Anjoshco Pty Ltd v Kellys Property Management Services Pty Ltd; Kellys Property Management Services Pty Ltd v Anjoshco Pty Ltd

Supreme Court of NSW|2013-12-19|Before: Beech-Jones J

Ex tempore Judgment 1As at March 2011 Anjoshco Pty Limited ("Anjoshco") operated a McDonalds restaurant at the BP Roadhouse at Chinderah near the Queensland border. The contracted cleaner for the roadhouse was Kellys Property Management Services Pty Limited ("Kellys"). 2Early in the morning of 14 March 2011 one of Anjoshco's employees, Ms Susan Player, slipped on some tiles when she walked from the McDonalds restaurant through the roadhouse towards the toilets. She suffered significant injuries. She received workers' compensation benefits. 3Anjoshco commenced proceedings in the Local Court against Kellys seeking to enforce the statutory indemnity in respect of the workers' compensation benefits paid to Ms Player created by s 151Z(1)(d) of the Workers Compensation Act 1987. 4On 9 April 2013 the Local Court published reasons for upholding Anjoshco's claim. It entered a verdict in favour of Anjoshco, although there is some doubt about the scope and operation of the orders, a matter to which I will return. 5Kellys appeals the Local Court's judgment pursuant to s 39(1) of the Local Court Act 2007 which confers on an aggrieved party a right of appeal on a "question of law". Its principal submission is that the Presiding Magistrate erred in law by failing to address or apply the provisions of the Civil Liability Act 2002 ("CLA") in determining its liability for the injuries suffered by Ms Player. 6Anjoshco also appeals the Local Court's judgment pursuant to s 39(1) of the Local Court Act. Its appeal concerns the form of the orders that were entered and that court's approach to interest.

His Honour's judgment 17The first part of his Honour's judgment briefly outlined the background to the claim. Then, under the heading "Issues" his Honour stated: "7. Kelly's asserts that it warned Ms Player that the floor was wet. Warning signs were erected in the line of Ms Player's vision. 8. Kelly's states that Anjoshco has not established that the fact of the white tiles being wet contributed to its slipperiness. 9. Ms Player knew that the white tiles were wet, so the failure to have warning signs in place was not causative of the fall." 18All of these issues were issues of fact and fact alone. His Honour then addressed them. In relation to the first issue, his Honour found: "... Kelly's did not warn Ms Player that the floor where she fell was wet, because it did not display warning signs in the area on the white tiles between the food court and the [other food outlet] where Mr Irwin pushed the scrubbing machine." Mr Irwin was the cleaner at the roadhouse. 19Second, his Honour found that the white tiles were "more slippery" when they were wet. 20His Honour's finding concerning the liability of Kellys immediately followed his Honour's finding on the third issue. In light of how Kellys frames its appeal, it is appropriate to set out both in full: "Conclusion 28. I am satisfied on the balance of probabilities that Ms Player did not know that the white tiles that she walked on during her journey to the toilets were wet. Liability 29. I have found against Kelly's in relation to the issues it has raised with respect to warning Ms Player of the risk, and causation." 21This is the entirety of the analysis by his Honour of Kellys' liability to Anjoshco. After this, his Honour then addressed an allegation that Ms Player's own negligence contributed to the injuries she suffered. His Honour rejected that allegation, because his Honour found that Ms Player did not know the tiles were wet and was not warned that they were wet. His Honour also rejected a contention that there should be a reduction of the total amount that Kellys was obliged to indemnify Anjoshco on account of Anjoshco's own negligence vis-à-vis Ms Player. In that context, his Honour found that "[t]here is no evidence that Anjoshco had any control of the area outside the restaurant". 22His Honour then addressed the quantum of the damages that Kellys would have been liable to pay Ms Player if sued direct by her. As part of that assessment his Honour stated as follows: "46. Past economic loss is calculated to be $70,918. Past out of pocket expenses are calculated to be $21,466.98. 47. The plaintiff claims 50% of pre-injury earnings for 21 years. The defendant submits that only a cushion of $20,000 - $25,000 is appropriate since Ms Player is able to do administrative work. I make an order of $7,805.52 for future economic loss as a cushion. 48. The plaintiff claims future out of pocket expenses for medication in the sum of $13,134.80, as well as a cushion for future orthopaedic intervention. I note that Ms Player does not intend to have future orthopaedic intervention. I make an order of $18,134.80 for future out of pocket expenses. 49. The plaintiff claims a cushion for future paid care. There is evidence of Ms Player needing care with respect to domestic duties, which has been provided by her daughter. I make an order of $20,000." 23Finally under the heading "Orders" his Honour then set out the relief he would grant. Given the significance of these passages to Anjoshco's appeal, I will set out this part of his Honour's judgment in full: "50. The verdict of the Court is for the plaintiff. The judgement amount is [$100,000]. 51. The defendant is to indemnify the plaintiff in the sum of $100,000 for past and future payments made to, for and on behalf of Ms Player, pursuant to s 151Z of the Act. 52. The defendant is to pay prejudgement interest on past payments to a maximum of $100,000 from 14/03/2011. 53. The defendant is to pay the costs of the plaintiff on an ordinary basis as agreed or assessed." 24At this point it should be noted that the amount of compensation that had been paid by or on behalf of Anjoshco to Ms Player to the time of judgment was approximately $90,000 and certainly less than $100,000.

Kellys' appeal 25I will address Kellys' appeal first. As noted, Kellys' principal contention was that his Honour failed to apply or address the CLA when determining whether Kellys had a liability to pay damages in respect of the injuries suffered by Ms Player. 26At the outset it is necessary to briefly note the obligation of the Local Court to give reasons in a case such as this. The Court of Appeal has discussed in a number of cases the obligation of lower courts to provide reasons (see, for example, Keith v Gal [2013] NSWCA 339 at [109] to [119] per Gleeson JA). However, in circumstances where an appeal is restricted to a question of law, and perhaps even of mixed law and fact, and thus the appeal is not by way of rehearing, then the obligation of the lower Court to give reasons in respect of a pure finding of fact, even if critical, is significantly qualified (see Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247, at 281 to 282 per McHugh JA). 27The principal complaint of Kellys does not concern any of his Honour's findings of fact or any failure by his Honour to make a finding of fact. Instead, it concerns an alleged failure on the part of his Honour to apply or even address the law, namely the CLA. Given that his Honour was obliged to expose and identify the law that his Honour was applying, it follows that a failure by his Honour to refer to the CLA or any of the terms or phrases used in the CLA, could certainly base a conclusion that the CLA was not applied or addressed. That said, it may be that in a particular case a consideration of the findings of the judicial officer, when taken with a consideration of the issues identified by the parties, leads to a conclusion that the judicial officer correctly applied the applicable law, even without expressly referring to it. Counsel for Anjoshco, Mr Morgan, argues that that is what occurred here. 28At all relevant times ss 5B to 5D of the CLA governed any assessment of Kellys' liability to Ms Player. Those sections provide: "5B General principles (1) A person is not negligent in failing to take precautions against a risk of harm unless: (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things): (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm. 5C Other principles In proceedings relating to liability for negligence: (a) the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and (b) the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and (c) the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk. 5D General principles (1) A determination that negligence caused particular harm comprises the following elements: (a) that the negligence was a necessary condition of the occurrence of the harm (factual causation), and (b) that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability). (2) In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party. (3) If it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent: (a) the matter is to be determined subjectively in the light of all relevant circumstances, subject to paragraph (b), and (b) any statement made by the person after suffering the harm about what he or she would have done is inadmissible except to the extent (if any) that the statement is against his or her interest. (4) For the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party." 29The starting point for considering Kellys' appeal is that nowhere in his Honour's judgment is there any reference to the CLA. Moreover, his Honour does not refer to or utilise the phrase "duty of care". His Honour did not refer to or utilise the phrase "breach". His Honour did not refer to or utilise the terms "reasonable care" "reasonable", or "reasonable person". His Honour did not refer to or utilise the terms "risk of harm" or "precaution". 30Without embarking upon any exegesis of the current state of the law in relation to ss 5B to 5D and bearing in mind the need for his Honour to at least make some attempt to identify the legal standard being applied, these failures certainly represent a strong start for Kellys' contention that his Honour failed to apply or address the provisions of the CLA. 31As already noted, Mr Morgan contends that the impression created by the absence of any reference to the CLA, or its concepts, in his Honour's judgment dissipates when one has regard to how the proceedings were conducted and the findings of fact that his Honour made. 32Mr Morgan has referred me to passages in the transcript and the written submissions provided by counsel for Kellys to his Honour which, at the very least and no doubt quite properly, narrowed the issues to be determined. Thus in his written submissions counsel for Kellys accepted that his client owed a duty of care to Ms Player, formulated the content of that duty, identified the, or at least a, "risk of harm", appeared to have accepted the risk was foreseeable and appeared to accept that the risk was not insignificant. Further, in those submissions counsel for Kelly submitted that his client had taken reasonable precautions because it had warned Ms Player, a factual contention that his Honour ultimately rejected. 33However, there are two related difficulties with Mr Morgan's contention that, in light of the various concessions made by counsel for Kellys and the manner in which the case was run, there was no failure on the part of his Honour to address or apply the CLA. 34First, nothing in the submissions of counsel for Kellys amounted to any concession that, if his Honour found that no warning sign was placed in Ms Player's path, then that necessarily meant that Kellys breached any duty of care or perhaps, more correctly, failed to take an appropriate precaution against an identifiable risk of harm. 35Second, the submissions made on behalf of counsel for Kellys did not suggest to his Honour that any assessment of what precaution was required by his client could be undertaken without bringing to bear the various concepts found within ss 5B and 5C, or at least the concepts upon which they operate, such as the scope and content of the duty of care. To the contrary, the submissions emphasised the significance of those concepts and ss 5B and 5C generally. 36Kellys' primary case was that it had warned Ms Player. However, if that case was rejected and leaving aside any question of causation, a finding of liability could only be made if his Honour found that it was obligated to take some step which would have led to Ms Player being warned of the relevant risk of harm. To reach that point, his Honour had to consider and apply ss 5B and 5C. His Honour clearly did not do so and the submissions made on behalf of Kellys did not obviate his Honour's obligation to do so. 37It follows that I uphold Kellys' appeal. 38I note three further points. First, at this point I have not addressed his Honour's approach to causation. On the facts found by his Honour, a finding of causation under s 5D(1)(a) of the CLA could only have been made if his Honour was satisfied that, first, Kellys was obliged to take some step which would have had the effect of warning Ms Player that the tiles were wet and, secondly, that if that occurred, she would not have fallen. Despite Mr Morgan's submissions to the contrary, I am satisfied that his Honour did not expressly or implicitly make any such finding. 39Before his Honour, counsel for Kellys had contended that causation was not established because Ms Player knew that the tiles were wet and in any event there was nothing to suggest that any water on the tiles meant that the floor was more slippery. His Honour rejected both contentions as a matter of fact. However, just because his Honour made those findings, did not necessarily mean that a conclusion on causation adverse to Kellys had to follow. 40In the end, s 5D(1)(a) had to be applied according to its terms. Unless the submissions made on behalf of Kellys amounted to an admission that causation would be established if certain facts were found, a Court simply cannot reason that, because it rejects a party's particular points, that that necessarily means they lose. The submissions put on behalf of Kellys did not amount to an admission of the kind just noted. 41Second, in its written submissions Kellys also argued that his Honour failed to give proper reasons for the findings in respect of Ms Player's past economic loss, future out of pocket expenses and future care. Senior counsel for Kellys, Mr Watson, did not address this orally. Instead Mr Watson SC focused upon the principal submission which I have upheld. In light of the conclusion that I have come to, it is not necessary to consider this further, other than to note that the findings about future economic loss referred to in [47] of the judgment extracted above (at [22]), as well as the approach to future out of pocket expenses in [48] of the judgment, provides further strong indications that something went awry. 42Third, in light of the success of Kellys' appeal, it will be necessary to set aside the Local Court's judgment and remit the matter for further hearing. It follows from the above analysis that, to resolve this matter, further factual findings are required. This Court cannot make factual findings on an appeal of this kind (see Lesley-Swan v Owners SP 32735 [2013] NSWSC 1635 at [70] to [75]). For the sake of clarity I add that any further hearing will need to be undertaken afresh.

Anjoshco's appeal 43As the proceedings will be remitted to the Local Court, it is not strictly necessary to address Anjoshco's appeal. However, out of deference to Mr Morgan's careful argument, I will briefly note the points made. As I understand the position, and leaving aside any question of the jurisdictional limit of $100,000 specified in s 29(1)(a) and s 30 of the Local Court Act, a Court hearing Anjoshco's case would start by undertaking the two step process identified by Cole AJA in Grant. Thus it would make findings as to the amount of the damages that would have been recoverable by Ms Player if she had sued Kellys, less any deduction for contributory negligence and any deduction for any contribution that would otherwise have been ordered from Anjoshco. This figure yields the upper limit of the amount of indemnity under s 151Z(1)(d). Further, the Court will also determine the amount of the compensation already paid. If the latter figure was more than the former, the Court would enter a money judgment for the former. If the latter was less than the former, the Court would enter a money judgment for the latter. If the Court in question only had a power to order monetary judgments, it would stop at that point. In respect of workers' compensation payments made after any such judgment, the employer could recover these from the third party tortfeasor up to the limit identified by the first step undertaken by the Court as identified in Grant. This would be so because, presumably, the Court's judgment would create issue estoppels as to the parties' respective obligations. 44In this case Mr Morgan has raised a number of difficulties with the apparent effect of the orders made by the Local Court extracted above (at [23]). 45First, the judgment amount has been quantified at $100,000, whereas, as I have stated at the time of judgment, Anjoshco had only paid out just above $90,000 in workers' compensation benefits. Thus in this sense the award was too high. 46Second, [53] of his Honour's judgment appears to misconstrue s 29(1) and s 30 of the Local Court Act by apparently including interest in the Local Court's jurisdictional limit. Sub-section 30(4) excludes interest from any consideration of the Court's jurisdictional limit. 47Third, and most significantly, Mr Morgan contended that [51] of the judgment appears to limit the operation of the indemnity conferred on his client by s 151Z(1)(d). His Honour's assessment of the amount of damages notionally recoverable by Ms Player from Kellys ultimately exceeded $200,000. However his Honour appears to have reduced the level of indemnity available in respect of all past and future payments to $100,000. 48Another and perhaps more fundamental problem with [51] of his Honour's judgment is that on its face it appears to be some form of declaratory relief. However, the Local Court was not given power to grant any declaratory relief, especially in relation to the causes of action being sued upon. 49Subject to one matter, each of the points raised by Mr Morgan seems to be correct. In relation to the third, I note that the jurisdictional limit of the Local Court is defined by reference to the amount claimed which no doubt informs the amount that can be awarded. In some circumstances it can exceed that amount by 20% (see s 31). Nevertheless, provided the amount claimed falls within the jurisdictional limit, then there is nothing prima facie objectionable about the Local Court making findings, but not orders, in respect of larger integers relevant to that claim. 50However, at the hearing of the appeal, Mr Watson SC pointed to s 29(2) of the Local Court Act which stated: "Jurisdictional limit of Court ... (2) However, the jurisdictional limit of the Court, when sitting in its General Division, in relation to a claim for damages arising from personal injury or death is $60,000." 51Mr Watson suggested that s 29(2) might be engaged in respect of a claim for indemnity under s 151Z(1)(d). Mr Morgan contended that s 29(2) is irrelevant, as a claim under s 151Z(1)(d) is not a claim for damages, but a claim for indemnity and that otherwise no claim for damages has ever been made by Ms Player. 52In the absence of detailed argument, I do not propose to resolve these matters, especially as they will not affect the outcome of the appeal. Further, it is probable that, by the time this matter returns to the Local Court, the payments that would have been made to Ms Player will have exceeded $100,000. In that case the matter will need to be transferred to the District Court where this issue will not arise.

Orders 53For an abundance of caution the appropriate orders in each matter are: (1)The judgment of the Local Court in proceedings number 2012/00048615 entered on 9 April 2013 be set aside. (2)The matter be remitted to the Local Court for further hearing. 54I will now hear the parties as to costs. [Discussion as to costs.] 55Kellys have sought an order for indemnity costs of both appeals on two bases. The first basis concerns two offers of compromise made on 16 October 2013, one in each proceeding. The offers proposed a compromise of each appeal on the basis that the relevant appeal be allowed and the matter be remitted for rehearing on all issues. The offer also provided that each party pay its own costs. 56The substantive relief proposed in each of the offers accords with the substantive relief that I have granted. Mr Morgan submits that the offers of compromise do not comply with the rules, because they include an amount of costs or are otherwise expressed to be inclusive of costs. The form of orders proposed stated "each party to pay its own costs". 57Subrule 20.26(2)(c) of the Uniform Civil Procedure Rules provides that an offer of compromise "must not include an amount for costs and must not be expressed to be inclusive of costs". Subrule 20.26(3) provides for a carve out from this in respect of offers that propose a judgment in favour of the defendant, with no order as to costs, and various other formulations which are not presently relevant. 58The difficulty for Kellys is that the form of relief proposed does not accord with subrule 20.26(3)(a) and thus it appears to fall foul of subrule 20.26(2)(c). I am not satisfied that they are offers of compromise under the rules. 59The second basis upon which indemnity costs are sought relates to the terms of a Calderbank letter which enclosed the offer of compromise. The letter was dated 6 October 2013. It was headed "Without prejudice, save as to costs". It offered to settle the appeals on the basis that they be allowed, the matter remitted for hearing, with each party to pay their own costs. It foreshadowed that if the offer was not accepted, and: "[o]ur client successfully defeats the Local Court judgment, our client will use this letter on the question of costs, specifically in seeking an order that your client pay costs on an indemnity basis from the date this offer lapses." 60On one construction of that paragraph the preconditions were not met, in that it might be said that their client did not "successfully defeat the Local Court judgment", if that was meant to be something more than setting aside the Local Court judgment and having the matter remitted. I note that the written submissions filed on behalf of Kellys went further than seeking a remittal and sought that this Court enter a judgment in its favour. 61However, I do not propose to base my ruling on that. The awarding of costs in respect of the Calderbank letter is discretionary. The difficulty that confronted Anjoshco at the time it received this letter was the status of [50] to [53] of his Honour's judgment. They represented a potential issue of real prejudice to Anjoshco, and presumably the insurer that stands behind it, in that it appeared to limit any indemnity that could ever be obtained arising out of a matter litigated in a Local Court to $100,000. The status of that contention, which I consider to be highly doubtful, is a matter of principle such that I think it was reasonable for Anjoshco to continue with its appeal against his Honour's decision. 62In light of that conclusion I return to my initial view about costs. I think in the end the only proper course is to order that the costs of these appeals be costs in the cause of the proceedings that have been remitted to the Local Court. Ultimately they will have to await the outcome of who succeeds there. 63Accordingly, I order that the costs of both appeals be costs in the cause of the proceedings remitted to the Local Court.

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