Barclay v Penberthy

[2011] HCATrans 333

[2011] HCATrans 333

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P25 of 2011

B e t w e e n -

AARON BARCLAY

Applicant

and

ALEC PENBERTHY

First Respondent

FURGO SPATIAL SOLUTIONS PTY LTD ACN 008 673 916

Second Respondent

NAUTRONIX (HOLDINGS) PTY LTD ACN 009 067 099 AND L-3 COMMUNICATIONS NAUTRONIX LTD ACN 009 019 603

Third Respondents

MALCOLM ANTHONY CIFUENTES

Fourth Respondent

MICHAEL BRIAN KNUBLEY

Fifth Respondent

JULIE ANNE WARRINER

Sixth Respondent

JANET GRAHAM

Seventh Respondent

OZAN PERINCEK

Eighth Respondent

Application for special leave to appeal

HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 9 DECEMBER 2011, AT 11.06 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, QC:   May it please the Court, I appear with my learned friends, MR H.J. LANGMEAD, SC and MR M.D. RUSH, for the applicant.  (instructed DLA Piper Australia)

MR D.J. FAGAN, SC:   May it please the Court, I appear with my learned friend, MR G.C. RICHARDS, for the first and second respondents.  (instructed by SRB Legal)

MR P.W. COLLINSON, SC:   If the Court pleases, I appear with my learned friend, MR A. GOLEM, for the third respondents.  (instructed by Freehills)

HAYNE J:   There is no appearance, I think, for the fourth to seventh or the eighth respondents.  Yes, Mr Walker.

MR WALKER:   Your Honours, may I go directly to the question whether the question arises.  It has been put against in the exchange of written submissions that “per quod servitium amisit” was, in any event, in play throughout these proceedings.  That is not so.  Could I take your Honours first to what is found behind tab 7 in the list of authorities and materials for Nautronix and, in particular, to the outline of submissions – closing submissions on behalf of plaintiffs, including Nautronix.  At paragraph 172, page 21 of that extracted typescript one sees that far from per quod being asserted for Nautronix, it was asserted, correctly, with respect, given the issues joined, that it was not necessarily a trial:

to resolve the arguments raised by the defendants, namely that the Nautronix parties cannot recover damages for so-called “pure economic loss” –

and then the part that matters –

or that part of its damages claim would be defeated by the common law principles relating to the action “per quod servitium amisit”.

HAYNE J:   What is the reference to “part of its damages claim”?

MR WALKER:   At least to the death of two of the persons. 

HAYNE J:   The SS Amerika point?

MR WALKER:   Yes.  The next passage which follows picks up both what I have said in answer to Justice Hayne and also the clear positive statement of the nature of the claim.  Paragraph 174:

The Nautronix plaintiffs claim damages caused by the negligence –

et cetera.  One sees, see 178 and 179, matters which, so far as the pleading is concerned, shows that there were material facts required for success by the Nautronix plaintiffs going far beyond and into different areas, including reasonable care, than those required by simple per quod.  Then one comes on the next page extracted in the section commencing with paragraph 211 where there are what I think the Americans call scare quotes around the heading “Per Quod Servitium Amisit”.  For once, it has a significance that one detect, given the intervention of what has happened by way of the volte‑face in this Court.  They were not putting per quod.  There was the slightest bit of disdain for the fact that the Latin tag of an antique cause of action not being pressed by the plaintiffs had been employed in argument against them.

HAYNE J:   I think that you might perhaps be stretching a bit when we see pure economic loss is also quoted off, are you not, Mr Walker, but there we are?

MR WALKER:   That may be truly scare quotes.  They may be nervous about the concept, your Honour.

HAYNE J:   Yes.  Who is scared, Mr Walker?  Let us come to a better point.

MR WALKER:   My point is not the typographical point but that what follows in substance is saying we do not have to be worried about anything that arises and has been held to apply to a per quod action because we are not running that.  We are running, see 216(a), a breach of duty of care.  That was how the matter was at trial.  The test of the matter in the Court of Appeal is even more telling as to the fact that this case truly does present a case where the use of per quod reasoning for the purpose of imposing a duty of care, breach of which sounds in negligence, is raised for the first time and, importantly, in this Court.

In the Court of Appeal where the complaint was that there had been a failure to find a duty of care and to award damages for the negligence constituted by its breach, it would have been an obviously straightforward proposition to have argued that of course – in that part of the issue and a number of complex issues before the Court of Appeal – there was no need to worry about negligence because there was, of course, a cause of action in per quod.  There is no joining of issue either formally or informally, either by reference to what the rules and discipline of litigious process would require or common sense would suggest was necessary in order to make that simple point now apparently sought to be raised against us in a special leave application.

It is for those reasons that, in our submission, the question very squarely arises, and the principal objection to the grant of special leave, namely, that it will make no difference because there always was a per quod action itself, is completely wrong.  The reverse is the case.  The second point I wish to make concerns the nature of what we respectfully submit are the errors committed by Justice McLure and agreed in by her Honour’s colleagues.  Could I take you in the application book, please, to page 199, paragraph 110.  This is a conclusory paragraph which demonstrates, in our submission, the nature of the error.

CRENNAN J:   You are contesting the proposition that it is a closely related common law action?

MR WALKER:   Very much so.  If I can be facetious, it might be that the fact that historically in what might be thought of as chapters in Holdsworth you will find things nearby does not make them closely related particularly when the proximity is intended to throw up contrast.  There is massive conceptual and radical difference between a cause of action per quod and a cause of action in negligence.  The radical difference is indeed underlined by the concession, properly made, with respect, that in pleading terms, the Bullen & Leake test, they are quite different and not in incidental fashion.

CRENNAN J:   At 108, just on the previous page, her Honour points to a difference, that is the limited class point which you make, of course, in your submissions, then her Honour raises an analogy.  Does her Honour anywhere else deal with this closely related point?

MR WALKER:   No, and, in our submission, that is something which is most deserving of attention in this Court.  It is to be recalled that what her Honour is setting out to do is to follow the precepts of this Court concerning consideration whether there is a duty of care.  In our submission, whatever epithet be applied but picking incremental as, with respect, a classical one, this is not incremental, it is both enigmatic and large, and for that ‑ ‑ ‑

CRENNAN J:   Because per quod would not require a breach of duty.

MR WALKER:   No, not at all.  Exactly so.  It is for those reasons, in our submission, that when one looks at paragraph 110, that is the first, we submit, serious error, but for a special leave application, very important issue to be determined by this Court.  A second thing, my third point, the second objection to the reasoning in the court below that we would seek to raise for this Court’s consideration is also found in paragraph 110.

The notion that there is a legitimate expectation of so‑called consistency is, in our submission, a misunderstanding of notions that are in other cases and quite different contexts, as explained by us in our written submission, concerned with questions of coherence.  There is, in our submission, here nothing truly analogous with what one sees, for example, in General Jones and the rule in Rylands v Fletcher, to which we have made reference.  This is not the same kind of approach, in any event.  Her Honour does not, of course, assume to be carrying out the kind of exercise available for this Court exemplified by General Jones and the rules in Rylands v Fletcher.

I then come to the fourth point and switch, with respect, from criticising Justice McLure’s reason to seeking to add all the strength we can muster in support of what her Honour would otherwise have done, that which makes this case an appropriate one for a grant of special leave

because the prospects of success, are we correct, in our legal arguments seem to be very good. 

At page 200 to 201, commencing at paragraph 116 and culminating in paragraph 125, by the application, with respect, of impeccably stated principle according to authority and an unexceptionable application of that to the facts, her Honour opines that an opposite result would have followed.  That is a combination which, in our submission, is an extremely apt and favourable one for a grant of special leave.  It means that the point concerning judicial method and the development, if there is to be any, of the common law of negligence by reference to an antique cause of action is thrown up very sharply and will be decisive.  May it please the Court.

HAYNE J:   Yes, Mr Fagan.

MR FAGAN:   May it please the Court.  We do not seek to intrude in the argument of whether there ought to be special leave but we just have interests to protect. 

HAYNE J:   If leave goes, you want leave?

MR FAGAN:   Yes.  I understand we would normally apply for that at the commencement of the appeal, but in this case, if your Honours were reminded to grant special leave, you might see fit to grant that leave straightaway.  Mr Walker says that he would not oppose that.  Our grounds would be exactly as his, as they appear in his application book at page 233, I think, with suitable changes of names.  We would just seek that the consequential order be different, namely, that Nautronix claim for economic loss be dismissed altogether.  The order that he seeks is that it fall upon us.  The other interest that we seek to protect is what my learned friend, Mr Walker, has just referred to and that is that if special leave were to be granted, it should be on terms that there would not be a cross‑appeal to re‑agitate the application of orthodox principles with respect to pure economic loss claim because that has been considered at first instance.

HAYNE J:   Sorry, I do not follow that.  What is the condition, you say?  I was not conscious of a condition being sought by ‑ ‑ ‑

MR FAGAN:   No.  All I am submitting is that if there is leave granted on this point, that the result should be that the case is decided in accordance with paragraphs 116 to 125, as the Court of Appeal stated.

HAYNE J:   Leave is granted, Mr Fagan.  Leave is granted.  Where it falls out ‑ ‑ ‑

MR FAGAN:   Well, for any different result to follow, it would seem the Nautronix parties would have to cross‑appeal against what Justice McLure decided at paragraphs 116 to 125 because otherwise that would stand.

HAYNE J:   I am not sure that it is cross‑appeal, but there we are.  I understand the point you seek to make.  Yes, Mr Collinson.

MR COLLINSON:   If the Court pleases.  We have two grounds of opposition to the grant of special leave.  We do not resile from the proposition, in our submission, that the pleadings in the first instance hearing did raise per quod, but I want to return to that.

HAYNE J:   But the proposition at 253, paragraph 1 is much broader.  Do you seek to maintain the proposition in paragraph 1, “proceeding was conducted on the basis”?

MR COLLINSON:   Well, yes, I do, and I will explain that, but I might return to that, if I could.  The first submission we want to make is the absence of any public importance with the point.  Let us assume our friends are right that the reasoning of the Court of Appeal was quite incorrect and, secondly, that the per quod action was not an issue for the primary judge.  The appeal issue will, of course, not examine in any respect whatsoever the validity going forward in modern times of the per quod action.  The special leave question assumes the validity of the per quod action.  So if one thinks of the practical relevance of the appeal point, there really is none. 

Any future action which might involve injuries to employees of an employer will lend themselves either to a tort claim in accordance with the principles developed by the Court of Appeal or a per quod action, but because the per quod action is available and yields the same damages, a decision by this Court that it is erroneous to see a common connection between per quod and negligence and to reason from a legitimate expectation that because per quod exists therefore there should be a duty of care in respect of pure economic loss has no practical relevance for the Australian community.  There will not be a case by definition where a litigant is in a position to assert a pure economic loss claim but not equally in a position to assert a per quod claim.  So we say, how can there be any public importance of the issue in those circumstances?

The second point we rely upon is we do maintain the contention that the pleadings of the issues in the primary proceeding did raise per quod.  Can I point out to the Court that our friends have misstated – if I could start with paragraph 44 of the applicant’s defence which is under, I think, tab 5 of your Honours’ materials.  I do not want to pretend before your Honours that per quod was pleaded with any elegance in the proceeding at first instance, but I think a starting point is paragraph 44.  What is not pleaded in paragraph 44, and it is important that it not be misread, is this plea, “To the extent that the sixth plaintiffs seek to rely on the action per quod, such claim is not available for the death of those employees.”  The comma is located at a later point and that is critical because what it means is the plea is, “To the extent that you are pleading per quod for the deceased employees, you are not permitted to do that at law.”  Necessarily that is conceding that the plea of per quod is being advanced by the sixth plaintiffs in respect of the injured employees, otherwise the plea really makes no grammatical sense.  Going to the statement of claim itself ‑ ‑ ‑

HAYNE J:   But the bottom line question, Mr Collinson, is not what you can now glean from the pleadings.  Was the case conducted at trial on the basis that an action per quod was on the table?

MR COLLINSON:   It was not in final submissions, it appears, but in terms of what is raised as an issue ‑ ‑ ‑

HAYNE J:   I ask you that question framed in that way, Mr Collinson, because of the way in which paragraph 1 is framed.  I would draw your attention to what was said by the Court in Hancock Foundation v Porteous (2000) 201 CLR 347 about the importance of accuracy in these statements.

MR COLLINSON:   Your Honour pleases.  What I wanted to point out to the Court was that in the statement of claim it is pleaded – this is the substance of our submission.  It is there on the pleadings.  Our submission then proceeds that the ‑ ‑ ‑

CRENNAN J:   When you say it is there, you mean the facts are there?

MR COLLINSON:   The pleading of per quod, yes, is there on the pleadings.  We put that on this footing, that the principles of pleading are that one does not plead a conclusion of law in pleadings.  A second principle in Wickstead Case is that the subjective views of the pleader are not to the point.  The point is, what does the objective plea reveal?  We point out in the statement of claim – if I could take your Honours to paragraph 21.2 – it is pleaded there under the heading “The Crash” that five employees of Nautronix Limited, namely those mentioned, boarded the plane.  Now, I can tell your Honours that paragraph 21.2 was admitted by both defendants in their defence and it includes a plea that the relevant plaintiffs, that is, the injured employees, were employees of Nautronix. 

So it is not to the point, for example, that – a point my friend on the right raises in their written submission – the trial judge is not very specific with his Honour’s findings about the employment relationship because that matter did not need to be subject to findings; it was admitted.  If I could take your Honours then to paragraph 23.2.  That pleads that Fugro and Penberthy failed:

to exercise reasonable care and skill in the piloting of the Plane . . . result in death or injury to the passengers –

that is relevantly the injured employees – with –

resultant economic loss to Nautronix Limited.

Those words are apt to fit a plea of per quod.  Paragraph 24 then pleads that a duty was owed to the first to fifth plaintiffs and Nautronix.  Paragraph 30 puts the plea that a duty was owed to the first to fifth plaintiffs and Nautronix by Barclay.  Then paragraphs 41 and 42 plead the loss by Nautronix.  It is plain from paragraph 42 that the loss is pleaded as the loss of value in terms of the progression of the development of the intellectual property and corporate knowledge of Nautronix of those employees.

Now, it is right to say that the issue of per quod received little attention in the trial before the primary judge.  Nonetheless, if cases are to be conducted in accordance with the pleadings, we have the fact that the plea is there.  All you have to do for per quod is plead the employment relationship and the duty owed to the employees and paragraph 44 admits it.  It has to be said to be conceding that per quod is alive in respect of the injured employees.  In our submission, there is no other way to interpret it.  Then it is fair to say that the submissions of the respondents to this appeal in final submissions did not seem to press an argument that even if there was not a duty of care in respect of pure economic loss, a per quod action was available.  Plainly that is right. 

However, it is worth mentioning to your Honours that if one looks at the Court of Appeal decision, President McLure made express reference to the fact that the Barclay party conceded that per quod was an issue, and it is application book, page 194, paragraph 94, and putting it plainly, that first sentence in paragraph 94 aligns with the construction of paragraph 44 of the defence which I have been contending for:

Mr Barclay took the view that Nautronix’s pleading of its claim for pure economic loss also relied on the action for loss of services –

and then there is the Latin tag.  Then it is not suggested by President McLure that that view by Barclay was incorrect.  It is mysterious, in a way, that the Court of Appeal did not seem to explore, in the light of what is said in paragraph 94, the question of why per quod did not represent an answer irrespective of this question of whether you could extend or apply pure economic loss where per quod was available.  It is correct to say that a cross‑appeal was not filed by the Nautronix parties challenging the adverse result for the Nautronix parties against Barclay in relation to negligence.  It is possible to ‑ ‑ ‑

CRENNAN J:   And no notice of contention.

MR COLLINSON:    No, that is so.  But paragraph 110, which is the source of the appeal, proceeds arguably on an assumption that the common law action is in the proceeding because where her Honour says, “In my view, the existence of this common law action is directly relevant” that can only mean, if one reflects upon it, that it needs to be available in the circumstances before the court.  If it is not available, then his Honour’s reasoning does not apply that you can then extend pure economic loss to align with it.  So her Honour seems to proceed upon an assumption that the common law actions exists in the proceeding, even though it is correct to say that there was not a cross‑appeal or a notice of contention.

It has not been adorned with clarity how per quod was articulated by my clients at various stages of this proceeding.  The adverse risk for them if special leave were to be granted is that having at least, in our submission, articulated it on the pleadings and if the special leave question were to go forward in this Court, they would lose the opportunity to contend that the successful result they presently now enjoy against both the pilot, Penberthy, and the engineer, Barclay, cannot be justified by reference to the availability of per quod.  So if your Honours were not with us on the question of a grant of special leave, we would ask that a condition be attached or some procedure if possible be allowed whereby our clients could contend that per quod justifies the judgment at the successful findings of liability on the part of those parties. 

It is not right to say that there is a complete absence of an airing of this cause of action and paragraph 44 – I do not think, your Honours, that from our knowledge of the transcript, there was any reference again to per quod after the openings until final submissions – the trial lasted about two weeks – and it is also relevant in considering the overall justice of the matter that senior counsel for Barclay in opening – and it is under tab 6 of your Honours’ materials – again consistently with President McLure’s interpretation at page 980 of the transcript said:

There is a minor side issue that I can say for submissions –

it says “say” but it must be “save” –

which is that the action per quod servitium amasit is not available in respect of deceased employees –

So again it has not been put in opening by Barclay that the action per quod is not being advanced in respect of injured employees.

CRENNAN J:   If the per quod aspect of the proceedings had been clearer – I think you have virtually conceded it was not pursued in a particularly clear fashion – then Mr Walker’s client, Mr Barclay, may, of course, sought to have rerun the issue that divided the Court in Commissioner for Railways v Scott, that is to say, what is the class and is it confined to domestic servants?

MR COLLINSON:   There is two answers to that, your Honour.  The first is that that is said in submissions, but if that were so, why was it not pleaded in paragraph 44 of the defence?  True it is it is a point that would only be available to Barclay in this Court in the light of Scott, but nonetheless, if that were so, one would expect, along with the Baker v Bolton point that per quod and negligence are both not available for deceased employees, one would expect to see a plea raising the Scott point.  The second answer is that were our clients to be permitted to advance in contention or cross‑appeal the per quod action, our friends could contend in response that the per quod action is not available on account of Scott being invalid.  I have no further submissions.

HAYNE J:   Yes, thank you, Mr Collinson.  Mr Walker, looking at your notice of appeal, there is no ground there, I think, is there, that would put in issue what has been described as the rule in Baker v Bolton?

MR WALKER:   No, that is right.

HAYNE J:   That is, you would not seek in this Court to agitate those questions?

MR WALKER:   No, we do not.  The ruling at 199, paragraph 112, is not one against which we would contend, of course. 

HAYNE J:   Yes.  Thank you, Mr Walker.  There will be a grant of special leave in this matter.  That grant is to not only the applicant Barclay but also to the first and second respondents represented by Mr Fagan and Mr Richards.  Whether or to what extent the respondents put on notices of contention or seek special leave to cross‑appeal will be matters for them.  What estimate would counsel give of the likely time for the hearing of the appeal?  Mr Walker?

MR WALKER:   Your Honours, but for the two issues I am about to name, one day.  The two issues I am about to name are first, is there per quod?  Second, does it extend outside the household, domestic and menial? 

HAYNE J:   My feeling was that it may be safe to allow a day and a half.

MR WALKER:   Thank you, your Honour.

HAYNE J:   But that would be a day and a half, not two days.

MR WALKER:   Yes, and after what I will call the pleadings in this Court and the written submissions have been in, then counsel will be able to inform the Court if the day and a half is excessive. 

HAYNE J:   Yes.

MR WALKER:   The Court may inform counsel of the same.

HAYNE J:   Yes.  I again draw the attention of counsel to the timetable that cuts in today despite the date in December that the grant is made.  The Court will adjourn for a time to establish the video link. 

AT 11.39 AM THE MATTER WAS CONCLUDED