North Sydney Council v Roman [2007] NSWCA 27 (27 February 2007)

Last Updated: 28 February 2007

NEW SOUTH WALES COURT OF APPEAL

CITATION: North Sydney Council v Roman [2007] NSWCA 27


FILE NUMBER(S):
40098 of 2006

HEARING DATE(S): 10 October 2006

JUDGMENT DATE: 27 February 2007

PARTIES:
North Sydney Council - Appellant
Maria Christina Roman - Respondent

JUDGMENT OF: McColl JA Bryson JA Basten JA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 4341 of 2004

LOWER COURT JUDICIAL OFFICER: Ainslie-Wallace DCJ

LOWER COURT DATE OF DECISION: 16 February 2006


COUNSEL:
R Sheldon - Appellant
S Norton SC and E E Welsh - Respondent

SOLICITORS:
Phillips Fox - Appellant
Bryden's Law Office - Respondent

CATCHWORDS:
NEGLIGENCE - roads - injury to pedestrian falling in pothole in road - liability of roads authority - failure to maintain road - whether immunity under s 45 Civil Liability Act 2002 (D)

LEGISLATION CITED:
Civil Liability Amendment (Personal Responsibility) Act 2002
Civil Liability Act 2002
Local Government Act 1993
Privacy and Personal Information Act 1998
Roads Act 1993
Transport Administration Act 1988
Securities Amendment Act 1988 (NZ)
Trade Descriptions Act 1968 (UK)

CASES CITED:
Brodie v Singleton Shire Council; Ghantous v Hawkesbury Shire Council [2001] HCA 29; (2001) 206 CLR 512
Crystal Wall Pty Limited v Pham [2005] NSWCA 449
Derbyshire County Council v Times Newspapers Ltd [1992] UKHL 6; [1993] AC 534
Director General, Department of Education and Training v MT [2006] NSWCA 270
Director of Public Prosecutions Reference No 1 of 1996 [1998] 3 VR 352
Hampton Court Ltd v Crooks [1957] HCA 28; (1957) 97 CLR 367
Hill v Commissioner for Main Roads (1989) 68 LGRA 173; 9 MVR 45
Hodgson v Cardwell Shire Council [1994] 1 Qd R 357
Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21
Integral Energy Australia v EDS (Australia) Pty Ltd & Ors [2006] NSWSC 600
Leichardt Council v Serratore [2005] NSWCA 406
Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500
Port Stephens Council v Theodorakakis [2006] NSWCA 70
Port Stephens Shire Council & Anor v Tellamist P/L [2004] NSWCA 353; (2004) 235 LGERA 98
Porter v Lachlan Shire Council [2006] NSWCA 126
R v Commercial Industrial Construction Group Pty Ltd [2001] VSCA 181
R v Trade Practices Tribunal; Ex parte St George CC [1974] HCA 7; (1974) 130 CLR 533
Re Supply of Ready Mixed Concrete (No2), Director General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456
State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536
Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153
Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40

DECISION:
1. Allow the appeal; 2. Set aside the judgment in favour of the Respondent in the District Court and in lieu thereof enter judgment for the Appellant with costs; 3. The Respondent to pay the Appellant’s costs of the appeal; 4. The Respondent to have a certificate under the Suitors’ Fund Act 1951 (NSW).


JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40098/06

DC 4341/2004

McCOLL JA

BRYSON JA

BASTEN JA

Tuesday 27 February 2007

NORTH SYDNEY COUNCIL v Maria Christina ROMAN

Maria Christina Roman, the respondent, was injured at night when she fell in a pothole half a metre wide and about four to five inches deep in Princes Street, McMahon’s Point on 16 October 2001. She brought proceedings against North Sydney Council, the appellant, alleging, in substance, that it had been negligent in failing to maintain the road by repairing the pothole. The appellant defended the proceedings, in part, on the basis that it did not have actual knowledge of the pothole as required by s 45 of the Civil Liability Act 2002.

The evidence established that Council street sweepers regularly swept the gutters in Princes Street in the vicinity of the hole into which the respondent stumbled. The street sweepers were instructed as part of their induction to identify hazards which needed attention and report them to their supervisor. The respondent argued at trial that the street sweepers’ actual knowledge of the pothole could be inferred from the regularity of those duties and from their obligation to identify hazards which needed attention. She also argued that their knowledge was attributable to the appellant.

The appellant did not call any street sweeper. It did call evidence from their supervisor and from people responsible for repairing potholes. All said they had not known of the pothole. They said that if they had they would have regarded it as a hazard. By the time of the trial the pothole had been repaired. None of the appellant’s witnesses was aware of how it had come to be repaired, nor did the appellant produce any records relating to its repair.

The primary judge inferred the street sweepers had actual knowledge of the pothole and that, for the purposes of s 45, their knowledge could be attributed to the appellant. She also found the appellant had breached its duty of care by leaving the pothole in a place where a person getting into or out of a car might reasonably be expected to step. She awarded the respondent $475,485 damages.

On appeal the appellant submitted that to find “actual knowledge” for the purpose of s 45 it was necessary that there be a connection between the person with actual knowledge of the particular risk and the person able to, but who failed to, carry out the roadwork which would have avoided the harm which materialised. It argued that even if it was assumed a street sweeper had actual knowledge of the pothole, such knowledge was not sufficient because street sweepers did not carry out repairs.

Held, allowing the appeal, per Basten JA (Bryson JA agreeing):

1. For the purposes of s 45 actual knowledge must be found in the mind of an officer within the council having delegated (or statutory) authority to carry out the necessary repairs.

Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153 applied; Brodie v Singleton Shire Council; Ghantous v Hawkesbury Shire Council [2001] HCA 29; (2001) 206 CLR 512 discussed.

2. The evidence demonstrated that no Council officer at a decision-making level had “actual knowledge” of the particular pothole and therefore the appellant did not have such knowledge. Accordingly, the exception to s 45 was not engaged and the statutory immunity prevailed.

Per McColl JA (dissenting)

As to liability,

3. For the purposes of s 45, the knowledge of those persons who, acting within the scope of their duties, learn of the particular risk under an obligation to report it as part of the roads authority’s system of maintaining the roads under its jurisdiction, should be attributed to the roads authority.
4. On the facts of this case, such people were sufficiently “relevantly connected” with discharging the appellant’s responsibility for carrying out road work to hold it prima facie liable in tort where it could be found, whether by direct proof, or inference, that they had actual knowledge of the particular risk which materialised in harm to the plaintiff.
5. Attributing those persons’ knowledge to the roads authority is consistent with the language of s 45, the context in which it appears and the policy discernible in its enactment.

Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500; Director General, Department of Education and Training v MT [2006] NSWCA 270 applied;
Leichhardt Council v Serratore [2005] NSWCA 406; Porter v Lachlan Shire Council [2006] NSWCA 126; Port Stephens Council v Theodorakakis [2006] NSWCA 70 referred to.

6. The primary judge had not erred in concluding the appellant had breached its duty of care.

As to damages,
7. The primary judge erred in awarding the respondent damages pursuant to s 15 of the Civil Liability Act.
ORDERS

(1) Allow the appeal;

(2) Set aside the judgment in favour of the Respondent in the District Court and in lieu thereof enter judgment for the Appellant with costs;

(3) The Respondent to pay the Appellant’s costs of the appeal;

(4) The Respondent to have a certificate under the Suitors’ Fund Act 1951 (NSW).

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40098/06

DC 4341/2004

McCOLL JA

BRYSON JA

BASTEN JA

Tuesday 27 February 2007

NORTH SYDNEY COUNCIL v Maria Christina ROMAN

Judgment

1 McCOLL JA: North Sydney Council appeals from the decision of Ainslie-Wallace DCJ who found it had breached its duty of care towards Maria Christina Roman, the respondent, who was injured when she fell in Princes Street, McMahon’s Point on 16 October 2001. The primary judge awarded damages in the sum of $475,485. The appeal is as to both liability and quantum.

Statement of the Case

2 The primary judge’s statement of the background facts and the circumstances in which the accident occurred are not challenged and can conveniently be extracted from her Honour’s judgment:

“4. In February 2001 before the plaintiff’s accident her daughter, Daniella, rented a flat in Princes Street McMahon’s Point. The plaintiff and her husband visited her there about two or three times each week.

5. On the night of the accident, the 16th October 2001, the plaintiff and her husband visited Daniella. They parked in Princes Street about ten metres from the flat. It was dark when they left the flat and they had some bags which they put into the boot of the car. The plaintiff went around to the driver’s side of the car to put a small bag on the back seat behind the driver’s seat. She was walking around the back of the car to get to the passenger’s door when, she said, that all of a sudden there was no ground under her foot and she fell heavily onto the ground.

6. The plaintiff said that in Princes Street in the vicinity [of] her daughter’s flat the lighting was poor and there were large trees which obscured the light further. She and her husband used to walk on the road when coming or going to the flat at night because the footpath was very dark. The plaintiff said that when she was walking around to her side of the car on the night of the accident, she was looking where she was going but did not see the hole in the ground.

7. Photographs of the kerb and gutter taken around the time of the plaintiff’s fall show a large hole in the road extending from the kerb onto the bitumen surface of the road. The plaintiff said and the photograph shows that the hole was about half a metre wide and about four to five inches deep. It started about twelve inches from the vertical face of the kerb.

8. The plaintiff’s husband said that he waited for his wife to get into the car and when she did not, he walked to the back of the car where he found her lying on the ground. After he helped her into the car he noticed that the ground where she fell was not ‘equal’ (from which I infer that he meant he felt a hole) and he opened the back door of his station wagon. By the boot light he saw leaves on the ground which he scuffed with his foot, to see how deep the hole was, he said about seven to eight centimetres deep.

9. Daniella Roman had inspected the Princes Street flat before she moved in. On the day of the inspection and after she moved in, she saw the hole in which her mother later fell. When she moved out of that flat in March 2002 the hole had not been repaired. It seems from a photograph (Exhibit E) that it has since been repaired.

10. Daniella Roman agreed that the lighting in that street was poor and obscured by trees and she said that she would walk on the road at night rather than along the footpath because she could not see where she was walking.

11. None of this evidence was challenged and I accept that the plaintiff was looking where she was walking as she made her way around the car to get into the passenger’s seat and that she could not see the hole because it was night and the light in the area was dim.”

3 The issue of liability turned, in part, on s 45 of the Civil Liability Act 2002 which provides:

“Special non-feasance protection for roads authorities

(1) A roads authority is not liable in proceedings for civil liability to which this Part applies for harm arising from a failure of the authority to carry out road work, or to consider carrying out road work, unless at the time of the alleged failure the authority had actual knowledge of the particular risk the materialisation of which resulted in the harm.
(2) This section does not operate:

(a) to create a duty of care in respect of a risk merely because a roads authority has actual knowledge of the risk, or
(b) to affect any standard of care that would otherwise be applicable in respect of a risk.

(3) In this section:
carry out road work means carry out any activity in connection with the construction, erection, installation, maintenance, inspection, repair, removal or replacement of a road work within the meaning of the Roads Act 1993.
roads authority has the same meaning as in the Roads Act 1993.”

4 The respondent’s case at trial was, in essence, that Council street sweepers regularly swept the gutters in Princes Street in the vicinity of the hole into which she stumbled. Their actual knowledge of the pothole could be inferred from that fact and from their obligation to identify hazards which needed attention. Their knowledge was attributable, it was successfully argued, to the appellant.

5 Ms Roman, the respondent’s daughter, gave evidence, not challenged in cross-examination, that she saw a council worker sweep along the footpath and the kerb in Princes Street twice a week. Mr Wetherill, who was the supervisor of street cleaning at the time of the accident, agreed that Princes Street was cleaned by a person using a broom to sweep the leaves from footpaths and gutters but “thought” that in the eight months of 2001 after the accident it would have only been swept eight or nine times. His evidence was also not challenged in cross-examination. The primary judge noted that his evidence was inconsistent with Ms Roman’s observations and that his “estimation” was not supported by any document. She concluded, without further elaboration, that she preferred Ms Roman’s evidence.

6 Mr Wetherill also gave evidence that street sweepers were instructed as part of their induction to identify hazards which needed attention and report them to him. When he received such a report he emailed it to the person responsible “depending on what the hazard was”. After being shown a photograph of the pothole in which the respondent stumbled, he opined that it was a hazard which he would have reported had he seen it. He also said he would have expected a street sweeper to report such a pothole. Nevertheless, Mr Wetherill had not seen the pothole nor had it been reported to him. The appellant did not call any street sweeper to give evidence about the process of sweeping Princes Street or whether the pothole had been seen and the appellant notified. The respondent’s daughter took a video of the pothole before it was repaired which showed a street sweeper’s barrow almost adjacent to the pothole which was clearly visible.

7 The primary judge found that the kerb and gutter in Princes Street was cleaned regularly by the street sweepers and that that involved “sweeping the very place where the pothole was located.”

8 The appellant called evidence from Mr Godbier, the overseer of maintenance work gangs, but his evidence dealt with inspection of the carriageway and not the kerb. He gave evidence that potholes such as the one into which the respondent fell were expected to develop in the roadway adjacent to the face of the kerb because petrol leaking from cars onto the bitumen caused it to break up. However he said the work gangs did not inspect that part of the road because of the difficulty posed by parked cars. The primary judge found this evidence “difficult to accept” because, notwithstanding that Mr Godbier had not inspected that area of the road as part of his duties, he also said “the cars were parked so close to each other (within a foot or two of each other) and so close to the kerb that it would be impossible to inspect the gutters in any event”.

9 The primary judge did not accept that, even if Princes Street was often filled with parked cars, it would have prevented an inspection for hazards. She relied in this respect, at least in part, on the evidence of Mr Steven Stathis, the Assistant Works Manager at the time of the respondent’s accident, who gave evidence as to the system for inspecting footpaths, kerbs and gutters for hazards which existed at the time of trial and did not indicate that parked cars caused any difficulties.

10 None of the witnesses the appellant called had either personal knowledge or had been notified, of the pothole in 2001. As the primary judge observed, by the time a photograph (Exhibit E) was taken, the pothole had been repaired, but none of the appellant’s witnesses professed to know of that repair either. The appellant did not produce any records dealing with its repair.

11 The appellant argued before the primary judge that the respondent had to prove it had actual knowledge of the particular pothole into which she fell in order that it could be made liable for her injuries. The primary judge noted that a similar argument had been advanced in Leichhardt Council v Serratore [2005] NSWCA 406 in which Giles JA (Hodgson and Ipp JJA agreeing) said:

“14 The appellant said also that, even if it inspected the footpath, inspection which could have brought knowledge of the trip hazard was less than actual knowledge of the trip hazard. .....

15 It will often be the case that a plaintiff does not have direct evidence of a road authority’s knowledge of a risk. Like all facts, knowledge can be inferred from other facts, and if the inference is fairly available and the road authority calls no evidence to rebut it the Court can comfortably find knowledge.”

12 The primary judge then said:

“34. In this case, even though there was no system in place for inspection of the kerbs and guttering, there was clear evidence that council workers were required to notify the Council of hazards. This hole was clearly a hazard and accepted as such by Mr Wetherill. It was located in a position regularly passed by council sweepers and it was repaired some time after the plaintiff’s fall. The absence of records does not persuade me that the Council did not know about the hole. Having called no evidence from any sweeper who worked in that area nor from the person who was directly in charge of the street repair workers, I can comfortably find that the Council had knowledge of the hole from a time well before the plaintiff’s fall and took no step to rectify it.”

13 Having reached that conclusion, the primary judge observed, as appeared to be uncontroversial, that the appellant owed the respondent a duty to take reasonable care to avoid foreseeable risks of injury to a person in the respondent’s position. She referred to Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 at 47-48 and, finding the appellant had breached its duty of care, said:

“36. It is clear from the evidence that the hole was present for some months, at least from February in the year of the plaintiff’s accident. It was in a position where a street sweeper would have seen it. The sweepers were told to look out for and notify the defendant of hazards and other things requiring repair. Mr Wetherill recognised it as a hazard. By leaving a hole of that size in that place in the street where a person getting into or out of a car might reasonably be expected to step, the defendant must have foreseen that to leave the hole in that condition involved a risk of injury to members of the public. I find that to leave the hole unrepaired was thus unreasonable.”

Grounds of appeal: liability

14 The appellant complains that the primary judge reversed the onus of proof with respect to proof of the knowledge required by s 45 of the Civil Liability Act and should have found it lacked actual knowledge of the pothole. It also complains that the primary judge erred in finding it had breached its duty of care, had failed to give adequate reasons for that finding and had failed to deal with s 42 of the Civil Liability Act.

Submissions: liability

15 Mr R Sheldon, who appeared for the appellant, submits that s 45 of the Civil Liability Act creates a rebuttable presumption that a roads authority is not liable for a failure to exercise a regulatory function. That presumption can be rebutted by a plaintiff who proves the relevant roads authority had actual knowledge of the particular risk which caused harm to the plaintiff.

16 The appellant does not challenge the primary judge’s finding that street sweepers went to Princes Street twice a week and that they were instructed if they saw something they thought was hazardous to report it to their supervisors. There is also no issue that the pothole constituted a hazard which any supervisor would have recognised as such and had repaired. Mr Sheldon submitted, however, that it was not sufficient to attract liability that there be evidence that street sweepers had knowledge of the pothole into which the respondent stumbled. Rather he contended that in order to demonstrate “actual knowledge” for the purposes of s 45, the respondent had to prove actual knowledge on the part of a person or persons so closely and relevantly connected with it that that person’s or persons’ state of mind could be treated as its state of mind: Integral Energy Australia v EDS (Australia) Pty Ltd & Ors [2006] NSWSC 600 at [17]. He submitted that the “relevant connection” interpretation of s 45 was consistent with the legislature enacting that provision in light of its presumed knowledge of the decision in Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153 concerning the person or persons whose knowledge will be found to be that of a corporation.

17 Mr Sheldon argued that to find “actual knowledge” for the purpose of s 45 it was necessary that there be a connection between the person with actual knowledge of the particular risk and the person able to, but who failed to, carry out the roadwork which would have avoided the harm which materialised. He argued that even if it was assumed a street sweeper had actual knowledge of the pothole, such a person was not “relevantly connected” in this sense as it was not open to street sweepers to repair the pothole.

18 Mr Sheldon next submitted that the appellant had “positively proved an absence of knowledge at relevant levels of its hierarchy”. He contended that s 45 precluded any finding of constructive or deemed knowledge of a hazard and required, as its terms demonstrate, actual knowledge. He argued the issue of its knowledge could not be resolved by identifying a theoretical class of members of the council staff who had the opportunity of observing the pothole and inferring that, since none of them was called, one of them knew the critical fact. Nor could the Council be made liable for the knowledge of all its staff whatever their responsibilities.

19 Mr Sheldon submitted, in the alternative, that it was not open to the primary judge to infer that a street sweeper had actual knowledge of the pothole. He argued that the more rational inference was that the pothole was not seen for two reasons. The first was the parking issue. As to this he pointed to the evidence given by the appellant’s employees concerning the difficulty cleaning streets, footpaths and gutters in North Sydney because of the “parking situation”. Accordingly, he submitted, it was mere speculation for the primary judge to conclude that a street sweeper had seen the pothole but, contrary to their training and contrary to the appellant’s witnesses’ experience, had not reported it to their superiors.

20 Secondly, Mr Sheldon contended that the evidence did not permit the primary judge rationally to infer that the street sweepers had actual knowledge of the pothole in circumstances where the appellant had called evidence of the protocol for reporting trip hazards and similar risks followed by both street sweepers and road repair gangers which had not brought the existence of the pothole to the attention of any of their supervisors. He submitted on the basis of that evidence that the more compelling inference was that none of those employees had seen the pothole. He relied, in this respect, upon Mr Wetherill’s evidence that no street sweeper had ever reported to him a pothole in Princes Street, but that other hazards had been reported to him by those under his supervision.

21 Mr Sheldon also argued that the primary judge misdirected herself in reaching her conclusion on liability because she relied, at least in part, on what she said was the appellant’s failure to call “the person ... directly in charge of the street repair workers”. He had, in fact, called both the person responsible for street sweepers as well as the person responsible for supervising the street repair workers immediately prior to the person with that responsibility at the time of the respondent’s accident.

22 Mr Sheldon submitted that the absence of witnesses was crucial to the primary judge’s inference drawing and, it having proceeded on a mistaken basis, lacked a critical evidentiary foundation.

23 Ms Norton of Senior Counsel, who appeared for the respondent on appeal with Ms E Welsh, but not below, accepted that s 45 required the respondent to demonstrate that the appellant had the relevant actual knowledge. She submitted it was sufficient for those purposes that the respondent prove that the street sweepers responsible for sweeping Princes Street had that knowledge. On her argument the knowledge of any person who was part of the Council’s maintenance programme for potholes was sufficient to satisfy the s 45 actual knowledge requirement.

24 Ms Norton submitted that the thesis that the pothole was not seen by street sweepers because of the number of cars parked in the street was implausible in light of a video showing a street sweeper’s barrow almost adjacent to the clearly visible pothole. She also argued that this theory appeared to ignore the fact that it was the street sweepers’ responsibility to sweep the gutter adjacent to the hole, that cars could not have obscured it on every occasion these duties were undertaken and that the more probable inference was that the pothole had been seen.

25 Ms Norton also contended that the argument the pothole had probably not been seen because it had not been reported was substantially weakened by the fact that the pothole had been repaired and none of the appellant’s witnesses was aware of how that had come about. Further no records dealing with its repair had been produced in response to subpoenas directed to such issues. She also pointed to the (unsurprising) evidence given by Mr Godbier that he could not recall where individual potholes had been in individual streets 4 or 5 years prior to giving evidence.

Consideration: liability

26 Section 45 was inserted into the Civil Liability Act by Sch 1[5] of the Civil Liability Amendment (Personal Responsibility) Act 2002. Schedule 1[5] commenced on 6 December 2002. The amendments it effected extended to civil liability arising before the commencement of the amendments, but did not apply to or in respect of proceedings commenced in a court before that commencement: Civil Liability Act, Schedule 1 Pt 3, cl 6(1). The respondent did not challenge the proposition that s 45 applied to her claim, the Statement of Claim having apparently been filed in 2004.

27 It was common ground that the appellant was a “roads authority” as required by s 45, being a body declared under the Roads Act 1993 to be such an authority: see the Dictionary to the Roads Act 1993. It is also a body corporate constituted pursuant to s 219 of the Local Government Act 1993. Its governing body are its elected representatives, who are called “councillors”: s 222. The role of the governing body is to direct and control the affairs of a council in accordance with the Local Government Act: s 223. A decision supported by a majority of votes at a meeting of the council at which a quorum is present is a decision of the council: s 371. The Council was empowered, by resolution, to delegate to the General Manager or any other person or body (not including another employee of the Council) any of its functions subject to exceptions not presently relevant: s 377 Local Government Act. A function of a council may, subject to Chapter 12, (which contains no relevant restriction) be exercised, relevantly, by its employees: s 355(a).

Knowledge of corporations: rules of attribution

28 When it is necessary to determine whether conduct or knowledge or the mental state of an individual employee or agent should be attributed to a corporation, an organic approach has been developed, which requires the identification, in the specific statutory context, of “rules of attribution”: Director General, Department of Education and Training v MT [2006] NSWCA 270 at [16] – [17] per Spigelman CJ (Ipp JA and Hunt AJA agreeing), referring with approval, to Lord Hoffmann’s speech in delivering the judgment of the Privy Council in Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500 at 506.

29 Meridian Global Funds Management Asia Limited v Securities Commission concerned the question when the knowledge of agents of a company would be attributed to it for the purpose of triggering a statutory requirement in s 20 of the Securities Amendment Act 1988 (NZ) to give a substantial security holding notice. Lord Hoffmann described (at 506) the “rules of attribution” as “rules by which acts are attributed to the company”. His Lordship drew a distinction between a company's “primary rules of attribution” (generally found in its constitution, typically the articles of association or implied by company law), “general rules of attribution which are equally available to natural persons, namely, the principles of agency” and special rules of attribution. He explained the occasional necessity for special rules of attribution as follows (at 507):

“The company's primary rules of attribution together with the general principles of agency, vicarious liability and so forth are usually sufficient to enable one to determine its rights and obligations. In exceptional cases, however, they will not provide an answer. This will be the case when a rule of law, either expressly or by implication, excludes attribution on the basis of the general principles of agency or vicarious liability. For example, a rule may be stated in language primarily applicable to a natural person and require some act or state of mind on the part of that person ‘himself’, as opposed to his servants or agents. This is generally true of rules of the criminal law, which ordinarily impose liability only for the actus reus and mens rea of the defendant himself. How is such a rule to be applied to a company?
One possibility is that the court may come to the conclusion that the rule was not intended to apply to companies at all; for example, a law which created an offence for which the only penalty was community service. Another possibility is that the court might interpret the law as meaning that it could apply to a company only on the basis of its primary rules of attribution, ie if the act giving rise to liability was specifically authorised by a resolution of the board or a unanimous agreement of the shareholders. But there will be many cases in which neither of these solutions is satisfactory; in which the court considers that the law was intended to apply to companies and that, although it excludes ordinary vicarious liability, insistence on the primary rules of attribution would in practice defeat that intention. In such a case, the court must fashion a special rule of attribution for the particular substantive rule. This is always a matter of interpretation: given that it was intended to apply to a company, how was it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy.” (emphasis added)

30 Lord Hoffmann explained how a rule of attribution was a matter of interpretation or construction of the relevant substantive rule by comparing Tesco Supermarkets Ltd v Nattrass with Re Supply of Ready Mixed Concrete (No 2), Director General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456.

31 In Tesco the House of Lords had to determine whether Tesco could avail itself of a defence, available to a shop owner charged with a breach of a provision of the Trade Descriptions Act 1968 (UK) who could prove that the commission of the offence was caused by “another person” and that -

“...he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control”

in circumstances where the conduct establishing the offence was that of a manager of Tesco who had acted negligently. The company was able to show that it owned hundreds of shops and had instituted systems of supervision and training which amounted, on its part, to taking reasonable precautions and exercising all due diligence to avoid the commission of such offences in its shops. The outcome, as Lord Hoffmann explained (at 508), was that:

“The House of Lords held that the precautions taken by the board were sufficient for the purposes of s 24(1) to count as precautions taken by the company and that the manager's negligence was not attributable to the company. It did so by examining the purpose of s 24(1) in providing a defence to what would otherwise have been an absolute offence: it was intended to give effect to ‘a policy of consumer protection which does have a rational and moral justification’ ([1971] 2 All ER 127 at 151[1971] UKHL 1; , [1972] AC 153 at 194–195 per Lord Diplock). This led to the conclusion that the acts and defaults of the manager were not intended to be attributed to the company.”

32 A different result was reached in the Ready Mixed Concrete case in which (Meridian at 508-509):

“[A] restrictive arrangement in breach of an undertaking by a company to the Restrictive Practices Court was made by executives of the company acting within the scope of their employment. The board knew nothing of the arrangement; it had in fact given instructions to the company's employees that they were not to make such arrangements. But the House of Lords held that for the purposes of deciding whether the company was in contempt, the act and state of mind of an employee who entered into an arrangement in the course of his employment should be attributed to the company. This attribution rule was derived from a construction of the undertaking against the background of the Restrictive Trade Practices Act 1976: such undertakings by corporations would be worth little if the company could avoid liability for what its employees had actually done on the ground that the board did not know about it. As Lord Templeman said, at p. 465, an uncritical transposition of the construction in Tesco Supermarkets Ltd v Nattrass.... -

‘would allow a company to enjoy the benefit of restrictions outlawed by Parliament and the benefit of arrangements prohibited by the courts provided that the restrictions were accepted and implemented and the arrangements were negotiated by one or more employees who had been forbidden to do so by some superior employee identified in argument as a member of the ‘higher management’ of the company or by one or more directors of the company identified in argument as ‘the guiding will of the company.’ (See [1995] 1 All ER 135 at 141–142, [1995] 1 AC 456 at 465.)” (emphasis added)

33 In Meridian (at 511) Lord Hoffmann observed that while the “directing mind or will” concept will “often be the most appropriate description of the person designated by the relevant attribution rule...not every such rule has to be forced into the same formula”. He held that the policy of s 20 of the Securities Amendment Act was “to compel, in fast-moving markets, the immediate disclosure of the identity of persons who become substantial security holders in public issuers. He concluded that the relevant rule of attribution which should be implied to determine whose knowledge was, for this purpose, to count as the knowledge of the company, was:

“Surely the person who, with the authority of the company, acquired the relevant interest. Otherwise the policy of the Act would be defeated. Companies would be able to allow employees to acquire interests on their behalf which made them substantial security holders but would not have to report them until the board or someone else in senior management got to know about it. This would put a premium on the board paying as little attention as possible to what its investment managers were doing.”

34 Lord Hoffman reached this conclusion despite the fact that the relevant employee had undertaken the relevant security transaction “for a corrupt purpose” and had not given notice “because he did not want his employer to find out”. He emphasised (at 511) that the Privy Council’s decision should not be understood to mean that “whenever a servant of a company had authority to do an act on its behalf, knowledge of that act will for all purposes be attributed to the company [and] it is a question of construction in each case as to whether the particular rule requires that the knowledge that an act has been done, or the state of mind with which it was done, should be attributed to the company.”

35 In Director General, Department of Education and Training v MT, after referring to Lord Hoffmann’s comparative consideration of Tesco and Ready Mixed Concrete, Spigelman CJ said:

22 Subsequent development of the case law has emphasised particular features of the legislative scheme under consideration, e.g. the protective nature of the statutory regulation. (See e.g. in the case of occupational health and safety legislation, Linework Limited v Department of Labour [2001] 2 NZLR 639; R v Commercial Industrial Construction Group Pty Ltd [2006] VSCA 181 and, in the case of a child protection statute, ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171.) Each statutory regime must be considered separately, although the case law that has developed, particularly after Meridian Global Funds Management, will prove instructive about the kinds of indicators that point one way or another.
23 In Director of Public Prosecutions Reference No 1 of 1996 [1998] 3 VR 352, Callaway JA with whom Phillips CJ and Tadgell JA agreed, referred to Lord Hoffmann’s analysis in Meridian Global Funds Management with approval and said that ‘it does not tell us the rule of attribution ... It merely provides a framework for analysis and dispels the notion that, for all offences, the person with whom a corporation is identified must be its directing mind and will.’ (at 355 lines 35-40).
24 Callaway JA also identified a number of principles which are inherent in Lord Hoffmann’s judgment and which it is convenient to set out, omitting matters pertinent only to the case under consideration by the Victorian Court of Appeal. His Honour said at 354-355:

‘1 The first step is to decide whether a corporation aggregate ... is capable of committing the offence in question ... The next step is to decide whose acts or omissions or state of mind are, for the purpose of the relevant offence, to count as the acts or omissions or state of mind of the corporation ...
2 The search is not for the officers, employers, or agents for whose acts or omissions the corporation might be held liable in a civil action. The question is whose acts or omissions or state of mind are taken to be the acts or omissions or state of mind of the corporation itself for the purpose at hand. The liability is direct, not vicarious ...
3 ... Leonards Carrying Co Limited v Asiatic Petroleum Co Limited [1915] AC 705 ... did not establish that a person whose acts or omissions or state of mind are to count as those of the corporation must always be its directing mind and will, even for the purpose of excluding ‘actual fault or privity’. ...
4 Sometimes only the board of directors acting as such or a person at or near the top of a corporation’s organisation will be identified with the corporation itself. On other occasions, someone lower, and perhaps much lower, in the hierarchy will suffice ... The criminal negligence of the lorry driver employed by a corporation will not make it guilty of manslaughter but it is not inconceivable that his or her failure to comply with some regulatory requirement could make it liable, directly and not vicariously, for non-compliance with the relevant regulations.
5 The rule of attribution depends on the offence and on the facts of the case ...
6 In at least some cases involving a criminally negligent omission to take due care a corporation may face the dilemma ... either there was or were a person or persons in the corporation’s organisation whose function it was to take care in the relevant respect, in which case that person or those persons may be identified with it, or the corporation was at fault because its organisation was inadequate. In referring to a person or persons I do not intend to convey that there can be aggregation as opposed to joint or collective responsibility ...’.” (emphasis added)

36 Director-General, Department of Education and Training v MT concerned the question whether a public agency was responsible, for the purposes of the Privacy and Personal Information Act 1998 (NSW), for the use or disclosure of personal information of a school student by an employee acting for a purpose extraneous to any purpose of the agency. Spigelman CJ considered the relevant legislation noting (at [29]) that the “focus of attention [of the legislative scheme] is on protecting the privacy interests of persons about whom public agencies collect information... [and] it is also a purpose of the legislative scheme to ensure the effective conduct of the public agencies by establishing a mechanism to determine the relevance and accuracy of the information held by such agencies.” He then considered the provisions of the legislation concerned with enforcement and concluded (at [38]) that each turned on the “’conduct’ of the public sector agency.” There being “no specific statutory provision ... [identifying], by way of clarification ... and extension, when conduct of an employee or agent of [the] organisation [was to be] attributed to the organisation”, his Honour concluded that the issue was one of interpretation of the legislative scheme, giving weight to its scope and purpose.

37 His Honour referred to s 12(c) of the Privacy Act which required the agencies to take steps to “ensure ... that the information is protected ... against ... unauthorised access, use ... or disclosure” and noted that s 62(1) made express provision proscribing employees from disclosing or using personal information for a purpose outside the scope of their official functions. He concluded:

“43 The interaction of s 12(c) and s 62(1) is such that, in my opinion, it leaves no scope for the extension of each reference to conduct of the public sector agency to encompass any conduct by an employee or agent, irrespective of whether it is within the scope of his or her functions as such. Where, as here, the ‘use’ or ‘disclosure’ of information was for a purpose extraneous to any

purpose of the Department, it should not be characterised as ‘use’ or ‘disclosure’ by the Department or conduct of the Department. It is not appropriate to adopt a rule of attribution that extends so far.” (emphasis in original)

38 Spigelman CJ pointed out (at [19]) that the relevant rule of attribution “will not be the same when a court is considering vicarious liability for a tort committed by a person associated with a corporation, as the rule that establishes criminal liability of a corporation for the conduct of a person [and] [t]he policy issues that must be considered in every such context differ considerably.” He referred to Hollis v Vabu Pty Ltd [1002] HCA 44[2001] HCA 44; ; (2001) 207 CLR 21 (at [42]) where, in the joint judgment of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ the following appears:

“[42] In general, under contemporary Australian conditions, the conduct by the defendant of an enterprise in which persons are identified as representing that enterprise should carry an obligation to third persons to bear the cost of injury or damage to them which may fairly be said to be characteristic of the conduct of that enterprise. In delivering the judgment of the Supreme Court of Canada in Bazley v Curry, McLachlin J said of such cases that ‘the employer's enterprise [has] created the risk that produced the tortious act’ and the employer must bear responsibility for it. McLachlin J termed this risk ‘enterprise risk’ and said that ‘where the employee's conduct is closely tied to a risk that the employer's enterprise has placed in the community, the employer may justly be held vicariously liable for the employee's wrong’. Earlier, in Ira S Bushey & Sons, Inc v United States, Judge Friendly had said that the doctrine of respondeat superior rests ‘in a deeply rooted sentiment that a business enterprise cannot justly disclaim responsibility for accidents which may fairly be said to be characteristic of its activities’.”

39 In R v Commercial Industrial Construction Group [2006] VSCA 181 at [32], the Victorian Court of Appeal (Maxwell P, Buchanan and Redlich JJA) observed that “[r]ules of attribution are of particular importance where the statutory provision imposing liability, or creating a defence, turns on a state of mind.”

Interpretation of s 45

40 A local government authority exists “for local government purposes”: R v Trade Practices Tribunal; Ex parte St George CC [1974] HCA 7; (1974) 130 CLR 533 at 551 per Menzies J. It is distinct from “other types of corporation, whether trading or non-trading”: Derbyshire County Council v Times Newspapers Ltd [1992] UKHL 6; [1993] AC 534 (at 547). Neither party suggested the distinct character of the appellant as a local government body militated against application of the principles derived from Tesco (which as I have explained have been developed in Meridian and later authorities) to identify the person or persons whose actual knowledge would be found to be the appellant’s for the purpose of s 45. That was the approach taken by Ipp JA (with whom Giles JA agreed), albeit in a different context, in Port Stephens Shire Council & Anor v Tellamist P/L [2004] NSWCA 353; (2004) 235 LGERA 98 at [403], a decision to which I will return.

41 An initial observation which can be made is that rules of attribution developed in such cases as Tesco to determine whether a corporation is criminally liable, albeit in a regulatory context, may be more stringent than those developed to determine whether a corporation, including a public authority, are civilly liable. In that context other policy issues, such as enterprise liability to which the High Court referred in Hollis v Vabu Pty Ltd, may come into play. While it might not be literally accurate to describe a local government body as an “enterprise” (cf R v Trade Practices Tribunal; Ex parte St George CC), it is, as a roads authority, charged with responsibility for ensuring the safety of road users and must take responsibility for organisational inadequacies: cf Director of Public Prosecutions Reference No 1 of 1996 [1998] 3 VR 352 (at 355).

42 Section 45 does not identify when the knowledge of which servant or agent of a roads authority will be taken to be its actual knowledge. The answer to that question may differ depending upon the organisational structure of the relevant roads authority and the allocation of responsibility for the road work the subject of s 45. However, s 45 is plainly intended to apply to bodies such as the appellant with a structure broadly similar to that of a corporation, even though the councillors who constitute its “directing mind or will” are popularly elected politicians.

43 It is plain, and the appellant does not contend to the contrary, that s 45 cannot be interpreted by what Lord Hoffman described as the primary rules of attribution, namely that the “actual knowledge” must be that of, in this case, the appellant’s governing body, the councillors. It is necessary, accordingly, to determine whose knowledge will be the appellant’s actual knowledge by identifying the rule of attribution the legislature intended to apply to a roads authority, taking into account the language of s 45, its content and policy.

44 The long title to the Civil Liability Act describes it as “An Act to make provision in relation to the recovery of damages for death or personal injury caused by the fault of a person...”.

45 As I earlier noted, s 45 was inserted into the Civil Liability Act by Sch 1[5] of the Civil Liability Amendment (Personal Responsibility) Act 2002. In introducing the Civil Liability Amendment (Personal Responsibility) Bill, the Premier, the Hon R Carr MP, said (Second Reading Speech, New South Wales Legislative Assembly, Parliamentary Debates (Hansard) 23 October 2002, at 5764):

“The Bill will also protect regulatory and roads authorities if they could have done something to avoid a risk but did not do so. It is more than reasonable that functions performed by a public authority are treated differently under the law. Public authorities carry out what is often a limitless task with necessarily limited resources. We must ensure, therefore, that it is not left to the courts to determine a public authority’s expenditure on its tasks. In keeping with this approach, the Bill will also provide immunity for a public or other authority for breach of statutory duty, unless it has acted irrationally.

An authority that has not exercised a regulatory function – such as a power to close a fishery – will also not be liable unless it could have been compelled by a court to exercise that power. A ‘roads authority’ that has not exercised a discretionary power to mend, for example, a pothole will not be liable unless it actually knew about the particular risk that led to the injury. This will reintroduce a protection for certain ‘non-feasance’ on the parts of roads authorities. If a roads authority did know about the particular risk, it will still be able to rely on the general ‘resources’ protection in the Bill for public authorities.”

46 Section 45 appears in Part 5 of the Civil Liability Act concerned with the “Liability of public and other authorities”. Part 5 applies to “civil liability in tort”: s 40(1). “Public or other authority” is defined in s 41. Section 42 sets out principles relevant to determining whether a public or other authority has a duty of care or has breached a duty of care in proceedings for civil liability to which Part 5 applies. Sections 43 and 44 preclude a “public or other authority” from being liable for a breach of a statutory duty in connection with the exercise of, or a failure to exercise, a function of the authority or for the exercise of, or failure to exercise, a special statutory power conferred on the authority unless, in substance, the authority’s conduct in the circumstances was “so unreasonable that no authority ... could properly consider the act or omission to be a reasonable exercise of [or failure to exercise]” either the statutory duty or the special statutory power. Section 44(1) precludes a public or other authority from being liable for failure to exercise or to consider exercising any function of the authority to prohibit or regulate an activity if it could not have been required to exercise the function in proceedings instituted by the plaintiff. None of these provisions identify the person or persons whose conduct will be found to be that of the public or other authority for the purposes of determining whether or not the statutory protection applies.

47 Section 45 applies only to “a roads authority”, a term which has the same meaning as in the Roads Act 1993. "Roads authority" is defined in the Dictionary to that Act to mean, relevantly, “a person or body that is, by or under this Act, declared to be a roads authority ...”. Pursuant to s 7(4) of the Roads Act, the council of a local government area is the roads authority for all public roads within the area, subject to two exceptions not presently relevant. A roads authority has such functions as are conferred on it by or under the Roads Act or any other Act or law: s 7(5). Section 71 authorises a roads authority to carry out road work on any public road for which it is the roads authority and on any other land under its control.

48 “Carry out road work” is defined in the Dictionary to the Roads Act in the same terms as the definition in s 45(3) of the Civil Liability Act. It is a broad definition:

“ ‘carry out road work’ means carry out any activity in connection with the construction, erection, installation, maintenance, inspection, repair, removal or replacement of a road work within the meaning of the Roads Act 1993.”

49 In Porter v Lachlan Shire Council [2006] NSWCA 126 Hodgson JA (Beazley and Giles JJA agreeing) held that to fill and make good a hole in that part of a road which is a nature strip within the area used for pedestrian purposes would be road work, and that failure to repair it would be failure to “carry out any activity in connection with the construction, erection, installation, maintenance, repair or replacement of a road work” within s 45(3).

50 Section 45 is a threshold a plaintiff must establish for a roads authority to be potentially exposed to civil liability. However a finding of actual knowledge is not sufficient to create either a duty of care in respect of the risk of which the roads authority had actual knowledge nor does s 45 affect any standard of care otherwise applicable: s 45(2). Actual knowledge is, accordingly, a necessary, but not a sufficient, condition for a finding of civil liability on the part of a roads authority in respect of a failure of the authority to carry out road work, or to consider carrying out road work.

51 The use of the expression “actual knowledge” in s 45 was plainly intended to prevent a roads authority being found civilly liable merely because it had constructive knowledge of a risk. This had been the outcome in Brodie v Singleton Shire Council; Ghantous v Hawkesbury Shire Council [2001] HCA 29; (2001) 206 CLR 512, decided the year before the introduction of the Civil Liability Act.

52 In Brodie the first applicant was injured when he drove a truck owned by the second applicant onto a bridge constructed some 50 years earlier within the Singleton Shire. The truck weighed 22 tonnes and the bridge was adapted to bear a load of 15 tonnes. The timber girders failed, the bridge collapsed and the truck fell onto the creek bed below. At trial the applicants tendered evidence from the Council’s files “indicating that it had been aware of the poor condition of the bridge” and had “within the recent past before the accident ... carried out some repairs on it”: Brodie (at [174]). The primary judge found that Council staff should have discovered that the girders on the bridge were “substantially affected by piping” at the time these repairs were carried out: Brodie (at [176]). He held that the evidence disclosed a case of misfeasance in the exercise of the power to repair and found for the applicants on the ground that the council had been negligent in failing to take steps to replace the girders.

53 Gaudron, McHugh and Gummow JJ concluded that the evidence disclosed “the conduct of periodic inspections but the failure to take in the course of those inspections reasonable steps to look for such dangers as might reasonably be expected to arise”: Brodie (at [178]).

54 The Council had led no evidence as to liability and, in particular, did not lead evidence to rebut any “inference arising from the applicants’ case that it knew the bridge was in a dangerous condition” or any “evidence of reasons why it could not or did not carry out further work on the bridge”. Gaudron, McHugh and Gummow JJ concluded the primary judge’s decision in favour of the applicants was supportable by the application of ordinary principles of negligence to the facts as found: Brodie (at [180] – [181]). Kirby J agreed: Brodie (at [249])

55 It is a reasonable inference that s 45 was intended to prevent roads authorities from being held liable in Brodie circumstances merely for failing to take reasonable steps to look for such risks as might reasonably be expected to arise. On the other hand, s 45 presupposes a system of inspection by which a roads authority can acquire actual knowledge of particular risks. That system of inspection must exist as an essential adjunct to the roads authority’s obligation to keep roads in a reasonable state of repair at least implicit, if not expressed, in its function of carrying out road work.

56 Section 45, in my view, indicates a legislative intent to strike a balance between the community’s legitimate expectation, that public roads will be reasonably safe to traverse, and the extreme consequences which would flow, in revenue terms, if a roads authority could be found prima facie liable for injuries arising from risks of which it had only constructive knowledge. So much, at least, is evident from the structure of the provision and the Second Reading Speech.

57 Nothing in s 45, in my view, precludes the conclusion that the actual knowledge which will be attributed to the roads authority will at least be that of those relevantly involved in the authority’s system of inspecting roads who have a duty to report their knowledge of a particular risk and/or who have a responsibility for repairing the road, or to consider repairing the road, if such a risk is brought to their attention.

58 This is not a case where the “directing mind or will” concept should apply to designate the person or persons whose actual knowledge will be attributed to the appellant. The appellant’s argument that the relevant rule of attribution is that only the knowledge of the person(s) able to, but who failed to, carry out the road work which would have avoided the harm which materialised, would, in my view, frustrate the policy of the Civil Liability Act. On that approach, and taking the evidence in this case, not only would the knowledge of the street sweepers be irrelevant but so, too, would be the knowledge of Mr Wetherill, who was responsible for reporting hazards to the responsible person, presumably whoever’s duty it was to consider the repair of the reported hazard.

59 Such an interpretation would discourage roads authorities from setting up effective risk reporting systems. As counsel for the appellant conceded on his argument the more incompetent the street sweeper at reporting hazards, the better the appellant’s position.

60 In my view, for the purposes of s 45, the knowledge of those persons who, acting within the scope of their duties, learn of the particular risk under an obligation to report it as part of the roads authority’s system of maintaining the roads under its jurisdiction, should be attributed to the roads authority. On the facts of this case, such people were sufficiently “relevantly connected” with discharging the appellant’s responsibility for carrying out road work to hold it prima facie liable in tort where it can be found, whether by direct proof, or inference, that they had actual knowledge of the particular risk which materialised in harm to the plaintiff. Attributing those persons’ knowledge to the roads authority is consistent with the language of s 45, the context in which it appears and the policy discernible in its enactment.

61 This interpretation of s 45 should not be taken to exhaust the identity of persons whose knowledge will be attributed to a roads authority. The outcome may differ, depending upon the organisational structure of the relevant roads authority. It is sufficient, however, to dispose of this case.

62 This conclusion does not conflict with Port Stephens Shire Council & Anor v Tellamist P/L in which Ipp JA applied the “directing mind or will” principle in Tesco to determine whether a Council had had a “conscious” disregard for the rights of Tellamist to support an award of exemplary damages. His Honour was not concerned with identifying a rule of attribution in a statutory context.

63 Section 45 has been considered in three decisions of this Court, none of which directly considered the issue which arises in the present case, but each of which is consistent with the conclusion I have reached.

64 In Leichhardt Council v Serratore Giles JA (Hodgson and Ipp JJA agreeing) concluded, in the passage relied upon by the primary judge in this case, that for the purposes of s 45, actual knowledge could be inferred.

65 In that case the plaintiff tripped on a difference in level between a new marble footpath recently constructed as part of the Italian Forum in Leichhardt, and the existing footpath. The primary judge inferred the Council had actual knowledge of the trip hazard in circumstances where it had inspected the footpath after the work upon it, and, she concluded, the trip hazard must have been obvious to it at the time of inspection. Giles JA upheld that conclusion observing:

“15 It will often be the case that a plaintiff does not have direct evidence of a road authority’s knowledge of a risk. Like all facts, knowledge can be inferred from other facts, and if the inference is fairly available and the road authority calls no evidence to rebut it the Court can comfortably find knowledge.”

66 There was no suggestion in that case that the Council would only have had actual knowledge if the defect had come to the attention of the person responsible for repairing it.

67 In Porter v Lachlan Shire Council the primary judge held that the plaintiff could not prove actual knowledge for the purposes of s 45 by calling “evidence that two council employees walk[ed] past [the] area and ... there was a hole there.” The council employees had been present in the area to inspect a site where building work was to be carried out. Hodgson JA held (at [53]) that his Honour was not in error in deciding the plaintiff had not proved the defendant had actual knowledge of the hole.

68 The third case in which s 45 was referred to is Port Stephens Council v Theodorakakis [2006] NSWCA 70, an unsuccessful application for leave to appeal from a decision in favour of a plaintiff who tripped and fell on a footpath. Bryson JA (Giles and Ipp JJA agreeing) observed (at [15]) that s 45 “posed no real difficulty for the opponent”, in circumstances where the Council’s records showed that “as part of a systematic observation of the footpath in which a number of defects were recorded, officers observed the 20mm lip on or shortly before 30 November 2000”. Bryson JA said (at [15]) directly in relation to s 42 of the Civil Liability Act, and implicitly in relation to s 45, that if those provisions were to be relied upon they should be pleaded, a duty which was discharged in the defence in the present case.

69 I have had the benefit of reading Basten JA’s judgment and, with respect, disagree with his Honour’s conclusion that the reference in the Second Reading Speech to s 45 reintroducing “a protection for certain ‘non-feasance’ on the part of roads authorities” has the consequence that “actual knowledge must be found in the mind of an officer within the council having delegated (or statutory) authority to carry out the necessary repairs.” Such a construction, as I have sought to explain, in a case such as the present where the role of looking for risks in the roads was committed to the street sweepers, would allow the Council to escape liability notwithstanding their employees’ actual knowledge of the presence of such defects.

Conclusion: liability

70 The evidence established that the system the appellant had established to guard against hazardous potholes involved the street sweepers reporting their observations of potholes as they carried out their duty to their supervisor who, in turn, reported the defect to a person responsible for carrying out the repair work. As the primary judge concluded, the evidence supported the proposition that the street sweepers regularly passed the area where the pothole was located. None of them was called.

71 The video evidence that the pothole was clearly exposed on occasions, including when a street sweeper’s equipment was close by, rebutted the “parking situation” issue. The fact the appellant proved a protocol for inspecting and reporting defects, which it said had not brought the pothole to its notice, did not preclude a finding of actual knowledge having regard to the regularity of the street sweepers’ attendance in the location. Moreover the primary judge was entitled to infer that the appellant’s record keeping systems were inadequate in circumstances where the pothole was repaired, but none of the appellant’s witnesses was aware of how that had come about and the appellant was unable to produce records of the repair.

72 The fact that the primary judge, apparently erroneously, said the appellant had failed to call the street sweepers’ supervisor does not undermine her ultimate conclusion.

73 Accordingly, in my view, in the absence of evidence from the street repair workers, and having regard to the evidence about the length of time the pothole had existed in the street, and in the absence of evidence from the relevant street sweepers responsible for that area, the primary judge was entitled to infer that the street sweepers knew of the pothole: Hampton Court Ltd v Crooks [1957] HCA 28; (1957) 97 CLR 367 (at 371-372).

74 The appellant also complains that the primary judge erred in concluding it had breached its duty of care. It says her reasons were inadequate. It says her Honour failed to have regard to its extensive road network (142 kilometres) and the large responsibilities it had to attend to repairs over that area. It points out that the difficulty with a finding of inferred actual knowledge is that it does not pinpoint that time at which that knowledge was acquired which would, in turn, enable an assessment of what it could and should have done to guard against the risk posed by the hole materialising.

75 These are interesting arguments but they cannot stand in the face of the evidence given by the appellant’s witnesses that the pothole posed a risk, particularly to pedestrians at night, and should have been repaired. As the respondent submits, the fact it was fixed apparently at such little expense, and I would add with such little deployment of staff that no record was generated of its repair, supported the primary judge’s conclusion that the appellant had breached its duty of care.

76 I would dismiss the appeal on liability.

The primary judge’s reasons: quantum

77 The primary judge dealt with the sequelae of the accident as follows:

“12. The plaintiff said that after she fell she felt severe pain in her left leg and her hands were sore where she had fallen onto them. She went to her doctor the next day who arranged an x-ray of her left foot. Her foot was bandaged and she was told to keep it immobile for six weeks. The plaintiff said that it was very painful to move her foot.

13. At the end of the six-week period her general practitioner, Dr Linkins, referred her to a specialist, Dr Giblin, because her foot was very swollen, discoloured and painful. As a result her left leg was put in a plaster cast for about six weeks. After it was removed the plaintiff said that she felt sharp pain in her foot and leg and she felt a burning sort of pain. Her foot was discoloured and cold.

14. Because of her persisting complaints of pain, in March 2002 further investigations were done. An x-ray showed features of reflex sympathetic dystrophy, which I understood to be due to nerve damage, even though the fracture in her foot had healed. The plaintiff was referred to a pain specialist, Dr Salmon, for further treatment and she has tried a vast number of medications and treatments in an attempt to alleviate the pain. Despite all of these, the plaintiff says that she has constant pain in her left ankle which extends to her left knee. She says that her foot is swollen and discoloured and that sometimes it is cold and at other times it is burning hot. Her foot hurts when she is active and standing on it.

15. As a result of the continuing pain, the plaintiff has been affected emotionally and she has been given anti-depressants to assist her. She found physiotherapy useful in the past to control the pain and more recently she was provided with a ‘TENS’ machine to help manage the pain. At present she takes a number of medications for pain.

16. The plaintiff said, and I accept, that before the fall she was an active, happy outgoing woman who loved socialising and dancing. She enjoyed keeping the house and attending to the needs of her family. She was apparently a tireless worker in the butchery business and was well liked by the customers. Her daughter and husband both gave evidence to the effect that she has changed since the accident. She has no interest in activities, she is unpleasant and often angry. She does little around the house and her husband takes on the burden of much of the housework and cleaning. She enjoyed gardening before the accident but can no longer manage to do it. She has lost much of her enjoyment of life. I accept that from time to time the plaintiff does what she can around the house but that it can cause her pain in her foot and knee.

17. From the medical reports it seems that there is little likelihood of any improvement in the plaintiff’s physical or emotional condition in the future. I find that her injuries will cause her pain, discomfort and emotional distress for the rest of her life.”

78 The primary judge recorded that there was “little dispute about the level of the plaintiff’s pain and discomfort from her injuries”. She found that the respondent had suffered, and would continue to suffer, pain and discomfort and that her life’s activities and enjoyment had been “significantly curtailed”. She found that the damages to be awarded were 33% of a most extreme case (s 16, Civil Liability Act) which she said equated with $92,000.

79 At the time of the accident the respondent was working with her husband in his butcher shop and had done so for about 8-9 years. However, the primary judge recorded, “it was accepted that it was floundering financially and it was eventually closed down”. The primary judge found that the respondent was “hard working and took an active interest in the work of the butcher shop”. About three months after the accident the respondent returned to work, but was only able to walk or stand for about 45 minutes.

80 The issue on the question of economic loss was whether, but for her injury, the respondent would have found work after the business closed. She had worked as a chemist’s assistant prior to the birth of her three children, and later had worked in a factory. While she worked in the factory she suffered a repetitive strain injury to her wrists and was put off by her employer. She remained unemployed for about eight years but, as I have said, subsequently worked in her husband’s business, 38-40 hours a week. She had done a TAFE course about keeping the shop clean to proper standards and was responsible for cleaning the shop after business hours. She had also served in the shop and taken orders while her husband attended to heavy work.

81 The primary judge found that any work the respondent would have done would have been unskilled, of the type she had done in the factory or perhaps in the food industry. She found that notwithstanding the considerable time the respondent had spent out of the workforce before taking on work with her husband, she would have sought some form of employment after the business closed, particularly in circumstances that her husband had suffered illness and his future health was far from certain. She concluded that a reasonable assessment of the respondent’s future earning capacity, but for the accident, was $300 net per week and that she had no residual earning capacity given her disabilities.

82 The butcher’s shop closed in about mid-2002, but it was accepted at trial that the respondent would not have resumed employment until January 2003. On that basis the primary judge calculated past economic loss at $46,000. She assessed future economic loss to age sixty-five, discounted by 15%, at $69,207.

83 As to past and future gratuitous care, the primary judge was satisfied that the respondent needed domestic assistance because of the injury and that the respondent’s husband and daughter gave her that assistance because of her injury for periods which satisfied s 15 of the Civil Liability Act. She assessed damages for past care at two hours a day at $20 per hour over four years and four months at $59,360. While she accepted that the respondent would continue to need assistance, she discounted future gratuitous care damages by more than the usual 15% for vicissitudes to take into account that, but for the accident, the injury to the respondent’s wrists may have caused her to require domestic assistance. She awarded damages for two hours a day for 26 years discounted by 20%, at $172,188.

Submissions: damages

84 The appellant complains about every head of damages, save for out of pocket expenses. It submits the respondent should have been assessed, at best, as 20% of a most extreme case which would translate into an award of $14,500, should be awarded $5,200 for past economic loss, calculated on the basis of a loss of $100 per week over 1 year and should receive nothing for future economic loss or past or future gratuitous care. In addition it contends the primary judge failed to give adequate reasons for her award for economic loss and for her finding that the respondent satisfied the s 15 threshold for an award of damages for gratuitous attendant care services.

Non-economic loss

85 At the outset of his submissions on this aspect of the appeal Mr Sheldon drew the Court’s attention to two tables setting out the determination of damages for non-economic loss for the purposes of s 16 of the Civil Liability Act. On the table which was current as at October 2005 and, I infer, at the date of her Honour’s judgment (16 February 2006) a finding that the damages to be awarded were 33% of a most extreme case translated into an award of $137,500, as opposed to the $92,000 the primary judge awarded. A figure of $92,000 would have been appropriate, however, under the tables current as at October 2004 if the damages to be awarded were found to have been 30% of a most extreme case.

86 This matter was never, apparently, drawn to the primary judge’s attention after she delivered judgment so that her Honour could indicate what her finding truly was. Mr Sheldon submitted, that in one respect, it was of no moment for his submissions as, on the assumption that her Honour’s figure of 33% in the judgment was incorrect and it should have been 30%, he would nevertheless have submitted that it was an excessive award.

87 The appellant’s essential complaint in relation to non-economic loss was that the primary judge erred in concluding that the respondent was suffering from nerve damage because of an x-ray which showed features of reflex sympathetic dystrophy.

88 The appellant also submitted that the primary judge had failed to refer to a “telling difficulty” with the plaintiff’s history namely the failure, on her part, to inform the medical practitioners that she had had a prior surgical procedure performed on her feet. It appears the scars were the result of a procedure conducted on the respondent after she had been having problems with her feet while working in a factory.

89 None of this appears to have been expressly drawn to the medical practitioners’ attention (none of whom, I note, was required for cross–examination) however it would be extraordinary, in my view, if medical practitioners examining a person complaining of an injury to her left leg and foot had not observed, at least, those surgical scars on that foot and enquired as to the circumstances in which they came to be there.

90 The appellant complains that her Honour did not address this issue squarely but has not, in my view, explained satisfactorily how the prior surgical scars might have affected the medical practitioners’ opinions. It was open to the appellant to call a medical practitioner, or to produce a report from one, which might address this issue but it did not do so. Further, the respondent submits, the appellant did not conduct a detailed analysis of the medical reports before the trial judge but only submitted that non-economic loss equated to 18%. The transcript of Mr Sheldon’s address before the primary judge bears out this submissions. He drew her Honour’s attention only to the fact that she had to approach it on the extreme case basis and that the “plaintiff is somewhere around 18%”.

91 In my view it is not apposite for the appellant to criticise the primary judge for failing to address an argument not advanced before her but, rather, leaving her Honour, apparently, to read the medical reports for herself and form her own opinion.

92 Nevertheless the question still remains whether an assessment of the respondent as being at 30% of a most extreme case was excessive.

93 The appellate approach to reviewing awards of non-economic loss which turn on the assessment of “a most extreme case” was discussed in Crystal Wall Pty Limited v Pham [2005] NSWCA 449 at [49] as follows:

“The exercise in which the primary judge was involved in determining non-economic loss is neither scientific nor normative. While it is not wholly at large, it involves an exercise of discretion with which the Court will rarely intervene: Southgate v Waterford (1990) 21 NSWLR 427 at 440. Having regard to the nature of the exercise, a finding that a particular case is or is not ‘a most extreme case’ has been said to be not ‘readily ... susceptible of appellate review’ as ‘its resolution ... involve[s] questions of fact and degree, and matters of opinion, impression, speculation and estimation calling for the exercise of common sense and judgment’: Dell v Dalton (1991) 23 NSWLR 528 at 533 per Handley JA (with whom Kirby P and Priestley JA agreed); Rabay v Bristow [2005] NSWCA 199 at [62] - [67]. Unless it can be demonstrated that the trial judge has erred in the application of principle, in order to attract appellate review it will be necessary to show that the conclusion reached by the primary judge was manifestly erroneous: Ellis v Rantzos (t/as Rantzos Hairdressing) [2005] NSWCA 266 at [43] per Basten JA (with whom Handley and Santow JJA agreed).”

94 In my view it should be inferred that the primary judge intended to classify the respondent as being 30% of a most extreme case. This is because the amount of $92,000 appears against that percentage in the 2004 table whereas there is no figure correlating with $92,000 on either table against 33%. On that basis, on the correct table, the respondent ought to have been awarded $95,500. No application was made before the primary judge to correct this figure, however, and the appeal should be approached on the basis that the respondent was awarded $92,000 in this respect. I have earlier set out the primary judge’s findings as to the extent of the respondent’s disability. As she there recorded there was “little dispute about the level of the plaintiff’s pain and discomfort from her injuries”.

95 I am unable to detect any error in her Honour’s assessment of the respondent as 30% of a most extreme case which would attract appellate review in accordance with the authorities to which I have referred.

96 This ground of appeal should be rejected.

Economic loss

97 The appellant submits that the respondent had no more than a notional capacity to earn at the time of the accident and that the award of damages for economic loss should have reflected the inherent unlikelihood of her finding a means of exercising that notional capacity. It relies upon the proposition that prior to commencing in her husband’s business, the respondent had been unemployed for eight years during which time she had unsuccessfully sought light work. She had not undertaken heavy work whilst employed in the butcher’s business. The appellant contends the difficulties the respondent had had prior to, and during, her employment in her husband’s business would have continued once that business closed in any event.

98 The appellant criticises the primary judge’s conclusion that the respondent would have found work of the type she had done in the factory, or perhaps in the food industry. It contends this is inconsistent with the fact that the respondent had been unable to find work for the eight or so years prior to commencing work in her husband’s business. As to the proposition that the respondent may have found work in a factory, the appellant submitted that it was that work which had produced injuries to her feet, shoulders, arms and hands and reduced her capacity to light work.

99 Accordingly the appellant submits that the primary judge erred in inferring that the respondent would have been able to find employment almost as soon as her husband’s business had closed and would have remained in employment until retirement age notwithstanding the medical problems from which she suffered prior to the accident and the limitation on her ability to undertake other than light duties.

100 The appellant also complains that the primary judge failed to give adequate reasons for her award of economic loss in accordance with s 13 of the Civil Liability Act. In particular, it complains that it could not be assumed that the respondent’s most likely circumstances, but for her injury, was that she would have returned to work in a factory or food preparation: cf s 13(1).

101 The appellant also observes that the respondent elected to tender no evidence of her pre-accident earnings, so there was no evidence to which the primary judge could have regard as a basis for her future earning capacity.

102 The respondent acknowledged that she had adduced no evidence of her pre-accident earnings from the butcher shop. Ms Norton conceded that it was common ground that the butcher shop was not “making a go of it” and the respondent was not earning much money from that enterprise. She argues, however, that the respondent had demonstrated that she had the capacity to work for up to 38 hours a week and it was that capacity, not her actual remuneration, which was relevant to the question of future economic loss. She submits that it was not put to the respondent by the appellant’s counsel that after the butcher shop closed she would not be able to work in any other capacity. Indeed, it was put to her that she could still do light work (a proposition with which she agreed) and that she would have been looking for that sort of work, a proposition with which she had again agreed. While Ms Norton acknowledged that that cross-examination had not undermined the appellant’s basic submission that the respondent would be unable to obtain work having regard to her limited earning capacity (which pre-existed the accident), she submitted that the eight year period the respondent had been unable to obtain employment was the period immediately after the onset of repetitive strain injury. The respondent had given evidence that she had learned to cope with that problem. Ms Norton also submitted the primary judge’s conclusion was supported by the poor health of the respondent’s husband. She argued that was another factor which would have impelled the respondent to keep working.

103 While it is usually desirable for evidence to be called as to what a plaintiff would have been likely to earn but for the injury, failure to call such evidence does not militate against a finding in favour of a plaintiff under this head of damages: State of New South Wales v Moss [2000] NSWCA 133; (2000) 54 NSWLR 536 at [66] per Heydon JA. In this case the failure to call evidence of what the respondent had earned prior to the accident is explained by the fact that she was not earning a great deal. That was not, however, because she lacked earning capacity but, rather, because the business in which she and her husband were engaged was in dire straits.

104 The process of assessing damages for future economic loss “involves an evaluation of possibilities, not establishing a fact as a matter of history”: Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 at 639. In State of New South Wales v Moss (at [71]) after quoting this passage from Malec v J C Hutton Pty Ltd, Heydon JA continued:

“The majority (Deane J, Gaudron J and McHugh J) in Malec v J C Hutton Pty Ltd said (at 643) that when the law takes account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring in a range from just above the speculative to just below the certain. The inquiry – the process of estimation of possibilities – is thus an imprecise and indeterminate one to be carried out within very broad parameters. The trier of fact may have to form conclusions on ‘slender material[s]’ ... Menzies J said that sometimes the assessment of damages involves ‘guesswork rather than estimation’... Lord Diplock described the factors underlying the assessment of damages for diminished earning capacity as ‘matters of prophecy or judicial guesses’ in Paul v Rendell (1981) 55 ALJR 371 at 376 ....”

105 The critical question the primary judge had to determine was whether, once the business closed, but for the accident, the respondent would have been able to obtain employment in the open labour market.

106 In my view her Honour did not err in concluding that the respondent would have been successful in obtaining such employment and in quantifying her likely remuneration at the level she did which was approximately half the average female wage.

107 The evidence established that the respondent’s situation had changed from that which prevailed during her eight years of unemployment prior to commencing work with her husband. First, she had been particularly troubled during that period by the repetitive strain injury she had suffered. That had clearly resolved sufficiently prior to, or perhaps during, the period she worked for her husband. During that period she carried out work even if it could be described only as light work. Further she had retrained in the area of shop hygiene, a skill which would, in my view, have stood her in good stead in many small businesses of the sort likely to employ a woman in her late fifties-early sixties.

108 The effect of her injury is that she is unable to carry out that work because her foot becomes swollen if she stands on it for too long.

109 In my view the primary judge did not err in concluding that the respondent was likely to have been gainfully employed until retirement age. Nor did her Honour err in assessing the respondent’s damages both for past and future economic loss at the relatively modest amount of $300 per week. Her Honour allowed for the possibility it would have taken the respondent approximately six months to obtain new employment.

110 The appellant also complained in its Notice of Appeal that the primary judge failed to give adequate reasons for the award of economic loss in accordance with s 13 of the Civil Liability Act. It did not address that ground of appeal in either written or oral submissions. In my view her Honour’s judgment adequately set out the assumptions necessary to underlie an award for future economic loss for the purpose of s 13.

111 This ground of appeal should be rejected.

Gratuitous attendant care services

112 Section 15 of the Civil Liability Act relevantly provides :

“15 Damages for gratuitous attendant care services: general

(1) In this section:

attendant care services means any of the following:
(a) services of a domestic nature,
(b) services relating to nursing,

(c) services that aim to alleviate the consequences of an injury.

gratuitous attendant care services means attendant care services:

(a) that have been or are to be provided by another person to a claimant, and

(b) for which the claimant has not paid or is not liable to pay.

(2) No damages may be awarded to a claimant for gratuitous attendant care services unless the court is satisfied that:

(a) there is (or was) a reasonable need for the services to be provided, and

(b) the need has arisen (or arose) solely because of the injury to which the damages relate, and

(c) the services would not be (or would not have been) provided to the claimant but for the injury.

(3) Further, no damages may be awarded to a claimant for gratuitous attendant care services if the services are provided, or are to be provided:

(a) for less than 6 hours per week, and

(b) for less than 6 months.

Note. Section 18 provides that a court cannot order the payment of interest on damages awarded for gratuitous attendant care services....”

113 The appellant submits the respondent did not establish the three s 15(2) prerequisites for an award of damages under this head. Further, the appellant argued, the evidence demonstrated that the assistance afforded by the respondent’s family, principally her husband, was rendered for less than six hours a week so that s 15(3) was not satisfied.

114 As to s 15(2)(b) the appellant submitted her evidence established that the respondent had received considerable assistance prior to the accident including her husband assisting in cleaning, cutting the grass and mopping the floors, apparently because of the problem she had with her arms. He had always helped her with the shopping before the accident, driving her to and from the shops.

115 The evidence concerning the claim for gratuitous attendant care damages was scant and, in my view, inconsistent.

116 In her evidence in chief, the respondent said that for the first six weeks after the accident her husband did most of the cooking, cleaning, shopping and washing. After that six weeks had passed she was able to do a little more but her husband was still helping her around the house with vacuuming, mopping floors, cleaning windows, shopping and washing. She said that during the first six weeks her husband was doing two or three hours housework a day after he came home from work. This appeared to continue after the first six weeks, according to her evidence in chief, for an indefinite period.

117 Prior to the accident the respondent said she had done all the housework inside the house with occasional assistance from her husband in cleaning windows or cutting the grass or keeping the backyard tidy. The amount of time her husband had spent on assisting her with those activities prior to the accident was not quantified. Her daughter said that prior to the accident her parents had shared “a lot of the housework”, but that after the accident her father did “a lot more work around the house”. She had also moved home sine the accident and said she was assisting with housework. In cross-examination she said her mother was mainly responsible for cooking, and she had seen her mother do cleaning work.

118 Mr Roman said prior to the accident he had always vacuumed since the “problem” the respondent had had “at the factory”. He accepted that prior to the accident he used to help with “some household tasks”. Since the accident he “help[ed] her more in cooking, or sometimes I’ll do the cooking myself and the cleaning.” He cleaned the bathroom “if she can’t do it”. He assisted his wife to hang up washing, but had done that before the accident too.

119 By 2002, the respondent said, her husband was still cooking, cleaning the house, washing, shopping, mopping floors and cleaning the windows and doing heavy work. She said he was doing this work because she could not do it because it aggravated her pain in her foot and knee. As to gardening in the “few years” prior to the hearing, the respondent said she did it sometimes, but it was difficult.

120 In cross-examination, however, the respondent said first, that she cooked dinner sometimes, maybe once or twice a week and that her husband had to cook because it was difficult for her, but then said she cooked everything. She also said, in cross-examination, that while she had not really done any vacuuming or mopping since she injured her feet, she might have done some and it “could be” that she could do mopping if she did it in bits and pieces.

121 Insofar as having said her husband had done the washing around the house in 2002, the respondent said in cross-examination that she did not mean washing clothes by hand because she had a washing machine and that she was able to put clothes into it and take them out but that sometimes she could not hang them up because her arms hurt and she could lose balance because of her foot but “again if on any particular day I feel that I can do it I will do it”.

122 In my view the appellant is justified in complaining about the primary judge’s award of damages for gratuitous attendant care services. The respondent’s evidence did not meet the test that the need for her family’s assistance had arisen solely because of the injury for which the damages related. This would have been difficult for the obvious reason that the injury to the respondent’s wrist was an equally probable explanation for her need for assistance as was the injury to her leg. There was clear evidence that the respondent’s husband assisted her in some respects with housework prior to the accident. There was insufficient evidence, in my view, to support the proposition that the services he provided after the accident would not have been provided but for her injury. Moreover the significant concessions the respondent made in cross-examination undermined the proposition that there was a reasonable need for the services to be provided: s 15(2)(a).

123 The primary judge’s conclusion that the plaintiff would continue to need assistance for the future was premised on the proposition that there was “no evidence which would lead me to find that she will require less assistance than at present”. It was for the respondent to prove that she would need assistance at the same rate for the rest of her life (as the primary judge allowed). There was no evidence, in my view, which could have supported a finding for the indeterminate future.

124 This ground of appeal should be upheld. The judgment should be reduced by the amount awarded under this head, $231, 548.

125 As to costs the respondent has been substantially successful on the appeal. The issue on which the appellant succeeded occupied a minor part of argument. In my view the respondent is entitled to costs of the appeal.

126 I propose the following orders:

1. Appeal on liability dismissed.

2. In lieu of the judgment below, judgment for the respondent for $207, 207.

3. Appellant to pay the costs of the appeal.

127 BRYSON JA: I regard it as clear that the Council was negligent in failing to observe the existence of the pothole or failing to act on the observation of the pothole which it is probable that sweepers made, and in failing to make the simple repair which was called for, and was ultimately made, in the time available before Mrs Roman was injured.

128 On the operation of s.45 of the Civil Liability Act 2002 I agree with the judgment of Basten JA, and I add some further observations. I was at first strongly attracted to the view that actual knowledge should be attributed to the roads authority where the knowledge was that of any persons within the authority’s organisation whose function it was to observe the existence of risks; on the evidence and the findings, the street sweepers were told in terms that it was their duty to observe and report risks. This seems appropriate if the test for imposing liability is or includes knowledge of some fact. But s.45(1) does not work this way.

129 Corporations can only have knowledge and they can only function through persons within their organisations: legislation such as s.45(1) which treats a corporation as having actual knowledge can only be understood as attributing to the corporation the actual knowledge of the person within its organisation who relevantly functions as the corporation.

130 Section 45 does nothing to impose liability on a roads authority. Section 45 creates a gateway through which a claim that a roads authority is liable must pass if the alleged liability is "for harm arising from a failure of the authority to carry out roadwork, or to consider carrying out roadwork ...". Whether or not failure to carry out roadwork or to consider carrying out roadwork gives rise to liability is otherwise left untouched by s.45: see subs.(2). Whether there was a failure to carry out roadwork or to consider carrying out roadwork, in the case of the Council as of any other roads authority which is incorporated, can only be addressed by examining the Council's organisation and identifying persons who in fact have the function of carrying out roadwork, or of considering carrying out roadwork. In the workings of s.45(1), those are the persons whose actual knowledge of a particular risk is relevant. In the reasonable interpretation of s.45(1), failure to act in the ways referred to and possession of the actual knowledge referred to relate to the same persons. A shift away from the persons whose failures are relevant to other persons whose actual knowledge is relevant would be anomalous and has no textual support in s.45.

131 I agree with the orders proposed by Basten JA.

132 BASTEN JA: After dark on the evening of 16 October 2001 Mrs Roman trod in a pothole on the edge of the roadway of Princes Street, McMahon’s Point in North Sydney. She fell heavily, causing injury to her left ankle. An X-ray later revealed a fracture of the fifth left metacarpal bone, with “internal derangement” of the left ankle. On 15 October 2004 Mrs Roman commenced proceedings in the District Court against the North Sydney Council (“the Council”), seeking damages for her injury. She was successful in that Court and obtained a judgment for $475,485.

133 The Council has appealed. It raised a number of grounds challenging the assessment of damages by the trial judge. It also contended that her Honour ought to have found in its favour on the question of liability, pursuant to s 45 of the Civil Liability Act 2002 (NSW). In my view the Council is entitled to succeed on the basis of that provision.

Liability of public and other authorities

134 Princes Street, at the relevant point, was edged by guttering made of stone or concrete. It appears from the photographs of the pothole in which Mrs Roman fell that the bitumen road surface had broken up at the point of juncture with the guttering. There is no doubt that the pothole was on the carriageway and that its repair would have constituted the carrying out of “road work”. The Council accepted that it was the “roads authority” for Princes Street, under the Roads Act 1993 (NSW). It was therefore responsible for the maintenance and repair of Princes Street.

135 Part 5 of the Civil Liability Act deals with the liability of “public and other authorities” in tort. It applies to all forms of civil liability, other than liability for intentional acts done with intent to cause injury: s 40 and s 3B.

136 Section 45 is in the following terms:

45 Special non-feasance protection for roads authorities

(1) A roads authority is not liable in proceedings for civil liability to which this Part applies for harm arising from a failure of the authority to carry out road work, or to consider carrying out road work, unless at the time of the alleged failure the authority had actual knowledge of the particular risk the materialisation of which resulted in the harm.

(2) This section does not operate:

(a) to create a duty of care in respect of a risk merely because a roads authority has actual knowledge of the risk, or

(b) to affect any standard of care that would otherwise be applicable in respect of a risk.

(3) In this section:

carry out road work means carry out any activity in connection with the construction, erection, installation, maintenance, inspection, repair, removal or replacement of a road work within the meaning of the Roads Act 1993.

roads authority has the same meaning as in the Roads Act 1993.

137 The application of sub-s (1) gave rise to questions of both law and fact. In broad terms, the legal issue was in whose mind must knowledge of the particular risk be present, in order to engage the provision. That question seems to have received little attention at trial, but it is necessary to answer it before considering factual issues as to which individuals had what knowledge and at what time.

138 There are two avenues of approach to the legal question. One is to consider what may be revealed by consideration of the generic term “roads authority”, as defined in the Roads Act. The other is to consider the structure and operation of the specific roads authority in this case, namely the Council.

139 The Dictionary to the Roads Act defines “roads authority” as a person or body declared under that Act to be a roads authority and, in relation to a particular public road, the roads authority for that road. Section 7 identifies various roads authorities, including the Road Traffic Authority, the Minister and other specific public authorities, depending on the nature of the road, and, in the last case, the provisions of any regulations. Nevertheless, in the present case it is clear that s 7(4) is the relevant provision:

(4) The council of a local government area is the roads authority for all public roads within the area, other than:

(a) any freeway or Crown road, and

(b) any public road for which some other public authority is declared by the regulations to be the roads authority.

It was not suggested that the exceptions applied in the present case.

140 It may be accepted that there are a number of different kinds of persons and bodies who may constitute a roads authority. For example, the Roads and Traffic Authority is a statutory authority constituted under the Transport Administration Act 1988 (NSW). The Minister is an individual. Other persons or bodies may be specified. This coverage does not, in my view, assist in identifying the operation of s 45(1) of the Civil Liability Act, and in particular the ascription of actual knowledge. That question must be answered by reference to the particular person or body concerned.

141 The second and more helpful approach is to consider the identification and description of a local council under the Local Government Act 1993 (NSW). The constitution and composition of councils is dealt with in Part 2 of Chapter 9 of the Local Government Act. It constitutes a council for each relevant area (s 219) and identifies the council as a body corporate: s 220. The direction and control of the affairs of the council are vested in a governing body constituted by the elected representatives called councillors: ss 222 and 223.

142 General responsibility for the efficient and effective operation of a council and for ensuring the implementation of council decisions is vested in the general manager: s 335. The first particular function ascribed to the general manager is “the day-to-day management of the council”: s 335(2). The organisation of the council involves two broad categories of employees, namely the general manager and other “senior staff”, who are dealt with in Chapter 11, Part 2 and other staff, dealt with in Part 5 of Chapter 11.

143 The operation of a council is dealt with in Chapter 12, but no relevant constraints are placed upon the exercise of the functions of the council: see, generally, s 355. (Restrictions on delegation, set out in Chapter 12, Part 3 and on the formation of corporations, set out in s 358, have no bearing on the present issue.) It follows that a council may, as one would expect, carry out its functions as a roads authority through employees, agents or contractors: s 355(a).

“Actual knowledge” of Council

144 There was no suggestion in the present that either the councillors or the general manager of the Council had actual knowledge of the pothole in which Mrs Roman stepped. Nor was it suggested that actual knowledge must exist at that level of the Council hierarchy. At the other end of the scale, it was argued on behalf of Mrs Roman that particular Council workers, including an individual (though unidentified) street sweeper, must have had such knowledge.

145 The issue in relation to the knowledge of the street sweepers depended upon a factual premise, not in dispute, that one of their roles was to look out for and report on hazards which might require repair. That was sufficient, Mrs Roman contended, to render their state of knowledge to be that of the Council, for the purposes of s 45(1). Although a finding (by way of inference) may plausibly have been raised in relation to the knowledge of the street sweeper (or street sweepers) who operated in Princes Street at the relevant time, there was no factual finding as to his, her or their identity or state of mind, nor was any notice of contention filed, seeking to rely upon such knowledge in a street sweeper. Nevertheless, counsel for Mrs Roman adopted that as an alternative submission, without objection, and it should be considered on its merits.

146 The Council called evidence from supervisory staff at an intermediate level in the hierarchy, with responsibility for street sweeping and road maintenance. Although each of these witnesses denied knowledge of the pothole in question at the relevant time, the trial judge appears to have inferred that one or more of them (unidentified) had such knowledge and that his knowledge was the knowledge of the roads authority. That factual finding was challenged.

147 The approach of the Council involved two limbs. First, and at the higher level, the knowledge of the Council was that of its governing body and its chief executive officer, in accordance with principles applicable to corporations generally: see Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153, and, in relation to a local council, see Port Stephens Shire Council v Tellamist Pty Ltd (2004) 135 LGERA 98; [2004] NSWCA 353, at [403]-[407] (Ipp JA, Giles JA agreeing) and at [314]-[320] (Santow JA).

148 As a secondary position, and the one which appears to have been relied on at trial, the Council argued that its knowledge could not extend beyond that of supervisory staff who had responsibility for the street sweepers who carried out inspections for hazards on the streets, or officers with decision-making responsibility for assessing the risk and effecting repairs and maintenance work on roads.

149 Whilst assistance may be obtained from cases dealing with other legal issues, they should not be treated as determinative. As the differences of opinion between the majority and minority in Tellamist demonstrate, there are significant policy issues specific to the identification of contumelious behaviour for the purposes of an award of exemplary damages. Similarly, different issues may be relevant in identifying whether the mind of an individual is the mind of the company for the purposes of the commission of an offence. However, a common theme is the difference between the state of mind of a person said to constitute the company for a particular purpose and the state of mind of a person for whose acts the company is vicariously liable.

150 The present issue is not one of liability under the general law: indeed, it may be assumed for present purposes that the Council was negligent in leaving the pothole unrepaired and would, under general law principles, have been liable to Mrs Roman in damages for her injury. Were it otherwise, the operation of s 45 would not arise. Further, it is significant that s 45 was introduced by the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), following the decision of the High Court in Brodie v Singleton Shire Council [2001] HCA 29; (2001) 206 CLR 512 and, relevantly in the case of pedestrians, the conclusions reached in the companion case of Ghantous v Hawkesbury City Council.

151 Brodie is sometimes described as abolishing the “immunity” of a roads authority for non-feasance, as opposed to active “misfeasance”, in the carrying out its statutory powers. More accurately, the principle established by Brodie is identified in the joint judgment of Gaudron, McHugh and Gummow JJ at [102] in the following terms:

“Whatever may be the general significance today in tort law of the distinction between misfeasance and non-feasance, it has become more clearly understood that, on occasions, the powers vested by statute in a public authority may give it such a significant and special measure of control over the safety of the person or property of citizens as to impose upon the authority a duty of care. This may oblige the particular authority to exercise those powers to avert a danger to safety or to bring the danger to the knowledge of citizens otherwise at hazard from the danger. In this regard, the factor of control is of fundamental importance.”

Their Honours continued at [103], with specific reference to roads authorities:

“It is often the case that statutory bodies which are alleged to have been negligent because they failed to exercise statutory powers have no control over the source of the risk of harm to those who suffer injury. Authorities having the control of highways are in a different position. They have physical control over the object or structure which is the source of the risk of harm. This places highway authorities in a category apart from other recipients of statutory powers.”

152 The High Court handed down judgment in Brodie on 31 May 2001. The Civil Liability Amendment (Personal Responsibility) Bill, which introduced s 45, was the subject of a second reading on 19 November 2002. The Minister stated, in reference to s 45 (Hansard, NSW Legislative Council, 19 November 2002, p 6899):

“A ‘roads authority’ that has not exercised a discretionary power to mend, for example, a pothole will not be liable unless it actually knew about the particular risk that led to the injury. This will reintroduce a protection for certain ‘non-feasance’ on the part of roads authorities.”

This appears to be an explicit acknowledgement of the change to the common law wrought by Brodie. It is also an acceptance of the principle established by the joint judgment (and Kirby J) in Brodie that the power of a roads authority to carry out repairs is coupled with a duty to take reasonable care to exercise the power so as to avoid or ameliorate risks of harm to road users. The purpose of the Bill (and now s 45) is to leave untouched the potential liability of a council for harm resulting from a hazard of which it was aware, but to remove liability for such matters as failing to undertake reasonable inspections to ascertain the existence of such risks. To the extent that the potential for financial liability may be an incentive to act, and the absence of such liability a disincentive to act, it could be argued that s 45 places a premium on ignorance. However, that consideration cannot affect the proper construction of the provision, nor lead to some diminution of the requirement of actual knowledge as a precondition to liability for “non-feasance”.

153 The facts in Brodie are instructive as to the concept of actual knowledge of an authority. The question of inspections was discussed in the joint judgment at [164] and [165] in the following terms:

“164 Cases respecting inspections for dangerous conditions have been determined by the dichotomy between misfeasance and non-feasance. A ‘highway authority’ was not liable if it failed to conduct inspections but, seemingly, was liable if it began remedial work in response to the discovery by inspection of defects or, possibly, even once it discovered the existence of those defects. These cases usually involved ‘non-feasance’, as an inspection typically discloses a situation which is unsafe and needs repair. Allied to them are cases in which a danger first manifests itself when the road surface, or a structure, collapses or gives way under the plaintiff or shortly before it is crossed.

165 Where the danger could not reasonably be suspected to exist, or could not be found except by taking unreasonable measures, generally there will be no breach of duty by the authority. On the other hand, there will be a breach of duty where an authority fails to take reasonable steps to inspect for such dangers as reasonably might be expected or known to arise, or of which the authority has been informed or made aware, and, if they are found, fails to take reasonable steps to correct them.”

The reference to dangers of which the authority “has been informed or made aware” is footnoted in the joint judgment to Hodgson v Cardwell Shire Council [1994] 1 Qd R 357 at 362-363 (Kneipp J in the Supreme Court of Queensland). That case involved a claim for damages arising from an accident which occurred on a dangerous bridge. Kneipp J referred to a letter written to the Council’s clerk, more than a year before the accident noting that a “number of accidents” had occurred on the bridge, “caused by the cars slipping off the runners and the driver loosing control”. His Honour continued (p 362):

“It is clear from the evidence of Mr Jones, who as has been said was the defendant’s engineer, that this complaint should have occasioned no surprise to him or at least some members of the Council.”

154 In response to the letter, the defendant’s clerk wrote to the correspondent advising:

“This matter was considered at the Council’s April meeting and I advise the Shire Engineer had been instructed to provide another plank on the inside of the runners of the bridge.”

155 Kneipp J also referred to the reasoning of this Court in Hill v Commissioner for Main Roads (1989) 68 LGRA 173; 9 MVR 45 and [1989] Aust Torts Rep ¶80-260, a case in which a motorcyclist was injured when he came, unexpectedly, on undulations in the bitumen surface of a road which the Commissioner had repaired on one occasion, but unsatisfactorily. It was the unsatisfactory nature of the repairs which allowed the case to proceed as one of misfeasance, rather than non-feasance. In that context, Samuels JA (Kirby P and Priestley JA agreeing) stated (at p 181) that the task undertaken by the Commissioner was to repair the highway in order to remove the danger.

“In order to achieve that purpose it was necessary to identify and rectify the fundamental cause of the manifest condition. That cause was identified; the respondent knew all about it.”

156 In Hodgson, knowledge reached the level of the Shire Clerk (the equivalent of the general manager under the Local Government Act) and the Council itself, which had instructed the Shire Engineer to undertake certain work. In Hill, it would seem that the Commissioner, or an officer with authority to undertake the repairs, had actual knowledge of the problem. Because the need to demonstrate misfeasance relied on evidence of repairs having been undertaken (though inadequately) those cases will inevitably involve knowledge, at least at the level of an officer with authority to undertake appropriate works. To the extent that s 45 was designed to “reintroduce a protection for certain ‘non-feasance’ on the part of road authorities”, being the language of the Minister, it would seem that actual knowledge must be found in the mind of an officer within the council having delegated (or statutory) authority to carry out the necessary repairs.

157 This conclusion is consistent with the language of s 45(1). The section confers an immunity on a roads authority where harm arises “from a failure of the authority to carry out road work”. The exception only arises where “at the time of the alleged failure” the authority had actual knowledge of the particular risk. A purposive construction would require that the relevant knowledge exist in an officer responsible for exercising the power of the authority to mitigate the harm. The existence of the power is only coupled with a duty to act in circumstances where such knowledge exists. Accordingly, the knowledge must exist at or above the level of the officer responsible for undertaking necessary repairs. The knowledge of others without such responsibility will not, relevantly for the purposes of the provision, constitute “actual knowledge” of the roads authority itself; at best it could give rise to “constructive” or imputed knowledge. The use of the term “actual” precludes reliance on constructive or imputed knowledge. It follows that, even if a street sweeper having a duty to note and report defects, was aware of the pothole, the immunity is engaged absent proof on the balance of probabilities that the officer in charge of maintenance works received that information.

Application of principles

158 The evidence given at trial led her Honour to conclude that the pothole was present “for some months, at least from February in the year of the plaintiff’s accident”: Judgment at [36]. That finding derived from evidence given by Mrs Roman’s daughter who lived in Princes Street and to whom Mrs Roman was paying a visit at the time of the accident. The finding was not challenged. (It seems unlikely that the pothole was in a static condition throughout that period, but there was no evidence as to its progression.)

159 Mrs Roman’s daughter had lived in Princes Street for approximately 12 months before the accident. She was asked whether she had seen cleaning activities in the street and gave the following evidence (Tcpt, 22 July 2005, p 7):

“Q. What would you see?
A. There was a street sweeper.

Q. Male or female I suppose I should ...
A. I think it was male.

Q. How often did he come?

A. I would see, I would see him approximately twice a week I’d say.”

160 The evidence of Ms Roman was a little vague in many respects, and the cross-examination was fairly cursory. Her evidence about seeing a street sweeper, apparently on more than 60 occasions over the 8-9 month period in question, and apparently during a period when she was working (Tcpt, pp 9 and 12) was not challenged. The Council officer who supervised the street cleaning, Mr James Wetherill, gave evidence in cross-examination (Tcpt, 27 October 2005, p 29) as follows:

“Q. I want you to assume that it’s the case that that pothole was there from at least February 2001 to the date of this accident in October; eight months or so. During that time, that gutter would have been swept how many times, Mr Wetherill?
A. According to the schedule which is adhered to, it would have been swept either eight or nine times, depending on the week that you’re telling me it was first observed during that period.”

161 Ms Roman’s evidence of sweeping occurring twice a week was not put to Mr Wetherill, but the trial judge “preferred” the observations of Ms Roman: Judgment at [23].

162 The Council also called Mr Robert Godbier, who was the engineering overseer with the Council for approximately 15 years until the end of August 2001. His duties were “the general maintenance for roads, kerb and gutter, footpaths, stormwater drains ...”: Tcpt, 27 October 2005, p 7. He was also familiar with Princes Street, as his residence was 75 yards from the street and he gave evidence that he had walked the footpaths on a daily basis for many many years: Tcpt, p 9. He gave evidence that his recreational walks in the year prior to 16 October 2001 took him up or down Princes Street about twice a week: ibid. He gave the following specific description of his activities (Tcpt, pp 10-11):

“Q. In your walking up and down Princes Street, did you ever notice a pothole in that location that I have just described to you, that is, the northern side of Princes Street, between Blues Point Road and the laneway?

A. No, I didn’t.
...

Q. Do you, from time to time, get reports from the crews working under you, or did you get reports from crews working under your control?

A. Yes we did.

Q. What sort of reports did you get from them?

A. They were mostly verbal from the street sweepers. Anybody that didn’t have anything to do with that particular job, concreting or stormwater drainage maintenance, would report that there was either a blocked drain, tripped in the footpath, or anything, or a pothole on the road, and we would put [it] on the list and when we moved into that particular precinct, we would attend to it.

Q. Did any person under your control or who worked for you ever tell you about a pothole in Princes Street, in this location that I’ve been asking you about?

A. No.”

163 In cross-examination he was asked if he had checked Council records before giving evidence and said that he had not, because he was no longer working for the Council: Tcpt, p 11. He was asked:

“Q. But you can say, without even looking at those records, can you, that nobody told you about a pothole in Princes Street in the location you’ve been asked to assume? Nobody told you. You’ve got a memory of that. Is that right?
A. Yeah. I’ve got a memory and I can’t remember anything like that, no.

Q. Do you think your memory might be defective?
A. I don’t think so.”

164 He was then asked if the way to test his memory would have been to look at the Council records and said that he thought they would have been given to him, had there been anything there: pp 11-12. He therefore assumed that there was nothing in the records. The cross-examination continued:

“Q. You don’t pretend to remember, do you, four or five years back as to where particular potholes were, in particular streets?

A. No.

Q. You’ve got no idea, do you?
A. No.”

165 It is common ground that there was no document or other computer record held by the Council which recorded the existence of the pothole. Indeed, there appears not to have been a record of it even at the time that it was filled in. Accordingly, on the test set out above, and in the absence of a written record, the knowledge of the Council would at least have included the knowledge of Mr Godbier. On the Council’s case, he had no knowledge of the pothole at the relevant time; on the Respondent’s case, he had no recollection. Accordingly, the Respondent sought to argue that it was open to the trial judge to “infer” that he had had actual knowledge at the relevant time, but had now forgotten. However, with respect, the rhetorical question relied upon, “You’ve got no idea, do you?”, and the answer in the negative, was hardly the full scope of his evidence. It was the conclusion of a general cross-examination about remembering “where particular potholes were, in particular streets”. But Princes Street was not any street in the municipality. As the following cross-examination made clear, he traversed the northern footpath twice a week. The cross-examination continued:

“Q. And, because of your responsibility and training, you’d be looking out for potholes, wouldn’t you?

A. Yes.

Q. As well as that, seven to ten times a year, you’d conduct a formal inspection of that street. Is that right?

A. Yes.

Q. Is it right that you’d do that yourself? This is you, doing the inspection, seven to ten times a year?

A. Yes.”

166 He also gave evidence of the difficulty of seeing potholes in the gutter, because of the intensity of parking in the street, but agreed that the pothole in the photograph which he was shown was “a pretty bad pothole” and the questioning continued:

“Q. If you saw that pothole, it would be something that you’d put on your list of defects to repair. Correct?

A. Correct.”

167 The effect of this further cross-examination was to establish a level of improbability that Mr Godbier had actual knowledge of the pothole between February and September 2001. It was not suggested to him that it might not have been repaired even had he seen it: rather it was suggested that if he had had knowledge of it, it would have been repaired. The fact that it was not repaired tended to undermine the suggestion that he had actual knowledge of it.

168 The Council also called Mr Steven Stathis, who was, at the time of the trial, the infrastructure maintenance manager with the Council. He took over responsibility as works overseer from Mr Godbier in August-September 2001: Tcpt, 27 October 2005, p 17-18. He also gave evidence that he had no knowledge of the pothole on the northern side of Princes Street: p 19. He was not cross-examined as to that evidence. He did, however, give evidence that the computer records had been checked with respect to the hole and no record found either prior to October 2001 or prior to it being patched, some ten months later: Tcpt, pp 23-24.

169 Finally, of present relevance, the Council called Mr Colin Marr who was an insurance and risk manager with the Council. He had made a search of the computer records for complaints by members of the public, a few days after receipt of the statement of claim and found no information concerning a pothole in Princes Street fitting the description of that involved in the accident: Tcpt, 22 July 2005, p 32. In cross-examination, he was asked the identity of the Council’s works overseer in October 2001 and identified a Mr Warren Stahlhut: Tcpt, p 35. However, he then stated:

“From discussions with him he was involved in works gangs at that time. He wasn’t an overseer at that time.”

This evidence was to attain some tangential relevance which will be addressed in the context of her Honour’s reasons.

170 There was some reference in argument in this Court to the onus of proof in establishing actual knowledge on the part of the Council. The question is whether the plaintiff or the defendant in a civil liability claim bore the onus of establishing the facts necessary to engage an exception to a statutory immunity. This issue appears not to have been explored at trial, nor was this Court taken to any authority with respect to that question in relation to this or analogous provisions.

Reasoning of trial judge

171 Her Honour did not discuss in whom actual knowledge of the risk needed to reside, but did find in express terms at [29]:

“None of the witnesses called by the defendant knew of or had been notified of the pothole in 2001 or even that it had been repaired.”

172 On the test set out above, that finding, in relation to Messrs Godbier and Stathis, might have been decisive of the case, in favour of the Council. However, her Honour continued:

“There was no system for inspection or recording potholes other than that used for the trafficable road service in 2001. No cleaner was called to give evidence about the process of sweeping Princes Street or whether the hole had been seen and the defendant notified.”

173 It was true that no cleaner had been called, but the last clause implies, correctly, that her Honour considered that notification of “the Council” was a necessary step, in addition to knowledge held by a street sweeper. However, both those responsible for undertaking repairs and the person in charge of the street sweepers, Mr Wetherill, had been called. Mr Wetherill gave emphatic evidence that he had never received a report of the existence of the pothole in question and that he himself had never seen the pothole: Tcpt, 27 October 2005, p 27. He was not cross-examined on that evidence.

174 Her Honour noted that a video film taken by the Respondent’s daughter, after the injury, showed that the hole was clearly visible: at [31]. She then set out s 45 of the Civil Liability Act (at [32]) and noted that knowledge could be inferred. In support of that proposition, she relied upon the reasons of Giles JA in Leichhardt Council v Serratore [2005] NSWCA 406 at [15]:

“It will often be the case that a plaintiff does not have direct evidence of a road authority’s knowledge of a risk. Like all facts, knowledge can be inferred from other facts, and if the inference is fairly available and the road authority calls no evidence to rebut it the Court can comfortably find knowledge.”

175 This was an appropriate principle to apply, but to apply it required consideration of the evidence called by the road authority. Her Honour’s application at [34] was as follows:

“In this case, even though there was no system in place for inspection of the kerbs and guttering, there was clear evidence that council workers were required to notify the council of hazards. This hole was clearly a hazard and accepted as such by Mr Wetherill. It was located in a position regularly passed by council sweepers and it was repaired some time after the plaintiff’s fall. The absence of records does not persuade me that the council did not know about the hole. Having called no evidence from any sweeper who worked in that area nor from the person who was directly in charge of the street repair workers, I can comfortably find that the council had knowledge of the hole from a time well before the plaintiff’s fall and took no step to rectify it.”

176 As the parties recognised, this was the key passage in her Honour’s reasoning on this issue and it was given detailed consideration on the appeal. A number of comments are apposite. First, the defendant Council is treated as an abstraction, which must be notified of any hazard or danger identified by its workers. In legal terms that approach is correct: in practical terms, it fails to identify the officers of the Council who might be expected to receive such notification. Secondly, and critically, her Honour’s claim that no evidence was called from “the person who was directly in charge of the street repair workers” was in error. There was some attempt in the course of argument to infer the basis for such a statement. Both of the relevant officers, namely Messrs Godbier and Stathis, had been called. The only explanation proffered was that her Honour had been confused by the evidence of Mr Marr in relation to the possibility that Mr Stahlhut was a relevant works overseer, despite the fact that Mr Marr had immediately explained that he was not: see [169] above. In the absence of any plausible explanation, one must conclude that her Honour was simply mistaken. However, it was a mistake with respect to a critical element in the case.

177 There were two further elements in that passage which were criticised. The first was the fact that the absence of records did not persuade her Honour that the Council did not know about the hole. In terms, the statement was unexceptionable: in context, however, it appears to have been one factor relied upon to support a comfortable conclusion to the contrary, namely that the Council had actual knowledge. There was no reason to think that the absence of records gave support to that conclusion.

178 Further, the Council argued that little if any weight should be given to the failure to call “any sweeper” who worked in the area. Despite the fact that the Respondent’s daughter appeared to have identified one person as “the street sweeper”, whom she observed twice weekly, it seems unlikely that only one undertook that work over an eight-nine month period. Mr Wetherill gave evidence that the Council employed 22 street sweepers and, in October 2001, had only one mechanical road sweeper. He was not asked as to how many street sweepers might have worked in Princes Street over the period in question, nor how easy it would be to identify them from Council records, nor the likelihood of them still working for the Council, some four years later. In the circumstances, it was reasonable for the Council to rely upon the three overseers who were called. No Jones v Dunkel inference should have been drawn from the failure to call any or all of the individual street sweepers.

179 Each of these criticisms is justified. Her Honour’s reasoning cannot in terms be accepted.

180 These criticisms are additional to the failure of the trial judge to take into account the evidence of Messrs Godbier, Stathis and Wetherill which was a critical error. Unless this Court is able to assess the evidence for itself, there must be a retrial. The Appellant sought a judgment in its favour and the Respondent did not seek in writing any alternative order if the Appellant were to be successful in relation to liability. It was not demonstrated by the Respondent in argument that a retrial would be the only appropriate order.

181 It is not apparent that any aspect of the assessment turns to a significant extent on demeanour or credibility. As noted, two of the three key witnesses for the Council were not cross-examined on the state of their knowledge.

182 The evidence and reasoning in support of an inference that relevant Council officers had actual knowledge may be summarised as follows:

(a) although parked cars may have partly or completely obscured the pothole from time to time, it is unlikely that it was always obscured during working hours;

(b) if not so obscured, it was readily visible;

(c) it was, accordingly, more probable than not that a street sweeper cleaning the gutters would have observed it;

(d) street sweepers were instructed to report hazards which they observed;

(e) Mr Wetherill, who supervised the street sweepers, on being shown the photograph agreed that the pothole depicted constituted a relevant hazard, and

(f) it should be inferred that it was reported.

183 On the other side of the balance, it is necessary to weigh the fact that the two officers who gave evidence that it should have been reported, if observed each gave evidence that, if reported, it would have been dealt with. It was not dealt with until many months after the accident. (It was not dealt with because of the accident because the Council did not know of it until it received the statement of claim, a significant period after the hole had been filled in.) In addition, it is necessary to give proper weight to the express and unequivocal denials by those who should have been notified that they were notified and their explicit and unequivocal denials that they themselves had seen the hole.

184 Indeed, the only challenge to the evidence given by the three officers in that respect was the challenge to Mr Godbier. As noted above, he himself walked the street as often as the street sweepers (on the evidence of Ms Roman), as well as carrying out inspections. The later part of the cross-examination demonstrated that he had not simply made an assumption based on the fact that he had not been referred to a Council record demonstrating a report.

185 As noted above, questions of onus were not addressed in any detail in argument. The passage from Serratore set out at [174] above appears to assume that the plaintiff bears the onus of proving the facts necessary to engage the exception to the immunity. My tentative view is that that approach is correct, but I am content to assume, in favour of the Respondent, that the Council bears the relevant onus.

186 In terms of s 45, the risk which materialised and which resulted in harm to the Respondent, was twisting her ankle and falling, when stepping in the pothole. Knowledge of that particular risk required, and would be satisfied, by knowledge of the existence of the pothole. Accordingly, for the statutory immunity to be displaced, the relevant officers of the Council had to have actual knowledge of the existence of the pothole at a time between February and October 2001. Their evidence that they had no such knowledge, especially where unchallenged, should be accepted. The only relevant challenge was that mounted in relation to the memory of Mr Godbier. In my view that challenge failed, both because of the specific reasons why he might have remembered the existence of a pothole in that particular street and because absence of recollection would not assist a finding of actual knowledge. Even assuming that a street sweeper had the relevant knowledge, the mere fact that street sweepers were directed to notify senior officers of hazards observed, would not satisfy me, on the balance of probabilities, that any such notification occurred. Indeed taking that into account, together with the circumstances outlined at [182] and [183] above, the evidence demonstrates that no Council officer at a decision-making level had “actual knowledge” of the particular pothole and therefore the Council did not have such knowledge. Accordingly, the exception to s 45 was not engaged and the statutory immunity must prevail.

187 For these reasons, I would propose the following orders:

(1) Allow the appeal;

(2) Set aside the judgment in favour of the Respondent in the District Court and in lieu thereof enter judgment for the Appellant with costs;

(3) The Respondent to pay the Appellant’s costs of the appeal;

(4) The Respondent to have a certificate under the Suitors’ Fund Act 1951 (NSW).

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LAST UPDATED: 27 February 2007