Public Relations Orientated Security Pty Limited v Sprod

[2008] HCATrans 237

[2008] HCATrans 237

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S608 of 2007

B e t w e e n -

PUBLIC RELATIONS ORIENTATED SECURITY PTY LTD

Applicant

and

GREGORY SPROD BY HIS NEXT FRIEND JENNIFER SPROD

Respondent

Application for special leave to appeal

KIRBY J
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 JUNE 2008, AT 11.14 AM

Copyright in the High Court of Australia

MR J.T. GLEESON, SC:   May if please the Court, I appear with MR N.J. OWENS for the applicant.  (instructed by Shearman Lawyers)

MR D.R. CAMPBELL, SC:   May it please the Court, I appear with my learned friend, MR A.J. HOURIGAN, for the respondent.  (instructed by Beston Macken McManis)

KIRBY J:   Yes, Mr Gleeson.

MR GLEESON:   Your Honours, at the outset we need and seek the order at page 59, paragraph 6.

KIRBY J:   Yes.  What is the attitude of the respondent to the application for an extension of time?

MR CAMPBELL:   We have nothing to add, your Honour, may it please the Court.

KIRBY J:   Yes.  You can proceed on the assumption that if you otherwise succeed in the matter you will have your extension.

MR GLEESON:   May it please your Honour.  Your Honours, we contend that the varying and inconsistent judgments of this Court in State of New South Wales v Lepore as to vicarious liability of an employer for criminal acts of an employee ‑ ‑ ‑

KIRBY J:   What was that case in South Australia about the shopping centre?

HEYDON J:   Modbury.

MR GLEESON:   Modbury.

KIRBY J:   Modbury, yes.  Would that throw any light on the circumstances of this case or not, because Lepore’s light, shall we say, comes through a glass darkly?

MR GLEESON:   Yes.  Your Honour, that dealt with direct liability and duty of care and not, we would say, with vicarious liability when I say that ‑ ‑ ‑

KIRBY J:   Yes, so it is a different situation really.

MR GLEESON:   The issue is still one necessary to decide and this case is the right case to decide it.  That is what I want to put as our primary submission.

HEYDON J:   What is the correct test in your submission?

MR GLEESON:   The correct test that we wish to contend for is the test laid down by Justices Gummow and Hayne in Lepore at paragraph 232.

KIRBY J:   You do not like the test that I laid down, Mr Gleeson?

MR GLEESON:   I have to answer a direct question directly, your Honour, and at the end of my submissions I want to indicate why if your Honour’s broader risk analysis found favour with the court, this appeal would still succeed.  I want to show how Justice Ipp, although purporting to apply every test, including your Honour’s test, has not carried out the risk analysis that your Honour indicated was the law.  That is my final point.

KIRBY J:   Yes.  At some stage you will have to answer the question of how it could ever then arise that an establishment is liable for the conduct of security guards who show violence towards customers in the purported exercise of their duties protecting the enterprise’s business.

MR GLEESON:   Let me then deal with it in the two stages.  Firstly is the test that we wish to argue for.  It is in the judgment of Lepore at paragraph 232 and it is a test which requires a close identification of what the employee is actually employed to do or held out as being employed to do. It is not sufficient merely to ask whether there is benefit to the employer. That is the primary question. Can I add immediately that we submit that the Court in Sweeney v Boylan 226 CLR 161where five Justices, but not your Honour Justice Kirby, lent support to this test in Sweeney.  At paragraphs 23 and 25 when five Justices were considering generally the question of vicarious liability, support was given to the test put forward by Justices Gummow and Hayne. 

From there I wish to do two things.  One is to show how if that is the law, this appeal has strong prospects.  Then I want to come back to your Honour Justice Kirby’s risk analysis.  If that is the law, could I ask your Honour to go to the findings of fact which were made on the critical question of what these guards were actually employed to do.  At page 24, paragraph 144, the trial judge found that:

It would have been within the course of the employment of the security guards to have taken the plaintiff outside and to have held him there pending the arrival of police.

Equally so if they had escorted him to the nearby police station.  That is the first finding as to what their tasks were.  The next finding is at page 26, paragraph 154.  I just advert to that.  Then paragraphs 157 and 158.  Could I ask your Honours to read 157 and 158.  Those findings of fact by the trial judge were common ground on the appeal.  That appears from page 49, paragraph 56.  Justice Ipp accepted those as findings of fact.

HEYDON J:   Which is a primary fact and which is an inference?

MR GLEESON:   The primary fact as to what were the tasks they were employed to do.  The inference where his Honour departed from the trial judge concerned what was in the mind of the security guards when they engaged in the brutal act.  I will come to that inference in a moment.  If I can just note on page 50 at paragraph 59 his Honour noted that these were findings of fact and that submission was accepted.  That is the finding as to what he was employed to do. 

Then let us turn to how the unfortunate, very unfortunate, assault occurred.  If your Honours were to go to back to page 17, the trial judge makes findings, which are accepted, that what occurred was that the two security guards took the respondent under restraint into a dark alleyway 56 metres from the premises and there proceeded to kick his head in and cause very great injury and to ‑ ‑ ‑

KIRBY J:   This was all a consequence of the fact that when they told him to go away from your client’s enterprise, go home, he did not do so but continued to cause trouble.  The suggestion of Justice Ipp in his findings was that the spontaneity of it rather suggests that what they were doing was being done in the improper discharge of the functions of their hiring, not, as it were, simply for personal animus. 

MR GLEESON:   With respect, your Honour, what Justice Ipp has found at page 54, which is his critical findings, paragraph 78, is that there was a planned and deliberate course of conduct by these two security guards ‑ ‑ ‑

KIRBY J:   Yes, but not on a so called frolic of their own.

MR GLEESON:   On a frolic ‑ ‑ ‑

KIRBY J:   They did not know the plaintiff before this incident, did they?  There is no suggestion of any background?

MR GLEESON:   No, your Honour.  That will be one case where vicarious liability will be negated, namely, an act of severe brutal blood lust, as the trial judge perceived this matter.  But let us take for a moment Justice Ipp’s approach.  If two security guards in a planned and deliberate endeavour take a patron under restraint into a dark alleyway 56 metres from the premises for what purpose?  For the purpose of kicking his head in.  That is what they came out and said they had done.  They had kicked his head in.  So their purpose was ‑ ‑ ‑

KIRBY J:   Well, they came out and said to a woman who was in the pizza shop that she did not have to worry any more.  That is some indication of what they concede their purpose to be; so the customers of your client would not have to worry any more. 

MR GLEESON:   They came out and boasted that they had “kicked his head in and he will not be troubling you tonight”.  That is what the proven boast was.

KIEFEL J:   Is not the approach of Justice Ipp, critically, that these matters are peripheral.  The central feature that influenced his Honour was that the guard’s duty, both as seen by them and as a question of fact, was to ensure that this person, the plaintiff, did not return and make a nuisance of himself again?  His Honour considered the employment duty viewed in that light satisfied any of the approaches taken in Lepore.

MR GLEESON:   Your Honour, if that is how one is to read the ‑ ‑ ‑

KIEFEL J:   I think that comes from paragraphs 79 and 84.

MR GLEESON:   The error his Honour has there made, with respect, is the error Chief Justice Gleeson pointed out in Lepore, which is that if one identifies the task at a level of generality which is so high as to be unrelated to the true situation, everything would be within the scope of employment.  If that is what his Honour has done, is to say, “Your task is to do whatever, whenever, wherever, however you think appropriate ‑ ‑ ‑

KIEFEL J:   That follows from giving an unlimited task to someone.  The alternative approach is that an employer could almost never be responsible for someone.

MR GLEESON:   What happened here is that the trial judge made the findings of fact as to the tasks, and that is why I commenced with them, which were not overturned on appeal, which were that he was not given an unlimited task to inflict whatever punishment he thought fit, wherever, in order to make sure someone not only could not return to the premises but could not function as a human being.

KIEFEL J:   But what you are doing is distinguishing the duty or the task and its scope with the manner in which it is to be carried out.  That is how you distinguish it. 

MR GLEESON:   Yes. 

KIEFEL J:   But that does not detract from the identification of a duty in the way that Justice Ipp – or the task, I should say.

MR GLEESON:   If your Honour goes to page 48, perhaps, to paragraph 53, at the end of that paragraph the test which his Honour, we would submit, has later taken up is this test at lines 30 to 40, which is:

the employer may be liable if the employee disobeys instructions and commits a criminal act in the subjective belief that by doing so the employer’s interests will be advanced.

That test, we submit, his Honour has come back to at paragraph 79:

the dominant cause of the assault was a desire on the part of the guards to do their duty by ensuring that the appellant would not again make a pest of himself –

Likewise at paragraph 81.  Now, the error that we seek to point to in that is that the limits of vicarious liability under this test expand and contract depending upon the capacity for imagination for evil resting in the mind of the employee.  No employee seeking to protect premises could possibly rationally think that taking a person into a dark alley, ringing up mates to guard the alley and kicking his head in is something the employer would consider appropriate.

KIRBY J:   It means that the more violent the activity of the employee, the less liable is the employer.  It seems counterintuitive.  It leaves people who are injured as a result of the economic running of your enterprise completely without opportunities for compensation.

MR GLEESON:   Your Honour, the law recognises, of course, direct and vicarious liability.  The case based on direct liability was advanced and failed.  The trial judge made findings that the employer exercised all proper care in the training of its staff.  So that case failed.  What we are left with is, when is it that the employer will be liable, notwithstanding any lack of fault on its part. 

Your Honours, given the time, I do want to move to your Honour Justice Kirby’s analysis to take the case against us.  Let us assume one looks not just at what I have tried to identify, which is the tasks given, but one takes a broader frame which says, let us look at the risks arising from the tasks you give people and let us look at the connection between those risks and the ‑ ‑ ‑

KIRBY J:   Can I just ask a factual question?  These were actually security guards of the business next door who were used on a temporary basis by your client, is that correct?  What was the factual situation?  Were they employees?  Do we accept that they were employees?

MR GLEESON:   We accept that they are employees of my client and that we are within the employer/employee ‑ ‑ ‑

KIRBY J:   I thought they were security guards of the business next door and that they were independent contractors who were brought in to ‑ ‑ ‑

MR GLEESON:   They were our employees contracted to the nearby business, lent out to this business.

KIRBY J:   I see.  I had it the wrong way round.

MR GLEESON:   Your Honours, assume a slightly broader view was taken that one can look at risk.  Can I take your Honour to a critical finding of Justice Ipp where his Honour dealt with your Honour Justice Kirby’s test in Lepore.  It is pages 50 to 51. 

KIRBY J:   I was influenced by something the Supreme Court of Canada had said which seemed to me good sense.

MR GLEESON:   Yes.  What we seize upon rather importantly here is that when Justice Ipp applied what your Honour was saying, he made the finding that it was not a characteristic risk that patrons would be assaulted.  That is paragraph 63 and likewise in paragraph 64.  He specifically rejected the plaintiff’s argument to that effect.  So when his Honour carried out the risk analysis, firstly at the level of security guard firms generally, the risk analysis failed to establish liability.  I hasten to add that nowhere further has his Honour then done a more specific risk analysis and said, “Given the way you conducted your business ‑ ‑ ‑

KIRBY J:   No, but we do not leave our common sense outside the courtroom.  Justice Ipp ends his reasons with the statement:

In recent times there have been several cases where a patron of a club, hotel or similar establishment is assaulted by security guards or bouncers –

I mean, we read the newspapers, you know.  We do not live in a dream world.

MR GLEESON:   Your Honour will note from this section that when Justice Ipp was carrying out the risk analysis, he made the findings that it was not applicable to the case.  That is the point I seek to make.  What his Honour’s judgment amounts to ‑ and if your Honours leave it intact, so be it, but we are here to attempt to persuade your Honours to take it on – is where you do employ security guards, where you discharge your direct duty of care by all proper instruction and training, where you give them a task relative to a particular premises, if their activity there is the occasion, the occasion in a background causal sense, or a series of events which, however they play out, lead to these guards deciding in a planned and deliberate endeavour, well removed from the premises, that they wish to inflict maximum physical harm on a person, the employer is liable ‑ ‑ ‑

KIRBY J:   It was not really well removed.  It was just around the corner in an alley that they took him to.

MR GLEESON:   A dark alley that they led him into, that they secured with other guards in order that their evil act could not be detected.  So my proposition is that ‑ ‑ ‑

KIRBY J:   Were those other guards also your employees?

MR GLEESON:   That was the finding, yes.

KIRBY J:   Then they come straight back and say to the customer, “You do not have to worry now”?

MR GLEESON:   “We kicked his head in”.

KIRBY J:   Lepore leaves the law in a state of some uncertainty, speaking for myself.  Whether one could get it clearer and with a stronger majority opinion is a question for the future, but the issue is whether in the facts of this case the actual decision of the Court of Appeal is attended by sufficient doubt to warrant this Court looking at the matter.

MR GLEESON:   I accept that is the issue and we submit that the effect of this decision is these people deliberately inflicted the most unfortunate injuries, brain damage, on this man, but on the logic of this decision ‑ ‑ ‑

KIRBY J:   That is the second time you have said it is most unfortunate.  The usual way most unfortunate events are visited on those set them in frame is by damages.

MR GLEESON:   Against the security guards, yes.  The logic is, had the injuries been even worse, whatever their extent, the firm was liable because there was what we would submit no more than an occasion for the assault.  Your Honour Justice Kirby in Lepore at paragraph 326, near the end, noted that, “the employment must represent more than the occasion for the performance of the” wrong.  Your Honour, the final matter I wish to deal with is the factual question.  The inference that the ‑ ‑ ‑

KIRBY J:   Would not a consequence of your argument be that no pressure is then put on employers to be scrupulous and careful, prudent in the selection of security guards and bouncers, because if they misbehave, if they cause violence, then it will be on their heads and the employer walks away without any liability?

MR GLEESON:   No, your Honour, because of the direct liability which remains on the employer to exercise reasonable care which this employer amply discharged.  I just want to mention the English case which is cited against us, Mattis v Pollock [2003] 1 WLR 2158, which your Honours have, which is an example of your Honour’s analysis, a risk analysis, carried out. If your Honours were to go simply to the last two pages. That was a case where vicarious liability was established, but the critical reasoning in paragraph 30 was that there were specific risks relevant to the behaviour of this employee ‑ ‑ ‑

KIRBY J:   That was a case where the patron of the nightclub was actually stabbed by a security guard.

MR GLEESON:   Yes, and what I am pointing to is ‑ ‑ ‑

KIRBY J:   The English court held that there was liability in that instance. 

MR GLEESON:   Letter D on page 2168, the finding was that there were specific risks about the behaviour of this employee of a violent and intimidatory nature which presented liability.  Specifically, on page 2169 in paragraph 33, having found this vicarious liability the court went on to say, based on these findings, there would also have been direct liability.  So what has happened in the risk analysis in England is that ‑ ‑ ‑

KIRBY J:   Yes.  Does that not simply show that these cases are factual cases?  It depends very much on their facts?

MR GLEESON:   No, your Honour.  What is shows is that when a risk analysis is carried out, at least in the English fashion, the matters that you build in to show the risk are the very matters which independently establish or do not establish a direct liability.  Now, that is what we argue is not the law of Australia.  There were no equivalent findings here of specific risks about the behaviour of these two people.  Your Honour, the final matter – the light is on – is that we do contend ‑ ‑ ‑

KIRBY J:   Can I just ask you – I know your time is up, but we are being very indulgent today – a case came before the Court recently apparently that

raised a similar issue and the Court refused special leave.  I do not think any of us sat in that matter.

MR GLEESON:   No.  Justice Heydon and Chief Justice Gleeson.  That was the case of Zorom.  That was a case where the Court of Appeal did carry out the analysis we contend for.  Justice Basten closely examined the tasks given to the employees and specifically they included the task of patrolling the vicinity of the area.  There was a finding that it was in carrying out that task that the assault occurred.  your Honours we do contend that the inference which the Court of Appeal drew contra to the trial judge is properly described as bizarre. 

KIRBY J:   The Court does not need your assistance on this occasion, Mr Campbell.

This application is propounded as an occasion to invite this Court to clarify the liability of commercial enterprises for the criminal wrongs of employees engaged as security guards for the protection of the enterprise and its customers. 

Although it is true that there is some uncertainty in the governing law, following the recent decision of this Court in New South Wales v Lepore (2003) 212 CLR 511, we are not convinced that the actual decision of the Court of Appeal in this case was wrong, having regard to Lepore and having regard also to the earlier longstanding authority of the Court in Deatons Pty Ltd v Flew (1949) 79 CLR 370.

In these circumstances we do not consider that the matter would afford an appropriate occasion to develop or clarify the liability of parties in the position of the applicant.  For that reason, the application for special leave is refused.  The applicant must pay the respondent’s costs.

The Court will now adjourn in order to reconstitute for the following matters.

AT 11.29 AM THE MATTER WAS CONCLUDED