Category Archives: Negligence

Non-delegable duty of care: the reach of Burnie Port Authority re-ignited

Such is my barrister’s brain, that whilst reading The Hobbit to my son the other night, I got to thinking about the similarities between non-delegable duties of care and the magic ring featured in the book. In The Hobbit, the ring grants its wearer invisibility and so comes in very handy as Bilbo Baggins continues his quest to recover the dwarves’ lost treasure from the evil dragon, Smaug. As the story unfolds, the ring is also shown to have quite a personality of its own, at times capricious and Delphic, particularly as the saga of the next book, The Lord of the Rings unfolds.

Those two words also seem apt to describe non-delegable duties of care. In fact, “Delphic” is a word Kirby J used in the High Court decision of Montgomery to describe past efforts of that Court to clarify the underlying rationale for non-delegable duties.  Indeed, any review of the authorities shows that the distinction between when there should and shouldn’t be a non-delegable duty imposed upon a defendant is far from clear.

Take for example, this passage from the judgment of Justice (Joseph) Campbell in Transfield Services (Australia) v Hall (2008) 75 NSWLR 12 at [119] as his Honour sought to encapsulate an aspect of Gaudron’s judgment in Lepore:

“Like the majority in Burnie [Port Authority], her Honour was saying that cases where there was a non-delegable duty exhibited a particular characteristic, but was not saying that all cases that exhibited that characteristic were cases where there was a non-delegable duty.”         

What can be said with some certainty however is that overall, there has been a general reluctance in this country to expand the categories where a non-delegable duty will be found beyond those prescribed by Mason J in Kondis (ie. hospital/patient, school/pupil and employer/employee).

The stated reasons of the judges of the High Court deciding Montgomery for keeping the categories limited come down to the harshness of the consequences upon a defendant of so doing and that any further expansion may have the artificial consequence of outflanking established common law principles surrounding vicarious liability (see Kirby J at [44]); in some instances, the strict liability that attaches to non-delegable duties makes it effectively the same as a finding of vicarious liability. Some High Court judges even maintain that a preferable approach would be to simply adjust the applicable duty of care itself, rather than imposing the non-delegable net over a given case. Take for example, the comments of Justices Wilson and Dawson in Stevens v Brodribb Sawmilling (1986) 160 CLR 16 at 42-43:

“The direction taken in this Court has also been away from strict liability for tortious behaviour. There is a preference for the view which is more in harmony with the ordinary principles governing liability for negligence, namely, that the extent of a duty of care will depend upon the magnitude of the risk and its degree of probability…”

The attraction for plaintiffs of course is that a non-delegable duty lifts the standard of care up so high that it makes it much easier for them to get home; somewhat like the ring in The Hobbit. If not strict, it imposes a liability to see that reasonable care is taken – quite a high standard; though if this makes it an impossible standard to meet, a non-delegable duty will not normally be imposed.

Such was the case in Montgomery where the High Court refused to find a non-delegable duty was owed by a local Council for the negligence of its contractor in creating a hazard during footpath installation works because, given it had had such limited involvement in the works, this was a duty that Council would never have been able to meet.          

Against this background, I consider any judicial finding of a non-delegable duty outside Mason J’s categories in Kondis to be quite significant. This is what took place in a decision handed down late last year by Justice (Stephen) Campbell in the NSW Supreme Court decision of Hossain v Unity Grammar College Ltd [2019] NSWSC 1313.

Interestingly enough, His Honour’s findings were prefaced by the following (at [101]):

“And I appreciate that the decision of the High Court in Leichardt Municipal Council v Montgomery evinces what might be regarded as a strong reluctance to extend the established categories of non-delegable duties. If the door has not been slammed closed, it is barely ajar and guarded by a vigilant, juristic sentinel.”

Hossain was a case in which the Plaintiff was seriously injured when a leak caused LPG gas to settle in the ceiling space of a building. It was then ignited when the Plaintiff switched on a light upon entering the room immediately below.  The contractor which caused the leak in negligently conducting gas connection and installation works was uninsured and so a number of others were sued, including the head building contractor.    

The head contractor’s insurer argued that its delegation of the gas connection works to an ostensibly skilled contractor discharged its duty of care to the Plaintiff. However, his Honour found that more was required of the head contractor. Pointing to one of the key indicia of the existence of a non-delegable duty, “control,” Campbell J found:

“There is no doubt that [the head contractor] has taken advantage of its control of the premises to introduce a dangerous substance namely LPGas and to carry on a dangerous activity in terms of facilitating [its use].”

In his judgment at [103], His Honour then quoted from Burnie Port Authority (atp. 554), a case in which the High Court found an occupier liable for the damage caused by a fire that escaped from its land, even though it was ignited by someone else:         

“In the case of such [dangerous] substances or activities, however, a reasonably prudent person would exercise a higher degree of care. Indeed, depending upon the magnitude of the danger, the standard of ‘reasonable care’ may involve ‘a degree of diligence so stringent as to amount practically to a guarantee of safety.’ ”      

In the end, Campbell J found that the non-delegable duty in Hossain involved the principal contractor “seeing that reasonable care is [or had been] taken,” which for reasons given in preceding paragraphs, his Honour found it had not.       

An interesting side note to this decision is that in Transfield, the decision of Justice (Joseph) Campbell to which I made mention above, Justice (Stephen) Campbell in his capacity as senior counsel for the Plaintiff/Respondent argued that Burnie Port Authority justified a finding that a non-delegable duty should be owed by a head contractor in circumstances where similar factors were at play as those in Burnie.

In Transfield, the head contractor was tasked with maintaining plant and equipment on the HMAS Stirling which it then subcontracted to another. The plaintiff suffered serious injury when a rope he was using to abseil gave way. The rope was supposed to have been properly inspected by the contractor.

The broader argument on the appeal in Transfield was effectively whether a non-delegable duty should be found in circumstances where an inherently dangerous activity (such as abseiling) was taking place in respect of which the head contractor had some “proximity” and/or “control” in relation to the Plaintiff. Faced with an argument put by Campbell SC as he then was, Campbell JA rejected outright that such a generalised notion could form the basis for finding a non-delegable duty existed. In this context, His Honour also expressed the view that Burnie Port Authority ought to be limited to its facts.

Justice Stephen Campbell however relied on Burnie Port Authority as one of the principal foundations for his decision in favour of a finding that the head contractor did owe a non-delegable duty to the Plaintiff, Mr Hossain who had been the subject of negligence where a dangerous substance/activity had been involved.

It will be interesting to see whether this aspect of the decision is appealed but for now the door through which a principal contractor can be found to owe a non-delegable duty of care to an injured third party in certain circumstances remains very much ajar. So too, the non-delegable duty of care ring now glows a little brighter.                       

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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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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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