Australia: Court of Appeal finds there was no duty of care owed by operators of a vessel to ensure the water depth was safe for diving and examines scope of "dangerous recreational activity"
Curwoods Case Note

Judgment date: 16 December 2011

Laoulach v Ibrahim [2011] NSWCA 402

NSW Court of Appeal¹

In Brief

• In determining the existence and scope of a duty of care in novel situations, it is necessary to look at the relationship between the plaintiff and defendant, including:
• • the degree and nature of control able to be exercised by the defendant to avoid harm;
  • any assumption of responsibility by the defendant;
  • the degree of vulnerability of the plaintiff to harm from the defendant's conduct; and
  • the capacity and reasonable expectation of a plaintiff to take steps to protect him or herself.
• An "obvious" risk within the meaning of s 5F(1) of the Civil Liability Act 2002 (CLA) means that both the condition and the risk are apparent to and would be recognised by a reasonable person in the position of the plaintiff, exercising ordinary perception, intelligence and judgement. A risk may be "obvious" even though it is not significant.
• A "dangerous recreational activity" within the meaning of s 5K of the CLA requires the recreational activity to involve a significant risk of harm. This standard lies somewhere between a trivial risk and one that is likely to occur. As a general guide, the risk cannot be "significant" unless there is a real chance of it materialising. This is even if the risk was significant in terms of its catastrophic consequences.

Background

On 30 November 2004, Robert Laoulach (plaintiff) and his friends had taken a vessel for a test drive. They moored the vessel in Botany Bay approximately 40 m from the shoreline. The friends began diving from the vessel's bow. The plaintiff initially entered the water feet first to check its depth. After a period of time, Mr Ibrahim and Mr Beaini, the second and fourth defendants in the primary proceedings and the only respondents in the appeal (respondents), moved the vessel as Mr Ibrahim had hit his shoulder whilst diving and decided it was too shallow to dive safely. The vessel was moved approximately 15 to 20 m further out to sea.

At the second anchor point, the plaintiff and his friends all dived off the bow safely at first. The plaintiff then returned to the boat and commenced a second dive into the water, which he believed to be the same area as he had previously dived. The plaintiff's head struck the sand and he suffered a significant fracture of the C5 and became a tetraplegic.

The plaintiff initially commenced proceedings against the owner of the vessel and 3 of his friends who navigated the vessel on the date of injury (defendants). The plaintiff alleged that the defendants had control of the vessel at the relevant time and that he was reliant upon their expertise for his safety. The particulars of negligence included failing to warn the plaintiff of the risk of injury and to adequately secure the vessel to ensure the vessel did not drift into shallow water. Damages were agreed in the sum of $8 million, subject to argument about any limitation under the Limitation of Liability for Maritime Claims Act 1989.

Supreme Court

The trial judge in the Supreme Court of New South Wales, Price J, made various findings of fact (discussed below) and concluded that although the defendants owed the plaintiff a duty of care, this duty of care was not breached. Although Price J found that the risk of harm of the plaintiff diving into water of uncertain depth was foreseeable and not insignificant, he did not consider the defendants had failed to act in a manner in which reasonable people in their positions would have acted as they reasonably held the belief that the water was sufficiently deep to dive into.

On an obiter basis, Price J determined that the plaintiff was engaged in a "dangerous recreational activity" as diving into water from a vessel was "recreational activity" for which the potential harm was catastrophic. He did so despite finding the obviousness of the risk of injury to a person in the position of the plaintiff at the time was low. Accordingly, he found the defendants would not have been liable in negligence for the plaintiff's injuries, even if a breach of duty of care had been found, pursuant to s 5L(1) of the CLA. Section 5L(1) provides that:

Judgment was entered in favour of the defendants. We note the primary decision was the subject of a Curwoods Case Note and can be referred to for further details of Price J's decision.

Court of Appeal

The plaintiff appealed the decision of Price J to the New South Wales Court of Appeal in respect of 4 findings of fact, the finding with respect to breach of duty of care and the findings with respect to a dangerous recreational activity. The respondents in turn appealed against the primary judge's finding with respect to the existence of a duty of care.

The plaintiff's appeal was ultimately dismissed with costs on a unanimous basis. Tobias AJA provided the unanimous judgment.

Findings of Fact

The plaintiff appealed against 4 findings of fact regarding the wind speed, the sea conditions, the use of a depth sounder and whether the vessel dragged its anchor into shallow water. On all points, the Court of Appeal found no demonstrable error in the primary judge's assessment of the evidence. Importantly, the Court of Appeal could find no fault in Price J's finding that it was more probable than not that the plaintiff dived into a shallow bank rather than the vessel drifting back towards the shore into shallow water due to the effects of wind causing it to drag its anchor, which might arguably have been observable by the respondents.

Duty of Care

Price J found that the respondents had a duty to exercise reasonable care to ensure that the vessel did not move back towards the shore into shallow water from the second anchor point. He found that the relationship between the respondents and the plaintiff gave rise to a duty of care as they had assumed responsibility for moving the vessel to the second anchor point which they considered to be safe for diving and had also taken on the responsibility of ensuring the vessel was securely anchored.

The respondents appealed this finding. The Court of Appeal agreed with the respondents' submissions that once the vessel had stopped and the anchor deployed, the relationship between the respondents and the plaintiff was no different to the relationship between any others on the boat.

Tobias AJA stated that when establishing a duty of care in a novel situation, reference should be made to the decision of Allsop P in Caltex Refineries (Qld) Pty Limited v Stavar². Having regard to that decision, the "salient features" to be considered include:

1. The degree and nature of control able to be exercised by the defendant to avoid harm;
2. Any assumption of responsibility by the defendant;
3. The degree of vulnerability of the plaintiff to harm from the defendant's conduct, and
4. The capacity and reasonable expectation of a plaintiff to take steps to protect itself.

The Court of Appeal found that once the vessel had been anchored, the respondents ceased to exercise some degree of control over the movement of the vessel. Nor had they assumed responsibility to take steps to ensure the vessel did not move. Further, it could not be asserted that the plaintiff was in a position of vulnerability. He had the capacity to protect himself and it would be reasonably expected that the plaintiff would satisfy himself that the water was of sufficient depth to enable him to dive safely, which is precisely what he did. The respondents were in no better position to be able to judge the depth of the water than the plaintiff.

The Court of Appeal cited with approval comments made by McHugh J in Dovuro Pty Limited v Wilkins³ that:

Accordingly, the Court of Appeal found the primary judge was in error in finding that the respondents owed to the plaintiff a duty to take reasonable care to ensure the vessel did not drift into shallow water.

Breach of Duty of Care

In finding that there was no breach of duty of care, Price J found that reasonable people in the positions of the respondents would have held the belief that the water was sufficiently deep to dive into safely, given their observations of water colour and having dived safely on numerous occasions before the injury occurred. Further, Price J held the respondents were entitled to act on the expectation that the plaintiff would exercise reasonable care for his own safety before diving. In addition, reasonable people in the positions of the respondents would not have considered it likely the vessel would move to any significant extent.

The Court of Appeal agreed with the analysis of Price J in determining the issue of breach of duty of care with reference to s 5B(1) of the CLA. The Court accepted the primary judge's findings that the risk of harm when diving in shallow water was foreseeable and not insignificant, as required by s 5B(1)(a) and (b). The issue then became in terms of s 5B(1)(c) as to whether a reasonable person in the position of the respondents would have taken precautions to prevent that risk of harm from materialising.

The Court of Appeal agreed that the plaintiff was in just as good a position to judge the depth of water as the respondents. They agreed no warning was required and that further, the respondents were entitled to expect the plaintiff would exercise reasonable care for his own safety. The facts suggested that all men onboard had previously dived without mishap and no one had observed the vessel to swing or move significantly. Accordingly, a reasonable person in the position of the respondents would not have taken the further precautions suggested by the plaintiff such as checking the water depth with a depth sounder. Accordingly, the Court of Appeal rejected the plaintiff's challenge to the primary judge's finding of no breach of duty of care.

Dangerous Recreational Activity

The primary judge, on an obiter basis, made a finding that the defendants would not have been liable for the harm suffered by the plaintiff, even if a breach of duty of care had been found, as the harm was a result of the materialisation of an "obvious risk" of a "dangerous recreational activity", as specified in s 5L of the CLA. In dealing with the plaintiff's appeal, the Court of Appeal looked at the meaning of these terms in their assessment of whether s 5L would have applied to this case.

Firstly, the Court referred to the definition found in s 5F of the CLA which provides that an "obvious risk" is one which is obvious to a reasonable person in the position of the plaintiff, exercising ordinary perception, intelligence and judgment, as per the decision in Jaber v Rockdale City Council⁴. In Jaber, Tobias AJA stated that diving from a vessel into water of unknown depth created an "obvious risk" of injury. However, in this judgment, Tobias AJA modified his comments and observed that the factual context must always be considered. In some circumstances, such as diving from a vessel in the middle of the ocean, the risk of injury might not be obvious.

In this case, the plaintiff had exercised his own judgment prior to his dives in deciding whether it was safe to do so from the vessel. The Court of Appeal agreed that a reasonable person in the position of the plaintiff would have considered the risk of injury from diving into the water was low. Despite this, the Court of Appeal held that once the risk existed and was known to the plaintiff, it became an "obvious risk".

Secondly, the Court of Appeal looked at the definition of a "dangerous recreational activity", which is defined in s 5K of the CLA to mean a recreational activity that "involves a significant risk of physical harm". The Court of Appeal confirmed that when determining whether the risk is "significant" one must look at the chance of it occurring and the consequences if it does. The Court of Appeal observed that a "significant" risk lies somewhere between a trivial risk and one which is likely to occur. As a general guide, the risk cannot be "significant" unless there is a real chance of it materialising, as per the decision in Fallas v Mourlas⁵.

In this particular case, although the risk of harm of hitting a sandbar was significant in terms of its catastrophic consequences, there had already been a finding that the risk of the harm materialising was low in terms of the probability of its occurrence. Accordingly, although the Court of Appeal agreed the risk of harm to the plaintiff was "obvious", they found Price J had erred in finding the plaintiff was engaged in a "dangerous recreational activity".

Implications

Despite the unfortunate and significant injuries suffered by the plaintiff, the Court of Appeal has supported the decision of the Supreme Court of New South Wales that a finding of negligence will not be made unless each of the elements set out in the legislation and common law are met. The Court of Appeal will not make findings in relation to the existence of a duty of care without consideration of the common experience of the community. Negligence law, to serve any useful social purpose, must ordinarily reflect the foresight, reactions and conduct of ordinary members of the community.

This decision will be of assistance to insurers in defending allegations of negligence both in relation to the existence of a duty of care in novel situations and also as to whether that duty of care has been breached. In particular, in determining breach of duty of care, each of the elements outlined in s 5B(1) must be met and the onus is on the plaintiff to establish that a reasonable person in the position of the defendant would have taken the alleged precautions.

The Court of Appeal in this case modified its comments in relation to diving from a vessel into water of unknown depth. Importantly, the factual context must always be considered and there will be circumstances where a risk of injury may not be "obvious", such as diving from a vessel in the middle of the ocean.

Even if a risk of injury is "obvious", and the potential consequences catastrophic, unless there is a real chance of the risk materialising, defendants will be unable to escape liability for harm caused by the materialisation of an obvious risk of a "dangerous recreational activity" under s 5L of the CLA.

Footnotes

¹ Giles JA; Macfarlane JA; Tobias AJA
² [2009] NSWCA 258
³ [2003] High Court 51
⁴ [2008] NSWCA 98
⁵ [2006] NSWCA 32

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