Conte v Surfers Chateau Limited
[1998] QDC 77
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- Conte v Surfers Chateau Limited[1998] QDC 77
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Conte v Surfers Chateau Limited[1998] QDC 77
Conte v Surfers Chateau Limited[1998] QDC 77
DISTRICT COURT | Plaint No 626 of 1993 |
CIVIL JURISDICTION
JUDGE ROBIN
CARLO CONTE and ELISA CONTE | Plaintiffs |
and
SURFERS CHATEAU LIMITED | Defendant |
SOUTHPORT
DATE 10/03/98
DAY 2
JUDGMENT
HIS HONOUR: This is an innkeeper's liability case. From the point of view of innkeepers, as the defendant company is conceded to be, the law is draconian; see, for example, Trevor Atherton's article, Tourist Accommodation Operators Beware, the Inns and Outs of Innkeeper's Strict Liability for Guest's Goods Proctor May 1996, page 12 and the views of Hart J with whom Hanger J agreed in Turner v. Queensland Motels Proprietary Limited (1968) Queensland Reports 189 especially at 201.
The position in Queensland in cases like the present where a guest's belongings have allegedly gone missing from the defendant's inn was considerably affected by the repeal of section 92 of The Liquor Act 1912 as shown in Atherton's article. A judicial description of the same legislative history was given by Lee J in Irving v. Heferen (1995) 1 Queensland Reports 255 at 261 and a commentary on that case by Clive Turner may be found in volume 16 Queensland Lawyer, page 5.
Mr O'Sullivan, appearing for the defendant, supplied me with two helpful statements of the law affecting innkeepers. The first is Halsbury's Laws of England (4th) volume 24 paragraph 1226:
“Subject to certain exceptions, the proprietor of a hotel, as an innkeeper, is an insurer of the property of his guests which is lost or stolen within the hospitium of the inn, and he is under the same liability to make good to his guest any damage to the guests's property brought to the hotel as he would if the goods were lost. The liability of a hotel proprietor is strict: it arises without proof of negligence on his part, but, subject to certain conditions, the liability can be limited in amount.
This liability does not depend upon bailment, pledge or contract, for the duties, liabilities and rights of hotel proprietors with respect to goods brought to hotels by guests are founded upon the custom of the realm with regard to innkeepers, and they depend upon the common law or custom of the realm, as modified by statute, and upon that alone; they do not come under any other head of law. It is immaterial, so far as that obligation is concerned, that the goods are stolen by intruders or by the hotel's employees or by another guests, or that their loss is unexplained; he is liable for keeping them safely unless they are lost by the guest himself.”
In addition he referred me to Swift J's comments in Winkworth v. Raven (1931) 1 Kings Bench 652 at 657, as follows:
“An innkeeper is commonly said to be an insurer of goods of the guest brought to the inn against loss by theft.” This is, I think, substantially accurate because an innkeeper undertakes by the common law that the goods of his guests shall not be stolen by his default and if loss of the goods occurs it is to be presumed that the goods have been stolen by failure of the innkeeper to take proper care of them unless he can show: (a) that the guest retain control in such a way that he relieve the innkeeper from his duty to care of them, or; (b) that the loss occurred by negligence of the guest or by; (c) the act of God or the King's enemies”
The repeal of section 92 means that the rigour of the common law applies again in Queensland.
Mr O'Sullivan claimed to have established either or both of (a) and (b) in Swift J's formulation.
The plaintiffs, Mr and Mrs Conte, arrived at the defendant's inn, known as Surfers Chateau, in the early evening of 15 August 1993 as part of a bus load of 63 retired people from Melbourne's Italian community. The de facto tour guide was Mr Viotto.
The property of the Contes, which is said to have gone missing from the defendant's premises, was jewellery and $1800 in $100 notes.
There is evidence from a bank statement to corroborate Mrs Conte's claim to have withdrawn the sum of $2,000 to take with her on the trip.
There are photographs which corroborate her possession, in earlier times, of the jewellery described in the plaint or most of it.
I accept her evidence that that jewellery was all she had and that her method of keeping it safe was to keep it in a purse with a clip, which she produced in Court. It seemed to be about seven inches long and five inches deep. Sadly, the receptacle now has another use of storing her medications.
Within the travelling group's first 24 hours or so at the Surfers Chateau, stories were abroad of one or two members having had handbags stolen in a context where apparently warnings had been given to guests to keep their balcony doors locked against possible intrusion of thieves by that means.
Mrs Conte, in the course of a discussion with Mr Viotti and his wife and Mrs Codognotto in their apartment, became anxious about the security of her valuable belongings. Mr Viotti's inquiries established that the defendant had a system of security boxes which might be available. The Contes determined to make use of one.
Anticipating later developments, I interpolate that on the evening of their departure, when the Contes sought to retrieve the jewellery and $1,800 already mentioned from the security box, it was not there. The defendant's first line of defence is that nothing of any value was ever placed in the security box. If that is so, of course, the plaintiff's can have suffered no relevant loss. The plaintiff's have not only their own evidence regarding the bringing of the jewellery to the Surfers Chateau. A number of others in their party are able to give evidence of having seen it there and it seems that some of the items would have been known to them from being worn by Mrs Conte on social occasions in Melbourne.
The items were placed, I am satisfied, in an envelope, after having been wrapped in what was described as tissue paper. The nature and source of that at some points in the trial seemed mysterious, but the evidence satisfies me that Mrs Conte had kept the items wrapped in that same tissue paper in her purse. The corroborating witnesses, or some of them, also saw the money; while they may not have counted it, in the circumstances, I am comfortably satisfied that Mrs Conte placed in the envelope the $1,800 she mentions.
There is a mystery regarding the envelope as well. The defendant suggests that Exhibit 14 is an envelope of the size which concededly Mr Conte, with the assistance of Mr Viotti, placed in security box number 6 in the early evening of 16 August 1993 in the reception area of Surfers Chateau. Such an envelope, but of different colour, it was said, was found completely empty on 25 August 1993 when Mr Conte went to retrieve it. In my opinion, the likelihood is that the envelope which was deposited was a rather larger one and probably the smaller of the two varieties imprinted with the name of the defendant, or its building, described by Mr Mahan as A5 size. (His demonstration indicated something half the size of the common A4). This is supported by the evidence that the envelope was supplied by Mr Viotti. He probably came into possession of one, along with others in the group, as a receptacle to contain keys and perhaps some literature which the defendant handed over to them on their arrival.
It is my view that although the money and jewellery items would not have been particularly bulky, even with tissue paper wrapping, the envelope as deposited must have been thicker than the one centimetre estimated by Mr Martin in his statement admitted under the Evidence Act. He was the defendant's employee who was charged with opening up the security box arrangement. He was available when this action came on for trial in the middle of last year. At that time the plaintiff's apparently were not ready to go on and an adjournment ensued.
It would seem unjust to the defendant to be deprived of the evidence of Mr Martin who now cannot be found, according to Mr Delaney's evidence. Until very recently, he was in fact in residence in Surfers Chateau.
Mr Howe, who did give evidence, seems to have taken a more active role in establishing the security box arrangement with the male plaintiff. Mr Martin had not attended to that task before and required to be guided through it by Mr Howe to the extent of Mr Howe having to operate in conjunction the two keys required to lock or open the box. It is Mr Howe whose signature appears on Exhibit 1, a card, also signed by Mr Conte, setting out the basis of the deposit.
One purpose of the card was clearly to commit the guest to the justice of the defendant making a charge of $150 if the guest's key, one of the pair required to lock or gain access to the security box, should be lost. The other purpose of Exhibit 1 was to record access to the security box and transactions effected during access. These ought to be attested by signatures of the guest and the defendant's staff.
The signature of the guest would plainly be a potential means of checking the identity of a person turning up with the guest's key and seeking access. The careful system designed when the cards was produced was not implemented in practice, at least by the time of the events which concern the Court. The practice was to regard possession of the guest's key as sufficient authentication of the presenter's right to have it and to access to the security box.
The other key required for that purpose was a master key which operated the second lock on at least the 15 security boxes, depicted in Exhibits 17 and 18, of which number 6 was one, and perhaps also similar security boxes in another area which were larger in size.
The evidence in the case from the defendant's witnesses, none of whom was a locksmith, none of whom would have had precise knowledge of the security system, was that it was indispensable to have both the guest's key, which was different for each security box, and the master key to get access to any of the boxes.
I was told the master key would not operate the lock for which the guest key was required. Forced to fight the case on its second line of defence, on the basis that Mr Conte did deposit items with it in safe custody, the defendant takes the position that Mr Conte or someone with his authority must have had access to security box number 6 between the 16th and 25 August 1993 and removed the items placed there. As I understand the defendant's pleading, that is the allegation.
The defendant of trial seemed to wish to rely on the possibility that negligence or carelessness in Mr Conte may have permitted someone else to get his key and persuade a staff member of Surfers Chateau to open the security box and remove the valuable items which I do find were placed in it on 16 August.
It is on the basis of the facts or matters just recounted that Mr O'Sullivan makes his submissions that Mr Conte retained control, that is by possession of the guest's key, in such a way as to relieve the defendant from its duty to take care of the items deposited. And also, or alternatively, that the loss occurred by Mr Conte's negligence regarding the keeping secure of the guest's key.
The circumstances are quite unusual. The defendant plainly retained control of security box number 6 every bit as much as the plaintiffs. Access could not be obtained without the use of the master key. Furthermore, the relevant security box was in an area inside the reception desk of Surfers Chateau and plainly not accessible to the general public and intended not to be accessible to the general public, or guests in Surfers Chateau if it comes to that.
The defendant's evidence suggests that if access to a security box was desired that was done by a staff member who would obtain and operate both keys but with the guest looking over his or her shoulder, having been invited in behind the desk for that purpose. A guest has no effective control of such circumstances because his or her control is subject to cooperation of the defendant's staff.
The discovery on 25 August that the items deposited were gone caused considerable excitement, on all accounts. The police were summoned but I've heard nothing of their involvement. Their inquiries presumably had no useful result. Mr Mahan told me of his unproductive inquiries of the defendant's staff who might have cooperated in giving Mr Conte (or someone assimilated with him through his authority or negligence) access to the security box, if that happened; there may perhaps have been a dozen staff in that category.
One would have thought that in dramatic circumstances of a guest (apparently for the first time in Surfers Chateau) complaining of a very substantial loss from the security box, there would have been no difficulty in identifying the staff member who facilitated access so the deposited items could be removed. That assumes, of course, that all staff members are being honest.
As one would expect, there existed a duplicate or duplicates of the master key available to the defendant. Its witnesses asserted there were no duplicates of the guests' keys which meant that if, as occasionally happened, guests lost their keys, the lock had to be destroyed to gain access to the security box and then replaced with a new one. Mr Ewing became expert in carrying out that procedure.
Accepting his confidence that the reputable locksmith he dealt with, Frank O'Neill's Locksmith of Ashmore Road, would never have made a duplicate of a guest's key, the possibility that some other less scrupulous locksmith might have done so at the behest of a dishonest guest or staff member cannot be excluded. I am far from finding that anything along these lines happened. The evidence is simply not there.
Unfortunately for the defendant, this case is litigated in a context in which the law presumes things against it. Mr Conte denied having availed himself of access to the security box and ever being without the guest's key, which he kept in his wallet or in his trousers. I accept both him and Mrs Conte as honest witnesses. Indeed, I accept all witnesses of both sides of the case as falling in the category of honest witnesses.
The loss which I find occurred of money and jewellery is thus “unexplained”, to use the term found in Halsbury. That does not help the defendant. Mr Bowden, for the plaintiff, sought to establish the defendant's liability on a second basis, that there was a bailment for reward in circumstances which placed on the defendant the onus of showing that it took reasonable care of the property entrusted to it.
I was referred to Palmer on Bailment, second edition, pages 511 to 513. None of the authorities there appears to reflect the present situation of double keys: one with the bailor, one with the bailee.
Mr Bowden cited the usual well known authorities, such as Jackson v. Cochrane, (1989) 2 Queensland reports 23, Pitt Son and Badgery Ltd v. Proulefco SA, (1984) 52 ALR 389, Conway v. Cockram Motors (Christchurch) Ltd, (1986) 1 New Zealand Law Reports 381, and, on the onus of proof, cited Palmer at 790.
It seems to me unnecessary for me to make a finding that this was a bailment case but on the balance of probabilities, it was a bailment and a bailment for reward. The authorities (in particular, the first references to Palmer mentioned), indicating that there need be no separate consideration for the bailee's taking goods into custody.
The plaintiffs are, in my judgment, entitled to damages, and the assessment of them is an unusually difficult task. That does not relieve the Court from carrying it out as best as it can. See Commonwealth of Australia v. Amann Aviation Pty Limited, (1991) 174 CLR 64, at 83, per Mason C J and Dawson J, and 138 per Toohey.
The parties presented different views as to the basis on which damages ought to be assessed, the plaintiff contending for a restitutio in integrum approach or a replacement cost (which might mean the cost of new items) approach in reliance on authorities to be found in Palmer at page 78. Mr O'Sullivan submitted the Court was required to assess market value in accordance with general principles expounded in McGregor on damages, paragraph 1030 and following. Can you tell me what edition that was, Mr O'Sullivan?
MR O'SULLIVAN: It is the latest edition, Your Honour, that is all I can say.
HIS HONOUR: Thank you. If that were the correct approach, the plaintiffs' difficulties are perhaps greater in that the only valuation evidence they presented was that of Mr De Pasquale, a jeweller of 45 years' experience, and also a long standing friend of theirs who claimed to be an expert in values of new jewellery only. He did not claim any expertise at all in the market in used items.
Other things being equal, the views of Palmer in the work specific to bailments are likely to be more apposite. I have attempted to be careful to ensure that there is a basis in the evidence for my conclusions on quantum. I would say that I am prepared to accept Mr De Pasquale as an expert in his field. If his experience is as he suggested, which was not challenged, I think he has expertise which might well outstrip that of a person who had done some formal course and had formal qualifications in valuing jewellery, but perhaps not as much practical experience.
Mr De Pasquale had some knowledge of the items through his acquaintance with Mrs Conte. Although this was not explored with him, she said that when her sister brought some items from Italy for her, she would take those to Mr De Pasquale to obtain his opinion.
He produced a valuation, Exhibit 15, dated February 1994 made in unusual circumstances. Mrs Conte came to his shop and the two of them adopted a procedure of locating items which were comparable to those that had gone missing. Mr De Pasquale then identified the retail price of such items. There are obviously real concerns, especially for a defendant, arising, from that methodology. The valuation was, it seems, prepared in circumstances where a hope was entertained that the defendant would make payment of the values claimed. It may be asking too much of human nature to expect the selection of comparable items to be done in a conservative way which would protect the defendant's interests rather than in an indulgent way which might protect the plaintiffs' interests.
All of the items are valued by Mr De Pasquale in round figures. Although loath to concede that it was permissible for the Court to embark on an exercise of discounting Mr De Pasquale's figures in some way, Mr O'Sullivan urged that if the Court did so, it ought to be done in what he described as a mean way, which I take it I refers to the plaintiffs' stand point.
It is convenient to adopt the numbering of the 10 items of jewellery in the plaint and set out in these reasons, the descriptions of the items in the plaint and the plaintiffs' related monetary claim.
PARTICULARS OF GOODS DEPOSITED
1 diamond ring, single stone | valued $15,000.00 | |
1 white pearl ring | valued $1,600.00 | |
1 topaz ring with rubies | valued $5,000.00 | |
1 necklace with pendant and photos | valued $3,000.00 | |
1 necklace with amethyst stone and pair of earrings | valued $3,500.00 | |
1 necklace with cross | valued $1,400.00 | |
1 brooch with cluster of diamonds | valued $3,000.00 | |
1 brooch with three large diamonds | valued $5,000.00 | |
1 brooch with white pearl and two pale blue pearls | valued $2,000.00 | |
1 bracelet (four rings with medallions) | valued $2,100.00 |
(The first reference to $5,000 appears to reflect inaccurately Mr De Pasquale's valuation of $3,500).
The defendant made the general point that Mr De Pasquale's new prices all contain an allowance for a sales tax at one-third of what would otherwise be the value and price of the item.
It was submitted that a deduction to that extent was appropriate in all cases. I am not satisfied that this is right. If new items are purchased, sales tax has to be paid and there is no material before me which enables me to say to what extent, if any, the sales tax phenomenon is reflected in second-hand prices.
In respect of item number 1, I accept Mr De Pasquale's valuation of $15,000. A particular reason for that is that he was the maker of the ring which was lost. It appears in a photographic exhibit. He appeared to have a good recollection of that ring and in particular of the large diamond in which resides almost the whole of its value.
The effect of his evidence, as I understood it, was that if the Contes wished to replace that ring, which he made as an eternity ring at about the time of the plaintiffs' silver wedding anniversary, the cost would be $15,000 or would have been $15,000 in February 1994. There was no evidence before me to show that values might have changed since then. I think, in the circumstances, I have to assume they remained constant.
In respect of item number 2, in cross-examination of Mr De Pasquale, there emerged some difference of opinion between him and the defence as to the size of the pearl. There was no indication what value the ring might have had if the pearl were a 7.5 millimetre one rather than 12 millimetres as Mr De Pasquale said it was. No sufficient reason has been shown for departing from his valuation.
In respect of item number 3, I do propose to make a gesture towards conservatism in the defendant's favour, particularly in light of the misgivings about Mrs Conte's and Mr De Pasquale's approach to the valuation - to which there was probably no practical alternative. I have adopted the approach of accepting the value suggested to Mr De Pasquale by Mr O'Sullivan in his cross-examination.
It was obvious that the defence had had access to a person proficient or claiming to be proficient in valuing jewellery. No such person was called by the defence, which was probably wise in that. If such a witness had been called, the defendant could hardly have complained if his or her opinions about value were accepted. The sum said by Mr O'Sullivan to be the value of that item in the cross-examination was $1,095. That is the sum I accept.
In respect to item 4, I accept Mr De Pasquale's opinion of value at $3,000. This is a difficult item. It concerns a very substantial gold chain which is depicted in photographic exhibits, particularly Exhibits 4 and 5. The main difference between Mr De Pasquale and Mr O'Sullivan appeared to be the weight of gold in it. Of this item, perhaps more than any other, one can get a clear idea of from the photographs. I am willing to accept Mr De Pasquale's valuation of it. I do not think it appropriate, in respect to this item, to accept that its value is no more than what might be called the scrap value of the gold for melting down purposes.
In respect of item 5, once again, I act on the defendant's valuation, “put” to Mr De Pasquale at page 101 of $1,115. That did not include earrings which also form part of this item. I accept what Mr De Pasquale put on the earrings as $700 being the bottom of a range he indicated.
In respect of items 6 and 7, as I read the cross-examination, there was no challenge by Mr O'Sullivan to Mr De Pasquale. Item 6 comes in at $1,400; item 7 at $3,000. Item 8, once again, is one in which I accept the defendant's suggested figure of $4,000 as against Mr De Pasquale's $5,000, by way of acceding to Mr O'Sullivan's plea to bend over backwards, as it were, to ensure that his client is not ordered to pay an excessively large amount. I adopt the same approach on item 9 and assess the damages as $540. In respect of item 10, I accept Mr De Pasquale's figure of $2,100 against the interesting background of the defendant suggesting to him that the figure was $2,200.
The total of the jewellery is $33,550. For reasons indicated already,
I am not inclined to award interest on that, although I should give Mr Bowden the chance to make submissions.
It follows from the foregoing that the plaintiff's are entitled to $1,800 in damages in respect of the money. That does carry interest which I have assessed at $810 applying a rate of 10 per cent. It seems that the total sum ought to be $36,160. I am subject to correction on that.
MR BOWDEN: Your Honour, I won't say too much about interest I know we'll formally-----
HIS HONOUR: Can I just say one more thing?
MR BOWDEN: I'm sorry, Your Honour.
HIS HONOUR: The last thing I want to do is mention an authority Mr Bowden referred me to, Neat Holdings Proprietary Limited v. Karajan Holdings Proprietary Limited (1992) 110 Australian Law Reports 449, especially at 450 where there was an application of Brigginshaw's case.
From the outset, Mr Bowden presented the case as one in which his clients were effectively charged with fraud. He said that this required the defendant to satisfy the civil standard of proof in its more rigorous manifestation. I have not found it necessary to proceed in that way.
I accept from Mr Bowden that his clients are extremely concerned that effectively such a charge has been made against them. The result of the proceedings indicates that there is no basis for suspecting that they might have been guilty of seeking to perpetrate any fraud.
I reiterate that I assessed both of them as honest people and I doubt that they would be capable of a fraud of the kind in contemplation, and particularly in the milieu when their associates in the Italian community were all about. I do not think I need repeat the submissions Mr Bowden made as to the steps the plaintiffs might have taken had they been bent on perpetrating a fraud such as, for example, having less challengeable valuation evidence available in advance.
...
HIS HONOUR: There will be judgment for the plaintiffs for $36,160 plus costs, to be taxed.
...
HIS HONOUR: I will add to the costs order that I made and order that from 1 August 1995 the costs be taxed on a solicitor and client basis under Rule 118(1).