Melbourne Water Corporation v Vaughan Constructions Pty Ltd & Ors

[2023] HCATrans 78

[2023] HCATrans 078

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M89 of 2022

B e t w e e n -

MELBOURNE WATER CORPORATION

Applicant

and

VAUGHAN CONSTRUCTIONS PTY LTD (ACN 004 334 543)

First Respondent

KV COOPER PTY LTD (ACN 609 267 763)

Second Respondent

DRAKON INVESTMENTS PTY LTD (ACN 609 250 740)

Third Respondent

Application for special leave to appeal

GAGELER J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 9 JUNE 2023, AT 9.59 AM

Copyright in the High Court of Australia

____________________

MR J.T. GLEESON, SC:   May it please the Court, I appear with MS K.I.H. LINDEMAN for the applicant.  (instructed by Wotton + Kearney)

MR J.P. MOORE KC:   If the Court pleases, I appear with my learned friend MR W.D.A. THOMAS for the first respondent (instructed by Piper Alderman Lawyers) and my learned friend MR L.J. CONNOLLY for the second and third respondents.  (instructed by Barry Nilsson Lawyers)

GAGELER J:   Thank you, Mr Moore.  Mr Gleeson.

MR GLEESON:   Your Honours, we need a short extension of time for the reason in the affidavit.

GAGELER J:   That is not opposed, I take it?

MR MOORE:  No, your Honour.

MR GLEESON:   Thank your Honours.  We rely upon the two affidavits on the question of general importance.  What those affidavits establish is that there are 18 water authorities in Victoria, a central part of their functions is to engage in works, including flood mitigation works, which inevitably interact with the natural environment.

The core issue raised by the case is where the cause of the injury or damage is on the one hand the flow of water from the water authority’s works, intentional or negligent; but, on the other hand, a natural cause.  In particular, can the natural cause be taken into account to reduce the assessed damages?

GLEESON J:   Where do you find support for the claim in paragraph 12 of your application that the concept of responsibility can be attributed to a natural event or a child or someone who is not capable of being accountable for an event?

MR GLEESON:   If your Honour is asking us about ordinary language - - -

GLEESON J:   Yes.

MR GLEESON:   We have given the definitions which cover both our case as well as the legal liability case.  If your Honour is asking about the ‑ ‑ ‑ 

GLEESON J:   I am asking about the ordinary English.  I am not aware of any definition that supports the idea of attributing responsibility to a non‑moral actor.

MR GLEESON:   Your Honour, I think in the definitions we have – I will just pull up the page.

GAGELER J:   It is a very awkward – you might find a definition that covers it, Mr Gleeson, but it is a very awkward use of the English language.

MR GLEESON:   We would submit not, your Honour, apart from what is in the dictionary as an alternate definition.  The real reason it is used in that way is explained by the history of this case, because what Justice Walker identified correctly was that Re Armstrong in 1952 was the decision which identified the problem.  Re Armstrong was exactly the case I have characterised where the loss or damage was in part due to an excessive flood and in part due to the works of the water authority.

In Re Armstrong, Justice Sholl ruled that under the former provision in principle it was possible to apportion the responsibility on a causal basis – on a causal basis – but felt that due to certain High Court authority – and we have given your Honours Re Armstrong again – an onus was cast on the defendant to disentangle the causes.  That was the problem which the Parliament looked at, inter alia, at page 151.

If I could draw attention to that parliamentary speech which explains the sense in which responsibility was brought into the statute.  In the first column, the problem identified was that the then existing section 260 unfairly hampered authorities because it placed upon the authority:

the onus of proving the negative case that the damage claimed for was not caused by the Authority’s negligence –

and that was, in fact, seen to be contrary to the common law whereby everything should be in the onus of the plaintiff.  The particular problem in the next paragraph is the one I have identified of excessive floods, but the authority as being unable to apportion their liability in the assessment of the damages.  That is what led to the 1954 provision which Justice Walker identified at paragraph 127, and that is where we first see the language of responsibility.

On this issue of whether the language of 1954 is the same as the current 1989 Act, both Justice Walker and Justice Sifris agree that there is no material difference in the language.  That is where the first use of responsibility came in, and it is in a context where the arbitrator is to determine the cause of the flooding of the water and the amount of damages assessable in respect of the cause, and shall also determine the proportion, if any, of the responsibility of the authority therefore; that is, for the loss or damage.

So, in a simple case where there has been, for example, a breach of a levy done quite deliberately to prevent a build‑up of water, you determine the assessed damages for the injury or loss flowing from that flow of water.  That is the prima facie measure of damages against the authority.  Then you determine the proportion of the responsibility therefore.  So, for example, if 50 per cent of the water would have flooded anyway because of the exceptional flood, you reduce your assessed damages by 50 per cent.

The provision, your Honours, unlike the contribution legislation that you have been given earlier this week, unlike contributory negligence, unlike modern proportionate liability legislation, in fact makes no mention of two wrongdoers, it makes no mention of legal liability.  What it is concerned with is your causal responsibility.

GAGELER J:   Mr Gleeson, what if you do have two wrongdoers?  What if you have the authority, you have a wrongdoer, and you have natural causes?  How does the provision work in those circumstances?

MR GLEESON:   Our submission would be it works in the same way, which is in terms of factual causation.  One says if you can point to someone else whose action or omission has, in the present case, led to the subsidence of the building, the damages of the authority will be proportionately reduced.  But what is critical about this provision – and the majority, with respect, got it wrong – it says nothing about how you assess the damages of the other person.

One of the features of this provision – which you will see on pages 109, 110, 111 – is that when we come to subsection (4), it only applies to a proceeding brought under subsection (1).  It is solely about, we submit, the liability and the damages assessed of the water authority.  In that context, for example, under subsection (4)(c), you cannot include remote, indirect or speculative damage in the damages of the water authority.

GLEESON J:   What about the words:

(if any) –

in subsection (b)?  Are you suggesting that the application of (4)(b) could produce a result that there is a proportion of nil?

MR GLEESON:   Yes.  And a case where the exact case of that is really close to the Parliament at page 151.  Because the primary liability provision applies to intentional and negligent conduct, which causes flows of water – subsection (1) – and because intention or conduct is defined in subsection (3), if you open the sluice gates, as occurred in the Wivenhoe Dam situation, for the reason that it is necessary because there is so much heavy flooding behind you, if you do not open them either the wall will breach or there will be a complete overspill.

GLEESON J:   But ‑ ‑ ‑

MR GLEESON:   If that had – if I could just finish, your Honour.  If that had happened under this legislation, that would be intentional conduct causing a flow of water onto land.  The liability under subsection (1) would be the liability for the damage which flowed.  The whole purpose of subsection (4)(b) is that, in an appropriate case, your proportionate responsibility may be nil because what you would say is the flood that was coming anyway behind the wall was so great that my intentional conduct is wholly excused at the stage of damages.

GAGELER J:   Mr Gleeson, what you are arguing for – just standing back from the merits of the argument for the moment – is a peculiar construction – I am using that pejoratively – of a bespoke provision which has been amended in the past by the Victorian Parliament to adjust rights and liabilities in a way thought appropriate.  Why is that not the appropriate response to the decision of the Court of Appeal in this case?

MR GLEESON:   It is not because of its far‑reaching ramifications for the entirety of water authorities in Victoria.  That is why our affidavit demonstrates, as of today, for instance, the applicant is spending $300 million under its current plan, altering the natural environment to try and reduce the effect of floods on citizens of Victoria.  As of this judgment today, we say contrary to the law established in 1954, maintained in 1989, and the correct statutory law over 70 years, the applicant is now exposed to complete damages for those natural causes, even though they may be partially or wholly the responsible authority, to avoid that ‑ ‑ ‑

GLEESON J:   When you say “now exposed” ‑ ‑ ‑

MR GLEESON:   Always exposed.

GLEESON J:   Always exposed?

MR GLEESON:   Always exposed.  So, what the case has thrown up – it is not just this case is a $100 million case, it is a very significant case.  It is not just what has been in the press; that the erection of the wall next to the Flemington Racecourse, which was designed to protect the racecourse, is said by some to have caused flows onto the land of other people.  So, none of those cases can be altered by, one would think, an ordinary future prospective legislative amendment.  There are significant cases already where we say the deliberate decision made in 1954, repeated in 1989, to allow the authorities the benefit of this reduction in the damages has been wrongly taken away by the majority of the Court of Appeal.

Your Honours will have observed a lot of our written argument, and my oral argument, has focused on the history.  The history is dealt with impeccably by Justice Walker.  There is not an error in that summary of the history.  The respondent hardly addresses that history.  They just do not go anywhere near it.  The history they seek to invoke this week is of an irrelevant piece of legislation which sees no reflection in this extrinsic material.

The majority judges – Justice Sifris and Justice Kennedy – have not addressed Re Armstrong.  They have not addressed the history.  So, when it is said this is just an application of established principles of statutory construction, we do not like the result, go to Parliament, et cetera, we are facing a judgment which has not applied established principles of statutory construction, which, in a case where the history is as direct as this, it needs to be grappled with.  That just has not been done, your Honours.

In theory, the Victorian Parliament might change the position for the future.  In practice, our case, plus other cases, cannot be solved by that means.  When one looks at the compelling strength of the point, we would submit it is well worthy of your Honours’ attention.

May it please the Court.

GAGELER J:   Yes, Mr Moore.

MR MOORE:   Your Honours, we say the application should be refused for three reasons:  there is no question of general importance, it is not a suitable vehicle, and it is not in the interest of justice.

GAGELER J:   Of course, it always depends what you mean by “general importance”, does it not?

MR MOORE:   Yes.  It is Victorian legislation with no counterpart anywhere else in Australia.  There is, we maintain, no general principle of statutory construction in play.  It is the application of well‑understood principles to a bespoke piece of legislation for one State only.

It is not a suitable vehicle because the case has reached only an interlocutory stage and this application results from a pleading fight determining the state of the pleadings.  There are no relevant concrete facts found against which this Court could test the competing constructions, unlike after a trial in which the facts are found.  The facts ‑ ‑ ‑

GAGELER J:   You say that the point would be available to be taken on as an appeal from the final judgment?

MR MOORE:   Yes. 

MR GLEESON:   Could I have that as an undertaking, please, your Honours, because it is contrary to every principle of law.  We – sorry to interrupt, your Honours.

GAGELER J:   But, Mr Gleeson, you can come to that in reply.

MR MOORE:   The relevant facts to be found will include the impact of any natural cause.  The evidence filed today goes to that, and we know, from cases like Patsuris in the Victorian Court of Appeal in 2016, that natural causes are a critical feature of the causation analysis in a case like this.  In that case, the authority contended – and it was accepted – that all of the damage was caused by natural causes because, regardless of the authority’s construction, the damage would have been suffered in any event.  So, natural causes is relevant to causation, is raised in the evidence, and will be considered.  Then, the role the natural causes has, in fact, played will be considered by the trial judge. 

We say, at the moment, that the question of construction is raised against hypothetical situations that may or may not concern this case at all, depending upon how the facts are found.  It is not in the interest of justice, we say, because the reasons of the majority are well‑supported by very familiar statutory language that has been used in this piece of legislation.  We adopt, with respect, the proposition that it is an awkward use of language to say that the extent of a person’s responsibility for damage does not mean legal culpability.  Every time that phrase:

the court . . . having regard to the extent of that person’s responsibility for the damage –

for the last 100 years – the material we have provided to the Court this week shows, including the decision of the High Court in Pennington, Chief Justice Dixon in 1956 said that phrase responsibility within the wider phrase:

extent of that person’s responsibility for the damage –

imports the notion of legal culpability.  It is even in ordinary language an awkward use to say that a natural person is responsible for damage, not because they are legally culpable, but because they cause the damage without any legal infringement of right or wrongdoing.

It would be an awkward assessment, we say, with respect, if there are two wrongdoers:  the water authority and another wrongdoer.  On my learned friend’s analysis, the Court would not undertake the well‑established allocation of responsibility by looking at the degrees of legal culpability, usually how far did each person depart from the standard of care that was applicable to each wrongdoer.  That would all be put to one side, on my learned friend’s analysis, and you just look at the – somehow assess the factual causal input from each individual to the result.

And legal culpability, if one wrongdoer was far more legally culpable because there was gross negligence by one wrongdoer and only mere negligence by the other, that would be irrelevant to an assessment of the extent of each person’s responsibility.  That would be awkward, unprecedented and, in our respectful submission, quite unjustified.  Your Honours should not accept that the Court of Appeal has disturbed principles which have applied for 70 years.  There is no case in which a water authority in Victoria has claimed – and successfully claimed – that its responsibility for damage that it has been found to have caused is to be reduced on account of natural causes.  This is not a case in which established principle has been disturbed at all.

Your Honours, this Act abolished common law rights to sue for breach of statutory duty or to sue in negligence.  It replaced it with a statutory cause of action.  That was detrimental for plaintiffs, on our view, because the liability of an authority to pay damages could be reduced on account of another wrongdoer, even if that other wrongdoer is completely insolvent, or dead, or cannot be found.  That is already detrimental for plaintiffs.  The construction of the authority would be far more detrimental to plaintiffs.

The liability of a wrongdoer, a water authority found to have caused damage, would be reduced on account of factors for which a plaintiff has no chance of resorting to to seek recovery; to sue a child, or to sue for a natural act of God, or heavy rainfall.  The Court would not, in our respectful submission, conclude that the Parliament has so detrimentally affected

plaintiff’s rights without clear words, and there are no clear words in this legislation.

Those are our submissions.

GAGELER J:   Thank you, Mr Moore.  Mr Gleeson.

MR GLEESON:   Thank you, your Honours.  Your Honours, the point stands or falls today.  The question of law that has been answered against us is at paragraph 21 on page 55.  We are not permitted at the trial, which starts on 31 July, to rely upon this provision unless we fall within that stricture.  Our defence, in respect to natural causes, which you will see at paragraphs 31 to 33, has been ruled out of the trial.  It is stand or fall today. 

Your Honour Justice Gleeson’s question, I do have a supplementary answer to responsibility.  It is firstly, just as to the dictionary, Justice Walker, paragraph 117 ‑ ‑ ‑

GLEESON J:   I struggle to see anything in that that supports your case.

MR GLEESON:  But it is more than that, your Honours.  Could I ask your Honours to go to Re Armstrong, which you should have.  What I said in‑chief was a summary of pages 207 to 208, and I referred to the High Court authorities, which are those at the foot of 207:  Commissioner of Railways v Stewart; Justice Atkin in Nitro-Phosphate.  You will see at the top of 208, quoting from Justice McTiernan:

the appellant has not discharged the onus of showing that the damage was due to other intervening causes.  In any event it would not be possible to distribute the damage due to the default and the damage, if any, due to other causes beyond the reasonable prevision of the responsible authority.

That is the universe we are in:  distributing damage between the legally liable authority and other persons.  Your Honours will then see Justice McTiernan said so and so, and then – this is Justice Sholl:

I am of opinion that the judgments of Latham C.J. and Dixon J., and of the Court of Appeal in the Nitro-Phosphate Case, warrant the same view, at all events if it appears that the default of the defendant is initially responsible for the flooding.

So, we are in the territory of the initial responsibility for the flooding.  The next sentence:

But where . . . it is not possible to draw so clear and so convenient a line –

what is to happen, in that case, the onus is cast on the defendant to show – this is the end of the paragraph:

that some calculable and apportionable portion thereof was not so due –

Now, at that point, it is solely about whether the water authority can show some of the damage for which it is initially responsible is not due to its activities causally, because of the effect of some other matter – in particular, natural causes.  And you see that in the order at 3(b) – this is the onus provision – your accessed liability is reduced for such injury, loss, or damage as you can prove not to have been due to your failure to provide the works, that is what the statute picked up in 4(b), but reversed.

May it please the Court.

GAGELER J:   Thank you, Mr Gleeson.  We are not persuaded that it is sufficiently arguable that the construction arrived at by the majority of the Court of Appeal was erroneous to warrant the grant of special leave to appeal.  Special leave is refused with costs.  The Court will now adjourn until 11.00 am.

AT 10.25 AM THE MATTER WAS CONCLUDED