CATCHWORDS Negligence - application to strike out statement of claim as disclosing no reasonable cause of action - plaintiff suffered personal injuries as a result of helicopter crash - use of unlicensed landing site ~- whether Commonwealth could be liable. Practice (Pleading) - application to strike out statement of claim as disclosing no reasonable cause of action - plaintiff suffered personal injuries as a result of helicopter crash - use of unlicensed landing site ~ whether Commonwealth could be liable. MARK BERNARD EVERARD McCAULEY v. HAMILTON ISLAND ENTERPRISES PTY. LIMITED & ORS. No. G5 of 1987 Beaumont, J. Sydney 10 June 1987 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G5 of 1987 ) GENERAL DIVISION ) BETWEEN: MARK BERNARD EVERARD MCCAULEY Plaintiff AND: HAMILTON ISLAND ENTERPRISES PTY. LIMITED First defendant KEITH WILLIAMS (QUEENSLAND) PTY. LIMITED Second defendant GREAT BARRIER REEF MARINE PARK AUTHORITY Third defendant THE COMMONWEALTH OF AUSTRALIA Fourth defendant MINUTES OF ORDER (On fourth defendant's motion to strike out para.18A to 182 (incl.) of the plaintiff's further amended statement of claim) Judge making order: Beaumont, J. Date order made: 10 June 1987 Where made: Sydney THE COURT ORDERS: 1. The fourth defendant's motion to strike out paras. 18A to 181 (inclusive) of the plaintiff's further amended statement of claim is dismissed. 2. The fourth defendant is to pay the plaintiff's costs of the motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G5 of 1987 GENERAL DIVISION BETWEEN: MARK BERNARD EVERARD MCCAULEY Plaintiff AND: HAMILTON ISLAND ENTERPRISES PTY. LIMITED First defendant KEITH WILLIAMS (QUEENSLAND) PTY. LIMITED Second defendant GREAT BARRIER REEF MARINE PARK AUTHORITY Third defendant THE COMMONWEALTH OF AUSTRALIA Fourth defendant CORAM: Beaumont, J. DATED: 10 June 1987 REASONS FOR JUDGMENT (On fourth defendant's motion to strike out para.18A to 181 Cincl.) of the plaintiff's further amended statement of claim) Before the Court is an application by one of the defendants to the proceedings to strike out certain parts of the Plaintiff's further amended statement of claim. The action was remitted to this Court by order made by Mason J. (as he then was) (see (1986) 69 A.L.R. 270). Since the remitter, the plaintiff has amended his statement of claim in a number of respects and has joined the Commonwealth as a fourth defendant. The nature of the plaintiff's claim, as originally made, is described by Mason 2. J. at 69 A.L.R. at p.271. The Commonwealth now moves to strike out paras.18A to 18I of the plaintiff's pleading on the ground that they disclose no reasonable cause of action (see 0.11 r.16(a)). The pleading is in these terms: "118A. Further and in the alternative, pursuant to Regulation 84(1) of the Air Navigation Regulations upon application by the proprietor of any place the Fourth Defendant may issue to him an aerodrome licence authorising the use of the place as an aerodrome. 18B. Pursuant to Regulation 85 of the said Regulations and subject to the said Regulations, the Fourth Defendant may, by specific or general description, authorise the use of any place as an aerodrome for the purposes of the landing and taking off of such types of aircraft, engaged in such classes of operations and subject to such conditions as the Fourth Defendant specifies in the instrument of authorisation. 18C. Pursuant to Regulation 89(1)(b) of the said Regulations an aircraft shall not land at, or take-off from, any place unless the use of the place as an aerodrome is authorised by a licence granted under Regulation 84. 18D. Pursuant to Regulation 89(1)(c) of the said Regulations an aircraft shall not land at, or take-off from, any place unless the use of the place as an aerodrome is authorised by the Fourth Defendant under Regulation 85 and:- (i) The aircraft is of a type of aircraft authorised under' that Regulation to land and take-off from the place; (11) The aircraft 1s engaged in operations included in a class of operations specified by the Fourth Defendant in the instrument of authorisation under that Regulation that relates to the place; and (iii) Any condition specified in that instrument of authorisation 18s complied with. 18E. The Fourth Defendant was thereby under a duty not to allow or permit the use of the pontoon as an aerodrome without first authorising the same. 18F. Further and in the alternative, the Fourth Defendant was thereby under a duty not to allow or permit the use of the pontoon as an aerodrome without first authorising the same. 18G. Further and in the alternative, the Fourth Defendant was thereby under a duty not to allow or permit the use of the pontoon as a helicopter landing site other than in accordance with the terms and conditions of the general Authorisation of helicopter landing sites made by the Fourth Defendant under the said Regulation 85. 18H. Further and in the alternative, the Fourth Defendant was thereby under a duty of care to take all reasonable care for the Plaintiff's safety. 181. The said collision, injuries, disabilities, loss and damage were occasioned to the Plaintiff by reason of the negligence and/or breaches of duty of the Fourth Defendant, his delegates and agents." Particulars of negligence are then given but there is no allegation there made that the Commonwealth was, or ought to have been, aware of the activities of the persons involved in the use of the unlicensed pontoon. It is conceded by the plaintiff that his cause of action, 1f any, against the Commonwealth 1s founded on common law negligence and not on breach of statutory duty. For its part, the Commonwealth, says that the paragraphs of the pleading now in question do not disclose any possible foundation in law for the cause of action which the plaintiff alleges. In essence, the Commonwealth's contention is that, in the absence of an allegation by the plaintiff that the Commonwealth knew or ought to have known of the activities of the other defendants in the use of the pontoon, the pleading is fundamentally defective. 4. The question which arises in an application of this type was explained by Lord Hodson, Lord Guest and Lord Diplock in The Mutual Life & Citizens' Assurance Company Limited v. Evatt (1970) 122 C.L.R. 628 at p.631 in the context of a demurrer under the old system of pleading: "The allegation in (9) that the company supplied the information and advice 'negligently' is an assertion of a breach of a duty of care owed by the company to Mr. Evatt. But under the common law system of pleading still in force in New South Wales the plaintiff in an action for negligence must allege facts from which if they and no other facts were proved at the trial, the law will deduce a duty of care. The question for their Lordships is whether the facts stated in (1) to (8) are in themselves sufficient to give rise to a duty owed by the company to Mr. Evatt to take care in giving him the information and advice which he sought. The guestion is thus different from that which arises under the modern system of pleading in England upon an application to strike out a statement of claim as disclosing no reasonable cause of action. There the question is whether 1t would be open to. the plaintiffs upon the pleadings to prove facts at the trial which would constitute a cause of action. See Dorset Yacht Co. v. Home Office [1970] A.C. 1004; T1970] 2 W.L.R. 1140." © The circumstances in which a public authority may be liable in negligence at common law were discussed in The Council of the Shire of Sutherland v. Heyman (1985) 157 C.L.R. 424. It was there held by the Full High Court (Gibbs C.J., Mason, Wilson, Brennan and Deane JJ.) that the Council was not liable to the plaintiffs for structural defects in a building purchased by the plaintiffs but erected with inadequate footings. The plaintiffs' contention that the Council was negligent, because 1t had failed, or failed properly, to inspect the footings during the course of their construction in the performance of its statutory duties, was rejected. Although the case directly concerned the operation 5. of the Local Government Act 1919 (N.S.W.), much of the discussion in the judgments is of general application and the Court's reasoning is authoritative for present purposes. Because of the importance of Heyman, it is necessary to refer to it in some detail. Gibbs C.J. (and the other members of the Court) following Lord Atkin's dissenting judgment in East Suffolk Rivers Catchment Board v. Kent [1941] A.C. 74 at pp.88-9, accepted that the fact that a statutory provision, which confers powers or duties on a public authority, 1s enacted for the benefit of the public generally and confers no private right upon an individual, does not mean that the individual has no right of action at common law if the authority is negligent (at p.436). After referring to Lord Wilberforce's well-known explanation in Anns v. Merton London Borough Council [1978] A.C. 728 of the distinction between the area of policy and the operational area as logical and convenient, and after expressing the view that a non-feasance could come within the rule of Donoghue v. Stevenson, Gibbs C.J. said (at p.443): "However, as a general rule, a failure to act 1s not negligent unless there is a duty to act. The duty May arise because of the conduct of the defendant himself or it may be created by statute." The Chief Justice further observed (at p.445): "Once it is accepted, as it must be, that the ordinary principles of the law of negligence apply to public authorities, it follows that they are liable for damage caused by a negligent failure to act when they are under a duty to act, or for a negligent failure 6. to consider whether to exercise a power conferred on them with the intention that it should be exercised if and when the public interest requires it. Where a public authority has decided to exercise a power, and has done so negligently, a person who has acted in reliance on what the public authority has done may have no difficulty in proving that the damage which he has suffered has been caused by the negligence. Where the damage has resulted from a negligent failure to act there may be greater difficulty in proving causation...I am disposed to agree that there is a basic difference between causing something and failing to prevent it from happening." The Chief Justice considered that, although no relevant statutory duty was imposed on the Council, it owed to the plaintiffs, as owners and occupiers of a house erected subject to its approval and under its control, a duty at common law to give consideration to the question whether it should exercise its powers, including its powers of inspection. The Council had a discretion as to how and when it should exercise its powers, and 1t could not be rendered liable for negligence unless it were shown that it had not properly exercised that discretion. The facts that the municipality was a large one and there were many building applications to be dealt with were relevant considerations (at p.447). The Chief Justice was of the view that, ain the absence of evidence that the Council's officers had been guilty of negligence in any inspection of the footings, the plaintiffs' claim should be rejected. Wilson J. was in general agreement with the reasons of the Chief Justice. Mason J., (as he then was) observed that since powers 7. are conferred upon a public authority for the purpose of attaining the statutory objects, sometimes generating a public expectation that they will be exercised, there 1s no reason why the authority should not be subject to a common law duty of care in appropriate circumstances in relation to performing, or failing to perform, its functions, except in so far as its policy-making and, perhaps, its discretionary decisions are concerned (at pp.457-8). His Honour said that, although generally speaking, a public authority under no. statutory obligation to exercise a power comes under no common law duty of care to do so, yet an authority may by its conduct place itself in such a position that it attracts a duty of care which calls for the exercise of the power (at pp.459-60). Mason J. instanced situations where the authority created a danger or occupied premises or a structure (at p.460). His Honour referred to situations in which the authority, not otherwise under a relevant duty, may place itself in such a position that others rely on it to take care for their safety so that the authority comes under a duty of care calling for positive action (at p.461). Reliance has always been an important element in establishing the evidence of a duty of care not only in the Anglo-Australian authorities but also in the United States experience (at pp.462-3): "...the liability of coastguards for negligent inspections has been denied on the ground that the plaintiffs had not shown that they knew that the coastguards conducted safety inspections and that they were thereby induced to forego their own safety efforts: Patentas v. United States (1982) 687 F.(2d) 7O7, at p.717. On the other hand, it has been recognized that where the government has supplanted private responsibility, as in the case of air traffic controllers, general, rather than specific, reliance may be sufficient to generate liability: Clemente v. United States (1977) 567 F.(2d) 1140, at pp,-1147-1148. This approach was adopted in relation 8. to the inspection and certification of civil aircraft: S.A. Empresa De Viacao Aerea R10 Grandense (Varig Airlines) v. United States (1982) 692 F.(2d) 1205 and United Scottish Insurance v. United States (1982) 692 F.(2d) 1209, where the court pointed out that the public generally depends on the government properly to inspect aircraft and that this justifies the imposition of a duty of care..." Mason J. was of the opinion that the foreseeability of the plaintiff's reasonable reliance is a sufficient basis for finding a duty of care, subject to such dispensations as may arise from the special character of a public authority exercising statutory functions (at pp.463-4). His Honour explained what he meant by "reasonable reliance" in this way (at p.464): "Reliance or dependence in this sense is in general the product of the grant (and exercise) of powers designed to prevent or minimize a risk of personal injury or disability, recognized by the legislature as being of such magnitude or complexity that individuals cannot, or may not, take adequate steps for their own protection. This situation generates on one side (the individual) a general expectation that the power will be exercised and on the other side (the authority) a realization that there is a general reliance or dependence on its exercise of power: see Shapo, The Duty to Act (1977), at pp.95-96. The control of air traffic, the safety inspection of aircraft and the fighting of a fire in a building by a fire authority (but cf. Bennett & Wood Ltd. v. Orange City Council (1967) 67 S.R.(N.S.W.) 426 may well be examples of this type of function." Mason J. rejected as a foundation for imposing a duty of care the mere failure by the Council to give proper consideration to the question whether the power of inspection should be exercised or not (at pp.464-7). On the other hand, his Honour did not accept that a duty of care could never arise where discretionary elements were involved in an operational decision: "1t 1s possible that a duty of care may exist in relation to 9. discretionary considerations which stand outside the policy category..." (at p.469). Mason J. said (at p.469): "The distinction between policy and operational factors is not easy to formulate, but the dividing line between them will be observed if we recognize that a public authority is under no duty of care in relation to decisions which involve or are dictated by financial, economic, social or political factors or constraints. Thus budgetary allocations and the constraints which they entail in terms of allocation of resources cannot be made the subject of a duty of care. But it may be otherwise when the courts are called upon to apply a standard of care to action or inaction that is merely the product of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness." Since a case of specific reliance had not been established and since a case of general reliance had not been suggested, his Honour held that the plaintiffs' claim should be dismissed. Brennan J. was also of the opinion that, in cases of alleged failure to act, reliance was a significant consideration: a public authority, which adopts a practice of so exercising its powers that it induces a plaintiff reasonably to expect that it will exercise them in the future, is liable to the plaintiff for a subsequent omission to exercise its powers 1f the plaintiff has relied on the expectation induced by the authority and has thereby suffered damage provided that damage was reasonably foreseeable and provided that any special element restricting a cause of action for negligence occasioning damage of that kind 1s satisfied (at p.486). Deane J. was of the view that since the Council's 10. functions there were of a routine administrative or "operational" nature, liability was not precluded as in cases where what is involved are actions taken in the exercise of policy-making powers and functions of a quasi-legislative character (at p.500). His Honour also held that where there is an alleged failure to act, apart from those cases where the circumstances disclose an assumption of a particular obligation to take such action or of a particular relationship in which such an obligation is implicit, the requisite proximity of relationship will be found to exist only in special or exceptional situations: they are largely confined to cases involving reliance by one party upon care being taken by the other in the discharge of statutory powers, duties or functions (at p.502). Part Ix of the Air Navigation Regulations ("the Regulations") deals with aerodromes and facilities and services. Division 1 of Part IX deals with the establishment of aerodromes and air route and airway facilities. Upon application, the Secretary is empowered to issue a licence authorising the use of a place as an aerodrome (Reg.84(1)). A licence shall be issued subject to such conditions as the Secretary considers necessary to ensure compliance with the Chicago Convention and the safety of aircraft using the aerodrome (Reg.84(2)). The Secretary may, by specific or general description, authorise the use of any place as an aerodrome for the purposes of the landing and taking-off of such types of aircraft, engaged in such classes of operations and subject to such conditions as the Secretary specifies (Reg.85). An aircraft shall not land at, or take off ll. from, any place unless (a) the place is an aerodrome established under Part IX; (b) the use of the place as an aerodrome is authorised by a licence granted under Reg.84; (c) the use of the place as an aerodrome is authorised under Reg.85 and the conditions specified in the instrument of authorisation are complied with (Reg.89(1)). Division 2 of Part IX deals with air traffic control but it is not suggested that the provisions of this Division are the source of the creation of any common law duty in the present case (cf. Heyman at p.462 per Mason J.; Nichols v. Simmonds [1975] W.A.R. 1; Skyways Pty. Ltd. (in lig) v. Commonwealth of Australia (1984) 57 A.L.R. 657 at pp.666-8; Shawcross and Beaumont on Air Law, 4th ed., VI (32)). The question in this case 1s whether the Commonwealth owed the plaintiff a legal duty to "try to forestall and prevent a peril" (per Windeyer J. in Hargrave v. Goldman (1963) 110 C.L.R. 40 at p.66; Skuse v. Commonwealth of Australia (1985) 62 A.L.R. 108 per Fox J. at pp.113-4; cf. H1ll v. Chief Constable of West yorkshire [1987] 2 W.L.R. 1126; Curran v. Northern Ireland Co-Ownership Housing Association Ltd. (1987) 2 W.L.R. 1043; P. Perl (Exporters) Ltd. v. Camden London Borough Council [1984] 1 Q.B. 342; Smith v. Littlewoods Organisation Ltd. [1987] 2 W.L.R. 480; David Cohen and J.C. Smith, Entitlement and the Body Politic: Rethinking Negligence in Public Law 64 Can. Bar Rev. 1 (1986); M.J. Bowman and S.H. Bailey, Negligence in the Realms of Public Law - a Positive Obligation to Rescue? (1984) P.L.277). It appears that there is no authority squarely in point. 12. In Sasin v. Commonwealth of Australia (1984) 52 A.L.R. 299, the pilot of an aircraft was injured when it crashed. He sued the Commonwealth for negligence in relation to the approval of the seat belt reel installed in the aircraft. Hodgson J. dismissed the claim, following Anns and Heyman in the Supreme Court (see (1982) 2 N.S.W.L.R. 618), on the ground that a duty of care was there excluded because of the "policy" or "discretionary", rather than "operational", character of the Commonwealth's conduct. His Honour did not, of course, have the advantage of the reasoning of the High Court in Heyman. Moreover, a real question arises here whether a duty of care should be excluded merely on "policy" or "discretionary" grounds. It is at least doubtful whether that exception could have any application here. It 18 common ground that, in order to disclose a reasonable cause of action, a statement of claim must contain statements of material facts which support the claims made. It is not enough for a plaintiff to allege merely that the defendant acted negligently and thereby caused him damage. He must also set out facts which show that the alleged negligence was a breach of duty which the defendant owed the plaintiff (see H 1976 Nominees Pty. Ltd. v. Galli and Apex Quarries Ltd. (1979) 30 A.L.R. 181 at p.186; Bullen & Leake and Jacob's Precedents of Pleadings 12th ed. at p.685). As has been said, it is submitted on behalf of the Commonwealth that the absence of an allegation by the plaintiff in his statement of claim that the Commonwealth was aware or ought to have been aware of the activities of the parties concerned is fatal. It is contended by the Commonwealth that such an allegation 1s an essential ingredient in a cause of 13. action of common law negligence. I cannot accept this analysis. It may be accepted that knowledge, actual or constructive, of the activities of the persons involved could be a basis for erecting a common law duty of care in the present case. But it is not the only way in which such a duty could be created. It is possible that the Regulations may play a part in the creation of a common law duty of care. In this connection, it is possible that the plaintiff could make out a case of general, rather than specific, reliance in the sense explained in Heyman. The present inquiry is not whether, as a matter of law, a cause of action is made out on the bare allegations on the face of the pleading. Put differently, the present question does not involve the determination of a preliminary issue of law such as arose in Home Office v. Dorset Yacht Co. Ltd. [1970] A.C. 1004. To adopt the language of Mason J. used in this case in another application (69 A.L.R. 270 at p274), I am not satisfied that there is no possible foundation in law for the cause of action which the plaintiff seeks to litigate in the paragraphs now in question. True, the plaintiff 1s confronted with a difficult task in demonstrating a case of general reliance, especially in terms of causation. But these difficulties do not require that the plaintiff be precluded at this preliminary stage, from prosecuting his claim. The legal complexity of his allegations may be accepted (see, e.g., the note on Heyman in (1985) 60 A.L.J. 4 at p.6). pleading. 14. Yet this 1s not a reason to strike out The Commonwealth's motion 1s dismissed with costs. Counsel and Solicitors for Plaintiff: Counsel and Solicitors for Fourth Respondent: Date of hearing: Date Judgment Delivered: I certify t dnd this and the ' preceding Ian (13) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Beaumont. Dyebe H Sehicor Associate Dated: 10 June 1987 Mr. A.B. Shand Q.C. with Mr. D. Cowan = instructed McGuren Allen & Holt by Mr. J.A.M. Pritchard Q.C. with Mr. R. Macready instructed by Australian Government Solicitor 19 May 1987 10 June 1987 the