Trkulja v State of Victoria
[2001] VSC 72
•13 March 2001
| SUPREME COURT OF VICTORIA | |
| COMMON LAW DIVISION | Not Restricted |
No. 8187 of 1992
| MILORAD TRKULJA | Plaintiff |
| v. | |
| STATE OF VICTORIA AND ROBERT PATTISON | Defendants |
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JUDGE: | NATHAN, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF JUDGMENT: | 13 MARCH 2001 | |
CASE MAY BE CITED AS: | TRKULJA v. STATE OF VICTORIA & ANOR. | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 72 | |
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CATCHWORDS: Negligence – Jury trial – Application by the defendants that there is no case in law to put to the jury – Whether the Public Works Department and its inspector owed any duty of care to contractors when certifying completion of works to enable payment – Alleged negligent misstatement – No reliance by the plaintiff on any certificates – San Sebastian Pty. Ltd. v. Minister Administering the Environmental Planning and Assessment Act 1979 & Anor. (1986) 162 C.L.R. 340 cited.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Appeared on his own behalf | |
| For the Second Defendant | Mr. D. Masel and Miss S. MacDougall | Victorian Government Solicitor |
| For the 15th Defendant | Mr. R. Cameron | Peter Eggleston & Associates |
HIS HONOUR:
The defendants have both submitted there is no case in law to be put to the jury. The case should be dismissed. Mr Masel for the State of Victoria contended there was no case to answer, either on the pleadings as filed, or as the matter was argued. For reasons which I shall now go on to develop, both those submissions are in my view, correct.
His argument was supported by Mr Cameron for the second defendant who elaborated further argument which I find correct, namely that there was no propinquity between his client Mr Pattison, and the plaintiff such as to create a recognisable duty invested in Mr Pattison towards Mr Trkulja.
Having said that, it is necessary to return to the pleadings, and then see how the case, was in fact, argued. Identification of the parties is critical. The plaintiff Mr Trkulja was at the relevant times a building contractor on the preferred list of building contractors kept by the Public Works Department, the first defendant. It was charged as a matter of statutory responsibility, with maintaining schools, police stations and similar government facilities.
The second defendant Mr Pattison was an inspector employed by the Public Works Department and his functions amongst others were to ensure that works done for the department, were in fact done, and make recommendations as to the payment therefore. I elaborate the facts by detailing the procedures within the department which applied to Mr Trkulja's work.
As a preferred contractor, he was retained by the department to do essential and immediate works on various facilities. He did so following receipt of a "works order." The department had various procedures for effecting major capital works which were completed by tender. Less important but substantial works were completed via a quotation process. But for minor works, the procedure used, was by way of a "works order".
The procedure operated thus. The department would receive a request from one of its clients, for example the Education Department, to do urgent and immediate works at a school such as the replacement of windows or the fitting of safety shields and guards to tables. It being a minor project, a works order would then be raised detailing the location of the work and characterising the work to be done. That works order would then be delivered to one of the preferred contractors, in this case the plaintiff. The work would then supposedly be done and the works order with attached invoices, and completed details as to work done and where, would be returned by the contractor to the department where it passed out of the control, purview or knowledge of the contractor.
The departmental officer in this case, but not solely Mr Pattison, would certify that the work had been done and recommend payment for it. The works order would then be forwarded to the Public Works Department Accounts Section and payment effected. The department produced a manual for its inspectors which directed that work should be inspected before it was certified as complete, and a recommendation made for payment. In this case the plaintiff pleads he was paid for some 40 works orders, in respect of work he had mostly not done, and at least had only partially done. He pleads that the payments he received ultimately resulted in his being charged with theft, brought to trial and acquitted by direction of the trial judge. He says that the trial process brought him personal distress and into the odium and contempt of his peer group.
The statement of claim is not quite in the terms as I have announced. It is necessary to review it. It is said that between the relevant times which I must add are 15 and 16 years ago, that Pattison was employed as an inspector. That it was his responsibility to inspect the building and repair works carried out by the plaintiff pursuant to the works orders, prior to recommended payment. This process is known as "certification" and "recommendation". It is said that Pattison knew or ought to have known or ought reasonably to have foreseen that if he issued the certificates or made the recommendations, then the plaintiff would be induced to rely on such certification or recommendations as a basis for seeking payment from the Public Works Department. And that the plaintiff would be likely to suffer loss if such building work had not been completed either satisfactorily or at all.
Alternatively it is put that Pattison knew or ought to have known or ought reasonably to have foreseen that the issuing of certificates and the making of recommendations would induce or be likely to induce in the plaintiff the belief that it was appropriate to make claims for payments in respect of work that had not been completed but which it was intended to complete prior to payment being made.
Again alternatively it is put that Pattison knew or ought to have known or have reasonably foreseen that on receipt of the certification or recommendations, the plaintiff would honestly believe that he would be entitled to seek and obtain payment for the work carried out in view of the tardiness that the work had either not been completed and that he would not anticipate that it would be improper or unlawful for him to do so or that it might lead to the laying of charges.
It can be seen that the claim is one for the tort of negligent misstatement. In fact the pleadings go on to assert that the plaintiff relied on the certificates and recommendations and in doing so, thereby suffered the damage to which I have referred. It can be seen that the plaintiff's claim fails at its very foundation. I refer back to the uncontested facts as to the procedure within the department.
The certification and recommendations for payments were not made by the department or Mr Pattison to the plaintiff. The certifications and the recommendations were internal to the Department. They were never made to the plaintiff. Once he returned the works orders and his own attached invoices, no other document or statement passed between him and the Department. Mr Trkulja having returned the fraudulent works order, did not have any statement made to him other than his own fraudulent statement that his word would receive the relevant certification, or recommendation that payment be made. The statement of claim wrongly assumes a procedure which the plaintiff now says was not in place.
It is of course, imperative that the plaintiff rely upon the alleged negligent misstatements in order to establish his claim. As I have just ruled, that no statement as to the satisfactory nature of the work he was supposed to do or certification was ever made to the plaintiff, it follows that he cannot have relied upon a statement not made. The mere delivery to him of a blank works order, except as to job and location, cannot be regarded as a statement that whatever he did or not do would be certified and recommended for payment.
It has been said that for a plaintiff to succeed, reliance upon the alleged misstatement must be established because it is reliance on the misstatement which generates the loss. I refer to San Sebastian Pty. Ltd. v. Minister Administering the Environmental Planning and Assessment Act 1979 & Anor.[1] where in the joint judgment of Gibbs, C.J., Mason, Wilson and Dawson, JJ. their Honours said.
"The existence of an antecedent request for information or advice certainly assists in demonstrating reliance, which is a cornerstone of liability for negligent misstatement".
As I have merely recited the impelling logic underlying the tort of negligent misstatement, that recitation from the High Court underscores the propositions I have just advanced.
[1](1986) 162 C.L.R. 340 at 356
I need go no further so far as the pleadings are concerned - but as the plaintiff is appearing in person, it is proper that I address the remainder of the submissions made and his responses thereto. It was put by Mr Masel and by Mr Cameron that the evidence failed to establish a foreseeable reliance, that is the prospect that Mr Pattison would foresee that Mr Trkulja would rely upon the recommendations and certifications and it is said that failure fails to establish the duty of care.
It was put succinctly there was no obligation on the Public Works Department to care for Mr Trkulja's financial interests and so much must be apparent from the facts I have outlined. It was Mr Trkulja who generated the claim and proffered the invoices which were wrong. He now seeks to recover on the basis that he was paid moneys he should not have been paid and that because of receiving those payments, an enquiry leading to the laying of charges was pursued which in turn resulted in his acquittal and so he says, mental distress therefrom.
The unchallenged unequivocal and concrete evidence firmly establishes there can be no such reliance as alleged. It is a legal question for me as to whether there is any evidence, any probative evidence which would establish the alleged acts of reliance. I have searched the evidence and there is none, not a suggestion, not a scintilla. There is no evidence which could go to a jury upon which it could be said that Mr Trkulja relied upon that which Mr Pattison might reasonably have foreseen would have created a duty of care.
I remind the parties all the evidence comes from the plaintiff, not him personally, as he did not give any evidence, but his evidence came from Mr Nitz who gave evidence as to the contracting process which I have outlined. It is not suggested that Mr Nitz made any statements or could have foreseen that Mr Trkulja would seek to profit from his own fraud.
That evidence was followed by Mr Kean, the manager of the relevant department and he gave evidence to the same effect. The investigation of these fraudulent claims advanced by Mr Trkulja was conducted by Mr Majerczak and Mr Campbell. Both of them gave evidence as to the procedures which I have already outlined.
Nowhere is there any evidence at all, which would entitle a juror or indeed the department itself to have foreseen that Mr Trkulja could rely either on the recommendations or the certifications or the fact that his invoices were fraudulent. Mr Trkulja's claim which I will come to when I deal with his case as argued as opposed to that which as is pleaded, was that the department should have complied with its own manual and inspected the works before it authorised payment whereby his fraud would then have been disclosed. Of course, that is exactly what the department did after it had discovered by its processes of internal examinations that fraud had in fact been committed.
Neither in law or in fact is there any evidence upon which it could be said that the plaintiff relied on the certificates and recommendations to which I have referred. In fact, the evidence goes in the contrary direction. It is that the plaintiff knew it was his responsibility to do the work before seeking payment. He knew that the procedure required him to do the work recited in the work order, spend the moneys for the materials which were necessary for the work, prepare the invoices for those materials, and recite the hours worked to complete the job.
In fact paragraph 35 contends that the work was not done. Paragraph 35 of the pleadings says, "Each of the said certifications and each of the said recommendations were false and made without reasonable ground in that the works referred to had not been carried out satisfactorily or carried out at all, and that the payments were made in respect of work that had not been carried out". Furthermore his own witnesses swore the work was not done at all, except in one case where it was partially done.
As a subsidiary argument, it was put to me and I find it to be correct, that there is no probative evidence the plaintiff has suffered loss and personal hurt due to being charged and acquitted. Not only is there no viva voce evidence from him or any of his peer group to establish the proposition. Such evidence as was drawn from Dr Batagol goes entirely against the plaintiff.
Were it required, I would find there is no evidence of any probative value which should be put to a jury to establish loss. There was a statement from Dr Batagol that the plaintiff complained to him about distress, but did so as a result of a motor car accident which occurred almost contemporaneously with the arrest and discharge.
Dr Batagol's evidence was that the plaintiff did not detail to him the fact of the arrest and discharge because he was embarrassed. That proposition was found to be vacuous upon the presentation to the court of a number of writs in which the plaintiff says he was variously referred to as a thief from a charity, a brothel keeper, a slaughterer of children in Bosnia, a procurer of sexual services for both genders, and a pornographer. None of these rather startling hurts for which he sought damages were ever detailed to Dr Batagol, yet he said he was embarrassed, in his terms, by a wrongful arrest.
If that were not enough, exhibited in the court is a front page story from a suburban newspaper which photographs the plaintiff, quotes him directly and is a full exposition of the arrest and discharge, which he was too embarrassed to mention to his psychiatrist. And if that were not enough, there then followed a video clip of the plaintiff on an SBS program detailing to the viewers the fact of his arrest and discharge. Accordingly there is no plausible or credible evidence which could go to the jury to sustain a claim for damages for mental hurt, or being brought into odium.
So much for the case as pleaded. I now turn to the case as advanced by the plaintiff before me. I reiterate he says that it was the obligation of the department to check that the work which he said he had done had in fact been done, and not pay him until that check had been completed. He says that the department failed to conduct that check. Accordingly it paid him money, on his own fraudulent invoices and claims and that in turn led to his being charged and acquitted.
This case as argued still relied on what is said to be the negligent misstatement, namely the certifications and recommendations prepared by Mr Pattison. The plaintiff has failed to comprehend that the certifications and recommendations were made not to him, and not in discharge of a duty owed to him, but were part of Pattison's duties within the department. Mr Pattison was not under an obligation, or a duty of care to the plaintiff, to ensure that the plaintiff had done that which he said he had done.
There is much authority on the extent of the duty of care and how courts should go to defining it. As Lord Esher had said, "A man is entitled to be as negligent as he pleases towards the whole world if he owes no duty to them." The duty of care, in given circumstances was examined again by the High Court in Modbury Triangle Shopping Centre Pty. Ltd. v. Anzil[2] and I refer to the Chief Justice's judgment at 168.
[2][2000] HCA 61
Anzil's case is not quite on point insofar as it dealt with the duty of care owed by an employer to an employee to prevent the employee from suffering harm inflicted by a third person, but goes to categorising where duties may arise and acceptance by the common law of incrementally increasing the range and scope of those duties, as society itself changes shape and structure. It is good law, it is appropriate here. He said that:
"The general rule that there is no duty to prevent a third party from harming another is based in part upon a more fundamental principle, which is that the common law does not ordinarily impose liability for omissions. This was explained by Lord Goff."
and he refers to Smith v. Littlewoods Ltd.[3]
[3][1987] A.C. 241
In this case, I do not consider that the common law should be extended to impose upon a Public Works inspector a duty to a contractor to ensure that the contractor has done the work which the contractor contends he has done. His duty is to the department. His certification and inspection duties are to the Department. He has no duty to go back to the renderer of services, and go behind the invoices to assure the contractor, he has done that which he has said he has done.
It is the inspector's obligation to ensure that the work was done and satisfactorily done and if not, then to require the contractor to do it. The breakdown in the department's procedures for which evidence was proffered in this court of a credible nature, namely that the inspectors were overworked, overstretched and often accumulated jobs to be inspected after payment, was an attempt at efficiency but in breach of their own work manuals. That became something that was tolerated, albeit reluctantly, within the department or at least by those officers functioning proximate to Mr Pattison even if not to the heads of the department.
I have been assisted in this judgment by Perre v. Appand[4]. The case came to grips with the essentials of the tort of negligence, the scope and creation of duties of care and the reasonable foreseeability of damage. It reflects the Australian law which is not now in conformity with that of the United Kingdom.
[4][1999] HCA 1190
Those disconformities relate to economic loss which is not the case here where the plaintiff is bankrupt and can proceed only for his personal loss, not his property losses. At 1195 Justice Gaudron under a heading, "Categories of case negligent misstatement" said this:
"So far as concerns the category of negligent misstatement, more accurately the failure to provide information or advice, usually the failure to provide accurate information and advice, the prediction of Justice Stephen in Caltex Oil v. Wilhemstadt (1976) 136 C.L.R. 529 has been borne out. The category was impliedly recognised as a discrete category in San Sebastian and expressly recognised by Chief Justice Brennan and Justice Dawson in Hill v. Vandoes. So far as concerns negligent misstatement, the circumstances which attract a duty of care are known reliance or dependence on the assumption of responsibility or a combination of the two. The word 'known' includes circumstances in which reliance or dependence ought to be known."
Now, in this case I am satisfied there was no known reliance, nor indeed was there any assumption of responsibility by Pattison for the financial interests or wellbeing of Mr Trkulja. I do not believe in the circumstances, there exists in law such a duty nor am I satisfied that I should extend the law to create one.
I have used the expression "fraud" in categorising the behaviour of the plaintiff. From the pleadings I have drawn such a conclusion.
Neither of the defendants used that word, however can it be anything other than fraud if the plaintiff on his own pleadings and admissions, produced claims for payment which he knew and says he knew, or by way of necessary implication, knew, related to work not done. He produced to the department 39 of the 40 works orders returned and signed by him to which invoices were attached in respect of work not done. The documentation is his. It is not the documentation of the department. The Department then processed the fraudulent claims. The plaintiff, in effect, now seeks to prosper from that behaviour and say that the criminal proceedings which arose there from caused him mental loss.
The criminal proceedings were not proceedings initiated by the department. They were proceedings initiated by the informant, Inspector Cosgriff. He did so as a result of information received from the department. Trkulja was prosecuted, not by the Public Works Department directly but by the appropriate police authority.
Therefore were it necessary to decide there was a new category of tort as contended for by the plaintiff, I would find that category would offend basic principles of public policy which are directed to the old legal maxim that a person should not prosper from their own wrongdoing.
It follows then that neither as pleaded nor as argued, is there any legal foundation for this matter to go before the jury. This is not a matter covered by the principles recited in Naxakis v. Western General Hospital[5] where the court indicated to courts such as this, that great care and reservation should be exercised before withdrawing an issue of fact from the jury's adjudication. There are no issues of fact other than for the evidence of Dr Batagol, which could possibly go before the jury, and his evidence could not because it was so substantially eroded in cross-examination that any putative value to the plaintiff must be excluded.
[5](1998-1999) 197 C.L.R. 269
Accordingly, I shall discharge the jury. The application for no case submissions by both defendants is made out and I shall hear counsel as to appropriate orders. Before I do that it must be said that I listened attentively to Mr Trkulja's response. None of his statements went to the critical issue of no case, I raised with him three days ago the likelihood that he would face applications of this kind, their possible foundations and that he should prepare for them.
He has not been disadvantaged by hearing these no case submissions, in effect for the first time today, and he has therefore not been disadvantaged at all.
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