REVIEW OF AUTHORITIES RELEVANT TO THE LIABILITY OF THE COUNCIL AND THE STATE IN NEGLIGENCE
221 The learned trial Judge found that the negligence of the Council and the State consisted in a failure to exercise their statutory powers. The questions raised are whether the Council and the State owed a duty of care to consumers of oysters harvested from the Lake, and, if so, whether they breached that duty by failing to exercise their statutory powers, and, if so, whether that breach caused Mr Ryan's illness.
222 Before I consider the individual appeals, I will outline in chronological sequence the leading Australian authorities relevant to the issue of a negligent failure of a public authority to exercise its statutory powers. Liability of the present kind is a comparatively recent development and the applicable legal principles are not yet clearly and firmly established.
Major Australian Authorities
223 A convenient starting point is Sutherland Shire Council v Heyman (1985) 157 CLR 424 ("Heyman"). The respondents in that case purchased a house in 1975. In 1976 structural defects appeared. These were caused by the subsidence of inadequate footings. The municipal council had approved plans and issued a building permit in 1968. Its officers had carried out inspections when the house was under construction but there was no evidence that they had inspected the footings. When the respondents purchased, they did not obtain from the council a certificate that the building was a complying one. Nor did they enquire of the council. Nonetheless, they claimed that the council owed them a duty of care and was liable to them in damages on the basis that the structural defects had flowed from the council's negligent inspection.
224 A finding by the trial Judge that the council was not negligent in approving the plans and issuing the building permit was not challenged on appeal. But his Honour found that a council officer had inspected the site after the foundation trenches were open and before the foundations were laid and that the council was negligent in the manner of inspection.
225 It was a condition of the building approval that the council be notified when foundation trenches were open and before foundations were laid. If the trenches had been inspected it would have been obvious that they were, and the proposed footings would be, inadequate. Searches of council files reveal a record of only one inspection, by which time the frame of the house had been erected. The record of the inspection read "Frame OK".
226 The trial Judge inferred that the builder had given the required notice to the council and that its officer had inspected the open trenches. The Court of Appeal held the inference insupportable but thought that the council had been negligent on the occasion of the frame inspection in not then detecting the inadequacy of the footings.
227 All five members of the High Court agreed that the council was not liable. Gibbs CJ, with whom Wilson J agreed, was of that view because the evidence did not establish that the council officer had inspected the foundations at all, a discretionary matter rather than an obligatory one, or that it would have been negligent for him to inspect the frame without inspecting the foundations.
228 Mason, Brennan and Deane JJ thought the council not liable because, in the absence of inquiry of it by the respondents, they had not relied on its having inspected the building and satisfied itself that the building complied with the law, and it owed them no duty of care (Deane J thought the absence of reliance indicative of the absence of the necessary element of proximity). Their Honours referred to the fact that, although s 317A of the Local Government Act 1919 (NSW) provided for applications to be made to councils for, and the issue by them of, certificates that buildings complied with that Act and the Ordinances made under it, the respondents had made no such application.
229 Mason J thought that it was "reliance" on a public authority to perform a function that gave rise to a duty to exercise a statutory power. His Honour distinguished between "specific reliance" (or "specific dependence") and "general reliance" (or "general dependence"), and said (at 463-464):
"In the case of a public authority, the foreseeability of the plaintiff's reasonable reliance is a sufficient basis for finding a duty of care, subject to such dispensations as may arise from the special character of a public authority exercising statutory functions, a matter to be discussed shortly.
If this be accepted, as in my opinion it should be, there will be cases in which the plaintiff's reasonable reliance will arise out of a general dependence on an authority's performance of its function with due care, without the need for contributing conduct on the part of a defendant or action to his detriment on the part of a plaintiff. Reliance or dependence in this sense is in general the product of the grant (and exercise) of powers designed to prevent or minimise a risk of personal injury or disability, recognised by the legislature as being of such magnitude or complexity that individuals cannot, or may not, take adequate steps for their own protection. This situation generates on one side (the individual) a general expectation that the power will be exercised and on the other side (the authority) a realization that there is a general reliance or dependence on its exercise of a power: … . The control of air traffic, the safety inspection of aircraft and the fighting of a fire in a building by a fire authority … may well be examples of this type of function. Whether the inspection of motor vehicles for registration purposes could generate such a general reliance is a more complex question: … ."
230 The absence of evidence of reliance was also emphasised by Brennan J and Deane J. Brennan J said that the legislation did not impose on the council a duty to inspect the foundations and that the only positive act by the council, its approval of the plans and the issue of the building permit, did not give rise to a duty to inspect. Deane J referred to the absence of any contact between the respondents and the council before the purchase and other circumstances as indicating an absence of "proximity" between them.
231 Heyman is important for present purposes because in it the High Court recongised that a public authority might incur liability founded in common law principles governing tortious liability for negligence arising out of a failure to exercise a statutory power, the exercise of which would have prevented the plaintiff suffering loss from the conduct of others, provided always the public authority had come under a duty to exercise the power. No member of the Court suggested that there was a general duty to exercise the power of inspection prior to the laying of foundations in the case of every building permission issued by the council, notwithstanding the fact that it was foreseeable that inadequacy of foundations might lead to injury to the person, damage to property and commercial loss. It did not matter that Parliament could hardly have intended councils to ignore their function of enforcing the statutory prohibition against construction of buildings otherwise than in accordance with the conditions of building permits and, to that end, the exercise of their power of inspection, or that councils should be at liberty to opt for a policy of never performing that function, or, to that end, exercising those powers. Nor did it matter that at least one purpose of the giving of the function and power must have been protection of the person and property. Some additional consideration had to be present giving rise to a positive duty to exercise the power of inspection.
232 Heyman was soon referred to in McDonogh v Commonwealth of Australia (1985) 73 ALR 148 (FCA/FC). The plaintiff was injured when the truck he was driving overturned on a road on unalienated Crown land. The Commonwealth maintained the road. The way in which it was maintained created the appearance that it was level and firm but in fact its outer portion was inadequate to support the truck. By majority, a Full Court of this Court held that while generally a highway authority is not liable to road users arising out of the state of disrepair of a road, it can be liable if, by the appearance of things resulting from its positive conduct, it induces drivers to believe that it is actively ensuring that the road is adequate. The circumstances were classified as misfeasance rather than non-feasance and the misfeasance extended to include the consequences of action.
233 Heyman was considered in Parramatta City Council v Lutz (1988) 12 NSWLR 293 (CA) ("Lutz"). The plaintiff had repeatedly complained to the local municipal council about the partly burnt, dilapidated, unoccupied property next door to her house, which attracted the attention of children, vandals and vagrants. Other residents in the same street also complained to the council. The council advised the plaintiff that it had the matter in hand and would take action. Eventually it issued a demolition order under s 317B of the Local Government Act 1919 (NSW), but before that order was executed a fire commenced in the property and spread to and destroyed the plaintiff's house.
234 The trial Judge held the council liable in damages for negligent failure to exercise its power under s 317B to order the owner of a building that is "in such a dilapidated or unsightly condition as to be prejudicial to the property in or inhabitants of the neighbourhood" to demolish the building or to re-erect it or put it in a satisfactory state of repair and condition, and in default to execute the order itself. The condition of the existence of the power was the existence of an objective state of affairs and there was no issue but that the state of affairs existed here. Accordingly, the council's powers had become presently exercisable. If the council had demolished the building after expiry of the period of the notice as it was empowered to do, the fire would not have occurred.
235 The New South Wales Court of Appeal dismissed the council's appeal. Kirby P held that a duty of care arose from the "relationship of proximity" between the plaintiff and the council in the "special circumstances" of the communications between her and the council. Mahoney JA thought that the council had come under a duty of care arising from "advice" it had given the plaintiff that it "was undertaking action with reasonable expedition to protect her" and her reliance on that advice by refraining herself to take steps to abate the nuisance. McHugh JA distinguished between two causes of action pleaded by the plaintiff: an action based on negligent informing or advising of the kind recognised in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, and negligence in relation to the exercise of a statutory power. As to the former, unlike Mahoney JA, his Honour thought that the plaintiff had not proved that reliance on the council's statements had caused her loss. As to the latter, his Honour spoke of actual or "ceded control of a social situation as the touchstone of liability for public authorities", that is, as giving rise to a common law duty on the part of a public authority to exercise a power to prevent a third party causing loss to the plaintiff. His Honour acknowledged that this concept had not been mentioned in Heyman and might even be inconsistent with the decision in that case, since the council in that case had taken upon itself control of building in its area. His Honour explained that "the general reliance concept depends upon the existence of a statutory power while, under the concept of actual or ceded control, the existence of a statutory power goes more to breach than to duty" (at 330B). His Honour thought that the Court should adopt the concept of "general reliance" which Mason J had expounded in Heyman, a concept "not far removed from the concept of control", as the foundation of a duty in a public authority to take affirmative action. His Honour concluded that although the plaintiff had not relied to her detriment on the council's statements, her case came within the concept of general reliance. As will be noted below, the "doctrine of general reliance" was later to fall into disfavour in the High Court.
236 Pyrenees Shire Council v Day (1998) 192 CLR 300 ("Pyrenees") was much referred to in submissions. The case concerned adjoining premises at 70 and 72 Neill Street, Beaufort. Beaufort was in the Shire of Ripon at the time of the fire that gave rise to the case but it later became part of the Pyrenees Shire ("the Shire" - an expression that I use also to refer to the party). In 1988, No 70 was owned by Mr and Mrs Nakos and let to Mr and Mrs Tzavaras. On 9 August 1988 the Country Fire Authority ("CFA") was summoned to the premises after Mr Tzavaras' assistant became alarmed by what he thought was a fire in the chimney. The fire or smoke was quickly doused but the attending CFA officer saw that some mortar was missing from bricks in the back and bottom of the fireplace. He advised the assistant that the fireplace was unsafe to use. The CFA notified the Shire. On 11 August 1988 Mr Walschots, a building and scaffolding inspector of the Shire, carried out an inspection and saw certain defects. He pointed these out to Mr Tzavaras and told him not to use the fireplace unless it was first repaired. On 12 August 1988 Mr Walschots wrote a letter to "P Tsavaros & S Nakos" at the address of the premises, describing the problem and stating that it was imperative that the fireplaces (there were actually two, back to back) not be used under any circumstances unless they were first repaired.
237 The trial Judge found that Mr Tzavaras received this letter but did not inform Mr Nakos of it or of the previous oral warning that Mr Walschots had given him.
238 In early 1990, Mr and Mrs Stamatopoulos negotiated to buy the business carried on in No 70 and the lease of those premises. Mr Tzavaras did not tell them about the Shire's letter. In fact, when Mr Stamatopoulos asked whether the fireplace was in use, Mr Tzavaras simply replied that it was. A Stamatopoulos family company, Eskimo Amber Pty Ltd ("Eskimo"), took from Mr and Mrs Tzavaras an assignment of their tenancy.
239 In May 1990 there was a fire in No 70 which destroyed those premises and damaged No 72 owned by Mr and Mrs Day.
240 The fire gave rise to three actions against Mr and Mrs Tzavaras and the Shire. Mr and Mrs Nakos sued Mr and Mrs Tzavaras, their former tenants, for damages for negligence and the Shire for damages for negligence and breach of statutory duty. At trial they succeeded against Mr Tzavaras but failed against the Shire.
241 In the action by Eskimo and the Stamatopouloses the result was the same.
242 Mr and Mrs Day succeeded against both Mr and Mrs Tzavaras and the Shire; against the Shire in negligence but not for breach of statutory duty. The trial Judge apportioned liability: Mr Tzavaras two thirds and the Shire one third.
243 The Shire appealed to the Court of Appeal of the Supreme Court of Victoria from the judgment against it in favour of the Days. The Nakoses and Eskimo and the Stamatopouloses appealed to that Court against the dismissal of their claims against the Shire. The Court of Appeal dismissed all three appeals. By special leave, the Shire, Eskimo and the Stamatopouloses appealed to the High Court.
244 Subsection 695(1A) of the Local Government Act 1958 (Vic) was as follows:
"For the purpose of preventing fires the owner or occupier of any land upon which is erected any chimney or fire-place which is constructed of inflammable material or which is not adequately protected so as to prevent the ignition of other adjacent material of an inflammable nature may by notice in writing be directed by the council of the municipality within the municipal district (24) of which such land is situated to alter the fire-place or chimney so as to make it safe for use as a fire-place or chimney, as the case may be."
The Act made it an offence not to comply with a notice issued under subs 695(1A) and subs 694(1) provided that if a notice was not complied with the council might "carry out or cause to be carried out any works or take any other measures for the prevention of fires". Accordingly, the Shire's powers were ample to ensure that the defect in the fireplace was remedied and that until it was remedied, no fire would be lit in it. There was no issue but that the Shire's powers had become presently exercisable.
245 The members of the High Court did not adopt a common approach to the issue whether the Shire owed a duty of care.
246 Brennan CJ thought that legislative intention, not community expectations or control of the area of social conduct in question, was the basis of liability in damages for a failure by a public authority to exercise a statutory power. The Chief Justice (at [21]) quoted with approval, inter alia, the following passage from the speech of Lord Hoffmann in Stovin v Wise [1996] AC 923 (discussed later) at 953:
"In summary, therefore, I think that the minimum preconditions for basing a duty of care upon the existence of a statutory power, if it can be done at all, are, first, that it would in the circumstances have been irrational not to have exercised the power, so that there was in effect a public law duty to act, and secondly, that there are exceptional grounds for holding that the policy of the statute requires compensation to be paid to persons who suffer loss because the power was not exercised." (my emphasis)
247 Accordingly, the Chief Justice placed the Shire's liability for non-feasance in statutory public law rather than in the general principles of private law that govern tortious liability. His Honour stated (at [24], [25]):
"… a duty to exercise a power may arise from particular circumstances, and may be enforceable by a public law remedy. Where a purpose for which a power is conferred is the protection of the person or property of a class of individuals and the circumstances are such that the repository of the power is under a public law duty to exercise the power, the duty is, or in relevant respects is analogous to, a statutory duty imposed for the benefit of a class, breach of which gives rise to an action for damages by a member of the class who suffers loss in consequence of a failure to discharge the duty. The general principles of public law establish the existence of the statutory duty to exercise the power and the statute prescribes the class of individuals for whose benefit the power is to be exercised.
Where the power is a power to control 'conduct or activities which may foreseeably give rise to a risk of harm to an individual' … and the power is conferred for the purpose of avoiding such a risk, the awarding of compensation for loss caused by a failure to exercise the power when there is a duty to do so is in accordance with the policy of the statute."
248 The Chief Justice thought that there would be no liability in damages where a power was intended to be exercised "for the benefit of the public generally and not for the protection of the person or property of members of a particular class". However, his Honour thought that consistently with public law principles the Shire was under a duty to Eskimo and Mr and Mrs Stamatopoulos as well as to Mr and Mrs Day. He said (at [28]):
"In the present case, although there was no public expectation that the Council would exercise its powers to enforce compliance with the requirements set out in Mr Walschots' letter, nor was any reliance placed by the respective plaintiffs on the Council's doing so, the Council was under a public law duty to enforce compliance with the requirements in Mr Walschots' letter. The risk of non-compliance was extreme for lives and property in the neighbourhood of the defective chimney and there was no reason which could have justified the Council's failure to follow up the letter, even to the extent of prosecuting for any default. It is unnecessary to determine whether the Council would have been under a duty itself to rectify the defects in the fireplace if the owners and occupiers all failed or refused to do so. The likelihood is that no more would have been needed to be done than to ensure that the owners and occupiers knew of the danger and to ensure that they knew of the request to remedy the latent defect which Mr Walschots' inspection had revealed." (my emphasis)
249 Toohey J thought that the cases warranted, if they did not compel, a conclusion that the concept of general reliance was the criterion of proximity in cases where the duty to exercise a statutory power was said to arise and where the danger was not created or contributed to by the public authority. His Honour also thought that the distinction between "operational" and "policy" decisions "not particularly appropriate or helpful in determining the present appeals" (at [68]), and that in any event no policy considerations were said to have explained the Shire's inactivity.
250 The decisive part of his Honour's reasons is as follows (at [81] and [82]):
" … The Shire had statutory power to deal with the danger constituted by the defective chimney. Through the exercise of that power it could have ensured that the danger was removed. It was a danger, not only to 70 Neill Street but also to adjoining buildings. Indeed, if a fire broke out, it was almost certain to extend beyond 70 Neill Street, having regard to the age and construction of the buildings. The danger was necessarily unknown to adjoining owners and occupiers. In any event, had they known, the remedies available to them were, as Brooking JA said …, 'slow and expensive'. In those circumstances it is but a short step to hold that there was a general reliance by neighbours, such as the Days, that the Shire would take steps to remove the danger of which the Shire was aware and which it had the power to remove. Because the Shire did nothing further after the letter of 12 August 1988, there was a breach of the duty of care which the Shire owed to Mr and Mrs Day. No issue of causation arose on the arguments presented to the Court.
However, Eskimo Amber and Mr and Mrs Stamatopoulos were in a different position, one which, in my view, did not point to any general reliance on their part. The company was in occupation as lessee by reason of the assignment from Mr and Mrs Tzavaras. It is true that Eskimo Amber and the Stamatopoulos' were not in occupation on 9 August 1988. But the company had responsibilities as assignee which extended to the condition of the premises. And, in respect of the premises, the company stood in a particular contractual relationship to the assignors of the lease and to the lessors. It is true that the trial judge described the defect in the premises at No 70 as 'latent'. However, notice of the danger had been given by the Shire to the owners, at any rate to one of the owners, and to the original lessees, at any rate to one of them. In those circumstances it is not appropriate to speak of general reliance as extending indefinitely to someone in occupation under an assignment of the lease, let alone someone in occupation by reason of their association with the assignee. And this is so even if the Shire was aware of a new tenant coming into the premises." (my emphasis)
251 McHugh J rejected criticisms of the doctrine of general reliance that had been formulated by Mason J in Heyman and applied by McHugh J himself when a member of the New South Wales Court of Appeal in Lutz, as noted above. His Honour observed that
· the doctrine applied only in limited situations "of such magnitude or complexity that individuals cannot, or may not, take adequate steps for their own protection" (at [107], quoting from Mason J in Heyman at 464);
· it is required that the public authority know or ought to know that the plaintiff will suffer damage unless the authority takes care (at [108]); and
· the fact that the public authority owes a common law duty of care because it is invested with a function or power does not necessarily mean that the total or partial failure to exercise that function or power constitutes a breach of that duty (at [109]).
252 Like Toohey J, his Honour thought that the Shire owed a duty of care under the general reliance doctrine only to Mr and Mrs Day. Mr and Mrs Nakos, the owners of No 70, had rights of inspection and entry and it was not reasonable for them to rely on the Shire to exercise its powers to protect them from defects in their own premises. For generally similar reasons, his Honour did not think that the Shire owed Mr and Mrs Stamatopoulos or Eskimo a duty of care: it was not reasonable for them, as the occupiers of No 70, to rely on the Shire to protect them from defects in the premises.
253 Gummow J thought the "general reliance" doctrine not sound on the basis that it was a legal fiction without a solid theoretical foundation. His Honour pointed out that, as Hill v Van Erp (1997) 188 CLR 159 illustrated, reliance is not always an essential ingredient in a negligence case, and (at [158]) that:
"The primary significance of reliance is in cases of alleged negligent provision of advice or information where reliance aids the formulation of a duty of care and detrimental reliance enters into the question of causation of loss."
Of course, Pyrenees was not a case of that kind. His Honour thought that the supposed doctrine of general reliance "assumes too general a significance for reliance in the law of negligence and then adds further complexity" (at [163]). He noted that as a result of the speech of Lord Hoffmann in Stovin v Wise [1996] AC 923 at 953-955, the doctrine was now discarded in English law.
254 Nonetheless, Gummow J thought that the Shire owed a duty of care. His Honour said (at [168]):
"In May 1990, the situation occupied in relation to this litigation by the Shire as the arm of local government gave it a significant and special measure of control over the safety from fire of persons and property in Neill Street. Such a situation of control is indicative of a duty of care (…). The Shire had statutory powers, exercisable from time to time, to pursue the prevention of fire at No 70. This statutory enablement of the Shire 'facilitate[d] the existence of a common law duty of care' ( … ), but the touchstone of what I would hold to be its duty was the Shire's measure of control of the situation including its knowledge, not shared by Mr and Mrs Stamatopoulos or by the Days, that, if the situation were not remedied, the possibility of fire was great and damage to the whole row of shops might ensue ( … ). The Shire had a duty of care 'to safeguard others from a grave danger of serious harm', in circumstances where it was 'responsible for its continued existence and [was] aware of the likelihood of others coming into proximity of the danger and [had] the means of preventing it or of averting the danger or of bringing it to their knowledge' ( … )." (my emphasis)
In relation to the extent of the Shire's duty, his Honour said (at [172]):
" … [t]he question then is what, as the acceptable minimum, in discharge of its duty of care, should have been done by the Shire before the second fire, bearing in mind the character in which the Shire would have acted and the nature of its duty. At the very least, the Shire was obliged to monitor the failure of Mr Tzavaras to carry out the repairs referred to in the letter of 12 August 1988 and to alert the new occupiers of No 70 of the serious but latent danger constituted by the fireplace in the living room."
255 Gummow J observed that the Shire did not discharge that duty. His Honour also noted that it was not contended that the necessary element of causation was lacking. Rather, the Shire relied on certain "control mechanisms". One of these turned on the distinction between misfeasance and non-feasance and between omission to exercise a statutory power and failure to discharge a statutory duty. Another was the "policy/operations" classification of the activities of public authorities. His Honour thought that neither negated liability.
256 His Honour considered that the circumstances did not involve "pure non-feasance" but rather an omission in the course of positive conduct. He stated (at [177]):
"A public authority which enters upon the exercise of statutory powers with respect to a particular subject matter may place itself in a relationship to others which imports a common law duty to take care which is to be discharged by the continuation or additional exercise of those powers. An absence of further exercise of the interconnected statutory powers may be difficult to separate from the exercise which has already occurred and that exercise may then be said to have been performed negligently…."
Gummow J also said that the case was not within the "core area" of policy making that has been said to be immune from any liability in negligence. (His Honour described the "policy/operational classification" as "not useful in this area").
257 The result was, according to Gummow J, that the Shire's appeal should be dismissed but that the appeal by Eskimo and Mr and Mrs Stamatopoulos should be allowed.
258 The fifth member of the Court, Kirby J, thought, following Caparo Industries Plc v Dickman [1990] 2 AC 605 (HL) ("Caparo") at 617-618 per Lord Bridge of Harwich, that the approach which should be adopted in deciding whether a legal duty of care existed was to be found in the answering of the following three questions:
"1. Was it reasonably foreseeable to the alleged wrong-doer that particular conduct or an omission on its part would be likely to cause harm to the person who had suffered damage or a person in the same position? …
2. Does there exist between the alleged wrong-doer and such person a relationship characterised by the law as one of 'proximity' or 'neighbourhood'? …
3. If so, is it fair, just and reasonable that the law should impose a duty of a given scope upon the alleged wrong-doer for the benefit of such person? …"
His Honour thought that all three questions should be answered affirmatively in favour of all plaintiffs. In answering the third question in that way, he referred to the facts that the statutory power addressed the special risk of fire which, by its nature, can imperil identifiable life and property; that the case was one not of pure omission but the taking of some steps incompetently; that the Shire should have known that most people at risk were vulnerable, because they were ignorant of the danger disclosed by Mr Walschot's inspection and were unlikely or unable to discover it themselves; and that while the promotion of individual choice and the efficient use of resources is a proper concern of public authorities, so is the adoption of good administration and procedures for the proper use of statutory powers. His Honour also noted these considerations which were said to suggest that it would not be "fair, just and reasonable" that the law should impose a duty on the Shire but I will not summarize them. Like Gummow J, Kirby J found the doctrine of general reliance to be an unnecessary legal fiction which may often be indicative of a duty of care but which was not a criterion of universal application. In the result, his Honour concluded that the Shire's appeal should be dismissed and the appeal by Eskimo and Mr and Mrs Stamatopoulos should be allowed.
259 There are difficulties in extracting a ratio decidendi from the judgments in Pyrenees. Three judges (Brennan CJ, Gummow J and Kirby J) rejected, while two Judges (Toohey J and McHugh J) applied, the doctrine or concept of "general reliance" as the criterion of the existence of a duty to exercise a statutory power. Brennan CJ located the criteria for the existence of a duty of care in public law principles rather than in the common law of negligence, and emphasised that the purpose of the statutory power must be the protection of an individual or class of individuals. The other four Judges treated the case as raising the question in what circumstances tort law principles imposed a duty of care on the Shire. Toohey J and McHugh J concluded that the Shire owed a duty of care to the neighbouring shop owners (the Days) but not to the assignee-tenants (Eskimo and the Stamatopouloses), based on the general reliance test formulated by Mason J in Heyman. Gummow J concluded in favour of the assignee-tenants as well as the neighbours on the basis of a test of a "significant and special measure of control over … safety" from the particular risk in question, coupled with knowledge of that particular risk on the part of the Shire and ignorance of it on the part of the parties at risk. Kirby J concluded similarly to Gummow J, but on the basis of cumulative tests of foreseeability, proximity and an overriding test of "fairness, justness and reasonableness".
260 In Romeo v Conservation Commission (NT)(1998) 192 CLR 431("Romeo")a young woman was seriously injured when she fell at night from the edge of a cliff onto a beach. The land was part of a nature reserve managed by the defendant Commission. The Commission did not own or occupy the reserve but it had statutory powers of management and control of it. The plaintiff failed before the trial Judge, the Court of Appeal of the Supreme Court of Northern Territory and the High Court of Australia.
261 I need not discuss the facts of the case. Brennan CJ distinguished between cases in which a public authority was said to be liable on the basis that it owned, possessed or occupied property, and those in which it was said to be liable on the basis of statutory powers of control or management on the other. His Honour's reasoning was consistent with the public law approach that he had espoused in Pyrenees. He said (at [17]):
" … in my respectful opinion, when the sole basis of liability of a public authority is its statutory power of management and control of premises, its liability for injury suffered by a danger in the premises is not founded in the common law of negligence but in a breach of a statutory duty to exercise its power and to do so reasonably having regard to the purpose to be served by an exercise of the power."
The Chief Justice adhered (at [18]) to the view which he had expressed in Pyrenees:
"no duty to exercise a statutory power and to exercise it with care can be imposed by the common law on the repository of the power when the statute, operating in the particular circumstances, leaves the repository with a discretion whether to exercise it or not. If it were otherwise, the common law would impose on the repository a duty to exercise the power when the legislature had intended the repository to decide for itself whether and in what manner the power should be exercised. But a public authority charged with the management and control of premises on which the public may enter as of right is given those powers for the purpose, inter alia, of protecting the person of those who enter. As that is a purpose for which the powers of management and control are conferred, the repository is obliged to exercise them and to exercise them reasonably to fulfil that purpose unless there be some contrary statutory direction …. Some public law justification must exist before a court can intervene to compel the exercise of a discretionary statutory power by a repository which has failed or refused to exercise the power."
262 The Chief Justice applied the test which Dixon J had formulated in Aiken v Kingborough Corporation (1939) 62 CLR 179 at 210, specifically in respect of persons who come onto property as of common right, to take reasonable care to prevent injury arising from dangers that would not be apparent to them and would be avoided by their exercise of reasonable care.
263 In a short joint judgment, Toohey and Gummow JJ concluded that the Commission was under a general duty of care to take reasonable steps to prevent persons entering the reserve from suffering injury, but that the taking of steps of that kind did not extend to fencing off an area of natural beauty where the presence of a cliff was obvious.
264 In separate dissenting judgments, Gaudron and McHugh JJ thought that the Commission owed the plaintiff a duty of reasonable care and that it was in breach of that duty, although it might be that the amount of damages to be awarded should be reduced on account of the plaintiff's contributory negligence.
265 Kirby J thought that the claim fell to be determined by the application of the tests accepted by the High Court in Nagle v Rottnest Island Authority (1993) 177 CLR 423 which his Honour said (at [115]), involved the following questions:
"1. Is a duty of care established? (The duty of care issue.)
2. If so, what is the measure or scope of that duty in the circumstances? (The scope of duty issue.)
3. Has it been proved that the defendant is in breach of the duty so defined? (The breach issue.)
4. If so, was the breach the cause of the plaintiff's damage? (The causation issue.)
5. (Where relevant.) Were the defaults alleged on the part of the public authority within the area of the authority's legitimate discretion on questions of policy and allocation of resources so that there was no duty of care owed to the plaintiff? Or was any suggested breach a matter left by law to the authority whose decision the courts would respect and uphold against the plaintiff's complaint? (The policy/operations issue.)
6. (Where relevant.) Has contributory negligence on the part of the plaintiff been proved and, if so, with what consequence? (The contributory negligence issue.)"
266 His Honour adhered to the "three-criteria test" of the existence of a duty of care which he had formulated in Pyrenees and which I set out earlier. He concluded that although the elements of foreseeability and proximity were satisfied, it was not "fair, just and reasonable" to impose on the Commission a duty of the scope asserted by the plaintiff.
267 Hayne J said that the Commission's statutory power to "occupy, use, manage, and control" the reserve gave rise to a duty of care in favour of members of the public who entered as of right analogous to that of an occupier of private land, and that it was the management of the land that provides the necessary relationship of proximity in such a case. This approach made it unnecessary for his Honour to address the question of the duty of public authorities to exercise other kinds of statutory power.
268 In my respectful opinion, Romeo provides limited guidance in the present case. The case is distinct from the present one in the following significant respects:
· Unlike the present case, Romeo is not concerned with the issue of the exercise of statutory powers to prevent harm befalling the plaintiff by reason of the conduct of other persons;
· Although the Commission did not own or occupy the reserve, it, and it alone, had statutory powers of management and control over it;
· The plaintiff's injury was said to result from a dangerous aspect of premises;
· There was a body of law defining the scope of the duty of care owed to persons entering upon land by common right.
For these reasons, I do not find great assistance in a conclusion that the Commission owed the plaintiff a duty of care.
269 It remains to consider two decisions delivered by the High Court since the primary Judge delivered judgment in the present case.
270 Pyrenees was referred to by the High Court in Perre v Apand Pty Ltd (1999) 164 ALR 606 ("Perre"). In this case, the respondent, a major participant in the Australian potato industry, supplied diseased seed to the Sparnons who were potato growers in South Australia. The seed caused the Sparnons' potato crop to be infected with bacterial wilt. The appellants grew and processed potatoes within 20 km from the Sparnons' property. They ordinarily exported most of the potatoes grown each year to Western Australia. That state, however, prohibited the entry of potatoes which had been grown, harvested, cleaned or packed within 20 km of a place where bacteria had occurred in the previous five years. As a consequence of the outbreak of bacterial wilt on the Sparnons' property, the appellants were unable to export their own potatoes to Western Australia and suffered financial loss. The appellants' own property and potatoes were not affected by the bacterial wilt at all.
271 The appellants sued the respondent for damages for negligence. A Judge of this Court dismissed their claim on the basis that the necessary relationship of proximity did not exist between the appellant and the respondent seed supplier. A Full Court dismissed the appellants' appeal from that decision. By a majority of five to two, the High Court allowed the appeal.
272 While Perre did not concern an allegedly negligent failure by a public authority to exercise a statutory power causing physical injury, the judgments include general observations on the law of negligence, including references to Pyrenees.
273 Gleeson CJ rejected the proposition that, in Caparo, Lord Bridge had purported to lay down a three-stage test that would provide the answer in all cases to the question whether a duty of care was owed. The Chief Justice emphasised "vulnerability" as "a significant factor in establishing a duty of care" (at [10]). His Honour thought, for the reasons given by Gummow J, that the respondent had owed the appellants a duty of care.
274 Gaudron J formulated (at [42]) the applicable test that as follows:
"where a person knows or ought to know that his or her acts or omissions may cause the loss or impairment of legal rights possessed, enjoyed or exercised by another, whether as an individual or as a member of a class, and that that latter person is in no position to protect his or her own interests, there is a relationship such that the law should impose a duty of care on the former to take reasonable steps to avoid a foreseeable risk of economic loss resulting from the loss or impairment of those rights."
Her Honour observed that while the law is concerned "to avoid the imposition of liability 'in an indeterminate amount for an indeterminate time to an indeterminate class'" (Ultramares Corporation v Touche 174 NE 441 at 444 (1931) per Cardozo CJ), it must be kept in mind that "this is a policy consideration, not a rule of law", and, accordingly, "it is not necessarily fatal to the recognition of a duty of care that the duty is owed to a class whose members cannot be identified with complete accuracy" (at [32]). Her Honour thought it important, however, that the appellants were in fact members of a particular class - those who grew potatoes within the 20km zone and sold them into the Western Australia market. In the present case the duty relied on by Mr Ryan is one owed to "consumers of oysters".
275 For McHugh J, none of "proximity", the "impairment of precise legal rights" and the "three-stage Caparo test" was capable of being supported as a determinant of the existence of the duty. His Honour favoured identification of established categories of case in which a duty of care has already been recognised, followed by incremental or analogical development of the law based on them. His Honour thought that in claims to recover damages for economic loss, "vulnerability" was ordinarily a prerequisite to imposing a duty and that reliance and assumption of responsibility were merely indicators of vulnerability (at [125]). His Honour considered that in Pyrenees the Court had concluded that the Shire owed a duty of care, partly because of the Shire's control (and knowledge) and the plaintiffs' inability to protect themselves. His Honour proposed (at [133]) that the test for establishing whether a duty of care existed on the facts of the present case was as follows:
1. Was the loss suffered by the appellants reasonably foreseeable?
2. If yes, would the imposition of a duty of care impose indeterminate liability on the respondent?
3. If no, would the imposition of a duty of care impose an unreasonable burden on the autonomy of the respondent?
4. If no, were the appellants vulnerable to loss from the conduct of the respondent?
5. Did the respondent know that its conduct could cause harm to individuals such as the appellants?
With regard to the second question, his Honour emphasised that the respondent need have knowledge only of an ascertainable class not a defined and small class. If the defendant knows or has the means of knowing who are the members of an ascertainable class liable to be affected by its conduct and the nature of the likely losses to them, its liability is not indeterminate even though the number of the members of the class may be large:
"Where the person or tangible property of the plaintiff is likely to be harmed by the conduct of the defendant, the common law has usually treated knowledge or reasonable foresight of harm as enough to impose a duty of care on the defendant. Where a person suffers pure economic loss, however, the law has not been so willing to impose a duty of care on the defendant." (at [70]).
This passage is attracted by the present case in so far as it is concerned with harm to the person rather than pure economic loss (the Barclay companies' cross-claim against the Council is of the latter kind). But it is also concerned with harm to the person in the developing area of the duty of public authorities to exercise powers to prevent one person being caused harm by another, in which something beyond mere foreseeability of the harm is required (see below).
276 McHugh J concluded that the five questions he posed should be answered favourably to the appellants.
277 Gummow J considered that several factors combined to constitute a sufficiently close relationship between the appellants and the respondent to give rise to a duty of care for breach of which the appellants could recover damages for their economic loss. These included:
· The respondent appreciated the consequences of the spread of disease by contaminated seed;
· At the time of supply the respondent knew or should have known that the appellants grew and processed potatoes within 20 km of the first grower's property and the respondent knew of the special requirements of Western Australia with respect to importation of potatoes;
· The respondent knew or should have known that the appellants exported potatoes to Western Australia;
· The appellants had no way of appreciating the existence of the risk to which they were exposed by the respondent's conduct and had no way of protecting themselves against that risk.
278 Kirby J reiterated (at [259]) and applied the three-stage test of Caparo that he had applied in Pyrenees, leading his Honour to agree that the appeal should be allowed.
279 Hayne J concluded that the appellants were entitled to recover damages for their economic loss because the respondent knew of the existence of a limited class, which it transpired included the appellants, likely to suffer economic loss if it failed to take care.
280 For Callinan J, the decisive factor was that the respondent actually foresaw that the appellants were within a class of persons likely to be adversely affected by its negligent conduct.
281 It is not possible to identify in Perre a single approach to the question whether a duty of care is owed that commands the assent of a majority of the members of the Court. Moreover, the case was one of economic loss and the judgments recognise the well established distinction, on the duty of care issue, between cases of that kind and those, like the present one, in which damages are sought to be recovered in respect of personal injury.
282 The judgments do, however, demonstrate a concern with the question whether there was an ascertainable class of persons, including the appellants, who, it was foreseeable, would be likely to suffer economic loss if the respondent failed to take reasonable care. An important question in the present case is whether that limitation applies in the present circumstances which, while concerning harm to the person, also concern a novel category of legal liability.
283 The High Court has recently considered the question of the duty to exercise a statutory powerin Crimmins v Stevedoring Industry Finance Committee (1999) 167 ALR 1 ("Crimmins"). Between 1961 and 1965 the plaintiff was assigned by the predecessor of the defendant ("the Committee") to work with stevedoring companies. Occasionally the work involved the unloading of asbestos cargo. From the inhaling of asbestos fibres the plaintiff developed mesothelioma. He sued the Committee for damages for negligence.
284 The Australian Stevedoring Industry Authority ("the Authority"), which was established by the Stevedoring Industry Act 1956 (Cth), regulated stevedoring operations throughout Australia. In doing so, the Authority assigned workers for work in accordance with the needs of employers. The workers had no control over their placements for work. They were registered with the Authority pursuant to the Act and received pay and other employee benefits from the Authority, although they were not actually employed by it. Pursuant to the Act, the Authority registered employers and waterside workers and allocated the latter to the former (work on the waterfront at the time was casual and by the day) and appointed inspectors of stevedoring operations.
285 The plaintiff succeeded before a jury. The Committee appealed to the Court of Appeal of the Supreme Court of Victoria. Before it gave its decision, the plaintiff died. The Court of Appeal allowed the appeal. The plaintiff's widow and executrix appealed to the High Court.
286 There were two issues before the High Court: whether the Authority had owed a duty of care to the plaintiff and whether the Committee was answerable in respect of the liability of the Authority. I will not discuss the latter (on which the appellant succeeded). The judgments emphasised that issues of breach of duty and causation were not before the Court.
287 Section 8 of the Stevedoring Industry Act 1956 required the Authority to "perform its functions, and exercise its powers … with a view to securing the expeditious, safe and efficient performance of stevedoring operations" (my emphasis). The statutory functions of the Authority were stated in subs 17(1) to include the following:
"(a) to regulate the performance of stevedoring operations;
…….
(i) to regulate the conduct of waterside workers in and about … wharves and ships;
…
(k) to train, or arrange for the training of, persons in stevedoring operations;
(l) to investigate means of improving, and to encourage employers to introduce methods and practices that will improve, the expedition, safety and efficiency with which stevedoring operations are performed;
…
(o) to encourage safe working in stevedoring operations and the use of articles and equipment, including clothing, designed for the protection of workers engaged in stevedoring operations and, where necessary, to provide waterside workers with articles and equipment designed for that purpose;
(p) to obtain and publish information relating to the stevedoring industry."
Subsection 18(1) empowered the Authority to "make such orders, and to do all such other things, as it sees fit" in performing its s 17 functions. Once made, such orders had the force of law.
288 The plaintiff claimed that the Authority had failed to warn of the dangers of asbestos, to instruct as to those dangers, to provide respiratory equipment, to encourage employers to introduce safety measures for the handling of asbestos, to ensure that employees knew of the risks of exposure to asbestos, and to inspect properly the conditions under which stevedoring operations were carried out. In effect, the plaintiff's claim was that the Authority had failed to take any positive step to avoid the risk of harm to which he had been exposed.
289 Gleeson CJ agreed, for the reasons given by McHugh J (summarised below), that the Authority owed a duty of care to the plaintiff. His Honour observed (at [5]):
"Acceptance that a statutory authority, in the discharge of its functions, owed a duty of care to a person, or class of persons, is only the first step in an evaluation of the authority's conduct for the purpose of determining tortious liability. In some cases, the difficulty of formulating the practical content of a duty to take reasonable steps to avoid foreseeable risks of harm, for the purpose of measuring the performance of an authority against such a duty, may be a reason for denying the duty. In other cases, of which the present is an example, recognition of the existence of a duty is consistent with the need, when dealing with the question of breach, to take account of complex considerations, perhaps including matters of policy, resources, and industrial relations".
290 Gaudron J thought that the obligation imposed on the Authority by s 8 of the Act was consistent, rather than, as the Committee contended, inconsistent, with the existence of a general law duty of care to take reasonable positive steps to prevent a foreseeable risk of injury to waterside workers. Her Honour noted that the Authority was in a position to know of, and to alleviate, the risks of harm with respect to the deceased's exposure to asbestos. Her Honour based her conclusion that there existed a relationship which gave rise to a duty of care on:
· the plaintiff's vulnerability and inability to protect his own interests, particularly because of the special circumstances touching the waterfront, in which employment was casual and workers were engaged by the day by different stevedoring companies on different ships;
· the fact that the Authority knew of the danger of exposure to asbestos and knew or should have known of the risk of the plaintiff being exposed to it; and
· the fact that the Authority had power "to control or minimise" that risk.
291 In a lengthy and detailed judgment, McHugh J analysed precedent similar cases to reveal their "bases in principle and policy" (at [73]). His Honour pointed out that there may be special factors applicable to a statutory authority which negative a duty of care that a private individual would owe in similar circumstances. His Honour stated (at [79]):
"Common law courts have long been cautious in imposing affirmative common law duties of care on statutory authorities. Public authorities are often charged with responsibility for a number of statutory objects and given an array of powers to accomplish them. Performing their functions with limited budgetary resources often requires the making of difficult policy choices and discretionary judgments. Negligence law is often an inapposite vehicle for examining those choices and judgments. Situations which might call for the imposition of a duty of care where a private individual was concerned may not call for one where a statutory authority is involved. This does not mean that statutory authorities are above the law. But it does mean that there may be special factors applicable to a statutory authority which negative a duty of care that a private individual would owe in apparently similar circumstances. In many cases involving routine events, the statutory authority will be in no different position from ordinary citizens. But where the authority is alleged to have failed to exercise a power or function, more difficult questions arise."
Later, his Honour elaborated as follows (at [91]-[94]):
"[91] In his article 'Liability in Tort of Public Bodies', Professor Todd has argued that, despite the current conceptual uncertainty in the law in Australia relating to the common law liability of statutory authorities for a failure to act, 'as regards four of the judgments [in Pyrenees, Brennan CJ apart] there is arguably a measure of underlying agreement'. He then listed what in his view were the key elements that could be distilled from the recent decisions of this court:
'(i) the imposition of a common law duty is consistent with and complementary to the performance by the public body of its statutory functions;
(ii) the duty can be seen to arise specifically in relation to a known plaintiff rather than generally in relation to the public at large;
(iii) the defendant is in a position of control and is under a statutory obligation, or at least has specific power, to protect the plaintiff from the danger;
(iv) the plaintiff is in a position of special vulnerability or dependence on the defendant. He or she cannot reasonably be expected to safeguard himself or herself from the danger;
(v) on a policy overview there is no good reason for giving the defendant an immunity from liability.'
[92] I am in substantial agreement with this analysis. I would prefer, however, to subsume Professor Todd's first criterion into his fifth. I also think that it is necessary to add a further element - that the authority knew, or ought to have known, of the risk of injury to the plaintiff.
[93] In my opinion, therefore, in a novel case where a plaintiff alleges that a statutory authority owed him or her a common law duty of care and breached that duty by failing to exercise a statutory power, the issue of duty should be determined by the following questions:
1. Was it reasonably foreseeable that an act or omission of the defendant, including a failure to exercise its statutory powers, would result in injury to the plaintiff or his or her interests? If no, then there is no duty.
2. By reason of the defendant's statutory or assumed obligations or control, did the defendant have the power to protect a specific class including the plaintiff (rather than the public at large) from a risk of harm? If no, then there is no duty.
3. Was the plaintiff or were the plaintiff's interests vulnerable in the sense that the plaintiff could not reasonably be expected to adequately safeguard himself or herself or those interests from harm? If no, then there is no duty.
4. Did the defendant know, or ought the defendant to have known, of the risk of harm to the specific class including the plaintiff if it did not exercise its powers? If no, then there is no duty.
5. Would such a duty impose liability with respect to the defendant's exercise of 'core policy-making' or 'quasi-legislative' functions? If yes, then there is no duty.
6. Are there any other supervening reasons in policy to deny the existence of a duty of care (for example, the imposition of a duty is inconsistent with the statutory scheme, or the case is concerned with pure economic loss and the application of principles in that field deny the existence of a duty)? If yes, then there is no duty.
[94] If the first four questions are answered in the affirmative, and the last two in the negative, it would ordinarily be correct in principle to impose a duty of care on the statutory authority." (my emphasis)
292 His Honour stated (at [99]):
"… some powers are conferred because the legislature expects that they will be exercised to protect the person or property of vulnerable individuals or specific classes of individuals. Where powers are given for the removal of risks to person or property, it will usually be difficult to exclude a duty on the ground that there is no specific class. The nature of the power will define the class - for example, an air traffic control authority is there to protect air travellers. Furthermore, a finding that the authority has powers of this type will often indicate that there is no supervening reason for refusing to impose a duty of care and that no core policy choice or truly quasi-legislative function is involved.
293 Finally, his Honour found nothing in the Act which forbade or was inconsistent with the imposition of a duty of care at common law; the Authority's quasi-legislative function of making orders did not exhaust its powers; and there were no policy factors denying a duty of care.
294 McHugh J found it a "compelling" factor in favour of the existence of a duty of care, that the Authority directed the plaintiff to places of work where there were risks of injury of which the Authority was or should have been aware, and in respect of which it also knew or should have known that the worker was specially vulnerable, that is, could not protect himself, in circumstances in which disobedience could lead to disciplinary action and even deregistration as a waterside worker. Like Gaudron J, McHugh J thought the special circumstances in which a person worked on the waterfront emphasised the plaintiff's vulnerability.
295 Gummow J agreed generally with the reasons of Hayne J for dismissing the widow's appeal. His Honour thought it inappropriate to posit a common law duty of care and to ask whether it is prohibited by, or inconsistent with, the relevant statute. Rather, his Honour said, the starting point must be the statute. And his Honour thought that:
"the provision for the making of orders under s 18 provided the complete statement of the legislative provision for the regulation of the subject matter" (at [169]).
For his Honour, the Authority lacked any power over safety of the kind possessed by the Shire in Pyrenees.
296 Kirby J applied the Caparo three-stage inquiry which he had applied in Pyrenees and Perre and concluded that the Authority had owed the plaintiff a duty of care to take reasonable steps to ensure that working conditions would be reasonably safe for him, and, to that end, to provide waterside workers with articles and equipment designed for their protection and to ensure that they were used. Among the policy considerations which informed his Honour's conclusion was, again, "[t]he specificity of the group of persons exposed to danger who constituted a defined and particular class much narrower than the community at large" (at [233]).
297 Hayne J closely analysed the statutory functions of the Authority and concluded that its powers were quasi-legislative. His Honour also thought that it was not in a position similar to that of an employer. He thought that there was no duty on the Authority to make an order requiring the use of respirators, to supply equipment, or to warn of the danger of asbestos. Although his Honour acknowledged that it was no bar to the existence of a particular duty that it duplicated a duty already incumbent on the waterside worker's employer, this was nonetheless one factor that led him to conclude that there was no such duty on the Authority, which he described as "peripheral" party. Unlike the plaintiff's succession of employers, the Authority was not in control of, or responsible for, the place and system of work to which the plaintiff was exposed, in his Honour's view.
298 Callinan J relied on the right to exercise control, and the actual exercise of control over waterside workers as to where and for which employer they should work, as important indicators of the existence of a duty of care.
299 There are differences between Crimmins and the present case. In Crimmins there was a direct and close relationship between the Authority and the waterside workers whom it had registered; it acted positively by directing them, under penalty, to work in, as it transpired, places that were dangerous to their health; and "registered waterside workers" represented an identified group of individuals as distinct from the public at large.