BUSINESS LAW IN AUSTRALIA

QUESTION

FRENCH CJ, GUMMOW, HAYNE, CRENNAN AND BELL JJ.

Introduction

1                           On 18 November 2001 Mr Napoleone Turano sustained fatal injuries when a eucalyptus tree fell onto the car that he was driving.  His wife, Mrs Turano (the first respondent), and their two children were travelling in the car at the time and each sustained injury in the incident.  Mrs Turano brought proceedings in negligence in the District Court of New South Wales on her own behalf and on behalf of the two children against the second respondent, the Council of the City of Liverpool (“the Council”), and the appellant, Sydney Water Corporation (“Sydney Water”), claiming damages for physical and psychological injury and for loss of dependency.

2                           The liability of the defendants was determined as a separate issue by the primary judge (Delaney DCJ).  His Honour found that the Council was liable in negligence, directing a verdict for Mrs Turano, and that Sydney Water was not liable, directing a verdict for Sydney Water.  He considered that in the circumstances Sydney Water did not owe a duty of care for the benefit of Mrs Turano.  Cross-claims brought by the Council and Sydney Water against each other were dismissed.

3                           The Council appealed to the New South Wales Court of Appeal against the primary judge’s order and Mrs Turano cross-appealed against the dismissal of her claim against Sydney Water.  It was not clear whether the trial of the separate issue had been confined to the determination of the defendants’ liability to Mrs Turano only, or to Mrs Turano and the two children.  The Council and Sydney Water each stated that it considered itself bound in all three cases by the determination of the separate issue[1].  In these reasons, a reference to a duty owed to Mrs Turano is to be understood as including a duty owed to the two children.

4                           The Court of Appeal (Beazley, Hodgson and McColl JJA) upheld the Council’s appeal, set aside the orders made by the primary judge and substituted a verdict for the Council.  By majority (Beazley and Hodgson JJA) the Court of Appeal upheld Mrs Turano’s cross-appeal.  The verdict in favour of Sydney Water was set aside and a verdict for Mrs Turano against Sydney Water on the issue of liability was directed.  The proceedings against Sydney Water were remitted to the District Court for the assessment of damages.

The case against Sydney Water

5                           Mrs Turano’s case against Sydney Water was that the tree fell because its root system had been compromised by the intermittent water-logging of the surrounding soil over an extended period.  This environment created the conditions in which a pathogen entered the root system and flourished.  The installation of a water main by Sydney Water was said to have diverted drainage from a nearby culvert causing the periodic water-logging.  Sydney Water’s negligence was said to lie in its failure to take into account the impact of the installation of the water main on drainage in the area, which required that it depart from its usual method of laying water mains in order to avoid adversely affecting the surrounding vegetation including the tree.

6                           The tree was growing on the grassed section of a road reserve.  Property in the tree and the road were vested in the Council[2].  The tree fell approximately 20 years after the installation of the water main.  There had been no complaint relating to the water main, or its effect on drainage in the surrounding area, in the intervening years.

A concession by Sydney Water?

7                           Sydney Water appeals by special leave from the orders of the Court of Appeal.  At the hearing of the leave application Sydney Water submitted that Mrs Turano’s claim raised consideration of the nature and extent of any duty of care owed to members of the public by a public authority arising out of the impact of infrastructure installed under statutory power on things growing on another’s land[3].  On that occasion Mrs Turano did not submit that Sydney Water was precluded by its conduct of the proceedings below from contending that it did not owe a duty of care to her.  In written submissions filed on the appeal Mrs Turano asserted that the existence of a duty of care owed to her by Sydney Water had not been in issue before the Court of Appeal and that Sydney Water ought not to be permitted to depart from that position in this Court.

8                           The primary judge said that there had been no dispute that each defendant owed Mrs Turano a duty to take reasonable care[4].  The making of such a concession was disputed by the Council in the Court of Appeal[5] and by Sydney Water in this Court.  Sydney Water denied that it owed a duty of care to Mrs Turano in its notice of grounds of defence[6].  It maintained this position throughout the trial.  In closing submissions Sydney Water’s counsel addressed the “conceptual difficulty facing the plaintiff … in respect of just the existence of the duty”.

9                           In the Court of Appeal, Sydney Water submitted that:

“[I]t is unrealistic to contend that the duty cast upon Sydney Water surrounding the installation of its mains, is such that in circumstances where there is no failure in a pipe nor leak, Sydney Water ought visit each roadway above where the mains are laid … to see if a tree might have a pathogen infecting it as part of the duties of Sydney Water.”

10                        Read in context, this submission is not a concession that Sydney Water owed a duty of care to Mrs Turano.

11                        The primary judge found that in the circumstances Sydney Water did not owe a duty of care for the benefit of Mrs Turano[7].  It was against this determination that Mrs Turano brought her cross-appeal.  The conduct of the proceedings below does not preclude Sydney Water from contesting that it owed a duty of care to her.

Sydney Water’s statutory powers

12                        Sydney Water is a corporation established under s 4 of the Sydney Water Act 1994 (NSW)[8].  It is the successor in liabilities to the Metropolitan Water Sewerage and Drainage Board, which was established under the Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW) (“the MWS&D Act”)[9].  References in these reasons to Sydney Water include reference to its predecessors.  Under the MWS&D Act, Sydney Water was at all material times, relevantly, charged with the conservation, preservation and distribution of water for domestic and other uses[10], the construction of any new, additional, or supplementary works of water supply[11], and the extension of its services to areas or districts not served with its mains[12].  Sydney Water was given the power to enter upon any Crown or private land, public road, or street and lay any water main, pipe or drain therein[13].  In the exercise of these powers, Sydney Water was subject to the mandate that it inflict as little damage as may be and that it make full compensation for all damage sustained[14].

The Civil Liability Act

13                        Mrs Turano’s claim is subject to the provisions of the Civil Liability Act 2002 (NSW) (“the CLA”).  Part 1A of the CLA (ss 5-5T) applies to any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise[15].  Negligence is defined for the purposes of Pt 1A to mean the “failure to exercise reasonable care and skill”[16].  Section 5B sets out what are described as “[g]eneral principles” and s 5C “[o]ther principles”.

14                        Part 5 of the CLA (ss 40-46) applies to the civil liability in tort of public and other authorities[17].  It extends to any such liability even if the damages are sought in an action for breach of contract or any other action[18].  A public or other authority includes any public or local authority constituted by or under an Act[19].

15                        Section 43A of the CLA applies to proceedings for civil liability to which Pt 5 applies to the extent that the liability is based on a public or other authority’s exercise of, or failure to exercise, a special statutory power[20].  A “special statutory power” is a power that is conferred by or under a statute and that is of a kind that persons generally are not authorised to exercise without specific statutory authority[21].  Sub-section (3) provides:

“For the purposes of any such proceedings, any act or omission involving an exercise of, or failure to exercise, a special statutory power does not give rise to civil liability unless the act or omission was in the circumstances so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power.”

16                        Sydney Water did not plead reliance on s 43A in its notice of grounds of defence.  No reference was made to the operation of the provision before the primary judge or in the Court of Appeal.  At the conclusion of the hearing in this Court, senior counsel for Sydney Water drew attention to the provision and informed the Court that it had not been argued below and that Sydney Water did not invoke it on the appeal.

17                        Following the hearing, the Court raised with the parties whether the existence of a duty of care at common law owed by Sydney Water to Mrs Turano is a hypothetical question in light of s 43A, or not one that can properly be decided without regard to the operation of the provision.  The parties were invited, in the event that the answer to either question was “yes”, to address the further question of whether special leave should be revoked.  They were asked to indicate whether it was desired to have the Court hear further oral argument.  Neither party sought to take up the latter invitation.

18                        On the hearing of the appeal Sydney Water submitted that in an action in tort in New South Wales a plaintiff is required to establish a legal obligation owed to him or her requiring the defendant to exercise reasonable care and skill before Pt 1A of the CLA is engaged.  It followed that the existence and extent of any duty of care owed by Sydney Water to Mrs Turano is to be determined by the application of the common law.  In the event that a duty is found to exist, Pt 1A is said to govern the determination of whether the defendant is held to have failed to exercise reasonable care and skill.  On this analysis the heading of Div 2 of Pt 1A (ss 5B, 5C), “Duty of care”, is a misnomer.  In Sydney Water’s submission, the provisions of Div 2 are a statutory modification of the principles stated by Mason J in Wyong Shire Council v Shirt[22] for the determination of the issue of breach.  Senior counsel for Mrs Turano adopted this analysis of the relationship between the common law and the CLA on the hearing of the appeal.

19                        In its supplementary submissions, in answer to the questions asked by the Court, Sydney Water maintained (consistently with the stance that it had taken on the hearing of the appeal) that s 43A does not speak to whether a legal obligation is imposed on a public authority to exercise reasonable care and skill for the benefit of another.  It also submitted that it is unclear that the installation of a water main under statutory power involves the exercise of a “special statutory power” within the meaning of s 43A(2).

20                        Mrs Turano submitted that the provisions of s 43A operate to confer immunity on a public authority in relation to the exercise of, or failure to exercise, a special statutory power subject only to the proviso in sub-s (3).  In her submission, it is plain that the installation of a water main under statutory power engages the immunity.  It followed on this view that the proceedings are singular and do not raise a question of general importance concerning the liability of public authorities in tort in New South Wales.  She submitted that the grant of special leave should be revoked.

21                        Following the final report of the Ipp Committee[23], a number of jurisdictions, including New South Wales, enacted legislation modifying the liability of public authorities in tort[24].  The approach has not been uniform.  In New South Wales, Pt 5, dealing with the liability of public and other authorities, was introduced into the CLA[25].  Section 43A was introduced into Pt 5 at a later date, apparently as a reaction to a decision at first instance of the New South Wales Supreme Court[26].  The history of s 43A is referred to in Precision Products (NSW) Pty Ltd v Hawkesbury City Council[27].  In that case the Court’s consideration of the operation of s 43A was undertaken in the context of the analysis of breach of duty in circumstances in which the parties had not addressed full argument on the terms of the section.

22                        This Court does not have the benefit of the consideration by the New South Wales Court of Appeal of the correctness of the assumption on which the appeal was argued:  that the legal obligation on a defendant to exercise care and skill for the benefit of a plaintiff is to be found outside the framework of the CLA.

23                        This appeal does not provide the occasion to consider the operation of s 43A.  Mrs Turano’s submission that laying a water main pursuant to the power conferred under the MWS&D Act plainly involves the exercise of a “special statutory power” is not one that can be accepted in the absence of full argument.

24                        Professor Aronson has written of s 43A[28] that it is important to understand its scope, adding[29]:

“We know from Hansard that the section was intended to apply to doctors performing certification roles under the mental health legislation[30].  By analogy and equally unfortunately, it may also apply in the context of police watch-houses and prisons, but nothing is certain.”

25                        Professor Aronson refers to the definition of “special statutory power” in s 43A(2), stating that this talks separately of “power” and “authority”.  He goes on[31]:

“The idea appears to have been to distinguish statutory authority per se … from statutes permitting coercive acts or non-consensual rights-depriving acts.  If that is correct, then one of the limits to the section’s scope is that the defendant must have received statutory authority to act in a way that changes, creates or alters people’s legal status or rights or obligations without their consent.”

26                        In light of the conduct of the proceedings below and the uncertain reach of s 43A, the question upon which special leave was granted should not be seen as hypothetical.

27                        It should be added that at the trial Sydney Water did not lead any evidence of its financial or other resources, so as to raise the operation of s 42 of the CLA with respect to its liability to Mrs Turano.  Section 42 lays out certain principles respecting resources and responsibilities of public authorities, which apply in determining the existence or breach of a duty of care.

The facts of the case

28                        The evidence at trial largely comprised expert opinion.  The Court of Appeal was critical of the primary judge’s failure to analyse aspects of the evidence and to record findings in these respects[32].  Each of the Justices reviewed the evidence.  Justices Beazley and Hodgson were in agreement as to the factual findings and the legal conclusions that flowed from them.  Justice McColl came to a different conclusion on critical questions of fact.  It is sufficient to refer to the primary judge’s unchallenged findings of fact and to the further findings of the majority in the Court of Appeal in order to demonstrate that Sydney Water did not owe a duty of care to Mrs Turano and accordingly that the appeal should be allowed.

29                        Edmondson Avenue, Austral, runs in a generally north/south direction.  It is located in a semi-rural area.  On either side of the sealed road surface is a grassed shoulder forming part of the road reserve.  The tree was standing on the western grassed shoulder, about 4 metres from the western outlet of a culvert.  The culvert had been installed under Edmondson Avenue in the 1960s and was designed to drain water from east to west.  Water flowing from the culvert pipe on the western side drained into an outlet pit and from there it had been designed to drain by means of a scalloped area of excavation (a “tail-out drain”) to pasture land lying to the west.

30                        In about 1981 Sydney Water laid the water main, a cast iron pipe, 900mm below ground in a trench which ran parallel to Edmondson Avenue, under the western grassed shoulder.  The water main transversed the outlet pit of the culvert.  It was laid at a higher level than the invert of the culvert pipe and this caused it to obstruct the free flow of water from the culvert pipe.  The earth of the outlet pit was impermeable clay.  The water main was laid on a bed of sand 300mm deep.

31                        The sand that was laid in the trench was much more permeable than the clay of the outlet pit.  One consequence of this difference was that the trench acted as a drain for the water that periodically collected in the outlet pit.  It was probable that excess water reached the roots of the tree by travelling north along the sand-filled trench[33].

32                        On the day of the accident there was a strong windstorm, which was the immediate cause of the tree’s fall.  An underlying cause of the fall was that the tree’s root system had been compromised by the presence of phytophthera, a root pathogen.  The intermittent water-logging of the root system had facilitated the introduction of the pathogen[34].

33                        The water main had been laid in accordance with standard engineering practice.

34                        A consultant engineer, Mr Burn, gave uncontradicted evidence that a person installing a water main in a bed of sand in this location would have appreciated that the sand-filled trench would probably create a north/south drain.  He considered that this result could have been avoided by installing a drain to the west, although this would have required Sydney Water to work on private land.  Alternatively, Mr Burn pointed out that the water main could have been laid under the bed of the culvert.

35                        At the time of the accident there were about 64,000 trees planted along roads under the Council’s control.  The Council’s risk management co-ordinator gave evidence that the Council did not carry out routine inspections of trees and culverts located on its land; it would only do so in response to a complaint or report in respect of the condition of a particular asset.

36                        The Council was not notified of the installation of the water main and it had no knowledge that the water main was laid in a sand-filled trench.  In November 1999 the Council surveyed the area in the course of undertaking preparatory work for a road-widening proposal of Edmondson Avenue.  The survey identified the water main and recorded its height relative to the invert of the culvert pipe.

37                        The tree had white marks which were on the trunk located about one metre above the ground.  These were indicative of the presence of phytophthera, within the trunk or lower root system.  The crown of the tree did not show signs of distress.  It was not clear that the white marks on the tree would have been visible from a passing car.

The primary judge’s reasons

38                        The primary judge referred to the evidence that the installation of the water main interrupted the flow of water from the culvert, which was likely to lead to water pooling from time to time.  His Honour appears to have accepted that it was probable that water which was partly dammed in the outlet pit reached the tree’s root system by travelling along the sand-filled trench[35].  He observed that there was no evidence that Sydney Water had obtained or was required to obtain an arborist’s opinion before installing the water main.  He found that it was not foreseeable by Sydney Water that water travelling along the sand-filled trench would undermine the tree to such an extent that it would eventually become unstable and fall.  It followed that Sydney Water did not owe a duty of care for the benefit of Mrs Turano when it laid the water main[36].

The Court of Appeal’s reasons

39                        Justice Beazley identified two errors in the primary judge’s analysis of Sydney Water’s liability.  First, her Honour considered that the primary judge had wrongly focussed on foreseeability of the precise sequence of events in determining the question of the duty of care[37].  She pointed out that it is sufficient that the class of injury, as distinct from the particular injury, be foreseen as a possible consequence of the conduct[38].  Justice Beazley formulated the question in this way[39]:

“[W]hether it was foreseeable that, by laying the water main in sand which acted as a conduit for water, in circumstances where the water main was installed in a position that both breached the existing drainage system and obstructed the drainage of water from the culvert, that there could be an effect on the surrounding area such as might cause harm.”

40                        The second error that Beazley JA identified was the primary judge’s acceptance that the water main had been laid in accordance with usual practice.  This finding overlooked the expert evidence that it was foreseeable that the sand-filled trench would act as a drain.  Her Honour considered that it was incumbent upon Sydney Water to have regard to the terrain, including the presence of other installations (the culvert), in which or near which the water main was laid[40].  The uncontradicted evidence was that the sand would act as a conduit for the water and that by laying the water main at this level water would not drain from the culvert as it had been designed to do.  After referring to these matters her Honour addressed Sydney Water’s liability to Mrs Turano in this way[41]:

“Given those facts and circumstances, Sydney Water had a duty to install the water main in such a way that the integrity of the culvert drainage system was not compromised.  Accordingly, Sydney Water owed Mrs Turano a duty of care of the content or scope that I have described.

In my opinion it is also clear on the evidence that Sydney Water breached that duty in two respects.  The first was that by laying the drain at a higher level than the discharge drain from the culvert, it caused periodic damming of the drain.  Secondly, by laying the drain in sand, it permitted the water to drain northwards, so as to undermine the roots of the tree.”

41                        Justice Hodgson did not separately discuss the formulation of the duty of care.  His Honour expressed substantial agreement with the reasons of Beazley JA[42].  He went on to say that the impact on drainage in the surrounding area created by the installation of the water main would have been readily foreseeable by Sydney Water, whose business involved the management of water.  He considered that Sydney Water should have carried out the works differently or that it should have investigated the consequences of the periodic saturation of the sand-filled trench[43].  The latter course should have alerted Sydney Water to the possibility of the roots of the tree being adversely affected.  In either case, his Honour concluded Sydney Water should have acted so as to avoid the risk that eventuated[44].

The parties’ submissions

42                        Sydney Water submits that the majority in the Court of Appeal imposed on it a duty of care without addressing the question of whether injury to a class of which Mrs Turano was a member was a reasonably foreseeable consequence of its conduct.  It complains that the class to whom the duty is owed is not confined within reasonable limits.  It contends that the formulation of the scope of the duty reflects reasoning with hindsight from the events that occurred leading to the imposition of a duty of strict liability.

43                        Mrs Turano submits that the inferences drawn by the majority in the Court of Appeal were open on the evidence and involved the orthodox performance of its function[45].  Her claim is for damages for personal injury arising from Sydney Water’s conduct in laying the water main in a manner that created a foreseeable risk of injury to any member of the public present on Edmondson Avenue.  In her submission, the lengthy interval between the conduct and the resulting injury does not stand in the way of the imposition of liability.  The claim, it is said, is analogous to a claim for the recovery of damages for asbestos-related disease brought many years after the date of exposure to the asbestos fibre.  Mrs Turano submits that the conclusion of the majority in the Court of Appeal as to Sydney Water’s liability is consistent with the application of settled principle.

Discussion

44                        The proposition that at common law a public authority may be subject to a general duty of care arising out of its conduct of works pursuant to a statutory power is not in issue[46].  Sydney Water acknowledged that it may be liable in damages to a person who suffers injury as the result of the rupture of a carelessly installed, defective, water main[47].  Mrs Turano’s claim may be understood as arising from her status as a road user.  It is a claim for damages for personal injury.  While the class to whom the duty is owed is potentially very large, only those members of it suffering injury as the result of the tree’s fall would have a cause of action against Sydney Water.  Sydney Water’s challenge does not turn on the indeterminacy of the class, defined as road users, so much as on the reasonableness of the conclusion that in 1981 Sydney Water should have had in its contemplation, as persons closely and directly affected by its conduct in laying the water main, persons on or near Edmondson Avenue in 2001[48].

45                        Reasonable foreseeability of the class of injury is an essential condition of the existence of a legal obligation to take care for the benefit of another[49].  The concept is relevant at each of the three, related, stages of the analysis of liability in negligence:  the existence and scope of a duty of care, breach of the duty, and remoteness of damage.  At the first stage, the inquiry has been said to involve the assessment of foreseeability conducted at “a higher level of abstraction”[50] than at the subsequent stages.  However, to speak of a higher level of abstraction in dealing with that first stage does not support a formulation of duty in terms devoid of meaningful content[51].  It remains, as Gleeson CJ observed in Tame v New South Wales[52], that the concept is to be understood and applied with due regard to the consideration that, in the context of the issue as to duty of care, it is bound up with the question of whether it is reasonable to require a person to have in contemplation the risk of injury that has eventuated.

46                        It was not necessary that the precise sequence of events leading to Mrs Turano’s injury be foreseen[53].  However, it was necessary to show that in 1981 it was foreseeable by Sydney Water that laying a water main in a bed of sand in this location involved a risk of injury to road users.  The evidence was that in 1981 it was foreseeable that laying a water main in a sand-filled trench transversing the culvert outlet pit would create a drain carrying water that collected in the pit north/south along its length.  There was no evidence that it was foreseeable by Sydney Water that altering sub-surface drainage in this way was likely to undermine the integrity of the roots of nearby trees.  The primary judge found that it was not foreseeable by Sydney Water that the water travelling along the trench would undermine the tree to such an extent that it would eventually become unstable and fall[54].  His reasons do not suggest that he misapprehended the nature of the inquiry.  The conclusion of the majority in the Court of Appeal, that harm to the tree was a foreseeable consequence of laying the water main in this location, was an inference drawn from the fact that Sydney Water was an authority involved in the management of water.  In the absence of any evidence, the basis for this conclusion may be doubted.  However, accepting that the conclusion was open, there remain difficulties with the majority’s reasons leading to the finding of liability.

47                        In considering the liability of the Council, Beazley JA referred to the observations of Gummow J (with whose reasons in this respect Callinan and Heydon JJ agreed) in Roads and Traffic Authority (NSW) v Dederer[55]:

“First, duties of care are not owed in the abstract.  Rather, they are obligations of a particular scope, and that scope may be more or less expansive depending on the relationship in question.  Secondly, whatever their scope, all duties of care are to be discharged by the exercise of reasonable care.  They do not impose a more stringent or onerous burden.”

48                        However, when it came to considering the liability of Sydney Water, Beazley JA stated the duty in absolute terms:  not to compromise the integrity of the culvert drainage system.  It was a duty called into existence because it was foreseeable that laying a water main in a trench that acted as a conduit for water could have “an effect on the surrounding area such as might cause harm”[56].  Neither the formulation of the duty nor the anterior inquiry as to foreseeability addressed the risk of injury to Mrs Turano or a class of persons of which she was a member.  In terms, it was a strict duty requiring that Sydney Water preserve the existing drainage in the vicinity of its installation in order to prevent a foreseeable risk of shortening the life of surrounding vegetation.  Stated in this way the force of Sydney Water’s complaint, that the scope of the duty was derived by reasoning backwards from the events that occurred, can be seen.  It was not a duty requiring Sydney Water to take reasonable care to avoid injury to road users in carrying out its works.  The majority’s conclusion of breach was inevitable having regard to the formulation of the scope of the duty.  Thus, there was no consideration of the general and other principles stated in ss 5B and 5C of the CLA.  Consideration of these principles would have directed attention to the question of whether in 1981 a water authority acting reasonably ought to have obtained the advice of an arborist on the impact of its proposed works on vegetation growing in an unpopulated, semi-rural area.

49                        The impact of the altered drainage from the outlet pit was such that over a lengthy period the tree’s stability was compromised.  The conditions that produced its fall in the windstorm took effect after 20 years.  It is reasonable to consider that those conditions might have caused the tree to fall in a windstorm after a lesser or greater number of years.  The point to be made is that the laying of the water main in this location did not create an immediate risk of harm to road users.  The temporal relation between Sydney Water’s conduct and Mrs Turano’s injury was relevant to the determination of whether the relationship between them gave rise to a duty.  A related factor relevant to this inquiry was the circumstance that in the interval between the conduct and the injury the tree was growing on land that was owned by the Council.

50                        Sydney Water was empowered to remove trees in the course of carrying out works[57].  Since the tree was not an obstacle to the installation of the water main and the water main did not create an immediate danger of compromise to the tree, its removal may not have been justified pursuant to the power.  (It will be recalled that Sydney Water was required in installing the water main to inflict as little damage as may be[58].)  Sydney Water had the power to enter upon land in order to carry out an inspection of works[59].  However, no occasion arose for it to exercise this power in the absence of any report concerning the operation of the water main.

51                        On the hearing in the Court of Appeal Mrs Turano did not maintain her case that the Council was negligent by its failure to carry out periodic inspections of roadside trees.  This was realistic in light of the evidence to which Beazley JA referred, that Edmondson Avenue is located in a semi-rural area, with no houses or buildings in the immediate vicinity, and that the tree population was sparse[60].  The evidence of an arborist, Mr Castor, which McColl JA extracted in her reasons, may also be noted[61]:

“Not all tree failure is predictable.  Not all tree failures can be explained even after the event.  No tree is completely safe.  Trees are living organisms which are anchored to the ground and so are subject, in situ, to activities and stresses from man and nature.  …  For a tree hazard to exist there must be a potential for failure and a potential for injury or damage to result.  Dead trees in remote locations are often less hazardous than healthy trees in built-up areas.”

52                        Nonetheless, it was necessary in considering the liability of Sydney Water to take into account that, in the years between the installation of the water main and Mrs Turano’s injury, the risk of the tree’s collapse was one over which the Council and not Sydney Water had control.  It is true that the Council was not on notice that the water main was laid in a sand-filled trench.  However, it would not be right to characterise Sydney Water as having created a hidden danger by the installation of the water main in this location.  Its presence transversing the outlet pit was observable.  The adverse impact on vegetation brought about by altered drainage might be expected to be apparent to the owner of land.  The circumstance that the presence of the pathogen in the tree was not readily observable does not provide a justification for holding Sydney Water liable after an interval of 20 years for the injury occasioned by the tree’s failure.

Conclusion

53                        Sydney Water’s conduct in laying the water main in this location in 1981 with the consequential alteration to drainage flows from the culvert and any foreseeable risk to the health of the tree did not impose on it a legal duty of care for Mrs Turano’s benefit.  The reason for this may be expressed as a conclusion that injury to road users as the result of the tree’s eventual collapse was not a reasonably foreseeable consequence of laying the water main, as the primary judge held.  Alternatively, it may be expressed as a conclusion that in the absence of control over any risk posed by the tree in the years after the installation of the water main there was not a sufficiently close and direct connection between Sydney Water and Mrs Turano, a person present on Edmondson Avenue in 2001, for her to be a “neighbour” within Lord Atkin’s statement of the principle.

Orders

54                        The appeal should be allowed and the following orders made[62]:

1.       Leave to file the amended notice of appeal dated 9 July 2009 granted.

2.       Appeal allowed.

3.       Set aside the following orders of the Court of Appeal of the Supreme Court of New South Wales:

(a)      orders 4, 6, and 8 of the orders made on 31 October 2008;

(b)      that part of order 5 of the orders made on 31 October 2008 which set aside orders and declarations stated at [155] of the judgment of Delaney DCJ numbered 2 and 3; and

(c)      order 1 of the orders made on 2 July 2009.

In lieu thereof, order that the cross-appeal to the Court of Appeal be dismissed with costs.

4.       First respondent to pay the costs of the appellant in this Court.

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[1]      Liverpool City Council v Turano (2008) 164 LGERA 16 at 21 [4]; [2008] NSWCA 270.

[2]      Local Government Act 1919 (NSW), ss 232(1), 233(3).  The relevant reprint is as at 15 October 1980.

[3]      Sydney Water Corporation v Turano [2009] HCATrans 085 at 30-97.

[4]      Turano v Liverpool City Council unreported, District Court of New South Wales, 2 May 2007 at [113] per Delaney DCJ.

[5]      Liverpool City Council v Turano (2008) 164 LGERA 16 at 35 [109] per Beazley JA.

[6]      Mrs Turano’s claim proceeded on her second amended statement of claim, which was filed in the District Court on 3 October 2006, which was the first day of the trial.  Counsel for Sydney Water informed the Court that its amended defence was understood to cover the pleading in the second amended statement of claim but that a further amended defence had been prepared.  The materials before this Court do not establish that the further amended defence was filed.  However, the pleading of the duty of care in the second amended statement of claim, par 14, that the defendants were under a duty to exercise reasonable care for the safety of the deceased, is in the same terms as par 14 of the amended ordinary statement of claim.  By its defence to the amended ordinary statement of claim, Sydney Water denied par 14.

[7]      Turano v Liverpool City Council unreported, District Court of New South Wales, 2 May 2007 at [150] per Delaney DCJ.

[8]      The Sydney Water Act 1994 (NSW) was formerly called the Water Board (Corporatisation) Act 1994 (NSW).

[9]      The Metropolitan Water Sewerage and Drainage Board was established under s 7 of the Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW).  The Water Legislation (Repeal, Amendment and Savings) Act 1987 (NSW) repealed that Act (Sched 1) and provided that the Water Board, as established under s 5(1) of the Water Board Act 1987 (NSW), was a continuation of and the same legal entity as the Metropolitan Water Sewerage and Drainage Board (Sched 3, cl 2(1)).  The Water Board (Corporatisation) Act 1994 (NSW) dissolved the Water Board (Sched 9, cl 4(1)) and provided that, on the dissolution of the Water Board, Sydney Water is taken for all purposes to be a continuation of and the same legal entity as the Water Board (Sched 9, cl 6(1)).

[10]     Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW), s 30(1)(a).

[11]     Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW), s 30(1)(f).

[12]     Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW), s 30(1)(g).

[13]     Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW), s 32(1)(e).

[14]     Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW), s 32(4).

[15]     Civil Liability Act 2002 (NSW), s 5A(1).

[16]     Civil Liability Act 2002 (NSW), s 5.

[17]     Civil Liability Act 2002 (NSW), s 40(1).

[18]     Civil Liability Act 2002 (NSW), s 40(2).

[19]     Civil Liability Act 2002 (NSW), s 41, definition of “public or other authority”, par (e).

[20]     Civil Liability Act 2002 (NSW), s 43A(1).

[21]     Civil Liability Act 2002 (NSW), s 43A(2).

[22]     (1980) 146 CLR 40 at 47-48; [1980] HCA 12.

[23]     Australia, Review of the Law of Negligence:  Final Report, September 2002.

[24]     Civil Liability Act 2002 (NSW), Pt 5; Wrongs Act 1958 (Vic), s 84; Civil Liability Act 2003 (Q), s 36; Civil Liability Act 2002 (WA), s 5X; Civil Liability Act 2002 (Tas), Pt 9; Civil Law (Wrongs) Act 2002 (ACT), Ch 8.

[25]     Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW).

[26]     Civil Liability Amendment Act 2003 (NSW), Sched 1.

[27]     [2008] NSWCA 278 at [167] per Allsop P (Beazley and McColl JJA concurring) citing, inter alia, the Second Reading Speech for the Bill for the Civil Liability Amendment Act 2003 (NSW):  New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 13 November 2003 at 4992-4993.

[28]     Aronson, “Government Liability in Negligence”, (2008) 32 Melbourne University Law Review 44 at 78-79.

[29]     Aronson, “Government Liability in Negligence”, (2008) 32 Melbourne University Law Review 44 at 78.

[30]     New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 13 November 2003 at 4993.

[31]     Aronson, “Government Liability in Negligence”, (2008) 32 Melbourne University Law Review 44 at 78-79.

[32]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 52-53 [220] per Beazley JA, 56 [236] per Hodgson JA, 64 [278] per McColl JA.

[33]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 51-52 [214] per Beazley JA.

[34]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 51-52 [214] per Beazley JA.

[35]     Turano v Liverpool City Council unreported, District Court of New South Wales, 2 May 2007 at [144] per Delaney DCJ.

[36]     Turano v Liverpool City Council unreported, District Court of New South Wales, 2 May 2007 at [148]-[150] per Delaney DCJ.

[37]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 50 [201]-[203].

[38]     Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 390; [1970] HCA 60.

[39]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 50 [203].

[40]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 50 [205].

[41]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 51 [210]-[211].

[42]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 56 [236].

[43]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 58 [243].

[44]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 58 [243].

[45]     Supreme Court Act 1970 (NSW), s 75A; and see Fox v Percy (2003) 214 CLR 118; [2003] HCA 22.

[46]     Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430; Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202 at 220 per Dixon CJ, McTiernan, Kitto and Taylor JJ; [1957] HCA 14; Metropolitan Water, Sewerage and Drainage Board v O K Elliott Ltd (1934) 52 CLR 134; [1934] HCA 57.

[47]     [2009] HCATrans 135 at 149-151.

[48]     Donoghue v Stevenson [1932] AC 562 at 580 per Lord Atkin; Sullivan v Moody (2001) 207 CLR 562 at 576 [42] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ; [2001] HCA 59.

[49]     Sullivan v Moody (2001) 207 CLR 562 at 576 [42] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ.

[50]     Vairy v Wyong Shire Council (2005) 223 CLR 422 at 446-447 [70]-[72] per Gummow J; [2005] HCA 62; Shirt v Wyong Shire Council [1978] 1 NSWLR 631 at 639 per Glass JA.

[51]     Vairy v Wyong Shire Council (2005) 223 CLR 422 at 447 [73] per Gummow J.

[52]     (2002) 211 CLR 317 at 331 [12]; [2002] HCA 35.

[53]     Chapman v Hearse (1961) 106 CLR 112 at 120 per Dixon CJ, Kitto, Taylor, Menzies and Windeyer JJ; [1961] HCA 46; Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 390 per Barwick CJ.

[54]     Turano v Liverpool City Council unreported, District Court of New South Wales, 2 May 2007 at [150] per Delaney DCJ.

[55]     (2007) 234 CLR 330 at 345 [43]; [2007] HCA 42.

[56]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 50 [203].

[57]     Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW), s 32(1)(a).

[58]     See [12].

[59]     Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW), s 38(1).

[60]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 38 [124].

[61]     Liverpool City Council v Turano (2008) 164 LGERA 16 at 66-67 [304].

[62]     In his judgment, delivered on 2 May 2007, Delaney DCJ set out declarations and orders in numbered sub-paragraphs (par [155]).  These orders were entered on 22 May 2007.  The numbering of the orders entered on that date differs from the numbering set out in par [155] of the judgment.  The orders of the Court of Appeal made on 31 October 2008 are expressed by reference to the “orders and declarations stated at [155] of the judgment of Delaney DCJ”.  Order 3(b) made by this Court reflects this circumstance.

SOLUTION

ONE:

a)     As per the given facts of the case Townsville Smelters Ltd (Townsville) entered in to a contract with Carpentaria Mining Ltd (CML) for buying bauxite (the main input for aluminum), along with the monthly shipment of 5,000 tons at a fixed rate of $400 per each ton for 24 months under the clause that there would be payment of $2 million as arrears for 3 months in advance starting from June 2009. The issue occurs when the value of bauxite got down by 25% for $ 300 per ton, thus Townsville advised CML that it would like to default its contractual obligations as even its own bauxite prices have gone down by 33%. It requested for acceptance on given obligations:

–        Three months extension of existing credit arrangements from October 2009, i.e. payment to be made after the completion of the month for the next 6 months.

–        Monthly shipment to be increased by 50% to 7500 tons at no extra charge to Townsville.

–        CML would guarantee a new unsecured loan of $6 million to Townsville.

If considered that CML agrees to all the clauses of Townsville then there is a change made to the terms of the contract which means variations to the contract. It is essential that the party making the variations to the contract should get the agreement from the other party. For a formal contract it is essential that the variations made have been formally written with the acceptance of the both the parties. Every variation contract should be in a written format to give legal effects. But what if Townsville claims for a word of mouth acceptance then it can be noted that it is not valid as per norms of the variation contract. It is to be well understood that under the variation contract it is essential for the contract to be in written format and formally agreed. The reason to have them in written format is because a simple variation can lead to huge consequences.

CASE STUDY REFERENCE:

ü  S.C. Taverner and Co. Ltd. v Glamorgan County Council (1941)

ü   Copper Company v McElroy & Sons and Others (1878)

b)     Consideration is a very essential element for a valid and simple contract. Consideration is a benefit to the promisor in form of some rights or interest (Lush.J). It does not have to be adequate if it is sufficient. In the given scenario Townsville as entered in to contract with CML and also had made variation to the contract. This contract made by Townsville can be concluded to have a valid consideration only if it can prove that the variation clauses it had made in its contract result in giving gain to the promisee as per the norms of the consideration. This benefit does not essentially need to be money, it can be goods or services (Chappell & Co. v. Nestle Co. Ltd.) and we understand that by this contract Townsville is ready to continue to supply Bauxite to CML based on the considerations given in the new contract. It is not mandate that the consideration has same value to both the parties. The consideration in given scenario is a kind of a promise for the performance of an act in fulfilling a promise. We understand by the third condition that if CML performed the act of getting the loan then Townville would continue the promise of the work. Thus, here the consideration made by the parties can be concluded to be valid as consideration is executor in nature and it has been properly executed as per the norms of a valid and simple contract. Also to make the consideration in this contract more valid it is essential that the parties are legally bound (Balfour v. Balfour 1919) to each other and thus they have made a valid contract.

CASE STUDY REFERENCE:

ü  Dunlop v Selfridge Ltd [1915] AC 847

ü  Thomas v Thomas (1842) 2 QB 851

 

c)     Duress is kind of a pressure imbibed by one party over other party by physical threats or unacceptable commercial pressure to procure agreement. Physical duress is the most blatant form of duress. This has been recognized as one of the basis for setting aside not only contracts but also gifts.  In the last 20 years the courts recognized a less duress that is the commercial duress also known to the Economic duress which is sophisticated in understanding how to tackle the difference between the unacceptable commercial pressure where law intervenes and market conditions where the law cannot interfere. With the facts of the face it can be understood that there were changes in the market conditions have led Townsville to change the norms of its contract such that both the parties are benefited. There is no pressure imbibed on CML to enter into the contract and thus it cannot be considered as duress. But if we check through the details of the clause the points state that CML should increase its production of the shipment by 50% without additional charges and also provide it a unsecured loan, thus it can be considered that Townsville is trying to make a unconscionable bargaining with CML, in short it is inducing a commercial pressure over CML. We say it is not duress on the terms that CML did not consider to enter this contract. But if CML based on the market requirements agreed to the conditions of Townsville then it is under economic duress and such a contract can be set aside as we set aside a physical duress contract. In Barton v. Armstrong, court observed that the contract deemed under physical duress is voidable and same would be with contracts on economic duress. It can be noted that Townsville for securing its position in the market had conditioned CML into entering into contract with clauses that are to its own advantage and thus the proposed variations of the given contract constitute to economic duress and it can be termed voidable under the Contract act and its regulations.

CASE STUDY REFERENCE:

ü  Skeate v Beale (1840) 11 Ad&El 983

ü  Maskell v Horner [1915] 3 KB 106

 

d)     Here we consider that CML has agreed to all the conditions stated by Townsville such that the business continues, in course of acceptance, CML makes a request that once the market is back to its normal position than Townsville has to abide to the clauses of the main contract. This agreement it considered by a word-of-mouth with their lawyer as a witness. While going through this condition it makes us think if a contract when over ridden by any other contract can be considered valid, it can be considered valid only when the current contract is made on the condition that this contract is applicable only till the market conditions are back to normal and we observe this was the word-of –mouth agreement which CML had from Townsville. After accepting through word-of-mouth Townville denied the payment of tons at its regular price and it can be noted that under a valid contract word-of-mouth is also considered valid only based on the observations of the court. The court in these conditions observes the legality of the terminologies of the contract and also checks its efficiency as CML entered into this oral contract with the witness of their lawyer. Oral contracts or verbal contracts are valid but the issue arises as to prove that it had been entered into a valid contract and also it is essential to prove its existence and that this contract was entered into. It even becomes troublesome to remember the conditions of the contract and it is essential to have an independent witness. While entering in to the contract CML did keep the witness of its lawyer, but he cannot be considered as independent witness because he is the lawyer of the company and may be challenged of being biased towards the company. Thus it can be termed that the oral contract made by CML is not binding on Townsville and based on this explanation it cannot end its contract with Townsville because it could not prove the existence of the oral contract. Therefore, it is always good to have the contract in written format and also an independent witness who is not biased to either party.

CASE STUDY REFERENCE:

ü  Fauzi Elias v George Sahely & Co (Barbados) Ltd [1983] 1 AC 646

ü  Regent v Millett (1976) 133 CLR 679

 

e)     If we consider that the value of Bauxite have further gone down for which Townville demands CML to reduce the price of Bauxite to $250 per ton and also advised that unless it accepted for this condition Townville would not make further selling of Bauxite. This is a kind of advantage taken on CML and CML has all the rights to deny this advice because it has to consider the risks involved. CML had considered every clause of Townsville for successfully completing the contract but Townsville started demanding a reduction in price even when the deduction in Bauxite has not reduced the value of Aluminum. This demand of Townsville can be considered as duress and we all know that duress are voidable, thus CML has every right to decline this contract on the terms that it would affect its marketing conditions. It is always to be observed that a party enters into a contract based on a proper consideration and in this contract there is no valid consideration given to CML and thus CML can decline this offer, not only declining this offer CML has the right to claim damages from Townsville on the ground of breach of the conditions of the contract and also on the term that Townsville acted on its own benefit. Legally due to breach of contract CML is bound to take damages from Townsville. It has the right claim damage from Townsville for the breach of production of Bauxite for 9 months with in the 24 month contract and thus can claim damages for 9 months such thus it can compensate the damages it would incur in the 9 months in the market. Thus, CML legally can decline the contract and claim damages for breach of contract by Townsville. For mitigating its losses CML has to provide evidence of all the variation clauses CML had agreed to Townsville and also must show its calculative losses such that the court can assess as to how much is the actual damage and how much it can make Townville pay so as to minimize the losses of CML and bring it back to the same position as it would have been there if the contract was not breached.

CASE STUDY REFERENCE:

ü  Glasbrook Ltd v Glamorgan County Council [1925] AC 270

ü  Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1; [1990] 1 All ER 512

REFERENCE:

• Australian Contract Law, Review of Australian Contract Law by Attorney General, 22 Marrch, 2012; http://www.australiancontractlaw.com/index.html
• Essential elements of a Valid Contract; http://www.scribd.com/doc/16514116/Essential-Elements-of-a-Valid-Contract
• Contract Law, Developed by e-learning Design Group, Study & Learning Centre, RMIT University, 2004; https://www.dlsweb.rmit.edu.au/lsu/content/d_bus/law/business_contract/index.html
• Taylor Dave, Contract Law, Oral Contract, Verbal Contract, ARE VERBAL CONTRACTS LEGALLY ENFORCEBLE, Business and Management Article 6701; http://www.askdavetaylor.com/are_verbal_contracts_legally_enforceable.html
• Variation to the contract, Lawyers Real Estate; http://www.lawyersconveyancing.com.au/variation.asp
• Bunge Corporation v Tradax Export SA [1981] 2 All ER 513
• Heffey, Paterson and Hocker, Contracts Voidable on the grounds of unconscionable conduct, Contact Commentary and Materials 8th ED, 1988, LBC Information Services; http://law.anu.edu.au/colin/Lectures/uncons.htm

 

TWO:

The facts of the case state that in March 2009 under a written agreement Harry Redford entered into a 3 year contract with Janapada Beef (Janapada) on an agreed remuneration of 5% of the gross sales. Later in October 2009 without reference to Janapada Redford made a highly profitable contract of $6million with a Singaporean importer Indi-beef for supplying low-fat Brahmin breed beef. This contract was entered by Redford beyond his authority, but later Indi-beef learned Redford’s lack of authority and found that the beef could be brought under more lesser price thus it terminated its contract with Janapada.

i)      As per the facts of the case Janapada does not have a valid contract with Indi-beef because it had no knowledge about the contract made by Redford. As per the essentials of a valid contract there is a need for the party to have capacity to the contract (in this case authority), legally binding the parties, can be performed and is enforceable by law. Under the facts these conditions were frustrated as Redford had no authority, and thus a contract made on lack of authority does not bind the parties to it and also when it cannot legally bind the parties to the contract there is no performance of the contract nor there is legal enforcement. This case can be considered under the role of misrepresentation. Here Redford misrepresented his authority and entered into contract with Indi-beef, thus contract made on the basis of misrepresentation can be termed to be void and thus the contract of Janapada with Indi-beef cannot be considered valid because it was a contract made by third party to the contract that had no valid authority towards the contract. The essential element of a valid contract is that it should be legally binding the parties to the contract and in the present scenario there is no legal binding on both the parties as they had no idea as to the presence of the parties in the contract. When an agent acts without the authority or exceeds the limit of the authority given to him then the contract entered by him with the third party will not bind the principle and the third party to the contract (Article 2.2.6). This concept can be more clear with the given illustration, where principle A asks his agent B to purchase grains for a particular price and not to exceed it, B later enters into contract with C, by exceeding the price value of grains, later in the process of performance of act C comes to know that B had lack of authority to purchase grains for such costlier value then it can terminate its contract with A. Here we understand A and C are not legally bounded. Thus, the act of Redford with lack of authority does not bind Janapada to abide by the norms of the contract nor that Indi-beef is needed to provide beef at a cost greater than in the market. With all these given observations it can be understood that the contract between Janapada and Indi-beef as not valid.

CASE STUDY REFERENCE:

ü  Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130

ü  Taylor v. Plumer (1815) 3M. & S.562: 105 E.R. 721

ii)    In the given scenario as per his agreements with the company Redford is eligible for commission of 5 % of the gross sales of the company, but the question aroused is can he demand his commission for his act performed with lack of authority. Redford must have entered into contract for the betterment of the sales of the company but he should have given prior information of the same to the company but instead of giving information to the company he entered in to the act with misrepresentation that he had the authority to sign the contract. This misrepresentation was later found by Indi-beef who ended their contract with Janapada. Not only misrepresenting his authority he also misrepresented the cost of the commodity for his benefits and demanded from Indi-beef who later found that the same quality of beef could be purchased at two-third of the contract price from a Darwin company and also can save shipment charges. Based on the observation it can be understood that legally Redford cannot claim his 5% commission because the contract made by him with Indi-beef was based on misrepresentation and that it is not a valid contract. As per the regulations of the contract act it is very essential that the parties to the contract have the knowledge of all the terminologies before entering into the contract and also neither parties had the knowledge that Redford had entered into a contract beyond his authority. As the contract did not legally bind the principle and the third party, it can be advised that commission should not be paid to Redford because he performed a contract on which he had no authority. At least if he had apparent authority he could have claimed his commission. Lack of authority and contract on misrepresentation deprive Redford of his commission.

CASE STUDY REFERENCE:

ü  Watteau v. Fenwick [1893 1 Q.B. 346]

ü  Edmunds v. Bushell (1865) L.R. 1 Q.B. 598

iii)  As per the observations and given solutions of the case it can be considered that Redford, against the norms of his company entered into contract with a third party with no proper authority, thus he was misrepresenting his authority and also it can be noted that the contract gained him more profits as he sold beef at higher rates, thus these all reasons give Janapada right to terminate the contractual employment of Redford. Under the employment norms, every employer who provides employment to an employee whether permanent or contractual as the right to deprive the employee of his employment if he does not abide by the norms stated by the company. In the present case Redford frustrated the norms of the company by entering into a contract beyond his authority thus the company can either warn him or as it is a serious breach can remove him from his contractual employment. Redford before entering into contract with Indi-beef must have contacted his employer as to the requirements of the company and also must have derived appellant authority from the company and also should have disclosed the details of the contract to the company. He satisfied neither of the terms, he entered into contract with Indi-beef for his personal monetary benefits by selling them beef for a two third price more than the market price and also performed the contract without the required authority. In a way he cheated both Janapada and Indi-beef and result of which he has to be terminated from his services and Janapada being the employer has the entire power to remove Redford from his service because he had breached the contents of the contract which he had signed in his employment. Proving him to be guilty of his acts Janapada can terminate the services of Redford even if the contract year has not been completed.

 

 

CASE STUDY REFERENCE:

ü  Scrimshire v. Alderton (1743) 2 Stra. 1182; 93 E.R. 1114

ü  Keighley, Maxsted & Co. v. Durant [1901] A.C. 240

 

REFERENCE:

• Essential elements of a Valid Contract; http://www.scribd.com/doc/16514116/Essential-Elements-of-a-Valid-Contract
• Armstrong v Stokes (1872) LR 7 QB 598 at 604

Article 2.2.5 Agents acting without or exceeding authority;

http://www.unilex.info/instrument.cfm?pid=2&do=comment&pos=40

 

THREE: Sydney Water Corporation v Turano & Anor

(a)  The case is related to the negligence of the act of one party and also the damage incurred to another party. Mrs. Turano and her children sustained injuries when a eucalyptus tree fell on them which also resulted in fatal injury for her husband Mr. Napoleone Turano, who were all travelling by car at the time of the incident. Thus, proceedings of negligence were bought against the Sydney Water Corporation who built the water main for diverting the drainage which was causing frequent water logging and on Liverpool City Council as the land belonged to them. Going forward it can be noted that the tree fell down because of the water logging in the surrounding area of the tree, and as the water was logging for a longer period the tree which was growing in the grass cover had pathogen enter the soil and flourish such that it got uprooted and fell on the car coming by. The water main in question has been there for 20 years and never such incidence of complaint had ever happened in the intermittent years.

Mrs. Turano claimed damages for the injuries suffered by her and her children and also for the loss of dependency. She filed a written claim stating that there is duty of care to be exercised by the Sydney Water Corp and the Council.

The primary judge going through the facts felt that there exist duty of care to be exercised by the Sydney Water Corp and the Council. The Sydney Water Corp as per the norms of the case denied that it had any duty towards Mrs. Turano and made a special appeal to the court of appeals. The primary judge in the first instance felt that the defendants were liable on act of duty of care for which Sydney Corp argued that if it is to be blamed then it would have to stand upon every water main it had constructed and check if it is working fine, based on this counter appeal made at Court of Appeals the primary judge concluded that Sydney Water Corp is not liable under the charge of duty to care towards Mrs. Turano. Another reason for this decision is because the water mains were constructed 20 years back and that they never had any complaints till date. Thus, the primary judge viewed that there was no mistake on the side of Sydney Water Corporation and also that it did not bear any duty if care towards Mrs. Turanto.

CASE STUDY REFERENCE:

ü  Sydney Water Corporation v Turano [2009] HCATrans 085 at 30-97

ü  Liverpool City Council v Turano (2008) 164 LGERA 16 at 21 [4]; [2008] NSWCA 270.

(b)  The appeal of Mrs. Turano was dismissed at the High court with costs, i.e., payment of court charges. Following is the procedure of appeals at the different hierarchical levels of the court.

–        Mrs. Turano appealed to claim damages against the defendants in which the primary judge viewed that the council was liable and that the Sydney Water Corp was not liable to Mrs. Turano, failing proper justice. The counter claim which the Council and the Sydney Water brought against each other was dismissed.

–        In the second stage we see the council making appeal to the New South Wales Court of Appeals stating that the appeal of the primary judge was not completely clear and also that it did not owe any to the appellant, Mrs. Turano also made a cross appeal for dismissing her appeal against Sydney Water. The claim laid down by Mrs. Turano was explained as separate issues where the council and the Sydney Water hheld themselves bound to the separate issues. The question here was whether the defendant were liable only to the appellant or her children also and thus the court of appeal set aside the appeal made by the primary judge against the Council by giving a substituted verdict and observed that verdict against Sydney Water has to be set aside and Mrs. Turano can claim her damages from Sydney Water. It forwarded the case to District Court for assessing the damages to be paid to Mrs. Turano.

–        It was observed by the court that it was the duty of the Sydney Water to have a check over the integrity of the cult management system which involves the duty to check the effect of conduit water over the surrounding land which might cause harm. It is the duty of the Sydney Water to drill in to the future while instilling the drainage pipes, it should check all the possible ways where a damage can be avoided.

–        This High Court allowed the appeal and the orders given by the court of appeal of Supreme Court of New South wales were dismissed ordering the respondent to pay charges of the appellant.

CASE STUDY REFERENCING:

ü  Turano v Liverpool City Council unreported, District Court of New South Wales, 2 May 2007 at [113] per Delaney DCJ

ü  Liverpool City Council v Turano (2008) 164 LGERA 16 at 35 [109] per Beazley JA

(c)   Sec 43 A of the Civil Liability Act (CLA) was brought in to discussion by both the parties for seeking justice. This sec 43 A of the Civil Liability Act applies to such a liability which is termed to be public and other authorities exercise to perform special statutory powers that can be exercised only by the statutory authorities and no other authority has the power to claim civil liability. Sydney Water in the beginning of its plea did not consider its appeal under Sec 43A but in the final appeal at the High Court it specified that it had never argued its claims under Sec 43A and also that it never invoked that section in its appeal. In answer to the question by court Sydney Water maintained that sec 43A is never used to determine if any legal obligation can be imposed on public authority in exercising reasonable care and skill for the benefit of the others. This clause can be dealt within the meaning of Sec 43A(2).

Mrs. Turano on the other hand based her appeal on the given section. It stated that having statutory authority Sydney Water is obliged to work in such a way that there is proper care taken for the benefit of the public and the immunity of the public authority in performance of the task under sub section 3 of Sec 43. Concerning the grant of public authority is tort in New South Wales; she submitted a grant of special leave which should be revoked. The appeal laid down by Sydney Water was more preferable because exercise of care and skill for the benefit of the plaintiff as per the given observations is outside the scope of the framework of CLA. High Court also opined that sec 43A of CLA is applicable only when there is breach of duty in which the parties have not addressed the full argument. The court opines that there is no uniformity in application of this clause and also it is Sec 42 that deals with the responsibility of the public authorities in breach of contract and not sec 43A.

CASE STUDY REFERENCE:

ü  Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48; [1980] HCA 12

ü  Precision Products (NSW) Pty Ltd v Hawkesbury City Council [2008] NSWCA 278 at [167]

(d)  The principle of negligence considered in the present case is the negligence of duty to care. Negligence is termed to be an omission of act of a person, this omission may result in damages to the opposite party, it is a false based tort. Under the present scenario we observe the presence of negligence of Duty to Care and it is essential that the plaintiff must prove the scope of negligence occurred in breaching the application of duty to care and how much standard of care the defendant had to practice against the plaintiff. The application of these principles not always straightforward as in the case of other principles. To understand it in detail we can take example of many case studies under the act of negligence such as the McEleney v McCarron (unrep, December 2012) which is dealt under a hit and run case where the plaintiff suffers from a brain damage after hit and run by the plaintiff’s car who could not see the defendant standing on the road as it was very dark, in the present scenario the court held plaintiff 70% liable and defendant 30 % liable and thus the defendant was not held liable as he had taken due care to avoid accident. In our current case it is argued that Sydney Water has to be held liable under the act of negligence of duty of care. The basis of the argument is that while constructing the water main, Sydney Water did not take proper care and that this resulted in the water clogging at the root of the tree inducing pathogen into its roots for uprooting it. Sydney Water negligence lied on its failure in considering the area and its conditions for installing water mains and it is also its duty to protect the natural vegetation including trees from any damage caused by its action. A consultant engineer gave an un-contradicted evidence that Sydney Water has taken due care in installing the water main and also that the tree was growing on the grass section on the reserved side of area. The tree fell after 20 years and that there was no complaint against the water main in those 20 years. Thus, Sydney Water has taken due care to avoid consequences. This principle is also observed along with the CLA point 1 and sec 5. As per the observations of the case Sydney Water is not held liable because any foreseeable risk to the tree did not impose its legal duty to care Mrs. Turano’s benefit. Thus, Sydney Water cannot be held liable under the principle of negligence i.e., duty to care.

CASE STUDY REFERENCE:

ü  Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 390; [1970] HCA 60

ü  Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

 

REFERENCE:

• Turano v Liverpool City Council unreported, District Court of New South Wales, 2 May 2007 at [150] per Delaney DCJ
• Sullivan v Moody (2001) 207 CLR 562 at 576 [42]
• Civil Liability Act 2002 (NSW)
• Metropolitan Water, Sewerage, and Drainage Act 1924 (NSW) Sections 30 & 32
• The Sydney Water Act 1994 (NSW) was formerly called the Water Board (Corporatisation) Act 1994 (NSW)

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