Fairfield City Council v Pisano

[1992] HCATrans 56

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S125 of 1991

B e t w e e n -

FAIRFIELD CITY COUNCIL

Applicant

and

FRANCESCO ANTONIO PISANO and

GUISEPPINA PISANO

Respondents

Application for special

leave to appeal

BRENNAN J

DAWSON J TOOHEY J

Fairfield 1 14/2/92

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 FEBRUARY 1992, AT 4.46 PM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:  May it please the Court, I appear with

my learned friend, MR M.T. McCULLOCH, for the

applicant. (instructed by Phillips Fox)

MR D.H. LLOYD, QC:  May it please the Court, I appear with

MR C.M. HARRIS for the respondents. (instructed by

Astridge & Murray)

BRENNAN J: Yes, Mr Jackson.

MR JACKSON:  Your Honours, may I hand to the Court a further

affidavit of Kevin Allan Gibbons in support of the

application, an affidavit sworn 13 February 1992,

and I would seek leave to file it in Court.

BRENNAN J:	What does it propose to show?
MR JACKSON:	Your Honour, it deals with the continuing

importance of the issue to which I will be

referring to in just a moment, notwithstanding that

section 317A of the Local Government Act has itself

been repealed.

BRENNAN J: Yes. You have no objection, Mr Lloyd?

MR LLOYD:	No, Your Honour.
BRENNAN J:	We are familiar with the judgments, Mr Jackson.

MR JACKSON:  Yes. Your Honours, the issue which it is

submitted merits the grant of special leave is
whether the terms of section 317A are capable of

giving rise to a cause of action in negligence in

favour of persons who rely on a certificate given

negligently under it.

Your Honours, may I go immediately to the core

facts and then to section 317A? Your Honours, the

respondents to the present application were

purchasers of a property, the house on which was
being constructed at the time of the contract.	The
house was later damaged by subsidence. That
appears at page 53, lines 9 to 11.	Now, the

Council, the applicant was, in the end, the only

financially substantial defendant. That appears at

page 53, lines 9 to 20.

Your Honours, the subsidence was caused

because there had not been compliance with the

approved plans in a number of respects which were

held to be significant. They appear at page 55,

line 30, through to page 56, line 27.

The cause of action against the Council was

based on a certificate given under section 317A and

the text of the certificate, Your Honours, is at

Fairfield 14/2/92

page 57. Now, the certificate, Your Honours,

between lines 5 and 15, is a certificate that the

building:

" ... in all respects complies with the Local

Government Act 1919 as amended, the Ordinances

made thereunder and the Plans and

Specifications, if any, approved by the

Council -

and so on.

Your Honours, the negligence found to exist

appears at page 59, lines 3 to 8. Other heads were

relied on but, in the end, it is what is set out at

paragraph 3:

In issuing the s 317A certificate showing compliance ..... knowing that the appellants

would rely upon the certificate and failing to

ensure that the matters set out in the

certificate were correct.

Now, Your Honours, moving from that, in the

passage which immediately follows, one sees the

ambit of section 317A as the primary judge had

found it to be. Your Honours, that appears at

lines 9 to 17, and the primary judge found:

That the Council in issuing as 317A

certificate had a duty to exercise reasonable
care in relation to persons such as the

appellants whom it knew, or ought to have

known, would rely upon the certificate.

Your Honours, the contention on the other

side - and I will come to the terms of section 317A next - that is our contention, appears, in essence,

at page 64, lines 2 to 5, and that is:

that the purpose of the statute was to protect

which might otherwise be taken by the issuing	a bona fide purchaser for value from an action	local authority, no more and no less.
Now, Your Honours, may I go immediately then

to the terms of the provision?

BRENNAN J: Let that be so. Your problem, as I read the

judgment, is that this was not a case of recovery

of damages for breach of the statutory duty, it was

damages for what might be described as a Shaddock

case of negligence and that is by reason of a

course of conduct adopted by the local authority

the reliance was placed.

Fairfield 14/2/92

MR JACKSON: With respect, Your Honour, no. The basis of

the judgment both in the Court of Appeal and at

first instance was on the basis that the cause of

action was brought about by the giving of the

section 317A notice and that it was that notice and

the obligations of the Council - Your Honour, I

will come to show that in a moment if I may - but

the performance by the Council of its obligations

in giving the notice that gave rise to the cause of

action. Your Honour, the Shaddock aspect of it, if

I can put it that way, comes about from no more

than the fact that the vendor asked for the

certificate; the Council gave one pursuant to a

statutory power. The argument is really no more

than that, with respect, Your Honour.

BRENNAN J: Well, it is a matter for you to dispel the

impression that I have acquired but the impression

that I have acquired from pages 64 to 66 is that it

was by reason of the facts that are there referred

to that the finding is supportable that this is a

case of the issuing of a certificate by a local

authority with knowledge that it is to be used by a

purchaser and, in reliance on that certificate, the

purchaser suffers damage.

MR JACKSON:  Your Honour, may I come to that in just a

moment?

BRENNAN J:  Of course. I want you to understand that that

seems to be the problem.

MR JACKSON:  Your Honour, I do understand that.

Your Honour, may I go first to section 317A? It

appears at page 90. What Your Honours will see is

that in subsection (1) it says, and I omit various

words:

Any person may ..... apply for a certificate to

the effect that in the opinion of the council

a building in all respects complies with the

Act, the ordinances -

and so on, and then if Your Honours go to line 21:

or if there has been any contravention of the

Act or ordinances or any departure ..... that

such contravention or departure is not such as

need be rectified.

One goes then, Your Honours, to see subsection (3)

which provides for the giving of the certificate in

the terms of subsection (1), and then

subsection (4):

The production of the certificate shall for

all purposes be deemed conclusive evidence in

Fairfield 4 14/2/92

favour of a bona fide purchaser for value that

at the date thereof the building complied with

the requirements of the Act -

and so on.

Now, Your Honours, the provision is, by

subsection (4), given a specific but limited

operation and our submission will be that the

presence of that specific, though limited
provision, militates against the view, inherent in
the judgment in the Court of Appeal, that the

provision has a more general operation.

Now, Your Honours, may I do two things: the

first is to go to the reasons in the Court of Appeal to seek to indicate the error which we submit exists; the second is to go to the Court's

decision in Sutherland Shire Council v Heyman where
the possibility of different views about the
operation of section 317A in relation to giving

causes of action was adverted to.

Your Honours, in that regard, could I go first

of all to page 61? Your Honours, I perhaps should

go to page 59 at the top of the page. Your Honours

have seen there the third claim, and the third

claim was, Your Honours, that:

In issuing the s 317A certificate ..... knowing

that the appellants would rely upon the

certificate and failing to ensure that the

matters set out in the certificate were

correct.

And then, Your Honours, paragraph (a) on the same

page. From there, Your Honours, one goes to

page 61 and His Honour sets out the section and

then, Your Honours, in our submission, commences to

fall into error at page 62 at about line 27 where

His Honour says:

The section does not contemplate the provision

of a certificate without concern as to its contents. The issue of the certificate is

clearly a serious act performed under the
authority of statute having significant

consequences. Bys 317A(4) it is expressed to

be -

Your Honours will see -

"conclusive evidence" and "for all purposes" -

but, Your Honours, the words which are not referred

to, at least specifically, are the remaining words

Fairfield 14/2/92

in section 317A(4) Your Honours will see at

page 61, namely:

for all purposes be deemed conclusive evidence in favour of a bona fide purchaser for value -

and, Your Honours, the view taken by His Honour and

other members of the Court of Appeal depends on the

fact that the Shaddockness of the case,

Your Honours, if I could use that word, derives

from the fact that section 317A is a provision

which is intended to put to the world, as it were,

a certificate which may be used by any person and

relied on by any person and, Your Honours, for a

purpose other than the purpose referred to in

section 317A(4).

Now, Your Honours, that view that is adverted

to at the top of page 63 is one which recurs in the

court's reasons for judgment. Now, Your Honours

will see that also at page 64 - the heading of the

case being dealt with appears at the bottom of

page 63, "There was a duty of care" - the argument

advanced on our side of the case and then,

Your Honours., if one goes to the passage commencing

at about line 25 on page 64, His Honour says:

it is the duty of this Court to apply to the

facts of the case, the principles adopted by

the High Court in Shaddock.

Now, Your Honours will see a recitation of what

occurred in that case at the bottom of the page and then, at the top of the next page, in the paragraph

that concludes at line 8, in the third line on

page 65, His Honour says:

Given its purposes and consequences -

and, Your Honours, that can only take one back to

section 317A(4) -

the Council must be taken to have been fully

aware of the fact that a number of persons would rely upon a certificate issued under

s 317A. So much is plain from the fact that,

bys 317A(4), the Certificate is "conclusive

evidence" of compliance and "for all

purposes".

Leaving aside once again, if we may say so with

respect, the fact that section 317A does not say

that. It says:

for all purposes be deemed conclusive evidence

in favour of a bona fide purchaser for value

that at the date thereof the building complied

Fairfield 6 14/2/92

with the requirement of the Act and

Ordinances.

And, Your Honours, the purpose of it, in our

submission, is that once such a certificate has

been given then a bona fide purchaser for value may

rely upon it as against the authority which gives

it.

DAWSON J: It is sort of an estoppel?

MR JACKSON:  A statutory estoppel, yes, Your Honours.

Your Honours, there is nothing at all novel or

heterodox in that view, it is a view that was

accepted by Chief Justice Gibbs and Justice Wilson

in Sutherland Shire Council.

Your Honours, if one goes through the

remainder of page 65, and corning down to the

conclusion at lines 28 and 29, it is apparent, we

would submit, that what His Honour is talking about

is a cause of action brought about by the giving of

a certificate in the exercise of the statutory

power construed as he construes it.

Now, Your Honours, at page 67, commencing at

line 27, in the paragraph starting:

Given that an express object of s 317A is

that the certificate will be received by and

protect purchasers -

and so on. His Honour arrives at the conclusion in

that paragraph. Now, Your Honours, that conclusion

is based, we would submit, upon a major premise as

to the operation and ambit of section 317A which we

would submit is incorrect.

BRENNAN J: That might well be an interesting proposition to

advance in a case where it was 317A alone which led

to the conclusion but that passage on page 67

demonstrates that it is only a view expressed in

line 27, added to the circumstances which
thereafter appear, which lead the court to say that

there is a duty.

MR JACKSON:  Your Honour, I am sorry, I do not wish to

appear obtuse about the matter but our submission

is that if one looks at the passages to which I

have referred, particularly bearing in mind that

the cause of action asserted is one based on

section 317A, then one must read what His Honour is

saying in the context. Of course, if we are wrong

about the construction of it, and His Honour's

construction of it is different from the one we

advance, it is Shaddock. If we are right about it,

it is not because, Your Honour, the result then is

Fairfield 14/2/92

that the certificate has a specific but limited

purpose and the persons who obtain a benefit from

it, be it a cause of action or be it a right as

against the Council, are only purchasers.

What Your Honour puts to me is correct, if I

may say so with respect, in a sense but based on an

assumption as to the operation and meaning of

section 317A which we would submit, with respect,

is incorrect.

BRENNAN J:  I mean, your proposition goes as far as saying

this, that a purchaser, relying simply on a 317A

certificate, can get no comfort from the statute

except within the framework of 317A?

MR JACKSON:  Indeed, Your Honour, yes.

BRENNAN J: Well, the problem in this case is that here is a

317A certificate given in the circumstances which

are summarized at page 67. Can a purchaser, by

reason of all of those circumstances, get greater

comfort at common law, not under the statute, from

Shaddock?

MR JACKSON:  Your Honour, if one puts the question in that

way, that itself is a question of considerable
importance which itself would merit special leave

because what Your Honour puts to me, with respect,

is really the consequence of rejection of our

primary submission. The answer, probably,

Your Honour, if we are wrong on our primary

submission, is that the purchaser would succeed.

But if our primary submission is right, then one

can add whatever one likes, in factual terms, to

the giving of the certificate but the giving of the

certificate has the statutory operation of

section 317A(4), Your Honour. That is the

proposition we would put.

Your Honour, if I may say so, with respect, it

is an issue on which different minds may well take

different views as is evidenced by the approach

taken by the Court, which dealt with it in passing

to a degree in Sutherland Shire Council v Heyman,

157 CLR.	May I hand Your Honours some copies of
that case?

Your Honours, the case starts at page 424. At page 434, in the reasons for judgment of the Chief

Justice - Justice Wilson agreed with his reasons -

His Honour says - perhaps if I could take the

shortest part of it - at the bottom, the fifth line

from the bottom of page 434:

It has been said that the purpose of s 317A

was to overcome difficulties between vendors

Fairfield 14/2/92

and purchasers when an intending purchaser

made requisitions concerning the failure of a

building to comply with the act and

ordinances. However, the main effect of the

section appears to be to protect a bona fide

purchaser for value who has obtained a

certificate from action which a local

authority might otherwise take in respect of

events that occurred prior to the issue of the

certificate.

And His Honour goes on to expand upon that.

Now, Your Honours, Justice Mason, at page 455,

at about point 4 recites, in a passage commencing

"and the Council is required on application" - he

paraphrases the terms of the section and then goes

on to say at page 470 - he speaks, Your Honours, in

the last substantial paragraph on the page of the

fact that there had been no certificate sought

under section 317A and, at the top of the next

page:

An intending purchaser of a building can apply

for a certificate under s. 317A and make

inquiries of a council -

he can do various things but unless he does some

things then the duty does not exist.

Your Honour Justice Brennan at page 483, the

first paragraph on that page, expressed a view

which, I think, would be adverse to the proposition

we are putting. Your Honours, we would, of course,
with respect, seek to argue if leave is granted

that that view should not be accepted.

Justice Deane, at page 509 at about point 8 on the

page, the sentence commencing:

It is however, in my view, impossible to

discern -

et cetera, is referring to the provisions of that
part of the Local Government Act in toto.	And then
at page 511, seems to take a similar view,

commencing at about point 3 on the page, the

sentence, "As has been seen", going to the

remainder of the page.

Perhaps, Your Honours, when I was at page 435

I should have referred specifically to the last

sentence in the paragraph which had continued on

from page 434:

It is enough to say thats 317A is not

directed to the questions whether the Council

owes a duty of care in exercising its

Fairfield 9 14/2/92

statutory functions and if so to whom and in

what circumstances such duty is owed.

Your Honours, to put it shortly, if one looks

at a case of this kind where the basis of the cause.

of action is the giving of a certificate pursuant

to section 317A and that is all that occurs, then
if the true meaning of section 317A is that it
provides a benefit only to a person mentioned in
section 317A(4), then there is no basis, we would

submit with respect, for there being any larger

cause of action based on the same core fact.

Your Honours, that is the essential submission we

would wish to make.

Your Honours, the affidavit of Mr Gibbons

demonstrates that the issue really has not gone

away by virtue of the amendments to the Local

Government Act and we would submit that a rather

similar question would arise also under the new

provisions which are set out at page 94 and

following. What Your Honours will see there is

that under section 317AE(l), the Council can give

or refuse to give a building certificate. There

are some differences of expression, of course. And

then one goes to section 317AG(l) at the bottom of

page 95, and the effect of those provisions is that

it limits the Council's rights. A rather similar

question arises, namely, does the expression "of a

limited class of rights" have the effect that there

is no larger right available under the general law?

Your Honours, if the Court were minded to

grant special leave, we would also seek to argue

the question of reliance which may, in a sense,

cast some light or be material in determining the

ambit of the duty. Your Honours, the case is one

where the evidence on the point was very short and

of the thinnest kind and the courts below, we would

submit, have too readily arrived at a conclusion

against us on the point without evidence to support
it.	Your Honours, the issue appears very shortly

at page 70, line 30, to the bottom of the page, and

goes through the next two pages and then to line 8

at the top of page 73.

BRENNAN J:	Mr Lloyd.
MR LLOYD:	Your Honours, notwithstanding what is said by

Mr Gibbons in his most recently filed affidavit, we would submit that if there be any question of

general principle, it is of greatly diminished or

limited importance since the repeal of section 317A

on 1 January 1988. It is not clear when one reads

his affidavit just precisely what the difficulty

has been with the section. It may be that in the

conveyancing transactions to which he has referred,

Fairfield 10 14/2/92

a certificate was not obtained. We do not know

whether it is a genuine concern with the

construction of the section.

BRENNAN J: Well, it is certainly the same problem, is it

not, as to whether or not the limited effect of a

carelessly given certificate is simply that there

is an estoppel, a limited estoppel?

MR LLOYD: It may or may not be, we do not know. But,

Your Honours, the position is that it is now over

four years since the section was repealed and was

replaced by provisions which Your Honours'

attention has been drawn to which are quite
different in effect and which by no means are said

to be in anything like the same terms as

subsection (4). It is simply now a certificate of

non-action by the Council, and clearly so.

TOOHEY J: Mr Lloyd, could I just ask you this: how did the

present respondents frame their cause of action

against the applicant?

MR LLOYD: It was a Shaddock kind of negligence. It appears

at page 38 in the judgment at first instance.

Sorry, page 37, line 35, there is a reference to the "Amended Statement of Claim", and I appreciate the pleadings are not before you:

the plaintiffs assert that the Council was

negligent in three respects -

and one does not have to worry about 1 or 2 but 3,

on page 38:

The s 317A Certificate which was issued showed

that the building did comply ..... Council knew

that subsequent owners of the house would

rely ..... the Council owed a duty to the

plaintiffs to ensure that the matters set out

certificate. plaintiffs purchased the house relying on the in the Certificate were correct; and the

That, we would submit, is on all fours with

Shaddock and merely by applying Shaddock one gets

to the result that Their Honours did.

Your Honours, it was clearly open on the facts

for the court to find the facts that Your Honour

Mr Justice Brennan has referred to on page 67,

including reliance. Here the purchasers were

purchasers under a contract for sale which contract

contained a special condition requiring the vendor

to furnish a certificate and the evidence was that

settlement occurred once that certificate had

issued and as the President noted, that is the

Fairfield 11 14/2/92

normal conveyancing practice and, in the light of

those facts, we would submit that it was certainly

open for the court to make the findings that were

made by the court below and the learned President.

Your Honour, that is all I can add.

MR JACKSON:  Your Honour, could I just say that this is a

case where there is absolutely no evidence that the
purchasers got the certificate and that is one of

the reasons why - the certificate was given to the

vendor, the evidence stops there.

BRENNAN J:  The view I am about to express is expressed as a

majority view of the Court.

The judgment of the Court of Appeal in this

case turns in the final analysis on the facts of

the case. It may be that the Court of Appeal did

not correctly appreciate the true effect of
section 317A of the Local Government Act but the

respondents' cause of action was not based on the

statute in the sense that the damages claimed were

said to be recoverable for breach of statutory

duty.

The cause of action was for common law

negligence and the governing authority in that area

of the law is Shaddock. The case is therefore not

a suitable vehicle for considering as a discrete

question the limits of the effect of a carelessly

issued certificate under section 317A or its

successor, section 317AE. Accordingly, special

leave will be refused.

MR LLOYD: With costs, Your Honour?

BRENNAN J: With costs.

AT 5.20 AM THE MATTER WAS ADJOURNED SINE DIE

Fairfield 12 14/2/92