Res ipsa loquitur: when the accident speaks for itself

By Barbara Casado

Insurance Australia Limited t/as NRMA v Richards [2023] NSWSC 909

A recent decision in the Supreme Court of New South Wales has reinforced the test necessary to establish the doctrine of res ipsa loquitur (‘the thing speaks for itself’). In this article, we examine the case of NRMA v Richards, which confirms that this doctrine exists in Australia and when defending statutory benefits claims under sections 3.11 and 3.28 of the Motor Accident Injuries Act 2017 (NSW) (MAI Act).

Facts

Wendy Richards (Richards) was involved in a head-on motor vehicle accident on 21 July 2020 (accident) after veering into oncoming traffic. The First Defendant was amnesic to the accident, but witnesses had indicated that – prior to veering into oncoming traffic and colliding with a vehicle (other vehicle) – the First Defendant had not been driving erratically and there was no hazard on the roadway. The First Defendant stated to police that she had been prescribed a medication that may have caused drowsiness and that she may have had a microsleep.

The First Defendant brought a statutory benefits claim under the MAI Act against Insurance Australia Limited t/as NRMA (Insurer), the other vehicle’s compulsory third party (CTP) insurer. Liability to pay benefits for the first 26 weeks was admitted but, thereafter, the Plaintiff denied liability under sections 3.11^[1] of the MAI Act, on the basis that the First Defendant was wholly or mostly at fault for the accident.

The First Defendant sought internal review, which affirmed the Insurer’s original decision, and the First Defendant then lodged an application for miscellaneous claims assessment at the Personal Injury Commission (PIC).

PIC decision under review

Member Bridie Nolan (Member) – in her decision on 14 December 2022 – determined that:

1. the motor accident was not wholly or mostly caused by the fault of Richards;
2. the motor accident was not caused by another person;
3. the defence of res ipsa loquitor was not available to the Insurer.

The Member found that the burden of proof fell on the Insurer regarding entitlements under sections 3.11 and 3.28 of the MAI Act and had failed to discharge the burden.

In coming to this decision, the Member stated:

’80. The principal question therefore on this application is whether the insurer can rely on the doctrine of res ipsa loquitur to make out the claimant’s fault or negligence in circumstances where the claimant’s vehicle swerved onto the wrong side of the road causing the collision. While the cause of the accident has been identified, that is the vehicle swerved onto the wrong side of the road, the reason for this manoeuvre has not been positively identified. In the circumstances, the principles of re ipsa loquitur is inappropriate: see the discussion in Schellenberg v Tunnel Holdings Pty Ltd at [20]-[25] and [39]-[47] (Gleeson CJ and McHugh J).’

The Member was of the view that:

• the facts did not ‘warrant the inference that the accident was occasioned by negligence’ given ‘direct evidence of negligence is lacking’;^[2]
• the ‘evidence confirms in my mind that the accident was a sudden occurrence for which there was no warning’ and Richards was ‘taking evasive action in the agony of the moment’;^[3]
• Richards ‘unexpectedly found herself in a situation, which was not of her making to which she was forced to react to suddenly and unexpectedly move into the path of the insured driver’ was the most probable explanation having regard to the totality of the evidence;^[4]
• Richards was not using her phone and was not otherwise inattentive or distracted’;^[5] and
• steering to the right was an error of judgement made by Richards ‘in the “agony of the moment”‘ and Richards therefore did not act unreasonably.^[6]

The Insurer was therefore liable to pay statutory benefits to Richards post-26 weeks.

The Insurer disagreed with the Member’s decision and filed a summons seeking judicial review in the Supreme Court of NSW.

Issues

The Insurer contended that the Member’s decision should be set aside as there was an error on the face of the record, jurisdictional error and, further, that there had been a constructive failure to exercise jurisdiction.

The primary issues were whether the Member erred in respect of the burden of proof falling on the Insurer and whether the defence of res ipsa loquitur was available to the Insurer.

Decision

The Member was found to have taken the correct approach in relation to the burden of proof, namely that the onus fell on the Insurer. Acting Justice Schmidt, in coming to this decision, noted, among other things, that Parliament had imposed the burden on the Insurer in the statutory benefits claims,^[7] lodgement of a claim triggered a duty to issue a liability notice and often liability investigations by the insurer in order to do so,^[8] duties were imposed on insurers to provide reasons for their decisions,^[9] and liability was deemed to be accepted if a the insured failed to issue a liability decision.^[10] To find that the onus fell on Richards would be ‘both illogical and contrary to the statutory object of the quick, cost effect and just resolution of disputes’.^[11]

An error of law was however established in relation to the Member’s approach to the doctrine of res ipsa loquitur (‘the thing speaks for itself’).

With reference to Schellenberg v Tunnel Holdings Pty Ltd,^[12] Schmidt AJ confirmed the doctrine exists in Australia^[13] and stated:

‘Res ipsa loquitor is not a distinct, substantive rule of law, but an inferential reasoning process, applied where the plaintiff bears the onus of proof in relation to alleged negligence: at [22]. In this case it was the insurer who had to prove fault, a concept which under this statutory scheme encompasses negligence and so was, accordingly, also entitled to rely on this inferential reasoning process.’^[14]

Her Honour ultimately confirmed the doctrine may allow negligence to be inferred from an unexplained fact, stating:

‘Whilst the burden of proof does not alter, the doctrine may permit negligence to be inferred from a fact which is unexplained, in this case, as the member found, what caused Mrs Richards to drive into oncoming traffic as she did. As explained in Schellenberg at [73], when a car runs off the road, that fact alone and unexplained, provides some evidence of negligence’. ^[15]

Therefore, while the Insurer bears the onus of proof in the statutory benefits claim, the Insurer was entitled to rely on the doctrine of res ipsa loquitur because it was an unexplained accident which caused the injury, the accident was one that ordinarily would not occur without negligence, and the vehicle that caused the injury was under the control of Richards.^[16]

It was emphasised that the Member was required to consider circumstantial facts as she had done. However, the Member’s decision that reliance on the doctrine of res ipsa loquitur was not available, in circumstances where Richards could not give direct evidence on matters (but witnesses had done so at least in respect of some of the factual issues), was incorrect.^[17]

Acting Justice Schmidt granted the Insurer the relief sought, namely the Member’s decision was set aside and the matter was remitted to the PIC for determination by a different member according to law.

Implications for CTP insurers

It is now abundantly clear that, in statutory benefits claims, CTP insurers bear the onus of proof regarding liability under sections 3.11 and 3.28 of the MAI Act. CTP insurers must, as always, take care to ensure that they have the evidence to meet the allegations against claimants.

In appropriate matters, it is open to CTP insurers to deny claims on the basis of wholly or mostly at fault in accordance with the doctrine of res ipsa loquitur, namely where the accident speaks for itself.

Insurers must ensure that there is sufficient basis to rely on the doctrine, namely that the accident that caused the injury is largely unexplained, the accident is one that would not ordinarily occur in absence of negligence, and the vehicle involved was under the control of the claimant.

We wait to see how this decision will impact not only the management of CTP claims but also the decisions of the Personal Injury Commission.

This article was written with the assistance of Nick Zraika, Law Graduate.

Footnotes

[1] Sections 3.11 and 3.28 of the MAI Act now refer to 52 weeks, rather than 26 weeks, and applies to accidents after 1 April 2023.
[2] Richards v Insurance Australia Limited t/as NRMA Insurance [2022] NSWPIC 721 at [85].
[3] Ibid.
[4] Ibid at [88].
[5] Ibid at [89].
[6] Ibid at [90].
[7] Insurance Australia Limited t/as NRMA v Richards [2023] at [19].
[8] Ibid at [51].
[9] Ibid at [46] and [49].
[10] Ibid at [47].
[11] Para 60 judgment.
[12][2000] HCA 18; 200 CLR 121; 170 ALR 594.
[13] n 7 at [99].
[14] n 7 at [101].
[15] n 7 at [102].
[16] n 7 at  [105] referring to n 12 at [25].
[17] n 7 at [109]-[116].