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HG Insurance and Risk Alert: Credit issues undo academic who fell from grace down stairs leading to x-rated goods 15 September 2014

Dailhou v Kelly; State of NSW v Kelly (No 2) [2014] NSWSC 1207

Dailhou v Kelly; State of NSW v Kelly (No 3) [2014] NSWSC 1220

In this Alert, Senior Associate Brooke Jacobs and Solicitor Abbey Wilkinson discuss the inherent but obvious risk posed by stairs, even when there are “distractions” present.

The facts

Mr Dailhou was employed by the Department of Education and Training in New South Wales (the Department) as assistant principal at the North Taree Primary School.  He ran a number of side line businesses.  In June 2007, Mr Dailhou travelled to Sydney to present at a conference.  He was paid by the Department for the duration of the conference.

On 25 June 2007, Mr Dailhou visited Kelly’s Bookshop (Kelly’s), which was located between Mr Dailhou’s accommodation and the conference venue.

The bookshop had a ground level which contained the majority of the books and a basement that contained ‘restricted materials’ including sex toys and x-rated literature.  Mr Dailhou fell down the stairs leading to the restricted materials in the basement.

Mr Dailhou subsequently received workers’ compensation benefits from the Department, as he was found to have suffered injury in the course of a journey to or from work.

This case considered the following two issues:

  • Mr Dailhou’s claim in negligence against Kelly’s; and
  • The claim by the Department against Kelly’s for recovery of workers’ compensation benefits paid.

Decision

Mr Dailhou’s claim against Kelly’s

Mr Dailhou alleged that Kelly’s failed to take reasonable precautions to prevent customers from falling down the stairs.  Mr Dailhou’s lawyers suggested that reasonable precautions would have included roping off the stairs, displaying signs warning of the presence of the stairs and not displaying books that could distract customers near the stairs.

Mr Dailhou’s credit was very much in issue, as he provided several different versions of what led to his fall.  He drew a diagram of his path through Kelly’s and after a recess sought to withdraw the diagram and submit a completely different sketch.  He was unclear whether he fell from the landing or after he commenced his descent of the stairs (and maintained throughout that he did not know that illicit materials were displayed in the basement).  He was vague and illusive about the impact of his injuries on travel for his sideline business in the years following the accident.

Justice Adamson made disparaging comments about Mr Dailhou’s credit, such as “I regard Mr Dailhou as an unreliable and at times dishonest witness” and “his capacity to invent such an explanation on the spot demonstrates his facility for self-justification at the expense of the truth”.

Her Honour found that Mr Dailhou had failed to establish why he fell or that there was any relevant negligent act or omission attributable to Kelly’s that caused him to fall.  Relevantly, her Honour found that:

  • Although the risk of a person falling down stairs is a foreseeable risk of harm that is not insignificant, it did not necessarily follow that a reasonable person in the position of Kelly’s was required to barricade the entry to the stairs;
  • The stairs were in a reasonably open location and there was no obligation on Kelly’s to ensure that books were not displayed anywhere near the stairs;
  • There was no obligation on Kelly’s to display a sign warning of the stairs (Her Honour particularly noting that a customer who did not see the very obvious stairs was unlikely to see a sign warning of the stairs).

The claim by the Department against Kelly’s

Justice Adamson held that, if she had found Kelly’s liable to Mr Dailhou, then the Department would have been entitled to recover workers’ compensation benefits paid to Mr Dailhou pursuant to section 151Z of the Workers’ Compensation Act 1987 (NSW).

Costs

In a separate judgment, Mr Dailhou was ordered to pay the costs of Kelly’s on an ordinary basis until 29 November 2013 and on an indemnity basis thereafter.  This is because Kelly’s had made an offer of $600,000.00 on 29 November 2013, which Mr Dailhou had not accepted.

The Department was ordered to pay the costs of Kelly’s on an ordinary basis up to and including 3 September 2013 and on an indemnity basis from 4 September 2013.  Kelly’s had made an offer of $160,000.00 to the Department on 3 September 2013, which the Department had not accepted.

Key points

  • A plaintiff’s credibility, particularly in the case of an unwitnessed accident, can make or break a case;
  • A plaintiff must establish that a breach of duty was causative of their accident in order to succeed, the corollary is that it is insufficient to say that the defendant is liable because the accident occurred without proving how or why it occurred;
  • Stairs remain an inherent but obvious risk and the mere presence of stairs does not obligate occupiers to take further precautions such as barricading or erecting warning signs;
  • Parties expose themselves to awards of indemnity costs if they fail to beat earlier offers of compromise.

For further information on Insurance and Risk matters, please contact HopgoodGanim’s Insurance and Risk team.

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