Reported Decision : [2000] 31 MVR 211 New South Wales Court of Appeal CITATION : NRMA v SMITH [2000] NSWCA 122 FILE NUMBER(S) : CA 40701/98 HEARING DATE(S) : 12 April 2000 JUDGMENT DATE : 25 May 2000 NRMA INSURANCE LIMITED PARTIES : v RUSSELL EDWARD SMITH & MITCHELL BEARD JUDGMENT OF : Mason P at 1; Handley JA at 2; Beazley JA at 28 LOWER COURT JURISDICTION : District Court LOWER COURT 1/97 FILE NUMBER(S) : LOWER COURT Ainslie-Wallace DCJ JUDICIAL OFFICER : D F Rofe QC/J P Guihot (Appellant) COUNSEL : L A Muston (1st Respondent) M R Aldridge SC/L A Christie (2nd respondent) Hunt & Hunt Newcastle (Appellant) SOLICITORS : Peter Long & Co Gunnedah (1st Respondent) R J O'Halloran & Co Tamworth (2nd Respondent) CATCHWORDS : NEGLIGENCE - whether duty of care - foreseeability of risk - plaintiff jumped from cattle truck and caught ring on rough metal - finger amputation necessary - risk of such injury not foreseeable - risk far fetched or fanciful Motor Accidents Act 1988 (NSW) LEGISLATION CITED : Motor Accidents (Amendment) Act 1995 (NSW) Suitors Fund Act 1951 (NSW) Steinberg v FCT (1975) 134 CLR 640 CASES CITED: Davis v Langdon (1911) 11 SR (NSW) 149 Wyong Shire Council v Shirt (1980) 146 CLR 40 DECISION : Appeal allowed - orders made THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40701/98 DC 1/97 MASON P HANDLEY JA BEAZLEY JA 25 May 2000 NRMA INSURANCE LIMITED v RUSSELL EDWARD SMITH & ANOR NEGLIGENCE - whether duty of care - foreseeability of risk - plaintiff jumped from cattle truck and caught ring on rough metal - finger amputation necessary - risk of such injury not foreseeable - risk far fetched or fanciful The respondent sustained a de-gloving injury to his left hand leading to the amputation of his left ring finger when he jumped from the headboard of a cattle truck and caught the wedding ring on that finger on some protrusion on the headboard. He sued the owner of the truck for negligence and joined the appellant third party insurer as the second defendant after it denied liability under the relevant policy. The trial Judge found that the owner of the truck had been negligent, that there had been no contributory negligence, and awarded damages for non-economic loss representing 25% of the most extreme case in addition to components for past and future economic loss. The Judge also held that the plaintiff's claim was covered by the compulsory third party policy because his injury fell within the definition of injury inserted in the Motor Vehicles Accident Act by the amending Act No 66 of 1995. The insurer appealed challenging the Judge's findings on negligence, damages and the scope of the policy. HELD , allowing the appeal: (1) The finding of negligence against the first defendant cannot be supported as there was no evidence which supported the inference that the first defendant, who had only owned the truck for a few weeks, knew or ought to have known of the existence of metal protrusions, or of the danger posed by them. (2) An adverse finding on the credibility of the truck owner's denials of knowledge regarding the existence of the protrusions does not prove the fact denied in the absence of other evidentiary material from which an inference to that effect can be drawn. Steinberg v FCT (1975) 134 CLR 640 referred to. (3) It could not be suggested that there was any duty on the purchaser or owner of a second-hand truck to make a thorough inspection of the whole of the vehicle or that the owner's presence in the vicinity of the headboard would have made him aware of the defects (rough metal) had he been taking ordinary notice of his surroundings. (4) The occurrence of this unusual accident provided no evidence that the rough metal at the top of the headboard rail posed any foreseeable risk of injury to persons in the vicinity. (5) The fact that the truck owner modified his truck after the accident was no evidence of negligence. David v Langdon (1911) 11 SR (NSW) 149 referred to. (6) Though it was foreseeable that persons coming into contact with the rough metal may suffer minor scratches or abrasions to the skin of their hands or arms, these were a common incident of the plaintiff's work. It could not be accepted that a reasonable person would have foreseen that the rough metal posed the risk of a de-gloving injury during a jump to the ground from the headboard. The risk of such an accident occurring would have been seen beforehand as "far fetched or fanciful". Wyong Shire Council v Shirt (1980) 146 CLR 40 referred to. ORDERS (1) Appeal allowed; (2) Set aside the judgment of the District Court and in lieu thereof enter a judgment in favour of both defendants with costs; (3) The appellant to pay the costs of the second respondent of the appeal; (4) The first respondent to pay one half of the appellant's own costs of the appeal and to have a certificate under the Suitors Fund Act. THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40701/98 DC 1/97 MASON P HANDLEY JA BEAZLEY JA 25 May 2000 NRMA INSURANCE LIMITED v RUSSELL EDWARD SMITH & ANOR JUDGMENT 1 MASON P: I agree with Handley JA. 2 HANDLEY JA: This is an appeal by NRMA Insurance Limited from a judgment entered against it and its co-defendant, Mr Beard, in favour of a Mr Russell Smith for $43,864.81 on 18 August 1998. The proceedings arose out of a most unusual accident. The plaintiff, who had jumped off the headboard of Mr Beard's truck, caught the wedding ring on his left ring finger on some part of the truck and suffered a de-gloving injury which led to the amputation of that finger. 3 The plaintiff had been helping his father-in-law, Mr John Buggy, load cattle onto Mr Beard's truck. When the loading had finished there was some doubt about the number of cattle on the truck. The plaintiff said he would count them and for this purpose climbed up onto the headboard of the truck immediately behind the cabin, using a step on the side of the table-top section and the horizontal timbers of the headboard. 4 After he had counted the cattle and it was time to return to the ground he decided that it would be too risky to climb down and that he would jump. The injury occurred in the course of the jump. 5 The plaintiff sued the owner of the truck. The NRMA, the owner's third party insurer, denied liability under the policy claiming that the plaintiff's injury was not within the narrower definition of injury inserted in the Motor Accidents Act by the Motor Accidents (Amendment) Act [No 66 of 1995] which defined the scope of the cover under the compulsory policy. The plaintiff then joined the NRMA as a second defendant. 6 The trial Judge (Ainslie-Wallace DCJ) found that the first defendant had been negligent, that there had been no contributory negligence, and assessed damages. She found that the injury, the amputation of the left ring finger of a right-handed person, represented 25% of a most extreme case and awarded $16,500 for non-economic loss. She awarded $25,000 as a cushion for future economic loss and the balance of the verdict represented past wage loss and out-of-pocket expenses. 7 The Judge held that the plaintiff's claim was covered by the compulsory third party policy because his injury fell within the definition added by Act No 66 of 1995. Judgment was therefore entered against both defendants. The NRMA appealed challenging the Judge's findings on negligence, damages, and the scope of the policy. The joinder of the NRMA as a defendant in the action and its standing to appeal on all issues has not been challenged. 8 The Judge found that the first defendant, the truck owner, knew that the plaintiff intended to climb the headboard to count the cattle on the truck and this finding has not been challenged. She said that the plaintiff could not say with certainty exactly where his ring was caught and that his ring could have been caught either on a cylindrical bolt hole or on the lug attached to the headboard. However she was satisfied that his finger was caught on a rough piece of metal protruding from the headboard, more likely than not the top of the right hand rail. 9 The Judge also found that it was foreseeable that someone would climb onto the truck and up the headboard and accordingly the truck owner owed the plaintiff a duty of care. There is no difficulty with this finding because the owner knew that the plaintiff was going to climb the headboard. The Judge also found that it was entirely foreseeable that a person such as the plaintiff would attempt to get down by jumping off. In view of the "undemanding nature" of the requirement for foreseeability, I have no difficulty in accepting the Judge's finding on this issue also. 10 The Judge's critical findings were as follows: "The state of the protrusions on the headboard including the rough surface were such that I can comfortably find that the first defendant knew or ought to have known of their presence and I further find that their presence made that part of the truck unsafe … It follows that the first defendant had a corresponding duty either to make the truck safe or to supervise people around the truck. I find that the first defendant did neither of these things". 11 She then considered the scope of the third party policy and held that the plaintiff's injury had been caused by the fault of the first defendant "in the use … of the vehicle" because it was being used for the transport of cattle and had been caused during a collision by a defect in the vehicle. When making these findings she said that the plaintiff had collided with "a sharp protrusion on the headboard" which was defective "because it had sharp protrusions capable of causing injury". 12 There was no direct evidence that the first defendant "knew" of the existence of the rough or sharp metal protrusions which caught the plaintiff's ring. The first defendant had purchased the truck secondhand some time in March-April (McGovern 47) or April-May (Beard 51) the same year and therefore had owned it for no more than about 10 weeks. The truck was a 1982 model. 13 The first defendant denied any knowledge of the existence of the rough or sharp metal protrusions. The Judge made an adverse finding on his credit which has not been challenged, but disbelief of his denials does not prove the fact denied unless there is other evidentiary material from which an inference to that effect can be drawn. See Steinberg v FCT (1975) 134 CLR 640, 694 per Gibbs J. There is no such evidence. 14 It was not suggested to the first defendant in cross-examination that he had had good reasons for being next to the headboard before the accident or that being there he had reason to see or feel its rough or sharp surface. The rough or sharp areas were at or near the top of the headboard, and it was not suggested that they were easily visible from the ground. The photographs in evidence suggest otherwise. Moreover no plausible suggestion was made from the Bar table of reasons which would require the first defendant to be near the headboard which could be accepted on the basis of commonsense or general experience. 15 Mr McGovern, who sold the vehicle to the first defendant, had owned it for 2 years (47), but he said he could not remember the rough or sharp protrusions from the headboard (49) because "you just don't look at it that close". (47) 16 There was therefore no evidence which supported an inference the first defendant knew of the protruding metal. The Judge found that this defendant "knew or ought to have known" of this danger. A finding that he ought to have known could be based on the existence of a duty on the purchaser or owner of a secondhand truck to make a thorough inspection of the whole of the vehicle, but no such duty was suggested. It could also be based on an actual inspection of the truck or the owner's presence in the vicinity which, it might be said, should have revealed the existence of this defect to the owner. An actual inspection of this part of the vehicle was never suggested, nor was it suggested in cross-examination or otherwise that the owner's presence in the vicinity of these defects would have made him aware of them had he been taking ordinary notice of his surroundings. There is therefore no evidentiary basis for any finding that the first defendant "ought to have known" of these defects. 17 There is also no evidence that the metal surfaces on the headboard were "sharp". The plaintiff's evidence, as her Honour held in her earlier findings, was that the surface was rough or very rough (6, 7, 25, 26). The evidence of his father-in-law was that there was "rough welding" in this area (40). There was also a bolt hole or lug in the headboard which her Honour said might have caught the plaintiff's ring, but she found that it was more likely than not caught on rough metal at the top of the right hand rail. 18 The occurrence of this unusual accident provides no evidence that this rough metal at the top of the rail posed any foreseeable risk of injury to persons in the vicinity. It could not be suggested that the bolt hole or lug was not a normal or common feature found in the body work of trucks such as this. Moreover the fact that the first defendant modified his truck after the accident is no evidence of negligence either. See Davis v Langdon (1911) 11 SR (NSW) 149. 19 Someone coming into contact with the rough welding on the top of the right hand rail may have suffered scratches or abrasions to the skin of their hands or arms, but such minor injuries are a common incident of work on the land. I cannot accept the view that the risk of a de-gloving injury during a jump to the ground from the headboard would have occurred to anyone as even a remote risk posed by the roughness of the welding on this part of the truck. In my judgment this was a freak accident of a kind which was quite unforeseeable. In the language of Mason J in Wyong Shire Council v Shirt (1980) 146 CLR 40 at 48, the risk of such an accident occurring would have been seen beforehand as "far fetched or fanciful". 20 For these reasons I have reached the conclusion that the finding of negligence against the first defendant cannot be supported and the appeal must therefore be allowed. 21 Although in these circumstances it is strictly not necessary to deal with the question of damages, I will express my conclusions briefly. 22 The plaintiff suffered the loss of the ring finger of his left hand but was right hand dominant and as he said "I didn't really use that hand". He was in a permanent job with the Department of Corrective Services at Tamworth. The loss of the finger did not prevent him performing his job and he had been back at work for over 2 years at the date of trial. No other part of the plaintiff's body had been affected by the accident. In these circumstances the case did not satisfy the requirements of s 79A(3) of the Motor Accidents Act which provides: "No damages are to be awarded for the non economic loss of an injured person as the consequence of a motor accident unless the injured person's ability to lead a normal life has been, or in the near future is likely to be, significantly impaired for a continuous period of not less than 12 months by the injury suffered in the accident". 23 Her Honour awarded $25,000 as a cushion for the plaintiff's future economic loss. He had been a fitter and turner in the Navy but on retiring from the Service had elected to take a position with the Department at Tamworth, presumably to be close to his in-laws. He intended to continue with that job, he enjoyed it, and was comfortable with it. He did not suggest that he would or might return to his trade in the future. Section 70A of the Act provides: "A court shall not award damages for future economic loss or damages for diminution of future economic capacity unless the claimant first satisfies the Court that there is at least a 25 per cent likelihood that the claimant will sustain a future economic loss or that there is at least a 25 per cent likelihood that the claimant will sustain a diminution of future economic capacity, as the case requires". 24 There was no evidence which would support a finding that there was at least a 25 per cent likelihood or chance that the plaintiff would wish to return to his trade as a fitter and turner. In these circumstances the section applies and bars any award for future economic loss. 25 It is unnecessary for me to express any views on the scope of the compulsory third party policy in the light of the amendments to the Act made in 1995 and it is not appropriate that I should do so. 26 The first respondent, the plaintiff, has entirely failed and must pay the costs of both defendants of the trial and a proper proportion of the appellant's costs in this Court. A substantial part of the hearing time in this Court, and of the written submissions, was devoted to the scope of the compulsory policy in the light of the amendments to the Act in 1995. The second respondent appeared to support the decision that he was entitled to be indemnified under that policy, and took no part in the hearing on the other issues. The appellant has succeeded in freeing itself from all liability to the plaintiff but in doing so has demonstrated that there was no need to seek relief against the second respondent. The appellant should therefore pay the second respondent's costs in this Court. 27 The following orders should be made: (1) Appeal allowed; (2) Set aside the judgment of the District Court and in lieu thereof enter a judgment in favour of both defendants with costs; (3) The appellant to pay the costs of the second respondent of the appeal; (4) The first respondent to pay one half of the appellant's own costs of the appeal and to have a certificate under the Suitors Fund Act. 28 BEAZLEY JA: I agree with Handley JA. ****** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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