the judgment below
40 In her reasons for judgment in Polar (No 4), Kenny J analysed in detail authorities governing strike out applications under O 11 r 16 of the Federal Court Rules 1979 (Cth) (equivalent to r 16.21 of the Federal Court Rules 2011 (Cth), which expands the grounds) and summary judgment under s 31A of the Federal Court Act.
41 Her Honour also noted that the rule governing strike out essentially related to the sufficiency of pleadings and (at [8]) set out the following extract from the Full Court's decision in Wride v Schulz [2004] FCAFC 216 at [25]:
[T]he the pleadings must disclose a reasonable cause of action against the party against whom the cause of action is brought and must state all material facts necessary to establish that cause of action and the relief sought. A "reasonable cause of action" for this purpose means one which has some chance of success if regard is had only to the allegations and the pleadings relied on by the applicant.
42 Her Honour discussed authorities, including National Mutual Property Services (Aust) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 ("National Mutual") in which Lindgren J (at 529) approved a summary of general principles in Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (Unreported, FCA, Beaumont J, 13 September 1994) ("Allstate") (at 24, distilled from the editorial note at (1992) 66 ALJ 47 in Lonrho plc v Tebbitt, The Times, 24 September 1991). The authorities indicated that a reasonable cause of action was one with some chance of success having regard to the allegations pleaded, even if weak; and that the strike out power should be exercised only in a plain and obvious case, where it was obvious that no reasonable amendment could cure the alleged defect and there was no reasonable question to be tried.
43 In Allstate, Beaumont J (at 24) cited the following principles:
(1) A "reasonable cause of action" means one with some chance of success if regard be had only to the allegations in the pleadings relied upon by the claimant; in such a case, the claim cannot be struck out: Davey v Bentinck [1893] 1 QB 185.
(2) The mere fact that the case appears to be a weak one is not of itself sufficient to justify the striking out of the action: cf Wenlock v Moloney [1965] 1 WLR 1238.
(3) Normally, the power to strike out should be exercised only in plain and obvious cases, where no reasonable amendment could cure the alleged defect: cf Hodson v Pare [1899] 1 QB 455.
(4) It goes without saying that if a substantial case is involved in the claim, the power to strike out cannot be exercised.
(5) Where a point of law has to be decided, and the judge is satisfied that this can be done by him appropriately, thereby avoiding the necessity of, and expense in going to trial, he is entitled to determine the point: cf Williams & Humbert v W & H Trade Marks [1986] AC 368.
44 Accepting that the strike out power should be exercised with caution and only in a plain and obvious case, Kenny J stated at [12] of Polar (No 4):
Notwithstanding the need for caution, where in a strike-out application, a point of law arises, which can appropriately be decided at the interlocutory stage, the judge is entitled to determine the point, thereby avoiding the need for and expense of a lengthy trial. For the reasons set out below, this is a case in which certain points of law should be decided at this stage, since their disposition does not depend on further evidence and findings of fact, and their resolution will limit any future trial.
45 Kenny J also discussed s 31A of the Federal Court Act, noting that the court can dismiss a proceeding (or part thereof) if it is satisfied that the relevant party has no reasonable prospect of success, which did not require that it be hopeless or bound to fail.
46 Her Honour referred to the High Court's discussion of s 31A in Spencer v The Commonwealth (2010) 241 CLR 118 ("Spencer") where the applicant's pleading (while not fully formulated or particularised) left open a possibility which required factual exploration of an informal agreement.
47 In Spencer, French CJ and Gummow J, in a joint judgment (on which the appellants particularly relied both before the primary judge and on appeal) stated (at [25]) that the court must make "a practical judgment…as to whether the applicant has more than a 'fanciful' prospect of success [which] may be a judgment of law or of fact or of mixed law and fact".
48 French CJ and Gummow J stated at [25]:
Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the court has formed the view that the applicant is unlikely to succeed on the factual issue.
49 French CJ and Gummow J also stated at [26]:
Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant.
50 Kenny J also referred to the slightly different judgment of the plurality (Hayne, Crennan, Kiefel and Bell JJ) in Spencer, who stated, inter alia, that it was "important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes" (at [60]).
51 Kenny J concluded at [17] and [18] of Polar (No 4):
Thus, in effect, no hard and fast rule can be laid down as to when summary judgment is available. Much depends on the case at hand. The critical question is that set by the statute - has the moving party persuaded the court that the opposing party has no reasonable prospect of success?
As the above discussion indicates, there is a clear distinction between the operation of s 31A of the Federal Court Act and the strike-out provisions of the Rules. In their joint judgment, French CJ and Gummow J acknowledged this, adopting the following passage in the judgment of Lindgren J in White Industries Australia Ltd v FCT (2007) 160 FCR 298 (White Industries) at 309 [47]:
[E]vidence may disclose that a person has or may have a "reasonable cause of action" or "reasonable prospects of success", yet the person's pleading does not disclose this. In such a case O 11, r 16 empowers the Court to strike out the pleading but … s 31A(2) would not empower the Court to give judgment for the respondent against the applicant. A failure after ample opportunity to plead a reasonable cause of action may suggest that none exists and therefore that the applicant has no reasonable prospects of success, but the existence of a reasonable cause of action and the pleading of a reasonable cause of action remain distinct concepts.
See also Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (2008) 252 ALR 41 at 44 [6].
52 Kenny J analysed the statutory context for the appellants' claims. Her Honour observed that "the object of the CAA is to establish a statutory regime for maintaining, enhancing and promoting the safety of civil aviation" (at [21]) and noted "the unmistakable emphasis on safety in s 9" (at [24]). Her Honour referred to "the primary importance of safety within this legislative regime…" recognised in the Civil Aviation Regulations 1988 (Cth) ("CAR") at [25]), and the "numerous references to 'safety' in the CAA, CAR and CAO [Civil Aviation Orders] emphasize that, in issuing AOC's or making regulatory decisions, CASA is obliged by law to accord primacy to the safety of air operations" (at [30]).
53 Kenny J also noted that a decision to cancel, suspend or vary an AOC (or a condition of an AOC) or to cancel, suspend or vary a licence is reviewable on the merits by the Administrative Appeals Tribunal (at [34]).
54 Her Honour then addressed each of the claims pleaded in the FASOC. As stated above, her Honour concluded that:
(a) there was no statutory duty as pleaded;
(b) there was no tenable basis on which the appellants could bring an action in tort against the respondents for breach of a general duty to be of good faith;
(c) there were no pleaded elements necessary to a tort of inference with trade or business by acting beyond statutory power (assuming such a tort existed); and
(d) the pleading of misfeasance in public office was embarrassing and should be struck out with no leave to replead, as (despite CASA's provision of relevant documentation) there was nothing in the material to indicate any basis "for pleading the critical element of intention or reckless indifference" (at [123]).
55 There is no appeal from those findings.
56 Kenny J also discussed in detail the alleged common law duty of care. Her Honour held that CASA and the individual respondents owed no duty of reasonable care as alleged, not to harm the appellants with respect to the discharge of their statutory functions. That finding is the focus of the present appeal.
57 Kenny J rejected the appellants' contention that it was not appropriate in this case to determine the existence of a duty of care as a preliminary issue.
58 Under the heading "It is appropriate to consider whether the duty as pleaded exists", her Honour analysed relevant authorities which identified criteria relevant to the existence of the duty, including distinctions between operational and policy decisions, misfeasance and non-feasance and statutory powers and duties, together with the plaintiff's vulnerability and the authority's control.
59 While acknowledging the appellant's submissions concerning the absence of guiding principles and lack of stable consensus about relevant criteria, her Honour rejected the appellants' submission that it was premature to determine the existence of the duty before trial because it would be first necessary to consider "the positions occupied by the parties on the facts as found at trial" (at [50]). Her Honour stated at [50] of Polar (No 4):
At the hearing, senior counsel for the applicants argued that the existence of a duty of care ought not be determined prior to trial and depended on findings of fact as to the precise relationship between CASA and the airline operators and air pilots. The applicants' senior counsel said that he had in mind that there would be "evidence of exactly how airlines operate, how they are financed, how they are dependent … for their efficient and safe operation on the certainty of being able to continue to operate".
60 Her Honour did not think that the facts as proven at trial would affect her conclusion.
61 Her Honour stated at [52] of Polar (No 4):
Although a court must proceed cautiously in exercising power under O 11 r 16, for the reasons set out below, I consider that this power is appropriately exercised in this case. As appears below, the existence of the duty as pleaded in the FASC is inconsistent with the statutory regime governing CASA, and the setting in which CASA issues, suspends or cancels certificates, licences and other authorities. This is not a case in which the facts as proven at trial would affect the conclusion I have reached. To avoid the necessity of, and expense in going to trial, it seems to me proper to determine the point: compare Commonwealth v Griffiths (2007) 70 NSWLR 268 at 294-295 [125]-[131]. Further, as regards the evidence to which senior counsel for the applicants referred (see par [50] above), the FASC contained no pleading of any material fact, by reference to which it might be said that such evidence might be relevant and admissible.
62 Her Honour concluded that this case was distinguishable from Repacholi, where McKerracher J declined to hold that it was not open to plead a duty of care against CASA in the exercise of its statutory duty.
63 Kenny J distinguished (at [53] of Polar (No 4)) the present case from Repacholi on the grounds foreshadowed in her earlier, more detailed comparison in Polar (No 2), discussed above. In the present case, her Honour held, consistently with her earlier analysis in a somewhat different context, that the FASOC pleaded the alleged duty of care at an unsatisfactory level of generality, which was fatal, because such a general duty of care was inconsistent with the statutory regime and due exercise of CASA's powers under the Act. In contrast, her Honour acknowledged that in Repacholi, the pleading gave some content to the alleged duty by reference to collecting information regarding take-off procedure. Moreover, in Repacholi, the proposed pleading was far from complete.
64 Under the heading "The duty as pleaded does not exist", Kenny J discussed Stuart v Kirkland-Veenstra (2009) 237 CLR 215 ("Kirkland") where the High Court examined a different empowering provision and statutory scheme in determining whether or not a duty of care was owed in exercising powers under s 10 of the Mental Health Act 1986 (Vic).
65 Her Honour noted the observations in Kirkland that reasonable forseeability of harm from lack of reasonable care by a holder of statutory power is not necessarily enough to result in liability to compensate. Power was also a necessary but not sufficient condition of duty. It was necessary to examine the particular statutory regime to determine whether it established a relationship between the authority and a class of persons, the degree and nature of control exercised over the risk of harm, the degree of vulnerability of those who depend on the proper exercise of the power and "the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute" (Kirkland 245 [112] to [113] per Gummow, Hayne and Heydon JJ).
66 Her Honour noted that in Kirkland, Gummow, Hayne and Heydon JJ considered that the factor of control was critical to finding that there was no duty. Crennan and Kiefel JJ, however, considered that the statutory power must be exercised towards an identifiable class or individual, as distinct from the public at large. Her Honour concluded that control and the identification of a class were important factors.
67 Her Honour also accepted that coherence of the law was a significant factor. Her Honour referred, in that context, to Sullivan v Moody (2001) 207 CLR 562, in which the High Court held that persons investigating and reporting on allegations of child sex abuse were not subject to a legal duty to take care to protect those suspected of being the source of harm, because such a duty would be inconsistent with the proper and effective discharge of their professional and statutory responsibilities. Her Honour stated that the "Court's decision turned on the proposition (at 580 [53]) that to find a duty of care in that case "would so cut across other legal principles as to impair their proper application" (at [59]).
68 Kenny J also referred to W v Home Office [1997] Imm AR 302 in which Lord Woolf MR (with whom Thorpe and Waller LJJ agreed) adopted an approach not dissimilar from that in Sullivan v Moody, and identified a number of relevant factors, including whether there were other private law remedies for deliberate abuse of power and public law remedies available to challenge decisions.
69 Her Honour recognised (at [63]) that in the present case there were some factors in favour of the existence of the duty. The alleged duty related to a positive act, rather than a failure to act, the appellants had a relationship with CASA which predated the power and the respondents would or should have known that the lack of reasonable care in exercising the statutory power to suspend, cancel or fail to renew authorisations could result in harm to the appellants.
70 Her Honour concluded, however, that the above factors were outweighed by other factors pointing against the imposition of a legal duty of care. Her Honour found that the legal relationship between the appellants and the respondents was not straightforward or analogous to any existing relationship in which a similar duty of care had been found to exist. The FASOC did not plead a relationship or vulnerability of the kind where a duty of care to avoid economic loss was said to be owed. Moreover, the appellants could protect themselves by making immediate application to the Administrative Appeals Tribunal for appropriate interlocutory relief. Nor did CASA have unfettered control over the issue, cancellation and suspension of the relevant certificates, licences or approvals. Rather, it was subject to the statutory regime under the CAA.
71 Her Honour concluded at [65] to [67]:
Further, although CASA had statutory power to issue, cancel, suspend or renew the relevant certificates, licences or approvals, CASA did not have unfettered "control" over their issue, cancellation and suspension. Rather, issue, cancellation and suspension were regulated by the CAA. In exercising the relevant statutory powers to issue, cancel or suspend, CASA was subject to the statutory regime established under the CAA, which had as its main aim, "maintaining, enhancing and promoting the safety of civil aviation". As discussed above, the functions of the CAA were all directed to this end - as s 9A(1) made clear. The legislative regime established under the CAA was a regime to maintain, enhance and promote air safety. The regime established by the CAA required CASA to make air navigation safety the paramount concern: see s 9A(1). Thus, CASA was required by its governing statute to treat air navigation safety as the most important consideration in issuing, cancelling, suspending or renewing any AOC, or approval as Chief Pilot or Flying Instructor.
With this in mind, it is difficult to avoid the conclusion that the duty for which Polar and Mr Butson contend - to take reasonable care not to harm them and others in the same class as them cannot be reconciled on any practical basis with CASA's overarching obligations to make air navigation safety its most important consideration in performing its functions and exercising its statutory powers.
This is not to say that a public authority such a [sic] CASA cannot be subject to a number of duties. But in the case of a public authority charged by its governing statute with giving primacy to air navigation safety, one would not anticipate that the law would impose on that public authority a legal duty to have regard to the interests of a particular class - here operators of air services businesses or air pilots - where that would in all likelihood impose on the public authority conflicting obligations.
72 Her Honour observed that even if not absolutely inconsistent with CASA's exercise of its statutory powers, the imposition of a duty of care could lead CASA and its officers to act defensively, contrary to the primary importance placed on air safety navigation. Further, other remedies were available to persons in the appellants' position, which had militated against the existence of a duty of care in Fernando v Commonwealth of Australia (2010) 188 FCR 188.
73 Her Honour concluded at [71] of Polar (No 4):
The considerations against the existence of a duty of care lead me to conclude that CASA (and therefore the individual respondents) did not owe the applicants a duty of care of the kind alleged in para [16(a)] of the FASC.
74 Her Honour then discussed deficiencies in the pleading of the negligence in the FASOC as follows at [75] of Polar (No 4):
There are other deficiencies in the applicants' pleading of negligence. As can be seen in the earlier analysis of the applicants' FASC, the facts alleged in the FASC relate almost entirely to the exercise of statutory powers by CASA and its officers. When the pleading is examined, there is, as the respondents submitted, no express pleading of material facts that could, if proven, establish "the crucial elements of reliance, assumption of responsibility and, most importantly, vulnerability": see Precision Products at 126 [106] (Allsop P). This pleading is especially important in such a case as this in which the relevant statutory powers are not directed towards the protection of a class of persons or their property, as distinct from the public at large. On the contrary, relevantly here, the CAA expressly provided that the public interest in air navigation safety was to be CASA's most important concern in any exercise of its statutory powers. In exercising its statutory powers at issue in this case - to issue, cancel, suspend or renew certificates, licences and other approvals - CASA did not necessarily assume responsibility to act in the applicants' interests. As noted already, the most important consideration in the exercise of the relevant statutory powers was air navigation safety. This meant that the powers would invariably be exercised against the applicants' interests in a situation where air navigation safety so required.
75 Her Honour concluded at [76] of Polar (No 4):
In all the circumstances, it cannot be said to be open to the applicants upon the FASC to prove the facts at trial which would constitute a reasonable cause of action in negligence against the respondents. In so far as the FASC endeavours to plead negligence against the respondents, this pleading should be struck out.