Welcome to the December 2009 issue of the Edwards Michael Lawyers eBulletin.

Recovery Issues # 1: High Court Limits Liability of Licensed Premises and puts Spotlight on Causation

Two recent decisions of the High Court have limited the liability of owners and occupiers of licensed premises and emphasised the need to establish a causal nexus between an alleged breach of duty and the injury suffered.

In C.A.L. No.14 Pty Limited v Motor Accidents Insurance Board and Scott (2009) HCA 47 the High Court dealt with a case in which it was alleged that the licensee had breached its duty of care to an intoxicated patron who was killed while riding his motorcycle home from the premises. Earlier in the evening the licensee had been requested to place the motorcycle in a locked room, it being the intention of the patron to have his wife pick him up from the hotel and to collect the bike later. Subsequently, the patron refused the licensee’s request for his wife’s phone number and insisted on being given access to the bike. It was alleged that the licensee had breached its duty of care by not refusing to hand over the bike or the keys or insisting on telephoning his wife to collect him.

The High Court overturned the decision of the Tasmanian Court of Appeal on the issues of duty of care, breach of duty and causation. The majority of the Court held that:

“Outside 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.”

This conclusion was based on a number of considerations which highlighted the impractical nature of imposing such a duty. In particular, the court noted the difficulty in determining the extent to which a person might be intoxicated, the conflict with the autonomy and responsibility of the individual concerned and the potential conflict which may arise with other legal principles such as assault or wrongful interference with property rights. These considerations also informed the question of whether there had been a breach of duty, had such duty existed.

The Court further held that, even had there been a duty which was breached, the necessary causal link between such breach and the injury had not been made out because the evidence did not establish that if the licensee had asked the patron for his wife’s telephone number he would have provided it or that she would have received such call at all or in time to prevent the patron riding his bike.

The second decision is Adeels Palace Pty Limited v Moubrak and Najem (2009) HCA 48, in which the High Court overturned a decision of the Court of Appeal of NSW. The facts were that following a fight involving a number of people in a restaurant, one patron left and returned with a gun and he shot two people, one of whom had not been involved in the earlier fight. The allegation of negligence was that the proprietors of the licensed premises did not provide sufficient security, in particular at the front entrance so as to stop or deter the entry of the gunman. Again the Court considered the nature of the duty of care, whether that duty had been breached and the issue of causation in the particular context of s.5D of the Civil Liability Act 2002.

It was held that the occupier did owe the shooting victims a duty of care both as the occupier of premises generally and also by reason of the duties upon licensees arising under the Liquor Act 1982. It was, however, emphasised that the duty was not an absolute one but required the licensee to take reasonable care to prevent injury to patrons. The Court then declined to attempt any definitive statement as to when it would be a reasonable step for a licensee to engage security personnel as this issue would depend upon the facts of each case and it was not considered necessary to determine the issue in that case by reason of the Court’s determination of the issue of causation.

It is in relation to causation that the High Court addressed issues of broader relevance. The court held that s.5D of the CLA imposed a statutory test of causation which differs from the established common law test in that the section drew a distinction between factual causation and the scope of liability and provided that the “but for” test of factual causation must be satisfied, meaning that the breach of duty must be a “necessary condition” to the occurrence of the harm suffered. Applying this test, the High Court was not satisfied that the provision of security at the entrance would probably have stopped or deterred the gunman from entering, noting his clearly irrational state of mind and the unusual nature of the threat posed by him.

The significance of this case, therefore, is that it confirms that the CLA gives rise to a different test of causation than that applicable at common law and also that, in cases where the harm is caused by a third party, care must be taken to establish that the breach of a duty of care owed by an occupier of premises (whether licensed or not) in fact caused the injury in question in the sense that it is more probable than not that had the breach of duty not occurred the harm would not have been suffered.

Recovery Issues # 2: High Court clarifies Head Contractor’s Duty

In Leighton Contractors Pty Limited v Fox (2009) HCA 35 the High Court found that the duty of care owed by a Head Contractor does not extend to providing on site safety training for its contractors and their employees, or to take detailed steps to ensure that such training has been provided by the contractors.

The Court confirmed the duty of care owed by a Head Contractor to supervise and co-ordinate the activities of contractors so as to prevent unreasonable risk of injury, and generally to provide safe premises and a safe place of work by reason of being an occupier.

Court of Appeal Confirms Limited Common Law Costs Liability for Employer

On 9 December 2009, the Court of Appeal delivered Judgment in Ace-Semi Trailer Sales Pty Limited v Zurich Australia Insurance Limited [2009] NSW CA 381. The Court rejected an attempt by the public liability insurer to challenge the previous decision of Estate of the Late M T Mutton v Howard Haulage Pty Limited [2007] NSW CA 340, which determined that it would not be just and equitable for an employer to be ordered to pay part of the Plaintiff’s costs against another tortfeasor if, in hypothetical proceedings against the employer, no costs would have been ordered against it.

Hodgson JA considered that if proceedings had been brought against the employer by the insured worker, the prospect of costs being ordered against the employer, by reason of Clause 89 and/or 92 of the Regulations, must be considered remote and speculative, and therefore the employer should not be ordered to contribute to costs of the injured worker.

Common Law: Cross Claims Against Employers

In Ace-Semi Trailers (above) the Court of Appeal rejected an argument that as the degree of employer-negligence could be taken into account by the public liability insurer pleading Section 151Z(2) in its defence, there was no need to implicate the employer in proceedings brought by an injured worker against the public liability insurer.

It was considered that such a pleading could do no more than (a) reduce the Plaintiff’s damages to account for the degree of employer-liability, and (b) reduce the limit of the public liability insurer’s liability to indemnify the employer for workers’ compensation paid.

The Court held that a Section 151Z(2) pleading in a Defence could not affect the public liability insurer’s claim for contribution from an employer pursuant to the Law Reform (Miscellaneous Provisions) Act 1942.

It can therefore be anticipated that employers will continue to be joined to Common Law proceedings where there is evidence that the employer’s negligence or breach of statutory duty caused or contributed to a worker’s injuries.

Section 9A Revisited

In Badawi v Nexon Asia Pacific Pty Limited t/as Commander Australia Pty Limited (2009) NSWCA 324 a bench of five judges of the Court of Appeal was convened to consider whether Mercer v ANZ Banking Group (2000) 48 NSW LR 740, the leading case on s.9A of the Workers Compensation Act 1987, should be reconsidered.

President Keating of the WCC had found that employment was not a substantial contributing factor within the meaning of s.9A in circumstances where the worker on a business trip to Perisher skiing for her own enjoyment received a phone call from her supervisor requesting her to return to the resort to discuss business matters, and injured her knee while skiing back. The employer had conceded that the worker had been in the course of her employment at the time of her injury but her claim had failed on the basis that she had been skiing for her own enjoyment, would have had to return to the base of the ski slopes in any event and, more importantly, because the activity of skiing did not have any “employment characteristic”.

By a majority of 4 to 1, the Court of Appeal found that President Keating had fallen into error of law and overturned his decision.

In the course of so finding, the Court determined that Mercer had been wrongly decided in two respects. First, it was held that the word “substantial” does not mean “more than minimal, large or great” but rather “real and of substance”, this being a less demanding test in terms of the weight of the causal connection required. Second, the Court rejected the suggestion in Mercer that the causal connection required under s.9A is a less stringent test than the test of whether injury arises out of employment within the meaning of s.4.

On the facts before it, the Court further held that President Keating had erred in law in concentrating upon the actual activity which gave rise to the injury when considering s.9A(2)(b), rather than the broader question of the role played by “the nature of the work performed and the particular tasks of that work”, in determining the causal relationship between such work and injury. Applying this broader consideration appears to have led the majority of the Court to consider employment to have been a substantial contributing factor having regard to the overall employment related character of the worker’s presence at the ski resort. In short, the Court of Appeal determined that the emphasis should be on “the circumstances surrounding the occurrence of the injury” rather than the immediate or proximate cause of the injury itself. The main factors which led the Court to determine employment to have been a substantial contributing factor in the circumstances of the case were that the worker was at the ski resort as part of her employment duties, that her skiing for recreational purposes had been authorised by the employer and that she had been skiing to the bottom of the slopes in response to a direct request from her employer to return and discuss business matters.

In a separate Judgment, Bastin JA reached the same conclusion but also considered the question of whether s.9A requires a different approach to be adopted where injury has occurred in the course of employment but during an interval or interlude within an overall period of work. His Honour considered that no such distinction should be drawn and effectively found that in the absence of a pre-existing medical condition or the involvement of a third party, employment would be a substantial contributing factor to an injury which occurred in the course of employment regardless of whether the worker was engaged in an activity directly relating to the performance of work.

Handley AJA dissented, taking the view that the worker’s actual activities at the time of injury were relevant to the issue of substantial contributing factor and that there is a fundamental difference between an injury which occurs during actual work and an injury which occurs during an interval between periods of work for the purposes of the section.

In summary, the effect of this decision is to increase the likelihood of injuries occurring while a worker is not actually performing employment duties satisfying s.9A, provided that the worker is in the course of employment and engaged in an activity which has been authorised or encouraged by the employer. It is noted, however, that this case was not one involving a pre-existing or constitutional medical condition or the intervention of a third party unrelated to the worker’s employment, such as cases of assault.

WID Costs: Schedule 7 Amendments

Amendments have been made to Schedule 7 by the Workers Compensation

Amendment (Legal Costs) Regulation 2009.

The amendments have effect from 1 December 2009.

Changes are:

  • (a) Where there is no Mediation, claimants have a period of one (1) month following “the issue of a Certificate” to make a subsequent offer of settlement, which is to be taken into account for the purposes of entitlement to costs.
    (b) Where there is a Mediation, the applicable date is one (1) month from “the conclusion of the Mediation”.
    Pursuant to Clause 89 the insurer is to pay the Claimant’s costs on a party/party basis if an outcome no less successful than such offers is eventually obtained
  • Payments of weekly compensation are to be included in the amount of a settlement or award for the purposes of calculating Schedule 7 costs.
  • Provision has been made for Scheme Agents’ representatives to be remunerated where claims are finalised other than by settlement or an award of damages (eg. discontinuances, verdicts for Defendant, etc).

Medical Report Fees: Speak Up or Pay Up!

Regulation 43A(1) provides that only one (1) forensic medical report may be admitted on behalf of a party to proceedings, except where the injury has involved treatment by more than one (1) specialist practitioner.

Accordingly, where multiple qualified medical reports have been submitted, they need to be closely scrutinised in order to ascertain whether there is a basis to object to admissibility of reports.

Any decisions in relation to admissibility may ultimately have significant implications by virtue of Regulation 45, which provides that a party is not entitled to be paid for the cost of a medical report unless the report has been admitted in the proceedings or disclosed to an Approved Medical Specialist.

It is therefore important to object to any medical reports falling outside the scope of Regulation 43 before they can be regarded as having been admitted in the proceedings or disclosed to the Approved Medical Specialist.

For most cases the best time for this would be at the initial Teleconference. If no Teleconference has been appointed, one should be requested so that the objection can be made before AMS referral.

Section 40: Failure to Job Seek

In Pikus Pty Limited trading as Banjo’s Bakery v Bradica (2009) NSW WCC PD 120 Deputy President Roche found that the failure of a partially incapacitated worker to seek suitable employment was not relevant to either the assessment of ability to earn in some suitable employment or to exercise of the Section 40 discretion.

The rationale for so finding was that, having determined a hypothetical ability to earn having regard to the incapacity resulting from injury and the matters referred to in Section 40(3), the worker’s entitlement will be based upon that ability to earn, regardless of whether the worker is taking steps to exercise it.

No Presidential Appeal from Interlocutory Decisions

Section 352(8) of the Workplace Injury Management Act effectively provides that there is no right of Appeal from any Award, order, determination, ruling or direction of an interlocutory nature.

In Moore v Greater Taree City Council [2009] NSW WCC PD 17, Acting Deputy President Snell determined that a finding of injury for the purposes of AMS referral could be characterised as “interlocutory”, and that the appropriate time to Appeal from such a determination is when the parties’ rights in respect of lump sum compensation have been determined, being after the issuing of a valid MAC and orders made in a final Certificate of Determination.

Our New Website

We are pleased to announce the launch of our new website at www.edwardsmichael.com.au.

We welcome all comments and feedback.

Christmas Closure

We will be closed from 5.00pm on 23 December 2009 until 9.00am on 4 January 2010.

We wish all readers a happy and safe festive season.