Kudrin v City of Mandurah - [2012] WASCA 65

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: KUDRIN -v- CITY OF MANDURAH [2012] WASCA 65

CORAM: BUSS JA
NEWNES JA
ALLANSON J

HEARD: 16 DECEMBER 2011

DELIVERED : 27 MARCH 2012

FILE NO/S: CACV 2 of 2011

BETWEEN: NIKOLAI KUDRIN
First Appellant
MARIA KUDRIN
Second Appellant
AND
CITY OF MANDURAH
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :WISBEY DCJ
File No  :CIV 1629 of 2009

Catchwords:

Retaining wall not constructed in accordance with specifications approved by local authority - Encroachment onto neighbours' property - Local authority issued but did not enforce statutory notice requiring rectification or removal of retaining wall - No duty of care owed by local authority to neighbour to enforce notice

Legislation:

Local Government (Miscellaneous Provisions) Act 1960 (WA), s 401

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

First Appellant              :     In person
Second Appellant          :     In person
Respondent:     Mr J Eller

Solicitors:

First Appellant              :     In person
Second Appellant          :     In person
Respondent:     John Eller

Case(s) referred to in judgment(s):

Campbelltown City Council v Mackay (1989) 15 NSWLR 501
Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1
Glendinning v Cuzens [2009] WASCA 21
Graham Barclay Oysters v Ryan [2002] HCA 54; (2002) 211 CLR 540
Kudrin v City of Mandurah [2009] WADC 75
Kudrin v City of Mandurah [2010] WADC 40
Pyrenees Shire Council v Day [1998] HCA 3; (1998) 192 CLR 330
Stuart v Kirkland-Veenstra [2009] HCA 15; (2009) 237 CLR 215

BUSS JA: I agree with Newnes JA.
NEWNES JA: This is an appeal against a decision of Wisbey DCJ in the District Court in which his Honour struck out the appellants' substituted statement of claim and dismissed their action for negligence against the respondent. The appellants contend that his Honour erred in doing so and that if the statement of claim was defective they should have been given a further opportunity to put it into a proper form. The appellants say there was sufficient before the primary judge to show that they have an arguable claim against the respondent.
In my opinion, for the reasons which follow, the appellants' statement of claim was defective and their action was doomed to failure. The primary judge was right to dismiss it.

Background

The origins of this appeal go back to 1993. The appellants live in Mandurah. In 1993, they erected a fibro‑cement fence on a side boundary of their property. Later that year, their neighbours erected on their property (which is on a higher level) a retaining wall, just inside and parallel to the boundary fence. The appellants believed that the retaining wall had not been constructed in accordance with the plans approved by the respondent and that the construction was inadequate.
It is unnecessary to canvass the long history of complaints by the appellants to the respondent about the retaining wall and the response by the respondent. So far as this appeal is concerned, the relevant events are set out in Mr Kudrin's affidavit of 11 November 2008, filed in a previous action, which is incorporated by reference into the substituted statement of claim (par 1) which was struck out by the primary judge. Those events are as follows.
On 20 February 2003, the respondent issued to the neighbours a notice under s 401 of the Local Government (Miscellaneous Provisions) Act 1960 (WA) (the Act), stating that the retaining wall had not been constructed in accordance with the plans approved by the respondent and requiring them to alter the retaining wall so as to bring it into conformity with the approved plans.
The neighbours appealed to the Minister against the s 401 notice. They also obtained an engineering report from Ewing Consulting Engineers. The report is dated 12 March 2003. The author of the report

concluded that the wall was not built to the approved design in that a wall 'toe' buried below ground was not installed and limestone boulders, rather than blocks, were used to construct the wall. He said, however, that there was no evidence of any significant movement in the wall and certified that it was 'adequate in its present state'.

The neighbours' appeal was dismissed by the Minister on 4 June 2003.
On 18 June 2003, the respondent wrote to the neighbours proposing two means of satisfying the s 401 notice. The respondent said its preferred solution was for the retaining wall to be removed and replaced. It said, however, that it was prepared to allow the retaining wall to remain provided: first, the neighbours provided evidence from a licensed land surveyor that the retaining wall could be kept within the boundaries of their property; secondly, a professional engineer had certified its structural integrity; and thirdly, the external face was finished to the respondent's satisfaction.
Subsequently, the neighbours obtained a further report, dated 25 July 2003, from Ewing Consulting Engineers. In that report, the engineers noted that a surveyor had found that apart from capping in two locations encroaching onto the appellants' property by 6 mm, the retaining wall was within the neighbours' land. They further observed that the capping could easily be removed without affecting the structural integrity of the retaining wall. They confirmed the structural integrity of the retaining wall.
On 12 August 2003, the respondent wrote to the appellants informing them that the only encroaching part of the wall was the capping, which the neighbours would remove, and that the engineers' report provided by the neighbours testified to the structural adequacy of the wall. The respondent said the neighbours had proposed that a new dividing fence be constructed on the appellants' side of the retaining wall, obviating the need for any attention to the finish on the external face of the retaining wall. The letter concluded that the issues identified in the s 401 notice had been adequately addressed by the neighbours and that no further action was contemplated by the respondent in relation to the matter.
Subsequently, there was extensive correspondence between the appellants' local member of parliament and the respondent about the adequacy of the retaining wall.
On 27 February 2006, the respondent wrote to the neighbours saying that it had arranged for a survey to be carried out which found there had been movement of the retaining wall of up to 23 mm at 12 points, with an average movement of 14.4 mm. As the reliability of the survey was up to 5 mm, the figures indicated that the retaining wall was moving. The respondent requested that the neighbours state what they intended to do in relation to the rectification or removal of the retaining wall.
The neighbours engaged another consulting engineer, J R Bradley, who provided a report dated 9 June 2006. In that report, Mr Bradley said that if the retaining wall had moved to the extent suggested by the respondent there would be reflective cracking to its rear face. He said a careful inspection had revealed no cracking.
On 12 July 2006, the respondent wrote to the appellants' local member of parliament saying that the respondent was obtaining advice on whether it was possible to issue a fresh s 401 notice to the neighbours.
It is common ground that the respondent did not issue a further s 401 notice, nor did it commence proceedings against the neighbour under s 401(7) to enforce the previous s 401 notice.
On 15 January 2007, the appellants commenced proceedings against the respondent in the District Court. In February 2009, the appellants' statement of claim was struck out by a registrar on a number of grounds, including on the ground that the proceedings had been commenced more than one year after the alleged cause of action had accrued and the appellants had not obtained leave to bring the action as required by s 47A(3) of the Limitation Act 1935 (WA). An application by the appellants for summary judgment was dismissed.
The appellants appealed against the registrar's decision. The appeal was heard by Davis DCJ, who delivered her decision on 21 May 2009: Kudrin v City of Mandurah [2009] WADC 75. Her Honour granted leave to the appellants to amend the proceedings so that they constituted an application for leave to commence proceedings pursuant to s 47A(3) of the Limitation Act. On the basis of the proceedings as so amended, her Honour granted the appellants leave to bring an action against the respondent with respect to any cause of action arising from the respondent's acts or omissions relating to the retaining wall following the dismissal, on 4 June 2003, of the neighbours' appeal against the s 401 notice.
On 2 June 2009, the appellants issued a new, generally indorsed, writ of summons. The endorsement was to the effect that the respondent had failed to pursue its statutory powers to effect the removal of the retaining wall. Shortly afterwards, the appellants served a statement of claim. That prompted a fresh application by respondent to strike it out.
On 1 April 2010, Staude DCJ struck out the statement of claim: Kudrin v City of Mandurah [2010] WADC 40. His Honour found, in effect, that the statement of claim was defective in failing to plead what the appellants allege the respondent should have done after the Minister dismissed the neighbours' appeal, what the respondent had failed to do, and what damage was caused by that failure [22]. The appellants were granted leave to file a substituted statement of claim within 30 days.
The appellants filed and served a substituted statement of claim on 14 April 2010. It was in the following terms:
1Particulars, regarding construction of the retaining wall on Lot 1154 in Chestnut Rise Mandurah have already been explained in affidavit of 11/11/2008.
2After a many years of denial that the retaining wall had not been built to the plan approved by the [respondent], coupled with denials that there was any problem with the wall, in December 2002 the [respondent] accepted that the wall had not been built to the plan approved by the [respondent] in July 1993.
3In February 2003 the [respondent] issued the Section 401 Notice to the neighbours (owners of the retaining wall) stating '… the matters listed in the schedule are departures from the approved plan and specification for the Building approved by the [respondent].' The Notice requested the neighbours to '… alter the Building so as to remove the cause of objection'.
4In March 2003 the neighbours appealed to the Minister for Housing and Works in relation to the Section 401 Notice
5In June 2003 the Minister dismissed the neighbours' appeal and advised in his letter '… you are required to alter the Building so as to remove the cause of the objection'.
618 June 2003, 14 days after the [neighbours'] appeal [to the Minister] was dismissed, the [respondent] withdrew the Section 401 Notice, and, as a consequence, [the appellants] suffered damages, emotional and physical. The fence that was replaced in March 1999 was damaged in 2004, 2006 and 2007.
7The [appellants] claim that the [respondent] must reissue the part of the Section 401 Notice that was discontinued on 18 June 2003 for the wrong reason. Structural condition of the wall should not be considered in this case. The Notice states '… departures from the approved plan and specifications approved by the [respondent]'. The Section 401 Notice was a statutory direction to the owners of the wall. After the appeal was dismissed the owners of the wall had to comply with the Section 401 Notice. The [respondent] failed in its duty to ensure that the owners complied with the Notice.
8The [appellants] claim damages for inconvenience, vexation, worry and emotional distress [the appellants] had to endure as a consequence of the [respondent's] negligence.
9The [appellants] claim $755.25 + Int. (From 20/04/2004) for the reports provided by the Licensed Land Surveyors, to establish true boundary, extent of encroachment and to prove that the retaining wall had moved.
10The [appellants] claim $ [blank] for the medication [they] were prescribed to control emotional stress.
The respondent filed an application to strike out the substituted statement of claim. The appellants responded with an application for summary judgment. The applications came on for hearing before the primary judge on 6 December 2010. His Honour gave an ex tempore decision in which he dismissed the appellants' application for summary judgment, struck out the substituted statement of claim, and dismissed the action.
The appellants appeal against his Honour's decision to strike out the substituted statement of claim and to dismiss the action.

Reasons of the primary judge

The primary judge held, in effect, that the substituted statement of claim did not address the defects which had caused Staude DCJ to strike out the previous statement of claim and that it remained defective for the same reasons.
His Honour noted that the substituted statement of claim was the fourth attempt by the appellants to plead a cause of action and concluded that the position had been reached where the only proper course was to dismiss the action. He therefore ordered that the substituted statement of claim be struck out and the action be dismissed.

Grounds of appeal

The appellants' grounds of appeal are not in conventional form but, in substance, the appellants contend that the primary judge erred in finding that the substituted statement of claim did not disclose an arguable cause of action.

Disposition of the appeal

Leave to appeal

The parties approached the appeal on the basis that the order of the primary judge dismissing the action was a final order and therefore leave to appeal was not required pursuant to s 60(1)(f) of the Supreme Court Act 1935 (WA). In fact, the question of whether the dismissal of an action on the ground that it does not disclose a reasonable cause of action is a final or interlocutory decision has not yet been finally determined: see Glendinning v Cuzens [2009] WASCA 21 [20] ‑ [25]. However, as the point was not addressed on the appeal, this is not an appropriate case to consider it. In the circumstances, it is convenient to proceed upon the basis that an appeal lies as of right.

The merits

The essential issue on the appeal is whether the facts alleged in the substituted statement of claim disclose an arguable cause of action against the respondent and, in particular, whether the facts alleged are capable of giving rise to a duty of care owed by the respondent to the appellants.
As I understand the appellants' case, it is contended that the respondent owed to them a duty of care to exercise its powers under s 401 of the Act to compel the neighbours to bring the retaining wall into conformity with the approved plans and specifications or to remove the retaining wall. However, it was not, and it could not be, alleged that there was an obligation on the respondent under the Act to exercise that power. It is clear that the power is discretionary. Rather, the appellants' case is necessarily to be understood as asserting that the existence of that power, coupled with the existence of facts which warranted its exercise, gave the appellants a cause of action for foreseeable damage caused by the respondent's failure to exercise it: see Stuart v Kirkland-Veenstra [2009] HCA 15; (2009) 237 CLR 215 [118].
The appellants' case was not put on the basis that the obligation on the respondent to exercise the power arose because the retaining wall is or was structurally unsound or unsafe. Indeed, the appellants contend that the structural soundness of the wall is not a relevant consideration (par 7 of the statement of claim). While the appellants allege damage of an unspecified nature to a fence (par 6), no claim for damages appears to be made in respect of that. The appellants say, in effect, that the duty arose because the retaining wall did not comply with the approved plans and that the failure to exercise the power has caused them damage by way of inconvenience, vexation, worry and emotional distress (including the cost of medication), and the sum of $755.25 for surveyor's reports relating to the alleged encroachment.
Although it is not clear from the pleading, I take the alleged inconvenience to relate to what is said to be the encroachment onto the appellants' property (which presumably is also what is alleged to have caused the damage to the fence) and the alleged vexation, worry and emotional distress to be a consequence of that encroachment. Whether a defendant is liable for such consequential damage depends upon whether it is a reasonably foreseeable result of the defendant's negligence: Campbelltown City Councilv Mackay (1989) 15 NSWLR 501, 511E (McHugh JA).
In his brief submissions, counsel for the respondent submitted that the respondent owed no relevant duty of care to the appellants. The respondent was under no obligation to take proceedings under the Act to enforce the notice. Section 401(7) gave it the power, but not an obligation, to do so and whether it exercised that power was a matter which lay entirely within its discretion. It was entitled not to exercise it in this case. Counsel for the respondent relied upon the judgment of Brennan CJ in Pyrenees Shire Council v Day [1998] HCA 3; (1998) 192 CLR 330, 346.
I think that for present purposes the relevant legal principles can be stated quite shortly. In Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1 [130], Gaudron J explained the nature of a claim of the present kind as follows:
In the case of discretionary powers vested in a statutory body, it is not strictly accurate to speak, as is sometimes done, of a common law duty superimposed upon statutory powers. Rather, the statute pursuant to which the body is created and its powers conferred operates 'in the milieu of the common law' [26].
Similarly, in Stuart v Kirkland-Veenstra [130], Crennan and Kiefel JJ noted that in such a claim where a general duty of care is alleged, the statute is not the source of the duty but rather the foundation or setting for it. The existence of the statutory power is necessary, but not sufficient, to give rise to a duty of care.
In Graham Barclay Oysters v Ryan [2002] HCA 54; (2002) 211 CLR 540, Gummow and Hayne JJ pointed out that the co‑existence of the knowledge of the holder of a statutory power of a risk of harm and its power to avert or to minimise that harm did not, without more, give rise to a duty of care at common law. The totality of the relationship between the parties, not merely the foresight and capacity to act on the part of one of them, is the proper basis upon which a duty of care may be recognised. Their Honours observed that were it otherwise, any recipient of statutory powers to license, supervise or compel conduct in a given field, would, upon gaining foresight of some relevant risk, owe a duty of care to those ultimately threatened by that risk to act to prevent or minimise it [145]. The existence or otherwise of a common law duty of care owed by a statutory authority turns on whether the relevant statutory regime erects or facilitates 'a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence' [146].
In Stuart v Kirkland-Veenstra, Gummow, Hayne and Heydon JJ, having referred to those statements in Graham Barclay Oysters, said:
Evaluation of the relationship between the holder of the power and the person or persons to whom it is said that a duty of care is owed will require examination of the degree and nature of control exercised over the risk of harm that has eventuated, the degree of vulnerability of those who depend on the proper exercise of the relevant power, and the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute. Other considerations may be relevant [113].

What I think clearly emerges from the relevant authorities is as follows. The existence of a statutory power is not sufficient to give rise to a duty of care to exercise it. Nor is it sufficient that, if action is not taken to exercise a statutory power, it is reasonably foreseeable that harm will ensue. Liability will arise in negligence in relation to the failure to exercise a power only if there is, in the circumstances, a duty to act. Such a duty is called into existence by the common law where the relationship between the statutory body and some member or members of the public is such as to give rise to a duty to take some positive step or steps to avoid a foreseeable risk of harm of the kind suffered by the person or persons concerned: Crimmins [25].
The starting point is the relevant statutory context. In the present case, the Act contains, and at all relevant times contained, provisions regulating the construction or alteration of buildings. In particular, the Act prohibits the construction or alteration of a building unless the plans and specifications of the proposed building or alteration have been submitted to the local authority and approved by it by the issue of a building licence: s 374(1). That is evidently for the purpose of ensuring that buildings are properly constructed and meet all prescribed standards. In that connection, the local authority has extensive powers under the Act to make local laws regulating the erection or alteration of buildings with regard to, among other things, their permitted size, height, type, design, and purpose, and the manner in which, and the materials of which, they may be constructed: s 433.
It is an offence for a person to construct or alter a building otherwise than in accordance with the approved plans and specifications: s 374(5). Where a building is being, or has been, constructed or altered otherwise that in accordance with the approved plans and specifications, the local authority has power under, among others, s 401 to require the builder or owner to bring the building into conformity with the plans and specifications, and to enforce any such requirement through legal proceedings.
Section 401 of the Act was, at the relevant time, in the following terms:
(1)A local government may, during or after the erection of a building in its district, give to the builder or owner of the building, written notice of anything, in the construction of the building -
...
(b)which is not in compliance with, or is a departure from, the plans and specifications for the building, of which plans and specifications the approval of the local government has been obtained as required by this Act, or which is a contravention of this Act;
...
and requiring him to pull down or so alter the building as to remove the cause of the objection and on being served with the notice the builder or owner shall comply with the requisition, unless where he has a right of appeal against the requisition, he exercises the right with due diligence, and ... the Minister ... quash[es] the requisition on appeal.
(3)Where a person is given notice under this section to pull down or alter a building in order to remove a ground of objection mentioned in subsection (1)(b) ..., he may within 35 days of the service of the notice upon him, if dissatisfied with the requisition in the notice, appeal to the Minister ... and the Minister may decide the appeal and his decision is not subject to an appeal.
...
(7)If the builder or owner on whom a notice mentioned in subsection (1) has been served does not -
(a) within 35 days of that on which the notice is served upon him, unless the requisitions in the notice are the subject of an application for review as described in this section; or
(b)if an appeal under this section is dismissed, within 14 days of the dismissal,
comply with the requisitions in the notice, a court of petty sessions, on complaint by the local government that he has not so complied with all or any of the requisitions in the notice and that the requisitions in respect of which the application is made are not the subject of an appeal under this section, may order the person on whom the notice has been served to comply with the requisitions within a time to be fixed by the order, and the court may make such order as to the costs of and incidental to the proceedings relating to the order as the court thinks fit.
(8)If an order made under subsection (7) is not complied with by the person to whom it is directed within the time so fixed, the local government may lawfully enter upon the land on which the building is erected or is in course of being erected and give effect to the requisitions and may, in a court of competent jurisdiction, recover the expense of so doing from the builder or owner on whom the notice was served.
(9)An order made under subsection (7) is not subject to appeal.
It was not in issue that the retaining wall was a 'building' within the meaning of the Act.
In my view, there was nothing in the circumstances of the present case which was arguably capable of giving rise to a duty of care on the part of the respondent to the appellants to take action under s 401 of the Act to enforce compliance with the requisitions in the s 401 notice. Ordinarily the common law does not impose a duty of care on a person to protect another from the risk of harm unless that person has created the risk: Graham Barclay Oysters [81] (McHugh J). The appellants do not contend that the respondent was responsible for the non‑compliant construction of the retaining wall by the neighbours or that the respondent was in a position to have prevented it. The appellants' complaint, as I have said, is that after the retaining wall was constructed the respondent did not then take action to ensure that the retaining wall was brought into compliance with the approved plans and specifications or removed. There was, however, nothing in the relationship between the appellants and the respondent which was capable of giving rise to a duty of care on the respondent to do so.
The statutory regime could not, in my opinion, be said to create or facilitate any relationship between the respondent and the appellants which was arguably capable of giving rise to such a duty of care. The power under s 401 is a general power to enable the local authority to enforce compliance by owners and builders with the approved plans and specifications for the construction or alteration of a building. It is not a power which is specifically addressed to the protection of neighbouring or nearby landowners from encroachment, or from inconvenience or distressed feelings, as a result of building work, but to the maintenance of appropriate building standards. Nor is it a power which the respondent is under an obligation to exercise in any case where a non‑compliant building may lead to some encroachment or cause some inconvenience to nearby landowners. The power is a discretionary one and any such obligation would be inconsistent with the discretionary nature of the power. There was nothing in this case which called for the power to be exercised to protect the appellants from the risks of which they complain.
This was not a case where the appellants were dependant upon the respondent to take action if the retaining wall was in fact encroaching on their land. Nor was it reasonable for them to rely on the respondent to protect them from risks of the nature alleged in circumstances where the respondent was not responsible for the retaining wall being built in a non‑compliant manner. The appellants were at least as well informed as the respondent in respect of both the extent of the non‑compliance and the alleged encroachment, and it was open to them to pursue their own remedies against the neighbours. The remedies available to them were not obviously less efficacious than that available to the respondent under

the Act. A duty of care on the respondent to take action in respect of an encroachment on the appellants' land caused by the non-compliant building work of the neighbours was not capable of arising simply because it was more convenient to the appellants that the respondent, rather than the appellants, bore the burden of such action.

In the circumstances, there is nothing in the pleaded case, taking that case at its highest, that is capable of leading to the conclusion that the respondent owed the appellants a duty of care of the nature relied upon by the appellants. It follows that the appellants' case had no prospect of success and was properly dismissed.

Conclusion

I would dismiss the appeal.
ALLANSON J: I agree with Newnes JA.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: KUDRIN -v- CITY OF MANDURAH [2012] WASCA 65 (S)

CORAM: BUSS JA
NEWNES JA
ALLANSON J

HEARD: 16 DECEMBER 2011 & ON THE PAPERS

DELIVERED : 27 MARCH 2012

SUPPLEMENTARY
DECISION :3 MAY 2012