JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: NEILSON & ANOR -v- OVERSEAS PROJECTS CORPORATION OF VICTORIA LTD [2002] WASC 231
CORAM: McKECHNIE J
HEARD: 9-12 SEPTEMBER 2002
DELIVERED : 2 OCTOBER 2002
FILE NO/S: CIV 1686 of 1997
BETWEEN: BARBARA MARY JOSEPHINE NEILSON
GEORGE ARNOLD NEILSON
PlaintiffsAND
OVERSEAS PROJECTS CORPORATION OF VICTORIA LTD
DefendantMERCANTILE MUTUAL INSURANCE (AUSTRALIA) LTD (ACN 000 456 799)
First Third Party004 192 394 PTY LTD
Second Third Party
Catchwords:
Choice of law - Deliction in China - Proper law to be applied - Contract of employment - Choice of law - Law of State where contract entered into - Occupier's liability - Lack of balustrade at top of stairs - Whether duty of care owed to person living in premises - Insurance - Terms and conditions - Proof of exemption - Words and phrases "normally resident" - "arising out of or in the course of employment"
Legislation:
Nil
Result:
Plaintiffs' claim successful
Category: A
Representation:
Counsel:
Plaintiffs: Mr J G Staude
Defendant: Mr G M Abbott
First Third Party : Mr D Wallace
Second Third Party : Mr I R Freeman
Solicitors:
Plaintiffs: John G Staude
Defendant: Freehills
First Third Party : Minter Ellison
Second Third Party : Phillips Fox
Case(s) referred to in judgment(s):
Akbarali v The Brent London Borough Council [1983] 2 AC 309
Beswick v Beswick [1968] AC 58
BP Refinery Pty Ltd v Hastings Shire Council (1978) 52 ALJR 20
Burke v LFOT Pty Ltd [2002] HCA 17; 76 ALJR 749
Clissold v Country Roads Board [1981] VR 259
Danvers v Commissioner for Railways (NSW) (1969) 122CLR 529
Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458
Hatzimanolis v ANI Corporation Ltd (1991-1992) 173 CLR 473
Hill v Van Erp (1996-1997) 188 CLR 159
John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503
Jones v Bartlett (2000) 205 CLR 166
Levene v Commissioners of Inland Revenue [1928] AC 217
Ma Xu v Li Ying & Liang Jin (1996) 1 Bulletin of the Supreme People's Court of the People's Republic of China
New Zealand Shipping Co Ltd v A M Satterwaite & Co Ltd (The Eurymedon) [1975] AC 154
Northern Sandblasting Pty Ltd v Harris (1996‑1997) 188 CLR 313
Phillips v Eyre [1870] LR 6 QB 1
Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (The New York Star) (1978) 139 CLR 231
Re Taylor; Ex parte Natwest Australia Bank Ltd (1992) 37 FCR 194
Re Vassis; Ex parte Leung (1985) 64 ALR 407
Regie National des Usines Renault SA v Zhang [2002] HCA 10; (2002) 76 ALJR 551
Scott v Shepherd (1773) 2 WBL 892; 96 ER 626
Smith v Baker & Sons [1891] AC 325
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Tweddle v Atkinson (1861) 1 B & S 393; 121 ER 762
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538
Wang Liefeng v Road Authority of Qianyang County (1990) 2 Bulletin of the Supreme People's Court of the People's Republic of China
Ward v Lewis [1896] 2 VLR 410
Wilson v Finch Hatton (1877) 2 Ex D 336
Zhang Lian‑qi and Zhang Guo‑li v Zhang Xue‑zheng (1989) Bulletin of the Supreme People's Court of the People's Republic of China
Case(s) also cited:
Amadio Pty Ltd v Henderson [1998] FCA 1069
Boonham v Heath Underwriting & Agency Services (NZ) Ltd (1993) 7 ANZ Ins Cas 61189
Brooklyn Lane v MIC Australia Pty Ltd (2001) 11 ANZ Ins Cas 61487
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Commissioner for Railways (Qld) v Ruprecht (1979) 142 CLR 563
Dagi v BHP Ltd (No 2) (1997) 1 VR 428
Damberg v Damberg (2002) 52 NSWLR 492
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
Donoghue v Stevenson [1932] AC 562; [1932] All ER 1
Dunlop Rubber Australia v Buckley (1952) 87 CLR 313
Fanhaven Pty Ltd v Bain Dawes Northern Pty Ltd [1982] 2 NSWLR 57
Fluor Daniel Constructors Pty Ltd v Zurich Australian Insurance Ltd [2002] WASCA 218
Geoffrey W Hill & Associates v Squash Centre (Allawah North) Pty Ltd (199091) 6 ANZ Ins Cas 61012
Henderson v Amadio Pty Ltd, unreported; FCA (Heerey J); VG 260/93; 22 March 1996
ICI Australia Operations Pty Ltd v KiddeGraviner Ltd [1999] WASCA 65
Kemp v Piper [1971] SASR 25
March v E & MH Stamare Pty Ltd (1991) 171 CLR 506
Marvin Manufacturers (Aust) Pty Ltd v Chamber of Manufacturers Insurance Ltd (199293) 7 Aust Ins Cas 61122
Mason v Social Welfare Department [1974] VR 506
Matthews v Currie (1994) 8 ANZ Ins Cas 61210
McKelvey v Meagher (1906) 4 CLR 265
Mitor Investments v General Accident Fire & Life Insurance [1984] WAR 365
Musgrave v Commonwealth (1937) 57 CLR 514
Norwest Refrigeration v Bain Dawes (198485) 157 CLR 149
Overseas Chinese Banking Corporation v Yin [2001] FMCA 133
Podrebersek v Australian Iron and Steel Pty Ltd (1985) ALR 529; (1985) Aust Torts Rep 80321
Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (19911992) 25 NSWLR 541
Re Bond Corporation Holdings Ltd (1990) 1 WAR 465
Russian Commercial & Industrial Bank v Comptoir d'Escompte de Mulhouse [1923] 2 KB 630
Scruples Imports Pty Ltd v Crabtree & Evelyn Pty Ltd (1983) 1 IPR 315
Sungravure Pty Ltd v Meani (1964) 110 CLR 24
Tadoran Pty Ltd (In Liq) v N G Delaney Insurance Pty Ltd (1989) 5 ANZ Ins Cas 6900
Turner v Trevorrow (1994) 49 FCR 566
Veljkovic v Vrybergen v CML Fire & Anor [1985] VR 419
Walker v Pickles [1980] 2 NSWLR 281
Wilson v Darling Island Stevedoring (1956) 95 CLR 43
Wyong Shire Council v Shirt (1979) 146 CLR 40
Yorke v British and Continental Steamship Co Ltd (1945) 78 Ll L Rep 181
McKECHNIE J:
Introduction
On 6 October 1991, Mrs Barbara Neilson, a long‑term resident of Attadale in Western Australia, fell down a flight of stairs and severely injured herself. The cause of the accident was the lack of a balustrade at the top of the stairwell which would have prevented just such an occurrence. The accident occurred in Wuhan, a city in the province of Hubei within the People's Republic of China. At the time, Mr George Neilson, her husband was engaged by the Overseas Projects Corporation of Victoria Ltd ("OPC"), a company owned by the State of Victoria and having its registered office and principal place of business in that State. OPC had been engaged by the Commonwealth Government to supply educational services in a joint venture with the People's Republic of China. Mr Neilson was engaged for two years as a consultant to prepare a curriculum on organisation behaviour to be taught at the China Iron and Steel Training Centre to be established on the premises of the Wuhan Iron and Steel University. These duties required him to live and work in China in accommodation supplied by his employer but built and maintained by Chinese officials. His wife was allowed to accompany him.
Mrs Neilson had also been engaged part‑time as a personal assistant to the Director of the program in Wuhan, Dr Ken Fargher. OPC had arranged a policy of insurance with Mercantile Mutual Insurance Australia Ltd to cover its public liability in respect of the sort of accident which did occur. Excluded from the policy were accidents to persons which arose out of or in the course of their employment and accidents to persons not normally resident in Australia.
Everyone in this action agrees that the damage suffered to Mr and Mrs Neilson as a result of the accident, if Australian law applies, totals $300,000 inclusive of disbursements.
The apparently simple facts I have just outlined, however, give rise to a plethora of legal issues which must be resolved before I can determine who, if anyone, is liable to whom in proceedings brought by Mr and Mrs Neilson against OPC and third party proceedings by that company against Mercantile Mutual Insurance Australia Ltd ("MMI"), which have been tried together in the one action.
I should note that OPC also joined as a party to the action the insurance broker who arranged the policy of insurance. Midway through the trial, the insurance broker sought to amend its defence in a fundamental way. Noting case management principles, but having regard to the justice of the matter, I allowed the amendment. As a result, the insurance broker which was the second third party was unable to resist an application by OPC to adjourn those proceedings for determination later. However, the insurance broker continued to be represented and to play a role in the main action.
Very few material facts are in dispute. In my assessment, all of the witnesses as to the facts were honest. Making allowances for the time that has passed between the events of 6 October 1991, and its consequent effect on memory, the witnesses were all able to give coherent accounts.
Mr and Mrs Neilson sue OPC in contract and in tort. OPC sues MMI in contract. Any relevant contract was made in Victoria.
The legal issues which arise
Mrs Neilson argues that her claim in tort should be determined by the application of common law principles of negligence which form part of the Australian jurisprudence. OPC, on the other hand, contends that the law of the People's Republic of China is the proper law governing any harm that may have been caused to Mrs Neilson. There are quite a number of issues raised on the pleadings and by the parties in their submissions. As far as possible, I have resolved all of these issues, even though resolution of many of them is not strictly necessary because of the conclusions of law I have reached or the facts I have found.
That said, there are some matters pleaded in the defence and counterclaim which I have not taken time to address because they were not pressed by counsel for OPC in any way. That category includes the pleading of voluntary assumption of risk. No evidence was led by OPC to establish that Mrs Neilson ever voluntarily consented to being at risk of injury from the lack of a balustrade. The mere fact of her knowledge of the condition does not allow an inference of consent to be drawn: Smith v Baker & Sons [1891] AC 325.
No attempt was made to justify the basis of the counterclaim, either in relation to implication of terms into contracts between OPA and Mr and Mrs Neilson, or in the attempt to join Mr Neilson with liability under the Law Reform (Contributory Negligence & Tortfeasor's Contribution) Act 1947.
As a result it is unnecessary to examine the facts of this case in light of Burke v LFOT Pty Ltd [2002] HCA 17; 76 ALJR 749.
The legal and factual issues which arise for determination are:
•The proper law of the contracts of employment;
•Did Mr Neilson's contract contain a term relating to the fitness of the residence?
•Was that law breached?
•Is Mr Neilson's claim time barred?
•Did Mrs Neilson's contract contain an express term relating to the fitness of the residence?
•Was there an implied term to similar effect?
•Was such a term breached?
•Is any claim under the employment contract by Mrs Neilson barred -
•by time?
•by the Accident Compensation Act 1985 (Vic)?
•Can Mrs Neilson take a benefit under Mr Neilson's contract?
•Whether the circumstances of the accident give rise to a legal claim;
•What is the choice of law to be applied to the claim?
•Principles of Chinese law to harm caused by another;
•Damages;
•Contribution to harm;
•Limitation periods;
•Choice of law under Chinese law;
•Principles of Australian law;
•Whether a duty of care is owed by OPC;
•Whether it breached that duty;
•Limitation periods;
•The insurance policy -
•its scope and territorial limits
•exemption for work related injuries.
The Iron and Steel Industry Training Centre Project
On 16 May 1989 the Government of Australia and the Government of the People's Republic of China signed a Memorandum of Understanding relating to the China‑Australia Iron and Steel Industry Training Centre Project. The rationale behind the project was:
"The iron and steel industry is a major contributor to China's National Economic Development Plan. Need for improved performance and productivity in the sector have been linked to a need for training in appropriate managerial and technical skills among middle and upper level management. China's economic reform requires the absorption and implementation of entrepreneurial thinking, managerial knowledge and technical know‑how.
…
A joint China‑Australia Iron and Steel Industry Training Centre will be established on the premises of the Wuhan Iron and Steel University in Hubei Province. A mixed Chinese Australian faculty will offer a total of 58 advanced training courses in three main teaching programs …"
As part of the Memorandum of Understanding, Australia would provide seven long‑term experts and up to 40 short‑term experts as course leaders for the management, technical and computer courses. As part of the contribution of China, a number of buildings would be supplied including:
"five apartments for the Australian long‑term staff members, each including a study, living room, dining room and kitchen."
China would be responsible for building maintenance and repair.
Wuhan is the capital of Hubei Province and the largest city in central China. It is located on the Yangtze and the Hanshui Rivers.
OPC is a multi‑disciplinary consulting company whose purpose is to develop opportunities for sharing Australian public and private sector expertise with other countries. It entered into a contract with the Commonwealth Government to supply the training services outlined in the Memorandum of Understanding. Dr Fargher was the Australian Centre Director and Professor Shen Shi De was the Chinese Centre Director.
Mr Neilson's employment with OPC
Mr Neilson is a lecturer in Business at Curtin University. Prior to January 1999 he was a lecturer at the Department of TAFE in Western Australia.
In January 1990 he accepted employment as a consultant with OPC in the area of organisation behaviour responsible directly to the Centre Director for the organisation behaviour curriculum to be taught in the general management program of the China‑Australia Iron and Steel Training Centre. His contract provided that he would aim to foster a good academic working relationship with the Chinese teaching counterparts so as to provide for a high standard of teaching and understanding of organisation behaviour concepts. The contract commenced in Australia on 5 February 1990 and in the People's Republic of China on 3 September 1990 and was to terminate on 3 September 1992, unless extended by mutual agreement. In other words, Mr Neilson was to spend some time in Melbourne working on the curriculum before moving to Wuhan. He did so.
The contract expressly provided that Mrs Neilson could accompany Mr Neilson to Wuhan. Allowances were provided for consultants with families, including repatriation expenses and an extra living allowance. Mr Neilson received the allowance during the period that Mrs Neilson lived with him in China.
Mrs Neilson's employment
At some stage before Mrs Neilson left for China, she was offered employment to work as the personal assistant to the Australian Director of the project (Dr Fargher) on the basis of 15 hours a week at $16.20 per hour gross, giving an average weekly income of $243 gross and $207.80 net. As part of the negotiations, which seemed to be conducted largely by telephone between Mrs Neilson in Perth and Ms Lucy Field, a representative of OPC in Victoria, Mrs Neilson sent across her curriculum vitae.
Unlike the position with Mr Neilson, there was no written contract between Mrs Neilson and OPC. Mrs Neilson relies on a contract containing oral and written terms, some of the written terms being provided by her curriculum vitae.
It is pleaded that it was an express term of Mrs Neilson's contract, agreed in the course of various conversations, that OPC would provide residential accommodation for her in Wuhan, together with her husband.
I find that while in Wuhan, Mrs Neilson worked as a casual secretary. She was not required to work on weekends; indeed all the buildings were locked. She was not required to work after regular business hours and not required to do any work from home. All the equipment she needed to perform her work was in the office.
The residential accommodation provided in Wuhan
It appears that the Australian contingent arrived in Wuhan in early September 1990. The contingent arrived to find that accommodation had been completed in accordance with the arrangements between Australia and China. The group of apartments provided for the residential accommodation of Australian staff, loosely known as the "Australian compound" built around a central quadrangle. The separate quarters were given numbers. Dr Fargher had travelled in China before and regarded the standard of accommodation as quite good compared with Chinese dwellings generally in the area. Dr Fargher was allocated Unit 1 which had been supplied with more furniture than the other units in recognition by the Chinese authorities of Dr Fargher's senior position.
Other units were occupied by Mr Groom, his wife and two children, Mr Turner, Mr Shinnick, Mr Nilsen, his wife and two children, Mr Ali Mohtaji and Mr Silver. These other people comprised the rest of the Australian contingent.
Unit 2
Mr and Mrs Neilson moved into Unit 2 on their arrival in Wuhan in 1990.
The unit comprised a downstairs area which consisted of a kitchen with refrigerator, a dining room with a table and some chairs and a lounge room with some furniture.
Access to the upper storey was by a flight of stairs with one landing half way up. The stairs ended in an open area. Directly to the right was a short passage with doors to a bathroom and a second bedroom.
The main bedroom in which Mr and Mrs Neilson slept led off the open area.
The light in the open area, which Mr Neilson described as "poor", was controlled by a light-switch on a wall between the stairwell and the bathroom door. There was further light-switch in the main bedroom for that room's light.
There was a balustrade protecting the stairwell at the top of the stairs. The stairs were also protected by a hand rail.
However, on the landing, to the left of the stairwell, there was no balustrade. A person approaching the top of the stairs from that side was in peril of a drop of one, two or three, stairs with the consequent risk of overbalancing and injury.
General complaints about the safety of units
Dr Fargher was employed as Australian Centre Director. The Deputy Director was Mr John Crittenden, whose duties were to work with Professor Shen in preparing the educational and residential accommodation. That preparation involved ensuring that equipment in the residential accommodation, such as washing machines, stoves and refrigerators, were in the units and in working order. There was a budget within the contract between the Australian Government and OPC allowing for the provision of furniture and fittings. Whitegoods items, refrigerators, stoves, a communal deep freezer, and televisions, were shipped from Australia. Some furniture was supplied in each unit. Dr Fargher considered he had little authority in relation to the Centre as all the physical aspects of the project, such as the housing, lifts within the teaching building, electricity, and access to motor vehicles, were controlled by the Chinese Director, Professor Shen. Principal responsibility for administrative matters rested with Mr Crittenden. Nevertheless, as the senior member on site, Dr Fargher would liaise directly with Professor Shen to resolve problems of necessity.
There were particular problems relating to the electricity supply and its safety which seemed to be resolved in an informal way by the attendance from Beijing of an Australian electrician.
Complaints about the stairs and stairwell
Mr Neilson's evidence is that he became aware of the danger posed by the lack of balustrade on the landing immediately on moving into the apartment and raised the matter continually with Dr Fargher, the Project Director. He understood that Dr Fargher had raised the matter with Professor Shen the Chinese Centre Director. Although it had not been directly relayed to him, it was commonly understood, and Mr Neilson understood, that there were difficulties in having the dangerous position of the stairwell rectified. Indeed, it was not until Mrs Neilson returned to Wuhan in June 1992 that a small balustrade was erected obviating the danger.
I find that Mr and Mrs Neilson, along with others, made immediate complaint upon arrival about the condition of the stairwell and the lack of a balustrade. Mr Shinnick was the project's nominated First Aid Officer. In his opinion, the stairs in the Australian living quarters were poorly designed and the treads and rises were irregular. There was no balustrade on the landing at the top of the stairs. He expressed concern about the safety of the stairs to Dr Fargher in the first week of settling into the project. Mr Groom lived in Unit 3, with his wife and two children, for nearly two years. Unit 3 and Unit 2 were mirror images. At the first staff meeting in early September 1990, when both Dr Fargher and Australian Project Manager, Mr Peter Burgess were present, he spoke of the potentially dangerous situation at the top of the staircase as the stairs protruded past the edge of the landing wall into the living room floor space. Mr Groom was concerned that a person could approach the staircase from the side and accidentally fall down the stairs. He suggested the problem be rectified by the construction of a balustrade from the landing wall to the point in the room where the stairs began.
In October 1990, Dr Fargher asked Mr Charles Nilsen to identify and comment on any items of concern relating to apparent deficiencies in the standards and safety of the units provided. Mr Nilsen referred to the missing section of balustrading from one side of the upper level of each of stairways in the two storey units and recommended that a simple balustrade matching the existing steel balustrade on the other side of the stairs be installed. He prepared a sketch demonstrating how the top landing could be made safe.
Dr Fargher raised the problem of the uneven steps, the stairwell lighting, and indented top step, with Professor Shen on several occasions. Professor Shen told him that the Chinese were proud of the houses they had provided and saw the issues raised as comparatively trivial and even akin to whingeing. Dr Fargher told the Australian staff that there was little chance of getting the Chinese authorities to fix the problem and that a pot plant, ornament, or piece of furniture should be used as a barrier at the top of the stairs.
I find that the OPC through its servants, Dr Fargher and Mr Burgess, knew of the dangerous condition of the stairwell. Dr Fargher regarded the buildings as part of the contribution of the Chinese authorities and, apart from raising the matter several times with Professor Shen, took no positive steps to obviate the danger of which he had a continuing awareness as the same condition was present in his unit. I further find that the construction and installation of a balustrade for each unit was a simple matter.
The circumstances of the accident
The circumstances of the accident are not significantly in dispute and I find them to be as follows.
On the night of 5 to 6 October 1991, Mrs Neilson woke with a thirst. This was probably about 4 am. As the sleeping accommodation was on the upper level and tap water from in the bathroom was not potable, a bottle of drinking water was kept in the refrigerator downstairs. Mrs Neilson decided to go downstairs for a drink of water and for this purpose left her bedroom and moved across the upper landing in darkness towards the light-switch. Mrs Neilson was in the habit of keeping two torches beside her bed. The electricity service in Wuhan was subject to blackouts. There had been a recent blackout and as a result the rechargeable torch had not been recharged. Another torch which used ordinary batteries was flat. Her husband was asleep in the bedroom and Mrs Neilson decided for this reason not to turn on the bedroom light. When approaching the stairs she tried to angle to the left to avoid the stairwell and to reach the light-switch to turn on the light which would have illuminated the stairs. In the course of doing so, she stepped over the edge of the stairs and fell down the unprotected upper sections of the stairs, suffering injuries which included a laceration to her head and a painful immobilising injury to her back. Mr and Mrs Neilson's son Alistair was woken by noise similar to a heavy thud. On investigation he discovered what had happened and woke Mr Neilson who found his wife lying on the landing, half‑way down the stairs, semi‑conscious and moaning. Mrs Neilson had a gash on her head. There was blood on the carpet and wall. Mrs Neilson's mid‑back was very swollen. Mrs Neilson complained of pain in her back and side and there was swelling between her shoulder‑blades.
A Chinese lady doctor, who could not speak English, arrived about 5.30 am. About 6.45 am Mrs Neilson was carried by stretcher to the nearby University Clinic for x‑ray. This involved a trip of about 300 yards and was very painful for Mrs Neilson. Although Mrs Neilson underwent x‑rays until 8.45 am, it was discovered that the machine was not actually functioning and she was stretchered back to Unit 2.
At 10 am, a Chinese orthopaedic surgeon suggested that Mrs Neilson be taken to Tongji Medical University in Hankou which is over two hours away by car.
The journey was made with Mrs Neilson being placed on a flat wooden board or door on top of the seats of a mini bus. Despite careful driving she experienced an arduous and painful journey. At 3 pm she was admitted to surgery and had 11 stitches inserted in her scalp due to severe lacerations sustained during her fall. At 4.30 pm she was admitted to the Tongji Medical University Hospital within the medical complex. X-rays showed her to be suffering from compressed fifth and sixth thoracic vertebrae.
Mrs Neilson remained at the hospital from 6 to 24 October 1990. It was agreed by her medical advisers that a period of convalescence in Australia was advisable.
The abstract of the medical history from Tongji Medical University Hospital notes the following on 15 October 1991:
"… THE PATIENT LIED (sic) IN BED FOR HER CONVALESCENT (sic) AND THE WOUND ON HER HEAD WAS STITCHED. AFTER APPLICATION OF PROPER MEDICATION HER CONDITION SHOWED AN IMPROVEMENT. THE WOUND HEALED WELL.
HOWEVER THE PATIENT NEEDS THREE MONTHS' IMMOBILE REST AND SOME PHYSIOTHERAPY. WE AGREE THAT THE PATIENT BE SENT BACK TO AUSTRALIA FOR CURE."
It was signed by her doctor and Consulting Professor. I will refer to the significance of this document later.
Current medical condition
I find that Mrs Neilson has suffered on‑going pain and limitation of movement in the neck and thoracic spine, occasional dizzy spells and frontal headaches, together with pain in her arms and tingling sensation in her hands. She has suffered from tinnitus and vertigo.
Prior to the accident, Mrs Neilson described her health as perfect. When in Wuhan she took up bicycling and activities she had neglected in the past. She also walked frequently to her work, a 30 minute journey each way, and made excursions on a Sunday to church by a lengthy journey in public transport. On St Andrew's Day she engaged in Scottish dancing without any ill effects.
She is presently on 5 to 6 Capadex tablets per day with occasional Valium. She has used a TENS machine and has received physiotherapy treatment. She regularly attends for hydrotherapy three times a week. She has undergone facet joint injections on an average of three times a year since the accident.
Furthermore, as a consequence of the accident Mrs Neilson lost earnings as personal assistant to Dr Fargher and has suffered a significant loss of earning capacity.
Mrs Neilson can no longer drive for more than 30 minutes or stand or sit for longer than that time without considerable pain, nor can she walk more than half a kilometre. She suffers sleep disturbance and takes painkillers during the night. She is unable to travel to the United Kingdom. She undertakes lighter domestic tasks at home and has paid help.
I find that Mrs Neilson's enjoyment of life has been restricted as a direct consequence of the accident.
Did Mrs Neilson contribute to her injuries
OPC pleads contributory negligence in that Mrs Neilson caused or contributed to her loss or damage in that she:
"(1)failed to take any precautions for her own safety;
(2)failed to request the installation of lights and/or a railing;
(3)failed to warn the defendant of the risk; and
…"
In the course of cross‑examination, OPC's counsel, Mr Abbott, cross‑examined Mr Neilson as to why bottled water could not have been left upstairs and also as to why Mr and Mrs Neilson could not have slept downstairs. He also cross‑examined both Mr and Mrs Neilson as to why an object could not have been placed at the site of the danger.
He sought to justify these questions as part of the general plea in (1). I am of opinion that OPC should have particularised these matters in the plea. However, no point was taken as to this and I will deal with the various matters raised by Mr Abbott as asserting that Mrs Neilson caused or contributed to her loss or damage. I will do so later in this judgment in the section dealing with Chinese law.
The claim in contract: Mr Neilson
Mr Neilson pleads a contract of employment that was partly oral and partly in writing and was made in Western Australia or in Western Australia and Victoria.
However, on the evidence I find that the contract of employment was wholly in writing and was made in Victoria.
The proper law of the contract
By cl 27 the contract provided that:
"The proper law of this agreement shall be the law of the State of Victoria, Australia."
There is no issue between the parties that the law of Victoria applies. Part of the law of Victoria at the time of this contract was the Accident Compensation Act (Vic) to which reference will in due course be made.
Accommodation reasonably fit for the purpose
It was clearly contemplated by the parties, and was an express term of the contract, that the consultant Mr Neilson would be provided with accommodation for both he and any member of his family who chose to accompany him to China. In fact, he was paid an extra allowance for the period while his wife accompanied him in China.
I find it was an express condition of the contract that Mr Neilson would be provided with a unit maintained in a reasonably fit condition for use as a residence. By Schedule Three of the Employment Agreement:
"DETAILS OF ACCOMMODATION PROVIDED AT PROJECT
Furnished house, Wuhan. Furnishings do not include household linen, crockery, cooking utensils and cutlery."
Paragraph 32 of the Employment Agreement provided relevantly:
"Notwithstanding the provisions of this Agreement the Consultants shall have the right to terminate this Agreement immediately and without penalty and the principal shall meet the Consultant's (and family if appropriate) repatriation expenses where:
…
(b)… the Principal does not fulfil its obligations to use its best endeavours to ensure that the furnished house referred to in schedule 3 is maintained in a reasonably fit condition for use as a residence by the Consultant (and his family) and in the event that it becomes necessary during the term of this Agreement for repairs to be executed for this purpose, the Principal shall take all reasonable actions to ensure that the repairs or replacements are executed as promptly as possible
AND
(c)if after seven (7) days from being given notice of a grievance, or longer if agreed between the parties, the Principal fails or neglects to take action to satisfactorily remedy the matter or matters referred to in the notice.
The Consultant undertakes to exercise his rights under this clause only after discussion and conciliation with the principal during which discussions both parties shall constructively seek to remedy the matters."
I find that OPC breached its contract with Mr Neilson. The premises were not maintained in a reasonably fit condition for use as a residence because of the danger posed by the lack of a balustrade at the top of the stairs. In Wilson v Finch Hatton (1877) 2 Ex D 336, Kelly CB regarded a term of fitness for occupation as meaning:
"… that it should be reasonably healthy, and so not dangerous to the life of those inhabiting it." (at 341)
"Maintained in a reasonably fit condition for use as a residence" means maintaining the premises so that they are reasonably safe for the occupants. Obvious dangers which arise from time to time should be repaired or fixed.
It was argued by Mr Abbott or OPC that if there was a breach of the contract, the breach occurred immediately upon Mr and Mrs Neilson taking up residence in Unit 2, that is in early September 1990. Furthermore, as the contract provided for a specific remedy, in view of that breach, if Mr Neilson failed to exercise that remedy, he has waived his rights.
I do not find favour with either of these submissions.
As I construe the contract, there was an express term to maintain the accommodation in a reasonably fit condition for use as a residence. Maintaining reasonable fitness of purpose includes taking steps to obviate conditions of danger, such as the lack of a balustrade protecting the stairwell. I construe the contract as providing for an on‑going obligation. Each day the balustrade was not in place was a breach of Mr Neilson's contract of employment. The contract did provide that failure to provide accommodation which was in a reasonably fit condition for use as a residence would allow Mr Neilson to treat the contract as at an end. However, it is not incompatible with the contract to regard Mr Neilson as having the right to treat the breach as one which did not end the contract, but one which nevertheless might sound in damages in an appropriate case.
It may be accepted that the limitation period in respect of contracts begins to run from the date of the breach of contract: Ward v Lewis [1896] 2 VLR 410. However, the breach to provide safe accommodation was a continuing breach of the contract for every day on which the accommodation provided was not reasonably fit for use as a residence. As I will elaborate later, dangerous premises may be regarded as unfit for habitation. I hold that these premises were not in a reasonably fit condition for use as a residence.
It is an error of reasoning to assert that the breach occurred only at one time, rather than on every occasion when the premises were unsafe in the context, even though damages, other than nominal damages, may not have arisen until there was an accident. There was an express obligation to maintain the accommodation in a reasonably fit condition for use as a residence and it was this term that was breached.
The premises being unsafe on 6 October 1991, accordingly the action was brought within the six year limitation period imposed by the Limitation Act (Vic) as the writ was issued on 20 June 1997. The time to issue a writ did not expire until 6 October 1997.
The contract expressly provided that the premises would be in a reasonably fit condition for use as a residence for both Mr Neilson's habitation and that of his wife who accompanied him. The breach of the contract caused damage to Mr Neilson. As a direct result of the breach he incurred airfares escorting his wife back to Perth and returning to China in the sum of $1300 and he lost the accompanied overseas living allowance for the period that his wife remained in Perth in the sum of $2525.81. I therefore assess Mr Neilson's loss for breach of his contract at $3825.81. However, his claim seems to be subsumed in the agreed damages for both Mr and Mrs Neilson.
The claim in contract: Mrs Neilson
Mrs Neilson's claim under contract is pleaded in three ways. The first two relate to her contract of employment.
No express term that accommodation would be provided
It is pleaded that it was an express term of her employment contract agreed in the course of various conversations that OPC would provide residential accommodation for her in Wuhan, together with her husband.
No evidence was led to establish such an express term and I find there was no such express term. Mr Neilson was engaged for his expertise and Mrs Neilson was going to live with him in Wuhan for the duration of his contract. Accommodation was to be supplied for Mr Neilson and his family, including of course Mrs Neilson. It was simply a happy circumstance that Mrs Neilson was going to China in any event and had the skills to be a personal assistant, and that Dr Fargher would benefit from having a part‑time personal assistant while in China.
No implied term that accommodation would be provided
It is then pleaded by par 9:
"It was an implied term of the female Plaintiff's Contract that the Defendant would provide safe and satisfactory accommodation for her in Wuhan.
PARTICULARS
(a)Such a term will be implied in law to give business efficacy to the female Plaintiff's contract.
(b)Such a term will be implied in law and fact by reason of the Defendant having engaged the female Plaintiff to take up employment in Wuhan on the basis that she would be provided with living accommodation there."
The test for implication of terms into a contract is well known and it is convenient simply to refer to BP Refinery Pty Ltd v Hastings Shire Council (1978) 52 ALJR 20 where Lord Simon of Glaisdale, in delivering judgment for the majority, said at 26:
"… For a term to be implied, the following conditions (which may overlap) must be satisfied:
1.it must be reasonable and equitable;
2.it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
3.it must be so obvious that 'it goes without saying';
4.it must be capable of clear expression;
5.it must not contradict any express term of the contract."
Applying this test, the term sought to be implied by Mrs Neilson is not necessary to give business efficacy to the contract, nor is it an obvious term.
Mrs Neilson had accommodation in Wuhan. This accommodation was supplied by OPC by virtue of Mr Neilson's contract of employment. There is no reason to imply a separate obligation to provide accommodation into Mrs Neilson's contract in order to give business efficacy to it.
Nor is such a condition of the contract obvious. The Memorandum of Understanding set out in general terms the Australian staff who would form part of the joint faculty. Accommodation was to be provided for those staff. While it happened to be convenient that Dr Fargher obtained the services of Mrs Neilson as a personal assistant, it is far from obvious that accommodation was a necessary part of such an arrangement.
I find as a fact that there was no implied term about accommodation as pleaded by Mrs Neilson. Mrs Neilson's claims for breach of her contract of employment therefore fails.
Reliance on the benefit of Mr Neilson's contract
Mrs Neilson's contractual claim is further pleaded by par 10:
"10.Further, at all material times the female Plaintiff was a party expressly acknowledged by the Defendant as being the member of the male Plaintiff's family who would be travelling with him to Wuhan, and who mutatis mutandis was entitled to the various benefits provided by the Defendant for members of the male Plaintiff's family pursuant to his contract of employment."
The contracts between Mr Neilson and OPC, as previously outlined, expressly provided that Mrs Neilson would be accompanying her husband and living in the accommodation provided to him. Moreover, the contract placed specific obligations on Mrs Neilson. Under cl 15 Mrs Neilson was required to undertake and repeat certain medical examinations and inoculations. Clauses 20 and 21 provided an obligation on Mrs Neilson as follows:
"20. The Consultant (and the Consultant's family if applicable) shall conduct themselves in a manner consistent with the maintenance of friendly relations between the Principal, the Client and the Government and people of the country in which the Project is located (the host country). They will not make public statements which may adversely reflect on the Government of the host country. They shall treat all official information gained in the course of their service as strictly confidential and will not discuss this information without the prior approval of the Principal with anyone outside the Principal's staff associated with the Project.
21. The Consultant (and the Consultant's family if applicable) shall not knowingly issue or make public statements concerning the Project and the release of any information by them shall be cleared in the first instance by the Project Manager."
Clause 24 provided:
"This Agreement is personal to the parties hereto and the benefit of it may not be assigned by either party without the consequent (sic) of the other."
I assume that "consequent" should read "consent".
The question which arises is whether Mrs Neilson is able to take the benefit of that part of Mr Neilson's contract with OPC relating to accommodation maintained in a reasonably fit condition for use as a residence in order to maintain a claim against OPC. In response to the plea made, OPC pleads by par 10 of the amended defence and counterclaim:
"Save to admit that at all material times the female plaintiff was a party expressly acknowledged by the defendant as being a member of the male plaintiff's family who would be travelling with him to Wuhan, and the Defendant denies the allegations pleaded in paragraph 10 of the Statement of Claim."
The rules of privity of contract exclude the claim
The question is whether the operation of the normal rules of privity of contract would appear to exclude the claim: Tweddle v Atkinson (1861) 1 B & S 393; 121 ER 762 per Wightman J at 397.
Mrs Neilson's counsel, Mr Staude, argued that the rule must now be seen in light of Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107.
However, that case is not authority for a general abandonment or relaxation of the normal privity rule. In any event the issue has since been further considered by the High Court in a case which has some similarity with the present.
In Jones v Bartlett (2000) 205 CLR 166 the question at issue was whether the son of tenants of a house who sustained injuries, when he accidentally walked into an internal glass door, could recover damages from the landlord by breach of an implied contractual term. There were other issues in the case. In dealing with the contractual claim, Gummow and Hayne JJ held at 205:
"Moreover, the appellant was not a party to the lease and hence was not privy to it. No exceptions or qualifications of the kind considered in Trident General Insurance Co Ltd v McNiece Bros (1988) 165 CLR 107 apply. Nor could the appellant bring himself within s 11 of the Property Law Act 1969 (WA). …"
The reference in Jones v Bartlett to the Property Law Act 1968 (WA) is relevant to the provisions of the Property Law Act 1958 (Vic) s 56. This Act, if relevant, governs the contract. Section 56 provides:
"(1)A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although he is not named as a party to the conveyance or other instrument.
(2)A deed between parties, to effect its objects, shall have the effect of an indenture though not intended or expressed to be an indenture."
The provisions of the Property Law Act 1969 (WA) s 11 are wider than those of the Property Law Act (Vic) s 56. In Jones v Bartlett, it was accepted by Gaudron J (and by Gummow and Hayne JJ) that s 11 (and as I hold, the Property Law Act (Vic) s 56) was amended and was only intended:
"… 'to sweep away the old common law rule that in an indenture inter partes the covenantee must be named as a party to the indenture to take the benefit of an immediate grant or the benefit of a covenant'. …": Beswick v Beswick [1968] AC 58 per Lord Upjohn at 102.
The High Court has therefore adopted a restricted view of the Property Law Act (WA) s 11. It is reasonable to assume that the High Court would adopt a similarly restricted view in respect of the Property Law Act (Vic) s 56.
Section 56(1) of the Property Law Act (Vic) reproduces the Law of Property Act 1925 (UK) s 56. That section has received considerable judicial consideration in the United Kingdom culminating in Beswick v Beswick. The House declined to give s 56 an interpretation which would have effected a fundamental change to the law subverting the principles as set out in Tweddle v Atkinson. Their Lordships held that s 56 should be confined to contracts relating to an interest in land.
In the present case, the contract of employment between Mr Neilson and OPC, does not give rise to any interest in land by Mr Neilson. All that arose was a right to be accommodated. In these circumstances, the Property Law Act (Vic) s 56 is of no effect.
The general law of privity insofar as it relates to the present contract of employment is not otherwise displaced by any authority and I hold that Mrs Neilson is unable to take the benefit of any contract entered into between Mr Neilson and OPC.
There is no separate contract
The contract, as set out in cl 20 and cl 21, purports to place obligations on the consultant's family - in this case Mrs Neilson. Other provisions which might impose obligations are cl 12(b), cl 13(a), cl 15 and Schedule Five.
I have briefly considered whether these terms constitute an agreement between OPC and Mrs Neilson, the consideration of which is, on her part, performance of the conditions imposed on her, and on the part of OPC, provision of accommodation with an implied term that it would be maintained in a reasonably fit condition for use as a residence.
There are indications in some of the judgments, see: New Zealand Shipping Co Ltd v A M Satterwaite & Co Ltd (The Eurymedon) [1975] AC 154 and in Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (The New York Star) (1978) 139 CLR 231 that such an approach might find favour. If such an agreement is found, questions of privity do not arise and the exercise becomes one of construction of the contract which has been discerned.
In the present case, I do not consider the pleadings by par 10 support such an argument. I have no relevant facts beyond those I have set out, including the terms of Mr Neilson's contract. No party has advanced argument on this question. For these reasons, I do not examine this issue further. I note that the contract purports to place obligations upon Mrs Neilson. Nevertheless, I do not consider those obligations are enforceable, evince any intention to create legal relations between OPC and Mrs Neilson, or in any way make her a party to the contract between Mr Neilson and OPA.
The effect of the Accident Compensation Act 1985 (Vic)
As explained elsewhere in this judgment, I find that the accident to Mrs Neilson did not arise out of or in the course of her employment. It is strictly unnecessary to consider then the effect of the Accident Compensation Act 1985 (Vic). However, this was in issue between the parties so I will resolve it. I do so on the assumption, contrary to what I have held, that Mrs Neilson was a worker who suffered significant injury.
The Accident Compensation Act 1985 (Vic) has evolved and crucial sections affecting rights have undergone significant change.
The Accident Compensation Act s 135B(2) applied to injuries before 1 December 1992 and provided relevantly that a worker who may be entitled to compensation in respect of an injury arising before 1 December 1992, shall not recover damages except in accordance with s 135 and s 135A. Section 135(1) provided at the relevant time, that a worker who is entitled to compensation in respect of an injury arising out of or in the course or due to the nature of employment shall not, in proceedings in respect of the injury, recover any damages except in circumstances not presently relevant.
Section 135A preserved the right to recover damages for a work‑related injury if the employment was a significant contributing factor and the injury was a serious injury.
The maximum amount of damages which might be awarded for pecuniary and non‑pecuniary losses are set.
In the present case, I have no doubt that Mrs Neilson suffered a serious injury and that damages for non‑pecuniary loss exceed the maximum if calculated. However, by s 135A(4), in the absence of a determination by the authority, action was precluded unless a court, on the application of the worker, gave leave to bring the proceedings. No leave has been given.
If the accident had arisen out of or in the course of or due to the nature of Mrs Neilson's employment therefore, this action would be incompetent.
Conclusion on contract claim
Mrs Neilson's claims for breach of contract, however arising, must be dismissed. Even if she had succeeded in establishing the contract for which she contends, the Accident Compensation Act 1985 (Vic) would bar her claim.
The claim for delict
Mr and Mrs Neilson plead that OPC was the occupier of the premises in which they resided in Wuhan, had the immediate control of the premises and had the ability to have repairs and modifications made as were necessary to make them safe and habitable. It is pleaded by pars 16 and 17:
"16.Further by reason of the Plaintiffs at the invitation of the Defendant taking up employment in Wuhan and in consideration of the Plaintiff travelling to Wuhan and taking up residence in accommodation provided or arranged by the Defendant the Defendant implicitly warranted that any residential accommodation provided for them would be reasonably safe and not contain any latent traps.
17.Further by reason of the Defendant:-
(a)having engaged the Plaintiffs in Australia to travel to China to take up employment therein;
(b)having undertaken to provide accommodation for them whilst they were residing at the Wuhan Iron and Steel University in China for the purposes of the Defendant's Project -
the Defendant was under duties in tort or delict or independently of any contract to take reasonable care for the safety of the Plaintiffs as residents in a foreign country inter alia by providing safe and suitable residential accommodation for them in that if the accommodation provided was unsuitable and unsafe the plaintiffs in consequence may suffer injury or contract disease.
18.The residential premises provided by the Defendant to the Plaintiff were not reasonably safe or habitable as the Defendant knew or if it had inspected the premises adequately and properly would have known. …"
OPC makes various responses, one of which is to assert by par 15:
"…
(a)the premises were occupied, managed and controlled solely by the Chinese authorities;
(b)the Chinese authorities made all repairs to the premises; and
(c)no repairs could be made to the premises until after they were negotiated with the local Chinese authorities."
The choice of law for the claim in tort: Australia or China
OPC also raises the question the law to be applied by par 29(b) of the amended defence which reads:
"(1)is not actionable under the law of Wuhan, China, according to which:
(A)liability in respect of injuries sustained in relation to buildings is only against the owner, controller or manager of the building, of which the defendant was none, and then only in respect of injuries caused by the collapse of the building or by objects falling or coming loose from the building, of which neither is alleged by the plaintiffs; and
Particulars
The defendant relies upon Articles 122 and 126 of the General Principles of Civil Law of the Peoples Republic of China adopted at the 4th Conference of the 3rd National People's Congress on 12 April 1986 with effect from 1 January 1987 (General Principles).
(B)in any event, as a matter of substantive law of Wuhan, China, the limitation period for:
(i)protection of civil rights is 2 years from the date of the injuries being sustained; and
Particulars
The defendant relies upon Article 135 of the General Principles.
(ii)personal injuries is 1 year from the date of the injuries being sustained.
Particulars
The defendant relies upon Article 136 of the General Principles.
(C)in any event, the maximum damages for any claim assessed in accordance with the law of Wuhan, China, is an allowance being the total of:
(i)actual medical expenses and disbursements incurred whilst the victim was in intensive medical treatment;
(ii)a lump sum payment for estimated necessary ongoing medication and medical attention;
(iii)100% of the victim's lost salary for the period that the victim was in intensive medical treatment; and
(iv)a lump sum payment for lost future earning assessed at the average local rate from the end of the period that the victim was in intensive medical treatment until the victim attains the retirement age.
Particulars
The defendant relies upon Article 119 of the General Principles and Articles 143, 144, 145 and 146 of the Opinion of the Supreme People's Court of Implementation of the General Principles of Civil Law of the People's Republic of China published in 1988. …"
Mr and Mrs Neilson are Western Australian citizens and have regularly invoked the jurisdiction of the Supreme Court of Western Australia to have their claims determined. It is trite but useful to acknowledge therefore that I am exercising Western Australian jurisdiction at all times, including Federal jurisdiction conferred on the Supreme Court by the Judiciary Act s 39, because the suit is between residents of different States. In the exercise of my jurisdiction, however, I must determine the proper choice of law to apply to the different claims made by the parties. I have already determined that the proper law governing the contract between Mr Neilson and OPC is the law of Victoria. I now turn to the choice of law which governs the claim for delict.
The question to be determined is whether to apply Australian law or the law of the People's Republic of China to the facts.
In John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 the High Court laid down new rules governing how a claim in tort brought in the courts of one Australian jurisdiction should be determined when some or all of the relevant facts occurred in another Australian jurisdiction. The High Court swept away rules encrusted upon Phillips v Eyre [1870] LR 6 QB 1 and established a new test for Australia.
At par 102, the majority stated the test as follows:
"The lex loci delicti should be applied by courts in Australia as the law governing all questions of substance to be determined in a proceeding arising from an intra national tort. And laws that bear upon the existence, extent or enforceability of remedies, rights and obligations should be characterised as substantive and not as procedural laws."
In Regie National des Usines Renault SA v Zhang [2002] HCA 10; (2002) 76 ALJR 551 the Court expressly extended the principle to foreign torts.
At par 75 and 76 the majority, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said:
75.The submission by the Renault companies is that the reasoning and conclusion in Pfeiffer that the substantive law for the determination of rights and liabilities in respect of intra-Australian torts is the lex loci delicti should be extended to foreign torts, despite the absence of the significant factor of federal considerations, and that this should be without the addition of any 'flexible exception'. That submission should be accepted.
76.To that outcome, several caveats should be entered. In Pfeiffer, reference is made to the difficulty in identifying a unifying principle which assists in making the distinction, in this universe of discourse, between questions of substance and those of procedure. The conclusion was reached that the application of limitation periods should continue to be governed by the lex loci delicti and, secondly, that Pfeiffer (2000) 203 CLR 503 at 544:
'all questions about the kinds of damage, or amount of damages that may be recovered, would likewise be treated as substantive issues governed by the lex loci delicti.' (original italics)
We would reserve for further consideration, as the occasion arises, whether that latter proposition should be applied in cases of foreign tort. We also would reserve for further consideration in an appropriate case the Moçambique rule (after British South Africa Company v Companhia de Moçambique [1893] AC 602) and the standing of Potter v Broken Hill Proprietary Co Ltd (1906) 3 CLR 479. Special considerations also apply to maritime torts and what Dicey calls 'aerial' torts"
The question reserved by the High Court for further consideration in the last paragraph quoted is very much alive in the present case.
Counsel for Mrs Neilson argued that the law of Australia should apply. The duty to Mrs Neilson arose within Australia. The provisions of Mr Neilson's contract allowed Mrs Neilson to stay in accommodation provided through OPC. A duty of care arose within Australia to take reasonable care to provide accommodation maintained in a reasonably fit condition for use as a residence. Necessarily, that duty extended to accommodation in China. As part of the tortious liability, if the duty of care arose in Australia, the appropriate law to apply is the common law of Australia.
In Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 the appellant manufactured a drug which contained thalidomide. The respondent's mother purchased the drug in New South Wales. There was no warning to a possible purchaser of the harmful effects on a foetus if the drug was taken by a pregnant woman.
The appellant filed a conditional appearance and applied for the writ to be set aside. When that application was dismissed, it appealed to the Privy Council whose judgment was delivered by Lord Pearson. At 468 he said:
"The defendant does not merely by behaving negligently give the plaintiff any cause for complaint in law. The plaintiff has such a cause for complaint if the defendant's negligence has caused damage to the plaintiff. In the great majority of cases the place where the defendant is negligent is the same as the place where the negligence causes damage to the plaintiff. For instance the defendant while driving his car negligently runs into and injures the plaintiff. But in some cases, particularly those in which the principle of Donoghue v Stevenson [1932] AC 562 is relied upon, there may be a separation in time and place between the negligent behaviour of the defendant and the resulting damage to the plaintiff."
In Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 the Court, Mason CJ, Deane, Dawson and Gaudron JJ at 566, quoted further from Lord Pearson's judgment in Distillers Co v Thompson where he had said:
"In a negligence case the happening of damage to the plaintiff is a necessary ingredient in the cause of action, and it is the last event completing the cause of action. But the place where it happens may be quite fortuitous and should not by itself be the sole determinant of jurisdiction."
Their Honours went on to say at 567:
"The approach formulated in Distillers does no more than lay down an approach by which there is to be ascertained, in a commonsense way, that which is required by Jackson v Spittall, namely, the place of 'the act on the part of the defendant which gives the plaintiff his cause of complaint'. That approach has particular point if, as was the case in Distillers, it is necessary to ascribe a place to an omission for the purpose of determining where, if at all, a tort was committed."
Although some of the authority of Voth may have to be reconsidered to some degree in the light of Pfeiffer and Renault, as at present advised, I consider that the approach in Distillers and Voth provides a commonsense principle with which to determine where the wrong arose. Furthermore, I am bound by Renault to apply the lex loci delicti. If OPC was delict in its duty of care to Mrs Neilson, the deliction was in Wuhan.
I find that although a duty of care arose in Australia, breach of that duty of care did not give rise to any cause for complaint until 6 October 1991 when Mrs Neilson fell down the stairs in Wuhan. That was when the wrong crystallised by the infliction of damage. Accordingly, I hold that in determining the choice of law to be applied in the resolution of Mr and Mrs Neilson's claim, the wrong or delicti substantially arose in Wuhan. Therefore the proper law to be applied in this case is the law of the People's Republic of China.
The General Principles of Civil Law of the People's Republic of China
OPC called Mr Hongliang Liu, who holds a Bachelor of Laws from Shanghai University and a Master of Laws degree from Macquarie University, to give expert evidence on the law of the People's Republic of China. He is a partner of Wyselead Law Firm in Shanghai.
Although some minor challenge was made to his qualifications and his research, I find him to be a relevantly qualified expert in Chinese law who undertook appropriate research in respect of this case.
He was an honest and impartial witness. I accept and rely in general on his opinion as to Chinese law. When he has opined about the attitude or possible approach of an Intermediate People's Court to a specific set of circumstances, I have taken his evidence into account in forming my own judgment as to how I should decide the claim on the facts I have found in accordance with the General Principles and other sources of Chinese law.
I find the relevant legislation applicable to these proceedings in Wuhan, China are the General Principles of Civil Law of the People's Republic of China adopted at the Fourth Conference of the Third National People's Congress on 12 April 1986 with effect from 1 January 1987.
The General Principles apply to foreign nationals within the territory of the People's Republic of China and would therefore cover the claim by Mr and Mrs Neilson against OPC.
In accordance with the law of civil procedure of the People's Republic of China, the Intermediate People's Court is competent to rule of major cases involving foreigners where substantial damages are claimed. Claims between 1,000,000 Yuan and 50,000,000 Yuan (approximately $A220,000 to $A11,000,000) fall within the jurisdiction of the Intermediate People's Court.
If legal proceedings are commenced in relation to an injury sustained in Wuhan, the Intermediate People's Court in Wuhan has jurisdiction to determine claims. That jurisdiction is in part dependent on whether a limitation period has expired.
Precedent does not apply
Mr Liu explained that Chinese law does not know of the doctrine of precedent. It finds its source within what we would regard as statutes. Chinese law is based on the German and the French Civil Codes with adaptations.
In this regard, I note the Code of Civil Procedure:
"Article 6. The people's courts shall exercise the right to hear civil cases.
The people's courts shall try civil cases independently in accordance with the law and shall not be subject to interference from any administrative organ, public organisation or individual.
Article 7. When hearing a civil action a people's court shall take facts as the basis of the case and the law as its criterion."
Mr Liu noted, and I accept, that the General Principles are based on fairness and justice and the courts provide fairness and justice according to law.
Remedy for physical injuries
The General Principles provide a remedy for physical injuries sustained in certain circumstances.
Article 98 provides:
"Citizens enjoy the right to life and health."
Article 106 provides:
"A citizen or legal person who violates a contract or fails to fulfil other obligations shall assume civil liability.
A citizen or legal person who through his own fault infringes upon State or collective property or upon another person, or who harms another person, shall assume civil liability. …"
Mr Liu agreed that prima facie if conduct injures another person the person causing the injury is liable under Article 106.
He pointed out that under Article 106 it is for the victim to prove fault on the part of the other person.
In certain circumstances there is what he described as "special liability". In cases of special liability, I understand that what Australian Judges might regard as the onus of proof shifts to the defendant in a manner similar to but not precisely equal with the concept of strict liability.
An example of "special liability" is Article 126 which provides:
"If a building or other installation or an object placed on or suspended from a building collapses, comes loose or falls, causing damage to another person, the owner or manager shall assume civil liability unless it can be proven he was not personally at fault."
Mr Liu was taken to a number of Opinions of the Supreme People's Court, including an opinion on the implementation on the "General Principles of Civil Law of the People's Republic of China" published in 1988.
In his evidence‑in‑chief, Mr Liu acknowledged that he read pars 17 and 21 of the statement of claim.
In Mr Liu's opinion the General Principles do not provide for such duties as those referred to in the statement of claim. Chinese law does not provide a duty to avoid physical harm to another person in the circumstances of Mrs Neilson. Although OPC arranged for the provision of accommodation for Mr and Mrs Neilson, OPC does not, by doing so, attract to itself a duty of care under Chinese law as might be the case under Australian law. Under Chinese law there is no law of negligence as understood in Australia. For a person to have a claim under Chinese law that person must be able to rely on a provision of the General Principles or other legislation.
In my judgment, although Chinese law does not recognise the concept of negligence, it does recognise the concept of harm caused to another person and if Mrs Neilson is able to bring herself within Article 106 by establishing that the actions or omissions of OPC caused harm to her, then OPC would assume civil liability.
Under Article 106, Mrs Neilson must prove that OPC's failure to provide a balustrade was the cause of her harm.
Other cases and opinions offer guidance
Although Chinese law does not follow the doctrine of precedent as is understood in the common law, nevertheless, it does appear that other cases may provide guidelines. There is a small body of reported judicial opinions. In an article by Dr Kui‑Hua Wang and Dr Danuta Mendelson entitled "An overview of liability and compensation for personal injury in China under the General Principles of Civil Law" reported in 1996, 4 Torts Law Journal 136, the authors note at 141:
"In appearance, the Chinese legal system is like the civil law system because creative law‑making tends to be undertaken by the legislature. Chinese judges are forbidden to make doctrinal comments on the codes, or to follow judge-made precedents as is the case in common law jurisdictions. … This means, for example, that in the area of the law of torts, the Chines judges are expected to apply legislatively imposed normative standards for reasonable conduct pertaining to private and public relationships. Their role in personal injury litigation is to conclusively settle controversies relating to existing rights or obligations between private parties, or the state and a private party, and, if appropriate, to determine the amount of compensation. But at least in theory, the Chinese judges have now power to create a body of normative rules of reasonable conduct that would be legally enforceable. Therefore, in China, the primary role of the law of torts is compensatory rather than normative."
Chinese law is based in part on French and German Civil Codes. It is appropriate to apply the continental theory of adequate cause (theorie de adaquaten verusachtung). As described by Hart & Honoré in "Causation in the Law" 2nd ed, Clarenden Press, Oxford 1985:
"… For a condition to be regarded as the adequate cause of harm 'it must have raised the objective probability of the harm to a not inconsiderable extent, taking account of
(1)all those circumstances which a very perceptive observer would have noticed at the time the condition was set, and
(2)circumstances actually then known to the person who sets the condition.
In reaching a conclusion regard is to be had to all laws and teachings of experience known at the time of judgment."
One problem which arises in respect of the General Principles of Civil Law is their very generality. The Judicial Committee of the Supreme People's Court has therefore issued an opinion on questions concerning the implementation of the General Principles: "Circular of the Supreme People's Court" dated 2 April 1998. This opinion can also be taken into account by me.
In "An overview of liability …" the authors refer, amongst others, to a number of cases reported in the bulletin of the Supreme People's Court of the People's Republic of China. I am able to refer to these cases as a guide on the application of Article 106 to the facts I have found even if, as I acknowledge, they have no precedental value. I regard them as "teachings of experience".
The first case is Zhang Lian‑qi and Zhang Guo‑li v Zhang Xue‑zheng (1989) Bulletin of the Supreme People's Court of the People's Republic of China. This was a case of an employer's liability. The defendant was a sub‑contractor engaged to demolish an old building. He employed the deceased on a casual basis and directed him to work on the roof while failing to ensure that the supporting beams were in safe condition. The worker suffered serious injury when a cross‑beam cracked and he fell from the roof of the building. He subsequently died and his family sued for expenses and loss of their major financial support. The court found that the defendant employer was at fault when he became aware of the danger created by insecure foundations. The defendant employer should have stopped the demolition process until the danger was eliminated. By continuing the demolition in disregard of the risk posed by the insecure beam, he failed to provide a safe system of work for the employee.
In Wang Liefeng v Road Authority of Qianyang County (1990) 2 Bulletin of the Supreme People's Court of the People's Republic of China the plaintiff's husband was riding his bicycle on the way home from work along a street when he was struck by the trunk of a dead tree. It was a very windy day and the dead tree on the side of the road fell suddenly and hit him on the head. The court found that the defendant Road Authority was aware that the trees on the relevant stretch of road were seriously damaged and unsafe. Some trees had been dead for three years, yet they had not been chopped down or uprooted and removed by the Road Authority. Apparently, a superior government body had instructed the Road Authority to cut down the dead trees on the road sides. However, no positive action was taken. The District People's Court found the defendant Road Authority liable and the case was appealed to the Intermediate People's Court. The defendant Road Authority argued that the findings of the lower court should be overruled on the ground that it was not at fault in causing the deceased's death. The failure to comply with the superior government's instructions to remove the dead trees was due to a conflict that existed between it and the local villagers who lived close to the road side. Since the conflict between the parties caused the delay in acting upon the instruction, the local villagers should be ordered to undertake partial liability. The Intermediate People's Court did not find these arguments persuasive and dismissed the appeal.
The third case which I examined, and which I find helpful, is Ma Xu v Li Ying & Liang Jin (1996) 1 Bulletin of the Supreme People's Court of the People's Republic of China. This involved an incident in January 1993. While in the playground a 9‑year‑old girl Li Ying attempted to light a fire cracker which she was carrying. Liang Jin, who was 13 at the time, came to help her. Having discovered that the fuse from the fire cracker was missing, he approached a third person for a small fire cracker that could be used as a fuse. The third party apparently complied with the request. After lighting the fire cracker Liang Jin warned the 9‑year‑old Ma Xu who was standing nearby to move away. Ma Xu did not heed the warning and tried instead to discover what was happening. The fire cracker exploded in Li Ying's hand, injuring Ma Xu's eye. Expert medical witnesses testified that the plaintiff's eye was seriously injured as a result of which he lost most of his vision. The representative of the first defendant Li Ying disclaimed responsibility and consequent liability for the injury, arguing that she only held the fire cracker. She neither lit it nor threw it at Ma Xu. The second defendant Liang Jin argued that the fire cracker was provided by Li Ying, the first defendant, and the fuse for lighting the fire cracker was provided by a third person. Both defendants alleged that Ma Xu was warned to stay away from the fire cracker, yet he insisted to come closer so as to have a better look at what was happening. The defendants argued that there were a number of causes of the plaintiff's injury and the third party should have been added as another party.
The court determined that the main cause of the plaintiff's injury was bringing the fire cracker into the playground by the first defendant. Liang Jin's action of lighting the fire cracker constituted the second cause. The court said that the person who provided the small cracker was not the cause of the plaintiff's injury and therefore it was not reasonable to add that third party as another defendant in the proceedings. In accordance with Article 98 and Article 119, both defendants had to assume civil liability.
I observe that this case seems in part to reflect the common law position on liability for a wrong: see Scott v Shepherd (1773) 2 WBL 892; 96 ER 626. Chinese law, fortunately is not troubled by the distinctions between trespass and case.
I now come to apply Article 106 to the facts as I have found them. The People's Republic of China assumed responsibility to build and to maintain the units within the Australian compound including Unit 2. OPC assumed responsibility to Mr Neilson to provide accommodation maintained in a reasonably fit condition for use as a residence. It was clearly in contemplation and known to OPC that Mrs Neilson would be living in the accommodation. There was nowhere else really suitable for her as the whole purpose of her going to Wuhan was to be with her husband. Dr Fargher's evidence about his general experience with accommodation in China bears this out. OPC knew the lack of a balustrade was dangerous. OPC, through Dr Fargher, had raised this with Professor Shen. A balustrade could have been erected easily. In fact, eventually a small balustrade was erected which overcame the danger. I conclude that OPC was at fault in allowing Mr and Mrs Neilson to continue to live in the apartment which had this inherent danger. The fact that the Chinese authorities may have been able to fix the problem does not assist OPC. I make no finding as to fault on the part of the Chinese authorities and it would be unfair to do so. They are not party to these proceedings. The fault was known to OPC who might have fixed it, or had it fixed, but did not. OPC arranged for the dangerous electricity supply to be fixed, albeit by informal means. It did not do so for the balustrade.
I take guidance from principles of fairness and justice and take note of the factual situations outlined in the three cases to which I have referred. I take account of Mr Liu's views as to how the Intermediate People's Court might approach the facts. I doubt whether Mr Liu's expertise can extend to an opinion on this issue but I weigh his opinion nevertheless. My conclusion is that OPC has caused harm to Mrs Neilson by allowing her to live in a unit with an obvious danger. OPC failed to rectify the danger. OPC's fault has harmed Mrs Neilson and it is proper that it shall assume civil liability, unless relieved from so doing by any limitation period or for other reasons. Assumption of civil liability by Article 134 includes eliminating the danger and compensation for danger.
The measure of damages under the General Principles as guided by the Opinion of Supreme People's Court
Article 119 provides:
"In the case of violation of a citizen's person causing bodily injury, compensation shall be paid for medical costs, reduced income due to time off work and the living allowance of a disabled person, etc …"
The Opinion of the People's Supreme Court provides important guidance. The Opinion of the Supreme People's Court on Implementation of the General Principles of Civil Law of the People's Republic of China provides:
"143The period of the delay of work incurred by the victim shall be established according to the actual degree of injury and recovery status of the victim and with reference to the certificate issued by the treating hospital or appraisal rendered by a legal medical expert in respect of the victim. The compensation amount may be calculated at a standard based upon the victim's salary or his actual income amount
144.The compensation for medicine and treatment fee shall be subject to the diagnosis and the documents of medicine and in‑hospital fees issued by the local treating hospital. In principle, the fee, which needs prior approval by the medical affairs authority, yet to be obtained and arises as a result of the victim's unilateral turn to another hospital for treatment, shall not be compensated. The amount the victim pays for the medicine, which is non‑related to the injury or is for the treatment of other disease, shall not be compensated.
145.The fee compensated for the delay of work of a person who has been approved by a hospital to be engaged in nursing may be calculated as a part of the actual loss of his income. In case of no wage income, the compensation standard shall be limited to the wage standard of a normal local casual labourer.
146.For a person who loses all or part of his labour ability due to a body damage, the compensation of the living allowance shall normally be made up to the standard of not lower than the basic living cost of the local residents."
Under Article 119 of the General Principles, there is no right for an injured party to claim damages for pain and suffering. Compensation is confined to a direct loss, though that loss includes loss of earning capacity.
An award of compensation under Chinese law would therefore be less in most cases than an award of damages under Australian law. As Mr Liu has explained, Chinese law does not recognise the concept of damages for non‑pecuniary loss.
Mr Hongliang Liu gave evidence in respect of these principles:
"According to the above principles, the injured shall be compensated basically under three categories, which are medical cost, loss of income and the living allowance.
A Chinese court would assess the medical costs to include all medical expenses relevant to the injury incurred, to Mrs Neilson during the period of the intensive treatment in hospital and further treatment afterward.
The basic proof for such expenses is the hospital's invoice.
This would include hospital fees and the costs associated of transferring from one hospital to another, unless such transfer was not necessary and was not consented by the first hospital.
The medical expenses incurred after a victim has completed the period of intensive treatment in the hospitals would also be allowed by a Chinese court, provided there is the medical proof indicating that such expenses are related to the treatment of the injury.
A Chinese court would assess a victim's loss of income based on the victim's income immediately before the injury and calculated for the period that the victim was prevented by their injuries from working. This covers the period when the victim is unable to work at all, and also covers the period where a doctor advises that diminished work is required.
There is no specific assessment for diminished capacity to work under Chinese law, but in practice, a Chinese court may consider medical evidence when calculating total loss."
The cost of transferring Mrs Neilson from Wuhan to Australia was necessary and was consented to by Tongji University Hospital as appears from the discharge summary referred to earlier in this judgment.
I am satisfied that the damage occurred as a direct result of the negligence of OPC. For the reasons also expressed, I do not consider that Mrs Neilson contributed in any way to that damage.
OPC caused Unit 2 to be occupied by Mrs Neilson in the knowledge of an obvious danger. There was a foreseeable risk of harm to Mr and Mrs Neilson which could have been easily averted. Mrs Neilson did not contribute to the harm by her neglect. In the circumstances, OPC has breached its duty of care to Mr and Mrs Neilson and is liable in damages in the sum of $300,000.
The first third party's claim
OPC having become liable to pay compensation to Mrs Neilson for personal injury, it is now necessary to examine its claim against MMI.
MMI is an insurance company which insured OPC under policy no 41P690349BPK. That policy was in force from 28 October 1990 to 28 October 1991. The policy provided in sub‑policy (f) cl 2, the definition of "territorial limits" as follows:
"COVERAGE
We will indemnify You for Compensation which You shall become legally liable to pay by reason of liability imposed on You by law in respect of:
2.1Personal Injury
2.2Property Damage
occurring within the Territorial Limits during the Period of Insurance as a result of an Occurrence happening in connection with the Business as described in the Certificate."
The policy defines "TERRITORIAL LIMITS" as:
"Anywhere in the world except …
1.7.4premises or operations outside Australia other than the presence outside Australia of any person who is normally resident in Australia and was not a manual worker or supervisor of work;"
It is common ground that Mrs Neilson was not a manual worker or supervisor of work. The question of fact to be decided is whether Mrs Neilson could be described as "normally resident in Australia". If she can then the policy is within the territorial limits so that the policy applies to OPC's advantage.
The phrase "normally resident in Australia"
The parties agree that the terms "normally resident" and "ordinarily resident" mean the same thing and are interchangeable.
Considerable help in the construction of this phrase can be derived from cases involving statutes. Ultimately, however, whether a person is "normally resident in Australia" is a matter of fact to be determined in all the circumstances.
In Levene v Commissioners of Inland Revenue [1928] AC 217 the House of Lords considered the case of a person who left England under medical advice with the intention of living abroad but returned to the United Kingdom for a period of about 5 months each year to obtain medical advice, visit his relatives, take part in certain religious observances and deal with his income tax affairs. Viscount Cave noted in the course of his speech at 223:
"But a man may reside in more than one place. Just as a man may have two homes - one in London and the other in the country - so he may have a home abroad and a home in the United Kingdom, and in that case he is held to reside in both places and to be chargeable with tax in this country."
Mr Wallace, who appeared for the first third party, drew attention to a further passage in Viscount Cave's speech at 225 where he said:
"The expression 'ordinary residence' is found in the Income Tax Act of 1806 and occurs again and again in the later Income Tax Acts, where it is contrasted with usual or occasional or temporary residence; and I think that it connotes residence in a place with some degree of continuity and apart from accidental or temporary absences."
His Lordship was however at this point contrasting the term "ordinary residence" with "usual", "occasional" or "temporary residence". Lord Warrington of Clyffe (at 232) took the view that the expression "ordinarily resident" had no technical or special meaning and that it was impossible to restrict its connotation to its duration:
"If it has any definite meaning I should say it means according to the way in which a man's life is usually ordered."
Mr Wallace, for the first third party, puts considerable store on Akbarali v The Brent London Borough Council [1983] 2 AC 309. The leading judgment was given by Lord Scarman. After a review of the authorities, Lord Scarman concluded at 343:
"Unless, therefore, it can be shown that the statutory framework or the legal context in which the words are used requires a different meaning, I unhesitatingly subscribe to the view that 'ordinarily resident' refers to a man's abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or of long duration."
Lord Scarman then considered two respects in which the mind of a propositus is important in determining ordinary residence. In respect of the second he said at 344:
"And there must be a degree of settled purpose. The purpose may be one; or there may be several. It may be specific or general. All that the law requires is that there is a settled purpose. This is not to say that the 'propositus' intends to stay where he is indefinitely; indeed his purpose, while settled, may be for a limited period. Education, business or profession, employment, health, family, or merely love of the place spring to mind as common reasons for a choice of regular abode. And there may well be many others. All that is necessary is that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled."
Mr Wallace argues that Mrs Neilson's position fits neatly within Lord Scarman's words. She moved to Wuhan to work with her husband and had resided there in accommodation specifically provided by OPC for a settled purpose for 14 months prior to her accident and she intended to remain for the full two years. There was a sufficient degree of continuity for her to be properly described as settled and accordingly at the time of the accident she was not "normally resident in Australia".
As pointed out, Lord Scarman in adopting the "settled purpose" test, rejected a submission that the "real home test" should apply, noting that the test was wholly inconsistent with the natural and ordinary meaning of the words as construed by the House of Lords in two earlier cases and was an unhappy echo of "domicile".
In Australia, the position has been considered many times, particularly within the context of bankruptcy.
In Re Vassis; Ex parte Leung (1985) 64 ALR 407, Burchett J noted at 413:
"The question where a person is ordinarily resident is a question of fact: Levene v IRC [1928] AC 217. It is obviously not to be answered, in respect of any particular time, by asking where that person was then resident. Otherwise, the word 'ordinarily' would have no meaning."
With respect, I agree. Questions as to whether a person is "ordinarily" or "normally resident" in one place will generally arise when a case can be maintained that they are also resident in another place. In such a case it may be that the person is resident, that is situate and living in one place while being ordinarily resident in another. It may also be that a person can be resident in more than one place at the same time.
After considering Lord Scarman's comments in Akbarali which I have quoted above, Burchett J held that the debtor was "ordinarily resident in Australia". He paid considerable regard to the contents of the departing passenger's card which the debtor had completed. In referring to the debtor's evidence he said, at 414:
"His own evidence, to which I have referred, clearly indicates that he regarded his journey overseas, desperate flight though it was, as no more than a temporary interruption of his ordinary residence in Victoria. I do not think the law requires it to be regarded in any different light. It may be compared, for example, to an absence overseas by a Melbourne university lecturer upon sabbatical leave at Athens University who would, in my opinion, still be correctly described as ordinarily resident in Australia if at the conclusion of his sabbatical leave he intended to resume life here."
It is tempting to elevate Burchett J's comments about a university lecturer into a persuasive statement of principle because of the similarity with the present facts. However, Burchett J was merely using the example as an illustration.
In Re Taylor; Ex parte Natwest Australia Bank Ltd (1992) 37 FCR 194, Lockhart J considered the expression "ordinarily resident" in the context of a bankruptcy petition. Lockhart J referred to Re Vassis; Ex parte Leung, Levene and Akbarali before noting, in accordance with all the authorities, that the words have no technical or special meaning, they are ordinary English words and the question is one of fact and degree.
At 198 Lockhart J said:
"To say that a person is ordinarily resident in Australia must mean something more than that he is resident in Australia. The word 'ordinarily' connotes a comparison, a measure of degree. A person may have more than one residence, but he is not necessarily ordinarily resident in each of them. The question must be determined for the purposes of s 43 of the Act at a particular time. One must ask the question whether at that time the person was ordinarily resident in Australia. The concept of 'ordinary residence' for the purposes of the Act, in my opinion, connotes a place where in the ordinary course of a person's life he regularly or customarily lives. There must be some element of permanence, to be contrasted with a place where he stays only casually or intermittently. The expression 'ordinarily resident in' connotes some habit of life, and is to be contrasted with temporary or occasional residence: …
Most people, if asked where they were ordinarily resident at a particular time, would name but one place: their home, because that would be the only place in which they normally or customarily live, although they may travel to other places on holidays or business intermittently. Other people may have two or more houses or flats and stay for various purposes and varying lengths of time in each. It may, depending on the circumstances, be permissible to say that at a particular time they are ordinarily resident in each of the places, though they may be at that time physically present somewhere else. This point is made in many of the reported cases, including the judgment of the House of Lords in Barnet London Borough Council (supra), especially per Lord Scarman (at 342‑348); but I must express a reservation about one passage from his Lordship's judgment (at 342) where he said:
'I note that in the 19th century bankruptcy case Re Norris (1888) 4 TLR 452 it was accepted that one person could be ordinarily resident in two countries at the same time'."
Lockhart J went on to distinguish this situation by virtue of the difference between the English and the Australian bankruptcy legislation.
The Neilsons' links with Australia
I find the following facts.
Mr and Mrs Neilson were born in the United Kingdom, Mr Neilson in Scotland and Mrs Neilson in England, although she moved north soon afterwards.
They emigrated to Western Australia in 1970 and became Australian citizens in 1975. They have four children. They purchased a home at 159 Stoneham Road, Attadale, where they have lived for 22 years. They also own a beach house near Yanchep.
Each of them is enrolled and entitled to vote in Federal and State elections and they continued to be so entitled during the period they were in China. Indeed, Mrs Neilson recounted how they received a query in 1991 from the Electoral Commission for failing to vote in a referendum about daylight saving.
Each maintained a bank account in Western Australia with the then R & I Bank, probably in the branch at Applecross. While in China, each of them was paid by OPC in Australian funds deposited into a bank account in Western Australia.
Mr and Mrs Neilson left their motor vehicle in Western Australia. While they took with them household items such as sheets, crockery, towels and the like, the majority of their furniture was left in Western Australia, either in storage, or in the house which was rented out for the period they were away. OPC gave Mr Neilson an allowance for storage which he used.
Mrs Neilson resigned her employment with the Education Department. Mr Neilson took two years' secondment from his duties as a lecturer in TAFE. He was employed as a consultant with OPC in Wuhan for a two year period and it was at all time understood that the contract was for a limited and definite period.
Mr Neilson had previously worked overseas in Indonesia and Singapore and on each occasion his wife accompanied him. Neither Mr nor Mrs Neilson owned land in China. It was Mr Neilson's intention that he would return to Perth after the contractual two year period and resume normal life in Perth. He had no intention of continuing to teach in China.
Wuhan was, in Mr Neilson's opinion, a very difficult city to live in and the Australian Embassy suggested that they try and get out of China three times a years, which they did. Mr Neilson's contract expressly provided for this eventuality. Mr Neilson travelled on a green passport. Mrs Neilson considers that Australia is a lovely country. She wished to make her home here and continue to live here. She calls Australia home. She regarded the accommodation in Wuhan as a temporary home, a home away from home, for only so long as she was in China.
Conclusion
From a review of the authorities, both those to which I have specifically made mention and others, it appears the following relevant principles emerge:
1.The expression "normally resident in Australia" is to be given its ordinary and natural meaning.
2.The issue is one of fact and degree in every case.
3.A person may be resident in more than one place at one time.
4.Evidence of normal residence may include:
(i)the settled purpose;
(ii)a declaration made on an outgoing passenger card;
(iii)the nature of work;
(iv)whether a person owns a dwelling that they regard as home;
(v)citizenship and passport;
(vi)whether a person remains on an electoral roll;
(vii)the length of time a person intends to be beyond Australia;
(viii)the place of payment of salary;
(ix)any visa restrictions in the country in which the person is residing;
(x)a person's intentions for future residence, whether in Australia or elsewhere.
None of these matters by themselves may be conclusive evidence of residence. In the present case, having regard to the facts that I have earlier set out in this judgment and applying the law I have just referred to, I conclude that on 6 October 1991, Mrs Neilson was a person who is correctly described as "normally resident in Australia". Her purpose in China was a limited purpose which was to accompany her husband to Wuhan and to work part‑time. Her normal residence was in Attadale, a place to which she intended to return at the conclusion of the two year period. Her obligations, such as the requirement to vote and the requirement to pay income tax remained and were accepted by her as Australian obligations.
As a result of this finding, I hold that the first third party is unable to rely on the territorial limit contained in the policy because at the time of the event, the claim did not fall outside the territorial limits of the policy.
Arising out of or in the course of employment
MMI resists also the claim on the basis that the event was one in respect of which MMI has exempted from coverage because the accident arose out of or in the course of employment.
"SECTION (A) - PUBLIC LIABILITY" provides coverage as follows:
"2.COVERAGE
We will indemnify you for compensation which You shall become legally liable to pay by reason of liability imposed on You by law in respect of:
2.1personal injury
…
occurring within the Territorial Limits during the Period of Insurance as a result of an Occurrence happening in connection with the Business as described in the Certificate."
Clause 4 is headed:
"EXCLUSIONS PARTICULAR TO SECTION A PUBLIC LIABILITY
4.1…
4.2Personal injury to any person
4.2.1arising out of or in the course of employment of such person by You;
…"
The contract of insurance was entered into in Victoria between OPC and MMI. It is necessary for me to apply the law of Victoria to the issue.
Mrs Neilson's contract of employment contained no express or implied term of residence. The issue therefore falls to be considered on the following facts which I have previously found:
1.Mrs Neilson was employed on a part‑time basis of 20 hours a week as personal assistant to the Centre's Australian Director;
2.All her work was performed at the Centre;
3.There was no requirement for after hours work and, except for one occasion when a fax had to be sent, no after hours work was ever sought or done;
4.Access to the Centre out of hours was not possible, the building being locked after hours and on weekends;
5.The accident occurred in what might be described as domestic circumstances unrelated to normal work when Mrs Neilson was fetching herself a drink of water.
In certain circumstances, despite the domestic or leisure activity being performed at the time of the accident being apparently unrelated to work, there may nevertheless exist a sufficient nexus with employment so as to regard the accident as arising out of or in the course of employment.
Before looking at the cases, I will briefly examine a submission made by Mr Staude for Mr and Mrs Neilson advancing an aspect of their case. The Accident Compensation Act 1985 (Vic) deems certain activities to be arising out of or in the course of employment: s 83. Those circumstances do not appear to extend to accidents occurring in residences where a worker is required to live for the purposes of employment. It is unnecessary to further explore this aspect, however, because in my opinion the Accident Compensation Act is irrelevant to the third party proceedings.
Although many of the cases which examine the phrase "arising out of or in the course of employment" do so in the context of workers compensation provisions, in the present case the words appear in a policy of insurance and as an exclusion to that policy. The cases are therefore useful insofar as they throw light on the meaning of the expression, but actual statutory provisions and limitations do not affect the construction of the contract.
The leading cases on the interpretation of the expression are Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 and Hatzimanolis v ANI Corporation Ltd (1991-1992) 173 CLR 473.
At 536 in Danvers v Commissioner for Railways (NSW) Barwick CJ said:
"Thus it may include being at a place at which the workman's presence 'is so consequential upon or incidental or ancillary to the employment that in being there he is doing something in virtue, or in pursuance, of his employment'. In applying such a statement to the facts and circumstances of a particular case, its elements, in my opinion, should be applied liberally and practically. Therefore, in relation to injuries occurring to workmen living in temporary accommodation provided by the employer at or near the place of employment, the liability of the employer cannot be determined, in my opinion, simply by deciding whether or not the employee was contractually bound to live in the accommodation so provided. Nor is it enough, in my opinion, to exclude the use of the employer‑provided accommodation from the course of the employment to establish that there was other accommodation of some kind available in the vicinity of the place of work. Of course, if the use of the employer's accommodation is the result of a real choice made by the employee as between that accommodation and other accommodation of a suitable kind which it would be practicable in all the circumstances for the employee to use, it may well be said that the result of his choosing the employer's accommodation does not extend the ambit of the course of his employment."
Windeyer J in agreeing with the Chief Justice added (at 544):
It seems to me that whether a worker's presence where he was when he was hurt was in the course of his employment cannot depend at all upon whether he had a contractual obligation to be there then, or whether he would have been free to be somewhere else had he wished. That is a consideration which could weigh in arriving at a decision as to the scope and course of employment; but it is not definitive of it. A worker who is using a place provided for his use by his employer as an incident of his employment is ordinarily in the course of his employment if he is using it for the purpose for which it was made available to him at and a time when he might be expected to do so. It may be a sleeping place, a luncheon place or a shower‑bath."
In Clissold v Country Roads Board [1981] VR 259 the worker had been injured one evening when attempting to remedy a faulty hot water system in a house which he rented from his employer.
The Full Court of the Supreme Court of Victoria distinguished Danvers. At 265 Young CJ, after analysing Danvers said:
"It is now clearly established that an injury by accident may arise in the course of a worker's employment even though there be no causal connection with the employment: see Kavanagh v Commonwealth (1960) 103 CLR 547; Commonwealth v Oliver (1962) 107 CLR 353, especially per Dixon CJ, at pp 355‑6. An injury may be held to have arisen in the course of the employment if the worker was either performing his duties at the time of the injury or doing something incidental to his work: Kavanagh v Commonwealth, supra.
In a very large number of reported cases a question has arisen whether an injury has arisen in the course of the employment, and as Rich J observed in Davidson v Mould (1944) 69 CLR 96, at p 108, 'one is rather apt to get lost in the forest of cases on the subject'. But it must be remembered that the question before the Board was a question of fact, viz. whether the injury arose in the course of the employment. The question of law is whether the Board's finding that it did not was open on the evidence, but because of the procedure by which this question comes before the Court, we have to answer that question of law, not on the evidence but on the facts found by the Board."
In Hatzimanolis v ANI Corporation Ltd the High Court took the opportunity to review the many authorities and in particular the Henderson Speechley test, before concluding at 484 per Mason CJ, Deane, Dawson and McHugh JJ:
"Accordingly, it should now be accepted that an interval or interlude within an overall period or episode of work occurs within the course of employment if, expressly or impliedly, the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way. Furthermore, an injury sustained in such an interval will be within the course of employment if it occurred at that place or while the employee was engaged in that activity unless the employee was guilty of gross misconduct taking him or her outside the course of employment. In determining whether the injury occurred in the course of employment, regard must always be had to the general nature, terms and circumstances of the employment 'and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen'. …"
Toohey J delivered a separate judgment. After dealing with the Henderson Speechley test he said at 490:
"However, if the worker is then doing something which or she is required or expected to do by the employer, the connexion with the performance of duties will usually be apparent. If the worker is doing something which he or she is merely authorized to do, any connexion with the performance of duties may be tenuous. The connexion may be no more than that the employer has authorized what the worker is doing in the interval as part of good industrial relations between the parties. Nevertheless, I would retain the words 'in order to carry out his duties', whatever their imperfections. To eliminate them, without substituting something in their place, tends to remove any connexion with the employment."
I consider that the majority judgment in Hatzimanolis v ANI Corporation Ltd represents the law and to the extent that any earlier authorities may differ, they are to be disregarded. I apply the test laid out in Hatzimanolis to the present case.
The evidence establishes that Mr Neilson was engaged by OPC months earlier than his wife. He spent some time in Victoria in preparation, although she did not. It was only shortly before departure for Wuhan that an oral employment contract was negotiated between Mrs Neilson and OPC. At that time she had it in mind to travel to Wuhan with her husband and live in the accommodation which was provided as part of his contract. She was not going to Wuhan because she had obtained employment there. The true position is that she was going to be living in Wuhan in any event and therefore obtained employment. Before her engagement as a personal assistant, it was accepted by all parties that she would be living in the unit in Wuhan in any event as Mr Neilson's family member who was accompanying him.
In the particular circumstances, Mrs Neilson's employment was limited to the time when she was actually at work at the Centre. In this respect she was no different from any secretary who might work in an office in central Melbourne between the hours of 9 am and 5 pm, but live in Caulfield. If, while living in Caulfield she sustained an accident, that would have no more relationship to her employment than Mrs Neilson's accident in the unit in Wuhan had to her employment.
The onus is on MMI to prove that the exclusion clause applies to its benefit. The evidence does not establish that the injuries to Mrs Neilson arose out of or in the course of her employment with OPC. MMI has not discharged its onus.
Conclusion on third party's claim
As neither of the two exclusions relied upon by the third party to decline OPC's claim for indemnity succeeds, it follows that OPC is entitled to judgment against the third party.
Conclusion on action and proposed orders
I find that OPC has breached its contract with Mr Neilson and is liable to him in damages.
On application of the law of the People's Republic of China, Australian law is able to be applied to the claim for damages by Mrs Neilson against OPC. Upon application of that law, I hold that OPC's negligence directly caused injury resulting in loss and damage to Mrs Neilson. She did not contribute to that loss and damage by any neglect on her part.
The parties have agreed that in the event of a finding of liability and that Australian law applied, the Neilsons would be entitled to judgment in the sum of $300,000. A small amount of that may technically be damages owed to Mr Neilson alone by reason of the breach of contract. However, having regard to the agreement on damage, I propose to enter judgment for Mr and Mrs Neilson jointly against OPC in the sum of $300,000, that sum including all items of special damage.
I find that OPC took out a general policy of insurance with MMI to cover any award of damages made against it in circumstances such as those which have arisen. I hold that MMI is unable to rely on either of the two bases of exclusion of liability which it has advanced. It is therefore liable to indemnify OPC for compensation which it has become legally liable to pay by reason of liability imposed on it in respect of personal injury to Mrs Neilson, together with the cost of defending the action and the plaintiffs' costs.
- AGLC
- Neilson v Overseas Projects Corporation of Victoria Ltd [2002] WASC 231
- Case
- [2002] WASC 231
- Decision Date
CaseChat Overview and Summary
The court examined the nature of Mrs Neilson's employment and her residence in Wuhan. It found that Mrs Neilson was not primarily going to Wuhan for employment but rather to accompany her husband. The court held that her employment was incidental to her residence in Wuhan, and therefore, her injuries were not in the course of employment. This conclusion aligned with the principles established in the Hatzimanolis case, which was applied to the present circumstances. The court also determined that MMI could not rely on exclusion clauses in the insurance policy to avoid indemnifying OPC.
As a result of the court's findings, OPC was held liable to the Neilsons for damages. The court applied Chinese law to the claim for damages by Mrs Neilson against OPC and found that OPC's negligence caused her injuries. The parties agreed that the Neilsons would be entitled to $300,000 in damages if Australian law applied, which it did. Finally, the court found that MMI was liable to indemnify OPC for the damages and costs, as the exclusion clauses in the insurance policy did not apply.
The court entered judgment for Mr and Mrs Neilson jointly against OPC in the sum of $300,000, and held MMI liable to indemnify OPC for the compensation and costs incurred.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
I consider that the majority judgment in Hatzimanolis v ANI Corporation Ltd represents the law and to the extent that any earlier authorities may differ, they are to be disregarded. I apply the test laid out in Hatzimanolis to the present case. The evidence establishes that Mr Neilson was engaged by OPC months earlier than his wife. He spent some time in Victoria in preparation, although she did not. It was only shortly before departure for Wuhan that an oral employment contract was negotiated between Mrs Neilson and OPC. At that time she had it in mind to travel to Wuhan with her husband and live in the accommodation which was provided as part of his contract. She was not going to Wuhan because she had obtained employment there. The true position is that she was going to be living in Wuhan in any event and therefore obtained employment. Before her engagement as a personal assistant, it was accepted by all parties that she would be living in the unit in Wuhan in any event as Mr Neilson's family member who was accompanying him. In the particular circumstances, Mrs Neilson's employment was limited to the time when she was actually at work at the Centre. In this respect she was no different from any secretary who might work in an office in central Melbourne between the hours of 9 am and 5 pm, but live in Caulfield. If, while living in Caulfield she sustained an accident, that would have no more relationship to her employment than Mrs Neilson's accident in the unit in Wuhan had to her employment. The onus is on MMI to prove that the exclusion clause applies to its benefit. The evidence does not establish that the injuries to Mrs Neilson arose out of or in the course of her employment with OPC. MMI has not discharged its onus. As neither of the two exclusions relied upon by the third party to decline OPC's claim for indemnity succeeds, it follows that OPC is entitled to judgment against the third party. I find that OPC has breached its contract with Mr Neilson and is liable to him in damages. On application of the law of the People's Republic of China, Australian law is able to be applied to the claim for damages by Mrs Neilson against OPC. Upon application of that law, I hold that OPC's negligence directly caused injury resulting in loss and damage to Mrs Neilson. She did not contribute to that loss and damage by any neglect on her part. The parties have agreed that in the event of a finding of liability and that Australian law applied, the Neilsons would be entitled to judgment in the sum of $300,000. A small amount of that may technically be damages owed to Mr Neilson alone by reason of the breach of contract. However, having regard to the agreement on damage, I propose to enter judgment for Mr and Mrs Neilson jointly against OPC in the sum of $300,000, that sum including all items of special damage. I find that OPC took out a general policy of insurance with MMI to cover any award of damages made against it in circumstances such as those which have arisen. I hold that MMI is unable to rely on either of the two bases of exclusion of liability which it has advanced. It is therefore liable to indemnify OPC for compensation which it has become legally liable to pay by reason of liability imposed on it in respect of personal injury to Mrs Neilson, together with the cost of defending the action and the plaintiffs' costs.