Part 1A - Negligence

Arrium Limited (“Arrium”), an Australian company, went into voluntary administration in April 2016 and liquidation in June 2019.

This decision was made following a period of falling iron ore prices and unsatisfactory (in the Board’s opinion) bids for one of Arrium’s businesses (the “MolyCop business”).

Various proceedings were commenced following Arrium’s collapse and these were all heard together. Relevantly, two proceedings were brought by two groups of banks, who were lenders to the Arrium group or assignees of claims by certain lenders, against Arrium’s CFO (Mr Bakewell) and Arrium’s Group Treasurer (Ms Sparkes). The plaintiffs argued that, because of misrepresentations, they advanced funds to Arrium which they would otherwise not have advanced. They also argued that Arrium should have been placed in administration earlier when there would have been a better return to creditors. The primary judge, relevantly, held that Mr Bakewell and Ms Sparkes were not liable in negligence for procuring a breach of duty owed by Arrium to the lenders. The Court of Appeal dismissed the appeal.

On s 5D

Section 5D(3) only precludes the adducing of evidence on the hypothetical question of what the plaintiff would have done but for

the negligence. It does not preclude the adducing of evidence of what the plaintiff did as a result of the negligent act: [386]. Here, the question on which evidence was lacking was not what the lenders would have done but for the negligence, but what they did because of the (assumed) negligence.

Section 5D(3) did not preclude evidence that some officer of the lenders read the representations in the drawdown notices, believed them to be true, and because of that belief, authorised the drawdown: [387].

Court of Appeal decisions referred to in discussion:

Richtoll Pty Ltd v WW Lawyers Pty Ltd (in liq)

[2016] NSWCA 308

Neal v Ambulance Service (NSW) [2008] NSWCA 346

Ms Williams (the appellant) was born with a condition known as a pars defect or dysplastic spondylolysis. In 2009, the appellant was treated for pain in her left hip. When the appellant commenced work, she again developed pain in 2012 and had X-rays which revealed the pars defect. However, Dr John Fraser (the respondent), a radiologist, and Dr Stening, the appellant’s orthopaedic surgeon failed to identify the defect and ordered conservative treatment. The appellant’s symptoms did not abate and in

2013, she had an X-ray of her spine which showed a slipping of one vertebral disc onto another (known as ‘spondylolisthesis’) due to the pars defect. A different orthopaedic surgeon performed spinal surgery, which caused a secondary chronic pain syndrome. The appellant commenced proceedings in the Supreme Court, alleging that the respondent’s failure to identify spondylolysis constituted a breach of his duty of care, which resulted in the need for surgery and the chronic pain syndrome. The respondent admitted a breach of duty of care. The primary judge held that the appellant had not established a causal link between the respondent’s failure to diagnose the appellant’s condition, the need for the surgery and the chronic pain syndrome. Ms Williams appealed this decision. The Court of Appeal dismissed the appeal.

On s 5D: Section 5D(1) of

the CLA requires a determination that negligence was a necessary condition of “particular harm”. The “particular

harm” on which the appellant sued was her chronic pain condition. Although the appellant asserted that disc damage attributable to inappropriate work and activity against which she should have been advised was a step on the way to the ultimate harm on which she sued, she did not advance a separate cause of action based on harm constituted by disc damage. Had the appellant successfully advanced such a case, the damages awarded would have been for a closed period ending in June 2013, and excluding the chronic pain condition, since that condition had a separate cause, namely the 2013 surgery,  which was not negligent: [101].

The respondent was engaged as an architect to design the appellants’ home renovations, for which the appellants indicated their initial budget was $300,000. After the respondent made an estimate of the costs of renovation, they increased their budget to $600,000. In February 2016 the parties had a falling out and the appellants continued the renovations using a builder. In June 2016 the builder advised that the cost of achieving their building “objectives” would exceed

$1,000,000. The appellants did not pursue all their objectives. It was agreed that the renovations ultimately cost $780,000 but only increased the value of the house by

$330,000. The appellants sued the respondent for a breach of s 18 of the Australian Consumer Law, and in contract and tort alleging, inter alia, that the architect breached a concurrent contractual and tortious duty to advise them about the “likelihood of achieving the client’s stated budget and time requirements for the architectural service concerned”. The primary judge found that the respondent breached that duty but did not specify what advice should have been given or make a finding about whether the appellants would have not pursued the renovations had the duty been performed. However, the primary judge found that “if the [respondent] felt himself unable or unqualified to give an accurate estimate of costs, he should have warned of that in writing and advised the plaintiffs to obtain an estimate from a properly qualified

professional”. The appellants framed their claim for damages on a “no transaction” basis, that is, if the representation had not been made, they would not have pursued the renovation. The primary judge found that they did not suffer any loss and only awarded the appellants nominal damages for breach of contract. The appellants appealed that decision. The Court of Appeal dismissed the appeal.

On s 5D: The most likely construction of s 5D(3)(b) is that “inadmissible”

means “inadmissible over objection”. . To support their ACL claim, the appellants led evidence of what they would have done had the respondent not told them the project was achievable within a $600,000 budget. There was no objection to this evidence.

The evidence was therefore admissible under s 5D(3)(b) to support the appellants’ claim in tort: [40]-[41].

The only specific means of discharging the relevant duty identified by the primary judge was that, in the event the respondent “felt himself unable or unqualified to give an accurate estimate of costs, he should

have warned of that in writing and advised the plaintiffs to obtain an estimate from a properly qualified professional.” If it was not demonstrated that, if the respondent had taken this means of discharging the

duty, loss would not have been occasioned, then “factual causation”, under s 5D(1)

(a) was not established: [66].

NSWCA decisions cited in discussion:

Hilton v Legal Profession Admission Board [2017] NSWCA 232

Varipatis v Almario [2013] NSWCA 76

Ms Yebdoo pulled out from behind a right- turning vehicle into the path of Mr Holmewood’s motorcycle. Mr Holmewood was driving in between parked cars and the stopped traffic, also intending to pass the right-turning vehicle. Mr Holmewood collided with Ms Yebdoo’s car and was thrown across the bonnet, landing on the road where Ms Yebdoo unintentionally drove over him. Ms Yebdoo suffered mental trauma as a result of the incident and sued Mr Holmewood for negligence. The primary judge found that breach had been established (failure to keep a proper lookout) but not causation. Expert evidence had been adduced concerning average reaction times and general rates of deceleration achievable by effective braking, but not from the speed at which the primary judge found that Mr Holmewood’s motorcycle had been travelling. Ms Yebdoo appealed on the issue of causation and the Court of Appeal by majority dismissed the appeal.

On s 5D: to establish causation, it was necessary to identify how long Mr Holmewood had to react, what his reaction would have been had he been keeping a proper lookout, and how that would have avoided a forceful collision. The onus to prove those elements fell on Ms Yebdoo (s 5E). No attempt was made to estimate what minimum speed would have sufficed to propel Mr Holmewood across Ms Yebdoo’s bonnet, this being necessary to cause Ms Yebdoo’s mental trauma: [119]-[120]. Given the small distances and times involved, the combination of these various considerations was far from straightforward. The available evidence of time and distance was too imprecise and in the absence of expert assessment no finding of causation could be made: [123].

(Per Macfarlan JA, in dissent) The Court, drawing on its common sense and experience, including matters of common knowledge as to the effectiveness of braking, did not require expert evidence to conclude that the period in which Mr Holmewood might have applied the brakes, had he kept a proper lookout, was sufficient to have significantly lessened the severity of the collision: [43].

Ms Makaroff suffered a dislocated right shoulder and a bite wound on her right. She was taken to a hospital in the respondent local health district, underwent plastic surgery on the bite wound and was discharged into the care of her general practitioner. Ms Makaroff did not have orthopaedic review or radiological examination of her shoulder for a number of months. By the tie she did it was too late for her shoulder to be repaired surgically. Ms Makaroff alleged negligence on the part of

the hospital in failing to inform her of the need for further investigation of her shoulder injury. The primary judge rejected that calim on the basis that the Respondents had acted in a manner widely accepted in Australia by peer professional opinion as competent professional practice. Ms Makaroff contended that the defence did not apply by reason of s 5P. Her Honour would also have rejected Ms Makaroff’s claim for failure to establish causation. The Court of Appeal held, by majority, that breach and causation had been established.

On s 5D: Ms Makaroff’s claim was for the loss of an opportunity of a better outcome. In a claim for negligence in relation to personal injury such a loss is not compensable unless it can be shown that, in the absence of the alleged negligence, a better outcome was the probable result. The onus fell on Ms Makaroff to prove that, but for failure to advise her of the urgency with which she ought to have sought an orthopaedic consultation, she would not have been left with a permanently injured shoulder: [148]-[150].

Some elements of the chain of causation were within Ms Makaroff’s control; others were not. Matters within Ms Makaroff’s control were to be judged subjectively, in terms of how she would have acted, but not without regard to ordinary human behaviour: [151].

It should not readily be concluded that a patient, properly advised that it is imperative that she have an urgent consultation, would disregard that advice: [164]. Further, it should not readily be accepted that a patient, faced with an ongoing shoulder problem and a recommendation for surgery with very good prospects of a satisfactory outcome if performed quickly, would decline to have surgery: [186].

Though there was uncontradicted evidence of a lengthy public waiting list for elective surgery of the priority usually allocated to rotator cuff repairs, the proposition that a patient whose condition would become inoperable if not operated upon expeditiously would be left on a waiting list until it became inoperable requires close scrutiny. In the circumstances, a reasonably prudent surgeon would have prioritised the surgery before it became no longer viable: [190], [200].

The Appellants undertook substantial construction works, including excavation works, on their land, causing damage to the Respondent’s neighbouring property. The stairway giving access to four of the six units in an apartment building let out by Ms Camuglia was damaged when its supporting foundations collapsed, with the stairway showing visible signs of damage. Temporary propping was installed, which an engineer’s report indicated was adequate to ensure safety until a permanent solution could be implemented. The leasing manager of the apartments nonetheless advised Ms Camuglia that the property was incapable of being advertised to let. At trial Ms Camuglia was awarded damages for consequential

loss, namely lost rent from units in the building, including for the period after the installation of the temporary propping. That award was challenged on appeal. The Court of Appeal dismissed the appeal, holding that it was not unreasonable for any decision to let the premises to await the construction of a permanent solution to access, in circumstances where that construction was expected to occur within a matter of weeks or months and the state of the damaged stairway would likely have an adverse effect on prospective tenants.

On s 5D: The appellants’ contention, though not properly particularised at trial, was essentially that Ms Camuglia had failed to mitigate her loss by failing to take reasonable steps to re-let the property. The relationship between causation and mitigation is contested, and where the Civil Liability Act applies there does not appear to be any analysis of the relationship between mitigation and the onus of proving “any fact relevant to the issue of causation” imposed by s 5E. Though unnecessary to decide in this case, the appellants’ (defendants at trial) failure to particularise what was described as a failure to mitigate is an example of when the issue of taxonomy, and the relationship between causation and mitigation, may be significant: [41].

Mr Coulthurst was engaged by Mr Miles to work as a sub-contractor on the construction of Mr Miles’s new home. Mr Coulthurst was a tradesman carpenter with many years’ experience in home building work. Mr Coulthurst was on a ladder when a large beam swung towards him and he fell off the ladder, landed awkwardly and suffered a serious fracture of his left leg and a back injury. Mr Coulthurst claimed damages for injuries he suffered.

On s 5D: The duty of care owed by the operator of an excavator is akin to that owed by the driver of a motor vehicle to other road users and therefore falls into an established category of duty recognised by the law of negligence: [137]. It is not necessary for a plaintiff to prove that a defendant’s negligence was the sole cause of the occurrence of his or her harm. It is sufficient that that negligence is a necessary condition of the occurrence of the harm: [139].

The Court held that Mr Miles’s acts and omissions in the operation of the excavator in his attempt to lower the steel beam onto the timber prop were necessary conditions to the occurrence of Mr Coulthurst’s serious personal injury: [140].

The appellant was an experienced truck driver. In 2011, while stopped at traffic lights in a right turning lane, the appellant’s oversized vehicle was struck in the rear by a car driven by Mr Stahlhut. At the time of the collision, the appellant’s trailer protruded into the through lane where Mr Stahlhut was driving wholly in his own lane. Mr Stahlhut suffered serious injuries, and received workers compensation. Payments to Mr Stahlhut had been made by the respondent, who commenced proceedings seeking recovery from the appellant. Judgment was entered against the appellant in the amount of $262,366.11 plus interest.

On s 5D: The respondent did not prove that more likely than not that activating another hazard light would have caused the appellant to avoid the collision: [63].

The appellant fell and suffered injury whilst negotiating a passage between the respondent’s apartment and her own apartment. Both apartments were located in a building owned by the respondent.

Because the appellant suffered a severe head injury, she experienced amnesia and was not able to explain exactly what had happened.

In order to discharge the persuasive onus of causation (in this case a breach of duty by failing to install a balustrade), the plaintiff

must prove that the taking of such a step would, more probably than not, have prevented or minimised the injury which occurred: [70]. A defendant who negligently exposes a plaintiff to risk of injury or damage will not be liable unless the plaintiff can persuade the trier of fact that it was probable the risk “came home”: [71].

There was no error in the trial judge not being satisfied as to the mechanism of the fall. Because the appellant could not establish the point from which she fell, she could not prove that the risk of injury to which she was exposed by the lack of balustrade had any bearing on the injuries she suffered: [72].

High Court cases cited in discussion:

Roads and Traffic Authority v Royal (2008) 82 ALJR 870; [2008] HCA 19

Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361

NSW Court of Appeal cases cited in discussion:

Bendix Mintex Pty Ltd v Barnes (1997) 42 NSWLR 307

The appellant’s partner was fatally injured when the car she was driving ran off the road and hit a tree. The appellant claimed that the accident was caused by loose gravel on the road surface and that the respondent was negligent in failing to provide adequate signage to indicate that the road had been resurfaced. The primary judge dismissed the claim on the basis that the Council’s breach of duty was not causative of the appellant’s loss.

Both at common law and now pursuant to s 5E of the Act, the plaintiff bears the onus of proving any fact relevant to causation. An actual persuasion is required to satisfy the burden of proof, meaning that the Court must be satisfied that the probabilities of the fact’s existence is greater than the possibilities of its non-existence. A competing finding may be described as a possibility and the likelihood of its occurrence, a probability; in this context, however, it is common to use the term “probability” to refer to a state of satisfaction greater than 50% and the term “possibility” to refer to something less likely.

In the present case, the primary judge did not err in the assessment of causation. [197], [320], [332]-[333]

Note: Beazley P dissented on the issue of causation.

NSW Court of Appeal cases cited in discussion:

Nguyen v Cosmopolitan Homes [2008] NSWCA 246

The respondent slipped and fell on a boat ramp during the course of employment as a ferry operator. The primary judge awarded damages without properly establishing a breach of duty of care under s 5B, and without concluding that the appellant’s breach caused the injury under s 5D.

A plaintiff may discharge the onus of proof of causation imposed by s 5E by relying upon the inferences open on the facts of the case. In order for causation to be established by inference, however, it is necessary that according to the course of common experience the more probable inference from the circumstances should be that the injury arose from the defendant’s negligence. A court is entitled to draw inferences from slim circumstantial facts that exist so long as that goes beyond speculation and if the available inference is considered more probable than other possibilities.

The respondent failed to prove that any breach of duty on the part of the appellant caused his injuries. [75]-[76], [77], [205]

High Court cases cited in discussion: Holloway v McFeeters [1956] HCA 25 NSW Court of Appeal cases cited in discussion:

Woolworths v Strong [2010] NSWCA 282

Flounders v Millar [2007] NSWCA 238

Jackson v Lithgow City Council [2008]

NSWCA 312

Progressive Recycling Pty Ltd v Eversham

[2003] NSWCA 268