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	Murdoch University Electronic Journal of Law

Hotelier and Social Host Liability for Alcohol Related Harm - A Review of the Law in Australia

Author:	Toby Blyth BA, LLB Solicitor, Middletons Moore & Bevins
Issue:	Volume 6, Number 3 (September 1999)

Contents

• Introduction
• Statutory Framework In New South Wales
• Canadian Common Law
• Position In The United States
• Social Host Liability
• The Common Law In Australia
• A brief overview of the tort of negligence
• Factual proximity
• Legal proximity
• Johns v Cosgrove & Chevron Queensland Ltd & Ors
• Rosser -v- Vintage Nominees Pty Ltd Licensee
• Conclusion
• Notes

Introduction

1. Recent decisions of first instance courts in Australia, in Queensland and Western Australia, and the filing of enterprising claims by plaintiffs[1] have highlighted what could be seen to be a trend in apportioning liability for alcohol-related injuries to alcohol providers. In both the United States and Canada, liability has been apportioned to alcohol providers for some time. Indeed, in some jurisdictions of the United States, social hosts have been found liable for serving party guests so much alcohol that they were unable to properly control their vehicles on leaving, colliding with other road users and causing serious injuries.

2. Australia, to some extent, has lagged behind the US and Canada in the development of what could be considered a new area for tort law. Recent Australian decisions, therefore, may represent the beginning of a turnaround or expansion of the law relating to the liability of alcohol providers. Previous Australian decisions had restricted liability of alcohol providers to hotels or nightclub guests injured as a result of the alcohol affected behaviour of other hotel or nightclub guests. It would seem that at this point of time, what could be termed the "wilder extremes" of social host liability are yet to move across the Pacific to Australia. No doubt if (and when) they do, a judicial decision will spark strong debate. This article attempts to provide a very brief introduction to social host liability in anticipation of such a debate.

3. This paper seeks to set out, in the format of an outline, the basic principles of the alcohol liability tort. It discusses the relevant legislation in the various Australian states. It then reviews the state of US and Canadian caselaw, and then the relevant Australian cases. It does not deal with product liability law. It is hoped the paper will serve as a useful introduction to the area to practitioners, as an interesting article to academics and students, and as a (useful) guide to members of the public or the hotelier profession in an area which, quite naturally, causes a great deal of community and political concern. The recent run of cases should serve as a timely reminder to all hoteliers and their insurers as to the potential liability involved in selling alcohol to intoxicated patrons, as well as an alert to the plaintiff bar of a new source of defendants.

   Statutory Framework In New South Wales [2]

4. Alcohol and motor vehicles are a heady and dangerous mix[3] The sale of alcohol in all Australian States is regulated by statute. Studies have found that licensed premises in Australia sell approximately one-third of alcohol consumed, but are associated with about two-thirds of alcohol problems[4]

5. The Liquor Act 1982 (NSW) contains two provisions specifically on point. Section 103 empowers a licensee to refuse to admit to the premises any person who is intoxicated, and also empowers a licensee to turn out of the premises intoxicated persons. Section 12[5] prohibits a licensee from permitting intoxication on the premises and a person is not permitted to sell or supply liquor on licensed premises to an intoxicated person5. The situation with regard to registered clubs is similar[6] The Liquor Administration Board has published various guides to assist licensees and their employees to detect signs of intoxication[7]

6. At first glance, these provisions appear, if breached, to provide the basis for a claim. Although there are various statutory requirements imposed by the Liquor Act regime upon publicans, it is not clear whether recent High Court authorities overrule a separate cause of action for breach of statutory duty as discussed in Darling Island Stevedoring and Lighterage Company v Long[8]

7. It would seem that since the High Court decisions in Northern Territory v Mengel[9] and the Burnie Port Authority[10] case, it would be unwise for a plaintiff to frame claim against an alcohol provider for mere breach of statutory duty per se, without including an allegation of negligence as well[11] In the absence of any claim for breach of statutory duty, a plaintiff would need to succeed on ordinary negligence principles.

   Canadian Common Law [12]

8. An analysis of relevant Canadian cases is useful in Australia in view of the similarity in legal frameworks, the use of common law and the approach of judges. The case regarded in Canada as the "landmark" case[13] is that of Jordan House Hotel Ltd v Menow and Honsberger[14]

9. In Jordan House, Mr Menow, a habitually badly behaved patron was banned from the hotel. The ban was lifted and Mr Menow was permitted to visit the hotel and be served alcohol, provided he was accompanied by a responsible adult. He visited the hotel on the night in question in the company of friends, who then left, leaving Mr Menow to drink alone for three hours. He became visibly intoxicated, harassed other guests and was ejected by the hotel staff. No precautions were taken to safeguard Mr Menow and he was, inevitably, hit by a car while staggering along the highway[15]

10. The Canadian Supreme Court upheld Mr Menow's claim against both the driver and the hotel. The trial judge held that in contravening the statutory provisions prohibiting provision of alcohol to intoxicated people, the hotel was in breach of a common law duty not to serve intoxicating liquor to Mr Menow when he was already intoxicated[16]

11. Although the hotel was under an obligation to eject, if necessarily forcibly, drunken patrons, it was under a duty not to subject the patron to "danger of personal injury, foreseeable as a result of the eviction"[17] Suitable, relatively low-cost, alternatives would have been to call the police, have Mr Menow spend the night in one of the hotel rooms, or to arrange safe transport home.[18]

12. Justice Laskin on appeal rejected a finding that the hotelier was liable on a third ground, that it had undertaken affirmative action, ejecting Mr Menow from the hotel, thereby assuming a duty of care to ensure that the plaintiff's safety was not endangered as a result of the hotel's actions[19] Justice Laskin also rejected an argument based on the voluntary assumption of risk, since the plaintiff was so intoxicated that it was "impossible to say that he both appreciated the risk of injury and impliedly agreed to bear the legal consequences"[20] Nevertheless, he was held guilty of contributory negligence and liability was apportioned equally between negligent driver, the hotelier and the plaintiff.

13. Justice Ritchie held that the hotel, through its staff, who were well aware of Mr Menow's propensities, assisted or permitted him to consume a quantity of alcohol which it should have known might well result in his being incapable of taking care of himself. This knowledge "seized them with a duty to be careful not to serve him with repeated drinks after the effects of what he had already consumed should have been obvious"[21] It was a breach of this duty which gave rise to the hotel's liability. The hotelier's obligation was then to prevent intoxication and not simply to protect patrons once they had become intoxicated[22]

14. The wider view taken by Justice Ritchie has become the basis upon which subsequent decisions and consideration of an hotelier's duty of care has been based[23] Professor Solomon notes that advances in the efficacy of blood testing and the introduction of mandatory blood alcohol testing have enabled courts to ascertain retrospectively the state of intoxication of a particular person and the probability that another person would have been able to notice this[24]

15. In Royal Canadian[25] Mr Porter was sued when he drove through a stop sign, killed three people and injured two others in another vehicle. He had consumed the equivalent of between 9 and 111/2 bottles of beer over a three hour period at the Royal Canadian Legion Hotel. The Ontario Court of Appeal rejected the hotel's argument that it could not be held liable since its employee was not aware of Mr Porter's intoxication. The court held that alcohol providers must establish serving and staffing practices that ensure that patrons are not served past the point of intoxication. The hotel was found to be in breach of its duty in providing alcohol to Mr Porter past the point of intoxication in circumstances where it was not able to determine his state of sobriety. This was in spite of the fact that it had had no prior dealings with Porter and no special knowledge of his susceptibility to alcohol (of course, it might be possible to generalise that any person who had consumed between 91/2 bottles of beer in three hours would be intoxicated at the end of that period, regardless of their state of sobriety at the beginning)[26] Although the hotel was only found to be 15% at fault, relevant legislation providing for joint and several liability meant that the plaintiffs could recover the full claim against the hotel.

16. Mr Schmidt, a 16 year old passenger in Mr Sharpe's car, was rendered a quadriplegic after a motor vehicle accident that occurred a short time after Mr Schmidt and Mr Sharpe left the Arlington Hotel[27] Although that hotel had served Mr Sharpe only three beers, and there was no evidence that Mr Sharpe had been acting in an obviously intoxicated manner, the Ontario Supreme Court found that the hotel was negligent since it had served alcohol to someone who was already intoxicated. Therefore the hotel was liable for Sharpe's conduct.

17. In Crocker v Sundance Northwest Resorts Ltd[28] the Supreme Court upheld an appeal by a plaintiff in respect of a claim that a resort was negligent in serving alcohol to an already intoxicated person, who then was thrown out of a large inner tube being used in a race down a steep ski hill. The plaintiff gave evidence that he had not seen the exclusion of liability notices on the entry ticket, and that he had not been able to see a film of previous races shown by the resort before the race which was said to illustrate the danger involved in such a race.

18. After the first race, when the plaintiff obtained more alcohol from the bar, the resort owner warned the plaintiff not to continue in the race but apparently took no other action. He then suggested to the plaintiff a second time that it would be a good idea not to participate in the race after the plaintiff had fallen over before the second race began. Nevertheless the plaintiff insisted on racing and subsequently injured himself, becoming a quadriplegic[29] Similarly to Jordan House, the Supreme Court held that the plaintiff was so drunk he could not be said to have voluntarily assumed the risk of injury[30] A conclusion that the resort owed the plaintiff a duty of care was described as "inevitable"[31]

19. The defendant correctly pointed out that a contractual waiver clause can serve as a full defence to a claim in tort. However, the relevant case law[32] in which the plaintiff had read the rules of the association and signed the waiver in "full knowledge of the association's intention to exempt itself from liability"[33] was distinguished since the trial judge in Crocker found as a fact that the waiver had not been drawn to Mr Crocker's attention, that he had not read it, and did not know of its existence, the defendant was precluded from relying on the clause[34] The Supreme Court agreed with the trial judge's determination that the plaintiff was guilty of 25% contributory negligence[35]

20. Even where a tavern employee in Hague v Billings refused a second drink to an intoxicated plaintiff and the owner attempted to convince the intoxicated person to give the keys to another, apparently less intoxicated, person, a hotel was found liable when, in the court's words, the employees and the owner:

    "...stood at the window ... and watched the [relevant people] drive south on Highway 28, knowing they were a danger for all people travelling on Highway 28" .[36]

21. In Stewart v Pettit[37] the defendant restaurant served between 5 and 7 double drinks to the brother of the plaintiff. He exhibited no signs of impairment, and drove his vehicle with the plaintiff and her sister-in-law home. On the way, while driving under the speed limit, slickness on the road caused the vehicle to go out of control and the plaintiff was rendered a quadriplegic[38]

22. Blood alcohol testing revealed a level of alcohol over twice the legal limit. Nevertheless, the plaintiff's action against the restaurant failed. Although the judge noted the plaintiff's suggestion of a number of steps that could have been taken by the restaurant, such as calling a taxi[39] he held that "the serving of alcohol alone is not sufficient to support liability, there must be a combination of circumstances: for example, visible intoxication plus the knowledge that the intoxicated party is walking or driving to give rise to the duty of care"[40]

23. It is submitted that the opportunities to argue a lack of causation must be limited. Not only was it not possible in Stewart to detect the driver's level of intoxication, he apparently obeyed all road rules and it was the state of the road that caused the accident[41] Had the driver behaved differently, then the court may have been able to attribute liability to the hotel. Agrios J noted:

    "...assuming obvious intoxication in 1985 (date of the accident), a quiz as to who was driving was not necessary. Today, in 1991, with the advent of the designated driver programme, an establishment would be better advised under these circumstances to ask a group who was driving and assure that obviously intoxicated persons were not driving. This is a gratuitous comment and clearly obiter for this decision"[42]

    Obiter dicta it may have been, but it would be an unwise and brave hotelier who relied on this case today to fulfil its duty of care.

24. An unlicensed, government regulated alcohol supplier was found to be liable for the death of three occupants, and serious injury to another three occupants, of vehicles involved in a collision in Smink -v- Nicholas and the Liquor Control Board of Ontario[43] A customer had watched Mr Nicholas enter the store, staggering, and warned a store clerk. A second store clerk sold a bottle of whisky to Mr Nicholas and allowed him to leave. An empty bottle of whisky was found in Mr Nicholas' car after the accident, and his blood alcohol was 0.287%. The government was found liable for failing to properly train the supervisor's employees and for failing to establish a system to prevent the sale of alcohol to intoxicated customers.

25. Professor Solomon considers that this is proof that courts will not apply different standards to government regulated alcohol providers[44] This may even raise the possibility of a potential claim against a government regulatory body in an Australian state where the authority grants a liquor licence to a negligent hotelier, with a pattern of service of alcohol to intoxicated people who then injure themselves or other people, or fails to adequately take this into account in the conditions of the liquor licence[45]

    Position In The United States

26. Similarly to Canada and Australia, the sale of alcohol to intoxicated people is illegal in most of the United States[46] As would be expected, a majority of American States have equivalents to the Liquor Act (NSW) and a thriving jurisprudence in relation to the liability of commercial alcohol suppliers[47]

27. In Ewing v Cloverleaf Bowl[48] Justice Tobriner, representing the majority, affirmed on an interlocutory hearing that it was not the law in California that it was only the consumption of alcohol, and not the provision, that was the proximate cause of any injury to intoxicated person or to third parties who were injured by intoxicated customers. The furnishing of alcohol to an intoxicated person may be a proximate cause of injury[49] This was a matter that was to be put to the jury. In this case, a wrongful death action was brought as a result of the death of two small children, killed after a patron who had turned 21 (the legal drinking age in California) on the day in question, was served 10 straight shots of 1[51] proof rum, a vodka collins, and 2 beer chasers in less than 11/2 hours. The autopsy revealed a blood alcohol concentration of 0.47[50]

28. The Supreme Court of Minnesota considered that the duty imposed on an alcohol provider required him or her to:

    "...engage the prospective purchaser in conversation, to note specifically the details of the purchaser's physical appearance, to observe the purchaser's conduct during the course of his drinking at the supplier's establishment, or to scrutinise the actions of the prospective customer in other ways by which the supplier may detect intoxication which is observable even though not obvious". [51]

29. The Fifth Circuit Court of Appeal of California, once again on an interlocutory point, has confirmed that there was no legal reason why an employer could not be liable for injuries to third parties, where a minor was induced by his employer to become intoxicated as the result of a Christmas party where the employer knowingly made available copious amounts of alcohol with knowledge that the minor would drive a vehicle on public highways[52]

    Social Host Liability

30. Courts in various states of the US (California, Minnesota, Iowa and New Jersey) have found limited causes of action to lie against social hosts for injuries caused by intoxicated guests[53] The New Jersey Supreme Court ruled in June 1984 that "where the social host directly serves the guest and continues to do so even after the guest is physically intoxicated, knowing that the guest will soon be driving home, the social host may be liable for the consequences of the resulting drunken driving"[54] Even earlier, in 1978[55] the Supreme Court of California held that a social host could be liable to third persons injured as a result of the intoxication of the consumer[56] Justice Richardson, with whom the majority agreed, held that "a social host who furnishes alcoholic beverages to an obviously intoxicated person, under circumstances which create a reasonably foreseeable risk of harm, to others, may be held legally accountable to those third persons who are injured when that harm occurs"[57]

31. A first instance Canadian judge in Baumeister v Drake[58] considered the principles of provider liability that applied to social hosts. However, in the particular case, because the parents of the son hosting the graduation party did not provide alcohol to uninvited gate-crasher, and even attempted to discourage an uninvited gate-crasher from driving, they could not beheld liable for a subsequent accident in which the third party passenger plaintiff was severely injured[59]

32. It is difficult to untangle the discussion of the existence or otherwise of a duty of care on the part of the parents from the factual matrix which rendered them not liable to the plaintiff. Professor Solomon considers[60] Gould J held that, following the principles of the Jordan House case, the same principles of provider liability that govern commercial establishments applied to social hosts. The express words of Gould J are not helpful[61]

    "[Discussing Jordan House] ... thus it is a case of a publican selling to a customer past the point of visible intoxication. The case is of no help to the plaintiffs in trying to attach liability to the [parents]. No Canadian cases have come to the court's attention that go any further than Jordan House. In result the [actions] .... against the [parents] are dismissed."[62]

33. While it is not proposed to discuss the Australian law relating to occupiers' liability here, it is submitted that it does not require a great leap in logic or legal reasoning to apply the principles enunciated in Zaluzna[63] to such a situation[64]

34. In an interesting footnote, Professor Fleming, in discussing US legislative inertia in relation to reform of the tort process, noted that Coulter, "a case that touched a sensitive nerve in constituents ... was promptly repealed by Bus & Prof Code § 25602"[65] Colman notes that all of the US cases, except for the New Jersey case of Kelly, have been overruled by statute[66]

    The Common Law In Australia

    A brief overview of the tort of negligence

35. The availability or otherwise of a claim in Australia against an alcohol supplier for pure breach of statutory duty has been discussed above. In brief, it would appear that a claim in negligence (whether or not in combination with allegations of breaches of relevant supply statutes) would have the best chances of success. To that end, a brief overview of the general principles is set out below, followed by a more detailed discussion of the issues as the relate to alcohol liability specifically.

36. In tort, person A will owe a duty of care not to harm person B's interests (in certain senses) if it is reasonably foreseeable to A that B would be harmed by A's acts or omissions, and if (and only if) there is legal and factual proximity between A and B[67] Proximity involves an analysis of the closeness between A and B, in a physical, circumstantial and causal sense. If it is reasonable to A that as a result of A's actions, B will suffer, and if the relationship between A and B is one of sufficient proximity (which depends on the circumstances), then it would open and expected for a court to find that A has a duty of care towards B. That duty carries with it a standard of care that A is not permitted to breach. The contents of the standard are dictated by many things - principally - what a reasonably prudent person in A's shoes would have done in the circumstances. If A breaches the standard (and does not meet the level of behaviour towards B that the law requires) then A is liable to pay damages to B for losses to B that are caused (in a commonsense way) to B.

37. Given the relative newness of the "alcohol service tort" in Australia, and the lack of any clearly established incremental analogy to guide courts[68] it will be necessary for Australian courts to go to first principles to assess whether a duty of care is owed by an alcohol provider to a particular person.

    Factual proximity

38. In relation to factual proximity, there are two relevant issues:
    1. Knowledge of existence of the thing constituting the relevant risk.
    2. Knowledge that that thing constitutes a risk of injury to the plaintiff[69]

39. In alcohol-provided liability cases, it may be difficult to characterise the "thing" constituting the relevant risk. It is arguable that it is the act of serving alcohol to an already or habitually intoxicated person, or serving alcohol to a person in circumstances where the level of sobriety and intoxication is not already established, or even rendering a sober person intoxicated. A plaintiff would need to show that it was reasonably foreseeable by an employee (the usual agent of the hotelier in such a case) that serving alcohol to an intoxicated patron constituted a risk of injury. It would need to be shown that the plaintiff was in a position where any reasonable employee could see that if reasonable skill and care was not used in relation to the plaintiff, the employee would cause a danger of injury to the plaintiff[70]

40. It is arguable that it is well known in the community generally that, if an obviously intoxicated person is served large amounts of alcohol, or if a sober person was rendered intoxicated by the service of large amounts of alcohol, where the only means of leaving are either by foot or by the plaintiff's own vehicle, then an intoxicated person is at risk of being injured or of injuring another person, by reason of his or her intoxication.

    Legal proximity

41. In addition to being factually proximate A and B must be in relationship of legal proximity with one another (with enough thought and with scientific developments it could be argued that a relationship of factual proximity could be found in most relationships). The concept is relatively amorphous, but will include an analysis of the nature of the relationship between A and B, the ability of A to affect B's interests, the ability of B to guard against any harmful act or omission on the part of B, and questions of reliance and assumption of responsibility[71]

42. It would generally be easy to argue that the injury to the plaintiff has occurred from the positive actions of the employee, in serving alcohol to the plaintiff when he or she was already intoxicated, or in rendering a sober person intoxicated, and therefore there is no need to assess the question of reliance[72] The plaintiff must then show that the plaintiff fell within a class of people to whom the duty was owed, or if this is not possible, that the defendant owed the particular plaintiff a duty to take care.

43. In Hay v Sheargold[73] and Speer v Nash[74] judges in the New South Wales District and Supreme Courts found that entrants into private entertainment facilities serving alcohol fell into a class of people to whom a defendant might potentially owe a duty of care[75] Traffic related hotelier liability cases are slightly different. The cases discussed above deal with a duty to take reasonable care that people entering the premises not be served so much alcohol that they injure themselves on the premises, or that the publican not serve so much alcohol to other patrons that the patrons assault other persons in or around the premises.

44. The extended third party hotelier liability case involves an allegation that a publican has a duty of care not to serve an already or habitually intoxicated person so much alcohol that he or she will then leave the premises and be injured by a third party, over which the publican has no control, or similarly injure a third party.

45. The question of legal proximity and the nature of the duty of care, in relation to negligence by a third party over which the hotelier had no control, fell squarely to be considered in the decision of Johns v Cosgrove.

    Johns v Cosgrove & Chevron Queensland Ltd & Ors[76]

46. At about 10.30pm on 24 April 1990, the plaintiff, then 29 years of age, was standing at a bus stop in Surfer's Paradise, across the road from the location of the hotel, which was the second defendant to the proceedings. In between ran a relatively busy four-lane northbound arterial road. It was relatively quiet at that time but there was still a moderate volume of traffic. The plaintiff had been drinking in the hotel from late in the afternoon until closing time. It was his usual habit to arrive and to become intoxicated, then to leave the hotel, cross a pedestrian crossing at traffic lights, and move to the bus stop where he would catch a bus home. At least some of the hotel staff were aware of this[77]

47. The first defendant was driving a motor vehicle at about 50 to 55 kph northwards, saw the plaintiff swaying and holding onto the bus stop signpost with both hands, and recognised that he was drunk. She then averted her eyes to watch the traffic, and the next thing she caught sight of was movement in the corner of her eye. Predictably, it was the plaintiff who appeared to be moving through the air as if in the middle of a jump, landing a few centimetres in front of the first defendant's bumper bar, and naturally a collision occurred.

48. Justice Derrington found that the first defendant was in breach of her duty of care to keep a proper lookout and failing to take precautions when she had noticed the plaintiff was intoxicated[78] He also found that the plaintiff was "grossly at fault in becoming heavily intoxicated knowing that he would then take himself in that state into the vicinity of such a busy thoroughfare", and that he was guilty of contributory negligence[79]

49. Of most interest is the discussion in relation to the liability of the hotel. At page 6, his Honour noted that there was conflicting evidence as to the policy of the hotel in respect of supply of alcohol to intoxicated consumers. Those customers were supplied, "the only disparity in the evidence being the degree of intoxication involved before refusal to serve"[80] One former employee said that the benchmark was rudeness or abuse or disturbance, but another said it was when a customer had difficulty picking up change from the counter or was staggering[81] Derrington J held that "knowing that an intoxicated person would place himself into a position of danger on leaving the hotel, a publican cannot continue to supply him with the means of greater intoxication without regard to the danger to which he is thereby contributing"[82] He discussed the leading cases in Canada, England and Australia and, in what might be seen as a slight narrowing, or manipulation of the wide test from Jordan House, stated that "it is not negligence merely to serve a person with liquor to the point of intoxication; but it is so if because of the circumstances it is reasonably foreseeable that to do so would cause danger to the intoxicated party"[83] He continued:

    "The danger would be enlarged ~ it were known that the intoxicated person would be negotiating dangerous traffic such as would be found where the hotel was situated between two major arterial roads, and his habit of going home unescorted was known" (at p. 9).

    It would be a small, logically easy, step to insert "or to another person" after "reasonably foreseeable that to do so would cause danger to the intoxicated person".

    Rosser -v- Vintage Nominees Pty Ltd Licensee [84]

50. On 21 December 1994, Mr Rosser went to the Liars Saloon. He may have drunk up to 7 bourbons, 2 "Flaming Lamborghinis"[85] and 3 "Rocket Fuel" cocktails (12 full measures of spirits, topped up with Bailey's Irish Cream and Kahlua)[86] The car yard which employed Mr Rosser had an agreement with its staff that they were not to drink and drive, and that they were to contact the second defendant, trading as "Mobitow", in such a situation. Mobitow would then take both the employee and the car home safely. Mobitow were called. The representative was unable to disengage the car's security immobiliser, and Mr Rosser snatched the keys from the representative and drove his car away. On the way home, he was involved in a collision with the third party's vehicle. The third party sued for property damage and succeeded against Mr Rosser, who then sought indemnity from the hotel and from Mobitow. Mr Rosser's blood alcohol at the relevant time was agreed to be 0.172. [87]

51. Commissioner Greaves accepted that Mobitow's employee had advised Mr Rosser against driving, and confirmed the verdict in favour of Mobitow on appeal[88] Counsel for the hotel, on appeal, submitted that Mr Rosser's intoxication was the cause of his conduct in taking the keys and driving away[89] or that the sole effective cause of the collision was Mr Rosser's conduct in snatching the car keys and driving his car away[90] that the duty on the hotel was "to take reasonable care to avoid the intoxicated person placing himself in a position of danger upon leaving the premises", and that it was not a duty in relation to the serving of drinks to the point of intoxication[91]

52. Commissioner Greaves accepted that Johns v Cosgrove represented the law in Australia[92]

    "... the ultimate issue ... was whether it was reasonably foreseeable on the evidence that serving liquor to the appellant to the point of intoxication would cause danger to the appellant if he drove his motor vehicle after leaving the premises.
    ... it was reasonably foreseeable that serving liquor to the appellant to the point of intoxication would cause danger to him if he drove his motor vehicle after leaving Vintage's premises"[93]

53. He held that it was not open to find that the act of snatching the keys away was a voluntary intervening act which broke the chain of causation between the hotel's breach of duty and the damage[94] He held on appeal that the only reasonable inference was that the act of snatching the keys was a result of the intoxication[95] Accordingly, the "consequence of the appellant driving his car away while intoxicated and colliding with the plaintiff after leaving the hotel's premises was within the risk created by the negligence of [the hotel]"[96] He did not accept that the hotel's duty to Mr Rosser was discharged once he left the premises in the company of the Mobitow operator[97]

54. This case poses problems to a business selling alcohol. The hotel's staff saw Mr Rosser out of the premises in the company of a responsible representative of an organisation whose purpose was to make suitable arrangements for precisely the sort of people in Mr Rosser's position. The court in Jordan House commented that that defendant could have arranged safe transport home.

55. However, in Hague v Billings, the court was critical of the hotel staff's actions in watching the intoxicated Mr Billings from the window of the hotel. Perhaps the hotel's liability in Rosser would only have been discharged had an appropriate person seen Mr Rosser out of the hotel carpark in the passenger's seat of the Mobitow vehicle (Mr Rosser's excessive alcohol consumption might have suggested precautions more than merely seeing him out of the door of the hotel - in this regard, evidence as to Mr Rosser's behaviour in the hotel would be relevant)[98] This would not have helped had Mr Rosser then misbehaved in the Mobitow vehicle on the way home, but arguably this would be a break in the chain of causation (although a personal injury claim against both Mr Rosser and the hotel by a Mobitow driver injured after the misbehaviour of Mr Rosser caused a crash is not inconceivable).

56. The matter is to be appealed and it is expected that the appellant hotel will argue against the finding of breach of duty of care by the hotel, although not the existence or nature of the duty, and on grounds of proximity in relation to the nature of the damage suffered by Mr Rosser.

    Conclusion

57. It is submitted that Australian courts would be and perhaps already are (following the Canadian cases) receptive to an argument extending the liability of hoteliers, both to situations where an intoxicated patron was injured by a negligent third party and to situations where an intoxicated patron injures an innocent third party[99]

58. The Rosser decision extends liability to cases of pure property damage. Both the Johns v Cosgrove and Rosser decisions are in line with established tort law, and, with respect, there is little to fault in the published reasoning. It appears that the crucial issues in the Johns v Cosgrove case will be those turning on the perjury/fraud issue, and factual questions, rather than on the general application of legal principle by Justice Derrington.

59. Although it could be argued that potential innocent victims of negligent intoxicated patrons represent some form of indeterminate class, it is submitted that confining the class to "other road users" or "pedestrians" is an effective antidote to such an allegation, especially when viewed in the context of the availability, and relative cheapness, of precautions. In addition to refusing to serve alcohol past the point of intoxication, "designated drivers" can be encouraged by the provision of appropriate entertainment and drinks, and hoteliers can implement the removal of practices deemed "unacceptable" by the New South Wales Liquor Administration Board[100]

60. It is submitted that the wilder extremes of "social host" responsibility as espoused in some of the American states may not get a receptive hearing in Australia. Indeed, it is perhaps arguable that in a country with a relatively accessible public health care and welfare system, some of the socio-economic factors driving claims against householders that exist in the US, and to a lesser extent Canada, are less likely to have an effect in Australia. The existence of homeowners liability insurance in a particular case, married with the suffering of significant injuries by a guest, may provide the right mix for an exploration of social host liability in Australia. The public reaction to any decision unfavourable to the host, in a country where the backyard party/barbeque, or dinner party are by no means unpopular event, will be interesting to see. It might provoke a similar public reaction as occurred in California, resulting in legislative intervention to abolish or amend the law relating to social host liability.

61. The case of Baumeister must serve as a warning to hosts (and more particularly to household insurers). The accountability of licensed hoteliers, with a professional interest in making profits from serving intoxicating liquor, must attract increasing attention from the courts, in a climate where the statistics show a connection between alcohol and road users and where, for the seriously injured, damages awards are ever increasing. It is expected that Australian jurisdictions will follow the lead of Canada and that the Johns Cosgrove and Rosser decisions are not the final word on hotelier liability cases.

Notes

[1] Gambler seeks damages from pub and Amex, Sydney Morning Herald, 30 June 1998, p 2. Interestingly, the claim is being run by the Wesley Gambling Counselling Service, whose spokesman stated that "clubs and pubs should realise they had a responsibility to gamblers, just as they had to drinkers". It is unclear whether alcohol was involved. On 18 May 1999, Master Harrison in the Supreme Court of New South Wales declined to strike out a claim against the Star City Casino that it induced the plaintiff to gamble, particularly while intoxicated, for failure to disclose an arguable duty of care or applicable statutory duty: Daily Telegraph, 19 May 1999, page 23.

[2] The statutory provisions in other states of Australia are essentially the same: see Liquor Act (NT) ss 102, 121; Liquor Act 199

[2] (Qld) ss 156(1), 165; Liquor Licensing Act 1997 (SA) ss 46, 108; Liquor and Accommodation Act 1990 (Tas) ss 62, 78; Liquor Control Act 1987 (Vic) ss 122(1)(c), 134; and Liquor Licensing Act 1988 (WA) s115.

[3] Solomon R, Alcohol Liability in Canada and Australia: Sell, serve and be sue, National Centre for Research into the Prevention of Drug Abuse, Curtin University of Technology, Western Australia, 1996, pp 1-6.

[4] Solomon (1996) p 5.

[5] See also the harm minimisation and responsible serving amendments in inserted into the Liquor Act by the October 1996 amendments: ss 2A, 20 (2A), 47(A), 68(dl)(d3), 104(4)(d), 125C, 125(4) & (4a), and 25(1A).

[6] Registered Clubs Act 197

[6] NSW s44(a). Amendments in October 199

[6] were to sections 3, 9A(1B), 17(1AA)(a)(xv)(xvi), 17AA(4)(d), 44B, 44A(3) & (4), and sections 73(1)(m), and 35A(1A).

[7] Liquor and Gaming Circular, September 1994, Underage Drinking Program, June 1997, Responsible Service of Alcohol Program, June 1997, Information Bulletin - No More. It's the law, January 1988, NSW Department of Racing and Gaming.

[8] (1957) 97 CLR 36.

[9] (1995) 185 CLR 307.

[10] Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520.

[11] Generally see Davis, JLR, Farewell to the Action for Breach of Statutory Duty? and Stanton, KM, The Legacy of Rylands v Fletcher, both in Mullany N and the Hon J A Linden (ed), Torts Tomorrow: A Tribute to John Fleming, Sydney, LBC Information Services, 1998.

[12] There have been a number of cases concerning liability under the Quebec Civil Code, but since Quebec is a civil law jurisdiction it is not discussed in detail here - Solomon, R and Usprich, S Civil Liability for the Conduct of the Intoxicated Across Canada (1989) Faculty of Law, University of Western Ontario, at pp 15-17. The wording of Articles 1382 - 1384 of the French Code Civil, and §§ 823 and 276 of the German Burgerliches Gesetzbuch are certainly wide enough to encompass this sort of liability: generally, Vranken, M Fundamentals of European Civil Law, Federation Press, Sydney, 1997, Ch 6 and Markesinis, B The German Law of Torts (3rd ed), Oxford, 1994, pp 68 - 79.

[13] Solomon (1996) p23.

[14] (1973) 38 D L R (3d) 105.

[15] The details are set out at p 107.

[16] At p 108.

[17] At p 108.

[18] At pp 111-112.

[19] At p 108.

[20] At p 113.

[21] At pp 105 to 106.

[22] Solomon (1996) p 24.

[23] Solomon (1996) p 28.

[24] At pp 14-15.

[25] Picka -v- Porter and the Royal Canadian Legion Hotel (1980) unreported Ont CA - this discussion of the case is based on the discussion in Solomon (1996), p 24.

[26] However, this should be compared with the peculiar facts in Stewart v Pettit, discussed below.

[27] Schmidt v Sharpe (1983)

[27] CCLT 1 (Ont HC) - once again, based on Solomon (1996), pp 24-25.

[28] (1988) 51 DLR (4th) 321.

[29] At pp 322-323.

[30] At pp 331-333.

[31] At p 329.

[32] Dyck v Manitoba Snowmobile Assn Inc (1985) 18 DLR (4th) 635, [1985] 1 SCR 589, [1985] 4 WWR 319.

[33] Crocker at p333.

[34] At p 333.

[35] At 333.

[36] Hague v Billings, (1989) 68 OR (2d) 321. Mr Billings and his two companions had together consumed 50 pints of beer, a 26oz bottle of rye whisky, and a substantial amount of marijuana before being refused a second drink at the defendant's tavern. They collided with a car driven by Mrs Hague and her 2 daughters. Mrs Hague was killed, and a 14 year old daughter left in a wheelchair.

[37] [1992] 4 WWR 532.

[38] The plaintiff was not wearing a seatbelt: pp 545-548.

[39] At p 539.

[40] At p 541.

[41] Solomon (1996) p 29.

[42] At p 542.

[43] Solomon (1989) at pp 33-34.

[44] (1989) at p 34.

[45] In Daoud v Commissioner of Police (unreported, District Court of New South Wales, 24 November 1997), a four person jury found the Commissioner of Police negligent in failing to have proper procedures in place in respect of granting gun licences. A man with a history of threats against his family, and in respect of whom his wife had taken out a restraining order, was issued a gun licence without proper precautions being taken. He returned to the family home, and, in the presence of the then 9 year old plaintiff, killed the plaintiff's sister, three brothers and mother before committing suicide: Why did police let my dad buy a gun - survivor sues over 1981 massacre, Sydney Morning Herald, 22 September 1997, p 21; Police must pay for giving licence to kill, Sydney Morning Herald, 25 November 1997, p7.

[46] Colman, V, Krell, J & Mosher, J Dram Shop Liability, [1985] 12 Western State University Law Review 417, pp 502-505.

[47] Colman et al (1985) at pp 443-444.

[48] (1978) 143 Cal Rptr 13.

[49] At p 18.

[50] The facts are more fully set out in pp 15 and 16. As Justice Tobriner pointed out, at readings above 0.42 the parts of the brain controlling heart rhythm and respiration become paralysed, resulting in death (at p 17).

[51] Mjos v Village of Howard Lake, 178 NW 2d 862, at 868. This mirrors the checklist provided by the NSW Liquor Administration Board, cited above at .

[52] Brockett v Kitchen Boyd Motor Company, (1972) 100 Cal Rptr 752. See also Harris v Trojan Fireworks 174 Cal Rptr 4

[52] (1981); Romeo v Van Otterloo 117 Mich App 333, 323 NW.2d 693 (1982) (Michigan); Fruit v Schreiner 502 P.2d 133 (Alaska 1972).

[53] Colman et al (1985) at p 457.

[54] Kelly -v- Gwinnell & Zak, 476 A.2d 1219 (NJ 1984).

[55] In Ross and Ross v Ross, the Supreme Court of Minnesota rejected the defendants' appeal against a finding that any person furnishing liquor in violation of law, including those who are not commercial vendors but who merely provide liquor gratuitously as an act of hospitality, may be liable if injury occurs to a third person as a result of the intoxication of the illegally supplied recipient: 200 NW.2d 149 (1972) at p 153.

[56] Coulter v Superior Court of San Mateo County and Schwartz and Reynolds, Sup, 145 Cal Rptr 534.

[57] At p 535.

[58] Baumeister -v- Drake 5 BCLR (2d) 382.

[59] At 389.

[60] At pp 45-46.

[61] At pp 390-391

[62] However, liability of employers and (arguably social hosts) for sexual abuse and assault torts may be a relatively new area for tort law both in Canada and in New South Wales: Feldthusen, B, Vicarious Liability for Sexual Torts, in Torts Tomorrow (cited above), and S v S, unreported, New South Wales Court of Appeal, 17 July 1998.

[63] Australian Safeways Stores Pty Ltd v Zaluzna (1987) 162 CLR 479 - the High Court effectively abolished the various aspects of the law relating to occupiers' liability. The law in this area had previously been broken into various, formalistic, categories, and the existence and content of any duty of care owed by a landlord/occupier to entrants to property depended on, among other things, the characterisation of the entrance (for example, whether the entrant had come onto the property to do business or as a trespasser). The High Court (to all intents and purposes) held that the duty of an occupier was subsumed by the general law of negligence.

[64] Solomon (1996) discusses occupier's liability in this respect at pages 31-41 in detail.

[65] Fleming, J, The American Tort Process, 1988 Oxford, p 39.

[66] (1985) at p 457. The legal situation in California in respect of all alcohol service liability is problematic due to incomplete and vague statutory immunities granted by the amendments in 1978: Colman et al (1985), pp 423-434.

[67] Generally, see Balkin R and Davis, J, Law of Torts, Butterworths, Sydney, 1996, chapters 7 and 8. The recent decision of the High Court in Perre v Apand Pty Ltd [1999] HCA 36 sets out in detail the current state of the law in this respect - especially in relation to proximity.

[68] Sutherland Shire Council v Heyman (1985)157 CLR 242 at 481 per Brennan J,

[69] Generally see Australian Torts Reporter, CCH, pp 54,001ff.

[70] The Council of the Shire of Sutherland -v- Heyman (1985) 157 CLR 424.

[71] Once again, Perre v Apand Pty Ltd is recommended reading - the High Court was confronted with a case where South Australian potato growers A in farms surrounding a property owned by B which also grew potatoes were at the mercy of B's attempts to prevent the outbreak of a disease known as "potato wilt". If the disease occurred, then relevant Western Australian regulations prevented the import of any potatoes from an area within a certain radius of farm B into Western Australia. Growers A could do nothing about what B did on its own farm - when potato wilt occurred on B's farm, growers A lost their export market to Western Australia. Questions of proximity figured large in the decision - it seems that the case represents the start of a move away from reliance on questions of proximity as determinative of the existence of a duty of care.

[72] The Council of the Shire of Sutherland -v- Heyman (1985) 157 CLR 424; Pyrenees Shire Council -v- Day (1998) ALJR 152.

[73] NSW Sup Ct, Dunford J, 18 April 1996, unreported.

[74] NSW Sup Ct, Studdert J, 17 December 1992, unreported.

[75] The Full Federal Court delivered a similar decision on appeal in Chordas v Bryant (Wellington) Pty Ltd (1988) 91 ALR 149.

[76] Qld Sup Ct, Derrington J, 12 December 1997, unreported. The case was appealed to the Court of Appeal on the ground that the plaintiff had procured witnesses to give perjured evidence and that the judgment against the hotel had been procured by fraud and the matter was remitted to the Supreme Court: Cosgrove and anor v Johns (unreported, Queensland Court of Appeal, 29 May 1998). On 20 September 1999, the Queensland Supreme Court confirmed a finding of fraud and it seems the matter will go back to the Court of Appeal to see whether a new trial will be ordered.

[77] At p 2.

[78] At p 4.

[79] At p 4.

[80] At p 6.

[81] At p 6.

[82] At p 6.

[83] This followed the Canadian case of Mayfield Investments Pty Ltd v Stuart (1995) 121 DLR (4th) 222.

[84] Rosser v Vintage Nominees Pty Ltd t/as Liars Saloon and West Coast Acceptances Pty Ltd, unreported, District Court of Western Australia, 5 June 1998. The case has been appealed: Drunk driver wins claim against hotel, Sydney Morning Herald, 27 June 1998, p7. The appeal was listed for directions on 30 September 1998 but according to the author's enquiries the appeal is still pending.

[85] A drink that includes Sambucca which is set alight before drinking.

[86] Drunk driver sues pub, The West Australian 26 June 1988, p 3.

[87] At p 6.

[88] At p 17 of the judgment, impliedly on a causation/novus actus argument.

[89] At p 8. An echo of the argument rejected by the Supreme Court of California in Ewing.

[90] At p 9.

[91] At p 8. The wider duty is similar to the view of Justice Ritchie in Jordan House.

[92] At p 9.

[93] At p 10.

[94] Interestingly, there does not appear to be any discussion on the nature of the damage. In this case, it was a liability to pay damages to a third party. The third party was not a party to these proceedings. Arguably, the decision means that a person who is rendered intoxicated by a hotel in circumstances where the hotel should have acted otherwise, who then proceeds to incur an economic loss in the form of a legal liability to a third party, is entitled to redress against the hotel. The Canadian and US cases involved the third party suing the hotel as a defendant. It is submitted that Rosser, on face value, represents a significant step forward in the law relating to negligent infliction of pure economic loss.

[95] At p 11. The Commissioner cited March v Stramare, and it is submitted that this is a correct application of the Australian law as to causation, and a proper ground for rejecting the hotel's quasi-but for causation arguments - see pp 12- 15.

[96] At p 15.

[97] At p 16.

[98] The decision of Commissioner Greaves does not discuss the evidence in relation to this.

[99] There has been some academic criticism of the source in tort law of commercial host liability: Klar, L, Downsizing Torts, in Torts Tomorrow (cited above) at pp 309-10.

[100] Such as drinks in non-standard measures with or without a motive title such as "Slammers/Test Tubes", drink cards providing multiple free drinks, promotions encouraging patrons to consume liquor irresponsibly, refusal to serve half measures of spirits on request or provide reasonably priced non-alcohol drinks, or any promotion such as "free drinks for women" or "two for one" encouraging excessive consumption of liquor for an unreasonable amount of time - see Liquor Administration Board Circulars cited above.