Ana Carvalho v Kensington Bowling Club

[2010] NSWDC 330

CITATION:	Ana Carvalho v Kensington Bowling Club [2010] NSWDC 330
JUDGMENT DATE:	10 December 2010
JURISDICTION:	District Court of New South Wales
JUDGMENT OF:	Cogswell SC DCJ
DECISION:	Verdict and judgment for the defendant
CATCHWORDS:	CIVIL LAW - judgment - claim for damages at common law and under statute law - common law cause of action of negligence - statute law claim under Trade Practices Act 1974 (Cth) and Fair Trading Act 1987 (NSW) - plaintiff suffered food poisoning after eating at defendant's premises - food served at premises by separate company - meaning of "supply","provision", "on behalf of" in Trade Practices Act
LEGISLATION CITED:	Fair Trading Act 1987 s 40Q, s 68 Trade Practices Act 1974 (Cth) s 4(2), s 70, s 71, s 84(2), s 87E(1)(a)
CASES CITED:	Arturi v Zupps Motors Pty Limited (1980) 49 FLR 283 Austral Pacific Group (in liquidation) v Airservices Australia (2000) 203 CLR 136 Downey v Carlson Hotels Asia Pacific Pty Ltd [2005] QCA 199 E v Australian Red Cross Society (1991) 27 FCR 310 Leighton Contractors v Fox and Others (2009) 258 ALR 673 Medlin v State Government Insurance Commission (1995) 127 ALR 180 Unilever Australia (trading as Streets Ice Cream) v Pahi [2010] NSWCA 149 Zalia v Col Crawford (Retail) Pty Limited (1980) 47 FLR 337
PARTIES:	Ana Carvalho Kensington Bowling Club
FILE NUMBER(S):	2009/338515
COUNSEL:	Mr Thompson for the plaintiff Mr Turnbull for the defendant

JUDGMENT

1. Ana Carvalho and her fiancé went to the Kensington Bowling Club for dinner on a Friday night. The occasion was a friend’s birthday. There had been for some years a South American night at the club on a Friday. Food and entertainment were put on, not by the club but by a family named Zambrano who used the club’s facilities. Guests bought their drinks from the club’s bar.

2. Ms Carvalho’s fiancé bought their food from the Zambranos and they enjoyed the evening. But within a few hours of getting home, Ms Carvalho became quite ill in the stomach. She ended up in hospital a day or so later with what she said was food poisoning caused by food she ate at the club. She says she still suffers from the consequences of that food poisoning.

3. Ms Carvalho has sued for damages. She has sued not the Zambranos but the club. The question in this case is whether she has satisfied me that the club is liable to pay her damages either at common law or under statute law.

4. The cause of action at common law pleaded by Ms Carvalho is in negligence. She pleads no cause of action for breach of contract, no doubt because she was not a party to any contract regarding the food. It was her fiancé who purchased it.

5. The statutory causes of action rely on provisions of the Trade Practices Act 1974 of the Commonwealth and the Fair Trading Act (NSW) 1987. Ms Carvalho says that the “provision of the food was subject to implied conditions” of merchantable quality and fitness for consumption. These implied conditions are provided for by each of the statutes.

6. Ms Carvalho claims damages because her injury was, she says, caused by the club’s negligence and also was “a result of a breach” by the club of the sections of the two statutes which make the provision of the food subject to the two implied conditions.

7. The club denies it is liable in either way. So the more specific questions raised by these proceedings for me to resolve are whether Ms Carvalho has satisfied me that the club is liable to her either in negligence or for the claimed breaches of either the Trade Practices Act or the Fair Trading Act.

8. First I should recount the relevant evidence. Ms Carvalho, who was born in 1960 in Brazil, came to Australia in 1992. In 1997 she got a job with Bankstown City Council Aged Care. She went from part time to full time work. She was a care worker who went to clients’ houses and helped them with their daily needs such as shopping and meals. She worked five days a week for eight hours a day. She might spend one or two days a week in head office. When she was not in the office, she spent about half the time travelling and the rest of the time with the agency’s clients.

9. On 30 January 2009 she went to the Kensington Bowling Club for a friend’s birthday. She went with her fiancé Ken Greville. They arrived at about seven. She was feeling well. They had a drink and waited for the others. At about 8 o’clock they ordered their dinner. She ordered a potato salad and a green salad and something from the barbecue. When they left at about 10 o’clock, she was still feeling well. However by 4am the following morning, she felt sick and had diarrhoea. She still had these problems at 6am. Mr Ken Greville was feeling all right.

10. They went to Jamberoo Park that day. She was feeling all right when they arrived, but by lunch time she was vomiting, shivering and had what she described as horrible diarrhoea. She could not eat lunch but had to lie down. When they left at 4pm she was feeling very bad and could not really stand up. She went straight to bed when she got home but had to frequently visit the toilet.

11. The following day, Sunday 1 February 2009, she was feeling very sick. She was feeling so bad that Mr Greville called an ambulance. She was taken to the emergency department of Bankstown Hospital and was an inpatient for the following seven days. She came under the care of Dr Alrubaie, a gastroenterologist. In hospital she got water on her lungs and needed oxygen. She had swelling in the face and hands which lasted a couple of days. She was discharged on 7 February 2009 and remained off work for the following two weeks with diarrhoea.

12. At the time she was earning a weekly income of about $600 after tax. Dr Wong was her local GP whom she had been seeing for about ten years. She saw him about a week after discharge from hospital. She still had some diarrhoea and was sick and could not go back to her normal routine because of her unpredictable bowels. She was referred periodically back to the gastroenterologist. He arranged for a colonoscopy and gastroscopy. She was still feeling bloated and very uncomfortable, especially after eating. She had to open her bowels up to four times a day. Normally it had been once or twice a day. She still has to be very careful about what she eats. She still gets diarrhoea once or twice a week and has to have her bowels opened more than before.

13. Having to go to the toilet often, she found it very difficult to return to her normal work routine since it involved a good deal of travel and visiting homes. It meant she had to find a toilet along the way or ask clients to use their toilets. The clients were all elderly. She returned to work in late February 2009 and took sick leave occasionally over the following few months.

14. She resigned from Bankstown City Aged Care in March 2010. She said there were two reasons for this. One was that she wanted work where she could stay in one place and not travel, so she could use the toilet. The second was that she had been working there for thirteen years and needed a change.

15. She got a job with a woman called Sarah Quinn as a nanny. She looked after Ms Quinn’s baby. In the gap between finishing at Bankstown City Aged Care and starting with Ms Quinn, she took long service leave and holidays. In fact she ceased work at Bankstown in about November 2009 and then took all her leave. She started with Sarah Quinn in about March 2010.

16. She worked three days a week with Ms Quinn for about six hours a day earning twenty dollars an hour. She worked in that employment until about the middle of August 2010. Ms Quinn’s mother-in-law then took over looking after the baby. Ms Carvalho has had no work since then. She married Mr Greville on 18 September 2010. She intends to look for further work. She does not feel that she could do the kind of work she was doing at Bankstown full time any more because she does not have the confidence in driving or using other people’s toilets.

17 She has been back to see Dr Wong a few times but he cannot really help any more. She sees him every month or two. She no longer sees the gastroenterologist. That doctor had suggested a particular medication which costs $127 a box. Each box lasts fifteen days. She would continue to take that medication if she could afford to. The symptoms subside if she takes the medication, but they return after she stops. She goes to the chemist every now and again to get some medication.

18. In cross-examination by Mr Turnbull of counsel, who appeared for the Kensington Bowling Club, Ms Carvalho agreed that a tax record showed average weekly after tax earnings of $400 for the year ended 30 June 2008 and $371 for the year ended 30 June 2009. With Ms Quinn she received $360 a week which was less than she was earning at Bankstown City Aged Care. She has had no income since she ceased being a nanny. Her husband has always been employed. She acknowledged that the only change had been her ceasing work and reducing her income. Ms Carvalho confirmed that she could not afford the special medication which the gastroenterologist recommended.

19. Asked by Mr Turnbull about the meal at the club on 30 January 2009 she said that it was purchased at a different till from the drinks. Her husband ordered and paid. She did not know anyone selling the food. Once the food was paid for she was given a plate with salad on it and then she went to the barbecue for the meat. The salad was already prepared and on the bench when they arrived. The salad, which was already on her plate, was a potato salad and a green salad. The potato salad had sliced potatoes and mayonnaise. The green salad was lettuce, tomato and cucumber.

20. After the immediate three weeks off work, she returned full time to the same employment. She continued the work until taking her long service leave in November 2009. She confirmed to Mr Turnbull the two reasons for resigning. When she wrote her letter of resignation, she informed the manager that she wanted a new challenge but she did not mention any health problems. She said she was reluctant to discuss that with people. She did not agree that she was tired of the job, but she did agree that she wanted to challenge herself.

21. Before the evening at the club she had had some time off with arthritis and some other joint and limb problems. She had surgery and had been on restricted duties but could not remember if she was still on those restricted duties around 30 January 2009. She said these health problems did not affect her work at Bankstown City Aged Care provided she followed the rules. She had to be careful about what she carried or lifted. When Mr Turnbull asked her whether she would have to use clients’ toilets from time to time in any event, she said she tried to avoid it. In some homes she would not want to use the toilet. The last time she saw Dr Wong about these problems was a few months ago. She last saw the gastroenterologist some three or four months ago.

22. Mr M Thompson of counsel who appeared for Ms Carvalho called as his next witness Ms Carvalho’s husband, Kenneth Greville. He remembered going to the club on 30 January 2009. He remembers they had dinner at about eight, and left at about half-past ten. He did not feel sick and he thought his wife had just had a bad case of diarrhoea when she was sick early the following morning. When they went to Jamberoo that day her diarrhoea got much worse and she was very sick. She could not even walk to the exit of the park. He saw her shaking. The condition got worse overnight and he called an ambulance to take her to Bankstown Hospital on Sunday. Then on the Monday he too began to feel unwell with some diarrhoea. He was not well for about a week and had to be taken to hospital at one stage to be put on a drip. He had to stay off work. When his wife was discharged from hospital, she was still not the best and to his observation, did not get back to how she was before the meal. She still gets sick in the stomach quite frequently and has to race to the toilet. This happens about once a fortnight when he is at home. Mr Greville was not cross-examined by Mr Turnbull.

23. Mr Thompson next called Junia Farias. She went to the club with Ms Carvalho and Mr Greville on that night. The salad was already prepared on the bench top when she arrived. She had some meat from the barbecue. She had been to the event before and was very familiar with it. The following afternoon she felt sick in the stomach. She had diarrhoea and vomiting. The diarrhoea lasted for about three days. In fact her husband and daughter had nausea and diarrhoea as well. She added evidence about a friend phoning her the following afternoon to find out how she was feeling and she told the friend that they were all sick.

24. Mr Turnbull called Anthony Croke. He was the secretary/manager and licensee of the club on the night in question and he still is. Before then he had been President for one or two years. He ran the bar and hired the hall out for functions. There was a South American Cultural Night held at the club which was a regular feature. The club was a bowling club. Its clubhouse comprised a bar, toilets, lockers, a kitchen and a big hall with tables and chairs. The club did not sell food from the kitchen and never did. It did not have crockery or cutlery but had a cool room for drinks which was regularly serviced. The kitchen had two fridges and a freezer which were in working order at the relevant times. The kitchen was kept clean. There is a bar at one end of the hall which is hired. The bar is separate to the kitchen. There is a barbecue out the back which is part of the club and part of the clubhouse exterior. That is also kept regularly cleaned. The club itself does not use that barbecue because it has its own. The hall is let out from time to time but food is provided by those who hire the hall.

25. Mr Croke was present at the South American night on 30 January 2009. That function had been going on on a Friday night for some fifteen years. Mr Croke liaised with Mr Eddie Zambrano for over twelve months. There is no fee to use the hall. Mr Zambrano was the organiser of the South American night. Mr Zambrano’s son and wife also helped as well as other family members. Mr Zambrano supplied a band and there was dancing. The only other person from the club might be Mr Croke’s wife. She helped him out on function nights. They served the alcohol. He and his wife collected the money for alcohol sales but the club did not provide, or supply, any of the food. It had been brought in by the Zambranos. The cool room and the fridge were used. He had no supervising role regarding the food. The guests would arrive from 6 o’clock onwards. Guests would purchase food and pay money to the Zambranos who had their own cash register.

26. The club did not retain any funds for food but only the bar takings. They were fairly constant at about two or three thousand dollars on Friday nights. Cutlery was supplied by the Zambranos and the food was prepared in the kitchen. The meat was brought by the Zambranos. There was no written agreement between the club and the Zambranos. Mr Croke himself had food that night but neither he nor his wife was sick.

27. Mr Croke had not seen the Zambranos since that night. Before that night there had been no complaints about any food sickness. Mr Croke agreed with Mr Thompson that the night was good for the club but did not agree that it provided the most profits. But sometimes it was the most lucrative night of the week.

28. Mr Croke and the Board of Directors authorised the Zambranos to come and provide food and the Zambranos did so. It provided a substantial boost to the liquor sales on that evening. Other Club members would attend if they wanted to. There was no admission fee, so on a Friday night the Zambranos supplied food and the club supplied the liquor. The club could make two or three thousand dollars, depending. Both benefited: the club’s members were fed and the Zambranos sold food.

29. The New South Wales Food Authority came to inspect the kitchen after 30 January 2009 and Mr Croke identified certain photographs which had been taken at the club and which became exhibit B. The photographs are taken in the kitchen and show a damaged ceiling panel and some cobwebs in the ceiling and a rough surface between the bench with sinks and the fridge and some other areas in the kitchen.

30. I accept, and this was not really challenged by Mr Turnbull, that Ms Carvalho obviously became sick in the way and to the extent that she did. In a moment I will refer briefly to the medical evidence. It seems to me that given Ms Carvalho’s sickness occurred soon after the meal and given that Mr Greville also became ill as well as her friend, I am satisfied that it was caused by something that she ate at the club that night.

31. Mr Thompson tendered two relevant medical reports. One was from the GP, Dr Wong, who reported on investigations which revealed that Ms Carvalho had developed “acute renal failure secondary to severe dehydration”. Apparently a chest x-ray taken at the hospital “showed bilateral pleural effusion” and investigations showed that she had contracted “salmonella enterica indicating salmonella gastroenteritis”. Dr Wong treated her for some months and referred her back to Dr Alrubiae and summarised her condition as a “severe bout of salmonella gastroenteritis”. Dr Wong added that that came on “following eating a contaminated meal in a restaurant on 30/01/09”. That observation does not assist me in establishing the causation which I have found. I make that finding based upon the evidence which I have already referred to.

32. Dr Alrubiae noted that Ms Carvalho had been admitted to hospital under his care on 1 February 2009. He noted on admission that she “looked unwell, dehydrated with fever and her renal function was impaired acutely”. He also confirmed that investigation showed infection with salmonella enterica. He saw her some six months later with a change in bowel habit and noted a history of “up to four bowel motions a day which were loose and occasionally normal in consistency”. He noted a history that Ms Carvalho continued to have “bloating, excessive flatulence and abdominal discomfort”. He arranged for the gastroscopy and colonoscopy which I have referred to. His diagnosis was that her change in bowel habit “was probably related to the changes in the microenvironment of the small bowel following her acute salmonella enteritis”. In order to help what he described as “this disorder” he “advised her on the use of concentrated pro-biotic in the form of VSL-3.” My understanding is that that may be the medication which cost $127 a box. He also gave her advice “on a lactose, sucrose and maltose free diet”.

33. As I said, Ms Carvalho relies on two causes of action and I will consider the common law cause of action first. She argues that the club is liable at common law in negligence. She acknowledges that the Zambranos were an independent contractor but says that the club had a duty to her to engage a competent independent contractor.

34. Mr Thompson referred me to what the High Court had said at [20] in Leighton Contractors v Fox and Others (2009) 258 ALR 673. Mr Thompson argued that the club had engaged the Zambranos to undertake a very important task, to supply food to its visitors. There was no evidence, he said, from Mr Croke that the Zambranos were competent.

35. But Mr Turnbull responds that the High Court decision in Leighton is authority for proposition that his client is not an insurer of Ms Carvalho. The club’s duty is to act responsibly and reasonably. As Mr Turnbull points out there is, in a case such as this, no “duty to retain control of working systems if it is reasonable to engage the services of independent contractors who are competent themselves to control their system of work without supervision”. The evidence from Mr Croke is that the function had been going on on a Friday night for some fifteen years. Mr Croke had been liaising with the Zambranos for over a year. Mr Turnbull argued that the club had no supervising role regarding the food. Before that night there had been no complaints about any food sickness.

36. Mr Thompson argued in supplementary written submissions dated 9 December 2010 that what the Zambranos were doing was plainly sanctioned and authorised by the club which would clean up and collect plates used by the patrons and return them to the Zambranos. He argues Mr Turnbull’s point about the club’s lack of expertise in supplying food does not excuse the club from abrogating its responsibility to Ms Carvalho. Mr Thompson argues that the club has done this by failing to use due care and skill when delegating to the Zambranos the task of supplying food and failing to supervise them, even, he said, to a rudimentary degree, and failing to make enquiries as to their methods and food preparations.

37. In respect of the photographs taken of the kitchen, I accept Mr Turnbull’s submission that they show no evidence of anything which could or did contribute to Ms Carvalho’s illness. More evidence would have been needed for her to discharge that onus. There was also evidence from Mr Croke that the kitchen was kept clean. Mr Turnbull referred me to the Court of Appeal’s judgment in UnileverAustralia (trading as Streets Ice Cream) v Pahi [2010] NSWCA 149. As the Court said at [38] of that case:

“ the law does not require a standard that involves a person using such measures as were within their power to obviate the dangers in question. The standard is one of reasonable care.”

The Court of Appeal continued at [49] that the principles applied by the High Court in Leighton were “not confined, for example, to the construction industry which merely provided the factual circumstances in which the principles were considered.”

38. In my opinion the duty of the club was limited to a duty to select competent independent persons to deal with the provision of food. I cannot find any evidence that the Zambranos were not competent themselves to control their own system of work. The impression I get is quite the opposite. The Zambranos supplied their own food and cutlery, used the facilities including cold storage in the kitchen, laid out the food and had their own cash register. Significantly, there was no evidence of any complaint before that night.

39. It was clear, as Mr Turnbull argued, that the Zambranos had specialised knowledge so far as the serving of food was concerned. The club’s responsibilities extended to the service of drinks and it was not in a position to supervise the Zambranos.

40. Ms Carvalho has not satisfied me on the balance of probabilities that her injury was caused by any negligence on the part of the club. In addition, as Mr Turnbull points out, there was no evidence of a breach of any duty which the club might have had to the plaintiff. No-one knows exactly what caused the food poisoning. As Mr Turnbull said, Ms Carvalho has to prove what caused the injury and what the club could have done so far as its discharge of reasonable care was concerned. As he points out, the problem could have been in an egg or mayonnaise and completely undiscoverable. Significantly, as I said, the club was not aware of any complaints before that evening regarding the Zambranos’ provision of food at that event.

41. I turn now to consider the causes of action which Ms Carvalho argues are afforded her by the Trade Practices Act and the Fair Trading Act. After hearing evidence and submissions I reserved my decision. In examining Ms Carvalho’s case under the Trade Practices Act it became apparent to me that there was a problem. The cause of action would appear to rely on s 82 of that Act which entitles a person to recover damage caused by the conduct of another “in contravention” of certain provisions of the Trade Practices Act. There are two difficulties with that.

42. The first difficulty is that the case relies on the assertion that the “provision” of the food was a “supply” for the purposes of s 71 of the Trade Practices Act. That is a section which inserts into contracts implied conditions of merchantable quality and fitness for purpose. Ms Carvalho argued that the “provision of the food” was subject to those “implied conditions”. As I said, she went on to argue that she was entitled to damages because of the breach of that provision.

43. However that argument, I discovered, is not available. In Arturi v Zupps Motors Pty Limited (1980) 49 FLR 283, a decision of Brennan J when his Honour was a member of the Federal Court, his Honour said at 286 that “a proceeding for damages for a breach of s 71 is not a proceeding falling within s 82.” His Honour explained over 285 to 286 the reasons for that. His Honour said -

“ There are two reasons why a breach of a condition which is implied by s 71 does not involve conduct in contravention of a provision of Pt V. First, the breach does not consist in the conduct of supplying goods, but in the want of correspondence between the state of the goods supplied and the quality referred to in s 71. Secondly, s 71 takes effect by imposing an obligation upon one of the contracting parties as though the parties had embodied the obligation in their contract. No doubt it is right to say that the obligation is statutorily created, for the condition can derive no force from an actual or implied consent of the parties whose freedom to exclude its imposition is removed by s 68. But by describing the obligation as an implied obligation, s 71 defines the nature of the obligation. It is an obligation which takes effect by a legal fiction, namely, that the parties had made a contract which includes the obligation. For the purposes of s 82, therefore, a breach of the obligation is not to be treated as a breach of an obligation imposed upon the obligor by the act dehors the contract, but as an obligation imposed by the contract itself .”

44. Rogers J had reached the same conclusion a few months earlier in Zalia v Col Crawford (Retail) Pty Limited (1980) 47 FLR 337, where his Honour said that a “breach is not a contravention of the Act” and that s 82 “has nothing to say to an action to damages where, for example, goods are not of merchantable quality.”

45. These views were confirmed more recently by the High Court in Austral Pacific Group (in liquidation) v Airservices Australia (2000) 203 CLR 136 at 141 where, in a joint judgment, Gleeson CJ, Gummow and Hayne JJ said in a case involving a claim for a breach of the undertakings as to quality and fitness implied by s 71 of the Trade Practices Act that provisions of that nature “operate to regulate the contractual rights and liabilities of the contracting parties.” They do not attract the operation of s 82 of the Trades Practices Act in favour of a person who suffers loss or damage by the conduct of another in contravention of pt V of the Trades Practices Act” (at para 8). Their Honours, in the following paragraph, referred to Brennan J’s decision in Arturi, and said that “claiming contract for damages for breach of obligations imposed by provisions such as s 71...involved obligations that are statutorily created and take effect by a legal fiction, namely that the parties made a contract including the relevant obligations.”

46. The second reason why damages are not available, it seems to me, is that the provisions in the Trade Practices Act regarding damages do not apply to proceedings in Division 2 of Part V which contains s 71. See s 87E(1)(a) of the Trade Practices Act.

47. There is a further problem. Section 70(1) of the Trade Practices Act refers to goods being supplied “under the contract for the supply of goods”. A plaintiff must prove a contract already in existence between the plaintiff and the defendant. See E v Australian Red Cross Society (1991) 27 FCR 310 and on appeal [1992] ATPR 41-156.

48. I should devote some attention at this stage to an argument about s 84 of the Trade Practices Act, because Ms Carvalho relies upon that section to attribute to the club the conduct of the Zambranos in engaging in a contract with her to supply her with food. The form of the contract she says is to supply food to her under s 71 of the same Act.

49. Ms Carvalho acknowledges that she has to prove that the conduct was engaged in “on behalf of” the club and with the consent of one of its employees. The second component is easily satisfied. There was an arrangement between the club and the Zambranos. All of the Zambranos’ activity within the club was in my opinion, done in the terms of s 84(2), “with the consent or agreement…of…an employee or agent of the body corporate”, namely Mr Croke.

50. However it is the first component - whether or not the conduct was engaged in “on behalf of” the club - which is less straight forward.

51. Mr Thompson relies on a decision of the Queensland Court of Appeal in Downey v Carlson HotelsAsia Pacific Pty Ltd [2005] QCA 199 concerning the meaning of “behalf of” as it is used in s 84(2). Downey says that there is a “wide range of relationships to which the phrase is applicable”. The range has to do with those that are “in some way concerned with the standing of one person as auxiliary to or representative of another person”. The adjective “auxiliary” is defined in the fourth edition, 2005, of the Macquarie Dictionary as “giving support; helping; aiding; assisting”. The Court of Appeal through Keane J, as his Honour then was went on to say at [19] that an “act is done ‘on behalf of’ a corporation for the purposes of s 84(2) of the Act if the actor ‘engaged in conduct in the course of the corporation’s business, affairs or activities’.”

52. To my mind, the Zambranos were clearly auxiliary to the club in the sense that they were giving support or helping the club. In addition they were clearly in my opinion engaging in conduct in the course of the club’s business. I reach these conclusions comfortably based upon the evidence that the club derived a financial benefit from the sale of alcohol to people who attended the South American night. In addition, the club’s own members could attend, so there was an interest in them being fed. That meant that the club’s members could come to the club rather than going elsewhere for a meal or come to the club for a drink and stay for a meal instead of going elsewhere. The club’s activities obviously included, as Mr Thompson argued, providing recreation and entertainment and refreshment for its members. The Zambranos were helping the club providing those activities and that assistance was being provided to the club “in the course of” the club’s “business, affairs or activities”.

53. It is true, as Mr Turnbull argues, that the supply of food itself may not be part of the club’s activities but the supply was done in the course of the club’s activities which included entertaining its members. Even if Mr Turnbull is right to argue that the Zambranos did not seek to represent the club, that is not the test. The test I accept is that laid down by the Court of Appeal in Downey. I do not think the analogy which Mr Turnbull makes to the landlord of a supermarket which sells bad food is applicable. The only financial benefits which the landlord derives is the payment of its rent. In this case the financial and other benefits to the club are increased by the activities of the Zambranos.

54 However I now have to return to the question of how Ms Carvalho can rely upon the provisions of the Trade Practices Act. She has to, it seems to me, argue that the “conduct” referred to in subs (2) must be the entering into the contract. The word “conduct” can include the making of a contract (see s 4(2) of the Trade Practices Act). Ms Carvalho has to argue that any conduct engaged in by the Zambranos by way of entering into a contract was, by virtue of s 84, engaged in also by the defendant. This in turn requires an examination of any contractual activity by the Zambranos. This is where, in my opinion, Ms Carvalho runs into difficulty. She acknowledged in cross-examination that it was Mr Greville who ordered and paid for the food. There was, it seems to me, no contract between her and the Zambranos which can be attributed to the club by using s 84 of the Trade Practices Act.

55. Mr Thompson argued that his client’s case can still be maintained by relying on s 68 of the Fair Trading Act which, unlike s 87E(1)(a) of the Trade Practices Act, does not exclude - in its provision for the recovery of damage by a person who suffers that damage by conduct of another in contravention of a provision of the Act - reference to the provision, namely s 40Q, regarding implied undertakings as to quality or fitness. He is right in that submission. However, the first difficulty still remains that there is, in my opinion, no contract - between his client and the Zambranos which could be attributed to the club - into which the implied conditions could be inserted as the authorities say about s 71 of the Trade Practices Act and which I accept would apply to s 68 and s 40Q of the Fair Trading Act. Damages for a breach of s 40Q in my opinion is not a proceeding falling within s 68 for contravention of the Act.

56. I am therefore of the opinion that Ms Carvalho cannot succeed in either of her causes of action at common law or under statute against the club.

57. In the event that I am wrong on the question of liability, I will provide a brief assessment of the damages which Mrs Carvalho would have recovered if she were successful.

58. As for non-economic loss, Mr Turnbull argues that it was a nasty bout of food poisoning which has largely resolved. There were only two medical reports tendered in her case, one from the GP and one from the specialist. There is therefore no up to date medical evidence about her current condition, nor does the medical evidence provide a prognosis. Mr Turnbull argued that the severity of Ms Carvalho’s non-economic loss was less than fifteen per cent of the most extreme case. Mr Thompson argued that the percentage should be in the low twenties.

59. This is a case where Ms Carvalho did suffer a serious case of food poisoning. On her own evidence she still suffers some effects but we have no medical evidence about her condition. She had to spend a week in hospital and some weeks off work but then returned to her old job. I accept that she experienced significant discomfort and has some ongoing discomfort. I would regard an appropriate figure to assess the severity of the non-economic loss as eighteen per cent of the most extreme case and that would result in a figure of $12,500 for damages for non-economic loss.

60. The past out of pocket expenses are agreed at a figure of $2,615.77. I accept that they were legitimately incurred and I would regard that as an appropriate figure if I was awarding her damages.

61. As for past economic loss, I accept that Ms Carvalho lost three weeks of work and then some days now and again after she returned to her employment. The respective figures provided by her of $2,039.61 and $1,087.79 are mathematically accepted by the club and I would accept them as an appropriate estimate of her loss in earning capacity.

62. Whether or not Ms Carvalho suffered a diminution in her earning capacity which was reflected in the difference between her income at her former employment and her income in child minding was a controversial question. Mr Turnbull pointed to Ms Carvalho’s evidence about there being two reasons for her leaving the former employment, namely that she wanted work where she could stay in one place and not travel so she could use the toilet but also she had been working at the same employment for thirteen years and needed a change. Mr Turnbull argued that this evidence means that Ms Carvalho cannot prove that any associated economic loss from the change of employment should be attributed to his client.

63. Ms Carvalho on the other hand refers to the decision of the High Court in Medlin v State Government Insurance Commission (1995) 127 ALR 180 for the proposition that “two or more distinct causes, without any one of which the particular damage would not have been sustained, can each satisfy the law of negligence’s, common sense, test of causation.”

64. Clearly, in my opinion, the need for employment where she could comfortably use a toilet was a contributing factor to her leaving her job. However, I would not measure the loss, as Mr Thompson urges me, as a nett amount of $70 a week. I do not think her earning capacity was diminished very much at all. After all, she had been continuing in her former employment. I would be prepared to allow her a nett amount of $35 a week for thirty weeks which amounts to $1,050.

65. As for future out of pocket expenses, Ms Carvalho argues that I should allow a sum of about $60 a week for the next thirty-five years of her estimated term of life. Mr Turnbull on the other hand argues that there is no medical evidence to justify the need for the particular medication which costs $127 a packet for the rest of her life. I think he is right in this. Mr Turnbull would be prepared to allow the figure of some $3,000 for future expenses. In my opinion, a more appropriate figure would be $5,000 which would allow for a slightly longer period for the medication plus any extra expenses.

66. I would accept Mr Thompson’s estimates for past foregone superannuation at nine per cent of gross, except that I would allow only half of the estimate provided by Ms Carvalho for the thirty weeks of her employment in child minding. My figure would be $135 for that period which should be added to the other two figures provided by her of $222.29 for the loss of fifteen work days and $118.56 for the eight occasional days off work.

67. Mr Thompson argues that I should assess future loss of earning capacity at a figure of about $70 nett a week for the following seventeen years producing a discounted figure of some $35,000. I do not regard it as appropriate to assess Ms Carvalho’s loss of earning capacity in the future in that way. There has been a diminution in her earning capacity but it is far from significant given that she was able to carry on her former work. She could earn comparable income in another job where there were more accessible toilet facilities. But to reflect that there has been some impact on her earning capacity, I would be prepared to allow a cushion of some $5,000. There is no medical evidence specifying any ongoing loss of earning capacity.

68. Accordingly, in these proceedings I would enter a verdict and judgment for the defendant.

HIS HONOUR: I just want to mark these submissions gentlemen you sent me. There is I think Mr Thompson, you sent me two, I have read both, I have just got one here. So your two submissions Mr Thompson I am going to mark for identification 7.

MFI #7 MR THOMPSON’S SUBMISSIONS

MFI #8 MR TURNBULL’S SUBMISSIONS

Thanks, that can go straight to my associate. Now, yes Mr Turnbull?

TURNBULL: I have an application, your Honour.

HIS HONOUR: Yes?

TURNBULL: By letter dated 9 August 2010 from my instructing solicitors to those who instruct my learned friend, sent by document exchange, the defendant served on the plaintiff an offer of compromise; the offer was that there’d be verdict and judgment for the defendant, secondly, no order as to costs. Can I ask my learned friend to concede that letter and offer was sent?

THOMPSON: That’s not in dispute, your Honour.

HIS HONOUR: All right, thank you.

TURNBULL: I don’t know whether you need to see the documents--

HIS HONOUR: What follows from this; where are you going?

TURNBULL: Pursuant to pt 42, r 15A of the Uniform Civil Procedure Rules, if the defendant makes an offer in proceedings before the trial commences and subsequently receives a judgment that is more favourable to it than the offer, the Rules provide that you can make an order for costs in the following terms. Firstly--

HIS HONOUR: Just give me that citation again?

TURNBULL: 42, 15A; page 8791 of the Practice.

HIS HONOUR: Just let me read it. What was that date again?

TURNBULL: The letter was dated 9 August, I would anticipate, but being sent by document exchange, it would not have been received before 10 August 2010.

HIS HONOUR: Do we know whether it was a weekend or something?

TURNBULL: It’s a fair question.

HIS HONOUR: We’d better check that.

TURNBULL: Actually, I can tell you that if--

THOMPSON: I can assist; I can make an admission that the document would appear to have been received by my solicitors on 11 August 2010.

TURNBULL: That was a Wednesday, your Honour; thank you to my learned friend for that.

HIS HONOUR: Thanks.

TURNBULL: On behalf of the defendant, I would seek an order that the plaintiff pay the defendant’s costs up to and including 12 August 2010 on an ordinary basis and thereafter on an indemnity-basis.

HIS HONOUR: I see. Mr Thompson?

THOMPSON: I don't wish to be heard as to the application in respect of costs on an ordinary basis, but as to the indemnity application, what I say is that the Rule requires some compromise; now, a verdict for the defendant is not a compromise, it’s a demand to submit. As such, the direction under the Rule is not enlivened, and the order ought not be made. Had it been a minimum offer of something, it would have been an offer to compromise, but simply to say no order as to costs - and that’s really, in these circumstances - as I say, a demand to submit rather than an invitation to compromise the client.

HIS HONOUR: What do you say?

TURNBULL: Your Honour, there is authority - I’m sorry, I don't have it with me- from the Court of Appeal that says an offer where the defendant offers to bear its own costs, essentially, that is, there be a verdict for the defendant but neither party pays its own costs, is a true compromise. And, indeed, you can see why that would be; because the defendant is willing to have a verdict--

HIS HONOUR: Walk away from the litigation?

TURNBULL: Walk away and pay its own costs. We are now--

HIS HONOUR: Sorry, just remind me again, the terms of your offer? Was the verdict for the defendant--

TURNBULL: It may be appropriate I should tender on the application.

HIS HONOUR: Tender it, yes.

TURNBULL: It being a verdict and judgment for the defendant, with no order as to costs.

EXHIBIT #1 OFFER DOCUMENT TENDERED, ADMITTED WITHOUT OBJECTION

TURNBULL: That is a copy, obviously; I don't have the original. I don’t anticipate that my friend would have the original.

HIS HONOUR: How recent is that authority?

TURNBULL: I’m sorry - I’m happy to get you a note of it by email to day when I get back to chambers; I know where I can find it, I’m sorry I just don’t have it on me. I should have it, your Honour, it’s my fault; but it certainly is in recent times insofar as it’s in the last few years. It’s not referred to in the Practice.

HIS HONOUR: It’s not Melchior v Sydney Adventist Hospital, is it? I mean, that’s at first instance.

TURNBULL: Well, I was looking at page 8783.

HIS HONOUR: Yeah, where the terms of the offer affected a walk away proposal, but still reflected a genuine compromise.

TURNBULL: I think that may be it; I can’t assure you of that, but that would certainly be consistent with the submission..(not transcribable)..

HIS HONOUR: Why don’t I take morning tea and look at it and have a think about it?

TURNBULL: I have a slight personal difficulty; I have to be in the Supreme Court.

HIS HONOUR: When?

TURNBULL: Well, I was meant to be there at midday, but if I’m not there by then, that’s okay - well, no, your Honour, I’ll be here. I’ll obtain a copy of the decision – at least, a reference to the decision—

HIS HONOUR: That would be helpful, and perhaps if you let the Court Officer know? If it’s different to Melchior - just whilst I’m doing it, Mr Thompson sent an email regarding a schedule of damages, and I’ve just put it on the file as an MFI, too.

MFI #9 EMAIL CONTAINING SCHEDULE OF DAMAGES

There are some other MFIs there, and there’s MFI 9, and here are the exhibits. Thanks. All right, I’ll just go and look at this point and come back at 10 past 12.

SHORT ADJOURNMENT

HIS HONOUR: Thanks Mr Turnbull, you sent up a reference to Court of Appeal’s decision in Leichhardt Municipal Council v Green [2004] NSWCA 341 and I turned up from the Practice Melchior v Sydney Adventist Hospital [2009] NSWSC 65. Where do you want to go from there?

TURNBULL: Can I just say then your Honour, I submit there is no reason to refuse a special costs order as I seek based on those decisions. The offer made by my client was a genuine compromise, it attempted to avoid running the case and incurring further costs as clearly would have been incurred. In those circumstances I ask for an order, as is agreed, that the defendant pay the plaintiff’s costs on an ordinary basis up to 12 August and thereafter on an indemnity basis.

HIS HONOUR: Mr Thompson, it does seem the onus is on you to demonstrate exceptional circumstances according to the authorities.

THOMPSON: I can’t take it further than I’ve already taken it your Honour.

69. These proceedings have just concluded by my entering a verdict and judgment for the defendant.

70. Mr Turnbull of counsel, for the defendant, has applied for an order under UCPR 42.15A. He wants indemnity costs from the time that an offer of compromise was served by his instructing solicitors on the solicitor for the plaintiff.

71. It is agreed that the offer of compromise was served on Wednesday 11 August 2010. The offer of compromise became exhibit 1 in these proceedings. The offer put by Mr Turnbull’s client, the defendant, to the plaintiff was to compromise the matter by consenting to orders in the form of a verdict and judgment for the defendant and no order as to costs. Mr Turnbull argued that costs under the Rule should be awarded on an indemnity basis from 13 August 2010.

72. Mr Thompson of counsel, for the plaintiff, argues that the offer was not a genuine offer to compromise, but really a demand to submit.

73. The authorities which I have consulted include Melchior v Sydney Adventist Hospital Limited No 2 [2009] NSWCS 65 and Leichhardt Municipal Council v Green [2004] NSWCA 341. Two things appear from those authorities which I regard as important at this stage. The first is that the onus is on Mr Thompson and the second is that he needs to demonstrate exceptional circumstances to resist the prima facie operation of the Rule.

73. I do regard the offer as genuine. The proceedings had their difficulties so far as proof of liability was concerned. The plaintiff sued not the persons who provided her with the food which she claimed brought about food poisoning, but the club who retained those persons. Statutory causes of action were not, in my opinion, available; nor was any cause of action in contract available. The plaintiff had to rely upon a cause of action in negligence which a result of the High Court’s decision in Leighton and the Court of Appeal’s decision in Unilever, meant that she faced some difficulties.

74. It was a genuine offer, in my opinion, to which she no doubt gave serious consideration. I propose to grant the order for costs in the terms which Mr Turnbull has sought.

75. Accordingly, having entered a verdict and judgment for the defendant in these proceedings, I order the plaintiff to pay the defendant’s costs on an ordinary basis up to and including 12 August 2010 and on an indemnity basis from 13 August 2010. I make that order pursuant to UCPR 42.15A.

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