Ian Henry Bonham v Bathurst Regional Council
[2007] NSWLC 9
•03/13/2007
Local Court of New South Wales
CITATION: Ian Henry Bonham v Bathurst Regional Council [2007] NSWLC 9 JURISDICTION: Civil PARTIES: Ian Henry Bonham
Bathurst Regional CouncilFILE NUMBER: Civil Claims Plaint No: 96/06 PLACE OF HEARING: Katoomba Local Court DATE OF DECISION:
03/13/2007MAGISTRATE: Magistrate G Zdenkowski CATCHWORDS: Summary judgment – whether plaintiff’s claim discloses a viable cause of action – claim in negligence for pure economic loss – duty of care of councils – duty of good faith – reconciling interests of plaintiff with statutory and common law obligations of the defendant LEGISLATION CITED: Uniform Civil Procedure Rules CASES CITED: Webster & Anor v Lampard (1993) 177 CLR 591;
Dey v Victorian Railways Commissioners (1949) 78 CLR 62;
General Steel Industries Inc v Commissioner for Railways(NSW) (1964) 112 CLR 125;
Wortley v Health Care Complaints Commission (2003) NSWSC 61;
Agar v Hyde (2000) HCA 41;
Caltex Oil(Australia) v Dredge Willemstad (1976) 136 CLR 529;
Sutherland Shire Council v Heyman (1985) 157 CLR 424;
Brodie v Singleton Shire Council (2001) 206 CLR 512;
Perre & Ors v Apand (1999) 198 CLR 180;
Sullivan v Moody (2001) 207 CLR 562;
Maitland Main Collieries Pty Ltd v Xstrata Mt Owen Pty Ltd (2006) NSWSC 1235;
Gibson v Parkes District Hospital (1991) 26 NSWLR 9;
Garcia v CGU Workers Compensation Pty Ltd (Unreported judgment, District Court of NSW, 14 July 2006);
Sutherland Shire Council v Becker (2006) NSWCA 344;
Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540.REPRESENTATION: Ian Collins for Plaintiff
Matthew Hutchings for DefendantORDERS: Statement of claim is dismissed. ; Plaintiff to pay the costs of the defendant, as agreed or assessed. ; Liberty is granted to either party to apply for the matter to be restored to the list (on 7 days’ notice to the other party to be given no later than 14 days after the receipt of this judgment) limited to the issue of costs.
Reasons for Decision
1. In this matter the plaintiff Ian Bonham (represented by Mr Collins) sues the defendant Bathurst Regional Council (represented by Mr Hutchings instructed by McIntosh Macphillamy & Co) for damages for negligence by Statement of Claim dated 18 April 2006.
2. By Notice of Motion dated 26 May 2006 the defendant – applicant seeks to have the proceedings dismissed on the basis that no reasonable cause of action is disclosed (rule 14.28 UCPR) or in the alternative because the proceedings can be characterised as frivolous or vexatious (rule 13.4 UCPR) or, in the further alternative, for want of prosecution (rule 12.7 UCPR).
3. No affidavit evidence has been filed by the parties as to the substantive claim. However, a short affidavit by Christopher John Nichols, solicitor for the defendant, dated 26 May 2006 (setting out an exchange of correspondence between the legal representatives of the parties as annexures “A” and “B”) has been filed and served, and is common ground in these proceedings. In essence, the correspondence seeks to crystallise the dispute between the parties: that is, whether or not there is a reasonable cause of action in negligence.
4. Mr Hutchings made written submissions upon hearing of the Notice of Motion amplified by oral argument. Mr Collins made oral submissions. At the conclusion of the hearing, the plaintiff was granted leave to file written submissions within 21 days and the defendant a further period of 14 days to reply. In due course written submissions and replies were filed and served. Mr Collins also submitted considerable additional material (largely by way of case-law said to be relevant) on 20 December 2006 and 18 January 2007 (referred to below).
5. The parties were content to regard the introductory material in the plaintiff’s original written submissions (namely paragraphs 1-7) as agreed facts for the purpose of this motion. However Mr Collins submitted that this was only a partial account and that the plaintiff’s claim was materially affected by subsequent developments (see below). The parties were also agreed that the legal principles governing the dispute (as distinct from their application to the matter before the court) are correctly set out in the defendant’s original written submissions and that the issue between the parties is whether the common law of negligence is capable of covering the instant case. Or, perhaps more accurately, the issue is whether for the purposes of this Notice of Motion, the plaintiff’s cause of action as presently pleaded identifies a maintainable cause of action as against the defendant.
6. Although the defendant’s submissions (both oral and written) draw attention to the purported inadequacy of the pleading, no relief is sought by the defendant in respect of further particulars nor does the plaintiff seek in these proceedings leave to amend the Statement of Claim. Both parties were content for the determination of this Notice of Motion to proceed on the pleadings in their current state.
7. It is not in dispute that a party seeking summary judgment - as the defendant does – faces a highly demanding test. Although Mr Collins in his submission used the terminology of “exceptional circumstances” and Mr Hutchings begged to differ by his reference to the court’s need for “exceptional caution” (embracing the language of Mason CJ, Deane and Dawson JJ in Webster & Anor v Lampard (1993) 177 CLR 591 at 602) at the end of the day there was basic agreement about the nature of the test. Both parties agree that the tests to be applied are set out in Dey v Victorian Railways Commissioners (1949) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; and Webster v Lampard (see above). The cases are conveniently reviewed in Wortley v Health Care Complaints Commission (2003) NSW SC 61 where Master Harrison analyses the tests. I respectfully adopt the approach there taken. In Agar v Hyde (2000) HCA 41 the High Court held (at p57) that:
“ Ordinarily a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way”
According to their Honours(at p58) this is because:
“ It would be wrong to deny a plaintiff resort to the ordinary processes of a court on the basis of a prediction made at the outset of a proceeding if that prediction is to be made simply on a preponderance of probabilities”.
So, the hurdle for the defendant in this Notice of Motion is formidable, but not impossible.
8. The defendant submitted that the plaintiff’s claim ought to be dismissed as it does not disclose a viable cause of action, or, in the alternative, the pleading should be struck out and leave be given to re-plead the Statement of Claim. It is noteworthy that, despite detailed written submissions on behalf of the defendant as to the manner in which the pleadings are said to be flawed the plaintiff has elected not to respond. In essence, the plaintiff submits that, on the current pleadings, he has a viable cause of action in negligence against the defendant and should not be denied the opportunity of pursuing it in the normal forum by virtue of an order for summary dismissal. The only issue for resolution then is whether there is a viable cause of action or whether, having regard to the criteria enumerated earlier (in General Steel and the other authorities mentioned) the claim should be summarily dismissed.
9. It is not the task of this court to re-draft the plaintiff’s claim nor to surmise as to what form such claim might take either in terms of a cause of action based on negligence or indeed another cause of action entirely. The defendant is confronted with a Statement of Claim which it is asked to meet. It is entitled to know what that claim is. I am not referring to clarification of the claim by way of requests for further particulars (although I interpolate here that were there to be a sustainable cause of action there would appear to be a legitimate basis for such a request in terms of the current pleading). As mentioned earlier, there has been no application either prior to or at the hearing for leave to amend the Statement of Claim.
10. The central issue is whether the current Statement of Claim, cast in its present terms, discloses a cause of action in negligence which is capable of succeeding. A subsidiary issue is what order the court should make if the answer to the first question is negative.
11. In addressing the first issue it is noteworthy that there is common ground between the parties. It is not in dispute that the plaintiff suffered economic loss (and no other). It is not necessary to quantify that loss for present purposes. It is also agreed that such loss was caused by the conduct of the defendant in the sense required by the law of negligence. (I leave aside any question of potential contributory negligence or failure to mitigate loss as irrelevant for present purposes). It is also common ground that the factual allegations in paragraphs 1-7 of the defendant’s original written submissions accurately reflect the circumstances which arose between the parties (subject to the qualification sought to be made by Mr Collins which I shall mention shortly). Accordingly it is agreed:
Mr Bonham brings proceedings (filed on 5 May 2006) against the Bathurst Regional Council alleging a cause of action in negligence.
I note that the claim appears to have been filed at Lithgow Court on 18 April 2006 (not 5 May 2006) but nothing turns on that.
12. Mr Collins submits that the above agreed facts represent only a partial account of the factual situation and that what happened after the events there recited materially altered the legal position of his client. During the course of argument Mr Collins conceded that there was a problem between the plaintiff and the defendant in relation to the manner in which the defendant was performing his work as a cattle brander because of safety concerns resulting from the proximity of the catwalk to the overhead powerlines having regard to the length and type of pole used by the plaintiff. Mr Collins claims that these problems were resolved with the local power authority and the plaintiff was advised of this. Although it is not strictly apparent from paragraph 4 of the Statement of Claim (which is ambiguous as to the recipient of the letter from Country Energy) it will be assumed in favour of the Plaintiff for the purposes of these proceedings that the letter came to the attention of the defendant. Yet it is not pleaded in the Statement of Claim that the plaintiff has been able to identify a system of work that would permit him to continue in the activity of marking cattle in the manner that he was doing it or an alternative system which would permit him to mark cattle in the way that he wishes to do it that would satisfy the concerns of the defendant as raised by Country Energy in relation to his safety and the safety of others in the immediate work area and permit him to make a living in the manner in which he wishes to do it.
13. The key dispute is whether the Statement of Claim discloses a cause of action in negligence because there was a relevant legal duty of care owed by the defendant to the plaintiff in all the circumstances or whether there was no such duty. In his written submissions Mr Collins variously characterises the duty said to be owed as follows:
“…the defendant owes a duty of care not to cause loss or damage to members of the public that it is aware will suffer loss or damage by its unreasonable acts or omissions” (paragraph 15)
and
- “ that duty of care is to not, by its unreasonable acts or omissions cause financial loss or damage to person or persons who they know will be directly affected by their actions” (paragraph 17)
Mr Collins seeks to derive from Caltex Oil (Australia) Pty Ltd v Dredge Willemstad (1976) 136 CLR 529 a general principle that damages are recoverable for the negligent acts or omissions of a defendant that cause purely economic loss and that a duty of care arises not to cause such reasonably foreseeable loss (paragraph 9). The plaintiff contends that this matter is governed by Sutherland Shire Council v Heyman (1985) 157 CLR 424 and Brodie v Singleton Shire Council (2001) 206 CLR 512.
14. The defendant ( in its original written submissions) relied on the test posited by Justice McHugh in Perre & Ors v Apand (1999) 198 CLR 180 as a guide to the determination whether a duty of care could be said to exist. The defendant relied on this test in conjunction with the decision of the High Court in Sullivan v Moody (2001) 207 CLR 562 which, according to the defendant, has a bearing on the third question posed by McHugh J in Apand. The plaintiff’s written submissions did not address Sullivan v Moody and only made a passing reference to Apand (relating to the issue of proximity) , but not to McHugh J’s test.
15. The defendant disputes the plaintiff’s characterisation of the principle in Caltex Oil and notes the demise of any authoritative support for the assertion that mere proximity will generate a duty of care. The defendant submits further that the plaintiff is obliged to rely on foreseeability of loss and that this is not sufficient to give rise to a duty of the defendant to protect the plaintiff from economic loss. The defendant disputes the principle sought to be derived by the plaintiff from Heyman and submits that Brodie is irrelevant to this application. The defendant further submits that the plaintiff has failed to address any of the issues arising from Sullivan v Moody, as outlined in the defendant’s original written submissions.
16. By letter dated 20 December 2006, the plaintiff provided the court and the defendant’s solicitors with copies of the following:
An article by Freehills Solicitors (16/6/06) entitled “ The duty of good faith: The ‘sleeper’ of insurance obligations?”
No specific submission was made by the plaintiff in relation to this material other than to comment, in the covering letter “We enclose herewith by way of reply to Defendants (sic) submissions authorities in relation to the duty to act reasonably in good faith in the context of economic loss”. The defendant has chosen not to comment on this material.
17. The decision in Maitland Main Collieries was concerned with the construction of a deed to determine the existence or otherwise of an implied duty to act reasonably and in good faith. This is not relevant to the issue before this court.
18. In Gibson it was held that a workers’ compensation insurer and employer have a duty to act in good faith in the processing of a worker’s compensation claim, and breach of this duty attracts liability for damages in tort. This case does not assist the present plaintiff. It is distinguishable because the tortious claim in Gibson is based on a breach of a duty to act in good faith (as distinct from negligence) and further because of the court’s recognition of the special relationship between the plaintiff and the defendants which was central to the court’s determination and has no parallel in the present case.
19. The decision in Wortley (apart from providing a useful summary of authorities relevant to the exercise of the powers of summary dismissal, referred to earlier) is also not relevant. The plaintiff in that case claimed the Health Care Complaints Commission (HCCC) owed him a duty to act in good faith while processing and dealing with the plaintiff’s complaints and letters. The Statement of Claim was dismissed as doomed to failure because the legislation establishing the HCCC was not intended to confer private rights on individuals but to investigate complaints. The statement of claim purported to be based on the defendant’s breach of its statutory duties. The court distinguished the decision of Gibson (above) in this respect.
20. The balance of the material supplied by the plaintiff in the letter of 20/12/06 related to the special relationship of a workers’ compensation insurer to the employees of the insured employer. In essence, the insurer owes a duty to such employees to act in good faith in relation to the handling of claims made by them. The existence of such a duty in these particular circumstances, bearing in mind the special relationship (for which there is no counterpart in the instant case), can shed no light on the question as to whether or not a cause of action exists or could exist in the present case.
21. In a letter dated 18/1/07, the plaintiff referred the court to the decision of Sutherland Shire Council v Becker (2006) NSWCA 344 and in particular to the judgment of Bryson JA from paragraphs 79 to 107 (emphasising paragraphs 100 to 105) in which, it is claimed (by the plaintiff’s solicitor), that Bryson JA states “ when a duty of care arises in a council in relation to economic loss”. A copy of this judgment was provided to the defendant’s solicitor but no comment or submission has been made in relation to it. The decision in Becker was concerned with physical damage to a fixture on real property, not with economic loss. On the facts of the case, which are not relevant for present purposes, the court held that no duty of care existed. The plaintiff in the present case appears to rely on Becker for the exposition of principles relating the to liability of Councils for economic loss owing to a breach of a duty of care. The paragraphs highlighted by the plaintiff review certain principles relating to the duty of care by local government authorities. However that review relates to generic issues and not to the particular matter in issue in this case, namely when such authorities should be liable in negligence for economic loss. It does not assist the resolution of the matter before this court.
22. Nevertheless Bryson JA makes some observations elsewhere which are germane to a consideration of the approach to be adopted to the ascertainment of a duty of care in a public authority. At paragraph 82 his Honour states:
- “ There is a very large gulf between observing that the legislature had decided to intervene in some activity and enhance some aspect of human existence by conferring administrative powers to influence it, and a conclusion that the legislature has decided that a public authority which is so empowered and its funds should recompense those affected if the administrative intervention does not produce the best results or is carried out to a lower standard of competence than is available. It is one thing to confer powers to regulate an activity and quite another thing to underwrite losses caused by the process of regulation, even if the results are less than the results reasonably obtainable”.
At paragraph 85, his Honour also cites with approval the cautious approach advocated by Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540. In both cases Bryson JA is referring to the need to exercise caution in the attribution of a duty of care for physical loss. For reasons which are apparent in Caltex Oil, even greater caution is appropriate in the context of economic loss.
23. Mr Hutchings submits that there is no duty of care recognised by law owed by the defendant to the plaintiff. In support of his contention, he submits:
The interests of the plaintiff cannot be readily reconciled with the statutory and common law obligations of the defendant.
24. Before turning to the main dispute between the parties I make some brief observations about other issues. In paragraph 6 of the Statement of Claim, the plaintiff claims in the alternative that
- “ Alternatively the defendant has permitted others access to perform the Plaintiff’s occupation of branding whilst not requiring safety conditions be met by those others from September 2005 whilst at the same time excluding the Plaintiff from performing his duties”.
I note that this aspect of the Statement of Claim was not the subject of written submissions (except to the extent that Mr Collins impliedly invited the court to draw some analogy from the “good faith” authorities discussed earlier). Nevertheless insofar as these allegations point to malice or discrimination which may or may not provide a basis for some other remedy, they do not provide a foundation for a cause of action in negligence.
25. To the extent that the plaintiff seeks to rely on his proximity to the defendant it should be pointed out that it is no longer appropriate to use proximity as an explanation of the process of reasoning leading to a duty of care: Bryson JA in Sutherland Shire Council v Becker (2006) NSWCA 344 at para 97 (citing Sullivan v Moody & Ors (2001) 207 CLR 562 at 578-579).
26. I am also satisfied for the reasons put forward by the defendant in written submissions that the decisions in Brodie and Heyman do not assist the plaintiff’s cause.
27. I now turn to the major issue. Considerable reliance was placed on Caltex Oil by the plaintiff. In my view this case does not generate the general principle contended for by the plaintiff. The question before the court in Caltex Oil was whether a person is entitled to be compensated in damages for economic loss sustained as a result of damage negligently caused to the property of a third party, and further, whether a person whose property has been physically damaged as the result of a negligent act may recover compensation for economic loss which was not a consequence of that physical damage but which happened to be caused by the negligent act that caused the physical damage.
28. Although there is no general rule that damages are recoverable for economic loss not consequential upon injury to the plaintiff’s person or property, there are exceptions. Absent injury to person or property (as is the case here) the plaintiff must bring himself within the very limited exceptions which allow recovery for pure economic loss. The fact that the loss is foreseeable is not enough to make it recoverable. Foreseeability is a necessary but insufficient condition.
29. The exceptional nature of the circumstances in which a plaintiff may recover for such economic loss are outlined by Gibbs J in Caltex Oil (at p555):
- “ However, there are exceptional cases in which the defendant has knowledge or means of knowledge that the plaintiff individually and not merely as a member of an unascertained class, will be likely to suffer economic loss as a consequence of his negligence, and owes the plaintiff a duty to take care not to cause such damage by his negligent act. It is not necessary, and would not be wise, to attempt to formulate a principle that would cover all cases in which such a duty is owed…It will be material , but not in my opinion sufficient, that some property of the plaintiff was in physical proximity to the damaged property, or that the plaintiff, and the person whose property was injured, were engaged in some common adventure”.
30. The defendant has submitted (paragraph 13, submissions in reply) that the plaintiff appears to rely on his membership of an unascertained class. But the plaintiff plainly contends (see paragraph 17 written submissions) that the defendant knew the plaintiff would be affected by their actions and that their acts and omissions relate specifically to the plaintiff and not to some unascertained class of persons.
31. However, assuming in the plaintiff’s favour that the obstacle of membership of an unascertained class can be overcome, that does not automatically bring the plaintiff, even potentially, within the scope of the exception identified in Caltex Oil. To say the least, the analogy between Caltex Oil and the present case leaves a great deal to be desired. Where is the damaged property? Leaving aside the problem of the lack of a person whose property was injured, what is the common adventure that the plaintiff and the so-called person whose property was injured were engaged in?
32. It is difficult to appreciate how the alleged actions of the defendant might constitute negligence without extending the known boundaries of the law. The plaintiff, in effect, seeks to advance a claim that the defendant has a duty of care to avoid foreseeable pure economic loss to a known person belonging to an ascertained class. There were considerable difficulties for the plaintiff in defining this so-called ascertained class. The pleadings did not identify any such class by reference to any relationship between the parties with any precision. The plaintiff must do more than simply assert that the defendant knew of his existence. True it is that the plaintiff was known to the defendant. But there was no contractual or special relationship between the parties. The plaintiff was an independent contractor who happened to earn his livelihood from working at the Sale-Yards owned and controlled by the defendant. He was otherwise indistinguishable from a broad class of people whose financial welfare may somehow (directly or indirectly) be affected by the defendant’s conduct. The fundamental problem for the plaintiff would seem to be in asserting reliance on a principle of negligence not currently recognised by law.
33. I am fortified in this respect by the observations of Kirby J in Apand (at paragraph 328):
Two threads, then, can be seen as important in the development of the principles governing liability for negligently caused pure economic loss. First is the desire to avoid ‘ liability in an indeterminate amount for an indeterminate time to an indeterminate class’. Second is the concern not to establish a rule that will render ‘ordinary’ business conduct tortious. Deciding whether one person owed a duty not to cause pure economic loss to another requires consideration of both these matters. Foreseeability of injury is essential but not enough”.“…the law has long treated ‘pure economic loss’ differently from other forms of injury. Although a person is just as much injured if the value of some intangible is diminished as that person is if bodily injury or injury to tangible property is sustained, separate and difficult questions are seen as arising in the first case. Especially is this so when the loss that is suffered is a loss in the course of carrying on a business. Making a loss of that kind is often no more than one of the ordinary consequences of participation in a market economy. The market economy treats rivalry between participants as an essential and defining feature: rivalry in which each participant seeks to maximise its profit and market share at the expense of all other participants in that market.
34. In this case, even if the plaintiff could establish that his claim cannot be characterised as generating liability in an indeterminate amount for an indeterminate time to an indeterminate class, he is confronted by the second concern identified by Kirby J, namely not to establish a rule that will render ordinary business conduct tortious.
35. Nevertheless, bearing in mind the criteria in General Steel and the other cases mentioned earlier, the court should scrutinise the circumstances with exceptional caution to ascertain whether a duty of care could possibly be said to exist on the material pleaded. Applying the test posited by McHugh J in Apand (and assuming in the plaintiff’s favour a negative response to questions one and two), the issue arises: would the imposition of a duty of care impose an unreasonable burden on the defendant? In answering that question it is appropriate to recall the matters raised by Kirby J but it is also germane, as submitted by the defendant, to review the matters considered by the court in Sullivan v Moody.
36. Having done so I have reached the conclusion that the interests of the plaintiff cannot be reconciled readily with the statutory and common law obligations of Bathurst Regional Council which include obligations to protect lawful entrants to the Sale-Yards from injury. The duty alleged by the plaintiff would appear to encompass permitting the plaintiff to continue to work from the catwalk thereby creating a risk of electrocution to him and to others. That duty cannot be reconciled with the defendant’s other duties to the wider community and cannot be said to exist at law.
37. This would not appear to be a situation where the plaintiff’s claim can be re-invigorated by redrafted pleadings. Although the Notice of Motion sought relief (in the alternative) in respect of a claim said to be frivolous or vexatious or which should fail for want of prosecution, neither basis was pursued in written submissions by the defendant nor ventilated in argument. It is my view there was no discernible foundation for either of these claims. The plaintiff’s claim was bona fide (albeit misconceived) and could not be characterised as frivolous or vexatious. There was no evidence of failure by the plaintiff to prosecute his claim with reasonable expedition. The parties were content for the matter to be determined by reference to the question as to whether the plaintiff had a viable cause of action. For the reasons I have given I consider that the plaintiff’s claim is manifestly groundless.
38. At the conclusion of the hearing both parties sought liberty to apply on the question of costs. It remains only to consider the appropriate orders to be made. Having regard to all the circumstances I make the following orders:
1. The Statement of Claim is dismissed
2. The plaintiff is to pay the costs of the defendant, as agreed or assessed.
3. Liberty is granted to either party to apply for the matter to be restored to the list (on 7 days’ notice to the other party to be given no later than 14 days after the receipt of this judgment) limited to the issue of costs.
George Zdenkowski
Chambers
13 March 2007
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