New South Wales Court of Appeal CITATION : Knight v Pedersen & Ors [1999] NSWCA 333 FILE NUMBER(S) : CA 40011/98 HEARING DATE(S) : 19 March 1999 JUDGMENT DATE : 16 September 1999 PARTIES : Paul Knight v Hans Sardoff Pedersen, Elin Inge Pedersen, Clive Peter Camp JUDGMENT OF : Priestley JA at 1; Beazley JA at 1; Stein JA at 1 LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : DC 2929/97 LOWER COURT JUDICIAL OFFICER : Gibb ADCJ COUNSEL : Appellant - C. Hoeben SC Respondents 1, 2 - J. Sharpe SOLICITORS : Appellant - Carroll & O'Dea Respondents 1, 2 - McCulloch & Buggy CATCHWORDS : Negligence; Nervous Shock ACTS CITED : Law Reform (Miscellaneous Provisions) Act 1944, s 4 CASES CITED: Coates v Government Insurance Office of NSW (1995) 36 NSWLR 1 DECISION : Appeal allowed, new trial ordered THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40011/98 DC 2929/97 PRIESTLEY JA BEAZLEY JA STEIN JA Thursday, 16 September 1999 KNIGHT v PEDERSEN & ORS NEGLIGENCE - NERVOUS SHOCK - LAW REFORM (MISCELLANEOUS PROVISIONS) ACT 1944, SECTION 4. A father, living apart from his family in a rented room, died in a fire in the premises. His widow brought an action under the Compensation to Relatives Act for herself and the two children of the marriage, a son and daughter. The son brought a separate action for negligently caused nervous shock. The two cases were set down for hearing at the same time but the defendants in the son's case were not ready to proceed, through procedural default on the part of the son. At a directions hearing it was arranged that the liability issue common to both cases would be decided at the scheduled hearing, that the mother's case would proceed to completion and that the damages aspect of the son's case would be left to a later time, if liability was established. At the hearing the trial judge dealt with more issues than, according to the son, had been intended at the directions hearing, and dismissed the son's case. On appeal it was argued that the son's case had been presented in accordance with the earlier directions hearing and he had not had proper opportunity of presenting his case on the issue which he argued should not have been decided at that stage and for which he was not properly prepared and in regard to which he had not put his case. Questions concerning the applicability of s 4 of the Law Reform (Miscellaneous Provisions) Act 1944 were also argued. Held : The circumstances of the case supported the view advocated on behalf of the son that the issue on which his case was dismissed had not been intended to be dealt with without a further hearing and that in the circumstances new trials should be granted. On the point under s 4 of the Law Reform (Miscellaneous Provisions) Act 1944, the court adopted the views of Kirby P and Clarke JA in Coates v Government Insurance Office of NSW (1995) 36 NSWLR 1 at 7, 8 and 21, 22. ORDERS 1. Appeal upheld. 2. Judgment below set aside. 3. New Trial on all issues with the exception of the issue whether the father's death was negligently caused by the defendants. 4. Plaintiffs' costs of the appeal to be borne by the defendants. 5. Costs of the first trial to be in the discretion of the judge hearing the new trial. 6. The defendants, Mr and Mrs Pedersen to have a Suitors Fund Certificate. THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40011/98 DC 2929/97 PRIESTLEY JA BEAZLEY JA STEIN JA Thursday, 16 September 1999 KNIGHT v PEDERSEN & ORS 1 THE COURT: This is an appeal by an unsuccessful plaintiff in the District Court who had brought an action claiming damages for negligently inflicted nervous shock, which was dismissed. 2 The first main ground of appeal is that because of directions that had been made by the list judge the hearing of the action by the trial judge was to be on one issue only, but the trial judge went further and disposed of a second issue, adversely to the plaintiff, which the plaintiff had not litigated at the limited trial. 3 The circumstances giving rise to this ground of appeal were as follows. The plaintiff's father, Mr S. Knight died of smoke inhalation from a fire on 1 August 1991 in tenanted premises in Bomaderry. Mr Knight's widow, Mrs C. Knight, brought an action in the District Court on behalf of herself and her two then dependent children, Mr P. Knight and Ms R. Knight, under the Compensation to Relatives Act 1897. The defendants in the action were Mr and Mrs Pedersen who had rented to Mr Knight the room in the building subject to the fire in which he died and a third defendant, Mr C. Camp, who was convicted of setting fire to the building. This action commenced in 1993 and proceeded towards trial during the next several years. 4 In May 1997 the son, Mr P. Knight, was granted leave to commence an action out of time for damages for negligently inflicted nervous shock. (This is the action from which Mr Knight, the unsuccessful plaintiff, brings this appeal.) Once leave was granted the solicitors for Mr and Mrs Pedersen promptly arranged an appointment for Mr Knight to be examined by Dr Shand, Psychiatrist, on 29 August 1997. On 8 July 1997 a block of five days commencing on 13 October 1997 was fixed for the hearing of both Mrs Knight's Compensation to Relatives action and Mr Knight's nervous shock action. The date was agreed to on behalf of Mr and Mrs Pedersen on the basis that they would have a psychiatric report from Dr Shand in good time before the trial. However, Mr P. Knight did not attend for his appointment, a fact which did not come to the attention of Mr and Mrs Pedersen's solicitors until about 25 September 1997. Their solicitors then filed a notice of motion seeking vacation of the hearing date (13 October 1997) of both matters. This motion came before the judge in charge of the District Court list, his Honour Judge Garling, on 7 October 1997. 5 The solicitors for Mr and Mrs Pedersen had not by that time been able to arrange a further appointment for examination of Mr P. Knight by Dr Shand. The solicitor appearing for the plaintiffs in the two listed cases was anxious not to lose the hearing date. She conceded, what was obvious, that the defendants could not be expected to meet the psychiatric aspect of Mr P. Knight's action. The solicitor for the plaintiffs then suggested that there was no reason why Mr P. Knight's matter could not proceed with the related matter of his mother on the issue of liability because the liability issue was the same and all the witnesses were available. Garling DCJ regarded this as sensible. He ascertained that Mrs Knight's case was ready to proceed totally and then asked the solicitor for Mr and Mrs Pedersen: " What about that - proceed with them both on the issue of liability and then list Paul Knight, the issue of damages, if it gets to that, can be dealt with on another day. It doesn't have to be the same judge. " 6 Garling DCJ then ruled, after further discussion on the notice of motion that, in relation to it " I will note that in the matter of Paul Knight, the assessment of damages, should they need to be assessed, is not to proceed on 13 October 1997 due to the plaintiff's failure to attend upon a medical appointment. Both proceedings can go ahead on liability and the matter of Caroline Knight can be concluded ." 7 The third defendant, Mr Camp, took no part in this motion, nor at the trials, nor in the appeal. He was serving his sentence of imprisonment at all relevant times. 8 The two matters were listed for hearing before Acting Judge Gibb. When counsel for the plaintiffs began to open the two cases the trial judge asked a number of procedural questions. A transcript of this preliminary discussion was kept and became part of the appeal papers. One procedural problem was that notice had been given in Mrs Knight's case of intention to amend her statement of claim. No such notice had been given in regard to the son's case, but application was now made by plaintiff's counsel for similar amendments in both statements of claim. Counsel for Mr and Mr Pedersen opposed the application in the son's case, while recognising that opposition in the mother's case was unlikely to be successful. 9 It has been necessary to state these details so that the following passage in the transcript should be intelligible. The trial judge said to counsel for Mr and Mrs Pedersen: " Just turning to Paul's case. Is it the case that a different case is mounted, from the point of view of liability, in relation to liability to the son that is relevantly affected by these particulars? SHARPE: Yes. Because they have not sought to amend to include these particulars in Paul's case. HER HONOUR: And were such an application made, would it be a different case that were run in relation to the son's case from that that is run in relation to the widow's case? SHARPE: No, it is the same. There would be no difference. " 10 There followed a good deal of argument back and forth about procedural matters in both cases. There was never any reference to the ambiguity in the word "liability" in the trial judge's question. The ambiguity was that to establish liability in the Compensation to Relatives case it was necessary for the plaintiff Mrs Knight to show that the defendants were liable in negligence for the fire, but the son, to establish liability in his nervous shock case needed to prove the same liability as his mother had to prove in the Compensation to Relatives case, and in addition that there was a causal connection between the negligently caused death of his father and psychiatric illness causing him damage. 11 In the argument in this court the liability which the mother had to establish in her case came to be referred to as the primary liability. It is convenient to adopt that term in the following narrative. 12 The distinction between the establishing of liability in the two cases was unfortunately never explicitly mentioned in the preliminary discussion before the trial judge. She was however told that the reason for Garling DCJ having restricted the issues in the son's case in the way that he did was the unavailability to Mr and Mrs Pedersen, through the fault of the son, of a psychiatric report on the son. So, as it seems to us, it must have been clear to all concerned at that stage that the direction given by Garling DCJ meant that the part of the son's case involving psychiatric evidence was not to be litigated until a later time when Mr and Mrs Pedersen had been able to arm themselves appropriately with Dr Shand's report. 13 In our view it is on that basis that the two cases from then proceeded together. That is, the two cases were going forward together, the son's case on the issue that was common to both cases while the mother's case was being heard in full. What happened in the son's case seems to us to bear this out. He was not called to give evidence and no evidence was tendered on his behalf concerning psychiatric injury claimed to be caused by his father's death. 14 There was in the possession of the defendants Mr and Mrs Pedersen a report of a psychiatric assessment of Mr P. Knight dated 22 November 1993 by Dr G.R.W. Davies. Dr Davies had recorded a history which defendants' counsel considered showed some discrepancies between the son's account of matters relevant to the mother's Compensation to Relatives action and the mother's account of the same events. This document was tendered as defendants' Exhibit 7 during the course of the son's case in order to help the defendants' criticism of the mother's reliability as a witness. Before this court, defendants' counsel agreed that this was so, and from our reading of the transcript this seems to us to have been the only arguable basis for its admission at the time it was tendered. Counsel argued that it was also tendered to undermine the son's psychiatric injury case. However, he did not assert any specific recollection to this effect but based his submission on the transcript and the probabilities of the matter. 15 Here we note that there are various aspects of what happened at the trials which were not recorded in the transcript and about which there was disagreement before us between counsel, in the sense that on some things they said their recollections were different, and on others, where they had no recollection, they made different submissions about what they said must have happened. In regard to these disagreements the court indicated that in the absence of agreement between counsel the court could not, as it were, adjudicate upon their differing recollections and assertions, but could only make its own assessment on the probabilities of what happened at the trial on the basis solely of the materials in the appeal papers (except for any concessions made by one counsel or the other). Counsel agreed the court should take this course. The only possible alternative to it (and this itself may have been contentious) would have been for evidence to be given about what happened at the trial and for the court to take that evidence into account also in its assessment. Neither counsel wanted to take this path. 16 Using the basis agreed on by counsel we have looked at the question whether at the time when Exhibit 7 was tendered it could have reasonably been understood to have been tendered as relevant to any other issue than that which the son's case had in common with his mother's Compensation to Relatives Case. We do not think so. Possibly counsel for the defendants may have had in mind that as well as being useful for his criticisms of the mother's credibility, it also might come in useful at the further hearing of the son's case, if that came about. We do not think counsel for the plaintiff either could have taken, or did take, the introduction of this evidence relevant to the issue which was not to be heard in the son's limited trial, as an invitation now to include that issue as one of the issues to be tried. 17 A complication arose towards the end of the case. Attention became directed to s 4 of the Law Reform (Miscellaneous Provisions) Act 1944. This section extended liability for injury from mental or nervous shock sustained by the child of a parent killed, injured or put in peril when that happened within the sight or hearing of the child. The question was raised whether this put the son out of court. Counsel for the son addressed the court on this question and relied on Coates v Government Insurance Office of NSW (1995) 36 NSWLR 1 in support of the view that s 4 did not limit the liability to the circumstances there set out but that common law principles themselves since 1944 had, as it were, overtaken the 1944 extension and themselves supported the availability of the head of damages to a child claiming relevant injury whether or not the child had been in sight or hearing of the death, injury or putting in peril of the parent. 18 In her reasons the trial judge considered Coates at length, but at their end she moved away from deciding the legal question, namely whether s 4 was extensive or restrictive, and proceeded to find that on the evidence before her she was not satisfied that the son's disturbance and personality problems were precipitated by his father's death. Accordingly she did not accept that he had suffered nervous shock as a result of his father's death. On that basis she found in favour of the defendants. 19 Two features in the progress of the son's trial seem to be very clear. One is that it undoubtedly began on the restricted basis that the liability issue which the son's proceedings had in common with the mother's proceedings was to be tried and the other that no evidence was called in the son's case going any more widely than necessary for that issue. Two matters appear to have muddied the waters so far as the trial judge was concerned. One was the introduction on behalf of the defendants of Dr Davies's psychiatric assessment of the son. The other was the question raised about s 4 of the Law Reform (Miscellaneous Provisions) Act 1944. We have already given our reasons for thinking that the introduction of the psychiatric report did not indicate any change in the issue to the decision of which the son's case at this hearing had been limited. The fact that the psychiatric report had been tendered in connection with the raising of the credibility issue against the mother could easily become obscured, particularly when the s 4 point arose for argument. Once that point came into contention, there was an issue before the judge which was not an issue in the mother's case. This may well have misled the judge, either consciously or unconsciously, into thinking that the issues before her had changed more widely from those with which the case had begun than was the fact. 20 Although once the s 4 point came to be argued, an additional issue had indeed arisen, it was one of law, what used to be called a demurrer point, and we think it did not widen the issues further than was necessary to deal with it. It was expedient for it to be decided even within the restrictions within which the son's trial was being conducted. If found in the defendant's favour, it was an end of the case. It did not involve getting into the area which it would have been unfair for the defendants to be required to deal with, the avoidance of which had been the object of Garling DCJ's directions. The primary reason for those limiting directions however was unchanged. The defendants did not have a psychiatric assessment of Mr P. Knight from Dr Shand. The entire point of the restriction of the issues to be decided in the son's case remained the same as it had been before Garling DCJ. 21 It seems to us to follow inevitably that the trial was not intended to get into the question whether the son had suffered nervous shock in the somewhat arcane sense that has come to be attached to that phrase and that Mr P. Knight's counsel was entitled to conduct his case on that basis. 22 We therefore think the son's case should not have been decided in the way it was. Subject to the question raised under s 4 of the Law Reform (Miscellaneous Provisions) Act 1944, we would order a new trial on all issues except that which was earlier referred to as primary liability and which was found in the son's favour. 23 However, a new trial would be a futility if s 4 of the Law Reform (Miscellaneous Provisions) Act had the result that the son could not in any event succeed in establishing nervous shock because the death of his father was not in the son's sight or hearing. We should therefore consider whether s 4 has that effect. 24 We do not think it necessary to enter into any kind of sustained discussion of the question. That took place, in sufficient detail, in Coates v NSW Government Insurance Office. We respectfully agree with the considerations advanced in that case in their separate reasons by Kirby P (at 7, 8) and Clarke JA (at 21, 22) for thinking that the present state of the common law in New South Wales supports the view that liability for nervous shock suffered by the child of a parent killed by neglect or default is not limited to cases where the parent was killed in the sight or hearing of the child. 25 Our conclusion therefore is that Mr P. Knight is entitled to a new trial on all issues in his proceedings with the exception of the issue, already decided in his favour, whether his father's death was negligently caused by the defendants. The judgment below is therefore set aside and a new trial ordered limited as just described. The defendants should pay the costs of the appeal. The costs of the first trial should be in the discretion of the judge who hears the second trial. The defendants Mr and Mrs Pedersen should have a Suitors Fund Certificate. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.