Bryan v Maloney

[1993] HCATrans 374

..

.

• JA

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Hobart No H9 of 1993

B e t w e e n -

ALLAN BRYAN

Applicant

and

JUDITH ANNE MALONEY

Respondent

Application for special leave

to appeal

DAWSON J TOOHEY J GAUDRON J

Bryan 1 9/12/93

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON THURSDAY, 9 DECEMBER 1993, AT 11.46 AM

Copyright in the High Court of Australia

MR B.J. SHAW, QC: If the Court pleases, I appear with my

learned friend, MR G.J. DIGBY, QC, for the

applicant. (instructed by Sly & Weigall)

MR P.W. TREE: If the Court pleases, I appear for the

respondent. (instructed by Zeeman Kable & Page)

DAWSON J:	Mr Shaw.
MR SHAW:	If the Court pleases, the question which arises here is whether the builder of a house, which is
built with defective footings, is liable to not the
person for whom he builds it but somebody who has
bought further down the line for the cost of repairing the defects when the only relationship
which exists between the builder and the subsequent
owner is those facts and the facts that when the
subsequent owner bought, she bought having looked
at the house and decided that it was soundly built
without knowing who built it or made any further
inquiries.

DAWSON J: In reliance upon the builder.

MR SHAW:  Yes, without any further reliance on the builder

than that. If the Court pleases, whether there was

any such liability was recently considered by the

House of Lords in the case of Murphy v Brentwood

when the House of Lords departed from its earlier
decision of Anns v Merton partly in reliance on

what was said by this Court in the Shire of

Sutherland case.

In Murphy v Brentwood - copies have just been handed to the Court - if I could take the Court to

what was said by Lord Bridge at page 475, in the

first paragraph on that page His Lordship addresses

the question of reliability of the manufacturer of

a chattel and comes to the conclusion that the

manufacturer of a chattel is not liable to somebody

who has acquired the chattel further down the line
for defects in the chattel itself which simply

renders the chattel less valuable in the absence of

a special relationship between the manufacturer and

the subsequent purchaser. That appears in the last

few lines of that first paragraph where

His Lordship says that the damage:

is not recoverable in tort in the absence of a

special relationship of proximity -

and he then goes on in the next paragraph to say
that the same principles were in his view

applicable to buildings, and again says that the

economic loss constituted by the diminution in

value of the building is not recoverable by the

Bryan 9/12/93

subsequent owner in the absence of a special

relationship. That is between the letters F and G.

At page 487 in the opinion of Lord Oliver, at the

bottom of the page just under the letter F and

going on to the next page, His Lordship points out

that anyone who builds something of a

semi-permanent nature must contemplate that

somebody may acquire it further down the line and

in effect says that that mere fact does not
constitute any special relationship of proximity.

Going back to the opinion of Lord Keith at page - - -

TOOHEY J:  Mr Shaw, just before you leave Lord Bridge, I am

just having a bit of trouble seeing the

relationship between latent and non-latent defects

and economic and non-economic loss and how what

His Lordship says ties into the facts of this case.

MR SHAW:  Your Honour, what the House of Lords was there

concerned with was not directly the question of the

liability of the builder, but it was the liability

of the district council. But the reasoning

proceeded from asking what would the position be in

relation to a builder and the subsequent owner.

What His Lordship said was that where one is

concerned with not damage or injury to a person

caused by a defect, not damage to other property

caused by a defect in the building or in the
chattel, but merely a defect in the chattel or
building itself which renders the chattel or
building in need of some restoration or repair in
order to put it into the state in which it would
have been had it been properly made in the first

place.

TOOHEY J:  On that approach, what is the significance of

"latent" as against "patent"?

MR SHAW:	The - - -
TOOHEY J: Except I suppose, a fortiori, if you rule out

liability in the case of "latent defect" or pure

economic loss in those circumstances, you rule it

out in the case of "patent defect", do you?

MR SHAW:  The relevance of "latent" and "patent" is really

more - it is relevant to two questions, I suppose.

It can be relevant to a question of limitation of
actions and it is also relevant to the question of
liability for damage which occurs after the defect,
damage to other property or persons after the

defect has been discovered, so that the defect is

known of. It is not directly relevant to the

question of liability in respect of the pure

economic loss, save for this, Your Honour, that it

may determine or may be thought to determine to

Bryan 3 9/12/93

whom the liability is, assuming there is any

liability, because if the house is still believed

to be properly built and is sold on that basis,

presumably the person who sells it on that basis

has suffered no loss.

TOOHEY J: But vis-a-vis the ultimate purchaser who does

suffer pure economic loss, it is hard to see what

particular relevance the distinction has.

MR SHAW: That is so, Your Honour, yes. At page 469

Lord Keith refers, between the letter D and going

over to the next page, to the position in the

United States and in Canada which he regards as

supporting the conclusion to which the House of

Lords was coming in this famous case, namely that

there was no liability, and says that one of the

United States cases which had been relied on in

Anns' case had been departed from in the United

States. So that the position is that in England, in the United States, in Canada, liability of the

kind which has been held to exist here has been

held not to exist.

The court below had the advantage of having

but said despite the decision in the House of	available to it this decision of the House of Lords conclusion that liability does exist. That seems
to be a very strange thing to have happened in view
of the fact that Anns was departed from in Murphy v
Brentwood partly in reliance on a decision of this
Court, but nevertheless that is what the court said. But it did not point to any express decision of the Court because there is none, nor did it point to any express dicta which leads to the conclusion to which the court came.
In our submission, if one in fact looks at the decisions of this Court - and if I might now go to
could take the Court to page 576 in the judgment of Hawkins v Clayton, a copy of which has also been handed up, a decision of this Court in 1987. If I
His Honour Justice Deane. This case does not
appear to have been referred to in Murphy v
Brentwood but it will be seen that what His Honour
says uses the precise words of Lord Oliver at the -
when I say the precise words, I mean the very words
that Lord Oliver used to describe what is necessary
in order to give rise to the duty of care, namely
that there be some special elements in order to establish the duty of care.
If I might go to the top of page 576, he there in the first five or ten lines sets out what the
position is where what is concerned is physical

Bryan 9/12/93

injury to persons or to other property. At about

point 3 on the page, His Honour says:

That cannot, however, be said of cases in the

area where the plaintiff's claim is for pure

economic loss. In that area, the categories

of case in which the requisite relationship of
proximity is to be found are properly to be
seen as special in that they will be

characterized by some additional element or

elements which will commonly (but not

necessarily) consist of known reliance (or
dependence) or the assumption of

responsibility or a combination of the two.

So His Honour too says one needs something special.

As the House of Lords points out, there is, in the

facts that they were postulating there and in the

facts which actually occurred here, nothing

special. So that, in our submission, when one

looks at the decisions of this Court, they lead

rather to the conclusion which one would have,

prima facie, expected, namely that the decisions of

this Court are likely to be in accordance with the

decision of the House of Lords in Murphy v

Brentwood rather than depart from it.

If I might now go to the Sutherland Shire

Council case, a copy of which has also been handed

up. This is the only passage that I have been able

to find in the decisions of this Court which seem

directly to bear on the question which arises here,

and it is in the judgment of Justice Brennan at
page 493. Immediately under the citation from

Lord Keith in the Peabody case, His Honour says:

If negligence in the construction of a

building can properly be seen to be the cause
of physical damage to that building - a

proposition to which I give no assent for the

moment -

the House of Lords, that in looking at such damage

if I might stop reading there and say His Honour

it is best to regard it as pure economic loss

rather than physical damage to the building. But

there seem to be expressions in many places that
the exact categorization of the kind of damage is

not necessarily determinative of any answer to the

question. His Honour goes on:

the better view is that only those with an

interest in the property at the beginning,

when the initial damage is done, can recover.

Subsequent purchasers in the position of the

respondents have no cause of action. The

Bryan 9/12/93

cause of action, if it existed, is vested in the original owners unless they assign it to their purchasers (a question not raised in

this case).

When one considers what the position is in relation

to a building, it is perhaps even more -

DAWSON J:  So that the initial owner, that is the person who

contracted with the builder, might have an action outside contract if he knew of the damage but, if

he does not know of the damage and then sells, he

does not suffer any loss so he does not have any

action, it not being apparent, and the subsequent

purchaser does not have any action because he does

not have any special relationship.

MR SHAW: That may be so, Your Honour, but what I was going

to say was this: if a builder builds, or somebody

who commissions him to build, there will almost

always be a contract. The question of liability

between those two will almost always be governed by

the terms of the contract. Very likely the

contract, if it is a sophisticated contract, will

have terms relating to final certificates and the

consequences of final certificates and all that

sort of thing. So that the owner may have no cause

of action simply because either the building was

built precisely as it was intended to be built,

even although it was negligently constructed - - -

DAWSON J:  Or the entire relationship is governed by a

contract.

MR SHAW:  Or the entire relationship is governed by a

contract. So you are in a position where he cannot

sue because he has contracted that he is in a

position where he cannot sue. So the builder is

not liable in those circumstances to the original

owner because that is what he contracted for.	The
subsequent purchaser cannot sue the person from

whom he bought because he has not contracted to buy

a building with sound foundations or habitable or

whatever it might be because there are no terms of

the contract which provide for that. If there are
terms of the contract, of course he can, but one

assumes that it would be the ordinary sort of

contract and he cannot. So he has not contracted

to buy a building which is sound or has sound

footings or whatever, so he cannot sue the person

he bought from.

The person he bought from who contracted to

build it with the builder cannot sue because he has contracted from the builder that there is not to be

liability after a final certificate or whatever,

but nevertheless, it is said, the subsequent

Bryan 6 9/12/93

purchaser, not having contracted to buy something

which is sound, can sue the builder because it is

not sound, although the person with whom he agreed to make it cannot sue him because it is not sound.

So that, in our submission, the conclusion

leads to quite absurd results and, what is more,
will have extremely serious effects so far as

builders are concerned because, if they cannot

protect themselves by final certificates, they are

going to have to try and find some other way. I am

not quite sure how, but it opens up the question of

liability not just of builders, although that is

the specific question in this case, but also, as

the House of Lords points out, the reasoning seems

to apply equally to chattels. So that what has

been held here is, it is submitted, a matter of

very great significance and one would, at first

blush at any rate, assume to be wrong and is

certainly very likely wrong. The courts below have

relied on what seem to be merely general feelings

about what this Court might do if it were asked the

question.

DAWSON J:  They said that the special relationship did exist

because of reliance on the builder, the reliance

being constituted by an inspection of the building.

MR SHAW:	Yes.
DAWSON J:	You say that is not - - -

MR SHAW: That is every case, Your Honour. Unless you

bought the house without looking, which I assume is

a rare case, it is every case.

TOOHEY J:  We are to take it this is a test case, are we,

Mr Shaw?

MR SHAW:  Your Honour is to take it it is a very important

case and will lead to very - - -

TOOHEY J: There is another question that follows depending

on your answer.

MR SHAW:  Your Honour, obviously it is a case which is very

important for builders. I cannot answer

Your Honour yes because a test case seems to me to

mean something that somebody has agreed is going to

determine things for a whole class of people, and

it is not a test case in that sense, but - - -

TOOHEY J:	No, I was looking at it from the point of view of the respondent if special leave were granted who
has been successful thus far at the trial and on appeal and - - -

Bryan 7 9/12/93

MR SHAW: That is why I was being a little bit cautious in

answering Your Honour's question.

TOOHEY J:	I understood your caution.
MR SHAW:	Your Honour, I have to say that from our point of

view we are looking at it as a case of more

significance than simply as between these parties.

DAWSON J: That has ramifications as to costs, does it?

MR SHAW:  I thought that was what His Honour was asking me.

TOOHEY J: That was going to be my second question.

DAWSON J: Undoubtedly it was.

MR SHAW:  I understand that, Your Honour.

DAWSON J: Well, what do you say about it?

MR SHAW:  What I say about that, Your Honour, is I

understand what in those circumstances the Court is

likely to say.

DAWSON J:	And your attitude?
MR SHAW:	If the Court does say that, I am reluctant to

agree but will.

TOOHEY J:  I hope this makes sense when somebody reads the

transcript.

DAWSON J: Yes, Mr Tree.

MR TREE:  Your Honours, can I hand up some outlines of

argument. Your Honours, in my submission it is of

assistance in this application to analyse the chain

of reasoning which Their Honours in the Full Court

adopted in arriving at the conclusions which they

did. In my submission, the chain of reasoning went

along these lines, that they concluded that there

was a duty of care in existence because they found

that there was the special relationship of

proximity. In turn, they concluded that there was

a special relationship of proximity because there

were circumstances which ought give rise to that

special relationship and there was no policy reason

as to why that special relationship ought not be

found.

In my submission, the approach of

Their Honours in the Full Court has the dual approbation of this Court in the sense that the

manner in which Their Honours approached the task

before them is the identical way in which this

Court has approached similar questions in relation

Bryan 8 9/12/93

to pure economic loss. The second form of

approbation is that the principles relied upon by

Their Honours at all stages during the course of

their reasoning were principles which have been

enunciated in decisions of this Court.

It is my principal submission, Your Honours,

that the principles relied upon in the court below

are principles which are beyond doubt. They are

principles which are established by this Court in a

consistent line of authority starting from Caltex

Oil and perhaps most lately in the decision of Gala

v Preston. Your Honours will see that I refer to

all of those authorities at paragraph l(a) of the

outline. In my submission, the principles which

have been relied upon by Their Honours in the court

below are beyond doubt in so far as they relate to

general principle.

The second submission which I make,

Your Honours, is that the circumstances which may

give rise to a relationship of proximity have been

the subject of both conceptual definition and

factual illustration by this Court. Your Honours

will see that both that conceptual definition and

the factual illustrations of it have been collated

by His Honour Mr Justice Underwood at page 43 of

the application book, line 42, to page 45, line 15.

Your Honours will see that at page 43 His Honour

Mr Justice Underwood deals with a statement of

conceptual principle as enunciated by His Honour

Justice Deane in the Sutherland Shire Council case

and then goes on to deal with other authorities.

Your Honours will see that at the bottom of page 43 and extending over to page 44, His Honour recites a

Sutherland Shire nature of the locus classicus as to the conceptual

significant passage from the

definition of proximity as enunciated by this

Court.

TOOHEY J:  Mr Tree, is there any decision of this Court or

of any Australian court which directly supports the

judgment of the court below?

MR TREE: There are some judgments at first instance which

support the reasoning of the court below but, in my

submission, Your Honours, what the Court ought be

directing itself to is not the factual result but

the line of reasoning by virtue of which that

result is arrived at.

DAWSON J: What, in other words you say they applied the

notion of proximity?

MR TREE: That is so, Your Honour.

Bryan 9 9/12/93

DAWSON J:  And even if it seems a little hard to accept that

simple inspection of the building establishes

reliance on the builder, nevertheless they were not

wrong in principle?

MR TREE:  Your Honour, I have two matters which I respond to

Your Honour's question. The first is that yes,

Your Honour is correct in saying that there is no

error or fundamental principle but there may - the

highest that my friend can place his submission is

that there is an error of conclusion as to the

application of that principle, and I develop that

further in my outline. The second point which I

would say in response to Your Honour's question is

that there were further circumstances relied upon

in the Full Court other than simple reliance as founding the special relationship. Your Honour

will see that those are dealt with at two locations

in the judgment below, firstly - - -

GAUDRON J: 

Does the question then not arise whether they

are capable of constituting reliance or capable of
bringing the relationship of proximity into
existence?

MR TREE: 

My response to Your Honour is this - - -

GAUDRON J: 

And more particularly in a one-sided situation,

as it were, where the builder simply is not party

to the inspection or anything of that nature.

DAWSON J:  The purchaser did not know who the builder was,

did he?

MR TREE:  No, Your Honour, there is no identification of the

builder. There is reliance upon the builder as a

general concept rather than upon - - -

TOOHEY J:  You say that, Mr Tree, but I was going to ask you

this question. Certainly in one judgment,

Mr Justice Underwood's, I think it is right to say

His Honour reached a conclusion of liability even

if there were no reliance.

MR TREE: That is so, Your Honour.

TOOHEY J:  So the proposition that you are supporting is not

simply a proposition that where there has been
reliance by a subsequent purchaser that the
relationship of proximity exists but, absent

reliance, that relationship exists.

MR TREE: Yes, Your Honour. In my submission, the decisions

of this Court point to a number of circumstances
which are capable of giving rise to the special
relationship of proximity. It is those

circumstances, the subject of the authority of this

Bryan 10 9/12/93

Court, which Their Honours have relied upon in the

court below as founding the conclusion which they

come to that the special relationship exists. If I

can take Your Honours to page 49 of the application

book in the decision of His Honour

Mr Justice Crawford with which His Honour

Mr Justice Cox agreed, Your Honours will see at

line 32 His Honour concludes, after having

discussed general principles:

A sufficient relationship of proximity

exists on the facts in this case. There
exists a close proximity between each of the

parties and the house which is the subject

matter of the action, one party being its

builder and the other its owner.

There I pause to say, Your Honours, that there is

no indication there of reliance. His Honour is

there talking about one species of causal

proximity, as His Honour Justice Deane spoke about

in the Sutherland decision. His Honour goes on:

Furthermore, and to adopt the words of Deane J in Sutherland at 498-8, there is "causal proximity in the sense of the closeness or

directness of the causal connection or

relationship between the particular act or

course of conduct and the loss or injury
sustained". There is also the element of

general reliance to which I have referred.

TOOHEY J: 

Is that the way in which proximity is normally

understood; to say that there is proximity
betwwn the parties and the house?

MR TREE: 

I think His Honour is there relating to the fact

that one is the builder of the house and the other

is the occupier of the house and he is looking at

the closeness of that relationship in a conceptual

way in the sense that one occupies the creation of the other. I think that is the - - -

TOOHEY J: It seems to imply that proximity arises from the

relationship not of the parties to each other but

from each of them to the house which one built and

the other occupies.

MR TREE: Yes, that is certainly one characterization, in my

submission, of His Honour's approach in that there

is an overlap of relationship in respect of the

house and by virtue of that overlap, there is

therefore some relationship between the parties.

But, in my submission, it is also capable of the

characterization that by virtue of that overlap,

there is in fact a relationship between the

Bryan 11 9/12/93

parties, although they are unconscious as to the
physical identity of either of them.

But, as I say, Your Honours, and perhaps in final response to Your Honour Justice Dawson's

question, it was not just reliance which was seized

upon by Their Honours in the court below as

justifying the finding of the special relationship

and, indeed, as Your Honour Justice Toohey has

pointed out, that in fact His Honour

Mr Justice Underwood concluded that there was

liability without finding or expressing any view as

to reliance in this instance. If I can take

Your Honours in the application book where

His Honour so concludes, that is at page 45 of the

application book at line 34 where His Honour says

as follows:

A basis for concluding that the appellant owed the respondent a duty of care is that the

former knew or ought to have known that the
latter, individually, not by name but as a

subsequent owner, not thereby being a member

of an unascertained class, would be likely to
suffer economic loss as a consequence of his

negligence.

His Honour cites as authority for that circumstance

the Chief Justice's decision in Caltex Oil.

His Honour then goes on to conclude another basis

on the basis of policy, and he reverts to certain
considerations there.

So it is my submission, Your Honours, that the court below has isolated circumstances of proximity

which are the subject of direct authority of this

Court and has based its conclusions by reference to

those circumstances and they have not seized simply

upon reliance. As I say, Your Honours, that is the

approach which this Court seems to have adopted in

considering the various factual situations which

have confronted it in the line of authority which I

have referred to.

My submission in relation to the first

paragraph in summary is this, that none of that

principle and none of those enunciated

circumstances are beyond doubt or, indeed, are the

subject of direct criticism in the House of Lords

in the Murphy v Brentwood decision. It follows

from that, Your Honours, that the link in the chain

of the reasoning of the court which the applicant

focuses its criticism on is the actual conclusion
that those validly existing and factually
established circumstances of proximity ought in
this instance to have given rise to the special

relationship of proximity. It is that narrow

Bryan 12 9/12/93

confined conclusion which is the true difficulty

which the applicant has in respect of the decision

of the court below.

They take no challenge in respect of proximity

being the necessary criterion of establishing
liability, they take no issue with the proposition
that those circumstances enunciated could or are

capable of giving rise to a special relationship.

There does not seem to be any factual challenge

that factually those circumstances existed. The

challenge is directly on the actual conclusion that

on these particular facts in this particular case,

the court ought to have concluded that the special

relationship in fact existed.

TOOHEY J: But that is what may make it an appropriate case

for a grant of special leave because the factual

elements can be abstracted, as it were, and left

with almost a pure question of law.

DAWSON J:  And, if I can add to that, the factual situation

is a common factual situation, I should have

thought.

MR TREE: Yes. In some respects one could also say that

about a driver and passenger in a motor vehicle

situation where ordinarily one would anticipate

that the requisite duty was owed by the driver to

the passenger, but of course there is no such
general principle as is illustrated by the decision

of the Court in Gala v Preston where, in each case

on each particular facts, the circumstances must be

analysed to see whether the special relationship of

proximity is made out on the particular facts.

Whilst it may be of some assistance to subsequent

courts in considering similar cases factually, in

my submission there is no general principle of duty

established by this decision because it is

necessarily confined to the particular facts on

which those circumstances are founded, or the

circumstances of proximity which - - -

GAUDRON J: But they are general facts.

DAWSON J:  What they amount to is that the purchaser had a

look at the house and decided to buy it, not being

able at that time to observe any defects; defects

subsequently occur.

MR TREE: Yes, and the other circumstances in addition,

Your Honour, that the builder knew or ought to have known that subsequent purchasers would be likely to suffer economic loss, and in addition the policy

considerations which His Honour

Mr Justice Underwood - indeed, all the judges

below - adverted to, and in addition the final

Bryan 13 9/12/93

circumstance of this causal proximity which is

alluded to by His Honour Mr Justice Crawford. So

that there were four separate aspects or four
separate circumstances which were cumulatively
relied upon in the Full Court below to justify the

finding of the special relationship in this

particular set of facts. My point is,

Your Honours, that the strength of those

circumstances and the number and combination of

those circumstances may differ from case to case.

To take, for example, the circumstance which

my friend has referred to, being a purchaser who

purchases a house which at the completion of

construction was subject to some certificate which

reduced the price that was paid for the building,

that, in my submission, would need to be one of the

circumstances which the court took into account on

those facts in establishing whether on those facts

the special relationship existed. So there is no

general proposition to be extracted from the
decision of the Full Court which would support the

notion that builders owe a duty to subsequent

purchasers. The proposition is that if you apply

the test of proximity and there are sufficient

circumstances justifying the finding of a special

relationship, then in those circumstances a court

is justified in concluding that the special

relationship and therefore a duty exists. In my

submission, that is what this case holds and it

holds no greater proposition than that.

Can I move on to the fourth paragraph of my

outline, Your Honours, and that arises from an

observation of His Honour Mr Justice Crawford at page 48 of the application book, line 10. There

His Honour alludes to the fact that in the

Full Court there was characterization - sorry, I

will read the passage:

the weight of judicial authority clearly The learned trial judge considered that

established that the action was one for economic loss rather than for damage to property. At the hearing of the appeal

neither party sought to argue to the contrary.

In my submission, that leaves the Court with something of a difficult choice to make because

this Court, if it is to make some pronouncement in

respect of the law of economic loss in relation to

this matter, would need to be or ought to be

satisfied that the characterization of the loss as

purely economic is indeed an accurate one.	To that
extent, if it were minded to make some

consideration of those matters, it would need to be

argued before it.

Bryan 14 9/12/93

DAWSON J: It would be.

MR TREE:  In my submission, it would be an unfortunate case

for the Court to have to select in which that issue

was not a live one in the court below. That is
why, in my submission, because those arguments have

not been ventilated in the Full Court, a more

appropriate vehicle - - -

DAWSON J:  It is purely a question of law and could be

argued on appeal even though it was not raised

below.

MR TREE:  I accept that, Your Honour. My submission is that

it would be more appropriate if the case which the

Court were to articulate matters in respect of pure

economic loss were one in which it had been argued

in the court below and it had been a live issue

during the currency of the proceedings. That is

the point which I make.

TOOHEY J:	The facts were canvassed, Mr Tree, were they not? There would not be any difficulty in reaching a
conclusion by reason of absence of evidence. The
evidence is there as to the nature of the damage.
MR TREE:	I certainly do not make any submission that the

Court would be disadvantaged other than by virtue
of not having the benefit of a decision below and

in being in the position that the grounds argued in

this Court may be expanded beyond those which were

argued in the Full Court. I do not say that there

is anything -

DAWSON J:  We have the benefit of some of our decisions on

the matter.

MR TREE: That is so, yes. Your Honours, could I move to

the final point in the outline of submissions, and
that is that in any event the decision of the court

below and the trial judge, looking at the result,

is correct. The first point which I make is that

it accords with established principle of this

Court, and I do not propose to retraverse those

matters. The second point which I make is that it

does not create indeterminate liability.

Their Honours are at pains to explain that the

liability is a one-off thing and that there is one

recovery subject to limitation periods and that it

is only members of a very limited class who can

subsequently recover.

The third point which I make is that the considerations of policy which Their Honours advert

to and which this Court encourages them to have

reference to are indeed valid considerations of

policy, and I do not propose to take Your Honours

Bryan 15 9/12/93

through them. They are dealt with both by the

trial judge and by all the judges in the Full Court
and, in my submission, those considerations of

policy are apt and are valid and lead to the conclusion that the Full Court and the trial judge's decision is an appropriate one.

The final point which I make, Your Honours, is

that the actual result is a just one. By that I mean that if there is to be a loss suffered, and there are competing persons who ought sustain that

loss, then it is the builder, that is the

perpetrator of the negligent act, who ought wear

the burden of the liability rather than an innocent

subsequent purchaser. In my submission, the

community's notions of justice would support that

as being an appropriate result.

Your Honours, there is one matter arising out

with that briefly. It is in some respects a

of my learned friend's submissions which I would

like to deal with, and that is the reasoning of

peculiar decision because, although it was decided

after all but Gala v Preston, reference is not made

to any authority of this Court other than the

Council of Sutherland decision. In that respect

Their Lordships' speeches reflect only the law as

articulated as at Sutherland and do not go on

further to consider the law as developed in such

critical cases as Hawkins v Clayton, where

Your Honours will recall that there reliance was

absent and there were some additional factors, either the assumption of responsibility or an

undertaking of responsibility, which were selected

by this Court as justifying the special

relationship of proximity in that case.

There is also flowing from that at page 481 of Their Lordships' reasons, of the reasons in the

speech of Lord Bridge.	Commencing at
E, His Lordship discusses the Council of the Shire

of Sutherland and at F concludes that this Court

held that the authority would be liable for damage
only if it were based upon reliance or only if it

was based on the principle of reliance, and yet

that is clearly an inadequate statement as to the

circumstances in which this Court has said -

GAUDRON J: But it is said in the context of a local

authority exercising statutory duties.

MR TREE: That is so, yes, I accept that, Your Honour.

GAUDRON J: Yes, which does rather suggest it may be more

accurate than your argument would query.

Bryan 16 9/12/93

MR TREE: Yes, I accept that, Your Honour, but the

difficulty is that in the Sutherland decision, that

was of course the factual scenario before this

Court.

GAUDRON J:  And of course that was the question in Murphy as

well.

MR TREE: That is so, but Their Lordships approached the

question quite differently. There they viewed the

liability of the local authority as being

derivative of the liability of the builder, and

that was of course a completely different approach

than that which was adopted by this Court.

Your Honours, for those reasons, in my submission,

it is inappropriate in this instance to grant

special leave.

DAWSON J:  Thank you, Mr Tree. We need not trouble you,

Mr Shaw. Special leave will be granted on condition that the applicant undertakes to submit

to an order for costs in this Court in favour of
the respondent in any event including the costs of

this application. Do you give that undertaking?

MR SHAW: If Your Honour pleases. Yes.

DAWSON J: That means that is the costs of the appeal, and I

will make an order for costs in this application

now on the basis of that undertaking.

MR SHAW: If Your Honour pleases.

MR TREE:  Your Honour, I rise to raise one matter which is

not in evidence before Your Honours but which has

been the subject of an application for costs which

is still unresolved in the Full Court, and that is

that the order sought in the Full Court is that the

costs be paid by a non-party, which is the Housing Industry Association. In due course, in the event

that the appeal were dismissed, it would be my

submission that an order for costs in this Court

ought be made against the Housing Industry

Association.

DAWSON J:  If you wish to raise that submission on appeal,

you could do that of course, and the Court can make

such order as they see fit.

GAUDRON J: Yes, except that, Mr Tree, if nobody represents

the Housing Industry Association and they are not a

party -

DAWSON J:  It is hard to see how an order for costs could be

made.

GAUDRON J: Yes.

Bryan 17 9/12/93

DAWSON J:	But that is a problem for you at a later stage.
MR TREE:	Yes, I accept that, Your Honour.
DAWSON J:	So special leave is granted with an order for costs of the application in favour of the
respondent and the grant of special leave is upon
the undertaking of the applicant to bear the costs of the appeal - that is the respondent's costs of the appeal - in any event.

MR SHAW: If Your Honour pleases.

MR TREE: Thank you, Your Honour.

AT 12.36 PM THE MATTER WAS ADJOURNED SINE DIE

Bryan 18 9/12/93