Gale v The Council of the Shire of Douglas

[2000] QSC 44

SUPREME COURT OF QUEENSLAND

CITATION:

Gale & Anor v The Council of the Shire of Douglas & Ors [2000] QSC 044

PARTIES:

STEPHEN GALE
(first plaintiff)
and
PAMELA HELEN GALE
(second plaintiff)
v
THE COUNCIL OF THE SHIRE OF DOUGLAS
(defendant)
and
ERROL JOHN MCCLELLAND, BETTY MARION MCCLELLAND, CHRISTOPHER JOHN MCCLELLAND AND LYNELLE MCCLELLAND
(third parties)

FILE NO/S:

SC (Cairns) No 66 of 1998
SC No 6475 of 1999

DIVISION:

Trial Division

DELIVERED ON:

25 February 2000

DELIVERED AT:

Brisbane

HEARING DATE:

13 September 1999

JUDGE:

Douglas J

ORDER:

Application Dismissed

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – application to strike out third party proceedings – rule in Sheffield Corporation v Barclay – whether indemnity arises from third parties’ request for subdivision approval from defendant council.

Local Government (Planning and Environment) Act 1990 (Qld), s 5.1(3).

Co-Ownership Land Development Pty Ltd v Queensland Estates Pty Ltd (1973) 47 ALJR 519 at 521.
General Steel Industries Inc v Commissioner for Railways (NSW) and Ors (1964) 112 CLR 125.

Secretary of State for India v Bank of India [1938] 2 All E R 797.
Sheffield Corporation v Barclay (1905) AC 392 at 399:

COUNSEL:

Mr G Gibson, and with him Mr K N Wilson, for the defendant
Mr P J Lyons QC, and with him Mr R J Anderson, for the third party.

SOLICITORS:

Barry Nilsson for the defendant
Lillian Nagan for the third party

1. Douglas J: This matter arises pursuant to an order of Derrington J made on 15 July 1999 wherein his Honour ordered that the question of whether the statement of claim delivered by the defendant to the third parties on 28 April 1999 discloses a cause of action good in law, be tried separately and before the trial of the proceeding.

1. The plaintiffs are the owners of land near Mosman.  They allege that on 19 January 1997, a land slip on a public reserve held by the defendant created a mud slide which flowed on to their land, causing damage to their property and resulting in personal injury, loss and damage.  They have commenced an action against the defendant, the Council of the Shire of Douglas (“the Council”), alleging that the damage was caused by the negligence or breach of statutory duty of the Council when approving the subdivision which created the reserve and the plaintiffs’ land. 

1. The plaintiffs purchased the land from the third parties who were the developers of the subdivision: the subdivision application having been brought on 11 March 1992, and approved by the defendant on 27 August 1992. 

1. The defendant claims to be indemnified by the third parties against the plaintiffs’ claim.  The indemnity is said to arise from the third parties’ request or demand for subdivision approval, in accordance with the principle developed by Lord Davey in Sheffield Corporation v Barclay (1905) AC 392 at 399:

“I am further of opinion that where a person invested with a statutory or common law duty of a ministerial character is called upon to exercise that duty on the request, direction, or demand of another (it does not seem to me to matter which word you use), and without any default on his own part acts in a manner which is apparently legal but is, in fact, illegal and a breach of the duty, and thereby incurs liability to third parties, there is implied by law a contract by the person making the request to keep indemnified the person having the duty against any liability which may result from such exercise of the supposed duty.  And it makes no difference that the person making the request is not aware of the invalidity in his title to make the request, or could not with reasonable diligence have discovered it.”

1. The plaintiffs’ claim against the Council is for negligence, trespass, nuisance and/or breach of statutory duty in relation to the Council’s approval of the subdivision of the land.

1. The Council’s statement of claim against the third parties relevantly alleges, inter alia, that:

(a)        at all material times prior to the 27 August 1992 the third parties owned the land which (following its subdivision) included the land which became the plaintiffs’ property;

(b)        on 11 March 1992 the third parties applied to the defendant to subdivide a parcel of land to create, inter alia, the land subsequently purchased by the plaintiffs;

(c)        on 27 August 1992 the Council approved the third parties’ application to subdivide that land;

(d)        if the Council is held liable to the plaintiffs in respect of its approval of the third parties’ applications to rezone and/or subdivide the land, then:

(i)         the Council’s decision to approve the rezoning and subdivision was consequent upon the request or demand of the third parties;

(ii)       the third parties are obliged to indemnify the Council against any liability it may incur as a result of the exercise of its statutory obligations to consider and approve the third parties’ applications;

(iii)      the Council is entitled to be indemnified by the third parties against its liability, if any, to the plaintiffs.

1. The third parties assert in their defence, inter alia, that:

(a)        the statement of claim discloses no cause of action against the third parties;

(b)        the third parties did not request the Council to commit negligence, breach of statutory duty, nuisance, trespass or any of them;

(c)        the third parties are not impliedly obliged to indemnify the Council against any liability which might result from the exercise of its statutory power to approve the applications for rezoning or subdivision approval if the approval were given negligently, in breach of statutory duty, or otherwise wrongfully on the part of the Council.

1. It is well established that the court’s jurisdiction to terminate an action, and by analogy to strike out a cause of action, is to be sparingly employed and is not to be used except in a clear case where the court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. General Steel Industries Inc v Commissioner for Railways (NSW) and Ors (1964) 112 CLR 125 per Barwick CJ at 129.

1. It has otherwise been stated that the power to make such an order should be exercised with “exceptional caution”: Co-Ownership Land Development Pty Ltd v Queensland Estates Pty Ltd (1973) 47 ALJR 519 at 521.

1. As I have said, the indemnity sought is said to have arisen from the principle developed by Lord Davey in Sheffield Corporation (above).  In that case the party seeking indemnity had been requested to exercise its statutory duty to register a transfer of stock.  The transfer had in fact been fraudulently executed and the effect of registration was therefore to deprive the owner of his interests in the stock.  The corporation was not subject to a duty to investigate the request and was in fact subject to a statutory requirement to register a transfer, regular on its face.

1. It is submitted by the applicants that the approval by the defendant of the third parties’ subdivision application is not analogous and was not the exercise of a “statutory or common law duty of a ministerial character”.  It was submitted that the defendant’s determination of the application was subject to the Local Government (Planning and Environment) Act 1990 (Qld) (“the Act”). The submission went on to say that s 5.1(3) of the Act required the defendant to give consideration to, inter alia, whether any of the proposed allotments would be unsuitable for use because of existing or possible inundation, subsidence, slip or erosion (s 5.1(3)(b)).  It was further submitted that other considerations were also required to be taken into account generally but including, potentially, a duty upon the defendant to make positive inquiries of its own.  The submission went on to say that the defendant had a discretion to grant to refuse the application or to grant the application subject to conditions.   In the event the defendant elected to grant the application on condition that the third parties dedicate to the Crown free of charge an area of land for use as a reserve for park and recreation purposes.

1. In its submission the defendant correctly points out that the third parties rely on the facts of the Sheffield Corporation case itself, and the later decision of the Privy Council in Secretary of State for India v Bank of India [1938 2 All E R 797] as, in each of those cases, the doer of the act seeking to be indemnified was obliged to do that which was requested of it.  However, in reliance upon the dicta of Lord Wright in the Bank of India case the defendant submitted that the benefit of the principle is not limited to those persons who are obliged to accede to the request, instruction or demand of another.  Lord Wright said:

“Lord Davey, in their (their Lordships’) opinion, did not mean when he used the word “ministerial”, to indicate that the act done must be done without any element of choice, deliberation or decision on the part of the doer.  All, it seems, that he meant was that the official had no interest except to perform his statutory duty.  Nevertheless, the mere performance of that duty may involve some degree of deliberation and judgment”.

1. The submission goes on:

Thus, the right to an indemnity does not arise only where the party seeking it is a mere conduit or passive recipient.  It can and does arise where the party seeking the indemnity has the right to refuse to act at the request of the other party.  The touchstone of the right to the indemnity is the acting at the request of another, in circumstances which are apparently legal, without default on the part of the actor.  In the present case, there is no suggestion that the Council was acting illegally.  The Council acted without default, as that term has subsequently been interpreted by the Privy Council in Yung v Hong Kong and Shangai Banking Corporation.Whether, on the facts of the case, the right to the indemnity is made out is a different question to whether the pleading discloses a cause of action.

“In the case at hand, both with respect to the third parties’ application to rezone the subject land, and their further application to subdivide that land, the Council was under a statutory obligation to assess the application by reference to a number of identified considerations.

Given that the Council was under a statutory obligation to consider and decide the third parties’ applications; that it was obliged to consider and decide those applications by reference to identified statutory criteria; that the Council’s decisions in response to those applications lacked the qualities or characteristics appropriate to describe them as “judicial” or “legislative”, those decisions are appropriately characterised as “of a ministerial character” as that phrase was used by Lord Davey in Sheffield Corporation as explained by Lord Wright in the Bank of India case. “

1. The principle upon which the third parties proceedings is based is succinctly stated in Halsbury Laws of England 4^th Ed Vol 20 at para 38 as follows:

“When an act is done by one person at the request of another, and the act is not in itself manifestly tortious to the knowledge of the person doing it, and it turns out to be injurious to the rights of a third party, the person doing it is entitled to an indemnity from the person who requested that it should be done.”

1. Whilst there is a persuasive argument to the effect that cases such as the Sheffield Corporation case and the Bank of India case only apply in circumstances where a party was obliged to do the act requested of it and therefore has no application to situations such as that being considered here, I am of the view that it is not so clear that I should strike out the third party proceedings at this stage in the action.

1. Other considerations were raised ancillary to the main thrust of the application with which I have dealt concerning:

(a)        the defendant’s own negligence;

(b)        whether the loss must be a natural consequence of the requested Act;

(c)        the fact that the plaintiffs’ case concerns the manner in which the requested Act was done about which no complaint can be made; and

(d)        the Council’s own duty to the third parties.

1. They all arise out of the same facts and circumstances and therefore I feel that it is not necessary to consider these in light of my findings with respect to the seminal argument that the decisions in the Sheffield Corporation and the Bank of India cases have no application to the present situation.

1. In the circumstances I am of the view that the statement of claim delivered by the Council to the third parties on 28 April 1999 discloses a cause of action good in law.  I therefore order that the Council’s application be dismissed.