A tale of two trucks – Herne Investments (NSW) Pty Limited v Don Watson Proprietary Limited [2016] NSWCA 72

On 27 June 2012, Mr Brogden, the driver of a prime mover and detached trailer owned by Herne Investments (NSW) Pty Limited (the plaintiff) was travelling along the Pacific Highway. Another prime mover and B-double trailer combination, owned by Don Watson Proprietary Limited (the first defendant) and driven by Mr Rhodes (the second defendant) was travelling behind the plaintiff's vehicle in a single lane as both approached the start of an overtaking lane. The plaintiff's vehicle moved into the left lane while the first defendant's vehicle moved into the right overtaking lane. The vehicles travelled side by side for some distance. The left lane ultimately came to an end and vehicles in that lane were required to merge to the right into the overtaking lane which continued as a single lane. Mr Brogden failed to move the plaintiff's vehicle into the overtaking lane before the left lane terminated and collided with the guard rail. The plaintiff's truck overturned. The plaintiff claimed $215,477.97 from the defendants for damage to the vehicle and loss of income.

In the District Court of New South Wales, the primary judge^[2] found in favour of the defendants as his Honour was not satisfied that a reasonable person in the position of the second defendant would have taken the precautions the plaintiff claimed he should have taken. Specifically, his Honour was not satisfied that the second defendant should have decelerated to enable the plaintiff's vehicle to move from the left lane into the overtaking lane. The plaintiff was ordered to pay the defendants' costs on an indemnity basis from the date of an offer of compromise which offered judgment for the plaintiff in the sum of $20,000 with the defendants' paying the plaintiff's costs on a party/party basis.

There were four grounds of appeal:

The New South Wales Court of Appeal (Court of Appeal) noted that r 148 of the Road Rules applies to vehicles moving from one marked lane of traffic to another. This rule provides that a driver who is moving from one marked lane (whether or not the lane is ending) to another marked lane must give way to any vehicle travelling in the same direction as the driver in the marked lane to which the driver is moving. Giving way, as defined by the rule, means the driver must slow down and, if necessary, stop to avoid a collision. Examples of how r 148 operates are shown below:

The principal issue on appeal was whether the second defendant breached his duty of care to the plaintiff. This required consideration of s 5B(1) of the CLA. This section states that a person is not negligent in failing to take precautions against a risk of harm unless: 

(a) The risk was foreseeable, and

(b) The risk was not insignificant; and

(c) In the circumstances, a reasonable person in the person's position would have taken those precautions.

The issue of speed, the braking ability of the respective vehicles and their position on the highway was considered at length. The Court of Appeal confirmed the primary judge's finding that the first defendant's vehicle was longer than the plaintiff's vehicle and was travelling at a slightly faster speed than the plaintiff's vehicle in the overtaking lane. Consequently, when the vehicles approached the 'left lane ends 500 metres' sign (the 500 m sign) the first defendant's vehicle was slightly ahead of the plaintiff's vehicle. In that event, the plaintiff's argument that no part of the first defendant's vehicle had moved ahead of the plaintiff's vehicle by the time they reached the 500 m sign failed as did the argument that the second defendant did not have enough time to finish overtaking and therefore, should have slowed down to allow the plaintiff's vehicle to enter the overtaking lane before the left lane ended.

The Court of Appeal confirmed the primary judge's acknowledgment that the fact that particular conduct is prohibited by the Road Rules is not determinative of what reasonable care requires for the purpose of s 5B of the CLA. Although the plaintiff's vehicle was required to give way to the defendant's vehicle, compliance or non-compliance with the Road Rules was only a factor to be taken into account when considering whether the parties have failed to take reasonable precautions to avoid a risk of harm. The Court of Appeal was satisfied that the relevant risk of harm was that the plaintiff's vehicle would veer off the roadway and sustain damage and that this risk was foreseeable and not insignificant.

In relation to the plaintiff's second ground of appeal, that the primary judge should have found that a reasonable person in the second defendant's position would have taken precautions to avoid that risk, the plaintiff suggested that such precautions would have been avoiding the overtaking manoeuvre altogether or, alternatively, slowing down after reaching the 500 m sign to allow the plaintiff's vehicle to move right into the overtaking lane. The Court of Appeal found that not only was the plaintiff obliged to give way to the first defendant's vehicle, but that the first defendant's vehicle was ahead of the plaintiff's vehicle at all times from the 500 m sign and whilst the risk of the plaintiff's vehicle veering off the roadway was foreseeable and not insignificant, a reasonable person in the second defendant's position was not required to take precautions to avoid that risk.

In relation to indemnity costs, it was found that there had not been any miscarriage of the discretionary power to award indemnity costs and that the plaintiff had not persuaded the Court of Appeal that it was not unreasonable for the plaintiff to decline the offer. This was despite the fact that the offer represented about 11% of the original amount claimed and was made before the defendants had served their expert's report and at a time when the second defendant had been charged with negligent driving. The Court of Appeal also noted that it was not obvious why the fact that the second defendant had been charged with negligent driving should have any bearing on the question of the reasonableness of the plaintiff's rejection of the defendants' offer of compromise.

The mere fact that a Road Rule prohibits certain conduct is not the only issue to be considered when determining liability. Although the plaintiff was required to give way to the second defendant pursuant to r 148 of the Road Rules, the CLA also required a determination of what is reasonable in the circumstances and whether a risk was foreseeable and not insignificant. Consequently, claims officers must consider the Road Rules and what a reasonable person would do to avoid a risk of harm.

In this case, the assessment of what a reasonable person would do included an analysis of: the surrounding highway and the two vehicles; their respective speeds; the short distance available to both vehicles from the 500 m sign and the greater ability of the plaintiff's vehicle to slow down. All of these considerations contributed to the Court's finding that it was not satisfied that a reasonable person in the second defendant's position would have taken the precaution of slowing down to allow the plaintiff's vehicle to enter the right and continuing lane.

This case is also a reminder that if seeking to challenge an order for indemnity costs it is incumbent upon the party challenging that order to persuade the court that it was not unreasonable for that party to decline an offer of compromise.