Sydney Water Corporation v Turano & Ors; Turano v Council of the City of Liverpool & Ors

[2009] HCATrans 85

[2009] HCATrans 085

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S496 of 2008

B e t w e e n -

SYDNEY WATER CORPORATION

Applicant

and

MARIA TURANO

First Respondent

COUNCIL OF THE CITY OF LIVERPOOL

Second Respondent

Office of the Registry
  Sydney  No S507 of 2008

B e t w e e n -

MARIA TURANO

Applicant

and

COUNCIL OF THE CITY OF LIVERPOOL

First Respondent

SYDNEY WATER CORPORATION

Second Respondent

Applications for special leave to appeal

FRENCH CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 1 MAY 2009, AT 9.49 AM

Copyright in the High Court of Australia

__________________

MR J.T. GLEESON, SC:   May it please the Court, I appear with MR S.E. TORRINGTON for the Sydney Water applicant.  (instructed by DLA Phillips Fox)

MR B.M. TOOMEY, QC:   May it please your Honours, I appear with my learned friends, MR M.J. McAULEY and MR E.G. ROMANIUK, for the respondent in the first and the applicant in the second.  (instructed by Paul A Curtis & Co)

MR N.J. POLIN:   Your Honours, I appear for Liverpool Council.  (instructed by TressCox Lawyers)

FRENCH CJ:   Yes, Mr Gleeson.

MR GLEESON:   Could I ask your Honours to go straight to page 113 of the application book to two paragraphs, 210 and 211, of Justice Beazley’s judgment which, we submit, reveal important errors of law in principle.  In paragraph 210 her Honour has found a duty of care with the scope being to install a water main in such a way as not to compromise the integrity of a nearby culvert.

FRENCH CJ:   Your complaint is about the indeterminacy, is it, of the duty?

MR GLEESON:   Indeterminacy of (a) the class of persons to whom the duty is owed, (b) that the risk of harm to person is not even incorporated into the duty, and (c) that it is a duty that has been formulated by reason of facts found 20 years after the event.  Our second main challenge is to paragraph 211 that at the stage of breach rather than apply the Wyong v Shirt calculus or, more specifically, the mandate under section 5B and 5C of the New South Wales Act, which is set out by Justice McColl at pages 128 to 129, a breach has been found merely by a failure to take an action which after the event can be seen might have avoided loss.

There has been no analysis of the factors in section 5B, for instance, the significance or otherwise of the risk, the matters under section 5B(2) and, really, her Honour, with respect, has contravened section 5C(b).  She has found that after the event the risk could have been avoided by doing something differently and therefore found liability.

GUMMOW J:   Does Justice Hodgson say anything different?

MR GLEESON:   His Honour, with respect, does not significantly improve the matter.  In his Honour’s reasons commencing at page 121 he deals with the facts of causation and gets to the result at paragraph 242 that he finds that 20 years after the event it was water flowing through the sand next to the Sydney Water pipe that carried the pathogen – although he does not refer to it – to the tree damaging the tree’s roots.  That is a finding on causation.  Then at paragraph 243 his Honour, it would seem, reasons back towards a breach without ever dealing with duty. 

His Honour at the stage of breach seems to say Sydney Water should either have done what her Honour says, namely, just do it differently or, he says, you were required to conduct an investigation into hydrological and arborist matters as soon as you got to this point in your pipe laying.  There was no evidence of any practice as of 1981 that pipe authorities would stop work and consult arborists about the health of nearby vegetation as they carried out their tasks.

GUMMOW J:   The phrase “of a kind” in the first sentence of paragraph 243 comes out of the case law, does it not?

MR GLEESON:   Yes, and we accept, of course, that at the stage of breach one is not having to foresee the very form by which the injury occurred.  One looks at it a little more generally.  With respect, a central error in both of their Honours’ judgments is that they have done the exercise of breach with 20 years hindsight and they have not ever really done the exercise of duty in the manner which this Court has indicated. 

Not only in the cases we cited including your Honour Justice Gummow’s judgment in Vairy, but as recently as Stuart v Kirkland, 22 April this year, this Court has never really approached duty as a question of law to be looked at prospectively, having regard to, in a novel case like this, critical matters such as the nature of the harm, the indeterminacy of the class and, indeed, the statutory power.  Sydney Water had a power and a duty to bring water to the community.

GUMMOW J:   I was wondering about that.  Where do we see the relevant statutory basis for all this?

MR GLEESON:   Could I hand to your Honours the Act in the form it was in at the time. 

GUMMOW J:   This was, after all, a public authority.  It is a statutory creature and there is some superimposition of the law of negligence upon its statutory functions.

MR GLEESON:   Your Honours will see in the Act at the relevant time that ‑ ‑ ‑

GUMMOW J:   Is this referred to in the Court of Appeal by counsel?

MR GLEESON:   It is not referred to.

GUMMOW J:   The starting point in a way, I would have thought.

MR GLEESON:   It ought to have been the starting point of duty under section 31, various powers to construct, inter alia, pipes.  Critically under section 32(1) a power to enter lands.  That is under (a).

FRENCH CJ:   These are to be read with the general functions, are they not?

MR GLEESON:   Yes, of course.

FRENCH CJ:   And section 30.

MR GLEESON:   And under section 32(1)(d) a power to divert water from streams as it may think fit and alter their courses as it may think fit.  In effect, what has been superimposed upon that is a prohibition, namely, according to Justice Beazley, thou shalt never alter the course of water flowing from a nearby culvert and if you do you are strictly liable for any

harm to anyone at any point into the future.  So we would submit that a proper analysis of duty, having regard to the statutory context, the nature of the harm, a proper approach to foreseeability and the indeterminacy of the class would have yielded no duty.  We submit that the point is of sufficient importance for your Honours to consider a grant of leave.  Those are our submissions.

FRENCH CJ:   Yes thank you.  Yes, Mr Toomey.

MR TOOMEY:   Your Honours, before getting to the important parts of Mr Gleeson’s argument, it is important to look at the facts.  The reference to the damage having happened 20 years later is true of the damage which happened to the plaintiff, but it is not true of the damage that began to be caused by the activities of Sydney Water.  What happened was – and the Court of Appeal found this – that the laying of the pipe had a twofold effect.  The culvert which came under the road had a pit at the end of it and at some time flowing from that pit when it was constructed was what was called a tail‑out drain, this being in a semi‑rural area when water in the pit collected, it dispersed through the drain furthest away – the side of the pit furthest away from the culvert headwall – and dispersed over pasture land.

What their Honours found, and they found it on the basis of good technical evidence, was that the effect of putting the pipe where it was was to dam the pit so that where formerly the water could disperse, now it could not.  That was the first of two important steps.  The second was that the water authority followed its invariable course of putting the pipe in a bed of sand.  The third step was that it carried the pipe across the roots of an established tree.  That is proved by the material collected at paragraph 100 on page 83 of the application book:

In November 1999, the Council surveyed the area in the course of undertaking preparatory work . . . Mr Bewsher –

who was one of the engineers who gave evidence –

stated that the 1999 survey identified a large tree approximately 4 m north of the culvert outlet, with a canopy width of 10 m, which appeared to be the problem tree.  It also showed the alignment of the water main to be 2 m west of the tree’s centre –

Now, the evidence was that the tree having a canopy width of 10 metres would have a root spread of approximately the same area or the same diameter.  So the alignment of the water main being 2 metres to the west of the centre of the tree was right across the heart of the tree’s roots. 

The Court of Appeal were mindful that the activities of the water authority had had a double effect.  First, it had dammed the pit so as to create a source of water to flow to the tree roots because had it not been dammed, it could have continued to disperse.  But having dammed it and provided the pit, it then provided the means of conduction of the water from the pit to the tree roots.  There was no rocket science about this, your Honours, and my learned friend saying that there was no practice of consulting aborists is, we would say, of no weight whatsoever.

FRENCH CJ:   A bit of an argument against you is the way in which the court approached the duty of care analysis.

MR TOOMEY:   Yes.

FRENCH CJ:   Are you really addressing that with these comments?

MR TOOMEY:   With respect, your Honour, we would not suggest that it was a perfect analysis of the duty, but we would say that on the facts as proved and on the basis on which the findings were made, there was a duty, there was a breach.  That is plain and it is not possible to escape from that.  The fact that the Court of Appeal did not analyse it correctly and apply it correctly is of no effect and your Honours would not grant leave unless you were satisfied that the result would be different.

FRENCH CJ:   I do not know that that is the test.

MR TOOMEY:   No.  I am saying as a practical result, your Honour.

FRENCH CJ:   Would be different.

MR TOOMEY:   Yes.  Your Honours, the 20 years hindsight is, of course, not the case.  What we are looking at here is people whose business is water.  They deal with water all the time.  They presumably know the effects of water on trees, or the possible effects.  If they do not, they should because the nature of their business is such that they are constantly dealing with trees along road margins and elsewhere.  If they know of the danger, if it is foreseeable that a tree’s roots will be attacked by water, then to do what they did in this case is obviously negligent, no matter how one analyses it or how one formulates the duty.  They did something which was a tort. 

The possible result was of such seriousness, that is, to compromise the roots of a tree by a road, not a very busy road, but busy enough as proved by the facts, so that if the tree fell it could cause horrible consequences, put a fair burden on them to make sure they did not compromise any structure which might fall on the road.  If one could say this.  Supposing it had been a building, a small building, on the nature strip and supposing in laying the pipe the water board had compromised the foundations of that building and that 20 years later it fell onto the road and caused the injuries that were caused here, the death that was caused here, I mean, the fact that it happened 20 years later would be irrelevant and it is irrelevant here, in our respectful submission.

The asbestos cases are a very good example.  Once one got over the limitation question, and that was done by statute, but it was never suggested that absent the limitation question that there was not a cause of action because the mesothelioma presented itself for the first time 35 years later or ‑ ‑ ‑

FRENCH CJ:   I’m not sure that’s put against you in any event, is it?

MR TOOMEY:   Well, your Honour, it is.  It is put in the written submissions, going, I think, to foreseeability, that it is not foreseeable that something might happen 20 years down the track.  Our answer to that is ‑ ‑ ‑

FRENCH CJ:   That is a different proposition.  You seem to be attacking a proposition that merely because something happens 20 years later there is a breach of a duty of care?

MR TOOMEY:   No.  I am, with respect, attacking the proposition that because it happens 20 years later it is not foreseeable or it may not be foreseeable, which I understand to be central to my learned friend’s submissions.

GUMMOW J:   The Civil Liability Act 2002 has no role to play in the Sydney Water case, does it?

MR TOOMEY:   No, your Honour.

GUMMOW J:   It is only in the Council case?

MR TOOMEY:   Yes, it is critical in the Council case, but not in the Sydney Water case.  I think that is our primary argument, your Honours.

FRENCH CJ:   All right.  Would you like to address us on Mrs Turano’s application?

MR TOOMEY:   Yes, your Honour.  Your Honours, this Court has granted leave on this point before in the case of North Sydney Council v Roman on 3 August 2007 [2007] HCATrans 405.

GUMMOW J:   It settled then, I think. 

MR TOOMEY:   Yes.  The insurance company thought it would be a good idea to take it away from the Court, your Honour.  Yes, the case never came to the Court.  The Court of Appeal of New South Wales then sat a bench of five to decide a cognate question, but not this question.  The name of the two cases was Angel v Hawkesbury City Council and Blacktown City Council v Hocking which are referred to in our submissions on 207 of the application book.  But the question has not been determined by this Court.

GUMMOW J:   What is the question?

MR TOOMEY:   The question is the nature of the knowledge the Council must have to fall within section 45 of the Civil Liability Act.

GUMMOW J:   We see section 45 at page 104 of the book.

MR TOOMEY:   Yes, your Honour.  The question that arises is, what is meant by actual knowledge where it appears that there is no liability?  This is in 45(1), page 104:

A roads authority is not liable in proceedings for civil liability to which this Part applies for harm arising . . . unless at the time of the alleged failure the authority had actual knowledge of the particular risk the materialisation of which resulted in the harm.

In Roman’s Case the Council had a direction to their street sweepers that they were to report to them any danger, dilapidation or such like which they came across in their duty as street sweepers.  The plaintiff in that case was unable to prove that there had been a report or that it had gone up higher into the Council offices.  The Court of Appeal held that there was no actual knowledge until it got to a person who had the power to operate on it and that is a proposition which we say is fallible and which we wish to attack because, if the statute is not to completely neuter the common law, then it must be read in a different way. 

This case is a very good example.  No one was called from the Council to say whether they considered that they knew about the water main or did not, that they considered whether or not there was a danger in the manner in which it dammed the culvert, that they knew or did not know that the culvert was continually, if not continuously, but continually flooded every time it rained and the plaintiff in the case was left to have to try to prove the matter from whatever documents were produced by the Council.  They produced no persons.  They put no one in the box to say, “No, we did not know and we had no means of knowing”.  So the plaintiff had to rely on documents. 

There were survey plans done in 1999 for the Council, two years before the accident, and those survey plans showed the existence of the water main, showed its relationship and proximity to the tree, there was handwriting on the plans five or six months before the accident querying the absence of a tail‑out drain which would have taken away the water from collecting in the culvert and, by those survey plans done for them, the Council knew that the water main went across the roots of the tree.  We said that in the absence of any contradictory evidence, and there was none because the Council chose to call none, that it was open to the court to find that from the inferences which could be drawn from the objective facts that an inference of knowledge was available.

FRENCH CJ:   This was, of course, only happening at the level of the Court of Appeal?

MR TOOMEY:   Yes. 

GUMMOW J:   It is said against you that one never got to section 45 because even without section 45 you still could not have succeeded.

MR TOOMEY:   We would have disputed that, your Honour.  We do dispute that.  We say that if you call in aid, for instance, De Gioia v Darling Island Stevedoring where Sir Frederick Jordan said when all the knowledge is in one party, very slight evidence presented by the other party is enough, that this is a case which falls within that area.  Your Honours, it has to be examined because no plaintiff is ever going to be able to do better than we can do.  All you can do is rely on the documents which are produced.  The Council never calls anyone in these cases.  There is almost always no protocol established by any of the councils as to what must be reported to them by their employees.  So what you are left with is a statute which limits you and practice by the councils which attempts to take advantage of that statute so as to prevent the facts being properly explored.

In our respectful submission, it is a case which ought to be dealt with by this Court.  These cases are happening every day of the week and there is no definitive statement as to the extended meaning or even the restricted meaning to be given to the words “actual knowledge”.  I repeat, no case is going to get higher than this one.  If it is read in the way in which the Council in this case asked it to be read, it means that unless some person actually knows in the sense, as I understand it, of what we call subjective knowledge.  My learned friend, Mr Polin’s leader in his submissions said “whatever that means”.  What it means is, I would have thought fairly clear, as opposed to knowledge drawn from inferences.

The question of whether you know a person is in a room because you saw him go into it or you infer that the person is in the room because you

know he is in the house, you have looked in every other room and he is not there.  We say that it is actual knowledge in both cases.  One it is perceived knowledge, the other it is derived knowledge by inference.  Now, the argument against us is that knowledge logically derived which does not constitute knowledge by means of the senses as opposed to the brain will not go there and we say that is a wrong construction.  If it is not a wrong construction, then the result is that all the Council has to do is make sure that no one investigates. 

There may be all sorts of inferential matters as here, a drain across tree roots, a culvert which is blocked by the main so that water collects, but you do not look at it, you do not do anything and it is said, well, we did not know and therefore you had no action.  Although if you looked at it intelligently, we say you could say that drain is laid in the water board’s invariable practice in a bed of sand across a culvert which is full of water because it partly dams it and it goes across the roots of the tree.  Now, why, if you put your mind to that, and we know that the knowledge was in the council because it knew from the survey of 1999 that the main was there, that it blocked the culvert because it notes, question mark, no tail‑out drain, and it went across the roots of the tree.

We say, on a proper reading of what was intended by the legislature, that is to prevent cases being made against a council without any proof that they knew anything about a danger that would, as we say, neuter the legislation.  One has to look at the nature of the law before the legislation.  This was the nonfeasance/misfeasance area.  What we are saying is, we are alleging misfeasance, not nonfeasance and it could well be that in a common law case – and I have taken a long time about it, your Honour, but I have got to your question about absent the legislation – we would say in a misfeasance case at common law the plaintiff may well have won.  May it please, your Honours.

FRENCH CJ:   Thank you, Mr Toomey.  Yes, Mr Polin.

MR POLIN:   Your Honours, we say simply in this that, even if there is a special leave point in section 45, this is not the appropriate vehicle.  As your Honour said, this is similar to the first matter in the list in that before you get to section 45 the applicant has got the four obstacles, being the findings of the Court of Appeal on duty, breach, causation and section 42 of the Civil Liability Act.  In relation to all of those, the Court of Appeal made findings adverse to the applicant.  All of them were unanimous, other than the question of duty where Justice McColl found that the Council did owe a duty, but there was no breach. 

The applicant does not seem to have addressed any of that either in the written submissions or in the submissions today.  We say this simply is

not the appropriate vehicle because the obstacles are insurmountable.  Unless there is anything else, your Honours.

FRENCH CJ:   Thank you, Mr Polin.  Mr Gleeson, is there anything in reply?

MR GLEESON:   No, we have put our submissions, your Honour.

FRENCH CJ:   There will be a grant of special leave in the Sydney Water application.  So far as the Turano application is concerned, there are insufficient prospects of success having regard to the number of matters on which the applicant would have to succeed before the question of principle for which it contends would arise and special leave will be refused in that matter.  What is your estimate of time, Mr Gleeson and Mr Toomey?  A one day matter?

MR GLEESON:   I think a day, your Honour.

MR TOOMEY:   Yes.

FRENCH CJ:   A day, yes.  What about the question of costs?  Mr Polin?

MR POLIN:   I think, your Honour, in the submissions I said that if leave was refused, there would be no reason why a costs order would not be made in favour ‑ ‑ ‑

FRENCH CJ:   Mr Toomey, can you resist the application?

MR TOOMEY:   I can try, your Honour.

FRENCH CJ:   That is what we like to hear, Mr Toomey.

MR TOOMEY:   All I would say is this, your Honour.  This was a particular case where the plaintiff had no knowledge of the underlying facts until after the event had occurred and nor could have had, had no knowledge of the way that the evidence would go at trial because of the nature of the evidence and lost in the Court of Appeal on a basis that it did not lose the trial.  It won the trial against the Council.  In our respectful submission, having regard to the relative position of the parties, your Honour might consider an order that each party pay its own costs.  May it please, your Honour.

FRENCH CJ:   Thank you, Mr Toomey.  Costs will follow the event.  Special leave will be refused with costs in that matter.

The Court will adjourn briefly to reconstitute.

AT 10.23 AM THE MATTER WAS CONCLUDED