Law of Negligence

The Ipp Panel, ‘Review of the law of Negligence’

Introduction

The federal Government commissioned a major review of the law of negligence. A panel chaired by Justice Ipp issued a final report in September 2002. The reforms are mostly focused on the area of medical negligence. In total the report contained 61 recommendations of change. Some are now evident in the amendments made to the civil liability act of Western Australia. There are a number of areas of contention with the report worth querying. This paper will however concentrate on the Ipp Report’s recommendations regarding Mental Harm, the reasons for and the consequence’s of such reforms.

The need for reform

There are a number of reasons for the urgent reforms to legislation. Arguable one of the most obvious is the number of claims and amounts being awarded for damages in respect of personal injury and death. Secondly, Australia is proving to be a society of blame and litigation following closely the patterns set in USA. There is also a belief that all injuries are in need of compensation and individuals are no longer responsible for there own safety. Thirdly, the system for awarding compensation is not current or representing of community standards. The awarding of damages is too generous and the required standard of care is unreasonably high. The remedial action for the liability insurance was to focus on the law of negligence directing the focus away from deficiencies in there own management

Insurance companies

The panel was prevented from examining the true nature of the insurance market and the factors responsible for the insurance crisis.

Following the collapse of HIH other insurance companies who had to previously rely on there reserves to stay competitive, where now having to rebuild reserves by putting up premiums. From the Ipp report reforms there has been a drop in the number and costs of claims and a reduction in premiums. This creates a favourable situation for Insurers they become claim proof whilst still collecting sizable premiums and an increase in profits. The insurance industry went further and asked for changes to the rules of liability and assessment of damages to provide clarity in the law of negligence.

Panel and Terms of reference:

The panel was formed in June 2002 with the first submission due on 30 August and the balance by 30 September. Some submission to the panel criticised the shortness of the period within which the panel is required to produce options for reform. The panel accepts that the period available for the review is extremely brief. It is the panel’s view that given the state of affairs of personal injuries, the opportunity to reduce liability and damages would make a significant contribution to resolving the crises. There is an existence for legislation to be passed to reform personal injuries law and the possibility to produce a report on these matters may be lost.

Terms of reference of the Ipp report included the statement that:

“The award of damages for personal injury has become unaffordable and unsustainable as the principal source of compensation for those injured through the fault of another.”

In view of the above statement the panel ‘throughout its consultations was requested to consider issues which extend beyond the Terms of reference’ this would be an expected path for a law reform commission but not realistic given the time. However the scope in reference to the law of negligence was broad. They included the scope of reasonable foreseeability, stringency of the standard of care and the personal responsibility of persons for their own safety against obvious risk. Attention being given to the area of medical negligence. The requirement of the Ipp panel was to develop and evaluate options to limit liability and reduce awards for damages.

Judges views

The common law and its development have come under considerable judicial criticism. The law of negligence has expanded since Donoghue v Stevenson and Lord Aitkin’s formulation of duty of care. Spigelman CJ said:

“The underlying cause was the practical application of the fault based tort system in the context of adversary litigation. This had produced outcomes which the community was no longer prepared to bear. What brought the issue to a head; however, were developments in the insurance industry.”

Law and cases pre reforms

The courts have dealt with 2 notable claims for psychiatric injury in the dual cases of Tame v New South Wales; Annetts v Australian Stations Pty Ltd

Tame v New South Wales

Mrs Tame was involved in a motor vehicle collision, in which the driver of the other vehicle had a blood alcohol reading of 0.14 and was driving on the wrong side of the road. Mrs. Tame’s blood alcohol reading was nil, but was mistakenly recorded on police report as being 0.14. This mistake was corrected however the insurance company had a copy of the incorrect report. A formal apology was issued by the police with the assurance the mistake had been rectified. As a result Mrs. Tame experienced shame, guilt stress and depression, with a diagnosed psychotic depressive illness. Mrs. Tames claimed psychiatric injury as a result of the defendants conduct.

Findings

The High Court found the relationship was inconsistent with a duty of care. It was not reasonable foreseeable that a person in the position of Mrs. Tame would suffer a recognizable psychiatric injury as a result of the defendants conduct. Also in this case there was a susceptibility of Mrs. Tame to have a psychiatric injury. (was not viewed as a person of normal fortitude)

Annett’s v Australian Stations Pty limited

The 16 – year old son of the Annetts, went to work as a jackeroo at a cattle station owned by the defendants. The Annetts were assured that their son would be under constant supervision and generally looked after. A short time later, James was sent to work alone on a remote station. A few days later the defendant suspected that James was in great danger of injury or death. The Annett’s were informed that their son was missing and believed to have runaway. Some months later James Annett’s body was found it appeared that he had died of dehydration exhaustion and hypothermia. The Annett’s claimed nervous shock after learning of their son’s disappearance and death.

Findings

The High Court found that the elements of sudden shock and direct perception were not required to establish a duty of care. Chief Justice Gleeson stated that the awareness of their son’s disappearance and death was protracted and not sudden. And it was not likely that such an even is ever like to be witnessed so there was no direct perception.

This case removed the special rules or control mechanisms that existed for nervous shock. The requirement of sudden shock and direct perception was to ridged preferring reasonable foreseeability.

Previous law

Consequential mental harm did not have to constitute a recognized psychiatric illness but was a result of physical harm.

Pure mental harm the plaintiff had to suffer a ‘recognized psychiatric illnesses requiring expert evidence to establish whether damages are recoverable for pure mental harm.

Types of personal injury

There are 2 types of personal injury physical or mental. Mental harm may be consequential on physical injury i.e. a mental illness suffered as a result of a physical injury to the body, or it may stand alone where a person suffers shock as a result of witnessing traumatic events.

The victims of nervous shock are cauterized as primary or secondary. Primary victims experience shock in respect of their own safety and are participant in the even. Secondary victims experience shock in respect of the safety of others and are not participants.

Under the law it was harder to recover damages for negligently caused pure mental harm than for negligently caused physical harm or consequential mental harm. Physical harm was much more easer to diagnose where as Pure mental harm was difficult to diagnosing and in relation to duty of care it is more difficult to foresee. The existents of a duty of care had the condition of being reasonably foreseeable by the person that owed that duty.

However, a duty of care has to be breached and will only be owed if it was foreseeable that a person of normal fortitude might suffer mental harm. That is, a plaintiff’s abnormal vulnerability is not taken into account when determining the standard of care to be applied. The exception to this rule is where the defendant knew or ought to have known of this vulnerability.

There are a number of factors to be assessed.

1 whether or not the mental harm was suffered as the result of a sudden shock,

2 whether the plaintiff witnessed the event or the aftermath,

3 what the relationship was between the plaintiff and defendant and

4 the nature of the relationship between the plaintiff and anyone killed or injured.

The reforms apply the same evidentiary requirements to both pure mental harm and to economic loss associated with consequential mental harm. That is, in order to be compensated for pure mental harm and economic loss associated with consequential mental harm a plaintiff must have suffered a ‘recognized psychiatric illness’ and the defendant ought to have foreseen that a person of normal fortitude might, in the circumstances, suffer a recognized psychiatric illness if reasonable care was not taken.

In addition, the reforms provide a legislative restatement of the relevant factors in assessing mental harm.

Recommend reforms to nervous shock

1 Pure mental harm and economic loss for consequential mental harm must be a recognizable psychiatric illness and harm must be foreseeable to a person of normal fortitude

2 Legislative restatement of factors relevant to assessing mental harm

3 Restrictions to the particular circumstances in which pure mental harm can be award as a result of another being put in danger injured or killed have been reformed to the narrower and more specified list of family relationships.

Implementation of these recommendations in Western Australia goes slightly beyond the recommended reforms and that of other states. With the inclusion of 5S mental harm: duty of care of abnormally venerable persons. Western Australia has excluded common law recovery by making the statutory provision the sole source of recovery for mental harm. The statutes of W.A now provide greater and clearer assistance to claims for psychiatric illness. W.A have followed the ACT Civil Law (Wrongs) Act in that it has extended recovery for nervous shock to include grandparents, stepparents, someone acting in place of a parent, half brothers/sisters and grandchildren. The Ipp Report excluded the grandparents and grandchildren.

Civil Liability Act 2002

Part 1B deals with claims for damages for mental harm resulting from negligence and provides for the following:

1 There will be no duty of care to avoid causing mental harm unless the defendant ought to have foreseen that a person of normal fortitude might, in the circumstances, suffer a recognized psychiatric illness. It must be foreseeable that the plaintiff would suffer a psychiatric illness and not merely mental distress.

2 The assessment of whether there is a duty of care relating to pure mental harm is to be made having regard to all the relevant circumstances including the suddenness of the incident, how closely the plaintiff was involved, and whether there was some relationship between the plaintiff and the victim.

3 The test of foreseeability relating to consequential mental harm requires the court to take into account all the relevant circumstances including the physical injuries in fact suffered by the plaintiff.

4 There are allowances for a court to have regard to a situation in which a person might owe a duty of care to someone who was abnormally vulnerable, even if no duty would be owed to a normally vulnerable victim, if the person knew that the other person was abnormally vulnerable. Inserted by no 58 of 2003

5S mental harm:

duty of care. (4) This section does not require the court disregard what the defendant knew or ought to have known about the fortitude of the plaintiff.

5 Consequential mental harm must consist of a recognized psychiatric illness.

Inserted by no 58 of 2003

5T Liability for pecuniary loss for consequential mental harm

A court cannot make an award of personal injury damages for pecuniary loss for consequential mental harm unless the harm consists of a recognized psychiatric illness.

Cases after the reforms

Gifford v Strang Patrick Stevedoring Pty Limited (2003) HCA 33

Barry Gifford was employed by Strang Patrick Stevedoring as a wharf Labourer. He was killed in work place accident when a large forklift vehicle reversed over him. The children did not witness the accident although they were informed the same day. Strang admitted liability for the accident. The three children of the deceased sued Strang seeking damages in negligence for psychiatric injury in the form of nervous shock.

After failing in the first instance and the court of appeal on similar grounds in that the children’s father had not been killed in there sight and that it was undetermined that they suffered a recognisable psychiatric illness.

The high court held that Strange owed a duty of care from the relationships between the three parties of employer employee and children with reasonable foresight of the particular harm suffered and the children had no way of protecting them selves from Psychiatric harm.

This decision is of important significance for employers and their insurers, it has established that a separate duty exists for employers for the risks of psychiatric harm. Mchugh J extend this to mean to all those with whom the victim has or had a close and loving relationship.

The Annett’s case for nervous shock removed the constraints from this Gifford had to conclude that an employer owes a duty to take reasonable care to avoid psychiatric injury.

The three cases of Tames, Annett’s and Gifford reached the High court of Australia this gives an indication in the case of Tame’s of the uncertainty of the law in regards to mental harm. Most cases for mental harm are herd in the lower courts.

Conclusion

The Ipp report has gone some way to clarifying the law of negligence in conjunction with judicial decisions in the area of mental harm. Unfortunately the panels recommend reforms did not create uniformity, with four different legislative responses to the question of secondary victim claims.

One area of concern is with people with pre existing psychiatric problems who are not viewed as having normal fortitude. The Ipp report went some way to address this problem; however some states have not given any clear indications in this area. This does raise the question of whether people with pre existing psychiatric problems, being able to claim damages for mental harm.

There is some indication that the reforms and a tightening of negligence law are having an effect in the absence of cases being presented to the High Court.

Time restriction imposed on the Ipp panel did not allow for a through examination. There should be an on going review panel, as the Insurance companies are still actively seeking to limit damage recovery through the Trade Practice Act.