Quality Roads Pty Ltd v Baw Baw Shire Council (Ruling No 1)
[2016] VSC 477
•18 AUGUST 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST
S CI 2015 06427
| QUALITY ROADS PTY LTD (ACN 073 550 946) | Plaintiff |
| v | |
| BAW BAW SHIRE COUNCIL | Defendant |
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JUDGE: | VICKERY J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 20 JULY 2016 |
DATE OF JUDGMENT: | 18 AUGUST 2016 |
CASE MAY BE CITED AS: | QUALITY ROADS PTY LTD v BAW BAW SHIRE COUNCIL (RULING No 1) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 477 |
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PRACTICE AND PROCEDURE — Application for summary judgment pursuant to s 63 of the Civil Procedure Act 2010 (Vic) — Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27 applied — Paragraphs of Statement of Claim struck out.
BREACH OF STATUTORY DUTY — Whether statutory duty created by s 40 of the Road Management Act 2004 (Vic) sounding in damages for breach — Principles to be applied — No statutory duty found — Whether statutory duty arising from alleged statutory duty owed by the defendant road authority to road users that could evidence negligence to a road contractor — Principles to be applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C W R Harrison QC | Ken Smith & Associates |
| For the Defendant | Mr A Downie | Maddocks |
HIS HONOUR:
Introduction
This is an application brought by the defendant, Baw Baw Shire Council (‘Baw Baw Shire’ or ‘the Council’), for summary judgment pursuant to the Civil Procedure Act 2010 (Vic) (the ‘CPA’) in respect of allegations of a breach of statutory duty by the Council advanced by the plaintiff, Quality Roads Pty Ltd (‘Quality Roads’), in its writ and statement of claim (the ‘Statement of Claim’).
Quality Roads is a company in the business of providing road maintenance services. On or about 31 March 2006, it entered into an agreement with the Baw Baw Shire Council pursuant to which it agreed to carry out routine maintenance of pavement, shoulders, roadside areas, drainage systems, road furniture, structures and ancillary matters to specified standards on Local Roads within the Baw Baw Shire municipality (the ‘Agreement’). Payment under the Agreement was an annual lump sum payment. The Agreement was for a term of three years commencing on 1 July 2006, with options of two three year extensions that were exercisable at the principal’s discretion.
Apart from this basic structure, few facts are agreed between the parties, with many of the documents contended by the plaintiff to comprise the Agreement being disputed by the defendant.
The Statement of Claim, as filed on 21 December 2015, is a difficult document to discern and orders are on foot directing that it be extensively amended and rectified.[1] It broadly sets out three claims said to arise out of the Agreement. First, that in breach of the terms of the Agreement, the Council failed to maintain the road network within the municipality in accordance with a set of standards specified in a road management plan.[2] Second, a claim for variation payments in respect of additional potholing and grading works which were performed.[3] Third, that by failing to maintain and repair public roads within the municipality in accordance with the standards specified in a road management plan, which is said to form part of the Agreement, the Council breached a statutory duty arising from s 40 of the Road Management Act 2004 (Vic) (the ‘RMA’ or ‘Act’) which, consequently, entitles Quality Roads to an award of damages under the civil liability provisions of the Act (the ‘Breach of Statutory Duty Allegation’).
[1]Orders of the Honourable Justice Vickery dated 24 June 2016.
[2]Statement of Claim: [6]–[11].
[3]Statement of Claim: [12]–[14].
It is the Breach of Statutory Duty Allegation which is the subject of the present application.
Procedural background
On 20 May 2016, the proceeding came before this Court for a first directions hearing. It there emerged that the defendant was intending to bring either an application for summary judgment or an application to have parts of the Statement of Claim struck out pursuant to the Supreme Court (General Civil Procedure) Rules 2015 (Vic). The defendant further submitted that the pleadings were unclear and imprecise in their present form. It was, therefore, considered appropriate to adjourn the directions hearing to a later date to consider the adequacy of the Statement of Claim as well as any summary judgment or strike out applications confined to the pleadings.
Subsequently, orders were agreed and authenticated on 1 June 2016 directing, inter alia, that:
1. The matter is adjourned to a directions hearing on 23 June 2016.
2.Any application for summary judgment that is to be heard at the directions hearing on 23 June 2016 shall be filed and served by Friday 10 June 2016.
3. The Defendant will file and its submissions by 4 pm on 16 June 2016.
4. The Plaintiff serve any submissions in reply by 4 pm on 20 June 2016.
On 10 June 2016, the defendant filed a summons seeking the following orders:
1.Pursuant to s 63 of the Civil Procedure Act 2010 (Vic) and Order 22 Part 3 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) judgment is given for the Defendant in respect of paragraphs 15 to 18 of the Plaintiff’s writ and statement of claim filed on 21 December 2015, being the allegation of breach of statutory duty by the Defendant.
2. The Plaintiff must pay the Defendant’s costs of the application.
3.The Plaintiff must pay the Defendant’s costs of and incidental to the allegation for which summary judgment was given.
On 23 June 2016, at the commencement of the hearing, the Court was made aware that a copy of the submissions of the defendant had:
(i)been served electronically to an email address of a former employee of the firm of solicitors retained by the plaintiff for whom he no longer worked;
(ii) not been served, by email or otherwise, to anyone else at the firm; and
(iii)first came into the possession of both the solicitors and counsel for the plaintiff at or about 3 pm of the previous day (22 June 2016) following an email exchange between counsel which had taken place that afternoon.
In these circumstances, the Court considered it preferable to adjourn the defendant’s application by summons to a later date.
Having had the benefit of reading and considering the criticisms of the pleadings contained in the submissions of the defendant prior to the hearing, the Court was in a position to give directions in respect of amending the Statement of Claim. These directions provided for a series of steps that the plaintiff was instructed to take to amend the Statement of Claim so as to enable both the defendant and the Court to better understand the bases upon which the respective claims were to be advanced.
Following the conclusion of the hearing, orders were pronounced and authenticated providing for the filing and serving of material in preparation for the return of the adjourned summons and reserving any questions on costs. The steps directed to be taken were set out in an annexure to the order entitled ‘Annexure A’.
Defendant’s application
The defendant seeks summary judgment as to paragraphs 15 to 18 of the Statement of Claim under ss 62 and 63 of the CPA. These provisions relevantly provide as follows:
62 Defendant may apply for summary judgment in proceeding
A defendant in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a plaintiff’s claim or part of that claim has no real prospects of success.
63 Summary judgment if no real prospect of success
(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
…
(b) on the application of a defendant in a civil proceeding; …
Despite some initial uncertainty surrounding the test to be applied by the court in determining whether to give summary judgment in a civil proceeding pursuant to s 63 of the CPA following the provision’s introduction,[4] the decision of the Court of Appeal in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (‘Lysaght’)[5] upon a reference from the trial division of the Court,[6] resolved the matter.[7] In that case, after having examined the provenance of the section and authorities concerning similar provisions in other jurisdictions, Warren CJ and Nettle JA (as his Honour then was) formulated four principles to guide the application of s 63:[8]
(a)the test for summary judgment under s 63 of the [CPA] is whether the respondent to the application for summary judgment has a “real” as opposed to “fanciful” chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the “hopeless” or “bound to fail test” essayed in General Steel;[9]
(c)it should be understood, however, that the test is to some degree a more liberal test than the “hopeless” or “bound to fail” test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.
[4]See: Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSC 201 (Vickery J).
[5][2013] VSCA 158; (2013) 42 VR 27.
[6]Ibid.
[7]This decision received recent approval in Mandie v Memart nominees Pty Ltd [2016] VSCA 4.
[8]Lysaght (2013) 42 VR 27, 40 [35] (Neave JA agreeing).
[9]General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 (Barwick CJ).
To this Neave JA, agreeing with the joint judgment, added the following instructive caveat:[10]
… I am concerned that undue emphasis on the caution with which a court must exercise the power of summary dismissal runs the risk of reinforcing the historical approach to summary dismissal and may result in the legislative liberalisation of the test in s 63 having little impact in practice. That approach would be inconsistent with the objective of reforming the law relating to summary judgment, expressed in s 1(2)(e) of the Civil Procedure Act, and with the requirement that the court give effect to the over-arching purposes of [the CPA], imposed by s 8.
[10]Lysaght (2013) 42 VR 27, 42 [41].
Plaintiff’s pleaded case on Breach of Statutory Duty Allegation
The paragraphs [15–18 inclusive] of the Statement of Claim the subject of the present application, incorporating the corrections contained in the plaintiff’s written submissions dated 19 July 2016, are set out below:
15.Pursuant to section 40 of the Road Management Act 2004 (Vic) (the “RMA”) the defendant was under a statutory duty to maintain and repair public roads within its municipality to the standards specified in the relevant Road Management Plan (the “RMP”).
16.By reason of the matters referred to in paragraphs 5 to 8 above the defendant has failed to maintain the road network in accordance with the RMP and has accordingly contravened section 40 of the RMA.
17.In the premises referred to in paragraphs 6 to 8 above the defendant has been negligent in the performance of a road management function (namely, the duty to maintain the roads within its municipality in accordance with the minimum standards under the RMP for the purposes for the purposes (sic) of s 40 of the RMA) which negligence has caused the plaintiff loss and damage.
18.In the premises referred to in paragraphs 12 to
1417 above the plaintiff is entitled to an award of damages under the civil liability provisions of the RMA.
The RMA came into force in May 2004. Its purpose is described as being ‘to reform the law relating to road management in Victoria and to make related amendments to certain Acts’.[11] Part 4 of the Act is entitled ‘Management of roads’. It comprises ss 20–59. Section 40 of the Act provides as follows:[12]
[11]Road Management Act 2004 (Vic) s 1(1).
[12]For an overview of the operation of s 40, see: Kennedy v Shire of Campaspe [2015] VSCA 215 [33]–[35].
40 Statutory duty to inspect, maintain and repair public roads
(1)Subject to Part 6, a road authority has a statutory duty to inspect, maintain and repair a public road—
(a)To the standard specified in the road management plan for that public road or a specified class of public roads which includes that public road; or
(b)If paragraph (a) does not apply, to the standard specified in a policy in respect of that public road; or
(c)If no standard is specified for that public road or in relation to a particular matter, to a reasonable level having regard to the matters specified in paragraphs (a) to (e) of s 101(1).
Note
Section 101 sets out principles for determining whether there is a duty of care and if there is a duty of care, the standard of care.
(2)The statutory duty imposed by subsection (1) does not create a duty to upgrade a road or to maintain a road to a higher standard than the standard to which the road is constructed.
(3)The statutory duty to inspect applies to any part of a public road which is —
(a)a roadway;
(b)a pathway;
(c)a shoulder;
(d)road infrastructure.
(4)The statutory duty to inspect does not apply to —
(a) a road which is not a public road; or
(b)any roadside or other area of a public road that has not been developed by a road authority for use by the public as a roadway or pathway; or
(d) non-road infrastructure which is installed in the road reserve.
(5)A road authority has a discretionary power to inspect, maintain or repair a road which is not a public road but this Act is not to be construed as imposing a duty to do so.
…
The principal question for consideration in this application is whether or not Quality Roads’ claim that the defendant breached the statutory duty contained in s 40 of the RMA, and thereby caused the plaintiff compensable loss and damage, has any ‘real prospect of success’?
The defendant’s contentions
The defendant contends that it is entitled to summary judgment in its favour relation to paragraphs 15 to 18 of the Statement of Claim pursuant to ss 62 and 63 of the CPA, applying the principles stated by the Court of Appeal in Lysaght.
In determining whether or not s 40 of the RMA confers on the plaintiff a statutory cause of action, the defendant submitted that the issue is governed by whether the legislature intended, in imposing an obligation under the legislation, to benefit a particular class of persons. In seeking an answer to the question, the purpose and intention of the relevant statute, having particular regard to the stated objectives within the legislation itself, calls for determination, after an examination of the nature, scope and terms of the statute, including the particular evil against which it is directed, the nature of the conduct which is prescribed and the pre-existing state of the law and the general circumstances surrounding the introduction of the particular provisions.
Having regard to the purpose and intention of the RMA, and having particular regard to the stated objectives within the legislation itself, the defendant contended that the plaintiff company did not fall within the class of persons intended to be benefited by the operation of s 40.
Here, the plaintiff is a company in the business of providing road maintenance services and was so engaged by the defendant at the time when it alleges it suffered economic harm arising out of its road maintenance contract with the Council, a ‘road authority’ under the RMA.
However, the defendant contends that the plaintiff at no material time was a member of a class of persons for whose benefit s 40 of the RMA was imposed. In particular, the defendant’s submission is that s 40 of the RMA is intended to benefit road users harmed from road incidents caused by poor road maintenance, and that the plaintiff was not a member of that class.
The plaintiff’s submissions
The plaintiff principally submitted that the impugned paragraphs of the pleading should remain because:
1.as to breach of statutory duty, there is a clear indication that Parliament intended to benefit contracting parties; and
2.as to negligence, the paragraphs allege necessary material facts, namely a breach of statutory duty which is evidence of a breach of duty owed by the defendant to avoid inflicting economic loss upon the plaintiff, as further potentially elucidated by s 101 of the RMA. In other words, the plaintiff seeks to rely upon an alleged breach of s 40 of the RMA as evidence of the alleged negligence of the defendant authority.
The plaintiff contends that it is not essential to the existence of an actionable statutory duty that the legislature should envisage the protection of a particular class or person or that there be a defined or ascertainable class of persons whom the statute is intended to benefit.
However, in this case, the necessary intention was said by the plaintiff to be evidenced by s 99 of the RMA and that the plaintiff fell within the class intended to be benefitted by s 40. The RMA provides at s 99:[13]
[13]Emphasis added.
Application of Division
This Division applies to any claim for damages resulting from negligence in relation to the performance of non-performance of a road management function, regardless of whether the claim is brought in tort, in contract under statute or otherwise.
Section 99 of the RMA appears as one of the opening sections of pt 6 of the Act entitled ‘Civil liability’. The ‘Division’ referred to in s 99 is div 2 of pt 6 relating to ‘Negligence’ comprising ss 99–106.
The plaintiff asserts that the inclusion of claims ‘in contract’ in s 99 to define the application of div 2 was sufficient to demonstrate the intention of the legislature to include contracting parties in the position of the plaintiff within the scope of persons intended to be benefitted by s 40, thereby enlivening the statutory duty owed to it under the Act.
The plaintiff also seeks to draw assistance for its contentions from s 101 of the RMA which provides:
Principles concerning performance of road management functions
(1)In determining whether a road authority, infrastructure manager or works manager has a duty of care or has breached a duty of care in respect of the performance of a road management function, a court is to consider the following principles (amongst other relevant things including the principles specified in section 83 of the Wrongs Act 1958)—
(a)the character of the road and the type of traffic that could reasonably be expected to use the road;
(b)the standard of maintenance and repair appropriate for a road of that character used by traffic of that type;
(c)the state of repair in which a reasonable person would have expected to find a road or infrastructure of that character;
(d)whether the road authority, infrastructure manager or works manager knew, or could reasonably be expected to have known, the condition of the road or infrastructure at the time of the relevant incident;
(e)in the case where the road authority, infrastructure manager or works manager could not have reasonably been expected to repair the road or infrastructure or take other preventative measures before the relevant incident, whether the road authority, infrastructure manager or works manager did display, or could be reasonably expected to have displayed, appropriate warnings.
(2)Subsection (1) applies to the EastLink Corporation as if the reference to the principles specified in section 83 of the Wrongs Act 1958 were excluded.
(3)Subsection (1) applies to the Peninsula Link Freeway Corporation as if the reference to the principles specified in section 83 of the Wrongs Act 1958 were excluded.
Analysis and conclusions
Cause of action for breach of statutory duty - principles
In Byrne v Australian Airlines Ltd (‘Byrne’), the High Court considered the elements of the cause of action for damages for breach of statutory duty.[14] This was a strike-out case where a five member bench examined whether an industrial award which imposed a penalty in the event of its breach, provided a statutory cause of action to workers against an employer founded upon the breach. The High Court concluded that it did not.
[14](1995) 185 CLR 410, 424–6; 457–62.
As to the nature of a breach of statutory duty, Brennan CJ, Dawson and Toohey JJ observed that:[15]
A breach of statutory duty is a cause of action for damages which arises where a statute, which imposes an obligation for the protection or benefit of a class of persons or the public at large, is construed as intended to provide a ground of civil liability. The action arises when a breach of the obligation causes injury or damage of a kind against which the statute was intended to afford protection.
The question is one of the construction of the statute, although as Dixon J pointed out in O'Connor v SP Bray Ltd an examination of the statute "will rarely yield a necessary implication positively giving a civil remedy". One generalisation that can be made is that where the persons upon whom the statutory obligation is imposed are under an existing common law duty of care towards the persons whom the statute is intended to benefit or protect, the statutory prescription of a higher or more specific standard of care may, in the absence of any indication of a contrary intention, properly be construed as creating a private right. Thus it is that Factories and Shops Acts and other legislation designed to protect the health and safety of employees in the workplace have been held to impose duties the breach of which gives rise to a right to sue for damages.
[15]Ibid 424 (citations omitted).
McHugh and Gummow JJ expressed the principle in like terms in Byrne when they observed in relation to the House of Lords decision of R v Deputy Governor of Parkhurst Prision; ex parte Hague:[16]
There, the House of Lords rejected the submission that, if the plaintiff belonged to a class which the statutory provision was intended to protect and the breach had caused the plaintiff damage of a kind against which the provision was intended to give protection, any breach of statutory duty causing injury and unaccompanied by a statutory remedy or penalty would afford the injured person a cause of action. Rather, their Lordships affirmed that "the fundamental question" was whether the legislature intended to confer on the plaintiff a cause of action for beach of statutory duty.
[16]Ibid 458.
More recently, J Forrest J of this Court in Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 2)[17] dealt with the issue and adopted and applied the formulation of the law stated by the High Court in Byrne. His Honour there considered whether provisions of the Emergency Management Act 1986 (Vic) (the ‘EMA’) together with the state disaster response plan (‘DISPLAN’) administered under the Act, gave rise to a statutory cause of action for damages in the event of its breach in the context of the disastrous Kilmore East bush fire. This too was an application by a group of defendants for summary judgment in relation to claims founded on an alleged breach of statutory duty, as to which his Honour, having examined the case law and the applicable legislation, said:[18]
[17][2011] VSC 168; (2011) 34 VR 584.
[18]Ibid 602.
68It follows from these statements of principle that there are two questions which must be answered affirmatively:
(a)Did the legislature in enacting the EMA intend to impose an obligation upon police officers carrying out particular roles and functions pursuant to DISPLAN; and
(b)Did the legislature intend to confer a private right upon an individual so that he or she could sue for non-compliance? As part of this analysis, one must ask whether the legislature intended, in imposing an obligation under EMA, to benefit a particular class of persons as opposed to the community generally or, to put it another way, was it passed primarily for the general good.
69These are both questions of statutory construction. The answer to these questions requires analysis of the purpose and intention of the Act having particular regard to the stated objectives within the legislation itself. In determining the intention of the legislature, and bearing in mind the provisions of the Interpretation of Legislation Act1984 (Vic), one examines the nature, scope and terms of the statute, including the particular evil against which it is directed, the nature of the conduct which is prescribed and the pre-existing state of the law and the general circumstances surrounding the introduction of the particular provisions.
70One of the difficulties in endeavouring to ascertain the legislative intention is that identified by Dixon J in O’Connor[19] – rarely will it be obvious that Parliament intended to confer a private right upon a particular class.
[19]O’Connor v SP Bray Ltd (1937) 46 CLR 464, 477.
After considering the legislation and applying the relevant principles, his Honour concluded that:[20]
[e]ven allowing for a degree of judicial insight, as to the legislative intention… the provisions of the EMA were not intended to confer a private right of action upon persons who suffered injury or those with dependency claims as a result of the Kilmore East fire. …
[20]Mathews v SPI Electricity Pty Ltd & Ors (Ruling No 2) (2011) 34 VR 584, 602 [71].
Earlier cases in this line of authority have approached the issue in a similar fashion.[21]
[21]See: Bourke v Butterfield and Lewis Ltd (1926) 38 CLR 354, 360; Knapp v Railway Executive [1949] 2 All ER 508; Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313; and Repacholi Aviation Pty Ltd v Civil Aviation Safety Authority (2009) 263 ALR 93.
I accept that the question of whether the plaintiff is a member of the class of persons s 40 of the RMA is intended to benefit is tied to the question of whether s 40 protects against harm that the statutory duty was intended to protect.
In Kebewar Pty Ltd v Harkin,[22] the New South Wales Court of Appeal held that for a harm caused by a breach of statutory duty to be compensable, it must be a harm of the kind that the statutory duty was intended to prevent.[23] McHugh JA (Samuels and Priestley JJA agreeing) observed the following in relation to a Local Government Ordinance which, it was contended by the plaintiff, imposed a duty on a party in the course of conducting an excavation of land, not merely to prevent harm by soil moving from the land containing the excavation, but also to prevent harm caused by soil moving from an adjoining occupier’s land:[24]
Before a plaintiff can succeed in an action for damages for breach of statutory duty, he must prove that the damage suffered was of a kind which the statute was designed to prevent: Gorris v Scott (1874) LR 9 Exch 125. Since the loss of support for a building to be erected on the [adjoining land] land is not the kind of damage which either Pt 31.3 or Pt 31.4 seeks to prevent, the plaintiff’s claim, in so far as it is based on Pt 31, must fail.
[22](1987) 9 NSWLR 738.
[23]Ibid 744–5.
[24]Ibid 745.
What then is the harm which s 40 is designed to prevent, and the class of persons to which the section is therefore directed?
Background to the introduction of the RMA
It was submitted on behalf of the defendant that the pre-existing state of the law and the general circumstances surrounding the introduction of the RMA assist with identifying the nature and scope of s 40.
It submitted, and I accept (and was not the subject of direct challenge on the part of the plaintiff), that the relevant history may be summarised as follows.
Up until 2001, local councils were considered to be liable to road users for a negligent act of misfeasance, but not for a negligent act of nonfeasance,[25] with the latter regarded as providing immunity from suit.
[25]Buckle v Bayswater Road Board (1936) 57 CLR 259; Gorringe v The Transport Commission (Tas) (1950) 80 CLR 35.
The distinction was that misfeasance required some lawful act to have been poorly performed, whereas nonfeasance involved an omission or failure to act at all in circumstances in which a person or public body had agreed, or had power, to so act, for example a failure to perform road repairs. Essentially the law provided that there was no duty to repair a road, thereby effectively conferring a nonfeasance immunity on a responsible authority. However, once a responsible authority had embarked upon the task, it had a duty to undertake and complete the works in a safe manner. This rule, a ‘complex of exceptions and reservations’,[26] became known as the ‘Highway Rule’.
[26]Brodie v Singleton Shire Council; Ghantous v Hawkesbury City Council (2001) 206 CLR 512, 570 [127].
In Brodie v Singleton Shire Council; Ghantous v Hawkesbury City Council (‘Brodie’),[27]a majority of the High Court[28] concluded that the misfeasance/nonfeasance distinction reflected in the Highway Rule should be abolished in Australia and held that, in certain circumstances a council may owe a duty of care to road users to take positive steps to remedy foreseeable dangers. The circumstances which may give rise to the duty and the content of the duty may be determined by a number of factors, as was explained in the following passage:[29]
Authorities having statutory powers of the nature of those conferred by the LG Act upon the present respondents to design or construct roads, or carry out works or repairs upon them, are obliged to take reasonable care that their exercise of or failure to exercise those powers does not create a foreseeable risk of harm to a class of persons (road users) which includes the plaintiff. Where the state of a roadway, whether from design, construction, works or non-repair, poses a risk to that class of persons, then, to discharge its duty of care, an authority with power to remedy the risk is obliged to take reasonable steps by the exercise of its powers within a reasonable time to address the risk. If the risk be unknown to the authority or latent and only discoverable by inspection, then to discharge its duty of care an authority having power to inspect is obliged to take reasonable steps to ascertain the existence of latent dangers which might reasonably be suspected to exist.
The perception of the response by the authority calls for, to adapt the statement by Mason J in Wyong Shire Council v Shirt, a consideration of various matters; in particular, the magnitude of the risk and the degree of probability that it will occur, the expense, difficulty and inconvenience to the authority in taking the steps described above to alleviate the danger, and any other competing or conflicting responsibility or commitments of the authority. The duty does not extend to ensuring the safety of road users in all circumstances. In the application of principle, much thus will turn upon the facts and circumstances disclosed by the evidence in each particular case.
[27]Ibid.
[28]Gaudron, McHugh and Gummow JJ, Kirby J agreeing.
[29]Brodie (2001) 206 CLR 512, 577–8 [150]–[151] (Gaudron, McHugh and Gummow JJ) (citations omitted).
As a result of the decision in Brodie, the Victorian Parliament passed the Transport (Highway Rule) Act 2002 (Vic), which amended the then Transport Act 1983 (Vic) to re-introduce the pre-Brodie immunity for failure to inspect and repair roads. This amendment operated until its repeal on 1 January 2005. This was expressed as having been done to provide road authorities with ‘breathing space’ so as to implement plans and procedures that responded to the decision in Brodie.[30]
[30]Victoria, Parliamentary Debates, Legislative Assembly, 10 October 2002, 511 (Mr Peter Batchelor, Minister for Transport).
The Victorian Parliament then introduced the Road Management Bill 2004 (Vic) (the ‘Bill’), which subsequently was passed into law as the RMA. The explanatory memorandum refers to Division 3 of Part 4, which commences with s 40:[31]
Division 3 deals with the construction, inspection, maintenance and repair of public roads. In particular, Division 3-
·Imposes a statutory duty on road authorities to inspect, maintain and repair the public roads assigned to them.
·Enables road authorities to set standards for these purposes, such as inspection intervals and the identification and prioritisation of matters for repair or maintenance work, having regard to policy and budgetary considerations. These standards may be set out in road management plans. These policy decisions will set the standard for legal purposes, provided the road authority has not made a decision that no reasonable road authority would have made.
·Where no standard has been made, the road authority will be under a duty to maintain the road to a reasonable standard having regard to principles set out in the Bill. These are similar to the common law duties of road authorities set out in the High Court decision of Brodie v Singleton Shire Council [2001] 206 CLR 512.
[31]Explanatory Memorandum, Road Management Bill 2004 (Vic) 5 (emphasis added).
In relation to s 40, the explanatory memorandum provides, amongst other things:[32]
The statutory duty under clause 40 (and the principles concerning the performance of road management functions set out clause 101) reflect the decision (the High Court in Brodie's Case that road authorities have a responsibility to take reasonable steps to actively manage the roads and paths under their administration to ensure that they are reasonably safe for use. Clause 40 also sets out how the standard of inspection, maintenance or repair is to be determined for the purposes of this duty. The relevant standard of inspection, maintenance or repair is-
· the standard (if any) determined by the road authority through a road management plan under Division 5 of Part 4 or other policy (if any) decided under clauses 39 and 41,
· if the road authority has not determined a standard, to a reasonable standard having regard to the criteria detailed in clause 101.
[32]Ibid 31 (emphasis added).
The second reading speech, which notes that the Bill is directed to the standard of public roads so as to facilitate road safety, says the following about statutory duty:[33]
But what do we mean by ‘road’ in the context of the management of public road infrastructure? This is one of the main questions dealt with by this bill. The matter has been brought into focus by the High Court judgment in Brodie v Singleton Shire Council. Under that decision a road authority that has powers to manage a road, that ‘controls’ a road, has a common-law duty to exercise those powers proactively to ensure that the road is maintained to a reasonable standard, to inspect the road, to repair defects and give warnings of dangers, and to manage development of the land in the interests of minimising danger to road users.
This bill proposes to reinstate those common-law rules by imposing specific statutory duties on road authorities to inspect, repair and maintain to a reasonable standard those roads that form part of the public road network.
[33]Victoria, Parliamentary Debates, Legislative Assembly, 4 March 2004, 290 (Mr Robert Cameron, Minister for Agriculture) (emphasis added).
The second reading speech concludes that the focus of the Bill is road safety and the standards of public roads:[34]
This Parliament has a proud record in the field of road safety. There are four risk factors in road accidents: the driver, the vehicle, the weather and the road.
In relation to driver behaviour, this Parliament is a world leader in enacting laws to promote good driving and deter reckless driving, such as speeding and drink-driving.
In relation to vehicle safety, Australia has comprehensive and detailed design rules. Vehicle safety standards have advanced tremendously in recent years.
In relation to the weather, we can complain, but there's not a lot we can do.
This bill focuses on an area where we can do something more - the standard of public roads. This bill is called the Road Management Bill because it is only by better management that we can improve the road system. This bill is about achieving the best road system we can with the available resources, about making decisions that will optimise results, and then implementing them.
[34]Ibid 297.
The RMA sets out the duties of road authorities to manage roads so as to promote road safety. The defendant is a road authority. The RMA provides for the creation of a road management plan (‘RMP’), the purposes of which are set out in s 50 of the RMA:
Purposes of a road management plan
The purposes of a road management plan are having regard to the principal object of road management and the works and infrastructure management principles -
(a)to establish a management system for the road management functions of a road authority which is based on policy and operational objectives and available resources; and
(b)to set the relevant standard in relation to the discharge of duties in the performance of those road management functions.
In my opinion, the history of s 40 of the RMA points strongly to it being intended to codify the Brodie principles in determining when a road authority, in the position of the defendant, will owe a duty of care to road users harmed from road incidents resulting from poor road maintenance.
Further, the text of the Act, in a number of its parts, is consistent with this analysis. The following provisions are referred to by way of examples.
The ‘General functions’ of a road authority under s 34(1) include:[35]
(a)to provide and maintain, as part of a network of roads, roads for use by the community served by the road authority;
(b)to manage the use of roads having regard to the principle that the primary purpose of a road is to be used by members of the public and that other uses are to be managed in a manner which minimises any adverse effect on the safe and efficient operation of the road and on the environment;
(c)to manage traffic on roads in a manner that enhances the safe and efficient operation of roads.
[35]Emphasis added.
A road authority is to exercise the functions and powers conferred on it by the RMA having regard to the matters set out in s 38, including ‘the rights of road users’.[36]
[36]Road Management Act 2004 (Vic) s 38(1)(c).
Section 101 sets out the principles concerning the performance of road management functions by a road authority to be considered by a court in determining liability arising from the performance of a road management function. Sub-sections (1)(d) and (e) provide, respectfully:[37]
(d)whether the road authority, infrastructure manager or works manager knew, or could reasonably be expected to have known, the condition of the road or infrastructure at the time of the relevant incident;
(e)in the case where the road authority, infrastructure manager or works manager could not have reasonably been expected to repair the road or infrastructure or take other preventative measures before the relevant incident, whether the road authority, infrastructure manager or works manager did display, or could be reasonably expected to have displayed, appropriate warnings.
[37]Emphasis added.
Section 115 makes provision for the delivery of a ‘Notice of Incident’ as a pre-requisite to commencing proceedings against a road authority based on a claim arising out of the condition of a public road or infrastructure:[38]
(1)If a person proposes to commence a proceeding in a court based on a claim in relation to an incident arising out of the condition of a public road or infrastructure, the person must give written notice of the incident to the responsible road authority within the prescribed period of the incident occurring.
[38]Emphasis added.
As noted above,[39] the plaintiff placed reliance upon the terms of s 99 of the RMA, specifically the inclusion of the phrase ‘in contract’. The plaintiff contended that the effect of this provision was sufficiently broad to cover and include a claim by a road maintenance contractor for damages for economic loss based on a road maintenance contract with a road authority. However, it is important to observe that s 99 extends only to ‘any claim for damages resulting from negligence in relation to the performance or non-performance of a road management function’. The Act defines ‘road management function’ to mean a function, power or duty imposed on a road authority by or under the RMA and the other legislation there specified.[40] However, counsel pointed to no provision in the RMA or other relevant legislation which provided that a road authority had a statutory duty to comply with the terms of any contract entered into with a private contractor to perform road maintenance works, and it would be surprising to find such a duty founded in legislation. Section 99 of the RMA does not assist the plaintiff.
[39]See [26]–[28].
[40]Road Management Act 2004 (Vic) s 3(1) ( definition of ‘road management function’).
Taking into account the history, nature, scope and terms of s 40 of the RMA, and the Act as a whole, I am driven to the conclusion that s 40 is directed to harm caused to the road using public from road incidents arising from hazards on public roads and poor road maintenance practices by road authorities. The provision is not directed to providing a supplementary cause of action to a private company, which is in the business of providing road maintenance services under a road maintenance contract with the road authority, where it claims economic harm arising out of an alleged breach of the contract. In such cases, a road maintenance contractor, in the event of an alleged breach of its road maintenance contract, is confined to such claims as it might have under the contract or otherwise under the general law. A road maintenance contractor such as the plaintiff, may protect its economic interests by negotiating suitable contractual terms with the road authority.
I am satisfied that the plaintiff, as a respondent to the defendant’s application under s 63 of the CPA, does not have a real prospect of success on its present pleadings of breach of statutory duty found in paragraphs 15, 16 and 18 of the Statement of Claim and paragraph D of the prayer for relief. Accordingly, those paragraphs should be struck out.
Breach of s 40 of the RMA as a particular of alleged negligence
The plaintiff pleads in the alternative that the defendant road authority has been negligent in the performance of a road management function - namely, the duty to maintain the roads within its municipality in accordance with the minimum prescribed standards for the purposes of s 40 of the RMA - which negligence has caused the plaintiff loss and damage.
The plaintiff submitted that there is a clear distinction between a breach of statute giving rise to a cause of action in itself, and a breach of statute relied upon as evidence of negligence. It points to the judgments of Dixon and McTiernan JJ which it says made the distinction clear in Henwood v Municipal Tramways Trust (SA) (‘Henwood’):[41]
When negligence as a cause of action is in question, breach of a legislative provision requiring a specific precaution amounts to evidence of want of reasonable care (Blamires v Lancashire and Yorkshire Railway Co). But it is not negligence per se.
[41](1938) 60 CLR 438, 461 (citations omitted).
In CSL Australia Pty Ltd & Anor v Formosa (‘CSL Australia’),[42] the New South Wales Court of Appeal considered provisions under the Occupational Health and Safety (Maritime Industry) Act 1993 (Cth) (‘the Maritime OHS Act’). The Maritime OHS Act imposed statutory duties on operators in the maritime industry for the protection of the health and safety of workers in that industry. Section 118 of the Maritime OHS Act provided:
[42][2009] NSWCA 363; (2009) 261 ALR 441 (Allsop P, Basten JA and Handley AJA).
Act does not give rise to other liabilities etc.
This Act does not confer:
a)a right of action in any civil proceeding in respect of any contravention of a provision of this Act or the regulations; or
b)a defence to an action in any civil proceeding or otherwise affect a right of action in any civil proceeding.
Specifically, the Court considered whether or not the statutory duties created by the Maritime OHS Act had any effect on the operator’s common law duty of care. In answering that question, the Court in the following passages applied the general principle derived from Henwood:[43]
Section 118 of the Maritime OH & S Act provides that the Act does not confer a right of action in any civil proceeding in respect of a contravention of a provision of the Act or confer a defence to an action in any civil proceeding or otherwise affect a right of action in any civil proceeding. Thus, the statutory intention is not to create a statutory cause of action: compare O’Connor v SP Bray Ltd (1937) 56 CLR 464;[1937] ALR 461; [1937] HCA 18.
Any duty of care owed by the appellants arises from their respective positions as owner and operator of the ship and being in possession or having the management and control of the ship. The obligations under ss 11(1)–(6) and 13, in particular those expressed by reference to taking all reasonable steps, while not founding a separate statutory cause of action (see s 118) may nevertheless be relevant to assessing the breach of any relevant common law duty of care: Henwood v Municipal Tramways Trust (SA) (1938) 60 CLR 438 at 449, 453 and 461; [1938] ALR 312 at 317 and 318–19, 321–2; [1938] HCA 35; Sibley v Kais (1967) 118 CLR 424 at 427; [1968] ALR 158 at 159; [1967] HCA 43; and Tucker v McCann [1948] VLR 222 at 225–6 and 237; [1948] 2 ALR 57 at 59–61 and 70–1. Further, as will be seen the place of these statutory obligations in a law of the parliament is not irrelevant to the consideration of the imposition of and the determination of the content of a duty of care at common law.
[43]Ibid 455 [60]–[61] (emphasis added).
The pleas of negligence in the Statement of Claim referred to in paragraphs 6–8 of the document are difficult to fathom.
Nevertheless, at this point of the present proceeding, I am not in a position to determine that the pleading in paragraph 17 of the Statement of Claim may or may not be relevant to the consideration of the imposition of and the determination of the content of a duty of care at common law, or may or may not be relevant to assessing the breach of any relevant common law duty of care to found a successful plea in negligence.
Accordingly, at this stage, the defendant has not established for the purposes of s 63 CPA that the plaintiff does not have any real prospect of success on its present pleading of negligence, insofar as reliance is placed on the evidence particularised in paragraph 17, when taken in combination with the other particulars of negligence pleaded.
For these reasons, paragraph 17 of the Statement of Claim should not be struck out at this point because it is at least potentially relevant to the pleaded allegation of negligence referred to in paragraphs 6-8 of the pleading.
The position however may change if it is subsequently established that there is no arguable case for pure economic loss founded in negligence.
Orders
I will make to following substantive orders:
Paragraphs 15, 16 and 18 of the Statement of Claim and paragraph D of the prayer for relief are struck out.
I will hear the parties on costs of the Summons and any further orders or directions which should be made to progress the proceeding to trial.
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