C G Maloney Pty Ltd v Hutton-Potts and Another [2006] NSWCA 136 | Case summary

C G Maloney Pty Ltd v Hutton-Potts and Another [2006] NSWCA 136 | Case summary | Zoe

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29 MAY 2006 C G MALONEY PTY LTD trading as Bondi Hotel v Diana HUTTON-POTTS and Another Judgment 1 SANTOW JA: INTRODUCTION A danger or risk may be relatively commonplace. But is it also an obvious risk? And what follows if it is, for the inadvertent plaintiff? Consider one who claims in negligence but was actually unaware of an obvious risk, does it matter that he or she ought to have been aware of the risk, in the sense that a reasonable person would have been? In what way, if at all, has the meaning of " obvious risk " and its consequences at general law been altered by the Civil Liability Act 2000 (NSW) ("the Act")? These are significant questions posed by the present appeal. 2 The appellant hotel-occupier challenges the determination of Graham DCJ that it was liable to the plaintiff entrant. She slipped on concealed unbuffed polish on the hotel's wooden floor, left by the cleaner still cleaning nearby, who was also held liable. Essentially the appellant's submissions come to this. The risk which led to the first respondent's injury on the premises was entirely commonplace. It was a risk so obvious that she ought to have anticipated it, even if she did not. The trial judge, Graham DCJ, so held when attributing contributory negligence at 20%. That she did not see concealed unbuffed liquid polish on a wooden floor upon which she slipped was, it is said, nothing to the point. She ought to have been aware of a cleaner carrying out floor-polishing in the vicinity of her fall and appreciated its attendant hazard. Taking reasonable care for her own safety she should have avoided the recently polished area, appreciating the risk of slipping if she did not. The trial judge appears to have concluded that she was not actually aware of the polishing and cleaning going on and hence the danger of slipping on spilt polish. That was why he determined she had been contributorily negligent. The appellant's case is that he should have gone further and concluded that the plaintiff failed altogether, in failing to take reasonable care for her own safety. 3 The appellant calls in aid the Act. It contends that there was, in terms of the definition in s5F of the Act, an "obvious risk" to the plaintiff which led to her injury. That is, "a risk that, in the circumstances, would have been obvious to a reasonable person in the position of that person" (s5F(1) definition). It submits the risk was in any event "patent" or "a matter of common knowledge" so as to be included within the statutory definition (s5F(2)), the risk so known being that cleaners can leave unbuffed polish. Moreover, the Act provides that a risk can be obvious "even though the risk (or a condition or circumstance that gives rise to the risk) is not prominent, conspicuous or physically observable", (s5F(4) being here the concealed liquid polish rendering the floor slippery). And a risk can be obvious even though "it has a low probability of occurring" (s5F(3)). Here it had a not insignificant probability of the risk materialising, because the floor was rendered slippery by unbuffed polish. 4 The trial judge did not deal with the effect of the Act. The appellant hotel-occupier, whom he held predominantly liable (80%), seeks to rely, inter alia, on the effect of the Act to challenge that determination. The cleaner, held to a lesser liability of 20%, joins with the hotel-occupier in resisting liability altogether. It also resists the hotel-occupier's attempt to re-apportion liability so the cleaner would bear a greater proportion. 5 The first respondent's position is straightforward. The trial judge made no error in his careful and comprehensive review of the evidence and in his findings. The Act's limited application would have made no difference to the result, the trial judge's findings being unassailable. 6 The immediate cause of the injury is not in dispute. Diana Hutton-Potts, plaintiff and now first respondent, slipped while walking on a recently polished hotel floor, on which some unbuffed liquid polish lay hidden. A cleaning operation was still going on in the vicinity of the spot where she fell. The cleaner was near enough to be observed. But Ms Hutton-Potts did not remember seeing a man polishing the floor before her fall saying she would have been careful if she had. That aspect is disputed. 7 There was a warning sign which Ms Hutton-Potts did not see, likely to have been obscured by the cleaner standing alongside. The specific danger of the actual unbuffed liquid polish was hidden in the sense that the unbuffed polish was not readily visible. The hotel-occupier, in control of the premises could readily have denied access to the area where the cleaning was going on and failed to do so. He did provide the (obscured) warning sign. 8 The factor of control on the hotel-occupier's part weighed heavily at trial. This was because the hotel-occupier (the appellant C G Maloney Pty Ltd "Maloney" trading as Bondi Hotel) was in full control of the premises where the accident occurred. The trial judge held the hotel-occupier to be predominantly liable, apportioning liability at 80%. He also found carelessness on the part of the cleaner (the second respondent, Kidgloves Australia Pty Ltd, "Kidgloves"), in not removing the unbuffed polish. Accordingly Kidgloves was also held to be in breach of a duty of care owed to Mrs Hutton-Potts, with its liability assessed at 20% as between it and the hotel-occupier. That apportionment is also challenged by the appellant on appeal, despite well-established constraints on appellate interference with such apportionment of liability. 9 The plaintiff's damages at trial were reduced by 20% for her contributory negligence, a finding not challenged on appeal. Rather the appellant contends that on the true facts of the case and by application of the principles in Phillis v Daly (1988) 15 NSWLR 65, it should not as occupier of the hotel been held liable at all. 10 As between appellant hotel-occupier and cleaner, the appellant contends: (a) that the trial judge should have found that the cleaner was in breach of an implied term in the cleaning services contract, that it would perform its obligations with reasonable care and skill, thereby entitling the appellant to indemnity or damages for breach in an amount equivalent to its liability to the plaintiff, and (b) on the facts found by the trial judge, the contribution ordered to be paid by the cleaner to the appellant was insufficient and outside the range of a sound discretionary judgment. 11 Aside from the challenge to liability and contribution, both appellant and cleaner contend that the damages awarded to the plaintiff for non-economic loss and cost of future medical treatment were excessive. It was contended that insufficient weight was given to the nature and severity of a pre-existing condition affecting the plaintiff's knee, which should have reduced damage, in particular for non-economic loss, by 50%. Finally, it was contended that the link between any need for ongoing physiotherapy and hydrotherapy and the negligence of the appellant was so attenuated and unjustified by any evidence that no amount should be allowed at least for the hydrotherapy or a substantial reduction made. 12 Finally, there is a challenge to the exercise of discretion by the trial judge in relation to the costs order. Though the appellant and the cleaner were required to pay the plaintiff's costs of the proceedings on a solicitor-client basis, the appellant was then ordered to pay the whole of the cleaner's solicitor-client costs of the proceedings. They included the costs of the plaintiff ordered against the cleaner. 13 It was contended that the trial judge's discretion miscarried in that he made an error of principle, took into account an irrelevant matter and made an order so unreasonable that the Court would infer it was made in error. Weighing heavily in the exercise of that discretion was that, following an arbitration on 27 May 2004 some three weeks before the trial commenced, the appellant made a formal "offer of contribution" whereby it offered to contribute 25% towards any damages recovered by the plaintiff plus costs. That offer was not accepted, in circumstances where the amount awarded to the plaintiff was more than $100,000 above the sum awarded by the arbitrator and where the arbitrator had found each of the defendant's 50% liable. The trial judge placed particular emphasis on Pt 39A r26 of the District Court Rules which is in the following terms: "Pt 39A r26] Offer to contribute 26 The Court may take an offer to contribute (or offer of contribution) into account in determining whether it should order that the offeree should pay the whole or part of:

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Findings of Fact 26 The first respondent gave in evidence in chief and maintained in cross-examination the following account of events occurring on the morning of the incident. 27 She arrived at the hotel, parked in the car park behind the hotel, and walked around the hotel (Red, 30W). 28 She was unable to recall whether she came through the main entrance or through the reception entrance but it was one or other of those and she inclined to believe that it was the reception entrance that she used (Red, 31C-F). 29 She said that she was not aware that there was an entry at the rear of the hotel leading to the car park until she was ushered out that way after her fall (Red, 31F-L). 30 Having arrived through one of the entrances on Campbell Parade, she checked the Gaming Room to ascertain whether there were many people there. (The Gaming Room operates 24 hours a day. The Starfish Bar was closed in the sense that no-one was serving drinks, but it was not physically closed off) (Red, 31L-V). 31 Having checked out the Gaming Room and discovered that it was very quiet, she decided to go to the toilet. She initially intended to go to the toilets in the Starfish Bar but recalled that they were sometimes dirty. She said she decided to make her way to other toilets that she believed were somewhere downstairs from the reception area (Red, 33N-V). 32 She left the Gaming Room, took a few steps towards the toilets on the other side of the Starfish Bar (Red, 37J), then turned to head towards the other toilets. As she turned she slipped and fell onto her hands and knees, striking her right knee against the door of the Gaming Room, or the corner of the doorway of the Gaming Room. She said she felt, on her hand and on her clothing, a sticky or oily substance (Red, 33Y-34H). (The trial judge considered that description of the substance to be generally consistent with the likely feeling of the residue of a mixture which Mr Elder, the principal of the second respondent, used on that floor as part of his duties) (Red, 34H-J). 33 The first respondent stayed in the hotel for some time. She was not greatly concerned about her knee because she thought the accident was a transient incident. Given that she had never previously experienced symptoms of arthritis and was an active woman, able to engage in skiing, running etc, the incident might well have been regarded by the first respondent as not a matter of any great moment (Red, 34K, R-W, 35H-K). 34 Mr Fing, who had been an employee of the appellant in the Gaming Room for many years, did not see the incident but became aware of it afterwards and made a diary note. His evidence confirms that the first respondent told him that she had fallen, but now seemed "okay". 35 The only eyewitness other than the first respondent was Mr Elder, the principal of the second respondent. He was working in the bar, spraying the polishing mixture on the floor and then buffing and polishing it with his polishing machine. He was in the position marked with an "X" on the sketch plan. He gave evidence that: (a) He saw the first respondent more or less adjacent to the door from the gaming area, three or four steps away from the entrance to the Gaming Room, at the place marked "P" in the sketch. (b) The area where he first saw her had already been sprayed and buffed. (c) A sign indicating "wet floor" was placed at the place marked S on the sketch, east of where he first saw the first respondent (Red, 38D-X). (d) The trial judge accepted that these positions were correctly marked (Red, 40S-V). (e) Mr Elder said that the first respondent was "sneaking" or "scurrying" towards the Gaming Room and was looking at him as she proceeded towards the entrance to the Gaming Room. She appeared to stumble or slip at the entrance to the Gaming Room (Red, 39E-K). 36 The trial judge considered his actual description of what Mr Elder saw to be by no means substantially or significantly inconsistent with the account given by the first respondent. He preferred her account to the extent there was any inconsistency. He observed that what was consistent with the general description given by the first respondent was her decision to change direction and head towards the corridor (Red, 39M-V). 37 The trial judge accordingly accepted that the first respondent had established, on the balance of probabilities, that she had left the Gaming Room by the door into the Starfish Bar and that she did so for the purpose of visiting the toilets before commencing a session of playing the poker machines. The trial judge accepted that she initially intended to head for one set of toilets but changed her mind and turned in order to make her way through the swinging doors heading towards reception. Because of that manoeuvre, she slipped on a substance on the floor and banged her knee against the edge of the doorway (Red, 40H-P). However, he observed that "she ought to have seen there was a man there [Elder] with a polishing machine, apparently going about his duties" (Red, 41F-G). 38 While it might be assumed that the Gaming Room would not be particularly busy during those hours, nonetheless a part of the hotel was functioning. 39 Patrons attending that room might be expected to, and were permitted to, have access to toilets, perhaps most particularly the toilets which could be accessed by crossing the Starfish Bar. 40 No barriers had been erected and no signs had been placed anywhere upon the possible entrances, to preclude patrons from entering that area and no attempt had been made by a sign or otherwise to dissuade patrons from using those toilets (Red, 41H-42E). 41 The trial judge accepted that the first respondent was a regular patron (Red, 32U-X). 42 It might be anticipated that, as a public place with regular patrons, patrons would tend to make their own way to the toilets without seeking permission, let alone the accompaniment of an attendant (Red, 42F-J). Mr Fing gave evidence that patrons were permitted to use the toilets in the Starfish Bar if escorted by an attendant. The trial judge considered this to be a highly unlikely method of permitting patrons to use the toilet (Red, 32E-T). 43 In those circumstances, the appellant and the first respondent must have known of the likelihood of patrons gaining access to that area for the purpose of using the toilets (Red, 42K-N). 44 Furthermore, the evidence disclosed that, between those hours when the Starfish Bar was closed, 4am to 9am, there were a number of persons who were likely to be passing through or gaining access to that area. That includes staff of the hotel and tradespersons and cleaners employed at the hotel (Red, 42N-T).

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Whether there was a duty owed and/or breached by the appellant 46 The trial judge held that the appellant could not escape liability by relying upon the principle that the second respondent was an independent contractor for whom the appellant was not liable. Mr Elder was described as a fairly tiny cog in the general wheel of the operation of the hotel. His contractual obligations related to treatment of the floor which was but part of the multitude of operations required to maintain the conduct and operation of the hotel (Red, 44M-V). 47 The appellant was in overall control of the premises. It was the appellant who could decide whether to bar entry to the Starfish Bar. This was a matter over which the second respondent had no measure of control. The (cleaning) operations were being conducted for the benefit of the appellant in premises which were substantially under the control of the appellant. 48 In the circumstances, the failure to take steps (such as warning the first respondent, erecting signs that entry was not permitted or perhaps not permitted at all except in the company of hotel employees) amounted to a breach of the duty of care which the appellant owed the first respondent and those who fell within her general category (Red, 44V-45L). 49 The second respondent's habits and practices in relation to his fortnightly treatment of the floor were so consistent as to have been habits and practices known to the appellant's relevant servants or agents, such as the duty manager. The hotel management knew or ought to have known when it was that this potentially dangerous operation was being conducted on their behalf and for their benefit. The hotel management ought to have known of the appreciable risk of patrons or other lawful entrants in the hotel coming to grief, if they slipped on the mixture that was used. The mixture itself had been arrived at in consultation with the principal of the second respondent (Red, 45P-46C). 50 The appellant had an obligation: (a) to warn the first respondent of the danger, to ensure that the floor was clear of slipping hazards; (b) to institute a proper system of cleaning and maintenance and to maintain in place such a system, and (c) to warn the first respondent of the presence, or possible presence, of polish on the floor but failed to do so by way of a sign or signs (Red, 46D-L).

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Whether duty owed and/or breached by second respondent 51 The trial judge was also satisfied that the second respondent was also liable in negligence to the first respondent for this fall, for the following reasons. (a) The second respondent was actually carrying out the work and it was aware of what was actually being done, and of which parts of the floor had been sprayed, which parts had been buffed and polished and how long it would take for the floor to dry out. (b) The second respondent was aware of the risk of slipping on any residue of that spray which remained after the polishing of the area, and (c) The second respondent, through the regular attendance at the hotel by its principal, must also have been aware of the likelihood of the presence of persons within the area of the Starfish Bar room and thus of the risk that there would be persons who could slip or fall on any residue left on the floor (Red, 47C-O). 52 The second respondent had taken some steps to alleviate the risk as follows: (a) The method of working included doing one square metre at a time, polishing it, then moving on to spray and buff the next square metre. That was not particularly hazardous, though there remained the residual risk relating to any residue that remained; (b) The presence of Mr Elder with the polishing machine, in the close vicinity of the first respondent, was something which ought to have been able to have been observed by a person taking reasonable care for their own safety; (c) The second respondent had placed one sign in the area but the trial judge was not satisfied that it was visible to the first respondent, accepting her evidence that she did not see a sign, and (d) Mr Elder did not, nor in the circumstances is it likely that he could have, made the place any more secure in the sense that there was no evidence that he had authority to lock any doors or rope areas off etc (Red, 47R-48R). 53 Nonetheless, given Mr Elder's knowledge of the likelihood of persons being within that area while he was working, he had an obligation to take reasonable care to ensure that the cleaning process was conducted in relative safety. To leave an oily film on the floor was an act of negligence on the part of the second respondent (Red, 49D-F).

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Contributory negligence 56 The trial judge observed that the problem with the obvious risk argument was that what caused the first respondent to slip, on the balance of probabilities, was a residue of a mixture of linseed oil and either methylated spirits or turps. It was not readily visible. Mr Elder was aware that it was possible that such a residue could remain after polishing. It was clear that this particular area where the first respondent fell had been treated that morning, and by Mr Elder's account, within twenty minutes or so at the outside, before her fall. The first respondent herself felt on her hand and clothing a substance consistent with the residue of that mixture (Red, 43O-44G). 57 The appellant and second respondent therefore were performing an operation for the benefit of the hotel which carried with it a risk of injury to a person even taking reasonable care for their own safety, who might step on an area which was still slippery with a residue (Red, 44G-L). 58 However, the trial judge was satisfied that the appellant and second respondent made out the defence of contributory negligence. They made out that the first respondent failed to keep a proper lookout while walking through the bar area, and failed to take reasonable care for her own safety (Red, 49V-50H). In particular, the first respondent, acting reasonably for her own safety, should have seen the presence of Mr Elder and, had she done so, would have realised that he was engaged in some form of polishing operation with the machine, which was large. She conceded that, had she been aware of the sign or of the presence of the cleaner, then she would have taken more care for her own safety (Red, 50G-V). 59 On the other hand, the observations that the first respondent ought to have made would have alerted her generally to the possible existence of some risk on the floor, but would not of itself have alerted her to the precise risk which eventuated when she slipped on the residue (Red, 50V-51H). 60 Thus the apportionment, as between plaintiff and defendants, was one which should fall heavily upon the defendants given that: (a) they were obviously in overall control of the situation; (b) they were the persons responsible for, or actually carrying out, the operations, and (c) they were the persons who could have taken measures to preclude the presence of the first respondent or ensured that she had brought home to her the risk of such a residue being present (Red, 51I-R). 61 The trial judge assessed the appropriate proportion of contributory negligence as being 20% which should be deducted from any verdict (Red, 51R-T).

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Damages 68 At 48 years of age, the first respondent clearly already had degenerative arthritic changes (Red, 53L). 69 The evidence of the first respondent and her treating GP of 14 years establishes that she was symptom-free prior to this injury (Red, 53M-P). 70 She was able to run, jump and was fond of skiing and the beach. She was fairly proud of the appearance of her legs (Red, 53P-Y). 71 She has suffered significant pain and discomfort and restrictions on her mobility (Red, 54C-D). 72 No claim was made for economic loss (Red, 54E). 73 In respect of non-economic loss, the medical evidence is essentially all one way, that is, that the injury to her knee on 5 December 2000 caused a discrete injury of its own in her knee but also triggered or made symptomatic underlying degenerative change. While it might be assumed that, at some point in the future, the first respondent would have suffered some symptoms from those degenerative changes, the evidence did not disclose when that would have been (Red, 54F-L). 74 The first respondent was still quite active at the age of 48 and that activity, including skiing and running, had not produced any symptoms (Red, 54L-O). 75 She has: (a) experienced arthroscopy for some repair to her right knee, (b) had fluid drained from her knee on a number of occasions, and (c) pain, which is intermittent when she is sedentary, but which is significant and continuous while she is active on her right knee. 76 Those activities which she enjoyed before she no longer enjoys. 77 The appearance of her right knee and calf has led her to be cautious as to where she bathes. She does not wear skirts that might reveal her knee (Red, 54P-55D). 78 Over four years, the injury has produced a significant change in the first respondent's life (Red, 55D-F). 79 Her prognosis is not attractive having regard to the fact that: (a) she has been undergoing physiotherapy and hydrotherapy for some time at the recommendation of medical practitioners and she will into the future continue to need significant measures of physiotherapy and perhaps hydrotherapy (Red, 55F-K), (b) even with that treatment, she has now reached the stage where she will need a partial knee replacement (Red, 55K-M), (c) the medical evidence discloses the likelihood of a need for a total knee replacement, albeit for some time in the future. There may be a requirement for additional replacement operations in the future (Red, 55R). 80 The trial judge considered the appropriate figure for non-economic loss to be 40% of a most extreme case, which is $160,000. The trial judge took into account: (a) the age of the first respondent, (b) the number of years she has already had to suffer pain, disabilities and restrictions on her activities, (c) her substantial life expectancy, (d) the probability of a need for further surgery and continuing treatment suggest that this is likely to have a significant impact on the first respondent's life for the rest of her life, and (e) the measure of relief and increase in mobility resulting from the operations she will have (Red, 56D-57C). 81 Out of pocket expenses were agreed at $9,689.75 (Red, 57C-H). 82 As far as physiotherapy was concerned, the trial judge considered that there was clearly a benefit to the first respondent and that she clearly intended to keep at it, albeit once a month rather than twice a month (Red, 58T-Y). The trial judge halved the figure claimed for physiotherapy ($25,000 reduced to $12,500) but allowed a further $2,500 for the contingency that there may be a need for more intensive physiotherapy because of the fluctuations in the impact of the knee problems on the first respondent. The trial judge therefore allowed $15,000 for future physiotherapy (Red, 59F-Q). 83 While the first respondent had only recently commenced hydrotherapy, she had clearly given thought to the future and struck a balance in her mind between the two forms of physiotherapy, which would mean a concentration on hydrotherapy (Red, 59R-V). The trial judge found that the probability of a requirement for two sessions of hydrotherapy per week was made out as a matter of probability and the trial judge allowed the entirety of the amount claimed: $45,495 (Red, 59W-60D). 84 The trial judge was satisfied that the claim for future GP visits of $3,939.87 was made out (Red, 60D-K). 85 The partial knee replacement is due to take place immediately. The full value of that operation is appropriately to be allowed in the sum of $16,500 (Red 60L-R). 86 The need for a total knee replacement, deferred for 10 years, is also made out on the evidence and the trial judge allowed the sum of $16,332.40 as claimed (Red, 60S-X). 87 There was a strong case for a general allowance of a physiotherapy and hydrotherapy buffer for the period leading up to an operation and for the period after the immediate aftermath of the operation (costs of therapy in the immediate aftermath being factored into the cost of the operation). Calculation was difficult and perhaps even speculative, but the trial judge considered that the best present estimate of what would be an appropriate buffer was $10,000 (Red, 60X-61X). 88 The total damages amounted to $276,957.02 with 20% deducted for contributory negligence. This resulted in a verdict of $221,566.02 against the appellant and second respondent (Red, 61X-62G). 89 There was a verdict for the second respondent against the appellant in the sum of $177,252.81. There was a verdict for the appellant against the second respondent in the sum of $44,313,20.

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DISPOSITION 91 Because there remains a conflict between appellant and respondents as to what Ms Hutton-Potts must have appreciated of the risk from the cleaning operation, I first turn to the actual evidence that Ms Hutton-Potts and Mr Elder gave about the circumstances of her accident, immediately before her fall. 92 It is not in dispute that she had walked out of the poker machine room with her intended path being to the ladies toilet, her fall taking place on a wooden floor surface in what was called the Starfish Room (T, 4). Before she fell she observes it as "just a wooden floor" but "didn't notice how slippery it was" (T, 4.50-.53). She observed that as she "went down" "it just looked rather shiny". As she fell, touching it with her hands, it was "just sort of slippery and on my hands it felt a bit oily …" (T, 5.4-.8). Her evidence was consistent that before she fell she did not notice anything in particular about the floor itself. 93 That being her evidence in chief, and cross-examination, she was pressed about whether she saw the cleaner before the fall. According to his evidence, and as stated in her expert's report (T, 53.4-.12), Mr Elder was standing nearby and actually polishing the floor, having just applied polish to the timber floor at the time and about to use the polishing machine to buff the polish into the timber floor. Her response when pressed that this was said in her expert's report was "well I think he might have got it a bit wrong, because I don't remember, when I'm thinking back to it now I don't remember seeing a man polishing the floor, if I had I would have been careful, if I saw someone polishing" (T, 53.20-.23). She added that the person concerned could have been simply mopping up water and she reiterated that she did not observe what he was doing (T, 53.29-.35). 94 She readily conceded that had she seen someone polishing and then about to buff the floor, she should have taken care but added that she did not remember seeing anyone and there was nobody there polishing the floor "because he only came up to me after, I remember" (T, 53.45-.48). 95 The trial judge accepted Mr Elder as an honest witness describing him as "generally accurate and otherwise a reliable witness". While observing that ultimately there was "no real inconsistency between the two accounts" he nonetheless concluded that the plaintiff's account "is the more reliable account in any event" as "she was apparently doing her best to tell the truth here" (Red, 39W-40D). It appears therefore that the trial judge accepted that Mr Elder was in the vicinity but not that she was actually aware of his presence doing the polishing. Rather, "she ought to have seen there was a man there with a polishing machine, apparently going about his duties" (Red, 41F-H) [emphasis added]. Moreover, when dealing with whether she had been contributorily negligent, he again expressed his conclusions in terms of what she "ought" to have been aware of rather than what she was actually aware of (Red, 50G-51H). 96 Thus he concludes "… whilst the observations which the plaintiff ought to have made would have alerted her, generally, to the possible existence of some risk on the floor, it would not have, of itself, alerted her to the precise risk which eventuated when she slipped on the filmy residue of the spray mixture." (Red, 51E-H). [emphasis added] 97 It was open to the trial judge on the evidence so to conclude and there is no basis for appellate interference with that conclusion. 98 Turning to the implications of this evidence and the inferences to be drawn from it the following could be concluded as to the nature of the risk which came home to cause her accident: (a) Ms Hutton-Potts was not actually aware of the cleaning operation though she ought to have been; (b) the unbuffed polish was a hidden hazard and thus not itself an obvious one, subject to any implications from (c) and (d) below; (c) while it could be said that the danger from an ongoing cleaning operation whereby a wooden floor is polished so as to be left slippery is at the least not unusual, she was not actually aware of that cleaning operation and thus of its attendant hazards; but (d) exercising reasonable care for her own safety she ought at least to have been aware of the cleaning operation. 99 The appellant in argument criticised the trial judge's reasons for failing to refer at all to the Act; in particular to its definition of "obvious risk" in s5F and to the substantive provisions of ss5G and 5H which attach these legal consequences to an obvious risk, namely: (a) that the injured person is presumed to be aware of obvious risks though the presumption is rebuttable (s5G); and (b) there is no proactive duty to warn of an obvious risk (s5H). I quote those provisions below: " 5F Meaning of "obvious risk" (1) For the purposes of this Division, an obvious risk to a person who suffers harm is a risk that, in the circumstances, would have been obvious to a reasonable person in the position of that person. (2) Obvious risks include risks that are patent or a matter of common knowledge. (3) A risk of something occurring can be an obvious risk even though it has a low probability of occurring. (4) A risk can be an obvious risk even if the risk (or a condition or circumstance that gives rise to the risk) is not prominent, conspicuous or physically observable. 5G Injured persons presumed to be aware of obvious risks (1) In determining liability for negligence, a person who suffers harm is presumed to have been aware of the risk of harm if it was an obvious risk, unless the person proves on the balance of probabilities that he or she was not aware of the risk. (2) For the purposes of this section, a person is aware of a risk if the person is aware of the type or kind of risk, even if the person is not aware of the precise nature, extent or manner of occurrence of the risk. 5H No proactive duty to warn of obvious risk (1) A person (the defendant) does not owe a duty of care to another person (the plaintiff) to warn of an obvious risk to the plaintiff. (2) This section does not apply if: (a) the plaintiff has requested advice or information about the risk from the defendant, or (b) the defendant is required by a written law to warn the plaintiff of the risk, or (c) the defendant is a professional and the risk is a risk of the death of or personal injury to the plaintiff from the provision of a professional service by the defendant. (3) Subsection (2) does not give rise to a presumption of a duty to warn of a risk in the circumstances referred to in that subsection." 100 Unaided by any deeming effect of the Act, it could not be said that Ms Hutton-Potts, being actually unaware of the cleaning and polishing operation nearby, and failing to see an invisible film on the floor, had succumbed to an "obvious" risk when she suffered her fall. But even if it were an obvious risk either at general law or by virtue of the partially objective test under the statute, what are the legal consequences? 101 The statutory consequences in ss5G and 5H, where an obvious risk is found, operate in aid of the general law in two respects: (a) in assisting the common law defence of voluntary assumption of risk, by introducing a rebuttable presumption of awareness of the relevant risk ("volenti"), and (b) in obviating any common law duty of care to warn of an obvious risk to the plaintiff (with limited exceptions not relevant here). 102 Thus there can be no need to warn of a risk one is presumed to know (s5G) nor any proactive duty to warn of an obvious risk (s5H). But liability for negligence is not coterminous with situations calling for warning. A warning may be insufficient to discharge the duty of care or may even be irrelevant to its discharge, depending on the circumstances. 103 The High Court decision in Brodie v Singleton Shire Council; Ghantous v Hawkesbury City Council (2001) 206 CLR 512 and High Court decisions since demonstrate that finding an obvious risk, while relevant to the scope of the duty of care and whether it has been discharged in any particular case, does not produce a preordained outcome to those questions. 104 In Temora Shire Council v Stein [2004] NSWCA 236, Giles JA (with whom Hodgson JA and Pearlman AJA agreed) reviewed the New South Wales Court of Appeal cases which followed Brodie and concluded at [31] that they "firmly establish that the content or breach of the duty of care of a council (or other entity responsible for a public area) involves regard to the obviousness of the risk to a pedestrian exercising reasonable care for his or her own safety" [emphasis added]. After reviewing the cases, Giles JA said (at [37]-[42]): "Obviousness to the careful pedestrian has been spoken of sometimes as going to the duty of care, and sometimes as going to breach of the duty of care. Reference to the content of the duty of care may have brought a slide to the existence of a duty of care. On the one approach, risk of harm is not foreseeable if the defect in the footpath is obvious to the careful pedestrian; on the other approach, there is no breach in failing to remedy the defect if the defect is obvious to the careful pedestrian. The language used in the cases has not been uniform, or always consistent…

[33]

In the balancing exercise, the ultimate issue is what reasonable care required. All the circumstances of the risk presented to the careful pedestrian must be considered…" 105 More recent High Court authority similarly appears to support the proposition that failure to avoid an obvious risk does not necessarily constitute a failure to exercise reasonable care for one's own safety, although it has treated obvious risk as a relevant factor, even an important one, in determining whether there be liability. Obviousness of risk also bears on the need for a warning and on contributory negligence. It must be remembered that a warning is by no means the only proper response to a hazard and in some cases may be an inadequate or irrelevant response. 106 Thus the High Court discussed the relationship between obviousness and breach of duty in the recent case of Vairy v Wyong Shire Council (2005) 80 ALJR 1. A majority of judges agreed that the obviousness of a risk of injury is not determinative of breach; Gleeson CJ and Kirby J at [7]-[8], Gummow J at [55], Hayne J at [162]. Gleeson CJ and Kirby J did however consider it to be a relevant factor in the context of deciding what steps ought to have been taken by the local authority to satisfy its duty of care. For example, they said "the obviousness of the danger can be important in deciding whether a warning is required" [8]. McHugh J, however, emphasised that obviousness of risk goes to the issue of contributory negligence and rarely to the discharge of the defendant's duty: [46]; see also Hayne J at [162]; Thompson v Woolworths (Qld) Pty Ltd (2005) 79 ALJR 904 at [37]. However, in Thompson, McHugh J formed part of a majority which said that the obviousness of a risk was often a factor relevant to what reasonableness requires as a response. 107 On the other hand, Callinan and Heydon JJ in Mulligan v Coffs Harbour City Council (2005) 80 ALJR 43 (heard with Vairy), went further, considering that obviousness could be conclusive in determining breach. In their view, obviousness conditions the response or the necessity for any response to a risk of danger; Mulligan [77] and [78]. That view can be reconciled with the majority if one emphasises the word "could" as I have just done. 108 Thompson v Woolworths (Qld) Pty Ltd (supra) explains in a joint judgment of the Full Court that one reason why an obvious risk may not necessarily exculpate a defendant is that "If the obviousness of a risk, and the reasonableness of an expectation that other people will take care of their own safety, were conclusive against liability in every case, there would be little room for a doctrine of contributory negligence". The High Court went on though to emphasise the relevance of the obviousness of a risk in these words "On the other hand, if those considerations were irrelevant, community standards of reasonable behaviour would require radical alteration." (at [37] and see earlier at [35] to [36]). 109 I turn now to the effect of the Act starting first with whether, in terms of the definition of "obvious risk" in the Act in s5F(1), subjective unawareness precludes the risk being obvious. Section 5F(1) is predicated upon what is obvious in the circumstances to "a reasonable person", that hypothetical person being however "in the position" of the person concerned (Ms Hutton-Potts). The test is thus objective, but taking into account at least the surrounding circumstances and at least personal characteristics such as whether the plaintiff was a child. 110 Ms Hutton-Potts' evidence is that she simply overlooked the presence of Mr Elder, or if she did see him, did not appreciate that he was polishing the floor as distinct from say, mopping up water. The warning sign was likely to have been obscured by Mr Elder. 111 While even a reasonable person can be momentarily inadvertent in such circumstances, there is no challenge to the finding that Ms Hutton-Potts was contributorily negligent to the extent of 20%. 112 Moreover, the finding of the trial judge is that "the observations which the plaintiff ought to have made, would have alerted her generally to the possible existence of some risk on the floor" [emphasis added]. That is to say, not alert the hypothetical reasonable person in the position of the plaintiff to an obvious or patent risk, but only to a possible one. Indeed had the former been the case, it is difficult to imagine a holding of contributory negligence at so low a level as 20%, certainly without aid of the definition in the Act. 113 I do not consider that the remaining sub-sections of s5F render the statutory definition of "obvious risk" applicable to these circumstances. The spilt polish being left rendering the floor slippery was not a "patent risk" to the unaware so rendering it an obvious risk; the most that could be said was that it was arguably common knowledge that cleaners on occasion do their job carelessly so that spilt polish might be a possibility; s5F(2). Of course if it were well-known to the plaintiff that a particular cleaner was excessively careless and regularly left polish on the floor, that would be a case converting the mere possibility of some risk into a patent risk, arising as a matter of common knowledge. But this was never such a case. 114 Nor do ss(3) and (4) of s5F convert the risk of spilt polish into an "obvious risk" in the statutory sense. Those provisions merely provide, in using the word "can" that the matters there specified do not preclude a risk from being an obvious one under the definition in s5F(1). They do not deem the risk to satisfy that definition. That the slip had "a low probability of occurring" is no part of the trial judge's reasoning. But even if it had been, nothing follows from that fact save that the risk is not precluded from being obvious by that factor. Likewise nothing here follows from the fact that the risk (concealed surface polish) was "not prominent, conspicuous or physically observable" (s5F(4)). 115 But even were the risk, in the statutory sense obvious, what follows? Section 5G of the Act makes clear that the presumption is rebuttable that a person who suffers harm from an obvious risk is presumed to have been aware of the risk of harm. It is rebutted if the person proves on the balance of probabilities that he or she was not aware of the risk. It is clear enough from the trial judge's reasoning that he was so satisfied and it was open to him on the evidence so to conclude. 116 In my judgment, s5G(2) leads to no different conclusion. Given Ms Hutton-Potts was held, impliedly at least, to be unaware of the cleaning and polishing operation she would have been unaware not only of the actual risk that came home but of "the type or kind of risk" to which she was exposing herself. 117 Section 5H of the Act exonerates the appellant from a duty to warn, where there is "an obvious risk to the plaintiff". But here the single warning sign was ineffective; it was not, in terms of Mason CJ's judgment in Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-8 a sufficient or appropriate response to this risk or hazard. As I have explained, at general law an obvious risk, apart from being at least a relevant factor in determining breach of duty, may excuse the need to warn (or bear on contributory negligence). That is likewise so under the Act. But none of this is to the point. What was called for by way of an effective and appropriate response, as I explain, was not a warning sign but denial of access to the area where the polishing was taking place until the polish could dry. 118 I have earlier set out the reasoning of the trial judge in some detail. I agree with the conclusion the trial judge reached. There is nothing in the reasoning of Phillis v Daly (supra) upon which the appellant seeks to rely, that mandates any different result. 119 Clearly the danger to a person in the position of the plaintiff from unguarded polishing operations gave rise to a duty of care on the part both of the hotel-occupier and the cleaner. The question is what would have sufficed to discharge that duty in the circumstances. That brings into play the well-known principles enunciated by Mason CJ in Wyong Shire Council v Shirt (supra) at 47-8: "In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the plaintiff may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position.

[34]

The considerations to which I have referred indicate that a risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far-fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors." 120 A reasonable person in the position of the hotel-occupier should have done more than place a warning sign that could easily be overlooked. Being in control of the premises, it should have roped off the area being cleaned or otherwise prevented access. No great expense or inconvenience was thereby entailed in removing the appreciable risk of not trivial physical injury for hotel entrants. That was sufficiently part of the reasoning of the trial judge and in my opinion it was correct. Similarly, the cleaner was careless in failing to remove the unbuffed polish. 121 There is nothing in the reasoning of Phillis v Daly which warrants any different conclusion. As Samuels JA observed at [67], "what is reasonable 'will vary with the circumstances of the plaintiff's entry upon the premises'". Here the plaintiff was at risk from the cleaning and polishing operations once the plaintiff was permitted on the premises while these were being carried out. Reasonable care for the safety of such persons called for preventing access to the hazardous area or at the very least a multiplicity of warning signs marking an artificial barrier to persons to keep off. Nor is the cleaner exculpated by the hotel-occupier's failure to take such steps. As the evidence bore out there was close collaboration of the cleaner with the hotel-occupier in carrying out the cleaner's tasks, with the hotel-occupier in charge. 122 For the appellant's contractual argument designed to attribute the whole liability to the cleaner, the appellant was permitted to add a further ground 2A to its Grounds of Appeal. That ground was that "on the facts found by the trial judge, he ought to have found the second respondent in breach of the implied term alleged, namely that the second respondent would perform its obligations under the contract with the appellant with reasonable care and skill. It was said to follow that the appellant was entitled to damages for breach in an amount equivalent to its liability to the first respondent." 123 The short answer is that it was not alleged to be an implied term, nor could it readily be found, that the second respondent would indemnify the appellant for any loss or damage including that caused by the appellant's own negligence. That being so, and accepting that the trial judge's finding on the issue of apportionment stands (see below), it must be taken that the appellant was liable independently of the second respondent to the extent of 80%. I would agree with the second respondent's submissions that s9 of the Law Reform (Miscellaneous Provisions) Act 1965 operates so as to produce the same result in respect of the contractual claim by the appellant against the second respondent as is provided by s5(1)(c) of the earlier 1946 Act in respect of the claim for contribution as between joint tortfeasors. 124 The second respondent's written submissions correctly state the position: "7. In terms of section 9, the Appellant has suffered damage (i.e. its liability to the first respondent) partly because of its failure to take reasonable care and partly because of the 'wrong' of the second respondent, with 'wrong', by virtue of the definition in section 8, including a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort .

[39]

Apportionment of liability 126 The trial judge apportioned liability as between appellant and second respondent at 80%/20%. His reasons for doing so relied primarily upon the fact that the appellant was clearly in overall control of the premises and of the operations conducted thereon, including the cleaning operations. He clearly considered it in the interests of the hotel-occupier that these should be carried on concurrently with patrons (as well as workers and trades people) coming on to those premises rather than having its trade interrupted for the necessary cleaning to occur. As Kirby J stated in Neindorf v Junkovic (2005) 80 ALJR 341 at 355, "To this day, the common law continues to recognise that, all other things being equal, a higher standard of care is owed by those with contractual or economic interests in the presence of an entrant on their premises." 127 Moreover, as was said by the second respondent in its written submissions: "The second respondent was a 'family' company with one employee, Mr Elder, and the system of work which he followed was devised in consultation with the appellant. At a factual level. Mr Elder was much more like an employee of the appellant than an independent contractor. Control of access to a part of the premises whilst floor polishing was being undertaken was essentially within the province of the appellant. Notwithstanding that the immediate cause may have been cleaning material which had not yet dried, the type of accident which occurred was plainly foreseeable and excluding other persons until any residue dried was the most obvious preventative step. The appellant, with overall responsibility for access to different parts of the premises must accept the primary responsibility for not excluding other persons from the area where polishing was being carried out, particularly as it was conducting itself as if it were the employer of Mr Elder." 128 As has again been affirmed by the High Court in Annikin v Sierra (2004) 79 ALJR 452 at 460 [50] in the joint judgment of Gleeson CJ, Gummow, Kirby and Hayne JJ "It is accepted that the decision [of apportionment] of the trial judge is 'not lightly reviewed'" Podrebersek v Australian Iron & Steel Pty Ltd (1985) 50 ALJR 492 at 494; Liftronic Pty Ltd v Unver (2001) 75 ALJR 867 at 868 [2]; Joslyn v Berryman (2003) 214 CLR 552 at 578-579 [84], 601-602 [157]. It was open to the trial judge to attribute the predominant causal potency in bringing about the plaintiff's injury to the failure of the party in control of the premises to prevent access to the hazardous area.

[41]

DAMAGES 130 The appellant challenges the determination of damages in two specific areas. The first is damages for economic and non-economic loss. An assessment of 40% of the most extreme case was said to be beyond the range of sound discretionary judgment. It was submitted that 30% of a most extreme case should be the appropriate award. 131 The second area of attack is in relation to the amount allowed for physiotherapy and hydrotherapy expenses ($15,000 in the first case, $45,495 in the second case) on two bases, namely (a) they were in absolute terms too high in the circumstances, and (b) they should have been reduced by 50% on account of Dr Bodel's assessment by reference to the effect of pre-existing degenerative changes would have had quite apart from the accident. 132 On the first challenge, in monetary terms the difference between 30% and 40% of the most extreme case is $68,000. The complaint is that the trial judge failed to take into account, or sufficiently into account, the pre-existing degenerative changes which were found to be present in the first respondent's knee, though asymptomatic. However, it is clear that, from his reasoning as I have earlier set it out (Red, 54F-L), the trial judge did take those matters into account albeit he did not make a specific quantification of that effect. I deal below with other aspects of the evidence on this point when considering the challenge to the physiotherapy and hydrotherapy expenses; that evidence was more particularly focussed on that claim in the appellant's argument on appeal. 133 I do not consider that the difference here between 30% and 40% is significant or that 40% is outside the range of a sound discretionary judgment. It was after all in relation to an injury which has rendered a previously symptom-free degenerative condition to the knee no longer asymptomatic. Moreover, the effect of the knee injury is that the significant pain, discomfort and restrictions on her mobility means that she is no longer able to run, jump or undertake skiing and has an embarrassment about the appearance of her legs. Moreover, she has suffered not only arthroscopy for some repair to her right knee but has had fluid drained from her knee on a number of occasions and suffers intermittent pain when she is sedentary and significant and continuous pain while active on her right knee. 134 The trial judge also dealt with her unattractive prognosis. 135 In those circumstances I consider that there is no proper basis for interfering with the trial judge's discretion in assessing her economic and non-economic loss at 40% of the most extreme case so as to produce $160,000. The matters which the trial judge took into account were properly regarded as relevant. 136 Turning to the physiotherapy and hydrotherapy, it should be noted that the trial judge halved the figure claimed for physiotherapy from $25,000 to $12,500. He then allowed a further $2,500 for the contingency that there may be a need for more intensive physiotherapy because of fluctuations in the impact of the knee problems upon her. 137 So far as hydrotherapy is concerned, the trial judge, as I have said, allowed the entirety of the amount claimed, namely $45,495. 138 I should first deal with Dr Bodel's evidence, given on behalf of the defendants at trial. At Blue, 42V he recorded his observations as follows: "On clinical testing this lady has medial compartment osteoarthritis in the right knee and the fall on 5.12.2000 has caused some additional structural damage in that knee, although there was evidence clinically of pre-existing pathology although it had been previously asymptomatic.

[50]

Moreover, the trial judge accurately summarised the effect of the medical evidence (Red, 54): "… the medical evidence is essentially all one way, that is that the injury to her (right) knee on 5 December 2000 caused a discrete injury of its own in her knee, but also triggered or made symptomatic underlying degenerative change." 142 I agree with the submissions of the first respondent that the trial judge did therefore take into account these matters in assessing damages both for non-economic loss and future medical treatment. In particular he recognised the impossibility on the evidence of any meaningful prediction of when in the future the pre-existing degenerative changes might cease to be asymptomatic and manifest themselves. 143 Nor is Dr Bodel's evidence to be understood as providing any accurate quantification of when, absent the injury, it would have become symptomatic at some time in the future. Dr Bodel's comment that "There are also longstanding constitutional factors contributing to the pathology which is now apparent in the knee" and his attribution of 50% of the disability to pre-existing degenerative changes does not justify in logic a corresponding reduction in damage of 50% for the reasons earlier explained. In those circumstances, I agree with the submissions of the first respondent that any reduction of damages on this hypothetical basis, though clearly required to be considered by the trial judge, was in fact estimated and was properly modest. Thus I would not take this factor into account in considering either the damage for non-economic loss or, relevantly in the present context, what was allowed for other physiotherapy and in particular hydrotherapy. 144 As to the figure for hydrotherapy, it is undoubtedly the case that the evidence for its need was relatively insubstantial. It first emerged (Black, 10E) in response to a question about pain, where the plaintiff said, "I've been doing a bit of hydrotherapy and that's helping a little bit, I think that the pain because its helping to develop my muscles a bit". 145 This was at a time when she had commenced at the hydrotherapy some two and half weeks before 17 June 2004 (Black, 10G). 146 At Black, 12W the plaintiff said she was going twice a week. 147 At Black, 13H-L she confirmed that she intended to do this hydrotherapy twice a week because "they said I should have my muscles prepared, ready for the knee replacement". She went on to say that she proposed to continue with it "because they seemed to be helping and it doesn't put any pressure on the knee". 148 She commenced the hydrotherapy on the recommendation of a Dr Lewington who was said to be a back specialist whom she had seen on one occasion only at the request of her GP. No report from Dr Lewington was tendered. 149 While there was some evidence of lower back pain, I agree with the appellant's submission that the evidence did not provide a sufficient basis to support the extraordinarily generous allowance of $45,495 so that it was outside a sound discretionary judgment. While it is difficult to form any accurate estimate, I would reduce it by two-thirds to $15,000. However, I do not consider that any reduction in the allowance for physiotherapy is appropriate. Nor do I consider any reduction to the other items sought by the appellant should be made as I do not consider that the determination by the trial judge was outside the permissible range of discretionary determination.

[52]

The appellant did not accept the offer. 152 The outcome of the rehearing before Graham DCJ was more favourable to the second respondent than the arbitration. Although the amount awarded to the first respondent was more than $100,000 above the sum awarded by the arbitrator, the trial judge ordered that the appellant bear 80% of the liability and the second respondent 20%. Thus the contribution recoverable from the second respondent was reduced from 50% to 20%. Moreover, the second respondent's offer to contribute was more favourable to the appellant than the 80/20 result. 153 In light of the fact that the result of the rehearing was to produce "a preponderance of liability on the appellant in terms of contribution" (Red, 69P-Q) and that, in terms of the actual sums involved, the second respondent's liability was reduced by some $15,000 or 26% (from $59,000 to $44,000), the judge concluded that: "In all of those circumstances, both the rules and their rationale point to a requirement that the [appellant] should pay the second [respondent's] costs of the cross-claim and, indeed, of the proceedings." (Red, 70C-E) 154 The appellant submits that the trial judge's discretion underlying the costs order in favour of the second respondent miscarried in that he: (a) made an error of principle, (b) took into account an irrelevant matter, and (c) made an order that was so unreasonable in the circumstances that the Court will infer it was made in error. 155 The appellant acknowledged that Pt 39A r26 DCR empowered the Court to make a costs order which varied from the general rule that the right to contribution extends to costs payable to the plaintiff in addition to the damages: James Hardie & Co Pty Ltd v Wyong Shire Council (2000) 48 NSWLR 679 at 684. However, it submitted that the trial judge made an error of principle in departing from the general rule. 156 The appellant emphasised that rule 26 merely empowers the Court to take into account an offer to contribute. In this regard it is to be distinguished from r25 which mandates a certain costs order to follow failure to accept an offer of compromise. Discussing a provision identical to r26 in the SCR (Pt 52A r24), Young CJ in Eq said that "no automatic consequence flows from the non-acceptance of an offer to contribute": Diamond v Simpson (No 4) [2004] NSWCA 57 per Young CJ in Eq at [62]. The appellant submitted that in the present case, mere failure to accept an offer to contribute does not justify an "exceptional" costs order the effect of which is to render the appellant liable for the whole of the costs of the proceedings. 157 A costs order is a matter of practice and procedure within the discretion of the trial judge. An appellate court should be slow to interfere with such discretionary determinations. In any case, it is apparent from the wording of Pt 39A r26 that it expressly contemplates that an offeree may be ordered to pay the whole of both the costs of the offeror and of any costs which the offeror is liable to pay to the plaintiff. Thus the orders made were within the range of orders expressly contemplated by rule 26. 158 The orders made also give effect to the legislative intention that costs sanctions be imposed where an offer to settle proceedings is not accepted. Rule 26 should be read in the context of rule 25 and Practice Note 42. I consider this to be so, even though r25 is concerned with offers of compromise and Practice Note 42 does not specifically or in terms refer to offers to contribute. Practice Note 42 clearly states that "rejection of an offer that should have been accepted will have serious consequences in costs"; these being not only solicitor and client costs from the date of the offer but costs of the whole proceedings. Thus in Bouras v Grandelis [2005] NSWCA 463 Giles JA observed at [32]: "… Practice Note 42 made plain that the amendments were intended to increase the effectiveness of the system of offers of compromise, and in particular to increase the incentive to a plaintiff to make a reasonable offer of compromise. The incentive was increased by making the costs in r 25(4) the costs "in respect of the claim", that is, all costs rather than costs from the date of the offer, unless the offer was made less than twenty-eight days before the trial when the entitlement was only to costs from the date of the offer. The incentive was increased by tightening the circumstances of an order otherwise." 159 The objects of r25 include "providing for penalties in costs to be imposed on a party who rejects an offer of compromise": Pt 39A r25(1A)(c)(1). 160 Given the apportionment of liability, had costs followed the event the appellant would likely have been liable for approximately 80% of the costs of the proceedings. Thus the orders made effectively impose an additional burden on the appellant of only about 20% of the overall costs. It cannot be said that to impose this additional burden, in light of the offer to contribute, would be "exceptional" or a "radical departure" from the general rule set out in James Hardie. 161 The appellant further submitted that the trial judge erred in principle in making a Bullock order for the benefit of an unsuccessful defendant in the absence of any conduct by the appellant to justify it. However, the trial judge did not purport to make a Bullock or similar order; he made an order based on failure to accept an offer to contribute. 162 The appellant's submission that the trial judge took into account an irrelevant consideration was faintly pressed. Insofar as the trial judge took into account that the appellant's own offer to contribute (made a week before that of the second respondent) proved wide of the mark (having offered 30% contribution), it does not appear that this consideration was a significant factor in the trial judge's reasoning nor determinative of the result. 163 There is some force in the appellant's submission that the second respondent's offer was uncertain in its terms, at least in respect of the percentage contribution the second respondent would make to payment of the first respondent's costs and whether this was restricted to payment of the first respondent's costs up until the date of the offer or extended beyond that date. However, having refused the offer without seeking to clarify its terms, the appellant cannot now rely on uncertainty. 164 For all of these reasons, it is clear that the trial judge did not err in the exercise of his discretion in making the costs award so as to justify appellate intervention.

[53]

OVERALL CONCLUSION AND ORDERS 165 Apart from one item of damages (hydrotherapy, reduced from $45,495 to $15,000) the appellant fails entirely on both damages and liability. The second respondent on appeal supported the appellant in its attack on the first respondent's damages and liability but concentrated its oral argument on damages. 166 In the circumstances, I would propose orders as follows: (1) (a) Appeal allowed, but only as to the reduction of damages for hydrotherapy from $45,495 to $15,000; (b) Orders 1, 2 and 3 of Graham DCJ to be varied accordingly, so that there shall be judgment (i) for the plaintiff (first respondent) for $191,071.02 against the first and second defendants (appellant and second respondent); (ii) judgment for the second cross-claimant (second respondent) against the cross-defendant (appellant) to the second cross-claim in the amount of $152,856.81, and (iii) for the cross-claimant (appellant) against the cross defendant (second respondent) on the Amended Notice of first cross-claim in the amount of $38,214.20. (2) Appellant to pay 80%, and second respondent 20%, of the costs of appeal of the first respondent and otherwise each is to bear their own costs of the appeal. 167 McCOLL JA: I have had the benefit of reading in draft the judgments of Santow JA and Bryson JA. I agree with Bryson JA that the risk which caused the first respondent's injury was not an obvious risk within the meaning of the Civil Liability Act 2002 and that the primary judge adequately dealt with the subject of obvious risk in his conclusion that the substance on which the first respondent slipped was not readily visible. I also would not join in Santow JA's examination of the Civil Liability Act or the issue of obvious risk in the law of negligence. 168 I agree with Santow JA's conclusions as to damages and with the orders his Honour proposes. 169 BRYSON JA: Section 5F of the Civil Liability Act 2002 is headed Meaning of "Obvious risk" and it is in these terms: 5F (1) For the purposes of this Division, an obvious risk to a person who suffers harm is a risk that, in the circumstances, would have been obvious to a reasonable person in the position of that person. (2) Obvious risks include risks that are patent or a matter of common knowledge. (3) A risk of something occurring can be an obvious risk even though it has a low probability of occurring. (4) A risk can be an obvious risk even if the risk (or a condition or circumstance that gives rise to the risk) is not prominent, conspicuous or physically observable. 170 Other provisions in Div.4 Assumption of Risk deal with (s. 5G) Injured Persons Presumed To Be Aware Of Obvious Risks, (s.5H) No Proactive Duty To Warn Of Obvious Risk and (s.5I) No Liability For Materialisation of Inherent Risk. An effect of s.5G is that Ms Hutton-Potts is presumed to have been aware of the risk and harm if it is an obvious risk; she can displace this presumption. An effect of s.5H is that, if the risk was an obvious risk, neither of the persons whom she sued had a duty of care to her to warn of that obvious risk. "Obvious risk" is also used in Div.5 Recreational Activities. 171 These provisions are not a complete statement of the application of the law of negligence to her claim; they deal only with limited parts of the application of that law. If s.5G operated and Ms Hutton-Potts were presumed to have been aware of the risk of harm that would not wholly dispose of the issues on her claim. The duty of care which she alleged went further than a duty to warn of a risk. 172 The course of argument requires consideration whether Ms Hutton-Potts' injury was caused by an obvious risk of such an injury occurring. 173 Much depends, in the application of provisions dealing with obvious risk, upon the degree of generality or precision with which the risk is stated. Rejecting more highly generalised statements, such as that bad things sometimes happen in hotels or that people sometimes fall over when walking on floors, the risks which confronted Ms Hutton-Potts can be stated at several different degrees of intensity. In a room in a hotel where a cleaner is polishing the floor with a buffing machine there is a risk that a recently polished floor will be slippery, because it is polished. I do not think that it would be correct in fact to see this as the risk which matured. If it were to be said that that risk was obvious it would, in the application of the meaning of "obvious risk" to the facts, have to be said that a reasonable person in the position of Ms Hutton-Potts who entered the room would have seen that Mr Elder was in the room, and would have gone further and considered what he was doing, and would have gone further and noticed that he was buffing the floor with a buffing machine; and that it would have been obvious to the reasonable person who did those things that there was a risk of slipping on the floor because it was recently polished. 174 However that would not be enough to show that Ms Hutton-Potts suffered harm from an obvious risk, because it was not the recent polishing of the floor which caused her injury. A higher degree of intensity is required in stating the risk. Her injury was caused by there being polishing material on the floor which was not visible, and had not been removed in the buffing process. The finding that the risk which caused her injury was an obvious risk involves attributing to the reasonable person in her position discernment, as an obvious matter, that there may (even with a low degree of probability) be polishing material on the floor which was not visible. This is the risk which matured and caused her injury. Involved in this is not only advertence to what Mr Elder was doing, but advertence to the risk that he was not doing it properly. 175 When the risk is stated at this degree it is in my opinion quite unsustainable that it should be found as a fact that there was an obvious risk to which the provisions of Div.4 applied; obviously so. 176 I do not find it surprising that the Trial Judge's reasons did not expressly deal with Div.4 or s.5F; they had no real claim on his Honour's attention. Judge Graham dealt with the subject of obvious risk without referring to the legislation, by saying that the mixture of linseed oil and spirits which caused Ms Hutton-Potts to slip was not readily visible. This disposed of the subject adequately and completely. It is not easy to understand why his Honour then decided that there was contributory negligence; but this part of the decision was not challenged on appeal. As there was not in fact an obvious risk of the kind to which s.5F refers, or of any kind, it is in my opinion unnecessary to discuss the meaning or effect of s.5F or the place of obvious risk in negligence law. I respectfully say that I do not join in Santow JA's examination of those subjects. 177 It would be a difficult exercise to deal comprehensively with the provisions of Pt.1A Negligence, Div.2-8 of the Civil Liability Act 2002; these are among the provisions inserted in that Act by the Civil Liability Amendment (Personal Responsibility) Act 2002. There is no general statement of purposes or of objectives in either Act. Some of the provisions may have been intended to restate or declare parts of the law of negligence while others change parts of that law. I have not observed any overall purpose or scheme of the amendments which can be brought to bear on the construction of any particular provision. The application of each particular provision should be considered in its statutory context and in relation to the facts of each particular case in which a litigant claims to rely on it. Broad views and insights based on them should be deferred until there has been a significant accumulation of judicial experience on the operation of these provisions.

[57]

23 NOVEMBER 2006 C G MALONEY PTY LTD trading as Bondi Hotel v Diana HUTTON-POTTS and Another Judgment 1 THE COURT: Pursuant to the liberty reserved on 29 May 2006, the appellant made further submissions in regard to costs seeking a reduction in the costs payable by the first respondent to 80% of the costs otherwise recoverable. The first respondent in turn by written submission dated 8 June 2006, apart from pointing out a minor adjustment to the figure for damages to be made under the slip rule (agreed by the appellant on 19 June 2006) sought to rely upon an offer of compromise as a basis for being paid indemnity costs from 13 January 2006. In the alternative it was submitted by the first respondent that the order for costs should not be disturbed on the basis that the appeal was successful to a minimal extent only. 2 We consider that the correct approach is in fact to make no alteration to the order for costs either by way of reduction or by way of substitution of indemnity costs. In the circumstances we do not consider that there is any basis for altering the order for costs, given the counterbalancing considerations and the relatively modest sums involved. 3 The minor adjustments to the figure for damages are made by consent under the slip rule. 4 Accordingly the orders of the Court are to substitute for the orders made on 29 May 2006, the following orders: (1) (a) Appeal allowed, but only as to the reduction of damages for hydrotherapy from $45,495 to $15,000; (b) Orders 1, 2 and 3 of Graham DCJ to be varied accordingly, so that there shall be judgment (i) for the plaintiff (first respondent) for $197,169.61 against the first and second defendants (appellant and second respondent); (ii) judgment for the second cross-claimant (second respondent) against the cross-defendant (appellant) to the second cross-claim in the amount of $157,735.68, and (iii) for the cross-claimant (appellant) against the cross defendant (second respondent) on the Amended Notice of first cross-claim in the amount of $39,433.93. (2) Appellant to pay 80%, and second respondent 20%, of the costs of appeal of the first respondent and otherwise each is to bear their own costs of the appeal. **********

C G Maloney Pty Ltd v Hutton-Potts and Another

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