Bankstown City Council v Alamdo Holdings Pty Ltd

Bankstown City Council (the Council) appealed to the High Court of Australia against a decision of the New South Wales Court of Appeal, which had upheld an injunction granted to Alamdo Holdings Pty Ltd (the respondent). The dispute concerned flooding of the respondent's land caused by the Council's construction and operation of a drainage system during urbanisation. The Council argued that it was indemnified by section 733 of the *Local Government Act 1993* (NSW) for its conduct.

The High Court was required to determine whether section 733 of the *Local Government Act 1993* (NSW) provided the Council with an indemnity against liability for nuisance arising from its drainage system, and specifically whether this indemnity extended to precluding the grant of injunctive relief. Further questions arose regarding the meaning of "good faith" in the context of the Council deferring action on the nuisance, and whether liability to injunctive relief constituted liability in respect of past events for the purposes of the indemnity.

The Court reasoned that section 733 of the *Local Government Act 1993* (NSW) was intended to protect local government bodies from liability for damages in respect of past events where they acted in good faith concerning flooding. However, the Court held that this indemnity did not extend to mandatory or prohibitory injunctions, which are directed towards future events. The Court found that the liability to injunctive relief, even if based on past conduct, is fundamentally a liability in respect of future states of affairs, and therefore falls outside the scope of the indemnity. The Court also considered that "good faith" did not require dishonesty, but that the Council's conduct in deferring action, in light of pending litigation, was not necessarily indicative of a lack of good faith.

The High Court allowed the appeal, setting aside the orders of the Court of Appeal and dismissing the respondent's proceedings. The appellant Council was ordered to pay the costs of the respondent in the High Court appeal.