56 th UIA CONGRESS Dresden / Germany October 31 November 4, 2012 TORT LAW COMMISSION Date of the session: Thursday, 1 November 2012 9.00am-12.30pm and 2.00pm-5.30pm in Seminar Room 1 AUSTRALIAN LAW ON LIABILITY IN PROFESSIONAL NEGLIGENCE - RECENT CASES AGAINST ARCHITECTS, DOCTORS AND LAWYERS UIA 2012 Jim Robinson Best Hooper Solicitors 563 Little Lonsdale Street, Melbourne, Victoria Tel: +61 3 9670 8951 Fax: +61 3 9670 2954 jrobinson@besthooper.com.au
AUSTRALIAN LAW ON LIABILITY IN PROFESSIONAL NEGLIGENCE - RECENT CASES AGAINST ARCHITECTS, DOCTORS AND LAWYERS By Jim Robinson 1. I covered the then current law in a paper written for the Istanbul Congress in 2010 for the Health Law and Tort Commissions. General background - The Ipp "reforms" 2. Following a crisis in the Australian insurance market just over 10 years ago, Ipp J (originally from the Supreme Court of Western Australia, subsequently from the New South Wales Court of Appeal) and two others were commissioned to enquire into liability insurance, and make recommendations. The result was the adoption of legislation throughout Australia which reduced the amounts that plaintiffs could claim personal injuries, and broadened the defences available to defendants. 3. For present purposes, I will mention:- General principles of negligence, as defined in section 48 Wrongs Act 1958 of Victoria, and its equivalent, section 5B Civil Liability Act 2002 of New South Wales. http://www.austlii.edu.au/au/legis/nsw/consol_act/cla2002161/s5b.html General principles of causation, as defined in section 51 Wrongs Act and section 5D Civil Liability Act. http://www.austlii.edu.au/au/legis/nsw/consol_act/cla2002161/s5d.html The standard of care for professionals, as defined in section 59 Wrongs Act and section 5O Civil Liability Act. http://www.austlii.edu.au/au/legis/nsw/consol_act/cla2002161/s5o.html 4. I mentioned in my earlier paper that, in the last decade of the twentieth century, the High Court of Australia had moved away from the Bolam doctrine (established by an English Court in 1957), that a professional would not be found negligent if he (they
were mainly "he's" then) had followed the usual professional practice of his peers. Section 59/5O largely reinstate Bolam:- "(1) A person practising a profession ("a professional") does not incur a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that (at the time the service was provided) was widely accepted in Australia by peer professional opinion as competent professional practice. (2) However, peer professional opinion cannot be relied on for the purposes of this section if the court considers that the opinion is irrational. (3) The fact that there are differing peer professional opinions widely accepted in Australia concerning a matter does not prevent any one or more (or all) of those opinions being relied on for the purposes of this section. (4) Peer professional opinion does not have to be universally accepted to be considered widely accepted." 5. The only concession to plaintiffs is in subsection (2). Architects - The Glass Stair Case (or the Glass Staircase Case) 6. In Indigo Mist v Palmer [2012] NSWCA 239 (handed down on 9 August 2012) http://www.austlii.edu.au/au/cases/nsw/nswca/2012/239.html, the New South Wales Court of Appeal considered the following facts. 7. The Oxford Hotel in Darlinghurst (an inner Sydney suburb) had been refurbished in 2006. The architects (PKD) designed a set of stairs linking two upper floors with glass blocks, which were lit from below. The two upper floors had a bar on each level. The toilets for both bars were on the top floor. 8. In 2008, the plaintiff fell after slipping on some liquid on the glass stairs, and suffered injury as a result. She commenced proceedings against:-
the owner of the hotel site; the manager and licensee ("occupiers") of the hotel; and the architect. 9. After trial in March 2011, the primary Judge awarded her $113,321.90 damages. The owner was absolved from any liability because it had delegated its duties of care to the occupiers and PKD. The Judge ruled that there had been no contributory negligence by the plaintiff, and apportioned liability equally between the occupiers on one hand, and the architect on the other. All these defendants appealed. The architect's liability 10. It was agreed that PKD had responsibility for the design and implementation of the refurbishment. It had not supplied or installed the stairs, but had recommended the use of glass blocks, lit from underneath. 11. At trial, the head architect had given evidence that she had presumed that no one would carry drinks between different levels of the hotel. Her evidence suggested that she had not turned her mind to safety considerations when she recommended glass blocks for the stairs. The trial Judge inferred that the look of the stairs was foremost in her mind, rather than safety aspects, and that she gave only cursory consideration to third parties who would be using the stairs. 12. The Judge went on to say that if the architect had considered the potential hazard created by the stairs, she would have realised that the glass blocks had a very low slip resistance when wet, and would therefore not an appropriate product to be used in stairs passing between two bars where alcohol was going to be consumed. 13. The Court of Appeal agreed that the architect should have taken these matters into account. Had PKD not recommended the use of stairs which became slippery when wet, the plaintiff would not have fallen. The lighting under the stairs was also negligent in design, which had contributed to the plaintiff's injuries. (The Court had also ruled that the occupiers should have had a system to discourage people carrying liquids on the stairs, and to mop up any liquid that nonetheless spilled there.)
14. PKD had pleaded section 5O, saying that the design was consistent with good architectural practice. However, the plaintiff had called two experts at trial, who had given evidence that to recommend glass stairs in such a location was not good practice. PKD had called no evidence on this point at trial, so the Judge and the Court of Appeal had no difficulty rejecting this aspect of the defence. Doctors - no damages for "loss of chance" 15. In Tabet v Gett [2010] 240 CLR 537; [2010] HCA 12 http://www.austlii.edu.au/au/cases/cth/hca/2010/12.html, a six year old child was admitted to hospital on 11 January 1991. She had recently had chicken pox, which was the ostensible reason she was brought in; but in fact an undiagnosed brain tumour had been growing in her head for about two years. On 14 January 1991, after she had a seizure, a CT scan and EEG were performed, and the brain tumour was discovered. 16. The only issue on which the plaintiff succeeded at trial was her allegation that the CT scan should have been performed on 11 or 13 January, before she had the seizure. According to the trial Judge, a CT scan, even the day before, would probably have avoided the seizure, and the irreversible brain damage she subsequently suffered. If the tumour had been treated immediately on 13 January, with steroids rather than by a drainage, that would have reduced intracranial pressure, and given her the chance of a better outcome. 17. The trial Judge assessed the quantum of the plaintiff's damages, referable to her entire brain damage, at about AUD$6.1M. He ruled that her decline after the seizure contributed no more than 25% to her ultimate disability, giving a figure of $1,523,146. He assessed her loss of chance of a better outcome, i.e. avoiding the damage referable to the deterioration on 14 January (the 25%), at 40%. The damages to which she was entitled for this 40% loss of chance was thus $610,000. Authorities 18. The trial Judge had relied on two Australian Court of Appeal authorities: but the High Court said he had misdirected himself as to their effect. The House of Lords had (by a 3-2 majority) rejected a "loss of chance" damages claim in 2005. The House of Lords
majority, and the High Court in Tabet, did not like the idea of awarding damages on the chance of an outcome that was as yet unknown, rather than after an outcome had occurred. Nor did they like "guessing" at the percentage applicable to the lost chance. 19. A 2008 decision of the Supreme Judicial Court of Massachusetts had ruled in favour of a "loss of chance" claim; but in that case, a cancer which had not been diagnosed as early as it should have been, had in fact caused the patient's death before trial, and the claim was by the deceased's executor. 20. In my view, though the Judges did not say so, Tabet was not a suitable vehicle for the purposes of analysing liability for a "lost chance", because of:- the trial Judge's finding that the earliest the doctor might reasonably have ordered a CT scan was 13 January, the day before the seizure; the finding that the seizure on 14 January had contributed only 25% to the plaintiff's overall brain damage; the paucity of evidence about the "size" of the lost chance - the trial Judge said the chance of a better outcome was 40%; the Court of Appeal said, if they were wrong in rejecting the "lost chance" doctrine entirely, then they could not put the chance at more than 15%. As one of the High Court Judges said, that is a substantial difference. 21. A commentator at the time noted that more than half the US States allow "loss of chance" damages in medical negligence claims, even though Texas had recently (in 2010) rejected it. He suggested that the Court's opposition to the doctrine might be because it could so easily be applied to legal negligence claims. Lawyers - Advocacy immunity retained 22. Under Australian law, lawyers are immune from liability for negligence occurring during their appearance in Court as advocates, or during preparation for, and closely connected with, such an appearance. The reasons for this immunity are based on public policy. Our Courts see it as contrary to public policy to argue that a final decision reached by a Court at trial would have been different if Counsel had
conducted the case differently. It is said that, unless there is such an immunity, Counsel will prolong trials and chase all sorts of possibly irrelevant issues, in order to minimise or avoid the possibility of a claim in negligence. 23. Before I examine the Australian cases, I point out that this doctrine of immunity does not apply, or no longer applies, in England and Wales, New Zealand, Canada, and the USA. I believe it is still retained in Scotland however. Gianarelli 24. In Gianarelli v Wraith (1988) 165 CLR 543; [1988] HCA 52, http://www.austlii.edu.au/au/cases/cth/hca/1988/52.html, there had been a Royal Commission into the conduct of a wharf-workers union. The Commissioner had uncovered evidence of money laundering, tax evasion and murder on the docks. The Gianarellis were charged with perjury offences, based on evidence they had given to the Commission. They were convicted at trial, and lost their appeal. They then changed lawyers. The new lawyers successfully argued that, under the legislation under which the Royal Commission had been established, evidence given before it (which involved penalties for refusing to answer) could not be used as evidence in criminal proceedings. The High Court therefore granted leave to appeal, allowed the appeal, and quashed the convictions. 25. The Gianarellis then sued their original lawyers in negligence. The doctrine of advocates' immunity was raised as a preliminary question. The primary Judge ruled that the immunity did not apply because of a Victorian statute enacted in 1891, and subsequently continued. The Court of Appeal ruled the other way, and the High Court, by a 4-3 majority, upheld advocates' immunity, and dismissed the appeal. 26. I recall having lunch with a senior insurance executive not long after the Gianarelli decision had been handed down. His view was that the decision had been so close, and the trend in overseas jurisdictions to refuse or reverse advocates' immunity had been so strong that, after a few retirements from the High Court from the majority camp, and in the replacement with new Judges, someone would "have another go" in the next ten years, and Australia would join the trend against such immunity.
27. However, the next case did not arrive in the High Court until 2005. D'Orta-Ekenaike 28. In D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR; (2005) HCA 12 http://www.austlii.edu.au/au/cases/cth/hca/2005/12.html, the plaintiff had been charged with rape. Being indigent, he approached VLA for representation, and they engaged a barrister for the committal (equivalent to US grand jury hearing) and the trial. The advice from the VLA solicitor and the barrister was that the accused had a poor defence. He should plead guilty at the committal and retain that plea at trial. If he did so, he would receive a suspended sentence; but if he pleaded not guilty, he would receive a custodial sentence. 29. The accused pleaded guilty at committal, but then changed his mind and pleaded not guilty at trial. At the trial, evidence was admitted that he had pleaded guilty at committal, and the fact was mentioned by the Judge in summing up to the jury. The accused was convicted, and sentenced to three years imprisonment. 30. The accused successfully appealed against his conviction. The Court of Appeal ruled that, although evidence of the guilty plea at committal had been properly admitted into evidence, the trial Judge had failed to give adequate directions to the jury as to how they should treat that evidence. The conviction was quashed, and a re-trial ordered. 31. At the re-trial, evidence of the accused's guilty plea was not admitted, and he was acquitted. He then sued his legal advisors. They moved the Court to dismiss the claim summarily, based on their advocates' immunity, as upheld by the High Court in Gianarelli. The primary Judge agreed, as did the Court of Appeal. Only the High Court can overrule one of its own earlier decisions. 32. The High Court declined to do so. By 2005, all the members of the 1988 Court had retired; but the new team were much more in emphatic in their support of the immunity. The majority this time was 6-1.
Goddard Elliott 33. Against this background, the issue was raised again in Goddard Elliott v Fritsch [2012] VSC 87 (judgment handed down in March 2012) http://www.austlii.edu.au/au/cases/vic/vsc/2012/87.html. 34. Goddard Elliott were a firm of lawyers suing for their fees for acting for Mr Fritsch in a dispute with his wife over property. The client counterclaimed that they (and the barristers and accountant involved) had been negligent, they had not acted in his best interests, and they had exerted improper pressure on him to sign a settlement with his wife, before the trial, which was grossly unfair to him. He had major depression and a post-traumatic stress disorder (he was a Vietnam veteran), and was therefore incapable of acting in his own best interests or of properly instructing his lawyers, and they should have known that. In the settlement that they got him to sign, he had paid his wife over $1.5M too much, and that was the measure of his damages. 35. The barristers and accountants had their professional indemnity insurance with companies different from the solicitors. These insurers cravenly settled with the plaintiff's solicitors just before the trial commenced. $90,000 was paid to the plaintiff (for costs only, not damages) on behalf of each barrister (total $180,000), and a further $60,000 (again only for costs) on behalf of the accountant (grand total $240,000). 36. The trial Judge found Goddard Elliott negligent in: failing to have certain expert evidence ready for the Family Court trial; failing to prepare affidavits answering some of the wife's allegations on legal costs; failing to prepare affidavits on the amount the plaintiff had spent on maintaining matrimonial assets; and acting on the plaintiff's instructions to settle the case, when they should have realised that he lacked capacity.
37. (I might add that, in the gossip that inevitably washes around legal circles in almost any city, even Melbourne, the last finding was strenuously disputed by the lawyers against whom it was made.) 38. After lengthy analysis, the trial Judge reluctantly concluded that he was bound by the doctrine of advocates' immunity, and that it applied in this case. Even though there had been a negotiated settlement, it had resulted in Court orders, and a declaration that the settlement was just and equitable; and the finality of those orders would be collaterally attacked if he permitted the claim against the solicitors to stand. 39. The Judge nonetheless went on to analyse Goddard Elliott's liability, if he were wrong in allowing the defence of advocates' immunity. He assessed the client's damages at $900,000. He assessed that Godard Elliott bore a 75% responsibility for those damages, and the barristers a 25% responsibility jointly. 40. His Honour concluded that he must dismiss the client's claim against his lawyers, and order him to pay their outstanding costs of the Family Court proceeding, as well as their costs of the trial before him. He said that this "[was] a conclusion to which I am driven by the binding authorities and find deeply troubling". 41. His Honour seemed to hope that the client would appeal his decision, and the current High Court would subsequently reverse advocates' immunity; but shortly after the decision was handed down, I ran into the lawyer who had run the case for the solicitors' insurers. He told me that, after discussions, the client and his representatives had agreed that there would be no appeal. As you might imagine, the insurer, and their London based re-insurers, were very pleased with the outcome.