Australia: Sloppy Pleadings, Inadequate Evidence And The Relevance Of A Lack Of Risk Management Systems

Last Updated: 7 April 2009
Article by Jocelyn Kellam

Hobbs v Oildrive [2008] QSC 45

  • Pleading a claim correctly is important and courts will carefully consider such issues, even if it does not affect the ultimate result.
  • Risk management systems are relevant to whether a defendant is negligent but there needs to be evidence of practice in the industry.
  • In order to claim damages, a real commercial opportunity must be lost.

A fire caused by a slasher machine on Oildrive's property spread to Mr Hobbs' property. Hobbs claimed damages for loss of income from a mango orchard. Oildrive did not have a "risk management system" in place which Hobbs said was negligent.

Included in the issues to be decided by the Supreme Court of Queensland were a pleading question, that is, whether the alleged duty of care had been correctly described in the statement of claim, whether there was any breach of duty (that is whether a reasonable person in Oildrive's position would have had a risk management system in place to prevent fires) and finally whether Hobbs lost a commercial opportunity to produce and sell mangoes as a result of the fire.

The plaintiff's claim failed.

The pleading question

Some readers like technical drafting questions. Other readers can skip this section as it does not affect the result.

After pleading a number of non-contentious facts, the statement of claim said:

"In the premises of this paragraph, the defendant by itself, its servants or agents, owed [the plaintiff] a duty to exercise reasonable care in and about the management and conduct of the physical conditions and activities on the defendant's property, by acting in a manner in which a reasonable man in the defendant's position ought act in respect of any foreseeable risk of injury, having regard to considerations of magnitude of the risk, the degree of the probability of its occurrence along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have."

The court thought it immediately apparent that this formulation of the duty of care was reminiscent of statements in Wyong Shire Council v Shirt. However, there was a mistake in the way it was being used. Although this statement is undoubtedly authoritative in approaching the task of deciding whether there has been a breach of duty, it does not define the content of the duty.

Did it matter? The Supreme Court noted that there was a danger in formulating a duty of care in specific terms. It referred to the High Court in Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 194 ALR 337, specifically Justice McHugh:

"The duty of care owed by a manufacturer or producer to a consumer is a duty to take reasonable care to avoid injury to the consumer. To formulate the duty in more specific terms invites error because it is likely to mix a question of law (whether a duty existed) with a question of fact (whether a breach occurred). If the duty if formulated in specific terms, the issue on breach is whether the duty has been performed in accordance with the terms of the duty as formulated. But, as Wyong Shire Council v Shirt shows, the question of breach is far more complex than an affirmative or negative answer to the question whether the defendant carried out the duty as formulated. It involves evaluating and weighing a number of competing considerations."

How was it fixed? The court did not have to make any orders regarding amendment of the pleadings. Common sense prevailed and Oildrive accepted that it owed the plaintiff a duty to take reasonable care to prevent damage to his property as a result of fire. Oildrive accepted that this formulation covered the prevention of fires at, as well as controlling the escape of fires from, its property.

Was Oildrive negligent?

Oildrive did not have a risk management system in place to identify potential fire risks, including the risks associated with slashing grass on the defendant's property. Hobbs thought this was negligent. The Supreme Court of Queensland thought not.

To win this point, Hobbs needed to establish that Oildrive's duty to take reasonable care required a risk management system to be in place to identify potential fire risks (including the slasher), and that, had there been such a fire risk management system, the risk associated with slashing grass on the defendant's property on this day would have been identified.

Hobbs' evidence on this issue was too little. There was little evidence to the effect that a fire risk management plan should be prepared for all orchards or that it was something which would have been expected to be undertaken by a reasonable person in the position of the defendant at the time. No evidence was led as to the cost to a farmer, the availability of fire risk assessment consultants to undertake such assessments, whether there was any practice amongst farmers at the time to have such fire risk assessments undertaken, or as to whether such an assessment was recommended by such groups as the Rural Fire Board or farmers' associations.

Claim for compensation

Could Hobbs get compensation for its burnt mango trees and for future loss of income?

Leaving aside that Hobbs had failed to establish that Oildrive was negligent, the Supreme Court also thought that Hobbs had failed to establish that he had lost the commercial opportunity to derive income from the orchard. To do so, Hobbs would have to establish that Oildrive's negligence caused him to lose a commercial opportunity of some not negligible value by reference to the degree of probabilities or possibilities.

There was some discussion by the court as to what was the proper approach for the assessment of damages in a case where trees in an orchard were damaged by fire - that is, whether the award should be the amount of the depreciation in the value of the land as a result of the injury. That test was thought to be insufficient if the land was intended to be used for a profitable purpose which had been frustrated, postponed, interrupted or made less profitable.

Oildrive said that the farm would not have been profitable had the fire not occurred and accordingly concluded that there was no commercial value to any opportunity which might have been lost to the plaintiff.

Again, Hobbs' evidence was insufficient. The court found that the burnt orchard was in reality an abandoned mango farm, which had been neglected for several years, with no equipment and little infrastructure. At best it held potential for the future. Therefore Hobbs' claim failed.

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.

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