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Kinsella v Gold Coast City Council (No 3)[2016] QSC 14

Kinsella v Gold Coast City Council (No 3)[2016] QSC 14

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Kinsella & Anor v Gold Coast City Council (No 3) [2016] QSC 14

PARTIES:

HELEN BARBARA KINSELLA AND PETER LOUIS KINSELLA

(plaintiffs)

v
GOLD COAST CITY COUNCIL
(defendant)

FILE NO:

5010 of 2013

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

19 February 2016

DELIVERED AT:

Brisbane

HEARING DATE:

20 and 21 July 2015; plaintiffs’ further written submissions dated 29 July 2015; submissions in reply on behalf of LMS Energy Pty Ltd dated 6 August 2015; further submissions on behalf of Energex Limited dated 6 August 2015

JUDGE:

Burns J

ORDER:

The orders of the court are:

  1. Pursuant to r 69 of the Uniform Civil Procedure Rules 1999 (Qld), that:
  1. LMS Energy Pty Ltd be included as the second defendant to this proceeding;
  2. Energex Limited be included as the third defendant to this proceeding;
  1. Pursuant to r 377 of the Uniform Civil Procedure Rules 1999 (Qld), that leave be granted to the plaintiffs to file and serve the Amended Claim and Second Further Amended Statement of Claim in terms of the drafts forming, respectively, exhibit MTS1 to the affidavit of Michael Thomas Smith filed on 6 February 2015 and exhibit MTS3 to the affidavit of Michael Thomas Smith filed on 9 July 2015.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JOINDER OF CAUSES OF ACTION AND OF PARTIES – PARTIES – GENERALLY – where the defendant raised allegations of concurrent wrongdoing in its defence – where the plaintiff brought an application under s 69 of the Uniform Civil Procedures Rules 1999 (Qld) seeking to join the alleged concurrent wrongdoers to the proceeding – whether the plaintiffs have demonstrated an arguable case against the alleged concurrent wrongdoers – whether joinder is ‘necessary’ or ‘desirable, just and convenient’ to adjudicate effectually and completely on all matters in dispute in, or connected with the proceeding

Civil Liability Act 2003 (Qld) s 30, r 31, s 32, s 32A, s 32C

Uniform Civil Procedures Rules 1999 (Qld) r 69, r 75, r 377

Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 

Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256

Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36; (2014) 254 CLR 185

Butler & Ors  v State of Queensland [2013] QSC 354; [2014] 2 Qd R 423

Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258; (2009) 75 NSWLR 649

Church of Scientology Inc v Woodward [1982] HCA 78; (1982) 154 CLR 25

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125

Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540

HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640

Kestrel Coal Pty Ltd v Longwall Roof Supports Ltd & Ors [2003] QSC 187

Kinsella v Gold Coast City Council [2014] QSC 65; [2015] 1 Qd R 274

Macquarie Bank Ltd v Lin [2001] QSC 341; [2002] 2 Qd R 188

MAM Mortgages Ltd (in liq) & Anor v Cameron Bros & Ors [2002] QCA 330

Modbury Triangle Shopping Centre Pty Ltd v Anzil & Anor [2000] HCA 61; (2000) 205 CLR 254

Pegang Mining Co Ltd v Choong Sam [1969] MLJ 52

Project Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd & Anor [2011] QCA 102

Spencer v The Commonwealth [2010] HCA 28; (2010) 241 CLR 118

Universal Music Australia Pty Ltd v Cooper [2004] FCA 78

Valleyfield Pty Ltd v Primac Ltd & Anor [2003] QCA 339

Wardley Australia Limited v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514

Wheelahan & Anor v City of Casey & Ors (No 3) [2011] VSC 15

Wickstead v Browne [1991] NSWCA 272; (1992) 30 NSWLR 1

Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515

COUNSEL:

D Kelly QC with P Somers for the plaintiffs

B Porter for the defendant

G Gibson QC with R Anderson for LMS Energy Pty Ltd

A Stumer for Energex Limited

SOLICITORS:

Shine Lawyers for the plaintiffs

Clayton Utz for the defendant

Thomson Geer for LMS Energy Pty Ltd

Allens Linklaters for Energex Limited

  1. The plaintiffs apply, pursuant to r 69 of the Uniform Civil Procedure Rules 1999 (Qld), to join LMS Energy Pty Ltd and Energex Limited as defendants to this proceeding. The defendant Council is content to abide the order of the court, however the application is opposed by both of the proposed parties. If an order joining LMS and Energex is made, the plaintiffs also seek leave to file and serve an amended claim and second further amended statement of claim pursuant to r 377 UCPR.

Overview

  1. The plaintiffs own a home in a residential estate at the Gold Coast. They maintain that the defendant Council’s operation of a nearby landfill facility resulted in the escape of harmful landfill gas and leachate and that, by September 2009, these problems had become such an issue of public concern and notoriety that the value of their property was adversely affected. It is claimed that the Council owed a duty of care to the plaintiffs to take reasonable care in occupying, operating and controlling the landfill facility and activities on it to protect the plaintiffs from suffering loss. They allege breaches of that duty and seek damages in negligence. It is an unusual case because, not only are damages for pure economic loss sought, but it is contended that such a loss was principally caused by a stigma allegedly attaching to the residential estate by reason of the media and other reporting of the public health issues associated with the escape of landfill gas and leachate.
  2. The proceeding is also brought in a representative capacity pursuant to r 75 UCPR.[1] Like the plaintiffs, each of the represented parties purchased lots in the estate prior to September 2009 and each such lot is said to have been affected in a similar way to the plaintiffs’ property. In total, there are 97 such lots.
  3. By its defence,[2] the Council has alleged that the plaintiffs’ claim is apportionable within the meaning of the Civil Liability Act 2003 (Qld) and that LMS and Energex are concurrent wrongdoers. In particular, it is pleaded that, in 1999, LMS advised the Council on the risk of landfill gas migration and how it should be addressed, that LMS subsequently designed a landfill gas extraction system for that purpose and that, from 2002 to April 2009, LMS was responsible for the maintenance, operation and monitoring of that system. The Council has pleaded that LMS had a responsibility to prevent loss and damage to the plaintiffs to whom, it is alleged, a duty of care was owed by LMS. It is further alleged that the duty was breached and that this was causative of the loss claimed by the plaintiffs. Energex entered into a landfill gas extraction and power generation agreement with the Council on 16 July 2001. The Council alleges that, under that agreement, Energex agreed to recover landfill gas, to install, operate and maintain the landfill gas extraction system designed by LMS and to take responsibility for the maintenance, operation and monitoring of that system between 2002 and April 2009 so as to enable the Council to comply with an environmental authority. The Council has pleaded that Energex owed a duty of care to the plaintiffs to take reasonable care in the maintenance, operation and monitoring of the system, that this duty was breached after March 2005 and this was also causative of the loss claimed by the plaintiffs.
  4. It is said for the plaintiffs that, faced with these allegations in the defence, they were in effect obliged by provisions of the CLA to make application to join LMS and Energex as defendants to the proceeding. For reasons to be shortly mentioned, that is not strictly correct, but if it transpires that the Council’s allegations are made out at trial and LMS and Energex are not included as defendants, the plaintiffs (together with the represented lot owners) will be left exposed to the prospect that any damages award will be limited by operation of the provisions of the CLA. The plaintiffs take the view that there is nothing in the Council’s allegations to cause them to conclude that they are “baseless” and, given that they have now been pleaded in defence of the claim, the application for joinder has been brought. In support of it, a proposed Amended Claim[3] and Second Further Amended Statement of Claim is in evidence[4] and, so far as LMS and Energex are concerned, the proposed pleading substantially mirrors the allegations made by the Council in its defence, although there are some notable differences when it comes to the allegations of causation.
  5. LMS and Energex have responded to that application in a similar fashion. A number of arguments were advanced to the effect that the proposed pleading fails to disclose a cause of action. It was argued that the proposed pleading fails to allege that the plaintiffs suffered any compensable loss and, for that reason, an essential ingredient of the tort of negligence – damage – is absent. It was also argued that no duty of care arose on the pleaded facts and, as part of that argument, that the duties respectively owed by LMS and Energex to the general public in tort could not be any wider than the scope of their contractual obligations. It was otherwise contended that the proposed case against them was quite inapt to establish breach, let alone causation.

The tests for joinder

  1. By r 69(1)(b) UCPR, the court may at any stage of a proceeding order that a person “whose presence before the court is necessary to enable the court to adjudicate effectively and completely on all matters in dispute in the proceeding”[5] or “whose presence before the court would be desirable, just and convenient to adjudicate effectually and completely on all matters in dispute connected with the proceeding”[6] may be included as a party to the proceeding.
  2. Whether a person’s presence is “necessary” in the sense contemplated by r 69(1)(b)(i) UCPR requires a consideration of whether that person’s rights against, or liabilities to, any existing party in respect of a matter in dispute in the proceeding will be directly affected by any order which the court might make.[7] Under r 69(1)(b)(ii) UCPR, a person may be included as a party where it is “desirable, just and convenient” to do so to enable the court to adjudicate on all matters that are in dispute in the proceeding and, further, to adjudicate effectively and completely on all matters that are connected with the proceeding.[8]
  3. Part 2 of Chapter 2 of the CLA deals with “apportionable claims”. These are relevantly defined to include claims for economic loss in an action for damages arising from a breach of a duty of care.[9] In any proceeding involving an apportionable claim, the liability of a defendant who is a concurrent wrongdoer in relation to that claim is “limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just and equitable having regard to the extent of the defendant’s responsibility for the loss or damage”[10] andjudgment must not be given against the defendant for more than that amount in relation to the claim”.[11] By s 30(1) CLA, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions caused, independently of each other, the loss or damage that is the subject of the claim. By force of s 32(1) CLA, an onus is cast on persons such as the plaintiffs to “make the claim against all persons [they have] reasonable grounds to believe may be liable for the loss or damage”. Lastly, by s 32A CLA, a concurrent wrongdoer against whom judgment is given in relation to an apportionable claim “can not be required to contribute to the damages recovered or recoverable from another concurrent wrongdoer for the apportionable claim, whether or not the damages are recovered or recoverable in the same proceeding in which the judgment is given” and “can not be required to indemnify the other concurrent wrongdoer”.
  4. It follows that, if LMS and Energex are truly concurrent wrongdoers, and the plaintiffs succeed against the Council, the damages awarded may be limited if the Court concludes that a proportion of the loss is attributable to the conduct of one or both of LMS and Energex. It is however for the plaintiffs to decide whether reasonable grounds exist for them to believe that LMS or Energex may be liable, in whole or in part, for the loss suffered by them.
  5. Under s 32C(1) CLA, the court may give leave for any one or more persons “who are concurrent wrongdoers in relation to an apportionable claim to be joined as defendants in a proceeding in relation to that claim”. How it can be determined at this stage of a proceeding that a proposed party is a concurrent wrongdoer – that is, someone whose acts or omissions caused, independently of a claimant, the loss or damage that is the subject of a claim – is not easily understood. It may be that s 32C(1) should be read with s 32, requiring as it does that an apportionable claim is made against all persons in relation to whom the claimant has reasonable grounds to believe may be liable for the loss or damage, with the consequence that establishing reasonable grounds may be sufficient to secure a grant of leave under s 32C(1), but that is far from clear. In any event, it is unnecessary to decide this question because the plaintiffs’ application is not brought under s 32C(1) CLA, it is brought under r 69 UCPR.
  6. As to the exercise of the discretion conferred by that rule, it is sufficient for present purposes to say that, if LMS and Energex are truly concurrent wrongdoers, their presence before the Court will be necessary to enable the Court to adjudicate effectively and completely on all matters in dispute in the proceeding and that it would, in any event, be desirable, just and convenient that they be joined. No question of prejudice has been raised and the Council, as the original proponent of the allegations, could hardly complain if LMS and Energex are added as defendants. As submitted by the plaintiffs, LMS and Energex are the “proper contradictors to the Council’s allegations that they are concurrent wrongdoers”.[12] Furthermore, the proposed claims are not statute barred and, as such, could be brought separately against LMS and Energex and then made the subject of an application to consolidate that proceeding with this proceeding. The position might well be different if this application was brought late. However, the pleadings have not closed, disclosure has not been undertaken and no expert reports with the benefit of disclosure have been commissioned. The application is therefore brought at a suitable stage of the proceeding.
  7. Of course, as I have already touched on, the feature that the plaintiffs are faced with a defence by which it is alleged that LMS and Energex were, in substance, concurrent wrongdoers does not, without more, provide a sufficient basis for the exercise of the Court’s discretion to join those parties. That is so even though the allegations contained in the proposed pleading echo those contained in the Council’s defence. This is because, regardless of what another party has pleaded against an applicant for such relief, it is still necessary for that applicant to demonstrate the existence of an arguable case, and one that is sufficient to resist the entry of summary judgment by the party sought to be joined.[13] That means that joinder should only be refused where the proposed claim is “so obviously untenable that it cannot possibly succeed”, “manifestly groundless” or “so manifestly faulty that it does not admit of argument.”[14] As Gaudron, McHugh, Gummow and Hayne JJ observed in Agar v Hyde:

“Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome.”[15]

  1. At least where there are significant doubts about whether an arguable case can be established, it is appropriate to consider the merits of the case proposed to be advanced after joinder.[16] Where, as here, the area of law may be said to be evolving, the “appropriateness of the joinder should be determined more by reference to general principles than by a detailed analysis of the pleaded allegations”.[17] As Kirby J said in Woolcock Street Investments Pty Ltd v CDG Pty Ltd:[18]

“Where the law is uncertain, and especially where it is in a state of development, it is inappropriate to put a plaintiff out of court if there is a real issue to be tried. The proper approach in such cases is one of restraint. Only in a clear case will answers be given, and orders made, that have the effect of denying a party its ordinary civil right to a trial. This is especially so where, as in many actions for negligence, the factual details may help to throw light on the existence of a legal cause of action – specifically a duty of care owed by the defendant to the plaintiff”.[19]

  1. It follows that this not an occasion to embark on an unforgiving analysis of the proposed pleading against LMS or Energex as if the court was finally deciding the claims. As Osbourne J said in Wheelahan & Anor v City of Casey & Ors (No 3),[20] the “real question is simply whether such an analysis should be permitted to go to trial”.[21] Nor should it be overlooked that whether a duty of care was owed by one party to another and, if so, whether there was a breach that was causative of loss are questions that are usually best left until after the facts are established at trial, and for good reason. As Kirby P said in Wickstead v Browne:

“Common experience teaches that is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence. Testimony gives colour and content to the application and development of legal principles. That is why leave is usually required for an appeal from interlocutory orders. Appellate courts, including this Court, will usually require evidence to be adduced and a trial concluded before considering the application of the law to that evidence.  Out of the detail of the evidence ultimately proved, affecting the relationship of the respondent and the appellant, may arise a finding of a duty of care which the common law of negligence would uphold.”[22]

  1. Both LMS and Energex accept that a clear case will be required before joinder will be refused and that the proper approach is one of constraint. However, both contend that this is a clear case and that accordingly the application should be dismissed.
  2. It only remains to be said that, in assessing whether LMS or Energex should be joined as defendants, the focus must necessarily be on the causes of action proposed on behalf of the named plaintiffs as opposed to the represented parties.

Consideration

  1. Before turning to the specific arguments advanced on behalf of LMS and Energex, it is useful to commence with a brief summary of the case advanced against each under the proposed pleading.

The proposed cases against LMS and Energex

  1. By the proposed pleading, the case against LMS is put in this way. From late 1998, the Council had “a series of dealings” with LMS for the purpose of obtaining advice “as to how the risks posed by [the landfill facility] could be addressed by closure and as to the implementation of an appropriate [landfill gas] collection and extraction system”. In early 1999, LMS was commissioned by the Council to evaluate the facility’s compliance with an environmental authority issued under the provisions of the Environmental Protection Act 1994 (Qld). From no later than August 1999, that authority required the Council to, amongst other things, develop and implement a landfill gas monitoring program to ensure that the facility complied with certain release standards for landfill gas. In the event that methane gas levels exceeded those standards, the Council was required by the authority to “take all necessary steps to ensure protection of human health” and to “install a collection system for landfill gas … to minimise the likelihood of any subsurface migration of landfill gas … [and to] prevent or minimise any uncontrolled emission of landfill gas”.
  2. During the first half of 1999, LMS provided written reports to the Council that contained advice and recommendations as to the steps necessary to manage landfill gas at the facility and, by around June of that year, the Council and LMS were aware that there was a significant lateral migration of landfill gas occurring on at least the Western batter of the facility. Subsequently, LMS designed a landfill gas extraction system for the facility. Then, on 4 October 2001, LMS entered into two written agreements with Energex under which LMS agreed to install the system and to operate, maintain and monitor it. By the provisions of one of the agreements,[23] LMS agreed to “provide all things and take all measures necessary to protect people, property and the environment”,[24] to “prevent, as is reasonable in the circumstances, nuisance and unreasonable noise and disturbance”[25] and comply with the terms of the environmental authority.[26] It is then alleged that from 2002 to April 2009, LMS was “directly responsible for the installation, maintenance, operation and monitoring of” the system designed by it and had “the power to install, maintain, operate and monitor” the system “so as to prevent existing and future owner of lots” in the residential estate from “suffering loss and damage in the form of diminution in the value of their land by the migration of landfill gas” from the facility.
  3. The proposed pleading against LMS then moves to a series of allegations that are advanced to support of a finding that LMS owed to the plaintiffs a particular duty of care. They commence with an allegation that at all times after 1999, or alternatively from the date when LMS entered into the two agreements with the Council, it was reasonably foreseeable by LMS that if it did not design, install, maintain, operate and monitor the landfill gas extraction system with reasonable care, then existing and future owners of lots in the residential estate might suffer loss and damage in the form of a diminution in the value of their land as a result of “the impact of the escape and migration” of landfill gas from the facility. Next it is pleaded that the plaintiffs and each of the represented lot owners were vulnerable to, and “were not able to protect themselves from a failure by LMS to take reasonable care to prevent them from suffering loss and damage” as a result of the escape of landfill gas. Then it is alleged that LMS knew that the plaintiffs and each of the represented lot owners “were reliant on LMS to carry out those tasks with reasonable care and skill so as to prevent loss and damage in the form of diminution in the value of their land as a result of the impact of the escape and migration of” landfill gas. It is then alleged that, by reasons of these matters, LMS owed a “duty to take reasonable care in the installation, maintenance, operation and monitoring” of the system so as to protect the plaintiffs and each of the represented lot owners from suffering loss and damage of that kind.
  4. The allegations in the proposed pleading of breach against LMS are of course not made with the benefit of disclosure and, probably for that reason, are framed in general terms. They include an alleged failure to take reasonable steps to ensure that the installation, maintenance and operation of the landfill gas extraction system was “effective in capturing [landfill gas] and preventing sub-surface migration of” landfill gas, an alleged failure to ensure that the system was “properly functioning”, an alleged failure to take reasonable steps to monitor the system, an alleged failure to ensure the system was effective to prevent migration of landfill gas from the facility, and an alleged failure to inform the Council, either directly or through Energex, that the system was not operating effectively or that it was affected by leachate levels on the south-eastern boundary of the residential estate. It is also alleged that the breach by LMS of its duty of care is to be inferred from the defects in the system identified in an AECOM Environmental Evaluation.
  5. Turning next to causation, the proposed pleading alleges that these breaches of duty was a cause of landfill gas regularly escaping from the land adjoining the residential estate, a fact that is alleged to be capable of being inferred from the features that landfill gas was able to be reasonably “managed and contained” by the adoption of a range of measures which are earlier set out in the proposed pleading and the fact that landfill gas did escape from the facility and affected the residential estate. It is to be noted that the plaintiffs’ case on causation against LMS (as well as Energex) is much narrower than their case against the Council where, in addition to the escape of landfill gas, several other events are alleged to have given rise to the loss allegedly suffered by them. Among those, for example, is an allegation concerning the inadvertent release of leachate to groundwater. Those alleged events form no part of the cases proposed against either LMS or Energex.
  6. Lastly, so far as the pleading of loss is concerned, the claimed measure advanced against LMS is identical to that advanced against the Council as, indeed, it is against Energex. Read in the context of the narrower case on causation against LMS and Energex, it is that, by reason of the breaches of duty, the plaintiffs and each of the represented lot owners suffered “the economic loss of value … as at in or about September 2009”, calculated as the amounts which are the difference between the “true value of [each lot] unaffected by the knowledge of the escape of [landfill gas] … from the [land adjoining the residential estate] or the risk to public health and safety and of asphyxiation and explosion posed by the presence or the risk of the [presence of such landfill gas]”, and the true value of each lot taking into account those factors as well as “the stigma attached to the [residential estate] as a result of” the release of landfill gas. Those amounts, “as at in or about September 2009”, are then specified in schedules to the proposed pleading. Importantly, it is to be noticed that the current pleading alleges that such losses were suffered “on and from in or about September 2009”, but the proposed pleading only alleges that the losses were suffered in or about September 2009 with no accompanying allegation that those losses were ongoing.
  7. The proposed pleading against Energex runs along similar lines to that against LMS. It is alleged that Energex entered into an agreement with the Council on 16 July 2001 under which Energex agreed to recover landfill gas from the facility in order to enable the Council to comply with its obligations under the environmental authority and to install, operate and maintain a landfill gas extraction system in accordance with the LMS design as well as any power generation station installed by it. It is further alleged that, after about 2000, Energex knew about the risks of sub-surface migration of landfill gas towards the residential estate. It is then pleaded that Energex had “the power to install, maintain, operate and monitor” the landfill gas extraction system “so as to prevent existing and future owners of lots within” the residential estate from suffering loss and damage in the form of diminution in the value of their land by the migration of landfill gas.
  8. Next it is pleaded that it was reasonably foreseeable by Energex that if it did not maintain, operate and monitor the landfill gas extraction system with reasonable care, then existing and future owners of lots in the residential estate might suffer loss and damage in the form of a diminution in the value of their land as a result of “the impact of the escape and migration” of landfill gas from the facility. It is then alleged that the plaintiffs and each of the represented lot owners were vulnerable to, and “not able to protect themselves from a failure by Energex to take reasonable care to prevent them from suffering loss and damage” as a result of the escape of landfill gas. It is alleged that Energex knew that the Council did not have expertise or experience to supervise or assess the manner in which Energex carried out the installation, maintenance, operation and monitoring of the landfill gas extraction system and the associated power generation station, and that the plaintiffs and each of the represented lot owners “were reliant on Energex to carry out those tasks with reasonable care and skill so as to prevent loss and damage in the form of diminution in the value of their land as a result of the impact of the escape and migration of” landfill gas. It is then alleged that, by reasons of these matters, Energex owed a “duty to take reasonable care in the installation, maintenance, operation and monitoring” of the system so as to protect the plaintiffs and each of the represented lot owners from suffering loss and damage in the form of diminution in the value of their land as a result of the impact of the escape and migration of landfill gas.
  9. The allegations of breach in the case of Energex are similar to those proposed to be advanced against LMS. It is alleged that there was a failure to take reasonable steps to ensure that the installation, maintenance and operation of the landfill gas extraction system was “effective in capturing [landfill gas] and preventing sub-surface migration of” landfill gas, a failure to ensure that the system was “properly functioning”, a failure to take reasonable steps to monitor the system to ensure that the facility complied with the requirements of the environmental authority, a failure to ensure the system was effective to prevent migration of landfill gas from the facility or to ensure that the facility complied with the requirements of the environmental authority, a failure to inform the Council that the landfill gas extraction system was not operating effectively or that it was affected by leachate levels on the south-eastern boundary of the residential estate. It is also alleged that the breach by Energex of its duty of care is, like LMS, to be inferred from the defects in the system identified in the AECOM Environmental Evaluation.
  10. The proposed case against Energex on causation and loss is then identical to the case against LMS in those respects.

Duty

  1. I deal first now with the argument advanced by LMS and Energex to the effect that no duty of care arose on the pleaded facts as well as the accompanying proposition that the duties respectively owed by LMS and Energex to the general public in tort could not be any wider than the scope of their contractual obligations.
  2. It has often been said that the categories of negligence are not closed. Nor is there any formula that can be applied to a given set of facts to determine whether a duty of care is owed and, if so, its scope. Indeed, as Boddice J stated in Butler & Ors v State of Queensland,[27] although the question whether a duty of care exists is one of law, a duty of care is “not owed in the abstract”; it is a legal obligation arising out of “relations, juxtapositions, situation or conduct activities”.[28] As such, what is required is a “multi-faceted inquiry” by which each of the “salient features of the relationship must be considered”.[29]
  3. In cases that may be regarded as novel, the correct approach to determine whether a duty of care exists was summarised by Allsop P in Caltex Refineries (Qld) Pty Ltd v Stavar[30] in the following way:

“It can be accepted, however, that the President did not enunciate the required multi-factorial approach in assessing whether a duty of care arose in a novel circumstance or category. This approach recognises what has been said to be the use of foreseeability at a higher level of generality and the involvement of normative considerations of judgment and policy. This approach requires not only an assessment of foreseeability, but also attention to such considerations as control, vulnerability, assumption of responsibility and nearness or proximity.

The High Court has rejected its previously enunciated general determinant of proximity, the two stage approach in Anns v Merton London Borough Council [1978] AC 728 based on reasonably foreseeability, the expanded three stage approach in Caparo Industries Plc v Dickman [1990] 2 AC 605 and any reformulation of the latter two, such as in Canada in Cooper v Hobart (2001) 206 DLR (4th) 193. See by way of example: Perre v Apand per Gleeson CJ (at 193 [9]–[10], per McHugh J (at 210 [77]–[82], 212 [83], 216 [93]) , per Hayne J (at 300 [330]–[333]); Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 288 [101], per Hayne J; Crimmins (at 97 [272]) per Hayne J; Brodie v Singleton Shire Council (at 630 [316]) per Hayne J; Sullivan v Moody (at 577 [43]-[53]) per Gleeson CJ, Gaudron J, McHugh J, Hayne J and Callinan J; Tame (at 402 [250]) per Hayne J; Vairy (at 444 [66]) per Gummow J; Imbree v McNeilly (at 524 [40]-[41]) per Gummow J, Hayne J and Kiefel J.

This rejection of any particular formula or methodology or test the application of which will yield an answer to the question whether there exists in any given circumstance a duty of care, and if so, its scope or content, has been accompanied by the identification of an approach to be used to assist in drawing the conclusion whether in novel circumstances the law imputes a duty and, if so, in identifying its scope or content. If the circumstances fall within an accepted category of duty, little or no difficulty arises. If, however, the posited duty is a novel one, the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and the putative tortfeasor by references to the “salient features” or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury.

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.

There is no suggestion in the cases that it is compulsory in any given case to make findings about all of these features. Nor should the list be seen as exhaustive. Rather, it provides a non-exhaustive universe of considerations of the kind relevant to the evaluative task of imputation of the duty and the identification of its scope and content.”[31]

  1. Then, after observing that the “assessment of the facts in order to decide whether the law will impute a duty, and if so its extent, involves an evaluative judgement which includes normative considerations as to the appropriateness of the imputation of legal responsibility and the extent thereof”, His Honour continued:

“I have described “foreseeability” as a salient feature; it is perhaps better expressed that the use of salient features operates as a control measure on foreseeability employed at the level of the abstraction earlier discussed, for example by Glass JA in Shirt as a foundation for the imputation of duty of care. In a novel area, reasonable foreseeability of harm is inadequate alone to found a conclusion of duty. Close analysis of the facts and a consideration of these kinds of factors will assist in a reasoned evaluative decision whether to impute a duty. Whilst simple formulae as “proximity” or “fairness” do not encapsulate the task, they fall within it as part of the evaluative judgment of the appropriateness of legal imputation of responsibility.”[32]

  1. For LMS it was submitted that the plaintiffs’ case that LMS owed a positive duty to protect the owners of land adjacent to the landfills facility from economic loss should be rejected. It was argued that such a duty will not arise where LMS was simply a contractor to Energex (and not a statutory authority or a person engaged in work for the benefit of the public generally), where the problems created by the escape of landfill gas was well-known and pre-dated any involvement by LMS, where LMS did not assume any responsibility for the care of nearby landowners, where LMS did not control the landfill facility and only operated on that portion of the facility known as “the gas field”, and where LMS had only a limited monitoring obligation, was not ultimately responsible for the escape of gas and was not otherwise responsible for its elimination. It was also submitted, as may be accepted for the purposes of this application, that the courts are reluctant to find the existence of a duty requiring a party to take steps to prevent harm to strangers.[33] Energex advanced similar submissions, highlighting various features which, it was contended, weighed against a finding that a duty of care was owed to the plaintiffs.
  2. The features highlighted by LMS and Energex in their submissions may, if established by evidence at trial, assist to deny the existence of a duty of care or, if a duty is found, to limit its scope, but I cannot resolve those issues now, or at least not in any complete way. The same of course may be said with respect to the plaintiffs’ contentions as to the salient features. They submitted (with reference to passages from the judgments of Gleeson CJ and Callinan J in Perre v Apand) that:

“[The] important salient features may be stated as known risk, the physical propinquity of the plaintiffs’ land to the [facility], the known vulnerability of people in the position of the plaintiffs, the limited and ascertained class of vulnerable people and the effective control exercised by [LMS and Energex] over the relevant activity on the land on which the [facility] was operated.”[34]

  1. Of somewhat greater attraction was the submission made on behalf of LMS that it could owe no broader duty in tort to the general public that its contractual liability to Energex. Thus, it was submitted that the existence and content of any duty of care owed to the plaintiffs must be determined having regard to the scope of the contractual obligations owed by LMS to Energex. This, it was contended, holds true regardless of the existence of any of the recognised “salient features”. The point was made that LMS “did not own the infrastructure or the land, and was contractually obliged to act in respect of both on the terms agreed with Energex and the Council, not to the plaintiffs or the represented lot owners”. Energex mounted much the same argument.
  2. There are however three difficulties with this argument, at least so far as it might bear on the outcome of an application such as this.
  3. First, the argument depends on the proper construction of the agreements in place between LMS and the Council, and between Energex and the Council, including the documents incorporated by reference in those agreements, the most notable of which is the environmental authority. Without in any way intending to express a final view about the breadth of the respective obligations of LMS and Energex under their agreements with the Council, it cannot be said that the scope of the duty contended by the plaintiffs is any wider than the contractual obligations owed by LMS or Energex. Indeed, in the case at least of the agreements between LMS and the Council, the argument very much depends on a not insubstantial reading down of at least one of the express obligations on the part of LMS.
  4. Secondly, to support the argument, reliance was placed on Woolcock Street Investments Pty Ltd v CDG Pty Ltd[35] and Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288.[36] In the latter case, Crennan, Bell and Keane JJ said that the imposition on the defendant builder “of a greater liability to a disappointed purchaser than to the party for whom the building was made and by whom the defendant was paid for its work would reduce the common law to incoherence”.[37] Further, it was submitted that it is not a prerequisite to consideration of this principle that there be a “contractual matrix” or a planned transaction case involving the plaintiffs and the represented lot owners.[38] Reference was also made to what was said by Jerrard JA in Valleyfield Pty Ltd v Primac Ltd & Anor[39] to the effect that the principle has been “increasingly articulated as something sufficient in themselves to denying the existence of a duty of care”.[40] However, I am not persuaded that the principle will have application to the cases the plaintiffs proposes to advance against LMS and Energex. In both Woolcock and Brookfield, the plaintiffs were able to enter into contracts to protect their own interests. That cannot be said of the plaintiffs in this case. It seems to me that the better view is that the scope of the contractual obligations owed by LMS and Energex under their agreements with the Council is unlikely to be determinative of the content of any duty that they might be found to have owed to the plaintiffs. Rather, their obligations under contract will fall to be considered alongside each of the other salient features which are identified as relevant to the question whether a duty was owed and, if so, its content.
  5. Lastly, in deciding whether a duty of care was owed to the plaintiffs by LMS or Energex, or both, how LMS and Energex performed their obligations under the agreements may be an important consideration. That will obviously be a matter of evidence.
  6. In the end, the allegations contained in the proposed pleading to support the existence of a duty of care on the part of LMS and Energex are not so obviously untenable that, if proved at trial, such a duty could not be found to have existed. Much will of course depend on what emerges in the evidence, but I am certainly not prepared to hold at this stage of the proceeding that the plaintiffs cannot succeed in this respect.

Breach

  1. For LMS, it was submitted that the allegations of breach in the proposed pleading are “fanciful” and that they “go well beyond the scope of the duty”. Energex submitted that it was “unable to understand the case that is made against it” as part of a broader submission that the pleading of breach was inadequate. Much of the argument on this point presumed a much narrower view of the scope of the “duty” than the plaintiffs propose to allege. Otherwise, resort was had to the affidavit evidence in an attempt to demonstrate why various allegations of breach could not be proved.
  2. As I have already observed, the allegations of breach in the proposed pleading are expressed in general terms but it is understandable why that is so because disclosure has not yet been undertaken. In any event, the allegations of breach against LMS and Energex are not so deficient as to amount to a reason, without more, to refuse this application. If one takes those allegations at their highest, and assuming the plaintiffs are successful in establishing the existence of a duty of care in the terms contended by them in the proposed pleading, there is a case for breach against both of the proposed defendants.

Causation

  1. Energex submitted that it was not possible to discern from the proposed pleading “any act or omission by Energex which might have caused or contributed” to the escape of landfill gas. It was also submitted that there were “multiple reasons stemming back to 1979 for the escape of landfill gas” and, such, that it was “essential that the causal link between the acts or omissions of Energex and the alleged loss is clearly pleaded”. I do not accept these submissions and, even if I did, such deficiencies would be most unlikely to affect the exercise of my discretion on an application such as this.

Loss

  1. For LMS, it was submitted that the proposed pleading does not allege that any such economic loss was ongoing, let alone permanent, or that the plaintiffs are “currently suffering any economic loss whatsoever”. They point out that this “temporary diminution in value of the land” is not alleged to have caused the plaintiffs any “actual economic loss” such as might be indicated by a sale for less than the value of the land unaffected by these issues or the rejection of the land as acceptable security for a loan. As senior counsel for LMS put it, the proposed pleading does no more than offer an “historical snapshot” and otherwise fails to allege facts demonstrating that the plaintiffs have suffered any compensable loss. Because loss is an essential element of the tort of negligence, it was therefore submitted that no cause of action was made out. These submissions were adopted by counsel for Energex.
  2. LMS submitted that, at best for the plaintiffs, all that could be pointed to was a “contingent loss” and referred in support of that submission to statements of principle from the decisions of the High Court in Wardley Australia Limited v The State of Western Australia[41] and HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd.[42] Reliance was also placed on a decision of the District Court of South Australia in Sarah Constructions Pty Ltd v Phillips.[43]
  3. I cannot accept these contentions.
  4. What appears in the proposed pleadings is an allegation that actual loss was suffered in or about September 2009. That loss is then quantified by reference to expert valuation evidence. I do not agree that the plaintiffs’ loss is in any sense “contingent” or yet to be crystallised. I am also, and with respect, not persuaded by the contrary view expressed in Sarah Constructions. True it is that there is no allegation that such a loss was ongoing, or even permanent, but the plaintiffs’ case is one for the assessment of loss at that time, and at no other. If LMS or Energex wish to contend that any loss was only temporary, or that some different date should be selected for the assessment of damages, then that can be done by way of defence. There is no need for the plaintiffs to allege any more than they currently propose to do.

Conclusion

  1. Having regard to the principles that guide the exercise of my discretion in the determination of an application such as this, for the above reasons I am satisfied that this is an appropriate case for the inclusion of LMS and Energex as defendants in this proceeding.

Orders

  1. It shall be ordered pursuant to r 69 UCPR that LMS Energy Pty Ltd and Energex Limited be included as defendants to this proceeding. Leave will also be granted to the plaintiffs pursuant to r 377 UCPR to file and serve the Amended Claim and Second Further Amended Statement of Claim in terms of the drafts forming, respectively, exhibit MTS1 to the affidavit of Michael Thomas Smith filed on 6 February 2015 and exhibit MTS3 to the affidavit of Michael Thomas Smith filed on 9 July 2015.
  2. I shall hear the parties on the question of costs, although my preliminary view is that the costs of and incidental to this application should be each party’s costs in the proceeding.

 

Footnotes

[1] As to which, see Kinsella v Gold Coast City Council [2014] QSC 65; [2015] 1 Qd R 274.

[2] Filed on 11 August 2014.

[3] Affidavit of Michael Thomas Smith filed on 6 February 2015, Exhibit MTS1.

[4] Affidavit of Michael Thomas Smith filed on 9 July 2015, Exhibit MTS3.

[5] UCPR r 69(1)(b)(i).

[6] Ibid r 69(1)(b)(ii).

[7] See Macquarie Bank Ltd v Lin [2001] QSC 341 at [14]; [2002] 2 Qd R 188 at 192 [14] per Holmes J, quoting Pegang Mining Co Ltd v Choong Sam [1969] MLJ 52 at 56 per Lord Diplock.

[8] MAM Mortgages Ltd (in liq) & Anor v Cameron Bros & Ors [2002] QCA 330 at [27] per McPherson JA.

[9] CLA s 28(1)(a).

[10] Ibid s 31(1)(a).

[11] Ibid s 31(1)(b).

[12] Plaintiffs’ Outline of Submissions filed on 2 July 2015, [39].

[13] To adopt the approach set out in Universal Music Australia Pty Ltd v Cooper [2004] FCA 78 at [6] -[7] per Tamberlin J.

[14] General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 at [8]; (1964) 112 CLR 125 at 128 – 129 per Barwick CJ.

[15] [2000] HCA 41 at [57]; (2000) 201 CLR 552 at 575 – 576, [57], (citations omitted), which observations were referred to with approval by Gleeson CJ, Gummow, Hayne and Crennan JJ in Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 at [46]; (2006) 226 CLR 256 at 275 [46] and by French CJ and Gummow J in Spencer v The Commonwealth [2010] HCA 28 at [24]; (2010) 241 CLR 118 at 131 – 132 [24].

[16] Kestrel Coal Pty Ltd v Longwall Roof Supports Ltd & Ors [2003] QSC 187 at [16] per Muir J.

[17] Project Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd & Anor [2011] QCA 102 at [27] per Muir JA (with whom White JA and P Lyons J agreed).

[18] [2004] HCA 16; (2004) 216 CLR 515.

[19] Ibid [138]; 566 [138] (citations omitted), which passage was adopted by Muir JA in Project Company No 2 [2011] QCA 102 at [27].

[20] [2011] VSC 15 at [32].

[21] Ibid [32].

[22] [1992] NSWCA 272; (1992) 30 NSWLR 1 at 5 – 6 per Kirby P.

[23] The Operation and Management Agreement.

[24] Clause 3.2(a).

[25] Clause 3.2(b).

[26] Clause 3.2(f).

[27] [2013] QSC 354 at [101]; [2014] 2 Qd R 423 at 443 – 444 [101].

[28] Ibid, quoting Miller v Miller (2011) 242 CLR 446 at 470 [64].

[29] Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54 at [149]; (2002) 211 CLR 540, 597 [149].

[30] [2009] NSWCA 258; (2009) 75 NSWLR 649.

[31] At [100]-[104]; 675 – 676 [100]-[104].

[32] Ibid [106]; 677 [106].

[33] See Modbury Triangle Shopping Centre Pty Ltd v Anzil & Anor [2000] HCA 61 at [26]-[28]; (2000) 205 CLR 254 at 265 – 266 [26]-[28].

[34] Plaintiffs’ Further Written Submissions dated 29 July 2015, par 20.

[35] [2004] HCA 16; (2004) 216 CLR 515.

[36] [2014] HCA 36; (2014) 254 CLR 185.

[37] Ibid [69]; 36 [69].

[38] Outline of LMS’ Reply Submissions dated 6 August 2015, [4].

[39]  [2003] QCA 339 at [116] per Jerrard JA.

[40] Ibid [116].

[41] [1992] HCA 55; (1992) 175 CLR 514 at 532.

[42] [2004] HCA 54; (2004) 217 CLR 640 at [29].

[43] [2007] SADC 137.

Close

Editorial Notes

  • Published Case Name:

    Kinsella & Anor v Gold Coast City Council (No 3)

  • Shortened Case Name:

    Kinsella v Gold Coast City Council (No 3)

  • MNC:

    [2016] QSC 14

  • Court:

    QSC

  • Judge(s):

    Burns J

  • Date:

    19 Feb 2016

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2016] QSC 1419 Feb 2016Application for joinder granted; leave to amend claim and statement of claim granted: Burns J.
Notice of Appeal FiledFile Number: 2931/1618 Mar 2016SC5010/13
Appeal Determined (QCA)[2016] QCA 17824 Jun 2016Purported application for leave to appeal struck out: Margaret McMurdo P.

Appeal Status

Appeal Determined (QCA)

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