Welcome to our General Insurance Insights Newsletter, bringing you the latest case notes on key judgments from November 2024 to January 2025 affecting general insurers in Australia.
Elisha v Vision Australia Limited [2024] HCA 50
The plaintiff was employed by the defendant from 2006 as an adaptive technology consultant. The plaintiff’s employment was terminated in 2015 after he allegedly intimidated and humiliated a hotel staff member, whilst staying at a hotel on a business trip. The plaintiff filed unfair dismissal proceedings, in which he was successful, and damages proceedings.
The trial judge, who accepted that the circumstances of the termination were “unfair, unjust and wholly unreasonable”, awarded $1,442,404.50 for psychiatric injury suffered by the plaintiff. The trial judge found breaches of the employment contract in relation to the defendant’s investigation into the alleged misconduct of the plaintiff.
The defendant appealed. The Court of Appeal found that damages for psychiatric injury were not available for breach of contract other than where the psychiatric injury is consequent upon physical injury (caused by the breach of contract) or where the very object of the contract is to provide enjoyment or relaxation. The plaintiff obtained leave to appeal to the High Court.
The appeal was successful and High Court reinstated the trial judge’s award of damages. In doing so, it confirmed that damages are available for psychiatric injury resulting from breach of contract, so long as it is not too remote (i.e. it was reasonably anticipated that such an injury could result from a breach of contract at the time the contract was entered into). To that end, the High Court said it was not necessary for the precise manner in which the breach by the employer would cause psychiatric injury to have been contemplated.
As the Hight Court accepted the plaintiff’s breach of contract claim, it was not necessary to re-visit the issue of whether an employer owes an employee a duty of care to provide a safe system of investigation and decision-making with respect to discipline and termination of employment (which has previously been rejected).
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Owners – Strata Plan 82089 v Omaya Holdings Pty Ltd (No 3) [2024] NSWSC 1511
The plaintiff purchased a large residential apartment building in Strathfield, NSW. The first defendant was the builder and the second defendant was the developer. The first and second defendants entered into a building contract in 2009 in relation to the design and construction of the building.
The plaintiff alleged there were height defects in the building and, on that basis, sought damages against the defendant on the basis that they had breached warranties implied into the building contract by reason of s.18B of the Home Building Act 1989 (the HBA Act) and their statutory duty of care in s.37 of the Design and Building Practitioner’s Act 2020 (the DBP). Additionally, it alleged there was a contract between a different entity of the first defendant, Omaya Investments, and the second defendant, relating to the design and construction of fire and life safety works for the building, and sought damages for that entity’s breach of the relevant statutory duty.
The defendants accepted liability to rectify part of the non-effective height defects, by reason of the warranties implied under the HBA Act. However, the defendants were successful in defending the plaintiff’s allegations in relation to effective height defects, with the Court finding that the Guide to the Building Code of Australia (the BCA) could be relied upon to provide context to and help understand the relevant BCA’s provisions, including the requirements for additional fire safety measures in buildings which exceed an effective height of 25 metres. In this case, the Court held the effective height of the building was 25 metres. Otherwise, the Court was not persuaded of the existence of a building contract between second defendant and Omaya Investments, as there was no document recording such an agreement nor was it a licensed builder.
Whilst the Court did not need to consider the plaintiff’s allegations against Omaya Investments under the DBP Act, because of its findings in relation to the effective height of the building, it confirmed that the statutory duty is not a duty to ensure anything (i.e. that the building did not exceed the relevant effective height or, if it did, that the building had the requisite additional fire safety measures). Accordingly, it does not amount to a duty to ensure reasonable care is taken by a person in line with s.5Q of the Civil Procedure Act 2002 and, in cases like this, does not operate to impose vicarious liability on developer or builder in respect of the negligence of a subcontractor or consultant. Rather, the statutory duty is a duty to exercise reasonable care to avoid economic loss caused by defects arising from construction.
The Court also rejected the argument that, because Omaya Investments was the applicant on the development application for the building and various architectural and certification documents, it had substantive control over the design and certification of the building for the purposes of the statutory duty. Indeed, it found that neither Omaya Investments nor either of the defendants exercised that control and relevant services provided by the architect and certifier involved in the project. Further, thy were entitled to rely upon those sub-contractors’ expertise in providing those services and the assurances they provided in relation to the design of the building.
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Carusi v St Mary’s Anglican Girls School Inc & West Coast Dance Festival Inc [2024] WASCA 137
The appellant fell whilst descending steps in a theatre aisle during a dance competition and injured her right ankle as a result. She claimed damages against the first respondent, the occupier of the theatre. The first respondent made a third party claim against the second respondent, who used the theatre for a dance competition pursuant to a hire agreement.
The trial judge dismissed the plaintiff’s claim as she failed to establish that her injuries were caused by the negligence and/or breach of statutory duty of the first respondent. The appellant appealed on six grounds, including the formulation of the relevant risk of harm, the foreseeability of that risk, whether it was a ‘not insignificant’ risk and the reasonableness of the response to that risk and causation.
The appeal was dismissed. The Court of Appeal found the trial judge was correct to find that the first respondent did not breach its duty of care and any breach of duty was not causative of the appellant’s injury. In doing so, it rejected the argument that the formulation of the relevant risk of harm, being the risk of a person misplacing a step or tripping, and falling, whilst descending an aisle in the theatre, was too broad, and that the risk of harm that should have been identified as the risk of a person falling by misjudging the anomalous height of the last step in the particular aisle in dim lighting.
The Court of Appeal accepted that the trial judge erred in failing to find that the relevant risk of harm was foreseeable and not insignificant. However, it disagreed that a reasonable person in the first respondent’s position would have taken the precautions contended by the appellant, in particular installing an intermediate step and localised lighting. It also disagreed that the fact that an intermediate step was added after the incident, during substantial renovations, inferred the same. Finally, the Court of Appeal agreed that the trial judge failed to determine the issue of causation by factual inference, but said the available evidence did not establish that the absence of an intermediate step or additional lighting materially contributed to the appellant’s injury.
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Milne v SDN Children’s Services and BRC Recruitment Pty Ltd [2024] NSWSC 1495
The plaintiff alleged she slipped on a cellophane noodle whilst preparing meals in a commercial kitchen at a childcare centre. She issued proceedings against the first defendant, the childcare centre operator and host employer, and the second defendant, the labour hire agency that employed the plaintiff.
The Court noted that the plaintiff had a history of dishonesty and misconduct in her employment, and there were inconsistencies regarding her recollection of events, in particular the mechanism of her fall. Nevertheless, whilst the Court said those matters required it to treat the plaintiff’s evidence with some caution, it accepted the version she had reported, particularly insofar as it was corroborated by a director of the first defendant, including that she slipped on a noodle, which was translucent and not readily detectable, after it had fallen to the floor near a working bench during meal preparation.
As against the first defendant, the Court held that it had a duty to provide a safe place and system of work to the plaintiff, and to not expose the plaintiff to a reasonably foreseeable risk of harm. To that end, it found that, in circumstances where there was a system of work that involved the preparation of multiple meals, including transferring a large number of bowls of cooked noodles from a bench to a trolley, under time pressure, it was reasonably foreseeable that a contaminant could fall to the kitchen floor and be undetected by the plaintiff, particularly a translucent food item like the noodles. Having regard to the expert evidence, it found the first defendant had failed to adequately guard against that risk by installing kitchen mats (which were, in fact, laid after the incident).
The Court also found the second defendant was negligent, as, although the first defendant had complete control over the physical features of the kitchen, including the floor surface, the second defendant knew the plaintiff was vulnerable to falling because of a pre-existing left knee disability and, by virtue of its inspection of the kitchen prior to the incident, that no mats were in place.
The Court apportioned 70% liability to the first defendant and 30% to the second defendant.
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Daher v Gold & Eagle Constructions Pty Ltd [2024] NSWSC 1575
The plaintiff, the sole director of his own company, was contracted by the first defendant, a builder, to install timber flooring in a residential building. The second defendant was the owner of the land of the construction site. It had retained the first defendant to undertake renovation works.
Whilst undertaking these works, the plaintiff fell three metres through an unguarded penetration in a suspended concrete slab, sustaining an ankle injury. The first defendant had installed a timber cover over the penetration as a precaution against falls previously. However, on the date of the incident, the cover was removed (both the plaintiff and second defendant said the other removed it, but the Court ultimately agreed with the second defendant’s position) and the opening was covered with a plastic sheet.
The plaintiff argued the first defendant owed him a duty of care to keep the work site safe. The major point of contention was whether the first defendant failed to take reasonable care to ensure adequate protection against the risk of falling remained in place whenever the timber cover was removed (i.e. by erecting a balustrade or handrails). The Court accepted that argument and found the first defendant had breached its duty of care. It refused to make the same finding against the second defendant as, although he was the owner and occupier of the site, he was not in charge or control of the area under construction, and was reasonably entitled to rely on the first defendant to cover any penetrations.
The defendants submitted that there should be a substantial reduction for the plaintiff’s contributory negligence. Whilst the Court confirmed the distinction between “determining the liability of the company and determining contributory negligence in cases involving a company of which an injured plaintiff is a director and/or participates in decisions concerning workplace safety”, it said the authorities do not preclude a Court from finding that the circumstances that establish liability on the part of the company to its employee, can also establish contributory negligence by the employee. With that in mind and in accepting that the plaintiff had the same knowledge in each of his capacities (i.e. as a worker and director of his company), allowed a reduced of 30% for contributory negligence.
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Springfree Trampoline Australia Pty Ltd v Forostenko [2024] QCA 255
The respondent suffered a foot injury while jumping on a trampoline in the backyard of his sister’s residence, landing on the cleat underneath the trampoline mat. The appellant was the manufacturer of the trampoline.
The primary judge found the trampoline had a safety defect due to the lack of appropriate warning to users about the trampoline’s design and certain features of the trampoline’s design were such that users were at an increased risk of foot injury.
On appeal, the appellant did not challenge the primary judge’s findings about existence and nature of the safety defect, but disputed that the respondent had suffered injuries due to that defect (i.e. the shape of the top of the cleat and the fact it operated as a ball joint) and argued the respondent had failed to prove his injuries would have been avoided had trampoline come with a relevant safety warning (i.e. that if users landed on the cleats on the edge of the mat they may be at increased risk of a foot roll and, therefore, an injury, or that jumping on the webbing should be avoided or at least approached with extra caution).
The appeal was allowed. In doing so, the Court of Appeal found the respondent failed to satisfy his onus of proving causation, having regard to a number of factors, including that the respondent was a fit and acting adult male who had a long history of undertaking recreational and household activities with an element of risk, and, in doing so, had never read or acted upon any relevant written instructions or warnings ; he was an “experienced and enthusiastic user” of trampolines; he did not read any of the warnings displayed on the relevant trampoline before using it; and the decision to use the trampoline was an impulsive one.
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This article was written by Ashley Harding, Partner, Theodore Heretakis, Associate and Madeleine Dashiell, Solicitor.
