(e) The actual knowledge which FAC had as to the potential contamination of the site.
213 BAL denied the existence of such a duty. It said that such a duty was inconsistent with the terms of the 1994 lease. It submitted that the terms of the lease should govern the relationship between the College and the defendant, not a duty relationship such as envisaged by the tort of negligence.
214 BAL relied upon RW Miller & Co v Krupp (Australia) Pty Limited (1995) 11 BCL 74 at 150-52. By reference to what was said by Giles J in that case BAL submitted that the law of contract has not been assimilated to the law of tort by the imposition of a duty of care co-extensive with specific contractual obligations. In that case his Honour found that Krupp did not owe Miller a duty to take care in accordance with certain provisions of a building contract, or to avoid loss to Miller through failure to so comply. In essence BAL submitted that the courts have generally denied the existence of a duty of care if the parties have clearly considered, discussed and negotiated the terms of their arrangement which is embodied in a contract.
215 The RW Miller decision is readily distinguishable. There was a contract between commercial entities of equal bargaining strength. The way in which the contract had been constructed with the obligations of Krupp spelled out in detail, made that clear. The real point of distinction, however, was that his Honour found as a fact that Miller did not rely upon Krupp to take care in the design of the relevant piece of machinery. Although reliance as an indicator of negligence has fallen into some disfavour, it is in reality another aspect of the vulnerability test.
216 As part of that argument, BAL also submitted that consideration needed to be given to the landlord and tenant relationship between the College and FAC. The consequences of imposing a duty of care to award economic loss to one's tenant would have far reaching consequences. No longer would landlords be able to rely upon the provisions of their lease to set out the full extent of their obligations to a tenant. They would face unlimited liability for a tenant's economic losses incurred as a result of its use/occupation of the site. BAL submitted that such a duty of care did not exist in situations where the claim was by a tenant against the landlord for pure economic loss.
217 As a matter of principle, I can see no reason why in certain circumstances a duty of care cannot be found to exist as between a landlord and tenant where the consequences for breach of such a duty involve purely economic loss. Such a duty was found to exist in Northern Sandblasting Pty Limited v Harris (1996) 188 CLR 313. It is true that the case involved a claim for personal injuries, not economic loss. It is also true that its ratio is limited given the divergent reasons of the court. Nevertheless, I can see nothing in that decision which would limit the existence of such a duty only to claims involving personal injury.
218 Support for that proposition comes from Perre v Apand Pty Limited (1999) 198 CLR 180. In that case the High Court examined the traditional limits which had been placed on claims for purely economic loss (p192, para 5). In doing so the court made it clear that there was no "bright line rule" which prevented the recognition of a duty of care in cases where only economic loss was being claimed and that each case would depend upon its own particular facts (p193, paras 7-8). It should be noted that one of the classes of case where a claim for pure economic loss has been held to be available is negligent misstatement made to a person who to the knowledge of the maker of the statement relies upon the information provided.
219 The duty sought to be relied upon here is but a form of negligent misstatement. It is not the incorrectness of what was said which was relied upon but rather the absence of information which should have been provided which was relied upon to constitute the breach of duty. The novelty of the duty (if there be such) arises from the landlord and tenant context in which the duty is said to arise.
220 In Perre v Apand the court emphasised the vulnerability of the plaintiff. There the particular vulnerability arose from the plaintiff's reliance on actions of the defendant for its welfare and from its inability to protect itself from the defendant's conduct. (Perre paras 123-126, 216-217.)
221 Similar considerations are relevant here. Given the nature of the information which was not communicated to the plaintiffs, ie risk of contamination, there was nothing the plaintiffs could do to protect themselves. This was not something that reasonable inquiries would reveal. It was a circumstance in which the plaintiffs were entirely reliant upon FAC to disclose the true situation.
222 In my opinion that effectively deals with the "floodgates" argument raised by BAL. This is not the sort of factual situation which would normally arise in a commercial lease between a landlord and tenant. It is certainly not the sort of situation which arose in such cases as Leda Holdings Pty Limited v Oraka Pty Limited (1998) ATPR 41-610 and Eattens Pty Limited v JLW (NSW) Pty Limited (1998) ATPR 41-619 where tenants complained because information was not conveyed to them which might affect the profitability of their businesses. In this case the information which was withheld was fundamental to the proposed use of the premises by the plaintiffs and it was not something which the plaintiffs could have been expected to find out as a result of their own inquiries.
223 Put another way, FAC as landlord by virtue of its actual knowledge of potential contamination of the leased site was in a position of control so as to be able to determine the extent to which the College could exercise or enjoy its legal right as a tenant to conduct a school.
224 The statement of principle by McHugh J (Perre p202, para 42) is apposite:
"In my view, where a person knows or ought to know that his or her acts or omissions may cause a loss or impairment of legal rights possessed, enjoyed or exercised by another, whether as an individual or as a member of a class, and that that latter person is in no position to protect his or her own interests, there is a relationship such that the law should impose a duty of care on the former to take reasonable steps to avoid a foreseeable risk of economic loss resulting from the loss of impairment of those rights."
225 A similar observation was made by Giles J in R W Miller v Krupp:
"… but it depends on a finding of proximity in the sense that word is used in relation to a duty of care in torts. The relationship created by the contract may in the particular circumstances be or be part of a relationship of proximity giving rise to a duty of care … whether there is a relationship of proximity requires examination of the particular circumstances." (p150)
226 Applying those principles to the facts, FAC ought to have known that its failure to advise the plaintiffs of the potential contamination in circumstances where it knew that the plaintiffs could not find out that information for themselves was such as to at the very least substantially impair the plaintiff's ability to conduct a school on the site. In those circumstances, the law should impose a duty on FAC to take reasonable steps to avoid that foreseeable risk of economic loss on the part of the plaintiffs resulting from that impairment.
227 Any economic loss suffered by the plaintiffs as a result of the failure by FAC to impart information about contamination was reasonably foreseeable by FAC. FAC was not legitimately protecting or pursuing its business interests in failing to disclose that information. It therefore accords with community standards and the goals of negligence law as an instrument of corrective justice to hold that FAC should have had the plaintiffs' interests in mind when it failed to provide that important information (Perre, p220, para 103).
228 The vulnerability of the plaintiffs is important in the context of the lease relationship upon which BAL relies. The following statements of principle are of assistance:
"The Court has recognised that in certain circumstances concurrent duties in tort and contract can exist and that the law of contract and the law of negligence are informed by differing rationales. That difference supports a conclusion that the vulnerability of the plaintiff may often be justifiable, but not sufficient, reason for imposing a duty of care in cases of negligence resulting in pure economic loss where the plaintiff could not have protected itself in contract. One of the assumptions of the law of contract, for example, is that the parties can bargain to protect their interests. A plaintiff who is vulnerable - for whatever reason - cannot do this in any meaningful way. In its quest for corrective justice, the law of negligence may be able to fill the gap which the law of contract has left." ( Perre , McHugh J, para 123).
"The Perres had no way of appreciating the existence of the risk to which they were exposed by the conduct of the Apand experiment and no avenue to protect themselves against that risk. They thus stood in quite a different position from that of the financier in Esanda Finance Corporation Limited v Peat Marwick Hungerfords which had the power to deal from a position of strength in ordering its commercial relationship with the party to whom it provided financial accommodation. Here, the relevant risk to the commercial interests of the appellants was in the exclusive control of Apand. Its measure of control was at least as great as that of the Shire in Pyrenees Shire Council v Day .
…
The characteristics of the present case to which I have referred combined, subject to what follows, to bring the Perres and Apand into such close and direct relations as to give rise to a duty of care owed by Apand for breach of which purely economic loss may be recovered." ( Perre, Gummow J, para 216-217.)
229 Accordingly, I find that FAC did owe a duty to the plaintiffs to exercise reasonable care to provide information which it possessed which was directly related to the use of the site as a school, ie the potential contamination of the site. That duty ran concurrently with, but independent of, any obligation which arose from the 1994 lease between the plaintiffs and the defendant. See also Armidale City Council v Alec Finlayson Pty Limited (1999) 104 LGERA 9.
230 The next argument by BAL relied upon the terms of the lease. BAL submitted that any claim in negligence had been excluded by the terms of the lease.
231 The specific submission was that clauses 5.2, 28.3 and 30.8 of the 1994 lease excluded any duty of care owed by the defendant to the College (see para [51]).
232 It is difficult to see how clause 5.2 can have that effect. In sub-clause (a) the College acknowledged that it had not relied upon any representation from FAC as to how the premises could be used. That is correct. There had been no express representation nor had any been relied upon. The complaint upon which the claim in negligence was based was a failure to disclose a particular fact about the site.
233 In relation to sub-clause (b) the College did make its own appraisal of the suitability of the premises for the operation of a school. The complaint on which the claim in negligence is based was that without the information concerning the possibility of contamination of the site, any such appraisal would be fundamentally flawed and of its nature inadequate.
234 In relation to sub-clause (c) the claim in negligence was not based upon any prohibition or restriction under requirements or orders of any authority or under any act or bylaw. It has no relevance to the claim.
235 Clause 5.2 of the 1994 lease does not exclude a duty of care owed by the defendant to the College.
236 Clause 28.3 raises similar issues to those in clause 5.2. To the extent that the College was able to make its own enquiries, it did so and to the extent that those enquiries were insufficient, no complaint is made. No reliance was placed by the College on any representation, warranty or undertaking by the FAC. The basis for the allegation of negligence was the failure by the FAC to communicate an essential fact relating to the occupation of the site by the College which would have informed any inquiries made by the College in relation to the site. Clause 28.3 does not exclude a duty of care owed by BAL to the College.
237 Clause 30.8 of the lease is more complex and raises different issues. Clause 30 is headed "Tenant's Works". Clause 30 in its parts is directed at works performed on the leased site by the tenant and is intended to exclude FAC from any liability arising from those works. Very detailed provisions in relation to the works are set out. Clause 30.8 needs to be read in the context of clause 30 as a whole.
238 Sub-clauses 30.8(a), (b) and (c) do not relate to the claim in negligence but to problems of design and construction. Similarly, the acknowledgement that any information made available by FAC forms no part of the lease is also irrelevant to that consideration.
239 The real question is whether the words "the tenant acknowledges that the Corporation is not responsible in any way for the accuracy or adequacy for the tenant's purposes of any information made available by the Corporation or its servants or agents" covers the claim in negligence brought by the College. My first observation is that the claim in negligence is not made concerning information actually provided, but rather the failure to provide information. Can the failure to provide information be so characterised as to come within the exclusion? There is another qualification. The particular information is described "as information furnished for the convenience of the tenant". Does that qualification limit the ambit of the word "information" as used?
240 There is a real distinction between the actual provision of information which is inaccurate or only partly accurate, and the failure to provide any information at all on a subject. If some information as to contamination, or lack of contamination of the site, no matter how vague or imprecise, had been provided, the exclusion may well have been activated. The failure to make any reference at all to the subject leads me to conclude that the acknowledgement is ineffective to exclude negligence of the kind sought to be relied upon.
241 The further characterisation "as information furnished for the convenience of the tenant" also operates to qualify the concept of "information" which is referred to. Whether or not the proposed lease site carried a risk of contamination was more than merely "information furnished for the convenience of the tenant". It was fundamental to the occupation by the tenant.
242 The 1994 lease was very much the FAC's document and to the extent that any ambiguity did exist in clause 30.8, the contra proferentem rule would apply. To the extent that there is ambiguity in the clause (as there seems to be) it should be read against the FAC and therefore BAL.
243 The final consideration in relation to clause 30.8 is the meaning to be given to the statement the "Corporation assumes no duties of care concerning any of the matters raised in this clause". That sentence takes the matter no further than that which has already been provided for in the clause. This is because of the qualification "any of the matters raised in this clause". It cannot apply to information generally but only to the information made available "as information furnished for the convenience of the tenant" and can only apply to information actually made available. It does not apply to subjects to which no reference was made, such as contamination of the proposed lease site.
244 The conclusion I have reached is that clause 30.8 of the 1994 lease does not operate to exclude a duty of care owed by BAL to the College. In that regard Darlington Futures Limited v Delco Aust Pty Limited (1986) 161 CLR 500 at 510 is of assistance:
"These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity."
245 The plaintiffs relied on clause 7.2 of the 1994 lease as implicitly contemplating that claims in negligence could be made against the FAC and therefore BAL despite other provisions in the lease. That is so where one is dealing with "damage to anything, loss of anything or injury to any person in or near the airport". I doubt whether that clause is sufficiently broad to cover the sort of damage claimed by the plaintiffs. Its recognition of some claims in negligence against the Corporation or any employee or agent of the Corporation is, however, useful when construing the other clauses on which BAL sought to rely, in particular clause 30.8 and supports the interpretation which I have given to it.
246 The exclusion clauses sought to be relied upon by BAL would only operate against a party to the lease. The second plaintiff was not a party to the 1994 lease and even if the clauses upon which BAL sought to rely were effective to prevent a claim in negligence by the College, they would not be effective to prevent the second plaintiff succeeding under that head of liability.
247 It follows from the above that not only did the FAC owe a duty of care to the plaintiffs in the terms alleged but it breached that duty when it failed to provide any information concerning the risk of contamination of the leased site before the 1994 lease was entered into by the College. Although there is an argument about whether any damage was suffered by the College, it seems beyond argument that at the very least the College suffered damage by losing the benefit of whatever capital outlay and improvements it had made in relation to the site, the cost of restoring the leased site and the cost of moving to a new site. To the extent that such damage was suffered, the tort of negligence is complete.