Category Archives: Civil

What might now be: Lost opportunity damages and the decision in Mal Owen

In my experience, lost opportunity damages claims are often fraught and the recent NSW Court of Appeal decision in Mal Owen Consulting Pty Limited v Ashcroft [2018] NSWCA 135 is no exception; though the appellant did get there in the end.

Mal Owen retained a solicitor to chase down some unpaid monies under a sale of business arrangement who did little or nothing about the case for about 3 years. They then retained new lawyers who eventually obtained a judgment and then bankrupted the debtor, a guarantor of the sale monies.

Mal Owen then sued the first solicitor on the basis that had he pursued the claim in a timely manner, the monies would have been recovered. Crucial to the claim was the allegation that the debtor’s financial circumstances had worsened considerably over time, ie. had he been sued earlier, the guarantor would more than likely have had the money to pay.

The claim against the solicitor was brought in both tort and contract (breach of retainer) and breaches in both were ultimately admitted. Sounds simple so far, right?

Each of the three Appeal Court judges then took largely different approaches to the case with Basten JA and Barrett AJA ultimately reaching the same result.

Basten JA reviewed the law on loss of an opportunity and concluded that the tortious standard for causation in lost opportunity cases was different to that applicable to a claim in contract, the latter being that which is applicable under trade practices statutes.

The tortious standard, his Honour opined, following the High Court in Badenach v Calvert (involving another negligence action against a solicitor), required the plaintiff to prove that it was “more probable than not that they would have received a valuable opportunity.”

This is the standard the trial judge had applied in finding that that on the evidence the plaintiff had not shown that the position would have been any different had the first solicitor acted expeditiously in seeking to recover the debt.

Justice Basten then went on to find that whilst the lost opportunity needed to be identifed with precision, the claim in contract only required that there be a “possibility of recovery of some damages”. Then the well-known principles set down by the High Court in Sellars were to be applied in applying a percentage reduction to the likely full value of the chance to account for the relevant contingencies. For various reasons, his Honour thought full recovery unlikely, even if the first proceedings had been pursued expeditiously. He therefore applied a 50% reduction.

Macfarlan JA, in dissent, found that the Court was bound by the High Court’s decision in Badenach, which required the causation issue, being a fact, to be proven on the civil standard just like any other. In reviewing the evidence, his Honour found that he couldn’t be satisfied that the debtor’s financial position would have been better at the time when the first solicitor was meant to be pursuing him for the money. His Honour didn’t deal with the contract and tort claims separately.

Nor did Barrett AJA, who applied Badenach and in particular the judgment of French CJ, Kiefel and Keene JJ describing the plaintiff’s onus as being proof on balance that there was a “substantial prospect of a beneficial outcome”, a test which itself seems fairly ambiguous. Be that as it may, his Honour Justice Barrett was satisfied that the test for causation had been met because he characterised the evidence regarding the debtor’s financial circumstances differently to the manner in which Macfarlan JA had done. But it was the way that his Honour characterised the relevant test for causation that is most interesting, stating (at [101]):

“At the first stage concerned with causation, the task is no more than to confirm the value is not in the realms of the merely theoretical or negligible – in other words, to establish, according to the balance of probabilities, that there is some colour of value to the lost opportunity.”

Once the causation gateway had been opened, the second stage of the process, ie. assessment was his Honour found necessarily “a process of estimating extending even to guesswork.”

This led his Honour to the same conclusion (including with regard to the applicable percentage reduction of 50%) as that which was reached by Basten JA and so the appeal succeeded.

Those negligence cases with a claim in contract in the alternative that involve an allegation of a lost opportunity will no doubt find Basten JA’s decision helpful. It seems as though as long as the opportunity can be identified with a fair degree of specificity, some damages will flow. It also appears to take a considerable degree of pressure off with regard to the evidence required to make out the claim, which is often the hardest part. Justice Barrett’s decision would also appear helpful even if there is only a claim in tort available.

Maybe the prospects for the poor old lost opportunity damages claim are now looking a little brighter.

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Filed under causation, Civil, Crime, damages, evidence, Negligence

Pure PTSD claims and the decision in Pel-Air: a body blow for plaintiffs

Whilst I realise that for most members of the public a juicy set of facts is far more compelling than even the most irresistibly cogent legal precept, I am often disappointed by the scarcity of legal context given in news stories these days. I did however come across one the other day that had enough of both to pique my interest.

 

It involves a man who has sued an airline alleging that he found the tip of a hypodermic needle in his inflight meal of butter chicken with cauli pea masala. The man alleges that he only discovered the needle once it was inside his mouth.

 

The story immediately brought to mind the quintessential and if true, makes the escargot in Donoghue seem like a delicacy by comparison.

 

Based on what was reported, it would seem that whilst the man may have sustained some physical injuries to the inside of his mouth, the focus of his damages claim will be in respect of alleged depression and post-traumatic stress.

 

The interesting bit of law came from a quote of what the man’s solicitor said, which was to the effect that the plaintiff is seeking damages under the Australian Consumer Law (ACL) and the Civil Aviation (Carrier’s Liability) Act, which for ease of reference I’ll give the somewhat unfortunate acronym of CACLA.

 

Negligence actions framed as a breach of the ACL provide a useful means of circumventing the various liability hurdles and damages caps contained in the Civil Liability Act 2002 and its cognate provisions in other states (cf: Nair-Smith v Perisher). For this reason, it has become a common cause of action where a contractual relationship exists between the relevant parties such as there would have been here.

 

Though not specified in the article, the implied term of due skill and care may be the go-to, or with respect to the supplier sub-contracted to prepare the meal (ie. the “manufacturer”, as defined in the ACL), which the article reports has also been sued, a breach of the statutory obligation to supply safe and/or merchantable goods.

 

There is a defence to that latter action if the manufacturer can show the alleged defect wasn’t there at the time of supply. The airline’s claim, also referred to in the article, that the meal went through a metal detector twice before it made it onto the plane may well assist both it and the supplier in this regard. Similar issues arose in a case called Effem Foods v Nicholls [2004] NSWCA 332 where a consumer was injured by a safety pin concealed within a chocolate bar.

 

The article’s lack of detail regarding that aspect of the claim (there’s that problem again) deems any further comment on this part of the claim otiose (such a judge’s word that I feel a little bit of an imposter in using it). But it’s the CACLA part of the claim that interested me more anyway. CACLA is applicable where a person sustains “bodily injury” whilst on an aircraft or during the course of embarking or disembarking.

 

It was no doubt a particularly appealing basis upon which to claim in the context of these facts because CACLA imposes strict liability, thereby removing the need for the claimant to prove negligence to complete his cause of action.

 

However, if a plaintiff claims for pure psychiatric injuries under CACLA, a decision of the NSW Court of Appeal handed down in March 2017 has now made things more difficult. In Pel-Air Aviation Pty Ltd v Casey [2017] NSWCA 32 the Court was asked to deal with the question of whether PTSD is a “bodily injury” as that term is understood by CACLA.

 

At this point I should say that the decision may also prove to be of some moment in the interpretation of other statutes incorporating those words, of which there are a few. Section 25 of the Companion Animals Act 1998 (NSW), which deals with the (strict) liability of dog owners for injuries caused by their pooches, is one that immediately comes to mind.

 

The plaintiff in Pel-Air was a passenger in a small plane that the pilot was forced to ‘ditch’ into the sea off Norfolk island due to bad weather. As a result, she spent about 90 minutes in the water, suffering multiple injuries including PTSD.

 

It is accepted law that where a physical injury and psychological injury are connected, this kind of psychiatric injury will meet the “bodily injury” requirement. Some of the plaintiff’s psychiatric injuries in Pel-Air fell into this category. However, for what is often termed “pure” psychiatric injury, such as the PTSD suffered by the plaintiff in Pel-Air something more would be required.

 

Nevertheless, at first instance, Justice Schmidt of the NSW Supreme Court determined that given the plaintiff’s PTSD had resulted in ongoing dysfunction that was “consistent with chemical changes in her brain and body and alterations in her brain’s neurotransmitter pathways, which [had] prevented a return to normal brain function”, this was enough for it to be properly categorised as a “bodily injury”.

 

On appeal, Justice Macfarlan (with whom Justices Ward and Gleeson agreed) undertook a detailed analysis of the evidence provided by the experts commissioned by each party and in particular, the joint document produced by them after they had ‘conclaved’, which read (quoted at judgment [21]):

 

“There is meta-analytic research evidence to suggest that in some persons suffering from PTSD or Generalised Anxiety Disorder can suffer from physical changes to specific areas on the brain [sic], [eg.] shrinkage of the hippocampus…[or] changes to the prefrontal areas of the brain… [However], the experts agree that there is no evidence available to them (i.e. imaging) that will prove that the plaintiff has structural changes to her brain.” [emphasis added]

 

His Honour then undertook an interesting review of the case authorities in the United Kingdom, the United States and Canada on the point, which were all highly relevant given that their legislation, in the same way as CACLA, includes the words “bodily injury”, as a result of them all having incorporating the unifying Montreal Convention into their domestic law.

 

Consistent with those authorities, the Court found that something more than malfunctioning or chemical change must to be shown for a claim to be made out in respect of pure psychiatric injury under CACLA. For example, structural or what his Honour referred to as “actual physical damage” (at [47]). It seems that a plaintiff alleging pure psychiatric injury under CACLA will now need brain imaging showing a change in brain architecture in order to succeed.

 

Excuse the pun, but to me this would seem like a bit of a body blow to what might otherwise be a rather straightforward statutory claim.

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Filed under Civil, Crime, damages, evidence, Negligence, statutory interpretation

Pokemon Go: a change of landscape for insurers and gamers alike

As a concerned parent, I have recently had cause to discuss with few fellow mums and dads the whys and wherefores of the Pokemon Go ‘phenomenon’; which, like the word ‘crisis’, has become one of those hyperbolic usages that characterises this age of sensationalism we are living in.

In line with accepted best practice parenting, one particular couple said they took the immersive approach, having decided to spend last Saturday afternoon playing it with their 12-year-old son.

Their rather tame introduction took them as far as the local shops in search of the nearest Pokemon to capture, which for the uninitiated, is the principal aim of the game. And sure enough, right there, smack bang in the middle of the road (in reality, well sort of) was the coveted creature.

It was at this point in telling the story that the boy’s father made the observation that the Google Map data used to determine the player’s location and distribute the various Pokemon is not vetted. Therefore players could well be led onto a busy road in search of glory; or off a cliff perhaps. Yikes!!

However, could or should it be? The conventional wisdom among gamers is that Pokemon are distributed by operation of an algorithm (a bit like the mysterious way Google sees some people’s websites arrive higher up the list of search responses than others). Therefore, it seems to be somewhat random.

The game’s terms and conditions say players should “be aware of [their] surroundings and play safely. …[and take] responsibility to maintain such health, liability, hazard, personal injury, medical, life, and other insurance policies … reasonably necessary for any injuries.”

But what about the 5 year-old child who all alone embarks on the same trip to the shops on a Pokemon Go quest and is busy standing in the middle of the road trying to make a catch when a car screams around the corner…

Even if such a disclaimer would have any force at law, surely it couldn’t be used to protect against this kind of claim.

Subject to a contributory negligence reduction (which would be little or none for a child of this age), this situation would be the responsibility of the CTP insurer. However, if I were the CTP insurer, I’d be ready for battle with a cross claim for contribution from the game provider. Surely such a tragic result is foreseeable enough to give rise to a duty of care on its part. The misplaced Pokemon could perhaps be likened to the ‘snail in the bottle’ a la Donoghue v Stevenson.

Then the question arises as to how reasonable it is to expect the system to be sufficiently controlled by the provider so as not to put its users in such obvious peril. That would make for a fascinating debate, though it may never reach a courtroom given it would likely result in the scrutiny of the top secret Pokemon distribution algorithm itself.

Airbnb now offers complimentary landlord style insurance to its subscribers whose use of the property as a short term rental might see them excluded by a conventional policy. So I’m sure there is an insurer brave enough to take on this new risk at the right premium, something I’d be strongly recommending if it hasn’t been done already.

Apparently, there’s already a Russian bank already offering to insure users themselves (https://www.rt.com/business/351813-pokemon-go-sberbank-insurance).

Watch this space (no pun intended).

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Filed under Civil, contributory negligence, Insurance, Negligence