Reasonable Forseeability in Australian Tort Law

by dwunsw (student)

“The touchstone of liability remains reasonableness of conduct”

The unique importance and influence of ‘reasonable foreseeability’ in common law is reflected in its ubiquitous presence in all areas of negligence, having become the essential thread of fabric or ‘touchstone' upon which the tort of negligence and liability has been constructed. The historical and theoretical development of modern tort law, largely spurred on by the social, economic, political and cultural changes of the last century, has revolutionised the way in which ‘reasonable foreseeability’ has been approached by the judicial system. The evolution of acknowledgement that negligent actions gave rise to injury has bred new classes of personal injury, such as pure mental harm and pure economic loss, previously unclassified or ignored by the courts. The specialised nature of these injuries and the court’s inclination towards maintaining the basic doctrines of tort law has diminished the value of ‘reasonable foreseeability’ as an adequate and exclusive measure in determining the existence of a duty of care. Accordingly, this essay will address the fallibility of ‘reasonable foreseeability’ in determining the existence of a duty of care in relations to actions for pure mental injury and pure economic loss and consequently discuss the relevant adequacy and need for extra legal tests within these domains.

The Civil Liability Act’s (CLA) distinct definition of pure mental injury as separate from consequential harm reflects the legal system’s affirmation that ‘something more’ than the test of reasonable foreseeability is required within this area. The judicial dichotomy between physical and psychiatric injuries reflects the historical and political context surrounding this issue, in particular the court’s scepticism regarding the legitimacy of nervous shock as class of injury. Such scepticism can be traced back to the court’s original feminist interpretation of psychiatric injury in addition to their perpetual ‘fear of fakery’ in regards to fraudulent claims for psychiatric injury. Indeed the evidential difficulties in proving psychiatric harm are starkly contrasted to the relatively easy identification of physical injury, a reality which pioneered the historical distinction between the two. Whilst such misgivings have lessened recently, s31 of the CLA is proof that such judicial hesitance still exists regarding the validity of certain illnesses. The purpose of this section as ‘something more’ is embodied by Howie’s situation in the fact scenario, as the medically unrecognised nature of Capgras Syndrome nullified his claim. This is indicative of the court’s desire to prevent a ‘floodgate’ of claims associated with fraudulent or imaginary illnesses succeeding and undermining the doctrine of tort law. Conversely the successfulness of Priscilla’s claim in regards to s 31 indicates that whilst these extra tests do limit the scope of liability, they still perform their perfunctory duty in compensating rightful victims.

Whilst the guiding principle behind the court’s inclusion of extra legal tests for pure mental injury remains firmly rooted in its fear of fraudulence, these tests also reflect the concern of indeterminacy as encapsulated by s30 and s32 of the CLA. These respective sections further reduce the scope of claim for pure mental injury by underlining the importance of proximity and relationship as governing factors in actions for pure mental injury. Ultimately the shortcomings of reasonable foreseeability in inadequately eliminating fraudulence and indeterminacy is the basis upon which the courts have decided that ‘something more’ is required in actions for pure mental ...

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The distinctive nature of pure economic loss, when considered in the context of western society’s capitalist structure, provides an adequate explanation as to why the courts have required ‘something more’ than the test of reasonable foreseeability in establishing a duty of care in this area. The fundamental rationale behind the extra texts, evinced in Hedley and Perre, flows from the fact that pure economic loss, economic loss occurring in the absence of physical or property damage, is a distinct reality of any capitalist society where businesses legally engage in competition and inflict economic loss upon each other. In applying extra legal tests for exceptional circumstances which give rise to pure economic loss, such as negligent mis-statements, acts or omissions; the courts have impliedly acknowledged that exclusively applying ‘reasonable foreseeability’ to situations of pure economic loss would inevitably undermine the basic principles of business and result in an unlimited number of claims. The existence of these tests is, henceforward, a reflection of the courts’ desire to properly compensate victims of pure economic loss in legitimate circumstances whilst curtailing the possible matter of indeterminacy.

Indeed this inference can be drawn from Bluebird Airlines’ and WhoppaOz Pies’ respective situations in the fact scenario, where both failed in their actions for pure economic loss. Bluebird Airlines’ action failed upon the unreasonableness of their reliance upon MegaEvents’ statement. Such a denial is a distinct manifestation of the courts’ desire to encourage people to exercise a suitable level of caution before relying on statements made by businesses in a commercial culture which is excessively characterised by hyperbolic rhetoric.

Conversely, the failure of WhoppaOz Pies’ claim, revolving around their lack of vulnerability in connection with MegaEvent’s negligence, is emblematic of the courts’ concern over indeterminacy. The extra legal tests stipulated in Caltex and Perre indicate that whilst negligent acts can circuitously affect many people, the courts have placed a greater emphasis on those who are particularly vulnerable as opposed to those who are slightly vulnerable, in order to eliminate the issue of indeterminacy.

In essence, the existence of these extra legal tests signifies the courts’ belief that pure economic loss is a reality within capitalist societies and that a mere test of reasonable foreseeability would undermine the framework of today’s society; a co-dependent fraternity of industrial frameworks; technological developments and; political systems entirely dependent upon competitive business.

The specialised nature of contemporary injuries, such as pure mental injury, has compelled courts to insist on extra legal tests in order to prevent the creation of litigious societies dominated by fraudulence and indeterminacy. Correspondingly, the restriction of actions for pure economic loss reflects a concerted judicial effort to protect the capitalist bedrocks of society. Ultimately, the courts’ unanimous emphasis upon the necessity and adequacy of ‘something more’ than the test of reasonable foreseeability in establishing a duty of care in actions for pure mental injury and a pure economic loss, reflects their acknowledgement of the increasing redundancy and folly of exclusively applying the test of ‘reasonable foreseeability’ in our ever-evolving society. As such, both the fact scenario and theoretical readings mentioned prove that the courts’ quest for ‘something more’ is symbolic of their desire to adapt and keep pace with the rapid changes of today’s avant-garde society.

Tame v New South Wales; Annetts v Australian Stations Pty Limited (2002) 211 CLR 317; referring to the oft- quoted assertion by Justices Gummow and Kirby that reasonability is the perpetual foundation of liability.

Rick Abel, “A Critique of Torts” (1990) 37 UCLA Law Review 785-831; Abel’s reference to events such as the Industrial Revolution and the evolution of scientific opinion regarding mental illnesses

Prue Vines, Mehera San Roque and Emily Rumble, “Is “Nervous Shock” Still a Feminist Issue? The Duty of Care and Psychiatric Injury in Australia” (2010) 18 Tort Law Review 9; referring to the courts previous interpretation of nervous shock as a ‘hysteria’ unique to woman and thus dismissible as an actual mental injury

Abel’s reference to three-pronged function of law; to pass moral judgement on what has happened, respond to the victim’s need for compensation and encourage future safety

Civil Liability Act 2002 (NSW) s27

Vines notes that the courts still the worth in keeping the distinction between physical harm and psychiatric harm, primarily because they traditionally disputed the legitimacy of mental illnesses and thus have held onto their scepticism.

Once again referring to the court’s concern of fraudulence of claims regarding physchiatric injury as it substantially harder to prove.

Vines’ assertion that early courts saw mental injury as result of female hysteria and evidence of the fact that they were mentally more susceptible than men, but which gave rise to the unreasonable thinking that men were unemotional

The courts’ fear of legitimising the imaginary and allowing an unlimited number of claims to be successful.

Civil Liability Act 2002 (NSW) s31, the court’s insistence on eliminating fake claims

Civil Liability Act 2002 (NSW) s30; limitations regarding recovering for pure mental harm dealing with either witnessing the event or having a special relationship with the victim

Civil Liability Act 2002 (NSW) s32; affirming the need to limit the scope of liability by limiting claims to people of normal fortitude and those in close proximity and/or relationship with the mafia

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465

Perre v Apand Pty Ltd (1999) 198 CLR 180

Carolyn,Sappideen and Prue,Vines and Helen,Grant and Penelope,Watson. Torts Commentary and Materials (Thomas Reuters (Professional) Australia Limited, 10th ed, 2009), pg 301

The legitimacy and need for businesses to compete with other and inflict loss upon each other to uphold free market principles.

Justice Cardozo’s famous quote that treating pure economic loss in the same way as physical injury might mean, “a thoughtless slip or blunder…may expose (defendants) to a liability in an indeterminate amount for an indeterminate time to an indeterminate class”

Abel’s reference to the aim of tort law to encourage safety and caution in the future must be upheld by the courts of today

Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529

Perre v Apand Pty Ltd (1999) 198 CLR 180