Magiten v Tabai [2008] PGNC 128; N3470 (10 September 2008)

N3470

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1452 OF 2004

OTTO BENAL MAGITEN
Plaintiff

V

BILDING TABAI
First Defendant

LAWRENCE ACANUFA
TRADING AS ACANUFA & ASSOCIATES LAWYERS
Second Defendant

Madang: Cannings J
2008: 9, 27 May, 10 September

JUDGMENT

NEGLIGENCE – lawyer/client relationship – lawyer’s duty to act in accordance with instructions – lawyer’s duty to be aware of statutory limitation periods.

A client sued his former lawyers for negligence. He claimed that they ignored his instructions to amend a statement of claim, instead discontinuing the case, and then filing a new one, which turned out to be time-barred. A trial was held to determine whether the lawyers are liable in negligence.

Held:

(1) The standard of care lawyers must exercise in dealing with their client’s cases is measured in accordance with the standards of the profession: the lawyer must act skilfully and diligently at all times.

(2) In particular, lawyers must act in accordance with their client’s instructions, unless the instructions are unlawful; and must be aware of all statutory time limitations for commencement of civil actions and advise their clients of the risks associated with commencing actions outside limitation periods.

(3) In this case, the lawyers failed to act in accordance with the instructions of their client and failed to take heed of, and advise their client of, the obvious risk in commencing civil proceedings outside the six-year limitation period set by the Frauds and Limitations Act.

(4) The plaintiff proved the existence of all elements of the tort of negligence, ie –

• the defendants owed him a duty of care;
  
• they breached that duty (ie acted negligently);
  
• the breach of duty caused damage to the plaintiff (loss of opportunity to succeed in other civil action);
  
• the type of damage was not too remote; and
  
• the plaintiff did not contribute to his own detriment, eg by being contributorily negligent or voluntarily assuming the risk of detriment.
  

(5) Accordingly, the plaintiff established a cause of action in negligence against the defendants, with damages to be assessed.

Cases cited

The following cases are cited in the judgment:

Martha Limitopa and Poti Hiringe v The State [1988-89] PNGLR 364
Otto Benal Magiten v William Moses and Others WS 938 of 1999, 20.20.06
Otto Benal Magiten v Kopina Raka, Gabby Ranu and Ela Motors (PNG) Ltd (2002) N2179
Takai Kapi v Maladinas Lawyers (2003) N2323

STATEMENT OF CLAIM

This is a trial to determine whether the defendant lawyers are liable in negligence to the plaintiff.

Counsel

B Meten, for the plaintiff
Y Wadau (not heard), for the defendants

10 September, 2008

1. CANNINGS J: Otto Benal Magiten, the plaintiff, is suing his former lawyers, Bilding Tabai and Lawrence Acanufa, for negligence. He says that they mucked up a case that he was running against Ela Motors, Madang. As a result of their negligence he lost that case and lost the opportunity to get an award of damages against Ela Motors.

2. What I have to determine is whether Mr Magiten has established a cause of action in negligence against Messrs Tabai and Acanufa. Negligence is a tort (a civil wrong) consisting of five elements. Mr Magiten must prove that:

• the defendants owed him a duty of care;
  
• they breached that duty (ie acted negligently – other than a reasonable lawyer in their position would have);
  
• the breach of duty caused him damage;
  
• the type of damage was not too remote; and
  
• he did not contribute to his own detriment, eg by being contributorily negligent or voluntarily assuming the risk of detriment.
  

(See Otto Benal Magiten v William Moses and Others WS 938 of 1999, 20.20.06.)

3. The very nature of the relationship between a lawyer and his or her client is that the lawyer owes a duty of care to the client (Martha Limitopa v The State [1988–89] PNGLR 364; Takai Kapi v Maladinas Lawyers (2003) N2323). If Mr Magiten’s lawyers were negligent, clearly, their conduct caused him damage or detriment, as he lost the opportunity to advance his case against Ela Motors. That sort of damage is not too remote. There is no suggestion that Mr Magiten contributed to his own detriment. Therefore all elements of negligence except the second are clearly in existence.

4. The only contentious issue is whether Messrs Tabai and Acanufa breached the duty of care to their client. Were they negligent?

5. Mr Magiten says that they were. Messrs Tabai and Acanufa deny that they were negligent. That is what is put in their defence. Unfortunately, they have not presented their case at the trial. Their legal representative, Mr Wadau, appeared. But I upheld an application by Mr Magiten’s lawyer, Mr Meten, not to hear him, and not to allow the defendants to call any evidence, as they had not complied with a court order for them to pay security for costs. (That order followed their procrastination in preparing for the trial.) The trial was conducted without hearing any submissions for the defendants and without any evidence being presented by them. That situation was of the defendants’ own making.

THE FACTS

Mr Magiten’s version of events

6. He says that in the mid-1990s he was running a PMV business between Madang and Lae. In January 1995 his bus was involved in a collision. He took it to Ela Motors, Madang, for repairs. They agreed to have it back on the road within three weeks. In fact, it took more than three months to repair it. This caused him cash flow problems. He could not service his bank loan and the bus was repossessed.

7. In January 2001 he commenced court proceedings, WS No 74 of 2001, against Ela Motors, claiming damages for breach of contract. He was acting for himself at that stage. Ela Motors was represented by Blake Dawson Waldron Lawyers. In April 2001 Blake Dawson Waldron gave him notice that they intended to bring a motion before the National Court in Madang to get the case dismissed on the ground that the defendants were not properly named. Mr Magiten decided, then, that he needed a lawyer.

8. On 10 April Mr. Magiten went to the offices of Acanufa & Associates. He gave instructions to their clerk and paid a deposit on his legal fees. The original, handwritten file-note by the clerk, Bidi Gemo, was adduced in evidence. It records the history of Mr Magiten’s case and notes that the defendants’ motion was set for 18 April. It concludes:

[Complainant] instructs that we assist and pursue matter and set aside motion and proceed with claim by amending the statement and writ.

9. The first defendant, Mr Tabai, was at that time an employed lawyer with Acanufa & Associates. He was assigned to Mr Magiten’s case. Mr Magiten visited him three times leading up to the hearing day, spoke to him about the case and confirmed his instructions: to pursue the case and apply to set aside the defendants’ motion and to amend the statement of claim.

10. At 9.00 am on 18 April Mr Magiten went to the National Court in Madang. Justice Sawong was presiding. The case was called. Mr Peter Kuman of Blake Dawson Waldron appeared for the defendants. There was no lawyer in attendance for Mr Magiten so he stood up and asked for an adjournment to 10.00 am, which was granted. He went immediately to the offices of Acanufa & Associates, found Mr Tabai and returned with him to the Court.

11. Mr Tabai had a conversation with Mr Kuman outside the courtroom. But Mr Magiten did not hear what was said. They went into court. When the case was called Mr Kuman moved the defendants’ motion. To Mr Magiten’s surprise, Mr Tabai responded by seeking leave to file a notice of discontinuance. He also said that the plaintiff (Mr Magiten) would pay the defendants’ costs. Leave was granted and an order made for Mr Magiten to pay the costs. WS No 74 of 2001 was discontinued.

12. Mr Magiten was not happy about this. He told Mr Tabai that he was not happy as he would face a problem with time limitations. But Mr Tabai said that he had done well and that he should file fresh proceedings.

13. That was done on 17 May 2001, with the filing of WS No 636 of 2001. Different defendants were named but in essence the claim was still against Ela Motors, Madang. The cause of action remained breach of contract. The defendants’ lawyers remained Blake Dawson Waldron. They again filed a motion to dismiss the proceedings, this time on the ground that the action was time-barred.

14. The motion was heard by Sawong J on 13 February 2002. On 12 March 2002 the ruling was given (Otto Benal Magiten v Kopina Raka, Gabby Ranu and Ela Motors (PNG) Ltd (2002) N2179). His Honour decided that Mr Magiten’s cause of action accrued at the end of February 1995 (when the three-week period for repairing his bus expired). He had until the end of February 2001 to commence proceedings. This was because of the six-year limitation period set by Section 16 of the Frauds and Limitations Act. Proceedings were not commenced until May 2001, more than two months late. Mr Magiten’s case was dismissed and he was again ordered to pay the defendants’ costs. That was the end of his case against Ela Motors.

Messrs Tabai and Acanufa’s version of events

15. They deny that Mr Magiten gave them specific instructions to amend the statement of claim in WS No 74 of 2001. They say that the decision to discontinue those proceedings was made in consultation with Mr Magiten. They deny that they failed to address their minds to the requirements of the Frauds and Limitations Act.

Findings of fact

16. As I said earlier Messrs Tabai and Acanufa denied themselves the opportunity to bring evidence before the court to rebut Mr Magiten’s evidence. The only evidence I have to go on, is Mr Magiten’s.

17. I am not bound to accept Mr Magiten’s evidence. I have not automatically adopted it. I have considered it on its merits. I note that he has included detailed diary notes of his conversations with the clerk at Acanufa & Associates and with Mr Tabai. The clerk has also sworn an affidavit which corroborates Mr Magiten’s version of events. Mr Magiten has given a detailed step-by-step description of the unfolding events.

18. I find, in the circumstances, that the facts as alleged by Mr Magiten have been proven.

WERE MR MAGITEN’S LAWYERS NEGLIGENT?

19. This is a question of law. The standard of care lawyers must exercise in dealing with their client’s cases is measured in accordance with the standards of the profession: the lawyer must act skilfully and diligently at all times. Section 3 of the Professional Conduct Rules states:

It is the duty of a lawyer ... to be competent in all his professional activities.

20. Section 8 of the Professional Conduct Rules also helps to circumscribe the duty of a lawyer to his or her client. It states:

(1) A lawyer shall treat a client fairly and in good faith, giving due regard to—

(a) the dependence by the client upon him and his special training and experience; and

(b) the high degree of trust which the client is entitled to place in him.

(2) A lawyer shall always be frank and open with his client and with all others so far as his client's interest may permit and shall at all times give his client a candid opinion on any professional matter in which he represents that client.

(3) A lawyer shall take such legal action consistent with his retainer as is necessary and reasonably available to protect and advance his client's interests.

(4) A lawyer shall at all times use his best endeavours to complete any work on behalf of his client as soon as is reasonably possible.

(5) If a lawyer receives instructions from a client and it is or becomes apparent to him that he cannot do the work within a reasonable time, he shall so inform his client.

(6) A lawyer shall not—

(a) take unnecessary steps or do his work in such a manner as to increase his proper costs to his client; or

(b) accept instructions which are beyond his competence.

(7) A lawyer shall, when in his client's best interests, seek his client's instructions to endeavour to reach a solution by settlement out of court rather than commence or continue legal proceedings.

21. Brunton AJ made the point neatly in Martha Limitopa and Poti Hiringe v The State [1988-89] PNGLR 364:

The duty of care that a lawyer has is not measured against standards that may be considered reasonable for labourers, or carpenters, or nurses, or community schoolteachers, or research biochemists.

22. So, what are the standards that the legal profession expects of its members? How does a lawyer act skilfully and diligently?

23. First and foremost, lawyers must act in accordance with their client’s instructions, unless the instructions are unlawful.

24. Secondly, lawyers must be aware of all statutory time limitations for commencement of civil actions and advise their clients of the risks associated with commencing actions outside limitation periods.

25. In the present case, the defendant lawyers failed to meet reasonable professional standards. Mr Tabai, in particular, failed to act skilfully and diligently. He ignored Mr Magiten’s instructions to defend the motion to dismiss his case in April 2001 and his instructions to apply to amend the statement of claim. He agreed to discontinue the case and failed to take into account the ramifications of doing this. He failed to take into account the time limitations under the Frauds and Limitations Act.

26. As Brunton AJ pointed out in Limitopa’s case, awareness of statutory limitations periods are run-of-the-mill obligations imposed on lawyers involved in the conduct of civil actions. Lawyers ignore them at their peril. In that case, the State was held vicariously liable for the negligence of the Public Solicitor who failed to meet limitation periods for the commencement of civil proceedings arising from a motor vehicle accident. His Honour stated:

The default in not adhering to these time limitations was not just a matter of heedlessness, or carelessness, but fundamentally unlawyerly conduct, and a clear breach of the duty of care, and the standard of care that the profession recognises as being owed to a client.

27. Those comments aptly describe the conduct of Mr Tabai in dealing with Mr Magiten’s case. He failed to act in accordance with the instructions of his client and failed to take heed of, and advise his client of, the obvious risk in commencing civil proceedings outside the six-year limitation period set by the Frauds and Limitations Act. Mr Tabai was guilty of fundamentally unlawyerly conduct. He was negligent. Mr Acanufa, the principal of the firm that employed Mr Tabai, is vicariously liable for Mr Tabai’s negligence, and is also adjudged negligent.

28. Mr Magiten has succeeded therefore in establishing a cause of action in negligence.

COSTS

29. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. The question of costs is a discretionary matter. There are no special circumstances in this case that warrant departure from the general rule.

JUDGMENT

30. I direct entry of judgment in the following terms:

(1) the defendants are liable in negligence to the plaintiff, with damages to be assessed;

(2) costs of the proceedings shall be paid by the defendants to the plaintiff on a party-party basis, to be taxed if not agreed.

Judgment accordingly

____________________________________________

Narokobi Lawyers: Lawyers for the plaintiffs
Young Wadau Lawyers: Lawyers for the defendants