07 June 2018

Statutory limitation on “injured person” evidence found not to apply to corporate plaintiff

This article was written by Travis Toemoe, Acacia Hosking and Joel Bond.

In a decision published yesterday, the Supreme Court of Western Australia provided some useful guidance on the admissibility of hindsight evidence and determined that the position differed between individual and corporate plaintiffs. That decision turned on the finding that a corporate plaintiff is not an “injured person” under section 5C(3)(b) of the Civil Liability Act 2002 (WA) (CLA). 

The consequence of the decision ([2018] WASC 167) is that when an “injured person” is a corporation, a director can provide evidence as to what the corporation would have done if the alleged tortfeasor had not been at fault.  However, where the “injured person” is a natural person, the same evidence would be inadmissible.    

Issue

Section 5C(3)(b) of the CLA restricts an injured person from providing evidence “as to what he or she would have done” had the alleged tortfeasor not been at fault.  In the case in question, the defendant objected to certain evidence from the plaintiff’s directors on the basis that the evidence was inadmissible due to the operation of section 5C(3)(b).  Justice Vaughan found that on its proper construction, the section 5C(3)(b) limitation on admissibility applies only when the injured person is a natural person, and therefore the directors’ evidence was admissible.

Analysis

In determining the meaning of “injured person” Justice Vaughan observed that:

  • Section 5 of the Interpretation Act 1984 (WA) defines “person” to include a company. However, section 3(1)(b) of the Interpretation Act provides that definition does not apply where the intent and object of the statutory provision or something in the subject or context of the statutory provision is inconsistent with such application.
  • Section 5C of the CLA was introduced in response to the Review of the Law of Negligence, Final Report (2002) (Report). The Report highlighted the enormous difficultly of counteracting hindsight bias in a plaintiff’s evidence and recommended that due to this difficultly, the question of what the plaintiff would have done should be decided on the basis of the circumstances of the case and without regard to the plaintiff’s own testimony. 
  • There is a difference between evidence of the injured person and evidence on behalf of the injured person. In this case, the injured person was the plaintiff corporation, not the directors who sought to give evidence on its behalf. 

Outcome

Before addressing the parties’ respective arguments, Justice Vaughan gave a comprehensive overview of the general principles of statutory interpretation, concluding the key elements in determining proper construction are statutory text, context and purpose.  The distinction in respect of the statutory text of the provision in question, was crucial for Justice Vaughan, who determined that any construction that equates evidence of the injured person with evidence on behalf of the injured person must be rejected.  His Honour found that in referring to “evidence of the injured person” Parliament is referring to an injured person who is capable of giving evidence.  His Honour went on to find that as a corporate plaintiff cannot give evidence (evidence can only be given on its behalf), the subject and context of section 5C(3)(b) is inconsistent with its application to a corporate plaintiff.  It appears Justice Vaughan prioritised the text itself above the purpose of the provision, given the comments made in the Report.

Although Justice Vaughan determined the directors’ evidence was admissible, His Honour noted the weight and reliability of the evidence remained to be considered in accordance with the common law principles outlined in Chappel v Hart (1998) 195 CLR 232 and Rosenberg v Percival (2001) 205 CLR 434.  Those cases express reservations about the value of a plaintiff’s hypothetical evidence and provide that a plaintiff’s evidence should be assessed carefully and conclusions should be reached, as far as possible, on objectively established facts. In short, care needs to be taken because of hindsight bias.

Key Thoughts

Justice Vaughan’s construction of section 5C(3)(b) arguably provides corporate plaintiffs with an advantage over a natural person plaintiff.  When the plaintiff is a natural person, any evidence by the plaintiff about what they would have done if the alleged tortfeasor had not been at fault is inadmissible due to the difficultly of hindsight bias as legislated in section 5C(3)(b).  However, in the case of a corporate plaintiff, evidence from directors, officers or employees on its behalf will be admissible under the same provision. 

It remains to be seen whether this Western Australian decision will be adopted in other Australian jurisdictions with similar (supposedly uniform!) legislation such as New South Wales. Until courts in those jurisdictions decide the issue, a prudent course would be to assume the Western Australian approach is likely to be followed.

Key contacts

Outbound investment: Managing risks and exiting with grace

Discover our top six tips in this Practical Belt and Road Guide.

Belt and Road
Share on LinkedIn Share on Facebook Share on Twitter Share on Google+
    You might also be interested in

    Trkulja v Google LLC (M88/2017) - The High Court has allowed an appeal to set aside a defamation proceeding brought by Mr Trkulja against Google LLC.

    13 June 2018

    Australia is in the midst of its third major inquiry into the growing litigation funding industry in four years.

    06 June 2018

    Special purpose liquidators of Queensland Nickel Pty Ltd (in liq) have been successful in their application for freezing orders against Mr Clive Palmer and several companies which he controls.

    25 May 2018

    This decision highlights issues faced by insurers in relying on exclusion clauses (even ones that are broadly drafted) to escape the operation of the Third Party Claim Act.

    25 May 2018

    This publication has been downloaded from the King & Wood Mallesons website. It is provided only for your information and does not constitute legal or other advice on any specific matter. If you require or seek legal advice you should obtain such advice from your own lawyer, and should do so before taking, or refraining from taking, any action in reliance on this publication. If you have any questions, please contact King & Wood Mallesons. See www.kwm.com for more information.