July 31, 2012

Corporate high-flyers are rare protagonists in injury compensation brawls. So when Neil Balnaves sued after a 2002 head-on boat smash on a narrow bend in the Coomera River in February 2002, he sought to align the personal injury damages theories of remoteness and probability, with the high-performance world of corporate risk and reward.

Our plaintiff, then 57, was returning to his Sanctuary Cove residence aboard his Bayliner cruiser from a Couran Cove excursion with UK house guest Garry Malone. The downstream vessel was a centre-console speedboat operated by Coomera Houseboats and skippered by Neil Smith, a 26-year company man on a service run to re-provision houseboats and to attend any guest maintenance problems.

The high-speed collision seriously injured all three and the plaintiff’s pelvis “imploded” from the impact. He underwent multiple surgeries. He moved from Sydney to the Gold Coast and required round the clock nursing care. His rehabilitation was slow. Balnaves was the executive chairman of Southern Star productions (“SSG”) – producer of the Australian TV phenomenon, Big Brother – a venture the entertainment mogul had started and grown into a $45 mil public company of which he held 35% in share capital.

“Driven” and “resolute”, working 70-80 hours per week, he was the force behind its success.

Discussion of his deficiencies by the board recorded an interim decision that formal notification of the key executive’s incapacity was not considered necessary.

This proved telling to the ultimate contest before the court.

Shortly after the accident, investment bank Rothschild was recruited to find a suitable merger partner or a buy-out entity which ultimately arrived in 2004 in the form of Southern Cross Broadcasting (“SCB”). Its offer valued SSG at around 90c per share. The board, including Balnaves, recommend the takeover and SSG became a wholly-owned subsidiary with our plaintiff remaining as executive chairman but by now reduced by his injuries, to working only 2.5 days each week and at half his former salary.

SCG prospered and went ahead with other overseas deals that the chairman had proposed pre-accident.
In 2007, SCB was itself taken over in a similar move by Macquarie Media (“MMG”) in a deal which valued the SSG subsidiary at $150 mil.

Balnaves claimed in his lawsuit that he only went along with the earlier SCB takeover because it offered a convenient exit strategy necessitated by his reduced capacity to lead the company and to make value-building deals. He further claimed that had he not been injured, MMG would probably have brought out SSG in 2007 at the far higher price which he calculated would have put him personally, $3.5 mil in front.

Unfortunately for him – while the loss of value in his share stake in the company was held not of itself too remote to recover – the evidence did not support the contention that his medical condition was the reason for the sale. And given there was no evidence led to allow the court to consider the probabilities of the paths the company might have taken post-2004 had the SCB takeover not occurred, the claim did not qualify for a Malec style assessment of the chance that the events the plaintiff contended for, would have eventuated.

It was however beyond doubt that he had lost some chance of earning further financial benefits, namely his annual full-time salary until age 65. This chance was assessed – on all the evidence – at 10% on a total wage loss figure of $2.35 mil.
Balnaves was charged with operating his vessel unsafely so as to cause injury and pleaded guilty “reluctantly” because a conviction on indictment might have had serious consequences his business, company directorships and his ability to travel.

Defeating an argument that his claim was sunk by non-compliance with a 2-year limitation under the federal Navigation Act – proceedings were issued just before the onset of 3 years in February 2005 – a five-day Queensland supreme court trial in 2009 examined conflicting accounts of the vessels’ positions on the narrow bend and ruled on the respective liability obligations of both skippers.

Balnaves will, therefore, recover 35% of the $250,000 assessed damages, ($87,500) with he or his insurer liable for the injuries to Malone and Smith to the extent of 65%.

In a further ruling in December 2012, it was revealed that Balnaves had rejected an offer of settlement of $300,000 made in September 2008. As a result, he was ordered to pay the defendant’s costs from that date to them.

Balnaves v Smith & Anor [2012] QSC 192 Brisbane Byrne SJA 17/07/2012

Categories: Law practice , Personal Injury , Litigation & Law Practice , Holiday & Travel Law

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