Allianz Australia Insurance Ltd v Roads and Traffic Authority of New South Wales

Allianz Australia Insurance Ltd appealed a decision concerning a motor accident where a driver aquaplaned and lost control of their vehicle. The dispute centred on the placement of a "water over road" sign by the Roads and Traffic Authority of New South Wales. The accident occurred when the driver, travelling at least 90 km/h, encountered a water hazard. The trial judge had found the Authority negligent for placing the "water over road" sign 924 metres east of the hazard, arguing it should have been positioned between 150 and 300 metres away. The appeal was heard by the Court of Appeal of New South Wales.

The primary legal issues before the Court of Appeal were whether the Authority was negligent in its placement of the "water over road" sign, and if so, whether that negligence caused the accident. A further issue was whether the Authority's conduct in placing the sign was so unreasonable that it could not be considered a reasonable exercise of its statutory power, as contemplated by section 43A of the Civil Liability Act 2002 (NSW). The court also considered whether the failure to place a "reduce speed" sign in addition to the "water over road" sign constituted negligence, though the evidence did not establish this.

The Court of Appeal determined that the placement of the "water over road" sign, while perhaps not the most preferable course, did not meet the high threshold of "Wednesbury unreasonableness" required by section 43A. This standard requires conduct to be "so unreasonable that no authority having the special statutory power could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power." The court found the placement near a small dip with some water understandable, and the test for unreasonableness is objective, not focused on the decision-maker's subjective thoughts. Regarding causation, the court held that there was no admissible evidence to demonstrate that the sign's placement, even if closer, would have altered the driver's behaviour. The existing sign, placed 924 metres away, did not change the driver's behaviour, and no inference could be drawn that a differently placed sign would have had a different effect. The court concluded that causation was not established.

Consequently, in each appeal, the Court of Appeal dismissed the appeals with costs.