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LAW REFORM (CONTRIBUTORY NEGLIGENCE AND APPORTIONMENT OF LIABILITY) BILL
Adjourned debate on second reading.

(Continued from 4 July. Page 1985.)

Mr CONLON: Sir, I draw your attention to the state of the House.

A quorum having been formed:

Mr ATKINSON (Spence): This is a story about a piggery in New South Wales. It is about an old established Adelaide trustee company tempted by 1980s greed. It is about trusted solicitors failing to advise the newly invigorated trustee company properly in one of its new ventures, namely, a deed to govern a trading trust.

Parliament is moving to change the law of contributory negligence owing to the High Court decision in the South Australian case of Astley and Others v. Austrust Limited. Contributory negligence is the negligence of the plaintiff. If a defendant raises contributory negligence, he or she is alleging that the plaintiff was negligent in such a way that he or she contributed to the damages claimed against the defendant. The majority of the High Court in Astley v. Austrust-namely, Justices Gleeson, McHugh, Gummow and Hayne-explain contributory negligence in this way:

A pedestrian, for example, owes no duty of care to a speeding driver to avoid being run down but is guilty of contributory negligence if he or she fails to take reasonable care to keep a proper lookout for speeding vehicles.

In the law of torts, which is mostly common law, it used to be that, if the defendant could establish contributory negligence by the plaintiff, even 5 per cent of the total causative fault, the claim was dismissed in its entirety. This is how the majority of the High Court explained it:

At common law, contributory negligence consisted in the failure of a plaintiff to take reasonable care for the protection of his or her personal property. Proof of contributory negligence defeated the plaintiff's cause of action in negligence.

This rule was harsh on the plaintiff so, in 1951, parliament added a new section 27A to the statute on tort law, the Wrongs Act. New section 27A provided:

Where any person suffers damage as a result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such an extent as the court thinks just and equitable, having regard to the claimant's share in the responsibility for the damage.

This section meant that, when a person sued another for damages arising from an alleged breach of duty of care, the defendant could seek to have the damages apportioned between the defendant and the plaintiff, according to their respective contribution to the damage. It was clear that this provision applied to suits under the law of torts. What was not clear was whether it also applied to suits under the law of contract.

In Astley v. Austrust, a public trustee company sued its solicitor for failing to advise the company on its potential liability to creditors of the trust and the advisability of confining liability to trust assets. Until 1990, Austrust Limited was known as Elders Trustee and Executor Company Limited, under which name it had traded since 1910. Until 1983, Elders Trustee had stuck to traditional lines of business, but from that time veteran manager David Oakeshott was moved on and replaced by a manager determined to obtain bigger returns by more aggressive investment strategies.

In 1984, Elders Trustee decided to invest in a New South Wales piggery. It sought the advice of Mr Astley's law firm and Mr Astley, as usual, handled the matter. It was established at the trial both that Elders Trustee failed to make any substantive inquiries about the commercial soundness of the venture and that Mr Astley did not advise Elders Trustee of the desirability of a clause in the trust deed to exclude liability beyond the value of the trust assets, namely, the piggery and the land on which it stood. The plaintiff sued for breach of common law duty of care, namely, the defendant's liability in the law of negligence or tort law. The plaintiff also sued on the basis of an implied contractual duty of care arising out of the contract of hire.

Once the fact of contributory negligence was found, there is no doubt that section 27A of the Wrongs Act would apply to permit the trial judge to apportion tortious damages as he or she thought fit. This the trial judge (Mr Justice Mullighan) did. The question before the High Court was whether that apportionment could occur if a breach of contractual duty were found against the defendant in addition to tortious liability as it had been at the trial. On this point the authorities on both sides were numerous and, over the years, many cases had been settled on the basis that contributory negligence did apply to breach of contractual duty, or at least that a trial judge would find some backdoor way of applying it, such as failure to mitigate damages even before the breach, remoteness of damage or causation.

In 1995 the damage to Austrust had been estimated at $1 436 837.78, which I believe was more than Austrust's stake in the piggery and the land on which it stood. In the High Court Mr Justice Callinan dissenting found that contributory negligence applied. The majority found that it did not. This was the nub of their reasoning, and I quote:

On any fair reading of the apportionment legislation against the background of the mischief it was intended to remedy, it is clear to the point of near certainty that the legislation does not and never was intended to apply to contractual claims.

Referring to the definition of fault in section 27A, the majority states:

A breach of contract does not come within the meaning of `fault'.

The majority points out that contributory negligence was first used in a nuisance case in 1808 and reviewing authorities in the first half of the 19th century concluded as follows:

No case can be found in the books where contributory negligence, as such, was ever held to be a defence to an action for breach of contract.

The majority argues that, in the first half of the 19th century, such a defence would have had to be specially pleaded in a contract case and there is no record of such a plea. Passing judgment on the disparate 20th century authorities that are decided after the passage of the section 27A equivalents, the majority concludes of the stream that supports contributory negligence for breach of contract cases, and I quote:

In our opinion those decisions, which have applied apportionment legislation based on the Law Reform (Contributory Negligence) Act 1948 (UK) to breaches of contract are wrong and should not be followed in this country. The interpretation of the legislation adopted by those courts which have applied the legislation to contract claims is strained, to say the least.

The majority decides that the context of section 27A and its equivalents, namely, acts on tortious liability, are against the interpretation that the 27As could apply in contract. It was 1951 when the Playford government's Attorney-General, the Hon. R.J. Rudall, told the other place:

Much dissatisfaction has been expressed with the `all or nothing' principle of the common law.

The High Court majority, interpreting the second reading speech 50 years later, states:

There is nothing in the second reading speech that remotely suggests that the legislation was to have any impact on contractual damages and nothing to suggest that the parliament intended it to apply, or even turned its collective mind, to the situation where a liability in tort was concurrent with the liability under contract.

It is common knowledge that the politically correct among Australia's legal fraternity tried every trick to stop Mr Justice Callinan becoming and remaining a High Court judge-the flip side of the Piddington saga 90 years before-because they regarded him as a big C conservative who would apply strict Dixonian canons of statutory interpretation; or, to put it another way, they feared he would uphold black-letter law by keeping parliaments to what they actually wrote as distinct from what the judges thought parliament had intended.

Mr Lewis: That is proper.

Mr ATKINSON: The member for Hammond says, `That is proper.' By contrast, Mr Justice Kirby, the `small l' liberal infuses self-styled progressive values into a permissive interpretation of the statutes and precedents in order to come up with what he thinks is a just result, whatever the black- letter law.

[Sitting suspended from 6 to 7.30 p.m.]

Mr ATKINSON: Before the dinner adjournment, I was contrasting the judicial style of Justice Callinan, who is a `big C' conservative and interprets statutes according to a black letter canon of interpretation, with the `small l' liberal permissive interpretation of Justice Kirby, who decides what result he wants and then comes in with the reasoning to reach it. I do not think the politically correct have yet contemplated the ultimate horror, namely, a High Court judge who interprets statutes and precedents permissively in order to find implied rights and duties based on traditional authority, obedience, family values and chastity.

The British chattering classes had a brief and unpleasant taste of this when Tom Denning was Master of the Rolls. So, what follows may come as a revelation to the politically correct. The majority in Astley v. Austrust argued that the law of torts was imposed on all of us alike. By contrast, they argued that parties to a contract voluntarily assumed their duties and could not complain if the terms of the contract led to an unjust apportionment of damage. The majority said:

Commercial people prefer the certainties of fixed rules to the vagueness of concepts such as just and equitable.

By contrast, Justice Callinan plays a bleeding heart and tries to obtain a just and equitable outcome by being permissive with the authorities and the history. Callinan dissents alone and only Mr Astley and his insurer are grateful.

The majority invited the state parliaments to pass legislation if we think the outcome is unjust. We do; and so here we are with this bill. The bill allows the parties to a contract to exclude apportionment by its terms. The bill realised that section 27A, with its new contractual operation, must be removed from the Wrongs Act. The Attorney-General has settled on a separate act. Surely, I would have thought that a home in existing legislation could have been found.

In conclusion, it is worth mentioning that the plaintiff argued that some contracts of service, such as audits and the work Mr Astley performed, had as their essence that the hireling would prevent financial disaster and no amount of negligence or fault on behalf of the hirer would reduce the hireling's liability in tort. The majority would not wear that, saying:

There is no rule that apportionment legislation does not operate in respect of contributory negligence of a plaintiff where the defendant, in breach of its duty, has failed to protect the plaintiff from damage in respect of the very event which gave rise to the defendant's employment. A plaintiff may be guilty of contributory negligence, therefore, even if the very purpose of the duty owed by the defendant is to protect the plaintiff's property. Thus, a plaintiff who carelessly leaves valuables lying about may be guilty of contributory negligence, calling for an apportionment of loss, even if the defendant was employed to protect the plaintiff's valuables. A finding of contributory negligence turns on a factual interpretation of whether the plaintiff contributed to his or her own loss by failing to take reasonable care of his or her person or property.

The opposition, having clamoured for this bill in the parliament long before the Attorney-General introduced it, is honour bound to support it.

Mr HANNA (Mitchell): The law of contributory negligence is now a unanimously accepted feature of our legal system. Indeed, the very concept of contributory negligence as a means of doing away with the all or nothing approach of the common law was necessary in the light of many 19th century cases, where workers injured at work but not entirely careful themselves were excluded from any compensation for their injuries and thrown on the scrap heap of penury and perpetual unemployment. We have come a long way since then in recognising the necessity for contributory negligence. In some ways, it is surprising that it has taken so long for the same principle to be applied to actions for breach of contract as well.

In the last few decades, we have seen an increasing number of actions that are pleaded in both tort and contract, and that reflects the development in the labour market, I suppose, where such high demands of care and such varied duties of care are required of people who are employed or engaged as consultants under contracts.

I suppose we have not had a need to legislate in this way because no-one seriously anticipated a result as disappointing as we saw in the High Court case of Astley where the black letter of the law was applied contrary to other developments in terms of implied rights under the constitution that we have seen in the last 20 years. On this occasion, the High Court reverted back to a very strict and literal interpretation of the common law and, unfortunately, in the view of many legislators and many in the legal profession, justice was not done.

That brings us to this bill, which will remedy that situation. As it turns out, it is overdue, but it took this disappointing decision from the High Court to necessitate our deliberations on this point. In the light of that, I am happy to support the bill.

The Hon. R.G. KERIN (Deputy Premier): I thank the members for Spence and Mitchell for their contributions and support of the bill. The bill will allow courts to apportion liability between the plaintiff and the defendant on account of the plaintiff's contributory negligence in cases where the plaintiff's claim is for breach of contractual duty of care. The bill also contains an additional provision to cover cases where the cause of action arose partly before and partly after the act came into operation. I thank members for their support and wish the bill a speedy passage.

Bill read a second time.

In committee.

Clauses 1 and 2 passed.

Clause 3.

Mr LEWIS: I wanted to understand from the minister whether the definition of a claimant, while it states it is a person `who asserts, or is entitled to assert, a right to damages from harm', includes anyone who may have been injured during the course of their work.

The Hon. R.G. KERIN: Yes.

Mr LEWIS: Do I understand from the minister's reply that it is possible for someone who is injured while they are going about their daily work, for which they are receiving reimbursement in some form or other, whether called wages or salary, or whatever, would be able to pursue those damages under this law as we propose to change it rather than the law as it exists or is presently established in workers' compensation?

The Hon. R.G. KERIN: This will not change the workers' compensation laws, so the answer is no.

Mr LEWIS: That was not the question.

The ACTING CHAIRMAN (Mr Hamilton-Smith): Does the member for Hammond have a third question?

Mr LEWIS: I only get three questions and not having the matter to which I drew attention in my inquiry addressed by the minister I am denied the opportunity of pursuing it to the third position, that is, to discover if a person going about their work can claim damages as a claimant under the provisions of this law rather than workers' compensation. I will go on from that and ask: is it possible for a claimant going about their work as a worker to claim not only under workers' compensation but also under the law to which this bill addresses itself? This is not all the law that would be relevant in that context.

The Hon. R.G. KERIN: There are some workers who still have a right to bring a claim for common law damages and they would be affected by this law.

Clause passed.

Clause 4.

Mr LEWIS: My query arises out of clause 4(1)(c) which provides:

This act applies to liabilities of the following kinds. . . a liability in damages that arises under statute.

I presume that does include statutes such as workers' compensation legislation.

The Hon. R.G. KERIN: The answer is no. Subclause (1)(c) refers to statutes or acts such as the Trade Practices Act and the Fair Trading Act.

Mr LEWIS: Could I ask the minister to repeat that? I did not hear. I heard him say no, which I presume meant that it does not prevent actions being taken under the provisions of this body of law even if actions have been taken under workers' compensation.

The Hon. R.G. KERIN: The answer is no in that the types of things covered under subclause ( 1)(c) are acts such as the Trade Practices Act and the Fair Trading Act. The workers' compensation act does not impose a duty of care.

Mr LEWIS: I take it that the application does or does not apply to people who have claims under workers' compensation? Does it apply? Can they pursue claims for damages under the provisions of this law; or does it not apply and they cannot pursue damages under the provisions of this body of law?

The Hon. R.G. KERIN: It would apply to common law claims but it does not apply to claims under the workers' compensation act.

Mr LEWIS: Finally, can a worker decide not to pursue damages under workers' compensation but to set that aside and settle his entitlements for costs of treatment, and so on, under workers' compensation and then pursue damages, if he believes he is so entitled as a claimant, under the provisions of this legislation?

The Hon. R.G. KERIN: Workers who were injured after September 1987 cannot bring a claim for damages at common law.

Clause passed.

Clause 5.

Mr LEWIS: To get to the bottom of this I will have to ask the minister a question under subclause (2) along the same lines as I was inquiring earlier. Can a worker simply not pursue any claim under workers' compensation but choose to pursue it under the provisions of this body of law or the body of law of which this is a part?

The Hon. R.G. KERIN: This act does not give the worker any rights in addition to those existing under present law.

Mr LEWIS: The question was whether, if they did not pursue under workers' compensation law any claim against their employer or any other person who might have in some way or other contributed to the injuries and damages they suffered, they would be able to pursue it under the provisions of this bill.

The Hon. R.G. KERIN: Only if their injury occurred before the date I mentioned, which was September 1987.

Mr LEWIS: That is the nub of it, I guess. What has happened is that we now have a monster in the form of the workers' compensation legislation. It is particularly a monster because of the way in which it is chosen to be interpreted. It is presently being interpreted unlawfully, and the consequences for the people who are injured at work-suffering exactly the same injury as they might otherwise suffer whilst not at work (where there is negligence on the part of the employer equal to the negligence of another party contributing to the injuries and damages, and similar in nature to the negligence of another party, not an employer, and where an injury did not occur at work)-are that, under workers' compensation, people are simply beggared. The way the law is being administered unlawfully at present, by discounting the value of the claims under the terms of the schedule rather than under the terms of what was determined in the act, is that they are simply way out of whack and out of kilter with those people who can pursue damages through this body of law.

I am saying that, because we pretend here that we are doing a great service to the community outside by clarifying the law and therefore making more certain what the consequences are if you are negligent in some way or another and someone suffers damage as a consequence. It is not just a physical injury I am talking about here: it might be negligence in some other manner and a third party suffers damages. If they result from an injury identical to the kind of injury that would be suffered, say, at work, the damages under this body of law are enormously greater-manyfold greater-than people will be offered and be able to settle under the workers' compensation legislation. That is crook. As legislators we are not really addressing-and seriously, honestly and honourably addressing-the worry abroad in the wider community about damages and injuries which people sustain. In fact, if what the minister said in his answers is fact-if that is so-then we are making the disparity between folk who are injured at work and those who are not far greater.

That is not fair or just. Why should somebody who breaks their back or who suffers an enormously damaging psychiatric injury whilst not at work be paid millions whilst the same injury sustained in the same way whilst at work results in $10 000 to $20 000 or, at the most, something of the order of $180 000 to $200 000 being paid, even though the person so injured-so damaged-will be unable to work again? I therefore believe that we are not doing our duty. Under the provisions of clause 5 and other elements of the bill, what the minister had said in the second reading speech and what the government has said in its press releases on this matter are simply rhetorical, address only a minuscule part of the problem and create an even greater disparity between the two sets of circumstances to which I have drawn attention. I do that now because I was unable to do it in the course of the second reading. Whilst the member for Mitchell was speaking I had expected he might have spoken a little longer and I missed the call. I am very disturbed by the way in which time limits are different under workers' compensation from those in these provisions-and I will come to that, if I must, in the next clause, clause 6.

The manner in which the quantum of damages is determined under this legislation is very different from the way in which it is determined in relation to workers' compensation. In any case, under the workers' compensation legislation, what is determined as being the damages in the statute is ignored, and the tribunal and its staff have been instructed to use the schedule and to discount the amount in the schedule by a factor and a formula that are being used illegally. It is not there in the law. I now have several cases of people who have been injured, not just physically but in other ways, in consequence of their work and who have been very shabbily treated by those who work in workers' compensation.

It is understandable that the government wants to minimise its costs, but the costs of workers' compensation to business ought not to be reduced at the expense of the health and welfare of the injured people at work. If the costs blow out in consequence of crook applications that cannot be sieved out in the process of examination, that is another matter, but it ought not to mean that those who are genuinely interested suffer such disparate, different outcomes just because the injury happened at work as compared with those who are injured in other ways or in places other than at work.

The Hon. R.G. KERIN: If the member believes that all workers should be able to sue for damages instead of, or in addition to, receiving workers' compensation, the Workers Rehabilitation and Compensation Act would be the one that would have to be amended. This bill will not reduce workers' statutory entitlements to workers' compensation.

Clause passed.

Clause 6 passed.

Clause 7.

Mr LEWIS: I now seek to determine whether, if an injury occurred in the first instance while someone was at work (and I am not necessarily restricting this to physical injury), and subsequently it was exacerbated by something that occurred not at work, does this provision, or indeed the whole bill, preclude the possibility of the injured party claiming damages under this legislation for that portion of the injury, or complication, and impact of the greater extent of the injury that did not occur at work?

The Hon. R.G. KERIN: The fundamental answer to that is no. The person would need to sue for the non-work injury.

Clause passed.

Remaining clauses (8 and 9) and title passed.

Bill read a third time and passed.