Decision of the Supreme Court of the Australian Capital Territory
On 18 April 2016, Associate Justice Mossop found that both Scott Smeaton and Todd Smeaton were negligent.
Expert evidence was adduced that Nathan Whittington should have been informed not to try and pull the towrope until the jet ski was nearly stationary.
Associate Justice Mossop held that a reasonable person in the position of Scott Smeaton and Todd Smeaton would have taken the precaution of ensuring that Nathan Whittington understood clearly that he was only required to keep the towrope away from the rear of the jet ski when it was almost stationary. Further, Scott Smeaton and Todd Smeaton ought to have given Nathan Whittington some warning about holding on, whilst rearward facing on the jet ski.
In addition to a finding of negligence, Associate Justice Mossop rejected the argument submitted on behalf of Scott Smeaton and Todd Smeaton, namely that they had a defence pursuant to sections 17 and 19 of the Civil Liability Act 2003 (Qld). Section 19 of the Civil Liability Act 2003 (Qld) provided the basis for a defence that Nathan Whittington had been involved in a “dangerous recreational activity” and that the fall suffered was a result “of the materialisation of an obvious risk”.
Associate Justice Mossop concluded that Nathan Whittington was not engaged in a dangerous recreational activity and therefore the application of sections 17 and 19 of the Civil Liability Act 2003 (Qld) were not triggered.
Allianz submitted that some of the acts of negligence by Scott Smeaton were matters addressed in obtaining the relevant licence. Furthermore, Allianz argued that pursuant to section 54(2) of the Insurance Contracts Act 1984 (Cth), it was entitled to deny the claim for indemnity. In addition, Allianz stated that Todd Smeaton could not meet the level of proof required by section 54(3) of the Insurance Contracts Act 1984 (Cth) to disentitle it from refusing the claim.
The claim by Scott Smeaton and Todd Smeaton against Allianz depended upon whether or not the Smeaton brothers could prove, for the purposes of section 54(3) of the Insurance Contracts Act 1984 (Cth), 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.
Associate Justice Mossop confirmed that the onus under section 54(3) of the Insurance Contracts Act 1984 (Cth) was on the insured, Todd Smeaton. The Court stated:
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.
The Court examined the legislation relevant to obtaining a personal watercraft licence (which is the type of licence necessary to legally operate a jet ski) in both Queensland and New South Wales. Ultimately, Associate Justice Mossop decided that whether the test had been taken by Scott Smeaton in Queensland or New South Wales, it would not have made any difference to the actions in the events comprising the accident.
Associate Justice Mossop found in favour of Nathan Whittington as against Scott Smeaton and Todd Smeaton and awarded damages in the sum of $800,000. The Court also ordered that Allianz was obliged to indemnify Scott Smeaton and Todd Smeaton.
Basis of Appeal
Allianz appealed the decision by Associate Justice Mossop on the basis that Todd Smeaton had failed to prove that no part of the loss was caused by (or contributed to) by the fact that Scott Smeaton was unlicensed.
Allianz summarised the basis of its appeal with the question: Would it have made any difference to the actions of Scott Smeaton, in driving the jet ski, that he had undertaken the licence requirements?
Allianz submitted that the information Scott Smeaton would have gathered in complying with the licensing requirements would have influenced the manner in which he drove the jet ski on 27 November 2010. Furthermore, that the influence would have, in turn, lessened the likelihood of the acts of negligence so that Todd Smeaton could not rely on section 54(3) of the Insurance Contracts Act 1984 (Cth).
The Court of Appeal found that the approach taken by Associate Justice Mossop, in considering whether the incident would have still occurred and the same damage been suffered had Scott Smeaton obtained the relevant personal watercraft licence, was correct.
Allianz also submitted that it would have been the Queensland, as opposed to the New South Wales, licensing requirements that would have applied because the accident occurred in Queensland. The Court of Appeal held that the New South Wales licensing requirements were the relevant requirements to be examined and that complying with the NSW licence requirements before the accident would not have made a difference to Scott Smeaton’s actions on the day.
The appeal was dismissed and Allianz was not entitled to deny the claim.