101 From the above provisions the following can be stated. First, the exercise of the power in s 91 is one of judgment for the regulatory authority (or the EPA: s 91(2)). The notice "may" be given. Secondly, the power in s 91 is not exercised for the benefit of either the occupier or the person to whom it is given; rather, the exercise of the power is only for the benefit of the public by dealing with, or preventing, the escape of polluting substances. Thirdly, the nature of the possible action contemplated by the phrase "clean-up action" in s 91 is likely, in the ordinary course, to place a financial burden on the person obliged by the notice to act. Fourthly, the notice in s 91 must be complied with, unless a person has a reasonable excuse. Fifthly, the circumstances that may give rise to a clean-up notice under s 91, or a preventative notice under s 96, or a prohibition notice under s 101 are not clearly segregated. There is, to a degree, a hierarchy of importance or seriousness, but there is potential for overlap of the sections. This multiplicity of bases for action should not be used to limit the scope of any particular step provided for. All are concerned with the public good, by protecting the environment. Sixthly, the relevant suspicion or belief or opinion is as to the occurrence of a pollution incident (s 91), or the carrying on of an activity in an environmentally unsatisfactory manner, including the occurrence of a pollution incident (s 96) or the serious matters of environmental damage (s 101). The relevant state of apprehension or belief is not one required (at least in terms of the provisions) to be judged having regard to the interests of the person or persons to whom the notice is directed. Seventhly, the financial consequences of the notices are, to a degree, dealt with. Parliament has not, however, sought to create a statutory avenue for compensation should the views of the relevant authority turn out to be wrong. Eighthly, the power in s 91 (and ss 96 and 101) is compulsory and enforced by the criminal law. To that extent, an obligation to consider the interests of the person to whom the notice is directed may be seen as inherently in conflict with the direction and focus of compulsory state power.
102 It is against this background that the existence of the duty is to be assessed.
103 The asserted duty or duties can be taken to have as its or their essence that the Council will take reasonable care in issuing the notices so as to avoid causing the appellant foreseeable economic detriment by the issue of a notice that would not be issued or would be issued in different terms had due care been taken in the circumstances of its issue.
104 Such a duty should not be imputed to or imposed upon the Council in respect of the issue of notices under s 91 for a number of reasons.
105 The duty is to prevent or avoid economic loss, beyond that which it is reasonably necessary to cause in the proper administration of the PEO Act. The circumstances in which the common law will impose a duty of care to avoid causing pure economic loss have been the subject of considerable debate and uncertainty in Australia since Caltex Oil (Australia) Pty Limited v The Dredge "Willemstad" [1976] HCA 65; 136 CLR 529. Since then, in a series of cases in the High Court culminating in Woolcock Street Investments v CDG (Bryan v Maloney [1995] HCA 17; 182 CLR 609; Hill v Van Erp [1997] HCA 9; 188 CLR 159; Esanda Finance Corporation Limited v Peat Marwick Hungerfords [1997] HCA 9; 188 CLR 241; Pyrenees Shire Council v Day; and Perre v Apand) the High Court has identified an approach based on the presence, in the particular circumstances, of "salient features" that, when combined, constitute or reflect a sufficiently close relationship to give rise to a duty of care. Such salient features include the inherent likelihood of the production of economic loss (Caltex at 576) and assumption of responsibility and known reliance (Bryan v Maloney and the negligent misrepresentation cases). The most important of these features, however, is vulnerability, in the sense discussed in the joint reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ in Woolcock Street Investments v CDG at 530 [23]:
"Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant.
(Citations omitted)
106 Here, though it was foreseeable that the exercise of the power would or may cause economic detriment to the appellant, there were absent the crucial elements of reliance, assumption of responsibility and, most importantly, vulnerability.
107 The appellant did not rely on the Council for any protection or assistance or skill as it may have done in a context of a building inspection or other beneficial regulatory step. The power was not directed to the benefit or protection of the interests of the appellant. The appellant did not rely upon the Council to state matters to better inform it. Rather, it was told to do certain things upon the assertion of lawful authority, and, under the sanction of the criminal law.
108 It was submitted that there was reliance upon the Council in the circumstances because the Council was the repository of knowledge about the terms of the development consent. I reject this submission. An occupier of land carrying on a business can be reasonably expected to understand the terms of any relevant consent that concerns it. In the circumstances here, although the Council made certain statements about the activities on the land and the development consent, this concerned the kind of matter one would anticipate a land user, such as the appellant, would be aware of.
109 The Council did not, by exercising a power to issue a notice under s 91, assume any responsibility to act in the interests, or for the benefit, of the appellant. The exercise of the power was directed towards protecting the environment; and to the extent that a cost was involved it was a power directed against the interest of the appellant.
110 The appellant was able to protect itself from the consequences of the notice to the extent that they arose from a lack of reasonable care in the issue of the notice in a number of ways. First, it was able to take legal advice immediately. To the extent (as it was argued here) that the notice was apparently bad or invalid on its face, or in the circumstances, that could be assessed and the notice challenged or ignored. It was said that procedural fairness was not afforded. For the reasons expressed later, I agree with that submission. That assertion could have grounded an application to the Land and Environment Court, or the notice could have been ignored as an invalid administrative act. To the extent that the notice was too widely drawn and not supported by s 91 and the associated definitions, that could also have been immediately put forward in an attack on the notice or as the basis for a reasonable excuse not to comply with it.
111 The factual considerations relied upon by the appellant do not establish a relationship or position of vulnerability in the sense described in Woolcock Street Investments v CDG.
112 This lack of vulnerability was reinforced when one looks at the purpose of the PEO Act. The powers are to be used to protect the environment and the public. The PEO Act does not require the interests of those who are suspected, or believed, to be responsible for, or be able to remedy, the pollution to be taken into account for the purposes of a common law duty of care. Indeed, to do so would, to a degree, be incompatible with the responsibilities under the PEO Act. Judgments about the existence and potential risk in connection with pollution need to be made. To cast on the EPA, or an authority such as the Council, the responsibility of taking into account the interests of the person who is, or may be, responsible for the pollution and requiring the authority to exercise care (enforceable by damages at common law) in going no further than is reasonable or necessary or proportionate to protect the environment is to infuse into the statutory process considerations that may have a tendency to discourage the due performance of the principal statutory duty. It might well lead to a defensive or overly cautious approach, or a hesitancy in ensuring that all steps are taken to protect the environment: cf X (Minors) v Bedfordshire County Council at 739 and 750 and Sullivan v Moody at 574.
113 In circumstances where there is an available court (which in fact specialises in matters of this kind), the risk of administrative over-reach can be seen to be protected against by the availability to the citizen of the courts (especially here, the Land and Environment Court) in the exercise of judicial power of review of administrative action.
114 The imposition of a duty of care to have regard to the economic interests of a person in the position of the appellant in the way proposed would be to subject the Council, whose responsibility is to exercise the power in the public interest, to a duty to have regard to the conflicting interests and claims of the party whose conduct (on this hypothesis) may have endangered the environment and the public interest. The setting up of this tension between the statute and the common law should not be permitted: Sullivan v Moody at 582.
115 Given the nature of the power as one the enforcement of which is committed to the criminal law, torts, such as malicious prosecution or misfeasance in public office, whose elements are concerned with failure to adhere to the honest and bona fide exercise of the power can be readily accepted as compatible and coherent with the statutory regime and administrative law. The difficulty with negligence in relation to such a power is that it sets up a conflict or tension in the decision-maker between the ends or purposes of the statutory provision and the object of the exercise of the power (such as the appellant), in circumstances of the honest and bona fide exercise of the power.
116 Not only is the duty proposed not compatible with the PEO Act for the reasons expressed above, it also poses issues of a lack of coherence with administrative law for the reasons expressed by the Chief Justice in Paige at 400-404 [156]-[177].
117 The appellant's complaints here can be seen as rooted in administrative law: the negligent production of an invalid act. That explains the terms of the 2nd FASC and the complaints as propounded: (a) a failure (to exercise reasonable care) to accord procedural fairness; (b) a failure (to exercise reasonable care) to draft the notice to identify the pollution incident and not to be misleading about the development consent; (c) a failure (to exercise reasonable care) to issue a notice within the meaning of the PEO Act; and (d) a failure (to exercise reasonable care) to ensure that there was proper delegated authority to issue the notice.
118 It is unnecessary to repeat the considerations discussed by the Chief Justice in Paige at the above pages, which I gratefully and respectfully adopt. The duty contended for here amounts, in substance, to the assertion of a compensatory claim for administrative error: cf Dunlop v Woollahra Municipal Council [1982] AC 158; Takaro Properties Limited v Rowling [1986] 1 NZLR 22; and Rowling v Takaro Properties Limited [1988] AC 473.
119 The lack of coherence between administrative law doctrines and the imposition of monetary compensation for the flawed or failed exercise of governmental power is illustrated later in these reasons in the discussion of breach of the posited duty. As will be seen, if standards of administration are to be regulated and enforced by recourse to the recovery of damages at common law, the courts must necessarily become involved, not just in the constitutional role of ensuring legality, but also in laying down standards of administrative conduct by reference to a standard of reasonable care. This standard setting and its enforcement by the courts would be in relation to the exercise of power of another branch of government and in circumstances where there exist machinery and techniques for the setting and maintenance of good administration and good government. The courts, of course, play a central role in that machinery in supervising the legality of the activity of government. To infuse common law duties and the recovery of damages in such a field as the issuing of notices under s 91 where governmental (EPA supervision) and legal (judicial review) controls already exist would introduce an undesirable incompatibility and lack of coherence to the regime of environmental protection.
120 The above is not to deny the continued force of Caledonian Collieries v Speirs and like cases. When a Council examines a power to build a structure, approve a plan, give permission for an act or otherwise engage in activity, it may well be required (on pain of liability in damages) to exercise care in relation to someone who may be affected by the power's exercise. What tends to strike at the coherence of administrative law here is the positing of a duty to exercise reasonable care not to make a flawed decision by, for instance, failing to give procedural fairness or failing to confine the power within statutory limits. Such a duty, as contended for here, would tend to open public authorities to the spectre of compensation for flawed decision making, in circumstances where the validity of the exercise of power can be tested and resolved by judicial review, and where standards of competence and skill are well able to be dealt with by an appropriate regime of governmental administration.
Breach of duty