Payne v Philaust Investments Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41051/01 DC 8670/97

HANDLEY JA YOUNG CJ in EQ FOSTER AJA

Friday 6 September 2002 PAYNE v PHILAUST INVESTMENTS PTY LTD Judgment 1 HANDLEY JA: I agree with Young CJ in Eq but will add some brief comments on the relevance in this case of the occupier's duty of care to lawful entrants. In my judgment the plaintiff's unfortunate accident had nothing to do with the occupier or with any activity which it was carrying on on the property. This distinguishes the present case from South Tweed Heads Rugby League Football Club Ltd v Cole [2002] NSW CA 205. The occupier itself did nothing to create the danger and that distinguishes the present case from Canterbury Municipal Council v Taylor [2002] NSW CA 24. 2 The episode from start to finish was a private matter between Mr Dowdle and the appellant. With respect I cannot see why the knowledge of Mr Burn, Mr Dowdle's superior, that Mr Dowdle had a race horse on the property and from time to time had house guests staying there should, without more, impose a duty of care on the occupier to take reasonable care for the safety of Mr Dowdle's guests who were permitted to ride his horses. As Dixon J said in Smith v Leurs (1945) 70 CLR 256, 262: "The general rule is that one man is under no duty of controlling another man to prevent his doing damage to a third". There are of course exceptions but in my judgment the present case is not within any of them. 3 The appeal should be dismissed with costs. 4 YOUNG CJ in EQ: This is an appeal from a judgment of his Honour Judge Downs in the District Court dismissing a claim for damages for personal injuries brought by the plaintiff Alicia Payne, now Alicia Nowell. 5 The factual circumstances are that on 26 February 1989 the appellant was injured when she fell from a race horse on a property near Mudgee. The second respondent was the freeholder of that property and the first respondent was the lessee and the person whom his Honour held was the occupier of the property. 6 A Mr Barry John Dowdle was employed by the first respondent to manage the horses on the property. The learned trial judge said that Mr Dowdle had worked with horses more or less the whole of his working life and in 1988 he returned to work for the first respondent as manager of its horse spelling complex, an enterprise that was independent from the stud and cattle raising activities which were carried on on the property. Mr Dowdle lived in a house on the property and was on call 24 hours per day, seven days per week. It was his practice to invite his friends to stay as his guests at his home on weekends. The employer recognised this. Included in his duties were the feeding and caring for the horses which were spelling and some farming, such as grass cutting. 7 Mr Dowdle owned five horses which he, with proper permission, kept on the property, a pony "Trumbie" which he used, an ex-race horse, "Just Ideal" which he and the wife of the controlling shareholder in the first and second respondents rode when she was in Mudgee, a race horse which was in training for picnic races that only he rode, and two Shetland ponies which he kept for his daughter. There were also on the property various other horses including race horses which were being spelled. 8 Again, taking the facts from the judgment below, Mr Dowdle invited the plaintiff and three others to spend the weekend at the property which included Sunday 26 February 1989. On that day, Mr Dowdle, the plaintiff and a Miss O'Shea drove from Mr Dowdle's house to the stables. When at the stables Mr Dowdle asked the plaintiff if she would like to ride his race horse, the one which was in training for the picnic races. The plaintiff said she would like to do this. Mr Dowdle asked the plaintiff if she had ridden a race horse before; she replied that she had not. Mr Dowdle did not give her any instructions concerning the riding of race horses and he told her she could walk the horse some hundreds of yards in a certain direction and then back to the stables. 9 Mr Dowdle saddled the horse with an exercise saddle, and assisted the plaintiff to mount the horse. He then loaded his utility with feed and drove away with Miss O'Shea as his passenger. The plaintiff walked the horse and after proceeding a hundred metres or more, the horse moved side ways. The horse tried to trot and the plaintiff tried to turn it back towards the stables but lost control. It appears that the saddle was not on properly and the plaintiff was thrown to the ground. Mr Dowdle and Miss O'Shea returned shortly afterwards, found the plaintiff on the ground and the saddle below the belly of the horse. The plaintiff suffered significant injuries and was taken to the Mudgee Hospital from whence she was conveyed by Air Ambulance to the Royal North Shore Hospital. She was not wearing any protective helmet. 10 The Judge said that the evidence established that Mr Dowdle failed to exercise reasonable care in all the circumstances, inter alia, by inviting the plaintiff to ride a race horse knowing she had never ridden one before, and failing to give her any special instructions as to how to do it. Further, Mr Dowdle failed to explain that an exercise saddle was less secure than the ordinary saddle, and failed to supervise her when she walked the horse; indeed he left her to walk it alone. He failed to properly secure the saddle and failed to provide her with a helmet. 11 The appellant said that there was an additional cause of the accident, and that was that the horse was spooked by a noisy air-conditioning vent which was operating on the premises. His Honour said of this that there was not any evidence that this noise, if it existed at the time, frightened the horse and so caused the plaintiff to fall, and it is hard to see how this finding can be upset. However, even if this were not so, the failure to warn the plaintiff of the possibility of the horse being so spooked would again go to Mr Dowdle's negligence, rather than anything else. 12 His Honour held that although the exercise saddle was the property of the first respondent, there was no evidence that it was faulty or defective. He held that it must have slipped and the only reasonable inference to draw was that it slipped because Mr Dowdle had failed adequately to secure it. 13 Although Mr Dowdle was initially sued, the plaintiff discontinued proceedings against him. Mr Dowdle gave evidence at the trial, and it was quite obvious that he was a man without any means whatsoever. Accordingly, the contest was whether there was any liability on either the first or second respondent. 14 His Honour held that in respect of the accident Mr Dowdle was neither acting in the course of his employment nor was what he did reasonably incidental to his employment. He said: "The plaintiff's case was that Mr Dowdle was on call 24-hours a day, 7 days a week and he was acting in the course of his employment when he invited the plaintiff to ride the race horse. As he was on 24-hours call he was only in the course of his employment when called upon. When he invited the plaintiff to ride his horse he was not called upon by his employer to carry out his work, therefore he was not acting at the relevant time in the course of his employment. … "In his personal and private time Mr Dowdle was free to entertain his guests. He owned the race horse that she rode. The plaintiff was his private guest. It was his independent idea to invite her to ride her horse and her riding of it was part of a manner in which he entertained his private guests. It had nothing to do with his employment, consequently the second defendant (ie the first respondent) is not vicariously liable for the negligent acts of Mr Dowdle. There will be a verdict for the second defendant …". 15 His Honour also considered the case made on occupier's liability. He said: "The second defendant was the occupier of the premises and therefore had a duty of care to those who came upon the property, but the plaintiff's accident was not caused by the condition of the property." 16 On the appeal, Mr D Kennedy SC and Mr P J Gow appeared for the appellant, and Mr W K Dodd SC and Mr A Bowen appeared for the respondents. Mr Kennedy SC submitted that his Honour's statement as to occupier's duty was correct as far as it went, but was inadequate. He referred to two recent cases in this Court in which, in situations which he said were analogous to the present, the Court had made it clear that the occupier's duty extended further than his Honour thought it did. 17 The first of these cases was Canterbury Municipal Council v Taylor [2002] NSWCA 24. The key judgment was delivered by Ipp AJA, with whom Spigelman CJ and Mathews AJA agreed. The essential facts were that the appellant council controlled the Tempe Velodrome, a concrete cycle track that surrounded a level grassed field suitable for playing touch football. On the morning in question, both cyclists and footballers were using the Velodrome. At half-time a football player moved towards where the cyclists were completing their 18th lap at 55 km per hour and the footballer was killed and a cyclist badly injured. At [112] Ipp AJA said that: "In the circumstances that I have described, the appellant thought itself under a duty of care to the touch football players and cyclists who played and trained in the velodrome. As occupier of the velodrome, the appellant, by agreeing to touch football being played on the inner field on 6 May 1990, by tacitly authorising the cyclist to use the velodrome for practising on Sundays, by promoting the velodrome and encouraging persons to use it for cycling and playing touch football, came under a duty to take reasonable care to avoid injury to touch football players and cyclists … ". 18 The second case is South Tweed Heads Rugby League Football Club Ltd v Cole [2002] NSWCA 205. Again, Ipp AJA gave the leading judgment with which Heydon and Santow JJA agreed, though each added a few remarks of his own. At [151] to [153] Ipp AJA said: "[151] The fact that a person is a lawful entrant upon premises occupied by another establishes a relationship between occupier and entrant which gives rise to a general duty on the part of the occupier to take reasonable care to avoid a foreseeable risk of injury to the entrant."

His Honour cited Australian Safeways Stores Pty Ltd v Zaluzna (1987) 162 CLR 479 and continued: "[152] This duty ordinarily concerns risk of injury from the condition of the premises, but this is not an inevitable limitation on the scope of the duty. If, to the knowledge of the occupier, activities conducted on the premises bring about a risk of injury to the entrant, the circumstances may give rise to a duty of care wide enough to encompass a duty to take reasonable care to avoid a foreseeable risk of injury arising from those activities … . Typically, the more foreseeable risk of injury in such a case is a risk of physical injury directly caused by the known activities on the premises. "[153] It is generally accepted that the duty to take reasonable care to avoid a foreseeable risk of injury to invitees, owed by the occupier or person in control of a hotel, restaurant, bar or similar establishment, extends to injuries to patrons caused by tortious or criminal acts of other patrons … ." 19 The appellant's counsel submitted that in this present case the occupier's duty was wider than his Honour stated it and that it was breached by the occupier allowing Mr Dowdle to have his own horses on the property or permitting him to have those horses on the property on the basis that they would only be ridden by him. They say that the occupier owed a duty not only to exercise reasonable care for the safety of persons on the property in respect of injuries beyond those caused by the condition of the property. Alternatively, they say the phrase "the condition of the property" should be read so that horses and chattels are classed as part of the property. They say it could hardly be correct that an occupier of premises with race horses that weren't properly stabled and where people were allowed to enter onto the property could not be liable in damages if a race horse was to injure them. 20 I do not consider that the two cases to which I have referred are of any assistance in the present case. The Tempe Velodrome case was one where the council which was the occupier of the velodrome, for its own purposes permitted two conflicting sports to be carried on at the one time. The Tweed Heads case was a case involving a licensed social club in which the authorities have indicated particular responsibilities are laid upon the occupier. 21 However, even assuming that his Honour understated the occupier's duty in the instant case, the acts of negligence found by his Honour had no relation to any duty of the occupier qua the condition of the premises, or even the condition of the horses. Indeed, the appellant was injured because she accepted the invitation of Mr Dowdle to ride Mr Dowdle's own horse. Mr Dowdle carelessly fixed the saddle to the horse and failed to supervise an inexperienced rider. None of this had anything to do with the duty of the occupier. 22 Before passing to vicarious liability, I should note that the plaintiff also put that the second respondent was liable as an occupier. This submission was rejected by his Honour. It is difficult to see how a freeholder who had leased the premises could be an occupier of the relevant part of the property. It matters little that there was a close relationship between the first and second respondents or they might have had common shareholders. Various matters were put by the appellant's counsel in their written submissions as to why there was something more in the instant case than mere proprietorship of the freehold on the part of the second respondent, but to my mind these are merely peripheral matters and do not take the case any further. The submission also appears to be based on a misunderstanding of the evidence that the stud activities of the second respondent were being carried on in the area where the accident happened. There was no evidence of this. 23 Accordingly, his Honour properly found a verdict for the second respondent. 24 I now turn to vicarious liability. 25 As Isaacs J said in Bugge v Brown (1919) 26 CLR 110, 117-118, the line has to be drawn between the area where it is just to make the employer liable and the area in which it would be unjust to do so. He said: "The law recognises that it equally unjust to make the master responsible for every act which the servant chooses to do. The limit of the rule - expressed in the widest form by the phrase 'the course of the employment' or 'the sphere of the employment' - is when the servant so acts so as to be in effect a stranger in relation to his employer with respect to the act he has committed, so that the act is in law the unauthorised act of a stranger … ". 26 The Canadian Supreme Court in Bazley v Curry [1999] 2 SCR 534, 546-560; 174 DLR (4th) 45, 54-65 recently re-examined where the line should be drawn with respect to intentional torts. It again observed that it is indeed necessary to draw the line at an appropriate place as it is unfair to burden employers with all wrongs which would not have been committed but for the employment (see [40] at SCR 558; DLR 63). 27 Mr Kennedy SC submitted that Mr Dowdle, in permitting the appellant to ride the horse, was acting in the course of his employment and the first respondent ought to be vicariously liable for his actions. Alternatively, if not in the actual employment, then what happened was incidental to Mr Dowdle's employment in that the riding of the horse was done with the express or implied authority of the first respondent. As a fallback position, if the permission to ride the horse was not part of the actual employment of Mr Dowdle, in the circumstances it was incidental to his employment he being required to be at the property seven days a week on 24 hour call and to engage in the feeding of the horses in the morning. 28 I have already set out his Honour's finding. There are three basic attacks on this:

(a) that the accident clearly happened whilst Mr Dowdle was on duty for his employer and what happened was in the course of or incidental to his employment;

(b) that this case is similar to cases decided in the workers' compensation field where an employee who is required to be at some place is injured during recreation in that place; and

(c) that the decision of the High Court of Australia in Hollis v Vabu Pty Ltd (2001) 75 ALJR 1356, 1365; 181 ALR 263, 275 [41] and [42] and that of the Supreme Court of Canada in Bazley v Curry (supra) means that the appellant should succeed. 29 I will deal with these submissions in turn. 30 (a) The appellant says that in fact Mr Dowdle was working at the time for the first respondent as he was in the process of feeding his employer's horses. Counsel thus say that it was not appropriate to find, as his Honour appeared to, that Mr Dowdle was only employed when called upon to do work and that he was in his own time when the accident happened. 31 However, even if this were correct, the mere fact that Mr Dowdle was on duty when the accident happened is not the end of the matter. If an employee, whilst on duty, carries out some private business negligently, that does not make the employer liable as Deatons Pty Ltd v Flew (1949) 79 CLR 370, demonstrates. 32 The plain evidence is that the appellant was Mr Dowdle's personal guest. Although she was on the property with the permission of the occupier, she had no connection with the occupier. She was injured whilst riding a horse owned, not by the occupier, but by Mr Dowdle, and she was injured because of Mr Dowdle's personal negligence (omitting any considerations of contributory negligence). Furthermore, Mr Dowdle gave evidence that the rule that applied to the property was that guests were under no circumstances to ride a race horse. It was put to Mr Dowdle that: "In fact that's not only a rule that was in operation in Gooree it's known throughout the industry isn't it?

A. I'd say it most probably would be, yes. Q. So the decision that you made to invite Alicia Payne to ride the horse was directly related to the fact it was your horse?

A. That's correct. Q. And under no circumstances would you have invited her to ride any other thoroughbred horse on the property?

Q. And the reason for that was that you knew it was forbidden? A. The reason I knew that was the horses didn't belong to me and I wouldn't put anyone on a horse that didn't belong to me, plus they were valuable. …". 33 Although Mr Kennedy SC valiantly tried to say that the evidence was that the prohibition upon riding race horses only applied to race horses being spelled, that evidence from Mr Dowdle which I have quoted, to my mind, goes well beyond that. 34 The riding by a guest of Mr Dowdle on Mr Dowdle's own horse had nothing to do with his employment at all. The mere fact that the invitation to Miss Payne was made at the time when Mr Dowdle was also involved in getting feed for the employer's horses is of no materiality. 35 (b) Mr Kennedy SC referred to two workers' compensation cases, Hatzimanolis v ANI Corp Ltd (1992) 173 CLR 473 and Cudgegong Soaring Pty Ltd v Harris (NSWCA, 1 May 1996, unreported). 36 The first of these cases concerns a person who was employed to work in the remote Mt Newman area of Western Australia. The employer organised an outing for recreational purposes and the worker was injured at that outing. The High Court held at 484: "It should now be accepted that an interval or interlude within an overall period or episode of work occurs within the course of employment if, expressly or impliedly, the employer has induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way. Furthermore, an injury sustained in such an interval will be within the course of employment if it occurred at that place while the employee was engaged in that activity unless the employee was guilty of gross misconduct taking him or her outside the course of employment." 37 In the Cudgegong case, the employee was required to be at an airfield most of the time seven days a week. His job was to live on the airfield as a caretaker and also as the chief flying instructor of a gliding club. Sheller JA, with whom Cole JA agreed (Powell JA dissenting) said that: "Absent misconduct or a frolic of his own, he would be in the course of his employment whenever he was on site." 38 Certainly a significant factor in the Cudgegong case, to a lesser extent in the Hatzimanolis case, was that the employee's presence was of some benefit to the employer. Mr Kennedy SC says that if that is a relevant factor, it was of benefit to the employer in the present case to have a happy employee on the property all the time. Thus, as the employee could not have any social life outside the property, he must have guests on the property. In the case of a property such as the present, which was geared to the riding of horses, such guests would almost certainly want to ride horses. Accordingly, the accident happened in the course of employment. 39 However, this extension to former notions of what was in the course of employment does not seem to me to be relevant in the present type of case. What happened was in the course of what used to be described as the frolic of the employee. Even though the employee was doing some work for his employer at the moment in time when the accident happened, the employee's guest was injured as a result of the employee's negligence in and about the employee's horse, the employee acting purely in a private capacity. 40 (c) In my view neither the Bazley nor the Hollis case assist in the resolution of the present appeal. Each involved a special type of enterprise. It is difficult to apply what was said in these cases to the present situation where there was a simple horse spelling operation run by a particular company where it was no part of the first respondent's enterprise or operation or Mr Dowdle's daily routine to invite guests to ride race horses. Indeed, that was probably contrary to the requirements of the first respondent made known to Mr Dowdle. 41 Bazley was a case of an intentional tort committed by an employee of a non-profit children's foundation. Its main concern is how far policy should make such organisations vicariously liable for intentional sexual wrongs perpetrated by employees on children in the foundation's care. 42 In Hollis, the High Court held that where the person responsible for an accident can properly be considered to have been representing an enterprise when the plaintiff was injured, then he should also be considered to be within the control of the company operating that enterprise and thus an employee. The case involved one of a group of lowly paid couriers who were an integral part of an enterprise providing courier services. 43 In the instant case, what occurred was the result of acts of Mr Dowdle which were not related to the activities of the first respondent. 44 It follows, that the appeal must be dismissed with costs. 45 FOSTER AJA: I have the misfortune to disagree with my brethren in respect of one aspect of this appeal, which leads me to a different result. My disagreement relates to the appellant's claim against the first respondent for breach of its duty of care to her, as a permitted entrant upon the property, of which it was the occupier. In all other aspects I agree with the reasons for judgment of Young CJ in Eq., which I have read in draft form. I gratefully adopt his Honour's statement of the facts. 46 The learned trial judge disposed of the appellant's case based on the liability of the first respondent as occupier, in the following brief passage:- "The second defendant was the occupier of the premises and therefore had a duty of care to those who came upon the property, but the plaintiff's accident was not caused by the condition of the property." 47 Although it is, perhaps, not crystal clear, I am prepared to accept that his Honour was approaching the first respondent's duty on too narrow a basis. It is clear that an occupier's duty can extend beyond the condition of the property. Arguably, the appellant came upon the property as an invitee of the first respondent, in that her presence was of some practical use to it, as it was part of Mr Dowdle's conditions of employment that he be permitted to have guests stay with him at the home provided to him on the property. The requirement of his employment that he be present at the property, in effect, twenty-four hours a day meant that he would lead an isolated and probably unhappy existence, were he not permitted to have such guests. Moreover, the evidence makes it clear that there was a reasonable degree of social contact between Mr Dowdle, his guests, the manager of the property and his guests and also the owners. Arguably in these circumstances, the appellant was also a guest of the first respondent, when she came to the property and resided with Mr Dowdle. 48 Under what may be called, for convenience, the "old law" of occupier's liability, the first respondent would have been under a duty to exercise reasonable care to prevent harm to her from unusual dangers of which it knew or ought to have known. Such dangers could have extended beyond the mere structural condition of the property. There is, however, no need to continue down this track, as it is now established that, in appropriate circumstances, an occupier can have a general duty of care to an entrant onto the property (Australian Safeway Stores Pty Limited v Zaluzna ((1986-1987) 162 CLR 479). 49 I am satisfied, with respect, that the learned trial judge did not consider whether, in the circumstances of this case, there existed a general duty of care and, if so, whether a breach had occurred. His failure to do so has resulted in appellable error, with the consequence that, unless this Court were satisfied that such a breach and duty could not, arguably, be established then the appeal should be upheld. 50 Although, undoubtedly, there are considerable factual dissimilarities between this case and the recent decisions of this Court in Canterbury Municipal Council v Taylor [2002] NSWCA 24 and South Tweed Heads Rugby League Football Club Limited v Cole [2002] NSWCA 205, I do not consider that this mandates a finding against the appellant. The underlying principle of those cases would, in my view, enable consideration to be given to whether there was, in the present case, a culpable failure to control a dangerous activity, which the occupier knew or should have known could possibly occur, in the sense that it would not have been far fetched or fanciful to foresee it. (Wyong Shire Council v Shirt (1980-1981) 146 CLR 40). 51 There was evidence from which, if accepted, knowledge could be found in the manager, Mr Burns, who was also resident on the first respondent's property, that the employee, Mr Dowdle, had amongst the horses that he was permitted to bring to and keep on the property, the recently acquired trainee racehorse, which the appellant was riding, unsupervised, at the time of her accident. There was also evidence that he and at least one other responsible employee of the first respondent would have been aware of the dangerous propensities of thoroughbred racehorses, when ridden by inexperienced riders. 52 The respondent should not have been permitted by Mr Dowdle to ride the horse in question. Moreover, she should not have been permitted to ride without a protective helmet. Mr Dowdle permitted her to do both these intrinsically dangerous things, although not acting in the course of his employment at the time. 53 I am of the view that, where the first respondent, through its managerial employee, was aware that Mr Dowdle permitted his guests to ride his horses, whilst they were staying with him, it is arguable that care should have been exercised to prevent Mr Dowdle permitting his guests to ride the racehorse. In the context that there was implied permission for guests to ride the ordinary docile horses, and knowledge that this took place, it was arguably incumbent upon the first respondent to take reasonable steps to ensure that this implied permission did not extend to allowing unsupervised riding of the racehorse. Again, arguably, the duty of care in this regard could have been discharged by a simple direction to Mr Dowdle that, in no circumstances, was such an activity to occur. 54 Mr Dowdle gave evidence that he had received no instructions that persons riding his horses should be supervised by him or some other experienced person. He also gave evidence that, after the accident, he was not reprimanded for allowing the appellant to ride his racehorse and that he continued in the appellant's employment for some years. He also gave evidence that he received no instruction from the respondent that persons riding his horses should wear riding helmets. 55 Under cross-examination, he agreed that he had never previously invited any of his guests to ride a thoroughbred, but denied that he had been told by his superiors that guests were, under no circumstances, to ride racehorses. He gave some evidence which might appear to be in conflict with that general statement but, arguably, that evidence, which is set out in the judgment of Young CJ in Eq., related only to the riding of the respondent's own racehorses, kept on the property. 56 In the result, I have come to the conclusion that his Honour's failure to consider the first respondent's general duty of care to an entrant, in the position of the appellant, has led to that aspect of her case, which, I am satisfied, was raised before him, not having been the subject of proper examination. For that to occur, necessary findings of fact would have to be made. In the circumstances, I think the situation requires that a new trial be ordered, as in Zaluzn. 57 Consequently, I would propose that the appeal be upheld with costs and the proceedings sent back for a new trial, restricted to the issues of the existence and breach of the first respondent's duty of care as occupier of the property.

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