Whittington v Smeaton
[2016] ACTSC 76
•18 April 2016
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Whittington v Smeaton |
Citation: | [2016] ACTSC 76 |
Hearing Dates: | 4-6 April 2016 |
DecisionDate: | 18 April 2016 |
Before: | Mossop AsJ |
Decision: | See [118] |
Catchwords: | TORTS – NEGLIGENCE – personal injury – injury sustained after falling off a jet ski – whether defendants in breach of duty to take precautions against risk of harm – Civil Liability Act 2003 (Qld), s 9 TORTS – NEGLIGENCE – Civil Liability Act 2003 (Qld), s 19 – whether the injury was an obvious risk of a dangerous recreational activity – riding as observer on a jet ski towing a waterskier found to be a recreational activity – assessment of whether or not activity is dangerous turns on particular circumstances of the case – harm suffered must have been an obvious risk – obvious to a reasonable person in plaintiff’s position – activity found not to be dangerous – harm suffered not a manifestation of an obvious risk INSURANCE – exemption clause in insurance policy contract – Insurance Contracts Act 1984 (Cth), s 54 – power to refuse to pay claim by reason of act of insured – act must be capable of being reasonably regarded as being capable of causing or contributing to a loss – low threshold test – insurer not able to refuse to pay where no part of the loss that gave rise to the claim was caused by act – absence of licence not found to have caused any part of the loss giving rise to the claim |
Legislation Cited: | Acts Interpretation Act 1954 (Qld), s 14(3) Civil Laws (Wrongs) Act 2003 (ACT), s 45 |
Cases Cited: | Benic v State of New South Wales [2010] NSWSC 1039 Campbell v Hay [2014] NSWCA 129 |
Parties: | Mr Nathan Whittington (Plaintiff) Mr Todd Smeaton (First Defendant) Mr Scott Smeaton (Second Defendant) Allianz Insurance Australia Limited (Third Party) |
Representation: | Counsel Mr A Black S.C, Mr J Wilson (Plaintiff) Mr G Smith (Defendants) Mr D Lloyd (Third Party) |
| Solicitors Stacks Southern Lawyers (Plaintiff) Johnston Legal (Defendants) McCullough Robertson Lawyers (Third Party) | |
File Number: | SC 216 of 2013 |
Mossop AsJ:
Introduction
This case arises out of a boating accident which occurred on 27 November 2010. The plaintiff was acting as observer on a jet ski driven by the second defendant which had been towing the first defendant who was waterskiing behind it. After the first defendant had fallen while waterskiing, the jet ski was turning around to go and pick him up when it struck the wake of another boat and the plaintiff fell into the water. Most unfortunately, after having fallen into the water, the plaintiff’s leg became somehow entangled in the towrope and his foot was traumatically amputated.
The plaintiff has sued the defendants, who are brothers. The first defendant, Todd Smeaton, owned the jet ski. The second defendant, Scott Smeaton, was driving the jet ski at the time of the accident. The defendants pleaded an immunity from liability under a provision of the Civil Liability Act 2003 (Qld) (CL Act) which protects a defendant from harm suffered as a result of the materialisation of an “obvious risk” of a “dangerous recreational activity”.
The defendants have joined as a third party Allianz Insurance Australia Limited (Allianz) which had denied liability to Todd Smeaton under a policy of insurance that he had taken out because Scott Smeaton was not licensed to drive the jet ski under Queensland law. The principal issue between the defendants and Allianz is whether or not under s 54 of the Insurance Contracts Act 1984 (Cth) Allianz is entitled to deny liability for that reason. Understandably, the plaintiff is interested in the outcome of this dispute and made submissions that support the existence of an obligation on the part of Allianz to indemnify the defendants.
In order to differentiate between the two defendants I will refer to them as Todd and Scott respectively. I do so for the sake of brevity and convenience and without intending any disrespect.
Facts
Each witness who gave evidence in the case gave evidence clearly, honestly and to the best of their recollection. No party submitted to the contrary. Subject to the inevitable effects of time and the likely influence of having been involved in a traumatic incident, I accepted that the evidence of each lay witness was reliable.
The plaintiff and the defendants
The plaintiff was born in 1992 and at the time of the accident in 2010 was 18 years old. At the time of the hearing he was 24. He completed schooling up to year 10 and gained his school certificate at Mulwaree High School in Goulburn in 2007. In 2008 and 2009 he worked as a trainee chef and then at Woolworths. In January 2010 he joined the Australian Army. He undertook his initial training at the Kapooka base at Wagga Wagga. He was then transferred to the Puckapunyal base in Victoria and undertook a basic driver training course so that he could obtain his medium rigid licence. After that training he was, in about the middle of 2010, posted to Lavarack Barracks in Townsville as part of a support platoon. When he had joined the army he had initially applied to be trained as a marine specialist, but was not successful in obtaining entry into that training stream.
The plaintiff met Scott Smeaton in 2010. Scott was also an army recruit being trained at Kapooka. The plaintiff and Scott became close friends and during the training at Puckapunyal were in the same unit. Scott had applied to be trained as a marine specialist and, in contrast to the plaintiff, was successful in getting entry into that training stream. Notwithstanding that the two men were being trained for different roles, they stayed in touch. Scott was also posted to Townsville shortly after the plaintiff.
In Townsville, Scott Smeaton introduced the plaintiff to his brother, Todd, who at that stage was a marine specialist in the army and held the rank of Lance Corporal. The plaintiff, Scott and Todd socialised regularly. The plaintiff estimated that by the time of the accident he had been in Todd’s company on more than 20 occasions.
Use of the jet ski prior to the accident
Todd owned a jet ski. He used it frequently. The plaintiff’s evidence was that Todd used it most weekends. On two occasions prior to the accident the plaintiff had been with Scott and Todd to the Ross River in order to use the jet ski.
On the first occasion, they went with some other friends from the Army. Todd rode the jet ski, Scott did not. The plaintiff rode as a pillion passenger on the jet ski with Todd for about 15 minutes. On that occasion no sudden turns were made and the plaintiff had no difficulty staying seated on the jet ski holding on to Todd who was sitting in front of him.
On the second occasion, the scenario was similar in that Todd, Scott and the jet ski were there along with a number of other army friends. The plaintiff did not go on the jet ski on that occasion although others did. Todd drove the jet ski by himself and with others. Scott did not ride the jet ski on that occasion.
On neither occasion was there any incident or misadventure involving the use of the jet ski and nobody fell from the jet ski.
The jet ski
The jetski was a Yamaha Waverunner GP1300R. It had a 1200cc engine. It had a seat large enough for two persons, a driver and a pillion passenger. At the rear end of the seat was a plastic hand grip. That hand grip was designed to be used by a person climbing from the water onto the flat area at the back of the jet ski known as the marlin board. The grip allowed a person in the water to reach up, grab the hand grip and pull themselves upon onto the marlin board. It was therefore horizontal and faced to the rear of the jet ski. The defendants used this as the attachment point for a waterskiing tow rope. Nothing in this case turns on the fact that this was not the intended use of the hand grip. The grip could also be used by a rearward facing observer to hold on to in order to secure his or her position. Even though not ideally positioned for such a task there were few other options for a rearward facing observer. Although such an observer could reach backwards and hold onto the driver, this was not nearly as easy or intuitive than in the case of a forward facing pillion passenger.
Plaintiff’s experience prior to the accident
The evidence established that prior to the day of the accident the plaintiff had very little boating experience. He had been in a “tinny” on a handful of occasions and had not been responsible for management of the boat. He had been deep sea fishing on a charter boat with his father on two occasions and on both occasions had no responsibility for the management of the boat and had become sea sick. He had no experience with waterskiing. He had been “tubing” on two occasions with the family of a friend at Wyangla Dam. Prior to his experiences with the defendants, he had no experience of waterskiing and his only experience of jet skis was having seen big wave surfers being towed behind them on television.
Defendants’ experience prior to the accident
The plaintiff’s understanding at the time of the accident, and the fact was, that both the first and second defendants were very experienced with boats. Both had grown up with boats where they lived at Batemans Bay.
Todd had first waterskied at the age of 12. His family owned boats. During his teenage years he went waterskiing most weekends. He had had some contact with jet-skis owned by the families of his friends. He had generally used those jetskis as a pillion passenger.
He obtained his New South Wales junior boating licence at the age of 14 and his full boating licence at the age of 16.
He had joined the Australian Army in January 2008 and had been trained as a marine specialist. By the time he joined the Army he had many hours of experience driving jet-skis and between 100 and 200 hours as a passenger. His Army training involved training in the operation of zodiacs, “tinnies”, LARC-V amphibious vehicles and 70 tonne barges.
He obtained his personal watercraft (PWC) licence (the type of licence necessary to use a jet ski) in New South Wales at the end of April 2009, when he was on leave from serving in Afghanistan. He purchased the jet ski in May 2009 and had used it once or twice a week during the whole of the year except for two or three months in winter. In the time since the accident he has gained various other qualifications, though not relevant to the present issue.
Scott had been involved with boats since the age of three or four. At the age of nine or 10, his parents bought a ski boat and from that age onwards he waterskied regularly. He would not have gone a month without waterskiing. His family did not own a jet ski but the family of his “best mate” bought a jet ski when he was 15 and he used that as both a pillion passenger and a driver. Prior to the accident, he had driven a jet ski on hundreds of occasions. He had operated jetskis in varying water conditions, in open and closed waters, with waves and without, with and without towing waterskiers.
He obtained his New South Wales boating licence at the age of 16.
Prior to the accident he had completed training as a marine specialist with the Australian Army, which included training in relation to the use of a number of different types of vessels.
Following the accident he obtained a New South Wales PWC licence. He did so at a Roads and Traffic Authority office and was required to answer 15 questions of which 12 had to be answered correctly. He did no study or preparation before sitting the test and passed on the first occasion. He denied having to complete any online course prior to sitting the test.
The day of the accident
On the day of the accident, the plaintiff went with Scott to a hotel for a meal. No alcohol was consumed. They were there with some other Army friends. There was a discussion with Scott about going waterskiing. Scott contacted his brother Todd. Ultimately the plaintiff and Scott met Todd at the Ross River reserve. Between four and six other friends from the Army were there.
The plaintiff had gone to the hotel in smart casual clothes. As he had not anticipated going on to a jet ski expedition he did not have any swimming costume or board shorts with him.
When the plaintiff and Scott arrived at the reserve, Todd had the jet ski in the water. There was a conversation with Scott and Todd about waterskiing. Todd asked the plaintiff to act as observer (also referred to as a “spotter”). He was asked whether he had done it before and said no. He did not have an understanding of what was involved. While Scott was getting his wetsuit on, Todd gave a brief description of the hand actions and the roles and duties of the observer. Todd explained to him that his role was to recognise the hand signals given by the waterskier and convey them to the driver, to notify the driver if the skier fell off and, if the towrope was not in use to pull it up to take the slack out of the rope so that it did not get caught in the jet ski propulsion system. It was explained that he had to lean forward (that is, to towards the back of the jet ski) and pull the rope out of the water. He was told, and then shown, that the towrope would be attached to a grab handle at the back of the jet ski. During the conversation, the plaintiff, because of the clothes that he was wearing, conveyed his desire not to get wet and was told by both Scott and Todd that he would not get wet.
Initially Todd drove the jet ski and Scott skied behind. Scott skied from about 10 to 20 minutes. He was barefoot skiing. He did not fall over. On more than one occasion, however, Scott indicated that he wished to slow down. The plaintiff understood that this was because he wanted a rest. Scott would let go of the towrope and sink down into the water. Todd then caused the jet ski to make a slow turn to the left while the plaintiff took the slack out of the towrope by leaning down picking up the rope and holding it on the grab handle. On these occasions the plaintiff had no difficulty staying on the jet ski. The jet ski, after turning round, would go back to Scott and then recommence waterskiing. After a number of such exercises there was a discussion between Scott and Todd about changing over. Scott had been having some difficulty skiing barefoot because the water was not quite smooth enough. They went back to the shore where skier and driver swapped roles. They then set off again with Scott driving and Todd waterskiing, with skis rather than barefoot. There was a difference in the evidence between the plaintiff and the defendants as to whether, prior to the accident there had been an occasion on which Todd had fallen while waterskiing. Having regard to the consistent recollection of both defendants that Todd had fallen before the fall that led to the accident, and the fact that the plaintiff’s recollection may have been affected by the traumatic circumstances of the accident, I prefer the evidence of the defendants to that of the plaintiff and find that Todd had fallen once while waterskiing prior to the fall associated with the accident. Apart from this, there had been no other unusual incidents while Scott was driving.
Todd then fell off. Consistently with his instructions, after Todd fell off, the plaintiff notified Scott by turning his head to his right and telling Scott that Todd had fallen off. Scott acknowledged that information by saying “Roger” or “Okay” and started turning the jet ski to the left. Unlike the turns that were undertaken when Todd was driving, this turn was undertaken at a greater speed. The plaintiff leaned forward to take the slack out of the rope. He reached far enough towards the back of the jet ski that his bottom was off the seat. At that point the jet ski hit the wake of another boat that was on the river. The wake was approximately 40 cm high, quite a significant wake for the environment in which they were skiing. The wake led the jet ski to become unstable and caused the plaintiff to fall off. He fell into the water and it was his grave misfortune to get his leg tangled in the towrope causing him injury. Scott was not immediately aware that the plaintiff had fallen from the jet ski and the jet ski continued for a short distance back towards where Todd was in the water before he became aware of what had happened.
The speed at which the jet ski was travelling when it was turning and the time it took before Scott became aware that the plaintiff had gone overboard are subject to further findings below.
Claim against the defendants
Plaintiff’s claim
The plaintiff has claimed that the defendants were negligent. Unhelpfully, the pleadings identified 92 particulars of negligence on the part of the first defendant and 88 particulars of negligence on the part of the second defendant. In submissions, the essential allegations of negligence were, in summary:
(a)The failure on the part of the Todd or Scott to properly instruct the plaintiff in relation to his responsibilities relating to the towrope. In particular the failure to instruct him that it was only necessary to lift the towrope up at a point where the jet ski was moving at low speed or stationary, because it was only at that point that there was a risk that it would become entangled in the jet ski’s propulsion system.
(b)The failure by Scott or Todd to instruct the plaintiff how to brace himself when sitting in a rearward facing position as an observer;
(c)The failure by Scott to give the plaintiff notice that the jet ski was about to cross the wake of another boat and hence that it may become less stable; and
(d)The failure by Scott to avoid unnecessary sudden movements of the jet ski that might make the plaintiff unstable on the jet ski.
Expert evidence
There was not a great deal of difference between the expert evidence called on behalf of the plaintiff and the expert evidence called on behalf of Allianz. The defendants did not call expert evidence.
The plaintiff called evidence from Jack Ellison, a professional jet ski rider, boat driver and waterskier. Allianz called evidence from Mr Philip Laing, an accredited BoatSafe Training Provider from the Gold Coast trading under the name of All State Boat Licensing and Training.
Mr Ellison expressed the opinion that Todd and Scott Smeaton should have instructed the plaintiff how to hang on and secure himself as a pillion passenger. Mr Laing’s report did not cover this point.
Both experts agreed Scott should have, but did not, slowed down to a safe speed to turn around and pick up Todd having regard to the conditions which included the potential for instability from the wake of other boats. Mr Laing was of the view that the speed of 15 knots at which Scott made the turn was at the upper end of the range of speeds at which the turn could be made. Mr Ellison was of the view that it was too fast having regard to the size of the wake that was to be crossed and the presence of a rearward facing observer. Both agreed that the speed would be excessive if the turn was actually “a bit of a sharp turn”.
Mr Ellison expressed the opinion that Scott ought to have told the observer to brace prior to making the turn to collect the fallen skier. This was a technique by which an observer could secure his position by leaning against the back of the driver and pressing his feet down into the footwell of the jet ski. Mr Laing was not familiar with the brace method, having never heard of the technique and certainly having never trained people to use it.
Both experts agreed that the plaintiff should have been instructed to not try to pull the towrope in until the jet ski was nearly stationary.
Statutory provisions
Because the accident occurred in Queensland, the claim is governed by the provisions of the CL Act. It is therefore necessary to assess the plaintiff’s claim against the defendants in the light of the relevant provisions of that Act. Section 9 of the Act provides:
9 General principles
(1) A person does not breach a duty to take precautions against a risk of harm unless—
(a) the risk was foreseeable (that is, it is a risk of which the person knew or ought reasonably to have known); and
(b) the risk was not insignificant; and
(c) in the circumstances, a reasonable person in the position of the person would have taken the precautions.
(2) In deciding whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (among other relevant things)—
(a) the probability that the harm would occur if care were not taken;
(b) the likely seriousness of the harm;
(c) the burden of taking precautions to avoid the risk of harm;
(d) the social utility of the activity that creates the risk of harm.
The driver of a watercraft clearly owes a duty to those on the craft to exercise reasonable care in relation to the use of the craft so as to minimise risk of personal injury to those persons. The existence of a duty of care is admitted by the defendants.
For the purposes of s 9(1) of the CL Act, it is necessary to identify the “risk of harm”. In the present case the risk of harm was that a rearward facing passenger might become unbalanced or dislodged from the jet ski and suffer appreciable (rather than inconsequential) physical injury: cf Hume v Patterson [2013] NSWSC 1203 at [108] (Hume v Patterson).
The risk of harm was foreseeable for the purposes of s 9(1)(a) of the CL Act, because it was a risk of which the defendants knew or should have known. This requires that the defendants were actually or constructively aware of the harm: Benic v State of New South Wales [2010] NSWSC 1039 at [90]. In their evidence, each of the defendants accepted that there was a risk of harm to a rearward facing passenger if the passenger became unbalanced or dislodged from the jet ski.
The requirement that risk not be insignificant, set out in s 9(1)(b), is a requirement which imposes something not very much more than it be not far-fetched or fanciful: Shaw v Thomas [2010] NSWCA 169 at [44], Sibraa v Brown [2012] NSWCA 328 at [49], Stenning v Sanig [2015] NSWCA 214 at [32]. In the present case that requirement is clearly met, because although in most circumstances a fall from a jet ski will not involve injuries of significance, there are a range of reasonably foreseeable circumstances in which the risk of more serious harm could materialise.
Section 9(1)(c) of the Act requires consideration of whether a reasonable person in the position of the defendants would have taken the precautions against the risk. In making that assessment the Court has to have regard to the matters in subsection (2). In my view, the precautions that a reasonable person in the position of the defendants would have taken were as follows. So far as both defendants were concerned:
(a)They should have ensured that the plaintiff understood that he only needed to lift the towrope away from the rear of the jet ski when it was almost stationary, because that was the only point at which there was any appreciable risk of it becoming entangled in the propulsion system of the jet ski. Had he had that understanding he would have appreciated that there was no need to lean out past the grab handle in order to take hold of the rope and hence no need for him to put himself in a position of potential instability, leaning with his bottom off the seat towards the back of the jet ski.
(b)They should have given some warning about holding on and some direction as to the options for doing so given that the usual method for a pillion passenger, namely holding on to the person in front, was either awkward or not available to a rearward facing observer. I am not satisfied that a breach of duty was involved in failing to instruct the plaintiff to brace himself against the rider of the jet ski. Although Mr Ellison uses and instructs that technique and it is a technique which provides a means of securing a rearward facing passenger’s position, Mr Laing, a very experienced trainer was not aware of it. Mr Ellison’s training experience focussed more on waterskiing whereas Mr Laing’s focussed on the use of jet skis not involved in waterskiing. Given that the use of the bracing method was unknown to Mr Laing and given Mr Ellison was not aware of it being taught by other training organisations, I am not satisfied that the owner or driver of a jet ski instructing a novice jet ski user in how to be an observer should have given the specific instruction in relation to bracing in that manner. However, a more general instruction was required. That was because the usual method for a pillion passenger, namely holding on to the person in front, was either awkward or not available to a rearward facing observer, other means of securing oneself effectively were not obvious and a rearward facing passenger obviously had less notice of the future movements of the jet ski than a person facing forwards who could see what was ahead and the steering movements of the driver.
So far as Scott Smeaton is concerned, the additional precautions he should have taken were:
(a)Ensuring that the plaintiff was warned of approaching conditions, such as boat wakes, which had the potential to unbalance him; and
(b)avoiding sudden movements of the jet ski that might unbalance him.
The requirement for these additional precautions was greater having regard to the failure to take the other precautions, namely providing proper instructions about the towrope and the means of securing the plaintiff’s position.
Having regard to the matters in s 9(2), I consider that these precautions were precautions that a reasonable person would have taken because the precautions were simple precautions to take, there was a prospect of accident or injury if the observer became unstable on the jet ski, the plaintiff was, and was known to be, a complete novice and there was a possibility of harm to the plaintiff if he became unstable and fell from the jet ski.
Causation is dealt with by s 11 of the CL Act. Like s 45 of the Civil Laws (Wrongs) Act 2003 (ACT), s 11 requires both the establishment of factual causation and consideration of the scope of liability thereby imposed.
I am satisfied that the reason that the plaintiff fell from the jet ski was the pitching movement of the jet ski as it crossed the wake of another watercraft occurring at the moment when the plaintiff was most vulnerable to such instability because he was attempting to lift the towrope away from the rear of the jet ski. The failure to take each of the precautions identified above was a necessary condition of the occurrence of the harm and therefore factual causation is established.
There is no reason why it would not be appropriate for the scope of liability in such a case to extend to the harm suffered by the plaintiff. Such a conclusion may be established authority: Wallace v Kam (2013) 250 CLR 375, 385 [22]. This case is sufficiently similar to waterskiing cases such as those referred to in Hume v Patterson at [119]-[121] to be treated as being an established category of liability.
In any event, the qualification in s 11(1)(b) arises out of recommendation 29 of the Ipp Report (Review of the Law of Negligence Final Report, September 2002). That recommendation was designed to address (at [7.47]):
... a perception amongst various groups that courts are too willing to impose liability for consequences that are only ‘remotely’ connected with the defendant’s conduct. In other words, there is a feeling that the net of responsibility for the consequences of negligence is being cast too widely.
Having regard to the purposes for which this normative question was included in the Act I find it appropriate for the scope of liability to extend to the harm caused to the plaintiff.
As a consequence I am satisfied that the plaintiff has established that, subject to any statutory defence or immunity, the defendants are liable to the plaintiff. While the pleadings raised contributory negligence, voluntary assumption of risk and the immunity granted by s 19 of the CL Act, only the latter was pressed at the hearing.
Obvious risk of a dangerous recreational activity?
The defendants rely upon a defence provided by the CL Act relating to the materialisation of an obvious risk created by a “dangerous recreational activity”.
Statutory provisions
Section 19 of the CL Act provides:
19 No liability for personal injury suffered from obvious risks of dangerous recreational activities
(1) A person is not liable in negligence for harm suffered by another person as a result of the materialisation of an obvious risk of a dangerous recreational activity engaged in by the person suffering harm.
(2) This section applies whether or not the person suffering harm was aware of the risk.
Section 18 provides the definitions relevant to s 19:
18 Definitions for div 4
In this division—
dangerous recreational activity means an activity engaged in for enjoyment, relaxation or leisure that involves a significant degree of risk of physical harm to a person.
obvious risk has the same meaning as it has in division 3.
For the purposes of the definition of “obvious risk”, the relevant section in Division 3 is s 13 which provides:
13 Meaning of obvious risk
(1) For this division, an obvious risk to a person who suffers harm is a risk that, in the circumstances, would have been obvious to a reasonable person in the position of that person.
(2) Obvious risks include risks that are patent or a matter of common knowledge.
(3) A risk of something occurring can be an obvious risk even though it has a low probability of occurring.
(4) A risk can be an obvious risk even if the risk (or a condition or circumstance that gives rise to the risk) is not prominent, conspicuous or physically observable.
(5) To remove any doubt, it is declared that a risk from a thing, including a living thing, is not an obvious risk if the risk is created because of a failure on the part of a person to properly operate, maintain, replace, prepare or care for the thing, unless the failure itself is an obvious risk.
Examples for subsection (5)—
1 A motorised go-cart that appears to be in good condition may create a risk to a user of the go-cart that is not an obvious risk if its frame has been damaged or cracked in a way that is not obvious.
2 A bungee cord that appears to be in good condition may create a risk to a user of the bungee cord that is not an obvious risk if it is used after the time the manufacturer of the bungee cord recommends its replacement or it is used in circumstances contrary to the manufacturer’s recommendation.
Examples form part of the Act: Acts Interpretation Act 1954 (Qld) s 14(3). Section 19 is in almost identical terms to s 5L of the Civil Liability Act 2002 (NSW).
The defendant bears the onus of establishing the elements of this “immunity”: Hume v Patterson at [124]. Whether the defence is made out is determined “objectively and prospectively”: Lormine Pty Ltd v Xuereb [2006] NSWCA 200 at [31] (Lormine).
Dangerous recreational activity
The first matter that must be determined is whether or not the plaintiff engaged in a dangerous recreational activity. Clearly the plaintiff was engaged in a recreational activity. The authorities establish the following propositions in relation to whether or not the definition in s 18 is satisfied:
(a)the definition must be read as a whole: Falvo v Australian Oztag Sports Association [2006] NSWCA 17 at [28];
(b)“regard must be had to the nature and degree of harm that might be suffered on the one hand, and the likelihood of the risk materialising on the other”: Campbell v Hay [2014] NSWCA 129 at [116];
(c)a risk is “significant” if the likelihood of its occurrence is not trivial, but rather has a real chance of materialising: Campbell v Hay at [116];
(d)the assessment of the risk includes an assessment of the likely seriousness of the harm: Campbell v Hay at [117];
(e)“significance is to be informed by the elements of both risk and physical harm”: Lormine at [31]; Stewart v Ackland [2015] ACTCA 1 at [33].
In making the determination it is necessary to take into account the particular circumstances of the participation in the recreational activity. This may include any limitations on participation by the plaintiff which reduces the risks involved: Fallas v Mourlas [2006] NSWCA 32 at [37] (Fallas). Similarly, adopting the same approach, even innocuous activities may become dangerous depending upon the manner in which they are being carried out (Vreman v Albury City Council [2011] NSWSC 39 at [85]-[93]) or because the level of experience of the person involved (Fallas at [36]).
Both experts gave their opinion as to the risk of physical harm to a jet ski user in circumstances where the jet ski was being used to tow a waterskier on an inland waterway, the rider, waterskier and observer were sober, the weather conditions were fine and the driver and waterskier were experienced waterskiers and recreational boat users. Both agreed that for a person in the position of the plaintiff, riding the jet ski was not an activity with a significant risk of physical harm. Using a jet ski in those circumstances was to be contrasted with other forms of use of a jet ski such as “freestyling” and “wave jumping” where a different conclusion might be reached. Until this case, Mr Ellison had not heard of any severe injury to a pillion passenger on enclosed waters. Mr Laing had never heard of any incident involving an observer although he had heard of a single incident when a forward facing pillion passenger fell from a jet ski and was run over by a boat.
The conclusion that acting as an observer on a jet ski was not an activity that involves a significant risk of physical harm is reinforced by the fact that the plaintiff participated in the activity on the basis that he would not get wet. This constituted a limitation on his participation, agreed to by the defendants, which qualified the nature of the activity so as to reduce any danger that might otherwise be involved.
In my view, in the light of the particular circumstances in which the activity was carried out and the expert evidence as to the risks involved, there was not “a significant degree of risk of physical harm” to a person in the position of the plaintiff.
Obvious risk
In case I am wrong in that conclusion I consider the next issue that would arise, namely whether or not the harm suffered by the plaintiff was the result of the materialisation of an “obvious risk” of that activity.
For the purposes of considering this question it is necessary to undertake an objective analysis of the circumstances which confronted the plaintiff so as to determine if the defendants conduct involved a risk of harm that would have been obvious to a reasonable person in the position of the plaintiff: s 13(1) of the CL Act, State of Queensland v Kelly [2014] QCA 27 at [33] (Kelly). This requires consideration of the plaintiff’s own knowledge and beliefs: Kelly at [33].
As pointed out above, the plaintiff was a complete novice in relation to jet skis generally and acting as an observer on a jet ski in particular. He had only ridden as a pillion passenger once before and had never acted as an observer. He had almost no general boating experience.
Further, regard must be had to the circumstances known to a person in the position of the plaintiff. Those circumstances all pointed to a risk of any harm (let alone the actual harm which materialised) being not an obvious risk. In particular:
(a)the proposed nature of the activity was the towing of a waterskier (rather than more adventurous use of the jet ski);
(b)the assurance to or agreement with the plaintiff that he would not get wet;
(c)the manner in which the activity had been conducted on previous occasions and in particular the absence of any incident on those previous occasions;
(d)the fact that the activity was to be undertaken on an relatively uncrowded area of water in calm conditions;
(e)the absence of any other factor (such as the use of alcohol or reckless or irresponsible behaviour) either on previous occasions or the occasion of the accident, which would indicate to a reasonable person an increase in the risk involved in the activity.
The risk which was pleaded by the defendants as being obvious was the “risk of harm to the Plaintiff resulting from falling from the jet ski”. The statute requires attention to the risk which actually materialises. The risk which materialised was that the plaintiff fell from the jet ski and became somehow entangled in the towrope trailing behind the boat. In my view the risk which materialised was a risk which was far from obvious. Indeed it appears to have been an unusual coincidence of circumstances which led to the plaintiff suffering his injury. I do not accept the submission of the defendants that by reason of the disclosed risk of the towrope becoming entangled with the propulsion system of the jet ski that it therefore should have been obvious that there was a risk of a person who fell off the jet ski becoming entangled with the towrope. That is reinforced by the expert evidence. Neither expert was aware of any case in which an observer had suffered injury as a result of falling off a jet ski, let alone an injury arising from entanglement with a trailing towrope. Therefore, had I found that the plaintiff was engaged in a dangerous recreational activity, I would not have found that the harm that he suffered was as a result of the materialisation of an obvious risk of that activity.
As a result, the defendants (and Allianz) have not established the immunity provided for by s 19 of the CL Act.
The insurance policy
It is uncontroversial that the “Club Marine” insurance policy taken out with Allianz by Todd would cover Scott in the circumstances of this case except by reason of the exclusion clause. Allianz denied liability under the insurance policy in September 2012.
The relevant clause covering the liability was as follows:
Section 2-Liability to other people
What We cover
We will cover the following persons for their legal liability to pay compensation in circumstances specified in 1. to 5. below, up to the sums insured noted on the Schedule inclusive of legal costs and expenses (as specified in 6. below), to another party.
1. Use of Your Boat
You or any person in charge or control of Your Boat with Your permission (excluding boat builders, repairers, yacht clubs and marine operators except as provided by this section), for death or injury and/or damage to property during the Period of Insurance caused by or arising out of the use of Your Boat within the Geographic Limits;
It should be noted that the liability covered is the liability of either Todd Smeaton (“You”) or Scott Smeaton (“any person in charge or control of Your Boat”). Therefore successful claims in negligence against either or both defendants would be covered.
The relevant exclusion clause provided:
General exclusions
These exclusions apply to Sections of the Policy.
…
Persons in control
Any claim arising from an incident involving Your Boat or any boat covered by this Policy, when that boat is under the control of:
· an unlicensed person when a licence is necessary;
· a person without adequate experience to reasonably control that boat;
...
This exclusion does not apply if You can prove that:
· You did not know or had no reason to suspect that the person with control of that boat was such a person; or
· as a result of an unforeseen emergency, it was reasonable for such a person to assume control of that boat.
Todd Smeaton knew that Scott Smeaton did not have a personal watercraft licence. The incident did not involve an unforeseen emergency. Therefore, subject to the operation of s 54 of the Insurance Contracts Act, any claim under the policy in relation to the present incident was excluded.
Section 54
Section 54 of the Insurance Contracts Act provides:
Insurer may not refuse to pay claims in certain circumstances
(1) Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer's liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act.
(2) Subject to the succeeding provisions of this section, where the act could reasonably be regarded as being capable of causing or contributing to a loss in respect of which insurance cover is provided by the contract, the insurer may refuse to pay the claim.
(3) Where the insured proves that no part of the loss that gave rise to the claim was caused by the act, the insurer may not refuse to pay the claim by reason only of the act.
(4) Where the insured proves that some part of the loss that gave rise to the claim was not caused by the act, the insurer may not refuse to pay the claim, so far as it concerns that part of the loss, by reason only of the act.
(5) Where:
(a) the act was necessary to protect the safety of a person or to preserve property; or
(b) it was not reasonably possible for the insured or other person not to do the act;
the insurer may not refuse to pay the claim by reason only of the act.
(6) A reference in this section to an act includes a reference to:
(a) an omission; and
(b) an act or omission that has the effect of altering the state or condition of the subject-matter of the contract or of allowing the state or condition of that subject-matter to alter.
Section 54(1) permits the reduction of an insurer’s liability in respect of a claim by an amount which fairly reflects the prejudice suffered by an insurer by reason of an act or omission on the part of the insured or some other person. It does not apply where subsection (2) applies. Subsection (2) involves a prospective assessment with a reasonably low threshold as to whether or not there is a causal link between the act or omission and the loss in respect of which insurance cover is provided. Once that relatively low threshold has been satisfied, then the onus shifts to the insured to prove that no part (s 54(3)) or only some part (s 54(4)) of the loss was caused by the act or omission. Subsection (2) is therefore the fulcrum about which the operation of s 54 turns, determining whether subsection (1) applies or whether subsections (2), (3) and (4) apply.
Allianz’s argument
Neither the defendants nor the plaintiff ultimately contended that the requirements of s 54(2) were not satisfied. That is clearly correct having regard to the low threshold involved. Therefore the claim by the defendants against Allianz depends upon whether or not the defendants have proved for the purposes of subsection (3) that no part of the loss that gave rise to the claim was caused by the act of Scott Smeaton in driving the jet ski while unlicensed, and hence that Allianz may not refuse to pay the claim by reason only of the act. In other words, if the defendants prove that the fact that Scott was unlicensed was not causally related to the loss for which indemnity is sought, then by operation of s 54 the defendants will be entitled to indemnity.
Allianz submits that s 54(3) imposes a heavy onus on the Smeatons. It submitted that the causes of the accident were multifactorial and that the evidence indicated that some of the errors on the part of the defendants which led to the accident were addressed in a course that was required under Queensland law in order to obtain the licence necessary to lawfully drive a jet ski. As a consequence it submitted that “one or more of the many failures of Scott Smeaton … could have been corrected in the course”. As a result it submitted that the defendants have failed to prove that “no part of the loss that gave rise to the claim was caused by the act”.
In oral submissions counsel for Allianz pointed to seven aspects of the conduct of Scott Smeaton causally related to the plaintiff’s loss which he submitted would have been addressed in the Queensland licensing course. They were:
(a)the capacity to safely cross the wake of other boats or of the jet ski itself;
(b)the speed of the jet ski when making its turn to collect Todd;
(c)the making of a sharp turn when turning to collect Todd;
(d)the failure to give any warning to the plaintiff of the making of the turn or that the jet ski was about to cross the wake of another boat;
(e)an apparent lack of situational awareness;
(f)the failure for a number of seconds to notice that the observer was no longer on the jet ski;
(g)the failure to check for at least 10 seconds as to whether or not the observer was still present on the jet ski.
The exercise required by s 54(3)
The exercise required by s 54(3) depends upon a comparison between the position that would have existed if Scott had been licenced and the position that in fact existed. If the defendants have proved that, on the balance of probabilities, the accident would still have occurred and the same damage suffered if Scott had been licenced, then they will have proved that no part of the loss was caused by unlicensed driving of the jet ski.
Licensing of jet ski users
Section 95(3) of the Transport Operations (Marine Safety) Regulations 2004 (Qld) provided:
(3) If the recreational ship is a personal watercraft, the person must also hold a personal watercraft licence or a current equivalent licence issued under the law of another State.
The significant point is that under Queensland law a user of a PWC was required to have either a Queensland PWC licence or a current equivalent licence under a law of another State.
The requirements to be satisfied in Queensland in order that a PWC licence be issued were different to those which applied in New South Wales for an equivalent licence.
In Queensland an applicant for a licence was required to be assessed for particular competencies by an accredited trainer and could then apply for the issue of a licence. In New South Wales, where Scott already held a boating licence, it was not essential that any “hands on” test or training be completed.
Obtaining a licence in Queensland
The scheme
Following the introduction in 2005 of the requirement for a PWC licence in Queensland, a regulatory regime was put in place that governed the issuing of such licences.
There was evidence of a number of elements of this:
(a)BoatSafe Manual: This described the overall BoatSafe scheme and described the various components of that scheme as reflected in the other documents listed below.
(b)BoatSafe Information Kit: This was a document explaining the BoatSafe scheme so as to assist organisations to make an application as a BoatSafe Training Organisation. It outlined the background to the 2005 framework for recreational marine driver licence training and outlines the process and requirements for becoming registered as a BoatSafe Training Organisation.
(c)BoatSafe Audit Framework January 2010: This document provided for auditing of BoatSafe Training Organisations. It required that compliance audits of BoatSafe Training Organisations would be held at least once during each year of an authority. The evidence of Mr Bundschuh, the officer at the Queensland Department of Transport and Main Roads, who was, in 2010, responsible for the accreditation of BoatSafe Training Organisations, was that in fact such audits were only carried out once during the period of each authority which ran for a period of three years.
(d)BoatSafe Management Standards: This identified the requirements for an organisation to be registered as a BoatSafe Training Organisation by Maritime Safety Queensland. One of the requirements was that the organisation did not present a training course in less than the time prescribed by Maritime Safety Queensland.
(e)BoatSafe Competency Standard October 2009: This document outlined the specific competencies required to be demonstrated in order to obtain a recreational marine driver licence or personal watercraft licence. Its content is of significance to the present case and is described in more detail below.
(f)BoatSafe Workbook: This document provided the informational content for the various competencies outlined in the BoatSafe Competency Standard. In relation to Unit 7 of the BoatSafe Competency Standard, the Workbook contains material relating to the use and operation of jet skis. The only reference to water skiing is as follows:
Waterskiing
As an observer is required, cruising PWC seating two or more can be used for waterskiing. The same rules apply to PWC as to other boats involved in waterskiing (see page 63).
There is then a photograph which shows a jet ski with a backward facing observer towing a waterskier.
The competency standard
The BoatSafe Competency Standard October 2009 outlined the skills, knowledge and competencies that must be demonstrated by those who wished to acquire a marine licence to operate registrable powered recreational vehicles and personal watercraft in Queensland. It contained the various competency units, the relevant one for present purposes being “Unit 7 - Operate a personal watercraft”. Unit 7 could be completed by the holder of a recreational marine driver licence as a single unit to qualify for a personal watercraft licence – effectively upgrading an ordinary boating licence to a licence that included personal water craft. Alternatively it could be done as part of the BoatSafe course to qualify for both a recreational marine driver licence and a personal watercraft licence. That meant that for holders of recognised interstate boating licences, Unit 7 could be taken separately as an extension to permit the use of personal watercraft.
The Standard recognises that assessors will be required to exercise some judgment as to whether or not appropriate competencies have been attained. In relation to seamanship the Standard provides:
When operating a vessel, seamanship is an essential component of competency. However, it is difficult to define a concept, which embraces such elusive things as attitude and sound decision making.
While seamanship itself is not easily evaluated or measured, its effects are, and the results of its application can, to some extent, be specified as performance criteria. In this way, this document sets out, not to explain what seamanship is, but rather, what it does.
For example, in some units of competency, a criterion for the demonstration of seamanship is stated as: Situation awareness is maintained. This is a requirement for the operator to be aware of the immediate environment and its potential hazards and it calls for a methodical approach not otherwise alluded to.
This is simply a matter of the operator knowing what is happening in and around the vessel – commonsense, certainly, but in need of documenting. Without this awareness and knowledge, the objectives of the unit of competency will not be achieved, or not achieved to the required standard.
The table outlining the various competencies required to complete Unit 7 of the Standard was as follows:
Elements Performance Criteria 7.1 Select equipment and prepare for activity 7.1.1 Identify and describe the main parts of a personal watercraft and its equipment using correct terminology
7.1.2 Safety equipment is worn/carried in accordance with legislation (Demonstrate knowledge of the type of PFD 1 and lifejacket cannot be worn, state the safety equipment for open waters and night operations)
7.1.3 Test equipment for correct operation (for example, throttle, steering and drain plugs, navigation lights (as required), for fuel leaks, all compartments are sealed and seats are locked down)
7.1.4 Perform pre-launch checks and brief passengers (drain plugs secured; safety lanyard attached with wrist strap, correct PFDs are available and passengers are briefed on safety requirements.)
7.1.5 State local area requirements
7.1.6 Display RideSmart sticker as required
7.1.7 Display registration numbers and label in accordance with the regulations.
7.2 Personal watercraft is started correctly 7.2.1 Start engine in accordance with manufacturer’s instructions, and control is maintained
7.2.2 Ensure sufficient depth of water to prevent engine damage from sand (for example, not less than 600mm)
7.2.3 Test cut off switch to ensure it is working
7.3 Operate personal watercraft in favourable conditions 7.3.1 Effect a smooth departure from ramp/jetty, control is maintained and collision avoidance requirements are demonstrated
7.3.2 Demonstrate ability to manoeuvre a personal watercraft smoothly while operating at various speeds including turns to port and starboard
7.3.3 Demonstrate a knowledge of the different handling properties of a personal watercraft (for example, loss of steerage when power is taken off and turning at high speed)
7.3.4 Demonstrate ability to bring personal watercraft alongside a floating object
7.3.5 Demonstrate ability to bring personal watercraft alongside a fixed platform
7.3.6 Conditions of wind, wave and current are assessed to determine the most favourable approach
7.3.7 Demonstrated ability to adequately determine a distance of 60 metres
7.3.8 Demonstrated ability to adequately determine a speed of six knots
7.3.9 Maintain situational awareness, safe speed and lookout.
7.4 Operate personal watercraft in adverse conditions 7.4.1 Personal watercraft is controlled in confined waters and collision avoidance requirements are demonstrated
7.4.2 Personal watercraft is controlled through the wash of another vessel
7.4.3 Techniques for manoeuvring and controlling a personal watercraft in adverse conditions are demonstrated.
7.4.4 Passenger safety is considered at all times.
7.5 Exercise seamanship 7.5.1 Personal watercraft is operated within the manufacturer’s limitations
7.5.2 Local noise abatement requirements are observed
7.5.3 Allowance is made for water traffic conditions
7.5.4 Right of way procedures are followed
7.5.5 Proper lookout is maintained during manoeuvres
7.5.6 Fuel status is monitored
7.5.7 Weather conditions are monitored and responded to accordingly
7.5.8 Contingencies are anticipated
7.5.9 Situation awareness is maintained
7.5.10 Passenger safety is maintained
7.6 Apply emergency procedures 7.6.1 Potential hazards which could lead to emergencies are identified
7.6.2 Corrective procedures for potential and identified hazards are implemented
7.6.3 Knowledge of proper righting procedures for a capsized personal watercraft is demonstrated
7.7 Demonstrate knowledge of legislative requirements 7.7.1 Compliance with relevant regulations is demonstrates in relation to –
· International Regulations for Preventing Collisions at Sea
· Transport Operations (Marine Safety) Regulation 2004
· Any local waterways management plan/s
· Any other regulatory restrictions on PWC operations such as exclusion zones
7.7.2 Responsibility for reporting marine incidents is clearly defined in terms of the Transport Operations (Marine Safety) Act 1994
7.7.3 Provisions of the Transport Operations (Road Use Management) Act 1995 relating to alcohol use is clearly defined
7.7.4 Knowledge of the following (as a minimum):
· lateral and cardinal marks
· isolated danger marks
· safe water marks
· blue middle channel marks
· lead marks
· special marks
· speed signs
· cable crossings
· measuring distance
· distance-off requirements for people, shoreline, infrastructure, moored vessels and boundaries of bathing reserves
7.7.5 Knowledge and understanding of behaviours and characteristics which are annoying to others, and those characteristics which demonstrate responsible use of a personal watercraft
Following this table there is an “Evidence Guide” which describes how these competencies are to be assessed. The “Critical aspects of evidence” are described as:
Assessment must confirm the ability to:
- prepare the personal watercraft for use
- carry out relevant safety precautions
- assess and plan for prevailing conditions
- apply weather information to interpret local conditions
- demonstrate a sound understanding of the safety and regulatory requirement relevant to the operation of personal watercraft
- respond to changing circumstances
- manage the effects of tide and current in a range of circumstances (for example, departing and approaching ramps and pontoons)
- adequately estimate speed and distance especially distance-off requirements.
It is notable that there is no reference to waterskiing in the competencies in Unit 7. The competencies in Unit 7 appear to be directed to safe and lawful basic operation of the jet skis rather than anything more exotic such as using them to tow waterskiers.
The Queensland course
Mr Laing was a very experienced provider of the PWC licence courses. He gave evidence that the PWC course would last for about three hours. It involved a theory component which was completed in 30 to 45 minutes as well as a practical component. The practical component involved between 10 and 20 minutes actually operating a jet ski (depending upon the user’s level of competence) and a period watching others doing the same course. Each applicant also had to complete an examination which contained multiple choice questions.
So far as Mr Laing’s course was concerned, half of the participants would be doing the course in conjunction with a course to obtain a boat licence and 60-70% would be novices so far as jet skis were concerned. There was no evidence that indicated the proportions would be different in courses run by other accredited training organisations.
Obtaining a licence in New South Wales
The New South Wales government “Boating Handbook 2010-2011” identified that there were, at that time, both general boating licences as well as personal watercraft licences. Anyone who drove a PWC was required to have a PWC licence. A PWC licence included a general boating licence and persons who held a general boat licence could upgrade to a PWC licence at any time. In relation to upgrading a general boat licence to a PWC licence the Handbook provided:
Applicants wishing to upgrade their existing student general boat licence to a PWC licence are not required to provide evidence of practical boating experience and need only comply with PWC Licence Boating Safety Course and PWC Licence test requirements.
The Boating Safety Course could be completed by viewing presentations online, by purchasing a DVD of the course for viewing at home or by attending a Boating Safety Course conducted by New South Wales Maritime or Marine Rescue New South Wales. The applicant was then issued with a Certificate of Completion and could sit the PWC licence test. The manual provided:
The PWC test contains 15 questions of which a minimum of 12 must be answered correctly. A fee is payable for each licence test attempt, which can be sat an unlimited number of times.
There were also alternative methods of obtaining PWC licences using a New South Wales Maritime accredited training provider.
The manual for the 2008-2009 period was to similar effect as the 2010-2011 manual.
Evidence of the defendants in relation to the New South Wales requirements
The evidence of Todd Smeaton was that he obtained his PWC licence in 2009 prior to purchasing his jet ski. He recalled that there were around 10 multiple choice questions. He could only recall questions relating to the distance that needed to be maintained from swimmers in the water. He could not recall how many questions had to be answered correctly in order to pass. However, he passed on his first attempt. There was no practical component to obtaining his licence.
The evidence of Scott Smeaton was that following the accident in early 2011 he went to the offices of the Roads and Traffic Authority and asked to do a PWC test. He was required to answer 15 multiple-choice questions and get the answer to 12 of them correct. None of the questions related to the use of a PWC for waterskiing. He did not do any study or preparation before sitting the test and obtained his licence on the first occasion. In cross examination he denied the suggestion that there was any online component that he was required to complete beforehand.
Notwithstanding the terms of the NSW Boating Handbook which indicate that a precondition for boat licence holders undertaking the multiple-choice test in order to obtain a PWC licence was the completion of at least an online boating safety course, I accept the evidence of Todd and Scott that they in fact obtained their PWC licences simply by passing the multiple-choice test.
There was nothing in the New South Wales test which related specifically to waterskiing with jet skis.
Finding – would a licence have made any difference?
The question of fact that must be determined is whether, on the balance of probabilities, the holding by Scott of a relevant licence would have made any difference to the loss suffered by the plaintiff. If the answer is that it would not have, then the insured will have proven that no part of the loss that gave rise to the claim was caused by the fact that a licence had not been obtained and hence no part of the loss would be caused by the act of driving a jet ski without a licence.
Picking up what Chesterman JA said in Johnson v Triple C Furniture and Electrical Pty Ltd (2010) 16 ANZ Insurance Cases 61-866 at [96], Allianz submitted that the completion of the Queensland course in order to obtain a PWC licence was a line of defence against jet ski driver error. The plaintiff, on the other hand, emphasised that the completion of a course was no vaccination against negligence.
In my view, having regard to the required content of the Queensland course and the manner in which it was in fact delivered, it is clear that although there is a chance that undertaking that course would have altered the manner in which Scott drove the jet ski on the day of the accident, when the matter is assessed on the balance of probabilities, it is clearly more likely than not that the obtaining of a Queensland licence would not have made any difference to the loss suffered by the plaintiff.
The most that can be said in relation to participation in the course is that it might have provided a general reminder to Scott of safety issues and there is a chance that he may have learned some new technique from his instructor either as a result of the required course content or because of the opportunity to ask questions of another experienced jet ski user. However, what that new information or skill might have been is a matter of speculation. There is nothing in the course content as described in the Unit 7 competencies, or the actual course as described by Mr Laing, that Mr Smeaton was shown to be unfamiliar with.
Even if there was some new information or skill that might have been obtained, the evidence is not sufficient to indicate that it would have made any difference to Scott’s manner of driving the jet ski on 27 November 2010.
In particular, in relation to the conduct relied upon by the plaintiff and Allianz as constituting negligence the position is as follows:
(a)Failure to give accurate instructions in relation to the towrope: There was nothing in the PWC competencies or course about waterskiing or rearward facing observers. Therefore participation in the course would not have influenced whether Scott Smeaton gave these instructions or corrected the instructions that had been given by Todd Smeaton.
(b)Failure to warn the plaintiff of the approach to the wake: There was nothing in the PWC competencies or course addressing waterskiing or rearward facing observers. The course competencies included 7.4.4 “Passenger safety is considered at all times” and 7.5.10 “Passenger safety is maintained”. Having regard to the nature of the course, directed largely at first time PWC users, I consider it unlikely that there would have been anything other than general reference to communication with a passenger. It might have extended to a suggestion that it would be prudent to notify a passenger of approaching adverse conditions. It is very unlikely that specific reference would be made to the circumstances of communication with a rear facing observer having regard to the fact that waterskiing was not addressed in the competencies or in the course and there was only a passing reference to waterskiing in the BoatSafe Manual. To the extent that there was any reference to the need to communicate with a passenger, it is unlikely that such course content would have made any difference to Scott’s conduct on 27 November 2010.
(c)The capacity to safely cross the wake of other boats or of the jet ski itself: This is a matter which was covered in the PWC course. Having regard to the evidence of Todd and Scott in relation to their experience, skill and attitude in relation to driving a jet ski I am satisfied that Scott was capable of safely crossing the wake of another boat or of the jet ski that he was riding. Bearing in mind his experience with a jet ski, the practical component of the Queensland PWC course such as that run by Mr Laing would have involved riding the jet ski for closer to 10 minutes rather than the 20 minutes that might be required for a less experienced operator. I do not consider that the 10 or 20 minutes of practical instruction, the observation of other participants or the theoretical component of the PWC course would have altered what he did on 27 November 2010.
(d)The speed of the jet ski when making its turn to collect Todd Smeaton: The evidence about the speed at which he made the turn was from Scott, who estimated the speed of the turn to be 15 knots. Both experts agreed that this was either at the upper end of what was appropriate or too fast depending upon how sharp the turn was made. Having regard to the other circumstances, namely the need to cross the substantial 40 cm wake and the actions of the plaintiff at the point of the turn in reaching out to grab the towrope, there was no speed at which the turn could have been achieved without the jet ski pitching and creating a significant risk that the plaintiff would fall overboard. To the extent that Scott Smeaton took this turn too fast, I am not satisfied that this was a result of anything other than a momentary miscalculation of the appropriate speed at which to take the turn and ignorance of what the plaintiff was doing at the time. On the balance of probabilities it was not as a result of any lack of training or experience. On the balance of probabilities the 10 or 20 minutes of practical instruction, the observation of other participants or the theoretical component of the PWC course would not have altered the speed at which he took a turn on 27 November 2010.
(e)The making of a sharp turn when turning to collect Todd: The evidence about this was from the plaintiff who in describing how the accident occurred used the words: “it just did a bit of a sharp turn and then as we hit the wake, as well the jet ski for some reason, it is difficult to say”. Todd did not agree that the turn was a sharp one. Scott also disagreed. The concept of “a bit of a sharp turn” is one of considerable imprecision. One person’s sharp turn is another’s sweeping curve. The plaintiff’s perception of the turn and his description of it is likely to have been influenced by the instability which he in fact suffered. The defendants’ denial of it as a sharp turn may have been influenced by the implied criticism of Scott’s driving of the jet ski. The significance of the sharpness of the turn is clearly related to the speed at which it is made. The sharper the turn the lower the appropriate speed. In my view, the comments made in relation to the speed of the jet ski when making the turn apply equally to the sharpness of the turn.
(f)Scott’s apparent lack of situational awareness: This contention was based upon some cross-examination designed to demonstrate a lack of competency having regard to the terms of item 7.5.9 in Unit 7. Situational awareness is a potentially amorphous concept. Some indication of its intended content is given by the extract quoted at [87] above. It is designed to encapsulate the idea that a PWC driver is required to be aware of what is going on around him or her. Mr Laing gave evidence that this was demonstrated by a trainee in the course showing “good improvement from go to [whoa]”. The practical matter that he looked out for in determining whether or not a driver was situationally aware was whether or not the driver looked over his or her shoulder prior to making a turn. There is no evidence that Scott was unaware of the wake before he crossed it or failed to be aware of other craft that were nearby. That he was momentarily unaware of what the plaintiff was doing or indeed that the plaintiff had fallen off does not demonstrate that he was unaware of the need for situational awareness. It certainly does not demonstrate that his state of awareness would have been altered by having completed a PWC course at some unspecified time prior to the accident.
(g)The failure of Scott for a number of seconds to notice that his observer was no longer on the jet ski: The evidence in relation to this was that after completing the turn so to be travelling back towards Todd, the jet ski was approximately 60-100 m from Todd. In 2012, Scott estimated that he was 15 m from Todd when he saw that the plaintiff was in the water. There was no evidence as to how far the plaintiff was from the jet ski at that point and whether the plaintiff was in the water at a substantially different point from where he had fallen into the water, i.e. whether he had been dragged through the water behind the jet ski by reason of being entangled with the towrope. Scott performed the turn at 15 knots (27 km/h) after having slowed down from his towing speed of 30-32 knots (54 km/h). After completing the turn he accelerated for a second or two, travelling at in excess of 10 knots and then approached his brother at 6 knots or less. If the distance from the end of the turn to the closest point to which the jet ski approached Todd was 45 m (60 m -15 m), then there would be quite a number of seconds after the end of the turn before Scott was made aware that the plaintiff had fallen off. Any estimate is necessarily imprecise given the imprecise (and potentially inaccurate) parameters. An example based on two seconds travelling at 15 kn (7.5 m/s) and the balance of the distance at 6 knots (3 m/s) would be 12 seconds to cover the distance (2x7.5m + 10x3m) assuming, inaccurately, an instantaneous change of speed from 15 knots to 6 knots. In any event, even assuming that it took Scott 12 or more seconds to discover that the plaintiff had fallen from the jet ski, I am not satisfied that having completed the PWC course would have made any difference to that length of time. That is particularly so because nothing in the course was targeted at the circumstances of waterskiing or any other situation where a rearward facing passenger was present on the jet ski.
(h)Failing to check for at least 10 seconds as to whether or not his observer was still present on the jet ski: The position is the same as in relation to the previous item. No part of the course involved any instruction in relation to rearward facing passengers. There was certainly no course content which indicated the need for constant communication between driver and passenger or even communication when the jet ski had passed over rough areas such as a wake. Given that fact, it is extremely unlikely that the completion of the PWC course would have made any difference to the time taken by Scott to realise that the plaintiff had fallen from the jet ski.
In relation to the last two items, even if they were established, I would not have been satisfied that the failure by Scott Smeaton to immediately notice that his passenger had fallen overboard caused any part of the loss that gave rise to the claim. That is because there was almost no evidence about how the injury to the plaintiff actually occurred or the point at which, after the plaintiff hit the water, the injury was inflicted. Thus, it is not possible to say with any precision how the plaintiff’s leg was damaged through its interaction with the waterski rope or whether the damage was inflicted upon first contact with the rope, at some later point or over the whole of the period during which it was in contact with the rope. There is no evidence that the plaintiff continued to be dragged behind the jet ski until Todd indicated to Scott that the plaintiff was in the water. Looked at as a matter of probabilities, it is more likely that the injury was inflicted at the point where some part of the waterski rope caught upon the plaintiffs foot, which necessarily occurred prior to that having passed him. Travelling at 15 knots the jet ski would have been travelling at 7.5 m/s and hence, assuming the towrope to be approximately 20m long, the jet ski would have passed the plaintiff within the first three seconds and the immediate impact of the towrope on the plaintiff’s leg would have occurred shortly after. In those circumstances it is more likely than not that, allowing a reasonable period for the enquiry to be made and a reasonable reaction time to the discovery that the plaintiff was not on board, even had Scott made an enquiry of his passenger or, having passed through the wake, checked that his passenger was still there, the injury inflicted upon the plaintiff would still have occurred.
I have made the findings above on the basis most favourable to Allianz, namely that the relevant inquiry is whether obtaining a Queensland licence would have made any difference to the suffering of the plaintiff’s loss. If it is relevant to answer the causal question for the purposes of s 54(3) by reference to the obtaining of a New South Wales PWC licence then the same result as outlined above would apply. The New South Wales scheme as it in fact operated in the case of Todd, pre-accident, and Scott, post accident, only required the completion of a short test which was, for persons of Todd and Scott’s experience, easy to complete. The undertaking by Scott of the test would not, on the balance of probabilities, have affected whether or not the plaintiff suffered the loss that he did. There is no evidence in relation to the content of the online or practical courses that were available (and, in the case of the online course, stated by the Boating Manual, required) to be done. In the light of the evidence concerning the content of the Queensland course, even if Scott in applying for a PWC licence had completed an additional course in New South Wales then, on the balance of probabilities, that would not have affected whether or not the plaintiff suffered the injury that he did.
In the light of these findings it is not necessary to attempt to resolve the question of principle that arises as to which of the two schemes it is relevant to consider when determining the question posed by s 54(3), namely whether or not the failure to have a relevant licence caused any part of the loss. That would involve considering the counterfactual situation in which Scott had a relevant licence. Because of the terms of s 95(3) of the Transport Operations (Marine Safety) Regulations 2004 (Qld), a licence could either be a Queensland licence or a licence from another state. Given that Scott did not in fact obtain a licence in New South Wales or Queensland, but might reasonably, given his circumstances, have obtained one in either jurisdiction, the determination of what circumstance should be applied for the purposes of the causation question is difficult. It is resolved in this case by my finding that licensing in either jurisdiction would not, on the balance of probabilities, have made any difference.
Application of s 54
Having regard to my finding above that no part of the loss that gave rise to the claim was caused by the unlicensed driving of the jet ski, s 54(3) has the effect that Allianz may not refuse to pay the claim by reason of that act.
Allianz’s additional argument
The final argument that counsel for Allianz was instructed to put was that, in the circumstances of this case, the insured was precluded from reliance on s 54 because of the nature of the unlawful activity engaged in by Scott. He frankly conceded that there was no authority in support of that proposition. However, he did point me to the principal articulated in Gray v Barr (1971) 2 QB 554 (Gray) that public policy might include recovery by an insured under a policy where the loss has arisen because of an illegal criminal act. That decision was referred to in S & Y Investments (No 2) Pty Ltd v Commercial Union AssuranceCo of Australia Ltd (1986) 44 NTR 14 (S & Y).
As articulated, the argument was targeted at the operation of s 54. However, it could not be successful if so targeted. The statute either applies or it does not. The Court’s view of public policy could have an influence upon a question of interpretation of the statute but once, upon its proper interpretation, the section applied, then it applied notwithstanding public policy. The argument would really have to be that notwithstanding that the section applied, the Court would deny recovery under the policy on public policy grounds, notwithstanding that there was no entitlement to refuse indemnity either under the policy or under s 54.
This ground of defence cannot succeed for a number of reasons which include the following:
(a)First, it was not pleaded. Allianz specifically invoked s 54 itself and did not plead any general public policy defence. No application was made to amend the pleading to accommodate the contention.
(b)Second, both the authorities referred to involved insurance claims arising out of a person discharging a firearm causing death. In Gray, the shooter would have been denied indemnity on public policy grounds: at 568-569, 581-582. 587-588. In S & Y, had Holmes, the shooter, been the insured then he too would have been denied indemnity on public policy grounds: (1986) 44 NTR 14, 34 (Asche J), 24 (Kearney J) . Recognising that “public policy is rightly regarded as an unruly steed which should be cautiously ridden” (Gray at 581), I would not hold that the infringement of a regulatory provision such as that relating to licencing of users of jetskis is so serious that public policy warrants denial of any entitlement to enforce an indemnity that is otherwise available. In circumstances where, under s 54, there is no preclusion upon the defendants being indemnified under the policy, it would not “shock the public conscience” if they were entitled to enforce their claim against Allianz: cf Gray at 581.
In reaching that second conclusion in relation to public policy, I have had regard to the fact that in so far as public policy is discoverable, it is not consistent with Allianz’s argument. Among the examples found in the notes to the Draft Insurance Contracts Bill 1982, which formed part of Australian Law Reform Commission’s Report 20 Insurance Contracts, was an example of a driver of a motor vehicle who had permitted his licence to expire and was therefore unlicensed. He thereby committed an offence. The example in the bill expressly contemplated that what became s 54 would apply. This suggests that public policy reflected in and underlying the operation of s 54 was that recovery under an insurance contract where the acts of an insured involved a criminal contravention of a regulatory licensing provision would be governed by the tests in s 54, rather than by some overarching question of public policy divorced from the legislation.
Further reinforcing the second conclusion is the fact that the contract of insurance in the present case contained an exclusion clause in relation to both claims arising from “a malicious or criminal act” as well as any claim arising from an incident involving “Your Boat” “when it is being used for an unlawful or illegal purpose”. Notwithstanding that this was pleaded, Allianz indicated during the course of the hearing that it was not relied upon. In assessing what the “unruly horse” of public policy requires, it must be relevant to take into account the bargain the parties have struck. The fact that the contract between the parties expressly dealt with criminal conduct and the relevant exclusion was not relied upon is, while not determinative, a factor which weighs against the submission that public policy requires a denial of liability.
Finally, s 55 appears on its face to deny any entitlement on the part of an insurer to contend that public policy considerations arising from the nature of the act or omission precluded enforcement of the insurance policy in circumstances where s 54 renders the insurer liable. Having regard to the conclusion that I have reached above and the absence of any argument on the point I do not need to finally determine the effect of s 55 on Allianz’s argument.
Damages
The parties agreed that the damages suffered by the plaintiff should be assessed at $800,000.
Orders
The orders of the Court are:
1.Judgment be entered for the plaintiff against the defendants in the sum of $800,000.
2.Judgment be entered for the defendants against the third party in the sum of $800,000.
3.The parties file and serve written submissions (limited to no more than four pages) and any evidence in relation to costs as follows:
(i) plaintiff and defendants within seven days;
(ii) third party within 14 days;
(iii) plaintiff and defendants in reply within 21 days.
| I certify that the preceding one-hundred-and-eighteen [118] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop. Associate: Date: 18 April 2016 |
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