How funny.
Neil Foster
Associate Professor
The attempt to re-write Barclay v Penberthy is understandable, but it would be better to acknowledge it was a cock-up.
So, the facts were that the plaintiff charters the defendant's aircraft. The defendant's employee negligently crashes it, killing or injuring six of the plaintiff's employees. The plaintiff claims for their economic loss.
If you read the High Court's decision, you'll discover a scholarly discussion of the rule in Baker v Bolton and the action per quod servitium amisit, but an embarrassingly scanty discussion of the question of more general importance of whether the employee
(Penberthy) owed the plaintiff employer a duty to take care to avoid 'pure' economic loss by injuring their employees.
[See issue 3 at paragraphs 43-49]
Now an orthodox (ie English) answer would be of course he didn't. If you negligently injure me, my children have no free standing claim for their economic loss if I can no longer work. I have been wronged, not my children. The point of the fatal accidents
legislation is that it creates such claim for dependents where I am killed, and not just injured (and it did so because the claim of the person killed didn't survive).
In Australia, the law is quite different and peculiar, so that today the children might have a claim based upon their 'vulnerability'. If this really is to be taken seriously, such foundational cases as Victoria Park Racing v Taylor will have to be reconsidered
http://www.austlii.edu.au/au/cases/cth/HCA/1937/45.htmlhttp://www.austlii.edu.au/au/cases/cth/HCA/1937/45.html
But, what about the obvious contractual claim? Surely there was an implied duty of the aircraft operator under the charter that the aircraft would be operated carefully? Why doesn't this provide the obvious, orthodox, and entirely straightforward answer
to the case? Why are we having to discuss pure economic loss and such obscure issues as the survival of Baker v Bolton in (Western) Australia?
The answer is that the trial judge, Murray J had said that the breach of contract claim failed
http://www.austlii.edu.au/au/cases/wa/WASC/2009/316.htmlhttp://www.austlii.edu.au/au/cases/wa/WASC/2009/316.html
He did so on the basis that there was no evidence that the employer had been negligent in operating the aircraft, see at para 428.
This is a basic mistake. The contractual duty of the employer was that the aircraft would be operated carefully, not that they would be personally careful. Aircraft that are crashed because of negligent pilots are not operated carefully.
This claim for breach of contract, which obviously should have succeeded, was never appealed.
But we are now told by Crennan, Bell and Keane JJ (the first two were in Barclay v Penberthy) that the breach of contract claim was the way the case was decided. If you read it, that obviously is not what was in fact decided, nor can this reasoning explain
the result as the claim against the negligent employee was allowed, not just his employer. (The employee should in principle have been liable to those he injured, and to his employer for breach of contract, but not to the employer of those he injured.)
What is the law now?
I suppose the best way forward is to accept Crennan, Bell and Keane JJ's reanalysis, and forget all about Barclay v Penberthy, the entire saga of which was created by a slip by the trial judge. That doesn't resolve the chaos of Australian law in relation
to 'pure' economic loss, but at least it reduces it.
Rob
From: Neil Foster [neil.foster@newcastle.edu.au]
Sent: 08 October 2014 05:34
To: obligations@uwo.ca
Subject: ODG: HCA on duty of care re economic loss in building case
Sent: 08 October 2014 05:34
To: obligations@uwo.ca
Subject: ODG: HCA on duty of care re economic loss in building case
Dear Colleagues;
In Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36 (8 October 2014) http://www.austlii.edu.au/au/cases/cth/HCA/2014/36.html the
High Court of Australia was dealing with a claim for negligence resulting in “pure economic loss” in a case involving a defective building. The unanimous outcome was that a builder of a block of flats subject to “strata title” does not owe a duty of care to
the “Owner’s Corporation” which owns the common property, to avoid causing them the economic loss they will suffer by having to pay out for repairs to defective common property. This was a reversal of a 2-1 decision by the NSW Court of Appeal, with fairly
strong judgments by Basten and Leeming JJA.
While the outcome was unanimous, four different sets of judgements were given- by French CJ, Hayne & Kiefel J, Crennan, Bell & Keane JJ, and Gageler J. I won’t analyse the different decisions separately, but there is some slight difference among them: French
CJ and Hayne & Kiefel JJ are concerned to say that their decisions do not turn on what claims are “appropriate” for torts or contracts, while it seems that the plurality judgement of Crennan, Bell & Keane JJ comes closer to making some comments on that topic.
But a couple of generalisations are possible on a quick reading:
- The denial of a duty of care flows from the lack of “vulnerability” of the plaintiff Owners Corp in the circumstances- whether representing their own interests or (as some members of the court preferred to say) acting as “agents” of the owners who would have to pay higher levies for the repairs, the Owners could have made appropriate contractual arrangements to protect themselves, and arguably did make some
- None of the judges suggested that Bryan v Maloney should be over-ruled, which I had thought might be canvassed. Gageler J was clearest in his comments on this point, suggesting that Bryan in future should be confined to dwelling house cases- see [185]. But all the judges accepted its continuing authority.
- All in different ways applied Woolcock Street to find sufficient analogies to deny a duty of care here.
There are a number of subtle differences which must await someone with more time than I have at the moment. But I did notice a couple of interesting features:
- The Canadian decision in Winnipeg Condominium Corporation No 36 v Bird Construction Co [1995] 1 SCR 8 was not followed, nor was the NZ decision in Invercargill City Council v Hamlin [1996] UKPC 56; [1996] AC 624. Hence there is more lack of conformity around the Commonwealth; but on the other hand the decision is consistent with current English decisions.
- There is a curious attempt, it has to be said, to deal with the bete noir of Australian economic loss case law at the moment, Barclay v Penberty, in para [143], by Crennan, Bell & Keane JJ. I reproduce most of the paragraph (which is all that was said on the case) here:
In Barclay, the plaintiff succeeded in its claim for damages for economic loss suffered when the aircraft it had chartered crashed as a result of the pilot's negligence, killing the plaintiff's valued employees and thus depriving it of their services. The Court held that it was an implied term of the contract of charter that the charter would be carried out with reasonable skill and diligence. There was no express provision in the contract which dealt with the subject of this term. The obligation created by this implied term was sufficient to entitle the plaintiff to recover the loss suffered as a result of negligent performance of the contract between the plaintiff and the defendant. The content of the duty which arose from the defendant's assumption of responsibility under that contract was the same as that which arose under the implied term of the charter. That was also the case in Astley v Austrust[185], to which Macfarlan JA referred. In each of these cases, the content of the duty was the same in contract and tort. That is not the case here. (emphasis added)
I may be wrong (it is late here in Utah where I am writing this having just finished a conference during the day). But it seems to me that, with respect, this
is wrong. The highlighted provisions imply that the tort action was between the same parties who had entered into the charter. But this is just not so. The contract of charter was with the defendant Penberty's employer! There was no contract with Penberty.
Precisely the odd features of the decision include the fact that an employee was held to have a duty of care to protect his employer’s client from economic loss.
Regards
Neil
Neil Foster
Associate Professor
Further details: http://www.newcastle.edu.au/profile/neil-foster
My publications: http://works.bepress.com/neil_foster/
The University of Newcastle (UoN)
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The University of Newcastle (UoN)
University Drive
Callaghan NSW 2308
Australia
CRICOS Provider 00109J
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