Australia: Causation: mere speculation that an effective warning might have deterred the harm is not enough
Curwoods Case Note

Judgment date: 2 June 2011

[2011] NSWCA 135

Jovanovski v Billbergia Pty Ltd

New South Wales Court of Appeal¹

In Brief

• Determining if breach of a duty of care is causative of a loss so as to establish negligence is governed by the principles enshrined in s 5D of the Civil Liability Act 2002 (CLA).
• It is not enough to merely show that a warning might have deterred or prevented the harm. The onus is on the plaintiff to establish that it is more likely than not that a warning would have prevented injury.
• The trial judge erred in assessing Mr Jovanovski's economic loss by using the average weekly earnings of full-time males in New South Wales based on the assumption that Mr Jovanovski was able to engage in lighter employment than his pre-injury duties as a truck driver.

Background

Mr Jovanovski was engaged by Billbergia Pty Ltd (Billbergia) as a contract truck driver in a building project at Meadowbank carrying excavated material from the building site.

Mr Jovanovski was one of 3 drivers who drove trucks owned by Billbergia and there were up to 10 other contracted drivers. Apart from truck drivers, there were 4 excavator operators and a number of other supervisory and administrative staff, and labourers on the site.

Among his work colleagues, Mr Jovanovski was known to be short tempered and abrupt in his manner. There was evidence that this caused him to be unpopular with others on site.

In or around August 2003, Mr Jovanovski was involved in an altercation with another driver, the other driver punching Mr Jovanovski in the face. Mr Jovanovski reported that incident to the site's foreman, Mr Brendan Cronin, who was an employee of another company called Ballyfore Engineering and Excavation Pty Ltd. No action was taken by Mr Cronin as a result of that report.

On a day in early February 2004, Mr Jovanovski discovered grease had been placed underneath the door handle of his truck. He again reported the incident to Mr Cronin. Approximately one week later Mr Jovanovski found that grease had been smeared not only on the door handle but also on the steps behind the truck cabin giving access to the top of the truck. Approximately one week later Mr Jovanovski again found grease being smeared in the same locations. He reported both incidents to Mr Cronin.

On 18 February 2004, Mr Jovanovski sustained a back injury when his foot slipped on the second step of the ladder at the back of his truck and he fell approximately 2 m to the ground onto his back and buttocks. He had checked for grease on the door handle and steps behind the truck cabin. After his fall Mr Jovanovski found grease on the steps.

In June 2004, there was a further altercation involving Mr Jovanovski, the truck driver he had had the original altercation with, and an excavator operator. As a consequence of this further altercation, Mr Jovanovski was charged with assault, to which he pleaded guilty.

Supreme Court Decision

The trial judge, Davies J, found that Billbergia owed Mr Jovanovski a duty of care. In particular, his Honour found that the duty was analogous to that owed by an employer to an employee adopting the decision in Stevens v Brodribb Sawmilling Company Pty Limited².

Billbergia was therefore obliged to provide a safe system of work, including proper supervision of other persons on the site for whose behaviour Billbergia was responsible or whose behaviour might impact on the safety of persons such as Mr Jovanovski. Mr Cronin's failure to act upon various complaints which were made by Mr Jovanovski was found by Davies J to constitute a breach of the duty of care owed by Billbergia to Mr Jovanovski.

Despite finding a breach of the duty of care, Davies J found in applying s 5D of the CLA he could not be satisfied on the balance of probabilities that a warning with a threat of dismissal would be more likely than not to have deterred or prevented Mr Jovanovski's injuries. Paying particular regard to the decision of the High Court in Adeels Palace Pty Limited v Moubarak³, Davies J found that Mr Jovanovski could not succeed merely by showing that particular conduct including a warning or a threat of dismissal might have deterred or prevented the harm.

In assessing Mr Jovanovski's damages, Davies J accepted that Mr Jovanovski had developed a posterolateral disc herniation in his lumbar spine. His Honour also noted that there was a significant psychiatric or psychosomatic component to Mr Jovanovski's symptoms which was not entirely related to his fall. Davies J found that there was a 50% reduction in Mr Jovanovski's earning capacity. He assessed his damages as follows:

Despite accepting that Mr Jovanovski suffered a 50% reduction in his earning capacity, Davies J used the average weekly earnings of full-time males in New South Wales as a measure of Mr Jovanovski's lost wages and his future earning capacity. His Honour arrived at the figures for past and future economic loss by deducting the average weekly earnings of full-time males from Mr Jovanovski's earnings at the time of his accident. Davies J assessed Mr Jovanovski's past wage loss at $490 net per week and the future wage loss at $410 net per week.

Court of Appeal Decision

 Mr Jovanovski appealed the finding of causation and the assessment of his economic loss. Mr Jovanovski submitted that Davies J should have drawn an inference of preventability, that is, it was more probable than not that, had the warning been given, the grease smearing which caused Mr Jovanovski's fall would not have occurred.

Mr Jovanovski suggested that the fear of instant dismissal from lucrative employment or exposure to criminal liability would be enough to make the warning effective. During the oral submissions, Mr Jovanovski's Counsel submitted that Mr Cronin's inaction imported an element of deception whereby Mr Cronin recognised that the continuing course of behaviour was dangerous yet he chose not to take any action. Mr Jovanovski sought to suggest that Billbergia's failure to take any steps could have been regarded as encouraging the perpetrator's behaviour when other truck drivers were aware of his complaints. The Court of Appeal did not accept those submissions and they were not referred in the Court's judgment.

Mr Jovanovski also referred to a sentence in Mr Cronin's statement:

"at times a building site can be like a kindergarten whereby the staff play childish practical jokes on each other and I generally turn a blind eye unless I consider the jokes to be hazardous."

Mr Jovanovski submitted that it was implicit that Mr Cronin was able to take effective steps to stop practical jokes if he perceived them as dangerous activities. Mr Jovanovski further submitted that an inference could have been drawn that Mr Cronin could have acted with some effect. Whilst the Court of Appeal accepted that those submissions had force, the Court was not persuaded that "they carry the day".

In the Court of Appeal, Giles JA delivered the unanimous judgment of the Court. His Honour confirmed that the trial judge correctly applied the High Court decision in Adeels Palace Ptyand rightly concluded that he could not be satisfied on the balance of Ltd v Moubarak⁴ probabilities that a warning coupled with a threat of dismissal would be more likely than not to have deterred the perpetrators from further acts of grease smearing.

Giles JA confirmed that it was mere speculation that a strong warning would have been effective. It was clear Mr Jovanovski gained unpopularity among his work colleagues. However, the class of persons that regularly interacted with him was indeterminate. The evidence did not direct to a particular person or a class of persons that could have been determined to apply grease to Mr Jovanovski's truck. Given the risk of injury and the seriousness of the conduct, it was likely that the perpetrator already appreciated their potential exposure to criminal liability and to dismissal from lucrative employment further highlighting the mere speculation of the effectiveness of any such warning. Such warning was clearly dependent in large part on the person's resolve and the likelihood of discovery and there appeared to be opportunities to carry out the acts without discovery.

Giles JA did not accept Mr Jovanovski's reference to Mr Cronin's statement and the implied inference that Mr Cronin could have acted with some effect. There was no evidence beforethe trial judge to suggest that the previous warnings were effective when Mr Cronin chose not to turn a blind eye. Giles JA accepted the trial judge's finding that it was not enough that a warning might have had the required deterrent effect. Not only did his Honour find no demonstrable error in the trial judge's conclusion as to causation, he found he "would come to the same conclusion for myself"

On the question of quantum, Giles JA considered that Davies J applied an incorrect measure to assess Mr Jovanovski's economic loss in light of the finding that Mr Jovanovski suffered a loss of 50% of his pre-injury capacity. The trial judge used the average weekly earnings of full-time males as a measure of Mr Jovanovski's post-injury earning capacity, and deducted this from his pre-injury earnings.

Giles JA found that the trial judge's reference to a loss of 50% cent of pre-injury capacity was ambiguous as it was unclear whether his Honour meant physical capacity or economic capacity. Giles JA also considered it was problematic to assess Mr Jovanovski's economic loss by using the average weekly earnings of full-time males based on the assumption that Mr Jovanovski was able to engage in lighter employment and despite the finding of severe injuries sustained in the accident. His Honour found that Mr Jovanovski's background, his age and personality problems did not equip him for many kinds of suitable employment.

Whilst Giles JA did not accept Mr Jovanovski's submission that he had a loss of 80% of his earning capacity, his Honour assessed Mr Jovanovski's past wage loss at $600 net per week and his future wage loss at $650 net per week.

Implications

The Court of Appeal affirmed that causation is to be addressed according to the principles in s 5D of the Civil Liability Act 2002. To establish the required elements of causation there must be more than simply a mere possibility that a particular conduct might have deterred or prevented the harm.

Nonetheless, whilst Billbergia was successful in upholding the trial judge's finding on causation, there were a number of unusual circumstances which took this case outside the ordinary in relation to the consideration of causation. Billbergia was able to establish that on the balance of probabilities the actions suggested by Mr Jovanovski would not have had the required deterrent effect. Employers and occupiers of building sites should therefore not take comfort from the decision and sit back and do nothing when they are aware of dangerous pranks or acts of workplace harassment or bullying.

In assessing future economic loss, a court should not be tempted to merely deduct the average weekly earnings from a plaintiff's pre-injury earnings on the assumption that he or she is able to engage in lighter employment.

Defendants should tender evidence about what a plaintiff could earn, and evidence which goes to prove residual earning capacity.

Footnotes

1 Giles JA, Hodgson JA, Macfarlan JA

2 (1986) 160 CLR 16

3 [2009] HCA 48

4 Ibid

Ranked No 1 - Australia's fastest growing law firm' (Legal Partnership Survey, The Australian July 2010)

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.