Northern Sandblasting Pty Ltd v Harris

[1996] HCATrans 79

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B30 of 1995

B e t w e e n -

NORTHERN SANDBLASTING PTY LTD

Applicant

and

NICOLE ANNE HARRIS (an infant by her next friend PAMELA HARRIS)

Respondent

Application for special leave to appeal

TOOHEY J
McHUGH J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 15 MARCH 1996, AT 11.16 AM

Copyright in the High Court of Australia

MR J.J. CLIFFORD, QC:   May it please the Court, I appear with my learned friend, MR S.L. DOYLE, SC, for the applicant.  (instructed by O’Mara, Patterson and Perrier)

MR C.F. WALL, QC:   If the Court pleases, I appear for the respondent.  (instructed by Boulton, Cleary and Kern)

TOOHEY J:   Yes, Mr Clifford.

MR CLIFFORD:   May I commence, in view of your Honour’s remarks earlier, by apologising for the excessive length of the list of cases provided to the Court.  It will not occur again.

TOOHEY J:   Yes, thank you, Mr Clifford.

MR CLIFFORD:   Thank you, your Honour.  The application raises an issue as to whether, at common law or by statute, a landlord has a non‑delegable duty to a third party in respect of the safety of demised residential premises.  While the Court of Appeal held for the respondent, there was a significant difference of opinion in the court as to the basis of such liability.  President Fitzgerald was alone among the trial judge and in the Court of Appeal in holding the respondent liable on the basis of a non‑delegable duty in tort.

Justice of Appeal McPherson was alone in holding the applicant liable and the respondent entitled to succeed on the basis of section 106 of the Property Law Act.  That was raised by Justice of Appeal McPherson for the first time in the Court of Appeal and it was not considered by the trial judge.  Justice of Appeal Pincus was of a contrary view.  President Fitzgerald seemed to incline to the view that the statute did not apply.  It did not finally decide the point.  In our submission ‑ ‑ ‑

KIRBY J:   This analysis creates the problem that I have that there seems to be no clear holding in the case.  It will not be a clear holding for anything because of the diversity of opinion within the Court of Appeal and that raises the question of whether separately, the points being important in the way the matter has been resolved, it is an appropriate vehicle for coming up here to this Court.

MR CLIFFORD:   In our submission, it is for this reason, if the Court pleases:  while there is a difference of opinion, there is a difference of opinion the resolution of which is a most important one for landlords and insurers, tenants and visitors to premises and for the general community as a whole.  So important is it that the applicant undertakes in the event of the application being granted and the appeal succeeding not to seek against the respondent the costs of the application or of the appeal.  It is a suitable case, in our submission, because all the relevant facts have been found.  Each ground for holding the applicant liable has been extensively examined in the Court of Appeal and it is difficult to imagine a better vehicle than this case for determination of the most important issue.  In our submission, the question is ‑ ‑ ‑

TOOHEY J:   Well, can I just ask you what is the issue that you suggest would be determined by this Court if special leave were granted?

MR CLIFFORD: Whether, first of all, there is a non‑delegable duty in tort in a landlord. Secondly, whether section 106 of the Property Law Act similarly provides a non‑delegable duty.

KIRBY J:   I think you answered my question by saying whatever is the basis, the present authority holds the landlord liable, and if that is so on an uncertain footing it is desirable that it should be made clear and you offer the costs in order to ensure that this Court clarifies (a), if there is liability and (b), if so, on what basis.  Normally the Queensland statute may not attract special leave to appeal.  Clarifying a division of the Queensland Act may not, but the general question of the liability of landlords is certainly an important question and a national question.

MR CLIFFORD:   Yes, if the Court pleases.  Shall I pass now to the analysis of what their Honours said?

TOOHEY J:   That is a matter for you, Mr Clifford.

MR CLIFFORD:   First of all, the President identified policy considerations as a consideration of utility in Burnie Port Authority in relation to supplying.....to effective care in the choice of contractors and pointing the victim to a defendant easily discoverable as probably financially responsible.  Of course here there was an express finding that the applicant engaged a reputable qualified and competent contractor previously employed by it.

As a further policy consideration, his Honour held that contemporary decisions of this Court overall demonstrate a broad tendency towards allowing the recoverability of non‑economic loss caused by another with whom the victim is in a relationship of proximity and encouraging those who are potentially liable to avoid any risk by insurance, but as Justice of Appeal Pincus pointed out at page 133:

the presence of insurance, proved or merely assumed, is not a very strong reason for holding that there was a liability to which the insurance attached.

It is our submission that application of the principle in Burnie was fundamental to the judgment of his Honour the President.  His Honour found that relevant to the appellant, the respondent was in total control.  The appellant was in a position of special dependence and vulnerability.  She could not influence what the respondent caused to be done in respect of the premises and the relevant contents or by whom or in what manner.

It is our submission that this reasoning is quite wrong; there is no basis on the facts of the finding that the applicant assumed a particular responsibility for the safety of the respondent.  The applicant was not an occupier, was by no means in total control of the premises.  He was not exercising any control, but merely fulfilling a contractual obligation to the tenant to repair the premises in the only way it could by choosing a competent and licensed contractor.  It was, of course, under a duty by statute not to seek to do the work itself; it was obliged to engage a licensed contractor.

KIRBY J:   I assume the electrician was not insured?  I assume that is where the practical problem arose?

MR CLIFFORD:  That seems to be the case, your Honour, yes.  The applicant, be it said, did not profess to have any expert knowledge in the field.  It was both reasonable and necessary, in our submission, that the applicant and the tenant and the tenant’s family and visitors rely on the knowledge and skill and expertise of an expert engaged by the applicant.  The learned trial judge was right in finding, at page 48, that the use of electricity:

is so controlled and fenced around with safety precautions that it cannot be regarded as producing such a dangerous situation that the price of having it on the premises requires the strict insurance of the safety of those who might visit them.

There is no special law particular ‑ ‑ ‑

TOOHEY J:   Mr Clifford, can I just ask you this question, if the judgment of Justice McPherson stood, namely the finding that there was a breach of statutory duty under the relevant legislation, is that likely to supersede as it were, claims in negligence in these situations?  In other words, does the statutory cause of action operate in wider circumstances than the common law duty might operate?

MR CLIFFORD:   It would seem so unless that legislation is to be construed as has the Canadian legislation, that is, is creating no more than the common duty of care, but if it is construed on its face as creating an action for a class of persons, then it is wider in its obligation than is the liability in tort.

The majority, in our submission, was right in holding that there was absent from the relationship between the applicant and the respondent the central element of control referred to in Burnie Port Authority; there was absent any element of extraordinary danger or hazard in the applicant’s activities; the case was a commercial matter between the parties to the contract, and these things point against the existence of the special, as opposed to a general duty of care.  The respondent was not, in the relevant sense, in a position of special dependence or vulnerability. 

It is by no means established that an occupier is under a non‑delegable duty and the decision in Kondis at page 688, Justice Mason, with whom Justices Deane and Dawson agreed, doubted on a factual hypothesis of an occupier engaging an electrician to repair premises, whether the occupier would be under a non-delegable duty, saying it was not immediately obvious why that should be so.

Cases in the past have drawn distinctions between the field in which the occupier has not the necessary or expert knowledge and a field in which no expert knowledge is needed.  Given the settling by this Court of the duty of care of an occupier to an entrant, as one of reasonable care in....., it would be extremely anomalous if a landlord, not having possession of premises, should be subjected to a greater duty in the absence of such being imposed by a contract to which the plaintiff was a party.  The measure of discharge of the duty of an occupier is what a reasonable man would in the circumstances do by way of response to the foreseeable risk.  The same measure, in our submission, should apply to the landlord, except in the case of a contractual obligation.

Turning now to the breach of statutory duty, it is first submitted that section 106(1)(a) of the Property Law Act did not apply to the lease in question.  Lease is defined as including a demise or tenancy, whether for a term ‑ ‑ ‑

KIRBY J:   Do you say that Justice McPherson raised this point for the first time in the appeal?  Had it been pleaded?  Was there any procedural fairness question to allow it to be raised on the appeal or must not have been thought to be?

MR CLIFFORD:   Well, the only thing that his Honour did do, that the court did do, was give us the opportunity to make written submissions later as to whether there was any reason why it could not be raised in the sense of whether evidence would have been required or something like that.

KIRBY J:   You did not contend that it did?  You did not contend that there was any evidentiary question that touched on the point?

MR CLIFFORD:   No, we were not able to, if the Court pleases. It was just a matter of trying to argue something for which we were not prepared at that time. The most important question, in our submission, is that his Honour was quite wrong in his construction of section 5 of the Residential Tenancies Act. That provides as follows:

Notwithstanding the Property Law Act 1974 and save as otherwise provided in this Act, this Act applies to -

(a)  dwelling-houses and tenancies of dwelling-houses;

KIRBY J:   Why do you say that does not apply?

MR CLIFFORD:   The reason we say it does not apply is that section 5 says “Notwithstanding” and then there are quite different obligations under section 7 of the Residential Tenancies Act 1975 as against section 106 of the Property Law Act. For instance, under section 7 of the Residential Tenancies Act 1975, the obligation is in section 7(a)(ii):

to provide and, during the tenancy, maintain the dwelling-house in good tenantable repair and in a condition fit for human habitation ‑ ‑ ‑

TOOHEY J:   But that is a provision to be implied in the tenancy agreement, is it not?  It may not have any bearing upon reliability to third parties.

MR CLIFFORD:   I did not hear the last part.

TOOHEY J:   I question whether the provision has any application to liability to third parties, it being operating as an implied term of the tenancy agreement.

MR CLIFFORD:   Yes.  The same question arose under both Acts, because the obligation is inserted in the agreement under the Property Law Act as well.  The court decided that the Residential Tenancies Act did not apply, but the Property Law Act did, but there are different provisions in section 7 and section 106. Section 106 inserts the condition as “reasonably fit for human habitation”, which is different from the simple requirement in section 7 of “good tenantable repair and in a condition fit for human habitation”.

Further, the obligations upon the tenant are different.  Under 7(b)(ii) of the Residential Tenancies Act the tenant has an obligation:

to repair, within a reasonable time, damage.....caused by the wilful or negligent conduct of the tenant or persons coming into or upon the dwelling‑house -

There is no such limitation as to negligent and wilful conduct in section 106(1)(b) and, further, under section 112 of the Property Law Act the measure of damages for a breach by the tenant is limited by section 112 to damage to the reversion. It is not so limited in the case of the Residential Tenancies Act.  So it is our submission that these are indications that the Residential Tenancies Act was to cover the field under the principle of generalia specialibus non derogant.  That was, in fact, held to be so by Justice of Appeal Pincus at page 137.  President Fitzgerald seemed at page 81 to incline to that view without finally deciding it.    We rely upon what Mr Justice Pincus said at the page cited, which is page 137:

It seems improbable that the legislature would have desired that both of these provisions, worded similarly but not identically, apply to tenancies of dwelling houses; the intention appears to have been to set out in the 1975 Act, a comprehensive statement of the implied obligations of the landlord and of the tenant in tenancies of dwelling houses, rather than to oblige landlords and tenants to attempt to piece those obligations together by a scrutiny of s 7 of the 1975 Act and ss 105 and 106 of the 1974 Act.

Proceeding further in paragraph 18 of our summary, it is our submission that section 106 of the Property Law Act does not on its face give a private right of action to a class of persons including the respondent.

TOOHEY J:   Mr Clifford, how did Justice Pincus approach that question?

MR CLIFFORD:   As to whether it provided a private right?

TOOHEY J:   Yes.

MR CLIFFORD:   His Honour held that it did not.  His Honour held that it did not as a matter of construction, if the Court please.  At page 140 of the application book his Honour basically held the legislation not to be of the type which confers a private right of action on a class of person.  His Honour referred to general principle at that page and the work of Professor Trindade and Mr Cane, The Law of Torts in Australia, for the proposition that:

“...Australian and English Courts have been unwilling, outside the area of industrial safety, to interpret statutes as impliedly providing for damages actions even where the damage likely to be suffered was personal injury or property damage”.

He also referred to Fleming’s work and over the whole asked:

if it was reasonable to impose the absolute obligation to compensate persons in the undefined class, why it should not extend to others providing premises for human occupation, such as the keepers of hotels, motels, caravan parks and boarding houses.

That is, in our submission, a strong point.  In Basset Realty (1979) 103 DLR (3d) 654, which was a decision upon which Justice of Appeal McPherson placed very considerable reliance, it was actually admitted that a breach of the statutory condition in the Residential Tenancies Act could give rise to an action in damages.  The terms in which the joint judgment said that are as follows:

While admitting that a breach of the statutory condition in the Residential Tenancies Act could give rise to an action in damages, the appellant contended that stat con 2 relieved the lessor of any liability in this case.  In so far as there was any duty to repair under the contract, the infant plaintiff was not a party to the agreement.

That is at page 663 point 6.  So it would seem that that concession made in the circumstances of the case may well have been a concession that it could give rise to an action in favour of the infant who was not a party to the lease.  So it is not, in our submission, a strong authority for the proposition that there is a right conferred upon a person other than the person referred to in the statute and that is the tenant.

KIRBY J:   Of course it is the nature of a residential tenancy that there is going to be often a group of people living in it.  That is the very nature of it.

MR CLIFFORD:   Quite so, your Honour, yes.  I mean, if you reach the conclusion that it confers a statutory right on a class of people, it is not difficult to extend it to all the people living in the house.  You might wonder why it would not also be extended to visitors, but the point, in our submission, is that it is not the sort of legislation which creates that right of action.  The other case is Zavaglia relied upon by Mr Justice McPherson.  The only thing that need be said about that is that the court held that the Landlord and Tenant Act did not give a right to a visitor or friend of the tenant, but the plaintiff succeeded because there was an express statutory provision in the Occupiers Liability Act extending the duty under the Act to any person on the premises.  I think my time is up.  I thank the Court.

TOOHEY J:   Thank you, Mr Clifford.  Mr Wall.

MR WALL:   I thank your Honours.  For the reasons referred to in paragraphs 1, 15 and 16 of our summary of argument, special leave should not be granted.  The decision of the Court of Appeal or the majority of the Court of Appeal was on different bases.  There is a divergence of opinion in that court and for that reason the decision cannot be regarded as binding authority for any particular view of the different questions considered.

KIRBY J:   But it is, as Mr Clifford pointed out, from a landlord’s point of view whichever footing, it does impose the duty which is what he says is an important point to be clarified.

MR WALL:   I concede that, your Honour, but regard should not be lost for the particular facts of this case and the importance of the facts assumed in the consideration of questions of principle by the different judges.  Your Honour, the applicant in paragraph 1 of its summary of argument says that this application:

raises an issue as to whether, at common law or by statute, a landlord has a non-delegable duty to a third party -

The Property Law Act or The Residential Tenancies Act has nothing to do with a non‑delegable duty.  It is just a duty.  The non‑delegable nature of the argument is limited to the negligence aspect of the case.

The authorities of this Court, your Honours, referred to in Part A of our list of authorities clearly establish such a duty - circumstances of the present case.  It is a question of fact here and it is a decision, or a view of one judge only, that there is a non‑delegable duty.  So as far as this Court is concerned, that view is not capable of being considered binding authority of any weight at all.

Further, your Honours, the applicant’s argument ignores the matters referred to in paragraphs 2, 3, 4 and 5 of our summary of argument and those matters have nothing whatsoever to do with the non-delegable nature of the duty.  At the time the respondent and his family commenced to occupy the house, it was in an unsafe and faulty condition.  The earth safety system was not functioning properly and that was still the position at the time the electrician was called six months later to repair the stove.  Had he repaired the stove properly, if the earthing system been working properly there would have been a short circuit.  Had he repaired the stove as he did and had the earthing system been working, it would have short circuited and the applicant ‑ ‑ ‑

KIRBY J:   Is not the consequence of this, though, to impose a very, very heavy duty on landlords not only to engage a licensed electrician to do work which they themselves cannot do but to then go afterwards and check it for themselves?

MR WALL:   That may be so, your Honour.  At least two judges of the Court of Appeal took the same view.  At the moment it is the view of one judge of the Court of Appeal that a landlord is subject to this duty.  To that extent it is no more binding authority than a decision of a single judge.  This is not the appropriate vehicle for this Court to interfere with the result.

The house at the time it was let was in an unsafe and defective condition.  That had nothing to do whatsoever with the non‑delegable duty.  Had the house been inspected at that time the defect would have been discovered.  It was still in that condition when the electrician came along to repair the stove.  So the respondent was entitled to succeed on that basis alone, and that much also was said by Mr Justice Fitzgerald.

Because of the divergence of views in the Court of Appeal, your Honours, the appeal, as is said in paragraph 16 of our summary, turns on its particular facts and, while the application may involve on one view questions of principle, that divergence in reasoning of the majority makes it an unsuitable vehicle for consideration of those questions.  I do not think I can take the matter any further, your Honours.

TOOHEY J:   Thank you, Mr Wall.  Mr Clifford, we do not need to hear from you in reply, but you did say something about the question of costs which struck me as rather qualified at the time when you said that if special leave were granted no order for costs would be sought against the

respondent.  But that is not quite the point, is it?  The question is whether the respondent’s costs would be met in any event.

MR CLIFFORD:   Yes, I have instructions to undertake that the applicant would pay the respondent’s costs in any event, if the Court please, of the application and of the appeal.

TOOHEY J:   Very well, there will be a grant of special leave on the undertaking of the applicant, by counsel, to meet the respondent’s costs of the application for special leave and of the appeal, those costs not to be set off against any costs incurred in connection with proceedings below.

AT 11.44 AM THE MATTER WAS CONCLUDED