Pyrenees Shire Council v Day [1998] HCA 3; 192 CLR 330; 151 ALR 147; 72 ALJR 152

Pyrenees Shire Council v Day [1998] HCA 3; 192 CLR 330; 151 ALR 147; 72 ALJR 152 - HCA 1998 case summary — Zoe

[167]

As I pointed out in Lutz[99], from the time of the Year Books, the common law has drawn a distinction between causing damage by a positive act and "causing" damage by a failure to act. The early forms of action gave no remedy for failure to prevent harm. The writ of trespass, historically the most important of the early writs for remedying wrongs, was available only for direct or forcible injury. Not until the action on the case was developed did the common law provide a remedy for omissions. Initially, both contractual and tortious wrongs were remedied by the action on the case because the distinction between "rights ex contractu and ex delicto was by no means clear"[100]. When tort and contract separated, contractual wrongs came to be identified with actions in assumpsit while tortious wrongs came to be identified with the action on the case. Speaking generally, remedies for omissions were henceforth seen as remediable by the action in assumpsit, not case. Absent consideration or its equivalent, the common law generally imposed no obligation on a person to protect or help another. As Windeyer J pointed out in Hargrave v Goldman[101], "the common law does not require a man to act as the Samaritan did". For that reason in most cases, the occupier of property owes no duty to a neighbour to secure the property so as to prevent thieves gaining access to the property for the purpose of robbing the neighbour's premises[102]. The "general rule" said Dixon J in Smith v Leurs[103], "is that one man is under no duty of controlling another man to prevent his doing damage to a third". Nor does the common law generally impose any duty on a person to take steps to prevent harm, even very serious harm, befalling another. Thus, absent a statutory duty, a highway authority owes no duty to motorists to improve the visibility on a dangerous corner even though it is aware of the danger created by the poor visibility[104]. The careless or malevolent person, who stands mute and still while another heads for disaster, generally incurs no liability for the damage that the latter suffers. Harsh though the common law may seem to be, there are nevertheless strong political, moral and economic arguments that justify its approach, as Lord Hoffmann pointed out in Stovin v Wise[105].

[309]

1. Various factual disputes, litigated with much ferocity at trial, must be taken as determined in the way found by Judge Strong. Thus, the disputes concerning whether Mr Tzavaras and Mr Nakos received the Shire's letter was decided: the former did and the latter did not. The finding that Mr Tzavaras removed the impediments to the fireplace and left it operational and without warning to the Stamatopouloses must also be accepted. Various factual complaints which persisted to this Court can safely be ignored. They included complaints about the inferences drawn concerning the age of the shops, that the Days were ratepayers of the Shire and that the Days both owned and occupied the adjoining shop. > > 2. Similarly, this Court can safely dismiss challenges to findings which seem entirely reasonable. Thus, the suggestion that the losses of Eskimo Amber and of the Stamatopouloses flowed from the failure of their solicitor to secure a Form 10 certificate from the Shire was rejected and should not be reopened. Nor should the claim by Eskimo Amber and the Stamatopouloses against the Shire based on negligent mis-statement be re-opened, having been determined against them at trial[253]. Given Brooking JA's complaint that, despite "tacit invitations"[254], insufficient assistance was afforded concerning the statutory powers relied upon by the several parties, I would not entertain the attempt of the Shire, before this Court, to deflect liability to other statutory authorities, such as those established by the Housing Act 1958 and the Housing (Standard of Habitation) Regulation or the Country Fire Act (Vic). Quite apart from the fact that these arguments were so belated, they appear to raise factual questions not explored at the trial[255]. > > 3. The remaining statutory provisions, still relied upon, need only to be examined so far as they bear upon the respective parties' claims against the Shire for breach of its common law duty in negligence. The matter must be approached upon the footing that all of the claimants accepted that there was no statutory duty owed by the Shire to them, giving rise to a personal cause of action for its breach[256]. > > 4. The cases must also be considered on the basis that the Shire did not dispute that the second fire, which occasioned the damage to the several claimants, was caused by the deficiencies in the condition of the fireplace and chimney found by Mr Walschots[257]. The Shire accepted that, if it was under a duty of care to the claimants and was in breach of that duty by reason of its omissions, such breach was the cause of the losses which they had suffered[258]. A claim by two of the original claimants (the Nakoses) that negligence could be brought home to the Shire by reason of its careless failure to consider the exercise of its powers has not been re-agitated[259] by the others. > > 5. Finally, no dispute was raised as to the transmission of any liability on the part of the Shire of Ripon to the Pyrenees Shire Council which was substituted as the party in the appeals.

[340]

1. One approach would be to accept that the attempts to dissect Lord Atkin's famous speech in Donoghue v Stevenson[317] have failed. They have certainly introduced undue complexities without the merit of compensating precision and predictability. Upon this view, each of the elements of "foreseeability", "proximity" and policy evaluation are, properly understood, inseparable components of the attempt by the common law to answer a single question. That question may be stated as whether the relationship of the parties is such as to make it reasonable to impose upon the one a duty of care to the other[318]. Upon this view, a defendant should only be liable for damage where a reasonable person in the defendant's position could have avoided the damage by exercising reasonable care and was in such a relationship to the other that that person ought to have acted to do so[319]. This formulation may be condemned as tautologous. Yet it may state what, ultimately, the other concepts of "foreseeability", "proximity" and policy are struggling to express at the price of introducing distinctions which, in Lord Hoffmann's words, are not always "visible to the naked eye"[320]. The closest that any member of this Court has come to expressing such a bedrock idea is Deane J. In Jaensch v Coffey[321] he suggested that the underlying notion of liability in negligence was "a general public sentiment of moral wrongdoing for which the offender must pay"[322]. Clearly enough, Deane J did not consider that this single criterion would afford adequate guidance to the imposition of a duty of care. Hence his repeated explorations of the notion of "proximity" as affording the "ultimate" criterion[323]. However, the obvious overlap of the components of the alternative tests suggests that a single concept exists, although it has so far proved impossible to define. > > 2. The second approach is the two-stage one expressed in Anns. It has certain attractions which even its critics acknowledge[324]. Not least, in the context of the failure of public authorities to exercise statutory powers reposed in them, it has created an "increased sensitivity in all jurisdictions ... towards the relationship of public authorities and the communities they serve"[325]. Anns gave the debates about the duty of care a broad conceptual structure and rightly acknowledged the part which the policy of the law inescapably plays in fixing the outer boundary of liability to an action in negligence[326]. However, the weaknesses of the Anns approach included the excessive work assigned to the notion of foreseeability of harm. That notion will not of itself automatically lead to a duty of care at law[327]. Something more is necessary. Relevant to that something more is the existence of a relationship between the parties which is such as to make it the duty of the one to act so as to avoid the risk of reasonably foreseeable damage to the other[328]. > > 3. Whatever the defects of "proximity" (and its common alter-ego "reliance") as universal indications of the existence of a duty of care, and however resistant the word "proximity" has proved to precise definition, the concept is nonetheless useful as an elaboration of the equally opaque notion of the neighbour relationship expressed in Donoghue v Stevenson[329]. Whereas Anns treated proximity and foreseeability as substantially synonymous[330], differentiation of the concepts in Caparo[331] reflects the long history of the common law that the mere foreseeability of the risk of harm to another is insufficient, of itself, to impose a legal duty to act so as to avoid the consequences to that other. The other merit of the Caparo formulation is that it makes it plain that the duty of satisfying the policy criteria (that it is "fair, just and reasonable that the law should impose a duty"[332]) is upon the party asserting the duty. This is where the onus would normally lie for those seeking to render another liable to them in law. It is important to emphasise that the third element is in addition to the foreseeability of harm and the existence of a "proximate" or "neighbour" relationship. It is not open to a court, absent those pre-conditions, to create a duty of care simply because, in the opinion of the court, fairness, justice or reasonableness suggests that one should exist[333].

[348]

1. The claimants were occupants of shops and attached dwellings to which a fire, of the kind foreseen, could spread. It is of the nature of fires, if unchecked, to spread readily. One might say particularly in a row of connected buildings of indeterminate but advanced age. > > 2. The Days were, as the judges below inferred, rate-payers of the Shire. Eskimo Amber and the Stamatopouloses were occupiers of a shop and dwelling for which rates were also paid to the Shire. In this sense, none of the claimants was a stranger to the Shire as, for example, was the claimant motorist in Stovin who just happened to be driving on a road controlled by a highway authority. > > 3. The Council of the Shire had relevant powers to require the owners of the shop and residence containing the dangerous chimney and fireplace to repair or remove the danger. The fact that the Shire officers were ignorant of those powers is beside the point. The powers existed for the protection against fire of persons such as the claimants. Had the powers been utilised, they would have provided a ready means for the removal of the danger which persisted and later gave rise to the fire causing the damage sued for. > > 4. The claimants were in a vulnerable position, and to that extent they were dependent upon the Shire and its officers in the use which they made of the knowledge gained by the inspection by Mr Walschots. The Days had no occasion to examine the fireplace of their neighbour to inspect and discover any dangerous defects. They had no legal right to do this if, remarkably, they had foreseen their risk. The Stamatopouloses had the opportunity of inspection. However, not having been alerted to the danger and presented with a fireplace apparently in ordinary use, they had no occasion to conduct an inspection or to anticipate the existence of the dangers which the Shire's officer had observed and perceived to be potentially hazardous. > > 5. Although there was no express reliance by any of the claimants upon the Shire, they would have been entitled, had they thought about it, to anticipate that the Shire's officers would have done more for the protection of rate-payers and occupiers at risk from a "razing of Beaufort" than they did. Apart from the enforcement of a notice under s 695(1A) of the Local Government Act, it would have been open to the Shire to take other steps, less drastic but also effective. These might have included (a) noting its records to follow-up the warning given in Mr Walschots' letter; (b) alerting immediate neighbours most at risk so that they could be vigilant about the use of the fireplace and chimney, including by strangers, visitors and successors to Mr Tzavaras; (c) noting the Shire's records to ensure that on sale or fresh lease of the premises any new purchasers or occupants would be warned; or (d) requesting the CFA to carry out periodic checks and also to check other fireplaces and chimneys in the row of shops and dwellings. By mentioning these considerations I do not mean to revive the fiction of "general reliance". However, given the foregoing "proximity factors", the undoubted statutory powers of the Shire, the high risk to which it had found the offending fireplace and chimney exposed the shops and dwellings and those who owned and occupied them, it is not at all unreasonable to suggest that prima facie more should have been done than to write the rather inconsequential letter which the Shire considered to be the discharge of its responsibilities. This is especially so as the costs and inconvenience of doing any or all of the foregoing would have been small and particularly if measured against the risk that an omission to attend to the danger could result in a fire in which the whole shopping centre could be razed and the town and its occupants threatened.

[354]

1. The statutory power in question is not simply another of the multitude of powers conferred upon local authorities such as the Shire. It is a power addressed to the special risk of fire which, of its nature, can imperil identifiable life and property. Therefore, the nature of the power enlivens particular attention to its exercise and to the proper performance of a decision whether to give effect to it or not[346]. Upon the evidence in this case, the proper exercise of the power was not considered for the simple reason that the Shire's officers were ignorant of s 695(1A) of the Act. > > 2. It is settled law that where a public authority enters upon the exercise of its powers, it must do so carefully[347]. Whilst it is true that, in the present case, the Shire did not enter upon the exercise of the power under s 695(1A), still less the enforcement provisions elsewhere in the Local Government Act (as it might), it did take some steps. It took them, according to its officers, with other statutory powers of dubious relevance in mind. Even then, the letter sent was not a competent exercise of those powers. Therefore, what occurred might fairly be viewed as a recognition by the officers of the Shire of a need for positive action on its part but a wholly incompetent discharge of the perceived need. Although in this case, it cannot be said that the Council positively created the risk of the fire which ensued[348], its response to the discovery of that risk was not entirely passive. This was not, therefore, a case of pure omission. It involved action but plainly inadequate and incompetent action. Had the action been competent and careful, the damage suffered by the claimants would probably have been avoided. > > 3. In many cases where action is brought against public authorities for omission to exercise statutory powers, emphasis is placed upon the degree of danger to which the claimant is exposed by that omission; the expertise available to the authority; the opportunities of intermediate self-protection; and the cost and inconvenience involved in the exercise of the powers. The plainest cases of this class involve the inspection of aircraft by a public authority where a failure to exercise statutory powers could have devastating consequences upon those who depend upon the authority to do so[349]. In the present case, as it happens, the damage done to the claimants was relatively modest. However, in determining whether the Shire ought to have used its powers it is relevant to take into account its own estimates of the peril judged at the time at which it acquired its knowledge. Those estimates were of a very high danger indeed in circumstances where it would have known that most of the people at risk were vulnerable, being ignorant of the danger which the Shire's inspection had disclosed and unable or unlikely by their own conduct to discover it. > > 4. Whilst the promotion of individual choice and the efficient use of resources is a proper concern for public authorities, so is the adoption of good administration and procedures for the proper use of statutory powers. It cannot be conducive to good public administration if serious dangers do not enliven an effective exercise of available powers; if the response is wholly inadequate and then if it is not followed up at all. Simply in economic terms, given the potential danger foreseen by Mr Walschots, this is arguably not the exercise of the power under s 695(1A) of the Local Government Act which Parliament envisaged when that power was conferred on the Shire for the protection of the public.

[356]

1. The Shire was small in numbers. By inference, its resources were small and its personnel few. What might be expected of a large public authority, well resourced and expertly advised, could not reasonably be imposed upon a body such as the Shire. On the other hand, the small size and population of the Shire made it easier for officers to visit and inspect sources of serious danger. It seems hardly likely that the discovery of a fire risk with a potential to threaten the main town of the Shire would be an everyday occurrence. > > 2. The small resources of the Shire make it reasonable that owners and occupiers of premises within the Shire should be expected to take precautions to protect themselves against risks rather than looking to the "deep pocket" of the public purse to do so. In this case that pocket would not be very deep at all. Owners and occupiers of property commonly do, and should, protect themselves, including by fire insurance[350]. The law should encourage self-reliance because it tends to promote greater economic efficiency[351]. To some extent, Shire rates and services would have been arranged with the operation of individual self-protection and private insurance in mind. These principles, whilst valid, cannot be extended to exclude recovery for every failure of the public authority to use its available powers[352]. That would not only contradict many decisions in negligence claims. It would be inconsistent with the established legal rule that in some circumstances, "may", in a statute empowering a public authority to act, can mean "must"[353]. > > 3. A particular consideration of policy mentioned by Lord Hoffmann in Stovin is the undesirability of adopting a rule which would result in insurance companies, under to their rights of subrogation, recouping themselves from the purse of a public authority[354]. However, in the absence of evidence (assuming it to be admissible) it is pure speculation as to whether the claimants here were insured or whether the public authority was uninsured. Of more direct concern would be the extension of duties to public authorities which would make it more difficult for them to obtain insurance or result in the curtailment of services because they are effectively uninsurable. There was no evidence on any of these questions. > > 4. In many cases, a court is not competent to review the decisions of public authorities as to their use of their resources. It has been suggested that the separation of powers lies at the heart of restraint of courts in substituting their judgments for those of the public authority[355]. Typically, a court does not have the "financial, economic, social or political factors or constraints" before it that are available to the officers of the public authority[356] in the deployment of its resources. Courts have drawn a distinction between "policy" decisions, which they will leave to the public authority itself, and "operational" decisions which they will have competence to evaluate[357]. Although the distinction is far from perfect, it has some validity. In the present case, more effective notice to the owner and occupier of 70 Neil Street concerning the hazard of fire and the provision of follow-up would certainly fall on the "operational" side of the line. But this conclusion leaves standing Lord Hoffmann's comment that courts should be wary of undue intervention in decisions having significant implications for the budgets of public authorities[358]: > > > "This would distort the priorities of local authorities, which would be bound to try to play safe by increasing their spending on road improvements rather than risk enormous liabilities for personal injury accidents. They will spend less on education or social services. I think that it is important, before extending the duty of care owed by public authorities, to consider the cost to the community of the defensive measures which they are likely to take in order to avoid liability."

[358]

5. The extent of the risk necessary to convert a statutory power into an obligation to act in particular circumstances has been variously described. In Stovin, Lord Hoffmann suggested that a consideration would be whether it could be said to be "irrational" for the authority not to exercise its powers[359]. Although such a test might have the attraction of reconciling principles of the law of negligence and administrative law, it would impose on a claimant a burden more onerous than the law of negligence typically does. It may be "fair, just and reasonable" to impose on a public authority a duty of care to exercise relevant statutory powers in given circumstances although a refusal to do so would not have attracted the epithet "irrational". This would be especially so where the beneficiaries of the power "could not guard themselves"[360] or where the defects said to call forth the exercise of the power are dangerous and even life-threatening[361]. The fact that, in the result, injury to life and body were not caused in this case is irrelevant to the peril which was foreseen. It was that peril which rendered it fair, just and reasonable that the Shire should have exercised its powers on this occasion. > > 6. The final consideration of policy relates to the opportunity which the several claimants had to inspect and appreciate the source of the danger to them[362]. Reasonable assumptions of self-reliance make it appropriate to withhold the imposition of a duty of care where the party suffering loss had reasonable opportunities to inspect a danger or otherwise to protect itself. But where the defects which give rise to the damage are latent and such as may not manifest themselves for a considerable time, or until it is too late, the party injured may have no appreciation of the danger and no occasion to consider it and take steps in self-protection. In the balance of the possession of relevant information here the Shire was at an enormous advantage. The claimants were at a profound disadvantage.

[361]

As for Eskimo Amber and the Stamatopouloses, the position is more complicated but essentially by one factor only. This is that they were resident in the premises and could have (had they thought to do so) inspected the fireplace and chimney and taken advice on its apparent defects. However, in default of a notice from the Shire or a warning from Mr Tzavaras (neither of which was found to be forthcoming) there was no reason for such an inspection to take place. Eskimo Amber and the Stamatopouloses were presented with a fireplace and chimney, apparently available for use. They too became the victims of the wholly inadequate response by the Shire to the serious dangers which Mr Walschots had discovered. The situation would have been different if the Shire had not taken action, had conducted no inspection, had no prior notice or no powers as clearly applicable as s 695(1A) was. But having embarked upon action, and then having performed it so inadequately, it is neither fair, just nor reasonable, to deny recovery and to differentiate the position of the Stamatopouloses' interests from those of the Days. The former had no occasion to inspect for defects, whereas the Shire was fully alerted to them and clothed with powers enacted by Parliament for the protection of them and others in the field of danger. A tenant would not normally embark upon structural repairs to a fireplace and chimney of demised premises. That is presumably why the enforcement provisions of the Local Government Act permitted repairs to be effected, if necessary by the occupier, at a cost deducted from the recalcitrant landlord's rent[366]. Because the defects discovered by the Shire were latent, it is not reasonable in this case to suggest that the Stamatopouloses and Eskimo Amber should have discovered them or anticipated them and protected themselves. Nor can the facility of securing their own insurance present a complete answer to their claims against the Shire. In the circumstances, it is therefore fair, just and reasonable that the law should impose a duty on the Shire in relation to Eskimo Amber and the Stamatopouloses. Its scope is the same as in the case of the Days. They are entitled to succeed in their appeal.

At a glance

Court

Decision date

Before

Source

Judgment (654 paragraphs)

Pyrenees Shire Council v Day [1998] HCA 3; 192 CLR 330; 151 ALR 147; 72 ALJR 152 (23 January 1998)

Parties

Legislation Cited (30)

Cases Cited (57)