FAI General Insurance Co Ltd v Lucre

FAI General Insurance Co Ltd (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the District Court which found it liable to indemnify the respondent, Mr Lucre, for damages arising from psychiatric injury. The respondent had suffered post-traumatic stress disorder following a head-on collision caused solely by the negligence of the deceased driver. The respondent blamed himself for his role in the accident, despite being the victim of the deceased's negligence.

The primary legal issues before the Court of Appeal were whether the appellant owed a duty of care to the respondent in respect of psychiatric injury, and whether the respondent's claim was precluded by the dictum of Deane J in *Jaensch v Coffey* (1984) 155 CLR 549. This dictum suggested that a duty of care might be negated where psychiatric illness is sustained as a result of the death or injury of the tortfeasor. The Court also considered the application of section 4(1) of the *Law Reform (Miscellaneous Provisions) Act 1944* (NSW) and whether the respondent could be characterised as a rescuer or a mere bystander under the principles of negligence.

The Court of Appeal, comprising Mason P, Meagher and Giles JJA, declined to follow the dictum of Deane J in *Jaensch v Coffey*, finding that it had not been entrenched by subsequent case law and was not supported by the wording of section 4(1) of the *Law Reform (Miscellaneous Provisions) Act 1944*. The Court held that the respondent's psychiatric injury was a foreseeable consequence of the negligent driving that caused the collision. His Honour distinguished the respondent from a mere bystander, noting the immediacy of his involvement in the crash that led to the death. The Court also considered section 141 of the *Motor Accidents Compensation Act 1999* (NSW) in its assessment of liability.

The appeal was accordingly dismissed with costs.