Insurance Litigation – Professional Indemnity & Liability: News and Commentaries: Edition 3

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Written Record Prepared by Solicitor Did Not Alter Parties’ Enforceable Equitable Interests

(Click here to view the case)

Page Seager Lawyers has successfully defended a claim alleging solicitor negligence brought by William and Barbara Jones in the Federal Court of Australia directly against AAI Limited & CGU Insurance, underwriters for the Law Society of Tasmania master policy scheme for Tasmanian solicitors. On Tuesday, 25 October 2016, the Federal Court of Australia handed down its decision in Jones v AAI Limited trading as Vero Insurance [2016] FCA 1244, dismissing Mr & Mrs Jones’ claim with costs.


Mr & Mrs Jones claimed that Peter Thiessen (solicitor) acted negligently in connection with a family arrangement involving them and their son and daughter-in-law, Paul and Catherine Jones. The claim was brought directly against underwriters pursuant to section 51 of the Insurance Contracts Act 1984 (Cth) as Mr Thiessen had passed away prior to proceedings being commenced.

Mr & Mrs Jones lived on a property just outside Hobart in Kellevie, Tasmania (Property). In 2011 and 2012, Mr Jones became quite ill after undergoing heart surgery and developing cancer. During 2012, Mrs Jones and Paul had discussed and agreed upon a family arrangement in which:

  • Paul and Catherine would sell their home in Victoria and move (with their three children) to Tasmania to live with Mr & Mrs Jones.
  • They would help Mrs Jones look after Mr Jones and the Property.
  • They would pay to Mr & Mrs Jones what they got from the sale of their house in Victoria, estimated to be about $300,000.
  • That money would be used to pay off the Property’s mortgage and to build a smaller house on the Property for Mr and Mrs Jones to live in.
  • Paul and Catherine and the children would live in the larger existing home.
  • Mr & Mrs Jones would leave the Property to Paul and Catherine in their wills.
  • The Property’s rates, electricity and any land taxes would be shared 50:50.

By December 2012, the family arrangement had been agreed and acted upon. Paul and Catherine moved down to Tasmania and paid the $300,000 to Mr & Mrs Jones.

In January 2013, Mr & Mrs Jones and Paul and Catherine went to see Mr Thiessen. The purpose for seeing Mr Thiessen was, on Mr Jones’ evidence, to have their wills done to leave the property to Paul and Catherine and secondly, to have an acknowledgement in writing to show Paul and Catherine that nothing was being hidden and to be able to show their daughter, Tanya (Paul’s sister), why they were leaving the property to Paul and Catherine and not to her. Thiessen prepared an indenture (deed) which evidenced those instructions. It was executed by the parties in February 2013.

In 2013, Mr & Mrs Jones moved in to the smaller house and Paul and Catherine (with their children) remained in the larger existing house. Throughout 2014 and 2015, the relationship between Mr & Mrs Jones and their son and daughter-in-law broke down, with police having to be called to the Property on occasions. In April 2015, Paul and Catherine put a caveat on the Property. By November 2015, Mr & Mrs Jones felt they were left with no other option but to move from the Property to Queensland.

The Court’s Decision

At the outset, it is worth saying that Allsop CJ went through the evidence given by both Mr Jones & Mrs Jones in detail. Allsop CJ favoured Mr Jones’ evidence and did not accept much of the evidence given by Mrs Jones with respect to the nature of the family arrangement and what had been agreed prior to the meeting in January 2013 with Thiessen.

In his decision Allsop CJ, considered that looking at the retainer (as limited to what was outlined in Mr Jones’ evidence) there is no aspect of the work of Mr Thiessen that was contrary to his instruction. Therefore, negligence on the pleaded retainer was not made out.

However, an essential aspect to Mr & Mrs Jones’ case was made in oral address by their Counsel. Counsel for the Joneses submitted that the drafting of the indenture in the form that it took had the effect of making their position worse than it would have been if no documentation had been prepared or alternatively, if Thiessen had prepared a simple letter of acknowledgement which evidenced what had happened. By analysing the evidence of Mr & Mrs Jones’ position immediately prior to seeing Mr Thiessen, the Court found that by what the parties had said and done there was plainly an enforceable arrangement in equity. Even prior to seeing Mr Thiessen, Mr & Mrs Jones would be estopped from asserting that they owned the property without there being any interest in Paul and Catherine’s favour.

Allsop CJ did not consider that the position of Mr & Mrs Jones had been made any worse by the work of Mr Thiessen. The Court rejected Counsel for the Joneses’ submission that in accordance with the decision in Equuscorp Pty Ltd v Glengallan Investments [2004] 218 CLR 47, the Joneses were forever bound with the consequential obligation in the indenture never to dispose of the property. The difference in this matter was that the indenture was not and was never intended to be the whole agreement. Therefore, the Court’s view was that it was never a question of setting aside the obligation in the indenture. It is a question of assessing the effect of that obligation in the totality of the family arrangement that had broken down. Allsop CJ in his reasons considered that:

“the arrangement was one in which each held his or her rights in equity on the assumption of the possibility of the performance of the whole arrangement which included, as an obvious and central factor, the parties being able to live on the property. Failing that assumption the court would impose a constructive trust over the land in a division that fairly and equitably reflected the parties’ contributions just as it would have done so prior to the signing of the indenture.”

Therefore, the Joneses were not disadvantaged by the drafting and execution of the indenture. They can seek to have the Court dispose of the property held in trust by them, given the impossibility of the performance of the arrangements binding in equity. This option remains open to them.

Weight of favourable expert evidence means finding in favour of medical practitioner

(Click here to view the case)

In late 2008, Damir Redzepovic (applicant) noticed swelling on the left side of his face and neck extending along the jaw line to a point near the left ear. In February 2009, the applicant was referred to the Western Hospital in Footscray where he was examined by Mr Sorwat Chan, an ENT surgeon. Mr Chan’s diagnosis was “FNA neck: features suggest abscess”, supported by a radiologist report which found “rim enhancing cyst arising from the left parotid gland.”

On 12 March 2009, Mr Chan recommended that the applicant undergo a left parotidectomy, which the applicant agreed to. The applicant signed a consent form which (among other things) notes the risk and complications that had been discussed by Mr Chan including: risks of injury to the facial nerve, risk of injury to the great auricular nerve, recurrence of the lump, the need for pathology to be performed in order to advise as to future treatment and Frey’s syndrome (sweating while eating).

On 1 April, Mr Charles Hall, an ENT surgeon performed the operation. The lesion was completely removed and the facial nerve was intact. Post-surgery, tests indicated it was a Warthin’s tumour (benign tumour) dominated by a central large cystic space filled with necrotic debris. There was no evidence of malignancy.

Following the operation, the applicant suffered from significant pain and adverse effects. The applicant claimed that Mr Chan and Mr Hall were negligent in their treatment by conducting the left parotidectomy when there was no urgent medical need and failing to advise him of the risks.

At trial, the applicant was self-represented. The trial judge dismissed the applicant’s claim. The judge concluded that first, the applicant was provided with advice about the relevant risks of the surgery. Second, the overwhelming medical opinion in the case was that the lump detected needed to be surgically excised. Finally, there was no evidence to suggest the symptoms complained of were a foreseeable risk or that there was a causal link with the surgery.

Court’s Decision

The applicant sought leave to appeal to the Victorian Court of Appeal, on the basis of whether the judge erred:

  • In finding that the parotidectomy was reasonable and appropriate;
  • In failing to provide to the applicant the appropriate assistance required to be provided to a self-represented litigate; and
  • Whether the judge’s questioning of expert witnesses made the trial unfair to the applicant.

With respect to the first issue, it is well established that in order for a medical practitioner to discharge their duty to the patient, they are required to warn of any material risk that is inherent in the proposed treatment. Whilst it is for the Court (and not medical evidence) to determine whether reasonable care and skill has been exercised, in the area of diagnosis and treatment the Court placed weight on the evidence of medical practitioners who are experienced in the field that is practised by Mr Hall and Mr Chen.

Aside from the one (and only) expert called by the applicant, whose evidence was that he would have adopted a wait and see approach, the Court found that all of the other witnesses’ evidence was supportive and based upon the facts established by the evidence. In particular, each of them stated that in the case of parotid lump, and in particular in the case of a lump in a young patient who presented with the features of the applicant’s lump, it was standard practice of experienced medical practitioners to recommend that the lump be excised. That evidence was of weight and the applicant was not able to establish that there was any error by the judge in accepting that evidence and relying upon it.

With respect to the second issue, the applicant said that the trial judge failed to provide to the applicant the proper scope of assistance that the law requires to be provided to a self-represented litigant. Essentially, the duty and obligation of the judge is to provide adequate assistance to an unrepresented litigant to ensure that the trial is fair, including advice on matters of practice and procedure to avoid that litigant from suffering such a disadvantage. However, the judge cannot become an advocate of the self-represented litigant. Upon review of the transcript of the trial, the Court considered that the judge fully complied with his obligation to provide assistance and advice to the applicant as to his rights and to ensure that the applicant was afforded a fair trial of his claim.

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