Back to basics – breach, section 5B and the foreseeability of the risk Collins v Insurance Australia Ltd [2022] NSWCA 135

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By Louise Cantrill, Partner and Luke Scrimes, Solicitor

The New South Wales Court of Appeal has provided practitioners with assistance on how breach of a duty of care is established pursuant to section 5B of the Civil Liability Act 2002 (the Act). While the decision involved the application of the Motor Accidents Compensation Act, the Court’s guidance on the operation of section 5B of the Act is instructive.

On 17 August 2014, the appellant suffered injuries when she drove her car up an embankment in an attempt to avoid a traffic jam created by an earlier accident. The manoeuvre caused the car to overturn. By the time the appellant commenced her action in negligence the driver who caused the original accident had died and the appellant’s claim was brought against the driver’s compulsory third-party insurer.

At first instance, the appellant was unsuccessful, as it was held that while the risk of harm to the appellant caused by the driver’s negligence was foreseeable, the consequences of that risk were insignificant, meaning that section 5B of the Act was not satisfied.

On appeal, to satisfy section 5B of the Act, the Court noted that regard must be had to what response a reasonable person, confronted with a foreseeable and not insignificant risk of injury, would have made to that risk. Applying these principles, the Court found that the driver’s negligence exposed the appellant to a foreseeable and not insignificant risk of harm.

In determining whether the risk of harm was foreseeable, the Court reiterated that the actual risk of harm which was created did not need to be foreseen with precision. It may be sufficient that the risk of harm which did eventuate was a consequence of the breach of duty.

In relation to the determination of the ‘significance’ of the risk, the Court emphasised that the seriousness of the possible consequences if the risk materialises is relevant to determining whether a reasonable person would take precautions against that risk of harm. As a corollary to this, the Court reiterated that a risk may be characterised as “not insignificant” even where it has a low chance of occurring.

The New South Wales Court of Appeal’s decision is a timely reminder to practitioners that the determination of breach pursuant to section 5B of the Act is a prospective, common-sense assessment.

Collins v Insurance Australia Ltd [2022] NSWCA 135

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