Transport for NSW v Hunt Leather Pty Ltd; Hunt Leather Pty Ltd v Transport for NSW [2024] NSWCA 227

Andrew Hales  |  Connor Wright

Key takeouts

• The Court of Appeal of New South Wales has held that Transport for New South Wales did not commit a private or public nuisance against business owners affected by delays in the construction of the CBD and South East Light Rail in Sydney.

• There was insufficient evidence to demonstrate that TfNSW could have carried out pre-construction investigations which would have reduced the time the business owners were exposed to interferences arising from the construction.

Facts

From 2011 to 2014, TfNSW, a statutory corporation, developed, procured, planned and organised the construction of the Sydney Light Rail.

In 2011 TfNSW entered into a project deed with a contractor to undertake the construction works. The project deed included an Initial Delivery Program (IDP), which divided the construction into individual stages or ‘fee zones’ that were to be completed by the contractor by set times. The purpose of this delivery strategy was to ensure minimal disruption to businesses along the route. The project deed also included allowances for the contractor to replace, upgrade or cover utilities that it came across in each fee zone. The project was due to be completed by March 2019. However, the contractor took until March 2020 to complete the construction as work in the various fee zones took significantly longer than anticipated. The time taken by the contractor to discover, identify and address unknown utilities substantially contributed to the delay.

The four lead plaintiffs brought representative proceedings in the Supreme Court of New South Wales against TfNSW on behalf of all people affected by the construction and development of the Sydney Light Rail. The plaintiffs maintained that TfNSW subjected them to a private nuisance arising from the construction, as the construction substantially and unreasonably interfered with their use and enjoyment of their properties. The plaintiffs claimed that the length of time that the construction occurred outside their properties was unreasonable because:

1. TfNSW contracted on terms that failed to disincentivise delays in construction caused by the contractor overstaying in each fee zone; and
2. the duration of the construction exceeded an amended IDP the plaintiffs had prepared for the proceedings, which the plaintiffs argued indicated reasonable timeframes for construction.

The plaintiffs also claimed that TfNSW committed a public nuisance against them by causing substantial and unreasonable disruption or inconvenience to the public in the exercise of public rights by damaging and obstructing roadways and footpaths and through closing roads and erecting hoardings.

The Supreme Court dismissed the claim in public nuisance but found that TfNSW committed a private nuisance against the plaintiffs. The Court held that the delays in construction which exceeded the times in the amended IDP amounted to a substantial and unreasonable interference with the plaintiffs’ use and enjoyment of their property.

The Court held that establishing that TfNSW failed to take reasonable care to protect the interests of the business owners along the Sydney Light Rail route was not essential to the claim in nuisance, but may have relevance to assessing whether any substantial interference was unreasonable. The Court held that as TfNSW (and not the plaintiffs) pressed the issue, TfNSW had the onus of proving that it took reasonable care. The Court was not satisfied that TfNSW had exercised reasonable care.

The Court also found that TfNSW could not rely on section 43A of the Civil Liability Act 2002 (NSW) to argue that it was not liable for the private nuisance because TfNSW’s conduct of the construction works was not ‘based on’ the exercise of a ‘special statutory power’.

Decision

The Court of Appeal held that TfNSW did not commit a private nuisance against the plaintiffs as the construction, which took longer than the timeframes included in the amended IDP, was not an actionable nuisance for two key factual reasons.

First, the IDP could not be regarded as a reasonable estimate of construction time in any particular fee zone because it made no allowance for various contingencies and, although the amended IDP sought to address contingencies, the premise of the amended IDP was that no construction would commence until there was complete knowledge of the thousands of sub-surface utilities along the route.

Second, the plaintiffs could not establish that TfNSW carrying out pre-construction investigation would have identified all of the utilities in each fee zone such that the contractor could have avoided the delays in construction and reduced the interference with the plaintiffs’ enjoyment of their land.

The Court of Appeal noted that it was the facts of the case, rather than the law of nuisance itself, which underpinned its finding that TfNSW did not commit a private nuisance against the plaintiffs. This suggests that claims in private nuisance brought against public authorities or construction principals responsible for the delivery of a construction project, similar to the one brought by the plaintiffs against TfNSW and supported by more favourable facts that can be proved, may succeed.

The Court of Appeal did not overturn any of the other findings made by the Supreme Court. In considering these findings, the Court clarified three important points of principle regarding private nuisances caused by construction:

1. construction authorised by statute will not become an actionable private nuisance merely because the construction takes several months longer than scheduled;
   
2. undertaking construction with reasonable care to mitigate an interference arising from the construction is not a defence to a claim in private nuisance. Whether an interference will constitute a private nuisance does not depend on how the construction is carried out but rather on the nature of the interference caused by the construction; and
   
3. there is no special category of nuisance that provides additional protection to those who perform, or authorise the performance of, construction work, as opposed to other activities which interfere with a person’s use and enjoyment of their land.

The Court of Appeal also held that the 40% funding commission was not recoverable as damages for nuisance as the fee was not a foreseeable loss caused by the nuisance but a voluntary act of the particular plaintiff.