New South Wales Supreme Court CITATION : YOVICHEVICH v RANZCR [2005] NSWSC 1208 HEARING DATE(S) : 19 April 2005 JUDGMENT DATE : 30 November 2005 JURISDICTION : Common Law JUDGMENT OF : Adams J at 1 DECISION : Leave granted to the plaintiff to file and serve an amended statement of claim within twenty-eight days from the date of this judgment, failing which the proceedings are to stand dismissed. The plaintiff is to pay the defendant's costs of the motion. CATCHWORDS : Negligence - statement of claim - whether discloses cause of action - pure economic loss - doctor examined for specialist qualifications - failed - whether RANZCR owed duty to conduct examinations properly - whether duty to conduct review of fail results - arguable case Health Insurance Act 1973 (Cth). LEGISLATION CITED : Limitation Act 1969 Uniform Civil Procedure Rules, 2005 rule 15.2 Anns v Merton London Borough Council [1975] AC 728 Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1 Caltex Oil (Australia) Pty Limited v The Dredge "Willemstad" (1976) 136 CLR 529 Day v Victorian Railway Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Hawkins v Clayton (1988) 164 CLR 539 Hedley Byrne & Co Pty Ltd v Heller & Partners Ltd [1964] AC 46 CASES CITED : Kaparo Industries Plc v Dickman [1990] 2 AC 605 Murphy v Brentwood District Council [1991] 1 AC 398 Northam v Favelle Favco Holdings Pty Limited (unreported, NSW SC, Bryson J, 7 March 1995 Perre v Apand Pty Limited [1998] HCA 36; (1999) 198 CLR 180 Pyrenees Shire Council v Day (1969) 192 CLR 330 Romeo v Conservation Commission (1998) 192 CLR 431 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Stanko YOVICHEVICH (Plaintiff) PARTIES : The Royal Australian and New Zealand College of Radiologists (Defendant) FILE NUMBER(S) : SC 20429/04 Plaintiff in person COUNSEL : Mr M Robinson (Defendant) Plaintiff unrepresented SOLICITORS : Tress Cocks (Defendant) LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADAMS J Wednesday 30 November 2005 20429/04 Stanko YOVICHEVICH v THE ROYAL AUSTRALIAN AND NEW ZEALAND COLLEGE OF RADIOLOGISTS JUDGMENT HIS HONOUR: Background 1 The plaintiff, Mr Stanko Yovichevich, sat for examinations conducted by the defendant, the Royal Australian and New Zealand College of Radiologists, in May and November 1995, and November 1997. The subjects for which he was examined at those times were radiology and pathology. The College passed the plaintiff in pathology on the last occasion but failed him in radiology for the third time. In November 1999, he was examined again in radiology but again the College failed him. On 18 November 1999 the plaintiff requested a review and reconsideration of his radiology examination results. Approximately three weeks after the review was sought, the College informed the plaintiff's solicitors on 9 December 1999 that (amongst other things) the Warden of the Fellowship had undertaken a view and had advised the College that he had examined the records of the examination, was satisfied that it was conducted and marked professionally and equitably and that the examination records accurately and fairly reflected the plaintiff's performance. The plaintiff's allegations 2 The plaintiff alleges that, in fact, the College did not or did not properly undertake a review as required by its procedures and has continued to fail to do so. The plaintiff had, when first seeking the review, also sought a copy of the examination questions with the plaintiff's answers to them. He alleges that the College has failed to provide him with a copy of this material. The plaintiff alleges in his statement of claim that the College owed him a duty, in effect, to conduct the examinations and the review with due care and that the College breached its duty in this respect. Further, or in the alternative, the plaintiff alleges that the College owed him a duty of care in connection with the examinations that included a duty to inform him of all relevant aspects of the examinations including criteria and method of assessment and to administer them properly and fairly including in such a way as to enable that the plaintiff's performance to be fairly considered and fairly reviewed and also subjected to an effective and fair appeal process. In this connection, it is alleged that the College owed the plaintiff a duty to have proper procedures in place to enable the examinations and any appeal in respect of the results to be conducted fairly, competently and impartially. The plaintiff alleges that the College was in breach of this duty by failing to inform the plaintiff of the relevant aspects of the examinations, including the criteria for assessment and method of marking, failed to administer the examinations appropriately by not keeping proper and adequate notes in respect of it and not having in place a procedure permitting adequate and fair reconsideration and review of his performance including, the plaintiff alleges, by the destruction or failure to properly safeguard or keep the questions and answers and other documents and materials that recorded performance of the plaintiff in the examinations and the way in which that was assessed. The plaintiff claims as a result of the alleged breaches by the College of its duty to the plaintiff compensatory damages representing the loss of income for the period from 1997 until "now" – but I rather think until judgment – an order that he be admitted as a fellow of the College and costs. The College's defence 3 By its defence the College contends firstly that the plaintiff's statement of claim discloses no reasonable cause of action, has a tendency to cause prejudice, embarrassment or delay in the proceedings, is frivolous or vexatious and, further, or in the alternative, is an abuse of the process of the Court. There is also a Limitation Act 1969 defence, as the statement of claim was not filed until 2 December 2004 in respect of so much of the plaintiff's cause of action that concerned the examinations of 1995 and 19097. Dealing with the substantive questions, the College denied that it owed the duties of care as pleaded by the plaintiff or, as I understand the defence, if it did have a duty, denied that it was in breach of any such duty. The College denied that the plaintiff suffered the loss or damage he claims or that there was any basis for an order that the plaintiff be installed as a fellow of the College. 4 The defendant also alleges contributory negligence on the part of the plaintiff by failing to appeal within the three months' time limit provided in the College's appeals' procedures as published by the College at the time and thus lost his opportunity to participate in the formal appeal process and also failed to apply to become registered as a specialist radiologist by alternative means such as applying to the responsible minister pursuant to s1 of the Health Insurance Act 1973 (Cth). 5 On 19 April 2005 the College moved the Court by motion on notice for orders that the proceedings commenced by the plaintiff be dismissed or stayed or the whole of the plaintiff's statement of claim be struck out. These orders were sought on the grounds set out in the defence, namely that the statement of claim discloses no reasonable cause of action, has a tendency to cause prejudice, embarrassment or delay in the proceedings, is frivolous or vexatious and is an abuse of the process of the Court. Statement of Claim 6 Although this is summarised above, the issues in this application can be more easily followed by reference to the statement of claim itself, which is set out below. "3. At all material times, the Defendant was recognized by the National Specialist Qualification Advisory Committee of Australia and the various Medical Boards in Australia and New Zealand as the academic body responsible for setting the standards and administering the examinations required to allow recognition and registration as a specialist in Radiodiagnosis in Australia and New Zealand ("Examinations"). 4. In 1994, the Plaintiff applied to the College to sit examinations administered by the College which, if successful, would qualify him to become a Fellow of the College, register as a specialist in Radio Diagnosis and practice as a Radiologist in Australia and New Zealand. 5. As the responsible body for setting the standards and administering the examinations required to allow eligible candidates to be recognised and obtain registration as specialists in Radiodiagnosis in Australia and New Zealand, the College owed to the Plaintiff a duty (amongst others) to exercise all reasonable care, skill, diligence and competence in, and in connection with, administering and processing the examinations and the review and re-considerations of the performance and results awarded to the Plaintiff in respect of the Examinations. Particulars The duty arose out of the relationship of the Plaintiff as an eligible candidate sitting for examinations and the College as the body responsible for administering and processing the Examinations, and the review and re-consideration of Examinations performance and results. 6. The Plaintiff sat for the Examinations as follows: (a) in May/June 1995, in Radiology and Pathology, when the College failed the Plaintiff in both Examinations; (b) in November 1995, in Radiology and Pathology, when the College again failed the Plaintiff in both Examinations; (c) in November 1997, in Radiology and Pathology, when the College passed the Plaintiff in Pathology and failed him in Radiology; (d) in November 1999, in Radiology, when the College failed the Plaintiff ("Radiodiagnosis Examinations"). 7. By letter from Martin Bell and Co., at that time acting as the Plaintiff's solicitors, to the College dated 18 November 1999, the Plaintiff requested: (a) a review and re-consideration of the Radiodiagnosis Examination results, ("Examination Review"), being the first step in the College's Appeal Process; (b) a copy of the Radiodiagnosis Examination questions and the Plaintiff's answers thereto. 8. By letter from the College to Martin Bell and Co, dated 9 December 1999, the College: (a) asserted that the Warden of the Fellowship had undertaken a review of the Plaintiff's performance of the Radiodiagnosis Examinations; and (b) stated that the Warden had advised the College that: (i) he had examined the records of the various elements of the Examination; (ii) he was satisfied that each element was conducted and marked professionally and equitably; and (iii) he was satisfied that the Examination records accurately and fairly reflected the Plaintiff's performance. 9. Contrary to the College's response as pleaded in the preceding paragraph, and in breach of its duty pleaded in paragraph 5, the College did not, or did not properly, undertake an Examination Review. 10. Despite repeated requests made by the Plaintiff and its legal representatives on its behalf for an Examination Review to the conducted, the College failed to: (a) undertake or to properly undertake a review and re-consideration of the Plaintiff's Radiodiagnosis Examination performance and the marks awarded by the examiners of the College for each element of the Radiodiagnosis Examination; (b) to provide to the Plaintiff a copy of the Radiodiagnosis Examination questions and the Plaintiff's answers thereto. 11. In the premises, the College breached its duty to the Plaintiff as pleaded in paragraph 5. 12. Further, or in the alternative, the College owed the Plaintiff a duty to exercise all reasonable care, skill, diligence and competence in and in connection with administering and processing the Examinations, including a duty: (a) to inform and advise the Plaintiff of all relevant aspects of the Examinations, including criteria and method of assessment; (b) to administer proper and fair Examinations in a manner that: (i) is proper, competent, fair and impartial; (ii) the performance of and results achieved by the plaintiff be capable of effectively, properly and fairly be considered and reviewed upon the Plaintiff's request for a re-consideration and review or, if so requested, be subjected to an effective, proper and fair appeal process; and (c) have proper systems, procedures and processes in place in respect of the administration of the Examinations, and the conduct of proper and fair re-consideration and review of Examinations, performance and results and any appeal in respect of the Examinations results, so as to ensure that, in each case, the Examinations, re-consideration, reviews and appeals be conducted in a proper, fair, competent and impartial manner. 13. The College breached its duty to the Plaintiff, as pleaded in the preceding paragraph, in that: (a) it failed to inform and advise the Plaintiff of all the relevant aspects in respect of the Examinations, including the criteria for assessment and method of marking; (b) it failed to administer properly and fairly the Examinations in that: (i) it failed to keep proper and adequate notes in respect of the Examinations; (ii) it failed to have in place proper systems to ensure that the Plaintiff was examined fairly and impartially; (c) it failed to provide a re-consideration and review, or a proper and adequate re-consideration and review of the Plaintiff's performance and results relating to the Examinations; (d) it did not have proper systems, procedures and processes in place at the time when the Plaintiff sat for the examinations to ensure that: (i) the Examinations were conducted in a proper and fair manner; (ii) the re-consideration and review of the Radio Diagnosis Examination requested by the Plaintiff be conducted properly, fairly, competently and impartially. (e) it destroyed, discarded or otherwise failed to keep all written questions and answers, notes, markings, assessments and other documents or materials recording the performance of the Plaintiff and the assessment of his performance at or in relation to the Examinations. 15. As a result of the College's breaches of its duty to the Plaintiff, as pleaded in paragraphs 9 and 13, the Plaintiff suffered and continues to suffer loss and damage. Particulars Plaintiff's Claim 1) Loss of income for 7 years/from 1997 till now. 2) Fellowship from RANZCR By the Court order. 3) Legal costs. Analysis 7 The first difficulty disclosed by the statement of claim, as it seems to me, is the source of the duty claimed by the plaintiff as owed to him because he was "an eligible candidate sitting for examinations" and the College was "the body responsible for administering and processing the examinations and the review and reconsideration of examinations performance and results". It is difficult to see how the fact that the plaintiff was an eligible candidate and that he actually sat for an examination imposed any duty on the College towards him in relation to the way the examination was conducted. However, it seems to me arguable that, if the College was the doorkeeper, as it were, for granting to persons with appropriate professional competence – the existence of which is ascertained, in part, by the examination that it conducted – the right to practice in a particular medical speciality there might be such a duty. Prima facie the duty arising out of this situation is that of ensuring that only competent persons practice as radiologists rather than ensuring that all persons who might be competent and who wish to practise as radiologists are permitted to do so. So considered, it is difficult to see how the College's "duty" is owed to the plaintiff. I will return to this aspect of the matter after considering further elements of the statement of claim. 8 The next difficulty is that although the pleading alleges that "the College failed the plaintiff" it does not allege that the plaintiff passed the examination. Put in another way, there is no allegation that the act of the College in failing the plaintiff was due in any way to any breach of the alleged duty to administer the examinations properly. The statement of claim alleges that a review of the plaintiff's examination was sought together with a copy of the questions and the plaintiff's answers. The source of the obligation to review and reconsider the results is said to be "the College's appeal process" but that document – if it be a document – and its status is not the subject of any elucidation. 9 The defendant has produced a document purporting to be the minutes of the College's Council of 17 September 1999 setting up what is said to be a new (as at that time) appeals process. Amongst other things, decisions of the Warden, the Chief Censor, Education Board, Board of Examiners or Supervisors of Training "in relation to examinations or training required to be undertaken by overseas-trained doctors for assessment" for recognition "on behalf of the Australian Medical Council, or the New Zealand Medical Council, or any applicable State or territory Medical Board (or for other appropriate purposes)" may be appealed to the Appeals Committee. Whether this is the "appeals process" to which the statement of claim refers is not clear. The mode of and time limit for applying is specified. The statement of claim does not refer to any compliance with these requirements, nor is there any material justifying the implicit requirement that the College provide the plaintiff with a copy of the examination questions and his answers. It appears that such an obligation does not arise from what the plaintiff calls "the College's appeal process", having regard to the way in which the statement of claim is drafted in this respect. This problem is taken no further by the allegation of the College's assertion on the one hand that the Warden of the Fellowship had reviewed the plaintiff's performance and was satisfied that the examination records accurately reflected it and, on the other hand, the plaintiff's assertion that "the College did not, or did not properly, undertake an examination review." Nothing is added by the allegations that the College failed to undertake any further consideration of the plaintiff's performance despite what is said to be repeated requests that it do so. 10 Enough has been said to show that the line of reasoning disclosed in the statement of claim is as follows: recognition and registration as a specialist radio diagnostician depends upon demonstrating competence in certain examinations; those examinations are conducted by the College; those examinations have to be conducted properly; an element of the proper administration of the examinations is a system of review and reconsideration of examination results at the instance of an unsuccessful examinee; the plaintiff was unsuccessful; the plaintiff requested a review; the College asserted it conducted such a review and found nothing wrong; the plaintiff alleges it did not conduct such a review or otherwise did not properly conduct it; the College failed to undertake a reconsideration when requested to do so; the College had an additional duty to provide the plaintiff with a copy of the questions and the plaintiff's answers; the College did not do so. These complaints, as it seems to me, may be conflated into the simple contention that the plaintiff failed and was entitled to a review but that whatever the College did, did not amount to a competent review. I find it impossible to accept that the duty, if there be one, to conduct an examination involved a duty also to conduct a review at the behest of an unsuccessful examinee. There is no allegation that the examination was itself negligently conducted or that the results did not reflect the plaintiff's competency nor, assuming there is a duty to conduct examinations in a certain way, does this establish a duty to conduct a review of results. Nor is there any basis for the allegation that there was a duty to provide an examinee with the questions in the examinations and the answers that he gave to those questions. 11 To put the matter in another way, even if there were a duty in the College to "exercise all reasonable care, skill, diligence and competence in and in connection with, administering and processing the examinations" there is simply no fact alleged which shows or from which it can be inferred that the College acted otherwise than in accordance with its duty so described except the bland statement, in effect, that it did not do so. Even if such inference might be drawn, there is no fact or circumstance alleged from which it might be inferred that any damage was caused to the plaintiff. The shortcomings alleged are that the review which it held was not a review or not a proper review and also that it did not keep and provide a copy of the questions and the plaintiff's answers. There is no particularisation of the nature of the review which, it is claimed the College had a duty to undertake nor are there any particulars as to the alleged failures. It is clear that the plaintiff does not assert that something like a review did not occur. The nub of his complaint appears to be is that it was not properly undertaken. However, no attempt is made to amplify the respects in which the review was inadequate. It might be that, if there were a duty to conduct a review as alleged, there is also a duty to provide the aggrieved examinee with a copy of the questions and answers since otherwise he or she could not participate in any review by way (at least) of making submissions as to why it was wrong to have been failed. However, as it seems to me, the basis for this contention, namely the duty to conduct a review and its incidents, must be clearly alleged. Again, there is no fact or circumstance alleged from which it might be inferred that the alleged failure to conduct a proper review caused damage to the plaintiff. 12 The statement of claim alleges that the College's duty to the plaintiff to properly administer the examinations included the duty "to inform and advise the plaintiff of all relevant aspects of the examinations including criteria and method of assessment." There is no particularisation of the aspects of which he should have been informed, except for "criteria and method of assessment". If the College did have a duty to the plaintiff to conduct the examinations properly then information concerning the criteria for passing and the method of assessment whether he passed was material that arguably should have been available to him. However, it cannot be that the duty of competent examination (assuming to exist) involved a duty proactively to inform the plaintiff of everything concerning the examination and its assessment. It is easy to accept that all material necessary to enable him to sensibly conduct himself in undertaking the examination should be available to him but this is altogether different. There is no allegation that this information was not available to him at any relevant time. There is no allegation from which it can be inferred that the alleged failure of the College in this respect was productive of damage. 13 There is an allegation that the examination should be administered in a manner that "is proper, competent, fair and impartial" and an assertion that the College "did not have proper systems, procedures and processes in place at the time when the plaintiff sat for the examinations to ensure that…[they] were conducted in a proper and fair manner" but the impropriety and unfairness are not the subject of any allegation except, it may be, that the College "failed to keep proper and adequate notes in respect of the examinations" and "destroyed, discarded or otherwise failed to keep all written questions and answers, notes, markings, assessments and other documents or material recording the performance of the plaintiff and the assessment of his performance at or in relation to the examinations". So far as the former allegation is concerned, this does not allege a failure to make proper records but seems to be an allegation of a failure to keep such records. It is impossible, as it seems to me, to accept that there is a general duty on the College to keep or otherwise safeguard for an unlimited time records connected with any particular examination. It cannot have such a duty. It may have a duty to keep such records for a reasonable time, but such an allegation is neither made nor implied. Nor would it be sufficient, even if such an allegation were made, for the plaintiff to allege that the records were disposed of or destroyed before the expiration of that reasonable time without particularising the matters which rendered the time frame posited a reasonable one. This omission has the result that the allegation of the duty contains no matter which permits the duty to be identified or understood. Nor, again, is it possible to see any connection between the alleged failures and damage to the plaintiff. 14 The plaintiff filed an affidavit in support of his application dealing with qualifications in medicine which he achieved in Yugoslavia prior to his immigration to New Zealand in November 1993. The plaintiff alleges that his expertise was such and the amount of study that he undertook was sufficient to justify the inference that he did not, in fact, fail the examinations. The plaintiff describes in his affidavit what he says was the course of a "mini review" conducted by a senior fellow of the College and an officer of the College in December 1999. Amongst other things, the plaintiff alleged that there was a demonstration of a "classical example of heavily manipulated farce barely distinguishable from open fraud". Other parts of the examination and the material provided to him in records are criticised by the plaintiff in his affidavit as was also the appeal process. Broadly speaking, it is difficult to extract from the affidavit a coherent account of the alleged failures of the college. It seems to me that the affidavit does not usefully carry the matter any further. 15 I should mention that, during argument, it appeared that the plaintiff may have paid a fee to sit the examination. If so, the possibility that there was a contract between him and the College concerning the examination and its ancillary processes, including appeal, might readily be inferred. Of course, what the terms of such a contract might be and, indeed, whether the payment of a fee was intended to create legal relations are distinct questions not without their own difficulty. 16 Clause 3 seems to me, in substance, to allege that examinations of the kind alleged to have occurred here are a necessary prerequisite to the recognition and registration of a specialist radio diagnostician and that the College is the body responsible for administering those examinations. Clause 3 appears to allege that passing such an examination to an appropriate standard of competence is a necessary condition for being permitting to practise as a radio diagnostician although it might not be a sufficient qualification. Nor is it alleged that membership of the College is a necessary precondition for such practise. It may be, therefore (though, if this is in fact the allegation of the plaintiff it should be specifically pleaded), that a successful examinee has a right to practise as a diagnostician or, to put it perhaps somewhat more accurately, an unsuccessful examinee loses the right that he would otherwise have (providing he satisfied other conditions, if any) to practise as a radio diagnostician. 17 If there be such a link between a right to undertake a professional activity and the function of the College in conducting examinations, it strikes me as not unarguable that this might give rise to a duty of care. The duty not to inflict pure economic loss 18 The relationship between a plaintiff and defendant giving rise to a duty of care not to cause economic loss was the subject of extensive discussion in Perre v Apand Pty Limited [1998] HCA 36; (1999) 198 CLR 180. Gleeson CJ observed (at 198 CLR 192) that "there is no general rule that one person owed to another a duty to take care not to cause reasonably foreseeable harm" commenting that the "consequences of such a rule would be intolerable" although "there are circumstances in which the law recognises the duty of care such as will permit recovery of pure economic loss" (citing Caltex Oil (Australia) Pty Limited v The Dredge "Willemstad" (1976) 136 CLR 529 and Hedley Byrne & Co Pty Ltd v Heller & Partners Ltd [1964] AC 465. His Honour referred to three fundamental policy considerations tending to restrain acceptance of the existence of such a duty of care in particular categories of case and then went on to say (ibid at 193) – "If there once was a bright line rule which absolutely prevented recognition of a duty of care in any case where the negligent conduct of one person caused financial loss to another, not associated with injury to the other's personal property, and which assigned claims to recover such loss to the field of contract rather than tort, the line gave way in an area where there is a clear potential for carelessness to cause financial harm: negligent misstatements made to a person who, to the knowledge of the maker of the statement, relies upon the advice or information provided. However, there is no convincing reason why conveying advice or information should be treated as the solitary exception to an otherwise absolute exclusionary rule." 19 Gleeson CJ went on to consider a number of unsatisfactory solutions which were discussed in Kaparo Industries Plc v Dickman [1990] 2 AC 605, citing with approval the speech of Lord Oliver of Aylemerton as follows (ibid at 194) – "In Kaparo , Lord Oliver emphasised that, in this field of discourse, the mere foreseeability of possible damage, without some further control, (which he summarised as 'proximity', after explaining what he meant by that term), would not be useful as the test of liability…At the same time, however, his Lordship made it clear that 'in some cases the degree of foreseeability is such that it is from that alone that the requisite proximity can be deduced'…In relation to the giving of advice or information, questions of reliance and actual foresight and the possibility of harm, (or, what is the same thing, the foresight that a reasonable person would have), are closely related. Moreover, knowledge (actual, or that which a reasonable person would have) of an individual, or an ascertainable class of persons, who is or are reliant, and therefore vulnerable, is a significant fact in establishing a duty of care. Vulnerability can arise from circumstances other than reliance. In Caltex , the obvious vulnerability of a specific plaintiff was influential in a number of judgments…This was not merely an arbitrary method of solving the problem of potentially indeterminate liability. It was an application of what Lord Oliver later discussed as the idea that in a given case, the degree (and nature) of foreseeability may have an important bearing on whether there is a duty of care." 20 His Honour went on to agree with the reasons given by Gummow J for concluding there was a duty of care, emphasising that the internal communications of the respondent specifically acknowledged that there was a need for care so as not to damage the interests of other persons, who are not neighbours but who were within specified distance of the potentially risky conduct as showing "actual foresight of the likelihood of harm, and knowledge of an ascertainable class of vulnerable persons". 21 Gaudron J commenced her judgment with a description of the relationship between the parties as pleaded in the statement of claim. Her Honour observed that "given the present stage of development [of the law as to liability for economic loss] different approaches have been advanced as to the way in which claims for which there is no legal precedent should be dealt with" (198 CLR at 197). Her Honour briefly mentioned the various approaches propounded in Anns v Merton London Borough Council [1975] AC 728, Sutherland Shire Council v Heyman (1985) 157 CLR 424, Hawkins v Clayton (1988) 164 CLR 539, Murphy v Brentwood District Council [1991] 1 AC 398 and in particular, the judgment of Kirby J in Pyrenees Shire Council v Day (1969) 192 CLR 330 at 419-420 where his Honour advocated a three-staged test now generally applied in England, namely foreseeability, the existence of a relationship between the parties of "proximity" or "neighbourhood" and a consideration of policy to determine whether it is "fair, just and reasonable" to impose the duty of care in question. Her Honour was sceptical about the utility of attempting to propound a general touchstone in this area of the law, preferring a more empirical and incremental approach from developing case law, citing as an example the category of negligent misstatement. Her Honour went on to say that it seemed "possible to discern another category for which the circumstances that attract a duty of care can now be articulated" (ibid at 199). Her Honour said (ibid at 200) - "It is in the area of legal rights that, in my view, there is to be discerned a second discreet category of liability for pure economic loss. Indeed, in some situations, the existence of the duty of care with respect to another's legal rights may be so obvious as to pass without argument. [Her Honour then cited Bennet v Minister of Community Welfare (1992) 176 CLR 408, especially per McHugh J at 427, Hawkins v Clayton (1988) 164 CLR 539, especially her Honour's judgment at 594, Hill v Van Erp (1997) 188 CLR 159 where, respectively, the legal rights involved were that of a named executor to obtain probate and that of a beneficiary to receive a testamentary gift where a solicitor had failed to ensure that the will in this respect was effective. Her Honour went on as follows.] The main difference is that, in those cases, the right involved was a right peculiar to the plaintiff. In this case, the rights involved are general rights, namely, the right to sell potatoes in the Western Australian market and the right to use one's land and equipment for the production of potatoes for that purpose … The consideration that the legal rights involved in this case are rights which attach to members of a class rather than to an individual is, to my mind of no significance. There is no principle basis on which a distinction can be drawn between rights which are peculiar to an individual plaintiff and to those which adhere to a plaintiff as a member of a particular case. And that is so even if the members of that class cannot be identified with complete accuracy. Although it would not be strictly accurate in this case to describe the respondent as being in a position of control, its relationship with the appellants is closely analogous to that which obtains where one person is in a position to control the exercise or enjoyment by a legal right of another person. .. In my view, where a person knows or ought to know that his or her acts or omissions may cause the loss or impairment of legal rights possessed, or enjoyed or exercised by another, whether as an individual or as a member of a class, and that latter person is in no position to protect his or her own interests, there is a relationship such that the law should impose a duty on the former to take reasonable steps to avoid a foreseeable risk of economic loss resulting from the loss or impairment of those rights." 22 The right which I have posited as possibly inhering in the plaintiff, namely to practice in the profession of his choice is controlled by a number of features, one of which might be the demonstration to the satisfaction of the College that he has the necessary medical competence. It is not quite the right to which Gaudron J referred but seems to me at least capable of being regarded as analogous to it or sufficiently similar to give rise to the relationship which her Honour held to exist. 23 The judgment of McHugh J (commencing 198 CLR at 203), following a brief discussion of the factual and legal background to the appeal, identified what his Honour called the "demise of proximity as a unifying theme identifying cases in which the law has considered the question of the duty of care on a defendant whose act or omission a plaintiff has suffered pure economic loss" and, as his Honour observed (198 CLR at 210) proximity has not been entirely abandoned as a factor in determining duty, though it "may no longer be the talisman for determining a duty of care". His Honour then went on (198 CLR 210 ff) to discuss some other attempts, especially in England, to formulate an appropriate test identifying, in particular, what his Honour described as "three defects" in the Kaparo formulation. His Honour also considered that "this court should [not] accept that a defendant should owe a duty of care merely because its conduct may defeat or impair 'a precise legal right' of the plaintiff in circumstances where the defendant is in a relationship with the plaintiff and in a position to control the enjoyment of that right." His Honour considered that imposing "duties of care in such situations would extend the liability of defendants, perhaps massively" pointing out that many cases of this kind were "simply cases of transfers of wealth …[with] often no net loss of social wealth". However, his Honour considered he did not need to pursue this argument in the case at hand since the plaintiff "no doubt had a right to trade, and that is a right that in various circumstances the law will protect [citing authorities which I omit]…but not by imposing duties of care on others simply because they are in a position to control the enjoyment of the plaintiff's right to trade". Noting, however, that the "exclusionary rule of the common law" no longer applies in Australia, at least strictly, and the need for predictability in the law, he concluded that, "until a unifying principle again emerges…the best solution is to proceed incrementally from the established cases and principles" (198 CLR at 217). His Honour went on to say (omitting references) – "[94] In my view, given the needs of practitioners and trial judges, the most helpful approach to the duty problem is first to ascertain whether the case comes within an established category. If the answer is in the negative, the next question is, was the harm which the plaintiff suffered a reasonably foreseeable result of the defendant's acts or omissions? A negative answer will result in a finding of no duty. But a positive answer invites further inquiry and an examination of analogous cases where the courts have held that a duty does or does not exist…The law should be developed incrementally by reference to the reasons why the material facts in analogous cases did or did not find a duty and by reference to the few principles of general application that can be found in the duty cases. [95] Further, I think that, so far as possible, the reasons for upholding or denying a duty in particular cases should be regarded as principles to be applied in determining whether a duty exists in case within that category. Such reasons will reflect policies that the courts have recognised as relevant in determining the duty issue. In some cases, they will be so decisive in determining duty that they can be applied as rules or principles in other case. [96] The present case is not one falling within any categories of liability hitherto recognised. The Canadian Supreme Court has adopted the categorisation of cases of pure economic loss proposed by Professor Feldthusen ( Winipeg Condominium Corporation No 36 v Bird Construction Co. [1995] 1 SCR 85 at 96/97]: 1. The independent liability of statutory public authority; 2. Negligent misrepresentation; 3. Negligent performance of a service; 4. Negligent supply of shoddy goods or structures; 5. Relational economic loss. [97] The present case was not within any of these categories. It is perhaps possibly closest to the last category… … [99] [McHugh J mentioned other cases of relational economic loss, which did not apply – and do not apply here – and said]…The present case is therefore novel in terms of the categories. But that does not mean that no duty of care was owed to the Perres. "The categories of negligence" said Lord McMillan, "are never closed" ( Donoghue v Stevenson [1932] AC 562 at 619). The issue of duty must be decided by reference to the few general principles that appear to govern all cases of pure economic loss. … [100] In determining whether the defendant owed a duty of care to the plaintiff, the ultimate issue is always whether the defendant in pursuing a course of conduct that caused injury to the plaintiff, or failing to pursue a course of conduct which would have prevented injury to the plaintiff, should have had the interest or interests of the plaintiff in contemplation before he or she pursued the or failed to pursue the course of conduct…That issue applies whether the damage suffered is injury to person or tangible property or pure economic loss… if the defendant should have had those interests in mind, the law will impose a duty of care. If not, the law will not impose a duty. … [103] Nevertheless, when a court is satisfied that the economic loss suffered by the plaintiff was reasonably foreseeable by the defendant, that no question of indeterminacy of liability arises and that the defendant was not legitimately protecting or pursuing his or her social or business interests, it will often accord with community standards and the goals of negligence law, as an instrument of corrective justice, to hold that the defendant should have had the plaintiff's interests in mind when engaging or refusing to engage in a particular course of conduct. However the common law in its desire to give effect to the autonomy of each individual does not generally require a person to act as if he or she were "my brother's keeper". That is particularly so when a defendant would have to take affirmative action to save a person from suffering harm. [104] What is likely to be decisive, and always of relevance, in determining whether a duty of care is owed is the answer to the question, "how vulnerable was the plaintiff to incurring loss by reason of the defendant's conduct?" So also is the actual knowledge of the defendant concerning that risk and its magnitude. If no question of indeterminate liability is present and the defendant, having no legitimate interest to pursue, is aware that his or her conduct will cause economic loss to persons who are not easily able to protect themselves against that loss, it seems to accord with current community standards in most, if not all cases, to require the defendant to have the interests of those persons in mind before he or she embarks on that conduct. [105] The principles concerned with reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual. Vulnerability to risk and the defendant's knowledge of the risk and its magnitude are, I think, relevant in determining whether a duty exists in all cases of liability for pure economic loss. In particular, other policies and principles may guide and even determine the outcome. But I do not think that a duty can be held to exist in any case of pure economic loss without considering the effect of the application of these general principles." 24 McHugh J then went on to analyse these elements and apply them to the issues in Perres. I do not think it is necessary for me to summarise that part of his Honour's judgment. It is sufficient I think to notice that there appears to be an arguable case, at least, that the application of the criteria identified by McHugh J to the plaintiff's case here suggests that the College might owe a duty of care to him to conduct its examination of him in a fair and proper manner. 25 The judgment of Gummow J commenced with a brief summary of the facts and an extensive discussion of the various approaches of the common law from time to time to the problem of imposing a duty of care not to cause economic loss, including a mention of the civil law position. His Honour also concluded that no satisfactory general formula had been developed to answer this question in a way which avoided "the necessity for examination of the particular facts" (198 CLR at 253), commenting, "That this is so is not a problem to be solved; rather, as Priestley JA put it in Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1 at 8] 'it is a situation to be recognised'. His Honour did not think that "the imposition of a fixed system of categories...in which damages in negligence for economic loss may be recovered" would assist in the emergence of a coherent body of precedents" (ibid at 254) preferring the approach taken by Stephen J in Caltex Oil, in which his Honour "isolated the number of 'salient features' which combined to constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for breach of what it might recover [quaere for] its purely economic loss (Caltex Oil (1976) 136 CLR 529 at 576-577), though there should be an "allowance for the operation of appropriate 'control' mechanisms". Gummow J analysed the facts in the case, concluding that the defendant knew or ought to have known of the plaintiffs' vulnerability to the activities which it proposed to undertake and the consequences of not preventing an outbreak of bacterial wilt disease in property adjacent to that of the plaintiffs which would, because of the special requirements of the law of Western Australia, cause severe adverse consequences to the plaintiffs. His Honour noted that the plaintiffs would not have appreciated the risk which they were exposed by the defendant's conduct and were unable to protect themselves from that risk. Subject to irrelevant qualifications, his Honour concluded (198 CLR at 260) that these characteristics when taken together, brought the parties "into such close and direct relations as to give rise to a duty of care owed by [the defendant] for breach of which purely economic loss may be recovered". 26 Kirby J commenced his judgment by noting that the question of liability in negligence for financial loss unconnected with physical injury was vexed, observing, "the law is in a state of development…[which] is unfortunate for everybody" (198 CLR at 263). After discussing a number of proposed solutions, which his Honour found for various reasons to be unsatisfactory his Honour returned to his reasons in Pyrenees Shire Council v Day (1998) 198 CLR 330 at 419-420; (see also Romeo v Conservation Commission (1998) 192 CLR 431 at 476) where his Honour made the suggestion that the following three questions should be asked - "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 persons who have suffered damage or a person in the same position? 2. Does there exist between the alleged wrongdoer and such 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 a person?" 27 His Honour then analysed a substantial field of authority, concluding that this approach, which had been established by Caparo, represented the most useful and appropriate "methodology which is universal to the tort of negligence and appropriate to the particular subcategory of negligence where the breach in question has occasioned pure economic loss" (198 CLR at 286). His Honour's analysis of the circumstances of the case led him to conclude that the defendant was under a legal obligation to observe care to prevent damage to the plaintiff's interests both from the risk inherent in its activities, the nature of which…[the defendant] actually foresaw or which were reasonably foreseeable" (198 CLR at 291) and "action based on the tort of negligence lies to enforce that duty for approved breach which results in damage [which]…is not excluded merely because the damage suffered…was purely economic loss." 28 Following a detailed discussion of the facts, Hayne J considered the utility of such notions as proximity and fairness as indicators of liability and the problem of indeterminate liability as a counter indicator of the existence of a duty. I trust that I am not disrespectful in passing over other discussions linked with this issue to move to what seems to me to be the nub of his Honour's judgment (198 CLR at 307) – "[350] Approaching the matter…by asking what would have been the position if the conduct had been engaged in deliberately…is not inconsistent with the case in which a duty of care to avoid pure economic loss has been found to exist. Three kinds of cases will serve to make good that proposition. First, if a misrepresentation causing economic loss is made with knowledge of its falsity rather than negligently, the party making the representation in liable for deceit…Secondly, if the dredge in Caltex Oil had deliberately set out to break the pipeline it would have been liable for procuring breach of existing contracts for supply or transport of the hydrocarbons carried in the pipeline. Thirdly, if the solicitor in Hill v Van Erp had intentionally sough to depart from her client's instructions, she would have been guilty of various forms of professional misconduct. The examples could be multiplied. For these reasons I consider that the respondent did owe a duty to some of the appellants to take care not to cause them economic loss. To impose a duty is not to create an indeterminate liability and does not make conduct cautious, that is conduct that would not be unlawful or tortious if done deliberately." 29 His Honour then considered to which of the appellants the duty of care was owed. This discussion is not material to the problem in this case. 30 Callinan J, following an extensive discussion of authority following Caltex, stated (198 CLR at 325) – "And it must be accepted that this is an area of the law in which the courts should move incrementally and very cautiously indeed. It is not yet possible to identify a bright line of demarcation between those cases of pure economic loss in which damages are recoverable and those in which they are not. The law is still developing in a somewhat piecemeal fashion that Stephen J predicted in Caltex (1976) 136 CLR 529 at 576… [406] I now turn to a consideration of the factors which in combination I think relevant in this case and which establish the sufficient degree of proximity, foreseeability, a special relationship, determinacy of relatively small class, a large measure of control on the part of the respondent and special circumstances justifying the compensation of the appellant's for their loss " 31 Callinan J referred to the defendant's effective control of the particular operation which caused the financial loss to the plaintiffs who were, his Honour concluded, members of a determinate class, referred to the geographical and commercial propinquity between the operations of the parties that the spoke "in a real sense" of proximity (198 CLR at 327), the devastating consequences of the foreseeable risks which arose because the defendant was undertaking an experiment in the use of particular seed, the powerlessness of the plaintiffs to abate or prevent the occurrence of the loss to which they were subjected, the lack of any statutory or regulatory regime otherwise able to govern or control the defendant's activities and that what happened to the plaintiffs "was not the result of merely legitimate, competitive, commercial activity" (198 CLR 328). Callinan J also noted that the "imposition of liability…would not impose an impediment in the way of ordinary commercial activity in the potato industry and that what the defendant "did went considerably beyond careless inadvertence and resulted from conscious decisions carrying with them obvious risks" (ibid at 329) and observed – "One of the major touchstones in a case of this kind will always be reasonableness…or as it has sometimes been put, proportionality…I do not regard the damages which are likely to be available to the appellants as being unfair, or unreasonable, or disproportionate in all the circumstances of the case." Inadequate statement of relevant facts and circumstances 32 I do not think that it is necessary to analyse further than I have already done the substance of the plaintiff's case. It seems to me that, having regard to all the judgments of the High Court in Perre there is an arguable case available to the plaintiff as to the existence of the relevant duty of care owed to him by the College, or, to put it perhaps more precisely, I am not satisfied that the allegation of the existence of such a duty of care is either manifestly groundless or plainly untenable: see Day v Victorian Railway Commissioners (1949) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. 33 There are however grave shortcomings in the statement of claim. Assuming for the present that the College had a duty of the kind that I have described towards the plaintiff, nevertheless it is essential that the plaintiff identify the particular attributes of the alleged duty, the breach of which demonstrates negligence. Otherwise, it is impossible for the defendant to defend the case except by denying, in a general way, the existence of such a duty. But it is plainly unable to deal with the particular acts or omissions which, the plaintiff presently alleges give rise to its liability. This is no more than requiring the plaintiff to "state the facts and circumstances on which…[he] relies as constituting the alleged act or omission" as required by rule 15.2 of the Uniform Civil Procedure Rules, 2005. This is not merely a matter of particulars, the function of which is not to state the material facts omitted from the statement of claim. 34 The particulars that are contained in the plaintiff's statement of claim are to my mind clearly embarrassing. If I may say so with respect the following passage from the judgment of Bryson JA (as his Honour now is) in Northam v Favelle Favco Holdings Pty Limited (unreported, NSW SC, Bryson J, 7 March 1995) is a useful statement of the relevant considerations – "A pleading may be embarrassing even though it does contain allegations of material facts sufficient to constitute a cause of action, if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to, or is imprecise or slang words are used with unduly broad ranges of possible meanings or without clear meanings. What is referred to must be clearly stated showing, as appropriate, when and where an event happened, who participated, what was said, what was the relevant effect of any document and so forth. It is not fair to require a defendant to flesh out general expressions or indirect delusions by piecing together information in other documents such as affidavits or experts' reports. He might get it wrong, and the greater the complexities are, the more probable it is that he will understand what is alleged in some different way to what the plaintiffs will rely on." 35 It will be seen from paragraph 9 of the statement of claim that the plaintiff alleges that the College's assertion that it had undertaken a review of the conduct of the examination in respect of the plaintiff was not true, although he does not specify in what respects it was not true. More fundamentally, it seems to me that the plaintiff is obliged to state the particular elements of the examination review which he alleges was part of the College's duty to perform and the facts, matters and circumstances which give rise to those particular elements and allege in what specific ways it failed to undertake those acts or perform those duties in respect of the plaintiff. 36 It appears to be part of the plaintiff's case that the College has not provided to him a copy of the examination paper and his answers to it together with any surrounding documentation relating to the assessment of his performance. It is obvious that such a duty cannot subsist in an unqualified way. If it be the true allegation that the College had a duty to keep this material and provide it in certain (relevant) circumstances – such as where a review was sought or conducted – then the allegation should be made in terms and the facts matters and circumstances that justified it set out. I gather that part of the College's response is that, at the time of the plaintiff's request for such material the time provided under the College's rules or practice for appeal had expired and, I take it, the relevant documents had been destroyed. Whether this be so or not, it is plainly insufficient for the plaintiff to complain about the failure to provide the material without having alleged the particular circumstances which, according to him, obliged the College, first, to keep the material and, secondly, to disclose it to him. Such an allegation must necessarily involve specification of the time period for which, he alleges, the College was obliged to keep or maintain the records. The omission to specify these matters, the statement of claim fails to comply with the rules and is plainly embarrassing. Clause 12 particularises the duty of the College in terms of so general a nature that it is impossible to discern the true character of either of the duty that the plaintiff alleges the College had towards him or of the way in which it failed to fulfil that duty. These clauses are fundamentally defective. Clause 13, by parity of reasoning is also grossly insufficient. 37 So far as the plaintiff's claim for relief is concerned, no facts matters or circumstances are alleged from which it is possible to identify the reasons for which the College is liable to compensate the plaintiff for the loss of income claimed, let alone admit him to membership of the College. Conclusion 38 It may be that the plaintiff is able to make good these defects. Accordingly, it seems to me that the proper order here is that I should give leave to the plaintiff to file and serve an amended statement of claim complying with the rules as to the allegations of material facts and giving appropriate particulars. He has twenty-eight days from the date of this judgment to do so, failing which the proceedings are to stand dismissed. The plaintiff is to pay the defendant's costs of the motion. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.