Liability in nuisance derailed

The recent New South Wales Court of Appeal decision in Transport for NSW v Hunt Leather Pty Ltd [2024] NSWCA 227 clarifies the law of private nuisance. In particular, the case demonstrates the heavy factual onus for claimants to establish a “substantial and unreasonable interference” against a statutory authority exercising a statutory power.

Background

The respondents (the plaintiffs at first instance) were proprietors of businesses in the Sydney CBD who brought representative proceedings against Transport for NSW (TfNSW) under Part 10 of the Civil Procedure Act 2005 (NSW), seeking, among other things, damages against TfNSW in private nuisance arising from delays in the construction programme for the Sydney Light Rail. The business premises of the respondents were located along the construction route. The plaintiffs alleged that the construction works associated with the project interfered with their businesses through the generation of noise, dust, vibrations and impediments to access.

Construction across the various “fee zones” (ie. stages of construction activities) took significantly longer than anticipated in the “Initial Delivery Program” (IDP), owing to difficulties encountered by the discovery of numerous underground utilities which were not anticipated at the time of development of the IDP.

The judgment at trial

The trial judge held that delays which exceeded the construction periods stated under the IDP, specifically the extended occupation of fee zones, amounted to an unreasonable interference with the plaintiffs’ enjoyment of their properties and TfNSW was accordingly held liable to the plaintiffs in private nuisance.

The trial judge rejected TfNSW’s submission that it had exercised reasonable care in its planning of the works, such that the interference with the plaintiffs’ land was not unreasonable.

Decision of Court of Appeal

The Court of Appeal found in favour of TfNSW and concluded that an action in nuisance was not made out, on the basis that the respondents had failed to establish that the interference to their enjoyment of their land amounted to an unreasonable interference.

Contrary to the finding at trial, the Court of Appeal held that the IDP could not be regarded as a “reasonable estimate” of the time for construction in any particular fee zone, because the IDP did not make allowances for contingencies such as inclement weather or the discovery of underground utilities. Accordingly, the timeframes nominated by the IDP were not a metric against which the substance and reasonableness of the interference suffered by the respondents ought to be measured.

The Court concluded that the respondents had failed to establish:

• whether it would have been possible for TfNSW to obtain complete knowledge of the underground utilities along the construction route prior to construction works taking place (given that there were underground utilities located every few metres along the construction route);
• if it was possible to obtain such knowledge, how long the investigations to acquire that knowledge would have taken; and
• if it was possible to obtain such knowledge, whether those investigations too would have amounted to a substantial interference (insofar as those investigations would have involved digging along the construction route to determine the location of utilities).

The Court then went further to find that, even if TfNSW had complete knowledge of the presence of the underground utilities and the completion of construction by the timeframes nominated by the IDP was reasonable, it would not necessarily follow that there would be an actionable claim in nuisance for any period of time that the construction occupied a fee zone beyond what was provided for in the IDP, given the complexity of the project and interdependency of many of the construction activities to be undertaken. The Court said that it “cannot be the law that construction authorised by statute becomes actionable nuisance if it takes a month or two months or three months longer than scheduled”.

In those circumstances, the Court of Appeal concluded that the respondents had failed to establish that the interference with their land was unreasonable.

The Court of Appeal did not otherwise disturb the findings at trial, but provided some important confirmations in respect of the operation of the law of private nuisance.

First, the Court rejected TfNSW’s submission that, because construction of the Sydney Light Rail was a legitimate activity, performed in order to establish a light rail service, there could be no nuisance if TfNSW could demonstrate that it used reasonable care in carrying out construction. The Court held that TfNSW had failed to establish that it had used reasonable care and that “reasonableness” is to be assessed by reference to the nature of the interference, rather than the reasonableness of a defendant’s conduct.

Second, the Court upheld the finding at trial that TfNSW had failed to prove that the interference caused to the respondents’ use of their land was an “inevitable result” of TfNSW’s carrying out the light rail works.

Third, the Court held that a litigation funding fee incurred by two of the respondents was voluntarily incurred and did not amount to foreseeable loss in an action for private nuisance.

Key takeaways

Transport for NSW v Hunt Leather Pty Ltd [2024] NSWCA 227 is a significant judgment in the private nuisance law landscape.

In particular, for statutory authorities carrying out construction works, the decision:

• Emphasises the importance of careful planning and programming, which is to be informed by appropriate pre-construction investigations. While the Court of Appeal ultimately held that the respondents had not established that the time for construction could have been reduced by TfNSW undertaking pre-construction utilities investigations, the Court may have reached a different finding if the respondents were able to establish that steps could have been reasonably taken by TfNSW to identify the underground utilities and avoid material construction delays.
• Confirms that the taking of “reasonable care” by a statutory authority is not, in and of itself, sufficient for an authority to avoid liability in nuisance, in circumstances where the interference itself is unreasonable.
• Confirms that statutory authorities may rely on a defence that the interference caused by works was inevitable, but that the authority will bear a heavy factual onus in proving that inevitability.

For parties considering bringing a claim against a statutory authority for interference caused by construction works, the decision provides clear guidance on the high bar to be met for claimants to prove that the use and enjoyment of their land has been substantially and unreasonably interfered with. In this case, the respondents were effectively required to undertake a detailed analysis of the sufficiency of the authority’s planning and programming, including the extent to which it appropriately factored in pre-construction investigations, and satisfy the Court that a counterfactual programme was available and would not have resulted in an unreasonable interference. In similar claims, plaintiffs may need to consider seeking preliminary discovery to enable a meaningful assessment of the sufficiency of pre-construction investigations and whether the causes of material delay might have been avoided by appropriate planning.