Karawari Lodge Pty Ltd v Luck [1998] PGSC 17; SC553 (5 June 1998)

Unreported Supreme Court Decisions

SC553

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]
SC APPEAL NO 25 OF 1997
BETWEEN
KARAWARI LODGE PTY LIMITED - APPELLANT
AND
BERNARD LUCK - RESPONDENT

Waigani

Kapi DCJ Injia Sawong JJ
30 March 1998
5 June 1998

MASTER AND SERVANT - Liability of Master for injury to servant intentionally caused by criminals - Common law liability - Breach of duty of care - To provide safe system of work.

Cases Cited

Lubbering v Bougainville Copper Limited [1977] PNGLR 183

Colbert v PNG [1988 - 89] PNGLR 590

Edwards v Jordan Lighting And Anor [1978] PNGLR 273

Turner v The State of South Australia [1982] ALJR 839

Warren v Coombes And Anor [1979] HCA 9; [1979] 142 CLR 531

Allan Oa Koroka v The State [1988 - 89] PNGLR 131

Counsel

P Payne for the Appellant

J Sirigoi for the Respondent

5 June 1998

KAPI DCJ INJIA SAWONG JJ: This is an appeal against the application of the relevant principles to the established facts. The trial judge’s findings of fact and the exposition of the relevant principles are not in issue in this appeal.

The appellant is the proprietor of the Karawari Lodge (hereafter referred to as “the lodge”) situated in the East Sepik Province. It is a popular international tourist destination. Between 1985 - 1988, the respondent (“Mr Luck”) was employed as its manager. Prior to August 1988, the lodge was quite peaceful. It did not encounter any security problems. As such the lodge did not have any security systems in place - there were no security guards employed, the lodge area was not secured by fence and there was no padlock to the main dining room hall. The success of the lodge partly depended on the support it received from the local people of the area. The lodge relied on the co-operation and support of the local people in the area for its cultural activities and general security.

For the first time in its history, in August 1988, the lodge was attacked by six (6) heavily armed criminals. They were armed with masks, bushknives and shotguns. They held up the manager and some 22 foreign tourists at gunpoint and stole various property items from the lodge and escaped. No one was injured in this incident. Security then became a matter of concern for the management and the proprietors of the lodge. After discussions between Mr Luck and Mr Bates who was the principal proprietor of the lodge, again for the first time in its history, a lone security guard from the area armed with a shot gun was employed to guard the lodge and its employees including Mr Luck.

On 20 October, at night, heavily armed criminals attacked the lodge again. This time there were 15 - 20 tourist guests dining in the main hall. When they attacked, the lone security gunman got scared and went into hiding and re-appeared after the attack was all over. In the attack, the criminals held up the guests and Mr Luck and stole items from the hotel as well as from the guests. When Mr Luck objected, he was hit on his neck. As a result, he sustained injuries to his neck and spine for which he pursued a compensation claim under the Worker’s Compensation Act (Ch No 72) and received compensation. He also instituted an action in the National Court claiming damages. His action was based under two heads namely, on the basis of occupier’s liability principles under S. 52 of the Wrongs (Miscellaneous Provisions) Act (Ch. No. 297) and on the basis of common law tort of negligence based on the alleged breach of duty of care owed by employer to its employee to provide a safe system of work. The trial judge rejected the claim based under occupier’s liability principles but found the appellant liable in negligence. The trial judge awarded damages in the total sum of K79,403.30 plus interest at 8% plus costs. This appeal arises from that decision.

There are eight (8) grounds of appeal which are set out in clause 3 of the Notice of Appeal. Four (4) of these grounds relate to His Honour’s findings on liability and the other four (4) grounds relate to quantum of damages. We propose to first deal with the four grounds relating to liability. They are:

(a) His Honour having made findings of fact that:

(i) the Respondent was responsible for the day to day security of Karawari Lodge; and

(ii) it was the Respondent’s duty to put in place adequate security measures,

His Honour erred in mixed law and fact in finding that the Appellant had unreasonably failed to take measures or adopt means reasonably open to it which would have protected the Respondent from the danger of attack by armed criminals;

(b) His Honour erred in mixed law and fact in finding the Appellant liable when the Respondent had failed to discharge the onus of proof that the Respondent had unreasonably failed to take precautions which would have prevented the Respondent being injured on 20 October 1988;

(c) His Honour having made a finding of fact that the Respondent, as the manager of Karawari Lodge, should have sought clear directions from the Appellant regarding security at Karawari Lodge, His Honour erred in mixed law and fact in finding the Appellant liable when the onus was upon the Respondent to prove that the Appellant had acted unreasonably in failing to take precautions against danger;

(d) His Honour erred in law in drawing a distinction between injuries suffered by the Respondent in the course of his employment (being injuries caused during an armed hold-up) and injuries caused or suffered by a plaintiff in a motor vehicle accident (ground 3 (e) is the Notice of Appeal).

At the hearing of this appeal, counsel for the Appellant, Mr Payne did not make any submission in relation to ground (d) above. We take it that this ground is not pursued. Of the remaining three (3) grounds, the appellant does not dispute the trial judge’s findings of fact as well as the trial judge’s exposition of the relevant principles but they only take issue with the application of the relevant principles to the established facts. We intend to deal with all the three remaining grounds of appeal together as they raise one main issue. That is whether the employer took reasonable steps to protect the lodge and its employees including Mr Luck from the risk of injury due to attacks by criminals.

The principles are clear. There is a general duty of care owed by an employer to its empoyees to provide a safe system of work. This duty is imposed by the common law. It is the employer’s duty to take reasonable steps to ensure or protect the safety of an employee from unnecessary risk of injury intentionally caused or otherwise. This includes risk of injury intentionally caused by a third party which includes criminals. It is the duty of the employer to provide adequate and readily available security measures to protect the employee at the employee’s workplace. There is no perfect system of work which is free from any risk and there is no such absolute obligation on the employer to provide such a system. It all depends on the circumstances of each case. The test is whether the employer has taken reasonable care, paying proper attention to the risk and paying reasonable attention to the other relevant circumstances. The necessary questions of fact which falls to be decided by the trial judge are: 1. That the defendant’s operations involved a risk of injury which was reasonably foreseeable; 2. That there was a reasonably practicable means of obviating such risk; 3. That the plaintiff’s injuries were caused by the risk in question; 4. That the failure of the defendant to eliminate the risk showed a want of reasonable care for the plaintiff’s safety. In considering the specific issue of whether the employer took reasonable steps to protect the employees from the risk of injury intentionally caused by criminals at the workplace such as in the instant case, the issues of fact are: 1. That the likelihood of a future attack by criminals was reasonably foreseeable; 2. That there was some reasonable security measures available to the employer to take to prevent the subsequent criminal attack; 3. That the employee’s injury was caused by the risk of criminal attack; 4. That the employer failed to prevent the subsequent criminal attack which amounted to want of care for the employee’s safety. These and other relevant factors must be considered in the aggregate when deciding whether the employer took reasonable steps to protect the employee from the risk of injury from attacks by armed criminals.

These principles are settled at common law and they have been adopted and applied here in cases such as Lubbering v Bougainville Copper Ltd [1977] PNGLR 183 at 190; and Colbert v PNG [1988 - 89] PNGLR 590 at 594 - 596; and Edwards v Jordan Lighting and Anor [1978] PNGLR 273. For the position in Australia, see the High Court decision in Turner v South Australia [1982] 56 ALJR 839 at 840 adopted and applied in Colbert at 597 - 596.

At the outset we make mention of the different types of employment. The provision of security may depend on whether the employee is employed under a contract of employment, written or oral, or under a statute. The contract or statute may make provision for security of the employee at the workplace or to and from the workplace. A breach of the contractual duty or statutory duty may give rise to an action in negligence.

In the present case, we presume Mr Luck as a foreigner was no doubt employed under a contract but he did not rely on any breach of terms of such contract by the employer in relation to provision of security at the workplace. His claim was based on the general common law duty of care.

The trial judge relied on the principles in the Colbert and Turner cases to the facts of the case before him in this way:

“In the instant case the plaintiff was the Manager of the Lodge. He had been for about three years before he was assaulted. Evidence is that some months earlier before the plaintiff was assaulted there was an armed hold up in the presence of Mr Bates the owner of the lodge. From that time on security became a matter of concern to the plaintiff as the Manager of the lodge. Mr Bates the owner and director of the company operating the lodge also became aware of the need for security at the lodge. Securimax guards were employed at the Lodge to provide security but they were returned to Mount Hagen because they were ineffective. Local people were engaged to provide security at the Lodge. At the time the plaintiff was attacked there was a local person involved in providing security. He was armed with a gun. However the lone armed local security man proved ineffective at the time of the attack by the six criminals who were also armed. Clearly he was outnumbered. The plaintiff as the Manager was responsible for the day to day security at the Lodge. The duty was thus on him to put in place adequate security measures. Mr Luck said he had discussed security problems with the Directors but nothing was done.

The defendant argue that the plaintiff must satisfy the court that if the defendant had authorised the plaintiff to engage the involvement of the local security guards he probably might not have been injured or that the injuries he sustained might have been averted. The defendants argue that at the time of the incident there was a local security guard armed with a gun but that proved ineffective and so in the circumstances, it was difficult to see how the presence of local security guards would have resulted in deterring the armed gang that assaulted the plaintiff.

The plaintiff thus argues that applying the words of Gibbs CJ in Turner v South Australia (Supra) the plaintiff cannot succeed unless he proves on the balance of probabilities that the safety measures (involvement of local people) would have been effective and that he would have made use of those local security guards who might have deterred the criminals from entering the premises of the lodge. As has been stressed earlier the plaintiff was the manager. He engaged the services of the local people to be involved in the operation of the lodge, presumably with the knowledge and the authorisation of the Directors and the owners of the Lodge. The engagement of the lone gunman proved ineffective. It was not sufficient. Placement of perhaps some more local men might have deterred the attack. There was in my view a need to place more than just one guard with a gun. That was not done. The plaintiff was the person who was responsible for arranging and putting in place those guards. However he could not act on his own as he had to get his directions from the Directors in Mount Hagen. He was given directions to employ local people. He only employed one man. That proved ineffective the directors however did not give him clear directions as to how many local people he should employ. It seems to me that it was the plaintiffs decision to have only one local security guard on duty on the night of the incident, that decision by him as resulted in the armed gang coming in easily to the lodge. I am of the view that given the circumstances the plaintiff was in he only got the one local guard to be on duty because he was not given clear directions as to how many local people he should engage. He, however was the Manager, he ought to have sought clear directions. In my view I would apportion liability on a 75% to the defendant and 25% to the plaintiff.”

The appellant asks this Court to disturb the conclusions reached by the trial judge on the basis that His Honour erred in finding the appellant negligent on those set of facts. The question whether proven set of facts meet the legal standard is primarily a question of law. The issue in this case is the same issue before the trial judge and that is, whether the appellant in the circumstances failed to take reasonable steps to protect Mr Luck from the risk of injury intentionally inflicted by criminals on the night of 20 October 1988. As an appellate court, the power to decide the question of whether the facts found do or do not give rise to the finding that a party was negligent is one which we share with the trial judge. It is our duty as well to decide the case, the facts as well as the law, for ourselves: Warren v Coombes [1979] HCA 9; [1979] 142 CLR 531 at 552 adopted and applied in Allan Oa Koroka v The State [1988 - 89] PNGLR 131 at 136 - 137.

Mr Payne submits that the appellant should not have have been held liable for the independent acts of criminals when the appellant, in all the circumstances, acted reasonably in providing appropriate security measures. Counsel for the respondent, Mr Sirigoi, submits that the appellant failed to take reasonable steps to ensure or protect the safety of the lodge including Mr Luck after the first robbery incident in August 1988, in that only one local security gunman was engaged which could not have and did not prevent or deter the second similar attack. He submits that after the first attack, the second attack was reasonably foreseeable. He submits the appellant’s subsequent engagement of professional security men from Securimax Pty Ltd came only after the second attack whereas if they had been engaged or other security systems installed at the lodge after the first attack, then the second attack could have been prevented. This he submits shows that the appellant was negligent.

We are also asked by Mr Payne to consider the policy implications of whatever decision we make in this appeal in two areas:

(1) That the court should not hold employers responsible for independent criminal acts, where the employer has in all the circumstances acted reasonably in providing appropriate security arrangements.

(2) The employees who are injured by independent criminal acts in the course of their employment should be compensated under the Worker’s Compensation Act and any common law claim should be discouraged.

We do not think it is our function to consider and pronounce policy statements concerning these types of matters. That is the function of the Parliament. We can only say that although we are cognisant of the general crime situation throughout the country, in particular the prevalence of serious crimes such as armed robbery committed by criminals, we do not believe that the crime situation in the country has reached unprecedent level that every employee is in dire need of protection at his workplace at all times. The need for security of employees in the workplace is a matter of private concern between the employer and the employee. As to whether or not the security arrangements in the workplace is required and if so required, as to what reasonable steps are to be taken to counter the risk of criminal attack would very much depend on the particular circumstances of each case.

The type of security arrangements provided by the employer to the employee at the workplace may depend on the type of activity carried on by the employer and the duties performed by the employee. If the type of employment involves dealing with substantial valuable property or money which might attract the attention of criminals, then it might be said that there is an inherent security risk which would require appropriate security measures to protect the employer’s business including the safety of the employees who are directly involved in managing that part of the employer’s business.

In the present case, the employee was employed as the manager of a lodge which had a history of peaceful co-existence with the local community for a long time. Before August 1988 security of the lodge including its employees such as Mr Luck was of no concern to the employer and the employees. Attack by criminals on the lodge was not known of prior to August 1988. This was partly because the lodge was not involved in the business of handling substantial valuable property and money as such would attract the attention of criminals in the area. It was involved in providing facilities for tourists to come to stay and enjoy with the support of the local people. In a country where criminal activities have increased over the years, this was a remarkable achievement on the part of the proprietors and the management of the lodge and the local people.

The first robbery incident in August 1988 did not radically change the views on security of both Mr Luck and Mr Bates. We consider this attitude to be reasonable given the very nature of the tourist business conducted on the premises of the lodge and surrounding areas by Mr Bates and managed by Mr Luck. The management and the owner of the lodge quite legitimately felt there was no need for additional security measures at the lodge for to do so would have sent wrong signals to potential tourists and the local people who supported the lodge.

The one-off incident in August 1988 was considered by both the employer and the employee to be quite remote. Nonetheless the employer did discuss the security concern with Mr Luck which resulted in the lone local security gunman being engaged to deter or counter any future criminal attack. Although the risk of a future (second) attack in these circumstances would have been reasonably foreseeable by Mr Luck and Mr Bates that risk in our view was sufficiently countered by installing security measures relative to the risk posed.

Given the peaceful history of the lodge, we consider that the employer acted reasonably in moving one step forward to install security measures. Given the intricate nature of the amicable relationship which existed between the lodge and the local people which was comforted by the corresponding confidence of tourists, both local and international, we do not think the employer acted unreasonably in employing just one local security gunman. However, the lone security gunman proved no deterrent to the heavily armed criminals. Even if the Lodge employed several armed or unarmed group of local security men from the area, we wonder whether they would have deterred or prevented several heavily armed determined criminals. The employer in his considered judgment in the given circumstances considered that Mr Luck should take steps to secure the premises from criminal attacks - steps which were relative to the risk posed. Both the employer and Mr Luck considered the engagement of the lone security gunman to be sufficient to counter the risk. After the second attack, the employer increased its security arrangements which they considered to be relative to the increased risk. We would pay deference to their judgments in these sort of situations and conclude that the employer was not negligent in the circumstances. We conclude that the trial judge erred in finding that the employer was principally negligent.

In all the circumstances, we consider that the trial judge erred in finding the appellant failed to take reasonable steps to protect the respondent against the risk injury intentionally caused by criminals. We quash His Honour’s finding on liability and find in favour of the appellant.

Having arrived at this view, we do not think it is necessary to consider the other remaining grounds of appeal relating to quantum of damages, interests and costs.

Order of the court: The appeal is allowed with costs to the appellant.

Lawyer for the appellant: Blake Dawson Waldron

Lawyer for the Respondent: Thirlwall Aisi & Koiri