Do you remember the McDonald’s Coffee case?  It inspired an episode of Seinfeld and the Stella Awards – a list of stupid things people do and  then sue for it.

I have a confession to make.  I never read the case.  It just wasn’t relevant to my clients.  It was in America and we know that American cases are nuts right?  We have rules here about when you can claim damages and you don’t win millions for your own stupidity.

Under the carefully constructed rules of negligence in the common law world, you can only claim damages when someone who owed you a duty of care breaches that duty and you suffer damage.  As Elaine said in Seinfeld “coffee is supposed to be hot”.  Where is the negligence?

The problem with reading newspaper reports of cases is that they can only report on information in the public domain.  They can’t report on confidential settlements.  Like all news, they are also looking for headlines and the intricacies of the case don’t make for good sound bites.  They didn’t in 1992 so imagine how much worse it would be now with the twitterati reporting with only 140 characters.

In most cases in Australia, you can only recover compensation for losses you actually suffered – the negligent person is not ordered to pay extra as a punishment.  However, Australian law does allow for punitive (punishing) damages in limited circumstances.

More commonly, our laws encourage parties in litigation to behave reasonably by using costs awards as a punitive measure.

In 2002, one of my clients was awarded indemnity costs.  Indemnity costs are awarded in cases where a Plaintiff makes an offer to settle during the course of the litigation but the Court awards damages in an amount more than that offer after a trial.

Although there had been no case at that time determining precisely what indemnity costs were, the then Chief Justice had indicated that they were literally all legal costs the Plaintiff had incurred unless the Defendant could prove that the costs were not reasonable.

Extraordinarily,  the Defendant refused to accept the Chief Justice was right because his comments had not been made in a binding Court judgment.  After over 2 years of hearings and Applications, the Court confirmed that indemnity costs were indeed all costs reasonably incurred and that the Defendant had not established our costs were unreasonable.

As a result, the Defendant needed to pay all of our costs of the entire litigation as well as the costs dispute.  The media reported the case as litigation gone mad.  However, the law was designed to make sure that Defendants were reasonable in their negotiations – that they accepted reasonable offers and did not unnecessarily protract litigation.

After stumbling across this video, I started to wonder whether it might not be the same in America.  According to this video, the Plaintiff only wanted payment of her out of pocket medical expenses.  She ultimately received a much larger award because she was the beneficiary of punitive damages.

If only McDonalds had just paid her medical expenses, she would not have become the butt of so many jokes and McDonalds would have avoided the ultimate hefty award of damages.

 

 

 

 

Okay, I still haven’t read the case.  I have my hands full reading all the cases coming out of our Courts.  This case is not a very persuasive precedent in Queensland.

However, I did think this was a timely reminder that we should take all media reports of damages awards with a grain of salt.

If you want to know what your prospects are, don’t look to social media or newspapers – call a lawyer.