Legal Practice Briefing
26 April 1995
THE END OF THE BEAUDESERT PRINCIPLE
Northern Territory of Australia and Others v Arthur John Mengel and Others
The High Court handed down its decision in this case on 19 April 1995. The Court unanimously decided that the Beaudesert principle should be overruled. The Court found that there was no basis for a finding of liability against the Northern Territory Government.
The Beaudesert principle was set out by the High Court in Beaudesert Shire Council v Smith1 and was in the nature of an action on the case. The High Court held that:
'independently of trespass, negligence or nuisance but by an action for damages upon the case, a person who suffers harm or loss as the inevitable consequence of the unlawful intentional and positive acts of another is entitled to recover damages from that other.' 2
In Mengel, the High Court decided (in one joint judgment by Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ and in separate judgments by Brennan and Deane JJ) that:
- the Beaudesert decision should be overruled and should not be reformulated
- there was no misfeasance in public office on the facts
- there was no basis to reconsider the finding of the Northern Territory Supreme Court that, on the facts, negligence was not established (although Deane J would have allowed the Mengels to apply to the Court of Appeal for leave to amend their claim on negligence)
- there was no separate cause of action, as formulated by the Court of Appeal, based on the High Court decision in James v Commonwealth,3 and
- there was no liability based on the 'constitutional principle of the rule of law'.
Implications for Clients
Clients who had been concerned about the potential liability of their agency for an act of one of their officers where the act was done with due care and in good faith but in fact was done without statutory or other authority can now be reassured. The vicarious liability of the Commonwealth for acts of its employees is to be determined in accordance with ordinary principles of negligence or misfeasance in public office, breach of statutory duty or otherwise in accordance with well established principles of tort (that is, the principles of law which apply to civil wrongs).
The Mengels owned two cattle stations in the Northern Territory. They had intended to sell cattle at the end of the 1988 season but were delayed in doing so because of the action taken by two employees of the Northern Territory Department of Primary Industry and Fisheries. The employees, who were inspectors in that Department, believed that, in relation to the Mengels' properties, they were acting in accordance with an approved program for the eradication of bovine brucellosis and tuberculosis in the Northern Territory. In fact the Northern Territory was not able to establish that there was such an approved program applicable to the Mengels' properties so that there was no statutory or other authority for the actions of the inspectors. The two officers acted in response to a positive reaction to tests conducted on cattle at the Mengels' property with the effect that the movement of the cattle was delayed. Because of the actions of the officers the Mengels missed the sales and suffered financial loss as a result of a declining market price.
The Mengels commenced proceedings in the Northern Territory Supreme Court and were successful in that Court and the Northern Territory Court of Appeal on the basis of the Beaudesert principle. They were not successful in establishing negligence. Several other causes of action were also found to have been made out by two members of the Court of Appeal.
Issues before the High Court
At the initial hearing before the Northern Territory Supreme Court the Mengels relied on various causes of action but Asche J found in their favour only on the basis of the Beaudesert decision. The Northern Territory appealed to the Northern Territory Court of Appeal which confirmed that the Mengels were entitled to succeed on that basis. Priestley J found that they should also succeed on a very similar cause of action based on the decision in James v Commonwealth. Angel J generally agreed with Priestley J but also found that the action should succeed on a wider ground of liability 'under the constitutional principle of the rule of law'. (Thomas J agreed with both of the other judges.) These three issues, plus arguments by the Mengels based on misfeasance in public office arising where the officer knew or ought to have known that their action was without authority and on negligence on the same basis were considered by the High Court.
The majority of the High Court considered that there were two problems with applying the Beaudesert principle to the facts. These concerned the meaning of 'unlawful act' and 'inevitable consequence'. They considered the difficulty in applying these terms without reaching an express conclusion whether the Beaudesert principle could be applied on the facts because, having considered the lack of application of the Beaudesert principle in subsequent cases, they decided that the Beaudesert decision contained an error of principle and that the present case was an appropriate opportunity for the Court to review an earlier decision of the High Court. The remaining judges of the Court agreed in substance but delivered separate judgments.
The High Court Majority Decision On Beaudesert
In their joint judgment, the majority referred to the trend displayed most recently in the decision of Burnie Port Authority v Jones Pty Ltd4 that liability in tort depends on either the intentional or the negligent infliction of harm. The intentional element in Beaudesert, which is satisfied merely by the doing of an intentional act, but which does not depend on an intention to harm the plaintiff, was inconsistent with that trend. The majority found that the Beaudesert principle was inconsistent with the now well-developed law of negligence, breach of statutory duty and also the economic torts, and that itwas not supported by authority and should be overruled.
The Minority Decisions on Beaudesert
Both Brennan J (as he then was) and Deane J agreed that the Beaudesert decision should be overruled, although they considered there was some old authority which supported the decision when it was originally made in 1966.
The Other Grounds
The majority also found that there was no basis for applying the tortious principles of misfeasance in public office, negligence, the cause of action discussed in James v Commonwealth or liability based on the principles of the rule of law. In general, they considered that, in the absence of an intentional wrong, where liability was already covered by the law of negligence, there was no useful purpose to be served by establishing liability based on a different principle. Moreover, to the extent that the liability of a public officer would be for harm that there was no duty to avoid, such a principle would be anomalous. In his separate judgment Brennan J gave his own reasons why misfeasance in public office was not established.
Misfeasance in Public Office
The majority considered that this remedy, now 'well established', is the appropriate remedy for intentional wrongs by public officers. They considered that both policy and principle required liability to be more closely confined than misfeasance being established merely by an act by a public officer which the officer knows is beyond power and which results in damage (as argued by the Mengels). The Court said that the remedy should arguably be restricted to intentional infliction of harm or an act that the public officer knows is beyond power and is calculated in the ordinary course to cause harm. However, it was sufficient to decide in this case that liability for misfeasance in public office requires an act which the public officer knows is beyond power (or, possibly, where the officer recklessly disregards the means of determining the extent of their power) and which involves a foreseeable risk of harm. The principle should not be extended to include the act of a public officer who ought to have known that the act was beyond power.
Brennan J considered this cause of action at some length. In summary, he made the following points:
- for the purposes of this tort a public officer is 'every one who is appointed to perform a public duty and who receives a compensation'
- the tort is not limited to an abuse of office in the exercise of a statutory power
- a purported exercise of administrative power is wrongful
- the exercise of power is invalid either because there is no power to be exercised or the purported exercise of power has miscarried, and
- the public officer has the relevant state of mind in that there is an intention to injure or knowledge that there is no power to engage in the conduct or reckless indifference as to whether there is that power
- constructive knowledge of the lack of power to engage in the particular conduct is not sufficient
- foreseeability of damage, which is necessary to establish negligence, is not necessary here although causation of damage is relevant, and
- here, the Northern Territory Inspectors' giving of directions to the plaintiffs cannot be held to have been wrongful and misfeasance in public office was not established.
Deane J was in general agreement with Brennan J in relation to this issue.
An allegation of negligence for breach of a duty of care owed to the Mengels not to restrict the movement of cattle without first ensuring that there was a 'reactor' beast had been dismissed at first instance and was not an issue before the High Court. The Mengels had argued, however, that the constructive knowledge of lack of authority was sufficient to establish negligence. The court held that, the argument having been dismissed in relation to misfeasance in public office, the issue of negligence on that basis 'disappears'.
James v Commonwealth Cause of Action
In James v Commonwealth Dixon J had formulated as a cause of action a wrong intentionally to compel a person, by means of a threat of an illegal act to do some act whereby loss accrues to them.5 This principle was applied by Priestley J as allowing an action on the case for damage suffered where the plaintiff has felt compelled to refrain, and has refrained, to the plaintiff's loss, from dealing with the plaintiff's goods because of an express or implied threat by government authority of unlawful interference with the plaintiff's property or of unlawful prosecution of the plaintiff. The majority found that the action identified by Priestley J, which did not involve an intentional element, was contrary to the principle expressed by Dixon J in James v Commonwealth and could not be supported by principle or policy. Deane J also found that an action on the basis of this decision (which he described as an action for intimidation) was not made out.
The Constitutional Principle of the Rule of Law
The majority (with whom Deane J agreed) found that liability on this basis was not supported by authority or by principle and may well be contrary to s.64 of the Judiciary Act 1903 (Cth) (and similar State provisions) to the extent that it creates a cause of action against governments on a basis not applicable to private individuals.
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The material in this briefing is provided for general information only and should not be relied upon for the purpose of a particular matter. Please contact the Legal Practice before any action or decision is taken on the basis of any of the material in this briefing.