Judgment date: 30 November 2011
Loose Fit Pty Limited v Marshbaum and Ors  NSWCA 372
New South Wales Court of Appeal1
- An occupier of premises owes a duty to take reasonable care to avoid a foreseeable risk of injury to an entrant who uses reasonable care for his or her own safety.
- What constitutes the exercise of reasonable care depends on the circumstances of the particular case and always with reference to the pre-conditions of breach of duty of care set out in s 5B of the Civil Liability Act 2002 (NSW) (CLA).
- In determining whether a landlord is in breach of the duty of care owed to an entrant, the questions that have to be addressed are whether there was a foreseeable risk of harm and, if so, what a reasonable person in the landlord's position would have done in response to that risk.
- As a general proposition, liability for injuries sustained by an entrant on commercial premises will primarily rest on a tenant-occupier, rather than the landlord. However, each case will be determined on its facts.
On 10 November 2006, Mrs Marshbaum (plaintiff) attended a gymnasium in Mosman operated by Loose Fit Pty Limited (Loose Fit). The gymnasium was located on the first floor of a small shopping centre owned by Mr Kocx and Ms Hickie (Owners). After the plaintiff finished her training session at about 11 am, she descended the upper flight of stairs and lost her footing on the third step. The plaintiff tumbled down the stairs sustaining multiple impacts causing injury. The plaintiff was said to be of short stature and solid build.
The relevant stairs were polished timber with differing riser heights and varying tread depths. The upper flight of stairs had not been fitted with a handrail. The original concrete stairs had been installed in 1977. The original plans approved by Mosman Council required handrails to be installed but the handrails were not in place when the Owners purchased the premises in 2003. In 2003, shortly after acquiring the premises, the Owners arranged for a builder to carry out substantial renovations, costing approximately $200,000. The builder was not licensed and approval for the building work was neither sought nor obtained from Mosman Council. The renovations did not include the installation of handrails on either the upper or lower flight of stairs, in breach of the Building Code of Australia (BCA).
In June 2005, Loose Fit obtained a lease from the Owners for part of the premises. At this time, the leased property did not include the relevant staircase. During the negotiation of the 2005 lease, Loose Fit requested that a handrail be installed on the lower flight of stairs. The principal of Loose Fit gave evidence at trial that he did not consider a handrail was required for the upper flight of stairs as there was a stud wall along one side of the stairs which he had used as support. The principal was noted to be very fit, 180 centimetres in height and had large hands.
In September 2006, approximately 6 weeks before the Plaintiff's injury, Loose Fit entered into a fresh lease with the Owners. This new lease extended the leased property to include the whole first floor and the staircase. Shortly after the accident, Loose Fit contacted a building contractor to assess the stairs and install a handrail for the upper flight of stairs.
The plaintiff brought proceedings in the Supreme Court of New South Wales against Loose Fit in both tort and contract. She alleged Loose Fit had breached its duty of care by failing to install a handrail on the upper flight of stairs and for breaching an implied term of the fitness contract to make the premises as safe for use as reasonable care and skill on the part of Loose Fit could make them.
Both Mr Cowling, engineer called on behalf of the plaintiff, and Dr Cooke, architect called on behalf of Loose Fit, were in complete agreement as to the dimensions of the staircase and its deficiencies. In particular, they agreed that the failure to install a handrail on the upper flight of stairs breached the relevant building standards at the time the stairs were built and also when the renovations were carried out in 2003.
Although Hoeben J did not accept that Loose Fit had any actual knowledge of the problems with the upper flight of stairs, he found Loose Fit should have made relevant enquiries which would have revealed a handrail was required by the BCA. Hoeben J also found that it was obvious that a person of small stature, such as the plaintiff, would not be able to grip the top of the stud wall as a means of support.
It was therefore found applying ss 5B and 5C of the CLA that a reasonable person in the position of Loose Fit would have concluded there was a foreseeable risk of injury to females of short stature, that the risk of a fall was not insignificant in that there was a real likelihood of it occurring, that the consequences were likely to be serious and that the burden of taking precautions to avoid the risk was small both by way of inconvenience and expense. Hoeben J found that Loose Fit had breached its duty of care to the plaintiff and an implied contractual warranty by failing to install a handrail as a precaution against the risk of a person of small stature falling.
Although the plaintiff did not sue the Owners, Loose Fit issued a cross-claim against the Owners alleging they knew or ought to have known about the imperfections of the staircase. In determining the cross-claim, Hoeben J relied on the decision of Jones v Bartlett2 in deciding that the Owners' duty was to take reasonable care to ensure that the premises leased to Loose Fit contained no "dangerous defects".
Hoeben J dismissed the cross-claim as he did not consider the absence of a handrail to be a "dangerous defect" and did not consider that a reasonable landlord would have installed the handrail. Judgment was entered in favour of the Plaintiff against Loose Fit in the sum of $433,441.57.
Court of Appeal
Loose Fit appealed the decision of Hoeben J with regard to liability only but did not challenge any of the findings of primary fact. Sackville AJA delivered the unanimous judgment of the Court of Appeal.
In the Court of Appeal, Loose Fit submitted that it was the occupier of the staircase at the time of the fall, that authorities had established that no stairs could ever be perfectly safe and that the risk of slipping or falling is an everyday risk against which members of the public can guard by taking care for their own safety. It was submitted that Loose Fit had only been the occupier for 2 months prior to the fall, that the staircase had been renovated by the Owners, that there were no previous complaints or accidents and that the principal of Loose Fit was inexperienced in the conduct of business and had no knowledge a handrail was required.
The Court of Appeal reaffirmed that Loose Fit, as occupier of the premises, owed a duty to take reasonable care to avoid a foreseeable risk of injury to the plaintiff: Australian Safeway Stores Pty Limited v Zaluzna3. The obligation is to exercise reasonable care to prevent injury to an entrant who uses reasonable care for his or her own safety: Roads and Traffic Authority of New South Wales v Dederer4. However, what constitutes the exercise of reasonable care will depend on the circumstances of the particular case: Wilkinson v Law Courts Limited5. In order to establish breach of duty of care, it is also necessary for the entrant to satisfy the 3 preconditions set out in s 5B of the CLA: Laresu Pty Limited v Clark6. Thus the entrant must show in relation to an occupier's failure to take precautions against a risk of harm that: the risk was foreseeable; the risk was not insignificant; and in the circumstances, a reasonable person in the occupier's position would have taken those precautions.
The Court of Appeal agreed with the findings of the primary judge that Loose Fit had breached its duty of care to the plaintiff. As the effect of s 5A(1) of the CLA applies the same standard of care whether a claim is brought in tort or contract, the Court of Appeal also agreed with Hoeben J's decision to uphold the plaintiff's contractual claim. In particular, they noted the expert evidence that there was a real likelihood of harm befalling a user of the staircase in the absence of a handrail. The risk of harm was not insignificant. They agreed it would have been obvious that a short person would not have been able to grip the stud wall of the upper flight of stairs as a means of support and that the installation of a handrail was a simple and inexpensive measure in response to the risk of injury. This was especially so considering Loose Fit had requested the installation of a handrail on the lower level of stairs.
The lease did not require the owners to construct a handrail on the staircase nor did it make the owners responsible for ensuring that the premises complied with applicable safety standards. Nevertheless the Court of Appeal found even if the lease contained such provisions, Loose Fit as the occupier, would not be relieved from taking reasonable precautions to ensure the safety of entrants.
The Court of Appeal found the absence of previous falls was not decisive, particularly as the configuration of the staircase had been in place for only a relatively short period.
The Court of Appeal thought it was of little relevance that Loose Fit had only occupied the stairs for a short period between the commencement of the 2006 lease and the plaintiff's fall. Even though the staircase had been fitted out by the Owners, it did not detract from Loose Fit's duty to take reasonable precautions to prevent injury to entrants. Although the principal of Loose Fit was inexperienced, the critical question was whether a reasonable person in Loose Fit's position would have installed a handrail on the upper level. The Court of Appeal therefore upheld the decision of the primary judge.
In determining whether the primary judge had been incorrect to conclude that the Owners, if sued by the plaintiff, would not have been liable, the Court of Appeal reviewed the primary judge's reliance on the decision of Jones v Bartlett. They noted that Jones v Bartlett involved a landlord's liability to a family member of a residential tenant. In that case, it was held that the duty of a landlord in relation to the safety of premises does not require the landlord to commission experts to inspect premises to look for latent defects or to make them as safe as reasonable care could make them. Rather, the duty of a landlord was to be determined by reference to foreseeable risk of harm and what a reasonable person would do in response to that risk.
Although one of the judges in Jones v Bartlett referred to the concept of a "dangerous defect", the Court of Appeal considered the primary judge's reliance on the question of whether the absence of a handrail could be characterised as a "dangerous defect" was flawed. Rather, the Court of Appeal said the key question was whether there was a foreseeable risk of harm and what, if anything, a reasonable person in the landlord's position would have done in response to that risk, in accordance with s 5B of the CLA.
Although the Court of Appeal agreed that, as a general proposition as between a tenant-occupier and the landlord of commercial premises liability for injuries sustained by an entrant on the premises will primarily rest with the tenant-occupier, the Court reiterated that everything must depend on the particular circumstances of each case. In this case, the circumstances were unusual. In particular, the Owners created the risk by renovating the premises using an unlicensed builder and neither seeking nor obtaining Council approval for the renovations. The renovations undertaken did not comply with the applicable safety standards which created the very hazard which later resulted in the plaintiff's injuries.
The Court of Appeal considered the Owners were in at least as good a position as Loose Fit to appreciate that the absence of a handrail on the upper level created a risk to the safety of entrants and that the risk was simple and inexpensive to eliminate. This particular case therefore could be distinguished from cases where the risk to safety was only ascertainable by a landlord from careful inspection of the premises prior to the lease being entered into.
The Court of Appeal considered in the circumstances, a reasonable person in the position of the Owners would have installed a handrail before entering into the 2006 lease. By failing to do so, they had breached their duty of care to the plaintiff. The Court of Appeal found it was just and equitable that Loose Fit recover from the Owners, a contribution of 50% of the damages payable to the plaintiff.
The Court of Appeal unanimously ordered that Loose Fit's appeal against the plaintiff be dismissed but that Loose Fit's appeal against the Owners be allowed with judgment entered against the Owners for 50% of the judgment sum, being $221,720.78.
This judgment is a timely reminder that decisions of a landlord and tenant-occupier's liability will be determined with reference to the specific circumstances of the case. What constitutes the taking of reasonable steps by the landlord is likely to be more demanding in respect of commercial premises than residential premises.
Both the owner of commercial premises and the tenant -occupier owe a duty of care to entrants to avoid a foreseeable risk of harm. Generally, liability for injuries sustained by an entrant on the premises will rest primarily with the tenant -occupier. However, this decision demonstrates that the courts will depart from general propositions of law if the facts of a particular case justify a higher contribution from the owner.
If owners of commercial premises have undertaken renovations, they must ensure they use appropriately qualified tradesmen and make relevant enquiries to ensure there are no breaches of relevant building standards. Otherwise, they are at risk of contributing substantially to a claim by an injured entrant, even if the premises have been leased to someone else.
The terms of the lease must always be considered in determining the liability between a tenant and landlord which may well affect the reasonableness of steps to be taken by the landlord.
As always, each case is to be determined on its relevant facts and with reference to the general principles set out in s 5B of the CLA.
1 Campbell JA, Handley AJA and Sackville AJA
2  HCA 56
3  HCA
4  HCA
5  NSWCA 196
6  NSWCA 180
Ranked No 1 - Australia's fastest growing law firm' (Legal Partnership Survey, The Australian July 2010)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.