QBE v Orcher [2013] NSWCA 478

Background

In our Insurance Update published in January 2013 (to access please click here) we discussed a Supreme Court of New South Wales decision whereby a pub owner was found liable for an assault outside of their hotel (Orcher v Bowcliff Pty Ltd [2012] NSWSC 1088). The Hotel’s appeal from that decision has now been heard.

The Trial Judge had found that Bowcliff Pty Ltd t/as the Bridge Hotel (the Hotel) and a security company, DSSS Cousins Pty Ltd (DSSS) had breached the duty of care they owed to John Orcher, a patron of the hotel, when he was punched by Mr Tamiano Paseka, a “glassie” and employee of the hotel, across the street from the pub.

Primary Judgment

The patron’s argument was that the hotel and security company owed a duty to take reasonable care to avoid the foreseeable risk of harm of an untrained, unqualified employee overreacting when intervening in an altercation between patrons, whether inside or outside the licensed premises. This duty was breached when the DSSS employee, Mr Paea, failed to prevent Mr Paseka, the hotel’s glassie from intervening in what appeared to be an altercation between patrons.

Alternatively Mr Paseka, as a hotel employee, had no place to be present on the footpath outside the Wellington Street entrance to the hotel. Consequently, the hotel was in breach of his duty of care by failing to require Mr Paseka to re-enter the hotel in order to avoid the possibility that as an untrained and unqualified employee, he might intervene in an altercation between patrons of the hotel within the vicinity of the licensed premises.

The Appeal

A number of those pivotal factual findings were overthrown on appeal. The Court of Appeal decided:-

  • Mr Lokotui, the hotel’s own senior security guard, was not outside the hotel when Mr Paseka crossed the street;
  • That DSSS security guard Mr Paea did not see Mr Paseka the glassie remove the bottle from Izzy (a patron involved in the altercation.) A fact in the case that would have made him aware that Mr Paseka was an employee of the hotel;
  • That Mr Paseka the glassie or Mr Paea the security guard heard or observed the altercation between the plaintiff and Izzy;
  • The altercation between the victim (respondent) and Izzy did not go beyond the trading of verbal insults, and was neither potentially violent nor did it constitute quarrelsome and disorderly conduct;
  • There was no evidence that any of the parties involved were ‘heavily’ affected by alcohol at the time; and
  • There was nothing to suggest to the security guard Mr Paea or anyone else that the glassie Mr Paseka had a propensity to become violent.

While it was accepted Mr Paea of DSSS owed a duty of care to take reasonable steps to prevent harm to patrons of the hotel in its vicinity, because Mr Paea was not aware and could not have been aware of Mr Paseka, nor his intention when he commenced to cross the road, he was not in breach of his duty of care to the respondent, Mr Orcher, by failing to intervene at an earlier stage. A sensible outcome when one considers the multitude of persons coming in and out of a nightclub and the competing responsibilities of security staff at the door.

Vicarious Liability

The issue of vicarious liability from this case may invoke the attention of the High Court of Australia due the Justices of the NSW Supreme Court failing to all agree.

In the primary trial the plaintiff relied on McDonald v The Commonwealth (1945) 46 SR (NSW) 129 to suggest there had been substantial transfer of control by DSSS to the Hotel over the services of their security guard, Mr Paea, to justify holding the Hotel vicariously liable for his actions. The victim had argued that Mr Paea, the DSSS security guard was under the direction and control of Mr Lokotui, the Hotel’s head security guard and had been subsumed into the hotel’s security system.

The following passage from McDonald v The Commonwealth was cited:-

“…If by the agreement the employer vests in the third party complete, or substantially complete, control of the employee, so that he is entitled not only to direct the employee what he is to do but how he is to do it, and the employee was performing services stipulated for, or authorised by, the third party at the time, the third party is liable…”

The victim also relied on at the primary trial the Court’s decision in North Sydney Leagues Club Ltd v Berecry & 2 Ors [2002] NSWCA 154 in that the Hotel had delegated its duty of care to the independent contractor who had supplied the security personnel. It was found by the primary judge that:-

In my opinion [the hotel] breached its duty by failing either to take steps to intervene in the disturbance in the first place or to prevent Mr Paseka from doing so himself. The timely presence of… security staff on the other side of Wellington Street when the disturbance erupted would have meant that they would have been on the scene before Mr Paseka arrived in time to quell the disturbance or would otherwise have acted as a deterrent to him joining in at all… the element of control, in this case specifically the ability to control Mr Paseka, is the foundation of the duty of care with which [the hotel] failed to comply. This is not a case of some stranger to the hotel performing acts of aggression against a patron in circumstances or in a location where [the hotel] employees were powerless to intervene”.

This suggested that an alert or vigilant security guard should have reacted to prevent the glassie from ever becoming involved. The trial judge found the liability of the Hotel greater (70% compared to 30% for DSSS) given that the security system at the Bridge Hotel was designed and implemented by the Hotel. This was seen as perhaps a concerning extension of liability for hoteliers.

On appeal, as illustrated above, Mr Paea of DSSS was not found negligent in the performance of his duties (as seen by the pivotal factual findings above) so ultimately determination of the question of whether the Hotel or DSSS would have been vicariously liable for any breach of duty by Mr Paea of DSSS did not affect the disposition of the appeals. However the Justices did discuss this issue. The majority gave a number of reasons why the Hotel was not in breach of any duty of care to the respondent.

The majority dismissed the victim’s argument from McDonald stating:-

“the evidence would need to establish that there was substantially complete transfer of control by DSSS to the Hotel of the services of Mr Paea to the point where he could not only be directed what to do but how to do it. In my view, the evidence does not come close to establishing that level of control.”

The hotel could instruct the DSSS employee where to patrol however it could not and did not instruct them how to perform the job of a professional security guard.

Interestingly, in a dissenting view, Macfarlan JA believed this case was distinguishable from Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19 that established a principal is not vicariously liable for the negligence of an independent contractor. Macfarlan JA view was the Hotel had its own qualified security guards who were in a position, and entitled, to give Mr Paea instructions about how he was to do his job and Mr Paea was integrated into the hotel’s security arrangements.

Justice Macfarlan in dissent believed the analogy drawn from McDonald was established in that at paragraph 3:-

“Mr Paea, although employed by an independent contractor, was integrated into the Hotel’s business in a manner that entitled the Hotel to direct Mr Paea not only what he was to do but how he was to do it.”

Relevance

While the claimant ultimately failed on the facts; the NSW Court of Appeal was apparently prepared to confirm that a duty of care owed to patrons by the owners and occupiers of pubs and clubs could extend beyond the hotel boundary when the owner/occupier is aware that a patron is at risk of injury and is able to react to prevent or otherwise deal with that risk.

Implications

Those in the hospitality industry are not able to be responsible for preventing all altercations involving patrons. What is reasonable will always turn on the facts of that particular case.

It is clear that the boundary of liability for Hotel owners has been extended. Where there is a reasonable basis to establish their duty of care to hotel patrons outside the hotel, the Court will do so. However this appeal has shown there must be compelling and cogent evidence to suggest:-

  • the hotel was aware or should have been aware of an impeding problem; and
  • the terms of the license demanded intervention.

To access this judgement please click here.