IZG2 v State of NSW; AXJ2 v State of NSW; KWM2 v State of NSW; BJS2 v State of NSW

1. [1]

   HIS HONOUR: In these legally complex and interrelated proceedings, which are currently part-heard, the State of New South Wales as cross-claimant seeks contribution or indemnity pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 from Helga Lam, a former teacher at Maroubra Bay High School in the 1970s. The plaintiffs in each case were at that time students at the school and alleged that Ms Lam sexually abused them when she was their teacher. The proceedings were settled by the State and damages were paid to each plaintiff. The general question remaining for determination on the cross-claim is whether Ms Lam should be required to pay contribution to the State as a tortfeasor who would if sued have been liable to the plaintiffs.

2. [2]

   The proceedings had reached the point where the evidence was complete and the parties were in the course of their final oral submissions. Written outlines had previously been provided to me. However, it was in the course of addresses that it became apparent, if it were not otherwise so, that Ms Lam wished to contend that the State could not succeed on its claims against her for at least the reason, among others, that it was seeking to recover contribution for damages paid by it in respect of pure mental harm and that notwithstanding that fact, it had tendered no evidence to establish that the damage for which the State maintained it was liable qualified as a recognised psychiatric illness.

3. [3]

   Section 31 of the Civil Liability Act 2005 provides as follows:

4. [4]

   Ms Lam did not refer to this provision in her defence. It was never referred to in terms in the several pre-trial directions hearings before his Honour Garling J, or in the schedule of issues in dispute. The State maintained that Ms Lam is not in these circumstances entitled to take this point as s 31 was never pleaded, and that it should have been, and that her attempt to rely upon it now is defeated by that fact. That proposition is contested by Ms Lam. This dispute resulted in the State seeking an order by notice of motion filed on 17 April 2025 that I determine pursuant to s 61 of the Civil Procedure Act 2005 whether Ms Lam “is permitted to rely upon s 31 of the Civil Liability Act 2005 in her defence”.

5. [5]

   I pause at this point to make the following important observation. The alleged absence in the case before me of evidence that the plaintiffs were suffering from a recognised psychiatric illness is a function of a particular forensic decision taken by the State with respect to its tender of various medical reports from psychiatrists in which expert opinions are offered about what is said to have resulted from Ms Lam’s alleged sexual abuse. Without at this stage expressing, or appearing to express, any view about the substance of those medical opinions, it is at least arguable that in the case of three of the plaintiffs, the psychiatric conclusion was that they were suffering from a recognised illness. However, the State tendered those reports before me with the avowed limitation that they were only to be received as evidence of the reasonableness of the settlements between the State and the plaintiffs, and not as evidence of the diagnostic opinions which they contained.

6. [6]

   The reason that the State took that approach is disputed. It may be taken at this stage, although not uncontroversially, that the self-imposed limitation upon the use to which those reports might be put was on one view the result of what the State maintains was a misunderstanding or misapprehension on its part about the very point that Ms Lam now wishes to maintain concerning the operation of s 31 of the Act. In short, the State insists that it was never aware that Ms Lam would contend that s 31 was a bar to its success because it was never pleaded when it should have been and that there was no other indication given to it by Ms Lam to the contrary. The State also disputes Ms Lam’s proposition that the damage sustained by the plaintiffs was pure mental harm. She says in contrast that the s 31 limitation on liability was always in play because the damage asserted was pure mental harm but that in any event she had no obligation to plead the section in terms or otherwise draw its asserted significance to the attention of the State.

7. [7]

   For reasons that I trust will later emerge clearly, I have chosen fully to record the parties detailed submissions on the motion in what follows. However, in the events that have occurred, I consider that the resolution of the manifold issues that the parties have felt the need to raise at this time can and should be put to one side without a final determination now and ought preferably to be left for consideration after final submissions have been made. This is explained later in these reasons.

The State’s submissions on the Motion

1. [8]

   The State submitted that it was not until 27 March 2025, the eleventh day of the trial, that Ms Lam for the first time raised a point in reliance on s 31 of the Civil Liability Act. Section 31 had been mentioned in passing by Senior Counsel for the State in oral address on day ten. That passing reference was made in response to Ms Lam’s written submissions, served at 4.36am on 26 March 2025. In those written submissions, without reference to s 31, Ms Lam took the point that the State had not proved that the plaintiffs had suffered compensable harm.

2. [9]

   The State in response to the oral submission made on 27 March disclosing reliance on s 31 for the first time, made known its objection to that course. The State now:

Background

1. [10]

   The plaintiffs in four proceedings have sued the State of New South Wales seeking damages. In each case, the plaintiffs particularise the injuries and disabilities which they contend that they have suffered. Those particulars include but are not limited to recognised psychiatric injury. In addition to the particularised recognised psychiatric injury, the particulars in each case include injuries and disabilities such as anxiety and matters other than a recognised psychiatric injury. The amended statements of claim do not plead or particularise whether the damages sought from the State were damages within the definition of "personal injury" in s 11 of the Civil Liability Act, or damages for "pure mental harm" or "consequential mental harm" within s 27 of the Act.

2. [11]

   The State filed a defence in each case. It pleaded certain provisions of the Civil Liability Act, specifically s 5D, s 5O and s 42. It did not plead reliance on s 31, presumably because it anticipated the receipt or tender of medical evidence establishing the existence in each plaintiff’s case of a recognised psychiatric illness.

3. [12]

   The proceedings settled. The rights to damages on the causes of action pleaded in the amended statements of claim merged in the judgments. There is no identification of which of the heads of damages are reflected in the judgments that were entered by the Court, or whether the judgments reflected judgment for the direct liability case and/or the vicarious liability case. No document identifies whether the damages awarded were "personal injury damages" or aggravated damages or were for pure mental harm or consequential mental harm as defined.

4. [13]

   The State filed cross-claims in each of the cases. The risk of harm pleaded by the State in each case against which the Department of Education was required to take precautions is "the risk of harm including mental harm to the plaintiff by him engaging in sexual conduct with the cross defendant". That is, the risk of harm was not identified as pure mental harm, and the risk included but was not limited to mental harm.

5. [14]

   The critical pleading of causation of harm is pleaded at [5N] of each of the cross claims. That State pleaded that "the failure by the Department … to take any of the precautions pleaded in 5L above was a necessary condition of the harm suffered by the plaintiff".

6. [15]

   Ms Lam filed defences to each of the cross-claims. The State maintains that the defences are uninformative. Relevantly in the State’s submission, Ms Lam did not admit that the plaintiffs suffered the harm they alleged and said that to the extent that the plaintiffs suffered any such harm it was not caused or contributed to by an act or omission of hers. Ms Lam pleaded no reliance on s 31 in the defences she filed.

7. [16]

   On 17 February 2025, the parties provided a joint memorandum of agreed facts and issues in dispute in accordance with the requirements in the usual order for hearing in the Practice Note. On the question of causation, the issues are confined to whether the State's breaches of duty were a necessary condition of the harm suffered by the plaintiffs and with respect to duty and breach, the scope of duty, whether the alleged conduct occurred and whether the State breached its duty as pleaded in paragraph 5L of the cross-claim. There is no reference in the joint memorandum to any issue arising from the asserted application of s 31.

8. [17]

   Nor is there any reference by Ms Lam in her opening written or oral submissions to any reliance upon s 31 or to a factual contention that the claims made by the plaintiffs are properly categorised as claims for pure mental harm within s 27. The first reference to s 31 by Ms Lam came in the afternoon of the eleventh and proposed final day of the trial.

Civil Liability Act provisions and authorities regarding personal injury damages - mental harm

1. [18]

   The State's case is that the harm alleged by the plaintiffs in their amended statements of claim is within the definition of "personal injury damages" in s 11. Section 11 is found in Part 2 of the Act. That is plain from the plaintiffs' pleadings, the defences and the cross-claims. It is also plain from the fact that the State agreed at T476.48-50 to limit the use to which the expert psychiatrist reports could be made under s 136 of the Evidence Act 1995.

2. [19]

   The State’s proposition that the damages claimed by the plaintiffs are "personal injury damages" and not properly characterised as damages for pure mental harm within the meaning of Part 3 of the Civil Liability Act is based upon the following matters.

3. [20]

   First, the relevant definitions in s 11 are as follows:

4. [21]

   The nature of the damages sought by the plaintiffs is not limited to impairment of their mental conditions. There is no authority in relation to a damages claim for child sexual abuse of which the State is aware that has characterised the damages sought as solely relating to impairment of the plaintiff's mental condition. The State’s position is that a sexual assault or abusive sexual conduct involves the violation of bodily integrity of the kind recognised in United Services Automobile Association v Doe 792 NE 2d 708 (Mass. App. Ct. 2003).

5. [22]

   Secondly, it is plain that the actionable abuse by Ms Lam of AXJ2 was an assault and battery which falls within the definition of personal injury damages and is not pure mental harm. The State pleads assault and battery with respect to some of the sexual conduct for each of the plaintiffs. The harm arising from an assault and battery is not pure mental harm. As noted, the plaintiffs' pleaded rights to damages merged in the judgments, with the result that those damages cannot be said to arise from pure mental harm.

6. [23]

   Thirdly, each of the plaintiffs claimed aggravated damages, which plainly are not damages sought for "pure mental harm". This is relevant for the same reason already advanced, that the plaintiffs' rights to damages merged in the judgments and are effectively indivisible.

7. [24]

   Fourthly, even if the plaintiffs' claims are characterised as relating solely to impairment of their mental condition, there are a number of relevant decisions of first instance judges in this Court and in the Court of Appeal which consider the meaning and construction of s 11 and its interaction with other provisions in the Act, including s 31.

8. [25]

   The effect of this authority is that, absent an assertion by a defendant that s 31 applies as an answer to its liability to pay damages, a plaintiff is entitled to recover for impairment of mental condition without demonstrating a recognised psychiatric injury.

9. [26]

   The State submitted that the proposition which it insists is “belatedly” being advanced by Ms Lam, that the plaintiffs' damages are properly characterised as "pure mental harm", is plainly wrong. At a minimum it is entirely novel.

The obligation to plead reliance on s 31 in a defence

1. [27]

   The State submitted that Ms Lam was required to plead any reliance upon s 31 of the Civil Liability Act that she wished to maintain.

What are a defendant’s obligations to plead defences under the Civil Liability Act?

1. [28]

   In Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243, the Court of Appeal held that parties and their advisers were under an obligation to exercise co-operation to express the issues for trial before and during the trial and that this was a matter that could not "be emphasised too strongly". The Court (at [160]) described that co-operation as something which "can now be taken as an essential aspect of modern civil procedure in the running of any civil litigation, including hard-fought commercial cases". The Court went on to say that: "The need for clarity, precision and openness as part of this co-operation has been emphasised in the context of ambush or surprise".

2. [29]

   The Court made the point at [161] that the need for clarity, precision and openness in the conduct of litigation and the responsibility of parties and their legal representatives flowed most clearly from statutory obligations. At [163], the Court made it plain that the statutory duty to bring forward the real issues in dispute in a co-operative and practical way applied not merely to pleadings but extended "to all aspects of the engagement in the Court's processes".

3. [30]

   The State submitted that it is obvious from the authorities that if a defendant wishes to rely upon s 31 to support a contention that it is not liable to pay damages for pure mental harm resulting from negligence, that is a matter which must be pleaded. There is no reason in principle to distinguish the obligation to plead s 31 and the obligation recognised by the Court of Appeal in the cases cited, where the Court held that it is necessary for a defendant to plead reliance on provisions such as ss 5H, 5I, 5L, 5O, 42, 45 and 54. If it applies, s 31 operates to render a defendant not liable to pay damages for personal injury governed by Part 2 of the Act. It involves a factual contention which raises as an issue the true nature of the damages which the defendant may be liable to pay, involving the question of whether those damages are correctly characterised as involving physical injury, or "pure mental harm" or "mental harm" or "consequential mental harm".

4. [31]

   There is a further reason why, if Ms Lam were to rely on s 31, it ought to have been pleaded. It is hardly obvious that the plaintiffs' damages should be characterised as damages for "pure mental harm". They are not derivative nervous shock cases. These claims involve direct physical contact between the plaintiffs and Ms Lam. Further, they also involve on the plaintiffs' cases allegations of assault and abusive sexual conduct. They are hardly within the ordinary run of "nervous shock" cases (to use outdated language).

5. [32]

   Ms Lam ought to have pleaded or otherwise given notice of reliance upon s 31 for another reason. The practical consequences of the failure to plead or otherwise give notice of the point emerge by reference to the uncontroversial facts and sequence of events in this litigation:

6. [33]

   In those circumstances, to not require that issue to have been notified properly and fairly by pleadings or otherwise would involve a manifest injustice to the State.

The State's alternative position, if leave is given to Ms Lam to rely upon s 31

1. [34]

   As set out above, the State's primary position is that the claims against it were for personal injury damages within the meaning of s 11 and are not properly characterised as claims for pure mental harm within the meaning of s 27: s 31 has no application.

2. [35]

   If Ms Lam wishes to rely upon s 31, the State contends that the proper course is that she ought to seek leave to do so. It really ought not properly fall upon the State to raise the issue: the obligation to seek leave squarely falls upon Ms Lam. If that leave is sought and granted, the prejudice to the State is significant, because it will be faced with an unpleaded defence to which it has an easy answer in the form of psychiatrists' reports which are already before the Court but with a limitation. That prejudice may be curable. On one view, the cure if leave is granted would be simple: the removal of the s 136 limitation on the exhibit to Ms Haski's affidavit, which would never have been sought had the point been notified.

Ms Lam’s submissions

1. [36]

   Ms Lam provided me with detailed and comprehensive written submissions in opposition to the State’s motion. She contends in effect that the State’s case against her is fundamentally and fatally flawed. Her submissions are as follows.

The State's cause of action

1. [37]

   For the State to succeed in its action under s 5(1)(c) of the Act, it must first establish that it was a tortfeasor liable in respect of the "damage" that is alleged to have been suffered by the plaintiffs. To that end, the State has relevantly pleaded that:

2. [38]

   The State's case is that the harm alleged by the plaintiffs is within the definition of "personal injury damages" in s 11 of the Civil Liability Act. Ms Lam submitted that by characterising its case in those terms, the State has demonstrated a misapprehension of both the "harm" allegedly suffered by the plaintiffs and, by extension, the "damage" in respect of which it was, allegedly, liable as a tortfeasor.

"Damage" is distinct from "damages"

1. [39]

   It has long been established that the "damage", the subject of a claim under s 5(1)(c), is not to be equated with the "damages" awarded by a court. As the High Court said in Mahony v J. Kruschich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 527; [1985] HCA 37:

2. [40]

   As distinct from damages, "damage" is "loss or harm occurring in fact": Cattanach v Melchior (2003) 215 CLR 1; [2003] HCA 38. Damage is the gist of tort liability for negligence. The damage necessary to found an action in negligence is, as Kiefel J observed in Tabet v Gett (2010) 240 CLR 537; [2010] HCA 12 at [135], "the injury itself and its foreseeable consequences"; or, as it was described by Hayne and Bell JJ, "some difference to the plaintiff [which] must be detrimental”: at [66]. The question of what, if any, categories of compensatory damages are available can only arise once actual damage or injury, together with a breach of duty of care and causation, have been established: Harriton v Stephens (2006) 226 CLR 52; [2006] HCA 15 at [218].

3. [41]

   Irrespective of whether the damages claimed by the plaintiffs were "personal injury damages" within the meaning of s 11 of the Civil Liability Act, the matters pleaded by Ms Lam in her defences to the cross-claims were such that the State was first required to answer the anterior question of whether the plaintiffs had, in fact, suffered damage of a kind that was actionable under that Act.

4. [42]

   That question was critical to the State's prospects of establishing that it was a "tortfeasor liable" to the plaintiffs in negligence. Ms Lam submitted that the State failed to answer it.

Mrs Lam's defences to the cross-claims

1. [43]

   In her defences to the cross-claims filed on 12 November 2024, Ms Lam:

2. [44]

   Far from being "uninformative", as the State has characterised her defences, Ms Lam has put the State squarely on notice that it would be required to prove the existence of the damage alleged by the plaintiffs, to prove that it was negligent, and to prove that the plaintiffs' damage was caused by that negligence. Having been put to proof on those issues, Ms Lam submitted that it should have been obvious to the State that it was required to tender evidence capable of establishing that each plaintiff had suffered actionable damage if it were to satisfy that essential element of the tort. The State, nevertheless, failed to do so.

3. [45]

   Contrary to the State’s submission, the position advanced by Ms Lam is not that the plaintiff's "damages" are characterised as "pure mental harm". The position, rather, is that the State's failure to tender any evidence of actionable harm within the meaning prescribed by the Civil Liability Act (and, for that matter, by the common law) necessarily means that it has failed to establish the gist of its asserted liability in negligence. As a result, there is no proper basis upon which the Court could find that the State was a "tortfeasor liable" for the purposes of its action under s 5(1)(c).

4. [46]

   By addressing those failures in her closing submissions, Ms Lam was simply advancing the position pleaded in her defences to the cross-claims. There is nothing "belated", "wrong" or "novel" about that position, or the manner in which it was advanced.

The damage alleged in these proceedings

1. [47]

   The harm said to have been suffered by the plaintiffs as a result of the "abuse" allegedly perpetrated by Ms Lam is comprehensively particularised in their respective amended statements of claim, under the heading "Particulars of injuries and disabilities". Included amongst the injuries and disabilities particularised by each plaintiff is that he suffered a recognised psychiatric injury. The various mental disorders said to constitute each plaintiff's recognised psychiatric injury are specifically identified. The balance of the plaintiffs' injuries and disabilities, as particularised in the amended statements of claim, could only have arisen as a consequence of their underlying psychiatric injuries. Whilst KWM2 and BJS2 each particularised some unspecified "physical injury", there has never been any suggestion - let alone evidence - that either of them was, somehow, physically injured as a result of the acts allegedly committed by Ms Lam.

2. [48]

   Moreover, each plaintiff specifically identified the evidence on which he relied in order to establish the existence of the harm alleged by reference to one or other of the medical reports of Dr Michael Diamond, psychiatrist.

3. [49]

   In circumstances where the injuries and disabilities allegedly suffered by each plaintiff consisted of a recognised psychiatric injury that was comprised of various mental disorders, as well as the sequelae of those disorders, and where the plaintiffs nominated a report from an expert psychiatrist (which the State did not tender on this issue), the harm (or "damage") said to have been suffered by the plaintiffs could only have been "pure mental harm" as defined by s 27 of the Civil Liability Act.

4. [50]

   Consistently with the authorities, that was the damage which the State was required to prove, in order to establish its asserted status as a "tortfeasor liable" for the purposes of its claim for contribution under s 5(1)(c). Ms Lam submitted that it is surprising, therefore, that the State now asserts that the plaintiffs' damage might have consisted of something other than pure mental harm. Equally surprising, is the State's submission that it is unaware of any authority in relation to a damages claim for child sexual abuse that "has characterised the damages sought as solely relating to the impairment of the plaintiff's mental condition", given that was the exact nature of the damages sought against the State and a female school teacher by the plaintiff in Withyman v New South Wales [2013] NSWCA 10.

5. [51]

   Ms Haski, the State's solicitor, had no difficulty identifying the relevant damage. That was made plain by the following exchanges that took place during her cross-examination by Senior Counsel for Ms Lam:

6. [52]

   The fact that the State has pleaded torts of assault and battery against Ms Lam, in respect of some of the alleged sexual conduct, is irrelevant. The question presently under consideration is whether the State has established its own liability as a tortfeasor, so as to be entitled to claim contribution under s 5(1)(c). The State has pleaded that it was liable to the plaintiffs in negligence. In order to establish the liability it asserts against itself, it was incumbent on the State to satisfy the essential elements of that tort, the gist of which is actionable damage.

7. [53]

   Ms Lam submitted that none of the authorities cited by the State is capable of overcoming the fundamental problem that has confronted it since the close of its case: that it failed to tender any evidence capable of establishing that the plaintiffs suffered actionable damage, and failed to establish that it was liable for the pure mental harm that was alleged.

Liability for pure mental harm - the position at common law

1. [54]

   Ms Lam submitted that in order to establish its asserted liability as a tortfeasor, the State was first required to prove that its breach of duty caused the plaintiffs to each suffer a recognised psychiatric illness. Ms Lam described that as “hardly a novel proposition”.

2. [55]

   The requirement to establish the existence of a recognised psychiatric illness, now entrenched in s 31, is not a recent development in the law. Prior to the enactment of the Civil Liability Act, it had long been established that manifestations of emotional distress, such as grief, anguish, anxiety, or depression, do not sound in damages unless they are the result of a compensable psychiatric injury. An injury of that kind will only be compensable if it meets the description, coined by Lord Denning MR in Hinz v Berry [1970] 2 QB 40 (and subsequently adopted in Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383; [1970] HCA 60 and Jaensch v Coffey (1984) 155 CLR 549; [1984] HCA 52) of a "recognisable psychiatric illness."

3. [56]

   What had also long been established prior to the Act, is that a plaintiff claiming damages for negligence occasioning a recognisable psychiatric illness must prove that the defendant's act or omission was a "demonstrable and readily-appreciable cause" of that illness.

4. [57]

   As was said by Gummow and Kirby JJ in Tame v New South Wales (2002) 211 CLR 317; [2002] HCA 35 at [193]-[194]:

5. [58]

   In the present proceedings, the burden of proving all facts essential to the State's claim for contribution against Ms Lam at all times rested squarely upon the State. Consistently with the authorities cited above, the State's inability to establish that any of the plaintiffs suffered a recognised psychiatric injury, could only mean that it has failed to discharge that fundamental onus.

Section 31 of the Civil Liability Act

1. [59]

   Section 31 restates the position in relation to negligently inflicted pure mental harm that had previously existed at common law: Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17 at [72].

2. [60]

   Contrary to the State's submissions, Ms Lam submitted that s 31 is not a "defence". It is a provision that, consistently with the common law, makes the existence of a recognised psychiatric injury a primary requirement of liability for pure mental harm. It was a matter for the State to satisfy that requirement, if it were to establish that it was liable to the plaintiffs for the pure mental harm they each alleged. Ms Lam bore no such onus and was clearly under no obligation to plead that provision in her defences to the cross-claims.

3. [61]

   In summary, Ms Lam submitted by an extensive reference to the authorities that she was under no obligation to plead s 31 in her defences to the cross-claims, because the existence of a recognised psychiatric injury was a matter which the State was at all times required to prove, in order to establish its asserted liability in negligence. Having failed to do so, the State is unable to demonstrate that it was a tortfeasor liable in respect of the plaintiffs' damage, such that its claim for contribution under s 5(1)(c) must fail.

The limitation that was sought by the State

1. [62]

   In circumstances where Ms Lam's defences to the cross-claims put the State squarely on notice of the need to establish actionable damage, and where the State made a conscious forensic decision to limit the use of the only evidence capable of establishing that damage to the question of the reasonableness of the settlements, the State's submission that Ms Lam's closing submissions exposed it to a "manifest injustice" is completely devoid of foundation.

2. [63]

   The State's decision to seek that limitation was made well in advance of the hearing, and was unaffected by anything said or done by Ms Lam, or those acting on her behalf. As much is demonstrated by the following matters.

3. [64]

   First, the letter from the State's solicitors dated 28 November 2024, under cover of which the State served the reports of Dr Diamond, the expert psychiatrist that had been qualified by the plaintiffs. That letter stated, relevantly:

4. [65]

   Secondly, the following exchanges between Senior Counsel for the State and Garling J during the directions hearing on 11 December 2024:

5. [66]

   Thirdly, the following exchange between Senior Counsel for the State and Garling J, during the directions hearing on 7 February 2025:

6. [67]

   Based on the State's pre-trial representations that it only intended to rely on Ms Haski's affidavit (and the documents contained in the exhibit to that affidavit, which included the psychiatrists' reports) on the separate question of the reasonableness of the settlements, there was no cause for the psychiatrists to be cross-examined during the State's case on liability. It should hardly have come as a surprise, in those circumstances, that Ms Lam did not notify the State that the psychiatrists would be required.

7. [68]

   The State's position did not change at any point during the hearing. When addressing IZG2's evidentiary statement during his opening of the State's case, Senior Counsel for the State said:

8. [69]

   Then, on the eighth day of the hearing, Senior Counsel for the State said:

9. [70]

   The following day, Senior Counsel for the State formally sought that limitation, in respect of which he said:

10. [71]

    In the face of the foregoing, Ms Lam contended that the State's submissions that the psychiatrists' reports were "admitted into evidence with no limitation and no objection was taken by the cross-defendant", and that the limitation was only sought because Ms Lam "failed" to give notice that the psychiatrists were required for cross-examination, are plainly untenable. So, too, is the suggestion that the issue of the limitation only arose "after the last of the State's witnesses had been called", when Senior Counsel for Ms Lam raised it with Senior Counsel for the State. Ms Lam submitted that those submissions are misleading.

11. [72]

    According to Ms Lam, the correct position is that the State had made a conscious forensic decision, well in advance of the hearing, to limit Ms Haski's evidence, including the documents in Exhibit JAH-1, to the question of the reasonableness of the settlement. Irrespective of what was written by the psychiatrists in their respective reports, the fact remains that those reports were not tendered in the State's case on liability. The fact that the psychiatrists' reports were served on Ms Lam "well before the trial", does not relieve the State of its obligation to prove that fundamental aspect of its case, by putting that evidence before the Court.

Summary

1. [73]

   Ms Lam submitted that despite having been squarely put to proof by her in her defences to the cross-claims, the State failed to establish that the plaintiffs suffered the actionable harm they each alleged, and failed to establish that it was liable to them in negligence. Its claim for contribution under s 5(1)(c) of the cross-claims must, accordingly, fail. There was nothing "novel", "wrong" or "belated" in Ms Lam having drawn attention to those failures in her closing submissions, or the manner in which her position was advanced.

2. [74]

   The State's submissions do not disclose any rational basis upon which the orders sought by the State could properly be made, and the Motion ought to be dismissed with costs.

Consideration

1. [75]

   I have taken the somewhat laborious, if not on one view unnecessary, course of including in these reasons a great deal of the detailed submissions upon which the parties rely with respect to their competing positions on the State’s notice of motion. My principal reason for doing so is to ensure that no points upon which the parties rely are misstated or overlooked. That becomes important in my opinion for the reason that these arguments, or many of them, will likely have a potentially significant role to play in the final disposition of these proceedings. It is to be emphasised that I am not presently deciding the case on a final basis and I remain cautious that I should not express any opinion on a significant matter that may give the impression, real or imagined, that I have a concluded view on how it should ultimately be decided.

2. [76]

   It seems to me that the resolution of this application is best achieved by taking a pragmatic and practical approach that effectively retains the parties’ respective arguments for consideration at a later time without prematurely and unnecessarily foreclosing on their eventual viability. In so saying I appreciate in excruciating detail the fact that Mr Toomey has been steadfast in his singular adherence to a forensic plan that he considers was legally correct and procedurally valid and that in the context of adversarial litigation, modifications in the form of the Uniform Civil Procedure Rules or judicial pronouncements about their application, should not deprive him of his carefully curated advantage.

3. [77]

   However, without wishing to discount the significant effort applied to the elucidation of the several issues by both parties in their submissions, resolution of the current dispute effectively turns upon the recognition and appreciation of one particular fact. Ms Lam’s point is that, for the reasons and in the way outlined in her submissions, the State has led no evidence of damage in the form of a recognised psychiatric illness and that it should not now be permitted to do so. If Ms Lam succeeds in both respects, the State on her case must fail at the threshold. The significance of that point would be great, and possibly determinative, if it were the case that no such evidence was ever likely to become available or could never be obtained.

4. [78]

   That is not the case. The several psychiatric reports referred to by the parties contain, subject to cross-examination or possible evidentiary exclusion, statements of professional medical opinion to the effect that the plaintiffs are suffering from a recognised psychiatric illness. Those reports could have been tendered by the State for all purposes and, but for the State’s decision to seek a limitation upon the use of those reports, they would be before me now as evidence in the proceedings. Nor is it in my estimation the case that the State sought cynically to secure some tactical or strategic advantage by limiting the use to which the reports could be put from which in good conscience it ought not now be permitted to resile.

5. [79]

   I do not consider that the form of the relief sought by the State in its notice of motion suitably informs how this contest should be resolved. The State’s preferred position is that Ms Lam should have herself sought leave to plead s 31 in order for her principal contention to be in play. That did not occur. The State’s secondary position is that it should, if required, be given leave to remove the current limitation applying to the medical reports it has tendered on the single issue of the reasonableness of the settlement.

6. [80]

   Ms Lam’s response to that approach is to say that cross-examination of the plaintiffs has now long ago concluded and that it was at the time carefully crafted so as not to negate or dilute the perceived forensic advantage that she was confident would flow from the state of the medical evidence concerning proof of any recognised psychiatric illness. Moreover, and in a related sense, Ms Lam maintains that the atmosphere of the proceedings has now changed so that any further cross-examination of the plaintiffs upon which she would inevitably be able to insist, if so advised, or cross-examination of the psychiatrists if that were also requested, would no longer be as effective as it might earlier have been. In that setting, Ms Lam insists she has suffered an irremediable forensic disadvantage.

7. [81]

   Ms Lam is critical of, and correspondingly sceptical about, the genuineness of the State’s explanation for not understanding or appreciating that she would contend that the plaintiffs sustained pure mental harm and that s 31 was clearly going to be significant even though it had not been pleaded. Whatever may be said of that criticism, it seems fairly clear that the State’s limited tender of the medical reports was a function of at least a failure to advert to the alleged significance of s 31. In the circumstances of the current dispute, a resolution of the question of why the State chose to take the course it did is not really of much present relevance or should not in my opinion be determinative.

8. [82]

   Ms Lam should not in my opinion be deprived of the opportunity ultimately to contend that the plaintiffs’ damage was pure mental harm or that s 31 means that the State cannot establish a fundamental aspect of its claim for contribution. Ms Lam has not yet sought, and may never seek, to amend her defence in the way that the State contends would be necessary before Ms Lam can maintain that contention. Whether or not Ms Lam seeks to amend her defence for that purpose remains to be seen. I anticipate that the State would not be in a position to oppose such an application if it were made.

9. [83]

   Correspondingly, the State should not in my opinion be deprived of the opportunity to rely upon the currently tendered psychiatric reports without limitation. Such an application has already been foreshadowed. As I have attempted to make plain, the absence of those reports for all purposes is the single unadorned fact that informs both the existence of, and a possible solution to, the current contest. I acknowledge that questions such as whether Ms Lam should have pleaded s 31 in her defence, or whether the plaintiffs’ claims were in fact for pure mental harm, or whether in the modern era Ms Lam’s attempt to rely upon an unpleaded issue should be permitted, remain unresolved. That was my intention. As I have earlier indicated, these fascinating and well-argued issues, among others, may well remain in play in the further conduct, and ultimate disposition of, the proceedings so that a final decision about them now is not appropriate.

10. [84]

    For present purposes it is in my view sufficient if I make the following orders:

    1. (1)

       Direct the State of New South Wales, if so advised, to file an amended notice of motion within 7 days seeking leave to reopen its case limited to the removal of the s 136 limitation currently applying to the tendered psychiatric medical reports of Dr Diamond.

    2. (2)

       Reserve the costs of and incidental to the State’s notice of motion filed on 17 April 2025.

    3. (3)

       Direct the parties to bring in short minutes of order containing a schedule or timetable for the further conduct of the proceedings.

    4. (4)

       Grant liberty to apply.