Impact of Civil Liability Acts

Legislative reform to torts laws associated with civil liability and personal responsibility was initially due to increased cost and diminished affordability/availability of public liability insurance following the terrorist attacks on 9/11 and the collapse of the HIH insurance group and the provisional liquidation of United Medical Protection Limited, Australia's largest medical indemnity provider.  This evidenced community volunteer groups that had provided for example annual triathlons, horse gymkhanas, etc being very concerned about the prospect of being litigated for material damages/costs by an injured participant.

Amendments introduced by the Civil Liability Acts in Australian states and territories during 2002/03 transferred significant liability from the Inviter to the Invitee(s).

These Acts were introduced to promote the notion of personal responsibility and as a result they make it far more difficult for a plaintiff to succeed.

Civil Liability Amendment (Personal Responsibility) Act 2003 ("the Amending Act") seeks to limit liability arising from recreational activities where there is either a risk warning or a disclaimer of liability and furthermore the warning is deemed to be sufficient even if it is only a general warning. In addition contributory negligence is now also applied more strictly.
 
What Impact Has Civil Liability Act 2002 (NSW) Had On Damages and Personal Responsibility?
Essentially the change has been profound as people are now required to look after themselves and take responsibility for their actions. The Civil Liability Act mainly deals with the question of damages whereas the amending Act deals with liability, but, with that said, the courts now pay proper respect for the concept of personal responsibility as required under the Civil Liability Act 2002 (NSW) ("the Act") and the Civil Liability Amendment (Personal Responsibility) Act 2003 ("the Amending Act"). The Act extends to cover personal injury damages even if they are recovered for breach of contract, breach of statutory duty or any other action. Claims for economic and non-economic loss are defeated if the claimant does not suffer from at least 15% whole of body impairment or serious mental disorder.

The Act attempts to limit damages for economic loss to no more than three times the amount of average weekly earnings. It caps gratuitous attendant care damages. Likewise the maximum award for non-economic loss (general damages) has been capped. Under the Amending Act the general principles of duty of care have been somewhat restricted as has the test of causation. The onus falls on the plaintiff to prove the facts are relevant to the issue of causation on the balance of probabilities.

These Acts were introduced to promote the notion of personal responsibility and as a result they make it far more difficult for a plaintiff to succeed. The Amending Act seeks to limit liability arising from recreational activities where there is either a risk warning or a disclaimer of liability and furthermore the warning is deemed to be sufficient even if it is only a general warning. In addition contributory negligence is now also applied more strictly. Under Division 4; voluntary assumption of risk is now an effective defence and therefore it is now harder to succeed in negligence claims where injuries arise when an obvious risk can be voluntarily assumed.

One of the fundamental changes in the law is that defendants now no longer owe a duty of care for failure to warn of obvious risks unless asked and they are therefore not liable for harm suffered as a result. The duty of care owed by professional persons has been modified as it is now a defence too an allegation of professional negligence that if the professional acted in a manner which was widely accepted in Australia at the time by peer professional opinion as competent professional practice then that person is deemed competent. Professionals are still required to advise their clients/patients etc of all material risks involved. Compensation has been severely reduced and capped at approximately $400,000 for non-pecuniary loss. Under section 5S the court is able to discount an award for damages by 100% for contributory negligence. In addition, contributory negligence also applies to claims for damages under the Compensation to Relatives Act 1987.

The Amending Act limits the class of claimants who can recover damages for psychiatric injury to persons who were at the scene and witnessed the harm which befell the plaintiff. The legislation sets out rules and the limits covering everything from mental harm, proportional liability, liability of public and other authorities, intoxication, self-defence, recovery by criminals, good samaritans, apologies, food donors, volunteers and damages for the birth of a child.

Previously the courts were awarding excessive damages and were looking to find fault where none existed. The purpose of these Acts is to control the awarding of damages in personal injury matters by capping some heads of damage and abolishing others including exemplary or punitive damages.

The Amending Act does not protect persons who dive off a ledge at low water mark as they should have been aware of an obvious risk and any statutory authority involved now no longer has a pro-active duty to warn the plaintiff of obvious risks. Plaintiffs must now pay proper regard to their own safety and the defendant no longer has a duty in these circumstances. The court has applied this reasoning in the case of Vairy and Mulligan where they found that the plaintiff had undertaken an obvious risk which they were presumed to know and that the relevant authority was not liable for the failure to warn of these risks. The same principal has applied in Waverley Municipal Council with Swain (2003) NSW CA61. It is clear from the above decisions that where a person assumes an obvious risk, that is where the courts will let it lie. They are reluctant to shift responsibility to an authority as they see no reason for doing so in cases of individual choice Cole vs South Tweed Rugby League (2004) 8CA.
 
New notions of personal responsibility in NSW civil liability
Contact: Stephen Sander  of  Allens Arthur Robinson
The legislative reforms
The terms 'inherent' and 'obvious' risk have been brought to the forefront of civil liability law in New South Wales with the enactment of the Civil Liability Amendment (Personal Responsibility) Act 2002 (the Act). The Act defines an 'obvious risk' to a person who suffers harm as a risk that, in the circumstances, would have been obvious to a reasonable person in the position of the person injured and includes risks that are patent or a matter of common knowledge. If a person suffers injuries as the consequence of such an 'obvious risk' that person is now presumed to have been aware of the risk of harm, unless he or she can prove otherwise. The duty of care to warn of an obvious risk has also been obviated, other than in specific circumstances, such as where the injured person has requested information about the risk.

The Act also provides that a person is not liable in negligence for harm suffered by a person as a result of the materialisation of an 'inherent risk', which is defined as a risk that cannot be avoided by the exercise of reasonable care and skill.

Changing attitudes
However, Premier Bob Carr announced in October 2002 in his second reading speech for the Act that 'these reforms are not only about reducing premiums' and that 'the insurance crisis served to highlight just how far the law has drifted away from the concept of personal responsibility.' These statements were reminiscent of comments made in April 2002 in an address to the Judicial Conference of Australia by the NSW Chief Justice titled 'Negligence: The Last Outpost Of The Welfare State'. Chief Justice Spigelman lamented the state of civil liability law and the gradual expansion of liability over the past 40 years that had made the standard of care required of a defendant more akin to strict liability.

The Chief Justice highlighted what he considered to be 'stretching the law' in respect of reasonable foreseeability, breach of duty and the concept of obvious risk.

Foreseeability
By way of example, he referred to the evolution of the test of reasonable foreseeability. In 1963, Justice Walsh at first instance in The Wagon Mound (No 2) had, in the words of the Chief Justice, 'placed particular weight on his assessment of the relevant facts' to find that a particular risk 'very rarely happened' and was likely 'only in very exceptional circumstances'. By 1980, the High Court in Wyong Shire Council v Shirt applied a test that deemed a risk to be foreseeable unless 'far-fetched or fanciful'.

Chief Justice Spigelman expressed a concern over the continuing reference to the test as 'reasonable foreseeability', noting that a test that excludes only that which is 'far-fetched or fanciful' has nothing to do with 'reasonableness'.

However, as the Chief Justice pointed out, in Wyong Shire Council v Shirt, the judgment of Justice Mason 'removed the questions of probability and reasonableness to the level of breach'.

Breach of duty
In Wyong Shire Council v Shirt, Justice Mason noted that, in order to conceptualise the reasonable person's response, consideration must be given to the 'magnitude of the risk and the degree of probability of its occurrence, along with expense, difficulty ... inconvenience ... and any other conflicting responsibilities'. In essence, all relevant considerations must be carefully balanced by the tribunal of fact in order to assert the standard response expected in the relevant circumstances.

The Chief Justice referred in his address to Nagle v Rottnest Island Authority, noting that 'this was the case in which the cost of a sign ... was virtually zero and was contrasted with the consequence of the admittedly foolhardy conduct of diving into water from a rock ledge.' He compared that approach to that of Justice Walsh in The Wagon Mound No 2, which had been a rejection of 'the suggestion that a reasonable man ought to have taken precautions wherever there appeared to be a possibility of danger' and confined the need to act to circumstances where the risk was 'significant enough in a practical sense.'

Obvious risk
The Chief Justice returned to the decision in Nagle v Rottnest Island Authority in the context of obvious risk, highlighting the conundrum firmly established by that case, namely that 'a person who owes a duty of care to others must take account of the possibility that one or more of the persons to whom the duty is owed might fail to take proper care for his or her own safety'. In the opinion of the Chief Justice, this proposition was contrary to modern community expectations and seemingly indifferent to any economic consequences. The Chief Justice expressed his concerns noting that:

...authority constrains me to participate in pushing the boundaries further when I think that the time has already been reached when courts should be seriously reconsidering a reformulation of firmer control devices than those currently exist.

These words have special resonance on the reading of Chief Justice Spigelman's recent dissenting decision in Waverley Municipal Council v Swain [2003] NSWCA 61, which appears to wind the clock back on the extent of civil liability to focus on the relevant facts.

Recent judicial decisions

In Waverley Municipal Council v Swain, Chief Justice Spigelman, in a dissenting judgment, dismissed the appeal of Waverley Council against a jury verdict in favour of Mr Swain, awarding him more than $1 million after he became a quadriplegic by diving into a sandbar at Bondi Beach.

The Chief Justice, referring to the authority of Nagle v Rottnest Island Authority, held that Mr Swain was entitled to assume that the placement of the flags on the beach was an express indication that bathing between the flags is reasonably safe and that, on the facts, it was open to the jury to conclude that that the council officers failed to have regard to the hazard involved.

Nevertheless, the majority, consisting of Justices Handley and Ipp allowed the appeal, ordering that the verdict for Mr Swain be set aside and that judgment be entered for Waverley Council. The majority considered that the facts established that Mr Swain was an experienced surfer with knowledge of the general conditions prevailing on a beach and that the risk in questions was inherent and well-known.

In Mulligan v Coffs Harbour City Council & Ors [2003] NSWSC 49, Mr Mulligan was injured after he struck a sandbar with his head while swimming and diving in a tidal creek near the ocean. His injuries rendered him a quadriplegic and he claimed that the defendants breached their duty of care by failing to provide warning signs in respect of the risk.

Justice Whealy held that although the defendants owed a duty of care to those attending the creek, the defendants had not, on the facts, breached that duty. Justice Whealy ordered that verdict be entered for the defendants and ordered Mr Mulligan to pay the defendants' costs. Justice Whealy considered that the facts established that:
  • Mr Mulligan was an experienced and strong swimmer;
  • sand dunes and tidal conditions of the kind that were present in the creek occur worldwide; and
  • that the existence of naturally occurring and dissipating sand formation beneath the surface of such water was an obvious fact and an inherent risk.

    Conclusion
    It appears that evolving judicial attitudes may have effected their own reform of the common law while the recent legislative reforms in the area of civil liability have now enacted their own reform of the law of negligence. The decisions referred to above may be an illustration of the future direction of the courts in this area of the law, as they are called upon to apply the rules relating to obvious and inherent risks prescribed in the (as yet) untested legislation. However, as the decision of Chief Justice Spigelman illustrates in Waverley Municipal Council v Swain, the facts of each case will determine its outcome, irrespective of the general views of the community, or even the arbiter, of large damages awards. The stated intention of the legislative reforms now effective in New South Wales is the promotion of personal responsibility and the rationalisation of personal injury damages awards.

    It seems to us that the practical effects of the legislative reforms in New South Wales include the reversal of the common law position after Nagle v Rottnest Island Authority, where the harm suffered is the consequence of an obvious or inherent risk. However, given the focus of the Chief Justice on the placement of the flags and the finding of an express indication that bathing between the flags was reasonably safe, it is possible that Chief Justice Spigelman would have arrived at the same decision in Waverley Municipal Council v Swain, even if the case was considered subject to the legislative reforms now in force. The majority considered the Chief Justice's view and noted that, although the flags may designate swimming areas and indicate where people may swim safely, they are not an indication that it is safe to dive anywhere between them.

    This differing approach in respect of the same scenario indicates to us that the approach of individual judges will continue to play an integral role in the interpretation of the legislative reforms and that there will be still scope for different judges arriving at differing conclusions. We await the judicial interpretation and application of the reforms.
    May, 2003

  • The state of tort reform and the law of negligence

    New South Wales

    The Civil Liability Act was enacted on 18 June 2002, with retrospective effect from 20 March 2002. The Act was later amended by the Civil Liability (Personal Responsibility) Amendment Act on 6 December 2002. Although the parts of the legislation relating to proportionate liability have not yet come into effect (and no date has been announced), the following New South Wales reforms may in some respects make product liability claims more difficult to establish:

    • it is only in an 'exceptional case' that a court may determine that it is appropriate to impose liability on a party whose negligence was not a necessary condition of the plaintiff's harm;
    • not only in those 'exceptional cases' but in any event when determining the scope of liability, the court is to consider whether or not and why the responsibility for the harm should be imposed on the negligent party;
    • in determining whether negligence caused the particular harm, if it is relevant to consider what the plaintiff would have done in the absence of the negligence, the plaintiff's self-serving statements made after the harm is suffered about what they would have done are inadmissible;
    • the plaintiff always bears the onus of proving any fact relevant to causation;
    • a defendant does not owe a duty to warn a plaintiff of an 'obvious risk' (a risk that would have been obvious to a reasonable person in the plaintiff's position) unless:
      • the warning was required to be given by law;
      • the plaintiff requested advice or information about the risk; or
      • the risk is that of personal injury or death arising from the provision of professional services by the defendant.
    • no person is liable to another for harm caused by an 'inherent risk' materialising, which is a risk that cannot be avoided by exercising reasonable care;
    • recreation service providers receive additional protection from liability through the following reforms:
      • no liability in negligence arises from harm caused by the materialisation of an 'inherent risk' of a 'dangerous recreational activity';
      • no duty of care is owed to a participant in a recreational activity to take care of a risk of which the participant was warned as set out in the Act; and
      • if a person agrees to participate at his or her own risk, the provider has no liability in negligence for a breach of a warranty that the recreation services will be rendered with reasonable care and skill.
    • there are complementary provisions to the Commonwealth legislation relating to recreational activities;
    • damages for mental harm arising from nervous shock are only to be awarded to witnesses at the scene or to close family members and are to be reduced by the victim's contributory negligence; and
    • the Limitation Act 1969 is amended to prevent claims for personal injury damages being commenced more than three years after the date on which the cause of action is 'discoverable' by the plaintiff or, if earlier, 12 years from the time of the act or omission that allegedly caused the injury (special provisions apply to minors and disabled persons).

    Limit liability arising from recreational activities: risk warnings and waivers

    • No liability for injury, death or property damage resulting from a risk of a recreational activity in respect of which a risk warning has been given.

    • A participant in a recreational activity will be able to waive the requirement that services be provided with due care and skill (combined effect with expected amendment to the Trade Practices Act 1974 (Cth)).

    • The new protection will be subject to compliance with any applicable NSW or Commonwealth safety laws.

    CIVIL LIABILITY AMENDMENT (PERSONAL RESPONSIBILITY) ACT 2002

    The Premier of New South Wales when introducing the Civil Liability Amendment (Personal Responsibility) Act in September 2002 said:

    “The overwhelming principle behind the new laws is that people must take personal responsibility for their actions.  We need to restore personal responsibility and dismiss the culture of blame”.

    Allan Fels, the then chairman of the Australian Competition and Consumer Commission, however, stated in early 2003:

    “The reforms related to insurance that are being debated, and in some states introduced, include damage caps, easy liability waivers and a block on liability when there are obvious risks – even when those risks are the fault of a shoddy or reckless operator. These types of reforms transfer the cost of accidents and other damage from those best able to understand and cheaply control the risks to those least able to understand and control them. This is neither sensible or fair”.

    Duty of Care – Division 2

    The “Personal Responsibility” Act adopts the principles enunciated in the High Court Decision of Wyong Shire Council v Shirt (1980) 146 CLR 40.

    Section 5B says a person is not negligent in failing to take precautions against a risk of harm, unless the risk was foreseeable, significant and one where a reasonable person would have taken those precautions).

    Causation – Division 3

    To establish causation, it is necessary to show firstly, the negligence was a necessary condition of the occurrence of the harm (factual causation) and it is appropriate for the scope of negligent person’s liability to extend to the harm so caused (scope of liability).

    It is relevant to determine what the plaintiff would have done if there had been no negligence on the part of the defendant and this is a subjective determination (Section 5D).

    Any statement made by the plaintiff after the injury is inadmissible except to the extent that it is against his or her interest [5D(3)(6)].

    Why should responsibility for the injury be imposed? [(Section 5D(4)].

    The plaintiff always bears the onus of proof on the balance of probabilities as to causation (Section 5E).

    Assumption of Risk – Division 4

    An obvious risk would have been obvious to a reasonable person even though it has a low probability or it is not observable – common knowledge (5F).

    A plaintiff is presumed to be aware of an obvious risk unless it is proven that he or she is not aware of the risk. It does not matter if the plaintiff was not aware of the precise risk (5G).

    There is no proactive duty to warn of obvious risk unless a plaintiff requested advice or information or the defendant is required by a written law to warn the plaintiff of the risk, or the defendant is a professional (5H).

    There is no liability for the materialisation of an inherent risk – one that cannot be avoided by the exercise of reasonable care and skill (5I).

    Recreation Activities – Division 5

    There is no liability for harm suffered from obvious risks in dangerous recreational activities whether or not the plaintiff was aware of the risk (5L).

    There is no duty of care for recreational activity where a risk warning is given (5M).

    A risk warning can be oral or written or by means of a sign (5N).

    If the plaintiff is incapable the defendant may rely on a risk warning to accompanying parent or capable person (5M).

    A risk warning is given if it is likely that the person received or understood the warning (5M).

    The defendant is not entitled to rely on warning if:
    – the harm resulted from contravention of a written law of the State (5M)
    – the warning was contradicted by the defendant (5M)
    – the plaintiff was required to engage in recreational activity (5M).

    A risk warning is not of itself evidence of an obvious or inherent risk nor proves a duty of care exists (5M).

    Professional Negligence – Standard of care for Professionals– Division 6

    There is no negligence if the professional’s action is widely accepted in Australia by peers as competent (5O).

    A Court can reject peer professional opinion that is irrational (5O).

    Differing or minority peer professional opinions are acceptable by the Court (5O).

    These provisions do not apply to failure to give a warning or advice by a professional (5P) (where that advice is associated with the provisions by a professional of his professional service).

    A Non-delegable duties and vicarious liability

    Non-delegable duties entrusted to a defendant are to be treated like a vicarious liability (5Q).

    Contributory Negligence – Division 8

    Contributory negligence applies also to taking precautions (5R).

    The standard of care is: a reasonable person plus what that person knew or ought to have known (5R).

    Contributory negligence can be up to 100% (5S).

    Contributory negligence of the deceased person is relevant and Section 13 of the Law Reform (Miscellaneous Provisions) 1965 does not apply (5T).

    Mental harm – Part 3 – “consequential mental harm” and “pure mental harm”

    The claim can be based wholly or in part from mental harm or nervous shock (Section 29).

    There is no entitlement to damages for pure mental harm unless the plaintiff witnessed the accident, was at the scene, OR the plaintiff is a close member of the family of the victim (Section 30).

    Close member equals parent, spouse or partner, child, sibling (including step/half brothers, sisters) (Section 30).

    Damages are reduced for contributory negligence of the victim (Section 30).

    Pure mental harm must constitute a recognised psychiatric illness (Section 31).

    Mental harm duty of care: reasonable care for a person of normal fortitude (Section 32).

    No economic loss for consequential mental harm unless recognised psychiatric condition (Section 33) – thus need recognised psychiatric illness to get economic loss, even though still do not get non-economic loss, but for the pure mental harm can get both non-economic loss and economic loss.

    Public Authorities – Part 5

    Public authorities equal the Crown, Government Departments, Public Health organisation, local Council, any public or local authority, any body exercising public functions (Section 41).

    The Court may look at resources reasonably available to the authority and evidence of its compliance with applicable standards (Section 42).

    Only unreasonable acts or omissions are breaches of duty of care (Section 43).

    Function to issue a licence or permit does not give rise to liability if the licence or permit could not be issued (Section 44).

    Non-feasance modified: no liability to repair unless the authority has actual knowledge (Section 45).

    Exercising a function does not prove the duty of care exists (Section 46).

    Intoxication – Part 6

    This part applies to personal injury and damage to property (Section 47).

    Intoxication = under the influence of alcohol or drugs whether taken lawfully or unlawfully (Section 48).

    The plaintiff not owed a duty of care merely because he/she is intoxicated. There is no increase in the extent of duty of care required for an intoxicated person (Section 49).

    It is presumed that a drunk plaintiff is contributory negligent unless the Court is satisfied that the plaintiff’s intoxication did not contribute in any way – the reduction is at least 25% or greater but does not apply where intoxication was not self induced (Section 50).

    Self Defence and Recovery by Criminals – Part 7

    This part applies to personal injury, damage to property and breach of contract (Section 51).

    No liability for tort if acting in self defence but only if:

    – the plaintiff was acting illegally and

    – the defendant believed the conduct was necessary to defend himself of his property and

    – the conduct was a reasonable response.

    Does not apply if the defendant uses forces with intentional or reckless infliction of death (Section 52).

    Immunity for self defence where the perpetrators act is unlawful or would have been unlawful but for the fact that they were suffering from a mental illness.

    The Court is not to award damages if the plaintiff was engaged in a serious offence at the time of the accident (Section 54).

    Serious offences defined as one punishable by imprisonment of six months or more.

    Good Samaritans and Volunteers – Parts 8 and 9

    No liability when assisting a person who is injured or at risk at being injured (Section 57).

    A good samaritan is one who acts in good faith and without expectation of payment or other reward, coming to the assistance of a person who is apparently injured or at risk of being injured (Section 56).

    Does not apply if the good samaritan is:

    – intentionally negligent or

    – caused the injury in the first place or

    – is drunk and negligent or

    – impersonating health care emergency worker or police (Section 58).

    Volunteers are protected with regards to everything except defamation (Section 59).

    A volunteer is a person doing community work but excludes work done under an order of the Court (Section 60).

    A volunteer does not incur any civil liability person or civil liability (Section 61), except if:

    – the conduct constitutes an offence, or

    – the volunteer was drunk and negligent,

    - or outside the scope of his activities

    – or contrary to instructions or written law.

    These provisions do not apply to CTP claims (Sections 65 and 66).

    Apologies

    An expression of sympathy or regret is not relevant to liability and not admissible (Sections 68 and 69).

    QUANTUM

    Economic Loss

    Weekly gross future economic loss capped at three times the average weekly earnings in New South Wales (Section 12).

    Plaintiff’s prospects and any adjustments must be taken into account and specified in judgment (Section 13).

    Discount rate for future loss is 5% (Section 14).

    Superannuation

    Relevant percentage applicable is the maximum percentage required by law for employer contribution (Section 15A).

    Gratuitous Attendant Care

    There must be a reasonable need (Section 15) and that need must be solely due to the injury.

    There are thresholds of 6 hours per week for 6 months (Section 15) and there is no claim for interest on any amount awarded (Section 18).

    Non-Economic Loss

    Earlier decisions or decisions of other Courts where awards of damages for non-economic loss may be brought to the Court’s attention (Section 17A).

    There is no interest on any award.

    A percentage of a “most extreme case” (Section 16 table) is used to determine damages and there is no award for any injury, which results in a whole person impairment of less than 15%.
     

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