Federal court of australia

15.Exercise of Statutory Duty

210 It is recognised in the authorities that cases in which the defendant is a repository of a statutory power or discretion are in a special class of case (see, e.g., Sullivan v Moody (2001) 207 CLR 562 at [50] (the Court); Hunter and New England Local Health District v McKenna (2014) 253 CLR 270 at [18] (the Court)). Liability in special cases is sometimes limited or negated, for reasons of policy (c.f. D'Orta Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at [102] (McHugh J)).

211 Intermediate appellate courts have recognised that “there is no authoritative guidance from the High Court for the determination of when a common law duty of care exists with respect to the exercise of statutory power” (Hunter Area Health Service v Presland (2005) 63 NSWLR 22 at [7] (Spigelman CJ), see also Sutherland Shire Council v Becker [2006] NSWCA 344 at [19] (Giles JA), [82] (Bryson JA)). The absence of a guiding principle has also been recognised by Crennan and Kiefel JJ in Stuart v Kirkland-Veenstra (2009) 237 CLR 215 (citations omitted):

[131] No guiding principle, by which an authority might be considered to be obliged to exercise its powers at common law, has been identified; the search continues. There is agreement that the statutory powers in question must be directed towards some identifiable class or individual, or their property, as distinct from the public at large.

[132] Different factors have been identified, from time to time, as relevant to the existence of a duty of care. Not all have continued to be regarded as useful. Notions of proximity and general reliance are no longer considered to provide the answer to the question of whether an authority should be considered to have been obliged to exercise its powers. In this case the majority in the Court of Appeal identified as of particular relevance the vulnerability of the plaintiff’s husband and the control that the officers had over the risk of harm which eventuated, because of the powers given by s 10. The majority emphasised that the Act intended those powers to be used to protect a person such as him.

[133] The vulnerability of a plaintiff was referred to in Pyrenees Shire Council v Day as an aspect of the plaintiff’s supposed reliance upon an authority to use its powers. A focus on vulnerability may in part explain the decision in Crimmins v Stevedoring Industry Finance Committee. It has not been universally accepted as a useful analytical tool. In Graham Barclay Oysters Pty Ltd v Ryan, Gummow and Hayne JJ treated the degree of a plaintiff’s vulnerability as part only of an evaluation as to whether a relationship may be seen to exist between a statutory authority and the class of persons in question. Establishing the existence of a relationship between a plaintiff and a public authority has the advantage of coherence with the exceptions, already recognised by the common law, to the general rule that there is no duty of affirmative action.

212 Spigelman CJ in Presland posited a relational or multi-factorial approach (at [9]–[10]):

[9] Where, as in the present proceedings, a novel issue arises with respect to the existence or scope of a duty of care, the contemporary Australian approach to determining both matters is to engage in a multifactorial or “salient features” analysis. (See the summary in the joint judgment in Sullivan v Moody (2001) 207 CLR 562 at 579 [50]–[51]. See also Perre v Apand Pty Ltd (1999) 198 CLR 180 at 198 [27]–[198], 254 [201], 302 [333] and 326 [406]; Graham Barclay Oysters Pty Ltd (at 597 [149], 624 [236]–[237]).)

[10] This approach, in the context of determining whether a duty of care arises with respect to the exercise of a statutory power, is exemplified in the joint judgment of Gummow J and Hayne J in Graham Barclay Oysters Pty Ltd (at 596 [146]–[149]):

“[146] The existence or otherwise of a common law duty of care allegedly owed by statutory authority turns on a close examination of the terms, scope and purpose of the relevant statutory regime. The question is whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence.

[147] Where the question posed above is answered in the affirmative, the common law imposes a duty in tort which operates alongside the rights, duties and liabilities created by statute.

…

[149] An evaluation of whether a relationship between a statutory authority and a class of persons imports a common law duty of care is necessarily a multifaceted inquiry. Each of the salient features of the relationship must be considered. The focus of analysis is the relevant legislation and the positions occupied by the parties on the facts as found at trial. It ordinarily will be necessary to consider the degree and nature of control exercised by the authority over the risk of harm that eventuated; the degree of vulnerability of those who depend on the proper exercise by the authority of its powers; and the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute. … ” (footnotes omitted)

213 His Honour (at [11]) stated that four matters of significance came out of that passage:

• the purpose to be served by the exercise of the power;

 the control over the relevant risk by the depository of the power;

 the vulnerability of the persons put at risk; and

 coherence.

214 Importantly, however, what is emphasised in all of the above approaches is that there is no guiding principle or test to apply in determining whether a novel duty arises. Rather, it is appropriate and necessary to reason analogically from decided cases (Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at [76] (McHugh J); Brookfield at [25] (French CJ)). For that reason, it is appropriate to discuss some of the more important cases in the area, including The Council of the Shire of Sutherland v Heyman (1985) 157 CLR 424, Pyrenees Shire Council v Day (1998) 192 CLR 330, Graham Barclay Oysters Pty Limited v Ryan (2002) 211 CLR 540, and Crimmins. I will commence with Heyman.

215 The rationale for limiting liability in the case of negligence concerning the exercise or non-exercise of statutory powers or duties, or their exercise in a particular way, is that public authorities are bodies “entrusted by statute with functions to be performed in the public interest or for public purposes” (Heyman at 456 (Mason J)). Generally, only limited resources and limited credit will be available for the execution of these functions and they will often be insufficient to cover completely all statutory responsibilities, in which case policy choices have to be made: Crimmins at [79]–[80] (McHugh J); City of Kamloops v Nielsen (1984) 10 DLR (4th) 641 at 655 (McIntyre J); see also R P Balkin, J L R Davis, Law of Torts (5th ed., 2013) at 223 [7.31].

216 Accordingly, generally a public authority under no statutory obligation to exercise a power comes under no common law duty to exercise it (Heyman at 459–460 (Mason J). But, in certain cases, set out in Heyman at 460–462 in particular, such a duty will arise. The principles were usefully collected by Ipp JA (with whom Mason P and McColl JA agreed) in Amaca Pty Ltd v the State of New South Wales (2004) 132 LGERA 309 at [21]:

(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.

217 Ipp JA stated that (at [21]) that “[n]othing in Pyrenees, Crimmins and Graham Barclay Oysters is materially inconsistent with Mason J’s remarks”.

218 Heyman concerned whether a council was negligent in failing to inspect footings of a structure, the later subsidence of which caused structural defects. Mason J said, at 458, as follows (citations omitted):

It is now well settled that a public authority may be subject to a common law duty of care when it exercises a statutory power or performs a statutory duty. The principle that when statutory powers are conferred they must be exercised with reasonable care, so that if those who exercise them could by reasonable precaution have prevented an injury which has been occasioned, and was likely to be occasioned, by their exercise, damages for negligence may be recovered … has been applied mainly to private Acts. However, it has been frequently applied in Australia to public authorities, notably public utilities, exercising powers under public statutes … .

Deane J, to like effect, reasoned (at 498) that the notion of “proximity”:

… may reflect an assumption by one party of a responsibility to take care to avoid or prevent injury, loss or damage to the person or property of another or reliance by one party upon such care being taken by the other in circumstances where the other party knew or ought to have known of that reliance.

219 In Pyrenees, a fire destroyed premises at 70 Neill St and damaged an adjoining shop at 72 Neill St. The fire was caused by a latent defect in the chimney of 70 Neill. The fire authority had two years earlier advised the then-tenants that the fireplace was unsafe to use and notified the shire council to that effect. A council building inspector inspected the premises and found a defect creating substantial risk of harm. The inspector wrote to the former tenants stating that it was imperative that the fireplace not be used unless fully repaired. The council took no further steps. It had powers to require compliance with its letter, but did not use them. The occupants of both 70 and 72 Neill were, in the High Court, successful.

220 At [25]–[37] of Amaca, Ipp JA identified and considered the “two differing strands of reasoning” that emerged from Pyrenees, noting (at [38]) that the differences were not of major significance. The first strand “emphasise[d] the sole and actual knowledge of the Council of the risk of serious harm to identifiable individuals, the power of the Council to intervene, and the prior (but inadequate) intervention by the Council to eliminate the risk” (Amaca at [30], emphasis added). It was typified (said Ipp JA) by these remarks of McHugh J at [115]:

Given the extensive powers of the Council, its entry into the field of inspection on this occasion, if not other occasions, its actual knowledge of the danger to the health and property of the occupiers of Neill Street and, at the least, its imputed knowledge that residents of the shire generally relied on it to protect them from the dangers arising from the use or condition of premises, the Council owed a duty of care to Mr and Mrs Day.

221 The second strand, said Ipp JA, was typified by the following statement of Gummow J at [168] of Pyrenees (citations removed, emphasis added):

The Shire had statutory powers, exercisable from time to time, to pursue the prevention of fire at No 70. This statutory enablement of the Shire "facilitate[d] the existence of a common law duty of care", but the touchstone of what I would hold to be its duty was the Shire's measure of control of the situation including its knowledge, not shared by Mr and Mrs Stamatopoulos or by the Days, that, if the situation were not remedied, the possibility of fire was great and damage to the whole row of shops might ensue. The Shire had a duty of care "to safeguard others from a grave danger of serious harm", in circumstances where it was "responsible for its continued existence and [was] aware of the likelihood of others coming into proximity of the danger and [had] the means of preventing it or of averting the danger or of bringing it to their knowledge".

222 Within that extract was a citation to the dissenting judgment of McHugh JA in Parramatta City Council v Lutz (1988) 12 NSWLR 293 at 328, where his Honour had said this (emphasis added):

In principle, there is much to be said for the view that a public authority should be under a duty to take affirmative action when the control of conduct or activities has been ceded to it by common understanding or when it receives some benefit from the conduct or activities. If in addition to the right of control the authority knows or ought to know of conduct or activities which may foreseeably give rise to a risk of harm to an individual, the authority should be under a duty to prevent that harm. Just as a teacher who has control of a classroom has a duty to prevent pupils from injuring others, so a public authority with legal or de facto control of a social situation should have a duty to take affirmative action to prevent harm to others. The touchstone of affirmative duty would be control and not the possession of any discretionary statutory powers. Failure to exercise such powers would go to breach of duty, but the common law duty would arise from actual or ceded control.

223 Gummow J’s emphasis on control continued in Crimmins, wherein his Honour said at [166] that “the powers vested by statute in a public authority may give to it such a significant and special measure of control over the safety of the person or property of the plaintiff as to oblige it to exercise its powers to avert danger or to bring the danger to the knowledge of the plaintiff.” In Graham Barclay Oysters at [151], Gummow and Hayne JJ, in describing the result in Day, referred to the “significant and special measure of control over the safety from fire of persons and property at the relevant premises. That degree of control was the touchstone of the Shire’s duty to safeguard others from the risk of fire in circumstances where the Shire had entered upon the exercise of its statutory powers of fire prevention and it alone among the relevant parties knew of, and was responsible for, the continued existence of the risk of fire … .” And, in Brodie v Singleton Shire Council (2001) 206 CLR 512, Gaudron, McHugh and Gummow JJ again emphasised the importance of control, at [102] (citations omitted, emphasis added):

The decisions of this Court in Sutherland Shire Council v Heyman, Pyrenees Shire Council v Day, Romeo v Conservation Commission (NT) and Crimmins v Stevedoring Industry Finance Committee are important for this litigation. Whatever may be the general significance today in tort law of the distinction between misfeasance and non-feasance, it has become more clearly understood that, on occasions, the powers vested by statute in a public authority may give it such a significant and special measure of control over the safety of the person or property of citizens as to impose upon the authority a duty of care. This may oblige the particular authority to exercise those powers to avert a danger to safety or to bring the danger to the knowledge of citizens otherwise at hazard from the danger. In this regard, the factor of control is of fundamental importance.

224 In Crimmins, the plaintiff was a registered waterside worker employed by various stevedoring entities over a period of years. He contracted mesothelioma from exposure to asbestos. He contended that the Committee was under a continuous duty in the exercise of its statutory functions to take reasonable care to avoid foreseeable risks of injury to his health. By majority the High Court held that the Committee was under a duty to protect him from reasonably foreseeable risks of injury arising from his employment by registered stevedores. Early in his consideration of duty, at [62], McHugh J said this (citations removed):

There is one settled category which I would have thought covered this case: it is the well-known category ‘‘that when statutory powers are conferred they must be exercised with reasonable care, so that if those who exercise them could by reasonable precaution have prevented an injury which has been occasioned, and was likely (Later cases require ‘‘likely’’ to mean that there is a reasonable possibility that the injury is likely to be occasioned) to be occasioned, by their exercise, damages for negligence may be recovered”

His Honour continued at [63]:

In directing the plaintiff and other waterside workers to places of work, the Authority was exercising its power to give directions in aid of its function of making ‘‘arrangements for allotting waterside workers to stevedoring operations’’ (s 17(1)(f)). That being so, I would have thought that the Authority owed a duty to the plaintiff as a person affected by the exercise of the power to exercise it with reasonable care for his safety.

225 At [93] his Honour set out a six-step approach for determination of whether, in a novel case, a statutory authority should be held to have owed a duty and to have breached it by failing to exercise a power:

1. Was it reasonably foreseeable that an act or omission of the defendant, including a failure to exercise its statutory powers, would result in injury to the plaintiff or his or her interests? If no, then there is no duty.

2. By reason of the defendant’s statutory or assumed obligations or control, did the defendant have the power to protect a specific class including the plaintiff (rather than the public at large) from a risk of harm? If no, then there is no duty.

3. Was the plaintiff or were the plaintiff ’s interests vulnerable in the sense that the plaintiff could not reasonably be expected to adequately safeguard himself or herself or those interests from harm? If no, then there is no duty.

4. Did the defendant know, or ought the defendant to have known, of the risk of harm to the specific class including the plaintiff if it did not exercise its powers? If no, then there is no duty.

5. Would such a duty impose liability with respect to the defendant’s exercise of ‘‘core policy-making’’ or ‘‘quasi-legislative’’ functions? If yes, then there is no duty.

6. Are there any other supervening reasons in policy to deny the existence of a duty of care (eg, the imposition of a duty is inconsistent with the statutory scheme, or the case is concerned with pure economic loss and the application of principles in that field deny the existence of a duty)? If yes, then there is no duty.

His Honour said that if the first four questions are answered affirmatively and the last two negatively then ordinarily it would be correct in principle to impose a duty. While those principles are no doubt useful by way of guidance and identify the kinds of “salient features” that will often be of critical importance in a case—consistency with statutory scheme, control, etc.—the contemporary approach is, as I have set out above, multi-factorial (c.f. Presland at [8] (Spigelman CJ)).

226 At [104] and [108] McHugh J concluded, on the issue of duty, thus:

To my mind, the factor that points compellingly to the Authority owing an affirmative duty of care is that the Authority directed the waterside workers where they had to work and that the failure to obey such a direction could lead to disciplinary action and even deregistration as a waterside worker. That factor points so strongly to the existence of a duty of care that it should be negatived only if to impose the duty was inconsistent with the scheme of the Act. It can seldom be the case that a person, who controls or directs another person, does not owe that person a duty to take reasonable care to avoid risks of harm from that direction or the effect of that control. …

…

… The Authority knew that the workers were being directed to work on ships where there could be a significant risk of injury to the workers from the use of equipment and machinery, the stowage of cargo and the hazardous nature of the materials which the workers had to handle. It also knew that it was directing the waterside workers to participate in transient, casual employment on the waterfront — a factor recognised in s 25(b) of the Act. In this context, the power of the Authority to direct the waterside workers as to when and where they must work placed them in a very real position of vulnerability. The casual nature of the employment, employment sometimes lasting only for a few hours, was likely to mean that employers did not have the same incentives to protect their employees from harm as do employers who must utilise the same work force day after day. …

227 I should note that Crimmins has been regarded as a “very special” case (Amaca at [52], Ipp JA). It was a “control” case of a special kind because of the degree of control exercised by the Committee.

228 The final case that I will consider, and which Ipp JA considered in Amaca, is Graham Barclay. Here, it suffices to set out Ipp JA’s discussion from [56]–[59] of Amaca:

[56] McHugh J observed, generally (at [81]):

A public authority has no duty to take reasonable care to protect other persons merely because the legislature has invested it with a power whose exercise could prevent harm to those persons. Thus, in most cases, a public authority will not be in breach of a common law duty by failing to exercise a discretionary power that is vested in it for the benefit of the general public … But if the authority has used its powers to intervene in a field of activity and increased the risk of harm to persons, it will ordinarily come under a duty of care … So also, if it knows or ought to know that a member of the public relies on it to exercise its power to protect his or her interests, the common law may impose a duty of care on the authority (Sutherland Shire Council v Heyman (at 461), per Mason J).

[57] McHugh [J] also found that the powers of the State did not constitute control in the relevant sense (at [93]). Of significance to the present appeal is his Honour’s remark (at [95]): “Knowledge or imputed knowledge that harm may result from a failure to take affirmative action is not itself sufficient to create an affirmative duty of care”.

[58] Gummow and Hayne JJ regarded two factors as being of vital importance (see at [144]). First, the fact that the Council (like the Council in Pyrenees) was the only party with actual knowledge of the potential source of harm (namely, the progressive deterioration of the sewerage infrastructure which imperilled the purity of the waters of Wallis Lake). Secondly, the fact that the Council had extensive statutory powers to prevent or to redress that deterioration and to mitigate the effects of any pollution. Their Honours said (at [145]):

[T]he co-existence of knowledge of a risk of harm and power to avert or to minimise that harm does not, without more, give rise to a duty of care at common law. The totality of the relationship between the parties, not merely the foresight and capacity to act on the part of one of them, is the proper basis upon which a duty of care may be recognised. Were it otherwise, any recipient of statutory powers to licence, supervise or compel conduct in a given field, would, upon gaining foresight of some relevant risk, owe a duty of care to those ultimately threatened by that risk to act to prevent or minimise it.

…

[59] Their Honours emphasised the importance of the particular terms of the statutory regime applicable, saying (at [146]):

The existence or otherwise of a common law duty of care allegedly owed by a statutory authority turns on a close examination of the terms, scope and purpose of the relevant statutory regime. The question is whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence.

229 I will attempt to state fairly concisely what I consider to be the correct approach to determination of whether a duty exists in this case. I note that the citations I have given below are illustrative and non-exhaustive. I also note that, as is necessary in this area of the law, the following list is non-exhaustive.

(1) the approach to determining whether a duty of care exists is multi-factorial (Stavar at [102]–[103]; Makawe at [17], [92]–[94]; Hoffman at [31], [127]–[130]; Carey at [310]–[317]; Brookfield at [24]).

(2) The seventeen factors listed by Allsop P in Stavar are a valuable checklist as to the kinds of matters that may be relevant in a multi-factorial analysis (Hoffman at [31]; Carey at [316]). But they are not exhaustive, not all considerations will be relevant in each case, and the considerations that are relevant will be of various weights (Carey at [316]; Stavar at [104])

(3) the case where the defendant is a repository of statutory power or discretion is a special class of case, which raises its own problems (Sullivan at [50]; Hunter at [18]). However, the correct approach remains multi-factorial (Presland at [7], [9]–[10]; Becker at [19]; Stuart at [131]–[133].

(4) in such cases, however, particular of the factors listed in Stavar assume especial relevance. Coherence with the statutory scheme and policy considerations are of critical importance (Stuart at [133]; Presland at [11]; Crimmins at [93]; Graham Barclay at [145]–[146]). So, too, may be control, reliance, vulnerability, and the assumption of responsibility (see, variously, Stuart at [133]; Graham Barclay at [81], [149], [151]; Presland at [10], [11]; Heyman at 458, 486, 498; Pyrenees at [115], [168]; Crimmins at [93], [104], [108]).

230 I note, before moving on, that I think the approach I have set out above is consistent, in principle, with the submissions of both parties (though, of course, in the application of those principles the parties arrived at divergent results). In particular, the applicant set out six factors (at [62] of its written submissions) which I accept are relevant but non-exhaustive. The respondent’s approach was not, in my view, different in principle (see [50]–[53] of their submissions in particular). The six factors identified by the applicant are these:

a) the power of a public authority to intervene to alleviate a risk of harm to an individual. … ;

b) the authority’s responsibility for, or control over, the existence or extent of a risk of harm;

c) the public authority’s knowledge, or constructive knowledge, of the danger or risk to an identifiable person;

d) the degree of vulnerability of those who depend upon the proper exercise by the authority of its powers;

e) the reliance by individuals on the public authority to take care for their safety, engendered by the nature of the authority’s powers and its conduct; and

f) the coherence of the asserted duty of care with the terms, scope and purpose of the relevant statute.

I should note that I conceive of vulnerability, control, reliance, and assumption of responsibility as being not entirely dissimilar, or at least overlapping.

231 Therefore it now is appropriate to direct attention to the salient features of this relationship. I devote particular attention to the features emphasised by the parties—coherence, policy, vulnerability, reliance, control, assumption of responsibility—commencing with the latter. I will commence by setting out some judicial consideration of that subject.