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Tepko Pty Ltd v Water Board

Tepko Pty Ltd v Water Board

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HIGH COURT OF AUSTRALIA
GLEESON CJ,
GAUDRON, McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ
TEPKO PTY LIMITED & ORS APPELLANTS
AND
WATER BOARD RESPONDENT
Tepko Pty Limited v Water Board [2001] HCA 19
5 April 2001
S36/2000
ORDER
1.Amend the style of the respondent to "Ministerial Holding Corporation".

2.Suspend order 1 until 3 May 2001 or earlier order and direct that any submissions by either party that order 1 would incorrectly identify the respondent be filed and served within seven days of the date of these orders.

3.Otherwise appeal dismissed with costs.

On appeal from the Supreme Court of New South Wales
Representation:
G K Downes QC with S J Motbey for the appellants (instructed by S A Teen)
P R Garling SC with S T White and K M Guilfoyle for the respondent (instructed by Phillips Fox)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

GLEESON CJ, GUMMOW AND HAYNE JJ. The Supreme Court of New South Wales (Allen J) entered judgment for the respondent ("the Board") which was the defendant in the action. By majority (Mason P and Beazley JA; Fitzgerald JA dissenting), the Court of Appeal dismissed an appeal. The question for this Court is whether the Court of Appeal erred in doing so. It is convenient to begin by identifying the parties.
The Board was constituted as a corporation under s 5 of the Water Board Act 1987 (NSW) ("the Water Board Act"). The Board was a continuation of and the same legal entity as that constituted under the corporate name of "The Metropolitan Water Sewerage and Drainage Board" by s 6A of the Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW) ("the 1924 Act"). The 1924 Act was repealed by s 4 and Sched 1 of the Water Legislation (Repeal, Amendment and Savings) Act 1987 (NSW) ("the Repeal Act"). The Repeal Act provided[1] for the continuation of the Board as the same legal entity, despite the repeal of the 1924 Act. The events giving rise to this litigation occurred whilst the 1924 Act was in force and before the enactment of the Water Board Act. It will be necessary to refer to various provisions of the 1924 Act.
[1]By par 2(1) of Sched 3.
By the time the action was tried in 1996, the Water Board Act had been repealed by s 107 of the Water Board (Corporatisation) Act 1994 (NSW) ("the 1994 Act"). The 1994 Act provided[2] for the dissolution of the Board and its assets, rights and liabilities transferred to the Ministerial Holding Corporation, a body constituted by s 37B of the State Owned Corporations Act 1989 (NSW). It would appear that the effect of the 1994 Act[3] was that the pending proceedings in this litigation were to be taken as proceedings pending against the Ministerial Holding Corporation. No step was taken to amend the identity of the party in question. It remains…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] HCA 19
Decision Date: 5 April 2001

CaseChat Overview and Summary

The case of *Tepko Pty Ltd v Water Board* involved an appeal to the High Court of Australia concerning a claim of negligent misstatement causing economic loss. The appellants, Tepko Pty Ltd and associated companies, sought to subdivide land which required rezoning and the provision of water supply by the Water Board. The dispute arose from an estimate provided by the Water Board regarding the cost of connecting water to the proposed subdivision, which the appellants alleged was negligently prepared and relied upon to their detriment.

The central legal issue before the High Court was whether the Water Board owed a duty of care to the appellants in providing an estimate for the cost of water connection services. Specifically, the court had to determine if the circumstances surrounding the request for and provision of the estimate, including the Water Board's knowledge of the appellants' serious purpose, their known reliance on the figure, and the Water Board's assumption of responsibility, were sufficient to establish a duty of care. This involved considering whether it was reasonable for the appellants to rely on a "ball-park" figure provided by the Water Board, particularly given the speculative nature of the appellants' development venture and the involvement of political and administrative processes.

A majority of the High Court held that the Water Board did not owe a duty of care to the appellants. The court reasoned that while the Water Board was in a position of advantage regarding the technical assessment of the work required, it was not the sole repository of expertise concerning costing. The appellants had engaged their own experts and could have relied on their advice once the scope of work was known. Furthermore, the court found that any reliance by the appellants on the Water Board's estimate was not reasonable in the circumstances. This conclusion was reinforced by the speculative nature of the appellants' venture, the inherent uncertainties involved, and the political and administrative processes at play, which collectively underscored the unreasonableness of relying on a preliminary estimate from a statutory authority.

The High Court dismissed the appeal, ordering that the style of the respondent be amended to "Ministerial Holding Corporation" subject to further submissions. The appeal was otherwise dismissed with costs.

Orders

Orders of the court

1. Amend the style of the respondent to "Ministerial Holding Corporation".

2. Suspend order 1 until 3 May 2001 or earlier order and direct that any submissions by either party that order 1 would incorrectly identify the respondent be filed and served within seven days of the date of these orders.

3. Otherwise appeal dismissed with costs.

Background

Background to the litigation

So far as the relevant facts are concerned, it is, unfortunately, necessary to make further detailed reference to them in order to make clear my reasons for concluding that the respondent ("the Water Board") owed no duty of care to the appellants with respect to the provision of an estimate of the cost of connecting water to the subdivision which they, the appellants, proposed.The facts It is important to note, at the outset, that the success of the appellants' proposal to subdivide their land at Wallacia depended on the land being rezoned from rural to rural-residental. Rezoning required the preparation by Penrith and Liverpool City Councils of draft local environmental plans pursuant to Pt 3 Div 4 of the Environmental Planning and Assessment Act 1979 (NSW) ("the EPA Act")[15] as it stood at the relevant time. And preparation of the draft plans would result in rezoning only if supported by a certificate from the Director of Environment and Planning under s 65 of the EPA Act and if, following public exhibition, the responsible Minister decided to make local environmental plans pursuant to s 70 of that Act.[15]In the case of Liverpool City Council, it would have required the preparation of a draft plan amending an existing plan. Penrith and Liverpool City Councils supported the proposed rezoning and subdivision of the appellants' land, but only if the Water Board were to supply water to the subdivision. The Councils' support was, apparently, made known to the appellants by April 1983. In June 1983, the appellants' consultant surveyor wrote to the Water Board, recording the appellants' understanding "that it [was] not the Board's policy to carry out investigation work where any proposed development is contrary to existing zoning" and requesting, if that were so, its "written confirmation ... so that [the appellants could] then perhaps approach the Department of Environment and Planning."[16][16]Letter to the Water Board from Geoff J Murray, consultant surveyor acting on behalf of the appellants. It is not entirely clear what steps were taken between June and August 1983 with respect to the appellants' proposal to rezone and subdivide their land. In August, however, they obtained approval from their bank to borrow in Swiss francs the equivalent of $A2,000,000 ("the loan"). The loan was said to be for various purposes, including the cost of subdividing the land. The loan was drawn down in November 1983. Before drawing down the loan, the appellants enlisted the support of a Member of Parliament, Mr R C Brading, who contacted the Minister responsible for Planning and Environment and, also, the Minister responsible for Water Resources. On 19 October, a letter from the Minister for Planning and Environment to Mr Brading made it clear that the attitude of the Department of Environment and Planning to the appellants' proposed subdivision was somewhat more cautious than that of Penrith and Liverpool City Councils. Although the Department had indicated that the Councils should proceed with an environmental study, the Minister pointed out that "a major constraint ... could be the availability of surplus capacity in the existing water supply". It was also noted in the letter that Departmental and Council officers were to investigate "alternate [sic] forms of water supply".

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GLEESON CJ, GUMMOW AND HAYNE JJ (dissent) GAUDRON J HUGH J KIRBY AND CALLINAN JJ

It follows from what has been said that the appeal must be dismissed. This notwithstanding, there are other considerations which, to my mind, militate against the imposition of a duty of care in the circumstances of this case. The appellants were engaged in a speculative venture which involved considerable uncertainty and in which, as they well knew, political and administrative processes were at play. The speculative nature of the venture and the uncertainty of the political and administrative processes which the appellants set in train serve to emphasise the unreasonableness of any reliance they may have placed on what was said or done by any participant in those processes. Rather, the very nature of the venture required them to carefully examine the detail of the course on which they were embarked and to rely on the professional advice available to them.Conclusion The appeal should be dismissed with costs. Mc Upon the facts of this case, I am of the opinion that the Water Board owed a duty of care to the appellants. My reasons for this conclusion are substantially the same as those of Kirby and Callinan JJ. Because our view is the minority view in the case, no useful purpose would be served by me articulating in different language the substance of the reasons given by Kirby and Callinan JJ. I agree with the orders that their Honours propose. The only issue in this appeal is whether a statutory water authority owed a duty of care to a developer who wished to know, and was negligently told, how much approximately the authority might charge to bring town water to his land to enable him to subdivide it. It is crucial to what follows in these reasons for the limited nature of the question for decision to be kept steadily in mind.Case history It is convenient to refer to the appellants in the singular as it was Mr Neal, the third appellant, who was the moving force of the companies involved. He represented these companies and was personally engaged in all relevant dealings in respect of the land[29].[29]The company arrangements are explained in the reasons of Gleeson CJ, Gummow and Hayne JJ ("the joint reasons") at [4]-[6]. The relevant authorities were the planning authorities for the land although the Director of Environment and Planning did have a supervisory role in relation to it[30]. The other authorities were prepared to approve the rezoning of the land so that it might be subdivided if water could be supplied to its perimeters for reticulation to the blocks that would be created by the subdivision. A corporation established by the Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW) ("the Act"), for whose obligations and liabilities the respondent is now responsible, controlled the storage and provision of water throughout New South Wales. We will refer to the respondent's predecessor and the respondent interchangeably as the respondent[31].[30]See s 34A(2) of the Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW).[31]The Water Board (the respondent) was established by s 5 of the Water Board Act 1987 (NSW) and was a continuation of the same legal entity as the one created by s 6A of the Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW). The Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW) was repealed by s 4 and Sched 1 of the Water Legislation (Repeal, Amendment and Savings) Act 1987 (NSW), and the latter Act provided for the continuation of the Board as a legal entity. The Water Board Act 1987 (NSW) was subsequently repealed by s 107 of the Water Board (Corporatisation) Act 1994 (NSW), which Act dissolved the Board and transferred its assets, rights and liabilities to the Ministerial Holding Corporation, which was constituted by s 37B of the State Owned Corporations Act 1989 (NSW). It is appropriate, as the joint reasons have explained, that the name of the respondent, and the title of the proceedings, be changed to "Ministerial Holding Corporation". See joint reasons at [2]-[3].

Ratio Decidendi

Legal Principle Established

Established by: GAUDRON J, HUGH J, KIRBY AND CALLINAN JJ

As already indicated, the Water Board was in a position of advantage vis-a-vis the appellants in that it, alone, was in a position to determine what work was required to provide water to the appellants' proposed subdivision. However, there is no reason to assume that it was the sole repository of expertise with respect to costing. The appellants had engaged their own experts and could have relied on their knowledge as to likely cost once the extent of the work was known. Moreover, it must have been clear to the appellants that the estimate was one which was subject to change, either in the course of discussions with the Water Board or in consequence of the time at which the work was carried out. If the appellants relied on the Water Board's estimate for any purpose – a matter which is not entirely clear – their reliance was not reasonable in the circumstances.Other considerations It follows from what has been said that the appeal must be dismissed. This notwithstanding, there are other considerations which, to my mind, militate against the imposition of a duty of care in the circumstances of this case. The appellants were engaged in a speculative venture which involved considerable uncertainty and in which, as they well knew, political and administrative processes were at play. The speculative nature of the venture and the uncertainty of the political and administrative processes which the appellants set in train serve to emphasise the unreasonableness of any reliance they may have placed on what was said or done by any participant in those processes. Rather, the very nature of the venture required them to carefully examine the detail of the course on which they were embarked and to rely on the professional advice available to them.Conclusion The appeal should be dismissed with costs. Mc Upon the facts of this case, I am of the opinion that the Water Board owed a duty of care to the appellants. My reasons for this conclusion are substantially the same as those of Kirby and Callinan JJ. Because our view is the minority view in the case, no useful purpose would be served by me articulating in different language the substance of the reasons given by Kirby and Callinan JJ. I agree with the orders that their Honours propose. The only issue in this appeal is whether a statutory water authority owed a duty of care to a developer who wished to know, and was negligently told, how much approximately the authority might charge to bring town water to his land to enable him to subdivide it. It is crucial to what follows in these reasons for the limited nature of the question for decision to be kept steadily in mind.Case history It is convenient to refer to the appellants in the singular as it was Mr Neal, the third appellant, who was the moving force of the companies involved. He represented these companies and was personally engaged in all relevant dealings in respect of the land[29].[29]The company arrangements are explained in the reasons of Gleeson CJ, Gummow and Hayne JJ ("the joint reasons") at [4]-[6].