L Shaddock & Associates Pty Ltd v Parramatta City Council
150 CLR 22536 ALR 385
(Judgment by: STEPHEN J)
Between: L SHADDOCK & ASSOCIATES PTY LTD
And: PARRAMATTA CITY COUNCIL
Judges:
Gibbs C.J.
Stephen J.Mason J.
Murphy J.
Aickin J.
Subject References:
Negligence
Damages
Judgment date: 28 October 1981
Judgment by:
STEPHEN J
The circumstances of this appeal sufficiently appear from the reasons for judgment of Mason J., which I have had the advantage of reading.
The substantial issue is whether the City of Parramatta is liable in damages to the appellants because it misinformed them about the non-existence of road-widening proposals affecting a block of land in the municipality, in consequence of which the appellants completed the purchase of that land. Before coming to that issue some preliminary matters must be disposed of. This I can do quite briefly because of the considerable assistance which is to be had from the judgments in the Court of Appeal (1979) 1 NSWLR 566.
The appellants through their solicitor, Mr. Carroll, made two inquiries of the Council. The first, by telephone, should not, in my view, be regarded as giving rise to any consequences in law. It was marked by informality: the person in the Council office to whom Mr. Carroll spoke remained unidentified and the advice which that person then and there gave over the telephone remained unconfirmed by any writing. It must be but rarely that information conveyed by unidentified voices answering a telephone at the offices of municipal councils will render those councils liable in damages for negligence if the information should prove to be incorrect. In my view neither a council nor an inquirer would, in the absence of quite special circumstances, regard the response to such an inquiry as carrying with it liability in damages if incorrect: this must especially be the case when there exists a customary and more formal means of obtaining from a council the information which is sought.
The appellants in this case also had recourse to such a customary and more formal means: through Mr. Carroll they made written application on the usual and appropriate printed form, just such an application as must each day be received in their hundreds by municipal councils throughout New South Wales. The form disclosed that the inquiry was by a firm of solicitors, was in respect of a specific piece of land within the municipality and was made for "conveyancing" purposes. It named two parties, one described as "Owner", the other as "Purchaser". It conveyed to the Council quite clearly that what was in question was a sale of property and that it was in connexion with that sale that the inquiry was being made.
The Council's response to the inquiry was to return the printed form with the answer to the question whether the property was affected by any "Road widening or re-alignment" proposals left blank. In the Court of Appeal, Mahoney J.A., affirming the finding of the primary judge, said (1979) 1 NSWLR, at p 596 :
"that a reasonable man in Mr. Carroll's position would, in the light of what the council had done on previous occasions, take the council to be giving him to understand that there were no proposals. In addition, I think that the council by what it did, intended so to do.... I think it should be inferred that the fact that no reference was made to the proposals on the certificate resulted from the council following the course of conduct to which I have referred; and the council should be seen as giving the plaintiffs to understand that there were no proposals."
Moffitt P. was of the same view. In my view their Honours were clearly right in their conclusion and I adopt, with respect, their respective reasons. Neither the fact that the application was not made in duplicate, as the instructions on the form required, and that the Council's answer was, in effect, a silent one nor the fact that the Council was under no statutory duty to give any answer, serves to deny to it the character which the parties themselves regarded it as possessing: that of an answer in the negative by the Council to the question whether any road-widening proposals affected the land described in the appellants' form.
This, then, clears the way to the question of substance: is the Council liable in damages for supplying this admittedly erroneous information? The response to this would be clearly "Yes" if this were a case of advice given by someone in the course of their business or profession, the advice requiring the possession and exercise of special skill or competence - Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. (1964) AC 465 and Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt (1970) 122 CLR 628 ; (1971) AC 793. However the respondents contend that, as a result of the judgment of those of their Lordships comprising the majority in the latter of these two cases, no duty of care can be said to have arisen on the part of the Council in relation to the answer given by it to the appellants' question. Such a duty of care only arises, it is said, where advice or information is given by those who possess or profess some special skill or competence in the subject matter of the advice or information, as by being engaged in a business or profession involving the exercise of such skill or competence, and whose course of conduct involves the furnishing of advice or information to others. This is said to be the positive limitation imposed by Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt. There is also said to be a negative limitation: that no duty of care arises merely from the fact that the giver of the advice knows that what he says is to be relied upon by the recipient and that it is sought of him in a serious, as distinct from a merely casual or social, context.
That their Lordships stated this second, negative proposition is, I think, undoubtedly correct, as appears from p. 638 of the report of Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt (1971) A.C., at p. 806). They did so because they did not regard the element of known reliance as involving any claim by the adviser that he possessed particular and relevant skill and competence which he was prepared to exercise on the inquirer's behalf. But, with respect to those who think otherwise, I do not understand their Lordships' judgment as confining the existence of a duty of care to quite those limits which a narrow understanding of what is said to be the first, positive proposition would require.
Their Lordships warned (1970) 122 CLR, at p 643; (1971) AC, at p 809 that their opinion in the instant appeal "like all judicial reasoning, must be understood secundum subjectam materiam". The context in which the judgment is to be understood is one in which "the fatal gap" in Mr. Evatt's case was the absence of any allegation that "the company to the knowledge of Mr. Evatt carried on the business of giving advice upon investments or in some other way had let it be known to him that they claimed to possess the necessary skill and competence to do so and were prepared to exercise the necessary diligence to give reliable advice to him" (1970) 122 CLR, at p 642; (1971) AC, at p 809 - Their concern was, accordingly, with what might be inferred, in reliance upon the doctrine of holding out, from the conduct of those engaged in business or a profession. It was in that context that their Lordships discerned two elements, the existence of which would establish a duty of care: the possession of skill or competence such as was necessary to supply the information sought and a willingness to put that skill or competence at the disposal of others. They concluded that to hold oneself out both as possessing relevant skill or competence in the giving of advice and as willing to put that skill or competence to work for others would give rise to a duty of care. Such a situation, they said, would commonly arise when the adviser was engaged in a particular business or profession which involved the giving of advice calling for skill and competence (1970) 122 CLR, at p 637; (1971) AC, at p 805.
But their Lordships were careful, on more than one occasion, to make it clear that it was no hard and fast rule which they were enunciating (1970) 122 CLR, at pp 638, 642; (1971) AC, at pp 806, 809. They deplored the notion that Hedley Byrne should be regarded as laying down "the metes and bounds of the new field of negligence to which the gate is now opened" (1970) 122 CLR, at p 642; (1971) AC, at p 809. They described their own decision as but one step in the step by step ascertainment of the limits of that new area. I do not understand their judgment as in any way suggesting that it is only those engaged in private enterprise, in particular trades or professions, who may attract such a duty of care: and this has certainly not been the view which the Canadian Supreme Court has taken of their Lordships' judgment - Hodgins v. Hydro-Electric Commission of Nepean (1975) 60 DLR (3d) 1, at p 10. Indeed, in a line of Canadian cases to which I will come the duty has been applied to municipal authorities in circumstances similar to those in the present case.
In Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt the context was the carrying on of a particular description of business, from which the necessary element of holding out was unsuccessfully sought to be extracted (1970) 122 CLR, at p 637; (1971) AC, at p 805. In other contexts conduct of a quite different kind may suffice. For example, one who holds himself out as being, by reason of having set up a system for its gathering and collation, in possession of special knowledge, especially when he has a monopoly of that knowledge, and who further holds himself out as providing the fruits of that system to those who seek it, should be subject to such a duty. Such, I think, is the position of this Council; and, consistently with the views of the majority in Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt, that appears to me to be enough to attract to the Council a liability for negligent mis-statement.
What much concerned their Lordships was what they perceived to be the absence of any ascertainable objective standard by which to judge particular conduct, were the duty of care to apply quite generally (1976) 122 CLR, at p 635; (1971) AC, at p 803. This led them to conclude that there was "no halfway house" between the simple duty of honesty owed by all, irrespective of skill, and the special duty of care which they acknowledged to apply in appropriate cases (1976) 122 CLR, at p 636; (1971) AC at p 804. In the present case there is no call for any such half-way house: just as their Lordships (1976) 122 CLR, at p 635; (1971) AC, at p 803 regarded the case of a banker giving a gratuitous reference as providing an instance where an ascertainable standard of care exists, so too will such a standard exist when a New South Wales municipal council carries out its familiar daily task of dealing with inquiries made of it on the standard form used in such cases. The appropriate objective standard of care will be no less ascertainable; it will be capable of proof by evidence of what is reasonable conduct on the part of such councils in performing that task. In the present case the existence of such an objective standard of care was not in issue; it was rather the existence of the duty of care that was in debate between the parties.
In the present case the Council had, as Moffitt P. puts it, set itself up as an information centre. It alone possessed the store of information which was of quite vital concern to those who owned or contemplated acquiring property in its municipal district. This was information which the Council must be taken to have known would, as a matter of course, be sought from it by all those concerned with property dealings in the municipality. As a matter of course it supplied that information, in common with other councils, as a regular and constant activity. It was under no statutory duty to furnish such information; whatever may be thought to be the effect of s. 342AS of the Local Government Act 1919 (NSW), it does not extend to the particular information here in question. But it had voluntarily devised a system and method by which it could readily make the information available to inquirers.
The information in question was of a kind which was known by all to be of great importance to those seeking it and it was largely inaccessible through other channels. Moreover, much of the information sought would concern the Council's own actions. But it would be worse than valueless, it might be positively harmful in its effect, should it prove to be incorrect. In those circumstances it cannot, I think, be supposed that the Council did not hold itself out as exercising care in relation to this information which it offered to impart. The matter can be looked at in this way. Were a council expressly to qualify its answers, stating that they might be subject to errors for which it accepted no responsibility, the present practice would be rendered largely worthless. Conveyancers could no longer rely upon a council's answers and would instead, in the case of each transaction, have to engage in extensive searches of council records, no doubt to the great inconvenience of all concerned. Why this does not now occur is because councils are rightly regarded as holding themselves out as exercising care in the answers they give.
It is true that what the Council was in the habit of supplying and which it in fact supplied, albeit incorrectly, in the present case was scarcely advice; it more readily answers the description of information, although the precise boundary between the two is no doubt difficult to draw. But in Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt their Lordships drew no distinction between the two (1970) 122 CLR, at pp 633-634; (1971) AC, at pp 802-803 , any attempt to do so seems to be unnecessary in principle and likely to lead to insoluble problems in practice.
It was said that in providing the information the Council was doing nothing which involved special skill or competence and that their Lordships refer to the possession of special skill and competence. But, as already mentioned, they do so because they assume circumstances in which the use of care by the supplier of information is only to be inferred from the fact that that supplier is possessed of special skill or competence. Where, as in the present case, the supplier is the exclusive possessor of essential information concerning a matter of importance, such as the buying and selling of property, and, being a local government body, sets itself up as a centre from which, in a quite formalized fashion, this information is distributed to those who require it, it requires no holding out of special skill or competence in order to lead to the inference that care will be taken in furnishing that information. The circumstances are such as of themselves to lead irresistibly to that conclusion. It follows that if, which I doubt, it were correct to deny to the Council skill or competence in marshalling and having available its store of information, this would not, in the particular circumstances of this case, relieve it of its duty of care.
It is for the foregoing reasons that I have concluded that nothing said by their Lordships who were in the majority in Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt denies the existence of a duty of care owed by the Council to the appellants. It is noteworthy that in Canada a number of decisions have held municipal corporations to be liable in damages for negligent misrepresentation. These cases apply the doctrine in Hedley Byrne to situations very similar to the present, Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt being seen as involving no relevant qualification. The earliest of these cases, Windsor Motors Ltd. v. District of Powell River (1969) 4 DLR (3d) 155 , preceded Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt but I mention it because it has been much cited in later cases. It concerned incorrect advice by a municipality about the zoning of land and to it the principle in Hedley Byrne (1964) AC 465 was held applicable. Then in 1972, in Gadutsis v. Milne (1972) 34 DLR (3d) 455 the City of Toronto was held liable in damages for negligent misrepresentation concerning permitted uses in a particular zone of the city. The Windsor Motors Case was referred to and Hedley Byrne was relied upon as establishing liability. Of Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt it was observed (1972) 34 DCR (3d), at p 459 that, unlike the case of the insurance company there in question, the City's "employees in the zoning department... were there to give out information as to zoning". Gadutsis was applied in H.L. & M. Shoppers Ltd. v. Town of Berwick (1977) 82 DLR (3d) 23 , again a case of the giving of incorrect information by a municipality. Particular reference was made to the feature stressed in Gadutsis, the function of the municipality in giving advice to prospective builders. See also Jung v. District of Burnaby (1978) 91 DLR (3d) 592.
Both in England and in Canada, as in this country, there has of course been considerable judicial and academic consideration, in other contexts, of the interaction of Hedley Byrne and Mutual Life & Citizens' Assurance Co. Ltd. v. Evatt. But for present purposes I can confine citation of authority to this line of Canadian cases, concerned with the special case of information given by municipal authorities concerning municipal affairs; adding perhaps only a reference to Town of the Pas v. Porky Packers Ltd. (1976) 65 DLR (3d) 1 , a decision of the Canadian Supreme Court in which, although ultimately turning upon a different point, Windsor Motors was cited and in which the view taken of Hedley Byrne was wholly consistent with the line of cases already mentioned.
There remains only a matter of the assessment of damages. As to it I am in agreement with all that Mason J. has said and have nothing which I would wish to add.
I would allow the appeal, set aside the judgment below and enter judgment in favour of the appellants for $173,938.