of a chance, she submitted, uncertainties must be specific to the particular features of the case at hand, and not attributable merely to the ordinary incidents of any form of litigation. For example, in Nigam v Harm (No 2),[83] the plaintiff sued her solicitors in negligence for failing to serve a writ, or extend its validity, against her medical practitioner. The Court held that there was no breach of duty by the solicitors. Newnes JA went on to hold that there would have been specific difficulties in the plaintiff’s attempt to establish that the medical practitioner was negligent or that any negligence caused her harm.[84] Those difficulties included a body of evidence against the claim that the diagnosis of appendicitis was inappropriate and considerable uncertainty as to what had been the cause of the plaintiff’s pain, a number of possible causes over the years having been suggested that had defied a firm diagnosis. So too in Leitch v Reynolds[85] a discount of 55 per cent was regarded as adequately explained and accommodated by the difficulties the plaintiff would have faced by reason of the absence of relevant X-rays[86] in a context in which all the medical experts had stated that the X-rays were ‘vital to a definitive answer’[87] as to whether an earlier attempt at fixing a fracture internally would have led to a better outcome.[88]
[83][2011] WASCA 221.
[84]Ibid [155]–[162]. See also [196]–[205] (Murphy JA).
[85](2005) Aust Tort Reports 81-806.
[86]Ibid 67, 813 [85].
[87]Ibid 67, 807 [42].
[88]It had been argued that the discount should have been higher, 80 per cent.

Here, it was submitted, the judge’s conclusions in relation to contested uncertainties, evidentiary difficulties or problems in establishing particular elements of the cause of action were actually resolved in favour of Rosa and, in any event, were not taken into account in the judge’s assessment of risk. Given the judge’s findings on the likelihood of Rosa establishing liability and resisting any claim for contributory negligence, and the absence of any ‘minuses’ in her claim, the question was asked, rhetorically: ‘Why was there a reduction?’

To this Galbally’s responded by submitting that the valuation of a loss of a chance very often requires a ‘broad brush’[89] approach to be taken to the determination of the elements of the valuation, and this is what the judge did here. As Murphy JA observed in Nigam v Harm (No 2) while a trial judge is to take into account any uncertainties, evidentiary difficulties or other problems,[90]

The trial judge is not required to isolate each contingency and apply a separate discount. The discount is global and evaluative in nature rather than mathematical.

[89]Johnson v Perez (1988) 166 CLR 351, 367 (Wilson, Toohey and Gaudron JJ).

[90][2011] WASCA 221, [266].

Galbally’s submitted that the judge made findings, available on the evidence, which identified particular uncertainties and evidentiary difficulties facing Rosa upon which he relied in fixing Rosa’s prospects of success at 82.5 per cent:

(1) The plan which was in evidence contained exactly the sort of information which would have assisted in developing a strategy to diminish the risk of injury; and

(2) The correctness of Rosa’s evidence that she had sought, but been unable to find, the plan was to be doubted. Rosa’s evidence, including evidence as to whether she had consulted the plan prior to attending to the patient was ‘hazy’ and may have involved a degree of reconstruction on her part.

The flaw in Galbally’s submissions is that the judge did not adopt a broad-brush evaluative non-mathematical discount. The discount adopted – 17.5 per cent – embodied an appearance of precision; it conveyed an impression of numerical exactitude down to a fraction of a per cent. The adoption of such an approach called for an adequate justification as to how such a precise figure was arrived at. Galbally’s had submitted before the judge that an appropriate reduction was 35 per cent while Rosa had submitted that no reduction should be made. Within that range the median figure was 17.5 per cent. Without the identification of particular difficulties Rosa would have faced in establishing her cause of action, in my opinion the judge’s reasons omitted to supply a proper basis for the discount chosen and raised the possibility that the assessment of risk made in fixing Rosa’s prospects of success was based upon an arbitrary figure chosen as a middle ground compromise.

Moreover, the finding that the plan recorded the type of information that would have assisted in developing a strategy to diminish the risk of injury did not assist Galbally’s because the plan was never made properly available to her: ‘It is not likely there would have been convincing evidence that the plan was readily accessible to Mrs Rosa’.[91] Furthermore, the judge did not make the finding that Rosa’s evidence was to be doubted that she had sought, but been unable to find, the plan. What he found was that it was ‘unlikely that there would have been much doubt that Mrs Rosa did not actually see the plan’,[92] and that the type of document it was rendered it ‘not the type of document of much practical use to the casual nursing staff’[93] such that reliance on it as a means of warning staff was ‘impractical and inadequate’.[94] Within the context of the issue of contributory negligence, the judge relied on these earlier findings.[95]
[91]Reasons, [32].
[92]Ibid [30].
[93]Ibid [30].
[94]Ibid [30].
[95]Ibid [35].

However, the plan, having been tendered in evidence by Galbally’s, did enable the judge to observe that the information contained in it was precisely the type of information that should have been made available to Rosa to guard herself against injury. The failure to have such information readily available in a proper form (probably orally[96]) contributed to the inference that the negligent conduct of the employer was a cause of Rosa’s injuries such that she would have enjoyed ‘strong prospects’[97] of establishing her claim for negligence against her employer in a personal injuries action.
[96]Ibid [31].
[97]Ibid [34].

In my view, Rosa is correct to argue that the judge failed to identify any specific basis upon which he could properly assess Rosa’s prospects of success in establishing liability against her employer in negligence for a personal injuries claim at 82.5 per cent. The careful assessment made by the judge of the elements of the cause of action, and his meticulous and assiduous approach to the uncertainties and difficulties in the evidence, all led him to conclude that his view of the probabilities was that there was a ‘substantial likelihood’[98] that Rosa’s claim would succeed, it also being ‘most unlikely’ that there would be any finding of contributory negligence. It was this global and evaluative assessment that should have governed his conclusions on liability unless there were distinct and individual features of the claim that reduced the overall prospects of success. No such distinct and individual features were identified. Indeed, after drawing conclusions about probabilities through conscientious examination of the conduct of the hypothetical trial, the judge himself said that the discount he adopted was one which was contrary to the probabilities at which he had arrived.[99]
[98]Ibid [22].
[99]See Reasons, [39], quoted at [46] above.

The discount of 17.5 per cent was not properly accounted for in the judge’s reasons and to that extent his reasons were inadequate. More importantly, there was nothing in the evidence, or in the elements of the cause of action, or other manifest difficulties, to support the finding that the prospects of success of establishing liability should be reduced by 17.5 per cent. As the discount applied to the issue of liability with respect not only to the common law claim for pain and suffering damages but also with respect to the claim for loss of earnings, my rejection of the 17.5 per cent discount has consequences for both claims.

I would uphold grounds 1, 2 and 3 of the grounds of appeal.

For the sake of completeness I should mention that Rosa sought to support her case with two matters that were not referred to in the evidence, the first being evidence that WorkCover had been successful in recovery proceedings against Southern Health pursuant to s 138 of the Accident Compensation Act 1985, and the second being evidence that Mr O’Bryan, the relevant solicitor at Galbally’s, did not discount his assessment for any risk to Rosa on issues of liability. I agree with Galbally’s that the first piece of evidence was of such slight probative value as to be irrelevant to issues on the appeal. The proceedings with Southern Health had been settled and had not reached judgment; the settlement was not proof of Southern Health’s liability nor was it clear what evidence had been considered at the time of the resolution of those proceedings. I also agree with Galbally’s that the second piece of evidence is of no assistance given that the context of the evidence given by Mr O’Bryan was that ‘liability wasn’t really the issue at the point in time that I made the decisions I made’.

(2)Did Professor Rosenfeld accept that pre-existing conditions would have taken Rosa out of the workforce?

In response to submissions made by Galbally’s, Rosa conceded on the appeal that she did suffer from pre-existing degenerative changes in the cervical spine and that the natural history of arthritic change is to progressively worsen over time. Having regard to the appearances of MRI scanning in 2005, Rosa accepted as likely that, even in the absence of trauma, she would have suffered deterioration at the C4/5, C5/6 and C6/7 levels between 2001 and 2005, involving grating in the neck, pain and limitation of movement, identical to those she was experiencing after the trauma. She had a tendency to degeneration greater than average. It is likely that, even absent the trauma associated with the injury, further degeneration of Rosa’s pre-existing cervico-arthritis and cervical spondylosis would have led to neck pain and stiffness, and myelopathy and upper limb symptoms. Galbally’s submitted, on the basis of this material, that, although it was impossible to predict precisely, Rosa was likely to be developing these types of problems at 60, or in her 60’s, and these symptoms would have meant that she did not continue to work. In support of this final proposition, Galbally’s relied on the evidence of Professor Rosenfeld, which was uncontradicted in this respect. The judge arrived at the view that the probability that Rosa would remain in the workforce diminished as years went by, bearing in mind that, as the judge described the evidence, Professor Rosenfeld ‘… accepted that, even without the injury, [Rosa’s] pre-existing disc degeneration and her tendency to arthritic change would have produced disabling neck symptoms which would have taken her out of the work force’.[100]
[100]Ibid [94].

Rosa argued that the judge misapprehended the evidence of Professor Rosenfeld. She submitted that Professor Rosenfeld gave evidence that by reason of the injury she was unfit for any form of employment but he did not give evidence that her pre-existing condition would have produced disabling neck symptoms which would have taken her out of the workforce. The only career-specific evidence given by Professor Rosenfeld as to Rosa’s pre-existing condition affecting her ability to work was confined to evidence concerning her nursing career. This was apparent from the following cross-examination:

[C]an we take it that you would expect her to deteriorate to the point of having these symptoms anyway but probably not at the age of 55 without the trauma? --- Well, I don’t know the answer to that.
She had them at 55 but if she hadn’t had the trauma for instance by the age of 60, is she likely to be exhibiting these symptoms of neck pain stiffness and possible cervical myelopathy? --- I think that the changes we saw in 2001 were a portent of what was to come clearly, and if she had not had the trauma that it still could have happened that way.
Would you accept for instance the age of 60, allowing that it’s impossible to predict, the age of 60 would be a reasonable estimate of when she’s likely to be developing these sorts of symptoms in any event? --- Yes, in the 60’s more common.
And that would take her out of the workforce in terms of ability to work as a nurse for instance? --- Most likely, yes.
You have obviously spent your entire career in a medical setting and you appreciate what nurses do? --- I do indeed.
And you would agree that it’s a heavy sort of a job? --- It can be very heavy yes, and heavy in terms of lifting and physical work.
The heavy and repetitive nature of that nursing work, can that be a factor in terms of aggravating the degenerate changes that we’re seeing in this lady’s neck in September 2001? --- Could be a factor, yes.
And if it was to operate in that fashion it would bring forward the development of her symptoms to an earlier time? --- It could do, could do.
So it could well be less than 60 before she’s getting to that stage of having her symptoms that would certainly take her out of certainly heavy work such as nursing? --- As I said before, there are aggravating factors to a natural tendency to arthritis and the repetitive nature of the nursing work could have been an aggravating factor, yes.

Rosa submitted that a fair reading of Professor Rosenfeld’s evidence showed that it was confined to an expression of an opinion with respect to Rosa’s likely incapacity to endure the heavy and repetitive nature of nursing work beyond her early 60’s.

I agree. Professor Rosenfeld’s view that Rosa’s pre-existing condition may have naturally resulted in symptoms that would have taken her out of the workforce in any event in her 60’s was expressed directly in response to questions about his knowledge of what nurses do and was linked to the lifting and other physical work performed by nurses. Professor Rosenfeld’s evidence did not address the welfare work for which Rosa had qualified herself, at 51 years of age, in order for her to be able to establish a retirement ‘nest-egg’ and which would have allowed her to phase out her nursing work other than maintaining a few hours in nursing to maintain her registration.

Grounds 9 and 10 should be accepted.

(3)Would Rosa have worked beyond 63 and until 69 or 70, primarily in welfare work? Did the judge err in his assessment of the hours in welfare Rosa would have worked?

It was apparent from the evidence that Rosa was well qualified to do welfare work, not only from her formal qualifications but also drawing on her personal life experience. As described above, the work involved going into homes and conducting family mediations, or giving advice, particularly to young mothers, on how to keep their children safe. The type of work thus did not require her to place strain upon her neck. Indeed, it required no special physical capacity. Rosa’s evidence was that she intended to work until she was at least 65, and more probably 69 or 70 years of age; she wanted to work as long as she could. Indeed, the reason Rosa gave for gaining the welfare qualification, which required studying both full-time and part-time between 1994 and 1998, supporting herself by her nursing work until she qualified for her degree in 1991, was because she wanted to be in a position to retire late. In cross-examination her evidence was as follows:

You gave some evidence when [Rosa’s counsel] was asking you questions, about your intentions in respect of work and you said I think that you would have worked until about 69 or 70? --- Ideally, because I was so fit the reason why I went back to university was to ascertain [scil. ‘obtain’] qualifications and gain another certificate which would give me the opportunity to work longer than what a lot of people retire at, welfare you can retire much later with several jobs.
But your evidence about that, about working till 69, 70? ---Yes.
Is that evidence of what your current thinking is about how long you would have worked for rather than what you were thinking back in 2000? --- My plan was to work as long as I could doing the job that I wanted to do, sir.
… the position is it’s just sort of out in the never-never, isn’t it, at some point I will retire that’s really the situation, isn’t it? --- I was trying to set myself up for long-term employment, I’m 62 now, another five years, I can’t see that I would have been, given my state of mind or what my health would have been like if it wasn’t for that accident I can’t see why I wouldn’t have been well enough to work until I was 70.
…
… there’s no precision to it, no planning to it, that is for instance back in 2000 when you were 51 you hadn’t drawn up any or made any specific plans that entailed you working beyond the age of 65, had you? --- With respect sir, yes, I did make plans, I went back to university in my late 40s or mid to late 40s with very much that intention to continue on working as long as I could. The advantage I had was having two certificates so that if funding was cut in welfare I sill had nursing to fall back on but in a lot of places with nursing they really don’t want you to work after 65, welfare is different.

Rosa emphasised that there was no finding contrary to her credit and there was no evidence to suggest that her ability to continue welfare work was reduced; indeed, the evidence was all to the contrary. There was no evidence called by Galbally’s with respect to Rosa’s continuing capacity to work in welfare.

On the appeal, Galbally’s submitted that her pre-existing condition, particularly with respect to her carpal tunnel injury, might have inhibited Rosa’s future capacity to engage in welfare work because it may have diminished her ability to drive a vehicle to see families who needed her assistance. However, while Rosa had been prepared to take welfare work in Shepparton, at the relevant time an hour from her home, she also engaged in welfare work in Seymour, which was near to her and enabled her to put in extra overtime. It was not apparent that Rosa would always need to drive to see her welfare clients or that the carpal tunnel injury would significantly affect her capacity to drive, or her capacity otherwise to engage in counselling work.

I consider that the judge was wrong to conclude that, in a hypothetical trial, a court was most likely to conclude that by 62 years of age Rosa’s ability to continue in welfare work would have dwindled over the following 12 months alongside a diminution in her capacity to sustain working as a nurse. I consider that to link the age limit at which Rosa would have stopped working in welfare to the limit the judge identified as applicable to her ability to sustain her nursing activity was wrong and not supported by the evidence which indicated that a distinction should be drawn between the two forms of work. In my view, the evidence supported a finding that Rosa would have worked until at least the age of 69 and that this retirement age should form the basis of any re-assessment of her award of damages.

I would uphold grounds 7, 11 and 12 of the grounds of appeal.

With respect to the hours of work Rosa may have engaged in, had the injury not occurred, Rosa maintained that she would have been able to work 40 hours a week. She relied on evidence given by the finance manager of Goulburn, Ms Hall, to the effect that in the period 2004-2009, Rosa’s community welfare work which had previously been limited to 20 hours per week by government funding would have potentially expanded significantly as equivalent full-time positions in that organisation alone increased from 75 persons to 120 persons. As her experience and skills increased, so too the chances of her gaining full-time work increased. Rosa argued that the judge was wrong to conclude that the evidence of the hours she had worked before the injury, 20 hours per week in welfare and 10 hours per week in nursing, in some sense precluded a conclusion that she would have gone on to work 40 hours per week.

To this Galbally’s responded by submitting that the evidence of Ms Hall did not assist Rosa as her evidence was hypothetical because she had no personal knowledge of Rosa, having not commenced with Goulburn until October 2004. Moreover, it argued that it was open to the judge to accept that Rosa would not have worked in full-time employment by way of a combination of welfare and nursing work from the time of the injury given Rosa’s evidence of the following matters:

(1) From towards the end of 1998 there had been no impediment to her working in any combination of welfare work and nursing that she could find. She was, from that time, doing all the work which was available; she did not decline any work as a nurse at all throughout this period;

(2) She had not worked more than 20 hours per week since commencing work in the welfare sector at the beginning of 1999, nor had she been offered any additional work at Goulburn;

(3) Since about the mid-1990’s she had been concerned that she was becoming less able to cope with the physical requirements of heavier nursing roles and was attempting to be selective in the type of nursing which she did, thereby limiting her ability to undertake nursing work;

(4) She never sought out work with any other agency that placed nurses throughout that period, and would have had difficulty doing so because of the potential for conflict in shifts. Rosa did not think it was appropriate to seek out another agency beside Drake and was content to get such work as Drake could make available.

(5) With the commencement of employment with Goulburn, Rosa was not always available to do nursing. In this period, her income from nursing declined from $17,566 in the 1999 financial year to $13,840 in the 2000 financial year.

Galbally’s submitted that there was ample evidence to enable the judge to find that a claim based on Rosa working 40 hours per week was too speculative, especially given that Rosa’s wage records showed that she had been working less than 20 hours per week as a welfare worker and just over 10 hours per week as a nurse prior to the injury. It was submitted that the allowance the judge made for employment of 20 hours per week as a welfare worker and 10 hours per week as a nurse, with an additional allowance for increased work in the welfare sector, was open on the evidence and ought not be disturbed on the appeal.

I agree. I consider that it would be too speculative to depart from the judge’s findings that it is most likely that, in the context of a hypothetical trial, a court would have found that, but for the injury, Rosa would generally have worked 20 hours a week in welfare and 10 hours a week in nursing, with a modest allowance for the times she would have worked some increased hours in the welfare sector. The speculation required to depart from this finding would involve not only inferences about Rosa’s future capacity and determination to work as much as she could, but also inferences about the availability of the combined forms of work, and an assessment that an increase in welfare work would not bring with it a diminution in hours spent in nursing. Such speculation is, in my view, unwarranted.

I reject ground 8.

Ground 6 – Should Rosa have abandoned her loss of earnings claim?

The question of whether Rosa should have abandoned her loss of earnings claim cannot be considered in isolation from the conclusions already reached with respect to the 17.5 per cent discount.

It is important to recognise the implications of the error made by the judge in discounting by 17.5 per cent the damages to be awarded to Rosa with respect to her prospects of establishing negligence against her employer, or the risk associated with a finding of some contributory negligence. In particular, the discount of 17.5 per cent led the judge to conclude that rather than assessing the value of the chance that Rosa would have received an award of damages for loss of earnings at $377,269 (the figure he arrived at after he had carefully calculated loss of earning capacity (past and present), loss of superannuation (past and present), allowance for vicissitudes of 20 per cent and the Fox v Wood component), the appropriate figure was $311,000.[101] This was then compared with the amount she would have had to have repaid by way of past statutory payments for compensation combined with the amount she would have had to have foregone by way of discounted future entitlement to statutory compensation, namely, $344,000.[102] The comparison was taken to support the inference that a solicitor discharging his duties responsibly would have given Rosa appropriate non-negligent advice to abandon her claim for damages for loss of earnings and Rosa would have prudently accepted that advice.
[101]Ibid [108].
[102]Ibid [109].

However, once the discount of 17.5 per cent has been revealed as mistaken, in accordance with the conclusions I have drawn on grounds 1-3 of the appeal, the comparisons to be made are quite different. Without disturbing the judge’s conclusions as to the age at which Rosa was likely to retire, or the hours per week she would work, the original figure of $377,269 would need to be reinstated and compared to the amount that Rosa would have had to have repaid or foregone, namely, $344,000. The comparison indicates that appropriate non-negligent advice to Rosa would have been not to abandon her claim for loss of earnings but to persist with that claim as likely to lead to a more favourable outcome for her. The comparison becomes even more striking once one accepts, as I do, in accordance with the conclusions drawn on grounds 7, 9, 10, 11 and 12, that the judge erred as to the number of years in which Rosa would continue to work in a combination of welfare and nursing work, with the recent establishment of a serious career for Rosa in welfare. Any additional year beyond the age of 62-63 would have increased Rosa’s likely earnings beyond the original figure of $377,269, consistently with the judge’s conclusions as to likely hours of work. Accepting that a court was likely to find that Rosa might have worked until she was 69, which I do, would have substantially increased her likely earnings. This further reinforces the proposition that the negligent advice of Galbally’s to abandon her claim for loss of earnings caused her loss.

Ground 6 should be accepted.

Conclusion on the appeal

I have upheld grounds 1, 2, 3, 6, 7, 9, 10, 11 and 12 of the appeal. [103]
[103]Grounds 4 and 5 having been abandoned, see above [80].

I have rejected ground 8 of the appeal.

The appeal should be allowed and the judge’s assessment of damages, fixed at $56,750.00, should be set aside.

Cross-appeal

In support of the complaint that the judge erred by failing to deduct from the award of damages the solicitor-client costs Rosa would have incurred had her negligence claim been tried, Galbally’s relied on the fundamental principle for the assessment of damages as set out in the judgment of Mason CJ, Dawson, Toohey and Gaudron JJ in Haines v Bendall:[104]

The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, as far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed. … Compensation is the cardinal concept. It is the ‘one principle that is absolutely firm, and which must control all else’ … Cognate with this concept is the rule … that a plaintiff cannot recover more than he or she has lost.

[104](1991) 172 CLR 60, 63.

Galbally’s also relied on the statement of Brennan J in Johnson v Perez that more specifically addressed the context of claims arising from the alleged negligence of a solicitor:[105]

The governing principle applies to the assessment of damages in an action brought by a plaintiff against a solicitor by whose negligence the plaintiff has lost a cause of action in damages for personal injury. An application of the principle requires, first, an appreciation of the plaintiff’s actual position in comparison with the position he would have been in but for the solicitor’s negligence; and secondly, an assessment, necessarily expressed as a contemporary dollar amount, of what is needed to put the plaintiff into the position he would have been in but for the tort or breach of contract.
When a plaintiff loses his original cause of action by the negligence of his solicitor, what is the extent of his loss? He has lost the monetary compensation for his personal injuries which he would have received at the time when he would have received it but for the solicitor’s negligence. That being the extent of the plaintiff’s loss, a court which seeks to put him back in the ‘same position’ must assess, as best it can, whether or not the cause of action would have yielded a judgment or a settlement and, if so, how much the plaintiff would have received and when. It may be necessary to conduct a trial within a trial to determine what the cause of action would have produced. That is what the cause of action was worth to the plaintiff.

[105](1988) 166 CLR 351, 371 (emphasis added by Galbally’s).

Galbally’s submitted that in accordance with the fundamental principle for the assessment of compensatory damages, a court, in determining the actual position that Rosa would have been in but for Galbally’s negligence, and breach of its retainer, must make allowance for the costs which would have been incurred as a result of Rosa continuing with her claim for damages. So much has been accepted by other appellate courts without the need for separate authority but in reliance only upon the fundamental principles of compensation.[106] It was argued that the judge’s failure to make allowance for those costs placed Rosa in a more favourable position than she would otherwise have been but for the negligence and breach of retainer by Galbally’s, as solicitor-client costs would have been deducted from the award she would have received in her damages claim. The judge’s observation that there was a ‘certain appeal from the viewpoint of fairness’ that there be an off-setting between those costs of the hypothetical trial for damages and the solicitor-client costs of the actual trial before him of the solicitor’s negligence was argued to be imprecise and unsupported by authority.
[106]See Firth v Sutton [2010] NSWCA 90. This case was concerned with the loss of opportunity to pursue common law claims in preference to Workers Compensation Act entitlements. Allsop P said: ‘Various deductions need to be made from the notional judgment sum of $330,596.42: solicitor client costs for obtaining it; past workers compensation payments; the value of future workers compensation payments; and a discount for the contingencies of obtaining the judgment’ ([159]) (emphasis added) (Macfarlan and Young JJA agreeing).

Galbally’s submitted that the uncontested evidence was that:

(1) at the time the damages claim was settled prematurely, $5,000 was deducted in solicitor-client costs;

(2) the likely solicitor/client costs associated with the conduct of the application for leave in the County Court proceedings would have been $10,000 - $15,000;

(3) the likely solicitor/client costs associated with the conduct of the hypothetical trial to verdict or judgment would have been $40,000.

Galbally’s contended that the only factors that would derogate from the sum of $35,000 as the amount that should be deducted from Rosa’s award, on a broad-brush approach, would be the prospect of resolution between the parties of the County Court proceedings and subsequently the resolution of the claim for damages at some point during the trial. Galbally’s submitted that given that the parties adopted such divergent valuations of Rosa’s claim,[107] very little allowance should be made for the prospect of a resolution by way of compromise between the parties.
[107]For example, in written submissions before the judge Galbally’s valued Rosa’s claim for damages for pain and suffering and loss of enjoyment of life at $100,000-$120,000 while Rosa submitted that, as at a putative trial date of June 2010, damages under that head would be within the range of $200,000-$230,000.

Rosa submitted that it was highly unlikely that the serious injury application in the County Court would have proceeded to a hearing. There was evidence that Rosa had, by reason of the injury arising from the incident, entirely lost her capacity to work and the ultimate assessment by the judge proceeded on this basis. Given that evidence, it would be unlikely that the serious injury application would continue to be contested. I agree.

Rosa also submitted that, with respect to the question of the deduction of solicitor-client costs notionally incurred in the hypothetical damages trial of which she was spared by reason of Galbally’s negligence, there were two significant factors which ought to preclude that deduction. The first was that the state of the evidence as to both liability and quantum was overwhelming indicating that there was a real possibility that Rosa would not have needed to pursue her damages trial to verdict. The second was that whatever solicitor/client costs might have been incurred in the damages trial they have been more than expended by Rosa in prosecuting to verdict and on appeal her case against Galbally’s for its admitted negligence.[108]
[108]Rosa observed that the point does not seem to have been argued in Firth v Sutton [2010] NSWCA 90.

To my mind, while I consider that there was a real possibility that the damages trial would have been resolved by compromise,[109] I do not consider that this is so because the evidence on liability and quantum was overwhelming. The contest between the parties at the trial before the judge, and on appeal, demonstrates that there were significant questions as to whether Galbally’s conduct caused Rosa to suffer loss, particularly with respect to the abandonment of the claim for damages for loss of earnings. It is also more than apparent that there is a contest with respect to quantum of loss.
[109]Galbally’s argued at the hearing of the appeal that as the parties had agreed that the hypothetical trial date would have been June 2010, Rosa had conceded that the matter would proceed to trial. Rosa clarified that in agreeing on a date for the hypothetical trial she had not conceded that the matter would have gone to trial but only that, if the matter went to trial, it would have commenced in June 2010. Galbally’s also accepted that if the trial had been limited to the claim for pain and suffering damages it may have taken less than the six to seven day estimate. It also accepted that it could not be assumed that the trial would have proceeded to verdict.

However, I consider that the second of the factors is decisive; that is, Rosa has incurred no doubt significant solicitor and own client costs at trial, pursuing the appeal and in resisting the cross-appeal. The costs orders made by the judge at trial, while in Rosa’s favour, were simply party/party costs. The trial occupied seven days of hearing.[110] Before the judge, Galbally’s relied on the evidence of Mr O’Bryan that the trial for damages in the County Court would have occupied about six or seven days.[111] The fundamental principle governing compensatory damages, to put a plaintiff back in the position he or she would have been in but for the tort or breach of contract, implies that the actual position Rosa would have been in but for Galbally’s negligence is the position of having incurred no costs with respect to the trial before the judge, or on this appeal, for the very reason that these proceedings would not have occurred. I consider that no deduction should be made for the solicitor/client costs Rosa would have incurred in pursuing either her serious injury application or her trial for damages.
[110]15, 16, 17, 18, 19, 22 and 23 August 2011.
[111]See Reasons, [120].

I reject ground 1 of the cross-appeal.

Conclusion on the cross-appeal

The cross-appeal should be dismissed.

Disposition

I have concluded that the judge was in error in discounting by 17.5 per cent the chance that Rosa would have established the liability in negligence of her employer. I have also concluded that the judge was in error in valuing the loss Rosa suffered by estimating that she would have worked only until the age of 62 with some welfare work continuing for the next twelve months. I consider that she would have worked beyond that age to retire at age 69, primarily developing her career in welfare. As indicated above, these conclusions are sufficient to set aside the judge’s assessment of damages in the sum of $56,750.00.

I have concluded, however, that the judge was correct to consider that the likely number of hours Rosa would have worked, but for the injury, was 10 hours a week in nursing and 20 hours a week in welfare. It may be that, as the years went by, the proportion of time spent on welfare work increased relative to nursing.

Rosa urged this Court, if it allowed her appeal and set aside the judge’s assessment of damages, to determine the sum in which her damages should be assessed. Such a course is supported by the history of the matter given that it is now almost 13 years after Rosa suffered the injury in June 2000. In that time, she received negligent legal advice from her solicitor, in December 2007; prosecuted a trial against her solicitor, which was heard in August 2011, by reference to a hypothetical trial, the notional date of which was June 2010; and received a result in January 2012 which, in my opinion, ought to be overturned. The desirability of ensuring the finality of litigation supports the view that this Court ought now to determine for itself what damages Rosa should be awarded. It is clear that the Court has the power to do so.[112]

[112]Section 14(1) of the Supreme Court Act 1986; Electrolux Pty Ltd v Siniakis [1998] 1 VR 29, 48; Murphy v Mark [1977] VR 316.

At the hearing of the appeal the Court raised the question of whether an agreed memorandum could be prepared by the parties indicating, on the basis of the materials before the judge, what would be the appropriate award of damages if a variety of alternative assumptions were made, for example, if the Court accepted that the likely hours of work Rosa would have worked would be 30 hours, or if the Court accepted that the likely hours of work would be 40 hours, and if the Court accepted that Rosa would only continue working until 62, or accepted that she would have worked until she was 69. In response, Galbally’s submitted that, if the appeal were to be allowed, it would be necessary for further instructions to be obtained and it would seek to make additional submissions on the disposition of the proceeding. The Court acceded to that request and indicated that, if the appeal were to be allowed, it would seek the assistance of the parties on the question of disposition. It will now be necessary to enlist the assistance of the parties on that question.

KYROU AJA:

I also agree with Tate JA.

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[2013] VSCA 116

17 May 2013