Link to decision

Key takeaways

In a recent decision, the Supreme Court of New South Wales held Hunter Water Corporation (HWC), a state-owned corporation, liable in nuisance for property damage arising from a burst water main.

Brief facts

An Owner’s Corporation in Newcastle, representing the owners of a strata scheme, being a townhouse complex in Elermore Vale, New South Wales, including 118 lot owners, issued Court proceedings against HWC for water damage caused by a burst water main.

Prior to the burst, a local plumber advised HWC of a leak from the water main. HWC commenced investigation into the leak through excavations until locating a small leak 4 to 5 metres underground. HWC left the excavation site overnight to return with equipment required for repairs the next day.

Overnight, the water main burst and discharged large amounts of water into the townhouse complex and lots.

The plaintiffs raised two key claims against HWC. The plaintiffs alleged the flooding was a nuisance perpetrated by HWC and a product of HWC’s negligence.

Crucially, and in light of the Hunt Leather v Transport for NSW litigation (currently on appeal before the High Court), the plaintiffs sought to rely on an action in nuisance to avoid the operation of public authority defences within the Civil Liability Act 2002 (NSW) (the CLA).

Judgment

Nuisance

The Court considered the authorities on nuisance and, for the purposes of a water mains burst causing damage to nearby properties, found the following must be established:

• There was an interference with the use or enjoyment of land.
• The interference was caused by water emanating from the water main.
• The defendant bears some element of fault in the loss, in that the loss was not inevitable and was consequent on some unreasonable act or omission on the part of the defendant.

As the first two points were conceded, the case turned on the examination of HWC’s conduct.

The Court determined that following HWC’s act of excavating the earth above the pipe, it was unreasonable to leave the pipe exposed overnight without shutting it off, diverting the water flow or reducing the pressure in the pipe. This was also considered in a context where the water main had burst previously ten years earlier, placing HWC on notice of its vulnerability. On this basis, the Court found HWC liable for nuisance.

The Court awarded the plaintiffs the sum of $1,161,841.92 plus costs.

Negligence

The Court noted that, whilst the plaintiffs could have established the elements of a negligence claim, HWC would have successfully defended the negligence action through its reliance on a public authority defence available under section 43A of the CLA.

Section 43A of the CLA provides that public authorities will not be found liable for loss or damage resulting from exercising their powers unless the “act or omission was in the circumstances so unreasonable that no authority having the special statutory power in question” could consider the act or failure to be a reasonable exercise of its power.

The Court took note of the practice of public water authorities across Australia, including other authorities that take a 'fix it when it breaks' approach to water mains maintenance. On that basis, the Court ruled HWC’s approach of attempting repairs after a leak was within the CLA defence.

Implications

Negligence cases against water authorities have historically been difficult to prosecute in NSW due to the high bar set by the defences available to public authorities in response to an action in negligence.

This decision highlights that bringing a claim in nuisance instead can potentially avoid the operation of those defences and open new potential for recovery action when properties are damaged by burst water mains. It is illustrative of other avenues by which aggrieved property owners and insurers, who are unable to succeed with claims in negligence, may consider pursuing public or other authorities in nuisance claims instead.

When preparing any such recovery action, parties should closely investigate both the mechanism of the mains burst and the history of any pipe or public asset to determine whether the burst was foreseeable.