Mitigation of Losses

Hobby had commenced proceedings in the District Court after she slipped and fell on a party pie at a function at the Rydges Hotel at Wollongong. The proceedings were commenced against ECS, the owners of the hotel, alleging that ECS was negligent in allowing food to be left on the floor. At first instance Hobby was successful in her claim and was awarded damages in excess of $400,000.00. In the judgment the primary judge reduced the damage to reflect a finding that that there had been an unreasonable failure on the part of the plaintiff to mitigate her damages and undergo medical treatment.

An appeal followed. ECS did not appeal the primary judge’s finding on liability but challenged several of the heads of damages awarded. Hobby cross-appealed challenging the judge’s finding that there was a failure to mitigate. At trial ECS argued that Hobby had failed to mitigate her loss as she had refused to undergo reconstructive surgery of her injured knee. Hobby had been on a waiting list for the surgery at Mt Druitt Hospital and had declined the surgery on three separate occasions prior to the hearing. The trial judge found that Hobby’s refusal to undergo surgery was unreasonable because the surgery was relatively safe and was likely to have reduced the extent of her disability.

In the Court of Appeal, it was found that the learned trial judge erred in not considering the High Court’s decision in Fazlic v Milingimbi Community Inc where the High Court held that reasonableness of a claimant’s refusal to undergo surgery depended on the claimant’s state of knowledge at the time of the refusal. The High Court also determined that a plaintiff’s choice cannot be said to be unreasonable because he has failed to give effect to factors unknown to him and in the case of complex medical or surgical procedures he will know little except what he is told. Hobby was cross-examined at length as to the reason for her refusal to undergo surgery and gave various reasons including a general fear to undergo the procedure, uncertainty as to what it entailed and the need for her to care for her three young children. Counsel appearing in the Court of Appeal conceded there was no evidence at trial that Hobby’s treating doctors explained to her the reasons why they considered the surgery was necessary or outlined to her the risks and benefits of the operation.

Justice Sackville considered that the absence of such evidence meant that the Court of Appeal could not, applying the test in Fazlic , find that Hobby’s refusal was unreasonable. In this case it could not be determined that Hobby was unreasonable in refusing to undergo a procedure which she knew little or nothing about. Accordingly the Court overturned the trial judge’s finding that Hobby had been unreasonable. As the trial judge’s decision on her failure to mitigate was overturned, Hobby argued that Justice Mahoney also erred in limiting her award of future attendant care services to a period of ten years. The trial judge found that if Hobby underwent the surgery she would not need care for the rest of her life, and awarded a ten year window to do this. His Honour’s reasons for nominating ten years were not made clear although Justice Sackville commented that the trial judge may have considered that Hobby’s fear of the surgery would be overcome if the benefits and risks were properly explained to her. Alternatively, Hobby may have been more likely to undergo the surgery once her children had grown.

In any event, Justice Sackville found there was no evidence before the trial judge that Hobby would continue to refuse to have the surgery. Again, Hobby’s evidence at trial was important, as it dealt only with why she had not had the surgery for the period up to and including the trial. Hobby did not give evidence about what she might do in the future and the claim for the cost of the surgery was never abandoned. Justice Sackville, again with whom Justice Gleeson and Justice McDougall agreed, found that the trial judge’s finding was not supported by the evidence although the award of damages should be limited to a period of five years.

The Court of Appeal’s decision upheld the authority that a plaintiff’s refusal to mitigate their loss will be determined on an objective basis having regard to what the plaintiff knew at the time the decision was made. It is not enough to say that if a procedure is relatively safe a failure to proceed with it is therefore unreasonable. The burden is on a defendant to establish unreasonableness based on what a plaintiff knew about a procedure. In this case ECS failed to meet that burden of proof. The award of damages was reduced but not due to a failure to mitigate and rather by reason of the conclusion that the treatment would have been undertaken at an earlier time in the future.

The refusal to undergo reasonable treatment can have an impact on the plaintiff’s damages but the onus rests on a defendant to prove that there has been a failure to mitigate if a reduction in damages is argued.