2014 - Barry.Nilsson. Lawyers - Barry.Nilsson. Lawyers 2010 - 2015/2014+Barry_Nilsson...Barry.Nilsson. Lawyers 2014 Casebook | 07 Contents < Back to Contents State and Local Authorities

Annual Insurance Law Review Casebook 2014

The casebook makes reference to all the major insurance related judgments throughout Australia (and in a few cases New Zealand) in the 2014 financial year. A hard working committee made up of Kim Nicolaidis, Stephanie Cook, Hannah Savins, Nick Robson, Sue Myers, Lisa Hulcombe and Adrian Lewis collated the cases which appear in the casebook. The case notes have been prepared by our ever expanding team of insurance solicitors, are hyperlinked to judgments and have been grouped under various subcategories for your ease of reference. We hope that the cases included in the casebook are a useful tool for you in examining policy issues as well as determining approaches to various claims.

In common with previous years, the liability of state and local authorities was frequently considered across all jurisdictions. These include the defence of claims by persons injured in a range of scenarios from the standard footpath trip and fall to a child being trapped in train doors (Fuller-Lyons v State of New South Wales [2013] NSWSC 1672). In Victoria, the State Government successfully defended a pure economic loss claim for breach of duty in failing to prevent the outbreak of disease in the local abalone farming industry (Regent Holdings v State of Victoria [2013] VSC 601). In Queensland, surprising many, the Court of Appeal upheld in State of Queensland v Kelly [2014] QCA 27 the Supreme Court judgment finding for a catastrophically injured plaintiff following him running down a sand dune at Fraser Island. The judgment resulted in Queensland national park legislation being changed.

The question of what constitutes a dangerous recreational activity and litigation in respect to the civil liability legislation generally continues to arise. In New South Wales it has been held that the flying of a light aircraft, even where the pilot is experienced and accompanied by a flying

instructor, is a dangerous recreational activity (Campbell v Hay [2013] NSWCA 129). In contrast, wake skating was found not to be a dangerous recreational activity because it is generally undertaken in deeper water and at slower speed than water skiing and wakeboarding (Hume v Patterson [2013] NSWSC 1203).

We have seen a spike in workplace claims and in particular those related to falls from ladders or scaffolding, and in relation to workplace bullying. In this space the High Court, with significant publicity, considered what activities fell within the course of employment when an employee is injured outside work hours but whilst on a business trip (Comcare v PVYW [2013] HCA 41). Otherwise a large number of cases consider apportionment of liability between principals, employers and contractors across a wide variety of industries.

Proportionate liability and causation have been frequently considered this year along with cases pertaining to insurance policy interpretation. There are 24 more cases of that type in this year’s casebook. Included is the well known Queensland Supreme Court case of LMT Surgical P/L v Allianz Australian Insurance Limited [2013] QSC 181 where the court considered the issue of whether backflow from a stormwater pipe connected to the Brisbane River constituted floodwater for policy purposes. New Zealand earthquake related judgments are frequent. The judgments included are from every Australian jurisdiction except South Australia and the Northern Territory. All have important implications for insurance practitioners. The meaning of the “professional services” exclusion was considered in 470 St Kilda Road Pty Ltd v Robinson [2013] FCA 1420; the ability of insureds to access costs inclusive insurance limits to fund defence and investigation costs of claims appeared in Chubb Insurance Company of Australia Limited

v Moore [2013] NSWCA 212 and the way in which indemnity and insurance clauses are to be interpreted in commercial contracts was reviewed in GIO General Limited v Centennial Newstan Pty Ltd [2014] NSWCA 13 and Pillinger v Lismore City Council [2014] NSWSC 447. In Queensland our own firm was successful in the Court of Appeal in Michail v Australian Alliance Insurance Company Ltd [2014] QCA 138 arguing that our client’s exposure to a claim should be reduced to $Nil under section 28(3) of the Insurance Contracts Act 1984 due to non-disclosure.

Apart from the long list of cases in our casebook the industry, of course, has taken huge strides with the Insurance Contracts Amendment Act making various and long awaited changes to the Insurance Contracts Act 1984, with many of those changes taking effect from 28 June 2014. We have seen changes to the privacy legislation and to the industry Code of Practice. The era of regulation remains alive and well and that is in a market that is soft. Regulatory change includes the introduction of new capital rules (Life and General Insurance Capital – LAGIC); the removal of risk of conflict in financial product sales with the future of financial advice legislation; new regulations for superannuation entities. This is all in an environment increasingly utilising technology and the use of data.

I hope you enjoy our casebook for 2014.

INTRODUCTIONWelcome to the Barry.Nilsson. Annual Insurance Law Review Case Book for 2014.

Now in our 51st year we are pleased to celebrate the continuing of our longstanding relationship with the insurance industry in Australia and overseas.

Barry.Nilsson. Lawyers 2014 Casebook | 02

Peter Murdoch, PartnerP: +61 7 3231 6369 [email protected]

PARTNERS

Rhett KennedyP: +61 7 3231 [email protected]

Peter MurdochP: +61 7 3231 [email protected]

John SharmanP: +61 7 3231 [email protected]

Robert SamutP: +61 7 3231 [email protected]

Richard LeahyP: +61 7 3231 [email protected]

Fiona SennettP: +61 7 3231 [email protected]

Nicholas AndrewP: +61 2 8651 [email protected]

ANNUAL INSURANCE LAW REVIEW COMMITTEE

Peter MurdochPartnerP: +61 7 3231 [email protected]

Stephanie CookSenior AssociateP: +61 7 3231 [email protected]

Adrian LewisSenior AssociateP: +61 7 3231 [email protected]

Sue MyersSenior AssociateP: +61 7 3231 [email protected]

Lisa HulcombeSenior AssociateP: +61 7 3231 [email protected]

Nick Robson Senior AssociateP: +61 7 3231 [email protected]

Hannah SavinsAssociateP: +61 7 3231 [email protected]

Kim NicolaidisPrecedent & Knowledge ManagerP: +61 7 3231 [email protected]


Melanie QuixleyP: +61 7 3231 [email protected]


PUBLIC LIABILITYCases considering the liability of State and local authorities, occupiers and the owners and operators of licensed premises

PRODUCT LIABILITYCases considering the liability of manufacturers, suppliers and vendors for loss associated with the use of a defective product

WORKERS’ COMPENSATIONCases considering the liability of employers for injuries to employees in the workplace

HEALTH LAWCases considering the principles of liability and procedural matters arising in the context of medical professionals and institutions

PROFESSIONAL NEGLIGENCECases concerning alleged breaches of duty or contractual obligations in the performance of professional work or provision of professional services

INSURANCE ISSUESCases considering insurance policy responses and the application of insurance legislation

MOTOR VEHICLESCases considering liability, quantum and legislation issues involving motor vehicles

PRIVILEGECases considering privilege, including legal professional privilege and privilege over loss adjusters’ reports

DAMAGESCases considering damages awarded for injury claims, economic losses and property damage

PROCEDURECases dealing with procedural matters such as the interpretation and application of legislation, costs and offers of settlement

MISCELLANEOUSCases concerning specific and/or discrete issues of relevance in an insurance context

LIST OF ABBREVIATIONS

CONTENTS

LIST OF ABBREVIATIONS

ACA Accident Compensation Act 1985 (VIC)

CA Corporations Act 2001 (CTH)

CCA Competition and Consumer Act 2010 (CTH)

CLA (NSW) Civil Liability Act 2002 (NSW)

CLA (QLD) Civil Liability Act 2003 (QLD)

CLA (SA) Civil Liability Act 1936 (SA)

CLA (TA) Civil Liability Act 2002 (TA)

CLA (WA) Civil Liability Act 2002 (WA)

CLWA Civil Law Wrongs Act 2002 (ACT)

ICA Insurance Contracts Act 1984 (CTH)

LAA Limitation of Actions Act 1974 (QLD)

LR (MP) Law Reform (Miscellaneous Provisions) Act 1946 (NSW)

MAIA Motor Accident Insurance Act 1994 (QLD)

MACA Motor Accident Compensation Act 1999 (NSW)

OHS Occupational Health and Safety Act 2001 (NSW)

PIPA Personal Injuries Proceedings Act 2002 (QLD)

TPA Trade Practices Act 1974 (CTH) now the Competition and Consumer Act 2010 (CTH)

WCA Workers’ Compensation Act 1987 (NSW)

WCA (ACT) Workers’ Compensation Act 1951 (ACT)

WHSA (QLD) Workplace Health and Safety Act (1995) (QLD)

WCRA Workers’ Compensation and Rehabilitation Act 2003 (QLD)

UCPR (QLD) Uniform Civil Procedure Rules 1999 (QLD)


PUBLIC LIABILITY


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State and Local Authorities

12 Shoalhaven City Council v Pender [2013] NSWCA 210Plaintiff injured in slip and fall on a ferry ramp during the course of his employment.

13 David Leonard Harris v Commissioner for Social Housing; Gregory Phillip Towney-Kilby v Commissioner for Social Housing; James Sullivan v Commissioner for Social Housing [2013] ACTSC 186Whether a landlord owes a duty to tenants to protect them from the disruptive behaviour of another tenant.

14 Simmons v Rockdale City Council [2013] NSWSC 1431Duty of care owed by Council to cyclist exiting from cycleway.

16 Streller v Albury City Council [2013] NSWCA 348Liability of Council for spinal injury to youth injured whilst performing a backflip into a river utilising a rope swing.

18 Botany Bay City Council v Latham [2013] NSWCA 363Liability of local Council for trip and fall on footpath due to uneven paver where no evidence of height discrepancy in pavers in area.

19 Regent Holdings v State of Victoria [2013] VSC 601Failure by servants of Crown to exercise statutory powers.

21 Collins v Clarence Valley Council (No 3) [2013] NSWSC 1682Local Council not liable for injuries sustained by cyclist in bridge accident.

22 Fuller-Lyons v State of New South Wales (No 3) [2013] NSWSC 1672Liability of the State of New South Wales for injuries sustained by an 8 year old boy after he became trapped in train doors.

24 Butler & Ors v The State of Queensland [2013] QSC 354Whether the State owed the plaintiffs a duty of care, which it had breached by granting mining licences for the extraction of minerals under their land.

PUBLIC LIABILITY


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25 State of Queensland v Kelly [2014] QCA 27Whether the risk of serious injury which materialised was an “obvious risk” and whether warning signs were adequate.

26 Holroyd City Council v Zaiter [2014] NSWCA 109Liability of Council for injuries sustained to 9 year old boy when he rode his bicycle into an unfenced drainage channel.

27 Cavric v Willoughby City Council [2014] NSWCA 147Whether a public car park owned by the defendant Council was a “ public road “ and entitled the Council to rely on defences under CLA (NSW).

28 Port Macquarie Hastings Council v Mooney [2014] NSWCA 156Whether the trial judge erred in identifying the relevant risk of harm to a pedestrian walking on a temporary footpath at night and the consequence of such error.

Sporting & Recreational Activities

29 Watson v Meyer [2013] NSWCA 243Personal injuries sustained during a horse riding incident when the appellant was struck by a stallion after the stallion broke free of its rider.

30 Hume v Patterson [2013] NSWSC 1203Whether defendant tow boat driver was in breach of duty to exercise reasonable care and whether wakeskating is dangerous recreational activity

31 Campbell v Hay [2014] NSWCA 129Liability of a flying instructor for injuries sustained by a trainee pilot and whether flying a light aircraft is a dangerous recreational activity.

Residential Premises

33 WB Jones Staircase & Handrail Pty Ltd v Richardson & Ors [2014] NSWCA 127Building contractors liable for defective installation of balustrade.

PUBLIC LIABILITY


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Occupiers’ Liability

35 Fitzsimmons v Coles Supermarkets Australia Pty Ltd [2013] NSWCA 273Liability of supermarket occupier for leaving wet floor unattended for several minutes until warning signs were in place.

36 Morton v Ivor Fritz Removals Pty Ltd & Ors [2013] QDC 293Liability of employer and occupier of premises for injury sustained by furniture removalist.

37 Simon v Condran [2013] NSWCA 388Whether the appellant’s presence on the respondent’s land when she was injured by the respondent’s dog was lawful.

39 Parkview Constructions Pty Ltd v Abrahim [2013] NSWCA 460A principal contractor, sub-contract scaffolder and employer were all found to have breached their respective duties of care to a painter working at a building site when he fell from scaffolding.

41 Brozinic v ISS Facility Services Australia Ltd [2014] ACTSC 8Liability of occupier of commercial building for failing to replace internal fire door with a fire door with a glass insert.

43 Ackland v Stewart, Vickery & Stewart [2014] ACTSC 18Whether the risk of catastrophic injury from performing backward somersault on jumping pillow was obvious.

44 Boral Bricks Pty Ltd v Cosmidis (No 2) [2014] NSWCA 139Injured worked found contributorily negligent for injuries sustained when struck by a forklift.

45 Marsh v Baxter [2014] WASC 187Claim for damages for pure economic loss against a neighbouring farmer in relation to swathing of genetically modified material.

47 Johnson & Anor v Hancock [2014] QCA 130Whether occupiers knew or ought to have known about the presence of a drainage easement on their property.

48 Parker v City of Bankstown RSL Community Club Ltd [2014] NSWSC 772Liability of a club for failing to illuminate or otherwise indicate the presence of a step.

PUBLIC LIABILITY


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PUBLIC LIABILITY

Educational Authorities

49 Oyston v St Patrick’s College (No 2) [2013] NSWCA 310Duty of care owed by a school to protect a student from bullying and harassment.

Licensed Premises

50 Day v The Ocean Beach Hotel Shellharbour Pty Ltd [2013] NSWCA 250Whether the occupier or licensee of a hotel is vicariously liable for the tortious conduct of security personnel not directly employed by them.

51 QBE v Orcher; Bowcliff v Orcher [2013] NSWCA 478Appeal by an operator of a licensed premises and its security provider against a finding of liability resulting from an assault by an employee of the licensed premises holder to a patron which occurred across the road from the licensed premises.

53 Smith v Croote Pty Ltd [2014] NSWCA 35 Consideration of the liability of a hotel proprietor and security company for injuries sustained in an assault on the appellant by a third party.

54 Howl at the Moon Broadbeach Pty Ltd v Lamble [2014] QCA 74Whether the appellant was vicariously liable for the conduct of its employee when the conduct was of the kind that the employee had been told to refrain from engaging in.

Other

56 AV8 AIR CHARTER PTY LIMITED v SYDNEY HELICOPTERS PTY LIMITED [2014] NSWCA 46Whether various factual findings of the Supreme Court supported a finding that the respondent was not negligent in flying a helicopter in deteriorating weather conditions.


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PUBLIC LIABILITY

58 Yeing v PG Boyle & AM Boyle [2014] WADC 54Farmer failed to take reasonable precautions when conducting prescribed burns on his properties, leading to the destruction of farming equipment on adjoining property.

59 McGlashan v QBE Insurance (Australia) Ltd (No 2) [2014] NSWSC 486Whether principal contractor liable for injury to independent contractor.

60 Waco Kwikform Ltd v Perigo and Workers Compensation Nominal Insurer [2014] NSWCA 140Whether principal contractor liable for injury to employee of independent contractor.


PUBLIC LIABILITY

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The Facts

Mr Pender (the respondent) sustained injuries on 9 April 2007 whilst working as a ferry master. Shoalhaven City Council (the appellant) was the owner of the ferry and occupier of the concrete ferry ramp. The appellant entered into an agreement with the respondent’s employer for management and operation of the ferry service.

The respondent alleges that he walked to the front of the ferry onto the ramp to check that there was sufficient clearance for the ferry at low tide. The respondent squatted to do so and alleges that when he stood up his right foot slid straight out from underneath him. The respondent alleged that the ramp was slippery due to a build-up of algae, mud and other debris.

The Decision at Trial

The trial judge accepted the evidence of the respondent and his lay witness that he fell on the ramp because it was slippery. The trial judge also found that the appellant was notified approximately every couple of months that the ramp was slippery but did not always take steps to rectify this in a timely manner. The trial judge found that the appellant was negligent for failing to have in place a proactive maintenance system to clean the ferry ramp.

Further, by way of obiter noting that the employer was not a party to the proceedings, the trial judge indicated that the employer would bear 25% contribution on the basis that it was aware the ramp was slippery and that the appellant did not always attend to it in a timely manner.

The Issues on Appeal

The appellant’s primary contentions on appeal were based on factual evidence that the respondent did not fall because the ramp was slippery, but because of the mechanics of his movement in standing up. The appellant also contended that whilst it owed the relevant duty of care to the respondent, it did not breach that duty of care as there was no evidence that a proactive maintenance system would have prevented the fall.

The Decision on Appeal

The Court of Appeal upheld the appellant’s contentions regarding factual findings, particularly how the fall occurred and whether it was the result of a slippery ramp or the way the respondent stood up. The Court of Appeal preferred the relevant expert evidence of the appellant in this regard over the opinions of the respondent’s lay witness. Further, the Court of Appeal did not consider that the respondent established that a failure to implement a periodic system of cleaning and inspection of the ramp was a necessary condition of the fall.

The Court of Appeal was also not willing to accept a broad inference that the respondent slipped on something that was slippery and would not have been slippery if cleaned.

Finally, the Court of Appeal considered that the employer’s contribution should have been higher at 50% on the basis of the various reports that it received regarding the condition of the ramp and its failure to take any positive action in this regard.

[2013] NSWCA 210Shoalhaven City Council v Pender

IN ISSUE

• Negligence, occupier’s liability, findings of fact

DELIVERED ON 10 July 2013

READ MORE click here

http://www.austlii.edu.au/au/cases/nsw/NSWCA/2013/210.html


PUBLIC LIABILITY


The Facts

Each of the 3 plaintiffs in the proceeding resided in public housing in ACT and had a residential tenancy agreement with the defendant, Commissioner for Social Housing. The plaintiffs alleged that during their tenancies, another tenant behaved in a violent and threatening manner and that the defendant was aware of this behaviour due to the many complaints made to it. The plaintiffs brought a claim in negligence against the defendant as well as alleging a breach of the terms of each of their respective residential tenancy agreements. While the plaintiffs’ claims were brought in 3 separate proceedings, the proceedings were heard together.

The Decision

The court noted that the pleadings did not articulate the existence of a duty of care, nor articulate the content of that duty of care. The existence and content of any duty of care was the key issue for consideration in the proceedings.

The court noted that there is a significant line of authority in the UK which clearly establishes that a landlord does not owe a tenant a duty of care to protect the tenant from the disruptive or violent actions of other tenants of the same landlord.

The court then went onto consider Australian authorities such as Modbury Triangle v Anzil (2000) 205 CLR 254 and ultimately concluded that in the present case, the fundamental relationship between the defendant and the plaintiffs was that of landlord

and tenant. That was a contractual relationship governed by the terms of the residential tenancy agreement between the parties.

The court then addressed the factors which might be argued to give rise to a duty of care. Although the plaintiffs had their vulnerabilities, they were not such as to put them in a category recognised as one of the “special relationships”. As to the factor of control, whilst there was a degree of control arising out of the fact that the subject tenant was a tenant of the defendant, it was not such as to justify the imposition of a duty of care. In relation to the factor of assumption of responsibility, the defendant did not assume any responsibility other than that which arose in relation to the physical state of the premises. Finally, in terms of reliance, this was not considered a matter of such magnitude or complexity that the individual tenants could not take adequate steps for their own protection.

After consideration of the UK and Australian authorities, the court determined that the defendant did not owe the plaintiffs a duty of care to protect them from the disruptive behaviour of the tenant. As a consequence, it owed them no duty of care to terminate the lease or seek to obtain a termination and possession order for the premises. The court noted that had a duty been established, it would have found no breach because the steps taken by the defendant to deal with the complaints made were reasonable in the circumstances.

The claim for breach of contract failed because the plaintiffs did not establish that the defendant either permitted the nuisance, authorised the nuisance or adopted the nuisance.


[2013] ACTSC 186

David Leonard Harris v Commissioner for Social Housing; Gregory Phillip Towney-Kilby v Commissioner for Social Housing; James Sullivan v Commissioner for Social Housing

IN ISSUE

• Public authority landlord – existence of a duty of care to tenants regarding the anti-social behaviour of a fellow tenant;

• Breach of tenancy agreement concerning anti-social behaviour of fellow tenant

DELIVERED ON 9 September 2013


http://www.austlii.edu.au/au/cases/act/ACTSC/2013/186.html


PUBLIC LIABILITY



The Facts

The plaintiff, an experienced competitive cyclist, was on an early morning training ride on 11 April 2007. At about 6.15am, while he was riding his bicycle through a car park adjacent to the St George Sailing Club (the Club), a route he had cycled hundreds of times before, he struck a boom gate that had been closed across a motor vehicle entrance to the car park. The Council had constructed the boom gate and other structures in 2004 to restrict car park access to prevent “hooning” at night. The plaintiff’s left lower leg took the full force of the impact with the boom gate and ultimately had to be amputated.

The plaintiff commenced proceedings against the Council and the Club alleging that they breached the duty of care owed to him as a regular user of the cycleway to ensure that the boom gate was opened by 5.00am every day to prevent the foreseeable risk of serious injury if a cyclist hit the closed boom. The Council argued that the accident occurred because the plaintiff was not keeping a proper lookout and that the system of operation of the boom gate (which gave the Club the discretion when to open and close it) was reasonable and practical. The Council also argued it was not liable because the accident was the result of an obvious risk of the dangerous recreational activity of cycling. The Club disputed that the Council had delegated it the power to open and close the boom gate and therefore disputed that it owed the plaintiff a duty of care.

The Decision

The court accepted the evidence that the cycle route followed by the plaintiff was a recognised high traffic cycle route for many years prior to 2004 and remained so after the boom gate was installed that year. As a result, the Council was required to implement a safe and effective system for the operation of the boom gate.

The court noted that the Council constructed the boom gate and was the entity which retained control over it and its operation. The Council had a duty to regular users of the area, including cyclists, to take reasonably practical steps to ensure that the boom gate once constructed would not operate as or become a hazard or a trap to cyclists. This duty arose from a number of circumstances including that it was well known that the area was used on a daily basis by a high number of sporting and competitive cyclists and that the Council was aware of other accidents involving cyclists colliding with the boom gate when it was not opened by 6am. The court held that the Council’s failure to take action to protect cyclists (by putting in place a system that ensured the gate would be opened by a specified time each day [for example by engaging a contractor as the Council already did in a number of other locations]; by taking steps, as it did after the accident, to make the boom gate more visible [the plaintiff’s evidence was that the plain white boom gate blended with the white markings on the road]; and by providing a safe alternative exit to the next

part of the cycleway), amounted to failures to exercise reasonable care to avoid a foreseeable risk of injury.

The court rejected the Council’s argument that the boom gate was an “obvious risk” on the basis of the plaintiff’s evidence and expert evidence that its structural configuration, its placement at an oblique angle and the lack of notice or warning of it being closed, made it a “perceptual trap” and not an obvious risk.

[2013] NSWSC 1431Simmons v Rockdale City Council

IN ISSUE

• Whether the Council was in breach of duty for failing to implement a formal arrangement for opening the boom gate and for failing to investigate and act upon perception problems identified by earlier accidents

• Whether the accident was the materialisation of the obvious risk of a dangerous recreational activity

• Contributory negligence



http://www.austlii.edu.au/au/cases/nsw/NSWSC/2013/1431.html


PUBLIC LIABILITY



The Council argued that cycling through boom gates against “no entry” signs and against directional arrows on the road, carried a significant risk of physical harm and was therefore a dangerous recreational activity for which it was not liable. This argument was rejected because the evidence established that the plaintiff was travelling at a reasonable speed and was keeping a proper lookout; there was no evidence of any risk from any vehicular traffic and the “no exit” sign and the road arrows were directed at motor vehicle traffic not cyclists.

The court rejected the Council’s defences based on allocation of resources of a public authority and special statutory powers and found the Council liable for the plaintiff’s injuries.

The plaintiff’s claim against the Club failed. The court determined that while the Club was subject to a duty of care, the scope of that duty was limited because of the lack of precise instructions on the opening hours of the boom gate; the lack of any formal, contractual relationship between it and the Council and because the Council retained control and authority over the boom gate and its operation. These factors also indicated that there was no breach of duty by the Club.

The court rejected the Council’s submission that contributory negligence should be assessed at 100%. The court found that the Council’s omissions and failure to take reasonable care were the dominant cause of the plaintiff’s accident. However, the plaintiff’s failure to brake in time to reduce the force of the impact was nevertheless a departure from the applicable standard but at the low end of the range. Liability was apportioned 80% to the Council and 20% to the plaintiff.

[2013] NSWSC 1431Simmons v Rockdale City Council

READ MORE click hereclick here



PUBLIC LIABILITY



The Facts

On 26 January 2008, the appellant attempted a back flip using a rope attached to a tree branch overhanging the Murray River into an area known as Oddies Creek Park on the outskirts of Albury City. Immediately downstream of Oddies Creek Park is an area known as Noreuil Park foreshore, where the respondent (Council) had organised Australia Day events on that same day.

The appellant’s attempt to complete the back flip was unsuccessful, and his head struck the sandy bottom of the river and he was rendered a C7 quadriplegic. At the time of the incident the plaintiff was 16, and an accomplished competitive diver. The Council had not arranged for any activities to take place in the Oddies Creek Park area where the appellant’s incident occurred.

The appellant alleged that the Council breached its duty to exercise reasonable care in failing to remove the rope swing, failing to properly supervise the rope swing having not removed it, failing to ensure that the water near the rope swing was sufficiently deep, and failing to warn that it was dangerous to dive into the water or to use the rope swing. It was also alleged that the Council was negligent in representing implicitly that it was safe for the appellant and others to use the rope swing for the purposes of jumping or diving into the water.


The court held that the Council did not owe the appellant a duty of care of the nature alleged. The court determined that a reasonable person in the Council’s position would not have taken any of the precautions the appellant argued should have been taken. The court rejected the argument that the Council impliedly represented that it was safe to use the rope or jump into the river. The court held that there was no duty to warn of the danger of using the rope swing because the risks of doing so were obvious. The court held that the appellant’s injury was the result of the materialisation of an obvious risk of a dangerous recreational activity for which, as a result of s 5L CLA (NSW) , the Council was not liable.


There were 23 grounds of appeal which fell into 3 broad categories. The first was a challenge to the trial judge’s rejection of the argument that the scope of the Council’s duty extended to taking steps to guard against the risk of injury from the swing. The second was a challenge to the finding that there was no representation that it was safe to use the swing. The third ground of appeal was a challenge to the finding that the Council was not in breach of duty by failing to remove the rope swing or to prevent its use. The appellant also challenged the finding that s 5L CLA (NSW) applied to provide a defence to the claim.


The appeal was dismissed with costs.

The Court of Appeal found no fault in the trial judge’s assessment of whether the Council was in breach of duty in failing to remove the rope swing or supervise its use. It was noted that the evidence established that a qualified climbing arborist was required to safely remove the rope from the tree and because no evidence was called to suggest that such an expert was available in the limited time available before the relevant weekend, the trial judge was correct to hold that the Council was not in breach for its failure to remove the swing.

[2013] NSWCA 348Streller v Albury City Council

IN ISSUE

• Whether the public authority owed a duty of care, and whether that duty was breached by the authority’s failure to remove a rope swing

• Whether the risk was obvious

• Whether the plaintiff was engaging in a dangerous recreational activity

DELIVERED ON 23 October 2013




PUBLIC LIABILITY



Similarly, no fault was found with the trial judge’s assessment that, adopting the balancing exercise required by s 5B CLA (NSW), a reasonable local authority would not have taken the precaution of placing a security guard at the tree.

The Court of Appeal also rejected the argument that the Council impliedly represented that it was safe to use the swing because there was no evidence of any conduct on the part of the Council which indicated to members of the public that the Council had placed the rope there or knew of its existence or that it had encouraged its use.

In any event, the Court of Appeal found that s 5L CLA (NSW) provided a complete defence to the claim on the basis that the injury was the result of the materialisation of an obvious risk of a dangerous recreational activity. The appellant argued that the risk was not obvious because he had dived and jumped into the river on many occasions previously; he was an accomplished diver; he had observed other people become submerged after jumping in that area of the river; other boys had jumped or dived without injury and he completed 3 feet first jumps without touching the river bed before the injury occurred. The Court of Appeal held that these matters were not helpful when assessing the risks from jumping in a different area, by a different person (of different height and weight), from a different position. The Court of Appeal determined that, from the appellant’s perspective, the critical matter was that the use of the rope swing increased the possible area in which the appellant could land in the river as compared with someone jumping from a fixed point in

the tree. In addition, the water was muddy and it was not possible to judge its depth. The appellant had not checked the depth of the water beforehand by wading into it and there were people standing at various points in the river which indicated that the water depth varied due to sand bars and mud banks. The circumstances did not exclude the risk of the appellant landing in an area where others observed by him had not landed and therefore did not exclude the possibility that he would land in shallow water. Also, the circumstances did not exclude the possibility that, because of the appellant’s height, weight, and his method of entry into the water, he might land deeper in the river than anyone else who had previously jumped without injury in the same part of the river. The Court of Appeal held that these matters would have been clearly apparent to a person in the appellant’s position exercising ordinary common sense.

The Court of Appeal agreed with the trial judge’s finding that the activity of jumping from a rope swing was “dangerous” because the risk of injury was more than trivial and the consequences were potentially serious and catastrophic.

Therefore, the trial judge correctly concluded that s 5L CLA (NSW) applied, affording Council a defence to the appellant’s claim.

[2013] NSWCA 348Streller v Albury City Council





PUBLIC LIABILITYState and Local Authorities

The Facts

The respondent fell whilst walking on a paved footpath with her partner. At intervals there were trees in the footpath around which brick pavers had been laid. At the time of the incident it was 4pm and daylight. The respondent was wearing closed in flat shoes. She sustained a broken wrist, injuries to her ribs and teeth as well as bruising to her face.

Although there were some irregular pavers due to heave caused by tree roots on the side of the footpath that her husband had been walking on, neither the respondent nor her husband could identify a specific paver or area of paving which caused her to fall.


The trial judge found for the respondent on the basis of the knowledge of the appellant (the Council) on a general level that there were problems with the footpath in the street in question due to tree roots. She found that the provision of a safe, functional footpath is a principal responsibility of a Council which required it to take precautions, such as regular inspections of the area in question.


The Council argued that since the trial judge did not make a finding about where and on what the respondent tripped nor on any height differential between contiguous pavers, she could not determine whether the risk was significant; the probability of its

occurrence; the likely seriousness of the harm or the burden of dealing with any such irregularity having regard to the Council’s obligations and resources.

The issue was whether the trial judge had failed to apply s 5B CLA (NSW). A further issue was whether the trial judge erred in finding that the Council could not rely on the nonfeasance immunity for road authorities in s 45 CLA (NSW).


The Court of Appeal held that the trial judge erred in imposing liability on the Council where the evidence did not permit her to make a finding about the extent of the unevenness said to have caused the fall. The trial judge was required to make a finding on where the respondent fell and what had caused her fall but she failed to do so.

The trial judge was obliged by s 5B (1)(c) CLA (NSW) to determine whether a reasonable person in the position of the Council would have implemented a system of regular inspection. It was also necessary to determine whether, having implemented such a system, the Council would have taken any action to reduce the unevenness. The trial judge having failed to make these determinations, it was necessary for the Court of Appeal to apply s 5B(1)(c) CLA (NSW) itself.

The Court of Appeal unanimously held that even if an inspection of the footpath had been carried out, there was nothing in the state of the footpath that would have caused or required the Council to take any action.

The Court of Appeal then went on to examine what the phrase “actual knowledge of the particular risk” in s 45 CLA (NSW) (which provides a limited immunity for road authorities) required. It held that the knowledge required is actual knowledge of the particular risk posed by the unevenness or irregularity of the very paver that caused her to trip and fall. It was not sufficient for the Council to know of the more general risk that the respondent might trip and fall on an area of irregular pavers. As there was no evidence that the Council had such knowledge, it was not liable for the respondent’s injuries.

[2013] NSWCA 363Botany Bay City Council v Latham

IN ISSUE

• Whether the Council was required to take precautions to avoid trip and fall on footpath

• Whether the Council had actual knowledge of the risk of injury within the meaning of s 45 CLA (NSW)






[2013] VSC 601Regent Holdings v State of Victoria


The Facts

In and about May 2006, abalone and abalone habitats along the western and central parts of the Victorian coast contracted an infectious herpes-like virus. The virus caused a disease, Abalone Viral Ganglioneuritis (“the disease”). As a result of the contraction of the disease, abalone in affected habitats died or otherwise became unavailable for commercial harvesting by the commercial abalone industry.

The plaintiff claimed damages for loss of income suffered by it by reason of the diminished availability of wild abalone for commercial harvesting, and the loss of value of its Abalone Fishery Access Licence (“AFAL”). The plaintiff brought the proceeding on its own behalf and on behalf of individuals and companies who are or were, in May 2006, involved in the commercial abalone industry and/or connected with it, and who had been affected by the outbreak of the disease.

The plaintiff alleged that the outbreak of the disease was caused by various breaches of duty committed by the Minister for Agriculture (“the Minister”), the Secretary (“the Secretary”) to the Department of Primary Industries (“the DPI”), the Chief Veterinary Officer of the State of Victoria (Dr Millar) and the Executive Director, Fisheries Victoria (Dr Appleford). The plaintiff’s case was that the State tortfeasors (the Minister, the Secretary, Dr Millar and Dr Appleford) owed the plaintiff a duty of care because they knew of the risk of harm to specific individuals, they had power (pursuant to various provisions of the Fisheries Act 1995 and the Livestock Diseases Control Act 1994) to take particular steps to eliminate that risk but failed to do so.

The plaintiff sued the first defendant (the State of Victoria) on the basis that it was vicariously liable for the actions of the Minister, the Secretary, Dr Millar and Dr Appleford. The plaintiff also sued Southern Ocean Mariculture Pty Ltd ( “SOM”- the second defendant), contending that the outbreak and spread of the virus and the disease were caused by negligence in the operation of a farm from which it conducted an abalone aquaculture business, and from which farm the virus and the disease were alleged to have spread. However, the plaintiff and the second defendant settled the claim between themselves on terms approved by the court.

The State denied that the State tortfeasors owed the duties of care alleged by the plaintiff. It submitted that each of the statutory powers the plaintiff alleged ought to have been exercised by one or more of the State tortfeasors was quasi legislative in that each of the powers alleged by the plaintiff create an offence with the consequence that the exercise of each of the statutory powers could not be compelled or constrained by a common law duty of care. Specifically, the State denied any duty to exercise a power of persuasion on SOM to take precautionary steps, on the basis that the practical content of any such duty would be elusive and therefore the duty did not exist. The State also argued that there could be no duty of care in the circumstances because there would be conflicting duties imposed on the State tortfeasors. In addition to denying the existence of a duty of care, the State denied any breach of duty and also denied that the plaintiff’s losses were caused by any breach of duty.

The Decision

The court held that the State tortfeasors did not owe the plaintiff a duty of care to protect it from economic losses caused by an escape of the virus or disease from the SOM farm. The factors which persuaded the court to find no duty was owed included the conflicting duties that would be owed to the owners and operators of the SOM farm (and other such

IN ISSUE

• Whether the State owed a duty to exercise certain statutory powers in relation to the spread of an infectious disease at an abalone farm

• Whether the actions taken by the State were unreasonable and in breach of duty

• Whether the exercise of reasonable care would have prevented the spread of the disease

DELIVERED ON 7 November 2013


PUBLIC LIABILITY

http://www.austlii.edu.au/au/cases/vic/VSC/2013/601.html




farmers/businesses) on the one hand, and the duties that might be owed to those involved in catching, storing and processing of wild abalone (such as the plaintiff), on the other hand. In addition, the class of people to whom the plaintiff’s alleged duty of care might be owed was, in the court’s view, indeterminate. Further, the quasi-legislative nature of the statutory powers (orders made pursuant to such powers would have the force of law) told against the existence of a duty of care.

The court did not accept the plaintiff’s argument that the State exercised a degree of control in relation to taking steps to eradicating disease sufficient to create a duty of care. The court determined that it was the farmers who could (without conflicting responsibilities) take steps to control and prevent the spread of the virus. Although the court accepted that the plaintiff was vulnerable in the sense that it could not take steps to prevent the virus spreading in to the wild, this was not a sufficient consideration upon which to base the duty of care argued for by the plaintiff.

Although it was not necessary to do so, the court considered whether the State tortfeasors were in breach of duty and found that they were not. The plaintiff also failed to establish causation because it was impossible to identify exactly how and when the disease passed from the SOM farm into the wild.

The claim was dismissed.

[2013] VSC 601Regent Holdings v State of Victoria

State and Local AuthoritiesPUBLIC LIABILITY



PUBLIC LIABILITY



The Facts

Dr Collins (the plaintiff) was riding her bicycle on a bridge made up of wooden planks, along the Orara Way in Lanitza, New South Wales. The plaintiff rode her bicycle at an angle across the bridge to avoid getting her wheels stuck in between the planks. However, the front wheel of the plaintiff’s bicycle became stuck in a gap between the planks, causing her to fall over the guardrails on the side of the bridge and sustain personal injury.

Clarence Valley Council (the Council) had the care, control and management of the Orara Way. The plaintiff alleged that the accident was caused by the Council’s negligence. The plaintiff contended that the bridge was in a poor state of repair and that the Council either knew or ought to have known that the bridge was unsafe for cyclists. Further, she maintained that steps were required to be taken by the Council to eliminate or minimise the risk posed to cyclists by the bridge. Such steps included repairs to the bridge or erecting a warning sign.

The Council sought to rely on a number of provisions of the CLA (NSW) to resist the plaintiff’s claim.

The Decision

The court found that the relevant risk of harm was the risk of injury to a cyclist if their wheels became stuck between the gaps in the bridge’s wooden planks. This risk was found to be foreseeable and not insignificant. However, the court held this risk

to be an obvious one to a reasonable person in the plaintiff’s position and therefore the Council did not have a duty to warn the plaintiff of that risk by installing a warning sign at the bridge.

Further, the court found that the Council was not liable for failing to repair or inspect the bridge as it was not demonstrated that the Council had actual knowledge of the particular risk, the materialisation of which resulted in harm to the plaintiff. This was a defence available to the Council as a roads authority under s 45 CLA (NSW). The court also held that given the Council’s limited resources and its other responsibilities (including in respect of similar wooden bridges), a reasonable person in the position of the Council would not have taken the precaution of repairing the bridge. This was a further defence afforded to the Council by section 42 CLA (NSW).

The court rejected the Council’s contention that the plaintiff was engaged in a dangerous recreational activity and that therefore it had no liability to her. It also held that the plaintiff did not contribute to the accident by her own negligent conduct. However, in light of the court’s other findings, the proceedings were dismissed.

It was noted by the court that the Council’s success in defending the claim may appear counter-intuitive. The bridge was in a poor state of repair and the plaintiff responded in a reasonable manner to the risk that she perceived was posed by the bridge. Despite this, the Council was able to avoid liability primarily because it

was ignorant to the risk posed and due to the limits on its own resources. However, the protections afforded by the CLA (NSW) reflect policy decisions that were made by the Parliament when it enacted the relevant provisions. It was not for the court to assess whether those policy choices reflect a sensible approach.

[2013] NSWSC 1682Collins v Clarence Valley Council (No 3)

IN ISSUE

• Whether the local Council owed the plaintiff a duty to warn of the risk of injury

• Whether the local Council is liable for failing to inspect or repair a timber bridge, which was in a state of disrepair





PUBLIC LIABILITY


The Facts

On 29 January 2001, 8 year old Corey Fuller-Lyons (the plaintiff) sustained serious injuries after becoming trapped in a train door and then falling from the moving carriage of the train.

The plaintiff could not recall the circumstances surrounding the incident. He therefore relied upon the court drawing inferences in order to make out his case of negligence against the defendant, the State of New South Wales, being the operator of the rail network upon which the plaintiff was travelling.

The plaintiff asserted that the court should find that he had become accidentally trapped in the doors of the train when they closed upon departure from the Morisset station. He alleged that the defendant was negligent for failing to commission an item of technology known as a traction interlock that the train was already fitted with and which, if operational, would have prevented the train from departing the station while its doors were impeded from closing. It was further submitted that the defendant was liable for its employee’s failure to observe that the doors to the carriage had not closed and parts of the plaintiff’s body were protruding from it.

The defendant asserted that the plaintiff and his brothers, with whom he was travelling, had deliberately interfered with the doors. In those circumstances the defendant maintained that it did not owe the plaintiff a duty of care, or alternatively that it did not breach its duty. It otherwise asserted that, in the event liability was established against it, there ought to be a finding of contributory negligence.

The Decision

The court did not accept that the defendant’s failure to commission the traction interlock system constituted a breach of its duty of care. The court found that it was reasonable for the defendant to delay the commissioning of the system due to the staging of the Olympic games in September and October 2000. That finding was significant because the evidence suggested that it took 6 to 12 months to commission the system. However, the plaintiff’s incident occurred 4 months after the conclusion of the Olympics. The court was not satisfied that the traction interlock system would have been operational by the time of the incident.

The nature of the train doors were such that, once they were closed they could not be opened until unlocked by the train driver. Given that the plaintiff fell from the train it followed that he must have become trapped within the doors as they closed prior to the train leaving the Morisset station.

The court rejected the assertion that the plaintiff’s brothers had any involvement in the incident but was unable to determine whether the plaintiff had become unwittingly trapped between the doors, whether he had attempted to interfere with the doors and then become trapped or whether he intended to be caught in the doors with a view to attempting to prise them open while the train was between stations.

The court found that the defendant owed a duty to exercise due care for the safety of passengers like the plaintiff. The scope of the duty was to take reasonable precautions against dangers likely to arise out of the

ordinary use of the train which might be reasonably expected. That included taking precautions against the relevant risk, being the danger of passengers becoming trapped in train doors.

The only realistic way that the plaintiff would have been capable of falling from the train after becoming stuck in the doors was if he forced them open while the train was moving. Given the force required to open the door, the only way the plaintiff could have done so was if his back was against one door and he was able to use his hands to push the other door. That being the case the court found that the doors must have closed on the plaintiff at the Morisset station such that part

[2013] NSWSC 1672Fuller-Lyons v State of New South Wales (No 3)


IN ISSUE

• Whether the defendant breached its duty of care to the plaintiff who became trapped in a door and then fell from a moving carriage of the train;

• Whether the plaintiff, an eight year old boy was guilty of contributory negligence





PUBLIC LIABILITY


of the plaintiff’s torso as well as one arm and one leg must have been protruding from the train. It followed from that finding that the customer service attendant, who was responsible for ensuring that the train doors were closed prior to signalling the driver that it was safe to leave the station, failed to exercise reasonable care and ought to have observed the plaintiff trapped in the door.

The precaution of making a proper observation was one that a reasonable person in the position of the defendant would have taken. The burden of taking the precaution was not great. To the contrary, it was exactly what the defendant was required to do in order to address the specific contingency that arose in this case, being that the door failed to close because of interference by an object or person. If the precaution had been taken then the customer service attendant would not have signalled the driver that it was safe to depart the station. As such, breach of duty and causation were established and a finding of liability was made against the defendant.

The defendant failed to discharge the onus of demonstrating any contributory negligence on the part of the plaintiff. There were a range of circumstances which could have led to the plaintiff becoming trapped in the doors. In the absence of a finding regarding how that occurred, the court was not prepared to infer that the injury arose from the plaintiff’s contributory negligence. That was particularly so when bearing in mind that the assessment of contributory negligence needed to be made from the plaintiff’s position, being an eight year old unsupervised child with little or no experience riding on trains.

[2013] NSWSC 1672Fuller-Lyons v State of New South Wales (No 3)





PUBLIC LIABILITY



The Facts

On 26 April 2008, a subsidence event occurred in Collingwood Park, a residential suburb east of Ipswich. Coal mining was undertaken below the site between 1967 and 1974 pursuant to lease CML568 granted by the defendant. It was common ground that the 2008 subsidence event was caused by the collapse of pillars in the disused coal mines.

The 18 plaintiffs owned 20 properties in Collingwood Park at the date of the 2008 subsidence event. The plaintiffs alleged that the defendant owed the plaintiffs a duty of care which it had breached by granting the mining lease for the extraction of minerals under their land, failing to supervise and monitor the mining under the land, failing to warn of the on-going risk of subsidence and failing to undertake remediation work.

The defendant submitted that it did not owe the plaintiffs a duty of care to take precautions against the risk of harm of subsidence damage to the surface land. It submitted that it did not exercise sufficient control over the risk of harm as it did not perform the mining work itself. It further submitted that each of the plaintiffs lacked the requisite vulnerability because there were steps they could have taken to protect themselves against the risk of harm, such as undertaking enquiries and searches as to the existence of underground mining and obtaining geotechnical reports as to the stability of the land and the adequacy of the construction of structures on the land.

The Decision

The court held that the defendant owed the plaintiffs a duty of care to take precautions against the risk of harm of subsidence damage to the surface land. The control exercised by the defendant was substantial – the defendant could impose conditions as to extraction ratios and pillar size and shape, which were known to impact on pillar stability. Further, the defendant’s inspector had an obligation to inspect the mine at least monthly, and the inspector had power to stop mining in the event of non-compliance with such conditions. Those inspectors were expressly aware of the risk of subsidence to the surface land in the event of non-compliance with conditions as to the size of pillars and the extraction ratios.

The court found that the results of any searches performed by the plaintiffs would have merely confirmed the existence of underground mining and, perhaps, the conditions imposed on CML568. Nothing in those searches would have revealed whether the conditions imposed on the grant of CML568 had been properly monitored, inspected and enforced in accordance with the statutory regime.

The court found that the defendant had breached its duty of care by failing to properly and adequately supervise and monitor the mining work such that those conditions imposed were not observed in the area of mine underlying the 2008 subsidence event.

However, the court found that the only properties that suffered a diminution in value as a consequence of the 2008 subsidence event were the 6 properties immediately adjacent to that area. The 5 plaintiffs who owned those 6 properties were entitled to judgment in an amount calculated by reference to evidence given by the defendant’s expert valuer, Mr John Gillespie. Given that the damage was a diminution in the value of property still owned by the plaintiffs, the court declined to award interest. The claims of the remaining plaintiffs were dismissed, with costs to follow the event.

[2013] QSC 354Butler & Ors v The State of Queensland

IN ISSUE

• Whether the defendant owed the plaintiffs a duty of care which it had breached by granting the mining lease for the extraction of minerals under their land, failing to supervise and monitor the mining under the land, failing to warn of the on-going risk of subsidence and failing to undertake remediation work

DELIVERED ON 19 December 2013


http://archive.sclqld.org.au/qjudgment/2013/QSC13-354.pdf


PUBLIC LIABILITY


The Facts

The plaintiff was a 22 year old Irish tourist. On 27 September 2007 he became a partial tetraplegic after running down a sand dune and falling into the waters of Lake Wabby on Fraser Island.

It was undisputed that Lake Wabby was under the management of the State of Queensland (the defendant) and the trial was limited to the issue of its liability.

The plaintiff and his friends visited Lake Wabby with a licensed commercial operator after having watched a video prepared by the Queensland National Parks and Wildlife Service warning of certain dangers on the island, including the danger of diving into shallow water. Commercial operators licensed to take patrons onto the island were required to show this video to visitors as a condition of their licence. No reference was made to the dangers of running down steep sand dunes.

The plaintiff asserted that the defendant was in breach of duty of care in a number of ways including by failing to change the wording of the warning sign to include a prohibition on running down the dunes in to the lake and listing the numbers of people previously rendered paraplegic and quadriplegic as a result of doing so.


The court found that the plaintiff tripped as he ran down the dune and fell into the lake. The court found that the risk of catastrophic injury was not an obvious one, but rather a trap.

The court held that the existing signs were inadequate to convey the real danger of injury at the lake although it did reduce the plaintiff’s damages by 15% to account for contributory negligence.


The defendant alleged that the court at first instance had erred in finding that the risk of injury was not an obvious risk and that it had made an insufficient reduction for contributory negligence.


The Court of Appeal unanimously agreed that the appeal should be dismissed.

The Court of Appeal held that whilst the presence of warning signs was a factor to be taken into account when determining the obviousness of a particular risk, in all of the circumstances the warning signs did not sufficiently convey the risk that the action of running down the dunes and jumping into the lake posed. It approved the finding at first instance that the signs merely advised of the two separate risks of running down the dunes and the risk of diving or jumping into the lake.

The Court of Appeal upheld the trial judge’s finding of 15% contributory negligence.

[2014] QCA 27State of Queensland v Kelly


IN ISSUE

• Whether the risk of serious spinal injury from running down a steep sand dune and jumping into a lake was an obvious one within the meaning of s13 of the Civil Liability Act 2003 (Qld)

• Scope of duty to warn

DELIVERED ON 25 February 2014


http://www.austlii.edu.au/au/cases/qld/QCA/2014/27.html


PUBLIC LIABILITY


The Facts

On 16 March 2008 the 9 year old respondent was riding his bicycle along a cycleway at the Holyroyd Sports Ground (the Sports Ground). There was a grassed slope leading down from the cycleway to a concrete channel owned by the appellant. The channel was 2 metres high and had vertical sides. It was not possible to see the channel from the cycleway. The respondent turned off the cycleway and rode down the slope. He fell over the edge into the channel and sustained a serious brain injury.

In 1988 the appellant had approved a request from AGL for the channelization of the creek on the condition that, inter alia, a 1.8m high wire mesh fence was installed along the full length of the channel on the north west side (the side from which the respondent fell). AGL accepted the conditions but the fence was not built.

On 4 October 2007 the Holroyd Sports Ground Local Park Committee (the Park Committee) wrote to the appellant raising concern about the fall hazard created by the channel. The appellant had not acted on the letter at the time of the respondent’s incident. In 2009, unaware of the respondent’s incident, the appellant installed fencing along the channel at a cost of $20,000.


The trial judge found that the injury was foreseeable, not insignificant and that it would not be imposing an unreasonable burden on the appellant if it were required to erect similar fences in similar situations.

The trial judge rejected the appellant’s submission that the incident occurred as a result of the materialisation of an obvious risk of a dangerous recreational activity on the basis that a reasonable 9 year old in the position of the respondent would not have appreciated the extent of the slope or that there was a 2metre drop onto the concrete base of the channel. Therefore, it was not an obvious risk to a reasonable person in the position of the respondent; and because the mere riding of a bike on a grassy slope is not, objectively speaking, a dangerous recreational activity.

The court found the appellant was negligent in not erecting a fence but also found the respondent contributed to his damage by 10% by not wearing a helmet.


The Court of Appeal was asked to consider whether the trial judge erred in finding there was a foreseeable risk of injury and that the risk was other than “not insignificant” within the meaning of s5B CLA (NSW); and whether he erred in not finding the respondent was engaged in a dangerous recreational activity.


The Court of Appeal held that the thrust of evidence, including the conditions imposed on AGL and the letter from the Park Committee, gave rise to anawareness on the part of the appellant of the existence of a real risk of injury to children unless something was done about fencing the channel. Further, it was difficult for the appellant to argue the

risk of a child falling into the channel was ‘far-fetched or fanciful’ when it was taking steps, albeit slowly, to alleviate the risk.

The Court of Appeal upheld the decision of the trial judge that riding a bike down a grass slope is not a dangerous recreational activity – nor is performing this activity without wearing a helmet. Further, the materialisation of the obvious risk depends upon the risk being obvious to a reasonable person. Here, the standard of reasonableness was that to be expected of a 9 year old boy. The Court of Appeal accepted that the respondent would not have seen the channel until he was half way down the slope. Finally, the Court of Appeal noted the risk which eventuated in the present case was not a fall off a bike but rather, a fall of 2 metres into an unfenced concrete channel.

The appeal was dismissed.

[2014] NSWCA 109


Holroyd City Council v Zaiter

IN ISSUE

• Whether the respondent child was engaged in a ‘dangerous recreational activity’ at the time of the incident

DELIVERED ON 8 April 2014


http://www.caselaw.nsw.gov.au/action/PJUDG?jgmtid=170705


PUBLIC LIABILITY



The Facts

On 6 June 2011 the plaintiff was pushing a shopping trolley full of groceries through a public car park (owned by the defendant) adjacent to the Northbridge Plaza. The trolley was so full the plaintiff could not see over the top of it. The plaintiff was accompanied by her 2 year old daughter (sitting in the trolley) and her 4 year old son (walking beside the trolley). As the plaintiff negotiated a section of the car park with a downward gradient the trolley fell and landed on the plaintiff and her daughter.

She alleged that the injuries she sustained were caused by the defendant’s negligence. The defendant denied liability and argued that it was a road authority and therefore entitled to the defence afforded by s 45 CLA (NSW).

The Decision

The court found there was a small pothole in the surface of the car park and the incident was caused by the front wheels of the trolley going into the hole, becoming jammed and causing the trolley to fall over.

The defendant argued it was a ‘road authority’ as referred to in s 45 CLA (NSW) and therefore relied on that section in defence of the claim. The plaintiff argued the defendant was not a ‘road authority’ as the subject car park was not a public road. In response, the defendant relied on s 249(1) of the Roads Act 1993 (NSW) which states the absence of a dedication as a public road did not necessarily mean the car park was not a public road.

The court held the requirements of s 249(1) of the Roads Act 1993 were met (the area formed part of a thoroughfare, was in the nature of a road and was used by the public) and therefore, the car park was a ‘public road’. The defendant’s reliance on s 45 CLA (NSW) was therefore triggered.

The plaintiff argued the defendant was not entitled to rely on s 45 CLA (NSW) because at the time of the incident the defendant had actual knowledge of the pothole through various visits by Council employees to the area, complaints from members of the public and previous work done in the car park.

The defendant argued that the plaintiff needed to prove knowledge on the part of an employee of the defendant who could have done something about the problem and also that the knowledge had to be of the actual pothole that caused the plaintiff’s accident.

The court held there was no evidence to support a conclusion about the age of the pothole and therefore, no basis on which a conclusion could be made on how long the pothole had existed prior to the incident. The court could not say that a Council officer on any particular day would have seen the pot hole in the condition it was in on the day of the incident. Therefore, the court could not conclude the defendant had had actual knowledge of the risk.

In summary, the court found the car park was a public road, the defendant was a road authority entitled to the protection of s 45 CLA (NSW) and the plaintiff failed to show the defendant had actual knowledge of the risk. The plaintiff’s case therefore failed and judgment was entered for the defendant.

[2014] NSWCA 147Cavric v Willoughby City Council

IN ISSUE

• Pedestrian accident in a car park

• Definition of a “public road”

DELIVERED ON 7 May 2014




PUBLIC LIABILITY


The Facts

At around sunset on 22 November 2008, the 69 year old respondent and her husband set out to walk home from their local supermarket. The couple’s journey led them along a 1.2km gravel footpath which had recently been completed by the appellant, as a temporary measure, pending construction of a new bike/footpath.

There was no artificial lighting installed along the footpath and shortly after the respondent and her husband commenced their journey home, it became very dark.

One particular area of the footpath consisted of a sharp deviation which allowed safe passage across a stormwater drain. It was around the location of the deviation where the respondent unwittingly left the footpath before slipping and falling into the stormwater drain which resulted in serious personal injury.


The trial judge identified the relevant risk of harm to be the risk of a pedestrian unintentionally veering off the footpath at the point of the deviation and falling into the stormwater drain.

The trial judge found that the risk was foreseeable and not insignificant and that there would have been minimal expense incurred by the appellant in providing either barriers or temporary lighting to warn pedestrians of the deviation. For this reason the appellant was found liable with no contributory negligence on the part of the respondent. Damages in the amount of $122,168.66 were awarded to the respondent.


The primary issue considered by the Court of Appeal was whether the trial judge had erred in identifying the relevant risk of harm created by the appellant when it completed the temporary footpath.


The Court of Appeal determined that the respondent had unwittingly left the footpath (around the location of the deviation) and shuffled a considerable distance (approximately 5-15 metres) before she slipped and fell into the stormwater drain. Based on this finding, the Court of Appeal rejected the trial judge’s formulation of the relevant risk and found instead that the risk to be assessed was the risk that, in complete darkness, a pedestrian could fall and sustain injury by encountering an unexpected hazard either on the footpath itself or by unwittingly deviating from the footpath and encountering an unseen hazard.

The Court of Appeal found that the risk of a pedestrian attempting to traverse a footpath in complete darkness without the aid of artificial light was foreseeable and not insignificant. The critical question therefore was whether a reasonable person in the position of the appellant would have taken precautions against the newly identified risk.

The Court of Appeal found that a significant portion of the footpath was susceptible to falling into complete darkness and that any precaution taken by the appellant would need to have been implemented along that entire stretch of footpath.

Based on the temporary nature of the footpath and the extent of the work required by the appellant to eliminate or ameliorate the identified risk, the Court of Appeal ruled that there was insufficient evidence to support a finding that a reasonable person in the position of the appellant would have taken precautions against the risk.

The appeal was allowed.

[2014] NSWCA 156Port Macquarie Hastings Council v Mooney


IN ISSUE

• Whether trial judge correctly identified the relevant risk to be managed by the public authority





PUBLIC LIABILITY



The Facts

Ms Watson (the appellant) and Mr Meyer (the respondent), who were then in a de facto relationship, were riding their respective horses together on the appellant’s property on 5 October 2009 when the respondent’s horse (Wrangler) attacked the appellant whilst she was riding her horse (Freckles), causing her to suffer serious injuries. The incident occurred when the horses were close to a paddock in which there was a mare owned by the appellant (Aletist), who was in season at the time. Wrangler, a stallion, became difficult to control when approaching the paddock and after throwing the respondent to the ground, charged towards the paddock and in the course of doing so, attacked the appellant.

The appellant alleged that her injuries, loss and damage were caused by the negligence of the respondent. The allegations of negligence centred on the respondent’s status as a horse expert, the fact that he had been informed that Wrangler was “a bit fresh” and that he had instructed the appellant not to let Wrangler get past after Wrangler threw him to the ground.


The trial judge found that the appellant knew on the date of the incident that Aletist was in season but did not tell the respondent.

The trial judge found that none of the allegations of breach were established and that even if they were, the accident would have happened regardless of the instruction given by the respondent, such that his

actions were not causative of the incident. Further, though not pleaded, the trial judge found that the respondent could rely on a statutory defence of obvious risk. The trial judge made obiter findings regarding contributory negligence and quantum.


The contentions on appeal had numerous bases, including the trial judge’s finding that the appellant did not inform the respondent that Aletist was in season, the level of the respondent’s expertise with horses, findings as to the prior disposition of Wrangler and the finding as to causation regarding the instruction provided by the respondent. The appellant also took issue with the findings regarding contributory negligence and the availability of a statutory defence that was not pleaded.


The Court of Appeal upheld a large component of the appeal and ordered that the matter be remitted to the District Court for re-hearing.

The Court of Appeal disagreed with the trial judge’s factual findings with respect to the conversations between the appellant and respondent regarding the fact Aletist was in season and inconsistencies in the factual conclusions by the trial judge were noted by the Court of Appeal. The Court of Appeal did not accept the appellant’s grounds of appeal based on her level of experience with horses and the prior disposition of Wrangler.

The Court of Appeal also found that the respondent, as the more experienced person in relation to horses, had a duty not to give an instruction (i.e. to block Wrangler’s path) that was likely to put the appellant at an increased risk of danger.

The Court of Appeal also upheld the appellant’s contention that the respondent could not rely on a statutory defence (obvious risk) that was not pleaded.

[2013] NSWCA 243Watson v Meyer

IN ISSUE

• Negligence, duty of care, breach, causation, voluntary assumption of risk and the application of the Civil Liability Act (NSW)

DELIVERED ON 2 August 2013




PUBLIC LIABILITY


The Facts

On 18 November 2007, the plaintiff was wakeboarding with 2 male friends on the Tweed River in northern New South Wales. The plaintiff had prior experience wakeboarding and he was towed upstream (in a southerly direction) on a wakeboard, getting up and coming off “a few times”. The plaintiff then switched to a wakeskate, which he had never used before.

The plaintiff fell 3 times on the wakeskate. The first fall occurred “almost straight away” and the second after approximately 50 metres. On the third occasion the plaintiff fell and sustained injury leading to C6 tetraplegia.

The plaintiff brought claims for negligence against the driver of the boat that was towing him (Timothy Patterson) and the owner of the boat.

The plaintiff alleged that the driver of the boat was negligent in driving the boat outside the navigation channel (the channel), which resulted in the plaintiff striking his head on a sandbar when he fell. The claim against the owner of the boat was discontinued prior to the hearing.

The Decision

The court accepted that the depth of the water in the channel was significantly deeper than outside the channel. Ultimately the court was satisfied that the fall occurred whilst the plaintiff was wakeskating over or close to a sandbar west of the channel in water that was approximately 1.1 metres deep. While the plaintiff was unsure whether he hit the bottom of the channel when he fell, it was not accepted that the plaintiff struck his head on an unseen submerged object or that he drifted from the deep water of the channel to the area of the sandbar after the incident.

There was no question that the defendant owed the plaintiff a duty to exercise reasonable care for the plaintiff’s safety. The court found that the risk of harm did not materialise from the activity itself ie. wakeskating, but rather from conducting the activity in shallow water. It was held that a reasonable recreational boat driver should have driven the boat wholly within the marked channel and the defendant’s failure to do so was negligent. Had the defendant remained within the channel, the plaintiff’s injury would not have occurred.

Despite the fact that the defendant had attempted to rely on section 5L CLA (NSW) with respect to obvious risk of a dangerous recreational activity in its defence, it was not put to the plaintiff during his evidence that wakeskating in deep water was a dangerous recreational activity.

After considering the evidence and other relevant decisions, the court ultimately found that the defendant had not proven wakeskating to be a dangerous recreational activity as it was generally undertaken in relatively deep water at a slower speed than wakeboarding, water skiing and ski-racing and there was a remote risk of serious injury in those circumstances.

Judgment was entered for the plaintiff with damages to be assessed.

[2013] NSWSC 1203Hume v Patterson


IN ISSUE

• Whether defendant tow boat driver breached duty of care during wake skating activity

• Whether wake skating is a dangerous recreational activity





PUBLIC LIABILITY


The Facts

The appellant sued the respondent for injuries sustained when a single engine light recreational aircraft, in which he was receiving flying lessons from the respondent, had to make a forced landing in a paddock in the Hartley Valley near Katoomba because of engine failure.

Two sets of engine vibrations were experienced during the flight. The first set of engine vibrations resolved themselves. The engine failed following the second set of engine vibrations.

The appellant claimed damages against the respondent for negligence. He alleged that the respondent was negligent in failing to abort the flight as soon as any engine vibrations appeared; in attempting to land the aircraft at an excessive speed; and in flying over rough terrain with no suitable landing sites.

The respondent defended the claim on the basis that the appellant’s injuries resulted from the materialisation of an obvious risk of a dangerous recreational activity pursuant to s5L CLA (NSW).


The trial judge found that the respondent failed to exercise reasonable care for the appellant’s safety by not flying towards an appropriate landing strip immediately after the second set of vibrations started and also by continuing to fly towards Katoomba by relying on some misplaced sense that luck or fate would look after him. Although it was not specifically addressed by the trial judge, a finding of causation was implicit.

Nevertheless the respondent was not held liable in negligence by reason of the operation of section 5L CLA (NSW). The trial judge was satisfied that the harm suffered by the appellant was a result of the materialisation of an obvious risk of a dangerous recreational activity.


The appellant appealed the findings that he was engaged in a dangerous recreational activity and that his injuries materialised from an obvious risk of that activity.

The appellant contended that flying the aircraft was not a recreational activity that was dangerous in the circumstances, particularly when bearing in mind the activity was taking place in the presence of an instructor with the respondent’s experience.

The respondent filed a notice of contention in relation to the trial judge’s findings of breach of duty and causation.


Each of the issues were resolved in favour of the respondent and the appeal was dismissed.

Upon reviewing the evidence, the Court of Appeal held that the trial judge erred in finding that there was a breach of duty because there was no explanation by the experts as to why the respondent ought to have behaved differently in response to the second set of engine vibrations after the first set of vibrations had resolved satisfactorily. That was significant because the experts were not critical of the respondent’s conduct following the first set of vibrations and because engine

vibrations, which resolved themselves, were not an uncommon experience in light aircrafts.

The Court of Appeal held that a fair reading of the respondent’s evidence did not support a conclusion that he had relied upon luck or fate in continuing to fly the aircraft following the second set of vibrations. The respondent took a number of steps to respond to the situation including taking control of the aircraft approximately 1 minute after the second set of vibrations had started to worsen, placing a mayday call, attempting to restart the engine after it failed, looking for suitable terrain to land and then effecting a forced landing. It was not unreasonable

[2014] NSWCA 129Campbell v Hay


IN ISSUE

• Whether the respondent breached his duty of care by failing to fly a light aircraft towards a landing strip after a second set of engine vibrations;

• Whether causation was established;

• Whether the appellant was engaged in a dangerous recreational activity





PUBLIC LIABILITY


for the respondent to wait a short time before taking that action given that the vibrations were of a kind commonly experienced.

Furthermore, the evidence did not establish that the respondent would have been able to land the aircraft safely, without injury to the appellant, had it been diverted at an earlier point than the commencement of the second vibrations. The Court of Appeal was therefore not satisfied that causation was established even in the event that there was a breach of duty on the part of the respondent by failing to take control of the aircraft earlier.

The Court of Appeal upheld the trial judge’s finding in relation to the appellant being engaged in a dangerous recreational activity. In so finding the Court of Appeal noted that the experience of the respondent did not reduce the risk of physical harm arising from a forced landing due to engine failure.

[2014] NSWCA 129Campbell v Hay





PUBLIC LIABILITY



The Facts

The first respondent, Peter Richardson (Richardson), contracted Mirvac Constructions Pty Ltd (Mirvac) to build a 2 storey house. Mirvac engaged WB Jones Staircase & Handrail Pty Ltd (WB) to manufacture and install a staircase, including a balustrade, on the first floor of the house. WB manufactured the balustrade and contracted JMKG Pty Ltd (JMKG) to install it. The balustrade was installed on 24 February 1999.

Richardson injured his back on 29 October 2006 when the metal in-fills and timber base plate of the balustrade gave way under his foot, causing him to fall. He sued Mirvac in negligence and contract and WB and JMKG in negligence.

It was agreed between the parties that Mirvac designed and specified the balustrade and the arrangement between Mirvac, WB and JMKG was one that had been in place over many years without incident or complaint. However, Mirvac was not aware that JMKG was installing the stairs and balustrade. WB did not attend the house at any time during installation and did not inspect JMKG’s work.

There was general agreement by the experts that the nails used by JMKG to affix the timber base plates were not of sufficient length or gauge. Further, it used a nail gun rather than a hammer to install the nails and some of the nails were driven into a gap, resulting in a reduced level of tension. The gap was between gyprock sheeting and the end bearers and was caused by the floor sheeting overhanging the bearer. The expert evidence was that if tradesmen were nailing

by hand, they could tell when there was no resistance without seeing the gap, but an operator of a gun-driven nail would have no idea.


Richardson was successful in his claims against Mirvac, WB and JMKG in negligence but failed in his contract claim. He was awarded damages of $826,891 reduced to $750,000 due to the jurisdiction limit of the District Court. Liability was apportioned 30% to Mirvac, 30% to WB and 40% to JMKG.

The trial judge found that the balustrade was a structural component and had to conform to AS 1720.1. The effect of part of the standard was that the use of gun driven nails should have put the installer and anyone else with responsibility for the stability of the joint on notice that there was a considerably increased risk of failure in the joint.

The trial judge held that Mirvac should have detected the poor craftsmanship in the laying of the floor. The laying of the floor and fixing of the balustrade should have been inspected before concealment to make sure they were to an appropriate standard and contained no defects or errors. Mirvac should have ensured compliance with relevant codes and standards by either certification or referencing itself. It could have seen that the fixture was made by gun-driven nails by inspecting it.

The trial judge also held that WB breached its duty of care in allowing the balustrade to be fixed by gun-driven nails. WB’s wrong understanding regarding the

joints and the applicability of the code meant that in fact it failed to retain a competent contractor.


WB and Mirvac appealed against the trial judge’s finding that they had been negligent and that their share of responsibility for the incident was 30% each.

[2014] NSWCA 127WB Jones Staircase & Handrail Pty Ltd v Richardson & Ors

IN ISSUE

• Whether a principal contractor and manufacturer of a balustrade were responsible for the negligent installation of the balustrade by a subcontractor

• Apportionment of liability for the negligent installation of the balustrade





PUBLIC LIABILITY




The Court of Appeal considered that the duty of care owed by Mirvac to Richardson was a duty to take reasonable care to avoid foreseeable risk of injury in the construction of the subject house. It also thought it reasonable that the contractual obligations of Mirvac (to ensure that the house was built in accordance with relevant legislation, standards and codes) inform the scope and content of that duty. It accordingly held that Mirvac, as the builder with a representative on site most days who was not only co-ordinating the trades but seeking to ensure that it satisfied its contractual obligations, had as part of its duty of care, an obligation to exercise reasonable care in inspecting the work carried out by the contractors.

The Court of Appeal held that the exercise of reasonable care when inspecting the work of contractors does not require the builder to closely supervise and otherwise control the work of a specialist contractor. However, it does encompass the inspection and detection of defects there to be seen by an appropriately qualified builder. While generally a designer/builder such as Mirvac should not be expected to be aware of every standard which is applicable to the construction of a project home, the standard here was important and fundamental in the construction of a house where substantial quantities of timber were used. For Mirvac to have exercised reasonable care in carrying out inspections to detect and remedy defects, it should have done so with an awareness of the standard. If it had, it would have been obvious that the nails had been inserted by a nail gun

rather than by hand. Even if an inspection was not possible, a simple inquiry as to whether a nail gun had been used would be sufficient.

The Court of Appeal observed that the duty of care owed by WB was to take reasonable care to avoid foreseeable risks of harm arising from the manufacture and installation of the balustrade. It held that in circumstances where WB was an expert in installing balustrades, it was difficult for it to argue that it was entitled to rely entirely upon the expertise of JMKG and not carry out any supervisory role itself. JMKG’s principal also accepted that the installation work done by JMKG required inspection by either WB or Mirvac. That evidence, together with the contractual context in which JMKG was retained, enabled the court to more easily give content to the duty of care so that it included an obligation to inspect the installation work of JMKG.

WB believed that in previous jobs Mirvac had inspected the work of JMKG and assumed this had occurred here when it had not. The Court of Appeal held that had a check been made, it would have been obvious that no adequate inspection of JMKG’s work was taking place. WB knew that JMKG consistently used nail guns when affixing fasteners to structural wooden joints and ought to have known that this was a dangerous practice and contrary to the applicable standard.

The Court of Appeal found that the trial judge’s treatment of apportionment did not identify how it supported a conclusion that JMKG’s responsibility

was only slightly greater than Mirvac or WB’s and that permitted a review. It held that the causal potency and relative culpability of Mirvac and WB was very much the same. Both had a supervisory role in relation to JMKG’s work. While Mirvac’s opportunity to intervene was greater than WB’s, WB had particular expertise in the installation of balustrades.

The culpability of JMKG and its contribution to the incident were substantially greater than Mirvac and WB’s. It held itself out as an expert, installed the balustrade, used a nail gun and nails of insufficient strength and gauge. Liability was accordingly apportioned 50% to JMKG and 25% each to Mirvac and WB.

[2014] NSWCA 127WB Jones Staircase & Handrail Pty Ltd v Richardson & Ors





The Facts

The appellant slipped and fell on a wet floor in the Coles supermarket at Gorokan, New South Wales. She claimed that the respondent breached its duty of care to take reasonable precautions for her safety. The respondent had placed 3 “wet floor” signs in a rough triangle around the subject area where the incident occurred and a staff member had been instructed to obtain material ie. paper towel or Chux, to remove residual water on the floor.

At the time of the incident the appellant was carrying her daughter on her hip and was hurrying.


At first instance the appellant failed to establish that the respondent breached its duty of care in circumstances where it had taken adequate precautions to warn customers of the wet floor. Despite dismissing the case on liability, the trial judge assessed damages at $1,773.


The appellant appealed the trial judge’s decision with respect to breach of duty, contributory negligence and assessment of non-economic loss.


The Court of Appeal unanimously agreed that the appellant should be granted leave to appeal. However, they did not agree on every aspect of the appeal. Basten JA and McDougall J found that the respondent

had breached its duty of care by failing to ensure that a staff member remained in the area to warn of and/or direct customers around the hazard.

Basten JA found that the appellant was 25% contributorily negligent and McDougall J found the appellant 50% responsible for her own injuries.

Emmett JA did not consider that the failure to have a staff member present directing customers around the hazard amounted to a breach of duty of care by the respondent and concluded that the appeal should be dismissed.

Given the differing opinions of the 3 judges, Basten JA adopted the approach of Mason P in Skulander v Willoughby City Council [2007] NSWCA 116 and held that as McDougall J’s findings represented an “intermediate position” his findings should be adopted. Ultimately, the respondent was held to be liable and the appellant was found to have contributed to her own injuries to the extent of 50%.

The trial judge’s findings on quantum were undisturbed. On that basis, the judgment for the respondent in the District Court was set aside and judgment was entered for the appellant in the sum of $886.50. The appeal was otherwise dismissed. Although the appellant had succeeded on one issue on appeal, the Court of Appeal upheld the trial judge’s order that the appellant pay the respondent’s costs. McDougall J observed that in light of the outcome, “by no stretch of the imagination could that be regarded as success on appeal”.

An application for special leave to appeal to the High Court was refused.

IN ISSUE

• Occupiers’ liability – failing to take reasonable precautions

• Supermarket’s liability for slip and fall



[2013] NSWCA 273Fitzsimmons v Coles Supermarkets Australia Pty Ltd

Occupiers’ LiabilityPUBLIC LIABILITY



PUBLIC LIABILITY


The Facts

The second and third defendants, John and Selwyn Glynn, carried on an interior design business. They retained the first defendant, Ivor Fritz Removals Pty Ltd, to move furniture from their business premises in Brisbane to a flat in Sydney. The first defendant assigned two employees to undertake the job: the plaintiff and Mr Herewini.

While performing the job the plaintiff sustained a twisting injury to his right knee. That injury was sustained while the plaintiff and Mr Herewini were moving a desk in the study of the Sydney flat. The injury occurred when the plaintiff bumped into a footstool while he was moving backwards while carrying the desk.

The system of work being utilised by the first defendant was such that the plaintiff, being the one walking backwards, was responsible for keeping a lookout to avoid obstacles. Although the plaintiff did look over his shoulder prior to moving the desk, he failed to observe the footstool.

The plaintiff sought damages against the defendants for negligence. He alleged that the system of work was unsafe and that the defendants ought to have warned him about the presence of the footstool.

The Decision

Negligence was not established against any of the defendants.

The court found that the system of work employed by the first defendant was reasonable. The person walking backwards had the more demanding task and therefore it was sensible for that person to be in control of the process. Further, it was sensible for the person walking backwards to check the path of travel given the potential that the view of the other person might, at times, be impeded by the objects that were being carried. Therefore it was not reasonably necessary for the first defendant’s system of work to require Mr Herewini to check for obstacles.

Given that the plaintiff looked over his shoulder to check for obstacles it would not have been obvious to either Mr Herewini or the third defendant, that he did not observe the footstool. As such, it would not have been apparent to either of them that there would have been any benefit in providing the plaintiff with a warning regarding its presence.

There was no breach of duty on the part of the second and third defendants as occupiers of the premises which caused the plaintiff’s injury. The plaintiff was injured as a result of the way in which the task was being performed. The second and third defendants were not under a duty to supervise the work the plaintiff performed. In any event, the plaintiff conceded in his evidence that he did not require supervision.

Although it was unnecessary to do so given the liability findings, the court was satisfied that the plaintiff was guilty of contributory negligence on the basis that he failed to examine the area with sufficient care to detect the presence of the footstool when he checked to see if the path was clear.

[2013] QDC 293Morton v Ivor Fritz Removals Pty Ltd & Ors


IN ISSUE

• Duty owed by employer and property owner to removalist injured moving furniture



http://archive.sclqld.org.au/qjudgment/2013/QDC13-293.pdf



The Facts

Ms Simon and Ms Condran were next door neighbours who both owned dogs. Ms Simon’s dog, Jake, and Ms Condran’s dog, Mack, did not get along. Most of the property boundary between the two houses was fenced either by pedestrian safety fencing or iron reinforced mesh “reo fencing”. However, at the northern end of the property there was no fencing that prevented Jake from entering Ms Condran’s land and straying underneath her house.

On 11 November 2009, whilst waiting for a friend to pick her up, Ms Simon let Jake off the run. Ms Simon said she saw the two dogs on opposite sides of the boundary fence facing each other but looked away when her friend arrived. A fight broke out between Jake and Mack. Ms Simon and her neighbour’s son, Luke, raced to the scene. Ms Simon went underneath her neighbour’s house and saw Jake’s head in Mack’s muzzle. Ms Simon and Luke started striking their dogs. Luke’s action caused Mack to let go of Jake’s head but proceeded to bite Ms Simon’s left hand causing serious injury. She sued Ms Condran under s25 of the Companion Animals Act 1998 (the Act) and in negligence.


The trial judge found for Ms Condran. The trial judge held that Ms Simon’s presence on Ms Condran’s land was unlawful as it amounted to trespass. Ms Simon’s reliance on the principle of necessity as a defence to conduct which would otherwise be a trespass was rejected.

The trial judge examined section 25 of the Act which provides that:

“(1) The owner of a dog is liable in damages in respect of:

(a) Bodily injury to a person caused by the dog wounding or attacking that person, and

(b) Damage to the personal property of a person (including clothing) caused by the dog in the course of attacking that person.

(2) This section does not apply in respect of:

(a) an attack by a dog occurring on any property or vehicle of which the owner of the dog is an occupier or on which the dog is ordinarily kept, but only if the person attacked was not lawfully on the property or vehicle and the dog was not a dangerous dog or restricted dog at the time of the attack, ...”

The trial judge found that s25(2)(a) of the Act applied and Ms Condran was not liable for the injuries sustained.


The appeal was confined to the liability created by s25 of the Act and particularly whether or not Ms Simon’s presence on Ms Condran’s property at the time she was bitten by the dog was lawful.


The Court of Appeal upheld the trial judge’s finding that Ms Simon’s presence on Ms Condran’s land was unlawful and therefore Ms Condran had no liability for the injuries sustained for two reasons.

The defence of necessity is not available if the predicament in which the victim finds themselves is brought about by their own negligence. The Court of Appeal rejected Ms Simon’s submission that her failure to keep Jake in her own yard was due to “momentary inattention or mere inadvertence” as she took her eye off her dog when her friend arrived. She was aware that Jake could go under the neighbour’s house and the repercussions if that transpired.

IN ISSUE

• Whether the appellant’s presence on the respondent’s land when she was injured by the respondent’s dog was lawful, and application of s25 of the Companion Animals Act 1998 (NSW)



[2013] NSWCA 388Simon v Condran





READ MORE

The Court of Appeal also held that Ms Simon’s presence on Ms Condran’s land was not lawful because Ms Simon was herself in breach of the Act when she failed to take all reasonable precautions to prevent Jake escaping from her yard. The Court of Appeal held that the Act must be read as a whole, and the defence of necessity established by s25(2)(a) does not extend to necessitous intervention occasioned by the victim’s own breach of the Act.

click here

[2013] NSWCA 388Simon v Condran




PUBLIC LIABILITY



The Facts

The plaintiff was employed by Blue Star Painting Solutions Pty Ltd (Blue Star) as a painter at a work site. Parkview Constructions Pty Ltd (Parkview) was the principal contractor and occupier of the work site. Parkview sub-contracted to Erect Safe Scaffolding (Australia) Pty Limited (Erect Safe) to erect the scaffolding at the work site.

The plaintiff suffered serious injuries when a scaffolding board gave way underneath him and he fell to the ground. There was evidence that tradespersons on work sites generally, and at this particular work site, removed sections of scaffolding where it was necessary or convenient to do so to enable them to complete their work. The plaintiff issued proceedings against Blue Star, Erect Safe and Parkview.


The trial judge found Parkview and Erect Safe liable for the incident but dismissed the plaintiff’s claim against Blue Star. The trial judge apportioned liability 40% to the principal contractor Parkview and 60% to the sub-contractor Erect Safe.

In assessing the plaintiff’s economic loss, the trial judge did not make any allowance for contingencies for the past and assessed future economic based on him remaining in employment for the balance of his working life less 15% for contingencies.


Parkview and Erect Safe appealed to the Court of Appeal challenging the findings of negligence, the apportionment of liability and the allowance for economic loss. The plaintiff cross-appealed contending that the trial judge erred in failing to find that Blue Star had also been negligent. Blue Star also cross-appealed challenging the allowance for economic loss.


Although the Court of Appeal found that the trial judge erred in failing to refer to the relevant provisions of the CLA (NSW), it nevertheless upheld the findings of negligence against Parkview and Erect Safe. The Court of Appeal found that there was a risk of harm if Parkview did not take reasonable care to institute a system of satisfactory inspections of the scaffolding and also found that a reasonable person in Parkview’s position would have undertaken precautions by way of a daily inspection of the site calculated to detect safety risks. It further found that Parkview knew of the risk caused by the removal of the scaffolding plank and had devised a system to minimise that risk but egregiously failed to implement its own system.

The Court of Appeal also found that Erect Safe breached its duty of care in assembling the scaffolding as it was aware that contractors frequently removed the scaffolding without authority regardless of the instructions they received from the principal contractor and that no system of inspection could

ensure that an unauthorised removal of the scaffolding would be immediately rectified so as to eliminate any danger to workers. The Court of Appeal found that an expert and experienced scaffolder such as Erect Safe should have known that unless the scaffolding was properly secured it could be removed by the unauthorised actions of contractors. The risk was held to be foreseeable notwithstanding that Erect Safe was under no contractual obligation to carry out inspections on the work site and that Erect Safe was aware that Parkview intended to undertake a system of inspections and to instruct contractors not to remove the scaffolding without permission.

[2013] NSWCA 460Parkview Constructions Pty Ltd v Abrahim

IN ISSUE

• Whether a principal contractor, sub-contractor and employer breached their duties of care to a worker on the work site

• Apportionment between tortfeasors

• The proper calculation of the economic loss





PUBLIC LIABILITY



The Court of Appeal found that if Parkview and Erect Safe each breached their duties of care to the plaintiff, Blue Star must also have been in breach of its own non-delegable duty to provide a safe system and safe place of work. It was not open to Blue Star to escape liability by relying on Erect Safe’s expertise or Parkview’s inspection system as it was also aware of the missing scaffolding at the time of the incident and did not warn the plaintiff of the danger.

As to apportionment, the primary responsibility for the injuries sustained by the plaintiff was found to reside with Parkview. Although the danger was initially created by the method used by Erect Safe to assemble the scaffolding on site, Parkview was aware of the danger and set up a system of inspection that was intended to detect and rectify just the kind of unauthorised removal of a plank that occurred. As between Parkview and Erect Safe, Parkview accepted responsibility for implementing the system of inspection. Had Parkview enforced its own system, the accident would have been averted. Erect Safe was entitled to expect that Parkview would carry out the daily inspections with a view to detecting obvious dangers such as the removal of part of the scaffolding.

Erect Safe, although not primarily responsible, still had a significant liability to the plaintiff. Erect Safe’s mode of assembly opened the way to a potentially disastrous accident. The risk could have been averted by employing a very simple safety mechanism. Erect Safe never gave an explanation as to why it did not do so.

Blue Star’s responsibility for the accident did not rest merely on the legal principle that it cannot

escape responsibility for the negligence of others. Its employee, Mr Kahla, ought to have been aware of the danger, and accepted that he should have warned the plaintiff not to step on the scaffolding, yet did not warn him.

In those circumstances, the Court of Appeal apportioned liability to Parkview as to 1/2, Erect Safe as to 1/3 and Blue Star as to 1/6.

In terms of the plaintiff’s damages, the Court of Appeal found that once his pre-accident employment history was given proper weight, his most likely future circumstances but for the incident would involve significant periods of unemployment or less than full-time employment. The Court of Appeal therefore discounted the awards for both past and future economic loss by 30%.

[2013] NSWCA 460Parkview Constructions Pty Ltd v Abrahim




PUBLIC LIABILITY



The Facts

The plaintiff was employed by the first defendant as a cleaning supervisor. Part of his duties required him to deliver cleaning supplies to the premises where company cleaners worked. On 8 April 2010, whilst he was delivering supplies to the premises of the second defendant, he was struck by a solid fire door being opened by an employee of the second defendant, and sustained personal injuries. He brought proceedings against the first defendant in relation to the injuries sustained as well as in relation to an earlier incident in March 2010. Those proceedings were settled on terms involving a payment to the plaintiff.

The plaintiff alleged that the second defendant was negligent in failing to provide a vision panel in the fire door. The cost to the second defendant of doing so would have been in the order of $3,000.

Although a fire door, it was regularly used by the plaintiff and other persons to enter and exit the building.

Approximately 12 months prior to the incident, an employee of the second defendant reported the risk of collision involving the fire doors, and suggested that a vision panel be provided in the door. In response, the second defendant’s OHS committee incorrectly concluded that fire doors with glass inserts were unavailable, and decided to issue a notice to staff and continue to monitor the matter.

At the time of construction of the building and also at the time of the incident, the design and operation of the fire door complied with relevant building regulations and standards.

The main issue in relation to liability was whether the second defendant was negligent in failing to replace the fire door with one with a glass panel.

The Decision

The plaintiff failed to establish that the second defendant breached its duty of care.

The court concluded that (as required by ss 43(1)(a) and (b) CLWA), the risk of a person being harmed by an opening door was foreseeable and not insignificant. The ‘critical issue’ (arising from ss 43(1)(c) and 168(1) CLWA) was whether a reasonable person in the second defendant’s position would have taken the precaution the plaintiff asserted it should have.

After considering the factors prescribed by ss 43(2) and 168(2), the court found that a reasonable person in the second defendant’s position would not have replaced the fire door prior to the accident.

The evidence presented at trial suggested that the volume of traffic through the door was relatively high, but incidents of any significance arising out of the use of the door were extremely rare. The court held

that, in those circumstances, the second defendant’s assessment of what to do in response to the risk was not unreasonable, and it was not determinative that it incorrectly concluded that fire doors with glass inserts were unavailable. The second defendant was faced with a claim of a hazard which, while being obvious, had not materialised in a way that caused harm of any significance in the 22 years the building had been occupied. A reasonable person in its position would not, in those circumstances, have necessarily proceeded to immediate replacement of the existing doors, and could readily have decided to proceed with the lesser measures of notifying staff in the manner that the second defendant did. The court considered that, looking at the matter from the point of view of the second defendant at the time, an incremental approach to addressing the problem was not an unreasonable response.

[2014] ACTSC 8Brozinic v ISS Facility Services Australia Ltd

IN ISSUE

• Whether the second defendant/ occupier was negligent in failing to replace an internal fire door with a fire door with a glass insert





PUBLIC LIABILITY



If the plaintiff had established breach, the court indicated it would have reduced the plaintiff’s damages by 50% on account of contributory negligence. It considered that the danger to the plaintiff was an obvious one with which he must have been familiar and that, in approaching close to the door in the manner that he did, he exposed himself to a risk of injury which a reasonable person in his position would have taken care to avoid.

[2014] ACTSC 8Brozinic v ISS Facility Services Australia Ltd




PUBLIC LIABILITY


The Facts

The 21 year old plaintiff, Benjamin Ackland, was a student when in October 2009 he went on a mystery bus tour to Green Valley Farm (the farm) with other students from his residential college. The farm was a holiday/amusement park that contained a number of attractions including a jumping pillow that was used similarly to a trampoline.

Other members of the plaintiff’s group had successfully performed backflips on the pillow during the course of the day. Encouraged by this and his previous experience in trampolining, he attempted to perform a backflip, but failed – landing awkwardly on his ‘side and belly’. Nevertheless, following some encouragement and suggestions of other group members, he tried again. The plaintiff landed on his head, sustaining injury to his neck that rendered him a quadriplegic.

The plaintiff alleged that the farm operators (the defendants) had failed to warn him of the risk of serious injury in performing back-flips on the pillow and failed to ban such manoeuvres. Less than two months prior to the incident the manufacturer of the jumping pillow had written to the defendants recommending that signage prohibiting somersaults on the pillow be erected nearby, and printed onto the pillow itself.

The Decision

Although the action was brought in the ACT, the accident occurred in NSW and the applicable law was the CLA (NSW). Section 5L CLA (NSW) provides a statutory defence in relation to injury arising from the materialisation of an obvious risk in a dangerous recreational activity.

While the court was prepared to find that performing a backflip on the jumping pillow was a dangerous recreational activity, it did not accept that the risk of sustaining a serious neck injury whilst doing so was an obvious one.

The court held that a reasonable person in the position of the plaintiff would have appreciated that there was a risk of some minor harm if they failed to perform the manoeuvre properly, however, this did not equate to the perception of the risk of serious neck injury as transpired.

The defendants failed to establish that the defence in s5L applied and the plaintiff was awarded damages in the sum of $4,626,241.84.

[2014] ACTSC 18Ackland v Stewart, Vickery & Stewart


IN ISSUE

• Whether performing a backflip on a jumping pillow posed an obvious risk of a catastrophic neck injury





PUBLIC LIABILITY



The Facts

On 18 April 2008, Mr Orestis Cosmidis (the respondent) was delivering a tanker load of fuel to premises occupied by Boral Bricks Pty Ltd (the appellant). After completing the delivery and attending the appellant’s office, he walked back towards his tanker. He was hit from behind by a forklift and suffered significant injuries. The respondent was aware that forklifts operated in the area.


The trial judge found the appellant liable on two bases, namely vicarious liability for the negligent driving of its employee and for not implementing its own system for managing traffic.

The appellant did not challenge the finding of liability, but appealed from the finding that there was no contributory negligence on the part of the respondent.


The Court of Appeal set aside the finding that there was no contributory negligence and directed that the parties have an opportunity to make submissions on the issue of contributory negligence for further hearing.


The Court of Appeal (by majority) assessed contributory negligence of the respondent at 30%. McColl JA assessed contributory negligence at 10%. The Court of Appeal noted that s 5R CLA (NSW) reflects the policy that people are to take responsibility for their own lives and safety. That the likely seriousness of harm caused by a driver’s conduct is greater than the harm caused by a pedestrian’s conduct does not operate to diminish the responsibility of either for any consequent accident. The Court of Appeal rejected the approach taken in earlier cases that the culpability of a person controlling a potentially dangerous vehicle is greater. Since s 5R CLA (NSW) contains no guidelines on how to determine the relative culpabilities of a plaintiff and defendant, the test to adopt is the ‘just and equitable’ test in s 138(8) MACA (NSW) .

Applying that test to the circumstances, the Court of Appeal found that, with respect to the appellant’s share of responsibility, although the driver’s view was obstructed by elements of the machinery, the driver must have failed to keep a proper lookout or he should have seen the respondent in his yellow safety vest.

With respect to the respondent’s share of responsibility, the Court of Appeal found that if he looked in all directions when he came out of the office,

he should have seen the forklift. Further, having walked down the line of safety cones, whilst wearing earplugs, he proceeded into an area where he knew that the forklift operated without looking behind him.

The appeal was allowed in part.

[2014] NSWCA 139Boral Bricks Pty Ltd v Cosmidis (No 2)

IN ISSUE

• Whether the respondent contributed to his own injuries by walking where he knew forklifts were in operation



http://www.caselaw.nsw.gov.au/action/pjudg?jgmtid=171194


PUBLIC LIABILITY



The Facts

The plaintiffs conducted an organic farming operation from a rural property known as Eagle Rest in the south-west of Western Australia. The defendant operated an orthodox cropping business on an adjoining property known as Sevenoaks.

In early 2010, the defendant decided to plant and then to harvest by swathing a new variety of genetically modified canola crop. In November 2010, he engaged a swathing contractor to cut the canola crops. Shortly afterwards, the plaintiffs noticed some canola swathes on their property. The plaintiffs notified the relevant organic certification authorities and ultimately the plaintiffs lost the right (for approximately 3 years) to sell their produce on the basis that they were officially certified as organic.

The plaintiffs commenced proceedings against the defendant claiming damages (and a permanent injunction against future swathing of the GM canola crop) for their financial losses ($85,000) arising from the decertification of most of their property and its produce as organic.

The Decision

The court observed that this was a wholly novel negligence action because of the absence of identifiable physical injury to persons, animals or property arising from the conduct of the defendant. The court noted that the plaintiffs claimed damages for common law negligence or for the common law tort of private nuisance.

In relation to both actions, it was clear from the way the case was conducted that the plaintiffs’ complaint about the way the financial loss occurred was not so much against the mere growing of GM canola on Sevenoaks but the way it was harvested, that is, by the swathing technique. Swathing is a well recognised agricultural harvesting technique used by canola growers. It involves cutting the immature canola plant close to its base and pushing the cut plants (with seed pods attached) together into standing windrows in a paddock so that they ripen following exposure to the elements for about 2-3 weeks. The windrows of the dried out canola plants and their attached pods are then processed by a header machine to harvest the ripened canola seeds from each plant.

In relation to the negligence claim, the court noted that since the evidence established that GM canola is in no way physically dangerous or injurious to persons, animals or property, there was no reason to impose a duty requiring a high degree of reasonable care as has been imposed in situations where lethal or toxic substances are involved because of the potentially calamitous consequences for neighbours. The court observed that even a duty to take reasonable care is not generally regarded as arising out of a relationship between neighbouring farmers. The court therefore rejected the plaintiffs’ argument that the defendant had a duty “to ensure” that the GM canola did not escape and spread to the plaintiffs’ property. The court held that in circumstances involving a large scale broad acre farming operation which was necessarily exposed to uncontrollable seasonal weather events, at best the scope of any duty of reasonable care would

be to “reduce” or “minimize” the risk of contamination or spreading. In addition, given that the loss claimed was purely financial, the court was very reluctant to extend a duty of care to the circumstances of the case. In any event, even if a lesser duty to take reasonable care did apply, in the circumstances, that duty was not breached by the defendant for a number of reasons including because of the lack of knowledge about prior occasions where windrows of canola had blown out of position, the lack of evidence about weather conditions at the relevant time and the efforts made by the defendant to create (by boundary fences) a buffer zone between the 2 properties. Further, the court was not satisfied that the swathing harvest method factually caused the economic loss under any common law test or under the test in s 5 CLA (WA).

[2014] WASC 187Marsh v Baxter

IN ISSUE

• Whether the defendant owed a duty of care to the plaintiffs to avoid purely financial loss

• Whether the defendant was guilty of breach or private nuisance



http://www.austlii.edu.au/au/cases/wa/WASC/2014/187.html


PUBLIC LIABILITY



The legal cause of the economic loss was the action of the certifying authority (erroneously, on the evidence presented) applying the certification standards.

The private nuisance action also failed because the court determined that as there was no physical damage from the GM canola swathes, and the swathing method was not novel or aberrant, nor done without first obtaining expert advice from an agronomist, and also because what occurred was an unexpected series of events due to strong winds rather than any deliberate action to release the canola swathes to Eagle Rest. As a result of these and numerous other factors, the court held that there was no unreasonable interference with the plaintiffs’ enjoyment of their property.

The court expressed the view that the certifying authority acted well beyond the scope of its contractual rights with the plaintiffs in decertifying their property and that the plaintiffs would be better served directing their concerns to the certifying body to recover the economic losses sustained by them.

[2014] WASC 187Marsh v Baxter




PUBLIC LIABILITY



The Facts

Cawood Hancock (the deceased) carried on a business providing gardening and handyman services. On 7 October 2009, the deceased and his assistant were trimming shrubbery in an area behind a pool at the back of residential land at Indooroopilly owned by the Johnsons (the appellants). While undertaking the task, the deceased, who was holding a chainsaw at the time, stepped back onto an area of ground somewhat lower than the pool. The deceased was not aware that under that area there was a 900 millimetre diameter drainage pipe. The metal lid and grate collapsed under the deceased’s weight and he fell into a drain pipe over two metres deep and seriously injured his knee. He later developed a deep vein thrombosis which in turn led to a pulmonary embolism from which he died.

The wife of the deceased brought a loss of dependency claim against the appellants for negligently failing to warn the deceased of the existence of the drainage pipe, which ultimately caused his death.


The trial judge held that the appellants knew, or ought to have known the drainage pit was there, and ought to at least have warned the deceased about its presence. The appellants were negligent for failing to warn the deceased of its presence and their negligence caused the deceased to fall, and his ultimate death. The deceased’s wife was awarded $445,515.90 in her claim for loss of dependency.


The appellants appealed on the basis that a number of inferences that were drawn by the trial judge were not supported by the evidence. These inferences were that the appellants must have been in the area of the drainage pipe because they deposited some material there and if they were in the area, the drainage pipe or at least the metal lid was visible.

The wife of the deceased submitted on appeal that the trial judge’s findings of fact ought not be overturned unless they were glaringly improbable.


The Court of Appeal held the findings of fact made by the trial judge were supported by the evidence. The inferences drawn by the trial judge were reasonably open having regard to the findings of fact and were not “glaringly improbable”.

The trial judge was entitled, having regard to the totality of the evidence, to reject the appellants’ denial of any knowledge of the existence of the drainage pipe. There was also uncontradicted evidence that a reasonable solicitor would have brought the existence of the drainage easement to the attention of the appellants, along with the evidence of the appellants that the drainage easement was brought to their attention.

[2014] QCA 130Johnson & Anor v Hancock

IN ISSUE

• Whether occupiers knew or ought to have known about the presence of a drainage easement on their property

• Whether occupiers should have warned about the presence of the drainage easement

DELIVERED ON 3 June 2014


http://archive.sclqld.org.au/qjudgment/2014/QCA14-130.pdf


PUBLIC LIABILITY


The Facts

On 22 December 2007, the plaintiff permanently injured her dominant right arm when she fell from a step in the auditorium of the Bankstown RSL Club (the Club). The plaintiff was in attendance at the Club to watch her two young children perform in a dance recital, organised by Mrs and Mr Yee who operated a dance school.

The plaintiff alleged that she was proceeding towards back-stage to collect one of her children when she stumbled and fell down a small step which connected the elevated platform where she had been seated to the ground floor of the auditorium.

The plaintiff instituted proceedings in negligence against the Club and both Mr and Mrs Yee. She alleged that the house lights in the Club’s auditorium had been dimmed during performances and that the strip lighting installed on the steps throughout the auditorium was either not operational or had not been illuminated on the day of the incident.

The Decision

The court dismissed the plaintiff’s allegation that the strip lighting installed on the steps throughout the Club’s auditorium was not operational at the time of the incident. This finding was based on evidence provided by witnesses, including a fellow parent attending the dance recital and various employees of the Club that the strip lighting was on at the relevant time.

The plaintiff submitted an alternative argument that the strip lighting did not sufficiently warn of the presence of the steps. This argument was dismissed following the court’s finding that the plaintiff did not fall due to the unexpected presence of the step but instead as a result of tripping on an unidentified object and then falling down the step. The court noted that an incident report completed by a Club employee and medical notes recorded by the plaintiff’s consulting surgeon during her emergency hospital attendance as evidence that the plaintiff actually fell because of an unidentified object on the steps.

The court dismissed the plaintiff’s claims in their entirety, noting that had the plaintiff taken adequate care for her own safety, she would have appreciated the presence of the step and been able to avoid any obstacles that were in her path.

[2014] NSWSC 772Parker v City of Bankstown RSL Community Club Ltd


IN ISSUE

• Whether strip lighting installed on the steps of the premises was operational at the time of the incident

• Whether the plaintiff’s fall was caused by the step or an unidentified object





PUBLIC LIABILITY


Educational Authorities

The Facts

Jazmine Oysten (the appellant) was a student at St Patrick’s College (the College) from 2002 to February 2005. She commenced a claim in negligence against the College alleging that she had suffered psychological harm after being bullied by fellow students.


The trial judge found that the College’s response to the bullying of the appellant and the implementation of its policies was inadequate.

While acknowledging that the College was active in attempting to deal with bullying on a more general level, it found that in the appellant’s case, the reaction had been ad hoc and not in compliance with established policies.

The trial judge found that the College ought to have been aware of the bullying by early 2004 and failed to bring the bullying under control. The College had breached the duty it owed to the appellant and she was awarded damages of $116,296.60 plus interest.


The appeal was heard in two parts. The first concerned breach of duty and was reported in the 2013 case book. The second part of the appeal was limited to the issues of causation and damages.


The Court of Appeal affirmed the trial judge’s conclusion on causation, finding that it was more probable than not that, but for the failure of the College to actively implement its anti-bullying policy, the psychological injury to the appellant would either have not occurred or would have been diminished.

On causation, the College submitted that the anti-bullying measures proposed by the trial judge would not have had any effect on the bullying culture at the school and therefore the established breach was not causative of the appellant’s injuries. The College further submitted that the injuries suffered by the appellant were in any case not a consequence of the bullying she had endured as a student.

The Court of Appeal rejected both arguments. There was sufficient expert evidence available to infer that had the College complied with its duty of care, the bullying would have ceased or drastically reduced. The Court of Appeal was also satisfied that the appellant’s injuries were a direct consequence of the bullying and therefore the College’s negligence.

The Court of Appeal then dealt with the appellant’s challenge to the trial judge’s calculation of damages. The appellant was largely unsuccessful with the exception of non-economic loss which was increased from $17,500 to $34,775, owing to the trial judge’s failure to take into account medical evidence that

the appellant was vulnerable to developing a future psychiatric disorder due to her diminished psychological resilience which resulted from the College’s negligence.

The award for damages, excluding interest, was increased from $116,296.60 to $133,571.60.

[2013] NSWCA 310Oyston v St Patrick’s College (No 2)

IN ISSUE

• Whether a school breached its duty to protect its student from harm caused by bullying






The Facts

The appellant was a patron at the respondent hotel on the night of 4 July 2008. The manager on duty formed the view that the appellant was intoxicated, and after speaking with the hotel’s licensee, instructed a security guard to remove her from the premises. The security guard pulled the stool on which the appellant was seated out from underneath her, causing her to fall to the floor and thereby to sustain injury. The security guard was employed by Checkmate Security International Pty Ltd (Checkmate), not the respondent hotel or its licensee.


The trial judge found that the security guard had committed an assault and battery upon the appellant, for which his employer, Checkmate, was vicariously liable. The trail judge awarded general damages of $2,500 and $7,500 for aggravated and exemplary damages.


The appellant sought to fix vicarious liability for the security guard’s actions upon the hotel or its licensee as Checkmate had, by the time of the verdict in favour of the appellant, ceased to exist as a separate legal entity.


The Court of Appeal held that neither the hotel nor the licensee were vicariously liable for the tort committed by the security guard. The security guard was not an employee of the hotel or the licensee and was not expressly authorised to commit the assault and battery. Further, the security guard was not the hotel’s agent in a legal sense and had no authority to bind the hotel. It was clear that the security guard represented Checkmate, not the hotel.

It was submitted by the appellant that the licensee could be directly liable for the security guard’s actions pursuant to s91 of the Liquor Act 2007. The Court of Appeal rejected that argument because the section and the legislation are directed at determining who is obliged to comply with the regulatory regime established by the Act – they do not create tortious liability for breach of the sections of it.

The Court of Appeal considered whether it was possible for multiple parties to be held vicariously liable for a security guard’s actions, giving rise to a “dual vicarious liability” situation. It found that there are no Australian authorities for that proposition. The Court of Appeal therefore determined that only the High Court could accept the appellant’s submission that Australian law allows a theory of dual vicarious liability where 2 different persons have control over a tortfeasor.


IN ISSUE

• Whether the occupier or licensee of a hotel is vicariously liable for the tortious conduct of security personnel not directly employed by them


READ MORE

[2013] NSWCA 250Day v The Ocean Beach Hotel Shellharbour Pty Ltd

Licensed PremisesPUBLIC LIABILITY

click here



PUBLIC LIABILITY


The Facts

The plaintiff was seriously injured at about 4:50am on 25 November 2007 when he was assaulted outside the licensed premises of The Bridge Hotel (the hotel) operated and occupied by the first defendant, Bowcliff Pty Ltd (Bowcliff). The assailant was a Mr Paseka who was employed by Bowcliff as a glass attendant. The plaintiff also brought proceedings against Mr Paseka (who did not play a part in the proceedings), the licensee of the hotel, Mr Keough, and the insurer of the hotel security provider (as the security provider was in liquidation), QBE.

Prior to the assault, the plaintiff had been asked to leave the hotel and was waiting for his friend on the corner of the street across the road when he was assaulted by Mr Paseka by way of a single punch. Mr Paseka had crossed the road to intervene after witnessing a heated verbal exchange between the plaintiff and a man known as Izzy and the assault followed. It was in issue as to whether or not Mr Paseka was employed by the hotel and still performing his duties at the time of the incident, even though it was submitted he had ceased work a few hours prior to the assault.

The issues at trial were whether or not Bowcliff, Mr Keough and/or the security company were responsible for the consequences of the assault which occurred outside the boundaries of the hotel. It was alleged that the security providers should have prevented the incident and it was also alleged that Bowcliff/Keough had assumed responsibility for the security providers while onsite.


The court was satisfied that Mr Paseka’s actions had nothing to do with his duties as a glass collector or to further the interests of Bowcliff or Mr Keough and therefore neither was vicariously liable for his actions.

The court held that Bowcliff and Mr Keough owed a duty to the plaintiff to take reasonable care to prevent injury to him from violent, quarrelsome or disorderly conduct of other persons on the premises of the hotel. It was also held that this duty may extend to circumstances where the wrongdoing causing the injury occurred in a public street, with the element of control and the statutory obligations imposed upon the licensee and occupier of the site being the foundation of this duty.

The court found in favour of the plaintiff against all defendants. Apportionment was attributed 70% to Bowcliff /Mr Keough as they designed and implemented the system of security and gave undertakings to the Liquor Board that patrons would depart in a quiet and orderly manner, and 30% to QBE as the insurer of the security provider as security guards had been specifically engaged to patrol the outside of the hotel and had failed to prevent the incident. Mr Paseka did not take any active part in the proceedings.


QBE and Bowcliff/Keough appealed the findings separately, challenging the finding of negligence and apportionment of liability.


Both appeals were allowed and the verdict against the defendants was set aside.

The Court of Appeal allowed the appeal on the following grounds:

(i) At trial, there was a finding that the security guards should have left their posts at the hotel and intervened in a verbal exchange taking place across the street, however, there was insufficient evidence that the security guards were aware that this exchange had become quarrelsome;

[2013] NSWCA 478QBE v Orcher; Bowcliff v Orcher

Licensed Premises

IN ISSUE

• Whether a duty of care is owed by an occupier of a licensed premises and its security provider to patrons beyond the licensed premises, and to what extent





PUBLIC LIABILITY


(ii) The role of the security provider, and particularly that of the security guard stationed at the exit of the hotel, was to control the activities of intoxicated patrons exiting the hotel and who were on the footpath outside the hotel. To find that the security guard stationed at the exit should have crossed the road, placed a higher burden upon him than was reasonable in the circumstances;

(iii) The plaintiff’s assertion that Bowcliff had totally delegated its duty of care to the security provider was rejected as they retained some control of the security system;

(iv) Bowcliff was not vicariously liable for any breach of duty on the part of the security guards, as they were trained and employed by the security provider and Bowcliff could not instruct them how to perform the job of a professional security guard;

(v) Even if the plaintiff could establish that he was owed a duty of care to prevent the incident occurring, there was no breach of duty. In order to establish a breach, the plaintiff needed to successfully argue that the conduct of the security guard stationed at the exit (Mr Paea) in not intervening or preventing the incident was negligent;

(vi) The onus to establish breach had not been discharged, particularly noting Mr Paea did

not give evidence, Izzy was not called to give evidence, the plaintiff had no memory of anything that occurred after he exited the hotel, CCTV footage was of limited assistance as to what Mr Paea saw (or ought to have seen) due to its lack of quality and the evidence of the plaintiff’s witness, Ms Williams (also the plaintiff’s partner) as to what occurred was at odds with the police interview with the assailant and the CCTV footage;

(vii) The duty of care owed by Mr Paea needed to be looked at in light of section 5(b) CLA (NSW). The evidence to hand was that Mr Paea was monitoring the situation and once he saw things get out of hand, he reported to the security guards inside the hotel entry in accordance with Bowcliff’s security policy, however, the assault occurred without warning. The majority held that without the benefit of hindsight, it could not be concluded that Paea’s failure to intervene constituted a breach of duty;

However, if the result had been different and the appeal against the finding of negligence had been rejected, the Court of Appeal agreed with the manner in which the trial judge apportioned liability.


[2013] NSWCA 478QBE v Orcher; Bowcliff v Orcher

Licensed Premises




PUBLIC LIABILITY


Licensed Premises

The Facts

The appellant, Mr Geoffrey Smith, suffered serious injuries on 7 April 2007 when he was assaulted by Mr Ricky Lohse (Lohse) outside the bar and beer garden area of the Lightning Ridge Hotel/Motel in Lightning Ridge, New South Wales. The appellant sued the hotel proprietor, Croote Pty Ltd (Croote) and TA &EL Dunn Pty Ltd (Dunns), who provided security guards on the night.


The trial judge found that there was negligence on the part of both Croote and Dunns in that neither had planned adequately for the night in question. Firstly, Croote failed to implement a system of satisfactory communication between itself and Dunns whereby Dunns were contactable in the event of trouble occurring. Secondly, the trial judge found that it was not unreasonable for both Croote and Dunns to expect 300 people might turn up as a result of a local festival on the day in question and in those circumstances, 8 security guards ought to have been provided rather than 4. Finally, the trial judge found the risk of injury to a patron at the premises by reason of inadequate planning and provision of inadequate numbers of security guards was foreseeable to both Croote and Dunns and that the risk was not insignificant.

However, the trial judge concluded that the negligence of Croote and Dunns was not a necessary condition of the occurrence of the appellant’s harm. The trial judge was not satisfied that, but for the action or inaction of either Croote or Dunns, the appellant’s injury would not have occurred. Further, the trial judge considered

that a verbal exchange between the appellant and Lohse immediately before the incident was sufficient to provoke the assault. The trial judge concluded that the close proximity between that verbal exchange and the assault was such that any security guard stationed outside the hotel premises would not have had sufficient time to intervene and apprehend Lohse before he assaulted the appellant.


A number of grounds of appeal were argued including that the trial judge was in error in concluding that the negligence of Croote and Dunns did not cause the appellant’s injuries and that the trail judge applied the incorrect test on causation. Croote also filed a Notice of Contention in relation to the findings of negligence and breach of duty.


The Court of Appeal ultimately concluded that the trial judge had erred in finding that Dunns and Croote were in breach of their duty of care in not adequately planning for the evening. There was no evidence to justify a conclusion that a larger crowd of people could or should have been anticipated by Croote to attend and no evidence that Croote should have provided for additional security guards to deal with any larger than usual crowd.

Despite a finding that there was no breach of the duty of care, the Court of Appeal went on to consider the issue of causation and held that the “but for” test of factual causation was not established. The court noted

that it was not shown to be more probable than not that, but for the absence of additional security guards (whether at the exit or elsewhere on the grounds), the appellant would not have been assaulted. Further, the court commented that even if providing additional security guards might have deterred or prevented the assault, unless the failure to do so was a necessary condition of the assault it would be contrary to established principles to hold Croote and Dunns responsible in negligence. The Court of Appeal found that negligence was not a necessary condition of the injury which resulted from the criminal wrongdoing of Mr Lohse.


[2014] NSWCA 35 Smith v Croote Pty Ltd

IN ISSUE

• Liability of hotel and security officers for assault to patron

• Causation

DELIVERED ON 7 March 2014




PUBLIC LIABILITY


Licensed Premises

The Facts

The appellant owned and operated a nightclub, described as a piano bar, at Broadbeach. On 8 December 2006 the respondent attended the appellant’s premises for the purpose of a work Christmas party. During the course of the evening 2 of the respondent’s colleagues were evicted from the premises by Mr Zulli, a manager of the nightclub. Those colleagues became involved in a physical struggle with Mr Zulli outside the premises. The respondent, who intended on catching a taxi home with his colleagues, followed them out of the premises fairly closely and became involved in the struggle.

There were no security staff available, as they were involved in detaining another aggressive patron upstairs.

Anthony Cerantonio, a barman employed by the appellant, had been instructed by another employee to clean up broken glass at the front entry of the premises. Mr Cerantonio complied with that instruction and went to the front of the premises with a long handled metal dustbin. He observed Mr Zulli, his uncle, involved in a struggle with the patrons and went to try and break up the fight. Mr Cerantonio said that, without thinking, he swung and struck the respondent in the head with the metal dustbin. The respondent was rendered unconscious and sustained serious injuries as a result of the incident.

The respondent sued the appellant claiming damages for assault and battery, negligence and/or breach of

duty on the basis that the appellant was vicariously liable for Mr Cerantonio’s conduct.

The appellant argued that it was not liable as it had provided Mr Cerantonio with a copy of its house policy, which contained a written instruction that employees ought to avoid confrontation and alert security in the event a patron becomes aggressive or violent. The appellant said that Mr Cerantonio signed that document at the commencement of his employment.

In addition, the appellant said that it provided verbal warnings to staff to leave security issues to security staff.


There was controversy regarding whether or not the house policy document was signed by Mr Cerantonio prior or subsequent to the incident involving the respondent. The trial judge found that it was more probable than not that the house policy document was signed after the incident. Therefore, the house policy document did not constitute evidence of the terms of Mr Cerantonio’s employment with the appellant. Although that was the case, the trial judge accepted that the appellant provided oral instructions to its employees, including Mr Cerantonio, to refrain from engaging in conduct of the kind which resulted in injury to the respondent. Accordingly, the trial judge found that the appellant was not directly liable to the respondent on the basis that it did not breach its duty of care.

The appellant was vicariously liable for the actions of Mr Cerantonio.

The trial judge inferred that Mr Cerantonio’s conduct was a misguided attempt on his part to rescue Mr Zulli in the emergency that had arisen. Mr Cerantonio was not engaged in an act of private spite or revenge and was not acting in his own interests. Although Mr Cerantonio may have been primarily motivated to act to protect Mr Zulli because he was his uncle, that did not detract from the fact that he was seeking to advance the appellant’s interests in protecting one of its managers. Therefore it was appropriate to describe Mr Cerantonio’s actions as carried out in the ostensible pursuit of the appellant’s interests. In the alternative the trial judge found that there was a sufficient connection between what Mr Cerantonio did and his employment so as to make it just that the appellant be liable for the respondent’s injury.

[2014] QCA 74Howl at the Moon Broadbeach Pty Ltd v Lamble

IN ISSUE

• Whether the appellant was vicariously liable for the conduct of its employee





PUBLIC LIABILITY


Licensed Premises


The appellant appealed against the finding of vicarious liability. It asserted that in order for there to be a finding of vicarious liability, there must be a sufficient connection between the act and the nature of the employment. That is, there must be a sufficient connection between the act and what the employee was actually engaged to do.

The appellant asserted that a worker’s intention to further the interests of his/her employer was insufficient to attract a finding of vicarious liability.



The Court of Appeal was not satisfied that Mr Cerantonio was acting outside the scope of his employment at the time of the incident due to the fact that he acted contrary to the oral instructions he had been provided by the appellant. The Court of Appeal was not satisfied that the instruction covered all possible contingencies and in particular, those in which security staff were not present or were otherwise unable to act in time to respond to an emergency.

The appellant’s business gave rise to the risk that bar staff may be faced with situations in which they needed to act in their own defence or in defence of other employees. The Court of Appeal held that Mr Cerantonio had an implied authority to act in an emergency in order to protect Mr Zulli, who was an employee of the appellant.

There was a direct connection between the attack on Mr Zulli and the operation of the appellant’s business as it arose during the course of ejecting a troublemaker from the premises. In those circumstances neither Mr Zulli nor Mr Cerantonio were on a frolic of their own.

The trial judge was correct in finding that Mr Cerantonio’s actions were done in the course of his employment as it was in the appellant’s interests that Mr Zulli be aided and protected and that the fracas in which he was involved be stopped. It was therefore accurate to describe Mr Cerantonio’s actions as being performed in pursuit of the appellant’s interests and/or in the ostensible pursuit of its interests.

[2014] QCA 74Howl at the Moon Broadbeach Pty Ltd v Lamble




PUBLIC LIABILITY


[2014] NSWCA 46AV8 AIR CHARTER PTY LIMITED v SYDNEY HELICOPTERS PTY LIMITED

The Facts

On 29 June 2009, a helicopter was on a flight from Scone to Sydney when it incurred damage after striking an overhead power line. The power line was not indicated on the Visual Navigation Chart (VNC) that was available to the pilot at the time. The appellant was the owner of the helicopter. The respondent was the bailee of the helicopter. Mr Harrold was the respondent’s pilot.

The licence of Mr Harrold required that he did not fly through cloud and that he was to keep sight of the ground at least every 30 minutes. During the flight, Mr Harrold encountered cloud and decided to descend in order to fly under the cloud, subsequently striking the power line. Another helicopter had also struck the wire in the same location in 1994. No markers had been installed following that incident. On determining his flight course, Mr Harrold was also attempting to avoid the Singleton Army Training Area (SATA), which was restricted air space. There were no physical features shown whereby this actual boundary could be determined on the VNC.

The appellant sought damages for the decrease in the resale value of the helicopter and for loss of profits for the repair period. The CLA (NSW) applied to the claim.


The trial judge found that the respondent’s pilot was not negligent. The trial judge referred to relevant sections of the Civil Aviation Regulations (CAR) and to section 30 of the Civil Aviation Act 1988 (Cth) (CAA) which provide that it is a defence that the act or omission was due to extreme weather conditions or other unavoidable cause. The trial judge found that if the prevailing weather conditions experienced by Mr Harrold did not classify as “extreme weather conditions” they qualified as an “other unavoidable cause”.


Numerous factual findings of the court were challenged on appeal including that the court paid insufficient attention to the opinion of the experts and that there was no proper evidentiary basis for the court’s findings.

The appellants also submitted that there were 4 implied terms in relation to the 2 agreements between the parties, including that the aircraft would be operated safely, pilots would exercise due care and skill in flying and the aircraft would be operated and flown in accordance with the CAA and the CAR.


The attack on the factual findings of the trial judge was not made out. The Court of Appeal was critical of the expert evidence, concluding that “...there is a significant element of hindsight...” in the approach they adopted. It was also critical of the fact that the experts approached the CAR as though any breach of a regulation constituted a negligent act (although even on this approach the claim failed because the respondent was able to make out a defence under the relevant regulation).

The Court of Appeal considered that Mr Harrold owed the appellant a duty to take reasonable care of flying the helicopter so as to avoid injury to its passengers

IN ISSUE

• Whether various factual findings of the Supreme Court supported a finding that the respondent was not negligent in relation to flying a helicopter in deteriorating weather conditions





PUBLIC LIABILITY


and damage to the aircraft. It assessed the relevant “risk of harm” as the possibility of the helicopter coming in contact with an unmarked obstruction which was not recorded on any map and which was virtually invisible from the air. There was a low risk of this occurring.

For the reasons set out in relation to the negligence claim, the appellant also failed to establish breach of the implied terms of the contract.

Although it was not necessary to do so, the Court of Appeal expressed the opinion that, in the circumstances, Energy Australia, should bear 60% of the liability for the claim because it was responsible for the erection and maintenance of the power line and could have used marker balls at a total cost of approximately $5,000 to mark out the power line and increase its visibility to pilots, which it knew used the area for low flying operations. In reaching this decision the Court of Appeal noted that a police helicopter had previously struck the same power line and also that the relevant Australian Standard required markers to be used. The Court of Appeal rejected a submission that because the power line was located in restricted air space (in a military zone), no duty was owed to civilian pilots to take the stated precautions. There was no compelling reason to restrict the class to whom the duty was owed to military pilots – there were many good reasons why non military helicopters could be forced to operate in the area, including, as here, because of poor weather conditions.


[2014] NSWCA 46AV8 AIR CHARTER PTY LIMITED v SYDNEY HELICOPTERS PTY LIMITED




PUBLIC LIABILITY


The Facts

Mr Jamie Yeing (the plaintiff) lost two tractors and a spreader when they caught fire shortly after Mr Peter Boyle (the first defendant) had conducted a prescribed burn on adjoining farming properties. The plaintiff suffered loss of $225,691.77.

On the day in question, the Bureau of Meteorology had issued a high fire danger warning for the district. Mr Boyle admitted that he had been aware of the fire warning. However, because it was autumn, he was not required to obtain a permit before conducting the prescribed burn on his properties and was not obliged to advise the owners of neighbouring properties of his intention to do so.

Mr Boyle was very experienced in conducting prescribed burns – he had been farming for 45 years, and was the shire’s Chief Bush Fire Control Officer for approximately 20 years.

On the day of the incident, Mr Boyle carried out prescribed burns on Humphrey’s Dam, Ambleside, Cornhill and George’s; in that order. Mr Boyle had employed his son, Mr Guydon Boyle, and a backpacker from Ireland, Mr Peter Carroll, to assist him.Having completed the burn-off at Cornhill at approximately 2.30 pm, Mr Boyle left Cornhill at approximately 2.45 pm to conduct the prescribed burn at George’s, and his son left to attend to other farming duties. Mr Boyle instructed Mr Carroll to remain at Cornhill and Ambleside for an hour, to patrol the area of the burn and to ensure that nothing was still alight which could spread further. Mr Carroll joined Mr Boyle shortly after

4.00 pm at George’s, having come to the conclusion that the fires on Ambleside and Cornhill were completely out.

The defendants accepted that soon after Mr Carroll’s departure a burning ember was carried by a breeze from either Cornhill or Ambleside to the plaintiff’s property, as the dry stubble on his land started burning and the fire engulfed two tractors and a spreader.

The plaintiff conceded that even if he had been told beforehand of the planned prescribed burn, he would not have considered it necessary to move his tractors.

The Decision

The only issue in dispute between the parties was whether Mr Boyle and his employees took reasonable precautions against the risk of fire escaping from his farming properties during or after the prescribed burn and causing damage to the plaintiff’s property.

The court found that Mr Boyle failed to properly assess the elevated risks pertaining to the prescribed burn on Cornhill and Amberley on that day and failed to adequately instruct Mr Carroll on how to look for hidden embers and burning twigs in the crown of trees. The court was satisfied that Mr Boyle’s failure to take the necessary precautions was a necessary condition of the fire escaping and the damage to the plaintiff’s farm machinery.

The defendants were found liable for the damage which occurred to the plaintiff’s property, and were ordered to pay damages in the sum of $225,691.77.

[2014] WADC 54Yeing v PG Boyle & AM Boyle

IN ISSUE

• Whether defendant failed to take reasonable precautions against the risk of fire escaping from his farming property

• Whether the failure to take precautions caused the plaintiff’s loss



http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/wa/WADC/2014/54.html?stem=0&synonyms=0&query=yeing&nocontext=1


PUBLIC LIABILITY


The Facts

The plaintiff was a roofing carpenter working under the business name B & J Roofing, in partnership with his son. The defendant was the insurer of Liordan Roofing Pty Ltd (Liordan), the principal contractor. There was a separate insurance coverage issue not decided in the subject judgement. B & J Roofing contracted with Liordan to provide roofing repair services.

On 6 September 2006 the plaintiff was undertaking work for Liordan fixing roof leaks, working alone. The plaintiff alleged that he sustained severe injuries to his heels when a ladder he was descending after completing a job blew over in the wind and he was forced to jump off, falling 3 to 4 metres.


The issue for determination was whether Liordan owed the plaintiff a duty of care in the circumstances. The injury had occurred during the task of repairing leaks, a specific task which the plaintiff, via B & J Roofing, was engaged to perform. The level of control of the system of work for the task was examined in the context of the plaintiff sustaining his injury whilst working alone. Particularly, it was considered whether Liordan owed a duty to provide the necessary manpower to the plaintiff for compliance with usual industry practice, in circumstances where the relevant officer from Liordan allocating the work knew that the plaintiff had attended the job alone.

The trial judge found that the plaintiff was an experienced roofing contractor. Accepted safe

practice in the industry required the work to be performed as a two-man job. The plaintiff was sufficiently experienced to be aware of this and Liordan was not required to retain control of the safety of the work methods for the task. The duty of a principal to an independent contractor usually does not extend to an obligation to institute and maintain a safe system of work for an independent contractor, as per established authority.

The trial judge found that the arguments for and against finding a duty on the part of Liordan were relatively evenly balanced. However, the principles of the relationship of principal and independent contractor were emphasised and there was not sufficient vulnerability on the part of the plaintiff or sufficient control by Liordan, as principal, over the system of work. Liordan therefore had no duty to the plaintiff with respect to instituting or maintaining a safe system of work. Had the plaintiff succeeded, damages would have been awarded in the sum of $645,693.

Although not necessary other than for issues on appeal, in a separate judgement on 2 June 2014 the trial judge considered contributory negligence. This was in the event that it was found that Liordan’s duty extended to controlling the system of work, and failing to provide a second worker for the task. It was held that in those circumstances the plaintiff would not have been guilty of contributory negligence as he would have been working within the system that had been presented to him, that is to work alone.

[2014] NSWSC 486McGlashan v QBE Insurance (Australia) Ltd (No 2)

IN ISSUE

• Whether principal contractor liable for injury to independent contractor



http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2014/486.html?stem=0&synonyms=0&query=mcglashan


PUBLIC LIABILITY


The Facts

The first respondent sustained injuries on 16 May 2006 when he fell 8 metres whilst dismantling scaffolding. The first respondent was employed by Bradley Tracey Scaffolding Services Pty Limited (the employer). The employer became deregistered and the insurer was substituted in the proceedings. The employer supplied labour to the appellant to erect and dismantle scaffold supplied by the appellant.

At the time of the incident, the appellant had ceased taking on new projects with the employer as a result of a number of prior injuries to the employer’s workers. As a result, the appellant had assumed responsibility for the system of work to be followed by the employer’s workers on existing projects. The job on which the first respondent was injured was an existing project.


The court found that the first respondent had fallen because the scaffolding had been erected using ledgers in place of transoms, most likely by an employee of the employer. This change had not been sufficiently communicated to those dismantling the scaffold and that knowledge would have altered the method of dismantling. Further, the first respondent had not been properly secured to the scaffold by way of his safety harness, which was found to be an oversight due to many hours of repetitive dismantling work.

The court found that prior to ceasing its relationship with the employer, the appellant was required to supply its equipment (the scaffolding) safely and establish a safe system of work for the use of that equipment. After assuming responsibility for the employer’s workers, the appellant had taken control of the system and of direct supervision of the employer’s workers as they carried out work under the system. This included, for example, the appellant devising a new safe work method statement for the dismantling process.

In the circumstances in which the first respondent sustained his injuries, the appellant owed him a duty of care which was breached. The duty was not akin to that of employer and employee but did result in significant apportionment. As the employer also owed a non-delegable duty and was found to be in breach of that duty, the apportionment was held to be 75% to the appellant and 25% to the employer. There was no reduction for contributory negligence.


The appellant challenged the findings on scope of duty of care, breach, causation, contributory negligence and apportionment. The key issues on appeal were the scope and content of the duty owed by the appellant, whether a safe system of work required that precautions be taken to draw the attention of the employer’s workers to the alternate construction method which had been used to construct the scaffolding and whether there had been contributory negligence.


The Court of Appeal upheld the findings of liability against the appellant and the employer and confirmed the level of apportionment. However, in respect of contributory negligence it was found that the first respondent’s conduct was inconsistent with that of an experienced scaffolder and his damages were reduced by 20%. The Court of Appeal confirmed that this was a case where the usual duty of a principal, which does not extend to supervising the system of work of independent contractors, was displaced by the principal’s actions in assuming control of the system of work from the contractor.

[2014] NSWCA 140Waco Kwikform Ltd v Perigo and Workers Compensation Nominal Insurer

IN ISSUE

• Whether principal contractor liable for injury to employee of independent contractor



http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWCA/2014/140.html?stem=0&synonyms=0&query=perigo%20and%20waco

PRODUCT LIABILITY


Contents

< Back to Contents

63 McDermott & Ors v Robinson Helicopter Company [2014] QSC 34Defective goods claim and whether the maintenance manual produced by the manufacturer contained defective instructions to ensure the safety of a helicopter.

PRODUCT LIABILITY


PRODUCT LIABILITY


The Facts

Mr McDermott (first plaintiff) was seriously injured on 30 May 2004 when the helicopter in which he was a passenger crashed while engaged in an inspection of fence lines on a very large cattle property on the Queensland-Northern Territory border. The pilot of the helicopter, Kevin Norton, did not survive the crash. The helicopter had been purchased by the owner of the property (the third plaintiff - NTB), in March 2004 and was delivered in April 2004. The helicopter had been regularly inspected and maintained before purchase by NTB. NTB employed Mr Norton.

It was common ground that the accident was the result of a failure of the forward flexplate which “forms part of the drive system by which torque is transferred from the helicopter’s engine to the rotor shaft, causing it, and the rotor, to rotate”. A bolted joint which was part of the flexplate assembly had been incorrectly assembled and tensioned.

The plaintiffs commenced proceedings against the first defendant, as the manufacturer of the helicopter, and a number of other defendants. The claims against the other defendants were settled.

The plaintiffs alleged that the helicopter and the maintenance manual were both defective - the helicopter because of a mechanical fault and the maintenance manual because it did not require a thorough inspection of the forward flexplate for cracks, corrosion or the like. The plaintiffs claimed damages for breach of duty and for breach of ss 75 AD and AE TPA.

The Decision

In respect of the negligence claim, the issue for determination was whether the contents of the maintenance manual adequately highlighted the need to take certain steps to prevent failure of the flexplate. That issue was to be determined by examining the maintenance manual as a whole and not by reference to individual provisions in isolation. The court observed at the outset that the maintenance manual recognised (by, amongst other things, identifying the bolts as critical fasteners) that there was a risk of catastrophic failure if one of the bolted joints for the flexplate became loose. After a detailed analysis of the evidence, the court held that the instructions in the maintenance manual relating to the inspection of the flexplate (particularly the instruction to verify that it was securely fastened) was, in light of other instructions in the manual, adequate to address the risk of failure of the flexplate from an inadequately secured bolt joint.

In respect of the claims under the TPA, the critical issue was whether the goods had a defect. The conclusions reached in relation to the maintenance manual dictated a finding that the plaintiffs failed to establish the existence of a defect in the goods supplied by the first defendant.

The first defendant’s allegations of voluntary assumption of risk and contributory negligence were not pursued at trial, and although it was not necessary to do so, the court ruled that both defences were not made out. Although he had previously flown a helicopter, the first plaintiff was not qualified or

experienced and he was therefore entitled to rely on the expertise of Mr Norton. Further, the court did not find that Mr Norton was negligent in carrying out his pre-flight inspection and, as a result, the court did not make a finding of contributory negligence on the part of his employer, NTB.

The claims were dismissed.

[2014] QSC 34McDermott & Ors v Robinson Helicopter Company

IN ISSUE

• Liability of manufacturer for defective part in helicopter

• Liability for instructions contained in maintenance manual



http://www.austlii.edu.au/au/cases/qld/QSC/2014/34.html

WORKERS’ COMPENSATION


Contents

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66 Wolters v The University of the Sunshine Coast [2013] QCA 228Employer’ liability for injuries sustained as a result of workplace bullying after failing to properly reprimand employee.

68 A Z v The Age [No 1] [2013] VSC 335Whether newspaper liable for psychiatric injury suffered by employee photographer following assignment to photograph families of Bali bombing victims.

70 Heywood v Commercial Electrical Pty Ltd [2013] QCA 270Appeal against finding that employer not in breach of duty to provide a safe system of work as trainee employee knew of danger of sharp metal object and created the danger by placing the object close to him.

72 Suncorp Staff Pty Ltd v Larkin [2013] QCA 281Whether a cupboard handle represented an obvious risk in an office environment despite the absence of prior incidents.

73 Cairns Regional Council v Sharp [2013] QCA 297Whether employer breached duty of care to employee by failing to close lanes of traffic immediately adjacent to where the employee was working.

75 Schonell v Laspina, Trabucco & Co Pty Ltd [2013] QCA 324Unsuccessful appeal against finding that employer not liable for employee’s fall from ladder.

76 Comcare v PVYW [2013] HCA 41Whether a worker’s injuries were sustained “in the course of” her employment.

77 Endeavour Foundation v Weaver [2013] QCA 371Whether an employer had breached its duty of care to an employee by instructing her to perform a particular physical demonstration “as quickly as possible”.

79 Taboas v Abigroup Contractors Pty Ltd [2014] NSWSC 13Whether employer negligent for providing unsafe system of work. Assessment of damages for back injury.

80 Keegan v Sussan Corporation (Aust.) Pty Ltd [2014] QSC 64Claim against employer for psychiatric injuries allegedly caused by workplace bullying.

81 ADCO Constructions Pty Ltd v Goudappel [2014] HCA 18Consideration of the transitional provisions to the Workers’ Compensation Act (1987).





Workplace bullying - employer liability

The Facts

The appellant (Ms Wolters) brought a claim in negligence against her employer (the respondent) for psychiatric injury sustained in the course of her employment. The alleged injury arose out of a confrontation between Ms Wolters and a fellow employee of the respondent (Mr Bradley).

The circumstances surrounding the confrontation were that on the morning of 14 March 2008, the University of the Sunshine Coast suffered a power outage. During the outage, Ms Wolters was gestured into the office of a fellow employee in order to provide assistance on an unrelated matter. Mr Bradley witnessed Ms Wolters through the window of the office and yelled at her to meet him outside. Ms Wolters complied and was met by Mr Bradley walking aggressively towards her, yelling and waving his arms. Mr Bradley accused Ms Wolters of abandoning her duties before demanding that she return to work.

Ms Wolters was seriously affected by the confrontation. She struggled through her rostered shift the next day, although this was to be her last day as an employee of the respondent. Ms Wolters made a complaint to the respondent’s human resource department but no immediate investigation was undertaken.

Four months prior to the confrontation with Ms Wolters, Mr Bradley had been involved in a similar incident where he had abused a different co-worker, Ms Carney. This particular incident resulted in Ms Carney leaving the employ of the respondent and

lodging a WorkCover claim based on the depression that she had sustained as a result of Mr Bradley’s aggressive behaviour. Eventually, Ms Carney and the respondent entered into a separation agreement. In response to this incident, the respondent informally counselled Mr Bradley but failed to conduct an investigation.


The trial judge found that the respondent had breached the duty it owed to Ms Wolters by failing to properly reprimand and counsel Mr Bradley following the incident with Ms Carney. However, the trial judge also held that even if the respondent had done so, it was probable that Mr Bradley would have acted no differently during the confrontation with Ms Wolters. On this basis, it was held that the respondent’s breach of duty was not causative of Ms Wolter’s injury and her claim was dismissed.


Ms Wolters contested the trial decision on a number of grounds. Firstly, she argued that in light of the finding that the respondent’s breach of duty (the failure to properly reprimand Mr Bradley after the incident with Ms Carney) increased the risk of injury to Ms Wolters, the trial judge erred by concluding that this was insufficient to establish causation. The Court of Appeal had no hesitation in dismissing this ground of appeal and stated that an increased risk of injury alone is insufficient to establish causation.

Secondly, Ms Wolters appealed on the basis that the trial judge erred in his application of evidential onus.

The Court of Appeal found that the respondent had not conceded that an alternative system of work, being the appropriate counselling and/or reprimand of Mr Bradley, would have avoided the incident. Therefore the onus of establishing that an appropriate reprimand would have avoided the injury remained with Ms Wolters and the trial judge did not err in this regard.

Finally, Ms Wolters submitted that the trial judge erred in his assessment that the appropriate reprimand of Mr Bradley following the incident with Ms Carney would not have avoided the incident with Ms Wolters. The Court of Appeal accepted this submission, finding that the trial judge failed to adequately describe the reprimand necessary to discharge the

[2013] QCA 228Wolters v The University of the Sunshine Coast

IN ISSUE

• Whether an employer was liable for injury caused by workplace bullying

• Whether inadequate reprimand for prior bullying by co-worker was causative of injuries







Workplace bullying - employer liability

respondent’s duty. According to the Court of Appeal, the appropriate reprimand would have involved counselling Mr Bradley to first check his facts before criticising co-employees as well as highlighting the importance of acting in a calm and rational manner when dealing with more junior employees. The Court of Appeal formed the view that Mr Bradley would have responded positively to the appropriate reprimand, meaning that the incident with Ms Wolters would have in all likelihood have been avoided.

On this basis, the trial judge’s decision was overturned and damages in the sum of $364,008.06 were awarded in favour of Ms Wolters.

[2013] QCA 228Wolters v The University of the Sunshine Coast






The Facts

The plaintiff was employed by the defendant, The Age, as a photographer for 21 years. She brought a claim against the defendant alleging that she sustained post traumatic stress disorder (PTSD) and major depression as a result of her employment.

The plaintiff contended that over the course of her employment she became sensitised to the risk of psychological injury. Then, in August and September 2003, she was assigned to photograph families of the victims of the first Bali bombings, who were being interviewed for an anniversary story. The plaintiff alleged that the content of those interviews was unusual, heart wrenching and sad, and that she had no support to deal with the emotional consequences which followed. Her condition worsened over time and she ceased working for the defendant in November 2005. She did not return to work, and her employment was terminated on 18 July 2008.

The defendant argued that there was no evidence that the plaintiff was exposed to traumatic events over the course of her employment such that she would be sensitised to psychological injury and also that, in any event, there was no evidence that any measures taken by it would have protected the plaintiff from injury.

The Decision

The plaintiff argued that by 2002 and certainly 2003, the defendant knew or ought to have known that there was a risk of psychiatric injury to journalists when they undertook tasks of the nature undertaken by the plaintiff , and that there was a need to protect journalists against that risk. It was also submitted that the defendant owed the plaintiff a duty to have in place trauma awareness training, a culture of education and support, a program of monitoring and responding to issues and, in particular, a peer support program.

The plaintiff argued that the defendant had knowledge of her vulnerability and increased risk of suffering from psychological injury by virtue of her cumulative exposure to trauma over the time she was employed by the defendant; her personal difficulties (which were known via her relationship with a Senior Manager employed by the defendant); work on the Bali assignment; her association with another journalist assigned to cover the Bali bombings and who later committed suicide; and by virtue of complaints made by her in an interview published in 2004.

In the court’s view, the central issue in this case was foreseeability, specifically the defendant’s knowledge of the nature and extent of the work being done by

the plaintiff, the overt signs given by her, and whether there were any foreseeable sensitivities. After analysing the evidence, the court held that the plaintiff’s injury was not foreseeable.

The court accepted that the defendant was not aware and ought not to have been aware that the plaintiff’s photographic career put her at particular risk, if it did. The evidence established that her career was not centred on coverage of events that could be characterised as traumatic or stressful such that a reasonable employer would be put on notice of a risk of psychological sensitisation.

[2013] VSC 335A Z v The Age [No 1]

IN ISSUE

• Whether the plaintiff sustained a psychiatric injury in the course of her employment due to the negligence of her employer

• Whether the plaintiff’s psychiatric injury was foreseeable







There was no basis to suggest that the defendant was aware, or should have been aware, that the plaintiff’s personal difficulties put her at risk by the time she was assigned to the Bali assignment. Further, the defendant was not obliged to proactively acquire knowledge of this vulnerability prior to the Bali assignment. Although the Bali assignment was a very tough assignment, it was not foreseeable at the time that it would cause psychological injury to the plaintiff.

Even if the risk to the plaintiff of psychiatric injury as a result of her work was foreseeable, the defendant did not fail in its duty and any failure did not cause injury. The defendant had an adequate culture and system of support, reallocation and counselling for its staff and, in particular, the plaintiff.

The court held that there was no basis to suggest that a reasonable employer in the position of the defendant in 2002-03 should have implemented a peer support or similar program as a method of protecting staff from the risk of psychological injury.

The claim was dismissed.

[2013] VSC 335A Z v The Age [No 1]






The Facts

The appellant was employed by the respondent as a trainee electrician. On 17 October 2008, while working on the fit out of a high rise apartment building, the appellant punctured his elbow (severing the ulna nerve) on a piece of scrap metal he had earlier placed on a nearby toolbox. The appellant had previously been instructed to attach pieces of U shaped framing cut from scrap metal to fixed framing in order to protect electrical cables in the building.

The appellant commenced proceedings against the respondent alleging that it failed to prescribe a safe system of work and breached its duty of care by providing no instructions on the safe handling of cutting and handling sharp steel.


The trial judge found that the respondent did not breach its duty to the appellant because the appellant knew that the scrap metal off-cut was sharp and because he created the danger by placing it, with its sharp edge exposed, close to where he was working. The trial judge assessed the damages he would have awarded if breach of duty had been established at $50,000 for general damages and $150,000 for future economic loss.


The issue for determination was whether the respondent breached its common law duty to provide a safe system of work to the appellant, and if so, whether that breach was causative of the appellant’s loss. The appellant also argued that the assessment of damages in relation to future economic loss and general damages were manifestly inadequate and that the trial judge erred in calculating future loss of superannuation.


The decision of the trial judge on breach of duty was overturned.

The Court of Appeal noted that the appellant was given no training or warnings concerning the handling of dangerous objects and their placement, and observed that the leaving of a sharp piece of metal on a tool box frequently used by the appellant and other workers was not a safe practice.

The Court of Appeal noted that case law clearly establishes that it is not an answer to an allegation that an employer has breached its duty of care to assert that the risk of injury was obvious and known to the employee. In exercising its duty to take reasonable care to avoid exposing an employee to a risk of injury, an employer is required to have regard to the risk that an injury may occur because of some inattention or misjudgement by the employee in performing required tasks.

The Court of Appeal held that the respondent was in breach of its duty of care because a reasonable employer in the respondent’s position would have required supervisors to instruct apprentices in safety management and adopting procedures in which dangerous objects were handled in a safe and consistent way. Instructions of this kind would have alerted the appellant to take simple precautions such as placing the off-cut sharp side down and/or away from the edge of a frequently used area.

Taking these sorts of measures would have been a reasonable, inexpensive, and convenient way to respond to these risks.

The Court of Appeal accepted the appellant’s evidence that if warnings or instructions had been given he would have done his “level best’ to follow them.

[2013] QCA 270Heywood v Commercial Electrical Pty Ltd

IN ISSUE

• Whether employer breached duty of care to provide safe system of work to trainee electrician







It was relevant that the respondent knew that the appellant was inexperienced. The risk that the appellant would leave a dangerous object where it might injure him and others was foreseeable. The respondent’s failure to guard against that risk, by taking the measures outlined, amounted to a breach of duty.

The Court of Appeal upheld the trial judge’s assessment of damages except in relation to the rate of calculation of future loss of superannuation entitlements, which ought to have been made in accordance with the Superannuation Guarantee (Administration) Amendment Act 2012 (Cth).

[2013] QCA 270Heywood v Commercial Electrical Pty Ltd






The Facts

The respondent was employed in the appellant’s call centre when he struck his right knee on the metal handle of a cupboard under a workbench on which the telephone he was using rested. The respondent alleged that the appellant breached its duty of care not to expose him to any risk of damage or injury of which the appellant knew or ought to have known. The respondent alleged that he sustained a soft tissue injury to his knee, complex regional pain syndrome and consequential psychological injury.


The trial judge found the appellant liable and ordered that it pay the respondent $245,000 damages together with costs.


The appellant appealed on the basis that there was no breach of duty of care as any risk of injury or the likely extent of any injury was slight.


The appeal was allowed.

The Court of Appeal held that the trial judge erred in not having due regard to a number of matters, which led to the conclusion that there was no breach by the appellant of its duty of care.

The fact that the whole of the appellant’s premises was furnished with handles identical to the subject handles

and that there was no evidence that they had caused injury over the years was pertinent to the question of whether a reasonable employer in the appellant’s position should have foreseen a risk of injury and, if it had known of such a risk, whether it would have altered the handles or taken other action in response to the risk. The trial judge equated the possibility that part of an employee’s body may come into contact with the door handle with an obvious risk of injury and reasoned by reference to the respondent’s injury, that such an injury may well be substantial.

The trial judge also erred in concluding that the existence of similar handles on some 300 other cabinets in the call centre was irrelevant because these handles were not at knee height. The evidence of the use of the same handles, which were not said to be in any way unorthodox in design, bore upon the reasonableness of the appellant’s failure to perceive any risk associated with the subject handles under the workbench.

Although the cost of taking remedial action in respect of the door handles may have been relatively modest, the likelihood of an employee being injured by the subject door handles was particularly low, as was the risk that any injury inflicted would be serious. It was not permissible to argue from the respondent’s injuries that the handle posed a risk of serious injury, particularly given the absence of any expert medical evidence in that regard.

The Court of Appeal did not accept that a reasonable employer in the position of the appellant would have foreseen that a failure to remove the subject handles

or take other remedial action in relation to them would have involved a risk that employees using the bench could sustain an injury more severe than minor bruising. However, it was not accepted that even if an employer perceived a risk of injury, having regard to the magnitude of the risk and the degree of probability of its occurrence, the employer would have changed the handles or taken other remedial action.

[2013] QCA 281Suncorp Staff Pty Ltd v Larkin

IN ISSUE

• Whether a cupboard handle represented an obvious risk despite the absence of prior incidents

• Whether the trial judge erred in identifying a breach of duty of care






The Facts

On 20 May 2009, the respondent was mowing the narrow median strip in the middle of seven lanes of traffic on Sheridan Street, Cairns, in the course of his employment with the appellant. He noticed that a spring had become detached from the top deck of the mower. Believing it was a hazard, he leaned forward to his left to pick it up. As he did so, a car horn sounded which the respondent perceived to be “very close” and it startled him. This caused his right hip to hit the left side of the mower and push the mower over his left hand, resulting in partial amputation of his ring and little fingers. The respondent commenced proceedings against the appellant for negligence.


The trial judge found that the appellant breached its duty of care to provide the respondent with a safe system of work. The risk of the respondent being injured when working in close proximity to vehicles travelling 60 kilometres per hour was held to be foreseeable. The duty was breached by failing to ensure appropriate signs and traffic control devices were used to provide a safe buffer between the area where the respondent was mowing and the traffic in the vicinity. The trial judge found that the sounding of the car horn caused the incident and that had there been a safe buffer between the respondent and the traffic, he would not have been startled and the accident would not have occurred. Contributory negligence did not arise and the appellant was ordered to pay the respondent $51,553.35 in damages.


It was necessary for the appellant to apply to seek leave to appeal because the damages award was for a sum less than the monetary jurisdiction of the Magistrate’s Court. The appeal concerned liability only.

The appellant contended that leave to appeal should be granted due to errors of law which resulted in a substantial injustice. The appellant submitted that the trial judge erred in finding that the appellant breached its duty of care by improperly considering the matter with hindsight, as well as wrongly finding a causal connection between the alleged breach and the respondent’s injuries.


The Court of Appeal refused the application for leave to appeal.

In respect of the finding of breach of duty of care, the Court of Appeal found it was foreseeable and not far-fetched or fanciful that if traffic in close proximity to the respondent behaved abnormally, he could be startled and instinctively react, inadvertently knocking the mower and injuring himself. The appellant argued it was impractical to block off lanes on either side of the median strip as the mowing task was to take only about five minutes to complete. The Court of Appeal rejected this argument and held that the fact that the mowing task only took a short time did not absolve an employer from responsibility if a breach of duty was established. There was a real potential for serious injury or even death to the respondent in these

circumstances. The risk could have been significantly alleviated by closing a lane on each side of the median strip and erecting temporary traffic warning signs.

The appellant also argued that the trial judge erred in concluding that the breach of duty caused the respondent’s injuries. It was alleged that the respondent was injured due to his response to the sounding of a car horn and that the appellant had no control over this risk. The Court of Appeal found that had the lane closures been implemented, the traffic would have been further away from the respondent and the sounding of the horn would have been more distant and less likely to startle him.

IN ISSUE

• Whether the defendant breached its duty of care to the plaintiff to provide a safe system of work

• Whether the breach of duty of care by the defendant was causative of the plaintiff’s injuries



[2013] QCA 297Cairns Regional Council v Sharp





READ MORE

The respondent would presumably not have instinctively reacted and subsequently injured himself as he did. A substantial cause of the injury was the appellant’s failure to ensure the respondent adopted a safe system of work in the circumstances.

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[2013] QCA 297Cairns Regional Council v Sharp






The Facts

The appellant was employed by the respondent as a block layer. He had been working on an elevated platform consisting of aluminium planks set on trestles. The platform was accessed by a ladder. When he completed his work, he stepped from the platform onto the ladder, felt the first rung of the ladder give way, and moved awkwardly back onto the platform. In doing so, he seriously injured his left knee. After the accident, it was discovered that the ladder was defective.


The trial judge dismissed the appellant’s case on the basis that he had failed to establish any negligence on behalf of the respondent.


The appellant challenged the factual findings made in relation to the inspections of the ladder by the respondent.


The Court of Appeal dismissed the appeal on the basis that the factual findings were reasonably open to the trial judge. The Court of Appeal held that the practice of visual inspection prior to use adopted by the employer was the only practically useful method of ensuring the safety of the ladder.

There was nothing found on visual inspection of the ladder by the appellant or another employee of the respondent to indicate that it was defective in any way.

Of critical importance was the fact that there was insufficient evidence to allow the trial judge to conclusively determine whether the broken bracket on the ladder was the cause of the ladder movement, or had resulted from the appellant’s actions in climbing awkwardly back onto the platform.

The Court of Appeal determined that the appellant did not establish, and was unable to establish, that the bracket, prior to use, displayed a visible crack. Since the respondent had acted reasonably, its failure nevertheless to identify the defect in the ladder did not attract liability.


[2013] QCA 324Schonell v Laspina, Trabucco & Co Pty Ltd

IN ISSUE

• Whether a visual inspection system that failed to detect defects in a ladder was sufficient to enable an employer to avoid liability







The Facts

The respondent had been required by her employer to work for 2 consecutive days in a regional town away from her ordinary place of residence. She stayed overnight at a local motel that had been booked by her employer. Whilst at the motel, the respondent engaged in sexual intercourse with an acquaintance. In that process, a glass light fitting above the bed was pulled from its mount and struck her on the nose and mouth, causing physical and psychological injuries. The respondent sought compensation pursuant to the Safety, Rehabilitation & Compensation Act 1988 (Cth) (the Act). The respondent argued that her injuries had been sustained in the course of her employment and that she was therefore entitled to compensation under the Act.

Comcare initially accepted the claim but later revoked that acceptance. The respondent sought a review of that decision in the AAT. At first instance, the AAT held that the respondent’s injuries were unrelated to her employment.


The respondent appealed the AAT decision to the Federal Court. The Federal Court set aside the AAT’s decision and declared that the respondent’s injuries were suffered in the course of her employment.


Comcare appealed to the Full Federal Court, which unanimously held that the respondent’s injuries occurred in an “interval or interlude” during an overall period of work and therefore arose in the course of her

employment. An interval or interlude existed because the respondent’s employer had induced or encouraged her to spend the night at a particular place, being the motel. It was not necessary to show that her employer had induced or encouraged her to engage in the particular activity she was engaged in when the injuries were suffered.


Comcare was granted special leave to appeal to the High Court for determination of the circumstances in which an injury to an employee that does not occur during an actual period of work is to be treated as having arisen in the course of employment.

The High Court Decision

The High Court allowed Comcare’s appeal by a majority of 4 to 2. The High Court confirmed that the test as reformulated in the case of Hatzimanolis v ANI Corporation Limited (1992) 173 CLR 473, applied in determining the circumstances in which injuries to employees which did not occur during periods of actual work would nevertheless be treated as arising in the course of employment.

In Hatzimanolis, the High Court said that an interval or interlude within an overall period of work occurs within the course of employment because the employer has either expressly or impliedly induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way. An injury sustained during such an interval will be within the course of employment if it occurred at that place or while the employee was engaged in that activity unless the employee was guilty of gross misconduct taking him or her outside the course of their employment.

The majority of the High Court applied this reasoning to the present case. The starting point was to determine whether an injury was suffered whilst the respondent was not engaged in actual work. The next enquiry was to look at what the respondent was doing when she was injured. For the Hatzimanolis principle to apply, the respondent must have been either engaged in an activity that the employer induced or encouraged her to engage in or present at a place where the employer induced or encouraged her to be. If the answer to either of those questions is yes, then the injury will have occurred in the course of the respondent’s employment.

In this case, the majority considered that the injuries sustained by the respondent were not a result of the employer’s requirement or encouragement that she be at a particular place, rather, they were sustained during an activity that she took part in that was not required, authorised or encouraged by the employer. Therefore, the respondent’s injury did not arise in the course of her employment.

[2013] HCA 41Comcare v PVYW

IN ISSUE

• Whether a worker’s injuries were sustained “in the course of” her employment



http://www.austlii.edu.au/au/cases/cth/HCA/2013/41.html




The Facts

The Endeavour Foundation employed the respondent, Mrs Weaver, as a trainer. Part of her duties involved teaching Endeavour Foundation employees techniques to deal with aggressive clients, including the “back steps” manoeuvre, which involved walking backwards on the balls of the employee’s feet in a slightly crouched manner.

In the course of demonstrating the manoeuvre, Mrs Weaver fell and sustained injuries to her buttocks and spine.


The trial judge examined the evidence which included a manual provided by the Endeavour Foundation to trainers such as Mrs Weaver. When dealing with an aggressive client, part of the instructions included the recommendation to “… move out of the way as quickly as possible”.

Mrs Weaver gave evidence that she was required to undertake the manoeuvre as quickly as possible, and she alleged that the Endeavour Foundation was liable to her for failing to instruct her to move at a slow or moderate pace. Mrs Weaver says that she was told to move as quickly as possible and that, while she found the manoeuvre difficult to perform, she had practised it to a point where she had got quicker at performing it.

The trial judge concluded that directing Mrs Weaver to walk backwards on the balls of her feet while keeping her attention focused elsewhere involved a real risk of injury that she might fall over. Her age and build meant that she was more vulnerable to fall with potentially more serious an outcome and she had been required to perform an unnatural activity as quickly as possible. The trial judge commented that while moving quickly could be justified in the circumstances of a real life incident, it was unnecessary in a training situation where “there was no pretence of getting an employee used to this unnatural action, if it were possible”.


The Endeavour Foundation appealed to the Court of Appeal on the basis that:

(a) The trial judge had erred in finding that Mrs Weaver had been instructed by it to perform the activity quickly; and

(b) The trial judge had erred in concluding that “there was no pretence of getting an employee used to this unnatural action” in circumstances where employees had been instructed to practise their manoeuvre.


The Court of Appeal concluded that the trial judge had erred in concluding that Mrs Weaver’s evidence was that she had been instructed to perform the manoeuvre quickly. Rather, on her pleaded case and in evidence in chief and cross-examination, Mrs Weaver conceded that she was to move at a pace consistent with her training and experience of the manoeuvre. Further, the Court of Appeal concluded that the trial judge had erred in finding that moving as quickly as possible was unjustified in a training scenario, as

[2013] QCA 371Endeavour Foundation v Weaver

IN ISSUE

• Whether the trial judge had erred in concluding that the employee was instructed to perform the activity quickly;

• Whether the trial judge erred in finding that there was “no pretence of getting an employee used to this unnatural action”; and

• Whether the trial judge erred in concluding that the instructions given to the employee were unreasonable







the evidence was that these practices in the training scenario assisted in ensuring a sufficient response could be provided in the event of a real life attack.

Finally, the Court of Appeal found that the trial judge had erred in concluding that the instruction given by the Endeavour Foundation to Mrs Weaver was unreasonable.

The Court of Appeal upheld the Endeavour Foundation’s appeal on liability.

[2013] QCA 371Endeavour Foundation v Weaver






The Facts

The plaintiff was employed as a carpenter with Abigroup Contractors Pty Ltd (Abigroup). He worked on the Windsor flood evacuation route project where VSL Australia Pty Ltd (VSL) supervised his tasks. His employment required him to perform work involving repetitive lifting of heavy objects including manoeuvring span jacks in confined spaces. He subsequently suffered a low back injury and claimed damages from Abigroup and VSL.

The plaintiff alleged his employer, Abigroup, was negligent and had breached its duty of care to the plaintiff in failing to adequately train the plaintiff and provide him with a safe system of work. The plaintiff also alleged that VSL had breached its duty of care because it supervised him performing the unsafe task.

Both Abigroup and VSL denied liability. VSL alleged contributory negligence against the plaintiff. VSL also alleged that Abigroup’s negligence caused/contributed to the plaintiff’s loss, so any damages he might recover should be reduced in accordance with the WCA. Abigroup and VSL filed cross-claims against each other.

The Decision

The court held that Abigroup breached its duty of care to the plaintiff in exposing him to the patently unsafe system of work. It was in control of the site and responsible for the design and implementation of the system of work. The court observed that no amount of instruction, training or supervision could relieve Abigroup of the consequences of a dangerous system of work that involved the lifting and manoeuvring of the span jacks in that way. The risk of injury to the plaintiff was both foreseeable and preventable and not one to which Abigroup, acting as a reasonable employer, ought to have exposed him.

VSL was found equally liable as it was assigned by Abigroup to supervise the span jack placement and removal work, including the workers who performed the work.

In relation to contributory negligence, the court held there was no basis at all for contending the plaintiff contributed in any way to his own harm.

The medical evidence supported the conclusion the plaintiff had sustained a disabling spinal pathology although the court was not satisfied the plaintiff was as disabled as suggested. The court assessed his degree of permanent impairment at more than 15%, awarding him $192,000 for non-economic loss, $220,805 for future economic loss and $33,692 for medical and treatment expenses. Future medical expenses were assessed at $20,000.

The court found that the plaintiff had recovered the capacity to perform restricted work and discounted $34,000 from his $134,000 assessment for past economic loss because the court was not satisfied the plaintiff had mitigated his loss when he could have. He was entitled to recover from Abigroup for past and future economic loss. The court reserved its decision on the final damages amount before respective monetary liabilities of Abigroup and VSL were known as it required the parties to carry out the necessary calculations and bring in short minutes of order.

[2014] NSWSC 13Taboas v Abigroup Contractors Pty Ltd

IN ISSUE

• Whether breach of duty where system of work required plaintiff to manoeuvre heavy objects in a confined space; contribution between employer and co-contractor

DELIVERED ON 31 January 2014






The Facts

The plaintiff, Ms Keegan, claimed around $1.2 million in damages for personal injury and consequential loss allegedly arising as a result of negligence, breach of contract or breach of statutory duty by her employer, the clothing retailer “Sussan”.

After a period of maternity leave, Ms Keegan returned to work as an assistant store manager and within 14 days went on sick leave and did not return to work. The plaintiff alleged that she was the victim of workplace bullying and harassment by a newly hired store manager (Ms Clarke). The plaintiff made a complaint to management which was then reported back to Ms Clarke, and subsequently any workplace support eroded and the bullying behaviour worsened. The plaintiff alleged she suffered a psychiatric injury as a result of the bullying and harassment by Ms Clarke over an 11 day period, and that her subsequent impairment was so extreme she was unlikely to be able to return to full time work.

Sussan denied liability on the basis that the plaintiff’s reaction was so extreme and unreasonable as to be an unforeseeable result of unremarkable behaviour by Ms Clarke.

The Decision

The trial judge found that Sussan had breached the duty of care it owed to the plaintiff. The court considered that Ms Clarke’s behaviour towards the plaintiff involved a pattern of such unreasonable and excessive behaviour by a manager towards an employee as to signal a risk that it may cause serious emotional distress.

Sussan should have been put on notice following a distressed phone call the plaintiff made after the initial bullying occurred, that if the problem was not properly addressed its deleterious impact upon Ms Keegan would likely continue and be heightened by such a failure. In this way, if Sussan did not properly address the issue there would be a reasonably foreseeable risk of the plaintiff suffering psychiatric injury. In addition, Sussan did not comply with its own bullying and harassment policy, nor was any attempt made to investigate the plaintiff’s complaint against Ms Clarke. The court found even if psychiatric injury was arguably only an insignificant risk as at the time the plaintiff placed her call, Sussan’s failure to then properly address the bullying complaint ensured the risk was not insignificant. A reasonable employer in Sussan’s position would have taken precautions against the risk by properly addressing the bullying complaint.

The court found Sussan’s breach of duty to be a necessary condition of the occurrence of the plaintiff’s psychiatric injury. Submissions made on Sussan’s behalf denying liability included that the plaintiff had a disproportionate response to essentially unremarkable behaviour by the supervisor, and that pre-existing personality traits (a high

need for validation and a focus on a sense of achievement through work) made the plaintiff more vulnerable to suffering a psychiatric injury, and that support provided to the plaintiff by her mother and husband exacerbated her dependency. It was found those matters may have made the plaintiff more vulnerable, but they were not causative of her psychiatric condition.

The plaintiff was awarded $237,770.00, plus a WorkCover refund. It was noted that the general damages award should not be reduced as a result of the plaintiff’s alleged pre-existing vulnerability to suffering a psychiatric injury because it was the act of the defendant that caused the injury.

[2014] QSC 64Keegan v Sussan Corporation (Aust.) Pty Ltd

IN ISSUE

• Whether employer had in place appropriate mechanisms to prevent psychiatric injury to staff arising out of workplace bullying by supervisor;

• Whether employee’s pre-existing personality traits should be taken into account







The Facts

Mr Goudappel was injured on 17 April 2010 in the course of his employment for ADCO. He made a claim for compensation under the WCA on 19 April 2010 and on 14 July 2011 was assessed as having a 6% permanent impairment. He made a claim for lump sum compensation of $8,250 pursuant to section 66 WCA on 20 June 2012.

ADCO’s workers’ compensation insurer (the insurer) declined liability on the basis that the WCA was amended in 2012 to limit the lump sum compensation entitlements of workers with a permanent impairment of less than 10%. The insurer argued that a transitional regulation which extended the introduction of the threshold to claims for compensation made before 19 June 2012 meant that Mr Goudappel was not entitled to compensation.

The question was initially referred to the President of the Workers’ Compensation Commission of New South Wales who found that the amendments apply to claims for compensation made on and after 19 June 2012 where a worker had made a claim for compensation of any type in respect of the same injury before 19 June 2012, and that Mr Goudappel was accordingly not entitled to compensation.

Mr Goudappel appealed by leave to the Court of Appeal.


The Court of Appeal allowed the appeal and awarded Mr Goudappel costs.

The insurer was granted special leave to appeal to the High Court on the basis of its undertaking not to disturb the costs order and agreement to pay Mr Goudappel’s costs of the appeal. The WorkCover authority of New South Wales was joined as a second respondent in support of ADCO’s position.


The High Court considered the amendments that had been made to the WCA in particular section 6 WCA, entitled “Savings, Transitional and Other Provisions”. Mr Goudappel argued that clause 15 protected the entitlement of claims made before 19 June 2012 from the disentitling effect of the threshold introduced by the new section 66(1). The insurer argued that clause 5(4) WCA displaced the protection apparently afforded to Mr Goudappel by clause 15.


The High Court found that the new clause 11 of schedule 8 to the WCR extended the amendments made by schedule 2 to the Amendment Act to include a claim for compensation made before 19 June 2012. Accordingly it also extended the operation of section 66(1) to such claims, which introduced the threshold of 10% permanent impairment. Accordingly, the effect of clause 11, which was retrospective in action, was to extinguish Mr Goudappel’s entitlement to claim for compensation as he fell below the threshold.

The High Court accordingly allowed the insurer’s appeal.

[2014] HCA 18ADCO Constructions Pty Ltd v Goudappel

IN ISSUE

• Whether transitional provisions to an amendment of the Workers’ Compensation Act 1987 (NSW) prevented the plaintiff from seeking compensation



http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2014/18.html?stem=0&synonyms=0&query=goudappel

HEALTH LAW


Contents

< Back to Contents

Medical Negligence

84 Cox v Fellows [2013] NSWCA 206Whether the surgeon departed from the usual standard of care.

86 Paul v Cooke [2013] NSWCA 311Whether negligent failure to diagnose caused the harm occasioned by treatment of the condition when ultimately diagnosed.

87 McKenna v Hunter & New England Local Health District; Simon v Hunter & New England Local Health District [2013] NSWCA 476The liability of a hospital for discharging a mentally ill patient into the care of a friend whom the patient subsequently killed.

88 Odisho v Bonazzi [2014] VSCA 11Whether a gynaecologist breached her duty of care by failing to warn a patient of a risk of multiple pulmonary emboli as a result of taking a drug called tranexamic acid to treat heavy bleeding.

89 Hayer v Kam & Ors [2014] NSWSC 126An application to strike out an intentional tort claim.

90 Mules v Ferguson & Anor [2014] QSC 51Patient sues her general practitioner for damages said to be as a consequence of a failure to refer the patient to a specialist in time to prevent catastrophic injuries.

91 Neville v Lam (No. 3) [2014] NSWSC 607Whether the defendant advised the plaintiff of the risk of pregnancy following an endometrial procedure.

HEALTH LAW


HEALTH LAW


Medical Negligence

The Facts

In August 2008, the respondent (Ms Reyna Fellows) was diagnosed as suffering from multiple gallstones. On 11 September 2008, the appellant (Dr Michael Cox, a general surgeon) examined the respondent and recommended surgery to remove the gallbladder. As part of the surgery, the appellant would be using a diathermy instrument, which uses electrical currents to destroy tissue. During the consultation, the appellant discussed with the respondent the risks, benefits and potential complications of the surgery, including the risk of bile duct injury and a bile duct leak. However, the appellant did not advise that there was a risk of the diathermy coming into contact with surgical clips used in the procedure, nor that this possibility was a recognised risk of injury.

The surgery was performed by the appellant. During surgery, the appellant used a diathermy instrument, as well as placing 3 surgical clips on the cystic duct. At the follow-up consultation with the appellant, the respondent mentioned that she had had several minor attacks of pain in the upper abdomen but that these attacks had settled. However, after attending her general practitioner regarding several matters in early 2009, the respondent was referred for a number of tests and investigations, including a radiological investigation. This latter investigation revealed that the respondent was suffering from a stricture (an abnormal narrowing) in the common hepatic duct due to compression by the surgical clips which had been placed by the appellant during the earlier surgery. The reason for the stricture was later found not to be due to compression by the surgical clips.

In March 2009, the appellant performed an endoscopic procedure, which confirmed that the respondent had a common hepatic duct stricture just above the surgical clips on the cystic duct. A week later, another general surgeon performed a second endoscopic procedure, where it was found that the respondent was suffering a second stricture in the distal common bile duct as well as a stricture at the level of the surgical clips. After a number of unsuccessful attempts to treat the strictures, the respondent was referred to another surgeon who performed a procedure, whereby both strictures were successfully treated.


The trial judge found factually that it was the application of the diathermy “at or near” the surgical clip on the cystic duct, which caused the stricture in the respondent’s common hepatic duct. The respondent’s injury was avoidable because there was no reason why the diathermy current should have been deployed by the appellant at or near the surgical clips. The usual technique was not to use the diathermy in the location of the surgical clips.

In those circumstances, the trial judge held that the application of the diathermy at or near the surgical clips was a breach of duty in the conduct of the surgery, as there had been a departure by the appellant from the required standard of care.

The appellant appealed the decision.


The appeal was limited to the issue of liability only, namely: whether, on the balance of probabilities, a stricture in the respondent’s common hepatic duct was an injury caused operatively by the appellant’s use of a diathermy current during surgery; and whether the error in the use of the diathermy current by the appellant involved a departure from the standard of care required of the appellant in the course of the procedure.


The appeal was dismissed. The appellant had not shown error in the trial judge’s conclusions on either the cause of the respondent’s stricture, or the appellant’s breach of his duty of care.

[2013] NSWCA 206Cox v Fellows

IN ISSUE

• Whether the surgeon breached his duty of care





HEALTH LAW


Medical Negligence


The Court of Appeal was satisfied that the respondent had established that the injury was caused in an area other than where the diathermy current should have been used. The appellant agreed that the injury location was the wrong location to use diathermy because it was too close to the surgical clips. The Court of Appeal noted that the respondent’s injury could have been avoided if the appellant had followed his usual technique of deploying the diathermy current at a location distant from the clips and the common hepatic duct. His failure to follow his usual technique was not an exercise of clinical judgment but a departure from the standard of care expected of the ordinary skilled person exercising and professing to have that special skill of a surgeon.

The Court of Appeal rejected the appellant’s argument that the diathermy injury was an inherent risk of the surgery for which no liability would attach as a result of s 5I CLA (NSW). This was because it is the occurrence (not the risk of it) that must be avoidable by the exercise of reasonable care and skill. In addition, on the appellant’s own evidence, the application of the diathermy in the wrong location on the respondent was avoidable by the exercise of reasonable care and skill.

[2013] NSWCA 206Cox v Fellows

click here



HEALTH LAW


Medical Negligence

The Facts

In 2006 the plaintiff underwent a medical procedure (coiling) to treat a berry aneurysm in her right anterior cerebral artery. During the procedure the aneurysm ruptured, resulting in the plaintiff suffering a stroke and sustaining injuries leaving her permanently disabled. This was a risk of the procedure.

The defendant, Dr Cooke (radiologist), was not involved in the 2006 procedure, but 3 years earlier had reviewed and reported on an angiogram performed on the plaintiff, negligently failing to detect and report on the aneurysm.

The plaintiff sought to recover damages (agreed at $1 million) from the defendant for her injuries sustained in 2006, alleging that his negligence in 2003 was a cause of the injuries that she suffered in 2006. The defendant admitted breach of duty but denied liability on a number of grounds including that the loss and damage suffered by the plaintiff was not caused by his breach of duty.


Factual causation was established. The court compared what would have happened had the defendant correctly diagnosed the aneurysm in 2003 with what in fact happened in 2006. The court found that in 2003 the plaintiff would have followed the doctors’ recommendations as she did in 2006 and had the aneurysm treated by a different procedure known as clipping (the preferred method in 2003). On the

balance of probabilities, but for the negligence of the defendant, the aneurysm would have been obliterated by clipping in 2003.

Legal causation however was not established, in view of ss 5D(1)(b) and 5D(4) CLA (NSW). The treatment that diagnosis would enable (either clipping or coiling) carried risks, including rupture. The treatment of the aneurysm was a consequence of diagnosis, not of a failure to diagnose and the treatment was the immediate cause of the rupture. The exposure to the risk of rupture had nothing to do with the defendant’s failure to diagnose. Therefore, the defendant’s negligence did not create the risk. That risk was associated with the necessity for treatment once and when the aneurysm was diagnosed.

Accordingly, the delay in diagnosis neither created nor materially increased the risks of rupture. As the rupture occurred during treatment, the defendant’s admitted negligence was not causative of the plaintiff’s harm.


The plaintiff appealed the trial judge’s determination that legal causation under s 5D(1)(b) was not satisfied.


The Court of Appeal unanimously agreed with the trial judge that there was no liability in the defendant’s failure to diagnose the aneurysm in 2003. Had the defendant exercised reasonable care and skill and

diagnosed the aneurysm in 2003, the plaintiff would have still faced the risks of the procedure she willingly chose to undertake in 2006. The risk of intra-operative rupture was always present and could not be avoided once the plaintiff decided to undergo an operation using either procedure. This risk could only be avoided by electing not to undergo surgery. There could be no liability for the materialisation of an inherent risk.



[2013] NSWCA 311Paul v Cooke

IN ISSUE

• Whether a failure to diagnose was causative of the harm suffered





HEALTH LAW


Medical Negligence

The Facts

On 20 July 2004, Stephen Rose was concerned about the mental state of his friend William Pettigrove, and arranged for him to be taken by ambulance to hospital. Following a medical assessment, Mr Pettigrove was compulsorily detained at the hospital pursuant to the Mental Health Act 1990 (NSW). After an assessment by a psychiatrist working at the hospital, Mr Pettigrove was discharged on 21 July 2004 into the custody of Mr Rose so they could drive to where Mr Pettigrove’s mother lived. It was expected that Mr Pettigrove would then undergo further psychiatric treatment.

When the two men stopped on the highway after nightfall, Mr Pettigrove strangled and killed Mr Rose. Mr Pettigrove said in an interview with police that he had acted on impulse, apparently believing that Mr Rose had killed him in a past life and seeking revenge. Mr Pettigrove subsequently committed suicide.

Mr Rose’s mother and sisters claimed damages for psychiatric injury resulting from nervous shock caused by the negligence of the New England Local Health District, which was responsible for the conduct of the hospital and those working in it. They claimed that the hospital breached the duty of care it owed to Mr Rose by discharging Mr Pettigrove from the hospital into his custody.


The trial judge held that the plaintiffs had not established negligence on the part of the psychiatrist and therefore the hospital. Further, the plaintiffs had

not established that Mr Rose’s death, and therefore the psychiatric injuries the plaintiffs had suffered, were causally related to the negligence they alleged.


There were a number of issues raised on appeal including whether the hospital owed Mr Rose a duty of care; whether the injuries suffered were causally related to the alleged negligence and whether the hospital or the health service was entitled to the protection of s 5O and s 43 CLA (NSW).


The Court of Appeal held that the hospital owed Mr Rose, and therefore the plaintiffs, a duty to take reasonable care to prevent Mr Pettigrove causing harm to Mr Rose. The hospital breached its duty by discharging Mr Pettigrove in circumstances where he had suicidal tendencies and there was a risk of harm to Mr Rose if Mr Pettigrove attempted to harm himself.

The Court of Appeal held that causation was established because the hospital’s decision to discharge Mr Pettigrove was a necessary condition of the occurrence of the harm to Mr Rose and it was appropriate that the hospital’s liability extend to the harm. The discharge and subsequent road trip enabled Mr Pettigrove to attack Mr Rose in isolated circumstances where no-one was able to come to Mr Rose’s assistance.

The hospital was unable to rely on the defence in section 5O of the CLA (NSW) concerning conduct of professionals in accordance with peer opinion because

the hospital did not establish that there was a certain practice in place to deal with this type of situation.

The hospital was also unable to rely on section 43A CLA (NSW) which provides a defence where a public authority exercises a “special statutory power” (unless the exercise of that power was so unreasonable that no authority with that power would consider the exercise of the power to be reasonable). The purported exercise of a special statutory power in this case was the hospital’s decision to cease detaining Mr Pettigrove under the Mental Health Act. The Court of Appeal held that this was not the exercise of a special statutory power and section 43A CLA (NSW) did not apply.

An application for special leave to appeal to the High Court was granted on 20 June 2014.

[2013] NSWCA 476McKenna v Hunter & New England Local Health District; Simon v Hunter & New England Local Health District

IN ISSUE

• Whether a hospital was negligent in discharging a mentally ill patient who subsequently killed another person





HEALTH LAW


Medical Negligence

The Facts

On 17 April 2006, Grazilda Odisho was admitted to hospital and diagnosed with multiple pulmonary emboli. Ms Odisho alleged that her pulmonary emboli were caused by a drug called tranexamic acid (the drug) prescribed to her by her gynaecologist, Marcia Bonazzi, for heavy bleeding.

Ms Odisho alleged that Ms Bonazzi was negligent by failing to warn her of the risk that consumption of the drug may cause her to suffer a thromboembolic event and that had Ms Bonazzi warned her of this risk, she would not have taken the drug.


The trial judge dismissed Ms Odisho’s claim on the basis that the exercise of reasonable care did not require Ms Bonazzi to warn Ms Odisho of the risk of the drug causing a thromboembolic event. Ms Odisho also failed to establish that the drug was a cause of her pulmonary emboli. The trial judge also held that even if Ms Odisho had been warned of the risk, she would not have been dissuaded from taking the drug.


The Court of Appeal was asked to consider whether the trial judge was wrong to conclude that there was no breach of duty in failing to warn about the effects of the drug and in failing to conclude that the drug caused the pulmonary emboli.


The Court of Appeal accepted that the risk of a thromboembolic event as a result of taking the drug was low (less than 1 in 1000). However, the risk was serious and potentially life threatening. The Court of Appeal noted that, notwithstanding evidence which suggested that it was not usual practice for gynaecologists to warn of the risk, there were grounds for contending that reasonable care required a warning of the risk. The Court of Appeal did not however make any finding on this point given its view on causation.

The Court of Appeal held that the evidence did not support a finding that Ms Odisho’s pulmonary emboli were caused by the drug.

As to whether a warning would have made a difference in this case, the Court of Appeal held that the weight of Ms Odisho’s evidence suggested that it would not. The exaggerated nature of Ms Odisho’s answers to questions put to her about what she would have done if warned of the risk and the nature of the invasive treatment she was allegedly prepared to undergo instead of taking the drug justified the trial judge’s decision to reject her evidence in that regard.

[2014] VSCA 11Odisho v Bonazzi

IN ISSUE

• Whether a gynaecologist was negligent in failing to warn a patient of the risk of a thrombo-embolic event from taking tranexamic acid



http://www.austlii.edu.au/au/cases/vic/VSCA/2014/11.html


HEALTH LAW


Medical Negligence

The Facts

On 1 July 2007, the late Mrs Rashpal Hayer (Mrs Hayer) was admitted to Westmead Hospital (the seventh defendant), complaining of a frontal headache. A CT scan and MRI confirmed the diagnosis of a colloid cyst of the third ventricle with secondary hydrocephalus. On 2 July 2007, her treating neurologist decided that she should be placed on the next available operating list for surgery. That evening Mrs Hayer experienced a severe headache and early the next morning she was found by nursing staff to have suffered a cardiac arrest. She was taken to theatre where bilateral drains were inserted and a CT scan showed diffuse cerebral oedema with herniation. Despite ongoing medical management she was declared brain dead on 7 July 2007.

In December 2012, proceedings were brought by the children of Mrs Hayer (the plaintiffs) against six medical practitioners working at the hospital (the first to sixth defendants) and the hospital. The plaintiffs alleged that Mrs Hayer’s death was caused by the intentional acts of the defendants, done with intent to cause injury or death, or with reckless indifference to the risk of injury or death. It was alleged that the defendants, amongst other things, deliberately silenced her bedside monitor and deliberately ignored other audio and visual neurological monitors. A coronial inquest into Mrs Hayer’s death conducted in 2009 had heard allegations that some of the monitors may have been turned off or silenced, however the Coroner was unable to find adequate evidence to support the allegations.

Prior to the hearing, the claims against the first to sixth defendants were withdrawn but the intentional tort claim against the seventh defendant was maintained. The seventh defendant filed an application, seeking to have the plaintiffs’ intentional tort claim struck out on the basis that there was no factual basis for the claim and that as a matter of law, even if a factual basis could be established, it was bad in law.

The Decision

In considering whether there was any factual basis for the claim against it, the court considered the evidence that was put before the Coroner. The court found that there were contradictions in that evidence and that, therefore, a factual issue remained to be determined which would best be carried out by a trial judge.

The second element of the seventh defendant’s strike out application was based on s3B(1) CLA (NSW) which relevantly provides that the CLA (NSW) does not apply to or in respect of “civil liability of a person in respect of an intentional act that is done by the person with intent to cause injury or death...”. The seventh defendant submitted that the claim against it was, in reality, a claim based on an omission to do something and that the legislation did not intend for s3B(1)(a) to extend to causes of action arising from omissions.

The court noted that it found the seventh defendant’s reasoning attractive, and were the issue free from authority, it would have adopted the seventh defendant’s interpretation of s3B(1). Given the uncertain nature of the law in relation to s3B(1)(a),

however, the court was not prepared to strike out the intentional tort claim against the seventh defendant and the application was dismissed.

[2014] NSWSC 126Hayer v Kam & Ors

IN ISSUE

• Whether s3B(1) CLA (NSW) applies to intentional tort claims





HEALTH LAW


Medical Negligence

The Facts

The plaintiff, Ms Mules, was rendered deaf and blind after she contracted cryptococcal meningitis in 2008. She brought a claim against her general practitioner, Dr Ferguson (the defendant), alleging a failure to refer her for specialist assessment after she initially presented with symptoms including headaches, neck pain and flushes to the face.

The plaintiff had earlier attended upon a chiropractor several times (perceiving she had a musculo-skeletal problem), shortly after which she consulted the defendant who advised her to take pain relief and continue with chiropractic or physiotherapy treatment.

The plaintiff consulted the defendant again around one week later. A CT scan was ordered which detected some irregularities in the cervical spine. At a consultation on the following day, the defendant believed the scan simply confirmed a musculo-skeletal issue and prescribed additional pain relief (the September consultations).

The plaintiff alleged that the defendant should have perceived a more sinister condition at the September consultations, and that had she been referred to a specialist, her illness would have been diagnosed and treated earlier and she would not have suffered the loss of sight and hearing.

It was relevant that cryptococcal meningitis is an extremely rare infection that most general practitioners will never see during their practising life.

The Decision

While there was expert evidence which expressed the view that had the referral occurred earlier, the critical diagnosis would have been made at a point in time to prevent the full scope of the plaintiff’s injuries, the court gave detailed consideration to the factual matters briefed to the expert and concluded that at the relevant time, the symptoms instructed to the expert as being present were not as marked as contended for by the plaintiff.

The true state of the plaintiff’s symptoms when she consulted the defendant was of “pivotal importance”. The court ultimately found that in the September consultations, the plaintiff did not have a discernible collection of symptoms which should have caused the defendant, acting with reasonable care and skill, to conclude that the plaintiff should be referred for urgent or specialist assessment.

The court did identify a “shortcoming” in the defendant’s failure to undertake a physical neck examination and make related enquires. However, the court found that this examination would have revealed nothing further, and it was noted that: “even if the defendant conducted professionally incompetent consultation that would not be to the point if a competently conducted consultation would not have identified symptoms suggesting a need to refer the plaintiff”.

The court found that the plaintiff’s symptoms suggested a musculo-skeletal cause was likely, and that “hindsight bias”, driven by the knowledge that the

plaintiff eventually suffered a catastrophic condition, may naturally cause individuals to make more than is reasonable out of symptoms which have potentially multiple causes.

The court therefore concluded that there was no causative breach of duty on the part of the defendant and the plaintiff’s claim failed.

[2014] QSC 51Mules v Ferguson & Anor

IN ISSUE

• Whether the defendant’s failure to refer the plaintiff for specialist assessment was a breach of duty of care





HEALTH LAW


Medical Negligence

The Facts

The defendant performed an endometrial ablation on the plaintiff on 3 November 2004. The plaintiff alleged the defendant did not advise her of the risk that she could still conceive after the endometrial ablation and should use contraception. The plaintiff believed it was not possible for her to become pregnant.

The plaintiff became pregnant and gave birth to a boy with serious disabilities. There was no suggestion that the endometrial ablation performed by the defendant caused or contributed to the disabilities.

The plaintiff alleged that the defendant’s failure to advise of the risk of pregnancy was negligent and claimed damages relating to having the child.

The Decision

The court found the plaintiff was an honest witness. The reliability of her evidence, however, was affected by the passage of time.

While the defendant could not specifically recall the two consultations with the plaintiff, his evidence was that his practice with respect to endometrial ablation was invariably to advise regarding the risk of pregnancy and that contraception should be used. His notes did not specifically refer to that advice but included a reference to “endometrial ablation discussed” and “endometrial ablation, vs marina IUCD [sic]”.

The defendant had written journal articles in 1992 which discussed endometrial ablation including the

fact that while pregnancy is unlikely, a safe method of contraception is advised.

The court accepted that there were reasons to be cautious in acting on evidence from a defendant as to their “usual practice” or in this case, what the defendant said was his “invariable” practice. The court considered, however, that the defendant’s assertions were bolstered by journal articles he had authored. The likelihood that he failed to comply with his own advice on two occasions seemed to be relatively low. Further, the notes of a consultation recording a discussion of the relative merits of an endometrial ablation compared with a marina IUD strongly suggested that their relative contraceptive effects were discussed.

The plaintiff’s behaviour in not using contraception did not necessarily assist the court deciding between whether she was not disabused of the belief there was no risk of pregnancy on the one hand or was told that pregnancy was unlikely or very unlikely on the other hand.

The court found that the plaintiff’s behaviour in not using contraception one to two years after the consultations with the defendant may have been consistent with not being advised regarding the risk of pregnancy; or being advised it was unlikely or very unlikely that she would become pregnant; her age and; her possible state of mind at the time of the consultation when she was in a relationship with her then husband who had had a vasectomy.

With respect to the first consultation the court was unpersuaded that the defendant did not advise her

of the risk but was also not persuaded that he did. With respect to the second consultation the court was persuaded that the defendant provided the advice when discussing the merits of endometrial ablation compared with the use of the marina IUD.

Where the court finds itself unable to choose between competing versions, the party upon who the burden of proof lies has failed to discharge that burden.

Accordingly, the plaintiff failed to prove breach of duty and her claim was dismissed.

[2014] NSWSC 607Neville v Lam (No. 3)

IN ISSUE

• Whether a doctor failed to warn the plaintiff of the risk of pregnancy and the need to use contraception

• Evidence of “usual practice”




PROFESSIONAL NEGLIGENCE


Contents

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Solicitors & Barristers

95 Symond v Gadens Lawyers Sydney Pty Ltd [2013] NSWSC 995A law firm (Gadens) was found negligent and in breach of contract for advice it gave relating to tax consequences of a revised ownership structure of a business.

96 Crouch and Lyndon (a firm) v IPG Finance Australia Pty Ltd & Anor [2013] QCA 220Whether a co-partner in a law firm is liable to its clients for the actions of another partner who acted outside the ordinary course of the firm’s business. Consideration of a claim for negligence and breach of ss 13 and 14 of the Partnership Act 1891 (Qld).

98 Liddy v Bazley [2013] NSWCA 319Solicitor’s negligence for failing to make common law damages claim, give advice and prosecute the claim.

100 Registrar-General of New South Wales v LawCover [2013] NSWSC 1471Proceedings commenced by Registrar-General against the insurer of a solicitor who had acted for the transferee of a property which was fraudulently dealt with.

102 Takla v Nasr [2013] NSWCA 435Whether the respondent solicitor breached his duty in failing to procure guarantees from the vendor’s directors and investigate their financial position and whether failure to do so caused the appellant’s loss.

104 JJES Pty Ltd v Sayan [2014] NSWSC 541Whether a solicitor should have advised an experienced client on the obvious financial implications relating to the purchase of a franchise.

105 Bakovski and Lenehan [2014] NSWSC 671Whether a solicitor was in breach of duty for failing to give specific and strongly worded advice not to enter a harsh and oppressive loan/ mortgage transaction; whether claim was apportionable.



Contents

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Brokers

106 Ravesi v National Australia Bank Limited & Ors [2014] FCA 99Whether an insurance adviser properly implemented his instructions.

107 Swansson v Harrison & Ors [2014] VSC 118An insurance adviser and his client were found jointly liable for non-disclosure of the client’s medical condition to the client’s insurer.

Financial Planners

108 Swan & Baker Pty Limited v Marando [2013] NSWCA 233Whether the duty of care owed by financial advisers extends to advise on developments occurring after an investment is made.

109 Tomasetti v Brailey [2013] NSWSC 1282Whether reliance on advice of financial adviser was causative of losses suffered.

Other

110 Sydney Water v Asset Geotechnical Engineering & Ors [2013] NSWSC 1274Negligence claim against owner, boatshed builder, geotechnical engineer and excavation contractor for damaged sewer main caused by a landslip during excavation work. Whether plaintiff entitled to recover full cost to replace sewer main when only part was damaged by the landslide.

112 Gratrax Pty Ltd v T D & C Pty Ltd [2013] QCA 385Whether engineer’s incorrect design specifications for a road caused the appellant’s losses.





The Facts

In 2003, John Symond (the plaintiff), the founder of Aussie Home Loans (the business), obtained legal advice from Gadens Lawyers (the defendant) in relation to the tax consequences of a revised ownership structure of the business. The partner primarily responsible for the advice, Mr Ross Seller, was an expert in tax law. One aspect of the advice related to the means by which the plaintiff could continue to borrow funds from the business, in a tax advantageous way, in order to complete the construction of a new home.

In accordance with Gaden’s advice, the business was restructured in 2003 and 2004. As part of the restructure, the plaintiff was able to withdraw funds from the business by redeeming preference shares, which Gadens advised would be “tax free” in his hands. During the 2004 to 2006 financial years, the plaintiff drew down approximately $57 million. In January 2005, Mr Seller left Gadens and took up a position with Abbott Tout (now HWL Ebsworth) and continued to provide advice to the plaintiff.

In 2007 the ATO conducted an audit of the plaintiff’s tax affairs. As a result of that audit the plaintiff entered into a Deed of Settlement with the ATO whereby he agreed to pay a significant tax bill, penalties and interest and the business agreed to deduct an amount from its franking account.

The plaintiff commenced proceedings against the defendant for negligent advice, breach of contract and misleading conduct under the TPA. He claimed that the defendant’s advice did not conform to the standard of a reasonably competent solicitor and was misleading. He alleged that the defendant should have advised him of the availability of other means of restructuring the business to ensure that the funds he borrowed were “tax free” in his hands. The plaintiff also brought proceedings against Abbott Tout. Those proceedings were settled in February 2013 for $1.85 million.

The Decision

The defendant denied the allegations and argued that the implementation of the alternative structures that the plaintiff had suggested would have caused the payment of significantly greater amounts of tax than that paid pursuant to the settlement with the ATO. It also claimed that the deduction from the franking account did not cause the plaintiff any compensable loss.

The court held that the defendant was negligent and in breach of its contract of retainer with the plaintiff in relation to the structure it proposed, and its advice that the proceeds from the redemption of the preference shares would be “tax free” in the plaintiff’s hands. In proposing the structure and providing the advice, the defendant had also engaged in conduct

contrary to section 52 TPA. The court found that the defendant was obliged to advise the plaintiff not to proceed with the restructure and should have advised him of three alternative methods of structuring, so as to achieve the plaintiff’s objective of obtaining funds in a tax advantageous manner. Had such advice been given, then the plaintiff’s tax liabilities would have been mostly avoided.

The court found that Abbott Tout was a concurrent wrongdoer and that liability should be apportioned 85% to the defendant and 15% to Abbott Tout.

[2013] NSWSC 995Symond v Gadens Lawyers Sydney Pty Ltd

IN ISSUE

• Whether advice given by a law firm in relation to a business restructure was negligent








The Facts

Wood was a solicitor and former partner of the law firm, Crouch & Lyndon (appellant). He encouraged the respondents to form a mortgage lending business. The respondents paid money into the appellant’s trust fund between December 2006 and August 2007 for one legitimate borrower and four fictitious borrowers created by Wood. A “finder’s fee” was paid directly to Wood’s account and the legal work to document the terms of the loans was undertaken by the appellant.

Wood misappropriated the loan monies and purported to make interest repayments using money from the appellant’s other clients. When the loans fell into default, the appellant was investigated and the fraud was discovered. Wood’s practising certificate was cancelled in late August 2008. The other partner of the appellant had no knowledge of any of Wood’s wrongdoings or representations to the respondents.

The respondents commenced an action against the appellant to recover the losses it had sustained as a result of Wood’s misconduct, claiming that it was liable under ss 13 or 14 of the Partnership Act 1891 (Qld) (the Partnership Act) or by way of damages for negligence.

Section 13 of the Partnership Act provides that a partnership is responsible for the wrongdoings of one or more of the partners acting in the ordinary course of the business of the firm, or with the authority of the co-partners to the same extent as the partner so acting or omitting to act. Section 14 of the Partnership

Act provides that a firm is liable to make good the loss suffered as a result of a partner’s actions where the firm receives money or property of a third person in the course of its business and the money or property is misapplied by one or more of the partners while in the custody of the firm.

To support its claim under s13 of the Partnership Act, the respondents claimed that they had engaged the appellant to provide legal services in accordance with the representations made by Wood. The alleged representations included that the appellant arranged finance as part of its business. The respondents further alleged that their contract with the appellant had “warranted the truth of the representation, and that any future loan transactions to be arranged by [the appellant] on behalf of [the respondents] would be genuine and enforceable loan transactions and not shams”.

The appellant argued that it did not carry on the business of arranging finance, that Wood acted outside of the authority of the appellant and that the money was not received by the appellant in the course of its ordinary business.


The trial judge dismissed the negligence claim on the basis that the respondents had not established that the appellant had breached any alleged duty of care. However, no decision was made as to whether the appellant, in fact, owed a duty of care to the respondents.

The trial judge found that the appellant’s retainer included contractual warranties and that Wood had breached those warranties by contravening s 52 of the TPA. The trial judge also found that Wood’s deceitful and misleading conduct in all of the circumstances and the breach of the warranties constituted “wrongful acts” under s13 of the Partnership Act and, further, that they were made in the ordinary course of the appellant’s business or with its apparent authority. Accordingly, the respondents’ claim under s 13 of the Partnership Act was successful. Additionally, the trial judge held that the respondent’s money was received by the appellant in the course of its business, and therefore, the appellant was liable for the respondent’s loss under s 14 Partnership Act.

[2013] QCA 220Crouch and Lyndon (a firm) v IPG Finance Australia Pty Ltd & Anor

IN ISSUE

• Duty of care owed by co-partners to clients when one partner acts outside authority of partnership

• When is a law firm liable for the actions of one partner under ss 13 and 14 Partnership Act 1891 (Qld)









The appellant appealed on the basis that the trial judge erred in identifying Wood’s wrongful acts, erred in finding that Wood committed the wrongful acts in the ordinary course of the appellant’s business or with its apparent authority, and erred in finding that the appellant received the respondents’ money in the course of its business.


Whilst the Court of Appeal agreed with the trial judge that the appellant had breached the contractual warranties given by Wood, it held that such conduct was not a “wrongful act” caught by s 13(1) of the Partnership Act.

With respect to whether Wood was acting in the ordinary course of the appellant’s business, the Court of Appeal considered the test to be used i.e. whether “the partner was authorised to do acts of the kind in question” and whether there was ”closeness of the connection between the duties which, in broad terms, the [partner] was engaged to perform and his wrongdoing”. It was held that Wood was not acting in the ordinary course of the appellant’s business.

The Court of Appeal considered whether Wood had acted with the appellant’s apparent authority and considered that ”in the absence of any notice to the client of a relevant restriction upon a partner’s actual authority, it must be within a partner’s apparent authority to encourage the client to retain the partner’s firm to do work which it is within the partner’s apparent authority to do”. The Court of Appeal held that there was nothing in Wood’s conduct at the time of the

representations that did, or should have, alerted the respondent or a reasonable person in his position that Wood was acting without the authority of his partner.

With respect to s 14 of the Partnership Act, the Court of Appeal upheld the trial judge’s decision that whilst the money was not received in the ordinary course of the appellant’s business, Wood had accepted the payments with the apparent authority of the appellant and as such, the respondents were entitled to recover the loss from the appellant under s 14 of the Partnership Act.

The Court of Appeal also considered the respondents’ claim that the trial judge erred in rejecting its claim of negligence against the co-partner, Scott. Essentially the respondents alleged a duty to take reasonable care when performing work for a client to prevent the firm from acting in transactions “that were unauthorised by law or were sham transactions”. It was argued that the duty was owed to current and future clients. As this was a “novel” duty, the Court of Appeal noted that it should be developed “incrementally and by analogy with established categories of duties”.

The claim was rejected on the basis that it was not reasonable to require a partner to “look over the shoulder of a co-partner” and that any such duty would cut across the Partnership Act which codified the common law on that subject. Additionally, the Court of Appeal upheld the trial judge’s decision that, in any event, the respondents had not established the alleged want of reasonable care by Scott in the limited activities he carried out in connection with Wood’s files.



[2013] QCA 220Crouch and Lyndon (a firm) v IPG Finance Australia Pty Ltd & Anor







The Facts

Mr Bazley, the respondent, was employed as a prison officer by the Department of Corrective Services at the Parklea Prison. On 13 December 1987, a violent riot broke out at the prison and the respondent was physically assaulted and held hostage. The respondent’s mental health deteriorated after the incident. He was also involved in further workplace injuries. He was diagnosed for the first time with post-traumatic stress disorder resulting from the riot at Parklea Prison in October 2004.

In August 2005, the respondent sought legal advice from a firm of solicitors trading as Taylor and Scott (the appellant). He sought advice in relation to making a claim for workers’ compensation payments and also on the viability of a claim for common law damages resulting from the prison riot.

In 2006, the appellant arranged for the respondent’s workers’ compensation payments to recommence. Advice was sought from counsel regarding a possible damages claim and the appellant was referred for a psychiatric report, which was obtained in early 2007. However, the possible proceedings for damages were not advanced and the respondent withdrew his instructions in June 2009. In March 2010, the respondent commenced proceedings in negligence against the appellant for failure to pursue his damages claim between 2007 and 2009.

On 9 November 2012 judgment was given by the District Court in favour of the respondent in the amount of $270,019.

The appellant accepted, both at trial and on appeal, that they were in breach of their obligations to Mr Bazley in failing to commence proceedings.

However, the appellant appealed the decision on the basis that the trial judge failed to correctly identify the consequences arising from the breach of duty, namely, what advice would have been given by the appellant had they undertaken the necessary inquiries and whether the respondent would have pursued proceedings for damages.


The issue was whether the appellant’s breach caused the respondent to suffer loss. To determine this issue, the Court of Appeal considered whether the respondent would have pursued common law damages (but for the negligence) and whether the respondent would have been awarded damages.

The Court of Appeal held that the trial judge failed to properly assess the risk that the substantive claim would fail. It was noted that the injury occurred 20 years before and there was little evidence as to what the prison could have done to diminish the safety risk and avoid the riot. Causation was also in issue as the respondent had suffered a number of other injuries

and had been treated for anxiety and depression since the incident.

The Court of Appeal criticised the trial judge’s failure to assess potential damages for the purposes of identifying what advice should have been given by the appellant in 2007/2008. The Court of Appeal assessed the respondent’s statutory workers’ compensation benefits at $700,000 compared with common law damages of less than $600,000. The Court of Appeal held that a competent and reasonable solicitor would therefore have advised a client in the position of the respondent in 2008 not to commence proceedings for common law damages.

[2013] NSWCA 319Liddy v Bazley

IN ISSUE

• Whether the solicitor’s failure to commence common law proceedings caused the respondent to suffer loss

• Whether the trial judge properly assessed the prospects of success of the original claim








The Court of Appeal concluded that, absent the appellant’s conceded breach of the duty of care, the respondent would not have brought proceedings for damages in respect of the Parklea riot. Accordingly, the Court of Appeal allowed the appeal and set aside the judgment and orders made in the District Court. The respondent was ordered to pay the appellant’s costs of the trial and the appeal.

[2013] NSWCA 319Liddy v Bazley







The Facts

In or about July 2006, Fernando Panetta (Panetta) instructed a solicitor, Lewis Yee (Yee) in regard to the transfer of a property owned by Panetta’s sister, Nadia Pedulla (Pedulla) to Panetta and his wife, Anna Lam (Lam). Panetta falsely advised Yee that Pedulla was living in a convent in Italy and wanted the property transferred to Panetta, and not the Church. In early 2007, Panetta provided Yee with an executed power of attorney and an executed authority, both allegedly from Pedulla, authorising the release of the certificate of title over the property. Both the power of attorney and authority were fraudulently created by Panetta and Lam.

In various correspondance with other solicitors regarding the transfer of the property, Yee stated that he acted for Pedulla, when in fact, he did not. In March 2007, the property was transferred from Pedulla (without her knowledge) to Panetta, and Yee assisted in this transfer. Subsequently, Panetta and Lam took out a mortgage in the amount of $1.99M over the property. However, on 2 May 2011, Panetta and Lam sold the property to a bone fide purchaser for $3.8M. Once the proceeds of the sale of the property were used to discharge the mortgage, Panetta and Lam each received $684,890.92, and left Australia.

On 1 July 2011, Pedulla commenced proceedings (the property proceedings) against Panetta and Lam alleging that Panetta and Lam had fraudulently dealt with property of which Pedulla was the registered proprietor. Pedulla joined the Registrar-General, seeking compensation from the Assurance Fund. The Registrar-General filed a cross-claim against Yee and,

subsequently, Pedulla joined Yee, alleging that Yee had negligently caused her loss.

In the property proceedings, the court held in favour of Pedulla against Panetta, Lam, the Registrar-General and Yee, and in favour of the Registrar-General against Yee on the cross-claim. Panetta and Lam were ordered to account to Pedulla for the net proceeds of the sale of the property in the amount of $684,890.92 each. Yee’s liability as a concurrent wrongdoer was assessed at 30%, and judgment was handed down for the Registrar-General in the amount of $1,238,748.11, being 30% of the amount the Registrar-General was ordered to pay Pedulla from the Assurance Fund, plus costs.

In the current proceedings, the Registrar-General sought leave pursuant to section 6(4) of the LR(MP) to commence proceedings against LawCover, Yee’s professional indemnity insurer as at 12 August 2011, when Yee was served with the Registrar-General’s cross claim in the property proceedings.

The Decision

The application failed, and the summons was dismissed with costs.

The court held that the event giving rise to a claim within the meaning of section 6 LR(MP) was Yee’s negligent conduct which caused Pedulla to lose her property. This occurred in either 2007 or April/May 2011 at the latest, but in any event, before 1 July 2011, and therefore, not during the relevant period of insurance commencing on 1 July 2011 under the LawCover policy. Therefore, no charge was created upon any insurance moneys that

were or may be payable pursuant to the LawCover policy indemnifying Yee for the policy year commencing 1 July 2011. The LawCover policy was not in existence at the time of Yee’s negligence.

The court also held that there was an inconsistency between the proposition that the Registrar-General has a right under section 133(2) of the Real Property Act 1990 (NSW) (the RPA) to recover from Yee the “compensable loss” sustained by Pedulla on the one hand, and the fact that Yee’s corresponding liability to the Registrar-General is the subject of indemnity under Yee’s professional indemnity policy on the

[2013] NSWSC 1471Registrar-General of New South Wales v LawCover

IN ISSUE

• The date of the event giving rise to the claim

• Whether the proceedings were arguable given earlier findings on the solicitor’s dishonesty

• Whether the Registrar-General’s claim against LawCover constituted an abuse of process








other hand. The definition of “compensable loss” for the purposes of section 133 of the RPA excludes such loss or damage for which indemnity is available under a solicitor’s professional indemnity insurance policy. The court held that the Registrar-General’s argument was self defeating and therefore, leave to commence proceedings against LawCover was refused.

The court determined that the proposed proceedings by the Registrar-General were not an abuse of process because the issue sought to be determined was different from the issue raised in the property proceedings.

[2013] NSWSC 1471Registrar-General of New South Wales v LawCover







The Facts

Elizabeth Takla (the appellant) wished to purchase a townhouse that she was leasing from a development company. The development company offered to sell her the property for $500,000 (a price below market rate) on the basis that she pay 80% deposit and that the deposit be released to the development company on the exchange of contracts. The directors of the development company agreed to provide personal guarantees in relation to the monies the appellant paid on exchange. At the time the development company made the offer the appellant was told that the company was having cashflow problems.

The appellant retained Mr Nasr’s firm (the respondent) to act for her in the purchase. The contract for sale was exchanged on 4 October 2005 and the deposit paid and released to the development company. Personal guarantees were, however, not obtained from the directors of the development company.

The development company went into receivership on 3 March 2006. The receiver refused to complete the contract and the townhouse was sold by a mortgagee who had security over the whole development. Accordingly, the appellant lost the $400,000 deposit she had paid.

The appellant alleged that the respondent was negligent for failing to properly explain the risks of the transaction to her, and pointing out that guarantees were not in place and failing to obtain personal guarantees from the directors.


The trial judge found the respondent did not breach the duty of care owed to the appellant or if he had, that breach had not caused the appellant’s loss.

There had been competing versions between the appellant and the respondent’s conveyancer handling the transaction. The trial judge preferred the conveyancer’s evidence that she told the appellant that it was not in her best interest to agree a release of deposit of 80% and that if something went wrong it may be difficult for her to get her money back, particularly if the vendor became insolvent.

In correspondence from the respondent to the development company’s solicitors it was identified that the appellant sought the directors’ guarantees to protect her in the event that the vendor became insolvent.

While the conveyancer’s file notes of her advice to the appellant did not include a reference to the possible insolvency, the trial judge accepted that she gave that advice because it was consistent with the instructions the appellant gave regarding the vendor’s financial problems and with the respondent’s letter to the development company’s solicitor.

The trial judge found that the appellant was an intelligent, shrewd and worldly wise woman who had engaged in wide ranging investigations about the development company.

He found that the appellant knew at the time that the development company was in financial difficulty and

there was a risk of losing the deposit.

While the trial judge found that the respondent had taken no proper steps to ensure that there were guarantees in place, he found no breach of duty. There was also no evidence the directors ever had the ability to meet guarantees.


There were numerous grounds of appeal including that the trial judge should have found that the respondent breached its duty by failing to give formal written advice as to the financial risks of the transaction and by failing to procure the guarantees. The appellant also argued that the trial judge’s decision regarding causation was wrong because proper investigation

[2013] NSWCA 435 Takla v Nasr

IN ISSUE

• Solicitor’s duty to advise and investigate financial risk of property transaction

• Whether failure to obtain guarantee caused appellant’s loss








by the respondent would have disclosed the risk of default by the development company and it was unlikely in light of proper informed warnings before entering the contract that the appellant would have proceeded with the transaction. It was also argued that the appellant’s loss flowed naturally from the breach of failing to procure guarantees.

Further, the appellant contended that the respondent had to protect the appellant from her reluctance to have proper regard to the risks of the purchase and that the respondent was in a position to do things that the appellant was not and as a professional person had a duty to look after the appellant’s concerns.


The Court of Appeal found there was a tendency in the appellant’s submissions to overstate the duty the respondent owed as one “to safeguard” the appellant. It held that such language should be avoided because it overstates the duty of care as one to prevent potentially harmful conduct when the duty is to exercise reasonable care to avoid foreseeable risk of injury.

The Court of Appeal held that the trial judge should have found that the respondent breached his duty to the appellant in failing to obtain the directors’ guarantees. Taking those guarantees was the course of action the appellant had identified as potentially protecting her from the risk of loss if the development company became insolvent. The respondent should have at least followed his instructions and obtained executed guarantees of the deposit from the directors.

However, the Court of Appeal held that the respondent did not have a duty to investigate the directors’ financial positions to ensure the efficacy of those guarantees (Basten and Hoeben JA held that this will depend on the circumstances of the particular case).

Although the Court of Appeal reached a different conclusion to the trial judge on breach of duty, it determined that the decision on causation disclosed no appealable error. The trial judge concluded that the appellant would have proceeded with the transaction no matter what advice she was given. His assessment of what the appellant would have done if she had been given the advice she alleged ought to have been given turned on his assessment of her state of mind, demeanour and conclusions as to her credit. It was an evaluative determination about which reasonable minds might differ and should only be disturbed if clearly erroneous. The causation conclusion had to be understood in light of numerous findings including that the appellant believed she was getting a very good deal in paying below market value for a property on which she hoped to make a capital gain, that the location and type of property suited her and that she rejected advice to delete certain clauses from the contract, and that she exchanged contracts despite being advised that it was not in her interests to do so. The appellant failed to identify any incontrovertible facts or uncontested testimony which demonstrated that the trial judge’s conclusions on causation were erroneous or glaringly improbable.


[2013] NSWCA 435 Takla v Nasr







The Facts

The solicitor defendant was retained to act on behalf of the plaintiff on the purchase of a 7-Eleven franchise. The purchase of the business was effected by two separate agreements. The first was an agreement for the sale of the business between the plaintiff and the outgoing franchisee, with the purchase price expressed as ‘for a total goodwill of $206,000’. The second was an agreement by which 7-Eleven granted a franchise to the plaintiff. The terms of that agreement included a lease to the plaintiff for only a guaranteed further 18 months before expiry, with two options to renew the lease for a period of 3 years each. However, the exercise of those options was at the sole discretion of 7-Eleven. The first option was exercised, but the second was not.

The plaintiff was unable to sell the franchise business prior to expiration of the lease, and therefore lost the opportunity to sell the franchise with a goodwill component. It claimed the defendant was liable for that loss, on the basis that he should have identified and advised as to the obvious financial risk involved in paying $206,000 goodwill for guaranteed tenure of 18 months only; and advised it to instruct him to seek an amendment to the franchise agreement whereby 7-Eleven agreed to exercise the renewal options, and that the plaintiff should not proceed with the purchase if 7-Eleven did not agree to the amendment.

The Decision

The court found that the defendant did not breach his duty of care as alleged.

The court considered that a reasonably prudent solicitor in the position of the defendant may have done more, but that his omissions did not constitute negligence. The court commented that the standard of professional practice accommodates a degree of flexibility according to the commercial nous and sophistication of the client.

It was held that it was reasonable for the defendant to form the view that the director of the plaintiff was, at least in relation to small retail businesses, including franchise agreements, a person of significant commercial nous and sophistication. The director had TAFE level qualifications, had previously run franchise and small businesses, and had attested to her own business acumen in her franchise application. In the circumstances, the court was not satisfied that a reasonable solicitor in the position of the defendant would have taken the precautions alleged.

In any event, the court was of the view any failure of the defendant to take the precautions was not a necessary condition of the occurrence of the harm to the plaintiff. By the time the defendant was retained to act on the purchase, the plaintiff was thoroughly committed to the proposed purchase to the extent it had paid the deposit, the plaintiff’s

director had commenced training with 7-Eleven, and a business plan for the store had been prepared by an accountant. The plaintiff was well aware of the terms of agreements (and the interaction between them) from its own inquiries prior to instructing any solicitor, and it appreciated the risk and was prepared to take it. In those circumstances, the court found that had the defendant advised against proceeding with the purchase, the plaintiff would have rejected that advice and gone ahead with the purchase anyway.

Judgment was entered for the defendant.

[2014] NSWSC 541JJES Pty Ltd v Sayan

IN ISSUE

• Whether a solicitor was negligent for failing to advise on financial implications in a business purchase



http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2014/541




The Facts

Mr & Mrs Bakovski, a couple with limited English (the plaintiffs), brought proceedings against a solicitor, Mr Arkoudis (the solicitor), alleging professional negligence in respect of legal advice provided by the solicitor to the plaintiffs at a conference on 13 August 2004 in relation to a loan and mortgage transaction they entered into with a finance company at the request of a friend, Mr Mitrevski. The plaintiffs mistakenly believed that the documentation executed made them guarantors to a mortgage to enable Mr Mitrevski to borrow money secured over the plaintiffs’ property. In fact, the documents named the plaintiffs as borrowers.

The solicitor asserted that he provided the plaintiffs with advice in relation to the relevant documents. That advice allegedly included his recommendation on a number of occasions that the plaintiffs not sign the documentation as it was a “very harsh loan”, there was a “ridiculously high rate of interest” and that “If I were you, I would never agree to this loan”.

The plaintiffs denied that any such advice was given and claimed that the solicitor gave no advice at all.

The Decision

The court noted that there was no record of the advice allegedly given to the plaintiffs and no record such as an invoice or time sheet that recorded the time the solicitor spent with the plaintiffs when he was explaining the loan documentation to them. The court held that this failure to maintain records suggested a level of informality which was inconsistent with conventional practice.

The court accepted the plaintiffs’ evidence that the conference was a hurried one of limited duration and that the solicitor failed to provide any or any sufficient advice on the proposed loan. The court found that the solicitor did not explain that the plaintiffs were entering into a loan and did not provide any advice on the terms and conditions of it and also failed to advise the plaintiffs of the risks and that they should not proceed without obtaining independent financial advice. It was evident that the harsh and oppressive terms of the loan represented a significant risk to the plaintiffs. The solicitor’s failure to advise against the transaction amounted to a gross departure from the standard of care required.

The court accepted the plaintiffs’ evidence that if they had been advised against the transaction, they would not have proceeded. The court relied on the evidence of the plaintiffs’ hard working wage earning history combined with the fact that they had never previously loaned money on a short term high risk speculative basis.

The defence of contributory negligence (based on the plaintiffs’ trust in Mr Mitrevski without enquiries about him) failed. The plaintiffs were simple, unsophisticated people, with limited English and they were entitled to expect their solicitor to draw their attention to and advise them on any matters of concern in relation to the proposed transaction.

The court held that the plaintiffs’ claim was an apportionable claim under Part 4 CLA (NSW) because there was sufficient evidence that Mr Mitrevski, having made material misrepresentations to the plaintiffs which induced them to agree to help him obtain short term finance, was a concurrent wrongdoer.

The evidence supported a finding of misleading and deceptive conduct by Mr Mitrevski which involved a significant level of culpability and contributed to the plaintiffs entering the loan transaction. The solicitor’s breach of duty was a gross departure from his duty of care as a solicitor retained to advise on the transaction. The evidence was clear that he was aware the transaction was unusual and that the terms were harsh and oppressive. There were no circumstances to justify his failure to strongly advise the plaintiffs against the proposed transaction.

Liability was apportioned in the amount of 40% to the solicitor and 60% to Mr Mitrevski.

[2014] NSWSC 671


Bakovski and Lenehan

IN ISSUE

• Solicitor’s duty in relation to loan documentation involving unsophisticated plaintiffs

• Consideration of contributory negligence and proportionate liability







Brokers

The Facts

Paul Ravesi (the plaintiff) and his de facto partner, Candace Torres, were the directors of a computer business called Affinity. In July 2006, Affinity, through the plaintiff, took out an overdraft loan of $50,000 from the first defendant, National Australia Bank (NAB). NAB referred the plaintiff and Ms Torres to the second defendant, Mr Moore, a financial services advisor employed by NAB, to arrange insurance cover to secure the loan and protect the plaintiff and Ms Torres should either of them become seriously ill or injured.

The plaintiff and Ms Torres met with the Mr Moore on several occasions in August 2006. Mr Moore recommended that the plaintiff take out a personal policy of life, total permanent disability (TPD) and income protection cover. He made a similar recommendation for Ms Torres.

The following three policies were issued by the third defendant, MLC Limited (MLC), on the direction of Mr Moore, in November and December 2006:

• A policy in favour of Affinity, on the life of the plaintiff, providing life cover of $150,000 and critical illness including TPD cover of $140,000. The same policy had lower sums insured for Ms Torres;

• A policy in favour of the plaintiff providing income protection cover of $3,750 per month, for up to 5 years;

• A policy in favour of Ms Torres providing life cover of $200,000, critical illness including TPD cover of $200,000, and income protection cover of $3,750 per month, for up to 5 years.

On 10 December 2008, the plaintiff was severely injured in a car accident. On 23 February 2009, he lodged claims with MLC and discovered that a personal life and TPD policy originally recommended to him by Mr Moore, had not been procured. The plaintiff subsequently brought proceedings against NAB, Mr Moore and MLC.

The Decision

The court dismissed the claim against MLC as it had simply issued the policies as directed by the first and second defendants.

The first and second defendants asserted that the plaintiff had advised the second defendant that he did not wish to effect the personal life and TPD cover. Having regard to the documentary and verbal evidence, the court rejected this assertion and found that the second defendant had failed to comply with the plaintiff’s instructions and therefore breached its duty of care to him both at law and (implied in the) contract. The first defendant was vicariously liable for the second defendant’s conduct.

The court held that the plaintiff was contributorily negligent for failing to carefully read the policy documentation and annual renewal notices sent to him by MLC. Had he ready the documentation, he would

have realised that the policies issued did not include personal life and TPD cover. Damages were reduced by 40%.

[2014] FCA 99Ravesi v National Australia Bank Limited & Ors

IN ISSUE

• Whether an insurance advisor was negligent for failing to take out the correct insurance policies on his client’s behalf



http://www.austlii.edu.au/au/cases/cth/FCA/2014/99.html




Brokers

The Facts

In 2004, the plaintiff took out a life insurance policy with AXA, which covered death or diagnosis of a terminal illness. The plaintiff renewed his policy from year to year and on 26 February 2012, AXA issued a renewal notice to the plaintiff in which it sought to increase his premium by $800, which was around 25% higher than the previous year. On 7 March 2012, the plaintiff attended a meeting with his insurance advisor (the first defendant) to discuss his insurance options. During the meeting, the plaintiff, based on the first defendant’s advice, agreed to cancel his AXA policy and obtain a new policy with AIA and together they filled out an AIA application form.

The application form contained a section requiring details of the plaintiff’s last medical consultation. Based on the plaintiff’s instructions, the first defendant wrote that the plaintiff’s last medical consultation was with Dr Feren on 5 March 2012, the reason being a “sore stomach” and the result being “giardia – antibiotics – resolved”. The plaintiff signed the application form and an undated letter authorising the cancellation of the AXA policy. On 23 March 2012, AIA issued a life insurance policy to the plaintiff. On 28 March 2012, the first defendant sent the letter authorising cancellation of the AXA policy, to AXA.

At no stage after 7 March 2012 did the plaintiff advise the first defendant or AIA of his ongoing medical condition. Critically, prior to the AIA policy being issued, the plaintiff had been referred to a gastroenterologist, who had ordered a scan.

In May 2012, the plaintiff was diagnosed as suffering pancreatic cancer and in July 2013, he was advised that his prognosis was terminal. Shortly after being diagnosed as terminally ill, the plaintiff made a claim under his AIA policy. AIA declined the claim on the basis that he had failed to comply with his duty of disclosure by not advising AIA of his ongoing medical condition before the policy commenced on 23 March 2012.

The plaintiff also lodged a claim with AXA but the claim was declined on the basis that the policy had been cancelled on 28 March 2012. The plaintiff brought proceedings against the first defendant, and his business and the entity holding the financial services licence, alleging a failure to exercise the skill and care reasonably expected of an insurance adviser. The plaintiff alleged that but for the negligence of the first defendant, he would have maintained the AXA policy until the terminal illness diagnosis. He sought damages of $1,477,454.79, being the amount he would have received under the AXA policy.

The Decision

The court found that the first defendant had, on more than one occasion, given the plaintiff adequate advice about the ongoing duty to disclose material facts to his insurer and had explained the consequences of not doing so. The court also found that the first defendant had explained the relevance of the plaintiff’s stomach condition in the context of his disclosure duty.

However, it was accepted between the parties that the first defendant failed to check with the plaintiff about his stomach condition before cancelling the plaintiff’s

AXA policy on 28 March 2012. The court found that the first defendant’s failure to do so amounted to a failure to exercise reasonable care.

The court went on to find that the plaintiff, having been advised of his ongoing duty of disclosure, was also culpable for failing to advise the first defendant about his ongoing stomach condition. On that basis, the court found that the damages should by reduced by 50% for contributory negligence and the plaintiff was awarded $738,727.35.

[2014] VSC 118Swansson v Harrison & Ors

IN ISSUE

• Liability of insurance advisor to inform client of ongoing disclosure obligations;

• Failure to disclose relevant medical changes prior to issue of policy







Financial Planners

The Facts

On 20 February 2008, on the advice of an accounting firm, Swan & Baker (the appellant), Mr and Mrs Marando (the respondents) invested $500,000 in the City Pacific Mortgage Fund (the Fund) for a term of 90 days. At the time of providing the advice, the appellant provided the respondents with a copy of the Fund’s Product Disclosure Statement (PDS). The PDS provided for a 14 day cooling off period for new investments. The appellant did not advise the respondents of this. Shortly after making the investment, the respondents advised the appellant that they were going away on holiday and would be contactable via mobile phone.

On 27 February and 4 March 2008 (before the expiry of the respondents’ cooling off period), articles were published in the media suggesting that the Fund was in financial difficulty. Over the weekend of 1 to 2 March 2008, investors in the Fund lodged withdrawal requests totalling $10 million. On 3 March 2008, the Fund announced that the redemption period for investments in the Fund had been extended from 90 to 180 days.

The respondents did not become aware of the extended redemption period or their entitlement to withdraw funds until after the cooling off period had expired on 18 March 2008. The respondents subsequently applied to redeem their investment in the Fund, however, their request was never processed because the Fund encountered financial difficulties.

At the time of the trial, the respondents’ investment was worth approximately 30% of their original investment.


The trial judge found that the appellant had breached its duty of care to the respondents because it had failed to take positive steps to advise the respondents of their entitlement to withdraw their money from the Fund during the cooling off period. The respondents were awarded damages of $377,390.


On appeal, the appellant argued that its relationship with the respondents did not give rise to an extended duty to take positive action to avoid risk. The appellant submitted that such a duty would place a substantial burden on a financial advisor as it would effectively require it to monitor the progress of all clients’ investments to determine whether a particular client should be advised to take action to minimise potential loss.

The Court of Appeal upheld the trial judge’s decision. It found that the trial judge was correct as to the nature of the duty of care owed by the appellant to the respondents, and that the appellant had breached its duty and had caused the respondents’ loss. The Court of Appeal held that the reasoning in Hawkins v Clayton [1988] 164 CLR 539 supported the proposition that the duty owed by the appellant to the respondents could be as extensive as the trial judge found. Significant factors included that the appellants knew the respondents’ funds were to be invested for a short term and for a specific purpose; that the appellant ought to have known of the right of redemption and that the

publicised freeze on redemptions posed a risk that investors such as the respondents would suffer loss.

The Court of Appeal noted that the consequence of this decision was not that financial advisors or other professionals would always come under a non-contractual duty to monitor their clients’ investments and take positive steps to alert clients as to additional risks. However, there would be particular circumstances when an advisor’s common law duty to take reasonable care could incorporate a requirement to take positive steps to alert clients to events that have exposed that client to an additional, but avoidable risk of financial loss.


[2013] NSWCA 233Swan & Baker Pty Limited v Marando

IN ISSUE

• The circumstance in which a financial adviser’s duty of care extends beyond the terms of its retainer







Financial Planners

The Facts

Mr Tomasetti, his wife Ms Cordony and Mr Tomasetti’s superannuation fund (TSF) (the plaintiffs) entered various agricultural investment schemes between 2000 – 2005 on the advice of their accountant, Mr Brailey and a financial planning business he was associated with. The schemes failed and Mr Tomasetti, Ms Cordony and TSF commenced proceedings against Mr Brailey and entities associated with him claiming damages in negligence, breach of contract, breach of various provisions of the Fair Trading Act 1987 and the Corporations Act 2001 and breach of fiduciary duty.

At first instance the plaintiffs were unsuccessful.


On appeal, the Court of Appeal found that Ms Cordony only was entitled to succeed and remitted the questions of causation and quantum.

After examining the facts and the relevant authorities, the Court of Appeal was satisfied that Mr Brailey’s conduct was causative of Ms Cordony’s loss.

The Court of Appeal accepted that the intertwined circumstances of Ms Cordony and Mr Tomasetti contributed to Ms Cordony’s decision to enter the investments. However, those circumstances did not necessarily mean that Ms Cordony would enter the investments in any circumstances. If Mr Brailey had

recommended the agribusiness investment to Mr Tomasetti but had qualified his recommendations by a statement that the schemes were not, in certain important aspects, suitable for Ms Cordony, it would be unreasonable to conclude that she would nevertheless have entered into them.

Mr Brailey and his associated financial planning business were ordered to pay damages and costs to Ms Cordony.

[2013] NSWSC 1282Tomasetti v Brailey

IN ISSUE

• Whether an investment would have been made even if it had not been recommended by a financial adviser







The Facts

Mr and Mrs Liddy (the Liddys) (2nd and 3rd defendants) wanted to construct a boatshed on their property at Gannons Bay in the Sutherland Shire. They engaged a local boatshed builder (the builder) (4th defendant) to provide preliminary drawings and advice for the Council approval process. A geotechnical engineer (1st defendant) was engaged by the Liddys to do a ‘walkover’ of the site and to provide a report for Council noting the suitability of the site for the proposed boatshed. The report noted the subsurface condition of the site and recommended certain excavation work. The application was approved by Council subject to various conditions – including a requirement for the drawings to be submitted to Sydney Water (plaintiff) for its approval prior to construction because it owned a sewer main that ran across the site which serviced many houses. The drawings were not submitted to Sydney Water.

An excavator was appointed by the Liddys (cross-defendant) to perform the excavation work. The builder managed the excavator and directed the excavation works in accordance with the geotechnical engineer’s report. Work commenced in mid-April 2007. At completion of the excavation works, the excavator raised concerns with the builder regarding the need to stabilise the excavations. The builder advised that he intended to construct retaining walls as part of the boatshed which would stabilise the excavations.

On 29 April 2007, a small landslip / ‘cave-in’ occurred due to heavy rainfall. Apart from clearing the cave-in, no action was taken to stabilise the excavations. A

little over one month later the slab for the boatshed was laid and construction of the walls commenced. Following more heavy rain a large landslip occurred which ruptured the southern part of the sewer main running across the site causing untreated sewage to spill into Gannons Bay. Sydney Water was immediately notified.

Sydney Water subsequently commenced action against the defendants for negligence claiming $3.3M to replace the whole of the sewer main across the site as a result of the landslip.

The Decision

The court held that the negligence of all defendants caused the landslip that damaged the southern section of the sewer main.

The court held that the geotechnical engineer was the party most at fault as it was an experienced professional that provided erroneous advice regarding the subsurface conditions on the site and had not identified that the sewer main existed on the site. The recommendations contained in the geotechnical engineer’s report regarding the safe batter slope for the excavations were also erroneous.

The court held that the Liddys were negligent for not obtaining Sydney Water’s approval for the development as this was a specific requirement of Council’s approval of the development. The court found that if Sydney Water had been notified, its in-house geotechnical engineers would have identified the errors in the report and would have taken

measures to ensure that adequate stabilisation of the excavations were included in the design.

The court held that the builder was negligent for not ensuring that the Liddys notified Sydney Water given that he was regularly advising the Liddys on what action they needed to take to progress the work. The court also found that the builder was negligent in not raising concerns with the geotechnical engineer when it became clear that the subsurface soil conditions differed from those noted in its report.

The court held that the excavator was not negligent. The excavator was engaged to undertake the excavation works under the direction of the builder. Any work associated with protecting the excavations

[2013] NSWSC 1274Sydney Water v Asset Geotechnical Engineering & Ors

IN ISSUE

• Liability of land owners, builder, excavator contractor, geotechnical engineer for damage to sewer main during construction

• Apportionment of liability between concurrent wrongdoers







once they were made by the excavator was the responsibility of the builder.

The court applied the proportionate liability provisions under the CLA (NSW). The court applied the test noted in Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 to apportion the liability between the negligent defendants “with reference to the degree of the departure from the standard of the reasonable person, and the causal potency of the relevant negligence bringing about the harm”.

As a result, the court apportioned liability 65% to the geotechnical engineer, 25% to the builder and 10% to the Liddys.

The court also considered the quantum claimed by Sydney Water which included the replacement of the northern end of the sewer main. The court found that while the negligence of the defendants caused the damage to the southern end of the sewer main, the northern end of the sewer main required replacement due to its poor condition, not as a result of the landslip. The court only granted damages to Sydney Water for the work associated with the part of the sewer main that was actually damaged by the landslip.

[2013] NSWSC 1274Sydney Water v Asset Geotechnical Engineering & Ors






The Facts

Gratrax engaged TD&C to design a road as part of a property development at Yatala. The road was to comply with the specifications of the Gold Coast City Council in accordance with the conditions of the subdivisional approval issued to Gratrax by the Council.

The road was to be constructed in 4 layers: sub-grade, sub-base, base course and top course. TD&C’s design specified the wrong class of material for the sub-base and base course.


The trial judge found that TD&C failed to exercise the skill and care that was usual amongst engineers.

However, the trial judge found that TD&C’s negligence did not cause the loss suffered by Gratrax because TD&C’s design included notes requiring Gratrax to test the sub-grade after it was laid and submit those test results with the design plans to Council for approval. Gratrax did not do so and continued to lay the subsequent layers of pavement.

With respect to causation, the trial judge found that the factual causation test was satisfied because, if TD&C had specified the correct classes of material in its design, Gratrax would not have laid the pavement with the incorrect classes of material. However, the trial judge decided that for any loss which occurred after Gratrax laid the subsequent layers of pavement,

the scope of liability test was not satisfied. This was because Gratrax decided to lay the pavement without having done the testing and submitting those results with the design plans to Council for its approval. That decision was not caused directly or indirectly by the error of TD&C.

The trial judge therefore found that TD&C was liable only for the additional costs to which Gratrax would reasonably have been put by TD&C’s negligence if Gratrax had not conducted the construction of the road prematurely.


Gratrax appealed against the trial judge’s findings regarding causation.


The Court of Appeal held that the trial judge approached the issue of causation correctly and upheld the trial judge’s finding that, whilst factual causation had been established, the scope of liability should not extend to TD&C being liable for the losses incurred as a result of Gratrax proceeding to lay the further layers of the road without performing the required testing.

[2013] QCA 385Gratrax Pty Ltd v T D & C Pty Ltd

IN ISSUE

• Whether the negligent design of a road caused the plaintiff’s loss




INSURANCE ISSUES


Contents

< Back to Contents

118 Vero Insurance Ltd v Australian Prestressing Services Pty Ltd [2013] NSWCA 181Whether expenses incurred to prevent a potential loss were recoverable under a general insuring clause or an implied term of the insurance contract, including consideration of exclusion clauses.

119 Zurich Australian Insurance Limited v The Workers Compensation Nominal Insurer [2013] NSWSC 915Whether double insurance existed between insurers and alternatively, whether insurer was contractually bound by conduct of solicitor for the insurer to make a contribution on the principles of double insurance.

120 Principal Finance Limited v Halse [2013] NZHC 1723Interpretation of exclusion clauses in a solicitor’s professional indemnity policy.

121 Ridgecrest New Zealand Ltd v IAG NZ [2013] NZCA 291Whether a policy of insurance entitled an insured to payment of the aggregate cost of damage to a building caused by 4 earthquakes occurring over the policy period.

123 Chubb Insurance Co of Australia Ltd v Moore [2013] NSWCA 212Whether claimants who had brought proceedings against former company directors and officers were able to assert a charge over money that may become payable by way of defence costs under policies of insurance pursuant to section 6 of the New South Wales Law Reform (Miscellaneous Provisions) Act.

124 IAG New Zealand Limited v Jackson [2013] NZCA 302The application of an exclusion clause in a professional indemnity policy for civil liability in connection with dishonest conduct.

126 LMT Surgical Pty Ltd v Allianz Australia Insurance Ltd [2013] QSC 181Whether water inundation from local run off and back flow from storm water pipes was damage occasioned by flood within the meaning of an exclusion clause in an ISR policy.

127 Prepaid Services Pty Ltd & Ors v Atradius Credit Insurance NV [2013] NSWCA 252Whether insurer entitled to avoid policy of trade credit insurance for fraudulent misrepresentation, or otherwise reduce its liability.

128 McLennan v Insurance Australia Ltd t/as NRMA Insurance [2013] NSWDC 148Plaintiff’s failure to demonstrate entitlement to coverage under home and contents policy where there were clear motives for, and physical evidence of, arson.

129 Terry Anne Downie & Anor v Jantom Company Pty Limited & Anor [2013] ACTSC 171Liability of manufacturer/importer of chair to injured plaintiff and her employer following chair collapse.

131 Sciacca v Langshaw Valuations Pty Ltd [2013] NSWSC 1285Application for summary dismissal of claim made against an insurer.

INSURANCE ISSUES


Contents

< Back to Contents

132 Hamcor Pty Ltd & Anor v Marsh Pty Ltd [2013] QCA 262Principles of construction of insurance contract as to whether certain losses recoverable under policies.

133 Bupa Australia Pty Ltd v Shaw (as Joint Executor of the Estate of Norman Shaw) & Anor [2013] VSC 507Whether insurer’s right of subrogation prejudiced by terms of settlement and whether insurer’s own conduct prevented the exercise of the right of subrogation.

134 Morgan, Re Brighton Hall Securities Pty Ltd (in liquidation) [2013] FCA 970Whether 2 separate class actions were one claim or multiple claims and liquidator’s entitlement to costs out of insurance proceeds.

135 Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2013] WASC 386The calculation of an excess in relation to a claim for business interruption.

136 Wild South Holdings Limited & Maxims Fashion Limited v QBE Insurance (International) Limited [2013] NZHC 2781The interpretation of a policy of insurance arising out of the Christchurch earthquakes.

137 Horsell International Pty Ltd v Divetwo Pty Ltd [2013] NSWCA 368Whether a claim arose in connection with the insured business; whether insured’s conduct was “criminal” for the purposes of an exclusion clause; and whether a broker failed to advise of deficiencies in a policy.

138 Vero Insurance Limited v Rail Corporation New South Wales [2013] NSWCA 372Whether car owner/driver incurred legal liability “as a result of an accident”.

139 Siegwerk Australia Pty Ltd (in liq) v Nuplex Industries (Aust) Pty Ltd [2013] FCAFC 130The manufacturer of a resin which failed resulting in a product recall was not covered under its broadform liability policy due to the applicability of policy exclusions for loss of use and product recall and an endorsement excluding cover for the failure of the manufacturer’s products.

140 Commonwealth of Australia v Vero Insurance Limited [2013] FCAFC 152Land not property on construction of insurance policy.

141 QBE Insurance (Australia) Limited v NSW Self Insurance Corporation [2013] NSWSC 1841Whether the NSW Self Insurance Corporation had a common monetary obligation with the plaintiff to indemnify the police force for liability for an injury caused to a police officer while travelling in a vehicle driven by another officer.

142 Lumley General Insurance Ltd v Port Phillip City Council [2013] VSCA 367Whether an injury occurred as the result of an occurrence in connection with the business and activities of the insured.

INSURANCE ISSUES


Contents

< Back to Contents

143 Mattress Innovations Pty Ltd v Suncorp Metway Insurance Limited [2013] QCA 377Consideration of policy provision allowing insurer to take into account insured’s input tax credit entitlements when making payment under policy.

144 Crystal Imports Limited v Certain Underwriters of Lloyds of London & Anor [2013] NZHC 3513Consideration of the extent of an insurer’s liability to indemnify under a material damage policy for separate damage to insured property by subsequent earthquakes.

146 470 St Kilda Road v Robinson [2013] FCA 1420The operation of an exclusion clause in a directors’ and officers’ liability insurance policy.

147 BFSL 2007 Limited & Ors v Steigrad [2013] NZSC 156The Supreme Court of New Zealand found that a statutory charge created by the Law Reform Act 1936 (NZ) had priority over all insurance money payable under a policy with a single indemnity for both third party liability and defence costs.

149 Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd [2013] NSWSC 1975Insurance – Construction of Home and Contents Policy – Duty of utmost good faith - Estoppel.

150 Associated Forest Holdings Pty Ltd v Gordian Runoff Ltd [2014] TASSC 3Construction and scope of re-insurance agreement.

151 Prepaid Services Pty Ltd v Atradius Credit Insurance NV (No 2) [2014] NSWSC 21Whether insurer entitled to reduce its liability under a policy of trade credit insurance for misrepresentation under section 28(3) ICA.

152 Austcorp Project No 20 Pty Ltd v LM Investment Management Ltd (in liq)(No 2) [2014] FCA 44Construction of insurance contract as to whether a previous action constituted a claim made prior to the period of insurance.

153 GIO General Limited v Centennial Newstan Pty Ltd [2014] NSWCA 13Relationship between insurance and indemnity clauses.

154 Lazarevic v United Super Pty Ltd [2014] NSWSC 96The duty of a trustee and an insurer of a superannuation fund in determining a claim for a total and permanent disablement benefit to a member.

156 Keeble v Murray [2014] NSWSC 151Application to join insurer as a defendant to the proceedings pursuant to s 6 LR (MP) in a personal injuries claim.

INSURANCE ISSUES


Contents

< Back to Contents

157 Skyward Aviation 2008 Limited v Tower Insurance Limited CA563/2013 [2014] NZCA 76Whether insurer or insured is entitled to elect manner and measure of insured loss under a full replacement value policy.

159 Allianz Australia Insurance Limited v Anthony Vitale and Anor [2014] NSWSC 364Whether it is unconscionable to demand a deed of indemnity as a condition precedent to issuing a contract for insurance and whether it is a breach of the utmost good faith provisions to use any commercial advantage available to a party.

161 Pillinger v Lismore City Council [2014] NSWSC 447Liability of parties responsible for road works following injuries to cyclist driving over loose material on newly resurfaced road and indemnity and insurance issues.

163 Allianz Australia Insurance Ltd v Mercer [2014] TASFC 3The applicable limitation period for an action brought under s 601AG of the CA – recovery against the insurer of a deregistered company.

165 Michail v Australian Alliance Insurance Company Ltd [2014] QCA 138Whether an insurer would have refused to insure a vehicle if the insured had disclosed his traffic infringement history.

INSURANCE ISSUES


INSURANCE ISSUES


The Facts

The appellant insured the respondents under a contract works and public liability insurance policy (the policy). The works involved the reconstruction of a culvert at parklands which required the construction of an earthen wall or cofferdam to hold back water. In May 2003 a substantial rainfall event occurred, which caused water levels in the area to rise. This allegedly required the respondents to take urgent steps to prevent the wall from failing. The work was undertaken by pumping and diverting water from a pond so as to prevent the wall from being breached. The wall itself was also ‘shored up’. The respondents made a claim under the policy for costs of the work. The appellant accepted liability for the costs involved in shoring up the wall but rejected the remainder on the basis that a dewatering exclusion applied.


The trial judge entered judgment for the respondents. The general insuring clause under section 1 of the policy provided coverage “... against Loss, Destruction of or Damage to Property Insured....” The trial judge found that the respondents were entitled to indemnity pursuant to section 1 as the costs were incurred in successfully preventing loss, destruction of, or damage to, property on the general principle that costs and expenses incurred by an insured in avoiding an insured loss or liability are recoverable. The trial judge found no ‘dewatering’ in the actions undertaken by the respondents therefore the exclusion did not apply. The actions were properly described as water diversion or flood mitigation.


The Court of Appeal was required to decide whether the costs fell within the dewatering exclusion, whether the claim fell within the insuring clause in section 1 and 2 of the policy and whether there was a relevant liability limit and specific excess under the policy.


The appeal was allowed in part. The Court of Appeal found that the expenses could not be recovered under the general insuring clause because that clause related only to physical loss or destruction or damage to the wall. It found that any principle that costs reasonably incurred by an insured in averting an imminent loss are recoverable under a policy, must be construed having regard to the language of the relevant policy.

The Court of Appeal found that a temporary protection extension of the policy did apply. That extension applied to the temporary protection of the insured property that was both deemed necessary by the insured to avoid further loss and consequent upon any loss or damage to property. The costs in diverting the water were therefore consequent upon the existing damage. The Court of Appeal agreed that the dewatering exclusion did not apply. The temporary protection extension had a liability limit of $250,000, restricting the original judgment.

The Court of Appeal rejected the implication of a term that where the exercise of reasonable care by the insured has avoided loss, damage or liability, then those costs and expenditure were to be indemnified.

The respondents pointed to an obligation imposed by a condition of the policy that the insured was to, ‘at its expense’, take action to minimise the extent of property damage for which the insured may be liable. The Court of Appeal found that because the condition referred to action being taken at the insured’s expense, an implied term requiring indemnity for those expenses was inconsistent with that express term.

[2013] NSWCA 181Vero Insurance Ltd v Australian Prestressing Services Pty Ltd

IN ISSUE

• Construction of insurance contract including application of express and implied terms and exclusions






The Facts

A worker was seriously injured in a minibus crash in the course of employment with Aimee’s Group Pty Ltd (Aimee). The vehicle was owned by R&S Australia Pty Ltd (R&S), not Aimee. The worker claimed workers’ compensation benefits under a policy held by Aimee. GIO managed the policy on behalf of the defendant, and paid the worker $650,000 in entitlements under the WCA.

The worker claimed against R&S as owner of the vehicle under the Motor Accidents Act 1988 (NSW) (MAA). Zurich, the plaintiff, was the motor vehicle insurer. The matter proceeded to assessment after the plaintiff accepted liability and the worker was awarded $1.574 million, plus costs.

The plaintiff claimed contribution from the defendant, by way of offset on the moneys due as a refund to the defendant pursuant to s151Z of the WCA, on the basis that the principle of contribution between insurers was applicable. Alternatively, the plaintiff claimed that by agreement made with the solicitors for the defendant, the defendant had agreed that it would contribute equally to the amount payable to the worker.

The Decision

The trial judge found that there was no situation of double insurance, however found that the defendant’s solicitors had entered into a binding agreement that it would contribute equally.

The wording of both policies was considered. The plaintiff’s policy extended coverage for the owner and

driver of a motor vehicle (in this case the driver and R&S) and the defendant’s policy extended coverage to the employer (Aimee) for the employer’s common law liability.

The trial judge emphasised that the starting point in matters of contribution between insurers is whether there is double insurance. There must be 2 insurers of 1 person such that a party could elect to make a claim on either policy if sued. It was found that there was no common insured that could make a claim against both policies if sued by the worker. R&S and the driver could not claim on the workers’ compensation policy and Aimee could not claim on the motor accident policy. The fact that the worker had chosen to claim against R&S was not the reason why the defendant was not liable to indemnify R&S, it was at no point liable to indemnify R&S. It was not open to extend a principle of contribution to a situation where there is no common obligation owed by 2 insurers to a single insured. The defendant was therefore not liable to contribute on the basis of double insurance.

In the alternative, the plaintiff asserted that a contract existed, arising from an exchange of correspondence between solicitors for the parties. It was alleged that the solicitors for the defendant conceded that double insurance applied to the matter. After conceding that point, the solicitors then requested to be consulted on the negotiations between the plaintiff and the injured worker. The concession was later withdrawn. The defendant contended that the concession of double insurance had only been made in the context of settlement negotiations at a conference on a particular date and that there was no unconditional agreement

that the principles of double insurance applied. The trial judge found that a contract had been formed and that the defendant was contractually bound to contribute to the amount of the MAA assessment.

IN ISSUE

• Whether double insurance existed or alternatively whether same had been contractually agreed between insurers



[2013] NSWSC 915Zurich Australian Insurance Limited v The Workers Compensation Nominal Insurer

INSURANCE ISSUES



INSURANCE ISSUES


The Facts

The plaintiff (PFL) was a private finance company which lent funds to various entities secured against property. Mr Halse was a solicitor and also the sole shareholder and director of PFL. He held the share as a trustee for the benefit of another person.

PFL alleged that Mr Halse breached his duties as a solicitor by making loans or having PFL make loans where he had been instructed not to do so. PFL also alleged that by the same actions Mr Halse breached his statutory obligations as a director.

Mr Halse held professional indemnity insurance with QBE and sought cover under that policy when he was sued in his capacity as solicitor of PFL (for 3 matters) and in his capacity as director of PFL for another matter. QBE denied that it was required to indemnify Mr Halse on the basis that the policy excluded losses arising out of professional services performed for a body corporate or other legal entity where the partner of the firm had a beneficial interest or shareholding exceeding 30% of the equity or total shareholding.

QBE also denied liability to cover Mr Halse in relation to the breach of director’s duties because the policy only covered advice given or services performed as a director in respect of liability arising from professional advice given in the capacity of the solicitor.

The Decision

The court accepted QBE’s submission that without reference to context and adopting a natural and ordinary meaning approach, the words “beneficial interest or share holding” would lead to a conclusion that the words describe two separate concepts.

However, the court held that it was difficult to understand why QBE would have intended to offer and Mr Halse intended to accept an arrangement where the insured would be entitled to cover in respect of a loss where the insured had a beneficial interest in a trust of up to 30% of the total equity, but not in a case where the insured held 31% of the shares in the company as a trustee that had no beneficial interest in them. In the context of the policy as a whole (and particularly noting that the definition of “Professional Services” expressly included duties undertaken as a trustee), the court considered that the parties could not have intended that outcome.

The court accordingly found that the expression “beneficial interest or share holding” in the policy should be taken to mean “beneficial interest or beneficial share holding”. Mr Halse accordingly was not caught by the exclusion.

The court found that the allegations regarding director’s duties fell outside the definition of “Professional Services” in the policy. Mr Halse was not covered by the policy in respect of that part of the claim.

In reaching its decision, the court noted that cover under the policy so far as director’s duties were concerned did not extend to all advices or services as a director. Cover was limited to liability arising from advice given. The claim by PFL against Mr Halse as director went well beyond the provision of professional advice.

[2013] NZHC 1723Principal Finance Limited v Halse

IN ISSUE

• Whether a solicitor was indemnified under a professional indemnity policy

• Interpretation of beneficial interest/ shareholding and professional services exclusion clause



http://www.nzlii.org/nz/cases/NZHC/2013/1723.html


INSURANCE ISSUES


The Facts

The appellant held a material damage insurance policy with the respondent for the period August 2010 to August 2011. The policy insured the appellant’s building in Christchurch. The policy had a limit on liability for any one “happening” of $1,984,000. During the policy period, the building sustained significant damage as a result of 4 separate earthquakes occurring on 4 September 2010, 26 December 2010, 22 February 2011 and 13 June 2011.

Repairs were commenced following the first earthquake but not completed before further damage was sustained by the second earthquake. Repairs were again commenced following the second earthquake but again disrupted by a further earthquake. The cost of these repairs was paid by the respondent under the policy. Following the third earthquake it was determined that the building had suffered irreparable damage and further damage was caused in the fourth earthquake. The appellant argued that this damage was “further and distinct damage” but the respondent alleged that the fourth earthquake only exacerbated the existing damage.

Following the demolition of the building, the respondent paid out the $1,984,000 policy limit and argued that this was the extent of the appellant’s entitlement under the policy. The appellant argued that, in addition to the $1,984,000, it was entitled to the full cost of repairing

the damage caused by the earlier earthquakes, despite the later earthquakes destroying the building so that repairs were never completed.


The court found that the limit of liability was available to the appellant to claim in the event of a loss in as many occasions during the period of insurance as a relevant loss was suffered. However, the court determined that the contract constituted by the policy had been frustrated as the parties would have agreed that “the scope of liability for subsequent happenings during the term of the policy would not extend to require payment of sums greater than necessary to effect repairs that were able to be undertaken before the building became irreparable”. On the basis that this formed an implied term of the contract, the court held that the respondent was not obliged to pay more than the sums necessary to effect the repairs that had been undertaken before the building became irreparable, plus the limit of its liability under the policy in respect of the final happening when the building became irreparable.


The appellant appealed the decision. The Court of Appeal reached the same conclusion as the trial court however on different reasoning.

Firstly, the Court of Appeal was of the view that the term implied into the policy by the trial court would have been a contradiction of express terms of the policy.

Secondly, as to whether the appellant was entitled to be paid for the damage resulting from each happening up to the limit of the sum insured in each case, the Court of Appeal concluded that this was not the case. The Court of Appeal examined the policy and determined that assessing which clause applied to each of the 4 earthquake claims was critical to the determination of how the policy should respond. In this respect clause C1 of the policy provided traditional indemnity cover payment in the amount of loss or damage or the estimated cost of restoring the asset as near as possible to the same condition it was in immediately before the loss or damage (old for old).

[2013] NZCA 291Ridgecrest New Zealand Ltd v IAG NZ

IN ISSUE

• Whether an insured was entitled to payment of the aggregate cost of damage to a building caused by 4 earthquakes over a policy period



http://www.nzlii.org/nz/cases/NZCA/2013/291.html


INSURANCE ISSUES


Clause C2 provided reinstatement cover on the basis that the appellant reinstated or replaced the damaged property (new for old).

The appellant argued on appeal that the first 2 or 3 claims were made under clause C1 and such claims triggered a liability on the respondent’s part as soon as the earthquake happened. The Court of Appeal found that, as the respondent had arranged for repairs to commence after the first and second earthquakes and agreed to meet the cost of actual repairs on those occasions, it was not open for the appellant to change the basis of its claims to bring them within clause C1. Having established that the 4 claims were made under clause C2, the Court of Appeal held that the respondent’s liability was to pay the cost of restoration of damage to the building to the same condition as when it was new, with qualification of the liability depending on repairs actually being made. Clause C2 further stated that when the building became unrepairable, the maximum liability on the policy was payable.


On 27 August 2014 the New Zealand Supreme Court reversed this decision. The Supreme Court decision will be included in the 2015 Case Book.

[2013] NZCA 291Ridgecrest New Zealand Ltd v IAG NZ




INSURANCE ISSUES


The Facts

Various proceedings were commenced in the Supreme Courts of Victoria and Western Australia arising out of the collapse of Great Southern Limited and its subsidiaries in 2009. The claimants, who were members of failed managed investment schemes, brought proceedings against the former directors and executives of the various companies owned by Great Southern Limited for breaches of the CA and other legislation.

The directors and executives were insured under professional indemnity policies that provided cover on a ‘claims made and notified’ basis. The policies, which were comprised of a primary layer and several excess layers, provided for a costs inclusive limit of liability.

The various proceedings gave rise to an issue as to whether the directors and officers, or the claimants, were entitled to insurance monies which may become payable under the policies. The claimants sought to assert their entitlement to the proceeds by way of a charge under s 6 LR(MP). The charge was to include legal expenses and defence costs incurred in defending the proceedings against the claimants.

Section 6 LR(MP) provides that the amount of any liability to pay damages or compensation (on behalf of a person who has entered into a contract of insurance by which that person is indemnified against such a liability) is to be a charge on all insurance moneys that may become payable in respect of that liability. The charge comes into existence on the happening of an event that gives rise to a claim for damages or compensation.


The insurers who issued the policies instituted proceedings to seek declarations as to the application of s 6 to the litigation against the directors and officers.


The Court of Appeal held that in the circumstances the claimants could not assert charges pursuant to s 6 LR(MP). The litigation commenced by the claimants was not brought in a New South Wales Court and therefore section 6 had no application to any of the claims being prosecuted elsewhere. Accordingly, there was no basis for the claimants to assert charges over monies payable under the policies. However, in coming to this conclusion the court made a number of general observations about the application of section 6 LR(MP).

Firstly, it was held that s 6 has no application where the insured’s conduct, giving rise to the claim, happened before the commencement of the insurance policy. Secondly, it was held that s 6 applies equally to ‘occurrence’ based insurance policies and ‘claims made and notified’ policies of insurance. Thirdly, a charge under s 6 does not extend to insurance monies payable in respect of defence costs, legal representation expenses or costs and expenses that are paid by an insurer under a policy of insurance.

It was noted that if the section was to capture all monies available at the time when the charge arises, it would have the effect of altering the contractual relationship between insurers and insureds. The Court of Appeal was critical of the fact that a claimant might be in a more favourable position than an insured in respect of the insured’s contractual right of indemnity under its contract of insurance where the intention of the parties is that the insured be indemnified for defence costs as and when they are incurred.

Finally, it was held that even if s 6 did impose a charge on insurance monies that are or may become payable, any payment made by the insurer by way of indemnity for the liability of an insured to pay damages or compensation (excluding a payment for defence costs, legal representation expenses or costs and expenses) will constitute a valid discharge of the insurer’s obligations under the policy.

[2013] NSWCA 212Chubb Insurance Co of Australia Ltd v Moore

IN ISSUE

• Whether claimants were able to assert a charge over monies payable for defence costs under a directors’ and officers’ policy of insurance






The Facts

In May 2009, Mr and Mrs Marchand engaged an insurance broker to arrange insurance cover for their home and contents, their motor vehicles and a medical practice. The broker placed business interruption cover for the medical practice but did not arrange any of the other insurances. Mrs Marchand wondered why no account had been sent for a premium and she telephoned the broker in July 2009 to check that the home, vehicles and contents were insured. The broker assured her that they were insured. Mrs Marchand repeated her enquiry early in 2010 and the broker repeated his assurance. In May 2010, Mrs Marchand told the broker that she wanted to make a claim for a pair of spectacles. The broker had her complete a claim form but did not send it to the insurer and he paid the claim himself. The Marchands’ home was badly damaged due to the first Canterbury earthquake on 4 September 2010 and they sued the broker for their uninsured loss. The broker joined his professional indemnity insurer IAG New Zealand Limited (IAG) as a third party to the claim. IAG applied to the High Court for summary judgment based on an exclusion clause in the professional indemnity policy which provided that the broker was “not insured for civil liability in connection with any dishonest, fraudulent, criminal or malicious acts or omissions”.


In affidavit evidence in opposition to the summary judgment application, the broker attributed his failure to place cover to inadvertence and repeated oversights. The broker also recounted serious health

problems that he had endured since 2007, supported by medical evidence. The court found that although the evidence pointed to dishonesty, the broker’s conduct was out of character and might be explained by the medical evidence. The court was therefore not satisfied to the relevant standard that the exclusion applied and found that dishonesty must be decided on facts at trial. IAG’s summary judgment application was therefore dismissed.

IAG appealed to the Court of Appeal of New Zealand. Before that appeal was heard, the Marchands succeeded at trial against the broker. In those proceedings, the court held that had the broker not hidden the truth from the Marchands, they would have secured cover before the earthquake.


The Court of Appeal found that the exclusion required a civil liability to another, a dishonest act or omission, and a connection between the two.

IAG submitted that the reasons why the broker acted as he did were not relevant as he knew the assurances he gave the Marchands were false and that was enough to invoke the exclusion. The Court of Appeal found that conduct is dishonest if it is both deliberate and underhand or not straightforward. It need not be motivated by an intention to deceive. Although dishonesty is a subjective mental state, the law uses an objective standard to measure it. That is, the person’s subjective knowledge must make the conduct dishonest by normally accepted standards. The Court of Appeal found that the broker knew, when

he gave the assurances to the Marchands that he had arranged insurance cover as requested, that they were false. This was confirmed by his behaviour in having Mrs Marchand complete a claim form only to pay the claim himself to give the impression that they had cover when in truth they did not. The Court of Appeal found that the broker’s admitted contemporaneous knowledge that the assurances he gave the Marchands were false made his conduct objectively dishonest.

The Court of Appeal held that the question whether the broker’s dishonest acts or omissions were “in connection with” his civil liability to the Marchands had to be answered because it was common ground that the broker did not act dishonestly when he first incurred a liability by failing to act on the Marchands’ instructions to secure cover for their home, contents and vehicles. The Court of Appeal found that the

IN ISSUE

• Whether an exclusion in a professional indemnity policy for dishonest conduct applied



[2013] NZCA 302IAG New Zealand Limited v Jackson

INSURANCE ISSUES




READ MORE

phrase “in connection with” plainly requires a nexus between one thing and another but the nature and closeness of the required connection always depends on context and purpose. The Court of Appeal found that in this case, IAG had to establish a nexus or relationship between dishonest conduct and civil liability if it was to exclude cover for liability incurred when delivering professional services. The dishonest act did not need to be the direct or proximate cause of the civil liability and it did not need to precede the liability in time. The Court of Appeal accepted that “in connection with” demands some causal or consequential relationship between the 2 things in this setting.

As it had already been found at trial that had the broker not hidden the truth from the Marchands they would have secured cover before the earthquake, the Court of Appeal held that IAG had established the necessary nexus between the broker’s dishonest acts and his liability to the Marchands.

The Court of Appeal therefore allowed the appeal and held that the broker’s claim for indemnity was not successful given the exclusion in the policy.

click here

[2013] NZCA 302IAG New Zealand Limited v Jackson

INSURANCE ISSUES




IN ISSUE

• Whether the defendant insurer was liable to indemnify the plaintiff following inundation of the plaintiff’s premises by water



[2013] QSC 181

The Facts

From approximately 6 pm onwards on 11 January 2011 the plaintiff’s premises, situated at the corner of Castlemaine and Black Streets, Milton, were inundated by a combination of water from local run-off and backflow of water from the Brisbane River via two local storm water drainage pipes.

The plaintiff sought a declaration regarding the defendant insurer’s liability to extend indemnity under the applicable ISR policy. The defendant argued that its liability to indemnify the plaintiff was excluded under the policy because the damage was ‘damage occasioned by or happened through flood’. The defendant sought to rely on the exclusion which defined flood as ‘the inundation of normally dry land by water overflowing from the normal confines of any natural watercourse or lake (whether or not altered or modified), reservoir, canal or dam.’

The Decision

The court readily found that the storm water pipes did not qualify as a modified or altered natural water course. In this context the court noted that some time ago (before the installation of the current drainage system) there had been a small natural watercourse in the vicinity of the premises. The court found, however, that at the time of the event there was no visual remnant of the original

watercourse, the changes which had occurred had broken any link to the prior natural watercourse, and the pipes instead were a functional replacement of the earlier watercourse which had been filled in.

Similarly the pipes did not fall with the ordinary meaning of a ‘canal’ (when considering that term in the context of the exclusion which also contained the words ‘dam’ and ‘reservoir’). The court found in that context a canal would suggest a man-made structure which held water and not an underground storm water drainage system.

In considering whether the water which flowed through the storm water pipes was water that overflowed from the natural confines of a watercourse, the court adopted a narrow construction and found that the ordinary meaning of the phrase ‘overflowing from the natural confines of a natural watercourse’ was a reference to where the overflowing occurred (ie the pipes), notwithstanding that the original source of the water was a natural watercourse (namely the river).

The court therefore concluded that the defendant was not entitled to rely on the exclusion clause to decline indemnity to the plaintiff and the plaintiff was entitled to the declaration it had sought.

LMT Surgical Pty Ltd v Allianz Australia Insurance Ltd

INSURANCE ISSUES




The Facts

The respondent issued a policy of trade credit insurance in favour of the appellants, a group of telecommunications providers. The appellants engaged Bill Express Limited (BXP) to sell pre-paid phone credit. The policy was to insure against any failure by BXP to pay amounts due to the appellants. BXP became insolvent and the appellants claimed under the policy (for up to $27 million in losses).

The respondent sought to avoid coverage under the policy by alleging non- disclosure and fraudulent misrepresentation on the part of Mr McQuade, who made the application for insurance on behalf of the appellants. It was alleged that on the insurance proposal form, Mr McQuade had given false answers about the appellants’ knowledge of BXP’s payment history regarding late payments and whether BXP had previously been put on a payment plan. The appellants allegedly had prior knowledge of BXP consistently being unable to pay its debts when they fell due.

In the alternative, it was alleged that the liability could also be reduced to nil on the basis of misrepresentations. The respondent also alleged that part of the loss could also be avoided as the losses were incurred in a manner not within the terms of the insuring agreement in the policy.


The trial judge found that the respondent was entitled to avoid the policy for fraudulent misrepresentation under section 28(2) ICA, or in the alternative, if the representations made by the appellants were not fraudulent, it was entitled to reduce its liability to nil on

the basis of the effect of the misrepresentations under section 28(3) ICA.

Mr McQuade was found to have been reckless in submitting details on the proposal form. In relation to allegations of non-disclosure, the appellants had contended that the respondent had sufficient information as to the financial position of BXP in its possession, from sources other than the appellants and sought to rely on sections 21 and 27 ICA. The trial judge agreed that the respondent did hold such information and there was no breach of any duty of disclosure.

The trial judge was satisfied that if correct answers had been given in relation to the issue of payment plans, the respondent would not have issued the policy when it did. In addition, one of the appellants, Optus, had undertaken sales under terms which did not conform to the relevant contracts noted under the policy. Those losses were therefore not covered under the policy in any event.

Issues on Appeal

The Court of Appeal considered whether the respondent could avoid the policy, or alternatively whether it could reduce its liability.


The Court of Appeal held that it was not open for the trial judge to find that the failures by Mr McQuade arose from reckless indifference as to the answers given. The Court of Appeal found that the trial judge had undertaken an objective assessment of the state of mind of Mr McQuade. What was required for a finding of fraudulent misrepresentation was that Mr McQuade had no honest

belief in the representation in the sense in which it was intended to be understood.

The trial judge failed to consider whether Mr McQuade was ‘consciously indifferent to the truth of the answers given’ in the completion of the proposal form. The Court of Appeal therefore applied a broad test and the respondent was not able to avoid the policy for fraudulent misrepresentation.

The question of whether the respondent was entitled to reduce its liability to nil under section 28 (3) ICA as a result of the misrepresentation regarding the payment plans was remitted to the trial judge for further hearing. There was insufficient evidence analysed by the trial judge that had the respondent known of the payment plan issue it would not have issued a policy of insurance.

IN ISSUE

• Whether insurer entitled to avoid policy of trade credit insurance for fraudulent misrepresentation, or otherwise reduce its liability


READ MORE

[2013] NSWCA 252Prepaid Services Pty Ltd & Ors v Atradius Credit Insurance NV

INSURANCE ISSUES

click here



INSURANCE ISSUES


The Facts

The plaintiff was the owner of a property located in Orange, New South Wales (the house), which along with its contents, was insured by the defendant. In addition to residing at the house, the plaintiff operated a restaurant out of part of the house.

On 27 December 2006, the plaintiff went to a nearby town for an overnight visit. During the evening of 27 December, the plaintiff’s neighbour observed lights on in the house at different stages of the night, despite the fact the plaintiff lived alone.

Later in the evening, the same neighbour awoke and noticed that the house was on fire. The local fire brigade attended and, upon entry, observed several jerry-cans full of kerosene on the floor and a number of lit candles in cupboards.

The plaintiff was charged with dishonestly destroying or damaging property under section 197(1)(b) of the Crimes Act 1900 (NSW) in relation to the incident, but was acquitted after a short committal hearing.

The plaintiff made a claim on the policy issued by the defendant which was refused in reliance on an exclusion clause which stated that: “We will NOT cover loss or damage as a result of fire started with the intention of causing damage by you or someone who lives in your home, or who has entered your home or site with your consent...”

The Decision

The evidence before the court revealed that, at the time of the fire, the plaintiff’s business was failing, she was indebted to the bank and her neighbour, and she had entered into a purchase agreement for a property that was conditional upon the sale of the house (which had not occurred by the relevant completion date). Accordingly, the court accepted that the plaintiff had clear financial motives for burning the house down.

The court also noted the suspicious circumstances surrounding the incident, namely: the plaintiff had decided to leave town on the evening when the incident occurred “on a whim”; there were no signs of forced entry; the arsonist appeared to be aware that the plaintiff was not coming home during the evening and was familiar with the inside of the house; fuel and ignition sources were found spread around the house; and the plaintiff was uncooperative during the investigations, even to the extent of moving the cupboards to another part of the property on the day police attended to inspect the house.

Although quantum was not in issue, it was also noted that the house and its contents were insured for over $1m, which was enough to settle the plaintiff’s outstanding financial obligations.

The court held that in accordance with the decision in Halikiotis v Insurance Australia Ltd [2011] NSWDC 31, the plaintiff bore the evidential burden of proving her

entitlement to coverage under the policy, in effect, by demonstrating that the fire was not started by someone who entered the property with her consent and with the intention of causing damage. The weight of evidence contradicted such a finding and, consequently, it was held the plaintiff had failed to demonstrate her entitlement to coverage under the policy.

Judgment was entered against the plaintiff who was ordered to pay the defendant’s costs.

[2013] NSWDC 148McLennan v Insurance Australia Ltd t/as NRMA Insurance

IN ISSUE

• Whether the plaintiff had demonstrated that she was entitled to coverage under her home and contents policy for fire damage where she had been charged, and acquitted, of deliberately causing the damage





INSURANCE ISSUES


The Facts

On 11 October 2002, the first plaintiff, Terry Anne Downie, sustained a lower back injury during the course of her employment with the second plaintiff, Community Information & Referral Services Act Incorporated, when an office chair she was sitting on collapsed.

The chair had been manufactured in China and imported by the first defendant, Jantom Company Pty Ltd. The first defendant supplied the chair in kit form to the second defendant, Ex-Government Furniture Pty Ltd, an office furniture retailer. The second defendant had assembled the chair and sold it to the second plaintiff. The third defendant, GIO General Insurance Limited, was the insurer of the first defendant under a business policy. It was joined to the claim by the first and second plaintiffs.

The first plaintiff settled her claim against the second plaintiff for $190,000 (in addition to the $75,281.05 in workers’ compensation benefits already paid). She then commenced proceedings against the first defendant.

The second plaintiff sought to recover amounts paid to the first plaintiff by way of workers’ compensation. It claimed against the first defendant for negligence, breach of the TPA and indemnity under s183 WCA (ACT). Its claim against the second defendant was for breach of contract only.


The court considered it more likely than not that the first defendant had purchased the base of the chair from a manufacturer in China, and sold it on as part of its chair to the second defendant. The court accepted the evidence of the plaintiff’s liability expert, that if the base had been made of steel or aluminium (as opposed to plastic), it would have been very unlikely to have fractured during normal use. It was likely that there were undetectable flaws in the base due to the plastic material not being ideal for the purpose and the temperature differentials that probably occurred during the moulding process.

There was no evidence that the first defendant was or should have been aware of these defects when it purchased the base from the manufacturer. There was even less basis for criticising the second defendant for failing to detect any weakness when assembling the chair.

However, there was evidence that between September 2001 and July 2002, 8 of the first defendant’s chairs had been returned by the second defendant for repair or replacement of broken bases. This satisfied the court that there was a foreseeable risk of failure of the base of the subject chair. A reasonable person in the position of the first defendant would have sought professional advice and taken steps to use bases with a reduced likelihood of fracture. As such, the first defendant had breached its duty of care to the first plaintiff.

GIO had granted indemnity to the first defendant on 7 November 2008. The plaintiff’s counsel argued that this, and conduct of the litigation generally by the insurer on behalf of the first defendant, gave rise to an estoppel. GIO attempted to rely on the products exclusion and the warranty by implication of law exclusion to avoid indemnity under the policy.

In considering the products exclusion, the court was not satisfied that the harmful nature, condition or quality of the chair resulted from the application of any design, formula, specification, plan or pattern. It was not necessary to consider the other exclusion as the claim pleaded by the plaintiff was in

[2013] ACTSC 171Terry Anne Downie & Anor v Jantom Company Pty Limited & Anor

IN ISSUE

• Whether the manufacturer/importer of a chair was liable for injuries sustained when it collapsed

• Application of policy exclusions re design

• Whether compensation “for” personal injury





INSURANCE ISSUES


negligence only and no statutory relief was sought. It was also unnecessary for the court to consider the representation estoppel argument, however it was noted that the court would not have been persuaded that GIO was estopped from relying on its defence that the policy did not respond.

In respect of the second plaintiff’s claim against the first defendant, the court held that the provisions of s183 WCA (ACT) gave the second plaintiff, as employer of the first plaintiff, a first charge on money payable by the first defendant to the first plaintiff to the extent of the amounts paid by the employer under the WCA (ACT). The second plaintiff was therefore entitled to succeed against the first defendant for the amount claimed.

In relation to the claim under the TPA, the court did not accept that the chair in question was one of a kind ordinarily acquired for personal, domestic or household use or consumption. Accordingly, the statutory claims were not available to the second plaintiff.

The court also considered whether the amount recoverable by the second plaintiff against the first defendant came within the expression “compensation for personal injury” in the GIO policy. GIO submitted that it was not a claim for compensation for personal injury, but a claim brought pursuant to a statutory entitlement by an employer to recover workers’ compensation amounts paid from a tortfeasor. The court held that the policy should be read in such a way that the claim by the second plaintiff against the first defendant was covered.

The second plaintiff’s claim against the second defendant was for breach of contract. The judge accepted that both at law and pursuant to s71 TPA, there was an implied term in the contract for the sale of the chair that it would be of merchantable quality and reasonably fit for its intended purpose. This was breached. However, it was too far a stretch that a loss of this kind (recovery of an amount an employer had to pay to one of its employees under workers’ compensation legislation) should have been within the contemplation of either contracting party (or a reasonable contracting party) at the time of sale.

The court awarded the first plaintiff $1,035,430 in damages less $102,400 for interest on the $190,000 settlement. Judgment for the second plaintiff was for $441,922.90, being the workers’ compensation payback plus interest.

[2013] ACTSC 171Terry Anne Downie & Anor v Jantom Company Pty Limited & Anor




INSURANCE ISSUES


The Facts

The plaintiffs loaned $490,000 to the registered owners of a property at Wahroonga in return for a second mortgage to be registered over the property. The property was later sold and the plaintiffs suffered a loss and claimed against a number of defendants.

The plaintiffs had engaged a finance broker, Integrity Mortgage Professionals Pty Limited (IMP), the third defendant, who had taken out professional indemnity cover with Vero Insurance (Vero). The policy was a claims-made policy operative between 31 May 2007 and 31 May 2008. IMP was deregistered on 18 April 2009. The plaintiffs made their first written claim to Vero on 21 April 2011.

The plaintiffs were unable to make a claim directly against IMP as it no longer existed. The plaintiffs claim against Vero was based on s 601AG of the CA which allows claims to be brought against insurers of deregistered companies if (a) the company had a liability to the person, and (b) the insurance contract covered that liability immediately before deregistration.

These proceedings concerned Vero’s application for summary dismissal of the claim made against it by the plaintiffs. Vero conceded that IMP had a liability to the plaintiffs for the purposes of section 601AG (a). However, it submitted that the determination of its application depended on whether the insurance contract “covered that liability immediately before deregistration” within the meaning of s 601AG (b).

Vero argued that as the policy was a claims-made policy and a claim had not been made prior to its deregistration, the insurer could not be liable pursuant to s 601AG and the claim against by the plaintiff should be summarily dismissed.

The Decision

The court dismissed Vero’s application for summary dismissal on the basis that the risk was one which was within the type of cover afforded by the policy.

For the purposes of determining Vero’s summary judgement application the court adopted a broad interpretation of s 601AG (b) i.e. it required simply that the plaintiffs establish at an interlocutory stage the liability of the insured to the claimant fell within the type of cover provided by the policy, as distinct from requiring that the insurer was liable to the insured (which would be a matter to be subsequently determined at trial).

The purpose of s 601AG was to obviate the need for a claimant who wishes to make a claim against a corporate insured, which has become deregistered, to apply for the insured to be reinstated for the sole purpose of having the insurer act for the corporate insured by subrogation. In this context the risk to IMP was the risk of a claim being made against it for damages for professional negligence, breach of contract and damages for misleading or deceptive conduct and, for the purposes of determining Vero’s summary judgment application, that the risk was covered by the policy.

[2013] NSWSC 1285Sciacca v Langshaw Valuations Pty Ltd

IN ISSUE

• The scope of section 601AG of the Corporations Act 2001 (Cth) concerning a claim against an insurer of a deregistered company





INSURANCE ISSUES


The Facts

The appellants owned land on which a chemical plant was situated. A fire destroyed the plant, resulting in water becoming contaminated and affecting the land and neighbouring properties. Statutory notices were issued ordering remediation of the contaminated land. The appellants spent in excess of $10 million undertaking the remediation works. Indemnity for those costs was declined by relevant insurers. Action was brought against the fire service (for negligence in fighting the fire) and two insurance brokers for failing to advise the appellants to obtain appropriate policies of insurance.

The appellants claimed that but for a breach of duty by the respondent brokers, the appellants would have been able to secure appropriate insurance cover for pollution and environmental risks associated with the land. A separate question was to be decided, being whether costs incurred by the appellants in remediating their land in response to statutory notices and court orders were recoverable under certain policies of insurance.


The trial judge found that the costs incurred were not capable of being the subject of indemnity under the relevant policies.

A primary policy, an excess policy and an ISR (Industrial Special Risk) policy were considered. The first two policies were taken out on behalf of the plant owner,

were ‘claims made’ policies and contained relevant exceptions. The appellants alleged that they should have been named as interested parties on those policies. It was also alleged that an ISR policy should have been made available to the appellants as an option.

The brokers relied on the wording ‘liability to pay compensation’ in the operative clauses of the first two policies as limiting the recovery under the policies to liability resulting from a cause of action against the insured for the payment of damages as compensation. The trial judge held that a liability to pay compensation was wider than simply a legal liability to pay damages to another. However, the wording also referred to coverage for liability for claims first made ‘against the insured during the period of insurance’. ‘Against’ the insured suggested claims by third parties.

The trial judge therefore found that the costs expended were not a liability arising from a ‘claim’ made. The trial judge also found that the ISR policy would not have covered the losses as the indemnity was for costs for removal of physical items (‘debris’) and also contained an exclusion of liability incurred as a consequence of pollution.


The Court of Appeal again considered the wording of the policies.


The Court of Appeal agreed with the broad application of ‘pay compensation’ and stated the words were to have their ordinary meaning. The primary and excess policies did not cover any legal obligation, but specifically a liability for compensation which contemplated the recompensing of a third party. The appeal was allowed to a limited extent in respect of the ISR policy. The Court of Appeal had difficulties with the construction of the hypothetical, incomplete ISR policy but agreed with the appellants that ‘debris’ was not inconsistent with indemnity for the costs of remediation of polluted property. The exclusions in the policy would also not necessarily have excluded all losses arising from pollution.

[2013] QCA 262Hamcor Pty Ltd & Anor v Marsh Pty Ltd

IN ISSUE

• Principles of construction of insurance contract as to whether certain losses recoverable under policies





INSURANCE ISSUES


The Facts

Mr Shaw underwent surgery to remove a tumour from the lining of his oesophagus. His health insurer, Bupa, paid him a total of $338,953.56 in relation to treatment expenses.

Mr Shaw subsequently commenced proceedings seeking damages for medical negligence against the surgeon. Bupa provided Mr Shaw’s solicitors with a schedule of benefits and asked to be kept informed as any benefits relating to the claim would have to be refunded if the claim was successful.

Mr Shaw died on 2 May 2010 but the negligence proceeding was continued by his wife. The claim was settled in or about December 2011 by the joint executors of the Estate.

Bupa was unaware of the settlement and in February 2012, emailed the Estate’s solicitors enquiring about the progress of the matter. Mr Shaw’s solicitors advised that the proceeding had settled and that the insurer of the surgeon had agreed to indemnify the Estate against repayment to Bupa and recommended that Bupa contact the solicitors for the surgeon’s insurer.

Bupa demanded repayment from the Estate of the payments previously made to Mr Shaw. The Estate refused to do so, on the basis of the surgeon’s indemnity in the settlement deed.

The Decision

The court was required to consider the following questions: whether Bupa was entitled to exercise

its right of subrogation; if yes, was Bupa’s right of subrogation prejudiced by the terms upon which the previous proceedings settled and, was Bupa prevented from exercising its right of subrogation as a consequence of its own conduct?

In relation to the first question, the court considered the terms of the policy and concluded that they did not exclude the usual right of subrogation. The court found on the proper construction of the policy, an obligation to indemnify had arisen in September 2005. It did not accept that the benefits had been paid in error and found that Bupa provided indemnity under the policy at least until it became aware of the negligence proceeding in March 2010. It was accordingly entitled prima facie to rely on its right of subrogation.

In relation to the second question, the court concluded that the deed of release extinguished any right of action Bupa might otherwise have been able to pursue. The Estate accordingly prejudiced Bupa’s exercise of its right of subrogation by the terms upon which it settled the negligence proceeding.

The final issue was whether Bupa’s conduct prevented it from exercising its right of subrogation. The Estate made a submission, based on communications between Bupa and the solicitors for the insured and the fact that Bupa took no step to intervene and take over the conduct of the negligence proceeding, that Bupa had elected not to exercise its right of subrogation. This submission was rejected. The court found that whilst Bupa was on notice that the surgeon’s insurer took issue with Bupa’s entitlement to

recover benefits paid, it could have had no knowledge or forewarning the Estate would proceed to settle the matter at mediation without involving Bupa. The court found that Bupa was not prevented from exercising its right of subrogation as a consequence of any inaction on its part.

The court concluded that Bupa was entitled to equitable compensation from Mr Shaw’s estate in the sum of $338,953.56 together with interest.

[2013] VSC 507Bupa Australia Pty Ltd v Shaw (as Joint Executor of the Estate of Norman Shaw) & Anor

IN ISSUE

• Whether a health insurer was entitled to recover amounts from the estate of a deceased patient following settlement of a medical negligence claim





INSURANCE ISSUES


The Facts

Brighton Hall Securities Pty Ltd (in liquidation) (the company) provided financial services to investors. On various occasions between late 2001 and late 2005 it advised clients to invest in property development schemes developed and marketed by the Westpoint Group of Companies which later went into liquidation.

Clients who had invested in the Westpoint products subsequently made claims against the company based on its advice in two separate actions. They contended that such advice had been negligent or misleading and that they had invested in reliance on the advice of the company, and had suffered loss and damage as a consequence. The company sought indemnity under a professional indemnity policy issued by Allianz Australia Ltd (Allianz).The company subsequently went into liquidation and Mr Morgan (the applicant ) was appointed its liquidator

Allianz honoured the policy and paid to the applicant $2M in settlement of the company’s liability. The applicant sought directions from the court on a number of matters including whether there were one or multiple claims under the policy and whether he could recoup his expenses from the insurance monies.

The Decision

Allianz argued that the two proceedings constituted multiple claims and that an “act, error or omission or series of related acts, errors or omissions” could not be identified and thus the claims could not be aggregated. Allianz contended that the company was

to bear a deductible of $25,000 in respect of each claim noting there were 170 ASIC claims and at least 60 State claims.

The court held that the very nature of a class action meant that there were multiple claims. The court noted that “the whole essence of the representative claim is that there are multiple claims before the court. The character of each claim is not changed by the proceeding which embraces it. The representative proceeding is simply designed to facilitate an efficient and cost effective way to resolve multiple individual claims ... if a person sues ... on behalf of another in a representative proceeding ... that unnamed group member nevertheless has brought proceedings”.

Turning to the question of whether there was a unifying factor sufficient to invoke the aggregation provisions of the policy, the court found that it was not sufficient to identify common features of the claims. If there were not common features, a representative proceeding would not have been possible in the first place. The court found that in the particular circumstances of this case, “... there were different products, different clients, different times of investment, different circumstances of taking advice, different levels of investment and perhaps most importantly, different circumstances and times and amounts of sustaining loss”. Consequently the aggregation provisions did not apply.

The court found that Mr Morgan was entitled to fair remuneration and entitled to payment for his costs related to the “getting in” of the funds and all enquiries and assessments necessary to ascertain the parties

to whom payments were to be made and distributing the funds. The court noted that it was clear in this instance that the claimants would undoubtedly receive a benefit which they would not be likely to achieve if not for Mr Morgan’s labours. This was a relevant factor in considering whether or not it would be unconscientious for the claimants to assert a right to the insurance proceeds without recognising the costs, expenses and fees incurred by Mr Morgan in producing that sum.

[2013] FCA 970Morgan, Re Brighton Hall Securities Pty Ltd (in liquidation)

IN ISSUE

• Whether 2 separate class actions were one “claim” or multiple “claims” and if so, whether each arose from one “act, error or omission” or “a series of related acts, errors or omissions”

• Whether the liquidator was entitled to deduct his remuneration from the insurance proceeds





INSURANCE ISSUES


The Facts

The plaintiff was the operator of a copper mine in Western Australia and held a policy of insurance with the defendant in relation to property damage and business interruption at the mine.

On 3 June 2008 an explosion interrupted the supply of gas to the mine which adversely impacted work at the mine. The plaintiff made a claim under the policy for its subsequent business interruption losses. The claim was rejected by the defendant on the basis that it did not exceed the excess. The policy prescribed that the excess was to be calculated by multiplying the “average daily value by 30 where ‘average daily value’ was stated to be the ‘annual value of the site affected’ divided by 365. The policy did not define “annual value of the site affected” for the purposes of the excess calculation.

The plaintiff sought a declaration from the court that the phrase meant either the amount of gross profit generated at the site in the 12 month period following the incident or alternatively the gross profit generated in the 12 months following inception of the policy. On either interpretation it would be entitled to claim for business interruption under the policy.

The defendant disputed these interpretations and argued that the annual value was the declared value of the mine referred to in the policy material. Further, it argued that as the plaintiff had entered into another insurance policy for the following year on that understanding, the plaintiff was estopped from seeking a different interpretation of the meaning of that clause.

The Decision

The court disagreed with the interpretations of the term “annual value” offered by both the plaintiff and the defendant.

The court rejected the plaintiff’s assertion that the annual value was either the 12 months following a damage event or the 12 month period following the inception of the policy and found that these interpretations did not reflect the common intention of the parties. As such, neither interpretation was capable of providing a method of calculating the excess at the time at which the loss incurred and, in some circumstances, could even serve to reduce the amount of the excess to $nil, which could not have been the common intention of the parties.

The court also rejected the interpretation of the defendant, who argued that the declared values provided in the policy schedule were to be applied as the annual value in the excess clause. The court noted that had that been the intention the terminology of the excess clause would have referred to the declared values rather than the term annual value.

The court suggested that ‘annual value’ could mean the value calculated in the 12 months immediately preceding the damage event. This was a sum which could be calculated at the time of the event.

While it was not required to do so given its findings, the court also gave consideration to the defendant’s arguments in respect to estoppel. The defendant argued that by entering into a new policy on the

same terms in circumstances where the plaintiff was aware of how the defendant was now interpreting the excess clause, there was conduct or representation which conveyed acceptance by the plaintiff of that interpretation and that the plaintiff was now estopped from arguing a different interpretation. The court found that in order to be entitled to the benefit of estoppel, the defendant had to show that it acted in some way to its detriment and that merely entering into contractual arrangements on commercial terms was not a detriment for the purposes of estoppel.

The court refused the declarations sought by the plaintiff.

[2013] WASC 386Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd

IN ISSUE

• The meaning of the term “annual value” as used in an excess clause;

• Estoppel





INSURANCE ISSUES


The Facts

The plaintiffs owned commercial buildings in Christchurch that were damaged in earthquakes on 4 September 2010, 22 February 2011 and 13 June 2011. The plaintiffs each held a policy of insurance with the defendant for the insured sum of approximately $3M, whereas the replacement cost for each of the damaged buildings was in excess of $8M. The plaintiffs were underinsured.

The parties sought a determination from the court on a number of issues regarding the interpretation of the insurance policies, including:

(a) the basis and measure of indemnity under the policies and when it was payable, and

(b) the interpretation and application of the automatic reinstatement clauses in the policies. It provided that, in the absence of written notice by either party, the amount of insurance cancelled by loss would be automatically reinstated from the date of loss.

The plaintiffs argued that the basis and measure of indemnity was the estimated total cost of replacement/repair (less depreciation) up to the sum insured per event, plus an additional amount to bring the cover up to full cost of reinstatement payable to the sum insured per event. The defendant argued that the plaintiffs were entitled to payment calculated on

an indemnity basis (having regard to the value at the time of the event). As each building was insured for replacement value, the plaintiffs were entitled to the reasonable costs of the reinstatement actually incurred once this exceeded the indemnity payment, up to the policy limit.

In relation to the automatic reinstatement clauses, the plaintiffs argued that the defendant was precluded from giving written notice and that the insurance was automatically reinstated upon each event of loss. The defendant argued that the effect of the reinstatement clause was to override the annual aggregate limit on its liability for damages to the sum insured, unless it or the plaintiffs gave notice to the contrary. Further, it was entitled to give valid notice up to and including the time of payment for the first loss. In the absence of notice, the amount of the sum insured available to meet the second loss was not depleted by the amount of the payment for the first loss but that if it gave a valid notice, the amount of the sum insured available to meet the second loss was depleted by the amount of the payment in the first loss (and so on for each subsequent loss).

The Decision

In terms of the basis and measure of indemnity, the court concluded that the indemnity value in each case was a factual enquiry, dependent upon the factual circumstances. Leave was reserved to enable the parties to apply for a more complete answer to that issue.

In terms of the interpretation and application of the automatic reinstatement clauses, the court found that:

(a) The parties have a reasonable period of time to give written notice to the contrary. If the notice is not provided within that timeframe, neither party can dispute the automatic reinstatement. In this case, valid notice had not been given by the defendant.

(b) Whether there was automatic reinstatement of cover before the February earthquake and thereafter before the June earthquake, depends upon the knowledge and conduct of the parties to the policies after each earthquake. Further evidence was required before the court could determine whether the reasonable time for the giving of notice to the contrary had passed.

[2013] NZHC 2781Wild South Holdings Limited & Maxims Fashion Limited v QBE Insurance (International) Limited

IN ISSUE

• The basis and measure of indemnity under the policies

• The interpretation of an automatic reinstatement clause





INSURANCE ISSUES


The Facts

The first respondent, Divetwo Pty Ltd (“Divetwo”), ran a scuba diving business. In 2006, the second respondent and sole director of Divetwo, Mr Todd, was navigating a Divetwo boat when it collided with a fishing boat owned by Mr Lane, the plaintiff. Relevantly, the boat trip was for a recreational purpose rather than as part of Divetwo’s regular business activities. Mr Todd pleaded guilty to negligent navigation occasioning grievous bodily harm.

Mr Lane commenced proceedings against Divetwo and Mr Todd alleging negligence causing personal injury. Divetwo and Mr Todd cross-claimed against Liberty Mutual Insurance Company (“Liberty”), the third respondent, seeking indemnity in respect of their liability to Mr Lane. In the alternative, (i.e. if the policy was found not to respond) Divetwo and Mr Todd cross-claimed against the insurance broker responsible for placing the policy, Horsell International Pty Ltd (“Horsell”), for damages equal to any award to Mr Lane.


Mr Lane’s claim was settled and judgment ordered against Divetwo and Mr Todd. With respect to the cross claims, the trial judge dismissed the cross claim against Liberty as the policy was held not to respond. The alternative claim against Horsell for damages for negligence and breach of contract, however, was successful.


Horsell appealed the decision. Horsell contended that the policy did respond, and, in any case, that it did not act negligently or in breach of contract. Divetwo and Mr Todd cross-appealed, contending that if Horsell’s appeal was successful with regards to the policy construction, then they were entitled to be indemnified by Liberty. Liberty also challenged one of the trial findings that an exclusion clause in the policy excluding liability for any “criminal act or omission” did not apply.


The first issue for determination upon appeal was whether the claim fell within the insuring clause of the policy. The Court of Appeal upheld the trial judge’s finding that the boating trip in which Mr Lane was injured was a recreational one, and, as such, there was not a sufficient connection between the activity engaged in and the “Insured’s Business” for the claim to fall within the insuring clause.

The second issue was whether the claim was excluded by reason of the exclusion clause in the policy. The exclusion stated that conduct by the insured of a “fraudulent, dishonest, malicious, wilful or criminal” nature was excluded from cover. However, it was held that the offence of negligent navigation occasioning grievous bodily harm did not require the offender to have intended the result of the act, and therefore

the trial judge did not err in concluding the exclusion clause did not operate to exclude the claim.

The final issue for determination was whether Horsell was liable for negligence or breach of contract. Horsell owed a duty of care to Divetwo both in contract and tort to exercise all reasonable care and skill in advising and placing the policy. Horsell was found to have been negligent in failing to make clear to Divetwo and Mr Todd that the policy did not cover liability arising from activities that were not connected to Divetwo’s business.

The Court of Appeal affirmed the trial judge’s findings that the Liberty policy did not respond, but Horsell was responsible by reason of its failure to make the scope of cover clear to Divetwo and Mr Todd.

[2013] NSWCA 368Horsell International Pty Ltd v Divetwo Pty Ltd

IN ISSUE

• Liability of broker for failure to warn of limits on cover

• Applicability of exclusion clause for criminal act





INSURANCE ISSUES


The Facts

On 4 May 2004, a passenger train struck a motor vehicle at a high speed at a level crossing near Baan Baa, NSW. The vehicle was owned and driven by Mrs Phyllis Jeffries and was insured by the appellant. Mrs Jeffries was killed in the collision. Stock and infrastructure owned by the respondents was extensively damaged. Proceedings were commenced against the appellant, as insurer of the motor vehicle, to recover the loss and damage suffered by the respondents.

The respondents argued that Mrs Jeffries owed each of them a duty of care which was breached when she allowed her vehicle onto the level crossing where it collided with the train. It was argued that Mrs Jeffries had a legal liability to pay compensation which, because of her death, and pursuant to s 51 ICA, the appellant was liable to pay. The appellant argued that the policy did not respond because Mrs Jeffries intentionally drove her vehicle onto the railway line and there was no legal liability to pay compensation because the collision therefore did not occur as the result of an accident.


The trial judge found that the respondents had established that the collision was “an accident” and ordered judgment for each respondent against the appellant ($5,392,327.14 in the case of the first respondent and $166,270.15 in the case of the second

respondent). There were also orders that the appellant pay costs (including costs on an indemnity basis from 1 April 2011) and interest on costs.


The appellant argued that the policy did not respond to the claims made by the respondents (and that the trial judge was in error in finding that it did) because Mrs Jeffries intentionally drove the vehicle on to the railway line so as to bring about the collision. The appellant challenged crucial aspects of the trial judge’s fact-finding.


The Court of Appeal analysed the undisputed facts and the findings made by the trial judge in relation to whether Mrs Jeffries’ car was stationary when the impact occurred and also as to whether she intended to commit suicide.

The Court of Appeal held that the technical evidence supported the trial judge’s conclusion that the car did not stop once it had advanced onto the railway line and was not stationary in the path of the train at any time.

The Court of Appeal determined that the lay and expert medical evidence as to Mrs Jeffries’ state of mind prior to the incident did not support a finding that she intended to commit suicide. The state of her relationship with a previous partner and her attitude to her health problems and her financial situation

together with the conversations she had with others on the day all justified the finding made by the trial judge that Mrs Jeffries did not intend to take her own life and that the collision was an “accident” within the terms of the relevant insurance policy.

The appeal was dismissed except as to certain costs orders.

[2013] NSWCA 372Vero Insurance Limited v Rail Corporation New South Wales

IN ISSUE

• Whether the trail judge erred in finding that the policy responded because a collision between a train and a car was an accident and not intentional





INSURANCE ISSUES


The Facts

Siegwerk manufactured a lacquer used to line the inside of tuna cans to prevent corrosion. Nuplex supplied a resin which was used in the lacquer.

The tuna cans corroded which resulted in two product recalls. The parties in the supply chain of the tuna cans claimed and counter claimed for the multi-million dollar losses arising from the product recall. The only claims that ultimately proceeded were the claims by Siegwerk against Nuplex and Nuplex against its insurer, QBE.

There were two main issues. First, whether the resin supplied by Nuplex had caused the corrosion of the cans. Second, whether Nuplex was entitled to indemnity under its policy with QBE.


Nuplex was contractually obligated to provide Siegwerk with a resin made of certain ingredients. However, Nuplex substituted one of the specified ingredients. This was a direct breach of the contract. However, the trial judge did not accept that the breach of contract was the cause of the corrosion.

The trial judge also found that QBE was required to indemnify Nuplex for any liability it may have to Siegwerk and for Nuplex’s costs of defending the claim.


Nuplex appealed against the trial judge’s findings regarding the cause of corrosion and QBE appealed against the trial judge’s findings in relation to cover under the policy.


The Court of Appeal found that the trial judge did not adequately consider the evidence on the cause of the corrosion and remitted this issue for re-hearing.

The Court of Appeal also found that QBE was entitled to deny cover on the basis that policy exclusions for loss of use and product recall applied. The Court of Appeal rejected an argument that there had been sudden and accidental damage to Nuplex’s products, which would have taken the claim outside the scope of the loss of use exclusion. It also rejected an argument that the product recall exclusions did not apply because, although there had been a recall of the cans of tuna, there had not been a recall of the product supplied by Nuplex’s product (the resin). Finally, the Court of Appeal found that an endorsement excluding cover for the failure of Nuplex’s products to perform the function or serve the purpose that they were intended to also applied.

[2013] FCAFC 130Siegwerk Australia Pty Ltd (in liq) v Nuplex Industries (Aust) Pty Ltd

IN ISSUE

• Whether a broadform liability policy covered a manufacturer of resin which failed

• Consideration of policy exclusions



http://www.austlii.edu.au/au/cases/cth/FCAFC/2013/130.html


INSURANCE ISSUES


The Facts

Comcover is a self-managed insurance fund within the Department of Finance and Administration responsible for providing indemnity to, or arranging indemnity for, all member organisations in respect of all insurable losses. The Australian Antarctic Division (AAD) was one of the fund members. Comcover issued the AAD with a Schedule of Cover for the period 1 July 1999 to 30 June 2000 in conjunction with the general terms and conditions in the Comcover Manual (the Manual).

Vero issued an Ultimate Net Loss Insurance Policy (the policy) to Comcover on 13 July 1999. This provided indemnity to Comcover for its liability or responsibility to reimburse fund members for loss or damage in accordance with the terms and conditions of the Manual. Pursuant to the schedule, Comcover was to bear the first $1million of each loss with Vero to bear the balance (subject to limitations).

On 29 July 1999 there was a fuel oil spill at Casey Base Station (Casey) within the Australian Antarctic Territory (the Territory) where about 2000 tonnes of soil was contaminated. Comcover was not notified of the incident until August 2004. It initially declined indemnity to AAD but later accepted that the event was covered by the Manual on 21 June 2005. Comcover paid the in-house retention to AAD and sought indemnity from Vero in the amount of the Ultimate Net Loss. Vero declined the claim on the basis that there was no damage to any real or personal property of the Commonwealth within the definition of “property” in the policy. Vero also contended that Comcover’s claim for indemnity was statute barred.


The trial judge held that as a matter of construction, Vero was not liable to indemnify Comcover. He considered that the liability created by the insuring clause was directed to the actual replacement value of the property that was lost, destroyed or damaged. This meant that “this class of cover” was in respect of items or buildings that could be replaced or reinstated by repair.

The trial judge held that the claim was not statute barred because the cause of action arose accrued when Comcover informed AAD that it accepted the oil spill as an insured event.


The Full Federal Court was required to consider the proper construction of the insurance contract and whether Comcover’s claim was statute barred.


The Full Court unanimously dismissed Vero’s appeal in relation to the limitation issue. Vero’s appeal on the policy construction issue was dismissed by a majority of 2:1.

The majority upheld the findings of the trial judge that the policy did not extend to cover damage to land. Reliance was placed on the extent of cover which was restricted to paying “the actual replacement value of the property lost, destroyed or damaged” and this had the effect of limiting the cover for real property to buildings. The majority also considered the term

“replacement value” was significant and observed that since land doubtfully had a replacement cost it was therefore outside the scope of the policy. The appeal was dismissed.


[2013] FCAFC 152Commonwealth of Australia v Vero Insurance Limited

IN ISSUE

• Whether Vero was liable to indemnify Comcover pursuant to a policy of insurance

• Whether land was property under the policy

• Whether Comcover’s claim was statute barred



http://www.austlii.edu.au/au/cases/cth/FCAFC/2013/152.html


INSURANCE ISSUES


The Facts

Mr Mannall, a New South Wales police officer, was injured on 11 June 2007 during a motor vehicle accident. The motor vehicle was owned by the police force and being driven by another police officer at the time. The accident was caused by the negligence of the driver.

Mr Mannall lodged a claim for workers compensation with the police force. The workers compensation self insurer was the NSW Self Insurance Corporation (SICorp).

Mr Mannall also made a claim for damages, against the police force and his employer (the Crown), pursuant to the MACA. A settlement was reached pursuant to which QBE, the compulsory third party insurer, paid Mr Mannall $1,175,000.

QBE sought contribution from SICorp on the basis that double insurance applied and, as such, SICorp was liable to pay QBE 50% of the settlement sum. QBE argued that SICorp’s function was to act for the state, or an authority of the state, and it was therefore required to ensure police force liabilities were met. SICorp denied liability on the basis that it was not an insurer.

The Decision

The court noted that prior to 1989, GIO managed claims made against NSW government agencies in respect of workers compensation and motor vehicle accidents. On 1 July 1989, the Treasury Managed Fund (TMF) came into operation. On 1 July 2005 SICorp became the manager of the TMF. The TMF was described by SICorp as an indemnity scheme which provides security in relation to the liability of risks of “budget dependant agencies of the NSW Government”.

The court found that SICorp was a statutory body, created by and which represents the Crown, which is charged with the management and administration of the TMF, in circumstances where claims are lodged by employees of the Crown (such as members of the NSW police force).

The court held that SICorp was not an insurer, because there was no contract of insurance between the relevant agency and SICorp. The court noted that:

“Whilst the TMF is replete with insurance terms such as “coverage” and “premiums” and is undoubtedly intended to mimic insurance, it is no such thing.......

The premiums for which the TMF provides are not premiums at all in the conventional sense… The TMF provides no risk cover in the nature of insurance to anyone. It might aptly be described as an insurance

phantasm.The defendant’s obligation is to manage the fund by meeting claims made against Government agencies. This obligation is in no way co-ordinate with that of QBE under its motor-vehicle policy which rendered it liable in respect of Mannall.”

The court found that SICorp was not an indemnifier and there was no (or no sufficient) community of interest so as to engage the principles of contribution. As such, SICorp was not obliged to contribute to QBE on the basis of double insurance.

[2013] NSWSC 1841QBE Insurance (Australia) Limited v NSW Self Insurance Corporation

IN ISSUE

• Whether a government agency appointed to manage a self insurer fund was an insurer for dual insurance purposes

• Whether there was a “community of interest” between SICorp and QBE (the 3rd party motor vehicle insurer)





INSURANCE ISSUES


The Facts

The Port Phillip City Council (the Council) entered into a contract with Kane Constructions Pty Ltd (Kane) for works at its town hall. An employee of another contractor (the worker) was injured in the gallery area of the town hall when he tripped over a door in a hoarding constructed by Kane. The gallery area works had been deleted from the construction contract some months prior to the accident and Kane had ceased work in that area. The worker received statutory benefits from the Victorian Workcover Authority (VWA) and the VWA brought a statutory recovery claim against the Council, Kane and the employer. The worker also brought a successful general damages claim. The Council and Kane were ordered to pay damages in both proceedings. The Council sought indemnity for those damages from Lumley pursuant to an insurance policy required to be effected by Kane pursuant to the construction contract.


The trial judge held that the Council fell within the definition of insured under the policy as a principal and/or owner and that the occurrence was in connection with its business as property owners/occupiers. Lumley was ordered to indemnify the Council.


The issues on appeal included whether the Council was an “Insured” for the purposes of the policy; whether the worker’s injury occurred ‘in connection with’ the

business of Kane; and whether a single excess was applicable to each occurrence under the policy, or to each insured who made a claim thereon.


The Court of Appeal held that the Council was an insured within the extended definition in the policy. However, the requirement for the occurrence to have arisen “in connection with the business and activities of the Insured”, related only to the actual insured who had taken out the policy, which was Kane.

Kane had constructed a hoarding in the gallery to prevent unauthorised access by other workers and the public. It had constructed a door through the hoarding, which for stability purposes had not been extended all the way to the ground, rendering the bottom of the doorway opening a tripping hazard. When the gallery works were deleted from the construction contract, Kane was instructed by the Council to leave the hoarding and door as it was. Subsequently, other contractors used the door on a much more frequent basis than had been the case when Kane was in possession of the area.

In determining whether the accident arose “in connection with the Business and Activities of the Insured and Insured Contracts” the Court of Appeal held that the Council was not required to establish a causative link between Kane’s business and activities. Rather, the insuring clause was in the nature of a ‘connection’ or ‘relationship’ issue. It was seeking merely to relate one thing (the Occurrence) with another (the Business Activities of Kane and the

Insured Contracts). As the door and hoarding had been constructed by Kane pursuant to the insured contract, the fact that a Council employee had directed Kane to leave the hoarding in place did not operate to sever the relationship created by the insuring clause. As such, the worker’s fall and injury (the occurrence) was sufficiently connected with the business activities of Kane so as to require Lumley to indemnify the Council under the contract of insurance.

In relation to the excess, the Court of Appeal held that on its proper construction, the policy required the payment of one excess with respect to each Occurrence under the policy, rather than by each insured. As Kane had already paid the excess, there was no obligation on the Council to do so.

Lumley’s appeal was dismissed.

[2013] VSCA 367Lumley General Insurance Ltd v Port Phillip City Council

IN ISSUE

• Liability of insurer to indemnify an insured for an occurrence “in connection with the business and business activities of the insured and insured contracts”



http://www.austlii.edu.au/au/cases/vic/VSCA/2013/367.html


INSURANCE ISSUES


The Facts

The appellant owned land and buildings, leased to a company which carried on business as a mattress and furniture warehouse. The appellant was registered under the relevant GST Act and treated payments of rental received from the lessee as subject to GST. Expenditures relating to the property were treated as giving rise to input tax credits (ITC) in an amount equal to the GST payable on those supplies. The buildings and their contents were totally destroyed by a fire on 25 April 2007. The fire was an insured event under an insurance policy issued by the respondent insurer. The appellant’s loss exceeded the sum insured.

On 21 August 2007, the respondent paid to the appellant a total amount made up of 10/11ths of each Sum Insured, reflecting the insurer’s construction of General Condition 16.2, which stated inter alia:

“… any payment or supply We make to You in respect of the acquisition of goods, services or other supply (or monetary compensation in lieu thereof) or otherwise in relation to Your claim will be calculated on the GST inclusive cost of Your claim. In calculating such payment, We are entitled to reduce it by any ITC which You are, or would be, entitled to... “


The trial judge held that the respondent’s construction of General Condition 16.2 (that it was entitled to deduct ITC from the Sum Insured) was correct.


The appeal concerned the proper construction of General Condition 16.2 in relation to payments made under the policy in circumstances where the loss exceeded the Sum Insured.


In allowing the appeal, the Court of Appeal held that the appellant’s construction of the General Condition (that the insurer’s maximum potential liability after taking ITC into account extends to the full amount of the Sum Insured), more closely reflects the text and structure of the clause in the context of the policy as a whole. The Court of Appeal noted that the construction adopted by the trial judge meant that the Insurer was able to discharge its obligations under the policy by making a payment that was 10/11ths of the sum insured. The Court of Appeal held that such a construction could not reflect the intention of reasonable contracting parties. Consequently, the application of general condition 16.2 did not prevent the appellant from being entitled to a payment the equivalent of the full Sum Insured.

[2013] QCA 377Mattress Innovations Pty Ltd v Suncorp Metway Insurance Limited

IN ISSUE

• Application of GST clause in circumstance where loss exceeds the sum insured





INSURANCE ISSUES


The Facts

The plaintiff owned 5 properties in Christchurch. The properties were damaged in earthquakes occurring in September 2010 and February 2011. The properties were each insured under material damage and business interruption policies issued by the defendants. After the September 2010 earthquake and before the February 2011 earthquake, the plaintiff notified the defendants of the damage giving rise to claims under the policy and the defendants paid almost $70,000 towards investigation and repair of the insured properties. Following the February 2011 earthquake, 3 of the 5 insured properties were demolished. The defendants accepted liability to pay the full sum insured for the buildings demolished but denied liability to pay the unspent cost of repairing the damage to the 2 remaining buildings due to the September 2010 earthquake.

The plaintiff argued that the policy entitled it to claim the losses arising from the September earthquake up to the sum insured for each property. It claimed the obligation arose as soon as there was damage to a property, and that in the circumstances this required ‘new for old’ cover for the relevant damage. The plaintiff also sought clarification of how the average clause in the policy operated and whether it limited the defendants’ obligations to pay the plaintiff the full sum insured for one of the properties on the basis of underinsurance.

The defendants argued that the wording of the policy meant that the insurer’s liability could not exceed the sum insured (for each building) over

the period of the policy. They also argued that the proper construction of the reinstatement of the sum insured (RSI) clause required two prerequisites before reinstatement occurred – a covered loss and the absence of notice to the contrary. They asserted that the plaintiff’s approach to the RSI clause had the result of immediate reinstatement, meaning there would be no effective opportunity for the notice to be given. They submitted that reinstatement of the sum insured therefore took effect only from the time a claim had been paid. The defendants also argued that the doctrine of merger applied.

The Decision

The court considered that the “amount of insurance cancelled by loss” was automatically reinstated from the date of the loss. The court did not accept that the statement that “the Underwriters’ liability will not exceed the sum insured” meant that during the period of the policy, the total claims were limited to the sum insured. The trial judge noted that this would have the effect of robbing the RSI clause of its evidently intended effect.

The court accordingly concluded that the policy should be construed on the basis for which the plaintiff contended.

However, the defendants argued that given the destruction of the buildings in the February earthquake meant that the total amount of cover became payable, any prior partial damage as a result of the September earthquake merged with the damage caused by the later earthquake.

The plaintiff argued that the doctrine of merger was restricted to cases of marine insurance. The trail judge found there was nothing in the reasoning of the decided cases which suggested that the relevant principles of merger were exclusively applicable to contracts of marine insurance. He concluded that the principle of merger should, subject to the particular policy wording, extend to all contracts of insurance by way of indemnity.

[2013] NZHC 3513Crystal Imports Limited v Certain Underwriters of Lloyds of London & Anor

IN ISSUE

• The extent of the defendants’ liability to indemnify the plaintiff.Whether the doctrine of merger was applicable

• The interpretation of an ‘Average’ clause and its impact where the property was under-insured





INSURANCE ISSUES


The trial judge accordingly found that while the policy applied as proposed by the plaintiff and the September damage was covered, once the February earthquake took place, unrepaired damage sustained in the September event was no longer a loss for which indemnity needed to be provided.

In relation to the interpretation of the average clause, the trial judge found that the value of the insured property for the purposes of the average clause (and therefore the calculation of the recoverable sum in the event of under insurance), would reflect the basis of recovery elected by the plaintiff in respect of covered damage to the property.

[2013] NZHC 3513Crystal Imports Limited v Certain Underwriters of Lloyds of London & Anor





The Facts

Mr Robinson was employed by Reed Constructions Australia Pty Ltd (Reed) as its chief operating officer. Reed constructed medium to large buildings and other construction projects. In October 2010, the applicant, 470 St Kilda Road Pty Ltd and Reed entered into a design and construct contract for a project in Melbourne. In December 2011, the applicant requested that Reed provide certain evidence to support a progress claim and Mr Robinson accordingly executed a statutory declaration in that regard on 12 December 2011, following which Reed supplied it to the principal’s representative under the contract, who issued a certificate of payment in the amount of $1,426,641.70. Principal proceedings were thereafter commenced by the applicant against Mr Robinson on 3 April 2012, claiming that Mr Robinson did not have a reasonable basis for making the statutory declaration in support of the progress claim and that he had engaged in conduct that was likely to mislead or deceive and acted negligently in the breach of his duty of care.

Mr Robinson made a claim for indemnity under a directors’ and officers’ liability insurance policy that Reed had taken out with Chubb for the period 25 July 2011 to 25 July 2012. It was accepted that Mr Robinson fell within the definition of an insured person under the policy. Chubb denied indemnity on the grounds of an exclusion in the policy. Mr Robinson instituted a cross-claim against Chubb seeking indemnity, which was denied.

On 8 February 2013, the court ordered that the following separate issue be tried:

“Whether the cross-claimant’s statutory declaration made on 12 December 2011 was an actual or alleged act or omission “in the rendering of, or actual or alleged failure to render any professional service to a third party”, within the meaning of Exclusion iv(A)(v) of the Directors’ and Officers’ Liability Coverage Section of the Policy of Insurance referred to in the Statement of Cross-Claim as Policy of Insurance No. 93301062”.

Chubb argued that the exclusion applied as Mr Robinson was rendering professional services by Reed in making the statutory declaration.

In contrast, Mr Robinson argued that he had made the statutory declaration in order to be paid for the work that Reed had performed, that it did not involve the rendering of a service, but rather was an “accountability mechanism”.

The Decision

The court noted that the policy was specifically a directors’ and officers’ liability insurance policy. The court noted that in interpreting an exclusion clause, the contra proferentem rule operates only where the words are ambiguous. It had been argued by Mr Robinson that the construction of the meaning of “Professional Services” was ambiguous.

The court found that the provision of the statutory declaration was an act in the rendering of services, based on the plain English meaning of the word “services”. Significantly, however, the court concluded in finding for Mr Robinson, that using the plain, natural

and ordinary meaning of “Professional Services”, the provision of the statutory declaration did not constitute professional services. Considered within the broader scope of its contract with the applicant, the statutory declaration was simply a means by which Reed was able to provide evidence and information as to payment of moneys due. This did not constitute either project management or professional services. Further, the court noted that had the clause been interpreted in the manner argued by Chubb, the practical effect would be to make the exclusion operate whenever officers undertake a great many acts in aid or support of business activities, which would circumscribe the cover offered by the policy.

IN ISSUE

• The meaning of service and rendering of a service in an exclusion clause

• The meaning of professional service in an exclusion clause



[2013] FCA 1420470 St Kilda Road v Robinson

INSURANCE ISSUES



INSURANCE ISSUES


The Facts

The respondent was a director of the Bridgecorp Group of companies (Bridgecorp) which collapsed owing investors nearly $500 million. Following the collapse, the respondent and his fellow directors were convicted of offences under the Securities Act 1978. The appellants were receivers and liquidators of Bridgecorp and issued proceedings against the directors seeking damages on the basis that they breached their duties as directors.

Bridgecorp held a D&O liability policy subject to a limit of indemnity of $20 million and a statutory liability policy with a limit of liability of $2 million which covered the directors’ defence costs but did not cover the directors for any liability to third party claimants. The limit of indemnity under the statutory liability policy was exhausted by the directors in defending the proceedings under the Securities Act. The directors made claims under the D&O policy for reimbursement of their defence costs in the civil and criminal proceedings against them. Due to the costs involved, there was a substantial risk that there would be no insurance money remaining under the policy to go to Bridgecorp’s investors if the claim against the directors succeeded. The appellants therefore gave the insurer notice of a charge under section 9(1) of the Law Reform Act 1936 (the Act) over the proceeds of the D&O policy in respect of their claims against the directors. Section 9(1) of the Act creates a statutory charge over “all insurance money” that may be payable under a liability policy. The appellants asserted that as a result of the charge it had a claim to the insurance money in priority to the directors.


The respondent applied to the High Court for a declaration that section 9(1) did not prevent the insurer from meeting its obligation under the D&O policy of reimbursing them for the defence costs. At first instance, the High Court held that the charge created by the Act applied to the whole of the amount of $20 million available under the policy at the date the charge was created and it therefore prevented the directors from having access to the insurance money to meet their defence costs.

The Court of Appeal Decision

The Court of Appeal overturned the High Court’s decision and found that the charge did not prevent the insurer from meeting its obligation under the policy to reimburse defence costs. The Court of Appeal found that the charge only crystallises over the balance of the policy limit that is available to meet third party claims after any defence costs liability has been met. It also considered that section 9 was of limited effect and was not intended to re-write or interfere with contractual rights as to cover and reimbursement.

The Supreme Court Decision

By a 3:2 majority, the Supreme Court overturned the Court of Appeal’s decision.

When considering the wording of the Act, the Supreme Court found that there was strong textual support in section 9(1) for the proposition that the charge arises at the time the event giving rise to the liability occurs and that it secures whatever the

full amount of the liability (if any) to the third party ultimately turns out to be. The Supreme Court also found that the wording of section 9(3) setting out the priority of statutory charges created under the Act would appear to displace any contractual provisions as to priority of claims and also changes the normal priority rules at common law with regard to rival claims. The Supreme Court considered that the effect of section 9(3) is to put the risk on the insurer, up to the limit fixed by the contract of insurance, if it does not observe the statutory charge and pays out under the provisions of the policy unequally where there are claims arising out of the same events giving rise to the claim for damages, pays out rival claimants arising from events later than those of another statutory charge holder or pays out claims under the policy (such as defence costs) which are not protected by the statutory charge.

[2013] NZSC 156BFSL 2007 Limited & Ors v Steigrad

IN ISSUE

• Whether a statutory charge prevented directors from having recourse to their D&O policy for cover for their defence costs



http://www.nzlii.org/nz/cases/NZSC/2013/156.html


INSURANCE ISSUES


The Supreme Court considered general policy arguments and held that allowing defence costs to diminish the sum available to third parties is tantamount to requiring third party claimants to fund an unsuccessful defence, which would normally not occur under ordinary court cost rules. It found that the fact that insurance for defence costs is covered in the same policy as the liability insurance does not obviously point to the displacement of those normal costs rules, absent clear statutory language.

The Supreme Court concluded that the statutory charge under section 9(1) secures the full amount of the eventual liability to the third party claimant and arises immediately on the event giving rise to the claim. Unless the indemnity for defence costs is within the statutory charge, the Supreme Court held that the payment of defence costs is at the risk of the insurer because of the statutory charge. The Supreme Court determined that it is irrelevant that the insured’s liability for defence costs is established (so that they become payable by the insured) before liability is established on the claims for damages.

The result is that the indemnity for defence costs does not get around the charge and the contractual obligation with regard to the payment of defence costs does not mean that the insurer can keep paying out defence costs if that would undermine the statutory charge.

The Supreme Court found that the circumstances of the case arose because the policy made the defence costs the subject of cover in a policy that also covers the third party liability that gives rise to the defence

costs. As a result, the statutory charge protects the third party claim and prevents performance of the defence costs obligation without risk to the insurer. The Supreme Court observed that “the insurer and the insured have made a poor bargain because the policy has not been properly drawn, overlooking the effect of the statutory charge”.

The Supreme Court noted that an insurer may be entitled to be cautious about meeting a defence costs claim where a third party claim, of which it has notice and which exceeds the insurance limit, remains outstanding.

[2013] NZSC 156BFSL 2007 Limited & Ors v Steigrad


http://www.nzlii.org/nz/cases/NZSC/2013/156.html


INSURANCE ISSUES


The Facts

The plaintiffs sought indemnity pursuant to a home and contents policy after their residential building and contents were substantially damaged by fire.

A dispute arose as to the manner in which to assess the costs of re-instatement. The parties alleged various estoppels and breaches of utmost good faith in their respective dealings during the life of the claim.

With respect to the claim against the insurer, the breach of duty of utmost good faith was premised on alleged failures to raise concerns about the plaintiffs’ building cost estimates in a timely fashion. As well, the plaintiffs took issue with the insurer seeking to rely on documents that it knew did not reasonably reflect the nature and cost of reinstatement works, for the purpose of negotiating a smaller payout of the claim.

The insurer counter-alleged a breach of duty of utmost good faith against the plaintiffs for their insistence on obtaining a Council development consent in circumstances where none was required.

The Decision

The court was satisfied that the broad language of section 13 ICA meant that the duty of utmost good faith applied throughout the life of the contract and in the handling of claims.

In respect of the different standards of conduct required of insurers and insureds, the court noted that a less stringent standard was arguably required of insureds than of their insurers.

In respect of the claim for breach of the duty of utmost good faith against the insurer, it was alleged that various representations by the insurer had varied its contract with the plaintiffs and later estopped the insurer from denying that the entitlement to policy benefits would be calculated on the basis of a quote from the plaintiffs’ building consultant, among other things.

Further, the plaintiffs alleged that in later doing those things from which it was estopped, the insurer had breached its duty of utmost good faith.

The court was not satisfied that there was any meeting of the minds or varied agreement as alleged by the plaintiffs. The court therefore rejected the plaintiffs’ arguments as to the existence of an estoppel, finding instead that it was not contemplated that the plaintiffs’ building consultant’s quote would be accepted without further scrutiny, and that despite some disingenuous conduct on the insurer’s part, it was entitled to obtain its own expert reports as to building reinstatement costs.

Accordingly, the breach of duty of good faith claim against the insurer failed.

In respect of the claim against the plaintiffs, the insurer asserted that it suffered prejudice and bore costs unassociated with the reinstatement of the plaintiffs’ home, as a result of the plaintiffs’ insistence on seeking Council consent in circumstances where it was unnecessary to do so.

However, the court accepted that the plaintiffs were simply relying on advice from their architects about that, and rejected the insurer’s claim that the plaintiffs had breached their duty of utmost good faith.

[2013] NSWSC 1975Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd

IN ISSUE

• Construction of a Home and Contents Policy

• Duty of utmost good faith





INSURANCE ISSUES


The Facts

In May 1987, Stephen Lowrie (SL) was injured in an accident while working for the plaintiff as a tree faller in north west Tasmania. He was rendered permanently and significantly disabled as a result. In 1990, he commenced 2 sets of legal proceedings seeking damages in respect of the accident but neither proceeding was progressed. In1997 the plaintiff had agreed to pay SL for the 24 hour attendant care he required as a result of his injuries.

Pursuant to the Workers’ Compensation Act 1927 (Tas) employers were required to maintain insurance, but could be granted an exemption from doing so upon proving that they had adequate resources, or arrangements in place to otherwise satisfy their liabilities in that regard.

Such exemption was granted to North Broken Hill Holdings Ltd (NBHH), of which the plaintiff was a subsidiary company. A re-insurance agreement was entered into between NBHH and the defendant. That policy provided cover for liabilities exceeding $1M.

The plaintiff contended that the payments made by it to the injured worker resulted in a loss of the type envisaged by the defendant’s coverage, and sought indemnity for losses exceeding the $1M it had already borne and any continuing losses.

The Decision

The trial judge agreed with the defendant’s submissions that the plaintiff had suffered no insured loss of the type contemplated by the re-insurance policy, and had therefore not reached the $1M threshold so as to enliven an entitlement to coverage under the re-insurance policy, because the payments by the plaintiff had not arisen from any legal liability to pay compensation. The particular costs of care met by the plaintiff were not paid pursuant to any settlement or judgment in a claim or proceeding, or by virtue of any common law or statutory obligation owed by the plaintiff to the injured worker.

The plaintiff also argued that the costs of hospital care for SL were significantly higher than the cost of attendant care, and, in agreeing to pay the costs of attendant care, the plaintiff was mitigating its losses. It was argued that costs incurred in those circumstances fall within an indemnity under the reinsurance policy as an implied term. The court held that to succeed on that argument, it was necessary for the plaintiff to prove that it had an obligation to minimize loss and that the payments were made for the purpose of meeting that obligation. The court was not satisfied, on the evidence presented, on either point and the claim for indemnity also failed on this ground.

Judgment was entered for the defendant.

[2014] TASSC 3Associated Forest Holdings Pty Ltd v Gordian Runoff Ltd

IN ISSUE

• Construction of a re-insurance agreement

• Whether an insured employer was entitled to indemnity under a re- insurance agreement for payments voluntarily made to an injured worker



http://www.austlii.edu.au/au/cases/tas/TASSC/2014/3.html


INSURANCE ISSUES


The Facts

The trial judge was required to consider a specific question remitted from the New South Wales Court of Appeal in Prepaid Services Pty Ltd & Ors v Atradius Credit Insurance NV [2013] NSWCA 252.

The trial judge had previously heard the matter at first instance. The plaintiffs were a group of telecommunications companies who had taken out a policy of trade credit insurance with the defendant. The plaintiffs had engaged Bill Express Limited (BXP) to manage point of sale terminals selling pre-paid phone credit for their networks. The policy was to insure against any failure by BXP to pay amounts due to the plaintiffs. BXP became insolvent and the plaintiffs claimed under the policy, for losses up to $27 million.

The defendant sought to avoid coverage under the policy by alleging fraudulent misrepresentation on the part of Mr McQuade, who made the application for insurance on behalf of the plaintiffs. It was alleged that on the insurance proposal form, Mr McQuade had given false answers about the plaintiffs’ knowledge of BXP’s payment history regarding late payments and whether BXP had previously been placed on a payment plan. The answers were said to be given in circumstances where the plaintiffs had prior knowledge of BXP consistently being unable to pay its debts when they fell due.

The Court of Appeal found that there was insufficient evidence of fraudulent misrepresentation and therefore

the defendant was not entitled to avoid the policy. The Court of Appeal remitted the alternate question of whether the defendant could reduce its liability on the basis of section 28(3) ICA given alleged ‘innocent’ misrepresentations. Section 28 ICA allows an insurer to reduce its liability to place itself in the position in which it would have been if the misrepresentation had not been made.

The Decision

The trial judge was required to consider whether, on the balance of probabilities, the policy would not have been issued by the defendant if the full extent of the knowledge of BXP’s payment history was disclosed. Evidence from various witnesses holding authority for risk and underwriting decisions within the defendant’s business was examined. That evidence included opinions that BXP was an ‘unacceptably high risk of loss’ when the whole of the payment history was considered.

The trial judge found that the defendant would not have issued the policy if truthful and complete answers had been given by Mr McQuade.

The operation of section 28(3) ICA therefore allowed the insurer to reduce its liability to nil. The evidence did not address whether, had the relevant answers been given and disclosure made, there was any alternate policy which could have been offered to cover the losses.

[2014] NSWSC 21Prepaid Services Pty Ltd v Atradius Credit Insurance NV (No 2)

IN ISSUE

• Whether insurer entitled to reduce its liability under a policy of trade credit insurance for misrepresentation






The Facts

The plaintiff had been granted leave to join the insurers of the first defendant in an earlier decision in the proceedings. The proceedings related to settlement of various Supreme Court litigation. A condition of the initial decision was that a separate question of policy response be determined. The policy response issue was related to the proper construction of the insuring clause in the contracts of professional indemnity insurance held with the insurers.

The separate question arose because it had been alleged by the insurers that the claim now asserted by the plaintiff was first made in a Commercial List Response in the previous Supreme Court proceedings, and since that claim was made prior to the period of insurance, the ‘claims made’ policies would not respond.

The court was required to consider two key issues. The first was whether the previous Commercial List Response was a ‘claim’ as defined in the policies, specifically a counter claim. The second issue was whether the claim in the current proceeding had first been made prior to the period of insurance.

The insuring clause provided coverage ‘in respect of Loss and Defence Costs and Expenses arising from any Claim for any civil liability first made against You during the Period of Insurance…’. ‘Claim’ was defined to include ‘any suit, civil or third party proceedings, counter-claim or arbitration proceeding brought against You alleging a Wrongful Act’.

The Decision

The trial judge held that the Commercial List Response was not a claim under the relevant definitions in the policy and even if it was, it was not the same claim now made as a different loss was asserted. The insurers were therefore not able to refuse indemnity on that basis.

The trial judge pointed out that questions of construction turn on the facts of each case and that previous decisions about a particular defined term in the context of different policies are not of particular assistance. The relevant ‘claim’ in question, the Commercial List Response, was to be assessed as whether it was a claim that fell within the insuring clause of the particular policies under consideration.

The Commercial List Response was not a claim because it had not resulted in any ‘loss’ as defined under the policy and for which the insuring clause responded. There could have been no damages or compensation orders arising from the Commercial List Response. A relevant counter claim would have to have asserted a ‘Loss’ as defined in the policies.

Even though the trial judge found that there was no previous ‘claim’, the judge nonetheless went on to find that even if there was a prior claim, it was not the same claim made in the subject proceedings.

A distinction was made between a ‘claim’ and a cause of action which might have similar facts. The trial judge answered the question of whether the loss suffered in the event of success in the subject proceedings

could be said to arise from the original Commercial List Response in the negative. The two matters were therefore different and there was no relevant claim made prior to the period of insurance.

IN ISSUE

• Whether a previous action constituted a claim made prior to the period of insurance under policies of professional indemnity insurance



[2014] FCA 44Austcorp Project No 20 Pty Ltd v LM Investment Management Ltd (in liq)(No 2)

INSURANCE ISSUES



INSURANCE ISSUES


The Facts

Centennial operated a coal mine near Newcastle. It entered into a contract with Longwall Advantage Pty Ltd (Advantage) for Advantage to supply labour to perform work at Centennial’s coal mine (the agreement).

The agreement contained an insurance clause which required Advantage to maintain public liability insurance with an indemnity clause in favour of Centennial for the injury or death of any person caused by the negligence of Advantage or its personnel (clause 8). In addition, the agreement included site regulations which provided special insurance requirements and indemnity in favour of Centennial (clause 43).

Advantage supplied a worker, Mr McDonald, who was employed by Labourforce, to Centennial and during the course of his work he suffered significant injuries. Mr McDonald sued Centennial, Advantage and Labourforce.


The trial judge found in favour of Mr McDonald as against the 3 defendants and also found that Centennial was entitled to indemnity as principal under the GIO policy of insurance issued to Advantage.


GIO appealed against the finding that it was obliged to indemnify Centennial. GIO argued that the site regulations did not form part of the contract and

that there was no obligation on Advantage to effect public liability insurance in favour of Centennial for Centennial’s negligence.


The Court of Appeal held that whilst the indemnity and insurances provisions in clause 8 of the contract did not include Centennial’s own negligence or breach of contract, those clauses must be read with the other indemnity and insurance provisions appearing later in the contract.

Interpreting the contract in this manner, the Court of Appeal held that the liability appearing in the site regulations was different to the liability for which insurance was required to be effected by Advantage under clause 8 of the agreement. In clause 43, the liability was wider and included the liability of Centennial and its employees who were required to be noted as interested parties in the Advantage policy effected by GIO.

It was further observed that the indemnity in clause 43 was also different to the indemnity appearing in clause 8 of the agreement, the latter indemnity being granted in favour of Centennial if Advantage failed to effect insurance for Centennial’s negligence.

Consequently, the Court of Appeal held that the indemnity in clause 43 of the site regulations was additional to the indemnity afforded in clause 8 of the contract and that the obligation to maintain insurance was supplemented by the insurance requirements and indemnity in clause 43.

The appeal was dismissed. GIO was required to indemnify Centennial for its liability under the primary judgment.

[2014] NSWCA 13GIO General Limited v Centennial Newstan Pty Ltd

IN ISSUE

• Interpretation of indemnity clause;

• Whether obligation on contractor to indemnify principal





INSURANCE ISSUES


The Facts

The plaintiff sustained a back injury working as a scaffolder on 11 April 2008. He was an unskilled manual labourer from a non English speaking background.

The first defendant (the trustee) was the trustee of a superannuation fund, of which the plaintiff was a member. The trustee agreed to pay the plaintiff a benefit if he became totally and permanently disabled whilst in employment, and insured its liability to pay such benefit with the second defendant, Hannover Life Re (the insurer).

The relevant policy defined ‘total and permanent disablement’ as an insured person being ‘unable to follow their usual occupation by reason of accident or illness for six consecutive months and in our opinion, after consideration of medical evidence satisfactory to us, is unlikely ever to be able to engage in any regular remunerative work for which the insured person is reasonably fitted by education, training or experience’.

The plaintiff’s claim for benefits was denied by both the trustee and the insurer on the basis that he did not meet the definition of total and permanent disablement. In denying liability both the trustee and the insurer asserted that the majority of the medical reports demonstrated, and medical consensus was, that the plaintiff retained capacity for work in alternate and restricted duties. Particular reliance was placed on a report from an occupational consultant who referred to ‘vocational goals for rehabilitation’ as ‘including process work, crane or hoist operator and forklift operator’.

It was not disputed that the plaintiff was unable to follow his usual occupation as a scaffolder for six consecutive months after the injury, and that his injury prevented him resuming that occupation at any time into the future. The question for determination was whether the plaintiff was unlikely to be able to ever engage in work in any employment, business or occupation for reward, or the hope of reward, of any type for which he was reasonably fitted by education, training or experience.

In that respect, the primary basis for the trustee’s and insurer’s denial of the claim was that the plaintiff was able to work as a forklift driver because of his ‘experience’.

The Decision

The court held that no trustee acting reasonably could have decided that the plaintiff was not totally and permanently disabled as defined, because the weight of the medical evidence was to the effect that the plaintiff was unable to engage in any regular remunerative work for which he was reasonably fitted by education training or experience. The decisions of both the trustee and the insurer were unreasonable and, accordingly, invalid.

The plaintiff was not qualified to drive a forklift, and the prior occasions on which he did so (unlicensed) did not provide the required existing ‘experience’. The policy definitions required examination of the plaintiff’s present fitness for work, such that what the plaintiff, with subsequent training and qualification in the future, might be able to do was not a relevant consideration.

As such, the court concluded that he had no education or training in relation to that work.

In terms of assessing the availability of alternative work, the court stated it is required to take a realistic and common-sense approach. There must be a real prospect, and not merely some theoretical possibility, that the work will be available. It should not be work in some special ‘light duties’ job created specifically for the injured worker.

In this case, the court found that, as a matter of reality and common sense, it was difficult to envisage the existence of any paid employment the plaintiff was capable of performing, bearing in mind his medical restrictions and his previous education, training or

[2014] NSWSC 96Lazarevic v United Super Pty Ltd

IN ISSUE

• Whether the plaintiff was totally and permanently disabled within the meaning of the relevant insurance policy

• The duty of a trustee and an insurer in determining a claim for a benefit





INSURANCE ISSUES


experience. There was no evidence of the availability of any such employment as at the date the trustee and the insurer made their decisions.

The court held that the trustee’s and the insurer’s decisions were contrary to the preponderance of evidence so as to be unreasonable in the relevant sense. The court took the view that remitting the matter to the trustee for reconsideration would be futile, and it was an appropriate case for the court to exercise the discretion that would normally be exercised by the trustee. Accordingly, the court determined that the plaintiff satisfied the definition of ‘total and permanent disablement’ and that he was entitled to be paid the corresponding benefits under the policy.

[2014] NSWSC 96Lazarevic v United Super Pty Ltd




INSURANCE ISSUES


The Facts

The plaintiff was an apprentice jockey with Edward (Bede) Murray pursuant to a deed of apprenticeship (“the deed”). The plaintiff alleged that on 30 December 2006 she was riding for Paul Murray, Bede Murray’s son, when she sustained serious personal injuries whilst being led into the mounting enclosure by the strapper, Chris Behan. The plaintiff issued proceedings against Paul Murray, Chris Behan, Murray Family Investments Pty Ltd t/as EB & DE Murray Family Trust (Chris Behan’s employer) and Racing NSW.

ACE Insurance Ltd (ACE) issued a public liability/professional indemnity policy for the Australian Trainers’ Association. It was accepted that, as licensed racehorse trainers, Paul Murray and Murray Family Investments were insured under the policy.

By notice of motion, the plaintiff sought an order that leave be granted to join ACE as a defendant to the proceedings.

The Decision

In order for the application to succeed, the court held that the plaintiff was required to establish that there was an arguable case against the insured; that there was an arguable case that the policy issued by ACE responded; and that there was a real possibility that if judgment were obtained, the insured would not be able to meet it. The third issue was not pressed by ACE.

The court was satisfied that there was an arguable case against the insured. Clause 3 of the deed contemplated that the plaintiff may “ride outside of her work” for a trainer other than her master, and the plaintiff contended that this was what she was doing at the time of the incident. She alleged that she was riding the horse at the request of Paul Murray, who was employed by Murray Family Investments as a foreman and also worked in his own right as a trainer. The court held that it was arguable that Paul Murray and/or Chris Behan were negligent and caused the plaintiff’s injuries.

The court was further satisfied that there was an arguable case that the policy issued by ACE responded to the plaintiff’s claim. ACE asserted that the workers exclusion in the insurance policy was applicable to preclude the plaintiff’s claim. The court rejected that argument, noting that the exclusion may not cover the situation where there is no employer/employee relationship between any of the parties. The court held that if Murray Family Investments, Paul Murray or Chris Behan was found liable not in their capacity as an employer of the plaintiff then ACE’s policy may respond.

Leave was granted to the plaintiff to join ACE as a defendant to the proceedings.

[2014] NSWSC 151Keeble v Murray

IN ISSUE

• Whether the insurer should be joined as a defendant to the proceedings





INSURANCE ISSUES


The Facts

A house and land owned by Skyward (the appellant) was damaged by the Christchurch earthquakes. The appellant had insured the house with Tower (the respondent) for its full replacement value. The appellant accepted an offer from Christchurch Earthquake Recovery Authority (CERA) to buy the land at its then current value and pursued claims for loss of the house against the Earthquake Commission (EQC) and Tower. The claim against EQC was settled but there was a dispute between the appellant and Tower about the basis for and the measurement of the insured loss under the full replacement value policy.

The appellant argued that it was entitled to payment of an amount equal to the estimated cost to rebuild or repair the house. The respondent argued that it had the right to choose from a variety of settlement options under the policy and that it was obliged to pay only the fair price of a replacement house elsewhere of comparable size, construction and condition as the appellant’s house was when it was new. The financial difference between the 2 approaches was approximately $300,000.00.


The parties submitted 3 questions to the High Court for determination: on what basis is the amount payable by the respondent to be calculated if the appellant’s claim is to be settled by the respondent paying the

cost of buying another house; is it the respondent’s choice whether the claim is to be settled by paying the costs of buying another house, or if the respondent settles by making payment, whether it is to be made based on the costs of rebuilding, replacing or repairing the house under the terms of the policy; and did the respondent make an irrevocable election to settle the appellant’s claim by making payment based on the full replacement value?

At first instance the High Court answered all 3 questions in favour of the respondent.


The issues for consideration were which party decides whether and where to repair or rebuild the house or purchase another house and what Tower is bound to do or pay to meet its obligation to the insured.


The Court of Appeal examined the relevant policy provisions and concluded that the policyholder (ie. the appellant) ultimately had the right to decide which approach to take.

The Court of Appeal found that once it had been established that the house was not economically repairable, the respondent had no right to choose the basis of settlement. This was a decision for the insured (i.e. the appellant) to decide whether to rebuild

(or repair) onsite, or to rebuild elsewhere, or to buy another house. In making this finding, the Court of Appeal reasoned that an insurer cannot rely on a general statement of economic desirability to override the express or clearly implied provisions of its policy.

The Court was asked to determine the measure of the respondent’s liability where it settles by paying the costs of buying another house. At first instance the respondent’s obligation was subject to limitation in that where the appellant is to receive the cost of buying another house the amount payable by the respondent is to be the fair price of a replacement house which is to be, to a reasonable and practical extent, comparable (i.e. same size, construction, condition, style and extent as the old house was when new). The Court of Appeal concluded that if the appellant buys another house, the respondent is bound to pay the costs of that house up to the cost

CA563/2013 [2014] NZCA 76Skyward Aviation 2008 Limited v Tower Insurance Limited

IN ISSUE

• Whether insurer or insured entitled to elect manner of payment of claim

• The measure of the insured’s loss under a full replacement value policy





INSURANCE ISSUES


which the appellant would notionally have incurred in repairing its existing house to the same condition and extent as and when new, even if this is much more than the value of the property that has been destroyed.

The Court of Appeal agreed that emails between the respondent and the appellant did not constitute an irrevocable election by the respondent to settle the claim by paying the full replacement value without more.

CA563/2013 [2014] NZCA 76Skyward Aviation 2008 Limited v Tower Insurance Limited




INSURANCE ISSUES


The Facts

In NSW, it is a requirement of the Home Building Act 1989 that a person must not do residential building work unless certain insurance is obtained to protect the owner against the risk of loss resulting from non-completion or the risk of being unable to recover compensation from the builder for a breach of a statutory warranty. Allianz Australia Insurance Limited (the plaintiff) was one of three insurers authorised to provide such building warranty insurance in NSW.

Anthony Vitale (first defendant) was a director of Avcon Constructions Pty Ltd (Avcon). In 2001 and 2002, Avcon sought job specific policies of building warranty insurance for residential building works in NSW from the plaintiff, and subsequently sought to increase its cover to enable it to undertake the development of seven townhouses (the development). The plaintiff requested additional information and recent financial statements for Avcon and required Mr Vitale and Guiliana Vitale (the defendants) to provide a Deed of Indemnity in its favour.

The Deed provided, inter alia, that the defendants unconditionally and absolutely agreed to indemnify and keep indemnified the plaintiff “for all loss, damage, costs, charges or other liabilities incurred or paid as a result of any claim arising under the policy and all amounts which the insurer must pay and is liable or may become liable to pay under the said policy...PROVIDED ALWAYS that the amounts of such indemnity shall not be greater than $200,000 per claim.”

In December 2002, the plaintiff issued seven building warranty insurance policies (the policies) for the development. The policies were “last resort” insurance policies and included cover for breach of statutory warranties or the inability on the part of the building owner to recover compensation from the contractor because of insolvency.

The development was completed in March 2004 and Avcon was placed into voluntary administration in August 2007.

The body corporate and individual lot owners of the development individually submitted claims in November 2007 and January 2008 respectively under the policies for building defects. The plaintiff assessed the claims and accepted liability for some but not for others.

Settlement was ultimately reached with the body corporate in December 2009 for just over $100,000 and with the individual owners through mediation in January 2010 for $1.1 million. Legal fees incurred by the plaintiff in defending and settling these proceedings amounted to approximately $150,000.

The plaintiff commenced these proceedings against the defendants to recover a total amount of $1,866,790.46 relying on the indemnity provided by the Deed.

In defence, the defendants argued that the plaintiff engaged in unconscionable conduct in requiring them to execute the deeds of indemnity as a precondition of issue of the insurance and that the plaintiff took unfair advantage of its superior position created by statute. The defendants argued that the deeds of

indemnity were therefore void and unenforceable. The defendants also argued that the procurement of the deed of indemnity was in breach of the duty of utmost good faith under section 13 ICA and that the plaintiff had engaged in unconscionable conduct contrary to section 12CB of Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

The Decision

The court noted that the real issue between the parties was whether or not the defendants could show that they suffered from a “situational disadvantage” because of the plaintiff’s request that the defendants execute deeds of indemnity in the context of Avcon’s

[2014] NSWSC 364Allianz Australia Insurance Limited v Anthony Vitale and Anor

IN ISSUE

• Whether an insurer engages in unconscionable conduct by requiring an insured to sign a deed of indemnity as a precondition to obtaining cover;

• Utmost good faith





INSURANCE ISSUES


need to acquire home warranty insurance cover. No issues were raised in relation to the policy of insurance or the level of premium charged. The court noted its difficulty in understanding the defendants’ case but it appeared that the defendants were arguing that the plaintiff unconscionably took advantage of the legislative regime in requiring the provision of the deeds of indemnity.

The court considered that the request for indemnities by the plaintiff “was both reasonable and necessary to protect the legitimate commercial interests of [the plaintiff]”.

The court held that the conduct of the plaintiff was not unconscionable either in the general law or pursuant to sections 51AA or 51AC TPA, and/or section 12CC ASIC Act.

In relation to the defendants’ argument that the plaintiff was in breach of section 13 ICA, the court held that it had no application to this matter as the extension of s13 ICA to third party beneficiaries was not enacted at the relevant time and, as Avcon and the defendants were not parties to any contract of insurance, it had no application. The court noted, however, that even if s13 was available, the obligation of utmost good faith would not require a party to surrender any commercial advantage which they may seek to take advantage of during negotiations in favour of the other party.

[2014] NSWSC 364Allianz Australia Insurance Limited v Anthony Vitale and Anor




INSURANCE ISSUES


The Facts

A motorcyclist (the plaintiff) was seriously injured after driving over loose material on newly resurfaced road in northern NSW in January 2006. The plaintiff had been, for many decades, a motorcycling enthusiast and was a very experienced rider. On the day of the accident, he was riding with a group of approximately 20 fellow motorcycling enthusiasts from Queensland to New South Wales. All of the motorcyclists passed over the stretch of road in question in a southerly direction without incident. On the return journey, whilst travelling north on the same stretch of road, over an uphill gradient, the plaintiff lost control of his motorcycle and became separated from it. The plaintiff was found lying on the road. No-one witnessed the accident and the plaintiff had no memory of it.

The plaintiff subsequently commenced proceedings against Boral Asphalt (Boral) and Lismore City Council (Council), who had both carried out road works on the stretch of road in November and December 2005. He alleged that they were negligent for failing to remove excess gravel from the road, and for failing to warn the plaintiff, via the erection of a sign, that road works had recently been carried out.

The Council issued a cross claim against Boral claiming a full indemnity for any damages awarded to the plaintiff for breach of contract.

The Decision

The court found both Council and Boral liable for leaving a swathe of material (a windrow) containing road base and aggregate on the high, eastern side of the road because there was a forseeable risk that the materials could wash or otherwise travel across the road, thereby reducing the available friction on the road and endangering motorcyclists. The court considered that a reasonable person in the position of Boral and the Council, would, (in the circumstances that this was a rural road, sloping to the west, without kerb or gutter in a treed area with a drain to the east), have formed a windrow on the lower western side of the road only. The court found that both Boral and the Council breached their duty in failing to do so. However the court held that s 43A CLA (NSW) protected the Council from any liability arising from the absence of road signs.

Contributory negligence was assessed at 10 %. In relation to contribution between Council and Boral, the court found that that Boral was more culpable than the Council for a number of reasons. First, the Council merely left an amount of road base, whereas when Boral departed there was left an amount of road base and aggregate. Secondly, whilst there was a final inspection by officers of the Council, it was Boral that worked on the stretch of road during the latter stage of the works. Thirdly, the court inferred that a company engaged in the specialised business of sealing roads has more expertise than a local Council exercising countless other functions. Applying the principles of apportionment to those circumstances, the court considered that contribution of liability should be apportioned at 60% to Boral and 40% to the Council.

The court then considered the cross-claim of the Council against Boral. The cross claim was based on the breach of three clauses of the contract between the Council and Boral. The first 2 related to the removal of aggregate and damage to persons and property. The Council was unsuccessful on both of these claims. The third clause upon which the Council relied was clause 10:

[2014] NSWSC 447Pillinger v Lismore City Council

IN ISSUE

• Whether the Council and its contractor were negligent for failing to warn of recent road works and for failing to remove excess roadwork material from a road

• Whether Council was entitled to an indemnity from its contractor for any liability to the plaintiff

• Whether contractor liable for failing to take out insurance





INSURANCE ISSUES


“10 PUBLIC LIABILITY INSURANCE

Before the Contractor commences work under the Contract, the party named in Item 17 shall effect a public liability policy of insurance in the joint names of the Principal and the Contractor which covers the Principal, the Contractor, the Superintendent and all subcontractors employed from time to time in relation to the work under the Contract for their respective rights and interests, and covers their liabilities to third parties........”.

Boral submitted that clause 10 should be read in a limited way, and that it could not be the case that Boral was required to insure the Council for all of its liabilities arising from the works, but only those with regard to which Boral had agreed to indemnify the Council pursuant to clause 8.

The Council submitted that the words of clause 10 should be given their plain meaning. It was submitted that the reading proposed by Boral would not make commercial sense, in that there was no point in requiring Boral to obtain insurance for the Council only with regard to liabilities for which Boral indemnified the Council in any event. The court accepted the Council’s arguments on the proper construction of the contract and held that Boral breached its contract with the Council by failing to effect a policy of public liability insurance that covered the liability of the Council to the plaintiff. The Council was therefore entitled to an indemnity from Boral for the whole its liability to the plaintiff.

[2014] NSWSC 447Pillinger v Lismore City Council




INSURANCE ISSUES


The Facts

In March 2008, Mr Mercer was injured in the course of his employment with Windsor Agencies Pty Ltd (Windsor Agencies). Windsor Agencies held an insurance policy with Allianz Australia Insurance Ltd (Allianz). Mr Mercer lodged an election to claim damages against his employer pursuant to the Workers Rehabilitation and Compensation Act 1988 (Tas).

On 26 January 2011 Windsor Agencies was deregistered. On 21 February 2012 Mr Mercer instituted proceedings against Allianz pursuant to section 601AG of the CA. This provision allows a person to recover from the insurer of a company that is deregistered if the company had a liability to that person and if the insurance contract responded immediately prior to deregistration.

Section 5A(3) of the Limitation Act 1974 (TAS) (LAA) stipulates that for a personal injuries claim involving negligence, a 3 year limitation period applies from the date of discoverability. Allianz pleaded that the date of discoverability was 3 September 2008 and that the plaintiff’s claim was statute barred on the basis that the 3 year period had expired.

Mr Mercer contended that section 601AG created a new cause of action which arose on deregistration of the company, and as such, the limitation period

ran from the date of deregistration. Mr Mercer also submitted that section 5A(3) of the LAA was not applicable to a section 601AG action. Rather, Mr Mercer submitted that s 4(1)(d) of the LAA applied. Section 4(1)(d) imposes a six year limitation period in respect of causes of action established by statute. Accordingly, Mr Mercer submitted that section 4(1)(d) applied as section 601AG was categorised as a cause of action for the recovery of an amount from the insurer, and could not be categorised as an action for damages for negligence.


The trial judge preferred Mr Mercer’s construction and held that the applicable limitation provision was s 4(1)(d) of the LAA. The trial judge held that Mr Mercer was not statute barred from bringing his action against Allianz.


The Court of Appeal was required to determine whether the trial judge had erred in precluding Allianz from relying on section 5A(3) of the LAA in its defence of the proceedings.


The appeal by Allianz was upheld. The Court of Appeal considered the legislative intention of 601AG and ultimately rejected the trial judge’s analysis of the relevant authorities.

The Court of Appeal accepted that s 601AG creates a new cause of action which arises on deregistration, but preferred Allianz’s construction that the new cause of action was a continuation of the existing cause of action against the original wrongdoer. At the time s 601AG was enacted there was no real debate that the applicable limitation period was other than that which related to the underlying cause of action.

The court held that the features of section 601AG combine to support the proposition that the insurer is to stand in the shoes of the insured as if it were being sued on the underlying cause of action.

The existence and nature of the company’s liability which it may have had, and the existence and amount of the insurer’s liability, are determined at the trial of the s 601AG action. All of that supports the

[2014] TASFC 3Allianz Australia Insurance Ltd v Mercer

IN ISSUE

• Which limitation period applies to a claim against an insurer pursuant to s 601AG of the Corporations Act 2001



http://www.austlii.edu.au/au/cases/tas/TASFC/2014/3.html


INSURANCE ISSUES


assimilation of the statutory cause of action to the underlying cause of action.

Moreover, to apply the six year limitation period pursuant to s 4(1)(d) irrespective of the claimant’s cause of action and irrespective of the time that had elapsed, created unfairness to insurers and to plaintiffs whose causes of action were not limited at all, or limited by a period greater than six years.

The court held that the least disharmonious construction was to find that section 601AG encompasses the assimilation of limitation legislation relevant to the underlying cause of action.

Consequently, Allianz was entitled to rely on the expiry of the limitation period in defence of Mr Mercer’s claim.

[2014] TASFC 3Allianz Australia Insurance Ltd v Mercer


http://www.austlii.edu.au/au/cases/tas/TASFC/2014/3.html


INSURANCE ISSUES


The Facts

The appellant insured his 2005 Aston Martin with the respondent, Shannons Limited, on 19 July 2010 for $250,000. The vehicle was damaged on 6 May 2011 when it was driven into the Tweed River on the Gold Coast. It was deemed a “total loss” under the insurance policy.


The trial judge found that the appellant breached his duty of disclosure in completing the proposal for the policy as he did not disclose relevant aspects of his traffic history. It was determined that the respondent would not have entered into the policy at all had there been proper disclosure.

The trial judge determined that pursuant to section 28(3) ICA, the respondent’s liability was reduced to nil.


The only issue on appeal was whether the respondent would have refused to insure the appellant had the appellant made proper disclosure of his traffic history.


The Court of Appeal accepted the trial judge’s findings that if proper disclosure of the appellant’s traffic history had been made at the time of the inception of

the policy, the appellant would have been considered an “unacceptable risk” under the respondent’s National Underwriting Guidelines. The National Underwriting Guidelines specified a particular number and type of traffic infringements that, if present on a driver’s traffic history, left the respondent with no option but to decline coverage.

The Court of Appeal upheld the trial judge’s findings that whether or not to accept the appellant’s proposal (having regard to his traffic history) was not a matter which the respondent’s employees could exercise their discretion. The Court of Appeal ordered that the appeal be dismissed with the appellant to pay the respondent’s costs.

[2014] QCA 138Michail v Australian Alliance Insurance Company Ltd

IN ISSUE

• Whether the insurer would have declined coverage to the appellant under the relevant motor vehicle policy had the appellant disclosed his full traffic history




MOTOR VEHICLES


Contents

< Back to Contents

169 Nominal Defendant v Green; Nominal Defendant v Golding; Nominal Defendant v Campbell [2013] NSWCA 219Appeal by Nominal Defendant against the trial judge’s findings of contributory negligence against passengers of vehicle driven by intoxicated person.

171 Egan v Mangarelli [2013] NSWCA 413Whether the respondent bus driver was paying “reasonable attention” to what was happening on or near the roadway when he ran over the appellant cyclist.

172 Rogers v Suncorp Metway Insurance Limited [2013] QSC 230Whether the rehabilitation services provided for the applicant are reasonable and appropriate.

173 McAndrew v AAI Limited [2013] QSC 290Whether liability should be apportioned in circumstances where the plaintiff was struck by a motor cycle as he alighted from a taxi in the middle of a road.

174 Marien v Gardiner; Marien v H J Heinz Company Australia Ltd [2013] NSWCA 396Whether a driver was liable for failure to activate high beam lights and assessment of contributory negligence.

175 Habig v McCrae & Ors [2013] QSC 335Voluntary assumption of risk and contributory negligence where plaintiff failed to take reasonable care for his own safety.

176 Hall v Yang [2014] NSWDC 36Collision between taxi and motorcycle, whether speed of plaintiff’s motorcycle constituted furious driving to enable defence claimed pursuant to s 54 CLA (NSW).

177 Grant v Roads & Traffic Authority of NSW [2014] NSWSC 379Duty of care and standard of care of the NSW Road Traffic Authority.

MOTOR VEHICLES


Contents

< Back to Contents

178 State of Tasmania v Hammersley [2014] TASSC 15A prime mover with a trailer loaded with an excavator hit and damaged a railway overpass. The main issues were whether the truck driver was negligent for overloading the trailer and whether the truck driver’s employer was entitled to be indemnified in respect of the claim under the relevant contract of insurance.

179 Johnston v Stock [2014] NSWCA 147Duty and standard of care owed by driver of vehicle to intoxicated pedestrian.

MOTOR VEHICLES



The Facts

Each of the 3 respondents was injured when the motor vehicle in which they were travelling left the road and collided with a power pole. On the night of the incident, there were 8 persons in the vehicle, a Toyota station wagon, of whom Golding and Green were in the rear luggage compartment. Campbell was not wearing a seatbelt. All passengers and the driver had been drinking alcohol prior to undertaking the voyage.

The Nominal Defendant was a party to the proceedings pursuant to s33 of the MACA on the basis that the vehicle was not registered or insured.

The subject matter of each appeal was the assessment made in the New South Wales District Court as to the degree of contributory negligence of each of the respondents, who were plaintiffs in the proceedings at trial.


The trial judge held that damages payable to Golding and Green should be reduced, in each case, by 40% and, with respect to Campbell, by 35%. The primary factors upon which the level of contributory negligence was assessed were the knowledge or constructive knowledge of each of the respondents that the driver of the vehicle was so affected by alcohol as to impair his ability to drive safely, that none of them was wearing a seatbelt and that they knew that the driver was inexperienced and unlicensed.


The Nominal Defendant appealed the decision of the trial judge, alleging that a reduction of 80% for contributory negligence was appropriate.


The Court of Appeal noted that the trial judge had assessed the question of contributory negligence in accordance with s138 of the MACA which provides that a finding of contributory negligence must be made where the injured person was a voluntary passenger in or on a motor vehicle at the time of the accident and the driver’s ability was impaired as a consequence of the consumption of alcohol and the injured person was aware or ought to have been aware of the impairment and/or where the injured person was not wearing a seatbelt at the time of the accident. s138 provides that the damages recoverable are to be reduced by such percentage as the court thinks just and equitable in the circumstances of the case.

The Court of Appeal stated that an appellate court should be reluctant to interfere with the trial judge’s finding as to contributory negligence, on the basis that “reasonable minds may differ as to where within a particular range, the appropriate result is to be found”.

The Court of Appeal acknowledged that there was superficial attraction in the submission made on behalf of Green and Golding that it cannot be said to be just and equitable to attribute 80% of the blame for the accident to the injured passenger, where the primary causative event was the carelessness of the

driver. However, it was noted that the submission has 2 separate difficulties: firstly, it avoids the principles of causation and culpability. The Court of Appeal observed that culpability is the measure of departure from an appropriate standard of care and may be viewed separately from the causal link between carelessness and harm. Secondly, the comparison between the culpability of the driver and that of the injured respondents is problematic and highly fact specific. In the present case, the respective failures of each respondent to avoid harm resulted from their willingness to travel in the car with a driver who was relatively inexperienced and intoxicated, and without seatbelts. The breach by the driver was not of a duty owed to himself, but of the duty of care owed to each of his passengers and potentially to other road users.

IN ISSUE

• The assessment of contributory negligence for passengers in a vehicle where not wearing seatbelts and knew driver was intoxicated, unlicensed and inexperienced



[2013] NSWCA 219Nominal Defendant v Green; Nominal Defendant v Golding; Nominal Defendant v Campbell

MOTOR VEHICLES




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An apportionment which is “just and equitable” requires the weighing of the culpability of each plaintiff as against that of the negligent driver and an assessment of the causative contribution of the lack of care of each. The range within which the resultant apportionment lies may, in a particular case, be quite broad.

The respondents noted that there were decisions in which similar conduct appeared to have given rise to findings of contributory negligence between 25% and 50%. Furthermore, it was noted on behalf of Green and Golding that the cases cited by the Nominal Defendant, where a reduction of 80% was upheld, could be distinguished on the facts on the basis that they each involved a plaintiff who was in a position not merely to decide whether he/she should accept a particular risk, but also to control the conduct of the intoxicated driver. Further, in each case, the plaintiff not merely failed to control the driver, but actively invited the driver to drive. In the cases involving alcohol, the blood alcohol levels of the drivers were far higher than that of the subject driver.

In light of these factors, the Court of Appeal held there was no demonstrated reason which took the conduct of the respective parties outside a range of 35% to 40%. In each case, the appeal was dismissed and the Nominal Defendant was ordered to pay the respondents’ costs on an indemnity basis.

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[2013] NSWCA 219Nominal Defendant v Green; Nominal Defendant v Golding; Nominal Defendant v Campbell

MOTOR VEHICLES



MOTOR VEHICLES


The Facts

The appellant, aged 16 was seriously injured when the bicycle he was riding collided with a bus driven by the respondent. The appellant rolled under the front of the bus, which ran over his leg and crushed his torso. This resulted in a brain injury and a right leg amputation.


The appellant argued that the respondent failed to keep a proper look out and, in the alternative, the respondent failed to apply the emergency brakes. The trial judge rejected both these propositions, noting that this conclusion was reached due to the conflicting expert evidence and too many unknown factors as to how the accident occurred.

The trial judge held that the appellant had not established that the respondent bus driver was negligent. It was noted that the burden of proof on an appellant is not discharged where the evidence suggests equal degrees of probability.


The Court of Appeal had to determine if the respondent was in breach of his duty of care by failing to keep a proper look out. This depended upon an assessment of the evidence lead by the experts at trial.


The appellant submitted that the respondent ought to have been aware that the pathway leading to the ramp (and which continued on the other side of the road) constituted a potential source of danger in so far as children on bicycles might attempt to cross the road without first looking to see whether it was safe to do so. The Court of Appeal stated that to impose such a duty would require the respondent to give simultaneous attention to whether the road ahead was clear, and also to whether one child, having passed in front of the bus without looking, might be followed by another child.

The Court of Appeal held that the respondent’s duty was to exercise reasonable care which would be determined having regard to findings of fact. The Court of Appeal noted that there was a gap in evidence as to what occurred between the time the appellant’s bicycle entered the pathway, and the time the bus passed over the appellant’s leg. Reasonable attention to what is happening on and near the roadway required a factual matrix against which the relevant standard can be applied, but was missing from this case.

The Court of Appeal upheld the trial judge’s finding as to liability.

[2013] NSWCA 413Egan v Mangarelli

IN ISSUE

• Whether respondent was negligent for failure to pay “reasonable attention”





MOTOR VEHICLES


The Facts

The applicant was 23 years of age and suffered an extremely severe traumatic brain injury following a motor vehicle accident.

The applicant made an application pursuant to s 51(5)(b) MAIA for the provision of certain rehabilitation services by the respondent, the CTP insurer of the motor vehicle. The services sought by the applicant included the construction of a purpose built residence for the applicant associated with attendant care and services; provision of care and services in an appropriate facility pending construction of that residence; provision of a suitable motor vehicle and provision and/or facilitation of access to sex workers.

At the hearing, the respondent indicated a willingness to continue to fund the applicant’s care in an appropriate facility provided by the service provider until determination of his claim. The respondent would also fund the provision of, and/or facilitate access to, sex workers on specified conditions. However, the respondent opposed any order for the construction of a purpose built residence, or for provision of a motor vehicle on the basis that neither was reasonable nor appropriate on the current medical evidence.

The Decision

The issue for determination by the court was whether the current rehabilitation services being provided for the applicant were reasonable and appropriate.

The court observed that the applicant provided significant challenges in terms of his accommodation and care needs due to aggressive behaviour towards staff members and fellow residents in a shared facility. Whilst the court held that the provision of accommodation by way of a shared facility placed fellow residents at significant risk, the provision of a purpose-built residence would place the applicant in an environment which would not be conducive for his long-term rehabilitation. Although the applicant contended that he could have others reside with him in a purpose built residence, the court found that this would place the applicant at significant risk of exploitation or of access to illicit substances. It would also place other residents at risk. By contrast, placement in a shared facility would result in an environment where the service provider determined who resided in the facility and where there would be a higher ratio of staff available to ensure the safety of residents.

The court concluded that the accommodation and care services being provided by the respondent by way of rehabilitation were reasonable and appropriate services at the present time.

[2013] QSC 230Rogers v Suncorp Metway Insurance Limited

IN ISSUE

• Whether the rehabilitation services provided for the applicant are reasonable and appropriate





MOTOR VEHICLES


The Facts

At approximately 2.50am on 20 December 2008 the plaintiff was travelling in maxi taxi on his way home from a night out. It was accepted he had consumed alcohol during the evening. The maxi-taxi began to make a right hand turn but this did not suit the plaintiff and his friend as they lived in the opposite direction. The maxi-taxi therefore stopped in the right-hand turning lane and the plaintiff alighted from the taxi and commenced crossing the road. As he did so, he was struck by a motor cycle operated by the defendant’s insured, and sustained serious injuries.

The Decision

The defendant argued there should be an apportionment of liability as the plaintiff alighted from the taxi in an unsafe position on the road; failed to immediately move to a safe position; failed to notice the presence of the loud revving motorcycle; failed to see the motor cycle; and was intoxicated and heavily affected by alcohol.

The court held the location of the motor cycle was unknown until it was virtually on the plaintiff. There was no evidence to suggest that the motor cycle was being driven down the relevant road for several hundred metres with its head lights on and engine revving loudly. Further, there was no evidence to indicate where the motor cycle was when the plaintiff

commenced crossing the road. The court rejected the defendant’s submission that if the plaintiff had been sober like his friend, he would have heard the motor cycle and seen it driven along the road.

The court noted the incident occurred in a small provincial town and that at the time, there was no traffic on the road. It was therefore perfectly safe for the plaintiff to get out of the taxi at that place and time. The court was not persuaded the defendant proved there was a failure to keep a proper lookout or other default in the plaintiff’s conduct.

In relation to the issue of intoxication, the court was not persuaded the plaintiff was intoxicated within the definition of that term in the CLA. There was no evidence as to the quantity of alcohol consumed, no blood alcohol analysis was performed and no expert evidence was called to support the argument the plaintiff’s capacity to exercise proper care and skill was affected by the alcohol he consumed.

The court therefore held contributory negligence was not made out. Judgment was entered for the plaintiff in the amount of $1.4 M.

[2013] QSC 290McAndrew v AAI Limited

IN ISSUE

• Whether a finding of contributory negligence should be made where injuries were sustained in a motor vehicle accident





MOTOR VEHICLES


The Facts

On 3 February 2009, shortly after 5.00am, the respondent was walking along Centenary Ave, a residential street in Tarcutta, a small country town in New South Wales. He was walking approximately 4 to 6m from the kerb, with his back to oncoming traffic. At the time there was no natural light and the respondent was wearing dark clothing. There was one streetlight on Centenary Ave but it did not provide any additional light to the driver of a car who would instead need to remain wholly reliant on headlight throw.

At the same time, the appellant’s motor vehicle turned right into Centenary Ave from Bent Street. Her lights were on low beam which illuminated the roadway for a distance of less than 28m in front of her car. After travelling approximately 150m along Centenary Ave, the appellant’s motor vehicle struck the respondent and he sustained serious injuries.


The trial judge held that the appellant was negligent in not keeping a proper lookout at the time of the collision, and in not using her high beam lights as she drove down Centenary Ave. The court reduced the respondent’s damages by 50 % for contributory negligence.


The Issues on Appeal included whether the appellant’s failure to keep a proper lookout was a necessary condition of the collision; whether the appellant was negligent in the circumstances in not having her lights on high beam; and whether the primary judge should have assessed contributory negligence at higher than 50 %.


The Court of Appeal held that the trial judge had erred in finding that had the appellant kept a proper lookout with her lights on low beam, she would have been able to take some action to avoid the accident. In reaching that finding, the Court of Appeal relied on expert evidence from two engineers that the appellant could not have seen the respondent and stopped if she was driving with her lights on low beam at 50km per hour.

The Court of Appeal held that the trial judge did not err in finding that the appellant was negligent for not switching her lights to high beam and agreed with the trial judge that had she done so, she would have observed the respondent in time to avoid a collision with him.

The Court of Appeal found that the respondent should have walked much closer to the kerb, on the other side of the road, and towards the oncoming traffic. As a result, the trial judge’s assessment of contributory negligence at 50 % was upheld.

[2013] NSWCA 396Marien v Gardiner; Marien v H J Heinz Company Australia Ltd

IN ISSUE

• Whether a driver was negligent for driving without high beam lights

• Whether contributory negligence assessment at 50 % was correct





MOTOR VEHICLES


The Facts

The plaintiff was struck by the defendants’ vehicle at 10.00pm on 22 June 2006.The plaintiff’s vehicle, a Toyota van, had broken down on the Bruce Highway, and came to stop at a right angle to oncoming traffic, blocking part of the southbound lane. The headlights were turned off.

The first defendant was driving a truck in the course of his employment. The second and third defendants were the owner and of the truck/ employer of the first defendant and the insurer respectively. He failed to notice the van until the last moment, and made impact with the tail of the van and propelled the van off the highway. The plaintiff who had been travelling in the van suffered a serious head injury as a result of the collision.

The Decision

The defendants argued that the plaintiff had voluntarily accepted the risk of a collision as the plaintiff failed to move the van out of the path of oncoming traffic, to warn oncoming traffic and remove himself from the area of danger. The court held this risk would have been obvious to a reasonable person in the position of the plaintiff. Further, the plaintiff’s lack of action indicated to the court a lack of awareness of the risk that an oncoming vehicle might collide with the stationary van and cause serious injury. However, the onus remains on the defendants to prove this risk was voluntarily accepted. The court held there was no evidence to suggest the plaintiff was consciously placing himself in harm’s way and

no inference could be drawn that the plaintiff freely and voluntarily agreed to incur the risk. As such, this defence was not made out.

The defendants submitted there should be a reduction of 100 per cent in damages by reason of contributory negligence. The court held there was ample time for the plaintiff to attempt to move the van off the highway, and remove himself from the risk of harm. In this sense, the court found the plaintiff failed to take reasonable care for his own safety. However, the court also found that had the first defendant been keeping a proper look out, and driving at an appropriate speed, the injury to the plaintiff would not have occurred.

The court held that the plaintiff should have considered that other traffic would be using the highway and given the time of night, and lack of lighting from the van, it would have been difficult for other drivers to see the van. Conversely, the first defendant was in control of a large truck with the potential to cause great harm if not driven in a manner and speed appropriate for the circumstances. The first defendant was found to have failed to keep a proper lookout on the highway ahead, and failed to travel at a safe speed.

The court held the relative culpability of both parties, and the relative importance of their acts in causing the injury was overall, evenly balanced. Accordingly, the court ordered an apportionment of damages in the order of 50%.

[2013] QSC 335Habig v McCrae & Ors

IN ISSUE

• Whether voluntary assumption of risk could be made out where plaintiff failed to remove himself from the danger;

• Contributory negligence where plaintiff failed to take reasonable care for his own safety





MOTOR VEHICLES


The Facts

In 2008 the plaintiff suffered an acquired brain injury and orthopaedic injuries as a result of a collision between his motorcycle and a taxi. The defendant taxi driver was travelling along the same road as the plaintiff, in the opposite direction, when he suddenly turned right, cutting across the plaintiff’s path of travel. The plaintiff’s motorcycle collided with the rear passenger side door of the taxi.

The plaintiff claimed damages for the alleged negligence of the defendant. The defendant denied that he had been negligent, and claimed he was entitled to a defence under section 54 of the CLA (NSW) on the basis that the claimant’s injuries were suffered during the commission of a crime, namely ‘furious driving’. The defendant also alleged contributory negligence on the plaintiff’s part.

The Decision

A central issue for determination by the court was whether the circumstances of the accident afforded the defendant a defence under s 54 CLA (NSW). The defendant alleged he was entitled to such a defence because the plaintiff committed a serious offence within the meaning of s 54, namely the offence of ‘furious driving’. The court rejected this argument, noting that whilst the plaintiff was more probably than not travelling in excess of the speed limit, this fell short of sustaining an allegation of furious driving.

The court further considered whether the defendant had been negligent, noting that the defendant’s duty extended to contemplating that other road users (in this instance, the plaintiff) might conduct themselves negligently. The court concluded that the failure of the defendant to stop and allow the plaintiff’s motorcycle to pass before commencing a right-hand turn was negligent, and the resulting collision was then inevitable.

The defendant argued that there should be a finding of contributory negligence and a resulting apportionment of up to 100% culpability on the part of the plaintiff. The plaintiff was travelling at approximately 65 kph in a 50 kph zone when the incident occurred. The court concluded that if the plaintiff had been travelling at a lesser speed, he had a better chance of avoiding the collision or recognising the opportunity to take evasive action. The court found that travelling at a speed of 15 kph in excess of the speed limited equated to contributory negligence of a ‘high order’ and therefore apportioned 25% culpability to the plaintiff, and 75% to the defendant.

Damages were assessed at $1,310,827.15, which were reduced to $983,120.32 after apportionment.

[2014] NSWDC 36Hall v Yang

IN ISSUE

• Whether the plaintiff’s speed constituted ‘furious driving’ to enable defence pursuant to s 54 CLA (NSW)

• Assessment of contributory negligence when plaintiff is travelling at excessive speed





MOTOR VEHICLES


The Facts

The plaintiff lost his left leg in a motorcycle incident, when the plaintiff’s vehicle collided with a median strip and/or pedestrian barrier on Longueville Road. The plaintiff had no memory of the accident. The defendant was responsible for the maintenance of the road and the barrier and median strip were built by or for the defendant.

The plaintiff alleged that the placement of the median strip without any warning sign was negligent, and the defendant’s breach of duty in this regard was the cause (or a substantial and operative cause) of the injuries to the plaintiff.

The Decision

The court held that the placement of the median strip, commencing on the eastern side of the intersection, without a sign indicating its non-alignment with the lanes on the western side, posed a not insignificant risk to road users exercising reasonable care for their own safety. Further, given the insignificant cost, the terms of the Road Design Guide, the risk created by each of the vertical and horizontal curves, and the likely consequences of the realisation of the risk, a reasonable person in the position of the defendant would have installed such a sign. The court concluded that the defendant was negligent in not doing so.

The defendant relied on the provisions of s 43A of the CLA (NSW) to avoid liability, claiming that it was exercising a special statutory power. The court rejected this argument, stating if the power is one that is of a kind that persons can generally exercise, it is not a special statutory power. The court concluded that the power granted to the defendant in respect of the placing of signs on public roads is no different to the authority in members of the public to place signs on their own property. The statute identifies a public authority with the power to act in relation to public roads. In that respect, a “special statutory power” was not being exercised.

Secondly, the plaintiff submitted that even if the placement of signs was in the exercise of such a power, the conduct was, in the circumstances so unreasonable that no authority having the power could properly consider it to be a reasonable exercise of power. The court accepted this, noting that no authority acting in the defendant’s position could properly consider the failure to erect an appropriate sign to be a reasonable exercise of power.

Judgment was entered for the plaintiff, however the court reduced the award of damages by 30% having regard to the plaintiff’s speed.

[2014] NSWSC 379Grant v Roads & Traffic Authority of NSW

IN ISSUE

• Duty of care of state Roads Authority





MOTOR VEHICLES


The Facts

The first defendant (Hammersley) was employed by the second defendant (Kellara Transport Pty Ltd (KT)) as a truck driver. On 1 July 2008, Hammersley was driving a prime mover with a trailer attached. Loaded on the trailer was a Caterpillar excavator. Hammersley attempted to drive the prime mover under a railway pass, owned by the plaintiff (State of Tasmania). When he did so, the excavator collided with the overpass causing damage. The State of Tasmania sued Hammersley and KT to recover the cost of the damage.

KT then joined its insurer (National Transport Insurance (NTI)) as a third party to the proceedings claiming that NTI was in breach of its contract of insurance with KT for failing to indemnify KT in respect of the claim.

Hammersley’s evidence was that after loading the excavator onto the trailer, he measured the height of the top of the excavator cab to the ground as being approximately 4.75 metres. KT had a permit for the vehicle allowing it to be loaded to a height not exceeding 4.9 metres.

The Decision

The court accepted that the height of the overpass was approximately 5.2 metres (as indicated on signs at the overpass).

The court stated that Hammersley owed a duty of care to the State of Tasmania that required him to ensure that the height of the vehicle, when laden, did not

exceed 4.9 metres and to ensure that his load did not collide with the overpass.

It was determined that the height of the excavator clearly exceeded Hammersley’s measurement of 4.75 metres and that the highest point of the excavator from the ground was actually the arm of the excavator, which had not been tucked downwards (contrary to loading instructions for that type of excavator). The court accepted that the height of the excavator was approximately 5.6 metres from the ground and determined that Hammersley had been negligent in overloading the trailer and in failing to accurately measure the height of the highest point of the excavator from the ground.

With respect to KT’s claim against NTI for breach of the relevant contract of insurance, NTI argued that a policy exclusion, relating to loss caused by “conveying an excessive load”, applied. In response, KT argued that the exclusion was negated by an additional insuring clause for “accidental overloading”. In brief, the court determined that loading the trailer to a height of 5.6 metres, where the maximum permitted height was 4.9 metres, was clearly in excess of the permitted load and, accordingly, the excessive load exclusion clause applied.

The court further stated that a miscalculation by Hammersley of approximately 1 metre in measuring the highest point of the excavator from the ground could not be said to be “accidental” for an experienced truck driver and that the height differential should have been obvious to the naked eye.

Judgment was entered in favour of the State of Tasmania. KT’s claim against NTI for breach of contract was dismissed.

[2014] TASSC 15State of Tasmania v Hammersley

IN ISSUE

• Whether the truck driver was negligent for overloading the trailer; and

• Whether the truck driver’s employer was entitled to be indemnified in respect of the claim under the relevant contract of insurance



http://www.austlii.edu.au/au/cases/tas/TASSC/2014/15.html


MOTOR VEHICLES


The Facts

At approximately 2.25am on 26 October 2008 the appellant was driving north along Hill Street, East Ballina. She observed the respondent walking in a ‘zigzag’ or ‘stumbling’ manner on the footpath adjacent to the roadway. The appellant reduced her speed from 50km/hr to 40km/hr and saw the respondent stop at the edge of the footpath, turn in the direction of the appellant and fix her gaze on the appellant’s car. The appellant therefore assumed that the respondent would remain stationary on the kerb but instead the respondent stepped onto the road and collided with the appellant’s car.

The appellant had not consumed any alcohol prior to the incident. In contrast, the respondent’s most likely blood alcohol level at the time of the incident (based on tests performed 2 hours after the incident) was 0.302, which was consistent with having consuming 19 standard drinks.


The trial judge found the duty of care of a driver of a vehicle extends to those who may be on a footpath, verge or kerb and who may enter onto the carriageway. His Honour held there were several precautions the appellant could have taken including flashing her headlights, sounding the horn, slowing the vehicle and keeping further to the right hand side of the lane in which the vehicle was travelling. The appellant was found liable but the respondent’s damages were reduced by 75% on account of her contributory negligence.


The issues on appeal were whether the trial judge erred in finding the appellant negligent without properly considering the duty owed and in failing to make a correct assessment of the reasonableness of her conduct.


In order to discharge the duty of care owed, a motorist must exercise reasonable care. This involves a degree of anticipation of what others may do, including that they may act carelessly or in a way that endangers themselves. However, there is a limit to which the irrational behaviour of pedestrians should reasonably be anticipated by a reasonably careful motorist.

The Court of Appeal held that once the respondent took the expected and rational step of stopping and looking for approaching traffic, the appellant was no longer required to anticipate any unexpected or irrational behaviour on the part of the respondent. Further, the fact the respondent was grossly intoxicated and that this fact crossed the appellant’s mind did not alter the standard of care owed by the appellant.

Finally, the Court of Appeal held a person such as the respondent whose gaze is apparently on the approaching vehicle is not someone whose attention needs to be attracted (by flashing lights, using the horn etc). In any event, the trial judge’s findings that these additional precautions could have avoided the risk of harm did not of itself warrant any conclusion that the appellant should have taken additional precautions.

The appeal was allowed and judgment was entered for the appellant.

[2014] NSWCA 147Johnston v Stock

IN ISSUE

• Duty and standard of care owed to pedestrians

• Significance of intoxication level of pedestrian




PRIVILEGE


Contents

< Back to Contents

182 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management & Marketing Pty Ltd [2013] HCA 46The powers available to the Supreme Court in relation to errors in compliance with court processes and whether privileged documents inadvertently disclosed were required to be returned.

PRIVILEGE


PRIVILEGE


The Facts

The appellants and the respondents were involved in commercial litigation in the Supreme Court of New South Wales. The Supreme Court ordered that the parties give verified general discovery. The appellants’ solicitors served a verified list of documents on the respondents’ solicitors and provided copies of documents to the respondents’ solicitors on a CD.

During their review of the documents, the respondents’ solicitors discovered that a number of the documents were communications between the appellants and their solicitors. They then wrote to the appellants’ solicitors pointing out that privilege had been claimed with respect to some, but not all, communications between the appellants and their solicitors. The appellants’ solicitors asserted that the documents had inadvertently not been marked as privileged during their electronic disclosure process. They requested that the documents be returned and an undertaking provided that the respondents’ solicitors would not rely on the documents in the proceedings. The respondents’ solicitors refused to return the documents, asserted that their client had no obligation to do so and that any privilege in the documents had been waived by their disclosure.


The trial judge ordered that 9 of the 13 documents be returned to the appellants on the basis that they had intended to claim privilege over them because they had been included in both the list of documents and the privileged section of the list of documents. The court held that privilege over the remaining 4 documents had been waived because there was no evidence to indicate any intention to claim privilege over them.


The respondents appealed to the Court of Appeal. The Court of Appeal overturned the trial judge’s decision and allowed the appeal. It held that the orders sought by the appellants could only be granted in the exercise of the court’s equitable jurisdiction on the basis of the law of confidential information, and that neither client legal privilege nor legal professional privilege at common law could support the injunctions made by the trial judge. The Court of Appeal found that there was no equitable obligation of confidence upon the respondents’ solicitors and the orders made by the trial judge should have been refused.


The appellants were granted leave to appeal to the High Court. The issue on appeal was whether the only basis for the grant of the orders could be found in the law of confidential information and also whether the Court of Appeal ought to have found that where an error was made in compliance with court processes,

the court has all necessary power to make orders to remedy an injustice that may be occasioned by allowing that error to stand.


The High Court unanimously allowed the appeal. It considered that the issue of waiver should never have been raised and that there was no need to resort to the court’s equitable jurisdiction. The disclosure was inadvertent and unintentional, and in large commercial cases, mistakes are likely to occur. The respondents did not dispute that a mistake had been made by the appellants’ solicitors here.

[2013] HCA 46Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management & Marketing Pty Ltd

IN ISSUE

• What powers are available to the Supreme Court in relation to errors in compliance with court processes

• Whether the appellants were entitled to the return of privileged documents which were mistakenly disclosed by their solicitors





PRIVILEGE


The High Court also held that if a privileged document is inadvertently disclosed during discovery, the Supreme Court ordinarily has all powers necessary to permit the correction of that mistake and to order the return of the document. Those powers exist by virtue of the Supreme Court’s role in the supervision of the process of discovery and the express powers given to it under the Civil Procedure Act 2005 (NSW) (CPA) to ensure the just, quick and cheap resolution of the real issues in the proceedings. In this case, the Supreme Court should have promptly exercised these powers to permit the appellants to correct their solicitors’ mistake.

The High Court also commented that the CPA imposes a positive duty upon a party and its legal representatives to facilitate its purposes and requiring the court to rule on waiver and the grant of injunctive relief here was inconsistent with that duty. The High Court also referred to Rule 31 of the Australian Solicitors’ Conduct Rules which deals with the duty of a solicitor to return material which is known or reasonably suspected to be confidential where they are aware that its disclosure was inadvertent.

[2013] HCA 46Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management & Marketing Pty Ltd



DAMAGES


Contents

< Back to Contents

186 Nair-Smith v Perisher Blue Pty Ltd (No 2) [2013] NSWSC 1463Inconsistency between Commonwealth and State laws regarding calculation of damages and establishing breach of an implied contractual term.

187 Gales Holdings Pty Limited v Tweed Shire Council [2013] NSWCA 382The appropriate award of damages for a landowner where Council’s nuisance led to the formation of a protected frog habitat on the plaintiff’s property.

188 Acer Forester Pty Ltd v Complete Crane Hire & Ors [2013] NTCA 11The assessment of damages in a business interruption claim.

189 Nucifora & Another v AAI Limited [2013] QSC 338Assessment of damages where plaintiff’s income has increased significant following his injury.

190 Wainwright v Barrick Gold of Australia Limited [2014] WASCA 15Whether the District Court erred in its quantum assessment.

192 Hulanicki (by her next friend Hulanicki) v Walton [2014] ACTSC 17Assessment of damages (including cost of fund management) for traumatic brain injury to 20 year old female.

193 Jamieson & Ors v Westpac [2014] QSC 32Calculation of losses flowing from negligence of financial adviser where loss occurs during general global market decline.

195 Martin v Golding Contractors Pty Ltd [2014] QSC 53Assessment of damages for a seriously injured mine worker.

196 Chaina v Presbyterian Church (NSW) Property Trust (No 25) [2014] NSWSC 518Claim for damages for nervous shock and per quod servitium amisit following death of 15 year old boy on school excursion.

DAMAGES


DAMAGES


The Facts

The plaintiff was an experienced skier who was injured on 18 July 2003 at the defendant’s ski fields. She claimed that she was waiting at the loading point to board a triple chair lift with 2 friends when they realised that the safety bar on the chair approaching them had not been raised. She claimed that the attendant “lunged” to the chair and pulled it back at an angle, “flipping” up the safety bar. As the attendant released the chair, it came towards the plaintiff and the armrest struck her in the groin.

The plaintiff claimed that she damaged the ligaments in the sacroiliac joints and sustained a significant soft tissue injury in the lumbo-sacral spine, as well as a psychiatric condition. The defendant was alleged to have been negligent and to have breached the term of the contract implied by with the plaintiff under section 74(1) of the TPA to perform the services with due care and skill.

The defendant argued that the plaintiff and her friends unnecessarily panicked, causing misalignment with the designated loading point. The defendant further argued that the operator raised the safety bar in a safe and timely manner, and that the alleged implied term was excluded by the terms of the lift ticket, which operated to exclude liability on the part of the defendant.

The Decision

In the principal judgment, the court upheld the claim for both negligence and breach of the term implied by virtue of section 74 of the TPA. The court directed the parties were to provide further submissions and address the court with respect to various outstanding issues, including whether damages recoverable for breach of the implied term were subject to the restrictions in Part 2 of the CLA (NSW) and whether part 1A of the CLA (NSW) limited or regulated establishing a breach of the implied term.

The defendant argued that section 74(1) of the TPA created a cause of action for breach of contract and not a separate cause of action allowing remedies contained in the TPA. Accordingly, the defendant argued that remedies for such a breach were regulated by state law, including the restriction of damages within Part 2 of the CLA (NSW) (subject to any express provision contrary to Commonwealth Law).

The court held this argument was inconsistent with the decision of the High Court of Wallis v Downard-Pickford (North Queensland) Pty Ltd [1994] HCA 17. It was accepted there that section 74(1) of the TPA carried with it a remedy of damages assessed at common law and any attempt by State law to limit that created a “direct inconsistency” with the Commonwealth law. Further, if Part 1A of the CLA

(NSW) applied to the claim for breach of the implied term, this would effectively rewrite the term, again giving rise to a “direct inconsistency”.

Ultimately the court found that the plaintiff’s recoverable damages for breach of the term implied by section 74(1) of the TPA was not subject to the limitations contained within Part 2 of the CLA (NSW) by virtue of section 109 of the Constitution.

The court assessed damages at $411,956.81 pursuant to the CLA (NSW) and $1,192,597.50 at common law. The latter assessment was the verdict which would be entered for the plaintiff once the parties had provided calculations for interest and submissions on costs.

[2013] NSWSC 1463Nair-Smith v Perisher Blue Pty Ltd (No 2)

IN ISSUE

• Inconsistency between Common-wealth and State laws (CLA (NSW) and TPA)

• Whether CLA (NSW) applied to cause of action based on breach of term implied by TPA






The Facts

Gales Holdings Pty Limited (Gales) was the registered proprietor of approximately 27 hectares of undeveloped land in Kingscliff within the Local Government area of the Tweed Shire Council (Council). Gales brought a claim for damages in nuisance, alleging that since 1994, Council had caused or allowed untreated and polluted stormwater run-off to discharge directly and indirectly via Council’s closed pipe system, roads, kerbs and gutters and stormwater outlets from local catchments onto the land owned by Gales and prevented stormwater running off the land. Gales contended that one of the consequences of the pooling of water on its land was the establishment of a habitat suitable for Wallum Froglets with the further consequence that Gales lost a portion of development land in order to maintain the habitat of the Wallum Froglets.


Following the initial hearing by the New South Wales Supreme Court, a decision was made on 21 September 2011 to award Gales damages in the amount of $600,000 to install a drainage system on the land to divert the additional stormwater from the land and also an additional $150,000 for the costs of obtaining expert evidence and reports.


Upon appeal, it was determined that Council had committed nuisance but only for a fraction of the period of time as alleged by Gales. It was further determined that the order requiring Council to pay $600,000 and

to contribute to the cost of treating stormwater should be set aside on the basis that the loss sustained by Gales by reason of the establishment of the Wallum Froglet habitat was not foreseeable (according to the principle established in Overseas Tankship (UK) Ltd v the Miller Steamship Co (Wagon Moard (No 2)) [1967] 1 AC 617) in that it was too remote from Council’s conduct constituting the nuisance.

The Costs Judgment

At the costs hearing, Council argued that, ultimately, Gales had only recovered $150,000, representing approximately 1.5% of the total damages sought in the initial claim (nearly $10M). The court noted that Gales had achieved a measure of success in both the appeal and the cross-appeal on the substantive question of the commission of nuisance. On the other hand, it had failed to treat any measure of success in the quantum of damages that it claimed as a consequence of Council’s nuisance. In those circumstances, the court determined that it was appropriate to order that Council pay 40% of Gales’ costs of the appeal and the cross-appeal.


IN ISSUE

• Whether the plaintiff was entitled to an award for costs in circumstances where it had been partially successful on the substantive question of the commission of nuisance but was largely unsuccessful in demonstrating the quantum of the claim



[2013] NSWCA 382Gales Holdings Pty Limited v Tweed Shire Council

DAMAGES




DAMAGES


The Facts

On 17 July 2006 a crane operated by the respondents collapsed onto the appellant’s business premises which were located on an adjacent lot. The appellant carried on business as engineers, building certifiers and project managers. The appellant sued the respondents claiming damages caused by the interruption to the appellant’s business whilst the building was being repaired. At the time of the collapse the appellant was contracted to provide engineering services for the purposes of residential developments for the Defence Housing Authority (DHA). The DHA project was governed by a fixed-price contract and was the appellant’s major project at the relevant time. The appellant’s work on the DHA project was due to be completed by 11 September 2006 but was not completed until 15 November 2006. It was claimed that the delay was wholly due to interruption caused by the accident. The appellant claimed that the delay to the DHA project resulted in delayed payment for that project and the loss of opportunities to earn income from other work during the period of the delay.


The respondents admitted liability shortly before trial and the matter proceeded as an assessment of damages.

The trial judge accepted that the crane collapse caused approximately 8 days loss of productive time to the business and concluded that this caused an 8 day delay to the DHA project. The trial judge held that the appellant had failed to establish that it had been deprived of an opportunity to earn additional revenue

during the delay period. Consequently, the trial judge only awarded damages on the basis of the 8 day delay in receiving payment for the DHA project.


The appellant challenged the trial judge’s decision. The appellant argued that the correct approach in a business interruption case was to consider the evidence of the appellant’s ongoing economic activity and the industry to enable the court to determine the economic loss occasioned by reason of a business interruption. The appellant contended that the correct approach for the court to adopt was to determine an average of income derived from the past and subsequent operations of the business and then apply that average to the period of time lost.

The respondents disputed the appellant’s claim for damages for loss of opportunity to perform other work during the period when the DHA project ran over time.


The Court of Appeal held that the trial judge erred in only awarding damages on the basis of the delay in receiving payment for the DHA project. The Court of Appeal held that the appellant was also entitled to damages for the loss of productive time during that 8 day period. The court accepted that this loss should be calculated in accordance with the averaging process contended for by the appellant. While the averaging process was subject to some criticism, the court accepted that it was the most reliable approach.

The Court of Appeal accepted the evidence of the appellant’s expert that on average the appellant would earn $106,821 per month. Therefore, on the basis of an 8 day delay, the appellant had been deprived of income in the sum of $38,800, and the Court of Appeal increased the award of damages to the appellant by this figure.

[2013] NTCA 11Acer Forester Pty Ltd v Complete Crane Hire & Ors

IN ISSUE

• The proper approach for the measure of damages in a business interruption claim



http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nt/NTCA/2013/11.html?stem=0&synonyms=0&query=acer%20forester


DAMAGES


The Facts

The plaintiff and his wife were involved in a motor vehicle accident on 6 July 2011. He suffered multiple physical injuries and an adjustment disorder with anxiety approaching a 10% whole person impairment.

The plaintiff alleged that he continued to suffer consistent pain through his back which radiates to his shoulders as well as the continuation of his anxiety symptoms, particularly when travelling.

At the time of the incident, the plaintiff was employed by BHP Billiton as a general manager at the Gregory Crinum mine. The plaintiff was able to continue in this role following his recovery until January 2013. He then took a project manager role for nine months and travelled internationally.

At the date of the trial, the plaintiff was employed as the general manager at the Saraji mine with a salary package in excess of $750,000 gross per annum. It was agreed that his income had significantly increased since his accident.

Liability was admitted by the defendant.

The parties agreed on the appropriate ISV to be awarded for the plaintiff’s injuries, and the plaintiff conceded he did not suffer any past economic loss. The only issues for determination were the assessment of future economic loss, future assistance and future medical expenses.


The plaintiff was aged 41 years of age at the date of trial. The court considered him to have an excellent work history indicative of a man who would have likely worked until at least 65 years of age.

The court had regard to the plaintiff’s significant increase in income subsequent to his injuries and the evidence to suggest he had capacity to adapt to and cope with his injuries. Nonetheless, the court awarded a global allowance of $250,000 for future economic loss (plus $28,325 for future loss of superannuation). In making this award, the court had regard to the possibility that in the long term the plaintiff’s occupation at such a high level becoming more than he could reasonably bear and other possibilities such as early retirement or reduction in working hours.

In assessing future care, the court noted there was no evidence to indicate what care the plaintiff received prior to his injuries or any other evidence to enable the assessment of how often the plaintiff will require care in the future. The plaintiff’s evidence focused on two aspects of domestic chores being fencing and concreting. The court considered these tasks would not arise often, but accepted that should the need for the plaintiff to perform these tasks arise, he would not be able to do so. Accordingly, the court awarded $7,500 for future paid care.

The plaintiff also claimed for future medication, physiotherapy, acupuncture and psychotherapy treatments. The court acknowledged that the expenses set out in the plaintiff’s schedule were incurred when the plaintiff was exposed to significant demands which may not reflect his daily life in the future. However, the court held that past experience supported a substantial allowance and made a global award of $16,500. The court also awarded the plaintiff $21,850 for pain and suffering.

[2013] QSC 338Nucifora & Another v AAI Limited

IN ISSUE

• Assessment of damages where plaintiff’s income has increased significantly following his injury





DAMAGES


The Facts

On 24 November 2003, the appellant was injured in the course of her employment when she slipped and fell. At the time, the appellant was employed by the respondent as a geological technician in a remote mine location on a fly in/fly out basis.

As a result of her fall, the appellant sustained injuries to her right leg, right knee, right ankle, left elbow and back. She also suffered ‘life threatening’ deep vein thrombosis (DVT).

Since her injuries, the appellant has not been able to work as a geological technician, however, she continued to work at the mine site on her usual roster performing office duties. She subsequently left her employment with the respondent in April 2005 and had not worked since that date. In mid 2006, the appellant received offers of employment from the respondent to return to her clerical duties at the mine site. She refused these offers.


The trial judge found that when the appellant ceased work in April 2005, she was capable of at least performing light duties. In calculating past economic loss, the trial judge compared the salary for clerical duties at the mine site and the salary of a geological technician. He awarded past economic loss based on the difference between the appellant’s pre-accident salary and the ‘light duties’ salary at remote locations.

The trial judge accepted the appellant would have worked until 65 years of age and again based his calculations on the difference between the plaintiff’s pre-accident salary and her ‘light duties’ salary.

The trial judge allowed $50,000 for general damages.


The appellant alleged the trial judge erred in the assessment of past economic loss and future economic loss because he effectively inflated the value of her residual earning capacity by assuming that she would perform light duties solely at remote locations.

The appellant also alleged the trial judge erred in law in awarding $50,000 for general damages, because such award was below the range of sound discretionary judgment and was so low as to amount to an erroneous assessment.


The Court of Appeal concluded there was an error in the application of the trial judge’s approach to economic loss. In assessing the appellant’s claim for lost earning capacity wholly by reference to the light duties rate applicable to the mine site, the trial judge assumed that it was unreasonable for the appellant not to continue in her clerical role with the respondent. As such, the trial judge failed to address and consider the question of mitigation.

The Court of Appeal held it was not open to the trial judge, on the facts, to make an assessment of past economic loss without addressing the questions of whether the appellant’s decision to leave work at the mine site in April 2005 and her refusal to accept the offers of employment in 2006 were unreasonable.

In relation to future economic loss, the Court of Appeal held it was necessary for the trial judge to consider whether it would have been unreasonable for the appellant to exercise her retained capacity in Perth, rather than at the mine site or some other remote mining location until retirement.

The Court of Appeal assessed economic loss on the basis that the appellant had retained capacity for clerical duties with her retained capacity being exercisable in Perth

[2014] WASCA 15Wainwright v Barrick Gold of Australia Limited

IN ISSUE

• Whether the District Court erred in its assessment of past and future economic loss

• Whether the District Court erred in its assessment of general damages



http://www.austlii.edu.au/au/cases/wa/WASCA/2014/15.html


DAMAGES


from 7 April 2005, rather than in other remote locations. The Court of Appeal considered the appellant’s decision to leave her employment and refuse subsequent offers from the respondent as reasonable, having regard to the necessities of working at a mine site. The appellant succeeded on these two grounds of appeal.

In relation to the award for general damages, the Court of Appeal held there was nothing on the face of it to indicate that the amount was so inordinately low so as to be a wholly erroneous assessment of damages. Accordingly, this ground of appeal was dismissed.

[2014] WASCA 15Wainwright v Barrick Gold of Australia Limited


http://www.austlii.edu.au/au/cases/wa/WASCA/2014/15.html


DAMAGES


The Facts

On 6 March 2006, the plaintiff Jessica Hulanicki, was involved in a serious motor vehicle accident in which she suffered a severe brain injury. The defendant admitted liability and the proceedings were an assessment of damages only.

At the time of the accident, the plaintiff was 20 years old with a future life expectancy of 60 years, subject to the increased risk of dementia due to the brain injury sustained in the accident. The injury resulted in significant physical, neuro-cognitive and neuro-behavioural impairments that prevented the plaintiff from functioning independently for any length of time. These impairments included persistent severe headaches, memory loss, reduced attention span, visual and hearing impairment , balance problems and significant psychological and emotional issues.

The plaintiff was unable to continue in her pre accident occupation as an administrative assistant at a real estate agency. She had unsuccessfully attempted numerous other clerical and administrative positions but her physical and psychological injuries prevented her from retaining any one position.

The Decision

The court awarded the plaintiff a total sum of $4,227,606.32 in damages. General damages were assessed at $375,000.00 of which half was attributed to past pain and suffering.

The most contentious issue in the assessment of damages was the cost claimed for fund management. The plaintiff claimed the cost of fund management by the Public Trustee, whereas the defendant submitted that the cost of fund management should only be allowed at the lesser rate charged by private trustee companies such as Perpetual Trustee. In addition, the plaintiff claimed for the cost of fund management on the amount awarded for fund management and for the cost of fund management on anticipated earnings of the fund.

The court held that a significant factor weighing in favour of the plaintiff’s damages being managed by the Public Trustee, was that the holder of the office is a statutory appointee subject to the supervision by the Crown and management of her funds by the Public Trustee fulfils the Crown’s obligations of responsibility for the affairs of those who cannot look after themselves. The court accepted the defendant’s argument that there was no evidence that the higher fees charged by the Public Trustee were due to superior management performance by it compared to private trustee companies. There were no circumstances personal to the plaintiff or her guardian to make the appointment of the Public Trustee more appropriate. There was also no question of overcompensation occurring because the funds would be paid into court and effectively controlled by the court until paid out for management.

The court noted that the discretion to appoint a fund manger requires consideration of what is best done for the person under the disability. In this case, the court was satisfied that there was good reason to impose the extra cost of fund management by the Public Trustee on the defendant for 2 reasons: first, that the Public Trustee, as a public servant, would be under the direct supervision and control of the Crown in its parens patriae jurisdiction and secondly, that the ACT government effectively indemnifies the Public Trustee against any liability arising out of its acts or omissions.

The court rejected the claim for fund management on fund management on the basis that it was too speculative and may lead to overcompensation. The claim for fund management on fund income was rejected for similar reasons.

[2014] ACTSC 17Hulanicki (by her next friend Hulanicki) v Walton

IN ISSUE

• Assessment of damages for traumatic brain injury to 20 year old female

• Cost of fund management – public or private trustee





DAMAGES


The Facts

In May and June 2007, Mark and Lorell Jamieson (the Jamiesons) and the trustee of their self-managed superannuation fund (the trustee) made investments based on a written statement of advice (SOA) provided by a financial planner employed by Westpac Banking Corporation (Westpac). The SOA recommended that Mr Jamieson borrow $5 million from Macquarie Bank Limited to be invested in a registered managed investment scheme described as the MQ Gateway Trust; and that the Jamiesons borrow $600,000 from Westpac to make undeducted contributions to a self-managed superannuation fund which would invest the funds in self-funding instalment warrants.

Both strategies were unsuccessful, and the Jamiesons and the trustee claimed damages against Westpac for alleged breaches of contract, negligence and contraventions of the Australian Securities and Investment Commission Act 2011 (Cth) in preparing and giving the SOA. The claims for damages were calculated so as to restore the Jamiesons to the positions they would have been in had no borrowing or investment been made.

The Decision

The court held that Westpac was negligent and in breach of contract, and engaged in misleading and deceptive conduct, in preparing and providing

the SOA, and that the Jamiesons would not have borrowed the money and made the investments had the breaches not occurred.

Westpac contended that the Jamiesons could not prove any recoverable loss because the applicable measure of loss is calculated (in accordance with the rule in Potts v Miller (1940) 64 CLR 282), as the difference between the price paid and the ‘true’ or ‘fair’ value of what was acquired at the time of entering into the investment, and that the loss so calculated was nil. Such an approach excludes subsequent or continuing losses, such as a later fall in market value. Westpac also argued that the Jamiesons would have entered into some other similar transaction in any event, and that, because they would have done so, they were required to prove what the result of that alternative transaction would have been in order to demonstrate that they had suffered compensable loss in comparison with the actual investment.

Both arguments were rejected. The court held that the rule in Potts v Miller, does not apply in all cases, and that a plaintiff may be entitled to recover consequential losses, such as trading losses, or interest on borrowings to fund losses, as damages.

The court relied on Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 to find that the Jamiesons were not required to prove an alternative transaction that they would have entered into in order

to support the loss claimed. In other words, the court rejected Westpac’s argument that Mr Jamieson had failed to prove any loss without proving what similar or alternative transaction he would have entered into if he had not entered into the MQ Gateway Trust investment and associated loans.

The court preferred the ‘net gains or losses’ approach, which measures the net change in the plaintiff’s position as at the date of trial. The court considered that the net gains and losses approach may be appropriate in a ‘transactional’ case where it is difficult to attempt an assessment of damages as at the date of the wrong because of the lack of an available market or information as to value, or where the plaintiff was unable to sell the thing acquired and should not have acted to sell the thing acquired before the trial or

[2014] QSC 32Jamieson & Ors v Westpac

IN ISSUE

• Calculation of damages in circumstances where negligent investment advice resulted in financial loss





DAMAGES


some earlier date when the loss crystallised. In those circumstances, the loss or damage suffered by the plaintiff as measured by a net gains or losses approach is the actual loss, not a hypothetical amount of loss that would have been suffered in hypothetical circumstances that did not and could not reasonably have occurred.

The court directed the parties to submit calculations setting out the quantum of damages that applied the principles referred to above.

[2014] QSC 32Jamieson & Ors v Westpac




DAMAGES


The Facts

The plaintiff suffered a spinal injury during a workplace accident in March 2009. She was 23 years of age at the time. The accident was sustained in the course of employment with the defendant, and occurred whilst the plaintiff was driving a truck at a coal mine. The plaintiff suffered serious back injuries that caused her daily pain and discomfort.

Liability was admitted so the trial proceeded on quantum issues only.

The Decision

The court found that at the time of the accident, the plaintiff had been employed with the defendant as a heavy vehicle operator and obtained “an impressive resume of trade and other machinery and equipment training”. The court considered the plaintiff to be impressive, ambitious and enthusiastic and a reliable witness in relation to her account of her pain and suffering during and following the accident.

The court heard expert evidence from both parties regarding the plaintiff’s prospects of continued employment in the local coal mining industry, as well as general evidence relating to the nature of the Australian mining industry during the period in which the injury was sustained. The defendant sought to rely on a decline in mining contracts as well as a performance review for the plaintiff which documented an apparent personality clash with other employees. The court preferred the evidence given by the plaintiff’s witnesses in this regard, and found

that the plaintiff would have had “excellent prospects of obtaining highly remunerative employment in the mining industry if she had been fit to work”.

The court entered judgment for the plaintiff in the amount of $1,466,078.93, less a $50,984.84 WorkCover refund. The judgment sum included $90,000 for general damages for pain and suffering and loss of amenities of life; $300,000 for damages for past economic loss; and $700,000 in damages for future economic loss. The court considered whether the plaintiff would have found alternative employment as a teacher or continued employment with the defendant once able, and that the plaintiff’s working career was unlikely to be interrupted because of family responsibilities as she was unable to conceive due to an unrelated condition.

[2014] QSC 53Martin v Golding Contractors Pty Ltd

IN ISSUE

• Quantum of damages awarded to young female plaintiff following workplace accident while operating mining truck





DAMAGES


The Facts

On the weekend of 23 and 24 October 1999, 15 year old Nathan Chaina was swept away by flood waters and drowned whilst on a school hike with his older brother in the Morton National Park. Breach of duty was admitted by the defendant which operated the school at which Nathan had been a pupil.

Proceedings were commenced by Nathan’s parents and his 2 brothers claiming damages for nervous shock. The proceedings by the 2 brothers were resolved. The claims by Nathan’s parents and 2 companies owned and operated by them (the plaintiffs) were continued. The 2 companies (Proton and Deluxe) brought per quod servitium amisit claims for the loss of services of Mr and Mrs Chaina.

The Decision

In order to successfully prove their nervous shock claims, Mr and Mrs Chaina were required to show that the harm resulting from the negligence consisted of a recognised psychiatric illness. Their respective mental states prior to and following Nathan’s death were examined by the court.

Mr and Mrs Chaina argued that their present psychiatric and emotional conditions resulted from Nathan’s death. The defendants argued in response “...that any psychiatric illnesses now suffered by Mr and Mrs Chaina were present before Nathan’s death”. The court concluded that both Mr and Mrs Chaina proved that they suffered mental harm by reason of the defendant’s negligence, but that mental harm had largely dissipated

by about June 2001. Neither were prevented from working in their business after that time. Damages were awarded to Mr Chaina in the amount of $202,486 and to Mrs Chaina in the amount of $138,887 in respect of general damages, past economic loss, lost superannuation and out of pocket expenses.

In relation to the per quod (loss of service) claims made by the 2 companies, the court cited the High Court decision of Barclay v Penberthy [2012] HCA 40, which sets out the principles regarding the damages recoverable in such a claim. The High Court noted that if an employer employs staff to take up the duties of the injured employee, these payments are recoverable. If a replacement employee achieves terms more favourable to the employer no loss will have been suffered. Further, an employer is obliged to take reasonable steps to mitigate loss.

The High Court in Barclay also noted that “...the measure of damages does not include a loss of profits suffered by the company. This is so unless the plaintiff satisfies the court that the loss is attributable to the loss of services and no other likely cause has been identified”. The plaintiffs argued that their case fell within this exception and that their companies should be entitled to claim loss of profits by reason of Mr Chaina’s inability to work.

The court found that the claim in this regard failed for a number of reasons including that Mr Chaina’s inability to work arising from Nathan’s death did not extend beyond the middle of 2001, that it did not accept that Mr Chaina was irreplaceable, there was no

evidence to suggest that a substitute/s for Mr Chaina could not be found and there was a failure to mitigate loss. As a result, the claim made on behalf of Proton for loss of profits failed.

However, the Court accepted the claim for the cost of replacing Mr Chaina during the period from Nathan’s death until June 2001 with 3 other workers and damages of $56,000 were awarded.

The claim by Deluxe failed entirely because the basis of the alleged loss was not properly explained.

[2014] NSWSC 518Chaina v Presbyterian Church (NSW) Property Trust (No 25)

IN ISSUE

• Whether the plaintiffs had suffered mental harm by reason of the defendant’s admitted breach of duty

• The entitlement of the plaintiffs’ companies to claim for the loss of their services

• Entitlement to claim costs of coronial inquest





DAMAGES


Mr and Mrs Chaina were also found to be entitled to $75,000 for the cost of attending the coronial inquest into their son’s death because they had evinced a clear intention from the outset to bring proceedings against the school and also because the defendant admitted liability after the civil proceedings were commenced, suggesting that the evidence which emerged at the coronial inquest was relevant to the civil proceedings.

[2014] NSWSC 518Chaina v Presbyterian Church (NSW) Property Trust (No 25)



PROCEDURE


Contents

< Back to Contents

Miscellaneous

201 Electrolux Home Products Pty Ltd v Delap Impex Ltd [2013] FCA 600The applicant sought an order for substituted service of an originating application by email where an address for personal service was not easily obtainable.

202 Flo Rida v Mothership Music Pty Ltd [2013] NSWCA 268Whether an order for substituted service by email and Facebook was properly made.

203 Tyrrell & Anor v McNab Constructions Pty Ltd & Ors [2014] QCA 52Appeal from application to strike out pleadings where no reasonable cause of action in negligence was disclosed.

205Stillman v Rushbourne [2014] NSWSC 730Whether advocate’s immunity applies to advice given by a solicitor at a mediation.

Limitation of Actions

206 Springfield Land Development Corporation v Melisavon Pty Ltd [2013] QSC 228Whether a cause of action for negligence in respect of economic loss suffered as a result of a latent defect arises when the loss first occurs or when a plaintiff becomes aware that loss has been suffered.

207Feher v Commonwealth of Australia [2014] QDC 145Extension of limitation period where non compliance with PIPA.

PROCEDURE


Contents

< Back to Contents

Costs

208 Incandela v Bobanovic [2014] ACTSC 21Costs recovery reduced for successful plaintiff on account of falsification of evidence.

CLA

209Hobbs Haulage Pty Ltd v Zupps Southside Pty Ltd & Anor [2013] QSC 319Application to strike out a defence pleading proportionate liability under CLA (Qld).

210Taylor v The Owners – Strata Plan 11564 [2014] HCA 9Whether the court should limit an award under the Compensation to Relatives Act 1897 (NSW) based on the requirement under CLA (NSW) to disregard any amount over three times the average weekly earnings.

PROCEDURE


PROCEDURE


Miscellaneous

The Facts

The applicant is a major manufacturer and supplier of a variety of branded whitegoods in the Australian market, including Electrolux. The applicant is the only authorised user of the Electrolux trademark for products sold in Australia.

On 17 May 2013, the applicant filed an originating application (later amended) seeking restraining orders against Delap Impex Ltd (the first respondent), a Hungarian company, and four individuals apparently associated with it. The purpose of the orders sought was to prevent the first respondent from advertising, promoting or supplying Electrolux branded appliances to consumers in contravention of Australian laws.

By an amended interlocutory application the applicant sought leave to serve the amended originating application and a statement of claim on the first respondent and Andras Paradi (the second respondent) outside Australia, and for substituted service by email on the fifth respondent, Suzanne Szabo. The email service was sought on the basis that within Rule 10.24 of the Federal Court Rules 2011 it was “not practicable” to serve the documents on her personally. Although Ms Szabo had been contacted via a mobile phone number and email, when asked for a street address, she told the applicant’s solicitors that if they wanted to send anything to her they could do so via a specified email address. In the mobile phone conversation, the applicant’s solicitors established that Ms Szabo had an association with the first and second respondents who were located in Hungary and she was located in Perth, although an address for her could not be found in Perth.

The Decision

In determining whether the applicant had made out a case for an order for substituted service, the court held that “not practicable” does not mean “impossible” but on the other hand does not mean “inconvenient” and presumed that the purpose of Rule 10.24 was to enable service to be effected where a party was evading personal service. While in the circumstances it could not be said that personal service was impossible or not feasible, the court doubted that the intention of Rule 10.24 was to require vast resources to be put into the task.

The court referred to Speedo Holdings B V v Evans [2011] FCA 1089 where it was found that it was not practicable to effect personal service after a number of attempts had been made to do so. While there had been no attempt to serve Ms Szabo personally, she appeared to be unwilling to provide an address at which she may be served and independent efforts to find one had been unsuccessful. The court was prepared to accept that Ms Szabo was unlikely to disclose an address even if pressed and therefore, for practical purposes, personal service was not feasible.

Accordingly, the court granted leave to the applicant to serve Ms Szabo by email at the nominated email address (and also to serve the first and second respondents outside the jurisdiction pursuant to Rule 10.43 by letter of request to the Hungarian Central Authority in accordance with the Hague Convention).

[2013] FCA 600Electrolux Home Products Pty Ltd v Delap Impex Ltd

IN ISSUE

• Whether it was “not practicable” to personally serve the respondents

• Whether substituted service by email was appropriate





PROCEDURE


Miscellaneous

The Facts

The appellant, Flo Rida, is a rap music artist who was contracted to perform as the headline act at the “Fat as Butter” Music Festival held in Newcastle on 22 October 2011. Flo Rida did not appear at the festival and the respondent event organiser issued proceedings against Flo Rida for breach of contract. Owing to difficulties with service, an application was made by the respondent for substituted service by way of email and Facebook, which was granted. Following default judgment, the appellant challenged the validity of the order for substituted service.


The Court of Appeal noted that, in terms of the District Court’s territorial jurisdiction, s 44 of the District Court Act 1973 (NSW) defines the subject matter of actions over which the District Court is to have jurisdiction while s 47 identifies the necessary territorial connections. The existence of a sufficient territorial connection under s.47 depends on due service and due service is dependent upon the rules outlined in the relevant Uniform Civil Procedure Rules.

The respondent contended that the appellant’s presence within New South Wales when the action was commenced was sufficient to found jurisdiction, however, this argument was rejected. The Court of Appeal held that jurisdiction is determined by due service and not the person’s presence within New South Wales when the action was commenced.

In terms of the order for substituted service, the Court of Appeal noted that substituted service contemplates the existence of a practical difficulty in service and that it does not embrace a situation where the relevant document cannot lawfully be served because the person is outside Australia.

The Court of Appeal ultimately determined that the order for substituted service ought not to have been made in the absence of evidence that the means of substituted service sanctioned by the order were likely to bring service of the statement of claim to Flo Rida’s attention whilst he was in Australia. Due to the apparent proximity of his departure, there was no basis in the evidence for any confidence that it would occur. The Court of Appeal noted that in the absence of that confidence, the effect of the order was tantamount to ordering substituted service on a defendant who was overseas and not lawfully able to be personally served overseas.

The Court of Appeal also found that the evidence before the primary judge did not in any event constitute a sufficient basis for the making of the substituted service order insofar as the order provided for notice to be given to Flo Rida by means of Facebook, but there was no evidence that the Facebook page was in fact that of Flo Rida and no evidence that the posting was likely to come to his attention in a timely fashion. The appeal was allowed and the judgment set aside.

[2013] NSWCA 268Flo Rida v Mothership Music Pty Ltd

IN ISSUE

• Validity of substituted service by way of Facebook and email





PROCEDURE


Miscellaneous

The Facts

The appellants purchased land from the third respondent in 2002. Between 2007 and 2013, the appellants became aware that some of the building works for a dwelling house on the land had not been approved by the local authority, that latent defects were present in the building works, and that some of those works did not comply with the Building Code of Australia. The first, second or third respondent carried out the building works between 1998 and 2001.


The respondents brought an application to strike out the amended statement of claim on the grounds that the appellants failed to plead necessary facts to establish the duty of care owed by the respondents to the appellants and failed to disclose a reasonable cause of action. The application was also to strike out the action in its entirety.

The primary judge discussed Bryan v Maloney (1995) 182 CLR 609 and subsequent decisions and held that the preponderance of opinion is that the determining factor of ‘proximity’ has lost favour and the factor of ‘vulnerability’ seems to be the touchstone.

The primary judge found that the pleading was defective and that there were insufficient facts pleaded to reach a conclusion that a duty of care was owed.

The primary judge struck out the appellants’ amended statement of claim and gave leave to re-plead. The primary judge refused the application to strike out the action in its entirety.


The appellants appealed against the order striking out their amended statement of claim. The respondents cross-appealed against the refusal to strike out the appellants’ action.

The first ground of the appeal contended that the primary judge’s reasons were insufficient because they did not include a finding in terms of rules 171(1)(a) or (b) of the UCPR (QLD) that the pleading “discloses no reasonable cause of action” or “has a tendency to prejudice or delay the fair trial of the proceeding”. The second ground of appeal contended that the primary judge erred in law in failing to find that the pleaded facts were capable of giving rise to a cause of action in negligence. This ground was considered together with the third ground of appeal, which contended that the amended statement of claim should not have been struck out because the relevant law was in a state of development.

The cross appeal essentially argued that there was no sufficient basis for the primary judge to conclude that the appellants might be able to plead sufficient facts to establish a relevant duty of care was owed by the

respondents.


The appeal was dismissed. In relation to the first ground of appeal, the Court of Appeal held that taken as a whole, the reasons given by the primary judge clearly conveyed that the pleading did not disclose a reasonable cause of action because the pleaded facts were incapable of justifying a finding that the respondents owed the appellants the alleged duty of care.

In relation to the second and third grounds of appeal, the Court of Appeal held no combination of the allegations in the amended statement of claim was arguably capable of supporting a finding that the actions of the respondents gave rise to a cause of action in negligence. Further, the facts alleged in the

[2014] QCA 52Tyrrell & Anor v McNab Constructions Pty Ltd & Ors

IN ISSUE

• Whether the amended statement of claim pleaded necessary facts to establish the respondents owed the appellants a duty of care in respect of pure economic loss from defective building work





PROCEDURE


Miscellaneous

amended statement of claim to justify the alleged

duty of care were incapable of making out a case that the appellants were “vulnerable” in a way which arguably might justify the imposition of a duty of care.

In relation to the cross appeal, the Court of Appeal held the order involved no particular injustice to the respondents and no error has been identified in the exercise of the discretion to grant the appellants leave to re-plead.

[2014] QCA 52Tyrrell & Anor v McNab Constructions Pty Ltd & Ors




PROCEDURE


Miscellaneous

The Facts

In July 2006, the plaintiff retained the defendants to act and advise in respect of a claim made against it by a company (CCCS) for repayment of rental charges in the amount of approximately $1.4 M. Between July 2006 and August 2007 the defendants provided advice to the plaintiff and drafted various court documents. In the course of doing so, the defendants provided detailed advice that the plaintiff had a number of meritorious defences to the claim.

In July 2007 there was a court appointed mediation in the proceedings. Two solicitors from the defendants (the solicitors) represented the plaintiff at the mediation. The plaintiff alleged that in the mediation the solicitors failed to refute or challenge the claims made against them by the legal representatives of CCCS and advised them to settle the claim on terms proposed by CCCS. The plaintiff asserted that the solicitors coerced it to accept the settlement offered.

The Decision

The court was required to determine whether the doctrine of advocate’s immunity was applicable to the advice to settle and the conduct of the solicitors at the mediation and also whether it was appropriate for the proceedings to be summarily dismissed by reasons of advocate’s immunity.

The court observed that it was clear that advice in advance of a hearing is within the immunity if it affects the conduct of the case in court. The issue was whether advice leading to settlement is within the immunity.

After reviewing the authorities, the court determined that advice leading to settlement is work which leads to the conduct of the case in court because the party agrees to the disposition of the proceedings on the basis of the settlement. The result is a final judgment and there is nothing in the authorities to suggest that judgment entered by consent occupies a different position in terms of immunity from a judgment obtained after a contested hearing and a judicial determination. Both types of judgments are final and cannot be contested or challenged except in limited circumstances such as fraud. As a matter of principle, the advice given and the acts or omissions of the solicitors at the mediation fell within the immunity.

As to whether it was appropriate to determine advocate’s immunity on a strike out application, the court noted that the complaint in this case was clear and confined. The allegations of breach were specifically set out in the Statement of Claim and all alleged breaches concerned the advice given and the conduct of the solicitors at the mediation. The court rejected the plaintiff’s argument that certain cases established that in all cases it is inappropriate to reach a view on advocate’s immunity in advance of a trial. The court also rejected the plaintiff’s argument that proscribed behaviour, such as coercion, falls outside the immunity.

The proceedings were dismissed with costs.

[2014] NSWSC 730Stillman v Rushbourne

IN ISSUE

• Whether proceedings should be dismissed because the defendants are protected by advocate’s immunity





PROCEDURE



The Facts

In 2000, the plaintiff engaged the defendant to provide structural engineering consulting services and project management services associated with the development of a residential golf course community. This included the design of a premier two-storey golf clubhouse (the Clubhouse) and surrounding pavements, to be constructed on the Clubhouse Site (the Design Contract). The defendant commissioned a geotechnical report which noted that the soil beneath the proposed building area for the Clubhouse was susceptible to high to extreme amounts of “ground heave” due to varying moisture conditions. It was essential for the design of the Clubhouse that the slab on the ground be supported by high level strip footings which could tolerate potential movement of up to 85 millimetres.

The defendant completed its design of the Clubhouse in mid-2003 and the Clubhouse was later constructed in accordance with the design. The plaintiff alleged that the defendant breached its duty of care in that the design failed to specify a design for the lower slab that could tolerate “ground heave” beneath the Clubhouse exceeding about 40 millimetres. Since the construction of the Clubhouse, the reactive soil beneath the Clubhouse expanded by up to 80mm. In 2009 and 2010, the lower level slab, adjoining non-structural walls and services of the Clubhouse, and surrounding pavements were damaged or failed, as a consequence of the ground heave. The plaintiff alleged it suffered loss and damage in the amount of at least $866,258.

The defendant argued that the damage first occurred in late 2003/early 2004 and that the claim was therefore out of time as more than six years had passed since the cause of action arose. The plaintiff contended that the defects did not become manifest until 2009 and 2010.

The defendant brought an application for summary judgment pursuant to r 293 UCPR (QLD).

The Decision

The court examined the Victorian Full Court decision of Pullen v Gutteridge Haskins & Davey Pty Ltd which applied the general proposition that in cases of pure economic loss due to a latent defect in design, time begins to run when the latent defect first becomes known or manifest.

The court held that in the present circumstances, determination of the time when the limitation period commenced could not simply be confined to an identification of the time when the cracking first appeared. The further questions which arose under the Pullen test called for a factual investigation as to when the present plaintiff first became aware, or ought to have become aware, that it had sustained loss because of the alleged defective design of the Clubhouse and surrounds. The court determined that that kind of factual determination was not one which was amenable to determination on a summary judgment application, particularly given the conflicting evidence as to what was known when by the parties with respect to the nature and cause of the cracking in the Clubhouse.

The court found that this was not a case in which it could be said, for the purposes of r 293 UCPR (QLD), that the plaintiff had no real prospect of succeeding on all or part of its claim because its claim was necessarily statute barred, and nor could it be said that there was no need for a trial of the plaintiff’s claim.

The defendant’s application for summary judgment was dismissed.

[2013] QSC 228Springfield Land Development Corporation v Melisavon Pty Ltd

IN ISSUE

• Whether the plaintiff’s claim was statute barred; whether application for summary judgment ought to be allowed





PROCEDURE



The Facts

On 6 June 2006 the applicant injured the anterior cruciate ligament in his right knee when he fell descending a ladder while inspecting a shipping container during the course of his employment for a labour hire company while working under the direction of the Australian Quarantine and Inspection Service. The three year limitation period expired on 6 June 2009. The applicant received WorkCover benefits until about January 2007 when he moved to the United Kingdom. He received medical attention for his knee but at no stage was he advised by his medical practitioners that his condition was stable. He returned to live in Australia in April 2012 and consulted his original surgeon, Dr Dekkers who carried out surgery on the knee in June 2013. There was no decrease to pain following the surgery and the mobility of the right knee became significantly worse. The applicant last attended Dr Dekkers on 15 October 2013 when he was advised that his symptoms would not improve and his condition was permanent.

The applicant did not serve a PIPA part 1 notice on the respondent until 6 November 2013. He alleged that he was unaware of a material fact of a decisive character until 15 October 2013.

The applicant sought an order for leave to commence proceedings out of time under s 43 PIPA on the grounds of urgency and also under s 59 PIPA. The respondent resisted all orders sought, arguing that no urgency was established and no reasonable excuse for the delay was provided.

The Decision

The court was satisfied that the applicant’s need for leave to commence proceedings was urgent because it was probable the limitation period (of 15 October 2014) would expire before all necessary pre-action procedures could be complied with.

The court accepted the applicant’s evidence that 15 October 2013 was the first time that he received specialist advice that his knee condition was permanent. Although the applicant had a long history of pain and knee problems, the court accepted his evidence that he had always hoped to be able to return to normal after surgery. The court was satisfied there was a basis for an argument that a material fact of a decisive character became known to the applicant on 15 October 2013 when he learned that his condition would not improve.

The court noted that an injured person’s hope or belief that his condition will improve with time can afford a reasonable excuse for delay in giving notice of a claim. In the court’s view the conduct of the applicant was reasonable. He attended solicitors promptly after receiving medical advice on 15 October 2013 that his condition was stable and would not improve and the part 1 notice was served with reasonable diligence by his solicitors in late November 2013.

Although the court was satisfied the respondent would suffer some prejudice in that records and witnesses were no longer available, it determined to grant leave under s 43 PIPA because the overall prospects of the

claim and the reason for and extent of the delay were reasonable in the circumstances.

The court also decided to grant leave to commence the proceedings under s 59 (2)(b)PIPA for the same reasons and because an order under that section would avoid an unnecessary further application to the court if the time taken to execute the necessary procedural steps went beyond the limitation period as extended by the LAA (i.e. 15 October 2014).

[2014] QDC 145Feher v Commonwealth of Australia

IN ISSUE

• Whether s 43 PIPA could be used to allow proceedings to be commenced after the expiry of the limitation period

• Whether there was an urgent need to commence proceedings



http://archive.sclqld.org.au/qjudgment/2014/QDC14-145.pdf


PROCEDURE


Costs

The Facts

On 21 October 2013 judgment was given for the plaintiff in a personal injury case against the defendant. Ordinarily, in this situation, costs would be ordered in favour of the plaintiff, at least on a party and party basis.

In this case, however, the defendant submitted that the plaintiff should pay costs for proof of loss, particularly economic loss or, at least, the plaintiff should be denied recovery of those costs.

This submission was based on the trial judge’s finding that the plaintiff had sought to exaggerate the economic loss aspect of his claim and, in fact, gave false evidence of disability to his lawyers, doctors and accountants.

The Decision

The court noted that it had taken into consideration the lies concerning the plaintiff’s true level of disability in coming to its decision on liability and damages . The court indicated that it may have awarded the plaintiff more for his injury had he told the truth concerning his level of disability.

The defendant had called into question the plaintiff’s credit which went not only to damages but to liability as well. The attack on the plaintiff’s credit had taken up considerable time in the proceedings but had succeeded only in part.

The court determined that if an adjustment of the usual costs order was to be made it should limit the

plaintiff’s entitlement to costs from the defendant, rather than allowing a costs order against the plaintiff for a particular head of damage. To do otherwise would create a multiplicity of proceedings which would unduly complicate the resolution of the issue.

The court concluded that an order should be made recognising the plaintiff’s overall success but making some allowance for the time wasted by litigation of those issues which were falsely created. The false statements did not lead to different witnesses being called although the extent of cross examination was greater.

The court therefore ordered the defendant to pay the plaintiff’s reasonable costs on a party and party basis. However, the cost component (that is, not disbursements) was reduced by 20 per cent to reflect the effect of the plaintiff’s deliberate but limited falsification of evidence.

[2014] ACTSC 21Incandela v Bobanovic

IN ISSUE

• Whether a successful plaintiff can be deprived of a costs order as a result of giving false evidence





PROCEDURE


The Facts

In 2009, Zupps Southside Pty Ltd (Zupps) supplied Hobbs Haulage Pty Ltd (Hobbs) with a new truck. Under the contract for sale or supply it was agreed that the specifications of the truck would be modified and the value of these modifications was included in the price.

Hobbs alleged that Zupps breached the conditions of the contract as to fitness for purpose or merchantable quality implied by the Sale of Goods Act 1896 (Qld). Alternatively, Hobbs argued that Zupps breached the conditions of fitness for purpose and merchantable quality implied under the TPA. Further or alternatively, Hobbs alleged that Zupps breached the warranty that services would be rendered with due care and skill, implied under section 74(1) TPA, to the extent that the contract was one for the supply of services.

The modification work had been subcontracted by Zupps to Trakka Pty Ltd (Trakka). Zupps joined Trakka as the third party to the proceeding claiming damages for breach of contract in the sum of Zupps’ liability to Hobbs (if any) and for negligence.

Zupps alleged in its defence that its liability, if any, to the plaintiff was an “apportionable claim” within the meaning of s 28(1)(a) CLA and that Trakka was a concurrent wrongdoer within the meaning of s 30(1) CLA. If accepted, this would have limited recovery from Zupps to that share that a court considered just and equitable.

The Decision

The court first considered whether the claim was one “arising from a breach of duty of care” as defined in the CLA (QLD) and therefore an apportionable claim under s 28(1)(a). The court held that not one of the claims for damages for breach of any implied condition was an “apportionable claim” as none arose from a duty to take reasonable care or exercise reasonable skill.

The court addressed section 74(1) TPA in particular, and held that in a general sense the warranty implied by the section gave rise to a duty to take reasonable care or exercise reasonable skill. Therefore, the contractual obligation was likely to be co-extensive with a duty of care in tort. However, as Hobbs did not plead the existence of a co-extensive tortious duty it was not considered further.

Zupps sought to argue that the relevant ‘apportionable claim’ was one (presumably a claim in negligence) that had not (but could have) been made by Hobbs against Trakka. The court rejected this argument and determined that the claim referred to in s 28(1)(a) is a claim which is brought against a defendant, not one that has not been brought but might have been.

The court then turned to the issue of whether Trakka was a ‘concurrent wrongdoer’ within the meaning of s 30 CLA (QLD). It determined that where the acts or omissions of each of the supposed ‘concurrent wrongdoers’ are not independent, and there is no

separate cause of loss or damage, then they are not ‘concurrent wrongdoers’ within the meaning of s 30(1) CLA (QLD). The court held that the acts or omissions constituting any breach of contract by Zupps would be the same acts that would constitute Trakka’s breach of duty owed to Hobbs in tort. Therefore, Trakka and Zupps were not ‘concurrent wrongdoers’ and the application to strike out the paragraphs of Zupps’ defence that sought to limit Zupps exposure on the basis of proportionate liability was successful.

[2013] QSC 319Hobbs Haulage Pty Ltd v Zupps Southside Pty Ltd & Anor

CLA

IN ISSUE

• Whether the claim was an “apportion-able claim” under section 28(1)(a) of the CLA

• Whether the parties are “concurrent wrongdoers” pursuant to section 30 of the CLA





PROCEDURE


CLA

The Facts

Mrs Taylor (the appellant) is the widow of the late Mr Taylor. Mr Taylor died when an awning outside a shop collapsed on him in 2007. The appellant commenced proceedings in the Supreme Court of New South Wales claiming damages pursuant to sections 3 and 4 of the Compensation to Relatives Act 1897 (NSW) (CRA) against some of the respondents. The proceedings were brought for the benefit of the appellant and children of the late Mr Taylor.

A preliminary question arose before the primary judge for separate determination as to whether any award of damages claimed by the appellant pursuant to sections 3 and 4 of the CRA would be limited by the operation of section 12(2) CLA (NSW).

Section 12(2) CLA (NSW) directs a court when awarding damages to disregard the amount (if any) by which a claimant’s gross weekly earnings would, but for the injury or death, have exceeded three times the average weekly earnings at the date of the award. The limitation invoked by section 12(2) applies to specified heads of damages, including, relevantly, for the loss of expectation of financial support.


The primary judge held that insofar as the damages claimed included damages for the loss of expectation of financial support, the court is required to disregard the amount (if any) by which Mr Taylor’s gross weekly earnings would (but for his death) have exceeded three times the average weekly earnings at the date

of the award. An appeal to the Court of Appeal of the Supreme Court of New South Wales was dismissed by majority.


The issue on appeal to the High Court was whether, in the case of an award of damages for the loss of expectation of financial support, the limitation in section 12(2) CLA (NSW) ought to be construed as applying to Mr Taylor’s gross weekly earnings.


In allowing the appellant’s appeal by majority, the High Court held that on no view could the word “claimant” as it is used in section 12(2) CLA (NSW) be read as referring to the deceased, Mr Taylor. That construction, which was adopted by the primary judge and the majority of the Court of Appeal, could not be reconciled with the language of the statute as enacted by Parliament. The phrase “the claimant’s gross weekly earnings” was incapable of identifying the gross weekly earnings of Mr Taylor.

The High Court held that the court was not required to disregard the amount by which the gross weekly earnings of Mr Taylor, but for his death, would have exceeded three times the average weekly earnings.

[2014] HCA 9Taylor v The Owners – Strata Plan 11564

IN ISSUE

• Whether in the case of an award of damages for the loss of expectation of financial support, the limitation in section 12(2) CLA (NSW) ought to be construed as applying to a deceased’s gross weekly earnings




MISCELLANEOUS


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MISCELLANEOUS

213 Electro Optic Systems Pty Ltd v The State of NSW; West and West v The State of New South Wales [2013] ACTSC 155Costs order where settlement refused and both insurance-backed and privately financed plaintiffs involved.

214 Motorcycling Events Group Australia Pty Ltd v Kelly [2013] NSWCA 361Consideration of the interaction between the TPA and the CLA (NSW).

215 Daly v Thiering [2013] HCA 45Whether the Lifetime Care and Support Scheme established under MACA (NSW) “provided for” the treatment and care needs of the first respondent given by his mother

216 Meredith v Commonwealth of Australia (No 2) [2013] ACTSC 221Whether the plaintiff was entitled for damages for incorrect advice from his employer regarding his eligibility to join a superannuation scheme.

218 SSYBA Pty Ltd v Lane [2013] WASC 445Trespass to land/nuisance.


MISCELLANEOUS


Calderbank offer

The Facts

On 17 December 2012 the court delivered judgment in favour of the State of NSW (the defendant) for a claim brought in negligence by numerous parties which related to damage arising out of a bushfire in the Brindabella ranges of both NSW and the ACT.

The court concluded that the defendant had indeed been negligent in its response to the bushfire, however, certain statutory defences applied, which ultimately led to the defendant avoiding liability.

On 28 June 2013, the court heard submissions from all remaining parties as to the appropriate order for costs. The court considered settlement terms proposed by the defendant throughout the proceedings and also the appropriate apportionment of costs between the remaining plaintiffs.

The Decision

Following commencement of the trial, a number of former parties agreed to undisclosed settlement terms and played no further role in the proceedings. The court considered it unfair for any of the costs occasioned by the defendant in respect to those former parties to be visited upon the remaining plaintiffs and accounted for such in the final order on costs.

The court then considered the plaintiffs’ argument that the proceedings were based upon the public interest (duty of care of fire-fighters) and that in such circumstances it was inappropriate to make an order of costs against the unsuccessful parties. However, the court disagreed with the plaintiffs’ submission,

finding that ultimately the plaintiffs sought to vindicate their private right to compensation and therefore a costs order in favour of the defendant (in some form) was appropriate.

In the early stages of proceedings, the defendant made two offers of settlement. Both offers were in terms of judgement in favour of the defendant, with each party paying its own costs. The court determined the plaintiffs’ rejection of these offers to be reasonable, considering the terms offered and the plaintiffs’ genuine prospects of success. The court subsequently found no reason to award costs on any but the usual party and party basis.

The court made a distinction between the remaining insurance backed ‘QBE plaintiffs’ and the privately financed ‘West plaintiffs’. The court determined that the ‘West plaintiffs’ should not bear any of the costs related to those issues outside of the narrow factual scope that they had individually pressed.

Further to this, it was deemed inappropriate for the ‘West plaintiffs’ to bear the entire burden of costs related to the issues that they had pressed, as those issues had been equally pressed by a number of former and present plaintiffs.

Finally, the court observed the submission that the ‘QBE plaintiffs’ were resourced by an insurer with long term interests in bringing the claim, which was not the case for the ‘West plaintiffs’. However, the court concluded that costs are not awarded or withheld to punish or reward a party but to recompense, to some extent, a party successful in litigation. Therefore the

court did not expressly rely upon the insurance-backed status of the ‘QBE plaintiffs’ in apportioning costs between the remaining plaintiffs.

In conclusion the ‘QBE plaintiffs’ were ordered to pay jointly and severally 50% of the defendant’s costs on a party to party basis. The plaintiffs referred to as the ‘West plaintiffs’ were ordered to contribute 5% of those costs to be paid by the ‘QBE plaintiffs’.

[2013] ACTSC 155Electro Optic Systems Pty Ltd v The State of NSW; West and West v The State of New South Wales

IN ISSUE

• Order for costs

• Calderbank offer by defendant

• Division of costs between plaintiffs





MISCELLANEOUS


Interaction between Civil Liability Act 2002 (NSW) and Trade Practices Act 1974 (Cth)

The Facts

On 6 December 2007, the respondent took part in a motorcycle training course at Eastern Creek Railway, organised by the appellant. Whilst undertaking a training circuit on the track, the respondent was hit by a rider travelling at high speed in a more advanced training session, causing the respondent to sustain serious injuries.


The respondent argued the appellant breached an implied warranty to provide training in handling a motorcycle, “with due care and skill”, pursuant to an implied term in the contract between the parties (see s74 (2A) TPA).

The appellant relied upon ss 5L (obvious risk of dangerous recreational activities), 5M (recreational activity where risk warning) and 5I (materialisation of inherit risk) CLA (NSW) in defence. Further, the appellant relied upon an exclusion clause in the registration form signed by the respondent (to suggest it was not liable for the respondent’s injuries).

The trial judge held the appellant breached the implied warranty in the contract as it allowed more experienced riders to ride on the track at the same time as the respondent, greatly in excess of the speed the respondent was instructed to travel at. The trial judge further held that as the exclusion clauses in the registration form purported to exclude both personal injury and property damage, it did not satisfy the

conditions of s68B TPA and therefore, was rendered void by s68 TPA.

The respondent was successful however his damages were reduced by 30% for contributory negligence. He was awarded $368,445.


There were 3 issues to address on appeal :whether risk warnings provided by the appellant negated a duty of care because s74(2A) TPA applied as a surrogate federal law s 5M CLA (NSW) to the contract of services; the appellant’s entitlement to rely on the exclusion clauses in the registration form and; the finding of negligence and causation (the appellant argued the trial judge failed to address the requirements of s5B CLA).


In relation to the first ground, the Court of Appeal held s 5M CLA (NSW) did not meet the description given in s74(2A) TPA because it did not limit or preclude liability for a breach of a term of a contract providing for the exercise of due care and skill. Rather, it negated the very existence of a duty of care owed to a person engaged in a recreational activity.

In relation to the second ground, the Court of Appeal held that it was not possible to separate some words in the exclusion clauses as those words could not be given sensible meaning separate from the remainder of the clause. Therefore, the relevant words in the

exclusion clauses could not be saved by s68B TPA and were rendered void by s68 TPA.

In relation to the third ground, the Court of Appeal held that although the trial judge failed to consider the requirements of s5B CLA, those requirements are met. There was no issue that a reasonable person in the appellant’s position would have foreseen the risk of injury posed by a system whereby slow and fast riders were on the track at the same time. Further, this risk of harm was ‘not insignificant’. Finally, the Court of Appeal held that a reasonable person in the position of the appellant would have taken the precautions the appellant should have taken.

The Court of Appeal rejected the appellant’s submission that the trial judge failed to determine whether there was an act or omission of the appellant that caused the incident.


[2013] NSWCA 361Motorcycling Events Group Australia Pty Ltd v Kelly

IN ISSUE

• Whether s74(2A) TPA (Cth) picked up and applied s5M CLA (NSW)





MISCELLANEOUS


The Facts

The first respondent suffered catastrophic and permanent injuries in a motor vehicle accident on 28 October 2007 when he was rendered a quadriplegic. Since then, he has been a participant in the Lifetime Care & Support Scheme (the Scheme) established under the Motor Accidents (Lifetime Care & Support) Act (NSW) in 2006 and administered by the Lifetime Care & Support Authority of New South Wales (the Authority). The aim of the Scheme is to provide lifetime care and support for those who have suffered traumatic injuries. The Authority assesses the participant’s treatment and care needs that are reasonable and necessary in the circumstances and relate to the motor vehicle accident in respect of which the person is a participant in the Scheme.

Since he was discharged from hospital, the first respondent has lived with his mother, the second respondent, who provides care services for him on a gratuitous basis. The services provided by the first respondent’s mother were included in those identified by the Authority in its assessment of the required treatment and care needs of the first respondent. The first respondent sued the appellant for damages for negligence in respect of his injuries. His claim included a claim for the value of the gratuitous services provided by his mother.


The determination of the question as to whether the first respondent was entitled to claim for the value of the gratuitous services hinged on the interpretation

of the former section 130A MACA. That section provided that no damages are to be awarded to a participant in the Scheme for economic loss in respect of their treatment and care needs that relate to the motor accident injury in respect of which they are a participant in the Scheme and that are provided for or are to be provided for while the person is a participant in that Scheme.

At first instance, the court found that section 130A MACA did not preclude the first respondent from recovering damages in respect of the value of his treatment and care services rendered by his mother. The appellant’s CTP insurer appealed to the Court of Appeal.


The Court of Appeal dismissed the appeal. It adopted similar reasoning to the trial judge and found that to the extent that the first respondent’s treatment and care needs were not paid for, they were not “provided for” under the Scheme (using those words from section 130A) and therefore may be regarded as economic loss compensable by an award of damages.


The appellant’s CTP insurer was granted special leave to appeal to the High Court. The issue on appeal to the High Court was the interpretation of section 130A MACA and in particular, whether the Scheme “provided for” the treatment and care needs of the first respondent provided gratuitously by his mother.


The High Court allowed the appeal and set aside the decision of the Court of Appeal. The High Court held that section 130A MACA precluded the first respondent from recovering damages in respect of care rendered gratuitously by his mother because the treatment and care needs were provided for under the Scheme, even though they were rendered gratuitously. The High Court accepted that one can provide for services without paying for them and that there was no real doubt about the interpretation of section 130A and that the words “providing for” and “provided for” as used in the legislation should be given their ordinary and natural meanings. Common law rights should be taken to have been cut down by statute only where there is a clear legislative intention to do so. The MACA evidenced a clear intention to cut back those rights.

Statutory Construction

[2013] HCA 45Daly v Thiering

IN ISSUE

• Whether the Lifetime Care and Support Scheme established under an Act in NSW “provided for” the treatment and care needs of the first respondent given by his mother





MISCELLANEOUS


Negligent misstatement

Background

In 2009 and 2010 a series of cases were heard together concerning temporary employees who had been employed by the Commonwealth through the then Department of the Interior (and its successor) as forestry workers at a forestry depot operated by the Department. The eligibility of workers employed under temporary but long term arrangements with the Commonwealth to join a Commonwealth superannuation scheme (CSS) was not widely known, and such employees did not take up superannuation during their employment, even though, under certain conditions, it was possible, indeed often likely, that they would be entitled to join the scheme.

The Facts

The plaintiff commenced full time work as a temporary employee in an administrative agency of the Commonwealth in January 1966. The plaintiff and his co-workers were located well away from any human resources branch of the Commonwealth and relied on their supervisors for the administration of their terms and conditions of employment. During his working life the plaintiff made a number of enquiries about joining a relevant CSS but was incorrectly advised that he was not eligible. The plaintiff claimed that he first became aware that he was eligible to join a CSS in about 1990 when he met a fellow employee who had been a member of the scheme during his employment. Soon after learning that he was eligible, he suffered a back injury in January 1991 which required him to take some time off work. The plaintiff accepted a voluntary redundancy in August 2001. He said that he would

have applied to access his superannuation when he turned 55 if he had been a member of a CSS from the date he was first eligible. During his employment, the plaintiff did purchase insurance policies but eventually surrendered them as he did not think they were worthwhile. He also looked into obtaining private superannuation but thought the benefits were unattractive. The plaintiff claimed damages based on negligent misstatement, breach of statutory duty and common law negligence.

The Decision

After considering evidence from the plaintiff, various co-workers over the years of his employment regarding what they had been told about their eligibility to join the scheme, and the plaintiff’s supervisors at the time, the court was satisfied that the plaintiff had been told that he was not eligible to join a CSS. The court was further satisfied that the information was incorrect and that correct information could have been accessed by the plaintiff’s supervisors.

In considering the plaintiff’s claim for negligent misstatement, the court found that the plaintiff’s supervisors were people with authority over him and who dealt with a number of aspects of his working conditions. They were people who could be expected to know either what the eligibility criteria were or, if they did not know, to whom the plaintiff could be referred to ascertain the correct position. Once a negligent representation has been made, the court found that there was an ongoing obligation on the maker to correct the error if it was discovered to be false. The court found

that it was reasonable for the plaintiff to have relied on the information provided by his supervisors as it was given without qualification and without any suggestion that the plaintiff should confirm or verify it for himself. The court accepted that the information provided by the supervisors was not supplied in the course of social intercourse as it was provided in response to specific complaints by the plaintiff about the unfairness of his exclusion from a CSS.

[2013] ACTSC 221Meredith v Commonwealth of Australia (No 2)

IN ISSUE

• Whether the plaintiff was provided with incorrect advice regarding his eligibility to join a super scheme

• Whether it was reasonable for the plaintiff to rely on the advice and make no further enquiries

• Whether the employer owed a duty of care to inform employees about their eligibility to join such schemes and ensure that its staff provided correct advice



http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/act/ACTSC/2013/221.html?stem=0&synonyms=0&query=meredith


MISCELLANEOUS


Negligent misstatement

The court rejected the Commonwealth’s submission that the plaintiff did not rely on the information he received from his supervisors as he double checked it with his union representative as reliance is not limited to one person or the last person to whom the plaintiff speaks. The court found that reliance is a question of fact and that it is possible to rely on multiple sources. The court accepted that the plaintiff relied on the negligently provided information until he became aware in 1990 of his potential eligibility.

The court accepted that the plaintiff’s back injury intervened and this was a reasonable basis for him not to have made further enquiries until mid-1992. Given the number of times the plaintiff asked about the matter and the persons who he asked, the court found that it was reasonable for him to accept that this was the position and make no further efforts to progress the matter until he received direct information on which he could have acted which occurred in mid-1992. The court was satisfied that the Commonwealth was vicariously liable for the negligent misstatements made by the plaintiff’s supervisors and on which the plaintiff relied to his detriment.

In terms of causation, the court was satisfied that the plaintiff would have joined the scheme had he been provided with the correct information. The court noted that the plaintiff had shown significant interest in a CSS and could have afforded the contributions. The court also found that the plaintiff would in early 1969 have been likely to obtain the relevant certificate to provide eligibility for him to join the scheme and that he would have passed the necessary medical examination.

However, the court found that from mid-1992 the negligent misstatements made to the plaintiff were no longer causative of his failure to join a CSS. The court entered judgment for the plaintiff in respect of negligent misstatement with damages to be assessed based on various factual findings in the judgment.

The court dismissed the plaintiff’s claims in common law negligence and for breach of statutory duty. It was at issue in the negligence claim whether there was a duty of care owed to the plaintiff by the Commonwealth. The court considered various factors including reasonable foresight of the likelihood of harm, a determinate class of persons who are at risk, vulnerability, causation and the closeness of the parties’ relationship. After balancing those factors, the court did not consider that the plaintiff had a cause of action in negligence against the Commonwealth other than had already been found in the claim for negligent misstatement. The court found that a factor militating against the finding of a duty of care was that the law of negligence should not cut across other legal principles.

[2013] ACTSC 221Meredith v Commonwealth of Australia (No 2)


http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/act/ACTSC/2013/221.html?stem=0&synonyms=0&query=meredith


MISCELLANEOUS


Nuisance and trespass to land

The Facts

The first plaintiff, SSYBA Pty Ltd t/as Abyss Self Storage, operated from Lot 50 Palmer Crescent in the commercial suburb of Bunbury. The second plaintiff, Mr Griffin, was the owner of Lot 50 and the controller of SSYBA Pty Ltd.

Lamac Commercial Plumbing Pty Ltd (LCP) was a plumbing business, whose sole director and shareholder was the defendant, Mr Lane. LCP was originally a defendant to the claim; however, LCP went into liquidation in February 2013 and the action against the company was stayed.

On 16 November 2008, Mr Griffin observed several brackets attached to the eastern wall of his building, facing Mr Lane’s land. The next day Mr Griffin delivered a letter to LCP addressed to Mr Lane asking that Mr Lane remove the brackets. Mr Griffin received no response to the letter.

A week later Mr Griffin telephoned Mr Lane, who acknowledged receipt of the letter. Mr Griffin asked Mr Lane to remove the brackets. Mr Lane said that he would look into it and see where he stands.

For the next 18 months Mr Griffin followed up with Mr Lane and the local Council with respect to the removal of the brackets to no avail. On 8 September 2010, Mr Griffin noticed that a further 3 brackets had been attached to the wall. By 22 September 2010 there were 10 brackets attached to the wall in total.

Upon threat of interlocutory injunction by letter on 19 May 2011, Mr Lane had the hoses taken down and

the brackets cut off by angle grinder. However, the loaded brackets had by this time caused damage to the building.

The plaintiffs issued proceedings against Mr Lane alleging nuisance and trespass to land. Mr Lane was self-represented at trial and did not bring any evidence. The judge took Mr Lane’s defence to be that he had no knowledge of the installation of the brackets on the wall and was therefore not liable.

The Decision

The court held that, whether the claim is considered as a direct trespass onto the plaintiffs’ land, or as a private nuisance by allowing people on Mr Lane’s land to interfere with the plaintiffs’ land, matters little as the result is the same.

From the letter written to him and received before 24 November 2008, Mr Lane knew that brackets had been affixed to the wall and that hoses were hanging off them. He also knew that the plaintiffs had not consented to this trespass.

Both as landlord and as controlling mind of the company Mr Lane had a duty to remove the brackets. He also had a duty to instruct LCP staff not only to remove the brackets but to refrain from any further trespasses. Mr Lane had a duty as a neighbour not to allow or permit his land to be used to facilitate a trespass on the plaintiffs’ land in the light of his knowledge. He manifestly failed to do so.

The primary relief sought by the plaintiffs was a mandatory injunction. Having regard to Mr Lane’s

inaction over many years and the blatant trespass committed, the court was satisfied that it was appropriate to grant a permanent injunction. Mr Lane was also ordered to pay damages to the plaintiffs of $57,192, apportioned to the first plaintiff $28,530 and to the second plaintiff $28,662.

[2013] WASC 445SSYBA Pty Ltd v Lane

IN ISSUE

• Whether director of company and landlord liable for permitting and continuing nuisance and/or trespass to land





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.

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