Professional Negligence in Australia Review

Recent case law May 2012

Click on the case name to be taken to the detailed version

Decision / More Info	Legislation	The question raised	The new position
Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem Court of Appeal 26/02/2009 Full Decision		Does the duty of care owed by a proprietor to patrons extend to taking 'reasonable care' to guard against injury from the intoxicated, unruly, violent, or criminal behaviour of other patrons?	The duty of care owed by the proprietor of a nightclub/restaurant extended to taking reasonable care to guard patrons against the intoxicated, unruly, violent, or criminal behaviour of other patrons.
Olbourne v Wolf Court of Appeal 06/05/2004 Full Decision	professional negligence	W sued O and North Shore Private Hospital for medical negligence following an unsuccessful breast reduction operation. The trial judge found in favour of W and awarded $200,000 in damages. He also made a bullock order against O for the hospital's costs. � Had W been adequately advised of the risks of the breast reduction surgery. � Was O negligent in failing to re-examine W before her discharge from hospital. � Was the bullock order in respect of the hospital's costs reasonable.	W had been adequately advised of the risks of surgery. The Court held that O was negligent in his failure to re-examine W. O at a fairly late stage was asserting that W�s problems were due to the fact she had been bathed in hospital by her daughters. It was prudent for W to have sued the hospital as well in case what O was saying was actually correct. There was no error or over caution on the part of W in the circumstances and the bullock order was appropriately granted.
Timbs v Shoalhaven City Council NSW Court of Appeal 01/04/2004 Full Decision	Common law liability	Is a council liable for injury or death that results from a falling tree if their officer had told the injured person the tree was safe?	Because the council's officer had taken it upon himself to offer advice, he had created a duty of care to ensure the advice was correct, and was negligent in the circumstances.
Harvey & 1 Ors v PD NSW Court of Appeal 30/03/2004 Full Decision	s17 Public Health Act	Did a doctor breach his duty of care to a patient by not telling her that her intended husband had AIDS, even though he was statutorily prohibited from doing so?	The doctor had breached his duty of care. Although he could not tell the patient of her intended husband's condition, he had been negligent in his management of the couple's treatment at his clinic. That negligent management prevented the patient from learning the truth by other means.
Diamond v Simpson (No 3) Court of Appeal 16/12/2003 Full Decision	Evidence Act 1995 Law Reform (Miscellaneous Provisions) Act 1946, s5 Limitation Act 1969 Supreme Court Act 1970, s75A(5) Causation of damage Contribution between Tortfeasors	Were there two causes of the Plaintiff's cerebral palsy.	NSWCA found that both the doctor�s negligent use of forceps during delivery and the hospital�s overdose of Syntocinon during labour caused the cerebral palsy.
Sharnee Breen -v- Margaret Kay Larkin Qld Court of Appeal 12/12/2003 Full Decision		B sustained injuries during the course of her birth due to an excessive force being placed on B during delivery. The Parties agreed, and the trial judge found that injury was sustained during birth however found no evidence of negligence of L by the use of forceps. B appealed. ∙ Did the Trial Judge err in his assessment of the evidence in relation to liability and quantum? ∙ Did the Trial Judge err in failing to apply principles of inferential evidence? ∙ Did the Trial Judge miscarry his discretion in denying the Plaintiff leave to adduce further evidence?	The Trial Judge was correct in finding that there was no evidence of negligence given by either the expert or lay witnesses. The Trial Judge had erred in his calculation of quantum based on his finding that B�s parents had attributed many of B�s symptoms to the trauma when they were attributable to other unrelated ailments. General Damages were assessed at $25,000.00 plus interest on past care, and the trial judges assessments as to special damages and future care were affirmed. The Trial Judge was correct in assessing the circumstantial evidence against the direct evidence in concluding that there was no negligence on behalf of L. The Trial Judge was correct in rejecting the Plaintiffs application for leave as such leave would be prejudicial to the Defendant and the need arose through the Plaintiffs inability to abide by previous orders of the Court. Appeal dismissed.
Notaras & Anor v Hugh & Ors NSW Supreme Court 17/10/2003 Full Decision	Offers of compromise indemnity costs professional negligence	When will the court order that the Plaintiff pay indemnity costs to a defendant?	Where a case had no reasonable prospects of success, or where the Plaintiff has conducted the proceedings in such a way as to cause unreasonable delay and expense or has unnecessarily protracted the proceedings, the Court will order that the Plaintiff pay the Defendant�s indemnity costs.
Rexstraw v Johnson NSW Court of Appeal 09/10/2003 Full Decision	Professional Negligence - Duty of care, fiduciary duty	The nature and extent of the duty owed to a client by a solicitor and his interstate agent.	Although a solicitor is in breach of the duty of care he owes his client, it does not necessarily follow that the solicitor is in breach of any fiduciary duty owed to the client. On becoming aware of anomalies in the transaction in relation to which he was instructed, an agent has a duty to satisfy himself that his principal had obtained instructions from his client to proceed with the transaction.
Christine Joy Hyland v Dr Kai Huen ACT Supreme Court 03/09/2003 Full Decision	General principles of negligence Medical Negligence	Did a dentist's failure to warn of the possible risk of infection and its consequences arising from an extraction of a decayed tooth amount to negligence?	The Plaintiff's difficulties were caused by the negligent failure of Dr H to warn her of the risk of infection and the availability of antibiotics to prevent infection.
Mills & Anor v Commonwealth of Australia NSW Supreme Court 29/08/2003 Full Decision	Evidence Act 1995 (NSW) s.79 Trade Practices Act 1974 (Cth) s. 74 Negligence, Breach of contract International law which law applies?	Whether causes of action in tort and contract arising out of an injury in Cambodia are maintainable in NSW and, if so, whether the law of NSW or Cambodia is to be applied.	The tortious claim is not maintainable in NSW if it is not maintainable in Cambodia. The contractual claim is maintainable in NSW even if not maintainable in Cambodia. The law of Cambodia applies to the tortious claim on the issue of liability. The issue of damages was reserved. The law of NSW applies to the contractual claim.
Presland v Hunter Area Health Service Supreme Court 19/08/2003 Full Decision	Compensation to Relatives Act 1897 Mental Health (Criminal Procedure) Act 1990 Mental Health Act 1990 Fatal Accidents Act 1976 UK Medical Negligence	Did HAHS' duty of care to P extend to guard against the harm resulting to P (distress and economic loss) from his killing of his brother's fianc� after P was discharged by HAHS in circumstances where HAHS should have detained P under the Mental Health Act 1958.	HAHS' duty of care extended to guard against the risk that the Plaintiff, without appropriate treatment, might suffer harm by seriously injuring himself or another. This was not a case where HAHS could rely upon the fact that the damage to P flowed from a criminal act as P had been acquitted of the crime.
Capital Brake Service Pty Limited v Meagher & 8 Ors t/as Sparke Helmore NSW Court of Appeal 14/08/2003 Full Decision	Professional Negligence solicitor duty to warn	How stringent is a solicitor's duty to warn clients of risks inherent in settling a litigated claim?	A solicitor is only required to provide warning of risks reasonably foreseeable on the evidence available at the time of recommending settlement.
State of NSW v Riley NSW Court of Appeal 01/08/2003 Full Decision	exemplary or aggravated damages	When should aggravated and exemplary damages be awarded?	Only when the award of compensatory damages does not sufficiently express the Court�s disapproval of the wrong-doers conduct.
Patrick Pulido v R S Distributions Pty Ltd and Vista Laser Eye Clinics Pty Ltd; Janice Parker and Ronald Binetter ACT Supreme Court 01/08/2003 Full Decision	Trade Practices Act Limitation Act (NSW) Limitations Act (ACT) Professional negligence - laser eye surgery	Where and when does a cause of action arise?	A cause of action in tort arises when and where the Defendant�s breach of duty is complete. A cause of action in contract arises in whichever place has the closest connection with the contract.
Tzaidas v Child New South Wales Supreme Court 25/07/2003 Full Decision	Law Reform (Miscellaneous Provisions) Act 1946, s6 Insurance Contracts Act 1984, s54 Professional negligence Application to join insurer	In circumstances where Section 54 of the Insurance Contracts Act 1984 (Cth) would prevent an insurer denying a claim, could the insurer successfully rely upon Section 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 in an application to commence proceedings?	The ICA (Cth) 1984 is irrelevant to consideration of whether leave ought be given to commence proceedings pursuant to s.6(4) of the Law Reform (Miscellaneous Provisions) Act 1946.
Cattanach v Melchior High Court 16/07/2003 Full Decision	Professional negligence General principles of negligence - duty of care - pure economic loss arising out of relationship wrongful life	Were C and the State liable for damages in relation to the cost of raising a child born following a failed sterilisation procedure.	C and the State of Queensland were held liable under the ordinary principles of negligence and found liable to pay damages for pure economic loss arising out of the cost of the raising of the unwanted child.
Radosavljevic v Radin & Ors Court of Appeal 10/06/2003 Full Decision	Solicitors' Professional negligence and general principles of negligence District Court Act 1973 (NSW) s127 District Court Rules 1973 (NSW) Pt12 r4(c)	Whether the solicitor's negligence caused the loss alleged. Whether damages for loss of opportunity were inadequate.	Although there was negligence by the solicitors this was not found to have resulted in loss to the Appellant as the negligence related to claims which were not viable. Damages awarded by the Trial Judge relating to one instance of negligence were not manifestly inadequate so were not altered on appeal.
Gosford City Council v GIO NSW Court of Appeal 07/03/2003 Full Decision	Insurance Contracts Act ss 40(3) Insurance Contracts Act ss 54(1)	The Relationship between s.40(3) and s.54(1) of the Insurance Contracts Act in a claims made liability policy where the insured did not give notice in writing to the insurer during the currency of the policy of facts that might give rise to a claim against the insured.	s.54(1) does not relieve the insured of the obligation to comply with the time limits in s.40(3) so that if the insured did not during the currency of the policy give notice to the insurer of facts that might give rise to a claim the insured may not invoke s.54(1) to excuse that omission. Result - insurer not liable.
FAI General Insurance Co Ltd (in liq) v Sherry & Ors Full Court Supreme Court South Australia 23/12/2002 Full Decision	Professional negligence dishonesty	The Plaintiff's were executors of the Estates of two persons who had obtained judgments against a chartered accountant Davies and an associated company of which Davies was a director for misappropriation of funds. They sued FAI as assignees of Davies and the company for indemnity under a D & O policy issued by FAI to the company and a firm of chartered accountants of which Davies was a partner. The policy contained the following "dishonesty" extension: "4. The insured shall be protected, within the terms of this Certificate, for any claim upon which suit may be brought by reason of any alleged dishonesty ... or fraud on the part of the Insured or its partners ... unless a judgment ... adverse to the Insured shall establish that acts of active and deliberate fraud or dishonesty committed by any partner or partners of the Insured with actual fraudulent or dishonest purpose and intent were material to the cause of action so adjudicated and notwithstanding that such acts were not disclosed within the Insured's proposal for insurance in which event this Certificate shall only pay in excess of the full extent of such Partner's or Partners' assets in the firm. Any other personal assets of such Partner or Partners recovered by the Insured shall inure, to the extent of the amount paid by this Certificate to the benefit of the Company."� Whether a "dishonesty" extension in a policy of professional indemnity insurance resulted in an insured partner in an accounting firm, Davies, being entitled to indemnity for deliberate acts producing intentional losses where the conduct was dishonest and criminal.	The presumption that an insurance policy will not indemnify a dishonest person in respect of deliberately caused loss will only be reversed by a clear intention expressed in the policy. Davies was not entitled to indemnity.
I&L Securities Pty Ltd v RS Melloy Pty Ltd Qld Supreme Court 04/10/2002 Full Decision	TPA s52 TPA s82 Common law negligence - valuer	Whether a valuer was liable in negligence/breach of Trade Practices Act to the Plaintiff mortgage lender in the circumstances of a valuation of land owned by a developer to whom the mortgage lender advanced finance.	The valuer was liable as the methodology used went beyond arguable error of judgment so that there was a failure to apply with reasonable care the principles of valuation (significant part of the land under the flood line; affected by easements)
McGroder v Maguire NSW Court of Appeal 13/08/2002 Full Decision	Nil	Whether a GP was negligent in the circumstances of his referral of a patient with neck and left arm symptoms to a chiropractor (without examining the patient or referring to medical records)? If so, did the chiropractor's negligence break the chain of causation between the GP's negligence and the patient's damage?	The GP was negligent and there was no break in the chain of causation - the GP's negligent referral generated the very risk of injury whereby the patient was subject to the later negligent act of the chiropractor which caused the damage.
Wakim v McNally Full Ct Fed Ct 03/07/2002 Full Decision	Partnership Act solicitor negligence failure to challenge QC's advice	Whether a solicitor with relevant expertise was negligent for failing to raise with a QC the fact that the QC omitted to consider an alternative basis for a cause of action despite the QC's standing and seniority. [2002] FCAFC 208	The solicitor was negligent as he should have been on notice that the QC's advice was defective. This ought to have been raised with the QC despite his standing and seniority.
Durovic v Zabow [2002] NSWCA 195 NSW Court of Appeal 26/06/2002 Full Decision	Common law negligence	Challenge to assessment of damages for psychiatric condition caused by negligent prescription resulting in birth of child.	Appeal unsuccessful - no error of law in trial Judge's approach despite smallness of component for general damages ($20,000.00)
Edwards v Blomeley NSW Supreme Court 12/06/2002 Full Decision	Common law negligence	Whether a severely disabled child could bring an action for "wrongful life" following birth resulting from negligence of a doctor in performing a vasectomy. Australian law does not recognise an action for "wrongful life" - public policy considerations. Whether parents could recover the costs of raising a healthy child born following a negligently performed sterilisation procedure.	Australian law does not recognise an action for "wrongful life" - public policy considerations. Claim succeeded. Appeal to High Court. Judgment reserved.
South Coast Regional Health Authority v Bloodworth NSW Court of Appeal 22/05/2002 Full Decision	finding differnt than basis for partie's case learning curve inexperience	Whether a verdict in favour of a Plaintiff ($1,093,680.00) could be upheld when the trial Judge found the surgeon to be negligent on a basis (inadequate training and experience) other than that which was argued by the Plaintiff (negligent performance of operation and failing to warn of surgeon's inexperience and risk of operation - removal of gall bladder	Appeal successful - not open to the trial Judge to find the surgeon's training and experience was inadequate even if the Plaintiff had sought to argue his case on this basis.
Rahmat Ali v Hartley Poynton Ltd Victorian Supreme Court 16/04/2002 Full Decision	Common law negligence - Stockbroker	Whether a stockbroker retained by his client to invest $101,814.00 was negligent as a result of the entire funds being dissipated after over $39 million worth of shares were traded.	The stockbroker owed the client a duty of care and breached that duty. Damages of $846,818.00 (after deducting 15% for contributory negligence) plus $260,000.00 exemplary damages were awarded.
Alexander v Heise NSW Court of Appeal 27/11/2001 Full Decision	Compensation to Relatives Ac	Whether a medical receptionist and the GP owed a duty of care to a deceased whose wife made an appointment for a check up but before the examination took place the deceased suffered a cerebral haemorrhage from which he later died? If there was a duty, was it breached?	On the basis of the information conveyed by the wife, the receptionist, in exercising her judgment, reasonably concluded that the condition was not life threatening such that it should be immediately referred to the GP. Thus the receptionist and therefore also the GP were not negligent.
Mastronardi v Kennedy NSW Court of Appeal 05/10/2001 Full Decision	CIVIL AVIATION (CARRIERS' LIABILITY) ACT 1959	Whether solicitors and barristers were negligent for failing to advise in relation to a two year limitation period in circumstances where they had advised that any action for personal injuries was likely to fail (consumption of allegedly contaminated yoghurt on an Alitalia flight)	The negligent failure to advise in relation to the limitation period did not cause any loss as the Plaintiff in any event would have failed in any action against the airline.
Melchior v Cattanach Queensland Court of Appeal 26/06/2001 Full Decision	Common law negligence	Whether parents could recover the costs of raising a healthy child born following a negligently performed sterilisation procedu	Claim succeeded. Appeal to High Court. Judgment reserved..
Heydon v NRMA Ltd; Bateman v NRMA Ltd; Morgan v NRMA Ltd NSW Court of Appeal 21/12/2000 Full Decision	advice about possible change to law	Whether in furnishing legal advice on some proposition that may be overturned or modified in the future Counsel is required to investigate the existence of any such litigation	Legal practitioners do not have a duty whenever some proposition of law is at risk of being overturned or modified in the future in the High Court to investigate whether any such litigation is in the pipeline, what has been said in the course of argument, and what is the possible outcome of the litigation. The solicitors were entitled to rely on Counsel's advice. The High Court refused special leave to appeal.
Daniels v Anderson NSW Court of Appeal 15/05/1995 Full Decision	Corporations Law s1318 Law Reform (Miscellaneous Provisions) Act 1946 ss 5,9,10. A full copy of this decision is ot available	This appellate Decision follows on from the initial Decision in AWA v Daniels. Nature and source of the duty of care owed by Directors	Directors are under a continuing obligation to keep informed about the activities of the Corporation. If an illegal or improper course of action is discovered by a Director, they have a duty to object, and if not corrected, resign.

Professional Negligence in New South Wales 2001 - 2003 a thumbnail sketch

Statutory Reform

In 2002 there was a general perception in some sectors of government, the community and the media that rising payouts to injured persons had resulted in escalating costs of insurance which had led to the cancellation or winding back of some community and professional activities. A Ministerial Meeting involving participants from state, territory and the federal governments commissioned a Review of the Law of the Negligence

The Final Report of the Review is known as the 'Ipp Report', after one of the authors, David Ipp, Acting Judge of Appeal of the Supreme Court of NSW and Justice of the Supreme Court of WA. The Review has recommended the enactment of a uniform Civil Liability (Personal Injuries and Death) Act in each jurisdiction. It was recommended that the Act contain the following statutory enunciation of the professional's duty of care: In cases involving an allegation of negligence on the part of a person holding himself or herself out as possessing a particular skill, the standard of reasonable care should be determined by reference to:
(a) What could reasonably be expected of a person professing that skill
(b) The relevant circumstances at the date of the alleged negligence and not at a later date.

It was recognised that this model provision is essentially a restatement of the common law position but it was felt that such a restatement was required in the current climate of misunderstanding and confusion about the law of professional negligence. There are some similarities in the provisions of the model Act and the NSW Civil Liability Act.

Section 5O of the Civil Liability Act provides:
(1) A person practising a profession (a professional) does not incur a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that (at the time the service was provided) was widely accepted in Australia by peer professional opinion as competent professional practice.
(2) However, peer professional opinion cannot be relied on for the purposes of this section if the court considers that the opinion is irrational.
(3) The fact that there are differing peer professional opinions widely accepted in Australia concerning a matter does not prevent any one or more (or all) of those opinions being relied on for the purposes of this section.
(4) Peer professional opinion does not have to be universally accepted to be considered widely accepted.

However the duty to warn, give advice or give information, still applies (section 5P).
Note that the Civil Liability Act provisions in respect of professional negligence apply to all professionals, not only medical professionals.
In NSW the Health Care Liability Act 2001 commenced operation on 5 July 2001 but was substantially repealed shortly thereafter by the enactment of the Civil Liability Act 2002.

Recent Caselaw
The following review of relevant cases is divided into two parts:
1. Medical negligence
2. Negligence of other professionals.
Some interstate cases are included where novel actions in negligence have succeeded. It should be noted that where negligence results in 'pure' economic loss, that is, where there is no damage to the Plaintiff's person or property, the scope of the duty of care is more narrowly confined. For a Plaintiff to succeed there must usually be knowledge or means of knowledge on the part of the Defendant that the plaintiff individually, and not merely as a member of an unascertained class, will be likely to suffer economic loss as a consequence of the defendant's negligence. Whether the parties are in a contractual relationship will often be relevant. The assumption of responsibility by a defendant, reliance, or the assumption of control, may also suggest that there is a sufficient relationship of proximity.

Recent developments in Case law Detailed versions

Click on the case name to be taken to the full judgment in .pdf format

Decision / More Info	Legislation	The question raised	The new position
Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem [2009] NSWCA 29 26/02/2009 Court of Appeal Beazley, Giles, Campbell JJA District Court Sorby DCJ		The proprietor held a New Years Eve function attended by members of the public on payment of an admission price. In the early hours 1 January 2003, a dispute on the dance floor escalated, and came to involve a fight between two patrons, Mr Moubarak and Mr Abbas. Mr Abbas left the premises and returned with a gun. Mr Moubarak and Mr Bou Najem were shot. The trial judge held that the proprietor was liable in negligence to the Patrons and rejected the contention that the victim had been contributorily negligent. The trial judge held that the proprietor owed the patrons "a general and wide duty ... to take care and avoid injuries caused by the unlawful actions of patrons (or invitees) on the premises during the course of the evening" and that the duty of care was breached because the proprietor's security arrangements were "far short of what reasonable care and skill required in all the circumstances". The trial judge held that the inadequacy materially contributed to, and so caused, the injuries suffered by the Patrons.	The duty of care owed by the proprietor of a nightclub/restaurant extended to taking reasonable care to guard patrons against the intoxicated, unruly, violent, or criminal behaviour of other patrons. The challenges to duty of care, breach and causation failed, and the appeals were dismissed. The security arrangements in place at the premises on the night in question were found to be sorely lacking. Expert evidence led by the injured patrons by an independent security consultant concluded that at least 6 to 8 security guards should have been on duty that night for a venue and function of that size. The trial judge found that no security staff were present on the evening of 31 December 2002 and early hours of 1 January 2003 (this finding was not challenged on appeal). No incident book was kept. CCTV footage (of very poor quality) only recorded the traffic of patrons and was not actively monitored. The Court also noted the chequered history of the establishment which included several assaults and incidents (some of which involved firearms) that preceded the altercation of 1 January 2003. Proximity was not held to be determinant of the existence of a duty of care, even in cases of personal injury as distinct from economic loss [see Hill v van Earp (1997); Pyrenees Shire Council v Day (1998); Perre v Apand Pty Ltd (1999)]. Proximity could not be the touchstone of a duty of care as it is a category of "indeterminate reference par excellence". The proprietor owed a duty of care to the Patrons, at least as an occupier. If it owed a duty to take reasonable care to protect patrons in relation to the physical state/condition of the premises; and in relation to the criminal conduct of another patron or other patrons; then the duty of care in the latter respect was owed at all times to the patrons on the premises (in the same way the occupier's duty of care in relation to the physical state/condition of the premises is owed at all times). The proprietor's duty of care did not "spring up" when a dangerous defect in the condition of the premises came about in the course of the function, nor when a fight presenting risk of injury to the patrons broke out. Essentially, the duty of care arose from the foreseeability of injury from the conduct on the premises, coupled with the capacity of the proprietor to control the conduct. The history of the club, as well as the inherent probabilities of the type of activity being carried on in the club [Club Italia (Geelong) Inc v Ritchie (2001)] made it reasonably foreseeable that the patrons would include persons that were potentially troublesome and violent.
Olbourne v Wolf [2004] NSWCA 141 06/05/2004 Court of Appeal Santow JA, Young CJ in Eq Stein AJA District Court Herron ADCJ	professional negligence	W sued O and North Shore Private Hospital for medical negligence following an unsuccessful breast reduction operation. Following surgery W showed signs of developing infection. The examining nurse communicated this by phone to O who was at his rooms 5 kms away from the hospital and who without further examination authorised her discharge. Upon release from hospital W's condition deteriorated and she was readmitted to hospital and underwent further operation which failed to prevent irreversible damage. W alleged that she had not been advised of the risks associated with the operation. Furthermore, she alleged that O was negligent in failing to re-examine her before authorising her release. The trial judge found in favour of W and awarded $200,000 in damages. He also made a bullock order against O for the hospital's costs. � Had W been adequately advised of the risks of the breast reduction surgery. � Was O negligent in failing to re-examine W before her discharge from hospital. � Was the bullock order in respect of the hospital�s costs reasonable.	The Court delivered a unanimous decision. W had been adequately advised of the risks of surgery. She had earlier contemplated undergoing this surgery from Dr S who had at that stage given her a booklet which thoroughly explained the risks. O had also explained to her that 2% to 3% of such operations resulted in infections although did not say that this would lead to further surgery. Young CJ in the lead judgment stated: �What is required is that the patient have sufficient material in order to make an informed consent. It does not matter where that information comes from.� The Court held that O was negligent in his failure to re-examine W. Medical evidence suggested that problems with infection needed to be dealt with without delay. In not seeing W before she was discharged and allowing her discharge W took the risk that nothing would go wrong even though she had signs to the contrary. There was no physical barrier to O examining W as his rooms were only 5 km away from the hospital. In relation to the bullock order the Court noted that O at a fairly late stage was asserting that W�s problems were due to the fact she had been bathed in hospital by her daughters and this may have introduced human waste into the wound. This being the case, the Court found it was prudent for W to have sued the hospital as well in case what O was saying was actually correct. There was no error or over caution on the part of W in the circumstances and the bullock order was appropriately granted.
Timbs v Shoalhaven City Council [2004] NSWCA 81 01/04/2004 NSW Court of Appeal Mason P, Sheller and Hodgson JJA District Court Nash ADCJ	Common law liability	S's officer inspected a tree on T's property in 1996 and 1998. On both occasions, S's officer said the tree was healthy and could not be cut down. The tree was subsequently uprooted in a storm and killed T's husband. T sued S over the advice given by S's officer. The trial judge held that although S had a duty of care, it did not require S's officer to conduct a digging inspection of the tree's roots, and that the duty of care had not been breached. T appealed: � Did S owe T a duty of care? � Had that duty of care been breached?	The Court agreed with the trial judge that S assumed a duty of care when its officer voluntarily gave advice about the safety of the tree. However, having elected to give that advice, the officer was under a duty to take all reasonable steps to ensure that the advice was correct. Expert evidence at trial established that the tree was subject to a number of factors that put it at risk of falling, and the Court found that the officer should have dug near the tree to inspect its roots. His failure to do so was a breach of his duty of care. Appeal allowed. Judgment entered for T in the sum of $750.00.
Harvey & 1 Ors v PD [2004] NSWCA 97 30/03/2004 NSW Court of Appeal Spiegelman CJ, Santow and Ipp JJA Supreme Court Cripps AJ	s17 Public Health Act	P and F attended H's clinic for blood testing, indicating that they planned to marry and engage in unprotected intercourse. No counselling was provided to them before the testing, and they were not asked whether they wished to receive the results separately or together. There were no notations made in the patient records that P and F were partners and they were from that point on treated as separate patients. P tested negative, but F tested positive to AIDS. Section 17 of the Public Health Act prohibited H from telling P of F's AIDS status and made it a criminal offence to do so. P was given her results but was told that the clinic was not able to tell her her partner's results. Despite knowing of the perilous position P was in, H took no steps to ensure that F had told her of his condition. F in fact lied to P and showed her forged pathology results. P subsequently contracted HIV and sued H. The trial judge found that H had been negligent in his management of the situation, and that that mismanagement had caused P's condition. H appealed: � Did F�s deception break the chain of causation? � Did telling P that H was not able to release F�s results to her mean that P was no longer able to rely on H? � Did H�s management of the case cause P�s loss?	The Court found that F's deception did not break the chain of causation because H continued to provide ongoing services to P after F's deception but before P contracted HIV. Specifically, H knew P was travelling to F's native country and that P sought contraceptive pills. The ongoing nature of H's services meant that his duty did not stop at the time the results were delivered. P had been told that the clinic was not able to release F's results because they were confidential. The Court held that this was not precise enough to have severed any reliance P had on H for her wellbeing. The Court found that, if H had raised the issue of joint discussion of the couple's result, P would have insisted on it and would not have contracted HIV. Therefore, H's mismanagement could be said to have caused P's illness and H was therefore liable. Appeal dismissed.
Diamond v Simpson (No 3) [2003] NSWCA 373 16/12/2003 Court of Appeal Meagher JA, Ipp JA and Young CJ in Eq Supreme Court Whealy J	Evidence Act 1995 Law Reform (Miscellaneous Provisions) Act 1946, s5 Limitation Act 1969 Supreme Court Act 1970, s75A(5) Causation of damage Contribution between Tortfeasors	S who has cerebral palsy as a result of complications experienced during delivery, sued her obstetrician (�D�) alleging D caused the condition. In proceedings at first instance D admitted negligent use of the forceps during delivery. D sued the hospital for contribution alleging that the hospital was negligent in administering to S�s mother Syntocinon (synthetic oxytocin) and that the dosage was a further cause of the damage to S. The Trial Judge found that although the hospital was negligent in administering to S�s mother an overdose of Syntocinon, this overdose was not a cause of S�s damage. The Trial Judge found the damage resulted only from the doctor�s negligence, and found for the hospital. S was awarded a verdict of $14 million against D, reduced on appeal to $11 million. D appealed on the claim for contribution. � Did the Appellant Court have the right to disturb the trial judge�s findings of fact. � Was the cerebral palsy solely a result of damage caused by the negligent use of forceps or was the hospital�s negligent overdose of Syntocinon a secondary cause of the development of cerebral palsy.	The Court unanimously accepted the argument that in the current case it was necessary to make a distinction between findings of primary fact and inferences to be drawn from the primary facts. The Court applied the reasoning in Abalos v Australian Postal Commission (1990) 171 CLR 167 that �Where the question is whether particular inference should be drawn from proved facts the appellate court has the right and duty to decide the question for itself�. Having determined this question the Court reviewed the evidence from which it drew different inferences from the Trial Judge. In particular, the Court reviewed the interpretation of the expert evidence and hospital records from S�s birth. The Court found that the Trial Judge erred in accepting the hospital�s evidence that the negligent use of forceps was the sole cause of the development of cerebral palsy. The experts accepted by the Trial Judge formulated their views purely on their limited clinical experience in which no other cause for the development of cerebral palsy had been found other than the negligent use of forceps. The Court considered that the scientific basis upon which the other experts had reached the conclusion that a secondary cause of development of cerebral palsy was required should have been preferred by the Trial Judge. �The bottom line is that the scientists said that a second hypoxic cause is to be expected for this event. The only contrary position was from the clinicians who said that they had not always observed such a second cause. This, however, does not negate the expert evidence. The Judge should have accepted it and held that it was more likely than not that a second hypoxic cause was present.... If there is undisputed scientific evidence that in order for a certain consequence to occur, there needs to be both a vagal and an hypoxic cause, the mere fact that a person in practice may not have observed a second cause, does not negate the scientific opinion.� The Court also drew a different inference on the effect of the Syntocinin overdose as demonstrated on the hospital�s partogram (hospital chart recording heart beats of the mother and foetus and noting oxytocin dose and administration of other drugs). The partogram was compelling evidence that for approximately one hour during the labour the mother experienced contractions of 60 seconds every one to two minutes and that these contractions were capable of causing hyperstimulation which the Court found was a further hypoxic cause over and above any damage caused by the negligent use of forceps. The Court found that apportionment ought be 50/50. The appeal was allowed with costs and the Trial Judge�s order on the doctor�s cross claim was set aside with an order in lieu that the hospital contribute one half of the damages and costs that the doctor was ordered to pay to the Plaintiff.
Sharnee Breen -v- Margaret Kay Larkin [2003] QCA 549 12/12/2003 Qld Court of Appeal McPherson JA, Jones J, Holmes J Qld Supreme Court		B sustained injury to her neck at birth during her delivery. The birth was complicated and forceps and force were required. Both parties accepted that force was used. The issue was whether the force was excessive There was varying evidence as to the amount of force used to deliver B. Evidence given by B�s mother was contradicted by evidence given by L. Prior to the trial B alleged a lung condition was caused by the birth trauma. L was unaware of the allegation. B sought to rely on an expert report however had failed to comply with basic rules of evidence and had failed to adhere to orders of the Court. Leave to adduce further evidence was rejected due to L�s inability to meet the report/evidence and the subsequent prejudice. The Trial Judge found that there was no evidence of negligence and found in favour of the Defendant. B appealed on the following grounds: ∙ Did the Trial Judge err in his assessment of the evidence in relation to liability and quantum? ∙ Did the Trial Judge err in failing to apply principles of inferential evidence? ∙ Did the Trial Judge miscarry his discretion in denying the Plaintiff leave to adduce further evidence?	Appeal dismissed. The Trial Judge was correct in finding that there was no evidence of negligence given by either the expert or lay witnesses. He was correct in assessing the lay evidence adduced as flawed and correct in preferring the expert evidence given. The Trial Judge was correct in assessing the circumstantial evidence against the direct evidence in concluding that there was no negligence on behalf of L. Much of the inferential evidence adduced was contradicted by the expert evidence and it was held that the Trial Judge had correctly assessed all of the evidence. The Trial Judge was correct in rejecting B�s application for leave as such leave would be prejudicial to L. The Trial Judge correctly held that the need for leave arose through the Plaintiffs inability to abide by previous orders of the Court. It was held that the Trial Judge had under-assessed B�s claim for General Damages ($10k) and interest (nil). B�s claim for General Damages was increased to $25K with 2% interest over 10 years totalling $5k. Damages on B�s claim for past care was assessed correctly by the Trial Judge however it was held he had erred in not allowing interest. Interest was awarded at 6% for 5 years.
Notaras & Anor v Hugh & Ors [2003] NSWSC 919 17/10/2003 NSW Supreme Court Sperling J	Offers of compromise indemnity costs professional negligence	N sued H for professional negligence. Throughout the proceedings, N served evidence which was subsequently withdrawn and not relied upon at trial. H had been forced to obtain evidence to meet the evidence served by N. N lost. H served an offer of compromise, which was more favourable than the result achieved by N, and sought an order that N pay indemnity costs.. � Did the offer of compromise operate? � Should H be entitled to indemnity costs?	The Supreme Court Rules relating to offers of compromise did not apply where a Defendant was wholly successfull. However, there was authority that allowed for an order for indemnity costs if the Plaintiff had conducted the proceedings in such a way as to cause unreasonable delay and expense or had unnecessarily protracted the proceedings. There had been no reasonable prospect of success, as N could not have proven on the evidence tendered that loss arose from the alleged negligence of H. N, by repeatedly serving and then withdrawing evidence, had caused unreasonable delay and expense. N was ordered to pay the H�s costs on an indemnity basis.
Rexstraw v Johnson 2003 NSWCA 287 09/10/2003 NSW Court of Appeal Sheller, Tobias JJA and Foster AJA NSW District Court Hogan ADCJ	Professional Negligence - Duty of care, fiduciary duty	R, a solicitor and M, the Managing Director of Provident Group (�P Group�), devised a contributory mortgage scheme and prepared promotional material containing information about the mortgage investments. The Promotional material included the statement that there would be an independent valuation of the property by a qualified property valuer. Vorona Pty Limited (�V�), whose Managing Director and sole shareholder was H, applied to P Group for a loan. P offered V a loan which was to be secured by the first mortgage on a home property offered for security by V. P forwarded to V correspondence which referred to an valuation carried out by Jacksons International (�Jacksons�). Jacksons report was prepared by Hobart Pty Limited, a company of which H was a shareholder and Director.This was known to M. One of the proposed lenders was lending in its capacity as trustee for a superannuation fund. V�s solicitors faxed to their Queensland Agent (�the Agent�) a copy of the proposed transfer document which revealed that the party from whom V had purchased the property had only paid half of the amount valued by Jacksons. When the Agent noticed the disparity in the consideration being paid, he contacted R and informed him that it was his responsibility to advise the investors on the information contained in the transfer document and obtain their instructions as to whether they wish to proceed with the transaction. R did not do as requested by the Agents and instead faxed a copy of the transfer document to M and a copy of the valuation provided by Jacksons to V�s solicitors. The investors were never informed of the information in the transfer document and the matter proceeded to settlement. Because of a delay in registering the mortgage another mortgage over the same property was registered as first mortgage over the property. The investor�s mortgage was eventually registered as a second mortgage. V defaulted on both mortgages and the property was sold for a sum of over $500,000 less than Jacksons valuation. The investor�s lost their money. The investor�s brought actions against P, R and the Agent for breach of duty of care. The Trial Judge found that R and the Agents had breached their duty of care. �Whether P, R and/or the Agents breached the duty of care owed to the investors.	P Group was more than just a mortgage broker. It held itself out to investors as being a mortgage manager whose duty and obligation was to minimise the risks to investors, and those duties did not cease when Provident engaged with R to act on behalf of the investors. The engagement of R was not sufficient to satisfy the duty of care owed by P Group to the investors. The duties it owed were in some respects coextensive. P Group and M failed to minimise the risks to the investors by carefully analysing the valuation in light of the information contained in the transfer documents and therefore breached their respective duties of care to the investors. M was liable to the investors for the negligent conduct of P Group as he either conducted himself so as to �make the conduct his own� or �directed or procured the conduct for which P Group was found liable. The Agents had breached their duty of care in proceeding to settlement without satisfying themselves that R had advised the investors of the relevant information and obtained instructions to proceed with the transaction. It was not enough to have obtained a copy of the valuation. The form of valuation that was received should have raised questions in the mind of the Agents as to whether or not the valuation was independent and satisfactory as regards to the investors. Because a solicitor is in breach of duty of care to his or her client, it does not necessarily follow that she or he is in breach of any fiduciary duty owed to the client. The fiduciary duties of a solicitor are more limited in scope, and do not include a duty to exercise reasonable care and skill, as such a duty is essentially tortious.
Christine Joy Hyland v Dr Kai Huen [2003] ACTSC 70 03/09/2003 ACT Supreme Court Connolly J	General principles of negligence Medical Negligence	H sued Dr H for damages for personal injuries sustained as a result of the unsuccessful extraction of a tooth which caused H to sustain a frozen jaw requiring surgical intervention. H relied upon 2 grounds: 1. Excessive force in the extraction. It was accepted that the method used by Dr H in extracting the tooth was endorsed by other specialists. Medical evidence was divided as to whether or not excessive force in the extraction could lead to fusion of the jaw. 2. Failure by Dr H to warn of the risk of infection from a removal of the badly decayed tooth. The tooth which was extracted was badly decayed and its removal released a "shower of bacteria" which was an alternate cause of the fusing of the jaw. If H was on a course of antibiotics prior to the surgery then she could have avoided infection. H gave evidence that if she had been advised of the risk of damage from infection by the badly decayed tooth, she would have sought antibiotic cover. � Did a dentist's failure to warn of the possible risk of infection, and its consequences, arising from an extraction of a decayed tooth amount to negligence?	The cause of the damage to the Plaintiff's jaw was not excessive force at the time of extraction of the tooth but rather the infection caused by the "shower of bacteria" which was released when the decayed tooth was removed. The High Court decision of Rosenberg v Percival, which set out the test to be applied in cases involving a failure to warn a patient of a risk, was applied. This test is a subjective test but the Court will be guided by what a reasonable person would or would not have done when evaluating the Plaintiff's evidence. H, being a trained nurse whose brother was a General Practitioner, would have obtained antibiotic cover prior to the procedure. The Plaintiff's difficulties were caused by the negligent failure of Dr H to warn her of the risk of infection and the availability of antibiotics to prevent infection. The Court awarded the Plaintiff damages in the sum of $139,208.95 plus costs.
Mills & Anor v Commonwealth of Australia [2003] NSWSC 794 29/08/2003 NSW Supreme Court Master Malpass	Evidence Act 1995 (NSW) s.79 Trade Practices Act 1974 (Cth) s. 74 Negligence, Breach of contract International law which law applies?	M�s child was referred for diagnosis and treated by an Australian Embassy employed medical doctor in Cambodia, Treatment was allegedly refused by the doctor and the child later died. M was a Cambodian national and her husband an Australian national. The child was an Australian citizen M and her husband sued for damages including exemplary damages for nervous shock as a result, in both tort and contract. Are the causes of action maintainable in the Supreme Court of New South Wales regardless of whether they are maintainable in Cambodia? If so should the law of Cambodia or Australia be applied?	The tortious claim is not maintainable in NSW if it is not maintainable in Cambodia. The contractual claim is maintainable in NSW even if it is not maintainable in Cambodia. Having rejected expert evidence on the issue the Court could not be certain whether the causes of action were maintainable in Cambodia but the issues would proceed to trial. The relevant law on liability was the law of Cambodia in relation to the tortious claim. The issue of the relevant law in relation to damages was reserved. In relation to the contractual claim the relevant law was the law of NSW. The contract was formed in Cambodia and performance took place there. However the Court had regard to the following facts: - The allegations were made against the Australian Embassy - Access to treatment was available to Australians - The Australian Government was a party to the agreement - One of the Plaintiff�s was Australian the other is his wife - The services in dispute were to be provided to an Australian - The law of Australia was significantly more stable and determinable than the law of Cambodia.
Presland v Hunter Area Health Service [2003] NSWSC 754 19/08/2003 Supreme Court Adams J	Compensation to Relatives Act 1897 Mental Health (Criminal Procedure) Act 1990 Mental Health Act 1990 Fatal Accidents Act 1976 UK Medical Negligence	On 3 July 1995 P had been brought to the John Hunter Hospital (JHH) by Police following an episode of bizarre and extremely violent behaviour. After treatment he was transferred to a psychiatric institution for assessment. He was released in the company of his brother at about 11 am on 4 July 1995 and six hours later killed his brother's fianc� (L). On 7 May 1996 he was acquitted by Newman J of the murder on the grounds that when he attacked and killed her he was legally insane. P claimed damages for distress and economic loss from Hunter Area Health Service (HAHS) on the grounds that the doctor who discharged him was negligent not to have detained him as an involuntary patient under the Mental Health Act 1990 and that had he been detained he would not have killed L. � Did the duty of care owed by HAHS extend to guarding against the risk that the Plaintiff would suffer harm as a result of committing a homicide or, in other words, was the risk that the Plaintiff would suffer harm as a result of committing a homicide reasonably foreseeable.	HAHS' duty of care extended to guard against the risk that the Plaintiff, without appropriate treatment, might suffer harm by seriously injuring himself or another. The relevant doctor had not properly assessed the Plaintiff and the releasing of the Plaintiff into the care of his brother was completely inappropriate. This is not a case where HAHS could rely upon the fact that the damage to P flowed from a criminal act as P had been acquitted of the crime. P was awarded general damages of $225,000.00 and damages for past economic loss.
Capital Brake Service Pty Limited v Meagher & 8 Ors t/as Sparke Helmore [2003] NSWCA 225 14/08/2003 NSW Court of Appeal Meagher JA, Beazley JA, Ipp JA District Court Taylor J	Professional Negligence solicitor duty to warn	C was the owner of a building with a faulty roof, and sued the architect and builder. SH was C�s solicitor and recommended compromise settlement against the architect for $55,000 inclusive of costs (50% of the claim) on the basis of an expert report. C continued their case against the builder and lost. C sued SH in the District court and lost. C appealed. � Should SH have warned C that settling their case against the architect could result in 50% of their money not being recovered, and costs being payable?	Ipp JA noted that when providing their recommendations, SH were relying on evidence by a retained expert which considered that the case against the architect was unlikely to succeed, and that the greatest likelihood of success was against the builder. His Honour noted �There is a great danger, particularly in professional negligence matters, of applying an unrealistic hindsight judgment... The Court must be careful to judge the conduct of a defendant, where negligent failure to warn is asserted, by reference to what the defendant reasonably knew at the relevant time. Not after the loss has been suffered�. The appeal was dismissed.
State of NSW v Riley [2003] NSWCA 208 01/08/2003 NSW Court of Appeal Sheller JA, Hodgson JA, Nicholas J NSW District Court Phegan DCJ	exemplary or aggravated damages	R shot a gun. Was arrested by police. Police thought R was mentally disturbed. R was placed in police wagon and handcuffed. R threw himself from side to side and was taken to hospital. He was given no explanation for his arrest or detention. Phegan DCJ found: that �the police committed assault and false imprisonment which came to an end when the officer formed the opinion� that R was mentally disturbed. R complained of psych injury and physical injury because the handcuffs were too tight. A wrist fracture was detected 2 years post the incident. Phegan DCJ found the fracture was caused between time of arrest and arrival at hospital. Damages (being compensatory of $48,000, exemplary of $45,000 and aggravated of $40,000) were awarded but reduced by 40% for contributory negligence. Police appealed arguing amongst other grounds: aggravated and exemplary damages for assault, battery and false imprisonment should not have been awarded.	Appeal upheld. Aggravated damages are compensatory in nature, being awarded for injury to the Plaintiff�s feelings caused by insult, humiliation and the like. If a court has awarded damages for hurt feelings as part of ordinary compensatory damages, the award of aggravated damages must only be for so much as is necessary to bring the damages up to the upper end of the available range. Exemplary damages may result from conduct which is �...high-handed, outrageous, and show contempt for the rights of others, even if its is not malicious or even conscious wrong-doing. However, ordinarily conduct attracting exemplary damages will be of this general nature, and the conduct must be such that an award of compensatory damages does not sufficiently express the court�s disapproval or (in cases where the defendant stood to gain more than the plaintiff lost) demonstrate that wrongful conduct should not be to the advantage of the wrong-doer�. The police were faced with a difficult and dangerous situation which had been created by R�s conduct. The police acted out of concern for R, themselves and the public. The conduct of the police was not beyond ordinary human fallibility and did not justify an award in excess of compensatory damages. Damages reduced by $80,000 being the amount Phegan DCJ had awarded for aggravated and exemplary damages.
Patrick Pulido v R S Distributions Pty Ltd and Vista Laser Eye Clinics Pty Ltd; Janice Parker and Ronald Binetter [2003] ACTSC 61 01/08/2003 ACT Supreme Court Higgins CJ	Trade Practices Act Limitation Act (NSW) Limitations Act (ACT) Professional negligence - laser eye surgery	P sued the Defendants alleging breach of contract and negligent failure to warn of risks of surgery. P had consulted R&S and V in the ACT, and RB in the ACT and NSW. The surgery was conducted in NSW but there was no allegation of negligent performance of the surgery. The ACT proceedings were within time, but if the cause of action against RB arose in NSW, an extension of time was needed. � Where and when did P�s cause of action against RB arise?	The contract with RB was formed in the ACT even though the surgery was ultimately performed in NSW. All relevant promises, payments, and representations had been made in the ACT and it was with the territory that the contract had the most connection. The real negligence in the matter was RB�s failure to warn the Plaintiff of the risk of surgery. That failure occurred in the ACT, and it was under the territory�s law that the claim should be brought. RB might deny committing any negligence in the ACT and a question therefore arose as to whether an extension of time should be granted. In the circumstances, His Honour considered it should.
Tzaidas v Child NSWSC 667 25/07/2003 New South Wales Supreme Court Grove J	Law Reform (Miscellaneous Provisions) Act 1946, s6 Insurance Contracts Act 1984, s54 Professional negligence Application to join insurer	The Plaintiffs (father, mother and child) claimed damages consequent upon alleged professional negligence at birth against Hurstville Community Co-operative Hospital Limited ("the hospital"). The hospital was impecunious so the Plaintiffs filed a Notice of Motion seeking leave pursuant to Section 6 of the Law Reform (Miscellaneous Provisions) Act 1946 to join the hospital's insurer. The hospital held cover under a "claims made and notified" policy, and had not notified the insurer. The insurer denied indemnity under the policy on the basis that notice was not given of a potential claim during the period of currency and resisted the motion to join it relying upon Section 6(4) of the Act. This provides that to commence proceedings leave will not be granted in any case where the Court is satisfied that the insurer is entitled to disclaim liability under the terms of the policy. In relation to the allegation of lack of notification the Plaintiff relied on Section 54 of the Contracts Act which provides that insurers cannot deny indemnity under a policy on the basis of an act or omission of an insured where that act or omission could not be regarded as being capable of causing or contributing to a loss in respect of which the insurance contract has provided cover. � Did Section 54 of the Insurance Contracts Act 1984 (Cth) prevent the insurers right to deny a claim. If so, did this prevent the insurer relying upon Section 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 in an application to commence proceedings against the insurer?	Grove J considered that the Court sitting at first instance was bound by the decision of FAI General Insurance v Jarvis 1999 49 NSWLR 1 which decided that the provisions of the Commonwealth Act were irrelevant to any consideration of whether leave to commence proceedings ought to be given pursuant to Section 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 because the latter "is directed, on application for leave to commence, to whether an insurer is entitled under its contract to disclaim liability, whereas the former is directed to the determination at trial of the extent of prejudice to the insurer and whether the act or omission of the insured which would have otherwise have provided a disclaimer should be permitted to provide a defence in whole or in part to the claim already made by the insured". The Plaintiffs' Motion was dismissed as the grounds for a direct claim against the insurer were not made out.
Cattanach v Melchior 199 ALR 131 16/07/2003 High Court Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ Queensland Court of Appeal McMurdo P, Davies, Thomas JJA Queensland Supreme Court Holmes J	Professional negligence General principles of negligence - duty of care - pure economic loss arising out of relationship wrongful life	Mrs M gave birth to a child following an unsuccessful sterilisation procedure performed by C in a Queensland public hospital. Mrs M and her husband sued C in Queensland and were awarded damages of $130,672.39 to Mrs M for pregnancy and birth, $3,000.00 to Mr M for loss of consortium, and $105,249.33 to Mr & Mrs M for the cost of raising the child. C and the State of Queensland appealed the damages awarded for the cost of raising a child. The Court of Appeal dismissed the appeal. Appeal to the High Court. � Whether C and the State liable for damages in relation to the cost of raising a child born following a failed sterilisation procedure.	The majority of McHugh, Gummow, Kirby and Callinan JJ dismissed the appeal finding that damages were payable by C and the State for the cost of raising a child following the failed sterilisation procedure and that C and the State would have been liable under the ordinary principles of negligence. This was not inconsistent with the value of life and welfare of the child that the law recognised and the law should not shield or immunise the appellants from what otherwise constituted a head of damage recoverable in negligence. C's argument that the birth of a child was always a blessing was rejected as this disregarded the widespread use of contraceptives designed to avoid such an outcome. C's argument that to award damages may result in possible psychological harm to the child in question when he became aware of the action was rejected as such harm was only speculative. The damages awarded to the mother for the birth of the child were separate to the damages provided for the cost of the child's maintenance. Gleeson CJ in dissent noted that the awarding of damages in the current circumstances was recognising a new claim of damages - recovery for pure economic loss arising out of a relationship which he considered, inter alia, too imprecise to calculate.
Radosavljevic v Radin & Ors [2003] NSWCA 217 10/06/2003 Court of Appeal Mason P, Handley JA McColl JA District Court Price J	Solicitors' Professional negligence and general principles of negligence District Court Act 1973 (NSW) s127 District Court Rules 1973 (NSW) Pt12 r4(c)	The Appellant (executor and widower of the deceased) brought actions in negligence against three solicitors resulting from their handling of the deceased's personal injury at Ashfield Mall and workplace accident at Concord Hospital claims. R was sued for failing to bring a proper claim for a fall suffered by the deceased at Ashfield Mall within the six year limitation period. R had mistakenly sued K-Mart. However, this claim against R was itself statute barred as it was brought more than six years after the extinguishment of the Ashfield Mall claim. G, retained by the deceased in place of R to prosecute the Ashfield Mall action and workplace accident proceedings, was sued for delay in acting in settlement negotiations which resulted in a costs order of $10,000 against the deceased pursuant to Terms of Settlement. The Appellant also claimed against G the value of the proceedings which should have been brought against R. C, the Appellant's own solicitor, was sued for failing to advise the Appellant to sue R for allowing the Ashfield Mall claim to become statute barred. The trial judge held: (i) G's delay did not contribute to the $10,000 costs liability to K-Mart Ashfield Mall. The Appellant challenged this finding. (ii) Award against G in the sum of $13,328 for the lost opportunity to sue R for negligent conduct of the Ashfield Mall Claim. Appellant appealed against the inadequacy of the award. G filed cross appeal seeking that verdict and judgment be set aside. (iii) G was negligent in the handling of the workplace accident proceedings for failing to take detailed evidence from the deceased after learning of her terminal cancer. However, the breach did not cause loss and no damages awarded. The Appellant challenged this finding. (iv) G had breached his duty in not advising the Appellant of the relevant limitation period but held that there was no causation. � Whether the solicitor's negligence caused the loss alleged. � Whether damages for loss of opportunity were inadequate.	The Court unanimously held: (i) The appeal against the rejection of the claim against G for the lost $10,000 failed as damages can only be awarded to the Appellant as indemnity against a real loss, actual or contingent. The Appellant suffered no loss in respect of the K-Mart costs order because the terms of the cost settlement stated that the payment was contingent upon a successful conclusion of the foreshadowed claim against R for professional negligence and the then pending claim relating to accident at Concord Hospital whichever happens first. Neither contingencies had happened nor was likely to happen. (ii) The Trial Judge's assessment of general damages ordered against G for the lost opportunity to sue R was not manifestly inadequate. (iii) G's cross appeal was refused because the sum involved was small and there was arguably a scintilla of evidence that the loss claimed was a viable one. (iii) G's failure to take detailed evidence from the deceased did not cause or contribute to the Appellant's inability to successfully pursue he work accident claim as the difficulties with the case were not caused or materially contributed to by the absence of evidence. The facts did not support a claim for work injury damages and a statement taken from the deceased 8 to 10 years after the accident would not have improved the viability of her claim. (iv) C's negligence in not advising the Appellant of the limitation period for bringing proceedings against R did not materially contribute to the loss. The evidence supported the trial judges conclusion that the Appellant would not have instituted proceedings against R even if he had been properly advised about the limitation period. The Court accepted that advices given by C and Counsel were that such an action was not viable.
Gosford City Council v GIO [2003] NSWCA 34 07/03/2003 NSW Court of Appeal Spigelman CJ, Meagher JA, Shaller JA NSW District Court Bergin SCJ	Insurance Contracts Act ss 40(3) Insurance Contracts Act ss 54(1)	The Council obtained a Broad Form Liability Insurance Policy for the period 30 June 1989 to 31 December 1991. The policy indemnified the Council in respect of claims made against the Council during the period of insurance. It was a condition of the policy that the insurer be notified in writing as soon as possible of any 'occurrence, claim, writ, summons, proceedings or of any impending prosecution or inquest'. In May 1991 an officer of the Council telephoned the Council's insurance broker and spoke to him about a potential claim. None of the information was passed on to the insurer. The Council was not sued until July 1994. The insurer denied indemnity because no claim had been made against the insured during the period of the policy. Section 40(3) of the Act provides that: Where the insured gave notice in writing to the insurer of facts that might give rise to a claim against the insured as soon as was reasonably practicable after the insured became aware of those facts but before the insurance cover provided by the contract expired, the insurer is not relieved of liability under the contract in respect of the claim, when made, by reason only that it was made after the expiration of the period of the insurance cover provided by the contract. Section 54(1) provides that: Where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into...the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act. Section 54(6) extends the definition of 'act' in s54(1) to include 'omissions. The Council argued that the effect of s54 was that the insurer could not deny indemnity by reason only of its failing to give notice in writing (the omission) within the time prescribed in s40(3) (ie as soon as reasonably practicable but before the expiry of the contract) of the facts which might have given rise to a claim. It was submitted that s40 effectively converted the policy into a 'discovery' policy. This argument was rejected at first instance by Bergin J. The facts of the Council's case did not fall within the discovery category identified by the High Court in FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (2001) 204 CLR 641. * Does s.54(1) relieve the insured of the obligation to comply with the time limits in ss.40(3).	The Court again rejected the Council's argument holding: [36] Section 54 does not permit the reformulation of the claim. It operates to prevent an insurer relying on certain acts or omissions to refuse to pay that particular claim. The actual claim made by the insured is one of the premises from which consideration of the application of s54 proceeds. The section does not operate to relieve the insured of restrictions or limitations, such as the temporal limits within which the claim must be made upon the insured in a claims made policy, that are inherent in that claim. [37}...the contract of insurance was a claims made policy. No claim was made against the insured within the temporal limits of the period of insurance. The insured's right to indemnity depended upon the third party's demand on it being made within the period of cover. The claim that was made on the insured was made outside that period. That fact was decisive unless s40(3) applied. If the subsection operates it denies the insurer escape from liability because the claim against the insured was not made within the temporal limits. To invoke s40(3) the insured must have given notice in writing to the insurer of facts that might give rise to a claim against the insured as soon as was reasonably practicable after the insured became aware of those facts but before the insurance cover provided by the contract expired. This was not done. In my opinion that is the end of the matter. The occasion for s40(3) to operate did not happen. Accordingly the subsection does not apply to prevent the insurer from contending that the claim is not within the policy.
FAI General Insurance Co Ltd (in liq) v Sherry & Ors [2002] SASC431 23/12/2002 Full Court Supreme Court South Australia Besanko, Bleby, Doyle JJA Supreme Court South Australia Debelle J	Professional negligence dishonesty	The Plaintiff's were executors of the Estates of two persons who had obtained judgments against a chartered accountant Davies and an associated company of which Davies was a director for misappropriation of funds. They sued FAI as assignees of Davies and the company for indemnity under a D & O policy issued by FAI to the company and a firm of chartered accountants of which Davies was a partner. The policy contained the following "dishonesty" extension: "4. The insured shall be protected, within the terms of this Certificate, for any claim upon which suit may be brought by reason of any alleged dishonesty ... or fraud on the part of the Insured or its partners ... unless a judgment ... adverse to the Insured shall establish that acts of active and deliberate fraud or dishonesty committed by any partner or partners of the Insured with actual fraudulent or dishonest purpose and intent were material to the cause of action so adjudicated and notwithstanding that such acts were not disclosed within the Insured's proposal for insurance in which event this Certificate shall only pay in excess of the full extent of such Partner's or Partners' assets in the firm. Any other personal assets of such Partner or Partners recovered by the Insured shall inure, to the extent of the amount paid by this Certificate to the benefit of the Company."� Whether a "dishonesty" extension in a policy of professional indemnity insurance resulted in Davies being entitled to indemnity for deliberate acts producing intentional losses where the conduct was dishonest and criminal.	The general rule that insurance is not intended to cover intentionally caused loss was not displaced by the extension. Davies' innocent partners were covered but not Davies himself. Per Doyle CJ "...it would be surprising, although not impossible, that protection should be provided to a dishonest partner in respect of deliberately caused loss. On the other hand, it is necessary to remember that professional indemnity insurance does not only protect the practitioner who is insured. Such insurance also provides protection to members of the public dealing with the person or firm or company insured, and members of the public will benefit if protection is given in respect of dishonest acts. But, in my opinion, it is reasonable to expect that if indemnity is to be provided to a dishonest person in respect of deliberately caused loss, the contract of insurance will make that intention clear... In the end, I am not persuaded that Clause 4 does displace, in relation to Mr Davies, the ususal principle that an insurer does not intend to cover loss deliberately brought about by the Insured. To my mind it would be unusual to provide protection to a dishonest insured, nor can I see any need to do so to achieve what I accept is the main purpose of Clause 4, the provision of protection to an innocent insured, innocent partners and innocent directors."
I&L Securities Pty Ltd v RS Melloy Pty Ltd [2002] QSC 306 04/10/2002 Qld Supreme Court Ambrose J	TPA s52 TPA s82 Common law negligence - valuer	The Plaintiff was a private mortgage lender controlled by a firm of solicitors. A loan application for $995,000.00 was received from a developer with security being a parcel of land which was valued by the Defendant company at $2,050,000.00. A short time later the developer's finance broker sought an increase in the loan facility to $1,200,000.00. An updated valuation again valued the parcel of land at $2,050,000.00. The developer ultimately defaulted on the loan and the Plaintiff exercised its power of sale. After Australia-wide advertising the parcel sold for $385,000.00. The developer's guarantors were made bankrupt. The Plaintiff sought to recover the capital loss suffered upon the sale of the land, interest due under the mortgage and the expenses incurred in attempting to sell the land. The total sum of the Plaintiff's claim was $1,662,507.40. * Was the valuer liable to a mortgage lender in negligence/Trade Practices Act in the circumstances of a valuation of developer's land?	The valuer's methodology went beyond arguable error of judgement so that there was a failure to apply with reasonable care the well recognised and generally applied principles of valuation. The valuation had been provided to the Plaintiff in terms designed to invite reliance upon it in determining the value of the developer's land for security purposes and the Defendant was liable both in negligence and for breach of s52 and s82 of the Trade Practices Act. The negligence included: * Failure to procure a plan of the land which would have revealed that a very large part of the site lay beneath the flood line and hence was not available for construction * Failure to take account of a number of easements within the site which further reduced the amount of available land * Uncritically adopting figures for civil works and other costs of development as supplied by the developer. A judgment in the sum claimed was entered for the Plaintiff.
McGroder v Maguire [2002] NSWCA 261 13/08/2002 NSW Court of Appeal Handley, Sheller and Beazley JJA NSW Supreme Court Dunsford, SCJ	Nil	The Plaintiff suffered an injury to his neck in the course of his employment. Despite treatment he continued to suffer from left arm symptoms. Two years after the original injury he attended the employer's consultant general practitioner (the First Defendant) who referred him to a chiropractor (the Second Defendant). The GP did not carry out a physical examination or refer to the medical records held by the employer. Following a chiropractic manipulation by the Second Defendant the condition of the neck and back deteriorated markedly. The Plaintiff underwent surgery but was unable to return to work. The trial Judge found that the GP had negligently referred the Plaintiff to the chiropractor and the chiropractor had negligently treated him. The GP appealed, arguing that there was no breach of duty of care involved in making the referral and that even if there was, the chiropractor's negligent treatment was a 'new intervening act' which severed the chain of causation between any negligence by the GP and the Plaintiff's damage. Was the GP negligent in referring the Plaintiff to the chiropractor? If so, did the chiropractor's negligence break the chain of causation between the GP's negligence and the Plaintiff's damage?	The appeal was dismissed. The GP's negligent referral had 'generated the very risk of injury' whereby the Plaintiff was subject to the subsequent negligent act by the chiropractor that caused the damage to his neck and back.
Wakim v McNally [2002] FCAFC 208 03/07/2002 Full Ct Fed Ct Branson, Mansfield and Stone JJ Federal Court Lindgren	Partnership Act solicitor negligence failure to challenge QC's advice	In 1985 the Plaintiff was awarded $860,000.00 in damages following an injury in the employ of a partnership. He had only sued one of the two partners. Shortly thereafter the partner against whom the judgement had been given filed for bankruptcy. The Official Receiver became the Official Trustee in Bankruptcy of the bankrupt estate. The Plaintiff was the major unsecured creditor of the estate. One of the few assets of the estate was its potential claim for indemnity or contribution from the other partner pursuant to the Partnership Act. The Plaintiff provided a cash advance and an indemnity in respect of costs so that proceedings against the other partner could be commenced. Proceedings were commenced. Solicitors were instructed and an advice was sought from a QC. The QC advised that the estate had no right of contribution or reimbursement until the joint liability had been paid in part or in whole. He recommended that the claim be withdrawn. While this was the position at common law the QC appeared to have overlooked the estate's equitable rights. The solicitor did not challenge this advice despite being a bankruptcy expert. The Official Trustee withdrew the claim and a costs order was made against the estate. The Plaintiff sued the solicitor (the QC had since died). The trial judge found that the solicitor had owed a duty of care to the Plaintiff because he knew that the Plaintiff was the sole indemnifying creditor of the estate and was aware of the terms of the deed of indemnity given by the Plaintiff. The solicitor's expertise in the area meant that he was not entitled to rely blindly on the QCs advice and should have turned his own mind to the matter. Ultimately he found that there had been no breach of the duty. The solicitor had turned his own mind to the matter but had deferred to the QCs opinion on the basis of his standing and seniority. Whether a solicitor, with relevant expertise, was negligent for failing to raise with a QC, despite the QC's standing and seniority, the fact that the QC omitted to consider an alternative basis for a cause of action	There had been a breach of the duty. As a result of the complete failure of the QC to address the position in equity, the solicitor should have been on notice that the QCs opinion may have been defective or incomplete and this ought to have been raised with him, notwithstanding his seniority. This breach had caused the Plaintiff's loss of the rights and benefits that arose out of the arrangement entered into for commencement of the litigation against the non-bankrupt partner. The matter was relisted for quantification of the loss of those rights and benefits.
Durovic v Zabow [2002] NSWCA 195 [2002] NSWCA 195 26/06/2002 NSW Court of Appeal Mason P, Barr J, McClellan J NSW District Court Couper DCJ	Common law negligence	The Plaintiff consulted her GP for renewal of a contraceptive prescription and was instead negligently prescribed hormone replacement medication. She subsequently conceived a child and underwent a termination. There was a consensus among the medical experts that she then developed a psychiatric condition, namely an Adjustment Disorder. * Assessment of damages for psychiatric condition caused by negligent prescription resulting in birth of child	Claim successful, damages as follows: General damages: $20,000.00 Interest: $ 1,345.00 Past treatment costs: $ 6,247.00 Future treatment costs: $2,100.00 Past economic loss: $7,500.00 Interest on past economic loss: $2,260.00 Total: $39,452.00 The trial Judge discounted general damages and past economic loss as he was not satisfied that the psychiatric consequences of the termination were as severe as alleged. The Plaintiff appealed the award as being too low. While the Court had 'some doubts about the smallness of the general damages awarded' the appeal was dismissed for failure to identify any errors of law in the trial Judge's approach.
Edwards v Blomeley [2002] NSWSC 460 12/06/2002 NSW Supreme Court Studdert J	Common law negligence	By way of contrast, in this case the Plaintiff gave birth to a healthy baby following a failed sterilisation procedure.- * Whether the parents could recover the reasonable costs of raising the child.	Claim succeeded. It should be noted that this head of damage was treated as a claim for pure economic loss and the relevant principles of this developing area of law were applied. The trial Judge concluded: "The law imposes a duty of care upon a medical practitioner to avoid the foreseeable risk of the costs of raising a child conceived through negligence in the context of a failed sterilisation performed for socio-economic reasons, subject to any appropriate limiting control mechanisms". Leave to appeal to the High Court was granted to the Defendant in March 2002 and the matter was argued over three days in February 2003. The Court's decision has been reserved.
South Coast Regional Health Authority v Bloodworth [2002] NSWCA 134 22/05/2002 NSW Court of Appeal Powell JA, Ipp AJA and Sperling J Supreme Court McInerney SCJ	finding differnt than basis for partie's case learning curve inexperience	The Plaintiff underwent a laparoscopy with the objective of having his gall bladder removed. During the operation a major artery and vein were lacerated causing internal haemorrhaging which was not observed for almost an hour and which resulted in the loss of 2 to 3 litres of blood. The Plaintiff also experienced an embolism leading to cardiac arrest when carbon dioxide which is used to inflate the peritoneal cavity entered his vascular system via the lacerations. He successfully sued the hospital and doctor recovering $1,093,680.45 in damages despite being an unsatisfactory witness and prone to exaggeration. It had been alleged that the operation led to hypoxic brain damage resulting in memory dysfunction, cognitive difficulties and mild expressive dysphasia. The trial Judge found that the doctor was negligent in performing the operation when he had inadequate surgical experience of the procedure and that this inexperience caused the Plaintiff's damage. The doctor was still on a "learning curve" but had performed 11 operations either as principal surgeon or co-principal surgeon. The Plaintiff had however argued the case on two different bases: (i) that the doctor had negligently performed the operation and (ii) that the doctor had negligently failed to warn the Plaintiff of his inexperience and the risks of the operation. The Defendants appealed against the findings of liability and damages. Was the surgeon negligent?	The appeal was upheld and a new trial ordered. It was not open to the trial Judge to find that the doctor's training and experience was inadequate even if the Plaintiff had sought to argue his case on this basis. The technique used by the doctor was the appropriate way for the procedure to be carried out and the doctor had adequate training and instructions on the technique. Given the trial Judge failed to determine the case on the basis on which it was advanced by the Plaintiff and decided the case on a basis that was not sustainable, the appeal was upheld and a new trial ordered.
Rahmat Ali v Hartley Poynton Ltd [2002] VSC 113 16/04/2002 Victorian Supreme Court Smith J	Common law negligence - Stockbroker	In October 1997 the Plaintiff entered into an agreement pursuant to which the Defendant would act as his stockbroker. A sum of $101,818.54 was provided to the Defendant. Over $39 million worth of shares were traded before the funds were finally dissipated. The Defendant claimed outstanding brokerage fees of some $67,000.00. The Plaintiff made a number of allegations against the Defendant including negligent advice prior to and during the duration of the retainer agreement, negligent trading and negligent supervision. The Plaintiff also alleged breach of the retainer agreement. The Plaintiff claimed compensation for loss of profit and loss of opportunity flowing from the Defendant's breaches. Was the stockbroker negligent in handling the client's funds?	The stockbroker owed the Plaintiff a duty of care as follows: 'to furnish the client with all the relevant knowledge, which the adviser possesses, concealing nothing that might reasonable be regarded as relevant to the making of an investment decision including the identity of the buyer or seller of the investment when that identity is relevant, to give the best advice which the adviser could give if he did not have but a third party did have a financial interest in the investment to be offered, to reveal fully the advisers financial interest, and to obtain for the client the best terms which the client would obtain from a third party if the adviser were to exercise due diligence on behalf of his client in such a transaction' (See Daly v The Sydney Stock Exchange Ltd (1986) 160 CLR 371, 385 per Brennan J). The Plaintiff was also owed fiduciary, statutory and contractual obligations by the Defendant to take reasonable care in performance of the retainer agreement. Damages of $846,818.00 (after a deduction of 15% for contributory negligence) plus $260,000.00 exemplary damages were awarded. NB. The hearing ran continuously for over 8 months.
Alexander v Heise [2001] NSWCA 422 27/11/2001 NSW Court of Appeal Priestley, Stein JJA and Ipp AJA Supreme Court Master Harrison	Compensation to Relatives Ac	The Plaintiff's husband died of a cerebral haemorrhage. Eighteen days prior to his death he woke at 2 a.m. with a severe headache which did not respond to Panadol. The Plaintiff was very concerned and told him the following morning that she would make an appointment for him to see the family GP. The husband had not previously attended upon the GP. He agreed to attend, but requested an appointment as late as possible in the evening so as not to interfere with his busy architectural practice. He felt well and went to work as usual. The Plaintiff attended the surgery to make an appointment. She told the First Defendant, the medical receptionist, that her husband had had a severe headache during the night, that she wanted him to have a full medical checkup as she thought this was related to stress at work, that she wanted him to have a blood test for prostate cancer and that she was worried about him,that her husband had appeared well enough to go to work the following morning. The Plaintiff argued that once the receptionist knew that the husband had suffered a severe uncharacteristic headache she should have telephoned the GP and asked for his opinion instead of making an appointment with the GP for the following week. The husband died before the appointment. The Plaintiff argued that had the GP seen the husband earlier, death could have been avoided. It was also alleged that the GP was negligent, although the judgement does not set out the basis for this allegation. The trial Judge found that while the receptionist owed a duty of care to the husband there was no breach in the circumstances. The receptionist had made an assessment on the basis of information provided by the Plaintiff, that the husband's condition was not life-threatening and that he was not in any pain or discomfort. A verdict for the Defendants had been entered. * Whether the medical receptionist owed the Plaintiff a duty of care in relation to prioritisation of patients? If so, whether negligence was established.	The Plaintiff's appeal was dismissed. The Court of Appeal affirmed the finding that the receptionist and the GP owed the husband a duty of care. On the material provided by the Plaintiff the receptionist, in exercising her judgment, reasonably concluded that the condition was not life threatening, such that it should be immediately referred to the GP.
Mastronardi v Kennedy [2001] NSWCA 354 05/10/2001 NSW Court of Appeal Priestley, Stein JJA and Fitzgerald AJA NSW District Court Garling DCJ	CIVIL AVIATION (CARRIERS' LIABILITY) ACT 1959	The Plaintiff allegedly suffered an illness following consumption of yogurt on an Alitalia flight. He sought advice from the Defendants - a firm of solicitors and a barrister. A two-year limitation period applied. The barrister advised that proceedings should not be commenced as there was a high likelihood of failure. Neither the barrister or firm advised in relation to the limitation period. The Plaintiff sued the barrister and solicitor for damages for professional negligence. In the District Court of NSW the claim was dismissed after the trial judge found that the plaintiff would not have succeeded against the airline. That is, the Plaintiff did not lose anything of value by reason of the negligent failure of the respondents to advise of the limitation period. The Plaintiff appealed. Were the solicitor and barrister negligent for failing to advise of the existence of the two year limitation period?	The appeal was dismissed in the Supreme Court. The medical evidence raised no more than the possibility of a connection between the yoghurt and the illness. Trial Judge's reasoning confirmed.
Melchior v Cattanach [2001] QCA 246 26/06/2001 Queensland Court of Appeal McMurdo, Davies and	Common law negligence	By way of contrast, in this case the Plaintiff gavebirth to a healthy baby following a failed sterilisation procedure.- Whether the parents could recover the reasonable costs of raising the child.	Claim succeeded. It should be noted that this head of damage was treated as a claim for pure economic loss and the relevant principles ofthis developing area of law were applied. The trial Judge concluded: "The law imposes a duty of care upon a medical practitioner to avoid the foreseeable risk of the costs of raising a child conceived through negligence in the context of a failed sterilisation performed for socio-economic reasons, subjectto any appropriate limiting control mechanisms". Leave to appeal to the High Court was granted to the Defendant in March 2002 and the matter was argued overthree days in February 2003. The Court's decision has been reserved.
Heydon v NRMA Ltd; Bateman v NRMA Ltd; Morgan v NRMA Ltd [2003] NSWCA 374 21/12/2000 NSW Court of Appeal Malcolm AJA, McPherson AJA and Ormison AJA Supreme Court of NSW Giles SCJ	advice about possible change to law	In 1999 the NRMA successfully sued Abbot Tout (specific retainer), Allen Allen & Hemsley (general retainer) and Mr J D Heydon, QC for among other things, professional negligence for incorrect advice given in relation to the demutualisation of the NRMA. At the time of the advice an application for special leave to appeal to the High Court in the matter of Gambotto v WCP Ltd (1995) 182 CLR 432, had just been granted. The decision in Gambotto (some 15 months later) introduced a very broad change of principles which meant that the advice given to the NRMA was no longer correct and certain steps taken by the NRMA were now open to challenge. The trial Judge found that the QC had failed to put anyone on notice of Gambotto and had failed to advise that the decision in that case may have an effect on any steps taken by the NRMA. Damages in excess of $32,000,000.00 were awarded to the NRMA, to be apportioned equally between the Defendants. The Defendants appealed. * Whether in furnishing legal advice on some proposition that may be overturned or modified in the future, Counsel is required to investigate the existence of any such litigation.	The verdict was overturned with the Court holding that neither the QC nor the solicitors were responsible for the effect of the decision in Gambotto on the demutualisation proposals. Malcolm AJA held that the solicitors were entitled to rely on Counsel's advice in discharging their duty of care. Ormiston AJA held that legal practitioners do not have a duty, whenever some proposition of law is at risk of being overturned or modified in the future in the High Court, to investigate whether any such litigation is in the pipeline, what has been said in the course of argument and what is the possible outcome of such litigation.
Daniels v Anderson [1995] 16 ACSR 607 NSW 15/05/1995 NSW Court of Appeal Clarke, Sheller and Powell JJA NSW Supreme Court Rogers SCJ	Corporations Law s1318 Law Reform (Miscellaneous Provisions) Act 1946 ss 5,9,10. A full copy of this decision is ot available	This appellate Decision follows on from the initial Decision in AWA v Daniels. Nature and source of the duty of care owed by Directors.	In accepting the office Directors assume the responsibility of exercising a reasonable degree of care and diligence in the performance of the office. The Courts recognise that more is required of a Director than a supine indifference. The Legislature requires both diligence and action. Ignorance is no longer necessarily a defence to proceedings brought against the Director. In some respects, at least, the Director must inform himself or herself about affairs of the Company. There is no doubt reason for establishing a Board which enjoys the varied wisdom of persons drawn from different commercial backgrounds. Even so, a Director, whatever his or her background, has a duty greater than simply representing a particular field of experience. That duty involves becoming familiar with the business of the Company and how it runs and ensuring the Board has available means to audit the management of the Company so that it can satisfy itself that the Company is being properly run. The responsibilities as Director require that they take reasonable care to place themselves in a position to guide and monitor the management of the Company. Given the varying skills of Directors and the different varieties of business with which companies may be concerned, it would be unreasonable to expect everyDirector to have equal knowledge and experience of every aspect of the Company's activities. The business of a Corporation could not go on if Directors could not trust those who were put in a position of trust for the express purpose of attending to details of management. Reliance would only be unreasonable where the Director was aware of circumstances of such a character, so plain, so manifest and so simple of appreciation that no person, with any degree of prudence, acting on his or her behalf would have relied upon the particular judgment, information and advice of the officers. The lone Executive Director does not have to turn himself or herself into an Auditor, Managing Director, Chairman or other officer to find out whether management are deceiving him. The Director's duty of care is not merely subjective, limited to the Director's knowledge and experience or ignorance or inaction. Directors are under a continuing obligation to keep informed about the activities of the Corporation. Directors may not shut their eyes to corporate misconduct and then claim that because they did not see the misconduct they did not have a duty to look. The sentinel asleep at his post contributes nothing to the enterprise who has charged to protect it. Directional management does not require a detailed inspection of day-to-day activities, but rather a general ordering of corporate affairs and policies. A Director is well advised to attend Board Meetings regularly. While Directors are not required to audit Corporate books, they should maintain familiarity with the financial status of the Corporation by regular view of financial statements. The review of financial statements however may give rise to a duty to inquire further into matters revealed in those statements. Upon discovery of an illegal course of action, the Director has a duty to object and, if the Corporation does not correct the conduct, to resign. A Director is not an ornament, but an essential component of corporate governance. Consequently a Director cannot protect himself behind the paper shield bearing "dummy Directors". No rule of universal application can be formulated as to the Director's obligations in all circumstances. The extent of his duty must depend on the particular function he is performing, the circumstances of the specific case and the terms on which he has undertaken to act as a Director. The Director's fiduciary obligations do not preclude the Common Law duty of care. In some circumstances the duty will require action. The person who accepts the office of a Director of a particular Company undertakes the responsibility of ensuring that he or she understands the nature of the duty a Director is called upon to perform. That duty will vary according to the size of the business of a particular company, that experience or skill that the Director held himself or herself out to have in support of an appointment to the office. The duty is a Common Law duty to undertake reasonable care owed civilly by persons who are fiduciary agents bound not to exercise the powers confirmed upon them for private or for any purposes foreign to their power.

Law as at 20 May 2012