New South Wales v Bovis Lend Lease Pty Ltd

[2007] NSWSC 1045

Reported Decision: (2007) Aust Torts Reports 81-917

New South Wales

Supreme Court

CITATION:	The State of New South Wales v Bovis Lend Lease Pty Limited (formerly Civil & Civic Pty Limited) [2007] NSWSC 1045 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	10/09/07, 11/09/07
JUDGMENT DATE :	20 September 2007
JURISDICTION:	Equity Division Technology and Construction List
JUDGMENT OF:	Einstein J
DECISION:	Referee held to have erred in finding duty of care.
CATCHWORDS:	Sydney Olympic Park Authority brings proceedings as a statutory corporation representing the Crown in right of New South Wales and in name of State of New South Wales pursuant to Crown Proceedings Act 1988 (NSW) - Claims arise out of construction by Civil and Civic [now Bovis Lend Lease] of pool facilities at Sydney Aquatic Centre in anticipation of 2000 Olympic Games - Proceedings referred for enquiry and report under Part 20 rule 14 of Uniform Civil Procedure Rules 2005 - Cross applications for adoption and rejection of referees report - Principles to be applied - Tort - Duty of care in cases of pure economic loss - Whether duty of care owed by defendant- Concepts of vulnerability and reliance - Circumstances permeated by succession of statutory corporation successors to Homebush Abattoir Corporation being the statutory corporation in which the land vested at a material time which was not a party to the building contract and destined to be dissolved by legislation passed but not yet effective - Statute - Examination of statutory vesting of right to sue
LEGISLATION CITED:	Arbitration Act 1902 (NSW) Crown Proceedings Act 1988 (NSW) Growth Centres (Development Corporations) Act 1974 (NSW) Homebush Abattoir Corporation (Dissolution and Transfer) Act 1991 (NSW) Homebush Bay Ministerial Corporation (Dissolution) Act 1993 (NSW) Income Tax Assessment Act 1936 (Cth) Limitation Act 1969 (NSW) Olympic Co-ordination Authority Act 1995 (NSW) Olympic Co-ordination Authority Dissolution Act 2002 (NSW) Public Works Act 1912 (NSW) Superannuation Administration Act 1987 (NSW) Supreme Court Rules 1970 (NSW) Sydney Olympic Park Authority Act 2001 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
CASES CITED:	Allied Constructions Pty Limited v Hyder Consulting (Australia) Pty Limited & Ors [2004] NSWSC 808 Amaca Pty Ltd v State of New South Wales (2003) 199 ALR 596 Australian Slate Quarries Ltd v Federal Commissioner of Taxation (1923) 33 CLR 416 Avenhouse & Anor v Council of the Shire of Hornsby (1998) 44 NSWLR 1 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Bank of New South Wales v The Commonwealth (1948) 76 CLR 1, Bass v Permanent Trustee Co Limited (1999) 198 CLR 334 Bropho v State of Western Australia (1990) 171 CLR 1 Brutus v Cozens [1972] 2 All ER 1297 Bryan v Maloney (1995) 182 CLR 609 Buckley v Bennell Design and Construction Pty Ltd (1978) 140 CLR 1 Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad (1976) 136 CLR 529 Cape v Maidment (1991) 98 ACTR 1 Cattle v Stockton Waterworks Co (1875) LR10QB 453 Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60 Chocolate Factory Apartments Pty Ltd v West Point Finance Pty Ltd [2005] NSWSC 784 Coco v The Queen (1994) 179 CLR 427 Commercial Oil Refiners Pty Limited v South Australia (1974) 9 SASR 88 Deputy Federal Commissioner of Taxation v State Bank of New South Wales (1992) 174 CLR 219 Donoghue v Stevenson [1932] AC 562 Esanda Finance Corp Ltd v Peat Marwick Hungerfords (Reg) (1997) 188 CLR 241 Farmer (Surveyor of Taxes) v Trustees of Cotton [1915] AC 922 Federal Commissioner of Taxation v Broken Hill South Ltd (1941) 65 CLR 150 Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 Foxman Holdings Pty Ltd v NMBE Pty Ltd (1994) 38 NSWLR 615 Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47 Hill (t/as R F Hill & Associates) v Van Erp (1997) 188 CLR 159 Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605 Hope v The Council of the City of Bathurst (1980) 144 CLR 1 Kelner v Baxter (1866) LR2CP 174 Le Lievre v Gould [1893] 1 QB 491 L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 Minister for Lands and Forests v McPherson (1991) 22 NSWLR 687 Monk v Australia and New Zealand Banking Group Limited (1994) 34 NSWLR 148 Mutual Life & Citizens’ Assurance Co Ltd v Evatt (1970) 122 CLR 628; [1971] AC 793 New South Wales Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509 Perre and Ors v Apand Pty Limited (1999) 198 CLR 180 Petersen v Maloney (1951) 84 CLR 91 Potter & Minahan (1908) 7 CLR 277 Poulton v Commonwealth (1952-1953) 89 CLR 540 State Authorities Superannuation Board v Commissioner of State Taxation for the State of Western Australia (1996) 189 CLR 253 State of New South Wales v Commonwealth Bank of Australia [2001] NSWSC 1067 Sullivan v Moody (2001) 207 CLR 562 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Torkington v Magee [1902] 2 KB 427 Trendtex Trading Corporation v Credit Suisse [1982] AC 679 Trident General Insurance Co Pty Ltd v McNiece Bros Pty Ltd (1987) 8 NSWLR 270 White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193 Woolcock Street Investments Pty Limited v CDG Pty Limited (2004) 216 CLR 515 Wynyard Investments Pty Limited v Commissioner for Railways (NSW) (1955) 93 CLR 376
PARTIES:	The State of New South Wales (Plaintiff) Bovis Lend Lease Pty Limited (formerly Civil & Civic Pty Limited) (Defendant)
FILE NUMBER(S):	SC 55048/02
COUNSEL:	Mr M Rudge SC, Mr T Thomas (Plaintiff) Mr J Sexton SC, Mr R Cheney (Defendant)
SOLICITORS:	Colin Biggers & Paisley (Plaintiff) Rivlin Deschamps Kelly (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

Einstein J

Thursday 20 September 2007

55048/02 The State of New South Wales v Bovis Lend Lease Pty Limited (formerly Civil & Civic Pty Limited)

JUDGMENT

The proceedings

1 Sydney Olympic Park Authority [‘SOPA’] brought proceedings as a statutory corporation representing the Crown in right of New South Wales and in the name of the State of New South Wales [pursuant to s 4 of the Crown Proceedings Act 1988 (NSW)] against Civil & Civic Pty Ltd now known as Bovis Lend Lease Pty Ltd [presently referred to as ‘BLL’] and Lend Lease Corporation Ltd [‘LLC’]. The claims arose out of the construction by BLL of the pool facilities known as the Sydney Aquatic Centre at Homebush in anticipation of Sydney's staging of the 2000 Olympic Games. Those facilities suffered from significant defects. It was part of BLL's case that any claim, either in tort or in contract, arising out of those defects was statute-barred.

2 The applications presently before this Court are not concerned with the cross-claims.

The reference out

3 In May 2006 the whole of the proceedings were referred for enquiry and report pursuant to Part 20 rule 14 of the Uniform Civil Procedure Rules 2005 to the Hon Mr R L Hunter QC (‘the Referee’) whose report was dated 12 June 2007 (‘the Report’). Following that report orders were made dismissing the claim made against LLC, which claim had been pursued by reason of its role as guarantor of BLL’s contractual obligations.

4 The Referee dismissed the contractual claims as statute-barred under the Limitation Act 1969 (NSW) but upheld the claim in tort.

The applications presently before the Court

5 SOPA by notice of motion filed on 6 July 2007 seeks an order that the Report be adopted. Subject to some issues pursued qua revenue loss in the present applications SOPA stands to receive in the order of approximately $5 million plus interest in damages.

6 BLL objects to the adoption of the Report on the ground that the Referee erred in finding that:

i. BLL owed a duty of care to Homebush Abattoir Corporation ["HAC"];
ii. HAC's rights in tort were transferred to SOPA;
iii. SOPA's claim in tort was not statute-barred;
iv. SOPA proved that it suffered any consequential revenue loss.

The principles to be applied on the adoption application

7 There was no issue as to the principles to be applied. A short overview summary of those principles follows:

i. Where, as here, the challenges to a referee’s report are directed to errors of law, the principles are well established. In Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605 the NSW Court of Appeal (Clarke, Meagher and Handley JJA) said (at 609) of proceedings regarding adoption of a referee’s report pursuant to Part 72 rule 13 of the Supreme Court Rules (which read identically to Part 20 rule 24 of the Uniform Civil Procedure Rules 2005 ):


“Whatever be the proper approach to a report dealing with issues of fact, there can be no justification for the Court exercising any restraint when dealing with a referee's decision on issues of law. The powers of reference currently conferred by Pt 72 are derived from powers of compulsory reference to an arbitrator or referee previously conferred on the court by s 15, s 16 and s 17 of the Arbitration Act 1902. The nature and extent of the court's jurisdiction to supervise references under these sections was considered in Buckley v Bennell Design and Construction Pty Ltd (1978) 140 CLR 1. Jacobs J said (at 38): “… In respect of errors of law there can be no implied authority given to an arbitrator under s 16(1) to make errors of law.”

A referee appointed under Pt 72 can have no wider authority. In our opinion therefore the court in deciding what action to take on a referee's report is both entitled and bound to decide for itself whether the referee has erred in law and to correct any such error.”

ii. The following year, in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Gleeson CJ (at 563) observed that the judge hearing such an application:

“has a judicial discretion to exercise in a manner that is consistent both with the object and purpose of the rules and with the wider setting in which they take their place.
That wider setting is a system for the administration of justice according to law. In so far as the subject matter of dissatisfaction with a referee's report is a question of law, or the application of legal standards to established facts, then a proper exercise of discretion would require a judge to consider and determine that matter afresh. That was decided by this Court in Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605: see also, Cape v Maidment (1991) 98 ACTR 1 at 4. That conclusion is entirely consistent with the history of the rules and the reasoning of the High Court in Buckley which, although the case related to different provisions is also instructive as to the present provisions.”

iii. As I put it in Allied Constructions Pty Limited v Hyder Consulting (Australia) Pty Limited & Ors [2004] NSWSC 808:

“There is no implied authority given to the Referee to make errors of law. The Court is bound to decide for itself whether the Referee erred in law and, if such error be found, to correct the error in exercising its discretion under the rules ( Bermria at 609).”

iv. The question whether, on a given set of facts, a duty of care was owed is a question of law: see the joint judgment of the High Court in Amaca Pty Ltd v State of New South Wales (2003) 199 ALR 596 (at 602 [26]):

“…there may be some question about whether the Court of Appeal, and therefore this Court, could undertake a review of the factual question of breach. But it is clear that the Court of Appeal did have power to determine whether, on the facts found at trial, the State did owe the injured plaintiff a duty of care . That was a question of law. If the Court of Appeal had identified the errors of law which the trial judge made, it would then have been appropriate, and in this case necessary, for the Court of Appeal to go on to consider whether the claim for contribution should have failed on the ground, urged by the State, that the State owed no duty of care to the injured plaintiff.”

v. A question of statutory interpretation is also a question of law, except to the extent that an expression in the statute is used in the sense that it has in ordinary speech, in which case the common understanding of that expression is to be determined as a question of fact: see Hope v The Council of the City of Bathurst (1980) 144 CLR 1 at 7 per Mason J:


“Many authorities can be found to sustain the proposition that the question whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law. One example is the judgment of Fullagar J in Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47 at 51, where his Honour quoted the comment of Lord Parker of Waddington in Farmer (Surveyor of Taxes) v Trusteesof Cotton [1915] AC 922 at 932, which was adopted by Latham CJ in Federal Commissioner of Taxation v Miller (1946) 73 CLR 93 at 97 that where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only. Fullagar J then said: “… this seems to me to be the only reasonable view. The distinction between the two classes of question is, I think greatly simplified, if we bear in mind the distinction, so clearly drawn by Wigmore, between the factum probandum (the ultimate fact in issue) and facta probantia (the facts adduced to prove or disprove that ultimate fact). The ‘facts’ referred to by Lord Parker … are the facta probantia . Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally — so far as I can see, always — be a question of law.”

However, special considerations apply when we are confronted with a statute which on examination is found to use words according to their common understanding and the question is whether the facts as found fall within these words. Brutus v Cozens [1972] 2 All ER 1297 was just such a case. The only question raised was whether the appellant's behaviour was “insulting”. As it was not unreasonable to hold that his behaviour was insulting, the question was one of fact.

The judgment of Kitto J (sitting as a single judge) in New South Wales Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509 is illuminating. Kitto J observed that the question whether certain operations answered the description “mining operations upon a mining property” within the meaning of s 122 of the Income Tax Assessment Act 1936 as amended was a mixed question of law and fact (p 511). He went on to explain why this was so: “First it is necessary to decide as a matter of law whether the Act uses the expressions ‘mining operations’ and ‘mining property’ in any other sense than that which they have in ordinary speech.” Having answered this question in the negative, he noted that the “common understanding of the words has … to be determined” as “a question of fact”. He continued (at 512): “The next question must be whether the material before the court reasonably admits of different conclusions as to whether the appellant's operations fall within the ordinary meaning of the words as so determined; and that is a question of law: ibid; see also per Isaacs and Rich JJ in Australian Slate Quarries Ltd v Federal Commissioner of Taxation (1923) 33 CLR 416 at 419. If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact: see per Williams J in the Broken Hill South case (1941) 65 CLR 150 at 160.”

vi. In Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156, Glass JA said:

“A finding of fact ... may nevertheless reveal an error of law where it appears that the trial judge has misdirected himself, i.e, has defined, otherwise than in accordance with law, the question of fact which he has to answer."

vii. More generally, in Chocolate Factory Apartments Pty Ltd v West Point Finance Pty Ltd [2005] NSWSC 784 at [7], McDougall J, by reference to various authorities, including Super Pty Ltd v SJP Formwork (Aust) Pty Ltd, Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60, White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193 and Foxman Holdings Pty Ltd v NMBE Pty Ltd (1994) 38 NSWLR 615 summarised the principles to be applied in considering whether to adopt or reject a referee’s report as follows:


“(1) An application under Pt 72 r 13 is not an appeal either by way of hearing de novo or by way of rehearing.

(2) The discretion to adopt, vary or reject the report is to be exercised in a manner consistent with both the object and purpose of the rules and the wider setting in which they take their place. Subject to this, and to what is said in the next two sub paragraphs, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised.

(3) The purpose of Pt 72 is to provide, where the interests of justice so require, a form of partial resolution of disputes alternative to orthodox litigation, that purpose would be frustrated if the reference were to be treated as some kind of warm up for the real contest.

(4) In so far as the subject matter of dissatisfaction with a report is a question of law, or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh.

(5) Where a report shows a thorough, analytical and scientific approach to the assessment of the subject matter of the reference, the Court would have a disposition towards acceptance of the report, for to do otherwise would be to negate both the purpose and the facility of referring complex technical issues to independent experts for enquiry and report.

(6) If the referee’s report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection. In this context, patent misapprehension of the evidence refers to a lack of understanding of the evidence as distinct from the according to particular aspects of it different weight; and perversity or manifest unreasonableness mean a conclusion that no reasonable tribunal of fact could have reached. The test denoted by these phrases is more stringent than “unsafe and unsatisfactory”.

(7) Generally, the referee’s findings of fact should not be re-agitated in the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee enjoys an appropriate expertise. Thus, the Court will not ordinarily interfere with findings of fact by a referee where the referee has based his or her findings upon a choice between conflicting evidence.

(8) The purpose of Pt 72 would be frustrated if the Court were required to reconsider disputed questions of fact in circumstances where it is conceded that there was material on which the conclusions could be based.

(9) The Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee such evidence and submissions as they desire.

(10) Even if it were shown that the Court might have reached a different conclusion in some respect from that of the referee, it would not be (in the absence of any of the matters referred to in sub para (6) above) a proper exercise of the discretion conferred by Pt 72 r 13 to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report.

(11) Referees should give reasons for their opinion so as to enable the parties, the Court and the disinterested observer to know that the conclusion is not arbitrary, or influenced by improper considerations; but that it is the result of a process of logic and the application of a considered mind to the factual circumstances proved. The reasoning process must be sufficiently disclosed so that the Court can be satisfied that the conclusions are based upon such an intellectual exercise.

(12) The right to be heard does not involve the right to be heard twice.

(13) A question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come is not raised “by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it”. The real question is far more limited: “to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence”.

(14) Where, although the referee’s reasons on their face appear adequate, the party challenging the report contends that they are not adequate because there was very significant evidence against the referee’s findings with which the referee did not at all deal, examination of the evidence may be undertaken to show that the reasons were in fact inadequate because they omitted any reference to significant evidence.

(15) Where the court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the court has a choice. It may decline to adopt the report. Or it may itself look at the detail of the evidence to decide whether or not the expense of further proceedings before the referee (which would be the consequence of non adoption) is justified.”

Duty of care

8 During the respective addresses the Court was taken in considerable detail to a number of contractual relationships relating to the subject land as well as to a number of statutes recording the steps pursuant to which sundry statutory authorities came to succeed HAC. Whilst the reasons below from time to time require to return to certain particular detail of the contractual relationships and lines of statutory succession, the convenient course is to commence with a shorthand version of the central facts. At the outset however it should be noted that:

i. the entity to which the Referee found that a duty of care was owed by BLL, was Homebush Abattoir Corporation (HAC) which was a statutory predecessor of SOPA;

ii. the duty derived essentially from various contractual relationships involving BLL, HAC and Lend Lease Development Pty Limited [“LLD”] and principally those relationships referred to in paragraph [66] of the Referee’s Report;

iii. the relationships between the various parties identified in that paragraph were taken by the Referee from recitals to the “Supplemental Deed to the HAC Agreement” of 19 December 1991 made between HAC and LLD.

The essential facts

9 The factual content in which the Supplemental Deed to the HAC Agreement came into existence was as follows:

i. At all material times up to 1985, the land upon which the swimming pool complex was eventually constructed was owned by HAC, the statutory predecessor to SOPA.

ii. In April 1985 an exclusive development agreement was entered into between LLD and HAC [“the HAC Agreement”] which provided LLD with exclusive development rights in respect of, inter alia, the land upon which the swimming pool complex was subsequently constructed. The HAC Agreement provided for the development of the ‘surplus land’ at Homebush Bay in order to provide a rental income stream to HAC.

iii. The duration of the exclusive development agreement was a period of ten years from the date of agreement, within which time, although the land was still owned by HAC, LLD would have exclusive development rights to provide infrastructure, and to promote development of the land with the ultimate return to HAC being lease payments either on an annual or a one off lump sum basis.

iv. In April 1988 the HAC land at Homebush was identified by the New South Wales Government as suitable for use in the proposed bid for the Olympic Games. Because LLD had exclusive development rights over the land, which rights had not expired in 1988, it was necessary, if the land was to be included in the Olympic bid, for there to be an agreement reached between HAC and LLD for the release of the development rights then enjoyed by LLD.

v. It was as a result of discussions concerning this, that on 19 December 1991, the Supplemental Deed to the HAC Agreement was executed. However prior to the execution of this Deed the Homebush Abattoir Corporation (Dissolution and Transfer) Act 1991 had been passed [on 27 November 1991] to become effective on 1 January 1992, the effect of which Act would be to dissolve HAC and to constitute Homebush Bay Ministerial Corporation [‘HBMC’] as the first of HAC’s statutory corporation successors.

[The later steps were:

2 September 1992 – Order pursuant to Growth Centres (Development Corporations) Act 1974 constituting Homebush Bay Development Corporation (“HBDC”) effective 4 September 1992.

24 September 1993 – Homebush Bay Ministerial Corporation (Dissolution) Act 1993 dissolves HBMC effective 24 September 1993 and retrospectively transfers assets, rights, liabilities of HBMC to HBDC effective 1 November 1992.

9 June 1995 – Olympic Co-ordination Authority Act 1995 dissolved HBDC and constituted Olympic Co-ordination Authority (“OCA”) effective 30 June 1995 and transfers assets, rights, liabilities of HBDC to OCA.

1 July 2001 Sydney Olympic Park Authority Act 2001 constitutes SOPA and vests ‘Sydney Olympic Park’ in SOPA.

1 July 2002 Olympic Co-ordination Authority Dissolution Act 2002 dissolves OCA and transfers assets, rights and liabilities of OCA to SOPA.]

vi. The December 1991 Supplemental Deed to the HAC Agreement provided that LLD would forgo its development rights over part of the land, the subject of the HAC Agreement, on condition that a building contract would be given to it for, inter alia, the construction of the swimming pool complex.

vii. Also prior to the execution of the Supplemental Deed to the HAC agreement and on 13 November 1991, the then Premier of New South Wales sent a memorandum to all Ministers dealing with the reform of the capital works program in New South Wales.

viii. The memorandum required that the Public Works Department was to be engaged by all Government Agencies (of which HAC was one) as the constructing authority for all capital works programs within New South Wales having a capital value of more than $500,000.00.

ix. On 19 December 1991 a building contract encompassing the works involved in erecting the swimming pool complex was entered into between Minister for Public Works as principal, Civil & Civic Pty Limited [later BLL], LLD and Lend Lease Corporation Limited [LLC] (‘the 1991 building contract’) for the purpose of constructing various Olympic facilities including the swimming pool complex at Homebush Bay. The building contract was annexed to the Supplemental Deed to the HAC Agreement and executed contemporaneously with it. Recital F to the building contract provided that the works the subject of it were being carried out pursuant to the provisions of the Public Works Act 1912.

x. It was contemplated by the Supplemental Deed to the HAC Agreement that LLD’s rights under it would be assigned to Civil & Civic Pty Limited [now BLL]. This, in fact, occurred (paragraphs 2.6 to 2.10 of the 1991 building contract) and upon that assignment being effected, Civil & Civic [BLL] became the builder of, inter alia, the swimming pool complex.

The approach taken by the Referee

10 It was against this background that the Referee, at [63] of his Report, defined the task upon which it was necessary for him to embark in the following terms:

“I think the correct approach to the determination of that question [whether BLL owed a duty to HAC and consequently SOPA] is through an examination of the surrounding circumstances of the Contract, of its form and of the contemporaneous and related Supplemental Deed to the HAC agreement.”

11 The Referee found (Report [64]) that “BLL owed ... a duty of care to HAC and that HAC’s correlative right devolved to SOPA through Homebush Bay Ministerial Corporation, HBDC [Homebush Bay Development Corporation] and the [Olympic Co-ordination] Authority under the vesting provision of the relevant legislation.”

12 The Referee proceeded to examine those facts against various principles enunciated by cases in the High Court concerning matters to be taken into account in deciding whether a duty of care exists in any particular case.

Vulnerability

13 Following an examination of those cases, and in particular Woolcock Street Investments Pty Limited v CDG Pty Limited (2004) 216 CLR 515 (‘Woolcock’) and Perre and Ors v Apand Pty Limited (1999) 198 CLR 180 (‘Perre’), the Referee (at [87] of his Report), said that of the factors he had considered, what:

“… emerges strongest as a guiding principle is the concept of vulnerability and its sibling reliance”.

14 As may be expected the parties on the instant applications spent considerable time examining the concept of vulnerability in terms of a determination as to whether or not a duty of care exists in any particular case and crucially, whether such a duty arose in the circumstances before the Referee.

15 The Referee summarised his findings at [91]-[94] of the Report in the following terms:

91. In my view, the circumstances of the HAC agreement, of the terms of the Supplemental deed together with the parties to and the terms of the 1991 agreement fixed LLD and BLL with the requisite responsibility for the subject risk; knowledge of the parties at risk; knowledge of HAC’s dependence upon the exercise of reasonable care by BLL in the performance of the Contract; with foreseeability of the damage to which HAC would be exposed by careless performance of that agreement, and established HAC’s vulnerability in the sense in which that expression was explained in Woolcock .
92. If it had not been for the advent of the opportunity to hold the Olympic Games in Sydney in 2000 the “Total Development Objective” of the HAC agreement would have been pursued in the form of a creation of a “commercial/industrial park estate with the intention of deriving (for HAC) an Ongoing Rental Income from the Estate …” Under such an arrangement I think it is also apparent from the terms of the HAC agreement that it would have had the capacity to protect itself in the contractual provisions governing the proposed development.

93. In my view no semblance of that capacity existed in the framework of the executive decisions taken in relation to the site.

94. No issue arises as to interference with the autonomy of the contracting parties to the Contract.

16 The Referee’s finding that a duty of care was owed by BLL to HAC derived principally from various contractual relationships involving those entities, which contractual relationships did not, however, include a direct contractual relationship between BLL and HAC. As BLL has contended, the imposition of a duty of care depended, ultimately, on findings

(at Report [92] and [93]) that HAC was not able to protect itself contractually from the consequences of any fault on the part of BLL in the design and construction of the Aquatic Centre.

17 Earlier, (at Report [6]-[15]), the Referee had outlined the contractual matters relating to the Aquatic Centre’s construction and the legislative history relating to the ownership of the land on which the Centre was constructed, then considered the issue of whether SOPA or the State of New South Wales in an “extended sense” was the plaintiff and whether SOPA had standing to sue for breach of the construction contract (at Report [16]-[54]), before finding (at Report [60]-[61]) that SOPA had not acquired any contractual rights and did not have standing to sue BLL in contract.

18 Accordingly, the Referee commenced his consideration of the issue of whether a duty of care was owed by observing that, because SOPA had not acquired any contractual rights from the Minister for Public Works, there was no possibility of a concurrent duty in tort and contract (at Report [62]).

19 It is apparent from subsequent paragraphs, particularly Report [64] and [91]-[93], that the Referee considered that the only issue was whether BLL owed a duty to HAC, not whether BLL owed a duty directly to SOPA. Central to that issue was the question whether BLL owed a duty of care to HAC notwithstanding the absence of a contract between BLL and HAC.

20 However, the Referee initially identified (at Report [62]) the question to be considered, in the absence of any contractual rights in SOPA, as

“whether there is any tortious duty of care that BLL may have owed the owner of the site at any time in relation to or arising out of the performance of the Contract for the breach of which there lies an entitlement of SOPA to bring these proceedings in tort.” (Emphasis added.)

21 In addition to rejecting BLL’s submission that SOPA’s position as a subsequent owner of the land and the detailed construction contract were factors negating a duty of care to any emanation of the State, the Referee’s process of reasoning was to identify:

i. the lack of a “conceptual determinant” in relation to a duty of care to avoid economic loss (at Report [77]);

ii. “vulnerability and its sibling reliance” as “what I think emerges strongest as a guiding principle” (at Report [87]); and

iii. the inability of HAC “to protect itself in the contractual provisions governing the proposed development” (at Report [92]).

22 As has already been made clear, the Referee identified (at Report [91]) the basis on which he found a duty of care as being “HAC’s vulnerability in the sense in which that expression was explained in Woolcock”.

23 He then went on at Report [92] and [93] to explain that “vulnerability” in more detail, in terms that:

i. if it had not been for the Olympic Games, the HAC land would have been developed as a commercial/industrial park estate;

ii. if that had occurred, HAC “would have had the capacity to protect itself in the contractual provisions governing the proposed development”;

iii. “no semblance of that capacity existed in the framework of the executive decisions taken in relation to the site.”

24 The reference to “vulnerability in the sense ... explained in Woolcock” appears to be to the passage quoted at Report [79] from Woolcock at 530 [23]:

“’Vulnerability’, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, ‘vulnerability’ is to be understood as a reference to the plaintiff’s inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant.”

25 It is thus apparent that the finding that BLL owed a duty of care to HAC, depended upon the circumstance, and thus a factual finding, that HAC was simply not in a position to acquire rights, either by contract or, presumably, by statute, against BLL in the event that BLL’s design or construction of the Aquatic Centre was defective.

Dealing with the issue

26 In my view for the reasons which follow, this conclusion was incorrect. Further, there was no other basis on which a duty of care to HAC could be found.

27 There was no evidence, apart from the documents themselves to which HAC was a party, which went to the issue of whether HAC could protect itself or which identified the so-called “framework of executive decisions” or which established that HAC relied on BLL in any way. No representative of HAC was called. The plaintiff appeared to assume that evidence from officers of the Department of Public Works constituted relevant evidence of reliance on BLL by any emanation of the State. There was a complete absence of direct evidence about HAC’s position at any point in time about any matter relevant to the question of whether HAC was “vulnerable”.

28 In the Report at [75], the Referee appears to have made a factual error, when he places reliance on BLL and HAC being in a “relationship...under the Supplemental deed”. [This error may have been due to the fact that the plaintiff pleaded that BLL was a party to the HAC Supplemental Deed: paragraph 36(d)(iv) of the Second Further Amended Summons.] BLL was not a party to the Supplemental deed and, although BLL was referred to in that document (i.e. as ‘Civil & Civic’), the Referee does not explain how those references give rise to a “relationship” or the nature of that relationship or how that relationship is relevant to the issue of whether BLL owed a duty of care to HAC.

29 As the Referee’s finding on the existence of a duty of care essentially derives from the contractual relationships between various entities, it is appropriate to immediately observe that a duty of care in tort is not imposed automatically even when there is a contractual relationship between parties, particularly when the duty asserted is in relation to pure economic loss.

The guidance which may be obtained from the authorities

30 In truth it is entirely appropriate to acknowledge the care and industry with which the Referee examined the authorities. Much of that analysis cannot be controverted. However in my respectful view the ultimate decision, which I accept treated with the most unusual set of circumstances, is incorrect. The reasons follow.

The ultimate question is one of fact

31 McHugh J in Perre at [129] made the important observation that the degree and nature of vulnerability sufficient to found a duty of care will no doubt vary from category to category and from case to case. The proposition included the following:

i. “although each category will have to formulate a particular standard, the ultimate question will be one of fact”;

ii. “the defendant's control of the plaintiff's right, interest or expectation would be an important test of vulnerability".

32 Clearly the seminal recent cases in the High Court are Bryan v Maloney (1995) 182 CLR 609 and Woolcock. The Woolcock decision was of course handed down after the rejection of the doctrine of proximity as anything more than giving guidance or expressing the nature of what is in issue in determining whether a duty of care exists in Sullivan v Moody (2001) 207 CLR 562: cf the observations by McHugh J in Woolcock at [71]-[73]. That notwithstanding, considerable assistance may also be gleaned from the 1999 decision of the High Court in Perre and from observations made in the New South Wales Court of Appeal in Avenhouse& Anorv Council of the Shire of Hornsby (1998) 44 NSWLR 1: all of this against the pervasive influence still exerted by Donoghue v Stevenson [1932] AC 562.

Avenhouse v Council of the Shire of Hornsby

33 In Avenhouse, Priestley JA furnished a reasonably extensive examination of the decision in Donoghue v Stevenson, observing that it had become "the foundational case for all modern consideration of the duty of care in Anglo-Antipodean law" (at 5). His Honour expressed the view that no single formulation as to when a duty of care arose had gained general acceptance, other than what Lord Atkin had said in Donoghue v Stevenson, which Priestley JA believed (at 6) resolved into the question: "is the contemplated relationship so close that the duty arises?"

[This was a reference to Lord Atkin’s effective adoption, subject to a not insignificant explanatory qualification, of what had been put forward as the principle by A L Smith LJ in Le Lievre v Gould [1893] 1 QB 491 at 504:

"… that a duty to take due care did arise when the person or property of one was in such proximity to the person or property of another that, if due care was not taken, damage might be done by the one to the other."

Lord Atkin's explanatory qualification (at 581) was:

"I think that this sufficiently states the truth if proximity be not confined to mere physical proximity, but be used, as I think it was intended, to extend to such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act. " [Emphasis added by Priestley JA.]]

34 Priestley JA observed that as Lord Atkin in Donoghue v Stevenson had foreseen, cases continued to arise where it was difficult to determine how that question should be answered. The present is one of those cases.

35 Priestley JA [referring to Fleming, The Law of Torts, 9th ed (1998) at 151], "no generalisation can solve the problem upon what basis the courts will hold that a duty of care exists", accepted the statement as true. However in a passage in Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1 at 8 (cited with approval by Gummow J in Perre at [198]), Priestley JA observed that he did not think that what Professor Fleming was describing was “a problem to be solved”; rather that it was “a situation to be recognised”.

Approach to be taken in cases of pure economic loss

Perre v Apand

36 McHugh J in Perre in treating at [100] with the reasons for denying or imposing a duty of care in cases of pure economic loss, observed that in determining whether the defendant owed a duty of care to the plaintiff:

“the ultimate issue is always whether the defendant in pursuing a course of conduct that caused injury to the plaintiff, or failing to pursue a course of conduct which would have prevented injury to the plaintiff, should have had the interest or interests of the plaintiff in contemplation before he or she pursued or failed to pursue that course of conduct “: citing Lord Atkin in Donoghue v Stevenson [1932] AC 562 at 580. [Emphasis added.]

37 McHugh J in Perre dealt extensively with the concept of vulnerability at [104]-[105] and [118]-[129] observing:

i. at [104] that what is likely to be decisive and is always of relevance in determining whether a duty of care is owed is the answer to the question, "How vulnerable was the plaintiff to incurring loss by reason of the defendant's conduct?". So also was the actual knowledge of the defendant concerning that risk and its magnitude [emphasis added];

ii. at [105] in a passage noted at [85] by the Referee and taken by him from Woolcock , that the five principles concerned with reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual, vulnerability to risk and the defendant's knowledge of the risk and its magnitude, were relevant in determining whether a duty existed in all cases of liability for pure economic loss;

iii. at [118] that the vulnerability of a plaintiff to harm from the defendant's conduct is ordinarily a prerequisite to imposing a duty:

"If the plaintiff has taken, or could have taken steps to protect itself from the defendant's conduct and was not induced by the defendant's conduct from taking such steps , there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss" [emphasis added];


iv. at [120] that in determining whether the plaintiff was vulnerable, an important consideration would be whether the plaintiff could easily have protected itself against the risk of loss by protective action, particularly by obtaining contractual warranties;

v. at [122] [in relation to the determination of whether a common law duty of care should be imposed on a defendant in terms of pure economic loss], that the agreement of the parties is ordinarily a better vehicle for determining their rights than imposing duties of care through the blunt application of negligence law;

vi. at [125], that reliance and assumption of responsibility are merely the indicators of the plaintiff's vulnerability to harm from the defendant's conduct, and that it was the concept of vulnerability rather than these evidentiary indicators, which was the relevant criterion for determining whether a duty of care existed [emphasis added];

vii. drawing attention at [127] to the significance of the circumstance that the plaintiff was vulnerable to the defendant's conduct because the defendant 'controlled' the situation.

Bryan v Maloney

38 In Bryan v Maloney the joint judgment of Mason CJ, Deane and Gaudron JJ, in examining the field of liability for mere economic loss being comparatively new in a developing area of the law of negligence, observed (at 618-619) as follows:

“One policy consideration which may militate against recognition of a relationship of proximity in a category of case involving mere economic loss is the law's concern to avoid the imposition of liability “in an indeterminate amount for an indeterminate time to an indeterminate class”. Another consideration is the perception that, in a competitive world where one person's economic gain is commonly another's loss, a duty to take reasonable care to avoid causing mere economic loss to another, as distinct from physical injury to another's person or property, may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage. The combined effect of those two distinct policy considerations is that the categories of case in which the requisite relationship of proximity with respect to mere economic loss is to be found are properly to be seen as special . Commonly, but not necessarily, they will involve an identified element of known reliance (or dependence) or the assumption of responsibility or a combination of the two. ” [Emphasis added.]

39 Later (at 627) in the joint judgment examination of the similarities between the relationships between builder and first owner and between builder and subsequent owner, their Honours drew attention to policy considerations. Here they observed that in the case of both relationships, the policy considerations which ordinarily militated against the recognition of a relationship of proximity and a consequent duty of care with respect to pure economic loss were insignificant.

Woolcock Street Investments v CDG

40 In Woolcock at paragraphs [19], [21]-[24] (parts of which were repeated in the Referee's Report), Gleeson CJ, Gummow, Hayne and Heydon JJ treated with the subject of economic loss as follows (footnotes omitted):

[19] The damage for which the appellant seeks a remedy in this case is the economic loss it alleges it has suffered as a result of buying a building which is defective. Circumstances can be imagined in which, had the defects not been discovered, some damage to person or property might have resulted from those defects. But that is not what has happened. The defects have been identified. Steps can be taken to prevent damage to person or property.

…

[21] Claims for damages for pure economic loss present peculiar difficulty. Competition is the hallmark of most forms of commercial activity in Australia. As Brennan J said in Bryan v Maloney:


If liability were to be imposed for the doing of anything which caused pure economic loss that was foreseeable, the tort of negligence would destroy commercial competition, sterilise many contracts and, in the well-known dictum of Chief Judge Cardozo, expose defendants to potential liability “in an indeterminate amount for an indeterminate time to an indeterminate class ”.

That is why damages for pure economic loss are not recoverable if all that is shown is that the defendant’s negligence was a cause of the loss and the loss was reasonably foreseeable.


[22] In Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” , the court held that there were circumstances in which damages for economic loss were recoverable. In Caltex Oil , cases for recovery of economic loss were seen as being exceptions to a general rule, said to have been established in Cattle v Stockton Waterworks Co , that even if the loss was foreseeable, damages are not recoverable for economic loss which was not consequential upon injury to person or property. In Caltex Oil , Stephen J isolated a number of “salient features” which combined to constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for breach of which it might recover its purely economic loss. Chief among those features was the defendant’s knowledge that to damage the pipeline which was damaged was inherently likely to produce economic loss.

[23] Since Caltex Oil , and most notably in Perre v Apand Pty Ltd , the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. “Vulnerability”, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, “vulnerability” is to be understood as a reference to the plaintiff’s inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant . So, in Perre , the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant’s negligence in sowing a crop which caused the quarantining of the plaintiffs’ land. In Hill (t/as R F Hill & Associats) v Van Erp , the intended beneficiary depended entirely upon the solicitor performing the client’s retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corp Ltd v Peat Marwick Hungerfords , (Reg) the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor’s certification of the accounts of the company.

[24] In other cases of pure economic loss ( Bryan v Maloney is an example) reference has been made to notions of assumption of responsibility and known reliance. The negligent misstatement cases like Mutual Life & Citizens’ Assurance Co Ltd v Evatt and L Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) can be seen as cases in which a central plank in the plaintiff’s allegation that the defendant owed it a duty of care is the contention that the defendant knew that the plaintiff would rely on the accuracy of the information the defendant provided. And it may be, as Professor Stapleton has suggested, that these cases, too, can be explained by reference to notions of vulnerability. …
[Emphasis added.]

Returning to the case in hand

41 In essence the Referee’s process of reasoning was that a duty of care was owed by BLL to HAC because of the series of agreements between, variously, HAC, the Minister for Public Works, BLL, LLC and LLD.

42 This finding that a duty of care was owed was incorrect. There was no relevant ‘vulnerability’ [or other relevant circumstance] which justified the imposition on BLL of a duty of care to HAC, in addition to BLL’s contractual obligations to the Minister for Public Works, in circumstances, in particular, in which HAC was in a position to adequately protect its own interests as owner of the land, either by contract or statute, or in which BLL was entitled to reasonably assume that State authorities could be relied upon to provide that protection to this statutory corporation destined for dissolution, as well as to its successors.

43 Certainly the facts present as unusual in the extreme. It must however be recalled that:

i. cases for recovery of mere economic loss where a common law duty of care is imposed are exceptional;

ii. significance is placed in the authorities on the proposition that the Court must be on guard against a finding of a duty of care which would impose indeterminate liability and for the correlative need "to avoid imposing unreasonable burdens on the freedom of individuals to protect or pursue their own legitimate social and business interests without the need to be concerned with other persons’ interests”: cf Perre at [101] and footnote 150, per McHugh J. [Emphasis added.]

44 In the same vein Gleeson CJ observed in Perre (at [5]) that the considerations which would remain influential in restraining acceptance of a duty of care not to cause reasonably foreseeable financial harm included the following:

"First, bearing in mind the expansive application which has been given to the concept of reasonable foreseeability in relation to physical injury to personal property, a duty to avoid any reasonably foreseeable financial harm needs to be constrained by ‘some intelligent limits to keep the law of negligence within the bounds of common sense and practicality’".

Secondly, to permit recovery of foreseeable economic loss, which may or may not occur in a commercial setting, for any negligent conduct, may interfere with freedoms, controls and limitations established both by common law and statute in many legal contexts.

Thirdly, in those cases where the loss occurs in a commercial setting, a third party, C, may suffer financial harm as a result of conduct which is regulated by a contract between A and B. It may be that the consequences of such conduct as between A and B are governed and limited by the contract. …" [Emphasis added.]

45 The circumstances in which the Referee determined that BLL owed a duty of care were commercial and were permeated by the complex web of legislative steps earlier identified in these reasons. HAC was not sidelined from a contractual involvement by anything which BLL did: to the contrary the proper inference from what occurred is that BLL was entitled to proceed on the reasonable assumption that HAC’s interests would be protected in every necessary parameter by the arrangements being made to constitute its statutory corporation successors with appropriate saving arrangements. BLL of course, had no responsibility for the framework of executive decisions which would come to be made.

46 Further during the time that HAC existed (i.e. prior to 1 January 1992) such contractual arrangements as did include BLL [then Civil & Civic] did not, at that point in time, identify in terms of the design and construction of the Aquatic Centre, what was to be built. The 1991 agreement, read with the September 1991 Facility Brief, went no further than to identify that it would be a swimming facility including a leisure pool: see September 1991 Facility Brief Exh AH tab 2 section A7.1 at p18. However, what was to be built to achieve that broad description was to be identified at some time in the future in a “Brief” to be provided by the Minister for Public Works (see section 3 of the 1991 agreement and in particular cl 3.1: Exh AH tab 3). In other words, although at a later stage there were detailed plans and specifications, before HAC ceased to exist there was insufficient precision in the identification of what BLL’s [Civil & Civic’s] obligations were, to readily identify the scope of any duty of care. This seems to me also to be yet another indicator of the need for special caution, before imposing upon BLL a duty of care to a non-contracting statutory corporation destined for dissolution and whose interests BLL was reasonably entitled to assume, were being protected by those responsible for determining its statutory corporation's lines of succession.

47 Ultimately, notions of HAC’s vulnerability [of the type of which the Referee found gave rise to the duty of care] are misconceived. They offend the necessity to observe 'intelligent limits' to keep the law of negligence within the bounds of common sense and practicality. In the particular context the imposition of the duty of care would impose unreasonable burdens on the freedom, here of BLL, to protect or pursue its own legitimate commercial interests without the need to be concerned with the interests of HAC. BLL was entitled to assume that those interests were being adequately catered for by the detailed web of contractual/statutory arrangements made on behalf of the State of New South Wales authorities in respect of the devolution of rights and interests in one of its authorities, HAC, destined for dissolution. It was entitled to infer that those interests were being protected by the contractual provisions put into place by arms length negotiations and by such other arrangements, if any, as had been (or were to be) put into place by the State authorities to indemnify the owners of the land from any loss they may suffer by reason of the pool facility or other constructions.

48 One only of the measures of protection of HAC’s statutory successor, HBDC, is to be found in the Growth Centres (Development Corporations) Act 1974, where a ‘development corporation’ constituted under Part 2 is charged under Part 3 with the responsibility of promoting, coordinating, managing and securing the orderly and economic development of the growth centre. HBDC was constituted as a development corporation under this Act by the Growth Centres (Homebush Bay Development Corporation) Order 1992. Hence HBDC was granted the responsibilities and power to be involved in the development on its land.

49 Under s 7(2) of the Act the development corporation has and may exercise and discharge particular powers, authorities, duties and functions and these include the requirement to submit to the Minister, such proposals with respect to the development and use of the land as it considers necessary or appropriate (s7(2)(a)) and to carry out research into problems with respect to the development and use of the planning and development of land within the growth centre (s7(2)(c)). In short the statutory scheme and the Order made pursuant to the Growth Centres (Development Corporations) Act1974 constituting HBDC had the result that HBDC had statutory responsibility to be involved in the development of the Aquatic Centre [on land the title to which had devolved upon it] and under section 18 HBDC had power to make and enter into contracts with any person for, among other purposes, the carrying out of works or the performance of services.

50 By 1992 before any work had been carried out on the site there were detailed statutory provisions which obligated the successor to HAC to be involved in issues concerning it. What effectively occurred appears to have been that HBDC simply permitted the Minister for Public Works to take over. The detailed provisions which obligated and/or empowered HBDC to be involved are section 7 [‘responsibility, etc, of development corporation’] and section 18 which provided express power to enter into contracts, section 19 which expressly empowered it to enter into arrangements with other public authorities, including the Minister for Public Works, and even more importantly, section 21 which empowered it to make use of the services of any officers, employees or facilities of any Government Department. Section 22 required that in the exercise and discharge of its responsibilities, powers, etc, it (as far as practicable) consult and negotiate with public authorities and Government Departments whose responsibilities, powers, etc included those of the same or of a similar nature.

51 To adopt the words used in the majority judgment in Bryan v Maloney, the particular circumstances were devoid of either:

(i) an identified element of known reliance (or dependence) or

(ii) the assumption of responsibility.

52 Hence BLL was entitled to proceed on the basis that its liability was regulated, governed and limited by the building contract: cf Gleeson CJ in Perre at [5].

SOPA's challenge to the Referee's findings concerning the capacity in which it sued

53 SOPA challenges the Referee's findings in relation to the 'capacity to sue' issue and seeks to reargue the proposition put to and rejected by the Referee that SOPA can by force of the provisions of the Crown Proceedings Act 1988 (NSW), sue on behalf of the Crown which made the contract.

54 In the alternative, SOPA again by way of challenge to the Referee's findings, addresses submissions in support of the proposition that the Minister for Public Works, when he entered into the contract with BLL, did so as the agent of HAC, with the consequence that the contractual rights enjoyed by HAC vested in SOPA. The agency for the making of the contract is said to be between the Minister as agent and SOPA as principal.

55 These are contentions which can be shortly disposed of for the reason that I have been unable to discern any shortcoming or flaw in the careful and detailed approach taken by the Referee on both these issues.

The Crown Proceedings Act

56 The Referee carefully examined [Report [16] et seq] the various parameters concerning the capacity in which SOPA sued. That examination included a careful treatment of the way in which the case had been pleaded.

57 The Crown Proceedings Act submissions were dealt with by the Referee at [31]-[42].

58 The totality of the written submissions of SOPA in relation to this matter read as follows:

i. Section 6 of the Sydney Olympic Park Authority Act 2001 provides:

“The Authority is, for the purposes of any Act, a statutory body representing the Crown.”

ii. Sections 3 and 4 of the Crown Proceedings Act 1988 defines “Crown” as:

s 3. Crown means the Crown in right of New South Wales, and includes:


(a) the Government of New South Wales; and

(b) a Minister of the Crown in right of New South Wales; and

(c) a statutory corporation, or other body, representing the Crown in right of New South Wales.

S 4. Crown may sue

The Crown may bring civil proceedings under the title `State of New South Wales’ against any person in any competent court.


iii. The plaintiff in this case is the State of New South Wales, as the Further Amended Summons title page indicates.

iv. Clearly, by reason of legislative authority, SOPA is able to bring proceedings on behalf of the State of New South Wales. In other words, it can by force of the statute, sue on behalf of the Crown which made the contract.

59 The submissions are rejected as misconceived.

60 The reasons given by the Referee which are free from error were as follows:

[31] I have some difficulty in accepting that if these proceedings are brought by the State as the Principal seeking to enforce its rights under the Contract and concurrent duties of care in tort that SOPA has any standing to bring those proceedings, notwithstanding its creation as a statutory corporation representing the Crown and so falling within the definition of the Crown in s.3 of the Crown Proceedings Act and its entitlement to sue in the name of the State of New South Wales pursuant to s.4 of that Act.

[32] I think something more than SOPA being so constituted to represent the Crown and to sue in the name of the State of New South Wales is necessary, otherwise it would follow that any statutory corporation so constituted (and there are several) would have been entitled to bring these proceedings while having no connection with the Contract or its subject matter.

[33] In considering the capacity of SOPA to bring these proceedings in the name of the State of New South Wales one may start with some basic propositions. Simply because SOPA is a statutory corporation representing the Crown under its incorporating legislation it carries no entitlement to enforce Crown rights regardless of their subject matter. By way of illustration SOPA would not be entitled to enforce Public Works rights under the Contract simply because SOPA was incorporated as an entity representing the Crown anymore than Public Works could enforce SOPA’s rights as owner of the subject site. To the extent that it has been contended on behalf of the State that SOPA is entitled so to act, that part of the plaintiff’s case is ill-founded in my view.

[34] This much is clear I think from the limited nature of the capacity of SOPA as a corporation representing the Crown as explained in the joint judgment of McHugh and Gummow JJ in State Authorities Superannuation Board v Commissioner of State Taxation for the State of Western Australia (1996) 189 CLR 253 at 280 et seq. In that case the plaintiff Board was a statutory corporation constituted by the Superannuation Administration Act 1987 , s.4 of which constituted the authority as one “for the purposes of any Act, a statutory body representing the Crown”.

[35] The effect of that section in the context of the Crown Proceedings Act 1988 was considered in the joint judgment of their Honours in the following way:


“Section 4 of the 1987 Act had, as its primary operation, the constitution of the (Board) as a corporation and it also, to the limited extent we will describe, classified it as ‘representative’ of the Crown, albeit not the Crown itself.

…it will be apparent that the effect of s 4(2) was not to render the (Board) the representative of the Crown for all purposes, still less to deem it to be the Crown (referring to Wynyard Investments Pty Limited v Commissioner for Railways (NSW) (1955) 93 CLR 376 at 386).

…Kitto J explained in Wynyard Investments…that the phrase ‘representing the Crown’ does not of itself necessarily convey any clear meaning. The question is not really one of attribution of the status of Crown representative; rather, it concerns the relationship of the entity in question to the Crown in respect of the particular matter in which the impact of the relevant provisions is incurred.
The phrase ‘representing the Crown’ does appear in the Crown Proceedings Act 1988 (NSW) in a fashion which indicates a particular operation of the classification of the (Board) as a statutory body representing the Crown” (at 280).

[36] Most of the cases turning to this question are concerned either with the construction of s.75(iv) of the Constitution for in examining the “shield of the Crown” doctrine and are instructive in the approach that should be adopted in relation to proceedings by a corporation such as SOPA. One such case is that of Deputy Federal Commissioner of Taxation v State Bankof New South Wales (1992) 174 CLR 219 where at 230 the Court, in considering that doctrine, observed:

“The ‘shield of the Crown’ doctrine has evolved as a means of ascertaining whether an agency or instrumentality ‘represents’ the Crown for the purpose of determining whether that agency or instrumentality is bound by a statute enacted by the legislature. The doctrine is in essence an aid to the process of statutory interpretation whereby the courts seek to ascertain the legislative intent of Parliament. Hence it has been said that an agency or instrumentality may be endowed with the attributes of the Crown for one purpose but not for others. Indeed, the legislature could explicitly endow a private corporation carrying on business for private purposes with the privileges and immunities of the Crown, yet that private corporation would not answer the description of ‘a State’ for constitutional purposes”.


[37] In an ex-tempore judgment in State of New South Wales v Commonwealth Bank of Australia [2001] NSWSC 1067, Young CJ in Eq considered the capacity of the State to sue for rights in the nature of subrogation vested in a statutory corporation (which by its constituting statute was established as one representing the Crown), notwithstanding the demise of that corporation upon the repeal of its incorporating statute.

[38] The State’s case was that the rights of subrogation had vested at the time of that repealing stature and remained vested in the Crown so entitling the State to bring the subject proceedings. That involved the proposition that, if the statutory corporation was the Crown, any such vested rights in the Crown would remain unaffected by the demise of the corporation and enforceable at the suit of the State.

[39] Young J treated the question as being “concerned with whether the (corporation) was an agent of the Crown (in the discharge of its statutory functions) and whether rights (so) acquired by it were exercisable by the Crown directly” (para 21).

[40] That question was answered in the negative and in so doing his Honour adopted as a correct statement of the law the passage in “Seddon Government Contracts”, 2 nd ed, as follows:

“A phrase commonly used when discussing the question of Crown immunities is ‘Crown agent’. It is said that when a personal body is carrying out a Crown function it is acting as the Crown’s agent, or as a Crown agent, and that therefore it should benefit from any relevant Crown immunity. The use of this language can be misleading and confusion may arise from different meanings of the word ‘agent’ in private and public law. It is possible…for a body which is contracting on its own behalf, for example the statutory corporation, to enjoy a Crown immunity. Agency, in its private law sense, which presupposes that the government is the principal, simply does not arise. The relevant inquiry is not whether the body is acting as an agent so much as whether the body should enjoy Crown immunity.”

[41] His Honour added the following further observation:

“One must be careful whenever one is dealing with the concept of agency. As the High Court made clear in Petersen v Maloney (1951) 84 CLR 91, the tag ‘agent’ is apt to mislead. One must always ask ‘Agent for what purpose and with what authority’? The term Crown agent does not usually denote someone with authority from the Crown to do something, but merely that that person has Crown immunity and Crown indemnity. This is consistent with the judgment of Menhennit J…, with the judgment of Dixon J in Bank of New South Wales v The Commonwealth (1948) 76 CLR 1, and what was said by the South Australian Full Court in Commercial Oil Refiners Pty Limited v South Australia (1974) 9 SASR 88, 93” (para 83).

[42] So I think it is reasonably clear that if SOPA has any standing to bring these proceedings in contract, in particular, something more needs to be shown than that it is a corporation constituted as one representing the Crown and that Public Works entered into the Contract on behalf of the State. SOPA has submitted that in this case it has sufficient “connection” with the subject matter of the claimed rights sufficient to entitle it to bring these proceedings, or alternatively that it has succeeded to rights accrued through its statutory predecessors originating in Public Works entering into the Contract as agent for one or other of those predecessors.

Agency

61 Here again the reasons given by the Referee to be found in the report at [43] – [61] are not infected by error. They are as follows:

[43] The starting point in considering SOPA’s capacity to sue for the relief sought in these proceedings is the Contract and, in particular, the description of the Principal as the contracting party namely The Minister for Public Works for The State of New South Wales for and on behalf of Her Majesty Queen Elizabeth the Second in the State of New South Wales: a description which standing alone leaves little or no room for debate on the proposition that the Minister acted as the Crown as principal under those agreements. In the Commonwealth Bank case Young J accepted as accurate the following statement of the nature of the Crown as the Sovereign and in an extended sense as follows:

“The Crown in the narrowest sense is the Sovereign and in regard to New South Wales is usually referred to as the ‘Crown in Right of New South Wales’; … The term ‘Crown’ is sometimes used in an extended sense to refer to the body politic which includes the members, servants and agents of the executive government: see Bass v Permanent Trustee Co Limited (1999) 198 CLR 334 at 347. This sense has never been fully developed in English or Australian law. …the Crown Proceedings Act 1988 adopts, in part, this extended notion” (para 20).


[44] The Contract then was made by the Crown in right of New South Wales through the Minister for Public Works. That fact alone I think removes the foundation for the submissions on behalf of the plaintiff that the Minister entered into the Contract as agent for HAC or HBDC.

[45] It is difficult to find anything in the surrounding circumstances or in the contents of the Contract to support the concept of agency between the Minister and either of those entities. Apart from the description of the contracting authority, the terms of the recitals identify the purpose of the Contract as the proposal of “the New South Wales Government…to construct sporting and related facilities at” the site to “support the Bid by the City of Sydney to conduct the Olympic Games in the year 2000”. It was further recited that the Minister had been authorised under the provisions of the Public Works Act 1912 by the Governor to carry out the subject work.

[46] The plaintiff has placed reliance upon the contents of a memorandum of the then Premier of New South Wales of 13 November 1991 directed to all Ministers notifying them of the introduction of a revised procedure for capital works implementation. It required use of public works for the “private sector interface role” in conformity with an attached paper which called for the appointment of public works “to undertake in conjunction with client agencies the private sector interface role for all Budget sector and nominated non-Budget sector Agencies…for capital works over $500,000…on a fee-for-service basis” and designated Public Works in that interface role as acting “as an arm of its client, directly advising CEO’s and their Ministers on capital works procurement issues”.

[47] There does not appear to be any issue that this directive governed Public Works entry into the Contract. However, I observe that it is not entirely clear to me that that is the case. In any event, the contents of the Contract do not, in my view, support the concept of agency for the benefit of HAC or its successor in title as disclosed or undisclosed principals.

[48] That position I think is consistent with the fact that the site was the subject of the HAC agreement whereby LLD had been granted exclusive development rights in respect of an area of which the site formed part and that the Government’s plans in 1991 calling for the modification of those rights was effected contemporaneously with the signing of the 1991 agreement by the execution of the Supplemental deed.

[49] The recitals of that deed are I think instructive in that they recite the history of the HAC agreement and the involvement of government in relation to the development of the site. In particular it was recited as follows:


“As a result of numerous studies initiated by the New South Wales Government Homebush Bay was identified in April 1988 as the most suitable site in Sydney to house the majority of the Olympic related sports facilities. Sydney’s proposed bid for the year 1996 Olympic Games tendered Homebush Bay as the venue for a significant number of sporting facilities.

…The parties understand that on 28 February 1991, Sydney’s bid for the year 2000 Olympic Games was initiated. The bid was supported by the New South Wales Government, the Opposition, Sydney City Council and the Australian Government.

The parties understand that in association with and in support of the bid for the year 2000 Olympic Games, the Governor authorised the construction of certain sports facilities within Homebush Bay.

The parties understand that the New South Wales Government has concluded that…a portion of the land the subject of the HAC Agreement (Excluded Land) would be required in order to allow the full extent of the facilities necessary to support the year 2000 Olympic Games bid to be constructed at Homebush Bay.

In recognition of the need to construct certain facilities at Homebush Bay the New South Wales Government has decided that the Excluded Land is land that is appropriate for the construction of a proportion of the required sporting facilities…

The New South Wales Government has determined the Excluded Land be developed by the construction of sporting facilities…and that (LLD) be requested to provide the services with respect to the design and construction of these works…

As a result of the New South Wales Government requiring the Excluded Land for the year 2000 Olympic Games bid, (LLD) has agreed to enter into (the supplemental) Deed and has agreed to the removal of the Excluded Land from the scope of the HAC Agreement…

Upon (LLD) entering into this Deed the Minister for Public Works will enter into the procurement contract…with (LLD) with respect to the works.”


[50] Incidental to those arrangements, HAC had agreed to consent to an assignment by LLD of its rights under the ‘procurement contract’ to BLL. It was acknowledged that the Supplemental deed would be executed contemporaneously with the 1991 agreement.

[51] I am satisfied that Public Works did not enter into the Contract as agent of any of SOPA’s predecessors’ in title to the site and that no contractual rights devolved to SOPA under its Incorporating Act or the 2002 Dissolution Act . I think it follows from that conclusion that the only capacity of SOPA to bring these proceeding in enforcement of any contractual rights under the Contract may only be founded on its status under its Incorporating Act as a corporation representing the Crown while recognising the contractual rights are those directly conferred on the Crown by that Contract through the Minister acting on behalf of the Crown.

[52] For SOPA to establish that entitlement I think it is necessary to recognise that its limited capacity as a corporation representing the Crown requires it to establish that its relationship “to the Crown in respect of the particular matter” which is the subject of these proceedings is such as to entitle it to bring the proceedings in the name of the State of New South Wales.

[53] In my view SOPA does not achieve that by demonstrating that either it or its predecessors in title have exercised their statutory rights in relation to the ownership of the subject site in, for example, entering into a lease with the relevant Minister in respect of land of which the site formed part and in relation to the license granted to Sydney Cricket and Sports Ground Trust to operate facilities on the site, the subject of the Aquatic and Athletic Centres Deed of 30 May 2000 (Exhibit AH, Tab 89).

[54] Examination of the Sydney Olympic Park Authority Act 2001 provides little basis for a “connection” sufficient to validate SOPA’s institution of these proceedings on behalf of the Crown, notwithstanding s.6 constituting it as a corporation representing the Crown. The objects of the Act are stated to include the making of reasonable attempts to ensure that Sydney Olympic Park becomes a successful town and sporting centre (s.3).

[55] The land comprising Sydney Olympic Park was vested in SOPA for an estate in fee simple (s.7) subject to any trusts, interests or charges (s.10). Its functions were generally defined in s.13 as including the promotion of the use of the park and the management of its infrastructure; promotion of cultural and sporting activities and liaising with Olympic organisations.

[56] It was also authorised to perform “all such supplemental incidental or consequential acts as may be necessary or expedient for the exercise of its functions” (s.14). Succeeding sections regulate various aspects of the performance of its functions none of which in my view are of assistance in providing a connection with the Contract.

[57] Schedule 8, clause 3 purported to vest certain assets of Olympic Coordination Authority in SOPA however that clause was expressed in terms that required the determination of the Director-General of the Authority for the identification of assets to be vested. There was no evidence of any such determination having been made and presumably as a consequence the Olympic Co-Ordination Authority Dissolution Act 2002 was enacted. The vesting provisions of that Act included the transfer to SOPA of the assets, rights and liabilities of the Authority (subject to some exclusions) vesting without the need for any conveyance or assignment. Those rights and liabilities of the Authority were deemed to become those of SOPA and all proceedings commenced by or against the Authority at the time of the transfer were taken to be proceedings by or against SOPA (ss.6 and 7).

[58] Where reference was made to assets rights and liabilities that reference carried the following meanings


• In relation to assets it meant “any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description (including money), and includes securities, choses in action and documents.

• Liabilities meant “any liabilities, debts or obligations (whether present or future and whether vested or contingent).

• Rights meant “any rights, powers, privileges or immunities (whether present or future and whether vested or contingent).


[59] I have referred to those definition provisions as I think they have some bearing on the assessment of SOPA’s entitlement to bring proceedings in tort.

[60] In summary then, I think SOPA gains no sufficient support for its claim of entitlement to bring these proceedings in the name of the State so far as they purport to enforce contractual obligations of BLL under the Contract and outside of those provisions I find insufficient connection through SOPA’s ownership of the site and its operation, nor from any assets or rights which may have devolved upon SOPA under its constituting and enabling Acts: this on the premise as I have found that there was no agency relationship between Public Works and any of SOPA’s predecessors in title and that the Contract was entered into by the Minister on behalf of the Crown in right of the State of New South Wales.

[61] On that approach the Crown in its “unextended” sense is the entity that could enforce those contractual rights and could do so through Public Works and not through SOPA or any of its predecessors in title.

62 As BLL has contended it seems clear that the Minister for Public Works could not have contracted as agent for SOPA.

63 SOPA did not exist at the time the contract was either made or performed. SOPA is a separate entity to HAC, not a continuation of HAC under a new name.

64 An agent may contract on behalf of an undisclosed principal but not on behalf of a non-existent principal.

65 The extract from the 16th edition of Bowstead & Reynolds on agency (1996) to which the plaintiff refers in its submissions regarding retrospective constitution of an agency relationship by subsequent ratification by the principal of acts done on his behalf, does not apply to the situation where, as here, the principal did not exist at the time of commission of the acts purportedly done on its behalf.

66 As the current edition of Bowstead & Reynolds on agency (17th ed, 2001) states (at 2-060):

“The only person who has power to ratify an act is the person in whose name or on whose behalf the act purported to be done, and it is necessary that he should have been in existence at the time when it was done [ Kelner v Baxter (1866) LR2CP 174] and competent at that time and at the time of ratification to be the principal of the person doing the act ...”

See also to similar effect Dal Pont Law of Agency Butterworths 2001 paragraph 5.13 citing Trident General Insurance Co Pty Ltd v McNiece Bros Pty Ltd (1987) 8 NSWLR 270:

“A principal who lacked the capacity to enter a contract at the time when it was made cannot ratify the contract”.

67 The difficulty with the plaintiff’s reliance on principles of agency in relation to private transactions is that they are not apt to be applied to contracts involving various arms of Government. That is because, unlike in the case of private entities, it would not necessarily be assumed that a Minister, when entering into a contract, would be acting as agent for a statutory corporation such as either HAC or SOPA.

68 The reasonableness of the proposition put forward by the plaintiff depends upon the notion that a private corporation which owned land would have a very real interest in a contract for construction of improvements on that land. That does not follow in the case of statutory corporations, particularly when it is contemplated that the statutory corporation may not operate the facility to be constructed or even continue to own the land.

69 Further, the proposition that the Minister was acting as agent for HAC is at odds with the subsequent legislation which transferred the land but made no express reference to the rights and obligations arising pursuant to the contracts between the Minister and BLL.

70 For these reasons the agency submissions are rejected.

71 In the circumstances I do not see it as necessary to travel through or determine any of the other issues which would have arguably been required to be determined, had BLL failed on the issues referred to above.

Statutory vesting of right to sue BLL

72 Notwithstanding it being strictly unnecessary to do so, that in light of the decision that the Referee's finding of a duty of care was incorrect, I propose to deal with the Referee’s decision that SOPA acquired a cause of action against BLL by virtue of statutory 'vesting'.

73 In my view that decision was incorrect. The reasons which follow generally adopt the submissions of BLL.

74 The Referee found (Report [64]) that a duty of care was owed to HAC by BLL, and that HAC’s “correlative right” in respect thereof, “devolved” to SOPA through its statutory predecessors and by operation of the vesting provisions in the Olympic Co-Ordination Authority Dissolution Act 2002.

75 Earlier, at Report [57], the Referee observed that:

“The vesting provisions of that Act included the transfer to SOPA of the assets, rights and liabilities of the [Olympic Park] Authority [subject to some exclusions] vesting without the need for any conveyance or assignment.”

76 The Referee found (Report [64]) that HAC’s “right” [the nature and content of which he did not articulate, beyond describing it as “correlative”] was to be treated as “falling within the definition of the interests so vested in SOPA.” The “definition” to which the Referee referred was that set out at Report [58], where the Referee said:

“Where reference was made to assets, rights and liabilities that reference carried the following meanings:

• In relation to assets it meant “any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description (including money), and includes securities, choses in action and documents.

• Liabilities meant “any liabilities, debts or obligations (whether present or future and whether vested or contingent).

• Rights meant “any rights, powers, privileges or immunities (whether present or future and whether vested or contingent).

I have referred to those definition provisions as I think they have some bearing on the assessment of SOPA’s entitlement to bring proceedings in tort.”

77 Hence on the basis on which the Referee had earlier determined the duty of care issue, the question of whether the right to sue BLL in tort had “devolved” to SOPA involved a process of statutory construction: namely, whether each of the chain of statutes was effective to transfer from HAC to SOPA, something which gave SOPA the entitlement to sue BLL in negligence.

78 The Referee did not expressly state where, within the foregoing definitions, the “correlative right” which he found was bestowed on HAC fell, but it would seem likely that he regarded it as within the definition of “rights”. However, as BLL has submitted, whatever “correlative right” was transferred to and vested in SOPA by the legislative scheme, that “right” cannot, by that scheme, be elevated higher than any “right” which was enjoyed by HAC. It follows that, because prior to the dissolution of HAC (i) there had been no act or omission with want of reasonable care on the part of BLL and (ii) HAC itself had suffered no loss or damage, no ‘complete’ right to sue in negligence could have been conveyed from HAC to its successors. In that sense, whatever “correlative right” HAC enjoyed by reason of BLL owing a duty of care to it, that “correlative right” was inchoate.

79 An alternative interpretation of the reasoning by which the Referee concluded that SOPA, which came into existence more than seven years after the Aquatic Centre was constructed, had a right to sue BLL in negligence, is that he regarded the “correlative right” that vested in SOPA as a chose in action and therefore an “asset” within the first limb of the definitions. If that were a correct interpretation of the Referee’s reasoning, then that also suffers from an error of law, for the reasons that follow.

80 A chose in action has been defined as “a known legal expression used to describe all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession”: Torkington v Magee [1902] 2 KB 427 at 430 per Channell J; as “a right enforceable by action, or the right of action itself” [Butterworths Australian Legal Dictionary p192]; and as “a right of proceeding in a court of law to ... recover pecuniary damages for the infliction of a wrong...” [Osborn’s Concise Law Dictionary p73]. Because no damage was suffered by HAC, a necessary element of the tort of negligence was missing at the time of HAC’s dissolution and, accordingly, there was no right which could be enforced by action and thus no “chose in action”.

81 A further problem facing the proposition that there was vested in SOPA, a right to sue BLL in negligence arises from the general principle that a right of action for damages in tort is incapable of assignment either at law or equity: Poulton v Commonwealth (1952-1953) 89 CLR 540 per Fullagar J at first instance at 571, and per Williams, Webb and Kitto JJ (on appeal) at 602.

82 Starke’s Assignments of Choses in Action in Australia (Butterworths, 1972) cites (at paragraph 56) Poulton as authority for the proposition that a right to sue for damages for tort is not a statutorily assignable chose in action:

“Rights signified by expression “ legal chose in action ” – the expression ‘legal chose in action’, used in the Australian enactments, does not signify legal choses in action in the strict sense, but embraces all legal rights which before these enactments were lawfully assignable, such as those legal choses in action which were treated in equity as being assignable, as well as other rights recognised as assignable. Thus the benefits of rights under covenants or contracts are statutorily assignable, whereas a bare right to sue for damages for a past breach of a contract, and contractual or other rights under agreements involving special personal qualifications, are not. In that connexion, it would appear that a right to sue for damages for tort is not a statutorily assignable chose in action. ”

83 Such a conclusion accords with the principle of statutory construction that legislation is presumed not to alter common law doctrines and is presumed not to invade common law rights. In Potter & Minahan (1908) 7 CLR 277 O’Connor J at 304 cited Maxwell on Statutes (ed 4), p121:

“It is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights or depart from the general system of law without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have that meaning in their widest, or usual or natural sense, would be to give them a meaning in which they were not really used.”

This passage has been endorsed by the High Court in subsequent decisions: see Bropho v State of Western Australia (1990) 171 CLR 1 at 18; Coco v The Queen (1994) 179 CLR 427 at 437.

84 The presumption has been held to operate such that legislation will, in the absence of an unambiguous contrary intention, be interpreted ‘so as to be in consonance with the principles of equity’: Minister for Lands and Forests v McPherson (1991) 22 NSWLR 687. In McPherson, the Court of Appeal held that the power in the Supreme Court, exercising its equitable jurisdiction, to provide relief against forfeiture was not removed because there was no clear intention to do so in the statute under consideration.

85 Hence, as a matter of construction of each of the statutes which transferred or vested “assets”, the expression “chose in action” does not include a bare right to sue in tort: this is because the mere inclusion of the term ‘choses in action’ in the definition of ‘asset’ does not express ‘with irresistible clearness’ an intention to achieve a result so discordant with equity’s prohibition on such assignments.

86 Thus even if HAC had enjoyed a right of action in tort against BLL, the vesting provisions to which the Referee referred did not operate to assign or vest such a bare right of action. As a minimum, it would be necessary for the statute to state in the clearest of terms that the vesting provisions included causes of action arising from breaches of duties of care owed to HAC and thereby assigned the benefit of such duties to HAC’s successors.

87 SOPA submitted that the words of the statutes were extremely wide and were sufficient to transfer both present and future "assets" and "rights". To my mind that proposition simply does not address the issue as to whether a duty of care in respect of which there has been no breach and no damage is either an "asset" or “right". Hence the authorities relied upon by SOPA [Monk v Australia and New Zealand Banking Group Limited (1994) 34 NSWLR 148 and Trendex Trading Corporation v Credit Suisse [1982] AC 679] are not of assistance as they involve the assignment of complete rights of action in tort, not merely the purported transfer or assignment of a 'duty of care' which has not yet been breached.

88 As BLL has submitted prior to breach, a duty of care which is "owed" is an ‘obligation’ on the part of the person by whom the duty is owed: it is not a 'right' which is held by the person or persons to whom it is owed which is capable of enforcement. Until damage is suffered [or, alternatively, at least until breach], the 'duty of care' has no "correlative right" which is capable of enforcement in law or equity. To assign a completed right of action is one thing. To purport to assign the benefit of an obligation to take reasonable care is quite another – particularly, as in this case, where the duty arises because of the particular 'vulnerability' of the transferor.

89 Indeed and as further submitted by BLL, if no duties were owed independently to the assignee, it is difficult to see how the person owing the duty to the assignor is to know what is required to discharge the duty to the assignee, who may be in a quite different position to the assignor in terms of knowledge, experience or capacity. I accept that because any duty of care not to cause pure economic loss depends on the particular personal characteristics of the person claiming the benefit of the duty, such a duty of care is a truly personal obligation which is simply not apt to be assigned.

90 Even if BLL did owe a duty of care to HAC not to cause pure economic loss to it, that obligation, if not breached prior to the dissolution of HAC in January 1992, simply ceased to exist at the moment of dissolution. There was simply nothing to be passed on to any of HAC's successors, including in their capacity as registered proprietors of the land.

91 Of course it must be remembered that the Referee did not find that there was a duty owed by BLL directly to any of the subsequent registered proprietors of the land. This follows from the decision in Woolcock.

Short minutes of order

92 The parties are to bring in short minutes of order on which occasion costs may be argued. At the same time if SOPA contends that bearing in mind the approach taken in the reasons, the Court has inadvertently failed to treat with a submission put by it and requiring to be treated with, leave is granted to raise that matter for the Court’s consideration.

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20/09/2007 - Typographic error. Replace the words "prior to" in the second sentence of paragraph 32 with the word "after". - Paragraph(s) 32