The litigation
On 8 September 2021 the New South Wales Court of Appeal allowed an appeal by the appellant Seqwater in the Brisbane River flood class action litigation.
The appellate decision – Queensland Bulk Water Supply Authority t/as Seqwater v Rodriguez & Sons Pty Ltd[1] – concerned a proceeding brought by the plaintiff company, as lead claimant, for property damage and loss suffered in South-East Queensland river region, in consequence of release of water from catchment dams.
The defendants were Seqwater, SunWater Ltd and the State of Queensland.
The proceeding was commenced in the Supreme Court of New South Wales, no doubt on account of no class action legislation existing in Queensland at the time.
Following a trial ensuing for over six months, the trial judge (Beech-Jones J, as Beech-Jones JA then was) found for the plaintiff, in negligence, against such defendants[2].
Each defendant appealed. SunWater and the State settled with the plaintiff prior to the hearing of the appeal.
Seqwater’s appeal was successful. The plaintiff’s claim against it – it being apportioned 50% responsibility by the trial judge under statutory proportionate liability – was dismissed.
On 6 October 2021, the plaintiff filed in the High Court of Australia an application for special leave to appeal. The proposed grounds of appeal adumbrated therein were:
1. The Court of Appeal (CoA) erred:
(1) in holding that s 36 of the Civil Liability Act 2003 (Qld) (CLA Qld)[3] applied to the applicant’s case in negligence in substitution for the standard of care identified in s 9 of the CLA Qld; or alternatively
(2) in its identification of the content of the standard of care under s 36.
2. The CoA erred in the discharge of its rehearing function under s 75A of the Supreme Court Act 1970 (NSW) in failing to identify error under the standard appropriate to the review of a judgment in a trial of enormous proportions.
3. The CoA erred in overturning the findings of the primary judge of negligence of the first respondent’s employees on 7, 8 and 9 January, which caused the plaintiff and sample group members to suffer loss and damage.
On 12 April 2022 the High Court refused the application for special leave.[4] The court – Keane, Steward and Gleeson JJ – wrote:
The court does not consider that the case presents a suitable vehicle for a consideration of section 36 of the Act.
The point of this article is to alert practitioners to the gravamen of the appellate decision. It serves to underscore the ascent of s 36 as a powerful tool in the armoury of Queensland state and local government authorities.
There is no sensible reason why the Queensland Court of Appeal would not follow the NSW appellate decision.
The plaintiff’s case
The plaintiff – Rodriguez & Sons Pty Ltd – was the owner of a sporting goods store. It suffered loss as a result of the flood. There were 6,500 group members in the proceeding class cohort. The aggregate damages were substantial, namely in the billions of dollars.
The plaintiff alleged negligent operation of the dams resulting in widespread property damage and economic loss. It was alleged that the dam engineers, in the exercise of reasonable care, ought have made substantial releases from the relevant dams before the heaviest of the forecast rain so as to create storage capacity.
The case put for adjudication was that had the engineers followed the promulgated statutory dam manual – on its proper construction – they would have made substantial earlier releases of dam water so as to circumvent the dams overtopping at a time of high flows.
Australian common law, modified – if applicable – by the statute law of Queensland, operated in respect of the plaintiff’s pleaded cause of action. Such statute law included s 36 of the Civil Liability Act 2003 (Qld) (Qld Act):
36 Proceedings against public or other authorities based on breach of statutory duty
(1) This section applies to a proceeding that is based on an alleged wrongful exercise of or failure to exercise a function of a public or other authority.
(2) For the purposes of the proceeding, an act or omission of the authority does not constitute a wrongful exercise or failure unless the act or omission was in the circumstances so unreasonable that no public or other authority having the functions of the authority in question could properly consider the act or omission to be a reasonable exercise of its functions.
The trial judge found that s 36 applied to a duty of care in the tort of negligence owed by each defendant, but that such provision did not apply to the plaintiff’s claim.
In finding negligence in the three defendants, his Honour apportioned liability 50% to Seqwater, 30% to SunWater and 20% to the State.
A raft of issues fell to be determined by the appellate court, but the particular focus was the trial judge’s above finding as to the proper construction of s 36, and the relevant standard of care operative thereunder.
Section 36 applicable to negligence
The trial judge found against the plaintiff’s argument that s 36, on proper construction, was confined in operation to a cause of action for breach of statutory duty. So much was contended (inter alia) on the content of the provision heading (see above).
There was trial division dicta in Queensland to the effect that s 36 was so confined.[5]
In upholding the trial judge’s construction the appellate court wrote:[6]
Whilst the heading forms part of the statute, and can be relied upon in construing the operative provision, the manner in which it was applied is not persuasive. The term “duty” is defined in the Dictionary to the Civil Liability Act to mean a duty of care “in tort”, “under contract”, or another duty under statute or otherwise that is “concurrent with a duty of care in tort or under contract”. The fact that the defined term “duty” is not used in s 36 suggests that the section was not limited to any particular cause of action. As the primary judge observed, “the definition of ‘function’ in s 34 is not confined to a ‘duty’.” Further, the phrase “breach of statutory duty” used in the heading is at best a paraphrase of the third limb of the definition of duty, the meaning of which is not without its own difficulties. Finally, s 36(1) makes explicit provision for the application of the section, and does so by reference to “function” rather than the type of duty which is alleged to have been breached.
Exercise of “functions”
The trial judge found that the reference to “functions” in s 36 did not apply to any statutory functions of Seqwater under the South-East Queensland (Restructuring) Act 2007 (Qld) in s 9 thereof.
In rejecting this finding the appellate court wrote:[7]
On any view, Seqwater in fact undertook its flood mitigation functions by establishing a Flood Operations Centre and exercising its powers to release water in a controlled manner. In doing so it was, on Rodriguez’ own case, subject to a duty to apply the Flood Control Manual according to its terms. The Manual, discussed in detail below, imposed strategies for the operation of Somerset and Wivenhoe Dams. It is not possible to read the reference to a “function” in s 36 as not encompassing the flood mitigation activities undertaken in January 2011.
Section 36 applies to vicarious liability
The trial judge found that s 36 did not apply to a cause of action founded on vicarious liability. Such liability was alleged in this case apropos of the conduct of the said dam engineers.
In rejecting the trial judge’s construction, the appellate court wrote:[8]
If a public authority can only exercise a function through the medium of trained professionals, it might be surprising if the standard of care applied to it differed from that applied to its agents. … Assuming that the functions of Seqwater included flood prevention and floodwater control, Seqwater was obliged to carry out those functions, having regard to the interests of Rodriguez and others with downstream interests in avoiding inundation. It employed professional engineers as its agents to carry out those functions. If the functions were carried out negligently, according to general law principles, Seqwater would be liable. However, the standard of care would be that identified in s 36(2). The contrary reasoning of the primary judge in this regard should not be accepted.
Seqwater as a “public or other authority”
The trial judge held that Seqwater was not a “public or other authority” within the definition of Qld Act s 34, and thereby not a “public or other authority” within the meaning of s 36.
Section 34 provides:
34 Definitions for div 1
In this division—
function includes power.
public or other authority means—
(a) the Crown (within the meaning of the Crown Proceedings Act 1980); or
(b) a local government; or
(c) any public authority constituted under an Act.
In finding that Seqwater was a “public or other authority” within the meaning of s 36, the appellate court wrote:[9]
It is aptly described as a “public authority” because it is established under statute, has the functions and powers conferred by the statute, has no corporators or individuals who would benefit from the exercise of its powers as members of a corporate body, is responsible for the supply of water and other services relating to the water industry and is run by a board appointed by the responsible Ministers. Although the characterisation of Seqwater is required for the purposes of the Civil Liability Act, the language of that Act in s 34(c), referring to “any public authority constituted under an Act”, cannot be read down so as to exclude a body having the characteristics of Seqwater.
…
The term “public authority”, as used in s 36, is not defined. Accordingly, it should be understood in the context of the regulation of water supply and flood control set out above. These considerations demonstrate that Seqwater was a public authority within the meaning of that term in s 34, and therefore in s 36 of the Civil Liability Act.
Section 36 standard of care
The appellate court found that s 36 significantly diminished the standard of care in negligence owed by a statutory authority. In doing so, it found assistance in the judgement of McLure P (Buss JA agreeing) in Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management.[10]
Qld Act s 9 – which the court contrasted in content – provides:
9 General principles
(1) A person does not breach a duty to take precautions against a risk of harm unless—
(a) the risk was foreseeable (that is, it is a risk of which the person knew or ought reasonably to have known); and
(b) the risk was not insignificant; and
(c) in the circumstances, a reasonable person in the position of the person would have taken the precautions.
(2) In deciding whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (among other relevant things)—
(a) the probability that the harm would occur if care were not taken;
(b) the likely seriousness of the harm;
(c) the burden of taking precautions to avoid the risk of harm;
(d) the social utility of the activity that creates the risk of harm.
The appellate court wrote:[11]
[T]he distinction between the general approach to breach of duty under s 9 of the Civil Liability Act and that applicable to a public authority to which s 36 applies may be identified as follows: under s 9 it is for the court to determine whether, on the evidence before it, it is satisfied that the defendant failed to take precautions against a risk of harm which a reasonable person in its position would have taken; under s 36, the court must be satisfied that the authority, acting on its understanding of the relevant circumstances and applicable law, adopted an approach to the exercise of its functions which fell outside the range of reasonably available options. … Thus, where a person suffers injury caused by the conduct of another, it may appear on the evidence that the impugned conduct falls into one of the following categories, viewed prospectively:
(i) conduct which was the preferred or correct course although harm may have been foreseeable;
(ii) conduct which was not unreasonable, although it involved an error of judgment and some would have avoided it;
(iii) conduct which, in the Court’s view, a reasonable person taking appropriate precautions would not have done, and
(iv) the exercise of a power which is so unreasonable that the Court cannot envisage any person in that position considering it to be a reasonable exercise of the power.
Each category may need reformulation where the complaint is of a failure to act. There are situations where morality and the law take different courses and the law does not impose a duty to act. However, that did not arise in this case. The purpose of the powers conferred on Seqwater to operate the dams involved management of the water supply for south-east Queensland and flood mitigation on the Brisbane River. It had only one tool to achieve both purposes, that was turning the tap on or off at the dams. No question of distinguishing which acts from omissions affected its legal responsibility.
Viewed in this way, one can see a progression in terms of culpability: categories (i) and (ii) do not engage tortious liability in negligence in accordance with s 9 of the Civil Liability Act; (iii) engages liability under s 9, and (iv) alone will engage liability under s 36(2). Thus the schema suggested above reflects a scale of increasing culpability. As McLure P said, (iv) imposes a higher burden on the plaintiff than does (iii). Lack of reasonable care, assessed in accordance with s 9, does not demonstrate liability where s 36(2) is engaged.
…
Because the primary judge did not apply the s 36(2) standard in assessing Seqwater’s conduct, it will be necessary for this Court to consider that exercise. However, in the absence of any notice of contention, the extent to which this Court can make findings is limited. The limitations are discussed in part 18 below. That will attract further questions, including as to the appropriate identification of the relevant “act or omission”, whether singular or plural, for the purposes of s 36(2). Such matters are conveniently addressed in the factual context in which they arise. Ground 1 of Seqwater’s appeal should be upheld.
(emphasis added)
No breach adjudicated
Thereafter, in a detailed exegesis, the appellate court proceeded to find that – judged by the altered standard imposed by s 36 – the plaintiff did not discharge its persuasive onus of proving a breach of Seqwater’s duty of care.
In adjudicating no breach was so proved, the appellate court treated the manual regulating dam management as a more flexible document than it was characterised by the trial judge:[12]
… [T]he Manual was….“a practical document addressed to engineers, not lawyers”. It falls within the principle that “documents addressed to practical people skilled in the particular trade or industry” ought “to be construed in light of practical considerations, rather than by a meticulous comparison of the language of their various provisions such as might be appropriate in construing sections of an act of Parliament”: Gill v Donald Humberstone & Co Ltd [1963] 1 WLR 929 [HL] at 933–934; Queensland v Masson [2020] HCA 28; 381 ALR 560 at [95]….The Manual identified four key volumes of water in the dam by reference to water levels plus a range of flow rates at Lowood and Moggill. The procedures contained in the Manual depended upon those integers relating to conditions in the real world….Further, bearing in mind the Manual’s purpose, and the textual inconsistencies and infelicities, it is convenient to step back from the detail and appreciate that the Manual contained “operational procedures” for the operation of two dams during flood events, noting that all that a flood engineer could do was to make decisions when and at what rate to release water. The Manual gave a structure to the exercise of the only power the flood engineers had.
(emphasis added)
Conclusion
Suffice it to say this litigation was complex. The outcome was such that the claimants recovered only 50% of the damages.
The construction adopted on appeal in respect of the scope of operation and content of Qld Act s 36 entailed it having the same broad effect as s 43A of the Civil Liability Act 2002 (NSW)[13], s 39(5) of the Road Management Act 2004 (Vic)[14] and s 5X of the Civil Liability Act 2002 (WA).
The appellate decision spawns a construction of s 36 which renders it a powerful tool as a defence in the hands of the State of Queensland, or a state or local government authority, as defendant.
[1] Queensland Bulk Water Supply Authority t/as Seqwater v Rodriguez & Sons Pty Ltd (2021) 393 ALR 162; [2021] NSWCA 206.
[2] Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No.22) [2019] NSWSC 1657 (29 November 2019)
[3] The CLA Qld is also referred to as the Qld Act or the Civil Liability Act below, with references to such variations also being made in judgments and legislation.
[4] Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater & Others [2022] HCA Trans 61 (12 April 2022).
[5] Hamcor Pty Ltd v Queensland [2014] QSC 224 at [195], [196] per Dalton J.
[6] Fn 1 at [68].
[7] Fn 1 at [82].
[8] Fn 1 at [101], [102].
[9] Fn 1 at [117], [121].
[10] Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287; [2012] WASCA 79 at [114].
[11] Fn 1 at [134]-[141].
[12] Fn1 at [224], [226] and [229].
[13] See Weber v Greater Hume Shire Council (2019) 100 NSWLR 1; [2019] NSWCA 74.
[14] See Kennedy v Shire of Campaspe [2015] VSCA 215.
