Saunders, Andrew --- "Malec v JC Hutton: causal potency in psychiatric injury cases" [2017] PrecedentAULA 7; (2017) 138 Precedent 22

---

MALEC v JC HUTTON

CAUSAL POTENCY IN PSYCHIATRIC INJURY CASES

By Andrew Saunders

Assessing damages in respect of past events is relatively straightforward. The court determines, on the balance of probabilities, whether an event has occurred. If proved, the occurrence of the event is thus treated as certain, and damages are assessed accordingly. That is, an ‘all or nothing approach is adopted’.^[1]

However, as was made clear in Malec v JC Hutton Pty Ltd,^[2] in respect of future or potential events, the court takes a very different approach. It assesses the degree of probability of an event occurring, and adjusts the award of damages accordingly – be it upwards or downwards.

This difference of approach can be particularly significant in psychiatric injury cases.

MALEC v JC HUTTON

In Malec v JC Hutton Pty Ltd,^[3] the High Court said:

‘(Q)uestions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring... (T)he court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability. The adjustment may increase or decrease the amount of damages otherwise to be awarded’ (author’s emphasis).

In doing so, the Court qualified what was said in Watts v Rake^[4] and Purkess v Crittenden.^[5]

Until Malec, it had been thought that it was not enough for a defendant merely to point to the possibility of a plaintiff’s pre-existing injury or illness worsening. To the contrary, as Dixon CJ said in Watts v Rake:^[6]

‘If it be the case that at some future date the plaintiff would in any event have reached his present pitiable state, the defendant should be called upon to prove that satisfactorily and moreover to show the period at the close of which it would have occurred.’

SUBSEQUENT DEVELOPMENTS

In Seltsam Pty Ltd v Ghaleb,^[7] Ipp JA (with whom Mason P agreed) held that Malec required the application of the following principles:

‘(a) In the assessment of damages the law takes account of hypothetical situations of the past, future effects of physical injury or degeneration, and the chance of future or hypothetical events occurring.

(b) The court must form an estimate of the likelihood that the alleged hypothetical past situation would have occurred.

(c) The court must form an estimate of the likelihood of the possibility of alleged future events occurring.

(d) These matters require an evaluation of possibilities and are to be distinguished from events that are alleged to have actually occurred in the past, which must be proved on the balance of probabilities.’

Ipp JA then continued:^[8]

‘What was said in Watts v Rake and Purkess v Crittenden now has to be qualified by these principles (cf Commonwealth of Australia v Elliott). Malec has an important bearing, for example, on the way in which a court must determine whether a defendant has discharged the “disentangling” evidentiary burden on it of showing that part of the plaintiff’s condition was traceable to causes other than the accident and that, had there been no accident, the plaintiff would have suffered disability from his pre-existing condition.

Where a defendant alleges that the plaintiff suffered from a pre-existing condition, the evidential onus as explained in Watts v Rake and Purkess v Crittenden remains on the defendant and must be discharged by it. Nevertheless, to the extent that the issues involve hypothetical situations of the past, future effects of physical injury or degeneration, and the chance of future or hypothetical events occurring, the exercise of “disentanglement” discussed in those cases is more easily achieved. That is because the court is required to evaluate possibilities in these situations — not proof on a balance of probabilities.

Without intending to give an exhaustive list of possibilities, it may be that, had the defendant’s negligent act not occurred, a pre-existing condition might have given rise to the possibility that the plaintiff’s enjoyment of life and ability to work would have been reduced and to a susceptibility to further injury; in addition, other causes entirely unrelated to the defendant’s negligent act might have contributed to the plaintiff’s ultimate condition.

Appropriate allowances must be made for these contingencies. A proper assessment of damages requires the making of a judgment (sic) as to the economic and other consequences which might have been caused by a worsening of a pre-existing condition, had the plaintiff not been injured by the defendant’s negligence. A pre-existing condition proved to have possible ongoing harmful consequences (capable of reasonable definition) to the plaintiff, even without any negligent conduct on the part of the defendant, cannot be disregarded in arriving at proper compensation.

As was pointed out in Newell v Lucas, the court must determine whether a comparison may be made between the plaintiff’s condition prior to the injuries sustained by the defendant’s negligence (including the plaintiff’s economic and other prospects in that condition) and the plaintiff’s condition and prospects after the injuries. Nothing in Watts v Rake and Purkess v Crittenden precludes the judge from carrying out this exercise.’

Ipp JA’s analysis has been followed by the New South Wales Court of Appeal in Varga v Galea^[9] and Ridolfi v Hammond.^[10]

More recently, it was also followed by the Victorian Court of Appeal in Smith v Gellibrand.^[11]

IMPLICATIONS

As stated above, this difference of approach can be particularly significant in psychiatric injury cases.^[12]

Specifically, it may be important where, for example, the plaintiff sues on multiple ‘stressors’ – and some are found not to be tortious. An example of this is Johnson v Box Hill Institute of TAFE.^[13] It is discussed further below.

So, too, it may be important where the plaintiff is subject to other ‘stressors’ at or about the time of defendant’s alleged negligence. An example of this is Rawlings v Rawlings.^[14] It, too, is discussed further below.

Care must, therefore, be taken with preparation – but more particularly, the assessment of damages – in such cases.

Johnson v Box Hill Institute of TAFE

In Johnson, the plaintiff, a trade teacher, alleged that he suffered a psychiatric injury as a result of being bullied by his manager. He relied on ten incidents said to constitute bullying, and put his case on two bases: one; that the defendant was vicariously liable for the manager’s bullying, and two; that the defendant failed to intervene in the conflict between the two men.

The trial judge was not satisfied that the plaintiff had been bullied, but did find that the defendant had negligently failed to intervene in the conflict between the plaintiff and his manager.

The assessment of damages was further complicated by a dearth of medical evidence addressing the effect of the tortious, as opposed to non-tortious, ‘stressors’. Relying heavily, then, on the evidence, generally, as to the plaintiff’s mental state before the tortious failure to intervene, together with the treating psychologist’s clinical records, the judge ultimately concluded that:

(a) the defendant’s negligence did no more than accelerate the onset of worsening psychiatric problems by, ‘at most a couple of years’. The Court thereby made a markedly reduced award for general damages; and

(b) the plaintiff would likely have ceased work for the defendant, by reason of his worsening mental state, not long after, and notwithstanding, the tortious failure to intervene. The Court thus reduced the assessment of damages for economic loss by 80 per cent.^[15]

Rawlings v Rawlings

In Rawlings, the plaintiff, a carpenter working in the family business, alleged that he suffered a psychiatric injury as a result of being directed to perform managerial duties (for which he was not qualified) and to delve into his parents’ financial affairs, when the business failed.

While the plaintiff failed to establish that he was injured in negligent circumstances, the judge nonetheless went on to assess damages.

Having found that the plaintiff was subject to a range of other ‘stressors’ at the time of the alleged negligence – including marital breakdown, surgery for an unrelated condition and loss of trust in his father – the judge ultimately concluded that:

(a) the alleged negligence, assuming that it had been made out, would only have contributed in a ‘minor way’ to the plaintiff’s breakdown. The Court thus reduced the assessment of general damages by 75 per cent; and

(b) the plaintiff ‘would have struggled to keep working in the building industry’, notwithstanding the alleged negligence. The Court thus made a ‘substantially reduced’ award of damages for economic loss.

CONCLUSIONS

As can be seen, damages awards can be markedly reduced by operation of the Malec principle.

In the first instance, the issue must be borne in mind when preparing a plaintiff’s case for trial.

It is particularly important that a complete set of treating doctors’ records be obtained (so that the plaintiff’s instructions as to the effect of a non-tortious stressor may be obtained – and tested). Lay evidence may be important, too (say, from a spouse, as to the plaintiff’s level of functioning at material times). In the appropriate case, medical witnesses should be asked to comment (especially in cases where it is inarguable that other ‘stressors’ are non-tortious).

More particularly, however, great care must be taken when advising a plaintiff – especially in the face of offers of compromise and the like. A plaintiff can recover damages only for that part of his or her condition resulting from a defendant’s negligence, and a court must take into account ‘the chance that (unrelated) factors...might have brought about the onset of a...similar condition’.^[16] If a plaintiff is thereby at risk of a reduced award, that risk must be identified early, and acted on.

Andrew Saunders is... PHONE [phone] EMAIL [e-mail].

---

^[1] Malec v JC Hutton Pty Ltd (1990) 169 CLR 638, 642.

^[2] Ibid.

^[3] Ibid, 642-643 (citations omitted).

^[4] [1960] HCA 58; (1960) 108 CLR 158.

^[5] [1965] HCA 34; (1965) 114 CLR 164.

^[6] See above note 4, 160.

^[7] [2005] NSWCA 208.

^[8] Ibid at [104]–[108] (citations omitted).

^[9] [2011] NSWCA 76.

^[10] [2012] NSWCA 3.

^[11] [2013] VSCA 368. See, too, Box Hill Institute of TAFE v Johnson [2015] VSCA 245.

^[12] Although, of course, the principle is not limited in its application to psychiatric injury cases. For the recent application of the principle in a physical injury case see, for example, Davies v Nilsen [2016] VSCA 557.

^[13] [2015] VSC 626.

^[14] [2015] VSC 171.

^[15] The defendant appealed the awards of damages, and the plaintiff cross-appealed. Leave to appeal was refused: Box Hill Institute of TAFE v Johnson [2015] VSCA 245.

^[16] See above note 1, 642.