Zorom Enterprises Pty Limited (In Liquidation) v Zabow & Ors

[2007] HCATrans 800

[2007] HCATrans 800

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S254 of 2007

B e t w e e n -

ZOROM ENTERPRISES PTY LIMITED (IN LIQUIDATION)

Applicant

and

PETER JOHN ZABOW

First Respondent

EASTERLEY PTY LIMITED

Second Respondent

ROBERT MURRAY TATE

Third Respondent

Application for special leave to appeal

GLEESON CJ
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 DECEMBER 2007, AT 11.22 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR P.R. STOCKLEY, for the applicant.  (instructed by Curwoods Lawyers)

MR J.E. SEXTON, SC:   May it please the Court, I appear with my learned friend, MR E.C. MUSTON, for the first respondent.  (instructed by Zabow Lawyers)

GLEESON CJ:   Yes, Mr Walker.

MR WALKER:   Your Honours, a glance at the headnote of this Court’s decision in State of NSW v Lepore (2003) 212 CLR 511 makes good the proposition that there are strands which are not obviously all running in the same direction in this Court concerning the guidance to be applied for the equivalent of the jury decision in relation to vicarious liability for what is not likely to be reduced in frequency, namely, illegal outright brutal or criminal conduct by those who are employed.

GLEESON CJ:   There are some cases where people who write headnotes deserve a medal, Perre v Apand is one that comes to mind.  Even so, Mr Walker, overenthusiastic crowd control by security people has been referred to, has it not, as a case that is different from Deatons v Flew?

MR WALKER:   Yes.  Your Honours, whatever else one may say about the range of duties or responsibilities of a barmaid, it was relatively easy to understand the finding of fact concerning the limit which had been transgressed in that case.  That is the difference between Deatons v Flew which remains a touchstone in the area and what I will call security guard or bouncer cases which are obviously different because they are not serving refreshments to which what I will call patron discipline may or may not become incidental, they are there for patron discipline. 

However, in our submission, that makes all the more critical what some members of this Court have sought to emphasise in varying ways, exemplified in Lepore, as to the importance of finding what are the duties and responsibilities of the people in question before the contract between them and their employer is the legal means for the employer, willy‑nilly, we would submit, without fault, becoming liable for conduct which of its nature can lead to the most serious of consequences as in a blow by which somebody comes to strike their head on hard ground.

If we are right that the findings about the nature of the duties and responsibility of the employee be critical, then, in our submission, in this case there was a failure to attend to that because there was rather an emphasis by Justice Basten, in particular, on what might be called, our word, a “fictitious” version of those responsibilities. 

May I take your Honours please to application book 77, paragraph 41, perhaps starting on page 76.  There is the repeated observation of the “unnecessary and excessive” nature of the action.  The word “unnecessary” your Honours, is quite evocative of the question, what part did it play in relation to what is called, unhelpfully, the course of employment and an authority that is, or ought to be, understood as meaning, first of all, ascertain what did the job call for, what was the employer entitled to get in return for the wage?

No one has made any finding in this case, least of all in the Court of Appeal, about the employer here being entitled to obtain strong arming in a public street, albeit in the vicinity of the licensed premises, of people who were not engaged in any provocative conduct.  No one has made any finding of that kind.  Rather, we have the assailant being described as “hyped up” and “angry”, line 45 on page 76 and then Justice Basten concludes, page 77, lines 20 and following, with the proposition that the more people you hit, the more plausible it is that this was within the scope of employment.  We paraphrase but that is the gist of that reasoning.  In our submission, that is completely wrong. 

GLEESON CJ:   What was the defendant’s evidence on this question of scope of employment, what their job was?

MR WALKER:   Your Honour, there was no evidence concerning any aspect of the job to be performed on the public footpath.  There was evidence of a condition of the licence which required persons to move away and for there to be steps taken by the licensee to ensure that people moved away from the vicinity on nights of entertainment.

GLEESON CJ:   That expression, paragraph 41, line 3, “security officers”, was that their job description?

MR WALKER:   Your Honour can take that as sufficiently accurate.  There are a number of different descriptions but that is sufficiently accurate.  There is no suggestion, I stress, that the security officer in relation to the unfortunate victim was confronted with any situation which fitted any class of circumstance that he was employed by my client to attend to, no finding of that kind at all.  To the contrary, the implication from the, as it were, clearing of the victim of any contribution to the violence, the clear implication is that it could not have fitted within any possibly imaginable scope of employment.

What Justice Basten does at about line 21 on page 77 is to pull together the strands from the guidance found, for example, in Lepore, by way of a conclusion that says that all of these facts, as unlikely as they are to contribute to this conclusion:

demonstrates that he [the assailant] perceived himself as acting in the interests of his employer and in the performance of his employment duties.

Your Honours, that is the special leave point.  Can it be enough that somebody who, ex hypothesi, has already gone over civilised limits, committed offences and mayhem, can it be the common law that the perception of that kind of person in that kind of circumstance where they are hyped up and angry, that what they are doing fits the otherwise unproven terms of his employment contract, is enough to make liable his innocent employer?  When I say “innocent”, there being no suggestion that my client had played any role whatever in fomenting, permitting anything in the nature of this violence.

GLEESON CJ:   Where is the passage in the judgment that reflects that error that you say is the special leave point?

MR WALKER:   Page 77, line 21 or so, “he perceived himself”, and our emphasis is on the notion that this is a subjective perception of somebody who, ex hypothesi, is in about the worst position the common law could surely imagine for somebody taking what I will call and honest view of circumstances as to what he is or is not responsible for in his employment. 

It is a special leave point which arises very neatly and importantly in this case because the plaintiff had plainly failed to follow the admonitions of this Court, at least the various members of it, concerning proof of the circumstances, that is, the terms upon which responsibilities and duties had been allocated.  That is expressed differently in the different judgments in Lepore but is a constant theme of all of them.  Your Honours, it also raises the question ‑ ‑ ‑

HEYDON J:   It is much easier for you to establish it than for him though, Blatch v Archer.

MR WALKER:   Your Honour, one is reminded of Professor Wigmore’s emphasis of the well‑established principle that the capacity of parties to marshal evidence is part of the method of weighing its weight but that is not a maxim which has anything by way of altering onus.  It does not alter onus at all.  This was a case of vicarious liability where I stress there was no proof of anything by the employer, act or omission, which would, as a matter of either civil policy or the policy of the law, render it appropriate that they should be blamed for what happened.  This was vicarious liability that turned simply on the finding that an unidentified assailant was one of our employees.  That is it. 

You go slightly further  to know that the employees were there, pursuant to a contract, to provide services in the nature of security and there it trickles out.  There is no suggestion that there was some brick wall of an embargo against the plaintiff being able to assemble a case in relation to vicarious liability.  He who alleges must prove.

Your Honours, it also raises, making it out for special leave, the extent to which the approach taken by Justices Gummow and Hayne in Lepore, particularly in paragraph 232, is something which will provide practical guidance to trial courts.  In particular, having stressed what, in our submission, is clear ratio in this Court, namely, the importance of:

the identification of what the employee is actually employed to do –

and I stress actually, not perceptually –

or is held out by the employer –

not by the employee –

as being employed to do –

and then emphasising that on the next sentence, the difficulty is whether or not the notion of what somebody is intending to do is at all relevant to the exercise and, in our submission, where one finds in paragraph 239 on the next page the attempt by their Honours to summarise what had gone before, subject to the further consideration noted in their previous paragraph in cases that we urge this should be one of.  Your Honours will see at about an inch down on that page this ambiguous reference to “the intended pursuit of the employer’s interests”.

In our submission, your Honours, properly understood in the context which includes paragraph 232, that must be a reference to what the employer intends and could not, bearing in mind what has been said by all Justices concerning the importance of identifying what the assailant was actually employed to do, could not properly be taken to be determined by the assailant’s subjective perception, particularly if the assailant was, for example, a casual employee who was hyped up and angry and may be subject to some pharmacological influences that rendered the notion that their view of what their contract of employment called for, bizarre as a test of liability.

Your Honours, the difficulty of applying the approach taken by this Court in Lepore in such circumstances is not confined to this case.  Your Honours have been supplied I think with a very recent decision in the Court of Appeal of New South Wales, Sprod bnf v Public Relations Oriented Security Pty Ltd, a name to conjure with, where their public relations had resulted in an assault.  Justice Ipp, at paragraph 53, says, and with great respect we adopt this, that:

It is not possible to discern a generally accepted jurisprudential theory that underlies the imposition of liability on an employer in this situation.

He goes on to point out that which, in our submission, makes this of peculiarly important social importance because ultimately the tort of trespass to the person is to do with fault of a very clear kind requiring no arcane legal appreciation to understand.  He goes on to point out that:

Liability without fault is an unusual phenomenon when its source is not legislation but the common law.

So long as that is understood as being uttered in the context in question, which is of an intentional tort involving physical violence, in our submission, it raises a very serious aspect of cases such as this, should the common law be permitting outcomes where someone is vicariously liable for that which is not shown to have been within the remit of the employee and is certainly not shown to be what I will call merely an unauthorised way of doing something authorised?

GLEESON CJ:   Was there not a concession made at the trial that affects this point?

MR WALKER:   No, your Honour.  There was no concession made about this conduct fitting either of the two orthodox formulations the ambiguities of which or difficulties of which have been the subject of judicial attempts to provide further guidance.  In our submission, the considerations that Justice Ipp note in paragraph 53 are enough to show the general public importance in an area of the common law which is by no means simply technical. 

In paragraph 54 his Honour goes on to say that bearing in mind the difficulty of tracing “a certain and secure path through the dicta” that the approach to be taken is, as it were, to have a multiple template and to be comforted if the result in question is indicated by the majority of those applications.  In our submission, that is a most undesirable way for the matter to be left in the country’s intermediate courts of appeal.

GLEESON CJ:   When you are dealing with the specific problem here, that is, over‑aggression on the part of a bouncer, which seems to be a fairly common source of litigation because we have had a number of special leave applications about this sort of thing already, what is, in your submission, the test that you would seek the Court to apply that is different from what the Court of Appeal did?

MR WALKER:   Your Honour, in our submission, the test has to be whether or not that which the employer has done by allocating duties and responsibilities and by the employer holding out the employee in certain positions renders the employer a person who cannot be heard to say – that is the estoppel component from Justice Gaudron – cannot be heard to say “I had nothing to do with that conduct”.

My answer has attempted to combine approaches taken by your Honour the Chief Justice in Lepore and Justice Gaudron but drawing from all the judgments the importance of ascertaining that which the employment contract erects as the limits of authority and then the circumstances which may be summed‑up as the holding out.  In our submission, that leads to a position where it becomes acceptable as a matter of policy for somebody who is, on the hypothesis in question, not guilty of any tort themselves by their own conduct and not guilty of a direct breach of duty, that is, we are not talking about a case of concurrent liability and negligence against the employer, then the policy of the law would be satisfied by much greater proximity to the crime than cases such as the present would indicate. 

In our submission, the authority represented in New South Wales by the approach taken by Justice Basten at page 77 of this application book which fastens critically by way of the necessary conclusion on the perception of the delinquent actor himself or herself, is one which threatens, in our submission, to remove the law much further than it should be from what might be called a social or moral view normatively of where responsibility should lie.  May it please the Court.

GLEESON CJ:   Thank you, Mr Walker.  Yes, Mr Sexton.

MR SEXTON:   Your Honours, the point that has been identified this morning as being a special leave, namely, the passage in the judgment at page 77 of the appeal book that the assailant perceived himself “as acting in the interests of his employer”, was not the only basis on which the Court of Appeal upheld the judgment of the trial judge which proceeded on the basis that there was objective evidence about what the various security guards were doing on the night in question from which one could infer what some of the terms of the contract of employment were.

The passage that my learned friend has drawn attention to and which he says justifies the special leave point was not the starting point for the Court of Appeal’s approach to this.  What is said at page 77 was said only to confirm what had already been said in terms of the available inferences about the employment, which starts at page 73 of the appeal book.  The background, before I take your Honours to paragraphs 33 and 34, is that the only witness called by the defendants was the manager of the hotel. 

The manager of the hotel said that he was not responsible in engaging security staff, that the owner of the hotel did that.  The owner was not called and nobody from either of the two security companies were called.  The evidence of the hotel manager suggested that there was an oral contract in relation to the provision of security.  It was against that background that the trial judge and the Court of Appeal dealt with the evidence that is summarised in paragraph 33, which was that:

There was, however, evidence as to the presence of security guards . . . being involved in the removal of disruptive patrons on the night in question –

and that they were engaged in doing that not only on the hotel premises but near the hotel premises, this assault having taken place very close to the hotel premises. 

The next point is that although my learned friend put it in terms that the plaintiff was not engaged in any provocative conduct, nevertheless the plaintiff was participating in the process that the security guards were engaged in of removing friends of the plaintiff from the premises.  Although he did not say anything or do anything which would provoke the security guard, he was nevertheless part of the group that was involved in the exercise by seven or eight security guards of their duties. 

The other matter that is relevant was that the security manager was present whilst the events preceding the actual blow to the plaintiff took place.  That is apparent from paragraph 38 on page 75 where Justice Basten records that:

there were some seven or eight security personnel . . . suggests that they were indeed at that stage involved in the course of their employment and carrying out duties related to the responsibility of the licensee –

Then Justice Basten picks up the passage from the trial judge at page 14 where he refers to:

the person, who identified himself as the manager –

as I said earlier, that is the security manager –

told the assembled group they had been asked to leave –

So the facts from which the Court of Appeal properly concluded that at least part of the terms and conditions of the employment of the assailant involved removing patrons from the premises and, if necessary, using reasonable force to do so, was inferred from actual observation of what the security guards were doing in the presence of the manager of the first security guard company.

GLEESON CJ:   I take that sentence on page 77 at line 21 with the words “demonstrates that he perceived himself” as referring back to the previous sentence and that in turn refers back to the first sentence at paragraph 39.  The question that the judge was asking himself was, was this person trying to disperse the group, albeit in an unacceptable fashion, or, perhaps alternatively, was he taking personal retribution upon somebody who irritated him?  The relevance of the observation that he perceived himself as acting in the interests of his employer I take to be to the factual question of whether he was trying to disperse the group or whether, on the other hand, he was trying to beat somebody up.

MR SEXTON:   Yes, your Honour.  That is the next step in the argument.  The first step is, is there some evidence of what the employment was?  The next step is, can it be found that the assailant was acting in the course of that employment or it is so connected with the course of that employment that it is an improper mode of carrying out a proper part of the employment.

GLEESON CJ:   The judge is saying to himself, what was this chap trying to do?

MR SEXTON:   Yes, your Honour.  The idea or the proposition that the subjective intention cannot be relevant, which, as I understood it, was the proposition my learned friend was putting forward, cannot be right.  It must be relevant to consider in circumstances in which there is more than one way of carrying out some part of one’s employment.

GLEESON CJ:   It would be relevant on the other side of the coin if there was evidence that there had been a longstanding personal animosity between these two individuals.

MR SEXTON:   Of which there was none in this case, and that was a matter that in the Sprod decision, essentially the competing versions because the trial judge found that there was an act of personal retribution and, to use the trial judge’s expression, “bloodlust” being perpetrated by the

security guards, and in the Court of Appeal Justice Ipp said, “It is open to draw inferences either way and I draw the inferences that that was not what was occurring in that case”, that the security guards who assaulted the plaintiff in Sprod thought that they were carrying out part of their duties in terms of doing something which would prevent that particular plaintiff re‑entering the relevant premises. 

Similar consideration in this case; it must be relevant to have regard to the subjective intention of what the employee was actually doing to see whether it fits into the overall picture of what the duties were to then take the next step to determine whether or not what actually happened is so connected with the employment as to bring it within the vicarious liability principle.  That is plainly what Justice Basten was doing and there is no error of principle.  Your Honours, they are my submissions in relation to that aspect.  I take it, as there has been no submissions in relation to the other two points, that they are not being pressed.

GLEESON CJ:   I think Mr Walker is relying on his written submissions.

MR SEXTON:   Can I say something, your Honour, about section 3B?  This case is not an appropriate vehicle in relation to that point because it was conceded below – I think that might be what your Honour the Chief Justice was referring to – that the Civil Liability Act did not apply to the proceedings.  The Court of Appeal in State of New South Wales and Bujdoso [2007] NSWCA 44 held tow things. Firstly, that section 3B(1)(a) as it was enacted did not say anything about vicarious liability. The second thing was that they held that the transitional provisions had the effect that if a case had been decided at first instance, then the new Act did not apply.

So that if the 3B point is raised in this Court, there are two hurdles for the applicant to overcome.  One is the judgment in this case and in Budjuso that there is no difference between the two versions of section 3B(1) and neither of them say anything about vicarious liability.  The second is that what was said in Budjuso about the transitional provisions will also have to be demonstrated to be wrong because otherwise the old version applies and the concession was made that the old version has the effect that the other provisions of the Civil Liability Act do not apply to this case.  May it please the Court.

MR WALKER:   Your Honours, the aptness for special leave of this case is rather highlighted by the earnestness with which it may be urged that the perception of the assailant might be relevant.  That is because if it were relevant to anything other than a focussed rebuttal of evil motive, if it were relevant to anything else and, in particular, relevant to the connection with the defendant, then it would be grossly at odds with cognate principles in the law of agency where it has never been the case and is contrary to

principle to suggest that the putative agent is so in relation to ostensible authority because of his or her own conduct.  In order for the ostensible authority to be found so as to impose liability for that putative agent’s conduct on another, there has to be conduct by the principle.

GLEESON CJ:   I thought that the reason Justice Basten referred to the fact that he hit a lot of people – there were four people and not just one – was simply to dispel or displace any possible suggestion that he had some personal animosity towards the one, not to demonstrate the more brutal you are, the more likely you are to be acting in the course of your employment.

MR WALKER:   Your Honour, that may have been a legitimate use, that is, simply to rebut the notion of what is called retributive justice, although what justice has got to do with is difficult to understand.  But, in our submission, what he cannot contribute to is the relevant nexus with the defendant against whom vicarious liability is alleged and it is there, in our submission, that the special leave point arises.  We will have the law of agency still insisting that for ostensible authority to impose liability in the absence of actual authority, one must look to the conduct of the defendant, the putative principle holding out traditionally, whereas in the law of vicarious liability for intentional torts, there can be liability attached to an employer by reason of the, as it were, pure heart of the criminal delinquent.  In our submission, that is a sufficiently anomalous suggestion of some degree of incongruence between related areas of the law that it would repay attention by this Court.  May it please the Court.

GLEESON CJ:   In this matter we think there are insufficient prospects of success of an appeal to warrant a grant of special leave and the application is dismissed with costs.

We are going to adjourn for a short time to reconstitute.

AT 11.56 AM THE MATTER WAS CONCLUDED