Melaleuca Estate Pty Ltd v Port Stephens Shire Council

[2004] NSWSC 415

CITATION:	Melaleuca Estate Pty Ltd v Port Stephens Shire Council [2004] NSWSC 415
HEARING DATE(S):	15/03/04, 16/03/04, 17/03/04, 18/03/04, 19/03/04, 22/03/04, 23/03/04, 25/03/04, 26/03/04,
JUDGMENT DATE:	19 May 2004
JURISDICTION:	Equity
JUDGMENT OF:	Cripps AJ
DECISION:	Plaintiff's claim against defendant in negligence and nuisance dismissed - Plaintiff to pay defendant's costs of the proceedings.
CATCHWORDS:	Discharge of water on plaintiff's land caused by the defendant's drainage works - Negligence - Duty of Care - Nuisance - s 241 of the Local Government Act 1919 and s 733 of the Local Government Act 1993 - "Good Faith" - Conditions of development consent.
LEGISLATION CITED:	Local Government Act 1919 s 241 Local Government Act 1993 s 733 Roads Act 1993 s 94 Environmental Planning & Assessment Act 1979 Clean Waters Act 1970 Land Acquisition (Just Terms Compensation) Act 1991 Protection of the Environment Operations Act 1997
CASES CITED:	Attrill v Richmond River Shire Council (1993) 30 NSWLR 122 Attrill v Richmond River Shire Council (1995) 38 NSWLR 545 Rudd v Hornsby Shire Council (1994) LGRA 120 Provender Millers (Winchester) Ltd v Southampton County Council (1940) 1 Ch 131 Manchester Corporation v Farnworth (1930) AC 171 Bonnici v Ku-ring-gai Municipal Council (2001) 121 LGERA Alambo Holdings Pty Ltd v Bankstown City Council (2004) Aust Torts Reports 81-721 Mid Density Development Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290
PARTIES :	PLAINTIFF Melaleuca Estate Pty Ltd DEFENDANT Port Stephens Shire Council
FILE NUMBER(S):	SC 4795/2002
COUNSEL:	PLAINTIFF Mr J J Webster SC with Mr M Green to 19/3/04 thence Mr P Newton DEFENDANT Mr J M Ireland QC with Mr J Maston
SOLICITORS:	PLAINTIFF Hunt & Hunt. Eastwood DEFENDANT Sparke Helmore, Newcastle

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

CRIPPS AJ

Wednesday 19 May 2004

4795/02 MELALEUCA ESTATE PTY LTD v PORT STEPHENS SHIRE COUNCIL

JUDGMENT

1 HIS HONOUR: The plaintiff Melaleuca Estate Pty Ltd (Melaleuca) is the owner of 8.4 hectares of land comprised in Lot 2 DP 575523 in the Shire of Nelson Bay and known as 2 Dowling Street Nelson Bay (the subject land).

2 It has sued Port Stephens Shire Council in negligence and nuisance alleging it has caused excess water to come onto its land by reason of drainage works undertaken in the 70’s and the 90’s.

3 On 26 July 2000 Melaleuca entered into a contract to purchase the subject land from Margaret Ann Coventry who had been the owner for many years. On 26 November 1999 and prior to her agreeing to sell her land to Melaleuca Mrs Coventry lodged a development application with the Port Stephens Shire Council for the erection of a large number of residential units on the subject land.

4 The contract between Melaleuca and Mrs Coventry had two provisions said to be relevant to these proceedings. The first was that Melaleuca was given exclusive possession and occupation of the land upon the signing of the contract in order that it could do all things that might be reasonably necessary to advance the current appeal to the Land and Environment Court from the Council’s deemed refusal to grant development consent. The second was that Melaleuca had the right to withdraw from the contract if it was of the opinion that the development consent, which had been applied for, was granted subject to conditions that, in the opinion of Melaleuca, would render the proposed development not financially viable.

5 The development consent was granted by the Land and Environment Court on 3 December 2001. The contract was completed in August 2002 Melaleuca being satisfied, apparently, that the conditions attached to the development consent would not render the proposed development not financially viable.

6 The order of the Land and Environment Court was by consent. A condition of the development consent negotiated between Melaleuca on the one hand and Council on the other was that a wick drainage system should be installed in accordance with drawings and plans identified in the development consent. The wick system advanced by Melaleuca and its expert engineer Mr Mulvey would be located on the western part of the subject land. If constructed it will consist of approximately 1600 one metre diameter wicks extending to a level no higher than minus 2.5 metres below AHD. The extensive drainage works agreed to by Melaleuca and the Council would, if implemented, not only carry off excess surface water generated by the residential development proposed together with roads, kerbs and gutters, but also excess water coming onto the subject land from the general catchment area of which the subject land forms part. There is, however, some uncertainty concerning how much of the work would have been necessary to accommodate the drainage requirements generated by the proposed development the subject of consent and how much would be needed to prevent excess water coming onto the subject land by reason of the Council’s drainage works the subject of Melaleuca’s complaint.

7 The subject land is in a catchment area of approximately 68 hectares. It is located about 1km east of the Nelson Bay Central Business District and is separated from Nelson Bay itself to the north by a large dune system. The subject land is bounded by Dowling Street to the east and south. The catchment area extends from a height of approximately 400m AHD at its highest to 8m AHD at its lowest level. Within the subject land there is an area of approximately 2.2 hectares constituting what has been variously described as a “dunal swale” or “ephemeral wetland” supporting a melaleuca paperbark forest together with some swampy mahogany trees. The bed of the ephemeral wetland is at the lowest part of the catchment area – 8m AHD.

8 Prior to the 70’s a significant area of land in the eastern part of the catchment area (that is east of Dowling Street) had been sub-divided. From the early 70’s onwards it was developed for residential purposes and was known as the Seabreeze Estate. During the 70’s the Council undertook work for the purpose of collecting and carrying off water from the built-up estate and local roads and footpaths which was then discharged onto, or in the near vicinity of, the subject land.

9 The “ephemeral wetland” or “dunal swale” is located towards the northeast of the subject land. Mrs Coventry has given evidence, which I accept, that prior to the residential development in the Seabreeze Estate area and before the carrying out of the drainage works referred to above the “ephemeral wetland” (as its name implies) was sometimes covered with surface water and sometimes not. It was this characteristic that allowed the growth of melaleuca paperbark trees with minimal undergrowth.

10 Over the years and from as early as the mid-70’s Mrs Coventry had meetings with Council during which she made complaints about water being discharged on her land as a consequence of the Council’s drainage works.

11 The only dealings Melaleuca had with the Council were those which were undertaken in the course of the resolution of the application for development consent which, as I have said, was granted by the Land and Environment Court by consent.

12 During the negotiations between Council and Mr Cornwell who negotiated on behalf of Melaleuca the Council did not represent to Mr Cornwell that it was prepared to meet the whole or any part of the costs of implementing the conditions relating to drainage attached to the development consent should the development proceed. Furthermore, and to the extent that it is relevant, I reject the suggestion implied by Mr Cornwell in his affidavit that Melaleuca completed the contract because it had received independent legal advice that the Council would be responsible to Melaleuca to undertake drainage abatement works should it (Melaleuca) become the owner of the land and that this circumstance was known to Council. Mr Cornwell is a solicitor. He consulted with his employee concerning the potential liability of Council to Melaleuca. I mention this because in his affidavit Mr Cornwell appeared to suggest that he had received independent advice concerning the liability of Council and, as he himself has admitted, he did not. More to the point, however, is that on the evidence I find that the Council did not represent to him that it would undertake any part of the drainage works referred to in the development consent.

13 I would infer that Mr Cornwell had before him the information Mrs Coventry has given evidence about in these proceedings concerning her dealings with the Council relating to discharge of water on her land. From this he may have believed the Council had some responsibility to abate the nuisance caused by the drainage works undertaken by the Council. If it is relevant I record that Melaleuca completed the $7.4 million contract to acquire Mrs Coventry’s land hoping, or perhaps expecting, that it could recoup some of the costs of the drainage works required to be undertaken to implement the development in accordance with the conditions of the consent.

14 Melaleuca commenced proceedings in 2002. As I have said it has sued the Council in nuisance and negligence. The drainage works the subject of complaint were undertaken in the mid-70’s and mid-90’s at a time when Melaleuca had no interest in the land.

15 The proceedings are complicated by the circumstance that if this Court made an order having the affect of requiring the Council to implement works of the type contended for by Melaleuca it could not undertake the development for which consent has been given without undertaking the wick drainage system propounded by it. Presumably Melaleuca would then seek to modify the development consent to relieve it of its obligation to undertake the wick drainage system. Of course whether such a modification would be granted by the Land And Environmental Court is a matter for that court and I express no opinion about it.

16 Although both parties have conducted the litigation on the basis that the arrangement and dealings between Mrs Coventry and the Council are relevant to the issues posed for determination it must be steadily borne in mind that it is Melaleuca that is bringing a case against the Council - not Mrs Coventry. Thus whether or not the Council owed a common law duty of care to Mrs Coventry (and I do not think it did) it would not follow that breach of that common law duty of care was relevantly breach of a common law duty of care to Melaleuca. The case in nuisance is different because nuisance is a continuing tort. However, as will be seen, it does not necessarily follow that Melaleuca has made out its case in nuisance because it has established that had Mrs Coventry taken proceedings against the Council at some time and succeeded Melaleuca must succeed.

17 Melaleuca is seeking a declaration “that the Council has been and continues to be guilty of nuisance in causing or allowing stormwater from the catchment to flow directly and indirectly onto the land via the Council’s closed pipe system and road, kerb and gutter systems”. It seeks an injunction “restraining the Council from continuing to discharge on its land stormwater in excess of the natural flow that would flow upon the land and take such measures as may be necessary to preclude the coming onto the land of stormwater containing high levels of nutrients and waste materials”.

18 It seeks an order that the restraining order be stayed for a period of twelve months pending the implementation by the Council of a drainage system “for the Seabreeze Estate which enables the stormwater to be controlled within the catchment or disposed of by a thrust-bore drainage line to the next catchment or a gravity drainage line to Port Stephens”.

19 In the alternative it seeks damages in the sum of $10,038,450 or $5,331,231 depending upon what the Court finds to be reasonable to compensate Melaleuca for damage it has suffered, or will suffer, as a consequence of the nuisance. The claim for damages is calculated by reference to the cost of abating the nuisance.

20 The Council does not admit that its construction of drainage works caused the subject land to receive more water and in greater concentration over the surface than previously. However, it admits to carrying out drainage work in the 70’s which included a system for draining the Seabreeze Estate and that three stormwater entry pipes with headwalls, ditches and gutters were constructed and that as a consequence some run-off has been discharged onto the subject land.

21 It also admits it carried out drainage work in the 90’s in Dowling Street in the course of which it constructed pipes, headwalls, ditches, gutters and channels on the subject land or in its near vicinity and that since these works were carried out rainfall run-off has been carried through pipes and discharged onto the subject land.

22 The Council maintains it undertook the works in the 70’s pursuant to s 241 of the Local Government Act 1919 (the legislation in force at the time the works were undertaken) and with respect to the works undertaken in the 90’s s 94 of the Roads Act 1993. Section 94 of the Roads Act 1993 was introduced into legislation after the Local Government Act 1993 was enacted. It is not, in terms, the same as s 241 of the Local Government Act 1919 and I was informed by senior counsel appearing on behalf of the Council that it no longer relies on s 94 of the Roads Act 1993.

23 The Council also alleges that it is immune from liability by reason of s 733 of the Local Government Act 1993. The scope and operation of the relevantly similar legislative predecessor was discussed by Hodgson J (as his Honour then was) in Attrill v Richmond River Shire Council (1993) 30 NSWLR 122 and later by the Court of Appeal in Attrill v Richmond River Shire Council (1995) 38 NSWLR 545.

24 The Council denies it came under any relevant common law duty of care to Melaleuca and that if it did it denies breach. If I understand Melaleuca’s submission correctly it is that it is entitled to succeed in negligence because of Council’s omission to discharge an ongoing duty of care to remedy the consequence of its negligence in the construction of drainage works in the 70’s and 90’s.

25 The Council has submitted that in any event the Court would not grant relief. First because Melaleuca, at the time of instituting the present proceedings was relevantly not an occupier and therefore had no standing to claim relief in nuisance. The claim has, I think, been abandoned. (At least no submission was advanced by the Council in support of it in address). The Council also asserts, however, that Melaleuca’s interest in the land was acquired in circumstances where it had full knowledge of stormwater movement in and over the subject land from the catchment area together with the drainage systems constructed by the Council. It also claims that Melaleuca being a successor in title to Mrs Coventry is bound by the arrangements entered into between Mrs Coventry on the one hand and Council on the other over the years concerning the extent of water coming onto the subject land and the means whereby the problem could be remedied. (Melaleuca for its part also relies on the arrangements between Mrs Coventry and the Council in support of its case that the Council at all relevant times had a liability to Mrs Coventry in negligence and nuisance).

26 The Council alleged that when acquiring an interest in the land Melaleuca did so for the purpose of carrying out a development permission for which was granted by the Land and Environment Court by consent in December 1991 - Melaleuca having full knowledge of the state of the land and the history of dealings between Mrs Coventry and the Council over the years.

27 Council has submitted that in the exercise of its discretion the Court would not grant injunctive relief because it would amount, in substance, to a mandatory requirement that the Council carry out undefined works without regard to the operation and requirements of the Environmental Planning and Assessment Act 1979 and/or the Local Government Act 1993. Very little evidence supports this assertion. The “thrust-bore” drainage system, (being the means of abatement proposed by the plaintiff and referred to later) although expensive, is feasible and could be undertaken, I think, without breaching the Environmental Planning and Assessment Act 1979 and/or the Local Government Act 1993).

28 The Council, as I have said, claims immunity from the following statutory provisions

Section 733 of the Local Government Act 1993 relevantly provides:

“Exemption from liability – flood liable land and land liable in coastal zones.
1. A Council does not incur any liability in respect of
(a) …..
(b) anything done or omitted to be done in good faith by the Council so far as it relates to the likelihood of land being flooded or the nature and extent of any such flooding.


2. …..”

Section 241 of the Local Government Act 1919 relevantly provided:

“Section 241 – Power to make drains on public or private land.
1. For the purpose of draining or protecting any public road the council may in or through any land of the Crown or of any public body or any person make open cleanse and keep open any ditch, gutter, tunnel, drain or watercourse, or lay any pipe in or through such land.
2. …….
3. If the property of the Crown or public body or person is damaged by the exercise of this power the Crown or public body or person, as the case may be, .shall have a claim against the Council for the damage so sustained;

29 Melaleuca claims that the Council is not immune from liability to Melaleuca pursuant to s 733 of the Local Government Act 1993 because the omission relied on by Melaleuca did not relevantly “relate to the likelihood to land being flooded” and that, in any event, the Council had not acted in good faith. It is also submitted that Council, by failing unreasonably to do anything to abate the nuisance has adopted it and that s 733 would not preclude a court from making a prohibitory or mandatory order or even, perhaps, making an award of damages in lieu of an injunction provided they were limited to compensation for events occurring after the commencement of the proceedings. (see the observations of Hodgson J in Attrill )

30 Melaleuca submits that s 241 has no application because the work undertaken by the Council in the 70’s was not the inevitable consequence of the exercise by the Council of its statutory powers and, in any event, the protection afforded by s 241 relates only to work on specific land on which the Council carries out the works and that in the present case only one of the three drainage pipes actually intrudes into the subject land (see Rudd v Hornsby Shire Council (1994) LGRA 120 at 135.

31 Melaleuca has also submitted neither s 241 of the Local Government Act 1919 nor s 733 of the Local Government Act 1993 affords protection to local councils where to give them that protection “would be to allow breaches of the Clean Waters Act 1970 and the Protection of the Environment Operations Act 1997”.

32 Finally Melaleuca alleges that the Council is, by it conduct, estopped from asserting Melaleuca has suffered to damage because it purchased the land in full knowledge of its condition, or from relying on s 241 of the Local Government Act 1919. The particulars and support for the various estoppels are to be found, generally speaking, in communications between Mrs Coventry on the one hand and the Council on the other from the middle of the 1970’s until the turn of the century.

33 From as early as 1960 the Northumberland Planning Scheme zoned the ephemeral wetland 6(a) Recreation and the balance of the subject land 2(a) Residential. Planning schemes in their application to the subject land were amended from time to time. In 1974 the subject land was zoned in part 2(d) Residential, in part 2(c)(i) Residential and the ephemeral wetland was zoned 6(a) Recreation. In 1981 and after the introduction of the Environmental Planning and Assessment Act 1979 the Northumberland Local Environmental Environment Plan No 1 zoned the land as it had been previously zoned and this zoning was repeated in the Port Stephens LEP No 83 made in November 1985. In November 1987 the Port Stephens LEP was amended and the ephemeral wetland was zoned Public Recreation and the balance of the subject land 2(a) Residential. In June 1998 the whole of the subject land was zoned 2(b) Residential. In 2000 Port Stephens LEP was further amended and the land was zoned 2(a) Residential –the difference between the 1998 and 2000 zonings was that under the latter zoning smaller lots could be used for building than under the former.

34 As I have mentioned the Council undertook extensive drainage works in the 70’s. During the 70’s, 80’s and 90’s Mrs Coventry lived in Sydney. She visited the subject land at irregular intervals. In 1972 she planned to sub-divide the subject land and although the project did not proceed her submission to Council made it clear that she wished the ephemeral wetland to be preserved as a “lake”. In a rough sketch plan attached to her subdivision proposal she indicated the location of roads and residential development which would be above the “flooding level” of the ephemeral wetland.

35 In about the middle of the 70‘s Mrs Coventry became aware that a noxious plant was growing on the subject land the seeds of which, apparently, were brought onto it by surface water. She noticed for the first time that there were stormwater pipes draining onto her land. She took the matter up with Council who told her it was not prepared to remove the artificial drainage which it had constructed to service the Seabreeze Estate and associated roads and gutters although it would be willing to limit the amount of water coming onto the land by installing a pumping station (which it never did).

36 In her dealings with the Council Mrs Coventry was anxious that the Council recognise the importance she attached to the pristine nature of the ephemeral wetland.

37 She has given evidence which I accept, that at the present time the level of water is now higher in, and remains longer on, the bed of the “ephemeral wetland” than had been the case prior to the undertaking by the Council of drainage works in the 70’s and 90’s. Throughout the 80’s Mrs Coventry complained to Council concerning noxious lands on her land caused by the introduction of seeds by surface water. There were, however, occasions in the 80’s when she saw no water in the ephemeral wetland area even after a long spell of wet weather. It would seem, therefore, that the 2.2 hectares retained some of its ephemeral characteristics during that period. I accept Mrs Coventry’s evidence that when water rose above 8m AHD in the 80’s it rose to levels higher than those to which it rose before any drainage works were undertaken.

38 Matters came to a head in 1993 when Council announced that it was proposing to construct a road link to Dowling Street with consequential drainage works. It wrote to Mrs Coventry setting out the drainage works proposed. Mrs Coventry told Council she would not give her consent to the work because she was dissatisfied with the amount and quantity of water already coming on her land and she believed the proposed work would worsen the situation. She threatened injunction proceedings. Later the threat was withdrawn when Council undertook not to connect and discharge water into a 900mm diameter drainage line constructed along Dowling Street until satisfactory arrangements were made with Mrs Coventry.

39 In a spirit of cooperation Mrs Coventry provided Council with information she had concerning the ephemeral nature of what she described at the time as the “wet basin”. At that time Council suggested it would construct two basins to receive the upper catchment water and until that was done a 900mm drainage line would be constructed but not connected.

40 In May 1994 Council told Mrs Coventry it would construct two basins and a gross pollution trap on her land. Later and after discussions with Mrs Coventry Council decided to construct one artificial basin having a storage volume of approximately 260,000 cubic metres.

41 The negotiations between Mrs Coventry and Council dragged on throughout 1995. Mrs Coventry through her solicitor had expressed concern that what was proposed might cause water in the ephemeral wetland to rise to 13.5m AHD. Although this turned out to be a mistake made by her solicitor there was some justifiable concern on her part that what was proposed would cause more water to come onto her land. During this time there were discussions between Mrs Coventry and her representatives on the one hand, and Council on the other, concerning the possibility of rezoning the subject land in the context of a “land exchange” – although this matter was not pursued in the proceedings.

42 After Council had forwarded its proposal for a single detention base, Mrs Coventry signed a consent to the lodgement of a development application by Council to itself for a construction of a single basin. Development consent was granted by Council on 20 December 1995.

43 In the meantime, Mrs Coventry had taken independent advice and, in March 1996, she forwarded to Council an alternative proposal developed by Mr Boyden, an engineering consultant retained by her. Mr Boyden expressed the opinion that Council’s proposal would not serve any worthwhile purpose because it would not reduce either the volume of water coming onto the subject land or the flood level likely to occur as a result. Also, he said it was not likely to improve the quality of suburban stormwater run-off.

44 Under Mr Boyden’s proposal, water would be intercepted at the boundary of Mrs Coventry’s land and then carried by what was described as a “thrust bore” underground tunnel from Dowling Street into Nelson Bay.

45 Although Mrs Coventry had threatened legal proceedings in 1993 and had later withdrawn the threat, it was not until March 1996 that she told Council she would not agree to any works being undertaken on her land of the type proposed by it.

46 After receiving Mr Boyden’s proposal, Council undertook geotechnical investigations and identified bedrock in the underground area identified for the “thrust-bore”. Council was interested enough in his proposal however, because, after he had produced a design for an amended tunnel bore, his firm was retained by Council. Mr Boyden’s proposal involved tunnelling work outside the subject land and, if implemented, would have required Council to acquire easements over neighbouring land.

47 A fair reading of Council’s internal memorandum makes it clear, in my opinion, that Council accepted it had a responsibility to Mrs Coventry to abate the nuisance it had caused by the drainage works undertaken in the 1970s and 1990s. It accepted what it described as the “concept” of a thrust-bore system as a possible way of abating the nuisance and spent money investigating Mr Boyden’s proposed methods.

48 In December 1997, Mrs Coventry’s solicitor was advised by Council that the thrust-bore proposal “did not appear viable on preliminary assessment due to environmental constraints”. Apparently, there were some discussions concerning compulsory acquisition because Council told Mrs Coventry’s solicitor that it could not afford the price she was asking for her land. This aspect of the dispute between Mrs Coventry and the Council was not explored before me. It is to be noted, however, that assuming, as I do, Council had the power compulsorily to acquire property for its lawful purposes, it would not have been required to pay any price Mrs Coventry asked for the land – it would have been required to pay “fair compensation” as that is relevantly understood in the Land Acquisition (Just Terms Compensation) Act 1991.

49 Although Council raised issues such as “community acceptance” and “environmental constraints”, the real reason, in my opinion, for Council not implementing the proposal to abate the nuisance was the estimated cost of the thrust-bore method. Nonetheless, Council continued to use Mr Boyden’s firm in an endeavour to find an acceptable solution for the abatement of the nuisance.

50 In July 1999, Mrs Coventry lodged the development application for the construction of 214 residential dwellings. The development was “integrated development” and hence Council was required to consult with relevant government departments on matters affecting the environmental impact of what was proposed. In particular, it consulted with the Department of Land and Water Conservation, prior to making a decision. Council did not make a decision within forty days and Mrs Coventry appealed to the Land and Environment Court. As I have said, the carriage of her appeal was taken over by Melaleuca in about September 2000.

51 In the course of negotiations which resulted in the Land and Environment Court granting development consent, subject to a number of conditions by consent, it was Melaleuca that propounded the wick drainage system. Council made no representations to Mr Cornwell, that it was liable for the implementation of abatement work and, in fact, Mr Cornwell has accepted that Council was at all relevant times denying liability.

52 I am satisfied on the balance of probabilities that prior to the drainage works being constructed by Council in the 1970s, very little surface water ran onto the subject land from the higher catchment area – and, in particular, that part of the higher catchment area referred to as the Seabreeze Estate. The rain that fell was, until the area was developed, absorbed within the area and became ground water, which in times of heavy rain raised the level of the ground water to above 8m AHD (the bottom of the ephemeral wetland). The extent of water covering the ephemeral wetland varied depending upon the amount and intensity of rainfall. In the absence of development in the catchment area, the ephemeral wetland would subside over a period of time and drain under the dunal area into Nelson Bay.

53 At the present time, water enters the subject land at three points – one of which is a pipe, which actually intrudes onto the subject land, and two others that are immediately adjacent to the subject land. A consequence of the drainage work undertaken by Council in the mid 70’s and 90’s is that now a significant amount of water enters the subject land carrying nutrients and other deleterious substances whereas previously all water that entered the subject land entered underground. Moreover, as I have already said, there is now more water going onto the subject land than prior to the drainage works being constructed.

54 I find that the work undertaken in the 70’s was necessary to be undertaken and was constructed with due care. Melaleuca has submitted that, at that time, drainage basins could have been constructed and, accordingly, the flooding of Mrs Coventry’s land was not the inevitable consequence of the exercise by Council of its statutory powers. It is accepted that the thrust-bore system and the wick drainage system were not feasible options in the 70’s – although both were in the 90’s. I have had regard to the circumstance that it is Melaleuca’s case before me that drainage basins would not have been appropriate for the reasons advanced by Mr Boyden. However I have also had regard to the circumstance that when Mrs Coventry discovered that a pipe had intruded onto her land and it, together with another two very close to the boundary, were bringing surface water onto her land the Council promised to address the matter by developing a pumping system which it never did.

55 I have already referred to the circumstance that the evidence is unclear as to what excess water reached the ephemeral wetland as a result of the drainage works undertaken in the 70’s, and what amount of additional water came onto the land as a consequence of the drainage works undertaken in the 90’s when, on occasions, the 900mm drainage pipe overflowed.

56 Mr Boyden thought that before any drainage work had been undertaken, about 62,000 cubic metres of water would have drained from the natural catchment to the subject land in consequence of a 1 in 100 year flood. He thought that after the drainage works had been carried out, about 76,340 cubic metres would reach the subject land – at least in a 1 in 100 year flood. This means that, on his estimate, there would be an increase in volume by approximately 18%. The experts disagreed about this but only Dr Joliffe did further calculations and I record I accept those calculations. His calculations led him to the conclusion that some water reached the ephemeral wetland area 25% of the time prior to the development of the Seabreeze Estate catchment area, and that after Council’s drainage works in the 70’s and the 90’s, some water is present in the ephemeral area more than 90% of the time. Moreover, Dr Joliffe thought that, prior to drainage works being undertaken, the maximum height of water in the basin would have been about 10m AHD, whereas, as a consequence of the work undertaken in the 70’s and 90’s, he believes that not only would there be some inundation above 8m AHD more than 90% of the time, but the maximum level would now be about 12.6m AHD. But the evidence does not permit of a determination of how much water now covers the 8mm AHD bed 90% of the time or how frequently it rises to 12.6 mm AHD.

57 In my opinion, the plaintiff has established that not only is more water coming on to the subject land by reason of the Council’s drainage work, but it is now coming over the surface whereas previously it entered underground and caused inundation only when the underground level rose about 8m AHD.

58 Moreover, I find the quality of water that now enters the subject land has been reduced because of surface water from Seabreeze Estate coming on to it. Gross pollutants enter the subject land via surface water and nutrient pollutants enter the subject land by surface water and, to some extent, by underground water. I accept, however, that the Council has already allocated money to install gross pollution traps and they will be installed in the course of the development being implemented.

59 Before turning to the submissions advanced by both parties, it is relevant in my opinion to note that even had there been no residential development in the Seabreeze Estate catchment area, the inundation of the ephemeral wetland to a little over 10m AHD at its maximum meant that any development of the subject land would have had to accommodate the circumstance that 2.2 hectares of it could not be built upon unless significant works were undertaken to accommodate the natural subterranean underground water coming on to the land.

60 As I have mentioned above, although reference has been made to possible “environmental constraints”, what deterred the Council from giving effect to the thrust-bore system was the financial cost (not “environmental” or “community” concerns). The general manager has given evidence to the effect that if an order were made, moneys would be found to undertake abatement work provided sufficient time were given. As I have said, on the evidence before me, I do not think that such a project, properly undertaken, would contravene the provisions of the Environmental Planning and Assessment Act 1979 and/or the Local Government Act 1993.

61 At the present time, there are detectable amounts of phosphate and/or total petroleum hydrocarbons in water entering the subject land through the Council’s drainage system. The evidence would appear to indicate that they have exceeded the guidelines by only a small amount, but, in my opinion, they ought not be characterised as being insignificant - as evidenced by photographs tendered in evidence. I do not accept the somewhat colourful description given by one witness that the nutrients entering the land have turned the ephemeral basin into a “duckpond”.

62 As I have earlier said Melaleuca has submitted that Council cannot avail itself of statutory protections against liability either by (s241 or s733) if works it undertook could cause water to be “polluted” within the meaning of the Clean Waters Act 1970 and cognate legislation. In my opinion the circumstances that water is found to be “polluted” by reason of the definition of pollution in the Clean Waters Act would not necessarily conclude the matter against the Council. The definition in the Clean Waters Act embraces even a miniscule amount of what is ordinarily understood to be pollution. It would not necessarily follow, in my opinion, that immunity would lost and an equitable remedy granted simply because there was a detectable amount of phosphates and/or total petroleum hydrocarbons found in water entering the subject land. Moreover, the denial of a remedy in the present case would not have the consequence that the relevant regulatory authority, the EPA, could not police its own legislation.

Section 241 of the Local Government Act 1919

63 If I understand Council’s submission correctly, it acknowledges that Council’s exercise of power under s 241 is attended by a number of judicially imposed restrictions. Compensation (and hence immunity) relates only to work on the specific land on which the Council carries out the work (see Rudd’s case). It has been held that in the exercise of statutory powers (as opposed to statutory duties), if it was not practically feasible for the Council to perform the statutory function in any other way, the Council is entitled to invade the rights of the landowner by adding additional water on to the subject land subject to that person’s right to compensation (Provender Millers (Winchester) Limited v Southampton County Council) [1940] 1 Ch 131. It has also been judicially recognised that if a nuisance is the inevitable consequence of the exercise by the Council of a statutory power, then it is implicitly made lawful by statute and no legal redress is available other than that which is given by the statute (Manchester Corporation v Farnworth (1930) AC 171).

64 In the present case, it is submitted on behalf of Council that Mrs Coventry may have had a claim for compensation consequent upon water entering her land in the 70’s, but that had to be a claim under s 241(3) of the Local Government Act 1993 which is now not only statute barred, but cannot be made in this Court. I am of the opinion that although the work that was undertaken in the 70’s could be described as reasonably necessary and properly performed, it did not have the inevitable consequence of damaging Mrs Coventry’s land because, as I have mentioned, the Council promised to install a pumping system, which it never did.

65 Mr Webster has also submitted that the Council does not have the protection of s 241 because that section has no application unless the work was actually undertaken on the subject land itself. This seems to me, in the circumstances of this case, to be an unduly technical appreciation of the facts. In fact, there were three pipes effectively discharging on to the subject land – one intrudes into the land and the other two are in very close vicinity to the boundary. Had Council otherwise made out its entitlement to protection pursuant to s 241, I would not have denied it that protection by application of Rudd’s case. That case dealt with very different facts. I have already referred to the circumstance that although Council in its defence had raised s 94 of the Roads Act as source of immunity, it abandoned that in the course of the proceedings. In my opinion the Council has not established that it would have had the protection of s 241 for the work undertaken in the 70’s had Mrs Coventry taken proceedings against it.

Section 733 of the Local Government Act 1993

66 Council submits that s 733 affords it an immunity in respect of any water coming on to the subject land. Melaleuca submits that s 733 refers to specific immunity arising from the preparation of the environmental plans and the carrying out of flood mitigation works, and the relevant activities undertaken, or omitted to be undertaken, by Council do not relevantly relate to the “likelihood of land being flooded” – I do not think this submission should be accepted. However, Mr Webster has submitted that the Council has not discharged the obligation it had to demonstrate “good faith” and s 733 cannot be availed of by the Council to resist a mandatory or prohibitory order.

67 In Attrill Hodgson J (as His Honour then was) at first instance said -

“However the liability which 582A (the forerunner of s 733) deals with is relevantly a liability in respect of anything “done or omitted to be done”. That is, that it is a liability in respect of past events. The question arises whether an injunction, whether prohibitory or mandatory, is correctly regarded, for the purpose of the section as a liability in respect of past events. …

… If there is a nuisance constituted by the raised level of the road in this case, irrespective of how the nuisance of created, it would seem to me that, if the Council were to adopt the nuisance by failing unreasonably to do anything to abate it, then it would be a matter giving rise to a liability which was not a liability in respect of past events; and that would be a matter, it seems to me, which would justify a mandatory injunction of the kind sought by the plaintiff.”

68 His Honour rejected the plaintiff’s claim for damages and the decision was upheld in the Court of Appeal. There was no cross-appeal challenging the remarks he made concerning the making of mandatory or prohibitory orders.

69 On behalf of Council, Mr Ireland QC has submitted that I should not follow the decision of Hodgson J in Attrill. He submits that unless constrained by a higher authority (which I am not), I should hold that s 73 can be availed of by a council in respect of acts undertaken in the past so as to preclude any mandatory or prohibitory order made as to the future.

70 Uninstructed I would have thought there was an argument to the effect that if the act or omission is in good faith and it relates to the likelihood of land being flooded, a grant injunctive relief (either by a mandatory or prohibitory order) disobedience to which could have serious consequence is relevantly to incur a Council in a liability in respect of a thing done or omitted to be done. However, I note that at least two other judges of the Court have followed the reasoning of Hodgson J (Sperling J in Bonnici v Ku-ring-gai Municipal Council (2001) 121 LGERA 1 and Gzell J in Alamdo Holdings Pty Ltd v Bankstown City Council Aust Torts Reports (2004) 81-721). It would seem to me therefore, as a matter of comity, I ought do the same and leave it to the Court of Appeal to determine whether there is any substance in a view contrary to that adopted by Hodgson J and other members of the Court.

71 Mr Webster has submitted that Council, having recognised the nuisance it had created, thereupon became obliged to take reasonable steps to deal with it (Alamdo Holdings) and he points to the circumstance that until the lodgement of the development application, the thrust-bore system was a means available to the Council of abating the nuisance.

72 Mr Webster has referred me to a number of decisions in which it has been held that the duty imposed on a council to demonstrate good faith calls for more than mere “honesty and ineptitude” (see Alamdo and Mid Density Development Pty Ltd v Rockdale Municipal Council (1993) 44 FCR 290). In the present case, it could be argued on Mrs Coventry’s behalf that Council, having caused the nuisance, came under an obligation to remedy it by undertaking works in abatement. It did not do this because it considered the works would cost too much. The evidence from the general manager is that, if ordered to undertake the thrust-bore works, the council could carry it out provided sufficient time were given to it. I would hold therefore that had there been litigation been between Mrs Coventry and the Council taken before the development application was dealt with the Council would not have made out its defence of “good faith” in its dealings with her.

73 The conclusion I have come to is that, had Mrs Coventry taken the present proceedings and had there been no complications arising by reason of the grant of development consent in the circumstances in which it was granted, she would more probably than not have succeeded in a claim against the Council and an order would have been made in terms not dissimilar to that proposed in the present proceedings. But in my opinion that finding does not necessarily make out Melaleuca’s case against the Council.

74 I record that I do not accept the submission made on behalf of Council that the “thrust bore” method was impractical because it involved the use of land or third party. I see no difficulty in the Council putting an underground pipe through private land to drain into Nelson Bay provided (has as been established in the present case) that its works would be environmentally acceptable to relevant government department.

75 Melaleuca appears to fix its claim in negligence on the circumstance that prior to its acquisition of the subject land, the Council had negligently constructed or maintained a drainage system which caused damage to the subject land. That claim could not be made by Melaleuca because it did not suffer any damage. It did not own the land until 2002. Melaleuca’s case in negligence, if it has a case at all, is that in the circumstances the Council came under a continuing common law duty to effect abatement works and its failure to do so sounded in damages. But as I have said the condition of the land at the present time is the same as its condition before Mrs Coventry sold it as Melaleuca well knew. Moreover I am of the opinion that the Council did not come under any common law duty of care to undertake works of the type submitted by Melaleuca. If Melaleuca has a claim it is a claim in nuisance.

76 Melaleuca’s claim in nuisance is the omission by the Council to abate the nuisance caused by its drainage works. I have already opined that had Mrs Coventry commenced proceedings in earlier 1999 and before she lodged her development application the Council would have lost any protection it otherwise may have had pursuant to s 733 because it had failed to demonstrate its “good faith” in its dealings with her.

77 But the same cannot be said of it in its dealings with Melaleuca. The development application was for “integrated development”. That meant Council was required, amongst other things, to consult with various government bodies to ensure that the development consent did not offend against environmental laws. The “thrust bore” system was not opposed by the Department Of Fisheries. The Council and Melaleuca entered into negotiations with the result that the Land and Environment Court gave development consent to the application subject to conditions agreed to by the parties. Accordingly I have come to the conclusion that the Council acted in “good faith” in its dealings with Melaleuca.

78 In these circumstances I would also hold that Council has not “adopted the nuisance by failing unreasonably to do anything to abate it” (see Attrill) (emphasis mine). I reject Mr Webster’s submission that the knowledge Melaleuca had of dealings between Mrs Coventry and the Council and the participation by it in negotiations which led to the Land and Environment Court granting consent subject to conditions that the developer install a wick drainage system is irrelevant to any issue I have to decide.

79 I have not overlooked the circumstance that theoretically, at least, Melaleuca, now the owner of the land, may not proceed with the development and that if it did not it would be unfair that it should bear the cost of drainage consequent upon the Seabreeze catchment area to the benefit of owners of property in that area and that a fairer way of dealing with the matter would be to make an order as proposed. However the evidence is that Melaleuca is actually developing the land. Melaleuca was perfectly aware of all the circumstances preceding the lodgement of development application. It took over the negotiations. It agreed to the condition being included in the develop consent that it undertake wick drainage work, part of which was necessary to meet the need generated by the development proposed.

80 Upon these findings it is unnecessary for me to express any opinion concerning the desirability or practicability of a more elaborate wick system scattered throughout the Seabreeze estate part of the catchment area and above the subject land as proposed by Melaleuca. Melaleuca advanced a further modified option that would restrict the area where the wicks could be built to roads west of Wentworth St (which runs parallel to Dowling St) but without being on the subject land. But in the light of my conclusion it is unnecessary to pursue the matter further.

81 Finally I should record that I do not think Council is estopped by its conduct from maintaining its statutory defences. As I have said I do not think the defence under s 241 has been made out. However had it been made out there was no representation made to Melaleuca that Council accepted liability for work undertaken in the 70’s or 90’s. Indeed Melaleuca knew liability was being denied. It was also submitted that the Council was estopped from raising defence under s 241 because it had not, at the time, advised Mrs Coventry of her entitlement to claim compensation pursuant to that section. As I have said the matter is academic but had it not been I do not think the Council would have been estopped from raising a defence in the proceedings that in the 70’s it had the protection of s 241. There was no representation to Mrs Coventry (much less to Melaleuca) that it would not rely on any statutory defence available to it if a claim were made.

82 I have come to the conclusion that the plaintiff’s case must fail . The order of the Court will be – claim dismissed, plaintiff to pay the defendant’s cost of the proceedings.

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Last Modified: 07/02/2004