Court of Appeal (WA)|2000-04-03|Before: Mr P, Wallwork J, Murray J, Ipp J

QBE Insurance Ltd v Moltoni Corporation Pty Ltd [2000] WASCA 82 (3 April 2000)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : QBE INSURANCE LTD -v- MOLTONI CORPORATION PTY LTD [2000] WASCA 82

Insurance - Indemnity policy - Appellant insurer ordered to indemnify respondent for damages awarded to respondent's employee - Employee injured 17 months before notice given to appellant - Whether appellant prejudiced - Whether opportunity lost by appellant to investigate claim and arrange for treatment for employee

Workers' Compensation and Rehabilitation Act 1981

Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418

Antico v Heath Fielding Australia Pty Ltd [1997] HCA 35; (1997) 188 CLR 652

City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362

Frichot v Zalmstra & Anor, unreported; FCt SCt of WA; Library No 980291; 13 May 1998

Hall v Motor Vehicle Insurance Trust [1984] WAR 111

Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242

Jimaco Clothing Pty Ltd v Norwich Winterthur Ins (Aust) Ltd (1985) 3 ANZ Ins Cas 60-640

Jovic v Bradley & Anor, unreported; FCt SCt of WA; Library No 970495; 3 October 1997

Lloyd v Faraone [1989] WAR 154

Morrissey v Nigoscik (1997) 26 MVR 553

Nigel Watts Fashion Agencies Pty Ltd v GIO General Ltd(1994) 8 ANZ Ins Cas 61-235

Nupin Distribution Ltd v Dennis Harlick (1988) 5 ANZ Ins Cas 60-874

Parker v Clarke (1989) 19 NSWLR 158

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

Sun Alliance Ins v Massoud [1989] VicRp 2; [1989] VR 8

1 IPP J: I have had the advantage of reading the draft reasons to be published by Wallwork J and Murray J. The relevant facts and circumstances appear from their Honours' reasons. Accordingly, I propose only to refer to those facts which are relevant to the conclusion to which I have come.

2 The appellant insured the respondent (which carried on a demolition business) under an indemnity policy. While the policy was in force, the respondent employed Mr P E Symons as a demolition worker. On 7 November 1992, while carrying out demolition work for the respondent, Mr Symons injured his back. In consequence, Mr Symons sued the respondent in the District Court, claiming damages for personal injuries arising out of the respondent's negligence. The appellant was joined in the proceedings as a third party.

3 The learned District Court Judge found that the respondent was negligent as alleged and awarded Mr Symons $383,544 as damages. Further, his Honour ordered that the appellant indemnify the respondent in respect of the damages so awarded to Mr Symons. It is the latter order that is the subject of this appeal. The appellant contends that the learned Judge erred in ordering it to indemnify the respondent.

4 Condition 2 of the policy required the respondent to give notice to the appellant:

"of any disability or personal injury as soon as practicable after information as to the happening of such, or of any incapacity arising therefrom, comes to the knowledge of the [respondent].

" [to] forward to the [appellant] forthwith after receipt thereof every written notice of claim or proceedings and all information as to any verbal notice of claim or proceedings."

5 Although the injury was sustained on 7 November 1992, the respondent gave notice of the claim to the appellant only on 6 April 1994. As Murray J points out, it appears to have been accepted (and found by the learned trial Judge) that condition 2 was breached and, but for s 54(1) of the Insurance Contracts Act 1984 (Cth), the appellant would have been entitled to avoid liability to the respondent under the policy.

"Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into ... the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act."

Section 54(6) of the Act provides that the word "act" includes an omission.

7 In Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Ltd [1993] HCA 5; (1993) 176 CLR 332, the High Court observed that prejudice under s 54(1) "will consist in the existence of a liability which, in whole or in part, would not have been borne by the insurer if the act had not been done or the omission had not been made". The appellant contended that the respondent's conduct caused it prejudice in this sense. The "liability" in question in this case was the appellant's liability to indemnify the respondent for Mr Symons' damages and, according to the appellant, that liability would have been reduced had the respondent not committed a breach of condition 2. The prejudice sustained by the appellant was the opportunity it lost to so reduce that liability.

8 The prejudice so alleged by the appellant involved the following propositions:

1. Had timeous notice been given by the respondent, the appellant would have investigated Mr Symons' claim at a time significantly earlier than it did.

2. Had an earlier investigation so been conducted by the appellant, it would have referred Mr Symons to a medical practitioner who would have advised him to stop doing heavy work for the respondent; Mr Symons would have taken this advice and, as a result, his injuries would have been less severe. In consequence, his claim against the respondent (and the liability of the appellant to indemnify the respondent) would have been reduced.

9 The learned trial Judge did not uphold the argument so advanced and it is necessary to describe, briefly, the basis on which this decision was made.

10 As regards the first proposition, the appellant relied on the evidence of Mr R J Mitchelson, who at the relevant time was its major claims controller. Mr Mitchelson testified that had timely notice been given to the appellant, Mr Symons would have been referred to an orthopaedic surgeon or an occupational specialist within about three months of the making of the claim. The learned Judge accepted that Mr Mitchelson gave his evidence honestly and noted that the appellant, no doubt, on many occasions at the relevant time did refer injured employees to either or both rehabilitation services and medical specialists. This did not carry sufficient weight with his Honour, who observed:

"However, in circumstances where Mr Mitchelson's opinion was formed with the benefit of hindsight, and given his inability to refer to comparable cases, Dr Barkhouse's certification of [Mr Symons] as fit to return to work in early January 1993, or within less than two months, that [Mr Symons] did then return, and in all the circumstances, after due consideration of his evidence, I simply do not feel persuaded to the requisite standard that any broad policy or aim of the [appellant] was applied consistently, or that had the [appellant] then received a claim [Mr Symons] would have been referred to either rehabilitation or to a medical specialist prior to the worsening of his symptoms in November 1993."

I pause to note that, from the learned Judge's reasons, it is apparent that "the requisite standard" referred to by his Honour was the usual civil standard, namely proof according to the balance of probabilities.

11 As regards the second proposition, the appellant relied on evidence to the effect that, had Mr Symons been referred to an orthopaedic surgeon or to an occupational specialist, it was probable that he would have been told to leave the demolition industry. The appellant relied additionally on the evidence of Professor Hollingworth, a specialist in occupational medicine, and Mr Batalin, an orthopaedic surgeon, as to the consequences that would have resulted had Mr Symons obtained and followed medical advice from medical practitioners retained by the appellant. Professor Hollingworth was of the opinion that the work performed by Mr Symons in 1993 aggravated his symptoms. Mr Batalin was of the opinion that a lesion seen in a CAT scan in November 1993 may have been caused by some occurrence after November 1992. In effect, they were of the view that had Mr Symons, early in 1993, taken up employment of a lighter nature, his injuries and symptoms would have been substantially less.

12 The respondent, on the other hand, relied on the evidence of Mr Woodland, an orthopaedic surgeon who was Mr Symons' treating specialist, and Mr Bell, another orthopaedic surgeon. Mr Woodland and Mr Bell testified to the effect that Mr Symons' symptoms were caused by the negligence of the respondent in 1992 and not by any subsequent occurrence.

13 The learned Judge accepted the testimony of Mr Woodland and Mr Bell. He found that that Mr Symons' injuries were caused solely by the negligence of the respondent in 1992, and therefore the obtaining of medical advice some three months after November 1992 would not have altered Mr Symons' condition in any significant way. The reasons given by his Honour as to why he preferred the evidence of Mr Woodland and Mr Bell are sparse, but it is plain that the learned Judge again applied the ordinary civil standard of proof, namely, proof on the balance of probabilities.

14 Mr Odes QC, senior counsel for the appellant, submitted that the learned Judge erred in applying the ordinary civil standard.

15 As mentioned, his Honour's task was to determine whether the appellant had suffered "prejudice" in the sense described. That prejudice was the loss of an opportunity to reduce the extent of the appellant's liability arising out of its obligation to indemnify the respondent against Mr Symons' claim.

16 The value of the opportunity lost by the appellant depended on the determination of past hypothetical facts. In this regard, Brennan and Dawson JJ in Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 said at 639:

"Hypothetical situations of the past are analogous to future possibilities: in one case the court must form an estimate of the likelihood that the hypothetical situation would have occurred, in the other the court must form an estimate of the likelihood that the possibility will occur. Both are to be distinguished from events which are alleged to have actually occurred in the past. Lord Diplock said in Mallett v McMonagle [1970] AC 166 at 176:

'The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards.'"

17 Mr Hancy, counsel for the respondent, sought to resist the consequences that appear to follow from the principles so enunciated (that is, that the value of the lost opportunity is not to be determined in accordance with the balance of probabilities) by relying on the following remarks of Mason CJ, Dawson, Toohey and Gaudron JJ in Sellars v Adelaide Petroleum NL (at 355):

"Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities."

18 Mr Hancy submitted that it followed from these remarks that, while the value of the opportunity lost (and the prejudice) suffered by the appellant was to be ascertained by reference to the degree of possibilities involved, the onus was on the appellant to prove, firstly, on the balance of probabilities, that it sustained some prejudice. He submitted that proof that some prejudice was suffered depended upon proof, upon a balance of probabilities, that, had timely notice been given, the appellant would have carried out an investigation. As the learned trial Judge found against the appellant on this issue, it was submitted, the argument advanced on the appellant's behalf must fail.

19 In considering this issue, I accept the submission of Mr Odes that the appellant's loss of opportunity was analogous to the loss of a chance and, just as the loss of a chance is compensable, so is a value to be attributed to the opportunity that was lost. This is consistent with the view that "ordinary contractual principles" should be applied to situations where "a fair balance needs to be struck between insurer and insured": Insurance Contracts, Report No. 20 by the Australian Law Reform Commission referred to in Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Ltd (at 340).

20 In Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332, Mason CJ, Dawson, Toohey and Gaudron JJ said (at 349):

"In the realm of contract law, the loss of a chance to win a prize in a competition resulting from breach of a contract to provide the chance is compensable, notwithstanding that, on the balance of probabilities, it is more likely than not that the plaintiff would not win the competition ... As the contract contained a promise to provide the chance, the breach of the contract resulted in the loss of the chance and that loss was for relevant purposes an actual loss, in the sense in which Dixon and McTiernan JJ used that expression in Fink v Fink [1946] HCA 54; (1946) 74 CLR 127 at 143. And, where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages ... The damages will then be ascertained by reference to the degree of probabilities, or possibilities, inherent in the plaintiff's succeeding had the plaintiff been given the chance which the contract promised."

"And there can be no doubt that a contract to provide a commercial advantage or opportunity, if breached, enables the innocent party to bring an action for damages for the loss of that advantage or opportunity."

22 Just as the contract discussed in Sellars v Adelaide Petroleum NL contained a promise to provide a chance, the contract of insurance in the present case contained a promise to provide an opportunity to the appellant to investigate a claim at an early stage (and, as part of that investigation, to refer the claimant to appropriate medical practitioners - and thereby to reduce the extent of the injuries and symptoms suffered). In my opinion, the loss of the opportunity was for relevant purposes an actual loss. Once it is accepted that the opportunity comprised both the opportunity to investigate and the opportunity to refer the claimant to an appropriate medical practitioner, it is self-evident that it had some value. That some value is ordinarily to be attributed to that opportunity is the reason why insurers invariably require provisions in the terms of condition 2 to be part of their indemnity policies. Accordingly, I do not accept that proof that some prejudice was suffered depended upon proof, upon a balance of probabilities, that, had timely notice been given, the appellant would have carried out an investigation. In the circumstances of this case, in my view, upon proof that condition 2 was breached, it was established that the appellant had sustained some prejudice. That prejudice was the loss of the opportunity afforded to the appellant to exercise the rights conferred upon it thereby. The very nature of that opportunity was such that its loss resulted in some prejudice being suffered.

23 In this regard, Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Ltd is instructive. Ferrcom owned a mobile crane and insured it with the Commercial Union against "physical loss or destruction or damage". When the policy was issued, the crane was located at a construction site and was not registered. After the work on the site had been completed, Ferrcom arranged for the crane to be registered so that it could be driven on public roads. The registration of the crane was a material variation under the policy and Ferrcom was required to notify the fact of registration to the Commercial Union. In breach of the policy, Ferrcom failed to do so. While the policy was in force, the crane overturned and was damaged. One issue considered by the High Court was the extent of the prejudice to the Commercial Union resulting from Ferrcom's failure to notify it of the registration of the crane. The High Court said the following in this regard:

"The prejudice to the interests of Commercial Union resulting from Ferrcom's failure to notify Commercial Union of the registration of the mobile crane does not consist merely in the increased risk attendant on the driving of the mobile crane on public roads nor in the non-receipt of the additional premium which Commercial Union would have demanded if it had continued to insure Ferrcom against damage to the mobile crane caused by overturning. Those disadvantages were but part of the prejudice. The loss of the opportunity to cancel the policy was the material prejudice suffered by Commercial Union ... An assessment of the amount fairly representing the prejudice to Commercial Union must include the value of the lost opportunity of cancellation determined by reference to the facts as revealed by the evidence. The value of that lost opportunity is, in the events that have happened, equivalent to the liability imposed on Commercial Union by s 54(1) of the Act. This conclusion involves two further propositions.

First, the liability imposed by s 54(1) on an insurer is not itself the prejudice to be taken into account. If it were, s 54(1) would be self-destructive. Here, s 54(1) imposed on Commercial Union a prima facie liability to pay under the policy by sterilizing the operation of cl 1(a), but the opportunity which Commercial Union lost was the opportunity to go off risk offered by the right of cancellation conferred by cl 3(a)(2). In determining the value of that lost opportunity, the fact that the continuance of the risk left Commercial Union exposed to the imposition of a liability by s 54(1) is material.

Second, the value of that lost opportunity depends on the hypothesis that Commercial Union would have exercised the right to cancel the policy in respect of the mobile crane and would not have issued another policy without the ... endorsement. The hypothesis is not an historical fact; the Court must form an estimate of the likelihood of Commercial Union having acted in that way ... In the present case, the Court of Appeal by majority found that Commercial Union would have gone off the risk of the crane's overturning had Ferrcom notified it of the registration of the mobile crane and the evidence to support that hypothesis was extremely cogent. The value to Commercial Union of its lost opportunity to go off risk was the value of a right to go off risk which Commercial Union would have exercised."

24 In the present case, by parity of reasoning, the prejudice to the interests of the appellant resulting from the respondent's breach of condition 2, comprised the loss of the opportunity to investigate the claim and to refer Mr Symons to an appropriate medical practitioner. An assessment of the amount fairly representing the prejudice to the appellant must therefore be based on the value of that lost opportunity by reference to the facts as revealed by the evidence.

25 In my opinion, it was the learned Judge's task, in determining the value of the lost opportunity, to have regard to a number of possibilities and probabilities. It was relevant that while the opportunity was not being afforded to the appellant, the condition of Mr Symons was deteriorating. On his Honour's findings, there was a possibility (albeit not a probability) that, had the condition not been breached, the appellant would have investigated the claim. There appears to have been a probability that, had that occurred, Mr Symons would have been referred to a suitably qualified medical practitioner who would have advised him to undertake light duties alone and Mr Symons would have followed that advice. Regard should then be had to the possibility (on the learned Judge's finding) that, had Mr Symons taken up employment of a lighter nature, his damages would have been reduced. His Honour did not approach the matter in this way and, in my view, erred in this respect.

26 In my opinion, the learned Judge applied the incorrect standard of proof and the appeal should succeed on this ground. The value of the opportunity lost by the appellant (and the concomitant prejudice suffered by it) depends on factual findings that this Court is not in a position to make. In the circumstances, I would set aside the order that the appellant indemnify the respondent, and I would refer the matter back to the District Court for a retrial of the issues between the appellant and the respondent.

27 WALLWORK J: On 7 May 1999 Mr P Symons obtained judgment against the respondent (then defendant) in the sum of $349,837.00 for damages in respect of a back injury which was sustained by him on 7 November 1992, whilst he was employed by the respondent as a demolition worker at the Sheraton Hotel in Perth. Mr Symons' injury was said to have resulted from him being required to lift and move with another employee, several heavy cast iron baths.

28 At the hearing of Mr Symons' claims the respondent claimed a declaration that the appellant (then the third party) was required to indemnify it under a policy of insurance. The appellant had denied liability primarily on the ground that notice of Mr Symons' injury had not been given to it by the respondent until 6 April 1994 approximately 17 months after Mr Symons' injury. The appellant claimed that due to the late notice it had suffered prejudice because it had not been able to carry out any investigation of the matter or arrange for treatment of the plaintiff's alleged injury before 6 April 1994.

29 The learned trial Judge held that the appellant was liable to indemnify the respondent for the full amount of the judgment obtained by Mr Symons and for the costs of the action. The appellant now appeals from that finding.

30 The grounds first argued for the appellant were grounds 1-3 to the effect that s 9 of the Insurance Contracts Act 1984 (Cth) excused the appellant from liability to the respondent because the relevant insurance policy was a policy for "workers' compensation" within the meaning of s 9(1)(e) of the Act.

"(1) Except as otherwise provided by this Act this Act does not apply to or in relation to contracts and proposed contracts:

(e) entered into or proposed to be entered into for the purposes of a law (including a law of a State or Territory) that relates to:

(ii) compensation for the death of a person, or for injury to a person, arising out of the use of a motor vehicle."

32 Counsel for the appellant submitted that the word "compensation" in s 9(1)(e) included both compensation under a statute and damages at common law. He submitted that although the insurance policy in this case provided for an indemnity in respect of any common law liability for damages, such a liability came within the words "workers compensation" in s 9(1)(e)(i).

33 It was conceded that there was no authority which supported that contention. However, it was said that there were authorities from which it appeared that where insurance against common law liability was compulsory under legislation, the policy would be regarded as covered by s 9(1)(e) of the Act, for example Butler v Dunn Monumental Masons Pty Ltd (1996) 5 Tas Rep 487, 489, 495; Workers Compensation Board Qld v Work Cover Authority NSW (1995) 36 NSWLR 732, 737.

34 It was submitted that the word "compensation" which appears in s 9(1)(e)(i) and again in s 9(1)(e)(ii) must mean the same thing and that it was obvious that the word "compensation" in 9(1)(e)(ii) meant "damages". It was also contended that the word "law" in s 9(1)(e) did not only mean "a statutory law". It was said that there were no Commonwealth laws relating to workers' compensation and there were no Commonwealth laws relating to injuries from motor vehicles. The relevant laws in those respects were all State laws. There was also no definition of "compensation" in the Federal Act and it must bear its normal meaning which is "recompense for loss or damage".

35 In my opinion, it is significant that s 9(1)(e) refers to contracts entered into or proposed to be entered into for the purposes of "a law". Those two words in their context naturally refer to a statutory law and not "the law", which would include the common law.

36 With respect to the contention that in some cases there had been a compulsory insurance for common law damages recovered by workers and the courts in those cases had assumed that s 9 excluded common law claims, the answer is that the relevant contracts had been entered into because they were required to be entered into by statute. It was conceded that in the decisions cited, being Butler v Dunn and Workers' Compensation Board Qld v Work Cover Authority NSW the appellant's present submission was not argued. In any event, it would be difficult to argue that where the relevant legislation required a contract of insurance, it was not a contract entered into for the purposes of "a law".

37 In my opinion, it is clear from a plain reading of s 9 that it is referring to a law of a State or Territory which relates to workers' compensation or compensation for the death or injury to a person arising out of the use of a motor vehicle. In this case the contract was not one contemplated by s 9(1). This ground of appeal is not sustained.

38 The next ground argued, was ground 4 which is that the learned trial Judge erred in failing to give any or any sufficient reasons for his finding that he preferred the evidence of Mr Woodland and Mr Bell to that of Mr Batalin and Associate Professor Hollingworth.

39 Mr Woodland's and Mr Bell's evidence had been to the effect that there had been no relevant significance in Mr Symons having to cease work in November 1993 (his original injury being in November 1992) and that his symptoms had increased in the latter part of 1993 as a result of the injury of 7 November 1992 and the heavy work he had been required to do in 1993.

40 It was submitted for the appellant that if the abovementioned finding had not been made the learned Judge would have been required to examine the question of any prejudice which may have been caused to the appellant arising from the fact that it was first notified of Mr Symons' injury in April 1994. It was further submitted that where a finding is central to the entire case a Judge has to do more than simply say "I prefer the evidence of this set of doctors as opposed to the other".

41 Counsel relied upon the reasons of Clarke JA in Clutha Limited v Riseby, (Butterworths) unreported BC9600757; Court of Appeal (NSW); 26 March 1996, at 3, where his Honour said:

"It is true that the employer would realise that it had lost the case because his Honour was persuaded that Professor Kefford's view should be accepted. That is not sufficient, in my opinion in the circumstances of this case. More was required, as McHugh JA explained in Soulemezis (1997) 10 NSWLR 247 at 277 where there were diametrically opposed views given by two eminent medical specialists. His Honour was, in my opinion, bound to explain why it was that he preferred, as it seems he did, the views of Professor Kefford. In saying that I do not mean to suggest that an elaborate explanation was necessary. It was not. But his Honour was obliged, in my respectful opinion, to explain the factors which led him to accept the worker's case. In the two passages I have cited he did not do this. No more can be said than that he was satisfied on the probabilities. What led him to prefer Professor Kefford, and to find that the worker had discharged his onus, was left unexplained."

42 In Fry v McGufficke [1998] FCA 1499, five of the learned Judges said:

"The ground [ground 6] has its genesis, of course, in the obligation of a judge to give a reasoned decision. The failure to explain the basis of a crucial finding of fact involves a breach of the principle that justice must not only be done but must be seen to be done: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 278 per McHugh JA and Mifsud v Campbell (1991) 21 NSWLR 725 at 728 per Samuels JA. The extent of the obligation to give reasons based on particular findings of fact will depend upon the circumstances of each case. It is, however, only the critical or crucial reasoning that must be exposed: ibid. It is in that sense that what is sufficient will depend upon all the circumstances of the particular case."

43 It was submitted for the appellant that in this case the critical reasoning had not been exposed.

44 In answer to the proposition that the learned Judge may have preferred Mr Woodland's evidence because he had had most to do with Mr Symons, as well as being an eminent medical witness whose evidence had been to a degree supported by Mr Bell, it was submitted that there had been no sufficient reasons given by the learned Judge as to why he had not accepted the evidence of Mr Batalin which had been directly contrary to that of Mr Woodland. Further, that just because a person was the treating surgeon his evidence should not be accepted despite what the contrary evidence was.

45 In this case there had been CAT scans taken after the November 1992 incident and a CAT scan taken after Mr Symons had ceased work in November 1993 which later scan had showed a difference in the relevant area. It had been partly on that basis that Mr Batalin had said that something had happened between the two occasions. It was contended that where a CAT scan had shown a change, and where one doctor had discounted the change and another had relied on it, the preference for one doctor's opinion over the other had to be grounded on something to do with the change. The patient's condition had as it were been "writ in stone".

46 Mr Woodland had agreed that the CAT scan taken in 1993 had shown a disc bulge which had not been there in 1992. He had explained that by saying that an MRI test on 15 December 1993, which test was a more sensitive test than the CAT scan, had not shown any disc bulge at all, so that the CAT scan of November 1993 might have been a red herring. Mr Woodland had said:

"That aside, I accept you could say that something happened in between. The worker has denied that to me, but that is possible."

47 It was contended that the evidence had shown that between the two relevant occasions Mr Symons had been engaged in heavy work in a bending position for much of the day. Mr Woodland had been asked, "So you would not be able to bet one way or the other what really occurred?" The answer was, "I just don't have that information. I mean, on the information presented to me, he has denied to me any specific incident. ... Even if it was fairly heavy physical work, I can't explain why he would suddenly have increased pain in November unless there was a specific incident, and unless someone can tell me there was a definite injury, I would find it hard to explain." Mr Batalin had said that the probabilities were that something had happened, and that that had been the cause of Mr Symons' problems in November 1993.

48 It was also submitted that Mr Symons had said that something had happened on 23 November 1993. However he had denied that to Mr Woodland. Therefore Mr Woodland's statement that there had been no particular significance in what happened in November 1993 had been premised on information which had not been entirely accurate.

49 Mr Batalin had concluded that the more probable explanation was that Mr Symons' November 1993 condition had been caused by what had happened between the two CAT scans. Counsel stated that Mr Batalin had hardly been cross-examined about that. Neither had Professor Hollingworth. Further, Mr Woodland had acknowledged without any reservation that he completely respected the views of Mr Batalin.

50 In my opinion, the problem with his Honour accepting Dr Woodland's evidence, partly on the basis that he was the treating surgeon, does not explain why his Honour preferred Dr Woodland's evidence rather than the evidence of Mr Batalin, which was that there could have been a progression of the degenerative changes, or other problems or injuries after the first CT scan, and that as Mr Symons had engaged in a number of occupations of a heavy nature after November 1992, one had to draw a logical medical conclusion that a lesion may have been caused by the subsequent employment.

51 It was conceded for the respondent that the learned Judge had not expressly stated why he had preferred one medical opinion to the other and that there had been no express finding dealing with the difference of opinion between the two doctors as to what was to be drawn from the CT scans. However, it was argued for the respondent that the plaintiff himself had given evidence which explained what had happened. That was that he had not recovered from his problem in November 1992 but he had worked on in spite of the pain and had been helped out by other people. Eventually he had reached the conclusion that he could not continue. It was submitted that the CT scan had to be understood in that context.

52 Mr Symons had said that he had gone back to full demolition duties on 23 February 1993 and that no one had been doing any favours for him after he was back at Moltoni Corporation. He said he was doing the work but he could not do it properly. He had been laid off again. From February 1993 through to May 1993 he had been trying to carry on doing demolition work. He had not gone to see any doctor. He was in pain doing work. He had a high resistance to pain because he was a fit, hard, strong man. He could take the pain then, but now he cannot. He said he had worked himself into the ground and finally had not been able to work any more. It was contended for the respondent that that evidence was logically compatible with the evidence which Dr Woodland gave.

53 In an affidavit sworn by Mr Symons on 22 November 1993 he said that he had sustained an injury to his lower back while lifting asbestos sheeting. He said he had been lifting asbestos and cutting steel and he had aggravated his back injury lifting all the time. He said he had sustained an injury to his back either by lifting asbestos sheeting or by cutting in a bent position, or both. He said "I sustained my back injury at Hi Tec doing those jobs". When he was asked: "On 22 September 1993?", he answered "Yes". He had previously said in evidence that when he had left work in November 1993, he had told his doctor that it was a pre-existing injury: "That I never hurt myself working for Hi Tec. It was nothing to do with them." He said that that was what he had told his doctor because that was the truth. When he was further questioned about that, he said: "I aggravated it every day I went to work".

54 Mr Symons had also sworn in an affidavit on 22 December 1993 that: "On 1 November 1993 I injured my neck and right shoulder and I was off work until 16 November 1993". He had sworn that his back had continued to get worse and worse and he had to take painkillers to keep him working. Eventually, on 23 November 1993, the pain in his back had become so intense that he had had to go and see his general practitioner. That was after he had been off work for two weeks with a shoulder injury. He had said that over the last three weeks of November 1993 the pain "just got worse and I couldn't work any longer".

"There was a greater risk of further injury if the plaintiff continued with demolition work, and Mr Bell said that he accepted that in the plaintiff's case the chances were "pretty good" that he was going to injure his back further."

56 In my opinion the appellant is correct in its contention that the learned trial judge did not sufficiently explain why it was that he preferred the medical opinions of Mr Woodland and Mr Bell to those of the other medical experts. There was considerable evidence which may have supported Mr Batalin's opinion. I would uphold ground 4 of the appeal.

57 With respect to the question of prejudice, the appellant's claim had always been that it had lost an opportunity to protect its position. Reliance was placed on the reasons for judgment in Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 and Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 which had indicated that where past historical facts are dealt with, the matter in dispute has to be established on the balance of probabilities, but where the court has to rely on past hypothetical facts, it is not possible to decide the issue on the balance of probabilities. It was submitted that in this case the appellant had been deprived of the opportunity of minimising its loss.

58 In Malec v J C Hutton Pty Ltd (supra), at 639, Brennan and Dawson JJ said:

"Hypothetical situations of the past are analogous to future possibilities: in one case the court must form an estimate of the likelihood that the hypothetical situation would have occurred; in the other the court must form an estimate of the likelihood that the possibility will occur. Both are to be distinguished from events which are alleged to have actually occurred in the past. Lord Diplock said in Mallett v McMonagle [1970] AC 166, at 176:

'The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not, it treats as certain. But in assessing damages which depend upon its view as to what will happen in future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards'."

59 In Sellars v Adelaide Petroleum NL [1994] HCA 4; (1992-1994) 179 CLR 332, at 335 Mason CJ, Dawson, Toohey and Gaudron JJ said:

"However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable."

60 It was contended for the appellant that in January 1993, after Mr Symons had been certified fit to return to light duties following the injury in November 1992, he would have been referred by the appellant to a rehabilitation expert and to an orthopaedic expert had the appellant known of the situation. It was contended that at the trial orthopaedic experts had given evidence that they would not have advised Mr Symons to go back to that type of work. There was therefore a very good chance that the damages would have been lessened. Mr Batalin had said that in certain circumstances Mr Symons' condition could have been stabilised within three months. Professor Hollingworth had said that there was no reason why Mr Symons would not have been able to carry on in alternate employment for the rest of his life without having incurred the problem.

61 The appellant contended that at the trial it had had to prove that it had lost an opportunity which had a compensable value and that the respondent had been the cause of that lost opportunity. There had been abundant evidence which should have been assessed on the basis of the possibilities. The learned Judge had not done that.

"To avoid the declaration sought by the defendant and the obligation to fully indemnify the defendant, the third party must therefore establish on the balance of probabilities that the defendant's failure to give timely notice prejudiced the third party's interest to some extent and that it suffered some detriment as a result."

64 His Honour discussed the evidence of Mr Mitchelson and came to the conclusion that he was not persuaded to the requisite standard that any broad policy or aim of the third party had been applied consistently or that, had the third party received a claim at the relevant time, Mr Symons would have been referred to either rehabilitation or to a medical specialist prior to the worsening of his symptoms in November 1993. The question arises whether the learned Judge gave sufficient reasons for coming to that decision.

65 The appellant had pleaded that it had been prevented by the delay in notification from seeking medical and rehabilitation reviews. On 7 January 1993, Dr Barkhouse had certified Mr Symons fit for light duties. The question was whether the third party, had it known of Dr Barkhouse's certificate at that time, would have taken referral action.

"For the reasons already given however I am not persuaded that the position would have been different had the defendant given timely notice of the claim to the third party ... and in the light of my findings in relation to the medical position, ultimately the cause of the plaintiff's injury is able to be ascertained, so that nothing follows upon the delay in the opportunity to investigate that."

67 Mr Mitchelson had said in evidence that he would have sent Mr Symons for a medical opinion. He had said that as a final certificate had not been issued, and with the last medical certificate being one as fit to return to light duties, intervention would have been put in place to ensure that the work Mr Symons was returning to was appropriate and that there was not a possibility of him aggravating the injury. There would have been a medical review arranged to ensure that the work he was going back to was appropriate.

68 His Honour accepted that Mr Mitchelson had given his evidence honestly. However, it was submitted for the respondent that Mr Mitchelson was not the person who was making the decision.

69 The learned trial Judge said that Mr Mitchelson had given evidence that rehabilitation was something where there had to be a referral as soon as possible, and a referral for rehabilitation would ordinarily occur within three months, particularly when a worker had been certified for only light duties. Mr Mitchelson had also said that had a claim in respect of Mr Symons been submitted to the third party in 1992, a rehabilitation provider would have been appointed within three months. In general the third party's policy had been for a referral to be made within three months of receipt of a claim. That review might not occur for three to six months. In the event of a delay in orthopaedic review, early review by an occupational health physician could occur. In Mr Symons' case, the initial medical referral would have been to an orthopaedic surgeon. In the event of delay there may also have been a review by an occupational specialist. Mr Mitchelson said that the third party's practice had been to settle claims, particularly when any loss was likely to continue indefinitely. Mr Mitchelson said: "The practice was told to me by Ron Burto who was the then claims manager and it was a practice that I also enforced with other employees in the claims department if I found that rehab had not been appointed as soon as it should have been."

70 Mr Mitchelson said that he would normally, within the three month period, have appointed a rehabilitation provider had the claim come to himself. When he was asked "Was that in accordance with the practice of your department?", his answer was "That would have been in accordance with the practice".

71 In his reasons at 56 the learned trial Judge said:

"Had the plaintiff been referred to an orthopaedic surgeon or to an occupational specialist, given the evidence of Professor Hollingworth, Mr Batalin and Mr Bell, it was probable that the plaintiff would have been told to leave the demolition industry, and had that occurred the plaintiff would have taken up employment of a lighter nature and would have avoided the problems which eventually beset him. Rehabilitation would also have been likely to have been of assistance to the plaintiff it was said, the evidence of Mr Scott showed."

Counsel said he was not quite sure whether that passage was a finding made by his Honour or whether it was a summary of what Mr Mitchelson had said. Counsel said he did not believe that Mr Mitchelson had actually put it in those terms. In any event it was said that those words were different from what had been put in the learned Judge's reasons on the following page where his Honour said:

"For the reasons already given however I am not persuaded that the position would have been any different had the defendant given timely notice of the claim to the third party."

72 In my view, the learned Judge did not in his reasons deal sufficiently with the evidence of Mr Mitchelson, which was quite extensive and concerned one of the most significant aspects of the case. Error is therefore demonstrated and the appeal should be allowed.

73 It is not necessary to deal with the contention of the appellant that due to the late notice it lost a chance to investigate the claim; that that chance had some value and therefore there was prejudice.

74 It was also submitted for the appellant that no finding had been made as to the effect of the evidence of Professor Hollingworth, Dr Batalin and Dr Bell on what would have happened early in 1993 had an opportunity been given. On one reading of his Honour's words, it appeared that he had accepted that had Mr Symons been referred to an orthopaedic surgeon or to an occupational specialist, it was probable that he would have been told to leave the demolition industry. Had he done that and taken up employment of a lighter nature, it would have avoided the problems which eventually beset him.

75 Granted that there was a significant difference in the evidence of Dr Woodland, Professor Hollingworth and Mr Batalin as to the effect of the November 1993 incident and that the extent of any prejudice depended largely on what happened after January 1993, a factual finding would have to be made as to what actually occurred in regard to Mr Symons' condition in 1993. That would depend on hearing the witnesses. In the circumstances a trial court should make that judgment. The matter should therefore be referred back for a new trial of the issues between the appellant and the respondent.

76 It was agreed between the parties that the cross-appeal should be adjourned sine die as the matters in issue can probably be resolved by agreement.

77 MURRAY J: I have had the advantage of reading in draft the reasons for decision published by Wallwork J. I am enabled to shorten these reasons by taking advantage of his Honour's discussion of relevant factual material, particularly his Honour's review of the relevant medical evidence, but I regret that I am unable to agree with all of his Honour's conclusions upon the case, as I am unable to agree with Ipp J, whose reasons I have also read.

78 The action at first instance was, as Wallwork J explains, a claim by a Mr Symons against his employer, the respondent, for damages for personal injuries found by the learned trial Judge to have been sustained as a result of an accident at his work on 7 November 1992 which occurred as a result of the respondent's negligence. The issue of the respondent's negligence, which was litigated at the trial, is not relevant to the appeal; nor is the learned trial Judge's assessment of damages.

79 Tried together with the action between the plaintiff and the respondent (defendant) were the issues raised by the respondent's third party notice claiming an indemnity against the respondent's liability to the plaintiff under a policy of insurance issued to the respondent by the appellant. The third party notice was defended on the ground of breaches of conditions of the policy, which required immediate notification of claims (in this case delayed until 6 April 1994), and that the insured should not without the consent of the appellant incur any expense of litigation or make any payment or admission of liability in respect of a claim by an employee.

80 The latter alleged breach need not be further noticed for the purpose of these reasons, but it was generally alleged that the appellant was prejudiced in that it lost the opportunity to timeously investigate the accident and to refer the plaintiff at an early stage to an occupational physician or an orthopaedic specialist, upon whose advice the plaintiff might have been prevented from returning to his pre-accident employment as a demolition labourer and would have been referred to vocational rehabilitation. These were said to be the appellant's usual practices which in this case might have led to the plaintiff being successfully returned to alternate work, thereby reducing the quantum of damages and perhaps leading to an early settlement. The loss of those opportunities was said to constitute prejudice to the appellant as a consequence of which it was contended that the respondent had forfeited its entitlement to an indemnity.

81 Of particular relevance to the issues arising upon the third party claim was the Insurance Contracts Act 1984 (Cth) s 54(1) which is in the following terms:

"Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act."

There is no need for present purposes to refer to s 54(2) and it need only be noted that under s 54(6) the word "act" includes an omission.

82 The insurance policy in question is an employer's indemnity policy. It specifically indemnifies the employer against legal liability to make any payment in respect of a disability of a worker under the Workers' Compensation and Rehabilitation Act 1981, and the employer is also indemnified against legal liability to pay damages and "all reasonable costs and expenses incurred with the written consent of the Insurer" under the Fatal Accidents Act 1959 and like statutes and "at common law for personal injury sustained by any person employed by the Employer under a contract of service".

83 The policy sets out various conditions, the "due observance and fulfilment" of which are provided to be "conditions precedent to any liability of the Insurer". For present purposes the relevant condition no 2 obliges the insured to give notice to the insurer of any disability or personal injury as soon as practicable after the insured learns of it and requires the insured to forward to the insurer forthwith after receipt, every written notice of claim or proceedings brought against it. It seems that it was accepted, and by implication the learned trial Judge found, that this condition was breached and under the terms of the policy the appellant would have been entitled to avoid liability were it not for the terms of s 54(1) of the Insurance Contracts Act.

84 The appellant's first line of defence was that the Act, particularly s 54, did not apply to this insurance contract by reason of s 9(1)(e) of the Act, which provides that it does not apply in relation to a contract of insurance:

"(e) entered into or proposed to be entered into for the purposes of a law (including a law of a State or Territory) that relates to:

(ii) compensation for the death of a person, or for injury to a person, arising out of the use of a motor vehicle."

The learned trial Judge concluded that this contract was not covered by that provision. Grounds 1 - 3 of the appeal challenge that decision. Wallwork J is of the view that the conclusion of the learned trial Judge was correct and I respectfully agree.

85 There is little that I would add to the reasons of Wallwork J and those of the learned trial Judge. It seems to me that the term "a law" when used in the section clearly refers to a statute or statutory instrument and not to the common law. I would agree that the word "compensation" where used in the section might encompass an award of damages, but it seems to me that the purpose of the provision is to leave the governance of insurance contracts entered into for the purposes of legislation relating to workers' compensation, compensation for the death of a person and compensation for personal injury arising out of the use of a motor vehicle to the legislative schemes, whether State or Commonwealth, governing such matters. This legislation is intended to apply where no such particular statutory scheme applies, no matter what may be the nature of the provisions of such legislation dealing with insurance contracts.

86 So far as this policy provided an indemnity in respect of a legal liability to pay damages at common law, it was therefore a policy of a kind governed by the Insurance Contracts Act and specifically by s 54. It could not therefore be avoided by reason of the breach of the condition requiring timely notification of the plaintiff's claim. The appellant remained obliged to indemnify the respondent, except to the extent of any amount fairly representing the extent to which the appellant's interests were prejudiced as a result of the late notification.

87 Therefore, it must firstly be found that the respondent suffered prejudice as a result of the late notification and then, the nature of that prejudice having been identified, it was necessary to value it. As it was put by the High Court in Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Ltd [1993] HCA 5; (1993) 176 CLR 332 at 343:

"The prejudice will consist in the existence of a liability which, in whole or in part, would not have been borne by the insurer if the act had not been done or the omission had not been made..."

So in a case such as this, once the trial Judge reached a proper conclusion about the extent of the respondent's liability to the plaintiff against which it was to be indemnified, it would be necessary for him to determine whether or not the appellant was prejudiced in respect of that liability by reason of the late notification of the claim.

88 The question in terms of this case as pleaded was whether the appellant lost an opportunity to deal with the plaintiff's claim, pursuant to its right of subrogation, in such a way that the defendant's liability and damages would have been reduced. Unless that conclusion could be drawn as to the nature of the lost opportunity, ie, unless it could be found that the appellant would have dealt with the claim in a way which would have reduced the damages awarded to the plaintiff, there would be no relevant prejudice to the insurer's interests. If prejudice of that character was found, then it would be necessary to value that prejudice.

89 As the High Court pointed out in Ferrcom at 342 - 343, the value of the lost opportunity depends on the hypothesis that the insurer would have acted in respect of the plaintiff's claim in such a way as to reduce the plaintiff's damages and therefore its liability to indemnify the defendant. That fact was not in issue in the case. It was accepted that the insurer would have cancelled the policy and so "gone off the risk." As the Court pointed out, the hypothesis upon which the valuation depends is not an historical fact and so the Court must form an estimate of the likelihood that the insurer would have acted in that way. In so holding, the Court relied upon Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 and Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR at 117 - 121 to which cases it compared Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd [1984] HCA 59; (1984) 157 CLR 149.

90 The issue of the proof of the value of the lost opportunity, a past hypothetical fact, again arose in Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332. The process of proof and the standard of proof was distinguished from the proof of a past historical fact on the balance of probabilities, and it was held to be sufficient to prove by reference to the degree of possibilities and probabilities that the lost opportunity had a capacity to benefit the party in question in that, it having been found that the opportunity would have been pursued, if not lost, it had a value which was not simply negligible, but capable of assessment. Malec and Amann were applied, but Norwest Refrigeration Services was not followed.

91 The Court, however, pointed out the distinction between establishing the value of the lost opportunity and proof that the party claiming the benefit had been caused by the other party to suffer some loss or damage. At 355 Mason CJ, Dawson, Toohey and Gaudron JJ said:

92 Brennan J made the same point in a separate judgment when, at 362, his Honour said:

"...the loss of a mere opportunity to acquire a benefit is not in itself a loss, but the loss of the benefit will be such a loss if the plaintiff proves that he could and would have taken the opportunity and that the benefit would then have been yielded."

"Although the issue of a loss caused by the defendant's conduct must be established on the balance of probabilities, hypotheses and possibilities the fulfilment of which cannot be proved must be evaluated to determine the amount or value of the loss suffered. Proof on the balance of probabilities has no part to play in the evaluation of such hypotheses or possibilities: evaluation is a matter of informed estimation."

The learned trial Judge referred to the authorities discussed above and directed himself accordingly.

93 However, his Honour did not in the end embark upon the process of valuing the lost opportunity for the appellant to so deal with the plaintiff's claim as to reduce the damages which would have been awarded and therefore the extent of its liability to indemnify the respondent. Putting it in the terminology used by Brennan J in Sellars, the learned trial Judge concluded that he was not persuaded to the requisite standard that the appellant probably would have taken the opportunity which it clearly lost as the result of the delay in notification, or that had it done so, the benefit of a reduction in the award of damages would probably have resulted.

94 In respect of the question of what it probably would have done if given timeous notice of the claim, the appellant relied on the evidence of a Mr Mitchelson, identified by the learned trial Judge as the major claims controller with the appellant from 1987 until 1993. His Honour reviewed and summarised the evidence given by this witness at 28 - 29 of his judgment. The witness's evidence, which his Honour said was given "honestly", was to the effect that it was an ordinary process within the appellant's organisation for an injured worker to be referred for rehabilitation, particularly where there had not been a return to work, noting that in this case there was a return to work early in January 1993 within two months of the accident, pursuant to a medical certification of fitness to return to light duties.

95 The referral would be for orthopaedic review or to an occupational health physician, or perhaps both. Examples of files which had been provided to the respondent to demonstrate the application of a process of specialist review were discussed. Each related to a worker who did not return to work. In this case, as I have mentioned, that did occur, albeit initially to light duties, but the plaintiff's evidence at AB173 was that although he initially went back to work on light duties, within a month or two he felt confident enough to try to resume his demolition work and he did so. His evidence was that that ultimately proved to be unsuccessful because of gradually worsening pain and disability until finally in November 1993 he was compelled to give up work entirely. That evidence appears to have been accepted by the learned trial Judge.

96 After referring to such evidence and to the evidence of Mitchelson, the learned trial Judge said at 53 of his judgment:

"I simply do not feel persuaded to the requisite standard that any broad policy or aim of the third party was applied consistently, or that had the third party then received a claim the plaintiff would have been referred to either rehabilitation or to a medical specialist prior to the worsening of his symptoms in November 1993."

A little later, referring back to his Honour's earlier conclusion that the cause of the plaintiff's progressively worsening back condition was effectively the accident of which he complained which had occurred on 7 November 1992, and the events culminating in his final incapacity to work in November 1993 had little impact on the plaintiff's condition, his Honour expressed a further conclusion relevant to this aspect of the appellant's case, that "I am not persuaded that the position would have been different had the defendant given timely notice of the claim to the third party."

97 Nor, in the light of his Honour's conclusion that the incident of 7 November 1992 was the effective cause of the plaintiff's disability, did he consider that the loss of a timely opportunity to investigate the plaintiff's claim would have produced a benefit to the appellant by way of a conclusion that the plaintiff's injuries, for which he sued, did not result from the respondent's negligence, but from a naturally occurring degenerative condition of the spine, gradually worsening and to which independently received trauma in November 1993 contributed. I have mentioned the terms in which the appellant's case was pleaded. Those conclusions, in my opinion, were a refutation of that case.

98 His Honour's reasoning in support of his refusal to accept Mitchelson's evidence at face value as establishing that the appellant probably would have taken the opportunity to manage the plaintiff's case in the way suggested by the witness is clear. So also is it clear that in view of the medical opinion accepted by his Honour, he was not persuaded in any event that a benefit would have resulted from the appellant managing the case in the way it said it would. While it may perhaps be said that his Honour's reasoning may have been more elegantly expressed, it is clearly discernible on the face of his judgment, and in my view, it cannot be said that his reasons are deficient in that regard.

99 Further, his Honour's conclusions were, in my view, supportable in view of the nature of Mitchelson's evidence, which was not evidence of contemporary practice at the relevant time in 1993 or thereabouts, applicable in the appellant's organisation, from which an inference could be drawn that in a case such as that of the plaintiff, procedures of investigation and medical referral such as those described were followed. Mitchelson's evidence was of an opinion as to what would have been done, which opinion was, as the learned trial Judge commented, informed by hindsight rather than by examples of contemporary practice. Indeed the only examples offered of the employment of the procedures which the appellant asserted would have been used, were apparently cases of an unlike kind where there had been a failure or difficulty experienced in having the plaintiff return to work. I am unable to conclude that his Honour erred in his application of the law, in his reasoning, or in his approach to the fact finding process.

100 For that reason alone I would dismiss the appeal, but I should not leave the matter without referring to the second principal plank in the appellant's argument, that concerned with the conflict of medical opinion as to the extent to which the plaintiff's injuries for which he sued were caused by the accident which occurred on 7 November 1992, or the extent to which later events, particularly in November 1993, contributed to his injuries, arising out of the degenerative state of his spine. At that time, and since May of that year, the plaintiff was still performing demolition work, but for another employer, until he finally ceased work on 22 November 1993.

101 So far as the third party was concerned, the relevant issue here was whether, had the opportunity been available earlier for the appellant to intervene in the treatment and rehabilitation of the plaintiff, a benefit in the nature of a reduction in the award of damages may have been achieved because the plaintiff may not have exacerbated his condition by the work he was doing between May and November (particularly in November) 1993. That conclusion would be negated if the trial Judge was not persuaded to the requisite standard that those later events made any substantial contribution to the plaintiff's final condition for which he sued.

102 Upon that issue the available evidence was carefully reviewed by the learned trial Judge. The plaintiff had called the orthopaedic surgeon, Mr Woodland. He was the plaintiff's treating specialist, having first seen him on 1 December 1993. He had available to him a CT scan taken in November 1993 which appeared to show a disc lesion in Mr Symons' lumbar spine. It was a relatively minor change, but there was a suggestion that it indicated a change produced by a traumatic event which occurred no doubt some time between November 1992 and November 1993. However, Mr Woodland had an MRI scan performed in December 1993 which, although it showed longstanding degenerative disc changes in the spine, did not show the disc bulge apparent in the CT scan of November 1993, although the MRI scan was a more sensitive test. That led Mr Woodland to the conclusion that there was no objective radiographic evidence as to when the plaintiff's injury was received, or putting it more correctly, when the traumatic event or events occurred which led to the degenerative spine becoming symptomatic, producing pain and inhibiting movement and the capacity to do heavy manual work. It was accepted by Mr Woodland, and indeed by other medical experts, that the capacity to offer an opinion upon that issue was made more difficult by the fact that no specialist medical practitioner had seen Mr Symons before December 1993.

103 As the learned trial Judge noted, Mr Woodland expressed the view that there was long-standing degenerative change in Mr Symons' lower back. He was satisfied that the accident on 7 November 1992 had rendered that change symptomatic, causing pain and disability. Mr Woodland expressed the view that without that incident, Mr Symons would have been able to continue working despite what was said to have occurred in November 1993, and he was of the opinion that nothing which then occurred was of any particular significance in aggravating the symptoms of Mr Symons' back injury. He thought the worsening symptoms could well have been simply due to altered posture and altered movement in a patient who was suffering continuous lumbar back pain.

104 The learned trial Judge then reviewed the evidence given by Mr Bell, an orthopaedic surgeon, who had seen Mr Symons once in December 1995 and who had reported to the respondent's solicitors expressing an opinion, and later giving evidence, in terms which were very similar to the views of Mr Woodland.

105 However, the appellant called Associate Professor Hollingworth, a specialist in occupational medicine, and Mr Batalin, an orthopaedic surgeon. Whilst Professor Hollingworth had expressed an opinion on Mr Symons early in 1998 upon a review of the reports of other qualified people, x-rays and the like, he did not see the plaintiff until August 1998. In essence it seems, his opinion was that the resumption by Mr Symons of heavy manual work in 1993 contributed to the plaintiff's final condition. Had he been seen by a specialist, and had it been recommended that he not return to such work (a recommendation which Professor Hollingworth said he would have made), the plaintiff, being engaged in lighter work, might well have been successfully redeployed and remained in employment until the normal retirement age.

106 The crucial opinion, so far as the appellant was concerned, however, was that of Mr Batalin, who saw the plaintiff only once in August 1998 and reviewed the relevant documentary material. While Mr Batalin recognised that there may well have been an aggravation of pre-existing problems which became symptomatic as a result of the accident on 7 November 1992, he expressed the opinion, as the learned trial Judge noted it, that although the plaintiff's final symptoms could have been the result of further degenerative change after November 1992, the comparison of the two CT scans of November 1992 and November 1993 led him to the conclusion that the lesion observed in the second may have been caused by the subsequent employment. The conflict in the opinions expressed is clear enough.

107 The learned trial Judge said that he generally preferred the evidence of Mr Woodland, who was the treating surgeon, and whose opinions were to a significant extent supported by those of Mr Bell. It is to be noted, however, that the opinions expressed by Mr Woodland and Mr Bell were not identical at all points. The learned trial Judge said that their views differed as to the age to which the plaintiff would have been able to remain in heavy work but for the accident. Upon that issue, and upon the question whether the plaintiff was likely to be able to work in the future at all, the trial Judge preferred the views of Mr Bell, who was noted to be a very experienced specialist, and the occupational specialist, Professor Hollingworth.

108 Of course, it was necessary to make findings of fact based on whichever medical opinion the trial Judge accepted, not only in respect of the assessment of damages generally, but also in respect of the relevance of that question to the third party claim made by the respondent and its defence by the appellant. His Honour returned to his views about the medical evidence when he expressed his conclusion that, for the reasons he had already given (ie, when discussing the medical evidence generally as a prelude to making his assessment of damages), he was "not persuaded that the position would have been different had the defendant given timely notice of the claim to the third party." By that remark his Honour clearly meant that having accepted the opinion of Mr Woodland and Mr Bell in preference to that expressed particularly by Mr Batalin, but to some extent also by Professor Hollingworth, he considered that the cause of the plaintiff's final injuries was established to be continuing degenerative change in his back made symptomatic by the accident of 7 November 1992 and to which any incident associated with the worsening symptoms in November 1993 made no effective contribution.

109 It was, I think, open to his Honour on the evidence he accepted to reach that view, and so far as the appellant's case was concerned, it followed that the lost opportunity to make an early investigation and to be earlier involved in the management of the plaintiff's condition was of no value, a conclusion expressed in his Honour's observation that he was not persuaded that the position would have been different. Having regard to that issue also, it is then my opinion that the appeal should be dismissed.

110 The relevant ground of appeal in respect of this issue does not directly challenge the decision of the learned trial Judge to prefer the evidence of Mr Woodland and Mr Bell to that of Mr Batalin and Professor Hollingworth. The error is said to be in the trial Judge's failure to give any, or any sufficient reasons for his conclusion. That is a weakness in the way the ground is formulated, although, without objection, the argument on the appeal canvassed the question at issue more widely.

111 It might perhaps be said that on this issue his Honour's reasons might have been structured with greater clarity. That is a criticism from which only one's own judgments may be thought to be immune, but in my opinion his Honour's reasoning is readily discernible. Upon the central issue presently under discussion, his Honour preferred the opinion of Mr Woodland because he was the treating specialist who had had the greatest involvement with Mr Symons' case. This witness dealt effectively, in his Honour's view, with the significance of the MRI scan taken in December 1993, and his opinion in this regard was generally supported by that of Mr Bell, whose long experience as an orthopaedic surgeon his Honour recognised. On the other hand, those who proffered the opposite opinion, while their expertise was unquestioned, only came to the plaintiff's case years later and therefore had not the advantage of direct consultation with the plaintiff, at least by the end of 1993.

112 In my respectful opinion, those were appropriate considerations upon the ground of which the trial Judge might prefer one body of evidence to the other. His Honour's reasons for the preference cannot therefore be said to be insufficient and his reasons for the conclusion to which he came are similarly supportable as a matter of law and fact. It must be remembered that such a ground of appeal will only attract the support of an appellate court if the reasons are insufficient to such a degree as effectively to render the right of appeal nugatory by making it impossible for the appellate court to determine whether or not the conclusions of the trial Judge are erroneous.

113 As it was put by Malcolm CJ, with whom Kennedy and Murray JJ agreed, in Charleston v Smith [1999] WASCA 261; 19 November 1999, at par [36]:

"In my view, although it would have been helpful and was desirable for the learned trial Judge to express his reasons in such a way that the chain of reasoning between his analysis of the evidence and the findings he made could be better understood or followed, I am unable to say that the reasons were not revealed to such an extent as to make it possible for the appellate court to determine whether or not his Honour's conclusions were erroneous: Carlson v King (1947) 64 WN (NSW) 65 at 66 per Jordon CJ; Pettitt v Dunkley [1971] 1 NSWLR 376 at 387 - 388 per Moffitt P (with whom Manning JA agreed); and Wright v Australian Broadcasting Commission [1977] 1 NSWLR 697 per Moffitt P (with whom Glass JA agreed). These passages were cited and applied in Lloyd v Faraone [1989] WAR 154 at 163 - 164 per Malcolm CJ (with whom Brinsden J agreed) and see also Kennedy J at 167 - 168. It is a fundamental obligation of a trial judge to give sufficient reasons for decision. The failure to give adequate reasons to an extent which deprives a party of the right of appeal conferred by statute is itself appealable error and constitutes a failure to afford a litigant procedural fairness, if the result is to deprive a party of an effective right of appeal: _Frichot v Zalmstr_a, unreported; FCt SCt of WA; Library No 980291; 13 May 1998 per Owen J at 14 - 15 (with whom White J agreed). In Danagher v Racing Penalties Tribunal (1995) 13 WAR 531 at 539 - 540 Rowland J said:

'In relation to the giving of reasons, it is now generally accepted that those exercising judicial power should give reasons that are sufficient to expose the reasoning which leads to all relevant and necessary findings: see Lloyd v Faraone [1989] WAR 154 and the authorities therein referred to, to which may be added Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 and, in particular, per McHugh JA (as he then was) at 279 - 80; Sun Alliance Insurance Ltd v Massoud [1989] VicRp 2; [1989] VR 8; Palmer v Clark (1989) 19 NSWLR 158.'

See also Kiama Constructions Pty Ltd v Davey (1996) 40 NSWLR 639 at 640 and 647."

Reference may also be made in this regard to Garrett v Nicholson [1999] WASCA 32; (1999) 21 WAR 226, 237, 248.

114 In my opinion, in this case, the reasons of the learned trial Judge meet the test of sufficiency so stated. I would dismiss the appeal.

Compensation and Rehabilitation Act 1981

Rehabilitation Act 1981

QBE Insurance Ltd v Moltoni Corporation Pty Ltd [2000] WASCA 82

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Judgment (176 paragraphs)

QBE Insurance Ltd v Moltoni Corporation Pty Ltd [2000] WASCA 82 (3 April 2000)

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Legislation Cited (5)

Cases Cited (18)