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Clare Cappa, Craig Forrest, Russell Hinchy and Vernon Nase[*]
The so-called crisis in the tort of negligence conflates a number of issues relating to the award of damages for personal injury. Foremost amongst these has been the so-called 'insurance crisis' arising from national and international events, most notably the collapse of HIH and United Medical Protection, and the fallout from the terrorist attacks of 11 September in the US and of October 2002 in Bali. The insurance industry reaction to these events has included substantial premium rises, sending ripples throughout Australian society, which has detrimentally affected rural communities in particular, and especially charitable and non-profit organisations.
While much of this 'insurance crisis' relates to the functioning of the insurance industry itself, the law of negligence has been implicated by the insurance industry pointing to the perceived uncertainties in the application of the common law, increases in the number of insurance claims, and most disturbingly, an increase in extremely large damages awards. Such claims do not only go to the administration of the law of negligence and legal proceedings, but to the basic common law principles that underpin the law of negligence. There is thus a need to clearly distinguish between three different issues in this crisis: a crisis within the insurance industry itself, unrelated to the law of negligence; a crisis within legal proceedings relating to personal injury claims; and a crisis in relation to the common law of negligence. The existence of a crisis in this area of torts can only be strictly discussed in relation to the latter.
The Queensland response to this 'crisis' has been the enactment of Personal Injuries Proceedings Act 2002 (Qld) and the Civil Liabilities Act 2003 (Qld). Through these Acts the legislature seeks to fundamentally change negligence liability by narrowing the scope of potential liability and educing the damages which may be awarded. In light of this legislative intervention, there is a need to fairly examine the role of the High Court of Australia in shaping basic negligence. Certainly, this issue has concerned the judiciary. In an address to the North Queensland Law Association, the Chief Justice of Queensland, the Honourable Paul De Jersey AC, addressing the post-September 11 insurance 'crisis' and the law of negligence as applied to medical practitioners, stated:
It would be very bad for this country if dissatisfaction of medical practitioners with the standard of care objectively established by the nation's highest court, conspires with the economic plight of commercial organizations resulting from executive inefficiency and rapacity, to produce a situation where reasonable entitlements to compensation of injured members of the public are compromised, and that seems clearly to be what is potentially involved.[1]
In the recent High Court decision Tame v New South Wales and Annetts v Australian Stations Pty Ltd ('Tame and Annetts ') McHugh J declared:
I think that the time has come when this Court should retrace its steps so that the law of negligence accords with what people really do, or can be expected to do, in real life situations. Negligence law will fall-perhaps it already has fallen-into public disrepute if it produces results that ordinary members of the public regard as unreasonable.[2]
This recognition by the High Court of some disquiet in the perception of the common law is not new, and prior to the 'insurance crisis' and the National Review of the Law of Negligence, under the Chairmanship of Justice Ipp, [3] the High Court had sought to return to basics and to redevelop a principled approach to the law of negligence. The High Court has endeavoured to do so not only in determining the duty of care element, but more importantly, to toughen the standard of care requirements that determine breach of that duty. Recent judicial decisions also reflect the significant shift in society towards accepting personal responsibility, which has not always been reflected in the inadequate weight given to the conduct of the plaintiff over past decades.
The High Court has been on a quest to define the principles that determine the existence of a duty of care in negligence. They have sought to develop a principled approach that exhibits flexibility, avoids the spectre of indeterminacy, rtenies spurious claims, and promotes legal certainty and predictability. Where Donoghue v Stevenson foreseeability failed to limit the scope of negligence, the courts invented other 'controlling mechanisms', such as the Anns' test, the Caparo v Dickman three-stage test, the 'proximity theory', and ever present 'incrementalism'.[4]
This search for a principled approach to the determination of a duty of care in negligence cases is reflected in the High Court's more recent judgments. Tame and Annetts were heard together and involved claims of negligence causing psychiatric injury.[5] In rejecting the prior temporal criteria, namely the requirements of 'sudden shock' and 'direct perception' of a distressing event or its 'immediate aftermath'' the court turned back to the 'original' negligence case of Donoghue v Stevenson[6] for guidance, in particular the criterion of 'reasonableness' in determining the existence of a duty of care. After citing Professor Fleming, who suggests that '[n]egligence ... consists in conduct involving an unreasonable risk of harm',[7] McHugh J asserted that '[m]any of the problems that now beset negligence law and extend the liability of defendants to unreal levels stem from weakening the test of reasonable foreseeability'. His Honour further argued that 'the issue of reasonable foreseeability of risk in preach of duty situations should no longer be determined in isolation from the issue of reasonable preventability' and the issue of what reasonable care requires'.[8] Returning to Donoghue v Stevenson his Honour suggests that Lord Atkin's concept of 'reasonable foresight' should be conceived as a 'compound conception of fact and value' and that policy considerations are relevant to its application.
What is foreseeable is a question of fact-prediction if you like. But reasonableness is a value ... reasonableness requires a value judgment ... Because reasonable foreseeability is a compound conception of fact and value policy considerations affecting the defendant or persons in similar situations arguably enter into the determination of whether the defendant ought reasonably to have foreseen that his or her acts or omissions were 'likely to injure your neighbour'.[9]
Gleeson CJ maintained that reasonableness ought to be 'judged in the light of community standards'.[10] The High Court's use of reasonableness as a controlling mechanism in negligence is similarly reflected in the matter of Gifford v Strang Patrick Stevedoring, where the court clearly expresses a desire to establish a test to determine the existence of a duty of care in the context of psychiatric illness. Here five of the six judges used a principled approach based on Lord Atkins formulation to arrive at this conclusion. [11] This principled approach has allowed for the denial of tenuous claims, as in Tame, while allowing legitimate claims, such as inAnnetts. In this way the High Court has endeavoured to show the flexibility and leadership demanded of it by reinvigorating the reasonableness criterion, at the level of reasonable foreseeability of risk, and in insisting that there be a need to reflect community standards for it to be reasonable to construe such a duty of care and breach. Under this principled approach the significance of reasonableness at the breach cannot be underestimated.
The High Court's active search for a principled approach to the law of negligence has clearly not been fully appreciated by legislators in some jurisdictions. For example, the approach taken by the High Court in Brodie v Singleton Shire Council ('Brodie') was to remove an old, anachronistic rule that provided an historical immunity to highway authorities for their non-feasance or failure to act. [12] The majority judgment of the High Court [13] characterised the content of this rule as being 'dictated by the caprices of unprincipled exceptions and qualifications'.[14] The majority judgment also noted with approval its repeal in the United Kingdom and quoted Lord Cooke of Thorndon who observed that '[a]bsolute immunity is in principle inconsistent with the rule oflaw but in a few, strictly limited, categories of cases it has been granted for practical reasons'.[15] Equally, the court felt that public authorities were obliged to exercise their statutory powers where those powers gave them 'such a significant and special measure of control over the safety of the person or property of citizens as to impose upon the authority a duty of care ... In this regard, the factor of control is of fundamental importance'.[16] As a result of Brodie, statutory authorities were to be subject to the 'ordinary principles of negligence'[17] At the same time the High Court sought to clarify the standard of care applicable and reiterated the ffjiong Shire Council v Shirt[18] formulation that requires courts to consider; (i) the magnitude of the risk, (ii) the degree of probability it will occur, (iii) the expense, difficulty and inconvenience to the authority in taking steps to alleviate the danger, and (iv) any other competing or conflicting responsibility or commitments of the authority. [19]
The High Court's decision in Brodie sent shockwaves through statutory authorities, who feared an opening of the floodgates to a myriad of spurious claims. However, it is to be noted that Brodie s case was decided with another case, that of Ghantous v Hawkesbury City Council[20] ('Ghantous'), a claim from Mrs Ghantous who fell after stepping from a concrete footpath onto an earthen verge. The failure of Mrs Ghantous's claim exemplifies that, in the absence of traditional immunity under the archaic highway rule, small mishaps or accidents do not translate to successful claims against statutory authorities. As Kirby J aptly observed in Ghantous, 'the real reason she fails is that no breach of duty is shown on the part of the local authority which she sued'.[21] Further, His Honour observed that '[l]ocal authorities are not insurers for the absolute safety of pedestrians or other users of roads and footpaths'.[22] More recent cases against statutory authorities have similarly been unsuccessful as the courts have toughened the standard of care requirements that determine breach of that duty. One example is the case of Waverley Municipal Council v Swain[23] in which the media had a field day with regard to the high damages awarded at first instance to the complainant, who had been rendered a quadriplegic as a result of diving into a sand bank in the surf of Bondi beach. However, the New South Wales Court of Appeal recently ruled that the statutory authority did not breach the duty of care owed to the complainant and no damages could be awarded.
Such an approach is also clearly evident in Queensland. In the recent case of Enright v. Coolum Resort Pty Ltd and Ors[24] regarding a claim over the drowning of a Pepsi executive who swam at an unpatrolled beach, the Queensland Supreme Court ruled that there had been no breach of duty by the statutory authority. Similarly, in Borland v Makauskas[25] the plaintiff had carelessly dived from the fence of a property into a Gold Coast canal resulting in injuries leaving the plaintiff a tetraplegic. At first instance the plaintiff succeeded in an action for damages against the property owners. However, on appeal, the Queensland Court of Appeal accepted the position adopted in a string of cases that the occupier is entitled to assume that most entrants will take reasonable care for their own safety. As the Court observed:
In the present case 'the risk existed only in the case of someone ignoring the obvious ... and the respondent's conduct was foolhardy in the extreme. To have required the appellants to erect a warning sign or to alter the construction of the fence would have been neither reasonable nor just ...[26]
Nevertheles, the concerns that the Brodie decision would lead to statutory authorities being held liable for a myriad of claims is now reflected in the Queensland legislative reforms to the 'torts crisis'.
The main purpose of the Act is to 'assist the ongoing affordability of insurance through appropriate and sustainable awards for damages for personal injury'.[27] Given the contents and scope of the Act, this is an unfortunate misrepresentation of the cause of the insurance crisis and allocation of remedial actions.[28] The Act itself is structured to achieve three aims; to reduce the cost of legal proceedings; reduce the number of frivolous claims for minor injuries; and to cap the size of large claims. Such an approach necessarily requires revision of both procedural and substantive law.
There is clearly an attempt not only to prevent the perceived increase in the number of personal injury cases being adjudicated by creating a structure that allows for the resolution of disputes without adjudication, but also to reduce legal costs. The procedural provisions designed to achieve this end include a new system of initiating a claim, ensuring full disclosure of all relevant material and the introduction of mandatory settlement conferences. There is certainly merit in structuring an alternative, cheaper and quicker method of resolving disputes. However, such an approach is twinned with the aim of reducing damages awarded in personal injury cases. So, while some of these procedural amendments are appropriate, they are supported by an inability to obtain full damages due to the limitation on amounts awarded. While the Attorney-General noted that Queensland Courts have not awarded large compensation payments in the past, there appears to be unease about the 'Santa Claus' payments awarded in New South Wales, and the Queensland legislation is seen as a 'pre-emptive' strike against such payments. The Act forbids the award of exemplary, punitive or aggravated damages; it allows for adverse consequences in calculating damages in cases where the claimant has failed to mitigate damages; it limits damages awarded for loss of earning to three times average weekly earnings; and it severely restricts the award of damages for loss of consortium, servitium or for gratuitous services. There are also restrictions on the award of costs so that it becomes more difficult to award costs against the respondent in cases where damages awarded are less that $50,000, and extremely difficult in cases where damages awarded are less than $30,000. This pre-emptive strike is also directed at those often regarded as responsible in some jurisdiction for large compensation awards -juries. The Act excludes jury trial in personal injury cases.
It would seem that the Queensland Government regarded the Personal Injuries Proceedings Act 2002 as only a starting point for the reform of the law of negligence, and the introduction of the Civil Liability Act 2003 will have an even more profound effect on the principles of tort law. Accordingly, the main purpose of this legislation is also stated as to 'further facilitate the ongoing affordability of insurance through appropriate and sustainable awards of damage for personal injury'.[29]
Many of the initiatives encapsulated in the Act are based on the recommendations of the Ipp Report. Justice Ipp, however, expressly declared that the report did not take into account the proposition that there was a relationship between the current law of torts and recent rises in insurance premiums, nor did it take into account the likely impact the recommendations would have on the insurance market.
The general tenor of the Ipp Report was to ensure that the law of negligence reflects the principles of personal responsibility and commonsense -principles which have purportedly been lacking in recent times. In achieving this, the Act makes a profound impact on the law of negligence by setting out in legislative form when a breach of a duty of care has occurred. It states that 'a person does not breach a duty or take precautions against a risk of harm unless (a) the risk was foreseeable ... (b) the risk was not insignificant; and (c) in the circumstances, a reasonable person in the position of the person would have taken such precautions'.[30] Further, the well-used 'calculus of negligence' is entrenched in that the Act requires the court to consider the probability that the harm would occur if care were not taken; the likely seriousness of the harm; the burden of taking precaution and the social utility of the activity. The Act not only puts principles of the law of negligence on a statutory footing, but in some cases amends more recent High Court developments, such as the part reversion to the 'Bolam Test' in respect of medical negligence, and in other cases expressly rejects common law principles, even those of more recent development, such as the reinstatement of the non-feasance rule for statutory authorities which had been abolished by the High Court in Brodie.[31]
The Act also contains a number of provisions aimed a reducing awards of damages in addition to those contained in the Personal Injuries Proceedings Act 2002.This pre-emptive strike against large compensation payments goes directly to the heart of torts law. Except for exemplary damages, damages in tort have a compensation function. Their aim in general, and as far as monetary compensation can achieve this, is to put the plaintiff back into the position they were in before the tort was committed.[32] The alteration of this fundamental principle of torts has a profound effect on the distribution of losses and adherence to a fault-based system of liability.
It appears that both the Personal Injuries Proceedings Act 2002 and the Civil Liability Act 2003 are a solution to what is simply thought may be a problem. The solution is proposed before the nature of the problem is identified. As such, Attorney-General Welford states that 'while our government has no power to dictate to private insurance companies the amount they charge for premiums, this legislation will remove one of the excuses used for high charges'.[33] This appears to be a rather drastic measure to remove an excuse which may not necessarily be valid, and is not guaranteed to lead to the desired goal of reducing insurance premiums.
In Gifford v Strang Patrick Stevedoring, McHugh J quoted Lord Scarman in McLoughlin v 0'Brian[34] to the effect that:
Policy considerations will have to be weighed: but the objective of the judges is the formulation of principle. And, if principle inexorably requires a decision which entails a degree of policy risk, the court's function is to adjudicate according to principle, leaving policy curtailment to the judgment of Parliament. Here lies the true role of the two law-making institutions in our constitution. By concentrating on principle the judges can keep the common law alive, flexible and consistent, and can keep the legal system clear of policy problems which neither they, nor the forensic process which it is their duty to operate, are equipped to resolve.
The Queensland Parliament, however, has had some difficulty in distinguishing between principle and policy, and, under the guise of reform, has sought to legislate on principles currently being worked through by the High Court. Such tort reforms have been introduced in other jurisdictions, with similar criticisms. With regard to tort reform in America, it has been said that 'the term tort reform implies that caps and other limitations on injured plaintiff's recovery improve the functioning of the American civil justice system. In reality, applying the word reform to those restrictions is as misleading as referring to nuclear weapons as "peace-keepers".'[35]
The High Court has sought and continues to develop a principled approach to negligence that denies tenuous claims. It is perhaps ironic that, at the very moment the High Court is succeeding in developing a coherent and predictable common law, the legislature has sought to take the initiative and to retreat from some of the Court's initiatives, such as Brodie.
[*] The authors teach the law of torts at the TC Beirne School of Law, University of Queensland.
© 2003 Clare Cappa, Craig Forrest, Russell Hinchy and
Vernon Nase (text)
© 2003 Stuart Roth (cartoon)
[1] Chief Justice Paul De Jersey AC (speech delivered at the Official Opening of the North Queensland Law Association Annual Conference, Southbank Convention Centre, Townsville, Friday, 4 October 2002).
[2] Tame v New South Wales and Annetts v Australian Stations Pty Ltd [2002] HCA 35, para 101 (McHugh J).
[3] National Review of the Law of Negligence: Final Report (September 2002) <http://www.revofneg.treasury.gov.au/content/reports.asp> at 23 September 2003.
[4] See further Martin Davies, Torts (3rd ed, 1999) 84.
[5] In Tame's case a police officer had made a clerical error in filling out a report about a traffic accident. The error was not corrected until after it had come to the attention of the appellant who subsequently developed a psychotic depressive illness, despite the fact that the police rectified the record as soon as their attention was drawn to the error. The High Court affirmed the Court of Appeal decision that Mrs Tame's psychiatric illness was not reasonably foreseeable (see Gleeson CJ, 29). Annetts case fell in a more elusive category. The Annetts' 16-year-old son had accepted work as a jackaroo on the respondent's property. After seven weeks, contrary to assurances alleged to have been given to the parents, he was sent to work alone as a caretaker on a remote property. He subsequently went missing. An extensive search was undertaken in which the appellant took part. Five months later his son's body was discovered in the desert. The son had died of dehydration, exhaustion and hypothermia. The father was informed by telephone and subsequently identified the body on viewing a photograph of his son's skeleton. The Annetts succeeded in their appeal to the High Court.
[6] Donoghue v Stevenson [1932] AC 562.
[7] Tame and Annetts [2002] HCA 35, 97 (McHugh J) quoting from Fleming's The Law of Torts (1957) 131-2.
[8] Tame and Annetts [2002] HCA 35, para 102 (McHugh J).
[9] Tame and Annetts [2002] HCA 35, paras 105, I08 (McHugh J).
[10] Tame and Annetts [2002] HCA 35, para 14 (Gleeson CJ).
[11] Gifford v Strang Patrick Stevedoring [2003] HCA 33, para 8 (Gleeson CJ), para 46 (McHugh J), para 86 (Gummow and Kirby JJ) and para 118, 120 (Callinan J).
[12] See Brodie v Singleton Shire Council [2001] HCA29, paral4 (Gleeson CJ): 'The essence of the rule is that a highway authority may owe to an individual road user a duty of care, breach of which will give rise to liability in damages, when it exercises its powers, but it cannot be made so liable in respect of a mere failure to act.'
[13] Brodie (Gaudron, McHugh and Gummow JJ), paras 50-185.
[14] Brodie, para 68.
[15] Brodie, para 97.
[16] Brodie, para 102.
[17] Brodie, para 181.
[18] Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40.
[19] Brodie, para 151.
[20] Ghantous v Hawkesbury City Council [2001] HCA 29.
[21] Ghantous (Kirby J) para 247.
[22] Ghantous (Kirby J) para 248.
[23] Waverley Municipal Council v Swain [2003] NSWCA 61.
[24] Enright v Coolum Resort Pty Ltd and Ors [2002] QSC 394.
[25] Borland v Makauskas [2000] QCA 521.
[26] Borland v Makauskas [2000] QCA 521, para 16.
[27] Personal Injuries Proceedings Act 2002 (Qld) s 4.
[28] The Attorney-General's introduction to the second reading of the Bill clearly sets the Act out as a response to the 'insurance crisis'. Queensland, Parliamentary Debates, I8 June 2002, I848 (R Welford, Attorney-General and Minister of Justice).
[29] Dept. of Justice and Attorney-General's webpage <http://www.
justice.qld.gov.au/ourlaws/public.htm#civil> at 13 March 2003. Similarly, in the Attorney-Generals' introduction to the second reading of the Bill, he declared that '[t]his bill is a comprehensive response to the problems raised by the insurance crisis'. Queensland, Parliamentary Debates, II March 2003, 369 (R Welford, Attorney-General and Minister of Justice).
[30] National Review of the Law of Negligence: Final Report (September 2002) s 9.
[31] The non-feasance rule will be reimposed by the Civil Liability Act after 31 December 2005
[32] David Baker, Sam Blay, Lillian Corbin and Andy Gibson, Tort Law in Principle (3rd ed 2002) 22-2.
[33] Queensland, Parliamentary Debates, 18 June 2002, 1848.
[34] McLoughlin v 0'Brian [I983] AC 430.
[35] Thomas Koenig and Michael Rustad, In Defense of Tort Law (2001) 4.
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