By Tara Plumbe, Partner and Tara Haas, Associate
The New South Wales Court of Appeal’s decision in Hunter Water Corporation v The Owners of Strata Plan 16460 marks one of the first major applications of the High Court’s reformulation of private nuisance in Hunt Leather.
The Court dismissed Hunter Water Corporation’s appeal and confirmed its liability in private nuisance following the catastrophic failure of a water main that flooded a strata scheme townhouse complex.
In doing so, the Court applied the nuisance principles set out by the High Court in Hunt Leather Pty Ltd v Transport for NSW [2025] HCA 53 (“Hunt Leather”), while also providing important guidance on the operation of section 43A of the Civil Liability Act 2002 (NSW) (“the CLA”).
The proceedings arose from the rupture of a water main operated by Hunter Water Corporation at Elermore Vale in September 2017. Hunter Water had excavated around a leaking section of pipe and left the water main exposed overnight while awaiting equipment required to complete repairs. During the early morning hours, water pressure within the network increased. The pipe subsequently burst, releasing a substantial volume of water that flooded a downhill townhouse complex and caused more than $1.1 million in property damage.
The plaintiffs, comprising the owners corporation and individual lot owners, brought common law claims in:
The plaintiffs also advanced a statutory compensation claim under section 22 of the Hunter Water Act 1991 (NSW) (“the HWA”).
At first instance, the nuisance claim succeeded, while the negligence and statutory compensation claims failed. Hunter Water subsequently appealed.
The Court unanimously dismissed Hunter Water’s appeal and upheld the finding of liability in private nuisance.
The Court’s analysis was heavily influenced by the High Court’s recent decision in Hunt Leather. That case arose from the construction of the Sydney Light Rail (“SLR”) project, where lessees along the SLR route alleged that prolonged construction activities substantially interfered with the use and enjoyment of their commercial properties.
In that decision, the High Court held that once a plaintiff establishes substantial interference with the ordinary use and enjoyment of land, the burden shifts to the defendant to establish that:
For insurers and litigators involved in nuisance claims, the allocation of this burden is particularly significant. Once substantial interference has been established by the plaintiff, the burden shifts to the defendant to justify the manner in which the relevant activities were carried out.
In Hunter Water, this element was straightforward. The flooding caused extensive physical damage to the respondent’s properties and constituted a substantial interference with their ordinary enjoyment of land. Hunter Water ultimately conceded this element.
The Court accepted that maintaining and repairing water mains were both common and ordinary uses of land in Elermore Vale. Hunter Water therefore succeeded at this stage of the analysis.
The case ultimately turned on whether Hunter Water had adopted means that reasonably minimised the risk of interference with neighbouring landowners.
The Court found that it had not. In particular:
The Court concluded that Hunter Water failed to establish that its conduct reasonably minimised the risk of catastrophic flooding and therefore failed to demonstrate that the works were “conveniently done”. In doing so, the Court provided a practical illustration of the third limb of the Hunt Leather test, emphasising that the focus is not simply whether the defendant’s activity was ordinary, but whether the means adopted adequately minimised the risk of substantial interference with neighbouring land.
Hunter Water argued that, as a statutory utility exercising statutory powers under the HWA, it was entitled to the protection afforded by section 43A of the CLA. The Court rejected Hunter Water’s reliance on this section and stated that it had no application to the claim in private nuisance in this proceeding. The Court explained that Hunter Water’s liability did not arise because it exercised a statutory power. Rather, liability arose because of its operational decisions on the ground, namely excavating the pipe, leaving it exposed overnight, and allowing pressure to increase.
The Court drew a critical distinction between liability that is truly founded upon the exercise of a statutory power and liability arising from ordinary operational conduct:
[151] “(…) there is a distinction between liability that is ‘based on’ the exercise of, or a failure to exercise, a special statutory power, and an act or omission merely ‘involving’ the exercise or failure to exercise such a power.”
The Court stated:
[169] “(…)The important point for purposes of the s 43A analysis is that HWC’s liability in nuisance is ‘based on’ its conduct, relevantly, leaving the pipe uncovered overnight while the water pressure increased.”
The Court’s ultimate conclusion was unequivocal:
[181] “It follows that s 43A has no application to the claim in private nuisance in this proceeding.”
The decision confirms that public authorities cannot invoke section 43A of the CLA simply because statutory powers form part of the broader factual background. For section 43A of the CLA to apply, the statutory power itself must form an essential foundation of the alleged liability.
This aspect of the judgment is likely to have significant implications for future claims against utilities, infrastructure operators, and public authorities.
Hunter Water argued that the pipe failed because of a latent manufacturing defect. The Court rejected that argument, finding that Hunter Water had not proved that a latent defect caused the rupture. Importantly, the Court held that even if a latent defect existed, it would not have defeated the nuisance claim because Hunter Water’s own conduct, including excavating the pipe, leaving it exposed overnight and allowing pressure to increase, materially contributed to the flooding.
This decision serves as a caution against assuming that latent defect defences will provide a complete shield in infrastructure or property damage claims.
The Court did not determine the negligence claim (although Leeming J considered a claim in negligence would likely also have succeeded) or the statutory compensation claim under section 22 of the HWA, finding it unnecessary to do so because the respondent had already succeeded in nuisance.
For insurers and litigators on both sides, the decision highlights the importance of carefully distinguishing between liability arising from operational conduct and liability arising from the exercise of statutory powers, while also reinforcing the broad reach of nuisance where reasonably foreseeable risks to neighbouring property are not adequately managed.
The decision also clarifies the distinction between a claim in nuisance and a claim in negligence against public authorities in NSW and highlights the different principles, burdens and defences may apply to each claim.
The court provided a cautionary reminder to practitioners about the application of Hunt Leather in future claims noting that the law is not settled.
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