Agius v New South Wales

[2001] NSWCA 371

CITATION:	Agius v State of New South Wales [2001] NSWCA 371
FILE NUMBER(S):	CA 40730/99
HEARING DATE(S):	22 November 2000, 20 July 2001
JUDGMENT DATE:	23 October 2001
PARTIES :	Sharon Agius - Claimant State of New South Wales - First Opponent Terry Kesby-Smith - Second Opponent Michael Pearce - Third Opponent
JUDGMENT OF:	Priestley JA at 1; Powell JA at 2; Giles JA at 3

LOWER COURT JURISDICTION :	District Court
LOWER COURT FILE NUMBER(S) :	DC 920/98
LOWER COURT JUDICIAL OFFICER :	Freeman DCJ

COUNSEL:	B J Gross QC & T Boyd - Claimaint T H Barrett - First Opponent S Smith - Second Opponent R N Winfield - Third Opponent
SOLICITORS:	Cameron Gillingham Boyd - Claimant I V Knight - First Opponent Beverley Forster & Associates, Narellan - Second Opponent Katie Smith, Woy Woy - Third Opponent
CATCHWORDS:	NEGLIGENCE - injury at premises of a voluntary organisation providing services to the handicapped - State provided funds for the organisation's programme - claims against State, President of organisation and manager of organisation - whether to be struck out on pleading grounds - whether maintainable causes of action on facts - discussion of different bases for summary disposal - of unsatisfactory cause taken when applications for summary disposal heard - and of duties of care arguably owed by State, President and manager. D
CASES CITED:	Agar v Hyde (2000) 201 CLR 552; Brewer Brothers v Canada (1991) 8 CCLT (2d) 45; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1; Curran v Northern Ireland Co-operative Housing Association Ltd (1987) 1 AC 718; Day v William Hill (Park Lane) Ltd (1949) 1 KB 632; Dey v Victorian Railways Commissioners (1949) 78 CLR 62; Dougherty v Nationwide News Pty Ltd (1968) 88 WN (Pt 1) 146; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Laurance v Norreys (1890) LR 15 App Cas 210; Penthouse Publications Ltd v McWilliam (CA, 14 March 1991, unreported); Perre v Apand Pty Ltd (1999) 198 CLR 180; Peter Kent Developments Pty Ltd v Australia and New Zealand Banking Group Ltd (Hunt J, 6 May 1980, unreported); Reid v Rusk-Tompkins Group Pty Ltd (1990) 1 WLR 212; Tampion v Anderson (1973) VR 321; Van Oppen v Clerk to the Bedford Charity Trustees (1990) 1 WLR 235; Webster v Lampard (1993) 177 CLR 598.
DECISION:	(1) Extend time within which the claimant may apply for leave to appeal and grant leave to appeal; (2) Dismiss the appeal with costs as between the claimant and the first and second opponents and refuse leave to file an amended statement of claim between those parties; (3) Dismiss the appeal as between the claimant and the third opponent without any order as to costs and grant leave to file an amended statement of claim as between those parties, the amended statement of claim to be filed and served within 21 days from today's date.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40730/99
DC 920/98

PRIESTLEY JA

POWELL JA

GILES JA

Tuesday 23 October 2001


AGIUS v STATE OF NEW SOUTH WALES & ORS

JUDGMENT


1    PRIESTLEY JA: I agree with Giles JA.

2    POWELL JA: I agree with Giles JA.

3    GILES JA: Ms Sharon Agius, now aged about 32, has Downs Syndrome and is intellectually handicapped. After leaving school she participated in a day programme conducted by Liverpool and Districts Handicapped Association Inc (“the Association”), and for that purpose attended its premises at Lurnea. On 17 February 1995 she was injured when, in the kitchen at the premises, she pulled onto herself an urn containing boiling water.

4    Through a tutor, on 13 February 1998 Ms Agius brought proceedings in the District Court against the Association, the State of New South Wales (“the State”), Mr Terry Kesby-Smith and Mr Michael Pearce. At the time of the injury Mr Kesby-Smith was the President of the Association and Mr Pearce was its manager. Mr Kesby-Smith was a member of its management committee. There was conflicting material on whether Mr Pearce was a member of its management committee. Ms Agius’ statement of claim pleaded causes of action in negligence against each of the defendants.

5    The Association went into liquidation, and Ms Agius applied for leave to discontinue the proceedings against it. Each of the State, Mr Kesby-Smith and Mr Pearce applied for summary disposal of the proceedings against it and him. Ms Agius applied for leave to amend her statement of claim as against these three defendants. All applications came before Freeman DCJ on 20 August 1999.

6    There was no opposition to the grant of leave to discontinue as against the Association, and leave was granted on 20 August 1999. The proposed amendments varied the pleading of the causes of action in negligence against the remaining defendants and added a cause of action against the State under the Fair Trading Act 1987. The variations do not seem to have been controversial, but the addition of the cause of action was opposed on the ground that the added cause of action would also be subject to summary disposal. In reasons given on 27 August 1999 Freeman DCJ held that the causes of action as originally pleaded and as they would be varied and added to were and would be unmaintainable. He refused leave to amend the statement of claim and made orders summarily disposing of the proceedings against the three defendants.

7    On 23 September 1999 Ms Agius filed a notice of appeal against his Honour’s adverse decisions. The appeal was incompetent, as leave to appeal was required. By a summons filed on 24 March 2000 Ms Agius applied for leave to appeal and any necessary extension of the time for making the application. The application was heard with full argument as if an appeal, so that if an extension of time and leave to appeal were granted it would not be necessary to undertake a further hearing. The application was heard in part on 22 November 2000, but could not be concluded on that day. All concerned could not be gathered together again until 10 July 2001, when the hearing of the application was completed.

8    Any appeal against the decision refusing leave to amend the statement of claim by adding the cause of action under the Fair Trading Act was abandoned. Extension of time and leave to appeal were not really in issue, and the application in those respects should be granted. The substantive question in the hearing was whether there were maintainable causes of action in negligence against the respective three defendants, so that there should not have been the summary disposal of the proceedings. The hearing proceeded by regard to the statement of claim as if amended by the variations to the causes of action in negligence.

9    It was common ground in the appeal that whether there were maintainable causes of action in negligence was to be approached in the manner explained in, for example, Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-30 and Webster v Lampard (1993) 177 CLR 598 at 602-3, in short that the power of summary disposal should be exercised only with exceptional caution and where it is clear that there is no real question to be tried.

10    I will hereafter refer to Ms Agius as the claimant, to the State as the first opponent, to Mr Kesby-Smith as the second opponent, and to Mr Pearce as the third opponent.

The pleaded causes of action

11    I take the pleading of the causes of action in negligence against the three opponents from the proposed amended statement of claim. I include the pleading of the cause of action in negligence against the Association, necessarily incorporated in part into the pleading of those causes of action.
“The Plaintiff pleads her cause of action as follows:

1. The First Defendant is an incorporated body, liable to be sued in its corporate name and style.
2. The Second Defendant is sued pursuant to Section 5 of the Crown Proceedings Act 1988.
3. The Third Defendant was at all material times the President of the First Defendant and a member of the management committee of the First Defendant.
4. The Fourth Defendant was at all material times the Manager of the First Defendant and a member of the management committee of the first Defendant.

A. CLAIM AGAINST THE FIRST DEFENDANT
5. At all relevant times the First Defendant was the occupier of premises at 30 Hillview Parade, Lurnea.
6. At all relevant times the First Defendant had the care, control and the management of the said premises upon which it conducted and provided facilities for intellectually handicapped persons such as the Plaintiff.
7. On 17 February 1995 the Plaintiff, who is intellectually handicapped, was lawfully upon the premises pursuant to a disability programme conducted by the First Defendant. As part of the programme the Plaintiff was required by the First Defendant to carry out certain duties in the kitchen. In the course of carrying out those duties the Plaintiff pulled an urn containing boiling water onto herself.
8. As a result the Plaintiff was injured.
PARTICULARS OF INJURIES
(i) Burns to her neck, face and chest;
(ii) Shock and sequelae.
9. As a result of her injuries the Plaintiff has suffered and will continue to suffer loss and damage.
PARTICULARS OF MONIES THE PLAINTIFF HAS PAID OR IS LIABLE TO PAY:
The Plaintiff has incurred expense for hospital, medical and other treatment detailed particulars of which will be supplied in due course.
PARTICULARS OF OTHER LOSSES SUSTAINED BY THE PLAINTIFF:
Detailed particulars of any other claim made by the Plaintiff, if any, will be particularised in due course.
10. The cause of the Plaintiff’s injury, loss and damage was the negligence of the First Defendant.
PARTICULARS OF NEGLIGENCE:
(i) Failing to warn the Plaintiff of the danger presented by the hot water urn;
(ii) Failing to adequately supervise the Plaintiff in the tasks she was required to perform in the kitchen.
(iii) Permitting a hot water urn to be freestanding in an area where handicapped people such as the Plaintiff carried out duties.
(iv) Failing to warn the Plaintiff not to touch the hot water urn;
(v) Failing to ensure the urn was free of hot water after use;
(vi) Exposing the Plaintiff to a risk of injury by allowing her, as part of her duties, to refill the urn.
(vii) Failing to secure the urn to prevent handicapped people such as the Plaintiff from pulling it onto themselves;
(viii) Placing a freestanding hot water urn on a bench near the sink exposing handicapped people such as the Plaintiff to a risk of injury from tipping the urn onto themselves.
(ix) Failing to obtain insurance as required by Section 44 of the Associations Incorporation Act 1984 and Regulation 13 of the Association’s [sic] Incorporation Regulation 1994.
B. CLAIM AGAINST THE SECOND DEFENDANT
11. The Plaintiff was a person under the care and control of the Second Defendant and as such the Second Defendant owed the Plaintiff a duty of care.
PARTICULARS
(i) By reason of the document entitled ‘Deed of Funding Agreement – Advance of Funds’ dated 5 December 1994, between the Minister of Community Services and the First Defendant (‘the agreement’).
(ii) By reason of the Disability Services Act (NSW) 1993.
12. Further and in the alternative the Second Defendant owed a duty of care to the Plaintiff to ensure the provision to her, to the maximum extent possible, of services and assistance by reason of the Plaintiff’s intellectual impairment.
13. Further and in the alternative the First Defendant operated under the auspices of the Second Defendant pursuant to the Agreement.
14. It was a condition of the Conditions of Funding to the Agreement that -
‘7.1 The organisation shall effect and maintain during the period of this Agreement the following:
(ii) A public liability policy of insurance in the sum of Five million dollars ($5,000,000.00) for any one occurrence.
(iv) such other insurances as would reasonably be expected to be required to give effect to the indemnities given under this Agreement.’
15. It was a further condition of the Conditions of Funding to the Agreement that -
‘7.2 At the same time as the annual audited financial statements are forwarded to the Area Manager, the organisation shall forward either a list of the insurance policies required to be maintained under this Agreement or a statement that the policies are the same as those forwarded the previous year. The list shall include, for each policy, the type of policy, the amount insured and the due date of the policy. The list or statement shall be signed by two principal office bearers of the organisation.’
16. At all material times the Second Defendant was aware, or ought to have been aware, that the First Defendant had not effected public liability or other insurance as required by Clause 7.1 of the conditions of funding to the Agreement.
17. At all material times the Second Defendant was aware or ought to have been aware that the First Defendant had not effected public liability insurance as required by Section 44 of the Associations Incorporation Act, 1984, the Regulation of the Associations Incorporation Regulation 1994.
18. The cause of the Plaintiff’s injury, loss and damage was the negligence of the Second Defendant.
PARTICULARS OF NEGLIGENCE

(i) Failed to ensure that the First Defendant had effected public liability or other insurance as required by the Conditions of Funding to the Agreement;
(ii) Failed to ensure the First Defendant had effected public liability insurance as required by Section 44 of the Associations Incorporation Act, 1984 and Regulation 13 of the Associations Incorporation Regulation 1994;
(iii) Failed to inspect the premises;
(iv) Failed to review, monitor and evaluate the performance of the First Defendant as to its compliance with the Disability Services Act (NSW) 1993;
(v) Failed to ensure the provision to the Plaintiff, by the First Defendant, to the maximum extent possible, of services and assistance by reason of the Plaintiff’s intellectual impairment.”

19. )
. ) [The cause of action under the Fair Trading Act was here
. ) set out]
. )
27. )

C. CLAIM AGAINST THE THIRD AND FOURTH DEFENDANTS

28. At all material times the Third and Fourth Defendants owed the Plaintiff a personal duty of care.
29. The cause of the Plaintiff’s injury, loss and damage was the negligence of the Third and Fourth Defendants.
PARTICULARS OF NEGLIGENCE:
The Plaintiff repeats the particulars in paragraph 10(i) –(ix).”

12    The pleading of the causes of action is clearly not a triumph of draftsmanship, and is at the least questionable in its adequacy. The claimant nonetheless did not proffer amendments which might improve it.

The basis of the opponents’ applications in the District Court


13    Each application was made by notice of motion. The first opponent sought orders that “[t]he proceedings be dismissed generally” and “[i]n the alternative the Statement of Claim be struck out”. The second opponent sought orders in the same terms. The third opponent sought an order “[t]hat the cause of action contained in the Statement of Claim … , insofar as alleges [sic] a cause of action against the Fourth Defendant be struck out”. None of the notices of motion stated the ground or grounds of the application, or referred to any affidavit or affidavits in support of the application.

14 The transcript of the hearing before Freeman DCJ was before us. At an early time the claimant asked that the opponents identify what rules of the District Court Rules each relied upon, and each of the opponents said that relief was sought under Pt 11A r 3 and in the alternative under Pt 9 r 17.

15    Part 11A r 3 provides -

“11A.3. Frivolity etc

(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

(a) no reasonable cause of action is disclosed,
(b) the proceedings are frivolous or vexatious, or
(c) the proceedings are an abuse of the process of the Court,
the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

(2) Evidence in support of an application for an order under subrule (1) shall be by affidavit unless the Court otherwise orders, and the provisions of Part 16 apply to any such application.”

16 Part 9 r 17 provides -

“9.17. Embarrassment etc
(1) Where a pleading:

(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading,
(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or
(c) is otherwise an abuse of the process of the Court,
the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out.
(2) The Court may receive evidence on the hearing of an application for an order under subrule (1).
(3) Where the Court makes an order under subrule (1) it may make such further order as to:

(a) subsequent steps in the proceedings being taken as though the matter so struck out had not been pleaded,
(b) granting time to any party to file amended documents,
(c) granting leave to a plaintiff to have judgment entered up after the striking out of grounds of defence, despite the effluxion of any time limited for entering up judgment,
(d) costs, and
(e) any other matter consequent on the order, as the Court thinks fit.”



17 Part 16 r 2(3) of the District Court rules requires that an applicant’s notice of motion “state concisely the grounds on which the order is sought, or refer to the affidavit in which those grounds are contained”.

18    All of the claimant and the opponents had an affidavit or affidavits. Putting aside the discontinuance as against the Association, the claimant had an affidavit of Mr John Boyd sworn 12 March 1999; the first opponent had an affidavit of Ms Jacqueline Ford affirmed 22 February 1999; the second opponent had affidavits of Ms Beverley Foster sworn 8 July 1999 and Mr Kesby-Smith sworn 9 July 1999; and the third opponent had affidavits of Ms Katie Smith and Mr Pearce affirmed 28 February 1999. Freeman DCJ read all the affidavits. He was told that there were some objections to the affidavits, but the objections were not properly identified or the subject of rulings. It will be necessary to return to this.

19    It was plain enough that all the applications were being heard together, although there was no order to that effect, but no attention was given to what evidence was evidence in each application. Before us it was agreed -
“ … that before his Honour each of the parties accepted that his Honour could deal with the material in all of the affidavit material before him regardless of what party produced that particular affidavit evidence. So in other words evidence in any affidavit was evidence in relation to the totality of the proceedings.”

The agreement was later qualified to the extent that the first opponent maintained that the affidavit of Mr Pearce was not in evidence in its application, a matter to which it will also be necessary to return.


20    In the course of his reasons Freeman DCJ said that neither the existing statement of claim nor the proposed amended statement of claim disclosed a cause of action against the first opponent, but did not then pronounce an order; said that the statement of claim against the second opponent was deficient in that it did not disclose a cause of action and ordered that the statement of claim against him be struck out; and in relation to the third opponent said that the pleadings as they stood did not disclose a reasonable cause of action and ordered that the statement of claim against him be struck out. After some further remarks, his Honour said, “The claim [sic] as against all of the defendants are dismissed”.

21 This left unclear the basis on which his Honour acted. It seems his Honour had in mind either Pt 11A r 3(1)(a) or Pt 9 r 17(1)(a), but he initially used the language of striking out appropriate to the latter and then used the language of dismissal appropriate to the former. Further, it is not clear whether his Honour paid regard to the evidence or, if he did, what evidence he paid regard to.

22    No doubt the pressures of a busy applications list contributed to the way in which the hearing of the applications proceeded. It must be said, however, that it is unfortunate that his Honour did not ensure that the evidentiary and procedural position was clear, and that counsel did not to take objections and seek evidentiary and procedural rulings to the same end. This left difficulties in the appeal which should not have impeded decision of the substantive question.

23    The unsatisfactory course of the hearing of the applications in the District Court is more than formal.

24 Although evidence may be received on an application under either Pt 11A r 3 or Pt 9 r 17 in relation to disclosure of a reasonable cause of action, and possibly on other of the grounds in the relevant rules, an order may be made simply on an examination of the pleading. The application may be on the basis that the pleaded facts can not give rise to a good cause of action, without regard to evidence (eg Tampion v Anderson (1973) VR 321; Penthouse Publications Ltd v McWilliam (CA, 14 March 1991, unreported)): this is like the old procedure on demurrer. The application may be on a like basis, but with evidence to explain the pleading or demonstrate a pleading fault (eg Day v William Hill (Park Lane) Ltd (1949) 1 KB 632 (affidavit annexing documents referred to in the pleading); Dougherty v Nationwide News Pty Ltd (1968) 88 WN (Pt 1) 146 (affidavit to show variance between pleaded and published defamatory matter)): this adds to the old procedure on demurrer. Or the application may be on the basis that the evidence shows that the pleaded cause of action, although on its face good, must fail on the facts or is otherwise an abuse of process (eg Laurance v Norreys (1890) LR 15 App Cas 210 (affidavits showing that “the story told in the pleadings is a myth, which has grown with the progress of the litigation, and has no substantial foundation” (at 220); Tampion v Anderson (so far as an affidavit was received explaining procedures in an inquiry relevant to immunity from suit): see generally Peter Kent Developments Pty Ltd v Australia and New Zealand Banking Group Ltd (Hunt J, 6 May 1980, unreported)).

25 In the first two situations, to which Pt 9 r 17 is particularly pertinent, an action may be bound to fail because the pleading shows its deficiency, perhaps with evidence to explain the pleadings; that is why the appropriate order is that the pleading be struck out, and there may be leave to file an amended pleading. In the third situation, to which Pt 11A r 3 is pertinent, an action may be shown by evidence to be bound to fail or otherwise an abuse of process, although the pleading is on its face satisfactory; that is why the appropriate order is that the proceedings be stayed or dismissed.

26    If for no other reason than the different consequences, it is necessary to be clear as to the basis of an application for summary disposal. The necessity goes further, since rulings on evidence (or in the present case absence of rulings on evidence) may be of no consequence if the application is made on pleading grounds. And there may be a question whether, in the manner the application proceeds, regard is had to the evidence not only for its destructive effect on the plaintiff’s cause of action, but to make up for deficiencies in the pleading by establishing what the pleader failed properly to allege, or to found an application for leave to file an amended pleading.

27    The unsatisfactory course of the hearing of the application in the present case, and the reasons of Freeman DCJ, left uncertain whether the summary disposal was because the pleading in the statement of claim, even as proposed to be amended, was deficient, or because the respective actions were bound to fail on the facts. It left uncertain what evidence in the affidavits had been before the court for the purposes of each application. And it left uncertain what regard had been had to evidence in the affidavits either for its destructive effect on the causes of action or to make up for deficiencies in the pleadings. There is no suggestion in the reasons of Freeman DCJ of any question of leave to file an amended pleading other than the statement of claim as proposed to be amended.

The causes of action as pleadings


28    In the first instance I will consider whether the pleading supports the causes of action in negligence, assuming the pleaded facts to be correct and without regard to the evidence. If it does not, as to one or more of the opponents, unless remedial regard can be had to evidence properly before Freeman DCJ the pleading should be struck out as against that opponent or those opponents. The question of filing an amended statement of claim will then arise.

29 This question must be addressed with the following rules in Pt 9 of the District Court Rules in mind. First, r 3(1) requires that “a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which he relies, but not the evidence by which those facts are to be proved”. Secondly, by r 5 where any document is referred to in a pleading the effect of the document shall be stated so far as material, but not its precise terms unless those terms are material. Thirdly, by r 9(1) a plaintiff “shall in his originating process, plead specifically any matter which if not pleaded specifically, may take the defendant by surprise”. Fourthly, by r 13 “A party may by his pleading raise any point of law”. Fifthly, by r 19(1) a party pleading “shall give such particulars of any claim, defence or other matter pleaded by him as are necessary to enable the opposite party to identify the case he is required by the pleading to meet”.

30    It is convenient first to go to the causes of action against the second and third opponents, which are pleaded jointly and very briefly.

31    Paragraph 29 of the proposed amended statement of claim, which I will hereafter refer to simply as the statement of claim, asserts breach of a duty of care and causation of loss. It is necessary to find the duty of care elsewhere.

32    Paragraph 28 is a bald allegation that the second and third opponents “owed [the claimant] a personal duty of care”. It gives no content to the duty of care.

33 The assertion of a duty of care offends Pt 9 r 3(1), since it is not a statement of a material fact but a conclusion of law. It is not uncommon to find such an assertion in a pleading, and the assertion may be useful to understand the case being made by the plaintiff, but the assertion is not a substitute for a statement of the material facts giving rise to the duty of care. Even if, which I doubt, it can be regarded as the raising of a point of law within Pt 9 r 13, it is still necessary to have the statement of material facts.

34    Further, a duty of care may be to protect from physical harm or to protect from economic harm, or it may have some other content. Different considerations will arise according to the nature of the duty of care. Perhaps it was intended that the nature of the duty of care be taken from the particulars of negligence, but they indiscriminately cover physical injury and, by particular (ix) although without any explanation of how the failure to obtain insurance caused loss, economic loss. This is not a substitute for giving content to the allegation of a duty of care.

35    The pleading as against the second and third opponents is at the least embarrassing, and should be struck out, because it leaves obscure the facts said to give rise to the duty of care and the content of the duty of care.

36    On a more benevolent view than I am prepared to take, the facts said to give rise to the duty of care are to be and can be found in the preceding paragraphs of the statement of claim. The only facts in the statement of claim which could underlie the allegation of a duty of care are that the claimant was injured on the Association’s premises in the course of the programme (paras 5, 6, 7 and 8) plus, as regard the second opponent, that he was the president of the Association and a member of its management committee (para 3) and, as regards the third opponent, that he was the manager of the Association and a member of its management committee (paragraph 4).

37    So far as concerns the second opponent, on this approach whether the pleading fails to disclose a reasonable cause of action comes down to whether, simply because he was the president of the Association and a member of its management committee, he owed a duty of care to the claimant as a participant at the Association’s premises in the programme conducted by the Association. So far as concerns the third opponent, on this approach whether the pleading fails to disclose a reasonable cause of action comes down to whether, simply because he was the manager of the Association and a member of its management committee, the third opponent owed a duty of care to the claimant as a participant at the Association’s premises in the programme conducted by the Association.

38    Nothing is pleaded as to the duties and responsibilities of the President, the manager or the members of the management committee of the Association. In particular, nothing is pleaded as to their knowledge of the state of the kitchen at the Association’s premises, the performance of tasks in the kitchen, or the insurance held by the Association, they being the subjects of the particulars of negligence, or as to duties and responsibilities in those regards. Persons holding the offices and positions in question do not necessarily have either supervisory or hands-on roles extending to such matters, and do not without more themselves owe duties of care to those to whom the Association might owe a duty of care. In my opinion, even on the benevolent view the statement of claim does not disclose reasonable causes of action against the second and third opponents. For that independent reason the pleading as against the second and third opponents should be struck out.

39    I go then to the cause of action against the first opponent.

40    Paragraph 18 of the statement of claim alleges negligence on the part of the first opponent and causation of loss, but again the duty of care must be found elsewhere. The pleading asserts a duty of care in para 11, again without giving content to it. Regard to the negligence particularised under para 18 confuses rather than clarifies. Particulars (i) and (ii) appear to be directed to economic loss. Particulars (iii) and (iv) appear to be directed to physical injury, although involving unexpressed causal steps. Particular (v) is so general as to be meaningless in the context of the proceedings.

41    In para 12 of the statement of claim another duty of care is asserted “further and in the alternative”, a more specific duty of care directed to the negligence alleged in particular (v) under para 18. It has the meaningless generality already mentioned.

42 The following paragraphs 13 to 17 appear to be the material facts from which it is alleged another duty of care is said to arise, again “further and in the alternative”, although whether the paragraphs are free-standing or whether in some manner they, or at least paras 14-17, are intended to be associated with the duties of care alleged in paras 11 and 12 is not clear. Paragraphs 14 and 15 offend Pt 9 r 5, but that is of less significance. The paragraphs are directed to the negligence alleged in particulars (i) and (ii) under para 18.

43    Again, the pleading as against the first opponent is at the least embarrassing, and should be struck out for that reason. The assertion of a duty of care in para 11 leaves obscure the facts said to give rise to the duty of care and does not give content to the duty of care. The duty of care asserted in para 12 and the associated allegation of negligence lack meaning and have no apparent relationship with the occasion for and circumstances in which the claimant suffered her injury. If paragraphs 13 to 17 are intended to give rise to a duty of care, they rest upon the allegation that the Association “operated under the auspices of” the first opponent pursuant to the identified agreement, but what that means and therefore how the first opponent’s knowledge that insurance was not held thereby gives rise to a duty of care is left obscure; further, whatever the duty of care is can relate only to some of the particulars of negligence. These resounding inadequacies are compounded by the joining phrase “further and in the alternative”, the intended effect of which is again obscure – does it in some way accumulate the duties of care? In my opinion the first opponent could not be expected to understand the case or cases intended to be made against it.

44    This position is not altered by the evidence of further particulars by letter.

45    Particulars were first provided by a letter from the claimant’s solicitors to the first opponent’s solicitors dated 25 May 1998.

46    As to para 11, the requests and answers were -

1. How is it alleged that the plaintiff was a person under the control of the second defendant?
The Plaintiff is a person under the care and control of the Second Defendant by reason of the Deed of Funding made on 9 December 1993 between the Minister of Community Services and the First Defendant.
2 How is it alleged that the second defendant owes the plaintiff a duty of care?
(a) The consequences of the First Defendant’s act of negligence as set out in the Statement of Claim were foreseeable to the Second Defendant;
(b) There was a relationship of proximity between the second Defendant and the Plaintiff.

3. Is it alleged that the second defendant had direct management over the care and control of the plaintiff?
No.



47    These particulars only made the position more unsatisfactory. How could the Deed of Funding dated 9 December 1993 – a different document from the Deed of Funding Agreement dated 5 December 1994 particularised under para 11 of the statement of claim - mean that the claimant was under the care and control of the first opponent? What consequences were foreseeable? Was foreseeability alone said to give rise to a duty of care, and what relationship did it have to proximity? What constituted the relationship of proximity?

48    As to para 12, the requests and answers were -
“1. How is it alleged that the second defendant owed a duty of care to the plaintiff to ensure the provision of her services and assistance by reason of the plaintiff’s intellectual impairment?
The Second Defendant was aware that the First Defendant had the care and control and management of the subject premises upon which the First Defendant conducted and provided facilities for intellectually handicapped persons such as the Plaintiff. Given the proximity of the relationship between the Second Defendant and the First Defendant it is alleged the duty of care as set out in paragraph 12 was owed by the Second Defendant to the Plaintiff.
2. What is meant by ‘the maximum extent possible’? Please specify.
Services and assistance of the highest quality. ”

49    These particulars were all but meaningless.

50    As to paras 13 to 17, it was asserted that the first opponent was aware or ought to have been aware of the absence of public liability insurance because it “should have insisted upon Certificates of Insurance being provided and should have had in place a system to ensure policies of insurance were in place from time to time”. This appears to have abandoned actual knowledge; as to what ought to have been known, that the first opponent should have acted as asserted begs the question.

51    Then in a letter to the first opponent’s solicitors dated 23 April 1999 the claimant’s solicitors relevantly said -
“(b) With respect to paragraph 11, answer 2, in addition to our previous answer, the Department by virtue of the relevant legislation, namely, the Disability Services Act 1993 (‘the Act’) and the Deed, was in a position of trustee with respect to the Plaintiff and it owed to the Plaintiff, a duty to ensure that the insurance provisions, set out in paragraph 7 of the Conditions of funding were properly effected.

Paragraph 7.1(ii) of the Conditions of Funding required the First Defendant to effect and maintain a public liability policy of insurance in the sum of $5,000,000.00 for any one occurrence and paragraph 7(iv) required the First defendant to effect and maintain ‘such other insurances as would reasonably be expected to be required to give the effect to the indemnities given under this agreement’. The First Defendant did not effect and maintain such policies and it is alleged the Department breached its duty to the Plaintiff in not ensuring that these conditions were complied with. Further, paragraph 8 of the Conditions of Funding provides that funds received under the agreement are held in trust and released only when due to be paid in relation to activity or activities for which the funds were advanced. There are also provisions within the conditions pertaining to the accountability to the Department for the use of funds and generally in relation to the conduct of recipient of the funds.

The Act expressly provides that the Minister has the function of facilitating the provision of designated services to persons in the target group, which in the present case comprises the Plaintiff. The Minister has expressly noted that the Department took over the responsibility of the First Defendant.
It is intended to amend the Statement of Claim to plead these matters.”
52    The statement of claim was not amended as foreshadowed, but it is plain beyond doubt that the Department (meaning the Department of Community Services, hereafter “the Department”) was not “in a position of trustee with respect to the Plaintiff” and the particulars do not otherwise put forward facts said to give rise to the duty of care or intelligibly give it content. It should be said that the claimant did not assert any kind of trust in the hearing of the appeal.

The evidence


53    Before considering the causes of action on the facts, it is necessary to establish what evidence may be taken into account.

54    Whatever may have been the position before Freeman DCJ, on appeal the second and third opponents did not object to any of the evidence in the affidavits identified earlier in these reasons. The first opponent said that it maintained objections it had taken or, had the hearing proceeded otherwise, would have taken before Freeman DCJ, and identified the material the subject of the objections. As to the second sentence of para 2 of the affidavit of Mr Boyd and annexures “B” to “D” and “F” to “K” and “M” to that affidavit, the objection was that the evidence was not relevant to the cause of action against the first opponent. As to the affidavit of Mr Pearce, the objection was not really an objection but the contention that the affidavit was not in evidence in the first opponent’s application.

55    The claimant did not press on appeal annexure M to the affidavit of Mr Boyd, apparently on the ground that it added nothing to the Deed of Funding dated 5 December 1994. That document was in evidence, and I will hereafter refer to it as the Agreement. It became common ground that it was unnecessary to determine the other objections as rulings on evidence, in that the relevance of the material the subject of the objections would arise and be established or otherwise in the course of determining whether the cause of action against the first opponent was maintainable. I will identify that material a little later in these reasons. It should be admitted in order that the arguments in reliance on it can be determined.

56    The position of the affidavit of Mr Pearce, as might be expected from what I have already said about the course of the hearing below, was marked by confusion. I think it will be helpful if I first indicate its content so far as relevant to the first opponent’s objection.

57    Mr Pearce said that he was employed as the manager of the Association, and was responsible for the day to day running of “the Centre” answering to the management committee. He sketched the way the Association provided programmes, with funding from the Commonwealth and then from the State. There were no details of Mr Pearce’s duties and responsibilities or of the programmes and their funding.

58    Most of the affidavit was concerned with insurance, to which the nature of the programmes was material. Prior to 1992 the programme involved the Association operating as a sheltered workshop, so that those participating in the programme were paid and workers’ compensation insurance was taken out. In 1992 the programme changed “from an industrial setting to one which approximated a home”, but “[w]e retained workers compensation and public liability insurance because we operated employment and training”. In mid-1994 the programme changed to provision of daily living skills and training in transport and communications.

59    What then happened was described by Mr Pearce -

“6 Shortly thereafter (mid 1994) insurance became due. This was the usual public liability and workers compensation employment. The [sic] was, I am informed raised in the Management Committee meetings and I was instructed to ring all the major insurance companies to obtain the best insurance. I was aware that I had to keep details of the history of efforts made. I was further instructed to keep the Department of Community Services informed.
…
10 When the insurance became due insurance for the building, contents and motor vehicles were maintained. However, the workers compensation and public liability insurance could not be contained [sic]. This was caused by the role of the attendees for clients changed [sic]. The clients could not work as they were not covered by workers compensation. They were not visitors to the premises and therefore public liability insurance could not cover them.
11 Pursuant to the directions of the management Committee, I contacted GIO, Zurich, MMI, NRMA, GRE Insurance, E McDonald Brokerages amongst others.
12 I reported back to the board of the Committee and advised of the difficulties with there being no insurance. I was also in contact with the District Officer concerned.”

60    It appeared in the appeal that the first opponent’s particular concern was with Mr Pearce’s statement, “I was further instructed to keep the Department of Community Services informed”, and his statement, “I was also in contact with the District Officer concerned”, apparently because it was considered that this provided evidence that the first opponent knew that the Association did not have public liability insurance (see paras 16 and 17 of the statement of claim). There was no evidence from anyone able to speak of the first opponent’s state of knowledge to the effect that the first opponent did not know that the Association did not have public liability insurance. It is not easy to see how, in the absence of such evidence, the first opponent could have had its application dealt with otherwise than on the basis of the pleaded knowledge: this appears to be a manifestation of the lack of clarity of the basis of the application for summary disposal.

61    Be that as it may, the affidavit of Mr Pearce was amongst the affidavits read by Freeman DCJ, and only in the course of the first opponent’s submissions was this said -
“There’s an assumption here your Honour that public liability insurance would have covered the plaintiff’s injury. I don’t debate that issue your Honour. I’m prepared to assume it for the purposes of the exercise. The default of the Department I also am prepared to assume for the sake of the exercise, because it’s not been shown in any shape or form that the occasion had arisen for the Department to in fact know that the relevant insurance wasn’t held. All that can be shown was that the Department was not notified if the occasion for notification had arisen. It doesn’t follow from that that there is any evidence that the Department in fact knew that insurance was not effected. I note your Honour that in Mr Pearce’s affidavit for the fourth defendant there is a reference to what he says he told the department. I understand from my learned friend Ms Winfield [counsel for the third opponent] that affidavit is not read against my client. If it had been I would have taken objection to the form of the affidavit. ” (emphasis added)


62    This was a misapprehension of what Mr Pearce had said. He had not said that he had told the Department anything.

63    The claimant did not, by intervention or a later submission, contest the proposition in the emphasised portion of the passage set out above that the affidavit was not read against the first opponent. Neither of the second opponent and the third opponent contested that proposition. None of Freeman DCJ or any of the parties questioned what was meant by the proposition or what its consequences were.

64    Taken at face value, it was a nonsense proposition. The contest was between the claimant and the respective opponents. There was no contest between the first opponent and the third opponent, and no question of the third opponent reading an affidavit against the first opponent. The parties, and the Court, can not have taken what was said at face value. In the circumstances of the hearing, by the proposition that the affidavit was not read against the first opponent must have been meant that, as an exception to the unexpressed approach that all the applications were being heard together with the evidence in each evidence in the others, the evidence in Mr Pearce’s affidavit was not evidence in the first opponent’s application. This was underlined by the assertion that the first opponent would have taken objection to the form of the affidavit.

65    The claimant by her conduct accepted this position. In the result, therefore, the affidavit was not in evidence in the first opponent’s application. The claimant can not rely on the evidence of Mr Pearce against the first opponent.

66    I return to identify the material in Mr Boyd’s affidavit to which the first opponent objected as not relevant to the cause of action against it.

67    In the second sentence of para 2 of the affidavit Mr Boyd said that he annexed as annexure “A” a subpoena addressed to the Department. It called for production of documents and records described in a schedule. In para 3 of the affidavit Mr Boyd said that he annexed “copies of the following documents which were produced under subpoena by the Department of Community Services”, presumably the annexed subpoena, the copies of the documents being annexures “B” to “L”. Unless relied on to establish that the Department did not have particular documents or records described in the schedule, on the argument that production of the documents or records was called for but they were not produced, the second sentence of para 2 and annexure “A” were surplusage. The argument could not be put forward, because Mr Boyd did not say that the documents copies of which were annexure “B” to “L” were the only documents produced. It was not put forward. No more need be said of the second sentence of para 2: the argument over it was one of the many red herrings in the case.

68    Annexure “B” to the affidavit of Mr Boyd is a letter from the South West Sydney Area Office of the Department to the Registrar of the District Court dated 19 February 1996. It refers to a subpoena, presumably the subpoena already mentioned, and says that it encloses “some of the documents requested regarding this matter” being ”all the documents held at the South West Sydney Area Office of the NSW Department of Community Services up until and including 19 February 1996”. It goes on to state a number of matters about the Association’s programme(s) and their funding. This did not feature in the claimant’s submissions in the appeal, and the matters stated about the Association’s programmes and their funding was dealt with in other of the documents objected to and in part in other affidavits. Separate attention to Annexure “B” is unnecessary.

69    Annexure “C” to the affidavit of Mr Boyd is a document headed “Report re the auspice of LADHA”. “LADHA” is an acronym for the Association. The document is undated, but from internal references was brought into existence after 7 December 1995. The claimant relied on it as evidence that the Department had investigated the Association’s conduct of the funded programme, had undertaken what was described as an “interim auspice”, and after the liquidation of the Association had undertaken the provision of a programme itself and had attempted to place those participating in the programme with another disability care association. Other of the material in Mr Boyd’s affidavit to which the first opponent objected was of the same nature. It is useful to set out what the report stated as “Background” and under the heading “Current” -
“In 1993 the Department took over the responsibility of Liverpool and District Handicapped Association (LADHA) from the Commonwealth Government.
While under the Commonwealth funding LADHA received annual funding of approximately $62,707 per annum, this was supplemented by contract work which was performed by the consumers and staff. They also had a second hand clothing bin contract which provided approximately $600 per month and held fund raising functions.
With the transfer to this Department and under the Disability Services Act they could no longer operate as work programme and were funded as a day programme.
The programme was involved in a number of Ministerials and Briefing Notes concerning injuries to a consumer and the failure of the manager and the committee to prepare a transition plan. There were a number of concerns over the management practices of the programme and the lack of activities being provided.
In September 1995 the Minister approved South West Sydney Area Office as the interim auspice for a period of six months while a review of the service be completed. During the review the committee of LADHA met and a decision was made to place LADHA into liquidation as from 7th December 1995. The review found that there were a number of discrepancies in procedures for finances, recruitment of staff, management of staff and consumers and that there was no provision of meaningful activities for the consumers. (see attached full report)
The decision to place LADHA into liquidation at that time of the year presented the Department with the difficulty of negotiating with other organisation [sic] over the Xmas break. The Department continued to provide a day programme for the consumers up until Xmas with the secondment of staff from group homes.
There are eight consumers attending the programme five of these consumers have ageing parents, two come from group homes and a third from a sole parent home.
CURRENT
Expressions of interest were sought from all organisations in the South West Sydney Area. Two expressions have been received from The Junction and The Centre (see attached). A number of calls were received and the concern from those organisations was the small amount of funding attached to the programme, $7,838 per consumer is well short of the funds provided for post school options and other day programmes.
The Department will continue to provide a day programme with the use of seconded staff from group homes and the rental of premises. This situation is seen as the most practical for the interim, however it is most distressing to the consumers and their families as there is no long term commitment or consistency for them.”



70    The report went on to consider “auspicing options” for the future care of the persons who had participated in the Association’s programme.

71    The claimant said, in short, that, if the first opponent (through the Department) acted in the manner described in late 1995, it could have so acted prior to her injury, and should have done so because of the lack of public liability insurance.

72    Annexure “D” to the affidavit of Mr Boyd is an unsigned submission by the Director-General of the Department to the Minister, recommending formal approval to “The Junction to auspice the day programme previously operated by LADHA Inc” and increased funding for those attending the programme. From internal references, it post-dated December 1995. It gave a brief outline of earlier “auspicing” by the Department following the liquidation of the Association. The claimant relied on it in the same manner as she relied on annexure “C”.

73    Annexure “F” to the affidavit of Mr Boyd is a letter from the Department to the Association (Mr Pearce) dated 21 December 1994. It seems to respond to a request for funding “to assist with the development of your Transition Plan”. It purports to explain why only $1,000 could be allocated. There is no apparent relevance to the claimant’s case, and it was not relied on in the claimant’s submissions on appeal.

74    Annexure “G” to the affidavit of Mr Boyd is a submission by the Director-General of the Department to the Minister, approved by the Minister, dated 21 September 1995. It reports that the management committee of the Association “have failed to demonstrate competent management practices in the area of consumer service delivery and financial management”, giving reasons, and recommends that funding to the Association be suspended “pending an indepth [sic] review of the organisation and the issues raised in this Briefing Note” and that a named officer of the Department “act as an Interim Auspice of funds for a period of up to six months, to allow service provision to consumers to continue”. The reasons given include that the claimant suffered injury and the Association did not have insurance, although the submission does not indicate prior knowledge of the lack of insurance. It is said that on a number of occasions after the injury to the claimant an officer of the Department spoke to the second opponent, to the third opponent or at management committee meetings “about the need to expedite insurance coverage”, but that despite these efforts public liability insurance was not obtained until May 1995, some three months after the injury. The claimant relied on this as evidence of what the first opponent (through the Department) could have done prior to her injury and, in the reasons, of the third opponent’s poor performance as manager.

75    Annexure “H” to the affidavit of Mr Boyd is a letter from the Department to the second opponent dated 11 October 1995, clearly enough consequent on annexure “G”. It asserts “issues in relation to LADHA and its service delivery”, including that it did not have public liability insurance at the time of the claimant’s injury, and says that funding will be suspended pending an in depth review of the Association and “An interim auspice will be appointed to continue service provision pending the outcome of the evaluation”. Included in the brief was that the person conducting the review would act as the third opponent’s “supervisor” during the period of review. The claimant relied on this in the same manner as she relied on annexure “G”.

76    Annexure “I” to the affidavit of Mr Boyd is a letter from the Department to the second opponent dated 7 November 1995. It purports to clarify the role of the South West Sydney Area Office of the Department “as an interim auspice of LADHA”. It outlines the “brief” of the person conducting the review of the Association earlier notified, making the point that it goes beyond the “issues” in the letter of 11 October 1995. The claimant’s reliance on it was of the same nature as her reliance on annexure “G”.

77    Annexure “J” to the affidavit of Mr Boyd is a briefing note from the Director-General of the Department to the Minister dated 24(?) November 1995. It includes that the second opponent had informed the Department “that services will cease at LADHA from 7 December 1995”, and that the Department had arranged for “the programme” to continue operating for a period at another disability care centre. It suggests discussions with other disability care bodies to see if they can “provide a service” to those attending the Association’s programme. The claimant’s reliance on the briefing note was of the same nature as her reliance on annexure “G”.

78    Annexure “K” to the affidavit of Mr Boyd is a letter to the second opponent dated 21 November 1995, in which the Department noted the impending cessation of services and asks that he tell “the parents and carers of the consumers who currently attend LADHA “of the endeavours to arrange continuance of care. The claimant relied on the letter as evidence that the first opponent (through the Department) could have asked that the parents and carers of those participating in the Association’s programme be told of the absence of public liability insurance, and suggested that because it saw fit in the interests of those attending the Association’s programme to make the request in the letter of 21 November 1995 it should have seen fit to make that request. The reliance was more than curious. The claimant’s mother (her tutor in the proceedings until possible conflict of interest was pointed out by the Court) was a member of the management committee. She must have known what there was to know about the absence of public liability insurance.

The causes of action on the facts


79    In other circumstances regard would be had to the evidence to determine whether, although the pleading of the causes of action is satisfactory, the claimant’s case against the respective opponents is bound to fail or is otherwise an abuse of process. The pleading of the causes of action is not satisfactory. The focus then moves to filing an amended statement of claim. It was clearly in contest, both before Freeman DCJ and on appeal, whether the claimant’s causes of action as she sought to put them forward were maintainable on the facts (and I repeat, on the approach appropriate to a question of summary disposal). On the question of filing an amended statement of claim, if they are not, leave should not be given because it would be pointless.

80    As general evidence, the evidence included minutes of an Association meeting, apparently of the management committee, on 22 December 1995. The meeting “assessed” the occasion on which the claimant was injured. Reports were received from the third opponent and from another employee of the Association, a development officer on duty at the time. It is evident that the claimant was cleaning the kitchen, as she had often done before, without supervision, and it was concluded that she was probably moving the urn to wipe under it: it was said, “It is not known why she did this in this incident and not at other times”. Recommendations were recorded about “changes to supervision practices and other safety issues at the Centre”, including that the urn was no longer to be used.

81    It is convenient to go first to the cause of action against the second opponent. I have described why, even on a benevolent view of the pleadings, no reasonable cause of action is disclosed against the second opponent. No evidence really added to or altered the simple position that he was the President of the Association and a member of its management committee.

82    The constitution of the Association relevantly provided that the management committee should “control and manage the affairs of the association”, but the President had no special decision-making or executive powers. The unchallenged evidence was that the day to day management of the Association and the implementation of policy decisions of the management committee was the responsibility of “the permanent management staff”. The second opponent’s evidence was that he “had never assumed the responsibility for the direct day-to-day supervision of persons utilising the facility”, and -

“6. During my tenure on the Committee of the First Defendant it had always been the policy of the Committee to maintain full public liability and workers compensation insurance. Such direction had been given to the permanent manager, Michael Pearce. The Manager was responsible for carrying out the administration of the First Defendant and implementing the policies of the Committee.”


83    This was reflected in the evidence of the third opponent. He said that the management committee “set policy, guidelines and anything that did not form the description of the day to day running was referred to them”. The evidence in the third opponent’s affidavit earlier set out showed instructions from the management committee to obtain insurance and reporting of difficulties, but nothing imposing particular responsibility on the second opponent as President and member of the management committee.

84    Even with regard to the evidence, I consider that there is not an arguable case for the cause of action against the second opponent.

85 I go then to the cause of action against the third opponent. It should be noted that one of the reasons for Freeman DCJ’s conclusion was that the effect of s 3 of the Employees Liability Act 1991 was that, as an employee of the Association, the third opponent “is not personally liable for acts carried out within his statement of duties”. The third opponent sought at times to support reliance on this provision, although attributing to it different significance which I confess I found difficult to appreciate, but it is insupportable. The provision does not cut down an employee’s liability to someone other than his employer.

86    Putting that aside, the evidence did expose more than had been pleaded. One matter appears to have been, although it is not entirely clear, that the third opponent was not in fact a member of the management committee. I do not think it matters for present purposes.

87    The evidence suggested, including from the third opponent’s own affidavit, an arguable case that in the third opponent’s role as manager he should have foreseen injury if the kitchen facilities at the premises were such that one of the participants in the Association’s programme could tip the urn over, that the system of supervision of the participants did not guard against such a happening, and that the third opponent was responsible for the safe configuration of the kitchen facilities and an appropriate system of supervision. The third opponent was responsible for the day to day running of “the Centre”; there was criticism of the third opponent’s performance as manager; and the minutes of the meeting of 22 December 1995 recorded recommended changes to supervision practices and safety issues, including that the urn was no longer to be used. In particular, the submission annexure “G” to the affidavit of Mr Boyd was critical of the third opponent, saying that he had “little or minimal involvement with the consumers and their programs” and other things including that he should have been active in the day to day conduct of the programme. That the world gets wiser as it gets older does not mean that it was not wise before, but at the arguable case level I do not think it can be said that a case of breach of a duty of care by the third opponent is untenable.

88    In my opinion, however, the evidence did not suggest an arguable case of breach of a duty of care by the third opponent in failing to arrange insurance. So far as the evidence showed, he tried to obtain insurance, but could not do so, and he kept the management committee informed. Insurance was obtained some three months after the claimant’s injury, but that does not mean that a duty of care was owed by the third opponent with the content of taking reasonable steps to obtain insurance, or that there was failure to take care.

89    Going finally to the cause of action against the first opponent, the case sought to be made against the first opponent as emerging, so far as can be seen, from the claimant’s submissions in the appeal was concerned with insurance. I say so far as can be seen because there was a regrettable lack of focus; at one point, it should be noted, it was said that the first opponent owed a duty of care with the content of inspecting the kitchen at the Association’s premises to ensure that it was safe. There is no basis at all for such a duty of care.

90    As to duty of care, the case went as follows -

(a) section 6 of the Disability Services Act 1993 (“the Act”) obliged the Minister to ensure that services to persons with disabilities were provided and funded;
(b) the Minister had agreed to provide funds to the Association pursuant to the Deed dated 5 December 1994 (“the Agreement”);
(c) the Agreement required the Association to get public liability insurance;
(d) the first opponent knew or ought to have known that the Association had not got public liability insurance; and as a conclusion of law from these facts
(e) the first opponent owed to the claimant a duty of care (i) to cause the Association to get public liability insurance or (ii) to put the programme conducted by the Association in the hands of a different disability care association or cause the claimant to be removed from the Association’s programme.


91 The duty of care in (e)(i) was taken up in the allegations of breach in particulars (i) and (ii) under para 18; none of the particulars was appropriate to the alternative duty of care in (e)(ii). Causation of loss was really not explained. I will assume as to (e)(i) a case on causation to the effect that the claimant had a good cause of action against the Association and would have obtained judgment against it, and by the breach was denied recovery from an insurer’s funds through the Association or from an insurer under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946. I will assume as to (e)(ii) a case as to causation to the effect that, had the programme conducted by the Association been put in the hands of a different disability care association or the claimant been removed from the Association’s programme, she would not have suffered the injury.

92    The facts in (a) to (d) above can arguably be found in paras 11 and 14 to 17 of the statement of claim. Assuming those facts, and cases as to causation of the kind I have described, is there a maintainable cause of action?

93    One of these duties of care was ostensibly a duty to protect the claimant from physical harm, by putting the programme conducted by the Association in the hands of a different disability care association or causing the claimant to be taken out of the Association’s programme. The other was a duty to protect her from economic loss, by causing the Association to get public liability insurance. There has been particular turbulence in establishing the approach to, or criteria for, finding a duty of care of the latter kind, see most recently Perre v Apand Pty Ltd (1999) 198 CLR 180. However, in my view the matters noted above can not give rise to either duty of care, and the case for the duties of care is so plainly untenable that the power of summary disposal should be exercised.

94 By s 6(1) of the Act -
“(1) It is the duty of the Minister in providing and funding designated services to persons in the target group, either directly to those persons or indirectly through other persons or bodies, to ensure that the services are provided and funded in conformity with the objects of this Act and the principles and applications of principles set out in Schedule 1.”

95    “Designated service” is defined to mean “a service that is provided or funded by the Minister and that is prescribed by the regulations, or that belongs to a class of services so prescribed, for the purposes of this definition”. On the claimant’s case there was a service funded by the Minister, it seems the conduct of the day care programme by the Association funded pursuant to the Agreement. There was raised in the appeal whether the service was prescribed by the regulations. The question was not satisfactorily answered. I will assume, in favour of the claimant, that it was.

96 Sections 6(2) and (3) of the Act provide that the section does not apply to certain designated services, essentially to allow for a period of transition following the commencement of the Act and in particular for the transfer of services previously provided by the Commonwealth the responsibility for which was transferred to the State. There was raised in the appeal whether the designated service relevant to the claimant was within these exclusions. The question was also not satisfactorily answered. I will assume, in favour of the claimant, that the exclusions are of no significance to her cause of action.

97 By s 5 of the Act a person is in the target group if the person has a disability satisfying certain criteria. I do not think it was in dispute that the claimant was a person in the target group.

98 The objects of the Act are set out in s 3. They are in general terms, in substance that services should be provided whereby persons with disabilities can achieve their maximum potential as members of the community and be integrated in and participate as members of the community. The principles and applications of principles in Schedule 1 are also in general terms, emphasising the human rights of persons with disabilities and that such persons should be assisted to function as members of the community and be appropriately recognised as such. It should be noted that, by s 25(1) of the Act, nothing in s 3 or Schedule 1 and no application of those provisions by the Act “give rise to, or can be taken into account, in any civil cause of action”.

99    By the Agreement the Department of Community Services (“the Department”) agreed to provide $62,707 to the Association “for the purpose of the individual projects through the funding programs detailed at Schedule A”. No individual project or projects was or were described in Schedule A or elsewhere in the Agreement, and from Schedule A it appeared that the funds were provided to the Association for its general purposes. Schedule A did show that the funding was to be for one year, and from the body of the Agreement the year was the period from 1 July 1994 to 30 June 1995.

100    Apparently attached to the Agreement, although purporting to be a schedule to an agreement between the Department and the Association dated 28 November 1994, was a “Performance Agreement” which included a description of a living skills programme provided or to be provided by the Association. On the claimant’s case, there was a funding of the day care programme conducted by the Association. Again in favour of the claimant, I will assume this to be so.

101    By cl 3 of the Agreement the Association agreed that “funded projects will be provided in accordance with the Department’s Conditions of Funding” and with certain other documents. The Conditions of Funding provided in cl 6 for comprehensive indemnities by the Association in favour of the first opponent for physical injury and property damage, and then included as cl 7 -
“7. INSURANCE
7.1 The Organisation shall effect and maintain during the period of this agreement:

(i) the insurance required under the Workers Compensation Act for the protection of the employees engaged in the provision of services under the Agreement.

(ii) a public liability policy of insurance in the sum of Five Million Dollars ($5,000,000) for any one occurrence.

(iii) …

(iv) such other insurances as would reasonably be expected to be required to give effect to the indemnities given under this agreement.
7.2 At the same time as the annual audited financial statements are forwarded to the Area Manager, the organisation shall forward either a list of the insurance policies required to be maintained under this agreement, or a statement that the policies are the same as those forwarded the previous year. The list shall include, for each policy, the type of policy, the amount insured and the due date of the policy. The list or statement shall be signed by two principal office bearers of the organisation.
7.3 In the event that any insurance policy included on the most recent list forwarded to the Department lapses or is cancelled the organisation shall immediately notify the Area Manager in writing.”


102    The Conditions of Funding also included in cl 9 that the “funded organisation” would “provide an opportunity for a representative of he Department … to attend board/committee meetings” if prior written request were made.

103    First addressing a duty of care to protect the claimant from physical harm, why in these circumstances was the first opponent under a duty of care to put the programme conducted by the Association in the hands of a different disability care association or cause the claimant to be removed form the Association’s programme? The first opponent provided funds to a disability care association which, so far as the claimant’s case went, it could expect to look after those who participated in its programme with competence. The fact of no insurance meant nothing for the physical safety of those participating in the Association’s programme. By providing the funding the first opponent did not itself take on the care of the participants, nor can I see an arguable case that it was or thereby put itself in a position in which it owed to the participants a duty to protect them from physical harm. That responsibility rested on the Association.

104    In truth, the reasoning underlying the ostensible duty to protect the claimant from physical harm is founded on a duty to protect the claimant from economic loss. The reasoning is that, knowing the Association was uninsured, the first opponent should have put the programme conducted by the Association in the hands of an insured disability care association, so that, if she happened to suffer physical injury, she would have the benefit of the insurance, or should have caused her to be removed from the Association’s programme so that she would not be injured without insurance protection. As a matter of causation, had that been done, it could be argued that breach of the duty of care led to suffering the physical injury. I say nothing as to the validity or strength of the argument, and removal from the Association’s programme would hardly have benefited the claimant if she were left without participation in any programme. But the breach would be breach of a duty to protect the claimant from economic loss.

105 Going then to that duty, why in the circumstances set out above did the first opponent owe to the claimant a duty to protect her from economic loss? Let it be accepted that the Act required that, in providing the funding through the Department, the first opponent was obliged to further the interests of persons with disabilities in conformity with the objects set out in the Act and with the principles and applications of principles set out in Schedule 1 of the Act. I have not set out the objects, or the principles and their applications, and have only described them in general terms, but even if regard may be had to them in the face of s 25(1) of the Act none of them approaches ensuring that a person with disabilities who suffers physical injury in the course of provision of a designated service such as the Association’s day programme (if that was a designated service) had the benefit of insurance. The Agreement did call for insurance, but that does not mean that the first opponent owed to those in whose interests it provided funding a duty of care to call for insurance, still less a duty of care to ensure that the insurance for which it called was in fact in place. Indeed, cl 7 of the Conditions of Funding seems directed to protecting the interests of the Minister as the object of a claim by third parties, not to protecting the interests of the ultimate beneficiaries of the funding.

106    Reasonable foreseeability of economic loss is necessary but not sufficient to give rise to a duty of care to protect from economic loss ( Perre v Apand Pty Ltd at 198, 207, 248-9). Restraint in finding such a duty of care is warranted, for reasons sometimes differently expressed ( ibid at 192-3, 199-200, 208-10). There must be something more than reasonable foreseeability of economic loss, and the turbulence to which I earlier referred has been in attempting to describe that something more. For some years it was proximity, but that criterion has fallen from favour and there is no unanimity as to a criterion to replace it or, indeed, as to whether the search for a criterion is futile and there must be a case by case assessment of factors justifying compensation for loss.

107    The claimant relied in particular on the evidence to which I have referred in describing the material to which the first opponent objected. It is open on that evidence that the first opponent (through the Department) could have done a number of things, although the claimant was unable to point to a satisfactory statutory basis for doing some of them. It could have conducted a review of the Association’s “consumer service delivery” and financial management. It could have requested the Association to give information to parents and carers of those participating in the Association’s programme. It could have appointed an “interim auspice”, although what that really meant counsel were unable to explain – it seems some kind of arrangement for provision of services, with “auspicing” being provision of services or seeing that services were provided when the Association stopped providing them. It could have suspended funding, although that would hardly have benefited the participants in the Association’s programme.

108    But what the first opponent could not have done was require that the Association cease conducting its programme, require that parents and carers be informed, or require that insurance be obtained, other than by the threat of suspending funding. If it could not require that the Association get insurance, cause the programme conducted by the Association be put in the hands of a different disability care association, or cause the claimant to be removed from the Association’s programme, it could hardly be under a duty to do so, or a duty to achieve the same result by indirect means, see Agar v Hyde (2000) 201 CLR 552 at [16], [81].

109 The further question is whether the first opponent should have taken some such action because the Association did not have public liability insurance. There was no evidence in the first opponent’s application of actual knowledge that the Association did not have public liability insurance, and as I have said the particulars appear to have abandoned actual knowledge. The Agreement was entered into in early December 1994, and there was nothing to suggest that the Department should have inquired into the Association’s holding of public liability insurance prior to the injury to the claimant. The Department was to receive insurance particulars when it received financial statements, in its own interests rather than the interests of the participants in the programme. I do not think the Minister’s obligations under the Act, or the agreement to provide funds pursuant to the Agreement, called for the first opponent to inquire. So it did not have the knowledge which called for the action necessary for the claimant’s case.

110    The claimant placed particular reliance on Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1. It was there held that there was a duty in the exercise of statutory powers and duties to take reasonable care to protect a waterside worker from the risk of harm from exposure to asbestos. The duty was a duty to protect from physical harm, not from economic loss, and the statutory powers and duties were specifically directed to, amongst other things, health and safety of waterside workers. As was said by Gleeson CJ at [45], the authority knew of the risk to health, and was in a position itself to take steps, short of orders having the force of law, to control or minimise the risks. It was a very different case from the present case.

111    Duties of care having the content of duties to insure or advise of non-insurance in order to protect from economic loss were rejected in Reid v Rusk-Tompkins Group Pty Ltd (1990) 1 WLR 212 and Van Oppen v Clerk to the Bedford Charity Trustees (1990) 1 WLR 235, both also being different cases from the present case. In Brewer Brothers v Canada (1991) 8 CCLT (2d) 45 the Canadian Grain Commission was held liable to grain producers for negligently allowing a grain elevator operator to carry on business without giving adequate security as required by s 36 of the Canada Grain Act. That provision provided that a licence to operate an elevator should not be given unless the applicant had given adequate security, and it was considered that it created a duty owed to the class of grain producers: again, a very different case from the present case.

112    Some other cases were referred to in the appeal, but they also were remote from the present case. The closest analogous case was adverse to the claimant. In Curran v Northern Ireland Co-operative Housing Association Ltd (1987) 1 AC 718 a statutory body provided a grant for extensions to a house. The extensions were so defective that they had to be demolished and rebuilt. It was held that the statutory body had no control over the building of the extensions other than withholding the grant, and that it did not owe subsequent occupiers a duty of care not to make payment in respect of the defective work: such a duty of care was described (at 728) as bizarre.

113    It is necessary to consider the positions of the claimant (and others in her position) and the first opponent, and the relationship between them, on the facts of the present case. I am unable to see an arguable case for the duty of care necessary for the claimant’s cause of action against the first opponent.

The result


114    In my opinion, therefore, the statement of claim should be struck out; the claimant should not be given leave to file an amended statement of claim as against the first and second opponents, in accordance with the amendments for which she applied for leave to amend or at all; but the claimant should be given leave to file an amended statement of claim as against the third opponent, not limited to the amendments for which she applied for leave to amend. The claimant should pay the costs of the appeal of the first and second opponents. Her limited success as against the third opponent was not greatly enhanced by the submissions on her behalf, and was achieved in such circumstances that I consider the claimant and the third opponent should each pay their own costs and a certificate under the Suitors Fund Act should not be granted.

115    The formal orders to given effect to this are -

1. Extend the time within which the claimant may apply for leave to appeal and grant leave to appeal.
2. Dismiss the appeal with costs as between the claimant and the first and second opponents and refuse leave to file an amended statement of claim as between those parties.
3. Dismiss the appeal as between the claimant and the third opponent without any order as to costs and grant leave to file an amended statement of claim as between those parties, the amended statement of claim to be filed and served within 21 days from today’s date.
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