Frewin v Emmdale Sports Club Incorp.

The law in relation to summary judgment 7 Part 15 r 26 provides: "(1) Where a pleading - (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings; or (c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out. (2) The Court may receive evidence on the hearing of an application for an order under subrule (1)." 8 Part 13 r 5 says: "(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings- (a) no reasonable cause of action is disclosed; (b) the proceedings are frivolous or vexatious; or (c) the proceedings are an abuse of the process of the Court, the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings." 9 In Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 the High Court held at 57 that:

"Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." 10 According to their Honours, at para 58,this is because:

"It would be wrong to deny a plaintiff resort to the ordinary processes of a court on the basis of a prediction made at the outset of a proceeding if that prediction is to be made simply on a preponderance of probabilities". 11 Similarly, in Air Services Australia v Zarb (NSWCA unreported, 26 August 1998) Rolfe AJA, at para 13, found it useful to remind himself of the highly demanding test imposed on a party seeking summary judgment. His Honour referred to Dey v Victorian Railways Commissioners (1949) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 and Webster & Anor v Lampard (1993) 177 CLR 598. I have reproduced some of the passages quoted in Zarb. 12 In General Steel Barwick CJ, who heard the application alone stated at 130: "Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed." 13 Barwick CJ also said at 129: "It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of cause of action - if that be the ground on which the Court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'." 14 In Webster, Mason CJ, Deane and Dawson JJ reinforced the rigorous testing stating, at 602: "The power to order summary judgment must be exercised with 'exceptional caution' and 'should never be exercised unless it is clear that there is no real question to be tried."' 15 According to Rolfe AJA in Zarb at paras 15-16: "The demanding nature of the test is in no way lessened in circumstances where there are the potential for difficult factual and legal issues to arise. Rather, as the decision in Webster made clear, it is heightened: see also Wickstead & Ors v Browne (1992) 30 NSWLR 1 and Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1997) 188 CLR 241." 16 Master Allen (as he then was) in Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 at 373-374 said: "…It is not by any means rare in the history of the development of the common law that a high appellate court, in enunciating a novel development in the law, albeit one avowedly based on a miscellany of old cases, has chosen to use general words of imprecise limits in meaning to facilitate the arrival, in later cases, of the final form of the development without the need to overrule what earlier had been stated. That being so I am of opinion that a court at first instance should be particularly astute not to risk stifling that development of the law by summarily throwing out of court actions in respect of which there is a reasonable possibility that it will be found, in the development of the law, still embryonic, that a cause of action does lie. The risk of injustice to the plaintiff, which summary termination of his claim would entail, is real. One cannot predict, with firm assurance, what the future holds as the final formulation of the new development." 17 This passage was quoted with approval by Justice Badgery-Parker in Gibson v Parkes District Hospital (1991) 26 NSWLR 9 at 35. 18 The statements of claim plead that the first defendant conducted, controlled and organised the race. This part of the pleading is uncontentious and remains on foot. The second defendants submitted, firstly, that the plaintiff now, some 13 years after the accident, seeks to plead a new cause of action namely that the defendants are personally liable and individually assumed responsibility for the conduct, control and organisation of the race and that leave to file a new pleading at this late stage should be refused. The second defendants submitted that the statement of claim and the proposed ASC are fundamentally flawed because they cannot be sued as individuals for any negligent acts or omissions of the Club.

Liability of Incorporated Associations 19 The Emmdale Sports Club Incorporated was incorporated under the Associations Incorporation Act 1984 (NSW) on 27 August 1986. The defendants referred to s 16 of that Act which reads: "Rights and liabilities of members and officers (1) Subject to this Act and the rules of the incorporated association, a member or officer of an incorporated association shall not by reason only of being such a member or officer be liable to contribute towards the payment of the debts and liabilities of the incorporated association or the costs, charges and expenses of the winding up of the association (2) Subject to this Act, membership of an incorporated association does not confer upon members of the association any rights, title or interest, whether legal or equitable, in the property of the association." 20 As Master McLaughlin stated in New South Wildlife Information and Rescue Service Incorporated v Goshi and Ors (unreported, 18 July 1997, No. 4110 of 1996) at para 8, it is clear from the wording of the subsection that the protection given by that subsection is protection against liability to contribute towards the payment of the debts and liabilities of the incorporated association. Hence, the members of the Emmdale Sports Club Incorporated shall not by reason of being members be liable for the liabilities of that Club (s 16). Hence, if there is no independent duty of care owed to the plaintiff by the second named defendants, the proceedings should be dismissed against them. 21 While on this topic, it was suggested by the defendants that the plaintiff should avail himself of s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and join the insurer as a defendant in these proceedings. However, the plaintiff submitted that there is no utility in this course of action because for the plaintiff to have resort to the charge under s 6 there must be in force a policy to indemnify the first defendant in respect of the claim. According to the plaintiff, there is no policy in force as the GIO have refused to indemnify the defendants because of the exclusion clause relating to the participants. 22 The plaintiff submitted that he had always pleaded that the second defendants as individuals and the club owed an independent and identical duty of care to the plaintiff. According to the plaintiff, these individuals were all present at the race day and could have taken steps to erect an outside barrier on the racetrack at any time before that particular race took place. 23 The pleading in of the statement of claim of the duties of care owed is ambiguous. Paragraphs 7 and 8 state: "7. At all material times the First Defendant had the care and control of the conduction of the Gymkhana and races run as part of the Gymkhana proceedings and at all material times the Second Defendants were Directors and Officers of the First Defendant and at all material times both the First Defendant and the Second Defendants owed a duty of care to the Plaintiff in relation to the conduct and running of the Gymkhana and consequence races. The First Defendant and the Second Defendants were negligent in the conduct of the Gymkhana and the races conducted at the Gymkhana and as a consequence of such negligence the Plaintiff suffered severe and permanent injury. 8. The Plaintiff claims that the incident of injury was caused by negligence on the part of the First Defendant, its servants, employees and/or agents and the Second Defendants." 24 There is nothing further to show the nature of an independent duty of care owed by the second defendants in the statement of claim. However, the plaintiff submitted that the first and second defendants owed the same duties of care concurrently. 25 Paragraph 7 of the FASC now pleads: "7. At all material times the First Defendant by its servants and/or agents the Second Defendants, and the Second Defendants had the care and control of the conduct of the race and in the circumstances owed a duty to exercise reasonable care for the safety of the Plaintiff in relation to the conduct and running of the race. 7A. In breach of their duty, the Defendants negligently and carelessly failed to provide: (i) a proper track for the purpose of the race (ii) proper and safe outside rails (iii) a proper and safe surface for the purpose of the race (iv) proper and efficient supervision of the race 7B. Injury to the Plaintiff was caused by negligence on the part of the First Defendant by its servants and/or agents Second Defendants and the Second Defendants." 26 The defendants referred to Williams & Anor v Natural Life Health Foods Limited & Anor [1998] UKHL 17; 2 All ER 577 and Agius v State of New South Wales [2001] NSWCA 371. In Williams the House of Lords considered whether a director of a franchise company is personally liable to franchisees for the loss which they suffered as a result of negligent advice given to them by the franchisor company. Lord Steyn stated at 582 that: "In such a case where the personal liability of the director is in question the internal arrangements between a director and his company cannot be the foundation of a director's personal liability in tort. The enquiry must be whether the director, or anybody on his behalf, conveyed directly or indirectly to the prospective franchisees that the director assumed personal responsibility towards the prospective franchisees." 27 In the pleadings to the case before me there is nothing to suggest that any of the individual members of the club assumed a personal responsibility towards the plaintiff. 28 The brief facts in Agius are that Ms Sharon Agius had Downs Syndrome and was intellectually handicapped. After leaving school she participated in a day programme conducted by Liverpool and Districts Handicapped Association Inc ("the Association'), and for that purpose attended its premises at Lurnea. On 17 February 1995, she was injured when, in the kitchen at the premises, she pulled onto herself an urn containing boiling water. 29 Through a tutor, Ms Agius brought proceedings in the District Court against the Association, the State of New South Wales ("the State"), Mr Terry Kesby-Smith and Mr Michael Pearce on 13 February 1998. At the time of the injury, Mr Kesby-Smith was the President of the Association and Mr Pearce was its manager. Mr Kesby-Smith was also a member of its management committee. There was conflicting material as to whether Mr Pearce was a member of its management committee. Ms Agius' statement of claim pleaded causes of action in negligence against each of the defendants. 30 Each of the State, Mr Kesby-Smith and Mr Pearce applied for summary disposal of the proceedings against it and him. Ms Agius applied for leave to amend her statement of claim as against these three defendants. All applications came before Freeman DCJ on 20 August 1999. 31 On 20 August 1999, leave was granted to discontinue as against the Association which was in liquidation. The proposed amendments varied the pleading of the causes of action in negligence against the remaining defendants. In reasons given on 27 August 1999, Freeman DCJ held that the causes of action, as originally pleaded and as they would be varied and added to, were and would be unmaintainable. His Honour refused leave to amend the statement of claim and made orders summarily disposing of the proceedings against the three defendants. 32 On appeal, Giles JA (with whom Priestley and Powell JJA agreed) stated at paragraphs 36 to 38: "36 On a more benevolent view than I am prepared to take, the facts said to give rise to the duty of care are to be and can be found in the preceding paragraphs of the statement of claim. The only facts in the statement of claim which could underlie the allegation of a duty of care are that the claimant was injured on the Association's premises in the course of the programme (paras 5, 6, 7 and 8) plus, as regard the second opponent, that he was the president of the Association and a member of its management committee (para 3) and, as regards the third opponent, that he was the manager of the Association and a member of its management committee (paragraph 4).

37 So far as concerns the second opponent, on this approach whether the pleading fails to disclose a reasonable cause of action comes down to whether, simply because he was the president of the Association and a member of its management committee, he owed a duty of care to the claimant as a participant at the Association's premises in the programme conducted by the Association. So far as concerns the third opponent, on this approach whether the pleading fails to disclose a reasonable cause of action comes down to whether, simply because he was the manager of the Association and a member of its management committee, the third opponent owed a duty of care to the claimant as a participant at the Association's premises in the programme conducted by the Association.

38 Nothing is pleaded as to the duties and responsibilities of the President, the manager or the members of the management committee of the Association. In particular, nothing is pleaded as to their knowledge of the state of the kitchen at the Association's premises, the performance of tasks in the kitchen, or the insurance held by the Association, they being the subjects of the particulars of negligence, or as to duties and responsibilities in those regards. Persons holding the offices and positions in question do not necessarily have either supervisory or hands-on roles extending to such matters, and do not without more themselves owe duties of care to those to whom the Association might owe a duty of care. In my opinion, even on the benevolent view the statement of claim does not disclose reasonable causes of action against the second and third opponents. For that independent reason the pleading as against the second and third opponents should be struck out." 33 His honour then continued at paragraphs 82 to 84 (inclusive): "82 The constitution of the Association relevantly provided that the management committee should "control and manage the affairs of the association", but the President had no special decision-making or executive powers. The unchallenged evidence was that the day to day management of the Association and the implementation of policy decisions of the management committee was the responsibility of "the permanent management staff". The second opponent's evidence was that he "had never assumed the responsibility for the direct day-to-day supervision of persons utilising the facility", and - "6. During my tenure on the Committee of the First Defendant it had always been the policy of the Committee to maintain full public liability and workers compensation insurance. Such direction had been given to the permanent manager, Michael Pearce. The Manager was responsible for carrying out the administration of the First Defendant and implementing the policies of the Committee." 83 This was reflected in the evidence of the third opponent. He said that the management committee "set policy, guidelines and anything that did not form the description of the day to day running was referred to them". The evidence in the third opponent's affidavit earlier set out showed instructions from the management committee to obtain insurance and reporting of difficulties, but nothing imposing particular responsibility on the second opponent as President and member of the management committee.

84 Even with regard to the evidence, I consider that there is not an arguable case for the cause of action against the second opponent." 34 And at paragraph 87 Giles JA stated: "87 The evidence suggested, including from the third opponent's own affidavit, an arguable case that in the third opponent's role as manager he should have foreseen injury if the kitchen facilities at the premises were such that one of the participants in the Association's programme could tip the urn over, that the system of supervision of the participants did not guard against such a happening, and that the third opponent was responsible for the safe configuration of the kitchen facilities and an appropriate system of supervision. The third opponent was responsible for the day to day running of "the Centre"; there was criticism of the third opponent's performance as manager; and the minutes of the meeting of 22 December 1995 recorded recommended changes to supervision practices and safety issues, including that the urn was no longer to be used. In particular, the submission annexure "G" to the affidavit of Mr Boyd was critical of the third opponent, saying that he had "little or minimal involvement with the consumers and their programs" and other things including that he should have been active in the day to day conduct of the programme. That the world gets wiser as it gets older does not mean that it was not wise before, but at the arguable case level I do not think it can be said that a case of breach of a duty of care by the third opponent is untenable." 35 In relation to the case before me, even if the first and second defendants duties of care were concurrent and identical there is nothing pleaded to suggest that any of the committee members were "hands on" managers responsible for the conduct of the race day. It is not pleaded that they had particular knowledge of the danger of not erecting an outside barrier. Nothing further is pleaded as to their individual knowledge if the state of the racetrack and the performance of the tasks on the racetrack. Hence it is my view that the FASC as currently pleaded is doomed to fail as against the second defendants. 36 On the issue of failure to raise insurance, in Agius at paragraphs 88 and 89 inclusive Giles JA stated: 88 In my opinion, however, the evidence did not suggest an arguable case of breach of a duty of care by the third opponent in failing to arrange insurance. So far as the evidence showed, he tried to obtain insurance, but could not do so, and he kept the management committee informed. Insurance was obtained some three months after the claimant's injury, but that does not mean that a duty of care was owed by the third opponent with the content of taking reasonable steps to obtain insurance, or that there was failure to take care.

89 Going finally to the cause of action against the first opponent, the case sought to be made against the first opponent as emerging, so far as can be seen, from the claimant's submissions in the appeal was concerned with insurance. I say so far as can be seen because there was a regrettable lack of focus; at one point, it should be noted, it was said that the first opponent owed a duty of care with the content of inspecting the kitchen at the Association's premises to ensure that it was safe. There is no basis at all for such a duty of care." 37 The allegations cast in the FASC in relation to the insurance in the case before me is somewhat different in that FASC alleges that the defendants failed to warn the plaintiff that they did not have appropriate insurance. On one hand, if the plaintiff is making a choice as to whether or not he should participate in a hazardous activity, such as horse riding, to be in a position to give an informed consent he would need to have been informed that if he injured himself he would bear the responsibility for the costs of any medical treatment. However, any obligation to warn would fall to the committee, the first defendant not the individual members of the second defendant. As with the prior allegations, it is not pleaded that any of the individual members of the committee assumed a personal responsibility to arrange insurance which would cover participants in the races. 38 It is my view, that the latest FASC as currently pleaded as against the second defendants is doomed to failure and should be dismissed. As 13 years have elapsed since the accident occurred, it is my view that no further leave should be granted to further amend the statement of claim as against the second defendants. 39 Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the second defendants' costs of the motions and the proceedings as agreed or assessed. 40 The court orders:

(1) The FASC is dismissed as against the second defendants.

(2) The proceedings are dismissed as against the second defendants.

(3) The plaintiff is to pay the second defendants' costs of the motions and the proceedings. **********

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