Gales Holdings Pty Limited v Tweed Shire Council

[2014] HCATrans 142

[2014] HCATrans 142

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S26 of 2014

B e t w e e n -

GALES HOLDINGS PTY LIMITED ACN 000 872 275

Applicant

and

TWEED SHIRE COUNCIL

Respondent

Application for special leave to appeal

KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 20 JUNE 2014, AT 12.42 PM

Copyright in the High Court of Australia

MR T.F. ROBERTSON, SC:   May it please the Court, I appear with MR M. GREEN and MR J.E. LAZARUS, for the applicant.  (instructed by Woolf Associates)

MR S.R. DONALDSON, SC:   If it please your Honours, I appear with my learned friend, MR S.P.W. GLASCOTT, for the respondent.  (instructed by Mills Oakley Lawyers)

KIEFEL J:   Yes, Mr Robertson.

MR ROBERTSON:   Your Honours, the special leave application raises several questions.  The primary one is whether the principles of foreseeability of damage which are well known in the law of negligence and part of the law of nuisance.  Wagon Mound (No 2) said that they were part of the law of public nuisance in that case because liability depended upon foreseeability in public nuisance, therefore, as a matter of logic, foreseeability of damage should also be part and parcel of the tort.

KIEFEL J:   It has been thus for a very long time.

MR ROBERTSON:   It has been assumed to be the case, your Honour, but we would say that there is no decision of this Court which addresses that question in the context of private nuisance.

KIEFEL J:   The fact that no one has challenged it might be a little telling to give this Court the opportunity to rule on it.

MR ROBERTSON:   Your Honour, I cannot, of course, contest that proposition.  However, our submission is that the tort of private nuisance has characteristics that are singular and that confine, if you like, remoteness issues in the context of the structure of the tort without the necessity to consider a further test for limiting damages and that is because private nuisance, of course, concerns unreasonable and substantial interferences with the use or enjoyment of land, land being a stable concept.  Whether it is interest in land or land itself, the consequences of action causing a nuisance can be readily foreseen by the tortfeasor.  Land is a – because of its stability and as private nuisance usually is occasioned by acts of a neighbour causing physical injury to neighbouring – to adjoining land.

KIEFEL J:   But where is the control mechanism in your theory?  I mean, thus far, it would seem that any unreasonable use of land would result in liability whereas reasonable foresight of the particular damage sustained operates to limit liability to an extent that reflects the policy of the law about how far unreasonable behaviour should result in a liability to compensation. 

MR ROBERTSON:   Understood, your Honour, but in the circumstances of this case the nuisance was intentional.  It was not negligent.  It did not arise ‑ ‑ ‑

KIEFEL J:   This is to elide intentional torts and nuisance?

MR ROBERTSON:   There is an elision already because the tort of trespass for land is seen to be a ‑ ‑ ‑

KIEFEL J:   That is a sui generis tort – an historical ‑ ‑ ‑

MR ROBERTSON:   Direct interference – that is true, but it is a direct interference and there is a point of overlap and then it proceeds into nuisance which has always been thought of as an indirect interference and interest in land. 

KIEFEL J:   What we have here then is a new tort called an intentional nuisance?

MR ROBERTSON:   Not a new tort, your Honour, but one where if it is of the essence of the tort that negligence is an element then foreseeability of damage is a controlling factor, but where the actions of the tortfeasor are intentional the policy of the law has always been that the tortfeasor takes the consequences of that intentional action as they fall.

KIEFEL J:   Assuming that to be so for present purposes, what do you say was the intentional act of the council here in the sense that intention is referred to in the intentional torts?

MR ROBERTSON:   Yes, the finding of the trial judge was that the council intentionally disposed of the municipal stormwater of Kingscliff onto my client’s land.

KIEFEL J:   Well, that is to say it was a conscious act.  Does not the damage have to be intentional?

MR ROBERTSON:   Can I just go one step ‑ two steps further?  There were two drainage areas.  The first one council intentionally blocked without informing my client, that is the northern drainage outlet, and the second drainage outlet was to the south, and it constructed a road in the face of the drainage path and then it constructed a drain at approximately one‑third of the recommended size for the purposes of the stormwater entering my client’s land running off and that had the effect of ponding on the site and engorging the groundwater table so that the groundwater rose almost to the height – almost to the surface of the land meaning that every time it rained the land would pond.  It was dry, it became wet, that was the ‑ ‑ ‑

BELL J:   This was a continuing state of affairs, hence it was a private nuisance.  Had there been an escape of water onto your client’s land on one occasion, then after the absorption of Rylands v Fletcher into the law of negligence you accept the foreseeability of damage would have been a requirement.  Now, how in terms of coherence does it play out that we would abandon foreseeability of damage because it happened on more than one occasion?

MR ROBERTSON:   Well, the structure is different because once Rylands v Fletcher was consumed by the law of negligence then there had to be a duty of care, obviously, and a breach of it to constitute the tort.  There is no necessity for a duty of care or breach of duty in the law of nuisance.  Nuisance was always – initially a tort of strict liability where fault played no part.  Subsequently, the courts have said, including in Wagon Mound (No 2) and in this Court, that fault is usually, although not essentially, an element of the law of nuisance and fault is generally established by the fact that the continuing state of affairs is obvious and in the case here we say intentional, known to the tortfeasor, and the consequences can be readily observed because it is adjoining land. 

BELL J:   And can conventionally be restrained but ‑ ‑ ‑

MR ROBERTSON:   Indeed, and can be restrained in the absence of reasonable foreseeability which is the – one could get a quia timet injunction without having to establish that the potential consequences of the action were foreseeable.

BELL J:   But it is really the coherence issue that I am taking up with you, Mr Robertson.  It would seem on one view surprising outcome were the law to move from the way it has been understood since Wagon Mound and in light of developments in Burnie Port so you remove foreseeability as a control mechanism.

MR ROBERTSON:   Your Honour, there is, as we put it, a halfway house, perhaps.  The majority in Burnie Port paid considerable attention to Justice Windeyer’s dissent in Benning v Wong where Justice Windeyer expressed the foreseeability test differently to the way in which the Court of Appeal expressed it in this case.  If I might – there is a bundle of cases and if I could ask your Honours just to open Burnie Port at tab 2. It is reported at 179 CLR 520. At 545, the last paragraph, the court said:

former restrictions upon the damages recoverable under the rule in Rylands v. Fletcher have, at least in this country, been relaxed towards correspondence with the rules controlling recoverable damages in an action in ordinary negligence.  In Benning v. Wong, Windeyer J. correctly saw that relaxation as part of a wider movement in the law of torts –

then there is a reference to moving away from rights ‑ to the protection of rights and land to more general concepts.  Then at the bottom of the page, in about point 8 on the page:

Otherwise, the main control of recoverable damages under the rule is the requirement that the damage be related to the qualities or circumstances which bring the case within the rule ‑

and there is a footnote reference to Rylands v Fletcher ‑

“damage which is the natural consequence of [the] escape” –

In the context of the other requirements of the rule, that control closely corresponds with ordinary negligence’s insistence that actionable damage be foreseeable.  There is a reference then to the passage in Benning v Wong at page 320. If I can take your Honours to that passage, it is behind tab 4. It is Benning v Wong 122 CLR 249 and the passage in Justice Windeyer’s judgment is at page 320. His Honour notes at the bottom of 319 that the origin of Rylands v Fletcher was the law of nuisance, and at the top of 320.  Then the first full paragraph on 320:

It has recently been established by the Privy Council that foreseeability of harm is an element of liability in nuisance as it is in negligence –

a reference to Overseas Tankship ‑

In a Rylands v. Fletcher case that requirement is, I consider, satisfied if, in the particular circumstances, the defendant ought reasonably to have been aware that the thing he had accumulated on his land was likely to do harm if it should escape.  In the present case that is met by the averment in the count that the gas was a thing likely to do harm if it escaped, as the defendant well knew.

This is a case about gas pipes in a public road.  Now, that test is satisfied in this case.  There are concurrent findings which satisfy the test because it was obvious that by ponding stormwater on the client’s property, preventing its escape, damage would be caused to the land, physical damage and ecological damage.  What Justice Windeyer’s concept of foreseeability in Benning v Wong does not include are the consequential losses that flow from the primary damage to the land.  As I said, there is no question but that the primary damage was foreseeable and there are concurrent findings in this case.

The problem lies in the fact that both the Court of Appeal and the judge at first instance considered that we needed to prove that council could reasonably foresee that a particular species needed an ephemeral pond for not less than six weeks in order to successfully and safely breed to establish a population of froglets on the land.  That, of course, was putting us to the proof of the manner of the occurrence which authorities suggest is too harsh a test to impose upon a plaintiff for reasonable foreseeability.  There were other concerns that we have which were expressed in our special leave submissions.  The difficulty was that the trial judge did not need to analyse all these issues because she had decided against us on the damages case because she found that we tolerated the nuisance.  Now, that toleration verdict was overturned in the Court of Appeal which took us back some years to 1999 and there has been no first instance consideration of the facts from 1999 to 2004 relating to the foreseeability question.

The Court of Appeal, as effectively primary fact finder, made a series of findings of fact in our favour.  Council knew about the existence of the frogs on our land in 1999 because it had obtained a report from adjoining land which said there was a large congregation of frogs forming on our land.  It knew that in 1999.  It knew the ecology of the frog because it had expert reports which we have included in the application book just to give you an idea of the extent of their knowledge.  It had undertaken a survey of our land.  It knew every species of plant and every vegetation community on our land.  It knew that the frog bred in ponds because its 1999 ecological study told it that.  Now, with all that knowledge we failed on reasonable foreseeability.  So the third leg of the special leave cases is effectively an attack, if you like ‑ ‑ ‑

KIEFEL J:   But it is rather knowledge after the event, is it not?

MR ROBERTSON:   No, no, this is knowledge before the event.  The knowledge of council – I can show – I can demonstrate this very quickly if I could.  If your Honours go to the second volume of the application book and if you could just go to 561, the land which is hatched on 561 is shown on this plan as Wallum Froglet Habitat.  The plan is dated May 1999.  The accompanying text at 550, or better still 523 to 524 at line 50 on 523 says:

Given that this species was also detected in all surrounding lowlands including the opposite sides of the new Turnock Street deviation road –

that is Gales’ land –

the survival of the population is unlikely to be affected ‑

meaning unlikely to be affected on the neighbouring land owned by council ‑

The largest detected grouping of the species was found to be between Turnock Street (east) and the new residential area to the north ‑

that is Gales’ land.  Then it says ‑

Additional groupings were detected north west of the Turnock Street roundabout at the rear of the residential subdivision and south of Turnock Street (east) in the area surrounding the roundabout ‑

that is Gales’ land.

KIEFEL J:   Would you mind just giving me a very short chronology of events to remind me of the dates?  This is 1999 and this is a report which, you say, predates the escape or the release of water onto your land in ‑ ‑ ‑

MR ROBERTSON:   No, there were – the chronology is this.  In the early 1990’s council closed off the northern drain which drained away Kingscliff stormwater from our land.  It then substituted a pipeline which was insufficient.  In 1997, it constructed Turnock Street.  Stormwater that previously flowed through the northern drain had to flow south towards a southern drain south of Turnock Street.  Once Turnock Street was constructed it could no longer do that.  Between 1997 and 2004 the land became progressively wetter and the vegetation communities changed.  Some dry species no longer existed, wetter species became more predominant and that created habitat for the Wallum froglet.  In 1999 – we sued in 2005, so before 1999 we had a limitation problem for the purposes of damages ‑ ‑ ‑

KIEFEL J:   When do you say the nuisance causing damage commenced?

MR ROBERTSON:   After the construction of Turnock Street, it commenced gradually.

KIEFEL J:   When was the damage suffered?

MR ROBERTSON:   The damage was suffered – the principal damage was 2003 because that is when many thousands of froglets were surveyed on the subject land and they then became – they were surveyed for the purposes of a court case dealing with the development of the land and council then raised in the legal proceedings the presence of the frog that is a barrier to the grant of development consent.

KIEFEL J:   What did the Court of Appeal say about the argument that the council had foresight in 1999 in relation ‑ as I understand you to be putting it, in relation to a continuing nuisance and, I suppose, taking no action to abate it?

MR ROBERTSON:   This is the problem.  The Court of Appeal made two findings.  The primary finding of fact in the earlier part of the court’s judgment at paragraphs 32 to 34 concerning the presence of the froglet and the fact that the library – what is called the library or the fourth ecological report notified council of its presence on the land.  However, in its findings at paragraphs 244 – I am sorry, its conclusions after informing itself as to the law at 244, 256 and 257, the court found that council had no knowledge, no expert knowledge of the habitat requirements of the frogs; we say that is quite wrong.  If you go to the application book at 415 you will see an extensive report to council in 1999 ‑ ‑ ‑

KIEFEL J:   So on this ‑ you have moved here to the question, as I understand it, the second aspect ‑ ‑ ‑

MR ROBERTSON:   The third.

KIEFEL J:   ‑ ‑ ‑of the appeal where you are effectively challenging findings of fact which would go to the question of foresight, assuming foresight to be the principle to be applied.

MR ROBERTSON:   We are not challenging the primary findings by the Court of Appeal but we just say they were not applied.  It is a challenge to the adjudicative method of the Court of Appeal.  They made findings of fact in our favour. 

KIEFEL J:   That would require this Court to reconsider the facts of this case completely effectively.

MR ROBERTSON:   No, it does not because we rely upon the findings of fact made by the Court of Appeal.  We simply say they were not applied in the court’s reasoning process. 

KIEFEL J:   Perhaps you might explain that.

BELL J:   For example, at application book 292, paragraph 256:

There was no evidence to suggest that the Council was aware at any time before 2004 that difficulties were being encountered in keeping the Land well drained.

Now, is that a fact that is accepted or is that some difficulty with the interpretation of primary facts by the Court of Appeal?

MR ROBERTSON:   We deal with this at paragraph 37, 337 of the second application book, in our submissions.  There were concurrent findings of fact, both by the trial judge and the Court of Appeal, that council knew of the drainage problems since 1994 and we give the Court the references to those concurrent findings of fact.

BELL J:   So the Court would be invited to review the evidence and conclude that Justice Emmett at paragraph 256 was in error in that statement, indeed, I think, in the whole paragraph, as a matter of fact?

MR ROBERTSON:   Not review the primary facts, your Honour.  We are content with the findings of fact made by both courts.  We say we had concurrent findings of fact in our favour on that point but that the conclusion of the Court of Appeal was contrary to them.  If I can just take your Honours to the relevant passages at, for example, 214 in application book volume 1.  At paragraph 42 the Court of Appeal records council’s drainage engineer, Mr Henley, consulting with an independent engineer:

Mr Henley said that he was not happy with how the northern drain had been dealt with . . . either the outlet drain had to be widened or the overland flow path cleared and levelled.

At 43 there is a reference to his consultation with a Mr Hill who wrote to the council pointing out:

that the northern drain had been filled in and a recent inspection revealed ponding along the Noble Park Estate’s northern boundary ‑

Its northern boundary is the Gales’ land ‑

He said that little cognisance appeared to have been taken of the upstream catchment of Pearl Street, Kingscliff . . . On 17 June 1994, Mr Hill again wrote to the Council, repeating that the northern drain had been filled in and seeking the Council’s advice as to what remedial action would be implemented –

At paragraphs 75 and 76 at 224 to 225, the court noted that there was an internal memorandum of council in 2003 recommended that a development application by my client be refused:

The February memorandum recorded that about 12 hectares of developed land upstream of the Bowling Club drained through a stormwater pipe system, which ran through the Bowling Club and

then west, including through pipes . . . to the Chinderah drain.  That is clearly a reference to the 1200mm pipe, which replaced the northern drain ‑

this was the pipe that caused all the problems ‑

The Council had known since 1995, as evidenced by its communications with Mr Findlater, that the drainage problems were caused by the filling in of the northern drain by the Noble Park Estate development.

Now, these are just examples, but there are findings – these are concurrent findings of fact.  Her Honour the trial judge went through this evidence in great detail and made findings that in considering a defence – a statutory defence that council failed to act in good faith in relation to these drainage issues on my client’s land.  That was a reference to acts not in good faith from the 1990s through to the 2000s.

KIEFEL J:   I see the light.  Is there anything you need to add before you conclude?

MR ROBERTSON:   There is not, your Honour.

KIEFEL J:   Thank you.  We need not trouble you, Mr Donaldson. 

Neither the question of law raised, nor the challenge to factual findings has sufficient prospects of success to warrant a grant of special leave in this matter.  Special leave is refused with costs.

The Court adjourns to 10.15 on Friday, 27 June in Canberra.

AT 1.09 PM THE MATTER WAS CONCLUDED