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June 2007 - Wrongful acts "like ripples on a pond"

“The law has always had difficulty as to where to draw the line.”

Those are the words of Prof Harold Luntz, professorial fellow at the University of Melbourne Law School and a world-renowned specialist on compensation cases. He was speaking on ABC Radio National’s The Law Report, discussing a case in which the NSW Rail Authority was found liable and ordered to pay an injured woman almost $240,000 in compensation.

According to Prof Luntz, the woman was injured at a Sydney railway station when she slipped on wet steps, injuring her ankle. Some weeks later, she was raped and beaten at a private home. She claimed she would have been able to avoid the attack, had her ankle not been in plaster.

She suffered psychiatric damage after the rape. The Sydney Morning Herald reported that she became increasingly depressed, lost her will to socialise and her hair turned gray. 

The judge found the consequences of the rape, the woman’s psychiatric damage, were attributable to the slip on railway premises and thus the NSW Rail Authority was liable for the consequences.

Prof Luntz made the point on The Law Report that the consequences were not those which one would “ordinarily expect to occur after an accident of that nature”.

However, forseeability was an issue for the judge to decide.

Prof Luntz said the judge found the injured woman’s consequences foreseeable, although common law tests were “supposedly superseded by the Civil Liability Act”.

He said the judge had no difficulty in saying the assault would not have occurred, but for the rail authority’s negligence, because she was unable to escape the rapist. 

Prof Luntz told the ABC any wrongful act had consequences “that stretch into the future, like ripples in a pond”.

The Sydney Morning Herald reported that District Court Judge John Goldring said: “The psychological injury to the plaintiff, which she would not have suffered but for the ankle injury, but which she did suffer because of the sexual assault, is within the scope of [RailCorp’s] responsibility.” 

It’s a curious outcome that I understand RailCorp plans to appeal.

Another interesting case serves as a reminder to us to consider that, with an insurance policy, you get what you pay for. Homeowners’ policies range from fairly simple defined-events policies, which may be cheaper but have limited cover, to accidental damage policies, which may cost more, but provide extended coverage.

In the South Australian District Court, a complex case involved several plaintiffs taking action against, in the first instance, Kent O’Halloran, an employee of advertising agent Bocksoffice. Mr O’Halloran had gone to his office after hours. A fire occurred after he and a female companion had smoked cigarettes in the office, contrary to the building’s no-smoking policy. The building, which housed Bocksoffice and other companies’ offices, was damaged.

The companies sued Mr O’Halloran, who joined RAA Insurance as a third party claiming indemnity under his homeowners’ policy. 

The policy insured Mr O'Halloran against “such sums as he shall become legally liable to pay in respect of claims made against him arising from damage to property caused by any accident occurring anywhere in Australia”.

When RAA denied indemnity, Mr O'Halloran sued RAA Insurance, his employer Bocksoffice for vicarious liability and its broadform liability insurer, QBE.

The judge found each of the corporate plaintiffs (except one) entitled to judgement against Mr O'Halloran for whatever damages they could prove. He found Mr O'Halloran entitled to be indemnified by RAA for any such judgements.

Mr O'Halloran was not entitled to be indemnified by QBE Insurance. The judge found no connection between Mr O’Halloran’s work and his presence in the office. That was “a folly of his own”, the judge said. (Intrend P/L & ors v O'Halloran & ors (no 2), SADC 38/April 20, 2007; Intrend P/L & ors v O'Halloran & ors, SADC 95/Aug 25, 2006)

On another note, I urge all members to attend the forthcoming AILA-NZILA joint conference in Christchurch in September.

As a member of the organising committee, I am aware of the hard work that has gone into putting together some fascinating sessions.

The venue is excellent and the social events a highlight.

Register early. I look forward to seeing you there.

Steve Knight

AILA President



PO Box 2011 FOREST HILL VIC 3131
1300 699 140 office@aila.com.au



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