Alcohol Consumption and Harm: A Consideration of Legal Liability Relating to the Service and Promotion of Alcohol

Transcription

1 The Wine Industry - Volume 12, 2010 Alcohol Consumption and Harm: A Consideration of Legal Liability Relating to the Service and Promotion of Alcohol Anna Bunn and Robert Guthrie School of Business Law and Taxation Curtin University of Technology Abstract The extent to which a licensee serving alcohol to customers is liable for the harm that those customers do themselves and others has been the subject of a number of recent High Court and Court of Appeal decisions. The High Court in the CAL No. 14 Pty Ltd v Motor Accidents Insurance Board; CAL No 14. Pty Ltd v Scott decision has now made it clear that the courts are not prepared to make licensees liable for the harm which intoxicated customers may do to themselves upon leaving licensed premises, except in exceptional circumstances. This decision appears to be based upon the notion that customers act voluntarily in becoming intoxicated and it is unreasonable to impose an obligation upon a licensee to protect them from harm. On the other hand the courts have more freely imposed obligations upon licensees to protect customers from being harmed by those who are intoxicated, and show a particular enthusiasm for extending the liability of licensees for harm suffered by third parties as a result of the acts of employees, even where those employees have acted without authority or contrary to policies. This paper considers and reviews the legal obligations for licensees in this context. Introduction It is commonplace for wineries to host wine tastings, or have a tasting room or cellar door open to members of the public. Larger wineries often have associated cafes and restaurants where alcohol is served, or host functions such as weddings. Wine tourism is something that wineries are naturally keen to encourage, but with a growth in visitor numbers comes a potential growth in the winery s liabilities towards its visitors. This paper explores some of the legal issues relating to the service of alcohol to members of the public. The paper will focus particularly on the extent to which licensees and proprietors of licensed premises owe a duty of care to patrons and third parties to prevent them from harm that arises from or relates to the service of alcohol. Part One of this paper considers whether there are any circumstances in which a licensee 1 may be found to owe a duty of care to a patron to take steps to prevent harm arising from the patron s own intoxicated state. Some of the recent case law which discusses and to a large degree clarifies the extent of a licensee s duty towards intoxicated patrons is reviewed. Part Two considers the extent to which a licensee may be found to owe a duty to the public at large to take steps to prevent harm to members of the public that arises from the acts or omissions of intoxicated patrons, both on and off the premises. The final part of this paper deals with the issue of a licensee s vicarious liability for acts of employees in the context of the service of alcohol or the maintenance of order or security on the premises where it is served Throughout this paper the word licensee includes the proprietor of the premises (where different).

2 Legal Issues in Business Part One: Liability in Negligence Towards Intoxicated Patrons Any organisation that is licensed to sell alcohol, whether for consumption on or off the premises, will be aware of the array of conditions attached to a licence. Most States and Territories in Australia require licensees and/or members of staff involved in the sale or service of alcohol to be certified as competent in the responsible service of alcohol. 2 Certification usually follows the completion of a relevant training course. Liquor control legislation generally makes it an offence to serve alcohol to someone who is intoxicated. 3 In addition to legislative rules and regulations relating to the sale and service of alcohol, which this paper does not aim to consider in any detail, a licensee may be liable in negligence where harm befalls a patron on, or even away from, licensed premises as a result of their intoxication. In order to be successful in a negligence action, the person bringing the action (the plaintiff) must show that the other party (the defendant) owed the plaintiff a duty of care; that the duty was breached; and that the breach of duty caused harm to the plaintiff, for which the defendant should be held responsible. 4 Establishing a duty of care is the threshold element in a negligence action if no duty is owed by the defendant to the plaintiff then there can be no finding of negligence made against the defendant. Whether in any particular case a duty of care is owed by the defendant to the plaintiff involves an enquiry into the nature of the relationship between the parties and all of the relevant facts of the case, including (but not limited to) the nature of the harm suffered by the defendant, whether that harm was foreseeable by the defendant and whether there are any policy considerations which should be taken into account. 5 Where harm has befallen a customer on the premises of a licensee the duty of care is usually fairly clear. This is because an occupier of premises generally does owe a duty of care to anyone who comes onto those premises: essentially the nature of that duty may be described as a duty to take reasonable care of the safety of those who enter the property. 6 The duty will include a duty to take reasonable care to ensure that the premises are physically safe and may extend to protecting customers from injury from activities carried on at the premises including the sale or supply of food and beverages. 7 2 See, for example, the Department of Racing, Gaming and Liquor, Liquor Licensing, Government of Western Australia < and the Liquor Control Act 1988 (WA) ss 33, 35B and 103A. Training is also mandatory in NSW, Victoria Tasmania, South Australia and the Northern Territory. For South Australia and the Australian Capital Territory, training may be required as a condition to granting a licence. See relevant State licensing authorities and relevant legislation or regulations available at: for ACT: Department of Justice and Community Safety < for NSW: Office of Liquor, Gaming and Racing < for NT: Department of Justice, Licensing, Regulation and Alcohol Strategy < for Qld: Department of Employment, Economic Development and Innovation, Getting a Liquor Licence < html>; for SA: Office of the Liquor and Gambling Commissioner < for TAS: Service Tasmania, Liquor Licences < =Business+registration&Topic=Business+and+economy&Sub Heading=Liquor+licences>; for VIC: Department of Justice < 3 See, for example, Liquor Control Act 1988 (WA) s 115(2). The question of whether the licensee of premises owes a duty to take reasonable care for the safety of a customer where that customer s injuries have arisen as a result of their own intoxicated state was, until recently, a more difficult one. In Cole v Sth Tweed Heads Rugby Club, 8 the High Court had the opportunity to consider whether a licensee owed a duty to take reasonable care to monitor and moderate the amount of alcohol consumed by a customer and whether it owed a duty to take reasonable care to ensure that an intoxicated customer 4 Lochgelly Iron and Coal Co Ltd v McMullan [1934] AC 1 at 25 (Lord Wright). 5 See, for example, Sullivan v Moody [2001] HCA 59 at See, for example, Cole v Sth Tweed Heads Rugby Club [2004] HCA 29, 30 (McHugh J). 7 Ibid Ibid. 58

3 The Wine Industry - Volume 12, 2010 travelled safely away from the Club. 9 The six judges of the court were divided on whether such duties were owed though there was no majority support for the proposition that they were. 10 Nevertheless, the division of the High Court on these questions left a degree of uncertainty as to the extent of a licensee s duty of care to intoxicated patrons. The extent of a licensee s duty to intoxicated patrons was again considered in Scott v CAL No 14 Pty Ltd (No 2). 11 That case involved an action in negligence brought by the widow of Shane Scott and by the Motor Accidents Insurance Board against the proprietor and licensee of the Tandara Motor Inn. Mr Scott had been killed as he rode a motorcycle home from the hotel premises. Shortly after arriving at the Tandara Motor Inn, Mr Scott had asked the licensee, Mr Kirkpatrick, to store his motorcycle in the hotel s storeroom and had handed the keys to Mr Kirkpatrick for safekeeping. Evidence was given that the arrangement had primarily been made due to reports of police activity in the area. Some time later, after Mr Scott had consumed numerous alcoholic beverages, Mr Kirkpatrick offered to call Mr Scott s wife to ask that she collect her husband. Mr Scott responded aggressively to this suggestion and subsequently requested the return of his motorcycle keys. Mr Kirkpatrick asked Mr Scott several times if he was right to ride, in response to which enquiry Mr Scott insisted that he was fine. 12 However, on the way home Mr Scott collided with a bridge rail and was killed. Evidence showed that the death was caused by Mr Scott s ability to drive the motor cycle being 9 Ibid Gleeson CJ and Callinan J found that there were no duties in the terms contended for, whilst Kirby and McHugh JJ were both of the view that a duty of care arising from occupation of premises should extend to the protection of customers from all injuries resulting from the ingestion of beverages (McHugh J at 31 whose view was endorsed by Kirby J at 91). Gummow and Hayne JJ opted not to decide whether there were duties of care in the terms contended for, finding it unnecessary to resolve those questions because if there were any such duties, they were not breached. 11 Scott v CAL No 14 Pty Ltd (No 2) [2009] TASSC Ibid 14 (Crawford CJ). 59 greatly impaired by intoxication from alcohol. 13 Mrs Scott and the Motor Accidents Insurance Board brought an action against the proprietor and licensee of the hotel essentially contending that the defendants were negligent in serving too much liquor to the deceased and failing to prevent him riding away on the motor cycle. 14 On the question of whether the hotel and licensee owed a duty of care to Mr Scott, the majority of the Supreme Court of Tasmania (Full Court) held that there was a duty and that it had been breached. In finding that there was a duty, Evans and Tennant JJ emphasised the differences between the circumstances of Cole and those of the present action. As to those differences, Tennant J noted as follows: The motor inn was in a small community, the number of patrons present on the night was relatively small, Mr Scott was a known customer who lived nearby, Mr Scott had requested Mr Kirkpatrick to lock his bike away to prevent Mr Scott driving in circumstances where he might be breathalysed, Mr Kirkpatrick had thereafter continued to serve Mr Scott alcohol, Mr Kirkpatrick knew Mr Scott intended to drive rather than ring his wife, and there was no evidence Mr Kirkpatrick was under any sort of threat if he refused to hand the bike over. 15 The proprietor and licensee appealed the Full Court s decision to the High Court of Australia and the appeal provided the High Court with the opportunity to clarify some of the uncertainty around the general duty of care issues created by the split decision in Cole. 16 The High Court not only reversed the Full Court of Tasmania s decision (finding that, amongst other things, the hotel proprietor and licensee owed no duty of care to Mr Scott) but in a joint judgment delivered by four of the five High Court judges, offered clarification on the issue as follows: 13 Ibid 6 (Crawford CJ). 14 Ibid 3 (Crawford CJ). 15 Ibid 75 (Tennent J). 16 C.A.L No. 14 Pty Ltd v Motor Accidents Insurance Board; C.A.L No 14. Pty Ltd v Scott [2009] HCA 47 (Gummow, Heydon and Crennan JJ).

4 Legal Issues in Business [O]utside exceptional cases, which this case is not, persons in the position of the Proprietor and the Licensee, while bound by important statutory duties in relation to the service of alcohol and the conduct of the premises in which it is served, owe no general duty of care at common law to customers which requires them to monitor and minimise the service of alcohol or to protect customers from the consequences of the alcohol they choose to consume. 17 It follows from the High Court s decision in Scott that it is only in exceptional circumstances that a licensee will owe a duty requiring them to monitor and minimise the service of alcohol or protect customers from harm which arises from or relates to their consumption of alcohol. Clearly the Scott case did not demonstrate exceptional circumstances. As such, the question arises: what will amount to exceptional circumstances such that a duty of care may be imposed on the proprietor or licensee? The judgment in Scott gives some brief consideration as to what may amount to exceptional circumstances: Examples of exceptional cases may include those where a person is so intoxicated as to be completely incapable of any rational judgment or of looking after himself or herself, and the intoxication results from alcohol knowingly supplied by an innkeeper to that person for consumption on the premises. Blow J thought that it would be reasonable also to make exceptions for intellectually impaired drinkers, drinkers known to be mentally ill, and drinkers who become unconscious. But the present circumstances bear no resemblance to those. This was not an exceptional case in that sense, nor, though counsel repeatedly hinted to the contrary, in any other sense. 18 The reference to a person being so intoxicated as to be completely incapable of any rational judgment or of looking after himself or herself relates to Ipp AJA s judgment in the Court of Appeal decision in Cole. 19 Ipp AJA s proposition does beg the forensic question as to when a point of such extreme intoxication and loss of the ability to make rational decisions arrives. As noted by Kirby J in his High Court judgment in Cole, [a] problem with the consumption of alcohol, persisted with beyond small quantities, is that it has a capacity to destroy the ability of the consumer to make reasoned choices, to observe proper self-protection and to behave in a civil and rational way. 20 Ipp AJA did, however, draw some analogy with the way in which contract law and criminal law treats intoxicated people and was of the view that there was no reason that the law relating to negligence should not adopt a similar approach. 21 Ipp AJA also quoted from Barwick CJ s comments in R v O Connor where the then Chief Justice said that even when a person is intoxicated in the sense that his personality is changed, his will is warped, his disposition altered, or his self-control weakened, that person still acts voluntarily and will be held responsible for criminal acts which they commit in that state even if it is possible to say that such acts would or might not have been committed by the person in a sober state. 22 If the law relating to negligence does indeed adopt a similar approach to that described by Barwick CJ in R v O Connor, then only patrons in a very extreme state of intoxication can be said to have lost the ability to act voluntarily and only then is there a possibility that licensees will come under a duty of care towards them. Accordingly, it would seem wise for licensees to assume that when a person has consumed so much alcohol that they become literally unconscious, a licensee has a duty to take reasonable care for such person s safety. In order to avoid an action for negligence in such a situation, it may be necessary to seek medical assistance for such a person and, in the meantime, to take reasonable care of them (ensuring, for 17 Ibid Ibid 44 (Gummow, Heydon and Crennan JJ) (footnotes omitted). 19 South Tweed Heads Rugby League Football Club Limited v Cole [2002] NSWCA, 197 (Ipp AJA). See also Cole v Sth Tweed Heads Rugby Club [2004] HCA 29, para 84 (Kirby J) Cole v Sth Tweed Heads Rugby Club [2004] HCA 29, 84 (Kirby J). 21 South Tweed Heads Rugby League Football Club Limited v Cole [2002] NSWCA, 182 (Ipp AJA ). 22 Ibid 180 (Ipp AJA quoting Barwick CJ in R v O Connor [1980] HCA 17, (1980)).

5 The Wine Industry - Volume 12, 2010 example that they are not left alone). 23 For customers who are intoxicated but not to the point of being unconscious a licensee (via its staff) may be required to exercise something of a value judgment as to how extreme that customer s intoxication is and whether medical assistance or other positive intervention is required. It must be noted, however, that liquor control legislation throughout Australia, including Western Australia, makes it an offence for a licensee to permit drunkenness on the premises. 24 In the Western Australian legislation, for example, a person is drunk for the purposes of the Act if the person s speech, balance, coordination or behaviour appears to be noticeably impaired; and it is reasonable in the circumstances to believe that that impairment results from the consumption of liquor. 25 There may therefore be a potential conflict between legislative provisions which require the removal of intoxicated people from licensed premises, and any potential duty of care in negligence which may (albeit only in exceptional cases such as noted above) require an intoxicated person to be prevented from leaving those premises. This potential conflict was recognised by the majority judgment of the High Court in the Scott case where it was noted that a problem of legal coherence arises where legislation compels a publican to eject a drunken customer but the tort of negligence requires the person s safety to be safeguarded by not permitting the person to drive or to walk along busy roads, and hence requires the person to be detained by some means. 26 In Scott the lack of coherence was resolved by finding that there was no general duty to protect customers from the consequences of the alcohol they choose to consume. 27 Nevertheless, the fact that the same court conceded that there may still be a duty in exceptional cases means that the dilemma will continue to present itself to licensees who find themselves confronted with an exceptional case. Such cases may include those which involve an extremely intoxicated person, who may be considered to lack the ability to act voluntarily, or (possibly) a person who is intellectually impaired, or known to be mentally ill. 28 The High Court s decision in C.A.L No. 14 Pty Ltd v Scott has offered useful clarification on the question of whether a duty of care is generally owed by a licensee towards intoxicated customers. However, by the High Court s own acknowledgement these conclusions say nothing about whether publicans owe a duty to third parties who may be damaged by reason of the intoxication of those customers. 29 As such, there is still an unresolved question as to whether a licensee, whilst not in general owing a duty to an intoxicated customer in terms discussed above, may still owe a duty to third parties. This is discussed in the following section. 23 However, note the effect of civil liability legislation in some States, notably New South Wales and Queensland. Section 49(1)(a) of the Civil Liability Act 2002 (NSW) provides that in determining whether a duty of care arises, it is not relevant to consider the possibility or likelihood that a person may be intoxicated or that a person who is intoxicated may be exposed to increased risk because the person s capacity to exercise reasonable care and skill is impaired as a result of being intoxicated. Section 49(1)(b) provides that a person is not owed a duty of care merely because the person is intoxicated. A similar provision to s 49(1)(a) of the NSW Act is contained in the Civil Liability Act 2003 (Qld) (s 46) although this provision does not have application to licensed premises. It is arguable that the effect of s 49(1)(a) of the Civil Liability Act 2002 (NSW) at least could be to preclude the finding of a duty even in exceptional circumstances such as those outlined above. 24 See for example the Liquor Control Act 1988 (WA) s Liquor Control Act 1988 (WA) s 3A C.A.L No. 14 Pty Ltd v Motor Accidents Insurance Board; C.A.L No 14. Pty Ltd v Scott [2009] HCA 47, 55 (Gummow, Heydon and Crennan JJ ). 27 Ibid 52 (Gummow, Heydon and Crennan JJ). 28 Refer South Tweed Heads Rugby League Football Club Limited v Cole [2002] NSWCA in which reference was made to Blow J s opinion in Scott v CAL No.14 Pty Ltd [2007] TASSC 94, 37. Tina Cockburn has speculated that exceptional circumstances may also include situations where a patron is underage or a known alcoholic ( Recent developments in the law of negligence (Notes for presentation at Australian Insurance Law Association Insurance Law Intensive, 26 May 2006) < ensive/ _tina_cockburn.pdf>,. 29 C.A.L No. 14 Pty Ltd v Motor Accidents Insurance Board; C.A.L No 14. Pty Ltd v Scott [2009] HCA 47, 57 (Gummow, Heydon and Crennan JJ).

6 Legal Issues in Business Part Two: Liability to Others for the Acts of an Intoxicated Patron Where intoxicated customers cause injury to others, could the licensee be held responsible to those others? In what circumstances might a licensee owe a duty to protect third parties from harm caused by a patron s intoxicated state? If Mr Scott riding home from the Tandara Motor Inn on his wife s motorcycle had instead hit and injured a pedestrian, for example, could the licensee have been found to have been under a duty of care towards that pedestrian? The High Court has not yet had to directly consider such issues. However, a number of other authorities suggest that a duty to third parties injured by an intoxicated customer does exist. 30 Ipp AJA, delivering the Court of Appeal s judgment in Cole, noted that [i]t is generally accepted that the duty to take reasonable care to avoid a foreseeable risk of injury to invitees, owed by the occupier or person in control of a hotel, restaurant, bar or similar establishment, extends to injuries to patrons caused by tortious or criminal acts of other patrons. 31 Ipp AJA refers to a number of other superior court judgments which support the existence of such a duty, including the case of Oxlade v Gosbridge Pty Limited from which he quotes Mason P as noting that [a] duty to exercise reasonable care to protect patrons has been imposed upon the manager of an hotel as regards intoxicated or dangerous customers. Whatever the outer limits of such, it encompasses the protection of a person while he or she is on or departing from the licensed premises. 32 intoxicated customers from occasioning harm to themselves centers on the concern that individuals who voluntarily choose to drink and who become intoxicated should not be absolved of responsibility for their voluntary decisions. 33 Those same concerns have less application in cases where a third party has been injured by the acts of an intoxicated person. It is submitted that, in such cases, the public interest in protecting innocent others from alcohol-related harm may override concerns that it is the intoxicated person who should be held solely responsible for their actions. Indeed, the strong public interest in minimising alcohol-related harm is evident in much of the legislation around liquor licensing and control. For example, the Liquor Act 2007 (NSW) states that: In order to secure the objects of this Act, each person who exercises functions under this Act (including a licensee) is required to have due regard to the following: (a) the need to minimise harm associated with misuse and abuse of liquor (including harm arising from violence and other anti-social behaviour), (b) the need to encourage responsible attitudes and practices towards the promotion, sale, supply, service and consumption of liquor, (c) the need to ensure that the sale, supply and consumption of liquor contributes to, and does not detract from, the amenity of community life. Liquor laws in other states contain similar provisions. In Western Australia, for example, the Liquor Control Act 1988 states that that one of the Act s primary objects is to minimise harm or ill-health caused to people, or any group of people, due to the use of liquor. 34 Much of the reluctance on the part of members of the judiciary to impose a duty on licensees to protect 30 See, for example, South Tweed Heads Rugby League Football Club Limited v Cole [2002] NSWCA 205, 153 (Ipp AJA) referring also to Oxlade v Gosbridge Pty Limited (unreported, NSWCA, 18 December 1998); Chordas v Bryant (Wellington) Pty Limited (1988) 91 ALR South Tweed Heads Rugby League Football Club Limited v Cole [2002] NSWCA 205, 153 (Ipp AJA). 32 Ibid 154 (Ipp AJA quoting Mason P in Oxlade v Gosbridge Pty Limited (unreported, NSWCA, 18 December 1998)) Evident most clearly in Ipp AJA s judgment in South Tweed Heads Rugby League Football Club Limited v Cole [2002] NSWCA 205, as well as in Callinan J and Gleeson CJ s judgment in the High Court in the same matter (Cole v Sth Tweed Heads Rugby Club [2004] HCA 29) and in the High Court s majority judgment in C.A.L No. 14 Pty Ltd v Motor Accidents Insurance Board; C.A.L No 14. Pty Ltd v Scott [2009] HCA Liquor Control Act 1988 (WA) s 5(1)(b).

7 The Wine Industry - Volume 12, 2010 Some of these legislative provisions have been cited in the recent High Court case of Adeels Palace 35 as being the basis for finding that a licensee (in that case a restaurant) owed a duty of care to other patrons to prevent criminal conduct by others on the premises. In that case an action was bought against Adeel s Palace restaurant by two of the restaurant s customers who had been shot by a gunman following a brawl which occurred at the restaurant on New Year s Eve. The victims asserted that the restaurant had been negligent in not providing any or any sufficient security during the function on New Year s Eve. 36 The High Court found that the restaurant did owe a duty of care in the terms argued for by the victims and that conclusion was based on a number of factors. One of the reasons for finding that there was a duty was that there was a duty to take reasonable care to prevent or hinder the occurrence of events which, under the Liquor Act, the licensee was bound to prevent occurring violent, quarrelsome or disorderly conduct. 37 Given the objectives of liquor control laws and the fact that they make it an offence to allow intoxicated people to enter or remain on the premises, it is likely that licensees will also be held to owe a duty to prevent harm to customers arising from the negligent actions of intoxicated patrons on the premises, at least where those patrons are noticeably intoxicated. A more difficult question, though, is whether there is a duty to prevent harm to third parties once an intoxicated person has left the premises. The question is more difficult because it involves, once again, a potential conflict. The conflict is between the objectives of the liquor control legislation on the one hand (the minimisation of harm associated with the misuse and abuse of liquor) and, on the other, the fact that it is an offence under the same legislation to permit drunkenness on the premises. 38 In order to comply with 35 Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem [2009] HCA Ibid Ibid See, for example, Liquor Control Act 1988 (WA) s 5(1)(b) and s obligations not to permit drunkenness on the premises, a licensee would have to ensure the departure of an intoxicated person. However, allowing (or requiring) an intoxicated person to leave the premises may, in turn, present a danger to others beyond the physical limits of the premises. How these matters of conflict will be resolved must remain to be seen. 39 In the meantime, it would seem that the safest option for licensees is to assume that there is a duty of care to protect third parties from the intoxicated actions of a third party. It must be remembered that the duty of care is only one of the elements of a negligence action. Even where a duty is owed by a licensee, there can be no liability where the licensee is found not to have breached the duty of care. Likewise there will be no liability if any fault, or breach of duty, which is found to have occurred did not in fact cause the harm in question, or where (even if the breach caused the harm) it is not appropriate to hold the defendant liable for the extent of the harm caused. 40 In relation to the question of breach of duty, a 39 With the exception of Rosser v Vintage Nominees Pty Ltd t/as Liars Saloon and West Coast Acceptances Pty Ltd (Unreported, District Court of Western Australia, 5 June 1998), the authors are not aware of any Australian cases which have had to directly consider these issues, though several North American cases have considered the question of alcohol server liability to third parties. In Mayfield Investments Limited v Stewart (1995) 121 DLR (4th) 222, for example, the Supreme Court of Canada held the proprietor of a restaurant liable in negligence for injuries sustained by one of its patrons in a motor vehicle accident that was caused, in turn, by the intoxication of another patron. Major J held (at 230) that [i]t is clear that a bar owes a duty of care to patrons, and as a result, may be required to prevent an intoxicated patron from driving where it is apparent that he intends to drive. For a discussion of other (earlier) cases on this issue, refer to Toby Blyth, Hotelier and Social Host Liability for Alcohol Related Harm A Review of the Law in Australia (1999) 6(3) Murdoch University Electronic Journal of Law < tml>. 40 Civil Liability Act 2002 (WA) s 5C1; Civil Law (Wrongs) Act 2002 (ACT ) s 45(1); Civil Liability Act 2002 (NSW) s 5D(1); Civil Liability Act 2003 (Qld) s 11(1); Civil Liability Act 1936 (SA) s 34(1); Civil Liability Act 2002 (Tas) s 13(1); Wrongs Act 1958 (Vic) s 51(1). The question of whether it is appropriate to hold a defendant liable for the extent of the harm caused by their breach of duty will involve a consideration of all those matters which at common law would reduce the width of the but for test of causation. (Justice Carmel McLure, A Practical Guide to the Resolution of Causation Issues in Negligence (Geoff Masel Lecture

8 Legal Issues in Business licensee will not breach any duty owed (and cannot be found liable in negligence) if it responds to the situation in hand in the same way that a reasonable licensee in the same position would respond. As noted in the Adeels case whether a reasonable person would have taken precautions against a risk is to be determined prospectively, and the answer given in any particular case turns on the facts of that case as they are proved in evidence. As the facts of each case will be different it is therefore impossible to develop a set of hard and fast rules which will apply in every situation. Nevertheless licensees may be required as a condition of obtaining a liquor licence to have in place codes of conduct and management plans in relation to the responsible service of alcohol and the way in which intoxicated patrons will be dealt with. 41 Accordingly, evidence that the policy is implemented consistently and that staff are adequately trained in the policy will likely be a key consideration in a court s decision as to whether the response in any given situation was reasonable. Wherever possible, each licensee s internal policies should reflect any wider industry practices or local government guidelines. In Queensland, for example, the Code of Practice for the Responsible Service, Supply and Promotion of Liquor published by the Queensland Government s Liquor delivered for the Australian Insurance Law Association, 12 November 2008). This will include, among other factors, the extent to which the harm was of a kind which was or should have been foreseeable by the defendant. It is also possible, in exceptional cases for a defendant to be liable for harm even if factual causation is not satisfied: see Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem [2009] HCA 48, para 54. Where the provisions of the relevant civil liability legislation do not apply to an action (see below n 60) (or in the Northern Territory where causation principles are not governed by legislation) then common law principles of damage will instead apply. In essence these common law principles also require that the relevant harm was caused by the defendant s breach of duty and that the scope of the defendant s liability should extend to the harm caused. 41 In Western Australia, for example, the Department of Racing, Gaming & Liquor requires applicants for a liquor licence to lodge with their application a copy of their premises house management policy, code of conduct and management plan which should set out such things as the policies and methods for dealing with intoxicated patrons and the responsible service of alcohol etc. See Director of Liquor Licensing, Harm Minimisation (7 May 2007) Department of Racing, Gaming and Liquor < imisation.pdf>. 64 Licensing Division sets out examples of practices and promotions which are acceptable and those which are not. 42 Ultimately though, beyond some general guidelines as to such things as the development of safe transport strategies and the need for adequate security personnel to be in place where appropriate, most of these guidelines stop short of setting out specific suggestions for the management of intoxicated patrons. Another factor in determining whether a licensee or proprietor s response to a given situation was reasonable will be a consideration of whether the management plans and policies in relation to the service of alcohol and the management of intoxicated patrons have been regularly reviewed. The Director of Liquor Licensing for Western Australia notes that the management plan should be a working document that responds to changes in the manner of trade and changes in patron needs and behaviours over time. 43 Clubs WA recommends that [r]esponsible service of alcohol strategies should be reviewed on an ongoing basis with a formal review over 6 to 12 months. 44 In particular, any such review should provide an opportunity for licensees/proprietors to reflect on particular incidents which may have occurred in relation to intoxicated persons, how those incidents were managed and whether they could have been managed more effectively. Evidence of a proactive approach to reviewing, and where necessary, amending policies may provide further support to a licensee s argument that their response in any given situation was reasonable and that therefore any duty which may be found to be owed was not breached. Even where management plans and strategies are developed, disseminated and regularly reviewed, a 42 See Liquor Licensing Division, Code of Practice for the Responsible Service, Supply and Promotion of Liquor (June 2005) Queensland Government < cticerespservicesupplypromoliquor.pdf>. 43 Director of Liquor Licensing, above n Clubs WA (2010) <

9 The Wine Industry - Volume 12, 2010 licensee relies on its staff for the implementation of such policies. The provision of staff training in relation to those plans may make it more likely that they will be followed. On the other hand, there is no guarantee that employers will not be liable even where their staff have acted improperly and in a way which runs counter to those policies. The next part of this paper discusses some of these issues in the context of staff involved in the service of alcohol or the operation of licensed premises. Part Three: Liability for Improper Acts of Employees An employer will be liable for the acts or omissions of their employees which take place in the course of employment. Conversely, where an employee acts in a way which is considered outside the course of employment there may be no liability on the part of the employer. The question of whether an employee has acted outside the course of their employment is by no means a straightforward one. The basic proposition is that an employer is not liable vicariously for independent wrongful acts of employees. 45 However, this basic proposition is to some degree clouded by the fact that the law will hold an employer vicariously liable for wrongful acts of employees which constitute modes (albeit improper modes) of doing acts which are authorised by an employer. In Deatons Pty Ltd v Flew, 46 the High Court considered the question of whether an assault upon a customer of a hotel by a barmaid in the employ of the publican company was committed in the course of her employment. Justice Dixon said of the barmaid s action: The truth is that it was an act of passion and resentment done neither in furtherance of the master's interests nor under his express or implied authority nor as an incident to or in consequence of anything the barmaid was employed to do. It was a spontaneous act of retributive justice. The occasion for administering it and the form it took may have arisen from the fact that she was a barmaid but retribution was not within the course of her employment as a barmaid. 47 In the same case Justice Williams said: The damage to the plaintiff was done by the glass. A barmaid who throws an empty glass at a customer is not doing an act of the class which she is employed to do. To throw the beer, much less the glass, at a customer is not a mode, although an improper mode, of serving a customer with beer, and even less a mode, although an improper mode, of answering his request for a glass of beer. 48 Conversely, in the New Zealand case of Petterson v Royal Oak Hotel, 49 a barman was found to be acting in the course of his employment when he threw pieces of broken glass at a customer. The barman had refused further service to a customer who was drunk, following which the customer threw an empty glass at the barman which broke at the barman s feet. The barman threw the broken pieces at this customer as he was walking out. A piece of glass splintered off and struck and injured another patron, the plaintiff. This action was held to be in the course of the employment on the basis that a barman s duties included, amongst other things, dealing with order in the bar. Accordingly the court held that his actions (throwing the glass at the customer) were a mode, albeit a wrongful one, of dealing with customers and was therefore in the course of his employment. More recently Australian courts have found that security personnel may indeed be acting within the course of their employment even when performing their duties with excessive force. In Sprod bnf v Public Relations 45 F McGlone & A Stickley, Australian Torts Law (LexisNexis Butterworths, 2 nd ed, 2008) 435 referring to Owston v Bank of New South Wales (1879) 4 App Cas 270 and Bugge v Brown 1818( 26 CLR 110). 46 Deatons Pty Ltd v Flew (1949) 79 CLR Ibid 385 (Dixon J). 48 Deatons Pty Ltd v Flew (1949) 79 CLR 370, 386 (Williams J). 49 Petterson v Royal Oak Hotel (1948) 67 N.Z.L.R

10 Legal Issues in Business Oriented Security Pty Limited 50 the New South Wales Court of Appeal was asked to decide if the employer of security personnel was vicariously liable for their actions in assaulting the appellant. Evidence in the case showed that the appellant had been escorted from the premises (a pizza shop) by the two security guards and taken down a narrow alley where the appellant was later found lying in a pool of blood. The appellant suffered permanent brain damage as a result of the assault. Ipp JA, with whom the other two judges agreed, held that although there may have been an element of personal animosity and vindictiveness in the actions of the security guards, this was not the primary motive of the assault. Rather, according to Ipp JA, the dominant cause of the assault was a desire on the part of the guards to do their duty by ensuring that the appellant would not again make a pest of himself at the shop, would not return to the shop, and would not again molest the customers Accordingly Ipp JA held that the conduct of the guards was so connected with acts that the respondent authorized them to perform that they may be regarded as modes although highly improper modes of doing them 52 A similar outcome was reached in the earlier case of Starks v RSM Security Pty Ltd. 53 Starks was drinking at the Bondi Hotel in New South Wales when he was requested to leave the premises by a security guard. He resisted and was headbutted by the security guard. Starks claimed damages for his injuries against the security guard and his employer and the owner/occupier of the hotel and the hotel s licensee. The Full Court of the New South Wales Supreme Court held that the employer was liable for the security guard s actions on the basis that he was acting in the course of his employment. In this case, although the court found the security guard s act in headbutting Starks was unreasonable, uncalled for, and not a usual mode to persuade a customer to leave hotel premises, this action had still been in the course of the employment as the guard was paid to remove patrons from the premises. The employer was vicariously liable because the unauthorised act (the headbutt) was so closely connected with the authorised act (removal of the patron from the premises) that it constituted a mode of performing his regular duties. In light of the above decisions, an employer may be held vicariously liable even where, as in the Sprod case, it is accepted that the employer had properly trained and supervised their employees and had taken reasonable care to ensure that employees did not assault or ill treat other persons. 54 It is interesting to note the comments of Ipp JA in Sprod that the fact that an employer may be liable for wrongful acts of employees in such circumstances may leave the employer entirely at the mercy of the employee. On this basis, no matter what instructions the employer may give the employee, the employer may be liable if the employee disobeys those instructions and commits a criminal act in the subjective belief that by doing so the employer s interests will be advanced. 55 Conclusions What is clear from recent decisions of the High Court of Australia in cases involving claims by intoxicated patrons is that courts are reluctant to impose liability on a licensee for what is regarded as self-inflicted harm arising from a patron s own personal decision to consume alcohol, even to the point of intoxication. The policy that people should be responsible for their own actions is also reflected in civil liability legislation. In addition to provisions in some States laws, discussed above, which impact on the question of whether a duty 50 Sprod bnf v Public Relations Oriented Security Pty Limited (2007) Aust Torts Reports Ibid 79 (Ipp JA). 52 Sprod bnf v Public Relations Oriented Security Pty Limited (2007) Aust Torts Reports , (Ipp JA). 53 Starks v RSM Security Pty Ltd & Ors [2004] NSWCA Sprod bnf v Public Relations Oriented Security Pty Limited (2007) Aust Torts Reports , 33 (Ipp JA). 55 Sprod bnf v Public Relations Oriented Security Pty Limited (2007) Aust Torts Reports , 53 (Ipp JA).

11 The Wine Industry - Volume 12, 2010 is owed to an intoxicated person, 56 civil liability laws in all states and territories of Australia include specific provisions which allow a defendant who is found negligent to assert a defence that an intoxicated plaintiff contributed to the harm they suffered. 57 Unless the plaintiff can prove that their intoxication did not contribute to the harm then the effect of these provisions, in most states and territories, is to reduce the amount of compensation payable by a defendant. 58 In New South Wales, however, the effect of s 5O(2) of the Civil Liability Act 2002 (NSW) is that a court will award no damages to a plaintiff who was intoxicated at the time of the accident, unless the court is satisfied that the accident is likely to have occurred in any event. control legislation as well as economic arguments (particularly evident in cases involving vicarious liability on the part of an employer) 59 as to which party is more able to bear the financial burden of compensation and as to how some of the social and other risks inherent in the sale of alcohol should be distributed. It is also true that the relative weight to be given to these respective considerations, and others, will depend a great deal on the times within which we live and the relative benefits or detriment attributed to the use and sale of alcohol. 60 Contrast, for example the strong views of Kirby J in Cole with the views of the majority judgment in Scott. Justice Kirby was of the view that: As has been discussed, rather different policy considerations operate when a person has been injured by the intentional or negligent acts of third parties who are somehow related to a licensee (whether because they are patrons or employees of the licensee). In these situations the court will be required to consider a number of often conflicting factors and policy considerations. On the one hand there are difficult questions as to the ability of a licensee to control the acts of third parties (this is particularly relevant when intoxicated customers have injured a third party away from the licensee s premises) and the commercial realities and practical considerations around the sale and service of alcohol. On the other hand, the court will take into account the harm minimisation objectives of liquor 56 See above n The civil liability laws have wide application in negligence actions, though will not apply to all types of damages. The Civil Liability Act 2002 (WA), for example, does not apply to certain damages, such as those to which the Motor Vehicle (Third Party Insurance) Act 1943 (WA) applies, asbestos and tobacco related damage, and other forms of damage included in s 3A. The Personal Injuries (Liabilities and Damages) Act 2003 (NT) applies only to claims for damages relating to personal injuries (s 4). 58 See Civil Liability Act 2002 (WA) s 5L; Personal Injuries (Liabilities and Damages) Act 2003 (NT) s 14; Civil Liability Act 2003 (Qld) s 47; Civil Liability Act 1936 (SA) s 46, Civil Liability Act 2002 (Tas) s 5. In Victoria the Wrongs Act 1958 (Vic) s 14G provides that the intoxication of a defendant should be considered in determining whether the plaintiff has breached their duty of care to that defendant. 67 [i]f responsibility is imposed on the Club by the law of negligence a message is sent that control is not just a formal duty imposed on the club and its officers by Parliament and by statutory offences unlikely to be prosecuted often. A holding of liability in negligence would reinforce such duties by visiting civil consequences that would sound in direct liability to the injured, with a resulting increase in insurance premiums that might stimulate a desirable change of culture and conduct. 61 The majority judgment in Scott reflected that: It is not against the law to drink, and to some degree it is thought in most societies certainly our society that on balance and subject to legislative controls public drinking, at least for those with a taste for that pastime, 59 See for example W L Prosser, W P Keeton, D B Dobbs, R E Keeton and D G Owen (eds) Prosser and Keeton on the Law of Torts (West Group, 1984, 5 th ed) 69, 500, quoting Baty, Vicarious Liability (1916) 154 that [ In hard fact, the [real] reason for [] employers liability is [...] the damages are taken from a deep pocket. ], as referred to in Hollis v Vabu Pty Ltd [2001] HCA 44, Consider for example the view of Penelope Watson who writes, Talk of personal responsibility and autonomy in the context of alcohol service operates as a justification for denial of community responsibility for activities of dubious social worth, which benefit strong commercial interests and provide government revenue. P Watson, You re Not Drunk if You Lie on the Floor Without Holding On Alcohol Server Liability, Duty, Responsibility and the Law of Torts (2004) 6 JCJUL Rev Conclusion < >. 61 Cole v Sth Tweed Heads Rugby Club [2004] HCA 29, 104 (Kirby J).

12 Legal Issues in Business is beneficial Almost all societies reveal a propensity to resort to alcohol or some other disinhibiting substance for purposes of relaxation Balancing the pleasures of drinking with the importance of minimising the harm that may flow to a drinker is also a matter of personal decision and individual responsibility. 62 What is clear is that the issue of civil liability on the part of those who sell alcohol is likely to remain one which attracts considerable debate, attention and no small degree of uncertainty. 62 C.A.L No. 14 Pty Ltd v Motor Accidents Insurance Board; C.A.L No 14. Pty Ltd v Scott [2009] HCA 47, 54 (Gummow, Heydon and Crennan JJ). 68