Downes v Maitland City Council

Supreme Court of NSW|2020-11-03|Before: Adamson J

Solicitors: Moray & Agnew (Defendant) File Number(s): 2019/62059

Introduction

By statement of claim filed on 25 February 2019 Maureen and Louis Downes (the plaintiffs) claim damages against Maitland City Council (the defendant). They allege that the defendant, by approving the development of a two-storied office and car park next to their property in Bull Street, Maitland (the property), negligently exposed them to the risk of harm caused by disruption to drainage on their property. Further, they allege that the Council created a nuisance which adversely affected the use, enjoyment and value of the property. In its defence, the Council denied negligence and nuisance and alleged that it had a complete defence to the plaintiffs' claim by reason of s 733 of the Local Government Act 1993 (NSW) (the Act).

Relevant legislation

Section 733 of the Act relevantly provides: "733 Exemption from liability - flood liable land, land subject to risk of bush fire and land in coastal zone (1) A council does not incur any liability in respect of - (a) any advice furnished in good faith by the council relating to the likelihood of any land being flooded or the nature or extent of any such flooding, or (b) anything done or omitted to be done in good faith by the council in so far as it relates to the likelihood of land being flooded or the nature or extent of any such flooding. … (3) Without limiting subsections (1)…, those subsections apply to - (a) the preparation or making of an environmental planning instrument, including a planning proposal for the proposed environmental planning instrument, or a development control plan, or the granting or refusal of consent to a development application, or the determination of an application for a complying development certificate, under the Environmental Planning and Assessment Act 1979, and … (c) the imposition of any condition in relation to an application referred to in paragraph (a), and (d) advice furnished in a certificate under section 149 of the Environmental Planning and Assessment Act 1979, and (e) the carrying out of flood mitigation works, and … (f3) the failure to upgrade flood mitigation works or coastal protection works in response to projected or actual impacts of climate change, and … (g) any other thing done or omitted to be done in the exercise of a council's functions under this or any other Act. …"

The evidence

The parties put on evidence on the motion which was assembled in a joint court book, to which no objection was taken. None of the deponents of affidavits contained in the court book was required for cross-examination. Accordingly none of the evidence has been tested. This is not an uncommon circumstance in an application such as the present, which is usually not an occasion for cross-examination. The summary of the evidence set out below is to be viewed in that context and does not represent final findings of fact, which, for the reasons given below, must await a final hearing.
The plaintiffs' family has owned two adjoining blocks on Bull Street, Maitland for as long as Ms Downes can remember. There was a gully behind the property which was very pronounced in Ms Downes' childhood. In the 1955 flood, the house on one of the blocks and the gully were submerged in water. Thereafter the area was declared a flood zone area.
In the mid-1990s, the Council granted development approval (DA 94425) for the construction of a 12m x 12m metal colorbond shed on a lot which fronted onto Anlaby Street, Maitland on the other side of the gully. The shed was to be used for storage and repair of vehicles. This and other developments in the gully began to affect the Downes' properties because they altered the course of the run-off from higher ground.
In 1996, the owner of the site on which the shed had been constructed applied for the site to be rezoned from 1(a) Prime Rural land to 3(b) Support Business. In purported performance of its statutory obligations under the Hunter Valley Flood Mitigation Act 1956 (NSW) (rep), the Council consulted the Department of Land and Water Conservation about the re-zoning. In its letter of 21 February 1996 the Department said: "The main issue here is that of flooding and the Department's attitude on development of the site was spelt out in our letter of 23rd October, 1995. In particular, I refer you to paragraphs two (2) and to the last paragraph. We would not support a rezoning if this were to be interpreted as a defacto support or facilitation of any future development of the site. Section 4.2 of the supporting documentation states that 'the existing development on the subject site is consistent with the land was in this commercial zone.' It should be pointed out that the existing development of the site referred to is a Colorbond Shed which was built in a designated flooding area without the Department's prior approval under Section 16 of the Hunter Valley Flood Mitigation Act. It is therefore inappropriate to use this argument in support of the proposed zoning. If Department Application No. 94425 consented to by Council for the construction of the above-mentioned Shed were referred to the Department of Land and Water Conservation, it is possible that consent would not have be given."
In further correspondence dated 14 March 1996, the Department of Public Works wrote to the Council on behalf of the Department of Land and Water Conservation. It reiterated the Department's opposition to the re-zoning.
By letter dated 23 April 1996, the Department of Land and Water Conservation wrote to the Council, referring to communications in the interim. The Department confirmed that it was not opposed to structures on the "high area" of Lot 2. However, it continued: "The Department of Land and Water Conservation is adamant that the southern, non-elevated portion of the site remain free of development as this land is within a high hazard floodway area."
The plaintiffs' property is towards the south and is not elevated.
On 7 May 1996 the Council's Development and Environmental Services Committee considered the proposed re-zoning application. The meeting papers contained the following passage under the heading "Flooding": "The site is situated within Council's declared flood way and the Department of Land and Water Conservation's (DLAWC) declared flood plain. Under Section 16 of the Hunter Valley Flood Mitigation Act, the DLAWC is required to give its concurrence to any construction, excavation or filling of land which lies within the declared flood plain. The land is located to the east of the Oakhampton Flood way. The site can be described as a backwater to the main storm flow, however it is expected to experience moderate flow velocities during a major flood. Part of the site has been filled in order to address flooding concerns. The current level of the site is 8.5m AHD and therefore would be inundated by 1.9 metres of flood water in a 1 in 100 year flood event. The NSW Government are continuing to acquire residential allotments along Bull Street due to their flood liability. The lots which have been acquired remain vacant. It was advised that the majority of other residential dwellings along Bull Street are planned to be voluntarily acquired by the DLAWC in the future. The Department advised in its letter of 21 February 1996 that 'we would not support a rezoning if this were to be interpreted as a defacto support or facilitation of any future development of the site.' This advice was significant owing to the Department's concurrence role for any development of the site. At this time, the Department of Public Works and Services concurred with the DLAWC and advised that 'the rezoning application in question should not proceed.' There appears to have been some confusion regarding the location of the part of the site which is proposed to be rezoned for development. After discussions with the DLAWC regarding flooding of the site, the Department resubmitted its advice in regard to the proposed rezoning. The advice dated 23rd April, 1996 stated, 'In clarification of Departmental correspondence of 23rd October 1995 and 21st February 1996, the Department of Land and Water Conservation is not opposed to structures placed on the high area of ground on the site (that is, the northern and north-eastern corners). According to the site map submitted, this comprises the bulk of Lot 2.' The DLAWC then further advised that conditions upon development would be required, such as restrictions on the south-western corner of the site, and planting and fencing of the area." [Emphasis added.]
The recommendation made by the Committee was that the Council prepare and exhibit a draft Local Environment Plan to rezone part of Lot 2 (on which the shed had been constructed) from 1(a) Prime Rural to 3(b) Support Business.
On 18 June 2001, a development application was submitted by Geoff Craig & Associates Pty Ltd, consulting engineers and project managers (Geoff Craig), for the construction of a two-storied building to accommodate the Infringement Processing Bureau, with an associated car park. The owners of the site consented to the application. The estimated cost of development was $2.48m. The plaintiffs, who were concerned about the effect on their property, met with Council representatives, including Belinda Smith, the town planner, to discuss what would happen to run-off from the development. The plaintiffs did not consider the Council's responses to their concerns to be satisfactory.
On 20 June 2001, the Council wrote to land owners whom it considered might be affected by the proposed development, including the plaintiffs, and invited them to respond.
In accordance with its usual procedures and protocols, by letter dated 21 June 2001, Ms Smith, on behalf of the Council, referred the development application to the Department of Land and Water Conservation as the site for the development was located within the declared flood plain, although the Council contended that it was outside the designated flood way.
On or about 26 June 2001, the Council sent a "comment sheet" to the members of the Council's Floodplain Management Committee. The "Description of Matter" section said as follows: "Description of Matter A development application has been lodged for the construction of an Infringement Processing Bureau at 525 High Street and associated car parking off Anlaby Street Maitland. Both sites are outside the floodway as mapped by Webb McKeown and Associates, however the car parking area is within the area within Maitland LEP 1993 that requires referral to the Committee. A location plan and a plan of the proposed car parking area are attached."
Of the three members of the Floodplain Management Committee, two (Ralph Ward and Wayne Carson) responded that they did not wish to comment and that they did not consider that the matter should be discussed at a full meeting of the Floodplain Management Committee. The third, Michael Belcher, answered both questions in the affirmative. He said: "I am concerned that a bad decision to allow development over an existing watercourse [the construction of the colorbond shed referred to above] will be compounded by this significantly more substantial development. While it is outside the floodway it is an extremely vulnerable site in the event of overtopping."
On 4 July 2001, Leanne Harris, who has been the Council's Co-ordinator of Development Assessment since July 2013, spoke to Mr Belcher. In her file note of the conversation she wrote: "Spoke to Michael Belcher 4th July 2001. He was concerned about the site in relation to what happened in the 1955 flood - levee breaking at Simm's garage - water course being blocked and downstream impacts - but didn't believe it would happen again. This [scil, the] main issue is ensuring drainage on the site is appropriate. I advised that he was the only member from the Committee that had provided comments on the proposal - remainder were happy not to discuss - on this basis a formal meeting of the Committee would not be held. Planner to be advised of drainage issues."
I understand the gist of this note to be that the main issue was the need to ensure that drainage with respect to the site was appropriate and that this was a separate issue to the flood levels, which were thought not to be likely to recur to 1955 levels.
Following this conversation, Ms Harris wrote to Ms Smith as follows: "The Floodplain Management Committee have been given the opportunity to review the development application for the Infringement Processing Bureau. As the development is outside of the actual floodway as mapped by Webb McKeown and Associates, no specific concerns were raised in respect of flooding. One issue was however raised in respect of drainage through the site via the existing piped watercourse. It was suggested that the drainage through the site should be investigated due to possible debris and blockage as a result of the 1955 flood."
I do not consider that the memo to Ms Smith adequately encapsulates the concerns raised by Mr Belcher about drainage, which were separate from his concerns about flood levels.
In about July 2001 the Council received, in response to its letter of 20 June 2001, several letters of objection from residents who lived in Bull Street, including the plaintiffs. A major ground of objection was that the development of the car park would cause stormwater run-off to pass into the properties of the residents.
By letter to the Council dated 25 July 2001, the Department of Land and Water Conservation conveyed its approval of the proposed construction work. However, it reminded the Council of the limits of the Department's involvement in the following passage from the letter: "Council is advised that the extent of the department's review allowed under the Act is restricted to the effect of the proposed development on flooding. Council should note that the site may be subject to flooding and the development could be damaged by floodwaters. Council should also note that the responsibility for cumulative impacts of development within the floodplain and hydraulic impacts on surrounding properties caused by development rests with Council."
By handwritten memorandum dated 31 July 2001, an "engineers' assessment" of the application was sent to Ms Smith. On the topic of drainage, the document said: "As the site of the proposed building is at present largely developed with nearly 100% impervious area, there is likely to be an additional impact on stormwater drainage. The site of the car park is however likely to be additional impervious area. Inspection of the downstream watercourse has revealed that there is a rise in the topography and therefore the additional impervious area is likely to add to the existing 'soggy' problems in this area. In order to maintain the existing hydrology the carpark would only be permissible using previous pavements. It is therefore conditioned such in the proposed conditions."
The relevant condition proposed was: "The proposed carpark is to be surfaced with pervious paving materials such that the pre-development initial and continuing rainfall loss factors are maintained."
By letter dated 7 August 2001, Geoff Craig wrote to the Council about concerns that the Council had raised about the proposed development. They said, in part, that the surface of the carpark was "90% impervious" which meant that "all runoff from the carpark is directed into the adjacent downstream gully". They proposed various measures to deal with the stormwater runoff including: "Discharge stormwater from the new carpark into an absorption trench nominally 30 metres long x 1 metre wide x 1 metre deep. The actual required dimensions shall be determined following permeability testing of the in situ soils."
The agenda for the Council's Approval and Regulatory Committee meeting on 14 August 2001 addressed the relevant considerations under s 79C of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act), including, of present relevance, s 79C(1)(b), "the likely impacts of that development, including environmental impacts on both the natural and built environments, and social and economic impacts on the locality". The effect of the development on the properties, such as the plaintiffs' on Bull Street, was not referred to under this heading.
Under the heading, "Section 79C(1)(c) the suitability of the site for the development", the meeting papers contain extracts from letters from concerned residents about the increased run off from the developments. The planner's comment was: "The drainage of storm water from the office building site has been considered as consistent with the current levels of storm water runoff from the existing service station/hardware building presently located on the land. As this present building almost covers the entire site with an impervious surface the proposed office building is unlikely to create any additional impact on current storm water levels. The site of the car park is likely to create some additional storm water runoff through an increase in impervious areas and therefore the retention of the storm water in a large gravel pit on Lot 2 has been proposed. This is an acceptable solution to this storm water issue and appropriate conditions will apply."
The conclusion expressed in the meeting papers was that the proposed development complied with the objectives of the 3(b) zone and was considered an appropriate form of development for the site. The proposal included a section on appropriate conditions and the reason for their imposition. Under the heading, "Drainage & Sediment/Erosion Control", the reason and conditions were set out as follows: "DRAINAGE & SEDIMENT/EROSION CONTROL - Reason: The following condition(s) have been applied to ensure that: (i) Adequate sediment/erosion control structures are provided to prevent siltation of existing drainage systems and waterways; (ii) Stormwater internal and external to the proposed development site is controlled to minimise the risk of flooding to upstream and downstream properties; and · (iii) Due regard is given to the development of flood liable land or land in the vicinity of flood liable land. 25 Stormwater runoff from large impervious areas, driveways and roof areas is to be collected and disposed of to Council's drainage system or an appropriate inter-allotment drainage system in accordance with Council's publication 'A Guideline for Stormwater Drainage Design'. 26 An approved stormwater drainage plan shall be submitted to Council for future reference. · 27 The site and its surrounding environs are to be protected from the effects of sediment and erosion by the application of generally accepted sediment and erosion control principles. In this respect, a sediment and erosion control plan shall be submitted to Council for reference, and site controls shall be established in accordance with that plan. 28 In order to protect adjoining properties, all cut and fill batters are to be contained within the property and are to provide stable, erosion free, maintainable slopes. In all instances where this cannot be achieved retaining walls are to be provided, the design and construction of which are to be Engineer certified."
On 14 August 2001, there was a "public access meeting" of the Approvals and Regulatory Committee of the Council. The plaintiffs were notified of the meeting. The evidence does not reveal whether they attended. However there is no record of any representations having been made by them at the meeting.
On 14 August 2001, the Council issued a notice of determination granting approval of the development application. The conditions with respect to drainage and sediment and erosion control were as set out above.
Ms Harris deposed in her affidavit in support of the motion: "[36] From my examination of the files it is apparent to me that the processing of the development applications in relation to the Traffic Infringement Bureau building and carpark appears to have proceeded in the usual way in accordance with statutory requirements and Council procedures at the relevant time. [37] It is apparent from the matters set out [in nominated paragraphs] that issues relating to flooding and drainage were at the forefront of Council's assessment and approval of the development. [38] I did not observe anything in the files, or the approval conditions, that would give me cause to consider that any impropriety had occurred in the approval process, or pressure had been brought to bear on Council officers to recommend the approval of conditions adopted."
Since the construction of the building and the car park, the plaintiffs' uncontroverted evidence is that the property has been affected by water from the southern side of the gully. Storms produce this effect without a flood. Every time there is a storm, the plaintiffs' property is affected by water coming from the direction of the Infringement Processing Bureau. The gully itself has also overflowed on several occasions, some of which have been documented by Ms Downes. As a result of this water, the piers of the plaintiffs' house are sinking, several of the old timber piers are rotting, the doors do not close and the walls are cracking.

Consideration

The onus of proving a defence under s 733 of the Act lies on the defendant. In order to obtain an order for summary dismissal, it is therefore incumbent on the defendant to show that there is no triable issue as to its good faith in approving the development next to the property.

Relevant authorities

Before turning to the facts of the present case, it is instructive to address the authorities in the area, including Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660; [2005] HCA 46 (Alamdo HC).

Bankstown City Council v Alamdo Holdings Pty Ltd

Alamdo Holdings Pty Ltd (Alamdo), which owned flood-prone land in the Bankstown City Council area, sued the Council, claiming damages and a mandatory injunction directing the Council to undertake remedial works. The Council pleaded s 733 as a defence to the claim. The primary judge found that the Council had not acted in good faith and, accordingly, had not made out the defence. Gzell J granted injunctive relief for the abatement of the nuisance and held that, in any event, s 733 would not protect the Council against the making of an injunction: Alamdo Holdings Pty Ltd v Bankstown City Council [2003] NSWSC 1074; (2003) 134 LGERA 114.
The Council appealed and Alamdo cross-appealed. The Court of Appeal (Spigelman CJ, Giles and Ipp JJA agreeing) upheld the primary judge's finding that the Council had not established the good faith defence but reversed the finding that injunctive relief was not excluded by s 733 (if good faith had been made out): Bankstown City Council v Alamdo Holdings Pty Ltd [2004] NSWCA 325; (2004) 135 LGERA 312. Accordingly, it dismissed the Council's appeal and Alamdo's cross-appeal, with the effect that the injunctions made by Gzell J stood as did his Honour's finding that Alamdo was not entitled to damages.
Spigelman CJ described s 733 as follows at [32]: "A statutory standard of 'good faith' is protean and always takes its colour from its context. The most significant feature of s733 in this regard is that the section protects a governmental body from legal liability for losses incurred by others."
Both the Council and Alamdo sought special leave to appeal to the High Court. The High Court allowed the Council's appeal against the injunction. The High Court held that, although s 733 conferred protection from exposure to an injunction because the word "liability" was to be construed broadly, there was insufficient evidence to support a finding that the Council had not acted in good faith. The plurality (Gleeson CJ, Gummow, Hayne and Callinan JJ) said at [56]: "The emphasis upon the significance to the Council of the pending litigation advanced its case for good faith, not the case of Alamdo to the contrary. It must be remembered that, as Mr Morrison explained in his oral evidence in chief, the established procedures of the Council with respect to proposals for infrastructure expenditure involved consideration of the relative priority of all projects. Where, depending upon the outcome of litigation which the Council was defending, the Council might have no responsibility in law to make an expenditure, prudence would support deferral. Section 733(1) protects such an approach as an exercise in good faith of the Council's powers."
On this basis, the High Court refused Alamdo's application for special leave to appeal against the refusal of the trial judge and the Court of Appeal to award damages.

Port Stephens Shire Council v Booth

Alamdo HC was considered by the Court of Appeal in Port Stephens Shire Council v Booth [2005] NSWCA 323; (2005) 148 LGERA 351 (Booth). In Booth, the Council had granted development consent for the construction of holiday cabins in the vicinity of the weapons range used by aircraft from the Williamtown RAAF Base. The developer brought proceedings against the Council in the District Court, which found that the Council was liable in negligence and had not made out the defence of good faith under s 149(6) of the EPA Act, to which s 733 of the Act was regarded as being analogous.
The Court of Appeal (Giles JA, Beazley JA and Hunt AJA agreeing) dismissed the Council's appeal. The reasons for upholding the primary judge's finding of lack of good faith appear from the following extract: "[123] In the present case, the failure to take reasonable care went beyond failure to have recourse to available information. The Council had the Caleb Smith report, but the mayor withheld it from the planning staff; all we know is that he did it for "his own purposes". It was plainly relevant to the staff's appreciation of potential noise affectation and thus the need for more full and accurate disclosure of ANEF zoning, and at the corporate level withholding relevant material for unknown and apparently private purposes is an impediment to proof of good faith. There was what appears to have been a conscious decision to refer in certificates to the ANEF 20 contour alone, without identifying that land might be, let alone was, within a higher value contour. The reasoning in my view could not be supported, and any real consideration should have brought the realisation that the technical correctness espoused in the proceedings was in fact in the nature of a trap. If advice on ANEF zoning was to be included in the certificates, proper attention had to be given to its inclusion in a manner which was not materially and prejudicially misleading, and was not. No cost inhibitions on certificates which stated the correct ANEF zoning were demonstrated. [124] There was not a casual act of negligence, but the systemic failure earlier described. In my opinion, the Council has not shown that it provided the advice concerning aircraft noise exposure in good faith."
The Court addressed the authorities on statutory analogues to s 149(6), which included s 733 of the Act. Giles JA said, at [122]: "[The authorities] include reference, sometimes by illustration, to no effort at all to take care to avoid causing foreseeable damage, to delegation of design to persons known not to be qualified, to lack of honest endeavour to undertake the relevant task, to 'fobbing off' rather than genuinely attempting to remedy a situation, and to declining to remedy a nuisance because the work would cost too much. Each case must turn on its own facts; as the High Court said in Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 79 ALJR 1511; 142 LGERA 1 at [50], speaking of s 733(1) of the Local Government Act 1993, the range of advice, acts and omissions to which it may apply may vary from one case to the next and it is 'unwise, if not impossible, to place a definitive gloss upon the words of the statute'."
One of the cases referred to by Giles JA was Melaleuca Estate Pty Ltd v Port Stephens Shire Council [2004] NSWSC 415, which his Honour noted was then the subject of an appeal.

Melaleuca Estate Pty Ltd v Port Stephens Shire Council

In Melaleuca Estate Pty Ltd v Port Stephens Shire Council, the plaintiff's predecessor in title acquired land in about 1950. In the 1970s the Council approved a neighbouring development and carried out road drainage works. The storm water substantially increased the flow of water onto the plaintiff's land. The plaintiff (Melaleuca) obtained development approval for a development which required it to execute drainage work on the land. Subsequently the plaintiff sought an injunction to restrain the Council from discharging stormwater onto the plaintiff's land.
The primary judge, Cripps AJ, was satisfied that the water coming onto the property constituted a nuisance but found that the plaintiff had willingly undertaken the responsibility of executing drainage work and that the Council was therefore not liable since it had not adopted the nuisance by failing unreasonably to do anything about it.
The Court of Appeal (Giles JA, McColl JA and Hunt AJA agreeing) allowed the appeal: Melaleuca Estate Pty Ltd v Port Stephens Council [2006] NSWCA 31; (2006) 143 LGERA 319. It found that the plaintiff/appellant had not taken upon itself the obligation to deal with the ingress of water and that the stormwater flow remained a nuisance for which the Council was liable. As the Council had relied on s 733 of the Act, it was necessary for the Court to consider the meaning of "good faith" and whether the Council had established that it came within the exception.
At [75], Giles JA referred to Alamdo HC as follows: "It was accepted in the High Court that the defendant had the burden of establishing that it acted in good faith. With reference to Mid Density Developments Pty Limited v Rockdale Municipal Council (1993) 44 FCR 290; 81 LGERA 104, there was mention of examples in the law where good faith was used 'as a criterion requiring some state of mind or knowledge other than the personal honesty or absence of malice of the relevant actor', but it was said (at [50]): 'Moreover, given the range of advice, acts and omissions to which s 733(1) may apply, what is required for something to be done or omitted in good faith may vary from one case to the next. This makes it unwise, if not impossible, to place a definitive gloss upon the words of the statute.'"
The findings of the Court of Appeal as to the lack of good faith of the Council are as follows: "[83] The respondent's acts and omissions in the 1970s and 1990s created the state of affairs resulting in the nuisance. I have said, the piping system ended with its discharge of the collected water, and its pollutants, directly onto Mrs Coventry's land or at the boundary of her land. The pumping station was not installed, pollution control basins were not constructed, and the commitment to contain peak flood levels was not honoured. The respondent's attitude was that it had a right to put the road drainage onto the land. When the appellant came on the scene, initial acceptance of the thrust-bore system and apparent preparedness to implement it turned to disinterest in any contribution, in money or use of land, to alleviation of the acknowledged water affectation, as a practical matter (and no doubt intended) leaving it to the appellant to deal with the affectation. The language used in Dubois v District Council of Noarlunga should be recalled; in my opinion, it is applicable. [84] The respondent had budgetary constraints and priorities. They were not shown to have moulded the termination of one pipe on the land and the other pipes at its boundary. Where the respondent created the state of affairs resulting in nuisance and in the circumstances I have outlined, its omission to remedy the state of affairs cannot readily provide justification on good faith grounds because its funds are spent elsewhere; in this respect, the circumstances are to be distinguished from those of a drainage system which becomes inadequate over time, as in Bankstown City Council v Alamdo Holdings Pty Ltd . In the result, rather than a shared cost of about $1.6 million for the thrust-bore system, the wick drainage system involved a first stage cost of about $2.5 million and a second stage cost of about $5 million, all borne by the appellant. [85] To repeat, there was a signal disregard of the rights of the owner of the land, first Mrs Coventry and later the appellant, and I do not think the respondent's acts and omissions have been shown to have been in good faith for the purposes of s 733. This limb of the third issue should be decided in favour of the appellants."
It was also argued by Melaleuca that s 733 did not apply because the Council's conduct did not relate to the likelihood of the land being flooded or the nature and extent of flooding. Giles JA rejected this argument at [78] as follows: "A narrow view of flooding for the purposes of s 733(1) has not been taken. In Bennett v Water Administration Ministerial Corporation (6 June 1991, unreported) Rolfe J held that the predecessor to s 773, s 582A of the Local Government Act 1919, was not confined to a council's conduct when carrying out flood mitigation work. His Honour was concerned with irrigation channels, and considered that '[t]he bringing, by artificial means, of water on to land, constitutes … the likelihood of land being flooded as a result of that which is done or not done', such as by a failed bank or an unexpected influx of water overtopping the banks of the channels. It was not disputed that the overflowing of a drainage canal brought a flood in Bankstown City Council v Alamdo Holdings Pty Ltd, or that work raising the level of a road so that stormwater went onto land related to the likelihood of the land being flooded in Attrill v Richmond River Shire Council."

Whether there is a triable issue on the question of good faith

It was common ground that the Council bears the onus of establishing good faith. Mr Guihot submitted that the Council had established a prima facie case that it had acted in good faith by adducing evidence that it had followed its usual processes of consultation and consideration when considering whether to approve the car park, and on what conditions. While he accepted that there was a triable issue on the questions of negligence and nuisance, he contended that the plaintiffs had neither rebutted the evidence by adducing their own evidence on the question of good faith, nor had they sought to challenge the Council's evidence by cross-examining the deponents of affidavits read on behalf of the Council. He submitted that, in those circumstances, there was no justification for the matter going to trial and that the proceedings should be summarily dismissed.
I reject the submission that the plaintiffs have not adduced evidence on the topic of good faith. The narrative set out above concerning the approval of the shed in 1996 and the concerns raised at that time derives from the documents tendered by the plaintiffs from the Council's files. The plaintiffs have also adduced substantial photographic evidence which shows the change in the topography of the land behind their property over the years. Further, the plaintiffs have adduced uncontroverted evidence that the conditions imposed by the Council on the development have been manifestly inadequate to address the drainage issues. In essence, the plaintiffs submitted that their concerns about the damage which would be caused to their property by the carpark which were foreseen by Mr Belcher, were disregarded by the Council, and have come to pass.
Plainly mere negligence does not amount to lack of good faith. The distinction between the two concepts needs to be maintained in order to preserve the meaning and effect of s 733 of the Act. Nonetheless, more is involved to establish good faith than mere proof of absence of corruption or compliance with procedures and applicable legislation. Further, the authorities referred to above demonstrate that the question whether good faith is established is one about which minds may differ and requires a close examination of the relevant facts, which can only be found at trial. The passage from Giles JA's judgment in Melaleuca Estate Pty Ltd v Port Stephens Shire Council indicates that a Council which has exhibited "signal disregard of the rights of the owner of the land" (at [85]) may be unable to prove that it acted in good faith. I understand this to be the basis of the plaintiffs' opposition to summary dismissal.
Rather than accepting the advice given to the Council by its in-house engineer in the handwritten assessment referred to above (which would have required the proposed carpark to be surfaced with pervious paving materials such that the pre-development initial and continuing rainfall loss factors were maintained), the Council approved the application on the basis that there would be an "approved stormwater drainage plan", which presupposed that the carpark would be covered in an impervious surface.
Further, the evidence adduced by the plaintiffs shows that the Council can be taken to have been aware, at least from 7 May 1996, that the residences on Bull Street (where the plaintiffs' property is located) would be, over time, acquired by the NSW Government because they were susceptible to flooding. The inference is open on the evidence that the Council may have been less concerned about the run-off to these properties from the developments to which it was granting approval because once the properties were owned by the Government, they were to be left undeveloped, thereby removing the potential for harm from run-off. While the Council was sufficiently aware of the need to address the run-off (as its documents indicate), it is plain from the plaintiffs' evidence (which would be available to be accepted at trial and was not controverted by the Council for the purposes of this application) that the conditions imposed by the Council have either not been enforced or are manifestly insufficient to protect the plaintiffs' property from the run-off occasioned by the building and car park development.
In my view, the material adduced by the plaintiffs, including Mr Belcher's response to the application, the express caveat in the letter from the Department of Land and Water Conservation and the historical material from the 1990s, is sufficient to indicate that there is a triable issue as to whether the Council will be able to prove at a final hearing, on the balance of probabilities, that it acted in good faith. It is not appropriate, in determining an interlocutory application, to say more about the strength or otherwise of the Council's defence.
It was accepted that the plaintiff has a reasonable cause of action in negligence (in the sense that there are issues to be tried). I am not persuaded that there is no triable issue as to whether the defendant can establish a defence under s 733 of the Act. The meaning of "good faith" has been described (by the Court of Appeal in Bankstown City Council v Alamdo Holdings Pty Ltd) as "protean". The High Court has warned against putting a gloss on the words "good faith" (in Alamdo HC). In these circumstances, the defendant has not established that the question whether it is entitled to defeat the plaintiffs' claim on the basis of s 733 ought be dealt with summarily.
Ms Downes confirmed that she and her brother acted on their own behalf and had not incurred expenses by way of legal fees. Accordingly, there will be no order as to costs in their favour, which would otherwise follow the event in accordance with the general rule: UCPR, r 42.1.

Orders

For the reasons given above, I make the following orders: 1. Dismiss the defendant's notice of motion filed on 30 March 2020. 2. Make no order as to costs as the plaintiffs have not incurred legal costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 November 2020

Hunter Valley Flood Mitigation Act 1956(NSW)

(2003) 134 LGERA 114

(2004) 135 LGERA 312

(2006) 143 LGERA 319

(2005) 148 LGERA 351

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Judgment (12 paragraphs)

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Cases Cited (13)