• Any

TORT -Negligence - non-feasance by public authorities - non-exercise bylocal government council and State government to minimise faecalcontaminationof lake where oysters grown commercially - oysters carrying hepatitis A virus -consumer of oysters contracting hepatitisA - whether duty of care owed to bedischarged by exercise of statutory powers - causation - whether localgovernment council andState government required to carry out sanitary surveyof shore of lake.

TORT - Negligence - whether duty of care owed by commercial farmer ofoysters to consumers of them breached where oysters carrying hepatitisA virusdue to faecal contamination of lake in which oysters grown - oyster farmer'sdepuration plant not shown to be working unsatisfactorily- whether dischargeof oyster farmer's duty required it to carry out sanitary survey of shore oflake or to urge public authoritiesto do so - causation of oysters contaminatedwith hepatitis A virus as a result of faecal contamination of lake whereoysters grown- whether circumstances show it was unreasonable for consumer torely on skills or judgment of grower - whether oysters were as fitfor purposeas reasonable to expect.

TRADE PRACTICES -Trade Practices Act 1974 (Cth) s 74B -liability of oyster farmer to consumer where consumer contracted hepatitis Afrom virus carried by oysters - whetherunreasonable for consumer to rely onskill or judgment of oyster farmer.

TRADE PRACTICES -Trade Practices Act 1974 (Cth) s 74D -liability of oyster farmer to consumer where consumer contracted hepatitis Afrom virus carried by oysters - whether"reasonable to expect" that oysterswould be free of virus - whose expectation relevant - relevance ofimpossibility of ensuringabsolutely that oysters free of virus.

TRADE PRACTICES -Trade Practices Act 1974 (Cth) ss 75AD, 75AK -liability of oyster farmer to consumer where consumer contracted hepatitis Afrom virus carried by oysters- whether "state of scientific or technicalknowledge" enabled defect (virus) to be discovered - only test available woulddestroythe oysters - impossibility of extrapolating from sample to bulk.

Trade Practices Act 1974 (Cth)ss 52, 74B, 74D, 75AD, 75AK,82

Clean Waters Act 1970 (NSW)ss 5,16,27,27A,29

Environmental Offences and Penalties Act 1989 (NSW)

Fisheries Management Act 1994(NSW)ss 8,189

Health Administration Act 1982(NSW)s 5(1)

Law Reform (Miscellaneous Provisions) Act 1946(NSW)s5

Local Government Act 1993 (NSW)ss 7,56-66,124

Public Health Act 1991(NSW) s 7

Fisheries Management (Aquaculture) Regulations 1995

Sutherland Shire Council v Heyman[1985] HCA 41;(1985) 157 CLR 424 discussed

Parramatta City Council v Lutz(1988) 12 NSWLR 293 distinguished

Stovin v Wise[1996] UKHL 15;[1996] AC 923 discussed

Pyrenees Shire Council v Day[1998] HCA 3;(1998) 192 CLR 330 distinguished

Bendix Mintex Pty Ltd v Barnes(1997) 42 NSWLR 307 followed

Hill v Van Erp(1997) 188 CLR 159 cited

Perre v ApandPty Ltd[1999] HCA 36;(1999) 164 ALR 606 discussed

Caparo Industries plc v Dickman[1990] UKHL 2;[1990] 2 AC 605 discussed

Romeo v Conservation Commission of (NT) (1998) 192 CLR 431 discussed

Crimminsv Stevedoring Industry Finance Committee[1999] HCA 59;(1999) 167 ALR1 discussed

Nagle v Rottnest Island Authority[1993] HCA 76;(1993) 177 CLR 423 cited

Caltex Oil (Australia) Pty Limited v The Dredge "Willemstad"[1976] HCA 65;(1976) 136CLR 529 referred to

Buckle v Bayswater Road Board[1936] HCA 65;(1936) 57 CLR 259 referred to

Trade Practices Commission v Manfal Pty Ltd(No 3)[1991] FCA 650;(1991) 33 FCR 382referred to

Schiller v Mulgrave Shire Council (No 2)[1972] HCA 60;(1972) 129 CLR 116 referredto

Fitzgerald v Penn[1954] HCA 74;(1954) 91 CLR 268 cited

March v Stramare[1991] HCA 12;(1991) 171 CLR 506 referred to

Doyle, RedwoodThe Common Law Liability of public Authorities: The Interfacebetween Public and Private Law(1999) 7 Tort Law Rev 30 at 34

FlemingThe Law of Torts9^th ed 1998 at 210

Aronson, WhitmorePublic Torts and Contracts1982 at 34-35

P W HoggLiability of the Crown 2^nd ed 1989 at 2

Trindade, CaneThe Law of Torts in Australia3^rd ed 199 at696-697

DaviesCommon Law Liability of Statutory Authorities27 (1998) UWAL Rev12

Justice SopinkaThe Liability of Public Authorities: Drawing the Line(1993) Tort Law Rev 123

Street on Torts 10^th ed 1999 at 182

K M HoggThe Liability of a Public Authority for the Failure to carry out aCareful Exercise of its Statutory Powers: The Significance of theHigh Court'sDecision inSutherland Shire Council v Heyman[1991] MonashULawRw 12;(1991) 17 Mon L R 285

GRAHAM BARCLAY OYSTERS PTY LIMITED & ORS v GRANT RYAN & ORS

N 219 OF 1999

N 234 OF 1999

N 298 OF 1999

LEE, LINDGREN, KIEFEL JJ

9 AUGUST 2000

SYDNEY

THE COURT ORDERS THAT:

In appeal N 234 of 1999 (the Council's appeal):

1.The appeal be allowed.

2.Orders 1, 2, 3, 4, 5 and 6 made on 5 March 1999 in proceeding NG 183 of 1997be set aside and in lieu thereof it be ordered anddeclared as set out in theschedule hereto.

3.The respondents pay the appellant's costs of the appeal. The liability ofthe respondents to contributeinter se to those costs be apportioned asfollows: one-third to the first respondent, one-sixth to the second respondent,one-sixth to thethird respondent, and one-third to the fourth respondent.

In appeal N 298 of 1999 (the State's appeal):

1.The appeal be allowed in part.

2.Orders numbered 1, 2, 3, 4, 5 and 6 made on 5 March 1999 in proceeding NG183 of 1997 be set aside and in lieu thereof it beordered and declared as setout in the schedule hereto.

3.The appellant pay the costs of the appeal of the first, second, third,fourth, sixth, seventh and fourteenth respondents, thecosts of the third andfourth respondents to be the one set of costs.

In appeal N 219 of 1999 (the Barclay companies' appeal):

1.The appeal be allowed in part.

2.Orders 1, 2, 3, 4, 5 and 6 made on 5 March 1999 in proceeding NG 183 of 1997be set aside and in lieu thereof it be ordered anddeclared as set out in theschedule hereto.

3.The appellants pay the first respondent's costs of the appeal.

4.The cross-appeal be dismissed with costs.

In appeals N 234 of 1999, N 298 of 1999 and N 219 of 1999:

If submissions in respect thereof are lodged within fourteen days, the ordersfor costs, including the orders for costs set outin the schedule hereto, arenot to take effect until further order.

Note:Settlement and entry of orders is dealt with in Order 36 of theFederal Court Rules.

SCHEDULE

1.The application be dismissed against the first respondent with costs.

2.There be judgment for the first applicant against the second, nineteenth andtwentieth respondents in the sum of $27,000 in respectof the first applicant'spersonal claim (and their liability to contributeinter sebeapportioned one half to the nineteenth respondent and one quarter to each ofthe second and twentieth respondents).

3.In respect of so much of the first applicant's representative claim thatalleges negligence, the first applicant is entitledto succeed against thesecond, nineteenth and twentieth respondents on behalf of those group memberswho prove that damage has beensuffered by them, and in respect of theremaining respondents the claim be stood over for determination.

4.In respect of so much of the first applicant's representative claim thatalleges an entitlement to recover loss or damage underss 74B and 74D oftheTrade Practices Act 1974, the claim be stood over fordetermination.

5.The cross-claims be stood over for determination.

6.The second, nineteenth and twentieth respondents pay the costs of the firstapplicant, whether in relation to his personal orrepresentative claim (andtheir liability to contributeinter se be apportioned one half to thenineteenth respondent and one quarter to each of the second and twentiethrespondents), and the nineteenthrespondent indemnify the first applicant inrespect of costs payable by the first applicant to the first respondentpursuant to item1 of these orders.

REASONS FOR JUDGMENT

LEE J:

1The matter before the Court involves appeals and cross-appeals from adecision of a Judge of this Court. The content of that decision,the parties tothe appeal proceedings and the grounds of appeal and cross-appeal relied uponare described in the reasons of LindgrenJ which also set out the relevantfacts and an outline of the pertinent arguments submitted by the parties to theappeals and cross-appeals.In those respects the reasons of Lindgren J are tobe read with the reasons which follow.

Liability of public authority

2The liability in tort of the Crown and public authorities is said to raisevexed issues, (see:Pyrenees Shire Council v Day[1998] HCA 3;(1998) 192 CLR 330 perKirby J at 397;Romeo v Conservation Commission of the NorthernTerritory (1998) 192 CLR 431 per Kirby J at 463-465), in particular whetherthe Crown and public authorities are to be treated differentlyfrom privatelitigants. (See: Doyle, RedwoodThe Common Law Liability of PublicAuthorities: The Interface Between Public and Private Law (1999) 7 Tort LawRev 30 at 34; FlemingThe Law of Torts 9^th ed 1998 at 210;Aronson, WhitmorePublic Torts and Contracts1982 at 34-35;P W Hogg Liability of the Crown 2^nd ed 1989 at 2;Trindade, CaneThe Law of Torts in Australia 3^rd ed 1999 at696-697; DaviesCommon Law Liability of Statutory Authorities27 (1998)UWAL Rev 21; Justice SopinkaThe Liability of Public Authorities: Drawingthe Line (1993) Tort Law Rev 123.) Whatever arguments may be raised in thatregard neither the Crown nor a public authority has immunity fromsuit innegligence unless that immunity is provided by statute. (See:Street onTorts 10^th ed 1999 at 182.) The liability in tort of a publicauthority is determined by application of the ordinary rules. As Hogg states(at2):

"...my review of the law leads me to the conclusion that, forthe most part, the `ordinary' law does work a satisfactory resolutionof theconflicts between government and citizen. Indeed, the parts of the law thatseem to me to be most unsatisfactory are thosewhen the courts have refused toapply the ordinary law to the Crown. In short, I conclude that Dicey's idea ofequality providesthe basis for a rational, workable and acceptable theory ofgovernmental liability."

3In particular circumstances however, the scope, or existence, of a duty ofcare has been confined or excluded by application ofconcepts such as"justiciability", "incrementalism" or "policy". (See: Fleming at 213-215; Doyleat 42-45.)

4The relevant principles to be applied in determining whether a publicauthority is liable in negligence were stated by the HighCourt inSutherland Shire Council v Heyman[1985] HCA 41;(1985) 157 CLR 424 and subsequentlyrefined inNagle v Rottnest Island Authority[1993] HCA 76;(1993) 177 CLR 423;Pyrenees;Romeo; andCrimmins v Stevedoring Industry FinanceCommittee[1999] HCA 59;(1999) 167 ALR 1.

5It was accepted inHeymanthat there was no reason why generalprinciples of negligence should not apply to public authorities and no reasonin principle, orpolicy, why liability in negligence of a public authorityshould be limited to the negligent exercise of powers vested in it andnotextend to the negligent non-exercise of a power exercisable at the discretionof the authority. (See: K M HoggThe Liability of a Public Authority forthe Failure to Carry Out a Careful Exercise of its Statutory Powers: TheSignificance of theHigh Court's Decision inSutherland Shire Council vHeyman[1991] MonashULawRw 12;(1991) 17 Mon L R 285.)

6InHeyman, a case involving financial loss, the existence and natureof the duty of care was confined by application of principles of proximityandreliance. InNagle, where the plaintiff suffered personal injury, theliability of the public authority was rooted in the breach of a duty of careconcomitantwith the statutory duty of the Board to control and manage theRottnest Island reserve for the benefit of the public, there beingarelationship of proximity between the Board and visitors to the Island. Theduty of care imposed on the public authority was toavoid foreseeable risks ofinjury to visitors to the Island. Although general reliance was put forward aspart of the plaintiff'scase inNagle, it was not held to be necessarythat the plaintiff show that the Board knew there would be general relianceupon the Board exercisingits powers.

7In Pyrenees, where the plaintiff parties sought compensation forproperty damage suffered by reason of the alleged negligence of the publicauthorityin failing to exercise its powers, the reasons of each of themajority (Brennan CJ, Gummow and Kirby JJ) rejected the concept thatgeneralreliance, or dependence, upon a public authority performing its statutoryfunctions was a necessary element in establishingthat a duty of care was owedby an authority to those said to rely upon the performance of thosefunctions.

8Brennan CJ based the liability of the public authority on a "public law duty"to enforce compliance with requirements the authority,in exercise of powersvested in it, had imposed on the occupier of premises in which was situated, tothe knowledge of the authority,a risk of harm to persons and property.

9Gummow J found the liability of the authority was to be established byapplication of the principles of common law negligenceand stated as follows(at 391-392):

"A public authority which enters upon the exercise of statutorypowers with respect to a particular subject matter may place itselfin arelationship to others which imports a common law duty to take care which is tobe discharged by the continuation or additionalexercise of thosepowers."

10Kirby J also held that liability was established under a common law dutyof care the principles for which were those set out bythe House of Lords inCaparo Industries Pty Ltd v Dickman[1990] UKHL 2;[1990] 2 AC 605 at 617-618,namely:

*was the prospect of harm to the person who suffered damage reasonablyforeseeable?

*was there a relationship of "proximity" or neighbourhood between the partysued and the party who suffered damage?

*was it "fair, just and reasonable" that the law impose a duty of care on theparty sued for the benefit of the party who suffereddamage?

11Toohey and McHugh JJ, in dissent, also determined liability according to thegeneral principles of negligence at common law,but held that to establish aduty of care there must be general reliance on the performance of functions notperformed by a publicauthority and that a relationship of proximity beapparent.

12InHill v Van Erp(1997) 188 CLR 159 the respective reasons of themajority (Brennan CJ, Dawson, Toohey, Gaudron and Gummow JJ) described therelationship of proximity,previously regarded as the "control mechanism" forthe tort of negligence (See:Caltex Oil (Australia) Pty Limited vTheDredge "Willemstad"[1976] HCA 65;(1976) 136 CLR 529) as a factor to be considered indetermining whether a duty of care existed, particularly where the loss claimedby reason of allegedbreach of duty of care was "pure" economic loss, butstated that it was not an overriding requirement for a right to recover damagesin negligence.

13InRomeo,which, likeNagle,involved a claimfor damages for personal injury, the liability in negligence of a publicauthority to which functions of protectionand management of a public reservehad been delegated by statute, was determined by application of the ordinaryprinciples of commonlaw. The majority (Toohey, Gaudron, McHugh, Gummow, Kirbyand Hayne JJ) rejected the opinion of Brennan CJ expressed inPyreneesand repeated inRomeo, that liability of a public authority was groundedin the breach of a "public law duty" and not common law negligence. The reasonsof the majority reflected views expressed in the dissenting opinion of LordNicholls, supported by Lord Slynn, inStovin v Wise[1996] UKHL 15;[1996] AC 923. Inparticular, the reasons of the majority inPyrenees andRomeo donot support the proposition set out in the opinion of Lord Hoffmann inStovin v Wise, adopted as the opinion of the majority, that, in effect,a public authority had to be under a statutory duty to act before a commonlawduty of care could arise where the authority had failed to act.

14InRomeo the majority held that by reason of the functions vested inthe public authority it was under a duty of care to persons enteringthereserve to take reasonable care to avoid reasonably foreseeable risks of injuryto such persons. The risk of such a person fallingover a cliff in the reservewas held to be reasonably foreseeable but in all the circumstances failure ofthe public authority toerect a fence or barrier at the edge of the cliff wasfound not to be a breach of the duty of care. The majority rejected thesubmissionthat the duty of care of a public authority could be differentiatedin some way from the nature of the general duty of care appliedby the generallaw of negligence.

15The joint reasons of Toohey and Gummow JJ stated that it was unnecessary todeal with the submission of the public authoritythat there was a distinctionbetween "policy and operational factors" and that "policy decisions" of publicauthorities were not"justiciable" and, therefore, incapable of grounding afinding in negligence, but the reasons of Kirby J, and by implication thereasons of the other members of the Court, rejected that submission. The commonlaw of Australia does not restrict determinationof public authority liabilityin negligence to "justiciable" matters and accords with the following viewexpressed by Lord NichollsinStovin v Wise at 938-939:

The exclusionary approach presupposes an identifiable boundary,between policy and other decision, corresponding to a perceived impossibilityfor the court to handle policy decisions. But the boundary is elusive, becausethe distinction is artificial, and an area of blanketimmunity seemsundesirable and unnecessary. It is undesirable in principle that in respect ofcertain types of decisions the possibilityof a concurrent common law dutyshould be absolutely barred, whatever the circumstances. An excluded zone isalso unnecessary, becauseno statutory power is inherently immune from judicialreview. This has not given rise to any insuperable difficulties in public law.Nor should it with claims in tort if, very exceptionally, a concurrent commonlaw duty were held to exist in an area of broad policy.Courts are well able torecognise that reasonable people can reach widely differing conclusions whenmaking decisions based on social,political or economic grounds: see, forinstance, Reg. v. Secretary of State for the Environment, Ex parteNottinghamshire County Council[1985] UKHL 8;[1986] A.C. 240. Similarly with competingdemands for money. Indeed, the courts have recognised that sometimes it may benecessary in private lawto look into competing demands for available money. Asalready noted, this is inherent in the very concept of a common law duty totake positive action. Thus this feature does not of itself exclude theexistence of a concurrent common law duty."

Perhaps inHeymanMason J (at 469) gave qualified support to acontrary view (referred to by McHugh J inPerre v Apand Pty Ltd[1999] HCA 36;(1999)164 ALR 606 at 631 and inCrimmins (at [84]), but when analysed theviews expressed by Mason J do not differ markedly from those stated by LordNicholls. InCrimmins(at [131]) McHugh J stated that considerations ofconvenience, discretion and budgetary allocation pertaining to the exercise ofpowersby a public authority are considered as part of the question whetherthere has been a breach of a duty of care not the question whethera duty ofcare exists.

16Crimmins v Stevedoring Industry Finance Committee[1987] HCA 46;(1999) 74 ALR 1declares the current state of the common law in respect of the liability of apublic authority in negligence. The relevant passagesin the respective reasonsof the members of the Court are as follows:

"[5] Acceptance that a statutory authority, in the discharge ofits functions, owed a duty of care to a person, or class of persons,is onlythe first step in an evaluation of the Authority's conduct for the purpose ofdetermining tortious liability. In some cases,the difficulty of formulatingthe practical content of a duty to take reasonable steps to avoid foreseeablerisks of harm, for thepurpose of measuring the performance of an authorityagainst such a duty, may be a reason for denying the duty. In other cases, ofwhich the present is an example, recognition of the existence of a duty isconsistent with the need, when dealing with the questionof breach, to takeaccount of complex considerations, perhaps including matters of policy,resources, and industrial relations."

(per Gleeson CJ)

"[25] It is not in issue that a statutory body, such as the Authority, maycome under a common law duty of care both in relation tothe exercise and thefailure to exercise its powers and functions. Liability will arise innegligence in relation to the failureto exercise a power or function only ifthere is, in the circumstances, a duty to act. What is in question is not astatutory dutyof the kind enforceable by public law remedy. Rather, it is aduty called into existence by the common law by reason that the relationshipbetween the statutory body and some member or members of the public is such asto give rise to a duty to take some positive stepor steps to avoid aforeseeable risk of harm to the person or persons concerned.

[26] In the case of discretionary powers vested in a statutory body, it isnot strictly accurate to speak, as is sometimes done, ofa common law dutysuperimposed upon statutory powers. Rather, the statute pursuant to which thebody is created and its powers conferredoperates `in the milieu of the commonlaw'. And the common law applies to that body unless excluded. Clearly, commonlaw duties areexcluded if the performance by the statutory body of itsfunctions would involve some breach of statutory duty or the exercise ofpowerswhich the statutory body does not possess.

[27] Legislation establishing a statutory body may exclude the operation ofthe common law in relation to that body's exercise orfailure to exercise someor all of its powers or functions. Even if the legislation does not do so interms, the nature or purposeof the powers and functions conferred, or of someof them, may be such as to give rise to an inference that it was intended thatthe common law should be excluded either in whole or part. That is whydistinctions are sometimes drawn between discretionary andnon-discretionarypowers, between policy and operational decisions and between powers andduties.Where it is contended that a statutory body is not subject to acommon law duty in relation to the exercise or non-exercise of a powerorfunction because of the nature or purpose of that power, what is being put isthat, as a matter of implication, the legislationreveals an intention toexclude the common law in relation to the exercise or non-exercise of thatpower.

...

[42] Various tests have been propounded as to the factors which will stamp arelationship as one which calls a duty of care into existence.In some cases,emphasis has been placed on the notion of `general reliance'...

...

[43] The notion of general reliance has been the subject of some criticismand more recent decisions of this Court have tended tofocus on thevulnerability of the person who suffers injury, on the one hand, and, on theother, the knowledge of risk and the powerof the party against whom a duty ofcare is asserted to control or minimise that risk. And those preciseconsiderations appear tounderpin the notion of general reliance as explainedby Mason J in[Heyman]."

(per Gaudron J)

"[62] There is one settled category which I would have thought covered thiscase: it is the well-known category `that when statutorypowers are conferredthey must be exercised with reasonable care, so that if those who exercise themcould by reasonable precautionhave prevented an injury which has beenoccasioned, and was likely to be occasioned, by their exercise, damages fornegligence maybe recovered'. Similarly, in[Heyman]at 458 Mason J,citingCaledonian Collieries Ltd v Speirs[1957] HCA 14; ,(1957) 97 CLR 202 at 219-220said that `[i]t is now well settled that a public authority may be subject to acommon law duty of care when it exercisesa statutory power or performs astatutory duty'.

...

[79] Common law courts have long been cautious in imposingaffirmativecommon law duties of care on statutory authorities. Public authorities areoften charged with responsibility for a number of statutoryobjects and givenan array of powers to accomplish them. Performing their functions with limitedbudgetary resources often requiresthe making of difficult policy choices anddiscretionary judgments. Negligence law is often an inapposite vehicle forexamining thosechoices and judgments. Situations which might call for theimposition of a duty of care where a private individual was concernedmay notcall for one where a statutory authority is involved. This does not mean thatstatutory authorities are above the law. Butit does mean that there may bespecial factors applicable to a statutory authority which negative a duty ofcare that a private individualwould owe in apparently similar circumstances.In many cases involving routine events, the statutory authority will be in nodifferentposition from ordinary citizens. But where the authority is allegedto have failed to exercise a power or function, more difficultquestionsarise.

...

[87]...It may be that functions and powers which can be described as part ofthe `core area' of policy-making, or which are quasi-legislativeor regulatoryin nature, are not subject to a common law duty of care. Outside this narrowlydefined policy exception, however, asProfessor Todd has argued, it seemspreferable to accommodate the distinction at the breach stage rather than theduty stage. Hehas argued:

`While the issue as to the ambit of a public body's discretion and whether ithas acted reasonably or rationally certainly needsto be addressed, it isbetter taken into account in determining whether the public body is in breachof a duty independently heldto exist...Indeed, it is significant that thedecisions purporting to use the exercise of policy or discretion as a dutyconceptsometimes themselves lapse into the language of breach.

The question whether a decision was made within the ambit of a statutorydiscretion seemingly has a direct analogy with the questionwhether aprofessional or skilled person took reasonable care in exercising his or herprofessional judgment. The professional personis not bound to ensure that heor she has made the right decision or to guarantee success in any particularventure. Rather, hisor her obligation is to speak or to act within theboundaries reasonably to be expected of a person claiming skill and competencein the particular area. Whether a public or a private defendant is involved,the same kind of question can be asked in relation toany acts or decisionsinvolving the exercise of judgment...'

[88] He went on to say:

`And the degree of care expected of a public body in meeting the standard ofreasonableness must be determined in the light ofits obligation to carry outvarious statutory functions and its inability simply to desist from anyexercise of its responsibilities...Sothe funding and other resources which areavailable to meet the demands which are made upon the public body are veryrelevant...'

[89] In Pyrenees, I said:

`[T]he fact that the authority owes a common law duty of care because it isinvested with a function of power does not mean thatthe total or partialfailure to exercise that function or power constitutes a breach of that duty.Whether it does will depend uponall the circumstances of the case includingthe terms of the function or power and the competing demands on the authority'sresources.'

[90] To highlight the different position of statutory authorities therefore, italso seems best to formulate an authority's dutyby reference to what a`reasonable authority' - rather than a `reasonable person' - would have done(or not done) in all the circumstancesof the case.

...

[93] In my opinion, therefore, in a novel case where a plaintiff alleges that astatutory authority owed him or her a common lawduty of care and breached thatduty by failing to exercise a statutory power, the issue of duty should bedetermined by the followingquestions:

1.Was it reasonably foreseeable that an act or omission of the defendant,including a failure to exercise its statutory powers,would result in injury tothe plaintiff or his or her interests? If no, then there is no duty.

2.By reason of the defendant's statutory or assumed obligations or control,did the defendant have the power to protect a specificclass including theplaintiff (rather than the public at large) from a risk of harm? If no, thenthere is no duty.

3.Was the plaintiff or were the plaintiff's interests vulnerable in the sensethat the plaintiff could not reasonably be expectedto adequately safeguardhimself or herself or those interests from harm? If no, then there is noduty.

4.Did the defendant know, or ought the defendant to have known, of the risk ofharm to the specific class including the plaintiffif it did not exercise itspowers? If no, then there is no duty.

5.Would such a duty impose liability with respect to the defendant's exerciseof `core policy-making' or `quasi-legislative' functions?If yes, then there isno duty.

6.Are there any other supervening reasons in policy to deny the existence of aduty of care (eg, the imposition of a duty is inconsistentwith the statutoryscheme, or the case is concerned with pure economic loss and the application ofprinciples in that field denythe existence of a duty)? If yes, then there isno duty.

...

[96] In Stovin v Wise Lord Nicholls of Birkenhead (dissenting, Lord Slynn ofHadley agreeing) said:

`Parliament confers powers on public authorities for a purpose. An authorityis entrusted and charged with responsibilities, forthe public good. The powersare intended to be exercised in a suitable case.'

[97] Similarly, in Pyrenees Kirby J said:

`The Council of the Shire had relevant powers to require the owners of theshop and residence containing the dangerous chimneyand fireplace to repair orremove the danger. The powers existed for the protection against fire ofpersons such as the claimants.'

[98] His Honour then went on to say:

`The statutory power in question is not simply another of the multitude ofpowers conferred upon local authorities such as theShire. It is a poweraddressed to the special risk of fire which, of its nature, can imperilidentifiable life and property.'

[99] These statements bring out the point that some powers are conferredbecause the legislature expects that they will be exercisedto protect theperson or property of vulnerable individuals or specific classes ofindividuals. Where powers are given for the removalof risks to person orproperty, it will usually be difficult to exclude a duty on the ground thatthere is no specific class. Thenature of the power will define the class - eg.an air traffic control authority is there to protect air travellers.Furthermore,a finding that the authority has powers of this type will oftenindicate that there is no supervening reason for refusing to imposea duty ofcare and that no core policy choice or truly quasi-legislative function isinvolved."

(per McHugh J)

"[165] Statute may establish a relationship between the parties which is saidto be so analogous to a relationship to which thecommon law attaches dutiesthat the common law should act in like manner with respect to the relationshipflowing from the statute.An example is the position of statutory bodies whichhave power to manage, and do manage, land which the public uses as of right;the position of the statutory authority is seen as analogous to that of anoccupier of private land and a duty of care may ariseas to members of thepublic who go to the areas managed by the authority.

[166] In other cases, the powers vested by statute in a public authority maygive to it such a significant and special measure ofcontrol over the safety ofthe person or property of the plaintiff as to oblige it to exercise its powersto avert danger or to bringthe danger to the knowledge of the plaintiff. Thepowers of the appellant with respect to fire prevention in [Pyrenees] were inthiscategory."

(per Gummow J)

"[221] In these circumstances, the proper approach for a court to take is thatexplained by Lord Browne-Wilkinson in X (Minors)v Bedfordshire County Council[1995] UKHL 9;[1995] 2 AC 633 at 739:

`If the plaintiff's complaint alleges carelessness, not in the taking of adiscretionary decision to do some act, but in the practicalmanner in whichthat act has been performed...the question whether or not there is a common lawduty of care falls to be decidedby applying the usual principles ie those laiddown in Caparo Industries Plc v Dickman. Was the damage to the plaintiffreasonablyforeseeable? Was the relationship between the plaintiff and thedefendant sufficiently proximate? Is it just and reasonable to imposea duty ofcare?'

...

[223] Reasonable foreseeability: The approach to foreseeability, as applied tothe ascertainment of the existence of a duty of care,is that stated by thisCourt in Wyong Shire Council v Shirt[1980] HCA 12;(1980) 146 CLR 40. Where what is inquestion is the existence of a duty of care, the decision maker is obliged toconduct a `generalised inquiry' toask whether a reasonable person in thedefendant's position would have foreseen that the conduct involved a risk ofinjury to theplaintiff, or to a class of persons including the plaintiff. Thetest is described as `undemanding'. This is because it is not necessarythatthe defendant should have foreseen the precise injury which has occurred, orthat such injury would have occurred to the plaintiffin particular or that itwas likely to eventuate. Lord Reid in C Czarnikow Ltd v Koufos [1969] 1 AC 350at 385 stated that liabilityextended to `any type of damage which isreasonably foreseeable as liable to happen even in the most unusual case'.Later in hisspeech the words `likely to happen' were clarified as meaning `notunlikely' to happen, so as to include even an event that couldbe described as`a very improbable result' of the acts or omissions in question. It is thisapproach that was adopted by this Courtin Wyong Shire Council v Shirt. Becausethe foreseeability test is so `undemanding', it cannot afford a universalcriterion of theexistence of a duty of care. The proper approach needs to besupplemented by the additional considerations of proximity and policy.

...

[226] Relationship of proximity or `neighbourhood': A number of `proximity'factors satisfy the second consideration. Many of thesefactors have beenmentioned already in the description of the statutory functions of theAuthority and the relationship between itand registered waterside workers suchas the deceased. The fact that such workers were not employed by the Authorityis by no meansdeterminative of the duty question or even of the question aboutthe `proximity' of the relationship in issue. If the deceased hadbeen employedby the Authority, there would have been no need to consider the three-stageapproach to ascertain whether a duty ofcare existed. It is indisputable thatsuch a duty exists as between an employer and its employees. That has longsince been decidedby the courts. What must be determined here is whether, inthe circumstances, that duty existed in the more limited relationshipcreatedby the 1956 Act between the Authority and registered waterside workers.

...

[230] Imposition of a duty: policy considerations: It is the thirdconsideration which is likely, in cases such as the present,to provide thegreatest obstacle to a claim by an individual plaintiff who seeks to establisha duty of care against a statutorybody for failure to exercise its statutorypowers..."

(per Kirby J)

"[270] The fact that the Authority is a statutory body given statutorydiscretions does not prevent the application of ordinaryprinciples of the lawof negligence. But the courts have often found the task of identifying the dutyof care that is owed by a statutorybody to be difficult. To whom is the dutyowed? What is the content of the duty?

[271] There are several reasons why the task is difficult. As Gummow Jpointed out in [Pyrenees] a person claiming against a publicbody withstatutory powers seeks `to translate the public law "may" into the common law"ought"'. Should the courts (and can thecourts) distinguish between policy andoperational decisions of statutory bodies? Is the distinction betweennon-feasance and misfeasancerelevant? Does it matter that the constitutingstatute gives a body some statutory duties and then, in different language,givesit some statutory powers? Is the body to be liable in negligence when itdoes not use the powers it was given but was under no statutoryduty to usethem (or perhaps even to consider their use)? All these, and more, arequestions that may arise.

[272] None of these questions is answered by the adoption of the three-stagetest said to have been expressed by Lord Bridge ofHarwich in Caparo IndustriesPlc v Dickman and requiring reference to (a) foreseeability, (b) proximity orneighbourhood and (c)whether it is `fair, just and reasonable that the lawshould impose a duty of a given scope upon the one party for the benefit oftheother'...

...

[299] [The] arguments of the appellant are all founded in allegations that theAuthority failed to exercise its powers, not thatit exercised them carelessly.I do not, however, consider that the classification of the alleged breaches asnon-feasances ratherthan misfeasances concludes whether the Authority owed thedeceased worker a duty of care to exercise the powers in question. Thedistinction between non-feasance and misfeasance is often elusive and even ifthat were not so, adopting that distinction as an exclusivetest for decidingwhether a duty was owed may well be inconsistent with Pyrenees. The majority ofthe Court held in that case thatthe Council owed a duty to exercise itsstatutory powers and was liable for failing to do so."

(per Hayne J)

"[359] It is necessary now to consider the nature and extent of the duty ofcare owed by the respondent to Mr Crimmins in lightof the statutory roleconferred on it. It is important to remember that s 17(1)(o) speaks interms of the encouragement of `safeworking in stevedoring operations' and thats 18 recognises that a relationship of master and servant exists betweenthe workersand the stevedoring companies. The duty owed by the respondent musttake account of and yield to these matters and other contextualindicationsthat the Authority cannot be precisely equated with an employer.

[360] That duty I would define as a duty to take such reasonable care for thesafety of Mr Crimmins in the workplace as the respondentwas reasonably capableof taking as a matter of practicality in the performance of its functions, andwhich the actual employercould not be expected to, or did not itself have thecapacity to take, or was flagrantly failing to take, in circumstances in whichmeasures available to the respondent, if taken, would have been likely to beeffective in preventing or alleviating the harm doneto Mr Crimmins."

(per Callinan J)

17The following principles may be extracted from the foregoing. The Crown,or a public authority, will owe a duty of care in theexercise or non-exerciseof its powers or functions to take reasonable steps to avoid the foreseeablerisk of harm to a person, orclass of persons, that may arise from the exerciseor non-exercise of those functions, the existence and scope of that duty beingdependent upon the nature of the powers and functions able to be exercised andthe relationship between the authority and the person,or class of persons, inrespect of whom such a risk of harm is foreseeable. Determination of whethersuch a duty of care has beenbreached may involve consideration of matters ofpolicy and competing demands on the resources of the authority.

18The powers delegated by the legislature to the Council, and to Statedepartments, were directed to protection of public healthwith the expectationthat the powers would be exercised whenever circumstances demonstrated a needfor that to be done. It was inherentin the nature of the powers that theirexercise be given priority if a public authority was balancing the exercise ofsuch powersagainst the performance of other obligations. In providingappropriate powers for local authorities and Crown officers to maintainandprotect public health, the legislature did not intend that the prospect ofcosts being incurred would make the exercise of thepowers whollydiscretionary. The risk to health represented by the introduction of humanfaecal pollution in waters used for theproduction of oysters was exposure of asection of the public, namely, the consumers of those oysters, to the risk ofcontractionof disease, and in the case of HAV an extremely debilitatingdisease. If such a risk materialised in the outbreak of a disease, substantialcost would be incurred by the community in providing medical treatment topersons who contracted the disease and in rectifying thecause of the outbreak.Declining to exercise the relevant powers was not a choice to be made toprovide a cost-saving option.

19In providing such powers the legislature recognised that the oyster industrywas not conducted on the basis that all risks beeliminated and that thecommunity would require and expect pollution controls to be implemented tominimise the risk of harm arisingfrom the sale to the public of oysters grownin waters known to be contaminated from time to time by human faecal material.The legislaturewas aware that any aggravation of circumstances that borehazards for the oyster industry was likely to have significant impact onthelevel of risk that harm may result from the harvesting and sale of oysters.

20The statutory powers provided by the legislature reflected the public willthat they be exercised. If a member of the publicsuffered harm by reason of afailure to carry out those powers, it would not be contrary to communityexpectation that such a personbe compensated by a public authority in defaultand that the person not be required to bear the consequences of the harminflicted,notwithstanding that such an entitlement would occasion publicexpense.

21The imposition of a duty of care on a relevant public authority would beunlikely to inhibit the authority carrying out otherduties and would do nomore than reflect the intent of the legislature that steps necessary for theprotection of public health beundertaken by authorities empowered to act forthat purpose.

The position of the Council

22TheLocal Government Act 1993(NSW)(s 7) provided that it was thepurpose of the legislation to give the Council the ability,inter alia,to carry out activities appropriate to the current and future needs of localcommunities and the wider public, and a role in managementof the resources ofthe area of the municipality. In particular,(ss 56-66) the Council had thecare and management of water supply and sewerage.Section 124 of theLocalGovernment Act provided that the Council may give orders to bring seweragesystems into compliance with relevant standards and to order that premisesbeconnected to a sewer of the Council. Furthermore, under theClean Waters Act1970 (NSW)(s 27) the Council was empowered to take action to remove,disperse, destroy or mitigate pollution in polluted waters and may recover theexpense of such action.

23"Pollute", in relation to waters, was defined in theClean Waters Act(s 5) as,inter alia:

"to place in or on, or otherwise introduce into or on to, thewaters (whether through an act or omission) any refuse, litter, debrisor othermatter, whether solid or liquid or gaseous, so that the change in the conditionof the waters or the refuse, litter, debrisor other matter, either alone ortogether with any other refuse, litter, debris or matter present in the watersmakes, or is likelyto make, the waters unclean, noxious, poisonous or impure,detrimental to the health, safety, welfare or property of persons, undrinkablefor farm animals, poisonous or harmful to aquatic life, animals, birds or fishin or around the waters or unsuitable for use in irrigation,or obstructs orinterferes with, or is likely to obstruct or interfere with persons in theexercise or enjoyment of any right inrelation to thewaters..."

Section 16 of theClean Waters Act provided"inter alia"thata person shall be deemed to pollute waters if:

"the person places any matter (whether solid, liquid or gaseous) in aposition where:

(i)it falls, descends, is washed, is blown or percolates, or

(ii)it is likely to fall, descend, be washed, be blown or percolate,

into any waters, on to the dry bed of any waters, or into any drain, channelor gutter used or designed to receive or pass rainwater,floodwater or anywater that is not polluted, or causes or permits any such matter to be placedin such a position,...

...

and the matter would, had it been placed in any waters have polluted or havebeen likely to pollute those waters.

..."

Contravention ofs 16 of theClean Waters Actby any person wasan offence against theEnvironmental Offences and Penalties Act 1989(NSW).

24Before determining whether the scope of these powers permitted a duty ofcare to arise at common law, it is necessary to considerthe findings of factmade by his Honour in respect of matters known to the Council or of which itought to have been aware.

25The oyster-growing industry was a substantial resource within the Councilarea and the Council knew that the consumption of disease-freeoysters producedfrom the waters of Wallis Lake ("the Lake") depended upon the maintenance ofpollution-free waters in the Lake.His Honour found that the Council knew thatnumerous sites within the catchment area of the Lake represented potentialsources ofhuman faecal contamination of the waters of the Lake. The Councilwas aware of numerous failures of septic tank systems within thecatchment areaand of the risk those circumstances presented of polluting substances enteringthe waters of the Lake. The Councilwas also aware that human waste may bedeposited directly into the Lake from vessels such as houseboats using thewaters of the Lakefor recreation purposes. The Council knew from the resultsof tests it had carried out that the faecal coliforms could be found inthewaters of the Lake from time to time and in watercourses leading into the Lake.In August 1994 the Council had been informedby the report prepared byProfessor Brown that pollution of the Lake was occurring by sewage effluentbeing washed into the watersof the Lake by stormwater drains and by rain, andby raw sewage being deposited directly into the Lake from pleasure craft.

26By May 1996 that position had not changed and evidence continued to be putbefore Council officers of numerous septic systemsnot operating according to"environmental public health" requirements from which they could conclude thatsuch circumstances hadto be corrected "[i]f we are to protect the quality ofwater in our catchments". For example, it was known by Council that sewageeffluent produced at Nabiac would be carried by stormwater run-off to theWallamba River which emptied into the Lake. The situationat Nabiac withrespect to appropriate disposal of human waste seems to have been deplorablydeficient for a number of years before1996. In June 1995 a Council officerreported that the level of sewage pollution revealed in water samples takenfrom a creek atNabiac was caused by "the failure of effluent disposal systemsthroughout Nabiac". In January 1990 the Council had resolved to investigatethepossibility of providing a reticulated sewerage system for Nabiac but byNovember 1996 no work had commenced. The number of residences,and the type ofsoil in which septic tank systems were situated, resulted in unsatisfactoryoperation of the septic systems. Councilofficers stated that it was "verydifficult to retain the liquid on the site that you're disposing it onto".After heavy rain a largeflow of effluent would be carried in the stormwaterdrainage system at Nabiac and lids of septic systems "popped" dispersing rawsewage over surrounding ground. The primary school at Nabiac had to have adaily "collection" from its septic tank because of theinadequacy of the systeminstalled.

27The Council was aware that two caravan parks on the Wallamba River, midwaybetween Nabiac and the Lake waters, irrigated or dischargedeffluent fromseptic systems conveyed by rainfall run-off or seepage to a creek leading tothe Wallamba River. In 1990 samples takenby the Council from the WallambaRiver near one of the caravan parks had "revealed high readings in both faecaland total coliformbacteria".

28In addition to the foregoing the Council was aware of the failure from timeto time of the pumping system on a holding tank servingpublic toilets on theforeshore of the Lake. Waste matter was pumped from the tank to the reticulatedsewerage system serving thetown of Forster. From time to time the pump did notoperate; on such occasions sewerage may overflow from the holding tank onto theforeshore land and make its way into the Lake.

29The Council was also aware that people camped on, or visited, islands in theLake where no toilet facilities were provided. Withrespect to most of theoyster sheds and depuration plants situated on those islands no toiletfacilities had been constructed. Basicirregular facilities such as drums andpits were used to collect human waste close to the shoreline of the islands.

30In August 1996 five of ten samples taken from street gutters in unseweredareas showed faecal coliforms exceeding 10,000 cfu/100mlwhich, although mostof the sample locations were outside the Lake catchment area, confirmed theinability of septic tank systemsto provide acceptable disposal and treatmentof human waste. Indeed, one sample taken within the catchment area atCooloongoolookshowed a faecal coliform reading of 3,780,000 cfu/100ml, thesample site being described by the relevant council officer as "grosslypolluted with septic tank effluent".

31The Council was aware that pollution of waters of the Lake by introductionof human waste presented the risk of a viral-bornedisease being contracted bypersons using the waters for recreation or consuming oysters grown in suchwaters. The material beforehis Honour also suggested that being charged withresponsibility for management of the Lake for the protection of public healththeCouncil should have been aware that the HAV virus in human faecal wastecould exist for significant periods of time: in excess ofthree months inseptic tank systems and sediments of lakes and watercourses.

32The Council was aware that oysters accumulate deleterious organisms presentin polluted water and that depuration methods usedby oyster producers wouldnot protect consumers of polluted oysters from the risk of contracting aviral-borne disease.

33It is obvious that it was reasonably foreseeable that if the Council did notexercise relevant powers available to it appropriatefor the management of thewaters of the Lake for protection of public health it would not control therisk to which a person consumingoysters produced from waters of the Lake wouldbe exposed, of suffering harm by contraction of disease. The magnitude of thatriskwas known to the Council in that the Council was aware that faecal matterwas entering the Lake and was aware of a number of sitesthat could be thesource of such pollution of the waters of the Lake.

34The powers available to the Council under theLocal Government Act(s 124) and theClean Waters Act(s 27) were directed toprotecting persons who consumed oysters produced from the Lake and if properlyexercised those powers were sufficientto reduce the risk of harm arising fromthe consumption of oysters to a level regarded as reasonable or acceptable,although noteliminating the risk entirely. Such a consumer was not in aposition to take any step to safeguard himself or herself from harm andwouldrely upon the fact that oysters from the Lake were being offered for sale asconfirmation that such steps as were necessaryto keep the risk of harmresulting from the consumption of oysters to a minimum had been taken by thoseresponsible for the managementof the waters of the Lake.

35It cannot be said that exercise of the powers already invested in theCouncil for the purpose of reducing the risk of harm toconsumers of oystersinvolved the exercise of a "core policy-making" or "quasi-legislative" functionout of which no breach of theduty of care could arise. Neither the use of, northe omission to use, the statutory powers provided, involved considerationsbeyondthe reach of the law. In so far as the administration of the finance ofthe Council was relevant, his Honour found that no unduefinancial burden wouldhave been imposed on the Council if it had acted to exercise the powersprovided to it for reducing the riskof harm arising from the consumption ofoysters. The law does not support the proposition that before a breach of aduty of caremay be demonstrated, the financial impact on a public authority ofthe performance of all of its duties must be examined and theability of thepublic authority to meet the cost thereof duly assessed. It may be assumed thata public authority empowered to financeits obligations, at least in part, bythe collection of rates, will be able to make appropriate provision from yearto year in respectof the reasonable steps it may be required to take to meetthe duties of care under which it operates.

36The circumstances of this case meet the requirements of the test or testsset out inCrimminsfor determining whether a duty of care is imposed ona public authority.

37In my opinion, his Honour did not err in determining that the Council had aduty of care to Mr Ryan to exercise the statutorypowers vested in it soas to reduce or minimise to the acceptable level the risk of harm being causedto Mr Ryan by the consumptionof oysters from the Lake.

38The remaining questions, therefore, are what steps were reasonably requiredof the Council to discharge that duty of care anddid the Council meet thoserequirements.

39His Honour found that well before the occurrence of the events in whichMr Ryan contracted the HAV disease, the Council shouldhave conducted asanitary survey to identify all potential, and actual, point-pollution sources.Implicitly, his Honour found thatthe Council was obliged to take whateversteps were necessary to fix the pollution problems of which it was aware orwere revealedby the survey. That is, the Council had to act to remove the riskof human faecal material entering the Lake from the dispersal ofsewerageeffluent at Nabiac, Cooloongoolook, Wallamba River caravan parks, the publictoilet on the Lake foreshore and from pleasurecraft using the Lake. As hisHonour noted, no material was put before him to suggest that the steps ofsanitary survey and rectificationof human faecal pollution sources, in respectof water in, or leading to, the Lake, were beyond the resources of the Council.Indeedhis Honour could have concluded that such a circumstance was mostunlikely given that evidence before him showed that the ShoalhavenCouncil hadtaken such steps under its Environmental Monitoring Plan in 1991 for themanagement and control of the development ofland for residential purposes inthe catchment areas of waters in which oysters were grown on a significantscale and for the preventionof pollution of those waters.

40It seems that the steps to be taken by the Council would have entailed theissue of compliance orders, and in default, work bythe Council to rectifynon-conforming septic and effluent disposal systems and to recover the coststhereof from persons on whomsuch notices had been served. If the long-termsolution to the problems at Nabiac was the installation of a sewerage system,thenthe Council should have commenced that work in addition to carrying outremedial work to prevent effluent reaching watercourses.

41It is clear that his Honour recognised that the HAV outbreak that resultedfrom the consumption of polluted oysters from theLake in late 1996, early1997, was an event that in the circumstances may have been anticipated to occurearlier than it did. Giventhe numerous sources of pollution from sewerageeffluent and the extent to which the introduction of such pollution to thewatersof the Lake was accepted without action being taken to identify andremove any source of that pollution, the eventual occurrenceof thetransmission of HAV from oysters taken from the Lake was inevitable. As theevidence before his Honour showed, the numberof persons who contracted thedisease and the spread of oysters that were affected throughout the Lake showthat the amount of humanfaecal material polluting the Lake must have beensubstantial and must have involved various sources.

42In my opinion, on the facts found by his Honour it could be concluded, asdetermined by his Honour, that the Council had breachedthe duty of care itowed to the class of persons that included Mr Ryan. It was not submitted thatany overwhelming "policy" considerationexisted in this matter to prevent theconclusion being formed that the duty of care had been breached.

43If it were necessary to distinguish between "misfeasance" or "non-feasance"in determining the liability of a public authority,it may be said that theconduct of the Council was a combination of inadequate performance of itspowers as well as non-performancethereof, but such a distinction no longerdetermines the liability of a public authority in negligence. Concepts ofmisfeasance andnon-feasance have been overtaken by regard being given toquestions such as the state of knowledge of the authority, the vulnerabilityofthe person harmed and the purpose of the powers vested in the authority. Apublic authority cannot assert that no duty of carecan arise where theauthority has neglected to exercise powers vested in it, particularly where thepowers delegated are for thepurpose of furtherance or protection of publichealth or safety. (See:Crimmins per McHugh J at [99].) If non-feasancehas any remaining role in determining whether a public authority owes a duty ofcare, it couldonly apply to a "highway authority", (see:Buckle v BayswaterRoad Board[1936] HCA 65;(1936) 57 CLR 259 per Latham CJ at 271) and having regard to thegeneral principles set out inCrimminsfor determining the liability innegligence of public authorities, it should be assumed that that distinction isno longer recognised.The questions now relevant to establishing whether a"highway authority" owes or has breached a duty of care are the extent to whichthe state of a highway makes risk of injury foreseeable; the knowledge of theauthority, actual or constructive, of the conditionof the highway; and whetherthe authority has had reasonable opportunity and the resources to take actionto mitigate or remove thatrisk.

44I would dismiss the appeal by the Council in respect of the finding ofliability.

The position of the State

45The relevant statutory provisions setting out the powers exercisable by theState are numerous.

46Section 5(1) of theHealth Administration Act 1982 (NSW) empoweredthe Minister to formulate general policies in accordance with which thefunctions of the Minister, the Departmentand relevant officers are to beexercised. The subsection stated that the purpose of the exercise of suchpolicies was for,inter alia, "...protecting...the health and well-beingof the people of New South Wales to the maximum extent possible having regardto theneeds of and financial and other resources available to the State."

47Section 7 of thePublic Health Act 1991 (NSW) expressly empowered theMinister to take such action and give such directions as the Minister considersto be necessary torestrict or prevent the use of water in, or flowing from,any source if the Minister suspects on reasonable grounds that a risk topublichealth is likely to arise because of that water. Such orders and directions ofthe Minister also had to bring the water, asnearly as practicable, to acondition under which the circumstance that caused the water to be water towhich the section appliedno longer exists. Furthermore, the State, through theEnvironmental Protection Authority, may exercise the same powers as a localauthority underss 27,27A and29 of theClean Waters Act.

48In addition to the responsibility imposed on a Minister to act if theMinister suspects that a risk to public health exists inwater, the provisionsof theFisheries Management Act 1994 (NSW) provide express powers in therelevant Minister(s 189) to impose a "fishing closure" to prohibit thetaking of oysters cultivated in the area of an "aquaculture permit" during aspecifiedperiod where the Minister is satisfied that the area is in such acondition that the taking of oysters therefrom ought to be suspendedor thatthe oysters are likely to be unfit for human consumption.

49Under theFisheries Management Act the State managed the oysterindustry by requiring the farming of oysters to be authorised by the grant ofan aquaculture permitand by providing for "operational controls" on oysterproducers to be endorsed as conditions of the permit.

50Under the Fisheries Management (Aquaculture) Regulations 1995 ("theAquaculture Regulations") Regulations were introduced whichhad the object ofensuring that shellfish taken for sale for human consumption from estuarinewaters in New South Wales were of thehighest quality and free from disease andpollutants. The Aquaculture Regulations required the Minister to determine theNew SouthWales Shellfish Quality Assurance Program ("the Program") as acommercial aquaculture industry development plan to assure the qualityof suchshellfish, compliance with such a plan to be a condition endorsed onaquaculture permits. An object of the Program was toensure that shellfishtaken from estuarine waters (such as the Lake) met quality standards specifiedin the Program and the watersmet specified environmental standards.

51Although his Honour was not persuaded that the failure of the State toprepare and implement by November 1996 the Program theMinister had beeninstructed to establish, his Honour was satisfied that the nature of therelevant powers exercisable by the Statebrought with it correlativeresponsibilities, a conclusion confirmed by the content of the AquacultureRegulations.

52The waters of the Lake were vested in the State and the State could controlthe use thereof. It permitted an oyster industryto be established in the Lakeand managed and controlled the industry by endorsement of conditions on,firstly, oyster leases andlater, aquaculture permits. The State was aware thatthe depuration process it had implemented and supervised did not make oysterssafe to eat if the oysters had been taken from waters affected by viralorganisms introduced by human faecal material. A corollaryto the powers theState had promulgated to be exercised for the protection of the health andwell-being of,inter alia, the consumers of oysters taken from watersunder State control, was the exercise of sufficient vigilance to determine ifthe powershad to be exercised to meet the objects of the legislation underwhich the powers had been provided.

53His Honour, correctly in my opinion, rejected the submission that the mannerin which the State approached the foregoing responsibilitieswas theimplementation of a "policy" to stand back from involvement in day-to-daycontrol of the condition of waters in which oysterfarms operated, suchexpression of "policy" being the outcome of a determination of how theresources of the State were to be applied,not being a matter subject toexamination at law or out of which a duty of care could arise.

54On the facts found by his Honour no question arose of restriction of theState's activity according to a "policy" determination.The relevant fact wasthat the decision whether the appropriate powers would be exercised was left tothe judgment of departmentalofficers. Failure to implement steps that,reasonably, the State should have taken was a matter of misjudgment not theapplicationof a "policy" in respect of the use of the financial resources ofthe State.

55Mr Bird, on behalf of the Department of Health, held the opinion thatit was unnecessary to incur the obligation to take stepsto reduce the risk ofharm to consumers of oysters produced from estuarine waters of the State.

56In 1987 the National Health and Research Medical Council had produced a"Code of Hygienic Practice for Oysters and Mussels forSale for HumanConsumption", a document that may be taken to have reflected an informed viewon appropriate standards to be appliedto the management of oyster productionin estuarine waters. The standards recommended were similar to those appliedinternationally,that is to say, in the United States of America and in theEuropean Union. The evidence before his Honour was to the effect thattheStates of Australia involved in the production of oysters, other than New SouthWales, had moved to control the industry by applyingsuch standards.

57The basic requirements for management of oyster-growing areas by responsibleauthorities involved regular sanitary surveys toidentify sources, or potentialsources, of pollution; action to eliminate those sources; regular monitoring ofwater quality; andclassification of oyster-growing areas according to theassessment of the level of risk.

58In 1991 Mr Bird took the position that the classification of estuariesby application of the foregoing steps would be "extremelyexpensive and takeseveral years". The following extract from a paper published by Mr Bird inthat year encapsulated his positionon the level of risk the State shouldregard as being acceptable:

"The majority of estuaries would probably not be classified as`approved areas' in which oysters could be harvested all year roundwith nocontrols irrespective of weather patterns.

Many would be classified as `Conditionally Approved' which requires certainrestrictions and controls when conditions are adversesuch as heavy rainfall.Some areas would be `Restricted' which means that oysters must be treated priorto sale.

And others may be classified as `Prohibited' which means no oysters can beharvested at all!

Once such a `Classification' system is established, the cost in monitoringthe areas within the 34 different estuaries for changesin classification andenforcing compliance with the classification requirements in terms ofadministration and laboratory supportwould be prohibitive."

The comments, particularly those emphasised by use of an exclamation mark,displayed failure by the State to recognise and addressthe nature of the riskposed to consumers of oysters produced in estuaries of New South Wales.Mr Bird was not called to give evidencebefore his Honour and his Honournoted that in so far as it was suggested by Mr Bird that the cost ofmanaging a classification systemwould be "prohibitive", no reasons had beenoffered to support that assertion, such costs being borne by other AustralianStatesand many overseas countries.

59His Honour recorded that there was no evidence capable of supporting aconclusion that it was reasonable for the State to adopta lesser standard forthe protection of consumers of oysters than was required in comparablecountries in which the production ofoysters was carried on.

60The State was aware that oyster growers may harvest oysters during or afterheavy rain and that no controls had been implementedby the State to preventsuch action. In 1981 the State had imposed the depuration system on growersafter oysters contaminated bythe Norwalk virus had harmed the health ofapproximately 2,000 people in 1978. The State was aware that depuration alonewas nota sufficient safeguard against harm resulting from oysters taken frompolluted waters. In 1989/1990 1,200 people suffered harm tohealth afterconsuming oysters contaminated by Norwalk or Parvo viruses taken from thewaters of the Tweed River. The State understoodthat pollution of the waters ofthe Tweed River from which the oysters were taken was caused by human sewageoriginating either fromsewerage systems and septic tanks adjacent to thewaters or from vessels navigating the waters. The State closed the Tweed Riverfor a period of not less than two months after the outbreak.

61The foregoing amply supports conclusions that the risk of harm being causedto consumers of oysters taken from the Lake was foreseeable;that the State hadknowledge of or ought to have known facts that defined the magnitude of thatrisk; and that in the absence ofaction by the State to reduce that risk ofharm by steps available to it and reasonable in the circumstances, consumerswould beexposed to a greater risk of harm than they would either expect or beable to ascertain. No question of "core policy" was involvedin the foregoingnor any decision by the State not to legislate in respect of the matter.

62Accordingly, it was open to his Honour to conclude, as he did, that theState was under a duty of care to ensure that powersit had created wereexercised to reduce the risk of harm being caused to consumers of oysters andfurther, to find that the Statehad breached that duty of care by reason of itsfailure to manage the waters of the Lake by taking steps to have sanitarysurveysof oyster-growing waters undertaken and sources of pollution, orpotential pollution, identified and rectified and to implement controlson theharvesting of oysters in conditions known to increase the risk of oystercontamination and, in particular, in failing to closethe Lake fishery whenthose conditions occurred in 1996 and keep the fishery closed untilcircumstances existed that made it safefor the harvesting of oysters for saleto the public to resume.

63Further, it was open to his Honour to conclude that on the balance ofprobabilities it was the failure of the State to act asdescribed and meet theduty of care imposed upon it, that caused Mr Ryan to suffer injury.

64In determining whether a duty of care exists in the circumstances described,it is not appropriate to speculate whether a dutyof care may exist in othercircumstances for which the State has responsibility in the management ofpublic health and safety, and,if so, whether resources of the State will beadequate for the State to meet the various duties imposed upon it. In each caseinwhich it is claimed that a duty of care is owed to a claimant by a publicauthority and that the duty has been breached, dispositionof that claim at lawwill require consideration of the particular facts of that case and applicationto those facts of the principlesof law relevant to a finding of negligence.

65In the instant case the attitude of the State to the management of a knownrisk to public health, being the attitude adoptedby Mr Bird, was that alevel of risk higher than that mandated elsewhere would be acceptable to theState. That was a position notcountenanced by the objects and powersexercisable under the relevant statutes the State had enacted. That approachinvolved inadequateperformance of statutory duties the State had created not a"policy" choice not to legislate to create appropriate powers. The Statecouldnot stand back and ignore, or inadequately perform, powers provided by statutefor the purpose of reducing, as far as possible,known risks to public health.Furthermore, when the State decided in 1994/95 that a system of industry-basedcontrol was to be implementedto meet the obligations of the State to safeguardpublic health that was not a "policy" decision based on limitations of theresourcesof the State. It was a course undertaken as a consequence of afailure to appreciate the nature of the risk to public health representedbycontinuing the production of oysters from the waters of the Lake without theimposition of further controls. As stated earlier,when considering theliability of the Council in negligence, on the facts found by his Honour, theevents that occurred were notmerely foreseeable, they were inevitable.

66The steps to be taken by the State were obvious and reasonable, andnecessary to meet the obligations of the State reflectedin the purpose andcontent of the statutory powers created to safeguard consumers of oysters fromharm. The State cannot submit thatsuch obligations were either met or negatedby a "policy" that management of the oyster industry be "industry-based" andthat theState could decline to take further steps pending the formation ofsuch a management system over a number of years.

67I would dismiss the appeal by the State in respect of the finding ofliability.

The position of the Barclay companies

68I agree with Kiefel J, that the appeal by the Barclay companies against hisHonour's finding that those companies were liablein negligence to Mr Ryanshould be dismissed. The substance of his Honour's finding (at [351]) was thatthe duty of care owed bythe Barclay companies was to be exercised byrefraining from harvesting and selling oysters from the Lake when conditionshad arisenthat to the knowledge of the Barclay companies increased the risk ofthe oysters being contaminated. Implicitly, his Honour foundthat until theBarclay companies had taken the steps that were necessary to show it was safeto resume the harvesting and sale ofoysters, no sales of oysters to the publicshould have been made. If, however, his Honour intended to limit the scope andperformanceof the duty of care to the Barclay companies providing notice toconsumers of the nature of the risk at the time of sale of the oysters,I wouldagree with Kiefel J that that was an inadequate finding and the proper natureof the duty of care and the breach of it isas set out above. In effect, thatis the substance of the notice of contention relied upon by Mr Ryan.

69With regard to liability under theTrade Practices Act 1974 (Cth), Iagree, for the reasons expressed by Lindgren J, that his Honour did not err infinding that Barclay Oysters was liable underss 74B and 74D of theTrade Practices Act.

70In respect of the cross-appeal by Mr Ryan, I also agree with Lindgren J, forthe reasons he has stated, that his Honour did noterr in finding the defenceprovided in s 75AK of theTrade Practices Act, to have beenestablished by Barclay Oysters thereby preventing liability arising unders 75AD of theTrade Practices Act. I would add that if a sampletest had been available in this case, destruction of the sample in that testwould not make discoveryof the defect by destruction of the sample mutuallyexclusive with the supply of defective goods under s 75AD.

71Mr Ryan's cross-appeal against the Barclay companies, therefore, must bedismissed.

Damages

72I agree, for the reasons expressed by Lindgren J, that the quantum ofdamages was assessed correctly apart from inclusion ofa sum which, as theparties agree, represents an excessive calculation of the amount of interest tobe awarded. Apart from the interestcomponent, the sum assessed by his Honourwas appropriate in all the circumstances. The several appeals, therefore,should succeedonly to the extent necessary to correct the error in respect ofinterest, namely by reducing the judgment sum by $3,000.

Cross-Claims

73If orders were made which reflected my reasons, the single judgment enteredagainst the appellants to pay the sum to which MrRyan has been found tobe entitled would stand. Notwithstanding that the liability of each appellantwas distinct, and severallydetermined, the separate sources of liabilitybecame merged in the judgment and, in equity, as judgment debtors, each wouldbe boundto discharge the whole of the judgment and to share the burden ofdischarging the judgment equally. (See:Trade Practices Commission v ManfalPty Ltd (No 3)[1991] FCA 650;(1991) 33 FCR 382 at 386.)

74That would mean that unless an order based on rights at law, or understatute, were made on a cross-claim providing for an indemnityor variation ofobligation to contribute, each of the Barclay companies severally would havethe same liability as other judgmentdebtors to make equal contribution to thejudgment debt.

75On his Honour's findings, it was not necessary to determine the variouscross-claims in that regard. Now that his Honour's judgmentis to be set asidein respect of the finding of liability of the Council and the obligation of theCouncil to contribute to the dischargeof the judgment in respect ofMr Ryan's personal claim, it will be necessary to determine whether thereis to be an apportionmentbetween tortfeasors unders 5 of theLawReform (Miscellaneous Provisions) Act 1946(NSW) involving orders forcontribution that would alter the liability for equal contribution that wouldflow from the entry of judgmentagainst the State, Barclay Oysters and BarclayDistributors. Furthermore, it will be necessary to determine whether theCouncil isliable to indemnify, or to make contribution, under the cross-claimsof the State and the Barclay companies and whether, under theCouncil'scross-claim against the State, the State is liable to indemnify the Council inrespect of any liability the Council mayhave under the Barclay companies'cross-claim against it.

76Of course, in respect of Mr Ryan's representative claims, thecross-claims will not be determined until each representative claimis decided.By reason of the foregoing, and also for the reasons stated by Lindgren J, allcross-claims seeking an order for indemnityor contribution in respect of anyliability to Mr Ryan personally, or in his representative capacity, shouldstand over for hearingand determination by his Honour.

Costs

Council Appeal

77His Honour's order that Mr Ryan recover the costs of his applicationfrom the Council is to be set aside and instead Mr Ryanis to be orderedto pay the costs of the Council. Mr Ryan should be indemnified by theState in respect of his liability to pay thecosts of the Council. It wasreasonable for Mr Ryan to take the precaution of joining both publicauthorities where each would, anddid, claim the other was responsible forMr Ryan's injury and loss.

78With regard to the Council's appeal, all respondents to that appeal shouldbear the costs of that appeal. All argued that thefinding of liability againstthe Council should stand. In exercise of a general discretion in relation tocosts - and not relyingon theLaw Reform (Miscellaneous Provisions) Act- the liability to contribute to those costs should be apportioned other thanequally to reflect the fact that on the appeal theBarclay companies spoke asone.

State Appeal

79The State joined fourteen respondents to its appeal of whom Mr Ryan,the Council, the Barclay companies, Sciacca Pty Ltd, TadevenPty Ltd andGeorges Oysters Pty Ltd appeared. They all opposed the thrust of the State'sappeal, namely that it be excluded fromliability, and they should have theircosts of the appeal. There will be no order for costs on Mr Ryan's noticeof contention.

Barclay Companies' Appeal

80Although the Barclay companies also joined the Council and the State asrespondents to the appeal, it is appropriate that theonly order for costs inrespect of the dismissal of the appeal be that the Barclay companies pay thecosts of Mr Ryan. The purposeof the joinder of the Council and the Statewas to preserve its position in respect of cross-claims for indemnity orcontributionagainst the Council and the State and as those cross-claims remainon foot those respondents should bear their own costs of the Barclaycompanies'appeal.

Orders

81The orders of the Court should be as set out in the minute of ordersattached to the reasons of the Court unless submissionsseeking variation ofthe proposed orders for costs are filed within fourteen days.

Associate:

Dated:9 August 2000

INTRODUCTION3

BACKGROUND FACTS7

Part 1 - Background7

The hepatitis A virus7

HAV and oysters9

Depuration10

Water testing12

Oyster flesh testing13

Part 2 - Growing Area Management14

Sanitary surveys - introduction14

The expert testimony of Mr Alton - USA14

The expert testimony of Dr Rodgers - Europe19

The expert testimony of Mr Brown - Tasmania21

National Health and Medical Research Council recommendation of 198722

The expert testimony of Mr Papworth of Shoalhaven City Council24

Mr Bird of NSW Department of Health24

Primary Judge's findings ´26

Part 3 - The New South Wales Regulatory System27

Part 4 - Management of Wallis Lake32

Monitoring of water quality by Council down to mid-199332

A non-statutory committee of local growers34

Professor Brown's two reports of August 199436

The Wallis Lake Estuary Management Committee40

Part 5 - Contamination of the Lake41

Part 6 - Council's position42

Council's statutory powers42

Mr Brooker's recommendations to Mr Braybrooke dated 9 May199645

Mr Tuxworth's report of 21 May 199646

Mr Brooker's report of 8 October 199647

Part 7 - The 1996-1997 oyster season48

REVIEW OF AUTHORITIES RELEVANT TO THE LIABILITY OF THE

COUNCIL AND THE STATE IN NEGLIGENCE54

Major Australian authorities54

Uncertainty remaining in the Australian case law relating to the

duty of care issue - an "incremental" approach79

United Kingdom, New Zealand and Canadian cases relating to

liability of public authorities for the non-exercise of

their statutory powers82

THE COUNCIL'S APPEAL ON LIABILITY (N 234 of 1999)86

Conclusions of primary Judge on Mr Ryan's personal and

representative claims against the Council86

Outline of Council's submissions on its appeal90

Outline of Mr Ryan's submissions on Council's appeal94

My conclusions on the Council's appeal96

Council's statutory powers96

General100

Foreseeability102

Proximity and other considerations103

Breach of duty107

Causation109

Misfeasance or non-feasance109

Council's past monitoring of water quality110

Mr Ryan's notice of contention110

Highway authorities111

Conclusions on Council's appeal on liability

THE STATE'S APPEAL ON LIABILITY (N 298 OF 1999)112

Conclusions of primary Judge on Mr Ryan's personal and

representative claims against the State112

Facts having special relevance to the State's appeal115

The oyster industry in New South Wales116

Development of the State's policy in relation to the State's oysterindustry

down to the introduction in late 1994/early 1995 of the

legislative framework for State and local QAPs117

Legislative powers of State government125

Development of the State's policy in relation to the State's oyster

industry after the introduction in late 1994/early 1995 of the

legislative framework for State and local QAPs131

My conclusions on the State's appeal134

General134

Breach of duty139

Causation139

A suggested alternative ground of the State's liability139

Mr Ryan's notice of contention140

THE BARCLAY COMPANIES' APPEAL ON LIABILITY AND

MR RYAN'S CROSS-APPEAL (N 219 OF 1999)141

Conclusions of primary Judge on libaility on Mr Ryan's personaland

representative claims against the Barclay companies, except to

the claims under the TP Act140

My conclusions on the Barclay companies' appeal on liability except

as to the claims under the TP Act143

General143

Breach145

Mr Ryan's notice of contention148

My conclusions on the Barclay companies' appeal on liability

under the TP Act148

Section 74B148

Section 74D154

Section 75AD (and s 75AK)157

Barclay Oysters' cross-claim against the Council161

THE APPEALS ON QUANTUM OF DAMAGES162

CONCLUSION167

LINDGREN J:

INTRODUCTION

82In these three appeals, the respective appellants ("the Barclay companies","the Council" and "the State") appeal from a judgmentin which they were heldliable to persons who contracted the disease hepatitis A in early 1997 as aresult of their consumption ofoysters grown in Wallis Lake, New South Wales("the Lake"). His Honour apportioned liability for damages equally as betweenthethree appellants.

83The appeals raise questions as to the liability of the Council and the State(public authorities) in relation to the non-exerciseof statutory powers, andas to the liability of a grower and a distributor of oysters (the Barclaycompanies) for failing to takesteps, in each case with a view to minimisingpollution of the growing waters of the Lake. They also raise questions ofconstructionof certain provisions of theTrade Practices Act 1974 (Cth)("theTP Act") designed to impose liability on "manufacturers" (includingoyster growers) in favour of consumers.

84The proceeding below was a representative proceeding brought underPart IVAof theFederal Court of Australia Act 1976 (Cth). The representativeparties were Grant Ryan ("Mr Ryan"), Scott Callaghan, Kevin Gower, DavidHolness, Geoffrey Bennett, BryanHocking and Brosow Hardy. OriginallyMr Ryan alone was the applicant but as a result ofRyan v Great LakesCouncil(1997) 78 FCR 309 the proceeding was reconstituted to add the othersix applicants. As a result, each applicant who made a personal claim againsta particular oyster grower or distributor was competent to represent othergroup members who claimed against the same grower or distributor. Followingthe reconstitution of the proceeding, the group members to whom the proceedingrelated were defined as 185 people namedin eleven annexures to a Re-AmendedStatement of Claim. Each annexure listed the group members who claimed againsta particulargrower or distributor, the Council or the State. All 185 peopleclaimed against the Council and the State but not all of those peopleclaimedagainst a particular grower or distributor of oysters.

85The largest oyster grower at the Lake is Graham Barclay Oysters Pty Limited("Barclay Oysters"). Its distributor is Graham BarclayDistributors PtyLimited ("Barclay Distributors"). Graham Barclay is the managing director ofeach company. By reason of the volumeof oysters produced and distributed bythem, the Barclay companies attracted more claims than any other grower ordistributor.

86 There were numerous cross-claims directed to establishing that if a partysued was liable, the ultimate burden was to be sharedwith other parties.

87 His Honour directed that the trial be limited to issues of liability andquantum of damages in respect of Mr Ryan's personalclaims and issues ofliability relating to his representative claims against the Council, the Stateand the Barclay companies. Laterhis Honour added for trial all cross-claimsas between the Council, the State and the Barclay companies and Mr Barclaypersonally,excluding the quantum of any damages (other than damages by way ofindemnity or contribution) suffered by a cross-claimant.

88The primary Judge

*gave judgment for Mr Ryan in respect of his personal claim in a sum of$30,000 against the Council, the State and Barclay companies;

*declared that Mr Ryan was entitled to succeed against each of thoserespondents in respect of that part of his representativeclaim that allegednegligence, but only on behalf of those group members who proved that damagehad been suffered by them;

*reserved that portion of Mr Ryan's representative claim that allegedbreaches by Barclay Oysters of ss 74B and 74D of theTP Act;

*otherwise dismissed Mr Ryan's representative claim based oncontraventions of theTP Act;

*ordered that Mr Ryan's costs to date, whether in relation to hispersonal or representative claim, be paid by the Council, theState and theBarclay companies; and

*directed that the burden of the liability referred to be apportioned as tothe Council one third, the State one third and theBarclay companies one third,and that judgment be entered on the cross-claims accordingly.

89As noted earlier the Council, the State and the Barclay companies appealfrom the orders made against them. Mr Ryan cross-appealsin his personaland representative capacities against the order dismissing his claim againstBarclay Oysters under s 75AD of theTP Act and his Honour's finding that adefence provided in s 75AK of theTP Act had been made out by Barclay Oysters.

90Mr Ryan filed a notice of contention. It relates to all three appealsbut differed in some respects as between them. The negligencefor which hisHonour held all three appellants liable was failure to take steps to minimisethe risk of faecal contamination of watersin which the oysters were grown,that is, the Lake, and, therefore, the risk that the oysters absorb and retainthe hepatitis A virus("HAV"). Against that background, the notice ofcontention can be understood. Omitting formal parts and references, it was asfollows:

"On hearing of the appeals of[the Barclay companies][Mr Ryan] will contend that His Honour ought to have found thefollowing:

1.First, His Honour ought to have found (if it is not otherwiseimplicit in his reasons for decision) that the [Barclay companies] breachedtheduty of care referred to in ... his reasons ... by selling the relevant oysterswhich were not fit for human consumption andnot of merchantable quality.

2.Second, His Honour ought to have found, based upon His Honour'sfinding ..., that:-

(a)the State ... owed a duty of care to [Mr Ryan] and groupmembers to implement a specific local quality assurance program for the WallisLake oyster fishery which required:-

(i)a comprehensive and competent sanitary survey of that fishery andsurrounding area;

(ii)in the absence thereof, a closure of the fishery, particularlyafter a heavy rainfall episode, until such a survey was carried outand it wasthen safe to re-open the fishery.

(b)the State ... breached that duty of care.

3.Third, His Honour ought to have found that as a matter of lawcausation was established if there was conduct of the [Barclay Companies]whichmaterially increased the risk of HAV contamination as distinct from materiallycontributed to such contamination.

4.Fourth, His Honour ought to have found ... that the State ... throughthe EPA breached the duty of care pleaded in ... the Re-AmendedStatement ofClaim ... in relation to the relevant caravan parks."

91Other parties also appeared before his Honour but I need mention only twoother growers and one other distributor which appearedon the appeal. Theother two growers were MW & EA Sciacca Pty Ltd ("Sciacca") and Tadeven PtyLtd ("Tadeven"). The other distributorwas Georges Oysters Pty Ltd ("GeorgesOysters").

BACKGROUND FACTS

92The reasons of the trial Judge were expressed in 142 pages divided into 12Parts.Parts 1-7 constituted a summary of evidence and findings of fact ofgeneral relevance.

93It is difficult, without repetition, to give an adequate account of hisHonour's summary, which, with respect, is succinct andinteresting and it isappropriate to divide the relevant material in the same manner as his Honour.For present purposes, I treatthe Barclay companies as one appellant.

Part 1 - Background

The hepatitis A virus

94There was expert evidence before his Honour relating to the HAV which wasnot controversial and which his Honour accepted. Thevirus multiplies, and issymptomatic, only in humans. The incidence of the disease viral hepatitis A("VHA") in the community isreported at about eleven cases per 100,000 personsper year. However, infections are under-reported; some infections aresub-clinicaland are therefore not investigated; and some clinical cases arenot reported.

95Alan Maxwell Murphy had worked as a virologist for some fifty years. Hespent twenty five years (1959-1984) as Chief Virologistat the Institute ofClinical Pathology and Medical Research, Sydney, an institution funded by theState. He testified as follows:

"HAV is spread by the `faecal-oral route'. This means that HAVspreads when excreted in faeces of humans and is contracted when humansingestmaterial contaminated with faeces. A person suffering from HAV may excrete10⁸ viruses per gram of faeces. The greatest excretion is in thetwo weeks before the onset of jaundice.

Once ingested it is thought that HAV multiplies in the lining of the gut.It is then transferred to the blood stream and carried tothe liver. HAVattacks the cells in the liver and at this stage becomes symptomatic. Commonsymptoms are anorexia, nausea, feverand jaundice.

HAV is considered to be a highly infectious virus. This means that only asmall number of viruses are required for an infection toresult."

96Professor Clement Boughton, Consultant Emeritus in Infectious Diseases toPrince Henry Hospital and the University of New SouthWales, said that in youngchildren VHA is commonly sub-clinical (no recognisable symptoms). In oldersubjects, a clinical attackof acute VHA has an incubation period of betweenfifteen and fifty days, and commonly about thirty days. (It was on 25 December1996 and first week of January 1997 that Mr Ryan consumed oysters boughtfrom Barclay Distributors and he first felt ill on about30 January 1997.)Professor Boughton stated:

"Initial symptoms are often non-specific influenza like, thatis, shiveriness, generalised aches and pains, headache, malaise, anorexiaandfever. There may be a period of several days of acute fever with temperaturesrising to 39 degrees Centigrade. This is thencommonly followed by nausea,vomiting and the appearance of dark brown urine. Other symptoms of VHA includeitchiness of the skin,profound lassitude, right upper abdominal discomfort dueto a tender distended liver and pale bowel motions.

The clinical presentation of VHA can be explained by the physiologicaleffects of HAV on the human body. HAV enters the body orallyafter beingconsumed. It travels to the gut and is transported by the blood stream fromthe gut to the liver. The virus invadescells of the liver.

.........................................................................................................

Any severe generalised infection causes tiredness and lassitude. However, theliver is the powerhouse of the body. It convertsfat and starch to glucose andregulates the blood sugar level of the body. Because HAV impairs thefunctioning of the liver, tirednessand fatigue are accentuated.

Attacks can vary greatly in severity from person to person. A mild attack mayproduce slight jaundice and indisposition lastingtwo to three weeks. A severeattack, however, can be prolonged with jaundice lasting severalmonths."

97Professor Boughton said that there was no antibiotic treatment for VHAbut that the disease does not commonly run a chronic course. He said inrelation to the typical case:

"Whilst the presentation and severity of VHA varies betweensufferers, generally sufferers recover following a period of rest. Nursingcare is often required during this period. In severe cases hospitalisation mayalso be required, particularly when intravenous fluidsare required to correctdehydration. Where a VHA sufferer has nobody to provide nursing care admissionto hospital may be indicated.

In the very acute stage, sufferers often have a fever accompanied by sweatingand shivering requiring bed linen to be frequentlychanged. When sufferers areable to cope with food they need meals prepared for them. Commonly, a personwith the illness:-

a.is unlikely to be capable of normal household tasks, such ascleaning, food preparation or looking after children;

b.will need to be absent from work;

c.may require assistance with personal hygiene such as toilet andwashing."

HAV and oysters

98A considerable body of expert evidence was given in relation to HAV andoysters. His Honour summarised some of that evidence asfollows:

"Oysters are filter feeders. They process 10 to 20 litres ofwater per hour, sucking in the water by movement of their gills andextractingfrom it particles of matter that enter the oyster's alimentary canal and aresubjected to the oyster's normal digestiveprocesses. Some particles areretained, others are excreted by the oysters. Particles may contain, not onlynutrients, but pathogens,including viruses. HAV is one such virus. Becausethe oyster relies on a process of concentrating matter, any viral contaminationof the oyster is likely to be at a level of concentration far exceeding theconcentration of the virus in the water.

HAV does not attack the oyster but will ordinarily be retained in theoyster's flesh. If a person consumes the oyster, ProfessorBoughton explained,the HAV will survive the consumer's gastric acid and pass into the small boweland on to the liver, where itwill have the consequences set out above.Professor Boughton noted that HAV `is able to survive for prolonged periods inthe environment,in foods, in fresh, brackish or salt waters and in particulatematter suspended in such media'. He said `This is of epidemiologicalimportance should waters in which molluscs are cultivated become faecallycontaminated.'"

99An issue at the trial was the longevity of HAV in the environment. Thisissue was relevant to the identification of the eventor events that caused theoutbreak of hepatitis A. Mr Murphy said:

"HAV is an extremely hardy virus. ... It can survive in theenvironment for periods of three months or longer. The major factor whichinfluences the survival of HAV in the environment is the exposure of virusparticles to heat and light. HAV particles that are exposedto these elementsare likely to die off more quickly than three months. However particles insediment or in damp or dark surrounds(such as in septic tanks) are likely toremain viable for a more significant period of time. HAV is inactive in theenvironment,which means that it does not multiply."

100Dr Gerhard Grohmann had worked in the field of microbiology,particularly virology and public health, for over twenty years. He was adirector and principal consultant of Environmental Pathogens Pty Limited, aprivate testing laboratory, and Chief Scientistand Head, Immunobiology(Vaccines), TGA Laboratories, Department of Health and Family Services,Canberra, and Lecturer in Virologyat the University of New South Wales. Hereferred to two instances in which viruses had been found in sediment, in onecase seventeenmonths after sludge disposal had ceased, and in the other casetwo years after sewerage discharge had ceased.

Depuration

101There was much evidence before his Honour in relation to the "depuration"of oysters. In June 1978 there had been an outbreakof gastroenteritisinvolving at least 2,000 people, which was traced to the consumption of oystersgrown in the Georges River inSydney. The oysters had been contaminated withthe Norwalk virus which has properties similar to those of the HAV. Followingthatoutbreak, in the period 1981 to 1983, it became mandatory for oystersgrown in New South Wales to be depurated for at least thirty-sixhours.Mr Murphy described depuration as follows:

"Depuration is a process where oysters are placed in tanks ofclean and disinfected estuarine water. The water is disinfected byultra-violet radiation or ozone treatment. I am advised that all of thedepuration facilities in use at Wallis Lake use ultra-violetlight as adisinfectant. Ultra-violet light, given correct conditions, will destroy allviruses and bacteria it comes into contactwith. Ultra-violet light will notdestroy viruses and bacteria with which it does not come into contact. Theeffectiveness of ultra-violetlight as a disinfectant depends on thefollowing:

a.The maintenance of the equipment used in the depuration tanks;

b.The turbidity of the water in which the oysters are depurated;

c.The capacity for ultra-violet light to come into contact with eachviral or bacterial particle."

102Mr Murphy explained that the effectiveness of depuration ineliminating the HAV from oysters depends on the oyster's excretingallparticles of virus while in the depuration tank and the virus then beingdestroyed by the ultra-violet light. He continued:

"If the surrounding water is heavily contaminated and an oystertakes up a large number of HAV particles, it is unlikely to excreteall theseparticles during a 36 hour of depuration. In my opinion, 36 hours is aninadequate period of time for depuration. The longer an oyster isdepurated for the more likely it is that it will excrete more particles. Ittherefore follows that thelonger the period of depuration, the more HAV islikely to be excreted. However depuration has been shown to be not entirelyeffectivein ensuring the safety of shellfish. While oysters depurated intanks functioning properly will most likely reduce their viral andbacterialload, they will not necessarily excrete all viruses from their system. In 1981a study was published by the Instituteof Clinical Pathology and MedicalResearch, Sydney; Health Commission of New South Wales; and New South WalesState Fisheries whichfound that oysters still contained Norwalk virus evenafter seven days of depuration. The study concluded that depuration ofshellfishwas not entirely satisfactory as a means of protecting publichealth."(emphasis by primary Judge)

Mr Murphy said that while depuration should reduce the presence ofhuman viruses in oysters, it will not remove them completely.

103Dr Grohmann also expressed only qualified support for depuration. He saidultra-violet depuration, when carefully performed,yields satisfactory results,but added:

"However, virological results are not always satisfactory asshellfish may still contain enteric viruses after purification if thewatersare heavily polluted due to uncontrollable environmental factors. The factthat viral outbreaks still occur via contaminatedoysters, despite oysterdepuration, indicates that current depuration techniques are not alwayseffective in removing pathogenicviruses."

104Philip D Bird, Technical Adviser to the Oyster Program of the New SouthWales Department of Health, wrote a sixty page book titledPurificationTechnology for New South Wales Oysters which the Department published. Inthe second edition, published in 1991, Mr Bird also conceded thatdepuration was not fail-safe. The booklet stated:

Purification is the only current viable alternative today in NewSouth Wales for the economic production of raw oysters which affordsthe leastrisk to public health.It is not a perfect system and will not guaranteethe absolute public health safety of raw oysters, however, on a cost-risk basisit is the only alternative.

It must be supported by regular testing of oyster harvest areas tomonitor large and extended periods of sewage pollution which arelikely topollute oysters to a degree which makes them incapable of effectivepurification."(emphasis by primary Judge)

105His Honour made this observation:

"The limitations of 36 hour depuration were graphicallydemonstrated in the summer of 1989/90 when some 1,200 people sufferedgastro-enteritisas a result of Norwalk or Parvo viruses in New South Walesoysters, and again in the Tweed River viral outbreak of August-September1996."

106Christopher Martin Burke, a Lecturer in the School of Aquaculture in theUniversity of Tasmania, stated in a report in evidencethat while most studiesreported reduced viral numbers after depuration, that procedure, as practised,was likely not to ensure thesafety of shellfish all of the time. Dr Burkesaid:

"In my opinion it is NOT possible to state unequivocally thatcommercial depuration can always completely remove Hepatitis A and Norwalkviruses from shellfish."

Water testing

107All the experts regarded the monitoring of water quality as a usefulsafeguard against the risk of viro-contamination of oysters. Like depuration,however, the procedure was subject to limitations.

108The expert evidence was that there is no practicable method of directlydetecting the presence of the HAV in estuarine waterbut that it is possible totest the water for bacteria, the presence of which would indicate thelikelihood of human faecal contamination. Dr Grohmann said:

"Bacterial indicators were developed to control entericbacterial diseases particularly in the days when cholera, typhoid and dysenterywere prevalent. Bacterial indicators have no relationship to the absence ofviruses in polluted waters or even in effluent. ...

... the absence of bacterial indicators in polluted waters cannot predict thepresence or absence of human viruses.

Bacterial indicators are, however, useful to show how well a sewerage treatmentsystem is managed and to measure how well a particularcomponent of a treatmentprocess is performing. In addition, they are useful for indicating thepresence of some bacterial pathogens... If adequate bacterial standards werenot adhered to, the risk of bacterial disease would also be extremely high fromoystersand recreational swimming in polluted waters.While the lack ofbacterial indicators in treated sewage does not indicate the absence ofviruses, where there are high bacteriallevels from a human effluent source,one can safely assume that levels of viruses will be also high. This isbecause any treatment which has failed to eliminate bacteria will also havefailed to eliminate viruses." (emphasis byprimary Judge)

109Mr Murphy expressed similar views. He favoured testing for faecalcoliforms. He said the preferred indicator group isEscherichia coli ("E.coli") which has a strong association with human faeces; the presence ofE. coli in water is a good indication of recent contamination by humansewage; there was no technical or practical difficulty in 1996 intesting awater sample for the presence ofE. coli; but the absence ofE.coli or other faecal coliforms does not negative the possibility of viralcontamination because viruses normally outlive faecal coliforms. Nonetheless,Mr Murphy supported faecal coliform testing "as a useful tool in detectingthe presence of faecal contamination inwater".

Oyster flesh testing

110A further procedure available for the detection of the presence of HAV isthat of testing the flesh (sometimes referred to as"meat") of oysters. Theonly method of flesh testing that achieved support from the experts as beingfeasible from a grower's perspectiveon a day to day basis was the PolymeriseChain Reaction ("PCR"). Dr Nicholas John Ashbolt, an environmentalmicrobiologist of fourteenyears' standing, who was currently AssociateProfessor in the Department of Water Engineering at the University of New SouthWalesand Deputy Director of the Centre for Water and Waste Technology, hadspecialised over the preceding ten years in water microbiology. He said ofPCR:

"PCR testing involves biochemical amplification of the viralnucleic acids to facilitate their identification. The test however doesnotdiscriminate between infectious or non-infectious virus particles. The testmust be performed under laboratory conditions byskilled personnel. PCRtesting costs between $50 and $200 per sample."

111Mr Murphy described PCR as "the current method of choice" for fleshtesting and said that it was known and available in November1996. He agreed,however, that PCR testing could be undertaken effectively only by trainedlaboratory personnel.

112Dr Grohmann thought that at its stage of development, PCR had no role toplay in the routine monitoring of viral contaminationof oysters. He said thatPCR testing was still in the research stage in November 1996; that it could beperformed only in a limitednumber of laboratories with specially trainedpersonnel; and that it was expensive. Moreover, he said that the test oftenfailedto detect a virus and that for this reason he did not use it as aroutine test in his laboratory. Further, PCR testing destroysthe oystertested and therefore can be used only to test samples and there is a difficultyin extrapolating from the sample. Inhis view, even if negative results werereliable, they would establish only that the tested and destroyed oysters werenot contaminated.

113The learned primary Judge was satisfied by Dr Grohmann's evidence that itwould be unsafe for an oyster grower or a regulatoryauthority to rely on PCRtesting alone as an indication of the absence of viral contamination in anoyster-growing area.

Part 2 - Growing Area Management

Sanitary surveys - introduction

114The primary Judge said that having regard to the problems discussed abovein relation to other measures, it was not surprisingthat there was agreementamong the expert witnesses that it was sensible to prevent contaminationarising in the first place by propermanagement of growing areas. Onesuggested component of a proper management régime was a "sanitarysurvey". His Honour describeda "sanitary survey" as:

" ... a comprehensive and detailed inspection of the foreshoresand tributaries of the relevant waterway, the purpose being to identifyallpoints of pollution and determine their effect on the quality of the water inthe growing area. The shoreline inspection shouldbe supplemented by a programof water testing designed to detect, and trace the source of, any faecalpollution of the waterway."

115The parties were not at one as to what constituted an acceptablemanagement régime. His Honour gave a detailed accountof the evidenceon this issue and said of it:

"In reading that evidence, it is relevant to bear in mind thatno sanitary survey of Wallis Lake or its tributaries was ever conductedbeforethe hepatitis A epidemic that gave rise to this proceeding."

The expert testimony of Mr Alton - USA

116Mr Ryan's leading witness on growing area management was David WarrenAlton, a former officer of the United States Food andDrug Administration("FDA"). Since the primary Judge relied heavily on the desirability of asanitary survey, I will, like his Honour,give a somewhat detailed account ofMr Alton's evidence.

117Mr Alton had a first degree in bacteriology and public health and aMasters degree in sanitary engineering. For more than twentyfive years untilFebruary 1998 he was involved with shellfish sanitation programs in the UnitedStates and internationally. From1992 until February 1998, he was AssociateDirector for International Programs, Office of Seafood, in the FDA. In thatcapacity,he was concerned to ensure that foreign countries that wished toexport shellfish to the United States met FDA standards, includingstandards inrelation to growing area management. In substance, in order to be approved, aforeign country had to adopt and enforcea régime akin to the UnitedStates National Shellfish Sanitation Program ("the NSSP"). Mr Altondescribed the NSSP as:

" ... a voluntary, tripartite program composed of shellfishproducing and receiving states [that is, American States],the shellfishindustry and federal agencies".

118The FDA co-ordinates and administers the NSSP and in each participatingstate one or more regulatory agencies manages the localshellfish program.Mr Alton observed that:

"it has been shown that cleansing or the commercial process ofDepuration is only ever at best likely to partially decontaminate oysters."

He continued:

"Growing oysters in water of acceptable sanitary quality isthe first critical control point with which the NSSP is concerned. Growingarea classification is thus central to the effectiveness of the NSSP. Theessential finding of many studies is that any seafood harvested in pollutedwater is by definition dangerous for the consumer."(emphasis by primaryJudge)

119Mr Alton described the NSSP approach as follows:

"Shellfish growing area classification under the NSSP is dividedinto two parts, the sanitary survey and the bacteriological survey. Thesanitary survey provides an overall view of pollution sources, types andvolumes of sewage, locations of potential point andnon-point sources ofpollution and an overview of the total environment of the growing area and theimpacts of known or potentialpollution sources. The bacteriological surveydefines the level of viable sewage organisms in terms of indicator equivalentsatany given point in the growing area.The importance of the sanitarysurvey to classify shellfish growing areas can not be overstated. This is theone classification stepthat experienced shellfish control agencies believegives them the best answers on the appropriate classification of shellfishgrowingwaters. The bacteriological survey is a supplement to the sanitarysurvey and confirms the findings of the sanitary survey withsome definition ofthe concentration of indicator organisms."(emphasis by primaryJudge)

120Mr Alton said that the principal components of a sanitary surveyincluded an evaluation of the pollution sources that may affectthe area; anevaluation of the meteorological factors; a review of hydrographic factors thatmay affect distribution of pollutantsthroughout the area; and an assessment ofwater quality. He said:

" ... a sanitary survey must be made of each growing areapriorto its approval by the state as a source of shellfish for humanconsumption".

121He emphasised that the sanitary survey is updated annually (and morecomprehensively every third year) in order to evaluate anychanges in pollutionsources and analyses of water quality samples taken in the preceding twelvemonths.

122Mr Alton described in some detail how the results of the sanitary surveyand of the bacteriological survey are used. He commencedas follows:

"The results of the sanitary survey and bacteriological surveyare utlilised to give growing areas one of the following classifications:approved; conditionally approved; restricted; conditionally restricted; orprohibited.All areas that have not been the subject of a sanitary surveyare prohibited. Prohibited areas are established adjacent to each sewagetreatment plant outfall and other waste discharges of public healthsignificance.An upward revision of an area classification must besupported by an adequate sanitary survey. Maps showing the boundaries andclassification of each shellfish growing area are maintained in a central fileby the state shellfishcontrol agency."(emphasis by primaryJudge)

123Mr Alton said that there are two primary shellfish growing areaclassification models: the NSSP, which is a sanitary surveyand water samplebased classification system, and the European Union ("EU") model, whichemphasises samples of shellfish meats forclassification purposes. He said:

"Sanitary controls under both systems are underpinned by aclassification of harvesting areas according to the degree of pollutionasjudged by faecal indicators. The purpose of this classification is to ensurethat shellfish are not harvested from polluted areas. For theseclassifications or grading of mollusc harvest areas EU Directive 91/492 relieson microbiological analysis of shellfishflesh whereas the US FDA NationalShellfish Sanitation Program relies on microbiological analysis of growingwaters."

124In relation to the bacteriological survey, Mr Alton commented thatsince a

"zero tolerance goal is unachievable, the task for anyregulatory agency is to determine what level can be tolerated and stillmaintainsafety and quality".

125A minimum of fifteen water samples must be collected from each stationin the approved area, the stations being located adjacentto actual orpotential sources of pollution, and sample collections being timed to representadverse pollution conditions. Mr Altonstated:

"Both the coliform and faecal coliform indicator groups havebeen used successfully in the classification of shellfish growing areas.Neither group fulfils all of the desirable characteristics of the idealindicator. The standards are based upon the public healthassumption that thepresence of viable faecal material in estuarine water establishes a potentialfor shellfish-borne illness.The shellfish control agency must decide howmuch viable faecal material will be tolerated in waters that producefilter-feeding shellfishdestined for the raw market, and then it mustestablish and enforce the appropriate standards. With our present state ofknowledge,testing for bacterial and viral pathogens in oyster flesh may be anadjunct to, but not a substitute for the use of indicator organismsfor thedetection of faeces in shellfish waters."(emphasis by primaryJudge)

126The NSSP manual requires that the total coliform median or geometric meanMPN (Most Probable Number) of an "approved area" notexceed 70 per 100ml(faecal coliform median not to exceed 14) and that not more than 10 per cent ofthe samples exceed an MPN of230 per 100ml (faecal coliform median not toexceed 43). The MPN is a statistical estimate of the number of bacteria perunit volumedetermined according to a certain test.

127Mr Alton said that he had visited ten countries in relation to theirshellfish programs and found that, in general, those whichhad signed memorandaof understanding had met or exceeded the NSSP requirements and had experienced"very limited numbers of illnessoutbreaks or problems". He said:

We are learning more about viruses and indicatorsyet thetried and true faecal coliform indicator applied to an in depth sanitary surveycontinues to protect the public health ofraw and semi-raw shellfishconsumers."(emphasis by primary Judge)

Mr Alton also observed:

"It has been observed that when shellfish are routinelydepurated prior to sale that the enforcement agencies and industry membersdevelop a tendency to believe that the situation is well in hand and that thedepuration process will solve pollution problems. This unfortunately has beenfound to not be the case with numerous outbreaks of illness from depuratedshellfish taken from improperlyclassified areas, grossly polluted areas, orareas impacted by human faecal material. It is well documentedinternationally that virus particles do not completely depurate from shellfishin the short time period ofthe depuration process (48 - 72 hours). It is alsowell documented internationally that the normal depuration process does notadequatelyremove from heavily polluted oysters: bacteria, heavymetals/pesticides, or marine biotoxins (shellfish poisoning). This means,shellfish control programs should have a classification limit on the qualityof the growing area water from which shellfish are harvestedfordepuration. This has been well known in the international community sincethe 1980's."(emphasis by primary Judge)

128Mr Alton gave the following evidence in relation to the incidenceof HAV contamination in shellfish:

"Hepatitis A is one of the most serious illnesses associatedwith shellfish-vectored disease, causing debilitating and chronic infectionandeven death. The first documented outbreak of shellfish-borne hepatitisoccurred in Sweden in 1956, when 629 cases associatedwith raw oysterconsumption were reported. Subsequent to that, hepatitis A cases were reportedin the United States. In 1961, severallarge outbreaks were reported amongconsumers of raw oysters in Mississippi and Alabama and consumers of raw clamsin New Jerseyand Connecticut. Outbreaks of hepatitis A have been reportedconsistently since the early 1960's and the illness continues to bea publichealth concern today. Worldwide, the illness is reported frequently. The mostdisturbing recent incident occurred in Chinain 1988 when more than 292,000cases (nine deaths) of hepatitis A (associated with the consumption ofuncooked, contaminated cockles)were reported in the urban areas aroundShanghai.This outbreak clearly demonstrated the need for effectivesanitation programs to prevent the introduction of contaminated shellfishintothe marketplace and what can happen when the system breaks down or when thereare no effective programs in place."(emphasis by primaryJudge)

129Mr Alton agreed that a system of grower self-regulation was noteffective because there will always be the "maverick" who will"pursue thedollar" and not "really care about the general good". However, he also agreedthat there was sometimes a problem ofoverlapping responsibilities andjealousies between agencies. He said that in his opinion "someone ha[d] toactually take charge".

130Finally, Mr Alton gave evidence regarding the relationship betweendepuration and classification. The following is the relevantpassage from hiscross-examination:

"Would you agree with this that current purification technologycannot itself always be relied upon to eliminate viruses from oysters?---That'scorrect.

And the answer would be the same whether or not you were taking oysters froma classified or a non-classified area and applying theUS purificationtechnology?---No, I wouldn't agree with that because I believe thatif youhad a classified area the requirements of the NSSP is that shellfish fordepuration have to be at least from an area that meetsrestricted growing areaclassification. In the process of doing this you throw in some barriers toviral contamination.

But if you don't have those barriers before depuration then it's certainlycorrect to say that depuration cannot always be reliedupon to eliminate viralcontamination?---Correct.

...

And even if one was, for example, in the NSSP program dealing with oystersthat had come from a conditionally approved or conditionallyclassified areathe result would be the same would it not that depuration applied to oysterscoming from such a source would noteven then provide an absolute guarantee offreedom from viral contamination?---No, there's no absolute guarantee. It'sdesignedto reduce the risk and it doesn't happen very often but you could havea problem.

Finally, I wonder if I could put this to you and ask you if you would agreewith this that extreme caution should be exercised whenresuming oysterharvesting operations after oysters and water have been polluted by faecalcoliform contamination?---That's correct."(emphasis by primaryJudge)

The expert testimony of Dr Rodgers - Europe

131The European system of management was described by Christopher JohnRodgers, an English fish and shellfish microbiologist, whowas employed by theUnited Kingdom government from 1987 to 1993 to advise on the design andconstruction of shellfish purificationplants. Dr Rodgers is now anaquaculture consultant who advises various international agencies. Heconfirmed that the Europeanapproach is to use flesh tests for classifyingharvesting areas. He said that the EU

"requires all Member States to classify their shellfishharvesting areas into one of three categories (A, B or C) according to thedegree of faecal indicator bacteria present in samples of shellfish flesh."

132According to Dr Rodgers' testimony, the classification determines therequired shellfish treatment régime. Shellfish fromCategory A areas(where the flesh tests have shown less than 230E. coli per 100 grams offlesh) may be sold without depuration. Shellfish from Category B areas (whereflesh tests do not exceed 4,600E. coli per 100 grams of flesh in 90 percent of samples) must be depurated. Shellfish from Category C areas (whereflesh tests record upto 60,000 faecal coliforms in 100 grams of flesh) may beplaced on the market only after a relaying period of at least two monthselsewhere. Dr Rodgers said there is no provision for harvesting shellfish thatexceed the upper limit of the most polluted categoryand that shellfish fromthose areas may not be placed on the market for human consumption.

133Dr Rodgers said the main reason why the EU system (shellfish flesh testing)was adopted in preference to other systems (suchas water testing) was largelyhistorical and related to the end product standard. He said:

" ... the end product standard was a measure designed to beapplied to the shellfish themselves, since these are the objects of theretailsale and public consumption in their raw state, particularly for oysters.In this way the shellfish were considered to act as sentinels and thusreflect the quality of the growing waters, although the relationshipbetween the levels of faecal coliforms in water and shellfish can varyappreciably." (emphasis by primary Judge)

134In oral evidence Dr Rodgers also described the role of a sanitarysurvey. He said:

"...if you actually have a sanitary survey, and you havegood monitoring in place prior to any sort of potential outbreak, you may notactually need to elevate the amount of testing which you routinelyundertake, providing you have a historical database which indicates thesort of situation you would expect in any particular area. This typeofmonitoring program is designed to reduce the risk, providing it is welldesigned statistically, and the samples are taken regularly. Unfortunately forthis type of viral outbreakthere are no guarantees that these measures,these risk measures would actually prevent an outbreak because there is still ariskalbeit small, even within a carefully designed program that such anoutbreak could still occur."(emphasis by primary Judge)

135Under cross-examination, Dr Rodgers explained that in order to determineinitially whether an area was in Category A, B, or C,a sanitary surveyidentifying actual or potential sources of pollution would be carried out.

The expert testimony of Mr Brown - Tasmania

136A further expert witness, Ray Brown, a qualified microbiologist employed bythe Tasmanian government, had, since 1987, managedthe Tasmanian ShellfishQuality Assurance Program ("TSQAP") which had been established pursuant to aMemorandum of Understandingbetween the Tasmanian government and theCommonwealth Department of Primary Industries ("DPI"). The DPI made anagreement with theFDA in respect of certification of the Tasmanian shellfishindustry under the United States NSSP. After that agreement was made,the DPI,or its successor in administration, the Australian Quarantine InspectionService ("AQIS"), established a committee of AustralianState governments andshellfish producers called the Australian Shellfish Sanitation AdvisoryCommittee ("ASSAC"). The ASSAC adoptedthe Australian Shellfish SanitationControl Program ("ASSCP"). According to Mr Brown, the purpose of the ASSCPwas,

"to safeguard public health through the implementation of sound,uniform standards in relation to the cultivation, harvest, processing,storageand distribution of shellfish for human consumption".

He said:

"A principal philosophy of the ASSCP is that if shellfish are onlyharvested from clean, unpolluted waters, then the shellfish willnot becontaminated and public health episodes will be averted".(emphasis byprimary Judge)

137Mr Brown explained the sanitary classification régime inTasmania as having three components: a shoreline survey; bacteriologicalexamination of water samples; and bacteriological and chemical examination ofshellfish. Under the TSQAP, there are four classificationsof proposedshellfish harvesting areas: approved, approved conditionally, restricted andprohibited. Mr Brown sounded a warningagainst reliance upon depuration,and concluded:

"In the absence of a sanitary survey a shellfish growing areamust be prohibited according to the ASSCP.

.........................................................................................................

In my opinion, a prudent person, with:-

a.knowledge of the impact of heavy rainfall on an estuary system;

b.a lack of information concerning the impact of pollution sourceson the oyster growing areas in the system; and

c.knowledge of the public health risks associated with human faecalcontamination of oysters

would do all things available to them to ensure the safety of oysterscultivated within that estuary system. If there was a dangerthat depurationwas unlikely to be effective in protecting public safety, the only optionavailable to such a prudent person wouldbe to recommend a closure of thegrowing area or to warn against continuing harvest.

Consistent with public health principles, an estuary system should remainclosed for harvest until such time as testing confirmedthat oysters harvestedfrom the area are fit for human consumption." (emphasis by primaryJudge)

138In cross-examination Mr Brown said that Tasmania and Victoria werethe first states to sign a Memorandum of Understanding withthe DPI or AQIS andwere the foundation members of the ASSAC. He said that South Australia becamea full member and that other statessent observers, one representing therelevant state government and the other representing oyster growers in thestate. Mr Brown statedthat in November 1996 Western Australia andQueensland were "in the throes of implementing the program". Asked about NewSouth Wales,he said "[t]hey were not embracing it at all". He said that theNew South Wales government observer had always been Mr Bird of theHealthDepartment who had started to attend meetings in about 1990 but had notattended regularly in recent years. In cross-examinationMr Brown made itclear that responsibility for the TSQAP rested with the Tasmanian stategovernment, specifically its Health Department,rather than with localgovernment or growers. He said that the Health Department bore that part ofthe cost of the program not coveredby the growers' levy and provided thepersonnel for the shoreline surveys and water bacteriological examinations.

National Health and Medical Research Council recommendation of 1987

139In 1987 the National Health and Medical Research Council ("NHMRC")published a twenty page booklet called "Code of HygienicPractice for Oystersand Mussels for Sale for Human Consumption". The Code dealt at length with"raw material requirements" and"plant facilities and other operatingrequirements". The raw material requirements section commenced by addressing"environmentalsanitation in growing areas". It included the following:

"1.Sanitary disposal of human and animalwastes

Adequate precautions should be taken to ensure that shellfish growing areasare free from pollution capable of causing pollutionof the shellfish, andextreme care should be taken to protect the shellfish from contamination by anywastes. A clean area surroundingthe shellfish growing areas should beestablished and the dumping of all wastes of agricultural, domestic orindustrial origin, includingwastes from private residences or boats, should beprohibited.

2.Determination of pollution types and sources

Surveys of the shoreline should be conducted to determine sources of bothdomestic and industrial pollution. Sources may includemunicipal sewageoutfalls, industrial outfalls, mine wastes, geophysical contaminants,agricultural activities, nuclear power plants,refineries or other sources.The need to reschedule sanitary surveys will be determined by changes inpopulation shifts caused bycommercial development of the shoreline or otherfactors affecting local population stability.

3.Classification of the growing area

................................................................................................

4.Growing area control

(a)Designated growing areas should be routinely monitored for changesin water quality, and sub-standard areas patrolled to prevent harvestingforpurposes other than that established by the official agency.

(b)Shellfish unless they are to be purified should not be removed for salefrom water which, when examined using the methods prescribed,does not meet thefollowing specifications.

(i)the coliform median MPN of the water should not exceed 70 per 100mL, and not more than 10% of the samples taken should ordinarilyexceed an MPNof 230 per 100 mL when examined by a 5-tube multiple dilution test; or

(ii)the Escherichia coli median MPN of the water should not exceed 2.3 per100 ml, and not more than 10% of the samples shouldordinarily exceed an MPN of7 per 100 mL."

140The section of the Code dealing with "plant facilities and otheroperating requirements" set out depuration requirements includinga minimumdepuration period of thirty-six hours.

The expert testimony of Mr Papworth of Shoalhaven City Council

141Warwick Andrew Papworth had, since 1993, been Environmental ServicesManager of the Shoalhaven City Council ("the ShoalhavenCouncil"). The City ofShoalhaven contains a substantial portion of the New South Wales south coast.It relies heavily on,inter alia, fishery, and encompasses manyestuaries, rivers and lakes, including the Shoalhaven River and Lake Conjola,in both of which thereis oyster-growing on a significant scale.Mr Papworth said that the Shoalhaven Council's Environmental MonitoringProgram, whichhad commenced in 1991, attempted, by the collection and analysisof water samples, to provide a body of data by which the ShoalhavenCouncilcould assess the long term impact of its development and planning decisions.The Program also assisted the assessment ofwater quality for the benefit ofusers of the waterways, including oyster farmers.

142The City of Shoalhaven is divided into twenty one catchment areas. Samplesare taken from sites in each catchment area andtested against variouspollution parameters, including faecal coliforms. Mr Papworth said thatif an actual or potential pollutionproblem was identified or suspected, theShoalhaven Council would expand its activity in order to identify the source ofthe problem,monitor it and formulate rehabilitative measures. The ShoalhavenCouncil provided test results to the local oyster farms. He saidthat in hisexperience low water quality coincides with high rainfall.

Mr Bird of NSW Department of Health

143Mr Bird did not testify. Although he was a New South Wales governmentobserver at ASSAC meetings, he rejected ASSAC's approach. In the second (1991)edition of his paper, "Purification Technology for New South Wales Oysters", hesaid of the possibility ofclassifying waterways for public health safety as inthe United States:

"The cost of determining such classifications would be extremelyexpensive and take several years.

The majority of estuaries would probably not be classified as `approvedareas' in which oysters could be harvested all year roundwith no controlsirrespective of weather patterns.

Many would be classified as `Conditionally Approved' which requires certainrestrictions and controls when conditions are adversesuch as heavy rainfall.Some areas would be `Restricted' which means that oysters must be treated priorto sale.

And others may be classified as `Prohibited' which means no oysters can beharvested at all!

Once such a `Classification' system is established, the cost in monitoringthe areas within the 34 different estuaries[in the State]for changesin classification and enforcing compliance with the classification requirementsin terms of administration and laboratorysupport would beprohibitive."

144His Honour noted that Mr Bird had not explained what he meant by"prohibitive" or why it was that the cost of a classificationsystem could beborne in other Australian states and overseas but not in New South Wales. AsMr Bird did not give evidence, thesequestions could not be explored withhim.

145In contrast to Mr Bird, Dr Burke thought a sanitary survey anessential adjunct to depuration. He said that in November 1996,a hepatitis Aoutbreak was "a serious possibility, serious in the sense that you've got to becareful and be worried about it". Later, he said that he understood thatBarclay Oysters' depuration system was "good by normal industry standards". Hestated:

"The crucial issue is to actually know the estuary and if youhaven't done the sanitary survey you are not going to be in a positionto saywhether or not a pollution source has been stopped, you know, a sewageworks is now functioning properly, there's no, storm water overflow orwhatever. If you haven't done the sanitary survey, no, you're not going tobe able to do it. You'll have to rely on testing the oysters forfaecalcoliforms and we know that that leaves you open to false negatives for virusesbecause viruses may be in there with zero E-coli."(emphasis by primaryJudge)

Primary Judge's findings

146The learned primary Judge set out his findings about the proper managementof oyster production as follows:

"(i)depuration for 36 hours is not an adequate protection tooyster consumers against the foreseeable risk of contracting viral disease,including hepatitis A;

(ii)that being so, it is good practice to manage oyster growing areas insuch a way as to minimise the risk of viral contaminationof the waters inwhich the oysters are grown; and

(iii)whether or not growing areas are classified and differing harvestingregimes formally adopted, as in the United States, Europeand Tasmania, amanagement regime that complies with proposition (ii) requires, at theleast:

(a)an initial sanitary survey to identify possible sources of pollution of thegrowing waters;

(b)regular update surveys to detect any change in the pollution situation;and

(c)regular monitoring of faecal coliform or E. coli levels of the growing areawater, by testing samples of the water itself oroyster flesh. This must bedone in a systematic manner so as to enable the test results to provideassistance in locating pollutionsources and guidance as to the safety ofrecommencing harvesting after heavy rain."

147His Honour noted that propositions (i) and (ii) were accepted by all theexperts who gave evidence, by those who devised the UnitedStates, European andTasmanian oyster management régimes, and by Mr Bird, and that inrelation to proposition (iii) the onlydissentient appeared to be Mr Bird.His Honour also said that Mr Bird's position has at all material timesbeen that adopted by theNew South Wales Department of Health and, through it,by the State. Then his Honour said this:

"The State's failure to recognise the need for items (a), (b)and (c) in proposition (iii) is not only at odds with practice widelyacceptedoutside New South Wales; it leaves oyster consumers exposed to an unnecessaryrisk of viral disease - from pollution sourcesthat are capable of beingdetected and rectified. There being no evidence of facts suggesting it isreasonable for those controllingoyster growing areas in New South Wales toadopt a lesser standard of protection to consumers than is required incomparable communitieselsewhere, the State's position must be regarded asfailing to ensure an adequate standard of management of oyster growingareas."

148It is appropriate to pause in this account of his Honour's reasons toobserve that his conclusion was one of general applicationthroughout theState. What his Honour was saying was that in the light of the expert evidenceand the evidence of growing area managementrégimes elsewhere, it wasinexcusable that the State had relied on only a policy of mandatory depurationand not on a policydirected to ensuring a satisfactory standard of growingwaters.

Part 3 - The New South Wales Regulatory System

149In April 1992, the New South Wales Minister for Health Services Management,the Hon Ron Phillips MP, published a document preparedby an AdvisoryCommittee, titled "New South Wales Oyster Quality Assurance Program". TheAdvisory Committee was chaired by Mr Birdand also comprised a FisheriesDepartment Officer and three industry committee representatives. One of thoserepresentatives, DavidMaidment, was an industry observer at ASSAC, whileanother, Peter Clift, was a Wallis Lake grower. The document noted that todateno hepatitis cases had been reported from shellfish in New South Wales,but that the potential hazard must be considered a seriousone. The documentstated:

"It must be emphasised that adoption of a clean watersclassification system by the N.S.W. oyster industry and relevant agencieseitherfor domestic use or for intended export of oysters to the U.S. market isnot something which could be achieved overnight.

The collection and analysis of the necessary data is an expensive and timeconsuming exercise and for export purposes, is likely tobe subject to detailedscrutiny by U.S. authorities and lengthy negotiations at governmentlevel."

150The Advisory Committee did not recommend adoption of a clean watersclassification system and referred to what it described asvarious "inherentproblems and difficulties" in that approach. Instead, the Advisory Committeerecommended a pollution early warningsystem and vigilance against developmentsthat would adversely impact on oyster-growing areas. It also recommended thatit be acondition of purification plant licences that all oysters treated inthem be cultivated, harvested and purified in accordance withan approvedquality assurance program.

151The Advisory Committee presented its Final Report in February 1994. Underthe heading "Export Considerations", the Committeestated as follows:

"A small section of the industry, with a view to export, wouldprefer the establishment in NSW of a Clean Waters Classification systembasedon the American National Shellfish Sanitation Program (NSSP), funded byGovernment (be it State or Federal).

In developing the NSW Oyster Quality Assurance Program the AdvisoryCommittee recognised that it was essential that the Program provideapro-active mechanism that could be quickly implemented to deal with theintermittent pollution events that currently effect themicrobiological qualityof oysters in the domestic market place. It was also recognised that,although it is desirable that estuaries be classified in terms of pollutionrisk in the future, which can be achieved under the Program,the industry canill afford the delay required to provide the data to establish such aclassification scheme covering all commercialoyster producing estuaries inNSW.

However, the NSSP procedures and standards were taken into account by theAdvisory Committee during the program development process. The NSSP standardscan be met under the program, if the local estuaries so desire, by increasingthe testing regimes in their estuariesand carrying out more detaileddocumentation and auditing required by the NSSP. It is the view of theAdvisory Committee that theindustry at this stage could not afford toestablish and maintain a monitoring program in each oyster producing estuary inNSW asset out under the NSSP. It is the view of the Advisory Committee thatit would be more cost efficient and appropriate for NSW to have a limitednumber of strategic estuaries approved for export underthe NSSP through anextension of the Program at a later date. This would provide an affordableopportunity for farmers wishing to export their oysters to relay their oystersin these estuariesfor the required period, as specified by the NSSP, prior toexport. The establishment and maintenance of a NSSP program in theseestuariescould only occur after lengthy negotiations by the industry with AustralianFederal, NSW State and US Government authorities."(emphasis by primaryJudge)

152The Committee recommended that "[m]embership of an Oyster QualityAssurance Program be made compulsory for all oyster leaseholderseither by acondition of oyster lease ownership or oyster sale".

153His Honour reviewed the relevant legislation. In 1994,FisheriesManagement Act1994(NSW) was enacted. In the course of his SecondReading Speech on the Bill for the Act, the responsible Minister said that newaquaculturepermits would:

" ... become the tool by which the industry is managed, with theresult that most of the operational controls on oyster farmers willbe removedfrom the leases and placed on permits."

The Act commenced on 16 January 1995. Section 8 in Part 2 of the Act providedfor a "fishing closure" to be effected by empoweringthe Minister, in subs(1):

"(1)The Minister may from time to time, by notification,prohibit, absolutely or conditionally, the taking of fish, or of a specificclass of fish, from any waters or from specified waters.

(2)Any such prohibition is called afishingclosure."

(The word "fish" was defined by s 5 to include oysters.) Section 14 made it anoffence to take fish in contravention of such a"fishing closure".

154Part 6 of the Act (ss 142 - 191) was headed "Aquaculture Management".Section 142 defined "aquaculture" so as to include cultivatingoysters for thepurpose of harvesting them with a view to sale. Section 143 empowered theMinister to make aquaculture industrydevelopment plans. Section 144 made itan offence for a person to undertake aquaculture except under the authority ofan aquaculturepermit. A ground on which an application for a permit might berefused was that it was "inconsistent with any relevant aquacultureindustrydevelopment plan". Section 156 required a permit holder, if the regulations sorequired, to pay to the Minister an annualcontribution towards the cost (amongother things) "of monitoring the quality of the environment in whichaquaculture is undertakenand of testing the quality of the fish ...cultivated". Subsection 160(1) empowered the Minister to cancel or suspend anaquaculturepermit under certain circumstances, including for mismanagement.

155Subsection 189(1) provided, relevantly:

"(1)The Minister may, by a fishing closure under Part 2,prohibit during a specified period the taking of fish ... cultivated underanaquaculture permit from the area to which the permit applies ifsatisfied:

(a)that the area is in such a condition that the taking of fish ...from the area ought to be suspended, or

(b)that the fish ... are, or are likely to be, unfit for humanconsumption."

156TheFisheries Management (Aquaculture) Regulation 1995was madeunder the Act. Like the Act, it commenced on 16 January 1995. It containedprovisions dealing with aquaculture permits. Permits were divided into nineclasses. Class A permits authorised "extensive aquaculture on public waterland". It is not indispute that the permits which came to be issued to WallisLake oyster farmers were all class A permits. The Regulation was amendedwitheffect from 1 May 1995 so as to include a new Division 4 providing for a NewSouth Wales Shellfish Quality Assurance Programand for local quality assuranceprograms at the individual estuary level (I will use the abbreviation "QAP" tosignify "quality assuranceprogram", whether the overarching State one or alocal one.) An explanatory note to the amending Regulation included thefollowing:

"The object of this Regulation is to provide for thedetermination of a commercial aquaculture industry development plan to ensurethat shellfish taken for sale for human consumption from estuarine waters inNew South Wales are of the highest quality and, in particular,are free fromdisease and pollutants. The plan is to consist of a New South Wales ShellfishQuality Assurance Program, which isto include local shellfish qualityassurance programs for estuarine waters in New South Wales where shellfishaquaculture is carriedon. It will be a condition of all class A aquaculturepermits that permit holders comply with the requirements of the New SouthWalesProgram and the relevant local program."

157The new Division 4 encompassed cll 12A to 12M. Clause 12A containeddefinitions, including a definition of "shellfish" as "bivalvemolluscs".Clause 12B provided:

"12B(1)The Minister is required to determine as a commercialaquaculture industry development plan a program to assure the qualityofshellfish taken from estuarine waters for sale for human consumption.

(2)The plan is to consist of the New South Wales Shellfish QualityAssurance Program, which is to include local shellfish quality assuranceprograms for those estuarine waters where holders of class A permits operateaquaculture farms.

(3)The objective of the New South Wales Program is:

(a)to ensure that shellfish are taken from estuarine waters to be soldfor human consumption only if:

(i)the shellfish meet the quality standards specified in or under theprogram, and

(ii)those waters meet environmental standards so specified, and

(b)to supervise the co-ordination of local programs; and

(c)to ensure that local programs meet the objectives specified inparagraph (a).

(4)The Minister is responsible for establishing the New South WalesProgram in consultation with the New South Wales Committee.

(5)If there is an inconsistency between the New South Wales Program anda local program, the New South Wales Program is to prevail."

158Clause 12C required the Minister "to appoint an advisory committee, tobe called the New South Wales Shellfish Quality AssuranceCommittee". It wasto consist of a chairperson appointed by the Minister, four class A permitholders and the Director of Fisheriesor his nominee. The clause also requiredthe Minister to appoint

"a local shellfish quality assurance committee for each area orgroup of areas of estuarine waters to which the New South Wales Programrelates".

159Neither the New South Wales Committee nor any local committee was to besubject to the control or direction of the Minister butthe Minister couldrequire a committee to reconsider a decision and could remove members of acommittee from office.

160Clause 12D gave the New South Wales Committee responsibility forsupervising and administering the New South Wales Program. Clause 12E gavelocal committees responsibility for local programs. Clause 12G made it acondition of a class A permit that thepermit holder comply with therequirements of the New South Wales Program and any relevant local program andpay charges levied bythe local committee. By cl 12H each holder of a class Apermit was required to pay to the Minister a contribution towards the costofoperating the State Program and of maintaining the State Committee.

161There was some delay in the appointment of members of the State Committee.That Committee's inaugural meeting was held on 15December 1995. AnnetteFordham was chairperson. The Committee appointed a State Co-ordinator, DrKerry Jackson. She commencedfull-time duties on 2 September 1996. Thiscoincided with an outbreak of gastroenteritis, involving at least ninety-threepeople,caused by oyster-borne Norwalk disease in the Tweed River growing area.Mr Bird made a report on this epidemic dated 6 November 1996whichcontained the following observations:

"The outbreak attracted wide national media coverage and oystersales from the Tweed stopped. A month after the outbreak, sales werestillbelow 50% due to harvesting suspensions and adverse consumer reaction. TheTweed River was closed by NSW Fisheries on 4 September1996. The smallerharvesting area of Chinderah was re-opened on 18 September 1996 but the majorarea was still closed by 6 November1996. A quality assurance program wasestablished to monitor the public health safety of oysters and water in growingareas andindicates a continuing water quality problem.Sewage from thesewerage system, septic tanks and boats are suspected.

This incident raises a number of problems requiring solutions: aneffective oyster quality assurance program, greater complianceby purificationplant operators, hygienic oyster processing, an adequate trace-back system, amore effective public health network,a modern government virology laboratoryand greater community and government involvement in addressing sewage pollutionof our rivers."(emphasis by primary Judge)

162Mr Bird's report was made some two months after the Tweed Riveroutbreak and only some two weeks before the "rainfall event" thatseems to havecaused the pollution that gave rise to the claims before his Honour. At thetime there was still no New South WalesShellfish QAP as required by cl 12B ofthe Regulations. Nor was there any Wallis Lake local QAP.

Part 4 - Management of Wallis Lake

Monitoring of water quality by the Council down to mid-1993

163Between August 1989 and late 1993 the Council had monitored the waterquality of the Lake. Brian Anthony Brooker, who was atthe time the Council'sSenior Environmental Health Officer, or a trainee working under hisinstruction, took samples every few weeksat ten locations on the Lake and atthe mouths of five stormwater outlets into the Lake. The person who took thesamples noted thetide or outlet flow conditions, weather and temperature andanalysed the samples for faecal and total coliforms in a small Councillaboratory. The results varied considerably. His Honour said:

"In some locations, notably the stormwater drains, the faecalcoliform reading frequently exceeded the accepted standard of 14 per100 ml;there were sometimes several thousand faecal coliforms per 100 ml. Even atsites within the lake itself, readings were oftenin the high hundreds orthousands. Mr Brooker did not carry out any systematic investigation ofthe cause of these high readings. Neither did he explore the relationshipbetween rainfall events and faecal coliform readings, by deliberately takingsamples afterheavy rain. This was not because he was unaware of the linkbetween rainfall and increased pollution. Mr Brooker was the authorof areport submitted to the Development Committee of Council on 11 June 1991 in thename of the Chief Health and Building Surveyor,John Chadban. That reportnoted the United States standards for the quality of water in which oysters aregrown and commented ongraphs prepared by Mr Brooker showing totalcoliform and faecal coliform counts in the period September 1989 to October1990. MrBrooker wrote:

`From the graphs it can be seen that water quality for the majority of the yearcomplies with the requirements where oysters areNOT [emphasisMr Brooker's] required to be purified. The times when the water qualitydoes not comply with the U.S. standards generallycorrespond with times of highrain fall. Fresh water inflow brings with it high bacterial contamination suchas sewerage surcharge,urban run off, rural run off, septic tanks etc. Throughidentification of point sources the level of pollution can be lowered.[emphasisby trial Judge] This should have the beneficial affect [sic] ofdecreasing the period of contamination thus increasing times whenoysters maybe harvested without purification. In addition to reduction of bacterialcontamination, the lake system would also benefitfrom a reduction in nutrientload as the process of reducing bacteria would also reduce nutrients. Therelationship between highbacterial levels and fresh water can be furtherdefined by salinity tests to determine the level of fresh water. A correlationbetweena specific level of salinity and a specific level of contaminationwould give the oyster industry a high degree of confidence inthe water qualityat the time of harvesting with the knowledge that purification is or is notrequired. A further advantage in determininga specific correlation betweensalinity and bacterial contamination is the time normally required for the lakewater to achieve asatisfactory water quality. Given weather forecasting andsalinity readings the harvesting of oysters could be programmed accordingtoconditions.'

Mr Brooker went on to note:

`Total Catchment Management systems are being adopted for may [sic: `many']river systems and one of the primary considerationsof such is water quality.With the information that Council now possesses, a basis for water quality canbe formed as a goal formanagement.'

The report stated the future program:

`It is now proposed to:-

1.increase sampling during rain periods and over tidal variations for thedevelopment of salinity bacterial correlations,

2.of point source [sic] to be carried out to locate specific pollutionsites.'

The report concluded with a recommendation that the information, including thefuture program, be noted. Apparently the Councilcommittee adopted thatrecommendation. None of the proposed action was taken."

164In a memorandum to the Council's General Manager dated 19 April 1993,written by Mr Brooker in the name of Mr Chadban, Mr Brookerdescribed the testing programs for Wallis Lake and Smiths Lake as "serving avital purpose in assessing water quality". He pointedout, however, that theexisting program measured only microbial quality and ignored "biological,physical and chemical parameterswhich are ecologically more important". Thememorandum suggested the Council extend into these areas. But far fromextending itstesting program, a few months later it terminated it.Mr Brooker said this happened as a result of a discussion between himselfandMr Chadban. He said:

"We discussed the staff and the resource problem and we came toa decision that for the time being that we'd recommence at a laterdate."

In fact the program was not recommended prior to the events that gave riseto this proceeding.

165The primary Judge recorded:

"Mr Brooker said the cost of the testing program was only$2,000 per year. Much of the work was done by trainees; it occupied aboutfourand a half days per month. The decision to abandon testing was taken becausethe latest trainee had just left and Mr Brookerfelt he had insufficienttime to do all the work himself."

A non-statutory committee of local growers

166Not long before termination of the Council's water testing program, acommittee was established under the name "Wallis LakeOyster Quality AssuranceCommittee". The members were elected at a meeting on 14 December 1992 chairedby the Shire President andattended by sixteen local oyster growers, twoofficers of the Department of Fisheries and some Council officers. This wassubsequentto publication in April 1992 of the State Advisory Committee'sdocument "New South Wales Oyster Quality Assurance Program" referredtoearlier. Mr McOrrie of the Department of Fisheries explained to thosepresent the concept of an "Oyster Quality Assurance Program". In a report toCouncil, Mr Chadban stated:

"The objectives of the policy are:-

a.To introduce a program which provides, at estuary level, long termquality assurances in respect of oysters offered for sale for publicconsumption via industry self-regulation.

b.To facilitate an understanding of the oyster farming environment ineach estuary so that existing problems can be rectified and futuredegradationof waterways avoided.

It is intended therefore that growers, to a large degree, will control theirown destiny by collecting data about their waterway,imposing harvestingrestrictions during certain conditions, creating public awareness, undertakingsampling programmes and continuallymonitoring all sampling results. Theresponsibilities of the latter are quite onerous and if properly undertakenwill guard againstthe `pollution scare' that is too frequently levelledagainst oysters."

167The Committee met on 22 February 1993. Seven people attended. Theycomprised four growers (including Mr Barclay), an officerof theDepartment of Fisheries and two Council officers, namely Mr Chadban andRichard Powell who was Council's Water and SewerageEngineer. One of thegrowers, Robert Moran, chaired the meeting and was appointed "AreaCo-ordinator". Mr Chadban was appointedSecretary. The Committee adoptedthe following Preliminary Policy:

"Resolved on the motion of M. Verdich and W Snowdon that thefollowing Preliminary Policy be adopted:-

1.That commencing in September/October, 1993, two oyster samples betaken from the four zones within the estuary, before depurationand afterdepuration, and that this continue on a monthly basis for the duration of theharvest season.

2.Harvesting shall not be permitted when water salinity levels arereduced to below [a stated level] in the harvest area.

3.Harvesting will not be permitted to resume until such times as watertests indicate a salinity level of at least [a stated level]AND that tests onindividual oysters meets [sic] the required health standards."

168The Committee also resolved that the Lake estuary be divided into fourzones and that each of the Committee's grower members wouldbe a zone monitor.The idea was that each zone monitor would be responsible for contacting growersin the zone whenever there wasa question of stopping harvesting because ofweather conditions, with a view to the making of a common decision.

169A few days after the meeting, Mr Chadban issued a Media Release whichattributed to Mr Moran the statement that the Lake's oysterfarmers "havenow taken the first step towards controlling their own destiny". Mr Moranwas quoted as saying:

"For too long farmers from Wallis Lake have been tarred with thesame brush as less responsible growers from other areas. We aimto installstringent requirements which will guarantee our product anywhere and peoplewill know that to eat a Wallis Lake oysteris the safest thing they cando."

170Apparently the Committee continued to meet every month or two. Theprimary Judge said that judging by its minutes in evidence,its main businesswas arranging with Microtech Laboratories in Sydney for the projected oysterflesh testing and collecting a $50levy from each local oyster lease holder.From time to time the Committee drew Council's attention to possible pollutionpoints butthe evidence does not reveal whether Council investigated thematters raised. Prior to the hepatitis A epidemic that gave rise tothepresent case, the Committee did not formulate a local QAP. It will be recalledthat the Final Report of the Advisory Committeewas dated February 1994; thattheFisheries Management Act 1994 commenced on 16 January 1995, that theregulation which provided the legislative basis for QAPs commenced on 1 May1995; and thatthe rainfall event which seems to have caused the pollutionwhich caused the outbreak occurred from 23 to 25 November 1996.

Professor Brown's two reports of August 1994

171Members of the Committee, but apparently not the Committee itself, wereinvolved in a project conducted by Professor KennethRobin Brown on behalf ofthe Institute for Coastal Resource Management at the University of Technology,Sydney. Professor Brownwas the Director of that Institute. The Institutereceived government funding to produce a mariculture study and oystermanagementplan for Wallis Lake. After consultation with relevant people,including local oyster growers and community groups, the Council,theDepartment of Fisheries and the Department of Conservation and Land Management("CALM"), Professor Brown's team published twodocuments in August 1994: theWallis Lake Mariculture Assessmentand theWallis Lake OysterManagement Plan. Copies of these documents were sent to the Minister forFisheries, the Minister for Public Works, the Council and other persons,including numerous growers.

172The documents were lengthy and his Honour set out what the second documentstated about pollution. The following are the partswhich his Honourhighlighted:

"Water pollution from sewage and in the case of Wallis Lake,probably agricultural runoff, poses environmental threats to oyster cultureinthe Lake.

.............................................................................................

Pollution is allowed to continue and the risks to the oyster farms areincreasing,

.............................................................................................

... there are real dangers of effluent and stormwater contaminantsentering the Lake.

.............................................................................................

Small recreational boats in particular are using the Lake in increasingnumbers. Not only do many dump raw effluent into the Lakeas such small boatsare too small to have on board retention tanks. Shore based `environmentallyfriendly' toilets could be installedby Council at strategic areas. Aneducation campaign is required to effect hygienic practice.

.............................................................................................

Because clean water is essential for the industry to exist and prosper,the quality of water conditions of the Lake should be monitoredon a regularbasis and the results of these tests should be available to thepublic."

173Professor Brown gave evidence. His written evidence concluded with thefollowing:

"6.1The preponderance of international experience demonstratesthat the central components of successful quality assurance for oysterproduction are:-

a.Careful and close scrutiny of the environment in which oysters areto be cultivated - the more pristine the environment the better;

b.In urbanised areas of existing oyster production, comprehensivepollution surveys should be undertaken designed to identify pointsources ofpollution.

c.Once identified, point sources must be regularly monitored.Such a program of monitoring should include as a minimum regular faecalcoliform (e coli) testing as a measure of faecal contamination. In Wallis Lakethe peak harvesting period coincides with the busiest time of year for thedistrict in terms of tourism. This placesadditional pressures on seweragefacilities and septic tank systems. It is particularly important that testingof suspected sourcesis intensified during this period.

d.Management plans for oyster growing areas should be designed andimplemented. Central to management of oyster cultivation is testingthequality of water of the oyster growing area prior to harvest. Testing must bestatistically valid and take account of the specificcharacteristics of thecatchment (eg tidal movements) and the methodology of harvest. For exampleoysters are generally harvestedat low tide. Tests conducted at high tide willgive a better pre-harvest indication of any faecal contamination.

e.Suspension of harvesting following defined events (such as rain) isalso central to reducing the risk of contaminated oysters beingharvested. Theduration of any withholding periods should be reliant on testing outcomesfollowing events.

6.2The quality assurance regime in place at Wallis Lake in thesummer of 1996-97 compares unfavourably with the practice of other oystergrowing regions in Australia and internationally. This is because:

a.at Wallis Lake no detailed pollution surveys had been undertakento identify likely sources of pollution;

b.no apparent monitoring of water quality was occurring at pollutionpoint sources or in oyster leases;

c.no effective system was in place to withhold harvesting followingevents such as rain and/or where elevated faecal coliforms levelswereindicated.

6.3As a result, oysters which were cultivated in waters contaminatedwith HAV were able to be harvested, depurated and sold to consumerswithout thepresence of HAV being detected.

6.4Had a comprehensive quality assurance regime, of the kind describedabove, been in place at the time, it is my opinion that consumersrepresentedin the current proceedings would not have contracted HAV from Wallis Lakeoysters. This is because:

a.A detailed pollution survey would have identified the likely sourcesof pollution, such as caravan parks, the unsewered township ofNabiac, the riskof pollution from recreational boaters and campers, and storm water drainscarrying urban run off into the lake.

b.These point sources could then be routinely monitored by regulartesting for faecal coliforms;

c.The water quality in the oyster lease areas would also have been thesubject of rigorous testing.

d.In my opinion, elevated levels of faecal coliforms would have beendetected during this period at pollution point sources and in theoyster leaseareas. Faecal contamination sufficient to contaminate the oysters cultivatedfrom the Lake with HAV would have beenreflected in detectable elevations infaecal coliform levels.

e.Elevated levels of faecal coliforms at point sources and in oysterleases would have triggered:

i.further testing (including viral testing) which would have beenlikely to confirm the presence of pathogens including HAV; and

ii.a withholding period from harvesting and sale;

f.Furthermore, the period was marked by heavy rainfall. The rainfallin November 1996 of itself would have caused the harvesting ofoysters to bewithheld for a period.

2.In any event, contaminated oysters would not have been available forconsumption by those persons who subsequently contracted HAV." (emphasis byprimary Judge)

174The primary Judge recorded that Professor Brown's views expressed inthis passage were not challenged in cross-examination orcontradicted by otherexperts. His Honour also referred to other evidence of recognition of theimportance of maintaining the waterquality of the Lake.

175Professor Brown agreed that for a Wallis Lake oyster farmer, it was notjust good practice but an absolute necessity that, afterrainfall, harvestingshould cease until after adequate testing.

The Wallis Lake Estuary Management Committee

176In August 1994, Council decided to establish a "Wallis Lake EstuaryManagement Committee". The Committee was active by March1995 at the latest.It included representatives of the Council, the Department of Public Works("PWD"), CALM, the Department of Fisheries,the Environment ProtectionAuthority ("EPA"), the Waterways Authority, the National Parks and WildlifeService, a person representingrecreational boaters, Mr Barclayrepresenting the oyster industry and two community representatives appointed byCouncil. On 8 June1995, the General Manager of the Council wrote to CALMseeking a grant of $10,000 for studies of Wallis Lake and Smiths Lake. Intheletter he described the function of the Committee and of an apparently similarcommittee established in respect of Smiths Lake,in these terms:

"The Committees will oversee the preparation of a ManagementPlan for each lake, the aim of which is to sustain a healthy, productiveandattractive estuary where balanced and co-ordinated management of resourcesensures sustainability of diverse natural systemswhilst meeting communityneeds.

The Committees, which have representation from Council, State Governmentagencies and the local community, are being guided by theEstuary ManagementManual in formulating the plans. In accordance with the Management Process itis now ready to proceed with step2, the preparation of data Compilationstudies for each lake."

177At a meeting held on 26 July 1995, the Committee resolved thatpreparation of the Management Plan be given priority and that thePlan shouldbe one which:

".analyses the existing condition of the catchment;

.identifies issues impacting on the long term (10 year plus) EcologicalSustainability of the catchment;

.nominates a range of options for the on-going management of the asset;

.recommends a preferred strategy in the form of a plan ofaction."

His Honour said:

"The Plan was intended to be developed in three phases, the time for each ofwhich was stated in weeks. The total estimate was 51weeks. In December 1995,the Minister for Land and Water Conservation acceded to Council's request for a$10,000 grant towards thecost of the plan. Notwithstanding this and lateradditional assistance from CALM, when this case was heard, almost three yearslater,the plan was still incomplete."

178On the appeal, it was submitted that in this passage his Honourmis-stated the effect of the relevant document by arriving atthe total offifty-one weeks by erroneously adding up various numbers of weeks which werenot separate components of an addition.

Part 5 - Contamination of the Lake

179The learned primary Judge reviewed, over twenty-three pages, the evidencetouching faecal contamination of Wallis Lake underten headings:

(i)The problem at Nabiac, a village of about 600 people within theShire of Great Lakes, northwest of Forster-Tuncurry and about 17.5kms awaywhich lacked a reticulated sewerage system and relied substantially on septictanks.

(ii)Flow from Nabiac to the Lake, that is, whether septic effluentdischarged into the Wallamba River at Nabiac would reach the Lake duringthetime the viruses in the effluent remained viable.

(iii)Cooloongolook, a village which lies beside the Cooloongolook Riverwhich flows into the Lake, is a little closer by river than Nabiacto theoyster areas in the Lake, and discharged septic effluent at one location atleast, into the Cooloongolook River.

(iv)Shalimar Caravan Park, or, more fully, the Shalimar Ski and CaravanPark, a caravan park situated on a bank of the Wallamba Rivercontainingsubstantial mobile homes and numerous caravans catering for permanent residentsand casual holiday makers, which reliedon a septic sewerage system.

(v)Wallamba Caravan Park, a caravan park near the Shalimar Caravan Parkon the Wallamba River which also relied on a septic seweragesystem.

(vi)The Little Street public toilet, a public toilet in Little StreetForster some 800 metres north of the Barclay companies' premiseson the shoreof the Lake.

(vii)Islands in the Lake, which were used by overnight campers and someof which had makeshift "pit toilets".

(viii)Watercraft, many of which were not fitted with "holding tanks orother suitable treatment devices" and most of which "were fittedwith`standard' direct disposal units".

(ix)Stormwater drains, some of which in Forster and Tuncurry carriedhigh levels of faecal coliforms to the Lake, especially after heavyrain.

(x)Other possible sources, notably seepage from Council's sullagedepots and escape of sullage into the Lake during its transportationfrom theForster sewerage treatment depot to Tuncurry sewerage treatment depot.

Part 6 - Council's position

Council's statutory powers

180The learned primary Judge discussed the legislation in force at the timerelevant to the Council, its financial situation andits reaction to the septictank problem. The Council exercised powers under theLocal GovernmentAct1993(NSW),s 7 of which specified the Act's purposes,including:

"(a)to provide the legal framework for an effective, efficient,environmentally responsible and open system of local government inNew SouthWales,

...

(d)to give councils: ...

a role in the management, improvement and development of the resources of theirareas;

(e)to require councils, councillors and council employees to have regard tothe principles of ecologically sustainable developmentin carrying out theirresponsibilities".

181Section 68 required the Council's approval before a person carried outan activity specified in the Table to that section. The Table included"Carryout sewerage work" and "Install, construct or alter a waste treatment device ora human waste storage facility or a drainconnected to any such device orfacility". The term "sewerage work" was defined in the Dictionary to the Actin wide terms as follows:

"sewerage work means the construction, alteration,extension, disconnection, removal, ventilation, flushing or cleansing of anysewerage servicepipes or fittings or fixtures communicating or intended tocommunicate, directly or indirectly, with:

(a)a septic tank, an effluent or a sullage disposal system, or

(b)any sewer of a council,

and includes work of sanitary plumbing and work of house drainage."

182Senior counsel for the Council submits that the prohibition in s 68 ofcertain activities without Council approval is irrelevantto any question ofhis client's liability.

183Clause 45 of the Local Government (Water, Sewerage and Drainage) Regulation1993(NSW) provided that in determining an application under s 68 of theAct for,inter alia, "carrying out sewerage work", a council wasrequired to have regard to "the protection and promotion of public health","the protectionof the environment" and other matters specified in theclause.

184By way of summary his Honour stated thats 124 of theLocal GovernmentAct1993empowered a council (amongst other things) to order anowner or occupier of premises:

"(i)to take action to comply with relevant standards inrelation to a `sewerage system on premises';

(ii)to do or refrain from doing specified things `to prevent environmentaldamage' or further environmental damage, where damageto the physicalenvironment has been caused, or is likely to be caused, by drainage works;

(iii)to cease conducting an activity that is a threat to public health; and

(iv)not to permit the use of a human waste storage facility on premises aftera specified date."

185I refer tos 124 in more detail later.Section 125 empowered a councilto abate a public nuisance or to order a person responsible for a publicnuisance to abate it.

186Part 2 (ss191-203) of Chapter 8 (ss 186-203) of the Act gave councilsextensive powers of entry, inspection and investigation, including powers ofentry, inspection and investigation on private land: see ss 192 and 197.Section 197 provided:

"If a person authorised by a council enters any premises underthis Part for the purpose of making an inspection and as a result ofthatinspection, under a power conferred on the council, the council requires anywork to be carried out on or in the premises, thecouncil may recover thereasonable costs of the entry and inspection from the owner or occupier of thepremises."

187His Honour also referred tos 29 of theClean Waters Act1970 (NSW) which empowered an "authorised officer" to enter any premisesfor the purpose of investigating discharges of wastes or pollutantsinto anywaters. His Honour noted that Mr Brooker, at least, was such anauthorised officer.Section 27 of theClean Waters Actread asfollows:

"27(1)Where any waters, ... are polluted by any person, anystatutory authority or local authority may and shall, if directed todo so bythe Authority[the EPA], take such action as is necessary to remove,disperse, destroy or mitigate the pollution and may recover all costs andexpenses incurredby it in connection with the removal, dispersal, destructionor mitigation of the pollution from that person.

(2)Any such costs and expenses may be recovered as a debt in a court ofcompetent jurisdiction."

Evidence was given about Council's financial situation but nothing turned onthe detail of this evidence in the appeal.

188Council officers were aware of the health significance of pollution fromseptic tanks. In September 1996, some four to fivemonths before the outbreak,Council'sState of the Environment Report for 1995-96 included passageson the topic of effluent disposal and the danger of seepage from septic systemsinto the waterways. The followingpassage appeared:

"The evidence of failure of on-site systems is plentiful.The reasons underlying these failures relate more to the planning, operationand maintenance of systems rather than inherent designfaults in thetechnology.If we are to protect the quality of water in our catchments,the basis upon which systems are selected, installed operated and maintainedneeds to be altered. Local authorities in many instances need to take a moreactive role and require support at the State levelwith the most currentinformation on on-site wastewater management. ..."(emphasis by primaryJudge)

Mr Brooker's recommendations to Mr Braybrooke dated 9 May1996

189The primary Judge observed that, notwithstanding this, Council officersdecided to give up investigating complaints about septictanks. On 9 May 1996,Mr Brooker sent a memorandum to his immediate superior, Adrian Braybrooke,which included the following:

"Over the past months I have received a number of septic tankcomplaints which have remained outstanding.The reason these complaintshave not been dealt with is that they cannot be effectively resolved withoutsupport and direction fromCouncil.

The difficulties with septic tank installations is that any rectification orconstant maintenance, such as pumpouts, requires considerablefinancialresources and these installations tend to be in areas where occupants directlimited financial resources to other areasthat they consider to be moreappropriate. Another major problem is thatthe numbers of complaints arerelatively small compared to the septic tank installations which are notoperating in accordance withthe environmental public health requirements andto focus in on those few areas of complaint appears to be discriminatory asmanyneighbouring properties have similar systems which do not operatesatisfactorily.

I recommend that no action be taken at this point and that complainantsbe advised of suchas Council will, hopefully in the near future, bereceiving a report from the Planning Services Division, with my comment, on thedifficulties associated with septic tanks. I hope that this report receivesfavourable consideration from Council, which may permitthe development ofpolicies and community protocol so as to address the septic tank effluentproblems as a whole rather than on anindividual basis which is currently thepractice.

RECOMMENDATION

1.That the complainants be advised that a report is being presented to Councilconcerning septic tank disposal systems.

2.That these complaints be held pending the report to Council." (emphasis byprimary Judge)

190On 17 May 1996 Mr Braybrooke endorsed the memorandum:

"Agreed. Please formally notify Mgr Bld Services that you areawaiting results of his report to Council. Careful wording of advicetocomplainants, weare interested in finding solutions. Schedule a reviewof the situation for 12 weeks time, let's look at the opportunities againthen."(emphasis by primary Judge)

191The foreshadowed "review of the situation" did not occur.

192In cross-examination, Mr Brooker said that after he readMr Braybrooke's comments, he realised that a policy of non-response"wouldbe a ridiculous position to take and continued on dealing with complaints",although he did not inform Mr Braybrooke, at leastin writing, of hischange of mind and practice. He agreed, however, that he was unaware of anynotice about defective septic tanksbeing issued by the Council to any propertyowner between that time and the hepatitis A epidemic in early 1997. He said:"We negotiatewith owners rather than issue notices". But there was noevidence before his Honour of negotiation with any owner either.Mr Braybrookedid not testify. His Honour recorded that he did notbelieve Mr Brooker had changed his position at all from that expressed inhismemorandum.

Mr Tuxworth's report of 21 May 1996

193His Honour noted that in stating that the review foreshadowed inMr Brooker's memo of 9 May 1996 did not occur, he did not overlookareport dated 21 May 1996 twelve days later, prepared by Tony Tuxworth,Council's Manager, Building Assessment, with contributionsby Mr Powell (asewerage expert) and Mr Brooker, which addressed "a number of issuesrelating to the approval, operation and managementof on-site effluent disposalsystems within the Council area". The report noted that "on-site waste watermanagement systems oftenfail[ed] to meet environmental and health protectionstandards which [would] have a detrimental impact on ... waterways andsurroundingenvironment and health of the community". Particular reference wasmade to "the spread of disease by bacteria, viruses, parasitesand otherorganisms in the wastewater". Mr Tuxworth's report recorded that it was"not uncommon for premises with pump-out septictank systems to divert greywater so that it does not discharge to the septic tank". He maderecommendations directed to improvingthe position and Mr Powell commentedin writing that he agreed with the thrust of the report. His comment includedthese passages:

" ... in the smaller villages and rural areas, very littlecontrol is exercised on liquid waste disposal. Many of the systems justdo notwork and localised pollution of the environment results.

..........................................................................................................

My own experience with both septic and aerated systems are that they can bea gross pollutant unless very carefully managed and maintained. This work canbe undertaken at full cost recovery."

194Mr Brooker's note on the report recorded his agreement that "theproblems resulting from the defective septic systems demand action"and thatMr Tuxworth's recommendations had considerable merit.

195Council's Director of Planning Services added a note recommending "theinformation be noted and actions resulting from the briefingbe incorporatedinto a further report to Council" and Council resolved "that the Director bringback a more specific report".

Mr Brooker's report of 8 October 1996

196On 8 October 1996, Mr Brooker reported to the Works and ServicesCommittee of Council relating to "the health and environmentalproblemsassociated with inappropriate and failing on-site waste water systems". Thereport contained a Table setting out the resultsof random sampling of streetstormwater at ten non-sewered locations taken on 13 August 1996. The Table setout, in relation toeach sample, figures for electrical conductivity, phosphatelevel and faecal coliform level. Most of the locations lay outside theWallisLake Catchment area but one was at Cooloongolook, the sample from which showeda faecal coliform reading of 3,780,000 cfu/100mlwhich Mr Brookerdescribed as "grossly polluted with septic tank effluent", and of which he said"it indicated that the effluentis likely to be piped directly to the streetgutter".

197Mr Brooker's report of 8 October 1996 mentioned the formation of an"Effluent Group" comprising various Council officers whichhad the goal ofensuring that there were effective systems for the collection, treatment anddisposal of sewage within the Shireof Great Lakes in order to "protect theenvironment and the health of the public". His report referred to otherAustralian studiesthat had "detailed public health risks resulting fromdefective effluent disposal systems". He mentioned the presence of virusesinsewerage including poliomyelitis, meningitis, pneumonia, acute gastroenteritisand hepatitis. Five of the ten samples taken on13 August 1996 yielded faecalcoliform levels above 10,000 cfu/100ml. Mr Brooker commented: "thedisturbing aspect of these samplesis that they were collected from streetgutters which are within the public environment exposing the public to risk ofdisease". He warned Council of its potential legal liability and observed that"Council has no money allocated to this area and no effectivepolicies toprotect public health through ensuring appropriate installation of systems andappropriate maintenance". But neitherhe nor his supervisor, the Director ofCommunity and Recreation Services, made any recommendation for action.

198On the recommendation of that Director, Council merely resolved that itnominate representatives to the Effluent Group and thatthe issues of effluenttreatment and disposal from premises with on-site waste water systems beaddressed by the development of policiesand systems in the future, and thatthe community be involved in that process. The primary Judge recorded that sofar as the evidencerevealed, no action was taken to meet the problemsidentified by Mr Brooker in his report of 8 October 1996 prior to thehepatitisA outbreak which occurred three months later. In particular, noinspection régime was put in place until after the epidemicbecameknown. Mr Brooker agreed in cross-examination that discussion in theEffluent Group never "actually resulted in anybody goingout into the field anddoing anything", although he was aware thats 27 of theClean Waters Actauthorised a local government authority to enter premises and rectify problemscausing any run-off of faecal matter that might enterthe waterway and torecover the cost from the proprietor.

Part 7 - The 1996-1997 oyster season

199Under normal conditions, the oyster harvesting season in the Lake extendsfrom mid-October until April. Barclay Oysters startedharvesting at the usualtime. In the period 22-25 November 1996 there was heavy rainfall. At Forsterthe readings for the twenty-fourhours to 9.00 am on the second of thefollowing stated days were as follows: 21-22 November 4.00mm; 22-23 November66.6mm; 23-24November 39.8mm; 24-25 November 19.00mm.

200Mr Barclay agreed that on these readings it would have been wrong foran oyster grower to harvest on 23 November and that itwould be a risk topublic health to do so. He maintained that Barclay Oysters did not do so,notwithstanding entries in its recordsindicating a harvesting of ninety-twobags of oysters on 23 November. When pressed, Mr Barclay asked that thequestion be referredto his company's Office Manager, Richard Ellery, who wasto follow him in the witness box. Mr Ellery was responsible for qualityassurance management but did not have this task in the 1996-97 season. At thattime it was the responsibility of Gary Atkinson,the foreman. Mr Ellerydid not remember 23 November but surmised that any harvesting would have takenplace only after the makingof a salinity test and a visual inspection of thewater. He said:

"... if it was still raining on the morning of the23^rd we would have started work at 5 o'clock in the morning, wewould have removed trays till 9 o'clock [morning tea time] and that wouldhavebeen it."

201Although still employed by Barclay Oysters at the time of the trial,Mr Atkinson was not called to give evidence.

202Whatever the position in relation to 23 November, it seems there was nofurther harvesting between that day and 27 November,some two days after therain stopped.

203Oysters taken from two Barclay leases and received by the laboratory on 26November tested negative forE. coli. The sample consisted of about onedozen randomly selected oysters. A similar result occurred in relation tosamples from two leasessubmitted on 3 December, samples from three leasessubmitted on 17 December, and samples from two leases submitted on 9 January1997. During that time Barclay Oysters continued to harvest and to supplyoysters, after depuration, to distributors for resupply to thepublic.

204On 21 December 1996, Thomas Ryan, Mr Ryan's father, bought six dozenoysters from Barclay Distributors. He took them to hisholiday home at GreenPoint and, subsequently, to his home in Sydney. The oysters were consumed onChristmas Day by members of hisfamily, including Mr Ryan.

205On 31 December, David Ryan, Mr Ryan's brother, bought a further tendozen oysters from Barclay Distributors. He took them toSydney the followingday and gave about two dozen to Mr Ryan who consumed them a few nightslater.

206On 30 January 1997, Mr Ryan began to feel unwell, although he went towork as usual. The following day he felt more ill. Onthat day he attendedhospital for the birth of his fourth child and felt faint. On 1 February 1997he saw his general practitionerwho arranged blood and urine tests. Theydisclosed that Mr Ryan was suffering from hepatitis A.

207According to a subsequent report by the Department of Health, hepatitis Anotifications increased in the week commencing 20January and peaked on 3February.

208By about 10 February, the Department of Health established the probabilityof a connection between the hepatitis A epidemicand Wallis Lake oysters. HisHonour noted that the existence of the causal link was not challenged beforehim and that all partiesconducted their cases on the basis that it wascorrect.

209Mr Barclay first became aware of the hepatitis A problem on about 11February when his premises were visited by Mr Bird, anofficer of theTamworth Area Health Service, and Mr Brooker. He immediately recalledoysters from all his customers. On 14 February1997 local growers met atMr Barclay's premises and decided to cease harvesting. On 14 February1997, Dr Kerry Jackson, the Co-ordinatorof the State QAP, issued a notice to"Wallis Lake Claim A Aquaculture Permit Holders." It stated as follows:

"Due to recent events in the Wallis Lake area the Wallis LakeQuality Assurance Program in consultation with the New South Wales ShellfishQuality Assurance Program (NSW SQAP) has undertaken that all growers willimmediately cease the harvest of any shellfish from leaseslocated within theconfines of Wallis Lake.

The cessation of harvesting will remain in force pending the results offurther investigations by NSW Health and local industry.

The harvest ban will be monitored by the local Quality Assurance Committee,NSW SQAP State Coordinator, NSW Health and NSW Fisheries."

210Barclay Oysters did not resume harvesting until the commencement of the1997-98 season.

211Testing of sample oysters was carried out. The results showed that faecalcontamination was widely dispersed in the estuary.

212The Council organised a sanitary survey. There was a five-day intensivesurvey in which fourteen people participated. Theywere supplied by publicagencies, chiefly the Council and the EPA. The sanitary survey was followed byinspections over the succeedingmonths of 319 residences, sixty-one boatshedsand oyster depuration sheds, thirty-one watercraft, and the Lake's islands andforeshorereserves. According to a report by the EPA, of the 319 residences,154 required follow-up action and seven of these were classifiedas "clearlydischarging to waterways", sixteen were rated as a "high risk" and forty-fourwere rated as "moderate risk". The EPAreport also revealed that in the wakeof the hepatitis A epidemic, Council had recommenced its water monitoringprogram and instituteda régime of compulsory pump-out of septic tanksin the Lake catchment area, including at Nabiac.

213On 19 March 1997, the Minister for Fisheries approved the Wallis LakeShellfish QAP as a local program under cl 12E(3) of theFisheries Management(Aquaculture) Regulation. However, there was still no New South WalesShellfish QAP to lay down general principles to be applied in local programs.Notwithstandingthis, the Wallis Lake program dealt with such matters as theeducation of oyster farmers, "environmental survey of potential sourcesofpollution", monitoring for pollution (including water testing, pre-purificationoyster meat testing and post-purification oystermeat testing), physicalparameters for harvesting and purifying, a pollution early warning system,"collaboration with other stakeholders"(the Council, Health Department andFisheries Department) and administrative arrangements, including rulesconcerning the closureand re-opening of harvesting after rain or a pollutionincident. The local program noted that there had now been mapped "all knownsources of pollution". Routine water testing was to be conducted on a weeklybasis at sites designated by Council in associationwith oyster growers. Thepre-purification oyster meat testing requirement was for a weekly test of fivesamples from each of thetwo zones into which the program divided the Lake;that is, ten samples in all. The post-purification tests were to be arrangedby individual growers, each purification plant with a capacity of twenty-fivebags or more being required to submit a sample fromeach batch of oysterspurified, and smaller plants less frequently.

214On 2 April 1997, Graham Clarke of the EPA reported to George Dodds(presumably also of the EPA) regarding a meeting of the WallisLake WorkingGroup on 26 March 1997. The report included the following:

"Council presented additional water quality monitoring results,in summary low levels of FC being detected in the lake/river withsome `spikes'recorded at random locations after rainfall.Viral sampling of sedimentsindicate hot spots around Nabiac and in the Wallamba River in the stretch wherethe caravan parks arelocated. Council suggested that FC results aredifficult to interpret and future monitoring should focus on using one viralindicator. Anxious to scale down their monitoring and to be replaced by the`program' under consideration by the task force, QAP and industryrequesteddaily sampling to continue over Easter period. Council to sample water qualityon one or two days over the period."(emphasis by primaryJudge)

215Immediately after the first reports suggesting a link between hepatitisA cases and the Lake, the New South Wales Department ofHealth formed twoinvestigatory teams: an epidemiological team and a field team. The latter wasled by Mr Bird and Greg Bell, SeniorEnvironmental Health Officer in theNew England Public Health Unit of the Department. Messrs Bird and Bell wrote areport, a copyof which they supplied to Council on 28 February 1997. MessrsBird and Bell stated in their report:

"A number of likely sewage sources discharging into theWallamba River up to, including and climaxing in November 1996 resulted insufficient HAV in sediments, water and oysters caused by a doubling ofpopulation which overloaded sewage disposal systems to becomean infectivedose. High rainfall in November and a ski speed boat competition over aweek in November on the Wallamba River flushed sediments suspendinghigh levelsof HAV in the water column further polluting oysters and severely polluting theWallamba River. Wallamba River out goingtides flowed over oyster areas aroundWallis Island on its way to the ocean. There was ineffective QAP monitoringoyster areas,no water monitoring program by Council of likely pollutionsources and a number of purification plants were not operated properly. Peakharvesting of millions of Wallis Lake oysters occurred in the December/Januaryholiday period providing increased numbers ofoysters for public consumption."(emphasis by primary Judge)

Although the views expressed in this passage were formed at a relativelyearly stage, there is nothing to suggest that Mr Bird orMr Bell everdeparted from them. Neither was called to give evidence supporting a differentview.

216Apparently the views of Messrs Bird and Bell were shared by other membersof the Wallis Lake Oyster Crisis Strategic WorkingParty on which the Councilwas represented.

217The opinion that there were multiple sources of the infection was supportedby expert evidence led before the primary Judge. For example, Mr Murphysaid in his statement:

"For the level of virus in the lake to be high enough tocontaminate some 260 people it is highly likely that the source ofcontaminationwould have been more than one infected person. This is becausean extremely large number of virus particles must have been in thelake. Themore infected people who are contributing to the source of contamination, thegreater the level of viral particles inthe water. It would be unlikelythat one person would excrete enough virus particles to cause such widespreadcontamination. It is more likelythan not that the HAV contamination came fromthe community sewerage facilities in the area. Coincident with such asignificantamount of virus particles entering the estuary, it is very likelythat there would have been markedly elevated levels of faecalcoliforms."(emphasis by primary Judge)

In oral evidence Mr Murphy explained that his expression "communitysewerage facilities in the area" was intended to include septictanks incaravan parks and private residences. He agreed that it was not feasible toeliminate the possibility that an infectedcasual pollutercontributedto the problem, but emphasised that, as infected oysters came from a numberof places, one polluter could not have been the sole causeof the infection.Professor King supported Mr Murphy's opinion from a hydrological point ofview.

218His Honour recorded that none of the experts challenged the "multiplesource theory" and that by the end of the hearing it hadbecome almost commonground. Nor has it been in issue on the appeal.

219In an important passage, his Honour concluded on this issue as follows:

"Although it is not possible to say the HAV contamination of thelake came from any particular source, in common with the expertsI conclude itemanated from many sources. For multiple human faecal contamination to lead tomultiple HAV contamination, there wouldneed to be more than one infectedperson in the area at a relevant time. However, given the population of thedistrict, I see noreason to reject that possibility. Again in company withthe experts, I believe the contamination probably stemmed from land-basedpollution sources. One or more boat people may have contributed to theproblem, but the extent and distribution of the HAV contaminationtells againstthis being its primary source."

220His Honour rejected a challenge made by the Council to the assumption madeby most of the expert witnesses that the HAV outbreakwas associated with theNovember 1996 rain. Again, this has not been an issue on the appeal and I neednot discuss the detail ofCouncil's submission or his Honour's reasons forrejecting it. However, his conclusion on the matter is importantbackground:

"It is obviously not possible to be precise about the period ofconsumption of contaminated oysters; still less their dates of harvesting.However, it seems unlikely the contaminated oysters were harvested before theNovember rain. They could have been harvested at anytime after the resumptionof harvesting on about 27 November. I do not think it is correct to say theillness pattern is inconsistentwith there being a causal relationship betweenthe HAV outbreak and the November rain. On the contrary, it seems to me highlylikelythat the rain brought the HAV contamination into the lake. I note thisview accords with that expressed by Council's hydrologicalexpert,Mr Hurrell. He agreed with Mr Alton that `human faecal materialwas/is impacting on Wallis Lake in sporadic high levels,with multiple sources,triggered during rainfall conditions'".

REVIEW OF AUTHORITIES RELEVANT TO THE LIABILITY OF THE COUNCIL AND THE STATE INNEGLIGENCE

221The learned trial Judge found that the negligence of the Council and theState consisted in a failure to exercise their statutorypowers. The questionsraised are whether the Council and the State owed a duty of care to consumersof oysters harvested from theLake, and, if so, whether they breached that dutyby failing to exercise their statutory powers, and, if so, whether that breachcaused Mr Ryan's illness.

222Before I consider the individual appeals, I will outline in chronologicalsequence the leading Australian authorities relevantto the issue of anegligent failure of a public authority to exercise its statutory powers.Liability of the present kind is a comparativelyrecent development and theapplicable legal principles are not yet clearly and firmly established.

Major Australian Authorities

223A convenient starting point isSutherland Shire Council v Heyman[1985] HCA 41;(1985) 157 CLR 424 ("Heyman"). The respondents in that casepurchased a house in 1975. In 1976 structural defects appeared. These werecaused by the subsidenceof inadequate footings. The municipal council hadapproved plans and issued a building permit in 1968. Its officers had carriedout inspections when the house was under construction but there was no evidencethat they had inspected the footings. When the respondentspurchased, they didnot obtain from the council a certificate that the building was a complyingone. Nor did they enquire of thecouncil. Nonetheless, they claimed that thecouncil owed them a duty of care and was liable to them in damages on the basisthatthe structural defects had flowed from the council's negligent inspection.

224A finding by the trial Judge that the council was not negligent inapproving the plans and issuing the building permit was notchallenged onappeal. But his Honour found that a council officer had inspected the siteafter the foundation trenches were openand before the foundations were laidand that the council was negligent in the manner of inspection.

225It was a condition of the building approval that the council be notifiedwhen foundation trenches were open and before foundationswere laid. If thetrenches had been inspected it would have been obvious that they were, and theproposed footings would be, inadequate. Searches of council files reveal arecord of only one inspection, by which time the frame of the house had beenerected. The recordof the inspection read "Frame OK".

226The trial Judge inferred that the builder had given the required notice tothe council and that its officer had inspected theopen trenches. The Court ofAppeal held the inference insupportable but thought that the council had beennegligent on the occasionof the frame inspection in not then detecting theinadequacy of the footings.

227All five members of the High Court agreed that the council was not liable.Gibbs CJ, with whom Wilson J agreed, was of thatview because the evidence didnot establish that the council officer had inspected the foundations at all, adiscretionary matterrather than an obligatory one, or that it would have beennegligent for him to inspect the frame without inspecting the foundations.

228Mason, Brennan and Deane JJ thought the council not liable because, in theabsence of inquiry of it by the respondents, theyhad not relied on its havinginspected the building and satisfied itself that the building complied with thelaw, and it owed themno duty of care (Deane J thought the absence of relianceindicative of the absence of the necessary element of proximity). TheirHonours referred to the fact that, although s 317A of theLocal GovernmentAct 1919(NSW) provided for applications to be made to councils for, andthe issue by them of, certificates that buildings complied with thatAct andthe Ordinances made under it, the respondents had made no such application.

229Mason J thought that it was "reliance" on a public authority to perform afunction that gave rise to a duty to exercise a statutorypower. His Honourdistinguished between "specific reliance" (or "specific dependence") and"general reliance" (or "general dependence"), and said (at 463-464):

"In the case of a public authority, the foreseeability of theplaintiff's reasonable reliance is a sufficient basis for finding aduty ofcare, subject to such dispensations as may arise from the special character ofa public authority exercising statutory functions,a matter to be discussedshortly.

If this be accepted, as in my opinion it should be, there will be cases inwhich the plaintiff's reasonable reliance will arise outof a generaldependence on an authority's performance of its function with due care, withoutthe need for contributing conduct onthe part of a defendant or action to hisdetriment on the part of a plaintiff. Reliance or dependence in this sense isin generalthe product of the grant (and exercise) of powers designed toprevent or minimise a risk of personal injury or disability, recognisedby thelegislature as being of such magnitude or complexity that individuals cannot,or may not, take adequate steps for their ownprotection. This situationgenerates on one side (the individual) a general expectation that the powerwill be exercised and onthe other side (the authority) a realization thatthere is a general reliance or dependence on its exercise of a power: ... .Thecontrol of air traffic, the safety inspection of aircraft and the fightingof a fire in a building by a fire authority ... may wellbe examples of thistype of function. Whether the inspection of motor vehicles for registrationpurposes could generate such a generalreliance is a more complex question: ...."

230The absence of evidence of reliance was also emphasised by Brennan J andDeane J. Brennan J said that the legislation did notimpose on the council aduty to inspect the foundations and that the only positive act by the council,its approval of the plansand the issue of the building permit, did not giverise to a duty to inspect. Deane J referred to the absence of any contactbetweenthe respondents and the council before the purchase and othercircumstances as indicating an absence of "proximity" between them.

231Heyman is important for present purposes because in it the HighCourt recongised that a public authority might incur liability founded incommon law principles governing tortious liability for negligence arising outof a failure to exercise a statutory power, the exerciseof which would haveprevented the plaintiff suffering loss from the conduct of others,providedalways the public authority had come under a duty to exercise the power.No member of the Court suggested that there was a general duty to exercise thepower of inspection prior to the laying of foundationsin the case of everybuilding permission issued by the council, notwithstanding the fact that it wasforeseeable that inadequacyof foundations might lead to injury to the person,damage to property and commercial loss. It did not matter that Parliamentcouldhardly have intended councils to ignore their function of enforcing thestatutory prohibition against construction of buildings otherwisethan inaccordance with the conditions of building permits and, to that end, theexercise of their power of inspection, or that councilsshould be at liberty toopt for a policy of never performing that function, or, to that end, exercisingthose powers. Nor did itmatter that at least one purpose of the giving of thefunction and power must have been protection of the person and property. Someadditional consideration had to be present giving rise to a positive duty toexercise the power of inspection.

232Heyman was soon referred to inMcDonogh v Commonwealthof Australia(1985) 73 ALR 148 (FCA/FC). The plaintiff was injuredwhen the truck he was driving overturned on a road on unalienated Crown land.The Commonwealth maintainedthe road. The way in which it was maintainedcreated the appearance that it was level and firm but in fact its outer portionwasinadequate to support the truck. By majority, a Full Court of this Courtheld that while generally a highway authority is not liableto road usersarising out of the state of disrepair of a road, it can be liable if, by theappearance of things resulting from itspositive conduct, it induces drivers tobelieve that it is actively ensuring that the road is adequate. Thecircumstances were classifiedas misfeasance rather than non-feasance and themisfeasance extended to include the consequences of action.

233Heymanwas considered inParramatta City Council v Lutz(1988) 12 NSWLR 293 (CA) ("Lutz"). The plaintiff had repeatedlycomplained to the local municipal council about the partly burnt, dilapidated,unoccupied propertynext door to her house, which attracted the attention ofchildren, vandals and vagrants. Other residents in the same street alsocomplained to the council. The council advised the plaintiff that it had thematter in hand and would take action. Eventually itissued a demolition orderunder s 317B of theLocal Government Act 1919 (NSW), but before thatorder was executed a fire commenced in the property and spread to and destroyedthe plaintiff's house.

234The trial Judge held the council liable in damages for negligent failure toexercise its power under s 317B to order the ownerof a building that is "insuch a dilapidated or unsightly condition as to be prejudicial to the propertyin or inhabitants of theneighbourhood" to demolish the building or to re-erectit or put it in a satisfactory state of repair and condition, and in defaulttoexecute the order itself. The condition of the existence of the power was theexistence of an objective state of affairs andthere was no issue but that thestate of affairs existed here. Accordingly, the council's powers had becomepresently exercisable. If the council had demolished the building after expiryof the period of the notice as it was empowered to do, the fire would nothaveoccurred.

235The New South Wales Court of Appeal dismissed the council's appeal. KirbyP held that a duty of care arose from the "relationshipof proximity" betweenthe plaintiff and the council in the "special circumstances" of thecommunications between her and the council.Mahoney JA thought that the councilhad come under a duty of care arising from "advice" it had given the plaintiffthat it "was undertakingaction with reasonable expedition to protect her" andher reliance on that advice by refraining herself to take steps to abate thenuisance. McHugh JA distinguished between two causes of action pleaded by theplaintiff: an action based on negligent informingor advising of the kindrecognised inHedley Byrne & Co Ltd v Heller & Partners Ltd[1963] UKHL 4;[1964] AC 465, and negligence in relation to the exercise of a statutory power.As to the former, unlike Mahoney JA, his Honour thought that theplaintiff hadnot proved that reliance on the council's statements had caused her loss. Asto the latter, his Honour spoke of actualor "ceded control of a socialsituation as the touchstone of liability for public authorities", that is, asgiving rise to a commonlaw duty on the part of a public authority to exercisea power to prevent a third party causing loss to the plaintiff. His Honouracknowledged that this concept had not been mentioned inHeyman andmight even be inconsistent with the decision in that case, since the council inthat case had taken upon itself control of buildingin its area. His Honourexplained that "the general reliance concept depends upon the existence of astatutory power while, underthe concept of actual or ceded control, theexistence of a statutory power goes more to breach than to duty" (at 330B).His Honour thought that the Court should adopt the concept of "generalreliance" which Mason J had expounded inHeyman, a concept "not farremoved from the concept of control", as the foundation of a duty in a publicauthority to take affirmative action.His Honour concluded that although theplaintiff had not relied to her detriment on the council's statements, her casecame withinthe concept of general reliance. As will be noted below, the"doctrine of general reliance" was later to fall into disfavour inthe HighCourt.

236Pyrenees Shire Council v Day(1998) 192 CLR 300("Pyrenees") was much referred to in submissions. The case concernedadjoining premises at 70 and 72 Neill Street, Beaufort. Beaufort wasin theShire of Ripon at the time of the fire that gave rise to the case but it laterbecame part of the Pyrenees Shire ("the Shire"- an expression that I use alsoto refer to the party). In 1988, No 70 was owned by Mr and Mrs Nakos andlet to Mr and Mrs Tzavaras. On 9 August 1988 the Country Fire Authority("CFA") was summoned to the premises after Mr Tzavaras' assistant becamealarmed bywhat he thought was a fire in the chimney. The fire or smoke wasquickly doused but the attending CFA officer saw that some mortarwas missingfrom bricks in the back and bottom of the fireplace. He advised the assistantthat the fireplace was unsafe to use. The CFA notified the Shire. On 11August 1988 Mr Walschots, a building and scaffolding inspector of theShire, carried out an inspectionand saw certain defects. He pointed these outto Mr Tzavaras and told him not to use the fireplace unless it was firstrepaired. On 12 August 1988 Mr Walschots wrote a letter to "P Tsavaros & SNakos" at the address of the premises, describing the problemand stating thatit was imperative that the fireplaces (there were actually two, back to back)not be used under any circumstancesunless they were first repaired.

237The trial Judge found that Mr Tzavaras received this letter but didnot inform Mr Nakos of it or of the previous oral warningthatMr Walschots had given him.

238In early 1990, Mr and Mrs Stamatopoulos negotiated to buy the businesscarried on in No 70 and the lease of those premises. Mr Tzavaras did nottell them about the Shire's letter. In fact, when Mr Stamatopoulos askedwhether the fireplace was in use,Mr Tzavaras simply replied that it was.A Stamatopoulos family company, Eskimo Amber Pty Ltd ("Eskimo"), took fromMr and Mrs Tzavarasan assignment of their tenancy.

239In May 1990 there was a fire in No 70 which destroyed those premises anddamaged No 72 owned by Mr and Mrs Day.

240The fire gave rise to three actions against Mr and Mrs Tzavaras andthe Shire. Mr and Mrs Nakos sued Mr and Mrs Tzavaras, theirformertenants, for damages for negligence and the Shire for damages for negligenceand breach of statutory duty. At trial theysucceeded against Mr Tzavarasbut failed against the Shire.

241In the action by Eskimo and the Stamatopouloses the result was the same.

242Mr and Mrs Day succeeded against both Mr and Mrs Tzavaras and theShire; against the Shire in negligence but not for breachof statutory duty.The trial Judge apportioned liability: Mr Tzavaras two thirds and theShire one third.

243The Shire appealed to the Court of Appeal of the Supreme Court of Victoriafrom the judgment against it in favour of the Days. The Nakoses and Eskimo andthe Stamatopouloses appealed to that Court against the dismissal of theirclaims against the Shire. The Court of Appeal dismissed all three appeals. Byspecial leave, the Shire, Eskimo and the Stamatopouloses appealed to the HighCourt.

244Subsection 695(1A) of theLocal Government Act 1958 (Vic) was asfollows:

"For the purpose of preventing fires the owner or occupier ofany land upon which is erected any chimney or fire-place which is constructedof inflammable material or which is not adequately protected so as to preventthe ignition of other adjacent material of an inflammablenature may by noticein writing be directed by the council of the municipality within the municipaldistrict (24) of which such landis situated to alter the fire-place or chimneyso as to make it safe for use as a fire-place or chimney, as the case maybe."

The Act made it an offence not to comply with a notice issued under subs695(1A) and subs 694(1) provided that if a notice was notcomplied withthe council might "carry out or cause to be carried out any works or take anyother measures for the prevention offires". Accordingly, the Shire's powerswere ample to ensure that the defect in the fireplace was remedied and thatuntil it wasremedied, no fire would be lit in it. There was no issue but thatthe Shire's powers had become presently exercisable.

245The members of the High Court did not adopt a common approach to the issuewhether the Shire owed a duty of care.

246Brennan CJ thought that legislative intention, not community expectationsor control of the area of social conduct in question,was the basis ofliability in damages for a failure by a public authority to exercise astatutory power. The Chief Justice (at [21])quoted with approval,interalia, the following passage from the speech of Lord Hoffmann inStovin vWise[1996] UKHL 15;[1996] AC 923 (discussed later) at 953:

"In summary, therefore, I think that the minimum preconditionsfor basing a duty of care upon the existence of a statutory power,if it can bedone at all, are, first, that it would in the circumstances have beenirrational not to have exercised the power, so that there was in effect apublic law duty to act, and secondly, that there are exceptional groundsfor holding that the policy of the statute requires compensation to be paid topersons who suffer loss because the power was not exercised."(myemphasis)

247Accordingly, the Chief Justice placed the Shire's liability fornon-feasance in statutory public law rather than in the generalprinciples ofprivate law that govern tortious liability. His Honour stated (at [24],[25]):

"... a duty to exercise a power may arise from particularcircumstances, and may be enforceable by a public law remedy. Where apurposefor which a power is conferred is the protection of the person or property of aclass of individuals and the circumstancesare such that the repository of thepower is under a public law duty to exercise the power, the duty is, or inrelevant respectsis analogous to, a statutory duty imposed for the benefit ofa class, breach of which gives rise to an action for damages by a memberof theclass who suffers loss in consequence of a failure to discharge the duty. Thegeneral principles of public law establishthe existence of the statutory dutyto exercise the power and the statute prescribes the class of individuals forwhose benefit thepower is to be exercised.

Where the power is a power to control `conduct or activities which mayforeseeably give rise to a risk of harm to an individual' ...and the power isconferred for the purpose of avoiding such a risk, the awarding of compensationfor loss caused by a failure toexercise the power when there is a duty to doso is in accordance with the policy of the statute."

248The Chief Justice thought that there would be no liability in damageswhere a power was intended to be exercised "for the benefitof the publicgenerally and not for the protection of the person or property of members of aparticular class". However, his Honourthought that consistently with publiclaw principles the Shire was under a duty to Eskimo and Mr and MrsStamatopoulos as well asto Mr and Mrs Day. He said (at [28]):

"In the present case, although there was no public expectationthat the Council would exercise its powers to enforce compliance withtherequirements set out in Mr Walschots' letter, nor was any reliance placedby the respective plaintiffs on the Council's doingso,the Council wasunder a public law duty to enforce compliance with the requirements inMr Walschots' letter. The risk of non-compliancewas extreme for livesand property in the neighbourhood of the defective chimney and there was noreason which could have justifiedthe Council's failure to follow up theletter, even to the extent of prosecuting for any default. It isunnecessary to determine whether the Council would have been under a dutyitself to rectify the defects in the fireplaceif the owners and occupiers allfailed or refused to do so. The likelihood is that no more would have beenneeded to be done thanto ensure that the owners and occupiers knew of thedanger and to ensure that they knew of the request to remedy the latent defectwhich Mr Walschots' inspection had revealed." (myemphasis)

249Toohey J thought that the cases warranted, if they did not compel, aconclusion that the concept of general reliance was the criterionof proximityin cases where the duty to exercise a statutory power was said to arise andwhere the danger was not created or contributedto by the public authority.His Honour also thought that the distinction between "operational" and "policy"decisions "not particularlyappropriate or helpful in determining the presentappeals" (at [68]), and that in any event no policy considerations were said tohave explained the Shire's inactivity.

250The decisive part of his Honour's reasons is as follows (at [81] and[82]):

" ... The Shire had statutory power to deal with the dangerconstituted by the defective chimney. Through the exercise of that poweritcould have ensured that the danger was removed. It was a danger, not only to70 Neill Street but also to adjoining buildings. Indeed, if a fire broke out,it was almost certain to extend beyond 70 Neill Street, having regard to theage and construction ofthe buildings. The danger was necessarily unknown toadjoining owners and occupiers. In any event, had they known, the remediesavailable to them were, as Brooking JA said ..., `slow and expensive'. Inthose circumstances it is but a short step to hold that there was a generalreliance by neighbours, such as the Days, that the Shire would take steps toremove the danger of which the Shirewas aware and which it had the power toremove. Because the Shire did nothing further after the letter of 12August 1988, there was a breach of the duty of care which the Shireowed toMr and Mrs Day. No issue of causation arose on the arguments presented tothe Court.

However, Eskimo Amber and Mr and Mrs Stamatopoulos were in adifferent position, one which, in my view, did not point to any generalreliance on their part. The company was in occupation as lessee byreason of the assignment from Mr and Mrs Tzavaras. It is true that EskimoAmber andthe Stamatopoulos' were not in occupation on 9 August 1988. But thecompany had responsibilities as assignee which extended to thecondition of thepremises. And, in respect of the premises, the company stood in a particularcontractual relationship to the assignorsof the lease and to the lessors. Itis true that the trial judge described the defect in the premises at No 70 as`latent'. However,notice of the danger had been given by the Shire to theowners, at any rate to one of the owners, and to the original lessees, atanyrate to one of them.In those circumstances it is not appropriate to speakof general reliance as extending indefinitely to someone in occupation underanassignment of the lease, let alone someone in occupation by reason of theirassociation with the assignee. And this is so even if the Shire was awareof a new tenant coming into the premises."(my emphasis)

251McHugh J rejected criticisms of the doctrine of general reliance thathad been formulated by Mason J inHeyman and applied by McHugh J himselfwhen a member of the New South Wales Court of Appeal inLutz, as notedabove. His Honour observed that

*the doctrine applied only in limited situations "of such magnitude orcomplexity that individuals cannot, or may not, take adequate steps for theirown protection" (at [107], quoting from Mason J inHeyman at 464);

*it is required that the public authority know or ought to know that theplaintiff will suffer damage unless the authority takescare (at [108]); and

*the fact that the public authority owes a common law duty of care because itis invested with a function or power does not necessarilymean that the totalor partial failure to exercise that function or power constitutes a breach ofthat duty (at [109]).

252Like Toohey J, his Honour thought that the Shire owed a duty of care underthe general reliance doctrine only to Mr and MrsDay. Mr and MrsNakos, the owners of No 70, had rights of inspection and entry and it was notreasonable for them to rely on theShire to exercise its powers to protect themfrom defects in their own premises. For generally similar reasons, his Honourdid notthink that the Shire owed Mr and Mrs Stamatopoulos or Eskimo aduty of care: it was not reasonable for them, as the occupiers ofNo 70, torely on the Shire to protect them from defects in the premises.

253Gummow J thought the "general reliance" doctrine not sound on the basisthat it was a legal fiction without a solid theoreticalfoundation. His Honourpointed out that, asHill v Van Erp(1997) 188 CLR 159 illustrated,reliance is not always an essential ingredient in a negligence case, and (at[158]) that:

"The primary significance of reliance is in cases of allegednegligent provision of advice or information where reliance aids theformulation of a duty of care and detrimental reliance enters into the questionof causation of loss."

Of course,Pyrenees was not a case of that kind. His Honour thoughtthat the supposed doctrine of general reliance "assumes too general asignificancefor reliance in the law of negligence and then adds furthercomplexity" (at [163]). He noted that as a result of the speech of LordHoffmann inStovin v Wise[1996] UKHL 15;[1996] AC 923 at 953-955, the doctrine was nowdiscarded in English law.

254Nonetheless, Gummow J thought that the Shire owed a duty of care. HisHonour said (at [168]):

"In May 1990, the situation occupied in relation to thislitigation by the Shire as the arm of local government gave ita significantand special measure of control over the safety from fire of persons andproperty in Neill Street. Such a situationof control is indicative of a dutyof care(...). The Shire had statutory powers, exercisable from time totime, to pursue the prevention of fire at No 70. This statutoryenablement ofthe Shire `facilitate[d] the existence of a common law duty of care' ( ... ),but the touchstone of what I would hold to be its duty was the Shire'smeasure of control of the situation including its knowledge, notshared byMr and Mrs Stamatopoulos or by the Days, that, if the situation were notremedied, the possibility of fire was great anddamage to the whole row ofshops might ensue ( ... ). The Shire had a duty of care `to safeguardothers from a grave danger of serious harm', in circumstances where it was`responsiblefor its continued existence and [was] aware of the likelihood ofothers coming into proximity of the danger and [had] the means ofpreventing itor of averting the danger or of bringing it to their knowledge' ( ... )."(my emphasis)

In relation to the extent of the Shire's duty, his Honour said (at[172]):

" ...[t]he question then is what, as the acceptable minimum, indischarge of its duty of care, should have been done by the Shire before thesecond fire, bearing in mind the character in which the Shire would have actedand the nature of its duty. At the very least, theShire was obliged tomonitor the failure of Mr Tzavaras to carry out the repairs referred to inthe letter of 12 August 1988 andto alert the new occupiers of No 70 of theserious but latent danger constituted by the fireplace in the livingroom."

255Gummow J observed that the Shire did not discharge that duty. HisHonour also noted that it was not contended that the necessaryelement ofcausation was lacking. Rather, the Shire relied on certain "controlmechanisms". One of these turned on the distinctionbetween misfeasance andnon-feasance and between omission to exercise a statutory power and failure todischarge a statutory duty. Another was the "policy/operations" classificationof the activities of public authorities. His Honour thought that neithernegatedliability.

256His Honour considered that the circumstances did not involve "purenon-feasance" but rather an omission in the course of positiveconduct. Hestated (at [177]):

"A public authority which enters upon the exercise of statutorypowers with respect to a particular subject matter may place itselfin arelationship to others which imports a common law duty to take care which is tobe discharged by the continuation or additionalexercise of those powers. Anabsence of further exercise of the interconnected statutory powers may bedifficult to separate fromthe exercise which has already occurred and thatexercise may then be said to have been performednegligently...."

Gummow J also said that the case was not within the "core area" of policymaking that has been said to be immune from any liabilityin negligence. (HisHonour described the "policy/operational classification" as "not useful in thisarea").

257The result was, according to Gummow J, that the Shire's appeal should bedismissed but that the appeal by Eskimo and Mr andMrs Stamatopoulosshould be allowed.

258The fifth member of the Court, Kirby J, thought, followingCaparoIndustries Plc v Dickman[1990] UKHL 2;[1990] 2 AC 605 (HL) ("Caparo") at 617-618per Lord Bridge of Harwich, that the approach which should be adopted indeciding whether a legal duty of care existedwas to be found in the answeringof the following three questions:

"1.Was it reasonably foreseeable to the alleged wrong-doer thatparticular conduct or an omission on its part would be likely tocause harm tothe person who had suffered damage or a person in the same position? ...

2.Does there exist between the alleged wrong-doer and such person arelationship characterised by the law as one of `proximity' or `neighbourhood'?...

3.If so, is it fair, just and reasonable that the law should impose aduty of a given scope upon the alleged wrong-doer for the benefitof suchperson? ..."

His Honour thought that all three questions should be answered affirmativelyin favour of all plaintiffs. In answering the thirdquestion in that way, hereferred to the facts that the statutory power addressed the special risk offire which, by its nature,can imperil identifiable life and property; that thecase was one not of pure omission but the taking of some steps incompetently;that the Shire should have known that most people at risk were vulnerable,because they were ignorant of the danger disclosed byMr Walschot's inspectionand were unlikely or unable to discover it themselves; and that while thepromotion of individual choiceand the efficient use of resources is a properconcern of public authorities, so is the adoption of good administration andproceduresfor the proper use of statutory powers. His Honour also noted theseconsiderations which were said to suggest that it would notbe "fair, just andreasonable" that the law should impose a duty on the Shire but I will notsummarize them. Like Gummow J, KirbyJ found the doctrine of general relianceto be an unnecessary legal fiction which may often be indicative of a duty ofcare but whichwas not a criterion of universal application. In the result,his Honour concluded that the Shire's appeal should be dismissed andthe appealby Eskimo and Mr and Mrs Stamatopoulos should be allowed.

259There are difficulties in extracting aratio decidendifrom thejudgments inPyrenees. Three judges (Brennan CJ, Gummow J and Kirby J)rejected, while two Judges (Toohey J and McHugh J) applied, the doctrine orconceptof "general reliance" as the criterion of the existence of a duty toexercise a statutory power. Brennan CJ located the criteriafor the existenceof a duty of care in public law principles rather than in the common law ofnegligence, and emphasised that thepurpose of the statutory power must be theprotection of an individual or class of individuals. The other four Judgestreated thecase as raising the question in what circumstances tort lawprinciples imposed a duty of care on the Shire. Toohey J and McHughJconcluded that the Shire owed a duty of care to the neighbouring shop owners(the Days) but not to the assignee-tenants (Eskimoand the Stamatopouloses),based on the general reliance test formulated by Mason J inHeyman.Gummow J concluded in favour of the assignee-tenants as well as the neighbourson the basis of a test of a "significant and specialmeasure of control over... safety" from the particular risk in question, coupled with knowledge ofthat particular risk on the partof the Shire and ignorance of it on the partof the parties at risk. Kirby J concluded similarly to Gummow J, but on thebasis ofcumulative tests of foreseeability, proximity and an overriding testof "fairness, justness and reasonableness".

260InRomeo v Conservation Commission (NT)(1998) 192 CLR431("Romeo")a young woman was seriously injured when shefell at night from the edge of a cliff onto a beach. The land was part of anature reservemanaged by the defendant Commission. The Commission did not ownor occupy the reserve but it had statutory powers of managementand control ofit. The plaintiff failed before the trial Judge, the Court of Appeal of theSupreme Court of Northern Territory andthe High Court of Australia.

261I need not discuss the facts of the case. Brennan CJ distinguished betweencases in which a public authority was said to beliable on the basis that itowned, possessed or occupied property, and those in which it was said to beliable on the basis of statutorypowers of control or management on the other.His Honour's reasoning was consistent with the public law approach that he hadespousedinPyrenees. He said (at [17]):

" ... in my respectful opinion, when the sole basis of liabilityof a public authority is its statutory power of management and controlofpremises, its liability for injury suffered by a danger in the premises is notfounded in the common law of negligence but ina breach of a statutory duty toexercise its power and to do so reasonably having regard to the purpose to beserved by an exerciseof the power."

The Chief Justice adhered (at [18]) to the view which he had expressed inPyrenees:

"no duty to exercise a statutory power and to exercise it with care can beimposed by the common law on the repository of the powerwhen the statute,operating in the particular circumstances, leaves the repository with adiscretion whether to exercise it or not. If it were otherwise, the common lawwould impose on the repository a duty to exercise the power when thelegislature had intendedthe repository to decide for itself whether and inwhat manner the power should be exercised. But a public authority charged withthe management and control of premises on which the public may enter as ofright is given those powers for the purpose, inter alia,of protecting theperson of those who enter. As that is a purpose for which the powers ofmanagement and control are conferred,the repository is obliged to exercisethem and to exercise them reasonably to fulfil that purpose unless there besome contrary statutorydirection .... Some public law justification mustexist before a court can intervene to compel the exercise of a discretionarystatutorypower by a repository which has failed or refused to exercise thepower."

262The Chief Justice applied the test which Dixon J had formulated inAiken v Kingborough Corporation[1939] HCA 20;(1939) 62 CLR 179 at 210, specificallyin respect of persons who come onto property as of common right, to takereasonable care to prevent injury arisingfrom dangers that would not beapparent to them and would be avoided by their exercise of reasonable care.

263In a short joint judgment, Toohey and Gummow JJ concluded that theCommission was under a general duty of care to take reasonablesteps to preventpersons entering the reserve from suffering injury, but that the taking ofsteps of that kind did not extend tofencing off an area of natural beautywhere the presence of a cliff was obvious.

264In separate dissenting judgments, Gaudron and McHugh JJ thought that theCommission owed the plaintiff a duty of reasonablecare and that it was inbreach of that duty, although it might be that the amount of damages to beawarded should be reduced on accountof the plaintiff's contributorynegligence.

265Kirby J thought that the claim fell to be determined by the application ofthe tests accepted by the High Court inNagle v Rottnest IslandAuthority[1993] HCA 76;(1993) 177 CLR 423 which his Honour said (at [115]), involved thefollowing questions:

"1.Is a duty of care established? (The duty of careissue.)

2.If so, what is the measure or scope of that duty in thecircumstances? (The scope of duty issue.)

3.Has it been proved that the defendant is in breach of the duty sodefined? (The breach issue.)

4.If so, was the breach the cause of the plaintiff's damage? (Thecausation issue.)

5.(Where relevant.) Were the defaults alleged on the part of the publicauthority within the area of the authority's legitimate discretionon questionsof policy and allocation of resources so that there was no duty of care owed tothe plaintiff? Or was any suggestedbreach a matter left by law to theauthority whose decision the courts would respect and uphold against theplaintiff's complaint?(The policy/operations issue.)

6.(Where relevant.) Has contributory negligence on the part of theplaintiff been proved and, if so, with what consequence? (The contributorynegligence issue.)"

266His Honour adhered to the "three-criteria test" of the existence of aduty of care which he had formulated inPyrenees and which I set outearlier. He concluded that although the elements of foreseeability andproximity were satisfied, it was not"fair, just and reasonable" to impose onthe Commission a duty of the scope asserted by the plaintiff.

267Hayne J said that the Commission's statutory power to "occupy, use, manage,and control" the reserve gave rise to a duty ofcare in favour of members ofthe public who entered as of right analogous to that of an occupier of privateland, and that it wasthe management of the land that provides the necessaryrelationship of proximity in such a case. This approach made it unnecessaryfor his Honour to address the question of the duty of public authorities toexercise other kinds of statutory power.

268In my respectful opinion,Romeo provides limited guidance in thepresent case. The case is distinct from the present one in the followingsignificant respects:

*Unlike the present case,Romeo is not concerned with the issue of theexercise of statutory powers to prevent harm befalling the plaintiff by reasonof the conductof other persons;

*Although the Commission did not own or occupy the reserve, it, and it alone,had statutory powers of management and control overit;

*The plaintiff's injury was said to result from a dangerous aspect ofpremises;

*There was a body of law defining the scope of the duty of care owed topersons entering upon land by common right.

For these reasons, I do not find great assistance in a conclusion that theCommission owed the plaintiff a duty of care.

269It remains to consider two decisions delivered by the High Court since theprimary Judge delivered judgment in the present case.

270Pyrenees was referred to by the High Court inPerre vApandPty Ltd[1999] HCA 36;(1999) 164 ALR 606 ("Perre"). In thiscase, the respondent, a major participant in the Australian potato industry,supplied diseased seed to the Sparnons whowere potato growers in SouthAustralia. The seed caused the Sparnons' potato crop to be infected withbacterial wilt. The appellantsgrew and processed potatoes within 20 km fromthe Sparnons' property. They ordinarily exported most of the potatoes growneach yearto Western Australia. That state, however, prohibited the entry ofpotatoes which had been grown, harvested, cleaned or packed within20 km of aplace where bacteria had occurred in the previous five years. As a consequenceof the outbreak of bacterial wilt on theSparnons' property, the appellantswere unable to export their own potatoes to Western Australia and sufferedfinancial loss. Theappellants' own property and potatoes were not affected bythe bacterial wilt at all.

271The appellants sued the respondent for damages for negligence. A Judge ofthis Court dismissed their claim on the basis thatthe necessary relationshipof proximity did not exist between the appellant and the respondent seedsupplier. A Full Court dismissedthe appellants' appeal from that decision.By a majority of five to two, the High Court allowed the appeal.

272WhilePerre did not concern an allegedly negligent failure by apublic authority to exercise a statutory power causing physical injury, thejudgmentsinclude general observations on the law of negligence, includingreferences toPyrenees.

273Gleeson CJ rejected the proposition that, inCaparo, Lord Bridge hadpurported to lay down a three-stage test that would provide the answer in allcases to the question whether a dutyof care was owed. The Chief Justiceemphasised "vulnerability" as "a significant factor in establishing a duty ofcare" (at [10]). His Honour thought, for the reasons given by Gummow J, thatthe respondent had owed the appellants a duty of care.

274Gaudron J formulated (at [42]) the applicable test that as follows:

"where a person knows or ought to know that his or her acts oromissions may cause the loss or impairment of legal rights possessed,enjoyedor exercised by another, whether as an individual or as a member of a class,and that that latter person is in no positionto protect his or her owninterests, there is a relationship such that the law should impose a duty ofcare on the former to takereasonable steps to avoid a foreseeable risk ofeconomic loss resulting from the loss or impairment of thoserights."

Her Honour observed that while the law is concerned "to avoid the impositionof liability `in an indeterminate amount for an indeterminatetime to anindeterminate class'" (Ultramares Corporation v Touche174 NE 441 at 444(1931) per Cardozo CJ), it must be kept in mind that "this is a policyconsideration, not a rule of law", and, accordingly,"it is not necessarilyfatal to the recognition of a duty of care that the duty is owed to a classwhose members cannot be identifiedwith complete accuracy" (at [32]). HerHonour thought it important, however, that the appellants were in fact membersof a particularclass - those who grew potatoes within the 20km zone and soldthem into the Western Australia market. In the present case the dutyrelied onby Mr Ryan is one owed to "consumers of oysters".

275For McHugh J, none of "proximity", the "impairment of precise legal rights"and the "three-stageCaparo test" was capable of being supported as adeterminant of the existence of the duty. His Honour favoured identificationof establishedcategories of case in which a duty of care has already beenrecognised, followed by incremental or analogical development of thelaw basedon them. His Honour thought that in claims to recover damages for economicloss, "vulnerability" was ordinarily a prerequisiteto imposing a duty and thatreliance and assumption of responsibility were merely indicators ofvulnerability (at [125]). His Honourconsidered that inPyrenees theCourt had concluded that the Shire owed a duty of care, partly because of theShire's control (and knowledge) and the plaintiffs'inability to protectthemselves. His Honour proposed (at [133]) that the test for establishingwhether a duty of care existed onthe facts of the present case was asfollows:

1.Was the loss suffered by the appellants reasonably foreseeable?

2.If yes, would the imposition of a duty of care impose indeterminateliability on the respondent?

3.If no, would the imposition of a duty of care impose an unreasonable burdenon the autonomy of the respondent?

4.If no, were the appellants vulnerable to loss from the conduct of therespondent?

5.Did the respondent know that its conduct could cause harm to individualssuch as the appellants?

With regard to the second question, his Honour emphasised that the respondentneed have knowledge only of an ascertainable classnot a defined and smallclass. If the defendant knows or has the means of knowing who are the membersof an ascertainable classliable to be affected by its conduct and the natureof the likely losses to them, its liability is not indeterminate even thoughthe number of the members of the class may be large:

"Where the person or tangible property of the plaintiff is likely to beharmed by the conduct of the defendant, the common law hasusually treatedknowledge or reasonable foresight of harm as enough to impose a duty of care onthe defendant. Where a person sufferspure economic loss, however, the law hasnot been so willing to impose a duty of care on the defendant."(at[70]).

This passage is attracted by the present case in so far as it is concernedwith harm to the person rather than pure economic loss(the Barclay companies'cross-claim against the Council is of the latter kind). But it is alsoconcerned with harm to the personin the developing area of the duty of publicauthorities to exercise powers to prevent one person being caused harm byanother, inwhich something beyond mere foreseeability of the harm is required(see below).

276McHugh J concluded that the five questions he posed should be answeredfavourably to the appellants.

277Gummow J considered that several factors combined to constitute asufficiently close relationship between the appellants andthe respondent togive rise to a duty of care for breach of which the appellants could recoverdamages for their economic loss. These included:

*The respondent appreciated the consequences of the spread of disease bycontaminated seed;

*At the time of supply the respondent knew or should have known that theappellants grew and processed potatoes within 20 km ofthe first grower'sproperty and the respondent knew of the special requirements of WesternAustralia with respect to importationof potatoes;

*The respondent knew or should have known that the appellants exportedpotatoes to Western Australia;

*The appellants had no way of appreciating the existence of the risk to whichthey were exposed by the respondent's conduct andhad no way of protectingthemselves against that risk.

278Kirby J reiterated (at [259]) and applied the three-stage test ofCaparo that he had applied inPyrenees, leading his Honour toagree that the appeal should be allowed.

279Hayne J concluded that the appellants were entitled to recover damages fortheir economic loss because the respondent knew ofthe existence of a limitedclass, which it transpired included the appellants, likely to suffer economicloss if it failed to takecare.

280For Callinan J, the decisive factor was that the respondent actuallyforesaw that the appellants were within a class of personslikely to beadversely affected by its negligent conduct.

281It is not possible to identify inPerrea single approach to thequestion whether a duty of care is owed that commands the assent of a majorityof the members of the Court. Moreover, the case was one of economic loss andthe judgments recognise the well established distinction, on the duty of careissue,between cases of that kind and those, like the present one, in whichdamages are sought to be recovered in respect of personal injury.

282The judgments do, however, demonstrate a concern with the question whetherthere was an ascertainable class of persons, includingthe appellants, who, itwas foreseeable, would be likely to suffer economic loss if the respondentfailed to take reasonable care. An important question in the present case iswhether that limitation applies in the present circumstances which, whileconcerningharm to the person, also concern a novel category of legalliability.

283The High Court has recently considered the question of the duty to exercisea statutory powerinCrimmins v Stevedoring Industry FinanceCommittee[1999] HCA 59;(1999) 167 ALR 1 ("Crimmins"). Between 1961 and 1965the plaintiff was assigned by the predecessor of the defendant ("theCommittee") to work with stevedoringcompanies. Occasionally the work involvedthe unloading of asbestos cargo. From the inhaling of asbestos fibres theplaintiff developedmesothelioma. He sued the Committee for damages fornegligence.

284The Australian Stevedoring Industry Authority ("the Authority"), which wasestablished by theStevedoring Industry Act 1956(Cth), regulatedstevedoring operations throughout Australia. In doing so, the Authorityassigned workers for work in accordancewith the needs of employers. Theworkers had no control over their placements for work. They were registeredwith the Authoritypursuant to the Act and received pay and other employeebenefits from the Authority, although they were not actually employed byit.Pursuant to the Act, the Authority registered employers and waterside workersand allocated the latter to the former (work onthe waterfront at the time wascasual and by the day) and appointed inspectors of stevedoring operations.

285The plaintiff succeeded before a jury. The Committee appealed to the Courtof Appeal of the Supreme Court of Victoria. Beforeit gave its decision, theplaintiff died. The Court of Appeal allowed the appeal. The plaintiff's widowand executrix appealedto the High Court.

286There were two issues before the High Court: whether the Authority had oweda duty of care to the plaintiff and whether theCommittee was answerable inrespect of the liability of the Authority. I will not discuss the latter (onwhich the appellant succeeded). The judgments emphasised that issues of breachof duty and causation were not before the Court.

287Section 8 of theStevedoring Industry Act 1956 required theAuthority to "perform its functions, and exercise its powers ... with a view tosecuring the expeditious,safe and efficient performance of stevedoringoperations" (my emphasis). The statutory functions of the Authority werestated in subs17(1) to include the following:

"(a) to regulate the performance of stevedoringoperations;

.......

(i)to regulate the conduct of waterside workers in and about ... wharves andships;

...

(k)to train, or arrange for the training of, persons in stevedoringoperations;

(l)to investigate means of improving, and to encourage employers to introducemethods and practices that will improve, the expedition,safety and efficiencywith which stevedoring operations are performed;

...

(o)to encourage safe working in stevedoring operations and the use ofarticles and equipment, including clothing, designed for the protectionofworkers engaged in stevedoring operations and, where necessary, to providewaterside workers with articles and equipment designedfor that purpose;

(p)to obtain and publish information relating to the stevedoringindustry."

Subsection 18(1) empowered the Authority to "make such orders, and to do allsuch other things, as it sees fit" in performing itss 17 functions. Oncemade, such orders had the force of law.

288The plaintiff claimed that the Authority had failed to warn of the dangersof asbestos, to instruct as to those dangers, toprovide respiratory equipment,to encourage employers to introduce safety measures for the handling ofasbestos, to ensure that employeesknew of the risks of exposure to asbestos,and to inspect properly the conditions under which stevedoring operations werecarriedout. In effect, the plaintiff's claim was that the Authority hadfailed to take any positive step to avoid the risk of harm to whichhe had beenexposed.

289Gleeson CJ agreed, for the reasons given by McHugh J (summarised below),that the Authority owed a duty of care to the plaintiff. His Honour observed(at [5]):

"Acceptance that a statutory authority, in the discharge of itsfunctions, owed a duty of care to a person, or class of persons, isonly thefirst step in an evaluation of the authority's conduct for the purpose ofdetermining tortious liability. In some cases,the difficulty of formulatingthe practical content of a duty to take reasonable steps to avoid foreseeablerisks of harm, for thepurpose of measuring the performance of an authorityagainst such a duty, may be a reason for denying the duty. In other cases,ofwhich the present is an example, recognition of the existence of a duty isconsistent with the need, when dealing with the questionof breach, to takeaccount of complex considerations, perhaps including matters of policy,resources, and industrial relations".

290Gaudron J thought that the obligation imposed on the Authority by s 8 ofthe Act was consistent, rather than, as the Committeecontended, inconsistent,with the existence of a general law duty of care to take reasonable positivesteps to prevent a foreseeablerisk of injury to waterside workers. Her Honournoted that the Authority was in a position to know of, and to alleviate, therisksof harm with respect to the deceased's exposure to asbestos. Her Honourbased her conclusion that there existed a relationship whichgave rise to aduty of care on:

*the plaintiff's vulnerability and inability to protect his own interests,particularly because of the special circumstances touchingthe waterfront, inwhich employment was casual and workers were engaged by the day by differentstevedoring companies on differentships;

*the fact that the Authority knew of the danger of exposure to asbestos andknew or should have known of the risk of the plaintiffbeing exposed to it; and

*the fact that the Authority had power "to control or minimise" that risk.

291In a lengthy and detailed judgment, McHugh J analysed precedent similarcases to reveal their "bases in principle and policy"(at [73]). His Honourpointed out that there may be special factors applicable to a statutoryauthority which negative a duty ofcare that a private individual would owe insimilar circumstances. His Honour stated (at [79]):

"Common law courts have long been cautious in imposingaffirmative common law duties of care on statutory authorities. Publicauthorities are often charged with responsibility for a number of statutoryobjects and given an array of powers to accomplish them. Performing theirfunctions with limited budgetary resources often requiresthe making ofdifficult policy choices and discretionary judgments. Negligence law is oftenan inapposite vehicle for examiningthose choices and judgments. Situationswhich might call for the imposition of a duty of care where a privateindividual was concernedmay not call for one where a statutory authority isinvolved. This does not mean that statutory authorities are above the law.But it does mean that there may be special factors applicable to a statutoryauthority which negative a duty of care that a privateindividual would owe inapparently similar circumstances. In many cases involving routine events, thestatutory authority will bein no different position from ordinary citizens.But where the authority is alleged to have failed to exercise a power orfunction,more difficult questions arise."

Later, his Honour elaborated as follows (at [91]-[94]):

"[91]In his article `Liability in Tort of Public Bodies', ProfessorTodd has argued that, despite the current conceptual uncertainty inthe law inAustralia relating to the common law liability of statutory authorities for afailure to act, `as regards four of thejudgments [inPyrenees,Brennan CJ apart] there is arguably a measure of underlying agreement'. Hethen listed what in his view were the key elements thatcould be distilled fromthe recent decisions of this court:

`(i)the imposition of a common law duty is consistent with and complementaryto the performance by the public body of its statutoryfunctions;

(ii)the duty can be seen to arise specifically in relation to a knownplaintiff rather than generally in relation to the public at large;

(iii)the defendant is in a position of control and is under a statutoryobligation, or at least has specific power, to protectthe plaintiff from thedanger;

(iv)the plaintiff is in a position of special vulnerability or dependence onthe defendant. He or she cannot reasonably be expectedto safeguard himself orherself from the danger;

(v)on a policy overview there is no good reason for giving the defendant animmunity from liability.'

[92] I am in substantial agreement with this analysis. I would prefer,however, to subsume Professor Todd's first criterion into his fifth. Ialso think that it is necessary to adda further element - that the authorityknew, or ought to have known, of the risk of injury to the plaintiff.

[93]In my opinion, therefore, in a novel case where a plaintiff allegesthat a statutory authority owed him or her a common law duty ofcare andbreached that duty by failing to exercise a statutory power, the issue of dutyshould be determined by the following questions:

1.Was it reasonably foreseeable that an act or omission of the defendant,including a failure to exercise its statutory powers,would result in injury tothe plaintiff or his or her interests? If no, then there is no duty.

2.By reason of the defendant's statutory or assumed obligations or control,did the defendant have the power to protect a specific classincluding theplaintiff (rather than the public at large) from a risk of harm? If no, thenthere is no duty.

3.Was the plaintiff or were the plaintiff's interests vulnerable in the sensethat the plaintiff could not reasonably be expectedto adequately safeguardhimself or herself or those interests from harm? If no, then there is noduty.

4.Did the defendant know, or ought the defendant to have known, of the risk ofharm to the specific class including the plaintiffif it did not exercise itspowers? If no, then there is no duty.

5.Would such a duty impose liability with respect to the defendant's exerciseof `core policy-making' or `quasi-legislative' functions? If yes, then thereis no duty.

6.Are there any other supervening reasons in policy to deny the existence of aduty of care (for example, the imposition of a dutyis inconsistent with thestatutory scheme, or the case is concerned with pure economic loss and theapplication of principles inthat field deny the existence of a duty)? If yes,then there is no duty.

[94]If the first four questions are answered in the affirmative, andthe last two in the negative, it would ordinarily be correct in principletoimpose a duty of care on the statutory authority." (my emphasis)

292His Honour stated (at [99]):

"... some powers are conferred because the legislature expectsthat they will be exercised to protect the person or property of vulnerableindividuals or specific classes of individuals. Where powers are given for theremoval of risks to person or property, it will usuallybe difficult to excludea duty on the ground that there is no specific class. The nature of the powerwill define the class - forexample, an air traffic control authority is thereto protect air travellers. Furthermore, a finding that the authority haspowersof this type will often indicate that there is no supervening reason forrefusing to impose a duty of care and that no core policychoice or trulyquasi-legislative function is involved.

293Finally, his Honour found nothing in the Act which forbade or wasinconsistent with the imposition of a duty of care at commonlaw; theAuthority's quasi-legislative function of making orders did not exhaust itspowers; and there were no policy factors denyinga duty of care.

294McHugh J found it a "compelling" factor in favour of the existence of aduty of care, that the Authority directed the plaintiffto places of work wherethere were risks of injury of which the Authority was or should have beenaware, and in respect of whichit also knew or should have known that theworker was specially vulnerable, that is, could not protect himself, incircumstancesin which disobedience could lead to disciplinary action and evenderegistration as a waterside worker. Like Gaudron J, McHugh Jthought thespecial circumstances in which a person worked on the waterfront emphasised theplaintiff's vulnerability.

295Gummow J agreed generally with the reasons of Hayne J for dismissing thewidow's appeal. His Honour thought it inappropriateto posit a common law dutyof care and to ask whether it is prohibited by, or inconsistent with, therelevant statute. Rather, hisHonour said, the starting point must be thestatute. And his Honour thought that:

"the provision for the making of orders under s 18 provided thecomplete statement of the legislative provision for the regulationof thesubject matter"(at [169]).

For his Honour, the Authority lacked any power over safety of the kindpossessed by the Shire inPyrenees.

296Kirby J applied theCaparothree-stage inquiry which he had appliedinPyrenees andPerre and concluded that the Authority had owedthe plaintiff a duty of care to take reasonable steps to ensure that workingconditionswould be reasonably safe for him, and, to that end, to providewaterside workers with articles and equipment designed for their protectionandto ensure that they were used. Among the policy considerations which informedhis Honour's conclusion was, again, "[t]he specificityof the group of personsexposed to danger who constituted a defined and particular class much narrowerthan the community at large"(at [233]).

297Hayne J closely analysed the statutory functions of the Authority andconcluded that its powers were quasi-legislative. HisHonour also thought thatit was not in a position similar to that of an employer. He thought that therewas no duty on the Authorityto make an order requiring the use of respirators,to supply equipment, or to warn of the danger of asbestos. Although his Honouracknowledged that it was no bar to the existence of a particular duty that itduplicated a duty already incumbent on the watersideworker's employer, thiswas nonetheless one factor that led him to conclude that there was no such dutyon the Authority, which hedescribed as "peripheral" party. Unlike theplaintiff's succession of employers, the Authority was not in control of, orresponsiblefor, the place and system of work to which the plaintiff wasexposed, in his Honour's view.

298Callinan J relied on the right to exercise control, and the actual exerciseof control over waterside workers as to where andfor which employer theyshould work, as important indicators of the existence of a duty of care.

299There are differences betweenCrimmins and the present case. InCrimmins there was a direct and close relationship between the Authorityand the waterside workers whom it had registered; it acted positivelybydirecting them, under penalty, to work in, as it transpired, places that weredangerous to their health; and "registered watersideworkers" represented anidentified group of individuals as distinct from the public at large.

Uncertainty remaining in the Australian case law relating to the duty of careissue - an "incremental" approach

300In a well known passage inPyrenees, Kirby J noted (at 397) theuncertain nature of negligence law as it stands:

"An optimistic view is that the difficulty arises because thelaw is `developing'. A more realistic perspective may be that it isa categorywhich is conceptually unsettled. The fundamental problem is that a singleunifying principle for liability in negligence,easy to apply and predictablein outcome, has proved elusive."

InPerre, McHugh J referred to the absence of "bright-line" rules incontemporary negligence law and said at (624):

"since the fall of proximity, the court has not made anyauthoritative statement as to what is to be the correct approach fordeterminingthe duty of care question. Perhaps none is possible. At allevents, the differing views of the members of this court in the presentcasesuggest that the search for a unifying element may be a longone."

By way of explanation and to signal a practical solution, his Honour stated(at 629):

"Having rejected arbitrary exclusions, proximity, impairment ofprecise legal rights andAnns andCaparo as suitable determinantsof duty, where does one find a conceptual framework that will promotepredicability and continuity and atthe same time facilitate change in the lawwhen it is needed? ... If a case falls outside an established category, but thedefendantshould reasonably have foreseen that its conduct would cause harm tothe plaintiff, we have only to ask whether the reasons thatcalled for ordenied a duty in other (usually similar) cases require the imposition of a dutyin the instant case. No doubt thatmay sometimes mean that, whether or not aduty is imposed at a particular time, will depend on the extent to which thecase law hasprogressed to that time."

301Similarly, inPyrenees,Kirby J observed (at 397) that thebest "cautionary advice [is] to study the cases in the hope of derivingguidance from analogies".

302We are called upon to decide the Council's and the State's appeals at atime when there are no clear principles laid down bythe High Court to guideus. The case raises legal issues that are novel in Australian case law inrelation to the liability in negligenceof public authorities for a failure toexercise statutory powers. In a sense, each such case is novel: the facts andthe legislationare unique. But the novelty here resides in two speciallyrelevant considerations. First, the duty propounded by Mr Ryan is oneowed, not to identified or identifiable individuals or to an identified oridentifiable class of individuals, but to the consumingpublic generally.Secondly, the duty propounded is not a duty to exercise powers in respect ofone particular place (cfPyrenees andLutz) but, in the case ofthe Council, in respect of all places from which faecal matter might emanate topollute the Lake, and in thecase of the State, in respect of the oysterindustry based on all the oyster leases in the Lake and, indeed, in the State.

303InHeyman, at 481, Brennan J noted and supported the development inthe area of negligence law of "novel categories of negligence incrementallyandby analogy with established categories, rather than by a massive extension of aprima facie duty of care restrained only by indefinable`considerations whichought to negative, or to reduce or limit the scope of the duty or the class ofperson to whom it is owed' [hisHonour was quoting from Lord Wilberforce inAnns v Merton London Borough Council[1977] UKHL 4;[1978] AC 728 at 752]" (see alsohis Honour's judgment inHawkins v Clayton (1988) 164 CLR 539 at 556).This observation was referred to with approval by Lord Bridge of Harwich inCaparoat 618, by Lord Browne-Wilkinson in X (Minors) v BedfordshireCounty Council[1995] UKHL 9;[1995] 2 AC 633 at 751, and by Hayne J inCrimmins at[272] and was adopted by the House of Lords inMurphy v Brentwood DistrictCouncil[1991] UKHL 2;[1991] 1 AC 398 at 461 (per Lord Keith of Kinkel with whom allother Law Lords agreed in separate judgments).

304The predominant methodology of cautious incremental development ofprinciple based on analogy with previous cases decided atauthoritativeappellate level was supported by Gleeson CJ, Gaudron, McHugh, Kirby, Hayne andCallinan JJ inPerre.Kirby J elaborated (at [232]):

"It is not enough to say that this court's approach, in anydevelopment of the ambit of liability, should be cautious and incremental.Ofcourse it should. It is necessary to express the content of the approach whichis proper and the criteria that will distinguish(so far as possible) acautious increment that conforms to legal authority from an incautious onewhich would take the law beyondits acceptable boundary. That boundary is set,ultimately, by the answer to the question: ought the alleged tortfeasor to beundera legal obligation to observe care for the protection of the plaintiffagainst the incidence of the risk which has in fact ensued?"

305InCrimmins, McHugh J said (at [77]) that the incrementalapproach curtails the examination of policy factors and makes decisions innovel casesmore confidently predicted by reference to a limited number ofprinciples that are applicable by analogy with previous cases of thesame type.His Honour said (at [73]):

"The policy of developing novel cases incrementally by reference toanalogous cases acknowledges thatthere is no general test for determiningwhether a duty of care exists. But that does not mean that duties in novelcases are determined by simply looking for factual similarities in decidedcases orthat neither principle nor policy has any part to play in thedevelopment of the law in this area.On the contrary, the precedent caseshave to be examined to reveal their bases in principle and policy. Onlythen, if appropriate, can they be applied to the instant case. A judge cannotknow whether fact A in the instant case isanalogous to fact B in a precedentcase unless he or she knows whether fact B was material in that case and, ifso, why it was material. Only then can the judge determine whether the factsof the current case are sufficiently analogous to those in an apparentlyanalogousprecedent to treat the precedent as indicating whether a duty of caredid or did not exist in the current case. By this means, reasonsof principleand policy in precedent cases are adapted and used to determine new cases.Very often, the existence of additional factsin the current case will requirethe judge to explain or justify why they are or are not material. In this way,the reasons in eachnew case help to develop a body of coherent principleswhich can be used to determine whether a duty of care does or does not existinnovel cases and which also provide a measure of certainty and predicability asto the existence of duties of care." (my emphasis)

His Honour said later ([78]):

"Sometimes, as inPerre v Apand Pty Ltd [(1999)[1999] HCA 36;164 ALR 606 at630-631], no case will be found which can reasonably be regarded asanalogous to the instant case. Where such novel cases arise, the existenceofa duty can only be determined by reference to the few principles of generalapplication that can be found in the duty cases."

306"Incrementalism" has, however, attracted criticism. In the New ZealandCourt of Appeal, Cooke P expressed the opinion that the"incremental"recognition of new classes or categories of liability by analogy, with nothingmore than existing forms, representedan empty concept:South PacificManufacturing Co Ltd v New Zealand Security Consultants & InvestigationsLtd[1992] 2 NZLR 282 at 296. And inPerre, Gummow J quoted (at[199]) the criticism by McCarthy J in the Irish Supreme Court, that theincremental approach "suffers from atemporal defect - that rights should bedetermined by the accident of birth" (Ward v McMaster[1988] IR 337 at347). Gummow J found the incremental approach particularly problematic in thecontext of distinct statutory schemes which interactwith the common law ofnegligence in the determination of the liability of statutory authorities.Determining cases by analogy withprevious case law, in his Honour's view,would result in deciding the duty question by reference to the issue whetherthe legislaturehad enacted similar laws in the past, whereas

"[t]he proper approach ... isto give due accord to thedistinct and particular statutory scheme which has been enacted, from whichrules as to the ambit of the common law can be identified for future cases"(Crimminsat [160], my emphasis).

307With respect, it seems to me that we should commence with a closeexamination of the relevant legislation in order to discernthe nature of thepowers in question and of the Parliament's expectations of the public authorityto which it gave them; then, inso far as there may remain scope for doing so,we should apply an incremental approach of reasoning by analogy withauthoritativejudicial responses to similar issues in the past, in order todiscern appropriate principles and policies relevant to the presentcase.

United Kingdom, New Zealand and Canadian cases relating to liability of publicauthorities for the non-exercise of their statutorypowers

308In the absence of clear Australian authority governing the duty of careissue which we are required to decide, I have referredto the following UnitedKingdom, New Zealand and Canadian cases (an actionable duty of care of publicauthorities requiring the exerciseof statutory powers is more readilyrecognised in Canada than in the United Kingdom or, perhaps, in New Zealand):

The United Kingdom

Sheppard v Glossop Corporation[1921] 3 KB 132 (CA)

East Suffolk Rivers Catchment Board v Kent[1940] UKHL 3;[1941] AC 74 (HL)

Anns v Merton London Borough Council[1977] UKHL 4;[1978] AC 728 (HL)

Dennis v Charnwood Borough Council[1982] 3 WLR 1064 (CA)

Christchurch Drainage Board v Brown"The Times", 26 October 1987

Caparo Industries plc v Dickman[1990] UKHL 2;[1990] 2 AC 605 (HL)

X (Minors) v Bedfordshire County Council[1995] UKHL 9;[1995] 2 AC 633 (HL)

Stovin v Wise[1996] UKHL 15;[1996] AC 923 (HL)

Barrett v Enfield London Borough Council[1999] UKHL 25;[1999] 3 All ER 193 (HL)

New Zealand

Morrison v Upper Hutt City Council[1998] 2 NZLR 331 (NZ/CA)

Canada

Barratt v District of North Vancouver(1980) 114 DLR (3d) 577 (SCC)

City of Kamloops v Nielsen[1984] 2 SCR 2 (SCC)

Laurentide Motels Ltd v City of Beauport[1989] 1 SCR 705 (SCC)

Just v British Columbia[1990] 1 WWR 385 (SCC)

Swanson and Peever v Canada(1991) 124 NR 218 (Fed CA)

Swinamer v Nova Scotia (AG)(1991) 6 CCLT (2d) 270 (NSSC)

Brown v British Columbia (Minister of Transportation and Highways)(1994) 112 DLR (4^th) 1

309I will not give an account of these cases with the exception of threeUnited Kingdom cases that have referred to the Australiancases or beenreferred to in them.

Three particular United Kingdom cases

310Anns v Merton London Borough Council[1977] UKHL 4;[1978] AC 728 was an"inspection of building foundations case". The House of Lords held that on thepleadings the council may have been undera duty of care to inspect foundationsand to see that they complied with the building by-laws. Accordingly, theproceeding was notto be dismissed summarily. In a well known passage LordWilberforce stated (at 751-2):

"Through the trilogy of cases in this House -Donoghue v.Stevenson[1932] A.C. 562,Hedley Byrne & Co Ltd. v. Heller &Partners Ltd.[1963] UKHL 4;[1964] A.C. 465, and Dorset Yacht Co. Ltd. v. Home Office[1970] UKHL 2;[1970] A.C. 1004, the position has now been reached that in order toestablish that a duty of care arises in a particular situation, it is notnecessaryto bring the facts of that situation within those of previoussituations in which a duty of care has been held to exist. Ratherthequestion has to be approached in two stages. First one has to ask whether, asbetween the alleged wrongdoer and the person whohas suffered damage there is asufficient relationship of proximity or neighbourhood such that, in thereasonable contemplation ofthe former, carelessness on his part may be likelyto cause damage to the latter - in which case a prima facie duty of carearises. Secondly, if the first question is answered affirmatively, it isnecessary to consider whether there are any considerations whichought tonegative, or to reduce or limit the scope of the duty or the class of person towhom it is owed or the damages to whicha breach of it may give rise: seeDorset Yachtcase[1970] UKHL 2;[1970] A.C. 1004,perLord Reid at p. 1027.Examples of this areHedley Byrne'scase[1963] UKHL 4;[1964] A.C. 465 where the classof potential plaintiffs was reduced to those shown to have relied upon thecorrectness of statements made, andWeller & Co. v. Foot and MouthDisease Research Institute[1966] 1 Q.B. 569; and I cite these merely asillustrations, without discussion) cases about `economic loss' where, a dutyhaving been held to exist,the nature of the recoverable damages was limited:seeS.C.M. (United Kingdom) Ltd. v. W. J. Whittall & Son Ltd.[1971]1 Q.B. 337 andSpartan Steel & Alloys Ltd. v. Martin & Co.(Contractors) Ltd.[1971] 1 Q.B. 337 andSpartan Steel & Alloys Ltd.v. Martin & Co. (Contractors) Ltd.[1972] EWCA Civ 3;[1973] Q.B. 27"

This dictum has been often referred to, although Lord Bridge of Harwich statedin Caparo(at 617-618):

" ... since theAnns case a series of decisions of thePrivy Council and of[the House of Lords], notably in judgments andspeeches delivered by Lord Keith of Kinkel, have emphasised the inability ofany single general principleto provide a practical test which can be appliedto every situation to determine whether a duty of care is owed and, if so, whatis its scope: see Governors of Peabody Donation Fund v. Sir LindsayParkinson & Co. Ltd.[1985] A.C. 210, 239F-241C;Yuen Kun Yeu v.Attorney-General of Hong Kong[1988] A.C. 175, 190E-194F;Rowling v.Takaro Properties Ltd.[1987] UKPC 2;[1988] A.C. 473, 501D-G;Hill v. Chief Constableof West Yorkshire[1989] A.C. 53, 60B-D. What emerges is that, in additionto the foreseeability of damage, necessary ´´ingredients in anysituation giving rise to a duty of care are that there should exist between theparty owing the duty and the party to whom it isowed a relationshipcharacterised by the law as one of `proximity' or `neighbourhood' and that thesituation should be one in whichthe court considers it fair, just andreasonable that the law should impose a duty of a given scope upon the oneparty for the benefitof the other."

311Caparowas not a public authority case, but an action for damagesfor economic loss against auditors for negligent auditing and reporting. Theplaintiff had taken over a company in reliance on an auditor's report, that hadbeen made not to the plaintiff in connectionwith the takeover, but to theshareholders of the target company.

312The House of Lords held that although it was foreseeable that the reportmight be relied on by a company placed as the plaintiffwas, the auditors didnot owe the plaintiff a duty of care. The reason was that in the case ofeconomic loss caused by negligentlygiven information or advice, a duty is owedonly where the information or advice is furnished toan identified oridentifiable person or class which includes the plaintifffor a specificpurpose of which the giver of the information or advice is aware. TheirLordships held that, under the relevant legislation,the auditors' report wasfurnished to shareholders to enable them to exercise their rights asshareholders, not to enable them toform judgments about further investment inthe company. Support is to be found in the speeches of Lord Bridge of Harwich,Lord Roskill,Lord Ackner and Lord Oliver of Aylmerton, for the followingproposition taken from the headnote (at 606-607):

"Whilst recognising the importance of the underlying generalprinciples common to the whole field of negligence, the law has now movedinthe direction of attaching greater significance to the more traditionalcategorisation of distinct and recognisable situationsas guides to theexistence, the scope and the limits of the varied duties of care which the lawimposes."

This passage suggests that in the present case we should look for anyprinciples or policies that have been authoritatively establishedspecificallyin respect of the exercise of statutory powers, which would have prevented theharming of the plaintiff by the conductof others, in preference to principlesor policies of more general application in the law of negligence.TheCaparo three stage test was applied by the House of Lords inX(Minors) v Bedfordshire County Council[1995] UKHL 9;[1995] 2 AC 633 andBarrett vEnfield London Borough Council[1999] UKHL 25;[1999] 3 All ER 193 (with differentresults).

313Stovin v Wise[1996] UKHL 15;[1996] AC 923 is one of the more important cases forpresent purposes. The plaintiff, when riding a motorcycle, collided with amotor vehicledriven by the defendant. The accident happened at a junctionwhich was known by the county council (the highway authority) to bedangerousbecause of obstruction of view by a bank on adjoining land. In fact accidentshad occurred there previously. In January1988, after a site meeting, adivisional surveyor of the council recommended removal of part of the bank.The council accepted therecommendation provided the landowner agreed. Thelandowner did not respond to the council's proposal before the plaintiff'saccidentoccurred, even though a further site meeting had taken place attendedby representatives of the council and the owner. The plaintiff'sclaim againstthe driver was settled but this left on foot the driver's third party claimagainst the council alleging negligenceand breach of statutory duty. Thetrial Judge held the council not in breach of statutory duty but in breach of acommon law dutyof care. An appeal to the Court of Appeal was dismissed.

314By a three to two majority the House of Lords allowed the council's appeal.The majority speech was delivered by Lord Hoffmann. His Lordship thought the"policy/operations" dichotomy an inadequate tool with which to discover whetherit is appropriate to imposea duty of care and characterised the "generalreliance" doctrine expounded by Mason J inHeyman as a doctrine whichhad "little in common with the ordinary doctrine of reliance" (at 954C). Inthe event, his Lordship did notexplore that doctrine because, for reasonswhich he gave, there were no grounds on which the case before the House couldbe broughtwithin it. His Lordship applied the general principle of "noliability for failure to exercise a statutory power". It did not matter,hisLordship thought, that the council knew of the hazard to traffic, that two ofits officers had agreed that the work needed tobe done and was to be done, orthat there was no budgetary obstacle to its being done. Like Brennan CJ inPyrenees, his Lordship applied this public law test: if the council hadconsidered the question whether to remove the hazard, would it havebeen boundto decide to do it because it would have been "irrational" for it to decideotherwise? His Lordship thought not.

315His Lordship referred to the fact that the imposition of a duty wouldexpose the council's budgetary decisions to judicial inquiryand that thiswould tend to distort the priorities of local authorities to the disadvantageof its other areas of responsibility. As appears later, I think that thisconsideration is directly applicable in the Council's and the State'sappeals.

316The earlier account of Parts 1 to 7 of the learned primary Judge's reasonsand the above account of the relevant law enableme to address now the threeappeals on liability, including his Honour's reasons for deciding against therespective appellants. Although I will deal with them separately, I will adoptby reference, in dealing with the State's appeal, much of what I am abouttosay in respect of the Council's appeal.

THE COUNCIL'S APPEAL ON LIABILITY (N 234 OF 1999)

Conclusions of primary Judge on Mr Ryan's personal and representativeclaims against the Council

317Mr Ryan's claim was that the Council was liable to him for breach of acommon law duty of care which could be discharged onlyby exercise of itsstatutory powers.

318The learned trial Judge accepted the Council's submissions in relation toMr Ryan's "test and warn" case, considered in isolation. "Test and warn"means "test [the quality of the water in the Lake] and warn [growers if faecalcoliform pollution was at a dangerouslevel]". Of the "test and warn" case hisHonour stated (at [288-289]):

"I do not think the evidence establishes that a water testingprogram along 1989-93 lines `would have imposed a significant cost'on Council,.... Mr Brooker said the testing program undertaken between 1989 and 1993involved the labour of one person (usuallya trainee) for 4½ days permonth. That cannot be regarded as a major burden, having regard to thecontribution of the WallisLake oyster industry to the economy of the Shire,the significance of a `clean water' image to the Shire's extensive tourist andrecreational fishing industries, and the importance of safe-guarding the healthof local residents and visitors.But I agree that a 1989-93 type watertesting program conducted in 1996 would have told growers only what theyalready knew: thatfaecal coliform levels increased quickly and dramaticallyafter rain and dropped within days. Such a testing program would not haveidentified the sources of the faecal coliforms or given growers any informationabout the presence of viruses.

This does not mean water testing is valueless. Although a negative coliformtest does not establish the absence of viruses, the expertevidence indicatesit is an essential feature of an acceptable oyster management regime. Watertesting can be used for the purposeof detecting points of pollution. Itfollows, I think, thatthe question whether the Council had a duty to testwater samples is related to the question whether the Council had any obligationin relation to minimising pollution of the lake."(my emphasis)

319On the question whether the Council had any obligation in relation tominimising pollution of the Lake, his Honour said that hefound useful the"pragmatic approach to the matter of proximity" taken by Priestley JA in theNew South Wales Court of Appeal inAvenhouse v Hornsby Shire Council(1998) 44 NSWLR 1. In that case, subdividers claimed damages for economicloss arising out of a council's failure to process their plan of subdivisionwith due diligence and within a reasonable time. Priestley JA, accepting theappropriateness of a test formulated by Professor Fleming,concluded (at8F):

"Courts ... decide, in case after case, whether or not a duty ofcare exists in new situations. Consideration of all the cases ofauthority todate leads me to the view that the position in Australia, at least in May 1998,has returned to (or recognised the continuingapplicability of) what it wasimmediately after the decision inDonoghue v Stevenson; that is, thatthe courts make decisions by first asking the question `is the relationshipbetween plaintiff and defendant in theinstant case so close that a dutyarose?' and then answering `yes' or `no' in light of the court's ownexperience-based judgment."

320The primary Judge noted that the Council had no direct responsibilityfor the operation of the oyster industry or the qualityor safety of oystersharvested from the Lake. On the other hand, his Honour stated that the Councilknew that (at [291]):

"(i)the waters of Wallis Lake were used for the growing ofoysters for human consumption;

(ii)within the lake catchment area, there were numerous facilities (septictanks, pit toilets, pumping stations, watercraft and thelike) that constitutedpotential sources of human faecal contamination of the waters of thelake;

(iii)the HAV virus (like other viruses) is commonly transmitted in thefaeces of infected persons;

(iv)the HAV virus is capable of surviving for many weeks (even months) inestuarine waters and may be concentrated by oysters;

(v)no procedure is available (whether by depuration or testing) toprevent HAV contaminated oysters being consumed by humans;

(vi)an HAV contaminated oyster might cause its consumer to become seriouslyill; and

(vii)Council had extensive statutory powers to control pollution from thefacilities mentioned in (ii)."

In an important passage, the primary Judge stated as follows (at [292]):

"I accept the submission that Council was not under an absolute duty toprevent pollution of the lake; prevention could never be guaranteed.Anyduty must be confined to a duty to take those steps that were reasonably opento the Council in order to minimise human faecalcontamination of the lake.But I do not accept Council did not have even that duty. Having regard tothe facts listed above- none of which is a matter of dispute in this case-the Council knew, or should have known, that oyster consumers were likelyto be adversely affected by any failure by it to take reasonablesteps tominimise human faecal contamination of the lake; in particular by theemission of faecal effluent from any of the facilities mentioned in (ii) above.That being so, it seems to me Council came under an obligation to oysterconsumers to take those steps."(my emphasis)

321His Honour went on to explain why he did not think that anything said bythe High Court inPyreneespointed to a different conclusion.

322The learned primary Judge then addressed a matter which Council has pressedon the appeal: that the evidence did not establishthat the pollution came fromany particular source. His Honour said (at [297]):

"The applicant need not prove the particular source or sourcesof the HAV contamination. The HAV oyster contamination came from humanfaecalpollution of the lake.The expert evidence establishes the probability thatthis pollution came from multiple points, predominantly land-based. All ofthosepoints were subject to Council control. The pollution occurred becausethe Council did not exercise its powers in a responsiblemanner; although itknew there was a problem, the Council allowed the continuation of pollutionfrom those points. It does not matterthat it is impossible to say which ofthose pollution points introduced the HAV contaminated faeces into thelake." (my emphasis)

323Having held that Council owed a duty of care to oyster consumers, hisHonour went on to find that the duty was breached. He referredto varioussteps which the Council could have taken. He said that it could have takensteps to identify the pollution sources. Moreover, he found that the Council"was aware of serious sewage effluent problems in the villages (Nabiac andCooloongolook) drainingto the lakes' tributaries". He said: "Anybody who gavethe matter thought would have realised there was a possibility that virusesinthat effluent might reach the lake and contaminate the oysters." As well, hisHonour referred to the two caravan parks, the LittleStreet public toilet, thetoilets on the Islands and the houseboats on the Lakes as potential sources ofpollution and said thatif Council did not know about these problems, "that wasbecause it chose not to look."

324In a passage which is attacked by Council, his Honour said (at [301]):

"The responsible reaction to such knowledge would have been toinstitute a sanitary survey, especially of premises that drained toestuarinewaters. Astonishingly, in May 1996 Council's officers took the oppositecourse, determining not even to respond to complaints. It may not becoincidence that the HAV outbreak occurred shortly after the first heavy rainof the next oyster season."

325The primary Judge rejected a submission that the Court should not reviewthe Council's decisions about the exercise of its powers,that its decision notto inspect regularly was not "shown to be other than bona fide and rational"and that "Council's failure tohave a water monitoring program for Wallis Lakeoysters was based on policy judgments and financial constraints". His Honourthoughtthat the evidence did not support this last submission and that thecontemporaneous material suggested that an upgraded water testingprogram wasnot seen by Council as imposing an unreasonable burden on its resources.

326Finally, his Honour did not accept that the sewage came from boats on theLake. He noted that the consensus of expert opinionwas that the pollution wassubstantially land-based. But he thought, in any event, that Council would nothave been absolved fromresponsibility if the boats did contribute. The 1994Wallis Lake Oyster Management Plan had warned Council of the risk ofcontaminationfrom boats and had suggested that it install "environmentallyfriendly" toilets at strategic points and undertake an education campaign.Council took neither step. His Honour observed that no suggestion was made inthe evidence that this was for want of resources. In relation to larger boats,"ships" or "vessels", including houseboats, fell within the definition of"premises" in theLocal Government Act 1993(NSW) so that in respect ofthem, at least, Council had the same powers of inspection, giving of abatementnotices and direct abatementas it had in relation to houses, caravan parks andother on-shore facilities. His Honour said (at [312]):

"If there were tourist boats or houseboats on the lake withunsatisfactory or inadequate toilet facilities, it was within the powerofCouncil to do something about that; and given their proximity to the oysterleases, there was every reason to exercise that power."

Outline of Council's submissions on its appeal

327On Council's appeal, not only did Council and Mr Ryan makesubmissions: so did the State, the Barclay companies, Georges Oysters,Sciaccaand Tadeven. Although I have studied them all, in what follows I will referonly to those of the Council and Mr Ryan. Someof the followingsubmissions are also relevant to the State's appeal, and those relevant to theduty found by his Honour to takesteps reasonably to minimise faecalcontamination of the Lake are relevant to all three appeals.

328Council's submissions proceeded along the following lines. Councilemphasised the diversity and spread of the potential sourcesof faecalcontamination of the Lake, the difficulty of eliminating it and the fact thatsome human faecal contamination must havebeen a feature of the Lake for a longtime. Council submitted as follows:

"(a)Wallis Lake is 85 square kilometres in area. The Lakeitself has approximately 225 kilometres of shoreline. The catchment areais1,300 square kilometres, of which approximately 65% is in the Great Lakescouncil area, 30% being located in the Greater TareeCity Council area and 5%in the Gloucester Council area.

(b)The Wallis Lake catchment contains the major towns of Forster and Tuncurry;various smaller townships (Pacific Palms, Nabiac,Green Point, Coomba Park);and various other homes built along the rivers and in the countryside which arenot part of any town ortownship.

(c)There are hundreds of points within the Wallis Lake catchment atwhich there is the potential for the escape of human faecal waste. Thereare two reticulated sewerage systems, one serving Forster/Pacific Palms/etc andthe other serving Tuncurry. Each systemhas hundreds of kilometres of pipesand numerous pumping stations. Breakages, blockages and pump failures in thesystem can resultin discharge of raw sewage... There are also hundreds ofprivate landowners' septic tank and other on-site treatment systems. Suchprivately owned systems are, of course, vulnerable to failure or even abuse onthe part of their owners, eg: by pumping out the contentsof a tank into adrain or onto the ground so as to avoid the pump-out charges ....

(d)There are also hundreds of potential pathways by which humanfaecal waste, if released, could enter the Lake system. Apart from directdeposition (ie: people boating, camping or bathing who defecate directly intothe water), there are scores ofstormwater outlets to the Lake [see e.g. map ofForster/Tuncurry stormwater systems]. Each outlet has its own catchment, whichmay(depending on its size) be quite complex and drain scores or even hundredsof houses. Faecal waste released at any point in a catchmenthas the potentialto travel down the stormwater drains to the Lake. This is particularly, butnot exclusively, if there is run-offfrom rain.

(e)Once released into the Lake system, contaminants can spread underthe influence of wind and tide. The mechanisms involved are complex,and therewas considerable evidence in the proceedings before His Honour from rivalconsulting engineers called on behalf of theApplicant and the Council on thisissue.

(f)Faecal contamination (including but not limited to human faecalcontamination) can be detected with fairly standard water testing. However,detecting faecal contamination in the Lake itself will not identify where suchcontamination entered the Lake, much lessits source. Testing stormwateroutlets and other places where contamination could enter the Lake presents itsown problems: first,there are a large number of points; second, flow isintermittent, so unless the testing is done during rain events, there is littlechance of detecting anything; and third, even if a positive result is detected,tracing back to the source may be a very difficultexercise, particularly ifthe source is only intermittent (and, in the case of deliberate discharge,clandestine as well).

...

(h)By late 1996, it had long been known that there was intermittent faecalcontamination (including, no doubt, on occasion humanfaecal contamination) ofWallis Lake, particularly after heavy rain. As has been pointed out, faecalcontamination was detectedin water testing carried out during various surveys.But in fact one would not need water testing to know that after heavy rainthereis a probability of faecal contamination of the Lake ....

(i)For a considerable period, therefore, the oyster industry operated in anenvironment of occasional faecal contamination with no apparentill-effects.No doubt this was due to the basic precautions taken by the growers, underwhich they suspended harvesting during a`fresh', only resuming theirharvesting when the water had cleared." (my emphasis)

329It is safe to assume that human faecal contamination, to varyingextents, has been a feature of the Lake for a long time, probablyfor as longas there has been significant settlement in the area. Such occasionalcontamination was detected in water testing carriedout by the Council in1989-1993, and in other studies. It was still being detected in 1998, despitethe clean-up efforts which followedthe outbreak.

330Council submits that the supposed duty to "minimise" pollution is withoutcontent. Since no particular site was identifiedas a source of the pollution,it is impossible to specify the scope of a duty to take steps reasonably openwhich would have "minimised"faecal contamination generally and prevented thatwhich in fact occurred here. For this reason, the duty would not beimposed.

331Council submits that the most that can be said is that its inactivityincreased therisk of illness but that this is insufficient to foundliability. In this respect, Council refers toBendix Mintex Pty Ltd vBarnes(1997) 42 NSWLR 307 at 316-317 per Mason P. Inthat case theplaintiff was awarded damages in the Dust Diseases Tribunalformesothelioma which was found to have been caused by the defendants' negligencein exposing him to asbestos. The defendants variouslyemployed the plaintiffin the period 1962 to 1985. But he was also exposed to asbestos during earlierservice with the Royal Navy. Leave to proceed against the United KingdomMinistry of Defence had been refused. Mason P and Beazley JA thought that theappellantemployers succeeded on the issue of causation, while Stein JA wouldhave dismissed the appeal. Beazley JA considered that the onuson a plaintiffto prove causation on the balance of probabilities was not discharged by proofthat a particular matter cannot beexcluded as a cause (at 339A). Mason Pemphasised that material contribution to injury is not established by proofthat the defendantmaterially increased the risk of it (at 316G).

332Council submits thatPyrenees is distinguishable from the presentcase on the facts. InPyreneesthe evidence proved that a fire wascaused by the use of a particular fireplace in premises which adjoined thoseoccupied by the plaintiffs. The Shire actually knew of the specific dangeroussite, had statutory power to eliminate the danger, and had sent, but notfollowedup, a letter. In contrast, the present case is not concerned with aspecific source which threatened to cause, and is now knownto have caused, thecontamination of the Lake and Mr Ryan's illness. In addition, the dangerwas posed, not to an identifiable person,but to consumers generally.

333Council submits that his Honour erroneously found it liable withoutanalysis of any particular risk or site, of the magnitudeof the risk, or ofsuch matters as the expense, difficulty and inconvenience of remedial action,or of any conflicting responsibilitiesof Council.

334The evidence established that Council had taken various steps "[o]n thegeneral environmental front", in particular in relationto the installation,operation, maintenance and improvement of the water and sewerage system. Theeffect of his Honour's conclusion,so Council's submission goes, was thatCouncil should have given priority to preventing faecal contamination of theLake at the expenseof other activities.

335Council submits that apportionment should have been nil to the Council andan equal sharing by the State and the Barclay companies. His Honour's equalthree-way apportionment did not recognise that the State had control of, andresponsibility for, the waterways,or that the Barclay companies undertook thecultivation, harvesting and sale of the oysters. The true cause of the harmwas thefailure of the State and the Barclay companies to prevent the oystersfrom being harvested and sold at all.

Outline of Mr Ryan's submissions on Council's appeal

336Mr Ryan's submissions proceeded along the following lines. Inrelation to Council's submission that his Honour formulated Council'sduty insuch general terms that it is without content and does not permit specificationof the scope of Council's duty, Mr Ryan pointsout that the primary Judgemade the following findings:

"(a)there was a duty to take reasonable steps to minimizehuman faecal contamination of the lake from the identified likely pointsourcesof pollution which were under Council control ...;

(b)in the context of (a), water testing was useful and could and ought tohave been used for the purpose of detecting points of pollution...;

(i)the Council ought to have done E-Coli testing of the water whichwould have indicated sources of pollution ... including from stormwaterdrainsthereby allowing tracing back;

(j)the Council ought to have instituted a sanitary survey of premisesthat drained to estuarine waters ...;

(k)the sanitary survey could have been as simple as an initialshoreline survey, and a lesser number of days in subsequent years forupdatesurveys ...;

(l)each of the steps in (a) - (e) would have identified particularpoint sources of pollution from particular premises, with specificstatutorypowers being then able to be used in relation to particular premises to dealwith the issue."

337Mr Ryan submits that the steps described above were those that theShoalhaven Council had taken and that the Council itself tookafter the event,when it undertook a detailed sanitary survey, identified and dealt with sourcesof pollution, recommenced its watermonitoring program and instituted arégime of compulsory pump-out of septic tanks in the catchment area,including at Nabiac.

338Contrary to Council's submission, his Honour did not conclude that theCouncil was not obliged to test water quality. In facthe considered that thiswas a necessary step in the identification of point sources of pollution. HisHonour merely rejected a "testand warn" program assufficientinitselfto satisfy the Council's duty of care.

339Mr Ryan submits that the fact that there were many and variedpotential pollution sources is not to the point: what is importantis that hisHonour described them as the likely sources of the HAV contamination and thatthey were all under Council control. MrRyan submits that for thesereasons the duty of care found by his Honour was consistent withPyrenees. The nature of the powers conferred and their objective of theprotection of public health and the identity of the intended beneficiariesgaverise to that duty.

340While Council had competing claims on its resources, Mr Ryan submitsthat the "policy"/"operations" dichotomy has no applicationbecause, inparticular, of his Honour's finding that a sanitary survey and inspectionrégime would have created little additionalburden.

341According to Mr Ryan, the case is not simply one of non-feasance.This is because Council materially contributed to the contaminationbecause ofthe Little Street public toilet, the pit toilets on the islands and thesewerage pumping stations and stormwater drains,as well as its havingundertaken some testing and regulation of pollution sources.

342Mr Ryan submits:

"This is not a case where the Council did something meaningfulwith the debate being about the reasonableness of the steps. The Councildidnothing."

He submits that at the relevant time, Council:

(a)had no water testing program to identify point sources of pollution;

(b)had undertaken no sanitary survey;

(c)had done nothing about pollution from the caravan parks, the islands, theLittle Street public toilet or Nabiac; and

(d)had done nothing about stormwater drains or the monitoring of them.

Mr Ryan suggests that Council was only reactive in that it responded tospecific complaints and then only in a limited fashion.

343According to Mr Ryan, it was not necessary for him to establish thatthe pollution was caused by a particular pollution sourcebecause his Honourfound that each potential source of the contamination that in fact occurred wasunder Council's control. He submits:

"The actual contamination from points under the control of theCouncil or the responsibility of the Council not only increased therisk towhich, ultimately,[Mr Ryan] was exposed but was the source of andmaterial contribution to or cause of[Mr Ryan's] injury."

My conclusions on the Council's appeal

Council's statutory powers

344The relative functions and powers of the Council appear, in summary,below.

345TheLocal Government Act 1993(NSW) included the followingprovisions:

*One of the purposes of the Act was (par 7(a)):

"to provide the legal framework for an ... environmentalresponsible... system of local government in New South Wales."

*Council was empowered to carry out activities appropriate to the currentand future needs within the local community and of thewider public (s 24).

*Council was charged with the care and management of sewerage worksconstructed by or on behalf of the Minister, and the expression"sewerage work"was defined in the Act's Dictionary (s 3) to mean:

"the construction, alteration, extension, disconnection,removal, ventilation, flushing or cleansing of any sewerage service pipesorfittings or fixtures communicating or intended to communicate, directly orindirectly, with:

(a)a septic tank, an effluent or a sullage disposal system, or

(b)any sewer of a council,

and includes work of sanitary plumbing and work of house drainage."

*Section 62 empowered the Minister for Public Works to direct a council totake measures specified in the direction with respectto, inter alia, suchsewerage works if

"of the opinion that an emergency exists that constitutes athreat to public health or public safety..."

*Section 63 provided that if a council did not comply with such a directionwithin a reasonable time, the Minister might do the workrequired and recoverthe cost from the council.

*Section 68 provided, relevantly, that a person might carry out an activityspecified in a Table in the section only with the approvalof the council. Twoof the activities were the carrying out of "sewerage works" (the Act'sdefinition of which I set out above)and the connection of a private sewer witha public sewer.

*Section 124 is important. It empowered the Council to order a person to door refrain from doing a thing specified in Column1 of a Table contained in thesection, if the circumstances specified opposite it in Column 2 of the Tableexisted and the personcame within the description opposite it in Column 3 ofthe Table. The following entries in the Table are of present relevance. (Ineed not set out the entries from Column 3):

Table

Orders

Orders requiring or prohibiting the doing of things to or on premises

Orders requiring that premises be used or not used in specified ways

Orders requiring the preservation of healthy conditions

24. To connect premises with a sewerage system by a specified date.

Orders requiring compliance with approval

(The expression "premises" was defined in the Act's Dictionary to included "aship or vessel of any description (including a houseboat)").

*Section 125 empowered the Council to abate a public nuisance or to order aperson responsible for a public nuisance to abate it.

*Division 2 (ss 129-135) of Part 2 of Ch 7 of the Act required the Council toobserve certain procedures of a "natural justice"kind before making an orderunder s 124, but this did not apply to an order in terms of order No 15 in theTable or to orders given,and expressed to be given, in an emergency.

*Part 2 (ss 191-201) of Ch 8 of the Act provided for the Council to enter ontoland. Section 191 provided that for the purposeof enabling the Council toexercise its functions, a Council employee (or other person) authorised by theCouncil might enter anypremises, and s 192 gave such a person wide powers ofinspection and associated powers. Section 197 provided that if as a resultofan entry and inspection, the Council required work to be carried out, theCouncil might recover the cost of the entry and inspectionfrom the owner.

*Section 673 empowered a Council to bring proceedings in the Land andEnvironment Court or such other court as might be specifiedin the Act for thepurpose, for an order to remedy and restrain a breach of the Act.

346The Local Government (Water, Sewerage and Drainage) Regulation 1993 (NSW)included provisions such as:

*Part 3 (clauses 33-44) of this Regulation was headed "Sewerage and Drainage"and dealt with such matters as connection to a council'ssewerage system.Clause 44 provided that the discharge of pan contents or septic tank effluentfrom premises was a disposal of wastefor which approval was required unders68 of theLocal Government Act 1993.

*Part 4 (clauses45-55) contained provisions applicable to, inter alia,sewerage works. Clause 45 provided:

"(1) In determing an application for the purposes of section 68of the Act for an approval to do any of the activities to which thisclauseapplies, the council must have regard to the following considerations:

(a)the protection and promotion of public health;

(b)the protection of the environment;

(c)the safety of its employees;

(d)the safeguarding of its assets;

(e)any other matter that it considers to be relevant in thecircumstances.

(2)This clause applies to the following activities:

(a)...;(b)...;(c)...;

(d) carrying out sewerage work;..."

*Clause 46 made it a condition of an approval (required by s 68 of the Act)of the carrying out of sewerage work that it comply withall applicablestandards.

347TheClean Waters Act 1970(NSW) included the followingprovisions:

*Section 16 of this Act prohibited a person from polluting any waters orcausing any waters to be polluted, whether intentionally or not, or permittingany waters to be polluted (there were statutory exceptions not presentlyrelevant). Contravention was made an offenceagainst theEnvironmentalOffences and Penalties Act 1989(NSW).

*Section 27 provided that where any waters were polluted by any person, anystatutory authority or local authority might, and mustif directed to do so bythe EPA, take such action as was necessary to remove, disperse, destroy ormitigate the pollution, and mightrecover all costs and expenses of doing sofrom that person. The same section provided that the cost and expenses mightbe recoveredas a debt in a court of competent jurisdiction.

*(Section 27A empowered the EPA, by a written notice, to direct an occupier ofpremises from which the pollution of any watershad been caused, or a personwho had caused the pollution of any waters, to take such measures to remove,disperse, destroy or mitigatethe pollution as were specified in thenotice.)

*Section 29 gave an "authorised officer" wide powers of entry on premises andassociated powers. An "authorised officer" was aperson authorised in writingby the EPA to act as an authorised officer for the purposes of s 29. It willbe recalled that Council'semployee, Mr Brooker, was an "authorisedofficer".

348The statutory powers of local government authorities described above do notinclude a power to prohibit the harvesting of oysters. As will be noted later,that power was given to the Minister under theFisheries Management Act 1994(NSW).In particular, subss 8(1) and 189(1)(b) empowered theMinister to prohibit the taking of, relevantly, oysters cultivated underaquaculturepermits if the Minister was satisfied that they were likely to beunfit for human consumption.

General

349In the following respects the present case, although novel, is similar toPyrenees, Lutz andCrimmins in which public authorities were heldliable for the non-exercise of statutory powers.

*The above powers are expressed in general terms and have objects whichinclude the protection of public health, and given thelakes, rivers andestuaries that are within local government areas throughout the State, it isreasonable to suppose that the Parliamentwould have envisaged that thosepowers would be exercised, at least to some extent, to protect swimmers andconsumers of fish (includingoysters) from the effects of faecal pollution ofthose waters.

*Power over the relevant area of social activity, faecal contamination of theLake, was ceded by the legislature, at least in part,to the Council, althoughit was also ceded to the EPA.

*Mr Ryan was vulnerable in that he could not take steps to ensure that theoysters he ate were free of the HAV and he had to dependon someone else havingdone so.

*The steps which it is said the Council should have taken are notquasi-legislative as Gummow and Hayne JJ thought the powers ofthe Authority inCrimmins to be.

*Council knew that some problems of discharge of faecal matter which enteredthe Lake had been experienced, whereas the consumersof oysters grown therewould not have known this.

350But the case is unlikePyrenees, LutzandCrimminsin thefollowing other respects which suggest that a duty of care should not beimposed on the Council:

*The duty posited is one owed to the consuming public generally, not toidentified or identifiable individuals or an identifiedor identifiable classof individuals.

*InCrimmins McHugh J (at [91]-[94]) and Kirby J (at [233])suggested that a duty of care requiring a public authority affirmatively toexercisea statutory power should not be imposed in favour of the public atlarge. It is true that McHugh J added that where powers are givenfor theremoval of risk to person or property, it will usually be difficult to excludea duty on the ground that there is no specificclass otherwise indicated as theintended beneficiaries of the power and that the nature of the power willdefine the class. ButI do not think that in saying this, his Honour had inmind powers of the kind in question here. All those members of the publicwhoconsume oysters grown in the Lake are no more specific a class than are allthose members of the public who swim in the Lakeor use public roads. And thesuffering of injury or illness is not the unifying feature of a particularclass any more than, toborrow from another field of discourse, the sufferingof persecution constitutes the unifying feature of a "particular social group"for the purposes of the definition of "refugee" in Article 1A(2) of theConvention Relating to the Status of Refugees (see Applicant A vMinister for Immigration and Ethnic Affairs(1997) 190 CLR 225 at 263-264per McHugh J). It is true also that Kirby J's reference inCrimmins to the specificity of the group of persons exposed to danger asdistinct from the community at large was given only as a policy considerationrelevant to the question whether a duty of care should be imposed.Nonetheless, what his Honour said tells against the impositionof such a dutyon the Council in this case.

*The problem did not exist in respect to a known problem site (cfPyrenees andLutz) or known problem sites (cfCrimmins)but in respect of many unknown sites on the lengthy shoreline of the Lake, theidentity of which changed from time to time.

*Because the faecal contamination came from many unidentified and changingsources, the Council was not in a position to "prevent"it and could at best"minimise" it, whereas inPyrenees, LutzandCrimmins therelevant public authority had the power definitely to prevent the risk frommaterialising, that is, the damage, loss or injuryfrom being suffered.

*Similarly, inPyreneesandLutzthe issue of breach presentedno special difficulty but the issue of breach of a duty to take stepsreasonably open to minimise therisk of faecal contamination of the Lake posesextraordinary problems because it raises complex issues as to the priority ofallocationof Council's resources, the magnitude of the risk and the cost ofthe reasonable steps (see below).

*InPyrenees,LutzandCrimmins,causation presented nopeculiar problem but it is impossible to say whether viral contamination of anoyster grown in the Lake isattributable to a particular source of faecaldischarge and therefore to prove that if Council had taken reasonable stepsopen toit to minimise faecal contamination of the Lake, and even eliminatedparticular sources of contamination, a person would not havesuffered illness.

*InPyrenees, LutzandCrimmins, there was no peculiar problemrelating to the financial burden of discharging the duty of care posited, butthe cost of identifyingand keeping identified all point sources of pollutionand exercising Council's powers to the extent necessary to eliminate them andkeep them eliminated might be too onerous financially for the Council (seebelow).

Foreseeability

351It was foreseeable that if Council did not exercise its powers at all, theactions of others might cause consumers of oysterstaken from the Lake to fallill. The "others" were at least the polluters and the oyster growers (I referto the role of the Statelater). Illness would not, however, ordinarilybefall consumers because of the combined effect of the oyster growers'practices ofdepuration and not harvesting after a "fresh" until the dangerperiod had elapsed. But it was forseeable that good practice mightnot beadhered to by one or more growers on one or more occasions.

352It is also possible that the extent of faecal contamination might increaseso that industry practices that sufficed in the pastwould not do so for thefuture or for particular occasions in the future. The assessment of themagnitude of the risk is complicatedby the interposition of the growers and ofthe Minister administrating theFisheries Management Act 1994. Therehad not, after all, been an outbreak of hepatitis A attributable to the Lake'soysters previously. Apparently the measuresmentioned had been effective inthe past. But increasing population could only increase the risk, as theCouncil knew.

353In my opinion, it was foreseeable that if Council did not exercise itspowers with sufficient effectiveness, faecal matter mightpollute the Lake, andin particular, the oyster-growing areas of it, and that consumers wouldcontract hepatitis A.

354But foreseeability, alone, does not establish duty of care on the Council(the present case is not one of a positive act thatcauses physical injury; cfWyong Shire Council v Shirt[1980] HCA 12;(1980) 146 CLR 40).

Proximity and other considerations

355SinceHill v Van Erp(1997)188 CLR 159, the element ofproximity or neighbourhood or closeness is not a necessary element to beinsisted upon in all cases of negligence. But this does not mean that this hasno role to play in any kind of negligence case. Proximity has been found auseful conceptto facilitate expansion of the law of negligence by enabling itto extend to new situations on a gradual basis. For example, proximitywasinvoked when the liability of manufacturers to consumers was recognised inDonoghue v Stevenson[1932] AC 562. Proximity, or more precisely therequirement that the loss sufferer must be an ascertained individual or amemberof an ascertained class of individuals whom the wrong-doer should havein contemplation, was invoked when the courts recognised liabilityfor thenegligent provision of information or advice causing pure economic loss inHedley Byrne & Co Ltd v Heller & Partners Ltd[1963] UKHL 4;[1964] AC 465,and liability for negligent acts causing pure economic loss inCaltex Oil(Australia) Pty Ltd v The Dredge Willemstad[1976] HCA 65;(1976) 136 CLR 529.

356InPyrenees, LutzandCrimmins the relationship between thepublic authority and the loss sufferer was much closer than it was between theCouncil and Mr Ryan inthis case. InPyreneesandLutz the losssufferers were physically close to the offending structures. InCrimmins the Authority directed the plaintiff as to where he was towork.

357In the present case, the relationship between the Council and oysterconsumers is indirect. The position can be contrastedwith that inDonoghuev Stevenson in which a manufacturer bottled the ginger beer so that it wasdestined for consumption without any intervening safeguard. In thepresentcase the ultimate wrong-doer was the polluter. Viruses would reach swimmersin the Lake without protective interventionbut in the case of consumers ofoysters the position was different. First, there was the intervention on thegrower. Secondly therewas the possibility of intervention by the Ministerunder theFisheries Management Act 1994. In my respectful opinion,there is not a relationship of sufficient proximity or neighbourhood orcloseness between the Counciland consumers of oysters to warrant theimposition of an actionable duty of care on the Council which would require itto exerciseits powers.

358As noted earlier, Kirby J, alone of the current members of the High Court,has consistently applied theCaparo three-stage test of the existence ofa duty of care. But it seems to me that in various ways other members of theCourt have takeninto account considerations of the kind to which his Honourhas referred when addressing the question "[I]s it fair, just and reasonablethat the law should impose a duty of a given scope upon the [allegedwrong-doer] for the benefit of [a person in the same positionas theapplicant]?" To my mind, several considerations make it not "fair, just andreasonable" to impose a duty of care on the Council.

*The class of persons to whom Council would owe the duty would beindeterminate since the Council had no control over the numberof oysters grownand sold, whereas, for example, the ginger beer manufacturer inDonoghue vStevensonwas in control of the number of bottles of ginger beer itmanufactured.

As noted earlier, on one view, inCrimmins, McHugh J (at [93]), withwhom Gleeson CJ agreed, and Kirby J (at [233]) said that a duty to takeaffirmative action by way of theexercise of a statutory power is not to beimposed upon a public authority in favour of the public at large.

*The duty which the primary Judge found, that is, a duty to take reasonablesteps that were available to the Council to minimisefaecal contamination ofthe Lake, will be effective only if "minimisation" results in "sufficientlypure" growing waters for theoyster industry, but it was unreasonable torequire the Council to make that assessment when those more directly involved,the growersand the Minister, had, so far as the Council knew, effectivealternative courses available to them, namely, depuration and suspensionofharvesting for a sufficiently long period after a "fresh" and the ordering of afishing closure.

*The notion of "minimisation" is too vague and uncertain a concept to found aduty. It would give rise to great problems for acouncil to know what a dutyto minimise required of it and for a court to determine whether the duty hadbeen breached. It is noanswer that in this particular case the problem wouldnot arise at the breach stage because the Council did nothing: the questionbeing considered at present is whether the duty as formulated by his Honourshould be imposed in the first place.

*The non-specificity of the sources of the faecal contamination that occurredhighlights the indeterminate nature of the burdenthat the suggested duty tominimise would impose. InPyreneesand Lutz the problem was aparticular building, and inCrimmins, the assigning of particularworkers to particular employers and sites. In the present case the Minister'spowers would relate tothe particular, albeit very numerous, sites the subjectof identified oyster leases and aquacultural licences. But the extent oftheburden imposed on the Council depended on the extent of wrongdoing of others -something beyond the Council's control. Aneffective exercise ofCouncil's powers would have required it to carry out a sanitary survey; toidentify every source of faecal pollutionof the Lake; to exercise, wherenecessary to the fullest extent possible, its powers in relation to the sourcesidentified; andto maintain that system by taking those steps sufficientlyfrequently and promptly.

*The learned primary Judge seems to have thought that these measures would nothave imposed an undue financial burden on Council,but, with respect, I thinkthis overlooks an important matter. The particular powers cannot properly beconsidered in isolation. According to my understanding, a reason for thejudicial reluctance to impose a duty affirmatively to exercise statutory powersis the question of cost and the related one of ordering of a public authority'spriorities. In this regard, it is not amiss to notein passing "powers toorder" referred to ins 124 of theLocal Government Act 1993which canbe regarded as powers to remove, or to require the removal of, sources ofdanger to human health and safety, which are inaddition to those related tofaecal contamination of the Lake referred to earlier:

Table

Orders

Orders requiring or prohibiting the doing of things to or on premises

Orders requiring the preservation of healthy condition

Orders requiring the protection of repair of public places

359Other Acts also gave powers to local government councils to give orders,notices or directions. For example, theRoads Act 1993(NSW) empowereda council to order the removal of an obstruction or encroachment on a road andtheSwimming Pools Act 1992 (NSW) empowered a council to order the ownerof a swimming pool to bring it into compliance with that Act.

360In all these instances, it is reasonably foreseeable that if councils donot effectively exercise the power in question, membersof the public (in somecases the foreseeable class of injury sufferers is more limited) may well beinjured and the councils knowor should know this.

361But I do not accept that a council comes under a duty to exercise thesemultifarious powers throughout its area merely because,in addition, (a) thecouncil knows or should know that there are many instances of the particularkind of danger throughout its area;and (b) the cost of effectively exercisingthe power would, in the case of each exercise of it considered in isolation,not imposean undue financial burden on the council. Yet to hold the Councilliable in the present case requires acceptance of such a view.

362It may seem reasonable to impose on councils a duty to exercise any one ofthe above powers considered in isolation, at leastwhere there is a forseeablerisk of injury to public health. The financial burden in each case consideredin isolation may not appearonerous. But taken together, the cost may beconsiderable.

363In order to know that it was fair, just and reasonable to impose on theCouncil the posited duty of care, it would be necessaryto have evidence of theCouncil's finances, the cost of all the activities in which in engaged, thecost of those in which it wasunder a duty to engage, and the magnitude of allthe respective risks in question. Yet this is the very invidious kind ofinquirywhich the common law treats as inappropriate by its general principleof "no liability of public authorities for the non-exerciseof discretionarystatutory powers".

Breach of duty

364If I am wrong in thinking that Council did not owe to consumers of theLake's oysters a duty of care, the question is whetherthe Council took allsteps reasonably within its power to perform the duty as formulated by hisHonour. Inevitably, Council couldhave done more than it did, since it couldhave made minimisation of faecal contamination of the Lake its top priority itterms ofallocation of resources and allocated resources to no other task untilthe contamination was minimised. But the question raisedby the duty asformulated is whether Counciltook all steps reasonably open to minimisethe faecal contamination of the Lake. Again, this formulation raisesnon-justiciable issues as to the priority that Council should reasonably havegiven to the task. But since Council did not address at all some particularcomplaints of faecal pollution madeto it, it is easy to conclude, and I do so,that Council did not takeall steps reasonably open to it directed tominimisation of faecal contamination of the Lake. That is, it breached atleast to someextent its supposed duty,as formulated by the learned primaryJudge, although the particular failures to respond to complaints are notshown to have been causally linked to the outbreak.

365A different approach from that which I have taken above is to hold that theCouncil owed to consumers of the Lake's oystersa duty of care leaving thequestion what was required of the Council to discharge its duty to beconsidered in the context of theissue of breach. As Gleeson CJ observed inCrimmins(see [289] above), the difficulty of formulating the practicalcontent of the duty of care may be a reason for denying the existenceof theduty or for denying that the duty has been breached. Many, if not all, of theconsiderations to which I have referred insupport of my view that Council didnot owe the duty as formulated by his Honour (a duty to take such steps as werereasonably opento minimise faecal contamination of the Lake) would then berelevant to the scope of what the duty required of Council and whetherCouncilbreached the duty, and would be reasons why I would hold that it did not doso.

366In this respect, it is important to recall that a "duty of care" means aduty ofreasonablecare and the concept of reasonableness makes relevantthe oft cited passage in the judgment of Mason J inWyong Shire Council vShirt[1980] HCA 12;(1980) 146 CLR 40 at 47-48:

"In deciding whether there has been a breach of the duty of carethe tribunal of fact must first ask itself whether a reasonable manin thedefendant's position would have foreseen that his conduct involved a risk ofinjury to the plaintiff or to a class of personsincluding the plaintiff. Ifthe answer be in the affirmative, it is then for the tribunal of fact todetermine what a reasonableman would do by way of response to the risk. Theperception of the reasonable man's response calls for a consideration of themagnitudeof the risk and the degree of the probability of its occurrence,along with the expense, difficulty and inconvenience of taking alleviatingaction and any other conflicting responsibilities which the defendant may have.It is only when these matters are balanced out thatthe tribunal of fact canconfidently assert what is the standard of response to be ascribed to thereasonable man placed in the defendant'sposition.

The considerations to which I have referred indicate that a risk of injurywhich is remote in the sense that it is extremely unlikelyto occur maynevertheless constitute a foreseeable risk. A risk which is not far-fetched orfanciful is real and therefore foreseeable. But, as we have seen, theexistence of a foreseeable risk of injury does not in itself dispose of thequestion of breach of duty. The magnitude of the risk and its degree ofprobability remain to be considered with other relevantfactors."

367The circumstances of the present case called for a consideration offactors of the kind referred to by Mason J before it couldbe held that theCouncil was in a breach of duty of care. That is, on this approach, I wouldhold that the Council was not shownto be in breach of its hypothesised duty ofcare merely because it did not take all steps that were reasonably opened to itto minimisethe faecal contamination of the Lake.

Causation

368In my view, it is not shown that Council's failure to take all steps thatwere reasonably open to minimise the faecal contaminationof the Lake caused MrRyan's illness. This is not because what is at issue is a failure to prevent atrain of events for which otherpersons are directly responsible, but becausesome faecal contamination of the Lake is consistent with Council'sdischarge of its supposed duty. In my view, it is not shown that MrRyan wouldnot have contracted hepatitis A if Council had "minimised" the pollution. Nodoubt the risk of a consumer's doing sowas increased or decreased according tohow lax or vigorous Council was in exercising its powers, but an increase inthe risk (or,more precisely in this case, a failure to reduce the risk) ofanother's sustaining loss or injury is not to cause that loss or injury: cfBendix,above, of which I say more below.

Misfeasance or non-feasance

369The learned primary Judge held as an alternative ground of his decision,that by reason of the Little Street public toilet,the pit toilets on theislands and the stormwater drains, the case was one of misfeasance rather thannon-feasance. With respect,I do not agree. There was not, and no doubt couldnot be, a finding that these sources contributed to the pollution whichactuallycaused the outbreak of hepatitis A. It may, for example, have beencaused by the septic tanks at Nabiac. Nor do I think that thework whichCouncil carried out on the Little Street public toilet converted all the manypotential sources of the faecal contaminationof the Lake into instances ofmisfeasance, any more than repair work carelessly carried out by a highwayauthority on one part ofa public road converts conditions of disrepair atother scattered locations, on what may be a road of many kilometres in length,into instances of misfeasance also. If circumstances are to constitutemisfeasance, it is necessary to show some causal connectionbetween themisfeasance, even if coupled with non-feasance, and the injury suffered.

Council's past monitoring of water quality

370InPyrenees,Kirby and Gummow JJ accepted that that case was neithera simple one of positive action nor a case where the Shire's response to therisk of fire was "entirely passive" (at 423), but was a hybrid case; "anomission in the course of positive conduct" (per GummowJ at 392, adopting LordAtkin's formulation inDonoghue v Stevenson). It was a case in whichthe absence of exercise of interconnected powers was difficult to separate fromthe exercise of powerswhich had already occurred.

371But I do not think that the monitoring of water quality of the Lake whichCouncil had carried out from 1989 to 1993 convertedits inactivity in late 1986into misfeasance. There was no connection between the two. As at late 1996,the Council was "entirelypassive" and the outbreak was not attributable to "anomission in the course of positive conduct". The various documents to whichhis Honour referred (Mr Brooker's recommendation to Mr Braybrooke of9 May 1996, Mr Braybrooke's endorsement of 17 May 1996, Mr Tuxworth'sreport of 21 May 1996 and Mr Brooker's report of 8 October 1996) asshowing that Council was aware of a problem in 1996 did not,in my view,establish "positive conduct" by the Council either.

Mr Ryan's notice of contention

372It remains to refer to Mr Ryan's notice of contention in so far as itrelates to the Council. Only one contention in the noticerelates to theCouncil, as it does also to the State and the Barclay companies. It is thathis Honour ought to have found that asa matter of law, causation wasestablished if there was conduct of the appellants "which materially increasedthe risk of HAV contaminationas distinct from materially contributed to suchcontamination". His Honour said that it was "clear" that Council's "breachoccasioneddamage to the applicant". I have said already that I respectfullydisagree. As inBendix, the most that can be shown here is thatCouncil's inaction increased the risk of injury to some indeterminate extent.I would followMason P and Beazley JA inBendix in holding that thisdoes not provide a basis for liability.

373Mr Ryan does not contend that the learned primary Judge erred inthinking that the Council was not in a position to eliminatethe possibility offaecal contamination of the Lake. No doubt the more money and resourcesCouncil devoted to the exercise of therelevant powers, the greater thereduction in that pollution. It is true that the learned primary Judge foundthat the Council didnothing, that is, did not exercise its relevant powers atall. But it is not enough, in my respectful opinion, that to dosomething obviously must have reducedto some extentthe risk offaecal pollution of the Lake and thereforeto some extentthe risk ofhis suffering illness. Mr Ryan must prove that if Council had taken particularsteps he probably would not have contractedhepatitis A and that the taking ofthose steps was no more than whatreasonable care required. He did notdischarge this onus, in my view.

Highway authorities

374In Australia (Buckle v Bayswater Road Board[1936] HCA 65;(1937) 57 CLR 259) andin England (Stovin v Wise,above) a highway authority is notunder an actionable duty of care which requires it to exercise its power torepair a public road. That is, it is not liable for pure non-feasance. To mymind, the present case has more in common withStovin v Wise than withPyrenees, LutzorCrimmins.In a non-feasance highway case suchasStovin v Wise, the highway authority is held to owe no duty of careto members of the public to do work on part of a highway even though

*it knows of a danger spot on the highway;

*it has embarked on repairing an unrelated danger spot or unrelated dangerspots elsewhere; and

*it would not be financially burdensome to repair the one that has caused theinjury in question.

Indeed, such a case is arguably stronger that the present one in favour of theimposition of a duty to act: it is known that a particulardanger spot causedthe injury and that work on it would have eliminated the danger entirely,whereas in the present case, unidentified,although identifiable, danger spots(sources of pollution) contribute to indefinable extents to the pollution ofthe waters in whichthe oysters are grown, so that it cannot be known whateffect elimination of anything less than all of the danger spots will have,other than to reduce the risk to some indefinable extent.

375Nor do I think a highway authority case such asStovin v Wisedistinguishable on the ground that drivers know that public highways are apt tohave some danger spots. The driver who has an accidenthas no foreknowledge ofthe particular danger spot that caused it and is therefore relevantly in thesame position as the consumerof oysters.

Conclusion on Council's appeal on liability

376In my respectful opinion, it would be not an incremental development but amajor change of direction in the law if we were tohold that the Council owedan actionable duty of care to the oyster consuming public in the circumstancesof this case.

377The Council would be under a duty to exercise each of its powers whereinjury to members of the public was foreseeable if itdid not do so, even if,as here, the exercise of the power could do no more than reduce the risk of theinjury. The Council wouldhave to take all steps reasonably available to it inrespect of all of the powers or be subject to the risk of indeterminate andpotentially huge liabilities, the extent of which was beyond its control.

378In my view, it is for the High Court, not this Court, to take the step ofrecognising a liability in these circumstances.

379For the reasons given above, in my opinion the Council's appeal should beallowed.

THE STATE'S APPEAL ON LIABILITY (N 298 OF 1999)

Conclusions of primary Judge on Mr Ryan's personal and representativeclaims against the State

380The learned primary Judge considered that the only case against the Statethat seemed open to Mr Ryan was not unlike that whichhis Honour hadupheld against the Council: "that the State failed to exercise its managementpowers in such a way as to minimisethe risk of HAV infection of oysterconsumers."

381His Honour did not accept that the State had been negligent by reason ofthe Minister's not having approved a QAP by the timeof the rainfall event of23 to 25 November 1996. Although theFisheries Management Act 1994(NSW) and theFisheries Management (Aquaculture) Regulation 1995 (Reg 12 of1995) commenced to operate on 16 January 1995, it was not until 1 May 1995 whenRegulation No 92 of 1995, which amendedthat Regulation, commenced to operate,that there was a legislative basis for the establishment of the local QAPrégime. His Honour was not prepared to find that the period from 1 May1995 to late November 1996 was unreasonably long, particularly havingregard tothe fact that consultation with the industry and the public was required.

382His Honour thought that the State was under a legal duty of care,performance of which demanded that it carry out a sanitarysurvey, require thatharvesting cease after a "fresh", and exercise caution before it permitted aresumption of harvesting, by reasonof the following matters:

"(a)the State owned, and had powers of control over, thelake;

(b)through the Department of Fisheries, it established, and supervised theoperations of, a mosaic of oyster leases;

(c)through the Department of Fisheries, it issued, and enforced the provisionsof, aquaculture permits;

(d)through the Department of Health, the State supervised the depurationprocess, including the nature and location of water intakepoints and thedesign, construction and maintenance of depuration tanks and ultra-violetfacilities;

(e)through the EPA, the State had powers under theClean Waters Act to remove,disperse, destroy or mitigate pollution of waters(s27) and to carry outinspections and investigations of premises(s29);

(f)through a number of agencies, the State was a participant in the WallisLake Estuary Management Committee, one of whose objectiveswas to prepare amanagement plan designed `to sustain a healthy, productive and attractiveestuary'; and, most importantly,

(g)through the Minister for Fisheries, it had the power - at any time, toprohibit the taking of oysters from the lake [his Honourreferred to subs 8(1)of theFisheries Management Act 1994 (NSW) set out earlier]"

383The learned primary Judge said that the case was not one of a failure tolegislate, or one dependent on policy as distinct fromoperational factors.His Honour said:

"Although the State cannot be made liable for failing to make ageneral prescription for sanitary surveys, it may be made liable forignoringthe necessity of a sanitary survey in relation to its management of aparticular oyster growing area. In the present case,the State did more thanlay down rules and leave the industry to manage itself. Through variousagencies, the State actively involveditself in the management of the WallisLake oyster industry. This is understandable. The State had a directfinancial interestin the industry, as a lessor of oyster leases, as well asindirect financial interests and (presumably) social and political concerns.The determination by the Fisheries Department of the areas to be leased tooyster growers, and the supervision of their use, wereactivities within theoperational area; as were the depuration activities of the Health Departmentand any decisions by the Ministeras to the closure or non-closure of thefishery. The EPA was involved in inspections and directions in relation topremises in theWallis Lake catchment area. Decisions by EPA regarding thenecessity to inspect premises for the purpose of determining whetherthey weresources of water pollution were decisions in the operational area. In sumtotal, through various agencies, the New SouthWales government exercisedsubstantial managerial control over the Wallis Lake oyster industry. Itexercised that control by day-to-dayoperational decisions."

384The notion of the State's "managerial role" in connection with Lake'soyster fishery was central to its duty of care, accordingto his Honour's view.He stated (at [336]):

"It seems to me the State's involvement in the management of theWallis Lake oyster fishery was so extensive and significant as towarrant theconclusion that it gave rise to a duty of care to oyster consumers. As withthe Council, the State was not obliged toundertake a quality assurance role orguarantee the safety of the oysters harvested in the lake. But it was under aduty to takethose steps that were reasonably open to it to minimise the riskof consumers contracting a viral infection from the oysters."

385Passing on to the question of breach, his Honour thought that if theState was under a duty of care, breach was clear. He referredto the"overwhelming evidence as to the desirability of investigation of possiblesources of pollution of a shellfish growing area". He referred to the factthat regular sanitary surveys are required in Europe and the United States ofAmerica because depurationcannot be relied on to remove viruses fromshellfish. His Honour stated (at [337]):

"The only way of safeguarding consumers is to prevent theshellfish becoming contaminated in the first place; that means preventinghumanfaecal contamination of growing area waters. Although it may rarely bepossible to eliminate thepossibility of water contamination, a thoroughinitial shoreline survey will go a long way towards this, provided it issupplemented by regularsubsequent surveys."(emphasis by primaryJudge)

386Where there is an existing commercial oyster-growing operation, thequestion arises whether harvesting must cease until a sanitarysurvey iscompleted. His Honour thought that it may be reasonable for the managers of anoyster fishery to permit continuation ofproduction during such time as isnecessary to enable them to undertake, or arrange for others to undertake, therequired comprehensivesanitary survey, but that a point must arise afterwhich, if the survey has still not been carried out, production must cease.

387His Honour noted that officers of the State, and, in particular,Mr Bird, knew of the danger of harvesting without a comprehensivesanitarysurvey. I will refer to some of the evidence in this respect below.

388His Honour concluded (at [340]):

"Long before November 1996, the stage had been reached by whichthe State, as the ultimate manager of the fishery, should either haveensuredthe making of a comprehensive and competent sanitary survey or closed thefishery. It was negligent of the State to havefailed to do one or other ofthese things."

389His Honour noted that meat testing, like depuration, was not a guaranteeof non-contamination, as the State well knew.

Facts having special relevance to the State's appeal

390On the appeal, the State made much of what it said was a determined policyof non-intervention and of leaving the oyster industryto self-regulation.Because this formed such an important part of its submissions, I will give asomewhat detailed account of theevidence on which the State relied in supportof it. The background to the development of that policy was the nature andscope ofthe State's oyster industry.

The oyster industry in New South Wales

391In a document dated April 1992 titled "New South Wales Oyster QualityAssurance Program" prepared for the Minister for HealthServices Management byan Advisory Committee, the rock oyster industry in New South Wales wasdescribed as follows:

"Currently there are some 3,900 leases covering approximately1,500 hectares distributed across 42 estuaries the length of the NewSouthWales coastline.

Although there are 1,100 individual lease holders, the majority ofcommercial oyster production comes from a few hundred only andof these lessthan fifty growers product 80% of the annual total. Production reached a peakof 150,000 bags in the late 1970's buthas been falling since and latestfigures suggest it is now in the order of 90,000 bags per annum (1 bag = approx100 dozen `plate-size'oysters), with a farm gate value of about $34 million.Nonetheless, the rock oyster industry in New South Wales still constitutesthelargest and most valuable aquaculture in Australia second to pearl productionand has a gross value to the economy of close to$200 million a year.

Under the NSWFood Act and Food Standards Code, the purification of alloysters produced and sold in New South Wales is a statutory requirement.

Currently there are 306 oyster purification plants distributed betweenWonboyn Lake near Eden in the south to the Tweed River in thenorth, a distanceof just over 1,050 km. The majority of commercial growers of rock oysters aremembers of the NSW Oyster Farmers'Association."

392It was common ground that it was impossible to guarantee that everyoyster harvested in the State would be free of the HAV. Thatis, it wasaccepted that consistently with the absence of negligence, such an oyster mightcarry the virus. The reason, of course,is that it is impossible to guaranteethat at all times all water anywhere in the State where oysters are grown willbe free of faecalcontamination.

393The State emphasises that it had to deal with a situation of establishedoyster-growing areas, as distinct from a situationin which the issue waswhether oyster-growing should be permitted to commence, and if so, subject towhat conditions. I will discussthe implications of this distinction later.

Development of the State's policy in relation to the State's oyster industrydown to the introduction in late 1994/early 1995 of thelegislative frameworkfor State and local QAPs.

394The State submits that over a period leading up to 1994 and culminating inthat year, the State government made a consideredsocio-economic decision infavour of a statutory framework which would place the financial andadministrative responsibility for"on the ground" control of oyster productionin the State's estuaries on the local growers. The decision was that the Statewouldrefrain from exercising its statutory powers as an adjunct to the day today operational management of oyster-growing. In short,the submission is thathis Honour mischaracterised the State's role as managerial: rather, the Statefacilitated management by theindustry.

395In 1981, following viral food poisoning in 1978 from New South Wales-grownoysters, a State Government Inter-Departmental Committeewas established toconsider the implications of the outbreak for public health, and the futurerole of the New South Wales oysterindustry. The result was the introduction,in stages from 1981 to 1983, of compulsory depuration. The requirement wasintroducedas reg 19B of the regulations made under thePure Food Act 1908(NSW). The Department of Fisheries (later the Department of Agricultureand Fisheries) was responsible for the issuing of depurationplant permits andmonitoring depuration plants. Food inspectors of the Department of Healthmonitored the processing of oystersat the wholesale and retail levels, thatis, after depuration. In February 1989, responsibility in relation to theplants was alsotransferred to the Department of Health.

396In 1987, the NHMRC adopted a "Code of Hygienic Practice for Oysters andMussels for Sale for Human Consumption". This NHMRCCode reflected thepossibility of the sale of non-depurated oysters - a possibility not relevantto New South Wales.

397TheFood Act 1989(NSW) repealed and replaced thePure Food Act1908. The Food (General) Regulation 1992 was made under that Act.Clause 79A provided that a person who, in New South Wales, producedoysters for sale must ensure that they were treated in a purification plant inaccordance with the conditions of a permit issuedby the Director-General. TheNew South Wales Health Department adopted a "Code of Practice for New SouthWales Oysters" with effectfrom 1 July 1991. Permits to operate oysterpurification plants issued under cl 79A were expressed to be subject toconditions,including a condition that the permit holder must comply with thatCode. Permits issued to Barclay Oysters on 1 July 1996 with anexpirydate of 30 June 1997 were in that form. It is not suggested that BarclayOysters' depuration plant was non-complying.

398As noted earlier, in April 1992, an Advisory Committee drafted for theMinister for Health Services Management a report called"New South Wales OysterQuality Assurance Program", which recommended the introduction of State andlocal QAPs. There was to bea State Committee and Co-ordinator and local areacommittees and local area coordinators. The Report stated (at 11):

"While the establishment of local committees within existingoyster farmers' associations is desirable in the long term, initiallythey mayhave to be constituted independently of such associations in order to attractparticipation by all farmers, irrespectiveof their affiliations.

The Advisory Committee recommends nomination of zone monitors for differentareas of an estuary and this is certainly desirable toshare the workload andgain comprehensive coverage particularly of the large areas (eg Port Stephens,Wallis Lake, etc)."

399The Report addressed such issues as the "Development of Local QualityAssurance Programs", "Basic program requirements", proceduresto be implementedin the event of a pollution emergency situation, the problem of growers who didnot participate in the local QAP,and, as an incentive to the industry to meetthe cost, identification in the market of oysters produced under a QAP. Thelocal QAPswere to be organised, funded and administered by the oysterindustry. The report stated (par 3.6, at 14):

"Each local quality assurance program participant shouldunderstand very clearly from the outset that although adoption of a programrepresents a major step towards self regulation it isvoluntary and hasno statutory or legal status (at least in the initial stages)."(emphasisin original)

400The Report recommended that in the event of a pollution emergencysituation, the coordinator of the local QAP be notified. Thatcoordinatorwould alert growers to suspend harvesting, arrange for samples to be collectedand delivered to the testing facility,and ensure that the Health Departmentwas notified of the event and of "action taken by industry". The reportrecommended that inthe light of favourable sample results from the affectedarea, the coordinator, in consultation with the Health Department, wouldlift"closure/suspension".

401The Report contained the following passages (at 24-25):

" ... inherent in the move towards industry self regulation is aconsideration of the role of government agencies, particularly theNSW HealthDepartment because the Minister for Health is charged with a responsibility forprotecting the public's health and hasappropriate regulations under the FoodAct to ensure that foods which reach the consumer are indeed fit forconsumption. In short,irrespective of any industry endeavours it is the NSWHealth Department that makes the final judgement about the product and hasthepowers to impose penalties.

..........................................................................................................

... if the industry can achieve via self regulation a situation whereby itsproduct meets the desired standards and offers a highdegree of assurance tothe public then the active role of government must be greatly reduced withconsequent savings to the publicpurse.

It is hoped that government will recognise this and respond accordingly byfostering the quality assurance objective.

In the Advisory Committee's view, non-participants however few or many theymay be, negate the whole concept of a quality controlprogram and will almostcertainly compromise its integrity at some stage.

It is recommended therefore that the government amends purification plantpermit conditions so that all oysters treated in plantsbe cultivated,harvested and purified in accordance with an approved quality assuranceprogram.

..........................................................................................................

As an incentive for industry to meet the costs of quality assuranceprograms, oysters produced under a quality assurance program couldbeappropriately endorsed.

The endorsement is made through the quality assurance program and not theNSW Health Department, enhancing industry self-regulationand quality assuranceprogram integrity.

Amendments to the Fisheries and Oyster Farms Act now in train should includeprovision for an aquaculture licence.

One of the qualifications for such a licence could be that oyster farmersmust be members of an approved or accredited quality assuranceprogram."

402On 9 December 1992, the Wallis Lake Oyster Farmers Association resolvedto form a QAP committee. This was long before the commencementon 1 May 1995of the regulation amendments that provided for QAPs. According to the minutesof the meeting, the committee comprised"Senior Health Surveyor", "Water andSewerage Engineer", "Fisheries Inspector" and "4 oyster farmers from strategicareas of thelake". The first two officers were Council officers and theFisheries Inspector was an employee of the State. The State's DepartmentofFisheries had an office at Tuncurry. Accordingly, both the Council and theState were, at that time, involving themselves ina growers' initiative,apparently to provide advice and information from their perspectives to assistthe growers.

403This Wallis Lake QAP Committee, in the early months of its existence,appears to have concerned itself with collecting leviesfrom growers and makingarrangements with a company to provide testing services to them. Thesearrangements were concluded in July1993. On 9 August 1993, the Committeeresolved that sampling should commence on or about 23 August with the dispatchof ten randomsamples from racks and that "samples on a weekly basis be sent oras required in September or when the `shipping' season commenced."

404On 26 August 1993, the Hon Ian Causley, Minister for Agriculture andFisheries, wrote to the Premier, the Hon J J Fahey MP,requesting inclusion onthe agenda for the Cabinet meeting on 31 August 1993 of the question ofamendment of theFisheries and Oyster Farms Act 1935 (NSW) to includeprovisions for QAPs for oysters. Minister Causley stated:

"In essence, these programs are designed to provide greaterassurance of product safety for the consumers of NSW. The programs areaninitiative of the oyster industry and will be operated and fully funded by theoyster industry."

405In February 1994, the State Advisory Committee previously referred tosubmitted its Final Report, again headed "New South WalesOyster QualityProgram". The Advisory Committee at the time comprised Mr Bird of theDepartment of Health, Mr Paul O'Connor of theDepartment of Fisheries andthree oyster industry representatives. The "Executive Summary" section of theReport recorded that theAdvisory Committee had developed, with the assistanceof a consultant and in consultation with industry, a self-regulatory QAP thatcould be implemented in all commercial oyster farming estuaries in the State.According to the Executive Summary, a Guide detailingthe QAP and including aModel QAP, as well as a Methods and Procedures Manual had been published andwidely distributed. The Reportmakes clear that what was being advocated wasan industry-controlled and industry-funded system. The Report stated (at4):

"The NSW Oyster Quality Assurance Program is based on a conceptof industry self-regulation at the estuary level, with a minimum ofcentralsupervision."

406The Report bemoaned the recalcitrant oyster growers the AdvisoryCommittee had encountered and observed that local QAPs couldbe undermined bynon-participants. The Report stated (at 5):

"It is the view of the Advisory Committee, that for an OysterQuality Assurance Program to function effectively it is essential thatmembership of the program be made compulsory for all oyster lease holders.This view is also supported by most commercial oystergrowers, many of whomregard compulsory membership to be the lynchpin[sic] for the success ofa Program."

407The Report recommended a co-ordinated approach on a state-wide basis andthe appointment of a permanent committee, with legislativebacking, to overseeand administer the Program with the assistance of a State Coordinator. TheReport stated (at 5):

"Unfortunately, due to present industry politics, the issue of aPermanent Committee remains contentious. A faction of industry donot favourstatewide co-ordination through a Permanent Committee and would prefer eachProgram to be administered solely at the localestuary level. ..."

408The Advisory Committee made the following recommendations (at 1):

"1.Membership of an Oyster Quality Assurance Program be madecompulsory for all oyster leaseholders either by a condition of oysterleaseownership or oyster sale.

2.A Permanent Committee comprising 3 elected oyster industryrepresentatives, 1 Health representative, 1 Fisheries representative and1independent Chairperson be established to administer and oversee theProgram.

3.A state Co-ordinator be appointed, responsible to the PermanentCommittee, to; [sic] co-ordinate individual programs; maintain a state-widedata base; liaise with government, academic, research and industry groups; andorganise seminars, audits, reports and educationalprograms.

4.The Government take the appropriate action to legally indemnify localcommittees and co-ordinators who voluntarily and in good faith,carry out theirduties as specified by the Program."

409In November 1994, Cabinet gave approval to the introduction of an industryfunded "Shellfish Quality Assurance Program" forNew South Wales. The role ofthe proposal was stated to Cabinet to be as follows:

"2.2The proposed QAP will complement the existing requirement(under the Pure Food Regulation) to purify oysters and will providethecommunity with a greater guarantee of product safety when they buyoysters."

410Minister Causley, and the Honourable Ron Phillips, Minister for Health,recommended that Cabinet approve the introduction of theQAP and note that:

"(i)The proposal will involve the establishment of separateQAPs on each shellfish producing estuary and that these estuary-basedprogramswill be co-ordinated at a state level to ensure standards are achieved;

(ii)membership of the QAP program will be made compulsory for all shellfishgrowers, as a condition on their aquaculture permit;

(iii)the proposal will involve three levels of funding, namely:

*funding for microbiological testing of individual oysters (to be met by thegrower - as now);

*funding for environmental testing (the level of testing required, which willvary from one estuary to the next, will be specifiedin the QAP; the costs willbe met collectively by the growers on that estuary);

*funding for the state wide co-ordination of estuary-based programs and forother costs associated with the QAP (to be met by acompulsory charge on alloyster farmers)."

411The Ministers also recommended that Cabinet approve the introduction ofa regulation unders 156 of theFisheries Management Act 1994 requiringall shellfish farmers to pay an annual contribution to fund state-widecoordination of the estuary based programs. Finally,they recommended thatCabinet approve of the QAPs' being administered by "NSW Fisheries".Accordingly, the proposal was that theState bear the responsibility and costof administering the QAPs, but that otherwise they be run and funded by theindustry.

412The Ministers' supporting paper for Cabinet noted, by way of background,that the Sydney rock oyster industry comprised some980 lessees growing oysterson 3,580 leases spanning 4,800 hectares of Crown land in forty-one estuariesand that in recent yearsproduction had averaged 120,000,000 oysters per yearvalued at $28,000,000 to $35,000,000 - one quarter of the value of fisheriesproduction in the State. (These figures were somewhat different from those inthe April 1992 report drafted by the Advisory Committeenoted earlier, but thedifferences are not presently material. It is of some interest that the Reportof April 1992 had stated thatalthough there were 1100 individual leaseholders, "the majority of commercial oyster production [came] from a fewhundred only andof these less than fifty growers produce[d] 80% of the annualtotal").

413The Ministers' paper for Cabinet noted that

*since 1981 all oysters grown and sold in the State had been required to bepurified by being held in clean (sterilised) waterfor thirty-six hours toallow them to cleanse themselves;

*the United States and most other Australian states and an increasing numberof Asian countries, on the other hand, classifiedtheir growing areas accordingto pollution levels and most use the United States FDA classificationsystem;

*Europe took a different approach again, testing oyster meat forcontamination; and

*purification alone was not sufficient to guarantee product safety and was noteffective in removing the viruses commonly foundin human sewage which wereknown to be the major causes of disease associated with the consumption of rawshellfish.

The paper referred to the work conducted by representatives of the oysterindustry, New South Wales Health and New South Wales Fisheriesto:

" ... develop a program for water and meat sampling that[would]identify those times when contamination is such that the oysters should notbe harvested."

414Paragraph 4.10 of the paper is important and was as follows:

"4.10The QAP committee recognised the advantages of NSWadopting the same system[a program for water and meat sampling], butrecognised that the U.S. FDA system would involve comprehensive water samplingfor several years in each estuary to allow classificationof the growing areas,and involve ongoing sampling thereafter. The sampling would have to be carriedout by a Government agencyand, because of the diffuse nature of the oysterindustry in NSW, would be extremely expensive to introduce. For this reason,thecommittee developed a compromise option (the QAP program) which should meetthe basic need (product safety) and yet impose much lowercosts on industry."

415This paragraph expressed a policy decision. Rightly or wrongly, whatwas recommended was rejection of alternative systems ofsafeguards usedelsewhere in the world in favour of a system of local estuary-based QAPs and aState "master" QAP, all, in substance, funded and controlled by oystergrowers.

416The Ministers' paper continued by noting that the Advisory Committee'sproposal would entail developing individual programsfor the forty-oneestuaries in which shellfish were commercially grown, based on a model programdeveloped by the State QAP Committee. Paragraph 4.14 was as follows:

"4.14The QAP is to be industry run and industry funded.Funding for the program is required at three levels:

(i)to pay for meat testing prior to marketing the oysters - this is requirednow and, as now, will be funded by the individualoyster farmer;

(ii)to pay for the environmental testing required by, and any other costsassociated with, the estuary-based program - it is proposedthat these fundswill be collected at the local level by the local committee responsible fordeveloping and implementing the program;

(iii)to pay for statewide co-ordination of the estuary based programs andother costs associated with the QAP - it is proposedthat this requirementwould be met through an `annual contribution' required from all oyster farmersby Regulation made underSection 156 of theFisheries Management Act1994."

417Finally, pars 4.25 and 4.26 were as follows:

"4.25Industry (all factions), NSW Fisheries and NSW Health allsupport the introduction of a Shellfish Quality Assurance Program. Theprogram will require minimal government involvement, although NSW Fisheries andNSW Health may from time to time have back-upenforcement roles (as they donow).

4.26NSW Health are keen to separate their enforcement role (inclosing rivers to harvesting or in prosecutions) from the education functionand as a result do not want to administer the QAP program. It is proposed,therefore, that the statewide co-ordinator will be employed (using industryfunding) by NSW Fisheries and that NSWFisheries will have administrativeresponsibility for the program." (my emphasis)

418The Ministers' paper thus reflects a view of the QAPs as having an"education function". The reference seems to be to the notionthat theindustry would encourage its members to conform to QAP standards. The HealthDepartment was taking the view that it mightbe compromised in its "enforcementrole" if it also administered the QAPs, no doubt thereby developing a closerelationship withoyster growers and their representatives.

419The Minister's paper noted that the QAP would "essentially be an industryrun and industry funded program" and that, althoughNew South Wales Fisherieswould employ the state-wide coordinator, it would use industry funds for thepurpose. Cabinet adoptedthe Minister's recommendations.

Legislative powers of State government

420It is convenient at this stage of this chronological account to refer tothe relevant legislative powers of the State government.

421As at the date of the Ministers' paper (November 1994) theFisheriesManagement Act1994had already been assented to (on 2 June 1994).It commenced to operate on 16 January 1995. It introduced the "aquaculturepermit"system. TheFisheries Management (Aquaculture) Regulation (Reg No 12of 1995), which was gazetted on 13 January 1995 and commenced on thecommencement of the Act, that is, on 16 January 1995,provided for suchmatters as aquaculture permits and aquaculture leases. It was Regulation No 92of 1995 gazetted on 3 March 1995,which commenced on 1 May 1995 andamended theFisheries Management (Aquaculture) Regulation, that provided forthe New South Wales Shellfish QAP and for the local estuary based QAPs, and sogave effect to the Cabinet's adoptionof the Ministers' recommendations. Itwas thus as from 1 May 1995 that there was a legislative basis for imposing acondition onaquaculture licences requiring the holder to comply with a localQAP.

422Section 8 of theFisheries Management Act 1994(NSW) empowering theMinister, by a "fishing closure" to prohibit the taking of, relevantly,oysters, was set out earlier.Section 10 provided that such a "fishingclosure" remained in force, subject to the Act, for a period (not exceedingfive years) specified inthe notification. Section 14 provided that a personwho took fish, or, subject to a defence, was in possession of fish taken, incontravention of a fishing closure, was guilty of an offence.

423Section 143 empowered the Minister to determine "plans for the developmentof the commercial aquaculture industry" called "developmentplans" and providedthat a development plan might relate to any aspect of the industry. Section144 prohibited a person from undertakingaquaculture except under the authorityof an "aquaculture permit" and provided that aquaculture permits might be ofsuch differentclasses as were prescribed by the regulations. Section 145provided for the making to the Minister of applications for aquaculturepermitswhich were required to be accompanied by a commercial farm development plandescribing the manner in which the applicantproposed to undertake theaquaculture.

424Section 156 provided that a permit holder must, if the regulations sorequired, pay to the Minister an annual contribution to"costs relating to theaquaculture industry".

425Section 160 empowered the Minister to cancel or suspend aquaculturepermits. Section 183 empowered him, by order, to declareany area to be aquarantine area because of the presence or suspected presence of a declareddisease. The same section providedthat such an order might prohibit thetaking of fish or specified fish in or from the quarantine area, and, in thecase of an areasubject to an aquaculture permit, require the permit-holder totake such action as was specified in the order or directed by a fisheriesofficer (including the destruction or treatment of fish cultivated or locatedin the area).

426I set out earlier the provision of subs 189(1) that the Minister might, bya fishing closure, prohibit, relevantly, the takingof oysters cultivated underan aquaculture permit from the aquaculture permit area if the Minister wassatisfied that the oystersare or are likely to be unfit for human consumption.This provision, to which I will return later, made it clear that the fishingclosure provision was not displaced by the issue of an aquaculture permit, atleast where the Minister was satisfied that oystersfrom the permit area wereor were likely to be unfit for human consumption.

427TheFisheries Management (Aquaculture) Regulation 1995, as amended byRegulation No 92 of 1995 with effect from 1 May 1995, provided for local QAPsand an overarching New South Wales QAP. Clause 12B of the amended Regulationwas as follows:

"(1)The Minister is required to determine as a commercialaquaculture industry development plana program to assure the quality ofshellfish taken from estuarine waters for sale for humanconsumption.

(2)The plan is to consist of the New South Wales Shellfish QualityAssurance Program, which is to include local shellfish quality assuranceprograms for those estuarine waters where holders of class A permits operateaquaculture farms.

(3)The objective of the New South Wales Program is:

(a)to ensure that shellfish are taken from estuarine waters to besold for human consumption only if:

(i)the shellfish meet the quality standards specified in or under theprogram, and

(ii)those waters meet environmental standards so

specified, and

(b)to supervise the co-ordination of local programs, and

(c)to ensure that local programs meet the objectives specified inparagraph (a).

(4)The Minister is responsible for establishing the New South WalesProgram in consultation with the New South Wales Committee.

(5)If there is an inconsistency between the New South Wales Program anda local program, the New South Wales Program is to prevail."(myemphasis).

(The "New South Wales Shellfish Quality Assurance Program" was the programestablished under cl 12B itself and was called the "NewSouth Wales Program".As noted earlier, the Lake's oyster farmers all held class A permits.)

428Regulation 12C required the Minister to appoint "an advisory committee" tobe called the "New South Wales Shellfish QualityAssurance Committee" (calledthe "New South Wales Committee") comprising six members, one of whom was to beappointed by the Ministeras chairperson, four of whom were to be, in effect,oyster growers, and the remaining one of whom was to be the Director ofFisheriesor his or her nominee. In addition, cl 12C required the Minister toappoint a local shellfish quality assurance committee for eacharea or group ofareas of estuarine waters to which the New South Wales Program related. Theclause also provided that in appointingthe members of a local committee, theMinister was required to consult the New South Wales Committee andrepresentatives of, in effect,oyster growers whose aquaculture farms werelocated within the relevant estuarine waters, and that he might only appointsuch growersas members of the local committee. Subclause 12C(5) was asfollows:

"Neither the New South Wales Committee or a local committee issubject to the control or direction of the Minister, but the Ministermayrequire it to reconsider any decision that it has made."

Subclause 12C(6) empowered the Minister to remove from office all or any ofthe members of the New South Wales Committee or of a localcommittee.

429In substance, cl 12D made the New South Wales Committee responsible forsupervising the administration of the New South WalesProgram and advising theMinister on certain matters and developing and implementing programs for theeducation of aquaculture farmersand the general community in public health andenvironmental misuse. Clause 12E made the local committee responsible forestablishingor administering the local QAP for the estuarine waters for whichit was appointed. A local program was required to include anyminimum standardspecified in the New South Wales Program for the quality of shellfishcultivated in the relevant estuarine watersand for the purity of those waters.Subclause 12E(4) provided that if a local committee failed to submit a draftlocal program tothe Minister for approval within three months after thecommittee's appointment, or, having submitted a draft program, failed tocomplywith the Minister's conditions for approval of it within one month after beingnotified of those conditions, the Ministermight determine a local QAP for thearea or areas of estuarine waters concerned.

430Clause 12G made it a condition of Class A permits (clause 4 provided fornine classes of permit but as noted earlier, all thosepermitting thecultivation of oysters in the Lake were class A permits) that the holder complywith the requirements of the New SouthWales Program and of the applicablelocal program, that the permit holder pay to the relevant local committee suchcharges as werefrom time to time fixed by it and levied on, and notified inwriting to, the permit holder, and pay for any relevant test requiredto beconducted under the local program on shellfish located within the aquaculturefarm or farms operated by the permit holder.

431I turn now to theClean Waters Act 1970 (NSW).Subsection 16(1) ofthat Act provided simply:

"A person shall not pollute any waters."

There were related prohibitions in following subsections of s 16. Section 5defined "pollute" widely. But subs 16(6) provided thatnotwithstanding theearlier prohibitions in s 16, it was not an offence for a person to pollutewaters if he held a licence and didnot pollute in contravention of itsconditions. Section 27 empowered the EPA to direct,inter alia, anylocal authority (such as the Council) to exercise its powers under that sectiondescribed in [347] above. Section 27A empoweredthe EPA, by written notice, todirect an occupier of premises from which the pollution of any waters wascaused, or a person whocaused the pollution of any waters, to take suchmeasures to remove, disperse, destroy or mitigate the pollution as werespecifiedin the notice. Section 29 gave wide powers of entry and inspectionand associated powers to an "authorised officer" (defined tomean a personauthorised in writing by the EPA to act as an authorised officer for thepurposes of s 29).

432Section 17A of thePollution Control Act 1970 (NSW) provided that aperson might apply to the EPA for a licence in respect of,inter alia,the pollution of waters within the meaning of theClean Waters Act 1970.Section 17D of thePollution Control Actempowered the EPA to grantapplications for licences to pollute, either subject to conditions orunconditionally. The section alsoempowered the EPA, during the currency of alicence to pollute, by notice in writing served on the licence-holder, torevoke or suspendthe licence or any conditions attached to it or to attach newconditions to it.

433Section 17I provided that a person might apply to the EPA for pollutioncontrol approval to do anything specified in,inter alia, par 19(1)(a)of theClean Waters Act 1970. Paragraph 19(1)(a) provided that a personwas not to install, construct or modify any apparatus, equipment or works for,relevantly,the discharge of pollutants into any waters or the treatment ofpollutants prior to, and for the purpose of, their discharge intoanywaters.

434Section 24 of thePollution Control Act gave an "authorised officer"(a person authorised in writing for the purpose by the EPA) wide powers ofentry and inspection andassociated powers.

435TheClean Waters Regulations 1972 were made under theClean Waters Act1970. Regulation 21 provided that where pollutants were being or werelikely to be discharged into waters from any premises, the EPAmight requirethe occupier to take any one or more of specified courses of action, includingcourses of action directed to causingthe pollution to cease.

436There was other legislation relevant to the State's role.TheFood Act1989(NSW) provided that where the Director-General of the Department ofHealth had reasonable grounds to believe that it was necessaryto do so "inorder to prevent or mitigate a serious danger to public health", he might makevarious kinds of orders, including anorder prohibiting the cultivation,taking, harvesting or obtaining, from an area specified in the order, of anyfood or of any foodof a class or description so specified(ss 44,45(1)(b)).

437ThePublic Health Act 1991(NSW) provided (ins 5) that if theMinister considered on reasonable grounds that a situation had arisen underwhich the health of the public was, or waslikely to be, at risk, and certainother conditions were satisfied, the Minister might take such action and givesuch directionsas he or she considered necessary to deal with the risk or itsconsequences.

438Section 7 provided that if the Minister suspected on reasonable groundsthat a risk to public health had arisen or was likelyto arise because of waterin, or flowing from, any source, the Minister might take such action and givesuch orders as he or sheconsidered necessary to restrict or prevent the use ofthe water and bring the water as nearly as practicable to a satisfactorycondition.

439Section 10 provided that if the Minister considered on reasonable groundsthat a public authority had failed to exercise a function and thefailure waslikely to endanger the health of the public, the Minister might require it toexercise the function.

440TheProtection of the Environment Administration Act 1991(NSW)constituted the EPA and gave it a wide environment protection function andresponsibility, and wide related powers. Subsection12(1) empowered the EPA,after consultation with the public authority in question (such as a localgovernment authority) to

"direct any further authority to do anything within the powersof the public authority which[would], in the opinion of the[EPA],contribute to environment protection."

441TheEnvironmental Offences and Penalties Act 1989(NSW) providedfor offences and penalties for a range of contraventions of environmentprotection legislation.

Development of the State's policy in relation to the State's oyster industryafter the introduction in late 1994/early 1995 of thelegislative framework forState and local QAPs.

442On 10 October 1995 the Oyster Farmers' Association of New South Wales Ltdwrote to the Minister for Fisheries expressing concernover what it perceivedto be delay in the introduction of the QAP. The Minister replied on 6 Novemberexplaining that some delayhad been experienced in finding a suitable person tochair the NSW Committee. He also advised that his Department had beenpreparingaquaculture permits for oyster farmers and had indicated thataccounts for their QAP contributions would be mailed in December 1995.

443The first meeting of the State Committee was held on 15 December 1995. Thechairperson was Annette Fordham. Other memberspresent were fourrepresentatives of the New South Wales shellfish industry and Damian Ogburn ofthe Department of Fisheries. SteveMcOrrie, also of that Department, attendedas an observer. There was discussion of the Committee's task of establishingthe StateQAP; the possibility that there might be no volunteers for membershipof the local committees so that they could not be constituted;the appointmentof a State coordinator; and the State coordinator's level of salary.

444No doubt there were further meetings throughout 1996. At the meeting on 6September 1996, some two months before "the rainfallevent", Dr Kerry Jacksonwas introduced as "the recently appointed State Coordinator". It was agreedthat she would work for threedays from her home and two days at an office inthe Department of Fisheries.

445The chairperson summarised what was known of the Tweed River problem andthere was discussion of the procedures according towhich the estuary therecould be safely re-opened for harvesting. The minutes contain the followingpassage:

"During the course of the meeting the Chairman was notified ofvarious growers in different estuaries who were that very day, apparentlyharvesting oysters during periods of heavy rain. Efforts were made by variouscommittee members to contact these people and to convincethem of the disasterswhich would result from such action."

This appears to be an illustration of the "education function" of the QAPsystem mentioned earlier - the industry encouraging itsmembers to conform tosafety standards.

446Dr Jackson was asked to prepare a "pro forma for the gathering of waterquality data". The local QAP for the Manning Riverestuary was presented andmembers were asked to read it and to consider it as "the first [local QAP] forpresentation to the Ministerfor ratification". No doubt, the reference was tocl 12E of theFisheries Management (Aquaculture) Regulation 1995 notedabove.

447At the meeting of the State Committee on 26 September 1996, Dr Jacksonupdated information on the situation in the Tweed Riverestuary. She reportedthat pre-depuration bacteriology and virology tests gave satisfactory resultsand that the plan was to re-openthe estuary. The minutes of the meetingrecord that all present agreed.

448On 2 October 1996, Dr Jackson prepared a paper addressed to the State QAPCommittee stating that she had been employed as StateCoordinator of the QAP ona full time basis since 2 September 1996 and had identified several majorproblems, which, if not rectified,would render the position of StateCoordinator untenable. She said that her major concern was that the StateProgram was yet tobe written. She pointed out that under theFisheriesManagement (Aquaculture) Regulation 1995 the State Program was to be developedby the Minister in consultation with the Committee. Her paper stated:

"My concern is that until the State Program is written theposition of State Coordinator will be very difficult, as illustrated bytheproblem with implementing a QAP closure in the Tweed. To permit a legal QAPclosure in the Tweed River the permit conditionsof the five growers concernedhad to be amended. It needs to be established who will write the StateProgram, and minimum standardsneed to be established for that program. In myopinion this is a priority - how can we demand a QAP from estuaries when theStateProgram has not been written and maintain any form ofcredibility?"

Dr Jackson also complained that there was uncertainty as to whether theState Coordinator was to work for the Department of Fisherieson the one handor the Committee and the State's oyster growers on the other hand.

449On 6 November 1996, Mr Bird, as Manager, "NSW Oyster Program andPublic Health Consultant, Oysters", to the Health Departmentprepared a reporton the outbreak in August and September 1996 of gastroenteritis affecting alarge number of people who had consumedraw oysters harvested from the TweedRiver. According to the report, growing areas were suspected of being pollutedby sewage fromthe sewerage system, septic tanks and boats. Oysters harvestedover a period of about a month were suspected. According to Mr Bird'sreport, purification had not been conducted in accordance with permitconditions and was inadequate according to an examination ofimplicatedoysters. Moreover, oysters had not been opened hygienically. According toMr Bird's report, the Tweed River estuarywas closed by NSW Fisheries on 4September 1996 and the smaller harvesting area of Chinderah was re-opened on 18September 1996,although the major oyster-growing area was still closed as at 6November 1996. The abstract in Mr Bird's report concluded:

"A quality assurance program was established to monitor thepublic health safety of oysters and water in growing areas and indicatesacontinuing water quality problem. Sewage from the sewerage system, septictanks and boats are suspected.

This incident raises a number of problems requiring solutions: an effectiveoyster quality assurance program, greater compliance bypurification plantoperators, hygienic oyster processing, an adequate trace-back system, a moreeffective public health network,a modern government virology laboratory andgreater community and government involvement in addressing sewage pollution ofour rivers."

450A copy of Mr Bird's report was forwarded to Dr Jackson on 12 May1997 in response to a request by her dated 15 January 1997, thelatter datebeing just before the outbreak of hepatitis A caused by the consumption ofoysters from the Lake, but long after therainfall event of 23-25 November 1996and Mr Ryan's consumption of the oysters.

451There was a further meeting of the State QAP Committee on 12 November 1996,chaired by Ms Fordham and attended by three representativesof the industry,Damian Ogburn of NSW Fisheries and Dr Jackson. It was reported thatinvestigation revealed that oysters harvestedfrom the Tweed River estuary wereinvolved in the outbreak of 160 reported cases of gastroenteritis in northernNew South Wales andsouthern Queensland, but that the Report on the outbreakwas not yet finalised.

452The heavy rainfall event in the area of the Lake occurred from 23 November1996 to 25 November 1996.

453After the outbreak, Dr Jackson wrote as follows on 14 February 1997 on theletterhead of "NSW Shellfish Quality Assurance Program"

"WALLIS LAKE CLASS A AQUACULTURE PERMIT HOLDERS

Due to recent events in the Wallis Lake area the Wallis Lake QualityAssurance Program in consultation with the New South Wales ShellfishQualityAssurance Program (NSW SQAP) has undertaken that all growers will immediatelycease the harvest of any shellfish from leaseslocated within the confines ofWallis Lake.

The cessation of harvesting will remain in force pending the results offurther investigations by NSW Health and local industry.

The harvest ban will be monitored by the local Quality Assurance Committee,NSW SQAP State Coordinator, NSW Health and NSW Fisheries."

I assume that the letter was distributed to the Class A aquaculture permitholders, that is, all of the Lake's oyster growers.

My conclusion on the State's appeal

General

454In my respectful opinion the State was not liable to Mr Ryan on the groundon which his Honour held that he was. Lee J andKiefel J conclude that theState's appeal should be dismissed and their view will prevail. For thisreason I will not state my ownreasons as amply as I might otherwise havedone.

455I do not think that the State had a duty to take steps that were reasonablyopen to minimise faecal contamination of the Lakefor the reasons that I gavefor reaching that conclusion in respect of the Council.

456At the outset, certain aspects of the State's position are noteworthy.

457First, the State had statutory power to prevent the actual harvesting ofoysters in the interests of public health underss 8 and189 of theFisheries Management Act 1994 andss 44 and45 of theFood Act1989, whereas the Council's powers enabled it to reduce the risk of viralcontamination of the waters of the Lake and therefore of theoysters growing init. But the Minister was not in fact satisfied that the oysters were, or wereunlikely to be, unfit for humanconsumption (cf par 189(1)(b) of theFisheries Management Act 1994) and the Director-General of theDepartment of Health did not in fact have before him reasonable grounds tobelieve that the makingof an order unders 45 of theFood Act 1989was necessary in order to prevent or mitigate a serious danger to publichealth (cfs 44 of theFood Act 1989). In this respect, theposition may be contrasted with that inPyrenees andLutz. Inboth of those cases the power to eliminate the danger was exercisable upon theexistence of a certain objective state of affairsand that objective state ofaffairs had in fact arisen to the knowledge of the Shire and the councilrespectively. In the presentcase, there had not previously been an outbreakof hepatitis A caused by the Lake's oysters and the State, through its variousemanations,did not in fact believe or in fact have reason to believe that onewas imminent on the occasion of the rainfall event of late November1996. Inso far as the duty posited is based on these powers, it would have to beformulated in the first instance as a duty toinvestigate and to become"satisfied" or acquire "reasonable grounds". This highlights the difficulty ofconstructing a duty toact out of statutory powers of this kind.

458Secondly, the State had a measure of control over the oyster industry inthe respects mentioned by the learned primary Judge,mentioned above, that wasnot available to the Council. In particular, by its control over the grantingof oyster leases and aquaculturelicences, it could limit the number of oystersplaced in the market and therefore the potential extent of its liability in awaythat the Council could not do. On the other hand, the State did not havecarte blanche: the industry was well and long established by November1996. Some idea of the dimension of the industry can be gained from theAdvisoryCommittee's paper of April 1992 and the Ministers' report to Cabinetof November 1994, both noted earlier.

459Thirdly, the State's measure of control was in respect of identified sites,whereas the duty posited in respect of the Councilrelated to numerousunidentified sources of discharge that would change from time to time and couldbe identified only by a sanitarysurvey which was updated with sufficientfrequency. It is true that the "identified sites" might increase or decreasein numberover time but the identity of the lease and aquaculture permit siteswas at any time known to the State. Again, however, the numberof the siteswas great.

460As in the case of the Council's appeal, the duty posited is one to exercisestatutory powers owed to the public at large, notin respect of a particularknown source of danger which later materialised, causing an adjoining neighbourloss (as inPyrenees andLutz), but, in the case of the State, inrespect, apparently, of all oyster-growing estuaries where there was humanfaecal contamination,the State's measure of control being the same throughoutthe State.

461As in the case of the Council, there is no discussion in the learnedprimary Judge's reasons for decision of all the other statutorypowers given tothe State government, the exercise of which might minimise the risk of injuryor illness. Take, for example, thepower to maintain State highways. Assumethat there are highways at various places throughout the State that have falleninto disrepairso as to pose a risk of injury to highway users. Is it to besaid that there is a duty of care to keep them in repair and also tominimisethe risk of faecal contamination of all oyster-growing estuaries or even onlyof the Lake? What if available funds to exerciseall relevantly similar powersthroughout the State prove inadequate? Who is to determine priorities? Is acourt to do so?Pyrenees andLutz are distinguishable for thereasons given earlier. Unless a case is exceptional, such asPyrenees,Lutz andCrimmins, the general principle that there is no liabilityof public authorities for non-feasance fulfils the policy of excluding theinvidiousintrusion of the courts into questions of this kind which the commonlaw has treated as appropriately reserved for elected politicalrepresentatives.

462Lest it be thought that the highway analogy is the only one available, Irefer to the following. ThePublic Health Act 1991 (NSW) empowers theMinister to take a variety of courses of action where the health of the publicis or is likely to be subjectedto risks of various kinds. TheFood Act1989(NSW), previously referred to, empowers the Director-General ofthe Department of Health to make various kinds of orders when he or shehasreasonable grounds to believe that the making of an order is necessary toprevent or mitigate a serious danger to public health(seePart 4 (ss44-56) ofthat Act). TheFood Production (Safety) Act 1998 (NSW) establishes abody corporate called "Safe Food Production NSW" andPart 5 (ss 23-54) of the Act empowers it and officers authorisedby it to exercise a range of enforcement powers in the interests of publichealth.

463My conclusion that the State was not shown to be liable is, I think,supported by various approaches to the issue. First, Ido not think that thearray of statutory powers referred to, including the power given bysubs 189(1) of theFisheries Management Act 1994 to close an oysterfishery where the Minister was satisfied that, relevantly, oysters were, orwere likely to be, unfit for humanconsumption, gave rise to the duty. A dutyto exercise that power would, in my view, in accordance withPyreneesandLutz, not arise unless, at least, the State knew that the oysters tobe harvested would be, or would be likely to be, unfit for humanconsumption.But there had not previously been an outbreak of hepatitis A arising from theconsumption of oysters harvested fromthe Lake. The Lake's growers' practicesof depuration and suspension of harvesting for a sufficient period following a"fresh" hadapparently worked in the past. Of course, the possibility of theirresponsible grower was always of general concern, but this didnot rise tothe required level to impose a duty to exercise statutory powers. Similarly,although, no doubt, instances of faecalcontamination over time can be pointedto, the evidence did not establish that the standard of purity of the Lake'swater was knownto the State to be dangerous by being, for example,significantly lower than that of the water in which oysters were satisfactorilygrown and harvested elsewhere in the State or overseas.

464But let it be assumed that the standard throughout the State was lower thanthe standard insisted upon in Europe and the UnitedStates of America. It maybe said that the State government failed in its duty to the public in thisrespect. That is, it may besaid that in the interests of public health theState should have adopted a different régime from that which it didadopt. In particular, it may be said that the State should have adopted asystem involving sanitary surveys of the estuaries or flesh testingor both. Ido not think, however, that a failure of that kind, which I would characteriseas a failure of policy, necessarily indicatesbreach of an actionable duty ofcare to those members of the public who consume oysters.

465A further point in relation to "fishing closures" unders 189 of theFisheries Management Act 1994 is that the duty proposed would have to beunderstood as one requiring the Minister to consider the question whether heshould besatisfied that the Lake's oysters were or were to be likely to beunfit for human consumption. To my mind this highlights, at leastin relationto that particular power, the fact that what is involved is a question ofpriorities and allocation of resources.

466I accept the State's submission that, rightly or wrongly, the government ofthe day took a policy decision in 1994-95 to theeffect that the State woulddistance itself from the day to day management of the oyster industry in favourof a system of industry-basedcontrol to be implemented through two bodiesrepresentative of the industry: a State QAP Committee and local estuary-basedQAP committees. I do not mean to suggest that by merely recording a policy of"non-involvement", a public authority can necessarily avoid incurringlegalliability. It is hard to accept that the formal adoption of a policy ofnon-intervention would have saved the Shire inPyrenees or the councilinLutz. The nature of their legislative powers and the facts andcircumstances of their knowledge of the particular danger and the stepstakenin relation to it would have prevailed to render them liable nonetheless. Butin the present case the State did act consistentlywith its policy. It didnot, for example, embark upon testing the growing waters of the Lake's oysterfishery or the flesh of oysterstaken from it. There is no scope for sayingthat partial action gave rise to "a common law duty to take care which is to bedischargedby the continuation or additional exercise of [partially exercised]powers":Pyrenees at [177] per Gummow J.

467The State's policy is to be contrasted with the learned primary Judge'sfinding that the State "managed" the oyster fisheryin the Lake. A questionarises as to the meaning of the notion of "management" in the present context.The State had ultimate controlbut this is not management of a kind that wouldgenerate a duty of care. Moreover, I do not think the State's roles oflicensingand inspecting depuration facilities, inspecting premises from anenvironmental viewpoint through the EPA, granting oyster leases,issuingaquaculture permits, participating in the Lake's Oyster Quality AssuranceCommittee as from 14 December 1992, or providingthe State's employee, DrKerry Jackson, to co-ordinate the State QAP as from 2 September 1996,constituted "management" of the dayto day oyster and harvesting activity of akind that would give rise to a duty of care.

468I do not accept Mr Ryan's submission that his Honour should have found thatthe State owed him a duty to ensure that the localQAP was in place by November1996. His Honour felt unable to reach that conclusion on the evidence and I donot think it is shownthat this was a finding of fact at which he was notentitled to arrive.

469Mr Ryan submits that control of the fishery was "ceded" to the State. Butin one sense, so is virtually every aspect of thecontrol of the production offood. The individual consumer cannot protect himself or herself and so is"vulnerable" and hopes thatsomeone will have taken steps to minimise the riskto his or her health. But is it to be said that in every case of "foodpoisoning",the State must be liable for having failed to exercise itsstatutory powers? It seems to me that as a matter of policy the law refrainsfrom imposing the kind of duty on which Mr Ryan is obliged to rely.

470I would not conclude, so far as it may remain relevant, that Mr Ryan"specifically relied on" the State to protect him. Therewas no dealingbetween the State and Mr Ryan before he consumed the oysters. As notedearlier, the doctrine of "general reliance"no longer enjoys support in theHigh Court as a touchstone of the existence of a duty of care of a publicauthority to exercise statutorypowers.

471In my view, on the evidence the State did not "manage" the shellfishindustry in the Lake in any way that might have given riseto a duty of care infavour of Mr Ryan.

Breach of duty

472If I had thought that the State owed a duty of care to Mr Ryan, I wouldhave held that the State was not shown to have breachedit. The case wouldhave called for consideration of what steps the State, acting reasonably, wouldhave taken. This would haveimmediately raised considerations of the kindreferred to by Mason J inWyong Shire Council v Shirt[1980] HCA 12;(1980) 146 CLR 40at 47-48 set out earlier, as discussed in the context of breach in relation tothe Council's appeal. I have referred to some ofthese considerations asrelevant to the State in the context of my treatment of the duty issue above.In the case of the State,questions of the magnitude of the risk, the fact thatthe Lake's oysters had not previously caused a problem and the cost to theState of taking (and maintaining) the course of action described by his Honourin all of the State's oyster-growing estuaries wouldhave arisen.

Causation

473For the reasons I gave for allowing the Council's appeal, it is not shownthat the course of action that his Honour decidedwas required (the taking ofthe steps that were reasonably open to minimise faecal contamination of theLake) would have preventedMr Ryan from contracting hepatitis A.

A suggested alternative ground of the State's liability

474Because I have held that the State did not owe Mr Ryan a duty of care atall, I need not consider whether it was required toexercise its power to closethe fishery (exercise of that power would have prevented Mr Ryan fromcontracting hepatitis A). ButI would not have been prepared to find onthe hearing of this appeal that it was required to do so. The issue is onethat wouldcall for the making of findings by the primary Judge, particularlyas to the reasonableness of the State's being required to monitorpollution atthe shoreline of all its oyster-growing estuaries and closing oyster-growingbusinesses from time to time, in the lightof the magnitude of the risk inquestion.

Mr Ryan's notice of contention

475This leaves to be dealt with Mr Ryan's notice of contention in so far as itrelates to the State's appeal.

476I gave reasons for not accepting Mr Ryan's contention relating to causationbased upon a duty to minimise faecal contaminationof the Lake when dealingwith the Council's appeal.

477Another contention relating to the State is that his Honour should havefound the State owed to Mr Ryan a duty of care to implementa specific localQAP which required:

(i)a comprehensive and competent sanitary survey of the Lake's oyster fishery"and surrounding area"; and

(ii)in the absence of such a survey, a closure of the fishery, particularlyafter a heavy rainfall episode, until such a surveywas carried out and it wasthen safe to re-open the fishery.

478I would not accept the contention. For the reasons given above, it was notincumbent upon the State to exercise its powersat all, in my view.

479The remaining contention relating to the State is that his Honour shouldhave found that the State, through the EPA, breacheda pleaded duty to ensurethat, relevantly, "the relevant caravan parks" did not pollute the Lake. HisHonour rejected the submissionby reference toBendix,that is, becausealthough the escape of sewage effluent from caravan parks increased the risk,this was not enough: it would haveto be shown that it materially contributedto the actual suffering of the illness by Mr Ryan. With respect, I agree withhis Honour.

THE BARCLAY COMPANIES' APPEAL ON LIABILITY AND MR RYAN'S CROSS-APPEAL(N 219 OF 1999)

Conclusions of primary Judge on liability on Mr Ryan's personal andrepresentative claims against the Barclay companies, except tothe claims undertheTP Act

480The Barclay companies acknowledged before the primary Judge that they oweda duty of care to consumers of their oysters. Theydenied breach andcausation. Mr Barclay knew that depuration was not adequate to ensure theremoval of viruses and thatE. coli oyster meat testing would notnecessarily reveal viruses, even in the oysters tested, let alone in otheroysters growing nearby.

481His Honour was not persuaded that there was a causal connection between theHAV epidemic and the harvesting undertaken by BarclayOysters on the morning of23 November 1996 or on 27 November after salinity testing and flesh testing wasperformed. His Honoursaid:

"The cause of the epidemic was the widespread HAV contaminationof the lake. I see no reason to believe the date of harvesting wasa criticalfactor in relation to any particular consumer contracting thedisease."

Moreover, his Honour accepted Mr Barclay's evidence that at all timeshe endeavoured to implement the requirements set out in Mr Bird's1991booklet,Purification Technology for New South Wales Oysters, and heaccepted that there was no evidence of any deficiency in Barclay Oysters'depuration plant in design, construction or maintenanceor the manner of itsoperation.

482The breach of the duty of care which his Honour found was based onMr Barclay's knowledge of "the existence of potential sourcesof viralpollution of the lake". His Honour thought that a prudent oyster grower neededto do more than to depurate and to relyonE. coli flesh tests. Theprimary Judge did not accept the State's submission that Barclay Oysters'omission lay in its failure to deferharvesting after the rain event ofNovember 1996 and to carry out PCR flesh testing and faecal coliform watertesting, because, althoughthese measures may have been useful, they would notnecessarily have protected consumers. His Honour observed that viruses couldhave remained in the water, or in unharvested oysters, for many weeks aftercessation of the rain, and after faecal coliform levelshad dropped back tonormal limits and that their existence would not necessarily have been revealedby PCR testing.

483His Honour thought that in order to discharge its duty of care, BarclayOysters was required to do something about the qualityof the water of the Lakeif it was to grow and harvest oysters in it. He said:

"The only real protection to consumers was to prevent viralcontamination in the first place. As is the case with the Council andtheState, Barclay Oysters was not obliged toensure the absence of viruses,but it was obliged to take the steps reasonably open to it to obtain avirus-free growing environment and,if this was impossible, to refrain fromselling oysters for human consumption, except perhaps with a warning about therisk in eatingthem.

..........................................................................................................

... The Barclay companies could have made a significant contribution to riskreduction by having a few men walk that part of the foreshoresof the lake,rivers and islands that is publicly accessible - and that is most of it - andlist all items of apparent concern. However,a satisfactory sanitary surveyrequired access to all premises and possession of enforcement powers.Governmental or local governmentalinvolvement was essential. This does notlet the Barclay companies off the hook; neither they nor any of the committeeswith whichthey were associated attempted to procure governmental or localgovernmental involvement. The evidence does not reveal any approachto theCouncil or a State agency for the making of a sanitary survey, with or withoutsupport (manpower or financial) from the localindustry. The Barclay companies(and, apparently, the other local oyster producers) were as oblivious to theneed for a sanitarysurvey as was the State. Given that they actually producedthe product that put consumers at risk, they cannot escape some responsibilityfor the lack of a sanitary survey.

If the oyster producers had endeavoured, and failed, to persuade the Councilor the State to undertake a proper sanitary survey, theywould have needed toconsider other options. One option - presumably expensive - might have been torelay the oysters in other watersfor a period before sale. There may havebeen other possibilities. It is not necessary to go into them. It is enoughto say itwas not sufficient for the Barclay companies (or any other producer)to shrug off their knowledge of the possible pollution of thelake by sayingthis was someone else's responsibility.

In my opinion, in selling without warning oysters grown in waters known tobe subject to possible undetectable viral contamination,both Barclay companiesbreached their duty of care to ultimate consumers of the oysters. Because itis apparent that the viral infectionsustained by Mr Ryan, and the groupmembers who became ill after consuming Barclay oysters, stemmed from thecontamination of thelake, there is a clear causal connection between thebreach and the damage."(emphasis in original)

484His Honour noted that it did not follow from his conclusion that alldistributors were liable but observed that Barclay Distributors was inthe unusual position of being controlled by a person (Mr Barclay) who wasalso the controller of a grower company. Barclay Distributors was thereforefixed with an unusual degree of knowledge about thecircumstances of productionof the oysters it distributed - knowledge which might exceed that ofdistributors based elsewhere and,even more so, people such as restauranteurswho purchased for commercial purposes without knowledge of the circumstances oreventhe location of oyster production.

My conclusions on the Barclay companies' appeal on liability except as tothe claims under theTP Act

485Lee J and Kiefel J are of the view that the Barclay companies' appeal inrelation to the learned primary Judge's finding thatthey were liable innegligence should be dismissed. I conclude below that Barclay Oysters isliable to compensate Mr Ryan undertheTP Act. For these reasons I willnot state in as ample a form, as I might otherwise have done, my reasons fordiffering from the learnedprimary Judge, Lee J and Kiefel J, in thinking thatthe Barclay companies were not shown to be liable in negligence.

486Georges Oyster, Tadeven and Sciacca made submissions in support of those ofBarclay Oysters. I have read them all but, forconvenience, will refer to theBarclay companies alone, treating them as having made the submissions in factmade by all the companies.

General

487Senior counsel for the Barclay companies emphasised that his Honour'sfinding that Mr Barclay agreed he was aware of "the existenceof potentialsources of viral pollution of the Lake" was ambiguous. If his Honour meantthat Mr Barclay agreed he was aware of actualdischarges of faecal matterinto the Lake, senior counsel submitted that the evidence did not support thefinding. If, however,his Honour meant only that Mr Barclay was awarethat there existed septic tanks, stormwater drains and other facilities which,ifdefective, could give rise to such discharges, senior counsel accepted thatthe evidence showed that Mr Barclay did have that knowledge. I think itclear that his Honour meant the latter.

488Senior counsel for the Barclay companies emphasised that it was importantto understand the state of Mr Barclay's knowledgein relation to the stateof purity of the water of the Lake. He referred to certain Council documents,such as Mr Brooker's reportdated 11 June 1991, of which Mr Barclaywas not aware. On the other hand, Mr Barclay did receive a copy ofProfessor Brown's documentsof August 1994,Wallis Lake MaricultureAssessment andWallis Lake Oyster Management Plan (copies were alsosupplied at the time to the Ministers for Fisheries and Public Works and theCouncil). Senior counsel referredto the following passage:

"Compared to other areas, there is little sewage dumped intoWallis Lake per se, however with increasing development unless adequatesafeguards are taken, there are real dangers of effluent and stormwatercontaminants entering the Lake. There still appears to bea problem with theBungwahl Creek site, an old sewage depot. Licences to discharge issued by theNew South Wales EPA need to beexamined carefully to safeguard the interests ofthe growers and other Lake users. Sewage from boats should be eliminated withbettereducation and enforcement."

489According to the submission, it should be accepted that so far asMr Barclay knew from Professor Brown's reports, as at August1994 the Lakewas "alright or more or less alright" but the authorities would need tosafeguard against the arising of a problemassociated with an increase inpopulation.

490The Barclay companies submit that although that problem did eventuate, asis shown by the complaints made to Council, Mr Barclaywas unaware ofthis development. They refer to Council'sState of the Environment Reportfor 1995-96 published in September 1996, and, in particular, to itsreferences to the problem of effluent disposal; Mr Brooker's memorandum tohis superior, Mr Braybrooke, of 9 May 1996; and Mr Braybrooke'sendorsement of 17 May 1996. I have referred to these documents earlier.

491Following the rainfall event of 23-25 November 1996, the oyster growersconducted salinity tests to ensure that the water wasnot "contaminated" byexcessive fresh water, or, to express the matter differently, to ensure thatthe water contained sufficientsalt water. Once there was a satisfactoryresult, oyster testing took place, and once this was also satisfactory,harvesting resumed. (Apparently, in the case of Barclay Oysters, harvestingtook place early on the morning of 23 November, from 5.00 am to morningteatime at 9.00 am, then ceased and did not resume until 27 November, two daysafter the rain stopped.) But, as always, a satisfactoryresult did notnecessarily signify an absence of viruses.

492After the outbreak, a sanitary survey was conducted as describedearlier.

Breach

493Whether the Barclay companies' duty of care was breached is a question offact and depends on the circumstances: seeThomson v Johnson & JohnsonPty Ltd[1991] VicRp 84;[1991] 2 VR 449 in which the Appeal Division of the Supreme Courtof Victoria stated as follows (at 490-491):

"... the duty of care cannot be categorised in the circumstancesof a case such as this as being merely a duty to warn or alternativelya dutyto withdraw the product from the market. The duty is a duty to take reasonablecare in theDonoghue v Stevensonsense to avoid injury or harm beingsuffered by those using the product as intended.In some circumstances adischarge of such duty of care might require and demand that the product bewithdrawn from the market so asto prevent it being used. In othercircumstances in order to discharge the duty it might be necessary to giveadequate warning asto the risks involved in itsuse. It does notfollow that the failure to warn with respect to those risks will necessarilyconstitute a breach of duty. In eachcase it will be necessary for thetribunal of fact to determine whether in all the circumstances those marketingthe goods failedto take reasonable care and whether that failure was a causeof the injury suffered by the user."(my emphasis)

Their Honours referred to the well known passage from the judgment ofMason J inWyong Shire Council v Shirt, above, at 47-48 set outearlier.

494Having regard to the fact that it is not possible anywhere where humanbeings are to guarantee that purity of the water, itseems to me that thecritical question in the present case is whether, as a result of what MrBarclay knew or should have known aboutthe quality of the water in the Lake,the Barclay companies' duty of care required then to do more than simply tosuspend harvestingfollowing a "fresh", to depurate in accordance with MrBird's booklet and to test the flesh of sample oysters before and afterdepuration.

495So far as Mr Barclay in fact knew, subject to the necessity of ceasingharvesting following a "fresh", the water of the Lakewas safe water in whichto grow oysters. The Lake's oysters had never previously given rise to anoutbreak of hepatitis A or ofany other oyster-related disease, althoughno doubt there had previously been rainfall events similar to thatof 23-25 November 1996. Mr Barclay testified that over the fouryear period from 1989 to 1993, he had regularly taken the Council's Mr Brookerout in hisboat to test the water in the Lake at twelve locations and that theresults were satisfactory. He said that in the "paddock" wherevirtually allBarclay Oysters' harvesting was done, the results were always excellent.Apparently, depuration and suspension of harvestingfollowing a "fresh" hadproved sufficient measures for the Lake's oyster growers to take in the past.

496Although it was not required to do so, Barclay Oysters had samples of itsoysters tested forE. coliby EMI Consulting Services Pty Ltd, a privatelaboratory at Parramatta. As well, such testing was carried out as part of thelocalQAP for the Lake, at the end of 1996, both before and immediately afterthe "fresh". As a result, sample oysters from Barclay Oysters'leases weretested every couple of weeks. By having sample oyster flesh tested, BarclayOysters was taking a precaution that wentbeyond the régime recommendedin Mr Bird's booklet, which Mr Barclay treated as his "Bible". Barclay Oystersdid not depurateor resume harvesting after a "fresh" until flesh testingproved satisfactory. Mr Bird's 59-page boklet, which was kept at BarclayOysters' premises and referred to from time to time as a "manual", informed MrBarclay:

"Purification is the only current viable alternative today inNew South Wales for the economic production of raw oysters which affordstheleast risk to public health. It is not a perfect system and will not guaranteethe absolute public health safety of raw oysters,however, on a cost-risk basisit is the only alternative."

But the shortcomings of flesh testing have been mentioned previously. Inany event, the fact that Mr Barclay was conforming to oreven betteringindustry practice does not establish the absence of negligence.

497Mr Barclay knew that in August 1994, Professor Brown had warned thatincreasing development was apt to give rise to an effluentproblem. Mr Barclaywas also aware that the Council had ceased testing the water of the Lake in1993. He knew, therefore, as atNovember 1996, that monitoring of the safetyof the water for oyster-growing had not being performed by Council for somethree years. But even in the absence of water testing, there would not be aproblem if the authorities were effectively exercising their powersto preventfaecal contamination of the Lake.

498Mr Barclay did not know or have any means of knowing what the position wasin this respect and testified that he regarded thematter of the testing of thequality of the water as the responsibility of the Council. He assumed that thequality of the waterin the "paddock" was still as it had been when watertesting by Council ceased in 1993. Moreover, Mr Barclay had been involved inthe oyster industry since 1957 and intensively since about 1966. Accordingly,the three year period of Council testing is itselfto be seen as a smallfraction of the period of safe oyster growing in which Mr Barclay had beenengaged.

499Depuration, suspension of harvesting and flesh testing cannot guaranteethat an oyster is safe to eat. As his Honour observed,the starting point wasto attack faecal contamination of the Lake at source. Whether it wasreasonable for the Barclay companiesto involve themselves in that activityrequires

"a consideration of the magnitude of the risk and the degree ofthe probability of its occurrence along with the expense, difficulty,andinconvenience of taking alleviating action..."(Wyong Shire Council v Shirt,above, at 47, per Mason J)

500His Honour thought that their duty of care required the Barclaycompanies to conduct their own sanitary survey of that part ofthe shoreline ofthe Lake, the rivers and islands that was publicly accessible, then attempt toprocure governmental or local governmentalinvolvement to ensure that anyfaecal contamination revealed by the survey was rectified.

501But, with respect, his Honour did not consider the matters referred to inthe passage fromWyong Shire Council v Shirt set out above from theviewpoint of the Barclay companies. Other particular questions arise. Whatabout the future, would the Barclaycompanies be obliged to update theirsanitary survey frequently and regularly? At what point, if any, would theybecome entitledto assume that the issue of faecal contamination of the Lakecould be left to the authorities? If it is accepted that they wouldbecomeentitled to make that assumption at some time, why was Mr Barclay not entitledto make it in November 1996?

502His Honour had regard to the difficulty that there was no assurance thatthe authorities would act, saying that if they didnot do so, Barclay Oystersshould have re-laid the oysters in other waters for a period before sale. Butthis possibility was notput to any witness and the whereabouts of the otherwaters and the cost of relaying the oysters were matters not explored in theevidence. I think it appropriate, on the evidence, to regard the alternativeas simply one of ceasing business entirely or of marketingthe oysters with aneffective warning that effectively brought home the risk that the oysters mightcarry the HAV. But such a warning would have put the Barclay companies out ofbusiness. Accordingly, in substance, the true alternative to the course ofconductin fact pursued was to cease business.

503It seems to me that on the evidence of the lack of any previous outbreak ofhealth problems arising from the consumption ofoysters grown in the Lake andthe lack of knowledge otherwise of Mr Barclay of the existence of an actualproblem as distinct frompotential sources of faecal contamination of the Lake,the Barclay companies' duty of care did not reasonably require them eithertotake the course that his Honour outlined or to suffer a closure of theirbusiness until somehow they could be completely assuredthat they were puttinginto the market a product that was free of defects.

Mr Ryan's notice of contention

504I gave reasons for rejecting Mr Ryan's contention in respect of causationbased on a supposed duty to take reasonable stepsto minimise faecalcontamination of the Lake, when dealing with Council's appeal.

505Mr Ryan also contends that his Honour ought to have found (if it isnot otherwise implicit in his reasons for decision) thatthe Barclay companiesbreached their duty of care by selling oysters which were not fit forconsumption and not of merchantable quality. I do not accept the contention.If accepted, the contention would convert the Barclay companies' common lawduty of care into astrict liability at common law. There is no warrant forthe Court's taking that step. The case is not one in which the maximresipsa loquiturapplies: harvesting and distributing in the market-placeoysters which carry a virus can be consistent with the absence of negligenceonthe part of the grower or distributor of the oysters as well as with itspresence. I deal below with the stricter form of liabilityimposed on BarclayOysters by theTP Act.

506For the above reasons, in my opinion the Barclay companies' appeal shouldsucceed in so far as the Barclay companies were foundliable to Mr Ryan innegligence.

My conclusions on the Barclay companies' appeal on liability under theTPAct

507Mr Ryan's first three claims under theTP Act arose out of Division 2AofPart V of that Act providing for actions against manufacturers and importersof goods. Section 74B deals with fitness for purpose, s 74Cwithnon-correspondence with description, and s 74D with unmerchantablequality.

508Mr Ryan brought three further claims under theTP Act against theBarclay companies: one under s 75AD in respect of manufactured defectivegoods causing injury; one unders 52 based on an alleged impliedrepresentation that the oysters were fit for human consumption; and theremaining one based ons 71 for breach of implied contractual conditionsof merchantable quality and fitness for purpose.

509Only the claims under ss 74B, 74D and 75AD (s 75AK must beconsidered with s 75AD) call for discussion, the first two on theBarclaycompanies' appeal and the third on Mr Ryan's cross-appeal (his Honourfound against Mr Ryan on his claims based onss 52,71 and 74C andthere is no appeal in any of these respects).

Section 74B

510Section 74B of theTP Act provided as follows:

"(1)Where -

(a)a corporation, in trade or commerce, supplies goods manufactured bythe corporation to another person who acquires the goods for re-supply;

(b)a person (whether or not the person who acquired the goods from thecorporation) supplies the goods (otherwise than by way of saleby auction) to aconsumer;

(c)the goods are acquired by the consumer for a particular purpose thatwas, expressly or by implication, made known to the corporation,eitherdirectly, or through the person from whom the consumer acquired the goods or aperson by whom any antecedent negotiationsin connexion with the acquisition ofthe goods were conducted;

(d)the goods are not reasonably fit for that purpose, whether or notthat is a purpose for which such goods are commonly supplied; and

(e)the consumer or a person who acquires the goods from, or derivestitle to the goods through or under, the consumer suffers loss ordamage byreason that the goods are not reasonably fit for that purpose;

the corporation is liable to compensate the consumer or that other person forthe loss or damage and the consumer or that otherperson may recover the amountof the compensation by action against the corporation in a court of competentjurisdiction.

(2)Subsection (1) does not apply:

(a)....................................................................................

(b)where the circumstances show that the consumer did not rely, or that itwas unreasonable for the consumer to rely, on the skill orjudgment of thecorporation." (my emphasis)

511Section 74A defines the word "manufactured" for the purposes of Division 2AofPart V, as including "grown, extracted, produced, processed and assembled".Clearly, the definition encompasses the activities of BarclayOysters ingrowing and harvesting oysters, then cleaning, depurating and packing them fordistribution.

512The primary Judge analysed how, he thought, s 74B applied in thecircumstances of the case. His Honour recorded that the Barclaycompanies didnot dispute his analysis and relied only on par (2)(b). That paragraphhas two limbs: "non-reliance" and "unreasonablereliance". Barclay Oysters didnot plead non-reliance in its defence but argued it before his Honournonetheless. Barclay Oysters'amended notice of appeal raises only the groundthat his Honour erred in failing to find that it was unreasonable forMr Ryan tohave relied on the skill or judgment of Barclay Oysters. Inits written submissions on the appeal Barclay Oysters expressly acceptedhisHonour's analysis of s 74B and its meaning but, as it had done in itswritten submissions at trial, submitted in terms of par(2)(b) thatMr Ryan did not in fact rely on Barclay Oysters' skill or judgment, aswell as that it was unreasonable for him to havedone so. Barclay Oysters'written submission on non-reliance on the appeal is itself, with respect,unclear. It is as follows:

"There was no actual reliance. Even by way of imputed reliance,the best that could be said of the first defendant [sic - first respondent:Mr Ryan] is that the oyster[sic]was not fit for human consumptionin an absolute sense. Looked at realistically, the oyster[sic] was asfit for human consumption as it was possible to achieve."

513In his own written submissions on the appeal Mr Ryan responded toBarclay Oysters' arguments in relation to both limbs ("non-reliance"and"unreasonable reliance"). In oral submissions on the appeal, however, BarclayOysters accepted that there was "a finding infavour of Mr Ryan that hewas never challenged as to his reliance [so that Barclay Oysters could not]rely upon that". Accordingly,in its oral submissions, Barclay Oysters statedthat the only point it wished to address was the issue of the reasonableness ofMrRyan's reliance.

514In the circumstances, it is clear that I am not called upon to decidewhether I agree with his Honour's general analysis ofs 74B and I expresslyrefrain from doing so, and will concern myself only with par (2)(b).Further, the amended notice of appealand the position taken by Barclay Oystersin its oral submissions on the appeal also suggest that I need not concernmyself withthe first limb of par (2)(b) (non-reliance), but since bothparties addressed that limb in their written submissions and I can dealwith itbriefly, I will do so.

515Reliance is not referred to in subs 74B(1): it is not expressed as anelement that Mr Ryan had to prove in order to establishthat BarclayOysters was "liable to compensate" him under that subsection. Rather,non-reliance goes to displace the operation ofsubs (1), that is, to render itinapplicable. In these circumstances, the burden of proving non-reliancerested on Barclay Oysters:cfCavalier Marketing (Australia) Pty Ltd vRasell(1990) 96 ALR 375 (Qld/FC) ("Cavalier Marketing") at 392 perCooper J.

516Mr Ryan testified that when he consumed the oysters, he assumed thatthey would not cause him illness and that if he had thoughtthey would do so,he would not have eaten them. There was no cross-examination of Mr Ryanor of the buyers of the oysters, his fatherThomas John Ryan or his brotherDavid Ryan, directed to showing that they or any of them understood that therecould be no assurancethat the oysters were fit to eat. Both the father andthe brother testified that they bought the oysters direct from Barclay Oystersin Forster (his Honour assumed that the purchase had in fact been from BarclayDistributors in view of the respective roles playedby the two companies) andgave some to Mr Ryan. In the circumstances, I think that the learnedprimary Judge was entitled to conclude,as he did, that non-reliance had notbeen proved, and also to infer, as he did, that Mr Ryan had in fact reliedon the skill andjudgment of Barclay Oysters.

517In relation to the second limb of par 74B(2)(b) (unreasonablereliance), his Honour stated (at [366]-[369]):

"I accept it would not have been possible for Barclay Oysters totest the particular oysters sold to the applicant's father and brother. I alsoaccept it is impossible toensurethat a particular oyster is free fromviral contamination, although it is possible to minimise the risk of the oysterbeing contaminatedat the time of sale. However, as counsel for the applicantsubmit in reply, the question is not whether the grower could reasonablyhavediscovered the defect; the issue is the reasonableness of the consumer'sreliance, not the reasonableness of the manufacturer'sbehaviour. The right ofaction created by s74B is a statutory cause of action. Its elements must betaken from the statute itself,free of any preconceptions that might arise byreference to principles governing common law negligence.

As counsel point out, neither of the Barclay companies gave any warning ofthe possibility that the oysters might contain a virusthey could not detect.It seems none of the Messrs Ryan was in fact aware of this possibility. Thatis not surprising. Probablymany people are aware that, if hygienic proceduresare not maintained, the consumption of oysters may result in gastroenteritis orother illnesses. However, I think most people would assume there areprocedures and tests that enable a grower to ensure its productis fit to eat.I believe it would come as a surprise to most members of the public, as it hascome as a surprise to me, to learnthis is not necessarily so. In the absenceof a warning, each of the Messrs Ryan was entitled to rely on the skill andjudgmentof the grower.

The applicant is entitled to succeed under s74B as against Barclay Oystersin respect of his personal claim. I cannot make any concludedfinding inrelation to the applicant's representative claim under s74B against BarclayOysters; it is conceivable - although, perhaps,unlikely - that something wassaid or done, at the time of the supply of oysters to a particular consumer, tomake it unreasonablefor that consumer to rely on the skill or judgment ofBarclay Oysters. The application of s74B to group members must be left forfuture determination, if that should prove necessary.

Section 74B has no application against Barclay Distributors, for tworeasons. First, that company did not `manufacture' the goods,even within theexpanded definition of that term; second, it is not shown that eitherMr Thomas Ryan or Mr David Ryan acquired theunfit oyster or oystersfor re-supply. The evidence suggests the oysters given to Mr Grant Ryanwere simply part of a larger batchacquired for the family generally."(emphasis by primary Judge)

518Barclay Oysters submits that the phrase "unreasonable for the consumerto rely on the skill or judgment of the corporation" importsan objectiveelement so that one must hypothesise a consumer who knew all relevant facts,such as, what the manufacturer (grower)knew or should have known, thecircumstances in which the manufacture (growing) took place, and the stepsavailable and not availableto be taken by the manufacturer (grower) to ensurethat the goods were reasonably fit for the purpose made known to it. BarclayOysters submits that it would have been unreasonable for a hypotheticalconsumer, possessed of all this knowledge, to rely on theskill or judgment ofBarclay Oysters to guarantee a virus-free oyster.

519Mr Ryan, on the other hand, submits that reasonableness is to bemeasured by reference to the particular consumer with his orher actualknowledge or lack of knowledge.

520Certain matters are clear:

*The expression "the consumer" in par (2)(b) refers to the particularactual consumer referred to in subs (1).

*The reliance to which par (2)(b) refers is reliance on the skill orjudgment of the manufacturer (here, Barclay Oysters) in supplyingthe goods inthe face of its having been apprised of the particular purpose of thatconsumer, that is, on the skill or judgment ofthe manufacturer as to thefitness of the goods for the particular purpose of that consumer made known toit.

*The expression "unreasonable for the consumer to rely" is, in terms,directed to the reasonableness or unreasonableness of the particularconsumer'sreliance, not the reasonableness or unreasonableness of the method or course ofmanufacture followed.

521To apply a totally subjective test would enlarge or diminish the protectiongiven by the section according to the idiosyncrasiesof the particularconsumer. It is possible, but perhaps unlikely, that Parliament intended theprovision to operate in this way. On the other hand, according to BarclayOysters' submissions, understood literally, the provision would operate todefeat a consumereven where a manufacturer put a product which it knew to bedefective into the market place, since, being deemed to know what theparticular manufacturer knew, the consumer would rely on the skill or judgmentof the manufacturer, unreasonably.

522It is important to appreciate the roles of the two limbs of par (b).The consumer's actual knowledge is addressed in the firstlimb (non-reliance).If the particular consumer knew that the manufacturer could not reasonably beunderstood to be accepting responsibilityfor the fitness of the goods for theparticular purpose made known to it, the consumer would not in fact have reliedon its skillor judgment.

523The second limb (unreasonable reliance) must be construed against thebackground of earlier parts of s 74B. It assumes:

(a)that the consumer made known to the manufacturer, whether directly orthrough the person from whom the consumer acquired thegoods, the particularpurpose for which the consumer acquired them (par (1)(c) - as noted earlierthere is a concession by BarclayOysters in this respect in the present case);and

(b)that the consumer did in fact rely on the manufacturer's skill or judgmentas to the fitness of the goods for that particularpurpose (first limb of par(2)(b)).

524Against this background, in what circumstances, it may be asked, might theconsumer's actual reliance on the skill or judgmentof the manufacturer havebeen unreasonable? It might be if, for example, the manufacturer had notifiedthe particular consumer thatit could not guarantee the goods' fitness for theconsumer's particular purpose or if the particular consumer's knowledge ormeansof knowledge was equal to or exceeded that of the manufacturer. Perhaps,in addition, for the purpose of the application of theprovision, there shouldbe imputed to the particular consumer the knowledge that "a reasonableconsumer" would have. Perhaps theparticular consumer should also be treatedas having taken any steps for his or her own protection that "a reasonableconsumer" wouldhave taken, having regard to the nature of the goods and thecircumstances of the case. Be this as it may, in my view, ordinarily,thereshould not be imputed to the consumer special technical knowledge touching theprocess of manufacture of the goods. Yet itis knowledge of that kind thatBarclay Oysters contends should be imputed to Mr Ryan.

525The evidence before the learned primary Judge did not establishcircumstances as to Mr Ryan's knowledge or that of the consumersgenerallythat might have provided a basis for a finding that it was in fact unreasonablefor Mr Ryan or for a reasonable consumerplaced as he was, in acceptingthat the oysters were fit to eat, to rely on the skill or judgment of BarclayOysters.

526In my opinion, the construction of the unreasonable reliance limb ofpar 74B(2)(b) advanced by Barclay Oysters should not beaccepted.

Section 74D

527Section 74D of theTP Act was relevantly as follows:

"(1)Where:

(a)a corporation, in trade or commerce, supplies goods manufactured bythe corporation to another person who acquires the goods for re-supply;

(b)a person (whether or not the person who acquired the goods from thecorporation) supplies the goods (otherwise than by way of saleby auction) to aconsumer;

(c)the goods are not of merchantable quality; and

(d)the consumer or a person who acquires the goods from, or derivestitle to the goods through or under, the consumer suffers loss ordamage byreason that the goods are not of merchantable quality;

the corporation is liable to compensate the consumer or that other person forthe loss or damage and the consumer or that otherperson may recover the amountof the compensation by action against the corporation in a court of competentjurisdiction.

(2)................................................................................................

(3)s of any kind are of merchantable quality within the meaning of thissection if theyare as fit for the purpose or purposes for which goods ofthat kind are commonly bought as it is reasonable to expect having regardto:

(a)any description applied to the goods by the corporation;

(b)the price received by the corporation for the goods (if relevant);and

(c)all the other relevant circumstances." (myemphasis)

528Barclay Oysters accepted his Honour's analysis of s 74D and it isnecessary for me to address only the issue that was debatedon the appeal.This concerned the effect of the words emphasised above. Barclay Oysters'amended notice of appeal is to the effectthat his Honour should have foundthat the oysters consumed by Mr Ryan satisfied those words (BarclayOysters had not pleaded thismatter in its defence, although submissions wereput to his Honour on it and he dealt with them).

529Barclay Oysters submits that "all the other relevant circumstances"referred to in par (c) set out above included:

"(a)The practical impossibility of testing the oysters for thepresence of viruses.

(b)The grower's inability to know that his oyster leases had been subjected toviral contamination.

(c)The grower's inability to control the environment in which the oysters grow- in particular the entry of contaminants from privateland or councilstormwater drains, etc into the estuary water."

530The learned primary Judge stated:

"The error in this approach is similar to that in relation tos74B. The issue posed by s74D(3) is not whether it was possible forthe growerto ensure the oysters were free of viruses, but whether a purchaser would actreasonably in expecting they were. Unlikes74B(2)(b), which directs attentionto the acts and omissions of the particular consumer, s74D(3) imposes anobjective standard (`asit is reasonable to expect'), though that standard mustbe applied having regard to all relevant circumstances. In the present casethose circumstances include the absence of any warning by the Barclay companiesof the possibility of a virus in the oysters. Ofcourse, this would not matterif it was well known to members of the public that viruses can survive evenproper processing and depuration,but the evidence does not suggest itwas.

The s74D claim should be determined in the same way as thatarising under s74B: the applicant is entitled to succeed on his own behalfagainst Barclay Oysters, although not Barclay Distributors. His representativeclaim against Barclay Oysters should be reserved."

531With respect, I agree with his Honour's conclusion, and, in substance,with his reasons.

532The legislative origin and analogues of the definition of "merchantablequantity" in subs 74D(3) were traced by Cooper J inCavalier Marketing,above, at 396.

533The words "as it is reasonable to expect" suggests a question as to theidentity of the person or persons, the reasonablenessof whose expectation isin question and is to be determined by the court. Possible contenders are:

(1)the consumer or other person who suffers loss or damage;

(2)a reasonable consumer placed as that actual consumer or other personwas;

(3)a reasonable bystander (in effect, the court).

534In my opinion consistently with both the objective nature of the standardaimed for and the consumer protection purpose of theprovision, it is thesecond or third category of person whose reasonable expectation is called intoservice by the statute, and inmy opinion a reasonable bystander would seek toput himself or herself in the position of a reasonable consumer placed as theactualconsumer or other person was. Accordingly, it is right to inquire intothe reasonable expectations of a category (2) person.

535InCavalier Marketing, above, Cooper J also suggested (at 403) thatthe test to be applied was the reasonable expectation of a reasonable consumerplacedas the actual consumer or other sufferer of loss or damage (the persondescribed in class (2) above) was.

536As in the case of s 74B discussed above, the provision is to be construedas a consumer protection measure (cfCavalier Marketing, above, at 400)and it would be wrong to measure the reasonable expectations of thehypothetical reasonable consumer against thespecialist technical knowledge ofoyster growers that it is impossible to be sure that the oysters they put intothe market for theone and only purpose of being eaten, are in fact safe forthat purpose.

537I discussed at [516] above the evidence that was before his Honour as toMr Ryan's assumption about the quality of oysters heate. There was noevidence before his Honour that consumers of oysters understood that therecould be no assurance that they didnot harbour the HAV. Barclay Oystersissued no warning to accompany its oysters and Mr Ryan ate them withouthaving been apprisedof the risk involved in doing so. He assumed that theywere safe to eat. The absence of any warning was a circumstance that wouldlead a reasonable consumer, placed as Mr Ryan was, to assume that thoseresponsible, that is, the growers, had satisfied themselvesthat this wasso.

538I see nothing unreasonable in my construction of the provision. It is notunreasonable for the legislature to adopt a policyof requiring a manufacturerto meet the reasonable expectations of consumers as to the fitness of themanufacturer's goods for theirpurpose or purposes. Consistently with thatpolicy, if the manufacturer knows that it cannot be sure to meet thoseexpectations,it must cease manufacturing, or, if possible, ensure that theconsumer has agreed to bear the risk (perhaps by an appropriate warningwiththe result that the consumer's otherwise reasonable expectations are madeunreasonable).

Section 75AD (and s 75AK)

539Section 75AD appears inPart VA of theTP Act which was inserted in 1992 toprovide remedies against manufacturers and importers of defective goods. Thesection reads as follows:

"If:

(a)a corporation, in trade or commerce, supplies goods manufactured byit; and

(b)they have a defect; and

(c)because of the defect, an individual suffers injuries;

then:

(d)the corporation is liable to compensate the individual for theamount of the individual's loss suffered as a result of the injuries;and

(e)the individual may recover that amount by action against thecorporation; ..."

Paragraph 75AK(1)(c) provides that it is a defence if it is established,relevantly, that:

"the state of scientific or technical knowledge at the time when[the goods]were supplied by their actual manufacturer was not such asto enable [the]defect to be discovered."

His Honour stated (at [377]):

"The term `manufactured' is defined in s75AA, for the purposes of s75AD, inthe same terms as in s74A. Section 75AC(1) explains that`goods have a defectif their safety is not such as persons generally are entitled to expect'.Consistently with what I have alreadysaid, it seems to me the elementsstipulated by s75AD are satisfied in this case. However, s75AK(1)(c) providesa defence to anaction under s75AD (amongst other sections) `if it isestablished that ... the state of scientific or technical knowledge at thetimewhen they were supplied by their actual manufacturer was not such as to enablethat defect to be discovered'. The paragraphobviously intends the defence beunavailable if the goods were supplied notwithstanding the possibility ofdiscovery of the defect. Conversely, the defence is available if the defectwas not capable of discovery before supply. In the present case, discovery andsupply were mutually exclusive; the only test that would reveal the defectwould destroy the goods. Accordingly, it seems to methe defence applies andthe s75AD claim fails."

540Mr Ryan cross-appeals, complaining that his Honour erred insustaining Barclay Oysters' defence under s 75AK(1)(c).

541His Honour treated "the goods" as referring to the individual oysters: ifan individual oyster were tested, it would be destroyedin the process and sosupply of it to an individual would have become an impossibility.

542In my opinion his Honour was entitled to find that Barclay Oysters haddischarged the onus of establishing that in December1996, when it supplied theoysters, the state of scientific or technical knowledge was not such as toenable the presence of theHAV in them to be discovered.

543His Honour's statement that discovery of the defect and supply weremutually exclusive and that the only test that would revealthe defect woulddestroy the goods, assumes two other findings which I think his Honour mustalso be taken to have made and for whichthere was ample evidence:

*that it is legitimate to extrapolate from the result of the sample test onlywhere there is relevant homogeneity between the totalpopulation from which thesample is taken and that this cannot be assumed to be so in relation to HAV andoysters;

*PCR gives false negatives, that is, while it is appropriate to rely on apositive test result, a negative one does not establishthe absence of the HAVvirus and in fact establishes no more than that the test did not establish itspresence in the oyster actuallytested.

544Counsel for Mr Ryan suggested that his Honour erred by construing theexpression "to be discovered" as referring to nothingexcept "a physicalverification in each and every oyster". They suggested an analogy:

"Thus His Honour's approach was to give a meaning to theexpression `to be discovered' which was too narrow and inconsistent withapurposive approach to the construction of Section 75AK(1)(c). It did not meanphysical verification in each and every oyster. That would have beenimpossible. None would have been supplied. One can test His Honour'sconstruction of S.75AK(1)(c) by takingthe example of a bag of sugar andstipulating a scenario where to test for a contaminant one needed to takeseveral sugar grains,dissolve them and test the liquid, with a positive resultdemonstrating that the bag of sugar contained a defect. One would assumethatthe Section 75AK(1)(c) defence could not be made out. But that example is nodifferent to the present case. One has destroyedpart of the goods (theseveral grains). Further, to be definitive one would need to dissolve all ofthe sugar. But that would destroyall sugar and none would be supplied. OnHis Honour's construction the Section 75AK(1)(c) defence would be made out. Butthat wouldenable the sugar manufacturer to supply sugar which was defectivewith the ready scientific and technical knowledge to identify thedefect andavoid supply."

545In my respectful opinion the sugar analogy is a false one. It assumesthe possibility of extrapolating from the individual grainsof sugar to all thegrains in the bag. But his Honour found that extrapolation was impossible inthe case of the oysters. If itwere impossible to make the extrapolation fromthe grains of sugar tested to all other grains in the bag, it would be true tosayin that instance also that the testing and supply were mutuallyexclusive.

546The present issue was addressed to varying extents by Mr Alan Murphy, DrNicholas Ashbolt, Mr David Alton, Professor KennethBrown and DrChristopher Rodgers who were called on behalf Mr Ryan, Dr Gerhard SGrohmann who was called on behalf of Tadeven andSciacca, and Dr ChristopherBurke who was called on behalf of the Barclay Oysters. There was expertevidence in support of the followingpropositions:

*PCR testing was a sophisticated research tool in its infancy in 1996, wasavailable in few laboratories and was unsuitable asa test to be carried out bypersons, such as oyster growers, who had not had considerable laboratorytraining and experience;

*PCR testing had to be performed under laboratory conditions by skilledpersonnel and cost between $50 and $200 per sample;

*there was no routine test for detecting the presence of viruses in shellfishused anywhere in the world;

*because PCR testing gave false negatives, negative results could not berelied on, even in 1998;

*because of the propensity of viruses to cluster together, there might be onecontaminated oyster in a bed of otherwise uncontaminatedones, yet because ofthe tiny quantity of the virus needed to infect a consumer, that onecontaminated oyster might do so;

*as at November 1996, PCR had no role to play in the routine monitoring ofviral contamination of oysters;

*reliable testing of oysters for viruses was not available in 1996;

*E. coliwas not an effective indication of the presence of viruses inoysters.

547If scientific and technical knowledge had enabled the fact that an oysterbeing put into the market did or did not carry theHAV to be discovered withoutdestruction of that oyster, the defence under s 75AK(1)(c) would not havebeen available to BarclayOysters (subject to what I say below). But hisHonour found otherwise on the evidence and was entitled to do so, in myview.

548For the above reasons, Mr Ryan's cross-appeal should be dismissed.

549If the problem of the "false negative" had not existed and if it had beenappropriate to test by sample, an interesting questionwould have arisen as towhether the expression "such as to enable that defect to be discovered" in s75AK(1)(c) was to be construedas importing a modifying notion ofreasonableness or practicability. Let it be assumed that extrapolation fromsample to bulk wasvalid, but that the testing of the sample had to take placeat a laboratory a considerable distance from the grower's establishment,thecost of the testing was great and the results could not be known for some days.A question would have arisen whether it couldbe truly said in thesecircumstances that the state of scientific or technical knowledge enabled thedefect to be discovered. Becauseof the conclusions which I reached earlier, Ineed not explore this issue.

Barclay Oysters' cross-claim against the Council

550Barclay Oysters (I now put to one side Barclay Distributors because I haveconcluded that it was not liable) cross-claimed againstthe Council (notagainst the State) seeking to recover damages for its economic loss arisingfrom any judgment Mr Ryan might obtainagainst it. The learned primaryJudge thought it not necessary to determine whether the Council owed andbreached a duty of careto Barclay Oysters. In the light of my conclusionsabove, the question raised by the cross-claim is whether the Council was liablein damages to Barclay Oysters in respect of its economic loss arising from itsliability to Mr Ryan.

551Much of my reasoning for concluding that the Council is not liable to MrRyan is applicable to the issue of its liability toBarclay Oysters, but oneaspect of it is not. Whereas Mr Ryan was simply an unidentifiable member ofthe public at the time whenthe Council's (and the other appellants') duty ofcare was said to be owed to him and breached, Barclay Oysters was an identifiedentitity: to the Council's knowledge it farmed oysters at specific places inthe Lake.

552Should the cross-claim be remitted to the learned primary Judge or decidedby this Court? In their written submissions, theBarclay companies invite usto refer the issue back to his Honour for decision or to determine it on thisappeal, as we see fit. In oral submissions, senior counsel for the Barclaycompanies invited us to take the former course, stating that he would wish tomake further submissions based onPerre, above. The parties seemed tohave understood that in the result that I have reached, the cross-claim wouldbe remitted to his Honourand for that reason I would favour taking thatcourse.

553Barclay Oysters has submitted that it was misled by representations made bythe Council's Mr Brooker as to the results of theCouncil's water testingfrom 1989 to 1993 and that if it had been made aware of the results, it wouldhave stopped harvesting. Thissubmission may suggest a cross-claim founded onpositive misrepresentations. A case of this kind was not pleaded or addressedbyhis Honour, but Barclay Oysters may wish to seek leave to amend or to arguethat it was relevant to their case as pleaded. Unlesswe can be confident thatno findings remain to be made on the cross-claim, we should remit it to hisHonour; cfSanders v Snell(1998) 196 CLR 329 at [47] - [49]. I am notconfident to the required level. For this additional reason, the cross-claimshould be remitted to hisHonour.

THE APPEALS ON QUANTUM OF DAMAGES

554All three appellants, the Council, the State and the Barclay companies makecommon cause in appealing in respect of the quantumof damages totalling$30,000 awarded to Mr Ryan. His Honour awarded Mr Ryan $20,000 forgeneral damages. The Council, the Stateand the Barclay companies submit thatthis figure was so high as to betray an erroneous approach to the assessment.This Court shouldnot interfere unless satisfied that the primary Judge applieda wrong principle of law or that the amount was inordinately high "thatit mustbe a wholly erroneous estimate of the damage", and it is immaterial, as isvirtually certain, that we would have awardedsome amount other than $20,000;cfMiller v Jennings[1954] HCA 65;(1954) 92 CLR 190 at 194-5 per Dixon CJ and KittoJ.

555I do not think it necessary to repeat his Honour's account of thesufferings of Mr Ryan. The State submits as follows:

" ... A fair reading of all the evidence shows that he had a 3week illness with a further recovery period in which he complainedof sometiredness.

Notwithstanding this short and unremarkable period of illness, the judgeawarded general damages of $20,000. The judge seems to haveacted on the basisthat Mr Ryan had suffered significant physical effects of hepatitis over aperiod of several months and had sufferedconsequential stress andinconvenience. This is a wholly erroneous assessment of the Applicant'scondition."

556This submission makes no reference to the fact that it was some sixmonths before Mr Ryan felt fully fit. It is true that itwas only aperiod of three weeks for which he was totally unable to work. But as theprimary Judge noted, upon returning to workhe was still very unwell, weak andlethargic and found strenuous physical work almost impossible and was only ableto perform lighterduties and to work reduced hours. Upon returning home, hewould go straight to bed and sleep, then wake up for dinner and returnto bed.He continued to depend on his wife to take care of the household duties and tolook after the children. Mr Ryan testified:

"It was a number of months before I started to eat more normallyand feel stronger. After about 6 months I had regained the weightI had lostand was able to perform my normal work duties."

557An attack is made on his Honour's characterisation of Mr Ryan'sillness as having been "fairly typical". His Honour stated:

"The suggestions made by counsel about the appropriate generaldamages figure range from $3,000 to $45,000. The former figure seriouslyunder-appreciates the significant physical effects of a bout of hepatitis A,suffered over a period of several months, and the stressand inconvenience thismust cause any sufferer. The latter figure seems too high, given the absenceof any residual disability. In my view the appropriate figure inthis,fairly typical, caseis $20,000.(emphasis mine)

558His Honour was saying that his appreciation of Mr Ryan's sufferingswere that they were not of the most trifling or most seriouskind but werebetween these two extremes and perhaps around the middle of the "severityrange". He was referring to a range of severityof suffering, not a range ofawards.

559In its submissions, the State referred toPlanet Fisheries Pty Ltd v LaRosa[1968] HCA 62;(1968) 119 CLR 118 at 124, in which Barwick CJ, Kitto and Menzies JJ"emphatically" rejected a submission that they should test an award of generaldamages by comparison with "a norm or standard of the amount to be awarded forgeneral damages in the case of injuries and disabilitiesof the kindexperienced by the plaintiff". But the learned primary Judge here did notassess damages by reference to any normalor standard amount awarded for thesuffering of hepatitis A. Rather, his Honour had in mind Professor Boughton'sdescription ofthe typical case of the disease (set out at [87] earlier) hisappreciation, based on the expert evidence referred to at [85] to [87],of moreand less severe forms of the disease. No doubt any judge assessing generaldamages for pain and suffering will have in mindsuch considerations, whetheror not they are spelt out, and there is nothing untoward in this.

560I would not disturb the award of general damages of $20,000.

561His Honour awarded "a round figure of $4,000 for loss of income and medicalexpenses". The medical expenses amounted to $554.05. Accordingly, although asa result of a rounding off exercise, his Honour's award for loss of incomebecomes $3,445.95. Mr Ryanoperated a family company, Grant Ryan PlumbingPty Ltd. He said in evidence that the company's gross receipts, through hislabour,were about $1,000 per week. In relation to the question whatdeductions from that amount should be made, his Honour said this:

"Some costs were fixed costs, incurred regardless of whether ornot Mr Ryan was working; others would not have been incurred duringhisabsence from work. It is also necessary to make some allowance for the effecton his earnings of being obliged to work shortdays for some months. Takingeverything into account, it would be reasonable to allow a round figure of$4,000 for loss of incomeand medical expenses[$554.05 as notedabove]."

562The State submits that an estimate of Mr Ryan's gross tradingmargin (revenue less cost of goods sold) and additional operatingexpenses,such as fuel, derived from his evidence is shown by the following table:

563Mr Ryan does not challenge these figures but submits that what fallsto be assessed is the loss of earning capacity, not theloss of wages orsalary, and refers toPaff v Speed[1961] HCA 14;(1961) 105 CLR 549 at 566 perWindeyer J. Accordingly, he submits that it is erroneous to suggest that hisHonour awarded an amount some three anda half times larger than the amount ofloss claimed on Mr Ryan's own evidence.

564It is not in dispute that Mr Ryan is entitled to be compensated for aloss of earning capacity and that his actual loss of earningscan be someevidence relevant to the assessment of that loss.

565Mr Ryan said that when he returned to work, he was able to work onlyan eight hour day rather than a ten hour day as previously,because he feltweak and lethargic. Over the full six months, and on the basis of a five dayworking week, Mr Ryan would have lost260 hours of work (26 weeks x 5working days = 130 working days x 2 hours = 260 hours). Two hundred and sixtyworking hours equals26 ten-hour working days. Accordingly, one way ofconsidering matters is to think that instead of being off work for only threeweeks, Mr Ryan was off work for eight weeks and one day. On the State'sfigures, if one assumes that the figure of $960 representsthe loss overfifteen working days, the rate of loss is $64 per day. At this rate theadditional twenty-six days lost gives an additionalfigure of $1664, which,with the original amount of $960, gives a total of $2,624. This amount isapproaching the sum of $3,000which was his Honour's starting point.

566Probably towards the end of the six month period, Mr Ryan was notfinding it necessary to go home a full two hours early. Onthe other hand,during the early part of that period he may well have found it necessary to gohome somewhat more than two hoursearly. Moreover, throughout the six monthperiod, even during the reduced working hours, he "found strenuous physicalwork almostimpossible and ... was only able to perform light duties." Thatis, he was experiencing a reduction in working capacity, even whileengaged inwork.

567All these considerations point to a loss of earning capacity that layoutside that represented by the initial three weeks ofwork.

568I do not think it is shown that the sum of $3,445.95 awarded toMr Ryan for loss of earning capacity betrays legal error orisinordinately high.

569Attack is made on his Honour's allowing interest at the rate of 10 per centper annum over the two year period from the accrualof the cause of action todate of judgment. It is common ground, by reference to the High Court'sdecision inMBP (SA) Pty Ltd v Gogic[1991] HCA 3;(1991) 171 CLR 657, that interestin this case should be calculated at 4 per cent rather than 10 per cent. Thiswould reduce pre-judgment interestfrom $5,000 to $2,000 and the total amountawarded to Mr Ryan from $30,000 to $27,000.

570It is submitted for the appellants, however, that a sum of $1,000 which wasincluded for the value of the nursing services whichMr Ryan received fromhis wife should bear interest at the yet lower rate of 2 per cent per annum.Mr Ryan, on the other hand, submitsthat thoseGriffiths vKerkemeyer damages (cfGriffiths v Kerkemeyer[1977] HCA 45;(1977) 139 CLR 161)should bear interest at the same rate as the other elements in his award, thatis, 4 per cent. In support of its submission, theState refers toGrincelisv House(1998) 84 FCR 190 at 201 per Foster J, at 203 per Hill and KiefelJJ. Their Honours in that case halved the rate of interest otherwise to beawardedto take into account the fact that the nursing services were not allrendered at the time when the cause of action accrued but wererendered and sowere received and notionally paid for progressively over time. Their Honoursdid not, however, purport to rule thatthe rate of interest applicable toGriffiths v Kerkemeyerdamages should always be one half of the rate ofinterest applicable to general damages otherwise.

571In the present case, the nursing services were rendered over a period ofthree weeks, apparently in February 1997. This wasan extremely short periodby comparison with the 5.8 years ofGrincelis v House, above (and the10.43 years ofArvind v Greco [1995] Aust Torts Reports 62,622).Accordingly, the interest to be awarded was "fully earned" by the end ofFebruary 1997 - longbefore his Honour's judgment of 5 March 1999. In thecircumstances, I do not think that a reduction in the rate of interest on theGriffiths v Kerkemeyer damages from 4 per cent to 2 per cent is calledfor.

572Since the last two paragraphs were written, the High Court, on 3 August2000, by a five to two majority, allowed an appeal fromthe Full Court inGrincelis v House ([2000] HCA 42). Nothing said by their Honours causesme to change the views expressed in the two paragraphs mentioned. Indeed,theHigh Court gave effect to the parties' agreement that interest on theGriffiths v Kerkemeyer damages should be assessed at one half ofwhatever rate was otherwise applied. The High Court allowed the appeal on thebasis thatin the circumstances ofGrincelis v House, the "reduction" ofthe rate of interest from 10 per cent to 4 per cent in accordance withGogic should not have been made. As noted earlier, in the presentappeals the parties agreed that the rate should be 4 per cent by referencetoGogic.

CONCLUSION

573For the above reasons, in my opinion the appeals of the Council, the Stateand Barclay Distributors should be allowed and thatof Barclay Oysters succeedsin so far as it relates to the finding that it was liable in negligence butfails in so far as it relatesto its liability under theTP Act. BarclayOysters' cross-claim against the Council should be remitted to the primaryJudge.

574For the reasons given by Lee J, I agree that the other cross-claims shouldalso be remitted and that, having regard to the conclusionsreachedrespectively by the three members of the Court, orders, including the costsorders, proposed by his Honour should be made.

Associate:

Dated:9 August 2000

KIEFEL J:

575I have had the considerable advantage of the summary by Lindgren J of thereasons given by his Honour the primary Judge andof recent cases concerningthe liability of public authorities for failing to exercise statutory powersand the principles to beapplied to determine, generally, whether a duty ofcare arises. As his Honour points out, there is no agreed statement ofprincipleon the latter question. The High Court may no longer be taken toendorse the notion of "proximity" as the determinant of a dutyof care, nor tofavour the use of reliance as a basis for liability, save in areas such asnegligent advice, where it does not havethe fictional quality which is now thesubject of criticism but provides a basis for determining both duty andcausation. I willrefer only to aspects of the findings and evidence.

Duty of Care

576In a context such as the present, where there is an absence of principle tobe applied in a new case, McHugh J inPerre v Apand Pty Ltd[1999] HCA 36;(1999) 164ALR 606, 630 and inCrimmins v Stevedoring Industry Finance Committee[1999] HCA 59;(1999) 74 ALJR 1, 19 suggested that where it is alleged that a statutoryauthority owed a common law duty of care and breached it, the issue of dutyshould be determined by a series of questions commencing with one as to whetherit was reasonably foreseeable that a failure to exercisethe powers in questionwould result in injury to the plaintiff; and if so, then by reason of thedefendant's statutory obligations,whether it had the power to protect aspecific class of persons, which class included the plaintiff. It is notnecessary to listthe remaining questions. McHugh J (Perre v Apand,630) and other members of the High Court, have cautioned that, in thecircumstances referred to above, the law should be developedincrementally andby analogy with decided cases. Hart,"The Concept of Law"2^nd edn, 274-5, considered that courts, when deciding unregulatedcases proceed by analogy, and attach importance to ensuring that anynew lawmade is in accordance with principles or follows underpinning reasonsrecognised as having a footing in the existing law. In any case, however,different principles supporting competing analogies may present themselves, anda judge will often have tochoose between them, relying on the judge's sense ofwhat is best and not upon any established order of priorities prescribed bylaw.

577A view has been expressed by Professor Todd ("Liability in Tort ofPublic Bodies in Mullany and Linden (eds)Torts Tomorrow - a Tributeto John Fleming (1998) 36, 47) that there is, arguably, a measure of underlyingagreement between four of the judgmentsinPyrenees Shire Council v Day[1998] HCA 3;(1998) 192 CLR 330 (see McHugh J,Crimmins, 18-19). Of the key elementswhich Professor Todd distils from that case and more recent decisions, two areimportant in the resolutionof these appeals: in connexion with the impositionof a common law duty, that it be consistent with and complimentary to theperformanceby the public body of its statutory function; and that thedefendant be under a statutory obligation (or at least possess a specificpower) and in a position of control so as to be able to protect the plaintifffrom the danger in question. These considerationsare, in my view, the key tothe cases against the Council and the State.

578As a general rule, the ordinary rules of negligence will apply to publicauthorities:Sutherland Shire Council v Heyman[1985] HCA 41;(1985) 157 CLR 424.Whilst at common law there can be no liability for mere inaction, a publicauthority will be liable for its failure to act when ithas come under a dutyto act. From a consideration of cases which follow, it would seem to me thatwhether it has come under a dutywill depend largely upon the statutory powersgiven to it; the connexion the powers have with the risk in question and thepersonor class of persons exposed to it; the extent to which those powersreasonably permit it to deal with the risk; whether it was intendedthat thataction be undertaken when the risk was present; and generally whether theimposition of a duty of care is inconsistentwith the statute in question.

579Pyrenees Shire Council v Day[1998] HCA 3;(1998) 192 CLR 330, whilst not a caseof complete inaction on the part of the local authority, was one where thepurpose of the statutory power givento the authority was to avoid the veryrisk which arose, damage by fire. Brennan CJ considered that where the powergiven was oneto control activities which may foreseeably give rise to a riskof harm to an individual, and the power was conferred for the purposeofavoiding such a risk, compensation for loss by failure to exercise the powermay be said to be consistent with the policy of thestatute (347). Further,given the stated purpose of the powers, difficulties were then not encounteredon the basis of some discretion,on the part of the authority, as to whether toexercise the power (345, 346). The measure of the duty was, consistently, nogreaterthan that arising under the public law (347). Gummow J, (377),considered that the primary requirement in such cases was the analysisof anylegislation in point, together with the positions of the parties (and inCrimmins, 31-32). The statutory powers given to the Shire facilitatedthe existence of a common law duty of care, and the touchstone of itsduty wasthe measure of control (389). Two other matters were adverted to by hisHonour. With respect to cases which required somekind of quasi-legislativeactivity on the part of public authorities: such were unrecognisable by thetort of negligence. The policy/operationaldichotomy was not however useful inthis area of the law (see also McHugh J inCrimmins, 17). In relationto the scope of the duty, questions of resource allocation and the like,matters relevant to an authority's abilityto act would fall for considerationalong with other facts which were to be "balanced out" when determining whatshould have beendone to discharge any duty of care (393-4).

580The importance of whether the statute was the source of the power tocontrol or manage the area of risk, and therefore of theduty to take care, hadbeen referred to in earlier cases includingSchiller v Mulgrave ShireCouncil (No 2)[1972] HCA 60;(1972) 129 CLR 116 (by Barwick CJ, 120). The distinctionbetween statutory powers conferred for the purpose of attaining statutoryobjects and in respectof which an obligation to act was created and thesituation where an authority had a choice whether to exercise powers wasdiscussedby Mason J inHeyman 457, although his Honour went on toconclude that there might then be a public expectation that they would beexercised. It hassince been recognised that reference to expectations, orreliance, is unnecessary to a determination as to whether a duty to actarises.

581InRomeo v Conservation Commission of the Northern Territory (1998)192 CLR 431, the existence of a duty of care on the part of the authority,which had statutory powers of control or management,was not in dispute. Theprincipal issue to which the judgments were directed was what was necessary tobe undertaken to fulfil theduty. Brennan CJ again equated the scope of theduty with the purpose of the statutory power, so that where it was one toprotectpersons, what was required was that which would reasonably fulfil thatpurpose, unless there was some contrary statutory direction. The manner of itsexercise was, however, one for the authority to determine (443).

582It follows in my view that with respect to the cases against the Counciland the State, the principal focus must be upon thestatutes which confer poweron those entities to determine what they were directed to and the objectssought to be achieved or theprotection afforded by them; and consider whatmeasure of control was given to them to effect those purposes. It may also berelevantto consider the relationship or connexion between the Council and theState on the one hand and the applicant, Mr Ryan.

Aspects of the Evidence and Findings

583Wallis Lake had been known to be subject to contamination from human faecalmaterial for some time. There had not, however,been an outbreak of any virusattributed to it, although the prospect of that occurring had been adverted toand available scientificknowledge would have confirmed that. The lake and itscatchment were, in particular, exposed to contamination from urban run-off.The risk of such contamination carried with it the risk of viral infection, ashad been experienced elsewhere. Viruses such as theHepatitis A virus ("HAV")were carried in human faeces. The risk of contamination was significantlyhigher after periods of heavyrainfall. Heavy rainfall occurred between 22 and25 November 1996. Consistent with its practice adopted in light of the risk,thathuman faecal material would be brought into the catchment in largerquantities than usual by run-off waters, the grower Barclay Oysterssuspendedits harvesting between 23 and 27 November. On 26 November, the results oflaboratory tests of flesh from a dozen of itsoysters, chosen randomly werenegative for E. coli. bacteria. It continued to harvest and supply, after aprocess of cleansing (depuration). It supplied through its distributor,Barclay Distributors. Purchases of oysters from that distributor were made bymembers of MrRyan's family on 21 December 1996 and 31 December 1996, and heconsumed some oysters from each purchase. He became ill on 30 January1997,and was later diagnosed as suffering from the HAV. There were subsequentnotifications of similar diagnoses sufficient tocharacterise the occurrence asan outbreak of HAV, attributable to the consumption of oysters from WallisLake.

584A considerable part of the evidence concerned better management practicesconducted elsewhere in Australia and overseas. Theexpert evidence supportedthe initial undertaking of a sanitary survey of waters in which shellfish weregrown, followed by furthersurveys and water testing to monitor changes inwater quality and the presence of bacteria, indicative of the presence offaecalcontamination and therefore also of possibly known viruses. It wasaccepted that it was not possible, on the current state of scientificortechnical knowledge, to test directly for HAV. Flesh testing of oysters,whilst direct, was not reliable in a number of respects. The risk of thepresence of the virus was ascertained by testing the water for bacteria, and inparticular E.coli., and the extentof such contamination. Depuration generallywas not considered effective to cleanse oysters of a virus and certainly notdepurationundertaken for a period of 36 hours or less. A negative result forbacteria in the water was also understood to be undeterminativeof the absenceof the virus, as the virus could survive longer than the bacteria. Variousranges were provided, from weeks to threemonths or longer. In some instances,it had been discovered some years after a pollution event. The latter evidencewas given inthe context of the possibility that the virus could have survivedelsewhere in the catchment area and be redistributed by water flow.

585The principal purpose of a sanitary survey appears to be the classificationof the waters according to the extent of any pollutionfirst found and theestablishment of a data base with which it was possible to monitor changes inwater quality. Just what was involvedin such a survey, and how variable theinformation sought and recovered might be, was a matter with which the Counciltook issueon the appeal; as was the conclusion, drawn by his Honour, that thesources of pollution might be identified by a survey. Wherehigh levels ofpollution were discovered in an area surveyed, harvesting from it was generallynot permitted, or permitted only afterthe oysters grown there were relayed toapproved waters for a period, or subjected to depuration which was proved to beeffective. Where pollution conditions were present but beyond those conditionswhich formed the basis for a growing area's classification,it would be closedand re-opening would not occur until the area returned to normal for asufficient time to allow the shellfishto reduce the coliform group ofindicator organisms or reduce other deleterious substances that may be presentin the shellfish meat. Growing areas subject to predictable pollution eventswould have criteria for closure and re-opening.

586No sanitary survey, or any extensive testing, had been undertaken in WallisLake. Heavy rainfall and run-off however occurredon a regular, if notfrequent, basis. The expert evidence was that, in the absence of informationto indicate the likely impactof pollution sources; with knowledge of theincrease in the risk of human viral contamination after pollution events, suchas heavyrainfall; and cognisant of the limits on the effectiveness ofdepuration; the only option which a prudent person would take wouldbe toclose the growing area to harvest until such time as testing confirmed oysterswere likely to be fit for human consumption. One expert expressed the viewthat, for an oyster farmer, the cessation of harvesting after such an event wasnot just good management,but a necessity.

587Testing conducted in early 1997 after receipt of notifications that thevirus had been contracted, revealed faecal contaminationwhich was widelydispersed throughout the estuary. It was accepted by his Honour that no onesource or even sources could be pointedto and multiple HAV contaminationrequired more than one infected person in the area. His Honour considered thatthe contaminationcame from a number of sources, probably land-based.

The case against the Council

588No issue can be taken with his Honour's findings of the Council's knowledgeof the potential for human faecal contaminationof the lake and of the possibleeffects of that upon the oysters grown there. The Council had commenced somelimited water testingfor faecal coliforms in about 1989 and became aware thatlevels of contamination in some stormwater drains exceeded the acceptedstandard. It was also aware of an adverse effect upon the quality of the waterat times of high rainfall and that this was attributableto a number ofsources, as earlier mentioned. It was in fact aware of problems relating toseptic and sewerage effluent. Some specificpossible sources of this pollutionsuch as public toilets and caravan parks could be identified, and somecomplaints in particularareas pointed to the overflow of septic effluent ontothe ground. Other possible sources of this pollution were more general, beingidentified by reference to activities or areas.

589No source or sources for the contamination in question could be identified,although it was accepted by the Council in submissionsthat the period ofrainfall referred to above probably brought the contaminants into the lake.The Council took issue with his Honour'sfindings as to what the Council shouldhave done. Its principal submission was that a duty of care could hardly besaid to ariseif its content could not be specified. Further, the difficultyencountered in defining the content of the duty was that no measurescould bepointed to which would have been effective to prevent the viral contamination.The duty, described by his Honour as thatto take reasonable steps to"minimise" contamination, or the risk of it, was, in the Council's submission,inconsistent with hisHonour's findings that if any of the three allegedtortfeasors - the Council, the State and the grower - had fulfilled their duty,the HAV outbreak would not have occurred.

590It is clear from his Honour's reasons that it was considered that there wasmuch that the Council could have done. So muchcan, I think be accepted. Thatdoes not however, in my respectful view, answer the question whether it cameunder a duty to takeaction.

591The Council's submissions pointed to the lack of efficacy in what hisHonour considered was necessary to be undertaken and toother evidence whichhighlighted the magnitude of any attempt to determine all sources of thepollution in question. His Honourconsidered that a sanitary survey couldfirst be undertaken and thereafter the water quality monitored. In addition tothe possiblesources listed by his Honour, those of which the Council knew orought to have known, it was submitted that the evidence disclosedthat therewere hundreds of points, in the very large catchment for the lake, which werepotential sources for human faecal contamination. In addition to thedifficulty of identifying all sources, the evidence clearly showed that watertesting, whilst able to detectfaecal contamination, could not detect the virusand that an absence of bacteria from the faecal contamination was notconclusiveof the absence of the virus.

592His Honour's view was that, nevertheless, water testing was useful andshould have been undertaken in conjunction with a sanitarysurvey. The dutythat the Council came under was described as one to "take those steps that werereasonably open to the Councilin order to minimise human faecal contaminationof the lake". The description seems to me necessarily to accept that theCouncilmay not have been able to find all sources and that it may not havebeen able to prevent any outbreak. Some action, in the natureof goodmanagement practice, should however have been undertaken and this could havereduced the risk. In what follows, it wouldappear that his Honour consideredthat knowledge of a risk of harm gave rise to a duty to act, when it was withinthe Council's powerto do so.

593A conclusion that the Council was under an obligation to use the powers ithad to protect oyster consumers from injury cannot,in my view, be reachedwithout ascertaining the nature of those statutory powers and what they weredirected to. It will be recalledthat inPyrenees there was coincidencebetween the action which was necessary to prevent the fire, the powers given tothe Council and the purposefor which they were given. In my view theprovisions here referable to water pollution and public health, whilst no doubtsufficientto authorise the undertaking of surveys or water testing, were notsuch as to place the Council in a position where it was obligedto prevent therisk of injury, assuming for present purposes that it could have done soeffectively. His Honour set out the relevantstatutory provisions. TheLocal Government Act 1993 (NSW), pursuant to which the Council obtainedits wider powers, had amongst its stated purposes the provision of the legalframework foran effective and environmentally responsible local government.More specifically, the Council had the power to approve the carryingout of"sewerage work", which was defined to include works relating to septic tanks oreffluent systems and Council sewers. In thatconnexion, it was to have regardto "the protection and promotion of public health". It had power to requirecompliance to "relevantstandards" relating to sewerage systems and to requirethat owners or occupiers of premises (a term widely defined) do or refrainfrom doing, specified things "to prevent environmental damage" or to cease anactivity which was a threat to public health. It hadthe power to abate anuisance, or to require that it be abated. It had powers of entry intopremises in aid of its other powers. It had a general power to remove,disperse, destroy or mitigate the pollution of water, at the direction of theEnvironmental ProtectionAuthority. There was, however, no statutory provisionwhich had as its apparent purpose the prevention of contamination of oysters,the water in which they were grown, or the protection of consumers, and whichrequired the Council to use one or more of its powersin a given circumstanceto achieve those ends. The powers given to the Council, referred to above,which allowed it to undertakesome action and which might have had some effectupon the risk in question may be contrasted with those inPyrenees, bywhich the Council could be said to have been obliged to act so as to ensure thedefective fireplace was remedied or not used. It may also be observed that theCouncil's argument, concerning the lack of definition of the content of anyalleged duty, reflectsthe lack of an obligation directed to a specific end.

594On the view I have taken of the issue, whether the Council was under arelevant duty of care, it is not necessary for me todeal with other questionsraised by the Council in submissions, which challenged the finding by hisHonour that any surveys or testingit should have undertaken were not,apparently, beyond its financial capability. If the Council was under a dutyto undertake aprogramme of a kind which could be reasonably identified, and itcould not be said to have a choice whether to do so, any reasonsit may havefor not doing so, or deferring it, would need to be taken into account inconsidering whether its inaction constituteda breach of duty. This was not,the Council submitted, a matter specifically addressed at trial for the reasonthat what was necessaryto be undertaken was not pleaded. Whether the Councilwas sufficiently appraised of the point during the questioning of witnessesdoes not need to be determined. In my view, such a duty did not arise. It is,however, necessary for me to refer briefly to thequestion of causation.

595Had the Council undertaken the management strategies referred to by hisHonour it would follow from the evidence that the bestoutcome would have beena reduction of the risk. A finding that it would actually "minimise" is not,with respect, apparent andin any event the Council could not have acted suchas to prevent the viral contamination and the injury in question.

596In order to involve liability, action or inaction must be sufficientlyimportant and closely connected with the incident inquestion so as to make itreasonable, on a broad commonsense view, to regard its author as responsiblefor it in law:Fitzgerald v Penn[1954] HCA 74;(1954) 91 CLR 268, 275-6. As to thepossibility that any inaction on the Council's part could be said to havematerially increased the risk of injury,the Council referred to the decisionof Mason P inBendix Mintex Pty Ltd v Barnes(1997) 42 NSWLR 307, wherehis Honour held that the law did not equate that situation with one where itcould be said the defendant materially contributedto it (as to which seeMarch v Stramare[1991] HCA 12;(1991) 171 CLR 506, 532). It does not seem to me thatthe Council's position is to be determined by such considerations, for in myview any generalomission on its part could only be said to have left oysterconsumers exposed to the same risk. The only relevant increase in riskarosenot from its conduct, but from the effect of heavy rainfall. Tested anotherway, one could not say, on balance, that the performanceof the duty identifiedwould have averted the harm (Heyman's case, 467, Mason J).

597In my respectful view, the case against the Council should have beendismissed.

The case against the State

598A substantial part of the argument relating to the State's liabilityconcerned its obligations to effectively undertake andenforce an OysterQuality Assurance Programme for the area and in particular, whether what wouldbe involved on its part was a quasi-legislativeactivity; by which was meantthat it was "operational" in the public law sense. The need for it to takethis and other action wassaid to arise because of the extent of knowledge ithad acquired over some years about the risk of faecal contamination of thewaterand of viral contamination in oysters, including that acquired throughvarious committees set up under State legislation, and alsobecause of theextent of its involvement in the management and practice of the oysterindustry. Issue was taken by the State withsome of his Honour's findings inthis regard.

599Once again, his Honour's finding as to the State's knowledge of theforeseeability of the risk of harm through the viral contaminationof oysterscould not, in my view, be attacked and the State rightly conceded this in itssubmissions. It pointed out, however, thatthe risk was one which was not verylikely, since it had not occurred in the area despite oyster production overmany years. Therisk of faecal, and therefore viral contamination, was howeverknown to be higher after heavy rainfall. As earlier indicated, thisknowledge,combined with the State's statutory powers and duties, is in my view,determinative of the existence of a duty of careand its breach. His Honour'sreasons disclose a primary concern with the State's exercise of its managementpowers, although notto the extent contended for by the applicant. In thatprocess his Honour also found that it had important responsibilities, onetoprohibit the taking of oysters from the lake.

600His Honour held that the State, like the Council, had a duty to exerciseits powers of management in such a way as to minimisethe risk of HAV infectionof oyster consumers. His Honour, at an earlier point in his reasons, haddetermined that the State hadresponsibilities which its counsel had identifiedas matters which could have been dealt with in a local Oyster Quality AssuranceProgram, namely that sanitary surveys be undertaken; that harvesting ceaseafter heavy rainfall, and that there be extreme cautionin re-opening afterclosure. The latter two assume particular importance in my view.

601His Honour accepted certain limitations upon the content and timing of sucha programme. It is not necessary to detail thosefindings. His Honourconsidered that the responsibilities arose by reference to a number of facts,including the State's statutorypowers as well as those given to its agencies;its participation in management and committees involved in management planningrelatingto the environment and the health of the estuary; and its day to daycontrol over the oyster industry. "Most importantly", hisHonour added,through the Minister for Fisheries the State had the power, at any time, toprohibit the taking of oysters from thelake.

602Clause 12B(3)(a) of Div 4 of the regulations to theFisheries ManagementAct 1994 (NSW) provided that an objective of the Quality Assurance Programsto be undertaken was to ensure that shellfish taken from estuarinewaters wasonly sold for human consumption if the shellfish and surrounding waters metcertain standards. The Act contained evenmore direct powers, cast in termswhich suggest an obligation to act in certain circumstances. Pursuant tos 8 of the Act, the Ministerwas given power to prevent the taking of fish(including oysters) from any waters and to close fisheries. Other sectionspermittedthe prohibition on the taking of oysters during a specified period ifsatisfied that they were likely to be unfit for human consumptionand thedeclaration of quarantine areas (ss 189 and 183). There were other powerswith respect to the pollution of waters providedby theClean Waters Act1970(NSW) but it is not necessary to list them. Reference can however bemade to theFood Act 1989 (NSW), which entitled the Director-General ofthe Department of Health to prevent the cultivation of oysters and to preventdamagegenerally to public health(ss 44 and45). The assumption that theFisheries Department, and not the Health Department, would act with respect tofish production and harvestingwas addressed in evidence and submissions. Inany event, the latter's statutory powers are not addressed to a particular riskora group of consumers, as I consider the provisions of theFisheriesManagement Act to be.

603The rainfall in the catchment in November 1996 created a known andsignificant risk of faecal contamination of oysters, carryingwith it a risk ofviral infection including HAV. The purpose of the powers given to the Ministerto prohibit the harvesting of oystersfrom an area for a specified periodclearly had, as its purpose, the protection of members of the public who mightbe consumers ofoysters, where the Minister had reason to be concerned aboutthe fitness of the oysters for human consumption, as he must have hadhere ifproperly informed. In my view, the State thereby came under a duty to exerciseits powers and prohibit harvesting untilthe Minister could be assured of thelikelihood of the oysters' fitness for consumption. It was reasonably able todo so, as theletter from the NSW Shellfish Quality Assurance Program affectinga ban, after reports of the diagnosis of HAV in persons, shows.

604In submissions the State complained that, in some respects, his Honour'sfindings towards a conclusion of negligence went beyondthe case as pleaded byits opponents. The power of the State to effect a closure was, however,squarely raised. There was, in anyevent, little by way of evidence whichcould have been addressed to it.

605The State's appeal should be dismissed.

The case(s) against the Barclay Companies

Negligence

606A finding of a duty of care on the part of an oyster grower in the arearequires considerations of the closeness of the relationshipbetween it andconsumers, and of any measures open to the consumers to protect themselves, inaddition to the grower's knowledgeof the risk (Perre v Apand, 631; 659;664). A duty not to expose consumers to the risk of virus is readilysatisfied. The existence of a duty of care wasconceded at trial. It wassubmitted on the appeal that this did not, however, spell out the content ofthe duty. In my view, theabove statement of duty is self-explanatory and themeans by which it was to be achieved clearly available.

607His Honour the primary Judge referred to the evidence of Mr Barclay, thathe was aware of the existence of potential sourcesof viral pollution of thelake; that depuration was not adequate to remove viruses; and that fleshtesting would not necessarilydetect viruses. His Honour referred to what theBarclays companies should have done and focussed, principally, upon the"significantcontribution to risk reduction" it could have made. For thereasons I have given with respect to steps which his Honour found mighthavebeen undertaken by others, but which were not likely to amount to prevention ordetection, I am respectfully unable to agreethat this was the proper measureof the duty owed by the Barclays companies. His Honour however alsoidentified, as an alternativeto attempts to prevent contamination, and in theevent that it proved impossible to obtain a virus-free growing environment, therequirement that the Barclays companies refrain from selling oysters for humanconsumption, except perhaps with a warning about therisk in eating them.Ultimately, it was the absence of warning when selling which his Honour held toconstitute negligence.

608It follows from the view I have expressed above concerning the State'sduty, and the basis for it, that even if the harvestingof oysters had not beenprohibited in the circumstances prevailing, as it should have been, theBarclays companies should not havesupplied oysters for sale until a sufficientperiod had elapsed by which the risk of contamination could be regarded asacceptableor tests sufficiently indicated that to be the case. That was theeffect of the expert evidence. A cessation of harvesting andsupply during andup to a few days after the rainfall could never suffice; nor could 36 hours ofdepuration thereafter. His Honourdetermined liability, ultimately, on thebasis that a warning was not given of the danger which remained in consumingoysters fromthe area. The requirement of a warning would of course rendernugatory the supply of oysters for sale.

Trade Practices Act Claims

609His Honour's conclusions and reasoning with respect to the claim againstBarclays Oysters based upon provisions of theTrade Practices Act 1974(Cth) are set out in the summary of Lindgren J, and it is not necessary forme to restate them. I propose only to state my views shortly.

610His Honour found that ss 74B and 74D were further sources of liabilityin Barclay Oysters. Section 74B(1) provides that a corporationis liable tocompensate a consumer who suffers loss as a result of goods manufactured (whichmay include produce grown) not beingreasonably fit for their purpose, whichpurpose was made known to the corporation. The purpose here was of coursehuman consumption,of which the grower was aware. Submissions on behalf ofBarclay Oysters and some other growers focussed upon s 74B(2)(b), whichprovides that subsection (1) is not applicable to a circumstance where theconsumer did not rely, or it was unreasonable for it torely, on the skill orjudgment of the corporation. In their submission, the question of reliance onthe part of consumers cannotbe assumed, as his Honour approached the matter.

611In my view, it is plain that a consumer will necessarily rely upon thejudgment of an oyster grower that oysters are fit forconsumption. In the caseof oysters, more so than other foods, it may be considered even more likelythat consumers will harbourconcerns but expect that the goods would not beavailable for sale if there was a real risk that they were contaminated. Itfollowsfrom my reasons relating to liability for negligence, that the judgmentBarclays Oysters exercised was when to return to harvesting. In my view, hisHonour was correct in holding Barclay Oysters (but not Barclay Distributors)liable on this basis and under s 74D. That provision concerns themerchantable quality of goods and whether a purchaser would act reasonably inexpecting that they metsuch standards.

612In my view, Barclay Oysters' appeal should be dismissed. So far asconcerns the Barclays companies' cross-claim against theCouncil, it should bedetermined by the primary Judge. As Lindgren J points out, that appears tohave been accepted by those partieson the appeal.

The cross-appeal against Barclay Oysters

613Section 75ADTrade Practices Act 1974 (Cth) provides a liability forcompensation in a corporation which supplies defective goods manufactured by itand a person suffersinjury as a result of the defect. Section 75AK(1)(c),however. provides that it is a defence to such a claim if it is establishedthat the defect could not be discovered, having regard to the state ofscientific or technical knowledge at the time of supply. His Honour held thatthe defence was available, since the only test capable of detecting the virus -flesh testing - would destroythe oyster. Discovery and supply were thereforemutually exclusive.

614I would respectfully agree with his Honour's conclusion that the defencewas available. The evidence relating to flesh testingwas that it wasproblematic; it often failed to detect a virus; it frequently gave falsenegatives; and it could only be undertakenby samples which, so far asconcerned oysters, could not be assumed to be representative. It is in thatlatter sense that I understandhis Honour to say that the onlyeffectivetest was to destroy each oyster to be offered for sale. The test could not inany sense be regarded as a proper or sufficient meansof detection. In myview, therefore, it could not be said that scientific knowledge was such as toenable the virus to be detectedwithin the meaning of s 75AK.

Quantum and Apportionment

615The simple answer, in my view, to the submission with respect to the awardof $20,000 for general damages is that it could notbe characterised asexcessive, given the seriousness and potential outcomes of the virus; thestress associated with those factors; and the debilitating nature of theillness associated with the infection. So far as concerns the interestawarded, I agree withLindgren J that the period over which the nursing carewas provided would not require a further reduction from the agreed rate of4per cent. His Honour allowed interest on all heads of claim at 10 per cent anda reduction of $3,000 is necessary.

616His Honour, the primary Judge, held that each of the respondents found tobe liable should share the burden equally and, inprinciple, I can see noreason to doubt such an approach. That may, however, be affected byoutstanding claims for contributionor indemnity, as Lee J has pointed out.

Conclusion

617The appeal by the Council should be allowed on the basis that it was underno duty to prevent the injury suffered. The Stateand the grower BarclayOysters were, however, obliged to act to ensure oysters potentially affectedwere not released to the publicand so far as concerned the grower, theapplicant can be taken to have relied upon its judgment and expected thatoysters sold byit were fit for human consumption. Their appeals are allowedonly to correct the amount allowed for pre-judgment interest.

618I agree with the orders proposed by Lee J with respect to costs for thereasons given by his Honour; and with the other ordersset out in the minute oforders.

Associate:

Dated:9 August 2000

N 219 of 1999