InsRev Doc 06 - Barry.Nilsson. Lawyers

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InsRev Doc 06 - Barry.Nilsson. Lawyers
ANNUAL INSURANCE LAW
REVIEW
2006
PARTNERS
Rhett Kennedy
ANNUAL INSURANCE LAW REVIEW COMMITTEE
[email protected]
Robert Samut
Peter Murdoch
[email protected]
Joanna Burton
John Sharman
[email protected]
Gillian Sheppard
Robert Samut
[email protected]
Natalee Barr
Richard Leahy
[email protected]
Alison Crane
Brooke Jacobs
No person should rely on the contents contained herein without first obtaining advice from
a qualified person. Barry & Nilsson are not responsible for the results of any action taken on the basis of
the information contained herein nor for any error or omission therein. Barry & Nilsson expressly disclaim
all and any liability and responsibility to any person in respect of anything and in consequence of anything
done or omitted to be done by any person in reliance (wholly or partially) upon the whole or part of the
contents contained herein.
“The better the society, the less law there will be. In Heaven there will
be no law, and the lion will lie down with the lamb. In Hell there will be nothing
but law, and due process will be meticulously observed.”
Professor Grant Gilmore, Yale University Law School 1910–1982
The insurance team at Barry & Nilsson is pleased to present the fourth edition of our annual insurance
law review casebook.
Whilst many of you will agree with the sentiments expressed by Professor Gilmore, the reality is that
we are firmly placed somewhere between the 2 locations that he describes. The past 12 months have
seen some significant decisions handed down by the High Court, and State superior courts, as well
as the entrenchment of the reforms contained in tort law reform legislation. While the reforms have
undoubtedly had a dramatic effect in reducing the number of actions being issued out of the various
court registries, and have caused many personal injury lawyers to look for career alternatives, the law
of negligence continues to demand frequent judicial review and in that regard we have captured the
more important decisions in this casebook. We have also this year included the casebook on CD to
make it easier for you to search areas of interest.
We are pleased this year to again be presenting our annual insurance law review seminar in Brisbane
and Sydney. We are fortunate, and honoured, to have Kerrie Kelly (Executive Director and CEO,
Insurance Council of Australia), Dr Christian Witting (Associate Professor, University of Melbourne),
and Duncan McMeekin (Senior Counsel) presenting on contemporary and topical issues of interest
to the insurance industry.
The last 12 months have been a very busy and rewarding period for the Barry & Nilsson insurance
team. We value the trust placed in us by our clients, and take pleasure in continuing to play a role
in the insurance industry itself. Our partners hold committee positions in organisations such as the
Australian Insurance Law Association (AILA), and the Australian & New Zealand Institute of Insurance
and Finance (ANZIFF). We have in 2006 continued our association with ANZIFF in presenting the
Insurance Law Program in both Brisbane and Sydney. We are also privileged this year to be working
with the Papua New Guinea Department of Treasury in presenting a seminar on the introduction
of insurance contracts legislation into PNG.
This casebook represents the culmination of the efforts of many people within the Barry & Nilsson
insurance practice. Our solicitors are collectively the authors of this book, and their efforts in digesting
what were often lengthy judgments into 1 or 2 pages have combined to produce what we hope is an
excellent resource for you. The Brisbane and Sydney seminars, and the casebook itself, owe any success
they enjoy to the work of the authors and to the outstanding efforts of the Seminar Committee of Joanna
Burton, Alison Crane, Gillian Sheppard, Natalee Barr and Brooke Jacobs.
Should you require any more copies of this casebook for your organisation, please do not hesitate
to contact us.
Until next year.
Robert Samut
Partner
CONTENTS
PUBLIC LIABILITY
Local & State Authorities
Whittlesea City Council v Merie [2005] VSCA 199
1
Council’s breach of duty of care to pedestrian who fell on patched area of footpath
T H Fatouros Pty Ltd v Randwick City Council [2005] NSWSC 874
2
Slip on stairs where defective handrail—reliance on Council’s approval—Council’s
duty—inspecting and approving structures—Council’s approval of inherently unsafe structure
Shire of Wakool v Walters [2005] VSCA 216
4
Duty owed by a Council with respect to children’s playground equipment under
its management and control—duty to warn of obvious risk—duty
to maintain sufficient depth of soft fall surface—causation
Chotiputhsilpa v Waterhouse & Ors [2005] NSWCA 295
5
Driver of motor vehicle struck pedestrian crossing traffic on Anzac Bridge—whether
breached duty of care—Roads and Traffic Authority (RTA)- adequacy of signage providing
information about presence of pedestrian subway— whether RTA owed duty of care
to pedestrians—whether RTA breached such duty of care
Port Stephens Shire Council v Booth & Ors;
Port Stephens Shire Council v Gibson & Anor [2005] NSWCA 323
7
Duty of care owed by Council to developers and purchasers of land regulated by Council
Vairy v Wyong Shire Council [2005] HCA 62;
Mulligan v Coffs Harbour City Council [2005] HCA 63
9
Duty owed by Council to warn of natural hazards—shallow water—recreational activities
Evans Shire Council v Richardson [2005] NSWCA 416
11
Plaintiff tripped on mound of dirt—whether duty of care owed by defendant
Council—de facto control of road
Waverley Council v Ferreira [2005] NSWCA 418
13
Duty of Council as occupier of park and community centre—death of child—whether
child aged 12 could perceive risk
State of New South Wales v Peter Andrew Bujdoso [2005] HCA 76
15
Plaintiff prisoner assaulted by other prisoners while on Work Release Program—plaintiff
previously threatened—defendant prison authority knew of threats
Bennett v Manly Council & Sydney Water Corporation [2006] NSWSC 242
16
Duty to warn swimmers of submerged hazards—regular swimmer—stormwater pipes
visible only at low tide
Randwick City Council v Muzic [2006] NSWCA 66
18
Duty owed by Council—algae on concrete promenades giving access to Council
pool— presence of algae obvious—risk of slipping not necessarily obvious
Binks v North Sydney Council & Anor [2006] NSWCA 463
19
Whether Council was liable for personal injuries sustained by an intoxicated driver in an accident
at Council’s road works—whether the intoxicated driver was contributorily negligent
Porter v Lachlan Shire Council [2006] NWSCA 126
Injury sustained by member of the public on Council land—whether Council had actual
knowledge of the risk that gave rise to the injury—whether Council could rely on defence
in section 45 of the Civil Liability Act 2003 (Qld)
22
PUBLIC LIABILITY
Workplace Claims
English v Rogers and Anor [2005] NSWCA 327
24
Liability of employer and hotel for plaintiff cleaner’s psychological injury after he was held hostage
Atkinson v Gameco (NSW) Pty Ltd [2005] NSWCA 338
26
Plaintiff injured while on premises of third party in Thailand—scope of employer’s duty of care
State of New South Wales v Mannall [2005] NSWCA 367
27
Workplace harassment and negligence—psychiatric injury—harassment humiliation
abuse—vicarious liability—foreseeability
Sprod v Public Relations Oriented Security Pty Ltd
[2005] NSWSC 1074
28
Whether security company vicariously liable for assault by employees
Suncorp Metway Insurance Ltd v Grant & Anor [2005] QSC 320
29
Application of the Motor Accident Insurance Act 1994 (Qld) where the vehicle was
being driven by an alleged employee of the owner of the vehicle
Ryan v Ann St Holdings Pty Ltd [2005] QDC 345
31
Liability of a club for illegal acts of security guard employees
Commex Communications Corporation Pty Ltd v Cammeray
Investments Pty Ltd and Anor [2005] QSC 394
33
Tradesperson fell through roof at commercial premises—implied contractual
term—reasonable care for safety of the plaintiff’s employee at lessee’s premises
State of New South Wales v Burton [2006] NSWCA 12
35
Duty of care to provide counselling to police officer shot at during siege
Newberry v Suncorp Metway Insurance Ltd [2006] QCA 48
36
Whether the Civil Liability Act 2003 (Qld) or the Workers’ Compensation and
Rehabilitation Act 2003 (Qld) applies to claim by employee
King v Parsons & Anor [2006] QCA 49
38
Plaintiff injured in course of employment—whether employment contributed
to injury—whether Civil Liability Act 2003 (Qld) applied to plaintiff’s claim
Francis v Emijay P/L and Ors [2006] QCA 62
40
Whether Queensland or NSW insurer was required to indemnify the employer against
liability for the plaintiff’s injury—injury suffered in NSW—employer resident in Qld
White v Calstores Pty Ltd [2006] QDC 161
42
Duty of service station to protect employee from armed robbery
Berowra Holdings Pty Ltd v Gordon [2006] HCA 32
43
Lack of strict compliance by injured worker with the Workers’ Compensation
Act 1987 (NSW) —does this prevent the worker from claiming damages from
his employer
Gordon v Ross [2006] NSWCA 157
Plaintiff injured when drenching cattle
44
PUBLIC LIABILITY
Contractors
Chandley v Roberts [2005] VSCA 273
45
Contributory negligence—sub-contractor and principal—plasterer fell from scaffolding
after principal failed to secure ladder—lack of care by sub-contractor in failing
to check that ladder secured
Coca Cola Amatil (NSW) Pty Ltd v Pareezer & Ors
[2006] NSWCA 45
47
Duty of care to contractors—contractor shot while delivering appellant’s
products—whether relationship creates duty to protect against violence
Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19
48
Vicarious liability—whether respondent vicariously liable for the negligence
of its “representatives”
Coote v Forestry Tasmania [2006] HCA 26
50
Tree feller rendered paraplegic after a tree branch hit him—whether the defendant
was negligent in directing him not to fell that tree
Occupier’s Liability
Ridis v Strata Plan 10308 [2005] NSWCA 246
52
Liability of owners’ corporation to occupier of unit injured on common property
Kingswood Golf Club Ltdv Smith & Anor [2005] VSCA 224
54
depression in grass pathway at golf club—whether golf club in breach of duty of care
Hall v Coles Myer Ltd [2005] ACTSC 108
56
Duty of care owed by supermarket to customer who slipped in liquid on the floor
Consolidated Broken Hill Ltd v Edwards [2005] NSWCA 380
57
Duty of care owed to trespasser where occupier knows that trespassing is prevalent
Sakoua & Anor v Williams [2005] NSWCA 405
59
Lessor’s duty of care to tenant—residential premises—unsafe steps
Timberland Property Holdings Pty Ltd
v Julie Bundy [2005] NSWCA 419
61
Plaintiff slipped on patch of grease or oil—whether finding that patch of grease
was obvious was inconsistent with a finding of breach of duty of care
Neindorf v Junkovic [2005] HCA 75
63
Whether duty of care owed by occupier of residential premises to member of
the public injured on the premises while attending a garage sale
Guides Australia Inc. v McMartin [2006] NSWCA 20
65
Duty of care owed to pedestrian who fell in hole in Girl Guides’ Hall grounds
Haris v Bulldogs Rugby League Club [2006] NSWCA 53
66
Duty of care owed by football club to spectator struck by fireworks
McEwan v Adpiosus Pty Ltd & Anor [2006] QDC 087
67
Fire—burns suffered by 14 year old boy—negligence—s74(1) Fire and Rescue
Authority Act 1990 (Qld)
C G Maloney Pty Ltd v Hutton-Potts and Anor [2006] NSWCA 136
68
Duty of care owed by hotel and cleaners to patron who slipped on polished floor
Ryu v Karadjian [2006] NSWCA 144
Duty of care to tradesman who fell while carrying out renovations to residential premises
69
PUBLIC LIABILITY
Hetherington v Belyando Shire Council & Anor [2006] QCA 209
70
Duty of care owed to infant at hockey grounds
Gaskell v Denkas Building Services Pty Ltd and Others
[2006] NSWSC 632
72
Duty of care owed to tenant who slipped and fell in common area at business premises
Licensed Premises
Lynch v Shooters Saloon Bar Pty Ltd [2006] QCA 63
74
Patron queuing to enter nightclub—patron decided not to enter nightclub and attempted
to step over rope barrier to exit queue—patron’s foot became caught in rope and he
sustained injury
T. Wagstaff v Haslam & Anor [2006] NSWSC 294;
G. Wagstaff v Haslam & Anor [2006] NSWSC 295
75
Duty of care owed by licensed premises to patrons assaulted by another intoxicated patron
Livermore v Crombie & Anor [2006] QCA 169
77
Liability of hotelier to patron who was assaulted by other patrons in hotel
Sporting & Recreational Activities
Fitness First Australia Pty Ltd v Vittenberg [2005] NSWCA 376
79
Injury while using gym equipment—whether sign on machine sufficient care against risk of injury
Falvo v Australian Oztag Sports Association and Anor [2006] NSWCA 17
80
Meaning of “dangerous recreational activity”—duty to maintain condition of sporting field
Fallas v Mourlas [2006] NSWCA 32
82
Whether hunting kangaroos by spotlight is a “dangerous recreational activity” under
the Civil Liability Act 2002 (NSW)
Smith v Perese and Ors [2006] NSWSC 288
84
Duty of care to diver injured by boat driver
Wardle v Kick and Ors [2006] NSWSC 327
87
Liability of pilot, hang gliding club and Council—collision of hang glider with pedestrian
City of Stirling v Tremeer [2006] WASCA 73
89
Liability of local authority for fall of adult from children’s playground equipment
Paltidis v The State Council of the Young Men’s Christian
Association of Victoria Inc [2006] VSCA 122
90
Liability of recreation centre for injury to volleyball player
Educational Authorities
Martin v The Trustees of the Roman Catholic Church of the
Archdiocese of Sydney [2006] NSWCA 132
92
Girl injured on school camp—fall from obstacle course—whether reasonable precautions taken
Animals
Smith v Williams [2005] QSC 267
Negligence and nuisance—animals straying onto highway—whether facts pleaded can
exclude the operation of the rule in Searle v Wallbank
94
PROFESSIONAL NEGLIGENCE
Solicitors & Barristers
Michael Peter Johnston v Roderick Alexander Smith & Ors
[2005] NSWSC 433
97
Alleged failure by solicitor to advise as to nature and effect of mortgage—mortgagee
exercised power of sale—cause of loss—failure of investment company to make
repayments to investor
Leitch v Reynolds [2005] NSWCA 259
99
Recovery of damages where the negligence of solicitors denied plaintiff’s opportunity to
pursue a cause of action—damages for loss of benefit of cause of action—measure of damages
Lewis v Hillhouse & Anor [2005] QSC 20
100
Whether cause of action exists against former solicitors following plaintiff’s imprisonment
for official corruption—public policy—abuse of process—collateral attack in civil
proceedings on criminal conviction—loss of a chance
Eurobodalla Shire Council v Wells & Ors [2006] NSWCA 5
102
Liability of legal practitioners to pay costs—whether claim has reasonable prospects
of success —Legal Profession Act NSW 1987
A&D Douglas Pty Ltd v Lawyers Private Mortgages Pty Ltd
[2006] FCA 520
104
Solicitors—private mortgage loan—investment failed—nature of duty of care owed
by trustee company and solicitors—professional indemnity insurance —exclusion for
dishonest or fraudulent statement—non-disclosure
Talbot & Olivier (a firm) v Witcombe [2006] WASCA 87
108
Duty of solicitor to pursue client’s claim with diligence—where the client died before
settlement or judgment of the claim could be achieved—whether duty owed
to spouse of client
Medical Practitioners
South Eastern Sydney Area Health Service & Anor
v King [2006] NSWCA 2
110
Medical negligence—duty of specialist to keep informed of up to date information
regarding treatment—whether duty can be discharged by members of hospital staff
circulating research information to other team members
Ambulance Service of NSW v Worley [2006] NSWCA 102
114
Duty of care owed by an ambulance service and its officers to patients
Harriton v Stephens [2006] HCA 15; Waller v James;
Waller v Hoolahan [2006] HCA 16
116
Wrongful life—duty owed to disabled children born to mothers not provided with
necessary information to make informed choice about termination/proceeding
with conception
Auditors
Stanilite Pacific Ltd. (in Liq) & Anor v Seaton & Ors
[2005] NSWCA 301
119
Duty of auditor—interpretation of accounting standards
Surveyors
Moorabool Shire Council & Anor v Taitapanui & Ors
[2006] VSCA 30
Duty owed by surveyor to subsequent purchasers of residential homes—claim
for pure economic loss
121
THE POLICY
Hannover Life Re of Australasia Ltd v Sayseng
[2005] NSWCA 214
125
Whether insurer owed a duty of utmost good faith to a third party who was not named
on the policy but would indirectly benefit from a payment under the policy —whether
insurer breached duty by failing to provide third party with opportunity to respond
to unfavourable evidence it obtained
NSW Arabian Horse Association Inc
v Olympic Coordination Authority [2005] NSWCA 210
128
Interpretation of contract—Whether breach of obligation to take out public liability insurance
QBE Insurance v SLE Worldwide [2005] NSWSC 77
130
Claim for equitable contribution— words “arising from and in relation to”
require causal connection—“insured” in policy of insurance
AMP Financial Planning Pty Ltd v CGU Insurance Ltd
[2005] FCAFC 185
131
Whether insurer breached duty of utmost good faith by declining indemnity after
making representations that were relied upon by insured to its detriment —whether
dishonesty is necessary to establish a breach of the duty of utmost good
faith by an insurer
Suncorp Metway Insurance Ltd v Landridge Pty Ltd
[2005] VSCA 223
133
Property management service provided by real estate agent regarded as a “profession”
for purposes of a professional indemnity policy
Morris v Betcke x 2 [2005] NSWCA 308
135
Application to join insurer as additional defendant—arguable case for indemnity
under policy—meaning of “entered into contract of insurance” in s 6 Law Reform
(Miscellaneous Provisions) Act (NSW) 1946—meaning of “the insured” in
s 51 Insurance Contracts Act
Waterman v Gerling Australia Insurance Company & Anor
[2005] NSWSC 1066
138
Punctual payment of premium not essential for cover
Regal Pearl Pty Ltd v Zurich Australian Insurance Limited
[2005] NSWSC 1055
140
Interpretation of policy—insuring clauses—liability for economic loss compared
to liability for personal injury.
Littlewood v Resource Underwriting Pty Ltd & Anor
[2006] NSWCA 62
142
Breach of duty by investment adviser—conflict of interest—whether exclusion
clause in professional indemnity insurance policy applied.
Baulderstone Hornibrook Engineering Pty Limited
v Gordian Runoff Limited (formerly GIO Insurance Limited)
& Ors [2006] NSWSC 223
144
Where HIH was underlying insurer—whether upper layer insurers in multi-layered
professional indemnity insurance scheme were obliged to indemnify a contractor
for design and construction work—If HIH policy applied were upper layer insurers
entitled to rely on exclusion clause in HIH policy—Interpretation of “Professional
Activities” in HIH policy.
A & D Douglas Pty Ltd v Lawyers Private Mortgages Pty Ltd
[2006] FCA 690
Claim against law firm—firm self represented—firm claimed reimbursement from
insurer for its professional costs and outgoings of defending claim
147
INSURANCE INTERMEDIARIES
Hazanee P/L v Elders Ltd & Ors [2005] NTSC 37
149
Claim for indemnity under policy containing flood exclusion—whether insurer’s
agent liable for not specifically directing attention of insured to flood exclusion clause
Crown Insurance Services Pty Ltd v National Mutual Life
Association of Australasia Ltd [2005] VSCA 218
152
Insurance agent—breach of duty to insurer in issuing policy of total and permanent
disability insurance—finding that insurer would not have imposed conditions upon
the insurance even if the agent had not breached the duty—whether insurer is still able
to claim for a loss of opportunity to have imposed a condition upon insurance
PIPA CASES
Grice v State of Queensland [2005] QCA 272
155
Threshold for payment of gratuitous care and assistance under s54(2) of PIPA
Dunn v Lawrence [2005] QSC 291
156
Discretion to extend limitation period under s59 of PIPA
Amos v Brisbane City Council [2005] QCA 433
158
Costs under PIPA—successful defendant
Cousins v Mt Isa Mines Limited [2006] QCA 261
160
Whether the claimant had a reasonable excuse for delay in providing
his notice of claim under PIPA
Hamilton v Merck and Co Inc; Hutchinson
v Merck Sharp and Dohme (Australia) Pty Ltd
[2006] NSWCA 55
162
Application of PIPA to Queensland claimants who are part of representative actions
commenced outside Queensland —whether PIPA is substantial or procedural
DAMAGES
Willett v Futcher [2005] HCA 47
165
Plaintiff suffered brain damage as a result of defendant’s negligence—Administrator
appointed to manage financial affairs—recoverability of reasonable management fees
where injured party unable to manage financial affairs because of defendant’s negligence
CSR Limited v Eddy [2005] HCA 64
167
Whether damages are recoverable where a personal injury prevents a plaintiff from
providing gratuitous personal or domestic services to another person
Fortuna Seafoods Pty Ltd as trustee for the Rowley Family Trust
v The Ship “Eternal Wind” [2005] QCA 405
Claim for damages for pure economic loss—related companies—whether the defendant
owed a duty of care to plaintiff—whether defendant had means of knowing plaintiff member
of an ascertainable class of vulnerable persons
169
HIGH COURT UPDATE
Judgments Delivered
Manley v Alexander [2005] HCA 79
173
Paua Nominees Pty Ltd v Miller [2005] HCA Trans 774
173
Travel Compensation Fund v Tambree
(t/as R Tambree & Associates) and Ors [2005] HCA 69
174
Bankstown City Council v Alamdo Holdings Pty Limited [2005] HCA 46
175
Povey v Qantas Airways Limited [2005] HCA 33
176
Cases Granted Special Leave
Piper v The Nominal Defendant (B4/2004)
177
Leichhardt Municipal Council v Montgomery (S5/2006)
177
PUBLIC LIABILITY
THE FACTS
On 20 March 1999, the claimant was
walking along a concrete footpath. There
was a piece of concrete which had become
detached from the footpath. The piece was
triangular in shape,
measuring about
Whittlesea City Council 10cm, 12.5cm and
v
15cm respectively,
Merie
with a thickness
[2005] VSCA 199
at most of
Council’s breach of duty
approximately
of care to pedestrian who fell
2.5cm tapering
on patched area of footpath
to about 0.5cm.
The triangular piece
had been laid by the Council approximately
2 years prior to the incident to patch up
a hole in the footpath.
The incident occurred at approximately
5pm in broad daylight. The claimant fell
when her left foot slipped out from beneath
her when she placed it in the hole left by
the missing piece of concrete. The claimant
gave evidence that she had not seen the
hole at the time and did not know of its
existence prior to the incident.
that sufficient steps had not been taken
to bond the new mortar to the existing slab).
The issue was whether Council had
breached its duty of care to a pedestrian
exercising reasonable care for her own
safety.
THE DECISION
The trial judge held that the claimant
was exercising reasonable care for her
own safety. The trial judge concluded that
Council was in breach of its duty of care in
that the patch was improperly laid. In the
judge’s view, the Council was aware of
the danger and took no remedial action.
The Council appealed.
THE DECISION ON APPEAL
The Court of Appeal upheld the trial
judge’s decision, finding that the Council
was aware of the existence of the hazard
and had not taken reasonable remedial
action. The Court of Appeal said that “while
considerations of cost and priorities may
have a role to play… (in Council cases)
it is hard to suppose that it might have a
role to play in justifying bad workmanship or
A number of years prior to the incident,
the claimant had tripped and fallen on
another section of the same footpath
which was cracked and uneven. At that
time, she complained to the Council, with
the consequence that a number of slabs
were taken up and replaced. Ironically,
during the course of carrying out this
work, the Council had patched the hole
in question. It appeared that the patch was
laid improperly (the expert evidence was
in avoiding the harm which this may cause”.
The Court of Appeal saw the breach of duty
as twofold:
1. The poor patching up of footpath, and
2. Failing to rectify the paving or eliminate
the hazard.
The Court of Appeal also agreed with the
trial judge’s decision not to reduce damages
due to any contributory negligence on the
basis that the failure of the claimant to notice
the hole was nothing more than mere
inadvertence.
Victorian Supreme Court of Appeal:
11 August 2005
Daniel McCormack
1
THE FACTS
The plaintiff was a tenant of a boarding
house owned by T H Fatouros Pty Ltd
(Fatouros). The plaintiff alleged that on
12 December 2000, he slipped and fell
through railings on
T H Fatouros Pty Ltd
external stairs at the
v
boarding house. The
Randwick City Council
building was within
[2005] NSWSC 874
the local government
Slip on stairs where defective
area administered
handrail—reliance on Council’s
by the Council.
approval—Council’s duty—
The plaintiff settled
inspecting and approving
structures—Council’s approval
his claim against
of inherently unsafe structure
Fatouros by
agreement. Fatouros then cross-claimed
against the Council.
In 1996, the Council had, by way of
a fire safety order, directed Fatouros to
provide an engineer’s certificate of structural
adequacy or, alternatively, fix the stairway
so as to comply with clause D1.8 of the
Building Code of Australia. Fatouros elected
to have the stairs replaced. Work on the
stairs was not undertaken until 1998 and
although Council undertook a number of
inspections between that time and the
date of the incident, no engineer’s certificate
was ever provided. It was later found that
the stairs did not comply with the Building
Code. Council nevertheless approved the
modified external stairway.
Fatouros alleged that Council failed to
properly inspect the premises, inform of
non-compliance, order Fatouros to take
all necessary steps to comply with statutory
requirements and ensure that such
work was completed.
THE DECISION
The trial judge entered judgment in favour
of Fatouros against the Council. He found
that the stairs did not comply with the
Building Code.
The Environmental Planning & Assessment
Regulations (the regulations) required the
Council to inspect the premises for fire
safety. It was held that Council owed
Fatouros a duty of care pursuant to the
regulations, because once the Council took
on supervision of the building for fire safety
it could not simply limit its duty to discrete
issues. The duty required Council to direct
Fatouros to erect a new stairway, for Council
to inspect the new stairway and ensure that
it was safe for the purpose for which it was
used and to not give approval until it was
safe. In approving an inherently unsafe
structure, the Council had failed in its duty
to Fatouros. It was held that Fatouros was
entitled to rely upon the expertise of the
Council officers in approving the
construction.
The trial judge noted that the Council’s
statutory powers existed for the purpose,
amongst other things, of ensuring the safety
of individuals who are not in a position to
protect themselves. Council officers had the
expertise to appreciate dangers that others
might not recognise. Fatouros was entitled
to and did rely upon the Council for advice
as to what was required. The trial judge
“hesitantly” held that Fatouros ought to
succeed against the Council and that it was
entitled to a complete indemnity. The fact
that the risk should have been obvious to
Fatouros did not help the Council. If the risk
was obvious to Fatouros it should have been
2
even more obvious to Council officers whose
job was to assess the safety of structures
and their compliance with statutory
requirements.
The trial judge noted that this case was not
one about a failure to exercise a statutory
duty, but rather one where a duty of care
arose because the public authority had
acted so that another relied on it to take
care for their safety. The safety in this
case was protection to exposure from
a claim for damages by a person injured
as a result of a defect in the building.
Through Council’s direction to Fatouros to
replace the old stairway, its approval
of the new one and subsequent
inspections which, by implication,
authorised the continual use of the
fire stairs, there existed the necessary
“proximity” of relationship between
Fatouros and the Council.
New South Wales Supreme Court:
1 September 2005
Amanda Tucker
3
THE FACTS
On 25 April 2000 the plaintiff
(aged 2 years and 5 months) fell from
playground equipment that was controlled
and maintained by
the Shire of Wakool
Shire of Wakool
(the defendant) and
v
fractured his left leg.
Walters
The plaintiff
[2005] VSCA 216
contended that the
Duty owed by a Council with
respect to children’s playground defendant breached
equipment under its
its duty of care to
management and control—duty the plaintiff by failing
to warn of obvious risk—duty
to put up a sign
to maintain sufficient depth of
warning that the
soft fall surface—causation
equipment was
unsuitable for children under 3 years of age
and by failing to maintain not less than
200mm of soft fall surface below the
equipment.
THE TRIAL
caused or materially contributed to
the fracture. The trial judge awarded
the plaintiff $54,000.
THE DECISION ON APPEAL
The Court of Appeal found that there
was no expert evidence to support
the trial judge’s view that the equipment
was unsuitable for children under 3 years
of age. The court noted that a local
authority charged with the responsibility
for a playground is not ordinarily under an
obligation to set up signs warning of the
obvious risks of using a playground. After
considering the magnitude of the risk and
the degree of probability of its occurrence,
along with the expense, difficulty and
inconvenience of a public authority having
to put up a warning sign for a risk of that
kind, the court concluded that a reasonable
authority placed in the defendant’s position
would not have put up a warning sign.
The trial judge accepted both of the
plaintiff’s arguments. The trial judge
found that the defendant had installed
the playground for use by children and
knew or should have known of the nature
and extent of risks associated with its
use. The trial judge found that if there had
been a sign warning that the equipment
was unsuitable for children under 3 years
of age, the plaintiff’s mother would not
have let her child use the equipment
and that the defendant’s failure to warn
was causative of the child’s injuries.
However, the court upheld the trial judge’s
The trial judge also accepted that the
defendant was under an obligation to
maintain a soft fall surface under the
equipment to the depth of at least 200mm
and that the absence of soft fall material
not that the plaintiff would not have broken
finding that the surface below the play
equipment was “hard and bare”, and that
this was due to a lack of reasonable care
on behalf of the defendant. Furthermore,
the court accepted expert evidence on
this issue and found that “it accords with
common sense and experience that
200mm of suitable soft fall would have
had a significant effect in reducing the
impact and, if appropriately loose, lessened
the forces contributing to rotational stress.”
The court held that it was more likely than
his leg were it not for the absence of
appropriate soft fall material.
The appeal was dismissed.
Victorian Court of Appeal: 1 September 2005
Wes Lerch
4
THE FACTS
On 22 September 1999 at approximately
5:10pm the plaintiff sustained severe injuries
when he was struck
Chotiputhsilpa
by a motor vehicle
v Waterhouse & Ors
driven by the first
[2005] NSWCA 295
defendant. At the
Driver of motor vehicle struck
time of the accident
pedestrian crossing traffic on
the plaintiff was
Anzac Bridge—whether
attempting to cross
breached duty of care
multiple lanes of
Roads and Traffic Authority
traffic on the Anzac
(RTA)- adequacy of signage
Bridge (the bridge)
providing information about
presence of pedestrian subway— after alighting from
whether RTA owed duty of care a State Transit
to pedestrians—whether RTA
Authority (STA) bus
breached such duty of care
at a bus bay not
regularly in use. The plaintiff was 16 and had
arrived from Thailand 5 months previously.
The plaintiff sued the first defendant
(driver) and second defendant (the RTA)
in negligence, claiming that each had
breached it duty of care to him. The
plaintiff also sued the State Transit
Authority (STA) in negligence.
The RTA’s liability essentially depended
on whether it should have provided
adequate sign-posting indicating the
presence of the subway.
THE DECISION AT TRIAL
At trial the plaintiff’s claim failed against
all of the defendants. The trial judge found
that the presence of the plaintiff on the
bridge was totally unexpected and there
was no basis to infer that the driver
should have seen the plaintiff and
reduced his speed.
There was no marked pedestrian crossing on
the bridge, however, there was a pedestrian
subway that ran underneath the bridge. The
presence of this subway was not signposted
in any way.
The trial judge did not accept that the
The plaintiff’s evidence was vague as
plaintiff’s actions as “suicidal folly” and held
to his activities after he alighted from the
that the RTA did not owe a duty of care to
bus (due to the brain injury he sustained),
the plaintiff in circumstances where he
however, it was accepted that he spent a
ventured into peak hour traffic rather
significant amount of time looking for and
than find an alternative route.
pondering a safe method of crossing the
The plaintiff appealed against the trial
judge’s findings on liability against the first
and second defendants but not the STA.
bridge. The position of the subway was
not immediately obvious to the plaintiff
as reaching it required descending
2 sets of stairs and following a footpath
for approximately 50m before the
subway become apparent.
plaintiff would have used the subway and
stated that there was no basis for the RTA
to erect signs telling the plaintiff what was
obvious. The trial judge criticised the
THE DECISION ON APPEAL
It was submitted by the plaintiff that the
driver was negligent through his failure
to appreciate that the vehicles in the lanes
to the right of him were reacting
to an emergency of some kind.
The plaintiff raised 15 separate grounds
of appeal against the trial judge’s findings
5
in favour of the RTA. The court characterised
these grounds as relating to duty of care,
breach of duty, causation, the finding that the
accident was due to the plaintiff’s own fault,
bias and the failure to give adequate reasons.
was inadequate signage of the subway,
especially in light of the RTA’s internal
guidelines and systems that specifically
highlighted the necessity for adequate
signage.
It was not disputed that the plaintiff failed
In relation to causation the court found
that there was sufficient evidence to
conclude that the plaintiff would have used
the subway and not attempted to traverse
the traffic had there been adequate signage
showing the presence of the tunnel and
that it led towards the city.
to take care for his own safety in crossing
the road. Counsel for the plaintiff submitted
that the trial judge failed to examine whether
the plaintiff was compelled as a matter of
necessity to return from the centre of the
road to the southern footpath. The court
confirmed the verdict of the trial judge in
favour of the first defendant. The argument
that the driver was negligent was rejected
as there was no basis for the inference that
the driver should have been aware of the
other vehicles braking. Even if this had been
the case it would not have been open to the
trial judge to conclude any breach of duty
through failing to slow down.
The court considered that the plaintiff’s
failure to take care for his own safety was
such that he bore the greater responsibility
for the accident and assessed contributory
negligence at 60%.
New South Wales Court of Appeal:
2 September 2005
Joanna Atherinos and Sam Kingston
As to the RTA the verdict of the trial judge
was set aside and judgment in favour of
the plaintiff entered, with damages to be
assessed. It was held that, by reason of the
statutory authority to design and construct
the bridge and having made provision for
pedestrian access, the RTA owed a duty
to protect classes of persons using the
bridge from harm. It was reasonably
foreseeable that a failure to exercise the
statutory powers properly would result in
injury to classes of people using the bridge,
including the plaintiff.
In relation to breach it was held that the
RTA ought to have known that pedestrians,
especially young persons, would be at risk
of harm where there was inadequate signage
to direct their attention to the presence of
the subway. The court considered that all
the expert evidence concluded that there
6
THE FACTS
On 17 March 1993, a development
application was lodged with Council for
the development of a budget level holiday
cabin resort. On
Port Stephens
21 April 1993, the
Shire Council
Council granted
v
development consent.
Booth & Ors;
On 22 December
1993, the Council
Port Stephens
approved the
Shire Council
building application.
v
Subsequently
Gibson & Anor
a number of
[2005] NSWCA 323
purchasers entered
Duty of care owed by Council
into contracts to
to developers and purchasers
of land regulated by Council
purchase lots in
the community
plan for the resort.
A RAAF base and weapons range was
situated a number of kilometres to the
southwest of the resort. Until at least late
1995 aircraft noise was not a significant
problem. From late 1995, the aircraft noise
increased in frequency and intensity.
The resort was situated within the
“25th contour” of an airport noise exposure
forecast (ANEF) in relation to this aircraft
base. The ANEF comprised a plan of the
RAAF base and its surrounds on which
noise exposure contours of 20, 25, 30
and 40 had been drawn. The higher
the contour value, the greater the
noise exposure. On 21 October 1992,
the Department of Defence sent to Council
the ANEF for the area. The resort was
situated in an area between the 25th and
30th contours. The Australian Standard
7
regarding aircraft noise intrusion provided
that hotels, motels and hostels should only
be constructed within the 25th to 30th
ANEF contours on a conditional basis, ie,
with a view to imposing construction
requirements to achieve appropriate noise
level reductions. The zones from the ANEF
had been entered onto Council’s “constraints
map” prior to the approval of the resort.
The development consent and building
approval from Council said nothing about
ANEF forecasts or noise exposure from
aircraft. The s149 certificates issued under
the Environmental Planning & Assessment
Act 1979 contained a notation that the land
was situated within the 20th ANEF contour
and consequently may be subject to noise
exposure from aircraft. No further information
was provided by Council to the developer
or lot owners.
In 1999, proceedings were brought against
the Council by the developer and the lot
owners, claiming damages for negligence
in the grant of the development consent
and building approval and the issue of the
s149 certificates. The plaintiffs alleged
that the Council was negligent for:
• Granting development consent and
the building approval notwithstanding
the situation of the land within the 25th
contour in the ANEF and without imposing
conditions relating to noise reduction
• Failing to notify the developer that Council’s
records indicated that the land was situated
within the 25th contour and may be subject
to noise exposure from aircraft, and
• Failing to include in the s149 certificates
an accurate notation to the effect that the
land was forecast to be subject to ANEF
levels of 25 and above and would therefore
be unacceptable for residential
development.
The following issues were raised at trial:
• Whether Council was under a duty of
care to the developer and the purchasers
• Whether Council had breached that duty
of care
• Causation, and
• The appropriate valuation of damages.
The trial judge held that the time for the
exercise of reasonable care, in the interests
of the developer and the purchasers, was
when Council was considering the
development application and the building
application, so that the approvals were not
given without appropriate noise reduction
conditions.
THE DECISION AT TRIAL
The trial judge held that Council owed
a duty of care to the developer and to the
purchasers.
The trial judge held that the:
“exercise of a power by a local authority
relating to the regulation of the development
of land would give rise to a duty of care to a
subsequent purchaser, and that the Council
owed the purchasers a duty of care:
• To inform itself adequately of the exposure
of the land to aircraft noise;
• To determine, in the light of that information,
whether the development application and
building approval should be rejected, or
whether it should be approved only on the
condition that specified noise reduction
requirements be complied with; and
• Prior to determination of the development
application and building approval, to inform
the developers of the manner in which the
land was affected by the ANEF and the
requirements of the Australian Standard”.
The trial judge held that the Council had
breached its duty of care in this regard.
Further, the trial judge held that the notation
on the s149 certificates was misleading and
did not adequately warn the developer or
the prospective purchasers of the potential
exposure to aircraft noise. The inadequacy
of the s149 certificates was the product
of the inadequate practices that Council
had in place.
The trial judge held that the developer
and purchasers had relied upon the defective
development approval, building approval, and
s149 certificates and that this had caused
them loss. The trial judge accepted the
developer’s evidence that had he known that
the site was located between the 25th and
30th contours, he would have made inquiries
and taken advice, and that if he had been
told of the conditional acceptability of a
resort development on that land, he would
have not proceeded with the development.
In respect of quantum, the trial judge held
that the appropriate way to assess damages
was to award the difference between
the value of each lot at the date of the
contract of purchase (having regard to
the ANEF contours) and the price paid
for each lot. The trial judge also allowed
some amount for consequential loss.
THE DECISION ON APPEAL
Council appealed the decision.
The Court of Appeal upheld the trial
decision on every ground.
New South Wales Court of Appeal:
27 September 2005
Daniel McCormack
8
These two cases were heard together by
the High Court. Both cases involved plaintiffs
who had suffered catastrophic injuries
as a consequence
of diving into
shallow water.
Vairy
v
Wyong Shire Council
[2005] HCA 62;
Mulligan
v
Coffs Harbour
City Council
[2005] HCA 63
THE FACTS
IN VAIRY
Soldiers Beach
is a well known
surfing beach
half way between
Sydney and
Duty owed by Council to warn
Newcastle, within
of natural hazards—shallow
the Wyong Shire.
water—recreational activities
It is one of six
patrolled beaches within that Shire.
Mr Vairy’s accident happened on 24 January
1993 at which time he was aged 33. He was
a frequent visitor to Soldiers Beach. On the
day in question he was swimming in the surf
with his young niece. After leaving the surf
Mr Vairy and his niece walked to a rock
platform where people were diving and
jumping into the ocean. Mr Vairy climbed
onto the platform at a height of around 1.5
metres at which point he was unable to see
the depth of the water below. He assumed
it was safe to dive and entered the water
head first at an angle of 45 degrees, hitting
the seabed, as a consequence of which he
became a tetraplegic. The Council had
constructed a car park near to the rock
platform with access to the platform provided
by a set of low wooden steps and gravel
path. Lifesavers at Soldiers Beach often
warned swimmers against diving off the
platform, but these warnings were generally
ignored. There had been an earlier accident
in 1978 when another diver from the
platform struck the ocean bed and was
rendered tetraplegic. Members of the
Council were aware of the earlier accident.
THE FACTS IN MULLIGAN
Mr Mulligan was an Irish tourist holidaying
in the Coffs Harbour region. He and a friend
had been swimming for about half an hour
in a tidal estuary adjoining the Pacific Ocean
at Coffs Harbour. Standing in water about
thigh deep he dived into the estuary and
hit his head on the sand, and was rendered
quadriplegic.
THE DECISION IN VAIRY
The trial judge found for Mr Vairy.
The trial judge was satisfied that the risk
that a person might suffer severe injury
diving from the platform was foreseeable,
and that risk ought to have been addressed
by erecting warning signs prohibiting diving,
or at least warning of the dangers of it. The
award of damages was reduced by 25%
for contributory negligence. Judgment was
entered for just over $5 million plus costs.
The Council appealed to the New South
Wales Court of Appeal. The appeal was
upheld. The Court of Appeal took the view
that the risk of injury attaching to diving into
water of variable and unknown depth was
obvious and ought to have been apparent
to Mr Vairy at the time. Mr Vairy appealed
to the High Court.
THE DECISION IN MULLIGAN
The trial judge found for the locl authorities
and held that reasonableness did not require
the local authorities to warn of the danger
which Mr Mulligan encountered. The incident
itself was fairly unremarkable, ie, standing
in a tidal estuary and diving into it. The trial
judge assessed damages at approximately
9
$9.5 million as the amount Mr Mulligan
would have received if he had succeeded.
The trial judge’s decision was upheld
unanimously by the Court of Appeal. Mr
Mulligan appealed to the High Court.
THE HIGH COURT APPEAL IN VAIRY
In a 4:3 split decision, the High Court
dismissed the appeal.
The majority came to its decision for
the following reasons:
• The duty of the Council did not include
an obligation to erect a warning sign(s)
to prohibit entry into the water from the
platform, or to construct a fence or other
barrier to deny access to the platform
entirely
• The Council had within its control 27 km
of coastline, along which there were many
places of natural hazard. Having regard to
other demands upon the Council, it should
not be held negligent for not singling out
this particular platform for special warning
or prohibition of diving
• The danger of diving into water that
is too shallow is only one of the risks
attaching to swimming in the sea. In
addition the Council had to consider
many other forms of recreation conducted
in many different areas over which the
Council had the care, control and
management. Swimming was but one
of these many forms of recreation, each
of which had its own risks and dangers
• The placement of the car park near to
the rock platform could not be seen to
be a case of the Council encouraging
persons to use the rock platform as
a point from which to enter the water
• Nearby was a patrolled beach and to
enter the water from the rock platform
was to act contrary to the basic prudential
rule governing swimming at a patrolled
beach, ie, to swim between the flags.
The minority referred to the following
reasons for its decision:
• The area where Mr Vairy dived was
one where many people dived. Diving
in that area was fraught with the risk
of serious injury to divers
• If the water did contain a risk of injury,
large numbers of people diving into it
without apparent harm made it a trap for
the unwary. When such a situation arises
it is imperative for the controller of the
land to warn swimmers of the danger.
Given that the Council permitted diving to
continue at this spot despite its knowledge
of the dangers, reasonable care required
that it warn those who did not have the
Council’s knowledge or who had
become desensitised to the risk.
THE HIGH COURT APPEAL IN MULLIGAN
The High Court unanimously dismissed
Mr Mulligan’s appeal. Reasons supporting
the judgment included:
• The danger that materialised was one
that exists at virtually every Australian
beach and in most waterways. It is one
of the many dangers involved in swimming.
It is difficult to see how such common
dangers can be addressed by particular
warnings at particular locations
• Short of prohibiting swimming in the
channel—which would probably also
mean prohibiting swimming in the creek
generally—there was no practical way that
the Council could eliminate the physical risk
of a swimmer striking a sand dune unless
they greatly deepened the channel.
High Court of Australia: 21 October 2005
Robert Samut
10
THE FACTS
On Anzac Day 1999 the plaintiff, Norman
Richardson, had been attending an Anzac
Day ceremony at a park located within the
village of Rockley (the village). After the
conclusion of
Evans Shire Council
the ceremony
v
the plaintiff was
Richardson
returning to his
[2005] NSWCA 416
car on Hill Street
Plaintiff tripped on mound of
when he tripped
dirt—whether duty of care owed over a mound of
by defendant Council—de facto
dirt that was
control of road
approximately 76cm
in length and about 30cm to 45cm high.
The mound was partially covered in grass
and blended with the surrounding area.
The defendant, Evans Shire Council, was
responsible for maintaining several roads
within the village. Other roads within the
village were vested in the Crown and this
included an unmade section of Hill Street,
which was a gravelled area that was
sometimes used for parking. On either side
of the gravelled area were grass verges.
The park where the Anzac Day
ceremony was held was Crown land
under the trusteeship of the defendant
and was located near Hill Street. An electric
light pole had been erected on the eastern
side of Hill Street, approximately 1m to the
west of the fenced boundary of the park.
The mound on which the plaintiff tripped
was located approximately 1m to the west
of the light pole.
11
The issue to be determined by the court
was whether the defendant owed a duty
of care to the plaintiff. This essentially rested
on a determination of whether the defendant
was exercising direct control over the area
where the mound of dirt was situated at
the time of the accident.
THE DECISION AT TRIAL
The trial judge found that the defendant
did have de facto control over the land and
therefore owed a duty of care to the plaintiff.
This duty of care required the defendant
to inspect the area prior to the Anzac Day
ceremony, identify the mound and have
it removed. The trial judge came to the
conclusion that the defendant did exercise
some control over the land from the
presence of several signs erected in the
park prohibiting certain activities. The trial
judge believed that these signs had been
erected by the defendant.
The trial judge held that the duty of care
owed to the plaintiff had been breached by
the defendant’s failure to remove the mound
which was described by the trial judge as
“an unacceptable hazard”. The trial judge
also believed that the mound was not
obvious to the plaintiff and was camouflaged.
The plaintiff was awarded $10,100 damages.
THE DECISION ON APPEAL
The New South Wales Court of Appeal
held that there was no evidence which
established that the defendant maintained
de facto control of the park or the gravel
area within Hill Street. There was no
evidence that it had been the defendant
who had erected the signs in the park,
and the maps of the area did not support
a finding that vast areas of Crown road fell
within the defendant’s area of responsibility.
It was not relevant that the Anzac Day
ceremony at the park was conducted
with the approval of the defendant.
Based on the above findings the Court of
Appeal held that the trial judge was incorrect
in holding that the defendant owed a duty of
care to the plaintiff. The defendant was not
the owner or occupier of the area and did not
exercise any control over it. The defendant
therefore did not breach any duty to the
plaintiff.
New South Wales Court of Appeal:
30 November 2005
Joanna Atherinos
12
THE FACTS
The plaintiff commenced proceedings
against the Council for damages for mental
harm suffered by reason of his 12 year old
son’s death. His son, Martin, died when he
fell to the ground
Waverley Council
through a skylight in
v
a community centre
Ferreira
situated in a park.
[2005] NSWCA 418
The Council had
Duty of Council as occupier
care, control and
of park and community centre— management of the
death of child—whether child
park and community
aged 12 could perceive risk
centre. The park
contained swings and other playground
equipment to attract children. It was
common knowledge that children came
to play in the park everyday.
The incident occurred when Martin,
by mistake, threw a dart onto the roof
of the building. He walked up to a fence
that abutted the building and pulled himself
up to stand on the fence and climbed on
the roof. Out of curiosity, Martin ended
up standing on the skylight, which caused
the skylight to collapse. Martin fell and
suffered fatal injuries.
It was accepted that the plaintiff had
suffered a recognised psychiatric illness
as a result of Martin’s death. It was also
accepted that the Council owed a duty
of care as the occupier of the park and
community centre. The issue at trial,
and ultimately on appeal, was whether
the Council had breached its duty
and whether Martin had been
contributorily negligent.
13
THE DECISION AT TRIAL
The trial judge held that the Council had
breached its duty of care by failing to take
reasonable steps to prevent a person in
Martin’s position from falling through the
skylight. The park was a popular place with
local children. The trial judge held that the
Council knew or ought to have known that
boys of Martin’s age would climb onto the
roof of the building. Armed with that
knowledge, the Council ought to have
taken reasonable steps to reduce the
risk of foreseeable injury of a child falling
off the roof or falling through the skylight.
A reasonable response would have been
removing the fence which abutted the
building and clearing the vegetation near
the fence which enabled easier access
to the roof. The trial judge also held that
the Council should have provided protection
against the possibility of the skylight
collapsing or breaking by installing a
metal grill over or underneath the skylight.
With respect to the issue of contributory
negligence, the trial judge held that a boy
of Martin’s age would not have had any real
perception of the risk involved in what he
was doing. Accordingly, the trial judge
held that Martin had not been guilty of
contributory negligence.
Judgment was entered in favour
of the plaintiff in the sum of $138,400.
The Council appealed.
THE DECISION ON APPEAL
The Court of Appeal upheld the trial decision.
The Court of Appeal held that the relevant
risk of injury was that a child might fall to the
ground once he had climbed onto the roof.
This was a foreseeable risk of which the
Council knew or ought to have known.
It was immaterial that the Council might
not have been able to foresee the precise
mechanism that caused the child to fall
(ie, the skylight collapsing). In response to
such a risk, a reasonable Council would have
taken precautions by removing the fence and
the undergrowth. Relevantly, the fence and
undergrowth served no apparent utilitarian
or aesthetic purpose and the burden of
removing them would have been small.
By failing to remove the fence and
undergrowth, the Council had breached
its duty of care.
The Court of Appeal also held that the risk
of the skylight collapsing was foreseeable
and not insignificant. It was clear that the
Council did not have in place a reasonable
system of inspection in relation to the roof
of the building. The Council ought to have
had such a system in place considering that
the building was situated in a children’s park
and it was known that children frequently
climbed onto the roof. Upon a reasonable
inspection, it would have become apparent
that the skylight was soft and presented
a foreseeable risk. The burden of taking
precautions (ie, installing a grill over or
under the skylight) was small and Council
breached its duty of care in failing to do so.
With respect to contributory negligence,
the Court of Appeal upheld the trial judge’s,
finding that a 12 year old child stepping on
a skylight was unlikely to appreciate the risk
involved.
New South Wales Court of Appeal:
1 December 2005
Daniel McCormack
14
THE FACTS
In 1990 the plaintiff, Mr Bujdoso, was
imprisoned for committing several sexual
assaults. During his imprisonment he was
assaulted and taunted by other prisoners.
He was transferred
State of New
to Silverwater prison
South Wales
in May 1991.
v
Peter Andrew Bujdoso
[2005] HCA 76
In July1991 the
plaintiff received
a threatening letter,
Plaintiff prisoner assaulted
of which the
by other prisoners while on
Work Release Program—plaintiff Silverwater prison
previously threatened—defendant officers became
prison authority knew of threats
aware. The plaintiff
was also taunted by other prisoners.
In September 1991 the plaintiff was
admitted to a prison work release programe
where prisoners were not closely supervised.
On 21 September 1991 two or more
prisoners entered the plaintiff’s room
and attacked him with iron bars, causing
serious injuries.
The issue was whether the State of New
South Wales (the defendant), as the operator
of Silverwater prison, was in breach of the
duty of care it owed to the plaintiff when
he was assaulted while imprisoned.
THE DECISION AT TRIAL
The trial judge held that the defendant
had believed that the prisoners in the work
release program were trustworthy and,
therefore, no special measures were required
to protect the plaintiff. This was held to
have been a reasonable conclusion reached
by the prison authority and it was therefore
held that the defendant had not breached
the duty of care it owed the plaintiff.
THE DECISION
The New South Wales Court of Appeal
held that the defendant breached the duty
of care it owed the plaintiff, as its system
of trusting prisoners did not always work
and there had been assaults in the past.
The defendant was held to have had actual
knowledge of the risk, but took no additional
steps to protect the plaintiff. The Court of
Appeal held that the defendant had been
negligent by not responding to the threats
made against the plaintiff.
THE DECISION OF THE HIGH COURT
In a unanimous decision, the High Court
held that the content of the duty of care
owed to prisoners was different from what
was owed to the general community. As
the plaintiff had been threatened, and the
defendant knew of this, it was under a
duty to adopt measures to reduce the
risk of harm to the plaintiff.
The High Court held that the defendant
did not adopt any measures to reduce the
risk of harm to the plaintiff and relied on
its existing methods of classification of
prisoners. The defendant therefore breached
the duty of care it owed the plaintiff. There
was a foreseeable risk of injury to the
plaintiff that required preventative measures.
None were adopted.
High Court of Australia: 8 December 2005
Kylie Powell
15
THE FACTS
Mr Bennett (the plaintiff), a professional
triathlete, was injured at Manly Beach on
8 October 2000 when he body surfed a
wave to shore and hit his head on a
stormwater pipe
Bennett
which extended from
v
the shore into the
Manly Council
sea. The plaintiff
& Sydney Water
suffered incomplete
Corporation
quadriplegia. It
[2006] NSWSC 242
was accepted that
Duty to warn swimmers of
in most conditions,
submerged hazards—regular
other than around
swimmer—stormwater pipes
low tide, the pipes
visible only at low tide
were obscured to
persons swimming or surfing beyond them.
The two 56cm stormwater pipes were
constructed in 1974. The Manly Council
and the Sydney Water Corporation
(the defendants) agreed that they would
be responsible for one pipe each. The
56cm pipes had replaced slightly smaller
pipes which had been in place since 1903.
The plaintiff had swum at Manly Beach
on many previous occasions and had
competed in ocean swims there. He knew
of the existence of the pipes. On the day
in question, he was swimming with three
friends as part of a training session. During
the course of the session, the plaintiff
warned his companions of the location
of the pipes and to be cautious of
swimming too close to them.
THE ISSUES
The allegations of breach against the
defendants were essentially that they
failed to:
1. Erect a marker or sign warning
of the presence of the pipes
2. Prohibit bathing in the vicinity
of the pipes
3. Carry out any assessment of the
risk posed by the pipes to bathers
4. Remove the pipes, or relocate them to
a safer place, for instance, underground.
There was evidence given by a former
lifeguard that he had struck the pipes on
two occasions and that he had observed
other people involved in similar incidents.
The plaintiff’s expert engineer gave evidence
that a simple solution would have been to
signpost the location of the pipes so that
they were visible to people in the surf to
whom the pipes represented a hazard.
No expert evidence was called by
the defendants.
Each defendant made a claim for
contribution against the other.
THE DECISION
Justice Hislop held the defendants negligent.
In doing so, Justice Hislop considered recent
decisions in favour of defendants in similar
cases where courts had placed greater
emphasis on the personal responsibility
of individuals for their own safety.
Justice Hislop held that the risk of persons
swimming or surfing in the vicinity of the
pipes and colliding with them was not
farfetched or fanciful and that the risk of
such an injury was reasonably foreseeable.
He accepted that a sign such as that
suggested by the plaintiff’s engineer
would have alerted the plaintiff to the
16
position of the pipes and concluded that,
on balance, the plaintiff would not have
sought to come ashore in the vicinity of
the pipes had such a sign been present.
Justice Hislop dismissed the other
allegations of negligence.
Justice Hislop held that the risk of injury
posed by the pipes was an unusual risk to
encounter on an Australian beach. Evidence
was provided that there are only two other
similar stormwater outlets on other Australian
beaches. Justice Hislop noted that the pipes
were a hazard specifically created by the
actions of the defendants.
With the defendants’ contribution claims,
Justice Hislop saw the liability of each
defendant to be substantially the same, and
he apportioned liability equally between them.
Justice Hislop also found the plaintiff guilty
of contributory negligence for the following
reasons:
• He was swimming outside the designated
safe swimming area
• He was aware of the existence of the pipes
and was aware that if he hit them, he could
suffer injury
• He was reminded of the presence of the
pipes when he observed them in the surf
• He was aware that there was a rip dragging
him toward the pipes
• It would have been possible for him to
orientate himself by looking for a marker
on the beach
• When he was catching the wave, he should
have checked his position by keeping his
head up.
Justice Hislop reduced damages by 50%
to account for the plaintiff’s contributory
negligence. Damages were agreed at
$3,500,000 and, with the deduction for
contributory negligence, an award was made
17
in favour of the plaintiff for $1,750,000. Each
defendant was ordered to pay $875,000.00.
New South Wales Supreme Court:
4 April 2006
Robert Samut
THE FACTS
The plaintiff alleged that on 30 January
2002 she slipped and fell approaching
the steps to the sea baths at Clovelly Bay
in Sydney. The defendant Council had the
custody, care and
Randwick City Council
control of the area
v
where the incident
Muzic
occurred.
[2006] NSWCA 66
Up until 1997, the
defendant regularly
removed the algae
growing on the steps
to the sea baths
using chemicals and
wire brushing. When this practice stopped,
people often slipped over on the algae
effected areas and injured themselves,
sometimes quite badly. Such incidents
were reported to the Council and sometimes
resulted in claims for compensation.
Duty owed by Council—algae
on concrete promenades giving
access to Council pool—
presence of algae obvious—
risk of slipping not necessarily
obvious
It was found that the plaintiff was aware
of the dangers posed by the algae prior to
the accident, having swum at Clovelly Bay
for over 30 years.
Prior to the plaintiff’s accident the Council
obtained a report from consulting engineers
who recommended that major remedial
work be carried out on the promenades.
The remedial work was underway at the
time of the plaintiff’s accident. There were
no signs warning members of the public
that the surface of the promenade was
slippery near the entry to the sea baths.
THE DECISION
The trial judge found in favour of the
to the plaintiff. The plaintiff appealed against
the finding of contributory negligence.
THE APPEAL
The appeal was dismissed. The Court
of Appeal held that the Council owed
the plaintiff a duty of care which it had
breached by failing to close each promenade
to the public until such time as the remedial
works on that promenade were completed.
The defence of voluntary assumption
of risk was not made out because the
plaintiff did not fully appreciate the risk
she took in entering the sea baths
by way of the promenade.
The Civil Liability Act 2002 did not apply
to the claim. The Court of Appeal found that
at common law obviousness of a risk was
not a separate legal criterion against which
the Council’s conduct is to be measured.
Obviousness of risk is only relevant at
common law to how a reasonable person
would have responded to the risk. Here
the Court of Appeal held that the Council
was in a position of superior knowledge
and understanding of the dangers posed
by the algae through its knowledge of people
falling and the engineer’s report. The Court
of Appeal found that the plaintiff was not
similarly aware of the dangers posed by
the algae, even though she was aware of
its presence. The plaintiff said that while
she knew that the area where she fell
was slippery she did not anticipate that
it would be “that slippery”.
The Court of Appeal allowed the plaintiff’s
appeal against the finding of contributory
negligence.
plaintiff and assessed damages at $250,239.
negligence. The Council appealed against
New South Wales Court of Appeal:
6 April 2006
the finding that it breached its duty of care
Amanda Tucker
This was reduced by 15% for contributory
18
THE FACTS
The North Sydney Council (the Council)
contracted with a builder to construct
a roundabout and to do other ancillary
road works at
Binks
an intersection.
v
A few days after
North Sydney
construction had
Council & Anor
commenced, the
[2006] NSWSC 463
plaintiff drove his
Whether Council was liable for
car towards the
personal injuries sustained by an
intoxicated driver in an accident intersection at
night. As the plaintiff
at Council’s road works—
Whether the intoxicated driver
approached the road
was contributorily negligent
works, his car veered
for his injuries
to the right, mounted
the curb and collided with a telegraph pole.
The plaintiff sustained severe head injuries
and multiple fractures.
at the intersection and, as a result, confusion
was likely to be created in the mind of a
driver approaching the road works as to
whether or not the southbound lane was
blocked.
The court had regard to a plan of the
roadworks, which showed that the central
island in the roundabout was positioned
to the east, rather than in the centre of
the road and that it substantially encroached
on the southbound lane. To safely negotiate
the roadworks motorists would have been
required to make a significant lateral
movement to the east when travelling south.
The only clear evidence provided to
the court as to the existence and position
of signs to warn drivers of the road works
were from photographs. The Council was not
able to provide any further information. The
A blood alcohol reading taken one hour after
the accident showed that the plaintiff had
a blood alcohol concentration of 0.133.
photographs showed a sign stating “changed
The plaintiff argued that the Council had
been negligent in its management of the
road works. The defendant argued that the
plaintiff’s intoxication meant that he was
fully or partially responsible for the accident.
roundabout sign and a “keep left” sign
THE DECISION
It was also held that the black and yellow
The plaintiff led evidence that the Council
had failed to comply with Australian Standard
1742.3 (1985) (the Standard) in relation to
signposting and delineation of the roadworks
traffic conditions ahead” 25 metres north
of the intersection and a black and yellow
near the roundabout.
The court held that the first mentioned
sign had been placed too close to the
intersection to comply with the standard.
sign would not have operated as a warning,
as it was a conventional sign that would not
have necessarily attracted a driver’s attention
at night or alerted a driver to the fact that
something unusual was occurring ahead,
such as road works, nor did it give the
impression that the left lane was blocked.
Further, the dimensions of the “keep left”
sign meant that it did not comply with
the standard. For these reasons, the
court found that the signs would have
given the impression to the plaintiff that
the southbound lane was entirely blocked
19
and that this impression would not have
been corrected until he was within
25 metres of the intersection.
The parties agreed that the Council
owed the plaintiff, as a roaduser,
a non-delegable duty to ensure that
reasonable care was exercised during
roadworks on public roads. Therefore,
it was not in dispute that the Council was
responsible for the acts and omissions of the
building contractor. The court also found that
the duty the Council owed was not restricted
to those motorists who were taking ordinary
care and who were sober. The duty required
the Council to have regard to the
inadvertence and thoughtlessness of those
drivers who speed, or whose faculties are
impaired either naturally or by the effects
of alcohol to the extent that it slowed their
reaction time. Therefore, the Council was
required to take reasonable care not to
create a foreseeable risk of harm to the
plaintiff as a motorist who happened to
have been intoxicated.
The court also held that it was foreseeable
that unless appropriate signage alerting
motorists to the roadworks were put in
position, the roadworks could create a risk
of harm to motorists. Therefore, the Council
was under an obligation to “properly signify
and delineate the fact and nature of the road
works”. The court also found that it was
reasonably foreseeable to the Council that
drivers travelling south along the road might
gain an impression from the signs that had
been erected and the overall configuration
of the works that the southbound lane
was blocked off and that they would act
accordingly. Thus, it was foreseeable that
the configuration of the road works together
with the absence of adequate signs and
markings would create a foreseeable risk
of harm to road users exercising reasonable
care. The risk was higher and therefore more
likely to occur where a driver was inattentive,
speeding or whose faculties were impaired
for any reason.
The nature of the works and the fact that
they encroached on the southbound lane
meant that the signage was inadequate to
provide motorists with sufficient notice of
the roadworks and that they would require
motorists to make a significant lateral
movement to the east. The court accepted
the evidence given by witnesses that even in
broad daylight the road works gave motorists
the impression that the southbound lane was
completely blocked until they were extremely
close. The court found that this impression
would have been greater at night. The
court concluded that the mixture of the
configuration of the road and inadequate
signage created a confusing and ambiguous
situation. The Council should have set out
more signs that were better positioned and
contained more information. As the Council
failed to take these steps, it was in breach
of its duty of care to the plaintiff.
The court then considered the issue
of contributory negligence. Although the
plaintiff was intoxicated when the accident
occurred, the court found that he would
still have had regard to better and clearer
signage had it been in place, as there
was no evidence that the plaintiff was
not keeping a proper lookout. However,
the court held that since the plaintiff
had a blood alcohol reading of at least 0.125
at the time of the accident, his ability to drive
safely would have been significantly effected
and would have slowed his reaction time. The
court found that the plaintiff therefore failed
to take reasonable care for his own safety.
20
The court held the plaintiff to be 65%
contributorily negligent for his injuries
on the basis that his driving while intoxicated
was the major cause of the accident as
opposed to the Council’s configuration
of the road works and failure to erect
appropriate warning signs. Further, the
moral culpability of the plaintiff’s actions
were held to be greater than the Council’s
carelessness.
Taking his contributory negligence into
consideration, the court awarded the
plaintiff $330,253 in damages.
New South Wales Court of Appeal:
25 May 2006
Bree Macfie
21
THE FACTS
The plaintiff sustained a fracture to his
right ankle after he accidentally stepped into
a hole in a nature strip between the footpath
and the gutter of a
Porter
road (the hole). The
v
hole was situated
Lachlan Shire Council
on land owned by
[2006] NWSCA 126
the Council and
Injury sustained by member
was in the vicinity
of the public on Council land— of property owned
whether Council had actual
knowledge of the risk that gave by the Condobolin
Aboriginal Health
rise to the injury—whether
Council could rely on defence
Service (the Service).
in section 45 of the Civil
Subsequent to the
Liability Act 2003 (Qld)
plaintiff’s accident
the Council paved the area and filled
the hole.
The manager of the Service gave
the following evidence at trial:
• At the time of the plaintiff’s accident, the
Council was involved in a road resurfacing
project in the area where the accident
occurred
• Two Council officers had inspected
the area one year prior to the plaintiff’s
accident, at which time the hole already
existed. However, the manager of the
Service did not draw the hole to their
attention, complain to them about it,
or suggest that the Council should
do something about the hole, and
• A cleaner employed by the Service
tripped in the hole two years prior to the
plaintiff’s accident, but that event was only
reported to the local electricity company
and not the Council.
There was also evidence from a photograph
taken two weeks after the plaintiff’s
accident that showed the grass in the
vicinity of the hole was quite long.
THE TRIAL DECISION
The plaintiff commenced proceedings
against the Council and the electricity
company. The Council sought to rely on
s45 of the Civil Liability Act 2002 (Qld)
(the CLA). This section provides a defence
for road authorities by precluding civil
liability for harm arising from a failure
of the authority to carry out roadwork,
or to consider carrying out road work,
unless at the time of the alleged failure
the authority had actual knowledge of
the particular risk the materialisation
of which resulted in the harm.
The trial judge held that but for the
existence of s45 of the CLA, he would
have found the Council liable for the
plaintiff’s injury. He considered that the
plaintiff had been looking out for his own
safety, and that the Council knew or should
have known of the existence of the hole,
as the area was one that they should have
inspected from time to time, and the hole
had existed for more than one year.
However, the existence of s45 of the
CLA “reluctantly” lead the trial judge
to find for the Council.
In reaching this decision the trial judge
examined the meaning of “actual knowledge”
in s45 of the CLA. The trial judge referred to
the dictionary definition of “actual” which
is “existing in fact, real, present or current,”
22
and said that the Council would clearly
have had actual knowledge of the hole’s
existence if a member of the public had
written or telephoned the Council to advise
of the hole’s existence and that it was
dangerous. Further, if the Council had
received a letter or telephone call simply
advising of the hole’s existence, that would
probably also have been sufficient to sheet
home actual knowledge to the Council. The
trial judge said that the plaintiff’s evidence
that two Council workers had walked past
the hole a year prior to the accident was
insufficient evidence to prove that the
Council had actual knowledge of the
particular risk.
The trial judge also found in favour of the
electricity company.
THE DECISION ON APPEAL
The plaintiff appealed against the trial
judge’s finding in favour of the Council,
on the basis that the trial judge had erred
in finding that the Council was permitted to
rely on the defence in s45 of the CLA.
The Court of Appeal held that the
s45 was applicable in the circumstances
and examined the issue of whether the
Council had actual knowledge of the
hole’s existence.
The Court of Appeal held that since
the Council had the responsibility of
maintaining the road, gutter and footway
in a satisfactory state of repair, it could
be assumed that its employees performed
inspections of the area at a level of
frequency that would mean that some
inspections had occurred during periods
when the hole was clearly visible. The Court
of Appeal also said that a finding of actual
knowledge can be based on inference rather
than direct evidence. However, the Court of
23
Appeal agreed with the trial judge’s finding
that insufficient evidence had been led by
the plaintiff concerning the visibility of the
hole when the two Council workers had
walked past it to prove that the Council had
actual knowledge of the hole’s existence at
the time of the plaintiff’s accident. The Court
of Appeal also upheld the trial judge’s
assessment of damages.
The appeal was dismissed with costs.
New South Wales Court of Appeal:
24 May 2006
Bree Macfie
THE FACTS
THE DECISION AT TRIAL
The plaintiff and his wife were employed
to clean the Carousel Inn Hotel (the hotel)
by Mr English (the employer). The hotel was
owned and operated by Bittini Pty Ltd. Large
amounts of cash were kept on the premises.
The plaintiff succeeded against his
employer and damages were assessed
in the amount of $277,054. The plaintiff’s
psychological injury was held to have
contributed to the 2 subsequent motor
accidents. The trial judge held that the
plaintiff’s injuries were the result of the
employer’s breach of duty as the plaintiff
was working in a dangerous and vulnerable
location without adequate protection.
English
v
Rogers and Anor
[2005] NSWCA 327
The plaintiff claimed
that he suffered
psychological injury
after being held
hostage by a masked
Liability of employer and hotel for
gunman at the hotel
plaintiff cleaner’s psychological
injury after he was held hostage early on the morning
of 17 March 2000.
The plaintiff had taken a load of rubbish
to a skip at the rear of the hotel where
he was met by the gunman. He was
taken inside and kept captive with his
wife for several hours.
The plaintiff stopped working at the hotel
7 days later and he was diagnosed with
a serious post traumatic stress disorder.
The plaintiff alleged that his psychological
injury caused him to have 2 subsequent
motor vehicle accidents. On 27 July 2000,
the plaintiff drove into a rock face and
fractured his left wrist. On 1 November
2001, the plaintiff drove into a tree,
sustaining serious orthopaedic injuries.
The plaintiff said that on both occasions
he was anxious because he was attending
job interviews for work as a cleaner. There
was no suggestion that the accidents
were suicide attempts.
The plaintiff sued both the employer and the
hotel for damages for personal injury, and the
employer sought contribution from the hotel.
The plaintiff argued that he was owed
a duty of care by the hotel because his
relationship with the hotel was analogous
to employer/employee. The trial judge
however found against the plaintiff in
this regard and held that the hotel owed
no duty of care to protect the plaintiff
from the criminal acts of a third party.
The trial judge acknowledged the High
Court case of Modbury Triangle Shopping
Centre Pty Ltd v Anzil (2000) 205 CLR 254
and stated that the circumstances of this
case did not support an occupier based
duty. Something more than occupation
of the land was necessary for the hotel
to owe a duty to protect the plaintiff.
The employer’s cross-claim against
the hotel for indemnity and/or
contribution was dismissed.
The plaintiff and the employer appealed.
THE DECISION ON APPEAL
The Court of Appeal affirmed the trial
judge’s finding that the negligence of
the employer was causative of the plaintiff’s
injury. The employer owed the plaintiff
a non-delegable duty of care which could
not be avoided by sending an employee
to work in a remote location under
another’s control. That duty included
24
the need to take reasonable measures
for its employees’ safety, including measures
designed to avoid the risk of the plaintiff
being robbed. There was no evidence that
the employer took any measures of its own,
when simple measures were available, or
even that the employer gave any instruction
to the plaintiff on the topic of safety from
intruders.
The Court of Appeal held that the facts
that established breach against the employer
also established breach against the hotel.
The relationship between the hotel and
the plaintiff was so close to that of
employer/employee, at least with regard
to safety in the workplace, that a duty
of care arose “that was not trumped” by
the principles in Modbury. The hotel knew
or ought to have known that the plaintiff was
in an especially vulnerable situation. In order
to alleviate the risk, simple measures could
have been taken such as leaving the rubbish
inside until it could be taken outside during
daylight hours, or being accompanied by
another person such as a manager while
taking the rubbish out. The hotel and the
employer could also have provided better
lighting and a warning to be aware of
intruders in order to discharge their
duty of care.
The plaintiff’s appeal was upheld.
The Court of Appeal apportioned liability
60% to the employer and 40% to the hotel,
and upheld the trial judge’s finding that the
motor accidents were causally related to the
tort-induced psychological injuries of the
plaintiff.
New South Wales Court of Appeal:
21 September 2005
Yolanda Battisson
25
THE FACTS
The plaintiff, Mr Atkinson, was employed
as a marketing manager of Gameco,
a manufacturer of gas burners.
Mr Atkinson was injured in Thailand while
visiting a prospective
Atkinson
customer, a Thai
v
company who
Gameco (NSW) Pty Ltd
[2005] NSWCA 338
manufactured
bitumen tanker
Plaintiff injured while on
vehicles that
premises of third party in
utilised gas burners.
Thailand—scope of employer’s
Mr Atkinson was
duty of care
climbing a ladder
attached to the rear of one of the tankers
at the Thai company’s premises (the
premises) when the ladder fell backwards
and he sustained serious injuries to his back.
The ladder fell because the bolts to secure it
to the tanker had not been inserted.
The plaintiff claimed that the defendant had
breached its non-delegable duty of care to
provide him with safe working conditions,
a safe system of work and safe plant and
equipment.
THE DECISION AT TRIAL
The trial judge found for the defendant.
It was held that while the defendant owed
the plaintiff a non-delegable duty of care,
it had not breached that duty as the duty
did not extend to the state of the Thai
company’s premises and, in any case, the
trial judge held that the working conditions
were not inherently unsafe. The trial judge
also found it unlikely that any safety or
risk assessment course would have
averted the accident.
The plaintiff appealed.
THE DECISION ON APPEAL
The Court of Appeal held that
in determining the content or scope
of the defendant’s non-delegable duty of
care, due regard must be given to the fact
that the plaintiff was injured on the premises
of a stranger, a company with which the
defendant had no contractual or other
relationship and which was under the
control of a third party.
The Court of Appeal held that the
defendant had no opportunity to inspect
the premises. The plaintiff was only visiting
the premises for the purpose of attempting
to sell the defendant’s product and had
therefore been on the premises for a
relatively short period of time. The defendant
had no knowledge of the particular danger
and it had virtually no capacity to shield the
plaintiff from the danger that materialised.
The Court of Appeal held that the scope
or content of the defendant’s duty of care
did not extend to the state of the premises
of the Thai company, its plant and equipment
or its system of work.
The appeal was dismissed with costs.
New South Wales Court of Appeal:
10 October 2005
Danae White
26
THE FACTS
After the plaintiff was appointed
as a team leader within the New South
Wales Department of Housing in May 1994,
she developed a psychiatric injury due to
being exposed to
State of New South Wales harassment and
abuse in her
v
workplace. She
Mannall
took sick leave and
[2005] NSWCA 367
subsequently was
Workplace harassment and
negligence—psychiatric injury— unable to return to
harassment humiliation abuse— work. She alleged
vicarious liability—foreseeability that the risk of such
an injury should have
been recognised by her supervisor and
employer, and that steps should have
been taken to placate the situation.
THE DECISION AT TRIAL
The plaintiff established workplace
negligence on the part of her employer
and was awarded $339,722 damages
for psychiatric injury. The finding was based
predominantly on the actions of the plaintiff’s
immediate supervisor, Mr Singh, who failed
to act on complaints by the plaintiff and
acknowledge signs that the plaintiff’s health
was in danger. His actions were found to
have materially contributed to the plaintiff’s
“mental breakdown”. The defendant
employer was found vicariously liable
for the action (or inaction) of Mr Singh.
The trial judge acknowledged
the influence of other team members
on the plaintiff’s condition. In particular,
Mr McKee was described as “a destabilising
influence.” It was recognised that some of
the plaintiff’s team members did not get
27
along well with her and had issues with
her management style. Part of the plaintiff’s
role was to restructure the team and this
created difficulty within her team, who knew
that she was charged with improving the
“old culture.” Many also had misguided loyalty
to the previous team leader, who had been
in that role for 8 years. The trial judge in
finding for the plaintiff also noted that
the plaintiff had limited experience and
management training and certain “personality
traits” that would only add to the disunity
in her team.
The defendant appealed.
THE DECISION ON APPEAL
The Court of Appeal unanimously
rejected the appeal. It differentiated
between difficulties that naturally occur
everyday in personal interactions at work
and those which give cause for a finding
of negligence. It did not disturb the trial
judge’s finding that Mr Singh was aware
of the risk that his conduct might cause
the plaintiff to suffer a psychiatric injury.
In relation to Mr Singh’s negligence, the
Court of Appeal agreed that his actions
were inadequate, ill timed and negligent,
and these actions had caused the plaintiff’s
psychiatric illness.
New South Wales Court of Appeal:
28 October 2005
Megan Dwyer
THE FACTS
After a night out at the Wagon Wheel
Hotel (a hotel of which The Band Club
formed a part), the plaintiff entered a
neighbouring shop, Dave’s Midnight Pizza,
between 1:00 am
Sprod
and 1:30 am on
v
the morning of 22
Public Relations
December 2001.
Oriented Security Pty Ltd There the plaintiff
[2005] NSWSC 1074
was said to have
made a pest of
Whether security company
vicariously liable for assault by
himself. He was
employees
very drunk, generally
abusive, and made
crude remarks to female patrons. In addition
he slapped one of the patrons.
The proprietor of the shop had an
arrangement with the management
of The Band Club that, in return for providing
the staff of The Band Club including its
security staff with discount pizza, they would
allow their security men to sort out problems
at the shop. The defendant, PROS, employed
the plaintiff and its name appeared on either
the shirt or the tie that the bouncers wore.
On the night in question, the proprietor
made 2 phone calls to The Band Club
seeking assistance from the security staff,
following which 2 bouncers arrived. Each
man was wearing black trousers and
a white shirt with PROS on it.
left away from The Band Club toward
the direction of a nearby laneway.
Some time later police arrived. The
plaintiff was lying on the ground in a pool
of blood, unconscious and in the foetal
position some 56m up the laneway. The
plaintiff commenced an action against
PROS, the employer of the security
guards who caused his injury.
THE DECISION AT TRIAL
The trial judge held that PROS
was not liable for the plaintiff’s injuries.
The trial judge held that the conduct of
the security guards in so severely assaulting
the plaintiff was outside their scope of
employment and that the conduct of taking
him into the lane and viciously assaulting
him about the head was not connected
with any authorised method of doing their
job ie, it was an independent act for which
PROS could not be held either personally
or vicariously liable. The trial judge said
that the only connection between the scope
of their employment and the assault was
that it put them in the location and afforded
them the opportunity to carry out their
independent act.
New South Wales Supreme Court:
1 November 2005
Nathan Rehbock
Evidence was led that the 2 bouncers
came into the shop and tried to grab the
plaintiff but he was shuffling away. Eventually
they held him around the upper arms, walked
him out onto the footpath and then turned
28
THE FACTS
THE DECISION AT TRIAL
The claimant, Mr Grant, was injured on
4 February 2003 while driving a motor
vehicle along Coolum-Yandina Road in
Queensland. The
vehicle was owned
Suncorp Metway
by a Mr Cleary. The
Insurance Ltd
compulsory third
v
party insurer of the
Grant & Anor
vehicle was Suncorp.
[2005] QSC 320
Suncorp applied for a declaration that
Application of the Motor
Accident Insurance Act 1994
(Qld) where the vehicle was
being driven by an alleged
employee of the owner of
the vehicle
On 30 September
2003, the claimant
lodged a notice of
accident claim form
with Suncorp under
the Motor Accident
Insurance Act 1994 (Qld) (MAIA).
In the notice of accident claim form
it was recorded that:
if the injury arises out of the employer’s
• the owner of the vehicle, Mr Cleary, was
responsible for the accident for failing to
maintain the vehicle properly. The claimant
alleged that the tread on the tyres was
unduly worn
• the claimant’s employer at the time
of the accident was “J J and M J Cleary”
(a business name used by Mr Cleary)
• the claimant was driving the vehicle
in the course of his employment, as a
chauffeur, when the incident occurred.
A number of factors indicated that the
the provisions of the MAIA did not apply
to the claimant’s claim. In particular, the
issue was whether the exclusion in clause
3(2) of the policy of insurance set out in the
schedule to the MAIA applied. The exclusion
provided that the policy does not insure
an employer against a liability to pay
damages for an injury to any employee
failure to provide a safe system of work
or a breach of some other duty of care
to the employee, and neither the employer
nor another employee of the employer was
the driver of the motor vehicle at the time
of the accident.
The court considered the relationship
between the claimant and Mr Cleary.
claimant was not an employee including
the following:
• the claimant did not receive a salary
but, rather, received 35% of the fees
paid to Mr Cleary by clients
• the claimant paid his own tax
• the claimant was not entitled to
superannuation, holidays or sick leave
and was not given a group certificate
• Mr Cleary allocated the jobs to the claimant
but Mr Cleary had little control over the
claimant’s performance of his duties
• the claimant could take time off work
without permission
• the claimant retained possession
of the vehicle, he was obliged to maintain
the vehicle “to showroom condition” and
was obliged to provide and maintain
facilities necessary for his employment
including a fax, uniform and mobile phone.
29
Notwithstanding the above, there were also
factors indicating that there was an
employment relationship, namely:
• Mr Clearly maintained and fuelled
the vehicle
• Mr Clearly effectively determined when
and where the claimant worked
• Mr Clearly could terminate the arrangement
• Mr Clearly required the claimant
to work under a specific name
• The capacity for the claimant to
delegate his work was limited.
be accepted, then it would have
expressly said so.
In light of the above the court made
a declaration that the exclusion did not
apply and that the claim fell within the
cover provided by the compulsory third
party policy of insurance.
Queensland Supreme Court:
4 November 2005
Alison Crane
After consideration of the above factors,
the court held that the claimant was not
employed by Mr Cleary. The court held
that as between the claimant and
Mr Clearly a bailment type situation
existed which afforded both parties
the opportunity to profit from limousine
work. The claimant carried out his work
remotely from Mr Cleary and in his own
way subject to directions as to time
and places of work.
Suncorp argued that given that the
term “employee” is not defined in the
MAIA, reference should be made to the
WorkCover Queensland Act 1996 (Qld)
which defines “worker” as “a person who
works under a contract, or at piece work
rates for labour only or substantially
for labour only”. Suncorp submitted that
due to the close relationship between
the WorkCover Act and the MAIA, the
term “employee” in the MAIA should be
given the same meaning as “worker”
in the WorkCover Act.
The court rejected this submission
stating that there is “a wealth of common
law to guide the determination of when that
relationship exists” and that if the legislature
had intended for this body of law not to
30
THE FACTS
The plaintiff (Mr Ryan) visited The Beat
nightclub (the club) with a friend (Mr Tyson)
at about midnight on 24 January 2002.
They had been drinking at another venue
earlier. The court referred to them being,
at 5.00 am, affected
by alcohol but
Ryan
“in control of
v
Ann St Holdings Pty Ltd themselves”.
At 5.20am, just
[2005] QDC 345
Liability of a club for illegal acts prior to the club
closing, Mr Ryan
of security guard employees
and Mr Tyson left
the club and were talking with friends
outside. A security guard (Mr Aperu),
employed by the club asked Mr Tyson
to help a friend leave the club. Mr Tyson
entered the club where he was ordered
to sit down by Mr Aperu and another
security guard. Mr Tyson was then abused
in a threatening manner. Mr Aperu
slapped him 3 times in the face before
uttering a profanity. Mr Tyson left the club.
Mr Aperu then asked Mr Ryan to come
in and help a friend leave the club (Mr Ryan
did not know that Mr Tyson had entered and
left the club). Mr Ryan was led to the back
of the club, past 3 security guards and
a woman who was closing up. Mr Aperu
then proceeded to hit him heavily on the
side of the face, causing him to bleed and
fall to the ground unconscious. The club duty
manager, Mr Peek, came up to see what was
happening and was told Mr Ryan had slipped.
Mr Ryan was then picked up off the floor by
another security guard and led to the front
door where he was either pushed again
or he fell and hit the front door. Mr Ryan
was then pushed out onto the footpath
where Mr Tyson stopped him from going
onto the roadway.
Mr Ryan and Mr Tyson reported the matter
to the Fortitude Valley police then went to
the hospital for treatment. Mr Ryan had
a cut to his face, 2 teeth had been knocked
out and another tooth damaged and one
of his kidneys was bruised.
Mr Ryan sued the club.
THE DECISION AT TRIAL
The trial judge had no difficulty reaching
the conclusion that Mr Aperu intentionally
committed a criminal act and that he would
have been liable to pay damages to Mr Ryan
had he been sued. However, Mr Ryan only
sued Mr Aperu’s employer, and Mr Aperu
himself was not a party to the proceedings.
Mr Peek accepted that he, as duty manager
of the club, had a duty of care to make sure
that he looked after the patrons on the
premises.
In finding that the employer was liable
the trial judge noted that up until the moment
of each attack, Mr Aperu appeared to be
carrying out the duties of a security guard.
When Mr Aperu led Mr Ryan back into the
club he was purporting to carry out his duty
to assist people from the club and this had
sufficient connection to his employment.
Further, when Mr Aperu assaulted Mr Ryan,
his action was directly connected with
his authorised acts as a security guard
which required him to be capable of
using physical force.
Damages of $37,502 were awarded.
In relation to costs the trial judge noted
that the injury was caused by an unlawful
intentional act. Therefore, pursuant to
31
s64(4) of the Personal Injuries Proceedings
Act (Qld) 2002, the section limiting costs
to $2,500 for judgments over $30,000
but less than $50,000 (section 56(3)(b)
of PIPA) did not apply.
Queensland District Court:
14 November 2005
Johanna Backhouse
32
THE FACTS
The plaintiff’s employee, Mr Balarezo,
was injured on 5 September 1997 in the
course of his employment. The plaintiff
was in the business
Commex
of installing and
Communications
repairing mobile
Corporation Pty Ltd
telephones and
v
2-way radios, and
Cammeray Investments had been called by
Pty Ltd and Anor
the lessee of the
[2005] QSC 394
premises to carry
Tradesperson fell through roof
out some work.
at commercial premises—implied The plaintiff sent
contractual term—reasonable
Mr Balarezo to the
care for safety of the plaintiff’s
second defendant’s
employee at lessee’s premises
premises, and
Mr Balarezo was required to climb onto
the roof of the premises to relocate some
cabling. The roof was primarily made
of corrugated iron, but had some alsynite
sheeting for lighting purposes. When
Mr Balarezo stepped on to one of the
alsynite sheets, it broke and he fell into
the building below, suffering serious injuries.
Mr Balarezo had brought a claim against
the plaintiff, his employer, which resolved
in 2001 for $508,026.56 plus costs. The
plaintiff then brought a claim against the
second defendant, as lessee of the premises,
and the first defendant, as owner of the
premises, for contribution as tortfeasors.
The plaintiff also brought a claim against
the second defendant for damages for
breach of an implied term of the contract
between the two.
THE DECISION
The court had to determine:
• whether the agreement between
the plaintiff and the second defendant
for work to be performed by the plaintiff
at the second defendant’s premises
included an implied term that the second
defendant would take reasonable care
to ensure Mr Balarezo’s safety and,
if so, whether that implied term had been
breached (such that the second defendant
would then be liable for the entirety of the
plaintiff’s loss, being the amount it paid to
Mr Balarezo in settlement of his claim)
• whether the first and second defendants
were liable as co-tortfeasors in negligence.
With regard to the alleged implied term
in the agreement, the court referred to
a number of cases where a contractual
duty of care was held to extend to the
employees of an entity with whom another
entity was in contact in the course of
providing services under a contract.
However, the court distinguished those
cases on the basis that it was the providers
of services who had the duty to take
reasonable care imputed to them as
an incident of the provision of services.
In this case, the second respondent was
the passive recipient of services, and it was
held that no such term ought to be implied
by law. The court went on to find that even
as a matter of fact (as opposed to a matter
of law), the alleged term could not be implied
into the contract between the plaintiff and
the second defendant. The court held that
it could not be said that the term’s implication
was required for the reasonable or effective
operation of the agreement, and the
agreement could be properly carried
out in the absence of any term requiring
33
the second defendant to take care
for the safety of the plaintiff’s employee.
The court went on to consider whether
the first defendant, as owner of the
premises, had breached any duty of care
to Mr Balarezo. It was determined that there
was no evidence to indicate that the first
defendant ought to have been aware that
there was any prospect of someone stepping
on the alsynite sheeting, and even if there
was some risk, it was not of such proportion
that a reasonable person in the first
defendant’s position would have taken
positive steps to guard against it. The
court was not satisfied that the first
defendant even owed a duty of care
to Mr Balarezo but, if it did, then that
duty of care was not breached by the first
defendant’s failure to reinforce, fence off
or otherwise bring to Mr Balarezo’s attention,
the existence of alsynite sheeting in the roof.
so obvious, and the effort involved in pointing
it out to him so minimal, that it was a breach
of the second defendant’s duty of care
to fail to warn him of its existence.
The court, when assessing contribution
between the plaintiff and the second
defendant, held that the bulk of responsibility
should rest with the plaintiff in its capacity
as Mr Balarezo’s employer. The second
defendant was ordered to pay the plaintiff
$107,989, being 15% of the settlement
sum paid by the plaintiff to Mr Balarezo
and including interest at 10% for 4 years.
Queensland Supreme Court:
15 December 2005
Sue Myers
With regard to the second defendant’s
liability in tort, the court held that the
second defendant breached its duty
of care to Mr Balarezo by failing to warn
him of the existence of the alsynite roofing.
It was noted that when the alsynite had
first been installed, it would have been
translucent and obvious to a person walking
on the roof. However, it had darkened over
time and was less observable, particularly
with the sun reflected off it. Although the
plaintiff’s workmen had previously been
on the roof in prior years, Mr Balarezo
had not, and the court held that the second
defendant could not reasonably assume that
Mr Balarezo had been told of the presence
of alsynite on the roof. The court determined
that while the danger of the alsynite might
have been apparent to a careful or well
informed observer, the risk to Mr Balarezo
if he failed to make that observation was
34
THE FACTS
The plaintiff was a marksman with
the NSW police tactical response group.
The plaintiff was deployed in December
1998 to a farm in NSW where a farmer
was holding his son
hostage (the siege).
State of New South Wales The farmer fired
v
shots at the plaintiff
Burton
after dogs released
[2006] NSWCA 12
by the farmer
Duty of care to provide
identified the
counselling to police officer
plaintiff’s position
shot at during siege
behind a tree. The
plaintiff was not hit
and continued to
work at the siege until the farmer’s arrest
the following day. The plaintiff did not receive
any counselling and was sent to another
farm siege less than 2 weeks later.
The plaintiff saw a police psychologist
in May 1999. He subsequently claimed
benefits in June 1999 for post-traumatic
stress disorder (PTSD) resulting from the
first siege. He left the police service in
November 1999 and commenced
proceedings against the State of NSW
(the State) for negligence arising from
its failure to provide the plaintiff with
counselling after his exposure to stress
at the siege.
THE DECISION AT TRIAL
The trial judge held that the State was
negligent for failing to provide the plaintiff
with proper counselling treatment after the
first siege and awarded the plaintiff just less
than $400,000 in damages. Importantly, the
trial judge reasoned that had counselling
occurred after the first siege as per protocol,
then the risk of the plaintiff developing PTSD
would have been minimised. It was held that
the delay that occurred in the plaintiff
receiving treatment probably contributed
to the development and persistence
of the plaintiff’s PTSD.
The State appealed.
THE DECISION ON APPEAL
The Court of Appeal unanimously found
that the psychiatric injury suffered by the
plaintiff was reasonably foreseeable, noting
that the State had identified the nature of
the risk of psychological harm faced by
officers who were fired at.
The Court of Appeal found the plaintiff’s
PTSD was caused by the shooting, not by
the plaintiff’s failure to have counselling.
The relevant loss suffered by the plaintiff
is the loss of a chance of a better outcome.
The matter was remitted to the District Court
for reassessment of the plaintiff’s damages,
to be assessed on a loss of a chance basis,
looking at the extent to which the plaintiff’s
PTSD would or could have been improved
had earlier counselling been provided.
The Court of Appeal reiterated that the
reassessment should not include the loss
of chance that the plaintiff would not have
developed PTSD at all.
New South Wales Court of Appeal:
10 February 2006
Megan Dwyer
35
THE FACTS
Mr Newberry issued proceedings
in the Mackay Supreme Court claiming
damages for injuries he suffered in a motor
vehicle accident on 8 October 2002.
Mr Newberry was
Newberry
a passenger in the
v
vehicle. Mr Newberry
Suncorp Metway
worked for a delivery
Insurance Ltd
company. His brother
[2006] QCA 48
was driving the
Whether the Civil Liability
delivery truck.
Act 2003 (Qld) or the Workers’
Compensation and Rehabilitation Mr Newberry
Act 2003 (Qld) applies to claim claimed that the
by employee
collision occurred
because the other
vehicle was travelling on the wrong side
of the road. Mr Newberry brought a claim
against the driver of the other vehicle.
Suncorp was the CTP insurer of the other
vehicle. No claim was made against
Mr Newberry’s employer.
THE DECISION AT TRIAL
At first instance Mr Newberry sought
a declaration from the court as to whether
the Civil Liability Act 2003 (Qld) (CLA)
applied to his claim. His interest lay in
establishing that the CLA did not apply,
in which case his claim for damages would
not be limited by the provisions of the CLA.
The court was required to consider s5(b)
CLA, and s32 of the Worker’s Compensation
and Rehabilitation Act 2003 (Qld) (WCRA).
Section 5(b) CLA
“This Act does not apply in relation to any civil
claim for damages for personal injury if the
harm resulting from the breach of duty owed
to the claimant is or includes:
(b) an injury as defined under the WCRA,
other than an injury to which sections
34(1)(c) or 35 of that Act applies”
Section 32 WCRA (defines injury)
“An injury is a personal injury arising out
of, or in the course of, employment if the
employment is a significant contributing
factor to the injury…”
The trial judge held that Mr Newberry’s
injury fell within s32 of the WCRA and
in reaching that conclusion held that Mr
Newberry’s employment was a significant
contributing factor to the occurrence of
his injury. The trial judge therefore held
that the CLA did not apply to the claim.
Suncorp appealed.
THE DECISION ON APPEAL
Suncorp’s appeal was upheld. The Court
of Appeal found the trial judge’s error to
have been focusing upon the claimant’s
injury, rather than the claimant’s claim,
in deciding whether the CLA applied.
The Court of Appeal said that s5(b)
of the CLA is concerned with the claim,
not the injury.
The Court of Appeal said that it is necessary
to consider whether “the claim” addresses
the requirements of s32 of the WCRA ie,
that the injury is one where employment is a
significant contributing factor. To succeed in
his claim, Mr Newberry had to prove that the
other vehicle was travelling on the wrong
side of the road. There was no allegation in
his claim that his employment was a
36
significant contributing factor. The Court of
Appeal unanimously held that the CLA was
therefore not excluded by s5(b) of the CLA.
According to the Court of Appeal, if you
focus on the injury, as the trial judge did,
then employment would be a significant
contributing factor to the injury because the
only reason Mr Newberry was in the van was
because of his employment. Mr Newberry’s
employment was not, however, a significant
contributing factor to the claim.
The Court of Appeal found that
the CLA will be excluded where:
• a personal injury claim is made against
a non employer
• the claimant asserts that employment
activities also significantly contributed
to the cause of the injury.
Queensland Court of Appeal: 3 March 2006
Robert Samut
37
THE FACTS
The plaintiff, Desmond King, was
injured on 20 July 2003 in the course
of his employment with the Australian Postal
Corporation (APC). The plaintiff was driving
his motorcycle along
King
a footpath in
v
Springwood while
Parsons & Anor
making mail
[2006] QCA 49
deliveries when
Plaintiff injured in course
the first defendant,
of employment—whether
Elsa Parsons,
employment contributed to
reversed out of
injury—whether Civil Liability
Act 2003 (Qld) applied
a driveway into
to plaintiff’s claim
the plaintiff’s path.
This forced him to
swerve and drop his motorcycle to avoid
colliding with a tree.
The plaintiff alleged in his claim form
that the first defendant caused his injuries
by failing to keep a proper lookout.
The issue to be resolved by the court
was whether the Civil Liability Act 2003 (Qld)
(CLA) applied to the plaintiff’s claim.
If it did, then the plaintiff must be subject to
the restrictions on damages under the CLA.
This involved a consideration of s5(b)
of the CLA.
Section 5(b) of the CLA provides as follows:
THE DECISION AT TRIAL
The trial judge held that s5(b) of the
CLA did not operate to exclude its
application to the plaintiff’s claim. This was
because s5(b), when referring to an injury
defined under the Workers Compensation
Rehabilitation Act 2003 (Qld) (WCRA),
meant an injury occurring in a situation
that would bring a claim for damages
for that injury within the WCRA.
The trial judge held in the alternative
that the plaintiff was not a worker within
the meaning of the WCRA as that Act
specifically excluded persons employed
by the APC as a licensed corporation
(The APC was a licensed corporation
under the Safety Rehabilitation and
Compensation Act 1998 (Cth)).
THE DECISION ON APPEAL
The Court of Appeal held that the trial judge
was correct in holding that the CLA did apply
to the plaintiff’s claim for the second reason
he gave. However, the Court of Appeal was
of the opinion that the trial judge was wrong
in reading s5(b) in the way that he had.
The Court of Appeal referred to the
reasoning in Newberry v Suncorp Metway
Insurance Limited (summarised at page 36
of this case book) and held that because
“This Act does not apply in relation to any civil
claim for damages for personal injury if the
harm resulting from the breach of duty owed
to the claimant is or includes…
the plaintiff’s employment with the APC
(b) an injury as defined under the WCRA,
other than an injury to which sections
34(1)(c) or 35 of that Act applies”
where the plaintiff’s employment was a
was relevant to his claim against the first
defendant, his claim was for an injury
suffered as a result of a breach of duty
significant contributing factor to the injury.
For those reasons, s5(b) of the CLA would
exclude the plaintiff’s claim from falling
within the Act.
In explaining how the plaintiff’s employment
was a significant contributing factor to his
38
injury the Court of Appeal concluded that:
• his employment was sufficient to explain
why he was where he was when the
first defendant’s breach of duty caused
his injury
• the exigencies of his employment explained
how the first defendant’s breach of duty
caused his injury in that his job obliged
him to ride his motorcycle on the footpath
• because of his job he was particularly
vulnerable to a driver in the position
of the first defendant.
The Court of Appeal agreed with the trial
judge’s reasoning that the WCRA does not
apply to persons injured in the course of
employment with licensed corporations.
Injury to persons employed by licensed
corporations falls outside the scope of
employment to which the WCRA applies.
Queensland Court of Appeal:
3 March 2006
Kylie Powell
39
THE FACTS
The plaintiff alleged that he suffered
personal injuries on 26 November 2001
during the course of his employment as
an interstate truck driver. The plaintiff was
employed by
Francis
Emijay Pty Ltd (the
v
employer) who had
Emijay P/L and Ors
a registered office
[2006] QCA 62
in Queensland.
Whether Queensland or NSW
insurer was required to indemnify The incident
the employer against liability
occurred at
for the plaintiff’s injury—injury
Newcastle in NSW
suffered in NSW—employer
when the plaintiff
resident in Qld
was preparing the
trailer of his truck by placing steel grocery
gates on the sides of the trailer. The plaintiff
says that as he was lifting the grocery gates
on his own, he suffered a rotator cuff injury
to his left shoulder. At the time of the
incident, the plaintiff had completed part
of his journey which had begun in
Maryborough, Queensland.
The plaintiff commenced proceedings
against his employer for damages for
breach of the implied terms of the
contract of employment.
At the time of the incident, the plaintiff’s
employer held policies of insurance under
the WorkCover Queensland Act 1996
(Qld) (the Queensland Act) with WorkCover
Queensland (WorkCover) and also under
the Workers’ Compensation Act 1987
(NSW) (the NSW Act) with QBE Workers’
Compensation (NSW) Limited (QBE).
Both WorkCover and QBE refused to
indemnify the employer in relation to the
plaintiff’s claim. The insurers alleged that
the obligation to indemnify the employer
rested on the other.
THE DECISION AT TRIAL
The substantive issue was whether the
Queensland Act or the NSW Act applied to
the plaintiff’s claim. Both the Queensland and
NSW Acts provide that an employer must
maintain a policy of insurance for employers’
liability except where a liability arises under
the law of another Act or State.
The plaintiff’s claim was brought in
contract only. There was no claim in tort.
The trial judge confirmed that there is clear
authority in Australia that the lex loci delicti
(ie, the law of the place of the tort) provides
the governing law for actions in tort. (Both
parties accepted that if the claim was
brought in tort, then QBE would be
obliged to indemnify the employer).
The corresponding position in relation
to contract is unclear.
In the circumstances of this case,
the trial judge determined that the
proper law of the employment contract
was Queensland for the reasons that
the contract of employment was made
in Queensland, the instructions for the
trip were given in Queensland, the system
of work was developed in Queensland
and the place from which the plaintiff’s
employment was controlled and
directed was in Queensland.
The trial judge then applied the decision
of Burrows v The Workers’ Compensation
Board of Queensland [1997] QCA 182
where the Queensland Court of Appeal
held that the relevant “insuring” section
40
of the NSW Act was “not inapplicable”
arising out of contracts of employment
just because the employee or employer
in NSW.
were not domiciled in NSW when the
employee was injured unless the employees
presence in NSW was “fortuitous, fleeting
or unusual”. The plaintiff’s presence in NSW
at the time that he was injured was not
fortuitous, fleeting or unusual given that
he was on a specific trip to Newcastle and
it was a regular activity of the plaintiff’s
employment to travel to NSW.
The trial judge considered that the
decision in the Burrows case compelled
him to find that the NSW Act applied to the
plaintiff’s claim and that the plaintiff being
injured in NSW was enough for the NSW
Act to apply. The trial judge acknowledged
that the relevant section of the NSW Act had
been amended since the Burrows decision
but thought that these changes had widened
the obligation to insure rather than restrict it.
The trial judge concluded that where
the employer was required to insure under
the NSW Act and has done so, then it must
follow that the injury is a liability for which
the employer is required to cover under
a “law of another State”. Accordingly,
the relevant section of the Queensland
Act will not apply.
The NSW insurer, QBE, appealed
the decision.
THE DECISION ON APPEAL
QBE argued that the NSW Act did
not oblige the employer to insure against
its liability to the plaintiff because the liability
arose by breach of contract, the proper law
of which is Queensland and the NSW Act
did not contemplate that kind of liability.
QBE submitted that the NSW Act should be
confined to employers’ liabilities for damages
41
The Court of Appeal rejected QBE’s
submissions, stating that the language
of the NSW Act does not support the
proposition that the employer’s liability
in contract, is excluded from the obligation
to insure, whereas the insurer’s liability in
tort is not.
The Court of Appeal considered that
the NSW Act should not be limited in this
regard and that there is NSW Court of
Appeal authority which provides that while
there must be some relevant connection with
NSW, that connection need not be that the
proper law of the contract of employment
is the law of NSW. QBE was unable to
cite any authority to the contrary.
The Court of Appeal dismissed QBE’s
appeal and affirmed the trial judge’s decision
that the NSW Act applied, excluding the
operation of the Queensland Act.
Queensland Court of Appeal: 10 March 2006
Alison Crane
THE FACTS
The plaintiff, Ms White, was employed
as a console operator at a service station
owned and operated by the defendant. On
the night of 27 October 1998 the plaintiff
was working alone in the service station
when 2 offenders
entered the service
White
station through
v
sliding glass doors.
Calstores Pty Ltd
The plaintiff was
[2006] QDC 161
serving a customer
Duty of service station to protect
at the time, and one
employee from armed robbery
of the offenders put
a gun to the customer’s head, and the other
offender pointed a gun at the plaintiff and
demanded that she put money into a bag.
After money was put into the bag, the
offenders left the premises through
the glass sliding doors.
During the day the glass sliding doors
to the shop opened automatically, but after
dark they were controlled by a remote control
button. There was evidence that the plaintiff
and other employees had previously
experienced trouble with the locking
mechanism. There was evidence that the
glass sliding doors were defective, in that
the locking mechanism would not secure
the doors in the locked position despite
the locking mechanism being applied. This
defect had been noted by the plaintiff from
time to time in the months preceding the
robbery, and the plaintiff had complained
to the defendant and her superiors of such
malfunctioning during that period.
THE DECISION AT TRIAL
The court had to determine whether the
defendant failed in its duty to the plaintiff to
provide a safe place of work and to ensure
her health and safety and further, whether
such duty was breached through the
defendant having an inadequate or defective
security system in place, inadequate lighting
in and around the service station and a
failure to provide any or any adequate
training to the plaintiff with regard to
how to react to an armed robbery.
The court held that at the time the
offenders entered the service station
premises, the doors were not locked,
but it was impossible to determine from
independent evidence whether this was
due to the plaintiff’s failure to lock them,
or because of a fault in the locking
mechanism of the remote control. In any
event, it was held that even if it was due
to the plaintiff’s failure to lock the doors,
such failure by the plaintiff was no more
than inadvertence or inattention on her
part, rather than a deliberate failure by her
to comply with the defendant’s instructions
in respect of security directions.
The court held that the defendant
breached its duty of care to the plaintiff
to provide a safe place of work, safe system
of work and to ensure her health and safety.
The defendant should have provided the
plaintiff with the assistance of a security
guard to police and/or secure the premises
during the night shift, when she was working
alone, at which time there was a foreseeable
risk of injury to the plaintiff from the type of
occurrence which did in fact occur.
Damages were assessed having regard to
the post-traumatic stress disorder injury the
plaintiff suffered as a result of the incident.
The plaintiff was awarded damages of
$109,502.25.
Queensland District Court: 2 June 2006.
Sue Myers
42
THE FACTS
Mr Gordon was a farmhand on a property
called “Berowra” near Dubbo in Central New
South Wales. Mr Gordon suffered serious leg
injuries at work on 2
October 2001.
Berowra Holdings Pty
Section 151C of
Ltd
the Workers’
v
Compensation
Gordon
Act 1987 (NSW)
[2006] HCA 32
(WCA) states that
Lack of strict compliance by
injured worker with the Workers’ a worker cannot
Compensation Act 1987 (NSW) commence court
—does this prevent the worker
proceedings against
from claiming damages from
his employer for
his employer
damages until 6
months after the employer was notified
of the injury. Mr Gordon commenced
proceedings in the District Court before
that 6 month period had elapsed. Berowra
did not take issue with Mr Gordon’s
non-compliance with s151C until the day
before the trial, which was approximately
18 months after Berowra was given notice
of the claim. An offer to settle, valid for 28
days, had been made under the District
Court Rules by Berowra and this offer could
not be withdrawn without leave of the court.
The evening before the hearing, Berowra’s
solicitors advised Mr Gordon’s solicitors
that they would apply to the court to
withdraw the offer. Berowra’s solicitors
also stated that they would seek an order
from the court that the proceedings were
a nullity, and that they be dismissed.
Mr Gordon’s solicitors sought to accept
the offer to settle before the Berowra
application was heard.
THE DECISION AT FIRST INSTANCE
AND APPEAL
At first instance the court held that
Mr Gordon’s proceedings were a nullity
and should be dismissed.
The Court of Appeal reversed the trial
judge’s decision.
Berowra then obtained special leave
to appeal to the High Court. The issue
on appeal was whether Mr Gordon’s failure
to comply with s151C of the WCA resulted
in his court proceedings being a nullity.
THE APPEAL TO THE HIGH COURT
The High Court unanimously agreed
that a failure to comply with s151C of the
WCA did not render the proceedings a nullity.
The High Court found that s151C did not
extinguish or create rights. Rather, that
section postponed the remedy available to
Mr Gordon. The section should not be read
as requiring Mr Gordon to wait 6 months to
commence proceedings as a pre-condition
to the jurisdiction conferred upon the lower
courts to determine claims for work injury
damages. However, s151C potentially gives
a defendant a right to apply to strike out
proceedings commenced in non-compliance
with that section, but that right must
be exercised in accordance with the
procedural rules of the court. The High
Court of Australia stated that the effect
of non-compliance will depend in each
case upon a defendant’s actions under the
rules of the court. In this case, Berowra’s
application was dismissed.
High Court of Australia: 15 June 2006.
Wes Lerch
43
THE FACTS
The plaintiff alleges that on 4 October
2000, he suffered a serious injury to his
neck in the course of his employment with
the defendant on a cattle property when he
was struck in the back by an 18 month-old
heifer while herding
and releasing cattle
Gordon
from a holding yard
v
into another area
Ross
for drenching.
[2006] NSWCA 157
Plaintiff injured when
drenching cattle
The plaintiff sued
his employer in
negligence.
THE DECISION AT TRIAL
The trial judge held the defendant liable in
negligence on the basis that the risk of injury
was reasonably foreseeable and could have
been avoided by employing a further person
to help or not undertaking the drenching until
a third person was available to assist. There
was no discount for contributory negligence.
Damages were assessed at just short
of $1.5 million.
The defendant appealed.
THE DECISION ON APPEAL
The defendant appealed on a number
of bases, the major challenges being with
respect to the finding that the defendant
was negligent in failing to employ a third
person to assist with the task of cattle
drenching and that the defendant’s failure
in that regard materially contributed to
the injury suffered by the plaintiff.
The Court of Appeal unanimously
agreed that a material decrease in a risk
is a sufficient test of the effectiveness of
a certain precaution to justify both a duty
to take the precaution and, in circumstances
where the risk eventuated, to satisfy the
test of causation.
The trial judge’s finding that a safe
system of work required the availability
of 3 persons to do the drenching was
open to him on the basis that such a course
of action did not involve an unreasonable
imposition on the resources of the defendant,
such a finding satisfied both the obligation
to take that step and a finding that the failure
to take the step materially contributed to and
was causative of the harm suffered. There
was evidence that 3 men usually performed
the task of cattle drenching and, had a third
man been engaged, his function would have
been to keep an eye on the person opening
the gate (in this case, the plaintiff) so as to
be able to warn him that he was in danger
of being charged by a beast.
The Court of Appeal added that the
defendant’s submission that even if
a third person had been there to assist
in the drenching process it would not
have reduced the risk which subsequently
materialised cannot be relied upon because
it was not explored by the plaintiff in
cross-examination before the trial judge.
New South Wales Court of Appeal:
22 June 2006
Natalee Barr
44
THE FACTS
The plaintiff, Mr Roberts, was injured
on 31 March 2003 when he fell 4 metres
from a scaffold plank in the course of
working as a
sub-contracting
Chandley
sheet plasterer.
v
The defendant,
Roberts
Mr Chandley, was
[2005] VSCA 273
a carpenter/builder
Contributory negligence—
and the plaintiff’s
sub-contractor and principal—
plasterer fell from scaffolding
principal. The plaintiff
after principal failed to secure
and defendant had
ladder—lack of care by subworked together for
contractor in failing to check
approximately 30
that ladder secured
years in the
relationship of principal and sub-contractor.
In the course of installing plaster sheets,
the scaffolding plank that the plaintiff was
standing on slipped, causing him to fall to
the ground and sustain serious injuries.
The ladder supporting the scaffolding
plank moved because the defendant failed
to secure it with a “chock”, being a piece
of timber nailed to the floor.
The plaintiff gave evidence that he
expected that the defendant had secured
the ladder in this way, as this was the
practice between them when erecting
scaffolding. The defendant did not lead
evidence at trial refuting this assertion.
Under cross examination, the plaintiff
admitted that he did not check to see
if the ladder was secured, instead he
“expected it to be safe”. Under cross
examination, the plaintiff conceded that
the danger of not securing a ladder was
“obvious and apparent”.
THE DECISION AT TRIAL
The trial judge found that the defendant
owed a common law duty to the plaintiff
by virtue of their relationship as principal
and sub-contractor, and by virtue of the
defendant’s responsibility on that occasion
for the system of work of securing the
ladder. The trial judge found that the
defendant had breached that duty, and
that the plaintiff’s failure to check that
the defendant had completed the task he
undertook in the usual and expected way
did not amount to a failure to take any or
any proper care for his own safety. The trial
judge found that the plaintiff was not guilty
of contributory negligence and awarded
the plaintiff $299,255.
THE DECISION ON APPEAL
The sole issue on appeal was whether
the respondent was guilty of contributory
negligence.
The Court of Appeal unanimously
dismissed the appeal. Critical to that
decision was the court’s acceptance
of the long-standing system of work
in place between the plaintiff and the
defendant when using scaffolding/ladders.
The Court of Appeal found that as the
defendant had assumed responsibility for
securing the ladder, the plaintiff had no
reason to doubt the defendant’s competence
or reliability in this or any other respect.
Because the elements of the system were so
well known to both parties, it was reasonable
for the plaintiff on this occasion to assume,
without checking, that the defendant had
45
secured the ladder with the “chock”,
in accordance with the accepted practice
between them. Further, the Court of Appeal
noted that it should be slow to intervene in
a trial judge’s assessment of contributory
negligence because that is something that
the trial judge, having seen and heard all the
evidence, is ordinarily in a much better
position to assess.
Victorian Court of Appeal:
14 November 2005
Wes Lerch
46
THE FACTS
On 17 February 1997 Mr Pareezer
attended Werrington TAFE to refill soft drink
in a vending machine and collect money
from it. Mr Pareezer was contracted by
the defendant to
Coca Cola Amatil
undertake this
(NSW) Pty Ltd
task. On that day,
v
Mr Pareezer’s wife
Pareezer & Ors
and son had
[2006] NSWCA 45
accompanied him
Duty of care to contractors—
to the TAFE. He
contractor shot while delivering
was in the process
appellant’s products—whether
of restocking the
relationship creates duty to
protect against violence
machine with drinks
when a man with
a handgun approached him demanding
money. The man then proceeded to shoot
Mr Pareezer in the chest and neck five times.
Proceedings were brought against the
defendant by Mr Pareezer, his wife and
son and his company as first, second, third
and fourth plaintiffs respectively. Mr Pareezer
alleged that the defendant required him to
collect money from a location where it
knew that Mr Pareezer had previously
been assaulted, failed to provide an
alternative system of collecting money
and did not provide any protection for
Mr Pareezer’s safety.
Mr Pareezer had been assaulted at the TAFE
while working for the defendant in 1995. As
a consequence, he asked the defendant not
to assign him to work at the TAFE and the
defendant agreed to that request. On the
day of the incident, circumstances were
such that the defendant requested that
Mr Pareezer attend the TAFE to restock
the vending machines.
THE TRIAL
The trial judge accepted that the criminal
acted irrationally and that Mr Pareezer
acted appropriately when confronted by
the criminal. The trial judge found that
the defendant owed a duty to exercise
reasonable care for Mr Pareezer’s safety.
The trial judge qualified the duty by referring
to risks “which the defendant was (or
perhaps ought to have been) aware,” and
held that the defendant had breached that
duty by requiring the plaintiff to collect
money from a location where it knew or
ought to have known there was an
unreasonable risk of Mr Pareezer
being robbed or assaulted.
Mr Pareezer was awarded damages of
$2.9 million. His family and his company
were awarded almost $100,000.
The defendant appealed questioning
whether the additional steps it could
have taken would have avoided the injury.
THE DECISION ON APPEAL
The Court of Appeal suggested
that the duty owed by the defendant
(at a minimum) was to provide adequate
training on how to reduce the risks. Also,
by requiring Mr Pareezer to collect money
from the TAFE, “a reasonable person would
do something if at all reasonably practicable
to protect the filler as effectively as it was
protecting its money.” The Court of Appeal
held that providing these additional
protections would not have prevented
the actions of the irrational criminal against
Mr Pareezer and, as such, the defendant’s
failure was not causative of the loss.
Accordingly, the appeal was upheld.
New South Wales Court of Appeal:
15 March 2006
Megan Dwyer
47
THE FACTS
The plaintiff, Mrs Sweeney, was injured
on 2 August 2000 at a service station. She
intended to purchase a carton of milk, and
when she opened the door of the refrigerator
in which the milk
was kept, the door
Sweeney
came off and hit her
v
Boylan Nominees Pty Ltd on the head.
[2006] HCA 19
The plaintiff
commenced
Vicarious liability—whether
respondent vicariously liable
proceedings
for the negligence of its
against the
“representatives”
owners/operators
of the service
station (the operators) and the entity who
was required to service and maintain the
refrigerator (Boylan). A few hours before
the plaintiff’s accident, the operators told
Boylan that the door of the refrigerator was
not closing properly. A mechanic attended
at the service station to fix the refrigerator.
The mechanic did not fix the refrigerator
properly, with the result that the door
fell off when the plaintiff opened it.
The mechanic was not an employee
of Boylan, but was described in evidence
as a “contractor” to Boylan. Boylan did
not provide the mechanic with a uniform,
any tools or equipment, or a vehicle. The
mechanics van was marked with the name
of a company of which he was a director.
The mechanic’s invoiced Boylan for the hours
that he performed work and for spare parts.
THE DECISION AT TRIAL
The main issue to be determined was
whether Boylan was vicariously liable
for the negligent acts of the mechanic
in failing to properly repair the refrigerator.
The trial judge held that Boylan was
vicariously liable for the mechanic’s
negligence because the mechanic was
acting as a servant or agent of Boylan
with Boylan’s authority and approval to
undertake the work that he did. This
decision was largely based upon the
existence of two documents. The first
was a written service report given by the
mechanic to the operators. That report was
written on Boylan’s letterhead and referred
to “our mechanic”. The second document
was Boylan’s claim report to its public
liability insurer which again referred to
“our mechanic” going to the service station,
and made no mention of the mechanic
not being an employee.
The plaintiff did not succeed in her action
against the operators, but did succeed
against Boylan on the basis that Boylan
was vicariously liable for the mechanic’s
negligent acts. The plaintiff was awarded
$43,932 in damages. Boylan appealed.
THE DECISION ON APPEAL
The Court of Appeal overturned the trial
judge’s decision and concluded that the
mechanic was not an employee of Boylan.
It determined that the mechanic was carrying
on his own trade or business, and there
was no relationship of employer/employee
between Boylan and the mechanic because,
amongst other things, the mechanic was
free to accept or decline work from Boylan.
The Court of Appeal then went on to
consider whether Boylan was nonetheless
48
liable for the mechanic’s acts, on the
basis that the mechanic was Boylan’s agent
or representative. In examining this issue the
court had regard to the decision of Colonial
Mutual Life Assurance Society Limited
v Producers and Citizens Co-operative
Assurance Co of Australia Limited (1931)
46 CLR 41. The principle in that case
as explained by Justice Dixon was that
an entity that was not an employer of a
negligent person can nonetheless be held
vicariously liable for the wrong done by that
person if that person had performed services
for the entity as a principal rather than
a representative, and the person has
not acted independently. The Court of
Appeal concluded that in this case the
“representative agent” principle did not
apply and, as such, that Boylan was not
vicariously liable for negligence of the
mechanic. The plaintiff sought leave
to appeal.
THE DECISION OF THE HIGH COURT
The High Court dismissed the plaintiff’s
appeal and held that Boylan was not
vicariously liable for the negligence
of the mechanic.
The majority of the High Court held that:
• the mechanic was engaged from
time to time as a contractor to perform
maintenance work for Boylan. Boylan did
not control the way in which the mechanic
worked, and the mechanic supplied his own
tools and equipment and brought his own
skills to bear upon the work to be done
• the mechanic was not presented to the
public as an emanation of Boylan, and the
two documents relied upon at trial did not
support the conclusion that he was given
that neither document said anything about
the nature of the relationship between
Boylan and the mechanic
49
• the concept of distinguishing between
independent contractors and employees is
now deeply rooted in Australian law in the
context of vicarious liability. Because the
mechanic was not an employee of Boylan,
but was acting as a principal pursuing his
own business, Boylan could not be held
vicariously liable for his negligence.
Justice Kirby dissented. While Justice
Kirby agreed that the relationship between
the mechanic and Boylan was not that of
employee and employer, he determined that
the “representative agent” principle referred
to in Colonial Mutual Life Assurance Limited
v Producers and Citizens Co-operative
Assurance Co of Australia Limited applied
because the mechanic was Boylan’s
representative, which afforded him the
means to persuade others that he should
be admitted to their premises to repair a
refrigerator and to receive Boylan’s money
and give a receipt for the money received.
Justice Kirby determined that Boylan was
vicariously liable for the mechanic’s
negligence, as the mechanic had
represented himself as Boylan’s agent.
Justice Kirby pointed out that the
“representative agent” principle is a very
confined exception to the general rule
that principals are not liable for the torts
of independent contractors, and the mere
fact that an independent contractor acted
at the request of a principal does not, of
itself, attract the exception. Rather, for the
principle to apply, the principal must arm the
contractor with the means to hold himself
out so that the service performed by the
contractor consists in the contractor standing
in the principal’s place and assuming his
rights, and not in any independent capacity.
High Court of Australia: 16 May 2006
Sue Myers
THE FACTS
The plaintiff, Mr Coote, was working
as a tree feller in Northern Tasmania.
In September 1998 he was rendered
a paraplegic when a branch fell from
a pulpwood tree
Coote
and struck him.
v
The plaintiff had
Forestry Tasmania
previously felled
[2006] HCA 26
two sawlog trees,
and those trees
Tree feller rendered paraplegic
after a tree branch hit him—
brushed the
whether the defendant was
pulpwood tree
negligent in directing him
as they fell.
not to fell that tree
Also to be determined was whether the
plaintiff was contributorily negligent in failing
to fell the pulpwood tree (despite directions
to the contrary), as the plaintiff would
have known that the pulpwood tree posed
a danger to him if it remained unfelled.
THE DECISION AT TRIAL
The trial judge found in favour of the
plaintiff and held that the defendant owed
the plaintiff a duty to take reasonable care
for his safety in its supervision, management
and control of the timber harvesting
operations. The defendant should have
had knowledge of the special risks to which
Prior to felling
the trees, the plaintiff was given a direction
by an officer employed by the defendant,
Forestry Tasmania, not to fell any pulpwood
trees. This was contrary to normal practice,
where tree fellers would ordinarily remove
any pulpwood trees considered to pose a
danger. Evidence was given that the plaintiff
ordinarily would have felled the pulpwood
tree from which the branch fell and struck
him, but for the direction from the
defendant’s representative that prohibited
him from felling that pulpwood tree.
timber workers were subjected, and was in
The issue for determination was whether
the defendant, through its forestry officer,
was negligent in giving the plaintiff
a direction that he was not to fell any
pulpwood trees, in that such direction
caused the plaintiff to be placed in a
position of danger posed by the potential
of a branch falling from the pulpwood tree.
two sawlog trees that had been felled,
a position to exercise statutory powers to
minimise those risks. The trial judge held
that the defendant was negligent in failing
to instruct the plaintiff to first fell any trees
that he considered posed a danger (such
as the pulpwood tree), and also in failing
through supervision to ensure that the
plaintiff did so.
With regard to contributory negligence,
the trial judge held that by walking under
the damaged pulpwood tree a short time
after that tree had been brushed by the
the plaintiff was contributorily negligent,
as his action in doing so “went beyond
misjudgement and inadvertence”.
It was held that the plaintiff knew of the
risk that there might be a loose branch
in the damaged pulpwood tree and that
such branch could fall and hit him, and he
therefore could easily have taken a different
route. Walking under the pulpwood tree in
that situation would ordinarily be considered
unsafe by workers in the timber industry,
and the plaintiff’s damages were reduced
by 1/6th due to his contributory negligence.
50
THE DECISION ON APPEAL
The Full Court of the Supreme Court
of Tasmania overturned the trial judge’s
decision. The Full Court found that the
trial judge had erred in concluding that the
defendant was negligent in failing to instruct
the plaintiff to fell any trees that potentially
posed a danger, and in failing through
supervision to ensure that the plaintiff did
so. This was held to be erroneous because
the defendant did not need to tell the plaintiff
(an experienced tree feller) to first fell any
trees that potentially posed a danger. In this
regard it was common ground at trial that the
plaintiff had the right to fell any tree that he
considered too much of a danger to leave
standing. Essentially, the Full Court held
that the plaintiff did not fell the pulpwood
tree because he had been instructed not
to do so by the defendant’s forestry officer,
but rather because it was the plaintiff’s
own assessment that the danger posed by
leaving the pulpwood tree standing was not
sufficiently high to require him to fell it first.
The Full Court held that this was an error
of judgment on the plaintiff’s part, not on
the part of the defendant.
The plaintiff sought leave to appeal.
THE DECISION OF THE HIGH COURT
The main issue for determination by the
High Court was whether the Full Court had
incorrectly found that the plaintiff had greater
freedom to remove pulpwood trees than the
directions given to him by the defendant’s
forestry officer. The High Court noted that
the Full Court did not disturb the trial judge’s
finding that the defendant’s forestry officer
gave the plaintiff a direction that he was not
to fell pulpwood trees as he would ordinarily
do. But the High Court held that it was open
to the trial judge to conclude that the
51
defendant was negligent in giving
a direction to the plaintiff that effectively
required pulpwood trees to remain standing,
as any pulpwood tree that was brushed by
another tree was a source of danger to
persons such as the plaintiff. The plaintiff
would have ordinarily felled the pulpwood
tree, and the High Court held that to require
some pulpwood trees to be left standing
(as directed by the defendant) exposed
the plaintiff to unnecessary danger.
The appeal was allowed with costs and
the matter was remitted to the Full Court
for a determination of the issues of
contributory negligence and contribution
between defendants (which issue was
not relevant to the High Court Appeal).
High Court of Australia: 13 June 2006
Sue Myers
THE FACTS
The defendant was the owners’ corporation,
having the management and control of the
common property of a block of units (the
building). The plaintiff was an occupier of
one of the units in
the building. The
Ridis
plaintiff sustained
v
an injury to his right
Strata Plan 10308
arm when he was
[2005] NSWCA 246
entering the building
Liability of owners’ corporation
via the front door and
to occupier of unit injured on
put out his hand to
common property
prevent the door
from closing and locking on him. The glass
pane in the door shattered and severely
lacerated his right forearm.
At the time of the accident the glass pane
in the door was ordinary annealed glass, as
installed when the building was constructed
in or about 1939. Such glass was known to
shatter into dangerously sharp shards, and
under contemporary safety standards safety
glass (which did not shatter into shards) was
required to be installed in the front doors of
similar buildings. These standards did not
apply retrospectively to existing buildings.
The standard required that if existing
annealed glass was to be replaced it
should be replaced with safety glass.
The plaintiff claimed that the defendant,
in not replacing the glass pane with safety
glass, had breached its duty of care as an
occupier of the common property and its
statutory duties under s62 of the Strata
Schemes Management Act 1996 (the Act).
Section 62 provided as follows:
“62 What are the duties of an owners
corporation to maintain and repair property?
(1) An owners corporation must properly
maintain and keep in a state of good
and serviceable repair the common
property and any personal property
vested in the owners corporation.
(2) An owners corporation must renew or
replace any fixtures or fittings comprised
in the common property and any personal
property vested in the owners corporation.
(3) This clause does not apply to a particular
item of property if the owners corporation
determines by special resolution that:
(a) it is inappropriate to maintain, renew,
replace or repair the property, and
(b) its decision will not affect the safety
of any building, structure or common
property in the strata scheme or
detract from the appearance of any
property in the strata scheme.”
THE DECISION AT TRIAL
The plaintiff’s claim was dismissed at
first instance, the trial judge finding that
there was no breach by the defendant of
its common law duty of care or statutory
duty under s62. The trial judge held that
s62 did not impose a duty to inspect the
common property over and above that of
an occupier at common law to inspect
and remove dangers or defects of which
it was aware or ought to have been aware.
The plaintiff appealed.
52
THE DECISION ON APPEAL
The Court of Appeal found that, whilst
s62 did impose an obligation to exercise
reasonable skill and care, it did not impose
an obligation to obtain an assessment of the
premises by specialist experts to ascertain
whether any of the materials of which the
common property was constructed could
be made safer. Accordingly there was
no obligation to replace the glass entrance
door that was otherwise in good repair, and
operating as intended, because the glass
in it did not accord with that used
in contemporary buildings.
In the present case, had the defendant
been aware that the glass in the door could
shatter into dangerous shards the exercise
of reasonable care and skill would have
required precaution to be taken. It was
not established on the facts that the
defendant had that requisite knowledge.
New South Wales Court of Appeal:
1 August 2005
Sam Kingston
53
THE FACTS
The plaintiff was playing golf at the
defendant’s club with two of her friends.
On the third hole it was necessary to pass
the men’s tee in order to reach the ladies’
tee. The plaintiff was walking to the ladies’
tee on her own in
Kingswood Golf Club Ltd front of her friends
v
who were in a golf
Smith & Anor
cart. The plaintiff
[2005] VSCA 224
was struck
depression in grass pathway
somewhere near
at golf club—whether golf club
the front of the
in breach of duty of care
men’s tee from
behind by her friend (the second defendant)
who was driving the cart.
The second defendant said that as she
drove the cart in the vicinity of the men’s
tee, the front left wheel of the cart went into
a depression in the ground which caused the
cart to move sharply towards the bushes to
the left and, in response, she pulled hard on
the right side of the steering wheel and put
her foot on the accelerator to get out of
the hole. The cart then shot forward and
hit the plaintiff.
The cart had a maximum speed of 4.7
metres per second. Average walking speed is
approximately 2.3 metres per second.
The plaintiff instituted proceedings against
both the golf club (first defendant) and the
second defendant.
THE DECISION AT TRIAL
The trial judge accepted that:
• the first defendant should have known that
the route taken by the plaintiff and second
defendant was often used by players
• there was no sign warning of the
depression or hole into which of the second
defendant drove which held solenoid boxes
• the depression could have been made more
obvious by clipping the grass around it
• the defendant knew of the concealed
hazard.
The trial judge held that:
• the first defendant owed a duty of care to
make the depression reasonably visible
• the injury was caused by the second
defendant’s failure to see the depression
and her failure to apply the brake after
exiting the depression
• liability as between the defendants was
to be apportioned 60/40 against the first
defendant.
The first defendant appealed.
THE DECISION ON APPEAL
The two main issues on appeal related to
liability and apportionment as between the
defendants ie, whether the first defendant
should have been held liable to the plaintiff
and, if so, whether responsibility ought to
be shared with the second defendant.
In looking at causation the appeal judges
were also asked the question that even if
the grass had been clipped, would the
driver have avoided the depression.
In relation to liability it was held that
making the depression more visible probably
would have averted the accident. The first
defendant knew of the hazard and had the
expertise and equipment to eliminate it.
54
The hazard that it created was described
as the root cause of the plaintiff sustaining
her injury.
In relation to apportionment, the court
held that the apportionment arrived at by
the trial judge was within the available range.
Accordingly, the appeal was dismissed
with costs.
Victorian Supreme Court:
16 September 2005
Joanna Atherinos
55
THE FACTS
The plaintiff was involved in an incident
on 24 November 1998 at 2.30pm while
shopping at a Coles supermarket in
Canberra (Coles). The plaintiff was walking
along a dairy aisle towards the pet food
area. The aisle was
Hall
partially blocked by
v
a stock trolley parked
Coles Myer Ltd
at a right angle to
[2005] ACTSC 108
the shelves. The
Duty of care owed by
trolley was loaded
supermarket to customer who
so that the plaintiff
slipped in liquid on the floor
could not see
through or past it. She walked out and
around the trolley, and as she did so, she
slipped and fell. Her clothing was slightly
wet, and she realised that she had slipped
in some liquid on the floor.
After a while the plaintiff picked herself
up off the floor and noticed behind the
trolley, a yellow plastic sign with wording
cautioning of a wet or slippery floor.
THE DECISION
The plaintiff led evidence from an engineer
who measured the coefficient of friction of
the floor and expressed the opinion that the
risk of slip and fall injuries on the vinyl floor
when wet was extremely likely. Coles called
no evidence on the issue of liability. Coles
submitted that the plaintiff would not have
slipped had she been keeping a proper
look out.
The court stated that an occupier
of a supermarket owes a high standard
of care to customers who it invites into
the store. An occupier of a supermarket must
be taken to be aware that spillages will
occur from time to time and should have
a system in place to detect and remove
spillages at intervals which are regular and
as frequent as is reasonably practicable.
The occupier may avoid liability for injury
to a customer where it has in place such
a system and the system was in effect at
the time. In such circumstances it will be
found that there was no negligence. In the
present case however, the court found that
there was no evidence of any such system.
The court was not satisfied that the spillage
was so obvious that a reasonable person in
the position of the plaintiff keeping a proper
lookout would have seen it or should have
been expected to. The court also concluded
that by placing a warning sign next to or
close to where the spillage was, a member
of Coles’ staff had detected the spillage.
In terms of the placement of the sign, it
was probable that another staff member,
unaware of the spillage, moved it to that
position in the course of stocking shelves.
As the evidence was clear that the spillage
had been detected, Coles owed a duty to
customers such as the plaintiff to place an
object over it, or put a warning sign where
customers would see it and then avoid the
area. Coles’ failure to do so amounted to a
breach of duty of care owed to the plaintiff.
Australian Capital Territory Court of Appeal:
4 November 2005
Joanna Atherinos
56
THE FACTS
Mr Edwards (the plaintiff) was injured
when he rode a bicycle over a bridge on
land owned by Consolidated Broken Hill Ltd
(CBH). The bridge carried a rail spur line
over a dry creek bed
Consolidated Broken Hill and 20 rail wagons
were parked on the
Ltd
bridge. The plaintiff’s
v
jumper got caught
Edwards
on a wagon which
[2005] NSWCA 380
caused him to fall
Duty of care owed to trespasser
from the bridge.
where occupier knows that
His injuries rendered
trespassing is prevalent
him a paraplegic.
The bridge was 4m long. There were no
walls or barriers to prevent a fall of 4.9m
to the creek bed below. The distance
between the side of the wagons and the
concrete edge of the bridge was 400mm
and the plaintiff attempted to cycle across
the bridge through this space.
CBH had arranged to look after the
wagons but did not own or operate them.
There was another route the plaintiff could
have taken but cyclists and pedestrians
preferred the route across the bridge
as it was flatter and shorter than the
alternative route. CBH knew that cyclists
and pedestrians used the bridge. Both the
plaintiff and other cyclists had cycled past
the wagons on previous occasions and
the plaintiff had cycled past the wagons
earlier that morning without incident.
THE DECISION AT TRIAL
The trial judge held that whilst the plaintiff
was a trespasser, CBH knew that people
like the plaintiff used the short cut and
therefore owed him a duty of care. The
trial judge held that CBH breached that
duty of care by allowing the wagons to
be parked across the bridge. The trial judge
reduced damages by one third on account
of the plaintiff’s contributory negligence for
failing to take sufficient care for his own
safety in riding over the bridge and for not
ensuring that his clothing was kept clear
of the rail car.
CBH appealed the liability finding.
The parties agreed on damages during
the trial.
THE DECISION ON APPEAL
The Court of Appeal distinguished between
a local authority administering large tracts of
public land and a public company occupying
private land for its own commercial use.
CBH could have taken steps to prevent
members of the public from crossing the
bridge. The trial judge’s decision that CBH
acted unreasonably in allowing the wagons
to be parked across the bridge was upheld.
With respect to “obviousness” of risk,
the Court of Appeal held that it was merely
a descriptive phrase that signified the degree
to which risk of harm may be apparent. It was
a factor that was relevant to whether there
had been a breach of the duty of care.
In relation to contributory negligence,
the Court of Appeal held that the plaintiff
made a deliberate and voluntary decision to
ride across the bridge despite the obvious
and serious risk that faced him in doing so.
The Court of Appeal held that the plaintiff
had ample time to make a decision whether
57
to cross the bridge. He was not in any
hurry and time was not an issue. It would
have taken little effort to cycle back to the
point where he had turned off. A reasonable
person in the position of the plaintiff would
not have gone on to cross the bridge.
Therefore, apart from the trial judge’s
decision that the plaintiff did not use
sufficient care when crossing the bridge,
the more serious failure was not turning
around and cycling home on the proper
cycle path.
The Court of Appeal increased the
reduction in damages for contributory
negligence to 50% and damages were
accordingly reduced to $912,915.
New South Wales Court of Appeal:
15 November 2005
Johanna Backhouse
58
THE FACTS
The plaintiff, Ms Williams, was injured
on 20 October 2001 when she fell on
the front steps of residential premises that
she had rented 7 days earlier from the
defendants (the lessors). The stairway had
3 steps and a fourth
Sakoua & Anor
riser up to the entry.
v
Ms Williams brought
Williams
proceedings against
[2005] NSWCA 405
the lessors alleging
Lessor’s duty of care to tenant
that they had been
—residential premises
negligent in providing
—unsafe steps
safe access to the
premises due to the absence of a handrail
and a landing on the stairs and the presence
of a tree stump in the vicinity of the stairs.
Ms Williams also relied upon evidence that
the stairs were uneven in height and that
branches of a hibiscus tree overhung the
steps so that a person exiting from the
front door was necessarily forced to utilise
the right-hand side of the steps. Access to
the right hand side of the steps was further
impeded by the tree stump near the bottom
of the steps. She also alleged that the
lessors were in breach of the terms
of the letting agreement by failing to
have the premises in a safe condition.
THE DECISION ON APPEAL
By a 2:1 majority the Court of Appeal held
that while the High Court in Jones v Bartlett
(2000) 205 CLR 166 established that the
lessor of residential premises owes a duty
of care to an incoming tenant, the duty
does not extend beyond requiring a lessor
to address defects of which the lessor is
aware or ought to be aware. The Court of
Appeal also referred to the authority in
Jones v Bartlett that a “defect” means
“something more than a condition capable
of causing injury”.
The Court of Appeal held that in order
to establish negligence, the lessee needed
to prove an unreasonable want of care with
respect to defects at the time the property
was let. The stairs were not defective in the
meaning of that term in Jones v Bartlett.
The Court of Appeal found that it was
established that the “stairs could have been
safer”. However, any deficiencies with the
steps were visible and “in no way unusual
dangers”. The issues with the steps would
have been as apparent to Ms Williams as to
the lessors. Changes in building standards
did not in themselves impose a duty to
upgrade the premises. The Court of
Appeal also took into account:
THE DECISION AT TRIAL
The trial judge found the lessors to have
been negligent. Contributory negligence
was assessed at 15%.
• the low height of the steps
• that there was no history of falls
at the steps.
The Court of Appeal was also not
persuaded that negligence was established
by the evidence establishing that repairs
to the steps would have been inexpensive.
In dissent, Justice Beazley held that
a landlord is under an obligation at the
time of the commencement of a tenancy
agreement to ensure that the leased
59
premises are reasonably safe for
the purposes for which they are let.
The condition of the steps was apparent
to the lay observer (unlike the position in
Ridis v Strata Plan 10308 [2005] NSWCA
246), and in this context, Justice Beazley
would have upheld the trial decision.
The lessor’s appeal was allowed with costs.
New South Wales Court of Appeal:
23 November 2005
Danae White
60
THE FACTS
The plaintiff was injured when she
tripped and fell on a patch of grease
or oil in a carpark in Sydney. The carpark
was in a building owned by the second
defendant. The
Timberland Property
first defendant, the
Holdings Pty Ltd
plaintiff’s employer,
v
was the lessee of
Julie Bundy
the building.
[2005] NSWCA 419
Plaintiff slipped on patch of
grease or oil—whether finding
that patch of grease was obvious
was inconsistent with a finding
of breach of duty of care
THE DECISION
AT TRIAL
The trial judge held
that the oil spill was
obvious, as it was not
small and was able to be observed by people
keeping a proper lookout. Also, the spill was
recent but only in the sense that it was less
than one week old.
The trial judge further held that the
defendants owed a duty of care to people
walking through the carpark, including the
plaintiff, and the duty of care had been
breached in this case. The trial judge
apportioned damages 30% to the first
defendant and 70% to the second
defendant.
The defendants appealed.
It was argued that the trial judge’s
finding that the oil spill was obvious, was
inconsistent with the finding that a duty
of care was owed to the plaintiff and there
was a breach of that duty. It was also argued
that the trial judge erred in finding a causal
connection between the breach of duty
and the injuries.
THE DECISION ON APPEAL
The Court of Appeal held that there was
evidence to support the finding that the
defendants owed the plaintiff a duty of care.
The Court of Appeal held that the question
of obviousness should be answered by
reference to the particular circumstances
of the case. In finding that the patch of
grease was obvious, the trial judge meant
that the patch would be obvious to a person
looking at the ground as they walked along,
but that did not mean that a person taking
reasonable care for their own safety should
look at the ground in the circumstances.
The Court of Appeal held that there is
no easy line to draw between inadvertence,
consistent with taking reasonable care for
one’s own safety, and the kind of
carelessness that can reduce the degree
of a defendant’s liability. The trial judge’s
finding that the patch of grease was obvious
and that the defendants owed the plaintiff
a duty of care and had breached that duty
was not inconsistent with legal principle.
The Court of Appeal said that the oil patch
would have been apparent to a person
looking down, however, a person taking
reasonable care for their own safety need
not necessarily look at the ground for
each step.
On causation, the Court of Appeal held
that in a practical sense, a reasonable
standard of inspection for a public car park
was once per business day. As oil had
remained for weeks after the accident,
61
an inference could be drawn that the spill
did not occur on the day of the plaintiff’s
accident.
The Court of Appeal held that there was
sufficient evidence to support the finding
of causation made by the trial judge.
The Civil Liability Act 2002 (NSW) did not
apply as proceedings were issued prior to
its commencement.
New South Wales Court of Appeal:
30 November 2005
Kylie Powell
62
THE FACTS
On 3 February 2000 the defendant
advertised a garage sale in the Trading
Post to be held at her residence on the
weekend. On the Saturday morning the
plaintiff attended
Neindorf
the defendant’s
v
property for the
Junkovic
purpose of the sale.
[2005] HCA 75
While walking along
the driveway, and
Whether duty of care owed by
occupier of residential premises with her attention
to member of the public injured drawn to goods
on the premises while attending
displayed on the
a garage sale
side of the driveway,
the plaintiff stumbled
over a 10mm to 12mm crack in the driveway,
as a result of which she broke a bone in her
right foot.
THE LITIGATION
The plaintiff sued the defendant as the
holder of the garage sale and the occupier
of the premises where the injury occurred.
On 26 November 2003, a Magistrate found
for the plaintiff, holding that the defendant
had been negligent. The defendant appealed
to a single judge of the Supreme Court. The
judge upheld the appeal and in doing so said,
amongst other things, that the duty of care
owed by the occupier of a domestic property
did not extend to include risks which were
obvious and well known, and which an
entrant may reasonably be expected
to notice and avoid.
The defendant appealed to the Full Court
of the South Australian Supreme Court.
THE COURT OF APPEAL DECISION
The majority of the Court of Appeal
considered recent occupiers’ liability
decisions, including decisions involving
occupiers of supermarkets, commercial
premises and highway authorities, where
defendants were held to not be liable to
persons injuring themselves on “obvious
risks.” However, the Court of Appeal
distinguished this case, and decided in
favour of the plaintiff on the basis that:
• intending purchasers had no alternative
but to approach the goods for sale by
using the driveway, and it was foreseeable
that the attention of entrants might be
drawn to those goods on display, and
away from the state of the driveway,
and as a result, an entrant may trip,
stumble or fall and suffer injury, and
• the defendant could have taken
a number of simple and inexpensive steps
to safeguard against such an occurrence,
such as erecting a warning sign or a barrier,
or by highlighting the edge of the driveway
in paint or marking it in some other way.
The Court of Appeal did not hold the
defendant completely responsible, and
said that the plaintiff had failed to take
reasonable care for her own safety, with
damages reduced by 30% on account
of contributory negligence.
THE HIGH COURT DECISION
The High Court allowed the appeal by
a 4:1 majority. The High Court confirmed
that as occupier the defendant owed a
duty of care to the plaintiff, but held that the
standard of the defendant’s conduct did not
constitute a failure to take reasonable care
for the plaintiff’s safety. In reaching this
decision the High Court found that:
63
• The unevenness of the surface on which
the plaintiff tripped was clearly visible and
of a nature that is commonly encountered
on suburban footpaths. As the risk posed
by the slightly raised concrete was so
minor, the concept of reasonableness
did not require the defendant to take
any action to avoid the risk
• As any suburban house contains
many dangers that can lead to injury,
the defendant as occupier of the premises
was not required to reduce or eliminate the
danger of the unevenness of the driveway,
because the unevenness was not larger
than or different from that found in any but
the newest suburban concrete driveways
• Nor was the defendant required to erect
a sign to entrants to the property warning
them that the condition of the driveway was
no different from most other driveways, and
• The appeal did not raise any question
of principle.
High Court of Australia: 8 December 2005
Bree Macfie
64
THE FACTS
THE DECISION ON APPEAL
On 21 December 1999, the plaintiff,
Ms McMartin, was injured when she fell in
the grounds of the Girl Guides’ Hall. Guides
Australia Inc (the Guides) was the occupier
of the premises.
The Court of Appeal held that the trial
judge was correct in finding that the Guides
had acted unreasonably. It held that in stating
that the Guides “had a duty to ensure that
there was no hole or depression”, the trial
judge was expressing a conclusion as to
what reasonable care required in this
particular case. The trial judge was not
suggesting an elevation in the duty of
care into something like strict liability.
Guides Australia Inc.
v
McMartin
[2006] NSWCA 20
Duty of care owed to pedestrian
who fell in hole in Girl Guides’
Hall grounds
The plaintiff had
been attending a
function at the hall
when she walked
across the grassed
area outside the hall
and fell in a hole.
The issue was
whether the Guides were negligent in
failing to:
• provide any warning of the hole
• remove the hole
• properly inspect the premises
to make sure it was safe, and
• maintain the lawn.
THE DECISION AT TRIAL
The trial judge held that the Guides had
a duty of care to ensure that there was no
hole in the lawn which would be a hazard if
concealed. The existence of a hole meant
that there was a foreseeable risk of injury
to entrants onto the hall grounds. This duty
had been breached by the Guides by failing
to fill in the hole so as to make the lawn
safe to walk on.
The trial judge held that the risk was not
an obvious one. The trial judge accepted
that the plaintiff had been looking where
she was walking and was therefore not
guilty of contributory negligence.
The Guides appealed.
65
The Court of Appeal held that as the
trial judge had found that the hazard was
concealed and the plaintiff was looking
where she was going, the trial judge was
entitled to find that the plaintiff was not
guilty of contributory negligence.
New South Wales Court of Appeal:
16 February 2006
Kylie Powell
THE FACTS
The plaintiff, Mr Haris, was injured when
he was struck in the left eye by a firework
while attending a football match as a
spectator at a stadium occupied by the
Bulldogs Rugby
League Club Ltd
Haris
(the Bulldogs) on
v
Bulldogs Rugby League 6 September 2002.
Club
[2006] NSWCA 53
The evidence
established that
flares were set
Duty of care owed by football
club to spectator struck by
off by members
fireworks
of the crowd on a
number of occasions.
Mr Haris was struck about 10 minutes
before the game ended.
Mr Haris brought a claim in negligence
against the Bulldogs, who conceded
that they owed the plaintiff a duty to take
reasonable care to avoid a foreseeable
risk of injury.
and significant, the Bulldogs had taken
reasonable precautions, in terms of the
security measures put in place, to minimise
the possibility that someone would be
seriously injured by a firework.
The trial judge was not persuaded by
the plaintiff’s submission that the Bulldogs’
failure to take additional measures, such
as increasing the number of security guards,
reducing the density of the crowd, stopping
the game or using bomb detection dogs,
constituted a breach of duty. The trial judge
found that the actual steps taken were
sufficient. These steps took place in advance
of the game’s commencement by way of bag
searches, and during the game by way of
attempting to identify the possible culprits.
The plaintiff appealed.
THE DECISION ON APPEAL
The Court of Appeal held that it was open
to the trial judge to conclude that the system
of bag inspection was in operation when
Mr Haris claimed that the Bulldogs
were negligent for failing to take reasonable
precautions by way of security measures
to minimise the possibility that the risk
would be realised.
the plaintiff entered the ground, some
The trial proceeded on the basis that the
origin of the firework was of no significance.
the likelihood of serious harm was remote,
THE DECISION AT TRIAL
for reasonable precautions. However, the
The trial judge held that the Bulldogs
had not breached the duty they owed
to the plaintiff. The trial judge found that,
although the risk was both foreseeable
5-10 minutes after the game had started.
There was undoubtedly the possibility that
harm could occur from fireworks, which could
not be said to be insignificant. That said,
though not so remote as to obviate the need
Court of Appeal did not consider that a
reasonable person in the Bulldogs’ position
would have taken the precautions suggested
by the plainitff in addition to the significant
precautions already taken.
The appeal was dismissed with costs.
New South Wales Court of Appeal:
17 March 2006
Danae White
66
THE FACTS
In March and April 1997 clearing had
been carried out on an undeveloped area
of land which was in close proximity to
the plaintiff’s house. On 8 April 1997 the
plaintiff, a 14 year
old male, entered
McEwan
the land to
v
Adpiosus Pty Ltd & Anor investigate the
remains of a fire
[2006] QDC 087
which he had
Fire—burns suffered by 14 year
observed from
old boy—negligence—s74(1)
a bus on his way
Fire and Rescue Authority
Act 1990 (Qld)
home from school.
In the course of his
investigation, he trod on some hot embers
and suffered burns to his right foot.
The first defendant owned the land. The
claim against it was discontinued pre-trial.
The claim continued against the second
defendants who were contracted to clear
the land and lit the fire.
The second defendants relied on s74(1)
of the Fire and Rescue Authority Act 1990
(the Act), which provides that a person who
lights a fire authorised to be lit by a permit,
and who in lighting the fire complies with any
condition or direction contained in the permit
and does not contravene any provision of the
Act, does not incur any liability at common
law for any loss, injury or damage caused
by the fire unless it is shown that the person
acted recklessly or maliciously causing the
loss, injury or damage.
The second defendants lit the fires at around
9.00am each day and they were generally
present up until 5.00 pm with a water truck
at which time the second defendants
said that the flames were doused and
they would leave the property with the
fires smouldering. Evidence to the contrary
was led that the property was often left
with flames still burning. The property was
not completely fenced and there were
no signs prohibiting entry.
THE DECISION
The court held that unless a fire has
burnt out completely, it remains a fire
(albeit a dying fire) and for the purpose
of the Act, and the conditions of the permit,
there needed to be 2 persons in attendance
until it had burnt out. The court held that the
second defendants were in breach of this
condition and were not entitled to the
protection of s74(1).
Further, the second defendants were aware
of persons entering the property while they
were carrying out clearing operations. The
court held that the second defendants were
engaged in a dangerous activity involving a
potential risk of serious injury to persons on
the property. The second defendants were
held to owe a duty to take reasonable care
for the safety of the plaintiff, or someone
in his position, in carrying out the burning
operations on the land. Leaving the property
with some active fires still burning and some
left in a dying state was a breach of the
second defendants’ duty to take reasonable
care for the safety of the plaintiff.
The court said that the risk to adults burning
themselves may be slight but the same could
not be said of children. A fire may be an
attraction to a 14 year old boy.
The plaintiff was awarded $59,234.
Queensland District Court: 28 April 2006
Amanda Tucker
67
THE FACTS
THE DECISION ON APPEAL
The plaintiff was injured on 5 December
2000 when she slipped at the Bondi hotel.
The hotel cleaner had recently polished the
floor with a polishing machine. No warning
signs were visible to the plaintiff.
The owner argued that the plaintiff’s claim
should have failed as the risk complained
of constituted an obvious risk within the
meaning of s5F of the Civil Liability Act
2000 (NSW) (CLA). It argued that the trial
judge had failed to consider the impact of
the CLA. In relation to apportionment of
liability, the owner contended that the
cleaner had breached an implied term of
the cleaning contract and was therefore
obliged to indemnify it.
C G Maloney Pty Ltd
v
Hutton-Potts and Anor
[2006] NSWCA 136
Duty of care owed by hotel and
cleaners to patron who slipped
on polished floor
The plaintiff sued
the owner of the
hotel and the cleaner
in negligence.
THE DECISION
AT TRIAL
The trial judge found
that the owner had
breached its duty of care by failing to warn
the plaintiff that the floor may be slippery,
and by not restricting access to the recently
cleaned area. Further, the owner should have
appreciated the risk the cleaning operation
posed to patrons. As the cleaner was
cleaning in the area when the incident
occurred and had placed a warning sign
that was not visible to the plaintiff, the trial
judge held that the cleaner had breached
his duty of care.
Liability was apportioned 80/20 against
the owner on the basis that it served its
interests to have people entering the hotel
when the cleaner was carrying out his
cleaning obligations. It was for the owner to
close off the area being cleaned. Damages
were reduced by 20% for contributory
negligence as the plaintiff
The Court of Appeal agreed with the
trial judge’s finding that both the owner
and the cleaner had been negligent in the
circumstances. The CLA did not come to the
aid of the owner as the Court of Appeal said
that the plaintiff had not “succumbed” to an
obvious risk. The Court of Appeal noted that
the trial judge considered that the owner had
allowed cleaning operations to occur
concurrently with patrons having access
to the area, rather than interrupting trade
to allow cleaning to take place. The Court
of Appeal therefore saw no need to interfere
with the trial judge’s apportionment of liability.
New South Wales Court of Appeal:
29 May 2006
Megan Dwyer
had failed to keep a proper lookout.
68
THE FACTS
THE DECISION AT TRIAL
The plaintiff, Tai Ak Ryu, was an
experienced tiler. On 7 December 2001
he went to the defendant’s home with a
colleague to provide a quotation for tiling.
At that time the
defendant was
Ryu
renovating her
v
house and the
Karadjian
works were
[2006] NSWCA 144
incomplete.
Duty of care to tradesman
The trial judge held that as the plaintiff
who fell while carrying out
renovations to residential
premises
The Court of Appeal accepted the general
As the defendant
and the plaintiff’s
colleague discussed
the tiling job in the upstairs lounge the
plaintiff walked down the corridor to a large
balcony. It was his intention to inspect the
surface of the balcony to see if it had any
lumps to be considered when tiling.
The plaintiff gave evidence that he saw
2 gyprock sheets lying on the surface of the
balcony. He stepped on one of the gyprock
sheets and fell through to the garage below
and suffered personal injuries.
The issue was whether the defendant
breached the duty of care she owed to
the plaintiff. This involved a consideration
of whether the plaintiff failed to take
reasonable care for his own safety.
was an experienced tiler he should have
known that it may be dangerous to walk on
the pieces of gyprock. The trial judge held
that the plaintiff failed to take adequate care
for his own safety when it would have been
easy to walk around the piece of gyprock.
The defendant was therefore not negligent.
THE DECISION ON APPEAL
proposition that it may be unreasonable
for an experienced construction worker to
assume that a building site is completely
safe and secure unless specific dangers
have been pointed out to him. It was pointed
out, however, that this case did not concern
a general construction site but a concrete
surface balcony that only required tiling.
The Court of Appeal held that the
2 gyprock sheets looked like cut-offs that
had no further use and there was no reason
why the plaintiff should not have walked
on them. The gyprock was also in a central
position where the plaintiff would have been
expected to walk as he exited the corridor
onto the balcony for his inspection.
Based on the above reasoning, the Court
of Appeal held that the trial judge erred in
holding that the defendant was not required
to warn the plaintiff that the gyprock sheets
covered a substantial hole in the balcony
floor. The Court of Appeal also held that
the plaintiff was not contributorily negligent
and was entitled to damages in the amount
of $163,696.
New South Wales Court of Appeal:
5 June 2006
Kylie Powell
69
THE FACTS
On 22 August 1998, Preah Hetherington
(the plaintiff), a 3 year old, injured her thumb
between a gate and post while playing on
a large hockey ground occupied by the
Moranbah Hockey
Association (the
Hetherington
association). The
v
plaintiff’s father was
Belyando Shire
playing hockey and
Council & Anor
the plaintiff’s mother
[2006] QCA 209
(the mother) was
Duty of care owed to infant
supervising the
at hockey grounds
plaintiff.
The Belyando Shire Council (Council)
owned and maintained the grounds. A
fence and several gates surrounded the
grounds where the hockey games were
played. The Council had erected the fencing
and the gates in around 1981. The gate
where the incident occurred (the gate)
was next to the car park. A turnstile
was next to the gate.
On match days, the association conducted
a canteen on the grounds and often the
gate was left open to allow deliveries to
the canteen. When the gate was unlocked,
most people entered the grounds through
the gate, as opposed to the turnstile, as it
was easier to use the gate, particularly
when carrying hockey gear.
“very near” the gate and probably only
1.5 metres away from it. When the mother
last checked on her before the incident, the
plaintiff was just watching the other children
and the mother told her to not go on the
gate or outside the fence into the car park.
The association did not purport to assume
responsibility for supervising the children.
The association did not dispute that it
owed a duty of care to the plaintiff. The
association accepted that the Council had
not opened, closed, locked or unlocked the
gate. There had been no prior incidents,
although a similar incident occurred a couple
of weeks after the plaintiff’s incident (no
claim was brought in relation to the further
incident). No one had complained of a risk
of injury if the gate was not locked.
THE DECISION AT TRIAL
The trial judge found that the association
and the Council owed a duty of care to
the plaintiff and that the unlocked gate
would pose a risk to children. The trial
judge asked what would a reasonable
person in the position of the association
do by way of response to the risk? The
answer was held to be that reasonable
care required that the gate be locked
immediately after a vehicle had entered
or left the grounds, or at least ensure the
gates were locked “when it could not be
On the day of the incident, the gate had
been left unlocked, probably by the person
making deliveries to the canteen. The mother
was well aware that the gate was unlocked
and that children older than the plaintiff
were swinging on it and standing on it.
The mother had seen the plaintiff
expected that children were… being
supervised by the parents”.
In this case, the trial judge held that the
association and the Council were entitled
to rely on the parents’ supervision of the
plaintiff to keep her safe from harm. Neither
the association, as occupier, or the Council,
as owner, was held to have breached
their duty of care.
70
The plaintiff’s claim was dismissed against
both the association and the Council.
The association had a claim for contribution
against the Council but the trial judge stated
that even if she had found in favour of the
plaintiff she would not have allowed the
claim for contribution by the association
from the Council.
The plaintiff appealed.
THE DECISION ON APPEAL
The association argued that the plaintiff’s
mother was in a much better position than
it was to assess the hazard. She had seen
her daughter near the gate, seen other
children swinging on it, and knew how
much supervision there was (if any)
other than herself.
The Court of Appeal unanimously dismissed
the appeal and held that the trial judge had
properly described the relevant duty and
properly applied the principles of the law
of negligence as it relates to occupiers
such as the association.
The Court of Appeal agreed that the
accident would not have happened if the
gate had been locked, but held that the
mother had allowed the plaintiff to play
in the area and was aware of the risk
if the plaintiff played near the gate.
The Court of Appeal also noted that
the association had other conflicting
responsibilities, including a need to provide
reasonable access to staff making deliveries
to the canteen and reasonable access to
patrons with sporting gear, which, on the
night in question, numbered in the order
of 100 people.
Queensland Court of Appeal: 9 June 2006
Johanna Backhouse
71
THE FACTS
The plaintiff, Mr Gaskell, alleged that on
10 September 1998 he suffered personal
injuries when he slipped in a pool of water
on the floor of the men’s toilets in a building
where he had leased
Gaskell
business premises
v
since 1993. The
Denkas Building
plaintiff brought an
Services Pty Ltd
action against one
and Others
of the building
[2006] NSWSC 632
owners, Denkas
Duty of care owed to tenant
Building Services
who slipped and fell in common Pty Ltd (Denkas),
area at business premises
and against the
managing agent
of the premises, Harding Rogers
& Associates Pty Ltd (HRA).
The plaintiff alleged that he had made
previous complaints in relation to pooling
problems in the toilet.
THE DECISION
The court held that Denkas, as the landlord
of the premises, owed a duty of care to the
plaintiff, as a tenant, to take reasonable care
to put and keep the premises in a safe state
of repair. In relation to the standard of care
owed, the court referred to the decision of
Jones v Bartlett (2000) 205 CLR 166, in
which the court held that the applicable
standard of care is that “which arises under
ordinary principles of the law of negligence,
namely, a duty to take reasonable care to
avoid foreseeable risk of injury to the
[plaintiff]”.
The court determined that Denkas had
not breached this duty of care. The court
noted firstly that there had been no previous
slip and fall incidents in the men’s toilet
in the 5 years preceding the incident.
Secondly, the court accepted the evidence
of HRA’s representatives that there was
a system used for cleaning the premises,
including the men’s toilet, which involved
regular attendance by a cleaner. Thirdly,
there had been no complaints made to
Denkas or HRA of any pooling problems
in the toilet. The court noted that the plaintiff,
during his time as a tenant in the premises,
had a propensity to make written complaints
to the managing agent about various issues
within the building. There was no evidence
of any written complaints made in relation
to pooling problems in the toilet. Also, on
the evidence, the plaintiff had written letters
to HRA on 11 September and 30 September
1998 concerning the fall, and neither letter
referred to any previous complaints or
implied that the plaintiff’s fall occurred
in the aftermath of complaints made
about pooling problems in the toilet.
The court noted that the decision in
Jones v Bartlett did not take the duty of
the landlord to repair the premises so far
as to require the landlord to address defects
of which he or she was unaware. The court
determined that the absence of previous slip
and fall incidents within the toilets and the
fact that, as a tenant, the plaintiff had made
more than 1000 trips to that toilet between
1993 and 1998 without incident, was
relevant to the question of foreseeability
and reasonableness.
The court was of the view that the only
omission attributable to Denkas was its
failure to clean up a pool of liquid, in
circumstances in which it was unaware
72
that the problem existed and where
it could not have reasonably been expected
to have known about its existence. In these
circumstances, the court was not satisfied
that Denkas had failed to take reasonable
steps to avoid the risk of injury to the
plaintiff with respect to the men’s toilets.
It was noted with some significance that
the plaintiff contended that, while he was
aware that there were pooling problems
in the toilet, he did not see the pool of water
prior to the fall. The court held that it was
not open to the plaintiff to claim that he
was aware of such a risk, yet oblivious to
it at the time of the incident. Accordingly,
if the plaintiff was aware of the problem
and there was no obstruction to the visibility
of the toilet floor, the court was of the view
that any pooling of liquid on the toilet floor
at the time of the incident should have
been obvious to the plaintiff.
In relation to the liability of HRA, the
court accepted that it had not been
established that HRA was ever informed
of any alleged pooling problems in the toilet.
In these circumstances, the court accepted
that there had been no relevant breach
of a duty of care on the part of the
managing agents.
New South Wales Supreme Court:
23 June 2006
Belinda Thatcher
73
THE FACTS
The front door of the defendant’s nightclub
was linked to the street by a walkway. Often
the nightclub’s patrons would have to queue
in the walkway while they waited to gain
entry to the
Lynch
nightclub. As the
v
walkway was also
Shooters Saloon Bar Pty
an exit from the club,
Ltd [2006] QCA 63
the defendant used
Patron queuing to enter
rope barriers to
nightclub—patron decided not
to enter nightclub and attempted separate those
coming from
to step over rope barrier to exit
queue—patron’s foot became
those leaving.
caught in rope and he
The plaintiff was
sustained injury
in the queue for
entry into the nightclub. The rope barrier
was on his left and varied in height from
about hip height next to its supporting posts
to about knee height in the middle. The
plaintiff decided not to go into the nightclub
and started to step over the rope barrier into
the exit line rather than trying to make his
way past those queuing behind him. As he
did so, his right foot became caught by the
rope, he fell and dislocated his knee.
THE DECISION AT TRIAL
The plaintiff did not have to step over the
rope barrier. He could have disconnected it
where it was attached to its supporting posts
by a clip, or he could have asked one of the
nearby staff to help him do that. Further, he
could have made his way back through the
queue behind him. The plaintiff’s case at trial
was that the defendant was negligent in not
providing a safer way to divide the walkway
such as a belt barrier commonly found for
queues at airports which are of uniform
height, usually about hip height.
The trial judge observed that although
the possible advantage of the suggested
alternative barrier was that few people
were likely to attempt to step over it, there
was a disadvantage in that some people
might attempt to go under it, an exercise
which for some at least would also involve
a risk. For that reason, the alternative would
not have removed the risk that someone
would be injured in trying to move from one
side of the barrier to the other. Judgment
was entered for the defendant.
THE DECISION ON APPEAL
The Court of Appeal unanimously dismissed
the plaintiff’s appeal. The Court of Appeal
upheld the findings of the trial judge ie,
that it was difficult to conclude that the
suggested alternative “would have presented
a significantly lower overall risk of injury”.
Queensland Court of Appeal: 10 March 2006
Nathan Rehbock
74
THE FACTS
Mr and Mrs Wagstaff went to the
Greenhouse Tavern for a drink after work
on 3 May 2000. Mr Wagstaff became
involved in a verbal
T. Wagstaff
altercation with an
v
intoxicated patron
Haslam & Anor [2006]
(the intoxicated
NSWSC 294;
patron) and was
subsequently
G. Wagstaff
assaulted. Mrs
v
Wagstaff, allegedly
Haslam & Anor
fearing for her
[2006] NSWSC 295
husband’s life,
Duty of care owed by licensed
kicked the
premises to patrons assaulted
intoxicated patron
by another intoxicated patron
hard in the buttocks
several times because he was assaulting her
husband. The intoxicated patron then chased
Mrs Wagstaff into the ladies toilet where she
waited until it was safe to come out.
Mr Wagstaff and Mrs Wagstaff commenced
separate proceedings for damages.
The extent of the duty imposed on
the occupier and licensee was to take
reasonable measures to protect Mr and
Mrs Wagstaff from risk of harm from the
actions of intoxicated patrons in the tavern.
The court held that the bar manager
was aware that the men who caused the
altercation had been drinking since early
that afternoon. Their insobriety should
have been obvious to the bar manager
and should have caused him to not serve
them their last round of drinks.
There had also been an earlier incident
where the intoxicated patron had broken
a glass and held it towards the faces of
Mr and Mrs Wagstaff. The bar manager
was aware of this incident and in fact
confiscated the glass from the intoxicated
patron. The court held that this should
have caused the bar manager to make
the intoxicated patron leave the tavern.
The court found that it was reasonably
foreseeable that Mrs Wagstaff would go
The first defendant was the licensee of
the tavern (licensee). The second defendant
was the occupier of the tavern (occupier).
to her husband’s aid and that she would
THE DECISION AT TRIAL
of care to Mr and Mrs Wagstaff and were
The court held that the licensee and
occupier had breached the duty of care
that they owed to Mr and Mrs Wagstaff. In
so determining, the court had regard to the
power of the licensee and occupier under the
Liquor Act 1982 (Qld) to control who enters
and remains on the premises. The decision
on liability was given in the case of
T. Wagstaff v Haslam & Anor [2006]
NSWSC 294.
suffer harm in doing so. Therefore, the
licensee and occupier breached their duty
liable for any physical and mental harm
they suffered.
Mrs Wagstaff was awarded damages
in the amount of $227,171 referable to
severe post-traumatic stress disorder.
Mr Wagstaff was awarded $61,510
referable to a neck injury and depression.
The court reduced Mr Wagstaff’s damages
award by 20% on account of contributory
negligence. The court held that Mr Wagstaff
had been contibutorily negligent in acting
irresponsibly by making a calculated and
offensive gesture to the intoxicated patron.
75
He had uttered some profanities to the
intoxicated patron. The court held that in
doing this, Mr Wagstaff had failed to exercise
reasonable care for his own safety in an
obviously volatile situation. Accordingly,
Mr Wagstaff’s damages award was
reduced to $49,208.
New South Wales Supreme Court:
21 April 2006
Kylie Powell
76
THE FACTS
The plaintiff alleged that on 21 May 1999,
he was assaulted by two other patrons
(the Michell brothers) in an unprovoked
attack at the Eimeo Hotel in Mackay.
The plaintiff commenced proceedings
against the hotel
Livermore
alleging that the
v
Crombie & Anor
[2006] QCA 169
hotel was negligent
and in breach of
its statutory duty.
Liability of hotelier to patron
who was assaulted by other
patrons in hotel
THE DECISION
AT TRIAL
The plaintiff gave
evidence that at approximately 9.00pm
he was sitting at the public bar when he
felt a tap on his shoulder. He looked up
to see a man (Brian Michell) who motioned
to him to follow him to the toilets. The
plaintiff followed the man to the entrance
to the toilets when, without any warning,
he punched the plaintiff in the jaw. Patrons
and staff intervened and Brian Michell left
the hotel and went out to the carpark.
The plaintiff sat for a short time in the bar
before deciding to go out to the carpark to
find out why he had been assaulted. In the
carpark he was again assaulted by Brian
Michell who punched the plaintiff in the
head. Brian’s brother, Kaden, also attacked
the plaintiff from behind.
The plaintiff alleges that the hotel
staff were negligent in failing to remove
the Michell brothers from the premises
in circumstances where there was an
incident earlier in the evening at the hotel
between one of the Michell brothers and
a Mr Crabtree (the Crabtree incident).
The trial judge considered that the
Crabtree incident was only a verbal
altercation between two patrons in a
hotel environment. The trial judge accepted
evidence that the Crabtree incident settled
quickly and that following the incident the
bar staff kept a close eye on the Michell
brothers. There was nothing further in the
brothers’ behaviour which attracted adverse
attention until the assault on the plaintiff.
For these reasons, the trial judge considered
that the bar staff’s response to the incident
was appropriate and that the conduct of
the Michell brothers did not warrant their
ejection from the hotel.
The trial judge pointed out that “if every
patron of a hotel who exchanged a cross
word with another patron over some
perceived slight was ejected on the off
chance that they might later launch an
unprovoked and unexpected attack…
many such establishments would be
largely empty.”
The trial judge dismissed the claim.
The plaintiff appealed.
THE DECISION ON APPEAL
The main issue on appeal was whether
the Crabtree incident should have caused
the hotel staff to eject the Michell brothers
from the hotel.
The plaintiff argued that the trial judge had
erroneously regarded the Crabtree incident
as “trivial and involved no violence”.
77
The Court of Appeal rejected this
argument and held that while the incident
was a “concern”, the incident was brief and
there was no further behaviour on the part
of the Michell brothers to indicate to the
hotel staff that the assault on the plaintiff
was going to occur.
The Court of Appeal pointed out that
the plaintiff did not present any expert
evidence to establish that an incident like
the one involving Mr Crabtree required the
immediate removal of the Michell brothers.
There was also no evidence to show that the
Michell brothers had consumed an amount
of alcohol after the Crabtree incident
sufficient to adversely effect their
behaviour towards other patrons.
In the absence of the evidence referred
to above, the Court of Appeal held that it
could not be found that the hotel staff should
have been alerted to an increased risk of an
unprovoked assault by the Michell brothers
on other patrons in the hotel.
The appeal was dismissed.
Queensland Court of Appeal: 26 May 2006
Alison Crane
78
THE FACTS
In February 2001, the plaintiff fractured
her leg while using a seated leg curl machine
during a circuit class at the defendant’s gym.
She was an experienced gym user. She had
used exercise
Fitness First Australia
machines at another
Pty Ltd
gym, but had not
v
previously used
Vittenberg
or even seen
[2005] NSWCA 376
a seated leg curl
machine, which, at
Injury while using gym
equipment—whether sign on
the time of the injury,
machine sufficient care against
were not commonly
risk of injury
found in a circuit
class. The plaintiff
thought the seated leg curl machine was
actually a leg extension machine.
There were about 30 to 35 people in the
class with one instructor. The instructor
asked the class in general whether anybody
was suffering from any injury and whether
anyone had not done a circuit class before.
The plaintiff did not answer these inquiries
because she had attended circuit classes
before although not at the defendant’s gym.
The instructor did not explain or demonstrate
the use of any of the circuit machines. There
was a sign near the machine with a diagram
explaining how to use it. The plaintiff did
not see the sign.
THE DECISION AT TRIAL
The trial judge held that the defendant
had negligently failed to provide adequate
instructions and supervision in the use of
the machine and was liable to the plaintiff
who had not been contributorily negligent.
THE DECISION ON APPEAL
The defendant appealed in relation
to the trial judge’s findings on liability,
contributory negligence and some of the
heads of damage. In relation to liability
the defendant argued that it had reasonably
responded to the risk of injury by the
instructor’s inquiry, by attaching a diagram
to every machine and even if it had not, the
plaintiff had not shown that the defendant’s
negligence caused her injury.
The Court of Appeal held that the trial
judge was correct in finding that the sign
on the machine was not a reasonable
response to the risk of injury to users given
that there was an expectation in a circuit
class that such users would move from
machine to machine at a rapid pace.
The Court of Appeal also held that it was
not sufficient to make a general inquiry about
participation in circuit classes in general and
that the instructor should have specifically
asked whether the gym class users were
familiar with the circuit machines at the
defendant’s gym.
The Court of Appeal rejected the defendant’s
argument that the cause of the injury was
the plaintiff’s failure to check that the
machine was a leg extension machine and
accepted the trial judge’s findings that it was
reasonable for the plaintiff to have assumed
it was a leg extension machine because
they looked similar.
The Court of Appeal also rejected the
defendant’s arguments that the plaintiff
was guilty of contributory negligence
and dismissed the appeal.
New South Wales Court of Appeal:
4 November 2005
Joanna Atherinos
79
THE FACTS
The plaintiff, Mr Falvo, injured his right
knee playing a game of Oztag on 18
January 2000. The game was organised
by the Australian Oztag Sports Association
Inc (the Association)
Falvo
and played on a
v
sports field occupied
Australian Oztag Sports and controlled by
Association and Anor
the Warringa Council
[2006] NSWCA 17
(the Council). The
Meaning of “dangerous
playing field was
recreational activity”—duty
grassed, but had
to maintain condition of
a number of bare
sporting field
patches caused
by wear and tear. The Council had topped
those areas up with sand.
As Mr Falvo was running towards the
opposing team’s try line he moved from
a grassed area to an area devoid of grass
and his foot sunk slightly into the sand
causing him to sustain injury to his knee.
Mr Falvo claimed that the Association and
the Council were negligent for failing to take
proper care for his safety and for allowing
play to proceed on a field that was not
suitable for playing oztag.
THE DECISION AT TRIAL
The trial judge entered judgment for
the Association and the Council. The
trial judge found that, at most, the surface
had slight depressions and there was no
evidence of sharply uneven cavities. The
trial judge found that the field was consistent
with accepted community standards and
suitable for playing oztag. The trial judge
also found that oztag was a “dangerous
recreational activity” within the meaning
of s5K and s5L of the Civil Liability Act
2002 (the Act). Section 5K of the Act
defines “dangerous recreational activity”
as a recreational activity that involves
“a significant risk of physical harm”. Section
5L of the Act provides that a defendant is
not liable in negligence if harm results from
the materialisation of an obvious risk of
a dangerous recreational activity engaged
in by the plaintiff.
Mr Falvo appealed against the finding
that the field was in a condition fit for
playing oztag and that oztag was a
dangerous recreational activity within
the meaning of s5K and s5L of the Act.
THE DECISION ON APPEAL
According to the Court of Appeal,
the definition of “dangerous recreational
activity” had to be read as a whole. This
required due weight being given to the term
“dangerous”. It also required “significant” to
be construed as bearing not only on “risk”
but on the phrase “physical harm” as well.
The Court of Appeal held that an activity
involving a significant risk of sustaining
insignificant physical harm (such as a
sprained ankle or a minor scratch) is not
a dangerous recreational activity. It will be
a matter of judgment in each individual case
whether a particular recreational activity is
“dangerous”. For instance, the “risk of
physical harm” may be “significant” if the risk
is low but the potential harm is catastrophic.
On the other hand, the risk of physical harm
may not be significant if, despite the potential
catastrophic nature of the harm, the risk
is very slight.
On this basis, oztag (which is not a contact
sport) was held not to be a dangerous
recreational activity within the meaning
80
of the Act. Accordingly, the trial judge’s
decision on the issue was overturned.
Nonetheless, Mr Falvo’s appeal failed.
The Court of Appeal found that the field
was not perfectly level and there were many
bare patches that had been filled in with
sand. The Court of Appeal stated that slightly
differing levels and sandy patches
on sports grounds carry risks when playing
sports, but the community accepts this
because the cost of perfection would be
exorbitant and, if insisted upon, countless
people would be deprived of the opportunity
to participate in sporting activities.
New South Wales Court of Appeal:
2 March 2006
Sarah Haigh
81
THE FACTS
THE DECISION AT TRIAL
The plaintiff was accidentally shot in
the leg by the defendant while “spotlight”
shooting kangaroos with 3 other men.
At trial, the plaintiff argued that the
defendant was liable to him in negligence.
The defendant argued that he was entitled
to immunity under s5L of the Civil Liability
Act 2002 (NSW) (the Act).
The men commenced “spotlighting” in
the bush at around 10.30pm. The plaintiff
was driving the
v Mourlas
vehicle and the
Fallas
[2006] NSWCA 32
defendant sat in
the front passenger
Whether hunting kangaroos
by spotlight is a “dangerous
seat. The plaintiff
recreational activity” under the
was shining the
Civil Liability Act 2002 (NSW)
spotlight out of
the window of
the vehicle while the other men took shots.
After a short time 2 of the men got out of
the vehicle and began walking in front. At
some stage later the defendant also got
out of the vehicle and joined the other men.
The defendant later returned to the vehicle
still holding his handgun. The plaintiff asked
him not to come into the vehicle with a
loaded gun. The defendant gave repeated
assurances that the gun was not loaded.
He then began “clocking [the gun] back
and forward” in an effort to un-jam it. In
the process of doing so the defendant
pointed the gun towards the plaintiff and
it accidentally discharged shooting the
plaintiff in the leg.
Section 5L of the Act provides that
a person is not liable in negligence for
harm suffered by another person as a result
of the materialisation of an obvious risk of
a dangerous recreational activity engaged in
by the plaintiff. This section applies whether
or not the plaintiff was aware of the risk.
Section 5K of the Act defines “dangerous
recreational activity” to involve a significant
risk of physical harm.
The trial judge found that the defendant
had been negligent and rejected the
argument that the plaintiff was contributory
negligent. The trial judge did not consider
that the activity being undertaken at the
time the plaintiff was shot was a “dangerous
recreational activity” as defined by s5K of
the Act and accordingly, the defence in
s5L of the Act did not assist the defendant.
The trial judge awarded the plaintiff damages
of $98,467. The defendant appealed.
THE DECISION ON APPEAL
The defendant accepted that he was
negligent in discharging the gun but argued
that “shooting at night” was a dangerous
recreational activity within the definition of
the Act and therefore he had a complete
defence to the plaintiff’s claim.
The Court of Appeal was therefore
required to consider whether spotlighting
was a dangerous recreational activity and
whether the risk that materialised was
an obvious risk.
82
As to whether an activity is dangerous,
the Court of Appeal applied an objective
test ie, consideration of the particular
activities engaged in by the plaintiff at
the time of the incident and the actual
circumstances giving rise to the harm.
In this case the activity involved the
plaintiff sitting in the vehicle, holding
the spotlight for the shooters outside.
Occasionally, the shooters would return
to the car with guns that might or might
not be loaded. The Court of Appeal
considered that this is a limited activity
which is distinguishable from other activities
involved in “shooting kangaroos by spotlight”.
The Court of Appeal then considered
whether there was significant risk of physical
harm in engaging in this “limited activity”.
The Court of Appeal acknowledged that
the men were not experienced in shooting
kangaroos, some had had a few drinks with
dinner and there was a certain “measure
of excitement” which may have meant that
their alertness and ability to concentrate
was not optimal.
The Court of Appeal identified that there
was a significant risk that one of the men
might handle a loaded gun in a negligent
manner and therefore the activity was
considered to be a dangerous recreational
activity within the meaning of the Act.
For s5L of the Act to apply, however, there
must be a materialisation of an obvious risk.
The Court of Appeal did not consider that
the risk of the plaintiff getting shot
was obvious in circumstances where the
defendant had repeatedly assured the
plaintiff that his gun was not loaded.
These assurances had the effect of
reassuring the plaintiff that there was
no obvious risk that he could be shot.
83
The Court of Appeal considered that
the defendant was grossly negligent in
discharging his gun and pointed out that
gross negligence on the part of defendants
may not be obvious to plaintiffs.
Accordingly, the Court of Appeal upheld the
trial judge’s decision.
New South Wales Court of Appeal:
16 March 2006
Alison Crane and Sam Kingston
THE FACTS
The plaintiff, Mr Smith, was injured on
12 October 2001 when he was spearfishing
off Brush Island (a well known spearfishing
spot), an island near Kioloa on the south
coast of New South Wales. The plaintiff
was with his son,
Smith
the plaintiff’s friend
v
(Mr Renton) and
Perese and Ors
Mr Renton’s son.
[2006] NSWSC 288
They had travelled
to the island in a
Duty of care to diver injured
by boat driver
boat owned by
Mr Renton.
The plaintiff and Mr Renton went into
the water to look for lobsters. The plaintiff
was wearing a snorkel, a mask and a wetsuit
and he was carrying a spear. A float was
attached to the plaintiff’s spear gun to show
where he was when he was underwater.
The sons stayed in the boat and Mr Renton’s
son moved the boat out of the area, as
it was rocky and dangerous for boats.
Mr Perese was driving a boat out past
Brush Island to dive for abalone,
accompanied by Mr Leather, a deckhand.
Mr Perese said the water was glary and
choppy. The plaintiff said the water was
clear and glassy but that a slight wind had
developed. While the plaintiff and Mr Renton
were in the water, the boat being driven
by Mr Perese ran over the plaintiff and he
sustained injuries resulting in a below knee
amputation. Mr Perese says he did not see
either the plaintiff or any float in the water.
The plaintiff commenced claims against
the defendants as follows:
1. Mr Perese, on the basis that he was
negligent as the driver of the boat
2. Mr Richard Perese (Mr Perese’s father),
on the basis that he was vicariously liable
as Mr Perese’s employer and/or partner
and/or the principal of Mr Perese
3. Perese Abalone Diving Pty Limited (the
diving company) on the basis that it was
vicariously liable as the trustee of the
Perese Family Trust.
Mr Perese cross-claimed against Mr Renton
on the basis that Mr Renton failed to prevent
harm occurring to the plaintiff.
THE DECISION
All 3 defendants alleged contributory
negligence on the part of the plaintiff in
failing to have a dive flag attached to his
float, and in failing to remain close to the
boat. Each of the defendants pleaded
defences under the Civil Liability Act
2002 (the CLA) and voluntary assumption
of risk. In addition, each of the defendants
pleaded that any damages recoverable were
limited under the Limitation of Liability
for Maritime Claims Act 1989 (Cth) (the
Limitation Act) and the Convention on
Limitation of Liability for Maritime Claims
1976 (NSW) (the Convention).
The court held that Mr Perese had a
duty to keep a proper lookout and to travel
at an appropriate speed given the accepted
evidence of a degree of choppiness and
glare on the water. The court found that the
84
choppiness and the glare on the water was
not so great as to excuse Mr Perese from
not seeing the plaintiff, Mr Renton and
their floats.
Further, the evidence indicated that
Mr Perese was aware that the area where
the accident occurred was one favoured
by spear fisherman and that the floats used
by the plaintiff and Mr Renton were large
and brightly coloured and therefore highly
noticeable. The court held that if Mr Perese
had been keeping a proper lookout, then
he would have seen the float in sufficient
time to avoid the collision. Mr Perese was
where he was not displaying a dive flag near
his boat and diving where other boats might
be, was an obvious risk which the plaintiff
voluntarily consented to. However, the court
did not accept that the risk which eventuated
was an obvious risk because the plaintiff
was fishing with another in an area he
was familiar with, in what he believed to be
good conditions and where he was using a
conspicuous float. In any event, the court was
satisfied by the plaintiff’s evidence that
it was not a risk of which he was aware and
it was not established that he voluntarily
consented to it.
therefore negligent. Given that the diving
The court also rejected the proposition
company employed Mr Perese, (and not
that the plaintiff was in the course of a
his father), it was vicariously liable for
dangerous recreational activity. The plaintiff
Mr Perese’s negligence.
was swimming about 15 feet under water,
The court rejected the defendants’
argument of contributory negligence stating
that the relevant naval regulation did not
impose any obligation on the plaintiff, who
was not the owner of the boat, to display
and flag the boat. The court accepted as
in company, and reasonably close to the
shore with a rope tethered to a gun and
a buoy. The court said it was not satisfied
that the activity of spear fishing in those
circumstances amounted to a dangerous
recreational activity.
reasonable the plaintiff’s belief that it was
With respect to damage, the court
only necessary to display a flag on the
observed that under the Limitation Act
boat for scuba diving operations. There
and the Convention, the persons entitled
was considerable evidence on the topic of
to limit their liability were “shipowners…
flags on floats. There was no legislation or
of a seagoing ship.” After referring to
regulation requiring the plaintiff to display a
numerous authorities on the meaning
flag from his float and his failure to do so
of the terms “ship” and “seagoing” the
did not constitute contributory negligence.
court determined that Mr Perese’s vessel
The court also found that the CLA defences
were not available to Mr Perese because
they came into effect after the proceedings
against Mr Perese were commenced. Those
defences were available to Mr Perese’s
father and the diving company. Each of
the defendants pleaded voluntary assumption
of risk by the plaintiff. They argued that the
risk of the plaintiff being struck by a boat
85
was properly regarded as a seagoing ship
and that, as a result, Mr Perese and the
diving company, as owner and operator
of the vessel, were entitled to the protection
of the Limitation Act and the Convention.
Finally, the court dismissed Mr Perese’s
cross-claim against Mr Renton. Having
regard to the relationship between the
plaintiff and Mr Renton and the extent
of the plaintiff’s experience, the court
was not persuaded that Mr Renton owed the
plaintiff a duty to ensure float flags were
provided or that the vessel was not
kept close to the dive spot.
The court ordered that the matter be relisted
for assessment of damages pursuant to the
Limitation Act and the Convention.
New South Wales Supreme Court:
21 April 2006
Johanna Backhouse and Kim Nicolaidis
86
THE FACTS
On 11 August 1996, the plaintiff was
walking along the headland at Long Reef
in New South Wales when he was hit by
a hang glider. The plaintiff did not see the
glider before it
collided with him.
Wardle
He was knocked
v
to the ground and
Kick and Ors
suffered significant
[2006] NSWSC 327
injuries to his left leg.
Liability of pilot, hang gliding
The headland at
club and Council—collision of
Long Reef had been
hang glider with pedestrian
used for many years
for hang gliding. The
area also provided a popular walking track
for local people and others visiting the area.
The plaintiff instituted proceedings against
the pilot of the hang glider, the Warringah
Shire Council (the Council), the Northern
Beaches Hang Gliding Club Inc (the Club)
and the Hang Gliding Federation of
Australia (the Federation).
The pilot was a member of the Club.
The Club was a delegate of the Federation
and was responsible for certifying the pilot.
The pilot was granted a restricted certificate
following an assessment by the Club on 9
June 2006. The Club was also responsible
for management of hang gliding activities
on the Long Reef site. The Federation
maintained an operations manual which
provided standards and rules for the
activity in Australia. Hang gliding activities
are also regulated by the Civil Aviation
Act 1988. (Cth)
87
The plaintiff alleged that the pilot was liable
because he failed to take reasonable care
for the safety of members of the public
when operating his hang glider.
The plaintiff alleged that the Council
should have constructed an alternative
pathway to the west of the headland and/or
should have erected signs warning walkers
of the presence of hang gliders.
The plaintiff alleged that the Club failed to
ensure the safe operation of the gliding site.
He also alleged that the Club was negligent
for failing to supervise the pilot and/or for
certifying the pilot to fly with a restricted
certificate.
The plaintiff also claimed against the
Federation, as the body with the overall
responsibility for hang gliding.
THE DECISION
The court found that the pilot was
negligent for flying his hang glider at
a low altitude over a crowded headland
while executing figure 8s, thereby exposing
pedestrians to a risk of injury. In doing so,
he breached clause 4.7(h) of Order 95.8
of the Civil Aviation Safety Authority which
provided for effective separation of aircraft
from ground locations where people might
be hurt if a pilot lost control. He also
breached his duty of care to pedestrians
in the area.
The court also considered that the Club
was liable as it was in control of the gliding
site and had the responsibility to ensure
its safe operation. Evidence was led that
although landing was supposed to occur
on the beaches, the headland was in fact
used for both take off and landing. The use
of the headland for landing was considered
unsafe, given the amount of pedestrians
usually in the area. The court said that the
Club did not take steps to exclude the
public and make the landing area safe.
The Club could have easily designated
an area and used signage to provide an
“exclusion zone” which could be enforced
by the Club. By failing to take such
measures, the Club breached its duty
of care to ensure the safety of members
of the public.
However, the court did not consider
that the Club was negligent for failing
to supervise the pilot while in the air, as the
pilot had been certified to fly with a restricted
certificate. There was no evidence to suggest
considered it unrealistic to assume
that the plaintiff would have kept to
the pathway rather than wandering
off to get a better view.
The defendants alleged contributory
negligence on the part of the plaintiff.
The court rejected this argument. The
plaintiff was walking where he was entitled
to and, although he knew that hang gliders
were in the area, he had no reason to keep
a look out to avoid a craft which was flying
too low and out of control in an area where
it should not have been excluded.
Damages were assessed at $344,802.
given to the pilot flying on the relevant day.
New South Wales Supreme Court:
26 April 2006.
The court also said that the Club was not
Samantha Davey
that any special attention should have been
negligent in certifying the pilot as the
evidence indicated a proper process
of examination and certification had
taken place.
The court found that the Federation was
not liable. The court said that the Federation
reasonably passed the responsibility for the
management of individual sites and pilots
to the various clubs.
The court also found that the Council
was not liable. The Court noted that the
presence of hang gliders on the headland
was notorious and would have been known
to any person contemplating walking along
the pathway. It was obvious that, if a hang
glider failed to observe safety constraints or
inadvertently lost control, there was potential
for an accident. The court accordingly
considered that the erection of signs would
not have made any difference. Further, while
the construction of an alternative pathway
may possibly have resulted in the plaintiff
and others using that pathway, the court
88
THE FACTS
On 22 September 1989 the plaintiff was
rendered a quadriplegic when he fell from
a track ride in a park playground controlled
by the City of Stirling (the City). He was
23 years old and
Stirling
1.85m tall.
City of
v
Tremeer
[2006] WASCA 73
noting that it was designed for use by
children aged between 8 and 12 years
old. The trial judge found that if there had
been approximately 30cm of sand present
underneath the ride, then the plaintiff
would not have suffered the injury, being
quadriplegia. The trial judge entered
judgment for the plaintiff.
The playground
was constructed
2 months prior to
Liability of local authority
the incident. The
for fall of adult from children’s
track ride was like
playground equipment
a horizontal flying
fox whereby the user would place their
hands in triangular handle and push
themselves off a platform. An adult would
have to overlap their hands at the base
of the handle, which sat approximately
2m above sand in a shallow depression
between the 2 platforms.
About half way across the ride, the
plaintiff was travelling with his legs up near
his chest when he felt a jerk, his hands then
slipped off the handle and he fell backwards
and his head hit the ground first. He sued
the City in negligence.
THE DECISION AT TRIAL
THE DECISION ON APPEAL
The City argued that the plaintiff failed
to prove he would not have suffered his
injuries if there had been soft sand (of any
depth) under the ride. For the purposes
of the appeal, the City conceded that it owed
a duty to persons using the playground and
the response of a reasonable person was
to provide 30cm of soft sand under the track
ride. It asked the Court of Appeal
to consider whether its failure to provide
the sand materially contributed to the
plaintiff’s injuries, or alternatively, whether
the injuries were caused by the plaintiff’s
own negligence in hanging upside down
prior to the incident.
The Court of Appeal held that the trial
judge’s conclusion that approximately
30cm or more of soft sand was “sufficient
to probably prevent this injury” was not
The trial judge considered that the
plaintiff fell further than 97cm directly
on to the top of his head. The trial judge
found that the plaintiff’s injury was consistent
with him being crouched in a cradle-like
position moving forward and when his hands
slipped, he flipped into a somersault and hit
his head on the ground. There was found
to be insufficient sand under the ride,
supported by expert opinion. The Court
of Appeal considered that the trial judge
had erred in finding that the City’s failure to
provide soft sand materially contributed to
the plaintiff’s injuries. The Court of Appeal
held that the plaintiff would have suffered
the injuries, being quadriplegia, even if he
had fallen into soft sand.
Accordingly, the City’s appeal was upheld.
Western Australian Court of Appeal:
10 May 2006
Megan Dwyer
89
THE FACTS
The plaintiff sustained an injury on
15 January 1999 during a social game
of beach volleyball on a sand-surfaced
volleyball court at a recreation centre (the
centre) managed by
Paltidis
the defendant. The
v
plaintiff was injured
The State Council
when he hit his chin
of the Young Men’s
against one of a
Christian Association
number of car tyres
of Victoria Inc
used to delineate
[2006] VSCA 122
the boundaries of
Liability of recreation centre
the volleyball court.
for injury to volleyball player
The plaintiff
commenced proceedings against
the defendant for negligence, breach
of duty as occupier of the centre under
the Wrongs Act 1958 and for breach of
contract. The defendant denied the plaintiff’s
allegations and pleaded voluntary assumption
of risk on the basis that the boundaries of
the volleyball court consisted of “plainly
visible car tyres” and any risk of injury was
obvious and fully appreciated by the plaintiff.
The defendant also alleged contributory
negligence on the part of the plaintiff for
carelessly diving in the direction of the
tyres during the game.
THE DECISION AT TRIAL
The jury answered a number of questions
which resulted in a judgment in favour of the
plaintiff. From those answers it was implicit
that the jury had rejected the defence of
voluntary assumption of risk. The defendant
was held liable and the plaintiff’s damages
were reduced by 70% to $174,000 on
account of the plaintiff’s contributory
negligence.
THE DECISION ON APPEAL
The plaintiff appealed the finding of
contributory negligence, the directions
(or lack thereof) given by the judge to
the jury regarding a finding of voluntary
assumption of risk, and the apportionment
of liability.
The Court of Appeal held that the trial
judge failed to properly instruct the jury
in relation to the voluntary assumption of
risk defence and the application of the
objective test. It said that the directions
given by the trial judge wrongly focused
the jury on whether the plaintiff had been
objectively aware of the risk of injury, rather
than whether the plaintiff was in fact fully
aware of the risk of injury by the tyres
before he began to play.
The Court of Appeal also said that the jury
had not been properly instructed in relation
to contributory negligence. While saying that,
the Court of Appeal still considered that
it would have been open to a properly
instructed jury to make a finding of
contributory negligence and held that the
plaintiff failed to take reasonable care for his
own safety in the circumstances and ought
to reasonably have appreciated, before the
incident occurred, the existence of the tyres.
However, it held that the defendant’s
departure from its duty of care was
90
greater than the plaintiff’s departure
in that the defendant failed to prevent
the avoidable danger posed by the tyres.
The plaintiff’s divergence from the standard
of care required of him involved a
“spontaneous act in the course of play by a
person essentially unfamiliar with the court”.
The plaintiff’s appeal was upheld and the
original judgment was replaced with a verdict
reduced to $435,000 on account of 25%
contributory negligence by the plaintiff.
Victorian Court of Appeal: 8 June 2006
Megan Dwyer
91
THE FACTS
The plaintiff, Ms Martin, was a year
8 student at the All Saints Catholic Girls
College at Liverpool run by the defendant.
In November 2000, the defendant conducted
a two day
Martin
“adventure-style
v
camp” that was
The Trustees of the
attended by the
Roman Catholic Church plaintiff and
of the Archdiocese
other students.
of Sydney
[2006] NSWCA 132
The plaintiff was
with a group of
Girl injured on school camp—fall
from obstacle course—whether 15 to 20 girls, and
a supervising teacher
reasonable precautions taken
and camp instructor.
They had just completed an obstacle which
left their shoes wet and muddy before
attempting an obstacle called “Mt Kosciusko”.
This was a structure with a platform
approximately 3.8m above the ground.
The platform could be reached by one
of two ramps. The ramp on the right was
a timber plank which could be climbed with
the assistance of a knotted heavy duty rope.
The plaintiff chose to climb the right ramp
of “Mt Kosciusko”. When she was about half
way up, she fell to the ground and sustained
a broken leg.
THE DECISION AT TRIAL
The trial judge made the following findings
of fact:
• Each obstacle was described to the girls
and the camp instructor demonstrated how
to climb the right ramp of “Mt Kosciusko”
• The plank climbed by the plaintiff was dry
• The plaintiff lost her balance and fell
• A large number of students had previously
used “Mt Kosciusko” without incident.
As a result of these findings, the trial
judge held that the defendant did not fail
to properly instruct or supervise the plaintiff.
The plank was not slippery and dangerous
and climbing it was challenging but not
inherently dangerous.
The trial judge also held that the risk
of injury was small and there were no other
precautions that a reasonable person should
have taken. Therefore the defendant did not
breach the duty of care it owed to the
plaintiff.
THE APPEAL DECISION
The Court of Appeal held that the trial
judge made an error in holding that the
plaintiff did not slip on the plank.
The Court of Appeal held that there
was a possibility that the girls could fall
from a height up to 3.8m, particularly
where they had wet shoes. The fact that 2
or 3 girls who attempted the obstacle before
the plaintiff slipped on the plank indicated
that there was a significant risk that the
plaintiff could slip and fall and be injured.
There was no evidence that any precautions
were taken or any instructions given to the
girls on how to climb the plank or on how
to act as a spotter, or what to do if they fell.
In those circumstances the Court of Appeal
held that the trial judge’s error in holding that
the plaintiff did not slip was sufficiently
material to void his decision and therefore
the Court of Appeal was required to form
its own view.
In assessing the evidence, the Court of
Appeal held that a reasonable response
92
to the foreseeable risk of injury was for
the defendant to give instructions on what
to do in the case of slipping on the plank
and also to have a properly instructed spotter
in place. This was not done and the
defendant was negligent.
The Court of Appeal gave judgment in favour
of the plaintiff in the sum of $80,519.10.
New South Wales Court of Appeal:
29 May 2006
Kylie Powell
93
THE FACTS
At about 5.20am on 17 April 2002,
the plaintiff was driving a loaded fuel tanker
along the Kennedy Highway near a property
occupied by the first and second defendants.
As the plaintiff was
Smith
proceeding over the
v
crest of a hill he
Williams
noticed a number
[2005] QSC 267
of cattle on the
Negligence and nuisance—
highway. He
animals straying onto highway—
swerved to avoid
whether facts pleaded can
them and the tanker
exclude the operation of the
overturned, bursting
rule in Searle v Wallbank
into flames and
causing the plaintiff severe injuries.
In April 2005 the plaintiff commenced
an action claiming damages for personal
injuries and consequential loss as a result
of negligence or nuisance. The plaintiff
claimed that the first, second and third
defendants were negligent for allowing
significant numbers of cattle to be
depastured, graze and wander or remain
upon land adjacent to the bitumen surface
of the Kennedy Highway. The plaintiff
sued the fourth and fifth defendants for
the manner in which they designed,
constructed, maintained, and conducted
safety inspections of that section of the
Kennedy Highway.
The first, second and third defendants
sought to dismiss the claim made against
each of them. They submitted that the rule
in Searle v Wallbank meant that the plaintiff
had no real prospect of succeeding in his
claim against them, entitling them to
summary judgment pursuant to r293 of
the UCPR. The rule in Searle v Wallbank
is a common law rule which provides that
there is no general obligation on an owner
or occupier of land adjoining a highway to
fence the land. The rule has been abrogated
by legislation in all states and territories
except Queensland and the Northern
Territory. Alternatively, they submitted that
due to the existence of the common law
rule, the plaintiff’s pleading disclosed no
reasonable cause of action and ought to be
struck out pursuant to r171 of the UCPR.
THE DECISION
The court dismissed the application
for summary judgment and made orders
giving the plaintiff leave to amend his notice
of claim against the first, second and third
defendants. The court considered the various
authorities regarding the rule in Searle v
Wallbank and concluded that incontrovertibly
Searle v Wallbank and the High Court case
of State Government Insurance Commission
v Trigwell (1979) 142 CLR 617 remain good
law in Queensland. However, the court
recognised that the rule in Searle v Wallbank
will not apply in situations such as the
following:
• where animals are brought onto
the highway deliberately, as opposed
to straying
• where the defendant knew that the animal
in question had vicious or mischievous
propensities
• where a large number of animals
94
may give rise to liability for nuisance.
The court stated that if the rule in
Searle v Wallbank were applicable to the
facts, the plaintiff would lack a cause of
action, however, on the evidence there
may be an arguable case for nuisance.
The plaintiff submitted that the first,
second and third defendants allowed
or permitted their cattle to graze, wander
or to be and remain on the road reserve.
The court felt that this was not clear on the
pleadings, however, stated that if the cattle
were deliberately placed on the road reserve,
then the rule in Searle v Wallbank would
likely be excluded.
The court considered that it could not
be said that the rule in Searle v Wallbank
would inevitably determine the plaintiff’s
claim such that he has no real prospect
of success. The pleadings were somewhat
ambiguous and the court considered that
the matter was best resolved by giving
the plaintiff leave to replead.
Queensland Supreme Court:
2 September 2005
Sam Kingston
95
PROFESSIONAL NEGLIGENCE
THE FACTS
In October 1999 the plaintiff became
aware that a company, the second defendant,
was seeking money from investors to enable
it to complete certain
property projects it
Michael Peter Johnston
was undertaking. The
v
plaintiff consulted a
Roderick Alexander
solicitor, who told him
Smith & Ors
that “the proposal
[2005] NSWSC 433
made no sense and
Alleged failure by solicitor to
advise as to nature and effect of that he should not
mortgage—mortgagee exercised sign documents or
power of sale—cause of loss—
hand over money”.
failure of investment company
to make repayments to investor The plaintiff did not
follow that advice,
and in December 1999 the plaintiff retained
another solicitor, the first defendant, to act
on his behalf in the transaction. The plaintiff
invested $360,000.
The investment monies were to be borrowed
by the plaintiff from Burrawong (the lender),
and secured by a second mortgage over the
plaintiff’s home. The plaintiff would then
on-lend that money to the second defendant.
In mid-January 2000 the third defendant,
a representative of the second defendant,
advised the first defendant that the
transaction was going ahead, and asked
whether he could take the mortgage
documents and show them to the plaintiff.
Although he knew that the third defendant
was not his client, the first defendant saw
no harm in what the third defendant was
proposing and handed over the documents
to the plaintiff.
On about 27 January 2000 the third
defendant returned the mortgage documents
97
to the first defendant, which had all been
signed by the plaintiff. The first defendant
then forwarded the documents to the
lender’s solicitors.
In January 2000 a change
to conveyancing law required that any
intending mortgagor sign a declaration
to the effect that the mortgage had been
explained, and that the declaration had
been signed after receipt of the explanation
(the declaration). The first defendant advised
the third defendant of this new requirement,
following which the third defendant arranged
for the plaintiff to attend at the first
defendant’s office for signing of the
declaration on 28 January 2000, that is,
after the mortgage documents had been
signed. It was accepted that the first
defendant gave the plaintiff the following
advice at that conference, following which
the declaration was signed:
“The effect of the arrangement is that
you will receive the mortgage sum and you
will need to make payments on this mortgage
as well. This mortgage is a second mortgage
that sits behind ANZ in priority. That means
that if you default on either mortgage either
mortgagee can take possession of your
property, sell it and ANZ will be paid out
first and Burrawong will be paid out next…
You will get the balance, if any, after these
payments have been made. If there is not
enough to pay out the mortgagees then
you are personally liable for the difference…”
The transaction proceeded, however,
the second defendant ultimately defaulted
on its loan from the plaintiff. This caused
the plaintiff to default on his loan from the
lender, which in turn exercised its power
of sale under the mortgage. The plaintiff
consequently lost all of his equity
in his home.
THE ISSUES
The plaintiff settled or abandoned his
claims against all defendants except the
first defendant. The plaintiff alleged that
the first defendant breached a duty of care
owed to the plaintiff by failing to explain
that the documents he signed included
a mortgage, and/or failing to explain
the nature and effect of the mortgage.
The plaintiff also alleged that the first
defendant engaged in misleading and
deceptive conduct contrary to s52
of the Trade Practices Act 1974 (Cth).
THE DECISION
a false statement that the mortgage
had been signed after receipt of the
explanation. Had the truth been told,
the transaction may not have completed
on that day, although application of the
principles in March v Stramare (E & MH)
Pty Limited (1990–1991) 171 CLR 506
led to the conclusion that:
• The first defendant’s breach was too
remote from the plaintiff’s loss to be
considered the cause thereof, and
• The real and effective cause of
the plaintiff’s loss was the second
defendant’s default in making its
repayments.
The plaintiff’s claim against the
first defendant failed because:
New South Wales Supreme Court:
25 May 2005
• The plaintiff was well aware before
he attend at the first defendant’s office
on 28 January 2000 that he was entering
into a mortgage, and was aware of the
general rights and remedies of a
mortgagee over secured property.
This was particularly the case given
that the plaintiff already had in place
a mortgage with the ANZ
• The first defendant did explain
to the plaintiff that he had executed
a mortgage and what its incidents
and consequences were
• Although the first defendant breached
his duty to the plaintiff by taking
instructions from other parties, being
the second and third defendants whose
interests were different from the plaintiff,
any harmful consequences of that breach
were brought to an end when the first
defendant conferred with the plaintiff
on 28 January 2000
• The first defendant also breached his duty
to the plaintiff by sending the declaration
to the lender’s solicitors, which contained
Adrian Lewis
98
THE FACTS
Mr Reynolds (the plaintiff) alleged that his
doctors performed surgery on his left leg
negligently. The plaintiff’s solicitors (the
defendants), failed to commence an action
against the doctors
Leitch
before the limitation
v
period expired, and
Reynolds
an application by the
[2005] NSWCA 259
defendants to extend
Recovery of damages where the the limitation period
negligence of solicitors denied
was dismissed. The
plaintiff’s opportunity to pursue
a cause of action—damages for plaintiff commenced
a claim against the
loss of benefit of cause of
action—measure of damages
defendants alleging
that they had been
negligent in the conduct of his case against
the doctors, and in relation to their retainer
generally.
The defendants admitted negligence
in failing to institute proceedings prior
to the expiration of the limitation period.
However, they contended that the plaintiff
had no prospect of success in the action
against his doctors.
THE TRIAL
The trial judge found that despite there
being a lack of evidence (particularly with
respect to x-rays that had been destroyed
by the hospital) the court “would have to
labour towards a conclusion on a balance
of probabilities with incomplete information.”
The trial judge found that there was some
prospect that the plaintiff would have
succeeded in his claim, and that the
negligence of the defendants deprived
him of the opportunity of securing
a settlement or award of damages
from the court. The trial judge discounted
the value of the cause of action by 55%
so as to take account of the plaintiff’s
reduced prospects of success. The trial
judge awarded the plaintiff $307,575
representing the likely outcome in damages
had the plaintiff proceeded against the
doctors (discounted by 55%) plus $5,000
by way of damages for vexation and distress.
THE DECISION ON APPEAL
In an unanimous decision the Court
of Appeal held that:
• There was no appealable error
demonstrated in the trial judge’s
assessment of the discount at 55%,
which adequately accommodated the
difficulties for the plaintiff caused by
the absence of the x-ray evidence. The
fact that the discount indicated a less than
50% chance of success was not fatal to
the plaintiff’s claim against the defendants
• The damages awarded by the trial judge
were not excessive. The trial judge’s broad
brush approach to damages for economic
loss was justifiable, even if the amount
allowed for the weekly loss of the
respondent’s wages was in the nature
of “guess work or speculation”, and
• It is well settled that a claim for damages
for inconvenience, mental distress and
upset caused by breach of contract are
available. An award of damages for
vexation and distress was appropriate
in the circumstances.
The appeal was dismissed.
New South Wales Court of Appeal:
5 August 2005
Wes Lerch
99
THE FACTS
The plaintiff, Mr Lewis, former Commissioner
for Police in Queensland, was convicted of
15 counts of official corruption and a prison
sentence was
Lewis
imposed. The
v
plaintiff’s appeal
Hillhouse & Anor
was dismissed.
[2005] QSC 20
He subsequently
Whether cause of action exists
sued his solicitors
against former solicitors following
(the defendants)
imprisonment for official
corruption—public policy—abuse for damages for
of process—collateral attack in
negligence and/or
civil proceedings on criminal
breach of contract
conviction—loss of a chance
for the loss of the
prospect of his convictions being quashed
had a certain ground of appeal been
pursued. It was alleged that the ground
of appeal had been abandoned contrary
to the plaintiff’s instructions.
THE DECISION
The defendants applied for the plaintiff’s
statement of claim to be struck out.
The judge accepted the defendants’
application and held that the plaintiff’s
case for substantial damages inevitably
involved the proposition that, had the
abandoned ground of appeal been advanced
on appeal, the plaintiff’s conviction would
have been quashed and he would not have
been convicted on a retrial of the charges.
The judge concluded that this contention
involved a collateral attack on the convictions
which had been upheld on appeal. Therefore,
the plaintiff’s action was an abuse of the
process of the court and was dismissed.
THE DECISION ON APPEAL
The Court of Appeal dismissed the plaintiff’s
appeal primarily on the ground that the
original decision that the plaintiff’s claim
was an abuse of process was correct.
The Court of Appeal recognised that
the principle protecting a judgment from
a collateral attack is quite distinct from the
principles of advocates’ immunity, although
both concepts are a manifestation of
a fundamental public policy promoting
confidence in the administration of justice
by preventing a judgment which has not
been set aside being called into question
in subsequent proceedings.
The plaintiff argued that the judge
erred in regarding his case against the
defendants as involving the proposition that
the plaintiff would have been acquitted had
the ground of appeal been pressed. It was
argued that the defendants’ breach of duty
caused the loss of a “prospect” of the
quashing of the plaintiff’s conviction and
that the case so formulated did not offend
the prohibition on a collateral attack. After
considering the plaintiff’s pleadings, however,
the Court of Appeal concluded that it was at
least part of his case that the negligence
caused the appeal to fail with the result that
the plaintiff’s convictions were not quashed.
To that extent, the plaintiff’s case sought
to establish that the appeal would have
succeeded had the ground of appeal
not been abandoned. The Court of Appeal
concluded that this was clearly a collateral
attack on the decision of the Court of
Appeal and the decision of the jury
In any event, the Court of Appeal concluded
that public policy against collateral attack
on a judgment is also offended by a claim
that the plaintiff lost only the “prospect”
100
of a successful appeal, so long as the
conviction stands.
The Court of Appeal also concluded that
the plaintiff’s claim would have failed in any
event because in order to establish a claim
for the recovery of substantial damages for
breach of duty in tort or contract, it must be
shown, on the balance of probabilities, that
his conviction quashed. In the nature of
things, being dependant upon the decision
of the court, that is something which either
would or would not have happened. The
plaintiff did not allege that his conviction
would have been quashed and therefore
his case as pleaded failed to identify
any loss of anything of value.
of value. It was necessary for the plaintiff to
Queensland Court of Appeal:
26 August 2005
accept and discharge the burden of showing
Richard Leahy and Bree Macfie
the breach caused actual loss of something
that if the abandoned ground of appeal
was persisted with, it would have led to
the quashing of the convictions and the
plaintiff’s acquittal. If the plaintiff could
not show that it was more probable than
not that he would have had his convictions
quashed and a verdict of acquittal had the
point been taken, he could not show that
he had suffered loss of anything of value
flowing from the failure of his lawyers to
persist with the abandoned ground of appeal.
The Court of Appeal also emphasised
that an opportunity to litigate, considered
in the abstract and without regard for the
prospects of a favourable outcome, is not
something of value. In the context of a claim
for substantial damages, the loss of a right
to an appeal or trial of criminal charges is,
of itself, nothing more than the loss of the
opportunity to be in peril of a conviction and
to spend money to avoid that peril. It is only
if the result of the appeal or trial was likely
to be favourable in some sense that anything
of value has been lost by the litigant.
The Court of Appeal concluded that
the plaintiff must show that he suffered
the loss of a “prospect” or “chance” or
“opportunity” of some value. The only
valuable opportunity identified in his
pleading was the opportunity to have
101
THE FACTS
Mrs Aldridge issued a claim in the District
Court seeking damages from the Council
for injuries suffered by her when a park
bench on which she was sitting collapsed.
The accident
Eurobodalla Shire
allegedly happened
Council
in a Council park,
v
and the allegation
Wells & Ors
was that the collapse
[2006] NSWCA 5
of the bench was
Liability of legal practitioners
caused by a breach
to pay costs—whether claim has
reasonable prospects of success of duty of care on
the part of the
—Legal Profession Act NSW
1987
Council as occupier.
The Council was found not to have been
negligent. The judge also held that Mrs
Aldridge did not meet the threshold for
general damages under the Civil Liability
Act 2003 (NSW), and in circumstances
where her out of pocket expenses were
$1,000, it was only that sum that she
would have recovered if she had proven
the Council to be negligent.
Mrs Aldridge was represented at trial
by Mr Wells, a solicitor, and Mr Porthouse,
a barrister. Mr Wells and Mr Porthouse
subsequently filed an application for leave
to appeal. On 8 November 2005 the Court
of Appeal dismissed the application for leave
to appeal. In delivering the judgment Justice
Giles said words to the effect that he did not
think there was any prospect of a successful
appeal as to damages, nor was there any real
case for liability, quite the contrary, and that
the case should be categorised as hopeless.
THE ISSUE
The Council applied to the court
for the following orders:
• That the order requiring Mrs Aldridge
to pay the Council’s costs in relation to
the application for leave to appeal be
varied, and
• That in lieu thereof, Mr Wells and
Mr Porthouse pay the whole of the
Council’s costs in respect of the application
for leave to appeal pursuant to the Legal
Profession Act NSW 1987 (the Act).
Section 198M of the Act provides that
where it appears to a court that a solicitor
or barrister has provided legal services
to a party without reasonable prospects
of success, the court may of its own motion
or on the application of any party to the
proceedings make an order directing the
solicitor or barrister to indemnify the other
party(s) against the whole or any part
of their costs.
The Act goes on to provide that if the
court is satisfied that the facts established
do not form the basis for a reasonable
belief that the claim would have reasonable
prospects of success, then there is a
presumption that the legal services were
provided without reasonable prospects
of success, and the presumption is only
rebuttable by the solicitor or barrister
establishing that at the time the services
were provided there were provable facts
sufficient to base the claim or defence
which had reasonable prospects of success.
THE DECISION
The Court of Appeal accepted that:
• At trial no evidence was led as to
what had caused the bench to collapse
• As it could not be proved what caused
102
the collapse, it could not be proved that
it was caused by some act or omission
on the Council’s part
• In the application for leave, Mr Porthouse
said that his client’s arguments on liability
were based on design, but there was
no evidence as to who had designed
or constructed the benches
• There was no evidence as to whether
the Council knew or ought to have
known that the design was defective.
The Court of Appeal said that the evidence
before the trial court could not form a basis
for a reasonable belief that Mrs Aldridge’s
claim had a reasonable prospect of success
and that presumption had not been rebutted
by either Mr Wells or Mr Porthouse.
The Court of Appeal noted that in the
circumstances, it still had to exercise
a discretion as to whether or not to make
an order against the legal practitioners.
Justice Giles concluded:
“I see no redeeming feature in this case.
There is no question of difficult law that was
involved in the decision whether or not to
prosecute Mrs Aldridge’s claim. No account
appears to have been taken of the need to
prove the facts necessary to support the
cause of action”.
The Court of Appeal also noted that
Mrs Aldridge was a 55 year old lady,
unemployed and living with friends in
a tin shed at one stage, and who, on any
view of her circumstances, had no prospect
of paying the costs of the application for
leave to appeal.
The Court of Appeal therefore ordered that
Mr Wells and Mr Porthouse pay the Council’s
costs of the application for leave to appeal.
The Council did not seek an order that Mr
Wells and Mr Porthouse pay their trial costs.
103
New South Wales Court of Appeal:
21 February 2006
Robert Samut
THE FACTS
The second respondents, McCarthy, Durie,
Ryan and Neil, were the partners in a firm
of solicitors (MDRN). The first respondent,
Lawyers Private
A&D Douglas Pty Ltd
Mortgages Pty
v
Ltd, was the trustee
Lawyers Private
company used by the
Mortgages Pty Ltd
second respondant
[2006] FCA 520
to receive and
Solicitors—private mortgage
advance investor’s
loan—investment failed—nature
funds. Thirty-nine
of duty of care owed by trustee
applicants
company and solicitors—
professional indemnity insurance (the applicants)
—exclusion for dishonest
deposited various
or fraudulent statement—
funds with the
non-disclosure
second respondents
for lending to Rivett Project Results Pty Ltd
(Project Results). The project failed and
the applicants brought proceedings against
the first and second respondents for loss
suffered. The second respondents sought
indemnity from St Paul and QBE with
respect to the losses claimed.
Most of the applicants’ claims arose
from statements in promotional material
sent by the first and/or second respondents
to the applicants, in particular, an investment
summary. It was also alleged that the first
and second respondents owed duties of
care to the applicants to take reasonable
care not to recommend or make imprudent
investments. The applicants alleged that
both respondents had been negligent
in recommending the loan and in their
assessment of the suitability of the loan.
THE DECISION AT TRIAL
The respondents made various admissions,
the effect of which was that all applicants
(except for the seventh, eleventh, twentieth,
twenty-first, thirty-eighth and thirty-ninth
applicants) were entitled to judgment for
breach of s 995 of the Corporations Law
and for breach of duty, with damages to
be assessed. It was necessary, however,
for the court to consider the evidence at
length given the declinations of indemnity
by St Paul and QBE and the claims where
the breach had not been admitted.
Justice Dowsett made the following
findings of fact:
(a) A statement in the investment summary
that Mr Rivett had net surplus assets
of $1,790,000 was misleading. Justice
Dowsett found that Mr Rivett’s real net
worth was, at most, $165,000. Mr Rivett
was a director and in effective control
of Project Results
(b) Project Results had no assets of value
and a representation in the investment
summary that it had a net asset position
of $640,000 was misleading
(c) The respondents admitted that they
made no or no proper checks with
respect to the financial position
of Mr Rivett and Project Results
(d) The investment summary was
misleading in stating that all units
in stage 1 of the project had been
“pre-sold”. However, given the inherent
ambiguity of that term, Justice Dowsett
doubted whether an investor would rely
on such an equivocal statement without
clarifying its meaning. For that reason,
other than for the seventh applicant,
Justice Dowsett did not accept that
there had been reliance upon the
104
statement. Justice Dowsett accepted that
the statement had significantly influenced
the seventh applicant’s decision to invest
(e) The investment summary was not
misleading in various other respects.
It was possible that applicants had
misunderstood parts of the investment
summary, but it was not in any way
misleading or deceptive
(f) All other applicants, save for the
twentieth and twenty-first applicants,
relied on the information in the investment
summary concerning the assets of Mr
Rivett and Project Results in deciding
to invest in the project
(g) As for the twentieth and twenty-first
applicants, it was found that no
misrepresentations had been made
to them and that their claim must fail.
As for the claims for breach of duty, Justice
Dowsett rejected any duty other than the
duty not to make negligent misstatements.
Justice Dowsett rejected that the investment
was imprudent and the claim in this regard
was rejected.
Each applicant had received some interest
under the loan and distributions by the
liquidator of Project Results. In each case,
the loss of the applicants was calculated
as the amount invested plus interest less
the sums received.
there was no innocent explanation for it.
On that basis, Justice Dowsett inferred
that the representation in the investment
summary as to the asset position of Mr
Rivett and Project Results was dishonest.
Justice Dowsett rejected, however, that
there was any dishonesty with respect to
the representation regarding the sale of
units. Conduct of an employee of the
second respondents of and including
the misrepresentation in the investment
summary brought about the second
respondent’s liability to the applicants
and so the exclusion operated. Justice
Dowsett stated that the exclusion clearly
applied even where the dishonesty was
that of an employee. Accordingly, St Paul
was obliged to indemnify the second
respondent only with respect to the claim
by the seventh applicant, who did not rely
upon the dishonest misrepresentations.
QBE
There were three possible policy years
triggered by the claim against the second
respondents. Justice Dowsett’s findings
with respect to each year were:
1. With respect to the 1998 policy,
the second respondent argued that
even though it had not given notification
of the claim or circumstances that may
give rise to the claim during the currency
ST PAUL
of the period of insurance, it was
St Paul relied upon an exclusion
for dishonesty to deny indemnity to the
second respondent. In this regard, Justice
Dowsett found that the investment summary
did not accurately portray the asset position
described to the second respondent by
Rivett and Project Results. Justice Dowsett
considered that the second respondent
must have understood the mistake and
nevertheless entitled to indemnity
105
under the policy by virtue of s54 of
the Insurance Contracts Act 1984 (Cth)
or the continuous cover extension in the
policy wording. Justice Dowsett rejected,
however, that any claim for indemnity
pursuant to the continuous cover
extension had been pleaded by the
second respondents. Justice Dowsett
was also not persuaded that any matter
came to the knowledge of the second
respondents during the period of cover
which would have entitled them to give
notice to QBE of a claim or circumstances
that may give rise to a claim. For that
reason, s54 had no relevant operation.
2. In relation to the 1999 policy,
the only grounds relied upon by QBE
to deny indemnity were that there had
been non-disclosure and
misrepresentation by the second
respondents in taking out the insurance.
It was the evidence of QBE’s underwriter
that she would not have issued insurance
if there had been no non-disclosure or
misrepresentation. The matters which
she said she was not aware of included:
(a) the partners of the second
respondent relied virtually entirely
upon the dishonest employee, who
was not legally trained, to evaluate
loan applications, valuations,
financial information and
supporting documentation
(b) the partners of the second respondent,
or some of them, read investment
summaries, but did not themselves
check the correctness of the
investment summaries
(c) investors were not provided
with source material unless they
requested it.
Justice Dowsett rejected that evidence
for a number of reasons. Firstly, the
employee’s job required the assessment
of financial issues and it was difficult to
see that legal training had much to do
with approval of loan applications. Also,
the employee was supervised by one
of the partners. Even though there was
no formal system in place for reviewing
documents prepared by the employee,
there was no reason that QBE should
have believed such a system existed.
With respect to numerous other matters
that the underwriter stated were of concern,
Justice Dowsett found that there was no
duty of disclosure where there was no
question relating to those matters in QBE’s
proposal form and those matters had been,
as Justice Dowsett had found, accurately
stated in the investment summary and
other relevant documentation.
Justice Dowsett found that the only matters
of concern which should have been
disclosed were:
(a) the misstatement in the investment
summary concerning the asset
positions of Mr Rivett and Project
Results
(b) the misstatement in the investment
summary concerning the pre-sale
of units
(c) any diversions between statements
in related documentation as to the
respondents’ mortgage assessment
practice and its actual practice.
However, Justice Dowsett found that the
second respondents were not relevantly
aware of the matters of concern.
3. In relation to the 2000 policy, although
there had been notification of the claim
and/or the circumstances giving rise to
the claim during the period of insurance,
an exclusion in the policy wording
excluded from indemnity any claim arising
from matters detailed in the proposal. This
claim had been mentioned in the proposal.
QBE also sought to rely upon an exclusion
for any act or omission committed with
reckless disregard for the consequences
thereof. Justice Dowsett considered,
however, that there was no recklessness
106
by the second respondents nor was it
aware of any recklessness on the part
of the employee.
Accordingly, the result at trial was that:
1. each of the applicants (except for the
twentieth and twenty-first applicants),
succeeded against both respondents
on the statutory cause of action and
for negligent misstatement
2. the second respondents were entitled
to be indemnified by St Paul only with
respect to the seventh applicant’s claim
3. the second respondents were entitled
to indemnity from QBE in respect of all
amounts recovered by the applicants.
Justice Dowsett then adjourned the matter
for further submissions.
COMMENT
It is submitted that Justice Dowsett’s
consideration of the dishonesty issue
and dishonesty exclusion with respect
to the St Paul policy is conventional.
Justice Dowsett’s analysis of the duty
of disclosure with respect to the QBE
policy may not be so conventional. In
particular, Justice Dowsett appears to
conclude that the second respondent had
a duty to disclose only matters that may
give rise to a liability to investors.
The judgment also reveals the difficulty for
underwriters in giving “what if” evidence.
Federal Court of Australia: 12 May 2006
Richard Leahy
(See also A&D Douglas Pty Ltd v Lawyers
Private Mortgages Pty Ltd [2006] FCA 690
under the heading “The Policy”)
107
THE FACTS
Mr and Mrs Witcombe were injured
in a motor vehicle accident on 13 November
1994. Mr Witcombe sustained serious
injuries including quadriplegia, brain injuries
and cognitive
Talbot & Olivier (a firm)
impairment.
v
Mr Witcombe died
Witcombe
on 24 March 2002,
[2006] WASCA 87
before his action
Duty of solicitor to pursue client’s could be tried
claim with diligence—where the
or settled.
client died before settlement or
Mrs Witcombe
judgment of the claim could be
achieved—whether duty owed
was substituted
to spouse of client
as the plaintiff
in the action.
Mrs Witcombe’s claims were expressed
in a substituted statement of claim to have
been brought on her own behalf and on
behalf of Mr Witcombe’s estate.
The substituted statement of claim,
so far as the action was brought on behalf
of Mr Witcombe, did not include any claim
for damages for Mr Witcombe’s loss
of earning capacity (past and future),
or damages for Mr Witcombe’s pain and
suffering and curtailment of his expectation
of life, due to the provisions of the Law
Reform (Miscellaneous Provisions) Act
1941 (Western Australia) (the LRA).
Mrs Witcombe’s claim, brought in her
personal capacity, was for damages for
loss of dependency. Both of these actions
were settled in November 2002 for
$825,000 plus costs.
Mrs Witcombe subsequently commenced
an action against Mr Witcombe’s former
solicitors (the solicitors) and asserted that,
because of their negligence in failing
to commence proceedings promptly,
Mr Witcombe and his estate had been
deprived of the opportunity to obtain
a settlement covering all heads of damage.
Mrs Witcombe alleged that Mr Witcombe
could have recovered approximately $5.25
million by settlement or judgment if the
solicitors had not negligently delayed
the progress of the claim. Mrs Witcombe
commenced the claim against the solicitors
in her personal capacity, and in her capacity
as executrix of Mr Witcombe’s estate.
THE DECISION
The master ordered that Mrs Witcombe’s
statement of claim be struck out in part,
and leave was given to file and serve
an amended statement of claim.
THE APPEAL
On appeal the solicitors contended that
the master should have found that the
statement of claim ought to be permanently
struck out and judgment entered in their
favour because:
• The statement of claim failed to disclose
any common law duty of care owed by
the solicitors to Mrs Witcombe in her
personal capacity
• The statement of claim failed to disclose
any common law duty of care owed by
the solicitors to Mr Witcombe’s estate
or to Mrs Witcombe as executrix prior
to Mr Witcombe’s death when there
was no perfected cause of action for
common law negligence prior to his
death, which his estate could prosecute
under the survivorship laws of Western
Australia against the solicitors.
The Court of Appeal found that the facts did
not establish that the solicitors assumed any
108
responsibility to Mrs Witcombe
to prosecute Mr Witcombe’s claim with
diligence. The fact that Mrs Witcombe
was married to Mr Witcombe, and acted
as his agent under power of attorney, did
not alter that fact. Nor did it matter that
Mrs Witcombe might have been known
by the solicitors to be dependant upon her
husband or that she would benefit from and
be supported by any damages recovered by
him. There was no basis for the proposition
which would support the existence of a duty
of care owed by a lawyer to third parties to
be diligent or expeditious in the conduct of
the client’s action merely because they are
dependants of the client whose action for
damages is being handled by the lawyer.
The Court of Appeal noted that while the
High Court has been prepared to recognise
that solicitors may owe third parties a duty
of care, the circumstances in which this
is so has been limited.
Furthermore, the pleaded facts did not
suggest that Mrs Witcombe was vulnerable
to the solicitors in any sense which was,
of itself, sufficient to give rise to a duty of
care. Nothing was pleaded to suggest that
she relied upon the solicitors, in her personal
capacity, to progress Mr Witcombe’s claim
with expedition. The matters raised did
not disclose any arguable basis for the
claim advanced by Mrs Witcombe in
her personal capacity.
The Court of Appeal found that an estate
is merely the property which, on a grant of
probate, will vest in the executor of the will.
It is not a legal person. No duty of care
could consequently be owed to it, even
if it had existed at the time at which the
solicitors had the conduct of Mr Witcombe’s
claim for damages. Nor could any duty then
have been owed to Mrs Witcombe in her
109
capacity as executrix of the estate.
That part of the claim was found
to be unsustainable.
However, the provisions of the LRA
did not restrict Mrs Witcombe’s right
to bring a claim, on behalf of the estate,
against the solicitors whose negligence is
said to have caused Mr Witcombe, during
his life time, to lose the chance of recovering
damages for heads of damage including pain
and suffering and loss of earning capacity.
A claim of that kind is not one for damages
for pain and suffering, or for the loss of
earning capacity. It is one for damages
for negligence, or breach of contract, arising
out of a failure to prosecute a claim for
damages of that kind. The alleged breach
arguably resulted in Mr Witcombe losing
a real and substantial chance of recovering
damages which he would otherwise have
recovered from the tortfeasor who caused
his injuries. A claim of this kind may be
brought depending upon the facts to be
proved at trial, and such a claim is arguably
able to survive for the benefit of the estate.
The Court of Appeal ordered that Mrs
Witcombe’s claim, in her personal capacity,
be struck out. However, Mrs Witcombe,
in her capacity as the executrix, should
be given leave to file a further amended
statement of claim in respect of the
loss of chance claim.
Western Australian Court of Appeal:
26 May 2006
Wes Lerch
THE FACTS
Monique King, the plaintiff, was aged
13 when she had a highly malignant tumour
partially removed
Eastern Sydney
from her spinal canal.
South
Area Health Service
& Anor
v
King
[2006] NSWCA 2
The plaintiff
was subsequently
referred for cancer
treatment to
Professor O’GormanMedical negligence—duty of
Hughes, a specialist
specialist to keep informed of
up to date information regarding paediatric
treatment—whether duty can
haematologist
be discharged by members of
and oncologist
hospital staff circulating research
at the Prince of
information to other team
Wales Children’s
members
Hospital (the
hospital). Professor O’Gorman-Hughes
established a treatment plan for the
plaintiff’s cancer which involved radiotherapy
and whole body chemotherapy, together
with chemotherapy to the spinal canal.
This treatment was based substantially
on a protocol established by a US based
study group. The protocol, IRS-II, had been
developed for a particular type of malignant
tumour presenting in the head or neck in
children. The protocol provided specifically
for the amount of radiotherapy to be
administered, and the dosage and frequency
of the two forms of chemotherapy.
The protocol was based on a study which
had been carried out between 1978 and
1984. Although it was only published
as a final report in 1993, Professor
O’Gorman-Hughes knew of the protocol
through literature available in 1987.
In March 1989, the treatment
commenced and was carried out over
a number of months. By July 1989, the
plaintiff demonstrated symptoms of
damage to her spinal cord, which
ultimately lead to quadriplegia.
THE ALLEGATIONS
The plaintiff alleged that both the
hospital and Professor O’Gorman-Hughes
were negligent in the administration of the
treatment. The plaintiff also alleged that
there was a failure to warn by Professor
O’Gorman-Hughes of the risks of the
treatment.
Key to the plaintiff’s claim was that,
prior to the treatment commencing,
the protocol upon which it was based
had been amended. In mid 1987 research
was published which disclosed that there
had been complications in a number of
patients who had been treated in accordance
with the protocol. While the cause of those
complications was unclear, it was said to
be the result of combining the three forms
of treatment (radiotherapy, whole body
chemotherapy, and chemotherapy to the
spinal canal) and it was recommended that
the chemotherapy to the spinal canal be
reduced or discontinued in specified
circumstances.
Professor O’Gorman-Hughes died prior
to the trial, but it was uncontentious that
his position was that he was unaware
of the amendment to the protocol.
THE TRIAL DECISION
The trial judge found that while a medical
practitioner’s duty of care does encompass
an obligation to keep informed of changes
to treatment methods, it was reasonable for
Professor O’Gorman-Hughes to rely upon
110
relevant changes being conveyed to him
through the hospital’s paediatric oncology
group. Professor O’Gorman-Hughes was
found to have discharged his duty to keep
informed by relying upon the hospital’s
system of dissemination of information,
which included the circulation of articles,
oncology department team meetings, and
discussions of treatments methods which
were being used.
THE APPEAL
The hospital contended that Dr White
did not owe a duty to circulate the literature
in question, because it had been provided to
him “on a personal basis” from an overseas
practitioner after he had informally expressed
an interest in the particular oncology group
responsible for the literature, and there was
no obligation for Dr White to circulate all
information within his possession.
It was also found at trial that while
there had been a failure to fully inform
the plaintiff’s parents about the risks
of paraplegia involved with the treatment,
even if fully informed, the plaintiff’s parents
would have elected to proceed with the
treatment, given the grave risk to her
life had the cancer not been treated.
The Court of Appeal found that it
At trial, Professor O’Gorman-Hughes
department, its regular sessions
escaped a finding of negligence.
to share information with other departments,
However, the trial judge found that there
had been a breach of duty of care by
Dr White, a member of the oncology
department team, in failing to pass on
literature he had received from an overseas
body which identified the relevant change
in the protocol.
It was also held that this failure was
causative of the loss as, had Professor
O’Gorman-Hughes been made aware
of the relevant change, he would have
sought further advice and, as a result,
he would have altered the plaintiff’s
treatment regime.
was an artificial distinction to say that the
information came to Dr White on a personal
basis, because the information was directly
relevant to the work Dr White undertook in
the paediatric oncology department of the
hospital. That, coupled with the collaborative
operation of the paediatric oncology
the department’s own weekly meetings
and a specific knowledge that Professor
O’Gorman-Hughes had based the plaintiff’s
treatment plan on the particular protocol,
justified a finding that there was a duty of
care on the part of Dr White to disseminate
the material in question, which was
breached by his failure to do so.
The hospital also challenged the finding
that had Professor O’Gorman-Hughes been
aware of the changes to the protocol, he
would have changed the plaintiff’s treatment.
The Court of Appeal found that while it may
be true that overseas collaboration regarding
cancer treatment was rare, the present
The trial judge found in favour of the
situation involved an initial treatment plan
plaintiff, as against the hospital, based
which was based on an overseas study.
on the hospital’s vicarious liability for
It was therefore appropriate to conclude
Dr White. Damages had been agreed
that, had Professor O’Gorman-Hughes been
by the parties during the course of
aware of the changes to the protocol, he
the trial at $7 million.
would have further investigated them and
111
would have made changes to the plaintiff’s
O’Gorman-Hughes would not have
However, it was found that the discharge
of this duty did not require Professor
O’Gorman-Hughes to personally undertake
searches. This was so in the context of him
practicing at “a leading hospital”, with team
members to whom such a task could be
delegated. That said, delegation of such
a duty could not be discharged by mere
reliance on other members of the team,
but rather required Professor O’GormanHughes to ensure that relevant searches
were undertaken for him.
administered the treatment to the
It was accepted that, had the duty
plaintiff which lead to her quadriplegia.
of care been discharged, relevant information
THE PLAINTIFF’S CROSS APPEAL
regarding the amendment would have come
treatment. While some questions were raised
as to the status of the research material
available and whether it was material which
would be widely accepted, it was accepted
that even if the changes to the protocol were
not final, it was appropriate to conclude that
any changes would have been investigated
and taken into account. It was therefore
correct to find that the amendments would
have been adopted and Professor
The plaintiff contended on appeal that it
was wrong for the trial judge to have found
that Professor O’Gorman-Hughes was not
negligent by failing to undertake for himself
appropriate enquiries to keep
his knowledge up to date.
The Court of Appeal found that there was
no absolute duty to keep informed, but rather
the duty to keep informed is dictated by the
nature of the treatment being implemented
and the risks involved in such treatment.
The Court of Appeal specifically emphasised
the “radical, experimental, and controversial”
nature of the treatment being administered
by Professor O’Gorman-Hughes, as well as
the fact that it was a treatment method
which had not been implemented before
(in the same way) at the hospital and the
risk of neurological complications due
to the direct injections of the drugs
into the spinal canal.
In those circumstances, the Court
of Appeal found that Professor O’GormanHughes did owe a duty to take reasonable
care to keep informed of developments
relevant to the treatment he prescribed.
to Professor O’Gorman-Hughes’ attention
and the treatment method would have been
appropriately adjusted. In this context, it was
found by the Court of Appeal that by failing
to ensure that appropriate searches
were undertaken on his behalf, Professor
O’Gorman-Hughes acted in breach
of his duty of care.
In relation to the failure to warn,
the plaintiff contended that had her parents
been appropriately warned, they would not
have given permission for the treatment to
proceed. The plaintiff did not succeed with
this ground of appeal. The Court of Appeal
made reference to evidence of the plaintiff’s
mother in cross examination at trial, wherein
the plaintiff’s mother agreed that if faced
with the choice of a spreading cancer which
would lead to her daughter’s death, or the
treatment involving a risk of paraplegia,
they would have chosen to try the
treatment, despite the risks.
Accordingly, on the basis of the Court of
Appeal’s findings that both Dr White and
Professor O’Groman-Hughes breached their
respective duties of care, and that Professor
112
O’Groman-Hughes would have altered the
plaintiff’s treatment as per the changes to
the protocol, the Court of Appeal upheld
the award of $7 million in favour of the
plaintiff.
New South Wales Court of Appeal:
1 March 2006
Joanna Burton
113
THE FACTS
On 7 October 1998 Mr Worley, a postman,
was stung by a bee whilst delivering mail.
He suffered an allergic reaction and the
treating ambulance officer diagnosed him
with anaphylaxis
Ambulance Service
and noted symptoms
of NSW
of severe shock.
v
In accordance with
Worley
ambulance service
[2006] NSWCA 102
protocol the officer
Duty of care owed by an
intravenously
ambulance service and its
administered
officers to patients
adrenalin to
Mr Worley, the pertinent passage
of the protocol being:
“ASTHMA OR ANAPHYLAXIS
1ML OF 1:10,000 ADRENALIN IV EVERY
30 SECONDS until the patient is no longer
“in extremis” or a maximum of 5mls.
Monitor E.C.G. continuously.
Can be repeated every 5 minutes.
Give IM as a bolus if a vein is not available”.
The adrenalin caused Mr Worley to develop
an intracranial haemorrhage, as a result of
which he suffered right-sided hemiplegia
and associated physical difficulties. At trial
the Supreme Court of New South Wales
awarded Mr Worley $2,628,032.57 on
the basis that the ambulance officer was
negligent in intravenously administering the
adrenalin and the Ambulance Service was
vicariously liable for that negligence.
The Ambulance Service appealed.
THE ISSUES
The significant issues on appeal were:
• Whether the ambulance officer was
negligent in administering the adrenalin
intravenously when Mr Worley was
not on the point of death, and
• Whether the Ambulance Service
was negligent in the preparation
and promulgation of the protocol
on the basis that:
(a) The protocol was unclear and
confusing, resulting in its application
in unsuitable circumstances, or
(b) It should have provided for
intramuscular administration
of adrenalin to patients who were
not on the point of death. In this
regard the trial judge had observed,
relevantly, that:
“It was common ground that the drug
indicated for anaphylaxis was
adrenalin…
… Adrenalin administered
intramuscularly can have the same
beneficial effects [as adrenalin
administered intravenously] but may
produce them more slowly and less
predictably. Intravenous administration
presents risks, including the risk of
intracerebral haemorrhage…”
THE DECISION ON APPEAL
As regards the role and training of
ambulance officers the Court of Appeal
noted, significantly:
“With respect to the role of ambulance
officers, [the trial judge] noted… that recruits
to the Ambulance Service obtained seven
weeks training where they learn the elements
of anatomy, physiology, pathophysiology and
pharmacology. There follows a nine-month
114
period of training on probation on
the job. His Honour continued:
“Each officer has a set of protocols…
Each officer is required to follow the
requirements of the protocols. There
is no discretion to do otherwise…”
The Court of Appeal’s decision was
unanimous. It held, firstly, that the ambulance
officer had not been negligent because:
• The trial judge held that in medical parlance
the phrase “in extremis” meant “on the point
of death”. That phrase did not, however,
have such a precise meaning and this
was borne out by variations in the evidence
of the medical experts
• The paramedic interpreted the phrase
“in extremis” as including a patient who
was suffering severe shock and such an
interpretation was open on the reading
of the protocol
• Mr Worley satisfied the key signs
of severe shock and
• The ambulance officer otherwise applied
the protocol according to its terms and that
course of action was in accordance with
his training and the directions given to
him by the Ambulance Service.
The Court of Appeal held that the Ambulance
Service had not been negligent because:
• The claim that the protocol was unclear
was not sufficiently pleaded or proved
• A review of the relevant material available
in October 1998 failed to demonstrate that
ambulance protocols in other jurisdictions:
(a) Generally restricted intravenous
administration of adrenalin to cases
where the patient was on the point of
death or
(b) Generally permitted only intramuscular
administration of adrenalin for persons
suffering from shock.
115
• The evidence of the medical experts
confirmed that questions of dosage and
rate of administration were controversial
and subject to differing opinions, without
good scientific evidence for any particular
option
• It was not established that the
Ambulance Service’s medical advisory
committee did not have available to it
up-to-date information, nor that it did
not take into account that which
was available, and
• It followed that the only tenable
conclusion was that the scientific evidence
did not support the view that a change to
the protocol, in place at the time of the
incident, was reasonably required.
New South Wales Court of Appeal:
3 May 2006
Adrian Lewis
THE FACTS
Alexia Harriton and Keeden Waller, the
plaintiffs, were born catastrophically disabled.
The disabilities in each case were caused by
circumstances prior
Harriton
to birth and it was
v
alleged on their
Stephens
behalf that the
[2006] HCA 15;
defendant medical
practitioners failed
Waller
to diagnose the
v
circumstances
James;
which resulted
in their being born
Waller
with disabilities.
v
Hoolahan
[2006] HCA 16
In the case of
Keeden Waller, the
Wrongful life—duty owed
claim also included
to disabled children born
allegations relating
to mothers not provided with
to the management
necessary information to make
of his birth. However,
informed choice about
termination/proceeding
his claim for physical
with conception
injuries relating to
the birth was stayed
pending determination of the wrongful life
issues. The claim by Keeden Waller’s parents
for wrongful birth was also stayed pending
the determination of the wrongful life issues.
Alexia Harriton was born with maternal
rubella. Alexia’s mother had told her GP
that she thought she was pregnant, but
also thought she was ill with rubella. The
pregnancy was confirmed but rubella was
excluded. It was common ground that in
1980 a reasonable medical practitioner
would have informed Alexia’s mother of
the risk that a foetus exposed to the rubella
virus would be born with profound disabilities.
Keeden Waller’s condition was as a result of
his father’s anti-thrombin 3 deficiency being
passed on to him during the process of IVF.
The particular circumstances giving rise
to the separate risks of these two plaintiffs
being born disabled were capable of being
discovered prior to birth. The parents of the
plaintiffs relied on the medical practitioners
in each case to detect and advise them of
the existence of those circumstances. It was
alleged on behalf of each plaintiff that had
the medical practitioners properly diagnosed
the particular circumstances that resulted in
each being born disabled, the parents of
the plaintiffs would have terminated the
pregnancy or avoided conception.
THE ISSUES
The litigation was ventilated in the Supreme
Court by preliminary determination, rather
than by a trial. Both matters were heard
together. The issues to be determined in
relation to both matters were:
• Whether the medical practitioners
failed to exercise reasonable care in
the management of the plaintiffs’ mothers
and, if as a result of that failure the
plaintiffs would not have been born,
do the plaintiffs have a cause of action
against the doctors?
• If so, what categories of damages
are available to the plaintiffs?
It was found that while the medical
practitioners did owe the children a duty
of care not to injure them, there was no duty
to provide the mothers with the information
to enable them to make an informed choice
about terminating the pregnancy or avoiding
conception. As a result of that finding, the
question as to the available heads of
damages was not considered.
116
THE DECISION ON APPEAL
By majority, the Court of Appeal dismissed
the plaintiffs’ appeal.
Justice Ipp considered that compensation
within the law of negligence requires
a comparison between the plaintiffs’ physical
and psychological state brought about by
the negligence of the medical practitioners
and the plaintiffs’ physical and psychological
state had that conduct not occurred. Justice
Ipp concluded that this required a
comparison between being born with a
disability and non-existence, a comparison
that was impossible. Such a comparison
could not be reconciled with the
compensatory principle upon which
tort law is based which requires a court,
to the extent possible, to put the injured
party in the same position they would
have been but for the tort.
Chief Justice Spigelman cited ethical
grounds, stating that the duty asserted
by the plaintiffs did not reflect values
generally held in the community. He also
found that the relationship between the
medical practitioners and the unborn
plaintiffs was not sufficiently direct.
In dissent, President Mason found that the
scope of a doctor’s duty is not necessarily
limited to an obligation not to cause harm.
In these cases, the negligence of the medical
practitioners in failing to detect the relevant
circumstances prevented the parents from
making any informed decision not to
conceive or to terminate the pregnancy,
both of which would have prevented the
disabilities. President Mason saw no
conceptual difference between the
critical event that generates a parent’s
recognised wrongful birth claim and a child’s
putative wrongful life claim, stating that there
117
was an essential consistency between
the two.
THE APPEAL TO THE HIGH COURT
The plaintiffs were granted special leave
to appeal to the High Court.
The issues before the High Court involved
a reconsideration of the two questions
initially determined by Justice Studdert in
the New South Wales Supreme Court, that is:
• Whether the medical practitioners owed
a duty of care to the then unborn children
to provide their mothers with information
upon which the mothers could make an
informed decision about termination
or conception, and
• Whether the harm suffered by the
children, having been born, was capable of
compensation within the law of negligence.
THE DECISION IN THE HIGH COURT
By a majority of 6:1 the High Court
dismissed the plaintiffs’ appeal. Separate
reasons were published in respect of the
two plaintiffs, but in relation to the wrongful
life issues, the claims were dismissed
on the same grounds.
Justice Crennan, in the leading judgment,
found that the damage claimed by the
plaintiffs was not amenable to determination
by application of legal methodology:
“A duty of care cannot be clearly stated
where the [child] can never prove…
the actual damage claimed, the essential
ingredient of the tort of negligence.”
In this way, the High Court found that
the plaintiffs were not able to show legally
recognisable damage, that is, a loss
caused by an alleged breach of duty.
Consistent with the majority in the Court
of Appeal, the High Court majority focused
on the impossibility of comparing
life with non-existence.
easily quantifiable by comparing needs
The High Court also found that to work
around this comparison to resolve on a
method of damages assessment would
High Court of Australia: 9 May 2006
with the absence of needs.
Joanna Burton
create an “unworkable legal fiction”. The
majority also found that a cause of action
for wrongful life would be incompatible
with common law values.
In dissent, Justice Kirby found that
the duty issue was unremarkable as the
foetus was clearly in the contemplation of
the medical practitioner and the accepted
duty to take reasonable care to avoid harm
to a foetus would also extend to encompass
a duty of care in the present circumstances.
Justice Kirby noted that in most of the
instances where a duty was excluded,
that finding was based on a more global
consideration of not just duty, but causation
and damage as a whole, as well as policy
issues. He found that such a global
consideration results in comparisons
of life with disability to non-existence and
this causes the duty argument to fail. Justice
Kirby expressed a preference that the duty
be considered at a more “general level
of abstraction”.
On the question of damage, Justice
Kirby found that it was wrong to focus
on the “impossible comparison” argument.
He found that while it can be difficult, where
there is actionable damage, courts will
provide relief and will undertake the
exercise to assign a dollar value to
intangibles in such circumstances.
In any event, such difficulty assessing
damages relates only to damages for pain
and suffering as claims for special damages,
including claims for care and assistance, are
118
THE FACTS
The defendant was the auditor of the
Stanilite Group, of which Stanilite Pacific
(Pacific) was the holding company and
Stanilite Electronics (Electronics) was
a subsidiary.
Stanilite Pacific Ltd.
(in Liq) & Anor
v
Seaton & Ors
[2005] NSWCA 301
On 11 November
1994 Electronics
entered into an
agreement for
the supply and
installation of
Duty of auditor—interpretation
telecommunication
of accounting standards
systems in Russia
for $37 million (the Russian contract).
A prospectus dated 3 May 1995 was
issued in support of a proposed underwritten
rights issue to all shareholders which
contained, inter alia, an audit report dated
16 March 1995.
On 27 June 1995 Electronics entered into
an agreement for the supply and installation
of telecommunication systems in Argentina
for $33 million (the Argentinean contract).
The unaudited accounts for the year
ended 30 June 1995 were tabled at
a board meeting of Pacific on 30 August
1995. Although as at 30 June 1995 only
$270,000 had been received under the
Russian contract and nothing had been
received under the Argentinean contract,
these accounts showed:
• An operating profit for Pacific of $6.967
million, of which $5.4 million represented a
dividend from Electronics, and
• An operating profit for Electronics
of $10.438 million. Importantly, the
“recognition of revenue” or “earned value”
method under accounting standard AASB
1009 was used in arriving at this figure.
The defendant gave an unqualified audit
opinion for those accounts, and on the basis
of them a net dividend of $1.576 million
was ultimately paid out by Electronics.
As at 31 December 1995 the consolidated
trading results of the group showed losses
of $55.48 million for the year to date.
On 22 May 1996, the board of Pacific
resolved to request the National Australia
Bank to appoint a receiver and manager
to Pacific and its subsidiaries. Following
liquidation, Pacific and Electronics sued
the defendant for:
• Damages of approximately $28.235
million on the basis that:
(a) If the defendant had not consented
to inclusion of its audit report in
the prospectus then the rights issue
would not have proceeded, and
(b) Pacific and Electronics would have
ceased trading by about 30 June 1995,
rather than continuing to trade and
thereby incurring further losses
(the first claim)
• Damages of approximately $1.576
million on the basis that Electronics
would not have paid out a dividend had
the defendant’s audit of the 1994/1995
accounts accurately reflected that
company’s financial position
(the second claim)
The trial judge found for the defendant and
dismissed the proceedings. Pacific and
Electronics appealed.
119
THE ISSUES
Clause 0.10 of the AASB 1009 required
the “recognition of revenue” or “earned
value” method only be used under
certain conditions, including the condition
that “total revenues to be received can
be reliably estimated”. Although a number
of issues were dealt with on appeal, the
most significant of these was whether that
condition required that it was “probable”
that the revenues would in fact be received.
THE DECISION
The Court of Appeal held, firstly,
that the terms “received” and “estimated”
in clause 0.10 justified the interpretation
that the condition was satisfied only if the
revenues would “probably” be received,
and the interpretation adopted by the
primary judge was therefore incorrect.
The Court of Appeal therefore held, as
regards the first claim:
• The defendant owed a duty to exercise
reasonable skill and care in giving consent
to the inclusion of its audit report in the
prospectus, however
• The defendant did not breach
this duty because:
(a) There was no requirement for
the defendant to repeat its audit
of 16 March 1995, and
(b) It was not was not shown that,
in the period 16 March 1995 to
3 May 1995, the defendant was
negligent in not coming to a different
conclusion regarding the compliance of
the accounts with accounting standards.
no breach of duty merely on the basis
that that interpretation was incorrect.
Notwithstanding this:
(a) In applying AASB 1009 to the Russian
contract according to the defendant’s
interpretation of the standard a
reasonable auditor, in order that the
1994/1995 accounts gave a true
and fair view, would have required
that provision be made against assets
included in the accounts, eliminating
$11.8 million of profit; and
(b) It was therefore a breach of the
defendant’s duty as auditor to give
audit approval for those accounts; and
• As it was extremely unlikely that Electronics
would have declared a dividend, or that
NAB would have permitted payment of it,
if the $11.8 million had not been included
as profit in the accounts, that payment
was therefore relevantly caused by
the defendant’s breach of duty.
The appeal was therefore allowed, and
judgment given in favour of Pacific for
$1.576 million plus interest.
New South Wales Court of Appeal:
14 September 2005
Adrian Lewis
And, as regards the second claim:
• There were substantial considerations
favouring the interpretation of clause 0.10
adopted by the defendant, and there was
120
THE FACTS
Taitapanui (the plaintiff) was the owner
of a house that had been constructed
approximately 3 years earlier. At the time
of construction, the house had been owned
by the Watsons.
Moorabool Shire
Mr Watson was
Council & Anor
a registered builder,
v
whose building
Taitapanui & Ors [2006] company constructed
VSCA 30
the house.
Duty owed by surveyor to
subsequent purchasers of
residential homes—claim
for pure economic loss
Prior to commencing
construction,
Mr Watson applied
for a building permit
from Moorabool Shire Council (the Council).
The relevant building legislation provided that
builders could either use the existing local
Council’s system or engage private surveyors
to issue building and occupancy permits,
conduct inspections and perform statutory
responsibilities. The house was outside
the municipal district of the Council.
Notwithstanding this, Mr Watson’s
construction company appointed
Council’s building surveyor (the surveyor)
as a private surveyor as provided for under
the building legislation.
The surveyor issued the building permit
and construction commenced. The surveyor
performed a number of inspections during
the construction of the house and ultimately
issued an occupancy permit which certified
that the completed house was ready for
occupants.
Subsequent to the plaintiff’s purchase
of the property, a number of defects became
apparent. These defects included the
collapse of part of the foundations
of the house.
The plaintiff commenced proceedings
against the Council, the surveyor, and
Mr Watson’s construction company for
negligence for pure economic loss caused
by the defects.
ISSUES AT TRIAL
The plaintiff alleged a breach of the duty
owed to him as a subsequent purchaser in
respect of the careless and incompetent
performance by the surveyor of his functions
as building surveyor engaged by the builder.
The Council and the surveyor denied that
they owed the plaintiff a duty of care.
THE DECISION AT TRIAL
The trial judge upheld a decision of the
Victorian Civil & Administrative Appeals
Tribunal that the surveyor owed a duty
of care to the plaintiff as the subsequent
purchaser and that the surveyor had been
in substantial default by issuing the building
permit. The trial judge upheld the Tribunal’s
finding that the surveyor had failed in his
basic functions of ensuring that the permit
application contained sufficient information
to ensure compliance with the relevant
legislation. The surveyor’s conduct was
held to amount to “gross carelessness and
incompetence”. It was also held that there
were approximately 20 other construction
defects which the surveyor ought to have
picked up during the course of his
inspections.
The trial judge upheld the Tribunal’s
decision ordering the builder’s insurer
to pay $116,789.70 (including interest) and
121
the Council (who was vicariously liable for
the surveyor’s negligence as his employer)
to pay $119,051.92 (including interest)
to the plaintiff.
ISSUES ON APPEAL
The Council and surveyor appealed
the decision of the trial judge on the basis
that the trial judge erred in finding that they
owed a duty of care to the plaintiff as
a subsequent purchaser.
THE DECISION ON APPEAL
The Court of Appeal upheld the trial judge’s
decision. The Court of Appeal found that
the surveyor owed a duty to the plaintiff
as the subsequent purchaser to exercise
reasonable care in granting a building permit
in respect of building work which was the
subject of an application for the permit.
The Court of Appeal held that this duty
was a natural extension of the duty of care
owed by the surveyor to the original owner.
by the surveyor, in accordance with
his statutory duties, to ensure that
the house constructed complied
with relevant building legislation,
and
(b) A known reliance (or dependence).
In other words, the surveyor knows
or ought to know that the subsequent
owners of the house were relying
(or would necessarily be dependent)
on the proper performance of the
surveyor’s functions.
This was the foundation of the surveyor’s
(and the Council’s) duty of care to the
plaintiff.
Accordingly, the appeal was dismissed.
On 16 June 2006 the High Court refused
the Council and the surveyor special leave
to appeal.
Victorian Court of Appeal: 24 February 2006
Dan McCormack
The Court of Appeal pointed to the
statutory scheme (particularly the obligations
which it imposed on the surveyor), which
it considered was of essential significance.
The legislation suggested that the role of
the surveyor was of critical importance. The
legislation provided that the surveyor must
not issue a building permit unless he or she
is satisfied that the building work will comply
with the relevant legislation. In this case,
the surveyor should never have issued the
building permit. In addition, the building
permit conveys to a prospective purchaser
an assurance that the building work was
compliant with the relevant legislation.
The Court of Appeal held that the
relationship between a surveyor and
subsequent owner is characterised by:
(a) An assumption of responsibility
122
THE POLICY
THE FACTS
Hannover Life Re Australasia Ltd
(the defendant) issued a Group Life Contract
(the policy) to the trustee of the Kellogg
(Aust) Pty Ltd
Hannover Life Re
retirement fund
of Australasia Ltd
(the fund). The
v
policy only provided
Sayseng
insurance cover to
[2005] NSWCA 214
the trustee and not
Whether insurer owed a duty
employee-members
of utmost good faith to a third
of the fund.
party who was not named on the
policy but would indirectly benefit However, payment
from a payment under the policy under the policy
—whether insurer breached duty depended on an
by failing to provide third party
employee-member
with opportunity to respond to
of the fund suffering
unfavourable evidence it
obtained
a “total and
permanent
disablement”. Pursuant to the terms of
the fund’s trust deed, both the trust deed
and the defendant were required to make
a determination of whether an employeemember satisfied this pre-condition.
The definition of “total and permanent
disablement” in the policy was as follows:
“…having been absent from work through
injury or illness for an initial period of 6
consecutive months and in our opinion being
incapacitated to such an extent as to render
the Insured Person unable ever to engage in
or work for reward in any occupation or work
which he or she is reasonably capable of
performing by reason of education, training
or experience”.
125
The plaintiff was an employee of Kellogg
(Aust) Pty Ltd from December 1988 to 21
September 1998 and became a member
of the fund during that period. After taking
a voluntary redundancy due to problems
with his lower back, on 18 October 1998
the plaintiff lodged an application with
the trustee for a disability benefit pursuant
to the policy. Both the trustee and the
defendant made determinations rejecting
the plaintiff’s application on the grounds
that he was not “permanently disabled”
as defined in the trust deed and the policy.
THE DECISION AT TRIAL
The plaintiff sought declarations to the
effect that the trustee and the defendant
ought to have decided that he was totally
and permanently disabled.
The trial judge interpreted the policy as
an agreement that benefits would be paid
by the defendant to the trustee. Employeemembers were not intended to be parties
to the agreement. Therefore, as there was
no direct contractual relationship between
the plaintiff and the defendant, and the
plaintiff was not in a class of persons
expressed to be insured under the policy,
the insured was not entitled to recover
pursuant to s48(1) of the Insurance
Contracts Act 1984 (Cth) (the ICA).
The trial judge was referred to the obiter
dicta of Justice Mahoney in CE Heath
Casualty and General Insurance v Grey
(1993) 32 NSWLR 25 at 27 concerning
the extension of the principle of utmost
good faith from parties to the contract to
“others who are necessarily involved in the
insurance”. In support of this approach, the
trial judge placed considerable emphasis on
the fact that the plaintiff’s interests were
indirectly, but strongly, involved in the
insurer’s decision.
The trial judge held that there were no
grounds to displace the conclusion reached
by the trustee to reject the plaintiff’s claim
and that the trustee had given the matter real
and genuine consideration. The making of
a final determination in relation to the
trustee’s determination was deferred, to
allow the trustee to reconsider the plaintiff’s
entitlement to receive payment under the
policy if the plaintiff obtained a favourable
decision against the defendant.
In relation to the defendant’s conduct,
the trial judge held that the defendant
was obliged to act with due regard to the
plaintiff’s interests as well as the interests
of the trustee in the course of acting in
“good faith and fair dealing” and had failed
to carry out its duty to the plaintiff by not
providing him with an opportunity to respond
to the unfavourable evidence it had obtained.
Therefore, the defendant’s determination that
the plaintiff was not suffering from a “total
and permanent disablement” was void and
set aside. The trial judge directed that there
be a trial and determination of the separate
question of whether the plaintiff was totally
and permanently disabled within the meaning
of the policy.
The defendant appealed the decision.
The trustee elected not to participate in
the appeal.
THE DECISION ON APPEAL
On appeal, the defendant argued that the
trial judge was incorrect in finding that it
owed the plaintiff a duty of good faith.
The Court of Appeal agreed with the
trial judge’s finding that the defendant’s
obligation was as stated in CE Heath
Casualty and General Insurance v Grey.
The duty of good faith would apply as the
policy was, at least, for the indirect benefit
of the plaintiff, as evidenced not only by
reference in the policy to each of the
employees as “the insured person” but also
by its availability to fund payments to them
by the trustee. The nature of the duty was
described by the Court of Appeal as one
of good faith and fair dealing.
The Court of Appeal also relied upon the
reasoning in Trident General Insurance Co.
Ltd v McNiece Bros Pty Ltd (1988) 165 CLR
107. The Court of Appeal considered that
the decision in Trident v McNiece provided
a principled basis for attributing the duty
of good faith and fair dealing to the
defendant in its dealings with the plaintiff,
notwithstanding that the plaintiff was neither
a party to the insurance contract nor within
the class of persons expressed to the
insured by it. However, this conclusion was
said to be based upon Justice Mahoney’s
comments in CE Heath Casualty and
General Insurance v Grey. In that case
Justice Mahoney extended the principle
of utmost good faith from parties to the
contract to “others who are necessarily
involved in the insurance”. Justice Mahoney
described 2 circumstances which a person
is “necessarily involved” in insurance:
• trust cases, where the insured holds
the benefit of the insurance on trust
for a third party, and
• benefit cases, where the insured
enters into the insurance in order to
confer a benefit on a third party which
is revocable at will.
Court of Appeal found that the
plaintiff benefited from the existence
of the policy and was wholly dependent
on it to determine the quantum of the
benefit he would receive by reason of
the operation of the membership rules.
Therefore, although the plaintiff was
a third party employee and was not
126
directly entitled to the proceeds of the policy,
he was entitled to the same obligation of
good faith and fair dealing as the defendant
owed to the trustee.
After deciding that the defendant did indeed
owe the plaintiff a duty of utmost good faith,
the Court of Appeal upheld the trial judge’s
findings that the defendant had breached its
duty by failing to disclose to the plaintiff the
unfavourable evidence it had obtained and
therefore not providing him with an
opportunity to respond.
The Court of Appeal also upheld the trial
judge’s findings that the faultless conduct
of the trustee meant it was entitled to
reconsider its decision to decline the
plaintiff’s application for cover under the
policy if the plaintiff obtained a favourable
decision against the defendant.
The appeal was dismissed with costs.
New South Wales Court of Appeal:
2 May and 23 June 2005
Bree Macfie
127
THE FACTS
The Olympic Coordination Authority
(the authority) had the management, care
and control of the Sydney International
Equestrian Centre (SIEC) and car park,
located at Horsely
NSW Arabian Horse
Park, New South
Association Inc
Wales. The authority
v
entered into a written
Olympic Coordination
agreement with the
Authority
New South Wales
[2005] NSWCA 210
Arabian Horse
Interpretation of contract—
Association Inc
Whether breach of obligation to (the association),
take out public liability insurance
whereby the
association as the event organiser acquired
rights to use the SIEC for the purposes of
staging an event known as the East Coast
Arabian Championships 2001 (the contract).
Two individuals, a husband and wife,
who had attended at the SIEC for the
championships, were making their way
back to their parked car via a lit pathway
at approximately 9.30pm. Before they
reached their car, they fell into a drainage
culvert adjacent to the car park and
sustained injuries. Both commenced
proceedings against the authority for
personal injuries. The authority brought
a cross-claim against the association.
Clause 6 of the contract required the
association to take out public liability
insurance “for the Event” for no less than
$10m and the authority was to be “named
on this policy as an interested party”. The
association took out a policy that included
a hand written note naming the Sydney
International Equestrian Park as a
co-insured, which was clearly not the
name of the authority.
The authority settled both claims brought
by the husband and wife for $70,000 and
$39,500 respectively. The cross claim by
the authority against the association for
breach of clause 6 of the contract
proceeded to hearing in November 2003.
THE DECISION AT TRIAL
The trial judge found in favour of the
authority and held that the association
was in breach of its obligation to take
out public liability insurance as required
by clause 6 of the contract. Damages
for the breach were quantified as the
amount claimed against the authority
by the two individuals who were injured.
The association appealed the decision.
THE DECISION ON APPEAL
The association argued that clause
6 should be read and confined by clause
22 of the contract. Clause 22 provided
that the association, as the event organiser,
indemnified and released the authority from
all liability, except to the extent that such
liability resulted from the negligence of
the authority. The association submitted
that clause 22 confined clause 6 to
insurance in respect of those liabilities
that arise out of the indemnity in clause
22 but not otherwise. The Court of Appeal
did not accept that clause 6 was to be read
and confined by clause 22 and held that
such a construction was untenable. Instead,
the Court of Appeal found that the purpose
of clause 6 was to ensure the authority
had insurance cover where clause 22 did
not provide indemnity, that is, when liability
arose from the authority’s own negligence.
128
The Court of Appeal interpreted
the words in clause 6 that the authority
“is to be named on the policy as an
interested party” to mean that the authority
was to be named in the policy “as a person
to whom the insurance cover provided by the
contract extends” as per section 48 of the
Insurance Contracts Act 1984 (Cth).
The association also argued that
the expression “for the Event” in clause
6 should be confined to the actual event,
namely the equestrian activities at Horsely
Park, and not extend to accidents which
occurred in the area between the arena and
the car-park. This argument was dismissed
by the Court of Appeal, which, in accepting
that the word “for” may be treated as an
equivalent to the expression “in respect
of”, found those words were capable in
an appropriate context of having the widest
possible meaning. The Court of Appeal found
that parking was an integral part of the event
as parking requirements were provided for
in the event application form and there was
provision for the association to receive 40%
of the parking revenue from the event.
Accordingly, the Court of Appeal held
“the Event” extended to the parking area
and the area between the parking area
and the arena, including the path from
which the two individuals fell.
The Court of Appeal upheld the trial judge’s
finding that the association had breached
clause 6 of the contract in failing to take
out insurance cover for the authority and
dismissed the appeal brought by the
association in full and awarded costs
on an indemnity basis.
New South Wales Court of Appeal:
23 June 2005
Yolanda Battison
129
THE FACTS
Ms Henderson was injured when she
slipped on some steps at Stadium Australia
when attending the 2001 National Rugby
League (NRL) grand final. She sued the
operator of the
QBE Insurance
stadium, Stadium
v
Australia
SLE Worldwide
Management
[2005] NSWSC 77
Pty Ltd (SAM),
and its agent,
Claim for equitable
contribution— words “arising
Ogden International
from and in relation to” require
Facilities Corporation
causal connection—“insured”
(Sydney) Pty
in policy of insurance
Limited (Ogden).
Ms Henderson alleged, and it was admitted,
that SAM had the care and control of
Stadium Australia, and that Ogden managed
the premises by agreement with SAM. She
alleged that her injuries were caused by
the negligence of SAM and Ogden, or
their servants or agents.
insurance policy held by the NRL responded
to the loss and damage in respect of which
QBE had indemnified SAM and Ogden, and
that QBE was entitled to equitable
contribution from SLE, constituting
half of the sum expended.
THE ISSUE
The SLE policy contained a standard
operative clause, that is, it agreed to
indemnify the insured for all amounts
which the insured became legally liable
to pay as compensation for personal injury
happening during the period of insurance
caused by an occurrence in connection
with the insured’s premises or business.
The term “the insured” was defined in the
schedule as including SAM and Ogden, but
“only for their respective rights and interests
for liability arising from and in relation to the
activities of the NRL at Stadium Australia”
[our emphasis].
that over time patrons had spilt beer on
The issue to be determined, therefore, was
whether the liability of SAM and Ogden to
Ms Henderson was a liability arising from,
and in relation to, the NRL’s activities?
the metal stairs with a painted edge, which
THE DECISION
An arbitrator awarded Ms Henderson
$16,006 plus costs. The arbitrator found
clearly constituted a slippery surface.
Judgment was entered in accordance
with the arbitrator’s award.
SAM and Ogden were insured with
the plaintiff (QBE) against this liability.
QBE provided the judgment sum to Ms
The trial judge held that it was not
enough for QBE to simply argue that but
for the NRL staging of the game the liability
of SAM and Ogden to Ms Henderson
would not have arisen.
by QBE was $77,385.35.
The trial judge held that the words
“arising from” denote the need for, at least,
an indirect causal connection between the
insured’s liability and the activities of the
NRL, which was not satisfied in this case.
Accordingly, judgment was entered for SLE.
SLE Worldwide (SLE) was the insurer
of the NRL.
New South Wales Supreme Court:
29 July 2005
QBE sought declarations that an SLE
Nathan Rehbock
Henderson, along with $28,000 for her
costs. QBE also incurred legal costs of
$33,378.45 in defending the claim,
meaning that the total amount incurred
130
THE FACTS
The appellant (AMP) was a finance,
investment and insurance advisor who held
a professional indemnity insurance policy
with the respondent
AMP Financial
(CGU). The policy
Planning Pty Ltd
covered AMP for
v
certain types of civil
CGU Insurance Ltd
liability incurred in
[2005] FCAFC 185
the conduct of
Whether insurer breached
AMP’s “Professional
duty of utmost good faith by
Business Practice.”
declining indemnity after making
representations that were relied AMP authorised
upon by insured to its detriment its representatives to
—whether dishonesty is
necessary to establish a breach provide AMP’s clients
with financial advice
of the duty of utmost good
faith by an insurer
in respect of certain
listed financial
products for which the representatives had
been accredited. However, two of AMP’s
representatives acted outside their
authorities and negligently advised clients
to invest money in a range of investments
in breach of various securities regulations.
Several of these clients made claims
against AMP and complained to the ASIC.
AMP then notified CGU of its intention
to claim indemnity under the policy in
relation to settlement monies it may be
required to pay to resolve the claims. AMP
prepared a protocol to facilitate and manage
these settlements which was presented to
CGU via AMP’s solicitors. CGU advised AMP
that while it “had no difficulties with the claim
protocol,” a decision on whether indemnity
would be granted had not yet been made,
and that AMP should act “as a prudent
uninsured.”
In reliance on the comment that CGU had
no difficulties with AMP’s claim management
protocol, AMP settled several of the
131
complaints in accordance with the protocol
at a cost to it in excess of $3,000,000.
This process involved providing information
to CGU in relation to issues such as liability
and quantum of the claims.
CGU then advised AMP that it had decided
to decline indemnity in relation to the claims
that had been settled and the outstanding
claims. AMP instituted proceedings against
CGU alleging that CGU had breached the
implied duty of utmost good faith that it
owed to AMP by virtue of section 13 of
the Insurance Contracts Act 1984 (Cth)
(the ICA). The bases for this allegation were:
• CGU had represented to AMP that
it did not oppose AMP’s protocol
• CGU failed to respond to AMP’s
requests for instructions pursuant
to the protocol which led AMP to
believe that it had permission to continue
• CGU delayed in communicating its
decision to decline indemnity to AMP
when it was aware that AMP had
started settling the claims.
THE TRIAL DECISION
The trial judge concluded that CGU had
not breached the implied duty it owed to
AMP pursuant to section 13 of the ICA.
The basis for the trial judge’s decision was
that evidence of a “want of honesty” is
required in order to prove that a breach of
the duty of utmost good faith has occurred.
As the trial judge considered that there had
not been a “want of honesty” on the part of
CGU, it was held that CGU had not failed to
act with the utmost good faith towards AMP.
The trial judge relied upon the authorities of
CIC Insurance v Barwon Region Water
Authority (1999) 1 VR 683, Kelly v New
Zealand Insurance Co Ltd (1996) 130 FLR
97 and Gutteridge v Commonwealth of
Australia (unreported, QSC, Ambrose J,
25.06.93) in this regard. The trial judge
dismissed the proceedings and ordered
AMP to pay 90% of CGU’s costs.
THE DECISION ON APPEAL
The trial judge’s decision was overturned
on appeal to the Full Federal Court.
In relation to the issue of good faith,
the Full Federal Court held that the cases
in this area do not establish that an insurer
must act dishonestly in order to breach its
obligations to an insured pursuant to 13 of
the ICA. The cases in this area go no further
duty even if the failure is not connected
to an attempt to achieve an ulterior purpose,
and occurs instead as a result of failing to
proceed reasonably promptly when all
relevant material is available to the insurer
that is sufficient to enable it to make
a decision on indemnity.
The orders made by the trial judge
were set aside. The matter was remitted
to the trial judge for further consideration.
Full Court of the Federal Court:
2 September 2005
Richard Leahy
than to establish that while honesty is at the
centre of the notion of utmost good faith,
dishonesty is not a prerequisite for breach
of the duty, as capricious or unreasonable
conduct can also establish a breach.
The Full Federal Court found that an insurer
could also breach the duty implied by section
13 of the ICA by:
“failing to make a prompt admission
of liability to meet a sound claim for indemnity
and to make payment promptly [as this] may
be a failure to act with the utmost good faith
on the part of an insurer… A failure by an
insurer to make and communicate within
a reasonable time a decision of acceptance
or rejection of a claim for indemnity, by reason
of negligence or unjustified and unwarrantable
suspicion as to the bona fides of the claim
by the insured, may constitute a failure on
the part of the insurer to act towards the
insured with the utmost good faith in
dealing with the claim.”
The Full Federal Court held that acting with
utmost good faith involves more than merely
acting honestly. Failure to make a timely
decision to accept or reject a claim for
indemnity can amount to a breach of the
132
THE FACTS
A tenant was injured when she fell in a hole
in a concrete floor of a garage in a premises
she was leasing. She sued the landlord and
real estate agent who managed the premises
(the agent). The
Suncorp Metway
agent made a claim
Insurance Ltd
under its professional
v
indemnity insurance
Landridge Pty Ltd
policy but was
[2005] VSCA 223
denied cover and
Property management service
so made a third
provided by real estate agent
party claim against
regarded as a “profession” for
Suncorp, the
purposes of a professional
indemnity policy
professional
indemnity insurer.
The tenant had made a number of
complaints about the hole to the agent’s
receptionist who had failed to record and
pass on these complaints to the appropriate
persons employed by the agent, and the
agent had failed to either cover the hole or
refer the tenant’s complaints to the landlord.
The proceedings by the tenant against the
landlord and the agent were settled on the
basis that the agent would pay $85,000
plus costs with the tenant’s claim against
the landlord dismissed. The agent’s claim
against its insurer remained to be resolved
by the court.
The insuring clause of the policy provided:
“Suncorp Metway agree to indemnify the
Insured up to the Limit of Indemnity against
legal liability for Claims for compensation first
made against the Insured during the Period of
Insurance and reported to Suncorp Metway
during the Period of Insurance, for breach
of a professional duty by reason of
any act, error or omission committed or
alleged to have been committed by the
Insured in the conduct of the Business.”
“Business” was defined in the schedule
to the policy as that of a real estate agent.
In the proposal (which formed part of the
policy) the agent’s “business and
professional activity” was defined as:
1. Established residential sales and
new home sales
2. Residential property management, and
3. Finance applications.
The only issue between the agent and
the insurer was whether the agent’s legal
liability to the tenant was “for breach of
a professional duty” within the meaning
of the insuring clause.
THE TRIAL DECISION
The trial judge held that the duty owed
by the agent to the landlord to properly
inspect the premises, assess its condition,
and repair defects or report them to the
landlord were “professional duties” of
a real estate agent. Accordingly, the failure
of the receptionist to pass on the tenant’s
complaints was held to be a breach of the
agent’s professional duties making the
insurer obliged to indemnify the agent
under the policy.
The insurer appealed.
THE DECISION ON APPEAL
The Court of Appeal held that in order
to make commercial sense of the policy
it was necessary to regard the core activities
of the agent’s business, namely, selling
houses, managing the letting of the houses
and arranging finance as the carrying
on of a profession. It would be a mistake
133
to limit the meaning of the word
“professional” in the insuring clause of the
policy to the conduct of a learned profession
because unless the core activities of the
agent’s business were regarded as carrying
on a profession, the policy would afford
no significant protection.
The insurer’s argument that the
act comprising the breach, namely the
receptionist’s failure to record and pass
on the tenant’s complaint, not being a breach
of professional duty was rejected. The Court
of Appeal found that it is necessary to look
at the overall activity in the context of which
the breach occurs and not concentrate
on the specific tasks performed or not
performed which give rise to liability.
In this case, the breach in question formed
part of the agent’s core activities and
therefore occurred in the course of carrying
on the agent’s profession.
The Court of Appeal referred to the
description of a “professional” by Justice
Kirby (then in the New South Wales
Supreme Court) in GIO General Ltd. v
Newcastle City Council (1996) 38 NSWLR
where Justice Kirby said:
“The term “professional”… involves,
in the context of a policy written for a local
government authority, no more than advice
and services of a skillful character according
to an established discipline.”
The Court of Appeal referred to there
being very little work done by a real estate
agent which answers the above description
(save perhaps for valuation service) but was
prepared to hold that they were in this case
as to do otherwise would mean the policy
would provide little or no cover.
Victorian Court of Appeal:
14 September 2005
Sarah Haigh
134
THE FACTS
Two applications were made for
leave to appeal arising from the crash
of a light aircraft in which the pilot and
his 2 passengers
were killed.
Morris
v
Betcke x 2
[2005] NSWCA 308
Two actions pursuant
to the Compensation
to Relatives Act
1897 (NSW) were
brought in the
District Court by
the widows of the
passengers against
the owner of the
aircraft (as first
defendant) and
the estate of the pilot (as second defendant).
Application to join insurer as
additional defendant—arguable
case for indemnity under policy—
meaning of “entered into contract
of insurance” in s 6 Law Reform
(Miscellaneous Provisions) Act
(NSW) 1946—meaning of “the
insured” in s 51 Insurance
Contracts Act
The plaintiffs sought to join Peter Morris
(Morris) to the proceedings. Morris was
the local representative of a syndicate of
underwriters who had entered into a policy
of insurance in respect of the aircraft
involved in the accident.
It was common ground that at the
time of the crash there was a policy
of insurance in force with respect to the
aircraft. A schedule to that policy identified
the insured as Pyojed Pty Ltd (Pyojed).
Pyojed was the owner of the aircraft. The
“uses” were identified as “private, business
and pleasure”. Four names were set out in
the schedule as pilots. Included in those
names was W Bamforth, the pilot at the
time of the crash.
The Bureau of Air Safety Investigation
(BASI) carried out an investigation.
Evidence from an expert outlined several
aviation regulations, including Civil Aviation
Regulation CAR 5.82 which was in force
at the time of the crash and which outlined
the recent experience requirements for a
pilot such as Mr Bamforth. The evidence
obtained by the BASI indicated that Mr
Bamforth had not complied with CAR 5.82
THE DECISION
The issue at trial related to the
application of section 6 of the Law Reform
(Miscellaneous Provisions) Act 1946 (LRA).
No submissions were made in relation
to the operation of sections 48 and 51
of the Insurance Contracts Act (Cth) (ICA).
Justice Bishop found that Pyojed, the owner
of the aircraft and the pilot were insureds for
the purposes of section 6 of the LRA and
leave to join the applicant (insurer) was
granted.
DECISION ON APPEAL
The only matter pleaded against Pyojed
was that it was vicariously liable for the
actions of the pilot. Pyojed submitted that
it was necessary for the plaintiffs to adduce
some evidence which made it arguable that
vicarious liability could be established on the
basis of employment or agency. Reference
was made to the decision of Tzaidas v Child
(2004) 208 ALR 651 to illustrate that all
that was required of the plaintiffs was an
arguable case to support vicarious liability
which, according to the Court of Appeal,
was a relatively modest hurdle. The pilot
was not only a shareholder of Pyojed, but
also a director. In addition, at the relevant
time, the director was flying the aircraft.
Accordingly, the Court of Appeal upheld
Justice Bishop’s finding that the relatively
135
modest hurdle of an arguable case
as to vicarious liability based on agency
was overcome by the plaintiffs.
Morris then submitted that Pyojed did
not have an arguable case for indemnity
under its policy of insurance because the
pilot was in breach of section VI, clauses
1 and 3 of the policy in light of his failure
to comply with CAR 5.82. The relevant
clauses provided: “Section VI: General conditions applicable
to all sections:
1. If the insured fails to comply with any
terms, conditions, limitations or exclusions
of this insurance, underwriters may refuse
to pay a claim but in any event
underwriter’s rights will be subject to
the provisions of Section 54 of the ICA;
…
MacLean v MacLean and Australian
Aviation Underwriting Pty Ltd (1977)
15 SASR 306. In that case it was held
that these are not orders and requirements
issued by the Department of Civil Aviation
or other competent authority. They are
regulations made by the Governor General
pursuant to section 26 of the Air Navigation
Act 1920 (Cth) and therefore part of the
law of the land.
According to the Court of Appeal,
on the basis of the finding in MacLean,
Justice Bishop was correct in holding that
it was arguable that there was no failure by
the pilot and therefore Pyojed to comply with
“all air navigation and air worthiness orders
and requirements issued by any competent
authority”.
Actions against pilot’s estate
3. The insured shall comply with all air
navigation and air worthiness orders and
requirements issued by any competent
authority effecting the safe operation of the
aircraft and shall take reasonable care that:
(a) The aircraft is airworthy at the
commencement of each flight;
(b) All log books and other records in
connection with the aircraft which are
required by any official regulations in force
from time to time shall be kept up to date
and shall be produced to the underwriters
or their agents on their request; or
(c) The employers and agents
of the insured comply with such
orders and requirements”.
While Morris conceded that the pilot
was negligent, he submitted that section
The Court of Appeal held that there
is a clear distinction in the words of the
policy between “regulations” and “orders”
(clauses VI 3(b) and (c)). A similar policy
wording was considered by the South
Australian Supreme Court in
According to the Court of Appeal, the
pilot was not a person who had entered
into a contract of insurance for the purposes
of section 6 of the LRA. The Court of Appeal
found that in so far as the intention of the
policy was concerned, there was no
6 of the LRA could not apply to the pilot’s
negligent acts because the precondition to
the application of the section had not been
established, that is, that the pilot was “any
person who has entered into a contract of
insurance”. On the contrary, the schedule
drew a clear distinction between “name
of insured” which was Pyojed and “pilots”.
Other sections of the policy’s wording made
it clear that a distinction was drawn between
the insured as identified in the policy and
certain persons including pilots who were
to be regarded or treated in certain
circumstances as if they were the insured.
136
indication that the pilots nominated on the
policy schedule should be regarded as
parties to the contract of insurance.
could not be said that the plaintiffs’ claim
At trial no submissions were made
in relation to the operation of section
51 of the ICA. They were, however, made
on appeal. Section 51(1) of the ICA
provides that where:
whether the pilot was an insured within the
“(a) The insured under a contract of liability
insurance is liable in damages to a person
(in the section called the third party);
(b) The insured has died or cannot, after
reasonable inquiry, be found; and
(c) The contract provides insurance cover
in respect of the liability
the third party may recover from the insurer
an amount equal to the insurer’s liability under
the contract in respect of the insured’s liability
and damages…”
On appeal Morris submitted that the words
“the insured” appearing in section 51 should
be given the same or similar meaning to
the words “a person who has entered into
a contract of insurance” in section 6 of the
LRA. In other words, “the insured” means
a party to the policy of insurance. On that
approach, section 51 of the ICA would have
no more application to the action against the
estate of the pilot than section 6 of the LRA.
According to the Court of Appeal, the nature
of the plaintiffs’ application was important.
The application was to amend the statement
of claim to add an additional defendant in
the actions brought against the estate of
the pilot. It was an interlocutory application.
The evidence before the court was of
necessity incomplete. Section 51 operates
to create a new right of action in the third
party. The Court of Appeal held that unlike
the reliance on section 6 of the LRA, it
137
under section 51 to support such a joinder
is unarguable. There is a triable issue as to
meaning of section 51. Because of the
nature of the application, to join an additional
defendant, and because it was arguable that
the plaintiffs have a cause of action against
Morris pursuant to section 51 of the ICA, the
Court of Appeal concluded that leave should
be granted to join Morris as an additional
defendant in the action.
New South Wales Court of Appeal:
16 September 2005
Gillian Sheppard
THE FACTS
Mr Waterman owned a Piper Cherokee
aircraft which he insured with Gerling and
a US insurer represented in Australia
by Australian Aviation Insurance Group
(Agency) Pty Ltd
Waterman
(AAIG). The policy
v
provided for the
Gerling Australia
payment of the
Insurance Company
premium by
& Anor
installments.
[2005] NSWSC 1066
Waterman initially
Punctual payment of premium
took out cover for
not essential for cover
the period 6 June
1997 to 6 June 1998. Three installments
were to be made in July, September and
December. The policy contained a term
that if any installment was not made by its
due date, cover would be deemed to have
ceased at midnight on that day. The history
of premium payments by Waterman for
the first year was:
• installment due on 6 July 1997
paid on 16 July 1997
• installment due on 6 September
1997 paid on 29 October 1997. AAIG
sent out a reminder on 10 October 1997
requesting payment within 7 days, and
• installment due on 6 December 1997
paid on 20 January 1998. A reminder
notice was sent on 19 January 1998.
On 13 May 1998, AAIG issued a
renewal notice to Waterman for the period
6 June 1998 to 6 June 1999. A new policy
was issued which included a similar deferred
premium endorsement. The history of
premium payments by Waterman for
the second year was:
• installment due on 6 June 1998
paid on 21 July 1998
• installment due on 6 September
1998 unpaid. AAIG sent a reminder
letter on 11 November 1998
• installment due on 6 December
1998 unpaid.
Waterman’s aircraft was destroyed in an
accident on 2 January 1999. Waterman
made a claim under the policy. Indemnity
was declined.
THE ISSUES
Waterman issued proceedings against
the insurers in the New South Wales
Supreme Court claiming that he was
entitled to cover under the policy.
Counsel for Waterman relied on certain
provisions of the Insurance Contracts
Act 1984 including:
• Section 59: Cancellation Procedure—
Requires an insurer who wishes to exercise
a right to cancel a contract of insurance
to give written notice of the proposed
cancellation to the insured
• Section 60: Cancellation of Contract
of General Insurance—Provides that
an insurer may cancel a contract of
insurance where an insured fails to
comply with certain provisions of the
contract including a provision requiring
the payment of premium
• Section 63: Cancellations Void—Provides
that an insurer may not cancel a contract of
138
general insurance except as provided for by
the Act, and any purported cancellation in
contravention of the section is of no effect.
Counsel for the insurers submitted that there
had been no “cancellation”, but rather cover
had ceased.
THE DECISION
The court found for the plaintiff.
the first installment was already due.
The court held:
“Together the effect of these matters
is to show that the insurers and Waterman
were dealing with each other on the
conventional basis that punctual payment
of premiums was not essential to the
continuation of cover, and once such
a convention is established, it matters
The court said that the deferred premium
endorsement did not have the effect of
conferring upon the insurer an election
to cancel the policy in the event that a
premium installment was not paid punctually.
Rather, the provision provided an automatic
cessation of cover upon that event, at least
until the installment was paid. Because there
was no cancellation, sections 59, 60 and
63 of the ICA had no application.
not if the terms of the deferred premium
endorsement provide otherwise, nor whether
or not the parties adverted to those terms.
The court went on to decide the case
in favour of the plaintiff on the basis of
an estoppel having arisen. Conventional
estoppel arises where:
In the circumstances, Waterman had made
out a case of estoppel so as to preclude the
insurers from relying upon the provisions of
the deferred premium endorsement.
• The plaintiff has adopted an assumption
as to the terms of his legal relationship
with the defendant
• The defendant has adopted the same
assumption, and
• Both parties conducted their relationship
on the basis of that mutual assumption.
New South Wales Supreme Court:
21 October 2005
The court held that at least up until
11 November 1998 when the final reminder
letter was sent by AAIG, all parties were
proceeding on the assumption that punctual
payment of premium installments was
not essential to the continuation of cover,
whatever might be the formal terms of the
policy. The terms and tone of the reminder
letters contributed to this conclusion, as did
the fact that at the time of inception and
renewal the policy documents arrived after
139
Once such a convention is established,
so that the requirement for punctual payment
loses the essential character which it
otherwise had under the endorsement, then
a practical effect is that, at least without
notice, neither party can insist on the legal
position under the endorsement”.
Robert Samut
THE FACTS
Regal Pearl was the operator of a restaurant.
On 11 May 1997, a number of customers
attended the restaurant and consumed meals
including prawns. The prawns contained
hepatitis A,
Regal Pearl Pty Ltd
which caused
v
the customers
Zurich Australian
to become ill.
Insurance Limited
[2005] NSWSC 1055
Regal Pearl had
Interpretation of policy—insuring purchased the
prawns from a
clauses—liability for economic
loss compared to liability for
wholesaler. The
personal injury—caused by
wholesaler had
or arising out of
purchased the
prawns from an importer. Zurich was the
liability insurer of the wholesaler. Zurich
had denied indemnity to the wholesaler
on the basis of a contractual assumption
of liability exclusion. The wholesaler
conducted the litigation itself.
Five customers issued proceedings against
Regal Pearl. The wholesaler was not named
as a defendant in any of these actions, but
was a cross-defendant to cross claims
brought by Regal Pearl and the importer.
THE DECISION
At first instance, Justice Wood made
findings of negligence and breach of implied
warranties under the Sale of Goods Act
1923 (NSW) (the Act) by Regal Pearl. The
court found no liability on the part of the
wholesaler or the importer.
Regal Pearl appealed to the Court of Appeal,
arguing that it was entitled to an indemnity
from the wholesaler under the Act for breach
of contract. The Court of Appeal upheld the
appeal and ordered the wholesaler to
indemnify Regal Pearl in respect of
its liability to customers.
Subsequent to Justice Wood’s decision,
but before the decision of the Court
of Appeal, Regal Pearl settled all the
customers’ claims and paid all of
the settlement money and costs.
The wholesaler did not pay the judgment
entered against it by the Court of Appeal.
It ceased trading in June 2001 and had
no assets.
Regal Pearl then commenced proceedings
against Zurich. The issue was whether the
liability of the wholesaler to pay money to
Regal Pearl was a liability to which Zurich’s
insurance policy responded.
The policy was a standard business
insurance policy which was divided
into two sections:
1. Part A—General liability, and
2. Part B—Product liability.
This case concerned Part B—product
liability. The insuring clause was as follows:
“We will pay for all amounts up to the limit
of liability that an insured person becomes
legally liable to pay in compensation for:
Personal injury; or
Property damage
which results during the period of insurance
from an occurrence within the territorial limits
that happens in connection with your
products”.
“Products liability” was defined in the policy
to mean:
“Any liability for an occurrence that is caused
by or arises out of any of your products”.
Zurich argued that under the insuring clause
140
it was liable to indemnify the wholesaler only
in respect of amounts that it became legally
liable to pay in compensation for personal
injury. Zurich’s argument was that the
wholesaler became legally liable to pay
compensation for economic loss, not
compensation for personal injury, and,
accordingly, it was not liable under the
insuring clause.
THE DECISION
The court held that the words in the
definition of “products liability”—ie,
“caused by or arises out of any of your
products”—in conjunction with the words
in the insuring clause “that happens
in connection with your products” meant
that the insurance clause had a much wider
application than merely limiting the liability
of Zurich to indemnify the insured only
against personal injury and property damage
which the wholesaler was found liable
to pay to an injured person.
In the court’s view, the phrases extended
the liability of Zurich to indemnify the
wholesaler in respect of its liability to
pay money to an injured third person arising
out of the insured’s products. In other words,
the court was satisfied that the insuring
clause covered the liability of the wholesaler
to indemnify Regal Pearl even though its
liability could be described as “economic
loss”. The liability occurred in connection
with the wholesaler’s products and liability
was caused by or arose out of the products.
The court found that the contractual
assumption of liability exclusion clause
(which Zurich had also sought to rely on to
decline indemnity) did not have as wide an
application as the insuring clause as it did
not relate to “all amounts… that an insured
person becomes legally liable to pay”. It only
141
related to liability for personal injury
or property damage, not economic loss.
As such, the exclusion clause was
found not to operate.
Judgment was entered in favour of Regal
Pearl against Zurich in the agreed amount
of $1,473,155.
New South Wales Supreme Court:
25 October 2005
Daniel McCormack
THE FACTS
The defendant was employed as a financial
adviser and was approached by the plaintiff
for financial advice. The defendant advised
the plaintiff to invest
Littlewood
$25,000 at an
v
interest rate of 15%
Resource Underwriting
for the first 3 months
Pty Ltd & Anor
in a development
[2006] NSWCA 62
project of WBG
Developments Pty
Breach of duty by investment
adviser—conflict of interest—
Ltd (the project).
whether exclusion clause
The investment
in professional indemnity
was purportedly
insurance policy applied
secured by a
mortgage. When the project failed, the
plaintiff sued to recover the money.
THE DECISION
The lower court held that the defendant
had negligently advised the plaintiff to invest
his money in the project and awarded the
plaintiff $25,000 plus interest and costs
on the following bases:
• The defendant did not advise the plaintiff
of other possible investment options
• The defendant knew that the project
was in financial difficulty at the time he
recommended that the plaintiff invest
his money and did not disclose this
information to the plaintiff
• The defendant was under pressure
to find further investors in the project
to avoid its collapse
• The defendant knew from the interest rate
that it was a high risk investment and did
not disclose this information to the plaintiff
• The defendant represented to the plaintiff
that the investment would be secured by
a mortgage. However, the mortgage was
not in registrable form and was never
registered. Further, the defendant never
intended to register the mortgage and
was aware that it did not offer any
security to the plaintiff
• The defendant had invested $100,000
of his own money in the project, and
• The defendant was to receive a $50,000
fee on the successful completion of the
project and interest on his $100,000.
The defendant sought indemnity from his
professional indemnity insurer. The policy
was a claims made and notified policy and
provided indemnity for breach of duty “in
the Professional Business of the Assured.”
The policy also contained an exclusion
clause that read:
“The Underwriters shall not indemnify the
Assured in respect of any claim made against
them arising from investment, or any advice,
inducement or recommendation to invest, or
endorsement or opinion favouring investment,
in any fund, scheme, arrangement, or entity in
which there is or was at any relevant time a
Related Interest unless shareholdings in
public listed companies.”
The definition of “Related Interest”
in the policy was:
“Any interest beneficially held by or on behalf
of any one or more of the Assured or any
spouse or child of the Assured, any firm or
company in which an interest is beneficially
held by or on behalf of the Assured.”
The definition of “Interest” in the policy was:
“Any share, shareholding, entitlement or
other financial interest.”
142
The court held that the defendant was
not entitled to indemnity under the policy
because the defendant’s business did not
satisfy the definition of “Professional
Business” and, in any event, the defendant
had a “Related Interest” in the project at
the time he provided the plaintiff with
financial advice.
THE DECISION OF THE SUPREME COURT
The defendant appealed to the Supreme
Court on the basis that the lower court had
erred in law as a result of its construction
of the exclusion clause and the definitions
“Related Interest” and “Interest” in the policy.
The Supreme Court dismissed the appeal
and upheld the magistrate’s decision.
THE DECISION OF THE COURT
OF APPEAL
The Court of Appeal concluded that the
general purpose of the exclusion clause
was to exclude indemnity where the assured
gave investment advice in a position of
conflict. The Court of Appeal found the
defendant plainly had a related interest.
The defendant may or may not have had an
entitlement or other financial interest in the
entity of WBG Developments Pty Ltd, but did
have an entitlement or other financial interest
in the scheme constituted by the project, as
he had invested his own money in the project
and had an entitlement to receive $50,000
and interest on its completion. The appeal
was dismissed with costs.
New South Wales Court of Appeal:
24 March 2006
Bree Macfie
143
THE FACTS
In August of 1992 the Federal Airports
Corporation, the predecessor to Sydney
Airports Corporation Ltd (SACL) accepted
a tender from
Baulderstone Hornibrook Baulderstone
Engineering Pty Limited Hornibrook
v
Engineering Pty Ltd
Gordian Runoff Limited (BHE) to design and
(formerly GIO Insurance construct a third
Limited) & Ors
runway at Kingsford
[2006] NSWSC 223
Smith Airport in
Sydney.
Where HIH was underlying
insurer—whether upper layer
Approximately
insurers in multi-layered
professional indemnity insurance one year after
scheme were obliged to
BHE constructed
indemnify a contractor for design
the runway, it
and construction work—If HIH
became evident
policy applied were upper layer
that excessive sand
insurers entitled to rely on
exclusion clause in HIH policy— loss was occurring
Interpretation of “Professional
between the joints
Activities” in HIH policy
in the concrete
facing panels in the
reinforced earth “Seawall” and “Millstream
wall” (the walls). This sand loss had caused
voids, sink holes and settlement to appear
behind the concrete panels. These defects
caused the steel straps behind the walls
to corrode, and therefore undermined the
structural soundness of the walls that were
supposed to last for 50 to 100 years.
On 24 June 2002 SACL commenced
proceedings against BHE alleging that
BHE had negligently designed and
constructed the runway, which had caused
the subsidence behind the walls. These
proceedings were settled on 17 June 2004
on the basis that BHE would rectify the
defects in the walls and would pay
the costs of the necessary design and
construction work to effect the rectification
which was likely to exceed $60 million.
BHE then made a claim against its insurance
policies. BHE’s insurance arrangements were
complex, involving a multi-layered scheme
with eleven different insurers. As several
insurers declined indemnity under the
policies, BHE commenced proceedings
against those insurers on 22 December
2003. However, BHE’s claims against most
of those insurers were settled, which left HIH
Insurance Limited (HIH), CGU Insurance Pty
Ltd (CGU) and Gordian Runoff Ltd (formerly
GIO Insurance Ltd) (Gordian). HIH was the
“underlying” insurer in the scheme, and
Gordian and CGU were the “upper layer
insurers”. This meant that HIH was
responsible for the first $20 million, Gordian
the first $10 million in excess of $20 million,
and CGU $5 million in excess of the first
$30 million.
On 6 November 2002 HIH confirmed that
indemnity was granted to BHE under its
policy, but due to its insolvency it was unable
to pay out on the policy. However, the grant
of indemnity pursuant to the HIH policy
triggered the Gordian and CGU policies, as
those policies contained terms to the effect
that they were subject to the same insuring
clauses, conditions and exclusions as the
HIH policy. However, both Gordian and CGU
argued that the HIH policy did not apply to
the claim, and declined indemnity to BHE
under their policies.
THE ISSUES
There were numerous issues for the court
to determine in this large matter, which is
obvious from the single judgement that was
delivered consisting of 315 pages. However,
144
as commentators such as Carl Raistrick
have pointed out (Australian Insurance Law
Bulletin Volume 21 Number 7), the major
issues in this case were:
• Did the sand loss occur by reason of
design defects, construction work or both?
• To what extent, if at all, was BHE
responsible for any cause of the defects?
• Did the HIH policy respond to indemnify
BHE?
• Did the Gordian and CGU policies
respond to indemnify BHE?
THE SUPREME COURT DECISION
The court heard extensive expert evidence
from several experts on the issue of what
had caused the sand loss from behind the
walls. The court preferred the evidence
presented by the insurers’ expert that led
to the factual conclusion that the sand
loss occurred directly as a result of flawed
construction of the walls as opposed to
flaws in the design. This finding was
important because it established that BHE
was solely to blame for the sand loss, and
had a serious impact on whether the HIH
policy, and therefore the CGU and Gordian
policies, responded to the claim.
The insuring clause in the HIH policy was
as follows:
“To indemnify the insured against any claim
or claims which may be made against them
or any of them and which are notified to the
company during the period specified in the
schedule, for beach of professional duty in
the profession stated in the schedule, by
reason of any act, error or omission,
whenever committed unless limited by
the retroactive dates dated in the Schedule
or wherever the same was or may have been
committed or alleged to have been committed
on the part of the insured in the conduct and
execution of the Professional Activities, and
duties as defined herein.”
The definition in the endorsement to the
policy of “Professional Activities” was as
follows:
“Engineering, project management, surveying,
designing, geotechnical, environmental
monitoring, construction management and
certification as defined in the policy wording.”
In light of the court’s finding that the
sand loss was attributable to BHE’s flawed
construction of the walls and not their
design, the court held that the facts giving
rise to the claim did not satisfy the definition
of “Professional Activities” in the
endorsement to the policy, and therefore
the insuring clause in the policy did not apply.
In these circumstances, the court concluded
that the HIH policy did not respond to
BHE’s claim.
The court also examined whether the
Gordian and CGU policies would have
applied if it had found that the HIH policy
applied. The court examined several
exclusion clauses in the HIH policy
in relation to this issue.
The court referred to a number of relevant
exclusion clauses, but gave particular
attention to the following exclusion clause
that states:
“1. The policy shall not indemnify the insured
in respect of any claim made against them:
(p) arising out of construction work
performed involving the means, methods,
techniques, sequences, procedures and
145
use of equipment, of any nature whatsoever
which were employed by the insured’s
contracting staff or others in the executing
any phase of the project.”
The parties made detailed submissions
on the interpretation of the phrase “arising
out of” in exclusion clause 1(p). The
emphasis of BHE’s submissions was that the
phrase should be restricted to a claim arising
solely as a result of the construction work or
negligent construction work.
The court held that by virtue of exclusion
clause 1(p), BHE’s claim against Gordian
and CGU failed for the following reasons:
• The facts giving rise to the claim
against BHE sufficiently came from
the undertaking of construction work
• The construction work materially
contributed to the claim made against
BHE, in that it was a significant cause
of the sand loss
• A significant cause of the sand loss
was poor workmanship
• The words “arising out of” do not
mean “solely arising out of”, so it was
not necessary for the claim against
BHE to have arisen solely out of the
construction work
• It was not necessary for the insurers to
prove that the construction work was the
“dominant” cause of the sand loss, and
• The words “arising out of construction
work” are not to be read as “arising out
of negligent construction work.”
A notice of appeal was filed by BHE
on 31 May 2006.
New South Wales Supreme Court:
12 April 2006
Bree Macfie
146
THE FACTS
A claim was made against a firm of
solicitors, McCarthy, Durie, Ryan and Neil
(MDRN). MDRN represented itself in the
defence of the
claim and thereafter
A & D Douglas Pty Ltd
sought
v
reimbursement
Lawyers Private
from its insurer for
Mortgages Pty Ltd
its professional costs
[2006] FCA 690
and outgoings. The
Claim against law firm—firm
insurer declined to
self represented—firm claimed
reimbursement from insurer
indemnify MDRN.
for its professional costs and
THE ISSUES
outgoings of defending claim
The relevant
provisions of the insurance policy were:
Clause 1.2:
“QBE agrees to pay, in addition to the
Limit of Indemnity, the Costs and Expenses
incurred with the written consent of QBE
in the defence or settlement of any Claim
covered by this Policy.”
Clause 7.2:
“Costs and Expenses” shall mean the
expenses incurred by or on behalf of the
Insured or QBE in the investigation or
defence of a claim and shall include legal
costs and disbursements.”
The insurer argued that MDRN was not
entitled to recover costs of representing
itself, because the expression “Costs and
Expenses” was restricted to actual outgoings
incurred and owed to others in defence of
the claim. The court was called on to decide
which was the correct interpretation of
clause 1.2.
THE DECISION
The court concluded that a solicitor who
defends him or herself and so is unable to
devote time and effort to his or her clients,
incurs expense in the relevant sense, namely,
lost professional time. MRDN was therefore
entitled to recover for that time at the
rate at which it would have otherwise
charged clients.
The court made reference to the following
matters in coming to its decision:
• Wide meanings were attributable to the
words “costs”, “expenses” and “incurred”
in the various dictionary definitions
considered by the court, and
• In circumstances where the parties
clearly intended that MDRN be indemnified
in respect of its defence of a claim,
including legal costs and disbursements,
the fact that insurer was aware that
MDRN was a law firm might at least
have suggested the possibility that MDRN
would act for itself in the defence of such
a claim. Further, it might therefore have
been expected that, had the insurer
wished to exclude indemnity for costs
of self-representation, it would have said
so expressly and not merely by using the
word “incurred” in clause 7.2 of the policy.
The court similarly held MDRN was
entitled to recover for disbursements,
such as photocopying, etc, however, those
amounts were limited to the actual cost to
MDRN and not the price it normally charged
its clients for supplying the underlying
services.
Federal Court of Australia: 26 May 2006
Adrian Lewis
(See also A & D Douglas Pty Ltd v Lawyers
Private Mortgages Pty Ltd [2006] FCA 520
under the heading “Solicitors & Barristers”)
147
INSURANCE INTERMEDIARIES
THE FACTS
The plaintiff, Hazanee Pty Ltd (Hazanee),
owned and operated Shell Katherine Self
Service in Katherine, Northern Territory (the
service station). It leased the service station
from Shell but owned
Hazanee P/L
most of the plant and
v
stock. Under the
Elders Ltd & Ors
lease, Hazanee
[2005] NTSC 37
was required to
Claim for indemnity under
maintain appropriate
policy containing flood
insurance cover
exclusion—whether insurer’s
in relation to the
agent liable for not specifically
directing attention of insured
building and service
to flood exclusion clause
station premises.
On 26 and 27 January 1998, a prolonged
tropical rainstorm caused water to enter into
the service station to a considerable height.
Hazanee sustained damage to the service
station premises, contents and stock.
At the time of the storm, Hazanee held
a general business insurance policy with
CGU for the service station premises and its
contents. Hazanee claimed indemnity under
the policy and this was rejected on the basis
that the flood exclusion applied to exclude
the claim. Hazanee sought a declaration as
to liability under the policy.
Hazanee also commenced proceedings
against Elders on the basis that Elders was
retained to service its insurance needs and
Hazanee was induced by Elders to select
CGU as its insurance carrier.
Elders issued a third party notice against
Greg Black alleging that Mr Black had been
appointed by Elders as a subagent to assist
it in arranging contracts of insurance for
149
CGU and in particular to assist Elders in
identifying potential insurance and liaising
between CGU and the intending insured.
It was accepted by the parties that Elders
was at all times an agent for CGU.
THE DECISION
Mr Cobb, a proprietor of Hazanee, gave
evidence that he had operated the service
station in Katherine since 1983 and since
that time effected business insurances
through TIO. Mr Cobb became disenchanted
with TIO when one of his business vehicles
was vandalised and his claim for the damage
was rejected on the basis that the risk was
not covered. Mr Cobb said that not long
after the vandalism incident he encountered
Mr Black and Mr Cameron (an employee of
Elders) at a football club and approached
them to speak about insurance. He said
that he expressed displeasure at his current
insurer and that Mr Black and Mr Cameron
expressed interest in quoting for alternative
insurance policies.
Mr Cobb submitted that he told them
that he wished to have an insurance cover
that spanned all relevant risks so that what
occurred in relation to the vandalism incident
could not occur again. Mr Cobb conceded
however that he did not specifically raise
the topic of flood cover with Mr Black.
Mr Cobb said that on 12 February 1996,
he signed 2 separate insurance proposals
on behalf of Hazanee, one relating to
computer and electronic equipment and
the other for general business insurance.
The electronic equipment policy included
flood cover whereas the general business
proposal had a variations and extensions
section referring to flood cover and
indicated that such cover would attract
an additional premium.
The detailed proposals were completed
by Mr Black in his own handwriting based
on information supplied to him by Mr Cobb.
Mr Cobb said that he relied on Mr Black
to effect the insurance cover that he had
requested. The 2 proposals were signed
by Mr Cobb and in relation to the general
business proposal the line relating to flood
cover was left blank, indicating that such
cover was not required. The proposals
were submitted by Elders to CGU and were
accepted by CGU. Mr Cobb acknowledged
that copies of the policy documents were
sent to Hazanee but he did not read them.
The general business package policy
documentation was voluminous although
expressed in plain English. The policy
expressly excluded damage caused
by “Flood”.
After the storm occurred on 26 and 27
January 1998, Mr Cobb lodged a claim for
the damage with CGU but all claims other
than those relating to storm damage were
rejected by CGU on the basis that they arose
from flood which was not covered by the
general business policy.
Mr Black gave evidence that his
understanding was that Mr Cobb asked him
to quote on the same basis as the TIO cover,
which expressly excluded flood damage.
He said that the topic of flood damage was
not raised by anyone. Mr Black said that the
topic of quoting for Hazanee’s insurance first
arose when he and Mr Cameron went to
pick up an Elders vehicle at the service
station. Mr Cobb then subsequently provided
Mr Black with a copy of the TIO schedule for
the 1994-1995 year so that he could take
information from it. Mr Black obtained a
quote for Mr Cobb from CGU but Mr Cobb
initially contacted Mr Black to say that he
was going to stay with TIO.
Several months later, Mr Cobb contacted
Mr Black and said that he had had an
argument with his current broker and was
uninsured and asked if cover could be
procured at the previously quoted premium.
There was no further discussion concerning
the scope of the proposed cover.
Mr Black specifically denied that he
was asked by Mr Cobb to organise cover
for everything. He says this would have
been impossible in any event.
The court preferred the evidence
of Mr Cameron and Mr Black that the
topic of insurance first arose in the manner
and circumstances related by them. The
court held that Elders and Mr Black were
CGU’s direct agent and subagent
respectively and that the evidence fell short
of establishing that CGU, Elders or Mr Black
held themselves out as advisors of Hazanee
and in this regard found that Mr Cobb’s
evidence was unreliable.
The court also noted that Hazanee had
not previously had flood cover over a lengthy
period and that this fact was something that
Mr Cobb “well appreciated”. The court said
that Mr Cobb had made no attempt
previously to effect such cover and due to
evidence that Hazanee had a fairly tight cash
flow, it seemed unlikely that Mr Cobb would
extend cover in a manner that would
inevitably result in an increased premium.
The court accepted the evidence of Mr Black
that what in fact occurred was that Mr Cobb
handed Mr Black his current TIO insurance
schedules, went through them together, and
sought a competitive quote for the same
types of cover.
As for the claim against CGU for indemnity
under the policy, the court held that the
damage was caused by flood and was
150
therefore excluded by the policy.
In coming to this conclusion, the court
referred to a Bureau of Meteorology report
which distinguished between the terms
“flooding” and “storm water”. “Flooding” is
applied to situations where rivers and creeks
overflow their banks and inundate land that
is normally dry. “Storm water” was defined
to mean local runoff collected in roads and
small catchments which do not have the
defined natural drainage system of rivers
and creeks.
Accordingly, all of the claims were dismissed.
Northern Territory Supreme Court:
8 July 2005
Alison Crane
151
THE FACTS
On 2 July 1999 the insurer issued a total
and permanent disability policy of insurance
to the insured. The insured brought an action
against the insurer
Crown Insurance
claiming certain
Services Pty Ltd
benefits pursuant
v
to that policy,
National Mutual Life
alleging that he had
Association of
become totally and
Australasia Ltd
permanently disabled
[2005] VSCA 218
as a result of an
Insurance agent—breach of
injury from a
duty to insurer in issuing policy
of total and permanent disability prolapsed disc in
his spine which he
insurance—finding that insurer
would not have imposed
suffered on 19 July
conditions upon the insurance
1999. The insurer
even if the agent had not
defended the claim
breached the duty—whether
on the basis that
insurer is still able to claim for
a loss of opportunity to have
the insured had
imposed a condition upon
fraudulently failed
insurance
to disclose a CT
scan of his spine that had been taken
in May 1996 and an x-ray of his back that
was taken in 1997, and the results of both.
In addition, the insurer brought third party
proceedings against the agent that had
issued the policy of insurance to the insured.
The insurer claimed that the agent had
breached its duty in contract and in tort
owed to the insurer in obtaining the insured’s
signature on blank proposal forms and failing
to ask the insured certain questions in the
proposal forms which would have revealed
the scan and x-ray and the results of both.
The insurer and the insured reached a
settlement, but the trial of the insurer’s
claim against the agent proceeded.
THE DECISION
The trial judge concluded that the settlement
between the insurer and insured was
reasonable and found that the insured was
not guilty of fraud. The trial judge also found
that the agent had failed to ask the insured
any questions about his medical history and
that the scan and x-ray showed no back
problem, only normal degeneration. Further,
the insured did not consider that the
condition of his spine was material to the risk
against which he sought insurance. However,
the trial judge concluded that the agent’s
actions in this regard and the obtaining of
the insured’s signature on blank proposal
forms constituted a breach of the duties
owed to the insurer in contract and in tort.
In relation to issues of causation, the trial
judge found that:
• if the insured had been asked relevant
questions in the proposal, the evidence
of his medical condition would have
been revealed to the agent
• the insurer would nevertheless have
accepted the risk without imposing any
further conditions upon the insurance.
Nevertheless, the trial judge held that the
agent’s breach of duty deprived the insurer
of the opportunity to consider whether it
might limit the insurance cover provided to
the insured. The trial judge considered that
the lost opportunity was of some value and
concluded that there was a 20% probability
that the insurer would have imposed a
condition on the insurance which would
have excluded the insured’s claim. The
trial judge assessed damages on that
basis for the insurer against the agent.
152
THE DECISION ON APPEAL
The agent appealed, arguing that as there
had been a determination that the insurer
would not have imposed a condition, there
was no room for an award of damages for
loss of an opportunity.
The Court of Appeal essentially accepted
this reasoning and made the following
findings:
• Unless the insurer proved that it would
have imposed a condition excluding liability
for the medical condition if it had been
advised of the medical evidence, it could
not establish any loss caused by the
agent’s wrongdoing
• In certain cases it will be appropriate to
characterise the loss suffered by a plaintiff
as the loss of a chance. The present case,
however, depended on establishing what
the insurer would have done but for the
agent’s breach, and it was not appropriate
to characterise the loss as the loss of an
opportunity. Rather, the case involved the
loss of a benefit, not the opportunity to gain
the benefit, and the insurer was required to
establish that it had lost the benefit on the
balance of probability. As it had failed to
do so, it had failed to establish any
compensable loss
• Nevertheless, as the trial judge had
found that the agent had breached a duty
in contract and this finding had not been
challenged on appeal, judgment was given
for the insurer against the agent for
nominal damages.
Victorian Court of Appeal: 1 September 2005
Richard Leahy and Bree Macfie
153
PIPA CASES
THE FACTS
The seventy-seven year old plaintiff, Ms
Grice, rented a home from the Queensland
Housing Commission which she shared with
her intellectually disabled adult son, Peter.
On 9 December 2001, she was walking
on a concrete path
Grice
in the backyard
v
when her foot went
State of Queensland
over the side of the
[2005] QCA 272
path causing her
Threshold for payment of
to fall and fracture
gratuitous care and assistance
her wrist. She
under s54(2) of PIPA
successfully sued
the State of Queensland for damages in
negligence.
THE DECISION AT TRIAL
Section 54 of the Personal Injuries
Proceedings Act 2002 (PIPA) relevantly
provides:
“(2) Damages are not to be awarded for
gratuitous services if the services are
provided, or are to be provided:
(a) For less than 6 hours per week; and
(b) For less than 6 months.”
The plaintiff’s damages award included
gratuitous care provided by her son
comprising $12,500 for past care and
$20,000 for future care. The plaintiff had
received gratuitous care for the first
9 weeks for more than 6 hours per week,
but thereafter for less than 6 hours per
week. The services were required indefinitely
(longer than 6 months).
155
The State of Queensland appealed the
gratuitous care damages award arguing that
the trial judge failed to give proper effect to
s54(2) of PIPA and that the proper
construction of the section would preclude
the plaintiff from recovering any damages
for past gratuitous services.
DECISION ON APPEAL
The Court of Appeal determined that
s54(2) should be interpreted in accordance
with it’s ordinary, literal meaning. The fact
that the legislature subsequently replaced
s54(2) with a provision containing an even
more restrictive approach (ie, s59(1)(c)
Civil Liability Act 2003 (Qld)) does not
bear on the interpretation of s54(2) where
the plain meaning of the words is clear.
Accordingly, the plaintiff would only be
disentitled to damages for gratuitous
services under s54(2) if the conditions
in subparagraphs (a) and (b) were met,
ie, she received care for less than 6 hours
per week and for less than 6 months.
As the care provided to her by her son
was extended past 6 months, the plaintiff
had met the requirements of s54(2) and
was entitled to an amount under this head.
Queensland Supreme Court: 5 August 2005
Sarah Haigh
THE FACTS
The plaintiff alleged that he sustained
personal injuries when he was assaulted
by the defendant on 23 June 2001.
The plaintiff served the defendant with a
notice of claim pursuant to the Personal
Injuries Proceedings
Act 2002 (PIPA) on
Dunn
v
Lawrence
[2005] QSC 291
10 September 2002.
On 8 October 2002
the defendant’s then
Discretion to extend limitation
solicitors responded
period under s59 of PIPA
in accordance with
PIPA, identifying
a number of non-compliance issues and
stating that the defendant did not waive
compliance.
The plaintiff did not respond within
the stipulated period of 1 month and
the defendant took no further action
in relation to compliance.
On 18 December 2002, the plaintiff
forwarded information to the defendant
which addressed some of the points
of non-compliance, but not all of them.
On 23 June 2004 the limitation period
expired, however the parties agreed to
extend the expiry date to 22 February
2005, apparently because the plaintiff
changed solicitors.
On 1 April 2005 the defendant’s then
solicitors wrote to the plaintiff’s new
solicitors, asking for confirmation that
they were acting and for a response
to a doctor’s report.
On 6 April 2005 the plaintiff’s new
solicitors responded to those issues and
on 12 April 2005, they requested a further
extension of the limitation period to 1 August
2005. Having received no response, on
22 April 2005, they again wrote requesting
the further extension.
On 26 April 2005 the defendant’s then
solicitors advised that they no longer acted
for the defendant. On 29 April 2005, the
defendant’s present solicitors wrote to the
plaintiff advising that an extension of time
was not consented to and that an application
under s59 would be resisted.
On 27 May 2005 the plaintiff’s
solicitors sent further medical reports
to the defendant’s solicitors and said that
the s59 application would soon be served.
For reasons that were not explained, the
application was not filed until almost
3 months later.
THE ISSUES
The plaintiff applied to the court for
an extension of time pursuant to s59(2)
of PIPA. The court was required to consider
whether a complying part 1 notice of claim
had been issued before the end of the
limitation period.
THE DECISION
Justice McKenzie held that the application
must fail, because a complying part 1 notice
of claim had not been given before the
end of the limitation period. The delivery
of a compliant part 1 notice within the
limitation period was a pre-condition
to the application of s59(2).
Justice McKenzie said that there was no
evidence that the defendant had stated that
he was satisfied that part 1 of the notice had
been given as required, nor was there
156
evidence that the plaintiff had taken
reasonable action to remedy the
non-compliance.
The plaintiff argued that s13 of PIPA
applied so that, when additional information
had been provided by the plaintiff and the
defendant did not respond in a timely way
challenging compliance, a conclusive
presumption of compliance arose. Justice
McKenzie did not accept this argument
and said that the legislative intent was that
s13 would apply to the time prescribed
following the initial delivery of a part
1 notice of claim only.
According to Justice McKenzie,
had there been a basis for making
an order under s59, he would have
exercised his discretion in the plaintiff’s
favour. He said that he would have given
weight to the fact that the matter had been
progressed to some extent and that a
compulsory conference had been held.
Although there had been no adequate
explanation for the delay between the
expiration of the limitation period and the
bringing of the s59 application, he did not
consider that decisive in the context of the
overall delay of the action. There was no
evidence of any prejudice to the defendant
resulting from such delay.
However, Justice McKenzie did not have
discretion to make an order under s59
in this matter as the plaintiff had not satisfied
the pre-condition that a complying notice of
claim be delivered within the limitation period.
The application was dismissed with the
plaintiff to pay the defendant’s costs.
Queensland Supreme Court:
12 September 2005
Samantha Davey
157
THE FACTS
Mr Amos tripped and fell over a water
valve located on a footpath at Albion and
commenced proceedings against the
Brisbane City Council for damages for the
personal injuries sustained in the incident.
At first instance,
the court assessed
Amos
damages in the sum
v
of $3,000, but found
Brisbane City Council
in favour of Council
[2005] QCA 433
and dismissed the
Costs under PIPA—successful
claim. The Council’s
defendant
costs of the
proceeding were to be paid by Mr Amos.
Mr Amos applied to the District Court for
leave to appeal the decision at first instance.
The appeal was dismissed with the costs to
be paid by Mr Amos. Mr Amos applied to
the Court of Appeal for leave to appeal
the decision made by the District Court.
Mr Amos relied on s56 of the Personal
Injuries Proceedings Act 2002 (PIPA)
which read as follows:
“Costs in cases involving damages awards of
not more than $50 000
(1) This section applies if a court awards
$50,000 or less in damages in a
proceeding based on a claim, but
it does not apply
to the costs of an appellate proceeding.
(2) If the court awards $30,000 or less in
damages, the court must apply the
following principles:
(a) if the amount awarded is less than
the claimant’s mandatory final offer
but more than the respondent’s, or
the respondents’, mandatory final
offer, no costs are to be awarded;
(b) if the amount awarded is equal to,
or more than, the claimant’s mandatory
final offer, costs are to be awarded to
the claimant on an indemnity basis as
from the day on which the proceeding
started, but no award is to be made
for costs up to that date;
(c) if the amount awarded is equal to,
or less than, the respondent’s, or the
respondents’, mandatory final offer,
costs are to be awarded to the
respondent or respondents on a
standard basis as from the day on
which the proceedings started, but
no award is to be made for costs
up to that date.
(3) If the court awards more than $30 000
but not more than $50 000 in damages,
the court must apply the following
principles…”
Mr Amos alleged that the correct
interpretation of s56 of PIPA is that
there is no power to award costs where
the claim is under $30,000 and the plaintiff
is unsuccessful. Mr Amos alleged that s56 of
PIPA is a complete code for the making
of costs orders in proceedings based on
a claim where there is not an award of
damages exceeding $50,000.
THE DECISION
The Court of Appeal refused leave
to appeal and upheld the decision of the
District Court. The Court of Appeal held
that s56 of PIPA applies to circumstances
where a plaintiff commences proceedings
and succeeds. It does not apply where
the plaintiff is unsuccessful. Costs in that
situation follow the event and remain
within the discretion of the court.
The Court of Appeal stated that by
construing section 56 so that a wholly
158
successful defendant could not recover
its costs would not assist the ‘ongoing
affordability of insurance through appropriate
and sustainable awards of damages’,
that being one of the purposes of PIPA.
The Court of Appeal stated that there was
no error in the conclusion reached on costs
by either court. Further, the Court of Appeal
stated that leave to appeal was also refused
as the appeal was against an order (in
respect of a relatively small sum of money)
made in the exercise of a discretion in a trial
and unsuccessful appeal and ought in the
interests of finality in litigation be
discouraged.
Mr Amos’ application to the High Court for
special leave to appeal the Court of Appeal
decision was refused.
Queensland Court of Appeal:
25 November 2005
Melanie Niotakis
159
THE FACTS
On 21 August 2003, the claimant was
injured in the course of his employment.
He was moving a metal plate, which weighed
in excess of 100kg, by sliding the plate
along beams with
the assistance of
Cousins
another worker. The
v
plate slipped, causing
Mt Isa Mines Limited
the claimant to bear
[2006] QCA 261
its entire weight and
Whether the claimant had a
the applicant
reasonable excuse for delay in
providing his notice of claim
suffered injury
under PIPA
as a result.
The claimant received workers’ compensation
benefits in respect of his time away from
work, and his medical expenses were met.
The claimant returned to work on light duties
on 15 December 2003 and subsequently
ceased employment with that employer
in May 2004. He then commenced
employment with a different company which
required him to work in Papua New Guinea.
He worked for three out of every four weeks
in Papua New Guinea, returning to his home
in Townsville during his weeks leave.
On 11 August 2004, solicitors acting
on behalf of a former co-worker of the
claimant contacted the claimant to obtain
a witness statement. In the course of that
discussion, the solicitors offered to obtain
a copy of the claimant’s workers’
compensation file in order advise whether
he had any prospects in relation to a
common law claim against his employer.
The solicitors arranged an appointment
with the claimant in Townsville, however
the claimant was unable to attend due to
work commitments. On 1 December 2004,
the claimant discussed the matter with the
solicitors who advised him that he should
pursue a common law claim against the
employer, as well as against the respondent.
The claimant said that he would not return
from Papua New Guinea until just before
Christmas. The solicitors advised the claimant
that there were no urgent time limits and
that the claimant should get back to them
in the new year.
On 17 December 2004, the solicitors
forwarded a statement and a client retainer
agreement to the claimant. The claimant
returned these on 23 February 2005.
On 19 April 2005, the solicitors provided
the claimant with a part 1 notice of claim
addressed to the respondent for his
signature, along with a WorkCover notice
of claim in draft. The claimant returned
these documents on 9 May 2005 but had
not sworn the notice of claim. The claimant
said that he had not been told that it
had to be sworn.
In a letter dated 31 May 2005 the claimant
was informed by his solicitors that he needed
to swear the notice of claim, and he said that
he would attend to these matters on 3 June
2005. The solicitors followed him up on 29
July 2005 and were told that the claimant
had telephoned the solicitors and spoken
with secretarial staff on 3 occasions leaving
messages. The solicitors denied any record
of these conversations. On 4 August 2005
the solicitors provided the claimant with a
notice of claim for swearing and the
applicant swore it on 11 August 2005.
The notice of claim was served on the
respondent by letter dated 15 August 2005.
160
The respondent asserted that the claimant’s
notice did not comply with the Personal
Injuries Proceedings Act 2002 (PIPA)
because the claimant had not provided
a reasonable excuse for delay in
providing the notice.
case in which circumstances had changed
THE DECISION AT TRIAL
could hardly be regarded as helpful to him
such that the applicant realised he had
suffered a more serious disability than he
had previously thought. The claimant’s failure
to do anything prior to 2004 was a matter
of conscious choice and, the court said,
when considering whether a reasonable
The issue before the court was whether the
claimant had provided a reasonable excuse
for his delay in providing his notice of claim.
The court accepted that there had been
significant delays involved in the matter.
excuse exists.
The court concluded that the claimant had
not given a reasonable excuse for his delay
in giving a notice of claim to respondent.
The court further held that the evidence
While the court recognised that the
claimant’s employment required him to
be out of Australia for three weeks in every
four, the court said that the claimant’s regular
absences were not specifically linked to
the delays on the evidence. For example,
no explanation was advanced for the
significant delay between 17 December
2004 and 23 December 2005. The same
could be said about the delay between the
claimant receiving the solicitors’ letter on
12 August 2004 enclosing an authority
and the claimant’s return of that authority
on 18 October 2004.
did not support an exercise of the court’s
discretion in the applicant’s favour under
section 18 of PIPA. This provision allows
a court, on an application by a claimant,
to authorise the claimant to proceed further
with the claim despite non-compliance.
The court highlighted that the notice was
not given until almost two years after the
incident and was accordingly one year
and three months out of time. Although
no evidence of prejudice on the part of
the respondent was put before the court,
the court referred to the fact that the
claimant could not give the surname of
The court also said that there was no
the employee with whom he was working
explanation as to why matters could not
at the time, and noted that the application
have been attended to by facsimile or email.
arose out of the claimant’s employment
The court said that, in the normal progress
with another party.
of a matter, the use of such means of
communication could be considered
commonplace, even in circumstances
The court dismissed the application
with costs to be assessed.
where the claimant’s solicitors had
THE DECISION ON APPEAL
advised him that there were no
The claimant appealed to the Court of
urgent time constraints.
Appeal, and concurrently applied for leave
Further, the claimant’s failure to provide
to adduce further evidence pursuant to rule
a notice prior to 2004 when he first spoke
766 of the Uniform Civil Procedure Rules
to the solicitors should also be considered.
1999 (Qld). The further evidence was the
The court highlighted that this was not a
surname of the claimant’s co-worker, as the
161
fact that this was unknown at trial was
considered by the trial judge to be evidence
of potential prejudice to the respondent.
The Court of Appeal allowed this further
evidence, and, in light of this evidence,
considered that the claimant was entitled
to an exercise of the court’s discretion under
section 18 of PIPA. The Court of Appeal
highlighted that no prejudice had been
suffered by the respondent, a fact which was
conceded by the respondent. It considered
that, where the effect of denying a claimant
authority to proceed would potentially be to
deny him the opportunity to litigate his claim,
the balance weighs heavily in favour of
exercising the discretion in the claimant’s
favour, in particular in circumstances where
no prejudice could be shown.
The appeal was allowed and the claimant
was authorised to proceed. The claimant was
ordered to pay the respondent’s costs of the
original application, with the respondent to
pay the claimant’s costs from the date on
which the claimant provided the further
evidence.
Queensland Court of Appeal:
21 July 2006
Samantha Davey
162
THE FACTS
The plaintiffs purported to commence
representative proceedings in New South
Wales on behalf of persons in New South
Wales and
Hamilton
Queensland allegedly
v
injured through
Merck and Co Inc;
the ingestion of the
anti-inflammatory
Hutchinson
drug, Vioxx, which
v
Merck Sharp and Dohme was imported and
formulated by the
(Australia) Pty Ltd
defendant in the
[2006] NSWCA 55
first action, and
Application of PIPA to
manufactured in
Queensland claimants who
are part of representative actions the United States
commenced outside Queensland by the defendant
—whether PIPA is substantial
in the second action.
or procedural
The statements
of claim pleaded causes of action in
negligence and for breaches of sections
74D and 75AD of the Trade Practices Act
1974 (Cth) (the TPA).
The Queensland plaintiffs had not complied
with the notice of claim and compulsory
conference provisions of the Personal Injuries
Proceedings Act 2002 (Qld) (PIPA) before
being nominated as representative parties
in the proceedings. The defendants
contended that these provisions were
substantive, and therefore the claims of the
Queensland claimants were not enforceable
in New South Wales until they had been
complied with.
THE DECISION
An Associate Judge ordered that questions
concerning the effect of PIPA be determined
separately and that the proceedings be
removed to the New South Wales Court of
Appeal.
The primary question for the Court of Appeal
formulated by the Associate Judge was:
“In a claim commenced in the New South
Wales Supreme Court seeking remedies
in negligence and under the TPA for which
the lex loci delicti [the law of the place of the
wrong] is the law of Queensland, do the PIPA
provisions form part of the law which must
be applied by the New South Wales Court?”
The Court of Appeal held that because
the claims in negligence (a state law claim)
and under the TPA (a federal law claim)
rested upon “a common substratum of fact”,
it had federal jurisdiction to determine the
whole matter. Once it is established that
a court is exercising federal jurisdiction,
it is settled law that there is no room for
the exercise of a state law which, apart
from any operation of the Judiciary Act
1903, the state court would have had.
Two provisions of the Judiciary Act
therefore became important to determining
the Associate Judge’s question. Firstly, s79
of the Judiciary Act required the Court of
Appeal to apply the procedural law of that
state (and implicitly, that it not apply the
procedural law of another state). Conversely,
by force of s80 of the Judiciary Act and the
choice of law rule, the Court of Appeal was
required to apply the substantive law of
the lex loci delicti, which was Queensland.
The issue therefore turned on whether or not
the PIPA provisions identified were
substantive or procedural. The Court of
163
Appeal stated that matters that effect
the “existence, extent or enforceability
of the rights or duties of the parties to an
action” are matters of substance, whereas
rules that are “directed to governing or
regulating the mode or conduct of court
proceedings” are procedural.
Although s7(1) of PIPA states that its
provisions are substantive law, the Court
of Appeal held that this did not conclusively
determine the issue for courts outside
Queensland. The Court of Appeal held that
such “self-categorising legislative provisions”
have not proven to be effective
in a number of cases.
Accordingly, the court held that the PIPA
requirements identified by the defendants
were procedural in nature and accordingly,
the Queensland claimants were not required
to comply with them before their rights
were enforceable in New South Wales.
New South Wales Court of Appeal:
30 March 2006
Nathan Rehbock
In support of the submission that
the PIPA provisions identified effected
enforceability and, accordingly, constituted
a matter of substance, the defendants relied
on a body of Queensland case law which
had determined that proceedings instituted
without complying with the notice of claim
provisions are a nullity.
The Court of Appeal noted that doubts
had been expressed in the Queensland
Court of Appeal as to the authority relied
upon (although it had not been overruled).
The Court of Appeal also stated that
a different approach to analogous issues
had been taken in the New South Wales
Court. The court also placed considerable
reliance upon the wide discretion given
to courts to grant leave to proceed despite
non-compliance with the identified provisions
of PIPA. The court held that these wide
and general discretionary provisions to
grant leave supported the conclusion that
the requirements concern the “regulation
of the mode or conduct of court
proceedings” and not the “enforceability”
of the right to bring an action.
164
DAMAGES
THE FACTS
The plaintiff, Ms Willett, suffered severe
brain and other physical injuries as a result
of a motor vehicle accident in July 1979.
The accident was
Willett
caused by the
v
defendant’s
Futcher
negligence.
[2005] HCA 47
The plaintiff’s
Plaintiff suffered brain damage
claim against the
as a result of defendant’s
defendant settled
negligence—Administrator
at a mediation
appointed to manage financial
on the basis the
affairs—recoverability of
reasonable management fees
defendant pay the
where injured party unable to
plaintiff $3.85 million
manage financial affairs because
in compensation
of defendant’s negligence
plus trustee
administration and management charges.
The plaintiff was unable to manage her own
affairs. An application was made to a single
judge of the Supreme Court of Queensland
for approval of the settlement that had been
struck at the mediation. On 24 December
2002, Justice Byrne approved the
compromise of the plaintiff’s claim and
appointed Perpetual Trustees Queensland
(Perpetual) to administer the plaintiff’s
financial affairs. Justice Byrne also gave
directions for the subsequent determination
of “the sum by way of damages in respect
to reasonable management fees of the
administrator”. Submissions on the
determination of this sum were heard
by Justice White.
THE DECISION AT FIRST INSTANCE
At the hearing before Justice White,
evidence was led as to what fees would
be charged by both Perpetual ($876,506)
and the Public Trustee ($969,336) based
on the fund being reduced to a zero balance
when the plaintiff reached the end of her life
expectancy. The defendant disputed some of
the categories of charges that the plaintiff
sought. Justice White concluded that
$180,000 should be allowed as damages
for the reasonable management fees of
administering and managing the settlement
sum to be paid by the defendant to the
administrator on the plaintiff’s behalf.
That sum covered the “establishment fee”
and a “discretionary portfolio management
fee”. Justice White disallowed the other
categories of charges (being the advisory
portfolio management fee, fund management
fee, initial brokerage fee and ongoing
brokerage fee), on the basis that “the
purpose of investment advice and decision
making about investments which concerns
the present determination is to maximise
the return over and above the amount
of compensation awarded which already
has an investment strategy inherent in it”.
After an unsuccessful appeal to the
Queensland Court of Appeal to have the
management fees fixed at $876,506, the
plaintiff appealed to the High Court of
Australia.
THE DECISION IN THE HIGH COURT
The High Court unanimously allowed the
appeal. It held that the costs of managing the
damages awarded to a person incapable of
managing their own affairs should include
remuneration and expenditure properly
charged or incurred by the administrator
of the fund during the life of the fund.
167
The High Court stated that no distinction
of the kind made by Justice White between
investment advice and other services should
be drawn in assessing that amount.
The High Court ordered that the matter
be remitted to the Court of Appeal to
reassess the damages to be allowed.
High Court of Australia: 7 September 2005
Wes Lerch
168
THE FACTS
The plaintiff brought an action against
the defendants for negligently exposing
the plaintiff to asbestos and causing him
to contract mesothelioma. The matter was
initially heard in
CSR Limited
the Dust Diseases
v
Tribunal of New
Eddy
South Wales. The
[2005] HCA 64
defendants admitted
Whether damages are
liability.
recoverable where a personal
injury prevents a plaintiff from
THE DECISION
providing gratuitous personal
AT TRIAL
or domestic services to
another person
The trial judge,
the President
of the Dust Diseases Tribunal, ordered
that the defendants pay the plaintiff
$465,899.49 in damages.
The damages award included a component
which was described as Sullivan v Gordon
damages. These damages were awarded
as compensation for the plaintiff’s inability,
after the onset of mesothelioma, to continue
to provide domestic assistance to his
wife. The plaintiff’s wife suffered from
osteoarthritis and, prior to the onset of
his mesothelioma, the plaintiff had helped
with vacuuming, cleaning, gardening and
general maintenance.
At the time of the trial in 2003 the
plaintiff was aged 61 and it was agreed
that he was expected to die in 2004. The
plaintiff’s wife was aged 60. The plaintiff
was awarded Sullivan v Gordon damages
in the amount of $155,480 which was
calculated on the basis that the services
would have been rendered for another
20 years for 1.5 hours per day at a cost
of $25 per hour. A 20% discount was
applied for contingencies.
The defendants’ appeal to the New South
Wales Court of Appeal was dismissed. The
defendants appealed to the High Court.
THE DECISION IN THE HIGH COURT
The appeal to the High Court related
to the award of Sullivan v Gordon damages
and, in particular, whether that head of
damage was recoverable under Australian
common law. A previous decision of the
New South Wales Court of Appeal had
held that Sullivan v Gordon damages
were recoverable.
The High Court was called on to consider
the following:
• whether, where a personal injury
prevents a plaintiff from providing
gratuitous services to another person, the
damages recoverable by the plaintiff can
include an amount calculated by reference
to the commercial value of those services
• whether that head of damage would
be recoverable, in the case of injury leading
to death, for the “lost years”. In this case,
the lost years referred to the 19 years in
which the plaintiff’s services might have
been provided from the plaintiff’s actual
death up until the date he would be
expected to have lived had the tort
not been committed.
The High Court unanimously ordered
that the defendants’ appeal be allowed
and held that Sullivan v Gordon damages
are not recoverable in Australia.
Justice McHugh said that Sullivan v Gordon
was a decision inconsistent with established
principle. Further, it was distinguishable from
169
Griffiths v Kerkemeyer on the basis
that Griffiths v Kerkemeyer damages arise
as a direct result of the creation of a need
in the plaintiff for the provision of particular
services and, as such, the damages are
inherently limited. Conversely, no inherent
limit exists for Sullivan v Gordon damages
as they are not concerned with the injured
person’s needs but, rather, the needs
of a third party.
Justice McHugh went on to say that,
to the extent that the plaintiff took pleasure
in gardening and attending to the car,
he would be entitled to damages for
loss of amenities and enjoyment of life.
To the extent that he was prevented
from performing those tasks such that
he required the provision of services from
another person, this should fall within the
Griffiths v Kerkemeyer damages for which
he would be awarded the market rate.
High Court of Australia: 21 October 2005
Samantha Davey
170
THE FACTS
Two fishing vessels, Melina T and
Eternal Wind, collided off Noosa Heads
in Queensland. Fortuna Fishing, a company
that was controlled
Fortuna Seafoods Pty Ltd by the Rowley Family,
as trustee for the Rowley owned Melina T.
Family Trust
The Rowley Family
v
also controlled
The Ship “Eternal Wind” another company
[2005] QCA 405
called Fortuna
Claim for damages for
Seafoods. While
pure economic loss—related
Fortuna Fishing
companies—whether the
owned and operated
defendant owed a duty of care
fishing vessels,
to plaintiff—whether defendant
had means of knowing plaintiff
Fortuna Seafoods
member of an ascertainable
sold the fish caught
class of vulnerable persons
by Fortuna Fishing.
Fortuna Fishing and Fortuna Seafoods
were related companies with common
shareholdings and directorships. They
were conducted as one company with
two bank accounts. Proceeds from fishing
were fed into the Fortuna Fishing account.
On occasions, money would be transferred
between the two companies and both
accounts would be used to meet
expenditures depending largely on
where the funds were lying at the time.
Both Fortuna Fishing and Fortuna Seafoods
sued Eternal Wind for losses sustained as
a result of the collision. There was no dispute
that the collision was caused by Eternal
Wind’s negligence. The claim brought by
Fortuna Fishing was settled before trial.
Eternal Wind defended the claim brought
by Fortuna Seafoods. Although Eternal
Wind accepted that Fortuna Seafoods had
suffered economic loss, it denied that it was
liable for that loss and argued that it did not
owe Fortuna Seafoods a duty to protect it
from pure economic loss.
THE DECISION AT TRIAL
The trial judge held that in order to succeed
in its claim, Fortuna Seafoods would need to
show that:
• The harm suffered was reasonably
foreseeable
• The defendant had knowledge
(actual or imputed) that damaging
the Melinda T was likely to cause
economic loss to those who relied
directly upon her use
• This was not a case of indeterminate
liability
• The defendant knew or had the
means of knowing that Fortuna Seafoods
was a member of an ascertainable class
of vulnerable persons who were unable
to protect themselves from harm
• Imposition of the duty would not impair
the legitimate pursuit by the defendant
of its own commercial interests, and
• The damage suffered flowed
from the occurrence of activities
within the defendants’ control.
At trial judgment was given for Fortuna
Seafoods. The trial judge held that Eternal
Wind owed a duty of care to Fortuna
Seafoods.
In relation to whether External Wind
knew, or had the means of knowing,
that the plaintiff was part of an ascertainable
class of vulnerable persons unable to protect
themselves from harm, the trial judge held
that one would expect that it had the means
of knowing that commercial fishing ventures
in Australia may consist of a number of
171
companies in a group with related
through integrated company structures
shareholders and different functions
with owners and fishing vessels.
for the individual companies.
DECISION OF THE COURT OF APPEAL
The uncontradicted evidence at trial
was that vertically integrated commercial
operations, like those of Fortuna Australia
Incorporated, comprising Fortuna Fishing
as the entity catching the fish and Fortuna
Seafoods as the closely related entity
processing and marketing the fish, were
by 1997 common within the Australian
fishing industry. The Court of Appeal held
that it could reasonably be inferred from this
evidence that such information was within
the means of knowledge of the master
or owner of Eternal Wind.
According to the Court of Appeal,
it was clear from the uncontested evidence
given on behalf of Fortuna Seafoods that
Fortuna Seafoods was vulnerable if Eternal
Wind negligently damaged the Melinda T.
Fortuna Seafoods suffered economic loss
from its inability to process Melinda T’s catch.
As the company processing seafood it could
do little to realistically protect itself against
Eternal Wind’s negligent acts. Fortuna
Seafoods loss flowed directly from
activities within the control of the
master of Eternal Wind.
The Court of Appeal held that the
imposition of a duty of care on Eternal
Wind not to negligently cause economic
loss to Fortuna Seafoods by colliding with
and sinking the Melinda T did not impair
Eternal Wind’s pursuit of its autonomous
commercial interests. The group to which
Fortuna Seafoods belongs is a relatively
The Court of Appeal was concerned
to ensure that the decision in this case
did not lead to “spreading the ambit” of
claims for pure economic loss much wider
than has ever been contemplated. According
to the Court of Appeal, the feature that
distinguishes this case is that the catching
and selling of fish are necessarily related
activities for commercial fishing operations.
Without both there is no commercial activity.
In this case the fish were not sold from
Fortuna Fishing to Fortuna Seafoods so
that Fortuna Fishing had a direct interest
in what Fortuna Seafoods did as its agent.
The catching and sale of the fish had been
separated by using two related companies
for the particular purpose of avoiding the
marketing restrictions which prevented
Fortuna Fishing selling its specialist
product into export markets directly.
The Court of Appeal held that it was
open for the trial judge to conclude that
it was within the means of knowledge of
Eternal Wind that Fortuna Seafoods was
a part of an integrated group of related
companies which were likely to rely directly
on fishing and more particularly on the
Melinda T for their income.
Accordingly, the appeal was dismissed
and judgment in the amount of $163,256
in favour of Fortuna Seafoods was upheld.
Special leave to appeal to the High Court
was refused.
Queensland Court of Appeal:
4 November 2005
Gillian Sheppard
small and determinate class of fish
processors and marketers closely affiliated
172
HIGH COURT UPDATE
JUDGMENTS DELIVERED
Manley
v
Alexander
[2005] HCA 79
Paua Nominees Pty Ltd
v
Miller
[2005] HCA Trans 774
The plaintiff sustained severe injuries
when he was run over by a tow truck at
approximately 4am whilst lying in the middle
of a road after a night out. In issue was the
extent of the duty of care owed by the driver
of a motor vehicle to a person lying on
a public road at night, in the context of
competing dangers requiring the attention
of the driver.
The plaintiff was injured when working
on scaffolding which the plaintiff’s employer
had engaged a contracting company to erect
and supply. In issue before the High Court
was whether there was a duty of care as
between the injured plaintiff and the
scaffolding supplier company, akin
to an employer/employee duty of care
with respect to the provision of a safe
system of work.
The trial judge found that the driver was not
negligent and dismissed the plaintiff’s claim.
The plaintiff appealed successfully to the
Full Court of the Supreme Court of Western
Australia. The court held that the driver had
been negligent, to the extent of 70%, with
the plaintiff contributorily negligent to the
extent of 30%.
The High Court gave judgment on
14 December 2005. The majority found
that it was open to the Full Court to conclude
that the truck driver had failed to exercise
reasonable care. The High Court found
that the reasonable care that a driver must
exercise when driving a vehicle on the road
requires that the driver control the speed
and direction of the vehicle in such a way
that the driver may know what is happening
in the vicinity of the vehicle in time to take
reasonable steps to react to those events.
The minority agreed with the trial judge’s
finding that there was no negligence
because the driver was, at the time
of the accident, focusing his attention
on another potential peril.
175
The High Court heard the matter
on 28 September 2005. After hearing
the full argument on behalf of the scaffolding
company the High Court rescinded special
leave on the basis that the case required
reconsideration of settled principles and,
without expressing a view on the
appropriateness of such reconsideration,
this matter was not the occasion for such
reconsideration.
Travel Compensation Fund
v
Tambree (t/as R Tambree
& Associates) and Ors
[2005] HCA 69
This matter related to a claim against
accountants (the defendants) for misleading
and deceptive conduct in the preparation of
accounts, in breach of section 42 of the Fair
Trading Act 1987 (NSW). In issue was the
particular construction of sections of the Fair
Trading Act 1987 (NSW) (FTA) and matters
of causation at common law and under
the statute.
Under the Travel Agents Act 1986
(NSW) all travel agents are required to
be licensed and participate in the Travel
Compensation Fund (the fund). In or
about 1996 Ms Fry set up a travel agency.
In order to participate in the fund, financial
statements were prepared by the first
defendant and audited by the second
defendant. The trial judge found that these
statements were false and misleading.
in respect of claims for the period after
Ms Fry terminated her participation in the
fund as she was operating the business
illegally. The fund appealed this decision.
The High Court gave judgment on
16 November 2005, allowing the fund’s
appeal. The High Court considered that the
illegality of Ms Fry’s conduct did not take it
outside the scope of the risk against which
the fund attempted to provide protection.
Her conduct did not sever the causal link
between the defendants’ conduct and the
loss suffered by the fund, and the defendants
were therefore liable in respect of the
full amount paid out by the fund.
Ms Fry subsequently withdrew from
the fund, however, continued trading until
licensing inspectors closed the business.
The fund received numerous claims from
people who had dealt with Ms Fry’s travel
agency and paid out $143,050 to the
complainants. The fund sought recovery
of that amount.
The trial judge found that the fund had acted
reasonably in making these payments. The
trial judge found that the defendants had
contravened s42 of the FTA and awarded
damages to the fund of $143,050. The
defendants appealed this decision.
The New South Wales Court of Appeal
found that the defendants were not liable
176
Bankstown City Council
v
Alamdo Holdings Pty Limited
[2005] HCA 46
Alamdo was the owner of land upon
which industrial buildings were erected.
Council was the owner of all works of
stormwater drainage installed by Council.
Alamdo purchased the land having been
told of a recent incident involving the
flooding of the buildings. After the purchase
of the land the incidence of flooding
increased significantly. Proceedings
were commenced against Council.
Alamdo opposed the appeal on the basis
that s733 does not extend to injunctive
relief and that Council could only rely upon
s733 if it established that it acted in good
faith, within the meaning of the section,
in circumstances where Council had failed
to do so. The trial judge accepted both of
these submissions by Alamdo. The New
South Wales Court of Appeal accepted
the first but not the second.
At trial, it was held that the increased
The High Court gave judgment on
7 September 2005. The High Court held
that the phrase “incur any liability” as found
in s733 extends to liability for injunctive
relief. However, the High Court found in
favour of Council in relation to the issue
of good faith. The High Court re-stated that
the burden of proving that Council did not act
in good faith lies with the party alleging this
(Alamdo) and in the present circumstances,
there was no evidence to support this.
frequency of likely flooding diminished
the activity planned for the land and was
an unreasonable interference with the use
and the enjoyment of the land of the kind
against which the action for private nuisance
was directed. The court ordered an injunction
restraining Council from causing
or permitting storm water from inundating
the land so as to cause a nuisance and
Council was ordered carry out works
to abate the nuisance.
Council appealed to the New South
Wales Court of Appeal on the basis that
the grant of injunctive relief, involving
remedial measures at a cost of at least
$1.5 million, had provided a disproportionate
remedy in the circumstances of the case
and that the relief granted was too broad.
This appeal failed.
Council then appealed to the High Court
on the grounds that it is exempt from liability
by reason of s733 of the Local Government
Act 1993 (NSW) and that this provides
a complete answer to all of the relief
granted against it in this matter.
177
Council’s appeal to the High Court was
upheld.
Povey
v
Qantas Airways Limited
[2005] HCA 33
This matter related to a class action
brought in respect of deep vein thrombosis
(DVT) alleged to have been sustained as
a result of air travel. The High Court was
asked to consider the liability of air carriers
under the Warsaw Convention 1929. In
particular, whether the definition in Article
17 of “accident” can encompass an
alleged failure by airlines to warn
airline passengers of a risk of DVT.
The High Court gave judgment on
23 June 2005, dismissing the plaintiffs’
appeal with costs. The High Court held that
the airline’s failure to warn of the dangers of
DVT could not be described as an “accident”
within the meaning contemplated by Article
17. The majority held that an “accident”
under Article 17 must be an event as
opposed to the cause of an injury,
therefore a cause of action against
the airlines was not established.
The Waterways Authority v
Fitzgibbon; Mossman Municipal
Council
v
Fitzgibbon;
Middle Harbour Yacht Club
v
Fitzgibbon
[2005] HCA 57
The plaintiff was rendered a quadriplegic
as a result of striking his head on the sandy
bottom of shallow waters after diving from
a jetty. At trial there was a factual dispute
as to whether the plaintiff dived deliberately
from the jetty and this issue turned on
evidence provided by independent witnesses.
The trial judge found that the plaintiff had
deliberately jumped off the jetty based on
the evidence of the emergency registrar
who treated the plaintiff.
The New South Wales Court of Appeal
found that the trial judge had placed
too much weight on the evidence of the
emergency registrar and ordered a re-trial
on the basis of evidence in the plaintiff’s
favour that he lost his balance and fell
into the water.
In issue before the High Court was whether
the New South Wales Court of Appeal had
erred in reversing the decision of the trial
judge to dismiss the first defendant’s action
on a factual basis and whether the Court
of Appeal erred in sending the matter
back for re-trial on a limited basis.
On 5 October 2005 the High Court allowed
the defendants’ appeal and ordered a new
trial of the action generally. It was held that
whilst the New South Wales Court of Appeal
was correct to order a new trial it should
not have confined it to the limited basis.
178
CASES GRANTED SPECIAL LEAVE
Piper
v
The Nominal Defendant
(B4/2004)
Leichhardt Municipal Council
v
Montgomery
(S5/2006)
This matter was granted special leave
This matter was granted special leave
on 19 May 2006, on appeal from the New
South Wales Court of Appeal. This matter
related to a claim for personal injuries where
the plaintiff, a pedestrian, fell on a broken
Telstra pit which was covered by carpet.
Council, as a road authority, was found
liable on the basis that it breached a nondelegable duty of care owed to the plaintiff,
a pedestrian.
on 12 November 2004, on appeal from
the Queensland Court of Appeal. This
matter related to a claim made under the
Motor Accident Insurance Act 1994 (Qld)
for personal injuries sustained in a motor
vehicle accident on 16 April 2002. In issue
was whether there was a reasonable excuse
for the delay in giving the notice of claim
to the Nominal Defendant.
The plaintiff lodged a workers’
compensation claim on 23 May 2002
and was referred to an industrial advocate
by a family member. The plaintiff was not
aware that the advocate was not a solicitor.
The advocate and a barrister visited the
plaintiff on 17 April 2002 at which time the
advocate explained the WorkCover process.
The New South Wales Court of Appeal
upheld the decision and found that Council,
in carrying out road works, owed a nondelegable duty of care to members
of the public who might be injured by
the carelessness of a contractor. Council
sought and obtained special leave. The
matter has not yet been heard.
The possibility of a claim against the Nominal
Defendant was not raised until August 2002
when the barrister advised the plaintiff that
the limitation period had expired. The
plaintiff’s excuse for the delay centred
on the fact that he had believed that the
advocate was a solicitor in circumstances
where the advocate purported to act
for the plaintiff.
The trial judge found that the plaintiff
did not have a reasonable excuse for delay.
By majority, the Queensland Court of Appeal
subsequently dismissed the plaintiff’s appeal
and upheld the trial judge’s decision.
The plaintiff appealed this decision.
Despite special leave being granted,
no appeal has been filed and further leave
would be required for the matter to be heard.
179
High Court Update prepared by
Sam Kingston, Melanie Niotakis
and Joanna Burton