Northern Territory of Australia & Ors v Mengel

[1994] HCATrans 430

-1~

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Darwin No 05 of 1994

B e t w e e n -

THE NORTHERN TERRITORY OF

AUSTRALIA and ORS

Appellants

and

ARTHUR JOHN MENGEL and ORS

Respondents

MASON CJ
BRENNAN J
DEANE J

DAWSON J

TOOHEY J

GAUDRON J

MCHUGH J

Mengel(2) 78 12/8/94

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY. 12 AUGUST 1994. AT 9.47 AM

(Continued from 11/8/94)

Copyright in the High Court of Australia

MASON CJ: Yes, Mr Solicitor.

MR PAULING:  Your Honours, just a few housekeeping matters,

if I may quickly. In a case called Wood v Blair

that is referred to in a number of parts of the

submissions - it concerned a barrister who was also a farmer, who poured milk away and, as a result, an order that was given to him - and I am told by the

library here that they could not find it. I have

the report from The Times newspapers and I hand up

seven copies. If more copies are later needed we

can do it. It is the case headed "Barrister

Farmer's Appeal". Not the one, "Did Woman in

Bikini Pose as a Nude", which was a libel case that

I do not want Your Honours to be distracted with,

even though it suggests she was posing in a lion's
cage. But I will say no more about that case.

Your Honours, perhaps a less interesting case, if I might: we failed to include on our A list the

Court of Appeal in Mogul which was a grievous

error, bearing in mind the importance of the

statements of Lord Justice Bowen in that case. Can

I hand up some copies of that so that Your Honours

do have it. I will be touching on it in my alloted

hour, to deal with it.

MASON CJ: Self-imposed hour.

MR PAULING:  Yes, Your Honour, but I mean to keep to it.

The third issue is the question of pleadings. I

handed those to the Court crier yesterday and I

hope that each member of the Court has now a copy

of the pleadings. The fourth matter:

Justice Toohey raised with us yesterday the

question in relation to movement restrictions and

where they might be found.	The references are
these -

TOOHEY J: These are the findings of the trial judge, are

they, Mr Solicitor?

MR PAULINGa Yes, it is a cumulative thing. There are four

statements. The first, relating to the first

movement restriction, is at 28; the second,

relating to the second movement restriction, is at

40; the third, relating to the third movement

restriction, is at 58; and the finding that these

cumulatively amounted to the imposition of movement

restrictions is at 79, point 58.

As we ended yesterday, Your Honour

Justice McHugh raised with me the proposition that it would be unfair in the circumstances, the

respondents having suffered a loss, if it was not

that the government ought to pay. I have given

Mengel(2) 79 12/8/94

some thought to what the elements of such a ground of liability - I hesitate to call it a tort, but a

basis of liability might arise in those

circumstances, and wonder when it might have come

about.

Justice Diplock in O'Connor v Isaacs, (1956) A starting point perhaps is in the judgment of

2 QB 288. The passage I want to read is at 313.

The judgment of Justice Diplock in this matter was	approved in the Court of Appeal. Starting about
ten lines down, he says:

Mr Fox-Andrews says quite frankly that he

cannot find any precedent for this - and this is talking about some basis of liability -

but he asks me to hold that there is a general

principle under which the plaintiff is

entitled to recover. He put the principle in

a way which I venture to paraphrase thus: if

A is clothed with an authority (and I

interpolate ex hypothesi limited) and in

purported exercise of that authority he does

something in relation to B outside the limit

of his authority, and the natural consequence
of his act will be that B will act to his

detriment, A is liable for any damage to B

resulting from his so acting.

So that if one is looking to the circumstances

posited here, it is said that because the people

were government officers, it would be the natural

thing that they might fear prosecution or seizure

of their goods or some other penalty and therefore

they would, as a matter of natural consequence, act

in accordance with what they were told.	But the
proposition is that:

A is liable for any damage to B resulting from

his so acting. Although I have used rather

different words from Mr Fox-Andrews, I do not

think that I have put unfairly what is the

proposition of law that he asks me to say is

good law.

I cannot accept so broad a proposition.

None of us has been able to find any precedent

for it, and I see great difficulty in finding
a basis for it in principle or in analogy. If

A, acting in perfectly good faith, orders B to do something, which order both A and B

erroneously think A is entitled to give, and B

does it, I know of no principle which makes A

liable for any damage suffered by Bas a

result of doing it. It seems to me that it is

Mengel(2) 80 12/8/94

damnum absque injuria. If a policeman, who

has a limited authority, orders me to cross

the road in circumstances where he has no

right to do so, and I do so, and as a result

of that I suffer damage, both of us

erroneously thinking that he is entitled to

give such an order to me, I cannot see any

principle on which I should be entitled to

recover from the policeman the damage which I

have suffered as a result of our mutual

mistake of law.

McHUGH J: Of course, this was in 1956, before Hedley Byrne

and, in a situation like the present, one might

think that there was a duty on the defendants not

to convey negligent information.

MR PAULING:  I accept that, and so one looks at the way in

which the trial judge dealt with that. He,

firstly, found that there was not such a duty and

then, positing that there might have been, found

there was no breach of any such duty. He has dealt

with that thoroughly and acquitted the present

appellant. He said, "If there was such a duty they

weren't in breach of it. What they did was fair

and honest and reasonable".

But let us look at the situation that we are

in here. If one has to crystallize what the facts

are, our starting point, we have - - -

BRENNAN J: Before you get to the facts there, looking at

what Justice Diplock said in that passage, it seems

anomalous, does it not, that if the officer is a

policeman and causes you to suffer some loss there
is no recovery, but if he is a tax inspector and

demands money, you can get it back?

MR PAULING: In respect of restitution?

BRENNAN J: Yes.
MR PAULING&	Bearing in mind the raising of the issue in our

learned friend's submissions in terms of Woolwich,

we have tried to see how that can be incorporated

here. It may well be that there are all sorts of

anomalies that one might identify and say, "Why can

you recover here and not there?", and there are

substantial answers to it. A whole special branch

of law has grown up in respect of taxing Acts and

in respect of receipt of money and David Securities

is but a development in this Court of that sort of
special area. But this is not, we say, in any

sense, a case where the concepts of restitution of

moneys paid over are irrelevant by analogy.

Mengel(2) 81 12/8/94

BRENNAN J: No, it is not irrelevant restitution in that

sense but, if there is a question of analogy, it

seems a curious anomaly that if the loss is a

pecuniary one then it can be recovered; if it is a

loss of another kind, it cannot.

MR PAULING:	Yes, but that is based on or predicated on the proposition of unjust enrichment, that the tax
enriched those who employ him and therefore the inspector on behalf of the community has unjustly
money ought to be paid back. And one says,
here?".  rhetorically, "Well, where is the unjust enrichment
DAWSON J:	In other words there is an element of penalty in

this, culpability. You penalize someone by

awarding damages against them for their wrongful

act.

MR PAULING: Yes. So that the analogy with that sort of

thing about the tax inspector is imperfect because
there is no question of unjust enrichment. There

is no question of enrichment because you have got

to start with the proposition that we are dealing

with an honest and reasonable mutual mistake as to

the application of the gazette to the circumstances

of the respondents. That is where we are starting

from.

we are not starting on a proposition that the

inspectors demanded that 1000 cattle be handed over
and they were. That would be a different
proposition. One would say, "Well, there is no

problem here. There are plenty of nominant torts

that might deal with that.". But here, that is

where we are starting from, whereas in Woolwich you

are starting with a tax inspector illegally

demanding that somebody pay over money and they do,

in reliance. We say there is a substantial

difference there and an imperfect analogy.

DEANE J:  Mr Solicitor, can I take you back to Wood v Blair.

MR PAULING: Yes.

DEANE J:  Do you refer us that out of a duty to the Court?

MR PAULING: Yes.

DEANE J: Because it is against you, is it not?

MR PAULING: Yes. No, we put it in our list and produced it

because it was not available to the library.	It is
referred to by Wade as a shadowy decision.

DEANE J: Well, why I wanted to raise it with you is that it

went off on the issue of damages against the

Mengel(2) 82 12/8/94

plaintiff. Yesterday I asked you some questions about damages but, looking at it overnight, am I

correct that there is a finding of the trial judge

that the unlawful direction caused damage? That

finding is effectively confirmed by the Appeal

Court and is not challenged in the notice of appeal

to this Court?

MR PAULING:	It was argued below, the whole issue of causation. Justice Priestley in the Court of
Appeal says - - -
DEANE J:	I follow that it was argued, yes.
MR PAULING:	There was a direct loss of money and those

sorts of things, and then you can get your

consequential loss. The question Your Honour

raises is?

DEANE J: What I raise with you: two findings and no

challenge in the notice of appeal to this Court?

MR PAULING: That is right.

DEANE J: Which means - well, I will push it just a little

further because it is something I would like to ask you. What if, at the end of the day, one saw force in your submission on Beaudesert and in your

submission as to Justice Priestley and

Justice Angel's judgments, but were of the view	that this was clearly a case of negligence but for
the question of damages, but that the question of
damages was foreclosed? What would be the outcome
of all that?

MR PAULING: Could I return to that, Your Honour? I want

to - - -

DEANE J: Yes. In putting it to you, I should perhaps

distinguish between the action against the

government and the action against individual

defendants.

MR PAULING:  I am not sure I understand all the implications

of that at the moment. I would like to come back

to Your Honour before I finish my address.

DEANE J:  Very well, yes. I was not indicating any view on

that matter, it seemed to me to be a possibility on

what - - -

MR PAULING:  Yes, Your Honour was merely exploring where we

might react to that. Just on that question of

Wood v Blair, our submissions at page 44 mention

them as a case that is against us, and then we seek

to show that it is unreliable, particularly bearing

in mind the way it went, and it went on a

Mengel(2) 83 12/8/94

concession that if damage could be proved then

liability was established.

May I return to the question I was dealing with, of formulating a basis of tortious liability

starting from a factual situation of honest and

reasonable mutual mistake as to the application of

the Gazette, and hence statements as to the legal

position while acting in good faith and in the

public interest because all of those bits and

pieces are there as the factual basis, but then we

have to predicate that this new basis of liability

involved no intention to harm, no knowledge as to

invalidity but reliance on the government officer

as having authority, leading to loss. You say,

"Well, all right, assume that was the basis of a

tortious liability. How does that affect the

interplay with other torts? What would be the
effect of giving legitimacy to a new basis of

liability that only applies to government officers

or acting through its officers?"

The first thing that one sees being distorted,

is the law of misfeasance which itself can only

apply to holders of public office. But, there it

stood for 100 years or more; the law has been that

absent malice, a public officer requires actual

knowledge that what he is doing is unlawful. This

is the law that was applied by Chief Justice Asche

at 114 to 135 and upheld by the Court of Appeal.

So you say, "All right, well absent malice you

can do one of two things in relation to a

government officer. If you can prove that he knew that he was acting outside his authority, then you

sue for misfeasance in a public office, but if you

cannot prove that, or if the fact is he did not

know he was acting outside his authority, don't

worry, there is a new tort. It does not involve

any intention to harm or knowledges to invalidity;

merely reliance that the person who gave, let us

say, the direction had the backing of government,

had government authority and you've relied on it."

So that the immediate effect is to distort and

make half of the law in relation to misfeasance

otiose. You then say, "All right, well maybe we're

talking in these terms like a Brasyer v McLean

case." Now, the Chief Justice in his judgment said

this was a peculiarity, because we are dealing with

a court officer who could give binding returns and

it could not be - it was a strange case - sort of

all lives on its own; a view that Professor Hogg

now has. In an earlier edition of his work he had

suggested that BrasY!5Jr v McLean was probably good

authority. He now, at pages 111 and 112 and

Mengel(2) 84 12/8/94

footnote 160 says he does not think that way

anymore.

We say that the modern position is this: that

when one looks at all these circumstances, you have

to have knowledge of invalidity to bring it back

within a recognizable tort framework. The most

Austen v Civil Aviation of the Full Court of the Federal Court,

recent decision is

20 May 1994. I see Your Honours have got copies.

What I want to refer to is at page 11 of the

report. There are two bits to it, and I will deal

with them both since the case is available to you

and open. Sorry, page 13 of the report.

Misfeasance in Public Office, Their Honours say:

What has been described [by Trindade and Cane

in "The Law of Torts in Australia"] as perhaps

the best definition of this tort is the

statement of Smith J. in Farrington v Thomson

and Bridgland (1959] V.R. 286 at p.293:

"In my view, therefore, the rule should be

taken to go this far at least that if a public

officer does an act which, to his knowledge,

amounts to an abuse of his office, and he

thereby causes damage to another person, then an action in tort for misfeasance in a public office will lie against him at the suit of

that person."

The trial judge found that neither the

respondent nor Dr Liddell acted maliciously or

with knowledge that what he did was an abuse

of his office. There was more than sufficient
evidence to support that finding.

I merely mention that it is taken in that court for granted that the requirement of knowledge, absent

malice, is good law. I might also say, if you go back to page 11 -

I will mention it now and we do not need to come

back to it - dealing with the rule in

Beaudesert Shire Council v Smith. Their Honours, having said:

A Full Court of the High Court of Australia

(Taylor, Menzies and Owen JJ.) held that

although the Council was not liable to

Mr Smith in negligence or for public or

private nuisance it was liable in an action on

the case because it intentionally did a

positive act forbidden by law which inevitably

caused damage to Mr Smith -

Mengel(2) 85 12/8/94

the only point we make there is, firstly, that it

is there just accepted that the positive act

forbidden by law, that accords with Dunlop in the

Privy Council and it is consistent absolutely with the submissions we have made all along, that the

unlawfulness requirement was never there in this

case and the plaintiff should never have got up on

Beaudesert because all we did was ultra vires not

an act forbidden by law.

Incidentally the High Court did hold the

Council was not liable in negligence, but only because they refused to let it be argued on the

basis that that was not the way the case was run.

And if one asks oneself if the Beaudesert facts

turned up again and you ran it on negligence,

provided one could prove the requisite proximity,
and presumably it was immediately available to the

Council that Smith had a licence to take the water;

it may be on the facts that any reasonable
inquiries would have revealed it. They were not

removing a small amount of gravel, but 12,000

yards.

It may be, as the case emerged, that she might

get to the proposition, and you say, "Well, the Council owed a duty to find out what effect all this would have on the flow of water down the river

and people who they ought to have in

contemplation". So properly seen it should have

been, we say, a negligence action.

BRENNAN J: What would have been the relevance of the

unlawfulness in that situation; any at all?

MR PAULING: In negligence?

BRENNAN J:  Yes •

MR PAULING:  No. There are two bits of unlawfulness in

Beaudesert.	The first is that they did something
without lawful authority; that is, they did not

have a permit. And the second is that they

committed a trespass. It is somewhat difficult,

following the reasoning through the case, to see what sort of unlawfulness they might be focusing on.

DAWSON J:  But why would unlawfulness not be evidence of negligence, as in breach of a regulation and so on?

MR PAULING: It may be. What I am saying is that it is not

a necessary element. It would be good evidence

that what they did was not authorized.

Mengel(2) 86 12/8/94

BRENNAN J: But the question is the duty of care, and

regulations may or may not be designed to protect

others.

MR PAULING:  They may or may not be designed also to give a

remedy.

BRENNAN J:  As I understand your argument, negligence would

lie if there was a lawful removal of gravel by

Beaudesert if it was foreseeable that the removal

of the gravel would do some damage to the water

rights of the plaintiff.

MR PAULING:	No, I cannot go that far.
BRENNAN J:	Why not?
MR PAULING:	Because if the removal of the gravel was

lawful, then it may have the consequential effect
of affecting somebody else, but it would not fit

with negligence.

BRENNAN J: The proximity does not change, does it? Perhaps

I should not ask that question.

MR PAULING:  Perhaps I should not answer it. I will move

on, if I may. So, we say, just dealing with the	tort that we have postulated arising from what
Your Honour Justice McHugh raised, that the first
effect would be to depart from a solid line of authority delineating misfeasance, and it would
unsettle existing principle. we say the same thing
in relation to negligence, it would mean that you are in a proximate relationship. There is
reliance, a duty is owed, there is a finding of no
breach, and a finding that you acted reasonably.
That is what might be said to happen here. That is the situation here, so if you sued in negligence
you say, "All right, there was a duty, but there is no breach of any duty here so I am not liable to
negligence." You say, "Well, don't worry about
that because there is a new principle now, a non-negligent assertion as to a state of legal
affairs is actionable provided you are a government
officer," and that is the point of the action.

Yesterday I raised the proposition what about

the bank manager who comes around and says, "You're

in default under your mortgage, you have got to get

out now," and the person says, "Oh, well, there is

a bank manager telling me, I had better do that,"
and so they move out, and you say, well in those

circumstances you cannot sue the bank manager.

But, if the same thing happened, as I suggested, by

an officer of the Housing Commission, because he is

a government officer and because there is an

assumption to be made that he is backed by

Mengel(2) 87 12/8/94

authority and he has got the power to penalize and

do all these sort of things, that is a different

proposition.

We say, when you look at it that way, then one

can only justify that by saying there ought to be a

special law of tort that affects government
officers in a different way to anybody else, a

special law of tort to do with government; a

proposition which Professor Hogg at page 119

rejects, and a proposition which, we say, moves
right away from already settled principle. Let us

take the case of negligent misstatements, this

would go right away from Shaddock and say, "Oh, no,

provided it's a government person who makes the

statement, there is a new principle," and we say

that principle cannot be justified. In the same

way, we say that it unsettles the law in relation

to breach of statutory duty, so far as anyone

really knows what the content of that law is, but

Lonhro v Shell is an example where, we say, that

one looks to see the limits. Beaudesert itself,

Their Honours were careful to say, "We are mindful of the limits to an action for breach of statutory duty," but this new proposition would say, "Oh

well, there is a new thing about breach of

statutory duty. You had a power under an act, but

you went outside it or went beyond it, and somebody

in reliance upon your authorized assertion or

direction acted to their detriment." There is now

a cause of action, a way one can sue and it does

not matter that the statute, on a proper reading of

it, was not intended to give or confer any private

rights.

So, just in relation to misfeasance and

settling the law in that area, I mentioned Austen

but I should have mentioned the position in England

which is in Burgoin and that has been upheld in

numerous ways.	As the judgment of Justice Mann, I
merely mention it and then we go - - -

MASON CJ: What is the reference to Burgoin?

MR PAULING: Burgoin, (1986) 1 QB 716. That is in the -

well both the reports are there. Justice Mann and

the Court of Appeal comprising

Lord Justices Oliver, Parker and Nourse.

At 735, or perhaps I will go back a page, 734, under the heading, Misfeasance in Public Office, it

says:

Paragraphs 23 and 26 of the amended

statement of claim allege the tort of

misfeasance in public office. Lord Diplock

has said that this tort is "well-established":

Mengel(2) 88 12/8/94

see Dunlop v Woollahra Municipal Council.

However, as Professor Wade has observed in

Administrative Law, 5th ed "there are

remarkably few reported English decisions on

this form of malpractice.

I might say in the 6th edition	he says he says it
is a matter for congratulation	that there are so
few reported cases in England.	Then over the page,
at point Che says:

There is no English authority on the point in issue. In Farrington v Thomson and

Bridgland Smith J, sitting in the Supreme

Court of Victoria, decided the argument in

favour of a plaintiff.

And then he sets out the passage from Justice Smith

which I do not need to read because the conclusion
he came to is the rule I have already read out

which is at page 736, that is that:

the rule should be taken to go this far at

least, that if a public officer does an act

which, to his knowledge, amounts to an abuse

of his office, and he thereby causes damage to

another person, than an action in tort for

misfeasance in a public office will lie.

Then he refers to three English decisions which caused some problems and at page 737E, he says:

However, the proposition that either

knowledge of lack of power or bad faith is

sufficient to establish liability can, in my

judgment, find support in the judgment of the

Privy Council in Dunlop v Woolahra Municipal
Council where Lord Diplock said that their

Lordships agreed with the conclusion of the

Supreme Court of New South Wales:

"in the absence of malice, passing without

knowledge of its invalidity a resolution which

is devoid of any legal effect is not conduct

that of itself is capable of amounting to such

'misfeasance' as a necessary element of this

tort.

And then he cites Professor Wade. Then on the next

page, 738, importantly, having quoted passages from

Lord Kenyon the Chief Justice, Justice Lawrence

passage:

"There is no instance of an action of this

sort maintained-for an act arising merely from

error of judgment. Perhaps the action might

have been maintained, if it had been proved

Mengel(2) 89 12/8/94

that the defendants contriving and intending
to injure and prejudice the plaintiff, and

deprive him of the benefit of his profits from the fishery, which as a member of this body he was entitled to according to the custom, had

wilfully and maliciously procured him to be

disfranchised, in consequence of which he was

deprived of such profits. But there was no

evidence of any wilful and malicious intention

to deprive the plaintiff of his profits, or
that they had disfranchised him with that
intent, which is necessary to maintain the

action."

Then he says:

It is to be observed that the case was one of

mistake and that the defendants did not do

that which they did knowing that they had no

power to do it.

Which was the case here. Interestingly, they go

on, Your Honours, to discuss the three Commonwealth

authorities: Roncarelli v Duplessis, which my

learned friends rely on. It will be recalled that

that was a flagrant case of an officer performing

an unlawful act with the object of injuring the

plaintiff, hardly relevant here. They mention

Gershman v Manitoba Vegetable and then at 740,

His Honour said:

There is apparently a decision of Hallet J to
the same effect: see Wood v Blair

(unreported), 4 July 1957, Court of Appeal

Transcript No 209 of 1957, p 9. The tort

described in Beaudesert Shire Council v Smith

was said by Lord Diplock - with whom the other

four members of the House agreed - in Lonrho

Ltd v Shell to be "no part of the law of

England." The wrong described before me is

not the wrong which was described before the

High Court of Australia. The wrong described

before me is that of an act performed by a
public officer with actual knowledge that it

is performed without power and is so performed

with the known consequence that it would

injure the plaintiffs.

I do not read any of the decisions to

which I have been referred as precluding the

commission of the tort of misfeasance in

public office where the officer actually knew

that he had no power to do that which he did,

and that his act would injure the plaintiff as

subsequently it does. I read the judgment in

Dunlop v Woollahra in the sense that malice

and knowledge are alternatives.

Mengel(2) 90 12/8/94

We are content with that but say that both are

absent in this case. Justice Mann said it was

confirmed in terms by the members of the Court of

Appeal.

The leading judgment is written by

Lord Justice Oliver, who was in dissent on one

point irrelevant to the matters under consideration here. Perhaps I will just refer to the pages: at 775 about half-way down they refer to a decision of

Lord Denning, or remarks by Lord Denning in a case,

and then it is set out some paragraphs relating to

the European community. Then at point G:

The third way in which the case is

formulated on the pleadings is as a claim for

damages against the minister for misfeasance

in public office, a tort which was described

by Lord Diplock in Dunlop as

"well-established." That is not in dispute.

The difference between the parties rests only

in their respective appreciations of the

essential ingredients of the tort. For the

purposes only of the preliminary issue, it was

accepted that the minister's purpose in

revoking the general licence was to protect

English turkey producers, and that he knew at

the time (i) that this involved a failure to

perform the United Kingdom's obligations under

article 30; (ii) that the revocation would

cause damage to the plaintiffs in their

business; and (iii) that the protection of not one for the achievement of which powers

were conferred on him by the enabling

legislation or the Importation of Animal

Products and Poultry Products order 1980. The

Solicitor-General's submission, however, was

that it was an essential allegation, and one

not made on the pleadings, that the Minister

acted with the purpose of inflicting harm

upon the plaintiffs. This has been referred

to conveniently as an allegation of "targeted

malice."

Then he goes on to further deal with the tort at

777B:

Of this case Wade in his book on

Administrative Law, comments that the Privy

Council held that the tort "required as a

necessary element either malice or knowledge

.•• of the invalidity" a view which is in line

with that expressed by Smith Jin Farrington v

Thomson and Bridgland, which was carefully

Mengel(2) 91 12/8/94

considered by Mann Jin the course of his

judgment in the instant case.

Then he comes to the conclusion that he does near

the foot of that page.

But, as I say, if a new formulation of the

sort posited were accepted that line of reasoning

would go. Recently, in the Court of Appeal, in Reg

v Deputy Governor of Parkhurst Prison; Ex parte

Hague, (1990) 3 WLR 1210, that reasoning at 1246

and 1267 was followed. I will not read those

passages but it will give you, as it were, a modern

instance.

So that what I have been doing there is to show that one cannot, in isolation, say, "Well, here's a situation where these people have a

substantial loss because they relied upon a

direction by a government officer which turned out

to be beyond power". That is all it was, beyond

power. The officer did not know he was acting

beyond power but none the less these people relied

upon it and suffered a loss.

One says, "Well, what is the basis upon which

then, one would say, Well, if it is a government

officer there should be recovery but if it's

anybody else it doesn't matter how powerful their

position might be, the citizen has a right to say,

'Go away'".

The first comment I would make as to the

suggestion that citizens automatically do what they
are told by the government is that they might in
the Australian Capital Territory but it is not

unknown in the Northern Territory that government

officers are given the sort of short orders that it

is suggested the private citizen might get.

But one, I suppose, can raise the question by

saying, "Well, what would happen if a powerful

property owner not far from Banka Banka - a

newspaper magnate owning properties - had said,

'Look, I'm told you've got a reactor and I'm

telling you don't drive cattle through my property

because the highway goes through my property, don't

you drive cattle anywhere near my property or I'll

sort you out and what's more I can lawfully tell

you you're not allowed to do it'". So, in reliance

upon that, cattle are not shipped to market or

anywhere else for fear that the person would use

whatever powers were available - they might be very

considerable - to enforce a situation, either by

legal means or othe~ means.

Mengel(2) 92 12/8/94

You say, "All right, well, here's a question

of unequal power, is that what we're talking about? We are saying we are developing this notion because

of unequal power, what is it that makes it

different because somebody is a government?". In

one way, you say, "Well, because the man in the

street gets a bit of a choice as to who he's got in

government. Every now and then he rolls along and

votes and in that sense the man in the street has

control over how the government acts.". If a
government is acting extremely badly in relation to
some people the voters might turf them out in

favour of a government that would be more

benevolent, but the short point we make here is

that when properly analysed, the mere fact that the

person who might be in an unequal bargaining

situation happens to be a government officer rather

than a powerful bank or a powerful businessman does

not, as we say, withstand detailed analysis.

Another problem arises in relation to

accepting the posited tort that I have raised which

does not involve, as we know, an intention to harm

or knowledge as to invalidity but merely reliance

on the government having authority which leads to

loss. How does that fit with what Justice Dixon

said in James, because Justice Dixon was not

prepared in James to make the assumption that

because the orders came from a government official,
therefore he desisted in moving his dried fruit

because he was fearful of prosecution or seizure.

In each case, what he did in relation to each of

the matters complained of by James, he examined the

evidence.	He said, "This is a matter for
evidence".	He looked at the situation of what

evidence there was as to the numbers of seizures

that had been made, what it was that James himself

said influenced him, what was said about the

carriers and these sorts of things, and His Honour

was unable on the evidence to find that the reason

why James desisted was a fear of or threats of
seizure or prosecution.	He said it was a matter
for evidence.

You would think in this case it would not have

been hard in 39 days of trial to say to one of	the
plaintiffs, "Well, you didn't move the cattle.	Why
didn't you?", and for a witness to say, "Well,	I
realized that if I did move the cattle, they'd

prosecute me or they'd seize the cattle or I'd be

visited with some unwanted penalty". You would

think somebody would have thought of that and put

the question and got the answer.

So, if one is to say, "You don't have to,

where it's a government officer, ·have any evidence

that anyone acted because of an actual fear or fear

Mengel(2) 93 12/8/94

induced by a threat", you do not have to have that

evidence because it is presumed in the case of a

government officer that that is why people acted.

So one would have to say in that sense, "Let's

depart from Justice Dixon in James and say you

don't need any evidence of that sort of stuff.

There's a concluded presumption in the case of a

government officer that people only act in reliance

upon it because they're fearful of the consequences

of not doing so".

Can I then just quickly deal with some aspects
of Beaudesert. Firstly, can I take Your Honours to

Your Honour the Chief Justice's judgment in Kitano, and I am looking, Your Honours, at 174, there

Your Honour the Chief Justice, about 8 lines down,

having referred to Beaudesert and pointing out that

it was binding, Your Honour said:

Neither the decision nor the principle as

it was expressed turns on the existence of an

intention on the part of the defendant to

cause harm to the plaintiff. It is enough to

found liability, provided that the other

elements are present, that the act is

intentional and its inevitable consequence is to cause loss to the plaintiff. This is made clear by the Court's reference to the remarks

of Bowen L.J. in Mogul Steamships Co. Ltd. v.

McGregor, Gow & Co.

The quote that is referred to there is from page

613 as footnote (4) shows::

" ... intentionally to do that which is

calculated in the ordinary course of events to

damage, and which does, in fact, damage

another in that other person's property or

trade, is actionable if done without just

cause or excuse."

Can I then take you to Mogul and the quotation at	page 613, the forbidden acts quote is on the next
page, 614. The citation, Your Honours, is (1889) XXIII QBD 598, Your Honours have the
photocopies I handed up. I draw attention to this
because I will come back to what the High Court
actually looked at in Beaudesert, certainly they
must have looked at this language:

Now, intentionally to do that which is calculated in the ordinary course of events to

damage, and which does, in fact, damage

another in that other person's property or

trade, is actionable if done without just

cause or excuse.

Mengel(2) 94 12/8/94

Then, His Honour goes on:

Such intentional action when done without just cause or excuse is what the law calls a

malicious wrong ..... The acts of the defendants

which are complained of here were intentional,

and were also calculated, no doubt, to do the

plaintiffs damage in their trade. But in

order to see whether they were wrongful we

have still to discuss the question whether

excuse. they were done without any just cause or

In Beaudesert itself, the reference to Mogul is to

be found at page 155, about two-thirds of the way

down, after the citation from Keeble v

Hickeringill, His Honour said:

This case was referred to favourably in both

the Court of Appeal and the House of Lords in

Mogul Steamship Company v McGregor, Gow & co. where it was assumed that, had the acts of the

defendants been unlawful - even in relation to

third persons - and the economic loss to the

plaintiffs sprung from such unlawful acts, the

plaintiffs would have had their remedy. And then, His Honour refers to.Lord Justice Bowen

and the citation there is to page 614, rather than

613 of the report, because that is where one gets

into Lord Justice Bowen's description of "forbidden

acts", and we rely upon that in our written

submissions, but also we rely upon what is attached

to the phrase which is picked up, "calculated in
the ordinary course of events to damage". What

Lord Justice Bowen is talking about is malicious wrong.

The other thing I might point out, in my

learned friend's submission it is suggested that in

the House of Lords, the Earl of Halsbury did not

pick up the word or use the word "forbidden". Can

I just give you a reference when you come to deal

with that. It is not, unfortunately, on our A list

of authorities, but it is Quinn v Leathem,

(1901) AC 495, and at 504, the Lord Chancellor

says:

the appellant's acts were in themselves

unlawful. They were acts of molestation -

intimidation - oppression -

It was put and, as I understand, approved:

They were acts of molestation - intimidation -

oppression. These are described by Bowen L.J.

in the Mogul Case as being forbidden and his

Mengel(2) 95 12/8/94

language was approved on the appeal to this

House.

I merely mention that in passing.

Could I then go on just to give some

references to that case. At 510 Lord Macnaghten

talks of the requirement of knowledge:

a violation of legal right committed knowingly

is a cause of action -

Note then also 526, Lord Lindley talking about legal rights invaded, and Lord Shand at 515, a

malicious act. So that our point in corning to this

now is when one looks at the way the respondents

develop their submissions, they are talking in the

terms of wilful invaders, violators and that sort

of language, and one has to look at it in its

context and its historical place.

Could I then say about the term "unlawful", we

rely upon what was said about it in Dunlop.

Justice Yeldham, whose language was picked up and

approved in the Privy Council, leaves no doubt

about it. We rely on what Justice McClelland said

in Copyright and we rely on Justice Kearney in

Freeman v Shoalhaven Shire Council, (1980)

2 NSWLR 826.	I do want to read from page 842C,
paragraph (79):

As to the claim against the second

defendants based upon the Beaudesert Shire
Council case, it follows from what I have just

said that the actions of the defendants,

albeit that they were unlawful, intention and

positive acts, did not involve negligence or

any other type of tortious conduct. All that

was involved on the part of the second

defendants was a breach of their statutory

duty under the Local Government Act. It is

clear from the Beaudesert case itself that the

High Court regarded the action on the case which was there relied on as being subject to

the limitations which the law places upon the
right of a person injured by reason of

another's breach of a statutory duty to

recover damages for injury. In the Beaudesert
case there was, in addition to the breach of
statutory duty, a trespass involved which

provided an adequate basis for the application

of the doctrine applied by the court in that
case.

He refers to two later cases, Grand Central Car

Park and Kitano, and· then on the next page:

Mengel(2) 96 12/8/94

His Honour then went on -

that is Your Honour the Chief Justice -

to find that the plaintiff in that case had

not succeeded in showing that the act of the

defendant was tortious and not merely a

contravention of the statute, and dismissed

the claim based on this principle. It is of

interest to note that his Honour's decision

was upheld unanimously by the Full Court of

the High Court.

Accordingly, I do not consider that the

plaintiffs' claim on this head is made out

against the second defendants. Other defences

were mentioned in addresses concerning this

claim, including the suggestion that the
unlawfulness required more than a mere

temporary breach of statutory requirements.

However, it is unnecessary to deal with those

defences. Likewise, a further aspect

concerning this claim, namely the possible

availability of the defence of justification,

which has been developed extensively in the

field of economic torts, might well have been

a further possible defence in this instance.

With regard to the scope of this possible

defence I do no more, in the circumstances,

than refer to the article by

Professor JD Heydon "The Future of the

Economic Torts".

That is the central theme in our submissions there.

Can I move then to the question of

justification. In our learned friend's submissions

at paragraph 49, it is suggested that justification

cannot depend on what one or two officers believe

might justify them, and we agree entirely with that

proposition. It is not for the officers to decide

what is or is not justified. It is for a court

when faced with that situation to make an objective

assessment of all the circumstances and determine

whether or not such a defence might be made out.

We say that whilst it may seem sometimes curious

that you could say, "How can an unlawful act be

justified?", we say there are circumstances that do

arise. Public health and safety is one of them

where it may be that to act, even knowingly, ultra

vires in the circumstances might in the end be

justified and damages denied.

Can we refer, in this regard, to Ansett

v Australian Federal.Air Pilots, 95 ALR 211,

at 254. The purpose of reading this passage is to

really point up the fact that in Australia the

Mengel(2) 97 12/8/94

position is unsettled and it needs, I suppose, this

Court to settle the issue.	On 254, the last
paragraph, he says:

Authorities I should follow establish that a trade union and its officials cannot

set up as a defence of justification in an

action for interference with contractual

relations the suggestion that what they did

was by way of performance of a duty to advise

members of the union and protect their

interests -

and then he refers to a whole lot of authorities -

Not only am I constrained by authority,

especially the Glamorgan case, to reach this

conclusion, but I find with respect the

reasoning on which it rests persuasive. I

notice that Speight J took a different view in

Pete's Towing Services -

and then he refers to others -

the Court of Appeal of New Zealand did no more than advert in passing to the possibility that

in considering whether a final injunction

should be granted it was permissible to take

into account the moral duty resting on a union

to protect the interests of its members.	I
also do not fail to notice the decision of

Nagle CJ at Common Law in Latham v Singleton,

to the extent to which that may be thought to

support the other view. The view that has

prevailed since the turn of the century can be challenged only in the High Court, as it seems

to me.

BRENNAN J: What is the proposition, that something which is

forbidden can, none the less, be justified?

MR PAULING:  No, we have brought that in in the situation of

something that is unauthorized.

BRENNAN J:  I can understand that. In other words,

something which is done which is perfectly lawful

to be done in itself but it is done without

authority may, none the less, be a legitimate act.

It was legitimate to say, "Don't move your cattle."

No offence was committed.

MR PAULING:  Yes.

BRENNAN J: Where does justification come into that?

MR PAULING:  What I am saying· is if one removes Beaudesert

and comes up with a formulation that says, "What

Mengel(2) 98 12/8/94

you really need is an act that is forbidden by

law." - I am just trying to think - it would arise

certainly in the union situation, where there may

be a law that prevents certain action by members of

the union, but in defiance of the legal

proscription against such conduct they so act, and

I refer here to a decision of Justice Nader in
Ranger which discusses that sort of area.

Perhaps if I take Your Honours to our submissions, very briefly, on the issue of

justification. Page 14 is the starting point. At

page 14, under the heading "Failure to Recognise Justification as the Defence" we mention Heyden,

the article I have already come to, and Dworkin in

"Intentionally Causing Economic Loss". Then the

passage from Justice Kearney that I have already

read:

The defence of just cause or excuse,

recognised by Bowen LJ in Mogul and later

adopted as part of the prima facie tort

at 282, in the minority had won the day, the

theory, was rejected by the majority of the

law would have developed in a much different

way.

The question which has posed most conjecture

is whether an unlawful act can ever be

justified -

And there, Your Honours, we refer to

Justice Brooking and to Jolly, "The Defence of

Justification and Industrial Action". We refer to

Latham v Singleton, where Justice Nagle said:

"Although in principle it may sound off that

an 'illegal act' can ever be justified, such

an approach would appear to be over simplistic

and the better view seems that adopted in the

authorities •.• namely, that defendants should

be able to avoid a verdict if they can

establish a defence of 'justification'.

Then we refer to Ranger. These Australian

views are in line with Lord Devlin in Rookes which

indicate that the defence may be applicable in

industrial intimidation cases. Lord Denning has

made similar comments in respect of various

economic torts and then we talk about

Lord MacNaughten in Glamorgen. Your Honours, the

observations in Posluns v Toronto Stock Exchange -

it is a very long ju~gment but the pages that we

have referred to there support the proposition that

it may be available.

Mengel(l) 99 12/8/94

Then at 17 we say, quoting from Justice Nader

in Ranger:

"What facts may amount to justification ought

not to be stated a priori. To do so has been

said to be probably mischievous and to be

better left to the "good sense" of the

tribunal to examine the case before it:

Glamorgan Coal Co Ltd v South Wales Miners'

Federation. The expression 'good sense'

appears to have come from a passage of

Bowen LJ in Mogul Steamship Co Ltd v McGregor,

Gow and Co.

Then we refer to Crofter Hand Woven Harris Tweed Co

Ltd v Vietch and then we say, public interest has

been accepted as justifying certain acts, lawful

and unlawful. Brimelow v Casson, which was the

case of the actress and the dwarf; Stott v Gamble

and Posluns and Ranger.

In PTY Homes v Shand, the court held that the

bona fide fulfilment of a public duty constitutes

justification.

In Ranger, Justice Nader used Dollar Sweets to

illustrate that the quality and extent of the

conduct of the defendants effecting the

interference is a factor relevant to the issue of

justification and so on.

Then we apply justification in this case and

conclude those submissions at page 20. We say that

it follows that if a duty is required for

justification - De Jetley is the authority there -

then it existed in this case.

Similarly, there is clear evidence of public

interest - Brimelow - and health and safety -

Ranger. In addition, there was no evidence of

malice or intent to harm on the part of the

appellants, even if the lawful authority they

relied upon was subsequently held by the Court to

be ill conceived.

Might I say then, just in conclusion, we say

that Beaudesert is much too wide as a principle and

cannot be accepted as it is. Indeed, the tort I

posited this morning could not be accepted because

it too, because of the lack of intention, makes the

principle far too wide. Heydon and Dworkin among

others make that point and one can find the

references to it in our written submissions.

We say, for example, Beaudesert is wider than the prima facie tort theory developed by Holmes in

America from Lord Justice Bowen's remarks and if

Mengel(2) 100 12/8/94

that was of interest, one can see now how that has

been clawed back in America.	Its influence much
diminished by authority.

TOOHEY J:  Mr Solicitor, do any of these authorities, as it

were, define what is meant by "justification"? I

know they illustrate what is meant by it? What

does the term mean in this context?

MR PAULING:	It is another way of saying, putting it the other way around, that the Act was not done without
just cause or excuse.  I think that is where
"justification" really comes from, the idea that
one could be justified or excused for the
consequences of an act done in certain
circumstances where, for example, one was fulfiling
a higher duty.  I mean, in Brimelow it was held
that the bringing about the breaking of a contract
was justified because the contract paid wages so
low that the actress sort of lived in a state of
immorality, and it was thought, morality would
justify a breach of contract in those circumstances.
TOOHEY J:	Does reasonableness play any part in this?
MR PAULING:	Yes, it does, because in looking at justification one would have to look at all of the
circumstances. One would, to put it in a negative proposition, say, if the person doing the act was
acting unreasonably, it is hard to see how they
could be justified in doing what they are doing.

TOOHEY J: And is the test objective?

MR PAULING: Yes, it must be. Yes. It is to be determined

by a court in all the circumstances. It is not the

subjective assessment of the person doing the act.

It is whether in the end, as a legal test, a court

could say in all these circumstances there is

justification and the person ought not be liable in

damages for the consequences. Lord Justice Bowen

seems to suggest it has got some difficulties and

it is common sense that will tell you in the end

whether you fall over the line or not. I think

that is the real origin of it. If you follow that
through, you say, "What do they mean by just cause

or excuse in these circumstances?" It was

transported into the prima facie tort theory in

America and came into, we say, in England,

certainly the economic tort area, but it is ill-

defined in Australia. Its situation is uncertain.

Does that answer Your Honour?

TOOHEY J: Yes, thank you.

Mengel(2) 101 12/8/94

MR PAULING:  Your Honour Justice Deane asked, "What about

negligence, what if that was a possibility?" The

way in which we would say you needed to approach it

is, first of all, you say, "All right, it did not

turn up in Beaudesert because of the matter was

pleaded and the way the case was run." In this

case you say negligence was not pleaded.	It was
pleaded in all sorts of guises that are not

relevant here: alleged negligent testing of

scientific materials and other allegations, but the

real one that would focus here, as pleaded, was

that there was a duty not to convey wrong

information. I know Your Honour Justice Deane

thought it was a curious way to put it but that was

the way, in fact, it was pleaded.

I suppose if you were reformulating it you would say the duty of care in the situation was to

take reasonable care that the information that you

are giving as to the status of the herd and the

legal requirements in relation to the cattle was

not wrong. So you would be testing there what

steps were taken and so on and whether or not the

advice that was given was plainly negligent.

DEANE J: Would it not be that in circumstances where it

would be obvious that the ordinary person would

accept a government's allegation express or implied of authority to give direction, there was a duty to take care not to make such an express or implied

allegation in circumstances where the direction

would cause damage?

MR PAULING:  Yes, you had to take reasonable care, then you

test it in the ordinary way, as Chief Justice Asche

did, and he found no want of care.

DEANE J: Of course, there would be a question now, would

there not, as to what is the standard of care, in

the context of what the Court said in Burnie?

MR PAULING: Yes, in two ways, I suppose. In Burnie itself

there is reference to Stevens v Brodribb saying,

"Look, we're moving away from this idea of strict

liability." If the standard of care was that a

government officer has a duty to be right then ergo

strict liability it would be inconsistent with the

trend of authority to construct a standard of care

that high.

DEANE J:	I do not want to delay you but, as I indicated to you yesterday, I do not see in the Chief Justice's
judgment the finding of lack of reasonable care
that you say is there in that context. It seems to
me that, with respect, it skirts round the relevant
finding.

Mengel(2) 102 12/8/94

MR PAULING:	I do not assert there is a finding of lack of reasonable care. I assert that in all the
circumstances His Honour found on numerous
occasions that the officers acted reasonably and non-negligently.

DEANE J: But, query, whether that has anything to say

whether a government, through one or other of its

officers, has given a direction which it was not

entitled to give in the circumstances of this case

has exercised reasonable care. As I say, prima

facie, it would seem to me there is a lot to be

said for the view that it obviously did not.

MR PAULING:	One has to approach it in this way, that one has to look at the way that negligence was pleaded
in this case.
DEANE J:	I follow that but what I was really putting to you was if, in the context of the pleadings, the issues
involved in negligence, properly framed, could be seen to have been fairly covered and if, at the end of the day, one thought that in view of the
findings and lack of appeal in relation to damages
this was clearly a case in which there was
liability and negligence, what would you say we
should do if we saw force in your Beaudesert and
other arguments?

MR PAULING: There is no cross appeal. There is no

contention that raises the issue that Your Honour

does.

DEANE J: Does there need to be a cross appeal? I would not

have thought so.

MR PAULING: All right, there is no notice of contention

that deals with the issue of negligence. That

finding is not brought up to the Court to be dealt with. Indeed, the Court of Appeal confirmed the	fact that the rejection of negligence by the trial	judge was correct and confirmed his finding. What
you would need in the context of this case to find
is that there was some duty on the particular officers to get some legal advice as to whether or
not, in the circumstances, the gazette applied.

DEANE J:  You are not addressing the point I was asking you

to assume and that is one can well have negligence

by a government or a company, even though you

cannot point to negligence on behalf of one or

other of the people who, in the particular system,

did particular things. What I have read of this

case, there would be a great deal to be said for

the view, that looking at the organization and the

way the whole affair was conducted, there was

Mengel(2) 103 12/8/94

obviously negligence on the part of the government

acting through all of its relevant employees.

MR PAULING:  My answer to that is it is not a case I have

ever been called upon to answer.

DEANE J:  I understand that, but my question to you is, what

if, looking at the way the case was conducted, it

is fairly obvious that the issues went so close to

that that the relevant material was covered and one

concludes that it is obviously a case where

liability should have been found to exist in

negligence.	Does one, on your legal arguments,
uphold the appeal and set the judgment aside and	say the plaintiffs fail?

MR PAULING:	Yes, that is what we are seeking.
GAUDRON J:	Or revoke special leave perhaps?
MR PAULING:	It is not a possibility I have yet turned my

mind to, Your Honour.

DEANE J: Perhaps you should, Mr Solicitor.

MR PAULING:  I mean, we are here because firstly, liability

has been found against us on the basis of a

decision which we say is contrary to the law and

ought to be put aside and secondly, on the basis of

some areas of tortious liability which we say have

been developed in a way that should be rejected by

this Court.

Once those things happen, and the judgment

against us is set aside, what might later happen is

a matter that is in the area of policy. And with

respect, if we are to establish that we are not

legally liable and that we are not legally liable

because we do not come within any principle that

makes us liable, then we are entitled to have the

judgment against us removed. And I can think of no basis upon which, having

got to that point, one is to be faced with a

proposition that a case that was never put up - a

case we have never had to answer, was put up here

on the basis that for some reason then, there

should be some discretionary area to set aside the

judgment. we would say we would be entitled if our

legal arguments are correct, we are entitled to

judgment in our favour and we are entitled to have

where you would be eventually going on that point.

MASON CJ:  Mr Jackson, the Court will adjourn at this point.

What I propose to do is to adjourn the matter until

Tuesday, 6 September, which is the day fixed for

the commencement of the Native Titles Act hearing

and I shall allow one hour for this case at 10.15

that morning. The Court cannot allow any further

time for the hearing of this case at that stage,

because we must not cut in to the totality of the

time available for the Native Titles Act to any

significant extent.

MR JACKSON:  Yes, Your Honour.

MASON CJ: But I understand you are putting in written

submissions in response to the argument against

you.

MR JACKSON:  Your Honour, what I would hope to do is to be

able to give to the Court something that deals in

writing with the submissions on behalf of the

interveners and if it is difficult to do so without

Mengel(2) 180 12/8/94

repetition, endeavour to put the remainder of our

argument, so far as possible, in writing.

BRENNAN J:	Do you mean that you do not need to have further oral time?
MR JACKSON:	No, I do not mean that, Your Honour.
MASON CJ:	You do not mean that?

MR JACKSON:  No. What I would like to do is, if I were to

deal with the whole case, the remainder of the

whole case orally, I would expect to take two or

three hours.

MASON CJ: Yes.

MR JACKSON:  But that seems impossible to do. What I am

seeking to say is that I would endeavour to deal

with the submissions of the interveners, so far as

they need separate submissions, in writing. If it

is possible to do so intelligibly and to the
advantage of our side in writing, I will do so, so

far as the remainder of our case is concerned.

MASON CJ: And we will see how the position stands at the

end of that hour on Tuesday, 6 September.	So the
matter will stand adjourned until then.
Mr Solicitor, it ought to be possible for	you to
put your reply in writing to Mr Jackson's	argument
as it has developed thus far.

MR PAULING:  Yes, I propose to do that, Your Honour. have already isolated the items to deal with it. We

MASON CJ: And you ought to be able to do that before

Tuesday, 6 September.

MR MASON:  Your Honour, however the matter proceeds on the

Tuesday, may the interveners be excused from

attendance that day?

MASON CJ: Yes, certainly. So the matter will stand

adjourned until Tuesday, 6 September.	The Court
will now adjourn sine die.

AT 4.20 PM THE MATTER WAS ADJOURNED

UNTIL TUESDAY, 6 SEPTEMBER 1994

Mengel(2) 181 12/8/94