Water authority levels a dam good defence

The New South Wales Court of Appeal set aside a finding at first instance that the Queensland Bulk Water Supply Authority (Seqwater) was liable in negligence for damage arising out of the 2011 Brisbane floods. The NSWCA allowed Seqwater’s appeal and held that it had not breached the lower standard of care required of public authorities under s 36 of the Civil Liability Act 2003 (Qld).

In Issue

• In assessing Seqwater’s conduct, was the standard of care to be applied reasonable care under s 9 of the Civil Liability Act 2003 (Qld) (CLA), or rather the lower standard required of public authorities under s36 of the CLA?
• Did Seqwater and the flood engineers breach their duties of care to persons with an interest in land when conducting their flood operations and releasing water from Wivenhoe Dam?
• The case also considered the vicarious liability of Seqwater, causation, the apportionment of liability, and the plaintiff’s entitlement to damages for services provided by volunteers.

The background

During January 2011, south-east Queensland experienced torrential rainfall.

Seqwater owned and operated the Wivenhoe and Somerset Dams (Dams) in south-east Queensland, west of Brisbane. It employed two of four flood engineers who undertook the flood operations at the Dams. The Dams both supplied water to south-east Queensland, and mitigated flooding in the Brisbane River valley by storing water at the peak of heavy rainfall.

The conduct of the flood operations was regulated by a flood operations manual (the manual) which required the engineers to use rainfall forecasts to determine appropriate strategies and water releases.

On the morning of 11 January 2011, the flood engineers released a large volume of water from the Wivenhoe Dam. The release of water, combined with the heavy rainfall in the Brisbane River catchment and its tributaries, flooded homes and businesses in the surrounding areas.

The plaintiff, Rodriguez & Sons Pty Ltd, commenced representative proceedings against several defendants including Seqwater on behalf of nearly 7,000 persons or entities that had an interest in land or property and had been impacted by the inundation of floodwater.

The decision at first instance

Barry.Nilsson. reported on the judgment at first instance here.

The Supreme Court of New South Wales (NSWSC) determined that Seqwater had breached the standard of care required of it under section 9 of the Civil Liability Act 2003 (Qld) (CLA), being the ordinary standard of a failure to take reasonable precautions against a foreseeable and not insignificant risk of harm.¹

The attenuated standard of care for public authorities (as outlined in s 36(2) of the CLA) did not apply because the trial judge considered that the proceeding was not one based on an alleged wrongful exercise of or failure to exercise a function of a public or other authority.

The issue of whether s 36 of the CLA applied, turned on the proper construction of s 9(2) of the South East Queensland Water (Restructuring) Act 2007 (Qld) (Restructuring Act), the legislation under which Seqwater was established. The trial judge interpreted s 9(2) of the Restructuring Act as conferring statutory power only to the extent that Seqwater’s functions were consistent with its operational and strategic plans. On the basis that Seqwater did not have an operational or strategic plan, his Honour found that Seqwater did not exercise a function of a public or other authority for the purposes of s 36(1) of the CLA.

The NSWSC held the flood engineers had failed to take reasonable care and that the flood engineers’ acts or omissions would be attributed to their employer, so as to render Seqwater liable. After examining the role played by each of the flood engineers, the trial judge apportioned 50% of the damages against Seqwater.²

The issues on appeal

On appeal, Seqwater contended that the flood mitigation operations were an exercise of function of a public or other authority and that as a consequence, the applicable standard of care ought to have been the standard outlined in s 36(2) of the CLA (as opposed to the ordinary standard referred to at s 9 of the CLA).

The NSWCA considered whether:

• the proceeding was one that concerned the alleged wrongful exercise of or a failure to exercise function of a public or other authority; and
• whether the standard of care used to assess Seqwater’s conduct at trial was the applicable standard.

The Decision on appeal

The NSWCA rejected the reasoning of the trial judge that Seqwater was not exercising a function of a public or other authority, on the following bases:

• Section 9 of the Restructuring Act conferred functions to carry out ‘water activities’, which is defined in the Water Act 2000 (Qld) to include flood prevention and floodwater control;
• Seqwater held a resource operations licence which authorised it to interfere with the flow of water in the rivers for flood mitigation purposes;
• The functions exercised by Seqwater were dependent on the statutory creation of Seqwater as the owner of the dams; and
• The reference to ‘operational and strategic plans’ in s 9(1) should not be read so as to deprive Seqwater of its role as defined by the Restructuring Act.

The release of water in a controlled manner by Seqwater was an exercise of its statutory function under s 9(1) of the Restructuring Act. The NSWCA considered that it was not possible to read the reference to ‘function’ in s 36(1) of the CLA as not encompassing Seqwater’s flood mitigation activities performed in January 2011.

It was necessary for the plaintiff to establish that Seqwater’s conduct constituted “an act or omission [which] was in the circumstances so unreasonable that no public or other authority in question could properly consider the act or omission to be a reasonable exercise of its function”.³ The NSWCA found the standard of care under s 36(2) is a curious form of expression, which differed from test of unreasonableness which is applied at common law.⁴

Bathurst CJ and Beazley J in Curtis v Harden Shire Council,⁵ considering an equivalent NSW provision, noted that the language “… envisions a range of opinions as to what might constitute a reasonable act or reasonable failure to act, but asks if no public authority properly considering the issue could place it within that range”.

The NSWCA examined Seqwater’s conduct including inter alia the reliance on ‘rain on ground’ forecasts, certain assumptions made by the flood engineers, the termination of the December flood event, and the opening of the sluice gates at Somerset. Ultimately, it was concluded that there was no evidence tendered that acts of the flood engineers were so unreasonable that no dam operator with the flood mitigation function of Seqwater could properly consider them to a be reasonable exercise of that function. The fact that the flood engineers, all well-trained and experienced, reached consensus as to the steps to be taken throughout the flood event, pointed against their (and Seqwater’s) conduct satisfying the test imposed by s 36(2). As there was no breach of duty, Seqwater was not liable in negligence.

The NSWCA also found that Seqwater owed a duty of care to downstream persons and entities with interest in land and/or property, and that it was vicariously liable for the acts of the flood engineers employed by it. The acts constituted potentially wrongful conduct so as to engage s 36(1) of the CLA. It was emphasised that if a public authority can only exercise a function through the medium of a trained profession, it would be surprising if the standard of care applied to it differed from that applied to its agents.

In relation to causation, the appeal failed. The NSWCA found that all engineers were liable for all breaches. The fact that a particular engineer was on duty at a particular time was not a critical factor because the flood engineers acted in a collaborative manner. What was important was the period over which the engineers breached the appropriate standard of care, and the time at which the window of opportunity for pre-releases to create flood storage volume closed. It was not necessary to cut and dice a particular course of conduct to determine separate specific breaches which could be attributed to the damage caused at particular properties.

Since the NSWCA concluded that Seqwater was not liable to the plaintiff or group members, it was not appropriate to address the question of apportionment on a contingent basis. However, it specifically noted that since Seqwater was the sole party responsible as licensee for controlling the release of water from the dams into the Brisbane River, it was difficult to envisage that its liability would be less than 50%. Again, although the finding of no liability on the part of Seqwater meant that the issue did not arise, the NSWCA determined that the commercial value of cleaning undertaken by volunteers was fully recoverable.

Implications for you

The decision is a timely reminder of the reduced standard of care required of public authorities and statutory bodies. It emphasises the significant evidentiary onus placed on plaintiffs in actions against public authorities to establish conduct satisfying s 36(2) of the CLA, and having no recourse to compensation for property and consequential economic losses (in this case, to the tune of around $440 million) for failing to do so.

Queensland Bulk Water Supply Authority t/as Seqwater v Rodriguez & Sons Pty Ltd [2021] NSWCA 206