Written by Diane-Maree Rauch
The New South Wales Supreme Court decision in The Owners – Strata Plan No 16460 v Hunter Water Corporation [2025] NSWSC 1029 clarifies the distinction between nuisance and negligence claims against public authorities in New South Wales.
Background
In September 2017, a Hunter Water Corporation (HWC) water main running above a townhouse complex in Elermore Vale, Newcastle, suddenly burst. The day before, HWC had excavated the soil surrounding the main and left it exposed overnight. When the pipe failed, water cascaded downhill into the complex, flooding and damaging 119 properties. This was not the first such incident: in 2010, the same main had burst about 90 metres away, causing similar flooding.
The owners’ corporation and lot owners sued HWC in nuisance and negligence, seeking damages for damage to their properties, as well as compensation for diminished property values due to the stigma of flooding and for increased insurance premiums. While HWC accepted ownership of the main and that flooding occurred, it denied liability.
Court’s Decision
Section 42 of the Civil Liability Act 2002 (NSW) (CLA) requires courts to take into account an authority’s limited resources, competing responsibilities, and adherence to general procedures when assessing breach of duty of care. Section 43A of the CLA provides authorities with qualified immunity for actions taken under special statutory powers, unless the action or omission was so unreasonable that no authority could properly regard it as acceptable. Relying on Transport for NSW v Hunt Leather Pty Ltd; Hunt Leather Pty Ltd v Transport for NSW, the Court confirmed that sections 42 and 43A of the CLA do not extend to nuisance claims.
Recognising that a lawful activity, such as constructing a road, may nonetheless give rise to a nuisance, for example, through noise disturbance, the Court examined the claim from the standpoint of works carried out by a public authority under statutory authority. It emphasised the need to distinguish between statutory provisions that impose a duty and those that merely confer a discretion. Where legislation requires an authority to undertake an activity, such as repairing a pothole, any nuisance arising from that work will generally be excused provided it is performed with reasonable care. By contrast, where legislation merely permits an activity, such as upgrading a footpath, the authority will remain liable for any nuisance caused unless it can demonstrate that the authorised activity could not have been undertaken without creating the nuisance.
In this case, because HWC’s statutory power to undertake the works was permissive rather than obligatory, the Court held that the resulting harm was avoidable, noting that reasonable measures, such as turning off, diverting, or reducing the water flow, could have prevented the flooding. Damages were therefore awarded for property damage. The claim for diminution in property values was, however, rejected, with expert evidence establishing that any stigma associated with flooding would diminish within five to seven years. The Court also found insufficient evidence linking higher insurance premiums to the flooding, although it left open the possibility that such claims could succeed in principle.
On negligence, the Court accepted that precautions could have prevented the burst but held HWC was protected by section 43A of the CLA. While other utilities, such as Sydney Water or Queensland counterparts, may have adopted more proactive approaches to maintenance, the Court noted there is a spectrum of reasonable practices available to public authorities. HWC’s “fix on failure” approach sat at one end of that spectrum but was not outside it, and so negligence was not established.
Takeaways
The decision highlights the different thresholds that apply to nuisance and negligence claims against public authorities.
For nuisance, the statutory protections under the CLA do not apply, and an authority may be liable where the harm was avoidable and the statutory authority to undertake the works was granted on a discretionary rather than mandatory basis.
For negligence, however, section 43A imposes a much higher standard: unless conduct is so unreasonable that no authority could consider it proper, liability will not attach. This indicates that, in the context of negligence, a “fix on failure” approach may still fall within the spectrum of reasonable practices, even where a more proactive response might have been adopted by other utilities.
Please reach out to Diane-Maree Rauch on 03 9947 4529 or any member of the Ligeti Partners Property team on 03 9947 4500 if you would like to discuss further.
