T and H Fatouros Pty Ltd v Randwick City Council

[2005] NSWSC 874

Reported Decision: 142 LGERA 271

New South Wales

Supreme Court

CITATION:	T & H Fatouros Pty Ltd v Randwick City Council [2005] NSWSC 874
HEARING DATE(S):	26, 27 October 2004
JUDGMENT DATE :	1 September 2005
JUDGMENT OF:	Simpson J
DECISION:	Verdict for cross-claimant on the cross-claim. Parties to bring in short minutes of order to reflect findings and conclusions and to quantify verdict.

CATCHWORDS:	plaintiff awarded damages for personal injury against owner/occupier of defective building - cross-claim by defendant owner/occupier against the local Council - whether Council owed cross-claimant a duty of care - the extent and content of Council's duty of care - whether Council in breach of duty of care to cross-claimant - whether breach of duty of care caused loss or damage to cross-claimant - compliance with Fire Safety Order - construction of stairway - building compliance inspection processes - application of the Building Code of Australia - Council approval of inherently unsafe structure
LEGISLATION CITED:	Civil Liability Act 2002 s43A, s44 Environmental Planning and Assessment Act 1979 s121, s121B, s121H Environmental Planning and Assessment Regulation 1994, Part 7B, Clause 80C Law Reform (Miscellaneous Provisions) Act 1946, s5 Local Government Act 1993 s124
CASES CITED:	Amaca Pty Ltd (formerly known as James Hardie and Coy Pty Ltd) v The State of NSW [2004] NSWCA 124; 132 LGERA 309; Aust Torts Reports 81-749 Council of the Shire of Sutherland v Heyman [1985] HCA 41; 157 CLR 424 Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; 200 CLR 1 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (Reg) [1997] HCA 8; 188 CLR 241 Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; 211 CLR 540 Parramatta City Council v Lutz (1998) 12 NSWLR 293 Perre v Apand Pty Ltd [1999] HCA 36; 198 CLR 180 Pyrenees Shire Council v Day [1998] HCA 3; 192 CLR 330 Romeo v Conservation Commission (NT) [1998] HCA 5; 192 CLR 432 Vetter v Lake Macquarie City Council [2001] HCA 7; 202 CLR 439
PARTIES:	Fatouros Pty Ltd - Cross Claimant Randwick City Council - Cross Defendant
FILE NUMBER(S):	SC 20370/02
COUNSEL:	DGT Nock SC with M Vesper - Cross-Claimant PW Taylor with T Bartush-Peek - Cross Defendant
SOLICITORS:	Henry Davis York - Cross-Claimant Peter Utiger - Cross-Defendant

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SIMPSON J

Thursday 1 September 2005

20370/02 T & H Fatouros Pty Ltd v Randwick City Council

JUDGMENT

1 HER HONOUR: The issue in these proceedings concerns the extent to which a local Council incorporated under the Local Government Act 1993 (“the LGA”)) owes a duty of care to ratepayers and landholders in the discharge of its statutory powers and functions.

2 The issue arises for determination in the context of a claim for damages for personal injury made by Mr Mark Ward against T & H Fatouros Pty Ltd (“Fatouros”) and a consequent cross-claim brought by Fatouros against Randwick City Council (“the Council”).

3 The substantive proceedings were commenced by statement of claim filed on behalf of Mr Ward on 2 September 2002. The only defendant named in those proceedings was Fatouros. Mr Ward claimed damages for serious personal injury suffered by him on or about 12 December 2000, when he slipped and fell through railings on external stairs on a building in Coogee owned by Fatouros. The building is within the local government area administered by the Council. Mr Ward’s proceeding against Fatouros has been resolved by agreement, with a substantial verdict and judgment in his favour. The Council agrees that the settlement figure was an appropriate one.

4 Following service of the statement of claim, Fatouros filed two cross-claims. In the first it named the builder of the stairway as cross-defendant. That proceeding also has been resolved by agreement, with a verdict for the builder. Only the second cross-claim remains extant. That was filed on 5 February 2004. It names the Council as cross-defendant. It is the issues raised by that claim that are the subject of the present judgment. Fatouros claims against the Council indemnity in respect of the verdict and judgment against it. The basis on which it does so will be considered below.

background

5 So far as can be gleaned from the limited material before me, the following are the relevant facts and circumstances.

6 Fatouros was the registered proprietor of premises at 241 Oberon Street, Coogee. It operated the premises as a “boarding house” or “shared accommodation”. Each of these terms has a special meaning under the LGA. Mr Ward was a tenant or resident in the premises.

7 On 28 October 1996 the Council served on Fatouros a “Notice of Intention to Give Fire Safety Order” under the LGA. The foreshadowed Fire Safety Order was in fact given on 15 November 1996, pursuant to s124 of the LGA. It directed Fatouros, within 35 days, to carry out certain work, specified in a schedule to the order, on the premises. Relevantly, this included the following:

“1. The external stairway serving as a required exit to the first floor is in a dilapidated state. An engineers certificate of structural adequacy is required to be submitted to Council. Alternatively, the external stairway is to comply with Clause D1.8 of the Building Code of Australia.”


(I was provided with a copy of Cl. 1.8 of the Building Code of Australia (“the BCA”). It bears the heading “External stairways or ramps in lieu of fire-isolated stairs”. The clause appears to be directed toward ensuring that external stairways are protected against a fire in the main building, and to be principally concerned with the materials of which such a stairway may be constructed, and with shielding the stairway from any fire in the building.)

The Council gave as the reason for the order:

“1. The provisions for safety or fire safety awareness in the premises are not adequate to prevent fire, suppress fire or prevent the spread of fire or ensure or promote the safety of persons in the event of fire.”

8 The work required by the Fire Safety Order was not undertaken within the specified time and, indeed, was not undertaken until well over a year later.

9 The documentation in evidence suggests that inspections of “places of shared accommodation” took place annually. These resulted in reports which took the form of checklists completed by the Council officers undertaking the inspections. A number of these reports are in evidence. For example, there is in evidence a report of an inspection on 18 February 1998. This document is headed:

“Randwick City Council
Places of Shared Accommodation Inspection Checklist”

The document was completed by a Council officer by the insertion of ticks in a series of boxes to signify which identified safety measures were or were not satisfactory. Other information was handwritten into spaces provided.

10 At this time Fatouros had not complied with the 1996 Fire Safety Order. In the 1998 Inspection Checklist, under a sub-heading:

“Inspection/assessment comment/instructions given to proprietor:”

is written:

“(2) Rear stair to be re-newed.”

11 Fatouros engaged a Mr Kaparos, an engineer, to design a new external stairway. The plans are dated 21 April 1997. Fatouros engaged Paul Jones, trading as Paul Jones Staircases, to build the stairway to Mr Kaparos’ design. It did this before Christmas of 1997. Mr Jones quoted for the job on 17 March 1998. In fact, it was common ground, the stairway was not built in accordance with the plans drawn by Mr Kaparos. (A Council file note, dated 27 August 2002, and admitted into evidence without objection, records a telephone conversation with Mr Jones, in which Mr Jones claimed to have told Mr Fatouros (the principal of Fatouros) that he could not “get compliance” by reason of the size of the available area, and that Mr Fatouros told him to go ahead with the construction.) From time to time Mr Fatouros spoke, either in person or by telephone, to Council officers, specifically Mr Tony Watson and Mr Scott Robeshaw. There appears to have been considerable delay in the commencement of the work. Documentation in evidence includes a good deal of correspondence from the Council to Fatouros, insisting upon the work being commenced, and even, on occasions, issuing additional orders. Much of this does not appear any longer to be material. The work was eventually undertaken and completed in 1998.

12 One of the notices given by the Council to Fatouros was dated 23 February 1998. The copy in evidence, which was obviously the copy retained in the Council files, bears a notation, dated 31 March 2000, “work completed”.

13 On completion of the new staircase, in about March or April of 1998, Mr Fatouros advised Mr Watson, and arranged for an inspection. The work was approved.

14 Photographs of the building and the completed stairway are in evidence (ex B). The building itself is of two storeys in the front and three at the back. The photographs of the stairway depict, at least to the uninitiated, a fairly conventional looking (except for one feature, to which I will return) and very basic fire escape. The steps themselves appear to be constructed of chequer-plate. There is an entrance from the top floor of the building. From the photographs (particularly the photograph identified as “Image 14” in ex B) it appears that the doorway on the top floor opens directly onto a short flight of steps which descends to a landing. A further set of steps, travelling in the opposite direction, descends to a series of quarter-landings which take the user to a second platform from which a third set of steps descends to the lower level. These quarter-landings appear to have the effect of taking the stairway full circle, so that the third flight of steps is directly under the second, and travelling in the same direction.

15 The surrounding structures of the stairway appear to be very simple. There are, on each side of the stairway, two vertical support pillars to which the stairs and landings are attached. The landings and the stairs themselves are surrounded by a framework, apparently made of steel tubing. On each side are two corner posts, joined by two fairly small-diameter pipes or tubes. These form a simple balustrade, with a handrail at the top, apparently at what would be about waist to shoulder height, and a second horizontal pipe or tube half way between the handrail and the landing or stairs. Otherwise, the landings and the stairs are completely open. There is nothing, such as mesh or other filling, to prevent a person or an object from falling through the open face.

16 An annual inspection of the premises by the Council took place on 27 March 2000. This appears to have been for the purpose, at least in part, of determining whether the premises complied with the relevant provisions of the BCA and to have been to do with its classification as a boarding house or place of shared accommodation. The checklist used for the purposes of inspection now bore the heading:

“Place of Shared Accommodation Inspection
BCA Assessment”

17 It is otherwise in similar form to, and seeks similar, if not identical, information as the 1998 document. In each checklist one category of information sought begins with:

“Are the relevant LGA and BCA provisions being complied with, including ....”

followed by a detailed series of questions concerning smoke detection systems, exit signs and the like. One item is:

“(xiii) are the handrails and balustrading satisfactory?”

In each report a tick was placed in the box for “yes”.

18 Although the determination on this occasion (the 2000 inspection) was that compliance was unsatisfactory, the only non-compliance identified was to do with rubbish removal and access to a fire extinguisher. No complaint or criticism was made concerning the stairway.

19 The documentation in evidence thereafter records a number of inspections and Orders, or Notices of Intention to Give Orders, in respect of various aspects of the premises. No further reference was, however, made to the stairway.

20 By s121B of the Environment Planning and Assessment Act 1979 (“the EPAA”) and the Schedule thereto, a council is authorised to issue to an owner of premises a Fire Safety Order requiring the owner to do or refrain from such things as are specified in the Order:

“so as to ensure or promote adequate fire safety or fire safety awareness.”

S121H requires notice to be given of an intention to make such an order.

21 On 4 May 2000 the Council issued a Fire Safety Order, under s121B of the EPAA; the subject matter of this Order was the removal of rubbish and furniture near the main stairway (presumably internal) and provision of access to a fire extinguisher. The copy in evidence bears a handwritten, undated, note of compliance.

22 On 7 July 2000 the Council issued a further Notice of Intention to Give a Fire Safety Order, (under s121H of the EPAA). This indicated the Council’s intention to order Fatouros to give a written notice detailing the fire safety measures then implemented in the building, and to install smoke alarms. The Notice made no reference to the stairway. (There is no evidence that a Fire Safety Order relevant to this Notice was ever given, but the Notice contains a handwritten, undated, note of compliance.)

23 In December 2000 Mr Ward suffered the accident which caused his injury. This was not the subject of direct evidence but was not in dispute.

24 Mr Ward occupied a room on the top floor of the three-storey section of the building. After sleeping for a short time he woke to find a thunderstorm in progress. He walked through the door onto the stairway, which was wet, and down the first, short, flight of stairs to the first landing, intending to walk down the next flight of stairs. His foot slipped on the slippery wet surface. He slid through the gap in the balustrade and fell to the ground below, which was concreted. He fractured his skull and now suffers from paraplegia.

25 In June 2001 Fatouros sold the property. On 2 February 2002 Mr Ward filed the statement of claim against Fatouros, pleading that his injury was occasioned by negligence and/or breach of contract on the part of Fatouros. Inter alia, he particularised the negligence he alleged as:

“failing to ensure that the staircase railing was constructed at a height in compliance with Australian Standard and the Building Code of Australia requirements.”

26 On 19 June 2003 the Council wrote to the new owner, in reference to the stairway, in the following terms:

“The inspection has revealed that the stairway does not comply in terms of the height and design of the balustrade as required by Clause D2.16 of the Building Code of Australia (BCA). You are advised to undertake works to the external stairway so that the balustrade complies with the BCA.”

27 Among other things, Clause D2.16 of the BCA required that balustrades of the kind here in question have no openings that would permit a 125 mm sphere to pass through. Plainly, the open faces of the stairway did not comply with this requirement. It is in this respect that the stairway was anything but a conventional fire escape.

the relevant pleadings

28 On 24 November 2003 Fatouros filed its first cross-claim, naming the builder of the stairway (Paul Jones trading as Paul Jones Staircases, to whom reference has already been made), as cross-defendant. On 5 February 2004 Fatouros filed the cross-claim the subject of the present judgment, naming the Council as cross-defendant. In this cross-claim Fatouros alleged, inter alia:

(i) that the Council was under a duty of care to “landholders and ratepayers within its area” of which Fatouros was one, inter alia, to

(a) inspect premises, to ensure compliance with the LGA (in particular s124); and the BCA (in particular, Clause D1.8);

(b) inform Fatouros of any non-compliance with any of “the said Acts or Regulations”;

(c) order Fatouros to take all necessary steps to comply with the statutory requirements;

(d) provide Fatouros with information concerning compliance of buildings with, inter alia, the BCA;

(e) ensure that Fatouros complied with the Boarding House/Shared Accommodation provisions of the LGA .

29 Fatouros further alleged that the Council owed a duty of care to persons such as Mr Ward (as a tenant in a boarding house or shared accommodation), inter alia, to:

(a) inspect the premises annually to ensure compliance with fire safety requirements of the EPAA , the LGA, and the BCA;

(b) require the owner of the premises to carry out repairs and maintenance in order to comply with statutory requirements;

(c) “grant and/or refuse licences for premises which did or did not comply with the said statutory requirement”;

(d) ensure that any repair and/or maintenance complied with the BCA;

(e) ensure that all such premises were fit for occupation by tenants such as Mr Ward.

30 Fatouros pleaded negligence against the Council, which it particularised as, inter alia,

(a) failure to advise Fatouros that the stairway did not comply with the BCA, particularly Clauses D2.13, D2.14, D2.15, D2.16 and D2.17 in circumstances where the Council had inspected the stairs for compliance;

(b) allowing the premises to be licensed as a boarding house/shared accommodation pursuant to the LGA when it knew or ought to have known that the premises including the stairway did not comply with the requirements of the LGA ;

(c) failure properly to administer the provisions of the LGA in relation to boarding house/shared accommodation, and allowing Mr Ward to continue to occupy premises which were unsafe or which it ought to have known were unsafe, particularly in the event of fire;

(d) allowing Fatouros to construct stairs which the Council knew or ought to have known did not comply with the BCA;

(e) having required Fatouros to carry out repairs to the external stairs, failure properly to inspect the plans and the construction of the stairs in order to ensure their compliance with the BCA;

(f) permitting the construction of the stairway to continue after having been informed by the builder that he could not comply with the BCA.

31 Fatouros also pleaded that it had relied upon the Council properly to inspect the premises and to inform it of any non-compliance with the BCA or the LGA, and that the Council failed to provide such information to it.

32 Fatouros adopted, for the purpose of the cross-claim, the allegations made by Mr Ward in the statement of claim, that his injury was caused by Fatouros’ own negligence.

33 In its defence to the cross-claim the Council generally denied or declined to admit the allegations in the cross-claim, and invoked ss43, 43A and 44 of the Civil Liability Act 2002. (The Council has since abandoned reliance on the Civil Liability Act.)

34 Careful analysis of the cross-claim is necessary. As it reads, it is bifurcated. It pleads, on the one hand, a case based upon the Council’s asserted duty of care to Mr Ward, and asserted breaches of that duty of care. I can only assume that this part of the pleading was intended to be the foundation for a claim under s5 of the Law Reform (Miscellaneous Provisions) Act 1946 (“the LRMP Act”). That section, put briefly, provides for an apportionment of liability between joint tortfeasors – that is, between two or more tortfeasors, each of whom owes, and is in breach of, a duty to a person who sustains damage as a result – in this case, Mr Ward. Secondly, the cross-claim pleads a case that the Council owed a duty of care to Fatouros itself, in essence in the discharge of its statutory functions, and in particular in the requirements it imposed in relation to Fatouros’ compliance with the Fire Safety Order, and that it breached that duty of care.

35 The case, as conducted, however, did not recognise the separate strands pleaded. Not only was no argument directed towards the claim that the Council owed a duty of care to Mr Ward, and that it might, as a joint tortfeasor, be liable, under the LRMP Act, to indemnify Fatouros in respect of all or part of its established liability to Mr Ward, but any such reliance on such a claim appeared to be expressly discarded. When I specifically asked senior counsel for Fatouros about apportionment, his answer was:

“The apportionment legislation deals with apportionment between the defendants, this is a plaintiff as it were. We are in exactly the same position as a plaintiff.” (t 44)

36 I take this to mean that Fatouros relied only upon the duty of care which it pleaded the Council owed to it in the exercise of its statutory powers. S5 of the LRMP Act may therefore be put to one side. There is thus no call to consider the extent of any duty of care that the Council owed to Mr Ward. Fatouros has opted to rely solely on the duty of care it asserts the Council owed to it.

37 The question which now arises is whether Fatouros is entitled to recover from the Council any or all of the damages it became liable to pay to Mr Ward. The answer to that question depends upon the determination of the issues identified in the opening paragraph of these reasons: whether the Council owed Fatouros a duty of care, and, if it did, the extent and content of that duty; whether it was in breach of that duty; and if so, whether that breach carried loss or damage to Fatouros.

* * *

38 In evidence before me was an expert report prepared by Mr Hugh Cowling, a civil engineer, apparently for the purposes of the principal proceedings. Mr Cowling assessed the claim made by Mr Ward and examined the fire stair for compliance with the BCA. He identified a number of instances of non-compliance with BCA provisions. I do not propose to restate all of those he identified, but to concentrate on those which seem most potentially pertinent to the cause of Mr Ward’s injury.

39 Mr Cowling found that all except one of the “tread goings” on the stairway were too narrow, with the result that the stairway was too steep. He concluded that:

“... the stair is far too steep for comfort and safety.”

40 He found that there was a lack of constancy in the dimensions of the goings and risers, resulting in unsafe and unpredictable conditions for users of the stairs; that each of the riser openings was too large; that the surface material was not of an approved type, with a non-slip finish; and that the stepped quarter landings, with variable dimensions, were of a kind prohibited in stairs of the kind in question. Mr Cowling turned his attention to the balustrades, which he also found to be non-compliant. This was partly because, in places (resulting from the stepped quarter-landings) the balustrades did not meet minimum height requirements; that the top rails did not consistently follow the overall gradient of the stairway, resulting in potential confusion to a user. Perhaps most significantly, Mr Cowling found non-compliance with that part of the BCA which requires that there must not be any opening within a balustrade that permits a 125 mm sphere to pass through. He found that the openings in the balustrade through which Mr Ward fell measured 640 mm in height and 890 mm in width, permitting not one, but no less than 35 x 125 mm diameter spheres to pass through simultaneously, side by side. Mr Cowling was also critical of the handrail (by which he seems to mean the top rail of the balustrade), which he said was repeatedly interrupted at vertical support posts and had irregular changes in level.

41 In a summary of his opinion Mr Cowling said:

“... this stair did not even come close to complying with essential requirements.
In my opinion, the following failures of compliance were instrumental in creating the circumstances whereby the fall was precipitated.

- The lack of constancy in the dimensions of the preceding flight of stairs.

- The excessive steepness of the stair flight.

- The existence of proscribed quarter landings, each tapering to a point at each end, instead of the required flat landing.

- The failure to use a suitable slip-resistant pedestrian tread and landing surface material.

- The failure to install the top rail of the balustrade immediately preceding the fall location at the correct height.

- The lack of any proper complying handrail for use as an effective handhold and guide on this excessively steep and inconsistently variable non-complying stairway.”

42 Mr Cowling also made reference to the extent to which any instance of non-compliance could have been causative of Mr Ward’s fall and his consequent injury. In my opinion it may readily be inferred that a number of the matters identified by him had that causal connection, in particular the open sides unprotected by any proper balustrading. That, possibly combined with the slippery surface, and perhaps confusion potentially arising from the uneven gradient of the rails, undoubtedly caused Mr Ward’s fall and therefore his injury.

43 In these circumstances it was inevitable that a finding of negligence would, in the proceedings brought by Mr Ward, be made against Fatouros. Although the terms of settlement expressly disclaim any admission of liability by Fatouros, to my mind the settlement of Mr Ward’s claim represents a realistic assessment that, if his claim had been litigated, he would have succeeded. The Council has never suggested otherwise.

44 Fatouros, who, as occupier of the premises (or as landlord or lessor) undoubtedly owed Mr Ward a duty of care, exposed him to the risk of injury by reason of the dangerous state of the stairway. In doing so, it was, equally undoubtedly, in breach of its duty of care. The result was that Fatouros became liable to Mr Ward to compensate him for his injuries.

45 It is that liability that Fatouros now seeks to pass on to the Council. It claims, in effect, that the Council owed it a duty of care in the exercise of it statutory powers, that the Council breached that duty of care, and that as a consequence, it (Fatouros) sustained loss and damage – the loss and damage being the financial loss incurred by reason of its liability to Mr Ward. That, as I discuss below, is pure economic loss.

the application of the BCA

46 The parties were at odds over a preliminary, and what initially (but wrongly, as I now believe) seemed to be a fundamental issue: whether the BCA applied: that is, whether, as a matter of law, the newly constructed stairway was required to comply with the provisions of the BCA.

47 The Council urged that no such requirement existed. This was because, so it argued, compliance with the BCA was, in 1996, required as a condition of a building approval or development approval under the LGA. The Fatouros stairway was never the subject of a Development Application or Building Application, and, accordingly, the provisions of the BCA were never invoked.

48 Fatouros contended that the construction was governed by the requirements of the BCA. However, the only argument it advanced in support of that contention is recorded in the transcript in the following terms:

“We submit in respect of that fire schedule notice – this is the crux of our argument – that given the way in which councils are required to deal with the Building Code of Australia as set out in Part 7B [of the Environmental Planning and Assessment Regulation 1994 (“the EPA Regulation”)] ... that it would be ludicrous if a council did not have to be certain that a fire exit in a shared accommodation building complied with the safety requirements of the Building Code of Australia in the light of those sections.
It would make it ludicrous for the council, as I apprehend it will argue, to say that all the stairway had to do was comply with Part D1.8. We concede that D1.8, on its own, has no causal link to the plaintiff’s accident.”

49 So far as I can make out, there is nothing in Part 7B of the Regulation to which reference was made (“the EPA Regulation”) that, in terms, requires compliance with the BCA. In any event, senior counsel who appeared for the Council pointed out (without contradiction) that all of the provisions contained within that Part were inserted with effect from 1 July 1998. The 1996 Fire Safety Order predates those provisions. Completion of the fire stair also predated (however marginally) the commencement of those provisions. Counsel for Fatouros advanced no other basis for a conclusion that compliance with the BCA was mandatory.

50 In my opinion it is beside the point whether the BCA governed the construction of these stairs. I have not been referred to sufficient material on which to reach a concluded view on that question, and have come to the view that it does not matter. What matters is that the Council, both in the 28 October 1996 Notice of Intention to Give a Fire Safety Order, and in the 15 November 1996 Fire Safety Order, by requiring that the stairway be the subject either of an engineer’s certificate of structural adequacy, or comply with Clause D1.8 of the BCA, involved the provisions of the BCA. (I have already noted the concession on Fatouros’ behalf that Clause D1.8 of the BCA, or non-compliance therewith, has little, if anything, to do with the circumstances of Mr Ward’s injury).

* * *

51 The case calls for consideration of the principles of law discussed, in recent times, in an avalanche of cases including (but not limited to):

Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; 200 CLR 1;
Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; 211 CLR 540;
Parramatta City Council v Lutz (1998) 12 NSWLR 293;
Pyrenees Shire Council v Day [1998] HCA 3; 192 CLR 330;
Romeo v Conservation Commission (NT) [1998] HCA 5; 192 CLR 432;
Council of the Shire of Sutherland v Heyman [1985] HCA 41; 157 CLR 424;
Vetter v Lake Macquarie City Council [2001] HCA 7; 202 CLR 439.

From these, it was observed in Amaca Pty Ltd (formerly known as James Hardie and Coy Pty Ltd) v The State of NSW [2004] NSWCA 124; 132 LGERA 309; Aust Torts Reports 81-749, that:

“19 A clear and universal test for determining whether a duty of care arises has not been laid down. Each case depends on its own circumstances and the totality of the circumstances must be weighed in the balance. Depending on the facts, different factors have different degrees of significance. Nevertheless, Pyrenees , Crimmins and Graham Barclay Oysters point to and delineate the path that is to be followed.”

52 Nothing is to be gained by my adding to the torrent of words that have been written on the issue. In Amaca, Ipp JA, with whom Mason P and McColl JA agreed, extracted the following propositions:

“22 ...

(a) Generally, a public authority, which is under no statutory obligation to exercise a power, owes no common law duty of care to do so.

(b) An authority may by its conduct, however, attract a duty of care that requires the exercise of the power.
(c) Three categories are identified in which the duty of care may so be attracted.
(i) Where an authority, in the exercise of its functions, has created a danger.
(ii) Where the particular circumstances of an authority’s occupation of premises or its ownership or control of a structure attracts to it a duty of care. In these cases the statute facilitates the existence of a duty of care.
(iii) Where a public authority acts so that others rely on it to take care for their safety.”

53 It may here be observed that Amaca was a case, in some respects like the present, in which an injured plaintiff had successfully claimed against certain defendants (being his employer, and the owner and occupier of his workplace), each of whom successfully cross-claimed against Amaca (in its former incarnation as James Hardie and Company Pty Ltd). Amaca then cross-claimed against the State of NSW, claiming contribution towards the damages it was required to pay. Unlike the present case, however, that claim was made under s5 of the LRMP Act and, accordingly, depended upon Amaca establishing that the State of NSW owed a duty of care to the injured plaintiff. It did not claim that the State of NSW owed it directly a duty of care, as is the case that has here been put on behalf of Fatouros. That does not render the propositions extracted by Ipp JA irrelevant but they need to be applied in the light of the different obligations asserted.

54 Later, Ipp JA extracted a further set of propositions from an amalgamation of the judgments in Pyrenees, Crimmins and Graham Barclay Oysters. These were:

“65 ...

(a) The totality of the relationship between the parties is the proper basis for the determination of a duty of care.

(b) The category of control that may contribute to the existence of a duty of care to exercise statutory powers includes control, generally, of any situation that contains within it a risk of harm to others.
(c) A duty of care does not arise merely because an authority has statutory powers, the exercise of which might prevent harm to others.
(d) The existence of statutory powers and the mere prior exercise of those powers from time to time do not, without more, create a duty to exercise those powers in the future.
(e) Knowledge that harm may result from a failure to exercise statutory powers is not itself sufficient to create a duty of care.”

55 The arguments of counsel never really focussed upon what are, in my opinion, the real issues. Indeed, as I commented during the course of argument, at times it seemed as if the parties were fighting in different hemispheres. As I have indicated earlier, there was a significant concentration upon whether compliance with the BCA was, in the circumstances, obligatory. But that ignores two important facts. One is that it was the Council who introduced BCA compliance (whether or not it strictly applied), as early as 1996, when it issued the first Notice of Intention to Give a Fire Safety Order, and in the Fire Safety Order itself. And the Council, by its approval of the completed structure, implied that it did comply, at least with Clause 1.8. Whether or not compliance was strictly required, the Council by its conduct implied that it was, and that the stairway did comply. This is where Part 7B of the EPA Regulation has some significance.

56 Clause 80C of the EPA Regulation relevantly provides as follows:

“80C Fire Safety Schedules
(1) When:
(a) ...;
(b) ...;
(c) ...;
(d) giving a Fire Safety Order in relation to building premises, the person doing so must issue a Schedule (a Fire Safety Schedule ) specifying the fire safety measures (both current and proposed) that should be implemented in the building premises.
(2) ...
(3) A Fire Safety Schedule:
(a) must deal with the whole of the building, not merely the part of the building to which the ... Fire Safety Order relates, and
(b) must include ...”

57 If it is correct, as was put to me, that these provisions came into effect on 1 July 1998, they obviously were not in force at the time the first Fire Safety Order was issued in 1996; they were, however, in force at the time the Fire Safety Orders of May and July 2000 were issued. In my view, the consequence of Clause 80C(3) is that, by implication, the Fire Safety Order given in May 2000 acknowledged that, except for the matters specified in the Order, the Council regarded the fire safety measures in place at the Fatouros premises as adequate. It is less easy to read the same implication into the Notice of Intention to Give a Fire Safety Order, given in July 2000 but, nevertheless, since such a Notice is required by s121H of the EPAA, and is a prerequisite to the issuing of a Fire Safety Order, that notice also should be so construed.

58 I am also of the view that s80C(3) did create in the Council a duty, in issuing the 2000 Notices and Order, to deal with the whole of the building, and not merely the questions of rubbish removal and smoke alarms. That is, once it took on supervision of the building with respect to fire safety, the Council was not entitled to limit its supervision to discrete aspects of fire safety. Its obligation was to deal with all fire safety issues. In omitting any reference to issues other than those mentioned, each implied that other fire safety measures were satisfactory. Each carried with it a silent imprimatur of the adequacy of the newly constructed stairway.

59 The second fact is that, as the evidence shows, the structure was, by reason of its open sides and the nature of the surface materials, inherently unsafe. It does not matter if it was held to be unsafe because it failed to comply with the provisions of the BCA, or, more directly, by reason of the nature of its construction. The fact was that it was dangerous and that it was this that caused Mr Ward’s injury. The question is whether the Council was at fault – that is, in breach of its duty to Fatouros – in permitting the structure to remain in the form in which it was constructed.

60 It was the Council’s role to ensure that the construction complied with safety standards. A Council has the expertise to assess, and the powers to ensure compliance with, safety standards.

61 Fatouros did not take the option given to it by the Council of obtaining an engineer’s certificate of structural adequacy; it took steps to have the pre-existing stairway replaced with that constructed by Mr Jones. It received approval as to compliance from the Council. This was an implied assertion that the stairway complied with the requirements of the Fire Safety Order – and that in turn implied that the structure complied with Clause D1.8 of the BCA. Clause 80C(3) created a duty in the Council in giving the Fire Safety Order, to deal with all fire safety issues relevant to the building. The absence of any reference to the nature of the construction carried the implication that it was adequate. The same may be said of the May 2000 Fire Safety Order. Further, following the inspection of 27 March 2000, the handrails and balustrading were expressly declared to be satisfactory. How any responsible Council officer could have done so is a mystery. I am of the view that the conduct of the Council entitled Fatouros to believe that the Council had approved the stairway as meeting relevant safety standards. That the Fire Safety Order omits reference to any clause of the BCA other than Clause D1.8 suggests that the BCA contains no other relevant provisions. And the 2000 checklist made express reference to compliance with the BCA.

62 I have not reached my conclusion with any degree of certainty. However, I have concluded that, for these reasons, the Council did owe Fatouros a duty of care. Its duty was, having directed him to erect a new stairway, and having taken upon itself inspection of the new stairway, to ensure that the stairway was safe for the purpose for which it was to be used, and not to give it approval until it was safe. In approving an inherently unsafe structure, the Council failed in its duty to Fatouros. In my opinion, Fatouros was entitled to, and did, rely upon the expertise of the Council officers in approving the construction.

63 In saying this I do not for one moment think that Mr Fatouros articulated any questions in his own mind concerning what was implied by the Council’s conduct. The process was more subtle than that. I am satisfied that he acquired a sense of security about the adequacy of the stairway because of the manner in which the Council dealt with him.

64 This is not a case about an asserted failure to exercise statutory powers. Rather, it involves that category of liability identified by Ipp JA in Amaca, as a duty of care arising:

“... where a public authority acts so that others rely on it to take care for their safety.”

(Fatouros’ “safety” in this instance is its protection from exposure to a claim for damages by a person injured as a result of a defect in its building.) In embarking on the course it did the Council assumed a duty of care – that is, to undertake the task and complete the exercise with reasonable care for the safety (in the sense mentioned above) of Fatouros.

65 I have not overlooked the nature of Fatouros’ claim. As senior counsel for the Council pointed out, Fatouros’ claim was a species of a claim for damages arising out of pure economic loss: see, for example, Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (Reg) [1997] HCA 8; 188 CLR 241; and, more recently, Perre v Apand Pty Ltd [1999] HCA 36; 198 CLR 180. The consensus which appears to emerge from the latter case, encapsulated conveniently in the headnote to the report, is that matters upon which a duty of care in such a case depends include foresight of the likelihood of harm, knowledge or means of knowledge of an ascertainable class of vulnerable persons unable to protect themselves from harm, and the fact that damage flows from the occurrence of activities within the defendant’s control. Kirby J posed three questions as follows:

“(a) Was it reasonably foreseeable to the alleged wrongdoer that particular conduct or an omission on its part would be likely to cause harm to persons who have suffered damage or a person in the same position?
(b) Does there exist between the alleged wrongdoer and such person a relationship characterised by the law as one of ‘proximity’ or ‘neighbourhood’?
(c) If so, is it fair, just and reasonable that the law should impose a duty of a given scope upon the alleged wrongdoer for the benefit of such a person?”

66 I have wavered in reaching a conclusion. As I have indicated, the stairs were inherently unsafe, as the photographs (ex B) graphically illustrate. Any person who turned his or her mind to the safety of the stairs as constructed, could not have failed to recognise that they posed a danger. In seeking to absolve itself of any duty of care to Fatouros and lay the responsibility at Fatouros’ feet, the Council relied upon the obviousness of the risk posed by the structure. It should, the Council argued, have been obvious to Mr Fatouros that the stairway was dangerously inadequate. In this respect, although it was not the existence of fire that gave rise to Mr Ward’s use of the stairs on the evening in question, it is to be remembered that the stairs were constructed specifically for the purpose of providing an escape in the event of fire in the building. It might reasonably be expected that users of the stairway would be panicking, frightened, jostling, and rushing, perhaps in a semi-awake state. The stairs could be expected to have been crowded, with an increased risk that some person or persons would, as indeed did Mr Ward, lose his or her footing. That would give rise to an immediate and real risk of slipping between the gap under the rail. This in some degree counters Mr Fatouros’ assertion that he relied upon the Council for advice. However, I am satisfied that he did rely upon the Council. This requires some analysis. What he relied upon the Council for was advice that the stairway was adequate to meet the Council’s requirements. The Council’s obligation is to exercise its powers with due regard to public safety, and, in particular, to the safety of individuals likely to use the stairs. It would, further, be much more likely that experienced Council officers would foresee the likelihood of harm of the kind in question. It could not be said that Fatouros fell into “an ascertainable class of vulnerable person ... unable to protect themselves from harm”; it could, however, reasonably be said that the damage (that is, the economic damage to Fatouros) flowed from activities within the Council’s control.

67 Whilst it is true that the risk should have been obvious to Mr Fatouros, that scarcely avails the Council. If the risk should have been obvious to Mr Fatouros, so much more so should it have been obvious to Council officers, whose task it was to assess the safety of structures and their compliance with statutory requirements. Approval of an obviously dangerous structure can only be a breach of duty.

68 To turn to the questions as posed by Kirby J: it was, in my view, reasonably foreseeable to the Council that particular conduct (that is, the approval of the stairway as constructed and the subsequent silent imprimatur given to it) or an omission on its part (that is, the failure to require the installation of mesh or some enclosing solid material on the sides of the balustrades, or the replacement of the slippery surface with a non-slip material) would be likely to cause harm to persons such as Mr ward, who would, in turn, claim against Fatouros.

69 By reason of the Council’s direction to Fatouros to replace the old stairway, its approval of the new one, and its subsequent inspections which, by implication, authorised the continued use of the fire stair, there existed the necessary “proximity” or “neighbourhood”.

70 The final question is whether it is fair, just and reasonable to impose such a duty upon the Council for the benefit of Fatouros. It is this question which has caused me the most struggle. However, on balance, I have concluded that it is fair, just and reasonable to do so. The Council’s statutory powers exist for the purpose, among other things, perhaps, of ensuring the safety of individuals who are not in a position to protect themselves; Council officers have the expertise to appreciate dangers that others might not recognise; Fatouros was entitled to, and did, rely upon the Council for advice as to what was required.

71 It was agreed by the parties that, given the way the proceeding was conducted, there is no room for apportionment. If Fatouros is to succeed, it is entitled to a full indemnity by the Council. I have, somewhat hesitantly, reached the conclusion that it is entitled to succeed against the Council and is therefore is entitled to a complete indemnity.

72 It is not possible, on the material before me, to quantify Fatouros’ loss. That is because the terms of settlement between Mr Ward and Fatouros include an unspecified amount for costs; and because, it seems to me (although no argument has been directed to the question), that it would also be entitled to recover the costs it incurred in relation to those proceedings. I will direct the parties to bring in short minutes of order to reflect my findings and conclusions, and quantifying the verdict that must be entered in favour of Fatouros.

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