Van Eckeren v Legal Services Commission of South Australia - [2006] SASC 282

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
VAN ECKEREN v LEGAL SERVICES COMMISSION OF SOUTH AUSTRALIA
[2006] SASC 282
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Sulan and The Honourable Justice Vanstone)
11 September 2006
TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - GENERALLY
DEFAMATION - ACTIONS FOR DEFAMATION
Appeal against a decision by a judge of the District Court dismissing the appellant's claim that the Legal Services Commission breached a duty that it owed to her by terminating legal aid and assistance - appeal against a decision by a judge of the District Court dismissing the appellant's claim for slander - whether the trial judge erred by finding that the Legal Services Commission owed no duty to the appellant to provide ongoing legal aid and even if such a duty was owed that the Commission did not breach that duty - the solicitors retained acted competently and properly in connection with the claims that the appellant sought to make out - it cannot be said that in the circumstances that the Director of the Legal Services Commission or the Legal Services Commission itself was obliged to continue the grant of legal assistance - consideration of the statutory scheme under which grants of legal aid are determined - no erroneous or misconceived exercise of the power to terminate legal assistance is disclosed by the evidence - it cannot be said that any duty was breached if in fact a duty was owed - whether the judge erred in dismissing the appellants claim to have been slandered - evidence on which the claim of slander is sought to be made out must be characterised as inadmissible hearsay - no error disclosed - appeal dismissed.
Legal Services Commission Act 1977 (SA) s 10, s 10(2)(a), s 11(a), s 11(b), s 11(c), s 11(d), s 16, s 23, s 29(1)(a), s 17(3), s 17(5), s 17(6), referred to.
O'Connor v S P Bray Ltd (1937) 56 CLR 464; Byrne v Australian Airlines Limited (1995) 185 CLR 410; Sullivan v Moody (2001) 207 CLR 562, discussed.

VAN ECKEREN v LEGAL SERVICES COMMISSION OF SOUTH AUSTRALIA
[2006] SASC 282
Full Court: Doyle CJ, Sulan and Vanstone JJ

DOYLE CJ: In 1986 and 1987 Ms Van Eckeren instituted seven actions claiming damages from medical practitioners for allegedly negligent treatment, and one action against the Australian Telecommunications Commission (“ATC”) claiming damages for personal injury.
By an “Application For Legal Services” dated 5 October 1990 she applied to the Legal Services Commission (“the LSC”) for legal assistance to continue the actions. In an accompanying letter Mr Russell, her solicitor, said she had run out of money. He said the actions were likely to come to trial in February or March 1991.
The LSC sought information about the actions, and there was some correspondence between Mr Russell and the LSC. On 25 February 1991 the LSC made a limited grant of legal assistance. It authorised Mr Russell to obtain counsel’s opinion as to the prospects of success and as to the likely award of damages.
Over the following 12 months the grant of legal assistance was continued from time to time, and advice was obtained from counsel. However, the LSC had not agreed that it would grant legal assistance for the purposes of the anticipated trials.
Along the way there were differences and disputes between Ms Van Eckeren, on the one hand, and the assigned solicitors, counsel and the LSC. Ms Van Eckeren raised a number of objections to the manner in which her matters were dealt with.
On 21 February 1992 the Director of the LSC terminated legal assistance on the grounds that Ms Van Eckeren had “refused to accept the proper advice of the assigned solicitor and to provide appropriate instructions…”. Ms Van Eckeren appealed against the Director’s decision, but that decision was upheld by the Commission on 12 March 1992
The actions came to trial in 1992 and 1993. Ms Van Eckeren appeared in person. All but one of the actions were dismissed.
In January 2001 Ms Van Eckeren issued proceedings in the District Court against the LSC. She claimed damages, alleging that the termination of legal assistance was wrongful. She claimed that the decision to terminate legal assistance caused her personal injury, attributable to the stress of conducting the trials herself. She also claimed compensation for the loss of the claims.
In the same action she sued an employee of the LSC, whom she claimed had defamed her.
The action was heard in the District Court in July 2005. Ms Van Eckeren conducted the case. The Judge dismissed both claims. Ms Van Eckeren now appeals.
The appeal raises the issue of whether the LSC owed Ms Van Eckeren a duty not to terminate the grant of legal assistance, a duty such that she can claim damages for breach of duty. It also raises the question of whether the Director and the LSC owed her a duty of care in making the decision to terminate legal assistance. The appeal raises the question of whether, if either such duty existed, the breach of the duty was proved and whether a loss was proved. As to the claim for slander (as it was) the question is whether Ms Van Eckeren proved that a defamatory statement was made.
The LSC
The LSC was established by the Legal Services Commission Act 1977 (SA) (“the Act”) as a body corporate. It is the means by which legal assistance is provided using funds provided by the government of the State and of the Commonwealth, and from certain other sources: see s 23.
The functions of the LSC are set out in s 10 of the Act. They include research and public education. For present purposes it suffices to refer to two functions:
10 –– Functions of Commission
(1)     The Commission will ––
(b)     provide, or arrange for the provision of, legal assistance in accordance with this Act; and
(c)     determine the criteria under which the legal assistance is to be granted; and …
Section 10(2) relevantly provides:
(2)In determining the criteria under which legal assistance is to be granted under this Act, the Commission must have regard to the principles ––
(a) that legal assistance should be granted where the public interest or the interests of justice so require; and…
Section 11 relevantly provides:
In the exercise of its powers and functions the Commission must ––
(a)seek to ensure legal assistance is provided in the most efficient and economical manner;
(b)use its best endeavours to make legal assistance available to persons throughout the State;
(d)have regard to the following factors:
(i) the need for legal assistance to be readily available and easily accessible to disadvantaged persons;
(ii) the desirability of enabling all assisted persons to obtain the services of legal practitioners of their choice;…
The LSC provides legal assistance by its employees and by legal practitioners assigned for that purpose: s 16. If an employee of the LSC provides legal assistance, the LSC is “taken to be the legal practitioner retained by the person to act on the person’s behalf”: s 29(1)(a).
The Director of the LSC deals with applications for legal assistance. Section 17(3) provides:
The Director must deal with an application for legal assistance in accordance with principles laid down by the Commission, and may grant, unconditionally or subject to such conditions as the Director thinks fit, or may refuse, the application.
The Director can at any time impose conditions on the continuance of legal assistance, or vary or revoke such conditions: s 17(5). An assisted person can appeal to the LSC against a decision of the Director: s 17(6).
The Grant and Termination of Legal Assistance
When the LSC received the application for legal assistance it asked Mr Russell, the solicitor, for information about the claim. Mr Russell replied that the materials were so voluminous, and the litigation so complex, that the LSC should come to his office and inspect his files and discuss the claims with him. Not surprisingly, the LSC insisted that Mr Russell comply with its request. After some material was provided, the Director of the LSC made a limited grant of legal assistance on 25 February 1991. The grant was limited to obtaining an up to date opinion from counsel as to the prospects of success and as to the likely damages.
Ms Van Eckeren appealed to the LSC against the decision to limit the grant of legal assistance, claiming that she should have received an unconditional grant. She also objected to the fact that the LSC had sent certain documents to counsel. This was the beginning of many differences between the LSC and Ms Van Eckeren. Her appeal was rejected. Although the Judge made no express finding on the point, the requirement for an opinion from counsel was reasonable and prudent.
In about May 1991 Mr Russell ceased acting for Ms Van Eckeren. The Judge found that he was no longer “on good terms” with Ms Van Eckeren.
Over a period of months, the LSC tried to find other solicitors who would act for Ms Van Eckeren. It was difficult to find solicitors willing to act who were also acceptable to her: [51]. Ultimately Mr Pearce agreed to act in connection with the claim against the doctors, and Mr Fairclough in connection with the claim against the ATC.
There was also some difficulty in retaining counsel to provide an opinion. In July 1991 Mr Holland was appointed to provide an opinion on prospects of success in all of the actions: [49]. A limited assignment was made for that purpose. He provided an opinion on the ATC action in October 1991: [50].
During this time the LSC undertook the role of finding a solicitor and finding and instructing counsel to provide an opinion. To that extent it acted as her solicitor. The LSC did not, however, act for her generally. It did not file a notice that it was acting in the proceedings, and did not give advice on her claims or concern itself with the preparation of the cases.
Mr Holland’s opinion was that the prospects of success on the ATC claim were reasonable, but he said that there was a lot of work that still had to be done. The appointment of Mr Fairclough to act as solicitor in connection with this claim (by letter dated 6 November 1991) was subject to a monetary limit, and on the basis that he was to proceed only if the case had “legal merit or is otherwise deserving of assistance”. If there was any doubt about the justification for proceeding, he was required to report to the LSC.
The evidence before the Judge established that the relationship between Mr Fairclough and Ms Van Eckeren was a difficult one. On a number of occasions he reported to the LSC that she would not accept his advice, and that she was hampering his preparation of the claim.
On 6 January 1992 the LSC appointed Mr Pearce to act as Ms Van Eckeren’s solicitor for the purpose of the medical negligence claims. It appears from the Judge’s reasons that Mr Pearce had been acting for Ms Van Eckeren since some time in November 1991. Mr Pearce’s appointment was also subject to a monetary limit, and with the same restriction in relation to proceeding with the case as was imposed in relation to the ATC claim.
On 17 January 1992 Mr Holland provided a detailed opinion relating to the medical negligence claims. In brief he advised that there were some actions that should be pursued, some which should not be pursued in any event, and others where further expert evidence was needed before he could provide advice about the prospects of success. He said that the likely award of damages did not warrant the cases being heard in the Supreme Court, and that they should be remitted to the District Court.
On 23 January 1992 Mr Fairclough reported to the Commission that Ms Van Eckeren was refusing to accept his advice, and that there were real difficulties with the claim. The difficulties related to liability and damages. On 31 January 1992 he reported in similar terms, adding that Ms Van Eckeren would not submit to the psychiatric examination which he thought was necessary to support a claim of a “functional component” to her injuries. It appears that Ms Van Eckeren and Mr Fairclough were at loggerheads.
On 11 February 1992 the LSC wrote to Ms Van Eckeren refusing to assign her cases to other solicitors, and confirming that she was required to provide proper instructions to her solicitor, and to accept the advice of her solicitor. She was warned that legal assistance would be terminated if she did not do so.
On 14 February 1992 Mr Holland wrote to the LSC reporting on an attendance before a Judge of the Supreme Court in connection with claims that were due to be heard in April. He had been seeking an adjournment. When he told the Judge that legal assistance had not yet been granted for the purposes of the trial, a dispute with Ms Van Eckeren arose. Apparently she complained to the Judge about the LSC and about Mr Holland. In part this was due to the fact that she had a letter which, on its face, read as if the grant of legal assistance was not limited. Mr Holland reported that, having regard to the circumstances, and to things Ms Van Eckeren had said to him and about him, he could not act for her. He said that she had indicated that she had no confidence in him, and that he had given a biased opinion about her claim.
The letter that caused the misunderstanding was not a letter that purported to deal with the terms on which legal assistance had been granted. It did no more than record that the solicitors were acting, and that Mr Pearce was dealing with the medical negligence claims and Mr Fairclough with the ATC claim. The letter was written in the context of Ms Van Eckeren wanting a change of solicitors. Taken in isolation, the letter was capable of suggesting that the grant of legal assistance was unrestricted, even though seen in context it did not.
On 18 February Mr Fairclough reported to the LSC that Ms Van Eckeren would not accept his advice in relation to the ATC claim, and that she was accusing him of conspiring against her interests. His advice was to the effect that she was unrealistically optimistic about the level of damages that might be awarded.
On 21 February 1992 the Director wrote to Ms Van Eckeren terminating the grant of legal assistance in each matter. He did so on the basis that she had consistently refused to accept proper advice and to provide proper instructions. One of the express conditions attached to the grants of legal assistance was that she must follow any reasonable advice her lawyer gave her. This condition would be implicit in any grant of legal assistance in any event.
Mr Pearce appealed on her behalf to the LSC. In a letter in support of the appeal he drew to the LSC’s attention the fact that Ms Van Eckeren suffered from a severe paranoid personality disorder. He had psychiatrists’ opinions to that effect, and there seems no doubt that this was so. As I understand the facts, this had been part of the background of the matter. Mr Pearce argued that having regard to her condition, it was to be expected that she would refuse to accept legal advice and would treat her legal advisors with, as he said in his letter of 9 March 1992, “unwarranted suspicion and distrust”. Although he argued that this should be a reason to provide legal assistance rather than to terminate it, it could not alter the fact of her conduct.
By letter dated 16 March 1992 the Commission informed Ms Van Eckeren and Mr Pearce that it had rejected her appeal, and had confirmed the Director’s decision on the basis that Ms Van Eckeren had consistently refused to accept proper advice and to provide proper instructions.
Ms Van Eckeren’s claim against the ATC was tried in the District Court in June 1992. Her action was dismissed. The medical negligence cases came to trial in the Supreme Court in August, September and October 1992, and all were dismissed, except for one action in which liability was admitted and damages of $6,100 were awarded.
Ms Van Eckeren’s Claim
Ms Van Eckeren claims that the LSC was not entitled to terminate the grant of legal assistance.
There appears to be a further claim (in para 41 of the statement of claim) to the effect that while legal assistance was on foot, the LSC misused its powers and interfered inappropriately in work being done by her solicitors, and failed to do what it should have done to advance her claims. That particular allegation appears to lead nowhere. It is convenient to record here that in any event the Judge, by her findings, rejected the factual basis upon which this part of the pleading rests. I say that it appears to lead nowhere because no particular consequence was established in evidence as flowing from the alleged interference or failure to act, even it had been made out. Hereafter I will deal only with the claim that the LSC was not entitled to terminate the grant of legal assistance.
The submission by Mr Scerri, who argued the appeal for Ms Van Eckeren, appeared to be that the LSC owed a statutory duty to Ms Van Eckeren, sounding in damages if breached, to continue to provide legal assistance after February 1992.
An apparent variant of the argument was that the LSC owed a common law duty of care to Ms Van Eckeren which required the LSC to continue to provide legal assistance. The precise nature of the duty remains unclear to me. It may be that the suggested duty is a duty to take reasonable care to act in her interest, that duty in the circumstances leading to the conclusion that her interests required that she continue to receive legal assistance.
However the claim was put, it was based on a particular approach to the facts. I will summarise that approach.
Mr Scerri submitted that the LSC became Ms Van Eckeren’s “primary legal advisor” as it was put. It became her legal advisor, or perhaps her solicitor, because in some respects it acted as if it were her solicitor. It endeavoured to retain counsel to provide an opinion, and in fact instructed counsel. During some of the time when the LSC was trying to locate counsel, Ms Van Eckeren did not have a solicitor acting for her. Mr Scerri also argued that the LSC took it upon itself to assist Ms Van Eckeren with her claims, knowing the difficulties they presented, and that in doing so it undertook the role of legal advisor.
As well, Mr Scerri identified a number of matters of a kind that might be relevant when considering whether a common law duty of care to avoid causing injury or financial loss arose. He made the point that Ms Van Eckeren was in a vulnerable position. Her claims were complex and numerous. She could not satisfactorily conduct the claims herself. The LSC knew that she suffered from paranoia, and that her condition made it difficult for her to deal with solicitors properly. The LSC knew that she was relying on it to assist her with her claims. Accordingly, the LSC knew that she needed legal representation and advice, knew that she was relying upon it to provide legal assistance and to find legal advisors, and knew that her interests would be prejudiced if she did not have legal representation.
Moreover, Mr Scerri argued, having granted legal assistance knowing the difficulties associated with the cases, the LSC was obliged to follow the matter through. I am not sure whether this was put forward as a separate argument, or was in substance a conclusion drawn from the factors just enumerated by me.
Mr Scerri submitted, as could hardly be denied, that it was foreseeable that if legal assistance was terminated Ms Van Eckeren would not be able to prosecute her claims competently, and the claims might fail.

Mr Scerri made the point, which is correct, that there is no express provision in the Act for the termination of a grant of legal assistance. Having regard to that, and relying separately on the duty arising from the facts, he submitted that the LSC was obliged to continue the grant of legal assistance and breached that duty by terminating legal assistance.
In the alternative, as I understand it, he argued that the Commission was wrong as a matter of fact, and acted unreasonably. He submitted that Ms Van Eckeren’s solicitors and counsel were the ones who were in error, and they did not act reasonably. Accordingly, it was unreasonable of the LSC to insist that Ms Van Eckeren follow their advice. The problem was that they would not act on Ms Van Eckeren’s reasonable instructions.
In short, the argument was that the Commission lacked the power to terminate the grant of legal assistance, or that in the circumstances of the case it was under a statutory duty to continue the grant of legal assistance, or that it owed a common law duty of care to Ms Van Eckeren which, in the particular circumstances, required that it continue to provide legal assistance in connection with the claims.
The Judge’s Findings
The Judge found that the LSC did not owe a common law duty of care to Ms Van Eckeren: at [175] and at [187]. She had in mind a duty to exercise reasonable care in deciding whether to grant or continue legal assistance: [173]. It may be that this is how the matter was put at trial. It is difficult to see how such a duty can advance Ms Van Eckeren’s cause, because as Mr Scerri recognised, the issue was not whether a careless decision was made, but whether the LSC was entitled to make the decision it made. The Judge said that to impose a common law duty of care would be to impose obligations inconsistent with the duties imposed by s 10 and s 11 of the Act, and would impose an excessive burden upon the LSC in the performance of its statutory functions: [175].
In any event, the Judge found that the LSC was not in breach of the suggested duty of care: [188].
The Judge found that the LSC did not owe a statutory duty to Ms Van Eckeren to continue with the grant of legal assistance: [216]. Whatever statutory duties the LSC owed to her, it had discharged. No breach of any statutory duty was made out.
The Judge rejected the claim that the LSC became Ms Van Eckeren’s “primary legal advisor”: [191] and [192]. The Judge made this finding as a matter of fact and law. It is convenient to deal with this point now, as it can be dealt with quite briefly.
It is clear, as the Judge found, that the LSC never undertook the task of advising Ms Van Eckeren in relation to the merits or in relation to the prosecution of her claims, and never undertook the preparation of her cases. Everything it did was consistent with it performing the statutory function of considering whether to grant or to continue legal assistance, as the case might be, so that solicitors or counsel authorised by the LSC might represent Ms Van Eckeren and advise her in connection with her claims. Even if it did things in her interests that only a legal practitioner could lawfully do, that could not give rise to a duty in law to continue to assist Ms Van Eckeren or to act for her. There is nothing at all in this point.
The Judge found that Mr Pearce and Mr Fairclough acted competently and properly in connection with the claims: [210]. By implication she rejected any criticisms that Ms Van Eckeren might have been making of Mr Holland and of his advice. The effect of the Judge’s findings was that Ms Van Eckeren had, over a period of time, acted unreasonably, and had made unreasonable demands of her legal advisors and of the LSC itself: [207].
As to this, I observe that although in the course of his submissions Mr Scerri argued that Ms Van Eckeren had not refused to accept proper advice and had not failed to provide appropriate instructions, no basis for rejecting the Judge’s findings was made out. As to Mr Fairclough, there is really nothing at all to support an argument that his advice was not proper advice, and that the difficulties that he reported to the LSC were a result of anything other than Ms Van Eckeren acting unreasonably. In relation to the medical negligence claims, the material before the Judge supported the finding that Ms Van Eckeren, in a number of respects, had not been prepared to accept proper advice, and was not prepared to provide proper or sensible instructions. It had become clear that it would not be possible to find a solicitor or counsel whose advice Ms Van Eckeren would accept, and to whom she would give appropriate instructions. In relation to the medical negligence claims, that, as I understand the facts, was really the basis of the Director’s decision. His decision was based not so much upon Ms Van Eckeren rejecting a specific piece of advice, as upon a more general conclusion of the kind outlined by me above. As the Judge said, when commenting on the complaint of delay by Mr Holland, such delay as there was resulted from “the intransigent and unreasonable behaviour of the plaintiff”: [213].
The effect of the Judge’s finding was that at all times the staff of the LSC acted properly, and did all they reasonably could to help Ms Van Eckeren.
There are two particular findings made by the Judge which warrant repetition. At [207] she said:
Whatever the motivations for the plaintiff’s behaviour, and it seems clear enough from the medical reports which are contained within the exhibits that this behaviour is a direct consequence of the personality disorder from which she suffers, the effect was such that no solicitor assigned to her could properly prepare the case nor was there any hope of any of the matters being settled while she refused to accept Mr Holland’s advice.
A little later, referring to complaints about Ms Harper (one of the staff of the LSC), the Judge said at [215]:
The plaintiff’s characterisation of Mrs Harper’s letters to her as constituting threats and victimisation is also unfounded. I accept, unreservedly, Mrs Harper’s explanation for those letters, and I find that the first defendant, in forwarding the letters to the plaintiff, at that time was doing no more than its duty to ensure that only meritorious actions proceeded and that scarce public funds were not misused or wasted.
The Judge found that the termination of legal assistance was “both justified and reasonable”: [208].
Disposition of Appeal
The Judge was right to dismiss the action.
The action cannot succeed unless it can be said that, in the circumstances, the LSC was not at liberty to terminate the grant of legal assistance.
The Director and the LSC had power under the Act to terminate the grant of legal assistance, even though the Act does not expressly confer power to do so.
The failure to make provision for the termination of a grant of legal assistance is, in a sense, odd. But the power to do so it implicit in the power to grant legal assistance. The nature of legal assistance under the Act is such that Parliament could not have intended that, once granted, legal assistance could not be terminated. If legal assistance cannot be terminated, a grant of legal assistance becomes a blank cheque. It would be necessary for the LSC to continue to provide legal assistance without regard to all kinds of circumstances that might arise after a grant of legal assistance is made, and that would, as a matter of ordinary prudence and commonsense, require consideration of the appropriateness of the continued provision of legal assistance.
The power of the Director under s 17(5) of the Act to impose conditions on the continuance of legal assistance at any time, and to vary those conditions, is a further indication that a grant of legal assistance was not intended to bind the LSC to continue to provide legal assistance.
As well, by s 10(1)(c) as set out above, the Commission must determine the criteria under which legal assistance is to be granted. The LSC has adopted criteria, and they appear in Exhibit D1C. They include a merits test. Aid will not be granted if there are no reasonable prospects of success. They include an “ordinarily prudent self-funding litigant test” that requires consideration of prospects of success, the amount of the likely recovery, and the costs that are involved. These are matters that will need to be considered from time to time during the course of a piece of civil litigation. While the criteria are expressed as applying to the decision whether or not to grant legal assistance, they must be treated as applying also to the question of whether it is appropriate to continue with the grant of legal assistance. These criteria themselves would require consideration, from time to time, of the question of whether legal assistance should be continued.
Moreover, in the present case, each grant of legal assistance, and the assignment of the legal representatives, was subject to an express condition that Ms Van Eckeren must follow reasonable advice. The imposition of that condition carries with it, as a matter of necessary implication, a power to terminate a grant of legal assistance if the condition is not met. The Judge found that it was not met.
Accordingly, the Director and the Commission had power to terminate the grant of legal assistance.
Was the power exercised properly? While posing that question, I emphasise that it is not the function of the Court to review the correctness of the decision of the Director and of the LSC as if it were hearing an appeal. The Court has no power to do that. An erroneous or misconceived decision to terminate legal assistance will be significant only if, as well, there is a legal duty of some kind to continue legal assistance, absent a proper or valid reason to terminate legal assistance.
The Judge found that Ms Van Eckeren had failed to accept proper advice. The Judge also found that Ms Van Eckeren had failed to provide appropriate instructions, or reasonable instructions, and had herself behaved unreasonably in her dealings with her legal advisors. There is no doubt that this was a factor in the decision by the Director and by the LSC. In my view, the circumstances attracted an aspect of the “ordinarily prudent self-funding litigant test”. It was not proper to continue with the grant of legal assistance if the litigation was to be conducted in a manner in which no ordinarily prudent person would do so. And that, in effect, is what Ms Van Eckeren wished to do. She was not prepared to accept sensible advice as to the likely outcome of her claims, and she was not prepared to have the cases prepared and conducted in the manner in which an ordinarily prudent person would do so.
There is no basis to doubt the correctness of the Judge’s findings on this matter. Indeed, in part the submission was that Ms Van Eckeren’s paranoid personality disorder was the explanation for her unreasonable behaviour, and was the reason why she needed legal assistance and why legal assistance should be continued. One can sympathise with Ms Van Eckeren, recognising that because of her condition she will not deal reasonably or sensibly with her legal advisors. But the facts, and the Judge’s findings, are to the effect that the LSC made considerable efforts to assist her. In any event, the LSC is not obliged to continue legal assistance because the assisted person finds it difficult, for personality or health reasons, to comply with the conditions of the grant. At a certain point, the prudent use of public funds may require the LSC to refuse to continue with the grant of legal assistance.
In short, the Director and the LSC were, on the facts, entitled to make the decision that they made. It cannot be said that in the circumstances the Director and the LSC were obliged to continue the grant of legal assistance. So the first essential step, an erroneous or misconceived exercise of the power to terminate legal assistance is not made out.
It cannot be said that the decision was made in a manner that involved a failure to exercise appropriate care, if there was any such duty of care.
Nor can it be said that the LSC owed to Ms Van Eckeren a duty of care that, in the circumstances, required it to continue to provide legal assistance. To impose a duty of care with that effect would be to impose a duty that would operate inconsistently with the provisions of the Act. I say this because a conclusion in favour of Ms Van Eckeren on this point would necessarily rest on a conclusion that because she might or would suffer injury or loss if the grant of legal assistance were terminated, the LSC came under an obligation to continue with the grant of legal assistance even though, exercising its powers under the Act, it would be entitled to terminate that grant as a matter of law, and in the particular circumstances of the case.
A further difficulty confronts Ms Van Eckeren. The grants of legal assistance that were made were, in effect, to enable the merits of the claims to be investigated. It remained for the LSC to decide whether or not it would grant legal assistance for the purpose of the various trials. It was under no obligation to do so. Its decision to grant legal assistance for the purpose of any particular trial depended, among other things, upon the prospects of success, the likely recovery, and the costs involved. In deciding whether to grant legal assistance for the purpose of a trial, the “ordinarily prudent self-funding litigant test” would come into play. To a considerable extent the case of Ms Van Eckeren is premised on an assumption that legal assistance either had been granted for the purpose of the trial of each action (and it had not), or on the assumption that it would be granted, and that assumption is not made out.
There was no statutory or common law duty, as a matter of law or in the circumstances, to continue to provide legal assistance. Assuming that the Director and the LSC had power to terminate the grant of legal assistance, the Judge’s findings of fact lead to the conclusion that the claim fails on the facts.
Moreover, there is nothing in the Act to indicate that it confers on an assisted person a cause of action sounding in damages in the event of a grant of legal assistance being terminated wrongfully.
It is not necessary to explore the relevant legal principles in any detail. On occasions a court has determined that a statute should be read as providing by implication, although not expressly, that it imposes a duty to act in a particular manner, to protect a particular class of persons, and that the failure to act in the manner required gives rise to a liability in damages for loss that results: see, for example, O’Connor v S P Bray Ltd (1937) 56 CLR 464 at 478, Dixon J. The issue is one of statutory interpretation: see Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 424-425 Brennan CJ, Dawson and Toohey JJ, at 458-461 McHugh and Gummow JJ.
There is no indication in the Act that Parliament intended, by the Act, to confer a remedy in damages on an assisted person if a grant of legal assistance is terminated under circumstances such that the decision to terminate was wrong, being based on a misapprehension as to the facts or circumstances.
I accept that a person to whom legal assistance is being granted is placed in a particular and close relationship with the LSC, and might suffer loss or harm if legal assistance is terminated. But the power to terminate involves the exercise of a judgment depending upon consideration of a range of matters, some of which (for example, the merits test and the prudent litigant test) are imprecise. The judgment to be made is not subject to an overriding requirement that the decision will be one that addresses only the interests of the person wanting legal assistance. The decision will usually be made on the basis of information provided by the legally assisted person, and legal representatives, and it may not be easy for the Director or for the LSC to verify all of that information. Exposing the LSC to an action in damages, in the course of which a court would review a decision to terminate a grant of legal assistance, is likely to give rise to substantial complications and burdens for the LSC in the discharge of its statutory functions. As well, Parliament has provided a limited remedy by conferring a right of appeal from the Director to the LSC. Another factor to bear in mind is that a grant of legal assistance is a kind of social welfare, provided by Parliament because of the importance that members of the community not be prevented by lack of resources from exercising their legal rights. It is rare, as far as I am aware, for a court to find in the statute that establishes such a scheme, an implied intention to create a right of damages if the benefit is withheld on erroneous grounds. Another matter to consider is that a cause of action of the kind under consideration will always give rise to considerable difficulties in the area of causation and proof of loss. Determination of a grant of legal assistance is not necessarily the end of the road for the assisted person. Frequently arrangements can be made to secure legal representation for otherwise impecunious claimants. Deciding the consequences of the termination of legal assistance, in terms of the ultimate outcome of the litigation in question, is a difficult task.
The matters to which I refer are all matters that suggest that Parliament would not have intended to impose a duty of the kind suggested by Ms Scerri. I conclude that there is no statutory entitlement to damages, even if it were to be proved that legal assistance was terminated erroneously.
I have already explained why a common law duty of care cannot assist Ms Van Eckeren’s case, even if one exists. The case is not one about a lack of due care, but about the correctness, in the particular circumstances, of the decision made.
In any event, I agree with the Judge that this is not a case in which a court should impose a duty of care, giving rise to an entitlement to damages, in the making by the Director or the LSC of a decision to terminate a grant of legal assistance. The approach to be taken into a case of this kind can be found in the reason of the High Court in Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562. I deal with this issue briefly, because the case fails on the facts in any event.
In deciding whether to terminate a grant of legal assistance, the Director and the LSC exercise their powers in the public interest, even though the power is exercised in relation to a particular individual, and for the benefit of that individual. The Commission must have to have regard to the public interest and the interests of justice: s 10(2)(a). The matters for consideration are not restricted to the interests of the assisted person. Quite apart from its own criteria, and the matters raised by conditions attached to the grant of aid, the Director and the LSC may have to consider matters such as the availability of funds, broad issues of the public interest, and prospects of the assisted person getting representation in other ways. Moreover, in deciding whether to continue with the grant of legal assistance, the LSC is obliged to consider carefully, and indeed to scrutinise, information provided by the assisted person and by that person’s legal advisors. The LSC might take the view that the assisted person has not made full disclosure of that person’s assets and means, or of the facts relevant to the person’s claim. The LSC might take the view that the legal advisors or the assisted person are wrong, or unduly optimistic. Far from being obliged to act solely with a view to the interests of the assisted person, the decision whether to grant or continue legal assistance is made by reference to the public interest as well, and in that respect the LSC must exercise a judgment which takes into account, but is by no means determined by, the interests of the assisted person.

To impose a common law duty of care to the assisted person, the effect of which would be to require the LSC to take reasonable care to avoid causing loss or harm to the assisted person, would be to put the LSC in a difficult position. The result of such a duty would appear to be to put a substantial weighting on matters favourable to the assisted person, as distinct from matters which otherwise might cause the LSC to refuse legal assistance or terminate a grant of legal assistance. The process of assembling and considering the relevant information would be distorted.
I am satisfied that the suggested duty of care, imprecise as it is, should be rejected.
If all of these hurdles were overcome, it would still be necessary for Ms Van Eckeren to prove that she suffered loss.
She claims that a consequence of the termination of legal assistance was that she had to conduct her own case, and that this has injured her health: para 43(a) of the statement of claim.
The Judge found that there was no evidence to support this allegation: [218]. A psychologist called by the plaintiff expressed the opinion that Ms Van Eckeren’s subsequent attempts to get assistance, and all that ensued, would have “exacerbated her depression”. She said that if Ms Van Eckeren had been able “to resolve her legal issues much sooner, possibly her outlook may have improved”: see Exhibit P10. I agree with the Judge that that is an insufficient basis upon which damages could be assessed by reference to an adverse effect on Ms Van Eckeren’s health.
To succeed in her claim for financial loss Ms Van Eckeren had to establish that, had legal assistance not been terminated, her claims would have been successful, and damages would have been recovered. Although the Judge alluded to this point, she does not appear to have made a specific finding in relation to it: [217]. There appears to have been no evidence before the Judge that would support a conclusion that, had legal assistance not been terminated, the claims would have succeeded. The fact that Ms Van Eckeren’s counsel and solicitors had expressed the opinion that some of her claims had merit, is not, of itself, sufficient. However, if this were the only obstacle to Ms Van Eckeren’s claim succeeding, I would want to hear more detailed submissions on this particular point. But it is unnecessary to do so.
For all those reasons, the appeal against the dismissal of the damages claim must be dismissed.
The Defamation Action
The appeal against the dismissal of the claim for defamation also fails.
The issue can be dealt with briefly.
Ms Van Eckeren claimed that the second defendant had defamed her by referring to her as being “mad”. The only evidence on the point was that on an occasion in 1994 Ms Van Eckeren and another person went to the home of a mutual acquaintance, and while there that mutual acquaintance told them that yet another person had said that she had been told by the second defendant that she considered Ms Van Eckeren to be “mad”, or in the words of the witness called at trial, “a bit mentally mad”. In other words, the evidence was that an acquaintance of the plaintiff said that another person had told her that the second defendant had made the statement in question. This was the only evidence tendered to prove the making of the allegedly defamatory statement. As the Judge said at [159], the evidence was hearsay, and there was no admissible evidence to prove the making of the defamatory statement. The Judge rightly dismissed this claim.
Conclusion
The appeal should be dismissed.
SULAN J: I agree with the Chief Justice. Each appeal should be dismissed.
VANSTONE J: I agree that the appeal should be dismissed and with the reasons given by the Chief Justice.