Insurance & Reinsurance
In a dramatic reversal of fortune, Western Power (the Western Australian State Government owned electricity network supplier) received an adverse judgment from the Western Australia Court of Appeal, in a decision arising out of the 2014 Parkerville bushfire, following a first instance trial at which it had avoided liability.
In Herridge Parties v Electricity Networks Corporation T/As Western Power, the Court of Appeal determined that Western Power owed a duty to inspect and maintain all equipment carrying its power infrastructure, including privately owned equipment, and retained responsibility for doing so even where it delegated responsibility for carrying out inspections of that equipment to a third party.
The judgment has implications for statutory bodies, public authorities, local government entities and others who are engaged in outsourcing to third parties.
Clyde & Co Perth partners JP Wood and Tim Searle, along with Jade Macukat (Special Counsel) and Cherry Lee (Associate), consider the decision.
The claim arose from a bushfire in Parkerville, Western Australia. On 12 January 2014, a pole supporting an electrical cable fell to the ground, resulting in a fire that caused significant personal injury and property damage. The pole was made of jarrah wood and was affected by fungal decay and termite damage. The Plaintiffs claimed that Western Power was responsible for testing the pole and that it would have been simple to test the pole with a hammer, which would have identified the underlying damage, and Western Power would have replaced the pole before it collapsed.
As a result of the fire, four class actions were commenced against:
At trial, the owner and Thiess were found negligent. The judge apportioned their responsibility on a 30/70 basis, respectively. The trial judge dismissed the claim against Western Power, finding that it had not breached its duty of care.
In relation to Western Power, the appeal focussed on two key issues:
The trial judge had found that Western Power had a duty to take reasonable care to inspect the pole and not to use to pole if it found that the pole was not in a safe condition (i.e. the Narrow Duty). He held that Western Power had responsibly discharged that duty by delegating the inspection to Thiess. His Honour rejected the submission that Western Power had a duty to supervise that work or provide training or instruction to line crews retained to conduct pole inspections.
He also rejected the Wider Duty argument, on the basis that s25 of the Electricity Act 1945 (WA), properly construed, required Western Power to maintain only the apparatus that it owned and not privately-owned apparatus, such as the pole.
The plaintiffs and the landowner submitted that Western Power had a duty to take reasonable care in delivering electricity to avoid causing fire on nearby properties. That duty was said to include taking reasonable care to ensure that the aerial cables used to deliver electricity were attached to structurally sound infrastructure (whoever owns them).
Western Power submitted (in line with the trial judge’s findings) that s25 of the Electricity Act informed the scope of Western Power’s duty of care at common law and was incompatible with the alleged Wider Duty, because (among other things):
The Court of Appeal acknowledged the need to determine the existence of a duty of care at common law so as to be coherent, consistent and compatible with the applicable statutory scheme, where the allegation is that the public authority has been negligent in the performance of its statutory powers and functions.
The Court of Appeal rejected Western Power’s argument that the statutory purpose of the Electricity Act was to place the responsibility for privately owned power poles on the property owner, and not Western Power. The Court found that Western Power had a duty of care at common law to maintain all service apparatus belonging to the network operator on the premises of any consumer, in a safe and fit condition, for supplying electricity. That required Western Power to keep the aerial cable safe to supply electricity to the landowner. That obligation could not be satisfied if the cable was attached to a defective pole. Accordingly, Western Power had a duty to take steps to monitor the pole on a regular basis to ensure it was capable of safely supporting the cable. Such a duty was not inconsistent with the statutory scheme.
The Court of Appeal then considered whether Western Power had breached that duty and whether the breach had caused the alleged loss and damage. The Court determined that Western Power should have responded to the risk of harm arising from the failure of wooden poles supporting its electrical apparatus, by establishing a system for undertaking the periodic inspection of those poles, regardless of who owned them. The Court determined that if Western Power had implemented a system for periodically inspecting wooden poles, it would probably have inspected the pole, identified the deterioration and replaced it before the collapse on 12 January 2014.
Those determinations resulted in a re-apportionment of liability as follows: Western Power 50%, Thiess 35%, landowner 15%.
The Court of Appeal judgment is significant for several reasons:
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