Insurance in MOtion - The irrationality of rational opinions

The application of peer professional opinion in professional negligence claims in NSW received judicial attention in the Court of Appeal’s decision in South Western Sydney Local Health District v Gould. The Court of Appeal overturned the District Court decision on the basis that the primary judge’s reasoning process was procedurally unfair and that he misapplied the test of irrationality in s.5O(2) of the Civil Liability Act 2002 (NSW) when rejecting peer professional opinion led by the defendant.

In NSW, s.5O of the Act operates to prevent a professional from incurring a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that was widely accepted in Australia by peer professional opinion as competent professional practice. If s.5O is found not to apply, duty of care is assessed by reference to the matters set out in ss.5B and 5C of that Act, including foreseeability and likelihood of harm.

Leeming JA stated that the defendant bears the onus of establishing the preconditions set by s.5O, failing which the terms of ss.5B and 5C of the Act will apply. “However, if the preconditions are established, then the standard of care against which the defendant’s conduct is assessed is that which was widely accepted by peer professional opinion as competent professional practice, unless the Court considers that opinion is irrational”. Leeming JA confirmed that this is the single standard against which the professional is assessed.

Leeming JA also provided some commentary on the question of what makes an opinion “irrational”. He considered that “it is a seriously pejorative and exceptional thing to find that a professional person has expressed an opinion that is ‘irrational’, and even more exceptional if the opinion be widely held. To consider a body of opinion to be ‘irrational’ is a stronger conclusion than merely disagreeing with it, or preferring a competing body of peer professional opinion”. Basten JA further stated that “it will only be if the court can, on the evidence, be satisfied that there is no rational basis for it that it can be properly rejected” with such evidentiary burden resting with the plaintiff.

The full case can be accessed here.

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