Public Liability and Duty of Care in Hoteliers' Responsibility to Intoxicated Patrons

1. TORTS LECTURE 8 PARTICULAR DUTY AREAS (continued) (d) Public Liability (e) Hotelier/Publican to Intoxicated Patron Pure Eco Loss(f) Negligent Misstatement (g) Supervision & Control of Others (h) Liability of Statutory Authorities

2. Public Liability • Thompson v Woolworths (Queensland) Pty Ltd (2005) 221 CLR 234 at 246-247 • Timberland Property Holdings Pty Ltd v Bundy[2005] NSWCA 419 at [25]-[27]).

3. Public Liability – “Slip & Fall” • The Metamorphosis of Slip and Fall*The Hon Justice D A Ipp AO • http://www.lawlink.nsw.gov.au/lawlink/supreme_court/ll_sc.nsf/pages/SCO_ipp300307

4. Hotelier/Publican to Intoxicated Patron • Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469 • Facts - On the evening of 26 June 1994, Ms Cole was seriously injured when struck by a motor vehicle driven by Mrs Lawrence. Ms Cole had been drinking at the Club’s premises and had consumed a large quantity of alcohol throughout the day.

5. Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469 • Ms Cole arrived at the Club at around 9.30am and attended a "champagne" breakfast at which free Spumante was available. When the free supply ceased Ms Cole and a friend purchased and consumed further bottles of Spumante. Ms Cole was refused service at the bar in the afternoon because of her intoxicated state. Ms Cole stayed at the Club and its surrounds for the day and was ejected between 5.30 and 6pm for being intoxicated. The Club had offered to call a taxi for Ms Cole as well as offering her the use of the Club bus and driver. One of the men Ms Cole was with had told the Club manager that he would look after her. At some time after this Ms Cole left the Club.

6. Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469 • Mrs Lawrence's vehicle hit Ms Cole at around 6.20pm. She had been travelling within the speed limit, it was dark and she had her lights on low beam at the time of the accident. Mrs Lawrence's evidence was that she had not seen Ms Cole until it was too late to avoid the collision. Ms Cole, who was wearing black clothing, suffered serious injuries from the accident and has continuing disabilities.

7. Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469 • The trial judge held that Mrs Lawrence had been negligent in that she had failed to keep a proper lookout while driving. Her liability for the injuries suffered by Ms Cole was assessed at 30%. The Club was also held liable for continuing to serve Ms Cole when she was intoxicated. The Club's liability was also assessed at 30%. His Honour held that Ms Cole had contributed to her injuries by failing to take reasonable care for her own safety and assessed that she had contributed 40% to her injuries.

8. Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469 • Majority 4 to 2 (McHugh & Kirby JJ dissenting) no duty of care owed by the Club • Gleeson CJ: 14.The significance of a need for coherence in legal principle and values, when addressing a proposal for the recognition of a new form of duty of care, was stressed by this Court in Sullivan v Moody[5]. Although there are exceptional cases, as Lord Hope of Craighead pointed out in Reeves v Commissioner of Police of the Metropolis[6], it is unusual for the common law to subject a person to a duty to take reasonable care to prevent another person injuring himself deliberately. "On the whole people are entitled to act as they please, even if this will inevitably lead to their own death or injury." This principle gives effect to a value of the law that respects personal autonomy... 17. It is possible that there may be some circumstances in which a supplier of alcohol comes under a duty to take reasonable care to protect a particular person from the risk of physical injury resulting from self-induced intoxication[7]. However, the appellant cannot succeed in this case unless there is a general duty upon a supplier of alcohol, at least in a commercial setting, to take such care. I do not accept that there is such a general duty.

9. Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469 • Gummow & Hayne JJ: 65. The appellant's contention that her collision with the driver's vehicle was caused or contributed to by the Club's negligence in continuing to serve her alcohol, when the Club knew or should have known that she was intoxicated, was a contention that depended upon taking a number of steps, some (perhaps all) of which may be contested. 66. First, what exactly is meant by "serving" the appellant alcohol? Does it encompass, or is it limited to, selling alcohol which it is known that the appellant will consume? Does it extend to selling, to others, alcohol which it is suspected that the appellant will consume? How is the Club to control what other patrons may do with bottles of alcohol which the Club sells them? Given the uncertainties about how and from whom the appellant obtained alcohol during the second half of the day, these are questions that go directly to the formulation of the duty which is said to have been breached. 67. Secondly, the evidence of what the Club knew, or could reasonably be taken to have known, of what alcohol the appellant took during the day was very slight...

10. Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469 • Gummow & Hayne JJ: 68. Unsurprisingly, there was no evidence which would have revealed that servants of the Club could have (let alone reasonably should have) been able to observe how much the appellant drank during the morning. That is, as we say, unsurprising when it is recalled how many patrons attended the Club. About 100 or 120 had attended breakfast. Some of those patrons stayed at, and no doubt others came to, the clubhouse and the ground to attend the several football games to be played that day. There was, therefore, a large and shifting population to observe. If it is said that the Club owed the appellant a duty to monitor and moderate the amount that she drank, it owed all its patrons such a duty... 69.Next, what level of intoxication is said to be relevant? Does it mean not lawfully able to drive a motor car? Some drivers may not drive a motor car if they have had any alcohol. Other drivers may be unfit to drive after very few glasses of alcohol. Does "intoxicated" mean, as the primary judge held, "loss of self-control or judgment which is more than of minor degree"[16]? If that is so, many drinkers will arrive at that point after very little alcohol. 70.All of these questions would have to be answered in deciding what duty of care was owed. None can be answered in isolation. All would require consideration of the purpose for which it is said that the duty alleged is to be imposed.

11. Cole v South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR 469 • Callinan J: 131 I am also of the opinion that in general - there may be some exceptional cases - vendors of products containing alcohol will not be liable in tort for the consequences of the voluntary excessive consumption of those products by the persons to whom the former have sold them. The risk begins when the first drink is taken and progressively increases with each further one. Everyone knows at the outset that if the consumption continues, a stage will be reached at which judgment and capacity to care for oneself will be impaired, and even ultimately destroyed entirely for at least a period.

12. PURE ECONOMIC LOSS • What is pure economic loss? • It is generally understood to deal with matters of tortious liability for loss that is neither consequential upon death and personal injury of the claiming victim nor upon the infringement of the victim's property. • Pure economic loss related to damage to objects or persons • 'Pure' pure economic loss by reliance

13. PURE ECONOMIC LOSS: EARLY DEVELOPMENTS • Earlier cases restricted claims for pure economic loss to instances where misrepresentation was fraudulent or where a duty arose from breach of statute, contract or fiduciary obligation • Palsey v Freeman (1789); Norton v Asburton [1914] AC 932 • The policy basis: the fear of imposing liability "in an indeterminate amount for an indeterminate time to an indeterminate class" • 1963: Limited recognition of a duty of care for negligent advice leading to economic loss: • Hedley Byrne Co Ltd v Heller Partners Ltd • ‘If someone possessed of a special skill undertakes quite irrespective of contract to apply that skill for the assistance of another person who relies on such skill, a duty of care will arise’ per Lord Morris • 1970: Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt (1970) 122 CLR 628 (The emphasis seemed to be on advice provided by someone possessed of the a special skill)

14. NEGLIGENT MISSTATTEMENT • In general D is liable for negligent advise/information that is provided to P which P relies and suffers economic loss • Shaddock v Parramatta CC (House affected by road widening program) • San Sabatian Pty Ltd v Minister Administering Environmental Planning (Whether Minister and the Sydney City Council liable for the negligent preparation by the State Planning Authority and publication by the Council of a redevelopment plan containing representations in reliance upon which developer had acquired land and sustained a loss.) What emerges is that in Australian law, the duty of care in relation to statements has been extended beyond statements made to a particular person for a particular purpose and even beyond statements made to a third person for the known purpose of communication to the person who sustains the loss. There are circumstances in which the maker of a statement owes a duty of care to a person who reasonably relies on the statement although the statement was not made to that person either directly or purposely through a third person.

15. NEGLIGENT MISSTATTEMENT • Esanda Finance v Peat Marwick: (in reliance upon the audited accounts, the plaintiff entered into transactions whereby it lent money to companies associated with Excel, accepting a guarantee from Excel, and purchased debts from Excel. The transactions resulted in loss to the plaintiff by reason of Excel's financial position.)

16. THE ISSUE OF SKILL • With all respect I find it difficult to see why in principle the duty should be limited to persons whose business or profession includes giving the sort of advice or information sought and to persons claiming to have the same skill and competence as those carrying on such a business or profession, and why it should not extend to persons who, on a serious occasion, give considered advice or information concerning a business or professional transaction. (Gibbs J in Shaddock)

17. THE CONDITIONS • Special relationship between P and D: such a relationship would not be found to exist unless, at least, the maker of the statement was, or ought to have been, aware that his advice or information would in fact be made available to and be relied on by a particular person or class of persons for the purposes of a particular transaction or type of transaction. • If the representor realizes or ought to realize that the representee will trust in his special competence to give that information or advice; • If it would be reasonable for the representee to accept and rely on that information or advice; • If it is reasonably foreseeable that the representee is likely to suffer loss should the information turn out to be incorrect or the advice turn out to be unsound."

18. ADVICE versus INFORMATION • Although the giving of advice must always necessarily require an exercise of skill or judgment, and the giving of information may not necessarily do so, a person giving information may be so placed that others can reasonably rely on his ability carefully to ascertain and impart the information.

19. THE ‘CALTEX PRINCIPLE’ • Property damage may constitute the basis for the claim in pure economic loss: before Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. it appeared to have been established that a plaintiff who sustained economic loss which resulted from loss or damage negligently caused to the property of a third person was not entitled to recover damages • Caltex Oil v The Dredge WillemstadPerre v Apand (1999) (HC) D introduced plant disease onto land of one farmer in SA by supplying infected seeds for planting; WA regs prohibited import into WA of potatoes grown within 20 km of land affected last 5 years

20. OTHER SITUATIONS OF PURE ECONOMIC LOSS • Bryan v Maloney • It was not open to the trial judge or the Full Court to find that the owner relied on the builder, or to infer reliance. There was no evidencethat she knew the identity of the builder before deciding to purchase. Nor was there evidence that she inquired whether the house had been built by a qualified builder • The owner can recover damages for pure economic loss only if she establishes a sufficient relationship of proximity between the builder and the owner so as to give rise to a duty of care on the part of the builder not to cause such economic loss • It is difficult to see why, as a matter of principle, policy or common sense, a negligent builder should be liable for ordinary physical injury caused to any person or to other property by reason of the collapse of a building by reason of the inadequacy of the foundations but be not liable to the owner of the building for the cost of remedial work necessary to remedy that inadequacy and to avert such damage

21. OTHER SITUATIONS OF PURE ECONOMIC LOSS • Hawkins v Clayton (Failure to notify executor of the death of testatrix substantial fine imposed as a result of death duties) • Van Erp v Hill (Failure of solicitor to ensure that spouse of beneficiary did not witness execution of will with resultant economic loss to P)

22. SUPERVISION & CONTROL OF OTHERS • In general the common law does not impose a duty to control the actions of others: No duty arises simply because one can foresee the likely risk of injury from conduct of another • Parents cannot be generally held liable for the conduct of their children. However where D is shown to have parental control D has a duty to exercise reasonable care to prevent the child from inflicting damage on others. Whether D has exercised the appropriate level of care is a question of fact (Smith v Leurs) • Teachers and school authorities may also have a duty of care with respect to the activities of the children in their care • Police and Government authorities: - Hill v Chief Constable of West Yorkshire (Failure to control criminal behaviour; No duty on the grounds of policy)

23. Supervision of Others: The Issue of Liability • Liability may arise where there is a relationship between the custodian and the victim “which exposes that person to a particular risk of damage in consequence of that escape which is different in its incidence from the general risk of damage from criminal acts… which he/she shares with all members of the public” - But see Swan v South Australia: The parol board was under a duty once informed about the conduct of the prisoner on parol

24. PUBLIC AUTHORITIES Part 5 of the Civil Liability Act (Sections 40 to 46) • Section 42 sets out the principles to determine duty of care exists or has been breached (ie. financial and other resources reasonably available, allocation of resources, broad range of its activities, and compliance with the general procedures and applicable standards) • Section 43: act or omission not a breach of duty, unless it so was unreasonable that no authority having the functions in question could properly consider it as reasonable. • Section 45: Restores the non-feasance protection for highway authorities taken away by the High Court in Brodie v Singleton Shire Council Council; Ghantous v Hawkesbury City Council (2001) 206 CLR 512

25. Part 5 Liability of Public & Other Authorities • Section 44: Removes the liability of public authorities for failure to exercise a regulatory function if the authority could not have been compelled to exercise the function under proceedings instituted by the Plaintiff. • Section 45: Restores the non-feasance protection for highway authorities taken away by the High Court in Brodie v Singleton Shire Council Council; Ghantous v Hawkesbury City Council (2001) 206 CLR 512 • Actual Knowledge:North Sydney Council v Roman [2007] NSWCA

26. PUBLIC AUTHORITIES • “When a statute sets up a public authority, the statute prescribes its functions so as to arm it with appropriate powers for the attainment of certain objects in the public interest. The authority is thereby given a capacity which it would otherwise lack, rather than a legal immunity in relation to what it does, though a grant of power may have this effect when the infliction of damage on others is the inevitable result of its exercise… There is, accordingly, no reason why a public authority should not be subject to a common law duty of care in appropriate circumstances in relation to performing, or failing to perform, its functions, except in so far as its policy-making and, perhaps, its discretionary decisions are concerned” (per Mason J in Sutherland Shire Council v Heyman)

27. PUBLIC AUTHORITIES: The Planning & Operational Dichotomy • Planning decisions of public authorities as based on the exercise of policy options or discretions and involving or dictated by social or economic considerations are in general non-reviewable and would not provide the basis for a duty • The distinction between policy and operational factors is not easy to formulate, but the dividing line between them will be observed if we recognise that a public authority is under no duty of care in relation to decisions which involve or are dictated by financial, economic, social or political factors or constraints • Operational decisions by which policy decisions are implemented are however subject to the duty of care - L v Commonwealth (sexual abuse in prison, D held liable for operational failures) - Parramatta CC v Lutz (failure to order the demolition of building P’s property catches fire)