When does the reasonable person eat chips?

By Legal Eagle

Recently the High Court has had to decide when it was likely that a person might eat hot chips. Seriously.

In Strong v Woolworths [2012] HCA 5, the unfortunate plaintiff slipped and fell on a hot chip which had been left on the ground outside Big W at Centro Taree Shopping Centre. She suffered serious spinal injuries as a result. Prior to suffering the injuries, the plaintiff had already had her right leg amputated above the knee and she was on crutches when the accident occurred. Her crutch slipped on the chip (or on grease left by the chip) and this is how she fell.

The problem in these kinds of slipping cases is establishing causation. Woolworths’ negligence lay in an omission; that is, a failure to inspect and clean the area outside its store. Causation is always a difficulty: if Woolworths had inspected the area and cleaned outside its store, would the accident have still happened? The parties agreed that a reasonable inspection period was every 15 to 20 minutes. The plaintiff sued Woolworths, alleging that that it owed a duty to take reasonable care for the safety of persons coming into the area near the entrance to its Big W shop. At the time of the accident, Woolworths did not have any system in place for periodic inspection and cleaning of the area outside Big W. It had not inspected the floor outside the shop between 8am and 12:30pm when the accident occurred. The question is whether, ‘but for’ the defendant’s failure to act, the plaintiff’s injury would still have occurred. Thus, in this case, one of the operative questions was whether the accident would have occurred had there been a system according to which Woolworths had inspected the floor fifteen minutes prior to the injury.

The trial judge held that Woolworths was liable, and awarded Mrs Strong $580,299.12. CPT, the second defendant and owner of the centre, was not liable, as it was not responsible for the cleaning of that area.

Woolworths appealed to the NSW Court of Appeal. The Court of Appeal  held that the appellant had failed to prove that Woolworths’ negligence was a cause of her injury. It found that there was no basis for concluding that the chip had been on the ground for long enough for it to be detected and removed by the operation of a reasonable cleaning system. There was no evidence supporting an inference that the chip had been there for some time (ie, the chip was dirty or cold to touch). The Court of Appeal decided that the injury would have occurred even if Woolworths had had dedicated cleaning of the entrance area at 15 minute intervals as the chip had probably been dropped by a nearby person eating lunch.

A majority of the High Court (French CJ, Gummow, Crennan and Bell JJ) found that Woolworths should be held to be liable. In the course of their judgment, they had to consider when it is reasonable to expect a chip to be eaten (and therefore, when it is reasonable to hire a cleaner to pick up dropped chips). They said at [37]:

If one reckons lunchtime as between 12.00pm and 2.00pm, it is right to say that the probabilities are evenly balanced as to the deposit of the chip between 12.00pm and 12.15pm and 12.15pm and 12.30pm, provided the chip was acquired for consumption at lunch. The Court of Appeal said that there was no basis for concluding that it was more likely than not that the chip was not dropped “comparatively soon before the [appellant] slipped”. It did not explain how it reasoned as to the likelihood that the chip was acquired at lunchtime. There was no basis for concluding that chips are more likely to be eaten for lunch than for breakfast or as a snack during the course of the morning. The inference was open that the chip was not present on the floor of the sidewalk sales area at the time the area was set up for the day’s trading. However, the conclusion that the chip had been deposited at a particular time rather than any other time on the day of the incident was speculation. (my emphasis added)

Thus, the majority found that Mrs Strong would not have fallen but for Woolworths’ failure to have a regular inspection and cleaning regime. Woolworths could not argue that it was more likely that the chip had fallen recently and would not have been picked up by the inspection and cleaning regime because the accident occurred around lunchtime, and people were likely to eat chips at any time of the day, including for breakfast or as a snack. (I must say that the thought of potato chips for breakfast nauseates me).

Heydon J dissented. His Honour discussed the evidential burden, concluding that the plaintiff bore the burden of proving that the system of inspection would have prevented her accident, and accordingly she had to prove that the chip had fallen before 12:15pm (the notional time when an inspection should have taken place). She had failed to prove this, and thus her case failed.

In more High Court news, a restitution case has been handed down today (Equuscorp Pty Ltd v Haxton [2012] HCA 7). I’m sure I will have something to say about that in due course.

48 Comments

  1. derrida derider
    Posted March 9, 2012 at 7:05 pm | Permalink

    Only a lawyer could think it makes any sense to hold Woolworths liable here. Where is the evidence that they were in any way negligent in the ordinary sense of the term, and even if they were where is the evidence that such negligence affected the outcome?

    If this decision was indeed an outcome of correctly applying settled law, then the law is an ass. If it was not then their Honours are asses.

    Its the sort of case that AP Herbert so amusingly lampooned in “Misleading Cases in the Common Law”.

  2. ben
    Posted March 9, 2012 at 9:38 pm | Permalink

    The distribution of chips during the day would be quite easy to discover so presumably this distribution didn’t help woollies case.

  3. Posted March 9, 2012 at 10:57 pm | Permalink

    DD:

    Woolworths occupied an area and invited the public onto it. To cut a long story short, it is settled that it is negligent to do this in a shopping centre unless you have some kind of system of checking for slip and fall hazards.

    Just to have sales staff calling for cleaners on an ad hoc basis if they see something spilt is not enough. Shops like Big W run on systems. They are absolutely capable of having a better system than that and it is reasonable to expect them to have such a system. In the ordinary sense of the term, Woolworths was negligent.

    Legally that has no consequences unless the lack of a system actually causes someone to suffer an injury and the injured person can prove this. That’s the second part of your question, I know, and is what the case was about. The case seems a bit comical because the facts are so mundane, but I don’t think it makes their Honours asses.

    The asses just now are the people at Woolworths or their insurers who didn’t just quietly settle with Ms Strong once they were successful in the Court of Appeal. If they had done so, they could still use that decision to resist or beat down future claims.

  4. Sleetmute
    Posted March 10, 2012 at 10:48 am | Permalink

    When I studied tort law, it was clear that many legal academics like Harold Luntz wanted the government to introduce a no-fault compensation scheme and many judges similarly interpret the law in a way that focuses on who is better able to bear the loss (ie who is insured). I get the point about occupier’s liability but the fact is that we are talking about a chip here, not a deep and unexpected trench. I haven’t read the case and I don’t know why Woolworths agreed so easily that they should be inspecting the area every 15 minutes. Spilt milk or soft drink in the store is one thing, a chip outside the store is quite another. The amputee should have been more careful and should have had her own insurance. All this decision will do is increase supermarket costs for all of us.

  5. Mel
    Posted March 10, 2012 at 2:15 pm | Permalink

    [email protected]:

    “The amputee should have been more careful and should have had her own insurance. ”

    Sleetmute has a point. It seems to me that Miss X was to some extent negligent in not paying more attention to where she walked given this incident happened in broad daylight. If the supermarket should have known that food scraps on the ground outside the store presented a danger to pedestrians, especially at lunchtime, then Miss X should have also have known. I mean, why should only one party be expected to have common sense? Surely contributory negligence should have reduced the payout.

    OTOH I do feel sorry for Miss X and I think the Welfare State should help her out in a manner that gives her dignity. I really do not want to live in a Helen Dale/Tory Party/Kristallnacht/ “I’m Still Not Sorry” type of society where the poor, the disabled and the different are essentially buttfucked and left to rot.

  6. Sleetmute
    Posted March 10, 2012 at 3:43 pm | Permalink

    LE, that’s not my take-away from the case! As it is, the DSP regime creates an unholy and corrupt alliance between the medical profession, the lazy and welfare bureaucrats to fleece the taxpayer. A no-fault compensation scheme would ramp that up many times. I would have preferred the court to let the loss fall on the victim and leave policy-making to the legislature, a position they used to take in the good old days! I personally have death, disability and income protection insurance (not to mention private health insurance) and I don’t see why I should subsidise careless or risk-taking strangers any more than I already do.

  7. Mel
    Posted March 10, 2012 at 5:03 pm | Permalink

    LE:

    “Mel: Be nice. I don’t think it’s fair to Helen to say that her position is that the disabled should be left to rot.”

    Sorry. Things have been a bit quiet here lately so I thought I’d engage in some OTT hyperbole just to spice things up ….

  8. Mel
    Posted March 10, 2012 at 5:22 pm | Permalink

    Sleetmute @9:

    ” I personally have death, disability and income protection insurance (not to mention private health insurance) and I don’t see why I should subsidise careless or risk-taking strangers any more than I already do.”

    Do you also support scrapping limited liability corporations? Why should I support “careless or risk-taking” shareholders by giving them special legal status?

  9. Posted March 10, 2012 at 6:06 pm | Permalink

    Mel:

    It seems to me that Miss X was to some extent negligent in not paying more attention to where she walked given this incident happened in broad daylight.

    From the trial judge (via the NSWCA judgement):

    It is clear from other evidence of the plaintiff that she has an interest in pot plants. She said there were pot plants on those racks, she was clearly interested in them so she made her way at least to the entrance area, perhaps a few steps, into that area to have a look at those pot plants.
    In her evidence-in-chief she said that she did not see any particular hazard when she glanced down, and indeed she paid particular attention to any water hazard that may have been there. I note that the plaintiff had a previous incident, a fall some time previously, not of any serious nature, not one which resulted in any medical treatment, but that clearly would have indicated to her, and perhaps there would have been other matters as well, that there was a need to keep a proper lookout. So I am entirely satisfied that she was keeping a proper lookout as any customer ought to do, or entrant, in that particular area. I accept her evidence that she did not see any hazard when she glanced down. I accept her evidence that she looked for any water hazard, and that is not surprising given what was for sale on those stands, they were pot plants.

    … it is entirely understandable in the circumstances that the plaintiff did not see the spillage. I fail to see how the plaintiff could be guilty of contributory negligence at all in those circumstances. She did what any prudent member of the public would do in her situation, she was extra careful in any event and her focus would have been in the general area, on the pot plants which attracted her attention in the first place but she also looked around for the possibility of any water spillage. She previously had a fall, that alerted her mind to the possibility of a problem. She did not see the chip or the grease and she came to grief.

  10. Sleetmute
    Posted March 10, 2012 at 6:22 pm | Permalink

    Mel – drawing an analogy with limited liability corporations. That’s a bit of a long bow, but in any case, taxpayers don’t bear the cost of that, creditors do. And creditors can choose to do business with other types of firm if they wish.

    desipis – re the trial judge, what a load of cods s/he wrote. This supposedly prudent person looked down in her immediate path and didn’t see the chip; so why expect a supermarket employee to see it when scoping the entire area?

    This entire case is about lawyers and judges as short-term do-gooders. Normally, one would think of lawyers as far-sighted analytical types, alive to unintended consequences. But alas no, our justice system seems to be full of immature bleeding hearts.

  11. Mel
    Posted March 10, 2012 at 6:58 pm | Permalink

    Sleetmute- Not at all true re LLCs. Customers, employees and indirectly many others are adversely impacted when an LLC goes pear shaped.

    Your comments on the case itself have now descended into trolling territory and thus I’m too bored to comment further other than to point out that Oz doesn’t have trigger happy border guards. If you feel you are unable to live with the rules of the Game in Oz and don’t believe you can change the rules by democratic processes you can always leave.

  12. Posted March 10, 2012 at 7:24 pm | Permalink

    Sleetmute,

    I imagine that a cleaner would have a more focus attention and specific experience that would mean they were more likely to spot a chip. Alternatively, a floor covering that wouldn’t have been (as) slippery even when covered in grease could have been used.

    As for short sightedness, I think it’s pretty clear that the costs of such injuries will be ultimately paid for by all the consumers at the store. This isn’t exactly a particularly undesirable outcome. The operators of the store are the ones most likely understand the risks of their own store and be in the position implement the widest range of precautionary measures. Placing the direct cost on the occupiers best enables the market mechanism to be leveraged to encourage efficient implementation of available precautions. The occupiers are also the ones in the best position to gather evidence to show intervening causes or contributory negligence.

  13. Sleetmute
    Posted March 10, 2012 at 9:34 pm | Permalink

    desipis, c’mon, we’re talking about an amputee here. It’s highly unlikely an able-bodied person would have slipped on a chip (or similar small object – I understand the law of negligence doesn’t require the precise chain of events to be foreseeable) and sustained serious injury. She was likely the best placed to have foreseen that she could slip easily on something – anything – and to have taken extra care or taken out appropriate insurance. It’s neither fair nor economically efficient to expect a business to take such an extreme level of precaution when only a tiny proportion of customers are likely to benefit from such measures.

  14. davidp
    Posted March 11, 2012 at 2:42 am | Permalink

    Why does the appeals court and then the High court start arguing about when the chip was dropped ? My non-lawyers understanding is that you cant present new evidence to an appeals court, so it becomes ridiculously hard for the plaintiff to argue the issue at that stage.

    If the appeals court is persuaded that is should have been considered, then surely it should be sent back to a court that can consider the facts?

    Is that partly what the High court is saying in the Court of Appeal “did not explain how it reasoned as to the likelihood that the chip was acquired at lunchtime” – the appeal court tried to decide a fact without evidence ?

    Even if the appeal court explained their reasoning, it would be unfair to not allow the plaintiff to bring evidence to address to new issue.

  15. Posted March 11, 2012 at 10:39 am | Permalink

    Sleetmute,

    It’s highly unlikely an able-bodied person would have slipped on a chip … and sustained serious injury.

    That’s pure speculation. As is the contention that the chip would have been there even if there had, in fact, been regular cleaning.

    The fact there was no regular cleaning, a chip and grease (which I think is the more likely culprit) was present, and the fact that someone did slip and injury themselves is sufficient evidence to demonstrate that the occupier breached their duty to take reasonable steps make the area safe from slip hazards, and that the breach caused injury. If the defendants wanted to argue that there were other unusual circumstances that intervened that causation (as above) then they have the burden to provide evidence of such.

    to have taken extra care

    The trial judge found she did take extra care.

    taken out appropriate insurance

    The ability to take out insurance is hardly an appropriate means of apportioning blame. Besides, the stores are far more likely to actually be able to afford insurance.

    It’s neither fair nor economically efficient to expect a business to take such an extreme level of precaution when only a tiny proportion of customers are likely to benefit from such measures.

    They’re not expected to. The point is they failed in their duty to take reasonable precautions.

  16. Mel
    Posted March 11, 2012 at 12:21 pm | Permalink

    Desipis has won me over. I now think I was unfair in saying contributory negligence should have been found to exist.

  17. kvd
    Posted March 11, 2012 at 12:56 pm | Permalink

    That’s pure speculation. As is the contention that the chip would have been there even if there had, in fact, been regular cleaning.

    Which is itself pure speculation – by desipis.

    a chip and grease (which I think is the more likely culprit)

    More speculation.

    and the fact that someone did slip and injury themselves is sufficient evidence to demonstrate that the occupier breached their duty

    Rubbish! Also, then why bother at all with the various trials? At fault from the get-go.

    Besides, the stores are far more likely to actually be able to afford insurance.

    More speculation, but this time (I would speculate) probably correct; this simply acknowledges the ‘deep pockets’ approach to achieving ‘justice’.

    I agree with Heydon J. – mostly his point as to where the burden of proof lay. Anyway, mark up another win for the lawyers, I suppose. LE it would be interesting to see the actual divvy up of the spoils in this case, if ever published.

  18. paul walter
    Posted March 11, 2012 at 2:33 pm | Permalink

    Can you imagine the damages if she had slipped up in a Woolies chocolate tort ?
    Why is Heydon J an utter misanthrope?

  19. Sleetmute
    Posted March 12, 2012 at 5:24 am | Permalink

    desipis, at the risk of going in circles,

    The fact there was no regular cleaning, a chip and grease (which I think is the more likely culprit) was present, and the fact that someone did slip and injury themselves is sufficient evidence to demonstrate that the occupier breached their duty to take reasonable steps make the area safe from slip hazards, and that the breach caused injury. If the defendants wanted to argue that there were other unusual circumstances that intervened that causation (as above) then they have the burden to provide evidence of such.

    I accept there was a duty of care; I do not accept there was a breach of that duty. As Lord Denning found in Roe v Minister for Health (thanks Wikipedia), the past should not be viewed through rose coloured spectacles. Therefore, there was no negligence on the part of the medical professionals in a case faulting them for using contaminated medical jars because the scientific standards of the time indicated a low possibility of medical jar contamination. Even if some were harmed, the professionals took reasonable care for risk to their patients.

    The trial judge found she did take extra care.

    I’m saying she either didn’t or that if she did, causation is problematic because it is unlikely a kid covering an area of 40 sqm would have noticed something that a person paying special attention to a particular area in front of her didn’t.

    The ability to take out insurance is hardly an appropriate means of apportioning blame. Besides, the stores are far more likely to actually be able to afford insurance.

    The insurance point is my response to those who worry about leaving the harm lie with the plaintiff in such cases.Individuals can manage such risks. As for cheaper, it’s not a straight comparison because personal insurance would pay out if she slipped in her bathtub at home or anywhere else as well.

    They’re not expected to. The point is they failed in their duty to take reasonable precautions.

    Fairness and efficiency are part of the calculus of negligence that goes to breach of duty. My concern is that courts seem to have stopped thinking this way (ie applying the law) and instead looking around for who has deep pockets.

  20. Posted March 12, 2012 at 6:38 am | Permalink

    I must say that the thought of potato chips for breakfast nauseates me).

    For shame, LE. And you a manchester alumn. Mmmm, chip barm… {drool}

  21. Insert
    Posted March 12, 2012 at 7:33 am | Permalink

    35. The Court of Appeal rejected reasoning along these lines because it found that the deposit of the chip was not a hazard with an approximately equal likelihood of occurrence throughout the day[48]. That conclusion was based on a consideration of three circumstances. First, chips are a type of food some people eat for lunch[49].

    I chuckled heartily. But seriously, issues of causation always frustrated me immensely.

    Sleetmute:

    The insurance point is my response to those who worry about leaving the harm lie with the plaintiff in such cases.Individuals can manage such risks. As for cheaper, it’s not a straight comparison because personal insurance would pay out if she slipped in her bathtub at home or anywhere else as well.

    I feel like you have just argued in favour of a no fault compo scheme, ie compulsory personal insurance. Behaviour finance research shows people are horribad at assessing risks and cost/payoffs. Saying she should have bought insurance implies that the rational person would have bought insurance. People are not rational, therefore there is justification for legislative intervention.

  22. Mel
    Posted March 12, 2012 at 10:04 am | Permalink

    Why didn’t a seagull eat the chip? I want answers !!!

  23. kvd
    Posted March 12, 2012 at 11:24 am | Permalink

    People are not rational, therefore there is justification for legislative intervention.

    This is the most depressing thought I’ve read for a while.

  24. Sleetmute
    Posted March 12, 2012 at 1:48 pm | Permalink

    Insert, that’s an interesting perspective, but not one that I share. I think it is a huge leap to go from what I’m saying, which is that a certain risk can be managed by an individual and saying that the government should step in with a universal no-fault compensation scheme.

    Individuals face a huge number of risks in their lives. If left to their own devices, people can manage these risks in a range of ways. Some may choose to avoid/limit certain activities, some may choose to self-insure (ie save money), some may choose to buy insurance in the marketplace and some may be happy to accept the risk as is. The same solution will not be equally appropriate for everyone and I am not saying that the plaintiff in this case should necessarily have bought insurance – just that she could have. But for individuals to make the right decisions for them, they need to face the right signals.

    I’m not against all government intervention if there is a demonstrable case of market failure. But like kvd, I think our future would be pretty depressing if the so-called irrationality of human beings was seen as a legitimate reason for taking decision-making away from individuals and putting it into the hands of the state.

  25. Posted March 12, 2012 at 7:09 pm | Permalink

    [email protected]

    People are not rational, therefore there is justification for legislative intervention.

    If people are not rational, why would the laws they pass be any better? Arguing for intervention based on attacks on rationality have this little reflux problem, unless you believe in some sort of Platonic Guardians.

  26. John H.
    Posted March 12, 2012 at 8:04 pm | Permalink

    If people are not rational, why would the laws they pass be any better?

    Laws are reinforcers of behavior, laws don’t have to make sense, they simply have to change behavior. Laws do that, whether people are rational or irrational, and such a generalisation itself misleads as to the nature of cognition, is irrelevant.

  27. Insert
    Posted March 12, 2012 at 9:47 pm | Permalink

    [email protected]
    [email protected]

    Apologies, I should clarify that rationality equates to economic rationality, or the myth of homo economis. They could be the sanest, more reasonable people in the world, yet utterly fail to appreciate the time value of money or what their risk (and cost) of losing an arm is.

    If left to their own devices, people can manage these risks in a range of ways.

    Yes, and the most common way is to ignore the risk, or to refuse to acknowledge it. This is all well and good, but when an accident occurs there are costs, and these are borne by the rest of society.

    I mean, I don’t see this as being utterly radical. We already have Medicare and compulsory super. Currently, the costs are still there, only somewhat hidden. The big corps would buy insurance, the costs of which are either borne by the consumer or swallowed by shareholders, which often includes super funds, hence everyone.

    Anyways, I think I’m distracting from the fun of this piece, which is the relationship betwen temporal distribution of chip and liability. Carry on.

  28. Posted March 12, 2012 at 10:07 pm | Permalink

    Apologies for lack of liveliness, Mel, but we do have jobs around these parts :). I also lost two weeks due to a spectacular stuff-up over here and have still yet to recover time-wise.

    I will be back in due course!

  29. kvd
    Posted March 13, 2012 at 5:08 am | Permalink

    [email protected] I don’t find your comments at all distracting – in fact I agree with your thoughts, providing they extend to both accident and disability. And I’d offer an even less scientific reason for a national scheme: because we are a rich enough country, and because we should in this area act as our brother’s keeper.

    The thing I come up against is the dreary valuation process of putting a ‘worth’ on various injuries and disabilities ($5,000 for a finger, $100,000 for a leg) which loses sight of the economic impact to the individual involved. This only seems adequately addressed via a court process, such as the subject of LE’s post.

    Maybe a national scheme could provide an ‘undisputed base’ for benefits, leaving the court process to add to the award amount? I have no general solution, and maybe it is a distraction, but it (a national scheme) is worthy of discussion imo.

    But I do like my chips 😉

  30. Mel
    Posted March 13, 2012 at 6:28 am | Permalink

    [email protected]:

    “If people are not rational, why would the laws they pass be any better?”

    Because a considered decision made by a group with a range of talents and predispositions and with greater information and hopefully some sort of sensible process may generally (but certainly not always) be better than a decision made on the run by individuals. A good example may be the vast and admittedly at times claustrophobic array of laws designed to save us (and in particular males) from our tendency to be reckless. Seatbelt laws, OH&S laws, anti-smoking laws etc have undoubtedly saved many tens of thousands of lives in Oz over the past few years.

    Compulsory superannuation, despite the relatively poor performance of super funds in recent years, has ameliorated the irrational tendency of most people to have inadequate savings for retirement ( As an interesting aside, the members of not for profit industry super funds are generally better off than the members of the “capitalist” retail funds).

    The Nanny State may not be fashionable but nonetheless I happily cling to her ample bosom.

  31. Posted March 13, 2012 at 9:32 am | Permalink

    [email protected] So, certain people, charged with effects over longer time horizons or wider ambits, may compensate for known likely cognitive failures.

    Which is a way of dealing with bounded ratonality and a much better way of thinking about it than “people are irrational”.

  32. Ripples
    Posted March 13, 2012 at 9:40 am | Permalink

    An issue that comes to mind is where the burden of incidents of this nature ultimately lies?

    Where the person is uninsured they will sue the best defendant they can find. In this case they seek Woolworths who subrogates to the insurer. If the plaintiff is successful Woolworths will pay a higher premium and this can be applied to the customer.

    The insurer will return a slightly lower profit that year and as such investors will likely receive a smaller dividend.

    If the investors are superannuation investors (conjecture only) then the general public will receive less of a return on their superannuation.

    If the above is not possible they will rely on the public purse and hence the tax base. This reduces the pool of tax available for other purposes.

    If they do have insurance then it probable that the insurer will seek to recover from someone for the outlay they have to make. Thus where a person has private insurance Woolworths could still be in the firing line as the individuals insurer seeks to recover from them.

    In the end insurance company profits are down with lower tax and dividends paid or the tax base is accessed through welfare.

    For my standpoint the two outcomes are essentially the same in the end in regards to the ultimate cost distribution. The society at large will have to undertake the care of those persons injured.

    I am fine with welfare and medical care for those who have need. The thing that is most worrisome is more the waiting lines for procedures and care for those who need it.

    A very simplistic viewpoint I would be happy to be corrected on.

  33. Mel
    Posted March 13, 2012 at 10:14 am | Permalink

    [email protected]:

    “Which is a way of dealing with bounded ratonality and a much better way of thinking about it than “people are irrational”.”

    I would never say something as unnuanced as “people are irrational”. But the extent of our irrationality goes well beyond what you suggest. Surely you’ve seen some of the experiments that demonstrate our irrationality, for instance if you give X a hot drink before meeting Y, he/she will have a more positive opinion of Y than would be the case if a cold drink was offered.

  34. kvd
    Posted March 13, 2012 at 10:46 am | Permalink

    Ripples, simplistic but reasonably accurate with the exception that your model makes no allowance for the fact that insurers set their premiums on actuarial ‘risk’ tables – thus the Woolies loss will have been budgeted for, or should have been.

    Where Woolies, or any insured party, would suffer is where they display a continuing disregard leading to further incidents of similar nature. Their risk profile will become somewhat inflated against industry standard, hence possibly higher premiums. Higher premiums might even cause a modification of future management behaviour; not a bad thing.

    In other words, insurance is a bet in advance just like your local TAB, with the ‘house’ taking a budgeted margin independent of specific incidents. And if that simplistic model is accepted then theoretically a national disability and accident scheme should be slightly cheaper (I can hear you laugh) because the risk is spread more widely, and the management reduced through benefit of scale.

    And please do stop laughing.

  35. Posted March 13, 2012 at 11:16 am | Permalink

    [email protected], I think we are going in circles a bit. I don’t see how the case you cite is analogous to this one, as I don’t see the foreseeability of the incident now as being any different to how it was prior to the incident. There has hardly been a significant change in understanding of customer behavior or slippage hazards since the incident.

    I also more or less base my opinion here on the principles of fairness and efficiency, so focusing on them isn’t going to change my point of view. I understand that others could have a different and reasonable view of the probabilities and evidential burdens for the case, I just don’t think the end result was all that unreasonable.

    [email protected], interesting point there how our welfare society means a significant portion of the costs will be placed on the public regardless of which way the case goes. I think it’s still important to consider the incentives the different outcomes would have. Placing the direct burden on the store means they’ll have the incentive to take efficient precautions. Arguably, I think the pain and suffering of injury would be sufficient for most people to take reasonable precautions for themselves in such contexts, so there is not as a significant loss of incentive in not placing the costs on the individual.

  36. Ripples
    Posted March 13, 2012 at 1:06 pm | Permalink

    KVD @ 39, I will think how to import the risk analysis into my proposition. You are right that how the insurer deals with and allows for risk is important in looking how claims affect the bottom line. Considering this it could impact my hypothesis in that the company would remain producing profit and not return less tax and dividends.

    Alas economics isn’t my strongest point so am not standing firm on my hypothesis given my lack of knowledge.

    Despis @ 40 I agree that incentives to minimise potential harm could in fact be the driving force of the law and that by making persons liable for harm would encourage care be taken. It may even be behind some of the reasoning of the courts on the more edge cases.

    The only thing I would question is the fear of pain and suffering of individuals would encourage reasonable precautions. I have a suspicion that optimism bias may negate this idea to a degree. Alas the Darwin Awards could be cited as proof that people don’t always consider their own best interests.

  37. Mel
    Posted March 13, 2012 at 1:36 pm | Permalink

    kvd @39:

    “In other words, insurance is a bet in advance just like your local TAB, with the ‘house’ taking a budgeted margin independent of specific incidents. And if that simplistic model is accepted then theoretically a national disability and accident scheme should be slightly cheaper (I can hear you laugh) because the risk is spread more widely, and the management reduced through benefit of scale.”

    I’m not sure why the canned laughter is necessary. No-one who isn’t a shill accepts that national health schemes like Medicare in Oz and NHS in the UK provide much cheaper healthcare than the more libertarian US system along with far fewer preventable deaths.

  38. Posted March 13, 2012 at 1:52 pm | Permalink

    Mel @42

    I’m trying to disentangle your negatives:

    “No-one who isn’t a shill accepts that national health schemes like Medicare in Oz and NHS in the UK provide much cheaper healthcare than the more libertarian US system along with far fewer preventable deaths.”

    Do you mean only shills accept that national schemes provide cheaper healthcare with fewer preventable deaths?

    Honestly, I thought that was precisely the case – namely, that health care expenditure in (for example) the US is much more than in Australia or the UK, but the outcomes across the population as a whole (ie, average outcomes) are worse.

    This is all getting very confusing. I can’t even work out where or in which direction or for what reason laughter is on the agenda or in the can.

  39. kvd
    Posted March 13, 2012 at 2:20 pm | Permalink

    [email protected], [email protected] my comment re laughter was directed to the assumption that a national scheme might deliver economies both of scale, and management. There are some who will say that the public sector is by its very nature less efficient, but I wonder about that sometimes.

    I think Mel meant ‘anyone’ rather than ‘no-one’.

    And Marcellous you are a fine one to talk about untangling negatives; just re-read your linked post first para (as I had to several times) to see what I mean 😉

  40. Mel
    Posted March 13, 2012 at 3:01 pm | Permalink

    Marcellous, I agree with you.

    “No-one who isn’t a shill accepts ” should be

    “No-one who isn’t a shill DOUBTS”.

    Thanx for untangling the spaghetti.

  41. davidp
    Posted March 14, 2012 at 10:02 am | Permalink

    Thanks LE for the High Court concern clarification.

    On the insurance front, if you want insurance that is not very widely purchased, the margins and administrative/marketing costs become huge – I think the accident insurance sold to school parents costs about three times any reasonable valuation. If you don’t fit the standard ‘underwriting rules’ abandon hope. Similarly, flood insurance for your house was apparently very difficult to get in Queensland 3 years ago. More floods have made it easier and cheaper to get, indeed in Victoria, RACV just added flood cover to my home insurance for free (or at least bundled into the annual premium increase). For smaller and discretionary insurance markets, insures compete on marketing not on price.

    This is one reason why a national disability insurance scheme could be much cheaper than individual insurance. None the less, I am not convinced it wont become a massive drain on resources and another incentive to stay ‘disabled’. I haven’t been convinced yet that the Australian welfare safety net needs this.

  42. Posted March 14, 2012 at 5:37 pm | Permalink

    [email protected] I find that sort of result revealing but not surprising. We are emotional creatures and we all know that our emotional states affect our decision-making. As Hume said, reason is, and ought to be, the slave of the passions. If we did not care about stuff, there would be no point to rationality.

  43. Mel
    Posted March 14, 2012 at 6:14 pm | Permalink

    I agree, Lorenzo. I use that Hume quote quite often and I note SL uses it too. It’s one of my faves.

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*