McCauley, M. v Hamilton Island Enterprises Pty Ltd

[1987] FCA 295

CATCHWORDS

Negligence - application to strike out statement of claim as disclosing no reasonable cause of action - plaintiff suffered personal injuries as a result of helicopter crash - use of unlicensed landing site - whether Commonwealth could be liable.

Practice (Pleading) - application to strike out statement of claim as disclosing no reasonable cause of action - plaintiff

suffered personal injuries as a result of helicopter crash - use

of unlicensed landing site	- whether Commonwealth could be
liable.

UARK BERNARD EVERARD MCCAULEY V . HAMILTON ISLAND ENTERPRISES

PTY. LIMITED h ORS.

No. G5 of 1987

Beaumont, J.

Sydney

10 June 1987

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY	)	NO. G5 Of 1987
1

DIVISION GENERAL 1

BETWEEN :	MARK BERNARD	EVERARD	MCCAULEY
Plaintiff

-	AND :	HAMILTON ISLAND ENTERPRISES
LIMITED

PTY.

First defendant

KEITH WILLIAMS (QUEENSLAND) PTY.

LIMITED

Second defendant

GREAT BARRIER REEF MARINE PARK

AUTHORITY

Third defendant

THE COMMONWEALTH OF AUSTRALIA

Fourth defendant

MINUTES OF ORDER

Judge making order:	Beaumont, J.
Date order made:	10 June 1987
Where made:	Sydney

THE COURT ORDERS:

1. The fourth defendant's motion to strike out paras. 18A to 181 (inclusive) of the plaintiff's further amended statement of claim is dismissed.

2 . The fourth defendant is to pay the plaintiff's

costs of the motion.

Note:

Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

1

NEW SOUTH WALES DISTRICT REGISTRY No. G5 of 1987

GENERAL DIVISION

BETWEEN :	MARK BERNARD	EVERARD MCCAULEY
Plaintiff

-	AND :	HAMILTON ISLAND ENTERPRISES PTY. LIMITED
First defendant
KEITH WILLIAMS (QUEENSLAND) PTY. LIMITED
Second defendant
GREAT BARRIER REEF MARINE PARK AUTHORITY
Third defendant THE COMMONWEALTH OF AUSTRALIA Fourth defendant

CORAM: Beaumont, J.

DATED: 10 June 1987

REASONS FOR JUDGMENT

(On fourth defendant's motion to strike out

para.18A to 181 (incl.) of the plaintiff's further

amended statemeqt of claim)

Before the Court is an application by one of the

defendants to the proceedings to strike out certain parts of the

plaintiff's further amended statement of claim. The action was

remitted to this Court by order made by Mason J. (as he then was) (see (1986) 69 A.L.R. 270). Since the remitter, the plaintiff has amended hls statement of claim In a number of respects and has joined the Commonwealth as a fourth defendant. The nature of the plaintiff's claim, as originally made, is descrlbed by Mason

2 .

J. at 69 A.L.R. at p.271. The Commonwealth now moves to strike out paras.18A to 181 of the plaintiff’s pleading on the ground

that they disclose no reasonable cause of action (see 0.11

r.l6(a)). The pleading is in these terms:

“18A. Further and in the alternatlve, pursuant to

Regulation 84(1) of the Air Navigation Regulations upon application by the proprietor of any place the Fourth Defendant may issue to him an aerodrome licence authorising the use of the place as an aerodrome.

18B. Pursuant to Regulation 85 of the said

Regulations and subject to the said Regulations,

the Fourth Defendant may, by specific or general description, authorise the use of any place as an aerodrome for the purposes of the landing and taking off of such types of alrcraft, engaged in such classes of operations and subject to such conditions as the Fourth Defendant specifies in the instrument of authorlsation.

18C. Pursuant to Regulation 89(l)(b) of the said

Regulations an aircraft shall not land at, or take-off from, any place unless the use of the place as an aerodrome is authorised by a licence granted under Regulation 84.

18D. Pursuant to Regulation 89 (1) (c) of the said

Regulations an aircraft shall not land at, or take-off from, any place unless the use of the place as an aerodrome is authorised by the

Fourth Defendant under Regulation 85 and:-

(i)   The aircraft is of a type of

aircraft authorised under that

Regulation to land and take-off from the place:

(11) The aircraft is engaged in operations included in a class of operations specifled by the Fourth Defendant in the Instrument of

authorisation under that

Regulation that relates to the

place; and

(iii) Any condition specifled in that instrument of authorisation is complied with.

18E. The Fourth Defendant was thereby under a duty

not to allow or permit the use of the pontoon as

an aerodrome without first authorising the same.

3 .

18F. Further and in the alternative, the Fourth

Defendant was thereby under a duty not to allow or permit the use of the pontoon as an aerodrome without first authorising the same.

18G. Further and in the alternative, the Fourth

Defendant was thereby under a duty not to allow

or permit the use of the pontoon as a helicopter

landing site other than in accordance with the

t e m s and conditions of the general

Authorisation of helicopter landing sites made

by the Fourth Defendant under the said

Regulation 8 5 .

18H. Further and in the alternative, the Fourth

Defendant was thereby under a duty of care to

take all reasonable care for the Plaintiff’s

safety.

181. The said collision, in~urles, disabilities, loss

and damage were occasioned to the Plaintlff by reason of the negligence and/or breaches of duty of the Fourth Defendant, his delegates and agents.”

Particulars of negligence are then given but there is no allegation there made that the Commonwealth was, or ought to have been, aware of the activities of the persons involved in the use of the unlicensed pontoon.

It is conceded by the plaintlff that his cause of

action, ~f any, against the Commonwealth is founded on common law negligence and not on breach of statutory duty. For its part, the Commonwealth, says that the paragraphs of the pleading now In question do not disclose any possible foundation in law for the cause of action which the plaintiff alleges. In essence, the Commonwealth’s contention is that, in the absence of an allegation by the plaintiff that the Commonwealth knew or ought to have known of the activities of the other defendants in the use of the pontoon, the pleading is fundamentally defective.

4.

The question which arises in an application of this type was explained by Lord Hodson, Lord Guest and Lord Diplock in - The Mutual Life h Citizens' Assurance Company Limited v. Evatt (1970) 122 C.L.R. 628 at p.631 in the context of a demurrer under the old system of pleading:

"The allegation in ( 9 ) that the company supplied the information and advice 'negligently' is an assertion

of a breach of a duty of care owed by the company to

Mr. Evatt. But under the common law system of

pleading still in force in New South Wales the

plaintiff in an action for negligence must allege

facts from which if they and no other facts were

proved at the trial, the law will deduce a duty of

care. The question for their Lordships is whether

the facts stated in ( 1 ) to ( 8 ) are in themselves

sufficient to give rise to a duty owed by the company ~ ~ ~~

to Mr. Evatt to take care in giving him the

information and advice which he sought.

The question is thus different from that which arises under the modern system of pleading in England upon an application to strike out a statement of claim as disclosing no reasonable cause of action. There the

question is whether it would be open to the

plaintiffs upon the pleadings to prove facts at the trial which would constitute a cause of action. See Dorset Yacht Co. v. Home Office [l9701 A.C. 1004; [l9701 2 W.L.R. 1140."

The circumstances in which a public authority may be

liable in negligence at common law were discussed in The Council

of the Shire of Sutherland v. Heyman (1985) 157 C.L.R. 424. It

was there held by the Full High Court (Gibbs C.J., Mason, Wilson,

Brennan and Deane JJ.) that the Council was not liable to the plaintiffs for structural defects in a building purchased by the plaintiffs but erected with inadequate footings. The plaintiffs' contention that the Council was negligent, because it had failed, or failed properly, to inspect the footings during the course of their construction in the performance of its statutory duties,

was rejected. Although the case directly concerned the operation

5.

of the Local Government Act 1919 (N.S.W.), much of the discussion

in the ~udgments is of general application and the Court's

reasoning is authoritative for present purposes. Because of the importance of Heyman, it is necessary to refer to it in some detail.

Gibbs C.J. (and the other members of the Court)

following Lord Atkin's dissenting ~udgment in East Suffolk Rlvers

Catchment Board v. Kent 119411 A.C. 74 at pp.88-9, accepted that

the fact that a statutory provision, which confers powers or

duties on a public authority, is enacted for the beneflt of the

public generally and confers no private right upon an individual,

does not mean that the individual has no right	of	actlon at
common law if the authority is negllgent (at p.436).

After referring to Lord Wilberforce's well-known

explanation in Anns v. Merton London Borough Council [l9781 A.C.

728 of the distinction between the area of policy and the

operational area as logical and convenlent, and after expressing

the view that a non-feasance could come within the rule of

Donoghue v. Stevenson, Gibbs C.J. sald (at p.443):

"However, as a general rule, a failure to act 1s not

negligent unless there is a duty to act. The duty

may arise because of the conduct of the defendant

himself or it may be created by statute."

The Chief Justice further observed (at p.445):

"Once it is accepted, as it must be, that the ordlnary principles of the law of negligence apply to publlc authorities, it follows that they are liable for

damage caused by a negligent failure to act when they are under a duty to act, or for a negligent failure

6 .

to conslder whether to exercise a power conferred on them with the intention that it should be exercised if and when the public interest requlres it.

Where a public authority has declded to exercise a power, and has done so negligently, a person who has acted in reliance on what the public authority has done may have no difficulty in provlng that the

damage which he has suffered has been caused by the negligence. Where the damage has resulted from a negligent failure to act there may be greater difficulty in proving causation...I am disposed to

agree that there is a basic difference between

causlng something and falling to prevent ~t from

happenlng. "

The Chief Justice considered that, although no relevant statutory duty was imposed on the Council, it owed to the

plaintiffs, as owners and occupiers of a house erected sub~ect to

consideration to the question whether it should exerclse lts powers, including Its powers of Inspection. The Councll had a discretion as to how and when it should exercise its powers, and	its approval and under its control, a duty at common law to glve shown that it had not properly exercised that discretion. The facts that the municipality was a large one and there were many
building applicatlons to be dealt wlth were levant
considerations (at p.447). The Chief Justice was of the view
that, in the absence of evidence that the Council's officers had * been guilty of negligence in any inspection of the footings, the plaintiffs' claim should be rejected.

Wllson J. was in general agreement with the reasons of

the Chief Justice.

Mason J. , (as he then was) observed that since powers

7.

are conferred upon a public authorlty for the purpose of

attaining the statutory objects, sometimes generating a public

expectation that they will be exercised, there is no reason why the authority should not be subject to a common law duty of care in appropriate circumstances in relation to performing, or

failing to perform, its functions, except in so far as its

policy-making and, perhaps, its discretionary decisions are

concerned (at pp.457-8). His Honour said that, although

generally speaking, a public authorlty under no statutory

obligation to exercise a power comes under no common law duty of care to do so, yet an authority may by its conduct place itself in such a position that it attracts a duty of care whlch calls for the exercise of the power (at pp.459-60). Mason J. instanced situations where the authority created a danger or occupled

premises or a structure (at p.460). His Honour referred to

situations in which the authority, not otherwise under a relevant duty, may place itself in such a position that others rely on It to take care for their safety so that the authority comes under a duty of care calling for positive action (at p.461). Reliance has always been an important element in establishing the evldence of a duty of care not only in the Anglo-Australian authorities but also in the United States experience (at pp.462-3):

"...the liability of coastguards for negligent

inspections has been denied on the ground that the

plaintiffs had not shown that they knew that the

coastguards conducted safety inspections and that

they were thereby induced to forego thelr own safety

efforts: Patentas v. United States (1982) 687 F.(2d)

707, at p.717. On the other hand, it has been

recognized that where the government has supplanted

private responsibility, as in the case of air trafflc controllers, general, rather than specific, reliance may be sufficient to generate liability: Clemente v.

United States (1977) 567 F. (2d) 1140, at

PPt.1147 - 1148 . This approach was adopted in relation

8 .

to the inspection and certification of civil aircraft: S.A. Empresa De Vlacao Aerea RIO Grandense (Varig Airlines) v. United States (1982) 692 F.(2d) 1205 and United Scottish Insurance v. United States (1982) 692 F.(2d) 1209, where the court oolnted out that .the public generally depends on the- government

properly to inspect aircraft and that this ~ustifies

the imposition of a duty of care..."

Mason J. was of the opinion that the foreseeability of the plaintiff's reasonable reliance is a sufficient basis for

finding a duty of care, sublect to such dispensations as may

arise from the special character of a public authority exercising

statutory functions (at pp.463-4). His Honour explained what he

meant by "reasonable reliance" in this way (at p.464):

"Reliance or dependence in this sense is in general

the product of the grant (and exercise) of powers

designed to prevent or minimize a risk of personal

injury or disability, recognized by the legislature

as being of such magnitude or complexity that

individuals cannot, or may not, take adequate steps

for their own protection. This situation generates

on one side (the individual) a general expectation

that the power will be exercised and on the other

side (the authority) a realization that there is a

general reliance or dependence on its exercise of

power: see Shapo, The Duty to Act (1977), at

pp.95-96. The control of air traffic, the safety inspection of aircraft and the fighting of a fire in a bullding by a fire authority (but cf. Bennett 6

Wood Ltd. v. Orange City Council (1967) 67

S.R.(N.S.W.)	426 may well be examples of this type of
function."

Mason J. rejected as a foundation for imposinq a duty of

care the mere failure by the Council to give proper consideratlon

to the question whether the power of inspection should be

exercised or not (at pp.464-7). On the other hand, h1s Honour

did not accept that a duty of care could never arise where

discretionary elements were involved in an operational decision: "it is possible that a duty of care may exist in relation to

9.

discretionary considerations which stand outside the policy

category ..." (at p.469). Mason J. said (at p.469):

"The distinction between pollcy and operatlonal

factors is not easy to formulate, but the dividing line between them will be observed if we recognize that a public authority is under no duty of care in relation to decisions which involve or are dictated by financial, economic, social or polltical factors or constraints. Thus budgetary allocations and the constraints which they entail in terms of allocatlon

of resources cannot be made the sub~ect of a duty of

care. But it may be otherwise when the courts are

called upon to apply a standard of care to action or inaction that is merely the product of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness."

Since a case of specific rellance had not been

established and since a case of general reliance had not been suggested, his Honour held that the plalntlffs' claim should be dismissed.

Brennan J. was also of the opinion that, In cases of

alleged failure to act, reliance was a significant conslderatlon: a public authority, which adopts a practice of so exercising Its powers that it induces a plaintiff reasonably to expect that it will exercise them in the future, is liable to the plaintlff for a subsequent omission to exercise its powers if the plaintiff has relied on the expectation induced by the authority and has

thereby suffered damage provided that damage was reasonably

foreseeable and provided that any speclal element restrlcting a

cause of action for negligence occasioning damage of that klnd 1s

satisfied (at p.486).

Deane J. was of the view that since the Council's

10.

functions there were of a routine administrative or

"operational" nature, liability was not precluded as in cases

where what is involved are actions taken in the exerclse of

policy-making powers and functions of a quasi-legislative

character (at p.500). His Honour also held that where there is

an alleged failure to act, apart from those cases where the

circumstances disclose an assumption of a particular obligation to take such action or of a particular relationship in which such

obligation an is implicit, r quisite he proximity of

relationship will be found to exist only in speclal or

exceptional situations: they are largely confined to cases

involving reliance by one party upon care being taken by the

other in the discharge of statutory powers, duties or functions

(at p.502).

Part IX of the Air Navigation Regulations ("the

Regulations") deals with aerodromes and facilities and services. Division 1 of Part IX deals with the establishment of aerodromes and air route and airway facilities. Upon application, the

Secretary is empowered to issue a licence authorising the use of

a place as an aerodrome (Reg.84(1)). A licence shall be issued

subject to such conditions as the Secretary conslders necessary to ensure compliance with the Chicago Convention and the safety of aircraft using the aerodrome (Reg.84(2)). The Secretary may,

by specific or general description, authorlse the use of any

place as an aerodrome for the purposes of the landing and taking-off of such types of aircraft, engaged in such classes of operations and subject to such conditions as the Secretary

specifies (Reg.85). An aircraft shall not land at, or take off

11.

from, any place unless (a) the place is an aerodrome establlshed under Part IX; (b) the use of the place as an aerodrome is

authorised by a licence granted under Reg.84; (c) the use of

the place as an aerodrome is authorised under Reg.85 and the

conditions specified in the instrument of authorlsation are

complied with (Reg.89(1)). Division 2 of Part IX deals with alr

traffic control but it is not suggested that the provisions of

this Division are the source of the creation of any common law duty in the present case (cf. Heyman at p.462 per Mason J.; Nichols v. Simmonds [l9751 W.A.R. 1; Skyways Pty. Ltd. (in liq)

v. Commonwealth of Australia (1984) 57 A.L.R. 657 at pp.666-8;

Shawcross and Beaumont on Air Law, 4th ed., VI (32)).

The question in thls case 1s whether the Commonwealth

owed the plaintiff a legal duty to "try to forestall and prevent

a peril" (per Windeyer J. in Hargrave v. Goldman (1963) l10

C.L.R. 40 at p.66; Skuse v. Commonwealth of Australia (1985) 62

A.L.R. 108 per Fox J. at pp.113-4; cf. - Hill v. Chief Constable of West Yorkshire [l9871 2 W.L.R. 1126; Curran v. Northern

Ireland Co-ownership Housing Association Ltd. (1987) 2 W.L.R.

1043; P. Per1 (Exporters) Ltd. v. Camden London Borough Council

I19841 1 Q.B. 342; Smith v . Littlewoods Organisation Ltd. [l9871

2 W.L.R. 480; David Cohen and J.C. Smith, Entitlement and the Body Politic: Rethinking Negligence in Public Law 64 Can. Bar Rev. 1 (1986); M.J. Bowman and S.H. Bailey, Negllgence In the

Realms of Public Law - a Posltive Obllgatlon to Rescue?	(1984
P.L.277).

It appears that there is no authorlty squarely in point

12.

In SaSin v. Commonwealth of Australla (1984) 52 A.L.R. 299, the

pilot of an aircraft was injured when it crashed. He sued the

Commonwealth for negligence in relation to the approval of the

seat belt reel installed in the aircraft. Hodgson J. dismissed

the claim, following and Heyman in the Supreme Court (see

(1982) 2 N.S.W.L.R. 618), on the ground that a duty of care was there excluded because of the "policy" or "discretionary", rather than "operational", character of the Commonwealth's conduct. His Honour did not, of course, have the advantage of the reasoning of the High Court in Heyman. Moreover, a real question arises here whether a duty of care should be excluded merely on "pollcy" or "discretionary" grounds. It is at least doubtful whether that

exception could have any application here.

It 1s common ground that, in order to dlsclose a

reasonable cause of action, a statement of claim must contain

statements of material facts which support the claims made. It

is not enough for a plaintiff to allege merely that the defendant

acted negligently and thereby caused him damage. He must also

set out facts which show that the alleged negligence was a breach

of duty which the defendant owed the plalntlff (see H 1976

Nominees Pty. Ltd. v. Galli and Apex Ouarries Ltd. (1979) 30

A.L.R. 181 at p.186; Bullen h Leake and Jacob's Precedents of

Pleadings 12th ed. at p.685). As has been said, it is submltted

on behalf of the Commonwealth that the absence of an allegation by the plaintiff in his statement of claim that the Commonwealth was aware or ought to have been aware of the activities of the parties concerned is fatal. It is contended by the Commonwealth that such an allegation is an essential ingredient In a cause of

. .

13.

action of common law negligence.

I cannot accept this analysis.

It may be accepted that knowledge, actual or

constructive, of the activities of the persons involved could be a basis for erecting a common law duty of care in the present

case. But it is not the only way in which such a duty could be

created. It is possible that the Regulations may play a part in the creation of a common law duty of care. In this connection,

it is possible that the plaintiff could make out a case of

general, rather than specific, reliance	in the sense explained In
Heyman.

The present Inquiry is not whether, as a matter of law, a cause of action is made out on the bare allegations on the face of the pleading. Put differently, the present question does not involve the determination of a preliminary issue of law such as

arose in Home Offlce v. Dorset Yacht Co. Ltd. L19701 A.C. 1004.

To adopt the language of Mason J. used in this case in another

application (69 A.L.R. 270 at p:274), I am not satisfied that there is no posslble foundation in law for the cause of action

which the plaintiff seeks to litigate in the paragraphs now in

question. True, the plaintiff is confronted with a difficult task in demonstrating a case of general reliance, especially In terms of causation. But these difficulties do not require that the plaintiff be precluded at this preliminary stage, from

prosecuting his claim. The legal complexity of his allegations

may be accepted (see, e.g., the note on Heyman in (1985) 60

14.

A.L.J. 4 at p.6). Yet thls 1s not a reason to strike out the

pleading.

The Commonwealth's motion 1 s dismissed with costs.

I certify th t this and the

preceding d t / f m ( 13)

pages are a true copy of the

Reasons for Judgment herein of

hls Honour Mr. Justip Beaumont.

. . . _

Associate

Dated: 10 June 1987

Counsel and Solicitors

Mr. A.B. Shand Q.C. with

for Plaintiff:

Mr. D. Cowan instructed by

McGuren Allen & Holt

Counsel and Solicitors

Mr. J.A.M. Pritchard Q.C. with

for Fourth Respondent:

Mr. R. Macready instructed by

Australian Government Solicitor

Date of hearing:

19 May 1987

Date Judgment Delivered:

10 June 1987