Adeels Palace Pty Limited (Adeels Palace) operated a restaurant and reception business at Punchbowl in New South Wales. The restaurant was open on New Year's Eve 2002 and was full.

The restaurant was licensed to trade until 4.00am. At approximately 2.30am on 1 January 2003 there was a dispute between persons on the dance floor, resulting in an altercation in which one man was hit in the face. That man left the restaurant and returned with a gun and shot Mr Najem in the leg and Mr Moubarak (the man who had struck the gunman) in the stomach.

Both Mr Najem and Mr Moubarak sought damages from Adeels Palace, primarily on the basis of negligence for insufficient security being provided at the function. Both Mr Najem and Mr Moubarak succeeded at first instance in the NSW District Court and on appeal in the NSW Court of Appeal.

The High Court allowed the appeals by Adeels Palace, finding:

  • While the injuries were occasioned by a criminal act, Adeels Palace nonetheless owed the plaintiffs a duty to take reasonable care to prevent such injury. In relation to this, the High Court distinguished the circumstances from the Modbury Triangle principle that a defendant will not generally be held liable for the criminal acts of third parties. The distinction lay principally in Adeels Palace's control over the premises at the relevant time, including its obligations under the relevant licensing law.
  • Whether security arrangements in place satisfied Adeels Palace's duty depended on the considerations in s 5B of the Civil Liability Act 2002 (NSW) (CLA), specifically the probability that the harm would occur, the likely seriousness of the harm, the burden of taking precautions to avoid the risk and the social utility of the activity that created the risk. The High Court did not need to decide whether the security was sufficient in the circumstances, but did note that unless the risk to be foreseen was a risk of a kind that called for the presence of security to deal with it safely, failure to provide security of that kind would not be a breach of the relevant duty of care.
  • The High Court decided the case on the issue of causation. It held that the "but for" test of factual causation in s 5D of the CLA was applicable. The test was not satisfied as it was not shown to be more probable than not that, but for the absence of security personnel, the shootings would not have taken place. It was also held not to be an exceptional case within the meaning of sub section 5D(2) (which allows courts to find in exceptional cases that factual causation is established even if the "but for" test is not satisfied).

The High Court's focus on the CLA provisions on causation (and CLA provisions on principles of negligence in general) is of significance. The NSW CLA provisions are mirrored in several other Australian jurisdictions (including Part X of the Wrongs Act 1958 in Victoria and Chapter 2 of the Civil Liability Act 2003 in Queensland). Despite such provisions being part of the landscape in most jurisdictions for seven years, the provisions have often been ignored by lower courts which have continued to have regard primarily to common law principles of negligence. Illustrative of this is that the NSW CLA provisions were entirely ignored by the trial judge in Adeels Palace.

While the CLA provisions to some extent reflect the common law, the position is not identical. In particular, Adeels Palace indicates that save for exceptional cases, in cases under the CLA there should be a rigid application of the "but for" causation test to establish that a negligent act or omission caused the loss or damage in question. The decision should remind lower courts that the common law position in March v. E & MH Stramare Pty Limited that causation is "ultimately a matter of common sense" must be viewed subject to the requirements of the civil liability legislation of the jurisdiction in question.

Adeels Palace Pty Limited v. Moubarak; Adeels Palace Pty Limited v. Bou Najem (2009) 260 ALR 628

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