AIR SERVICES AUSTRALIA v ZARB SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, POWELL JJA and ROLFE AJA 8 April 1998, 26 August 1998 [1998] NSWCA 7 Appeal by leave against decision to dismiss an application for summary judgment on the basis that no reasonable cause of action disclosed. Appeal argued on the sole point that there was no cause of action as the appellant's actions were policy decisions and not operational decisions. District Court Rules: Ptl1A 13(1)(a) and Ptl1A 13(1)(b) District Court Appeal Appeal from refusal of the District Court to dismiss proceedings pursuant to PtllA 13(1)(a) and Ptl1A 13(1)(b) on the grounds that no reasonable cause of action was disclosed and the proceedings were frivolous or vexatious. Matter argued on the sole point as to whether the defendant owed the plaintiff a duty of care on the basis that no duty of care arose because the activities of which the plaintiff complained came about from the exercise by the defendant of policy or quasi legislative functions rather than from the exercise of operational functions pursuant to Air Services Act 1995. Held, applying the General Steel's test, that this was an inappropriate case to dismiss the proceedings summarily having regard to the developments in the law on this issue, the questionable applicability of the reasons of Mason J in The Council of the Shire of Sutherland v Heyman & Anor (1985) 157 CLR 424 on this topic, and the subsequent decisions of the High Court including Pyrenees Shire Council v Day (1988) 72 ALJR 152 and Romeo v Conservation Commission of the Northern Territory (1998) 72 ALJR 208. Dey v Victorian Railway Commissioners (1948-1949) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125; Webster & Anor v Lampard (1993) 177 CLR 598; Wickstead & Ors v Browne (1992) 30 NSWLR 1; NRMA Insurance Ltd v A W Edwards Pty Ltd (Court of Appeal - 11 November 1994 - unreported) and Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 referred to and followed. See also W D & H O Wills (Aust) Ltd v State Rail Authority (Court of Appeal - 3 April 1998 - as yet unreported) and Avenhouse & Anor v The Council of the Shire of Hornsby (Court of Appeal - 15 May 1998 - as yet unreported). Priestley JA I have had the benefit of reading in draft the reasons of Rolfe AJA. I agree with them and with his conclusions. I wish to add that the point decided in this appeal is a very limited one, chosen by the appellant Airservices Australia. In the District Court the appellant sought to have the plaintiff's proceedings summarily and finally dismissed on the ground that even if she proved the allegations in her Statement of Claim, she would not establish any cause of action. That may turn out to be right, but the fact that it may be right did not entitle the appellant to stop the plaintiffs proceedings at that stage. To use the words of Barwick CJ in General Steel, the appellant had to show "the case of the plaintiff [was] so clearly untenable that it cannot possibly succeed" (1964) 112 CLR at 129, more fully cited in Rolfe AJA's reasons). The basis on which the appellant sought to show the plaintiff's case was clearly untenable was that the allegations in her Statement of Claim did not give rise to a duty of care, and that the reasons of Mason J in Sutherland Shire Council v Heyman (1985) 157 CLR 424 on this point had become the law in Australia 2 UNREPORTED JUDGMENTS which this court must follow. On this narrow issue I think the appellant must fail in this appeal. In my opinion what Mason J said in Heyman was not part of the ratio decidendi of that case in the sense relied upon by the appellant, and is not now recognised as such by the High Court. In my opinion, on the ground chosen by the appellant in the District Court and this court, it was not entitled, at the stage the proceedings had reached, to have the plaintiff's claim shut out from further hearing. I agree with Rolfe AJA that the appeal should be dismissed with costs. Powell JA I have read in draft the Judgment which has been prepared by Rolfe AJA with which Judgment Priestley JA agrees. I regret that I cannot share their Honours' view that the appeal should be dismissed with costs. On the contrary, I am of the opinion that the appeal should be upheld, the orders made by Mahoney DCJ at first instance set aside and in lieu that it be ordered that the proceedings in the District Court be dismissed with costs, and that in addition, the Respondent should pay the costs of the Appellant of the appeal but have a certificate under the Suitors Fund Act 1951. Although, at the commencement of the hearing of the appeal, the Court was at some pains to ascertain with precision what was to be the point the subject of the appeal and was informed by Mr A J Sullivan QC, who appeared with Ms L McCallum for the Appellant, that it was whether the Appellant was immune from suit in respect of the actions alleged to have been taken by it in respect of what were said to be its responsibilities for the planning and determination of, supervision of, control of and co-ordination of, flight paths leading into and out of Sydney (Kingsford Smith) Airport, which alleged actions were said to be negligent in the respects asserted in para6 of the Statement of Claim which had been filed on behalf of the Respondent, later during the course of the hearing of the appeal, Mr P C B Semmler QC, who appeared with Mr N J Mullany for the respondent, asserted that the Respondent's complaints were not limited in the way suggested by Mr Sullivan but extended to matters which were alleged to be operational matters. Since, contrary to what was said by Mahoney DCJ in his Judgment, the application which had been brought by the Appellant in the District Court was made, not pursuant to the provisions of Pt9 r17 of the District Court Rules - which deals with pleadings - but pursuant to the provisions of Pt11A 13 of the District Court Rules - the terms of which are set out by Rolfe AJA in his Judgment, and which deal with (inter alia) summary dismissal - it seems to me that the real question with which the Court is now faced is whether or not it can be said that, in the circumstances, the case which the Respondent sought to set up in her Statement of Claim is so clearly untenable that it cannot succeed. It is my view, in the light of the matters to which I will now refer, that the claim which the Plaintiff has sought to make out in her Statement of Claim is clearly untenable and should not be permitted to go for trial. It is to be noted, at the outset, that, in the Statement of Claim which was filed on behalf of the Respondent on 24 May 1996, it is alleged in paraS that the Appellant breached its duty to take reasonable care for the safety of the Plaintiff, particulars of the alleged breach being set out in para6 of the Statement of Claim. Two things flow from those two matters, they being, that it is the acts of the Appellant - and not the acts of any predecessor of the Appellant or of any person to whose direction the Appellant is subject - that are the subject matter of the Respondent's complaint; and, second, that, since the cause of action in respect of which a litigant approaches a court must be complete at the time when he issues URJ AIR SERVICES AUSTRALIA v ZARB (Powell JA) 3 his process (Re Keystone Knitting Mills Trademark!; Eshelby v Federated European Bank Ltd?; Wigan v Edwards3; Baldry v Jackson'), the acts complained of must have occurred during such time as the Appellant was in existence but prior to the filing of the Statement of Claim. As I will seek to show, it is not possible for the Respondent to establish that the matters of which she complains in relation to flight paths were taken by the Appellant, or by any person for whose actions it was vicariously responsible. Although the position prior to 1986, the relevance of which date will shortly appear, is by no means clear to me, it would seem likely that, as from 1920, when the Air Navigation Act 1920 (Cth) ("the Navigation Act') was passed, the general control of civil aviation and airports within Australia and of international flights into, and from, Australia was, until comparatively recent times, in the hands of the Department of Civil Aviation (which seems later to have been called the Department of Aviation) under the control of the relevant Minister, the Permanent Head of the Department seemingly being known as the Director-General of Civil Aviation. In addition to the Navigation Act, there appear from time to time to have been passed various acts dealing with aspects of the control of airports - as, for example, the Airports (Business Concessions) Act 1959 authorising the grant by the Minister on behalf of the Commonwealth of leases and licences in respect of land within an airport, and the Airports (Surface Traffic) Act 1960 authorising the control and regulation of parking of vehicles on land within an airport - and dealing with various aspects of the liability of those who might be involved in the carriage of passengers by air or otherwise involved in civil aviation - as, for example, the Air Accidents (Australian Government Liability) Act 1963, the Civil Aviation (Carriers Liability) Act 1959 and the Civil Aviation (Damage by Aircraft) Act 1958. During the period to which I have just referred, much of the regulation and control of such operations appears to have been the subject of regulations - apparently known as the Air Navigation Regulations - made by the Governor-General pursuant to the provisions of s26 of the Navigation Act, or of other regulations made pursuant to similar powers contained in the associated Acts to which I have just referred. It seems to have been pursuant to provisions of the regulations made under the Navigation Act that the Minister for the time being established a service known as "Air Traffic Control". Sydney (Kingsford Smith) Airport appears to have been established and to have commenced to operate in or about 1920. Whatever may have been the original configuration of the runway, or runways, at the airport it is clear that, for many years prior to 1994, the significance of which latter date will shortly appear, the runway configuration featured two intercepting runways, one which ran in a direction roughly North West to South East - known as Runway 16 when approached from the North and Runway 34 when approached from the South - which runway had been the subject of significant extension into Botany Bay in order to accommodate the operations of heavy jet aircraft, and the other running in a direction roughly East North East to West South West known as Runway 25 when approached from the East and known as Runway 07 when approached from the West. . [1929] 1 Ch 92, 103 per Lord Handworth MR . [1932] 1 KB 254 . (1973) 47 ALIR 586 . [1976] 2 NSWLR 415 RwWNS 4 UNREPORTED JUDGMENTS Whether or not dictated by the runway configuration, the fact seems to be, and for many years to have been, that there are two main air traffic routes into Sydney Airport, one from the North and the other from the South West, and a third, but less used, air traffic route from the East. 5 The home which is occupied by the Respondent is located approximately 1.5 kilometres to the North West of the threshold of what was formerly known as Runway 16 and in a direct line with a prolongation to the North West of the centre line on what was then known as Runway 16. This being so, it was, and remains, inevitable that any aircraft approaching from the North and coming in 10 to land on Runway 16 - now known as Runway 16 Right - or seeking to take off to the North from Runway 34 - now known as Runway 34 Left - would, and will, pass directly over the Respondent's home at a low altitude. As is well known, the increasing volume of air traffic using Sydney (Kingsford Smith) Airport led to congestion and delays. In December 1982 the organisation 15 - by whatever name then known - responsible for controlling aircraft movements into and out of Sydney (Kingsford Smith) Airport, introduced a mode of operation, known as Simultaneous Operations ("SIMOPS") for controlling such movements. That procedure allowed each of Runway 16/34 and Runway 25/07 to be used simultaneously and thus permitted the airport to cope with a higher 20 volume of air traffic. However, the use of SIMOPS demanded a high level of skill and vigilance on the part of both air traffic controllers and pilots. In early 1986, there was passed the Federal Airports Corporation Act 1986 (Cth) which Act established the Federal Airports Corporation ("the Corporation') as a body corporate with perpetual succession and which Act provided in s6: 25 "6. The functions of the Corporation are (a) to operate Federal airports in Australia; (b) to provide the Commonwealth, governments, local government bodies, and other persons, who operate, or propose to operate, airports or facilities relating to airports (including airports and facilities outside 30 Australia) with consultants and management services relating to the development and operation of those airports or facilities; and (c) such other functions relating to airports, not being functions specified in subs8(2), as are declared by the regulations to be functions of the Corporation." 35 — S7(2) of the Act provided (Inter alia): (2) The Corporation shall endeavour to perform its functions in a manner that (a) is in accordance with the policies of the Commonwealth Government; (b) ensures the safety of persons using airports; (c) ensures that, as far as practicable, 40 the level of noise at airports is not such as to be detrimental to the communities near airports; (f) ensures that the Corporation and the community served by Federal 45 airports are good neighbours; (g) enables the Corporation to earn a reasonable return on the assets used by the Corporation; (h) enables the Corporation to pay reasonable dividends to the Commonwealth in accordance with this Act; and 50 (j) is in accordance with sound commercial practice. S8(2) of the Act provided URJ AIR SERVICES AUSTRALIA v ZARB (Powell JA) 5 (2) The functions of the Corporation do not extend to (a) Air Traffic Control (including the provision of facilities for Air Traffic Control); (b) matters relating to the control, by persons engaged in air traffic control, of vehicles on manoeuvring areas at Federal airports; (f) the investigation of the need for additional Federal airports and the desirability of replacing existing Federal airports with new Federal airports; and (g) preparation of plans for, and the establishment of, airports that are to be Federal airports." (S8(3) of the Act defining "Air Traffic Control" as a service established, and defining "Flight Service" as a service established, maintained or operated, by the Minister under regulations in force under the Air Navigation Act 1920). S28 of the Act provided for the vesting in the Corporation, without any conveyance, transfer or assignment, of land owned by the Commonwealth which was a Federal airport - Sydney (Kingsford Smith) Airport was, and still is a Federal airport - while s29 of the Act provided that while a place owned by the Corporation as a Federal airport that place is held by the Corporation for and on behalf of the Commonwealth. In June 1988 there was passed the Civil Aviation Act 1988 (Cth) ("the Civil Aviation Act") which Act established the Civil Aviation Authority as a body corporate with perpetual succession. $9(1), s9(4) of the Act provided (inter alia) as follows: "9(1) The functions of the Authority are: (a) as provided by this Act and the regulations, to conduct safety regulations of. (i) civil air operations in Australian territory; and (ii) Australian aircraft operating outside Australian territory; (b) to provide air route and airway facilities; (c) to provide air traffic control services, and flight service services, for, in either case, surface traffic of aircraft and vehicles on the manoeuvring area of aerodromes; (h) to provide services to the Bureau of Air Safety Investigation in relation to the investigation of aircraft accidents and incidents; (j) any functions conferred on the Authority under the Air Navigation Act 1920; (4) Subject to s12, the functions to provide services and facilities may be performed at the discretion of the Authority." ("air route" being defined by s3(1) of the Act as meaning "the navigable airspace between two points and the terrain beneath such air space identified, to the extent necessary, for the application of flight rules".) $12(1), s12(2) of the Act provided: 6 UNREPORTED JUDGMENTS "12(1) The Minister may give the Authority written directions as to the performance of its function. (2) Directions as to the performance of the regulatory function shall be only of a general nature." S98 of the Act provided that the Governor-General might make regulations, not inconsistent with the Act, (inter alia) prescribing matters required, or permitted, by the Act to be prescribed or necessary, or convenient, to be prescribed for carrying out or giving effect to the Act. In pursuance of that power, the Governor-General made the Civil Aviation Regulations which Regulations, in addition to dealing with many aspects of the conduct of aerodromes, and civil aviation operations generally provided (inter alia) that the Authority might establish, maintain and operate (inter alia) a service to be known as "Air Traffic Control" the functions of which were (inter alia): (a) to promote the safe and efficient conduct of flight operations by issuing air traffic control clearances and instructions and by giving information appropriate to the locality and circumstances in which the operations are conducted; and (b) to promote the safe movement of aircraft on manoeuvring areas by giving instructions and information; and (c) to expedite and maintain an orderly flow of air traffic." The increasing volume of air traffic using Sydney (Kingsford Smith) Airport, coupled with the high level of skill and vigilance on the part of air traffic controllers and pilots required in order that SIMOPS might continue, led to demands for the Construction at the airport of what came to be known as - and is still colloquially known as - the third runway (that is an additional runway parallel to Runway 16/34. The construction of that runway - situated about 800 metres to the East of Runway 16/34 - was announced by the then Minister for Shipping and Aviation Support in November 1991. Up until this time Runway 16 was the preferred runway for departures, while Runway 16 and Runway 07 were the preferred runways for arrivals. As part of the process of preparation for the coming into operation of the new runway and for the conduct thereafter of parallel runway operations, in July 1994, there were introduced Standard Terminal Arrival Routes (STARs), which were pre-planned arrival routes which joined incoming routes into the airport onto a fixed position near the airport and Standard Instrument Departures (SIDs) and Standard Radar Departures (SRDs), the combination of which was intended to segregate arriving and departing traffic, thus enhancing safety and efficiency. The new runway was opened on 4 November 1994. Thereafter Runway 16/34 came to be known as Runway 16R/34L while the new runway came to be known as Runway 16L/34R. Thereafter, the Governor-General made the Air Navigation (Aerodrome Flight Corridors) Regulations, which Regulations came into force on 23 December 1994. Reg3 and reg4 of the Regulations provided: "3(1) A jet aircraft: (a) for the purpose of approaching to land on a runway; or (b) for the purpose of departing after take of from a runway; must fly within, and not deviate from, the appropriate designated flight corridor for the runway, except in accordance with an instruction or approval given under subreg(2). (2) Subject to subreg(3) an air traffic controller may: (a) instruct a jet aircraft to deviate from, or not to fly within, a designated flight corridor; or URJ AIR SERVICES AUSTRALIA v ZARB (Powell JA) 7 (b) approve a jet aircraft deviating from, or not flying within, a designated flight corridor; (3) An air traffic controller must not give an instruction or approval under subreg(2) unless it appears to the air traffic controller to be necessary to do so: (a) having regard to the safety of the aircraft or any person; or (b) to avoid damage to property. (4) In subreg(1) 'appropriate' means appropriate having regard to: (a) the designated flight corridor or flight corridors for the runway; and (b) the kind of flight operation concerned; and (c) the designated flight corridor in respect of which a flight operation of that kind is specified in the Schedule. 4(1) For the purposes of reg3, the flight corridor specified in Column 2 of an Item in the Schedule is designated for the runway specified in Column 3 of that Item in respect of the kind the flight operation specified in Column 4 of that Item. (2) The points by reference to which the location and dimensions of a designated flight corridor are defined are the points determined in writing by the Minister." while the Schedule referred to in reg4 was in the following form: Column 1 Column 2 Column 3 Item Flight Corridor Runway 1. Flight Corridor A Runway 3 2. Flight Corridor B Runway 3 3. Flight Corridor C Runway 3 4. Flight Corridor D Runway 1 5. Flight Corridor E Runway 1 6. Flight Corridor F Runway 1 7. Flight Corridor G Runway 1 (Flight Corridor B directed a departing aircraft over the Respondent's home, while Flight Corridor F directed an arriving aircraft over the Respondent's home.) As from 23 December 1994 SIMOPS procedures at Sydney (Kingsford Smith) Airport ceased. After the coming into operation of Runway 16L/34R, the runways were preferred in the following sequence: (a) Runway 16L and 16R were used for departures and Runway 16R and 16L for arrivals; and (b) Runway 34L was used for departures and Runways 34R and 34L for arrivals. 8 UNREPORTED JUDGMENTS In June 1995 there were passed the Air Services Act 1995 (Cth) ("the Air Services Act") and the Civil Aviation Legislation Amendment 1995 (Cth) ("the Amendment Act'') the combined effect of which two statutes was to abolish the Civil Aviation Authority and to divide the functions formerly performed by the Civil Aviation Authority between two new bodies corporate, Air Services Australia, the Appellant and the Civil Aviation Safety Authority. S8(1), s8(3), s9(1), s16(1), s16(3) of the Air Services Act provide (inter alia): "8(1) AA has the following functions: (a) providing facilities to permit safe navigation of aircraft with Australian administered airspace; (c) co-operating with the Bureau of Air Safety Investigation in relation to the investigation of aircraft accidents and incidents. (3) Subject to subs9(1) and s16, the extent to which AA provides services and facilities is subject to AA's discretion. 9(1) In exercising its powers and performance its functions, AA must regard the safety of air navigation as the most important consideration. 16(1) The Minister may give directions to AA relating to the performance of its functions or the exercise of its powers. (3) AA must comply with a direction given under subs1." The Amendment Act provided for the transfer to Air Services Australia and to the Civil Aviation Safety Authority of the assets and liabilities and the staff of the Civil Aviation Authority. The Amendment Act also amended the Civil Aviation Act (inter alia) by omitting s8(1), s9 and s9(a) and substituting: "8(1) An Authority called the Civil Aviation Safety Authority is established by this subsection. 9(1) CASA has the function of conducting the safety regulation of the following, in accordance with this Act and the regulations: (a) civil air operations in Australian territory; (b) the operation of Australian aircraft outside Australian territory; by means that include the following: (c) developing and promulgating appropriate, clear and concise aviation standards; (d) developing effective enforcement strategies to secure compliance with aviation safety standards; (e) issuing certificates, licences, registrations and permits; (f) conducting comprehensive aviation industry surveillance, including assessment of safety related decisions taken by industry management at all levels for their impact on aviation safety; (g) conducting regular reviews of the system of civil aviation safety in order to monitor the safety performance of the aviation industry, to identify safety related trends and risk factors and to promote the development and improvement of the system. URJ AIR SERVICES AUSTRALIA v ZARB (Powell JA) 9 (3) CASA also has the following functions: (a) co-operating with the Bureau of Air Safety Investigation in relation to the investigation of aircraft accidents and incidents; 9A(1) In exercising its powers and performing its functions, CASA must regard the safety of air navigation as the most important consideration." In addition the Civil Aviation Act was amended by inserting a new section, s12A reading as follows: "12A(1) The Minister may notify CASA in writing of the Minister's views on the following matters: (b) the manner in which CASA should perform its functions. (2) In performing its functions CASA must take account of notices given under subs(1)." The Air Services Regulation which came into operation in July 1995 provided (inter alia): "3.02 The functions of the Air Traffic Service are: (a) to facilitate the safe and efficient conduct of aircraft flights; and (b) to facilitate the safe movement of aircraft on the manoeuvring area of aerodromes; and (c) to facilitate and maintain a safe, orderly and expeditious flow of air traffic; ("Air Traffic Service" being defined as meaning "AA in its capacity as the provider of air traffic services".) At the time of the coming into operation of the Sydney Airport Curfew Act 1995, the Air Navigation (Aerodrome Flight Corridors) Regulations were amended by the Air Navigation (Aerodrome Flight Corridors) Regulations (Amendment) in the following (Inter alia) respects: 1. the words "a jet aircraft' were omitting from each of reg3(1), reg3(2)(a), reg3(2)(b) and there were substituted the words "a jet aircraft or a relevant propeller driven aircraft"; and 2. Reg4(1) was amended by inserting after the words "of Reg3" the words "in relation to jet aircraft". ("the words "relevant propeller driven aircraft" being defined as meaning "an aircraft to which s14 of the Sydney Airport Curfew Act 1995 applies.") Following the election of the current Government, the then Minister for Transport and Regional Development, on 20 March 1996, acting under s16 of the Air Services Act 1995 directed the Appellant, inter alia, to: "1. Take immediate steps, consistent with the requirements of the Act, to increase the usage of Runway 07/25 (known as the East West runway) at Sydney (Kingsford Smith) Airport in order to distribute the noise generated at the airport more fairly. Consistent with this, the East West runway is to operate in accordance with the following principles: ¢ The full length of the runway is to be available for use by both jet and propeller aircraft. 10 UNREPORTED JUDGMENTS ¢ Procedures involving independent use of the intersecting runways (such as the procedures known as SIMOPS) are not to be adopted. ¢ Usage of the runway should be directed, consistent with safety and efficiency of airport operation, toward achieving the earliest and maximum practicable reduction in the number of aircraft taking off and landing over areas to the North of the airport." In April 1996, the Air Navigation (Aerodrome Flight Corridors) Regulations were further amended by omitting from the Schedule to the Regulations Items 2, 4 and 6. On 24 April 1996 there was issued by the then Minister for Transport and Regional Development a Media Statement which read (inter alia) as follows: "FAIRER SYDNEY AIRPORT FLIGHT PATHS The Federal Government has abolished the inequitable flight corridors to the North of Sydney Airport, and returned to broader flight paths to eliminate the concentration of air noise in suburbs North of Sydney Harbour. The decision fulfils a commitment made by the then Opposition Leader John Howard prior to the election, which began with the 28 March order to re-open the East/West runway. The measures will have the added effect of trimming delays for air passengers by reducing air space congestion close to the airport. New procedures introduced by Air Services Australia on 22 April allow incoming jet flights to join final approach earlier than the restrictive 6 mile limit introduced by the previous Government. Some departures to the North will also be allowed to turn off between 4 and 6 nautical miles." Despite the direction given by the Minister in March 1996 and _ the amendments made to the Air Navigation (Aerodrome Flight Corridors) Regulations in April 1996, the fact remains that an aircraft landing from the North on Runway 16R will still be obliged to pass over the Respondent's home at low altitude, and an aircraft taking off from Runway 34L will still be obliged to pass over the Respondent's home at low altitude. The result of all this is that, from December 1994, when the Air Navigation Aerodrome Flight Corridors) Regulation came into operation until no earlier than 28 March 1996, when the Minister gave his direction, or no later than April 1996, when the Air Navigation (Aerodrome Flight Corridors) Regulations were amended, the promulgation of flight corridors which jet aircraft, and, later, relevant propeller driven aircraft, were required to use, and from which they could not diverge without becoming subject to penalties, was done by way of regulation, the requirements of which, after the Appellant came into being, the Appellant's employees, the air traffic controllers, were required to enforce. It is thus clear, in my view, that if this action is to be permitted to go for trial, the Respondent will be unable to establish any of the particulars of breach of duty charged by her in para6 of her Statement of Claim. This being so, it seems to me, that the Appellant's application to Mahoney DCJ should have succeeded and the action should have been summarily dismissed. For these reasons, I would make the Orders which I have indicated at the commencement of these reasons. Rolfe AJA Introduction Carman Francisca Zarb, for whom Mr P C B Semmler of Queen's Counsel and Mr N J Mullany of Counsel, appeared, resided, at all material times, in the Sydney suburb of Sydenham. On 24 May 1996 she commenced proceedings by URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 11 an Ordinary Statement of Claim in the District Court of New South Wales against Airservices Australia, ("AA"), for which Mr A J Sullivan of Queen's Counsel and Ms L McCallum of Counsel appeared, which is a statutory corporation under the Air Services Act 1995 ("the Act"). In so far as is presently relevant she pleaded her case thus:- "1. The Defendant is the Airservices Australia and is liable to be sued in and by its said corporate name and style. 2. The Defendant was at all material times responsible for the planning and determination of, supervision of, control of, and co-ordination of flight paths leading into and out of Sydney Kingsford Smith Airport which airport is located in Mascot, near Sydney in the State of New South Wales. 3. The plaintiff is a housewife who resides at 10 Hogan Avenue Sydenham. 4. The Defendant owed persons such as the Plaintiff a duty to take care of their safety. 5. The Defendant breached its duty to take reasonable care for the safety of the Plaintiff resulting in the Plaintiff suffering injuries and disabilities and sustaining loss and damage. 6. Particulars of the breach by the Defendant are as follows: (i) designing and planning aircraft flight patterns which concentrated unusual level of noisy aircraft immediately above the Plaintiff's roof; (ii) co-ordinating the flight paths of an aircraft in such a manner so as to expose the Plaintiff to damage levels of noise; (iii) exposing the Plaintiff to a risk of damage and injury of which the Defendant knew or ought to have known; (iv) failing to warn the Plaintiff that the Defendant's flight plans introduced upon the opening of the third runway would injure the Plaintiff and her hearing; (v) failing to take any or any adequate immediate steps to protect the Plaintiff from damage and loss of hearing; (vi) allowing, permitting and directing as many as 150 aircraft per day to fly directly over and in close proximity to the Plaintiff's roof. (7) The Plaintiff relies on an admission upon the Defendant authorising, paying for and installing insulation in the Plaintiff's home in 1996 that at a time when she had already suffered from hearing loss". The balance of the pleading related to the injuries and damage allegedly suffered by Mrs Zarb. On 15 January 1997 AA filed a Notice of Grounds of Defence in which it admitted paral, did not plead to para3, did not admit para2, para8 and para9, and denied para4 to para7 of the Ordinary Statement of Claim. On 18 March 1997 AA filed a Notice of Motion, pursuant to Pt11A 13(1)(a) and 13(1)(b), seeking an order that judgment be entered for it or, alternatively, the proceedings be summarily dismissed with costs. The Rule provides:- "3(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:- (a) no reasonable cause of action is disclosed; (b) the proceedings are frivolous or vexatious the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings". "Dismiss" is defined in the Rules as:- 12 UNREPORTED JUDGMENTS "in relation to any proceedings means finally dispose of the proceedings, but (except where the proceedings consist of an appeal to the Court) without prejudice to any right to commence fresh proceedings seeking the same, or substantially the same, relief". It moved on the affidavit of Mr William Charles Sims, sworn 14 March 1997, who identified himself as the Terminal Control Unit Manager Sydney Air Traffic Services and, as such, the person responsible for the provision of air traffic services in the airspace surrounding Sydney Airport. He referred to the Act and asserted that its function was to provide services to aircraft, which facilitate safe air navigation, including air traffic control, flight information and search and rescue services. The affidavit stated that Sydney Airport is very busy and described where it is located, the main air traffic routes, the various runway configurations, and that Mrs Zarb's residence "is almost exactly on the centre line of runway 16R". In paralO he set forth a number of "competing factors", which have to be balanced to determine flight path locations, including "relevant policy directives". He continued in paral 1:- 'Operational restrictions mean that certain suburbs particularly those close to the Airport, will always be exposed to a high level of aircraft noise regardless of what noise abatement policies are put in place. For example, in order to make a successful landing, aircraft require a period in which to stabilise prior to touchdown. The final approach of all high capacity regular public transport aircraft must be aligned with the centre line of the runway generally by four miles from the point of touchdown. 12. Accordingly the house in which Mrs Zarb lives, which is approximately one mile from the threshold of runway 16R, has always had, and is going to have, aircraft flying almost directly over the top of it". He described steps taken in relation to handling the problems and, in paral8, he referred to the fact that AA "develop procedures in line with government environmental and noise abatement policy" by following certain procedures. In paral9 he stated that the Minister has the power to direct AA as to which runways and flight paths should be used under s16 of the Act, and that the Chief Executive Officer and other authorised officers of it have delegated power to alter aircraft flight paths. He commenced, in para20, to consider the construction of a new parallel runway, usually referred to as the third runway, and to the effect of its opening on 4 November 1994. Thereafter he referred to certain procedures adopted pursuant to the Air Navigation (Aerodrome Flight Corridors) Regulations 1994 and to a Ministerial Direction issued on 20 March 1996 concerning increased use of the east/west runway. The Notice of Motion came on for hearing before Mahoney DCJ and, on 22 August 1997, his Honour gave judgment dismissing it with costs. It is against that decision that AA was granted leave to appeal on 15 September 1997. The Matters In Issue At the commencement of the hearing the Court raised with Mr Sullivan a number of matters, which may, arguably, have arisen for decision. They included the fact that the Act did not come into force until 1995. Mr Sullivan stated expressly that whilst that and various other matters, such as a limitation point, may arise on the hearing, if there was one, the only matter which AA had submitted for determination by Mahoney DCJ, and the only matter it wished to URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 13 argue in this Court, was whether, as Mrs Zarb asserted and it denied, AA owed a duty of care to Mrs Zarb. Within that question the following points arose:- (a) Whether there was no duty of care because the activities of which Mrs Zarb complained arose from the exercise by AA of policy or quasi-legislative functions, such that their exercise did not give rise to a cause of action in her for negligence; rather than from the exercise by AA of operational functions, which would. (b) Whether the authorities are so clear that this is an appropriate case to terminate Mrs Zarb's case in line consistently with the "General Steel" test. It was not in issue that in approaching the matter in this way AA was obliged to accept the truth of the matters pleaded, and to assert that notwithstanding that acceptance, and particularly acceptance of the matters pleaded in para6(1), para6(ii) and para6(vi), there was no allegation of any matter giving rise to a duty of care for the reason stated in subpara(a) above. Finally, it was not in issue that the District Court Rule under which AA moved does not entitle it, as claimed in the Notice of Motion, to "judgment", but to a stay or dismissal of the proceedings, which latter remedy has the consequences stated. The Act and the Regulations The basically relevant provisions of the Act are s8(1), s9, s11(1), s12(1), and s16(1). S8(1) provides:- "8(1) AA has the following functions: (a) providing facilities to permit safe navigation of aircraft within Australian-administered airspace; (d) carrying out activities to protect the environment from the effects of, and the effects associated with, the operation of Commonwealth jurisdiction aircraft; (e) any functions prescribed by the regulations in relation to the effects of, and effects associated with, the operation of Commonwealth jurisdiction aircraft; (g) any other functions prescribed by the regulations, being functions relating to any of the matters referred to in this subsection; (i) any functions incidental to any of the above functions. (3) Subject to subs9(1) and subs16, the extent to which AA provides services and facilities is subject to AA's discretion". S9(1) and s9(2) provide: "(1) In exercising its powers and performing its functions, AA must regard the safety of air navigation as the most important consideration; (2) Subject to subs(1), AA must exercise its powers and perform its functions in a manner that ensures that, as far as practicable, the environment is protected from: (a) the effects of the operation and use of aircraft; and (b) the effects associated with the operation and use of aircraft". S11(1) provides: "Tn addition to any other powers conferred on it by this Act, AA has, subject to this Act, power to do all things necessary or convenient to be done for or in connection with the performance of its functions". $12(1) provides: 14 UNREPORTED JUDGMENTS "The Chief Executive Officer may, in writing, delegate any of AA's powers under this Act to a member or an employee". $16(1) provides: "The Minister may give written directions to AA relating to the performance of its functions or the exercise of its powers". $16(3) obliges AA to comply with any such direction. Reg2.02(1) and reg(2) provide: "(1) For the purpose of assisting the safe navigation of aircraft, AA may designate air routes and airways in Australian-administered airspace. (2) AA may determine the conditions of use of a designated air route or airway". "Air route" is defined as "a specified route between 2 points, the purpose of which is to channel the flow of air traffic to facilitate the provision of air traffic services"; and "airway" is defined as "a control area, or a specified part of a control area, established in the form of a corridor equipped with navigational aids". In relation to certain activities such as removal of safety hazards, (reg3.04); giving directions to fire fighters and volunteers, (reg4.04); and recovery of a debt that is not secured by an approved security interest, (reg6.10(4)); liability of AA is expressly excluded. There is no such exclusion in relation to reg2. The Judgment of Mahoney DCJ His Honour noted that the Court was asked to strike out Mrs Zarb's proceedings on the ground that they failed to disclose a cause of action. He referred to the pleadings and Mr Sims' affidavit to which no substantial objections were taken and on which he was not cross-examined. He turned to the Act and set out AA's functions pursuant to s8(1) thereof Under the heading "The Nub of the Matter" he said:- "AA's motion fairly and squarely raises the question of whether, laying down a plan of how aircraft are to land at or take off from the Airport, is carrying out a 'Police (sic) Function' or an 'Operational Function'." The word "Police" should read "Policy". His Honour noted AA's submission, namely that the combined effects of s8, s9 and s16:- "\.. clothe AA's aircraft movement plans with a 'policy function' mantle and that all of the relevant Australian authorities (1) have decided that such decisions are 'immune from a court's evaluation of them in terms of duty and breaches thereof, to recapture learned senior counsel's turn of phrase". He continued:- "Restated it was put that an action pleaded in negligence will not lie against an instrumentality for doing that which the Act requires it to do". The authorities to which his Honour had been referred were, apparently, The Council of the Shire of Sutherland v Heyman & Anor (1984-1985) 157 CLR 424; McMullin v ICI Australian Operations Pty Ltd (1997) 72 FCR 1; and what he described as a "general reference" to Bienke & Ors v Minister for Primary Industries (1996) 63 FCR 1. His Honour's reasons noted that Senior Counsel for Mrs Zarb did not seek to challenge the correctness of any legal principle sought to be relied upon by AA, but put two independent points in support of the general proposition that the motion should be dismissed, namely that it was too early for the making of such an application, because in the absence of any evidence the Court could not rule URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 15 that the implementation of any particular flight paths "was indeed the result of a 'policy function'", and, alternatively, that s8(1)(d) of the Act had a different effect in that "it transformed AA's flight path planning decisions into an environmental issue". The second point was not decided by his Honour and was not agitated before this Court. His Honour directed attention to the well known line of authority as to the circumstances in which proceedings may be struck out as failing to disclose a cause of action, dealt with the evidence of Mr Sims, and stated that because of the view he had formed on the first issue, it was unnecessary for him to consider the second. He accepted the correctness of the submission that it was too early to make the order for which AA contended, because it was not possible for him to come to any firm decision about whether the aircraft movements in the airspace above Mrs Zarb's house in the period in respect of which she complained "found their way into that airspace as a result of a decision which was wholly political or wholly operational or a mixture of both". He considered that the authorities to which he had been referred delineated clearly between policy and operational decisions, and:- "For my part, however, I am not satisfied that the plaintiff should be precluded from demonstrating by recourse to the various interlocutory and other evidentiary courses which are open to her in the conduct of litigation to establish that what took the aircraft into the airspace above her house were operational decisions or, indeed, that in her particular instance they might be a combination of both policy and operational decision in which case a nice and to my mind brand new legal issue would arise for determination, namely is the Government instrumentality immune from suit if its operations are in nature a combination of policy and operational decisions". Mrs Zarb was granted leave to file a Notice of Contention in which she asserted that the status, role and effect of the "policy"/"operational" distinction in Australia is uncertain, such that it would be inappropriate to strike out her pleading "'on the basis that the distinction determines the viability of the alleged cause of action". The Law Relating to Applications of this Type There is a consistent line of authority in the High Court and in this Court, which places a high onus of persuasion on a party seeking to have proceedings dismissed summarily. AA did not seek to dispute the correctness of these authorities. However, I find it useful to remind myself of the highly demanding test they impose on a party seeking the relief for which AA contended. As Dixon J said in Dey v Victorian Railway Commissioners (1948-1949) 78 CLR 62 at p91:- "The application is really made to the inherent jurisdiction of the Court to stop the abuse of its process when it is employed for groundless claims. The principles upon which that jurisdiction is exercisable are well settled. A case must be very clear indeed to justify the summary intervention of the Court to prevent a plaintiff submitting his case for determination in the appointed manner by the Court with or without a jury. The fact that a transaction is intricate may not disentitle the Court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact 16 UNREPORTED JUDGMENTS or law and that the rights of the parties depend upon it, then it is not competent for the Court to dismiss the action as frivolous and vexatious and an abuse of process'. (my emphasis) After considering that proposition further his Honour said, at p92:- "Tt is in my opinion of more importance to maintain the integrity of the principle that under cover of the inherent jurisdiction to stop abuse of process litigants are not to be deprived of the right to submit real and genuine controversies to the determination of the courts by the due procedure appropriate for the purpose than for this Court to add another to the many judicial attempts that have been made to construe and apply the perplexing provisions that stand in Victoria as s5(2)(b) of the Workers' Compensation Act 1928". In General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125 Barwick CJ, who heard the application alone, said, at p130, after quoting from the first passage in Dey to which I have referred:- "Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiffs claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed". Earlier, at p129, his Honour had said: "Tt is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the Court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the Court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'." More recently in Webster & Anor v Lampard (1993) 177 CLR 598 Mason CJ, Deane and Dawson JJ reinforced the rigorous test stating, at p602. "The power to order summary judgment must be exercised with 'exceptional caution' and 'should never be exercised unless it is clear that there is no real question to be tried'." Their Honours referred to Dey and considered the particular matter before them, which involved certain statutory defences. The demanding nature of the test is in no way lessened in circumstances where there are the potential for difficult factual and legal issues to arise. Rather, as the decision in Webster made clear, it is heightened: see also Wickstead & Ors v Browne (1992) 30 NSWLR 1 and Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241. Rather, as the decision in Webster made clear, it is heightened: see also Wickstead, NRMA Insurance Ltd v A W Edwards Pty Ltd (Court of Appeal - 11 November 1994 - unreported) and Esanda. URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 17 In Wickstead Kirby P set forth five reasons for not dismissing part of the proceedings at the stage he was considering the matter. The third, fourth and fifth reasons all involved a consideration of the changes taking place in the law and the relevance of that to such an application. In NRMA Insurance Ltd his Honour, with whom Powell JA agreed, in repeating the test to be applied said, at p7:- "Nevertheless, the more complex and arguable is the legal point, and the more dependent it may seem to be upon debatable factual premises, the less likely is it that the peremptory relief sought by a party will be appropriate to the circumstances of the case, particularly where it would lead to the consequence of terminating proceedings altogether, or terminating them forever against one party." He then pointed out that:- "Unless the remedy is effectively confined to cases 'for protecting a defendant from vexation by the continuance of proceedings which must be useless and futile', it would have the consequence of substituting summary judicial impression for determination on the merits, having heard both evidence and argument in the normal way of our courts." His Honour then went on to consider potential changes in the law. The Grounds of Appeal AA has asserted that his Honour erred in finding that it had failed to discharge "the General Steel test"; in failing to find that Mrs Zarb's claim was clearly untenable because it owed no duty of care to her; in failing to find that it owed no duty of care towards her because the conduct of which she complained was manifestly of a policy or planning nature with the result that no duty of care arose; in finding, or appearing to find, that on the evidence it was possible that its decisions about which she complained were partly of a policy nature and partly of an operational nature; and in finding, or appearing to find, that there may be legal liability in respect of a decision which was influenced by operational as well as policy factors. The third, fourth and fifth reasons seem to me to raise matters prima facie, for determination at trial. The sixth Ground of Appeal asserted that his Honour was in error:- "\.. in failing to apply, or failing to correctly apply, the legal principles enunciated by Mason J in Sutherland Shire Council vy Heyman (1985) 157 CLR 425 at 469 and confirmed by more recent decisions such as Yuen Kun Yu v Attorney General (Hong Kong) [1988] AC 175 at 195; X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 735, Bienke v Minister for Primary Industries (1996) 63 FCR 567 at 590-596; Alec Finlayson v Armidale City Council (1994) 51 FCR 378 at 404-405 and McMullin v ICI Australian Operations Pty Ltd...". The Submissions on Behalf of the Appellant AA accepted that his Honour applied the correct test in respect of a summary judgment application. It submitted, however, that the present "is one of those rare cases where that test is satisfied because the respondent could not possibly succeed if the decision complained of was of a policy nature rather than an operational one and clearly the decision complained of here was of a policy nature". The submission involved the unarguable correctness of two contentions, 18 UNREPORTED JUDGMENTS namely that the respondent could not possibly succeed if the decision was of a policy nature rather than of an operational nature; and "clearly" the decision was of a policy nature. The submissions turned to what constituted a policy decision, as opposed to an operational decision, and relied on the decision of Mason J in Heyman at p468-p469, where his Honour said:- "The standard of negligence applied by the courts in determining whether a duty of care has been breached cannot be applied to a policy decision, but it can be applied to operational decisions. Accordingly, it is possible that a duty of care may exist in relation to discretionary considerations which stand outside the policy category in the division between policy factors on the one hand and operational factors on the other". At p469 he continued:- "The distinction between policy and operational factors is not easy to formulate, but the dividing line between them will be observed if we recognise 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". Heyman was not decided by reference to the portions of the judgment of Mason J on which AA placed such reliance. It was decided on the basis that the High Court was not satisfied that the plaintiff had proved that the defendant was negligent. However, Gibbs CJ referred, at p438, to the distinction drawn by Lord Wilberforce in Anns & Ors v Merton London Borough Council [1978] AC 728 between policy decisions and operational decisions which executed policy decisions. His Honour noted that his Lordship had considered the distinction to be "one of degree", "since many 'operational' powers and duties have in them some element of discretion". At p442 his Honour said there was no novelty in holding that the ordinary principles of negligence apply to statutory authorities exercising statutory powers or duties and that such an authority would not be liable if it exercised a statutory power in a certain way, provided it did so in good faith and within the limits of the discretion. Obviously enough these matters raise issues for decision. At p448 his Honour said:- "The onus of proving that a public authority is negligent in failing to consider the exercise of a statutory power, when the decision whether or not the power should be exercised is discretionary, is not a light one. Unfortunately for the respondents, they have not discharged it in the present case". These words, in my opinion, indicate that a plaintiff may, in such circumstances, establish negligence which, on one view, is not inconsistent with the case Mrs Zarb is seeking to propound. The passages from the reasons of Mason J, to which I have referred, whilst acknowledging the distinction and suggesting how it should be applied, do not, in my respectful opinion lay down, (and if they do this was not the ratio decidendi of the case), an inflexible rule for deciding between policy and operational decisions. His Honour acknowledged the difficulty and predicated tests based on the particular factual circumstances. URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 19 Deane J, at p500, said:- "The existence of liability on the part of a public government body to private individuals under those principles will commonly, as a matter of assumed legislative intent, be precluded in cases where what are involved are actions taken in the exercise of policy-making powers and functions of a quasi-legislative character... No such legislative intent can be assumed however in a case, such as the present, where the relevant powers and functions are of a routine administrative or 'operational' nature". Whilst the legislative intention will, no doubt, appear from a consideration of the legislation, it remains necessary, as I understand his Honour, to determine how the particular functions or activities are, in all the circumstances, to be characterised. In Alec Finlayson the question arose whether a council owed a duty of care to the applicant, who asserted he had relied on its grant of the development approval as indicating that certain land he purchased was appropriate to be built on for residential purposes. The distinction was drawn between a decision to re-zone, which was held to be a policy decision of a public authority, which may not be the subject of a duty of care, and a decision to approve a development application, which may be the subject of a duty of care because of its operational nature. At p403 Burchett J noted the reliance placed upon the judgment in Heyman and the statement of Mason J, at p458, that it is 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. His Honour acknowledged that whilst policy-making decisions cannot be the subject of a duty of care, operational decisions may be and cited the judgment in Nielsen v Kamloops City (1984) 10 DLR (4") 641 at 661-662 where Wilson J, with the concurrence of Ritchie and Dixon JJ, said:- "In the operational area, ie, in implementing their policy decisions, public officials will be exposed to the same liability as other people if they fail in discharging their duty to take reasonable care to avoid injury to their neighbours". Burchett J, at p405-p406, in referring to the judgment of Mason J in Heyman, said:- "Fundamental to the reasoning by which Mason J so limited the scope of the plaintiffs' possible case, and then dismissed it on the facts, was the passage I have already quoted, in which he distinguished between an authority's mere failure to exercise a statutory power, which it is under no statutory obligation to exercise, and a case where the authority, by the exercise of its functions, has actually created the danger. In the latter case, it may come under a duty of care because of the positive part it has played. Similarly, it may do so because it has placed itself in a position where others depend upon its exercise of care in relation to functions it has accepted, or which it is incumbent upon it to perform". It may be argued that the decision to re-zone land, on the basis of which a person may acquire it to carry out activities conformably with the re-zoning, is an operational decision, so that if the land could not be used for the purposes for which it had been re-zoned the Council may be liable. In that case the policy decision may well be whether the power to re-zone should be exercised. The operational decision may be not whether, in the abstract, the land should be re-zoned, but whether, having regard to its characteristics, it was appropriate to re-zone it for the purposes specified. 20 UNREPORTED JUDGMENTS In Bienke the Full Court of the Federal Court considered a submission that the Minister and the Commonwealth were liable in damages for negligently promulgating and implementing what was submitted to be an invalid plan. Their Honours said the claim necessarily failed as the element of invalidity had not been established but, nonetheless, dealt with the policy/operational point. Thus, what they said on this point was obiter dictum. They accepted that it is 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 and then considered the analysis of Gummow J from whom the appeal lay. After a detailed consideration of the cases their Honours concluded, at p596:- "As the cases we have mentioned indicate, there are very strong reasons of policy why the exercise of legislative or policy-making powers should not sound in damages though exercised negligently. Our opinion accords with that of Gummow J who said (at 175): "Whatever otherwise may be the scope of the "administrative tort" it cannot have the reach necessary to provide any remedy in a case such as the present where the alleged negligence is in relation to an act of law-making'." In McMullin Wilcox J found that the State of New South Wales was not liable in damages in relation to its having granted and extended a clearance to a certain chemical. He said, expressly, that he did not come to that conclusion because he adopted the submission that the States are not vicariously liable for any negligence of their representatives but:- "T reach my conclusion because of the nature of the tasks upon which the two Committees were engaged when granting and extending clearance, and the nature of the decisions to register Helix under State law. I think all those decisions fall into the policy, rather than the operational area. The enquiry whether an action of a public authority falls into the policy or operational area is an aspect of the enquiry about proximity...". His Honour concluded, at p98:- "In my opinion, all the decisions concerning clearance, registration and extension of clearance were policy decisions. It was foreseeable that a negligent act or omission in relation to them might cause damage to persons whose cattle were affected by the subject chemical. That circumstance underlined the importance of the people concerned with the decisions acting in a careful and professional manner. However, because of the nature of the relevant decisions, it did not give rise to a duty of care to the cattle owners, enforceable by an action in negligence". The only policy I can see in such circumstances is whether a certain chemical should be cleared for use. But how that question should be answered must require those charged with answering it to decide whether it will have deleterious effects causing loss or injury. If such people carry out that investigation negligently the reason for acquitting them of negligence is not apparent to me. The policy decision is what regime will be put in place to decide whether a chemical should be cleared. The operational decision is whether, after appropriate testing, the chemical should be cleared. In Pyrenees Shire Council v Day (1998) 72 ALJR 152 and in Romeo v Conservation Commission of the Northern Territory (1998) 72 ALJR 208 the law in relation to the liability of public authorities was further examined. Because of the almost total reliance Mr Sullivan placed on the judgment of Mason J in Heyman and cases which have applied that reasoning, it is necessary to consider these cases in some detail. In the former Toohey J, at p166, para67 said- URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 21 "There may be a fine line between a power conferred on a local authority which, in the exercise of its choice (taking into account policy considerations), has made a decision whether or not to exercise that power and cases where the decision is made as a matter of day-to-day operations". His Honour then referred to the passage from Heyman at p469, which I have quoted. Gummow J, at p175, paral22, noted that the appeals involved the application of the tort of negligence to the statutory responsibility of local government authorities for fire prevention, and, after noting the statement of Dixon CJ in South Australia v The Commonwealth (1962) 108 CLR 130 at 140, his Honour continued:- "That is not to deny that the law of tort, with its concerns for compensation, deterrence and 'loss spreading' may bear directly upon the conduct of public administration. The established actions for breach of statutory duty and for misfeasance in public office counter any such general proposition". Shortly thereafter his Honour said:- "However, in the sense identified by Dixon CJ these appeals concern the application to public administration of the substance of principles of tortious liability which were formulated primarily for operation in the field of private law". At p176, paral24, his Honour said:- "The expansion in the scope of the tort of negligence followed rather than preceded these developments in Australian public law and administration. Negligence has a doctrinal basis which differs from the action for breach of statutory duty. That action, originally deriving from the relationship between the legislature and the promoters of private Acts and later extending more generally, usually imposes strict liability but rests upon legislative intention. Misfeasance in public office concerns conscious maladministration rather than careless administration, and has been said to be the only tort having its roots and application within public law alone. Yet such is the degree of control by governmental authority over the daily conduct of the affairs of individuals and corporations that there are considerations favouring recovery of loss sustained by careless or incompetent administration. Sutherland Shire Council v Heyman established that the circumstance that a public authority is the repository of a statutory discretion does not prevent the application of the ordinary principles of the law of negligence. (125) The broad concepts which found the modern law of negligence reflect its development from the action on the case. Windeyer J explained this in Hargrave v Goldman. These concepts are expressed in major premises which, if unqualified, may extend liability beyond the bounds of social utility and economic sustainability. This has proved particularly to be so with liability for economic loss caused by negligent misstatement. In argument on the present appeals various 'control mechanisms' were canvassed for the application to local government bodies of the principles of negligence with respect to the discharge of their statutory functions. These included the distinctions between policy and operational decisions, between misfeasance and non-feasance, and between the exercise of statutory powers and the performance of statutory duties. Submissions also were based upon the new doctrine of 'general reliance'. This appears to be designed to bridge a gap seen between the perceived importance in negligence law of specified reliance by the plaintiff and the absence in many instances of any duty upon public authorities to take affirmative action. 22 UNREPORTED JUDGMENTS (126) Some of these distinctions and doctrines are entrenched in the common law of Australia, others are not. All of them, as the present appeals will demonstrate, tend to distract attention from the primary requirement of analysis of any legislation which is in point and of the positions occupied by the parties on the facts as found at trial. This analysis is of particular importance where, as here, the facts do not fall into one of the classes, referred to by Gibbs J in Sutherland Shire Council v Heyman', already recognised by the authorities as attracting a duty of care, the scope of which is settled". (My emphasis) Footnote 136 refers to what Gibbs CJ said at p441-p442:- "In deciding whether the necessary relationship exists, and the scope of the duty which it creates, it is necessary for the Court to examine closely all the circumstances that throw light on the nature of the relationship between the parties. The judgment of Lord Roskill in Junior Books Ltd v Veitchi Ltd provides an example of the process. If a relationship of neighbourhood or proximity is found to exist, then it will be necessary to proceed to the second stage of the enquiry. None of this process will be necessary if the facts fall into a category which has already been recognised by the authorities as attracting a duty of care, the scope of which is settled - eg, no trial Judge need enquire for himself whether one motorist on the highway owes a duty to another to avoid causing injury to the person or property of the latter, or what is the scope of that duty". His Honour went on to consider the particular matters raised by the appeal and, at p183, paral66, he said:- "The judgment of Dixon J in Shaw Savill & Albion Co Ltd v The Commonwealth contains three general propositions of importance for the present litigation. The first is that: '(he obligation of due care to avoid harm to others, though a general duty, arises out of the situation occupied by the person incurring it or the circumstances in which he is placed'. The second proposition was that: "where what is alleged against (the defendant) is failure to fulfil an obligation of care, the character in which he acted, together, no doubt, with the nature of the duties he was in the course of performing, may determine the extent of the duty of care'. Earlier Isaacs ACJ had expressed a related point by stating that no conclusion of negligence could be arrived at until, first, 'the mind conceives affirmatively what should have been done'. The third proposition to be found in the judgment of Dixon J is that, in the application of the other propositions, regard is to be had both 'to reason and to policy'." At pl85, commencing at paral74, his Honour considered "control mechanisms". He considered there was no statutory duty in the relevant sense m that case and that the appeals did not turn "simply" upon liability for negligent omission to exercise a statutory power. He also considered the litigation concerned "... interconnected provisions with which the Shire was endowed to further the evident legislative purpose of fire prevention within the area under" its administration. He continued, at paral76 and paral77:- "The distinction in this area between misfeasance and nonfeasance was accepted in Heyman and is not challenged in these appeals. Nevertheless, and as will appear, the existence of the distinction is not fatal to the case against the Shire. URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 23 The general rule is 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'. A public authority which enters upon the exercise of statutory powers with respect to a particular subject matter may place itself in a relationship to others which imports a common law duty to take care which is to be discharged by the continuation or additional exercise of those powers. An absence of further exercise of the interconnected statutory powers may be difficult to separate from the exercise which has already occurred and that exercise may then be said to have been performed negligently. These present cases are of that kind. They illustrate the broader proposition that, whatever its further scope, Lord Atkins' formulation in Donoghue v Stevenson includes 'an omission in the course of positive conduct... which results in the overall course of conduct being the cause of injury or damage'." At p186, paral80, et seq his Honour continued: "Nor is this a case within that 'core area' of policy-making which in Sutherland Shire Council v Heyman Mason J regarded as immune from any liability in negligence. Further, officers of the Shire were not exercising the policy-making powers and functions of a 'quasi-legislative character' which Deane J identified in the same case. In Heyman, Gibbs CJ said that the distinction between the area of policy and the operational area was 'logical and convenient'. This has been doubted by political scientists and in 1991 was disclaimed by the United States Supreme Court in United States v Gaubert. The Supreme Court there reviewed decisions construing the 'discretionary function exception' to the removal of immunity by the US Tort Claims Act, to which reference had been made in Heyman. The phrase 'operational level' had been coined in 1953 in Dalehite v United States to identify activities to which the exception would not apply. In 1991, the Supreme Court concluded that the earlier decisions did not stand for the proposition that 'decisions made at an operational level could not also be based on policy'. The preferable view is that the policy/operational classification is not useful in this area. Rather, the class of case to which Deane J referred in Heyman is not cognisable by the tort of negligence. This precludes the application of negligence to quasi-legislative activity of public authorities such as zoning prescriptions and to the inter-governmental dealings with which, in a contractual setting, this Court dealt in South Australia v The Commonwealth... On the other hand questions of resource allocation and diversion, and budgetary imperatives should fall for consideration along with other factual matters to be 'balanced out' when determining what should have been done to discharge a duty of care. In Just v British Colombia, Cory J explained that the standard of care which is owed to a plaintiff by a government agency may be less than that which would be owed by a private party". His Honour concluded that none of the "control mechanisms" operated to preclude or provide an answer to the liabilities of the Shire in negligence in that case. Kirby J observed that the appeals specifically raised the question of a public authority's liability consequential upon its failure to exercise effectively, or at all, statutory powers conferred on it for the protection of the public and, in paral88 at p188, he said: 24 UNREPORTED JUDGMENTS "The appeals provide this Court with an opportunity to reconsider its decision in Sutherland Shire Council v Heyman in the light of difficulties presented by subsequent applications of that decision?'*, judicial??? and academic?' commentary, the general development of the law and the facts of this case". At p188, paral89 and paral90 his Honour continued:- "This field of the law of negligence has been acknowledged to be amongst the most difficult, both by Judges and scholars. An optimistic view is that the difficulty arises because the law is 'developing'. A more realistic perspective may be that it is a category which is conceptually unsettled. The fundamental problem is that a single unifying principle for liability in negligence easy to apply and predictable in outcome, has proved elusive. Differing theories hold the legal stage for a time. But then their defects and inadequacies are exposed. None has won permanent acceptance. The best that observers of this branch of the common law have been able to offer is the cautionary advice to study the cases in the hope of deriving guidance from analogies. However, in order to do this it is necessary to have some concept of the principle by which the analogy is to be discovered. (190) The appeals before the Court provided an opportunity to afford a more principled approach which is at once more realistic about the law's objectives and operations, more straightforward in application and, to the extent possible, more predictable in outcomes". Commencing at p197, para233, his Honour considered liability of public authorities for negligent omissions and, at p210, para244, he said: "T would therefore adopt as the approach to be taken in Australia the 3-stage test expressed by the House of Lords in Caparo. To decide whether a legal duty of care exists the decision-maker must ask three questions: (1) Was it reasonably foreseeable to the alleged wrongdoer that particular conduct or an omission on its part would be likely to cause harm to the person who has suffered damage or a person in the same position? (2) Does there exist between the alleged wrongdoer and such a person a relationship characterised by the law as one of 'proximity' or 'neighbourhood'? (3) If so, is it fair, just and reasonable that the law should impose a duty of a given scope upon the alleged wrongdoer for the benefit of such person?". At p206, para254, Kirby J concluded: "The risk of harm to the claimants was known to the Shire and the damage which ensued from that risk was foreseeable. Similarly all of the claimants can quite readily be classified as within a proximity relationship in respect of the Shire. The difficult question is, as it will usually be, whether considerations of policy make it 'repugnant' to allow recovery against the Shire. I do not agree with the remark of the Privy Council in Yuen Kun Yeu v Attorney General of Hong Kong that the evaluation of the policy considerations 'will rarely have to be applied' to deny the imposition of a duty of care and thus liability. Unless policy considerations of fairness, justice and reasonableness are to be hidden again in the malleable, imprecise and sometimes fictitious concepts of 'foreseeability', 'proximity' and 'general reliance', the ultimate question will often need to be addressed. And it is, in every case which is not covered by an established category, a question of legal principle disciplined by the application of analogies derived as far as possible from past authority". The authority of Heyman has, in my respectful opinion, relevantly been called into question. It is also clear from Pyrenees that in considering the liability of a public authority regard must be had to all the factual material. URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 25 This decision was followed several weeks later by Romeo v Conservation Commission of the Northern Territory (1998) 72 ALJR 208. Kirby J alone seems to have referred to the decision in Heyman noting, p225, para85, that the Court had been asked again to declare the limits of the common law liability of a public authority, which area of the law has been much criticised as unsatisfactory and unsettled, as lacking foreseeable and practical outcomes, and as operating ineffectively and inefficiently. His Honour reaffirmed the three considerations he had expressed in Pyrenees Shire Council (p201, para244), at p233, paral17 and at p237-p238, paral38-paral39 he said: "Tt was then suggested that the Commission, being a governmental authority, was exempted from a duty of care in circumstances such as the present because the decision on whether to provide the kinds of precautions urged by the appellant, or any of them, at the Dripstone Cliffs involved detailed evaluation of financial, economic, social or political factors. It was argued that, by law, such considerations, and the budgetary allocations which they entailed, were committed to the Commission, as matters of policy. They were therefore beyond the purview of the Courts. Either there was no duty of care in such a case, whatever the foreseeability of the risk of injury and the proximity factors. Or the questions which the appellant presented by her allegations of breach would be classified as non-justiciable, such that a Court would hold back from substituting its conclusion for that of the public authority. As Mason J observed in Heyman's case, there is a great deal of learning in the United States on this question. There is still comparatively little legal authority about it in Australia. In this country, a distinction has occasionally been drawn between the policy-making powers of a public body which are treated as quasi-legislative in character and so-called operation or managerial decisions which are susceptible to judicial evaluation. It is a distinction which it is not easy to apply. Outside the United States, common law courts have been loathe to accept the submission that public authorities can conclusively and exclusively determine, by their allocation of funds, what is required to be done in the discharge of their powers. Unless an express statutory exemption is enacted, Courts normally prefer to exercise their responsibility to decide whether, in the particular circumstances, a duty of care is imposed and whether it has been breached. They have sometimes acknowledged that no such duty will arise from decisions on matters of pure policy on the part of public authorities. (footnote 218) In other matters they have accepted the budgetary, political and other constraints within which such authorities must operate are factors to be taken into account in determining the scope of the duty of care and whether, in a particular case, it has been breached */%." (My emphasis) (Footnote 218 is a reference to the decision in Just and footnote 219 is a reference to Cekan v Haines (1990) 21 NSWLR 296.) His Honour was of the view, p238, paral40, that the decision as to whether a safety fence should have been installed was properly to be classified as an operational or administrative, rather than a policy or discretionary decision, and that notwithstanding that it had financial, economic, social and possibly political implications, so also would many decisions of public authorities, because every suggested precaution said to be necessary to prevent damage has, at least, financial and economic implications. He continued:- "Tn relation to the operational decisions of a body such as the Commission, the present state of the law would not sustain its submission that such questions were exclusively for it. Nor would such consideration justify the conclusion that the 26 UNREPORTED JUDGMENTS Commission was released from any duty of care to entrants onto land such as the reserve or from a Court's consideration of the case which the appellant brought". I also note that in the Full Court of the Supreme Court of the Northern Territory in Romeo Martin CJ, with whom Thomas J agreed, said (1995) 123 FLR 84 at p99: "Just where the dividing line between those two concepts lie is not yet settled, no more is the question as to what, if any, evidence is required as to the making of those decisions. It is not necessary to venture upon that ground for the purposes of this case. These and some other issues attaching to this subject matter are discussed in some detail by Gibbs CJ in Heyman (at 444-448) and Mason J (at 464, 467 and 468-469)". The two concepts to which his Honour referred were the distinction between policy-making decisions and discretionary matters. I have quoted at length from these decisions because, on the hearing of this appeal, Mr Sullivan pressed the Court greatly with the applicability of the decisions in Heyman and Gaubert and the Canadian decisions flowing from and including Just. The decisions in Pyrenees and Romeo cast doubt upon the applicability of those principles and, as I understand it, at the least do not so far as certain members of the High Court are concerned determine the issue, and especially do not do so in the absence of findings of fact. The decisions provide a basis for arguing properly, depending upon the factual findings, that AA owed a duty of care to Mrs Zarb. In this context I would also refer to the decisions in W D & H O Wills (Aust) Ltd v State Rail Authority (Court of Appeal - 3 April 1998 - as yet unreported) particularly per Mason P at p25 and p29 and Priestley JA at pl; and Avenhouse & Anor v The Council of the Shire of Hornsby (Court of Appeal - 15 May 1998 - as yet unreported): per Priestley JA at p8, and Sheller JA particularly at p25 to p27. The Doctrine of Precedent Courts are required to follow decisions of higher courts, which are binding on them. They must do so without seeking fine distinctions. The reason is to ensure that there is certainty in the law. This Court would be bound to give effect to biding authority of the High Court and, in a case such as the present, it would be necessary for it to be able to say that such authority was so strong as to meet the tests applicable on application for summary dismissal. That, in turn, would require a decision that irrespective of the factual findings Mrs Zarb's case would not succeed conformably with the various tests laid down in summary dismissal cases. Even without the assistance of Pyrenees and Romeo I would have had strong doubt as to whether this is an appropriate case in which to apply the decision in Heyman, at this stage, to dismiss Mrs Zarb's proceedings summarily. I would have inclined to the view that it is necessary to determine the facts before applying the law. In my opinion Pyrenees and Romeo make that imperative and, further, they seem to me to cast some doubt upon the critical passage in Heyman from the judgment of Mason J upon which Mr Sullivan placed reliance. Mr Semmler placed reliance not only upon these decisions, but upon various academic writings. All of these confirm that there is a doubt as to the law to be applied, which is increased by the attempt to determine the matter without a final resolution of the facts. From what I have said it will be plain that I am of the opinion that one cannot, at least in the present case, form the view that a decision URJ AIR SERVICES AUSTRALIA v ZARB (Rolfe AJA) 27 is "quasi-legislative" or "policy" and not "operational", in the absence of the clearest statement of legislative intent and a determination of the relevant facts. A Further Matter Since preparing my reasons for judgment I have had the advantage of reading the judgment of Powell JA in draft form. At p6 and p7 of my judgment I set forth the confined basis on which Mr Sullivan sought to disturb the decision below. I noted that he did not seek to rely on the fact that the Act did not come into force until 1995. A re-reading of the transcript satisfies me that Mr Sullivan maintained that position throughout: Tp2 lines 33.35; p3 line 29 et seq; p4 line 17 et seq; p8 line 46 et seq; p79 and p80. In so far as Mr Semmler may have travelled beyond that point he was, of course, entitled to seek to uphold the decision in his client's favour on any justifiable ground. However, as I am of the opinion that the only attack made by Mr Sullivan fails, it is, in my respectful view, inappropriate for the Court to travel beyond Mr Sullivan's submissions. Conclusions Accordingly, I do not consider that the appellant has satisfied the test necessary for summary dismissal. I consider, therefore, that the appeal should be dismissed with costs. Appeal dismissed with costs. Counsel for the appellant: A J Sullivan QC, Ms L McCallum Solicitors for the appellant: Corrs Chambers Westgarth Counsel for the respondent: P C B Semmler QC, N J Mullaney Solicitors for the respondent: M F Twemlow & Co