Moorabool Shire Council & Anor v Taitapanui & Ors [2006] VSCA 30

Moorabool Shire Council & Anor v Taitapanui & Ors [2006] VSCA 30 - VSCA 2006 case summary — Zoe

[42]

21 As we have seen, the majority in Woolcock has confirmed that proximity is no longer to be regarded as the "conceptual determinant". At the same time, by adopting the "sufficiently close relationship" test as developed by Gummow J, the members of the majority have made clear that it is both proper and necessary to ask, by reference to the facts of the particular case, whether the relationship is of sufficient closeness to give rise to a duty of care. An affirmative answer to that question would, it seems, justify describing the case at hand as exemplifying a "distinct species of negligence", displaying "a particular manifestation of the notion of a relationship of proximity."

22 Against that background, I turn to consider the "salient features" of the present case.

The "salient features" of the present case

23 The first point to note is that no issue arises in the present case about what the High Court in Woolcock referred to as the "anterior step". That is, the Council - and its employee, the surveyor - owed the first owner a duty of care to avoid pure economic loss. So much was conceded - quite properly - by the Council on the appeal. (Both the Tribunal and the learned Judge addressed the anterior step substantively, and concluded that the duty existed.[47])

24 Nor is there anything in the decision in Woolcock to suggest that the class of case - the "species of negligence" - represented by the decision in Bryan could not, as a matter of principle, have encompassed an engineer just as much as a builder. On the contrary, the discussion in Woolcock of the "anterior step", and of the concept of vulnerability, seems to have assumed without question that an engineer - like a builder - could owe a duty of care to the first owner and - potentially, at least - to a subsequent owner, to avoid pure economic loss.[48]

25 In my view, there is nothing in the reasoning in Woolcock or in Bryan, nor is there any consideration of principle or policy, which would require or justify the a priori exclusion of a surveyor from the same class of case. After all, the surveyor - like the builder and the engineer - has a responsibility to the first owner to take reasonable care to ensure that the house as constructed complies with all applicable building regulations. As I have said, the existence of that duty is not in issue on this appeal.

26 According to the High Court in Woolcock -

[52]

31 Other considerations point in the same direction. Take the important element of control, to which reference has already been made. Obviously enough, the surveyor (and therefore the Council) have complete control over the discharge of the statutory functions of granting the necessary permits. Like the first owner, the subsequent owner is completely powerless to influence that process.

32 True it is that a subsequent purchaser could arrange, at its own expense, for detailed inspections and investigations. As the present appellants point out, it was not disputed that pre-purchase building inspection reports were available had the current owners sought to commission one. Equally, as the joint judgment of Ormiston and Ashley JJA makes clear, no finding of fact was made that the carrying out of such an inspection would have disclosed the critical defects.[60]

33 If it were correct, this "self-protection" argument would apply with equal force to the position of the first owner, who could always arrange an independent inspection to make sure that the house was free of defects. It was not suggested in Bryan or in Woolcock that the ability to procure such an inspection negated the duty of care owed by the builder to the first owner. Nor was it suggested by the appellants in the present case that the availability of such inspections negated the duty of care owed by the surveyor to the first owner. That being so, I see no reason why the theoretical possibility of self-protection (by independent inspection) should be held to negate the surveyor's duty to a subsequent owner.

34 Once it is concluded that the relationship between surveyor and subsequent owner is characterised by assumption of responsibility and known reliance (or dependence), it is difficult to accept the contention that the availability of private building inspection services negates the existence of a duty of care. Either the subsequent owner is dependent on the surveyor, or (as in Woolcock) it is not. Although the analogy is far from perfect, this contention - if it were right - would seem to mean that no duty of care existed between lawyer (or accountant) and client because it is always open to the client to check the accuracy of the advice given by seeking a second opinion. Whether a subsequent owner could, and should, have obtained its own pre-purchase inspection, and whether that inspection would have revealed the relevant defects, seem to me to be questions which properly relate to causation and contributory negligence, rather than to the existence of the duty of care.

35 As suggested by the majority in Woolcock,[61] the factor of known or likely reliance may best be understood as constituting, or signifying, vulnerability. Here, as the defendant surveyor knows, the owners (first and subsequent) of the house will rely - or will necessarily be dependent - on the building inspections having been done with reasonable care. Each owner is vulnerable to any failure on the part of the defendant to take such care. It may be for this reason that a comparable duty of care will not be held to arise with respect to the owners of commercial buildings, because - as the particular facts of Woolcock demonstrate - a commercial party involved with the buying and selling of commercial property may be assumed to be self-reliant in this regard. That class of case would therefore be distinguished from the present by the lack of any known reliance/dependence. No such question arises on the present appeal.

36 The element of control is part of the same vulnerability analysis. That is, it is precisely because the defendant was in control of the discharge of the relevant statutory functions (as in Pyrenees), of the relevant experimental seed production (as in Perre), and of the execution of instructions to prepare a will (as in Van Erp), that the plaintiff in each of those cases - lacking that control - was vulnerable to the consequences of a lack of care on the part of the party in control. So too the current owners in the present case were vulnerable to the consequences of a lack of care on the part of the surveyor.

No actual reliance

37 In arguing that no duty of care arose, the appellants relied heavily on the lack of evidence from the current owners that they relied on - or even knew of - the surveyor's work. It may readily be accepted that there was no such reliance, though the role evidently played by the solicitors for the current owners should not be overlooked, as Ormiston and Ashley JJA explain.

38 As the Tribunal itself observed,[62] there can, of course, be vulnerability - and duty of care - without actual, conscious, reliance on the part of the plaintiff. In Pyrenees, in the course of rejecting as unsound the "general reliance" doctrine earlier espoused by Mason J, Gummow J said:

[62]

42 Although these last remarks were made with reference to the notion of "general reliance or dependence", as described by Mason J in Sutherland Shire Council v Heyman,[69] what Dawson J said about dependence and assumption of responsibility was undoubtedly true, independently of any such overarching notion. Moreover, in my opinion, what his Honour said about the relationship between the intended beneficiary and the solicitor has obvious parallels in the case of surveyor and subsequent owner. As I have already indicated, it seems to me that the present case is characterised by both the known, inevitable, dependence of each subsequent owner upon the proper performance of the surveyor's function, and the assumption of responsibility by the surveyor, in accordance with his statutory duties, to ensure that the house as constructed complied with the building regulations.

43 It may be that this was - to use Dawson J's phrase - no more than "an assumption of responsibility of a kind, and reliance of a kind," and that it would not suffice were this a negligent misstatement case. But it is not. It is a case of negligent conduct, negligent execution of tasks, negligent performance of duties, just as Bryan was.

Conclusion

44 For these additional reasons, the appeal should in my opinion be dismissed. It is important to say in conclusion that I do not regard this case as involving any significant new development in this area of the law. On the contrary, it involves exactly the kind of analogous or incremental development which is the hallmark of the common law in general and of this area of law in particular. As I have sought to demonstrate, the conclusion here arrived at is an application, by analogy, of the law as clearly enunciated in Bryan and Woolcock. It is part of the very "species of negligence" which those cases define.

45 Both the Tribunal and the learned Judge gave full and careful reasons for arriving at the conclusion that a duty of care existed. Both paid close attention to applicable High Court authority and, in particular, both identified and analysed the "salient features" of the relationship between surveyor and subsequent owner. Having endeavoured to do the same, this Court has reached the same conclusion.

46 The appellants would have it that to apply the Bryan/Woolcock reasoning to a surveyor represents "impermissible judicial legislation", and that such a step could only be taken - if at all - by the High Court. For the reasons I have given, I disagree. The decisions arrived at in this case - first by the Tribunal and then by the learned Judge - are examples - fine examples - of the time-honoured approach of applying to particular facts general principles laid down by the High Court. This is of course the only possible approach. Otherwise the wheels of justice will grind to a halt, and the common law will ossify.

[63]

47 This appeal raises an issue concerning liability in negligence for pure economic loss caused by the collapse of part of the foundations of a house (and for other consequential damage). The property had been purchased by the first respondents, Justin and Lisa Taitapanui ("the Taitapanuis"). They claimed that the loss resulted from breaches of duty owed to them as subsequent purchasers in respect of the careless and incompetent performance by the second appellant, Wally Mellis ("Mellis" or "the surveyor") of his functions as a building surveyor engaged by the builder of the house on behalf of the property owners some three years earlier. They claimed further that the first appellant, Moorabool Shire Council ("Moorabool"), was vicariously liable as the surveyor's employer.

48 The claim was brought in the relevant statutorily invested jurisdiction of the Victorian Civil and Administrative Appeals Tribunal. It led to orders in favour of the Taitapanuis against the appellants, and also against HIA Insurance Services Pty Ltd trading as Home Owners Warranty ("HIA"). HIA had been the insurer of the builder.[70]

49 By leave, the surveyor and the council appealed to the Trial Division of the Supreme Court raising two questions of law, one of which was directed to the issue whether the appellants owed a duty of care to the Taitapanuis. The appeal was dismissed by Smith, J. on 1 July 2004 and from that decision, directed only to that first question of law, Moorabool and Mellis have appealed, again by leave, to this Court. The essence of their grounds of appeal is that they seek to have the judge's and the Tribunal's decision overturned on the ground that neither of them owed any duty of care to the Taitapanuis.

50 The facts leading to the proceeding and this appeal may be summarised as follows. At the time the relevant damage became evident, which was in 1999, the Taitapanuis were the registered proprietors of a property at Torquay in the Surf Coast Shire ("Surf Coast"), on which was erected a house. The house had been constructed some three years earlier, at a time when Stephen John Watson and Leanne Joy Watson ("the Watsons") had owned the property.[71] Stephen Watson ("Watson") was also a registered building practitioner and a director of Watson Constructions Pty. Ltd. ("Constructions"). The company, in substance, was Watson's alter ego.

51 On 21 August 1996 Watson applied to Mellis for a building permit for a two-storey residence estimated to be worth $112,000. We note that the application form was prescribed[72], but that, although directed to Mellis, it contained Moorabool's insignia, whilst the address of that entity and other of its details appeared at the foot of the form.

52 It seems that on the previous day, pursuant to s.80 of the Building Act 1993 ("the Act"), Mellis had notified Surf Coast that he had been appointed as the private building surveyor for the house's construction.[73] In any event, on the very same day as the application for a permit was made, a building permit was in fact issued to "Stephen Watson" which had attached to it a number of plans of the proposed dwelling. The permit, again in the form prescribed by the Regulations, did not directly contain a heading relating to Moorabool, but gave its new telephone number at the top. At the foot of the document the name of the "relevant building surveyor" was given as Mellis, with his registration number, but immediately below there appeared the following, in capitals:

[65]

$805 was paid by way of fee and a receipt was given, seemingly by Moorabool, for there appears to be no reference to the surveyor on the receipt.

53 Later in 1996, Constructions built the house. On 28 January 1997 Mellis issued an occupancy permit in the form prescribed by the Regulations. It contained a heading and an endorsement at the bottom which referred to Moorabool. The document was signed by Mellis. It stated that the "relevant building surveyor" was "Wally Mellis M.B.S.", and that his postal address was Moorabool's P.O. Box.[74]

54 We pause for a moment to make four observations. First, documents to which we have referred mentioned Moorabool and Mellis in somewhat indiscriminate fashion. But the case was conducted on the basis that Mellis was the appointed surveyor, and that Moorabool was his day to day employer; in which circumstances Moorabool was vicariously liable for any negligent acts or omissions on Mellis' part in his role as surveyor in respect of the premises built by Constructions.

55 Second, there was uncertainty at trial as to the precise identity of the builder - that is, whether it had been Watson or Constructions. The Tribunal gave close consideration to the evidence bearing upon the identity of the builder. It concluded that "the most likely identity of the builder was" Constructions. Again, at one point in its reasons it seems to have treated Watson, rather than the Watsons, as being the "building owner." But later it said that by the "building owner" it meant "the owner of the subject property at the time that the dwelling was erected." Whilst Watson at times identified himself as the owner[75], in light of the evidence that the Watsons were the purchasers from Great Ocean Views Pty Ltd, [76] and that they eventually took title, Watson must in fact have been acting as agent for him and his wife when he identified himself as the owner. The logic of the Tribunal's reasons is that the Watsons were to be regarded as the owners.

56 Third, in piecing together the factual picture, so far as it pertained to the relationship between Mellis and Moorabool, the identity of the owner and builder, and the relationship between Mellis, Moorabool, the owner and the builder, the Tribunal was unassisted by any evidence of Watson, Mrs Watson, Mellis or a representative of Moorabool. Even if findings which the Tribunal made could be challenged, a court would be very reluctant to impugn such findings in the circumstances described.

57 Fourth, the appeal to the Supreme Court was brought pursuant to section 148(1) of the Victorian Civil and Administrative Tribunal Act 1998. Such an appeal, by leave, is only available on a question of law. A question whether there was any evidence to support a particular finding is a question of law. But no such question was raised by the appellants. So the relevant findings of the Tribunal are not open to debate.

58 We return to the chronology.

59 In about July 1997 the Watsons sold the property to Kathleen and Joseph Pozman ("the Pozmans") and in due course they became the registered proprietors of the property. Early in 1999 the Pozmans entered into a contract of sale with the Taitapanuis for the latter to purchase the property, and in about May 1999 the Taitapanuis became registered owners thereof.

60 According to the evidence, in the period preceding purchase of the property by the Taitapanuis no defects, certainly none of a significant kind, were apparent either to the Pozmans or the Taitapanuis. It was only after the Taitapanuis had bought the house that they saw certain defects.

61 It is convenient to mention immediately something of the scale of the problems encountered by the Taitapanuis. They first noticed water leaking from the extremities of their ensuite shower recess, this leading to the lifting of certain tiles. According to the Tribunal, certain tradesmen who attended to rectify that problem, and a leaking dishwasher, also noticed substantial non-conforming plumbing works. By September 1999 there was a major entry of water above the French doors in the main bedroom, water was forming pools on a balcony and tiles in the kitchen were lifting. Then, towards the end of the year, significant quantities of water started entering into the downstairs meal, living and kitchen areas from the balcony and upstairs area.

62 At the outset, the Taitapanuis asked the builder to rectify the observed problems. At the same time they approached HIA - which had insured Constructions in respect of the building work as required by s. 135 of the Act.

63 The Taitapanuis also had an inspection made by another building surveyor, Raymond Hamill. He in turn obtained an opinion from a structural engineer. It identified a number of serious structural deficiencies in the footings. The Taitapanuis were advised that the wrong footing system had been installed, and that it could not support the external walls. They were also advised that the footing system was contrary to the requirements stated in the CSR user's guide, which said that a reinforced concrete strip footing was the minimum required by the relevant Australian standard for masonry veneer where the soil was class H - as was here the situation. The wholly unsuitable footings had resulted in excessive settling of a number of stumps, as well as defects in the structural support for the garage.

64 It seems that the house had been built on land with a considerable slope. There was a significant uphill catchment area potentially causing an overland flow towards and through the house site. Either Watson or his company had prepared the plans and the design for the foundations. Those documents had been submitted to Mellis together with the application for a building permit. The house as planned and built was of two storeys. Its footings consisting of a stump and pad system. The external walls were clad with what is called CSR "Power Panel," which consisted of a 75 mm. reinforced panel made from "Hebel" autoclaved aerated concrete. The power panels were placed as a veneer over the wooden frame. Internally, the frame was lined with conventional plasterboard. The prime difficulty with the construction, as it was proposed and as it was effected, was that the relevant Australian standard (AS 2870.1/1988) did not permit masonry veneer to be installed where the footings were to be constructed of a stump and pad design.

65 It was accepted at the Tribunal that the plans and other documents submitted to Mellis with the application for the building permit were inadequate in a considerable number of respects, in particular because the footings as specified were of stump and pad design. The Tribunal held that Mellis had been in substantial default by issuing the permit. That default arose in the first place because, contrary to the Regulations, no specifications had been provided describing the materials and methods to be used. Moreover, the plans did not identify the particular external wall material, although it did show a wall thickness of 250 mm. which ought to have alerted Mellis to the likelihood that masonry product would be used. So the Tribunal held that Mellis had failed in his basic functions of ensuring that the application contained sufficient information to ensure compliance with the Regulations. It described his conduct as amounting to "gross carelessness and incompetence"[77]. The learned judge in the Trial Division said the Tribunal was clearly justified in saying that the plans were "completely inadequate and [appeared] in effect to have been done by a thumbnail dipped in tar". The Tribunal also noted that some 20 other construction defects had been identified, most of which Mellis should have picked up in the course of his inspection - in particular, subfloor defects in the bearers and joists, defects in the roof framing, clear shortcomings in the flashings and a failure to provide the correct safety glass for certain window and door panels.

66 The advice given by a building consultant, Perry Setford, to the Taitapanuis - confirming the opinions of Messrs Hamill and Evans as to the essential cause of the problems - was that the structure was "so compromised by the wrong type of footing system that it was cheaper to demolish and rebuild rather than try to rectify the inadequacies." On the other hand, an expert engaged by the insurer, Mr Browning, considered that demolition might be unnecessary. But he agreed that rectification would be very costly, and that a replacement veneer which he suggested might be used would breach a restrictive covenant. According to the Tribunal, all parties accepted that there were very serious deficiencies, the most significant being in the footings, and all agreed that the use of stumps had resulted in an unacceptable deformation in the power panel wall, leading to cracking of joints and deterioration of the panels themselves. This was likely to worsen. It had been accompanied by a large amount of water penetration.

67 The Tribunal concluded that -

[67]

68 It should be added, as might be expected, that the Taitapanuis did not themselves consciously rely on anything that Mellis or Moorabool said or did when purchasing the property. But they did take the conventional steps of dealing with a firm of estate agents whom they thought were very reputable and a firm of solicitors who they believed to be highly respected. Otherwise they optimistically took the view that the acquisition of the house might be a "bonus" because the original builder had lived in it. They were sadly mistaken.

69 Whether or not the Taitapanuis were right to have taken comfort from the role of the builder as both builder and initial occupier, it was of little practical consequence, as the builder was by then in liquidation. Their legal advisers understandably considered that it was necessary for them to bring proceedings in the Tribunal against not only the builder (for what that might be worth) but also against Mellis, Moorabool and the insurer. The Tribunal hearing extended for more than a week. It led to a decision on 8 April 2003 in favour of the Taitapanuis. The Tribunal ordered that HIA pay them $116,789.70, that sum including interest. The Tribunal also ordered that Moorabool and Mellis pay them $119,051.92, that sum including interest. No order was made against Constructions, since HIA was indemnifying the builder's proportionate liability to the Taitapanuis.

The developing law as to liability in tort for pure economic loss

70 Over the past 30 years, there has been recurrent, intensive, consideration - at the highest judicial levels in Australia and elsewhere - of the circumstances in which a duty of care will arise to avoid causing pure economic loss. No occasion arises in this appeal to rehearse at any length the chain of case law through which the principles have been developed and refined. It is sufficient for present purposes if we identify what appear to us to be pertinent considerations, as the law now stands in Australia.

71 The categories of case in which a duty of care with respect to pure economic loss is to be found are properly to be seen as special. Foreseeability of loss, and an unbroken chain of causation, are necessary elements, but by themselves are not sufficient. An additional element which must be present has been variously described as involving one or more of known reliance or dependence of the plaintiff; the assumption of responsibility by the defendant; or the control exercised, or exercisable, by the defendant over the circumstances affecting the plaintiff's interests. What ultimately determines whether a duty of care arises is the character of the relationship between the plaintiff and the defendant. Matters such as those which we have just mentioned, and others, bear upon the resolution of that question in the particular circumstances of particular cases; though not all of those matters will be at the forefront in every case. The question to be answered is whether, having regard to the salient features of the particular case, the connection between the parties is sufficiently close - though not necessarily physically close - as to give rise to a duty of care. When the defendant's acts or omissions arise in connection with the discharge of statutory duties or the performance of statutory functions, the statutory framework is itself a salient feature to which consideration must be given.

72 To those considerations should be added the following: Three policy considerations are pertinent in every case. First, that the effect of a decision should not lay a defendant open to claims which are indeterminate as to the class or number of potential claimants, time or amount. Second, that the effect of a decision should not be to unduly hinder ordinary commercial transactions (or, be inconsistent with normal business standards). Third, that a decision should not have the effect of intruding into another area of the law.

73 Also to be borne in mind is the fact that the pertinent law has been developed cautiously, incrementally, and by analogy. So, for example, in Perre v Apand Pty Ltd[78] McHugh J said this:

[84]

• "The major reforms are in the areas of liability, the provision of a privatised option for building approval and of a one-stop shop approach to dispute resolution."[89]

• "The Bill introduces the option for building permits to be issued by private surveyors, which will expedite the issuing of building permits."[90]

• "When the Bill becomes law, builders will be able to choose to engage a private building surveyor to carry out the building permit, inspection and occupancy permit functions and responsibilities or, where available, they may choose to use the system provided by local councils."[91]

• "The private building surveyor will be required to work in a professional and impartial manner. His or her conduct will be regulated by the scrutiny of the Building Control Commission, and the proposed legislation includes significant penalties. Building surveyors whose work falls short of standards required can be deregistered or fined. Those formal powers will be complemented by the peer group scrutiny of other builders and building surveyors, and the scrutiny of the insurer. Without a good professional record and an acceptable standard of professional practice, insurers will not maintain the insurance cover required by a building surveyor on an ongoing basis."[92]

• "The Bill introduces a more vigilant approach to the insurance aspects of approval practices than currently exists. All building surveyors will be required to carry compulsory insurance cover as a prerequisite to practising."[93]

• "All building practitioners will be required to carry professional indemnity cover to financially guarantee their professional obligations, except in the case of residential builders who already provide the consumer with an indemnity under the Housing Guarantee Fund Limited."[94]

• "No defendant will be liable for more than his individual apportionment. This means that architects, engineers, local government officers and building surveyors will not have to assume liability for the mistakes of other defendants."[95]

• "The Building Bill defines a clear starting date - the date of issue of an occupancy permit - and a clear conclusion date of 10 years from the date of issue. This will remove the existing ambiguity surrounding the time during which the building owner retains the right to issue legal proceedings. This will provide property owners with additional protection in terms of years beyond the very short number of years that now exists."[96]

• "The 10-year cap applies to property damage resulting from defects in the design, construction approval and inspection of buildings. It does not, however, extend to claims for personal injury or death which may result from the damage."[97]

[107]

95 If a permit is issued, then by s.30(1) the surveyor must give the "relevant council"[101] a copy of that permit and any plans and other documents lodged with the application. By s.31(1)(2), a council must keep a permits register, and must make it available for inspection by members of the public. By s.32 a council must keep all documents given to it for the prescribed period - which by Regulation 2.7 was most often not less than 10 years from the date of issue of the occupancy permit.

96 A form of building permit was prescribed by Regulation 2.6(1) and Form 1 of the Regulations.

97 Pausing again, sections 16, 18, 19, 24, 31 and 32 of the Act, and the interrelated regulations to which we have referred, show the importance which the Act attaches to the issue of a building permit, and the critical importance of the role of the surveyor in that connection. Quite apart from the surveyor's role in inspecting buildings which are under construction - or which more later - the surveyor must not issue a permit unless he or she is satisfied, inter alia, that the building work will comply with the Act and the Regulations - into the latter of which is incorporated[102] the Building Code of Australia. No doubt it is with that responsibility in mind that the regulations prescribe, as we have said, the documents which must be provided with an application for a permit; and which empower the surveyor to require additional information. A permit, when granted under the hand of the surveyor, is a written certification which both authorises building work and declares that the building work as described in the application will comply with the Act and the Regulations.

98 In the present case, the permit should never have been issued. Mellis, as the Tribunal found, failed his basic statutory function "to the extent of gross carelessness and incompetence." He issued the permit when the material provided by the application was, as he must have known, much lacking. Because he issued the permit in those circumstances, the critical design flaw - which must have required refusal of the permit - went unrecognised.

99 A permit, when issued, does not declare a situation only to the applicant for the permit, but intendedly to certain other persons also. That can be seen from the requirement that the relevant council maintain an accessible permits register. It can also be seen, in a related and important way, from consideration of s.32 of the Sale of Land Act 1962.

100 The last-mentioned section has a number of aspects. Overall, the material which must be supplied will give a prospective purchaser a very clear idea of just what he or she will be acquiring, the better to equip that person to decide whether or not to enter into a purchase contract.

101 The importance which the legislature attaches to the provision of full and accurate information to a prospective purchaser is underlined by the following aspects of s. 32.

[111]

103 Three points should be noted. First, the obligation imposed by sub-s.(1A) was to provide a statement. There is no reason to suppose that sub-sections (5), (6) and (8) did not apply to such a statement. Second, the obligation was not to set out a copy of the permit - though we see no reason why that should not have been done. It was to provide particulars of any permit issued. Those particulars might themselves identify the building work to which the permit related. But if they did not do so, they should certainly provide information sufficient to enable the purchaser to search the permit register of the relevant council. Third, the structure of the Building Act, to which we have referred, means that the issue of a permit referable to a particular building on the land would convey to the prospective purchaser and his or her solicitor (if a solicitor was engaged) an assurance that the person issuing the permit - that is, the surveyor - had been satisfied that the building work the subject of the application for a permit would comply with the Act and the Regulations. Taking that as a starting point, the prospective purchaser could properly assume any building erected in consequence of the grant of the permit had in fact been erected in accordance with the Act and the Regulations, provided only that the building work had been performed in accordance with the plans and specifications submitted with the permit application.

104 We referred a moment ago to a purchaser being given sufficient information to enable a search to be made of the council register; and to the issue of a permit conveying a certain assurance to a purchaser. It is notorious that almost all members of the public engage a solicitor or a conveyancer in respect of real property purchasers. As we noted earlier, the Taitapanuis, consistently with that general practice, engaged an experienced firm of solicitors in respect of their purchase. It is the professional adviser, rather than the lay client, whom one could expect would be assured in the first instance in the way which we have described - whether by consideration of the particulars of the building permit as provided, or by inspection of a copy of the permit if the same was appended, or (as here) by inspection of a copy of an occupancy permit if the same was appended.

105 It would be for the solicitors to notify their client as to any irregularity or any uncertainty concerning particulars of a building permit which had been provided, or concerning a copy of such a permit annexed to a s.32 statement. In the absence of such notification, the client might fairly be assured that all was in order, as the client may be with title, planning permits and the like. There may be circumstances in which the solicitors would suggest that the clients make their own inspection of a document or the land (or both), but in the ordinary case the clients could rely on the solicitors having perused and made proper enquiries as to any particulars or documents supplied with such a statement, so that in respect of any advice or query relating to particulars or a document so to be supplied, the solicitors' assurance can fairly be converted into an implicit, if not explicit, reliance by the clients that no relevant defect had been revealed.

106 There is a fourth point to be made about s. 32(1A); but only to explain an apparent anomaly. The sub-section was, as we have said, introduced by the House Contracts Guarantee Act 1987. By s. 7(3)(b) of that Act the liability of an approved guarantor under a guarantee referred to in either of sub-sections (1) or (2) was -

[115]

107 There was, then, a conformity between the guarantee period and the period for which, by s. 32(1A), prospective purchasers must be given particulars of a building permit referable to the sale property.

108 When s. 32(1A) was amended by the Building Act 1993, an element of disconformity appeared; that is, because the limitation period fixed by that Act in respect of non-personal injury claims became 10 years. Nonetheless, the reference in s. 32(1A) to a 7 year-period continued to have a discrete application and relevance.

109 We have referred to the critical role of the surveyor in respect of the issue of a building permit. That is not the only role of a surveyor in respect of building work once that person has been appointed as the relevant surveyor. There is a duty to make mandatory inspections, and power to conduct other inspections.[106] A surveyor has broad powers when conducting an inspection, and in consequence of conducting the same.[107] Again, if a building permit states that an occupancy permit is required, a building must not be occupied unless the same has been sought from, and issued by, the surveyor.[108] An occupancy certificate is not to be issued unless the building to which it applies is fit for occupancy. It is evidence that the building is suitable for occupation. It is not evidence that the building to which it applies complies with the Act or the regulations.[109] The same is the situation if a certificate of final inspection is issued, which happens where an occupancy permit is not required.[110]

110 An occupancy permit, then, by statute gives no assurance other than that the building the subject of the work is suitable for occupation. On the other hand, such a permit will only be granted where a building permit has earlier been issued. A reasonably competent conveyancing lawyer or conveyancer should be taken to know those matters. Indirectly, then, such a person seeing an occupancy certificate would be reassured that at least the building work authorised by the building permit which necessarily lies behind the occupancy permit was work which the surveyor had been satisfied would comply with the Act and the regulations. That person would also be reassured by knowing, as he or she should be taken to do, that the surveyor had at least conducted the mandatory inspections.

111 We said earlier that we would examine the permit regime, and the role of surveyors. We have thus far done so without focusing upon the new regime pertaining to surveyors which was introduced by the Act. To the latter we now turn.

112 Under the Act, "building practitioners" who are natural persons are obliged to seek and obtain registration pursuant to Part 11. The term "building practitioners" is defined in Section 3(1) to include, inter alia, building surveyors and builders.

113 Section 170(1) permits the prescription of qualifications for registration. If a particular qualification is prescribed, the Building Practitioners Board may refuse[111] to register an applicant in an event that the applicant is not so qualified.

114 In the case of building surveyors, Regulation 15.3(1)(a) prescribed that an applicant must have a degree or diploma in building surveying from a university within the meaning of the Tertiary Education Act 1993; and four years of practical experience to the satisfaction of the Board.

115 Section 170(1) refers to an applicant's compliance with s.169. The Board may refuse to register an applicant if a requirement of s.169 has not been met. Section 169(2) provides that an application for registration must -

[145]

141 Section 134, then, creates a particular limitation period in respect of building actions - whether they be founded in tort or contract. Any claim for pure economic loss, necessarily being the subject-matter of a "building action," is thus strictly limited in time. There appears to be no prospect of the operation of any of the extension provisions in the Limitation Act. That bears, we think, upon the indeterminacy aspect of the policy considerations to which we earlier referred.

142 We must mention two aspects of the insurance regime. First, we have already noted s. 135(1) of the Act, and the fact that it was not in debate that Mellis was required to hold, and must have held, professional indemnity insurance. That was the consequence of s. 135(1)( c) and Ministerial Order No S52 dated 16 May 1996, the latter of which was operative from 1 July 1996.

143 Second, the appellants referred to and relied upon certain provisions of the Domestic Building Contracts Act 1995, s. 137C of the Act, and provisions relating to insurance of building practitioners, with a view to showing that the legislature has distinctly provided for the rights of successors in title in particular circumstances, in which case it would be judicial legislation, as the appellants submitted, to discern a duty of care as between private surveyor and subsequent purchaser. We refer in greater detail to the particular provisions, and to the pertinent submissions, below.

The principal submissions for the parties

144 Before going to our analysis of the facts of the case, considered in the context of the legislation which we have now described, we should mention the principal submissions advanced for the parties. We do not suggest that equal emphasis was laid upon each submission.

The appellants

145 Counsel contended that the "salient features" did not justify the conclusions of the Tribunal and the learned Trial Division Judge that a duty of care arose. Neither decision could be regarded as incremental, or analogous to existing established authorities. Both decisions were based upon "lofty generalization" which paid little or no regard to the facts of the case. Further, many of the "salient features" identified by the learned judge in fact contra-indicated the existence of such a duty. Finally, what may be described as "certification" cases that were mentioned in argument did not assist the Taitapanuis.

146 More specifically, counsel submitted that -

[177]

Resolution of Appeal

149 It is convenient to mention three matters at the outset.

150 First, one indispensable requirement for the erection of a duty of care in a claim for pure economic loss is reasonable foreseeability that damage of that kind might be suffered by the claimant in the event of the defendant's want of reasonable care. There is no question but that in this case infliction of damage of that kind upon a subsequent purchaser should reasonably have been foreseen by Mellis. The contrary was not argued.

151 Second, Mellis' want of reasonable care, if he owed a relevant duty to the Taitapanuis, was multi-faceted, depending upon the precise formulation of that duty. The breach, on a narrow conception of the duty, consisted of issuing the building permit despite gross inadequacies in the material provided in support of the application, and despite such material as was provided at least implying a mismatch of the footing systems and the external wall material. The permit, once issued, both authorised the building work and implied that such work would comply with the Act, the Registrations and the Code as it was imported. Depending upon the precise formulation of the duty, Mellis' further want of reasonable care may have included his failure to detect many defects in the building work as it was effected - some of which defects, it seems very clear, were such as would be, and were, hidden as construction proceeded. The same may be said of his issuing the occupancy permit, insofar as such a permit necessarily implied not only the antecedent issue of a building permit but also the making of mandatory inspections.

152 According to the Tribunal's findings, Mellis' want of reasonable care was, in effect, gross. But nothing turns on that. This was not a case in which the Taitapanuis sought to establish that Mellis' conduct had been anything more than negligent.

153 Third, the submissions made by the parties considerably focussed upon the decision of the High Court in Bryan v Maloney, analysis of that decision in Woolcock Street Investments, and earlier criticism in Zumpano v Montagnese. But, with respect, we do not consider that Bryan v Maloney, or Woolcock Street, provide the basis for resolving this appeal. Mellis was neither the designer nor builder of the premises. To say that he was a short step removed from the designer or builder, and that, by resort to cautious development or analogy, a duty of care could be discerned to arise in favour of the Taitapanuis, fails in our opinion to focus upon the essential features of the role which Mellis assumed.

154 In our opinion, it is of critical importance that Mellis was a person who voluntarily agreed to perform important statutory functions and duties bearing upon the soundness of the premises which were to be constructed. The performance of those functions and duties could readily be seen to impact not only upon the owners of the premises at the time of their construction but also upon any subsequent owners in the seven year period after the permit was issued. Further, for the performance of such functions and duties, Mellis' employer, at least, was remunerated.

155 Once Mellis assumed the role of building inspector with respect to the particular premises, no discretion existed whether or not to do certain things. His statutory obligation was to act, and in some circumstances to refuse to act. Contrast the circumstances in Heyman. So, Mellis was obliged to consider an application for a building permit and, if the papers were in order, to issue such a permit. But if the material was not in order, he was obliged not to issue a permit. If once he issued a permit, certain inspections were mandated. When premises were built, he was obliged (in a case such as the present) either to issue or refuse to issue an occupancy permit.

156 Further, it should be noted that the work which Mellis was obliged to perform, once he assumed the role of building inspector in respect of the particular premises, gave effective authority - if a building permit was issued, inspections were satisfactory and an occupancy permit was issued - for the building and occupation of a home. It need hardly be said that for most people the purchase of a home is a major personal decision, that the structural soundness of the home is of first importance, and that homes are often enough the subject of resale.

157 What we have just said leads on to the point that a vital step in what Mellis was obliged to do - that is, issue or refuse to issue a building permit - has statutory implications which extend beyond the owners at the time when such a permit issues. A certificate, once issued, serves two purposes. First, it authorises construction of premises in accordance with plans and specifications submitted to the surveyor. It intendedly reflects the surveyor's skilled appraisal of material provided, and his conclusion that such material means that the proposed building work (and the permit) will comply with the Act and the Regulations (and thus the Code, so far as the same is incorporated). This is of particular importance for, as the Tribunal recognised, structural deficiencies may well be concealed when building work has advanced beyond its early stages.

158 Second, the requirement that particulars of any building permit must be supplied with a s.32 Sale of Land Act statement, for a period of 7 years after issue of such permit, shows that the statutory scheme is concerned to provide a prospective purchaser in that 7 year period with an assurance that the authorised building work to which the permit relates - work some of which is likely to be hidden from a purchaser's view - was work which was not in breach of the Act or Regulations. We have already explained why any competent solicitor would gain the assurance of which we have spoken from a perusal of the permit particulars, or from inspection of a copy of the building permit in the council register; or alternatively by perusing a copy of the permit or the occupancy certificate in the event that the same is appended to the s.32 statement; and the correlative assurance of the purchaser.

159 Where a surveyor voluntarily assumes particular responsibilities under the Act, to the financial advantage at least of his employer, the statutory regime seeks to give comfort to a prospective purchaser in the manner which we have just described. It appears to us that it would be anomalous if the issue of a building permit under the statutory scheme, its issue being conveyed to a prospective purchaser, did not give rise to a duty of care of the kind here contended for. To conclude otherwise would tend to deny that there was any significance, so far as a prospective purchaser is concerned, between the assurance properly conveyed by a soundly-issued certificate, and the assurance improperly conveyed by a negligently-issued certificate. The failure to provide particulars of a building permit - be it good or bad - would call s.32(5)(b) of the Sale of Land Act into play. But it is a moot point whether the provision of particulars of a building permit which had been issued in negligent breach of the surveyor's statutory obligations could call s. 32(5)(a) into play.

160 The duty of care should be described as a duty to exercise reasonable care in the giving of a building permit in respect of building work the subject of an application for the permit. There is no occasion for us to consider whether any duty of care rested on Mellis in connection with any subsequent performance by him of his duties as surveyor in respect of the building work the subject of the permit.

161 In this case, the contract note of January 1999 - which, incidentally, identified the Taitapanuis' solicitors - contained an acknowledgment of receipt of a s.32 statement. That statement, dated 2 January, said that "attached are particulars of any building permit given in the last seven years." In fact, what was attached was a copy of the occupancy permit. As we have said, that permit necessarily implied the proper issue of a building permit.

162 Whilst we consider that the requirement imposed by S.32(1A) of the Sale of Land Act in its then form is of particular significance, set in the whole context which we have described, in leading to a conclusion that Mellis owed a relevant duty of care to the Taitapanuis, on one view it was enough, in context, that Mellis assumed and executed a duty which required him to issue or refuse to issue a building permit. That duty, once assumed and negligently executed, might authorise, as here occurred, the erection of a house affected by structural deficiencies which were not readily ascertainable by a later purchaser. At least in circumstances where there was no debate that the surveyor owed a relevant duty of care to the original owners (though subject in a contributory negligence argument to which we shall later refer), we think that a relevant duty of care, owed by Mellis to the Taitapanuis, might be discerned. But the point need not be decided.

163 We referred a moment ago to a contributory negligence submission advanced for the appellants. In some claims for pure economic loss it has been considered relevant whether a predecessor of the claimant was owed a duty of care akin to that being contended for by the claimant. As we approach resolution of this matter, that is, at least, not a consideration of importance. Were the matter to be resolved, however, by reference to the alternative circumstances which we have said might give rise to a duty of care in favour of the Taitapanuis, or if a Bryan v Maloney approach was available,[132] the question whether Mellis owed a relevant duty of care to the building owners as at the period of his engagement would have more obvious relevance.

164 It was not in debate that Mellis owed a relevant duty of care to the owners of the property as at the time of his engagement. Whether the duty was imposed by contract, or arose at common law, or could be cast in either way, was not said by any of the parties to be of key significance. For the practical content of the relevant duty was accepted as being the same whatever its conceptual basis.

165 But in this case, counsel for the appellants contended that the duties - one conceded, one contended for by the Taitapanuis - were not the same; and that this was of importance. There were two elements to the submission. First, that any duty owed by Mellis to the Watsons was impacted upon by their contributory negligence. Second, that any duty owed by Mellis to the Taitapanuis was impacted upon by their contributory negligence in failing to obtain a pre-purchase inspection of the premises which would have revealed their structural deficiencies. The second element also bore upon the question whether the Taitapanuis were vulnerable, as that word is understood in the context of claims in tort for pure economic loss.

166 In our opinion, the appellants' submissions should not be accepted. The content of the duty of care owed by Mellis to the Watsons was no different even if it be assumed that he would have been able to successfully allege contributory negligence against them. In the latter connection, we add, there would need to have been careful consideration of the distinction between Watson and Constructions, albeit that the latter was Watson's corporate alter ego.

167 Then, as to the Taitapanuis, the appellants face the problem that the Tribunal did not find that a pre-purchase inspection, even if the same could have been conveniently arranged, was likely to have revealed the critical structural deficiencies.[133] The Tribunal said this, in the context of a discussion about vulnerability:

[179]

168 There was no appeal ground which contended that there was no evidence to support those findings. We have already noted the nature of the appeal authorised by s.148(1) of the Victorian Civil and Administrative Tribunal Act 1998. Accepting their correctness, it could not have been successfully contended[134] that a finding of contributory negligence should be made based upon the Taitapanuis' failure to arrange such an inspection.

169 Thus far we have identified the main features of the legislation, the circumstances of the case, and the relationship of the parties, which have cumulatively led us to conclude that Mellis owed a relevant duty of care to the Taitapanuis. We have rejected a particular argument advanced for the appellants. A number of other considerations have contributed to our conclusion. We must now mention them.

170 First, Mellis voluntarily assumed a powerful position. His negligent performance of duties confided in him in virtue of his holding that position detrimentally affected the Taitapanuis. By taking on the task of certification, Mellis relevantly assumed responsibility. He must be taken to have known the significance of issuing a building permit - both as an authority to construct, and as a document the existence of which must be disclosed to a later prospective purchaser.

171 Second, the Taitapanuis were vulnerable, in the sense described by Gleeson CJ, Gummow, Hayne and Heydon JJ in Woolcock Street[135].

172 Third, for reasons already discussed in the context of the appellants' contributory negligence argument vis a vis the Watsons, the practical content of the duty of care owed by Mellis to the Watsons and to the Taitapanuis was no different. In each instance, the nature and scope of the duty was discernible from Mellis' statutory obligations.

173 Fourth, Mellis could not have but been aware of the risk of economic harm being suffered by a later purchaser in the event that he neglected his statutory obligations. Such awareness, arguably, was likely to have been greater than usual because he must have known that the Watsons - Watson being the moving spirit - were unlikely to be interested in anything but obtaining a building permit in accordance with the application material, and then in the building work proceeding smoothly through inspection to the point where an occupancy permit was issued.

174 Fifth, to impose a relevant duty of care upon Mellis did not impair his reasonable freedom of action. It was, to the contrary, compatible with him acting consonantly with the statutory obligations which he voluntarily undertook.

175 Sixth, to impose a relevant duty upon Mellis carried no risk of indeterminacy. The duty could only run in favour of a small class of readily identifiable beneficiaries, and that for a short time. Note also that, as the Act then stood, the surveyor's liability could not exceed his or her proportionate responsibility as between those who were liable to a claimant.

176 It is enough, in this case, to define the class as persons purchasing the property in the seven year period stipulated by s.32(1A) of the Sale of Land Act in its pre-substituted form. There is no occasion to consider the situation of a person buying in the further period during which, by s.134 of the Act, a building action may be brought.

177 Seventh, there was an unbroken chain of causation between Mellis' want of reasonable care and the economic loss suffered by the Taitapanuis. Upon the Tribunal's finding, for reasons explained, that was not gainsaid by the asserted opportunity for the Taitapanuis to have a pre-purchase inspection conducted. Nor was it gainsaid by the circumstance that "particulars of the building permit" - in fact a copy of the occupancy permit - were supplied with the Section 32 statement. Indeed, that circumstance reinforced the continuity of the causal chain.

178 Eighth, it is the fact that the Taitapanuis did not assert that they had consciously relied upon anything done by Mellis as being causative of their loss. But they did entrust the purchase to solicitors whom they perceived to be highly respected. Those solicitors were supplied, broadly in conformity with s.32(1A) of the Sale of Land Act, with material bearing upon certification. In the absence of anything suggesting the contrary, it must be inferred that, having been engaged, the solicitors performed their task competently. The relevant material was not such as might have occasioned concern on their part. The fact that no solicitor gave evidence is in our opinion not to the point. We have already pointed out the way in which the solicitor's assurance should be taken to have affected the purchasers.

179 Ninth, if that not be a correct analysis, we do not understand it to be the law that absence of actual reliance upon conduct of a defendant necessarily requires the failure of a claim for pure economic loss; and in this case the multiplicity of considerations standing in favour of the imposition of a duty of care suggests that, if there was absence of actual reliance, it should not be decisive against such imposition. Neither should an assumed absence of reliance be decisive against causation of loss. For the Taitapanuis' loss was, in truth, sealed by the issue of the building permit and the improbability that pre-purchase inspection would have revealed the essential structural deficiencies.

180 Tenth, it was submitted for the appellants that the statutory scheme provided reason why the surveyor's duty did not extend to the Taitapanuis. The submission had these elements:

[183]

181 We do not accept that submission. The relevant provisions of the Domestic Building Contracts Act and the Act imply commonplace warranties into contracts to which a builder is a party. The warranties are such as particularly relate to construction work carried out by a builder. It is true that the particular warranties run in favour of successors in title. But it is another thing altogether to conclude that the Parliament objectively intended to displace the common law as it should otherwise apply in respect of the quite different conduct of a building practitioner of another class.

182 Eleventh, in connection with the issue just considered, the requirement that a building surveyor carry professional indemnity insurance is not without all relevance. The legislature can be said to have had in mind the prospect of a surveyor being sued for alleged defective performance, at least, of his or her duties of certification. We think that it would be illogical to conclude that Parliament had in mind a possible claim by the person who owned the property during the period of the surveyor's engagement, but not a claim by a subsequent purchaser within the s.32(1A) period.

183 We turn finally to consider a small number of English cases concerning certification, to which reference was made in argument and in later written submissions after the question of their possible relevance had been raised in argument. We consider, in the event, that they provide no assistance to the appellants' case. We should say why that is so.

184 In Marc Rich,[138] the leading opinion was given by Lord Steyn.[139] His Lordship's conclusion that a classification society did not owe a duty of care to cargo owners in respect of physical damage to the cargo arising from the society's pronouncement that a vessel on which the cargo was carried was safe to continue on its voyage after certain repairs had been effected depended on a Caparo analysis. There was reasonable foreseeability of economic loss, and his Lordship was prepared to assume sufficient proximity. But it would not be fair, just, or reasonable to impose a duty. His Lordship said this -

[185]

185 His Lordship further concluded, in effect, that the circumstances fell outside "even the most expansive view of the doctrine of voluntary assumption of responsibility," and that the cargo owners had not even been aware of the society's examination of the ship, let alone relied upon any pronouncement that the society's representative had made.

186 The factual differences in the present case, ignoring the difference in approach dictated by Caparo, are stark. Almost every matter which his Lordship considered important was factually the converse in the present case.

187 Reeman[141] also involved consideration of factual circumstances far removed from the present. The plaintiffs purchased a fishing boat in respect of which there was a current certificate of compliance with statutory requirements that were designed to ensure seaworthiness. The certificate which was then extant, issued by the Department of Transport, was founded upon an inspection carried out many years earlier, and incorrect calculations then made and reiterated from time to time in the intervening period. Only after the purchasers had purchased the vessel was it re-inspected, and was it found that it did not meet minimum requirements. The purchasers suffered financial disaster.

188 In holding, contrary to the trial Judge, that the Department had owed no duty to the purchasers, the Court of Appeal applied a Caparo test. That apart, Phillips LJ, who gave the leading judgment, identified the following matters as being of importance. First, the statutory duties related to the regulation of the performance of obligations of owners of property designed to be used for commercial purposes that involved potential risks to third parties[142]. Second, Murphy v Brentwood District Council[143], Philcox v Civil Aviation Authority[144] and Marc Rich raised serious questions whether the Department would owe any duty of care to Mr Reeman or his crew even in the event of their injury or death resulting from unseaworthiness of the vessel[145]. Third, aspects of the task of survey and certification involved the exercise of discretion; and there was a right of appeal against refusal of certification. It was at least arguable that no duty of care was owed to the owner of a vessel at time of survey and certification. Still less could a duty of care be owed to a person later acquiring the vessel[146]. Fourth, the statutory framework was designed to promote safety at sea. The protection of those whose commercial interests might conceivably be affected by unseaworthiness of vessels formed no part of the purpose of the legislation[147]. Fifth, such persons did not form part of a class that was capable of definition and delimitation by identifiable characteristics at the time of issue of a certificate[148] . Sixth, it was always open to persons in the position of the purchasers to take steps - such as surveying the vessel or stipulating for contractural warranties - that would provide protection[149]. Seventh, there was force to the submission that the circumstances were akin to those considered in The Morning Watch[150] and Marc Rich. Arguably, the Department could be equated with a non-profit making classification society[151].

189 The Caparo analysis and reliance upon Brentwood apart, his Lordship's analysis shows how different were the statutory provisions and the circumstances in that case and in the present matter. To point up the differences would be only to repeat much of what we have already said.

190 Finally we mention, for completeness, Perrett v Collins[152]. It raised a duty of care question in the context of certification of airworthiness; and the suffering, by the immediate beneficiary of the certification, of personal injury. The Court of Appeal upheld a finding that the certifier owed a duty of care to the injured plaintiff. The Court considered Marc Rich, Reeman and Philcox; but they were very different cases, as Hobhouse LJ recognized when, having referred to the reliance of defendant's counsel upon them, he said:

[188]

[1] (1995) 182 CLR 609 at 617 per Mason, C.J., Deane and Gaudron, JJ.

[2] [2004] HCA 16; (2003) 216 CLR 515.

[3] Mason, C.J., Deane, Toohey and Gaudron, JJ.

[4] The use of the term "proximity" is discussed below in paras [20]-[22].

[5] At 618-9.

[6] At 624.

[7] ibid.

[8] At 625.

[9] ibid.

[10] At 627.

[11] At 628.

[12] Gleeson, CJ, McHugh, Gummow, Hayne, Callinan and Heydon, JJ, Kirby J dissenting.

[13] At 527 [14].

[14] At 531-2 [25]-[26], referring to Bryan (supra) at 624.

[15] Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529.

[16] [1999] HCA 36; (1999) 198 CLR 180.

[17] Stapleton, "Comparative Economic Loss: Lessons from Case-Law-Focused 'Middle Theory'", UCLA Law Review, vol 50 (2002) 531, at pp 558-559.

[18] (1997) 188 CLR 159.

[19] [1997] HCA 8; (1997) 188 CLR 241.

[20] At 530-1.

[21] The proceeding in the Queensland Court of Appeal was by way of Case Stated.

[22] At 533 [31].

[23] At [31].

[24] At [32].

[25] At 534 [35].

[26] At 528 [18].

[27] [1976] HCA 65; (1976) 136 CLR 529.

[28] ibid at 576-8.

[29] Woolcock at 530 [22] (emphasis added).

[30] See at 530 footnote 90.

[31] (1997) 188 CLR 159.

[32] At 234.

[33] ibid.

[34] [1998] HCA 3; (1998) 192 CLR 330.

[35] Toohey, McHugh, Gummow and Kirby JJ.

[36] His Honour here referred to Howard v Jarvis [1958] HCA 19; (1958) 98 CLR 177 at 183; Parramatta City Council v Lutz (1988) 12 NSWLR 293 at 328; Hawkins v Clayton (1988) 164 CLR 539 at 553; Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408 at 427; Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520 at 556-557; Hill v Van Erp (1997) 188 CLR 159 at 198-199, 234.

[37] His Honour referred to Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 460.

[38] [1998] HCA 3; 192 CLR 330 at 389 [168] (emphasis added).

[39] [1999] HCA 36; (1999) 198 CLR 180.

[40] Gleeson CJ, Gaudron, McHugh, Gummow, Kirby and Callinan JJ.

[41] At 253 [198] (emphasis added).

[42] At 254 [201].

[43] At 259-260 [215]-[217] (emphasis added).

[44] At 238.

[45] [1994] HCA 13; (1994) 179 CLR 520.

[46] 188 CLR 159 at 238 (emphasis added).

[47] Reasons for judgment [32], [48].

[48] See, for example, Woolcock at [25]-[27]; [28] - "in considering what duty a builder or engineer owed others"; [31]-[32].

[49] Woolcock at [15].

[50] Woolcock at [26], quoting Bryan at 619.

[51] The word used in Bryan was "proximity".

[52] Bryan at 625.

[53] ibid.

[54] Woolcock at [33].

[55] cf. Bryan at 625.

[56] Bryan at 627.

[57] Reasons [111], [114].

[58] ibid.

[59] ibid.

[60] Paragraphs [167]-[168].

[61] At [24].

[62] Reasons for judgment [46].

[63] [1998] HCA 3; 192 CLR 330 at 385-6 [158].

[64] At 390 [170].

[65] 188 CLR 159 at 230.

[66] 188 CLR at 184, citing San Sebastian Pty Ltd v The Minister [1986] HCA 68; (1986) 162 CLR 340 at 355.

[67] At 184-5.

[68] At 186.

[69] [1985] HCA 41; (1985) 157 CLR 424 at 464.

[70] In consequence of a proportionate liability order made by the Tribunal, which order the appellants sought to challenge, HIA was made a respondent to the appeal to the Trial Division. It was also named as a respondent to the present appeal. But the challenge to the Tribunal's resolution of the proportionate liability question was not pursued in this Court. Counsel for HIA nonetheless appeared, and made a number of useful submissions directed to the key issue on the appeal.

[71] Subject only to an issue concerning the date upon which they took a transfer of title from the original sub-divider; as to which, see below.

[72] Under the Building Regulations 1994, SR 81/1994.

[73] We have not been able to trace the document which effectuated that appointment. The statement appears in the detailed reasons of Mr R.J. Young constituting the Victorian Civil and Administrative Tribunal in para.3.26 but he notes also that the document nevertheless was under Moorabool's letterhead.

[74] Notification was also given by Mellis to Surf Coast on 28 January 1997 as to the dates of approval of the stump holes, frame and "final" stage. The last-mentioned was stated as being 22 January 1997.

[75] For instance, on the application for a building permit.

[76] It had sold the land to the Watsons by contract dated 7 March 1996. The Transfer was dated 25 November 1996, and stamp duty was apparently paid that day.

[77] Paras 3.50 of the Member's reasons.

[78] [1999] HCA 36; (1999) 198 CLR 180 at 216 [93].

[79] Scott v Green [1969] 1 WLR 301 at 304 per Lord Denning MR, cited with approval by Mason J in Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 460.

[80] At 460.

[81] At 432.

[82] At 447.

[83] [1998] HCA 3; (1998) 192 CLR 330.

[84] At 391-2 [177].

[85] His Honour referred to Howard v Jarvis [1958] HCA 19; (1958) 98 CLR 177 at 183; Parramatta City Council v Lutz 91988) 12 NSWLR 293 at 328; Hawkins v Clayton (1988) 164 CLR 539 at 553; Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408 at 427; Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520 at 556-557; Hill v Van Erp (1997) 188 CLR 159 at 198-199, 234.

[86] His Honour referred to Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 460.

[87] [1998] HCA 3; 192 CLR 330 at 389 [168] (emphasis added).

[88] At 372 [115].

[89] Hansard 11 November 1993, p 1689.

[90] ibid, p 1690.

[91] ibid, p 1690.

[92] ibid, p 1690 - 1.

[93] ibid, p 1691.

[94] ibid, p 1691.

[95] ibid, p 1691.

[96] ibid, p 1692.

[97] ibid, p 1692.

[98] Defined by s.3(1) of the Act in broad language.

[99] That term is defined by s.3(1). See particularly paragraphs (a) and (b).

[100] SR 51/2005.

[101] By s.3(1), "the council of the municipal district in which the building or land is situated". Here, Surf Coast.

[102] Subject to a little modification.

[103] Though see sub-s.7.

[104] Act No 44/1987.

[105] Section 264, Schedule 5 item 19.

[106] See sections 34, 35, and Part 7 of the Regulations.

[107] See sections 36, 37, and Part 7 of the Regulations.

[108] See sections 21, 39, 41, 42, 43 and Schedule 2, Part 9 of the Regulations and the Forms there referred to.

[109] See sections 44(a), 46(1)(2).

[110] See section 38(1)(2).

[111] Subject to the operation of s.170(1)(b)(ii).

[112] For example, for the purposes of ss. 30, 31, 32.

[113] See, for example, paragraph 1.1 of its reasons.

[114] See paragraph 2 of his Honour's reasons.

[115] See, for example, the powers conferred by ss.102, 105, 121, 124.

[116] See s.216B.

[117] See s.216A.

[118] Cf Local Government Act 1989, s. 3E(2).

[119] It was not asserted that there was any relevant certification by another building practitioner in this case.

[120] See now Wrongs Act 1958, Part IV AA.

[121] [1985] HCA 41; (1985) 157 CLR 424.

[122] (1995) 182 CLR 609.

[123] [1997] 2 VR 525.

[124] [1997] 2 Lloyd's Rep. 648.

[125] Caparo Industries Plc v Dickman [1990] UKHL 2; [1990] 2 AC 605.

[126] [1991] UKHL 2; [1991] 1 AC 398.

[127] [1995] UKHL 4; [1996] AC 211.

[128] [1998] 2 Lloyd's Rep. 255.

[129] The Times, 8 June 1995, Court of Appeal (Civil Division) Transcript No 821 of 1995.

[130] [2004] HCA 16; (2004) 216 CLR 515, at 526-529, [10] - [18].

[131] Pertaining to pure economic less.

[132] We do not suggest that it was.

[133] There had been conflicting evidence about the matters by witnesses called for the Taitapanuis; and neither Moorabool nor Mellis called witnesses to address the point.

[134] The allegation seems to have been raised by paragraph 47 of the appellants' defence.

[135] At 530-531, [23].

[136] See s.8.

[137] See s.9.

[138] [1995] UKHL 4; [1996] AC 211.

[139] Lords Keith, Jauncey and Browne-Wilkinson agreed in his Lordship's opinion. Lord Lloyd dissented.

[140] At p. 242.

[141] [1997] 2 Lloyd's Rep. 648.

[142] At 678.

[143] [1991] UKHL 2; [1991] 1 AC 398.

[144] The Times, June 8, 1995.

[145] At 679.

[146] At 679.

[147] At 680.

[148] At 681.

[149] At 683.

[150] [1990] 1 Lloyd's Rep 547.

[151] At 683.

[152] [1998] 2 Lloyd's Rep 255 (CA).

[153] At 257-258.

At a glance

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Judgment (188 paragraphs)

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Legislation Cited (2)

Cases Cited (15)