Australia: Judicial Consideration Of Hoteliers´ Liability

Originally Published 10^th March 2009

The New South Wales Court of Appeal has recently delivered judgment in 3 matters involving personal injuries occurring on or around licensed premises. We discuss each of those judgments below – the common threads, the distinguishing features and the impact for insurers of hoteliers moving forward.

Rooty Hill RSL Club Limited v Karimi [2009] NSWCA 2 (30 January 2009)

Mr Karimi suffered serious injuries when he was assaulted by Mr Smith in the car park of the Rooty Hill RSL Club (the hotel). Mr Karimi had earlier been the victim of an unprovoked assault by Mr Smith while still inside the hotel. As a result of that incident, both parties were evicted. It was the hotel's policy to evict both parties to an incident, without enquiring as to its cause.

Both parties were led to separate exits. Mr Karimi waited with security guards, employed by Allied Security Group, at the western exit of the hotel until guards at the eastern entrance confirmed that Mr Smith had been driven out of the car park. Mr Karimi waited with the guards for a further 4 minutes before being invited to leave. Whilst walking to his car in the company of 3 male friends, Mr Karimi was king hit by Mr Smith, who had re-entered the car park.

At first instance

Mr Kamiri brought proceedings against the hotel, Allied Security Group and Mr Smith and was successful at first instance. The court found that the hotel and its security provider breached their duty of care by failing to monitor the entrance to the western car park to prevent Mr Smith re-entering, failing to stagger the interval between the parties' departure and failing to provide a security guard to accompany Mr Karimi to his car. The court noted that both the hotel and Allied Security Group possessed information which should have warned them that Mr Smith harboured aggressive feelings towards Mr Karimi, that Mr Smith might be driven out of the front car park and that he might enter the western car park and assault Mr Karimi. In those circumstances the trial judge found that there was a demonstrable requirement for precautions to be taken for the safety of Mr Karimi.

On appeal

The appeal was successful and the trial judge's decision was overturned. Whilst the Court of Appeal agreed that it was reasonably foreseeable that Mr Smith could seek to re-enter the car park, it thought that the precautions identified by the trial judge were coloured by hindsight. In making its decision the Court of Appeal had regard to the security guard's evidence that they had no previous experience with evicted patrons travelling from one car park to another in determining what precautions were reasonable.

The Court of Appeal noted that the initial incident was not of a character to warrant greater measures than those taken by the hotel and the security providers. Security guards had spent 10 minutes with Mr Smith and formed the belief that he no longer posed a threat. Furthermore, security guards at the western exit confirmed that Mr Smith had left before inviting Mr Karimi to leave in the company of 3 men.

The Court of Appeal was also critical of the trial judge's findings on causation and doubted whether, even had the entrance to the western car park been monitored, it would have been possible to prevent Mr Smith from re-entering. With respect to the finding that a security guard should have accompanied Mr Karimi to his car, the Court of Appeal noted that he was travelling in a group and had moved no further from 10 metres from the security guards at the entrance to the hotel when he was assaulted. The Court of Appeal was not convinced that the measures proposed by the trial judge would have prevented the assault.

Portelli v Tabriska Pty Ltd & Ors [2009] NSWCA 17 (17 February 2009)

Mr Portelli was injured on 1 August 1998 when he and his companion were set upon by a group of men outside the Aspen Hotel (the hotel) in a public street in Jindabyne. Mr Portelli and his companion had been involved in a brief altercation with the same group inside the hotel shortly before closing time. Subsequently both parties were evicted from the premises. The assailants were evicted first and left through the front door. Mr Portelli and his companion were allowed to finish their drinks and game of pool after which they were evicted through the back door. As Mr Portelli and his companion were walking home they intersected with the assailants and a fight broke out. Mr Portelli sustained personal injuries after he was punched to the ground and kicked in the head whilst on the ground.

At first instance

Mr Portelli issued proceedings against the owner and occupier of the hotel, the licensee, his assailants and the security company engaged by the hotel. By the time of trial, Mr Portelli was no longer proceeding against his assailants. The proceedings were unsuccessful at first instance. Ultimately, the court held that the hotel's duty to Mr Portelli extended only to preventing injury on the premises under its control. The hotel did not owe the plaintiff a duty to protect him from harm caused by the deliberate wrongdoing of third parties in a public street. If a duty existed, the trial judge found that the hotel staff acted appropriately in evicting the group and then having Mr Portelli and his companion exit later by a different door.

The trial judge also noted that the security company had been engaged to give effect to the hotel's obligations. Consequently, as the hotel owed no relevant duty to the plaintiff, it followed that the security company also owed no duty to Mr Portelli.

On appeal

Mr Portelli's appeal was dismissed. The Court of Appeal noted that any duty of care that may have existed could only arise from a conclusion that the circumstances at the time revealed to the hotel that unless steps were taken in the furtherance of Mr Portelli's safety, he may be subject to foreseeable harm. In the present case, there was a slight scuffle over a pool game near closing time. In accordance with industry standards, the parties to the fight were evicted through opposite exit points in a staggered fashion. The Court of Appeal considered that harm was not reasonably foreseeable.

The Court of Appeal did, however, express reservations about whether the duty of a hotelier cannot extend to any circumstances where the wrongdoing causing injury occurs in a public street. The fact that an aggressor has been put out of the hotel may not discharge the obligations of the hotelier where there is an apprehended risk outside the premises, although the obligations do not go so far as to place a positive obligation on the hotelier to become the "protector and guardian" of the patron. It may be sufficient to simply say something to the patron to make the patron aware of the danger and allow the patron to make a decision about how to deal with the situation.

Adeels Palace Pty Ltd v Moubarak; Adeels Palace Pty Ltd v Bou Najem [2009] NSWCA 29 (26 February 2009)

Adeels Palace Pty Ltd conducted a restaurant/nightclub under the name Adeels Palace in Punchbowl, New South Wales (the hotel). Mr Moubarak and Mr Bou Najem attended a New Years Eve function at the hotel on 31 December 2002. There was evidence that approximately 400 people attended this event and 2 security guards were retained. There was also evidence that the proprietors of the hotel also participated in the performance of security work on the premises.

At about 2:30am on 1 January 2003, a fight broke out on the dance floor involving many patrons including Mr Moubarak and another patron, Danny Abbas, with furniture and glassware being thrown. Mr Abbas left the premises during the fight and returned with a gun and shot Mr Moubarak (injuring him seriously) and Mr Bou Najem. As a result, Mr Moubarak and Mr Bou Najem brought proceedings against the hotel in the District Court claiming damages for negligence and breach of contract.

At first instance

The trial judge held the hotel liable in negligence. It found that the hotel owed the 2 injured patrons a general and wide duty to take care to avoid injuries caused by the unlawful actions of patrons (or invitees) on the premises during the course of the evening. It found that the duty of care was breached as the security arrangements at the time of the function were far short of what reasonable care and skill required in the circumstances. The trial judge held that the inadequate security measures contributed to, and so caused, the injuries.

The trial judge did not deal with the alternative basis of liability in contract and rejected the contention that Mr Moubarak was liable for contributory negligence by engaging in a fight.

On appeal

The hotel appealed the decision in relation to duty of care, breach of duty and causation. The Court of Appeal ultimately upheld the trial judge's findings and dismissed the appeal. However, in doing so it disagreed with the basis for the duty of care noted by the trial judge.

The Court of Appeal noted that a duty of care of a hotelier arises from the combined position that the hotelier "knew or ought to have known facts requiring intervention to protect patrons" and had "the capacity ... to control conduct on the licensed premises". In this case, the Court of Appeal noted that the function should have been seen beforehand as having a potential for drunken or violent behaviour by reference to the facts that: the hotel was filled to capacity and was serving alcohol for a long period of time; there had been prior incidents of violence at the premises; and that resort to weapons was not unfamiliar to some patrons at the hotel.

The Court of Appeal noted that the hotelier had the capacity to control behaviour within the premises and the ability to control who entered and remained in the premises. Therefore, it found the duty of care owed by the hotelier extended to taking reasonable care to guard against injury to patrons by the unlawful conduct of another patron or other patrons.

Implications of the judgments

These 3 decisions confirm that in claims where one patron intentionally injures another person, in determining whether a duty is owed by the hotelier, a court should focus on the knowledge of the hotelier prior to the injury occurring and look forward as to what is foreseeable. In Karimi and Portelli, despite reasonable inquiry, the knowledge of the hotelier was not sufficient to put it on notice of a risk of further injury. By contrast, in Adeels Palace, there was sufficient evidence to suggest that there was a further risk of injury.

Whilst claims of this type are largely dependent on their facts, hoteliers, licensees and security providers might reduce their exposure by the following steps:

1. When parties to an altercation are being evicted, it is important to ensure that:

2. If the hotelier knows or ought to have known of the risk of injury to a patron after leaving the premises, depending on the circumstances, in order to discharge its duty of care the hotelier may need to:

3. In circumstances where there is a history of altercations at the premises, the hotelier may be armed with knowledge sufficient to put the hotelier/him or her on notice of a risk of injury such that he or she should take one or all of the steps highlighted above. This is particularly so where there is a record of frequent altercations that are violent, involve serious injury to patrons and where the security and management practices of the hotelier have been shown to be insufficient to prevent and minimise these types of incidents.
4. From a hotelier's perspective, documented systems establishing internal procedures and protocols in security contracts are valuable to support an argument that the hotelier has taken reasonable precautions for the management of any known risks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.