Australia: The High Court Of Australia

Last Updated: 27 October 2008
Article by Claire Tait

CGU v Porthouse [2008] HCA 30

This matter involved an exclusion clause in a professional indemnity insurance policy for a Barrister in New South Wales.

The insurer refused to provide cover to the Barrister on the basis that the Barrister knew of the possibility that a claim would be made against him.

The insurer relied upon the exclusion clause in the policy that made it encumbant on the Barrister that he declare any claims arising from a 'known circumstance'.

A 'known circumstance' included a situation that a reasonable person in the insured's position would reasonably believe could give rise to a claim (the second limb).

The High Court found that the second limb was a purely objective test. This test was to be applied independently of any consideration of the insured's state of mind.

It was incorrect to ask whether the Barrister's subjective point of view was 'unreasonable', rather than determining what a 'reasonable person' in the Barrister's position would have thought.

Lumbers v W Cook Builders Pty Ltd (in liquidations) [2008] HCA 27

This case involved a contract between two brothers (the Lumbers) and W Cook & Sons Pty Ltd (Sons). Sons verbally agreed to build a house for the Lumbers. In so doing, Sons sub-contracted the building work to a subsidiary company, W Cook Builders Pty Ltd (Builders).

Builders sued the Lumbers for an amount said to be owing for the work done on the house.

At first instance, the lack of any contractual relationship between Builders and the Lumbers curtailed any right that Builders had against Lumbers.

On appeal, the Supreme Court of South Australia found that as Builders had done the work, Sons had failed to perform their obligations under the contract. As Sons had also previously admitted that it had no claim against the Lumbers, Builders was able to seek compensation from the Lumbers.

The majority of the High Court found that the Supreme Court had erred in disregarding the contractual relationship between Builders and Sons.

There had been no acceptance of any benefit by the Lumbers, as the Lumbers had never known of Builders' existence. Further no benefit had been conferred upon the Lumbers by Builders, but rather it had been conferred upon Sons by the sub-contract.

In overturning the decision of the Supreme Court, the High Court emphasised the importance of curtailing the law of unjust enrichment in situations where contractual relationships imposed limits on the rights and liabilities of the parties.

Roads & Traffic Authority v Royal [2008] HCA 19

This case involved the collision of two cars at an intersection on the Pacific Highway. At first instance, the Roads and Traffic Authority (RTA) was found not to have caused the plaintiff's injury.

On appeal to the Supreme Court of New South Wales, the majority found that the RTA's failure to design the intersection suitably was not wholly superseded by the defendant's negligent driving.

In appealing to the High Court, the RTA accepted that it had breached its duty of care to the plaintiff, but argued that its breach had not caused the accident.

The RTA argued that the defendant's negligence was an intervening act which resulted in RTA's breach of duty being irrelevant as a cause of the collision.

The majority of the High Court agreed. They found that the flawed design of the intersection meant that drivers approaching the intersection would not be able to view cars approaching from the east and west.

However, they ruled that where a party increases a risk of injury, that heightened risk must directly relate to the cause of the injury.

In this particular case, as eyewitness evidence showed that the plaintiff should have been able to view the defendant's car as it approached, the defect in the intersection did not play a part in the collision.

Ferguson v Latham [2008] HCA 24

This decision involved a driver of a motor vehicle who hit the claimant (23 months old at the time) while the claimant was traversing a pedestrian crossing.

The primary judge found that on seeing the mother of the claimant (who was on the opposite side of the road) looking back over her shoulder, the driver should have been aware of the potential for someone to walk out onto the crossing.

On appeal, the Court of Appeal found that while there may have been a breach of duty of care by the driver in that she was focusing on the mother rather than at the road in front of her, the driver would have hit the claimant (who was hidden behind a sign before walking out onto the road) whether or not she had slowed the vehicle.

The driver's negligence was not found to have caused the claimant's injuries.

On appeal to the High Court the claimant argued that the Court of Appeal had failed to consider whether or not the claimant's injuries would have been less serious if the driver had slowed her vehicle.

The High Court ruled that the claimant had not raised the issue of the seriousness of her injuries previously, and that as a result she was not entitled to do so before the High Court.

Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5

This case involved the compulsory acquisition of land by the Sydney Harbour Foreshore Authority (the Authority).

Walker Corporation Pty Ltd (Walker) was the nominee nominated by the Walker Group Pty Ltd under a call option agreement for the land.

The Valuer-General had initially valued Walker's interest in the land at $10,100,000. On objection to the Land and Environment Court, Justice Talbot reassessed the value of Walker's interest at $43,555,138.50.

In doing so, Justice Talbot took into account the Leichhardt Council's (the Council) decision in 1991 to continue to zone the land as 'industrial' so as to ensure the land was never developed.

The High Court was asked to determine whether the Council decision formed part of the Authority's proposal to acquire the land, and should have been taken into account in assessing the value of the land at the time the Authority acquired it.

The High Court found that while the New South Wales State government (which had initially opposed maintaining the land for public purposes) eventually fell in line with the Council, the 1991 decision by the Council did not form part of the Authority's proposal.

As the Authority's proposal only arose in 2002, any agitation by the Council to keep the land as public space could not be considered in assessing the value of the land.

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This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

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