The New South Wales Court of Appeal recently considered the operation of the intoxication provisions (Section 50) of the Civil Liability Act 2002 (NSW)(CLA) upon a claimant’s entitlement to damages.
The decision provides useful guidance for insurers with regard to:
- the importance of expert evidence regarding the effects of a claimant’s alcohol and/or drug consumption upon their decision-making faculties;
- consumption of apparently excessive amounts of alcohol by a claimant will not ‘immunise’ a defendant from liability – the liability consequences will depend upon the circumstances of the accident and expert evidence; and
- even if there is evidence that the claimant was intoxicated, damages may still be payable if the claimant can demonstrate that they would have suffered the injury even if they were not intoxicated.
The Claimant was one of a group of passengers who had hired a pontoon boat from the First Defendant. The First Defendant engaged the Second Defendant to act as the skipper of the boat.
A hat belonging to one of the passengers was blown into the water and the Claimant dived into the water while the boat was moving to retrieve the hat. Prior to the incident, the Claimant had consumed four cans of full-strength beer, partly consumed a fifth and consumed two lines of cocaine. The Court heard expert evidence that the Claimant’s blood alcohol content was at least 0.05, if not 0.11 and he would have been experiencing increased confidence and decreased inhibition due to the use of cocaine.
The master of the boat circled the boat back towards the Claimant. This meant the Claimant had to swim near the stern to access the ladder to get back in the boat.
The Claimant suffered severe lacerations to his leg from the propellor of a while swimming toward the ladder. The Claimant commenced proceedings against the Defendants, alleging that the First Defendant was responsible for the Second Defendant’s negligent handling of the boat.
The primary decision
The Claimant was successful at first instance in the District Court and he was awarded damages of $464,773.25, with no reduction for contributory negligence.
The First Defendant (the owner of the boat) appealed the primary decision with regard to:
- whether the Claimant’s ability to exercise reasonable care was impaired within the meaning of s50(1) of the CLA;
- whether the injuries were likely to have occurred if he had not been intoxicated;
- whether the Claimant’s intoxication contributed in any way to the cause of his injuries; and
- whether the Claimant’s damages should be reduced on account of contributory negligence by more than 25%.
In partly allowing the appeal, the Court of Appeal found that:
- the primary judge erred in finding that the Claimant’s consumption of alcohol and cocaine had not impaired his decision-making ability. Beech-Jones JA noted that the primary judge appeared to have limited their consideration to physical impairment, despite making reference to expert evidence that the Claimant’s intake of alcohol and cocaine had been influential in his impulsive decision to dive into the water to retrieve the hat;
- the unchallenged expert evidence was that the Claimant’s ability to exercise reasonable care and skill was impaired due to his drug and alcohol consumption. This engaged the intoxication provisions in s50 of the CLA;
- section 50(2) of the CLA provides that damages are not payable unless the Court is satisfied that the injury is likely to have occurred even if the Claimant had not been intoxicated. The Court of Appeal was satisfied that even if a person in the position of the Claimant was not intoxicated, they would have still swum near the propeller due to the lack of turbulence and loud music covering the engine noise;
- The Court of Appeal was satisfied that s50(2) applied and that the Claimant would have suffered his injury even if he had not been intoxicated;
- as s50(2) applied, the Court then considered the operation of s50(3). Section 50(3) provides that if the injury is likely to have occurred even if the Claimant had not been intoxicated, it is presumed the Claimant was contributorily negligent unless the Court is satisfied that the Claimant’s intoxication did not contribute in any way to the cause of action the injury;
- as the Claimant was unable to satisfy the Court that his intoxication did not contribute to the cause of his injuries, s50(4) provided that his damages were to be reduced by 25% or a greater percentage to be determined by the Court; and
- by majority, the Court found that the Claimant’s actions in being intoxicated and swimming too close to the engine and his belief that the engine was off, a reduction of 30% was appropriate.
The decision is relevant for all insurers of business whose operations may involve consumption of alcohol.
Section 50 of the CLA provides a mechanism to potentially reduce liability exposure but it is dependent upon expert evidence identifying the level of intoxication and its effect on judgment and behaviour and the circumstances in which an injury occurs.
Even when intoxication can be established, a claimant may still be able to recover damages if they can persuade the Court that the injury is likely to have occurred even if they had not been intoxicated. When injuries arise as a result of a number of factors (such as a master’s decision not to turn off a boat’s engine and intoxication) the courts may be reluctant to entirely deprive an injured claimant of an award of damages.
Consequently, businesses whose operations involve persons consuming alcohol can best protect their interests by adopting appropriate risk management measures to guard against injuries from the actions of persons whose coordination and decision-making by alcohol consumption. In regard to alcohol-related liability claims, a six-pack of prevention will always be preferable to a carton of cure.
This article was written by Anthony Highfield, Partner and James McIntyre, Special Counsel.