OCCUPIERS LIABILITY. Occupiers Liability a possible challenge to the law. Introduction - Occupiers

Transcription

1 OCCUPIERS LIABILITY Occupiers Liability a possible challenge to the law In Turjman v Stonewall Hotel Pty Ltd 1 (Stonewall) the appellants argued that a significant change should be made to the law of occupiers liability. The appellants argued that, in certain circumstances, occupiers tortious duties to entrants should be conflated with the implied warranties that exist in the contract between an occupier and an entrant, arising where payment for entry to the premises has occurred. The challenge was not successful as the appellants were ultimately denied an opportunity to pursue on appeal a matter not agitated at trial. Accordingly, the issue remains live. In the event that the common law ultimately evolves in the way contended for by the appellants, occupiers (and those insuring such entities) may well face significantly increased exposure. In this article we discuss the challenge and its possible implications. As a starting point, however, we provide a brief recap on the nature and content of occupiers duties. Introduction - Occupiers Occupiers of premises owe a duty of care to any third party who enters those premises (entrant) with the express or implied consent of the occupier 2. Whether or not a person can be considered an occupier and, as a result, bound by such a duty, is a matter to be determined by the degree of control that person has over the premises. The NSW Court of Appeal had cause to consider the issue in Stojan (No 9) Pty Ltd v Kenway 3 (Stojan), a case in which the plaintiff fell whilst ascending concrete stairs constructed by Stojan on land which the Council (also a party to the litigation) had permitted Stojan to use. The Court encapsulated the position with reference to Mason P (with whom Giles and Hodgson JJA agreed) in State of New South Wales v Broune 4 where his Honour said 5 : An occupier need not have exclusive possession, and there may be shared occupation. What matters is that the person has the immediate supervision and control and the power of permitting or prohibiting the entry of other persons... and the control need not be total.... The duty owed by an occupier arises principally at common law. The Work Health and Safety Act 2011 also imposes a modified duty on occupiers. 6 The duty imposed under this Act, and its significance, is not a matter that we will address in this article. Evolution of the common law duty of care of an occupier Historically, the duty of care owed by an occupier to an entrant was dependent upon the category of entrant to the premises (be the entrant an invitee, licensee or trespasser). 1 [2011] NSWCA Trespassers (who enter premises without the consent of the occupier) are, in certain circumstances, also owed a duty of care by the occupier. However, this duty of care is not identical to the one owed by occupiers who have given consent. 3 [2009] NSWCA [2000] NSWCA 3. 5 Ibid at [69]. 6 See s.19(2) of the Work Health and Safety Act 2011.

2 2 The rigid way in which classes of entrant were categorised, and the way in which an occupier s duty was formulated by reference to that class, was ultimately abolished in favour of a more generic duty founded on legal principles of tort 7. As was concluded in the High Court s pivotal case of Australian Safeways Stores Pty Limited v Zaluzna 8 : the fact that the respondent was a lawful entrant upon the land of the appellant establishes a relationship between them which of itself suffices to give rise to a duty on the part of the appellant to take reasonable care to avoid a foreseeable risk of injury to the respondent... [our emphasis]. The taking of such reasonable care, as discussed in Stojan 9, does not of itself encompass a duty to make the premises as safe as reasonable care and skill on the part of anyone can make them. Rather, it is an obligation to: protect entrants from risks of injury which can be foreseen and avoided. The measure of the discharge of the duty is what a reasonable person would, in the circumstances, do by way of response to the foreseeable risk. 10 It is worth pointing out that, notwithstanding the Court s departure from the notion of classes of entrant, the content of an occupier s duty and the conduct that amounts to reasonable care will depend on the circumstances surrounding entry to the premises and the degree of knowledge or skill which may reasonably be expected of the entrant. Factors of significance include, among many, whether the entrant is a child or the specific purpose for which the entry occurred. 11 We should also say that while the existence and/or content of an occupier s duty is a matter shaped by the common law, consideration of an occupier s duty and breach of duty are also issues to be informed by reference to ss.5b and 5C of the Civil Liability Act 2002 (at least where the Act applies). Contractual obligations owed by occupiers / implied warranties For a significant number of occupiers, including those in occupation of roads, interchanges, footpaths, shopping centres, supermarkets, residential premises, sporting ovals, parks and other such public areas and facilities, entrants are not usually granted access to the premises in exchange for valuable consideration or reward. In circumstances where entry occurs on terms requiring the exchange of consideration or reward, an occupier owes separate and more onerous obligations to the entrant than would otherwise be imposed 12. This more onerous duty, which has not been subsumed within the broad brush approach mandated by Zaluzna, has been described by the ACT Court of Appeal as an exacting one 13. It flows directly from the contractual obligation that arises between the parties. It is trite to say that in any contract for exchange of goods and services for a reward, certain obligations may be implied into the contract, necessary for its efficacy, whether or not the parties have specifically agreed to be bound by these terms or not. The exacting duty referred to above arises from the implied contractual warranty, as articulated by the Chief Baron of the Exchequer in Francis v Cockrell 14 as follows:... when one man engages with another to supply him with a particular article or thing, to be applied to a certain use and purpose, in consideration of a pecuniary payment, he enters into an implied contract that the article or thing shall be reasonably fit for the purpose for which it is to be used and to which it is to be applied See in particular Hackshaw v Shaw (1984) 155 CLR 614 at and Australian Safeways Stores Pty Limited v Zaluzna (1986) 162 CLR 479 at Australian Safeways Stores Pty Limited v Zaluzna (1986) 162 CLR 479 at [2009] NSWCA 364 at [89] referring to Jones v Bartlett (2000) 205 CLR 166 at [92] and Hackshaw v Shaw (1984) 155 CLR 614 at [2009] NSWCA see Shaw v Thomas [2010] NSWCA 169 at [37] and [38], a case in which the plaintiff was a child. 12 Watson v George (1953) 89 CLR Caftor Pty Ltd t/as Mooseheads Bar & Cafe v Matthew Kook [2007] ACTCA (1870) LR 5 QB 501 at 503.

3 3 The principle was also crystallised by McCardie J in Maclenan v Segar 15 in the following terms: Where the occupier of premises agrees for reward that a person should have the right to enter and use them for a mutually contemplated purpose, the contract between the parties... contained an implied warranty that the premises are as safe for that purpose as reasonable care and skill on the part of anyone can make them.... In short, the occupier warrants to a paying entrant that reasonable care has been taken to ensure that the premises are reasonably fit and safe for the intended purpose. While this implied warranty clearly overlaps to a significant extent with the tortious duty owed by all occupiers, it can have significant practical implications. A practical implication At common law, an occupier will not generally be tortiously liable for the negligent acts of its independent subcontractors. There are, of course, various well established exceptions to that rule that we will not traverse in this article. Nor is there a tortious duty on occupiers to inspect their premises for the purpose of discovering unknown or unsuspected defects 16. The implied warranty owed by an occupier to a paying entrant, namely that its premises are reasonably fit and safe for the intended purpose, is one factor that may significantly impact that generally applicable common law position. In the ordinary course, the engagement of a suitably qualified independent subcontractor, by an occupier on its premises, will provide a basis upon which that occupier may defend an allegation that it has failed to take all reasonable care and skill to prevent harm, resulting from the negligent actions of the subcontractor. The implied warranty discussed in Francis v Cockrell and Maclenan v Segar significantly impacts that position. Critically, as articulated in Francis v Cockrell 17 : it matters not whether the lack of care or skill be that of the defendant or his servant, or that of an independent contractor or his servants.... In Stonewall, an attempt was made to challenge the rigidity of the Francis v Cockrell and Maclenan distinction (in so far as it is inextricably linked to payment for entry). While the appellants were not permitted to advance the proposition that an occupier s tortious duty encompasses the content of the implied warranty (it not having been agitated at trial), the appeal and the submissions made during the appeal provide useful insight into this potentially evolving area of the law. The Stonewall case Facts At 5.20 am on 24 November 2002 the suspended ceiling on the first level of Oxford Street s Stonewall Hotel (Hotel) collapsed. At the time of the incident there were over 200 patrons in the premises. A number of those patrons were injured and numerous proceedings were subsequently commenced in which the plaintiffs sought personal injury damages. In June 2002, some months before the collapse of the ceiling, a patron of the Hotel ed Stonewall and the relevant Council raising concerns about the flex of the third floor dance level. A structural engineer was subsequently retained by the Hotel but he was not briefed with a copy of the patron s nor informed of the specific loadings which arose from the Hotel s use, including the presence of a dance floor. The structural engineer prepared a report shortly thereafter, confirming that the structures were adequate to support the anticipated loading. Three months later, the ceiling collapsed. 15 [1917] 2 KB 325 at See Gaskin v Ollerenshaw [2010] NSWSC 791 at [203]. 17 (1870) LR 5 QB 501.

4 4 It was uncontroversially accepted at trial that the collapse was as a result of the ceiling s inadequate installation by AB & S Wall Linings Pty Ltd (ABS). The defect lay in the size and fixation of the ceiling s screws. First instance decision The plaintiffs commenced proceedings against the Hotel, among others. ABS was not a party to the proceedings. While the trial judge determined that the Hotel had breached its duty to the plaintiffs (for not properly briefing the structural engineer), the trial judge accepted that the plaintiffs had been unable to establish a causal nexus between that breach and the incident. Appeal On appeal the appellants sought leave to argue (a proposition not raised at trial) that the content of the duty of care owed by the Hotel was informed by the principles articulated in Francis v Cockrell and Maclenan. If that submission were accepted, the Hotel was liable to the appellants for the negligence of ABS, the entity having (uncontroversially) installed the ceiling in a negligent fashion. While there was no evidence before the Court that the appellants had paid a cover charge or other fee to enter the premises (as a matter of fact they had not), the appellants argued that such consideration was immaterial. Rather, it was submitted that while the principles enumerated in Francis v Cockrell and Maclenan employed the language of the law of contract, the contractual relationship was not determinative, as those decisions must be read and understood in the context of the legal landscape of the time (namely, when the common law demanded strict observation of fixed classes of entrants and determined the scope of an occupier s duty in accordance with such classifications). It was submitted that the true rule was in fact founded in tort and related, as discussed in Fox v Buffalo Park to: buildings and structures in which public exhibitions and entertainments are designed to be given, and for admission to which the lessors 18 directly or indirectly receive compensation. 19 The appellants also sought to rely on more recent Australian authority said to give credence to that true rule including Voli v Inglewood Shire Council 20. In short, the appellants submitted that the existence of a contract was not a pre-requisite it only mattered that the Hotel occupied a building of a certain type (ie. a building for public entertainment and for admission to which the lessors directly or indirectly receive compensation). On that basis, despite the fact that the appellants did not pay a specific cover charge, the Hotel owed to the appellants obligations analogous to the implied warranties discussed above. YPOL acted for the Hotel at trial and during the appeal. In the event that leave to introduce the point had been given to the appellants, it was the Hotel s position that the appellants analysis of the relevant case law was misconceived, as the authorities specifically emphasised the importance of the contractual relationship. Outcome Leave to introduce the point for the first time was refused. As a result, while the matter was argued, the point is yet to be determined. Should the appellants have been successful, the decision would have represented authority for the proposition that, regardless of whether an entrant paid a fee to enter the premises or not, the relationship between the occupier and entrant was founded on contract or tort, any failure 18 The fact that the Hotel was not the lessor would no doubt have been a matter of significance if this point was ultimately agitated at trial. 19 Fox v Buffalo Park (1897) 47 NYS 788 at 792. See also Voli v Inglewood Shire Council (1963) 110 CLR 74 at (1963) 110 CLR 74.

5 5 by an occupier s (appropriately qualified) independent contractor would be, in effect, a failure of the occupier. Implications / comment The submissions made by the appellants during the Stonewall appeal clearly raise an interesting and potentially significant issue which we can expect to see agitated in future matters. We should also say that while it was argued that the expanded duty pertained only to occupiers of certain premises (eg. those concerning public exhibitions or entertainment ), it is conceivable that future submissions on the point will not be so constrained and will extend to encompass other types of premises, including those from which an entrant s entry to the premises can be characterised as representing some benefit to the occupier. Whether or not the courts will agree with submissions along the lines advanced by the appellants in Stonewall is difficult to predict. It is certainly foreseeable that application of the principles articulated in Francis v Cockrell and Maclenan may lead to unsatisfactory and inconsistent outcomes. For example, on any given night a cover charge to a venue may be inconsistently applied to entrants such that there are both fee-paying and non fee-paying entrants on the premises (and, in any event, such cover charge may be nominal). If these patrons were injured whilst on the premises, in circumstances analogous to those observed in Stonewall (ie. due to the negligence of an independent subcontractor), the rights of recovery of the two patrons against the occupier will be significantly different. On the other hand the change contended for by the appellants in Stonewall, for a separate class of non fee-paying entrant that is nonetheless owed Francis v Cockrell and Maclenan type duties, does not sit well with the dissolution of classes of entrant that emerged from Zaluzna. Such a distinction may itself lead to further unpredictability. Conclusion It is difficult to anticipate whether the common law will evolve in the way contended for by the applicants. On one view, such evolution would be surprising given that one effect of such a change, the impact on an occupier s liability for the negligence of its subcontractors, would sit at odds with recent trends limiting the exposure of such principles (eg. Leighton v Fox 21 ). While that may be cause for some optimism, given the significant impact of such a change, occupiers and those insuring occupiers have cause to watch this space. March 2013 This article was prepared by Katherine Ruschen, Director, Sybilla Waring-Lambert, Senior Associate and Katherine Allsop. Katherine Ruschen can be contacted on or at kruschen@ypol.com.au, Sybilla Waring-Lambert can be contacted on or at swaring-lambert@ypol.com.au and Katherine Allsop can be contacted on or at kallsop@ypol.com.au 21 [2009] HCA 35.

6 6 On 1 September 2007, three of the leading insurance and commercial litigators of Phillips Fox joined forces with the established and respected insurance and commercial litigation specialist, Yeldham Lloyd Associates to create our firm. On 5 May 2008 we enhanced our capability and commitment to the insurance and reinsurance industry with the addition of a specialist corporate and regulatory team. We are a specialist incorporated legal practice. We are focused on insurance, reinsurance and commercial litigation. Our directors are recognised locally and internationally as among the best in their fields. They are supported by an experienced and talented team. We are accessible, straightforward and responsive. We are about providing the best legal service at a reasonable cost. For more information on our firm please visit LEVEL 2, 39 MARTIN PLACE SYDNEY NSW 2000 DX 162 SYDNEY T: F: YPOL PTY LTD TRADING AS YELDHAM PRICE O BRIEN LUSK ACN LIABILITY LIMITED BY A SCHEME APPROVED UNDER PROFESSIONAL STANDARDS LEGISLATION. LEGAL PRACTITIONERS EMPLOYED BY YPOL PTY LIMITED ARE MEMBERS OF THE SCHEME DISCLAIMER This paper was prepared by YPOL (Katherine Ruschen) and provided at the Insurance Update seminar on 21 March This update is intended to provide a general summary only and does not purport to be comprehensive. It is not, and is not intended to be, legal advice. YPOL Pty Limited