Tepko Pty Limited & Ors v Water Board S187/1999 [2000] HCATrans 90 (10 March 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S187 of 1999

B e t w e e n -

TEPKO PTY LIMITED

NEAL EARTHMOVING PTY LIMITED

JOHN HENRY NEAL

Applicants

and

WATER BOARD

Respondent

Application for special leave to appeal

McHUGH J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 MARCH 2000, AT 11.53 AM

Copyright in the High Court of Australia

MR G.K. DOWNES, QC: If the Court pleases, I appear with my learned friend, MR S.J. MOTBEY, for the applicants. (instructed by S.A. Teen)

MR P.R. GARLING, SC: If the Court pleases, I appear for the respondent. (instructed by Phillips Fox)

McHUGH J: Yes, well Mr Downes we think we might be better informed for the moment if we hear from your opponent.

MR DOWNES: If your Honour pleases.

McHUGH J: Yes, Mr Garling.

MR GARLING: If your Honours please.

McHUGH J: Given the dissent in the Court of Appeal, why should not special leave be granted, Mr Garling?

MR GARLING: Three principle reasons, your Honour. This case revisits the question of liability for negligent misstatement. This is not a pure economic loss case of the kind the Court looked at in Perre v Apand; it is entirely separate and distinct from that. The principles of negligent misstatement have been revisited, we would submit, really very recently, in those series of cases ending with Esanda and there is no reason for the Court to revisit those general principles and this case does not add to or assist in the elucidation of that general principle.

The second reason, we would submit, your Honours, why special leave ought not be granted is that there is a critical finding of fact which is relevant to a determination which has not been made in favour of the applicants as they would need to have made in order to succeed, and that is the question of whether the evidence disclosed that at the time the Board's officers gave advice to their Minister, they had any intention that that advice would be used by the applicants - although foreseeable that it may come to their attention in some form or other - no suggestion that they had any notice of or knowledge of the fact that the applicants intended to take the content of that advice and use it in any particular way at all, let along for the purpose for which it was used.

CALLINAN J: Would it have mattered how it would be used, if the advice had no proper foundation?

MR GARLING: Yes, your Honour, because, underlying the principles of liability, we would submit, for negligent misstatement is an understanding of the way in which the advice is used in the context in which it is proffered. So, for example, it is not at all uncommon for a negligent misstatement - I use that term to describe a careless misstatement for the moment, your Honours - to be proffered in circumstances where the intention of the State - as it would be used by one person for a particular purpose and had no reason to believe it would be used by another person for a different purpose; that does not create liability for negligent misstatement, your Honour, because, otherwise, one would have - and I know your Honours hear this regularly from defendants, and I hesitate to mention it - but one would have a question of how one would restrict the liability for the negligent misstatement and how the principle arises.

Now, your Honours, what happened here was, in terms of the factual circumstance, was that the applicant had written to the planning Minister seeking help - I use the word generally, your Honours - from the planning Minister with respect to the rezoning of his land. It was a decision for the planning Minister. The Water Board could not rezone the land. The planning Minister wrote to the Water Board's Minister seeking information about policy. That information was provided in the material sued upon. It was directed, as Justice Mason said, clearly, and we would submit, correctly, to a question of policy. It may have been foreseeable that some or all of that information would have been made available by the planning Minister to the applicants, but there is no suggestion anywhere in the evidence - and indeed, the evidence is to the contrary in the trial judge's judgment - that the Water Board knew how the applicants would use that information or, indeed, knew of their precarious financial position. Indeed, the evidence found by the trial judge was that the applicants were insolvent at this time and that had not been disclosed to the Water Board.

What, in fact, happened, of course, your Honours, was - and this is the third reason why it is not a suitable vehicle or an appropriate case - that the information which the applicants received and which they ultimately relied upon, which was a letter from Mrs Crosio to a Mr Watkins, was a document about which the findings demonstrate the Water Board knew nothing at all. So that it cannot be said, with respect, that where the Board has prepared information for one purpose, and it is being used for that purpose by the Minister, if the Minister chooses to use the information for an entirely different purpose, unknown to the Water Board, that either the current principles of liability for negligent misstatement or even, we would submit, by analogy and extension of those principles, the Board could be liable in those circumstances.

CALLINAN J: You say that intention is essential?

MR GARLING: Yes, your Honour.

CALLINAN J: Well, is that what Justice Dawson says in Esanda at page 256? Does not his Honour say:

an intention to induce a person to whom information or advice is given to act in a particular way is merely one of the various means by which it may be shown that the reliance by that person upon the information or advice is reasonable -

There is no suggestion there that intention is always essential.

McHUGH J: And I think I said the same thing, did I not, from recollection, in Esanda?

MR GARLING: Yes, your Honour, it is fair to say that there was not a single statement in Esanda that intention was essential.

CALLINAN J: That statement is clearly against it; it says intention may be one of the ways.

MR GARLING: Yes, but only in one respect, your Honour, with respect.

CALLINAN J: With respect to reliance.

MR GARLING: Correct, and reliance was an issue that was never tried in this case, and that, your Honours, was the fourth reason I was going to come to as to why this case is not a suitable vehicle.

CALLINAN J: I would have thought that reliance is irresistible, that there was reliance; I do not see how any other finding would have been open.

MR GARLING: Well, your Honour, the evidence was truncated, because the trial judge only fixed particular questions for trial.

CALLINAN J: Which is another problem that we are seeing more and more of, dividing cases into issues, which cannot really discretely be divided and they come up here, and there are enormous difficulties in determining what, in fact, the courts are now to decide and what remains to be decided.

MR GARLING: Yes, your Honour. Can I just tell you the circumstances in which the truncation arose, because it may be of assistance to your Honours. The truncation, if I may use that expression, arose, I think, during the first week of the hearing. The trial judge that was hearing this had a limited time for hearing, because this was the last case prior to his retirement, and it became apparent in the limited time his Honour had available, the entirety of the evidence and the arguments could not be heard, and the choice that was posed for the parties was a separation of some of the issues or, alternatively, an adjournment to a different trial judge. That is how it arose, your Honour.

CALLINAN J: It does not sound like much of a real choice, does it?

MR GARLING: Well, it was not of the parties election, your Honour - either party - it came about as a consequence of circumstances, but, your Honour, may I just take that point to submit to the Court that it is because of those truncation issues that this is not a suitable vehicle for the points to be decided. May I just raise one other point that your Honour Justice Callinan dealt with where your Honour said "who would have thought that reliance was unarguable" or words to that effect? In our respectful submission that was not so, in this respect. The damage asserted by the applicants was that, as a consequence of - and this was not tried, your Honours - this letter being taken to the bank, they were put into receivership, and thereafter could not proceed with the project. The evidence touched on, but did not completely deal with, the question of the circumstances under which the bank put the applicants into receivership. I can only say that there is a very real issue as to whether the bank, determining that these applicants should have been put into receivership, was, in fact, directly related to - - -

CALLINAN J: If this application fails, that issue will never be tried, because if this application fails, it is the end of the case, is it not?

MR GARLING: Yes, your Honour.

CALLINAN J: So, because the issues were truncated, for the reasons that you say, the applicant is never going to get a trial on that issue if this application here fails.

MR GARLING: I hope your Honour has not mistaken what I have tried to put. Your Honour said it was almost unarguable. I was simply trying to indicate that this was a case in which there would likely to be a real argument on the question of reliance; that was the only thing I was seeking - - -

CALLINAN J: And, they will never get a trial on that issue.

MR GARLING: Of course, your Honour, that is so. That follows, we would submit, with the refusal of special leave, which we would submit is - - -

CALLINAN J: Well, we can sent that back if we allowed the application and the appeal and that can go back for a trial, assuming that I am wrong and that it does not emerge clearly anyway.

MR GARLING: Of course, your Honour, but I did not want your Honour considering this application on a basis which we would not agree with.

CALLINAN J: I always find it very unattractive that a party may have been deprived of a hearing on something being used as a basis for saying that there should not be a grant of special leave.

MR GARLING: No, your Honour.

CALLINAN J: Well, it comes down to that.

MR GARLING: No, with respect not, your Honour. We submit that one of the issues, which needs to be considered by the Court in considering whether to grant special leave in one case or another, is whether the case is a suitable vehicle to elucidate the general principle. For various reasons, cases will or will not be suitable vehicles.

McHUGH J: But usually those cases are cases where, by reason of the Court's necessity to determine some anterior question of fact may never get to the important point of principle, which the case appears to throw up, but that is not this case, is it?

MR GARLING: Well, we would submit, it is, for this reason, your Honour. When one looks at how duty arises for negligent misstatement - - -

McHUGH J: Well, before you go on, look at the way that Justice Fitzgerald dealt with the duty question at page 144. He seems to take the view that in this area there are a lot of factors now to be considered after the recent cases. Is that not in itself is a special leave question. I know that I have been at pains to say that you should not be interfering with the established categories, but I am not altogether sure that that view commanded universal assent in those recent cases, did it?

MR GARLING: With respect, your Honour, there is very little of unanimous view in the recent cases, if I may say so, with the greatest respect to your Honours.

CALLINAN J: I think the judgments have got quite a lot more in common than some of the commentators have said, but - - -

MR GARLING: It has eluded the commentators, your Honour.

CALLINAN J: I know. Your Honours, that is all I can say, with respect. We say, for the reasons that are appropriate, special leave ought not be granted.

McHUGH J: Thank you. Yes, there will be a grant of special leave in this case.

AT 12.06 PM THE MATTER WAS CONCLUDED