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Supreme Court of Victoria |
Last Updated: 16 May 2022
AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST
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JUDGE:
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WHERE HELD:
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DATE OF HEARING:
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CASE MAY BE CITED AS:
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MEDIUM NEUTRAL CITATION:
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PRACTICE AND PROCEDURE – Strikeout application – No proper basis
for the causes of action alleged – Civil Procedure Act 2010 (Vic),
s 18 – Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr
13.10(3) and 23.02 – Wheelahan v City of Casey (No 12) [2013] VSC
316, Sidgreaves v State of NSW (No 2) [2021] NSWSC 934, referred
to.
NEGLIGENCE – Duty of care – Novel duty – Negligent
advice – Whether employee engineer owed a duty to avoid
economic harm to
building owner – Owner contracted with architects and with builder –
No contract between owner and engineer’s
employer – Engineer’s
employer sub–consultant to architect – Written advice to architect
by engineer on behalf
of employer – No material facts alleged in support
of allegation the engineer knew or ought to have known the owner would rely
on
the advice – Salient factors – Owner not vulnerable – No
particulars of reliance – Propell National Valuers (WA) Pty Ltd v
Australian Executor Trustees Limited [2012] FCAFC 31; (2012) 202 FCR 158, Barclay v
Penberthy (2012) 246 CLR 258, distinguished – Perre v Apand Pty
Ltd [1999] HCA 36; (1999) 198 CLR 180, Brookfield Multiplex v Owners Corporation Strata
Plan No 61288 [2014] HCA 36; (2014) 254 CLR 185, Woolcock Street Investments Pty Ltd v
CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515, ABN AMRO Bank NV v Bathurst Regional
Council [2014] FCAFC 65; (2014) 224 FCR 1, Ku-ring-gai Council v Chan (No 2) [2018]
NSWCA 73, Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258; (2009) 75 NSWLR 649,
Brickhill v Cooke [1984] 3 NSWLR 396, referred to.
MISLEADING AND
DECEPTIVE CONDUCT – Direct claim against employee when accessorial
liability the only potential basis of claim
– Failure to distinguish
between representation of fact and representation of opinion – Fair
Trading Act 1999 (Vic), ss 6, 9, and 159(1) – Houghton v Arms
[2006] HCA 59; (2006) 225 CLR 553, distinguished – Quinlivan v Australian Competition
and Consumer Commission (2004) 160 FCR 1, applied – Yorke v
Lucas [1985] HCA 65; (1985) 158 CLR 661, Ireland v WG Riverview Pty Ltd [2019] NSWCA 307; (2019) 101
NSWLR 658, referred to.
PLEADING – Reliance and causation –
No material facts pleaded – Claim against employee engineer struck out
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Not to be repleaded unless and until plaintiff able to show a sound
basis to support proposed claims – Environinvest Ltd v Pescott &
Ors [2011] VSC 325 applied – Reichel v Paulyn Investments Pty
Ltd [2008] VSC 413, referred to.
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APPEARANCES:
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Counsel
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Solicitors
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For the Plaintiff
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Lander & Rogers
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For the First Defendant
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DLA Piper Australia
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For the Second Defendant
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Mr C Viti
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Moray & Agnew
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For the Third Defendant
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Mr G Harris QC
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Wotton + Kearney
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Introduction
1 The proceeding concerns damage that has
developed to a building known as the New Ministry Centre, at 225 Derrimut Road,
Hoppers
Crossing (‘Building’) following its construction for the
plaintiff, the Uniting Church in Australia Property Trust (Victoria)
(‘Uniting
Church’).[1]
2 By
summons dated 25 November 2021, the third defendant (‘Grant’) seeks
orders, pursuant to s 18 of the Civil Procedure Act 2010 (Vic)
(‘CPA’) and/or r 23.02 and/or r 36.04(2) of the Supreme
Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’)
and/or the Court’s inherent jurisdiction, that paragraphs 4, 12-17 and
36-43 of the statement of
claim dated 14 October 2021 (‘SOC’), and
paragraph B of the prayer for relief, be struck out. Section 18 of the CPA
and
r 23.02 of the Rules are in similar terms. Section 18 provides:
18 Overarching obligation—requirement of proper basis
A person to whom the overarching obligations apply must not make any claim or make a response to any claim in a civil proceeding that—
(a) is frivolous; or(b) is vexatious; or
(c) is an abuse of process; or
(d) does not, on the factual and legal material available to the person at the time of making the claim or responding to the claim, as the case requires, have a proper basis.
3 For the purposes of determining the
strike out application, the SOC may be read together with the further and better
particulars
of paragraphs 38, 42 and 43 dated 22 November 2021
(‘Further and Better
Particulars’).[2]
4 Grant
relies on written submissions dated 4 March 2022 and 1 April 2022. The Uniting
Church opposes the application. It relies
on written submissions dated 8 March
2022.
5 The first defendant, Ian Hartley Architects
Pty Ltd (‘Hartley’), is a provider of architectural and project
management
services. Hartley were the architects involved in the project to
construct the Building. The second defendant, E J Lyons &
Sons Pty Ltd
(‘Lyons’) is a builder.[3]
Lyons built the Building. Neither of those parties took an active part in the
hearing of the application.
6 The application by
Grant is to be determined by reference to the SOC, including the particulars,
and by reference to documents referred
to in the
pleading.
7 The claim against Grant has two bases.
The first is a claim in negligence for pure economic
loss.[4] The second is for misleading
and deceptive conduct alleged to be in contravention of the Fair Trading Act
1999 (Vic)
(‘FTA’).[5]
8 Grant
submits that the SOC is deficient for failure to properly plead a duty of care
to avoid pure economic loss said to be owed
by him to the Uniting Church, for
failure to properly plead reliance, for failure to plead a counterfactual and
for its failure to
plead facts sufficient to establish
causation.
9 The FTA plea is one against Grant
personally. Grant submits that as the representations of which the Uniting
Church complains were
contained within documents written by him in his capacity
as an employee, any liability for contravention of the FTA could only be
based
on accessorial liability. He submits that he could not be found directly liable
for breach of the FTA. The FTA plea is separately
alleged to be defective for
failure to plead the meaning the documents were said to have conveyed and, in
the case of representations
as to matters of opinion, for the failure to plead
an absence of reasonable grounds for making the
representations.[6] The complaints
about a failure to plead reliance and to plead facts sufficient to establish
causation are repeated concerning the
FTA
pleading.
10 The Uniting Church disputes the
assertion that the pleading is deficient. It submits that the material facts
necessary to establish
the causes of action against Grant are pleaded and are
supported by particulars sufficient to put Grant on notice of the case he
needs
to meet. It submits that Grant’s objections are technical in nature and
that they do not advance the overarching purpose
of the CPA. Grant does not
contend he does not understand the case against him or that he is unable to file
a defence. The Uniting
Church contends the Court should refuse to exercise its
discretion to strike out the relevant paragraphs of the
SOC.
11 For the reasons that follow, I will order
that the claims against Grant both for pure economic loss in negligence and
relying upon
the FTA will be struck out. The deficiencies in the pleading were
drawn to the attention of the Uniting Church prior to the hearing.
No affidavit
evidence was relied on by the Uniting Church to seek to demonstrate that a
proper basis exists to amend the pleading
in a manner that would enable either
of the causes of action alleged to be properly pleaded. The flaws in the
pleaded claims are
such that it is not appropriate to grant the Uniting Church
leave to re-plead and it would be contrary to the provisions of the CPA
to
permit it to do so.
The parties and the plaintiff’s claims
12 The SOC alleges that on 1 February
2010, the Uniting Church and Hartley entered into a written contract for the
provision by Hartley
of architectural services relating to the construction of
the Building (‘Architect
Contract’).[7]
13 Pursuant
to the Architect Contract, Hartley engaged AGB Engineering Pty Ltd
(‘AGB’), a firm of structural engineers,
to produce structural
drawings for the footings of the Building
(‘Drawings’).[8] The
Uniting Church alleges that the Drawings, issued for the construction of the
Building in around May 2011, specified that the
footings were to be
‘founded solely on basalt
bedrock’.[9]
14 The
Drawings depict soil or rock with a notation ‘basalt bedrock’
immediately below a line designated RFM (meaning
recommended foundation
material).[10] The Drawings do not
include a direction notation which ‘expressly specified’ that the
foundations were to be founded
solely on basalt
bedrock,[11] although such an
inference is open.
15 On 30 June 2011, the Uniting
Church and Lyons entered into a contract for the construction of the Building
(‘Building Contract’).
The Building Contract is alleged to have
been partly in writing, and partly to be
implied.[12]
16 On
14 September 2011, Hartley requested Kersulting Pty Ltd
(‘Kersulting’), consulting engineers, to provide ‘structural
and civil engineering services’ for the Building and to attend a site
visit on 15 September 2011 (‘the Kersulting
Services’).[13] On
15 September 2011, Kersulting issued a written fee proposal that, amongst
other things, stated that Hartley required advice and
inspection of the
structural and civil engineering elements of the Building as it progressed
through the construction phase.[14]
On that same day, as requested of Kersulting by Hartley, Grant, a civil and
structural engineer employed by Kersulting, attended
the site to inspect the
footing system of the
Building.[15]
17 Following
his inspection, Grant issued two written project advice notices to
Hartley.[16] The First Project
Advice and the Second Project Advice (together ‘the advices’) form
the basis of the claims against
Grant. Both documents were issued by Grant in
his capacity as an Associate Director of
Kersulting.
18 The First Project Advice dated 19
September 2011 stated:
In response to the query by Lyons Construction seeking clarification of the required founding material for the footings, we make the following comments:
19 The geotechnical report to which the
First Project Advice refers did not form part of the materials on the hearing of
the application.
20 The following may be noted about
the First Project Advice:
(a) the advice is addressed to Hartley;(b) it is expressed to be provided in response to a query by Lyons;
(c) it does not mention basalt bedrock or highly reactive clay;
(d) it expressly refers to the Drawings; and
(e) it advises that footings are to be founded ‘100mm minimum into any of the natural undisturbed soils that underlay any filling materials that may exist on site’.
21 The Second Project Advice dated 20 September 2011 stated:
22 The Second Project Advice is also
addressed to Hartley. As mentioned in the Second Project Advice, RFM is an
acronym adopted by
AGB on the Drawings for ‘Recommended Foundation
Material’. The Second Project Advice stated that basalt rock, which
is
indicated on some of the footing details, is not required to be encountered to
achieve the recommended foundation material. The
Second Project Advice referred
to the need to found all footings on recommended foundation material. It
recommended that, due to
the inherent variability of soil profiles, the
geotechnical engineer (who had earlier provided a report) confirm the material
being
encountered is the recommended foundation
material.
23 The SOC does not allege that either the
First or the Second Project Advice were read by anyone, or that any person,
whether the
Uniting Church, Hartley, Lyons, or anyone else, relied on both
advices, or either of them, to act or to refrain from acting in a
particular
manner.
24 The claim against Hartley includes an
allegation that Hartley failed to ensure the works were being executed generally
in accordance
with the contract documents, including the Drawings. Further,
that Hartley failed to exercise the skill and care of a reasonably
competent
registered architect. The particulars in support of that claim are that:
Hartley...[failed] to obtain confirmation from a geotechnical engineer that the founding material being encountered was the recommended foundation material, as set out in the Second Project Advice.[18]
25 Between July 2011 and September 2012,
Lyons constructed the Building.[19]
The Uniting Church alleges the footings of the Building (as constructed by
Lyons) were not founded solely on basalt bedrock as per
the Drawings; instead,
they were founded partly on basalt bedrock, and party on highly reactive deep
clay.[20]
26 The
Uniting Church alleges that the footings were not constructed with any provision
for movement at the change between the highly
reactive clay and the basalt
bedrock, contrary to clause 3.1.7 of the Australian Standard AS 2870, the
specified performance criteria
for the design and construction of footing
systems for foundation conditions in
Australia.[21]
27 The
Uniting Church does not allege the Building should or could have been founded
solely on basalt bedrock, given the actual site
conditions that were
encountered. It alleges that it did not provide written approval to vary the
requirement that they say was
‘expressly specified’ in the Drawings
that the footings of the Building were to be founded solely on basalt
bedrock.[22]
28 The
occupancy certificate for the Building was issued on 25 September
2012.[23]
29 The
Uniting Church alleges that substantial cracking has occurred in the Building
since its construction, which has worsened since
October
2013.[24] It alleges that the
cracking has been caused by differential settlement of the footings due to them
being partly founded on basalt
bedrock, and party on highly reactive clay, and
being constructed without provision for movement at the change between the two
types
of foundation
materials.[25]
30 The
Uniting Church alleges that as a result of the cracking in the Building it has
suffered loss and damage including the cost
of either rectifying, or demolishing
and rebuilding the Building and the cost of investigating the cause of the
cracking.[26]
31 The
primary claim by the Uniting Church is against Hartley. The Uniting Church
claims against Hartley for breach of the Architect
Contract,[27] and in negligence for
breach by Hartley of its duty to exercise reasonable care in performance of the
architect services pursuant
to that contract so as to avoid causing the Uniting
Church to suffer economic loss.
32 The written terms
of the Architect Contract relied on include that Hartley was to engage
sub-consultants for the project to provide
specialist design services for and on
behalf of the Uniting Church, but that Hartley would not be relieved from any of
its obligations
or liabilities under the Architect Contract in doing
so.[28] Hartley was also
responsible, pursuant to the Architect Contract, for contract administration,
undertaking periodic site inspections
and checking work in progress with respect
to design against the contract documents and
conditions.[29]
33 Consistent
with its obligations under the Architect Contract, Hartley engaged AGB to
produce the structural Drawings for the
footings.[30] It was also Hartley
who engaged Kersulting to provide the Kersulting Services. Kersulting was
deregistered on 12 June 2019 pursuant
to s 509 of the Corporations Act
2001 (Cth).[31] No claim is
made by the Uniting Church against
Kersulting.
34 The Uniting Church claims against the
builder, Lyons, for breach of the Building Contract and in tort for breach of
duty to avoid
causing economic loss in the performance of works under the
Building Contract.[32] There were
terms of the Building Contract that Lyons would perform its obligations with
reasonable care and
skill.[33]
35 The
Uniting Church alleges that Grant owed it a duty to exercise reasonable care in
performing the Kersulting Services to avoid
causing it to suffer economic loss,
and that Grant breached his duty of care causing it to suffer loss and
damage.[34] Although the scope of
the duties alleged extends to the performance of all of the Kersulting Services,
the breach allegation in
paragraph 37 of the SOC is directed only to the advices
issued by Grant.
36 Further, or in the alternative,
the Uniting Church alleges that by issuing the advices Grant made various
representations, including
that the footings of the Building did not need to be
founded in basalt bedrock but could be founded in any of the natural undisturbed
soils, and that in accordance with the Drawings, the footings were to be founded
in any of the natural undisturbed soils (‘the
Representations’).[35]
37 The
Uniting Church alleges that the Representations were made in trade or commerce,
and that by making them, Grant engaged in conduct
that was misleading or
deceptive, or likely to mislead or deceive, in contravention of s 9 of the FTA
(as in force at the time of the relevant
conduct).[36]
38 The
SOC alleges that the making of the Representations by Grant caused it to suffer
loss and damage.[37]
The principles to be applied
39 The parties agree that the principles to be applied are those summarised by J Dixon J in Wheelahan v City of Casey (No 12).[38] It is sufficient to reproduce the first five paragraphs of his Honour’s summary:
(a) Order 13 of the Rules set out the relevant requirements of a sufficient pleading, while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;(b) the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;[39]
(c) the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence).[40] The expression ‘material facts’ is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;[41]
(d) as a corollary, the pleading must be presented in an intelligible form – it must not be vague or ambiguous or inconsistent.[42] Thus a pleading is ‘embarrassing’ within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;
(e) the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;[43]
...[44]
40 Concerning the fifth of the matters referred to in Wheelahan, Grant relied in addition on the following statements by Middleton, Perram and Anastassiou JJ in Oztech Pty Ltd v Public Trustee of Queensland:
31. Clarity in pleading is by no means an unattainable objective, even in the most complex litigation. Often the elements of a cause of action require careful and precise identification to ensure that the relevant integer is properly characterised having regard to the context in which the claim arose. The pleading should always be a bespoke articulation of the dispute between the parties, even though the warp and the weft of its fabric may be the same as other claims based upon the same, or a similar, cause of action.
32. There are occasions when such definition can be difficult and may require reference to technical or scientific material, including cases where the material requires specialist explanation by reference to expert evidence to be given at trial. In some instances, the contended facts may be asserted based upon inferences to be distilled from a web of other facts. In other instances it may be necessary to define an implicit representation drawn from the contextual background against which express statements were made or from the failure to make an express statement contrary to the apparent common assumption of the parties. While the limits of text may in some cases impose linguistic limitations beyond a certain level, such linguistic limitations would not generally present any obstacle to expressing the substantive causes of action with sufficient clarity to ensure that the parties are able to reach a shared understanding of the issue in the dispute.[45]
41 In support of its submissions that technical objections to pleadings are inconsistent with the obligations imposed on litigants and practitioners under the CPA, the Uniting Church placed reliance on Babcock & Brown DIF III Global Co-Investment Fund, LP v Babcock & Brown International Pty Ltd (No 2),[46] where Hargrave J, after adopting the principles set out in Wheelahan, went on to say:
15. To this summary, I would add that the Court should consider the pleading under a challenge as a whole and adopt a practical case management approach to pleading objections, rather than accepting technical objections when the true nature of the case to be met is clear from reading the pleading as a whole and there is no embarrassment to filing a responsive pleading. Such an approach accords with the discretionary nature of the power to strike out and with the overarching purpose under the Civil Procedure Act...[47]
42 In Babcock & Brown,
Hargrave J struck out the Australian Consumer Law claim because it was
embarrassingly ‘rolled
up’.[48] Grant submitted that
his complaints are not ‘merely technical’, but are substantive and,
if upheld, are deficiencies
that are incapable of being cured by
amendment.[49]
43 The
critical issue in this case is whether the SOC pleads material facts sufficient
to establish a reasonable cause of action against
Grant, one with a proper basis
for the causes of action relied upon. The complaints made are substantive. In
short, are the causes
of action alleged available; if so, are they properly
pleaded; if not, should leave be given to re-plead.
The pure economic loss claim: determining whether a novel duty should be imposed
44 Paragraph 36 of the SOC pleads a duty of care against Grant. It is in the following terms:
36. At all material times, Grant owed the Plaintiff a duty to exercise reasonable care in performing the Kersulting Services to avoid causing the Plaintiff to suffer loss, including economic loss.
Particulars
The duty arises by reason of the following salient features:
(1) It was reasonably foreseeable that if Grant failed to exercise reasonable care and skill when performing the Kersulting Services, the Plaintiff might suffer loss, including economic loss.
(2) Grant knew or ought reasonably to have known that the Plaintiff would rely upon his expertise to perform the Kersulting Services using care and skill.
(3) The Plaintiff was vulnerable to suffering loss or damage as a result of Grant failing to perform the Kersulting Services will reasonable care and skill.
(4) The class of persons who might suffer loss or damage as a consequence of Grant’s failure to exercise reasonable care and skill was not indeterminate.
(5) It is not unreasonable to impose a duty upon Grant to take reasonable care to avoid causing the Plaintiff to suffer loss, including economic loss.
45 In Brookfield Multiplex v Owners Corporation Strata Plan No 61288,[50] French CJ said:
24. This Court in Sullivan v Moody eschewed any attempt at formulating a general test for determining the existence or non-existence of a duty of care for the purposes of the law of negligence. As the Court said, different classes of case raise different problems, requiring “a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle”.[51] The development of the law of negligence had revealed “the difficulty of identifying unifying principles that would allow ready solution of novel problems”.[52][53]
46 The duty of care alleged to be owed by
Grant, an employee of Kersulting, to avoid pure economic loss being sustained by
the Uniting
Church in the performance of the Kersulting Services (the Uniting
Church not being a party with whom either Grant or Grant’s
employer,
Kersulting, had a contractual relationship), is a novel duty of
care.
47 In Ku-ring-gai Council v Chan (No
2),[54] McColl and
Meagher JJA and Sackville AJA said that where a novel duty of care to
avoid pure economic loss is alleged:
7. ... An assessment of the merits of that claim depended in part on the presence or absence of salient features which in earlier cases have assisted in determining whether such a duty should be imposed. Those issues in turn depended on a close analysis of the legal and factual relationships between the plaintiffs, the builder and the Council.[55]
48 In Caltex Refineries (Qld) Pty Ltd v Stavar,[56] Allsop P, with whom Simpson J agreed, extracted from the authorities a non-exhaustive list of salient features relevant to the evaluative task of imputation of a novel duty and the identification of the scope and content of such a duty:
103 These salient features include:
(a) the foreseeability of harm;(b) the nature of the harm alleged;
(c) the degree and nature of control able to be exercised by the defendant to avoid harm;
(d) the degree of vulnerability of the plaintiff to harm from the defendant’s conduct, including the capacity and reasonable expectation of a plaintiff to take steps to protect itself;
(e) the degree of reliance by the plaintiff upon the defendant;
(f) any assumption of responsibility by the defendant;
(g) the proximity or nearness in a physical, temporal or relational sense of the plaintiff to the defendant;
(h) the existence or otherwise of a category of relationship between the defendant and the plaintiff or a person closely connected with the plaintiff;
(i) the nature of the activity undertaken by the defendant;
(j) the nature or the degree of the hazard or danger liable to be caused by the defendant’s conduct or the activity or substance controlled by the defendant;
(k) knowledge (either actual or constructive) by the defendant that the conduct will cause harm to the plaintiff;
(l) any potential indeterminacy of liability;
(m) the nature and consequences of any action that can be taken to avoid the harm to the plaintiff;
(n) the extent of imposition on the autonomy or freedom of individuals, including the right to pursue one’s own interests;
(o) the existence of conflicting duties arising from other principles of law or statute;
(p) consistency with the terms, scope and purpose of any statute relevant to the existence of a duty; and
(q) the desirability of, and in some circumstances, need for conformance and coherence in the structure and fabric of the common law.[57]
The submissions
49 In support of its claim that the duty
alleged is properly arguable, the Uniting Church placed reliance on Voli v
Inglewood Shire Council,[58] and
Brickhill v Cooke.[59] That
is, to say that a professional (such as an engineer), who owes a duty of care to
a client or third party, is ‘required
to exercise the care and skill of
the ordinarily skilled professional within the same profession’, and where
they fail to uphold
that standard, the duty is
breached.[60]
50 I
do not consider Voli or Brickhill to be of assistance in
evaluating whether or not the duty of care alleged is one that has a proper
basis.
51 Voli involved a claim for personal
injury by a person injured when a stage designed by an architect with inadequate
floor joists collapsed.
It was not a case involving a claim for pure economic
loss.
52 Brickhill involved a claim in
contract and in tort against an engineer who had provided an inspection report
in relation to a property that
the plaintiffs were considering purchasing.
Glass JA, with whom Kirby P and Priestley JA agreed, considered that an
engineer could
be sued both in tort and in contract. Later, in Astley v
Austrust Ltd, the High Court held that an implied term of reasonable care in
a contract for professional services arises by operation of law;
noting that the
parties to a contract can, and often do, bargain away or limit the duty as they
choose.[61] Brickhill is not
relevant to the determination of the prospects of success of the duty alleged in
this case. That is so because in this case,
unlike Brickhill, there is
no contract alleged between the Uniting Church and Grant. The implied term to
which the High Court referred in Astley has no
application.
53 What is required in this case is an
identification and consideration of the salient features, those listed in a
non-exhaustive
manner by Allsop P in Stavar, which in earlier cases have
assisted in determining whether the novel duty alleged should be
imposed.
54 The Uniting Church placed reliance on
the following passages from Professional Liability in
Australia[62] in support of the
proposition that as an employee, Grant could be found to personally owe a duty
of care to a third party in the
provision of the Kersulting Services:
Where a company is engaged to provide professional services to a client and an employee carries out the relevant services or tasks, whether the employee owes a duty of care to the client or a third party involved the application of general principles concerning when a duty of care exists to the relationship between the plaintiff and employed person. For example, in Australian Executor Trustees Ltd v Propell National Valuers (WA) Pty Ltd [2011] FCA 522, a company which carried on business as a valuer was engaged to provide a valuation of real property proposed to be used as security for a loan. The company knew the plaintiff lender may rely on the valuation. Mr Coleman, an employee of the company, prepared the valuation. At the time, he knew that the plaintiff may rely on the valuation. A question arose... as to whether Mr Coleman, in addition to his employer, owed the plaintiff a duty of care. Barclay J... Concluded... That “having regard to all relevant aspects of the dealings between the parties – the dealings involving Mr Coleman, as a licensed valuer, and the applicants, in the sense that Mr Coleman knew who he was actually preparing the valuation for and that Mr Coleman knew the report he agreed would be relied upon by them for mortgage security purposes – Mr Coleman should be taken as owing a duty of care to the applicants in respect of the valuation he produced and knew his employer, Propell, would be providing to them”. On appeal, the Full Court agreed: Propell National Valuers (WA) Pty Ltd v Australian Executor Trustees Ltd [2012] FCAFC 31; (2012) 202 FCR 158; [ 2012] FCAFC 31 at [115].
...
In Barclay v Penberthy (2012) 246 CLR 258, F Pty Ltd carried on the business of providing air charter services for commercial purposes. The plaintiff engaged F Pty Ltd in respect of a flight. P, an employee of F Pty Ltd, was the pilot of the flight. The plane crashed during the flight, causing economic loss to F Pty Ltd. The High Court’s consideration of whether P owed a duty of care to the plaintiff in respect of pure economic loss involved the application of general principles to the relationship between the plaintiff and P.[63]
55 Australian Executor Trustees Limited v Propell National Valuers (WA) Pty Ltd,[64] involved a land valuer, Mr Coleman, personally licensed under legislation to provide a valuation, who was found to have known that the trustee company would rely upon his valuation for mortgage security purposes. The Full Court dismissed an appeal against the imposition of the personal duty alleged.[65] Collier and Stone JJ concluded that,[66] on the facts as found by the trial judge, there was no error in finding that Mr Coleman owed a duty of care to the plaintiffs.[67] Collier J (with whom Stone J agreed) summarised the approach of the trial judge and the particular facts to which he had regard when finding in favour of the duty alleged:[68]
110. In considering the question of personal liability of Mr Coleman, his Honour explained rules ordinarily governing the law of negligent misstatement in Australia... In summary, those principles (as rephrased by Gleeson CJ and Gummow and Hayne JJ in Tepko at [47]) were:
1. The speaker must realise or the circumstances be such that he ought to have realised that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence; and
2. The circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker.
111. In considering these points in the context of these proceedings, his Honour formed the view that Mr Coleman, as the licensed valuer employed by Propell, who prepared and signed the valuation, fully realised that AET and Seiza (who were named as the intended recipients of the valuation) would rely upon the valuation for the purposes of considering the loan application. His Honour concluded that there was no doubt on the facts that it was reasonable for AET and Seiza to rely upon the statements made in the valuation, and that this too was well understood by Mr Coleman.
112. In light of these findings his Honour found that, unless there was some other, narrowing principle that excludes a person such as an employed licensed valuer in a case such as that before the Court from owing a duty, there was no reason to conclude otherwise than that Mr Coleman owed a duty of care at common law to AET and Seiza...
...
115. ... On the facts as found by his Honour, I can identify no error in his Honour’s findings ... that Mr Coleman owed a duty of care at common law to the respondents.
56 In Barclay v Penberthy,[69] one of the questions for the High Court was whether the pilot, Mr Penberthy, who crashed a specialist commercial charter plane (killing the plaintiff, Nautronix (Holdings) Pty Ltd’s key employees and injuring others) owed a duty to Nautronix to avoid economic loss sustained by Nautronix when its employees were killed or injured. Fugro Spatial Solutions Pty Ltd was a company that carried on the business of providing air charter services for commercial purposes, including the testing and development of technology. Nautronix was testing equipment designed by it intended to indicate the position of submarines from an aircraft and to provide communications with them.[70] Mr Penberthy was employed by Fugro as a commercial pilot. Nautronix claimed for damages for breach of the aircraft charter agreement against Fugro. It also claimed damages in tort for economic loss against Fugro, who had modified the plane being flown by Mr Penberthy to accommodate Nautronix’s equipment and its operation, and against Mr Penberthy personally. French CJ, Gummow, Hayne, Crennan and Bell JJ, with whom Kiefel J agreed, held that Mr Penberthy personally owed a duty of care to avoid economic loss. As Kiefel J recorded:[71]
120. Murray J [the trial judge] took Fugro and Mr Penberthy to admit the existence of a duty of care towards Nautronix. They had admitted knowledge of the potential economic loss which would be caused to Nautronix in the event of the death of or injury to its employees, and Mr Penberthy had admitted owing a duty to use reasonable care and skill in the piloting of the aircraft. Fugro was vicariously liable for Mr Penberthy’s actions.
121. His Honour found that Nautronix was vulnerable in the sense that it was unable to protect itself from foreseeable harm of an economic nature caused by Mr Penberthy’s negligence...
57 The Court of Appeal of Western
Australia overturned the trial judge. When allowing the appeal, the plurality
in the High Court
drew on factual findings by the trial judge that
Mr Penberthy knew the purpose of the flight, knew that it was a commercial
purpose,
knew that the company who employed his passengers was Nautronix, that
Nautronix was a member of an ascertainable class of commercial
users of the
aircraft, and that Nautronix was the particular commercial entity which depended
upon the exercise of his professional
skill as a part of the successful
performance of the service for which the aircraft was chartered. The plurality
considered that
the Court of Appeal erred by saying that the claim by Nautronix
depended upon Mr Penberthy having known, or that he ought reasonably
to have
known, of the risk that Nautronix would suffer economic loss were its employees
to be injured in the crashed plane. Their
Honours considered that given the
highly specialised nature of the testing program in which Nautronix and Fugro
were engaged, and
which was the purpose for which the plane was chartered, that
an appreciation of that risk might readily be
inferred.[72]
58 In
separate reasons, Kiefel J approached the question of the duty alleged against
Mr Penberthy personally as
follows:[73]
173 In Perre v Apand Pty Ltd, the defendant’s knowledge of the risk associated with its activities and of the consequences for an individual, or a class of persons, was identified as being of importance to the question of whether a duty of care could be said to arise. In Woolcock Street Investments Pty Ltd v CDG Pty Ltd, reference was made to one of the “salient features” identified by Stephen J in Caltex Oil (Aust) Pty Ltd v The Dredge Willemstad namely, the defendant’s knowledge that to damage the pipeline was inherently likely to produce economic loss. It was this feature which constituted the close relationship between plaintiff and defendant, sufficient to give rise to a duty of care in that case.
174 A tortfeasor may know that a person is reliant upon them. Such is usually the case in the giving of advice. As Gleeson CJ observed in Perre v Apand Pty Ltd, reliance and actual foresight are closely related. Knowledge of an individual who is reliant, and therefore vulnerable, is a significant factor in establishing a duty of care, although vulnerability can arise otherwise than by reliance. In Perre v Apand Pty Ltd, the defendant’s internal communications showed that it had actual foresight of harm and knowledge of a class of people who were vulnerable to the threat of harm.
175 Vulnerability was said in Woolcock Street Investments Pty Ltd v CDG Pty Ltd to have become an important requirement in cases where a duty of care has been found to have been owed. Vulnerability is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken, but rather as referring to the plaintiff’s inability to protect itself from the consequence of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the burden of the loss upon the defendant.
176 In the present case, whilst Mr Barclay [another defendant who had three years earlier approved the design of a modification to or repair of an aircraft component] could not be said to have had knowledge of Nautronix and its interests, Fugro and Mr Penberthy clearly did. The contractual relationship between Fugro and Nautronix, and the part Mr Penberthy had in piloting the specially adapted charter flights, provided Fugro with knowledge of Nautronix’ project, its commercial purposes and the importance of the employees to the achievement of those purposes. As Murray J observed, Fugro and Mr Penberthy largely admitted that any failure on their part to exercise reasonable care and skill in the piloting of the plane was likely to result in economic loss to Nautronix, consequent upon injury to its employees. Even without that admission, a duty to take care is evident not the least because the law would imply a term to that effect in the performance of the charter agreement.
177 On the view of the Court of Appeal, Nautronix could have gone further and negotiated terms with Fugro to protect itself from the effects of economic loss, and Nautronix could not, therefore, be said to be vulnerable. Presumably the Court of Appeal had in mind Fugro accepting liability for such loss in the event of negligence. A conclusion that Fugro would have agreed to such a term is not open. In any event, Nautronix had the protection of the implied term to take reasonable care, which, combined with Fugro’s knowledge, was sufficient to give rise to a duty of care.
59 The passage from Professional
Liability in Australia upon which the Uniting Church relied, extracted above
at paragraph 54, begins with the proposition that the question of whether an
employee owes a duty of care to a third party involves the application of
general principles. As Kiefel J’s analysis in Penberthy
shows, in the pure economic loss context where a novel duty is alleged, those
principles require consideration of salient features
including known reliance
and the vulnerability of the individual or the class of persons in whose favour
the alleged duty is said
to arise.
60 Grant
submitted that in order to establish a duty of care to found a claim of pure
economic loss, it is incumbent on the Uniting
Church to plead:
(a) an assumption of responsibility by Grant to the Uniting Church;(b) Grant’s known reliance by the Uniting Church on his assumption of responsibility;
(c) how and why the Uniting Church’s interest that was harmed was vulnerable to Grant’s conduct; and
(d) the material facts relied on to support each of these conclusions.[74]
61 Paragraph 36 of the SOC (via the particulars) seeks to identify ‘salient features’. The salient features alleged include allegations that:
(a) Grant knew or ought reasonably to have known that the Uniting Church would rely upon his expertise to perform the Kersulting Services using care and skill;[75] and(b) that the Uniting Church was vulnerable to suffering loss or damage as a result of Grant failing to perform the Kersulting Services with reasonable care and skill.[76]
62 The Uniting Church submitted that the salient features of its relationship with Grant, including its vulnerability, are duly particularised in paragraph 36.[77] It submitted:
(a) it is common practice for salient features of a duty to be particularised;(b) there is no proposition that Grant cannot understand the basis of the alleged duty of care, and that it is entirely open for him to respond to it;[78] and
(c) if the Court requires the salient features be pleaded as material facts, in order to advance the proceeding, they can be so pleaded.[79]
63 Grant submitted that while knowledge and vulnerability are referred to in the particulars, material facts necessary to support those allegations are not pleaded. Grant relied on the recent decision of Davies J in Sidgreaves v State of NSW (No 2)[80] where, amongst other things, his Honour said:
47. It is, therefore, necessary, as McDougall J had said in CDG, for there to be proper pleading of material facts concerning assumption of responsibility and, for that matter, known reliance on the defendant by the plaintiffs with the concept of vulnerability.[81]
Duty of care: consideration
64 There are some important matters to note about the claim that Grant owed a duty to the Uniting Church to avoid economic loss:
(a) First, it is not alleged that Grant was in privity of contract with the Uniting Church and no claim in contract is made against him. The implied term addressed by the High Court in Astley has no application.(b) Second, Grant’s application proceeds on the assumed basis that unlike Hartley and Lyons, who were directly parties to contracts with the Uniting Church, the plaintiff intended to plead that Kersulting was a subcontractor to Hartley.[82]
(c) Third, there is no pleading against Grant which seeks to characterise his conduct other than in his capacity as an employee of Kersulting.
(d) Fourth, although expressed to concern the performance of the Kersulting Services, the claims against Grant are confined to the contents of the advices.
(e) Fifth, both the advices are addressed to Hartley. Neither document is addressed to the Uniting Church.
(f) Sixth, the SOC itself does not allege that Grant knew or reasonably ought to have known that there would be reliance on either or both the advices by the Uniting Church. While the particulars contain such an allegation, no material facts in support of that proposition are alleged.
(g) Seventh, neither the SOC nor the particulars plead material facts in support of the allegations that the Uniting Church was vulnerable to economic loss.
65 Unlike the facts in Penberthy,
in this case there was no contract between the employer of the individual,
Kersulting, and the plaintiff, the Uniting Church, to
whom the duty alleged is
said to have been owed. Unlike the facts in Propell, the Uniting Church
was not named as an intended recipient of the advices. In Propell, Mr
Coleman’s position as a licensed valuer, preparing and signing a valuation
in that capacity, added a feature specific to
his status as the author of the
valuation not present in any like form in this case. Although a civil and
structural engineer, Grant
signed the advices as an employee only of Kersulting
and not in any personal professional
capacity.
66 When determining whether the salient
features present in this case are such that the claim in tort against Grant to
avoid economic
loss has a proper basis, three matters are critical. First, the
knowledge allegations concerning Grant; second, the vulnerability
of the Uniting
Church; and third, the nature of the claim, one based on negligent advice and in
that context, known reliance. When
considering each of these matters,
distinctions between the particulars and the substantive allegations in
paragraph 36 of the SOC
may be put to one side.
The knowledge allegation
67 Rule 13.10(3) of the Rules requires
that every pleading shall contain particulars of any condition of the mind,
including knowledge,
which is alleged.
68 The
allegation of knowledge in paragraph 36 of the SOC, including in the
particulars, is wholly deficient. The pleading makes
no attempt to plead
material facts that identify the basis on which it is alleged that when
performing the Kersulting Services (for
which his employer was engaged by
Hartley), Grant actually knew or ought reasonably to have known that a third
party, the Uniting
Church, would rely upon his expertise as required by
r 13.10(3).
69 There is simply nothing in the
pleading itself, including the particulars, or in the documents referred to in
the pleading and
relied on during the hearing, to support the assertion in the
particulars that Grant either knew or ought reasonably to have known
that the
owner of the Building might read or rely on either of the advices of which he
was the author on behalf of his employer.
When regard is had to the available
materials, it is not at all apparent how that deficiency might be
cured.
70 Both advices were provided in response to
a request by Hartley. Both documents were addressed to Hartley. The First
Project Advice
referred to a query by Lyons. When Grant provided the advices,
neither document was addressed to the Uniting Church. It might reasonably
be
inferred, although not alleged or particularised, that as the author of the
advice, Grant knew or ought reasonably to have known
that Hartley and Lyons
would or might rely on the advices. The same cannot be said about the Uniting
Church.
71 The SOC does not allege that Grant was
told the Uniting Church would rely on his advice. It does not even plead that
the Uniting
Church is, or at relevant times was, the owner of the land on which
the Building was constructed. It does not allege that Grant
knew that to be the
case.
72 The email sent by Hartley to Kersulting on
14 September 2011 stated that the owner of the site ‘is the Uniting Church
in
Australia (Victoria)’. However, that email was not addressed to Grant
and nor does it appear to have been copied to him.
It was addressed to Don
Kerr, a director of Kersulting, who responded to Hartley on 15 September
2011 on behalf of Kersulting. The
response is not alleged to have been copied
to Grant and it does not appear to have been copied to
him.
73 Not only does the allegation of knowledge
fail to comply with the Rules, on the available material, the deficiency –
the
absence of pleaded material facts to support the knowledge allegation, is
not capable of being cured.
The vulnerability allegation
74 The allegation in the particulars to
paragraph 36 that the Uniting Church was vulnerable, is also an allegation that
is not supported
by the pleading of any material fact on the basis of which
vulnerability might be established or from which vulnerability might be
inferred.
75 Vulnerability, or the absence of it,
and the ability on the part of a plaintiff to take reasonable steps to protect
its own interests
are critical considerations when it comes to imposing a duty
of care to avoid pure economic
loss.[83] In some cases the absence
of vulnerability may be determinative against the existence of a
duty.[84]
76 In
Perre v Apand Pty Ltd,[85]
McHugh J highlighted the critical importance of vulnerability:
Cases where a plaintiff will fail to establish a duty of care in cases of pure economic loss are not limited to cases where imposing a duty of care would expose the defendant to indeterminate liability or interfere with its legitimate acts of trade. In many cases, there will be no sound reason for imposing a duty on the defendant to protect the plaintiff from economic loss where it was reasonably open to the plaintiff to take steps to protect itself. The vulnerability of the plaintiff to harm from the defendant’s conduct is therefore ordinarily a prerequisite to imposing a duty. If the plaintiff has taken, or could have taken steps to protect itself from the defendant’s conduct and was not induced by the defendant’s conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss.[86]
77 McHugh J continued:
In determining whether the plaintiff was vulnerable, an important consideration will be whether the plaintiff could easily have protected itself against the risk of loss by protective action, particularly by obtaining contractual warranties. Pecuniary losses are one of the ordinary risks of business and, for that matter, ordinary life. Business people frequently take, or are easily able to take, steps to minimise their business or economic losses. Taking these steps will often be a more efficient way of dealing with the risk of these losses than requiring defendants to have regard to the risk that others may suffer economic loss........Where another body of law can effectively deal with economic loss, a court should be slow to use negligence law to impose a duty of care on a defendant. This is particularly important where to do so would interfere with a coherent body of law in another field.[87]
78 When vulnerability is a salient factor, consideration is required of the plaintiff’s political and economic standing,[88] the ability or otherwise of the plaintiff to protect itself, and of the impact of other salient features, such as those listed by Allsop P in Stavar,[89] being factors which may contribute to the overall vulnerability of the plaintiff and therefore to the existence of a duty of care.[90]
79 In this case, there is nothing alleged
about the political and economic standing of the Uniting Church that would
support a finding
that it was relevantly vulnerable. The contractual
arrangements and obligations put in place by the Uniting Church relating to the
project referred to in the pleading are not consistent with it being
economically vulnerable.
80 When the Uniting Church
contracted with Hartley, it did so on terms that required Hartley to be
responsible for site inspections
and to check work in progress with respect to
design quality against contract documents and
conditions.[91] While Hartley could
engage sub-consultants, it was an express term of the Architect Contract that
the engagement of those persons
would not relieve Hartley of its
obligations.[92] There was no
direct contract between the Uniting Church and Grant’s employer,
Kersulting. However, if there was a problem
with Kersulting’s work, the
Uniting Church expressly retained its rights against
Hartley.
81 There was an express obligation in the
Building Contract that Lyons would exercise reasonable care. Both that express
term and
the terms of the Architect Contract tell against the proposition that
the Uniting Church was not able to protect itself and, as a
result, was
vulnerable.
82 It may be inferred that the Uniting Church could have taken additional steps to protect its economic interests. It could have done so either by choosing to contract directly with Kersulting or by requiring formal subcontracts between Hartley and its sub-consultants that included warranties in its favour and/or by requiring the novation of those contracts. The fact it did not do so does not mean that it was vulnerable.
83 In Brookfield, the alleged existence of a duty of care was denied, substantially because the plaintiff was not vulnerable.[93] In Woolcock Street Investments Pty Ltd v CDG Pty Ltd McHugh J stated that a lack of vulnerability was ‘often a decisive – reason for rejecting the existence of a duty of care in tort’ in pure economic loss cases.[94]
84 In RinRim Pty Ltd v Deutsche Bank AG,[95] the New South Wales Court of Appeal considered that the earlier decisions in Woolcock and Brookfield established propositions including:
..., in a case in which a plaintiff relies on the existence of a duty of care in novel circumstances, the plaintiff’s vulnerability to loss caused by the defendant’s negligence is an extremely important if not determinative consideration...[96]
85 The pleading does not include any allegations of material fact that support the proposition that the Uniting Church, which had secured protection in its favour in its contracts with the architect and the builder, was vulnerable. The matters to which I have referred are all factors that suggest it was not.
86 The lack of a proper basis for vulnerability is a significant factor that tells against the existence of the duty of care alleged.
Negligent Professional Advice
87 As the cause of action relied upon in this case is allegedly negligent advice, the fact that the plaintiff was not vulnerable does not necessarily mean that the cause of action is not soundly based. In the negligent advice context, known reliance, may be sufficient to support a finding that a duty is owed.
88 In ABN AMRO Bank NV v Bathurst Regional Council, the Full Federal Court said:[97]
573. For the purposes of this appeal, the applicable principles may be summarised as follows. First, for there to be a duty to exercise reasonable care in making a statement or giving advice:
1. The speaker must realise, or the circumstances must be such that the speaker ought to have realised, that the recipient of the information or advice intends to act on that information or advice in connexion with some matter of business or serious consequence; and
2. The circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker.
574. In respect of the second limb, the nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge (actual or potential) and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker. It is important to recognise that the list is not exhaustive.
575. Second, proof of the criteria at [573] and [574] above establishes an assumption of responsibility or known reliance (or the converse, vulnerability), sufficient for a duty to be imposed.
89 The Full Court went on to discuss the relationship between reliance and vulnerability; rejecting the notion that in negligent misstatement cases, vulnerability is a ‘prerequisite’ for the existence of a duty of care to avoid pure economic loss’:[98]
596. S&P contended at trial and on appeal that LGFS was not vulnerable because it was capable of protecting itself from the loss suffered. The primary judge found that LGFS was vulnerable: J[2950]. S&P submitted that finding was in error. Again it is necessary to address the legal and factual foundation for S&P’s submission.
597. Legally, S&P submitted that vulnerability was a “prerequisite” for the existence of a duty of care to avoid pure economic loss. Vulnerability was described by S&P as the plaintiff’s “inability to protect itself from the consequences of a defendant’s want of reasonable care” or the plaintiff’s inability to protect itself from the risk of injury by reason of ignorance or social, political or economic constraints. In support of this contention, S&P referred to the statement by McHugh J in Perre v Apand that if the plaintiff could have taken steps to protect itself from the defendant’s conduct, and was not induced by the defendant’s conduct not to take such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss.
598. S&P’s submission fails legally and factually. S&P misstates the relevant legal principles. As Gleeson CJ said in Perre v Apand:
In relation to the giving of advice or information, questions of reliance and actual foresight of the possibility of harm ... 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 factor in establishing a duty of care.
In the field of negligent misstatement, vulnerability is the consequence of, not an additional criterion of, knowledge (actual or which a reasonable person would have) of reasonable reliance by an ascertainable class of persons.
90 As stated in ABN AMRO, in a
negligent advice context, known reliance (actual knowledge of reliance or
knowledge which a reasonable person would have) is
critical. The difficulty for
the Uniting Church is that no material facts in support of the allegation of
knowing reliance are pleaded.
91 As earlier
discussed, the SOC does not allege any material facts in support of
Grant’s asserted actual or attributed knowledge.
Not only are no facts
alleged in support of the actual knowledge allegation, no circumstances are
pleaded from which it might be
inferred that Grant did or should have realised
that the Uniting Church would be a recipient of the advices and would be relying
on them.
92 The present circumstances are a distance apart from those in Penberthy, upon which the Uniting Church relied. In that case, Mr Penberthy had knowledge of Nautronix and its interest. There was a contractual relationship between Fugro and Mr Penberthy’s employer, Nautronix. Mr Penberthy largely admitted any failure on his part in piloting the plane was likely to result in economic loss to Nautronix, consequent upon injury to its employees. In this case, there was no contractual relationship between the Uniting Church and Kersulting. There is no basis to imply a duty to take care in the performance of a contract because there was no contract.
93 The novel duty of care alleged in the SOC is unsustainable. The plea is devoid of particulars of knowledge on the part of Grant that the advices would be relied upon by the Uniting Church. Not only are no particulars of reliance provided, none appear capable of being provided.
The Fair Trading Act claim
94 The FTA claim is pleaded at paragraphs 39-43 of the SOC. Further particulars of paragraphs 42-43 are also relied on. It is convenient to reproduce the relevant parts of the FTA allegations, including the particulars later provided:
39. Further or alternatively, by issuing the First Project Advice and/or the Second Project Advice, Grant represented that:
(a) the footings of the Building did not need to be founded in basalt bedrock;(b) the footings of the Building were to be founded in any of the natural undisturbed soils that underlay the filling material at the site; and
(c) in accordance with the Drawings, the footings of the Building were to be founded in any of the natural undisturbed soils that underlay the filling material at the site.
(individually, collectively and in any combination, the Representations)
40. Insofar as the Representations were representations of opinion, they had no reasonable basis.
Particulars
The Representations had no reasonable basis because:(1) the Drawings expressly specified that the footings were to be founded entirely on basalt bedrock;(2) the Drawings did not specify that the footings could be founded on any material other than basalt bedrock;
(3) the Drawings did not specify that the footings could be founded on any of the natural undisturbed soils which underlay the filling material at the site;
(4) the Representations were contrary to the requirements in clauses 3.1.7 and 5.6.2 of AS 2870; and
(5) the Representations were not based on any engineering solution to support those opinions.
...
42. In the premises, the making of the Representations constituted conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 9 of the Fair Trading Act 1999 (Vic).
Particulars
The making of the Representations by Grant constituted conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 9 of the Fair Trading Act 1999 (Vic):
(a) as to subparagraphs 39(a) and 39(b), because those representations had no reasonable basis, as to which the Plaintiff refers to and repeats the particulars to paragraph 40; and(b) as to subparagraph 39(c), because the representation in that paragraph was not true, as to which the Plaintiff refers to and repeats the matters in paragraph 8.
43. The making of the Representations by Grant caused the Plaintiff to suffer the loss and damage alleged in paragraph 25.
Particulars
The making of the Representations by Grant caused the Plaintiff’s loss and damage by reason that, as a result of issuing the First Project Advice and the Second Project Advice (which contained the Representations):
(a) the footings of the Building were founded partly on basalt bedrock and partly on highly reactive clay, instead of founded solely on basalt bedrock in accordance with the Drawings;(b) the footings of the Building were constructed without any provision for movement at the change between the two types of foundation materials, including articulation of the superstructure or strengthening of the footing system; and
(c) as a result of the matters above, there has been differential settlement of the footings, which has led to substantial cracking of the Building.
95 Grant asserts that there are a number
of deficiencies in the pleading of the FTA claim. His first complaint is that
as an employee
of Kersulting, it is not open to the Uniting Church to make a
claim against him directly for damages for breach of the FTA. Any
claim against
him based on contraventions of the FTA might only be one for accessorial
liability.[99] If that is so, any
such claim needs to address the issues identified in Yorke v
Lucas.[100] Second, Grant
submits that the SOC does not plead the ‘meaning’ conveyed to the
person relying on the advices, or how
that meaning was ‘objectively and
reasonably conveyed’.[101]
Without such a plea, Grant is unable to understand how what is pleaded at
paragraph 37 of the SOC constitutes a contravention of
the FTA. Third, Grant
submits that so far as the advices or either of them expressed opinions, there
is no plea of an absence of
reasonable grounds on his part as the person who
expressed the opinion. Fourth, Grant submits that the Uniting Church has failed
to plead who relied on the advices, or either of them, and what meaning was
conveyed to that ‘particular
person’.[102]
96 In
response to Grant’s first criticism, the Uniting Church relied on the
decision of the High Court in Houghton v
Arms,[103] to submit that a
direct claim against Grant for breaches of the FTA was permissible. The problem
about that submission is that the
provisions of the FTA considered in
Houghton v Arms and those in force in November 2011 were materially
different.
97 In Houghton v Arms, the
defendants, Mr Houghton and Mr Student, were employees of the company with whom
the plaintiff, Mr Arms, contracted for the provision
of services. A key issue
was whether or not Mr Houghton and Mr Student had been acting in trade or
commerce on their own account.
At trial, Ryan J held that no independent
trading or commercial interest could be imputed to them. The claims against
them were
dismissed.[104] The
Full Federal Court allowed an appeal, finding that Ryan J had erred by holding
that it was not ‘open to him at law’
to find them personally liable
under s 9 of the
FTA.[105]
98 In
the High Court, Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ compared and
contrasted the relevant provisions of the FTA
with those of the Trade
Practices Act 1974 (Cth) at that time in force:
23. The similarities between the text of s 52 of the TP Act and s 9 of the FT Act, and between s 82(1) and s 159(1) will be readily apparent. However, several points should be noted. First, s 159 differs from s 82(1) by omitting any reference to the party whose conduct contravened the statute and referring only to those involved in the contravention.[106] The legislative assumption appears to be that involvement in a contravention includes the actor whose conduct occasioned the contravention. Secondly, at the relevant time,[107] the FT Act contained no counterpart to s 75B(1) of the TP Act, so that there was no statutory exegesis of the phrase “any person involved in the contravention” appearing in the damages provision in s 159(1). ...
24. Thirdly, the opening words of s 9(1) are “[a] person”, whilst those of s 52(1) are “[a] corporation”. However, when s 52(1) is read with the additional operation given it by s 6 of the TP Act, it is apparent that, in some circumstances, s 52(1) applies immediately to individuals. On the other hand, in accordance with ordinary principles of construction, and subject to any apparent contrary intention, a body corporate may answer the description of “a person” in s 9(1) of the FT Act.[108] It is not expressly limited to “natural persons”.[109]
39. The upshot of the legislative history in Victoria is that, because the critical events occurred between 1999 and 2003, s 9 of the FT Act falls for application in a context in which there is no counterpart of s 75B(1) or s 84(2) of the TP Act.
40. The appellants are fixed with the findings by the primary judge respecting the conduct in which they engaged, being certain acts and omissions. As indicated earlier in these reasons, these were “in trade or commerce”. Why then are the appellants not persons who contravened the prohibition imposed by s 9 of the FT Act? As a general proposition, and as Lord Rodger of Earlsferry stressed in Standard Chartered Bank v Pakistan Shipping Corpn (Nos 2 and 4),[110] in the world of tort the status of an individual as an employee does not divest that person of personal liability for wrongful acts committed while an employee. There is no good reason for treating the text of s 9 any differently and, in particular, for construing the section as if it read “[a] person, as principal, must not ...”.
41. The main purposes of the FT Act include (s 1(a)) the promotion and encouragement of “fair trading practices”. As Bell J pointed out in Astvilla Pty Ltd v Director of Consumer Affairs,[111] and as relied upon by the present respondent, to read down the word “person” in s 9(1) to exclude employees would not promote that object.[112]
100 Sections 9 and 159(1) of the FTA as considered in Houghton v Arms were in the following terms:
Section 9:
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of this Part is to be taken as limiting by implication the generality of sub‑section (1).
Section 159(1):
A person who suffers loss, injury or damage because of a contravention of a provision of this Act may recover the amount of the loss or damage or damages in respect of the injury by proceeding against any person involved in the contravention.
101 As at November 2011, ss 6, 9 and 159 (1) of the FTA relevantly provided as follows:
6 Extra-territorial application of this Act
(3) Without limiting subsection (1) or (2), this Act applies to—
...
(c) a supply of goods or services in Victoria where the contract for the supply of goods or services is made in Victoria;
...
9 Application of Australian Consumer Law(1) The Australian Consumer Law text, as in force from time to time—
(a) applies as a law of this jurisdiction; and(b) as so applying may be referred to as the Australian Consumer Law (Victoria); and
(c) as so applying is a part of this Act.
159 Actions for damages(1) A person who suffers loss, injury or damage because of a contravention of a provision of this Act may recover the amount of the loss or damage or damages in respect of the injury by proceeding against any person who contravened the provision or was involved in the contravention.[113]
102 As can be seen, by November 2011,
s 9 of the FTA as it was between 1999 and
2003[114] had been replaced by the
direct incorporation of the Australian Consumer Law (‘ACL’), the
successor to the Trade Practices Act 1974 (Cth). Section 159(1) had been
amended to distinguish between and to deal separately with claims for damages
against any person who contravened the act
and those ‘involved’ in
such contravention. The analysis by the plurality in Houghton v Arms was
heavily dependent upon the language of the FTA at the time. The amendments to
the FTA to incorporate the provision of the ACL
and to distinguish between
primary and accessorial liability mean that Houghton v Arms is of no
assistance to the Uniting Church.
103 The ACL
distinguishes between primary liability, and that of persons involved in
contravention. As held by the High Court in
Yorke v Lucas, to be
knowingly concerned in, or party to a contravention, the individual must have
intentionally participated in the
contravention.[115]
104 In
Quinlivan v Australian Competition and Consumer
Commission,[116] Heerey,
Sundberg and Dowsett JJ discussed the elements that must be pleaded and proved
in order for accessorial liability to be made
out:
8. The leading case on s 75B is Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661. The High Court held that the section imports the requirements of the criminal law. The person sought to be made liable must be shown to have had knowledge of the essential matters which go to make up the contravention. This contrasts with the rule as to primary liability under s 52 where liability may attach even though a corporation acts honestly and reasonably: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11; (1978) 140 CLR 216 at 228, Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 at 197.
9. In Yorke itself the alleged accessory, an employee of a corporate respondent, was held not to be liable because although he was aware of the representations made – indeed they were made by him – he had no knowledge of their falsity. Therefore he could not be said to have intentionally participated in the contravention: 158 CLR at 668. “Knowledge” means actual and not constructive knowledge: Compaq Computer Australia Pty Ltd v Merry [1998] FCA 968; (1998) 157 ALR 1 at 5. What is said in Yorke about s 75B is applicable to s 80(1)(c), (d), (e) and (f).
10. From the interaction of these provisions three conclusions emerge. First, s 51A does not detract from the Yorke principle that actual knowledge of the essential elements of the contravention is required if s 75B or s 80 is to apply. Where the contravening conduct involves misrepresentation, whether as to a future matter or not, this principle requires actual knowledge by the accessorial respondent of the falsity of the representation. This is an essential matter which must be alleged and proved: Su v Direct Flights International Pty Ltd [1999] FCA 78 at [38], Fernandez v Glev Pty Ltd [2000] FCA 1859 at [18].[117]
105 The SOC does not address the elements
which the Full Federal Court in Quinlivan said must both be alleged and
proved in order for accessorial liability to be established. As a result, the
FTA claim must be struck
out.
106 In response to the
second criticism by Grant, the failure to separately plead the meaning conveyed
by the First and Second Project
Advices, the Uniting Church submitted that the
SOC makes clear the terms of the Representations alleged to have been made to
Hartley.
It submitted that this is not a case of an ambiguous representation
being open to interpretation, but an objective meaning conveyed
on the face of
the advices and pleaded in paragraph 39 of the
SOC.[118]
107 I
agree that paragraph 39(a)-(c) of the SOC put Grant on notice of the case he has
to meet as to the meaning of the Representations
alleged. I do not accept
the second criticism of the FTA pleading.
108 The
importance of distinguishing between representations of fact and representations
of opinion was emphasised by the New South
Wales Court of Appeal (McFarlan JA,
with whom Bell ACJ and Barrett AJA agreed) in Ireland v WG Riverview Pty
Ltd:[119]
30. The case law requires that the characterisation of a statement as to one of belief or opinion, on the one hand, or as to a matter of fact, on the other hand, is to be viewed from the perspective of the person or “ordinary” or “reasonable” audience to whom the statement or representation is directed (as opposed to from the perspective of the maker of the statement):. This will frequently be a critical aspect of the context as the decision in Forrest also illustrates. Thus, in Pyrotek Pty Ltd v Ausco Industries Pty Ltd, French J (as he then was) observed that:
A statement which has the character of a statement of fact when read by an ordinary person may to another, who has relevant knowledge, be seen as an opinion involving interpretation of other data. If in the circumstances in which it is communicated, including the nature or resources of the recipient, a statement presents as a statement of opinion then it is not necessarily to be characterised as anything other than a representation that the maker of the statement holds the opinion or interpretation offered.
109 In the course of the hearing, it
became clear that the Uniting Church seeks to rely on the Representations in
paragraphs 39(a)
and (b) as representations of opinion, and the Representation
in paragraph 39(c) as a representation of fact. If a claim against
Grant for
ancillary liability contrary to the FTA is to go forward, the pleading will need
to be amended to accord with the delineation
between alleged misrepresentations
of fact and alleged misrepresentations of opinion adopted during the
hearing.
110 Grant’s third complaint concerns
the absence of a plea that he did not have reasonable grounds for the opinions
expressed.
Although the particulars to paragraph 40 set out why, in the broad,
there was an absence of reasonable grounds for the opinions
expressed, the
particulars do not directly expose why it is alleged that Grant, the author of
the Representations made those representations
without him personally having
reasonable grounds for doing so. In Australian Competition and Consumer
Commission v Woolworths
Limited,[120] Mortimer J
stated as follows:
129 Most importantly in my opinion, the text of s 4(1), read with s 4(2), clearly supports the position for which the ACCC contends. Subsection (1) is concerned with whether the person making the representation “does not have” reasonable grounds. The only sensible way to understand that phrase is that at the time of making the representation, the representor herself or himself, or through its corporate actors, “had” – as in fact possessed – a basis which can be objectively described as reasonable, for what was represented. The text directs attention to the information which in fact provided the basis for the statements or conduct. It does not direct attention to whether there were reasonable grounds for the making of the representation. Rather, the text focuses on whether the representor “had” such grounds.[121]
111 If the FTA claim is to go forward,
the deficiency in the pleading, the failure to comply with the requirement
identified by Mortimer
J in ACCC v
Woolworths,[122] needs to be
corrected.
112 Given the failure to frame the claim
against Grant as one for accessorial liability, the FTA claim has no proper
basis and must
be struck out.
Reliance and causation
113 There are, however, further issues of
substance with the pleading raised by Grant. For both causes of action relied
upon by the
Uniting Church to succeed, it is necessary that the Uniting Church
prove how the advices caused it to suffer loss and further, what
would have
occurred if the advices were not negligent and the Representations were not
made.
114 In Reichel v Paulyn Investments Pty
Ltd,[123] Kyrou J (as his
Honour then was), determining a pleading summons, said as follows in relation to
the need to plead reliance when
bringing a claim for damages for breach of the
Trade Practice Act 1974 (Cth):
20. In relation to the TPA claim, what s 82 requires is that the misleading conduct causes the plaintiff’s loss. Although s 82 does not refer to reliance, where the alleged misleading conduct is the making of a representation, it is difficult to see how the representation can be misleading and cause loss unless it is communicated to someone and that person relies on it by doing something (or refraining from doing something) which results in the plaintiff suffering loss. Ordinarily, it is the plaintiff who relies on the misleading conduct. However, the cases recognise that the plaintiff can succeed under s 82 where a third party relies on the misleading conduct and acts in such a way that causes loss to the plaintiff.[124]...[125]
115 Grant submitted that the SOC should, but does not, allege reliance on his advice by anyone. Relying on Smith v Noss,[126] he submitted that the advice said to be relied on must have caused an action, or inaction, other than what would have been done if the advice had not been given.[127] The Uniting Church relied on Smith v Noss, but to submit that:
...specific evidence of reliance is not essential for proof of causation. Such evidence may be one strand, perhaps an important one, in the factual skein, but causation may be found without it.[128]
116 The Uniting Church accepted that it is necessary to plead and prove causation, but maintained that this has been clearly expressed in the SOC.[129] With respect to the negligence claim, causation is dealt with in the Further and Better Particulars of paragraph 38 as follows:
1. Grant’s breach of his duty of care caused the Plaintiff’s loss and damage by reason that, as a result of issuing the First Project Advice and the Second Project Advice:
(a) the footings of the Building were founded partly on basalt bedrock and partly on highly reactive clay, instead of founded solely on basalt bedrock in accordance with the Drawings;(b) the footings of the Building were constructed without any provision for movement at the change between the two types of foundation materials, including articulation of the superstructure or strengthening of the footing system; and
(c) as a result of the matters above, there has been differential settlement of the footings, which has led to substantial cracking of the Building.
117 The Further and Better Particulars to paragraph 43 which are concerned with the Representation claim, as reproduced at paragraph 94 above, are in identical terms except that they begin with the words:
The making of the Representations by Grant caused the Plaintiff’s loss and damage by reason that, as a result of issuing the First Project Advice and the Second Project Advice (which contained the Representations).
118 Both sets of particulars relied on
assert that Grant ‘caused’ the Uniting Church’s loss ‘as
a result of
issuing the First Project Advice and the Second Project
Advice’. However, neither paragraph pleads any material facts to show
or
establish how or why what occurred was caused by, or was a result of, the
issuing of either or both of the advices.
119 The
omission is significant when it is appreciated that the pleading does not assert
that anyone read the advices, or either of
them. To the extent the pleading
deals with a person reading or relying upon the advices, the particulars to
paragraph 26(c) alleging
breach by Hartley allege in substance that either
Hartley did not read the Second Project Advice or, if it did, Hartley failed to
act in accordance with it.
120 The SOC fails to
plead facts that establish what occurred ‘as a result of’ the
advices. The SOC also fails to engage
with the counterfactual; what is it that
the Uniting Church says would have happened if Grant had not provided the
advices?
121 The SOC alleges that the Drawings
prepared by AGB specified that the footings of the building were to be founded
solely on basalt
bedrock.[130]
Contrary to what was specified by AGB in the Drawings, the footings as
constructed by Lyons were not founded solely on basalt bedrock,
but were founded
partly on basalt bedrock and partly on highly reactive
clay.[131]
122 Although
not expressly stated, the effect of the allegations in the SOC is that when it
came to construct the building, it was
not possible to found the footings solely
on basalt bedrock because the site conditions were not solely basalt but were
basalt together
with highly reactive deep clay. So much is apparent from
paragraph 21(b), which alleges that the footings were not constructed with
any
provision for movement in the change between the basalt bedrock and the highly
reactive clay.
123 Cracking to the building is
alleged to have been caused by differential settlement of the footings as a
result of the footings
being founded partly on basalt bedrock and partly on
highly reactive clay, instead of being founded solely on basalt bedrock in
accordance
with the Drawings, and having been constructed without any provision
for movement at the change between the two types of foundation
materials.[132]
124 The SOC does not say, for example, that were it
not for the advices being negligent or misleading, it would not have constructed
the Building. The SOC fails to allege material facts that show how the
advices caused any loss. It also fails to plead what would have happened if the
advice was not negligent and if the Representations
had not be
made.
125 The failure to plead reliance by any
person on the advices and the failure to allege material facts that show how the
advices
actually caused loss and damage is fatal to both causes of action
alleged.
Disposition
126 For the reasons previously stated,
there is no proper basis for the pure economic loss claim. There is also no
proper basis for
the FTA claim against Grant personally. In addition, there is
a failure to plead reliance and material facts to establish causation
for both
causes of action. In all of the circumstances and for the reasons previously
stated, the claim against Grant will be struck
out.
127 The Uniting Church has been on notice since
November 2021 that Grant considered the SOC to be deficient. A letter from
Grant’s
solicitor to the Uniting Church’s solicitor dated 11
November 2021 advised that, amongst other things, the SOC did not engage
the
alleged duty of care, it failed to plead assumption of responsibility and known
reliance, and it did not properly plead the requisite
vulnerability or
counterfactual together with the material facts relied on to support each of
those conclusions. In respect of the
misleading and deceptive conduct claim,
the letter emphasised that the statement of claim did not plead reliance, or the
necessary
counterfactual together with the material facts relied on to support
those conclusions.
128 On 18 November 2021, the
solicitors for the Uniting Church responded by advising that the Uniting Church
did not agree that the
SOC was defective or liable to be struck out. Further
and better particulars to paragraphs 38, 42 and 43 were provided on
22 November
2021. On the same day, Grant’s solicitors responded by
stating that the further and better particulars did not cure the deficiencies
within the SOC, and that it remained liable to be struck
out.
129 The parties engaged in further
correspondence, and on 23 November 2021 the solicitors for Uniting Church
advised that they did
not have instructions to amend their client’s
pleading.
130 If the deficiencies in the SOC were
capable of being cured, one would have expected the Uniting Church to have
attended to those
deficiencies well before the hearing of the strikeout
application. No attempt was made to do so and no evidence was put before the
Court on the hearing of the application to show that the deficiencies identified
could be cured.
131 Paragraphs 4, 12 – 17 and
36 – 43, and paragraph B of the prayer for relief of the SOC will be
struck out.
132 In Environinvest Ltd v Pescott
& Ors,[133] having found
there was no proper basis for the claims alleged, Judd J ordered that the
liquidator not be permitted to re-plead unless
and until he could satisfy the
court that there was a sound basis to support the claims
made.[134] I will adopt the same
course as was adopted by Judd J in Environinvest. I will order
that the Uniting Church is not permitted to re-plead a claim against Grant
unless and until it is able to satisfy
the Court that there is a sound basis to
support claims proposed to be made against
him.
133 As Grant has succeeded in obtaining the
relief claimed in his 25 November 2021 summons, I will order that the Uniting
Church pay
Grant’s costs of and incidental to the proceeding, including
the costs of that summons and any reserved costs on a standard
basis, to be
taxed if not agreed.
SCHEDULE OF PARTIES
THE UNITING CHURCH IN AUSTRALIA PROPERTY TRUST (VICTORIA)
Plaintiff
- and -
IAN HARTLEY ARCHITECTS PTY LTD (ACN 006 528 463)
First Defendant
E J LYONS & SONS PTY LTD (ACN 004 584 883)
Second Defendant
DAMIEN GRANT
Third Defendant
[1] Plaintiff, Statement of Claim, dated 14 October 2021 (‘SOC’), [5].
[2] The Further and Better Particulars, which were annexed to the Third Defendant’s Submissions dated 4 March 2022, appear not to have been filed on RedCrest.
[3] SOC, [1]-[3].
[4] Plaintiff, Submissions in Response to Third Defendant’s Strike-Out Application, dated 8 March 2022, (‘Plaintiff’s Submissions’), [21]; Transcript of Proceeding, The Uniting Church in Australia Property Trust (Victoria) v Ian Hartley Architects Pty Ltd (Supreme Court of Victoria, Delany J, 11 March 2022) (‘Transcript’), 21 and 60.
[5] The Fair Trading Act 1999 (Vic) was in force at the time of the alleged misleading conduct.
[6] Third Defendant, Submission in Support of its Summons dated 25 November 2021, dated 4 March 2021 (‘Third Defendant’s Submissions’), sections G and H.
[7] SOC, [5]-[6].
[8] Ibid, [7].
[9] Ibid, [8].
[10] Plaintiff’s Submissions, 17-20, which are the Structural Slab Details Sheets 1-4.
[11] Cf Plaintiff’s Submissions, [19(a)] and [19(b)].
[12] SOC, [10]-[11].
[13] Ibid, [12].
[14] Ibid, [13(a)].
[15] Ibid, [13]. The Kersulting fee proposal and the inspection are together defined in the SOC as ‘the Kersulting Services’.
[16] Ibid, [14]-[17].
[17] Ibid, [17].
[18] Ibid, [26] and particulars therein.
[19] Ibid, [19].
[20] Ibid, [21(a)].
[21] Ibid, [20] and [21(b)].
[22] Ibid, [18].
[23] Ibid, [22].
[24] Ibid, [23].
[25] Ibid, [23]-[24].
[26] Ibid, [25].
[27] Ibid, [27].
[28] Ibid, [6(a)(i) and (c)].
[29] Ibid, [6(a)(iv)].
[30] Ibid, [7].
[31] Ibid, [4].
[32] Ibid, [31]-[34].
[33] Ibid, [11(c)].
[34] Ibid, [36]-[38].
[35] Ibid, [39].
[36] Ibid, [39]-[42].
[37] Ibid, [43].
[38] [2013] VSC 316 (‘Wheelahan’).
[39] The function of defining issues for trial is required from an early stage. Otherwise, discovery and other interlocutory process are likely to be misdirected: Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd & Ors [1996] FCA 1758; (1996) ATPR 41-522 per Burchett J at 42,679.
[40] A reasonable cause of action or defence is one with a real chance of success, assuming the correctness of the allegations of fact in the challenged pleading.
[41] Australian Automotive Repairers’ Association (Political Action Committee) Inc v NRMA Insurance Ltd [2002] FCA 1568 [13], citing Bruce v Oldhams Press Ltd [1936] 1 KB 697, 712-713.
[42] In Environinvest, the pleading was struck out because it was confusing, often circular, sometimes inconsistent and contained no coherent narrative.
[43] SMEC at [8].
[44] [2013] VSC 316, [25].
[45] [2019] FCAFC 102; (2019) 269 FCR 349, [31]-[32].
[46] [2017] VSC 556 (‘Babcock & Brown’).
[47] Ibid, [15]. The Uniting Church also relied on Uber Australia v Andrianakis [2020] VSCA 186; (2020) 61 VR 380.
[48] Ibid, [11]-[12].
[49] Transcript, 23-4.
[50] [2014] HCA 36; (2014) 254 CLR 185 (‘Brookfield’).
[51] (2001) 207 CLR 562 at 579–580 [50].
[52] (2001) 207 CLR 562 at 580 [53].
[53] [2014] HCA 36; (2014) 254 CLR 185, [24].
[55] Ibid, [7].
[56] [2009] NSWCA 258; (2009) 75 NSWLR 649 (‘Stavar’).
[57] Ibid, [103]-[104].
[58] [1963] HCA 15; (1963) 110 CLR 74, 84 (‘Voli’).
[59] [1984] 3 NSWLR 396, 398 (‘Brickhill’).
[60] Plaintiff’s Submissions, [42].
[61] [1999] HCA 6, (1999) 197 CLR 1, (‘Astley’) [47] (Gleeson CJ, McHugh, Gummow and Hayne JJ).
[62] Stephen Walmsley et al, Professional Liability in Australia (Thomson Reuters, 3rd Ed, 2015).
[63] Ibid, 82 [1.860].
[65] Propell National Valuers (WA) Pty Ltd v Australian Executor Trustees Limited [2012] FCAFC 31; (2012) 202 FCR 158 (‘Propell’), [1].
[66] Ibid, [151] and [173]. Gilmour J determined the appeal on a different ground and did not need to decide the duty question.
[67] Ibid, [115].
[68] Ibid, [110]-[112], and [115] (citations omitted).
[69] [2012] HCA 40; (2012) 246 CLR 258 (‘Penberthy’).
[70] Ibid, [8].
[71] Ibid, [120]-[121], (citations omitted).
[72] Ibid, [42]–[49].
[73] Ibid, [173]-[177] (citations omitted).
[74] Third Defendant’s Submissions, [13], relying on CJD Equipment v A&C Constructions [2009] NSWSC 1362, [236]-[245] (McDoughall J); Brookfield, 200, [22] (French CJ), [127]-[131] (Crennan, Bell and Keane JJ); Chan v Acres [2015] NSWSC 1885, [100]-[141] (McDougall J); Smith v Australian Executor Trustees Ltd [2017] NSWSC 1406; GC Group Co Pty Ltd v Bingo Holdings Pty Ltd (No 2) [2020] NSWSC 1360, [35]; Sidgreaves v State of New South Wales (No 2) [2021] NSWSC 934, [47] (Davies J).
[75] SOC, [36(2)].
[76] Ibid, [36(3)].
[77] Plaintiff’s Submissions, [30]-[31], relying on Brookfield [2014] HCA 36; (2014) 254 CLR 185, 200 [22] (French CJ).
[78] Ibid, [32]-[33].
[79] Transcript, 60.
[81] Ibid, [47].
[82] Third Defendant’s Submissions, [7].
[83] See Alexander Jackman, 'Vulnerability, autonomy and protection: The role of actual and hypothetical contracts in the duty of care to protect against pure economic loss' (2020) 49(1) Australian Bar Review 82.
[84] Ku-ring-gai Council v Chan [2017] NSWCA 226; (2017) 224 LGERA 330, [70] (Meagher JA with whom McColl JA and Sackville AJA agreed).
[85] [1999] HCA 36; (1999) 198 CLR 180.
[86] Ibid, [118].
[87] Ibid, [120].
[88] Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515, [80].
[89] [2009] NSWCA 258; (2009) 75 NSWLR 649, [103].
[90] See, for example, Chan v Acres [2015] NSWSC 1885, [142]-[148].
[91] SOC, [6(a)(iv)].
[92] Ibid, [6(a)(i) and (c)].
[93] [2014] HCA 36; (2014) 254 CLR 185, [34]-[36] (French CJ), [56]-[58] (Hayne and Kiefel JJ), [69], [130]-[132] (Crennan, Bell and Keane JJ).
[94] [2004] HCA 16; (2004) 216 CLR 515, [94] (‘Woolcock’).
[96] Ibid, [132]-[133].
[97] [2014] FCAFC 65; (2014) 224 FCR 1 (‘ABN AMRO’), [573]-[575] (citations omitted).
[98] Ibid, [596]-[598].
[99] Transcript, 41.
[100] [1985] HCA 65; (1985) 158 CLR 661.
[101] Third Defendant’s Submissions, [18], relying on Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357, [5] (French CJ and Keifel J) (Miller); Takemoto v Moodys Investors Service Pty Ltd [2014] FCA 1081, [25] (Flick J); Taylor v Lederman [2013] VSC 99, [25] (Ferguson J, as she then was); Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564, 589-592, [63]-[69]; TS16.
[102] Transcript, 16.
[103] [2006] HCA 59; (2006) 225 CLR 553, [40].
[104] Arms v WSA Online Ltd [2005] FCA 943.
[105] Arms v Houghton [2006] FCAFC 46; (2006) 151 FCR 438, 448.
[106] The earlier Victorian statute, the 1985 Act, had, in s 37(1), followed closely the terms of the federal provision.
[107] Before the insertion of a new s 145 by s 58 of the Fair Trading (Amendment) Act 2003 (Vic) ("the 2003 Amendment Act"). The 1985 Act had included in s 31 a provision following s 75B(1).
[108] Interpretation Act, s 38; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; (1985) 157 CLR 309 at 324.
[109] [2006] HCA 59; (2006) 225 CLR 553, [23]-[24].
[110] [2002] UKHL 43; [2003] 1 AC 959 at 973‑974. See also at 968 per Lord Hoffmann.
[111] [2006] VSC 289 at [148].
[112] [2006] HCA 59; (2006) 225 CLR 553, [39]-[41].
[113] Fair Trading Act 1999 (Vic) as at 1 September 2011.
[114] See Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553, [39].
[115] [1985] HCA 65; (1985) 158 CLR 661, 667.
[116] [2004] FCAFC 175; (2004) 160 FCR 1 (‘Quinlivan’).
[117] Ibid, [8]-[10].
[118] Plaintiff’s Submissions, [35]-[37].
[119] [2019] NSWCA 307; (2019) 101 NSWLR 658, [30] (Bell ACJ) (citations omitted).
[120] [2019] FCA 1039 (‘ACCC v Woolworths’).
[121] Ibid, [129].
[122] Ibid.
[124] Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526, 530-1; Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, 528-9 [101]-[102]; McCarthy v McIntyre [1999] FCA 784, [48], [50]; Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2002] FCAFC 177, [31].
[125] [2008] VSC 413, [20].
[126] [2006] NSWCA 37, [25] (Giles JA, Beazley and Ipp JJA agreeing)).
[127] Third Defendant’s Submissions, [16].
[128] [2006] NSWCA 37, [27].
[129] Plaintiff’s Submissions, [34].
[130] SOC, [8].
[131] Ibid, [21].
[132] Ibid, [24].
[133] [2011] VSC 325 (‘Environinvest’).
[134] Ibid, [36], [39] and [67].
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