Case: Sullivan v Moody [2001] HCA 59 ; (2001) 207 CLR 562
Outcome: followed
applicants do not submit that Veda was subject to the broad duty of care that I have described. They quoted from the following summary by McDougall J in OzEcom &amp; Anor v Hudson Investment Group &amp; Ors [2007] NSWSC 719 ( OzEcom ) at [321] of the elements of the cause of action in negligence causing pure economic loss extracted from recent High Court judgments: (1) Reasonable foreseeability of loss is not of itself a sufficient basis to impose a duty of care: Tame v New South Wales [2002] HCA 35 ; (2002) 211 CLR 317 at 329 [6] (Gleeson CJ; Tame was a case of alleged psychiatric injury, but what his Honour said applies a fortiori to a case of pure economic loss); Sullivan v Moody And Others [2001] HCA 59 ; (2001) 207 CLR 562 at 576 [420] (another case of alleged psychiatric and other injury; the comment just made in relation to Tame applies). (2) Nonetheless, reasonable foreseeability is a necessary condition of duty: Tame at 355 [103] (McHugh J). (3) The absence of reasonable foreseeability negates the existence of a duty of care (following from (2)). (4) A plaintiff's 'vulnerability', in the sense of its inability to protect itself from the consequences of a defendant's want of reasonable care, is an important requirement in analysing whether any such duty of care is owed: Woolcock Street Investments Pty Ltd v CDG Pty Ltd And Another [2004] HCA 16 ; (2004) 216 CLR 515 at 530 [23] (Gleeson CJ, Gummow, Hayne and Heydon JJ). (5) Another important consideration is assumption of responsibility coupled with known reliance: Woolcock Street at 531 [24] (ibid). (6) The existence and terms of any relevant contract may bear upon the existence and content of a duty of care: Astley And Others v Austrust Limited [1999] HCA 6 ; (1999) 197 CLR 1 , 22 [47] (Gleeson CJ, McHugh, Gummow and Hayne JJ). To adapt the words of Lord Steyn (with whom the rest of the House of Lords agreed) in Williams And Another v Natural Life Health Foods Ltd [1998] 1 WLR 830 at 857, the role of the law of tort is to fill gaps where other remedies are not available. (7) The relevant statutory and common law context, including the allocation of responsibilities and the provision of remedies, is relevant to the determination, whether a duty of care should be imposed in a particular case: Esanda Finance Corporation Limited v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241 at 282 and 286 (Mc Hugh J [sic]); and see Perre And Others v Apand Pty Limited [1999] HCA 36 ; (1999) 198 CLR 180 at 192 [5] (Gleeson CJ; his Honour repeated this sentiment in Tame at 329 [6]), 226 [120] (McHugh J)." As McDougall J acknowledged, the material relevant to the seven headings might overlap to some extent. It must be emphasised that foreseeability of economic loss is only the beginning of the enquiry as to whether a duty of care exists: see, for example, Sullivan v Moody [2001] HCA 59 ; (2001) 207 CLR 562 at [42] . The method of posing the foreseeability question is not free of difficulty. I have expressed it as relating to the foreseeability of economic harm arising from the provision of an inaccurate credit report to an enquiring credit provider. However, an alternative is to express it as the foreseeability of economic harm arising from a failure by Veda to take certain steps by way of training or warning or monitoring subscribers with a view to ensuring that they enter only accurate data into the database. I am prepared to assume that it was foreseeable that in the case of some listing credit providers there would be some steps in the nature of training, warning or monitoring that might prevent an inaccurate listing of a default which was likely to cause an individual economic loss. Much would depend on the extent, persistence and intensity of the training, warning and monitoring, and on the particular credit provider's desire to cooperate. I should make it clear that the extent, persistence and intensity of the training, warning and monitoring may need to be very great indeed. It may even require Veda to assume the role of a day to day enforcement authority with a presence in the credit provider's business establishment, in order to exclude the possibility of inaccurate listings. 2. Vulnerability of the loss sufferer The applicants were not powerless in relation to the information recorded in their credit information files maintained by Veda. Section 18H of the Privacy Act gave them a right of access to their file and s 18J entitled them to have Veda make appropriate corrections, deletions or additions to ensure that information in their file was accurate, up-to-date, complete and not misleading, or, if Veda did not do so, to have it include a statement in their credit information file. Veda submits that the general law background to Part IIIA of the Privacy Act also tells against the imposition of a duty of care of the kind that the applicants must establish. Veda refers to the law relating to defamation and to statements by the High Court in Sullivan v Moody and Tame v New South Wales [2002] HCA 35 ; (2002) 211 CLR 317 , generally to the effect that a duty of care will not be recognised where its recognition would render the common law incoherent. In particular, Veda relies on the defence of qualified privilege claims in defamation a defence that is made available in the public interest. The defence is made available by the common law when a credit reporting agency provides an inaccurate credit report to a credit provider. It is argued that it would be destructive of that defence if the same common law were to impose a duty of care on the credit reporting agency as the foundation for a liability in negligence. Sullivan v Moody was concerned with notifications by various categories of professional persons to the authorities of suspicions on reasonable grounds that certain offences had been committed against children. Certain medical practitioners and social workers employed by the South Australian Department of Community Welfare issued reports to the authorities that certain children had been sexually abused. The fathers of the children alleged that as a result of negligent examination, diagnosis and reporting by those professional persons, they, the fathers, had suffered shock, distress, psychiatric injury and resultant personal and financial loss. The High Court held that it would be inconsistent with the proper and effective discharge of the professional or statutory responsibilities of those involved in investigating and reporting upon alleged sexual abuse, for them to be subjected to a legal duty to take care to protect persons who were suspected of being the sources of the harm. Their Honours emphasised (at [42]) that foreseeability of harm to the fathers was not sufficient to ground a duty of care. Sullivan v Moody is not on all fours with the present case because it involved a statutorily imposed duty on the professional persons to provide reports. There is no duty imposed by the Privacy Act on Veda to engage in its credit reporting business. Notwithstanding this difference, in my view Sullivan v Moody gives guidance in the circumstances of the present cases. The passage from Sullivan v Moody quoted above is not expressed to depend on the imposition of the reporting duty by statute, or on the "professional" responsibilities of the medical practitioner and social workers. Rather, the passage addresses the relationship between the imposition of a duty of care and the existence of the defence of qualified privilege. Once I have held that even an inaccurate defamatory credit report issued by Veda does not expose it to liability for defamation by reason of the defence of qualified privilege, it would introduce incoherence in the common law to impose a duty of care. Veda would, contrary to the convenience of the community and welfare of society that give rise to the defence, be inhibited in passing on the creditworthiness information in its database to those who have a legitimate interest in receiving it. At [28], Gleeson CJ stated (citations omitted): ... as in Sullivan v Moody , this is a case where the appellant claims to have been injured in consequence of what others were told about her. There is the same intersection with the law of defamation, and the same need to preserve legal coherence ... In the events that occurred, Mrs Tame's reputation was not harmed. But suppose it had been. Then the law would have engaged in an exercise of balancing the rights and responsibilities of Mrs Tame and Acting Sergeant Beardsley by reference to considerations many of which would be rendered irrelevant by the application of the law of negligence. Similarly, Gaudron J stated (at [58] citations omitted): The second matter which indicates that Acting Sergeant Beardsley did not owe a duty of care to Mrs Tame is the fact that the direct cause of her psychiatric illness was not the inaccurate recording of her blood alcohol level, but its communication to others. Thus, in this case as in Sullivan v Moody , "there is an intersection with the law of defamation which resolves the competing interests of the parties through well-developed principles about privilege and the like" ... And as in Sullivan v Moody , "[t]o apply the law of negligence in the present case would resolve that competition on an altogether different basis". At the very least, the law of negligence with respect to psychiatric injury ought not be extended in a disconformity with other areas of the law. McHugh J observed (at [122] and [123] citations omitted): Mrs Tame's psychiatric illness is the product of her concern for her reputation. There is no doubt that the publication of the P4 report to the insurer defamed her. She could have sued for damages for defamation. If successful, she could have recovered all the damages in that action that she sought in the present action including damages for her psychiatric illness. In determining whether Acting Sergeant Beardsley owed a duty of care to Mrs Tame, it is proper to take into account quite apart from the issue of reasonable foreseeability that the law of defamation appears a more appropriate medium for dealing with the facts of her case than the law of negligently inflicted nervous shock. Her action arises out of a communication to a third party, her concern is with her reputation and the law of defamation has various defences that reconcile the competing interests of the parties more appropriately than the law of negligence. This Court has already taken the view that, independently of policy issues relevant to the interests of the parties and persons like them, the need for the law to be coherent is a relevant factor in determining whether a duty exists. In Sullivan v Moody , ... the Court said that coherence in the law was a relevant factor in determining whether a duty of care existed. In Sullivan , the Court held that officers of the Department of Community Welfare owed no duty of care to a person affected by a communication made as the result of investigating, under a statutory power, a sexual assault allegation. Finally, Callinan J, (at [323], [325]) stated (citations omitted): Whilst it may be accepted that a plaintiff is entitled to avail herself of whatever remedies are available to her, it is important that a decision and the reasoning leading to it, in an unusual case, which this one is, be in harmony with, so far as is possible, available related causes of action, and the common law as a whole or, as it was put by this Court in Sullivan v Moody , ... that they not offend the "coherence of the law". The facts of this case might conceivably have given rise to actions in negligent misstatement (if that action is not confined to claims for economic loss) and defamation. That these causes of action may also be available on the facts of the case, and would then be governed by special rules affected by policy considerations, is relevant to the question whether the appellant should recover damages for "nervous shock" on the basis of those facts. As to the former cause of action, Barwick CJ in Mutual Life &amp; Citizens' Assurance Co Ltd v Evatt ... said: "But I think it is quite clear that the relationship of proximity, adequate for compensation of injury caused by physical acts or omissions, would be inappropriate in the case of utterance by way of information or advice which causes loss or damage. The necessary relationship in that connexion must needs be more specific." ... Many controls and special defences, both statutory and at common law, ordinarily operate to restrict claims in defamation; for example, defences of qualified and absolute privilege, and the need for a plaintiff to prove absence of good faith on the part of the defendant. Like Sullivan v Moody , Tame v New South Wales is unlike the present cases in that it was concerned with duties imposed by statute on persons who perform certain functions in the interests of the public or of a cross-section of it (for a recent illustration from the United Kingdom see Jain v Trent Strategic Health Authority [2009] 2 WLR 248). However, I think that the approach taken in Tame v New South Wales is applicable. The defence of qualified privilege is made available because it is seen to be required in the public interest. It would introduce an incoherence in the law to impose a duty of care on Veda directed to the accuracy of its credit reports to enquiring credit providers. 2. Did Veda commit a breach of any duty of care it owed to the applicants in relation to the accuracy of the credit reports concerning them that caused those credit reports to be inaccurate?