Philo v Hurleys Arkaba Hotel Pty Ltd and Hurley No. DCCIV-99-1685

PHILO v HURLEYS ARKABA HOTEL PTY LTD and HURLEY
[2002] SADC Enter judgment number
Judge Anderson
Civil

This is an appeal from the decision of a Master of this Court given on 22 March 2002.
Before the Master the Defendants sought to strike out several enumerated paragraphs of the Further Amended and More Explicit Statement of Claim on various grounds. By order of the Master there was some striking out, some proposed form of amendment and a refusal to strike out those paragraphs of the pleading which might be said to be at the heart of the Defendants’ application.
The orders of the Master complained of in this appeal are those numbered 1, 3 and 6. They are in these terms:
“1.On the defendants’ application (FDN 13) I refuse the defendants’ application with regard to paragraphs 6.1. The same argument must apply with regard to paragraphs 6.2 and 10.1. I decline to strike out those paragraphs.
3.I decline to strike out paragraph 6.8 of the Claim but allow it in the form that I have proposed.
6.Leave to plaintiff to plead paragraph 6.7 and 6.8 as a positive case with particulars although I am not encouraging this course. Such amendments to be made available to the defendant within 14 days.”
The Plaintiff, in her amended Statement of Claim, alleges a breach by the Defendants of a statutory duty cast upon them by s52 of the Gaming Machines Act 1992 (“the Act”) as amended. In addition, a breach of the general law duty of care is also alleged.
The relevant paragraphs in the pleading are in these terms:
“6.During the relevant period the defendants and each of them owed a duty of care to the plaintiff as they knew or ought reasonably to have known that certain persons including the plaintiff would become addicted to playing the machines and as a result suffer financial losses placing their welfare and that of their dependants at risk.
PARTICULARS OF THE DUTY OF CARE OF THE DEFENDANTS
The defendants and each of them owed a duty to the plaintiff:
6.1 by reason of S52 of the Act and at general law not to lend or offer to lend her money or extend or offer to extend her credit when she was in or about to enter the gaming area or to enable her to play the machines
6.2 to inform her that by reason of S52 of the Act it was illegal for them to lend or offer to led (sic) her money or extend or offer to extend her credit when she was in or about to enter the gaming area or to enable her to play the machines;
6.3    to supply gaming machine services to her which would not cause or be likely to cause her to become addicted to playing the machines;
6.4    not to induce her to use the machines in any manner which exploited or was likely to exploit her addiction to playing the machines;
6.5    to warn her of the risks associated with playing the machines and in particular the risk of becoming addicted to playing the machines;
6.6    not to induce her to play the machines when they knew or reasonably ought to have known that she was addicted to playing the machines;
6.7    not to make any false or misleading representations to her that would induce her to play the machines;
6.8    not to engage in unconscionable conduct that would induce her to play the machines;
6.9    to bar her from the gaming area and direct her to obtain professional counselling for her addiction to playing the machines when they became aware that her welfare or the welfare of her dependants was at risk as a result of her playing the machines.”
Mr Jervis of counsel for the Respondent conceded in his submissions that paragraphs 6.7 and 6.8 were inappropriately pleaded as part of a pleading alleging breach of duty and that a further amended pleading with unconscionable conduct as a separate cause of action was required.
Unfortunately, when the matter came before the Master it was not realised that the form of s52 of the Act was amended with effect from 17 December 1997 and that a different form of s52 was applicable to the period referred to in the Statement of Claim, namely from December 1993 until March 1997.
Consequently, the Master has given his interpretation to a form of s52 which is not relevant to the Plaintiff’s claim. To that extent there must be a de novo reconsideration of the Defendants’ application as it now appears in the Defendants’ Amended Notice of Appeal which was filed on 14 May 2002 after the original oversight became apparent at the first return of the Appeal.
Section 52 is set out hereunder:
“52. The holder of a gaming machine licence, a gaming machine manager or a gaming machine employee-
(a) who lends or offers to lend money to a person who is in or who is about to enter the gaming area on the licensed premises;
or
(b) who extends or offers to extend credit to any person for the purpose of enabling the person to play the gaming machines on the licensed premises.
is guilty of an offence.
Penalty: Division 3 fine or division 5 imprisonment.
There is, in the Master’s decision, a discussion of the principles applicable to an application to strike out part of a Statement of Claim: paragraphs 30-43. There has not been any suggestion that this discussion is in any way incorrect and I propose simply to adopt its conclusions without re-stating them at length. A very brief summary is to be found in paragraphs 37 and 42:
“³⁷ The issue of whether a Statement of Claim should be struck out has been further considered in Shipard & Anor v Motor Accident Commission (1997) 70 SASR 240 per Bleby J at 249-250. The matter was also discussed in Chapman & Chapman v Australian Broadcasting Commission [2000] 77 SASR 81 at 185-7 (para 22). A reasonable cause of action means one or (sic) some chance of success when only the allegations in the pleadings are considered.
⁴²The mere fact that the case disclosed is weak or not likely to succeed is no basis for striking out on this ground - see Moore v Lawson (1915) 31 TLR 418.”
The Appellants submit that there is nothing in the Act which can substantiate the interpretation of s52 contended for by the Respondent so as to establish the causes of action relied upon by her.
Whether there is a cause of action for breach of statutory duty established by s52 depends upon a true construction of that section in the context of the legislation.
A consideration of the whole of the Act, which, in its preamble, is described as “an Act to provide for and regulate the supply and operation of gaming machines; and for other purposes” is not helpful to the Respondent.
There is no clear and obvious social policy to be found in the Act. There is a reference to minors not being permitted in gaming areas. The Second Reading Speech refers to persons “who are not able to control their gambling habits .....” and to “providing a ..... regime in which all participants are subject to close scrutiny and control”. But this is all in the context of authorising and regulating gaming and those who are licensed pursuant to the Act.
The High Court considered whether a cause of action for damages arose for breach of statutory duty in Byrne v Australian Airlines Limited (1995) 185 CLR 410. At p424 the majority of the Court said:
“A cause of action for damages for breach of statutory duty arises where a statute which imposes an obligation for protection or benefit of a particular class of persons is, upon its proper construction intended to provide a ground of civil liability when the breach of the obligation causes injury or damage of the kind against which the statute was designed to afford protection. The question is one of construction of the statute although as Dixon J pointed out ..... an examination of the statute ‘will rarely yield a necessary implication possibly giving a civil remedy.’.
One generalisation that can be made is that where the persons upon whom the statutory obligation is imposed are under an existing common law duty of care towards the persons whom the statute is intended to benefit or protect, the statutory prescription of a higher or more specific standard of care may, in the absence of any indication of a contrary intention, properly be construed as creating a private right.”
Assuming (but not deciding), that the Respondent is within a particular class of persons, I am unable to find anything in the Act which supports the view that the obligations contained in s52 are “intended to provide a ground of civil liability” so as to support the cause of action for breach of statutory duty. I am not persuaded that the object of the Act is to protect against the type of injury or damage which is alleged by the Respondent in these proceedings.
The Respondent does not receive assistance in this regard from the provisions of either s59 or s83 of the Act upon which Mr Jervis placed some reliance.
I am unable to infer, as the Master did, that there is a purport in the Act to create a statutory cause of action in s52. This section does not create a positive obligation upon any of the persons referred to therein towards the Respondent.
As there is nothing within the Act to allow the necessary inference to arise so as to enliven the Respondent’s cause, it is necessary to resort to questions of policy based on the nature and purpose of the provision. There is nothing in s52, which is a penal provision, which sensibly allows for a remedy beyond that created in the section. This is the more so, as I have said, as there is no positive obligation to act cast by the section but rather an imperative “not” to do the stated acts.
Thus, when the Act is taken wholly in context I am not of the opinion that it is reasonably arguable that conscience and policy favour the conclusion that it was the intention of Parliament to establish a statutory right with a remedy in damages.
Whether there is to be found in s52 a duty of care at common law is the Respondent’s alternative plea in paragraph 6 of the Statement of Claim.
The most recent discussion of the relevant principles is to be found in the decision of the Court of Appeal of NSW in Reynolds v Katoomba RSL All Services Club [2001] NSWCA 234.
The Plaintiff there made a claim for economic loss only. Here, of course, the Respondent alleges personal injury to herself and some other unidentified loss by other members of her family. Mr Jervis submitted, on this basis alone, that Reynolds was distinguishable from the case at bar. I am unable to see that the discussion in that case of the principles as to when a duty of care may arise is not of general application.
I respectfully adopt what the Chief Justice said as a matter of policy relating to the interests to be protected at paragraph 9 of his judgment. He said “..... save in an extraordinary case, economic loss occasioned by gambling should not be accepted to be a form of loss for which the law permits recovery”.
In the ensuing discussion in the judgments the topics of “Autonomy” and “Vulnerability” loam large. So it is here.
The Respondent’s plight here allegedly commenced with economic loss. This is self‑inflicted. Clearly, she had the ability to either not attend, or not spend, or both. It is no answer to say that she was addicted. There is nothing in the Act, or more particularly in s52, which might in any way be extrapolated to a duty based upon the Appellant’s reasonable knowledge or belief of an addiction to gambling in the Respondent. The Act relates to regulation of an industry and does not have a social objective of the type necessary for this plea to succeed.
The Respondent always had personal responsibility for her own conduct - her own autonomy. To find to the contrary would be to find, to use the words of Giles JA in Reynolds at paragraph 143, that the duty sought to be imposed was “a duty to infringe [her] individual autonomy”. Such a duty is impractical.
It can also be said that the Respondent’s vulnerability to the initial economic loss could only exist where she had “little or no capacity to protect ..... herself” [Crimmins v StevedoringIndustry Finance Committee (1999) 200 CLR 1 per McHugh J @ paragraph 100]. In that same paragraph His Honour, on this topic, posed the question, “..... - how vulnerable is the plaintiff as the result of the defendant’s acts or omissions.”
That question, when asked here, may only be answered by acknowledging that the Respondent must accept responsibility for her own actions and, consequently, there is no vulnerability.
I am unable to find that there exists in s52 a cause of action at common law for breach of duty of care.
Paragraph 10 of the pleading also alleges a breach of a duty and negligence. These pleas must fail for like reasons.
It was agreed during submissions that any cause of action based upon unconscionable conduct is to be repleaded as a separate cause of action. This will replace paragraphs 6.7 and 6.8 of the pleading.
The Appeal is allowed and the order of the Master is set aside. I order that paragraphs 6 and 10 of the Further Amended and More Explicit Statement of Claim be struck out.
I shall hear counsel as to costs and further directions.

[2002] SADC 77

5 June 2002