Roman v North Sydney Council

[2007] HCATrans 405

[2007] HCATrans 405

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S131 of 2007

B e t w e e n -

MARIA CRISTINA ROMAN

Applicant

and

NORTH SYDNEY COUNCIL

Respondent

Application for special leave to appeal

GLEESON CJ
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 3 AUGUST 2007, AT 12.07 PM

Copyright in the High Court of Australia

MS S. NORTON, SC:   If the Court pleases, I appear with my learned friend, MS E.E.J. WELSH, for the applicant.  (instructed by Brydens Law Office)

MR P.R. GARLING, SC:   If the Court pleases, I appear with my learned friend, MR R.S. SHELDON, for the respondent.  (instructed by DLA Phillips Fox)

GLEESON CJ:   Yes, Ms Norton.

MS NORTON: This is an application for special leave to appeal a 2:1 decision of the New South Wales Court of Appeal overturning a judgment entered in favour of Mrs Roman by a District Court judge. Mrs Roman fell into a pothole in Princess Street in North Sydney. Neither the existence of the hole nor her fall would be especially interesting, but the occurrence of this accident would normally only be of interest to Mrs Roman and her family and perhaps some members of the Council. What we say the question of general interest is is the interpretation of section 45 of the Civil Liability Act (NSW) and some similar sections in the legislation of other States.

GLEESON CJ:   Is this the first time the Court of Appeal has had to deal with this question?

MS NORTON:   The Court of Appeal has dealt briefly with it in the two other cases that are mentioned in the judgment of Justice McColl, that is the matters of Theodorakakis and Serratore, but this is the first time when it was argued in any depth and I might say at the trial itself it does not seem to have been a big issue and it was just one of about 15 grounds of appeal in the Court of Appeal but in the arguments at the Court of Appeal it took on the major aspect.

KIRBY J:   Was Mr Garling in the case at the trial?

MS NORTON:   No, and Mr Garling was not in the Court of Appeal so I cannot say that ‑ ‑ ‑

KIRBY J:   We cannot blame Mr Garling on this occasion.

MS NORTON:   We cannot blame Mr Garling.

KIRBY J:   The interesting question is who can have the actual knowledge of a body such as the Council.

MS NORTON:   Indeed, your Honour.

KIRBY J:   And does that reside in a sweeper or cleaner or only in somebody higher in the hierarchy or how does one attribute it to the Council?  How does it get proved?

MS NORTON:   How does it get proved, especially as in this case where there was an absence of documentary evidence produced?  In the matter of Theodorakakis it was fairly simple because a subpoena was issued and in response to that subpoena documents were produced which showed an inspection of the area had taken place and that the lip over which Mrs Theodorakakis fell had been noted as being dangerous, so that was easy.  When there are no documents to be produced, how is a plaintiff to prove the knowledge in the Council.  That is the difficult thing.

GLEESON CJ:   What did you actually prove in the sense of what inference of fact did the primary judge in this case draw on which you rely as satisfying a statutory test?

MS NORTON:   It is the North Sydney Council and the area in question is a fairly densely populated area.  The North Sydney Council has 22 street sweepers and this particular area was swept, on the evidence that was accepted, twice a week, not by a machine but manually.  That is a person with a broom and a trolley that has hessian bags on it and they sweep the leaves into a pile and put them into the hessian bags.

GLEESON CJ:   Do you have a finding of fact in your favour that ‑ ‑ ‑

MS NORTON:   That the street sweepers must have seen it.

GLEESON CJ:   Any particular street sweeper or just some street sweeper?

MS NORTON:   There was no documentary evidence produced as to how many sweeps – whether the street sweepers had their own streets that they looked after or whether they roamed around the municipality.

GLEESON CJ:   The factual finding, which is the basis of your argument of construction of the Act, is that some street sweeper in the employment of the Council saw it?

MS NORTON:   Yes.

GLEESON CJ:   Is there an additional fact, such as it was the responsibility of such a street sweeper to report it to somebody in the Council?

MS NORTON:   Indeed.  They called some oral evidence from the Council and – I will get the name of it, I think it was Mr Wetherill – who gave evidence that when the street sweepers were inducted they were told that it was part of their duty to look for these kind of hazards and report them.  Issue is taken in the written submissions of the respondent with the use of the word “duty”, but in the submissions in reply I have taken out of the actual transcript the words of Mr Wetherill, and they are at page 123 of the application book where he said Mr Wetherill stated – that is at paragraph 3 - that he instructed:

staff part of their duties is to record hazards that they observe in the workplace, particularly as they are cleaning the streets.  When you are cleaning something, you tend to be able to pick up things you don’t necessarily see and when – as part of their induction, they go through their position description which I need to point out their responsibilities in the job, and part of their responsibilities is the reporting of hazards that they observe; hazards to themselves and others” ‑ ‑ ‑

GLEESON CJ:   Ms Norton, where in Justice McColl’s judgment can we most conveniently find the facts on which she based her conclusion?

MS NORTON:   I think when she applies – after going through the laws of attrition she makes her conclusions on liability, which are 53 of the application book, starting at paragraph 70.

GLEESON CJ:   Paragraph 73:

the primary judge was entitled to infer that the street sweepers knew of the pothole –

Where does she make the finding about their responsibilities to report that?

MS NORTON:   She recites the evidence of Mr Wetherill towards the beginning of the judgment at page 31, paragraphs 6 and 7.

GLEESON CJ:   Is there any disagreement with those factual matters on the part of the majority in the Court of Appeal?

MS NORTON:   No.

GLEESON CJ:   All right.  We thought we would be assisted to hear from Mr Garling.

MS NORTON:   Thank you, your Honour.

MR GARLING:   If the Court please.  A comparison of fact needs to be undertaken between paragraphs 70 and 73 in Justice McColl’s judgment on the one hand.  Her Honour there finds that there was a system that “involved the street sweepers reporting their observations” and then the paragraph to which your Honour the Chief Justice drew attention, and paragraph 182 in Justice Basten’s judgment where his Honour does reject certain of the findings of the trial judge and in paragraph 182 summarises there the evidence and reasoning in support of the inference of fact.

At subparagraph (d) your Honours will see he notes that “street sweepers were instructed to report hazards” as well as, in effect, the nature of the hazard was such as to be seen.  But, your Honours, whilst there may be – and I should add, in Justice Basten’s judgment he makes it plain that there was no suggestion in the facts of this case that the, may I call it, intermediate level of managers knew at all of this hazard.

KIRBY J:   What is the relevance of that?  If servants of the Council know of it and even if there were not a system one would infer they ought to have a system and they ought to report about it and therefore it is in the knowledge of employees of the Council.

MR GARLING: Your Honour needs to have regard, if I might respectfully submit, to the terms of section 45. It is best to be found at page 71, although there are a number of places in the judgment and in the book in which it can be found. Your Honours will appreciate section 45 was introduced into the statute after the decision of this Court in Brodie and it provides what has been described in the court below as either a threshold or a gateway before liability can be established.  Your Honours will note that it says that:

A roads authority is not liable . . . arising from a failure of the authority to carry out road work, or to consider carrying out road work, unless at the time of the alleged failure the authority had actual knowledge of the particular risk the materialisation of which resulted in the harm.

Now, your Honours “road work” includes, if your Honours look at about line 40 on that page:

carry out any activity in connection with the construction, erection, installation, maintenance, inspection, repair, removal or replacement -

So that one has to have actual knowledge of the particular risk before a failure to address it can be the subject of successful suit.  Pausing there, your Honours, of course this being a corporation, albeit a particular statutory corporation, there is always a question as to where within the corporation the knowledge must reside.  Clearly, it cannot be every employee.

GLEESON CJ:   Equally clearly, it does not have to be the Lord Mayor.

MR GARLING:   Equally clearly, and curiously, your Honours, there may be some cases in which one might submit that knowledge and the Lord Mayor may not be sufficient but we do not need to travel that far.

GLEESON CJ:   Did the parliamentary material relating to this legislation discuss this question of what is actual knowledge of a roads authority?

MR GARLING:   Not in terms at all, your Honour.  The relevant part of the second reading speech was referred to in Justice McColl’s judgment which in effect says this is a reimposition of a protection from liability on road authorities following upon the decision of this Court in Brodie.  So, your Honours, pausing there, an inquiry has to be mounted as to which officer or officers or employees have the requisite knowledge.  Justice McColl, Justice Basten and Justice Bryson accept that will vary from council to council and road authority to road authority, as it must.

GLEESON CJ:   And defect to defect.

MR GARLING:   And defect to defect.  Ultimately, this is a pure question of fact in this particular case.

GLEESON CJ:   Yes, but you have still have to identify what the question is.

MR GARLING:   The question is, in this ‑ ‑ ‑

GLEESON CJ:   The question is, knowledge on the part of whom will in the circumstances of this case constitute actual knowledge of the roads authority?

MR GARLING: Yes. That turns, in our respectful submission, on this, your Honours. What section 45 is addressing is a failure to carry out work, nonfeasance, in the old terms. There is little point in nonfeasance being known to anybody in the Council unless they can do something about it, that is to say, remedy the nonfeasance.

KIRBY J:   Yes, but you feed it in.  They had a system for that.  It is fed in to those members of the Council and that is how the actual knowledge exists in the Council because it is fed in to those who can do something about it.

MR GARLING:   That is how it comes to the attention of the requisite person and it is their knowledge, your Honour, in our respectful submission, that then counts.

KIRBY J:   Yes, but this is a provision that takes away the rights of the citizen and if the Parliament is going to take away the rights of the citizen and say, “Well, though the sweepers had actual knowledge and though the Council have instituted a system for reportage and though this is the sort of pothole that should have been reported and though the trial judge so found and though apparently it was not contested at the trial that this particular citizen has lost her rights to sue.”  It has to be very clear – very, very clear.

MR GARLING:   Your Honour, the right of the citizen was, in this State, at least, but a mere temporary right for a relatively short period of time.

KIRBY J:   The theory of the law was there for a long while.

MR GARLING:   But, your Honours, we accept, of course, what your Honour says which is that this is a restriction on the right that existed at the moment before the legislation was passed.  We accept that.  The interpretation of the section must take that into account, but we would submit that what his Honour Justice Bryson says at paragraphs 129 and 130 is compelling.  May I take your Honours to that?  It is at page 69 of the application book.  His Honour in paragraph 129 points out something which is really, we would submit, fundamental and has been the basis of many authorities, not only of this Court but of other courts.

Corporations can only have knowledge and they can only function through persons within their organisations: legislation such as s.45(1) which treats a corporation as having actual knowledge can only be understood as attributing to the corporation the actual knowledge of the person –

then these words, we submit, are critical –

within its organisation who relevantly functions as the corporation.

Your Honour, to so state the proposition is to state it, we would submit, conventionally, and without criticism. The question is how one applies that in the particular circumstances of any one or other case in any one or other road authority.  His Honour goes on to draw attention at page 70, about line 10 to that proposition where he says that the question:

can only be addressed by examining the Council’s organisation and identifying persons who in fact have the function of carrying out roadwork, or of considering carrying out roadwork. In the workings of s.45(1), those are the persons whose actual knowledge of a particular risk is relevant.

GLEESON CJ:   Just a minute.  Suppose – and this may be a very imaginative supposition – but suppose you had a council that actually engaged somebody to go around and inspect the roads and look for any defects.  That would not be the person whose function it was to carry out roadwork or to carry out or to consider carrying out roadwork, but suppose that defect inspector was a person whose job it was to identify defects and report them to somebody whose obligation it was to consider carrying out roadwork.  Would not knowledge of the defect inspector be relevantly the knowledge of the council?

MR GARLING:   Not unless it got to that person for this reason, your Honour.  Let me add to your Honour’s example of additional fact.  The defect inspector, having completed the inspection was returning to the council offices and was struck ill and died without reporting his or her knowledge so that the council, as a corporate body, as opposed to that inspector as an individual, had no knowledge of what that inspector knew.  In that circumstance, as an example, your Honour, we would submit actual knowledge could not be attributed to the council because they could not act on it.

GLEESON CJ:   That might raise an interesting problem about the construction of this legislation.  Is it a problem that arises in this case?  Did they infer as a fact that the street sweepers reported this to anybody?

MR GARLING:   No, and there was a specific finding that those at the intermediate level, if I may use that expression, did not know of this pothole.  They were called, they denied it and they were not challenged, with one exception, which Justice Basten says was not an effective challenge.

GLEESON CJ:   Maybe that is an argument in your favour.  Maybe an argument in your favour is that you could affix the Council with knowledge of a street sweeper, provided the street sweeper was shown to have told somebody about it.  You may not – I do not know – be able to affix the Council with knowledge of a street sweeper who looked at a hole and could not care less.

MR GARLING:   Or who did not appreciate its significance, perhaps.

GLEESON CJ:   You might have a street sweeper who fell into the hole.

MR GARLING:   Your Honour, all of these are examples of a great range of fact which ‑ ‑ ‑

GLEESON CJ:   Yes, but the problem of construction is – you can always say something is a question of fact but you have to at some stage identify the question, “What are you actually looking for?”  It is not a particularly novel problem.  There are plenty of corporations in private enterprise that have many more employees than North Sydney Council and questions of whether the corporation has actual knowledge of something are questions that commonly arise.

MR GARLING:   We accept that, your Honour, and for that reason we say the principles of how a corporation acquires actual knowledge are well settled and do not need to be determined in this case.

KIRBY J:   But you have to look at the principle in the light of the legislation and its apparent purpose and the fact that it takes away important civil rights and you have two judges who have taken a view contrary to that which you are urging and two who have taken the other view, and we have a strong dissent in the Court of Appeal, interesting question, good counsel, cannot think of a better case for the grant of special leave.

MR GARLING:   Your Honour overlooked paragraph 157 of Justice Basten’s judgment at page 79 which puts our case as highly as we can put it.  At about the fifth line his Honour commences:

A purposive construction would require that the relevant knowledge exist in an officer responsible for exercising the power –

et cetera.  I will not read it, your Honours.  That is the way in which we put it and we simply say in addition to all of those matters that your Honour Justice Kirby has raised, ultimately, this is not a question that is attended by any real doubt, notwithstanding her Honour Justice McColl’s judgment. 

May I point to a couple of matters that may well have misled her Honour in her Honour’s dissent and caused her Honour to perhaps take a course which was different from her fellow judges. At page 45 her Honour comes to consider the interpretation of section 45 and at paragraph 41 it seems that her Honour does, in the middle of that paragraph, deal with, although in passing, a question of whether or not issues of vicarious liability are relevant because her Honour there says:

In that context other policy issues, such as enterprise liability to which the High Court referred in Hollis v Vabu Pty Ltd, may come into play.

Now, your Honours, we would wish to submit that any notion of vicarious liability coming into play with section 45 is a fundamental error.

GLEESON CJ:   Nobody is suggesting in this case that the Council are vicariously liable for the negligence of the street sweeper.

MR GARLING:   No, that is not the basis of the cause of action.  But, then in paragraph 55, page 49 her Honour says this:

It is a reasonable inference that s 45 was intended to prevent roads authorities from being held liable in Brodie circumstances merely for failing to take reasonable steps to look for such risks as might reasonably be expected to arise.

That, your Honours, we would submit, is a very narrow view of section 45 which reinstates the entirety of the nonfeasance principle, we would submit, but her Honour goes to say:

On the other hand, s 45 presupposes a system of inspection by which a roads authority can acquire actual knowledge of particular risks.

That is an error, we submit.  It does not presuppose such a system of inspection at all.

KIRBY J:   So roads authorities and footpath makers can be completely indifferent and the Parliament has condoned their not being liable unless there is actual knowledge.

MR GARLING:   Yes, your Honour.

KIRBY J:   That is an interesting question to be argued, I think.

MR GARLING:   No, but the point I wish to make, your Honours, is this.  Councils acquire knowledge of hazards in many different ways.  People ring up, the local councillor drives by, someone calls attention to this or that, there is a newspaper article.  There are many, many ways in which knowledge may be acquired.  The officer at the counter of the council dealing with the public may receive a complaint about this or that hazard.

KIRBY J:   But your theory is they can just forget it.  Forget it.  Do not bother passing it up the line, do not bother having a system for reporting accidents and reporting defects, you are protected by this legislation.

MR GARLING:   Your Honour expresses a discomfort with the principle of nonfeasance, your Honour, which this Court dealt with in Brodie but the Parliament reinstated, with one exception where actual knowledge is

proved.  We submit that what one then has to look at is whether the counter officer, as an example ‑ ‑ ‑

KIRBY J:   I do accept that this is an arguable point and that the arguments are balanced, but it cannot be denied that it is an important issue, people are falling over footpaths and holes in roads and footpaths all the time, so it is ‑ ‑ ‑

MR GARLING:   Much less frequently since the Civil Liability Act, your Honour.

KIRBY J:   I should have known you would say something like that.

GLEESON CJ:   I suppose the citizens of Minneapolis think it is an important principle.

MR GARLING:   Yes.  That is not a matter about which I was making a joke, your Honour.

GLEESON CJ:   At all events, what would you say about the man who is designated the complaints department?

MR GARLING:   He will no doubt receive complaints about all sorts of things in the Council’s department.  He is nothing more than a filter and unless he filters those complaints and sends them to the requisite decision‑maker one cannot really be able to act upon that, your Honour.

KIRBY J:   You want to write into this statute “actual knowledge on the part of someone who can do something actual about it”.  Well, it is not there and as far as I am concerned cutting down further the civil rights of citizens is not something I think the common law normally does.

MR GARLING:   Your Honours have the benefit of my argument.

GLEESON CJ:   Thank you.  In this matter there will be a grant of special leave, as you have probably guessed.

We will adjourn for a short time to reconstitute.

AT 12.32 PM THE MATTER WAS CONCLUDED