Melaleuca Estate Pty Ltd v Port Stephens Council [2006] NSWCA 31 (1 March 2006)

CITATION: Melaleuca Estate Pty Ltd v Port Stephens Council [2006] NSWCA 31

FILE NUMBER(S):

40473/04

HEARING DATE(S): 9 & 10 June 2005

DECISION DATE: 01/03/2006

PARTIES:

Melaleuca Estate Pty Ltd - Appellant

Port Stephens Council - Respondent

JUDGMENT OF: Giles JA McColl JA Hunt AJA

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT FILE NUMBER(S): 4795/02

LOWER COURT JUDICIAL OFFICER: Cripps AJ

COUNSEL:

J Webster SC & M Green - Appellant

J M Ireland QC & J B Maston - Respondent

SOLICITORS:

Hunt & Hunt, Eastwood - Appellant

Sparke Helmore, Newcastle - Respondent

CATCHWORDS:

Nuisance - claim for injunction to restrain - approval of development and drainage works in 1970s and 1990s - pipes discharged onto and at boundary of plaintiff's land - whether a nuisance - whether defendant liable for nuisance - in particular whether works without regard for landowner's interests - consideration of liability for works carried out under statutory power - whether defence by virtue of s 241 Local Government Act 1919 - whether "good faith" defence under s 733 Local Government Act 1993.

LEGISLATION CITED:

DECISION:

(1) Appeal allowed; (2) Set aside the orders of Cripps AJ made on 19 May 2004; (3) Make orders - (a) granting an injunction restraining the respondent from continuing to discharge upon the appellant’s land stormwater in excess of the natural flow that would flow upon the land; (b) that the respondent take such measures as may be necessary to preclude the coming onto the land of stormwater containing high levels of nutrients and waster materials; and (c) that the injunction set out in paragraphs (a) and (b) be stayed for eighteen months pending the implementation of a drainage system by the respondent for the Seabreeze Estate which enables the stormwater to be controlled within the catchment or disposed of by a thrust bore drainage line or gravity drainage line, to the next catchment in Port Stephens; (4) Order that the respondent pay the appellant’s costs of the trial and the appeal; (5) Order that the respondent have a certificate under the Suitors Fund Act if otherwise qualified.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40473/04

ED 4795/02

GILES JA

McCOLL JA

HUNT AJA

Wednesday 1 March 2006

MELALEUCA ESTATE PTY LTD v PORT STEPHENS SHIRE COUNCIL

Judgment

1 GILES JA: The appellant owns 8.44 hectares of land at Nelson Bay, within the respondent’s local government area. The land is bounded by Dowling Street to the east and south, and is substantially the low point in a catchment area of about 68 hectares.

2 There was subdivision and development in the catchment area to the east of Dowling Street in and after the 1970s. The respondent approved the development and carried out drainage works by kerbed and guttered roads and a piping system, resulting in the discharge of water onto and adjacent to the land changing its previous affectation by water.

3 In proceedings brought in 2002, at a time when it was the purchaser of the land under an uncompleted contract for sale, the appellant claimed an order that the respondent be restrained from “causing or allowing stormwater to flow, whether directly or indirectly, from the catchment via a closed pipe system, its roads, kerbs and gutters onto the land at such a rate and condition as to cause a nuisance to the land”, alternatively damages. It alleged that the respondent had “created a nuisance upon the land and continues to create a nuisance from time to time”, and additionally or alternatively that it had breached a duty of care owed to the appellant “for the proper construction and maintenance of road drainage work within its municipality”. Cripps AJ dismissed the proceedings.

4 His Honour observed at one point that the work undertaken in the 1970s was “necessary to be undertaken and was constructed with due care”, but said that, since the appellant did not own the land until 2002, if it had a case in negligence it was that the respondent “came under a continuing common law duty to effect abatement works”; he considered that the respondent “did not come under any common law duty of care to undertake works of the type submitted by [the appellant]”, and that if the appellant had a claim it was a claim in nuisance.

5 He described the claim in nuisance as “the omission by [the respondent] to abate the nuisance caused by its drainage works”. He did not accept that the respondent had the protection of s 241 of the Local Government Act 1919, in force at the time of the drainage works in the 1970s, but held it was entitled to the “good faith” defence under s 733 of the Local Government Act 1993; and it seems that his Honour held that in any event the respondent was not liable in nuisance because it “has not ‘adopted the nuisance by failing unreasonably to do anything to abate it’” (emphasis in original). Important to his Honour’s holdings in both respects was the December 2001 grant of development consent in respect of the land on an agreed condition that the appellant would install a wick drainage system to remove from the land a lot of the water coming upon it.

6 On appeal the appellant relied only on nuisance, and claimed only the injunctive relief. The appeal was heard in June 2005, but with further written submissions to be provided following the then anticipated decision of the High Court in Bankstown City Council v Alamdo Holdings Pty Ltd [2005] HCA 46. The decision was given in September 2005, and the last of the written submissions was received in November 2005.

Facts

7 The land was owned by Mrs Margaret Coventry from about 1950, until it was purchased by the appellant under a contract for sale dated 26 July 2000. The sale was completed in August 2002. The judge considered that a submission that the appellant had no standing at the time the proceedings were brought to “claim relief in nuisance” had been abandoned.

8 The land was separated from the sea at Nelson Bay by a large dune system, and its lower 2.2 hectares was a dunal swale supporting a melaleuca paper bark forest and some swamp mahogany trees. This area was described as an ephemeral wetland, meaning that it was from time to time inundated as the water table rose with prolonged rainfall but was dry when the water table fell. There was ponding when the groundwater rose above 8m AHD (a particular height datum). Rain falling on the land and in the catchment was readily absorbed and became groundwater, and the ponding largely came from the rise in the water table rather than from surface flow to the lowest point of the land.

9 In the 1970s the Seabreeze Estate was developed to the east of Dowling Street. The respondent approved the development and carried out road drainage works. These included a pipe system of two stormwater pipes, with associated headwalls, ditches, gutters and channels, one of which intruded onto and discharged onto the land and the other of which discharged at the Dowling Street boundary of the land. The topography was such that the stormwater discharged at the boundary ran onto the land to the wetland area.

10 Noxious weeds began to grow near these drains, from seeds brought onto the land by the water, and the water flowed in channels seaward across the surface of the land rather than being absorbed. The ponding of water in the wetland area was increased, and when ponded it was often covered in duckweed. In 1977 the respondent provided labour to help eradicate the noxious weeds. In response to Mrs Coventry’s complaints, it told her that there was “no question of the artificial drainage being removed”, and she would “have to be realistic and cope with development”, but that “Council would be willing to limit the amount of water coming onto your land to the 9 metre mark and if necessary Council would install a pumping station”. It did neither.

11 In 1993-4 the respondent carried out roadworks involving Dowling Street. A small part of the land was resumed, and an additional pipe system was constructed discharging at the Dowling Street boundary of the land. The respondent’s approval of its own development application for the works included that “[t]he stormwater drainage system should be directed where possible to the low area on [the land]”. This water also flowed over the land and the ponding was further increased.

12 It was foreseen that these works would increase the water affectation. In December 1993 the respondent wrote to Mrs Coventry noting that preliminary studies indicated that a degree of extra flooding was likely on the land; the letter included -

“Council will complete this part of the assessment to ensure your land is not adversely affected, and a commitment is hereby given to contain peak flood levels to an area approximately as shown on the current zoning maps. (Extra depths of water to those of the original/natural system are anticipated, containment to areas which do not adversely affect the development potential of your land is seen as a requirement for Council.)”

13 The respondent told Mrs Coventry that it would construct pollution control basins, and in the meantime would not use the new pipeline “until we have reached a satisfactory solution”. Pollution control basins were not constructed. The pipeline was used although a “solution” had not been reached.

14 The judge found -

“52 I am satisfied on the balance of probabilities that prior to the drainage works being constructed by Council in the 1970s, very little surface water ran onto the subject land from the higher catchment area – and, in particular, that part of the higher catchment area referred to as the Seabreeze Estate. The rain that fell was, until the area was developed, absorbed within the area and became ground water, which in times of heavy rain raised the level of the ground water to above 8m AHD (the bottom of the ephemeral wetland). The extent of water covering the ephemeral wetland varied depending upon the amount and intensity of rainfall. In the absence of development in the catchment area, the ephemeral wetland would subside over a period of time and drain under the dunal area into Nelson Bay.

53 At the present time, water enters the subject land at three points – one of which is a pipe, which actually intrudes onto the subject land, and two others that are immediately adjacent to the subject land. A consequence of the drainage work undertaken by Council in the mid 70’s and 90’s is that now a significant amount of water enters the subject land carrying nutrients and other deleterious substances whereas previously all water that entered the subject land entered underground. Moreover, as I have already said, there is now more water going onto the subject land than prior to the drainage works being constructed.

...

55 I have already referred to the circumstance that the evidence is unclear as to what excess water reached the ephemeral wetland as a result of the drainage works undertaken in the 70’s, and what amount of additional water came onto the land as a consequence of the drainage works undertaken in the 90’s when, on occasions, the 900mm drainage pipe overflowed.

56 Mr Boyden thought that before any drainage work had been undertaken, about 62,000 cubic metres of water would have drained from the natural catchment to the subject land in consequence of a 1 in 100 year flood. He thought that after the drainage works had been carried out, about 76,340 cubic metres would reach the subject land – at least in a 1 in 100 year flood. This means that, on his estimate, there would be an increase in volume by approximately 18%. The experts disagreed about this but only Dr Joliffe did further calculations and I record I accept those calculations. His calculations led him to the conclusion that some water reached the ephemeral wetland area 25% of the time prior to the development of the Seabreeze Estate catchment area, and that after Council’s drainage works in the 70’s and the 90’s, some water is present in the ephemeral area more than 90% of the time. Moreover, Dr Joliffe thought that, prior to drainage works being undertaken, the maximum height of water in the basin would have been about 10m AHD, whereas, as a consequence of the work undertaken in the 70’s and 90’s, he believes that not only would there be some inundation above 8m AHD more than 90% of the time, but the maximum level would now be about 12.6m AHD. But the evidence does not permit of a determination of how much water now covers the 8mm AHD bed 90% of the time or how frequently it rises to 12.6 mm AHD.

57 In my opinion, the plaintiff has established that not only is more water coming on to the subject land by reason of the Council’s drainage work, but it is now coming over the surface whereas previously it entered underground and caused inundation only when the underground level rose about 8m AHD.

58 Moreover, I find the quality of water that now enters the subject land has been reduced because of surface water from Seabreeze Estate coming on to it. Gross pollutants enter the subject land via surface water and nutrient pollutants enter the subject land by surface water and, to some extent, by underground water. I accept, however, that the Council has already allocated money to install gross pollution traps and they will be installed in the course of the development being implemented.”

15 From 1994 onwards there was much discussion between Mrs Coventry and her solicitors and the respondent. In October 1995 Mrs Coventry’s solicitor was told that funds had been allocated in that financial year “to complete the drainage works and construct the detention basin on the property”. This did not come to pass. The discussions came particularly to a “thrust-bore” system to remove the excess stormwater from the land and discharge it to the sea. This involved works on the respondent’s land as well as on the land. In the latter part of 1997 the respondent accepted the “concept” of the thrust-bore system in principle, but a few months later said that the proposal was not viable. It kept assuring Mrs Coventry that it was giving the matter priority, and the judge said at one point that “[a] fair reading of Council’s internal memorandum [sic] makes it clear, in my opinion, that Council accepted it had a responsibility to Mrs Coventry to abate the nuisance it had caused by the drainage works undertaken in the 1970s and 1990s.” His Honour said that the “real reason, in my opinion, for Council not implementing the proposal to abate the nuisance was the estimated cost of the thrust-bore method.”

16 In November 1999 Mrs Coventry lodged an application for development of the land by the construction of 214 residential dwellings. In July 2000 she entered into the contract to sell the land to the appellant. In August 2000 an appeal was filed in the Land and Environment Court against the respondent’s deemed refusal of the development application. The appellant took over the conduct of the application for development consent; it was revised and the number of dwellings was reduced to 164 and then 158.

17 By mid-1999 the thrust-bore system was back under consideration. The respondent engaged the consultant previously retained by Mrs Coventry, accepted his proposals in principle, and in February 2000 published its Final Urban Stormwater Management Plan which as to this area stated that -

“ ... the gravity pipeline proposal is considered as a solution that should not be discarded because of its relatively high construction cost. This solution provides a top water level, within the site pondage, that can be consistently maintained and managed.”

18 The plan said -

“5.5.4 CONCLUSION AND RECOMMENDATION

It can be concluded from this report that:

· The majority of stormwater volume impacting the property is generated from the external catchment. This stormwater runoff should be directed away from the site and not discharged on Mrs Coventry’s property.

· The responsibility of stormwater runoff from the external catchment impact from the external catchment impacting the property rests with Port Stephens Council, and

· Option One Gravity Pipe detailed is a viable alternative.

· The final management strategy should incorporate an upstream in-line separation device and artificial wetland to facilitate stormwater quality control and polishing.”

19 At a meeting in October 2000 the respondent’s representatives agreed that the thrust-bore system was the best of the four options. There were many meetings between representatives of the appellant and the respondent; at one of them the respondent’s solicitor told Mr Cornwell of the appellant that the respondent “has the right to put road drainage onto private land” and talked of assessing compensation.

20 The development application included the thrust-bore system, and Mr Cornwell proposed sharing its cost. The respondent rejected the proposal. In the course of the proceedings in the Land and Environment Court the respondent informed the appellant that it was “not prepared to allow and/or allocate public money to the construction of the drainage system as proposed by [the appellant]”. The thrust-bore system involved works on land vested in the respondent, and it was also made plain that the respondent would not consent to the works on its land.

21 The appellant then prepared a proposal for the wick drainage system, essentially the construction of vertical agricultural drains (the wicks) to promote drainage into the water table. The works were entirely within the land; once the ponding of water reached a certain level, it would drain through the wick system. In due course orders were made by consent in the Land and Environment Court approving the development application on conditions which included that the appellant construct the wick drainage system; there was also provision for easements in favour of the respondent allowing passage of the stormwater over the land.

The issues

22 For the legal wrong of (private) nuisance, a nuisance is an unreasonable interference with the use and enjoyment of land: an “invasion of the common law rights of an owner or occupier of land” (Hargrave v Goldman [1963] HCA 56; (1963) 110 CLR 40 at 60 per Windeyer J). Preferably used, the word denotes the result of the defendant’s conduct, or perhaps the state of affairs created by the conduct and bringing about the result. Thus in Torette House Pty Ltd v Berkman [1940] HCA 1; (1940) 62 CLR 637, in which water discharged from the defendant’s premises onto the plaintiff’s premises, Dixon J said (at 657) that there was “no nuisance or other wrongful act on the part of anyone of which the plaintiff could complain until the water began actually to flow onto the plaintiff’s premises”. Also preferably used, finding a nuisance does not mean legal liability for the result of the defendant’s conduct. In some circumstances there may be an unreasonable interference with the use and enjoyment of the plaintiff’s land without liability in the defendant.

23 Discharge of water onto the appellant’s land could be a nuisance if it was an unreasonable interference with the use and enjoyment of the land. But the nuisance would be the discharge onto the land, and each occasion on which there was a discharge would, if the respondent was liable, be a separate legal wrong.

24 For the claim to injunctive relief, evidence of past discharges could found a finding that unless relief was given nuisances are likely to occur, and consequentially that the relief should be given. The relevant conduct of the respondent could nonetheless be its past conduct creating the state of affairs whereby the water was discharged and would be discharged onto the appellant’s land. As was said in Bankstown City Council v Alamdo Holdings Pty Ltd at [43]-[44], discussing the availability of the “good faith” defence, depending on what the council had done or omitted to do, in answer to a claim for injunctive relief -

“43. The propositions that (1) injunctions are generally directed towards requiring or preventing future events and (2) evidence of actions performed in the past by the defendant will show that which is apprehended to be reasonably probable, may be accepted. But this does not deny that the susceptibility of a defendant to suffer equitable relief quia timet may be said to be in respect of what has already been done by the defendant. That which presents the threat has already occurred.

44. The equity which the plaintiff has in such circumstances is not equated with an accrued right to sue on a cause of action at law in contract or tort. Equity responds to threats of future injury to legal or equitable rights.” (emphasis added)

25 The appellate claim being only to injunctive relief, the issues in the appeal were -

1. Whether there was a likelihood of future nuisances, that is, future unreasonable interferences with the appellant’s use and enjoyment of the land.

2. If yes, whether the respondent was liable in respect of those nuisances.

3. If yes, whether the respondent was protected by s 241 of the Local Government Act 1919 or the “good faith” defence under s 733 of the Local Government Act 1993.

26 It is necessary also to say something as to the exercise of the Court’s discretion to grant or withhold the injunctive relief.

Nuisances

27 It is tolerably clear that Cripps AJ considered that the discharges of water onto and at the boundary of the land while it was owned by Mrs Coventry were nuisances. His Honour referred in passages earlier set out to nuisance caused by the drainage works undertaken in the 1970s and 1990s, and to abatement of the nuisance, and said at [73] -

“73 The conclusion I have come to is that, had Mrs Coventry taken the present proceedings and had there been no complications arising by reason of the grant of development consent in the circumstances in which it was granted, she would more probably than not have succeeded in a claim against the Council and an order would have been made in terms not dissimilar to that proposed in the present proceedings. But in my opinion that finding does not necessarily make out Melaleuca’s case against the Council.”

28 It is not entirely clear whether his Honour considered that discharges of water when the land was in the appellant’s ownership were not and would not be nuisances at all. The relevant part of his reasons, rather mingling existence of a nuisance, liability for nuisance and the “good faith” defence, is -

“76 Melaleuca’s claim in nuisance is the omission by the Council to abate the nuisance caused by its drainage works. I have already opined that had Mrs Coventry commenced proceedings in earlier 1999 and before she lodged her development application the Council would have lost any protection it otherwise may have had pursuant to s 733 because it had failed to demonstrate its “good faith” in its dealings with her.

77 But the same cannot be said of it in its dealings with Melaleuca. The development application was for “integrated development”. That meant Council was required, amongst other things, to consult with various government bodies to ensure that the development consent did not offend against environmental laws. The “thrust bore” system was not opposed by the Department of Fisheries. The Council and Melaleuca entered into negotiations with the result that the Land and Environment Court gave development consent to the application subject to conditions agreed to by the parties. Accordingly I have come to the conclusion that the Council acted in “good faith” in its dealings with Melaleuca.

78 In these circumstances I would also hold that Council has not “adopted the nuisance by failing unreasonably to do anything to abate it” (see Attrill) (emphasis mine). I reject Mr Webster’s submission that the knowledge Melaleuca had of dealings between Mrs Coventry and the Council and the participation by it in negotiations which led to the Land and Environment Court granting consent subject to conditions that the developer install a wick drainage system is irrelevant to any issue I have to decide.

79 I have not overlooked the circumstance that theoretically, at least, Melaleuca, now the owner of the land, may not proceed with the development and that if it did not it would be unfair that it should bear the cost of drainage consequent upon the Seabreeze catchment area to the benefit of owners of property in that area and that a fairer way of dealing with the matter would be to make an order as proposed. However the evidence is that Melaleuca is actually developing the land. Melaleuca was perfectly aware of all the circumstances preceding the lodgement of development application. It took over the negotiations. It agreed to the condition being included in the develop consent that it undertake wick drainage work, part of which was necessary to meet the need generated by the development proposed.”

29 The reference to Attrill was to Attrill v Richmond River Shire Council (1993) 30 NSWLR 122, the passage at 127 from which his Honour cited involving the existence of a nuisance which was adopted by failure to do anything about it. His Honour’s reasoning appears to have gone to liability for nuisance, but there may be a suggestion that it went to existence of a nuisance because, with the wick drainage system in place, the discharge of water onto and at the boundary of the land would no longer be an unreasonable interference with the appellant’s use and enjoyment of the land.

30 A submission to that effect was put on appeal. It was submitted that the appellant “willingly took upon itself under the conditions of development consent that the ‘wick’ drainage system be established on the land”; that in the result the discharge of stormwater “will not be harmful to the intended and actual use of the land”; and that -

“What could in other circumstances or to another plaintiff represent interference with use of land because of entry of stormwater will not damage Melaleuca’s use of the land. The object of the tort of private nuisance is to reconcile conflicting interests in the use of land according to a standard of reasonableness. There is nothing unreasonable about the outcome in the present case.”

31 In oral submissions the respondent accepted as its argument that it was not unreasonable interference with the appellant’s use and enjoyment of its land if the appellant was “taking steps to cope with the extra ingress of water”, adding that it was doing so “by consent and ... with no strings attached”.

32 I do not accept the submission.

33 Changes in the use of land must of course be recognised. The current use of a plaintiff’s land may mean that what would interfere with the use and enjoyment of other land does not interfere with its use and enjoyment, and the plaintiff can not expect the freedom from interference appropriate to its long past use. But a nuisance does not cease to be a nuisance because the plaintiff takes steps to overcome the result of the defendant’s conduct. The discharge of water onto and at the boundary of the land remained a nuisance even when the appellant took steps to overcome it by construction of the wick drainage system, and future discharges will be nuisances.

34 Further, the effect of the wick drainage system is to drain ponded water above a given height, so that there will remain (a) the surface flow of water over the land from the points of discharge; (b) subject to installation of a gross pollutant trap, the bringing of seeds and other pollutants onto the land; and (c) increased ponding, in depth and area and over a longer time, because relieved only when the ponding reaches the given height. The wick system only partially overcomes the result of the respondent’s conduct.

35 There was no direct evidence of discharges of stormwater onto and at the boundary of the land after July 2000, but there is no reason to conclude that discharges will not occur in the future as they did in and after the 1970s. Development of land is a form of use and enjoyment, and the discharges will interfere with it because the appellant’s development of the land will have to cope with the surface flow and any pollution and more of the land will be unavailable for residential development than would otherwise have been the case. In my opinion, the interference will be unreasonable, and the first issue should be decided in the appellant’s favour.

36 The agreed installation of the wick drainage system is nonetheless material to the question of discretion.

Liability for the nuisances

37 I have set out the part of the reasons of Cripps AJ in which he held, in his [78], that the respondent had not “adopted the nuisance by failing unreasonably to do anything to abate it”. This reflected his Honour’s observation (see his [76]) that the appellant’s claim in nuisance was “the omission by the Council to abate the nuisance caused by its drainage works”.

38 Abatement is used to refer to the ability by self-help to remedy a nuisance. By omission to abate may have been meant that the respondent “continued or adopted the nuisance or, more accurately, did not without undue delay remedy it ...” (Sedleigh-Denfield v O’Callaghan [1940] UKHL 2; [1940] AC 880 at 913 per Lord Wright). I do not think it was correct to speak of the respondent’s liability in terms of abatement, reasonable or otherwise. The respondent approved the development in the catchment area and constructed the drainage works. If it were liable for the nuisance, it would be liable because of that conduct, not because of continuance or adoption by failure to abate. Adopting the words in Bankstown City Council v Alamdo Holdings Pty Ltd, susceptibility to equitable relief would be in respect of what it had already done.

39 Prior to the decision in Bankstown City Council v Alamdo Holdings Pty Ltd, the respondent submitted that it was not liable for any nuisance quite apart from any question of adoption or one of the statutory defences. Referring to Marcic v Thames Water Utilities [2004] 2 AC 42, it said that it was necessary to ask whether liability in nuisance was compatible with the statutory regulation of its functions in respect of roads and drainage, and that it was not.

40 In Marcic v Thames Water Utilities the sewer system had been adequate when constructed, but had become inadequate with increased user as of right. Escaping sewage affected the plaintiff’s property. The defendant, a statutory undertaking, had inherited the sewer system. The defendant had a statutory to duty to provide and improve sewers, but the statutory duty was enforceable only by a particular regulator under statutory mandate outside the law of nuisance.

41 Lord Nicholls, with whom Lords Steyn, Hope and Scott agreed, Lord Hoffman’s speech to the same effect, said of the plaintiff’s argument for liability in nuisance -

“35. The difficulty I have with this line of argument is that it ignores the statutory limitations on the enforcement of sewerage undertakers’ drainage obligations. Since sewerage undertakers have no control over the volume of water entering their sewerage systems it would be surprising if Parliament intended that whenever sewer flooding occurs, every householder whose property has been affected can sue the appointed sewerage undertaken for an order that the company build more sewers or pay damages. On the contrary it is abundantly clear that one important purpose of the enforcement scheme in the 1991 Act is that individual householders should not be able to launch proceedings in respect of failure to build sufficient sewers. When flooding occurs the first enforcement step under the statute is that the director, as the regulator of the industry, will consider whether to make an enforcement order. He will look at the position of an individual householder but in the context of the wider considerations spelled out in the statute. Individual householders may bring proceedings in respect of inadequate drainage only when the undertaker has failed to comply with an enforcement order made by the Secretary of State or the director. The existence of a parallel common law right, whereby individual householders who suffer sewer flooding may themselves bring court proceedings when no enforcement order has been made, would set at nought the statutory scheme. It would effectively supplant the regulatory role the director was intended to discharge when questions of sewer flooding arise.

36. For this reason I consider there is no room in this case for a common law cause of action in nuisance as submitted by Mr Marcic and held by the Court of Appeal. On this point I agree with the decision of Judge Richard Havery.”

42 The respondent did not inherit a once adequate but now inadequate stormwater drainage system. It constructed a drainage system which discharged onto and at the boundary of the appellant’s land. Nor is there a statutory scheme akin to that in Marcic v Thames Water Utilities. A council’s functions under the Local Government Act 1993 include provision of facilities (s 24), and so the construction of drainage works, and it owns the works (s 59A). It must operate under management plans (ss 402-406). But there is no statutory scheme for holding a council to account for liability for a nuisance, or for a regulator, rather than the general law, to determine whether a remedy should be ordered against it. Section 733 of the Local Government Act 1993, later considered, clearly contemplates that there can be liability in nuisance – it provides protection against liability but conditioned on good faith. I do not think there is excluded liability in nuisance for the respondent’s conduct resulting in nuisances.

43 Following the decision of the High Court in Bankstown City Council v Alamdo Holdings Pty Ltd, the respondent submitted, relying on observations in that case, that it could not be liable for any nuisance unless it was negligent in its planning and construction of the drainage system. For the case in negligence Cripps AJ had said “that the work undertaken in the 70’s was necessary to be undertaken and was constructed with due care”, and it was submitted that, with the abandonment of the claim of breach of a duty of care, the appellant was left without negligence as a necessary element for its claim in nuisance.

44 In Bankstown City Council v Alamdo Holdings Pty Ltd at [16] Gleeson CJ and Gummow, Hayne and Callinan JJ noted that in the courts below attention had not been drawn to “a line of authority marshalled by the English Court of Appeal in Marcic v Thames Water Utilities Ltd”. Their Honours continued -

“This indicates that a body such as the Council is not, without negligence on its part, liable for a nuisance attributable to the exercise of, or failure to exercise, its statutory powers. In this Court, it had been remarked by Gavin Duffy and Starke JJ in Metropolitan Gas Co v Melbourne Corporation:

‘And though it was said in argument that the Company’s claim was founded upon either trespass or nuisance or negligence, still the liability of the Corporation must depend upon whether, in the exercise of its statutory powers, it has acted negligently, so as to do unnecessary damage to the company’.”

45 In footnotes their Honours identified p 988 of the report of Marcic v Thames Water Utilities Ltd, and referred also to Hawthorn Corporation v Kannuluik (1906) AC 105 “where the corporation was held to have been negligent in the planning of the original drains and in the construction from time to time of contributory channels”, and to “the discussion of the authorities by Owen J in Benning v Wong [1969] HCA 58; (1969) 122 CLR 249 at 324-337”.

46 Their Honours later said at [51], in considering the “good faith” defence, that something more than negligence was required for lack of good faith “because, unless negligence were present, there would be no liability for protection against which s 733(1) [of the Local Government Act 1993] was required by the Council”.

47 The marshalling of a line of authority in Marcic v Thames Water Utilities Ltd in the Court of Appeal (2002) QB 929 at 988 was -

“60 In Department of Transport v North West Water Authority [1984] AC 336 statutory authority was invoked by way of defence by a water undertaker in answer to a claim in nuisance in respect of damage caused by a burst water main. Webster J set out the following propositions, which were subsequently approved by the House of Lords, at p 344:

‘1. In the absence of negligence, a body is not liable for a nuisance which is attributable to the exercise by it of a duty imposed upon it by statute: see Hammond v Vestry of St Pancras 918740 LR 9 CP 316. 2. It is not liable in those circumstances even if by statute it is expressly made liable, or not exempted from liability, for nuisance: see Stretton’s Derby Brewery Co v Mayor of Derby [1894] 1 Ch 431, and Smeaton v Ilford Corpn [1954] Ch 450. 3. In the absence of negligence, a body is not liable for a nuisance which is attributable to the exercise by it of a power conferred by statute if, by statute, it is not expressly either made liable, or not exempted from liability, for nuisance: see Midwood & Co Ltd v Manchester Corpn [1905] 2 KB 597; Longhurst v Metropolitan Water Board [1948] 2 All ER 834; and Dunne v North Western Gas Board [1964] 2 QB 806. 4. A body is liable for a nuisance by it attributable to the exercise of a power conferred by statute, even without negligence, if by statute it is expressly either made liable, or not exempted from liability, for nuisance: see Charing Cross Electricity Supply Co v Hydraulic Power Co [1914] 3 KB 772. In these rules, references to absence of negligence are references to: ”the qualification, or condition, that the statutory powers are exercised without ‘negligence’ – that word being used in a special sense so as to require the undertaker, as a condition of obtaining immunity from action, to carry out the work and conduct the operation with all reasonable regard, and care for the interests of other persons ... ”: see Allen v Gulf Oil Refining Ltd [1980] UKHL 9; [1981] AC 1001, per Lord Wilberforce’.”

48 The explanation of negligence is important. In Allen v Gulf Oil Refining Ltd [1980] UKHL 9; (1981) AC 1001 a statute empowered the construction of an oil refinery. It was said at 1004 by Lord Wilberforce, with whom Lord Diplock agreed with additional observations, that the statutory power conferred immunity against proceedings for any nuisance which could be shown by the constructor of the refinery to be an inevitable result of erecting a refinery, “however carefully and with however great regard for the interest of adjoining occupiers it is sited, constructed and operated”, and that any nuisance beyond that immunity remained actionable. In that connection, his Lordship had said at 1011 -

“We are here in the well charted field of statutory authority. It is now well settled that where Parliament by express direction or by necessary implication has authorised the construction and use of an undertaking or works, that carries with it an authority to do what is authorised with immunity from any action based on nuisance. The right of action is taken away: Hammersmith and City Railway Co v Brand (1869) LR 4 HL 171, 215 per Lord Cairns. To this there is made the qualification, or condition, that the statutory powers are exercised without ‘negligence’ – that word here being used in a special sense so as to require the undertaker, as a condition of obtaining immunity from action, to carry out the work and conduct the operation with all reasonable regard and care for the interests of other persons: Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430, 455 per Lord Blackburn. It is within the same principle that immunity from action is withheld where the terms of the statute are permissive only, in which case the powers conferred must be exercised in strict conformity with private rights: Metropolitan Asylum District v Hill (1881) 6 App Cas 193.”

49 Absence of negligence in this sense is a reflection of inevitability. If exercise of the statutory power means that the interests of other persons are harmed despite all reasonable regard and care for those interests, there is no right of action. In Benning v Wong Owen J said at 325, after citing from Fullarton v North Melbourne Electric Tramway and Lighting Co Ltd (1916) 21 CLR 131 -

“I do not think it has ever been doubted, at least since Metropolitan Asylum District v Hill, that where a body purporting to act under statutory authority is sued for committing what is prima facie a nuisance, it is for it to show that its statutory authority could not be carried out without creating that nuisance and the judgments of the Chief Justice and of Barton J in Fullarton’s Case seem to me to do no more than follow that line of authority.”

50 There may be a close relationship on the facts between negligence in the sense of familiar failure to exercise reasonable care and skill and negligence in the sense explained by Lord Wilberforce, but the two should not be equated. In Rudd v Hornsby Shire Council (1975) 31 LGRA 120, with reference to Geddis v Proprietors of the Bann Reservoir (1878) 3 App Cas 430 and Provender Millers (Winchester) Ltd v Southampton County Council (1940) Ch 131 (Farwell J and Court of Appeal), Holland J spoke at 137 of the “special sense of meaning that there would be negligence if the nuisance could have been prevented by reasonable exercise of the powers given by the statute and if there was a failure to prevent it by neglecting to make such reasonable use of the powers”. His Honour suggested that the use of the word “negligence in the present context could be misleading, and that he would be pursuing the wrong question if he enquired whether the council carried out its drainage works without negligence. In Fleming, The Law of Torts, 9th ed, it is said at 489 that the test of inevitability, “though redolent of the negligence calculus and occasionally equated with it, is more stringent: the focus is on the feasibility of avoiding injury ... “.

51 The exposition in Marcic v Thames Water Utilities Ltd took up Lord Wilberforce’s explanation of negligence. Bankstown City Council v Alamdo Holdings Pty Ltd was concerned with a drainage canal which, with increased urbanisation, had become inadequate and occasionally overflowed. Whether its construction under the general powers conferred by the Local Government Act 1919 attracted immunity because at the time the council had acted with all reasonable regard and care for the interests of other persons could have been raised for decision in that case.

52 The passage from the judgement of Gavan Duffy and Starke JJ in Metropolitan Gas Co v Melbourne Corporation [1924] HCA 46; (1924) 35 CLR 186 cited by their Honours, appearing at 197, referred to unnecessary damage and continued, “The corporation had authority to construct its barrel drain and silt chamber, and its liability, if any, must be founded upon an excess of that authority (Kannuluik v Mayor etc of Hawthorn)”. On the facts, any negligence lay in the construction of a pipe so as to be susceptible to subsidence, and there was correspondence with negligence in the sense of failure to exercise reasonable care and skill.

53 The footnoted summation of Hawthorn Corporation v Kannuluik, that the corporation was held to have been negligent in the planning of the original drains and the construction from time to time of contributory channels, calls for respectful comment. Delivering the advice of the Privy Council, Lord Macnaghten noted at 108 that the trial judge relied principally on faulty construction in 1899 but that the decision of the Full Court “turned rather on the subsequent acts and conduct of the municipal authorities”. He said that their Lordships agreed with the Full Court, asked whether the municipal authorities had acted negligently so as to do unnecessary damage to Mr Kannuluik, and continued at 108-9 -

“As for negligence, it is difficult to imagine a more conspicuous example of negligence than is shewn by repeatedly pouring offensive stuff into a receptacle or channel proved over and over again to be insufficient to hold it and pass it on. The municipal authorities might just as well pour this stuff directly on the plaintiff's land. The damage to the plaintiff cannot be denied. It is nothing to the purpose, even if it be true, to say that the property in the plaintiff's hands and in the hands of his predecessors in title, was often flooded before the municipal authorities turned the watercourse into a public drain. Nor is it enough to prove that the work done in 1889 was sufficient at the time. It is insufficient now. It has been insufficient for some time past. The mischief grows as building increases, as new roads are made, new channels formed, and more and more of the surface becomes impervious to rainfall. It is not suggested that there is any real difficulty in remedying the mischief. Indeed, if the evidence of the surveyors called on behalf of the plaintiff may be trusted, the matter can be set right at a very trifling cost.

54 This was exercising the statutory power of care and management of the drains negligently by extending and using the drains without reasonable regard and care for Mr Kannuluik’s interests, when at trifling cost the mischief could be remedied.

55 I have mentioned the discussion by Owen J in Benning v Wong of one of the authorities. The other High Court authorities were Metropolitan Gas Co v Melbourne Corporation, Cox Bros (Aust) Ltd v Commissioner of Waterworks [1933] HCA 50; (1935) 50 CLR 108, Metropolitan Water, Sewerage and Drainage Board v OK Elliott Ltd [1934] HCA 57; (1934) 52 CLR 134, Railways Commissioner (SA) v Riggs [1951] HCA 25; (1951) 84 CLR 586 and Thompson v Bankstown Municipal Council (1953) 87 CLR 6l9. The cases other than Metropolitan Gas Co v Melbourne Corporation were concerned with the escape of water, sparks or electricity, and whether the escapes had been shown to be due to the negligence in construction of the water or electricity reticulation system or in the control of sparks. On the facts, it was sufficient to advert to negligence in the sense of failure to exercise reasonable care and skill.

56 Owen J then discussed Manchester Corporation v Farnworth (1930) AC 171, which he accepted as a case in which it had not been shown that the creation of the nuisance was an inevitable result of the authorised work by showing that “all reasonable precautions to avoid creating a nuisance” (at 334) had been taken, and Northwestern Utilities Ltd v London Guarantee and Accident Co Ltd (1936) AC 108, which he considered was a case of negligence in breach of a duty of care.

57 I do not understand the High Court to have departed from Lord Wilberforce’s explanation of negligence. The respondent’s submission should not be accepted. It is not correct to equate absence of breach of a duty of care with the absence of negligence material to the immunity from action of a body exercising a statutory power. The appellant was held not to have been owed a relevant duty of care, and Cripp’s AJ’s observation about construction of the work undertaken in the 1970s with due care was in passing and confined to the 1970s. Failure of the case that the respondent had breached the duty of care would in any event not have meant absence of negligence, in the sense explained above, conferring immunity from action for a nuisance. Still less did abandonment of the claim of breach of a duty of care mean absence of negligence whereby the respondent was not liable for any nuisance.

58 The respondent approved the development in the catchment area and carried out the drainage works in the exercise of powers conferred by the Local Government Act 1919 and its successor the Local Government Act 1993. Save so far as s 241 and later s 582A of the former Act, and s 733 of the latter Act succeeding to s 582A, did so, the legislation did not exempt the respondent from liability for nuisance resulting from its exercise of the powers. Putting those provisions aside for separate consideration, and subject to them, the respondent is liable unless, despite its acting with all reasonable regard and care for the interests of the appellant, or all reasonable care to avoid the creation of a nuisance, nuisance was an inevitable result on a “common sense appreciation ... of practical feasibility in view of situation and expense”: Manchester Corporation v Farnsworth at 183 per Lord Dunedin.

59 The negligence (or lack of inevitability) in the present case is in my view stark.

60 The respondent may have brought about a well designed and constructed roadway and piping system which effectively drained the development in the catchment area, viewed as a system which brought the stormwater to the discharge points on and at the boundary of the land. There may have been no negligence of the kind in question in Metropolitan Gas Co v Melbourne Corporation and like cases of escape of water. But the piping system ended with discharge of the collected water, and its pollutants, directly onto Mrs Coventry’s land or at the boundary of her land, with the consequences earlier described. There was unreasonable regard and care for her interests, and she was left to suffer the increased water affectation. It was akin to the circumstances in Dubois v District Council of Noarlunga (1985) 59 LGRA 53, where the council made a channel by which stormwater collected from roadways discharged onto the plaintiff’s land. Napier CJ said (at 60) that the drain was designed to turn the water off the road and over the plaintiff’s property, where it must necessarily find its way downhill, and described the council’s attitude as “one of callous indifference to the injury that it was inflicting on the plaintiff”. Piper J used even stronger language, saying (at 68) -

“Indeed, it seems to me that the method of draining the water off the road onto the plaintiff’s land without making provision for carrying it through the land was one which, on the face of it, was so unreasonable, so fraught with manifest danger to the plaintiff, that no council acting bona fide and rationally, having regard to its obligations to the plaintiff, would ever have undertaken it ... “

61 The respondent held out to Mrs Coventry that the amount of water coming onto her land would be limited, but did not fulfil the holding-out. The pumping station was not installed, pollution control basis were not constructed, and the 1993 pipeline was used contrary to the advice to Mrs Coventry and knowing that it was likely to bring extra flooding. After considerable time the thrust bore system was accepted in principle, but it was not implemented because of the estimated cost (of about $1.6 million) and ultimately because the respondent was not prepared to contribute any money at all or allow works on its land; the judge said, however, that the respondent’s general manager gave evidence to the effect that it could find money and carry out abatement work if given sufficient time, and he said that “if the Court orders us to do it we will do it”. There was signal disregard of the rights of the owner of the land, first Mrs Coventry and later the appellant. Subject to consideration of ss 241 and 733, the second issue should be decided in the appellant’s favour.

Statutory protection – s 241 of the Local Government Act 1919

62 Section 241 relevantly provided -

“Section 241 – Power to make drains on public or private land.

1. For the purpose of draining or protecting any public road the council may in or through any land of the Crown or of any public body or any person make open cleanse and keep open any ditch, gutter, tunnel, drain or watercourse, or lay any pipe in or through such land.

2. ...

3. If the property of the Crown or public body or person is damaged by the exercise of this power the Crown or public body or person, as the case may be, shall have a claim against the Council for the damage so sustained; “

63 The judge held that the respondent would not have been protected by s 241 in respect of the 1970s drainage works if Mrs Coventry had brought proceedings against it. His Honour did not specifically consider protection in the proceedings brought by the appellant, no doubt because it was thought that the protection could not be any greater. The reasons for the holding were -

“63 If I understand Council’s submission correctly, it acknowledges that Council’s exercise of power under s 241 is attended by a number of judicially imposed restrictions. Compensation (and hence immunity) relates only to work on the specific land on which the Council carries out the work (see Rudd’s case). It has been held that in the exercise of statutory powers (as opposed to statutory duties), if it was not practically feasible for the Council to perform the statutory function in any other way, the Council is entitled to invade the rights of the landowner by adding additional water on to the subject land subject to that person’s right to compensation (Provender Millers (Winchester) Limited v Southampton County Council [1940] 1 Ch 131). It has also been judicially recognised that if a nuisance is the inevitable consequence of the exercise by the Council of a statutory power, then it is implicitly made lawful by statute and no legal redress is available other than that which is given by the statute (Manchester Corporation v Farnworth (1930) AC 171).

64 In the present case, it is submitted on behalf of Council that Mrs Coventry may have had a claim for compensation consequent upon water entering her land in the 70’s, but that had to be a claim under s 241(3) of the Local Government Act 1993 which is now not only statute barred, but cannot be made in this Court. I am of the opinion that although the work that was undertaken in the 70’s could be described as reasonably necessary and properly performed, it did not have the inevitable consequence of damaging Mrs Coventry’s land because, as I have mentioned, the Council promised to install a pumping system, which it never did.

65 Mr Webster has also submitted that the Council does not have the protection of s 241 because that section has no application unless the work was actually undertaken on the subject land itself. This seems to me, in the circumstances of this case, to be an unduly technical appreciation of the facts. In fact, there were three pipes effectively discharging on to the subject land – one intrudes into the land and the other two are in very close vicinity to the boundary. Had Council otherwise made out its entitlement to protection pursuant to s 241, I would not have denied it that protection by application of Rudd’s case. That case dealt with very different facts. I have already referred to the circumstance that although Council in its defence had raised s 94 of the Roads Act as source of immunity, it abandoned that in the course of the proceedings. In my opinion the Council has not established that it would have had the protection of s 241 for the work undertaken in the 70’s had Mrs Coventry taken proceedings against it.”

64 The respondent submitted on appeal that the judge had found that the work undertaken in the 1970s was “necessary to be undertaken and constructed with due care” (at his [54]), and “could be described as reasonably necessary and properly performed” (at his [64]), and that -

“22. The structure of s 241 was to allow the owner of the land to bring a claim for compensation within a period of 6 years. This period had obviously long passed at the date of the hearing and by the date Melaleuca obtained an interest in the land. Any further claims arising from those works would have been barred by the Limitation Act 1969, s 14.”

65 There are many answers to the respondent’s reliance on s 241. If it gave protection by confining the landowner to a claim for compensation, it gave protection only in respect of the drainage work in the 1970s. Given that the nuisance lies in each interfering discharge of water, any protection may only have been while s 241 was in force. But the entitlement to compensation was only for damage sustained by making a drain, laying a pipe etcetera in the land, not for damage sustained when the respondent’s piping system discharged water onto or adjacent to the land: Rudd v Hornsby Shire Council. And the entitlement to compensation was not made the sole remedy of the landowner, excluding a claim to an injunction to restrain the commission of a nuisance, let alone excluding a claim to an injunction by a subsequent landowner.

66 In Rudd v Hornsby Shire Council the drainage works resulted in the discharge of water which then flowed over the plaintiff’s land. Holland J held that s 241(1) gave authority to establish drainage works in or passing through land, but not to discharge water from the works so as to affect detrimentally the natural flow of water across the land of a lower owner (at 135-6). His Honour considered also that s 241(3) related only to “the specific land in which the Council has carried out the works authorised by s 241(1)”, so that the lower owner would not have had a right to compensation (at 136), and that in any event it gave no authority for creation of a continuing nuisance and did not “lead to a conclusion that the statutory powers relied on by the Council authorised the creation or the continuance of the nuisance of which the plaintiff is complaining” (ibid).

67 For his holding as to s 241(1) Holland J referred to Aisbett v City of Camberwell [1933] HCA 36; (1933) 50 CLR 154. It is sufficient to refer to the judgment of Dixon J at 171, accepting the construction given to s 241 by Higgins J in Webster v Mosman Municipal Council [1926] HCA 11; (1926) 37 CLR 557 at 567 -

“I do not regard s 241 as justifying more than the trespass alleged of breaking and entering the plaintiff’s land and digging the soil and constructing or keeping open the drain. The section confers no right on the Council to send on the plaintiff’s land more water than that to which it was subject by nature. The right to make a drain is clear under s 241; to throw more water on the land than it naturally would bear is not a right conferred by that section;

68 Respectfully differing from Cripps AJ, I do not think the slight intrusion of one of the pipelines onto the land makes any difference. What is at stake is not any damage caused by the construction of the pipe with that intrusion, but the discharge from the pipelines. This limb of the third issue should be decided in favour of the appellant.

Statutory protection – s 733 of the Local Government Act 1993

69 Section 733 relevantly provided -

“733 Exemption from liability—flood liable land and land in coastal zone

(1) A council does not incur any liability in respect of:

(a) any advice furnished in good faith by the council relating to the likelihood of any land being flooded or the nature or extent of any such flooding, or

(b) anything done or omitted to be done in good faith by the council in so far as it relates to the likelihood of land being flooded or the nature or extent of any such flooding.

...

(3) Without limiting subsections (1) and (2), those subsections apply to:

(a) the preparation or making of an environmental planning instrument or development control plan, or the granting or refusal of consent to a development application, or the determination of an application for a complying development certificate, under the Environmental Planning and Assessment Act 1979, and

(b) (Repealed)

(c) the imposition of any condition in relation to an application referred to in paragraph (a), and

(d) advice furnished in a certificate under section 149 of the Environmental Planning and Assessment Act 1979, and

(e) the carrying out of flood mitigation works, and

(f) the carrying out of coastal management works, and

(g) any other thing done or omitted to be done in the exercise of a council’s functions under this or any other Act.

(4) Without limiting any other circumstances in which a council may have acted in good faith, a council is, unless the contrary is proved, taken to have acted in good faith for the purposes of this section if the advice was furnished, or the thing was done or omitted to be done, substantially in accordance with the principles contained in the relevant manual most recently notified under subsection (5) at that time.

(5) For the purposes of this section, the Minister for Planning may, from time to time, give notification in the Gazette of the publication of:

(a) a manual relating to the management of flood liable land, or

(b) a manual relating to the management of the coastline.

The notification must specify where and when copies of the manual may be inspected.

... ”

70 The judge followed, with doubts, existing authority to the effect that s 733 did not provide a defence to a claim to injunctive relief. It remained necessary for his Honour to consider the question of a defence to the claim for damages.

71 As to the claim for damages, the judge first said -

“72 Mr Webster has referred me to a number of decisions in which it has been held that the duty imposed on a council to demonstrate good faith calls for more than mere “honesty and ineptitude” (see Alamdo and Mid Density Development Pty Ltd v Rockdale Municipal Council [1993] FCA 408; (1993) 44 FCR 290). In the present case, it could be argued on Mrs Coventry’s behalf that Council, having caused the nuisance, came under an obligation to remedy it by undertaking works in abatement. It did not do this because it considered the works would cost too much. The evidence from the general manager is that, if ordered to undertake the thrust-bore works, the council could carry it out provided sufficient time were given to it. I would hold therefore that had there been litigation been between Mrs Coventry and the Council taken before the development application was dealt with the Council would not have made out its defence of “good faith” in its dealings with her.

72 His Honour went on, however, to say that the appellant was not in the same position, and found that the respondent “acted in ‘good faith’ in its dealings with Melaleuca”; for convenience, I repeat paragraphs earlier set out -

“76 Melaleuca’s claim in nuisance is the omission by the Council to abate the nuisance caused by its drainage works. I have already opined that had Mrs Coventry commenced proceedings in earlier 1999 and before she lodged her development application the Council would have lost any protection it otherwise may have had pursuant to s 733 because it had failed to demonstrate its “good faith” in its dealings with her.

77 But the same cannot be said of it in its dealings with Melaleuca. The development application was for “integrated development”. That meant Council was required, amongst other things, to consult with various government bodies to ensure that the development consent did not offend against environmental laws. The “thrust bore” system was not opposed by the Department Of Fisheries. The Council and Melaleuca entered into negotiations with the result that the Land and Environment Court gave development consent to the application subject to conditions agreed to by the parties. Accordingly I have come to the conclusion that the Council acted in “good faith” in its dealings with Melaleuca.

...

79 I have not overlooked the circumstance that theoretically, at least, Melaleuca, now the owner of the land, may not proceed with the development and that if it did not it would be unfair that it should bear the cost of drainage consequent upon the Seabreeze catchment area to the benefit of owners of property in that area and that a fairer way of dealing with the matter would be to make an order as proposed. However the evidence is that Melaleuca is actually developing the land. Melaleuca was perfectly aware of all the circumstances preceding the lodgement of development application. It took over the negotiations. It agreed to the condition being included in the develop consent that it undertake wick drainage work, part of which was necessary to meet the need generated by the development proposed.”

73 In Bankstown City Council v Alamdo Holdings Pty Ltd it was held that s 733 can provide a defence to a claim to injunctive relief. In that case the defendant had constructed and operated a drainage system from the 1960s onwards, which urbanisation made less adequate, and a drainage canal occasionally overflowed to flood the plaintiff’s land. It was said (at [34]) that “not incur any liability” in s 733(1) conferred protection from liability -

“ ... in the general sense of ‘amenability to claims, or (to describe it from the opposite point of view) the range of the claims to the possibility of which the general principles of the law expose [a council]’ in respect of any advice within par (a), or anything done or omitted to be done within par (b).”

74 Subjection to a claim to injunctive relief, therefore, was incurring liability in respect of the defendant’s past conduct, conduct in consequence of which the relief would be given. So the defendant’s involvement in the construction and operation of the drainage system and its role in the process of urbanisation fell within what was done or omitted to be done. The good faith criterion applied to that conduct. A particular feature was that the defendant had abandoned investigation of remedial steps pending the outcome of the litigation, as to which it was said in the joint judgment -

“56. The emphasis upon the significance to the Council of the pending litigation advanced its case for good faith, not the case of Alamdo to the contrary. It must be remembered that, as Mr Morrison explained in his oral evidence in chief, the established procedures of the Council with respect to proposals for infrastructure expenditure involved consideration of the relative priority of all projects. Where, depending upon the outcome of litigation which the Council was defending, the Council might have no responsibility in law to make an expenditure, prudence would support deferral. Section 733(1) protects such an approach as an exercise in good faith of the Council's powers.”

75 It was accepted in the High Court that the defendant had the burden of establishing that it acted in good faith. With reference to Mid Density Developments Pty Ltd v Rockdale Municipal Council [1993] FCA 408; (1993) 44 FCR 290, there was mention of examples in the law where good faith was used “as a criterion requiring some state of mind or knowledge other than the personal honesty or absence of malice of the relevant actor”, but it was said (at [50]) -

“Moreover, given the range of advice, acts and omissions to which s 733(1) may apply, what is required for something to be done or omitted in good faith may vary from one case to the next. This makes it unwise, if not impossible, to place a definitive gloss upon the words of the statute.”

76 Taking up the line of authority marshalled in Marcic v Thames Water Utilities Ltd in the Court of Appeal, it was said (at [51]) that the defendant’s evidentiary burden was lighter because -

“ ... given that, without negligence on its part in the exercise or failure to exercise its statutory powers, the Council was not liable in nuisance. True enough that point was not taken as an answer to liability, but it cannot properly be shut out of consideration of the content of the requirement of good faith in this case. Here, something more than negligence is necessary because, unless negligence were present, there would be no liability for protection against which s 733(1) was required by the Council.”

77 The appellant submitted that s 733 did not avail the respondent because the respondent’s conduct did not relate to likelihood of the land being flooded or the nature and extent of flooding. It said that the discharge of water increased the level and duration of the ponding in the wetland, but that the ponding was not a flood. A rather passing submission to like effect had been made to Cripps AJ, as to which his Honour said only that he did not think it should be accepted.

78 A narrow view of flooding for the purposes of s 733(1) has not been taken. In Bennett v Water Administration Ministerial Corporation (6 June 1991, unreported) Rolfe J held that the predecessor to s 773, s 582A of the Local Government Act 1919, was not confined to a council’s conduct when carrying out flood mitigation work. His Honour was concerned with irrigation channels, and considered that “[t]he bringing, by artificial means, of water on to land, constitutes ... the likelihood of land being flooded as a result of that which is done or not done”, such as by a failed bank or an unexpected influx of water overtopping the banks of the channels. It was not disputed that the overflowing of a drainage canal brought a flood in Bankstown City Council v Alamdo Holdings Pty Ltd, or that work raising the level of a road so that stormwater went onto land related to the likelihood of the land being flooded in Attrill v Richmond River Shire Council.

79 In an insurance context, Kirby P has regarded a flood as “a great flowing or overflowing of water, especially over land usually not submerged” or “any great outpouring or stream”: Manufacturer’s Mutual Insurance Ltd v Stargift Pty Ltd (1985) 2 ANZ Ins Cas 60-615 at 78,763-4. His Honour considered that the corresponding verb had a wider ambit, so that a factory with an inch of water was flooded although the damage to it was not caused by flood. In Young v Sun Alliance & London Insurance Ltd (1976) 3 All ER 561 to which his Honour referred “flood” appeared with “storm” and “tempest”, leading to the meaning of an abnormal occurrence going beyond escape of water and also more than conveyed by “flooded” or “flooding”. In Spika Trading Pty Ltd v Royal Insurance Australia Ltd (1985) 3 ANZ Ins Cas 60-663 Rogers J considered that “flood” took its colour from its setting in “by the sea, tidal wave, high water and flood”, and while accepting that an outrush of water from a broken pipe or a stormwater channel could be said to be a flood did not think that fell within the word in the policy.

80 Section 733(4) and (5) refer to a manual relating to the management of flood liable land. A manual has been gazetted. Its complex definitions include in a flood “inundation by local runoff rather than overbank discharge from a stream, river, estuary, lake or dam”, when associated with “major drainage works”; these words do not include “smaller scale problems in urban areas” but do include works controlling runoff over 0.3m in depth. It does not follow from the references to the manual that flooding for the purposes of s 733(1) was the kind of flooding which might occur on a flood plain or was the subject of the manual, and the manual’s scope is in any event not inconsiderable. A council can and often will act in relation to quite confined areas of water affectation – as in Attrill v Richmond River Shire Council. Much municipal drainage work will be for the control of deleterious water collection and flow, perhaps quite small in extent. There is no reason to distinguish in s 733(1) between great outpourings of water and lesser flows; the council is to have immunity, if it acts in good faith, in relation to all circumstances reasonably described as land being flooded or flooding.

81 The relevant land is not confined to the appellant’s land. The drainage works were undertaken with the development of Seabreeze Estate, and no doubt more generally, in order to collect and carry away water which fell (or perhaps was brought by reticulation) within the catchment area. While there was no specific evidence, it can readily be accepted that the construction of roads could lead to the water collecting and flowing in the catchment area so as to deserve the description of a flood. No doubt the drainage works were a control on the prospect of flooding, and in my view related to the likelihood of flooding in the catchment area or the nature or extent of any such flooding. It is not necessary to decide whether the flow of water over the appellant’s land and the increased ponding should be described as flooding, although I consider that water flowing over the land and producing ponding covering a greater area than previously and for a longer period would merit that description.

82 It is thus necessary to consider whether the respondent established that it acted in good faith.

83 The respondent’s acts and omissions in the 1970s and 1990s created the state of affairs resulting in the nuisance. I have said, the piping system ended with its discharge of the collected water, and its pollutants, directly onto Mrs Coventry’s land or at the boundary of her land. The pumping station was not installed, pollution control basins were not constructed, and the commitment to contain peak flood levels was not honoured. The respondent’s attitude was that it had a right to put the road drainage onto the land. When the appellant came on the scene, initial acceptance of the thrust-bore system and apparent preparedness to implement it turned to disinterest in any contribution, in money or use of land, to alleviation of the acknowledged water affectation, as a practical matter (and no doubt intended) leaving it to the appellant to deal with the affectation. The language used in Dubois v District Council of Noarlunga should be recalled; in my opinion, it is applicable.

84 The respondent had budgetary constraints and priorities. They were not shown to have moulded the termination of one pipe on the land and the other pipes at its boundary. Where the respondent created the state of affairs resulting in nuisance and in the circumstances I have outlined, its omission to remedy the state of affairs can not readily provide justification on good faith grounds because its funds are spent elsewhere; in this respect, the circumstances are to be distinguished from those of a drainage system which becomes inadequate over time, as in Bankstown City Council v Alamdo Holdings Pty Ltd. In the result, rather than a shared cost of about $1.6 million for the thrust-bore system, the wick drainage system involved a first stage cost of about $2.5 million and a second stage cost of about $5 million, all borne by the appellant.

85 To repeat, there was a signal disregard of the rights of the owner of the land, first Mrs Coventry and later the appellant, and I do not think the respondent’s acts and omissions have been shown to have been in good faith for the purposes of s 733. This limb of the third issue should be decided in favour of the appellants.

Relief and discretion

86 When confining its claim on appeal to injunctive relief, the appellant sought the orders -

“(a) An injunction restraining the Respondent from continuing to discharge upon its land stormwater in excess of the natural flow that would flow upon the land and to take such measures as may be necessary to preclude the coming onto the land of stormwater containing high levels of nutrients and waste materials.

(b) An order that the injunction set out in paragraph 1 [sic: (a)] be stayed for six months pending the implementation of a drainage system by Council for the Seabreeze Estate which enables the stormwater to be controlled within the catchment or disposed of by a thrust bore drainage line or gravity drainage line, to the next catchment in Port Stephens.”

87 Council for the appellant then said that it was agreed in respect of (b) that the time should be 18 months, saying that in discussion between counsel “they have indicated they would need 18 months to carry out the work and we accept that”. Counsel for the respondent said nothing against the making of orders in those terms if the appeal was successful.

88 The respondent pleaded in its defence that “the Court would not, in the exercise of its discretion, grant equitable relief in that ... “, then setting out a number of matters in paras (a) – (g). Not all appeared to go to the exercise of the discretion, but they included that the appellant acquired its interest in the land with full knowledge of the drainage and stormwater affectation and that “[a]t the date of institution of the proceedings [the appellant] was not suffering and was unlikely to suffer any relevant damage to its interest in the land”. They did not include that damages were an adequate remedy.

89 The judge did not come to the exercise of a discretion. The respondent did not submit on appeal that, if the appellant made good its reliance on nuisance, its claim to injunctive relief should be refused in the exercise of the Court’s discretion. It was not submitted that damages were an adequate remedy, even in the light of the High Court’s aversion to that matter in Bankstown City Council v Alamdo Holdings Pty Ltd at [8] – [11]; and none of the pleaded matters was taken up in relation to an exercise of discretion. It may or may not have been within the pleading that the agreed installation of the wick drainage system went to discretion, but it was deployed only for the submission that there was no nuisance.

90 We were informed that the first stage of the wick drainage system had been constructed. The first stage was installation of wicks for building stages 1 and 2, the second stage was installation of wicks for building stages 3 and 4. One may wonder why an order should be made requiring the respondent to spend a lot of money to prevent stormwater entering the land, when the appellant has spent in the order of $2.5 million towards removing the water from the land once it has entered. Perhaps the answer lies in the further $5 million to be spent; perhaps in restraining the flow of water over the land; or perhaps in the height of ponding at which the wick drainage system reduces the water affectation. These matters were not explored. Accordingly, they can not fairly be taken into account; the appellant has made out the basis for relief against future nuisances, and the discretion to grant or withhold relief should not be exercised against the appellant.

91 Subject to formal changes, in the absence of contest orders should be made in the terms earlier described.

Orders

92 I propose the orders -

1. Appeal allowed.

2. Set aside the orders of Cripps AJ made on 19 May 2004.

3. Make orders -

(a) granting an injunction restraining the respondent from continuing to discharge upon the appellant’s land stormwater in excess of the natural flow that would flow upon the land;

(b) that the respondent take such measures as may be necessary to preclude the coming onto the land of stormwater containing high levels of nutrients and waster materials; and

(c) that the injunction set out in paragraphs (a) and (b) be stayed for eighteen months pending the implementation of a drainage system by the respondent for the Seabreeze Estate which enables the stormwater to be controlled within the catchment or disposed of by a thrust bore drainage line or gravity drainage line, to the next catchment in Port Stephens.

4. Order that the respondent pay the appellant’s costs of the trial and the appeal.

5. Order that the respondent have a certificate under the Suitors Fund Act if otherwise qualified.

93 McCOLL JA: I agree with Giles JA.

94 HUNT AJA: I agree with Giles JA.

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LAST UPDATED: 01/03/2006