Shehata v Hussein

[2004] NSWSC 617

CITATION:	Shehata v Hussein [2004] NSWSC 617
HEARING DATE(S):	08/07/04
JUDGMENT DATE:	8 July 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Specific performance ordered
CATCHWORDS:	EQUITY - specific performance - agreement to compromise litigation - one party refuses to perform - allegation that solicitor exercised duress in causing client to agree to compromise
LEGISLATION CITED:	Supreme Court Act 1970, s.100
CASES CITED:	Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 Daniels v Pynbland Pty Ltd (No 2) (1985) 4 BPR 9726 Harvey v Phillips (1956) 95 CLR 235 Holt v Jesse (1876) 3 ChD 177 Savage v Norton [1908] 1 Ch 290 Singh v Secretary of the Department of Family and Community Services [2001] FCA 1281
PARTIES :	Nabil Shehata - Plaintiff Faizal Hussein - Defendant
FILE NUMBER(S):	SC 6203/03
COUNSEL:	Mr S D Kalfas - Plaintiff Defendant in Person
SOLICITORS:	David Ian Brown - Plaintiff Defendant in Person

IN THE SUPREME COURT REVISED
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

THURSDAY 8 JULY 2004

6203/03 - NABIL SHEHATA v FAIZAL HUSSEIN

JUDGMENT

1 The plaintiff is a medical practitioner. He practices as a surgeon. On an occasion in November 1999, the plaintiff was consulted by the defendant and performed upon the defendant at a medical centre in Auburn a procedure involving draining and treatment of an abscess in the rectal area of the defendant's body. As I shall mention later, the defendant returned to the surgery on the same day and received further treatment from the plaintiff.

2 The defendant, as plaintiff, afterward sued the plaintiff, as defendant, in the District Court alleging negligence in respect of the treatment rendered by the plaintiff. Various offers of compromise were made as the District Court case approached trial. On 7 November 2003, the present defendant's then solicitors, Keddies, faxed to the present plaintiff's solicitor a letter conveying acceptance of an offer of compromise which had emanated from the present plaintiff and entailed a verdict for the present plaintiff with each party paying his own costs.

3 In the proceedings in this court which I have heard today, the plaintiff seeks relief by way of declaration and order for specific performance in respect of the agreement said to have arisen from the defendant’s acceptance of that offer of compromise.

4 7th November 2003 was a Friday. The next day, Saturday 8 November 2003, the defendant faxed to Keddies (with a copy also to the plaintiff's solicitor) a document signed by him stating that his solicitors were instructed to send a letter to the plaintiff indicating withdrawal of the acceptance of the offer of compromise and also stating that Keddies no longer acted for him. There was an accompanying covering letter with the copy of this document faxed to the plaintiff's solicitor.

5 On 11 November 2003, the following Tuesday, Mr Tsaousidis, an employed solicitor of the plaintiff's solicitor, telephoned Mr Thornton, the solicitor with Keddies who had had carriage of the matter for the defendant, and told him that he had received a letter from the defendant and described it. Mr Tsaousidis said to Mr Thornton that he intended sending the defendant a letter saying that settlement had been reached and that he was instructed to enforce the settlement agreement if necessary and to seek costs of enforcing it. Mr Thornton said: "You can send it if you like, but you don't have to worry because I have since received instructions to act for Mr Hussein". Mr Thornton also said that Mr Tsaousidis should send over the terms of the settlement and Mr Thornton would sign them. The plaintiff's solicitors sent the terms of settlement to Keddies on 11 November, but they have not been signed.

6 The defendant's evidence is inconsistent with any suggestion that Keddies were retained again by the defendant after 8 November 2003 but, in the end, I do not consider it necessary to go into this as, on all versions of the evidence, Keddies were retained by and acting for the defendant at the time they faxed to the plaintiff's solicitor the letter of 7 November 2003 accepting the offer of compromise.

7 I should say a little more about the treatment administered by the plaintiff to the defendant. The defendant went to the Auburn medical centre complaining of the abscess to which I have referred. The plaintiff drained the abscess and administered related treatment. The defendant in due course left the surgery and proceeded towards his home. On the way home, he became aware of bleeding from the area the plaintiff had treated. There was what he regarded as a large quantity of blood coming from the treated area and he was, quite understandably, highly alarmed and distressed, as were his parents when he arrived home. The defendant was taken back immediately to the plaintiff's surgery and further treatment was administered by the plaintiff. The bleeding was arrested and the defendant again went home.

8 Over time, the wound healed but the defendant says that he has continued to suffer adverse and unpleasant consequences. It is in respect of those consequences that the defendant sued the plaintiff in the District Court alleging negligence in the treatment administered.

9 The plaintiff's case before me is quite straightforward. There is, in the plaintiff’s submission, a concluded agreement that was made on 7 November 2003 by means of acceptance by the defendant’s solicitors (Keddies) of the offer of compromise previously made by the plaintiff's solicitor. The agreement, the plaintiff says, is of a kind that is capable of specific performance and the defendant should be ordered to perform accordingly.

10 Specific performance is, of course, a discretionary remedy. The matters that the defendant has put before the Court go to the question whether the Court should withhold the exercise of its discretion in favour of the plaintiff in this case.

11 The defendant has confirmed in the witness box that he visited Keddies’ office late on the afternoon of 7 November 2003 and was advised by Mr Thornton that, in Mr Thornton's opinion and that of counsel briefed in the District Court proceedings, the defendant would lose the District Court case and would be liable, very likely, for costs of a significant amount. The amount mentioned by the defendant in evidence before me was $40,000, being $20,000 on each side, the assumption being that he would be the losing party, although he says that he regarded one lot of $20,000 as inconsistent with the “no win no fee” arrangement he had with Keddies. Whether it be $40,000 or $20,000, the fact is that the costs sum was, in the particular context of the defendant's circumstances, a sizeable amount.

12 The defendant agrees that Mr Thornton advised him to accept the offer of compromise. The defendant says that he did not want to settle, yet he signed a written instruction or authority to settle. He did this at Mr Thornton's request in circumstances where, as I have said, he says he did not want to do so. He says that he was forced to do so and was left with no choice. He said in the witness box that Mr Thornton "threatened" him, but it became clear in his later evidence that by "threatened" he meant to refer to the advice about the highly probable costs outcome if the claim was dismissed in the District Court, as Mr Thornton's assessment and that of counsel in the case indicated that it would be. In a real sense, any feeling on the defendant's part that he had no choice was no more than a playing out of a practical and inevitable logic.

13 The defendant is obviously intelligent and well able to see where his own interests lie. He has shown this in representing himself today and in cross-examination. I do not accept that he did not know the full implications of his conversation with Mr Thornton at the 7 November 2003 meeting and of the instructions he then gave, even though the meeting took place after ordinary business hours. In my judgment, the defendant was well aware of the very real and significant likelihood that, if he pressed on with the District Court case, he would lose and be exposed to a significant order for costs. I am satisfied also that, despite his protestations of having been pressured, he was appropriately advised of the implications of the expert evidence served by his opponent in the District Court and of the opinion of his own solicitor and counsel that he would not win the case. I refer in this connection to two items in particular.

14 The first is a file note which appears in Keddies' file, which has been put into evidence. It is, on its face, a record of a telephone conversation between Mr Thornton and the defendant on 6 November 2003, the day preceding their relevant meeting. The defendant acknowledges that he spoke with Mr Thornton on the telephone on that day. He says that Mr Thornton telephoned him to ask him to come into Keddies' office to discuss a development of importance and that an appointment was made. The defendant says that the telephone conversation was quite short and involved nothing really beyond what I have just said.

15 The note in the Keddies' file, however, shows something quite different. The note is consistent with Mr Thornton having informed the defendant on the telephone on 6 November that reports of Dr Gatenby and Dr Meagher, served by the plaintiff in the District Court proceedings, indicated no negligence by the plaintiff; that the defendant himself had no evidence from a colo-rectal surgeon in order to deal with the opposing medical evidence; and that the opinion of Mr Thornton and counsel briefed in the matter was: "You lose". The note goes on to suggest that Mr Thornton said to the defendant that he would like to discuss the matter with him on either Friday or Monday, and that an appointment at 2.30 on Monday 10 November was fixed. The defendant has explained that this time was later changed and that he went to the office late on the Friday afternoon.

16 The second particular item to which I refer is also in the Keddies' file. It is a letter dated 10 November 2003 from Mr Thornton to the defendant. It is a report of what Mr Thornton says was discussed at the meeting on 7 November. Among the things said in this letter are as follows:

“We then discussed the advice of your barrister, Mr Ken Pryde, dated 5 November 2003, together with the defendant's medical reports as to liability.”

There was then reference to the reports of Dr Gatenby and Dr Meagher and to what they indicated, namely, in summary, that the performance of the operation itself was not challenged as being otherwise than reasonable, that the bleeding which followed was a known complication and could have occurred at any time after the surgery (such as one hour later), that in those circumstances it would not have been reasonable to detain the patient for observation following the procedure and that the procedure itself would normally only take something in the vicinity of ten minutes, so that the duration of what was done on the first visit could not be criticised. There is also reference, in Mr Thornton’s letter, to the defendant’s having been informed of other aspects of the reports of Dr Gatenby and Dr Meagher in the following terms:

“There was no effective choice but to undergo the procedure. Your problems would have become even worse if you had not undergone the surgery or it had been delayed. The symptoms which you suffer are likely to be consequent upon the original abscess rather than upon its drainage or from the abscess and from the fact that it had to be drained as opposed to consequent upon the drainage in some way having been inappropriately performed.”

The letter goes on to refer to other matters which Mr Thornton says in it were discussed at the meeting on 7 November.

17 I am satisfied that the matters reflected in this letter were put to the defendant at the meeting, having been outlined in brief and general terms in a telephone conversation he had with Mr Thornton the previous day, and that what he chooses to regard as lack of choice was, as I have said, merely a matter of logical outcome.

18 When the defendant's solicitors communicated to the plaintiff's solicitor acceptance of the offer of compromise, they did so with the knowledge and consent of the defendant. The defendant's consent was not what Malins VC in Holt v Jesse (1876) 3 ChD 177 described as “careless consent”, that is, consent given by someone "not fully knowing or considering what he is about”. In my judgment, the defendant's consent was a reluctant consent in that the defendant continued to feel a sense of grievance and wrong about his medical treatment and had a general desire to seek redress against the plaintiff. But even on his own evidence, he understood what he was doing and the implications of his actions when he instructed his solicitor to accept. He says that his solicitor brought duress to bear upon him. I doubt that he uses that term in its technical sense of unconscionable overbearing of the will: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 per McHugh JA. On the evidence, his solicitor explained to him that his case was extremely weak (in effect, fatally so) and that the expense of pursuing it, having regard to costs consequences, would be out of all proportion to the likelihood of obtaining any positive result. The expert evidence that had been served by the plaintiff, in the form of the reports of practitioners skilled in the fields relevant to the controversy in the District Court, amply bears out the opinions thus expressed by the solicitor.

19 The reality is, of course, that the defendant did have a choice at the meeting on 7 November. He was cross-examined about the order of events at that meeting and was at pains to make it clear that he had signed the authority or instruction document before having received a full explanation of the implications of it. Indeed, he would say that he did not receive a sufficient explanation. I am satisfied, however, particularly having regard to the two documents from the Keddies file, that he did know what he was about at the time and that the order in which things happened is, in the end, of very little importance. If he in fact signed before appreciating important implications of what he was doing, it would have been a simple matter for him to say to the solicitor at the time that he had changed his mind and wished to withdraw his instruction and tear up the document. That he did not do.

20 In summary, the defendant consented to the compromise, even though he did so grudgingly and with a sense, in his own mind, that justice was not going to be done. But he did so of his own free will and with a sufficient appreciation of what he was doing. I am not satisfied that he was subjected to any pressure, let alone anything approaching the kind of pressure described in Harvey v Phillips (1956) 95 CLR 235. This is not a case where the legal advisers took it upon themselves to agree to a settlement. The defendant’s solicitors agreed on the express and informed instructions of defendant, even though those instructions were grudgingly given.

21 The plaintiff did nothing wrong or unconscionable by way of inducing the defendant to accept the offer. Nor, as I have said, is there any basis for concluding that the defendant's will was overborne by his solicitor in a way that would make it wrong for equity to hold him to the bargain the solicitor made on his instructions.

22 I would add that, on the material available as to the merits of the medical negligence claim, there is nothing at all to suggest that enforcement of the agreement will impose undue hardship on the defendant. Indeed, on an overall view of matters, it will be to the defendant's advantage not to go ahead with the District Court case. As counsel for the plaintiff mentioned, this brings to mind a comment by the Full Federal Court in Singh v Secretary of the Department of Family and Community Services [2001] FCA 1281:

“[I]t is by no means apparent to us how, on any objective basis, entering into the compromise actually prejudiced Mr Singh.”

23 The defendant has also expressed dissatisfaction with the solicitors who acted for him before Keddies, but those matters are quite irrelevant to the present controversy.

24 The plaintiff has established an entitlement to a declaration as to the existence of the agreement of compromise and an order for specific performance. I therefore make orders 1 and 2 in the amended summons, as follows:

1. A declaration that on 7 November 2003 the Plaintiff (‘Dr Shehata’) and the Defendant (‘Mr Hussein’) agreed to compromise proceedings which were commenced by Hussein against Shehata in the District Court of New South Wales, being proceedings number 8553 of 2002 on terms:
(a) that there be a verdict in favour of Dr Shehata;
(b) that Dr Shehata and Mr Hussein each pay his own costs.
2. An order that the Plaintiff specifically perform the agreement referred to in paragraph 1 hereof.

25 The plaintiff also seeks the following order:

An order that Mr Hussein or his legal representative or the Registrar of this Court sign the terms of settlement which are annexed hereto and marked A.

26 The element of this proposed order referring to the Registrar of the Court obviously calls in aid s.100 of the Supreme Court Act 1970. The annotations to that section in Ritchie’s Supreme Court Procedure (NSW) refer to Savage v Norton [1908] 1 Ch 290 as authority for the proposition that an order empowering some other person to sign should not be made until it is seen that the person ordered to sign has not done so. The opening words of s.100 are, after all, “Where any person does not comply with a judgment or order directing the person to execute any conveyance, contract or other document …”. The terms of the provision under consideration in Savage v Norton (s.14 of the Judicature Act 1884) were not in all respects the same as those of s.100 but I am of the opinion that the following observation of Parker J in that case holds good here:

“My own opinion is that, on the true construction of s.14, the circumstance which gives rise to the jurisdiction is the neglect or refusal, and that the Court, before making the order, ought to satisfy itself that there has been a neglect or refusal and also as to the circumstances in which that neglect or refusal has taken place, because the order is only to be made ‘on such terms and conditions (if any) as may be just’. Therefore, in making the order, the Court ought to know the circumstances of the refusal or neglect as well as the fact that there has been a refusal or neglect. The refusal may, for instance, have been due to some unforeseen cause, and the party all along may have been willing, and may still be willing to comply, but may have been prevented by some accident – in which case I doubt whether the Court would, after considering the circumstances of the case, make any order.”

27 Young J observed in Daniels v Pynbland Pty Ltd (No 2) (1985) 4 BPR 9726 that, while it is “just conceivable” that an anticipatory order might be made under s.100, there is no reported case of this having been done and it would require “an extraordinary set of facts”. There is nothing extraordinary about this case. The defendant should thus be given a chance to obey the court’s orders before any application for assistance by way of order under s.100 is pursued by the plaintiff. I now make, in addition to orders 1 and 2 in the amended summons, the following order:

Order that the defendant sign, or procure to be signed by any solicitor on the record for him in District Court proceedings 8553/02, terms of settlement in the form of the annexure A to the amended summons.

28 The plaintiff may apply for an order under s.100 in due course if the orders I have made are not obeyed.

29 The defendant is to pay the plaintiff's costs of these proceedings.

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Last Modified: 07/12/2004