Council of the Shire of Noosa v Farr & Ors

For the reasons given earlier I consider that the plaintiff suffered loss in December 1989 when it paid the dredging contractors. The cause of action was thus complete prior to the expiration of the contractual time limit so the implication would not assist the plaintiff.

[133] The plaintiff's last attack on the contractual limit takes the form of an estoppel. It is submitted that it failed to commence a claim within time because the defendants represented, in effect, that the cause of the inoperability of the screens was not their design but other, extraneous, factors. These representations are said to contain a further, implied, representation that the defendants had incurred no liability to the plaintiff with respect to the design. The plaintiff claims to have relied upon that representation to delay making a claim. The effect of the representation is said to be that the plaintiff was denied the opportunity, for some time, to discover that it had a claim.

[134] I entertain grave scepticism that an estoppel of the kind described could ever operate to defeat a contractual limitation, in least in the absence of fraud. Part of my scepticism derives from the need to imply the critical representation and the necessity for the plaintiff to establish that officers charged with the serious responsibility of implementing a scheme of the magnitude of the one in question would be so feeble minded as to act upon such a facile and self serving representation. It is equally difficult to see how the representor could have thought that the implied representation had a tendency to induce the plaintiff to alter its position on the strength of it. If the representation lacked that character it was not material. See Actionable Misrepresentation by Spencer Bower and Turner 3rd ed Article 18. An estoppel, of course, prevents a representor denying the truth of the representation. Here the defendants do not deny it; they still maintain they were not negligent. An estoppel allows the representee to act on the basis that the representation was true. Here the plaintiff wants to say it is false. It is not necessary to ponder these matters too deeply because the evidence, perhaps not surprisingly, does not make out the requisite reliance by the plaintiff.

[135] The plaintiff's submissions put forward Mr Williams, the shire engineer, as the person whose "knowledge and belief" is relevant. The plaintiff did not explain why Mr Williams should enjoy this monopoly and why it is not equally relevant to look at the knowledge and belief of other senior employees or councillors.

In any event Mr Williams did not say that he acted in reliance upon the representation. What his statement does say is that in May 1990, following a letter from the plaintiff to FEA which advised that recent floods had again filled the river with sand and covered the screens, to which no reply was received, Mr. Williams "lost confidence in Farr Evrat providing an acceptable solution. (The plaintiff) started looking elsewhere for answers . . .". It seems difficult to believe that, in that frame of mind, Mr Williams would have gullibly accepted the truth of the implied representation. In his supplementary statement Mr Williams explains that at the time he had no reason to suspect that FEA or Mr Farr had been negligent in the design of the intake, and notes that Mr Farr had suggested the contrary. It is significant that his statement does not contend that he acted upon that suggestion and refrained from advising the plaintiff to take action against the defendants. Mr William's later assertion in his supplementary statement (para 10 of exhibit 5) that he did not believe that the defendants had been negligent "because of the advice Mr Farr had given as to there being other causes of the problem" does not sit happily with his earlier statement that he had lost faith in anything Mr Farr had to say about the intakes.

In oral testimony Mr Williams said that he did not begin to consider whether FEA might or might not have been negligent until June 1991 (T 73.15). It is hard to see, then, that he positively believed it had not been negligent because of a representation to that effect. In April 1991, prior to the expiration of the contractual time limit, Mr Williams met with the shire solicitor to consider, on a preliminary basis, whether FEA had been negligent and what investigations should be undertaken to ascertain if that were so. Again the inconsistency with the reliance necessary for an estoppel is obvious.

[136] By letter dated 7 March 1990 FEA's bank wrote to the plaintiff to inquire whether the bank guarantee provided to the plaintiff as an earnest of the defendants' performance of their agreement could be released. Mr Steel discussed the response with Mr Williams in April 1990. They decided the guarantee should not be released because of the possibility that the design of the intake had been negligent and the plaintiff may look to recover some of the money it had spent and would spend to rectify the deficiency. Mr Steel's opinion that FEA might have been negligent was not affected by anything said by FEA in their correspondence about the cause of the problem (T 319.20).

[137] By October 1989 there was disquiet among the public and rate payers of Noosa about the failure of their very expensive scheme. The matter had attracted the attention of the local news media. The problem was well known though its cause was not obvious, and the defendants' liability was only a possibility. Nevertheless one of the plaintiff's councillors, Mr Abbott was adamant that by the end of 1989 he would not have accepted any statement by the defendant that they were not responsible. At least one other councillor shared that view.

[138] The plaintiff does not establish that its lateness in making a claim was induced by any representation made by any of the defendants that they were not responsible for the failure of the intake.

[139] The plaintiff has made out some of the causes of action it pleaded, but in respect of those clause 4.3 of the contract prevents the recovery of damages. There must, accordingly, be judgment in the action for the defendants.