The Victorian Supreme Court has reaffirmed the principles and analysis of imposing a novel duty of care in claims for pure economic loss, and has provided some guidance to the interplay of multiple proceedings arising from the same factual scenario.
In issue
- The factors considered in determining whether a duty of care is owed, or a duty of care has been assumed.
- Whether a party is prevented from denying a fact which has been determined in prior proceedings.
- Whether a party has engaged in an abuse of process by denying a fact which has been determined in prior proceedings.
- Whether the plaintiffs were precluded from bringing their claim due to an Anshun estoppel.
- Calculation of pure economic loss.
The background
The plaintiffs were a group of 15 commercial abalone fishing companies, which had been granted licences to harvest abalone in the Eastern Abalone Zone fishery located in the east of Victoria, around Mallacoota.
In around 2018 to 2019 the State of Victoria granted MAPA Pearls Pty Ltd (MAPA) two Crown leases which gave MAPA exclusive possession of certain sites within the Eastern Zone.
Interestingly, when MAPA lodged its application for the leases it did not seek exclusive possession of the land. Its application also alerted the State to other commercial fishing activities in the area. Notwithstanding this, the State drafted a lease granting exclusive possession of various sections of the Eastern Zone to MAPA.
Upon the grant of each lease, MAPA acted to exclude the plaintiffs from fishing within the leased areas.
The validity of the leases was challenged by several, but not all, plaintiffs in prior proceedings. In those proceedings, the leases were found to have been granted invalidly as there had not been compliance with section 137 of the Land Act 1958 (VIC). Section 137 requires a proposed tenant to publish a notice in the Government Gazette and a local newspaper not less than 14 days before the lease is granted.
Although it was MAPA’s obligation to publish the required notice, the Court found in the prior proceedings that Mr Dyson, a public servant of the State, had verbally informed MAPA he would arrange for the publication (Mr Dyson’s representation).
The plaintiffs alleged the public servants who were involved in granting the leases owed them a duty of care, as a class of persons whose interests would be affected by the granting of the lease. The plaintiffs alleged the failure to publish the relevant notice under section 137 of the Land Act was a breach of that duty and, as a result, the plaintiffs suffered economic loss due to a reduction in harvesting.
It was alleged the State was liable for the negligence of its public servants under section 23 of the Crown Proceedings Act 1958 (Vic). This was not disputed.
The State denied its public servants owed a duty of care to the plaintiffs. In the alternative, it argued its public servants did not breach their duty of care and if they did, it was not causative of the plaintiffs’ loss. The State sought to deny Mr Dyson’s representation had been made, and further alleged the plaintiffs were estopped from pursuing their current claim as it should have been brought as part of the prior proceedings.
The decision at trial
In Justice Watson’s judgment, delivered on 16 February 2026, the Court found in favour of the plaintiffs on all substantive issues.
In considering the purpose of section 137 of the Land Act 1958, the Court found the required publication was intended to notify any parties with an interest in the affected land, so that they could take appropriate steps to protect their interest if they choose to do so.
The Court found Mr Dyson’s representation was a factor in the ultimate determination of the prior proceedings, and its subsequent appeal. In respect of the plaintiffs who were also parties in the prior proceedings, the State was estopped from denying Mr Dyson made that representation. In respect of plaintiffs who were not a party to the prior proceedings, the State was prevented from denying the representation as this would otherwise amount to an abuse of process.
The Court further held the plaintiffs who were not a party to the prior proceedings were not estopped from bringing their claim, as this was the first occasion on which they could do so.
In respect of the plaintiffs who were parties to both proceedings, the Court found those plaintiffs could have brought a claim for negligence at that time, however, it was not unreasonable for them to issue separate proceedings. The addition of a negligence claim to the prior proceedings would have significantly impacted on the complexity and duration of the trial. Further, the plaintiffs were not currently seeking to assert any matters of fact or law which were inconsistent with the matters of fact and law determined in the prior proceedings. There was no prejudice to the State in separate proceedings being commenced.
The plaintiffs’ claim was put as a claim for pure economic loss, which was defined as a 'loss which is not consequential on damage to person or property'. There was no established category for imposing a duty to take reasonable steps to avoid causing pure economic loss to another. Therefore, the Court was required to determine whether a novel duty was owed. A duty could be imposed in circumstances where a tortfeasor assumed a responsibility, or after consideration of the salient features of the relationship between the parties, it was appropriate to impose such a duty.
When considering whether the public servants owed a duty to the plaintiffs, the Court affirmed and adopted the list of salient relationship features identified by Allsop P in Caltex Refineries (QLD) Pty Ltd v Stavar (2009) 75 NSWLR 649.
Ultimately, the Court found the public servants owed a duty of care to the plaintiffs because:
- the statutory functions undertaken by the public servants were not political or related to core government policy,
- there was no inconsistency with section 64C of the Fisheries Act,
- the granting of the lease infringed the plaintiffs intangible property rights,
- the plaintiffs were vulnerable because the failure to advertise meant they could not protect themselves or their interests from the grant of the leases,
- the public servants exercised a high degree of control because they were responsible for granting the invalid leases in circumstances where the plaintiffs could not have known about them as they were not advertised, and
- the public servants ought to have known of the existence of the plaintiffs.
His Honour found that had notification of the leases been published, the issue would have come to the attention of the plaintiffs, and they would have addressed this with the State. Based on the internal guidelines for the grant of a Crown lease, the State would then have reconsidered the leases, and either not granted them or carved out provision for the plaintiffs’ to continue their harvesting operations.
Further, separate to the analysis of the relationship between the parties, the Court also found Mr Dyson’s representation amounted to an assumption of responsibility which created a duty on Mr Dyson towards the plaintiffs. The failure to in fact undertake the advertising was a breach of that duty.
In terms of quantifying the loss for damage to intangible property, actuarial evidence was led by four expert witnesses. The Court determined the past loss to be calculated by reference to the average harvesting in the three years prior to the grant of the leases, less the actual amounts harvested, and discounted for business costs which were not incurred. The Court then further discounted the past loss for the chance of independent, adverse events affecting the harvesting, as well as the possibility (although unlikely) the leases would have been granted regardless of the failure to advertise.
In quantifying the plaintiffs’ future loss, consideration was given to the trend in reduced harvesting and forecasts prepared by the experts.
Implications for you
The case provides clear confirmation of the principles applied in determining whether a duty of care exists and establishing negligence.
It also, provides an indication of the way in which a Court will consider the wide-ranging effects of a failure to comply with statutory requirements.
Finally, the case provides a clear and detailed analysis of how the Court may approach the interplay between multiple proceedings arising out of the same factual scenario.
Shorland Fisheries Pty Ltd & Ors v State of Victoria [2026] VSC 29
