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HG Insurance and Risk Alert: Widow awarded $2.6 million in a claim for nervous shock brought against a hotelier and a local government authority 6 November 2014

Lee v Carlton Crest Hotel (Sydney) Pty Ltd [2014] NSWSC 1280 – 19 September 2014

The plaintiff instituted proceedings against a prominent hotelier and the City of Sydney Council for nervous shock injuries associated with her witnessing her husband’s death at a hotel car park.

In this Alert, Partner Robert Tidbury and Solicitor Candice Stower, consider the key factors considered by the Court in its assessment of both defendants’ liability exposure.

The facts

On 5 March 2006, the plaintiff’s husband was fatally injured when their car collided with a barrier and fell from the second level of a car park owned and operated by Carlton Crest Hotel (Sydney) Pty Ltd. Evidence led at trial indicated that prior to the incident:

  • Ms Lee alighted the vehicle while her husband, Mr Lee attempted to reverse the car into a car park.

  • Mr Lee placed the engine in reverse and allowed it to idle until it came to a stop when some part of the car’s undercarriage came into contact with the wheel stop.

  • Mr Lee accelerated slightly as he had not reversed into the park as far as he thought necessary.

The defendants submitted that the deceased accelerated to the point that the car drove over the top of the wheel stop. However, the Court considered that the force associated with the car’s reversing into the wheel stop caused the wheel stop to rotate and subsequently collide with the barrier which then gave way. As a result of this, the car fell from the second level to the ground below, causing Mr Lee’s death.

Judgment

The following findings were made at trial:

  • Only one end of the wheel stop was affixed to the floor of the car park, causing it to rotate upon the application of force. The evidence suggested multiple wheel stops were unattached in the car park;

  • The barrier did not comply with the relevant standard, and had not done so from the time it was constructed. Engineering evidence described the barrier to be “grossly inadequate” and viewed it as no more than a pedestrian railing given its inability to withstand a specific load of resistance; and

  • The deceased’s vehicle would have been travelling at a speed no greater than five kilometres per hour such that had the barrier conformed to at least the 1981 standard, the accident would not have occurred.

Hotel’s Liability

The hotelier was found to have breached its duty of care by failing to undertake any reasonable inspection of the wheel stop and nearby railing, despite being aware that there were some unattached wheel stops and that at least one of the railings was loose.  This was particularly relevant given the car park had been in operation for over a decade and accommodated approximately 500 cars in a metropolitan area.  It was found that the only inspection system in place involved security personnel and cleaning staff.

The Court also had regard to the fact that a structural inspection had not taken place following the hotelier’s acquisition of the car park in 1996, and that if it had conducted an inspection then, it would have revealed the barrier’s non-compliance with at least the 1981 standard.

It was held that the hotelier ought to have commissioned a detailed inspection by a qualified engineer by at least 2001, being some years after the acquisition, and continued these inspections bi-annually.  The Court found that the burden of undertaking these inspections was relatively small when taking into account the hotel’s substantial operating profits from the car park’s operation.  At the very least, the Court considered that the areas of the car park in disrepair should have been closed until rectification works were undertaken.

The Council’s Liability

The Council inspected the car park towards the end of its construction in 1989 and subsequently issued a building certificate and a classification certificate.

The plaintiff alleged a number of duties owed to her by the Council.  However, the Court determined that it was the statutory powers exercised in relation to the inspection and granting of the building approval that attracted the duty to Ms Lee and her late husband.  To that end, the Council physically entered the premises for the purpose of undertaking the inspection, and was obligated to exercise reasonable care in doing so. 

Given that the Council had searched its archives and could not produce any documents (such as structural plans) in respect of the certification process, the Court was satisfied that there was no material on which the Council could have concluded that the railing conformed to the relevant standard, particularly in light of the evidence of the engineers stating the barrier would not have been compliant with the 1981 standard at the time it was constructed.

The Court considered the railing to be a significant safety feature of the building in its role of offering resistance to out of control motor vehicles, and with this in mind, viewed the Council’s failure to ensure compliance with the relative standard as more than a mere oversight.  Therefore, the Court found the Council’s inspection and subsequent exercise of its powers in the issuing of the building and classification certificates to be negligent and unreasonable in circumstances where any liability of the Council was not excluded by the operation of section 44 of the Civil Liability Act 2002 (NSW).

As the wheel stops were not in place at the time the Council inspected the car park, the Court observed that the Council could not have breached any duty in that respect.

Apportionment

The hotelier’s cross-claim against the Council, alleging the Council owed it a direct duty of care, was rejected by the Court.  It was clear that the Council would be liable in respect of its role in the inspection and certification of the car park.  However, as the incident was caused in part by the inadequate wheel stop for which the Council was not legally responsible, taking into account that the Council was not an advisor to the hotelier or the predecessor owner in relation making the building safer, the Court determined that the hotelier should bear the bulk of responsibility and apportioned its contribution to the damages at 75 percent, attributing 25 percent of the responsibility to the Council.

Contributory Negligence

The Court accepted the submissions of both defendants that the deceased’s acceleration of his vehicle contributed to his death.  While both defendants sought a reduction in the order of 50 percent, the Court was mindful of the fact that the deceased had no knowledge of either the faulty wheel stop or the faulty barrier, and determined that a reduction of 20 percent was appropriate in the circumstances.

Other actions

The plaintiff also pleaded the existence of a contract between herself and/or her late husband with the hotel for the provision of “car parking services” to be rendered with due care and skill pursuant to the Trade Practices Act 1974 (Cth).  While the Court was of the view that a contract existed between the deceased and the hotel, it did not extend to his wife.  Nor was it suggested that she was the owner of the car.  It followed that the plaintiff was not entitled to sue for any breach of a contractual duty.

Key Points

  1. An occupier’s duty of care requires it to have a reasonable system of inspection in place for public amenities, such as car parks, to ascertain the existence of any potentially significant or obvious defects or disrepair and to take reasonable steps in response to rectify any issues identified.

  2. When issuing building certificates and/or classification certificates, a local government authority must ensure the building complies with all applicable legislative requirements and particular design standards in place at that time. A local government should retain all documentation to evidence its prior inspection of the building demonstrating such compliance. In the absence of such documentation, a local government authority may not be able to avail itself to the relevant protections contained in sections 43 and 44 of the Civil Liability Act 2002 (NSW) in any subsequent claim for personal injury based on an alleged negligent inspection of the building structure.

  3. Local government authorities do not typically owe a duty of care to a subsequent purchaser of a building previously inspected and certified by that authority. However, the absence of such a duty will not prevent an apportionment of liability being made under the general contribution provisions found in a relevant state’s Law Reform Act; in this case the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

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