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Editors --- "Johnson v Department of Community Services - Case Summary" [2000] AUIndigLawRpr 30; (2000) 5(4) Australian Indigenous Law Reporter 49

Court and Tribunal Decisions - Australia

Johnson v Department of Community Services

Supreme Court of New South Wales (Rolfe J)

2 December 1999

[1999] NSW SC 1156

Aboriginal ward of the state — Crown breach of common law duty — Crown breach of statutory duty — Crown breach of fiduciary duty — exercise of discretion in extending time under Limitation Act — ss 58, 60G, 60I Limitation Act.

Facts:

Johnson, the appellant, is an Aboriginal man who was made a ward of the State as an infant. He sought to bring proceedings against the New South Wales Department of Community Services alleging common law negligence, and breach of statutory and fiduciary duties.

The appellant pleaded that these breaches caused him to suffer, and he continues to suffer from, the psychiatric illnesses of chronic depression, acute anxiety and post-traumatic stress disorder. He also pleaded that he was exposed to physical ill treatment, especially in a foster home, and to sexual abuse at state run institutions. He pleaded that this caused him to be predisposed to violence, which contributed to his commission of and imprisonment for various violent offences.

At first instance, the Master found that the actions were brought outside of the statutory limitation period and Johnson’s application for an extension of time failed because he had not established the requirements of ss 58(2), 60G and 60I of the Limitation Act 1969 (NSW). However, the Master found that Johnson had satisfied the just and reasonable requirements for an extension of the time.

Held:

1. The Master was in error in finding that there was an absence of evidence in the application of the relevant provisions for an extension of time and therefore the appeal be allowed.

2. The Master was correct in finding that the appellant had pleaded justiciable causes of action, sufficient to make it just and reasonable for the proceedings to go forward.

3. The respondent may owe the appellant a fiduciary duty at common law or under statute.

4. The same facts are said to give rise, essentially, to each cause of action. As a breach of fiduciary duty does not require an extension of time, it is difficult to see what prejudice could apply to the hearing of the other causes of action: Williams v Minister, Aboriginal Land Rights Act 1983 and Anor (1994) 35 NSWLR 497 (Williams (No 1)).

5. The evidence of Dr Gertler provided the necessary causal link to establish any breach of duty by the respondents and the appellant’s present condition.

Rolfe J:

...

Does the Applicant Have a Case?

82. ... It has been made clear in many cases that decisions on difficult and developing questions of law should await findings of fact.

83. Against this background I shall consider the type of case, which an applicant must make out to obtain an extension of time. This was considered by the Court of Appeal in Williams (No 1). Studdert J, at first instance, refused the application under the Limitation Act 1969 to extend the time. The Court of Appeal, by majority, Kirby P and Priestley JA, Powell JA dissenting, allowed the appeal.

84. At p 508 Kirby P considered a submission that Studdert J had overstated the extent to which Ms Williams had to establish a cause of action to secure the extension sought. His Honour had referred to a ‘requirement’ for her to establish an available cause of action, and that ‘it must now appear that the evidence to establish her cause of action exists’. Kirby P observed that it was submitted that this involved a mis-statement of law, which vitiated the order under appeal. His Honour continued:

To the extent that it was submitted that the need to establish a viable cause of action was irrelevant to the discretion invoked (for example, by reason of the terms of s 60G by contrast to the former provisions of s 58(2)(b) of the Limitation Act 1969), I would reject this assertion. It is contrary to the authority of this Court: see James Hardie & Co Pty Limited v Wootton [1990] NSWDDT 9 (22 November 1990); [1990] NSWDDT 9; (1990) 6 NSWCCR 302. By the same token, it is obviously unnecessary for a claimant to establish a case in the detail that would be required at the trial. The reason for this was sufficiently explained by Hunt J in analogous circumstances in Martin v Abbott Australasia Pty Limited [1981] 2 NSWLR 430 at 437. The alteration of the legislation has not removed the need to demonstrate, in an appropriately preliminary way, the apparent viability of the action and, thus, the utility of providing the extension of time sought. To permit an obviously hopeless case to proceed would be to condone the harassment of a defendant otherwise protected by a time bar. That could not be a proper exercise of the judicial discretion afforded by parliament. It would condone the unreasonable and be far from just: cf Briggs v James Hardie & Co Pty Limited (1989) 16 NSWLR 549 at 564. I see nothing in the remarks of Studdert J which indicate that his Honour was imposing an excessively onerous test or approaching the criterion in other than the correct preliminary (and necessarily tentative) way. Only if there is evidence which, in the preliminary hearing initiated by the motion for extension, shows that it is just and reasonable to allow the action to be brought, will the order of extension be granted. I do not consider that Studdert J asked himself the wrong question. Nor do I believe that it was unreasonable to take closely into account the concern which ultimately decided the matter for his Honour, namely the prejudicial effect upon the respondents of the lapse of time which Ms Williams sought to cure by the extension claimed.

85. Priestley JA, at pp 515-516, after stating that he broadly agreed with the reasons of Kirby P, continued:

Some of the issues Mrs Williams seeks to raise in her proceedings are, in my opinion, important. The respondents contend these issues cannot or should not now be explored in the Courts. Whether either form of that contention should be accepted is itself an important question.

To enable a properly satisfactory and fully explored answer to be given to that question and the preliminary ones Mrs Williams wishes to raise, it seems to me desirable that Mrs Williams have the opportunity of putting all relevant evidence before the Court at a trial, rather than that the matters of significance which this case raises should be dealt with on the incomplete state of the evidence at present before the Court.

These considerations have influenced my general agreement with the approach of Kirby P. That approach involves conclusions, favourable to Mrs Williams, about the arguability of a number of issues. I have reached some of these conclusions only with hesitation and I recognise they may be vulnerable to a strict approach. However, this case seems to me pre-eminently to be of the kind where a broad approach should be taken to questions of arguability of legal propositions which may be novel but which require careful consideration in the light of changing social circumstances.

86. There was no suggestion in either judgment that the ‘strike out’ test should be applied, but rather, as the President said, that it should be established that a cause of action existed in the sense of an apparently viable cause of action, such that there is utility in providing the extension of time sought.

87. The question of the type of case to be established was considered by the Court of Appeal in Commonwealth of Australia v McLean (1997) 41 NSWLR 389. At p 395, Handley and Beazley JJA said:

The Judge carefully reviewed all the relevant authorities, and we entirely agree with his analysis. In particular we agree that the references in Harris v Commercial Minerals Limited [1996] HCA 49; (1996) 186 CLR 1 at 8 to the onus of proof of certain matters borne by an applicant are not authority for the proposition that those matters must be proved as facts on an application for an extension. No such issue was before the High Court in that case, and the references are merely descriptive.

Section 60G and s 60I are clearly intended to operate together. The requirement in s 60I that the Court be satisfied of various matters must be read as requiring no higher proof from an applicant on matters which form part of the cause of action than is required by s 60G(2). When these provisions are read together, it becomes clear, as the Judge held, that s 60I requires the Court to be satisfied that the applicant was not aware of the matters referred to, but does not require proof of those matters as facts.

If an applicant had to satisfy the Court of the existence of ingredients of his or her cause of action, s 60I would not only impose requirements which were inconsistent with s 60G(2) but it would have increased the burden of proof on an applicant above the level previously required by s 58(2). It is clear from s 60G(2) that this was not the intention of parliament.

We also endorse the Judge’s interlocutory ruling disallowing cross-examination of the applicant’s expert. An application for extension is not a trial, or a dress rehearsal for the trial. The Court is concerned with whether there are serious questions to be tried, and once this threshold is established on the relevant issues, cross-examination or further cross-examination on those issues can serve no useful purpose. We respectfully adopt the Judge’s reasons on these matters. These grounds of appeal have not been established. [My emphasis.]

88. In the present case it was not in issue that the appellant was made a ward of the State and came under the authority of the respondents; and that the respondents, pursuant to the authority vested in them, placed him in foster care with people of their choosing. There was evidence that the appellant suffered severe chastisement and floggings at the hands of his foster parents, and at least one sexual assault subsequently. There was also evidence of a neighbour’s complaint to the respondents that the appellant was being mistreated and subjected to racial discrimination at the hands of the foster parents. That provided a substantial factual starting point for the cause of action. The evidence of Dr Gertler established, sufficiently for present purposes, that being subjected to that conduct led to the appellant’s suffering a psychiatric illness which, if established, would be appropriately compensable. Mr McCarthy did submit that it would be very difficult to prove damages. At the level at which I am presently considering the case, I do not see why, if tortious conduct causes a person to develop a psychiatric illness, that person, at least prima facie, is not entitled to recover damages in consequence thereof.

89. In these circumstances I am satisfied that the appellant has established the type of case to which Kirby P and Handley and Beazley JJA were referring. The question which then arises, having regard to my earlier conclusions, is why he should not be allowed to pursue it. The answer to that question, so Mr McCarthy submitted, lies in the decision of Abadee J in Williams v The Minister, Aboriginal Land Rights Act 1983 & Anor [1999] NSWSC 843 (Williams (No 2)). As I have said his submission was that the facts of that case were so similar to the facts of the present, that I should merely apply his Honour’s legal conclusions, based on the facts he found, to the presumed and thus far established facts in the present case. I am not prepared to do that.

The Notice of Contention

90. In his written submissions Mr McCarthy ... dealt firstly with the common law duty of care and submitted that the first and second respondents are alleged, in these proceedings, to have obligations to the appellant ‘which on analogous facts have been rejected in Williams’. The submission continued that as in that case the relationship of the appellant and the respondents ‘is most aptly described as one of substitute care’ arising from the guardian/child relationship provided for in the Child Welfare Act 1939, pursuant to which the Minister became the substitute guardian of the appellant ‘in contrast to others, who from time to time had custody/care of the appellant, including the foster carers’.

91. The submission continued that the common law of Australia recognises that the relationship between parent and child is ‘a moral duty of imperfect obligation and not a relationship which creates duties, which if breached, sound in damages’. Reliance was placed upon the statement of Barwick CJ in Hahn v Conley [1971] HCA 56; (1971) 126 CLR 276 at pp 283-284 that:

... the moral duties of conscientious parenthood do not as such provide the child with any cause of action when they are not, or badly, performed or neglected ... There is no general duty of care in that respect imposed by the law upon a parent because of the blood relationship.

92. In his oral submissions, Mr McCarthy conceded that there were circumstances in which a parent could be sued for a tortious act causing injury to the child. He instanced the negligent driving of a motor vehicle by a parent in which the child was a passenger, and, more appositely for the present case, an assault by a parent on a child.

93. Mr McCarthy’s written submissions continued that the same policy reasoning, as informed the judgment of Barwick CJ in relation to the moral obligation for the upbringing of children, ‘should apply equally to substitute carers such as foster carers (who are not professionals trained in child care or management) and to other substitute carers provided by the respondents, whether the actual personnel are professionally trained or otherwise’. The written submissions continued that the appellant’s complaints related to ‘ordinary parental discretion, conduct and decision-making with respect to the upbringing of the appellant, and can be contrasted with the ward’s complaints in Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408, where the negligence was causative of Mr Bennett’s loss of a right of action’.

94. However, the present case is not one, as Williams (No 2) was, where there are no specific complaints about the way in which the appellant was treated. In Williams (No 2), at paragraph 25, Abadee J stated the nature of Ms Williams’ case thus:

As will be seen from the above, the case does not involve what might perhaps be described as a specific single identifiable act or omission occurring at a particular time and constituting, inter alia, negligence. No specific incident, happening or event in the history from 1942 to 1960 is relied upon as giving rise to the plaintiff’s claimed psychiatric or psychological conditions. Nor is there any identifiable single casual act of negligence alleged. The conduct (essentially ‘omission’ conduct) relied upon to constitute negligence is said to have generally been of an ongoing nature throughout the period referred to.

95. Mr McCarthy accepted that this set forth accurately the issues with which his Honour was concerned. It is immediately apparent that there is a significant difference from the present case. The appellant relies upon specific incidents of physical mistreatment, racial abuse and sexual assault in circumstances where, at one stage, a concerned neighbour saw fit to complain about the way in which he was being treated by his foster parents in their home.

96. It may be, at the end of the day, that the evidence does not support the allegations made by the appellant, or that the Court comes to the view that the facts established by the evidence fall within the category of conduct, which does not give rise to a breach of any duty of care. But it seems to me that until the facts are established one cannot characterise the matters as pleaded, and thus far established to the requisite degree, as necessarily, or perhaps at all, giving rise to a situation where there has been no breach of any common law duty of care.

97. Mr McCarthy’s submissions dealt, at some length, with matters of policy that might be affected by any finding of a duty of care and which were addressed in Williams (No 2), including financial consequences for child-caring bodies and the reduction in the provision of substitute care services. The submissions continued that ‘manifestly’ to impose duties on substitute carers, which are not imposed on natural carers, would have a detrimental effect on the supply of foster carers and the charities that currently supply them; on the availability of substitute care and like services; on the practicability of supervision of foster parents by the Minister; on the nature of foster care by demanding unrealistic standards of care of volunteers, who are fulfilling a community need; and on the foster carer/child relationship whereby the law would mandate favouritism for the foster child, rather than encouraging treatment in a like manner to the other children of the foster carer.

98. The submission continued that the imposition of such ‘legal’ duties on substitute carers would be unreasonable, given that the natural parents do not have any such ‘legal duties’, and would be counter-productive ‘as it would compromise the core value of fostering, which is to afford the ward the opportunity to benefit from being part of a family’.

99. These policy considerations may well be ones to which regard will have to be given, but it will be noted that they stem from the concept of a ‘moral’ rather than a ‘legal’ relationship. It was conceded by Mr McCarthy that a child cannot, in appropriate circumstances, be precluded from suing his or her parents. Accordingly, it seems to me that the foster parent cannot be placed in any better position, in that regard, to the natural parent.

100. It may also be argued, and in my respectful opinion there would be much force in this argument, that as a matter of policy children, who are basically unable to protect themselves and, therefore, find themselves subject to the control of the respondents, are entitled to expect that they will not be placed into foster care in circumstances where they are likely to be mistreated and, if they are, once again as a matter of policy, that the person with the ultimate control over the foster caring situation should be held to be negligent in failing to act in the child’s interests, if it comes to that person’s knowledge that the child is being mistreated and that person fails to act.

101. It also seems to me that these policy considerations, which no doubt flow to a large extent from the relevant legislation, have to be considered in the light of whether they are, in law, policy matters or operational matters: Pyrenees Shire Council v Day [1998] HCA 3; (1998) 192 CLR 330 and Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431. This area of the law does not, in my respectful opinion, seem to be finally settled, and certainly it is not resolved in circumstances where the facts are not established: Air Services Australia v Zarb (Court of Appeal, 26 August 1998, unreported). In refusing special leave to appeal to the High Court both Gleeson CJ and Hayne J referred, in argument, to the need to establish the facts before considering issues of law.

102. Mr McCarthy next submitted that in the light of the facts and circumstances of this case ‘it is not just and reasonable to recognise a “legal” duty of care owed by the respondents to the appellant’. The basis for this submission was that as in Williams (No 2), the appellant’s complaints about breaches of legal obligation by the first and second respondents have no appropriate analogy in existing law.

103. Abadee J commenced to consider remedies under the law at paragraph 95. He accepted that the Courts cannot provide a solution for every social problem, including problems arising from all human relationships including those of nurture and nature; that there is a distinction between the role of the Courts and the legislature; and that in determining the meaning of ‘reasonable’ in the statement of the common law duty of care, the Court cannot require perfection or the use of hindsight. So much, if I may say so with respect, is not in issue. His Honour continued, ‘The common law cannot provide a remedy for all life’s accidents, which are the fault of no person.’ He also observed, paragraph 101, that even if there is error, not every error is to be equated with a negligent error giving rise to an entitlement to recover damages. These propositions are not in doubt, but each day the Courts determine whether an accident is the fault of a person and, if it is, whether that fault constitutes a right in the person injured to recover damages.

104. The circumstances with which his Honour was dealing in Williams (No 2) are graphically illustrated in the concluding sentence of paragraph 101:

Even if there was error and I do not find any in the circumstances of this case, it would not in any event amount to negligent error, for reasons that will appear.

Once again, his Honour was pointing up the need to find the facts.

105. His Honour also drew heavily on an analogy between ‘bad parenting’ or ‘bad upbringing’ by natural parents, and the position of a substitute or a non-biological carer to provide maternal care ‘of the type that a natural mother could or might be expected to ordinarily provide ...’.

106. It seems to me, with respect to the careful submissions made by Mr McCarthy in this regard, that one cannot generalise to the extent which his submissions require me to do and, further, that Williams (No 2) does not provide any support for such generalisation. Each case will have to be decided after its particular facts are determined. It may well be that once the facts are determined the legal principles, which Abadee J applied, will apply to those found facts and deny a plaintiff, and perhaps the appellant in this case, the right to recover. However, one cannot simply assert that because there appears to be some commonality of facts in Williams (No 2) to the present case, that will lead inevitably to the same conclusion to which his Honour came.

107. Mr McCarthy’s written submissions continued that the relationship between the appellant and the respondents should not ‘in these circumstances give rise to a duty of care as alleged’. The reason advanced is that the reasonable foreseeability test must be subject to an ‘intelligible limit to keep the law of negligence within the bounds of commonsense and practicality’. Reference is made to the judgment of Gleeson CJ in Perre v Apand Pty Limited [1999] HCA 36; (1999) 73 ALJR 1190, to which Abadee J referred in paragraph 805. Whilst the full range of Perre will have to be worked out on a case by case basis, it does not immediately appear to me why, if the appellant is able to establish negligent conduct leading to his psychiatric condition, in the particular circumstances of the case he wishes to bring, the foreseeability test would preclude his recovery. It may or it may not. Whether it does or not will, once again, depend on the findings of fact.

108. Mr McCarthy’s submissions then turned to the statutory relationship under the Child Welfare Act. He referred to various sections of the Act and submitted that pursuant to them the Minister is the statutory guardian throughout the relevant period. The submission continued that the issue was what legal obligations the statute imposed on the guardian and what, if any, obligations did the common law then impose upon the Minister, and that s 23(1)(g) ‘appears’ to provide a discretion exclusive to the Minister and unconfined. The submission was that the appellant would require a modification of the statutory discretion to establish the duties alleged. He continued that the acts and conduct of the respondents relied on by the appellants were within the ambit of the respondents’ statutory discretion, and if exercised erroneously were only errors of judgment within the ambit of that discretion and were not negligent. This, so it seems to me, raises once again the issue of policy and operational provisions. These cannot be resolved without final factual findings.

109. The difficulties inherent in this area of the law were considered in Zarb. It must be remembered that that was a case involving an application to strike out originating process as failing to disclose a cause of action. Thus the principles in cases such as General Steels were applicable. None-the-less, the Court considered the various cases distinguishing between policy and operational considerations. I find it unnecessary to further encumber these reasons with references to the authorities on that point. Suffice to say that in this area of the law, it could not be said that there was not an available cause of action based on a perception of the meaning of the statute without an examination of the facts.

110. I am supported in this view by the decision in Cubillo v Commonwealth of Australia [1999] FCA 518; (1999) 163 ALR 395. The facts in that case were that the applicants were part Aboriginal persons who claimed that, as children, they were removed from their families and thereafter detained in institutions against their will until the ages of 18 and 16 years respectively. The Statement of Claim pleaded four causes of action against the Commonwealth for wrongful imprisonment, breaches of statutory duty, breaches of a general duty of care, and breaches of fiduciary duty. The Commonwealth sought orders that the Statement of Claim be struck out and the action dismissed.

111. Under the relevant legislation of the Northern Territory, the Director of Native Affairs was the legal guardian of every Aboriginal and one applicant alleged that her removal and detention was in breach of the duty owed to her by the Director as her guardian, including his conduct in delegating the roles and duties of guardian over her to institutions in which she was detained and failing to supervise the institutions properly or at all.

112. O’Loughlin J dismissed the interlocutory application not being satisfied that there was not a real question to be tried consistently with the General Steels test. Once again this was a case involving a strike out application. The headnote disclosed that his Honour was of the view that the various claims made by the Commonwealth as to the inadequacy of the originating process, which substantially match the claims made by the respondents in the present case, could not be determined until the facts had been found. He held that it would be premature to hold that the applicant had failed to make out a case in various regards, including the obligation to take care at common law and under the statute and in relation to fiduciary duty, until the facts were decided.

113. Mr McCarthy relied upon the first portion of a passage of his Honour’s judgment at p 426, where he said:

This Court has no jurisdiction to review the desirability of policies underlying acts of the parliament. It is therefore not open to the applicants to ask this Court to review the policies that were enacted in the Ordinances and embodied in the powers conferred by the Ordinances. Those provisions, being valid laws, bind this Court and bind the applicants. But, as I have said, I understand the applicants to be pursuing a different course; they seek to establish that there was an indiscriminate policy of removal and detention which was not authorised by statute. That particular argument, if successful, may, of course, take the case out of the realm of ‘breach of statutory duty’ altogether, leaving the applicants to rely on their remaining causes of action. But as to this, counsel for the Commonwealth acknowledged, during the course of argument, that the exercise of power under the Aboriginal Ordinance could miscarry if, for example, it was exercised for a malicious purpose or for an objective that was foreign to the mandates of the legislation.

However, in the whole passage his Honour made clear the necessity to look at the particular facts and, in these circumstances, he was of the view that it was premature to decide that point and, at p 427 paragraph 95, noted, with approval, that Studdert J in TC v New South Wales (1999) NSWSC 31:

... accepted the decision of the High Court in Pyrenees Shire Council v Day as general authority for the way in which a private right of action may arise from the terms of a statute and the claimant’s membership of a class which the statute is intended to protect.

114. Mr McCarthy relied upon the findings of Abadee J in relation to statutory duty. At paragraph 676, his Honour noted the argument on behalf of Ms Williams that the primary relevance of the provisions of the Child Welfare Act 1939 was that they imposed duties on the Board and concomitant powers to perform the duties, and that the statutory duties were exercised by the Board to create a relationship with the plaintiff, which attracted common law duties of care and fiduciary duties. His Honour said that no authority was quoted in support of the submission, although he referred to that portion of the judgment of Kirby J in Romeo at p 472. He continued that he was left with the impression that Ms Williams’ argument advanced in support of the reliance upon the statutory duty was not regarded by Senior Counsel appearing for her as being strong, it not having been pleaded in the original Statement of Claim, nor the subject of any ruling by Studdert J. Further it does not appear to have been raised in the Court of Appeal.

115. His Honour was of the view, paragraph 681, that there was no ‘actionable statutory duty at all’. He did not consider that the provisions upon which reliance were placed were intended to give a right of action in tort, and that they did not impose upon the defendants any special statutory duty or liability to the plaintiff enforceable by an action for damages independently of the ordinary principles of the common law of negligence, for which he placed reliance upon the decision of Deane J in Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at p 500.

116. In paragraph 683 his Honour observed that some of the recent authorities dealing with actions for breach of statutory duty were considered in Cubillo, noting that O’Loughlin J considered that prima facie the plaintiffs had private rights of action for breach of statutory duties available to them. However, his Honour was not persuaded that he should follow that line of reasoning and he referred to various other authorities, which, he considered, confirmed him in that view.

117. It will be immediately apparent that, although Abadee J and O’Loughlin J were considering the matter from somewhat different perspectives, ie Abadee J was looking at it from a trial point of view, whilst O’Loughlin J was concerned with a strike out application, there is a difference of view as to the scope and applicability of statutory duty, at least until the facts are found. I think, if I may say so with respect, that it is also important to have regard to the facts to determine whether the activities were based on policy or operational matters.

118. I also consider that it is appropriate to have regard to the statements of Studdert J in TC v State of New South Wales. In that case his Honour considered whether a separate right of action could arise under the statute, notwithstanding, as appears in paragraph 157, that it was not contended that the Child Welfare Act gave rise to a statutory cause of action. His Honour did so in the context of considering whether the defendant owed to the plaintiff a duty of care at common law by adopting the three stage approach employed by Kirby J in Pyrenees. In the course of his Honour’s comments on this aspect he noted that s 148B(5) of the Child Welfare Act had no real counterpart in the legislation considered by the House of Lords in X (Minors) v Bedfordshire County Council [1995] UKHL 9; [1995] 2 AC 633.

119. I have referred to the various authorities, although probably not in sufficient detail to do full justice to them. However, I believe that what I have said is sufficient to indicate that it could not be said, on the test applicable to determine whether there is a cause of action for present purposes, rather than what might be the higher test for determining whether a pleading should be struck out as failing to disclose a cause of action, that there is not an arguable case as to whether a statutory duty was owed and breached.

120. Next, Mr McCarthy submitted that the relationship of child and guardian did not give rise to a fiduciary obligation. He relied on the decision of the House of Lords in Henderson v Mevrett Syndicates [1995] AC 145 and Williams (No 2) at paragraph 740. He submitted that one first had to find the fiduciary obligations and then prove that such obligations were breached. His submission continued that if the basal relationship of parent/child does not give rise to fiduciary obligations then the derivative or substitute relationship between the respondents and the appellant should not entail any greater fiduciary obligation extending beyond that for which it is substituted by statute.

121. I am not satisfied that there cannot be a fiduciary relationship. In Secretary, Department of Health and Community Services v JWB and SMB (Marion’s case) [1992] HCA 15; (1992) 175 CLR 218 McHugh J said, at p 317:

The powers which the parent exercises on behalf of the child are exercised in the course of a fiduciary relationship. At all events, the role of the parent, when acting for the benefit of his or her child, and the role of a fiduciary are sufficiently similar to make at least some of the principles concerning fiduciaries applicable to the parent-child relationship.

122. In Williams (No 1), Kirby P considered the existence of a fiduciary relationship at length. His Honour was of the view that certain Canadian authorities should be followed and considered that part of the error at first instance in refusing to extend the time was the fact that the claim for equitable compensation for breach of fiduciary duty could not be disposed of by the limitation point, but would, peremptory relief apart, be required to proceed to trial. He continued, pp 510-511:

The evidence relevant to the claim for breach of fiduciary duty would be substantially the same as the evidence relevant to the claim for damages for the torts of negligence and wrongful detention. If a court concluded that a claim for breach of fiduciary duty was bound to be tried, it would seem strongly arguable that the alternative causes of action upon which the same plaintiff relied at common law should be heard at the same time.

123. He posed the question whether the action for breach of fiduciary duty was so hopeless that the failure to have regard to it constituted legal error. He considered it did amount to such error and continued:

The Board was in the nature of a statutory guardian of Ms Williams. The relationship of guardian and ward is one of the established fiduciary categories: see Hospital Products ...; Bennett ... . The Board was, in my view, arguably obliged to Ms Williams to act in her interest and in a way that truly provided, in a manner apt for a fiduciary, for her ‘custody, maintenance and education’. I consider that it is distinctly arguable that a person who suffers as a result of want of proper care on the part of a fiduciary, may recover equitable compensation from the fiduciary for the losses occasioned by the want of proper care ...

124. The basis of Mr McCarthy’s submission, which was put in absolute terms, that the relationship of child and guardian does not give rise to a fiduciary obligation was Paramasivan v Flynn [1998] FCA 1711; (1998) 160 ALR 203. In that case the appellant commenced proceedings in the Supreme Court of the Australian Capital Territory against the respondent claiming damages for assault and breach of fiduciary duty at a time when the respondent was the appellant’s guardian. An application was unsuccessfully made at first instance to extend the limitation period and the Full Court dismissed the appeal. Their Honours commenced to consider fiduciary claims and their application to limitation law provisions at p 214. They referred to the pleadings and to the significant problem that the appellant had not attempted to define, with any precision, exactly what the circumstances were, or where they occurred, which gave rise to the alleged fiduciary relationship. Nor had the appellant elaborated the precise scope or content of the fiduciary duties.

125. Commencing at p 218, their Honours considered the general principles relating to fiduciary duties and the decision of the Supreme Court of Canada in M(K) v M(H) (1992) 96 DLR(4th) 289, in which it was held that the relationship of parent and child was fiduciary, giving rise to a fiduciary duty to protect the child’s well-being and health, and that incest was a breach of that duty. Their Honours also referred to the decision in Williams (No 1), which they noted preceded that of the High Court in Breen v Williams (1996) 186 CLR 71, in which their Honours discerned disagreement with several aspects of recent Canadian approaches to the development of the law to which they referred and, at p 221, concluded:

All of those considerations lead us firmly to the conclusion that a fiduciary claim, such as that made by the plaintiff in this case, is most unlikely to be upheld by Australian Courts. Equity, through the principles it has developed about fiduciary duty, protects particular interests which differ from those protected by the law of contract and tort, and protects those interests from a standpoint which is peculiar to those principles. The truth of that is not at all undermined by the undoubted fact that fiduciary duties may arise within a relationship governed by contract or that liability in equity may co-exist with liability in tort. To say, truly, that categories are not closed does not justify so radical a departure from underlying principles. Both propositions, in our view, lie at the heart of the High Court authorities to which we have referred, particularly, perhaps, Breen.

126. In Cubillo O’Loughlin J considered the claim for breach of fiduciary duty. His Honour traced through the various cases, noting that the fiduciary relationship was said to arise because of the role and functions of the Commonwealth’s servants and agents in the removal and detention of the applicants and because of the Commonwealth’s powers over, and its assumption of responsibility for, Aboriginal people in the Northern Territory. It was also said to arise because of the powers, obligations and directions of the directors and the vulnerability of each applicant to the exercise of them: paragraph 115.

127. At paragraph 124 O’Loughlin J noted that the High Court in Northern Land Council v The Commonwealth (No 2) [1987] HCA 52; (1987) 75 ALR 210, was of the view that the question whether there was a fiduciary relationship was to be resolved at trial.

128. In paragraph 126 his Honour referred to reliance upon the decision in Bennett and to the statement in the joint judgment of Mason CJ, Deane and Toohey JJ at p 411:

It is not now in question that there was a duty of care owed by the Director of Community Welfare (the Director) to the appellant and that there was a breach of that duty (for which, it is agreed, the minister was vicariously liable). In the Courts below, the duty of care appears to have been equated to, even derived from, a fiduciary duty owed by the Director to the appellant arising out of his statutory office as guardian. That fiduciary duty was a positive duty to obtain independent legal advice with respect to the possible existence of a cause of action on the part of the appellant arising out of the circumstances in which he sustained an amputation of four fingers of his left hand.

It may well be arguable that there was a positive duty to have appropriate regard to the neighbour’s complaint, and to take action, if it was found to be justified, to protect the appellant. Reference was also made to the judgment of McHugh J at p 427, where his Honour said:

Nevertheless, it is not open to doubt that, in addition to the fiduciary duty which the Director owed to the appellant, the circumstances of the guardianship and the injury to the appellant while under the care and control of the Director, gave rise to a common law duty on the part of the latter to take reasonable care to ensure that the appellant did not suffer economic loss by not being advised of his rights in respect of that injury.

129. His Honour referred to Williams (No 1) and to Paramasivan. It was pressed upon him that he should regard himself as bound to hold, as a result of that decision, that on the pleadings the applicants did not have a cause of action against the Commonwealth for breach of fiduciary duty. He noted the refusal of the Full Court to follow the Canadian decision to which I have referred, which he contrasted with the decision in Williams (No 1) to follow it. He referred to the Full Court’s reliance on the decision of the High Court in Breen v Williams and, at paragraph 134, said:

But the warning in Northern Land Council v Commonwealth not to determine the nature of any relationship in the abstract, the acceptance in Bennett v Minister of Community Welfare that the relationship of guardian and ward created a fiduciary relationship and the acknowledgment in Paramasivan v Flynn that the relationship of guardian and ward may give rise to a fiduciary relationship are sufficient to persuade me that it would be premature to hold, at this stage, that the applicants have failed to make out a case of a fiduciary relationship on the pleadings. It may transpire, when all the evidence has been taken, that no such relationship has been proved: That is matter, however, that should await the trial of the action.

130. Abadee J commenced his consideration of a fiduciary duty in Williams (No 2) at paragraph 695 by suggesting that the action for breach of fiduciary duty ‘is a novel one’.

131. He contrasted the different views of Kirby P and Powell JA in Williams (No 1) although, I would have thought, with respect, that the views of Kirby P, which were adopted by Priestley JA, established that for which Williams (No 1) stood as authority. His Honour thought that there was much force in the views of Powell JA, although he did not consider he was bound by them, but he said that in many ways they ‘perhaps’ reflected his ‘ultimate independent views’. His Honour continued, paragraph 703:

It seems to me, that even assuming a fiduciary relationship is established, there is no fiduciary duty of the kind urged by the plaintiff, or that further or alternatively, that no action for breach of fiduciary duty is available in any event. Indeed, in light of my finding and reasons, no breach of such duty has in the event been established.

132. His Honour pointed out in the subsequent paragraphs the need to find the particular obligation or obligations owed and, at the conclusion of paragraph 706, said:

Such an approach thus involves a consideration of whether a fiduciary concept embraces a specific duty of the type urged in the instant case. In my view it does not.

133. It is apparent, if I may say so with great respect, that whilst his Honour rejected the general view that there could be a fiduciary relationship giving rise to fiduciary duties, he also found, on the facts of that case, that there was no specific duty of the type urged on behalf of Ms Williams of which there had been a breach.

134. He also drew the distinction between various legislation to support his conclusion that no fiduciary duty arose in that case.

135. His Honour was also referred to the decision of the Court of Appeal in Brunninghausen v Glavanics [1999] NSWCA 199; (1999) 46 NSWLR 538 in which, on several occasions, Handley JA, who delivered the principal judgment of the Court, noted that the relationship of guardian and ward had always been one which gave rise to fiduciary duties. At paragraph 721, Abadee J said that it was not necessary to decide, in that case, whether the relationship of guardian and ward or parent and child was of a fiduciary nature, and he noted that in Hospital Products neither Gibbs CJ nor Mason J included those relationships within their formulations of fiduciary duties. However, his Honour may have overlooked that Dawson J did at p 141 in a passage to which Kirby P drew attention in Williams (No 1). In the light of the authorities to which I have referred, it is difficult, in my respectful opinion, to say that the relationship of child and guardian does not give rise to a fiduciary relationship or obligation. Of course, in every case it is necessary to examine the content of the duty and the alleged breach of it. In the end, paragraph 734, his Honour was of the view that Paramasivan correctly stated the law and, subsequently, he drew upon various other authorities in support of the proposition that there was no fiduciary relationship.

On the facts of that case his Honour was obviously of the view that even if there had been a fiduciary duty, there was no breach of it.

136. I do not consider that in the light of Williams (No 1) and Brunninghausen, supported by the other authorities to which I have referred, it can be said that there is not, relevantly for present purposes, an available action based on the existence of a fiduciary duty and breach of it.

137. Next Mr McCarthy submitted that there was no evidence available to demonstrate the necessary link between any breach of duty by the respondents and the appellant’s present condition. The submission was that any suggestion that isolated incidents in a 14 year period of substitute care are relatively causative of the appellant’s personal problems is without evidentiary foundation. He submitted:

The complexity of causation and the lack of evidence of the necessary link between demonstrable breach of duty and causative effect reinforce that the relationship alleged by the appellant is non-justiciable.

In my opinion the evidence of Dr Gertler provides the necessary causal link.

138. In my opinion each of the claims made by the appellant shows, prima facie, an available case of the type referred to in Williams (No 1) and McLean, which the appellant is entitled to have heard. The contentions to the contrary should be rejected, and the Master’s decision, in this regard, upheld.

Conclusions

139. For these reasons I consider, with respect, that the Master was in error in finding that there was an absence of evidence in the way in which she did. In my opinion the appeal against these findings should be allowed. I am further of the opinion that the Master was correct in finding that the appellant had pleaded justiciable causes of action, sufficient to make it just and reasonable for the proceedings to go forward, and that her analysis of the issue of prejudice does not indicate any failure to exercise her discretion properly: see also Sydney City Council v Zegarac (1998) 43 NSLWR 195. Finally, I am not satisfied by the submissions of Mr McCarthy that the principles of law for which he contends, namely the absence of any duty in the respondents at common law or under statute or by virtue of a fiduciary duty, irrespective of the findings of fact, is correct. It may be, eventually, that the principles applied by Abadee J in the particular circumstances of Williams (No 2) are held, as principles of law, to be correct. However, even if that be so, it does not seem to me that that will necessarily lead to the conclusion that in any given case those principles should be applied without regard to the particular facts of the case. In my view, however, that position has not been reached at the moment. The various authorities to which I have referred show that each area of law is in a somewhat fluid state, and I can see no justification for declining to hold that on those facts pleaded, which were accepted by the respondents as correct, and on the facts proved before the Master to the extent necessary for the application, the appellant does not have an arguable case on each cause of action for which he contends. The same facts are said to give rise, essentially, to each cause of action. As that for breach of fiduciary duty does not require an extension of time, it is difficult to see what prejudice could apply to the hearing of the other causes of action: Williams (No 1).

140. I would merely conclude by stressing that the evidentiary material to which I have referred has not been tested. The appellant’s case, after trial, may lead to the conclusion that he is not entitled to succeed. However, the situation has not been reached where it has been demonstrated that that case should be defeated in limine, in the sense that the limitation provisions should provide a complete defence to it.

Counsel for the Appellant:

Mr T K Tobin QC and Mr P W J Gray

Solicitors for the Appellant:

Carroll & O’Dea

Counsel for the Respondents:

Mr J A McCarthy QC and Ms R Druitt

Solicitors for the Respondents:

I V Knight, Crown Solicitor