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Court of Appeal of Fiji |
IN THE COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT
CIVIL APPEAL NO. ABU 0019 of 2012
(High Court HBC 139 of 1996 L)
BETWEEN:
LAUTOKA CITY COUNCIL
Appellant
AND:
AMBARAM NARSEY PROPERTIES LIMITED
1st Respondent
AND:
1. MOHAMMED YAKUB KHAN
2. MOHAMMED NASIR KHAN
3. MOHAMMED SABIR KHAN
4. MOHAMMED IQBAL KHAN
5. MOHAMMED MUKTAR KHAN
6. MOHAMMED AZAD KHAN
2nd Respondents
Coram: Calanchini P
Basnayake JA
Almeida Guneratne JA
Counsel: Mr. V. Mishra for the Appellant
Mr. B. C. Patel with Mr. C.B. Young for the
1st Respondent
Ms. N. Khan for the 2nd Respondents
Date of Hearing: 14 February 2014
Date of Judgment: 05 March 2014
JUDGMENT
Calanchini P:
I have read the judgment of Almeida Guneratne JA and agree with his proposed orders.
Basnayake JA:
I agree with the reasons and conclusions of Almeida Guneratne JA.
Almeida Guneratne JA:
Nature of the Appeal
[1] This appeal is concerned with the liability of a local authority which had failed to ensure that a builder complies with the conditions of building that had been imposed upon it resulting in physical damage to an adjacent landowner's building.
[2] Several interconnected questions arise for consideration in that context. First, was the builder (the 2nd Respondent) negligent and in breach of a duty of care owed in general to other property owners and a specific duty to the 1st Respondent (the plaintiff in the original action) who was admittedly an adjacent owner of a building thus bringing the plaintiff within the neighbour principle expounded in the seminal House of Lords decision in Donoghue v Stevenson [1932] AC 562.
[3] Secondly, was the Appellant negligent in failing to take steps and ensure that, the builder complied with the conditions of building that had been imposed upon it for which it had statutory power to impose?
[4] Thirdly, did the Appellant owe a statutory duty of care to ensure that the 2nd Respondent did not engage in construction works negligently or was its function merely a supervisory or regulatory one that did not entail liability for negligence and/or arising out of a breach of a statutory duty of care?
[5] Fourthly, should the answers to the aforesaid questions be in the affirmative in what proportion ought the Appellant and the 2nd Respondent have been cast in liability to make good the monetary loss caused to the 1st Respondent?
[6] Fifthly, What and were there policy considerations relevant and if so to what extent the same could be said to have mitigated against imposing liability on the Appellant?
[7] Lastly, did the learned High Court Judge err and/or misdirect himself in finding favour with the House of Lords decision in Anns and Others v London Borough of the Merton [1977] UKHL 4; (1977) 2 ALL.ER 492 which was followed by the Fiji Court of Appeal in Suruj Lal v Joseph Michael Chand and SCC (1983) 29 FLR 71) despite Ann's case being overruled by the House of Lords in Murphy v Brentwood District Council (1996 3 ALL ER 908.
[8] I will take these questions seriatim and deal with them accordingly.
Some Preliminary Observations
[9] Before I do that, it is necessary to make some preliminary observations at the outset.
[10] This appeal is against the judgment dated 20th December, 2007 of the High Court of Lautoka.
[11] By that judgment the High Court held that the 2nd Respondent who had carried on construction of a commercial building, admittedly on a land adjacent to the 1st Respondent's building had carried on such construction negligently causing damage and loss to the 1st Respondent.
[12] The Court also held that, the Appellant, the local authority (the 2nd defendant in the High Court) had been negligent and was in breach of its statutory duty of care, inter alia, in:
(a) Having approved the 2nd respondent's building plans on inadequate information;
(b) Having approved inadequate designs and works;
(c) In having failed to ensure that the 2nd Respondent (builder) had complied with the conditions attached to the building permit that had been issued to it.
[13] Suffice it to say that, it is the appeal against the said judgment of the High Court by the Appellant (the local authority) that comes up presently for determination before us.
The Second Respondent's Stand
[14] The 2nd Respondent to this appeal (hereinafter referred to as the Builder) has submitted (vide: its written submissions dated 21st January, 2014) that it supports the 1st Respondent's position in so far as it refers to the Appellant's negligence and liability.
[15] This is significant and is obvious for, should for some reason this appeal is allowed, the 2nd Respondent would be liable for the entire claim of the 1st Respondent in as much as the trial court cast the Appellant and the 2nd Respondent in the proportion 20% and 80% respectively in so far as liability was concerned.
[16] This fortifies the learned High Court Judge's observation in noting that as revealed (in the pleadings, submissions and in the background of the evidence that was led at the trial both oral and documentary) both the Appellant and the 2nd Respondent alleged negligence against the other.
[17] I also note that, neither the Appellant nor the 2nd Respondent seriously or otherwise challenged that extensive damage had been caused to the plaintiff's building. The broad defence taken up by both the Appellant and the 2nd Respondent in regard to which they struck common ground was that their actions were not causative of any damage. But the fact that, both alleged contributory negligence on the part of the 1st Respondent and contended further that, the 1st Respondent failed to mitigate the loss prima facie seems to run counter to that broad defence in regard to which I propose to comment on later.
[18] I now proceed to deal with the several questions that await determination in this appeal.
Matters of Determination
[19] Was the 2nd respondent (a builder) negligent and in breach of a duty of care to its neighbour (an adjacent occupier of a building)?
[20] As noted earlier, the trial Judge found it to be so. There is no appeal against that judgment of the trial judge. Therefore the dust having settled on that aspect, I will not dwell any further on that and proceed on the basis that, negligence and a breach of a duty care had been established by the 1st Respondent against the 2nd Respondent.
Was the Appellant negligent in relation to the 1st Respondent?
[21] The appellant Council itself had imposed the following conditions attached to the buildings permit it issued to the 2nd Respondent:
Condition 12: Provision must be made for underpinning the adjoining buildings as required.
Clause 15: Adequate provisions must be made for protecting properties during construction.
Clause 16: A 12 mm per story height setback to be provided on the side boundaries.
[22] Having done so it clearly failed to ensure that the 2nd Respondent acted in compliance with the same. The 1st Respondent by its letter dated 6th April, 1992 had written to the Appellant pointing out the possible risk of damage to its building seeking assurances that preventive measures be taken.
[23] The Appellant had replied on the 21st April, 1992 stating that the 2nd Respondent had been advised to take adequate precaution to protect the adjoining properties.
[24] It was only in March, 1994 that the Appellant had issued a stop work order. In the meantime whereas damage was being caused to the 1st Respondent in various forms.
[25] Even the stop work order was eventually lifted by the Appellant on 22nd August, 1994 informing the 1st Respondent that, "the differential settlements of its property and the adjoining property will stabilize in due course if the same has not already occurred."
[26] The letter had also stated that; "I have inspected the above property and have come to the conclusion that the damage to your building are superficial and not structural."
[27] The inspector (Mr. Shiv Kumar) who carried out the inspection however had sought to qualify the scope of its duties and the extent of his knowledge particularly in regard to the need for underpinning.
[28] Consequently, the 2nd Respondent had continued to fill in the slab to its fourth and final floor in September, 1994. The impact of that additional load had been sudden. The cracks on the floor and the walls had widened. The damage had worsened which was borne out by photographs taken before and after 1994.
[29] In the meantime, the tenants occupying the 1st Respondent's building had vacated.
[30] Moreover, Shiv Kumar (the building inspector) had not made any decision about underpinning although he accepted that normally, it is carried out where adjoining foundations may be affected. He had not seen any need for it. The Appellant had not addressed its mind to the condition it had imposed in regard to underpinning through its employees.
[31] The failure to keep within Condition 15 concerning 12 mm set back per storey meant there was more stress on the subsoil than otherwise. There was no point in imposing this condition unless adequate compliance was ensured for it was aimed at avoiding this extra pressure.
[32] The 2nd Respondent's drawings and calculations as submitted to the Appellant had not contained the statutory required information under Regulation 67 of the applicable Building Regulations.
[33] The abovementioned findings were arrived at by the learned trial Judge after a careful and detailed analysis of the evidence which made him draw the conclusion that the 1st Respondent had proved its case of negligence against the Appellant Council.
[34] We see nothing perverse or wrong in those findings of fact and conclusion. We see no erroneous inferences drawn from primary facts in the present case to bring the matter within the principle laid down in Arumugam Pandaram & Others v Pandit Rup Narayan; (1972) 18 FLR 83.
[35] Indeed, it is a well established proposition of law that, an appellate court will not lightly interfere with findings of fact by a trial Judge unless they can be shown to be perverse or clearly wrong or constituting misdirections and/or non-directions.
[36] The learned High Court Judge has carefully considered the evidence, both oral and documentary, led and adduced on behalf of the parties and arrived at his said conclusion on the requisite standard of proof of a balance of probabilities.
[37] On that, we note that even the expert's report dated 6/10/2000, on which the 2nd Respondent had relied on had conceded that "these settlements of the Khan building would probably cause a drag down effect on the neighboring buildings" although he is seen attempting to absolve the 2nd Respondent subsequently. (Record of the High Court Vol.8, pp7-8).
[38] As against that, the 1st Respondent also had adduced expert evidence and in the 1st Respondent's expert witnesses' report. (Vide: Record of the High Court, Vol.4, folio 000989 to 001011) there was no such qualification as to the damage that had been caused to the 1st Respondent's building.
[39] This is an aspect that stood as an additional factor that fortifies the learned trial Judge's conclusion that, the Appellant was (factually) negligent which tilted the 1st Respondent's case in its favour on the criteria of a balance of probabilities taken together with Mr. Shiv Singh's evidence, who was the Appellant's employee who had inspected the soil on the premises of the 2nd Respondent, which inspection had been "only visual" and after advising one of the directors (Mr. Khan) to engage a Surveyor to pre-load the building and to check it and as to how pre-loading should be done was heard to say in his evidence; "I did not know what my role was in the matter. I abandoned the matter" Indeed as the learned trial Judge observed in his judgment, Mr. Shiv Singh did not say why the plaintiff's building was cracking. He had gone on to state that he did not form any views. He did not understand what was happening."
[40] This was the Appellant's witness whose approach was not favoured by the 2nd Respondent's witness Mr. Mortagh, said to be an expert from Canberra.
[41] In that background, could the trial judge have been faulted when he found the Appellant negligent in not ensuring that its own conditions attached to the building permit had been complied with?
[42] The Appellant had not done a geo-technical survey and had not only approved building plans on inadequate information but had also approved inadequate designs and works in breach of the Town (Buildings) Regulations and particularly during the construction stage, had failed to ensure that its building permit which it had issued, with specific conditions was adhered to.
[43] The learned trial Judge has given his reasons touching on the aforesaid aspects at paragraphs 89 to 91 of his judgment.
[44] I do not see any ground to interfere with those findings of fact.
[45] That reasoning stands fortified in regard to Condition 12 attached to the building permit re: the requirement of underpinning and Conditions 14 to 16 as well.
[46] On the basis of the evidence recapped earlier and the ensuing analysis the learned Judge found that there was default on the part of the 2nd Respondent builder in regard to compliance with the said regulations, against which there is no appeal. I need to comment on just one other matter.
[47] That is the phrase "as required" contained in the condition dealing with underpinning which was interpreted by the trial Judge to mean "as necessary to the works", with which this Court agrees. The appellant had failed to implement its own regulations. It had approached its regulatory task negligently. Indeed, as the learned trial Judge found on the evidence, the building surveyor for the Appellant Council who had been engaged by the Appellant proved, on his own admission, to be not a suitably qualified person for the task for which he had been so engaged. He was neither an engineer nor a geo-technical surveyor.
[48] Consequently, the Appellant was vicariously liable for the negligence of its surveyor.
[49] The Appellant, (the local Council), was charged with the statutory duty of monitoring the building works carried on by the 2nd Respondent (builder) from the moment the building permit was issued. Any other view would render the conditions attached to that permit based as they were on the relevant building regulations meaningless.
[50] In that duty the Appellant had failed.
[51] It is also to be noted that Mr. Shiv Singh, the Appellant's witness, an engineer who had designed the foundations and submitted his calculations to the Council official, Mr. Naicker (who did not testify) had made assumptions on the soil conditions on the Khan (2nd Respondent) building site and its immediate surrounds. The building, as the evidence established had design faults. It is such a building that, the Appellant had allowed to be erected.
[52] It had failed to take reasonable care to ensure that the foundation will support the building without detrimental settlement. This duty included supervision of the method of putting up of the foundations.
Did the Appellant owe a statutory duty of care to ensure that the 2nd Respondent did not engage in construction works negligently or was its function merely supervisory or regulatory – one that did not entail liability in law?
[53] We have already concluded, agreeing with the findings of the trial Judge that, the Appellant had been negligent in relation to the 1st Respondent in failing to ensure that, the condition imposed by it on the 2nd Respondent were complied with.
The Tests Commonly Applicable to ascertain a Duty of Care and Breach of the Same
[54] Ought the Appellant as a reasonable and prudent legal persona have foreseen that, the 2nd Respondent's failure to comply with the said conditions would result in damage to the 1st Respondent's property?
[55] Was the ensuing damage to the 1st Respondent's building the direct or probable consequence of that failure?
[56] Was the 1st Respondent entitled to or did it have a reasonable expectation to rely on the exercise of the Appellant's statutory power to ensure that the conditions attached to the building permit were adhered to?
[57] In that regard, the 1st Respondent by its letter dated 6th April, 1992 had apprised the Appellant of possible risks to its building on account of the ongoing building works of the 2nd Respondent which was responded to by the Appellant by its letter dated 21st April, 1992. The Appellant then issued a stop work order in March, 1994 which was eventually lifted in August, 1994.
[58] We have derived considerable assistance from the various Judicial precedents cited to us in that regard.
[59] Consequently, on whatever test is applied, we have no difficulty in holding that the Appellant owed a duty of care as a statutory body to the 1st Respondent, whose buildings or properties ran the risk of being exposed to physical damage on account of an adjacent builder's negligence. The Appellant had a duty to ensure that such a consequence would not have resulted.
The Public Trust Doctrine
[60] The Appellant is a statutory authority vested with power to supervise and regulate building operations within its jurisdiction.
[61] That power, public functionaries such as the Appellant are expected to exercise in trust and for the benefit of the Public.
[62] The Public Trust doctrine has been recognized and employed in almost all developed legal systems. (see for example Premachandra v Jayawickrena (1994) 2 Sri Lankan Law Report 90, Heather Mundy v Central Environmental Authority and Others SC/58/03 –S.C. Minutes of 20.01.2004- Society Law and Trust Review,Vol 15, Issue 213, July 2005. See also Wade & Forsythe, Administrative law (10th Ed.) Claredon, Oxford).
[63] In Heather Mundy's case, Justice MDH Fernando observed that, "Powers vested in public authorities are not absolute or unfettered but are held in trust for the public, to be exercised for the purposes for which they have been conferred" (at page 12 – Law and Society, Trust Review) (supra).
Link between the Public Trust Doctrine and the interconnected concepts of Power, Discretion and Duty
[64] Power, no doubt implies discretion. But, in as much as such discretion is to be exercised in trust for the Public, a duty arises to exercise that discretion properly and not arbitrarily.
[65] Thus, the law does not recognize any notion of unfettered discretion. This is the essence of the Rule of Law. Indeed, if a notion of unfettered discretion is to be accepted it would amount to replacing the 'Rule of Law' with a 'Rule of Discretion' which would be like reducing rock to sand.
[66] Thus the emphasis falls upon the nature of discretion itself and the standards upon which Courts are obliged to insist in order that it may be exercised in a proper, reasonable and lawful way in accordance with the presumed intention of the legislature that conferred it. The law thus controls both the substance of discretionary decisions and the procedure under which they are made such as compliance with the principles of natural justice which brings into focus the need for due administration.
[67] Applying these principles could the Appellant be said to have exercised its statutory power and discretion which it had a duty to perform in a proper, reasonable and lawful way in accordance with the presumed intention of the legislature that conferred it?
[68] It is not in dispute that the legislature has conferred the Appellant with statutory power to impose conditions on builders to construct buildings.
[69] What could be regarded as the presumed intention of the legislature in conferring such power other than to have vested the Appellant with power so as to ensure that adjoining properties during construction are protected and which is reflected in Condition 15 which the Appellant properly imposed?
[70] Flowing from the exercise of that statutory power, the Appellant, as the circumstances and evidence of this case revealed, exercised its discretion in writing to the 2nd Respondent (the builder) by its letter dated 21st April, 1992, informing as complained to it by the 1st Respondent by its letter dated 6th April, 1992 that the ongoing building construction was posing a possible risk of damage (to the 1st Respondent).
[71] Consequentially, the statutory duty stood established to ensure that, the 2nd Respondent takes note and complies with the said conditions by the Appellant's own acknowledged act followed by the stop work order issued to the builder by its communication dated, though belatedly in March 1994.
[72] As observed earlier, that order was lifted in August 1994 which had paved the way for the 2nd Respondent to re-commence its construction works that had led to extensive damage being caused to the 1st Respondent's building.
[73] Thus, it is established on that evidence that, there was a direct nexus between the Appellant's act of lifting the said stop work order and the extensive damage the 1st Respondent's building suffered in consequence.
[74] The substance of the exercise of discretionary power on the part of the Appellant stood open to question.
[75] Moreover, in lifting the said stop work order, the 1st Respondent had not been called upon to make representations on its behalf, rendering the Appellant's exercise of power and/or discretion bereft of procedural fairness and in breach of natural justice as well.
[76] It was not in dispute that the 1st Respondent is a rate payer and had been occupying its building beginning with the year 1962 (initially) and then in 1982 (an appended part).
[77] I have no hesitation in concluding that, the appellant, a statutory authority, exercising power in trust for the public (to which category the 1st Respondent fell), in exercising that power, had failed in its statutory duty by the 1st Respondent thus constituting a breach of its statutory duty of care.
[78] It may be noted that, I have approached the matter under consideration in somewhat, a complementary perspective to what the learned trial Judge ventured to examine. But, in the result, I concur with the learned Judge in his conclusion in regard to whether there was a statutory duty of care in the Appellant in relation to the 1st Respondent and whether there was a breach of that duty.
[79] One aspect remains to be responded to and considered and that is, the trial Judge's remarks that, the Appellant's function was merely 'supervisory and regulatory'.
[80] Questioned by us on that matter, the 1st Respondent's counsel submitted in effect that, the use of that remark was redundant.
[81] Indeed, it must be regarded to be so for the primary duty to take care against damage being caused to the 1st Respondent's building was that of the 2nd Respondent.
[82] It was a secondary duty of care that stood visited upon the Appellant in ensuring that such damage would not be caused.
[83] It is from that perspective that, the trial Judge's reasoning in apportioning liability in the proportion 80% (on the 2nd Respondent – builder) and 20% on the Appellant must be viewed.
[84] If, at all, it is that percentage apportionment of liability that the 2nd Respondent could have complained about, which the learned Counsel for the 2nd Respondent, though making an oblique attempt to pursue, abandoned when that court informed her that, that matter had been laid to rest in an earlier ruling given by the President of this Court (vide: order dated 5th February).
[85] In the result, the said apportionment of liability decreed by the learned High Court Judge remains intact and will not be disturbed.
[86] Consequently, the fourth question I have formulated in this appeal for determination also stands answered.
Re: Applicability of Judicial precedents and policy considerations in imposing liability on the Appellant in a private action.
[87] This is a point learned Counsel for the Appellant stressed. The thrust of his argument was that even if there was a breach of a statutory duty the 1st Respondent had no cause of action to have sued the Appellant in a private action in as much as neither the Local Government Act (Cap 125, Vol. VII) nor the Public Health Act (Cap 111 Vol. VI) indicate that a member of the public could be compensated.
[88] Consequently, he argued that, the 1st Respondent could not have been entitled to any monetary damages which were awarded to it.
[89] For his contention counsel relied on several precedents.
[90] We have examined these precedents and proceed to comments on them as follows.
[91] East Suffolk Rivers Catchment Board v Llent; [1940] UKHL 3; [1940] 4 All ER 527, was concerned with an unsuccessful attempt on the part of the relevant statutory authority to counteract damage done by flooding.
[92] Clearly there was no antecedent positive act by the said authority. The initial flooding was a case of Vis Major.
[93] In the instant case, not only had the Appellant approved building plans on inadequate information provided by the 2nd Respondent builder but also had lifted a stop work order which itself had earlier imposed. The causal nexus between the damage suffered by the 1st Respondent and the Appellant's said acts thus stood established.
[94] No doubt, the primary duty was on the 2nd Respondent not to injure its neighbour's property, the 1st Respondent. That is why the learned trial judge apportioned liability accordingly.
[95] The next case relied on by learned Counsel was that of Stovin v Wise [1996] UKHL 15; [1996] 3 All ER 801. That was a case of the highway authority being sued for failing to exercise its statutory power to remove an earth bank from the side of the road which had obstructed the plaintiff's view of the side road from which the defendant had emerged eventually injuring the plaintiff.
[96] I can do no better than adopting the words of Lord Hutton in Barrett v Enfield London Borough Council [1999] UKHL 25; [1999] 3 All ER 193 in distinguishing Stovin's Case wherein it was observed by His Lordship that, "Stovin's case was concerned solely with the omission by a highway authority to perform a statutory power, whereas in the instant case the allegation of negligence relates to the manner in which the local authority exercised its statutory duty and powers." (at page 225C; Supra, per Lord Hutton)
[97] In other words, in the instant case, unlike in Stovin's case (supra), the allegation of negligence against the Appellant relates to the manner in which the local authority exercised its statutory duty and powers, inter alia, in approving the 2nd Respondent's building plans on inadequate information and lifting the stop work order.
[98] To put it in another way, here, the Appellant's conduct was constituted by both an antecedent act of commission (in approving the said plans) and subsequent omissions.
[99] Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15; [2004] 2 All ER 326, was a case of a highway authority being sued for failing to exercise a discretion to put a slow sign on the crest of a road to warn motorists of prospective risks. There the authority was under no duty to do so. It was a "benefit" it had a discretion to bestow.
[100] Here, the Appellant, having given permission to build was under a duty to ensure that, the 2nd Respondent complies with the conditions attached to the building permit in question.
[101] It is that failure that contributed to the damage caused to the 1st Respondent's building.
[102] Counsel relied heavily on Murphy v Brentwood D. C. [1990] 2 All ER 908.
[103] That was a case where the plaintiff had purchased from a construction company one of a pair of semi-detached houses newly constructed on an in-filled site on a concrete raft foundation to prevent damage from settlement. The plans, calculations and the ensuing design were approved by the local council under the relevant building regulations and by-laws. Subsequently, the plaintiff noticed serious cracks in his house and discovered that the raft foundation was defective and the differential settlement beneath it had caused it to distort. Later the plaintiff sold the house subject to the defects for a sum less than its market value. The plaintiff filed action against the council claiming it was negligent in approving the plans and alleging that he and his family had suffered an imminent risk to health and safety.
[104] The trial judge found as a fact that, the plaintiff had been exposed to an imminent risk to health and safety and held that the council was liable and awarded damages being the loss on the sale of the house and expenses.
[105] On appeal, the Court of Appeal, in dismissing the appeal held that, the council owed a duty of care to the plaintiff to see that the house was properly built so that injury to the safety and health of those who lived in it was avoided and that it was in breach of that duty when it approved plans for a defective raft foundation.
[106] At the outset, it must be noted that, although imminent injury to safety and health was referred to by both the trial judge and the Court of Appeal, the damages awarded by the trial judge which was affirmed by the Court of Appeal was in respect of the loss on the sale of the house by the plaintiff and expenses.
[107] Thus, it was an award of damages for the pure economic loss that did not flow from any fiduciary duty (Vide: Nocton v Asburton [1914] UKLawRpAC 31; [1914] AC 932), a contractual duty (Derry v Peek [1889] 14 AC 337) or from a duty arising from a special relationship (Hedley Byrne & Co. Ltd v Heller & Partners Ltd [1963] UKHL 4; [1964] AC 465.
[108] The House of Lords in reversing the Court of Appeal judgment held that,
"When carrying out its statutory functions of exercising control over building operations a local authority was not liable in negligence to a building owner or occupier for the cost of remedying a dangerous defect in the building which resulted from the negligent failure of the authority to ensure that the building was designed or erected in conformity with the applicable standards prescribed by the building regulations or bylaws but which became apparent before the defect caused physical injury, because the damage suffered by the building owner or occupier in such circumstances was not material or physical damage but the purely economic loss of the expenditure incurred either in remedying the structural defect to avert the danger or of abandoning the property as unfit for habitation, and, since a dangerous defect once known became merely a defect in quality, to permit the building owner or occupier to recover his economic loss would logically lead to an unacceptable wide category of claims in respect of buildings or chattels which were defective in quality, and would in effect introduce product liability and transmissible warranties of quality into the law of tort by means of judicial legislation. The council accordingly had owed no duty of care to the plaintiff when it approved the plans for a defective raft foundation for the plaintiff's house."
[109] What then was the ratio in that decision?
[110] That is, that, a claim for damages based on the negligent failure of the authority to ensure that the building was designed or erected in conformity with the applicable building regulations or by-laws cannot succeed where it is in respect of a defect that had pre-existed and the claim itself being not for physical damage but for pure economic loss of the expenditure incurred either in remedying the structural defect to avert the danger or of abandoning the property as unfit for habitation.
[111] In contrast, in the instant case, we are concerned with a situation where the Appellant had approved building plans on inadequate information furnished to it by the 2nd Respondent in respect of a proposed new building which inter alia in the course of construction had caused direct physical damage to the 1st Respondent's building taken in conjunction with the failure on the Appellant's part to insist on compliance with the requirement of underpinning and other aspects which we have referred to earlier.
[112] Thus, to regard the loss suffered by the 1st Respondent as pure economic loss would defy logical reasoning.
[113] Consequently, the Murphy decision, in my view, stands distinguished from the facts and circumstances of the instant case.
[114] Learned Counsel has also invited us to consider the case of Land Transport Authority v Ravind Millan Lal & Others, a Supreme Court decision of Fiji, wherein it was laid down that, whether a statutory duty gives rise to a private cause of action is a question of construction of the statute (in question) to decide whether it intended a right for compensation for breach. (Vide: SC – Civil Appeal No. CBV 0019 of 2008 at page 17).
[115] In that ruling Stovin v Wise (supra) had been referred to.
[116] We have already referred to Stovin's Case and given our reason as to why it stands distinguished from the facts and circumstances of the instant case.
[117] The statutory regime impacting on the instant case flows from the Public Health Act (Cap 111.Vol.VI) Towns (Buildings Regulations) including the 2nd Schedule thereto of which the trial Judge took cognizance (at pages 5 – 6 of the Judgment) and consequently from Conditions 12 and 14 to 16 which the Appellant itself attached to the building permit it granted to the 2nd Respondent in pursuance of its powers.
[118] Thus, I hold that, the case of Ravind Millan Lal & Others (supra) and an earlier Supreme Court decision to which it referred do not support the Appellant's contention.
[119] Counsel referred to another House of Lords ruling in X and Others (minors) v Bedfordshire County Council [1995] 3 All ER 353.
[120] Basing his contention on that decision he argued that in order for compensation for an alleged breach of a statutory duty to be paid, the particular statute under which the duty arises must provide for the same. His argument was that, since the Local Government Act (Cap.125) or the Public Health Act (Cap.111) do not make such provision, the damages which the High Court had ordered were not recoverable. Counsel however, acknowledged that there was a statutory duty on the Appellant.
[121] I agree that neither the Local Government Act nor the Public Health Act contain provision recognizing a private law action for a breach of any duty.
[122] However, that cannot be conclusive of the matter.
[123] The moment the Appellant imposed the conditions attached to the building permit on the Appellant in pursuance of building regulations, its statutory duty to take care arose. It was in breach of that duty when it failed and neglected to ensure and take timely action to see that the 2nd Respondent (the builder) complied with those conditions.
[124] That duty of care arose not only from the issuance of the building permit under its powers under the building regulations but also from the common law.
[125] This proposition was acknowledged in Bedfordshire C. C (supra) itself. It was said that:
"The mere assertion of the careless exercise of a statutory power or duty was not sufficient in itself to give rise to a private law cause of action. The plaintiff also had to show that the circumstances were such as to raise a duty of care at common law.
In determining whether such a duty of care was owed by a public authority, the manner in which a statutory discretion was or was not exercised (i.e the decision whether or not to exercise the discretion) had to be distinguished from the manner in which the statutory duty was implemented in practice. Since it was for the authority, not for the courts, to exercise a statutory discretion conferred on it by Parliament, nothing the authority did within the ambit of the discretion could be actionable at common law, but if the decision was so unreasonable that it fell outside the ambit of the discretion conferred on the authority that could give rise to common law liability. Furthermore, there was no common law duty of care in relation to the taking of decisions involving policy matters, since the courts could not adjudicate on such policy matters and therefore could not reach the conclusion that the decision was outside the ambit of the statutory discretion. Accordingly, a claim alleging negligence in the exercise of a statutory discretion involving policy considerations would pro tanto fail as being non-justiciable. If, however, the claim was justiciable then the ordinary principles of negligence, that is whether the damage was reasonably foreseeable, whether there was proximity of relationship between the parties and whether it was fair, just and reasonable to impose a duty of care, applied. In particular, the requirement that it had to be just and reasonable to impose a common law duty of care in all the circumstances before liability in negligence would be imposed applied not only where the plaintiffs was for pure economic loss but also where the claim was for physical damage." (see: Head note at pages 355 – 356, supra)
[126] The facts and circumstance of the instant case may be viewed in the light of the propositions emanating in that decision.
How does such a duty of care arise?
[127] Their Lordships held that, it is in "the manner in which a statutory discretion was or was not exercised" (ie. The decision whether or not to exercise the discretion).
[128] As already noted, the power to issue building permits being the power the Appellant was vested with and it having exercised that power, could it be said that, it had discretion to wash its hands off the matter thereafter?
[129] It failed and neglected to ensure that the conditions of the building permit were adhered to.
[130] Thus, at that point the Appellant failed in its duty of care in the manner in which it exercised its power and discretion.
Implementation of Statutory Duty
[131] Not only was the Appellant initially negligent in having approved the 2nd Respondent's building plans based on inadequate information but also as noted earlier, it lifted its stop work order as well without even consulting the 1st Respondent and given it a hearing.
[132] Thus, the Appellant failed in the implementation of its statutory duty.
Exercise of a Statutory Discretion and a Duty Arising Out of a Power (or Discretion which power implies)
[133] I have no quarrel with the proposition that the exercise of a statutory discretion falls within the province of the statutory authority concerned and not the courts.
[134] However, statutory discretion must be contradistinguished from a duty flowing from the exercise of a power.
[135] Once the Appellant exercised its power and discretion in granting a building permit to the 2nd Respondent there arose a duty to ensure compliance with the conditions attached thereto. There was no discretion left at that point of time. Its acts and subsequent inaction fell outside the ambit of discretion.
[136] It will be noted therefore that, it is like a case where an authority is vested with power to build a road or construct a stadium for which parliament will allocate limited resources.
[137] It will have discretion to exercise that power in whatever manner and whenever it may choose to do, as long as the public interest is not offended.
[138] Child Care Services and Education Services under their respective Acts would fall into this category.
[139] But here we are faced with a different situation where the appellant's acts and omissions fell outside the ambit of any discretion but constituted a breach of its duty of care to the 1st Respondent.
Matters involving Policy Considerations – No Common Law Duty?
[140] This is another factor that weighed with the House of Lords, when the Law Lords held that, "there was no common law duty of care in relation to the taking of decisions involving policy matters".
[141] Unlike in the case of socio-economic legislation such as what the House was concerned with in the Bedfordshire Case (supra), where policy considerations may have been a cogent factor, in the instant case what factors could have been regarded as warranting consideration?
[142] Could it be said that, it was its policy to adapt a "hands off policy" and turn a blind eye to the fact that, the 2nd Respondent was acting contrary to the building conditions?
[143] Furthermore, despite the damage caused to the 1st Respondent's building by the 2nd Respondent could the Appellant be heard to say that, it did not have the financial resources to investigate and take steps to ensure compliance with the building conditions and adapt the stand that "loss must lie where it falls?"
[144] I am unable to subscribe to such a stand.
[145] The Appellant's acts and omissions fell outside the ambit of statutory discretion and acceptable policy considerations in its wake for a common law duty of care which it breached the consequences for which it became liable in damages to the 1st Respondent.
[146] I am also of the view that, consequently and in the light of the propositions expounded in the Bedfordshire Case (supra) itself, the same goes against the Appellant rather than supports it.
Ann's and Suruj Lal's Cases vis a vis Murphy's Case etc:
[147] Learned counsel for the appellant found fault with the trial judge for finding favour with the House of Lords decision in Anne's and others v London Borough of Merton [1977] UKHL 4; [1977] 2 All ER 492 and the Privy Council decision in the New Zealand case of Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) and reliance placed on the Fiji Court of Appeal in Suruj Lal v Joseph Michael Chand [1983] 29 FLR 71.
[148] It is true that a fuller bench of the House of Lords in England in Murphy v Brentwood D.C (supra) overruled Anne's Case.(supra)
[149] We have earlier touched on the tests resorted to in Anne's Case (supra) along with the New Zealand Court's approach in Hamlin's Case (supra) and compared and contrasted them with the approach in Murphy's Case (supra). I have explained the view that whatever test that may have been applied, in the facts and circumstances of the present case how they stand distinguished.
[150] The question is whether the Appellate Courts of Fiji are bound by a decision of another jurisdiction however high that court might be? Surely not, although such decisions may carry persuasive value.
[151] The learned High Court Judge has been persuaded by the approach in Anne's Case(supra) and the Hamlin Case(supra) observing as he did that, those approaches are more in line with the conditions of Fijian society.
[152] The Court of Appeal in Fiji as well, in Suruj Lal's Case (supra) has followed Anne's Case. (supra)
[153] Although Suruj Lal's Case was a decision handed down in the year 1983, presently it stands as precedent.
[154] Thus, viewing those factors from the standpoint of the doctrine of stare decisis, the only binding decision on the trial judge was the decision of this court which followed Anne's Case in Suruj Lal's Case.
[155] Whether the approach in Anne's Case has been departed from or not followed in other jurisdictions is not and cannot be a material factor.
[156] As for our part in this case, I am inclined to re-iterate and agree with the approach adapted in Anne's Case, followed in Suruj Lal thus forming a cursus curiae in favour of Anne's Case.
[157] Before parting with this part of my judgment I feel obliged to respond to another English House of Lords decision learned counsel for the Appellant relied on in support of his contention in regard to the scope of a statutory authority's liability in negligence viz: the case of Hill v Chief Constable of West Yorkshire [1987] UKHL 12; [1988] 2 All ER 238.
[158] That was a case in which it was held (per the head note) that:
"In the absence of any special characteristic or ingredient over and above reasonable foreseeability of likely harm which would establish proximity of relationship between the victim of a crime and the police, the police did not owe a general duty of care to the individual members of the public to identify and apprehend an unknown criminal, even though it was reasonably foreseeable that harm was likely to be caused to a member of the public if the criminal was not detected and apprehended. Furthermore, even if such a duty did exist public policy required that the police should not be able in such circumstances. It followed that the Chief Constable could not be liable in damages for negligence because of failure of the police to detect S before he murdered the appellant's daughter."
[160] I see no analogy with the situation that arose in that case with the instant case.
[161] I also looked at the criteria laid down in Caparo Industries v Dickman [1990] UKHL 2; [1990] 1 All ER 568 at 573-574 and conclude that foreseability of loss, relationship of proximity and fairness and reasonableness to impose a duty of care in the circumstances are satisfied in this case.
[162] The Appellant ought to have reasonably foreseen that, if it was negligent in allowing the 2nd Respondent to continue to build despite the 1st Respondent informing on the possible risk of harm to its building that loss would result; there was relationship of proximity between the Appellant (as a statutory authority who had power to grant building permission to a builder) and the 1st Respondent (as an adjacent property owner) to whom as a member of the public, the Appellant owed a duty to ensure that the builder carried out its works in compliance with the building conditions that had been imposed and therefore, it was fair and reasonable to fix liability on the Appellant for failure to ensure such compliance.
[163] I therefore, conclude, on the basis of what has been expressed above that, in the circumstances and the law in respect of a statutory authority owing a duty of care in common law to a property owner who suffers damage in breach thereof, the property owner is entitled to claim and recover such damage in monetary terms.
[164] I venture to add that I see nothing erroneous in the learned High Court Judge's approach in deciding the matter against the Appellant on the factual aspect of negligence as well as on the applicable law having regard to the principles of stare decisis as well.
[165] Finally for the purpose of determining this appeal, I address the following issues that have been raised on behalf of the Appellant:
(a) Whether the 1st Respondent could have been regarded as blameworthy for contributory negligence.
(b) Whether the 1st Respondent ought to have sought an injunction against the 2nd Respondent (the negligent builder) without which would have at least brought down the quantum of damages decreed by the High Court against it.
(c) Whether, in any event, the plaintiff (the 1st Respondent) could have recovered loss in monetary terms for the loss of rental on accounts of the tenants occupying its building vacating the damages.
[166] I proceed to deal with those issues as follows:
Plea based on contributory Negligence
[167] The Appellant's contention was based on the premise that, the poor pre - existing condition of the 1st Respondent's own building (its poor design, excessively high bearing pressures on its footings, flooding of water in the foundations and its subsequent drawing away) had (led or) contributed to the damage it suffered.
[168] To succeed in the defense of contributory negligence, a defendant must prove that the plaintiff did not in his own interest take reasonable care of himself and contributed, by his own want of care, to his own injury. (Vide: Nance –v- British Columbia Electric Railway Co. Ltd. [1951] AC 601 at 611 per Viscount Simon (PC) and cf: Jones v Livox Quarries Ltd.[1952] EWCA Civ 2; [1952] 2 QB 608 at 615 per Denning L.J.
[169] The two part building of the 1st Respondent (1962 and 1982 respectively) had withstood the test of time for more than 30 years and 10 years respectively) until the 2nd respondent commenced its building works.
[170] The 1st Respondent also wrote to the Appellant bringing to its notice the possible risk of harm to its building on account of the 2nd Respondent's building works. Thus the 1st Respondent had exercised the standard of care expected of a prudent person even in that regard and to that extent. (see: Sungravure Pty Ltd. v Meani [1964] HCA 16; (1964) 110 CLR 24 at 36 -37 per Windeyer J.)
[171] More over even assuming that, the 1st Respondent's pre existing building had defects, it is the Appellant as the building approving authority which must bear responsibility for that as well.
[172] The Appellant cannot after a long lapse of years, like Rip Van Winkle waking up from his slumber take refuge in that. Indeed, the Appellant would be estopped by its own conduct in fact and in law from raising a plea of contributory negligence.
[173] Accordingly, I agree with the learned trial judge's finding that there was no contributory negligence on the 1st Respondent's part in the condition of its building.
[174] Although counsel referred to this aspect only in passing I felt obliged to address that aspect as well even briefly.
The 1st Respondent not seeking an Injunction in the First instance
[175] This point (though taken up at the trial) was not urged in appeal either in the oral submissions or in the written submissions of the appellant.
[176] However I note that the learned trial judge has given cogent reasons for holding that the plaintiff was not under any sensible obligation to obtain an injunction. Damages were clearly the correct remedy. (see paragraphs 123 to 128 of the High Court Judgment).
[177] There is an added reason for that as well in that the plaintiff has clearly quantified its damages in its 2nd statement of claim.
[178] In such a situation, it is established law that a court would not grant an injunction.
Could the plaintiff (1st Respondent) have recovered loss resulting from loss of rental?
[179] Appellant counsel's focus was on the broad defence of non liability of the appellant in law which I have dealt with earlier, in all its aspects. Loss of rental therefore was not touched specifically by learned Counsel. His argument was that the entire damages claim was a claim for pure economic loss and therefore was not recoverable.
[180] Learned Counsel for the 1st Respondent addressing the issue specifically submitted inter alia that, not only the loss resulting from damage to its building but the 1st Respondent was entitled to the rental loss as well for it was consequential to the physical damage and it was not "pure economic loss".
[181] In that context we were referred to the English decision in Wilson v Dagnall [1972] 1 QB 509 at 515 which I found to be of no assistance.
[182] The general principle regarding Consequential loss is that, a defendant who, by a negligent act or omission, causes damage to a plaintiff's property is liable not only for the cost of repairing or restoring that property, but also for the further financial harm which is a direct consequence of the damage to the property.
[183] It is established evidence in the case that, several tenants vacated the 1st Respondent's building after it suffered damage. It had become uninhabitable.
[184] What then are the principles applicable to "Financial harm which is a direct consequence"?
[185] That, the 1st Respondent had a proprietary interest in the damaged building is not in dispute thus making applicable the general principle.
[186] In SCM (UK) Ltd. v W.J. Whittall and Son Ltd. [1971] 1 QB 337 it was held that if a contractor who had negligently severed an electricity cable, gas main and water pipe which served a number of factories, that contractor will be liable both for the value of the material rendered useless by that disruption and for the profits which the plaintiff expected, but is no longer able to make on selling that material.
[187] So too, a manufacturer whose pumps proved to be defective was held liable to the owner of a lobster farm, when the defect caused most of the lobsters to die, for the value of that stock and the profits expected to be made on its sale. (vide: Muirhead v Industrial Tank Specialities Ltd. And Ors [1985] EWCA Civ 16; [1986] QB 507.
[188] Here there was a direct causal nexus between the damage caused due to the Appellant's negligence in failing in the discharge of its duty by the 1st Respondent and the loss of rental income to the 1st Respondent when the tenants vacated.
[189] Accordingly, I have no difficulty in affirming the trial judge's award of loss of rental income to the 1st Respondent as financial harm which is a direct consequence of the damage to the property.
Costs of Expert Reports and Photocopies
[190] The trial judge has awarded a sum of $60, 919.68 as cost of expert reports and a sum of $520.25 as cost of photocopies.
[191] Was the cost of procuring expert reports in proving its case against the Appellant and the 2nd Respondent recoverable? If so, under which head of special damages?
[192] The causal link between damage to property and consequential loss within the four corners of the general principle was expounded earlier. That does not deem to be present here. The criteria used by the learned trial judge themselves such as diminution of value of the property and reinstatement value do not in our view encompass expenses incurred in procuring expert evidence and reports in proving a case. The "loss" if it is to be called so would if at all fall into the category of "pure economic loss".
[193] The same would apply to cost of photocopies.
[194] They were expenses and are subsumed in the award described by the learned trial judge under the head costs and were in the nature of incurred costs in the action.
[195] Although Appellant's Counsel did not address on this aspect as a specific ground of appeal, given the fact that his contention was that the Appellant was neither negligent nor therefore was liable to meet any monetary claim based on a duty of care, statutory or flowing under the common law, it is an aspect that encompasses the award.
[196] Accordingly, we strike off that part of the award made by the trial judge.
[197] Subject to that variation we dismiss this appeal and affirm the judgment of the trial judge.
What sum is the 1st Respondent entitled to recover?
[198] This is the final matter we have to determine in this appeal.
[199] Learned Counsel for the 1st Respondent submitted that the 1st Respondent is entitled to recover the sums awarded by the trial Judge together with interest until the conclusion of this appeal should this appeal be dismissed.
[200] Since we have determined that the appeal should be dismissed (subject to the afore mentioned variation) this is an aspect we are obliged to address.
[201] Consequent upon the judgment of the trial judge, a stay of execution of the same had been granted at the instance of the appellant. Thus, the 1st Respondent was deprived of the fruits of its victory. That was in December, 2007 and we are now in the year 2014.
[202] It would be a travesty of justice if the sum recoverable by the 1st Respondent stands at the date of the judgment of the High Court.
[203] Consequently, we decree that, (subject to the aforementioned variation) the 1st Respondent is entitled to recover the sums awarded by the trial Judge together with the rates of interest given in his Judgment up to the date of this judgment.
Conclusion
[204] For the reasons given in our judgment we dismiss the appeal and affirm the judgment of the learned trial judge subject to the variation as indicated above and the adjustments that would follow in consequence thereof.
[205] We place on record the valuable assistance rendered to us by all Counsel for their submissions and citations. We ourselves have had to do our own research given the vexed issue that came up for determination before us in regard to the nature, scope and content of a statutory authority's liability on the law pertaining to its duty of care arising from statute as well as under the common law.
The Orders of the Court are:
Hon. Justice W. Calanchini
President, Court of Appeal
Hon. Justice E. L. Basnayake
Justice of Appeal
Hon. Justice Almeida Guneratne
Justice of Appeal
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