WA Insurance Update

Our Western Australia Insurance team provide an update for clients on relevant cases delivered in 2022.

Motor vehicle accidents

Untruthfulness = dismissal of actions

Mr Mecavin, a painter by trade, alleged that he suffered significant injuries in a motor vehicle accident in November 2014 (First Crash), and further injuries in a second car accident in May 2017 (Second Crash). Mr Mecavin, who was self-represented at trial, claimed total incapacity for work from the First Crash and sought damages in excess of $1 million.

The key issue was whether Mr Mecavin could establish on the balance of probabilities that he had suffered any injury because of the First Crash or the Second Crash and, if so, the damages to be awarded. His credibility was central to the defence to the matter.

In respect of the First Crash, Mr Mecavin alleged that his stationary vehicle was hit in the rear by a vehicle driven by Ms Parker, and that he hit his head on the steering wheel. He claimed to have seen front-end damage to Ms Parker’s car.

Ms Parker admitted that her vehicle connected with the rear of Mr Mecavin’s vehicle but said it was only a tap or slight bump. Her evidence was that she and Mr Mecavin got out of their vehicles to look at their cars, but there was no damage evident to either vehicle, other than a scratch on her licence plate.

Judge Stevenson rejected Mr Mecavin’s allegation that he hit his head on the steering wheel. His Honour accepted the evidence of Ms Parker and considered that, over time, Mr Mecavin had exaggerated the factual circumstance of the First Crash to support a claim for damages.

In respect of the Second Crash, Mr Mecavin alleged that his parked car was hit from behind by a vehicle driven by Ms Cole, who was attempting to parallel park. He claimed there was a scratch to his tow ball and a dent in Ms Cole’s licence plate.

Ms Cole’s evidence was that she only just nudged or tapped Mr Mecavin’s car, and it was only when she got out of her car that she realised someone was sitting in his vehicle. She said they did not exchange contact details but, without her knowledge, Mr Mecavin took her vehicle registration details.

Judge Stevenson accepted Ms Cole’s evidence as truthful and reliable and held that the Second Crash was very low impact. His Honour considered that the Second Crash was so insignificant in speed and force that it had no capacity to create any trauma to Mr Mecavin, and that it was simply convenient for him to add it to his claim for the First Crash to bolster his award of damages.

In considering Mr Mecavin’s economic loss, he had been in receipt of Centrelink benefits since 2008 (carer’s allowance and Newstart allowance). Mr Mecavin alleged that he had been totally incapacitated for work since the First Crash.

The Insurance Commission obtained surveillance evidence which showed Mr Mecavin performing work as a painter after the First Crash. Further, financial records showed earnings of more than $177,000 between 2014 and 2019 and that he was working 38 hours per week. Online advertisements showed Mr Mecavin seeking painting and decorating work and reviews were posted by customers.

Mr Mecavin conceded that he received payments of more than $120,000 between 2014 and 2019 but was not registered to perform painting work between 2014 and 2016. He denied failing to report earnings to Centrelink or the Australian Taxation Office, but produced no contrary evidence.

Mr Mecavin reported to Dr Watson that he had not worked since 2012 and to Dr Hill that he had not worked since 2008. He alleged that both doctors and his GP had not recorded a correct history. Mr Mecavin was prosecuted and convicted of two counts of providing false or misleading information to Dr Silbert and Dr Hill contrary to section 27B(1)(b) of the Motor Vehicle (Third Party Insurance) Act 1943 (WA).

Mr Mecavin admitted that he was ‘deliberately untruthful’ when completing a driver’s entitlement and taxi extension in 2016 in which he indicated that he was not being treated by a health professional for any injury and that he had no neck, back or limb disorders and had not been in a crash since his last assessment. Mr Mecavin did not accept that he had been untruthful about the damage to the vehicles in the First Crash or Second Crash and did not accept that he had suffered no disability as a result.

Both actions were dismissed on the basis that Mr Mecavin had failed to prove any injury and, even if he did sustain an injury, it fell short of the threshold allowing non-pecuniary damages. Further, he failed to adduce any evidence to prove his alleged economic loss.

This case highlights the way in which the Court deals with self-represented litigants, including affording leniency in procedural matters. It also highlights the importance of a plaintiff’s credibility and the dangers of providing untruthful reports of crash circumstances, alleged injuries and alleged incapacity, and the lengths to which the Commission will go to investigate and prosecute fraudulent reports.

Mecavin v Parker [2022] WADC 23

Defence collapses in the face of falling pillar

Causation was called into question in a District Court matter involving a motor vehicle accident where the alleged factual circumstances were disputed.

Mr Ibrahim was seated on the front verandah of his property when Mr Purdy lost control of his vehicle and collided with a car parked in Mr Ibrahim’s driveway, which was then pushed into Mr Ibrahim’s own parked car, causing a brick pillar next to the verandah to collapse.

Mr Ibrahim claimed to have suffered soft tissue and ligamentous injuries to his left arm and elbow as a result of being struck by falling bricks. He also alleged a psychological injury on the basis that he thought his children, who were playing at the front of the house, had been killed or injured in the accident.

The issue for the District Court to consider was whether the accident had caused Mr Ibrahim’s physical and psychological injuries.

Mr Purdy argued that Mr Ibrahim and his children were inside the house and not seated at the front verandah at the time of the accident, and disputed that he was struck by any falling bricks. Alternatively, Mr Purdy claimed that the alleged left elbow injury was not due to the accident, but was a result of a pre-existing condition.

In considering causation of his physical injuries, Judge Sharp accepted Mr Ibrahim’s evidence that he was sitting on his front verandah and was struck by falling bricks. His Honour found that a childhood injury to his left elbow of which Mr Ibrahim was probably unaware, did not constitute a pre-existing condition, and subsequently found that his physical injury was related to the accident.

As for his psychological injury, his Honour noted section 5S of the Civil Liability Act 2002 (WA) (CLA) which provides the test of whether a duty of care is to be found based on whether the defendant ought to have foreseen that a person of normal fortitude might, in the circumstances of the case, suffer a recognised psychiatric injury.

After the accident, Mr Ibrahim was diagnosed with post-traumatic stress disorder on the basis that he ‘freaked out’ as he could not see the children after the accident and thought they were beneath the car. He continued to experience anxiety and fear for the safety, health and welfare of his family after the accident. His Honour accepted that this constituted ‘pure mental harm’ within the definition of section 5Q of the CLA. Further, Judge Sharp held that it ought to have been foreseeable to Mr Purdy that Mr Ibrahim might suffer a psychiatric illness as a result of the sudden shock if he drove his car in the manner alleged.

A lesser issue for Judge Sharp to consider was an alleged breach of the rule in Browne v Dunn raised by Mr Ibrahim’s counsel. Counsel for Mr Ibrahim submitted that Mr Purdy’s defence was that Mr Ibrahim had engaged in fraud, and that it was detrimental to Mr Ibrahim as he was denied the opportunity to address this during the trial. Mr Purdy maintained that fraud was not pleaded in his defence and his Honour accepted that the trial was not conducted on that basis by either party.

This case provides a solid basis for determining the extent to which a previous injury may constitute a pre-existing condition, with a childhood injury of which the person was unaware not enough to overcome the threshold. In the context of mental harm, the case illustrates that it is foreseeable that crashing into a private property may give rise to a recognised psychiatric illness, and that the perception of what happened, as opposed to seeing what happened, can be just as traumatic.

Ibrahim v Purdy [2022] WADC 57

Disentangling causation from an unreliable witness

The District Court has relied solely on expert medical evidence to disentangle injuries and symptoms allegedly sustained in a motor vehicle accident.

Mr Sayed was involved in a motor vehicle accident on 25 February 2014 when his vehicle was hit in the rear by a vehicle driven by Mr Lee. There was no dispute regarding Mr Lee’s negligence. However, Mr Sayed claimed to have suffered injuries to his neck and back, numbness in his hands and loosening of his dentures together with a psychological injury.

Mr Sayed had been imprisoned and tortured in a Russian prison in Afghanistan sometime between 1985 and 1990. Then in 1990, Mr Sayed’s teeth were damaged during an assault by a parent of one of his students. Mr Sayed was assaulted and injured his back fending off the attacker.

In 2010, Mr Sayed was convicted of fraud in Western Australia and spent three years in prison where he suffered from depression. At various times before the accident, he had complained to his GP of post-traumatic stress disorder (PTSD) and depression, back pain, neck pain and numbness to his hands. Dental records confirmed that Mr Sayed had suffered poor dental health and the loss of a number of teeth prior to the accident.

Mr Sayed failed to disclose any of these pre-existing complaints to the medical experts consulted in respect of the accident.

Judge Whitby found that Mr Sayed’s evidence in relation to his medical history and post-crash injuries and symptoms was neither reliable nor credible. On the balance of probabilities, her Honour considered that the force of the impact was insufficient to cause Mr Sayed’s alleged symptoms. At most, if any injury was caused, it would have resolved within two months and could not have caused or contributed to his PTSD.

In addition, Judge Whitby found no evidence to suggest that Mr Sayed had dental implants prior to February 2014 and already had poor dental care and loss of teeth. Her Honour concluded that the accident could not have caused loosening of his dental implants, or any dental injury.

Mr Sayed had presented job offers from Habib’s Halal Meat Shop and Fun and Learn as evidence of his economic loss. Judge Whitby found that not only were these offers not genuine offers of employment, but that Mr Sayed had not suffered any economic loss because of his short-term injuries.

Mr Sayed was awarded $1000 for medical expenses incurred in the two months after the crash along with $100 for travel to and from these appointments. Mr Sayed’s non-pecuniary loss was assessed at 2% of a most extreme case, being under the threshold for any monetary award.

This case is a reminder that both contemporaneous and expert medical evidence is crucial in establishing causation of alleged injuries, particularly when a witness’s credibility is in question.

Sayed v Lee [2022] WADC 76

Not so fast, the limits of causation

The District Court has determined that while a person loaning a vehicle to another person was under a duty of care to ensure it was free from defects that affected the safety of the vehicle and that duty was breached, the defect (in this case a non-working speedometer) did not materially contribute to the accident.

Ms Davie was involved in a car accident in which she sustained traumatic injuries (incomplete tetraplegia). She was staying at a hostel owned by Ms Manuel with a view to taking up a rural employment opportunity and Ms Manuel made a car available to hostel guests.

The accident occurred when Ms Davie was negotiating a right hand sweeping bend and the car began to slide and ultimately slid and/or rolled off the road on the opposite side, landing on its roof. The critical issue at trial was whether the lack of a working speedometer caused or materially contributed to the car being driven at a speed that was too fast for the conditions.

Although Ms Manuel disputed the allegation that the speedometer did not work, Judge Petrusa was satisfied on the weight of the evidence that the speedometer was not working before the accident.

There was no expert evidence led about the cause of the accident or any reliable evidence about the car’s speed before or during the accident. Judge Petrusa reached the conclusion that at some point while negotiating the right hand sweeping bend, the car began to slide and as a matter of common sense that was consistent with the car moving too quickly around the right hand bend.

Ms Davie’s evidence about her use of a speedometer generally when driving was not accepted and Judge Petrusa stated that as a general proposition a driver would look at the speedometer from time to time. Ms Davie’s evidence was that at all times she was driving to the conditions and believed her speed was safe.

Judge Petrusa held that Ms Manuel had breached her duty of care because she ought to have known the car did not have a working speedometer and this defect could (our emphasis) affect the safe use of the car. However, Judge Petrusa found that, given the absence of any other cause, it was more likely than not that Ms Davie was going too fast to safely negotiate the right hand bend. Judge Petrusa was not satisfied that Ms Davie would have driven any differently had she known her precise speed. It followed that Judge Petrusa was not satisfied that the absence of a working speedometer caused or materially contributed to the accident. Accordingly, Ms Davie’s action was dismissed.

This decision reminds us that ultimately whether damages will follow turns on whether the breach materially contributed to the event that caused the harm.

Davie v Manuel [2022] WADC 91

Public liability

Employer liable in catastrophic explosion at Morley Galleria Shopping Centre

On 3 February 2015 an electrical explosion occurred in a substation at Morley Galleria Shopping Centre. Two men died in the accident and two others sustained very serious burn injuries. Mr Smith was one of the men who was badly burnt. Mr Smith worked as a high voltage electrician for High Energy Service Pty Ltd (HES). The other injured man was Mr Richards, who worked as a high voltage electrician for Richards Energy Services (RES) in partnership with his wife.

On the day before the explosion, Mr Smith was instructed by HES to attend the shopping centre to investigate a power outage. Mr Smith performed a process known as ‘switching’ in the substation in an attempt to determine the cause of the power outage. During this process, Mr Smith opened an oil-insulated GF3 switch and saw that the ceramic body of one of three fuses had disintegrated but that the two metal end-caps of the fuse remained. Mr Smith had never seen this before.

The next day, Mr Smith went back to the shopping centre. Mr Richards also attended, after being requested to by Mr Smith the day before. Mr Smith, Mr Richards and two other men walked inside the substation. After Mr Smith opened the lid of the GF3, they heard a sound, described as both a ‘bubble’ and a ‘whoosh’ and they turned to run out. The GF3 exploded and created a fireball. The mechanism of the explosion was that a metal end-cap, which had become loose, came into contact with live busbars at the bottom of the GF3. The end-cap was one of the end-caps of the disintegrated fuse Mr Smith had witnessed the day before.

Mr Smith succeeded in his claim against HES. Mr Smith told HES that he saw the disintegrated fuse the day before the explosion. Judge Vernon found that HES knew that Mr Smith was in a highly unusual situation and that there was a risk of explosion. Despite this, the only instruction given to Mr Smith was to ‘be careful’. It was found that HES should have done more. HES should have properly assessed what Mr Smith intended to do and directed him to not perform any further works on the GF3 until the busbars were no longer live. An assessment of the risks should have been done and instructions should have been given by HES on the basis of those assessed risks. HES breached its duty of care to Mr Smith by failing to do this.

Mr Smith also sued RES and HES commenced third-party proceedings against RES. However, her Honour dismissed these claims, on the basis that RES did now owe Mr Smith or HES a duty of care to supervise the inspection of the GF3. Mr Richards was not told enough information about the situation by Mr Smith or what was expected of him. His phone call with Mr Smith was only of two minutes duration. Mr Richards was not aware that there was a GF3 in the substation, let alone that there was a loose end-cap in the GF3. It was found that Mr Richards did not have the opportunity to ‘put two and two together’ to identify that there was a disintegrated fuse in the GF3. In any event, Mr Smith and HES were both aware of the danger presented by a disintegrated fuse in a live switch and did not rely on Mr Richards’ expertise in that respect.

Mr Smith was found contributorily negligent in the order of 10%. Mr Smith knew that an end-cap remained in the GF3 after he worked on it the day before the explosion. He was aware of the danger that presented. He was aware that he was unable to properly open the lid of the GF3 the next day, prior to Mr Richards attending the shopping centre (it was accepted by her Honour that this was because an end-cap had become jammed). It was found that Mr Smith was negligent for failing to pause to consider the dangers of proceeding in these circumstances.

This case illustrates the high standard of care that is placed on an employer, which includes taking into account the possibility of inadvertence or carelessness on the part of employees. It also demonstrates that workers are required to take care for their own safety, including pausing to consider the potential dangers of a situation. Finally, it demonstrates the importance of establishing that a duty of care is owed in the first place. Mr Richards was found to have not owed Mr Smith or HES a duty of care.

Smith v High Energy Service Pty Ltd [2021] WADC 101

A costly fall – the duty of a principal contractor

In this case, the District Court explored the scope of the duty of care owed by a principal contractor to an independent contractor’s employee together with how liability was to be apportioned between them.

Mosman Bay Construction Pty Ltd (MBC) was the principal contractor responsible for the construction of two four-storey residences in South Perth. MBC engaged DGA Windows Australasia (DGA) to undertake glazing work for one of the homes. Mr Ciesla was an employee of DGA.

An express term of DGA’s quote for the glazing was that MBC would supply and erect scaffolding required on site to enable DGA’s employees to undertake the glazing work.

On 15 May 2017, Mr Ciesla attended the site to undertake glazing work and found there was no scaffolding erected. He proceeded to use a ladder to undertake his duties and fell from the ladder, sustaining serious injuries.

Mr Ciesla sought damages against MBC alleging negligence and a breach of statutory duty under the Occupiers’ Liability Act 1985 (WA) and the Occupational Safety and Health Act 1984 (WA) and as against DGA in negligence.

The District Court found that MBC owed a duty to Mr Ciesla to take reasonable care to ensure that its systems of work for independent contractors were safe. It further found that MBC ought to have foreseen that its independent contractors would be working at heights, that it was necessary to have scaffolding erected to facilitate that work was being carried out in a safe manner and that independent contractors would devise alternative means, including unsafe means, to carry out the work if scaffolding were not erected.

Similarly, the District Court found that DGA breached the non-delegable duty of care that it owed to Mr Ciesla by failing to provide and erect scaffolding at the site, failing to cause MBC to provide and erect such scaffolding and failing to provide Mr Ciesla with supervision at the site or appropriately instruct him to prevent him from commencing work until scaffolding was provided and erected.

The District Court apportioned liability 40% to MBC and 60% to DGA. Total damages were also reduced by 25% for Mr Ciesla’s contributory negligence.

This decision reinforces the nature and scope of the non-delegable duty of care owed by employers to employees and the nature and scope of the duty of care owed by principal contractors to independent contractors. Principal contractors must ensure that works are appropriately sequenced and co-ordinated so independent contractors can safely undertake their work.

Ciesla v Mosman Bay Construction Pty Ltd (in liq) [2022] WADC 3

Loose gravel path is an ‘obvious risk’

The WA District Court has found in favour of the Public Transport Authority of WA (PTA) in a slip and fall claim brought by James Gladstone.

On 26 May 2014, Mr Gladstone arrived at the Bassendean train station in Perth. Construction works were taking place at the train station and the PTA had constructed a temporary car park for passengers to use. Mr Gladstone parked in the temporary car park, which was unmarked and had a loose blue metal gravel surface.

After parking, Mr Gladstone exited the temporary car park surface on foot to step onto the road, where he rolled, twisted and strained his right ankle due to slipping on some gravel on the road.

Mr Gladstone brought a claim against the PTA in negligence and for a breach of the Occupiers’ Liability Act 1985 (WA).

The Court held a reasonable person in Mr Gladstone’s position, exercising ordinary perception, intelligence and judgement, would have known that construction was taking place, that the car park was temporary, that he was walking across a temporary car park which had a blue metal gravel surface, and that blue metal gravel moves. The blue metal gravel surface was an ordinary hazard that any person walking around the temporary car park could expect to encounter.

The Court found these observations were matters of common knowledge and patently obvious to any adult with experience of walking outdoors. The risk was obvious under section 5O of the Civil Liability Act 2002 (WA) and the PTA did not owe a duty of care to Mr Gladstone to warn him of the obvious risk.

The Court also found that although the PTA did Mr Gladstone a duty of care, the PTA did not breach its common law or statutory duty. It was not accepted that a reasonable person in the position of the PTA would have created a separate safe walkway from the temporary car park to the train station. The works in place were temporary and not exceptional or unusual and therefore it would also have been unreasonable to expect the PTA to perform daily sweeps of the area having regard to the risk posed by the blue metal gravel on the road surface.

This decision reaffirms that an occupier’s response to a risk only needs to be reasonable and proportionate, taking into account the likelihood of an accident occurring and that entrants will take reasonable care for their own safety for obvious risks.

Gladstone v Public Transport Authority of Western Australia [2022] WADC 6

Stick to what you know! Employees working outside the scope of their employment

Mr Sanders was employed as a bricklayer by NeoWest Building Co Limited (NeoWest) to work on the Perth Stadium construction project (Project). NeoWest was engaged by Multiplex Engineering & Infrastructure Pty Ltd (Multiplex Engineering) to provide overall supervision of the Project.

On 6 October 2016, Mr Sanders suffered an injury to his left arm when he attempted to remove two overhead steel purlins (Purlins). Mr Sanders alleged that he tried to remove the Purlins because he had been instructed to do so by his own supervisor and by a supervisor of Multiplex Australasia Pty Ltd (Multiplex Australasia).

Mr Sanders unsuccessfully commenced proceedings against Multiplex Engineering and Multiplex Australasia (Defendants).

The Defendants denied that Mr Sanders was instructed to remove the Purlins and denied that such an instruction would have been given, as it fell outside NeoWest’s scope of works, and instead fell within the scope of steel riggers engaged on the Project. The District Court was not satisfied on the balance of probabilities that the supervisors instructed Mr Sanders to remove the Purlins.

Mr Sanders alternatively argued that, regardless of whether he was instructed to remove the Purlins, there was no safe system in place to ensure the timely removal of the Purlins by the steel riggers on site and they should have foreseen that a bricklayer would attempt to remove them.

The District Court found that Multiplex Engineering had taken the precautions that a reasonable person would have taken to avoid the risk of harm at common law by clearly defining the scope of works for each subcontractor, tasking each subcontractor with the responsibility for completing its own works in a safe manner, preparing contracts requiring subcontractors to comply with legal and safety requirements and planning for the potential clash of trades.

The District Court found that the Defendants were not negligent and had not acted in breach of their statutory duty owed to Mr Sanders under the Occupiers’ Liability Act 1981 (WA) (OLA) and the Occupational Safety & Health Act 1984 (WA) (OSH). There was no breach of the OLA as the Purlins did not represent a danger to Mr Sanders on account of the state of or anything done or omitted to be done at the site. There was no breach of the OSH as the system of work between NeoWest and the Defendants was found to be sufficient to meet the Defendant’s duty of care under the OSH.

The District Court found that NeoWest was the body to provide training and induction within its specialist area of bricklaying and it was not reasonably practicable for Multiplex Engineering to interfere with NeoWest’s training and induction of employees.

This decision reinforces the proposition that principal contractors are not expected to supervise or have specialist knowledge of trades it engages on site and reminds principal contractors of the necessity to properly establish and document a safe system of work.

Sanders v Multiplex Engineering & Infrastructure Pty Ltd [2022] WADC 31

How much supervision does a teenager need? A lot

The WA District Court has found a school liable in negligence after a schoolboy engaging in unsupervised horseplay was injured during school hours when a teacher stepped out of a classroom to speak to a student.

Mr Sidhoum, a 16-year-old student, was messing around with other students, throwing laptop stands at each other during a class. The teacher reprimanded the students, confiscated the stands by putting them on her desk, and sent one student outside for misbehaving.

The teacher instructed the students to sit on the ground and then – when she deemed them calm – left the room to speak to the removed student. Mr Sidhoum and another student retrieved the stands and then resumed throwing them at each other. A sharp point on one of the stands (revealed by pulling the stand apart) penetrated the victim’s eye, causing a significant injury.

The Department of Education admitted that it owed the student a duty of care to take reasonable precautions to protect him against reasonably foreseeable risks of harm. The Court reaffirmed that the content of this duty is not to insure against injury, but to take reasonable care to prevent it. The Court stated that the duty of care does not require that 16-year-old boys be kept under constant observation and supervision; however, a school must account for the ‘notorious’ risk-taking behaviour of teenage boys left to their own devices.

It was alleged that the teacher breached her duty by leaving the stands in a visible and accessible location and then leaving the classroom, leaving two of the students who had just engaged in the activity unsupervised and with access to the stands.

The Court concluded that the teacher did not take reasonable precautions against this foreseeable risk. The Court held that the teacher should not have left the stands in a visible and accessible location while the students were unsupervised, immediately after the students had been throwing the computer stands at one another.

The Court held that a reasonable person in the teacher’s position would either have gathered up the stands and taken them out of harm’s way before leaving the room, or simply not left the room.

However, in finding the Department of Education liable, a discount for contributory negligence of 35% was applied, as it was considered reasonably foreseeable to a person in Mr Sidhoum’s position that resuming the prohibited activity might cause injury. The Court also accepted that the school was not required to warn of the risk because it was an obvious risk (section 5O of the Civil Liability Act 2002 (WA)).

The Court awarded damages of $362,712.50 after a 35% deduction for contributory negligence (total original award of $558,019.14). Notably, the full awarded amount included $225,000 for general damages and $200,000 for future loss of earning capacity.

This decision confirms that although students, particularly 16-year-old boys, do not need to be kept under constant supervision, the non-delegable duty of care owed to students does require teachers to take steps to prevent students from engaging in risky behaviour, especially in circumstances where the students have recently engaged in the behaviour.

Sidhoum v Minister for Education [2022] WADC 35

Obvious risk defence unsuccessful: soil expertise

The High Court has held that the Australian Bushmen’s Campdraft & Rodeo Association (Association) breached its duty of care in failing to stop a campdrafting event until its employees had inspected the arena and were satisfied that the surface was safe.

Campdrafting is a sport that involves a horse and rider working cattle quickly around a figure-eight course. A campdrafting event was organised on 8 January 2011 by the Association.

Ms Tapp was an experienced horse rider and campdraft contestant. In the space of around 45 minutes in the late afternoon of 8 January 2011, four other contestants had ‘bad falls’ while competing.

An experienced campdrafter approached event organisers and said that the competition should be stopped because the ground was becoming slippery and was ‘unsafe’. The organisers delayed the competition to discuss the conditions but decided to continue. Not long afterwards, Ms Tapp competed and fell when her horse slipped on the ground of the arena causing her to suffer a serious spinal injury.

The appeal concerned whether the Association breached its duty of care, whether that breach caused Ms Tapp’s injuries and whether the harm was the result of the materialisation of an obvious risk of a dangerous recreational activity.

The Court characterised the risk as ‘the risk of injury as a result of falling from a horse that slipped by reason of the deterioration of the surface of the arena’. The Court concluded that a reasonable person in the position of the Association would have taken the immediate precaution of stopping the event in response to the substantially elevated risk of contestants being injured from falling from a horse that slipped on the deteriorated surface of the arena after the falls and warning.

The majority also considered whether Ms Tapp’s injuries were as a result of the materialisation of an obvious risk of a dangerous recreational activity: section 5L of the Civil Liability Act 2002 (WA). The Court concluded that this statutory defence did not apply.

The majority of the High Court found that this risk was not obvious, for the following reasons:

• Ms Tapp did not have the opportunity to inspect the area before riding her horse on it.
• Ms Tapp had no reason to be concerned about the surface area. She was unaware of the other falls.
• Ms Tapp was entitled to rely on an assumption that the Association was taking care of the surface area.

As all the elements of the appeal were found to be satisfied, Ms Tapp was successful in her appeal to the High Court and was awarded damages of $6.75 million.

This decision highlights that the responsibility for assessing and determining the safety of the environment for an event rests with the organiser and not with the contestants in circumstances where a contestant had no prior knowledge of the issue as to the safety of the environment.

Tapp v Australian Bushmen’s Campdraft and Rodeo Association Limited [2022] HCA 11

Medical malpractice

Inadequate reasons for primary decision in medical negligence case leads to retrial

WA Country Health Service successfully defended a claim of medical negligence at first instance, but the plaintiff’s appeal to the WA Court of Appeal was successful and a retrial was ordered.

Mr Chester claimed that a hospital had misdiagnosed his left shoulder injury as a subluxation, when he had in fact suffered a dislocation of his left acromioclavicular joint, and that it failed to refer him for an orthopaedic review.

The primary Judge dismissed the action, finding in favour of the hospital on the basis that even if a correct diagnosis had been made, there was a lack of evidence pointing to a better outcome from reduction surgery, or that early surgery would have probably resulted in a better outcome than conservative treatment handled correctly.

The primary Judge also found that there was insufficient evidence to conclude that even if surgical options had been discussed with Mr Chester, he would have elected to proceed with surgery or that he would have been able to raise funds for the surgery privately without any delay. Mr Chester’s action was dismissed.

The Court of Appeal unanimously held that the primary Judge failed to provide adequate reasons explaining the process by which he concluded that Mr Chester had failed to establish a causal connection between his ongoing injuries and the failure to refer him for orthopaedic review. The Court of Appeal found that the reasonings of the primary Judge were not, for the most part, factual findings. Rather, they consisted of the identification of possibilities and uncertainties associated with various factual matters relevant to the questions necessary to establish causation.

The Court of Appeal held that the adequacy of the primary Judge’s reasons required attention to two aspects:

• with respect to the question of whether early surgery was the ‘preferred treatment’, the primary Judge did not set out why he concluded that Mr Chester failed to prove he would have a better outcome with earlier surgery, and that to simply refer to the evidence as ‘not persuasive’, was insufficient reason. The primary Judge ought to set out whether the expert evidence adduced was not preferred, and the reason why one expert’s evidence was preferred over the other. His Honour also did not engage with the clear disagreement between the expert witnesses in relation to the central element of Mr Chester’s case and explain his position.
• the primary Judge’s consideration of the various hypothetical matters did not necessarily compel the conclusion that Mr Chester would have undergone early reduction surgery. Further, his Honour did not set out his intellectual process that led to the conclusion.

This case turns on its own facts, but highlights the need for decision makers to reveal in detail the intellectual thought processes that lead to their findings on breach and causation.

This case will hopefully be the rare occasion where a retrial has to be ordered on appeal, which is a highly undesirable outcome for all parties involved.

Chester v WA Country Health Service [2022] WASCA 57

 

Employment law

Truck drivers found to be independent contractors

The High Court has once again considered the correct test to determine whether a worker is an employee or an independent contractor.

Martin Jamsek and Robert Whitby were both truck drivers who were initially employed by ZG Operations Australia Pty Ltd (ZG) in 1977. Their employment continued until 1986 when they were offered a choice, either to take a redundancy or work as an independent contractor. Mr Jamsek and Mr Whitby both agreed to become independent contractors and they purchased their trucks and formed partnerships with their wives to facilitate that new relationship.

The agreement between Mr Jamsek and Mr Whitby continued until 2017 when ZG sought to terminate the relationship. Mr Jamsek and Mr Whitby then sought declarations in respect of statutory entitlements that they alleged that were owed as employees of ZG.

The High Court considered the totality of the relationship and noted that Mr Jamsek and Mr Whitby owned their respective trucks, the trucks displayed ZG’s logo, they had not worked for anyone else, they paid their own operating expenses, they carried out business as a partnership (or through their own ABN) and they invoiced ZG at an hourly rate which included an allowance for annual leave, public holidays and sick days.

The High Court unanimously concluded that both Mr Jamsek and Mr Whitby were independent contractors. Although there were indicia which supported an employment relationship, the High Court placed significant weight on the fact that Mr Jamsek and Mr Whitby provided ZG with both the skill of a truck driver and the truck required to make their deliveries. In addition, the High Court noted that there was no suggestion that the partnership arrangement was a sham and Mr Jamsek and Mr Whitby had both enjoyed the advantages of that arrangement for many years.

This case confirms that a number of indicia must be considered when characterising whether the relationship is that of an employee or independent contractor; however, not all indicia are weighed equally and in this case the services and equipment provided were a significant factor that outweighed other indicia of employment. If a worker provides expensive equipment and pays for the costs associated with maintaining that equipment it will be a significant factor that supports the existence of an independent contractor relationship.

ZG Operations & Anor v Jamsek & Ors [2022] HCA 2

Professional indemnity insurance

Negligence does not always lead to liability

The Victorian Supreme Court has emphasised the importance of retainers entered into by parties and that only the parties to the retainer may make claims against one another in contract or negligence. Retainers for professional services will inform the nature and extent of the duty of care owing by the professional.

Payton Securities Pty Ltd (Payton Securities) commenced proceedings in the Victorian Supreme Court against Bertacco Ferrier Pty Ltd (Bertacco) for alleged negligence in valuing a development property.

Payton Securities lent money to Z&L Property Management Pty Ltd which was secured over a property at Diamond Creek, Victoria (the Property). Z&L were to develop the Property. At the request of Payton Capital (a corporate entity in a group which included Payton Securities) Bertacco valued the Property.

Z&L eventually defaulted and liquidators were appointed. Payton Securities took possession of and sold the Property but suffered a shortfall on the loan in part in reliance upon the valuation provided by Bertacco. Payton Securities claimed damages against seven defendants, including Bertacco. The claim against Bertacco related to its alleged negligence in valuing the Property.

The Court found that Payton Securities had not engaged Bertacco to undertake the valuation and therefore Bertacco did not owe a duty of care to Payton Securities. The Court found that Bertacco did not owe a duty of care to Payton Securities because the valuation report was not addressed to Payton Securities and it was not reasonably foreseeable to Bertacco that its valuation would be relied upon by Payton Securities. On this basis, the Court concluded that Bertacco had not breached its duties in contract or tort.

The Court commented that to make a finding that Bertacco was negligent, it must not use the benefit of hindsight and can only take into account the circumstances that were present at the time of the valuation. The Court further went on to say that, with respect to valuers, the standard of reasonable care and skill is not a standard of perfection and that not every error resulting in loss is negligent.

There was a finding that Bertacco was negligent in failing to consider to a reasonable extent the significance of a draft bushfire management overlay plan which impacted the Property. However, the Court found that this had no or no significant impact on the assessment of the value of the Property as a whole. In any event, there was no loss to Payton Securities as it had not engaged Bertacco.

The decision underlines the importance of the party engaging the professional being the party that may ultimately suffer the loss. Entities engaging third parties to obtain professional reports may not be able to make claims against those entities in the event that an issue arises.

Payton Securities Pty Ltd v Mason White McDougall (Hurstbridge) Pty Ltd [2022] VCS 394

Establishing breach only is not enough

The Supreme Court of NSW has put would-be claimants on notice that establishing a breach of duty of care is not enough; they must also establish that there would have been a different outcome if the appropriate advice had been provided and a different policy obtained.

The Supreme Court of New South Wales considered a professional negligence claim against an insurance broker relating to the failure to give advice in respect of an exclusion involving swimming pools in a homeowner’s insurance policy.

Dr Flanagan was the owner of a large property with a swimming pool. Dr Flanagan had taken out a Homeowner’s Insurance Policy with CGU Insurance Ltd (CGU) in 2003 and renewed each year until 2012. Due to CGU’s increased premiums, Dr Flanagan decided to take out a policy with Vero. Mr Bernasconi assisted with this process. Mr Bernasconi had been Dr Flanagan’s insurance broker for several years.

In 2012, Dr Flanagan emptied the pool due to a leak. Despite being advised to re-fill the pool to prevent it lifting from the ground, Dr Flanagan failed to do so. In 2013, the pool partially lifted from the ground and damage was caused. This would not have occurred if the valves in the pool were functioning properly, which may have been a cause of the initial leak in 2012.

Dr Flanagan made a claim for accidental damage but her policy with Vero unfortunately excluded events that related to swimming pools. Dr Flanagan submitted that she had relied upon the advice of Mr Bernasconi in taking out the Vero policy (the exclusion did not exist in the CGU policy).

Mr Bernasconi admitted that he had breached the duty of care he owed to Dr Flanagan. However, Dr Flanagan’s claim of negligence against Mr Bernasconi failed as the Court found that an admitted breach of duty did not cause Dr Flanagan’s loss. The Court found that Dr Flanagan failed to take reasonable precautions to avoid loss and, therefore, no other home and contents policy would have responded to the claim. Mr Bernasconi did not cause Dr Flanagan any loss. Dr Flanagan ought to have investigated the issue in 2012 and, if she did so, she would have identified the fault with the valves. This was the fault that caused the issue.

The Court held that Dr Flanagan would not succeed on the causation element unless she could demonstrate alternative cover was available which would have covered her loss. In the circumstances, even if Dr Flanagan had remained insured with CGU, it would not have covered the claim as the pool had lifted due to a valve not working, which would constitute a ‘defect.’ A defect would have enlivened an exclusion clause in the CGU policy and therefore the CGU policy would not have covered the claim either.

The Court determined that in the context of a home and contents policy, the obligation to take reasonable precautions extended to a requirement to investigate the cause of a leak in a swimming pool.

The authority serves as a reminder to claimants that reasonable precautions must be taken to prevent any loss and damage that occurred as, otherwise, the claimant may not be able to establish that a different policy would have responded to the claim.

Flanagan v Bernasconi [2022] NSWSC 381

Directors’ and Officers’ insurance

Court considers prior circumstances and improper profit exclusions in directors’ and officers’ policy

The Federal Court of Australia has considered whether certain exclusions under a D&O policy were enlivened in circumstances where a director gained an improper advantage due to the director’s role in a contract.

Mr McGrath was a director of Hakea Holdings Pty Ltd (Hakea) but was also the sole director, shareholder, secretary and general manager of Denham Constructions Pty Ltd (Denham).

Denham was engaged by Hakea in relation to the design and construction of an aged care facility in New South Wales. Claims were made by Hakea against Denham that it was unable to complete the contract on 21 May 2015 and proceedings commenced in 2017 (within the policy period). This date fell within the insurance contract period. Hakea contended that Mr McGrath ought to have been aware of Denham’s financial difficulty and alerted it to these issues.

It was found that, if Hakea had been alerted to the severe financial distress, the contract would have been terminated. The Court held that Mr McGrath breached his directors’ duties.

The Federal Court was also required to consider complex insurance issues and whether Mr McGrath was covered under his policy with Neon Underwriting Ltd (Neon). Neon was joined to the proceedings as it had denied cover to Mr McGrath. The relevant exclusion excluded loss arising from a director gaining ‘any personal profit or advantage or receiving any remuneration to which he or she is not legally entitled’. A further exclusion considered by the Court excluded cover in respect of claims known by the director or officer prior to commencement of the policy.

The Federal Court found that the ‘Improper Profit’ exclusion had been enlivened as Denham had obtained an advantage to which it was not otherwise entitled due to Mr McGrath’s position. Further, the advantage received by Mr McGrath was a personal advantage as Mr McGrath was the controller of all aspects of Denham. Mr McGrath benefited directly from his role with Denham.

In relation to the prior circumstances exclusion, the Court found that the exclusion had not been engaged. A factual finding was made that Mr McGrath knew that Denham was in severe financial distress. However, the Court found that Mr McGrath was unaware that his conduct exposed him to any liability to Hakea. Accordingly, Mr McGrath was unaware of the potential claim by Hakea against Denham.

This authority serves as a reminder to directors that cover may be excluded if the director is the recipient of the relevant benefit. Subject to the terms of the policy, a director will not be able to successfully argue that the company (rather than the director personally) receives the benefit if the director is the sole controller and beneficiary of that company.

  Hakea Holdings Pty Ltd v McGrath (No. 2) [2022] FCA 995

Workplace injuries

Limbo: section 60 a low bar

The District Court of Western Australia has dismissed a worker’s appeal against an arbitrator’s decision to discontinue her weekly payments in accordance with section 60 of the Workers’ Compensation and Injury Management Act 1981 (WA) (the Act).

Chia Yang alleged that she suffered an injury to her right wrist after she lifted a tray in the course of her employment. On the claim form, Ms Yang declared that the injury completely related to the workplace accident and she had no history of right wrist symptoms. In reliance on that history, liability for the claim was accepted and weekly payments commenced.

Subsequently, the employer became aware that Ms Yang had a previous right wrist injury which had not been disclosed and a medical expert was of the opinion that Ms Yang had reported symptoms of degeneration which related solely to the previous injury. The employer filed a section 60 application alleging a genuine dispute as to liability for the injury based on the previous non-disclosure and sought the discontinuance of Ms Yang’s weekly payments.

The Arbitrator accepted that Ms Yang’s previous right wrist injury and symptoms were relevant to the issue of causation and considered that they ought to have been disclosed when Ms Yang made her claim. The Arbitrator also accepted that the medical opinion supported the existence of a genuine dispute and he was not required to make any findings on the merits of the opinion. The Arbitrator therefore ordered the discontinuance of Ms Yang’s weekly payments.

Ms Yang appealed the Arbitrator’s decision to the District Court and argued, among other things, that:

• the medical opinion relied on by the employer failed to address the correct test for causation;
• the employer was precluded from relying on section 60 because the medical evidence supported a dispute under section 61 and/or section 62; and
• the employer failed to file a statement attesting to the presence of a genuine dispute.

Her Honour Judge Lonsdale affirmed that in section 60 applications it was only necessary for the employer to demonstrate that matters had arisen since the initial acceptance of liability which would have impacted the question of liability. It was not necessary to enquire into the merits of the medical opinion relied on by the employer.

Her Honour rejected Ms Yang’s contention that the medical evidence gave rise to a dispute over capacity rather than liability and agreed that section 61 and/or section 62 were not available to the employer. In addition, her Honour rejected the contention that it was necessary for the employer to file a statement directly attesting to the presence of a genuine dispute and she accepted that the presence of the genuine dispute could be inferred. Ultimately, her Honour dismissed all of the appeal grounds and upheld the Arbitrator’s decision.

This decision affirms that there is a low bar for an employer to establish a genuine dispute under section 60 and there is no requirement for the Arbitrator to undertake a substantive enquiry into the merits of the evidence. In addition, it is not necessary for the employer to file a witness statement as their attitude can be inferred from the evidence.

This case demonstrates that a failure to disclose a relevant pre-existing history can found the basis for a section 60 application if it would have been relevant to the initial decision to accept liability.

Yang v The St Brigids Convent of Mercy Perth Ltd [2021] WADC 132

Redemption settlement recoverable

The WA District Court delivered judgment in favour of Mr Murrell in an earlier judgment, with the parties being granted leave to make subsequent submissions in respect of past loss of earnings, interest, Fox v Wood and the cost implications of an Order 24A offer made by Brosna Construction Pty Ltd (in liq) prior to the matter proceeding to trial.

Mr Murrell resolved his workers’ compensation claim by way of redemption, which was documented in a memorandum of agreement (MOA) to which Brosna Construction Pty Ltd (in liq) (Brosna) was not a party. The MOA recorded that Mr Murrell had received $131,721 in workers’ compensation payments at the time of the agreement. Brosna submitted that an amount of $6150 shown in Mr Murrell’s 2018 tax return reflected the tax that had been paid on Mr Murrell’s workers’ compensation payments and that this amount should form the Fox v Wood component to the damages award.

Mr Murrell claimed that section 92 of the Workers’ Compensation and Injury Management Act 1981 (WA) (the Act) obligated him to pay the entire gross amount of workers’ compensation payments back to the insurer out of the damages award such that the Fox v Wood amount should reflect the shortfall between the net past loss of earnings awarded and the gross compensation payments he received. Judge Bowden agreed with Mr Murrell, referring to the ‘fundamental principle’ that the tribunal should award the injured party such a sum of money as will put him in the same position as he would have been in if he had not sustained the injuries and noting that Mr Murrell is liable to the Australian Taxation Office to pay the full tax on the full amount of the workers’ compensation payments received and that the Fox v Wood amount needed to reflect this.

Prior to the matter proceeding to trial, Brosna had made an Order 24A offer to Mr Murrell offering to settle his claim against it for $400,000 ‘exclusive of compensation’. This became relevant as the overall damages awarded to Mr Murrell exceeded $400,000; however, did not exceed $400,000 plus statutory payments made to Mr Murrell under the Act. Mr Murrell submitted that the term ‘exclusive of compensation’ was too ambiguous and should accordingly be construed against Brosna. Mr Murrell submitted that other interpretations of the term could include that the Order 24A sum should be subject to a deduction of the workers’ compensation recovery or, in the alternative, the sum would be in addition to the workers’ compensation recovery.

Judge Bowden did not accept that there was any ambiguity about the words ‘exclusive of compensation’, noting the plain meaning of ‘compensation‘ when used in the context of an Order 24A offer, encompasses all monies paid to or for the benefit of Mr Murrell under the workers’ compensation claim. That would include weekly payments, medical expenses, Schedule 2 entitlements and redemption of future weekly payments and future medical expenses. 

His Honour’s comments about redemption of weekly payments and future medical expenses were particularly interesting.

Gosper v Christopherson [1986] HCA 28; (1986) 160 CLR 423 (Gosper) is a High Court authority considered to have arguable application in Western Australia where it is considered that a lump sum redemption to resolve a workers’ compensation claim was a payment made at the option of the employer and with no liability on an employer to redeem either future medical expenses or weekly payments and accordingly any redemption amounts could not be considered worker’s compensation payments that were recoverable in any claim under section 92 or section 93 of the Act.

Judge Bowden stated that there was no need to make a determination on this issue, as it was ultimately found that the $400,000 plus statutory payments excluding any redemption figure still exceeded what Mr Murrell was ultimately awarded in damages such that the O24A offer would have costs implications against Mr Murrell.

However, noting the degree to which counsel for Mr Murrell and Brosna argued the application of Gosper in Western Australia, Judge Bowden did provide observations that section 67 of the Act provides that with the consent of the worker and the employer, an order can be made under Part XI of the Act that liability for the incapacity is to be redeemed by the payment of a lump sum (section 67(1)(a)) or the worker and employer can agree to the redemption and register a MOA (section 67(1)(b)). If such an order is made, or a MOA is registered, there would be an obligation under the Act for the employer to pay the redemption. Judge Bowden found that in Gosper, it was found that the making of the lump sum was at the option of the employer, which is different to WA and so monies paid by redemption are payments made within the Act.

This interpretation of Gosper in WA shows that the District Court may accept that any recovery sought by a workers’ compensation insurer against a worker under section 92 of the Act, or a third party under section 93 of the Act will include any redemption payment under section 67 of the Act and reflected in a MOA.

Murrell v Brosna Construction Pty Ltd (in liq) [2022] WADC 68 (S)

Privileged from production

The District Court has determined that arbitrators do not have the power, under section 193(6) of the Workers’ Compensation and Injury Management Act 1981 (the Act), to order the production of an investigation report that is the subject of legal professional privilege.

Mr Vrebac has a disputed worker’s compensation claim for a psychiatric condition he allegedly sustained in the course of his employment with RLA Morgans. He sought orders, by way of an interlocutory application, for the production of an investigation report that was commissioned by RLA Morgans.

The Arbitrator held at first instance legal professional privilege did attach to the report; however, section 193(6) gave him discretion to abrogate the claim for privilege. The Arbitrator ordered the report be produced to him for consideration. The arbitration then found an order for production was necessary for the fair, just, economic and quick resolution of the dispute and ordered its production to Mr Vrebac and his solicitors.

On appeal, RLA Morgans’ solicitors said that, under section 193, arbitrators could call to inspect documents, but once they determined the documents were privileged (as in this case) they had no power to require it be provided to another party. Mr Vrebac’s solicitors contested this and in the alternative submitted that RLA Morgans had not adduced sufficient evidence to support the claim for privilege.

District Court Judge Bowden noted that legal professional privilege is an important common law right and the courts would not construe legislation as abrogating such a right in the absence of unambiguous terms. His Honour found that where the legislature had abolished other common law rights in the Act they had done so clearly and unequivocally, but not so with section 193(6). His Honour concluded section 193(6) did not empower an arbitrator to order that a document the subject of legal professional privilege be provided to another party.

His Honour found the dominant purpose for the preparation of the report was to provide witness statements to RLA Morgans’ solicitors. The report revealed instructions to the investigator had been provided by an employee of RLA Morgans but were confirmed by their solicitors, and the report was to be provided to their solicitors. The report included statements from witnesses and an assessment of their credibility. His Honour found the only reasonable inference was that proceedings were contemplated, and the Arbitrator was correct to hold the report was protected by legal professional privilege.

This case illustrates that, while arbitrators have broad powers, they cannot abrogate a fundamental common law right such as legal professional privilege without express allowance in the Act. It also highlights the importance of ensuring that documents which are intended to be protected under legal professional privilege are obtained in a fashion consistent with this, so that the privilege is clear and unequivocal.

RLA Morgans v Vrebac [2022] WADC 86

Can employers be ordered to establish a return-to-work program?

In the recent decision of Dhu v Royal Perth Hospital, the WA District Court considered whether the Arbitrator erred in law in finding that an Arbitrator was not empowered to order that an employer establish a return-to-work program under section 155C of the Workers’ Compensation and Injury Management Act 1981 (WA) (the Act).

In December 2012, Ms Dhu allegedly suffered a left shoulder injury while working full-time as a registered nurse attending to patients in the hospital ward (Ward Duties) at Royal Perth Hospital (RPH).

Ms Dhu lodged a workers’ compensation claim and her claim was accepted by RPH.

Between January 2013 and December 2016, Ms Dhu participated in a return-to-work program established by RPH with the rehabilitation goal being for Ms Dhu to return to her pre-injury duties by March 2018. However, Ms Dhu’s duties on the return-to-work program involved her attending to patients in a hospital clinic (Clinic Duties).

In April 2021, Ms Dhu was certified as ‘currently fit to perform all aspects of her normal occupation as a registered nurse on an acute medical ward in a public hospital’.

Ms Dhu submitted a request to RPH to return to Ward Duties. RPH refused Ms Dhu’s request as they considered there was a risk that she would aggravate her injury if she returned to Ward Duties.

The Arbitrator dismissed Ms Dhu’s application and concluded that the Act did not contain an express or implied power for an Arbitrator to make an order that an employer establish a return-to-work program under section 155C of the Act.

Ms Dhu sought leave to appeal the Arbitrator’s decision under section 247(1) of the Act on the basis that the Arbitrator had incorrectly construed provisions relating to an Arbitrator’s powers as to return-to-work programs under section 156B of the Act.

Judge Flynn found that the Arbitrator had the power to make an order that RPH establish a return-to-work program with the goal of returning Ms Dhu to her pre-injury position unless RPH was able to provide to the Arbitrator that it would not be ‘reasonably practical’, upon Ms Dhu completing a return-to-work program, for RPH to provide Ms Dhu with her pre-injury position.

His Honour held that the relevant question is whether, on the assumption that Ms Dhu successfully completes a return-to-work program under section 155C of the Act, her pre-injury position will be available at the time she completes the program. If the position is available, then it would be ‘reasonably practical’ for RPH to provide her with that position.

This case highlights the importance of consultation between employer and workers regarding the viability of return-to-work goals.

Dhu v Royal Perth Hospital [2022] WADC 89

Existing evidence can ground a ‘genuine dispute’ under section 60

This matter involved an appeal from the decision of a WorkCover WA Arbitrator to the District Court of Western Australia. It involved consideration of the meaning of and requirements for the existence of a ‘genuine dispute’ under section 60 of the Workers’ Compensation & Rehabilitation Act 1981 (WA).

The employer contended that a genuine dispute existed in circumstances where it became apparent after liability was accepted for the claim that the ‘worker’ was a subcontractor and not a worker for the purposes of the Act. The employer sought to dispute liability for the claim after it received legal advice on evidence that was available to it at the time the liability decision was made, but which it had not considered.

In dismissing the employer’s application, the Arbitrator held that the employer had not discharged its onus to establish a genuine dispute ab initio. In reaching this conclusion, the Arbitrator identified several factors, including that the matters raised by the employer were known to it at the time of the initial acceptance of liability for the claim. The Arbitrator rejected the employer’s contention that the time the assessment is to be made as to the existence of a genuine dispute is the date of the hearing, rather than the date of the initial liability decision.

On appeal, the employer contended that the genuine dispute need only arise at the time of the assessment, not at the time of the initial assessment of liability. The employer contended that it did not need to show a change in circumstance since the liability decision was made.

Judge Stavrianou agreed with the employer and held that the Arbitrator was required to consider whether a genuine dispute existed as at the date of the hearing. His Honour also accepted the employer’s submission that it did not need to show changed factual circumstances after an admission of liability, to establish the existence of a genuine dispute.

The case highlights that a genuine dispute as to liability can arise even if the factual circumstances have not changed since the time the decision was made.

Buckeridge Nominees Pty Ltd  v Foxley [2022] WADC 118

When is a cost award so low as to be unreasonable?

A District Court appeal was brought under section 246 of the Workers’ Compensation and Injury Management Act 1981 (WA) (Act) from a cost decision of a WorkCover WA Arbitrator.

In this case, Ms Wang sought costs in the sum of $70,916.38. Costs were assessed at $20,704.20. Costa Holdings sought to cross-appeal against the Arbitrator’s decision to award Ms Wang the costs of the cost assessment hearing. The appeal was allowed in part and the cross-appeal was allowed.

Ms Wang’s solicitors argued that the Arbitrator erred in law regarding the taxation of costs for the conciliation (items 1 and 2 Workers’ Compensation (Legal Practitioners and Registered Agents) WorkCover WA Costs Determination (Costs Determination)). Ms Wang’s solicitors argued that because a prior milestone (for example, filing an application) was fulfilled by a different person this did not preclude Ms Wang’s solicitors from claiming costs for subsequent milestones.

Judge Bowden held that the correct interpretation of clause 10(4) of the Costs Determination is that a prior milestone is only required to be completed by the party claiming costs for a subsequent milestone if that party is required by the Act, Workers’ Compensation and Injury Management Conciliation Regulations 1982 (WA), Workers’ Compensation and Injury Management Arbitration Rules 2011 (WA) or the Workers’ Compensation and Injury Management Conciliation Rules 2011 (WA) to complete the previous milestone.

His Honour gave the example that if a party has not lodged a conciliation application that party may not be entitled to costs under item 2 of the Costs Determination but they may be entitled to claim costs for the steps that follow (negotiated settlement and arbitration).

Costa Holdings’ solicitors argued in the cross-appeal that the Arbitrator erred in failing to allow Costa Holdings to be heard over the issue of the costs for the costs assessment hearing and in awarding Ms Wang the costs of the cost assessment. The Arbitrator was aware before the decision on costs was made, a Calderbank offer had been made and the Arbitrator should have assessed the costs and then called for further submissions in relation to the Calderbank offer in view of the costs being assessed being less than what was offered in the Calderbank offer.

Judge Bowden allowed the cross-appeal, finding that there was a breach of procedural fairness as Costa Holdings was denied the opportunity to make submissions in respect of its Calderbank offer. The Arbitrator should have assessed the bill, then considered both parties’ submissions regarding sections 264(5) and 264(6) of the Act and the Calderbank offer.

This case confirmed that an Arbitrator should not exclude all claims for costs merely because an applicant has filed their own application and that an Arbitrator should have regard to the terms of a Calderbank offer when determining what costs should be awarded.

Wang v Costa Holdings Pty Ltd [2022] WADC 119

The importance of obtaining contemporaneous medical evidence: recurrence claims

The Court of Appeal of the Supreme Court of Western Australia has highlighted the importance of ensuring contemporaneous medical evidence is obtained when a ‘recurrence‘ claim is lodged.

Ms Dodson had an accepted workers’ compensation claim for an injury sustained on 6 April 2010. Payments ceased when Ms Dodson was issued with a final medical certificate on 19 October 2011.

In 2017, Ms Dodson lodged a further claim alleging a recurrence of her injuries, saying that she had experienced continuous and worsening pain since her initial claim. Liability for the claim was disputed.

At arbitration, Ms Dodson’s account of her symptoms since 2010 was held to be inconsistent and exaggerated. The Arbitrator determined that the most reliable source of evidence was the contemporaneous medical and physiotherapy evidence and the evidence of an independent medical expert called by the employer. The Arbitrator found that Ms Dodson had not reported experiencing ongoing pain after December 2011 up to the recurrence claim in 2017 as alleged. Further, there was no causal link in the medical evidence between the 2010 injury and her ongoing symptoms. The Arbitrator dismissed Ms Dodson’s application.

Ms Dodson’s appeal to the District Court of Western Australia was dismissed by Judge Lonsdale.

Ms Dodson sought leave to appeal in the Court of Appeal on the grounds that the learned primary Judge erred in law in finding as a matter of fact that she was not experiencing pain in the period from 2011 to 2017 and that there was no continuity of symptoms and that the decision was unfair because she had not been cross-examined on her medical history (an alleged breach of Browne v Dunn).

The Court of Appeal upheld the decision of Judge Lonsdale and the Arbitrator and dismissed the appeal on the basis that no error of any kind had been demonstrated.

This decision highlights the importance of obtaining complete medical records in order to present a contemporaneous account where credibility is in issue.

It is also a reminder that a failure to accept evidence given by a party that is not challenged on cross-examination will not be a breach of Browne v Dunn if the party is placed on notice that the evidence is being challenged by other means such as pleadings or submissions.

 Dodson v Woolworths Group [2022] WASCA 22

The rule in Browne v Dunn: the importance of effective cross-examination

This matter involved an appeal by William Moyes against the orders of the trial judge, dated 3 July 2020, dismissing his action in the District Court of Western Australia.

ENSCO Australia Pty Ltd (ENSCO) operated an offshore drilling rig. GRN Australasia Pty Ltd (GRN), was a labour hire business that employed Mr Moyes and provided his services to ENSCO.

Mr Moyes alleged that he was injured in the course of his employment on 19 January 2012, when he slipped on mud that had been deposited as a result of the drilling process, causing him to fall (Accident). As a result, Mr Moyes allegedly suffered an injury to his spine and damage to the sensorial nerves in his mid‑back, causing pain of a type named ‘nociplastic pain’. Mr Moyes also claimed to have developed psychological sequelae.

Mr Moyes issued common law proceedings, seeking damages from ENSCO as the occupier of the drilling rig and from GRN as his employer, for the injuries and loss he allegedly suffered as a consequence of the accident. The matter proceeded to trial in the District Court in 2017. At the end of the trial, counsel for Mr Moyes conceded that damages could not be awarded against GRN, as Mr Moyes had not been assessed as having a relevant whole person impairment for the purposes of accessing common law damages against his employer under section 93K of the Workers’ Compensation & Injury Management Act 1981 (WA). The claim against GRN was dismissed and the primary decision dealt only with the claim against ENSCO. The trial judge dismissed Mr Moyes’ claim against ENSCO.

Mr Moyes appealed the trial judge’s decision on the following grounds:

• he alleged that the trial judge erred in law in finding that he did not fall with significant or sufficient force to cause nociplastic pain in circumstances where:
  • Mr Moyes’ evidence on this topic was not challenged at trial. Mr Moyes raised the rule in Browne v Dunn [1893] R 67 and contended that the trial judge was bound to accept his evidence regarding the degree of force with which he fell, because it had not been challenged in cross-examination; and
  • there was no evidence as to the amount of force necessary to cause nociplastic pain as asserted by Mr Moyes.
• the trial judge erred in law in denying Mr Moyes procedural fairness in making findings adverse to him on the topic of medical causation in circumstances where his evidence on the topic was not the subject of cross‑examination.

Mr Moyes sought orders that the trial judge’s decision be set aside, and judgment entered against ENSCO for damages to be assessed.

The Court of Appeal upheld the trial judge’s decision. With respect to the issues of cross-examination and the rule in Browne raised by Mr Moyes, the Court of Appeal held that no error of law had been established. The Court of Appeal held that, under cross-examination at trial, Mr Moyes’ evidence had been adequately challenged in relation to the existence and extent of his alleged nociplastic pain and alleged psychological sequalae and the veracity of the history of symptoms Mr Moyes had provided to doctors. The Court of Appeal also held Mr Moyes was given the opportunity to answer those challenges at trial. On that basis the Court of Appeal held that the rule in Browne had been adhered to and the contradictory evidence had been sufficiently put to Mr Moyes in cross-examination.

This case highlights the important role of cross-examination at trial and the necessity to adequately address any contradictory evidence a party intends to lead that may contradict or challenge the evidence of another party.

Moyes v Ensco Australia Pty Ltd [2022] WASCA 104

Death at hotel gym on business compensable

The South Australian Employment Tribunal has found the death of an employee while exercising in a hotel gym during a work trip to China to be compensable under the Return to Work Act 2014 (SA).

Mr Palmbachs, the Chief Financial Officer of Core Lithium Ltd (Employer), suffered a fatal aggravation of pre-existing coronary heart disease on the morning of 12 November 2018 while exercising in a gym in a hotel arranged by his employer during a business trip to China. Mr Palmbachs had arrived at the Marriot Hotel in China on the evening of 11 November 2018 and his first work-related meetings were scheduled for 12 November 2018 to engage potential customers.

The claim was initially rejected by Return to Work SA, on the basis that the gym exercise did not constitute part of his employment, and was not undertaken with the inducement or encouragement of the employer. Mr Palmbachs’ wife sought compensation under the South Australian scheme and the dispute was referred to the South Australian Employment Tribunal.

It was not disputed that Mr Palmbachs’ employer had booked his accommodation in China and was aware of the hotel’s facilities (including the gym). It was also not disputed that the Employer did not say anything expressly to Mr Palmbachs about the gym or whether he could use its facilities.

Deputy President Judge Crawley found the death was compensable for the following reasons:

• the injury was an activity engaged in with the implied encouragement of the Employer;
• the injury occurred during an interval or interlude within an overall period of work at a place where the Employer required Mr Palmbachs to be; and
• it was not a sporting activity (an exemption under the South Australian Scheme).

As part of his reasoning, Deputy President Judge Crawley confirmed that the mere fact the Employer had provided the hotel accommodation complete with gym facilities was sufficient to establish that he was induced or encouraged by the Employer to attend the gym. Alternatively, the Employer’s encouragement to undertake the gym activity can be implied from the fact that the Employer provided Mr Palmbachs with hotel accommodation that included a gym.

The wording of the Return to Work Act 2014 (SA) is analogous to the Workers’ Compensation and Injury Management Act 1981 (WA) as it requires that an injury arises out of the course of employment and the employment is a significant contributing cause of the injury. However, the Return to Work Act 2014 (SA) has an exclusion related to social or sporting activities if they are not undertaken at the direction or request of the Employer. In this case an individual workout was not considered a social activity nor an organised or structured formal activity.

This case is a reminder for employers that an injury suffered during a work-related trip, even while not engaged in actual work, will be compensable if an employer expressly or impliedly induced or encouraged an employee to spend their time between periods of actual work at a particular place or in a particular way.

Palmbachs v Return to Work Corporation of South Australia [2022] SAET 14

What happens when an employee consents to unsafe work practices

The High Court of Australia has enforced the need for employers to create and enforce a safe system of work even in circumstances where an employee consents, or appears to consent, to unsafe practices.

In June 2009 Ms Kozarov was employed as a solicitor in the Victorian Office of Public Prosecutions (OPP) within the Specialised Sexual Offences Unit (SSOU). Ms Kozarov’s role required her to deal with serious sexual assault offences involving children. The OPP had identified that vicarious trauma was an unavoidable consequence of working with survivors of sexual assault. In January 2008 the OPP published a Vicarious Trauma Policy intended to protect employees of the SSOU against vicarious trauma and post-traumatic stress disorder (PTSD).

Ms Kozarov had first identified the impact of her work on her personal life to her managers in a one-day workshop in either September 2009 or March 2010. Subsequent events put the OPP on notice of the risk of injury, including on 9 June 2011, when Ms Kozarov resisted, unsuccessfully, the allocation of a particular case due to her existing workload.

During the trial which followed the allocation of the additional case, Ms Kozarov required two weeks of sick leave, and in this period one of the complainants attempted suicide. Ms Kozarov, and her manager, were advised of this event, but no support was offered to her. On 28 August 2011, while on sick leave, Ms Kozarov applied for a promotion within the SSOU. On 29 August 2011, Ms Kozarov was involved in an email dispute with her manager following an assertion that she was not coping with her work. Ms Kozarov was diagnosed with PTSD in February 2012.

It was not disputed that the OPP had breached its duty of care to provide Ms Kozarov with a safe system of work. It was also not disputed that Ms Kozarov’s PTSD was caused by the OPP’s failure to undertake an appropriate welfare check in around August 2011. However, Ms Kozarov disputed the Court of Appeal’s finding that she would not have accepted a rotation out of the SSOU if one had been offered.

The High Court found that Ms Kozarov’s job application was not an indication that she would not accept a rotation out of the SSOU and, rather, if provided with adequate training on the signs and symptoms of PTSD, along with an appropriate welfare check and opportunity for rotation, she would have transferred, and in doing so she would have reduced her exposure to trauma.

The decision is a reminder that just because an employee appears to consent to unsafe work practices, it does not absolve the employer of their duty to enforce a safe system of work, particularly where the risk of injury is significant.

Kozarov v Victoria [2022] HCA 12 (13 April 2022)

General insurance

Cleanaway cleans up at the District Court

Cleanaway Waste Management Pty Ltd (Cleanaway) brought a claim against Insurance Australia Limited t/as Swann Insurance (Swann) under section 51 of the Insurance Contracts Act 1984 (WA) in the District Court of Western Australia arising from a motor vehicle collision between a motorcycle driven by a person insured by Swann and a Cleanaway truck.

The circumstances of the collision were that on 31 October 2013, Mr Anthony Goncalves (deceased) died when he rode his Harley Davidson motorcycle, at speed, into the path of an oncoming truck owned by Cleanaway. At the time of the collision, the deceased had a Harley motorcycle insurance policy (policy) with Swann.

Immediately before the collision, the deceased travelled onto the wrong side of the road to overtake another vehicle. While overtaking, the deceased accelerated at speed and collided with the centre-front of the Plaintiff’s truck.

The post-mortem results revealed the deceased had methylamphetamine in his system. Eyewitness reports of the collision noted the deceased was wearing sunglasses, but no helmet and had accelerated to a speed of about 100 km per hour, before impact.

The parties asked the Court to determine the following issues:

• whether the loss and damage to the plaintiff was caused by a deliberate act or an accident; and
• whether Swann’s liability to indemnify was excluded under the relevant policy by reason of the deceased’s intoxication or failure to take reasonable precautions to avoid the accident.

Swann denied liability and argued that the policy did not extend to cover the plaintiff’s loss as the policy excluded liability for deliberate acts or intoxication or arising from a failure to take reasonable precautions.

In making a determination of whether the collision was an accident or deliberate act it meant that:

• if the Court determined that the collision was an accident, the Court must then consider whether the policy exclusions applied; and
• if the collision was deliberate, Cleanaway’s case would fail.

The Court ultimately found in favour of Cleanaway.

The Court relied on the principle from Vero Insurance Limited v Rail Corporation New South Wales [2013] NSWCA 372, that in the absence of clear evidence to the contrary, an intention on the part of an insured to cause damage is improbable. Based on the evidence before the Court, Swann could not prove on the balance of probabilities that the deceased intended to cause the collision.

As the collision was deemed an accident, it then fell to the Court to consider whether any of the exclusions applied (the deliberate act exclusion being ruled out once the Court found that the collision was an accident).

The Court found that the insurance policy did not define ‘under the influence’ or ‘reasonable precautions’ and so the ordinary meaning of those words should apply (it had also noted that the policy did not define ‘accident’ either and it applied the ordinary meaning of that term).

When applying the ordinary meaning of ‘under the influence’ the court concluded that this did not mean an insured was disentitled to the benefit of a policy of insurance simply because a drug was present in their system at the time of the collision, the drug needed to be at a quantity capable of affecting the driver. The Court also found that the reasonable precautions exclusion did not apply because Swann could not make out, on the balance of probabilities, there were not competing reasonable explanations for the motorcycle driver’s actions.

The Court was then required to consider whether Swann, under the policy, was required to compensate Cleanaway for their loss and damage.

The Court again turned to consider the policy, which required Swann to pay compensation for loss and damage to someone else’s ‘property’ caused by an insured. The term ‘property’ was not defined. The Court therefore adopted the natural and legal meaning for the term property.

This case highlights the importance of adequately defining key words and phrases in an insurance policy which are relevant to the operation of the policy and policy exclusions. In the current case (given the facts involved) had the insurance policy defined ‘under the influence’ or ‘reasonable precautions’ in a restrictive way, the decision may have been more favourable to Swann Insurance.

Cleanaway Waste Management Ltd v Insurance Australia Ltd T/As Swann Insurance [2022] WADC 37

General liability

It wasn’t the prolapse but the awareness that led to timely success

This was a successful appeal against the Principal Registrar’s dismissal of an application under section 39 of the Limitation Act 2005 (WA) (the Act) for an extension of time to commence proceedings for damages relating to a personal injury following vaginal mesh implant surgeries.

The decision has been appealed by Dr Natalwala to the WA Court of Appeal.

Tina Tompkins commenced proceedings in the Federal Court of Australia on 29 May 2019 against Dr Jay Natalwala, a specialist obstetrician and gynaecologist, claiming damages for personal injuries allegedly caused by vaginal mesh implant surgeries performed by Dr Natalwala on 15 June 2012 (first implant surgery) and 7 November 2013 (second implant surgery). The proceedings were transferred to the Supreme Court of Western Australia and then to the District Court of Western Australia in 2020.

Dr Natalwala denied the allegations and pleaded that the claims were statute barred. Ms Tompkins applied to extend the time within which to commence her action against Dr Natalwala under section 39 of the Act, which allows a plaintiff to apply for leave to commence an action for damages relating to a personal injury even though the limitation period has expired. The application was dismissed and Ms Tompkins appealed against this decision. The key issues for determination in the appeal were:

• whether the action for damages for personal injury was commenced within the limitation period;
• if not, whether the Court’s discretion was enlivened under section 39 of the Act to extend the time within which Ms Tomkins’ action for damages for personal injury could be commenced; and
• if so, whether the Court should exercise its discretion to extend the time within which the action be commenced, and for how long.

District Court Judge Russell reaffirmed that the relevant date for accrual of the cause of action for personal injury is not when the injury (the subject of the action) was sustained, but the earlier of: (a) when the person becomes aware of having sustained a not insignificant personal injury; or (b) the first symptom, clinical sign or manifestation of personal injury. The action must be commenced within three years of such awareness or manifestation.

Her Honour concluded that it was not until Ms Tomkins was informed by a different specialist, Dr Jessica Yin, on or about 6 September 2017 that her ongoing symptoms may have been caused by the first and/or second implant surgery that Ms Tomkins’ symptoms and clinical signs were recognised as manifestations (or potential manifestations) of a not insignificant injury. Her Honour accepted Ms Tompkins’ evidence that this was the first time a medical practitioner explained to her that her ongoing symptoms could be related to the implant surgeries. Ms Tompkins instructed solicitors on or about 11 October 2017, who obtained an expert report, supporting the allegations, dated 7 November 2018.

District Court Judge Russell determined that the relevant date for accrual of the cause of action for personal injury is not when the injury (the subject of the action) was sustained, but the earlier of: (a) when the person becomes aware of having sustained a not insignificant personal injury; or (b) the first symptom, clinical sign or manifestation of personal injury. The action must be commenced within three years of such awareness or manifestation.

Her Honour concluded that it was not until Ms Tomkins was informed by a different specialist, Dr Jessica Yin, on or about 6 September 2017 that her ongoing symptoms may have been caused by the first and/or second implant surgery that Ms Tomkins’ symptoms and clinical signs were recognised as manifestations (or potential manifestations) of a not insignificant injury. Her Honour accepted Ms Tompkins’ evidence that this was the first time a medical practitioner explained to her that her ongoing symptoms could be related to the implant surgeries. Ms Tompkins instructed solicitors on or about 11 October 2017, who obtained an expert report, supporting the allegations, dated 7 November 2018.

District Court Judge Russell determined that it was not until the date of the expert report that Ms Tompkins became aware of precisely what her injuries were, their physical cause and that they were attributable to the conduct of Dr Natalwala. Therefore, because Ms Tompkins’ proceedings were issued on 29 May 2019, within three years of both 6 September 2017 and 7 November 2018, the action for damages for personal injury was issued within the limitation period and an extension of time was not required.

Her Honour stated that even if she was wrong and the action had not been issued within time, she would exercise her discretion under section 39 of the Act to extend the limitation period to 7 November 2021. That is, three years from the date of the expert report, by which Ms Tompkins became aware her injuries were attributable to the surgeries performed by Dr Natalwala. In exercising her discretion to extend the time, her Honour did not consider that Dr Natalwala would suffer any significant prejudice nor any diminished prospects of a fair trial of the action.

Her Honour noted that given the sheer volume of medical consultations, procedures and surgeries undergone by Ms Tompkins, it was difficult to see what more she could possibly have done to become aware earlier as to the cause of her injuries and that they were attributable to the conduct of Dr Natalwala.

The case is a reminder that the limitation period does not always run from the event causing the damage/injury and can sometimes run from when the damage/injury is first discovered.

Tompkins v Natalwala [No 2] [2022] WADC 50

Damages Assessment

Damages Assessment Summary Table