Australia: At The Courthouse

Last Updated: 13 May 2009
Article by James Bruun

Edwards v Territory Insurance Office [2009] NTSC 6

This case dealt with an applicant's entitlement to benefits for the loss of earning capacity under section 13 of the Motor Accidents (Compensation) Act (NT) (Act).


The applicant, Mr Edwards, sustained a reasonably severe injury to his right knee as a result of a motor vehicle accident at Palmerston in December 2002. In May 2003, Edwards applied for and was paid benefits for his loss of earning capacity under section 13 of the Act from that date.

Subsequently, the relevant Authority reviewed Edwards' case and in April 2007, it was determined that Edwards was not entitled to section 13 benefits from 28 February 2007. The basis of this determination was that the medical evidence showed that Edwards was capable of engaging in full time employment as of the retrospective date.

Edwards complained about the determination made and also complained that the retrospective cancellation of benefits was unlawful and in breach of the operation of the Act. The Supreme Court found against him on both these points.


Under the Act, compensation ordinarily payable is not payable for any weekly period that the Authority determines the person is capable of working full time, regardless of the type of work. The Court found that Edwards, while clearly suffering a residual physical limitation, was capable of performing a number of identified sedentary positions on a full time basis. It was determined that a medical assessment of his earning capacity for the purposes of section 13 must only consider residual disabilities and not factors such as the availability of employment or his level of education or vocational skills.

On the second point, it was determined that there was no reason to find that 'the relevant weekly period' could not be a weekly period preceding the date of determination. As such, there was no reason why the decision of the Authority should not be retrospective.

CGU Insurance Limited v CW Fallaw & Associates Pty Ltd [2008] VSC 197


This claim arose from a failed construction of a domestic building. CW Fallaw & Associates Pty Ltd (Fallaw) which certified the design of a slab and footings for the domestic building was sued by the building owner (as was the principal contractor) in the Victorian Civil Administrative Tribunal. This action settled, save for an indemnity dispute between Fallaw and its insurer, CGU Insurance.

Fallaw submitted a claim on its professional indemnity policy with CGU. CGU denied indemnity on the basis of the 'known claims and circumstances' exclusion. CGU alleged that Fallaw was aware or should have known of such circumstances by virtue of its design and endorsement of the plans for the building.


The Tribunal, while raising some instances of blameworthiness on the part of Fallaw, decided that the type of knowledge held by Fallaw was not actual knowledge of the kind required to trigger the exclusion.

Interestingly, the Tribunal refused to allow CGU to call an important witness. CGU wanted to call evidence from one of the building owners in order to establish the state of knowledge of Fallaw. The Tribunal refused permission on the basis that the witness had been present throughout the hearing and CGU should have made arrangements earlier to call the witness.

CGU appealed.


The Supreme Court of Victoria agreed with CGU's submission that the Tribunal erred in not allowing CGU to adduce evidence from one of the building owners. The Court found that the evidence sought to be called from this witness was relevant to a central issue about which no other witness had given evidence.

The Court was also satisfied that Fallaw would not have suffered prejudice if the witness had been allowed to give evidence. On the operation of the relevant exclusion, CGU made two submissions. First, it argued that the Tribunal applied the wrong test in finding that the state of knowledge of Fallaw was not actual knowledge of the kind required to trigger the exclusion. CGU noted that the Tribunal had focussed on the question of blameworthiness of Fallaw rather than applying the specific words of the exclusion. The policy specified that the exclusion would apply where it could be concluded that 'a reasonable person' would have thought that there was a real possibility of an allegation against the insured.

Second, CGU submitted that if the Tribunal had considered the facts proven by the documentary evidence (read with the concessions made at trial), it would have found that on the balance of probabilities, CGU was entitled to refuse indemnity.

The Court accepted both of these submissions from CGU. The orders made by the Tribunal were set aside and the matter was remitted for re-hearing to the Tribunal.

Middleton v Erwin [2009] NSWSC 108

In November 2002, the claimant was severely injured when his vehicle was struck by a semi trailer driven by the first defendant, Erwin. The accident was caused by a sudden failure of the steering mechanism (a loose universal joint) in the truck, which was manufactured by the second defendant (the manufacturer).

The claimant sued both Erwin and the manufacturer.

Claim against Erwin

The claimant alleged that Erwin failed to properly service or maintain the truck. At trial, Erwin confirmed that he personally attended to the routine maintenance as required. He agreed that between the date of purchasing the truck and the date of the incident, he did not undertake any preventative maintenance in relation to the steering. During the course of the trial, Erwin conceded that he was in breach of his duty of care to the claimant but contended that the claimant had failed to establish a causal connection between the admitted breach and the failure of the steering mechanism.

Erwin argued that there was no expert evidence to confirm what specific preventative maintenance would have been carried out if the claimant had arranged servicing by a qualified mechanic (in the absence of a specific complaint about the steering).

The Court rejected this argument and said that Erwin was aware of the potentially catastrophic consequences of a steering failure in a vehicle of this type. The Court was satisfied that (even in the absence of any specific complaints about the steering) proper inspection would have included inspection of the universal joint and that would have revealed the worn state of this component before the sudden failure.

Claim against the manufacturer

The claimant noted that a manufacturer is under a duty to design a machine so as to keep its inherent dangers to a minimum. The claimant argued that the use of a universal joint in the steering column was negligent in that such a design was dependent on the owner of the vehicle arranging regular maintenance. The claimant noted that this contingency could have been wholly avoided by the use of a welded joint in the manufacturing process.

The manufacturer argued that the case raised against it was fatally afflicted with the reasoning of hindsight. It noted that its duty of care was limited to taking such care as a reasonably prudent manufacturer would take in the circumstances. It emphasised that any enquiry about a breach of duty must identify the reasonable person's response to foresight of the risk of the occurrence.

The Court found in favour of the manufacturer. It found that there was no persuasive reason for concluding that the common practice of producing universal joints in the steering mechanism fell short of what reasonable care required. The fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to liability.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

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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