Elliott v Bali Bungy Co

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20067/01 - ELLIOTT v BALI BUNGY CO 20068/01 - ELLIOTT v BALI BUNGY CO 20069/01 - BURTON v BALI BUNGY CO 20070/01 - MACDONALD v BALI BUNGY CO 20071/01 - BAMBLETT v BALI BUNGY CO

JUDGMENT 1 HIS HONOUR: These reasons concern identical notices of motion filed in five sets of proceedings against the one defendant. The motions are a motion by the plaintiff filed 9 October 2001 for leave to proceed against the 8th defendant, Black Diamond Manufacturing Ltd (Black Diamond) and a motion filed 4 May 2001 by Black Diamond to set aside the statement of claim or the service thereof against Black Diamond. 2 The facts which I can assume for the purpose of the present motions are as follows. On 22 January 1998, at approximately 5.30 pm at Bali in the Republic of Indonesia, Mark Ian MacDonald and Troy Burton were killed when bungy jumping. Both men had been held together by a harness to carry out a bungy jump ride from a facility probably operated by the first defendant. The harness was attached to a cord by a carabiner allegedly manufactured by Black Diamond. When the men were dropped, the carabiner broke after taking their weight. 3 The first seven defendants have not been served. They are Indonesian enterprises, apart from a Mr Bredow, the seventh defendant, who appears to be a New Zealand national in charge of the enterprise and who purchased some of the equipment, including probably, the carabiners from the ninth defendant Paddy Pallin Pty Ltd possibly in New South Wales. 4 Black Diamond appears to be incorporated in accordance with the laws of Utah, USA and carries on its manufacturing business in Utah where probably the carabiner, the subject of these proceedings, was manufactured. The carabiners are primarily used for mountain climbing. 5 The defect in the carabiners, if there be a defect, was a latent defect which could not be discovered on reasonable inspection by a retailer. 6 The claims made by the various plaintiffs can be summarised as follows:

A. In proceedings 20067/01 the plaintiff is Rebekah Jane Elliott, the step-sister of the late Mr MacDonald. On 23 January 1998 her mother told her that her step-brother had died in an accident in Indonesia. Rebekah viewed the body on one occasion in NSW and attended the funeral. Allegedly she suffered psychiatric damage because of that. In other words, her claim is for damages which flowed from what is commonly termed "told nervous shock".

B. In 20068/01 the plaintiff is Elaine Frances Elliott, the mother of the late Mr MacDonald. She says that she was told by her daughter-in-law (the plaintiff in 20070/01) that her son had been fatally injured in an accident in Indonesia, and suffered immediate shock and distress. She also viewed the body in NSW and went to the funeral. Again, her claim is told nervous shock. C. The plaintiff in 20069/01 is Robyn Elizabeth Burton. She is the mother of Troy Burton and sues under the Compensation to Relatives Act 1897 (ss 3 and 6E) and also for told nervous shock.

D. The plaintiff in 20070/01 is Jennifer Ann MacDonald, the widow of the late Mr MacDonald. She also sues under the Compensation to Relatives Act and for told nervous shock.

E. The plaintiff in 20071/01 is Jason Brian Bamblett. He was a member of the party which was touring Bali when the accident occurred. The deceased were killed within the sight and hearing of Mr Bamblett. He sues for nervous shock. 7 It is necessary to set out the relevant portions of Parts 10 and 11 of the Supreme Court Rules. Part 10(1A)(1) of the Rules provides that subject to Rules 2 and 2A, originating process may be served outside Australia in the following cases: "(a) where the proceedings are founded on a cause of action arising in the State;

(d) where the proceedings are founded on a tort committed in the State;

(e) where the proceedings, wholly or partly, are founded on, or are for the recovery of damages in respect of, damage suffered in the State caused by a tortious act or omission wherever occurring;…

(i) where the proceedings are properly brought against a person served or to be served in the State and the person to be served outside the State is properly joined as a party to the proceedings." 8 Part 10(2) says that where an originating process is served on a defendant outside Australia and the defendant does not enter an appearance, the plaintiff shall not proceed except with leave of the Court. 9 Part 10(6A) provides that the Court may make an order of the kind referred to in Part 11 r8 on an application by a person on whom an originating process is served outside Australia including cases where the service is not authorised by the Rules or this Court is an inappropriate forum. Part 11 r8 provides that the Court may, on application by a defendant, set aside the originating process or its service. 10 Mr Glissan QC and Mr Ashhurst, who appeared for the eighth defendant, strongly submitted that the onus was on the plaintiff in each case to establish that jurisdiction existed; see WA Dewhurst & Co Pty Ltd v Cawrse [1960] VR 278, 280. They submit that the plaintiff must satisfy the Court that there is a good arguable case. They cite Hyde v Agar (1998) 45 NSWLR 487, 507, a passage approved by Gleeson CJ in the High Court, Agar v Hyde (2000) 201 CLR 552, 559. Counsel acknowledge that there is, what they call, obiter dicta at pp 573-574 from the majority in the High Court that it is not the function of the Court to assess the strength in the sense of the likelihood of success of the plaintiff's claim. 11 Counsel submit that to the extent that claims are based on the Compensation to Relatives Act, they cannot qualify under Part 10(1A) unless they come within (i). However, here they say that the only domestic defendant is Paddy Pallin Pty Ltd and for reasons which I will set out later, this is not sufficient. 12 So far as the told nervous shock claims are concerned, counsel submit that the decision of the High Court in Annetts v Australian Stations Pty Ltd [2002] HCA 55, means that the claims cannot succeed. Mr Bamblett's claim for nervous shock is in respect of a tort wholly committed in Indonesia, and accordingly is not one that comes within paras (e) or (f) of Part 10(1A). 13 There was no argument on the question of forum conveniens. 14 I should note, lest it be thought that I have overlooked it that I was referred to Regie National des Usines Renault SA v Zhang (2002) 76 ALJR 551. In view of the statement in the previous paragraph this case provided little assistance. 15 Before dealing with the central points of the case I should note that at one stage the plaintiffs forecasted that they would be amending the statements of claim to add a failure to warn in Sydney. However, as the argument progressed, this application was abandoned. 16 I should now deal with the principal arguments raised before me and decide the fate of the notices of motion. 17 It seems that I can deal with these matters under the following heads:

(1) The test under Part 10 of the Supreme Court Rules .

I will deal with these matters in turn. 18 (1) Mr Bartley SC and Mr Toomey for the plaintiffs, kept repeating that this was not a trial and that all that the plaintiffs' counsel had to show was that there was material to demonstrate that there may be evidence which, if believed, may lead to a verdict for the plaintiffs. This is really a fairly dry topic. As Gleeson CJ said in Agar at 560: "It does not matter for present purposes whether the rubric of Part 10 rule 2 or Part 10 rule 6A is invoked." 19 Accepting Mr Bartley SC's submissions that under rule (2) there is no assessment of the strength of the plaintiffs' case, one still runs into the problem for the Court under rule 6A as to whether the Court should exercise its discretion to allow the matter to proceed in this State. Under 6A, the Court needs to consider whether: "The claims made have insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending the claims."

(See Agar p 575 [55]). 20 This was the view of the majority, Gaudron, McHugh, Gummow and Hayne JJ. Callinan J at 601 did not favour that test but applied it, and Gleeson CJ, p 559 [8], thought that the good arguable case test, so long as it was related to the jurisdiction or nexus, not the merits of the claim for relief, should be applied. 21 I consider that I cannot disregard what the majority said as mere dicta and that I am bound to apply the test that they adopted. However, it makes little difference in the instant case because most of the matters I have to consider are questions of law. 22 (2) The question here was whether the proceedings were properly brought against a person to be served in the State, namely Paddy Pallin. The authorities show that the claim against a resident defendant must be genuine and not doomed to failure: The Brabo [1949] AC 326, 345. 23 It would seem that any defect in the carabiner was related to the circumstance that it was intended for mountaineering with constant pressure, rather than bungy jumping with a sudden strain. Any defect in the product would have been a latent defect and not one which could have readily been noticed by intermediate inspection. Black Diamond submits that "A vendor of goods does not owe a duty of care to undertake inspections to determine latent defects in the goods he sells and is not liable to third parties for defective goods unless he was aware of the defect or alternatively the defect was of a type that a qualified retailer would have taken steps to preclude." 24 Counsel cite, inter alia, as authority for that proposition, the decision of Curtis J in Burns Philp & Co Ltd v J Blackwood & Son Ltd (2000) 21 NSWCCR 96, 100. However, it seems to me that that is no authority for the proposition. Indeed, Curtis J fixed on the last words of a sentence used in Fleming on Torts (now in the 9th edition (LBC, Sydney, 1998) page 547): "Retail dealers … duty, in the first place, is to warn of dangers of which they know or should know."

Curtis J emphasised the words "should know" and did seem to find liability of the distributor of a dangerous product, namely asbestos, even though he held that the breach of the retailer's duty did not cause or materially contribute to the plaintiff's disease. 25 With respect, the words "should know" go beyond what is in the authorities unless, as Fleming suggests in the footnote to p 547, they are read as "have reason to know". 26 Unless what Fleming says is read in this way, it would be inconsistent with most of the other leading works on tort which deal with the subject. There is, indeed, very little in the authorities on the point, but the leading books are of one mind. For instance, Trindale and Cane on Torts 2nd ed (Oxford University Press, Melbourne, 1993) p 577, speak of "second-hand dealers who are under a duty to take reasonable care to detect defects in the products they sell which they are in a position to spot." Winfield and Jolowicz on Tort 14th ed (Sweet and Maxwell, London, 1994) says at 259: "A mere distributor or supplier … may be under a duty to make inquiries or carry out an inspection of the product and if it is dangerous for some reason of which he should have known, his failure to warn of it will then amount to negligence."

The learned editor continues later: "It should not be thought that these cases impose a general duty on suppliers to subject all their goods to an exhaustive examination. The duty to examine will only arise if in all the circumstances they could reasonably be expected to carry out an examination." 27 Miller and Lovell Product Liability (Butterworths, London, 1977) at p 304 state: "The precise scope of retailers' liability in tort is open to debate. Certain propositions would, however, be generally accepted. Firstly, retailers are subject to the basic duties common to all suppliers. They must not supply a dangerous article into irresponsible hands and must warn of defects of which they know or have reason to be aware and which render the product dangerous." 28 In Laundess v Laundess [1994] Aust Torts Rep 81-316, the plaintiff suffered injury when she fell out of a car which her husband had recently purchased because the repairer to whom the seller had sent it, was negligent in repairing the door mechanism. The Court of Appeal, consisting of Mahoney, Meagher and Powell JJA, held the seller of the car not to be liable. Mahoney JA, who gave the leading judgment said at 61,874: "A vendor of goods does not, as such, have a duty in negligence to a purchaser. There must be something more than the mere relationship of vendor and purchaser."

He then continued at 61,876: "I do not think that that additional factor can be stated in a simple formula of words. …, there must be something more. Thus, if there be something to suggest to a reasonable vendor of the vehicle that the risk actually existed, ie that the door mechanism was defective, then there would ordinarily be a duty of care which would involve such an inspection." 29 The vendor was held not liable as there was nothing to suggest that there was a defect in the vehicle and accordingly there was no duty to inspect it. 30 Nor was there anything in this case to suggest that the vendor had represented that the product was safe; see eg Watson v Buckley [1940] 1 All ER 174. 31 Accordingly, on the facts as pleaded and as available, there would not appear to be an arguable case against Paddy Pallin. This being so, para (i) of the relevant sub-rule cannot be brought into play by the plaintiffs. 32 (3) The only nervous shock case is that of Mr Bamblett. He suffered his nervous shock in Indonesia. 33 There is nothing in the pleadings to suggest that the plaintiff, Jason Bamblett, has suffered any damage in NSW. Had there been such, it may well have been that the case would have come within para (e) of the relevant sub-rule as it may be sufficient if some of the damage is suffered in NSW consequent upon the tort; see eg Challenor v Douglas [1983] 2 NSWLR 405; Flaherty v Girgis (1985) 4 NSWLR 248, 266 (affirmed by the High Court Flaherty v Girgis (1987) 162 CLR 574). However, in the absence of such pleading the case is not one which should be brought in NSW and should be struck out as against Black Diamond. 34 (4) A good starting point to consider the modern law on damages for causing nervous shock is Mt Isa Mines Ltd v Pusey (1970) 125 CLR 383. In that case a workmate of the plaintiff had been severely burnt at work owing to the defendant's negligence. The plaintiff assisted in carrying the person to an ambulance and nine days later that person died. The plaintiff suffered psychological damage. The Queensland Full Court and the High Court held the defendant liable. 35 The next landmark case was Jaensch v Coffey (1984) 155 CLR 549. That was a case where a woman's husband was seriously injured as a result of the defendant's negligence in a motor vehicle accident. The wife did not witness the accident, but was told her husband was "pretty bad" and had gone into intensive care and then had suffered a change for the worse. She developed a psychological injury. The High Court affirmed liability in the defendant. 36 The leading judgment was given by Deane J. At 583, his Honour said: "It is not and never has been the common law that the reasonable foreseeability of risk of injury to another automatically means that there is a duty to take reasonable care with regard to that risk of injury."

His Honour said that all the cases show there must also be a relationship of proximity between the plaintiff and the defendant. At 606 he said that that requirement is not only satisfied by a plaintiff who saw or heard the actual accident but may be satisfied by a plaintiff who has suffered psychiatric injury as a result of what he or she saw or heard in the aftermath of the accident at the scene. The requisite duty relationship will not exist in a case where mere psychiatric injury results from subsequent contact, away from the scene of the accident and its aftermath with a person suffering from the effects of the accident. Thus, in King v Phillips [1953] 1 QB 429, 441, Lord Denning said that a person "who suffers shock on being told of an accident to a loved one cannot recover damages from the negligent party on that account". However a person who suffers nervous shock at the time when shortly after the accident the injured person is taken to hospital is considered to have suffered that shock in the aftermath of the accident. 37 The law was most recently reviewed by the High Court in Annetts v Australian Stations Pty Ltd. In that case the plaintiffs' son who was employed by the defendant, had gone off into the desert where he had died. The plaintiffs suffered nervous shock and sued. The High Court held that their action lay. 38 The Court said that it was impossible to reason directly from the motor car cases where there is an accident and an aftermath. The real problem was to work out the relationship and to consider whether, in all the circumstances, in combination with reasonable foreseeability of harm, there was a duty of care though the parents did not directly witness their son's death and suffer a sudden shock in consequence (see para [37]). Gaudron J said at [54] that on the assumed facts of the case: "It is possible to identify special features of the relationship between Mr and Mrs Annetts and Australian Stations Pty Ltd such that the latter should have had them in contemplation as persons closely and directly affected by its acts and omissions in relation to their son." 39 McHugh J said at [139]: "Authority requires the plaintiff to prove more than the reasonable foreseeability of nervous shock to the plaintiff. It is unnecessary in this case to examine those additional requirements or the special rules or to determine whether and, if so, to what extent, they represent the current law. They do not apply where the defendant is already under a duty to take reasonable care to avoid injury to the plaintiff." 40 I must confess that I have some difficulty reading the several judgments of the members of the High Court to see exactly what the test is that must be applied. Some guidelines proffered by some of the Judges are rejected by others. 41 However, it seems to me, with respect, that the summary given by Callinan J at [366] is as good a guidance to the ratio as anything else in the case. His Honour said: "In my opinion, the reasons for judicial caution in cases of nervous shock remain valid, as do the principles formulated by the courts in this country to give effect to that caution. The principles may need to be refined as new situations, and improvements in the professional understanding, diagnosis and identification of psychiatric illness occur. Those principles are currently in summary these. There must have occurred a shocking event. The claimant must have actually witnessed it, or observed its immediate aftermath or have had the fact of it communicated to him or her, as soon as reasonably practicable, and before he or she has or should reasonably have reached a settled state of mind about it. The communicator will not be liable unless he or she had the intention to cause psychiatric injury, and was not otherwise legally liable for the shocking event. A person making the communication in the performance of a legal or moral duty will not be liable for making the communication. The event must be such as to be likely to cause psychiatric injury to a person of normal fortitude. The likelihood of psychiatric injury to a person of normal fortitude must be foreseeable. There need to exist special or close relationships between the tortfeasor, the claimant and the primary victim. Those relationships may exist between employer and employee and co-employees and relationships of the kind here in which an assurance was sought, and given, and dependence and reliance accordingly ensued. Other relationships may give rise to liability in future cases. A true psychiatric injury directly attributable to the nervous shock must have been suffered. The evidence in this case, if accepted could satisfy all of those conditions."

42 It follows that the mere informing of the deceased's relatives of their death will not be enough. Nor probably would be the viewing of the body when it was brought back to NSW days later. That would not be the immediate aftermath of the accident. 43 In my view it is arguable that a tortfeasor should foresee that if he injured a young man or caused his death, that fact would soon be communicated to his wife or mother or both and that they would suffer psychiatric harm. They should also foresee that that communication might be made in the immediate aftermath of the fatality. 44 It seems to me that it is arguable that the injury suffered by Mrs MacDonald, Mrs Burton and Mrs Elliott are sufficiently proximate to the negligence. Their injuries were suffered in NSW. 45 The case of Rebekah Elliott is less certain. A step-sister would not normally be a person that one would have in contemplation. 46 Accordingly, I reject the prime thrust of the submissions made by Black Diamond. 47 However, Mr Glissan SC and Mr Ashhurst say that in any event the claim for told nervous shock has not been properly pleaded. 48 The statements of claim are not the same in each case. In the case of Rebekah Elliott the pleading says, so far as Black Diamond is concerned: 15. Black Diamond owed a duty of care to persons who were likely to be injured in the event that the carabiner failed. 17. Black Diamond breached its duty of care to the plaintiff whereupon the plaintiff has suffered injury. 21. By reason of the breaches of the defendants and each of them the plaintiff suffered injuries loss and damage and in particular nervous shock. 22. The plaintiff has suffered loss of wages and/or has incurred medical or other expenses in the State of New South Wales. 49 The claim of Elaine Elliott is exactly the same. 50 Robyn Burton's claim, apart from the Compensation to Relatives aspects of it, pleads that: 14. Black Diamond owed a duty of care to persons who were likely to be injured. 16. Black Diamond breached its duty of care to the deceased (Note, not the plaintiff). 23. Upon learning of the death of the deceased the plaintiff suffered nervous shock. 24. The plaintiff has and/or will require treatment in respect of nervous shock in the State of New South Wales. 51 Mrs MacDonald's statement of claim is in similar, but not quite identical, terms to that of Mrs Burton. 52 Mr Bamblett's statement of claim pleads that Black Diamond owed a duty of care to persons who were likely to be injured and that Black Diamond breached its duty of care for the plaintiff and that by reason of the breaches of the defendants the plaintiff suffered injuries loss and damage, nervous shock being given as a particular. 53 The pleadings are not, with respect, a particularly good example of the pleader's art. It seems to me that the pleadings in the case of Mrs Burton and Mrs MacDonald fail to allege material facts from which the Court could find that there was a duty of care to them and that they suffered nervous shock in NSW as a result of that breach of duty. It seems to me, in the case of Mrs Elliott, there is just sufficient in the statement of claim from which one can glean a pleading of causation that the nervous shock was a result of Black Diamond's breach of duty causing damage in NSW. 54 In the case of Ms Elliott, as I have said, the fact that she is a step-sister requires more by way of pleading of facts to show that there is a sufficient proximity for there to be a breach of duty. Although the pleading comes close to the line, in view of the circumstances it seems to me it does not adequately plead the cause of action. 55 Were this a case with no foreign element, I would merely stand the matter over for amended pleadings to be filed. However, in this sort of case, there may be no real purpose in granting any amendment because the whole document would have to be re-served, there not having been any appearance. 56 (5) I now turn to the Compensation to Relatives claims. Mr Glissan SC and Mr Ashhurst claim that an action under the Compensation to Relatives Act is not an action in tort, it is an action under a statute. The case accordingly does not come within para (e). They cite Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Co Pty Ltd (2001) 53 NSWLR 626. With respect, I cannot see how that decision assists me in the present case. 57 An action under the Compensation to Relatives Act can be brought whether the relevant death occurred wrongfully because of tort, or because of breach of contract: Woolworths Ltd v Crotty (1942) 66 CLR 603. Latham CJ said at 618 that the Act "created an entirely new cause of action in the representatives of a deceased person. … the right of action given to his executors is quite distinct from any right of action that the deceased would have had. It is a purely statutory creation for the purpose of filling what was regarded as a gap in the law. …". 58 The real question is what is meant in para (e) by the words "founded on or damage suffered caused by a tortious act". There are a series of cases to the effect that an action is still founded on tort even though relating to a contractual obligation or brought about by breach of statutory duty. Thus in Lyles v Southend-on-Sea Corp [1905] 2 QB 1, 15, the English Court of Appeal held that where a man was injured through a tramway authority's breach of statutory duty the Public Authorities Protection Act applied even though the action was not strictly one in tort. See also Sachs v Henderson [1902] 1 KB 612. 59 It is to be observed that Halsbury's Laws of England 4th ed Vol 45 page 558 [1201] says "Those civil rights of action which are available for the recovery of unliquidated damages by persons who have sustained injury or loss from acts, statements or omissions of others in breach of duty or contravention of right imposed or conferred by law rather than by agreement are rights of action in tort." 60 In Koop v Bebb (1951) 84 CLR 629, the High Court appears to have treated an action under the Compensation to Relatives Act as though it were an action in tort. In Blomme v Sutton (1989) 52 SASR 576; [1989] Aust Tort Rep 80-294, the South Australian Full Court held that an action under the Compensation to Relatives Act was an action in tort. 61 Accordingly it seems to me that for present purposes I should treat an action under the Compensation to Relatives Act as falling within para (e) of Part 10(1A)(1). 62 Black Diamond's submissions on this part of the case must thus be rejected. 63 (6) To recapitulate, I have come to the conclusion that at least part of the proceedings instituted by Mrs Elaine Elliott, Mrs Robyn Burton and Mrs Jennifer MacDonald are appropriate to proceed. I have found that because of defective pleading, the claims of Rebekah Elliott and Jason Bamblett, if they were to go to trial on the pleadings that have been filed to date would probably fail. However, had these pleadings been filed in local actions, it may be they could have been amended. 64 Although there are difficulties in amending pleadings where there is service outside Australia, it seems to me that this can best be handled either by allowing a separate application if it is ever made to amend the pleadings, or for there to be some re-service of an amended statement of claim rather than by me terminating the proceedings at this stage. I am also influenced by the fact that these five cases may well be heard together and no additional inconvenience will be caused through allowing the two borderline cases to proceed. Accordingly, in the exercise of my discretion under Part 10(6) of the Rules I do not set aside the proceedings or their service. 65 It follows that in each case I should give leave to proceed and dismiss the notice of motion to strike out the proceedings and their service. However, it does seem to me that it is appropriate that the matters dealt with in these reasons be considered at this stage for the good of both sets of litigants. Accordingly, costs of both motions should be costs in the cause.

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