Insurance & Reinsurance
Greater Hume Shire Council (Council) operated the Walla Walla Waste/Recycling Depot in New South Wales (the Tip). On 17 December 2009, a fire ignited at the Tip. It spread beyond the border of the Tip and travelled 11kms south east to the township of Gerogery. In total, approximately 5,200 hectares of land was burnt. The appellant’s property was directly in the fire’s path and was destroyed by the fire.
The appellant commenced proceedings in the Supreme Court of NSW against Council, seeking to recover damages in negligence and nuisance as a consequence of the losses suffered by her and the class of people she represented (i.e. other property owners) as a result of the fire. The appellant alleged that the fire materialised as a consequence of Council's management and operation of the Tip.
At first instance, the Supreme Court of NSW dismissed the appellant's case on the basis that causation was not satisfied. The trial judge accepted that Council owed a duty of care to prevent the fire from escaping from the Tip and held that this risk was reasonably foreseeable and not insignificant. The trial judge further accepted that a reasonable person in the position of Council would have taken the precautions outlined by the appellant in her pleadings (this included reducing vegetation, compacting and covering the waste and maintaining a firebreak around the Tip). However the trial judge stated that the expert evidence did not establish that, even if the precautions had been taken, the progress of the fire would have been sufficiently slowed to allow firefighters time to intervene. The appellant therefore failed to show factual causation and the claim was dismissed.
The appellant appealed the finding that she had failed to establish causation on the basis that:
Causation could be established where the sole probable cause of the fire could not be identified, but the likely causes were all due to the Council’s negligence; and
There was a causal link between the Council’s failure to take precautions against the risk of fire and the damage suffered by the appellant.
The Council also filed a notice of contention challenging the trial judge’s findings that the Council owed the appellant a duty of care, that the duty of care had been breached and that there were no defences available to it under sections 42 and 43A of the Civil Liability Act 2002 (NSW) (CLA).
This article is confined to addressing the findings of the Court of Appeal with respect to Council's entitlement to rely upon s.42 and 43A of the CLA as a statutory defence to the appellant's claim.
S.42 of the CLA sets out a number of factors that are to be considered by the Court in determining whether or not a public authority has breached its duty of care. S.42(a) provides that a Court must have regard to the fact that the functions required to be exercised by Council are limited by financial resources. S.42(b) provides that Council's general allocation of resources is not open to challenge. S.42(c) directs the Court to have regard not only to the burden of taking precautions to avoid the risk of harm that eventuated, but also to the burden of taking precautions to avoid similar risks of harm from occurring. If this matter becomes litigated, s.42(d) provides that a public authority can rely on evidence that it had complied with the general procedures and applicable standards for the exercise of its functions, as evidence of the proper exercise of its functions.
Council sought to rely on its budgetary documents in the years prior to the fire to prove that there were no significant funds available to it to prevent the risk of harm from materialising and that the Tip was running at a loss. Council stated that it only had a budgetary allocation of AUD51,000, in the year preceding the fire, to use towards precautions. However, the Court did not accept this submission as Council could not adduce evidence confirming that this sum had been fully exhausted.
The Court undertook a comprehensive review of the Council's financial documents for the years preceding the loss. As part of this review, the Court located unallocated grants and unallocated cash equivalents in the amount of AUD6,000,000. Further, the Court of Appeal located a general waste management fund, of which the actual expenditure prior to the fire was less than the budgeted expenditure.
In circumstances where there were additional, unallocated funds available for Council's use, the Court held that a reasonable public authority would have utilised these funds to implement precautions to reduce the risk of harm from materialising. As such, it held that there was no financial restraint which would have precluded a reasonable Council from taking the precautions identified by the appellant. Accordingly, s.42 of the CLA was not enlivened as a defence to the claim.
Finally, the Court held that Council’s management of the Tip was not undertaken pursuant to a special statutory power and therefore, s43A was not engaged.
By reason of this, the appellant established that the Council’s failure to take the reasonable precautions caused the fire to spread and her loss and damage. The appellant was awarded AUD104,400 plus interest and costs.
Traditionally the statutory defences available under the CLA to public authorities (such as Councils) have been seen as a deterrent to recovery. However, the decision in Weber has curtailed public authorities' ability to rely on the allocation of its financial resources as a defence to a claim. What is now required is proof that the financial allocation has been exhausted and that there were no unallocated funds available for use.
In light of the recent bushfires taking place on the east coast of Australia, public authorities (such as Councils) are encouraged to consider the viability of s.42 defence in light of the Weber decision.