"Negligence - Duty of Care - Statutory powers of local authority": Randwick City Council -v- T & H Fatouros Pty Ltd [2007] NSWCA 177
Author: Andrew Adam   
Judgment Date: 20 July 2007
Jurisdiction: NSW Court of Appeal
In Brief
  • A local council was found not liable for obvious defects in works it had directed a property owner to undertake.
  • Established principles governing novel duties of care and liabilities of public authorities affirmed.
Facts
  • Fatouros (“the Landlord”) operated a boarding house in Coogee.  
  • In 1996 and 1997, Randwick City Council (“the Council”) issued fire safety orders under the Environmental Planning and Assessment Act 1979 (“the EPA Act”) and the Environmental Planning and Assessment Regulation 1994 (“the EPA Regulation”).  These notices required the Landlord to repair or replace an external stairway serving as a fire exit, so that it would comply with clause D1.8 of the Building Code of Australia (“BCA”).  Clause D1.8 deals with measures to ensure that an external fire escape stairway is properly protected from fire.  
  • The fire safety notices made no mention of clause D2.16 of the BCA, which sets standards for balustrades of stairways.  It states that stairway balustrades should be designed so that there are no openings between the balustrades that would permit a sphere with a diameter of 125mm to pass between them.  
  • The Landlord engaged an engineer to design the stairway.  It passed that design on to a builder.  The builder indicated that he could not build the stairway to the engineer’s design and substituted a different design.  It is not apparent from the Court’s reasons whether the engineer’s plans complied with Clause D2.16 of the BCA.  
  • The balustrade, as built, had openings 640mm high and 890mm wide.  They were clearly non-compliant with Clause D2.16.
  • In 2000, the Council undertook its annual fire safety inspection.  It completed a form (for internal use by the Council only) indicating that the handrails and balustrading were satisfactory, although the form itself suggested that only internal staircases had been examined.  
  • Mark Ward was a tenant of the Landlord at the premises.  In December 2000, he was asleep in the premises when a thunderstorm occurred.  He left his room and commenced descending the external stairway.  He slipped on the slippery wet surface of one of the landings, slid through a gap in the balustrade, struck the ground below, fractured his skull and was rendered paraplegic.  
  • Mr Ward recovered damages from the Landlord, who sought an indemnity from the Council, alleging that the Council had failed in its duty of care to it.  It alleged that the Council, in inspecting the premises ought to have ensured compliance with the BCA and other regulatory standards.  Additionally, it alleged the Council ought to have informed it of its non-compliance with those standards and that it should have ordered it to comply with those standards. 
Decision at Trial
  • At trial Simpson J found for the Landlord.  
  • She considered that, the Council having undertaken inspections with respect to fire safety owed the Landlord a duty to inspect the stairway with respect to other safety issues.  While she did not find that the Landlord consciously assumed that the Council had dealt with all safety concerns in its inspection, she found that the Landlord had relied on the Council for advice to ensure that the stairway was adequate.
Decision on Appeal
  • Ipp JA delivered the leading judgment, with which Giles and Tobias JJA agreed.
Liability at Common Law
  • Ipp JA noted the caution of courts in imposing affirmative common law duties of care on statutory authorities: Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1.  Additionally, he observed that the exercise of statutory powers by a public authority does not necessarily give rise to a common law duty of care: Sutherland Shire Council v Heyman (1985) 157 CLR 424.  
  • Mere co-existence of knowledge of a risk of harm and the power to minimise that harm does not, in itself, give rise to a common law duty of care: Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540.  In determining whether there is a duty to take care in a novel situation, the courts will look to the vulnerability of the plaintiff and the knowledge and the degree of control exercised by the defendant.
  • Additionally, courts are reluctant to establish novel duties of care to avoid pure economic loss: Woolcock Street Investments v CDG Pty Ltd (2004) 216 CLR 515.  The Landlord’s loss (its liability in damages to Mr Ward) was pure economic loss.  
  • Ipp JA rejected the proposition that the Landlord might have relied on the inspection by the Council.  The defect in the balustrading was obvious.  Additionally, there was no evidence from the Landlord’s principal that he had relied in any way on what the Council had done or not done.  He was sophisticated and not a vulnerable person unable to protect himself from harm.  
  • His Honour assumed that the Council, in sending the notices and the fire safety order of 4 May 2000 and informing the landlord that the stairway was “fine”, acknowledged and represented that it considered the stairway to be adequate as regards fire safety. 
  • Ipp JA held an acknowledgement and representation in these terms, without more does not create any duty of care on the part of the Council as contended for by the landlord.  The fundamental elements of control, reliance and vulnerability on the part of the landlord must be considered.
Liability under EPA Act
  • When a Council gives a fire safety order, it must issue a schedule specifying the fire safety measures, current and proposed, that should be implemented: EPA Regulation, Clause 80C(1).  This forms the basis of the Council’s subsequent inspection.  Such a schedule must deal with the whole of the building: Clause 80C(3)(a).  However, such measures include only “statutory fire safety measures”.  Stairways are not amongst such measures.
  • Therefore, in Ipp JA’s analysis, whether the stairway was safe was beyond the Council’s statutory duty of inspection.  No duty therefore arose under the EPA Act or Regulation.
  • His Honour observed that the landlord knew full well that the stairway did not comply with the plans drawn by the engineer and was content for the stairway to be constructed in accordance with the builders design.
  • Therefore, Ipp JA found that there was no duty arising from the EPA Act or Regulation requiring the Council to certify the safety of all of the fire safety measures. 
Implications
  • The Court of Appeal has applied well-established principles in determining a duty of care in a novel situation – the information and control possessed by a defendant and the vulnerability of the plaintiff to loss.  It has also confirmed the reluctance to impose positive duties of care on public authorities.
  • When determining whether to impose a duty of care on a public authority in the exercise of its statutory powers, close attention should be paid to the particular terms of the authority’s statutory powers and responsibilities.
  • The Court of Appeal did not refer to Part 5 of the Civil Liability Act 2002, which deals with liabilities of public authorities, although the trial judge dealt with this after judgment had been delivered by re-opening the case.  The provisions of this Part, which operate to limit the liability of public authorities, should be considered in cases in which a public authority is alleged to have been negligent.

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