Amaca Pty Ltd v The State of New South Wales

[2004] NSWCA 124

Reported Decision: 132 LGERA 309
(2004) Aust Torts Reports 81-749

Court of Appeal

CITATION:	AMACA PTY LIMITED (Formerly known as James Hardie & Coy Pty Limited) v THE STATE OF NEW SOUTH WALES & ANOR [2004] NSWCA 124 revised - 27/05/2004
HEARING DATE(S):	15/04/04, 16/04/04
JUDGMENT DATE:	17 May 2004
JUDGMENT OF:	Mason P at 1; Ipp JA at 2; McColl JA at 164
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	NEGLIGENCE - Construction industry - Working environment with large amounts of asbestos dust - Negligent performance of statutory duties - Whether State owed a duty of care to employees to direct the employer to address unsafe working conditions - whether inspectors knew such conditions were unsafe - Whether knowledge of the State inspectors to be attributed to the State - Whether knowledge of an independent statutory corporation is to be attributed to the State - Whether circumstances fall into any of the specified exceptional categories identified in Sutherland Shire Council v Heyman (1985) 157 CLR 424 - Whether circumstances analogous to those in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 or Pyrenees Shire Council v Day (1998) 192 CLR 330. D
LEGISLATION CITED:	Construction Safety Act 1912 Dust Diseases Tribunal Act 1989, s 32 Law Reform (Miscellaneous Provisions) Act 1946, s 5 Local Government Act 1958 (Vic) Occupation Health and Safety Act 2000 Scaffolding and Lifts Act 1912, ss 5, 13, 15 Scaffolding and Lifts Regulations 1950, regs 10, 13, 73 Stevedoring Industry Act 1956 (Cth), ss 17, 18
CASES CITED:	Amaca Pty Ltd v State of New South Wales (2003) 199 ALR 596 Babcock International Ltd v Babcock Australia Ltd (2002) 56 NSWLR 51 Anns v Merton London Borough Council (1978) AC 728 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 Fowles v Eastern and Australian Steamship Company Limited [1916] 2 AC 556 Graham Barclay Oysters Pty Limited v Ryan (2003) 211 CLR 540 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 Launceston Corporation v The Hydro-Electric Commission (1959) 100 CLR 654 Oceanic Crest Shipping Co v Hamersley Iron Pty Ltd [1986] WAR 88 Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 Parramatta City Council v Lutz (1988) 12 NSWLR 293 Pyrenees Shire Council v Day (1998) 192 CLR 330 Revesz v The Commonwealth (1951) 51 SR (NSW) 63 Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Coy Pty Ltd (2001) 53 NSWLR 626 Romeo v Conservation Commissin (NT) (1998) 192 CLR 432 Rowling v Takaro Properties Limited [1988] AC 473 Scott v Green & Sons (1969) 1 WLR 301 Sheppard v Glossop Corporation (1921) 3 KB 132 State Authorities Superannuation Board v Commissioner of State Taxation (WA) (1996) 189 CLR 253 Stevedoring Industry Finance Committee v Gibson (2000) 20 NSWCCR 417 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Tamlin v Hannaford [1950] 1 KB 18 "The Christiana" (1850) 13 ER 841 Vetter v Lake Macquarie City Council (2001) 202 CLR 439 Voli v Inglewood Shire Council (1963) 110 CLR 74 Wetzel v District Court of New South Wales (1998) 43 NSWLR 687 Woolcock Street Investments Pty Ltd v CDG Pty Limited [2004] HCA 16 Workington Harbour and Dock Board v Towerfield (owners) [1951] AC 112r
PARTIES :	AMACA PTY LIMITED (Formerly known as James Hardie & Coy Pty Limited) (Appellant) THE STATE OF NEW SOUTH WALES (First Respondent) ROLLS ROYCE INDUSTRIAL POWER (PACIFIC) LIMITED (Formerly John Thompson (Australia) Pty Limited) (Second Respondent)
FILE NUMBER(S):	CA 40852/99
COUNSEL:	F M Douglas QC/G M Watson SC (Appellant) J M Ireland QC/J F Burn (First Respondent) No Appearance (Second Respondent)
SOLICITORS:	Allens Arthur Robinson (Appellant) I V Knight, Crown Solicitor (First Respondent) Hunt & Hunt (Second Respondent)

LOWER COURTJURISDICTION:	Dust Diseases Tribunal
LOWER COURT FILE NUMBER(S):	DDT 34/94
LOWER COURT JUDICIAL OFFICER :	Curtis J

CA 40852/99
DDT 34/94

MASON P
IPP JA
McCOLL JA

Monday 17 May 2004

AMACA PTY LIMITED (Formerly known as James Hardie & Coy Pty Limited) v THE STATE OF NEW SOUTH WALES & ANOR

FACTS:

Between 1955 and 1961 Rolls Royce Industrial Power (Pacific) Limited (“Rolls Royce”) was constructing a power station for the Electricity Commission of NSW (now “Pacific Power”). Rolls Royce employed Mr Hay as part of that construction. Mr Hay was exposed to asbestos dust and fibre and in 1993 contracted mesothelioma. The trial judge found that the conditions under which workers like Mr Hay were required to work were frequently, obviously and dangerously dusty.

Under the Scaffolding and Lifts Act 1912, the State was empowered, through the Department of Labour and Industry, to inspect work sites and to give directions where it appeared that the manner of carrying out work was dangerous or the regulations under the Act were being contravened. The directions that could be given were those thought necessary to prevent accidents and to ensure compliance with the regulations.

The NSW Department of Labour and Industry, through its inspectors had constant and regular access to the power station to inspect the conditions there. On 11 June 1958, Mr Jones, a scientific officer of the Division of Industrial Hygiene of the Department of Health and a temporary inspector of the Department of Labour and Industry, visited the power station. Mr Jones produced a report, which found that in only one area of the construction site did the asbestos fibre concentration exceed the recommended international standard.

Mr Hay brought actions in the Dust Diseases Tribunal against Rolls Royce (as his employer) and Pacific Power (as owner and occupier of the building). These proceedings were settled. Both defendants, however, cross-claimed against James Hardie, the manufacturer and supplier of a number of the asbestos products used on the construction site. These claims resulted in James Hardie becoming liable for payment to Pacific Power (by consent) and Rolls Royce (by an order of contribution). James Hardie in turn cross-claimed against the State of New South Wales in respect of these payments.

James Hardie’s cross-claim against the State was dismissed by the trial judge (Curtis J) on the ground that it was not just and equitable that the State should contribute to the liability of James Hardie. This order was upheld by the Court of Appeal. An appeal to the High Court was allowed, so that the matter is now remitted to the Court of Appeal for hearing and determination conformably with the reasons of the High Court.

HELD per Ipp JA (Mason P and McColl JA agreeing):

1. In the context of negligent performance of statutory duties, a clear and universal test for determining whether a duty of care arises has not been stated. Each case depends on its own circumstances and the totality of the circumstances must be weighed in the balance.

2. The judgment of Mason J in Sutherland Shire Council v Heyman (1985) 157 CLR 424 is authority for the statement that, generally, a public authority, which is under no statutory obligation to exercise a power, owes no common law duty of care to do so. An authority may by its conduct, however, attract a duty of care that requires the exercise of the power. Such a duty may be attracted where an authority, in the exercise of its functions has created a danger; where the particular circumstances of an authority’s occupation of premises or its ownership or control of a structure attracts to it a duty of care; or where a public authority acts so that others rely on it to take care for their safety.

3. The judgments in Pyrenees Shire Council v Day (1998) 192 CLR 330, Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 and Graham Barclay Oysters Pty Limited v Ryan (2003) 211 CLR 540 refine and expand the general propositions stated by Mason J in Sutherland Shire Council v Heyman (1985) 157 CLR 424, and adapt them to the particular circumstances of the cases concerned. In particular, the following propositions can be drawn from the judgments:

(a) The totality of the relationship between the parties is the proper basis for the determination of a duty of care;

(b) The category of control that may contribute to the existence of a duty of care to exercise statutory powers includes control, generally of any situation that contains within it a risk of harm to others;

(c) A duty of care does not arise merely because an authority has statutory powers, the exercise of which might prevent harm to others;

(d) The existence of statutory powers and the mere prior exercise of those powers from time to time do not alone create a duty to exercise those powers in the future;

(e) Knowledge that harm may result from a failure to exercise statutory powers is not itself sufficient to create a duty of care.

4. Curtis J did not find that the State inspectors observed that the dust was in excess of the Dreesen standard; that was a matter that was not capable of detection by the eye alone. In all the circumstances Curtis J did not hold, implicitly, that the State knew or ought to have known that brief and intermittent exposure to the quantities of dust observed by the inspectors might cause injury to workers.

5. “Effective line management” required control over the inspectors to be exercised through the Minister, the Under-Secretary and the Chief Inspector. The knowledge of the inspectors is to be attributed to the State.

6. Pacific Power is to be regarded as a distinct and separate statutory corporation, so that its knowledge is not to be attributed to the State itself.

7. However, even assuming the relevant knowledge on the part of the State, the circumstances of this case do not fall into any of the specified exceptional categories identified in Sutherland Shire Council v Heyman (1985) 157 CLR 424 that would attract a duty of care.

8. The control exercised by the State came nowhere near the degree of control exercisable by the authority in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1. Moreover the field of endeavour was populated by self-interested commercial actors who themselves possessed some power to avert the risks

9. Rolls Royce and James Hardie had no less knowledge of the risk than the State. Furthermore, the Jones report was not a statutory direction to eliminate the risk, and the acts of the State did not engender in any relevant person a sense of reliance on the State. These circumstances fundamentally distinguish this case from Pyrenees Shire Council v Day (1998) 192 CLR 330

10. There are other factors militating against the recognition of a duty of care. The duty contended for would not be owed to the ultimate consumer. Plaintiffs in circumstances such as those of Mr Hay are able to protect themselves by claiming from those primarily responsible for the loss. Recognition of such a duty would render the State liable to a massive obligation. The duty contended for would be a duty to control third parties. The finding of a duty such as that contended for may lead to the giving of premature and unnecessary directions and would be an incentive to the State not to inspect particular buildings where it is known that hazards may be hard to find.

11. Even assuming actual knowledge of the State (at all relevant times) of the possibility that a brief exposure to asbestos might cause the workers serious harm, a duty of care as contended for by James Hardie should not be imposed.

ORDERS

The appeal is dismissed with costs.

CA 40852/99
DDT 34/94

MASON P
IPP JA
McCOLL JA

Monday 17 May 2004

AMACA PTY LIMITED (Formerly known as James Hardie & Coy Pty Limited) v THE STATE OF NEW SOUTH WALES & ANOR

Judgment

1 MASON P: I have had the privilege of reading in draft the reasons of Ipp JA. I agree with them and the orders proposed.

2 IPP JA:

The duty of care issue

3 Between 1955 and 1961 Rolls Royce Industrial Power (Pacific) Limited (“Rolls Royce”) was constructing the Wallerawang power station for the Electricity Commission of New South Wales (now Pacific Power). During that period Rolls Royce employed Mr Warren Hay as a fitter’s assistant and, in that capacity, Mr Hay worked on the construction of the power station. There, Mr Hay was exposed to asbestos dust and fibre. In 1993 he contracted mesothelioma.

4 Mr Hay brought an action in the Dust Diseases Tribunal against Rolls Royce (his employer) and Pacific Power (the owner and occupier of the power station), claiming damages for personal injuries. Rolls Royce and Pacific Power cross-claimed against each other. On 27 June 1994 the proceedings, including the cross-claims, were settled. A consent judgment was granted in favour of Mr Hay against each of Rolls Royce and Pacific Power in the sum of $185,000 inclusive of costs.

5 Some of the products containing asbestos that were used in the construction of the power station were manufactured and supplied by the appellant (to which I shall refer as “James Hardie”). Each of Pacific Power and Rolls Royce brought cross-claims against James Hardie claiming contributions to the damages each had become obliged to pay Mr Hay.

6 Pacific Power’s cross-claim against James Hardie was settled by a payment by James Hardie to Pacific Power. Rolls Royce’s cross-claim against James Hardie (and a cross-claim by James Hardie against Rolls Royce) proceeded to trial and each recovered an order for a contribution of 50% from the other.

7 Prior to judgment in the contribution proceedings between Rolls Royce and James Hardie, the latter cross-claimed against the State. In that cross-claim, James Hardie claimed from the State an order for contribution in respect of any sum which it might be ordered by the Dust Diseases Tribunal to pay by way of contribution to Rolls Royce and in respect of the payment by James Hardie to Pacific Power.

8 The trial judge in the contribution proceedings between James Hardie and the State (Curtis J) held that it was not just and equitable that the State should contribute to the liability of James Hardie. The Court of Appeal upheld this finding (Rolls Royce Industrial Power (Pacific) Ltd v JamesHardie & Coy Pty Ltd (2001) 53 NSWLR 626). James Hardie appealed to the High Court and the appeal was allowed (Amaca Pty Ltd v State of NewSouth Wales (2003) 199 ALR 596). The orders made by the Court of Appeal were set aside and the matter was remitted to the Court of Appeal for further hearing and determination conformably with the reasons of the High Court (see Amaca Pty Ltd v State of New South Wales at 602, [27]).

9 The High Court identified two errors in the reasons of the trial judge, namely:

“First, the reasons given for concluding that it was not just and equitable that the State should contribute to the liability of James Hardie were irrelevant. That James Hardie was a commercial enterprise pursuing profit and the State a polity raising revenue by taxation are not considerations relevant to their respective responsibilities to contribute to the damage sustained by the injured plaintiff.
Secondly, and no less fundamentally, the assumption which the trial judge made about the State’s liability was an insufficient basis for deciding what order should be made in the contribution claim against the State. The making of assumptions and the acceptance of concessions for the purpose of litigation is sometimes an appropriate and efficient way to proceed. It may allow a court to sever irrelevant or immaterial questions to permit it to concentrate on those issues that are legally essential to the decision. However, this was not a case where such a shortcut could be taken. What was assumed was that the State had breached the duty of care which it owed the injured plaintiff. But neither the duty nor the breach was identified with any particularity. Without identifying the duty owed, and the breach or breaches committed, it was not, and is not, possible to identify the extent of that party’s responsibility for the damage. Nor is it possible to say that that party should be exempted from liability despite it having breached the duty which it owed the plaintiff.

10 The High Court went on to say:

… there may be some question about whether the Court of Appeal, and therefore this Court, could undertake a review of the factual question of breach. But it is clear that the Court of Appeal did have power to determine whether, on the facts found at trial, the State did owe the injured plaintiff a duty of care. That was a question of law. If the Court of Appeal had identified the errors of law which the trial judge made, it would then have been appropriate, and in this case necessary, for the Court of Appeal to go on to consider whether the claim for contribution should have failed on the ground, urged by the State, that the State owed no duty of care to the injured plaintiff. The Court of Appeal should now consider that question.”

11 The question whether the State owed a duty of care to Mr Hay arises by reason of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, which governs James Hardie’s claim for contribution. That section provides:

“(1) Where damage is suffered by any person as a result of a tort (whether a crime or not):
…
(c) Any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued had been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought.
(2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.”

12 Thus, James Hardie’s claim for contribution depends on whether the State was a tortfeasor which, if sued, would have been liable to Mr Hay. Hence, the need to determine whether, on the facts found at trial, the State owed Mr Hay a duty of care. Mr Douglas QC (who together with Mr Watson SC appeared for James Hardie) adopted, as the scope of the duty of care contended for by James Hardie, the duty described by McHugh J (with whom Gleeson CJ agreed) in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 45, [112], namely:

“… a continuing duty of care … in the exercise of [the Stevedoring Authority’s] statutory functions, duties and powers to take reasonable care to avoid foreseeable risks of injury to the health of the Plaintiff.”
Only the duty of care issue to be determined at this stage – the powers of the court

13 The parties accept that should this Court determine that the State owed a duty of care to Mr Hay, the matter should be remitted to the Dust Diseases Tribunal pursuant to s 32 of the Dust Diseases Tribunal Act 1989 to enable the Tribunal to determine the issues of breach, causation and damages which would then arise (including any necessary factual findings in that connection).

14 On the other hand, a finding that the State owed no duty of care to Mr Hay would be determinative of the claim for contribution made by James Hardie against the State.

15 The duty of care issue comes before this Court as an appeal pursuant to s 32 of the Dust DiseasesTribunal Act 1989. It is therefore an appeal on a “point of law” and the powers of this Court are limited to correcting decisions on a point of law (see Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 464, [70] per Kirby J). This was common ground between the parties. It is therefore not for this Court to make factual findings not made by the trial judge.

16 In determining the duty of care issue, as a point of law, the following observations of the High Court are pertinent:

“The trial judge came to no final conclusion about whether the State owed a duty of care to the injured plaintiff and he did not decide what the scope or content of any such duty might be. Accordingly, it may be said that such findings of fact as he made about what the State did or did not do were not made with any definition of duty in mind. It follows that it may not be clear whether all the findings of fact that might bear upon any question of breach of duty were made at trial. If not all necessary findings about breach were made at trial, and if it became necessary to compare the respective degrees of responsibility of James Hardie and the State of the damage suffered by the injured plaintiff, the trial judge’s reasons would have provided an insufficient factual platform for doing so.”

17 These comments are also applicable to the issue whether the State owed a duty of care to Mr Hay.

The legal principles relevant to the determination of the duty of care contended for

18 The determination whether the State owed Mr Hay a duty of care as asserted by James Hardie depends upon a proper understanding (and the application) of the principles laid down in Pyrenees Shire Council v Day (1998) 192 CLR 330, Crimmins v Stevedoring Industry Finance Committee, Graham Barclay Oysters Pty Limited v Ryan (2003) 211 CLR 540 and other decisions dealing with the negligent performance of statutory duties.

19 A clear and universal test for determining whether a duty of care arises has not been laid down. Each case depends on its own circumstances and the totality of the circumstances must be weighed in the balance. Depending on the facts, different factors have different degrees of significance. Nevertheless, Pyrenees, Crimmins and Graham Barclay Oysters point to and delineate the path that is to be followed.

20 The statements of approach of the members of the High Court in these leading authorities have to be seen in the context of the issues in each. There were singular and distinctive aspects about all these cases. Thus, the reasoning of the various justices cannot properly be understood without regard to the different facts in each case. Moreover, both James Hardie and the State sought to rely on these authorities in part and to distinguish them in part. The arguments presented by counsel in this regard, again, can only be understood by reference to the different facts in the cases in question. Accordingly, the facts in each must be closely analysed.

21 It is appropriate to commence the discussion on this topic by repeating Mason J’s remarks in Sutherland Shire Council v Heyman (1985) 157 CLR 424. These remarks were referred to on a number of occasions in Pyrenees, Crimmins and Graham Barclay Oysters and are an important part of the discussion of the duty of care issue in those cases. His Honour said (at 459-461):

“Generally speaking, a public authority which is under no statutory obligation to exercise a power comes under no common law duty of care to do so: see Revesz v The Commonwealth (1951) 51 SR (NSW) 63. But an authority may by its conduct place itself in such a position that it attracts a duty of care which calls for exercise of the power. A common illustration is provided by the cases in which an authority in the exercise of its functions has created a danger, thereby subjecting itself to a duty of care for the safety of others which must be discharged by an exercise of its statutory powers or by giving a warning … That it is the conduct of the authority in creating the danger that attracts the duty of care is demonstrated by Sheppard v Glossop Corporation (1921) 3 KB 132. There the highway authority was under no duty of care with respect to lighting, though the danger was foreseeable, because it did not create the danger. Having statutory power to make provision for the lighting of streets, it placed a lamp at a dangerous point in a street, the danger not being of its making, but extinguished the lamp at 9.00 pm in accordance with a general resolution applying to all streets in the borough. The authority was held not liable on the footing that the statute imposed no obligation to light, that the Authority having begun to light was under no obligation to continue to do so, and that having done nothing to make the street dangerous, it was under no obligation to give warning of the danger. Atkin LJ (at 51) explained earlier cases in which under the same statute local authorities had been liable for not lighting by stating that the local authorities had created the dangers which were responsible for the plaintiffs’ injuries.”
There are other situations in which an authority’s occupation of premises … or its ownership or control of a structure in a highway or of a public place … attracts to it a duty of care. In these cases the statute facilitates the existence of a common law duty of care. In the words of Lord Denning MR in Scott v Green & Sons [(1969) 1 WLR 301 at 304]: ‘The statute does not by itself give rise to a civil action, but it forms the foundation on which the common law can build a cause of action.’ As [ Voli v Inglewood Shire Council (1963) 110 CLR 74] demonstrates, the breach of the common law duty may arise from the failure of the authority’s officers to ascertain that the statutory requirements are satisfied. There, the officers who examined the plans and specifications of the shire hall failed to ascertain that the authority’s by-laws relating to public buildings had been infringed with the result that a stage collapsed and injured the plaintiff. The authority and its architect were held liable. Liability of this kind extends to liability for damage which is attributable to the positive and wrongful act of another …
And then there are situations in which a public authority, not otherwise under a relevant duty, may place itself in such a position that others rely on it to take care for their safety so that the authority comes under a duty of care calling for positive action. Such a relationship has been held to arise where a person, by practice or past conduct upon which other persons come to rely, creates a self-imposed duty to take positive action to protect the safety or interests of another or at least to warn him that he or his interests are at risk …”

22 Nothing in Pyrenees, Crimmins and Graham Barclay Oysters is materially inconsistent with Mason J’s remarks. What is significant for the purposes of this appeal are the following propositions, drawn from Sutherland Shire Council v Heyman:

(a) Generally, a public authority, which is under no statutory obligation to exercise a power, owes no common law duty of care to do so.
(b) An authority may by its conduct, however, attract a duty of care that requires the exercise of the power.
(c) Three categories are identified in which the duty of care may so be attracted.
(i) Where an authority, in the exercise of its functions, has created a danger.
(ii) Where the particular circumstances of an authority’s occupation of premises or its ownership or control of a structure attracts to it a duty of care. In these cases the statute facilitates the existence of a duty of care.
(iii) Where a public authority acts so that others rely on it to take care for their safety.

23 Mason J did not suggest that the categories of circumstances in which an authority may attract a duty of care are closed. Later cases, which are in accord with the general propositions laid down in Sutherland Shire Council v Heyman, have extended the categories to situations where an authority has control over a particular situation that carries with it a risk of harm of which the authority knows or should know. That is to say, where an authority has such control, a duty of care may (not, I stress, must) be recognised.

24 I turn now to Pyrenees. A fire destroyed premises (a shop and a residence at 70 Neill Street, Beaufort) occupied by tenants and damaged an adjoining shop (72 Neill Street) owned by Mr and Mrs Day. The fire was caused by a latent defect in the chimney of the premises at 70 Neill Street that were occupied by tenants. About two years earlier the fire authority had advised the then tenants at 70 Neill Street that the fireplace was unsafe to use and notified the Shire Council to that effect. A Council building inspector inspected the premises and found that there was a latent defect in the fireplace creating a substantial risk of fire. The inspector wrote a letter to the then tenants at 70 Neill Street stating that it was imperative that the fireplace should not be used unless fully repaired. The former tenants did nothing however and did not communicate the contents of the letter to the owner. The Council took no further steps in relation to the fireplace. It had statutory powers under the Local Government Act 1958 (Vict) to ensure compliance with its letter, but did not exercise those powers.

25 The shop owners (Mr and Mrs Day) succeeded at the trial but the tenants failed. The Court of Appeal did not disturb the trial judge’s findings. The High Court dismissed the Council’s appeal against the decision in favour of the shop owners and by a majority upheld the tenants’ appeal.

26 Brennan CJ founded his decision on a public law duty on the part of the Council. Toohey, McHugh, Gummow and Kirby JJ held that the Council was in breach of a duty of care owed to the shop owners. Brennan CJ on the same public law ground upheld the tenants’ appeal. Gummow and Kirby JJ held that the Council was in breach of a duty of care owed to the tenants. Toohey and McHugh JJ were in the minority on this aspect, being of the view that there was general reliance by the shop owners on the Council to take steps to remove the danger of which it was aware and had power to remove, but there was no such reliance by the tenants.

27 Two differing strands of reasoning, relevant to this appeal, can be identified in Pyrenees. The first is exemplified by the following remarks of McHugh J (at 372, [115]):

“Given the extensive powers of the Council, its entry into the field of inspection on this occasion, if not other occasions, its actual knowledge of the danger to the health and property of the occupiers of [the street] and, at the least, its imputed knowledge that residents of the shire generally relied on it to protect them from the dangers arising from the use or condition of premises, the Council owed a duty of care to Mr and Mrs Day.”

McHugh J considered that the tenants of the premises where the fire occurred (70 Neill Street) were not in the position of vulnerability of Mr and Mrs Day (at 72 Neill Street) and it was not reasonable for them to rely on the Council to exercise its powers to protect them from defects in their own premises.

28 It is to be noted that in Graham Barclay Oysters McHugh J said (at 581-582, [94]):

“I do not regard Pyrenees as a ‘control’ case. Rather it is a case where the Council came under a duty of care because it knew of the risk of harm to specific individuals, it had power to take steps to eliminate the risk and importantly, at an earlier stage, had given directions to eliminate the risk.”

29 What is the relevance of the earlier giving of directions? If Pyrenees was not a “control” case, the giving of directions, on the Sutherland Shire Council v Heyman analysis, could only attract a duty of care if they created a danger or gave rise to reliance.

30 The remarks of McHugh J in Graham Barclay Oysters cast light on what his Honour meant in Pyrenees when he referred to the importance to be attributed to the Council’s actions in giving directions to eliminate the risk. His Honour said (at 580, [91]):

“The powers and functions of the government of a polity are generally invested for the benefit of the general public. In the absence of a statutory direction, the mere existence of such a power in that government imposes no duty to exercise it for the protection of others. In that respect, its situation is analogous to a private citizen who, absent special circumstances, has no duty to take affirmative action to protect another person from harm … Nor does the bare fact that the Executive government has exercised its powers from time to time create any duty to exercise its powers. Such exercises of power do not constitute ‘control’ of an activity in the sense that that expression is used in the law of torts. They are merely particular exercises of powers that were invested in the Executive government for the benefit of the general public to be exercised at the discretion of the Executive government. Unless a particular exercise of power has increased the risk of harm to an individual, the Executive government of a polity does not ordinarily owe any common law duty to take reasonable care as to when and how it exercises its powers. No doubt circumstances may arise where conduct of the government, short of increasing a risk of harm, creates a duty of care. But such cases are less likely to arise than in the case of other public authorities. In particular, knowledge of specific risks of harm or the exercise of powers in particular situations is less likely to be a factor in creating a duty than in the case of an ordinary public authority. This is because the powers and functions of the Executive government are conferred for the benefit of the public generally and not for the benefit of individuals.”

Despite his Honour’s view that, generally, no duty of care arises from the mere exercise of powers, McHugh J appears to recognise the possibility (albeit an unlikely one) of “conduct of the government, short of increasing a risk of harm, creat[ing] a duty of care”.

31 In summary, the first strand of the reasoning in Pyrenees emphasises the sole and actual knowledge of the Council of the risk of serious harm to identifiable individuals, the power of the Council to intervene, and the prior (but inadequate) intervention by the Council to eliminate the risk.

32 The second strand in Pyrenees is exemplified by the following remarks of Gummow J (at 389, [168]):

“The Shire had statutory powers, exercisable from time to time, to pursue the prevention of fire at No 70 [Neill Street]. This statutory enablement of the Shire ‘facilitate[d] the existence of a common law duty of care’ ( Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 460), but the touchstone of what I would hold to be its duty was the Shire’s measure of control of the situation including its knowledge, not shared by [the tenants] or by the Days, that, if the situation were not remedied, the possibility of fire was great and damage to the whole row of shops might ensue (cf Parramatta City Council v Lutz (1988) 12 NSWLR 293 at 328). The Shire had a duty of care ‘to safeguard others from a grave danger of serious harm’, in circumstances where it was ‘responsible for its continued existence and [was] aware of the likelihood of others coming into proximity of the danger and [had] the means of preventing it or of averting the danger or of bringing it to their knowledge’ [citation omitted].”

33 The reference by Gummow J to the passage in Sutherland ShireCouncil v Heyman at 460 is important as it indicates how the “statutory enablement of the Shire” could facilitate the existence of a common law duty of care.

34 Gummow J’s reference to Parramatta City Council v Lutz (1988) 12 NSWLR 293 at 328 is to the dissenting judgment of McHugh JA where his Honour said:

“In principle, there is much to be said for the view that a public authority should be under a duty to take affirmative action when the control of conduct or activities has been ceded to it by common understanding or when it receives some benefit from the conduct or activities. If in addition to the right of control the authority knows or ought to know of conduct or activities which may foreseeably give rise to a risk of harm to an individual, the authority should be under a duty to prevent that harm. Just as a teacher who has control of a classroom has a duty to prevent pupils from injuring others, so a public authority with legal or de facto control of a social situation should have a duty to take affirmative action to prevent harm to others. The touchstone of affirmative duty would be control and not the possession of any discretionary statutory powers. Failure to exercise such powers would go to breach of duty, but the common law duty would arise from actual or ceded control.”

The reference to the above passage from Parramatta City Council v Lutz reinforces the emphasis that Gummow J placed on the control factor.

35 Gummow J repeated this emphasis in Crimmins where his Honour J said (at 61, [166]) that in some cases:

“the powers vested by statute in a public authority may give to it such a significant and special measure of control over the safety of the person or property of the plaintiff as to oblige it to exercise its powers to avert danger or to bring the danger to the knowledge of the plaintiff. The powers of the appellant with respect to fire prevention in Pyrenees Shire Council v Day … were in this category”.

36 As I understand his Honour’s remarks, the measure of control exercisable by the Council in Pyrenees was “significant and special” because of the sole and actual knowledge that the Council had of the risk, coupled with the particular powers it had which, if exercised, would have prevented the materialisation of the risk.

37 In Graham Barclay Oysters Gummow and Hayne JJ said (at 598, [151]):

“[I]n Pyrenees Shire Council v Day … the Shire held a significant and special measure of control over the safety from fire of persons and property at the relevant premises. That degree of control was the touchstone of the Shire’s duty to safeguard others from the risk of fire in circumstances where the Shire had entered upon the exercise of its statutory powers of fire prevention and it alone among the relevant parties knew of, and was responsible for, the continued existence of the risk of fire … It will be recalled that, in Pyrenees , the only other party with that knowledge was the former tenants. They had not communicated it to the subsequent tenants or adjoining occupiers, who were the relevant parties in this Court.”

In this passage their Honours point to control, as the touchstone again, together with the Council’s sole knowledge of the risk and the prior exercise by the Council of its powers. As regards the latter element, it echoes the reference by McHugh J to the Council giving directions to eliminate the risk.

38 Thus, the second strand of the reasoning in Pyrenees based the recognition of a duty of care on the part of the Council on a significant and special measure of control, a degree of seriousness of the risk, and a vulnerability of the owners and occupiers of the premises.

39 The differences between the two strands are not of major significance and are basically matters of emphasis.

40 I turn now to Crimmins. Mr Crimmins, a registered waterside worker, was employed between 1961 and 1965 by various stevedoring entities which were registered employers in the port of Melbourne. In 1997 he was diagnosed as suffering from mesothelioma caused by inhalation of asbestos fibres. During the period of his employment he was exposed to asbestos dust. He claimed damages from the successor to the liabilities and obligations of the Australian Stevedoring Industry Authority. He contended that the Authority was under a continuous duty from 1956 to 1977 in the exercise of its statutory functions, duties and powers to take reasonable care to avoid foreseeable risks of injury to his health.

41 The High Court held by majority (Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ, Gummow and Hayne JJ dissenting) that the Authority owed Mr Crimmins a common law duty of care to protect him from reasonably foreseeable risks of injury arising from his employment by registered stevedores.

42 The Authority did not employ Mr Crimmins. It had, however, certain disciplinary powers over workers including Mr Crimmins. These powers included power to cancel or suspend registration. Once a worker was assigned to a wharf, he was subject to the direction of the employer who supplied the safety equipment required by an award. The Authority was generally ignorant of the structure or size of the ships to which workers were allocated and of the nature of the cargoes to be handled.

43 The statutory function of the Authority included, by s 17 of the Stevedoring Industry Act 1956 (Cth) the regulation of the performance of stevedoring operations and the conduct of waterside workers, the training of persons in stevedoring operations, the encouragement of employers to introduce safe methods and practices and the encouragement of safe working in stevedoring operations.

44 Section 18(1) of the Stevedoring Industry Act provided that, for the purpose of the performance of its functions under s 17, “the Authority may, subject to this section, make such orders, and do all such other things, as it sees fit.”

45 McHugh J (with whom Gleeson CJ agreed), observed (at 34, [79]) that common law courts “have long been cautious in imposing affirmative common law duties of care on statutory authorities.” His Honour referred to the remarks of Mason J in Sutherland Shire Council v Heyman at 459-460 (and to which Gummow J referred at 389 in Pyrenees) which I have quoted above.

46 McHugh J, in finding that the Authority owed Mr Crimmins a duty of care to exercise statutory powers, relied on the element of control on the part of the Authority, Mr Crimmins’ “special” vulnerability, and the relevant knowledge of the Authority. The following passages make this clear.

At 26, [51]:

“The statutory authority owed a duty of care to the worker because it directed him to places of work where there were risks of injury of which the authority was, or ought to have been, aware and in respect of which, the authority knew or ought to have known that the worker was specially vulnerable. The worker’s vulnerability arose as a result of the casual nature of his employment and his obligation to obey the authority’s directions as to where he worked.”

At 42, [104]:

“To my mind, the factor that points compellingly to the Authority owing an affirmative duty of care is that the Authority directed the waterside workers where they had to work and that the failure to obey such a direction could lead to disciplinary action and even deregistration as a waterside worker. That factor points so strongly to the existence of a duty of care that it should be negatived only if to impose the duty was inconsistent with the scheme of the Act. It can seldom be the case that a person, who controls or directs another person, does not owe that person a duty to take reasonable care to avoid risks of harm from that direction or the effect of that control.”

And at 43-44, [108]:

“The Authority knew that the workers were being directed to work on ships where there could be a significant risk of injury to the workers from the use of equipment and machinery, the stowage of cargo and the hazardous nature of the materials which the workers had to handle. It also knew that it was directing the waterside workers to participate in transient, casual employment on the waterfront – a factor recognised in s 25(B) of the Act. In this context, the power of the Authority to direct the waterside workers as to when and where they must work placed them in a very real position of vulnerability. The casual nature of the employment, employment sometimes lasting only for a few hours, was likely to mean that employers did not have the same incentives to protect their employees from harm as do employers who must utilise the same work force day after day.”

47 Gaudron J based her finding (that a duty of care existed) on similar grounds. Her Honour emphasised the casual nature of Mr Crimmins’ employment, the lack of incentive to his employers to take care for his safety, the hazardous nature of the work, the Authority’s knowledge of the hazards of asbestos, the fact that the Authority was in a position to take various steps (short of making orders having the force of law) to control or minimise those risks, and the powerful degree of control the Authority could exercise over workers and employers, including the power to register employers, to apply to the Commonwealth Industrial Court for their de-registration and to institute proceedings against an employer for statutory offences.

48 There is one other aspect of her Honour’s reasons to which I should draw attention. Her Honour said (at 20-21, [31]-[32]):

“Different considerations apply with respect to the Authority’s power under s 18(1) of the [ Industry Act ] to make orders, although not its power to ‘do all such other things, as [the Authority thought] fit’. The power to do all such other things as the Authority thought fit necessarily extended to doing those things that were essential for and, also, those things that were conducive to the performance of its functions … And unlike the power to make orders, the power to do those things was not confined by succeeding sub-sections requiring consultations with interested organisations. There is, thus, nothing in the [ Industry Act ] to exclude the common law in relation to the power to ‘do all such other things, as [the Authority thought] fit’.
The critical consideration in relation to the Authority’s order-making power under s 18(1) of the [ Industry Act ] is that, if made, orders would have had the force of law (section 20(1)(c) of the [ Industry Act ]. It is, thus, appropriate to characterise the power to make orders as legislative in nature. There is considerable incongruity in the notion that the common law might impose a duty of care in relation to the exercise or non-exercise of a power that is legislative in nature … Indeed, so incongruous is that notion that I am of the view that, as a matter of necessary implication, s 18 is to be construed as excluding the operation of the common law in relation to the Authority’s exercise or non-exercise of its power to make orders.”

49 Hayne J was of a similar view, saying (at 100, [288]):

“As I have said, the Authority could have required the use of respirators only by making a general order under s 18. The Authority owed no common law duty of care to the deceased worker in deciding whether or not to exercise that quasi legislative power.”

50 I find it difficult to draw any material distinction between the powers of the Authority in Crimmins to make orders and the power of the State in the present case to give directions under s 15 of the Scaffolding and Lifts Act 1912. Counsel did not pay particular attention to this point, however, and as a decision on the issue is not essential to the final conclusion to which I have come, I shall say no more about it.

51 As I have mentioned, Gummow J (at 61, [166]) observed that “[In some cases] the powers vested by statute in a public authority may give to it such a significant and special measure of control over the safety of the person or property of the plaintiff as to oblige it to exercise its powers to avert danger or to bring the danger to the knowledge of the plaintiff.”

52 In Graham Barclay Oysters Callinan J (at 663, [317]) said that Crimmins stood apart from other cases where a duty of care had been upheld. He said:

“Whilst it was a case in which the Court effectively treated powers and functions as giving rise to duties of care, the factual and statutory contexts were both very special. What distinguished the powers and functions there was that if they were not in fact exercised, then the industry which was a uniquely organised one, would hardly have been able to function at all, or with any degree of efficiency …”

53 Crimmins has always been regarded as a “very special” case. There can be little doubt that it has to be regarded as a “control” case of a unique kind. Its uniqueness lies in the degree of control that the Authority had over the actual entering into of contracts of employment, the conditions of work, and the conduct of both workers and employers. The vulnerability of the workers has also to be regarded as “special”. Their very employment in practical terms was in the hands of the Authority and they were only casual workers with relatively weak bargaining power.

54 Before going to Graham Barclay Oysters it is worth noting that in Brodie v Singleton Shire Council (2001) 206 CLR 512 (the next High Court decision dealing with the negligent exercise of statutory powers) Gaudron, McHugh and Gummow JJ, after referring to Sutherland Shire Council vHeyman, Pyrenees, and Crimmins adopted the test of a “significant and special measure of control” (the phrase used by Gummow J in Crimmins (at 61, [166]) Their Honours said (at 558-559, [102]):

“The decisions of this Court in [ Sutherland Shire Council v Heyman , Pyrenees , Romeo v Conservation Commission (NT) (1998) 192 CLR 432 and Crimmins ] are important for this litigation. Whatever may be the general significance today in tort law of the distinction between misfeasance and non-feasance, it has become more clearly understood that, on occasions, the powers vested by statute in a public authority may give it such a significant and special measure of control over the safety of the person or property of citizens as to impose upon the authority a duty of care. This may oblige the particular authority to exercise those powers to avert a danger to safety or to bring the danger to the knowledge of citizens otherwise at hazard from the danger. In this regard, the factor of control is of fundamental importance …”

55 I now turn to Graham Barclay Oysters itself. This case concerned claims by consumers who had contracted hepatitis A after eating oysters from Wallis Lake. The waters of the lake had been polluted by human faecal contamination which in turn contaminated the oysters. The plaintiff consumers contended that the local council for the area and the State of New South Wales were liable to them in negligence for the harm suffered. The High Court held that neither the Council nor the State owed a duty of care to the plaintiffs. The members of the High Court (by reason of the facts of the case) drew virtually no distinction between the position of the Council and the State. Generally, the Court held, as the headnote states, that:

“Government decisions about the proper extent of regulation of private or commercial behaviour, or of a particular industry, are inappropriate for judicial review.”

It is, however, helpful to refer to some of the other grounds on which their Honours based their decisions.

56 Gleeson CJ held that the statutory powers on which the plaintiffs relied for their case against the State were powers to protect the general public. His Honour said (at 562, [22]):

“A legislative grant of power to protect the general public does not ordinarily give rise to a duty owed to an individual or to the members of a particular class …”

Similarly, as regards the Council, Gleeson CJ said (at 564, [39]):

“The powers conferred upon the Council, insofar as they are presently relevant, were conferred for the benefit of the public generally; not for the protection of a specific class of persons …”

57 McHugh J observed, generally (at 576, [81]):

“A public authority has no duty to take reasonable care to protect other persons merely because the legislature has invested it with a power whose exercise could prevent harm to those persons. Thus, in most cases, a public authority will not be in breach of a common law duty by failing to exercise a discretionary power that is vested in it for the benefit of the general public … But if the authority has used its powers to intervene in a field of activity and increased the risk of harm to persons, it will ordinarily come under a duty of care ... So also, if it knows or ought to know that a member of the public relies on it to exercise its power to protect his or her interests, the common law may impose a duty of care on the authority ( Sutherland Shire Council v Heyman at 461, per Mason J).”

58 McHugh also found that the powers of the State did not constitute control in the relevant sense (at 581, [93]). Of significance to the present appeal is his Honour’s remark (at 582, [95]): “Knowledge or imputed knowledge that harm may result from a failure to take affirmative action is not itself sufficient to create an affirmative duty of care”.

59 Gummow and Hayne JJ regarded two factors as being of vital importance (see at 596, [144]). First, the fact that the Council (like the Council in Pyrenees) was the only party with actual knowledge of the potential source of harm (namely, the progressive deterioration of the sewerage infrastructure which imperilled the purity of the waters of Wallis Lake). Secondly, the fact that the Council had extensive statutory powers to prevent or to redress that deterioration and to mitigate the effects of any pollution. Their Honours said (at 596, [145]):

“[T]he co-existence of knowledge of a risk of harm and power to avert or to minimise that harm does not, without more, give rise to a duty of care at common law. The totality of the relationship between the parties, not merely the foresight and capacity to act on the part of one of them, is the proper basis upon which a duty of care may be recognised. Were it otherwise, any recipient of statutory powers to licence, supervise or compel conduct in a given field, would, upon gaining foresight of some relevant risk, owe a duty of care to those ultimately threatened by that risk to act to prevent or minimise it.”

I would pause to note that these comments apply squarely to the present case.

60 Their Honours emphasised the importance of the particular terms of the statutory regime applicable, saying (at 596-597, [146]):

“The existence or otherwise of a common law duty of care allegedly owed by a statutory authority turns on a close examination of the terms, scope and purpose of the relevant statutory regime. The question is whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence.”

61 Their Honours then referred to the importance of the existence of third parties, particularly commercial enterprises, constituting a tier of potential liability between the injured plaintiff and the local authority. They said (at 599, [154]):

“In broad terms, the Council’s statutory powers enabled it to monitor and, where necessary, to intervene in order to protect, the physical environment of areas under its administration. However, the conferral on a local authority of statutory powers in respect of activities occurring within its boundaries does not itself establish in that authority control over all risks of harm which may eventuate from the conduct therein of independent commercial enterprises.”

Their Honours later repeated this theme (at 610, [185]):

“It may readily be accepted that public authorities, armed with statutory powers to compel, prevent or punish conduct, frequently exercise informal and non-coercive influence or persuasion over those persons and organisations against whom they are empowered formally to act. So much follows from the existence of an organised system of sanctions beneath which there is interaction between public authorities and industry participants. But the exercise or potential exercise of powers of supervision or persuasion of this type provides an insecure basis for a duty of care enforceable by the common law. This is so particularly where the duty allegedly is owed not to industry participants but to the ultimate consumer.”

Their Honours had earlier stated (at 596, [145]):

“[T]he common law should be particularly hesitant to recognise such a duty where the relevant authority is empowered to regulate conduct relating to or impacting on a risk-laden field of endeavour which is populated by self-interested commercial actors who themselves possess some power to avert those risks.”

62 Kirby J found that it was not reasonable to conclude that the State and the Council owed a duty to exercise their respective powers for the protection of consumers like the plaintiffs.

63 Callinan J held that the plaintiffs failed against the Council and the State as these bodies did not have the requisite degree of control over the area in question. In addition, his Honour said (at 665, [324]):

“What distinguished the source of danger in Pyrenees is not present here: its precise identification by the Council and inadequate attempts by it to remove it. The massive obligation of the State to which a contrary view would give rise is a relevant and important circumstance to which I should have regard, and which, although not decisive, weighs in the balance.”

64 The judgments in Pyrenees, Crimmins and Graham Barclay Oysters are variations on the themes in Sutherland Shire Council vHeyman. The variations do not represent a significant departure from anything that was said by Mason J in that case. The later judgments refine (and, as I have noted in [23] above, in one respect expand) the general propositions laid down by Mason J and adapt them to the particular circumstances of the cases concerned. A duty of care was recognised in Pyrenees and Crimmins because of the exceptional circumstances in each; not because a radically new principle was laid down.

65 In summary, the following propositions can be drawn from Pyrenees, Crimmins and Graham Barclay Oysters:

(a) The totality of the relationship between the parties is the proper basis for the determination of a duty of care.
(b) The category of control that may contribute to the existence of a duty of care to exercise statutory powers includes control, generally, of any situation that contains within it a risk of harm to others.
(c) A duty of care does not arise merely because an authority has statutory powers, the exercise of which might prevent harm to others.
(d) The existence of statutory powers and the mere prior exercise of those powers from time to time do not, without more, create a duty to exercise those powers in the future.
(e) Knowledge that harm may result from a failure to exercise statutory powers is not itself sufficient to create a duty of care.

The facts of the case to which this Court may have regard

66 The trial judge, Curtis J, made several findings of fact that are relevant to this appeal. As appears below, however, some facts that might be thought to be relevant to the duty of care issue were not determined.

67 At the Wallerawang power station, Mr Hay worked in the installation and ducting of coal crushing mills. Curtis J found that, during the course of Mr Hay’s employment, the conditions under which workers, in that area, were required to work were “frequently, obviously, and dangerously dusty”. It is to be noted that this particular finding is not a finding that the dust included asbestos.

68 The mills were situated at ground level. They were below some boilers and steam piping. The boilers rose to a height of 125 feet above ground level. Men working above Mr Hay applied most of the asbestos lagging.

69 Mr Hay gave evidence, which Curtis J pointed out was unchallenged, as follows:

“’[When asbestos sheets were sawn,] fine asbestos particles could be seen everywhere in the atmosphere and sometimes the ground was white with particles which were so concentrated they looked like snow flakes.
It was common to pick up the asbestos lagging and throw it to the ground at which clouds of dust would rise from the sheeting. I recall that asbestos particles were constantly in our clothes and hair”.

148 I come to the issue of prior intervention to eliminate the risk.

149 In Pyrenees, the Council, on 12 August 1988, sent a letter to the occupier of the premises where the fireplace was situated drawing attention to the fire hazard constituted thereby. The letter concluded:

“It is therefore imperative that the abovementioned fireplaces be not used any circumstances unless: -
(a) Structurally sound repairs are made to make the chimneys and fireplaces safe.
(b) General repairs are made to mortar and brickwork to make the walls heat resistant and prevent smoke leakage.
(c) Alternatively, repair the fireplaces structurally and seal both fireplaces openings permanently and discontinue the use.”

150 Brennan CJ (at [340, [11]), Toohey J (at 353, [47-49]) and Gummow J (at 383-384, [151]) accepted that, in sending the letter of 12 August 1988, the Council exercised the power conferred upon it by the relevant legislation. I have drawn attention to the fact that in Graham Barclay Oysters McHugh J (at 581, [94]) said that the Council had come under a duty of care in Pyrenees “because it knew of the risk of harm to specific individuals, it had power to take steps to eliminate the risk and importantly, at an earlier stage, had given directions to eliminate the risk”. The giving of “directions”, to which his Honour referred, was the sending of the letter. Kirby J (at 631, [249]) took into account that, by inspecting the premises and sending the letter, the Council had embarked upon preventative action in the exercise of its statutory powers.

151 Thus, in Pyrenees, in addition to the inspection by the Council, there had been a positive exercise of its powers to compel affirmative action (an exercise that proved to be inadequate).

152 In the present case, Mr Douglas argued that the State had “embarked upon the exercise of their powers by going along and inspecting [the premises and] getting a report”. By the “report” he was referring to the Jones report. He submitted that the Jones report was a “warning signal like the letter in Pyrenees”.

153 The Jones report, however, was not akin to the letter to the Council in Pyrenees. Although it set out recommendations (that were not implemented), it was not a document that called for or was capable of compelling affirmative action on the part of Rolls Royce or anyone else. It was not a statutory direction to eliminate the risk (as the letter in Pyrenees was).

154 The acts of the State relied on by James Hardie did not increase the risk of harm to any person, and did not engender in any relevant person a sense of reliance on the State. In my view, they are not of particular significance in determining whether a duty of care arose.

155 There are other factors that militate against the recognition of a duty of care in this case.

156 As in Graham Barclay Oysters, this is a case “where the duty allegedly is owed not to industry participants but to the ultimate consumer” (see Gummow and Hayne JJ at 596, [144-145] and 610, [185]). This is, in itself, a factor to be taken into account. The reality is that, practically speaking, the State can only be liable if the employer is liable. The claim by James Hardie is an attempt by the manufacturer and supplier, a party directly responsible (with others) for the injury suffered by Mr Hay, to redirect the cost to it of having to pay part of Mr Hay’s damages. Of course, James Hardie is perfectly entitled to assert such a claim, but the overall picture is such that the need to recognise a duty of care by the State to Mr Hay is less than compelling from a social point of view.

157 In Woolcock Street Investments Gleeson CJ, Gummow, Hayne and Heydon JJ said in regard to the vulnerability of a plaintiff in cases where a duty of care to avoid economic loss has been held to have been owed (at [23]):

“‘Vulnerability’, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, ‘vulnerability’ is to be understood as a reference to the plaintiff’s inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant.”

Plaintiffs in circumstances such as the present would be able to protect themselves from the consequences of the State’s want of reasonable care by relying on and claiming from those primarily responsible for the loss, namely, their employers, the suppliers and the owners and occupiers of the property involved.

158 Recognition of a duty of care in the present case would render the State liable to a “massive obligation” (per Callinan J in Graham Barclay Oysters at 665, [324]). The massive obligation would flow from the State being seen as potentially liable for failure to exercise its statutory powers whenever it has or ought to have knowledge that a work site is hazardous to workers, or that workers are working in conditions that could cause them harm. In other words, on James Hardie’s argument, liability might attach to the State every time a worker is injured in circumstances where the State knew or ought to have known of the dangers on the site to which the worker might be exposed. That is going far indeed, and a finding of a duty of care that would lead to the incurring of extensive obligations in a multitude of situations is, to paraphrase Callinan J in Graham Barclay Oysters (at 665, [324]), a relevant and important circumstance that, although not decisive, weighs in the balance. As was said in Woolcock Street Investments by Gleeson CJ, Gummow, Hayne and Heydon JJ (at [97]):

“In determining whether the common law should recognise a duty of care, the possibility that its recognition might lead to a flood of claims is a ground for rejecting the existence of the duty.”

159 A further factor is that the duty contended for is a duty to control the conduct of third persons. As was said in Woolcock Street Investments by Gleeson CJ, Gummow, Hayne and Heydon JJ (at [89]):

“The common law has always been reluctant to impose a duty to control others.”

160 In Parramatta City Council v Lutz Kirby P referred (at 308) to the judgment of the Privy Council in Rowling v TakaroProperties Limited [1988] AC 473. In that case Lord Keith referred to the danger of imposing excessive burdens on public authorities. Kirby P discussed his Lordship’s remarks in the following terms:

“Lord Keith of Kinkel referred to a number of circumstances from which he concluded that it would not be appropriate to impose a legal duty of care on the Minister in negligence … Whilst it was to be hoped that, as a general rule, imposition of liability in negligence would lead to a higher standard of care in the performance of the relevant type of act, sometimes not only might this not be so but the imposition of liability might even lead to harmful consequences (at [502]):
‘… the cure may be worse than the disease. There are reasons for believing that this may be so in cases where liability is imposed [upon] local authorities whose building inspectors have been negligent in relation to the inspection of foundations, as in the case of Anns v Merton London Borough Council (1978) AC 728 itself; because there is a danger that the building inspectors of some local authorities may react to that decision by simply increasing, unnecessarily, the requisite depth of foundations, thereby imposing a very substantial and unnecessary financial burden [upon] members of the community … “
In the present case, it was urged that, if local government authorities acted prematurely in issuing demolition orders and were too rigid and inflexible in enforcing such orders once made, (lest they be held liable in negligence for the subsequent losses caused to ratepayers during any delay) the result could be unnecessary interference by such authorities in the normal prerogatives of property owners. It could provide oppressive administration, contrary to recent beneficial developments in administrative law in Australia both by statute and in the courts.

161 Considerations of this kind arise in this case. A finding that there is a duty of care may lead to the giving of premature and unnecessary directions and would be an incentive to not inspect particular buildings where it is known that hazards to workers are not self-evident and may be hard to find.

162 In all the circumstances I do not think that a duty of care as contended for by James Hardie should be imposed (that is, even assuming actual knowledge of the State at all relevant times of the possibility that a brief exposure to asbestos might cause the workers serious harm).

163 I propose that the appeal be dismissed with costs.

164 McCOLL JA: I have read Ipp JA’s reasons. I agree with them and the orders he proposes.

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Last Modified: 05/28/2004