Kolavo v Pitsikas (t/as Comino and Pitsikas) & Anor [2003] NSWCA 59 (1 April 2003)

Last Updated: 4 April 2003

NEW SOUTH WALES COURT OF APPEAL

CITATION: Kolavo v Pitsikas (t/as Comino and Pitsikas) & Anor [2003] NSWCA 59

FILE NUMBER(S):

41033/01

HEARING DATE(S): 17 February 2003

JUDGMENT DATE: 01/04/2003

PARTIES:

Eva Evdokia Kolavo (Appellant)

Spero Pitsikas (t/as Comino and Piksikas) (First Respondent)

James W Conomos (Second Respondent)

JUDGMENT OF: Stein JA Santow JA Cripps AJA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 6312/99

LOWER COURT JUDICIAL OFFICER: Gamble ADCJ

COUNSEL:

Mr M J Neill QC/Ms G M Preston (Appellant)

Mr T E F Hughes QC/Mr T D F Hughes (First/Second Respondents)

SOLICITORS:

Graham Molloy & Associates (Appellant)

Henry Davis York (First Respondent)

Moray & Agnew (Second Respondent)

CATCHWORDS:

LEGAL PRACTITIONERS - professional liability - duty of care owed by a professional legal advisor to client - negligent provision of advice - legal practitioners must exercise reasonable care and skill in provision of professional advice - tortious duty of care identical to contractual duty - whether solicitor can rely on the expertise of a barrister - whether a reasonably competent lawyer could have given any advice other than that the appellant's case was hopeless - whether failure to advise that case hopeless constitutes a breach of duty - whether District Court had jurisdiction to determine claim for equitable relief - whether trial judge erred in refusing to allow leave to amend claim for equitable relief - District Court Act

s134(1)(h) - whether trial judge erred in refusal to exercise discretion to allow leave to amend claim for equitable relief - D

LEGISLATION CITED:

District Court Act 1973, s 134(1)(h)

DECISION:

Appeal allowed and orders of Gamble ADCJ set aside.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 41033/01

DC 6312/99

STEIN JA

SANTOW JA

CRIPPS AJA

Tuesday, 1 April 2003

Eva Evdokia KOLAVO v Spero PITSIKAS (trading as Comino and Pitsikas) & Anor

Facts:

The appellant retained a solicitor (the first respondent) and a barrister (the second respondent) to advise her regarding the pursuit of legal proceedings against two companies (a travel agent and a tour operator) involved in the provision of a package tour holiday on which she was injured. The appellant was advised that she had a cause of action in negligence against both companies. Reliant upon this advice legal proceedings were instituted on her behalf.

At trial it became apparent that the case was a hopeless one in that no cause of action existed as against either company. The appellant then brought an action against the first and second respondent in negligence on the grounds that they failed to advise her that she had no cause of action against either of the parties against whom she commenced proceedings. She sought equitable relief in the form of a declaration that the respondents indemnify her for costs payable to the two companies as a result of the failed litigation.

The trial judge held that neither respondent was liable to indemnify the appellant for the costs incurred as a result of the litigation. Her Honour held, notwithstanding the fact that neither respondent apprised the appellant of the fact that she had no cause of action, that both respondents had provided the appellant with adequate legal advice.

The appellant challenges the findings of Gamble ADCJ on the grounds that a reasonably competent lawyer could not have given any advice other than that the case was hopeless and thus each respondent failed to exercise reasonable care and skill in the provision of professional advice.

Held: per Cripps AJA (Stein JA and Santow JA agreeing) allowing the appeal:

1) That the District Court had the power pursuant to s 134 (1)(h) of the District Court Act to entertain the claim for equitable relief sought from the respondents for the as yet unassessed costs for which the appellant would become liable, and that the amendment be allowed since the declaratory relief sought did not cause any prejudice to the respondents as it was merely a reformulation of a claim made in the proceedings from the outset.

2) That the respondents failure to advise the appellant that she did not have a cause of action in either tort or contract as against any of the defendants amounted to a failure to exercise reasonable care and skill in the provision of professional advice. (Heydon v NRMA [2000] NSWCA 374; (2000) 51 NSWLR 1 applied.)

Orders:

1) Appeal allowed- verdict and orders of Gamble ADCJ set aside and the respondents to pay the appellant's costs of the proceedings before her Honour.

2) The respondents to pay the appellant's costs of the appeal and, if qualified, to have a certificate pursuant to the Suitor's Fund Act 1951.

3) In lieu of the decision of Gamble ADCJ order:

i. That the first and second respondents indemnify the appellant in respect of costs payable to the Travel Agent being the order made by Naughton DCJ in its favour in matter 1853 of 1997. Such costs to include costs of the appellant reasonably incurred in the assessment of said costs.

ii. The appellant be reimbursed by the first and second respondents for costs paid by her to the Tour Operator being the second defendant in matter 1853 of 1997. These costs amount in all to the sum of $31, 305.01 made up as follows:

(a) $28, 556.51 paid on 5 July 1999

(b) $2,136 paid on 17 December 1999

(c) $612.50 paid on 28 June 1999

(d) Interest on the above amounts from the date of payment in accordance with Schedule J of the Supreme Court Rules.

iii. The appellant be reimbursed for costs paid to the first and second respondents in the sum of $2,200. These amounts were paid in instalments as set out in the affidavit of G.B. Molloy sworn on 3 June 2002 and filed in the proceedings. The appellant is entitled to interest on these instalments from the date of payment in accordance with Schedule J of the Supreme Court Rules.

iv. The appellant be reimbursed in the sum of $500 for payments made for medical reports in matter 1853 of 1997 and paid as to $250 on 22 May 1997 and as to $250 on 29 July 1997. The appellant is entitled to interest in accordance with Schedule J of the Supreme Court Rules.

v. The appellant is entitled to damages for distress, discomfort, disappointment and inconvenience in the sum of $11,000.

4) The parties to bring in short minutes of order within 7 days to give effect to the decision of the Court.

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 41033/01

DC 6312/99

STEIN JA

SANTOW JA

CRIPPS AJA

Tuesday, 1 April 2003

Eva Evdokia KOLAVO v Spero PITSIKAS (trading as Comino and Pitsikas) & Anor

Judgment

1 STEIN JA: I agree with Cripps AJA.

2 SANTOW JA: I agree with Cripps AJA.

3 CRIPPS AJA: This is an appeal from the decision of Gamble ADCJ published on 30 November 2001 dismissing claims of professional negligence made by the appellant against the first named respondent (her solicitor) and the second named respondent (her barrister). The claim against the first named respondent was in contract and tort and against the second named respondent in tort only.

4 The respondents cross-claimed against each other for contribution. The cross-claims were not dealt with by her Honour because it was not necessary to do so. We were informed by Mr Hughes QC, who appeared for both respondents, that in the event the appeal is upheld and this Court determines damages, we need not concern ourselves with the cross-claims for contribution. Mr Hughes said, however, that he was maintaining separate arguments for the respondents and he did not concede that if one respondent were held liable it would follow that the other should also be held liable.

5 The appellant alleged she was assaulted by one Ms Krueger, with whom, at the time, she was sharing a room, during an organised package tour of Spain in 1996. The tour had been arranged by Dial A-Coach Group Pty Ltd (the Travel Agent) and conducted by Circuit Travel Pty Ltd (the Tour Operator). She alleged she was the victim of an unprovoked assault in the course of which Ms Krueger bit the little finger of her left hand almost severing it leaving her with a permanent deformity.

6 The first respondent and the second respondent acted for the appellant in providing advice which was taken to be first, as to whether she had a cause of action against the Tour Operator and/or Travel Agent and later, and after proceedings had commenced against both, with respect to the conduct of the proceedings. The brief in which advice was sought by the first respondent from the second respondent on behalf of the appellant was expressed somewhat more loosely "to advise with respect to the matter generally and to settle an initial letter to the Defendant to settle the matter as well as a Statement of Claim ..."; see later.

7 The appellant's claim against the Tour Operator and the Travel Agent (no. 1853 of 1997) came on for hearing before Naughton DCJ who, on 11 March 1998, dismissed her claim. She was ordered to pay the costs of the Travel Agent and the Tour Operator. There was no appeal.

8 The appellant commenced the present proceedings on 23 August 1999. On 30 November 2001 Gamble ADCJ dismissed her claim holding that neither the first respondent nor the second respondent was in breach of any legal obligation to her.

9 As already mentioned, by reason of her Honour's decision it was unnecessary for her Honour to consider the question of contribution (which had been claimed by each respondent against the other) or damages. The appellant claimed general damages for distress, discomfort, disappointment and inconvenience. She claimed "costs (if any) payable to the first defendant and the second defendant" (a reference to the Travel Agent and the Tour Operator). In terms she sought reimbursement of the costs she was obliged to pay the Tour Operator, which had been assessed in the sum of $29,169.01 and which had been paid by the appellant on 5 July 1999. The Travel Agent's costs have not (and to this day had not) been assessed. She sought reimbursement of certain monies paid to the respondents. She also claimed aggravated and exemplary damages.

10 Prior to the commencement of the hearing she sought to amend the proceedings to make a claim pursuant to s 134 (1)(h) of the District Court Act 1973. In effect, she sought an order that the respondents indemnify her in respect of the costs assessed in favour of the Travel Agent and a declaration that the respondents were not entitled to professional costs for work undertaken by them in connection with proceeding 1853 of 1997.

11 In this Court Mr Hughes on behalf of the respondents stated that the respondents are no longer claiming fees for work undertaken in the proceedings before Naughton DCJ. Accordingly that aspect of her claim can be put to one side.

12 It is not clear whether the learned trial judge refused to allow an equitable claim to be raised because she was of the opinion that the District Court lacked jurisdiction to entertain it or whether she declined amendments in the exercise of her discretion. As will be seen and for reasons which I will give, I am of the opinion that the District Court had the power pursuant to s 134 (1)(h) of the District Court Act to entertain the claim for equitable relief with respect to the indemnity she sought from the respondents for the costs she would become liable to pay the Travel Agent. If the amendment was refused in the exercise of discretion her Honour, in my opinion, erred in failing to have regard to the circumstance that there was no relevant prejudice to the respondents because the declaratory relief was merely a reformulation of a claim that had been made in the proceedings from the outset.

13 It was common ground before Gamble ADCJ and on appeal that to succeed the appellant had to discharge the onus of establishing that, on the material before the respondents at all relevant times i.e. from the giving of the initial advice and until the hearing, the only advice open to be given in the discharge of their obligation was that, even if her version of the events were accepted, neither the Tour Operator nor the Travel Agent was liable to her in law.

14 This was not a case of information being given to lawyers on which advice is given and which later turns out to be less probative than originally thought. The criticism of Gamble ADCJ is that she failed to consider whether a reasonably competent lawyer could have given any advice other than that the appellant's case was hopeless.

15 After the proceedings 1853 of 1997 were commenced the respondents were put in possession of a statement from Ms Krueger claiming it was the appellant and not her who started the fight. Ms Krueger's statement together with the actual description of the fight itself by the appellant (to be described later) led the respondents to the view that there was a very real possibility that the appellant would not be believed. However the second respondent never wavered in his view that the appellant had an arguable case provided she was believed. The first respondent gave evidence that initially he told her the case was hopeless. However, and after receiving the advice of the second respondent, he also gave her advice that if she were believed she would succeed. He asserted in evidence that he "believed mistakenly or otherwise that it would have been considered cheeky" for him to have taken up "with Mr Comonos any further requests for advice on that advice".

16 There is no dispute concerning the information which was placed before the two respondents although Mr Hughes has submitted that when considering whether the formal advice of the second respondent was legally competent, regard should be had to a discussion the second respondent had with the appellant on a social occasion at City Tattersalls Club in June 1996 viz that her case against the Tour Operator and/or Agent would be attended with some difficulties. I shall return to this submission later.

17 The second respondent has special expertise in the area of personal injury litigation. At the meeting at City Tattersalls Club he suggested the appellant consult lawyers of his nomination. However the appellant retained the first respondent who was her solicitor. The evidence is silent concerning whether the first respondent claimed any expertise in the area of personal injury litigation but if not, Mr Comino the employed solicitor, for whose conduct the first respondent is vicariously liable, appeared to have a fair instinctive grasp of some of the issues involved at least.

18 In March 1997 the appellant consulted the first respondent. Her case was assigned to Mr Comino. He was instructed by the appellant to deliver a formal brief to the second respondent for advice. I shall deal with the content of the brief in due course but for present purposes I note that all the information that was included in the brief was placed before Mr Comino.

19 The appellant denied Mr Comino gave the advice referred to above and there was no finding by the learned trial judge about the matter, beyond her conclusion that "I am satisfied that Mr Comino did express his doubts about the viability of her case to Mrs Kolavo".

20 In September 1996 the first respondent delivered a Brief to Advise to the second respondent. Relevantly the brief contained the following instructions:

Counsel's Instructing Solicitors act for Mrs Eva Evdokia Kolavo. Counsel is briefed to advise relative to the Defendants to claim compensation for pain and suffering, damages, loss of enjoyment of holiday and costs not met by travel insurer, and as to quantum.

Our client purchased a ticket with Cosmos Tourama in 1995 for a package holiday to Spain & Morocco. The Tour Operator had the option of "sharing" a room with another person in order to reduce costs as described on page 5 of the Tour Brochure. This involved being assigned a room with another single person of the same sex. Upon arrival in Madrid our client stayed at the Hotel Praga by herself in a single room until the date that the tour was to commence. On the day of commencement of the Tour she was assigned another room with Aniseta Kruegar, (the attacker).

Our client noted several episodes of questionable conduct by her companion and requested the Tour leader to allow her to pay the difference and obtain a room on her own behalf. This opportunity was denied to our client as she was told this could only be arranged before the tour not after the tour. Our client accepted this and remained with Kruegar in the shared room.

On the day of the attack, our client had packed and prepared to leave her room. On the day in question our client was feeling unwell and the plumbing in the room was not adequate. Her attacker, after our client had used the bathroom and after she had attempted to adequately flush the toilet, entered the bathroom and entered a rage calling our client "A pig". When she had finished taking her luggage out, her attacker grabbed her attention by banging on the television in the room. Our client thought she may have forgotten something and made a hand gesture indicating what was wrong. The attacker then bit her fifth finger on her hand almost completely off. Eventually our client was able to obtain assistance and made a report to the Tour Manager and Police.

The Tour Manager was employed by the Defendant as an interpreter and accompanied our client to the Police statement (sic) when she sought to have her attacker charged with assault. Our client is unaware as to the accuracy of the translation provided by the Tour Manager to the Police who eventually treated the incident as domestic and refused to lay charges against the attacker.

When our client sought to terminate her involvement with the Tour, the Tour Manager indicated that her reason for cancellation was that she wished to spend more time in Spain and made no comment of the fact that our client had been attacked and required urgent medical attention and surgery, (see Document 20)

As a result of this incident our client was forced to cancel this part of her holiday program and be hospitalised and had two operations to her finger.

Our client claims the following:

(a) Loss of Enjoyment of her holiday

(b) Damages

(c) Damages for pain and suffering

(d) Reimbursement for additional expenses by her as a result of the attack.

Counsel is briefed to advise with respect to the matter generally and to settle an initial letter to the Defendant to settle the matter as well as a Statement of Claim to claim the above and any other matter as a result of the incident.

Counsel is also requested to advise whether in the event that proceedings are instituted and our client is unsuccessful she would be liable for the costs of the Defendant and whether or not the Defendant would be obliged to pay our clients legal costs in any event.

Counsel is briefed to advise of quantum and results of proceeding.(sic)

Counsel is briefed with the following documents.

21 There were twenty-four documents included in the brief. Most were directed to the consequences of the injury but the brief also included written notes compiled by the appellant concerning the attack, the travel brochure and a document referred to as Document 20 being the "Cosmos Tour Termination Report" and the "Report Injuries Form".

22 The appellant's notes were that on 11 February 1996 she had formed the opinion that Ms Krueger, with whom she was to share a room, was "strange" and spoke with a heavy Filipino accent. She said that she was aggressive and that in "approx two hours had her life story told to me". Later that day she approached the tour escort, Raymond Walsh, and said she would like to have a single room and she was prepared to pay the difference because she was not happy with sharing with Ms Krueger. She was told she could not have a single room because that option could not be exercised once the tour had commenced.

23 She also recorded that on 14 February 1996 Ms Krueger had become agitated because the water from the shower was not draining away quickly enough. The appellant said she was "babbling incoherently". Upon complaint the Hotel Manager offered another room but before they had moved the drainage problem had been solved.

24 Some time later (the date not specified) Ms Krueger told the appellant she saw a cockroach in the bathroom causing her to vomit. The appellant killed the cockroach and told Ms Krueger if she was going to vomit to do it over the toilet bowl and not the basin.

25 She said that later she asked Ms Krueger to stop rustling plastic bags and go to bed. She said Ms Krueger raised her voice and said "give me a break". The appellant raised this with Raymond Walsh, who had the room next door, and who later told her that he heard Ms Krueger's raised voice.

26 She recorded that on 25 February 1996 after an argument in which she, the appellant, was referred to as "a pig" she was assaulted by Ms Krueger. She said she heard Ms Krueger raising her voice and she indicated with her hands to the effect "what are you talking about" and

"that is when she bit my left hand, index finger, I managed - or she let go of it, but she then got hold of my little finger left hand, a scuffle followed, she still had my finger in her mouth, somehow I managed to have her on the floor (tiled floor). I recall pulling her hair, ears - I lost my voice, I vaguely remember calling for "HELP" in a weakened voice - she seemed to be in a trance. I tried holding her nostrils so she would open her mouth. I finally managed to scream. (The door of the room was still open as I had previously left it) When I screamed she opened her mouth and released my fingers. I ran out of the room".

27 The appellant said that the assault was unprovoked but that in the course of it somehow I managed to "have her on the floor" and was pulling Ms Krueger's hair and ears. The second respondent considered that the appellant's version of the fight might not be interpreted in a way that had Ms Krueger as the attacker.

28 The travel brochure was included in the brief and relevantly it included a page headed TOUR CONDITIONS - PLEASE READ CAREFULLY and under the heading of "Responsibility" were a number of conditions the relevant ones being:

5. The Company shall in no circumstances whatsoever be liable to the client or any person travelling with him for -

1. any death, personal injury, sickness, accident, loss, delay, increased expense, consequential loss or any misadventure howsoever caused;

2. any act, omission, default of any hotelier, carrier or other person or by any servant or agent employed by them who may be engaged or concerned in the provision of accommodation, refreshment, carriage facility or service for the client or for any person travelling with him howsoever caused;

3. ...

In this condition "howsoever caused" includes negligence on the part of any person.

6. No liability on the part of the Company arising in any way out of this contract in respect of any tour, holiday, excursion or facility shall exceed the total amount paid or agreed to be paid for the product, and shall in no case include any consequential loss or additional expense whatsoever".

29 At the beginning of the brochure and under the heading of "Stretch your Vacation Dollars" was the following "Singles Save with "guaranteed share" rates"

"More than one-third of all people travelling with Cosmos (the Tour Operator) are single or travelling alone. Since economy is our middle name, we do not want to charge an expensive single room supplement without giving you an alternative. We therefore accept reservations on a "guaranteed share" basis. We charge the basic price and match up singles of the same sex in twin-bedded rooms. If we cannot find a roommate for a tour member who has booked on a "guaranteed share" basis we'll absorb the single room supplement, and that tour member will be accommodated in a single room at no extra charge.

For those travellers who want to pay the single room supplement, a word of advice. Paying more does not necessarily mean you'll get superior accommodation. Single rooms are often quite small, and we cannot even guarantee that private facilities will be included as advertised. No refund can be made when a single room has no private bath.

We must also point out that occasions do arise where a client who paid the single supplement may be asked to share. In the rare instances when this occurs, the tour escort will issue a refund on the spot".

30 On 6 March 1997 the second respondent furnished the following memorandum of advice.

"I am asked to advise Eva Evdokia Kolavo (Kolavo) as to the prospects of success in relation to an injury she suffered to her left little finger when she was assaulted by Anisetta Krueger (Kreuger).

The facts are sufficiently set out in the brief and observations - I will not restate them.

Kolavo wishes to sue the tour promoters and providers alleging breach of contract and negligence in that personnel failed to heed her requests for a single room rather than "twin share" accommodation, especially when Kolavo expressed disquiet at sharing a room with Krueger.

The tour documentation under the heading "RESPONSIBILITY" in paragraph 5 provides:

"The Company shall in no circumstances whatsoever be liable to the client or any person travelling with him for:-

(1). any death, personal injury, sickness, accident, loss, delay, increased expense, consequential loss or any misadventure howsoever caused;

(2). ...

(3) ...

In this condition the expression `howsoever caused' includes negligence on the part of any person.

Leaving aside the terms of paragraph 5, Kolavo will have to prove that it was reasonably foreseeable and not far-fetched and fanciful, that she would suffer harm from Krueger whilst she at all times acted reasonably and with due restraint.

Questions will arise as to the exact ambit of paragraph 5 and whether all tortfeasors can rely on its terms.

I enclose a draft Statement of Claim.

Kolavo should understand that if she is unsuccessful against all tortfeasors, then orders for costs will be made against her. This case is not "open and shut" because it arose from an assault by a fellow tourist and not by a clear omission by a person for whom the tortfeasors are vicariously liable.

6th March 1997. Henry Parkes Chamber. J W Conomos."

31 The second respondent included a draft Statement of Claim in which it was alleged that the Travel Agent and Tour Operator were in breach of contract and were negligent the particulars being:

"(i) Failure to heed the Plaintiff's repeated requests for a room on her own;

(ii) Failure to heed the Plaintiff's complaints about the bizarre conduct of Anisetta Krueger;

(iii) Failure to screen persons who were allotted "twin share" accommodation to ensure that they were suitable for sharing accommodation with strangers;

(iv) Failure to isolate Anisetta Krueger from other tourists or to remove her from the tour as unsuitable".

THE PROCEEDINGS BEFORE NAUGHTON DCJ

32 Before Naughton DCJ the plaintiff's claim in negligence was the failure by the Tour Operator and/or Travel Agent to screen persons who were allotted "twin-share" accommodation to ensure they were suitable for sharing accommodation with strangers conformably with the third particular referred to above. The second respondent, who appeared for the appellant, also submitted to the Court that the contract between the appellant and the Tour Operator and/or Travel Agent contained an implied term:

"That in allocating twin-share accommodation care should be taken to screen persons to ensure there was compatibility".

33 In this Court Mr Hughes re-framed the implied term as:

"There was a duty by implication on the part of the tour operator to take reasonable steps to provide single accommodation for the appellant should she make an apparently reasonable complaint of the suitability of her accommodation sharer on grounds related to that sharer's conduct"

Later he added:

"provided shared accommodation was available".

34 The liability of the respondents cannot, of course, be determined by reference to the findings of Naughton DCJ. For example Naughton DCJ had an unfavourable view of the appellant's credit and did not accept her version as to who started the fight. His Honour also appeared to reject the case made on her behalf that she was unaware of the contents of the tour brochure. On those grounds alone the defendants would have been entitled to a verdict. The respondents, however, were entitled to accept that the appellant was telling them the truth as to who started the fight and her lack of awareness of the contents of the travel brochure until after the assault.

35 Naughton DCJ rejected her submission that the contract between the appellant and the Travel Agent and/or Tour Operator was subject to an implied term of the type advanced in the submission and pointed out that none had been alleged in the statement of claim. Finally his Honour expressed the opinion that the episodes referred to by the appellant which preceded the assault did not operate to make either the Travel Agent or the Tour Operator liable in negligence or in contract. His Honour was of the opinion that none of them alone or in combination operated to raise any duty by the defendant or either of them to segregate the women into separate accommodation and concluded that it was not "reasonably foreseeable that the fight which occurred would occur". As will be seen I am of the opinion that his Honour's findings were plainly correct.

THE APPELLANT'S CLAIMS AGAINST THE RESPONDENTS

36 As I have said the essence of the claim against both respondents is that they should have advised the appellant that, in law, her case could not succeed even if her version of the events were accepted.

37 I have referred to the fact that Mr Comino said that when he first interviewed the appellant concerning her injuries, and being aware of the episodes referred to above, said that he told her that he didn't think she had any case because she could not establish it was reasonably foreseeable by the Tour Operator that she would be attacked. He said he found no basis for any negligence because, as he put it, what she told him did not "lead me to believe that anybody in their right mind could have foreseen such an event occurring". He also said that he directed her attention to the exculpatory clause in the travel brochure and was told by the appellant that she had not read it until after the assault when she was in hospital.

38 The appellant denied Mr Comino gave her the advice he said he gave her and said that if he had she would not have proceeded. There was no finding by the trial judge about this matter beyond that stated in para 19. Although not explored during the hearing, it might be thought doubtful that the appellant would have paid much attention to opinions of Mr Comino if they were inconsistent with the second respondent's advice and inconvenient to her litigious ambitions.

39 The hearing before her Honour lasted approximately four days. A great deal of the evidence was taken up with the advice given to the appellant after the proceedings had been instituted and, in particular, just prior to the matter coming on for hearing, that she should give instructions for the second respondent to make an offer to the Travel Agent and the Tour Operator that she would discontinue the proceedings on the basis that each party pay their own costs. Evidence was given by Mr Comino that the Travel Agent's solicitors had indicated that if such an offer were forthcoming he could get instructions to accept it. There was, however, no such commitment by the Tour Operator who had brought Mr Walsh to Sydney to give evidence in the proceedings.

40 From August 1997 onwards there were several discussions between the appellant and the respondent. In January 1998 she gave instructions to the respondent to make an offer to the Travel Agent and the Tour Operator that she would settle her claim for $45,000 together with costs. The offer was conveyed and rejected by both.

41 On a number of occasions the respondents sought instructions from the appellant to make an offer on her behalf to the Travel Agent and Tour Operator that she would withdraw her claims against them and each party would pay its own costs. She declined to accept the advice.

42 As I have said the second respondent never altered his opinion that the appellant had a good cause of action in negligence and contract if she were believed. In evidence before the learned trial judge he conceded in cross-examination, however, that it would be difficult to hold the Travel Agent liable in negligence based on failure to screen bearing in mind that the Travel Agent was at all material times in Sydney and unaware of the appellant's complaints.

43 On 26 February 1998, twelve days before the hearing, the first respondent wrote to the appellant:

"We also confirm our discussion of even date and earlier that this matter was based on a claim that the Travel Agent was negligent inn (sic) providing you with a product which was faulty. We confirm that the argument as drafted by Counsel in the Statement of Claim is that the travel agent and the tour operator were negligent in supplying a product which failed to screen strangers. If this application is accepted by the Judge, you will succeed and the Defendants will be liable for damages. If this sole ground does not succeed, then you will fail and a verdict for the Defendants will result. The consequences of this have ben (sic) explained to you at length by the writer and Counsel, that is you will be liable for three sets of costs".

44 The appellant wrote to the respondent in response:

"I advise in writing that I wish the abovementioned matter to proceed.

I base this decision on the written opinion of Counsel Mr J Conomos dated 6th March 1997".

45 In her Honour's judgment the learned trial judge said:

"Mr Neil for Ms Kolavo says that neither Mr Conomos or Mr Comino told Ms Kolavo that she did not have a case. Mr Conomos accepts this and gave evidence that he still believes Mrs Kolavo had a good cause of action, both in negligence and contract, despite the verdict against her by Naughton DCJ. There can be no complaint against Mr Conomos that he did not advise Mrs Kolavo that she did not have a case. He thought she did. Mr Conomos' assessment of the legal position was not challenged in cross-examination, beyond questions concerning his view of the Naughton DCJ judgment.

46 The learned trial judge appeared to be of the view that because the second respondent believed the advice he gave was correct that was an end of the matter. Her Honour dealt in detail with events after November 1997. She did not address the question whether the advice given by the second respondent and adopted by the first respondent was relevantly negligent. There is no dispute that the appellant was given the firmest possible advice just before trial, that she should give the respondents instructions to make an offer that she would withdraw, each parties paying its own costs and that she refused to accept that advice. But at no time was she told that her case, on any view of the matter, was hopeless. That is because the first and second respondents did not think that was so. Well before the time the trial was due to commence the respondents had become aware of the statement of Ms Krueger which contradicted the version given by the appellant and that, together with the second respondent's stated concern that the appellant's description of the fight with the appellant ending up on top of Ms Krueger, might result in a judge rejecting her version of the events.

47 Mr Hughes has submitted there was no challenge to the finding referred to above, although, of course, he could not deny that the case was conducted throughout on the basis that the respondents in the discharge of their obligations were bound to tell her that her case was hopeless. It does not seem to be of great moment in the present case that the second respondent was not asked why he believed and continued to believe that the appellant had a good cause of action both in negligence and in contract. His opinion never changed (except for the concession he made with respect to the liability of the Travel Agent in negligence).

48 For some reason (which was not explained by the learned trial judge) her Honour would not allow the appellant to give evidence that she relied on the advice that was given. She was asked:

"If Mr Conomos or Mr Comino had said to you in March 1997 that you would lose the case because it was not reasonably foreseeable on the part of the travel agent or the tour operator that you would be attacked by Ms Krueger, what would you have done?"

49 The respondents objected. The appellant was not allowed to answer the question. The objection, put by counsel for the first respondent and adopted by counsel for the second respondent, was that an answer would be "hypothetical". Later she was asked a series of questions, each one of which was rejected conformably with the unstated reason for upholding the first objection:

Q: Mrs Kolavo, if your solicitor or counsel in the previous trial had advised you that the case was hopeless and you could not win, what would you have done?

Q: If your solicitor or counsel in the previous case had given you a warning to the effect that the case was hopeless, what would you have done?

Q: If your solicitor or counsel in the previous case had advised you that clause 5 of the agreement prevented you from succeeding in the case, what would you have done?

Q If your solicitor and counsel had advised you that the travel agent and the tour operator were not vicariously liable for the actions of Mrs Krueger what would you have done?

Q: If your solicitor and counsel had advised you that your contractual claim could not succeed because there was no breach of any term of the contract, what would you have done?

50 The issues before her Honour were first, did the advice of the respondents that the appellant had a cause of action in contract or tort against the Travel Agent and/or Tour Operator for failure to screen persons for compatibility amount to negligent advice? Second, and if the answer to the first question was in the affirmative, did the negligent advice of the respondents result in or materially contribute to the loss claimed by her?

51 Her Honour, in terms, did not direct her attention to the above issues. Rather she concentrated on whether the appellant was behaving reasonably in rejecting the advice she was being given that she should give instructions to the respondents to make an offer to the Travel Agent and the Tour Operator that she would withdraw each party paying their own costs. There was no certainty that the offer would have been accepted. There was some encouragement from the Travel Agent that it would be accepted but there was no similar encouragement from the Tour Operator.

52 Mr Hughes has submitted that the Court should have regard to the conversation between the appellant and the second respondent at a social function at City Tattersalls in June 1996 when considering whether the formal advice given by him in March 1997 should be characterised as negligent. The appellant told the second respondent she had been assaulted by Ms Krueger. The second respondent correctly opined that there was little chance of successfully suing Ms Krueger bearing in mind she lived an America. He said "Kitsa you probably have an action against the Travel Agent but in order to sue the Travel Agent and/or Tour Operator you have to be able to establish they were at fault." He added that to establish fault against either she would have to show that "in some way they could foresee this incident would occur and that you would suffer injury". Mr Hughes on behalf of the respondents submits that these statements make it clear that the appellant must have known when she received the formal advice in March 1997 that the second respondent was guarded about her prospects of success.

53 In my opinion the conversation in June 1996 had no real bearing on the issues before the Court. The second respondent had advised the appellant to go to a solicitor of his nomination. In fact she went to her own and expressly instructed him to seek formal advice from the second respondent. The formal advice made no reference to the conversation in June 1996 although it was mentioned to Mr Comino by the appellant in the course of instructing him to brief the second respondent. Moreover a fair reading of that conversation as recounted by the second respondent makes it clear, in my opinion, that in his view the prospects of success depended on whether the appellant would be believed. It also must be steadily born in mind that the second respondent never departed from his opinion that the appellant had a good cause of action. He was concerned, however, that she may not be believed - in the first instance by reason of her own version of the fight and later because of the conflicting version of the fight by Ms Krueger.

54 The content of the duty of care owed by a professional legal adviser to a client is the same whether founded in contract or upon a duty of care in tort Heydon v NRMA [2000] NSWCA 374; (2000) 51 NSWLR 1.

55 In Heydon Malcolm AJA at para 146 described the duty of care of legal practitioners and the standard of care as follows:

"Both barristers and solicitors owe a duty of care to those whom they advise or for whom they act. In the present context, their duty is to exercise reasonable care and skill in the provision of professional advice. The standard of care and skill is that which may be reasonably expected of practitioners. In the case of practitioners professing to have a special skill in a particular area of the law, the standard of care required is that of the ordinary skilled person exercising and professing to have that special skill".

And later:

"There is no implied undertaking that the advice is correct, but only that the requisite degree of professional skill and care has been exercised in the giving of the advice. Of course, where there is reason for doubt or there are risks which a person possessing the relevant degree of skill and competence should perceive, it follows from the above that there may be a duty to warn of the kind recognised by their Honours in Rogers v Whitaker".

56 In Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575 Callinan J referred to the nature and scope of the duty of lawyers when being asked to advise and to the need to keep in mind when determining the appropriateness of the advice that regard has to be had to what the law might reasonably be perceived at the time at which the conduct occurred. Developments in the law of negligence over the last two decades has had the consequence that liability has been found to exist in circumstances previously thought to be beyond the scope of the tort. When evaluating advice one should bear in mind that different minds might reasonably come to different conclusions.

57 Having regard to the test identified in Heydon and explained in Boland, I am of the opinion that, (and putting to one side the effect of clause 5 if liability were found to exist) in all the circumstances, the risk that Mrs Krueger, by reason of her not being an agreeable room sharer, would have assaulted the appellant in the manner contended for by her was not relevantly foreseeable. In Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 at 47 Mason J posed the question whether a reasonable man in the defendant's position could have foreseen that his conduct involved a risk of injury to the plaintiff - a risk that is to say that is not far fetched or fanciful. In my opinion the only advice that could have been given by a competent lawyer is that neither the Tour Operator nor the Travel Agent could, in law, have relevantly foreseen that the failure to allow the appellant to have a separate room (and assuming one were available) would lead to her being assaulted by Ms Krueger. In my opinion, foreseeability in the relevant sense was not even arguable.

58 I am of the opinion that the contract between the appellant and the Tour Operator and/or Travel Agent (assuming the contract was with both) contained no implied term as formulated by the second respondent at trial before Naughton DCJ or Mr Hughes in argument before this Court.

59 In BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283 it was said:

"for a term to be implied the following conditions (which may overlap) must be satisfied:

(1) it must be reasonable and equitable;

(2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(3) it must be so obvious that it "goes without saying";

(4) it must be capable of clear expression;

(5) it must not contradict any expressed term of the contract.

60 In my opinion the implied term, as formulated by the second respondent or by Mr Hughes, would be unreasonable; unnecessary to give business efficacy to the arrangement between the parties, would not be one that went without saying, was not clearly expressed and, in fact, would contradict other terms of the contract. The respondents were unable to point to any authority supporting the contrary.

61 I am of the opinion that the contract contained no implied term of the type put forward by the second respondent or that advanced by Mr Hughes. The submission that it did was not arguable in the relevant sense.

62 Accordingly I am of the opinion that the respondents, by failing to advise the appellant that her case was hopeless, were derelict in their duty to her.

63 Although the appellant was precluded from answering questions directed to reliance on the advice given, there was material before her Honour that clearly indicated that she was being told that she could not succeed, not because she had no prima facie case even on her own version of the incidence that preceded the attack, but because she would or might not be believed concerning who started the fight. I have already referred to her response to the letter of 26 February 1998 when she said she rejected the advice and was relying on the "written opinion of counsel Mr J Conomos dated 6 March 1997".

64 Mr Hughes maintained that a verdict against the second respondent did not necessarily conclude the matter against the first respondent but no submission was put as to why that was so. It scarcely lies in the mouth of either respondent in the present case to assert that the appellant has not established that her loss was the result of negligent advice bearing in mind they objected to her answering the question relating to reliance. I accept, as her Honour did, that the appellant was an enthusiastic litigant and that from August 1997 up until the hearing she refused to heed the advice given to her by the respondents. I do not think "the chain of causation" was broken as was submitted by Mr Hughes because of her refusal to accept the advice given between August 1997 and up until the commencement of the hearing. Had she been told at any time during that period that, contrary to the advice earlier given she could not win her case even if her evidence were accepted, the position might be different. But she was never given that advice.

65 No submission was made as I would understand it that she did not rely on the advice that she had a good case if she were believed. In written submissions in support of the learned trial judge's decision to reject the reliance evidence the respondents, after referring to the alleged error of her Honour in refusing to allow the appellant to give evidence concerning reliance, said:

"In relation to par 93, although her Honour ruled those questions inadmissible, Her Honour nevertheless accepted that the appellant's answer to the questions ruled inadmissible would have been that she would not have proceeded. Her Honour accepted that if the appellant had been advised that she had no prima facie case and that she should not have commenced and maintained proceedings then the appellant would not have commenced and maintained proceedings".

66 The learned trial judge referred to authorities for the proposition that a solicitor does not avoid an obligation to tender correct advice simply because that advice is contrary to the opinion of counsel. In the present case the first respondent thought the appellant's case was hopeless and I do not think his duty towards the appellant to continue with that advice was discharged by reason of the opinion of the second respondent. However, an issue may have arisen as to whether or not the appellant would have taken any notice of the views of the first respondent had he maintained the advice he tendered in August 1996. The matter was not explored during the hearing although it was raised in the questions asked by Mr Neil QC but which were not allowed to be answered.

67 Although Mr Hughes did not concede that a verdict against the second respondent automatically operated to make the first respondent liable, no submissions were put to the effect that had the first respondent maintained the view he expressed to the appellant in August 1996 the appellant would have taken no notice of it because it conflicted with the opinion of the second respondent. As I have said, the Court was told that it need not concern itself with any claim for contribution between respondents if the appeal were upheld because the parties had made their own arrangements. Mr Hughes appeared for both respondents. The written submissions made no reference to the separate position, if there were one, of the first respondent. And, as I have said, it must be remembered that at all material times after August 1997 the first respondent was advising the appellant in the same terms as the second respondent.

68 In these circumstances I do not accept the submission, if it were made, that the appellant failed to establish as against the first respondent that she suffered loss because she relied on his advice. Of course, so far as the second respondent is concerned, the question is not even debatable.

69 In my opinion s 134(1)(h) of the District Court Act gave the Court the jurisdiction to declare that the respondents were liable to indemnify the appellant for costs payable by her to the Travel Agent when those costs are assessed. Section 134(1)(h) relevantly provides:

"(1) The Court shall have the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court in proceedings for:

(h) any equitable claim or demand for recovery of money or damages, whether liquidated or un-liquidated (not being a claim or demand of a kind to which any other paragraph of this subsection applies), in an amount not exceeding $750,000".

70 In Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440; (2001) 53 NSWLR 614 the Court of Appeal considered s 134(1)(h) of the District Court Act. In that case the Court considered whether a plaintiff seeking damages for wrongful exercise of a power of sale could also seek equitable relief being claims for equitable compensation and an account. In the course of giving his reasons Bryson J said at para 68:

"Legislation which confers jurisdiction without limiting any existing jurisdiction should receive an ample construction. Its own terms show that s 134(1)(h) should not be seen as modifying or supplementing previous conferrals of jurisdiction ... it marks are wide reforming purpose ... (which) took a strikingly new direction away from earlier conferrals of equitable jurisdiction characterised by close definition and small amounts".

71 Accordingly, I am of the opinion as I have earlier said that her Honour was in error if she refused the amendment because she believed the Court had no jurisdiction to entertain it. I have also expressed the opinion that if an amendment was refused in the exercise of discretion, the discretion was relevantly misapplied.

72 The appellant has also alleged that the learned trial judge was in error in failing to give reasons why she rejected the expert evidence tendered which was not subject to cross-examination and which was contrary to her concluded view that neither respondent was liable to the appellant. Her Honour's failure to do so may have derived from the circumstance that she approached the case upon the basis that the sole issue was whether the appellant unreasonably rejected advice given to her after proceedings had commenced that she was not likely to succeed because she might not be believed. However that may be, both Mr Coombs QC a barrister specialising in the field of personal injury litigation and Mr McDermott, a solicitor specialising in the same field, presented reports critical of the conduct of the first and second named respondents.

73 In Heydon Malcolm AJ referred to the admissibility and relevance of expert evidence in cases where negligence of advising lawyers is an issue. For example in Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp [1979] Ch 384 Oliver J doubted its relevance stating that it:

"really amounts to no more than an expression of opinion by a particular practitioner of what he thinks that he would have done had he been placed, hypothetically and without the benefit of hindsight in the position of the defendants".

74 In Boland, Gleeson CJ at para 47 noted without comment that expert evidence from senior counsel was tendered.

75 Because the written opinions were admitted into evidence and were not subject to cross-examination there is substance, in my opinion, in the appellant's criticism of her Honour for not dealing with them. However, I do not propose to take this matter further because to a large extent the opinions criticised the second respondent for failing to advise on the possible effect of clauses 5 and 6 of the tour brochure. A proper consideration of them became relevant only if liability of the Tour Operator or Travel Agent were otherwise established and it was not.

76 When the appeal came on for hearing a question arose whether the appeal was competent. The Court determined in a separate judgment dated 17 February 2003 that it was. I should also say, however, that even if the appeal were held not to be competent because the amount in issue was less than $100,000 I would have granted leave to appeal bearing in mind my conclusions that the learned trial judge misdirected herself by failing properly to address the essential issue in the case, by making findings that were not reasonably open, by wrongly rejecting evidence that the appellant wished to give concerning her reliance on the advice given and, when called upon to allow amendments to the statement of claim misapplied her discretion.

77 I have come to the conclusion that the verdict and orders of Gamble ADCJ should be set aside and that in lieu thereof this Court should grant the appellant appropriate relief. She has claimed damages for distress, discomfort, disappointment and inconvenience and it is not disputed by the respondents that an allowance should be made for that aspect of her case. In support of her case the appellant tendered a report of E.P. Fitzroy-Mendis dated 27 May 2001. It was not the subject of cross-examination. It was the view of Dr Fitzroy-Mendis that the failure of the litigation and the anxiety and stress consequent upon the financial consequence of that failure led to her to suffer severe anxiety, depression and panic attacks. The cause of her anxiety will largely be removed by the judgment of this Court. Mr Neil has submitted that an award of between $20,000 and $50,000 should be awarded to her. I do not think that this amount is appropriate. I would allow $11,000. She is not entitled, of course, for any compensation relating to the injury she received in Spain but she is entitled, in my opinion, to expenses incurred and paid for medical reports used in the litigation against the Travel Agent and the Tour Operator. Her claim for exemplary and aggravated damages has been withdrawn.

78 I would propose the following orders:

1. Appeal allowed - verdict and orders of Gamble ADCJ set aside and the respondents to pay the appellant's costs of the proceedings before her Honour.

2. The respondents to pay the appellant's costs of the appeal and, if qualified, to have a certificate pursuant to the Suitor's Fund Act 1951.

3. In lieu of the decision of Gamble ADCJ order:

i. That the first and second respondents indemnify the appellant in respect of costs payable to the Travel Agent being the order made by Naughton DCJ in its favour in matter 1853 of 1997. Such costs to include costs of the appellant reasonably incurred in the assessment of the said costs.

ii. The appellant be reimbursed by the first and second respondents for costs paid by her to the Tour Operator being the second defendant in matter 1853 of 1997. These costs amount in all to the sum of $31,305.01 made up as follows:

(a) $28,556.51 paid on 5 July 1999

(b) $2,136 paid on 17 December 1999

(c) $612.50 paid on 5 July 1999

(d) Interest on the above amounts from the date of payment in accordance with Schedule J of the Supreme Court Rules

iii. The appellant be reimbursed for costs paid to the first and second respondents in the sum of $2,200. These amounts were paid in instalments as set out in the affidavit of G.B. Molloy sworn on 3 June 2002 and filed in the proceedings. The appellant is entitled to interest on these instalments from the date of payment in accordance with Schedule J of the Supreme Court Rules.

iv. The appellant be reimbursed in the sum of $500 for payments made for medical reports in matter 1853 of 1997 and paid as to $250 on 22 May 1997 and as to $250 on 29 July 1997. The appellant is entitled to interest in accordance with Schedule J of the Supreme Court Rules.

v. The appellant is entitled to damages for distress, discomfort, disappointment and inconvenience in the sum $11,000.

4. The parties to bring in short minutes of order within 7 days to give effect to the decision of the Court.

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LAST UPDATED: 03/04/2003