Inglis v Metrolink Victoria Pty Ltd

[2010] HCATrans 26

[2010] HCATrans 026

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne     No M95 of 2009

B e t w e e n -

RYAN INGLIS

Applicant

and

METROLINK VICTORIA PTY LTD

Respondent

Application for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 12 FEBRUARY 2010, AT 11.59 AM

Copyright in the High Court of Australia

MR J. RUSKIN, QC:   If the Court pleases, I appear with MR A.N. MURDOCH for the applicant.  (instructed by Ligeti Partners)

MR A.G. UREN, QC:   If the Court pleases, I appear with my learned friend, MR J.P. BRETT, for the respondent.  (instructed by Norton Rose)

FRENCH CJ:   Yes, Mr Ruskin.

MR RUSKIN:  If the Court pleases.  The points of special importance in this case concern what principles should govern and inform the kind or genus concept within the doctrine of remoteness of damage in the context of a case in which the loss claimed, we say, derived indirectly and by reason of the terms of a contract between the defendant and a third party. 

FRENCH CJ:   The grounds of appeal do not exactly sharpen the question, do they?

MR RUSKIN:   Well, I must say, your Honour, I have not revisited them, but I am sorry about that. 

FRENCH CJ:   We have 12 grounds of appeal.

MR RUSKIN:   Yes.  Well, I see that they are on page 74.  What they seek to show is that – and this is really the special points – what went wrong in the case was that the Court of Appeal, unlike the learned magistrate and the learned primary judge, the majority of the Court of Appeal gave too broad a categorisation to the loss in this case.  What I am seeking to do is say that the point of special interest is, what guidance and what criteria should be applied so as to assist courts in identifying the kind or genus, because both Justice Neave at paragraph 10 on page 38 of her judgment and Justice Redlich bemoaned the lack of assistance, if I could put it that way.  On page 38, paragraph 10, “There are no settled legal criteria for categorising” and Justice Redlich at paragraph 87 on page 61:

The method to be used to determine the appropriate categorisation has not been the subject of much judicial comment.

Indeed, the comment, your Honours, is somewhere between 40 and 50 years old.  The Advocate case in Hughes v Lord Advocate in 1963 said you do not want to be too precise, you do not have to be too precise, you want to avoid the concatenation.  The reference to Justice McHugh is in the Cambridge Case in 1987 where his Honour said you do not want to be too broad and you do not want to be too narrow.

KIEFEL J:   Is it not generally viewed as caught up with the causation question, the applied causation principles?

MR RUSKIN:   Well, it does not have to be because the mantra is that, when you look at the question of damage, you say was it of the kind or genus which would be in contemplation of the reasonable person in the position of the applicant.  So that involves looking at the kind or genus and causation is really too broad.  Causation is common sense and it does not answer the question, but might in a particular case, whether the ‑ ‑ ‑

KIEFEL J:   Well, has value judgments inherent in that which might take up the sort of discussion that you are entering upon now.

MR RUSKIN:   Indeed they might, and in this case the problem was as follows.  How do you categorise, as part of the first step, the loss here, because the loss was not the damage to the tram as is common ground.  The negligent car hit the innocent tram and the consequent damage was not anything to do with the tram itself.  It was not damage to the property of the tram or the people in the tram or the fares of the tram.  What it had an effect of doing was that it sent other trams on the tram service late or not completing their journey.  In other words, other trams not adhering to the master timetable and thus incurring a penalty by reason and arrangement between the respondent and a third party, namely, the Department of Transport.

Therefore, to answer the question was this foreseeable, the first question was what was the kind or genus and the category which the learned magistrate found, which the learned primary judge found, which the learned minority judge in the Court of Appeal found, Justice Neave, was this; reduction of a financial penalty payable by the third party to the plaintiff or the imposition of a penalty upon the plaintiff by the third party.  So you had, in effect, three learned judicial officers so characterising the loss and two not, that is, Justice Redlich had a much broader view, agreed in by Justice Williams without giving independent reasons.

FRENCH CJ:   So is there some principle other than too wide or too narrow that informs your submission as to the approach that should have been taken?

MR RUSKIN:   Yes.  In our submissions we say that the approach taken by the learned primary judge, Justice Smith, at paragraph 30 of his judgment in which he looked at the test such as salient features, for example, or some other phrase, what he said at page 20 of the application book was this, and this is really what the Court needs to look at and assist in helping the parties.  At paragraph 30 on page 20 Justice Smith said this:

While it may be said that the categorisation adopted included a description of some details of the loss and its mechanism, it does not follow that the learned Magistrate erred in applying the test.  Sufficient detail must always be included in the description to enable the “kind or genus” of loss to be identified.  That detail may also need to include reference to the mechanism of the loss.

Going through the authorities we would say that what his Honour is there doing and he looks again at – at 31 he says:

what his Honour identified as the relevant features of the “kind or genus” of the loss were a reduction of a financial benefit payable by a third party to the plaintiff or the imposition of a financial penalty upon the plaintiff by a third party.  The situation was one where it was not inconsistent with the need to define a “kind or genus” –

without going to the “concatenation of circumstances”, which is impermissible.  His Honour helpfully there says the concatenation –

would have included the combination of the precise cancellations, starts, earlys and lates –

the formula by which the loss ultimately by computer was evaluated.  Justice Neave agreed in that formulation by the magistrate and it was Justice Redlich who had a much broader category which, we would submit, did not deal with anything like the salient features or the critical features.  If I just take the Court to that, that is at page 66 of the book at paragraph 99.  His Honour says:

I conclude that the learned Magistrate erred in defining too narrowly the kind or genus of the loss suffered by Metrolink.  The appropriate categorisation was simply one which required foreseeability of ‘revenue lost as a result of the inability to operate the tram service’.

We say that is far too wide because it would capture everything, including, we would respectfully say, even the category that our friend says is outside it, investing moneys by the tramways board.  Well, the money that you invest comes from the operation of the tramways board so it could all be caught.  So our submission is the Court needs to give guidance to the criteria or methodology by which kind or genus can be more precisely identified, for example, a salient features test, a test which does not exclude entirely the mechanism so that, especially in an economic loss case, the reality of the loss is exposed. 

To say that Mr Inglis could have foreseen loss of revenue, of course he could have, but that is not answering the reality.  It is quite a different question to answer, would he have foreseen – and we say no – the loss of a kind that derived from a third party contract, and there is a linkage between identifying the category or characterising the kind of genus with the second step of reasonable foreseeability.  Once you make the error of categorising too widely, you will make the error of reasonable foreseeability in the way that I have just explained.

FRENCH CJ:   Have you really told us anything about the principle that informs this taxonomic judgment or just indicated the criteria by which one might think it is wrong?

MR RUSKIN:   What I have sort to do ‑ ‑ ‑

FRENCH CJ:   Ultimately it is purposive I suppose, is it not?

MR RUSKIN:   I am sorry sir?

FRENCH CJ:   It is ultimately a purposive judgment, like so many taxonomic judgments?  I think, by way of analogy from my own experience in terms of market definition and too wide, too narrow is usually the debate and it is a purposive context in which it operates, we are operating in that sort of setting here.  Can one get any more precise than that?

MR RUSKIN:   Well, one can just as by analogy in the old days the duty of care might be a bit broad, it might be you are a bit of a neighbour and you are a bit foreseeable and now we have had many cases, Graham Barclay Oysters through to the last case of Scott, whereby incremental design you fashion a more precise way of identifying the duty.  Here the test that we say the lower courts are calling out for is some guidance which enables this broad, narrow category to be more precisely defined.  We say a special point is to enable guidance to be given as to how you undertake this.

KIEFEL J:   Will you be suggesting that policy considerations play a part in the test that the Court should propound?

MR RUSKIN:   Yes, only in the sense of contemporary standards policy.  I mean by that that in an economic loss situation the policy should be to ensure that the reality of the – unlike, say, a personal injury case – something more precise might need to be given as to the origin or mechanism of the economic loss compared to say the personal injury loss.  Everybody knows if you hurt your back you might get a psychiatric injury, but nobody knows, in the shoes of Mr Inglis, we say, that if you hit a tram you are going to have to pay for some imposed penalty.

KIEFEL J:   Perhaps in the end what is involved is a value judgment about the extent to which anyone should pay damages for hitting a tram.

MR RUSKIN:   In that case, to the extent that that applies, and we say it might, it really raises the last part of our submission which is about the question whether this is a factual or a legal exercise.

KIEFEL J:   But to what extent do we see value judgments in the decisions of the Court of Appeal or do you say that they are not driven by those?  They are, rather, an attempt to formulate it in legal terms, but they have not given expression to any value judgments.

MR RUSKIN:   No, we would submit there is no expression of value judgment.  We have diverse views.  On the one hand we have the learned magistrate, the learned primary judge and the learned minority judge seeking to deal, as a matter of specificity, with some of the circumstances of the loss in a clear way which fairly tells the story of what the damage really is.  To that extent, if there is a value judgment, it is, with respect, correct.  Whereas we have Justice Redlich with a very broad category that just says, well, that is all you need.  It is, in a sense, revenue and that is all the applicant needed to know. 

Now, it is a matter of real need to go beyond the broad, narrow category to give guidance in the way that we respectfully say should have happened.  The proof is in the pudding.  When you get judges going in such diverse directions in a case like this, and there may be many in the pipeline of damage from a third party arrangement, how does the court deal with that?  Does it not have to look in a little more refined and defined way with respect to this category known as kind or genus? 

FRENCH CJ:   There is an infinite variety of possible third party arrangements, of course, and I suppose that raises the question whether the most one can say about the judgment of the Full Court is that it involves a contestable judgment arising out of a rather particular set of circumstances but does not give rise to any principle.  I mean, you yourself put the proposition that this is really a question of fact.  I just look at what you say at 28 at page 85 of your submissions.  That is a kind of constellation of factors which one sort of weighs up together, but there does not seem to be an overarching principle which you are going to ask this Court to adopt.

MR RUSKIN:   Well, it is a factual case, of course, but, as your Honours observe, there will be many cases with respect to losses from third party contracts.  Every month in Victoria, I have to tell your Honour, that negligent cars hit innocent trams, it just happens.

KIEFEL J:   They do not all get charged with penalties under franchise arrangements.

MR RUSKIN:   Although if you read what the learned magistrate said – this was the second one that he was doing, and he said, “I have already decided this issue” and he invited the very brave barrister to tell him to rethink his thinking, which the barrister did, which he did not do.  So I am not sure it is not a very common matter, but it may well apply well beyond this kind of thing.  In the real world of personal injuries and drawn from the pages of life I can tell your Honour that there are these very interesting cases about people who have bad backs, they then become addicted to pain killers and the case we did a couple of years ago the poor plaintiff then used heroin to give himself relief from pain.  He then was given the wrong dose of heroin and he had a hypoxic brain injury.  So that might invite the question, how do you look at the kind or genus there?  We would say by a formula that says salient facts or by a formula that says essential facts or something of that kind you could ‑ ‑ ‑

KIEFEL J:   I think the question is whether this is more in the nature of a revisitation.  Whether or not you are really saying there is error that needs to be corrected, in which case, how much was the penalty involved?

MR RUSKIN:   Yes, well, not a lot of money, but we certainly say there was error or we have tried to set it out both in the way it was categorised, in the fact that it was a question of fact, not law, matters of that kind.  We got lots of complaints about that.  I do emphasise that, just by looking at the fact that the magistrate – this was the second one he had done that year or whatever it was – it is the thin edge of the wedge.  It is very important to both correct this and to inform by reference to the kind or genus category some assistance in the way that I have suggested by reference to a test such as salient features.  So, your Honours, for those reasons we say that this case, because of its subject matter, remoteness, which has not been looked at for 40 to 50 years, is a suitable vehicle to interest the Court so that guidance can be given to the lower court judges.

FRENCH CJ:   Yes, thank you, Mr Ruskin.  Yes, Mr Uren.

MR UREN:   If the Court pleases.  There are two issues in this case on each of which the applicant would have to succeed on appeal if special leave was given.  One is the matter of the kind or genus, which my learned friend has spent some time on, and the other is whether it was open to the magistrate to have found against the respondent on the characterisation that the magistrate considered was the appropriate one.  Now, in our submission, neither of these matters warrant the grant of special leave, but it is relevant to observe that the applicant would have to get up on both of them in order to succeed. 

The second one, if I may say something about that shortly and then go on to the more important aspect, is on any view a mere matter of fact.  If the magistrate had correctly characterised the loss suffered in the way that he did, then it is only a question of fact as to whether the circumstances of the case fell within that characterisation.  The view of the majority of the Court of Appeal was that it did and we would respectfully submit that if this is a mere matter of fact, then the result of the case would not be of advantage to the applicant because it would inevitably lose if the matter came before the High Court on appeal. 

Could we make one observation relevant to this issue before going further.  This is in the respondent’s reply at pages 96 and 97 of the application book.  The respondents have, in fact, misstated the characterisation which the magistrate applied.  The characterisation which the respondent refers to is that ‑ ‑ ‑

FRENCH CJ:   This is the applicant’s reply you are referring to?

MR UREN:   Sorry, your Honour, yes.  The applicant says at the bottom of page 96:

The respondent ignores the dual nature of the categorisation – that is, it comprehended both the reduction of a financial benefit payable by a third party to the respondent and the imposition of a financial penalty upon the respondent by a third party.

If the Court looks at page 3 of the application book at about line 37 or 38, it can be seen that the relevant connector between the two elements is not “and” but “or” and that was the way in which the Court of Appeal looked at the matter.  So if it is a simple matter of fact as to whether the correct characterisation – sorry, go back a step.  If acting on the categorisation of the magistrate, the question of whether the loss falls within that categorisation, it might be a simple matter of fact, then, in our submission, the case itself would not, on any view, warrant the grant of special leave even if they were right on the first point.

On what appears to be the major point, I wonder if we could take up a point which your Honour the Chief Justice referred to, that is to say that one noticeable thing about the case is that the applicant does not advance any proposition which it considers that the High Court ought to adopt or which the Court of Appeal ought to have adopted but did not other than the approach which you have adopted in the case.  In other words, it is a very odd situation to have the applicant saying, “We should be given guidance by the High Court on a particular point”, but they did not advance any point and do not, as we apprehend it, still advance any point which the Court should adopt instead of the broad approach which the Court of Appeal adopted in the light of authorities which, although they may have started off 40 years ago, nonetheless have been applied since without difficulty and their antiquity, if it is such, cannot be said to be a reason for special leave being given if they have, in fact, caused no difficulty in the past.

All that is ultimately sought, we would think, is the High Court would be asked on appeal to form a different view as to what was the correct kind or genus in the present case and not to formulate any test which the applicant says is the test that should have been adopted.  In our submission, the test which the Court of Appeal adopted is in line with the relevant authority and that is set out at page 55, paragraph 70 of the application book in the judgment of Justice Redlich:

The process of reasoning by analogy as to questions of policy as to whether the particular damage in issue was of a kind foreseeable, requires a line to be drawn between the broadest of categories, on the one hand, which would reintroduce liability for direct consequences, and the narrowest on the other, which would promote uncertainty and provide distinctions of disreputable nicety.

Now, it appears to us that what our learned friends would be asking the High Court to do is to, in fact, provide distinctions of disreputable nicety by going into the particulars of the way in which commercial losses can be suffered and saying this commercial loss is not a relevant kind or genus as other commercial loss is within a kind or genus and so forth.  In our respectful submission, business losses and revenue losses provide a category which, providing the requirements of causation and foreseeability are established, provides a sufficient definition of losses for the policy purposes which inform the task of the Court in this particular case. 

So, in our submission, there is nothing that the Court is asked to do which differs from what the Court of Appeal did, except to give guidance without saying what the guidance that they propose might be and also merely to say we do not think the kind or genus was the correct one on a view which we take of characterisation.  This, in our respectful submission, will not be a special leave matter, put that way, and also it is noticeable that the prescription which the Court of Appeal gave in the present case is of a type which satisfied the courts who have had to deal with this issue for many years.

I wonder if we could, in particular, take the Court to paragraph 8 of the applicant’s reply which we thought might, in fact, illustrate the issue which we are putting to the Court.  It is on page 96 of the application book.  When the applicant says that:

The respondent’s loss was brought into existence solely by the operation of the Franchise Agreement.

it can be seen that what the applicant omits, by way of fact, is the part played in the causation of the loss by the accident and by the negligence of their client.  So it is not true to say that the respondent’s loss was brought into existence solely by the operation of the, let us say, pre‑existing franchise agreement.  It is not a case of subsequent consequences, but a pre‑existing agreement.  It was brought into existence by the operation of the franchise agreement and also by the circumstances that a negligent accident occurred. 

This paragraph can only make sense then if the word “particular” appears before the word “loss” in each case.  It may be correct to say that the respondent’s particular loss, in other words the loss in this form, was brought into existence solely by the operation of the franchise agreement, but we think that is to, in fact, make the point that we make that it is the delving into the particular way in which the loss was suffered which the applicant is putting.

KIEFEL J:   I see in the next sentence the applicant would seem to deny that it might be seen as consequential loss. 

MR UREN:   Well, it may too, although, mind you, they conceded that issue below because there was no point addressed to the issue of liability save the point of remoteness.  So, in our respectful submission, the case ought not to be granted special leave because all that is really sought ultimately is that there be a different opinion expressed by this Court as to the matter of characterisation and that no particular point of principle is really advanced. 

Now, I think it was agreed by our learned friends that a loss of revenue could be foreseen, but if this is not a loss of revenue, then it is very difficult to say what is in view of the findings of the Court of Appeal.  Business losses of all types may well be outside the thing which, in fact, has been injured because the thing which is injured is the thing which earns the money and consequently the losses must happen because the money cannot be earned because of what has happened to the thing.  What happened to the thing in this case was that because you have got a unitary track, things were held up behind the tram and the consequences of that were perfectly clear in a tramway situation that, firstly, the tram would be held up and not be able to earn money, the trams behind would be similarly held up and also that the tram operator would seek to mitigate its loss by reorganising its route so the other trams can be used. 

In our respectful submission, that is a perfectly sensible case for the law to say that the business loss which was suffered in consequence of those things in an application of the agreement which provides for the operator’s

revenue, is a loss which should be compensable and there is no reasonable policy why it should not.  If the Court pleases.

FRENCH CJ:   Thank you, Mr Uren.  Yes, Mr Ruskin.

MR RUSKIN:   Two short matters.  First of all, the applicant does advance a positive suggestion with respect to formulation by referring to and inviting the Court to consider and perhaps adopt the judgment of Justice Smith, in particular, page 26, paragraphs 30, 31, 46 and 48 and 46 would be enough to get the picture across.  It is really in the work that the learned judge put into this critical matter where he said:

In defining the “kind or genus” of an economic loss, the features of the loss claimed need to be identified and a decision made as to which of those features best define the “kind or genus” of the loss and which do not. 

Then going through to 48, looking at the various matters that need to be taken into account, and at the top of 27, it was a penalty and:

The penalty was the result of the special terms negotiated between Metrolink and the Director –

So what we are suggesting, in accordance with what his Honour found, was that the test for remoteness, especially in an economic consequence, ought have regard to the essential features which define the circumstances of the loss.  Of course, in our friend’s last point, the revenue loss, which is always foreseeable, exposes the problem.  This was not just revenue, this was a particular kind of loss which a features or a salient features test would best expose.  That is why we invite the Court to give the opportunity to better define the genus class aspect.

FRENCH CJ:   The problem is you might just be moving your problem out of genus into salient.

MR RUSKIN:   Well, any genus or class must be comprised of salient features and that is what was lacking in the majority judgment.  If the Court pleases, those are our submissions.

FRENCH CJ:   Thank you, Mr Ruskin. 

The application in this case raises a question of evaluative judgment arising out of a particular set of circumstances.  Without endorsing the particular conclusion at which the Court of Appeal arrived, the application, in our opinion, does not give rise to a question of principle warranting a grant of special leave.  Special leave will be refused.

Do you seek costs, Mr Uren?

MR UREN:   We do, your Honour.

FRENCH CJ:   Can you resist that, Mr Ruskin?

MR RUSKIN:   No, your Honour.

FRENCH CJ:   Special leave will be refused with costs.

AT 12.31 PM THE MATTER WAS CONCLUDED