Alamdo Holdings Pty Ltd v Bankstown City Council

[2003] NSWSC 1074

Reported Decision: 134 LGERA 114
(2004) Aust Torts Reports 81-721

Supreme Court

CITATION:	Alamdo Holdings Pty Ltd v Bankstown City Council [2003] NSWSC 1074
HEARING DATE(S):	17 November 2003 - 20 November 2003
JUDGMENT DATE:	2 December 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Gzell J
DECISION:	Injunctions prohibitory and mandatory to be made to prevent the defendant continuing the nuisance and requiring it to abate the nuisance.
CATCHWORDS:	NUISANCE - What constitutes - Whether water overflowing from an unlined stormwater channel onto the plaintiff's land constitutes actionable private nuisance - Whether the channel was the remnant of a watercourse the overflow from which should be borne by the plaintiff as riparian owner - Whether the plaintiff as reversioner had suffered a permanent reduction in the value of the reversion - Whether knowledge of the flood-prone nature of the land by the plaintiff upon acquisition was a defence - Whether the Statute of Limitations 1969, s 14 applied - Whether the defendant was entitled to immunity under the Local Government Act 1993, s 733 - Whether the defendant acted in good faith - Whether the defendant was protected from injunctive relief directed at future acts or omissions - Whether damage to the plaintiff was disproportionate to the cost to the defendant of abating the nuisance - Whether injunctive relief should be granted - PROCEDURE - Courts and judges generally - Whether the Supreme Court of a State is bound by a decision of the Privy Council given prior to the Australia Act 1986
LEGISLATION CITED:	Australia Act 1986 (Cth) Local Government Act 1993 Environmental Planning and Assessment Act 1979 Local Government Act 1919 Limitation Act 1969
CASES CITED:	Gartner v Kidman (1961-1962) 108 CLR 12 Knezovic v Shire of Swan-Guildford (1967-1968) 118 CLR 468 Hawthorn Corporation v Kannuluik [1906] AC 105 Viro v The Queen (1976-1978) 141 CLR 88 Hawkins v Clayton (1986) 5 NSWLR 109 R v Judge Bland; Ex parte Director of Public Prosecutions [1987] VR 225 Shelmerdine v Ringen Pty Ltd (1990) V ConvR 54-375 Essendon Corporation v McSweeney (1914) 17 CLR 524 Metropolitan Gas Co v Melbourne Corporation (1924) 35 CLR 186 Aisbett v City of Camberwell (1933) 50 CLR 154 Rudd v Hornsby Shire Council (1975) 31 LGRA 120 Bonnici v Kuring-Gai Municipal Council (2001) 121 LGERA 1 Kuring-Gai Municipal Council v Bonnici [2002] NSWCA 313 Miller v Jackson [1977] QB 966 Khyatt v Morgan [1961] NZLR 1020 Rust v Victoria Graving Dock Co (1887) 36 Ch D 113 Simpson v Savage (1856) 1 CB (NS) 347 (140 ER 143) Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290 Lamont v Wyong Shire Council (unreported, NSW SC, 13 December 1991) Attrill v Richmond River Shire Council (1993) 30 NSWLR 122 Attrill v Richmond River Shire Council (1995) 38 NSWLR 545 Earl of Harrington v Derby Corporation [1905] 1 Ch 205 Pyrenees Shire Council v Day (1998) 192 CLR 330 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 Brodie v Singleton Shire Council (2001) 206 CLR 512 Graham Barclay Oysters Pty Ltd v Ryan (2002) 77 ALJR 183 MacAdam and Pyke, Judicial Reasoning and the Doctrine of Precedent in Australia, Butterworths, Sydney, 1998 Fleming, The Law of Torts, 9th ed, LBC Information Services, Sydney, 1998
PARTIES :	Alamdo Holdings Pty Ltd - Plaintiff Bankstown City Council - Defendant
FILE NUMBER(S):	SC 2252/99
COUNSEL:	CJ Birch SC and J Stoljar - Plaintiff J Ireland QC and J Maston - Defendant
SOLICITORS:	Speed and Stracey Lawyers - Plaintiff Marsdens Law Group - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

TUESDAY 2 DECEMBER 2003

2252/99 ALAMDO HOLDINGS PTY LTD v BANKSTOWN CITY COUNCIL (No 3)

JUDGMENT

1 The plaintiff sues in nuisance and negligence for the failure of the defendant council to prevent inundation of land by water overflowing an unlined channel through which storm water flows north-west along an easement within the boundary of the plaintiff’s land at Bennett Street, Chester Hill, Sydney and thereafter beside the plaintiff’s land.

2 Stormwater is piped from the south to a gross pollutant trap at Orchard Road close to the south-east boundary of the property. From the Orchard Road gross pollutant trap, water flows in the channel through and beside the property to a lined culvert under Sir Thomas Mitchell Road where it becomes the Villawood drain, an open concrete-lined channel proceeding to the north-west and then to the west.

3 The Villawood drain was transferred by the Commonwealth to the defendant in December 1995. The Commonwealth undertook to pay four instalments of $1.967 million each for the repair and maintenance by the defendant of the drain. Repair work is currently being carried out and the Commonwealth instalments have not been exhausted.

4 The only unlined portion of the defendant’s drainage system north of the Hume Highway is the channel of approximately 450 metres that passes the plaintiff’s land.

5 Aerial photographs from 1930 were considered by experts on both sides. The land in question was then undeveloped. Dr Perrens concluded that the photographs indicated that there was no well defined drainage line in the position of the channel. He was of the view that the photographs showed that the general area constituting the main drainage depression for the catchment included the area where the channel is now located. However, the photographs, in his view, showed no well defined watercourse.

6 Mr Lucas took the view that the photographs showed a shallow watercourse passing through the property generally in the vicinity of the existing channel, the watercourse having been gradually reshaped and realigned as development of adjoining properties occurred over time.

7 In cross-examination, Dr Perrens said that the 1930 photographs revealed a broad shallow depression. He observed no creek.

8 In cross-examination, Mr Lucas said that a watercourse might have run along a darkened patch in the 1930 photographs to the east of the channel. He said it was very difficult to say whether the white line to the west of the darkened area or the darkened area itself was a watercourse unless there was evidence from people who were around at that time. Furthermore, Mr Lucas said that it appeared that the channel had been moved from its original position to suit the filling of adjoining lands.

9 One of the issues raised by the defence was that the channel represented what was left of a creek or natural watercourse. It was submitted that any overflowing of the banks of the watercourse was a natural incident of riparian ownership: the plaintiff must bear the burden of the floodwater and the law of nuisance did not apply (Gartner v Kidman (1961-1962) 108 CLR 12 at 47-48).

10 In my view, the evidence of Mr Lucas did not establish the channel as the remnant of a natural watercourse. Without the assistance of evidence from persons familiar with the site in 1930, it was very difficult, he said, to determine whether the watercourse was in the position of the channel or in the darkened patch on the photographs to the east of the channel.

11 To constitute a watercourse, there must be a stream with bed, banks and water albeit that the flow of water may be intermittent or seasonal. But, essentially, there must be a stream and it must be sharply distinguished from a mere drain or a drainage depression in the contours of the land which serves to relieve upper land of excess water in times of major precipitation (Knezovic v Shire of Swan-Guildford (1967-1968) 118 CLR 468 at 475-476). I am not satisfied that the aerial photographs demonstrate the existence of a watercourse as distinct from a drain. I prefer the evidence of Dr Perrens in this regard.

12 In any event, the change of position of the drain to suit the use of neighbouring land, rendered it no longer the remnant of a watercourse if, indeed, it ever was.

13 In the early 1960s, a building (“Building No 1”) was constructed on the western boundary of the land. It is a factory and office building of steel frame construction with brick and metal clad external walls and a steel roof. Its floor level was built above ground level at an Australian height datum of 22.86 metres.

14 I was invited to draw the inference that the building was constructed with a raised floor because of the potential for flooding of the land. I decline to do so. The raised height is equally consistent with a back-in loading and unloading dock as an adjunct to the factory.

15 From 1987, Building No 1 was occupied by Australian Window Furnishing Pty Ltd, a wholly-owned subsidiary of Hunter Douglas Ltd which held a registered lease from the State Superannuation Board.

16 A second building (“Building No 2”) was constructed on the land at a later stage. It is also a steel frame construction with brick walls to about two metres and metal cladding thereafter. It is located towards the eastern boundary of the property. Its floor was at ground level at an Australian height datum of 22.53 metres. During the 1980s it was occupied by engineering companies.

17 The plaintiff executed a contract for the purchase of the land in December 1988. Prior to making that commitment, Mr Anthony Maurici the managing director of the plaintiff, had discussions with Mr John Mayo managing director of Australian Window Furnishing Pty Ltd. Mr Mayo recounted the flooding of the land in October 1998. He observed water coming over the edge of the channel, through the fence that divided the two buildings, across the back of the car park and into the loading docks of Building No 1. The water rose to within four to five inches of the elevated factory floor. It remained at its peak for between 15 to 30 minutes and within two hours had receded to the channel. Mr Mayo later observed a high watermark inside Building No 2 about 200 millimetres above floor level. Mr Mayo took Mr Maurici to Building No 2 and showed him the high watermark.

18 Mr Maurici wanted a long-term lease of the property at purchase. He gave a commitment to Hunter Douglas Ltd to re-roof Building No 1 and to reclad the walls to reduce heat and improve security. Hunter Douglas Ltd undertook to take a 10 year lease following the purchase at a higher rent.

19 Mr Mayo was on the premises for a 10 year period from 1987. The October 1988 flood was the only occasion he observed water to enter building No 2. He never observed water entering Building No 1. On a few occasions after October 1988, Mr Mayo observed flooding of the yard of the premises for short periods which impeded deliveries and collections from the factories.

20 Troy March had been in Building No 2 for the seven years prior to September 2003. On two occasions he witnessed flooding of the land. The first was in January 1998 when water entered Building No 2 to just below knee height in some places. Other places remained dry and he was able to move welders into dry areas and pick up tools. The water remained in the factory for 15 to 20 minutes and took about an hour to recede to the channel.

21 The other incident was in April 2000 when water came up about 20 metres from the channel into the yard and receded within 15 to 20 minutes.

22 Mr Maurici was aware of the flood prone nature of the land. Not only had Mr Mayo informed him of the October 1988 incident but also he wrote to the defendant in February 1989 indicating that the plaintiff was in the process of purchasing the land, that it flooded as a result of the incapacity of the channel to pass sufficient flow and that water had risen to about 200 millimetres in Building No 2. He asked the defendant what work was planned to remedy the flooding and to repair the channel. This letter was written eight days before the settlement of the contract of purchase which took place before a response had been received from the defendant.

23 The defendant responded to Mr Maurici’s letter in April 1989 indicating that there was a proposal to reconstruct the bridge at Sir Thomas Mitchell Street which was expected to reduce flooding problems on the land. The defendant stated that no other work on the channel was listed in its forward works programme although maintenance of the channel had commenced. During his occupancy of the premises, Mr Mayo observed the defendant to carry out dredging work in the channel only once.

24 Later in April 1989, Mr Maurici again wrote to the defendant suggesting that it install an underground pipe or culvert drain in place of the channel and stating that the plaintiff was prepared to contribute to the cost of this work and purchase and consolidate the drainage easements into the land. At that time Mr Maurici did not believe that the defendant was legally liable to make good the problems of susceptibility of the land to flooding.

25 Officers of the defendant prepared estimates for the construction of an open concrete channel at a cost of approximately $1.6 million and for a reinforced concrete box culvert at a cost of approximately $2.7 million. Mr Maurici was informed of these estimates in May 1989. The defendant reiterated that this work was not listed in its forward works programme.

26 There was no further correspondence between the parties until January 1996 when the plaintiff requested the defendant to clear out the channel as water had banked up during heavy rain. The defendant responded that the letter had been referred to the relevant member of staff.

27 At the request of Mr Maurici, a site meeting was held on the land in July 1998. Mr Morrison, the manager of roads and infrastructure of the defendant, attended the meeting. Mr Maurici reiterated his interest in the construction of a concrete lined channel upstream from the bridge at Sir Thomas Mitchell Road. The focus of the meeting was the deterioration of the bank and fencing on the plaintiff’s land beside the channel.

28 Mr Morrison requested consultants of the defendant to investigate the need for urgent maintenance of the banks of the channel to protect private property and the drain from further scouring, future maintenance methods and the need and options for improvements as, for example, concrete lining of the channel.

29 The consultants produced a preliminary report in September 1998 recommending the construction of a new fence and urgent maintenance of the banks of the channel. Later that month, a further report was prepared by the consultants. It recommended that a study of the channel and surrounding areas be undertaken to determine flows and the capacity of the channel and to develop options to reduce inundation of properties in the vicinity.

30 In February 1999, Mr Maurici wrote to the defendant requiring it to repair damage caused to the plaintiff’s property the previous year and continuing damage caused by the concentrated flow of water through the channel. Mr Maurici also required the defendant to construct a properly designed and sufficient drainage channel to carry its stormwater discharge so that the plaintiff’s property did not continue to be affected by regular flooding. The letter went on to record the matters discussed at the site meeting of July 1998.

31 Mr Morrison wrote a memorandum on receipt of that letter recording his undertaking to Mr Maurici that he would arrange a thorough investigation of the situation to determine possible solutions and costs with a view to including it in the rolling works programme subject to funding.

32 An officer of the defendant acknowledged Mr Maurici’s letter saying he had sought urgent advice from the defendant’s engineering staff and so soon as the information was to hand he would contact Mr Maurici.

33 In March 1999, Mr Maurici complained to this officer that he had not had a reply. Mr Maurici gave notice that he would take legal action unless satisfactory action was taken by the defendant within seven days. There was no response. These proceedings were commenced in May 1999.

34 The defendant’s consultants produced a memorandum in May 1999 in which they stated that the stormwater drainage system had a low capacity and adjacent properties would be flooded at quite frequent intervals and recommended further investigation.

35 In November 1999, the consultants produced a preliminary report on the plan of management for the Villawood drain in the corridor from Sir Thomas Mitchell Road to the Orchard Reserve. This report recommended the acquisition of the plaintiff’s land to demolish the buildings, rezone and redevelop portion of the site as residential property above flood level and consolidate the remainder with the Orchard Reserve incorporating passive recreation facilities, floodways, wet detention basins and restoration of the channel to a natural creek system. The object of the plan was to produce a cost neutral solution by the sale of the residential portion of the land. Subsequent investigation by the property manager of the defendant indicated a higher cost of acquisition and the project was abandoned.

36 No further steps have been taken by the defendant to alleviate the problem. In particular, no proposal has been included in the defendant’s forward works programme. Mr Morrison said that nothing had been done pending the resolution of these proceedings.

37 The defendant called no evidence as to its inability to carry out either of the options mentioned in its letter to the plaintiff of May 1989. Nor was any evidence called of competing demands upon the defendant’s funds for other works having a higher priority. The work being carried out on the Villawood drain is at no cost to the defendant. The instalment payments from the Commonwealth have been sufficient to carry out those restoration works.

38 The defendant accepted that urbanisation of the catchment in which the plaintiff’s land is located has led to an increased flow in the channel. In addition to the evidence of actual flood events, expert hydrologists from both sides gave predictive evidence of such events. There was little difference between the experts.

39 Dr Perrens calculated the flow of water through the channel at the Orchard Street gross pollutant trap at rates applicable to his analysis of the position in 1930 when the land was in a green field state, in 1960 when the majority of the stormwater drainage infrastructure within the lower catchment had been constructed and in 1998 when the plaintiff acquired the land and the propensity for inundation was probably close to the present position.

40 In 1930, a one in a 100 year flood produced a flow of 26 cubic metres per second. In 1998, this velocity was exceeded in a one in two year event. The calculated flood height for a one in 100 year event in 1930 was lower than the elevated floor of Building No 1. On the experts’ figures, that remained the case in 1998. On the other hand, flood heights in 1930 were calculated below the level of the floor of the Building No 2, whereas this remained likely on 1998 flows in only a one in two year event.

41 With respect to Building No 2, I was invited to contrast the projected above floor flood depths in 1960 and 1998. In 1960, flooding of a floor was likely to occur somewhere between a one in five year event and a one in 10 year event. In 1998, the floor was expected to be flooded somewhere between a one in two year event and a one in five year event. It was submitted that there was very little difference between the present position and that in 1960 before the buildings were constructed on the land.

42 I reject this submission. The action for private nuisance is directed against unreasonable interference with the use and enjoyment of land. In my view, the evidence demonstrates a significant increase in the frequency with which plaintiff’s land is likely to be inundated. Significantly, flood waters would not have reached the floor of Building No 2 at the flow rates for any events up to the one in 100 year event in 1930. And it would have taken something in excess of a one in a five year event for water to be likely to enter the building at 1960 flow rates. By 1998, however, floodwaters would be likely to enter Building No 2 at flow rates somewhat in excess of a one in two year event.

43 In my view there is a more significant interference with the use and enjoyment of land subject to expected flooding every three years or so than in the case of an expected flood every 100 years. The frequency of the likely flood event diminishes the type of activity that can be planned to take effect on the land.

44 Mr Lucas projected the duration of flood events under current conditions and as at 1961. While flood levels at Building No 1 were projected to last 51 minutes longer in a one in two year event and four minutes longer in a one in five year event, the flood levels themselves were projected to effect only a small portion of the yard along side the building. Mr Lucas projected no change in the duration of flooding in a one in 10 year event, a reduction of three minutes in the one in 20 and one in 50 year events and a reduction of two minutes in the one in 100 year event.

45 Again, I take the view that changes in the length of flooding are of little consequence in comparison with the frequency with which flooding is likely to occur.

46 In Hawthorn Corporation v Kannuluik [1906] AC 105 a municipal authority was held liable to the respondent where, under its statutory powers, it took over the care of a watercourse and made it into a public drain which proved, in the course of time, to be increasingly insufficient to hold and pass on a mixture of slime and sewerage poured into it, with the result that the respondent’s property was flooded. The appellant was liable notwithstanding that the drain when first formed was sufficient for its purpose.

47 It was submitted that I am bound by that authority. The High Court is not bound by any decision of the Privy Council whether given before or after the Australia Act 1986 (Cth) (Viro v The Queen (1976-1978) 141 CLR 88). MacAdam and Pyke, Judicial Reasoning and the Doctrine of Precedent in Australia, Butterworths, Sydney, 1998 at 113-119 argue that State courts are bound by decisions of the Privy Council given prior to the Australia Act 1986.

48 I disagree with that view. Once the Privy Council ceased to be part of the hierarchical structure of Australian courts, the same considerations that led the High Court to conclude it was no longer bound by Privy Council decisions should apply equally to other courts in Australia. This was the view taken by McHugh JA in Hawkins v Clayton (1986) 5 NSWLR 109 at 136-137 and by Nathan J in R v Judge Bland; Ex parte Director of Public Prosecutions [1987] VR 225 at 230-233, a view that his Honour repeated in Shelmerdine v Ringen Pty Ltd (1990) V ConvR 54-375.

49 While not bound by the decision, the question remains whether I should follow it. The defendant submitted I should not. The mischief in question in Kannuluik was capable of being met by “a very trifling cost”. It was submitted that the instant circumstances are distinguishable because costs in millions of dollars are involved in this case. I do not regard the principle established by the case as limited to a small cost of rectification, although that issue will have relevance to the nature of the relief available to the plaintiff if successful.

50 Kannuluik was distinguished by the High Court in Essendon Corporation v McSweeney (1914) 17 CLR 524. It was not doubted. It was referred to with approval in Metropolitan Gas Co v Melbourne Corporation (1924) 35 CLR 186 and was followed in Aisbett v City of Camberwell (1933) 50 CLR 154.

51 In Aisbett, the plaintiff owned land through which a natural depression ran on which surface water flowed from neighbouring land. The defendant municipality replaced a drain that discharged water onto the neighbouring land. Owing to the increased flow of the water carried by the new drain which drained a larger area, damage was caused to the plaintiff’s land. There was no evidence that the defendant had been negligent in the design or construction of the new drain, nor was there any evidence that the old drain had caused any damage to the plaintiff. It was held that the defendant was not authorised to discharge onto the neighbouring land, water which flowed onto the plaintiff’s land in greater quantities than would naturally flow there. It was liable for damages.

52 In Rudd v Hornsby Shire Council (1975) 31 LGRA 120, Holland J followed Kannuluik and Aisbett. His Honour said at 134:

“If, by reason of the development of the area by approval or permission of the local council and the establishment by that council of a roads and drainage system designed to serve the development by collecting and concentrating the run-off from the area so as to discharge it into the watercourse, the watercourse becomes inadequate to cope with the flow thereby causing physical damage to and interference with the use and enjoyment of the plaintiff’s land, the council may be liable to him in nuisance. It will be liable unless the council can justify the nuisance suffered by the plaintiff on the ground that it had statutory authority to create and maintain that nuisance.”

53 In Bonnici v Kuring-Gai Municipal Council (2001) 121 LGERA 1, the plaintiffs constructed a house on land that was not prone to flooding. As a result of road works carried out by the defendant, stormwater that had formerly been diverted flowed directly across the plaintiff’s property causing damage to the land. Sperling J dismissed a submission that the law of private nuisance should be assimilated to the law of negligence. His Honour took the view that the incursion of stormwater from the street on the plaintiff’s land in excess of stormwater arriving naturally, not being negligible, there was actionable private nuisance. His Honour’s decision was upheld on appeal: Kuring-Gai Municipal Council v Bonnici [2002] NSWCA 313.

54 The defendant submitted that Bonnici was distinguishable because, in the instant circumstances, there was no claim for nuisance beyond the easement upon which the channel flows. That submission was not made out by the evidence. Both the evidence of actual flood events and the hydrological projections establish flooding of the plaintiff’s land beyond the easement.

55 Secondly, it was submitted that Bonnici did not involve a watercourse. I have, however, concluded that no watercourse is involved in these proceedings.

56 In my view, I should followed Kannuluik as it was explained by Holland J in Rudd and applied by Sperling J in Bonnici. The interference with the use and enjoyment of the plaintiff’s land constitutes actionable private nuisance by the defendant unless it can justify the nuisance on the ground that it had statutory authority to create and maintain it or it establishes some other defence.

57 The defendant submitted that the plaintiff purchased land that was subject to inundation to its knowledge and it has not shown any potential for greater inundation of the land since that date.

58 Coming to a nuisance was once thought to preclude a person from complaint of private nuisance. If the person chose to acquire property with knowledge that it was exposed to a nuisance, complaint was precluded on the ground of volenti non fit injuria or contributory negligence. That view is no longer tenable (Miller v Jackson [1977] QB 966 at 986-987, Khyatt v Morgan [1961] NZLR 1020 at 1024).

59 The evidence reveals that the plaintiff’s land is, and in so far as the evidence reveals, has always been leased to tenants. The plaintiff sues as a reversioner.

60 Since the right to complain of private nuisance belongs to the actual possessor of the land, the reversioner cannot sue unless the nuisance permanently impairs the usability of the land and thereby damages the reversioner’s proprietary interest (Fleming, The Law of Torts, 9th ed, LBC Information Services, Sydney, 1998 at 474-475). A reversioner can only recover damages where the injury to the property is permanent so that it will continue to affect it when the reversioner comes into possession. A reversioner is not entitled to damages in respect of a temporary injury on the ground that it affects the present saleable value of the reversion (Rust v Victoria Graving Dock Co (1887) 36 Ch D 113, Simpson v Savage (1856) 1 CB (NS) 347 (140 ER 143)).

61 The defendant submitted that permanent damage to the reversion had not been established. But there was evidence from valuers on both sides and evidence from Mr Maurici that rental values were permanently affected by the flood prone nature of the site. Mr Maurici said that the flooding had been mentioned by tenants in his negotiations over rent and they had demanded an attractive rental level. Kent Wood, the valuer called by the defendant, put a figure of $1,417,340 on the diminution in value of the reversion as a result of the plaintiff’s land being flood prone. Peter Byron, the valuer called by the plaintiff put a higher figure on the damage to the reversion.

62 The defendant invokes the Local Government Act 1993, s 733(1) which is in the following terms:

“A council does not incur any liability in respect of:
(a) any advice furnished in good faith by the council relating to the likelihood of any land being flooded or the nature or extent of any such flooding, or
(b) anything done or omitted to be done in good faith by the council in so far as it relates to the likelihood of land being flooded or the nature or extent of any such flooding.”

Section 733(4) provides that unless the contrary is proved the council is taken to have acted in good faith if the advice was furnished, or the thing was done or omitted to be done, substantially in accordance with the principles contained in the relevant manual most recently notified under s 733(5). It provides that the Minister for Planning may, from time to time, give notification in the Gazette of the publication of a manual relating to the management of flood liable land.

63 The relevant manual is the 1986 Flood Plan Management Manual. The defendant argued that there was no suggestion that any works undertaken by the defendant in relation to flooding was not accomplished in conformity with the manual.

64 The plaintiff sought to answer this submission in two ways. First, it was argued that the defendant had not acted in good faith and was not protected by the Local Government Act 1993, s 733.

65 In Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290, the respondent issued certificates under the Environmental Planning and Assessment Act 1979, s 149 containing an incorrect statement that it had no information indicating that the property was subject to the risk of flooding. The respondent had no proper system to deal with information concerning flooding and the misstatement was made honestly by an employee who turned his mind to the task but did not consult records.

66 A Full Court of the Federal Court having analysed the authorities on the meaning of good faith in other contexts, concluded at 299-300 that it would be wrong to restrict good faith in the Local Government Act 1919, s 582A(1), the forerunner of the Local Government Act 1993, s 733(1), to dishonesty. The court was of the view that the respondent could not be said to be acting in good faith when it issued the certificates with no real attempt to have recourse to vital documentary information available to it and it had no proper system to deal with requests for information of the type in question. The Court went on to say that the statutory concept of good faith with which the legislation was concerned called for more than honest ineptitude.

67 In Lamont v Wyong Shire Council (unreported, NSW SC, 13 December 1991), Palmer AJ said at 6-7 that although negligence or even gross negligence was not sufficient to avoid the protection afforded by the Local Government Act 1919, s 582A(1), a lack of honest endeavour to undertake the task for which the council had responsibility, would be sufficient.

68 In my view, the defendant did not act in good faith in the instant circumstances. Mr Morrison was of the view that there was a potential problem. He initialled a detailed investigation. A solution was the acquisition of the land and its use, partially as a detention basin and partially for on-sale of residential lots. Further investigation led to the rejection of that plan because the cost of acquisition of the land would not make the proposal cost neutral. Notwithstanding recognition of a continuing problem, the defendant did nothing thereafter. It made no prospective plans but relied solely on the argument that these proceedings having being commenced, further investigation should await their outcome.

69 Having recognised the problem, the defendant was, in my view, obliged to take reasonable steps to deal with it. Had the defendant continued its investigations, arrived at an alternative solution and introduced it to its rolling works programme so that its priority might be established as against other works, a different result may have eventuated. Its abandonment of any further investigation pending the outcome of these proceedings put it, in my view, outside the protection of the Local Government Act 1993, s 733.

70 The second argument of the plaintiff against the defendant’s entitlement to rely upon the Local Government Act 1993, s 733 was that the abatement of the nuisance which it seeks was not a liability for anything omitted to be done in the past but a liability for the failure to do something in the future and the Local Government Act 1993, s 733(1) is limited to relief from liability with respect to past advice, acts or omissions.

71 In Attrill v Richmond River Shire Council (1993) 30 NSWLR 122 at 127, Hodgson J was of the view that, prima facie, the legislature should not be presumed to have intended to take away rights for redress of injury under the general law without reasonably clear words. His Honour took the view that the word “liability” in the Local Government Act 1919, s 582A(1) was capable of extending to an order to do something. His Honour also took the view that the phrase “anything done or omitted to be done” connoted past events and an injunction directed at the probability of some future state of affairs fell outside the ambit of the provision.

72 Hodgson J answered the question: can the council rely on the Local Government Act 1919, s 582A(1) as a defence to the claim for damages caused by the council’s acts and omissions prior to the commencement of the proceedings? in the affirmative. He answered the question: can the council rely on the Local Government Act 1919, s 582A(1) as a defence to the claim for injunctions, prohibitory and mandatory, against acts and omissions after the commencement of the proceedings which would constitute a nuisance of general law? in the negative.

73 The defendant submitted that I should not follow this decision. It was submitted that I am not bound to do so. In Attrill v Richmond River Shire Council (1995) 38 NSWLR 545 at 549, Kirby P recorded that there was no cross appeal with respect to the second question.

74 In Bonnici (2001) 121 LGERA 1 at 30, Sperling J followed Attrill in denying damages for acts or omissions committed before the proceedings were commenced but granting an injunction against committing prospective acts or omissions.

75 I see no reason to depart from these decisions. If the parliament is to deny a citizen relief against actionable private nuisance committed by a local authority it must do so in clear words. In my view the Local Government Act 1993, s 733(1) is open to the interpretation placed upon it by Hodgson J. Its terms are not sufficiently clear to grant immunity from liability for prospective action or inaction.

76 The defendant also raised the Limitation Act 1969, s14, although the issue was not pressed in final submissions. It does not seem to me that the provision applies to an application for a prohibitory or mandatory injunction. In any event, the tort of private nuisance is a continuing wrong such that the plaintiff can recover for all harm suffered during the relevant limitation period preceding the cause of action (Earl of Harrington v Derby Corporation [1905] 1 Ch 205 at 227).

77 The plaintiff raised an alternative claim in tort. It points out that the reasoning in Kannuluik was expressed in terms of negligence. Because of the view I hold in relation to the cause of action in nuisance, it is unnecessary for me to determine whether a duty of care was owed by the defendant to the plaintiff.

78 The matter was not argued. A submission, almost formal in its enunciation, was made. I would require full argument on this issue before arriving at a conclusion in light of the consideration of such cases as Pyrenees Shire Council v Day (1998) 192 CLR 330, Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 and Brodie v Singleton Shire Council (2001) 206 CLR 512 in Graham Barclay Oysters Pty Ltd v Ryan (2002) 77 ALJR 183.

79 With respect to the relief claimed by the plaintiff, the defendant argued that there was such a disproportion between the cost to the defendant of abating the nuisance and the prospective damage suffered by the plaintiff that injunctive relief should be refused.

80 It was submitted that Building No 2 could be protected from the incursion of flood waters by the provision of ramps or flood flaps at relatively inexpensive cost. But that approach does not overcome the diminution in value of the reversion as a result of the land being flood prone.

81 Mr Wood said that the diminution in the value of the reversion stood at $1,417,340. He arrived at a figure of $947,634 per annum as the rental of the two buildings assuming them to be flood free. This he capitalised at 10% to arrive at $9,476,340. The current rental of the two buildings he ultimately took to be $846,195 which, capitalised at 10.5%, gave $8,059,000. The difference of $1,417,340 as the permanent loss in value of the reversion is not inconsequential.

82 Dr Perrens suggested the lining of the channel with reinforced concrete base slab and reinforced concrete block walls at an approximate cost of $1,516,000. To effectively abate the nuisance, some work would be required to the culverts at the bridge on Sir Thomas Mitchell Road.

83 The plaintiff asks me to order the defendant, within two years, to construct a concrete lined channel in accordance with Dr Perrens’ suggested solution but that, if within that period, despite reasonable endeavours by the defendant, it proves impracticable to perform the works, the defendant should be ordered to pay to the plaintiff the diminution in reversion calculated by Mr Byron.

84 The cost of complying with Dr Perrens’ suggestion has not been fully analysed. Furthermore, I prefer the valuation of Mr Wood to that of Mr Byron. Mr Byron attributed additional value to the hardstand surrounding Building No 2 at a rate that I do not regard as justifiable. Furthermore, I accept the criticism of Mr Wood that hardstand is reflected in the rental for comparable industrial sites. I also accept Mr Wood’s calculation of the actual rental of Building No 2.

85 Finally, the defendant submitted that in the exercise of my discretion, I should refuse to grant injunctive relief because the plaintiff purchased the land in its flood-prone state with knowledge.

86 While this is a matter to be taken into account in the exercise of my discretion, I am of the view that it is far outweighed by the abandonment of investigation of further proposals for the elimination or amelioration of the flooding problem by the defendant.

87 In my view, the plaintiff has made out a case in nuisance and is entitled to injunctive relief for the abatement of that nuisance. Since I am of the view that the Local Government Act 1993, s 733 is not available to the defendant, the plaintiff is also entitled to damages.

88 However, since those damages are limited to the diminution in the value of the reversion, which should be rectified by the abatement of the nuisance, I do not propose to order an inquiry as to damages.

89 I am not prepared to order the defendant to carry out any specific works to abate the nuisance. There may be other alternatives to that proposed by Dr Perrens. I propose to grant a prohibitory and a mandatory injunction in general terms requiring the defendant not to continue and to abate the nuisance.

90 I will hear the parties on the appropriate terms of such orders. I will also hear the parties on costs. I direct the parties to bring in short minutes of orders reflecting these reasons.

Last Modified: 12/03/2003