Legal Practice Briefing No. 19

Number 19

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 Facts

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
    if:
    1. the exercise of power is invalid either because
      there is no power to be exercised or the purported
      exercise of power has miscarried, and
    2. 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.

Negligence

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.

1 (1966)
120 CLR 145

2 (1966)
120 CLR at 156

3 (1939)
62 CLR 339

4 (1994)
179 CLR 520

5 (1939)
62 CLR 339 at 374

ISSN 1448-4803 (Print)
ISSN 2204-6283 (Online)

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.

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