Loss Of Opportunity In The Commercial Context
- The Commercial Context
The Australian law, as with the English does not recognise a claim for loss of a future prospect that is not consequent upon established injury or damage1. The issue that has evolved is, ‘What constitutes injury or damage?’.
In the case of Sellars v Adelaide Petroleum, the Plaintiffs sued under the Trade Practices Act for damages. They had come to a draft agreement with ‘Pagini’, but were then induced by representations by another party ‘Poseidon’, to enter into an agreement with that entity.
Poseidon then repudiated the agreement. The Plaintiffs accepted the repudiation and entered into fresh negotiations with Pagini, but concluded on less favourable terms than originally they would have achieved. They sued Poseidon for the loss of opportunity of completing the original agreement with Pagini. The Plaintiffs were successful under the Trade Practices Act, and in so finding, the majority of the High Court [Mason CJ; Dawson, Toohey and Gaudron JJ] acknowledged there was no reason for confining the approach taken in Malec2 and in breach of contract cases3 in determining whether a Plaintiff had suffered loss or damage under Section 82 of the Trade Practices Act. Unlike in contract, it was acknowledged that loss or damage is the ‘gist’ of the action for contravention of Section 52 and in negligence.
The Plaintiffs convinced the Court that the opportunity to conclude the agreement with Pagini and to acquire the benefits of the original Pagini contract, was a valuable opportunity. It was held that the loss of the opportunity itself was sufficient to constitute damage being the final element enabling completion of the tort. The measure of that damage was then to be ascertained by reference to the degree of probabilities or indeed, possibilities.
The use by the Court, of the word "possibilities" in that context, acknowledged that the measure of damages can be less than 50%. It was pointed out by the Court that this did not effect the standard of proof, which was still on the balance of probabilities. This touched upon an issue of considerable judicial and philosophical discussion. This discussion has continued in recent decisions of the New South Wales Court of Appeal and the House of Lords.
In the Sellars case, His Honour Brennan J discussed the nature of loss of opportunity as it applied to contract, the Trade Practices Act and tortious liability claims. His Honour highlighted the crucial difference between a tortious claim for loss of opportunity and other actions, being that in an action for breach of contract, it is only necessary to prove the breach. Once this is done in most cases, the Plaintiff will be entitled to nominal damages. In however, an action for negligence, if the Plaintiff cannot prove damage, be it to property, for personal injury or for economic loss, the Plaintiff will fail entirely and receive no compensation. It is an ‘all or nothing’ approach. There is also the difference that in contract, the opportunity lost can be referenced to the contractual promise itself, which will usually specify the benefit or detriment that is to be acquired or avoided.
In negligence and in cases arising from breaches of Section 82 (1) of the Trade Practices Act therefore, damage is the gist of the action. The question is then whether, in circumstances where the Plaintiff cannot prove on the balance of probabilities, that the breach caused actual monetary, property or personal injury, can a lost opportunity to acquire a benefit or avoid a detriment, constitute damage for the purposes of completion of the tort? In the Sellars case, the Defendants argued that the Plaintiffs must fail because they failed to prove all the links in the chain of causation in circumstances where the damage pleaded or loss identified, was the financial benefits of the original Pagini contract. They could not prove the steps leading to the bargain, that is continuation of negotiations with Pagini, their satisfactory conclusion, the obtaining of an underwriter for the proposed share issue, the execution of the contract with Pagini and/or the satisfaction of seven conditions precedent. Brennan J agreed that they must therefore fail.
What if however, there was a reformulation of what constituted damage? If there was such a reformulation, then proof of causation to that reformulated damage could still be available. In illustration, Brennan stated "But if the loss of opportunity to continue negotiations with Pagini be identified as a loss entitling the Plaintiffs to recover under Section 82 (1), they succeed for they were induced to lose that opportunity".4
Once the damage is reformulated in this way, causation and the burden of proof becomes less of a difficulty. How then, does the Plaintiff discharge the burden of proof? It is clear that if they could prove on the balance of probabilities then there would be no need to have recourse to the reformulated definition of damage.
His Honour Brennan J, in explaining the appropriateness of allowing recovery for loss of opportunity in Trade Practices and tort in a commercial context, pointed out that opportunities to acquire commercial benefits were frequently valuable in themselves, not only when they could produce a financial return but also, when they offered a substantial prospect of a financial return. This was so provided that the opportunity lost, offered a substantial and not merely speculative, prospect of acquiring a benefit or avoiding a detriment. If such an opportunity was valuable, the loss of that opportunity was truly ‘loss’ or ‘damage’ for the purposes of Section 82 (1) of the Trade Practices Act and for the purpose of the law of torts5. Having established the value of the opportunity, the Plaintiff must then prove a causal relationship between it and the Defendant’s contravening or tortious conduct and this must occur before any issue of assessment of the measure of damages arises. In practice, it will be the same body of evidence that establishes the existence of the loss of opportunity and the amount to be recovered.6
It is important to note His Honour pointed out, that where there may be competing hypotheses as to causation of pure loss of opportunity, then the Plaintiff still bears the onus on the balance of probabilities. Where the loss or opportunity is to acquire a benefit [say to lessen spinal damage7,] Brennan J says that the Plaintiff discharges that onus by establishing a chain of causation that continues up to the point where there is a substantial prospect of acquiring that benefit8.
Further, he emphasised that an important distinguishing characteristic of commercial loss is that objectively, such opportunities are recognised as valuable. The value of the chance is apparent. A purely personal opportunity, such as that to avoid fractures in the spine as a result of excessive provision of corticoid steroid drugs by a medical practitioner, cannot be so traded. It is of personal worth specific to the injured Plaintiff who must then prove its value to the Court.
- Examples Of Loss Of Opportunity In The Commercial Context.
- The Plaintiffs at the time of entering into the lease may have had no alternative but to do so, as they could not acquire land elsewhere;
- The failure to reach profitable student levels was causally related not to contamination, but due to having inexperienced teachers, the quality of the facilities, the continuing financial difficulties of the college and the ill will of some of the parents and others within the Muslim community;
- The figures did not prove that increased student levels increased profit; and
- The Plaintiffs were also unable to prove that the drop in student numbers, based on previous years, was due to notice to the parents of contamination (except in 2003 where there was a considerable drop and when relocation was required).
- Rufo v Hoskings [2004] NSWCA 391
- Gregg v. Scott [2005] UKHL 2
- Conclusion
There is now no reason why loss of opportunity as the gist of the action, cannot be used in negligence actions, including negligent misstatement, where otherwise, no damage could be causally related to the acts or omissions of the defendant.
It may appear as an alternative plea, or indeed, as an alternative submission. It will certainly be seldom that a plaintiff will plead a pure loss of opportunity as the gist of the action because this would be to acknowledge the deficiencies in its primary case. Certainly, the defendant won’t be bringing it up as an issue, as the defendant will be convinced that the plaintiff will fail due to absence of causation and/or actionable damage and will not want to give the plaintiff any creative ideas. However unpleasant though it may be, and it may be seriously unpleasant, it is unclear that the pure loss of an opportunity need be specifically pleaded, so the defendant may find itself meeting the alternative submission at the close of what it otherwise considered to be a successful defence.
Apart from Sellars v Adelaide Petroleum, the most common context in which to locate loss of opportunity examples is where such a claim is parasitic upon the main cause of action. This is not pure loss of opportunity but rather, a use of the methodology in order to compensate Plaintiffs for breach of contract and or contravention of the Trade Practices Act in respect of opportunities flowing from the breach or contravention. For example:-
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(a) |
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The facts were that the Plaintiffs were men in their late 40s and 50s. They had worked for Amcor for a long period of time and were technical people. They were approached by AWI and asked whether Amcor had technology for measuring and assessing fibres. A meeting took place to ascertain whether Amcor could provide AWI use of material for wool baling that was cheaper than the plastic they already used. A proposal was prepared that AWI found impressive. In the next meeting, the managing director of AWI raised another matter of McDonald and Allan, which was whether technology could be developed for measuring wool fibre in a handheld device for use on the farm. The Plaintiffs later telephoned AWI and proposed that this venture be pursued independently of Amcor. AWI were interested and McDonald and Allan then worked on a proposal to identify technologies that might be used and developed for AWI. The initial proposal was sent and contained clear terms that McDonald and Allan were long term employees of Amcor and stood to lose a lot by walking out on their positions so a reward or equity would be the cornerstone of any negotiation. A more detailed proposal was then provided and contained a desire by McDonald and Allan for a three year contract at an annual salary each of $250,000 inclusive and that they would be interested in an incentive or equity program linked to outcome. The location of the research project was raised both in office and lab space. The accompanying proposal for the measuring system contained details of it, including a cost to the wool grower of $2,000, the development of a lower cost wool bale pack and logistics manager. The company was to be named and logoed "Imaginate".
AWI through its managing director advised its board of the opportunity. McDonald and Allan were then advised that they would be working with a small AWI team. AWI’s most senior qualified scientific officer then prepared a briefing note to the managing director of AWI which commended the Imaginate proposal. Four days later there was an internal meeting at AWI and later that day, the Plaintiffs were advised that in principle approval had been given. It was confirmed that Imaginate would be a wholly owned subsidiary of AWI, equity would be provided to McDonald and Allan but that it was now necessary to seek formal AWI board approval for the establishment of Imaginate Pty Ltd. The Plaintiffs were asked to sign a copy of the letter to confirm their willingness to be part of the proposal which they did. The following day, Allan resigned from Amcor.
On 27 August 2002, a meeting took place at which their salaries per annum were negotiated and a sum agreed. They were told that their salaries would be $220,000 each per year and there would be a three year contract. They were told that their budget was $1.75m per annum and of their titles and roles. In addition, the constitution of the board was agreed and independent solicitors for Imaginate nominated. The parties ‘shook on the deal’ and agreed to start right away. McDonald then arranged a resignation on ill health from Amcor [the amount he received was later deducted from his entitlement]. McDonald and Allan were later telephoned and advised that the board had approved the proposal.
Things then took a turn for the worse when AWI hired a new employee and through controversial circumstances, that employee cast doubt on the efficacy of the Imaginate deal. This employee telephoned McDonald and Allan and told them that there would be changes. He told them that Imaginate was not going to be an independent company and that in future, they would not answer to the managing director of AWI, but to the scientific officer. Later that day in discussions between McDonald and the managing director, it was confirmed that due diligence now prevented the managing director from continuing with the Imaginate project and that they could either work on the project for AWI on a contract basis or, AWI would pay them something, but not to ‘get excited about the amount’. McDonald and Allan then commenced proceedings.
In addition to damages for repudiation of contract they sought damages for the lost opportunity that the contract would have been renewed at the end of the three year period, for profits that might have been generated and the value of the equity that might have been paid to them. His Honour, Justice Weinberg found the contract established and repudiated. It followed that damages for breach of contract pursuant to ordinary principles were awarded including the Plaintiffs salaries.
In addition to the calculation for their lost salaries, His Honour considered their claim to damages for loss of opportunity that the contract would have been renewed for a further three years. Although His Honour found this highly unlikely he considered it was not speculative and of some value. It’s value was not under 1%. Having concluded this, he assessed the chance of renewal of the contract at 10% and awarded a global sum of $40,000 for each Plaintiff.
This left the Plaintiffs’ claim to equity in Imaginate. The Defendant submitted that this claim could only be illusory and the high risk nature of the venture could only mean any award if contemplated should be discounted by 100%. His Honour did not accept this. He considered that there was a chance that one or more of the Imaginate projects would have made money although the Plaintiffs evidence on this was very weak. This did not though, pursuant to the authorities, relieve him of the task of fixing a value on the lost opportunity provided it was occasioned by the breach and not wholly speculative. His Honour therefore awarded a low global sum.
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The Plaintiffs claimed removal costs, lost of capital funding and loss of profits in that the contamination it was alleged, had caused a drop in student numbers which in turn, had caused a drop in profits and loss of funding.
The claims were brought under the Trade Practices Act for breach of implied terms of contract and in negligence. The matter proceeded before His Honour Hoeben J.
An allegation that BAL had known about the contamination prior to entering into the lease and not told the Plaintiffs, was successfully made out.
BAL disputed causation. It alleged that the contamination did not cause any loss and that any losses the Plaintiffs experienced were due to the Plaintiffs’ own conduct or to factors unrelated to contamination.
The conduct and factors that the Plaintiffs had to surmount included;-
His Honour found that in 1994, had the Plaintiffs known about the contamination they would not have entered into the BAL lease but would have entered into a lease elsewhere at a smaller property.
His Honour also found that the tort of negligence was complete because the Plaintiffs had sustained actual damage in the form of economic loss due to purchasing and assembling temporary school building and services.
In relation to the loss of profits for the past from 1994, this claim was based upon a number of hypotheses. His Honour found though that for the years from 1994 to 2002 there was no basis made out to award past loss of profits. In relation to 2003 though, and upon hearing the evidence His Honour could not "identify any reason for such a large financial loss other than the further reduction in student numbers" due to the contamination.
Comparing the lost opportunity to occupy a smaller site from 1994 to the occupation of the Strathfield site to which the school ultimately moved, His Honour calculated the value of the 1994 lost opportunity at 50%. The cost was quantified at $500,000.00. The Plaintiffs were therefore entitled to $250,000.00.
In quantifying the lost opportunity to occupy the site from 1994 into the future, His Honour extrapolated from the reduction in numbers from 2003 onwards. He identified the damage or lost opportunity as the money lost between now and the future until numbers at the Strathfield site built to the maximum. He noted his calculation to be complicated by the knowledge that increases in student numbers did not, according to the evidence, mean an increase in profitability. His Honour found that the maximum numbers would be reached by 2007, and assessed loss of profitability to that time at $500,000.00 then applied a 50% discount representing the value of the 1994 lost opportunity.
A similar methodology, taking into account the evidence of past fact was used to calculate the loss of opportunity to acquire capital grants from the government. The various impediments to these grants were noted against an overall entitlement and a percentage discount was then applied to quantify the loss of opportunity.
These two examples demonstrate the relative ease with which damages for lost opportunity can be established following a finding of breach of promise referable to that opportunity. Causation though an issue, is not an impediment as the contract itself will often evidence the fact of the opportunity. The only difficulty appears to be the value of the unfulfilled promise and this becomes a matter of calculation and assessment.
Where however, the original breach in s.52 and negligence claims for various reasons cannot result in a finding of actual damage, the Court is then left looking for damage to which it can prove causation.
This, in my view, is what occurred in the recent case of the New South Wales Court of Appeal in Rufo v Hoskings11. The result of this case has been that what appeared a quite reasonable approach for the loss of a commercial opportunity in Sellars, has been converted to a rather unsatisfactory result as it applies to medical negligence. The loss of opportunity approach taken in Rufo’s case has been rejected in the recent House of Lords decision of Gregg v Scott12 as unsuitable for medical negligence matters.
The Plaintiff was a woman with lupus. She failed to complete an action in negligence against her doctor because she was unable to prove that the doctor’s breaches of care, caused or materially contributed to, her damage. She had suffered micro-fractures to her spine brought on by, it was alleged, the administration of cortico steroids.
In the alternative, the Plaintiff alleged that she was entitled to compensation for the pure loss of chance that, but for the doctor’s breaches, the micro fractures would not have occurred in the severity they did. This was on the basis and was acknowledged that, any loss of chance would be below 50%.
Her background condition of lupus was complicated by the possibility of celiac disease. It was probable that her background condition would cause micro fractures in her spine.
The Court of Appeal upheld the trial judge that she could not succeed in negligence against the doctor. On the alternate plea of loss of opportunity, the Court of Appeal reformulated the damage to a "loss of opportunity to suffer less spinal damage than she did, had she not been administered an excess of cortico steroids".
There was no evidence which proved on the balance, which of the occasions upon which the drug was administered caused the fractures. Also, the expert evidence could not prove that had a cortico steroid sparer been introduced, that this would have prevented the fractures from occurring.
Further, it was not possible to infer on the balance that the Plaintiff’s bone density was normal before treatment with the steroids, particularly in view of the possible diagnosis of celiac disease. It was submitted there was therefore, no firm starting point from which it could be concluded that any loss or damage including a loss of opportunity to suffer less severe damage, could be measured.
Notwithstanding, all three Judges concurred that there was established, a loss of chance that was greater than a speculative one. His Honour Campbell AJA proceeded through the case law and the complex medical evidence, including the dosage levels and frequency of the steroids. He found that there was an excess of steroids administered to the Plaintiff over the entire period of the administration of the drugs. He considered that he had to determine whether this excess caused the Plaintiff a loss of chance of suffering less damage to her spine than had actually occurred. There was however, an impediment to causation in that there was no expert evidence on this issue. The height of the medical evidence consisted of a statement from evidence in chief as follows:-
"The fact is that on theoretical grounds it is likely that there would be an important proportionality, a dose effect consequence… So that we have to run with basic pharmacological principles that there will be a dose response effect on loss of bone density, until a fracture threshold is reached".
So there was no direct expert evidence that the excess of steroids administered was sufficient or did, cause in this Plaintiff, micro fractures in her spine or cause them to be greater than they would otherwise have been.
His Honour though, was prepared to accept that there was sufficient evidence from which to infer that on the balance of probabilities a loss of chance to avoid the severity of the fractures existed and was caused to the Plaintiff.
In drawing this inference, His Honour Campbell AJA took what he termed, a "common sense view".
Their Honours Hodgson and Santow JJA explained why in such a case with these facts, the decision to allow pure loss of opportunity in tort despite competing hypotheses as to causation should be made.
The example was given that where a Plaintiff for instance, had a less than 50% chance of not having a leg amputated provided the surgeon took reasonable care in treating it, but then have the surgeon not take reasonable care, and the Plaintiff lost the leg, one could infer that the breach by the surgeon deprived the Plaintiff of the chance of saving the leg, but could not infer that it caused the loss of the leg since more probably than not, the loss of the leg would have happened even had the surgeon not been negligent. The Plaintiff therefore would lose the action in negligence. This means medical practitioners can be as negligent as they like as long as they work on patients who have less than a 50% chance of survival.
Unless, the Court reasoned, the duty of care could be invoked where negligence had reduced the chance of a successful outcome, even though that chance was less than even, that would be the consequence for many elderly or desperately ill people. The recovery for loss of a chance can be seen therefore as the corollary of the medical duty of care directed to achieving the best chances of a successful outcome even though it calls for no more than a reasonable care and skill in that endeavour. Further, if recovery was precluded for loss of chance in tort, this would lead to a disparity in the law and claims for medical negligence would simply be brought in contract against the doctor upon an implied contractual term. It was also asserted that the extension of the action for pure loss of opportunity was subject to control mechanisms because causation would still have to be demonstrated at greater than 50% probability in that it must be proven that the chance existed and also that if offered, that the Plaintiff would elect to take the chance.
Given though the reformulation of damage by the Court in Rufo to include a possibility which the expert evidence did not itself contemplate, and combining this with the great unliklihood that any Plaintiff would deny they would have taken the chance, the Defendant in pure loss of chance matters will have a difficult burden to discharge. Indeed, one of the criticisms of the pure loss of chance in tort is that it shifts the onus of proof to the defendant.
In Gregg v. Scott, the plaintiff was a patient with a particularly aggressive and difficult to treat cancer. The doctor failed to recognise the cancer. When the plaintiff showed his doctor a lump under his arm, the doctor told him it was a collection of fatty tissues. That was the most likely explanation but unfortunately, it was wrong. A year later, he went to another GP who referred him to hospital for examination, when he was diagnosed with cancer and the tumour had spread to his chest. He suffered significant pain and had to undergo a particularly debilitating course of chemotherapy. The treatment temporarily destroyed the tumour but was followed by a relapse, which left him with a poor prospect of survival.
The plaintiff did not sue for the damage being the spread of the cancer and the associated pain of that spread, but sued for his diminished chance of survival and the loss of opportunity for a cure which he said were now reduced to under 50%.
The allegations were the subject of statistical evidence, there being no evidence within medical science that would provide this particular plaintiff’s prognosis in the absence of delay.
The trial judge held that 55% of patients with the plaintiff’s type of cancer would achieve complete remission as a result of initial treatment and that 42% would ultimately survive, of whom 35% would not have had to undergo high dose chemotherapy with stem cell treatment. He held that it was possible to say that the appellant would more probably than not have achieved complete remission with initial chemotherapy and with high dose chemotherapy with stem call harvesting but that it was not possible to say that, without the adverse factors caused by the delay, the appellant would more probably than not, become a survivor or have suffered relapse.
Given these figures, the trial judge held that the appellant had not proved that he had suffered an injury as a result of the delay. He had not proved that it was more probable than not that, had there been no delay, he would not have suffered those consequences.
The problem was that the plaintiff was not able to prove on a balance of probabilities that had it not been for the enlargement of the tumour he would have made a complete recovery.
Lord Nicholls of Birkenhead in dissent, held that the law should compensate for diminishing a plaintiff’s chances of recovery and cited contract and other tortious examples in support of his argument that this promoted consistency in the law.
He tackled the criticism that in medical negligence cases there is the complication that the prognosis is inherently uncertain, so it is difficult to prove in an individual case what the patient lost when he lost the chance of a more favourable outcome. He argued that the patient’s previous history may assist but statistical evidence was useful and may be called upon. This is similar to what the Court endeavoured to do in Rufo, but without the benefit of statistical evidence actually on point.
His Lordship pointed out that statistics were not personal to the plaintiff patient and could not say whether that plaintiff would have been an exception to them or in conformity with them. Who can know whether Mr Gregg would be in the ‘survivor group’ or in the ‘terminal group?’ There was no evidence peculiar to him. Nonetheless, he considered that this argument was defeated by the policy based view, that in appropriate cases it was in the interests of justice to "leap an evidentiary gap.13" Courts he said, traditionally used statistics as an aid to compensating plaintiffs for a risk of an outcome which may materialise whether the risk is more than 50% or less than 50%.
In answer to this, Lord Hoffman14 argued that the fact that proof is rendered difficult or impossible because no examination was made at the time, or because medical science could not find the answer made no difference. He said "There is no inherent uncertainty about what caused something to happen in the past or about whether something which happened in the past will cause something to happen in the future. Everything is determined by causality. What we lack is knowledge and the law deals with lack of knowledge by the concept of the burden of proof."
Taking up a theme in Prof. Stapleton’s excellent article, "The Gist of Negligence15" Lord Nicholls then points out that to award compensation in a percentage fashion on the pure loss of opportunity basis was fair because it reflected the degree of negligence rather than an all or nothing approach and statistics aided in ascertaining this percentage. The argument he said, that this would have the effect of under-compensation to those whose outcome was in fact worsened by the delay in treatment and over-compensating those whose outcome in fact was not worsened cannot be accepted despite its impeccable logic16. This point refers to the argument that the all or nothing rule means that by compensating the 95% chance as though it were 100%, courts over compensate the plaintiff. Therefore, that both types of chance, should be valued evenly. It would mean that those plaintiffs who could prove that a defendant’s breach caused damage by 51%, could recover 51% only and if the plaintiff can prove causation of a possibility to say 49%, the plaintiff would recover 49%.
Professor Jane Stapleton argues that "In the interests of doing justice to defendants, therefore, there is a strong argument that even in cases where the plaintiff could prove causation in a claim formulated in terms of past outcome [in the Gregg v. Scott case, being whether if treated the cancer would have been cured, and in Rufo whether if not administered excess steroids would have prevented the microfractures], all claims would be better formulated in terms of loss of chance to ensure that the valuation of the claim will take relevant risks into account.17 Professor Stapleton foreshadowed that this could provoke a reaction to defend the all or nothing probability test.
It is this test that is in my view, being undermined in the Rufo decision. The reformulation of ‘damage’ to the ‘possibility of avoiding or diminishing the chance of damage or affording a benefit’ dictates itself, the causal path. It is self fulfilling as the reformulation is done in terms of the very possibility rather than probability, that prevented the initial cause from success. It will mean all plaintiffs providing that their statistical evidence is on point (or even not necessarily so if a common sense inference can be made) can adjust their case after the evidence and therefore succeed, but where probability can be proven, will also succeed and for the full amount.
It was this very issue that Baroness Hale of Richmond highlighted in her judgement dismissing the plaintiff’s appeal. She drew the distinction that the claim was not for the loss of an outcome, in this case the cure of his disease, which he would have enjoyed but for the negligence. His claim was for the reduced chance of achieving that outcome. She termed the dissientient approach of Lord Nicholls and by implication, that of the New South Wales Court of Appeal, as the "policy approach.18" She pointed out that the wide version of the policy approach would mean that recovery would be available for any reduction in the chance of a better outcome or any increase in the chance of an adverse outcome even where it could not be linked to any physiological changes caused by the defendant. She said "A defendant who has negligently increased the risk that the claimant will suffer harm in future would be liable even though no harm had yet been suffered19."
The narrower version would require that there be still some physiological change caused by the defendants negligence, bringing with it a reduced prospect of favourable outcome. This is the version that was applied in Rufo. Baroness Hale in fact, cites Rufo as being an example of how easy it is, once a breach of duty is shown, to conclude that this has led to a reduction in the chances of a favourable outcome. Baroness Hale says of the decision. "This conclusion [of Campbell AJA] comes after many paragraphs of dense and careful analysis of the evidence before the trial judge. But in the end the appeal is to common sense. And common sense will often suggest that the chances of a better outcome would have been better if the doctor had done what he should have done, for why else should he have done it but to improve the patient’s chances? Reformulating the damage in this way could lead to some liability in almost every case."
But then again, why is this not a correct approach, why should not the law transform itself from the measurement of probabilities to possibilities? Taking the amputation of the leg example, she points out that what is missing from that example is that the defendant ends up paying substantial sums even though the outcome, being the loss of the leg, is one for which by definition the surgeon cannot be shown to be responsible.
Lord Hoffman was more direct and said "But a wholesale adoption of possible rather than probable causation as the criterion of liability would be so radical a change in our law as to amount to a legislative act. It would have enormous consequences for insurance companies….20."
It is difficult despite the Court of Appeals’ citing of the case, to reconcile the comment of His Honour Brennan J in Sellars, that "a causal relationship between the loss of such an opportunity and the defendant’s contravening or tortious conduct must be proved before any issue of assessment of the amount of the loss arises," with the approach that has been taken by the Court of Appeal in Rufo.
Footnotes
- Sellars v Adelaide Petroleum NL and Ors – 120 ALR 16; Gregg v Scott [2205] UKHL 2
- Malec v Hutton Pty Ltd (1990) 169CLR638 cited at 120 ALR 16 at 27
- Commonwealth v Amann Aviation Pty Ltd (1991) 74 CLR 64 at 92 cited at 120 ALR 16 at 27
- Op. Cit Sellars at 34 per Brennan J
- Ibid. at 38
- Ibid. Cit Sellars at 39
- Rufo v Hosking [2004] NSWCA 391
- Op. Cit Sellars at 41
- McDonald & Anor & Australian Wool Innovation Limited [2005] FCA 105; BC200500352
- Noor Al Houda Islamic College v Bankstown Airport Limited [2005] NSWSC 20
- [2004] NSWCA 391
- Gregg v Scott [2005] UKHL 2
- Op. Cit Gregg v. Scott, per Lord Nicholls of Birkenhead at para 31
- Ibid per Lord Hoffman at para 79
- Prof. Jane Stapleton "The Gist of Negligence" v.104 Law Quarterly Review 213 and 289
- Op.Cit Gregg v. Scott at para 31
- Op Cit Stapleton at page 398
- Op. Cit Gregg v. Scott at para 212
- Ibid, at para 212
- Ibid per Lord Nicholes at para 90
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
