New notions of personal responsibility in NSW civil liability
by Stephen Sander
The legislative reforms Mr Mulligan was an experienced and strong swimmer;
The terms 'inherent' and 'obvious' risk have been brought to the forefront of civil liability law in New South Wales with the enactment of the Civil Liability Amendment (Personal Responsibility) Act 2002 (the Act). The Act defines an 'obvious risk' to a person who suffers harm as a risk that, in the circumstances, would have been obvious to a reasonable person in the position of the person injured and includes risks that are patent or a matter of common knowledge. If a person suffers injuries as the consequence of such an 'obvious risk' that person is now presumed to have been aware of the risk of harm, unless he or she can prove otherwise. The duty of care to warn of an obvious risk has also been obviated, other than in specific circumstances, such as where the injured person has requested information about the risk.
The Act also provides that a person is not liable in negligence for harm suffered by a person as a result of the materialisation of an 'inherent risk', which is defined as a risk that cannot be avoided by the exercise of reasonable care and skill.
The impetus for legislative reform in New South Wales was initially the widely reported crisis in the affordability and availability of public liability insurance. This was initially attributed by the Government to personal injury damages awards by the courts and, more recently, the terrorist attacks on 11 September 2001, the collapse of the HIH insurance group and the provisional liquidation of United Medical Protection Limited, Australia's largest medical indemnity provider.
However, Premier Bob Carr announced in October 2002 in his second reading speech for the Act that 'these reforms are not only about reducing premiums' and that 'the insurance crisis served to highlight just how far the law has drifted away from the concept of personal responsibility.' These statements were reminiscent of comments made in April 2002 in an address to the Judicial Conference of Australia by the NSW Chief Justice titled 'Negligence: The Last Outpost Of The Welfare State'. Chief Justice Spigelman lamented the state of civil liability law and the gradual expansion of liability over the past 40 years that had made the standard of care required of a defendant more akin to strict liability.
The Chief Justice highlighted what he considered to be 'stretching the law' in respect of reasonable foreseeability, breach of duty and the concept of obvious risk.
By way of example, he referred to the evolution of the test of reasonable foreseeability. In 1963, Justice Walsh at first instance in The Wagon Mound (No 2) had, in the words of the Chief Justice, 'placed particular weight on his assessment of the relevant facts' to find that a particular risk 'very rarely happened' and was likely 'only in very exceptional circumstances'. By 1980, the High Court in Wyong Shire Council v Shirt applied a test that deemed a risk to be foreseeable unless 'far-fetched or fanciful'.
Chief Justice Spigelman expressed a concern over the continuing reference to the test as 'reasonable foreseeability', noting that a test that excludes only that which is 'far-fetched or fanciful' has nothing to do with 'reasonableness'.
However, as the Chief Justice pointed out, in Wyong Shire Council v Shirt, the judgment of Justice Mason 'removed the questions of probability and reasonableness to the level of breach'.
Breach of duty
In Wyong Shire Council v Shirt, Justice Mason noted that, in order to conceptualise the reasonable person's response, consideration must be given to the 'magnitude of the risk and the degree of probability of its occurrence, along with expense, difficulty ... inconvenience ... and any other conflicting responsibilities'. In essence, all relevant considerations must be carefully balanced by the tribunal of fact in order to assert the standard response expected in the relevant circumstances.
The Chief Justice referred in his address to Nagle v Rottnest Island Authority, noting that 'this was the case in which the cost of a sign ... was virtually zero and was contrasted with the consequence of the admittedly foolhardy conduct of diving into water from a rock ledge.' He compared that approach to that of Justice Walsh in The Wagon Mound No 2, which had been a rejection of 'the suggestion that a reasonable man ought to have taken precautions wherever there appeared to be a possibility of danger' and confined the need to act to circumstances where the risk was 'significant enough in a practical sense.'
The Chief Justice returned to the decision in Nagle v Rottnest Island Authority in the context of obvious risk, highlighting the conundrum firmly established by that case, namely that 'a person who owes a duty of care to others must take account of the possibility that one or more of the persons to whom the duty is owed might fail to take proper care for his or her own safety'. In the opinion of the Chief Justice, this proposition was contrary to modern community expectations and seemingly indifferent to any economic consequences. The Chief Justice expressed his concerns noting that:
...authority constrains me to participate in pushing the boundaries further when I think that the time has already been reached when courts should be seriously reconsidering a reformulation of firmer control devices than those currently exist.
These words have special resonance on the reading of Chief Justice Spigelman's recent dissenting decision in Waverley Municipal Council v Swain  NSWCA 61, which appears to wind the clock back on the extent of civil liability to focus on the relevant facts.
Recent judicial decisions
In Waverley Municipal Council v Swain, Chief Justice Spigelman, in a dissenting judgment, dismissed the appeal of Waverley Council against a jury verdict in favour of Mr Swain, awarding him more than $1 million after he became a quadriplegic by diving into a sandbar at Bondi Beach.
The Chief Justice, referring to the authority of Nagle v Rottnest Island Authority, held that Mr Swain was entitled to assume that the placement of the flags on the beach was an express indication that bathing between the flags is reasonably safe and that, on the facts, it was open to the jury to conclude that that the council officers failed to have regard to the hazard involved.
Nevertheless, the majority, consisting of Justices Handley and Ipp allowed the appeal, ordering that the verdict for Mr Swain be set aside and that judgment be entered for Waverley Council. The majority considered that the facts established that Mr Swain was an experienced surfer with knowledge of the general conditions prevailing on a beach and that the risk in questions was inherent and well-known.
In Mulligan v Coffs Harbour City Council & Ors  NSWSC 49, Mr Mulligan was injured after he struck a sandbar with his head while swimming and diving in a tidal creek near the ocean. His injuries rendered him a quadriplegic and he claimed that the defendants breached their duty of care by failing to provide warning signs in respect of the risk.
Justice Whealy held that although the defendants owed a duty of care to those attending the creek, the defendants had not, on the facts, breached that duty. Justice Whealy ordered that verdict be entered for the defendants and ordered Mr Mulligan to pay the defendants' costs. Justice Whealy considered that the facts established that:
sand dunes and tidal conditions of the kind that were present in the creek occur worldwide; and
that the existence of naturally occurring and dissipating sand formation beneath the surface of such water was an obvious fact and an inherent risk.
It appears that evolving judicial attitudes may have effected their own reform of the common law while the recent legislative reforms in the area of civil liability have now enacted their own reform of the law of negligence. The decisions referred to above may be an illustration of the future direction of the courts in this area of the law, as they are called upon to apply the rules relating to obvious and inherent risks prescribed in the (as yet) untested legislation. However, as the decision of Chief Justice Spigelman illustrates in Waverley Municipal Council v Swain, the facts of each case will determine its outcome, irrespective of the general views of the community, or even the arbiter, of large damages awards. The stated intention of the legislative reforms now effective in New South Wales is the promotion of personal responsibility and the rationalisation of personal injury damages awards.
It seems to us that the practical effects of the legislative reforms in New South Wales include the reversal of the common law position after Nagle v Rottnest Island Authority, where the harm suffered is the consequence of an obvious or inherent risk. However, given the focus of the Chief Justice on the placement of the flags and the finding of an express indication that bathing between the flags was reasonably safe, it is possible that Chief Justice Spigelman would have arrived at the same decision in Waverley Municipal Council v Swain, even if the case was considered subject to the legislative reforms now in force. The majority considered the Chief Justice's view and noted that, although the flags may designate swimming areas and indicate where people may swim safely, they are not an indication that it is safe to dive anywhere between them.
This differing approach in respect of the same scenario indicates to us that the approach of individual judges will continue to play an integral role in the interpretation of the legislative reforms and that there will be still scope for different judges arriving at differing conclusions. We await the judicial interpretation and application of the reforms.