INSIGHTS: When can public authorities rely on s 43A of the Civil Liability Act 2002?

Transport for NSW v Hunt Leather Pty Ltd; Hunt Leather Pty Ltd v Transport for NSW [2024] NSWCA 227

Key takeaways

• The NSW Court of Appeal decision upholds the findings that the reduced standard of care set out in s 43A cannot be relied on in a claim brought in nuisance (as opposed to a claim for negligence, where the reduced standard applies).
• When alleging nuisance, it is not necessary for the claimant to establish there was a failure to take reasonable care. This distinguishes a claim brought in nuisance to one brought in negligence.
• Even in circumstances where s 43A does apply, the public authority must show it was exercising a special statutory power, as opposed to a general power or function.

Background

Businesses that experienced financial loss during the construction of the Sydney Light Rail (SLR) pursued a class action against Transport for NSW (TfNSW) in the NSW Supreme Court. The claimants brought a nuisance action, alleging that the construction had caused substantial and unreasonable disruption with their enjoyment of their interest in the land.

TfNSW had been granted a licence to enter and occupy the land (principally, the road surface and footpaths within the road reserve), which were owned by the claimants. It was also empowered to grant licences to anyone else to do so for the purposes of constructing the SLR.

The project was to be completed in stages based on fee zones, with the occupation period for each zone established under the project deed (referred to as the Amended Initial Delivery Program (IDP)), aimed at minimising business disruption. If a contractor encountered an unidentified utility, they were entitled to request an extension of the occupation period for that zone.

The SLR project was due to be completed in March 2019, but was delayed and completed in March 2020.

Primary proceedings

The primary judge found in favour of the plaintiffs, holding TfNSW liable for the time that exceeded the IDP in each fee zone. TfNSW was found to be personally liable for causing the situation that led to the nuisance. Essentially, the disincentives in the IDP for delayed occupation of a fee zone were insufficient. While the SLR was completed a year behind schedule, the fee zone strategy resulted in the business owners being subject to extensive construction activities for much longer than originally anticipated. TfNSW took this risk when entering into the IPD, leaving the plaintiffs to suffer the consequences.

In the primary proceedings, TfNSW relied on s 43A of the Civil Liability Act 2002 (NSW) which applies to the extent that liability is based on a public or other authority’s exercise of, or failure to exercise, a special statutory power conferred on the authority. A “special statutory power” is defined as a power conferred by or under a statute that is of a kind that persons generally are not authorised to exercise without specific statutory authority.

Under s43A(3), any act or omission involving a special statutory power does not give rise to civil liability unless it is so unreasonable that no authority with that power could consider it to be a reasonable exercise of, or failure to exercise, its power.

The primary judge rejected the Defendant’s reliance on s 43A, finding that it does not apply to nuisance claims. Notably:

• The primary judge distinguished between liability based on how a special statutory power is exercised (or not exercised), versus liability for an act or omission that occurs as a result of exercising (or failing to exercise) that power. This distinction was significant to the primary judge’s reasoning.
• Applying Gales Holdings Pty Ltd v Tweed Shire Council (2013) 85 NSWLR 514, the primary judge found it was not sufficient to point to an element of public power in the facts constituting the nuisance. What was required was that the complaint be directed to the public authority’s choice to exercise or not exercise that power.
• The powers supporting TfNSW’s works did not answer the description of “special statutory powers”. TfNSW argued that the relevant statutory power arose under s 104O of the Transport Administration Act 1988 (NSW). That section gives TfNSW the power to develop or operate, or facilitate the development and operation of, light rail systems. However, the primary judge found that TfNSW was exercising the more general powers conferred on it in Schedule 1, Clause 9 of the Act, which empowered it to make or enter into contracts or arrangements with any person in connection with the exercise of its functions. On this basis, the primary judge reasoned that s 104O could not meet the description in s 43A(2), being of a power of a kind that persons generally are not authorised to exercise without specific statutory authority. The judge noted that merely pointing to the general functions, granted to the defendant by the legislation, would blur the distinction between statutory powers and special statutory powers.

Appeal

On appeal, TfNSW contested several of the primary judge’s findings, including the determination that the plaintiffs suffered both substantial and unreasonable interference. TfNSW also challenged the finding that the IDP was a reasonable estimate and argued that there was insufficient evidence to show that the delay was caused by the discovery of unknown utilities.

The plaintiffs filed a cross-appeal, arguing that the litigation funding fee represented a loss for which damages for nuisance should be considered.

The Court of Appeal found that while several of TfNSW’s appeal grounds were not valid, its challenge to the main finding – that the plaintiffs suffered unreasonable and substantial interference caused by TfNSW – was upheld. This was on the basis that it was not open for the Court to have regarded the IDP as a reasonable estimate.

The Court of Appeal found it was not established that it was possible to obtain (or know how long it would take to obtain) a complete knowledge of unknown utilities, and whether such delays would significantly interfere with the plaintiff’s enjoyment of their land.

The Court of Appeal upheld the comments made by the primary judge regarding the application of s 43A in nuisance claims. On appeal it was determined:

• Section 43A does not provide, strictly, for a defence. It imposes an altered standard of care, reducing the standard of care required to be proven when establishing civil liability in tort under s 40(1) of the Civil Liability Act.
• As determined by Gales Holdings Pty Ltd v Tweed Shire Council (2013) 85 NSWLR 51, it is not necessary in nuisance claims to show the defendant failed to take reasonable care. A defendant may be found liable for creating, adopting, or continuing a nuisance.
• If a special statutory power is exercised negligently, s 43A makes it necessary to show that the exercise or failure to exercise the statutory power is so unreasonable that no authority with that power could reasonably consider it a proper exercise of, or failure to exercise, that power. However, the claim for nuisance in this case is not one which is based on the exercise of a special statutory power.
• Planning the construction of a light rail system, or deciding to start construction despite incomplete identification of utilities along the route, does not constitute the exercise of a special statutory power. The essence of the plaintiffs’ case was that TfNSW either did not provide adequate incentives for the contractor to adhere to the planned staging, or failed to address the risks posed by unknown utilities along the route. Those were not failures to exercise special statutory powers. They were complaints that TfNSW had not insisted on the right contractual terms, or had not ensured that necessary actions were taken before construction began.

Practical application of the decision in the context of Recoveries

This decision is significant in terms of the application of the reduced standard of care under s 43A of the Civil Liability Act 2002 and reiterates:

• It is not necessary when alleging nuisance, for a plaintiff to show the defendant failed to take reasonable care.
• Section 43A relates to claims brought for an alleged breach ofa duty of care by a public authority when exercising a special statutory power, and where no claim in negligence for such a breach is brought, the provision has no application.
• The reduced standard or care in s 43A cannot be relied on where a claim is brought in nuisance against a public authority.
• In order to successfully rely on s 43A, the defendant must show it was exercising a “special statutory power”, as opposed to a general power or function.

When pursuing recoveries against authorities in NSW, the above is significant as it provides an angle to pursue such claims where a negligence claim may not otherwise be successful.

Where the claim is limited to nuisance, the authority would not be able to rely on s 43A to avoid liability. For example, and in the context of a claim against a water authority for damage caused by a failed asset, where there is insufficient evidence to show the water authority has failed to take reasonable care or breached a duty of care (noting the reduced standard of care under s 43A) , a claim may still exist in nuisance where it can be shown the conduct of the authority which led to the failure of the asset has interfered with the claimant’s enjoyment of their land.

The following table shows the practical application of the decision in the context of Recoveries:

This article was written by Principal Drina Govic with the assistance of Solicitor Caroline Russell. Please contact Drina if you have any questions or would like more information.

Disclaimer: This information is current as of October 2024. This article does not constitute legal advice and does not give rise to any solicitor/client relationship between Meridian Lawyers and the reader. Professional legal advice should be sought before acting or relying upon the content of this article.