This edition includes:
- Unsatisfactory Professional Performance: How adequate do reasons have to be?
- Double Insurance: Lambert Leasing Inc v QBE Insurance (Australia) Ltd
- Failure to Mitigate: Not Just a Failure to Attend
- A Minister’s Duty of Care: Gunns Limited v State of Tasmania
If you have any queries or would like further information regarding this edition, please contact:
Mat Wilkins
Principal
M: 0419 106 417
E: mwilkins@pageseager.com.au
Unsatisfactory Professional Performance: How adequate do reasons have to be?
(Click here to view the case)
On 30 October 2012, the Medical Board of Australia received a notification from a former patient of the appellant regarding a coronary angioplasty which was performed on him. The complaint concerned the appellant’s alleged failure to explain the risks and possible complications of a coronary angioplasty, and to discuss alternative, non-invasive, treatment options. The patient signed a consent form which outlined a number of risks and included a declaration that the patient understood the risks and had been provided with satisfactory information.
On 2 November 2011, the coronary angioplasty was performed. Fifteen minutes after the surgery was performed, the patient was found to have suffered a stroke. In May 2014, the Medical Board brought allegations of unsatisfactory professional performance against the appellant.
The Panel found that the appellant had behaved in a way that constituted unsatisfactory professional performance and issued a caution to the appellant. This was because the appellant had failed to maintain clear, appropriate, accurate and detailed clinical records of his discussions with the patient regarding the risks and potential complications of the coronary angioplasty.
The appellant appealed the Panel’s decision at first instance to the Supreme Court of Western Australia. The Supreme Court dismissed the application for judicial review.
The appellant again appealed this decision to the Court of Appeal arguing that the Panel’s reasons for the decision were inadequate. The appellant submitted that the failure of the Panel to give adequate reasons for its decision gives rise to the inference that it failed to exercise its power according to law.
The Court examined the requirement for reasons as contained in the National Law. In essence, fulfillment of the obligation to give reasons ensures that a person whose interests may be adversely affected by a decision understands why the decision has been made, and allows a party dissatisfied with the decision to determine whether there has been a reviewable error. The Court found that the appellant was failing to read the decisions as a whole and was taking statements in the decision out of context by investing it with a meaning that the Panel never intended. The only real issue in controversy before the Panel was whether the appellant’s conduct involved the exercise of the expected standard of care. That was an evaluative decision for the Panel to make. The Panel was not required to say expressly in its reasons that those matters were not in dispute. When its reasons are read as a whole, it evidently proceeded on those undisputed facts. The Court also held that the Panel’s reasoning process was explicit and succinctly expressed.
Furthermore, the appeal was dismissed on the basis that there is no right of appeal for cases where a practitioner is cautioned.
Double Insurance: Lambert Leasing Inc v QBE Insurance (Australia) Ltd
(Click here to view the case)
This case arose out of the Lockhart River air disaster. On 7 May 2005, an aircraft on approach to land at Lockhart River Airport in far-north Queensland struck terrain and crashed, killing all 15 people on board. Just under two years prior to the crash, on 9 May 2003, Lambert Leasing Inc and SAAB Aircraft Leasing Inc (the appellants) sold the aircraft under a Purchase Agreement to Partnership 818, which was made up of Mackellar Mining Equipment Pty Ltd and Dramatic Investments Pty Ltd (the second and third respondents). On 17 June 2003, Partnership 818 leased the aircraft to Lessbrook Pty Ltd (Hire Lease Agreement).
The Purchase Agreement required Partnership 818 to maintain aircraft liability insurance for a period of two years (until 9 May 2003) which covered the appellants. At the time of the accident, there were two policies that would arguably respond to claims arising out of the crash. First, a Global Aerospace Underwriting Manager Limited (Global Policy) where the insured was listed as SAAB and its subsidiaries. The second was a policy between QBE Insurance (Australia) and Lessbrook Pty Ltd (QBE Policy) where the appellants were listed as “Additional Insureds”. Both policies contained “other insurance” clauses which purported to reduce each insurer’s liability where there was more than one policy covering the same risk.
The relatives of the deceased crew and passengers commenced a number of proceedings in the United States against the appellants (US Proceedings). In 2007, the appellants notified a claim to Global and were subsequently granted indemnity under the Global Policy. Global paid all of the appellants’ defence costs in the US Proceedings. In 2010, Global and the appellants entered into a Deed whereby the amounts paid out by Global were characterised as a loan. Pursuant to the Deed, the appellants were required to commence proceedings against QBE Policy (as well as others) to try and recover the “loan amounts”.
The appellants sought indemnity under the QBE Policy for the US Proceedings. QBE declined to grant indemnity (for a number of reasons), one being that it sought to rely upon the “other insurance” clause. The appellants’ position was that the “other insurance” clause was void pursuant to section 45 of the Insurance Contracts Act 1984 (Cth) (ICA).
At first instance, the Supreme Court of NSW found that QBE did not breach its obligation of utmost good faith and whilst it was accepted that there was dual insurance in respect of certain claims, the appellants could not recover from QBE for the costs which had been incurred in the US proceedings. The appellants appealed that decision to the Court of Appeal. The insurance issue on appeal were whether section 45 of the ICA rendered the other insurance clause void and if it did not, whether the two “other insurance” clauses cancelled each other out.
The Court found that section 45 of the ICA requires that the “Insured” must have “entered into” both contracts of insurance. The appellants did not “enter into” the QBE Policy or the Global Policy. In reaching its decision, the Court considered the High Court decision of Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd*. In Zurich, the High Court found that section 25 is only concerned with other insurance provisions affecting double insurance where the Insured is a party to both relevant contracts of insurance.
The QBE Policy was not entered into by the appellants. They were an “Additional Insured” under that policy, implying a third party beneficiary role of the contract (as per the requirements of the Purchase Agreement) rather than a party who has entered into the contract. The appellants were not in any way involved in negotiating the terms of the insurance, nor did they pay any part of the premium. With respect to the Global Policy, the appellants argued that both had entered into this contract, despite only SAAB being the named Insured, because the Insured was listed as “SAAB and its subsidiaries, past and present”. As Lambert was a subsidiary, it had entered into the contract. The Court did not accept this argument. If they were to follow the appellants’ reasoning, there would be temporal problems with all “future” subsidiaries having entered into a contract when such a subsidiary may not even be in existence at that time. Furthermore, the extension to subsidiaries means that they have an insurable interest. It does not mean that they are a contracting party to the contract.
The Court’s conclusion was that section 45 did not render clause 9 of the QBE Policy void. Therefore, the two “other insurance” clauses cancel one another out and the insured is entitled to elect which of its two insurers it requires indemnity from. The appellants elected Global. Despite the attempt by Global and the appellants to argue that the payments made by Global were not payments under the policy, the Court found that Global had clearly indemnified the appellants. Even on the contingent basis that the appellants were entitled to be indemnified under the QBE Policy, QBE would have succeeded on the basis that the appellants could not recover the same amounts under the QBE Policy as they had already been indemnified under the Global Policy. Whilst Global has the right of contribution under section 76 of the ICA against QBE, no such claim was made.
*(2009) 240 CLR 391
Failure to Mitigate: Not Just a Failure to Attend
(Click here to view the case)
On 16 October 2007, the respondent, Troy Eirth, was injured as a result of negligent driving by the appellant, Geoffrey Spaulding. The respondent brought an action for damages in respect of his injuries. Interlocutory judgment for damages to be assessed was entered on 18 August 2008. Justice Estcourt assessed the damages in the sum of $361,913 on 2 April 2015. The appellant appealed from that judgment, contending that his Honour made a series of errors which resulted in the judgment sum being too high. The respondent cross-appealed.
Overall, the appellant was successful as the award for damages was reduced from $361,913 down to $215,913. The majority of the reduction, namely $140,000, was the amount awarded at first instance to the respondent for past and future loss of earning capacity. The appellant contended that nothing should have been awarded under this head.
The primary judge made findings to the effect that, although the respondent’s earning capacity was impaired by his injuries, he would never have undertaken any remunerative work if the accident had not occurred. Therefore, any impairment on earning capacity was not compensable. However, his Honour went on to assess damages under this head in the sum of $140,000. The majority of the Full Court found that the award of $140,000 was “absolutely irreconcilable with the findings that the respondent would not have exercised his earning capacity, and that his loss of earning capacity was therefore not productive of financial loss, and not compensable”. It was also held that this was not a case in which the Court could properly substitute findings of its own as to whether and to what extent the respondent, but for the motor vehicle accident, would have earned any income during the rest of his life. The primary judge’s finding that the respondent’s loss of earning capacity was not productive of financial loss was an unimpeachable finding. There were no inconsistent findings of fact or ambiguity, “[T]here was simply an award of $140,000 when the findings compelled the learned primary judge to award nothing under this head”.
The balance of the reduction ($6,000) was the result of various other reductions, offset against additional awards made to the respondent. Of particular note is the fact that general damages were increased from $75,000 to $90,000.
At first instance, the respondent was awarded $75,000 for pain and suffering and loss of amenities. This was on the basis that the amount was discounted because of his failure to mitigate his damage by not attending a pain clinic for appropriate treatment in 2009. Chief Justice Blow noted that a defendant bore the onus of establishing a failure to take reasonable steps to mitigate damage* before finding that in this case the onus was not discharged. His Honour said that there was no evidence as to whether the treatment was available, whether consultations with the specialist were an inadequate substitute for whatever the treatment had to offer, why the respondent did not pursue the treatment, or what any general practitioner thought of the treatment. Accordingly, his Honour found that the submission as to failure to mitigate should have been rejected and he awarded the respondent $90,000.
Although he ultimately agreed with the findings of the Chief Justice, Pearce J was of the opinion that but for the award for loss of earning capacity, intervention of the Court was not justified. His Honour stated that he would have simply reduced the judgment sum by $140,000. However, because the difference between the result of that reduction and the result of the calculations undertaken by Blow CJ was minimal, he decided that the appropriate course was to agree with the orders the Chief Justice proposed.
Justice Wood wrote a dissenting judgment, in which she agreed with Blow CJ in all but his resolution of the ground of appeal relating to the award for loss of earning capacity. It was her Honour’s view that the award of $140,000 should stand. Given this, Wood J considered that the errors identified by the Chief Justice ($6,000) were not sufficient in combination to taint the award for damages as a whole. That is, they did not render the award unreasonable or manifestly excessive. Justice Wood would have dismissed both the appeal and cross-appeal.
*Watts v Rake (1960) 108 CLR 158.
A Minister’s Duty of Care: Gunns Limited v State of Tasmania
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The appellant, Gunns Limited, is in liquidation. It previously operated a number of Tasmanian vineyards, constructed dams on them and irrigated them. This appeal related to a vineyard near Evandale on which the appellant constructed a dam. To construct and use that dam, the appellant needed a permit to undertake dam works under s 156 of the Water Management Act 1999 (Act) and a licence to take water from a watercourse under s 63 of the Act. The appellant applied for the relevant permit and licence, was granted the permit, constructed the dam at a total cost of almost $750,000 while the licence application was pending, and then learned that it would not be granted a licence.
Water licences are granted by the Minister administering the Act and his or her delegates. The Act did not, at the time of the appellant’s application nor subsequently, impose any time limit on the Minister for determination of an application for a water licence. The appellant sued the State of Tasmania (respondent) claiming damages for negligence, calculated by reference to its wasted expenditure. That action was dismissed. This was an appeal from that judgment.
At the outset, Chief Justice Blow noted that the trial judge had correctly observed that the circumstances of this case fell outside any accepted category of duty. In such a novel situation, his Honour said, it is necessary to undertake an analysis of the “salient features” of the relationship between the parties in order to determine whether there is a duty of care*.
The principal factors addressed by the trial judge included foreseeability, the role of government in society, control, vulnerability, reliance and indeterminancy.
Chief Justice Blow concluded that the Minister could reasonably have foreseen that his failure to make a decision within a reasonable time might result in economic loss to the appellant. However, foreseeability of harm, without more, is not sufficient to establish the existence of a duty of care in tort. It was therefore necessary to consider the salient features other than foreseeability.
In terms of incoherence with the statutory scheme, Blow CJ held that it was not in the public interest that decision-making should be rushed as a result of a duty to avoid harm to an applicant’s economic interests. His Honour considered that if there was such a duty of care, the Minister would be obliged to take the economic interests of water licence applicants, and possibly others, into account when deciding how quickly to process water licence applications. That would result in a conflict. His Honour also found that the appellant was well able to protect itself from the consequences of a failure to make a decision within a reasonable time in respect of the water licence application. There were a number of other courses of action open to them. Further, any reliance by the appellant on the Minister to grant a satisfactory licence was unreasonable, and therefore did not weigh in favour of a conclusion that it was owed a duty of care. Finally, the class of persons to whom the Minister might have owed a duty of care if one existed, could not be defined. If the duty existed, the Minister may well owe anyone whose interests might be affected by such an application, a duty to make a decision within a reasonable time. In addition, his Honour noted a breach of that duty could result in the respondent being exposed to claims for damages for all sorts of economic loss by many and various actual and potential water users.
After undertaking an analysis of these features, his Honour concluded that they all weighed against the conclusion that the Minister owed the appellant the suggested duty of care. In these circumstances, it was upheld that no duty of care was owed and the appeal was dismissed.
*Perre v Apand Pty Ltd [1999] HCA 36; Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54.
