Public authorities - reduced protection against negligence

In brief

In coming to a recent decision, the Queensland Supreme Court has taken a narrow view of a section of that state's civil liability legislation that was designed to limit the liability of public authorities in Queensland. Partner Nicholas Ng and Senior Associate Goran Gelic report on this decision and its implication of greater liability exposure.

The statutory framework

Section 36 of the Act is designed to limit the liability of public authorities in Queensland. The section provides:

36 Proceedings against public or other authorities based on breach of statutory duty

(1) This section applies to a proceeding that is based on an alleged wrongful exercise of or a failure to exercise a function of a public authority or other authority.

(2) For the purposes of the proceeding, an act or omission of the authority does not constitute a wrongful exercise or failure unless the act or omission was in the circumstances so unreasonable that no public or other authority having the functions of the authority in question could properly consider the act or omission to be a reasonable exercise of its functions.

 

Background 

In 2005, there was a large fire at a chemical factory in Narangba which was owned by Hamcor Pty Ltd. The Queensland Fire and Rescue Service (the QFRS) attempted to extinguish the fire using large volumes of water.

The water used by the QRFS, combined with the factory’s chemicals, produced large amounts of contaminated fluid that overflowed into the surrounding environment (including the factory premises). This caused the factory premises to become 'contaminated land' and Hamcor was required to remediate the 'contaminated land' (with final costs in excess of $9 million).

Hamcor commenced proceedings against the State in negligence.¹ Hamcor claimed that it would not have incurred the remediation costs but for the QFRS’s negligence.

The decision

The Supreme Court ultimately dismissed Hamcor’s claim against the State but the reasoning adopted by the court is important in the context of s36 of the Act.

The court found that the State did owe Hamcor a duty of care and that this duty was breached. The court held that that the duty was breached as it was not reasonable, in the circumstances, for the QFRS to have used water to extinguish the fire.

In the context of s36 of the Act, the court dismissed the State's argument that its standard of care should have been reduced by s36 of the Act. The court concluded that the State's liability was not alleged to be a breach of a statutory duty but merely a breach of a duty of care owed under general law. For the QRFS, this meant it could not rely on s36 of the Act to limit its liability.

The court confirmed that s36 of the Act was limited to cases where a public authority was alleged to have breached a statutory duty, and that s36 did not apply to negligence under general law.

Implications

The decision has implications for public authorities in Queensland at all levels. The decision confirms that s36 of the Act will not apply to actions in negligence  – it will only apply to actions for breach of statutory duty. This is important as s36 was often understood as applying to any proceeding (breach of statutory duty or not) based on a public authority’s wrongful exercise of power or failure to exercise a power.

 As a result of the decision, public authorities in Queensland may become increasingly exposed to negligence claims (particularly where services are provided to an 'end user'). Public authorities, under general law, may be exposed to a claim of negligence where it is reasonably foreseeable that damage could occur as a result of the relevant action. This is a significantly lower threshold than the test under s36 of the Act (which only requires that the relevant action was 'so unreasonable' that no other statutory authority in the position of the statutory authority would have done it).

Public authorities in Queensland may need to review relevant procedures and policies with a view to mitigating against any increased liability exposure. To this end, it is also prudent for public authorities to re-visit their insurance arrangements to ensure protection in light of the current interpretation of s36 of the Act by the Supreme Court.

Public authorities in New South Wales should also take note of the decision. The civil liability regime in New South Wales has similar provisions to s36 of the Act (which to date, has had very limited judicial consideration). As a result of the decision, the courts in New South Wales may adopt a similar approach to the civil liability regime operating in that state.