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This was an appeal from the decision of Beech-Jones J in the Queensland floods class action. In November 2019, his Honour found that the defendants were vicariously liable for losses caused by the negligence of flood engineers. 

Both Seqwater and SunWater appealed that judgment. However, SunWater, the plaintiff (Rodriguez) and the State of Queensland agreed to a proposed settlement which was approved by Adamson J on 4 May 2021. That left Seqwater as the only appellant.

Issues on Appeal

The Court began its consideration of the issues by stating (at [7]) that while Seqwater had initially challenged findings by the primary judge as to its duty of care, those challenges were abandoned shortly before the hearing. In this context, the issues in dispute on the appeal primarily focused on the applicable standard of care and the findings as to breach of duty.

Leave to Appeal

The Court noted (at [14]) that while “the issues raised undoubtedly warrant a grant of leave to appeal … it is desirable to explain why leave may be required”. This explanation was required firstly because leave may have been required due to s 101(2)(e) of the Supreme Court Act 1970 (NSW) (SCA), which provides that an appeal shall not lie from an interlocutory judgment of the Court in a Division except by leave. The Court also held that s 103 of the SCA required leave for an appeal of a decision of a question decided separately from any other question or issue except where the answers to the separate questions result in the proceedings being finally determined (Plymouth Brethren Christian Church v The Age Company Ltd (2018) 97 NSWLR 739; [2018] NSWCA 95). 

The Court observed that on one view the question falls to be resolved by s 103 and that Plymouth Brethren indicates that the appeal would lie as of right where the answers did give rise to a final order. However, the Court noted that this issue was complicated by the present matter involving a class action and the part of the Civil Procedure Act 2005 (NSW) (CPA) dealing with them only provided for appeals by the representative party. It concluded (at [20]) that, because the issues formed a common substratum between the plaintiff’s claim, which had been finally resolved, and the representative claims, which had not, a grant of leave was required to address the answers to the common questions.

Standard of Care 

The Court held (at [12]) that “at the forefront of Seqwater’s case on appeal was the legal submission that the standard of care to be applied was not that of reasonable care under s 9 of the Civil Liability Act 2003 (Qld) [QLD CLA], but rather the attenuated standard required of public authorities under s 36 of the [QLD CLA]’’. The first element of the Court’s consideration of this issue was to uphold (at [69]) the primary judge’s finding that Hamcor Pty Ltd v Queensland [2014] QSC 224 was wrongly decided and therefore that “s 36 should not be read down as applicable only to a proceeding in which the cause of action is a breach of statutory duty”. It then turned to the two propositions on which the primary judge’s determination that s 36 of the QLD CLA was nonetheless not engaged relied. The first of these was that s 36 did not apply to any of Seqwater’s statutory functions because the conferral of such functions under s 9(2) of the South East Queensland Water (Restructuring) Act 2007 (Qld) (Restructuring Act) “was conditioned on the existence of an operational or strategic plan … (and) no such plan was tendered” (primary judgment at [14]). 

The Court held (at [77]) that the non-engagement of s 9(2) of the Restructuring Act did not necessarily provide a basis for excluding the operation of s 36 of the QLD CLA to Seqwater as a body exercising functions because of its statutory creation as the owner of the dam (at [120]). It also affirmed the primary judge’s statement that Seqwater was a public authority for the purpose of that section. However, its key finding on this issue (at [81]) was that “to construe s 9(2) as not conferring any function on Seqwater unless (there was an) operational (or) strategic (plan), would be to subvert the statutory scheme”. This finding and the fact that its consequence would run contrary to the “established principles of statutory interpretation set out by Project Blue Sky” guided the Court’s conclusion (at [82]) that “it is not possible to read the reference to a ‘function’ in s 36 as not encompassing the flood mitigation activities undertaken in January 2011”.

The primary judge’s second reason for rejecting Seqwater’s reliance on the attenuated standard of care of public authorities (primary judgment at [205]) was that s 36(2) of the QLD CLA, as a provision that was directed to “whether a public authority’s acts or omissions were ‘wrongful’ … (had no application) in a case of ‘true vicarious liability’”. The Court rejected this interpretation of s 36(2) that “the negligence of the flood engineer would be attributed to the employer (Seqwater), so as to render Seqwater liable, but that s 36(2) would not be engaged because the act or omission of the flood engineer was not the act or omission of Seqwater” on the basis of the alleged circularity of its reasoning and inconsistency with principles regarding vicarious liability (at [99]-[100]). It instead found (at [101]) that Seqwater would be liable according to general law principles for the negligence of professional flood engineers it employed to carry out its functions of flood prevention and floodwater control. 

The Court stated (at [137]) that the standard imposed by s 36(2) should not be paraphrased or reformulated by reference to the Wednesdbury standard whose language it adopts (at [137]). It held (at [134]) that s 36(2) requires the court to “be satisfied that the authority, acting on its understanding of the relevant circumstances and applicable law, adopted an approach to the exercise of its functions which fell outside the range of reasonably available options”.

Breach of Duty

The Court then turned (at [143]) to a reconsideration of the findings of breach of duty in the context that the wrong standard of care had been applied. The Court observed (at [145]) that the respondent’s case in negligence had resolved itself in two parts, the first of which was the assumption that the engineers were negligent in terminating the December 2010 Flood Event. The primary judge found that the course captured by the respondent’s expert Dr Christensen ‘Simulation C’ of keeping the flood operations centre open was available in conformity with the Flood Operations Manual. The second element of the case was based on Dr Christensen’s simulations F and H, which assumed that the engineers were not negligent in closing down the flood operations centre. 

The Court held (at [153]) that re-evaluating this case required recourse to the Flood Operations Manual, which both parties accepted governed the standard of conduct required of the engineers. The first ground of appeal that it considered in examining the proper construction of the Manual and how it applied at various times was the ‘no release’ assumption. According to the Court (at [237]), this assumption related to “whether the references to maximum storage levels in sections 8.3 and 8.4, the determination of ‘likely levels’ in the flow chart and the ‘predicted’ levels in the ‘conditions’ of each strategy were determined by assuming no releases from the dam were made”.

The Court’s finding (at [263]) that “both text and purpose point against the no release assumption” turned firstly on its determination that “there is nothing expressly [or impliedly in the Manual’s text] requiring future outflows to be ignored when determining the maximum height and storage level”. The second relevant determination (at [277]-[278]) was that the “no release assumption inevitably pushes the flood engineers towards higher strategies … [for example towards] a strategy which has as its primary consideration the prevention or [sic] urban inundation when there is no risk of urban inundation”. Finally, the contention with regards to circularity was disposed of by the Court by reference to the principle (at [279]) that “it was common ground that the ‘Flood Operations Strategies’ … were to be operated iteratively … It is of the essence of an iterative procedure that it is circular or self-referential”.

The Court rejected ground 6 relating to weather forecasts, ground 9 which attacked Dr Christensen’s Simulation F, grounds 16 to 18 which attacked Simulation C and grounds 19 and 20 of the appeal which alleged that variations to the simulations took Simulation F and H outside of the respondent’s pleaded case. However, it upheld wholly, or in the alternative if there was a breach in ending the December flood event on 2 January, grounds 10, 12, 13, 14, 15, 22, 23(a), 23(b), 23(c), 24, 25(a) and 25(b) because of the attenuated standard of care imposed by s 36 of the QLD CLA. The effect of these findings was firstly the Court’s determination (at [455]) that the flood engineers had not breached their duties in having terminated the flood operations on 2 January and therefore that none of the other breaches on 3, 4 and 5 January related to Simulation C were engaged. The second was that, in the absence of the no release assumption, there were no breaches on the part of the flood engineers in failing to make sufficient releases on 6, 7, 8, 9 and 10 January. This second import of the findings also included the Court’s rejection of the respondent’s notice of contention that the flood engineers’ failures to make releases submerging downstream bridges but not so as to inundate Ipswich and Brisbane was so unreasonable that no dam operator could properly consider them to be a reasonable exercise of a flood mitigation function. 

Causation 

The Court noted (at [691]) that the only ground relied upon in this regard “alleged that the judge had erred in finding that the breaches of each of the flood engineers were sufficient to account for the occurrence of the particular harm suffered by the first respondent and other selected group members, again based on the difference in outflows between the actual events and simulation C". Seqwater’s challenge revolved around the inapplicability of the reasoning in Strong v Woolworths Ltd (2012) 246 CLR 182; [2012] HCA 5 to a situation which involved sequential breaches by different parties. The court rejected this approach (at [697]) because of the artificiality of dividing a single course of conduct into discrete temporal segments and the need in this case to identify a time at which, or period over which, the engineers breached the appropriate standard of care. 

Apportionment

Seqwater’s challenge regarding apportionment was that the primary judge had given insufficient weight to the greater responsibility of Mr Ayre as senior flood engineer. The Court held (at [709]) that because Seqwater had been held not to be in breach, it was not appropriate to address the question of apportionment. However, it made a number of comments in obiter that cast doubt over whether the defendants were in fact concurrent wrongdoers within the meaning of s 30(1) of the QLD CLA and therefore whether apportionment was appropriate or even available. 

These comments turned on the distinction the Court drew between that statute and the Civil Liability Act 2002 (NSW) (NSW CLA). The first of these differences was the absence in the NSW CLA of the provision made by s 28(4) of the QLD CLA that claims where, by statute, liability is ‘joint and several’ are not apportionable. The second was the fact that the QLD CLA did not include the words “or jointly” that appeared in the equivalent of s 30(1) of the NSW CLA, and was expressed only to apply to two or more persons whose acts or omissions caused “independently of each other” the relevant damage. 

Damages for Costs of Cleaning by Volunteers

The Court considered (at [712]) whether it should address Seqwater’s challenge concerning the calculation of the reasonable commercial cost of cleaning and reinstating damaged property following the flood by reference to the principles of judicial economy articulated in Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49. This involved balancing the fact that this was an issue of principle with the countervailing considerations that it was entirely discrete, did not have any practical utility and is not easily defined in terms which will readily resolve contingent factual disputes.

The issues related to the basis on which cleaning services were to be valued. The Court found (at [729]) that “the legal basis upon which such services are recoverable may affect the appropriate method of valuation” and the uncertainty in this regard was a further reason for the Court not to address this question.

Pre-Judgment Interest on Damages

The Court also considered the Boensch v Pascoe principles in relation to this issue, but found that the issues and context were different from those with regard to the previous ground. The first issue was whether the primary judge erred in not awarding interest on damages for cleaning of fixtures and fittings, undertaken by volunteers, but calculated by reference to the commercial cost of the labour. The respondent’s appeal of this decision was rejected (at [750]) on the basis that it had not established that Screenco Pty Ltd v R L Dew Pty Ltd (2003) 58 NSWLR 720; [2003] NSWCA 319 had been wrongly decided and thus that the primary judge could not be faulted for following it. Screenco had relevantly decided that a company that had purchased a screen from its parent company without making any payment was not entitled to be awarded interest because money had not been paid and there was no interest liability. The second issue regarded Seqwater’s appeal about whether the amount of funds received by class members from the Premier’s Disaster Relief Fund should be taken into account in the calculation of interest payable on each class member’s damages. The Court rejected this ground on the basis that the approach of the primary judge accorded with current practice. 

Costs of Trial – Apportionment

The final ground of appeal that was considered was Seqwater’s challenge to the apportionment of their joint and several liability to pay the plaintiff’s costs. The primary judge had apportioned liability for costs among the defendants in the proportions for which they had been found liable in damages and proceeded on the basis that the source of power was either s 7 of the Law Reform Act 1995 (Qld) or s 98 of the CPA. 

The Court held that the Law Reform Act was inapplicable because the question was not determined by the law of Queensland in a context where the closest connection between the costs order and any Australian jurisdiction was with New South Wales. The Court found in this regard (at [774]) that the primary judge had relied on an additional source of power which was not available, but that that had not vitiated the exercise of his discretion. It also considered Seqwater’s further challenge that the appropriate starting point in the assessment of the defendant’s respective responsibilities for the plaintiff’s incurring of legal costs should not be the apportionment of liability for damages between the three defendants. It held that this approach did not disclose appealable error.

The respondent has filed an application for special leave to appeal to the High Court.

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

New South Wales Court of Appeal, Basten, Meagher and Leeming JJA,
8 September 2021

Appellant’s Solicitors: King & Wood Mallesons;
Respondent’s Solicitors: Maurice Blackburn;
Respondent’s Funder: Omni Bridgeway

Austlii Link: Accessible here

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