Newcastle City Council v Shortland Management Services & Ors

Court of Appeal (NSW)|2003-03-11|Before: Spigelman CJ, Mason P, Sheller JA

Background Facts 7 No 17 Anzac Parade is located in an area of Newcastle known as "The Hill". It has a north-westerly aspect. The house on the property is two storeys high. In about 1979 or 1980 the second Respondent had built an extension at the rear of the house, including a large living area. The extension has extensive glass windows on the upper storey, in order to take advantage of the western view afforded by the elevated position of the house. The western view takes in Mount Sugarloaf on the Watagan Ranges. From the front of the house there are views of Newcastle City and its harbour. 8 On 30 April 1996, Mr and Mrs Blakemore submitted a building application to the Appellant for alterations and additions to their property at No 19. They proposed to continue the existing roof line to the north in order to provide a new kitchen, family room and verandah. The extension would be in the line of sight of the western view from No 17. 9 Mr R Ball was a building surveyor employed by the Appellant. He had had delegated to him a number of council functions. Amongst those was a delegation to administer specified requirements of the Local Government Act 1993. It was not contested in these proceedings that he had the authority to form the opinion for purposes of s114 of the Act. 10 Mr Ball gave evidence that the notification clerk employed by the Appellant requested that the owners of the properties at No 21 Anzac Parade and No 5 Kitchener Parade be notified of the Blakemores' application pursuant to s114(1) of the Local Government Act. No 21 Anzac Parade was located immediately to the west of the Blakemores' property. No 5 Kitchener Parade was around the corner at a lower elevation. Letters were sent by the Appellant to the occupiers of each of those properties. 11 On 4 June 1996 Mr Ball carried out a site inspection for the purposes of assessing the Blakemores' application. In the course of the inspection Mr Ball filled out various parts of a document entitled "NCC Building Application Checklist - Class 2-9". Under the heading "Environmental Protection" that document specified: "Consider effect of adjoining and other land Clause 114 LGA and Clause 12 (Local Government) Approval Regulations 1993 (write separate report as necessary)". Mr Ball gave evidence that in relation to the Environmental Protection assessment, he assessed the Blakemores' plans against the onsite conditions in order to determine their effect on the privacy of other buildings and on views or enjoyment or use of adjoining property. He noted the following under the heading "Environmental Protection": "Consider notification sent to 5 Kitchener Pde and 21 Anzac Pde sufficient. After due consideration notification not req'd to adjoining properties ie 17, 15." 12 At the time of his inspection access to the rear of No 17 was not available. Accordingly, Mr Ball did not assess the impact of the plans from the Respondent's property. He gave evidence that considered each of the matters in s114(2) (Black AB 46). He said that he did assess the views to and from No 17. In some respect he used the front verandah of No 17 as a viewing platform. He said he also assessed the likely effect of the proposed extension on views from No 17, by observation from the existing rear verandah of No 19. He gave evidence that he considered the height of the existing roof on No 19 in relation to the existing windows of No 17. He said that No 17 had views to the west, north and south and that the views to the north and south would be predominantly intact if the building work was approved. Mr Ball concluded that the enjoyment of the land of No 17 would not be detrimentally affected by the Blackmores' plans. 13 When cross-examined by counsel for the Respondents, Mr Ball conceded that although it had crossed his mind that the extension to No 17 had been added with the intention of maximising the western view, as suggested by the extensive use of glass in the upper storey, he nevertheless concluded the enjoyment of the property would not be detrimentally affected. This, he said, was because the property still enjoyed views to the north and south. Mr Ball admitted that he could have arranged access to the rear of No 17 but did not do so. 14 The Blakemores' building application was approved by the Appellant on 11 June 1996. The approval document bears Mr Ball's signature. 15 In late August or early September 1996, the second Respondent noticed that building work was being done at No 19. It was not until late October, when he looked out of his rear window and saw the roof trusses being erected for the Blakemores' extension, that he recognised that the extension would affect his views. Mr Butler telephoned Mr Blakemore informing him that the roof would block his view. Mr Blakemore undertook to speak to his builder. He did so and called Mr Butler and told him that the roofline could not be altered because the truss had been manufactured and fitted on. Altering the truss would cost in the vicinity of $30,000. 16 Mr Butler sought advice. He was advised that he could halt the building by obtaining an injunction. However, he decided that this was not an option for him on the basis of the time and expense required for such an action, as well as the negative effects of a halt in construction on the half demolished rear of the Blakemores' home. 17 He wrote to the Appellant asking why he had not received any notice. He received a reply from Mr Ball on 4 November 1996 which said, inter alia: "… I would advise you, following an inspection of the subject property by a building surveyor it was considered that as the proposals did not affect the visual amenity of No 17 Anzac Parade the owners of that property were not notified …"

Proceedings in the District Court 18 The Respondents commenced proceedings in the District Court in 1998 claiming damages for economic loss caused by a breach of the Appellant's statutory duty pursuant to s114 of the Act or, alternatively, for negligence. Only the latter remains in issue. 19 English DCJ found in favour of the Respondents on the cause of action in negligence. Her Honour formulated the duty of care in the following way: "I find that in order to render effective the statutory entitlement of the plaintiffs to notice and to object and have their objections considered, a duty towards the plaintiffs was imposed on the council to take reasonable steps to ensure that its decision took into account any objection lodged by the plaintiffs." (Red AB 18 E-I) 20 This duty was based on the following propositions of general application: "It is well known that when statutory powers are conferred they must be exercised with reasonable care so that if those who exercise them could, by reasonable precaution, have prevented an injury which has been occasioned and was likely to be occasioned by their exercise, damages for negligence may be recovered. It is now well settled authority that public authorities may be subjected to a common law duty of care when it exercises a statutory power or performs a statutory duty." (Red AB 17V-18C) 21 The first paragraph repeats a statement contained in the four judge joint judgment of the High Court in Caledonian Collieries Limited v Speirs (1957) 97 CLR 202 at 220. The second paragraph repeats a statement from Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 458 per Mason J. These formulations are referred to as a "settled category" and a "well known category" by McHugh J in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at [62]. 22 Her Honour had referred to s114 of the Act in her judgment in the following terms (Red AB10C-F): "The defendant council had obligations under s 114 of the Local Government Act, as it then was, to give notice of the application for approval to erect a building, including extensions, to persons who appear to own land adjoining if that enjoyment maybe detrimentally affected." 23 It is pertinent to note that neither here, nor on any subsequent occasion, does her Honour refer to the terms of s114(1) which require the Council to formulate an "opinion" as to the detrimental affect and that the obligation to gives notice turns on such an opinion. 24 When dealing with the issue of breach her Honour said (Red AB17I-N): "Section 114(2) of the Local Government Act requires the council to take into consideration the effect that proposed buildings would have, after its erection, on amongst other things the views to and the views from the adjoining land." 25 Her Honour went on to state, again without identifying the need for the Council to form an "opinion", a conclusion of fact in the following manner (at Red AB17R-U): "The council failed to give notice of the application for approval to erect the building on number 19 to the plaintiff, whose enjoyment of adjoining land maybe detrimentally affected by the proposed building after its erection." 26 As to breach, her Honour first said (Red AB17N-Q): "The evidence of Mr Ball is that although he took into account the extensions built by the owners of number 17 to maximise the western view, he failed to obtain access to the property and thereby take into consideration the affect that the proposed buildings would have upon that western view." 27 Her Honour found that the Appellant failed to take reasonable care (Red AB18J-L) and that the harm which resulted "was a reasonably foreseeable result of the defendant's omission" (Red AB18N). That omission was expressed in the following way (Red AB18O-X): "I find that what Mr Ball on behalf of the defendant ought to have done having regard to the nature of the extensions and recognising the interest of the occupant of number 17 was to have made arrangements to go into the property and to have a look and see what the impact would be. Not only does the adjoining property partially block the view to the west, the extensions also have the effect of overshadowing the pool at number 17 and its surrounds, especially in the afternoon and have created a general 'blocked in' appearance to what was previously a spacious and expansive pool area." 28 Her Honour expressed the findings of causation in two distinct ways. First, she found (Red AB18Y-19B): "… the council's action deprived the plaintiff of an opportunity to persuade the council to impose conditions on the proposed development to preserve the westerly view." 29 When her Honour came to consider the issue of damages, a process she described as assessing "the loss of an opportunity" (Red AB19C), she referred to the causal link and the damage in the following way (Red AB19O-R): "… the omission on part of the council has caused the loss of an opportunity, that being an opportunity to lodge an objection, I being satisfied there was some prospect of the objection being successful." 30 Subsequently her Honour described the breach in a somewhat different form (Red AB20F-O): "… I find that the defendant's failure to comply with the requirements of s 114 of the Local Government Act amounted to a breach of duty of care owed to the plaintiff to ensure that proper consideration was given to the development application by the council. The failure by the council to notify the plaintiffs has totally deprived the plaintiffs of an opportunity to lodge an objection to the proposed building application and deprived the plaintiffs an opportunity to negotiate with the owners of the adjoining property in an endeavour to persuade them to alter the roofline so as to preserve the view from No 17 and to enjoy the use of their pool in privacy." 31 The loss of opportunity as stated on this occasion was twofold: both the loss of the chance to convince the Appellant and the loss of the chance to change the neighbours' intentions. 32 Her Honour made findings and awarded damages on the basis of two heads of damage. One was the diminished value of the property, which she assessed at $30,000. The second was loss of enjoyment of the dwelling which she assessed at $5,000. There was a substantial amount of interest also awarded.

Submissions on Appeal 33 The primary thrust of the Appellant's submissions is a challenge to her Honour's finding that a common law duty of care arose in the circumstances of the case. During the course of submissions Mr Campbell SC, who appeared for the Appellant, also challenged the finding of breach of duty, although there is no specific ground of appeal directed to that issue. The grounds of appeal do, however, put in issue causation and damages. The Appellant challenges her Honour's failure to discount the award of damages for diminution in value of the property by reason of the fact that the harm was simply the loss of a chance. The Appellant also challenged the award of interest. 34 With respect to the question of duty, the Appellant emphasised that the relevant statutory power turned on the formation of an opinion by the Council. It was only if the Appellant formed an opinion that adjoining land may be detrimentally affected, that it was subject to an obligation to give notice of the building application. The conduct was not in a well settled category and her Honour ought to have approached the matter as if it were a novel case. 35 The Appellant noted that it was open to the Respondents to challenge the validity of the grant of building approval on administrative law grounds and drew attention to this Court's consideration of s114 of the Act in Hamman v Lake Macquarie City Council [1999] NSWCA 82. The Appellant stressed the centrality of social and political factors in the overall decision-making process of granting approval for building applications and that the particular decision to give or not to give notice was merely an incident of this wider decision-making process. 36 The Appellant submitted that although the case focused only upon s114 it was necessary to see where that provision with respect to notice stood in the overall scheme of granting approvals. 37 The Appellant identified an error in the reasoning of the trial judge as stating the relevant propositions too broadly and particularly her repetition of the sentence from Caledonian Collieries as if it were authority for the proposition that every exercise of a statutory power gives rise to a common law duty. 38 Furthermore, it was submitted that her Honour erred in the interpretation she gave to s114 by assuming an objective standard rather than a standard conditioned upon formation of an opinion by the Appellant. Mr Campbell noted that at no stage did the trial judge refer to the relevant statutory provision in terms of the formation of an opinion. The formulation of any duty of care, it was submitted, must be determined by reference to the actual statutory language. 39 The Appellant also relied upon the fact that a duty of care on the basis of the statutory power in issue in the present proceedings could only lead to pure economic loss, relevantly as assessed, in the form of a diminution in the value of the property. Mr Campbell submitted that there were important policy considerations involved in ensuring that local government decision-making of a regulatory character should not be subject to duties which, in substance, imposed on ratepayers of the municipality a role equivalent to the guarantors of the value of property within the local government area. 40 On the issue of breach Mr Campbell submitted that there was no negligence by reason of the Council officer's failure to enter the property and perceive the view from the upper level of the Respondents' home. Mr Ball did in fact enter the neighbour's home and was able to assess the impact upon the Respondents' property by observing the location of the windows and other aspects of the layout of the property. Mr Campbell submitted that Mr Ball undertook the process conscientiously: he went to the site, carried out various inspections and made a judgment about what was required. Even if there was an error of judgment, there was no breach of any duty. Mr Campbell particularly drew attention to the contemporaneous handwritten note of Mr Ball to the effect: "After due consideration notification not required to adjoining properties (at 17,15)". 41 In response to the contention that no rational decision-maker could form an opinion other than that the property at No 17 would, at least to some degree, be "detrimentally affected" by the proposed building on No 19, Mr Campbell submitted that the effect on views was one of only a number of considerations that needed to be taken into account on the issue of deciding whether or not there was a relevant detrimental effect. He submitted that it was open to conclude that, as there are views available in other directions, the loss of the view in one direction was not a relevantly detrimental effect. In this context he re-emphasised the proposition that the determination was one for the Council by the formation of an opinion and was not an objective question. He submitted that not every detriment or disadvantage, however small, required the formation of an opinion that the enjoyment of the land had been detrimentally affected. Mr Campbell submitted that Mr Ball could make a perfectly reasonable assessment of the impact upon the views of No 17 from No 19 and it was not negligent of him to fail to enter No 17 itself. 42 On the damages issue Mr Campbell submitted that the loss was merely the loss of a chance. Her Honour had to evaluate that chance rather than awarding damages on the basis that the Respondents could receive their total loss. He relied upon Malec v J C Hutton Pty Ltd (1991) 169 CLR 638 and Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 esp at 355. He submitted that the Court should make a reassessment of the possibility that the Blakemores would not have received approval for a substantial development. That possibility should be assessed as very low. As to interest he submitted that it was not appropriate for interest to be awarded on the basis of the loss of value of the property because that loss had not crystallised into an actual financial loss. 43 Mr I D Cullen, who appeared for the Respondents, emphasised that their case was that the Appellant had acted negligently in the performance of its functions under s114, namely that it had acted negligently in the formation of the opinion. He submitted that this was not a new category of duty but that it was a settled category in the terms of the sentence from Caledonian Collieries that a public authority is subject to a common law duty of care when it exercises a statutory power or performs a statutory duty. He referred to Crimmins, supra at [62] and Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 458. He said that the Respondents' case was always one of misfeasance and not nonfeasance. He submitted that the fact that the loss in this case was pure economic loss did not take it out of that line of authority. He submitted that, in substance, the damage considered in Sutherland Shire Council v Heyman was an economic loss even though it occurred by reason of physical damage to the property due to inadequacy of footings. 44 Mr Cullen submitted that the circumstances of control and vulnerability in the present situation were such that the Appellant ought to have a common law duty of care. He emphasised that the case was distinguishable from Graham Barclay Oysters Pty Ltd v Ryan (2002) 77 ALJR 183, on the basis that here there was an act of misfeasance, i.e. the negligent performance of a function which the Appellant had a duty to carry out in an appropriate fashion. Unlike both Sutherland Shire Council v Heyman and Graham Barclay Oysters there was no third party involved. In those cases the risk or hazard had been created by some other person and the Council's error was a failure to discover that risk. In this case there was a direct relationship between the Appellant and the Respondents with no intervening factor. 45 On the issue of breach Mr Cullen emphasised that her Honour was entitled to come to the conclusion that Mr Ball failed to properly conduct the inspections required for the formation of the opinion in that he did not observe the views available from the Respondents' property. He emphasised the ease with which the Council could comply with its obligations by sending a single letter by way of notice. He referred to the evidence of Mr Ball, that he had come to the view that there would be some impact on the property. He submitted that any impact was sufficient to constitute the requisite detrimental effect. Findings of duty and of breach were open on the facts found by her Honour. 46 On the issue of damages, Mr Cullen submitted that the loss of value had crystallised as at the date at which the extension to the Blakemores' property was built. Accordingly it was open to her Honour to assess damages in that sum. Mr Cullen referred to her Honour's finding that the Respondent had been deprived of an opportunity of negotiating with the neighbours and that it was open to infer that this would have successfully alleviated the problem. However he accepted that Mr Blakemore was called in the Respondents' case and did not give any evidence to that effect.

Statutory Exclusion of a Common Law Duty 47 A legislative scheme may manifest an intention to delineate the whole of the pertinent duty, so as to be inconsistent with an overlapping duty at common law. Issues of coherence, which have come to be emphasised in recent Australian case law, may arise. 48 As McHugh J said in Graham Barclay Oysters at [78]: "In determining whether a public authority has breached a common law duty by failing to exercise a statutory power; it is essential to examine the words and policy of the legislation. That is because the legislation may indicate that the legislature has legislated to cover the field and excluded all common law duties of care." 49 This approach was further explicated by Gaudron J in Crimmins at [27]: "Legislation establishing a statutory body may exclude the operation of the common law in relation to that body's exercise or failure to exercise some or all of its powers or functions. Even if the legislation does not do so in terms, the nature or purpose of the powers and functions conferred, or of some of them, may be such as to give rise to an inference that it was intended that the common law should be excluded either in whole or part. That is why distinctions are sometimes drawn between discretionary and non-discretionary powers, between policy and operational decisions and between powers and duties. Where it is contended that a statutory body is not subject to a common law duty in relation to the exercise or non-exercise of a power or function because of the nature or purpose of that power, what is being put is that, as a matter of implication, the legislation reveals an intention to exclude the common law in relation to the exercise or non-exercise of that power." 50 In my opinion, the text of s114 in the context of the legislative scheme and in the context of the legislative history of prior provisions, is such as to lead to the conclusion that the legislature intended that the obligations arising with respect to the formation of an opinion under s114 were to be found in the statute and the statute alone. 51 The first indication is the fact that the relevant decision-making process is not based on an objective standard of whether or not enjoyment of adjoining land is "detrimentally affected". The very inclusion of the reference to the "council's opinion" indicates an intention to limit the scope for legal redress to the narrow range of grounds available with respect to a power so expressed, as fully outlined in the now classic statement of Gibbs J in Buck v Bavone (1976) 135 CLR 110 at 118-119, where his Honour concluded: "… where the matter of which the authority is required to be satisfied is a matter of opinion or policy or taste it may be very difficult to show that it has erred … or that its decision could not reasonably have been reached. In such cases the authority will be left with a very wide discretion which cannot be effectively reviewed by the courts." 52 Secondly, the legislature has in s114(2) identified a specific list of matters which are required to be taken into consideration and which stand in contrast with the highly generalised statement of relevant considerations applicable with respect to applications for approval other than those for erection of buildings (see s89 of the Act). 53 The legislative history supports the conclusion that the Parliament was concerned to ensure that scope for litigation about the relevant decision-making process be restricted. The predecessor provision was s312A of the Local Government Act 1919 which, until its repeal in 1993, entitled an owner of adjoining land to inspect plans of a proposed building. In Hornsby Shire Council v Porter (1990) 19 NSWLR 717, this Court held that s312A obliged a council to notify adjoining owners that an application likely to affect them detrimentally had been made. It did so on the basis that, without such notice, s312A would be ineffective. This obligation was further extended to owners of the land affected but not adjoining in the strict sense. (See Parkes and Spencer v Rastogi and Newcastle City Council (1992) 78 LGERA 71 per Pearlman CJ.) 54 This line of decisions caused concern on the part of local councils. In direct response to the decision in Hornsby Shire Council v Porter, the Local Government (Building Applications) Amendment Bill 1991 was introduced to the Legislative Assembly and in the course of the second reading speech the Minister for Local Government said: "The need to address the issue of notification to neighbours and to strike a balance between the competing interests through the introduction of legislation to achieve an equitable notification system arose from recent court decisions. In general terms, the judgment of the Land and Environment Court in Porter and Rosenberg v Hornsby Shire Council, which in the Court of Appeal was confirmed but on different grounds, placed a wider interpretation on the previously understood meaning of section 312A of the Local Government Act , which states that certain persons can inspect building plans. As a result of the courts' decisions, councils found themselves with an obligation to notify the persons detailed in section 312A that they were able to inspect building plans, notwithstanding that it was clearly not the intention when the section was introduced in 1985 that they be required to do so." 55 The Minister went on to refer to the need to achieve balance between the interests of the building owner to limit delays and costs on the one hand and the interests of the public and neighbours on the other. He referred to the fact that much building work was often of a minor nature and would not have any effect on adjoining owners. 56 The bill was never enacted but is the background to s114 of the Act. The provisions of this bill were in similar terms to those later enacted as s114 of the Local Government Act 1993. 57 Under the legislative scheme, a council is required to take into consideration the submissions from persons upon whom it has served a s114 notice. Such issues of amenity of the neighbourhood have long been relevant considerations in planning decision-making. Particular provision is made for a notice to persons affected so that they may make submissions to protect their perceived interests. However, the provision for determining who is to receive notice is not expressed as an objective standard, but in terms of a subjective opinion on the part of the Council. Mason P emphasised the subjective nature of the trigger in Hamman, supra at [7], [18] and [30]. This was a mechanism deliberately adopted to restrict the possibility of judicial review. It is not consistent with that objective to impose a common law duty of care on a Council with respect to the formation of the opinion. 58 Furthermore, the giving of notice to affected neighbours is part of a public decision-making process which requires a public body to balance conflicting interests, relevantly, between one neighbour seeking to develop property and another whose amenity may be affected by development. 59 The basic restriction on development without approval was not imposed to serve the private interests of those who may be affected by development. Those restrictions serve the public interest. The purpose of notice under Div 4, specifically s114, also serves a public, not a private, purpose. It ensures that citizens have a reasonable opportunity of influencing decisions which affect them. No citizen is given any right to prevent or even inhibit decisions which have adverse effects on their interests. The only right is the opportunity to make submissions which the Council must take into account. 60 In such a context public remedies, including electoral sanctions and judicial review, albeit of limited scope, were intended to cover the field. Common law duties are, in my opinion, excluded. 61 I proceed to consider, on the assumption my conclusion that the statute excludes common law duties is wrong, whether a duty of care arises.

New Zealand Precedent 62 There is one New Zealand case, not drawn to the attention of the Court, which is a relevant precedent. In Craig v East Coast Bays City Council [1986] 1 NZLR 99 the views from the residence of a plaintiff had been adversely affected by the construction of another residence with Council approval. The plaintiff received no notice of modification of the proposed building which resulted in the loss of views. What occurred in the case was a dispensation or waiver from the requirements of a town planning scheme. It was held that the Council had failed to observe the requirements of the statutory scheme. The case in negligence was based on the proposition that the Council failed to ascertain that the application under consideration did require an application for dispensation or waiver and that failure deprived the Appellant of the opportunity to object to the proposal (at p105 lines 45-50). 63 The determination that the Council owed a duty of care to ensure that its relevant planning scheme was complied with or, if there was to be a departure, that proper statutory procedures were observed was based on the two step test propounded by Lord Wilberforce in Anns v Merton London Borough Council [1978] AC 728. By the application of this test, the New Zealand Court of Appeal determined both that the relationship of proximity existed and the damage was foreseeable if proper procedures were not followed. There was also a degree of reliance in the circumstances of the present case. The Court identified the decision-making process as "operational" rather than one of "policy" and concluded that "it was just and reasonable" that the Council owed a duty of care to ensure that the scheme was complied with and if there was to be a departure that proper procedures were observed (at 106-107). 64 The decision of the House of Lords in Anns has long been adopted in New Zealand. (See Scott Group v McFarlane [1978] 1 NZLR 553; Mount Albert Borough Council v Johnson [1979] 2 NZLR 234; Meates v Attorney General [1983] NZLR 308.) Even after the Anns test had been abandoned in England (Caparo Industries Plc v Dickman [1990] 2 AC 605 and Murphy v Brentwood District Council [1991] 1 AC 398), the New Zealand Court of Appeal decided not to follow suit and continued to apply Anns. (See South Pacific Manufacturing Co Limited v NZ Security Consultants Limited [1992] 2 NZLR 282 esp at 294-295, 306 and 312). See also Invercargill City Council v Hamlin [1996] AC 624 at 642 in which the Privy Council affirmed the entitlement of the New Zealand Court of Appeal to consciously depart from the English case law on the ground that conditions in New Zealand were different. 65 In Australia the two stage Anns approach was rejected in Sutherland Shire Council v Heyman (see, e.g. at 460-464 and 465, 477, 481, 501-505, 508). In Sullivan v Moody, supra the High Court has also rejected the three stage approach in Caparo Industries which was to a certain extent a development of the Anns test. 66 Notwithstanding the similarities between this case and Craig v East Coast Bays City Council, New Zealand law differs substantially from Australian law in this regard and the reasoning cannot be regarded as a binding precedent in Australia.

Duty of Care: An Alternative Analysis 67 The Court was informed that the case was fought as a misfeasance case, i.e. the negligent exercise of a statutory power to form an opinion. It was not fought as a nonfeasance case, i.e. the failure to give a notice. However, her Honour appeared to decide the case on the latter basis. To repeat her Honour's finding, the relevant duty was "to take reasonable steps to ensure that its decision took into account any objection lodged by the plaintiffs". That refers to the ultimate decision-making process rather than the formation of the s114(1) opinion, upon which the Respondents' submissions focused both at trial and in this Court. This Court should approach the appeal on the basis on which it was put, i.e. the negligent formation of an opinion under s114 of the Act. 68 The Respondents were awarded damages on two bases. First, for diminution in the value of the property, a form of pure economic loss. Secondly, for loss of enjoyment of the dwelling on the basis of loss of views and of privacy, to which I will refer as loss of amenity. This is a distinctive category of harm. The Court was not referred to any authority which has acknowledged a duty to avoid harm of this second character. As I will outline below, there is a well-established doctrine that no such kind of damage is available in nuisance. 69 With respect to pure economic loss it is necessary to proceed in accordance with the guidance for cases of this character set out in the respective judgments in Perre v Apand Pty Ltd (1999) 198 CLR 180. With respect to the particular kind of economic loss, and the cognate loss of amenity, this is a case in which it is appropriate to identify the interests which are said to require the protection of the law. (See Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at [14]; Perre v Apand, supra at [191]: Reynolds v Katoomba RSL All Services Club Ltd (2001) 53 NSWLR 43 at [9]-[18].) 70 Those interests were not said to be to prevent diminution of property values or loss of amenity. The interests to be protected are the preservation of an opportunity to make submissions to the Council or to negotiate with the neighbour in order to secure some advantage. 71 This is not a case involving a category recognised by the authorities as attracting a duty of care, the scope of which is settled. (Sutherland Shire Council v Heyman, supra at 441-442 per Gibbs CJ, Pyrenees Shire Council v Day (1998) 192 CLR 330 at [126] per Gummow J.) 72 Her Honour repeated, as adopted in this Court by the Respondents, a sentence from each of Caledonian Collieries and Sutherland Shire Council v Heyman. They were not statements capable of being applied in the manner they were applied by her Honour. They do not stand for the proposition that the exercise of any statutory power necessarily gives rise to a common law duty of care. As Mason J went on to say in Sutherland Shire Council v Heyman at 459: "… it has generally been accepted that, unless the statute manifests a contrary intention, a public authority which enters upon an exercise of statutory power may place itself in a relationship to members of the public which imports a common law duty to take dare." [Emphasis added] 73 As noted above, McHugh J accepted that there was a "settled category" of the character referred to by her Honour in Crimmins at [62]. However, his Honour clearly distinguished, without purporting to be comprehensive, two other situations which were not within the "settled category". First, a claim that a public authority was under an affirmative obligation to prevent harm. (See e.g. Crimmins at [70] and [79].) Secondly, a distinctly different approach is adopted with respect to a claim for pure economic loss. (See Crimmins at [78] and [93] at point 6.) 74 In each case, the statutory regime and the circumstances of the exercise, or failure to exercise, a power must be analysed to determine whether a duty of care has arisen. In the case of conduct leading to personal injury, it can be said that there is a broad range of statutory powers which gave rise to a duty of care of settled scope. That is not so with respect to the harm alleged in the present case. 75 For the purposes of the present case, I have found particular assistance in the following passage from the judgment of Gummow and Hayne JJ , with which Gaudron J agreed, in Graham Barclay Oysters, supra: "[146] The existence or otherwise of a common law duty of care allegedly owed by a statutory authority turns on a close examination of the terms, scope and purpose of the relevant statutory regime. The question is whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence. [147] Where the question posed above is answered in the affirmative, the common law imposes a duty in tort which operates alongside the rights, duties and liabilities created by statute. In some instances, a statutory regime may itself, in express terms or by necessary implication, exclude the concurrent operation of a duty at common law. … [148] However, contrary to submissions put on behalf of the Attorney-General for Western Australia (as an intervener in this Court), the discernment of an affirmative legislative intent that a common law duty exists, is not, and has never been, a necessary pre-condition to the recognition of such a duty. This may be contrasted with the action for breach of statutory duty, the doctrinal basis of which is identified as legislative intention. [149] An evaluation of whether a relationship between a statutory authority and a class of persons imports a common law duty of care is necessarily a multi-faceted inquiry. Each of the salient features of the relationship must be considered. The focus of analysis is the relevant legislation and the positions occupied by the parties on the facts as found at trial. It ordinarily will be necessary to consider the degree and nature of control exercised by the authority of the risk of harm that eventuated; the degree of vulnerability of those who depend on the proper exercise by the authority of its powers; and the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute. In particular categories of cases, some features will be of increased significance. For example, in cases of negligent misstatement, such as Tepko Pty Ltd v Water Board, reasonable reliance by the plaintiff on the defendant authority ordinarily will be a significant factor in ascertaining any relevant duty of care. [150] The factor of control is of fundamental importance in discerning a common law duty of care on the part of a public authority. It assumes particular significance in this appeal. This is because a form of control over the relevant risk of harm, which, as exemplified by Agar v Hyde , is remote, in a legal and practical sense, does not suffice to found a duty of care." 76 Of the factors identified in recent case law as pertinent to determining whether a duty exists, a number support the existence of a duty in the present case. Foremost amongst these is the element of control and correlative vulnerability. Although a neighbour may advise another of his or her intentions with respect to development of a property, or another neighbour, who is in fact notified by Council, may discuss the proposal with other neighbours, the Council has a high degree of control over the situation. 77 In the normal case, it is notification by Council which alerts an adjoining owner to a proposal. Furthermore, it appears that the Council is only obliged to consider submissions from a person who has been notified under the statute. An informal notification may not trigger the obligation to consider in s118(2). 78 The next factor supporting a duty is that the legislative provision is specifically designed to protect an adjoining owner. The scheme creates a statutory right to make a submission, which submission must be considered by the Council. 79 In my above analysis of whether the statute intended to exclude a common law duty, I have emphasised the significance of the subjective test in s114. That is also a critical factor to be considered in determining whether, assuming away any such statutory exclusion, a duty of care can be said to arise. The formation of an opinion for purpose of notification - as distinct from an opinion which will be conveyed to another for purposes of actual reliance - is not a matter to which a standard of reasonableness can readily apply. 80 In the present case, the scope and subject matter of the matter about which the opinion must be formed is not such as can be judged on a standard of reasonable care, as distinct from Wednesbury unreasonableness. Whether the "enjoyment of land" is or is not "detrimentally affected" is a matter on which the views of reasonable people will differ and those differences can cover a wide range. 81 This difficulty is highlighted by the issue of breach which has arisen in this case. Mr Ball said he could form an opinion on the effect of the Blakemores' proposal by standing on their property and looking at the Respondents' property, observing their extensive west facing fenestration. The Respondents' case was that inspection from their property was mandatory. Issues which turn on a person's capacity for imagination are not such as fall for assessment by a test of reasonable care. 82 In my opinion, the subjective nature of the test and the subject matter about which the relevant opinion is to be formed strongly indicate that no common law duty should be found to exist with respect to the formation of the opinion. 83 It is of significance on the issue of duty that the risk of harm said to be protected by the law is the loss of an ability to make a submission to the Council and/or to negotiate with the neighbour. The ultimate harm, for which damages were sought and awarded, arose from the final approval and the construction of the building. This raised issues of causation and remoteness which it is not necessary to consider. However, neither the Council approval, nor the neighbour's conduct is the direct focus of the alleged duty. 84 Although the law will, in appropriate circumstances, compensate for the loss of a chance, the indirect and, in large part, speculative nature of the actual economic loss and/or loss of amenity, is of significance. If the step leading to actual harm does not involve a duty of care, why should the loss of an opportunity to avert that step being taken give rise to a duty? 85 There is no duty to avoid the risk of harm constituted by the approval or by the actual construction of the building. 86 It is now well established that coherence in the law is a factor to be considered in determining whether a duty of care arises in the context of a particular relationship. By reason of the focus upon negligence in the formation of a statutory opinion there does not appear to be an issue of coherence between the statute and a common law duty of care. Further, no question of incompatibility or inconsistency appears to arise, but the issue of coherence is not limited to such a situation. (See State of New South Wales v Paige (2002) 115 IR 283 at [93].) 87 An issue of coherence with other common law doctrines may arise. (See e.g. Sullivan v Moody (2001) 207 CLR 562 at [50].) As Gummow J put it in Perre v Apand, supra at [197], it is pertinent to ask whether: "… to allow recovery in negligence for economic loss would cut across a well developed body of doctrine which already applied, with its own checks and balances, to the situation in question. The wisdom of encouraging the further march of negligence across such fields remains a matter of debate." 88 Coherence was also emphasised in several judgments in Tame v New South Wales (2002) 76 ALJR 1348 where liability in negligence would "intersect" with the law of defamation, which resolves the competing interests of the parties in a different manner and according to a coherent body of doctrine. (See at [28], [58], [123] and [323].) 89 There is a pertinent "intersection" of particular relevance to the claim for loss of amenity, but which is also relevant to the claim for economic loss. Traditionally, it is the tort of nuisance rather than the tort of negligence that protects an occupier's interest in the beneficial use and enjoyment of land. Nuisance offers recovery for unreasonable interference with an occupier's amenity in the form of an unaffronted sense of smell (e.g. noxious fumes) and of hearing (e.g. excessive noise). However, the amenity of a view has never been accepted. 90 As long ago as William Aldred's Case (1610) 9 Co Rep 57b, where the relevant view was of a hog sty, Wray CJ noted "… for prospect, which is only a matter of delight, and not of necessity, no action lies for stopping thereof … The law does not give an action for such things of delight." This has been consistently applied over the centuries. (See e.g. Attorney General v Doughty (1752) 2 Ves. Sen 453; Dalton v Angus (1881) 6 App Cas 740 at 824; Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 504, 507; Phipps v Pears [1965] 1 QB 76 at 83; Kent v Johnson (1973) 21 FLR 177 at 212-213; Bathurst City Council v Saban (No 2) (1986) 58 LGRA 201 at 206; St Pierre v Ontario [1987] 1 SCR 906 at [12]-[13].) The same principle has been applied to interference with television reception by the erection of a tower. (See Hunter v Canary Wharf Limited [1997] AC 655.) 91 The common law has long recognised that protecting rights of this character would unduly interfere with the development of urban centres. The tort of nuisance has balanced these rights in a particular manner, which should not be disturbed by the tort of negligence. 92 The same kinds of concerns are apparent when courts have considered the similar issues which arise when issues of amenity are required to be taken into account pursuant to statutory planning schemes. For the same reasons as motivated the common law to reject inhibition on development, one can perceive in the case law a distinct reluctance to acknowledge a right to a view or give significant, let alone determinative, weight to interference with a view. (See e.g. Idonz Pty Ltd v National Capital Development Commission (1986) 13 FCR 70; Rapid Transport Pty Ltd v Sutherland Shire Council (1987) 62 LGRA 88.) 93 In the present case, as the focus of attention is not on the grant of approval but upon the formation of an opinion about detrimental effect, one cannot say that the tort of nuisance would "apply … to the situation in question", to employ the words of Gummow J in Perre v Apand at [197]. Nevertheless there remains an intersection between the tort of nuisance and the tort of negligence in the circumstances of this case. 94 No duty to prevent building, e.g. by way of refusing approval, can be said to exist. If the ultimate conduct does not give rise to a common law duty, I do not see why a procedural step should do so. 95 The legislative scheme under consideration involves the formation of subjective opinions by councils in numerous contexts. These opinions often lead to decisions which have effects on the value of property. In such a context the hesitation of the law in allowing recovery for pure economic loss is particularly appropriate. 96 When identifying the considerations that may be said to constitute a relationship of sufficient "proximity", in accordance with his Honour's approach to the tort of negligence, Deane J said in Sutherland Shire Council v Heyman, supra at 511: "… protection of the owner of land from the mere economic loss which might be sustained by reason of a defect in the building erected upon his or her land is no part of the purpose for which the relevant legislative powers and functions were conferred upon the Council. The provisions of the Act and Ordinances have traditionally never been seen as intended to place upon a local government council the duty or burden of protecting an owner of premises from mere economic loss sustained by reason of the negligent erection, by someone other than the council, of a building upon his or her land. Nor is there any readily discernible reason in principle, policy or justice why the general body of ratepayers within an area should bear the economic loss sustained by such an owner of land." 97 This reasoning is applicable to the proposed recognition of a duty to recover for economic loss, as well as loss of amenity, from the negligent failure to give notice under s114. These are public duties to be enforced by public sanctions. 98 Although her Honour made no pertinent findings of fact, it is difficult to see what rational basis there could have been for the Appellant reaching a conclusion that the proposed building had no detrimental affect on the enjoyment of the Respondents' land. Indeed, the Wednesbury unreasonableness test may well have been satisfied. (I do not intend to suggest that this public law test is pertinent for purposes of tort law. See McHugh J in Crimmins at [82] and other authorities I have set out in Paige, supra at [125]-[127].) What had occurred in this case was an assessment of the degree of detriment likely to be caused. This is not the kind of process to which a common law duty should attach. 99 The position would not be different if Mr Ball had formed an opinion that notice should be given but, by reason of negligent conduct by another Council officer, the notice was not posted. The statute would be contravened, but no common law duty to notify exists. (See e.g. Revesz v The Commonwealth (1951) 51 SR (NSW) 63). 100 Balancing the relevant considerations leads to the conclusion, in my opinion, that a council does not owe a duty of care at common law, to exercise reasonable care in and about forming an opinion under s114(1) of the Act. It is, accordingly, unnecessary to consider the other grounds of appeal.

Costs 101 When these proceedings came before the Court for leave to appeal, the Court made it clear that leave would only be granted on the basis that no order for costs would be made. Accordingly, this appeal should be allowed, but no order made as to costs.

Judgment in favour of the Respondents in the sum of $54,390.00 be set aside and in lieu thereof judgment be entered in favour of the Appellant.

An order for restitution in favour of the Appellant in the sum of $54,390.00 together with interest pursuant to the provisions of s94 of the Supreme Court Act 1970 from the date of payment of the judgment below to the date of order in the Court of Appeal.

The Respondents to pay the Appellant's costs of the proceedings in the District Court. 103 MASON P: I agree with the Chief Justice. 104 SHELLER JA: I have had the privilege of reading in draft the judgment of the Chief Justice with which I entirely agree.

Last Modified: 06/19/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION : Newcastle City Council v Shortland Management Services & Ors [2003] NSWCA 156 HEARING DATE(S) : 11 March 2003 JUDGMENT DATE : 18 June 2003

CATCHWORDS : TORTS - Negligence - novel duty of care - interaction with statutory scheme - interaction with law of nuisance - whether statutory intention to exclude common law duty of care - whether recognition of duty would undermine legal coherence - TORTS - Negligence - where extension to adjoining property would block views - where statute required notification to adjoining proprietors if council formed opinion enjoyment of land may be detrimentally affected - whether duty of care in formation of opinion as to detrimental effect LEGISLATION CITED : Local Government Act 1919 s 312A Local Government Act 1993 ss 68, 89, 114, 115, 118 Anns v Merton London Borough Council [1978] AC 728 Attorney General v Doughty (1752) 2 Ves. Sen 453 Bathurst City Council v Saban (No 2) (1986) 58 LGRA 201 Buck v Bavone (1976) 135 CLR 110 Caledonian Collieries Limited v Speirs (1957) 97 CLR 202 Caparo Industries Plc v Dickman [1990] 2 AC 605 Craig v East Coast Bays City Council [1986] 1 NZLR 99 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 Dalton v Angus (1881) 6 App Cas 740 Graham Barclay Oysters Pty Ltd v Ryan (2002) 77 ALJR 183 Hamman v Lake Macquarie City Council [1999] NSWCA 82 Hornsby Shire Council v Porter (1990) 19 NSWLR 717 Hunter v Canary Wharf Limited [1997] AC 655 Idonz Pty Ltd v National Capital Development Commission (1986) 13 FCR 70 Invercargill City Council v Hamlin [1996] AC 624 Malec v J C Hutton (1991) 169 CLR 638 Meates v Attorney General [1983] NZLR 308 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 CASES CITED : Mount Albert Borough Council v Johnson [1979] 2 NZLR 234 Murphy v Brentwood District Council [1991] 1 AC 398 Parkes and Spencer v Rastogi and Newcastle City Council (1992) 78 LGERA 71 Perre v Apand Pty Ltd (1999) 198 CLR 180 Phipps v Pears [1965] 1 QB 76 Pyrenees Shire Council v Day (1998) 192 CLR 330 Revesz v The Commonwealth (1951) 51 SR (NSW) 63 Reynolds v Katoomba RSL All Services Club Ltd (2001) 53 NSWLR 43 Rapid Transport Pty Ltd v Sutherland Shire Council (1987) 62 LGRA 88 Scott Group v McFarlane [1978] 1 NZLR 553 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 South Pacific Manufacturing Co Limited v NZ Security Consultants Limited [1992] 2 NZLR 282 St Pierre v Ontario [1987] 1 SCR 906 State of New South Wales v Paige (2002) 115 IR 283 Sullivan v Moody (2001) 207 CLR 562 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Tame v New South Wales (2002) 76 ALJR 1348 Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 William Aldred's Case (1610) 9 Co Rep 57b Newcastle City Council PARTIES : Shortland Management Services Kym Gillen Butler Buttalla Pty Ltd FILE NUMBER(S) : CA 40930/01 COUNSEL : Mr S Campbell SC / Mr T Bland (Appellant) Mr I D Cullen (Respondents) SOLICITORS : Hunt & Hunt Lawyers (Appellant) Robert Foggo Lawyers (Respondents)

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