McNally v Spedding & anor; Nobles v Spedding & anor

LOWER COURT District Court JURISDICTION : LOWER COURT FILE NUMBER(S) : 10455 of 2001; 10456 of 2001 LOWER COURT Finnane, DCJ JUDICIAL OFFICER :

• 15 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40884 of 2003 CA 40303 of 2004

SHELLER JA PEARLMAN AJA WINDEYER J

WEDNESDAY, 10 NOVEMBER 2004. BELINDA MCNALLY V DOUGLAS SPEDDING T/AS BALD FACE STAG HOTEL & ANOR NICOLE NOBLES V DOUGLAS SPEDDING T/AS BALD FACE STAG HOTEL & ANOR Judgment 1 SHELLER JA: I agree with Windeyer J 2 PEARLMAN AJA: I agree with Windeyer J 3 WINDEYER J: The court is dealing with two appeals from decisions of Judge Finnane in the District Court of New South Wales, in which he dismissed actions by the plaintiff in each action and entered judgment for the defendants. Although he found for the defendants he proceeded in his judgment to assess damages which he would have awarded had the actions succeeded. There was one judgment delivered for the two actions with separate assessments of damages for each separate plaintiff. The amount of damages which would have been awarded to the appellant, Nicole Nobles, in appeal No CA40303 of 2004 was such that leave to appeal was not required. The amount of damages assessed in respect of Belinda McNally, the appellant in appeal No. CA 40884 of 2003 was under $100,000 so that leave to appeal is required. The court dealt with both matters together with attention being given to the material in the claim by Nicole Nobles, but it was accepted that if her appeal succeeded then leave to appeal would be given in the other action and the appeal would be allowed in the same way. 4 Nobles, McNally and another friend Barbara Maloney, spent some five hours drinking at the Leichhardt Hotel in Balmain on 18 October 1999, commencing at about 4.30 pm. It is not disputed that they left there about 9.30 pm intending to go to Nobles' flat. Instead of going there they found their way to the Bald Faced Stag Hotel (the hotel), which is situated on the corner of Balmain Road and Parramatta Road. It is owned by the second respondent, Winbin Pty Ltd (Winbin) and occupied by the first respondent, Douglas Spedding, who is the licensee. The women's path from the Leichhardt Hotel took them to Hay Street and on reaching Parramatta Road they turned right, or west, and walked along the footpath towards the hotel and Balmain Road. There is conflicting evidence as to the time they arrived at the hotel. If the appellant's story is correct, it is likely they arrived there shortly before 1.00 am on 19 October. If that is so then their movements during the three hours before that are not accounted for. Finnane DCJ considered this could be explained by the severe injuries which they sustained. 5 Part of the hotel premises which fronts on Parramatta Road consisted of a separate room or area known as "Ground Control" which contained a number of pool tables and a bar. Adjacent to it, but in a separate area with glass walls there were some poker machines. Adjoining the "Ground Control" pool room and accessible through the poker machine area was a public bar area with an entrance from Parramatta Road and another entrance from Balmain Road. The entrance to "Ground Control" did not align with the Parramatta Road footpath boundary, but was offset, leaving a somewhat triangular indented area between the frontage of the "Ground Control" part of the building and Parramatta Road. This area was owned by the second respondent, Winbin Pty Ltd, and presumably occupied by the first respondent, Douglas Spedding, who carried on business at the hotel, although this was not found as a fact. 6 The three women walked west in Parramatta Road with Nobles in the lead. According to the stories of Nobles and McNally, which were reasonably consistent, a man of Lebanese appearance was standing in the area outside the "Ground Control" doors. Nobles turned and called to the other women "Look at the yuppie on the mobile". She walked past him and entered the bar. McNally said the man came out of the alcove and asked her what she had said. She said that she had said nothing but he did not accept this. He grabbed, pushed her against the wall, hit her face, pushed her to the ground and kicked her. He also took her watch, although she said she did not notice this at that time. Maloney intervened, the man let McNally up and the two women joined Nobles, who was at that stage at the bar ordering beers for the three of them. They told her what had happened. 7 The story of the appellants as to what happened thereafter was that Nobles told the night manager, Mr Spears, what had happened; he asked McNally to go with him to "Ground Control" to identify her assailant. She did so with Nobles, although the position from which she said this took place could not have been correct. She said she realised at this time that her watch was missing and she reported this to Spears; she said that Spears said that he could not help. The three women therefore decided to leave their drinks and the hotel. They went out through the bar door to Parramatta Road and turned east and walked along the footpath in front of "Ground Control". There was a seat outside "Ground Control" which for some reason Nobles sat on. Maloney said to the people inside "What's the chance of getting our watch back" and one said, "Sure, come and get it". They went in. Nobles reluctantly decided to follow them, she having suggested to them that they should leave things alone. Nobles said that she was attacked by the man identified as the original assailant. Others joined in. There was a serious fight and brawl during which Nobles was brutally assaulted and injured and McNally was also assaulted and injured but less seriously. The hotel staff finally broke up the fight; the police and ambulance were called and by the time the police had arrived the group of men in the hotel had left. There is no dispute about the fight and the assault. 8 Mr Spears, the night manager, first gave evidence which conflicted with a statement he had made to the police. The Judge thought that he was surprised when confronted with the statement he had made having decided to give a story contrary to it. His evidence in chief was the women had entered the hotel through the back door, that they had been there for some time, and that Nobles was causing trouble. He said that he eventually got the three women to leave, ejecting them with the help of a Mr Montgomery and the next time he saw them was when he was called to assist with the fight in "Ground Control". He had seen them leave. A statement he made to the police differed from this. He said that the statement was correct, but he also said his earlier evidence was correct. In the statement he said that he had been informed of the attack on McNally, that the assailant had been pointed out to him, that he had approached the man who admitted the attack but said McNally had poured a drink on him. Nevertheless the gist of his evidence, taken as a whole, was that Nobles was creating a nuisance, that he had to remove her from "Ground Control" three times, that things settled down, and the women left so he thought there would be no further trouble. 9 Steven Bell was a bar attendant. The statement that he had made was admitted into evidence. He said that a group of Lebanese men had arrived at the hotel before 10.30 pm and had begun to play pool. About half an hour later he said that he saw the three women arguing with the men over a spilt drink, that Spears spoke to them and to the men and that the women went back to the bar. About half an hour later the fight took place. His Honour made no finding on this evidence. It is contrary to most of the other evidence. 10 Mr Duncan Spedding is the son of the first respondent/licensee. He was in the hotel drinking on the night. He said that Spears told him about a problem between the women and the men playing pool, but that all was under control. A little while later he heard the sound of breaking glass and saw Nobles running into "Ground Control" with a broken glass in her hand. Spears ran in and asked him to help. 11 Under a heading in his judgment "Findings of Fact" the trial judge said that he could not be certain when the appellants arrived at the hotel. However he found that the fight occurred shortly after 1.00 am. That is not challenged. Police, ambulance and hospital reports support this finding. His Honour considered the evidence of Mr Spedding about the broken glass, noting its significance and that this was not mentioned to the police, as one would have expected. His Honour said: The circumstances surrounding this evidence cause me to doubt the veracity of Mr Spedding. I am not prepared to place any reliance on any part of his evidence which is not supported by other reliable evidence. 12 His Honour next moved to the evidence of Mr Spears. He noted that it was contradictory; he noted the original version as compared to the police statement. He said: As I have said, I regard Mr Spears' evidence with considerable caution. It is difficult for me to understand how the version he first gave in evidence is so different from the version in his police statement. He appeared to me to be quite surprised to be confronted by his police statement, but agreed he had said to the police what was contained in it. His only explanation for giving a different version was that his statement was made three years ago. His evidence, when first given, may have been wrong because of a faulty memory, but his manner of giving evidence and the clear differences in the versions in my opinion, made it more probable that he thought he would give evidence which he considered favourable to the defendants, not realising that the police statement which he made would be available to the plaintiffs' legal advisers. 13 His Honour found: As a matter of probability one or both of the plaintiffs accompanied Mr Spears into the "Ground Control" bar and identified the assailant. I think it probable that they did so from a doorway from the poker machine area into the Ground Control. 14 He then said: The plaintiffs clearly believe that they got to the Bald Faced Stag at about 10pm or 10.30.pm. This may well be correct, but I think it likely that they arrived much later in the night, probably close to 1am. I accept that when they arrived, they complained of the treatment given to Miss McNally outside the hotel but I am unable to say where they might have been in the two or three hours before this.

I cannot accept as probable the events as recounted by Mr Spedding or Mr Spears, except that the brawl probably started shortly after 1am. I am left in a quandary as to what actually happened and how it happened, since none of the witnesses are totally reliable.

Of course, it is possible that the versions of the plaintiffs are correct. If they are, then it is clear that they left the hotel of their own accord and that they gave no indication to anyone that they intended to enter Ground Control. They had no such intention when they left.

At the time of these events, there was a seat on the footpath outside Ground Control and so it is possible that Miss Noble sat on it. What is difficult to follow is why she was attacked so viciously, if she was the last of the three women to enter Ground Control. However, assuming that she was attacked without reason by unidentified persons who were in the hotel, there is no evidence that anyone on the hotel staff had any reason to suppose that any of its patrons would be violent towards the two plaintiffs while they were in the hotel. There is evidence that the manager believed they had left the hotel. He did not know that, after they went into Parramatta Road they entered Ground Control. It is their evidence that they had never before entered Ground Control. I have already found that this is not entirely correct since one, or both of them, entered it sufficiently to enable them to identify Ms McNally's assailant.

I doubt that the versions of Mr Spears and Mr Spedding are correct. However, if either of the versions of Mr Spears were correct it would follow that the defendants had no reason to believe that either or both of the plaintiffs could be injured on the hotel premises, since they had been ejected (Spears evidence), or had left voluntarily (Spears Statement).

If Mr Spedding's version were correct, it was Miss Nobles who started the brawl by running into Ground Control with a broken glass. She was assisted by one of her female friends who was hurling pool balls around. Hotel staff had no time to intervene and stop the ensuing brawl before the plaintiffs were injured.

I am unable to say on the evidence what happened, since I cannot accept any of the witnesses as being totally reliable. I conclude, that whatever did happen, the defendants had no way of foreseeing it or preventing it. 15 The learned trial judge then, in a brief paragraph, headed "The Law" said: The occupier of the hotel premises owes a duty to take reasonable care to avoid a foreseeable risk of injury to a patron of the hotel (see Australian Safeway Stores v Zaluzna; Hackshaw v Shaw 155 CLR 64 ; Chordas v Bryant 91 ALR 149. However, the mere fact that an injury is foreseeable is not sufficient of itself to found negligence Sullivan v Moody (2001) 183 ALR 404; NCS Australasia Pty Limited v Hindi & ors [2003] NSWCA 233 para 40 per Beazley JA). In the present case, the occupier, if the plaintiffs' version of events is the correct one, through its servant and agent, the night manager, Jason Spears, knew the women had left the hotel. There was, therefore, no foreseeable risk of injury that could occur to them on the hotel premises. 16 His Honour then went on to consider the result under the Spedding, appellants and Spears' version of the events. He said, I think clearly correctly, as to the Spedding version, that if the fight was precipitated by Noble running into "Ground Control" with a broken glass in her hand then the hotel was not liable. He said that if the Spears' versions were correct, presumably either version given by Mr Spears, then the appellants were ejected from the main bar after Nobles had been misbehaving or they left voluntarily. He went on to say: Regardless of which of the versions were correct, he was entitled to accept that they had left. He had no way of knowing that they would enter Ground Control. His barman in Ground Control had no warning either that they were coming in, or that trouble was likely to start. Neither Mr Spears nor the barman could have foreseen what might happen and neither had any opportunity to prevent it. 17 He said that if the appellants' versions were correct: … then the plaintiffs left the hotel and without warning to the staff of the hotel, entered a different bar deliberately to encounter a man who had been violent to Miss McNally. The hotel staff had neither knowledge of likely danger nor the opportunity to do anything about it. If they had known that the plaintiffs intended to enter Ground Control, that in itself would not put them on notice that a patron or patrons in the hotel might assault either or both of them. There is no evidence that any of the men in Ground Control were intoxicated, nor that they were threatening violence towards the plaintiff or anyone else.

His Honour concluded that on any version the respondents did not, at the relevant time, foresee that persons in Ground Control were likely to attack the appellants or were likely to be attacked by Nobles and her friends. He said, "Accordingly, there being no foreseeable risk of injury, neither is liable to the plaintiffs, or either of them, in negligence". There is, of course a problem with the conclusion but it may be understood as meaning "the defendants could not foresee", rather than " did not. 18 The main grounds of appeal are the trial judge erred in finding (a) that the attack was without warning; (b) that there was no foreseeable risk to the plaintiff and (c) that the hotel staff had no ground for suspecting persons in Ground Control would attack the appellants. The more important grounds are 6 and 7 as follows: 6. The Trial Judge erred in concluding that there was "no evidence that any of the men in 'Ground Control' were threatening violence towards the plaintiff or anyone else" in light of the evidence which he accepted that one of them had previously assaulted the Appellant. 7. The Trial Judge erred in not concluding that the Defendants breached their duty of care in failing to take any action against the assailants when the first assault and theft of property upon and from Ms McNally was reported to the hotel staff. 19 It is, I think, clear that had there been no prior assault the respondents could not have been liable to the appellants. The happening would not have been reasonably foreseeable. The difficulty is that I am unable to accept that necessarily to be the position in light of the earlier attack. 20 In most circumstances there is no duty imposed in law on an occupier of premises to prevent harm to a person on those premises from the unlawful conduct of another; Smith v Leurs (1945) 70 CLR 256 at 262, but in the particular circumstances of hotel premises, where unruly, inappropriate and violent behaviour is not uncommon, there may be a duty on the occupier and licensee who is in control of those premises, to protect the customer against reasonably foreseeable criminal acts by other persons on those premises. 21 The statement of law by the trial judge is unfortunately too simplistic for the circumstances of this case. The pleaded case of each of the plaintiffs was quite clear. It relied upon the first attack to found the claim for arguing that the second attack and its consequences resulted from negligence from the respondents. For instance, under the heading in the statement of claim "Particulars of Negligence" in paragraph 8 it was alleged that the defendants were guilty of negligence in that they: (c) failed to take any steps to protect the plaintiff from the second assault in circumstances where a complaint was made by the plaintiff in respect of the first assault. … (j) failure to, by the ejection of the unidentified male person, avoid the risk of injury to the plaintiff.

This claim had nothing to do with the physical condition of the premises. It is far removed from Australian Safeway Stores Pty Limited v Zaluzna (1987) 162 CLR 479 which was a case of a slip on a supermarket floor. It is necessary to consider this matter, assuming the facts relating to the first assault and its being unprovoked are found, in light of the decision of the High Court of Australia in Modbury Triangle Shopping Centre Pty Limited v Anzil (2000) 205 CLR 254. In that case the court considered the element of control significant and essential to sheet home to a person liability for criminal actions of a third party on premises: see Gleeson CJ at 263 to 264; Gaudron J at 270 and Hayne J at 292 to 294. Whatever the extent of the liability of an occupier of a premises for the illegal acts of third parties causing damage on those premises the boundaries do not extend beyond circumstances where the occupier has control over the third parties. Generally speaking it has been held that liability of the type sought to be brought home by the appellants here requires some special relationship to be established, such as employer and employee, parent and child, gaoler and prisoner, bailor and bailee. These are the restricted circumstances referred to by Hayne J in the following passage from Modbury at page 293 [117]: Established principle provides the answer to the present problem because it reveals that there is no duty to control the criminal conduct of others except in very restricted circumstances. Being an occupier of land should not be added to those exceptional cases, at least where the complaint that is made by the plaintiff is not about the occupier failing to control access to or continued presence on the premises. I would wish to reserve for consideration in a case in which they are raised the questions that are presented by a complaint of that last kind. Further, like Gleeson CJ, I would wish to leave open for consideration the appropriate approach in cases where an occupier has a high degree of certainty that harm will follow from lack of action. 22 One of the cases noted as related to control of access or continued presence on premises is Chordas v Bryant (Wellington) Pty Limited (1988) 20 FCR 91 where it was accepted that in the case of injuries on hotel premises caused by assault of a third party, the occupier could be liable in certain circumstances the element of control being essential. It should not be held that the categories of special relationships are closed. The judgment of Heydon J in Ashrafi Persian Trading Co Pty Ltd t/as Roslyn Gardens Motor Inn v Ashrafinia [2002] Aust Tort Reports 81-636, in which the other members of the court agreed, proceeds on the basis they are not (see paragraphs 70 to 73). Both Modbury and Ashrafi were considered in Club Italia (Geelong) Inc v Ritchie [2001] 3 VR 447, a decision of the Victorian Court of Appeal. That case involved injuries to a policeman in the course of his duties on club premises "inflicted by a vicious ruffian" on those premises where the man, who was actually identified, had been causing trouble over many hours, but had not been removed from the club premises. A lot of the discussion in that case was related to the ability and duty of the club management to eject such disruptive persons under the Liquor Control Act 1987 (Vic) and the question of whether the fact that the injured person was a police officer bore on the decision. Nevertheless the court dealt with the "relationship" referred to in Modbury relating to control and ability to protect from danger. The following passage appears at paragraphs 45 to 46 of the joint judgment. [45] Each of the majority judgments in Modbury makes it clear that the basis of the "special relationship" exception is, as the NSW Court of Appeal has noted, the existence of "control". Where the defendant is in a position to control the offender, a special relationship may be held to exist. The club was in a position to control Holton; a special relationship, and prima facie a relevant duty of care, existed. The case is also one of the occupier's failure to control access to or continued presence on the premises, a category reserved by Hayne J for future consideration. We need say no more about this category. Nor need we consider whether an exception to the general rule should be held to exist by reason of the degree of foreseeability and predictability of criminal conduct. [46] We have said that here a special relationship, and prima facie a relevant duty of care, existed. The club contends that it is inexpedient that a duty of care be recognised. The argument here is that police officers have the training and experience, and the duty, to evaluate and deal with situations like that which existed at the premises; that occupiers cannot be expected to make their own evaluation; that the imposition of a duty of care might deter occupiers from sending for the police; and that it would be wrong to impose a duty of care for the protection against criminal conduct of the very persons whose duty it was to enforce law and order.

The last argument was rejected. The verdict in favour of the plaintiff policeman was upheld. 23 I am not certain whether this is a proper statement or understanding of the passage from the judgment of Hayne J in Modbury referred to, but it does support the argument that it is the ability to control which brings about the special relationship. I consider that to be the position which arises on these appeals and the principles of law under which the facts must be considered. 24 Unless the first story of Spears is accepted, the evidence of the original assault on McNally is not contested although there may be some question about its cause. Spears in the long run - despite his earlier evidence which the judge seems to have regarded as false - accepted that Nobles and McNally had complained to him and had identified the assailant. Whether he spoke to the assailant and was told some story about a spilt drink was not found by the trial judge and on that basis the reasons or lack of reasons for the assault were not found. And, of course, on the story of the women, apart from the comment about the "yuppie" there was no reason for the assault. 25 This is not a case, where in the events which happened, there was any foreseeable risk to the appellants in particular so far as Spears was concerned. The question is whether allowing the assailant to remain on the premises, if the first attack occurred as the appellants alleged, gave rise to the foreseeable risk of injury to other hotel patrons or persons entering the premises such that there was a duty to protect such persons against that risk. 26 Counsel for the respondent argued that the proprietor of the hotel was not responsible for conduct outside it. He said that it was for McNally to report the first assault to the police. As he put it, the assault could have occurred anywhere. That cannot be the position. As counsel for the appellants said it did not happen at Circular Quay, but happened immediately outside the hotel premises, and probably on land owned by the second defendant and occupied by the first defendant. But in any event it is not suggested the occupier was responsible for the attack off the premises. I would have thought it reasonably clear that a hotel proprietor with knowledge that a person drinking in the hotel had a short time before attacked and stabbed with a knife a person in the street immediately outside the hotel, would be bound to consider whether it was safe to other patrons who might be on or come onto the hotel premises, to allow the attacker to remain. This was not a knife attack but it was a serious and brutal assault. If the necessary facts were found it is possible in the matters under appeal that it could be found that the risk of criminal conduct by the assailant to other patrons was reasonably foreseeable and that the injuries to the appellants were caused by failure to take reasonable steps to prevent such risks. This matter was not addressed by the trial judge; it was a submission made to him which he failed to consider. It is a ground of appeal. I think that means that the appeals must succeed. 27 While I consider the appeals must be allowed as against the first respondent, there does not seem to me to be any basis for a finding of liability in the second respondent, Winbin, the owner of the premises. This is not a case about the condition of the premises, where in some circumstances the owner might be liable. This is a case which depends upon a responsibility to exercise reasonable care in the control and management of the premises. That is a duty which falls upon the occupier, and particularly upon a licensee of hotel premises. So far as the second respondent is concerned, the decision of the trial judge should stand, although I point out that he did not consider the liability of the respondents separately one from the other. 28 The next question is whether the court can determine the matter for itself, or whether there should be a new trial. A new trial is to be avoided if possible, but I have come to the conclusion that this is not a matter where this Court can make its findings of the facts and come to the necessary conclusion. It is necessary for the fact of the first attack and its position, details and circumstances to be determined as facts, although in light of the admission of Spears in his police statement the fact of the attack is unlikely to be difficult to find. It is necessary for the facts as to the actions taken by Mr Spears, namely as to whether he spoke to the assailant after the complaint, and his actions thereafter to be found and it is necessary to make a finding if possible on the story told by Mr Spedding. I accept that the trial judge said he could not find which account of the events was correct. That should not, I think, be taken as a statement that the appellants had not satisfied the onus resting on them. It was a statement more easily made in light of the conclusion of the trial judge that it did not matter which story he accepted as on any version the appellants failed. This is not a conclusion that he would necessarily have come to had he given the required consideration to the apparent risk of having a man on the premises who it was claimed had savagely attacked a woman immediately outside the premises. His Honour was clearly not impressed with the evidence of either Mr Spedding or Mr Spears. There were cogent reasons for this. As against this he may have had some doubt about the story of the appellants because the times did not tally. It is not possible to say that his only doubts were about the time of the second attack. None of these matters was sufficiently explored or decided but I have no doubt the necessary findings could be made. I do not consider this Court can decide which account should be believed or which parts of the various stories should be accepted. What it can decide is that there was not a particular duty of care to the appellants which came to an end once they were seen off the premises, it being their own risk when they re-entered. The question is whether there was a reasonably foreseeable risk of harm to any patron, by allowing a violent man, who had struck down and kicked a woman in the street outside the premises, to remain there assuming those facts to be found. In other words, was there a responsibility on the proprietor to require the man to leave, and if he refused, to summon the police, and did the failure to take action gave rise to the injuries suffered. All of this requires a close consideration and determination of the relevant facts. It may or may not require evidence of police response times although the response time for the second attack could assist with this. 29 I consider that in the case of McNally leave to appeal should be granted and in both cases the appeals should be allowed and the matter referred back to the District Court of New South Wales for a new trial on the question of liability only as against the first respondent. 30 ORDERS

2. Direct notice of appeal in accordance with draft lodged be filed within 14 days.

Set aside judgment in the District Court in favour of the first defendant and order there be a new trial in the District Court against the first defendant limited to liability.

Order the first respondent pay the plaintiff's costs of the proceedings in the Court of Appeal.

No order as to the costs of the second respondent.

First respondent to have certificate under the Suitors Fund Act if eligible.

Costs of the first trial in the District Court to be determined by the judge hearing the new trial.

Set aside judgment in the District Court in favour of the first defendant and order there be a new trial in the District Court against the first defendant limited to liability.

Order the first respondent pay the plaintiff's costs of the proceedings in the Court of Appeal.

No order as to the costs of the second respondent.

First respondent to have certificate under the Suitors Fund Act if eligible.

Costs of the first trial in the District Court to be determined by the judge hearing the new trial. ********** I certify that this and the preceding 14 pages are a true copy of the reasons for Judgment Mr Justice Windeyer and of the Court in this matter ………………………………… Associate Date………………………..

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