Transport for NSW v Hunt Leather Pty Ltd; Hunt Leather Pty Ltd v Transport for NSW

Background

1. The following paragraphs are uncontroversial.
2. TfNSW did not own the roads along which the Sydney Light Rail was built. Nor did it perform any construction work. As will be seen, those matters do not exclude TfNSW from being liable in private nuisance to occupiers affected by the construction.
3. Construction would inevitably occur along the entirety of the route, so as to prepare foundations, lay tracks, install electrical infrastructure and signalling, and so on. The construction occupied much of the land dedicated as a road including the footpath, including by the erection of fencing and hoarding. Footpaths are ordinarily part of the land dedicated as a road; see for example Brodie v Singleton Shire Council (2001) 206 CLR 512; [2001] HCA 29 at [50]-[51], and what matters, as Dixon J observed in Buckle v Bayswater Road Board (1936) 57 CLR 259 at 286; [1936] HCA 65, is that there is a public right of passage. The occupation of the road (including the footpath) was capable of constituting a public nuisance, but it was also capable of constituting a private nuisance, insofar as it interfered with the enjoyment of neighbouring land, notably, by reducing passing traffic.
4. Pursuant to agreements with City of Sydney Council, Centennial Park and Moore Park Trust and Randwick City Council, TfNSW was granted a licence to enter and occupy the land (principally, the road surface and footpaths within the road reserve), which were owned by those bodies, and was empowered to grant licences to anyone else to do so for the purposes of constructing the Sydney Light Rail. Pursuant to cl 12.1 of the Project Deed, TfNSW granted OpCo a "non-exclusive Construction Site Licence" permitting it and its contractors to use and occupy the land.

The "public and private partnership"

1. The main planning of the Sydney Light Rail commenced in 2012, and TfNSW determined that it would be built and operated through a "public and private partnership". The label is at best uninformative and at worst misleading - as is perhaps most obvious from the fact that the sole defendant was TfNSW, with nothing to suggest any joint liability with or contribution from some private "partner".
2. What in fact happened in point of law was based on a Project Deed and a Design and Construct Contract. The parties to the Project Deed were TfNSW and a partnership of three ALTRAC companies each of which was a trustee of trusts known, respectively, as the ALTRAC Light Rail Trust 1, 2 and 3. The primary judge explained at [23] that he would refer to the partnership, interchangeably, as "ALTRAC" and "OpCo", and these reasons will use the same nomenclature. The parties to the Design and Construct Contract were that partnership (ie ALTRAC or OpCo) and each of Alston Transport Australia Pty Ltd and Acciona Infrastructure Australia Pty Ltd, which two companies were defined as the "D&C Contractor". None of those details greatly matters for the purposes of this litigation. The essence of the bargain was that a Spanish infrastructure company and a French rolling stock manufacturer would construct the light rail system which would then be operated privately for a period of 15 years. The Project Deed provided in cl 1.6 that the "Project Agreements" (which included the Project Deed, and the Design and Construct Contract) did not incorporate any of the principles or guidance published by either the Commonwealth under its National Public Private Partnership Policy and Guidelines or the State under its NSW Public Private Partnerships Guidelines (2012).

Staging of construction and the IDP

1. The D&C Contractor was not to occupy the entirety of the site throughout the construction period. Instead, construction would occur in stages. It is obvious that staging the construction reduced the ability of the D&C Contractor to be flexible in a range of matters (including the timing of each work and the storage of machines and materials along the route) and may well have increased the cost and time taken for construction. It is also obvious that to the extent that disruption to motorists, pedestrians and, most relevantly, the occupiers of neighbouring premises along the route, was caused by the construction activities and the erection of fencing and hoarding preventing ordinary access to the road and footpath, that disruption would be expected to be reduced in any particular area by the construction being staged.
2. Those considerations were reflected in a development agreement between TfNSW and City of Sydney Council dated 18 December 2013, which recited that the parties sought to minimise the impacts of construction on the community, businesses and residences in the local government area, including by TfNSW's agreement that staging of the works would be developed to demonstrate a balance between efficient construction methods and to minimise impacts on business operations and resident amenities.
3. Attached to the Project Deed as Schedule A10 was an "Initial Delivery Program" or "IDP". The Schedule was not included in the appeal books. It appears to have been a lengthy print out obtained from an .XER file, which is used in project management software. As will be seen below, on the third day of the hearing the Court was given a print out of the "amended IDP" which is critical to the approach taken by the primary judge. The print out has 56 pages, and each page has over 100 rows of entries. Many of the rows contain headings, but the large majority describe specific activities in a particular place and timeframe along the route of the Sydney Light Rail.
4. The IDP reflected a division of the construction route into stages, which were called "fee zones". Hunt Leather's Strand Arcade store was in fee zone 5 and Ancio's restaurants were in fee zone 29. The IDP identified a wide range of activities which would be undertaken in each fee zone, the order in which they would be undertaken, and stated the time during which the D&C Contractor would occupy each fee zone. There were thousands of activities in the IDP.

The amended IDP

1. The primary judge did not use the IDP itself in determining the extent to which there was actionable nuisance. Instead, his Honour deployed an "amended IDP" which had been propounded by the plaintiffs and determined that insofar as occupation of the fee zones had exceeded the times in the amended IDP, it was unreasonable and therefore actionable. According to the amended IDP, work in fee zone 5 should have started on 15 October 2015 and finished on 1 November 2016. It did not finish until 3 December 2017. In fee zone 29, the work should have started on 12 December 2016 and finished on 3 September 2017. It did not finish until 28 February 2019.
2. The author of the amended IDP was Mr Griffith. The primary judge recorded that Mr Griffith was a "planning and programming" expert, who was not originally called to provide an opinion about the quality of the defendant's utilities investigations or management, but nonetheless ended up doing so (at [486]). There was a large issue at trial concerning Mr Griffith's opinions, much of which is incorporated below: 487 Mr Griffith considered that the delay risk associated with unknown utilities should have been known to the defendant. He says that the defendant should have taken further steps to reduce this risk by: (a) undertaking more utility surveys covering the rail alignment and adjacent properties with statistical analysis of the differences between the utility plans and survey results; and (b) reaching concluded agreements with utility providers that clearly defined treatment plans and agreed expected procedures. 488 Mr Griffith's expertise lay in the assessment of whether there were delays in the completion of the SLR Project and the cause of those delays. Notably, the defendant challenged Mr Griffith's evidence relating to the cause of the delays and the reasoning applied in reaching his conclusions. The defendant also suggested that the assumptions made by Mr Griffith were not available.
3. The primary judge explained the preparation by Mr Griffith of the amended IDP at [495]: Mr Griffith prepared an amended IDP, reflecting what he says would have been reasonable allowances for the works and, in particular, the utility treatments, should the defendant have undertaken those further steps he suggests. There is obviously hindsight in the calculation but the point is to provide some indication of what might have been a reasonable timeframe for the works to have been completed in each fee zone, assuming more knowledge and agreement in respect of utilities at the outset, (thereby meaning less delay during the works).

The error in the determination of the period Ancio suffered actionable nuisance

1. There was an error in the dates applicable for Ancio's claim in fee zone 29, which was corrected by his Honour in a subsequent judgment under the slip rule (the application was not opposed by TfNSW): Hunt Leather Pty Ltd v Transport for NSW (No 3) [2023] NSWSC 1598 at [12]. For reasons which will become apparent, it is convenient to reproduce [9]-[12] of that judgment: 9 In paragraph [936] of the judgment, I found that I would adopt Mr Griffith's amended Initial Delivery Program ("IDP") as an appropriate measure for determining the point at which the interference with the land became unreasonable. I set out a table in paragraph [935] of the judgment. I identified Mr Griffith's corrected IDP occupation period as between 12 December 2016 and 3 September 2017. On that basis, I commenced the period of nuisance for Ancio on 3 September 2017. 10 Mr Hochroth points out that, in fact, I had already found that the period of interference commenced for Ancio in May 2016 and, thus, my table (which set out the occupation period as commencing on 12 December 2016) was incorrect. 11 I accept that what I had intended to find in the table at paragraph [935] and the finding at [936] was that there was a specific period during which the works on behalf of the defendant were reasonable but, after a specific period, the work became unreasonable, such that that was the date on which the period of nuisance commenced. 12 In those circumstances, I accept that the commencement of the period of nuisance for Ancio on 3 September 2017 was an accidental slip. The date in the table is incorrect and inconsistent with my earlier findings. The period of nuisance for Ancio should commence on 27 January 2017 and end on 28 February 2019. The date will be amended in the table at [935] of the judgment and also at paragraphs [938] and [1108(1)] and [1108(2)].
2. The finding that the commencement of the interference to Mr Zisti's restaurant was 7 May 2016 was at [888]-[909], where his Honour concluded that the interference continued between 7 May 2016 and 28 February 2019.
3. It is apparent from the above how his Honour proceeded. Because the only integer that mattered for the purposes of calculating damages was the point at which the interference became, on the approach taken by his Honour, no longer reasonable, his Honour only corrected the date of 3 September 2017, replacing it with 27 January 2017. However, as the passage at [9]-[10] of the later judgment makes plain, the starting date for the actual occupation (which on the approach taken by his Honour was not tortious) was 7 May 2016, not 12 December 2016, despite that date not being corrected under the slip rule. It is also clear that the important date of 27 January 2017 was determined by using the methodology in the main judgment, which admitted of a period under the corrected IDP of non-tortious occupation of the period from 12 December 2016 until 3 September 2017 (which is 265 days), and shifted that period so that it commenced on 7 May 2016 (7 May 2016 until 27 January 2017 is also 265 days).

The way Mr Griffith calculated the amended IDP

1. How then did Mr Griffith calculate his amended IDP? Attachment 6 to his report was not included in the appeal books, but at the Court's request was provided on the last day of the hearing of the appeal. In that document he explained, in paragraph 625, that on his calculations the "IDP Occupation" of fee zone 5 of 281 days had, when corrected, increased to 349 days. In the case of fee zone 29, IDP Occupation of 211 days had increased to 251 days. In paragraph 626 he explained why. In both cases, 19 days were attributable to "Increased Earthworks Contingency" and "Inclement Weather Allowance". In fee zone 5, there were also 36 days for "Early Works Design Links" and 13 days for "Increased Float between Utility Treatments". In fee zone 29, there were 25 days for "Increased Allowance for Treatment of Unknown Utilities", 8 days for "Increased Float between Utility Treatments" and a reduction of 12 days for "Start date delay mitigation" (not all of those delays extended the time cumulatively). Each of those categories was explained in paragraphs 628-665 in his report. For example, Mr Griffith was critical of the fact that the IDP did not include any "Float", which was essentially an allowance for various contingencies ("In my opinion, a contractor should reasonably have included some contingency in the IDP for the higher risk Activities such as Utility Treatments and Civil Works"). Mr Griffith also considered that there should have been a contingency for Unknown Utilities ("A Contractor acting reasonably would have made an allowance for [the delay in completing Unknown Utilities] in the IDP").
2. Mr Griffith produced a table in section 2.3 of his report headed "Corrected IDP" for the purpose of correcting the IDP so as "to represent a reasonable baseline against which to assess delay to Fee Zone Completion", based on the links between the design submissions and construction, the lack of general contingency, lack of contingency for Unknown Utilities, lack of float between Utility Treatment Activities in successive fee zones, and lack of inclement weather allowance. The result was that the "IDP occupation" for fee zones 5 and 29 increased from 281 and 211 days, respectively, to 349 and 251 days, respectively.
3. It is worth explaining two aspects of the details of Mr Griffith's reasoning. The largest contributor to the increased times is an allowance for "utility treatment activities", and the most straightforward component of the increase was the incorporation of an allowance for inclement weather.

Liability of TfNSW for nuisance for work directed by it

1. TfNSW was not a landowner. Nor did it do any relevant construction work. Nor was it said to be vicariously liable for the conduct of any contractors. Instead, it was found to be personally liable for creating the state of affairs which led to the nuisance: at [939]-[946]. The essence of the problem was that the disincentives in the Project Deed for delayed occupation of a fee zone were insufficient. Simplifying the position considerably, the total amount of daily fees for occupying fee zones beyond the "Base Fee Zone Occupation Period" was capped at $7.5 million, and even that amount might in certain circumstances be reduced by the $3 million "Base Fee Zone Credit" (the details are given at [224]-[225] of the reasons of the primary judge). (For completeness, it may be noted that the "Base Fee Zone Occupation Period" was calculated by reference to Schedule B9, as opposed to the IDP in Schedule A10.)
2. The primary judge concluded: 944 In the end, I agree with Mr McIntyre, one of the defendant's experts, to the effect that the defendant was faced with competing interests, and I agree with Mr Hardman that the defendant was required to undertake a commercial negotiation. The problem is that it did so on terms that were to the advantage of OpCo at a time when the risk to business owners along the route remained high. That which was predicted by Ausgrid, and had been described by the defendant as an extreme risk, occurred. 945 Whilst the SLR was completed only a year behind schedule, the defendant's fee zone strategy failed because business owners were subject to extensive construction activities for periods far in excess of that originally anticipated. The defendant took the risk of that occurring when it entered into the Project Deed on the terms that it did. It was the business owners who bore the consequence of the decision. The defendant created that state of affairs. 946 For these reasons, the defendant is personally responsible for the nuisance and is liable to Hunt Leather and Ancio in respect of the losses which they have sustained.
3. That approach accords with authority. It is sufficient if the defendant "created, adopted or continued" the nuisance: Hargrave v Goldman (1963) 110 CLR 40 at 62; [1963] HCA 56. Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 arose from a directed verdict for the defendant in an action for negligence and nuisance. A contracted plumber had gone onto the premises and mistakenly turned on a stopcock which caused water to flow into the plaintiff's neighbouring land. It was admitted that the defendant did not create it, and was not shown to have known of its existence or allowed it to continue: at 160. However, Jordan CJ was at pains to emphasise that "[a] person who procures the doing of an act is liable for its actual consequences and for anything necessarily involved in its being done whomsoever he may have procured to do it. He is liable for the acts of any agent of his acting within the scope of his employment" at 170; see also at 165. The High Court dismissed an appeal: (1940) 62 CLR 637; [1940] HCA 1, with each of Latham CJ, Starke and Dixon JJ confirming there could be no liability for nuisance from the unanticipated and faultless act of the owner: at 646, 651, 659. This is different from the present facts, and indeed Latham CJ noted at 646 that "the defendant did not employ the plumber to do any act of which the nuisance was the necessary or a natural consequence".

Utilities risk

1. Reference has already been made to the "utilities risk": the risk of delay and additional work arising from the need to treat utilities lying beneath the route of the proposed light rail as well as the risk of discovery of previously unknown utilities under the route which would need to be dealt with. The primary judge referred to there being two levels at which the utilities risk arose: in part because of the absence of agreements with utility providers such as Ausgrid, and in part because of the problems which might arise from the discovery of unknown utilities along the route.
2. His Honour said: 108 The NSW Government had announced and promoted the idea that the SLR would be constructed in stages. Occupation periods were specified in the Project Deed. An Initial Delivery Program ("IDP") was attached to the Project Deed. This was intended to provide a schedule for the construction works in individual stages (fee zones). Part of the schedule included allowances for the treatment of utilities in each fee zone. The risk was that, if more utilities were discovered in a particular fee zone and/or there were difficulties in reaching agreement with utility providers, then the IDP would be impacted and the occupation period in each fee zone would be extended. This is because: (a) in respect of existing and known utilities, it would be necessary to reach agreement with utility providers as to how the utilities could be treated; and (b) the discovery of any previously unknown utility would require the D&C contractor to: (i) identify it; (ii) investigate it; (iii) figure out how the construction works would impact upon the utility; (iv) determine whether the utility needed to be relocated or merely protected; (v) determine whether that work could be performed by the D&C contractor ("contestable work") or whether it would have to be done by the utility provider itself ("non-contestable work"); (vi) plan for the work; and (vi) undertake the utility work. 109 All utilities were owned by third party utility providers. Some utilities could only be handled by the owner of the utilities. Others could be treated by the D&C contractor, as needed.
3. The Project Deed addressed the utilities risk in the Design and Construct contract, as summarised by the primary judge at [216]-[228], including, importantly, cl 12.3. The clause is long and reproduced in its entirety by the primary judge at [224]. His Honour summarised its effect at [225]: The effect of cl 12.3 was to make OpCo liable to the defendant for a specified amount for each day that OpCo occupied each fee zone longer than the agreed period. Daily fees were calculated for each day that the "Actual Fee Zone Occupation Period" exceeded the "Base Fee Zone Occupation Period." As was evidenced in cl 12.3(a), a sliding scale of amounts applied, but the total amount was capped at the aggregate of $7.5 million for all daily fees for which OpCo may become liable. Further, at financial close, OpCo would be allocated a credit of $3 million ("Base Fee Zone Credit") subject to conditions.

Steps to identify unknown utilities

1. How could TfNSW have obtained better knowledge of unknown utilities? TfNSW's basic submission was simple: "to achieve greater certainty about what utilities were under George Street, for example, in effect cannot be done other than by digging up George Street and having a look".
2. The primary judge recorded at [168] that, by 10 March 2014, TfNSW had undertaken surveys along the Sydney Light Rail route comprising 105,032 electronic files, all to be issued to the proponents for tender on secure hard drives, and at [178] that on 12 June 2014, TfNSW published further survey data comprising 1,855 electronic files issued to the proponents for tender. This work was done, at least substantially, by a trenching contractor, pursuant to a contract in September 2013 which required the contractor to: (a) carry out a desktop study of the "Dial Before You Dig" documentation; (b) coordinate with others to determine the exact location and depth of trenches required; (c) conduct field verification of existing infrastructure and services (known and unknown) and propose trench locations; (d) facilitate interface agreements with technical advisers and utility providers to optimise access to utilities; and (e) obtain all of the necessary approvals, including from responsible authorities, and comply with their conditions.
3. Mr Griffith assumed full knowledge of utilities in his amended IDP. He confirmed in cross-examination that he did not say what additional surveying should have been undertaken: MR MILLER: You don't say anywhere in your report what more utility surveys needed to be undertaken than were. Do you agree? MR GRIFFITH: No. MR MILLER: You don't say anywhere in your report what more part or parts of the alignment needed to be the subject of more survey; do you? MR GRIFFITH: No.
4. Further, his view that insufficient surveying had been undertaken was a product merely of the fact that so many unknown utilities were encountered during construction: MR MILLER: Mr Griffith, what you do in your report is say because there were a number of unknown utilities found in the fee zones that you have looked at that are recorded in a utilities register, it must therefore follow that there was insufficient utilities investigation carried out by the date of the project deed; don't you agree? MR GRIFFITH: What I say is because there were as many unknown utilities as there were known utilities, that insufficient utility investigations were carried out. MR MILLER: So the answer to my question is yes, isn't it? MR GRIFFITH: If that's the question that you have asked.

Different delivery model?

1. The trial judge rejected the respondents' case that there should have been a different delivery model: at [780]-[790]. In large measure this turned on the finding that utility owners such as Ausgrid would not have committed to any treatments in advance of a completed detailed design (as opposed to a concept level design). There was no challenge to that rejection. His Honour continued at [790]: In my view, the delivery model was not the problem. As identified by Mr Griffith (and as the documents demonstrate), the problem was that there were too many previously unknown utilities which continued to be discovered in the individual fee zones. The terms on which the defendant engaged the D&C contractor provided relief to the D&C contractor in the case of such events and offered no disincentive for overstaying in each fee zone. At least according to the D&C contractor, the absence of an interface agreement with Ausgrid and the differences between the initial guidelines (attached to the Project Deed) and Ausgrid's guidelines led to the D&C contractor overstaying its occupation of the fee zones. Having regard to the terms of the Project Deed, the D&C contractor was entitled to relief for these differences.
2. The primary judge rejected TfNSW's submission that the utilities risk was allocated to OpCo, holding that cl 12.3 provided no disincentive for overstaying in the fee zones. There was no challenge to that finding. The primary judge concluded at [804]-[805] that the risk of delayed completion of the works in each fee zone caused by the discovery of unknown utilities and changes to known utilities continued, and despite TfNSW's initial plans that OpCo assume that risk, the result was "an arrangement which imposed little of that risk on the D&C contractor", and in turn "the business owners were exposed to that risk and the risk came home".

The dispositive reasoning of the primary judge

1. Under the heading "Was the interference with the plaintiffs' businesses substantial and unreasonable?", the primary judge concluded that it was at [910]-[923].
2. His Honour said: 912 Whether the interference with the plaintiffs' use of their properties was unreasonable must be assessed objectively, having regard to the position of both landowners (or occupiers) and the uses to which the land was being put. 913 This necessarily involves an evaluative assessment of the principle of give and take. It is not an assessment based on some legal standard. It is necessary to consider what would be reasonable for a person in the position of the plaintiffs to put up with, having regard to the principle of give and take.
3. The primary judge said at [914] that the period of the interference must be an important factor in assessing reasonableness, and noted that it was lengthy and much longer than TfNSW had assured businesses would occur. His Honour said that other relevant factors included the nature and purpose of the activities, the relationship between the parties, including the obligations of the landowner from which the nuisance emanates, the period during which the interference was substantial, the benefit of the activities to the public, whether the landowner took care to avoid unnecessary interference, whether there were self-help measures available to the claimants, and the extent to which the defendant might have known or anticipated that the interference would impact on the financial interests of the adjoining landowners. Many of those factors pointed in favour of a longer period of time for construction. The essence of the evaluative decision made by his Honour was as follows: 916 … However, the period is not never-ending. Nothing about the defendant's power or authority permitted it to infringe the rights of the landowners and users along the route for an excessive period. 917 In my view, assessed objectively, the lead plaintiffs (Hunt Leather and Ancio) suffered an interference with the use of their properties which was both substantial and unreasonable. 918 Both the Hunt Leather Strand Arcade store and Mr Zisti's restaurant were exposed to the effects of the construction works for a period of three years. This must be contrasted with the much shorter periods set out in the IDP (and even Mr Griffith's amended IDP). The defendant may be correct in suggesting that the IDP was merely an estimate but it was an estimate which the parties must have considered to be reasonable and reflective of the way they thought the work could and should be done, assuming that there would be proper planning.

The notice of appeal

1. The notice of appeal contained 11 grounds. Parts or all of grounds 1, 2(b), 3, 5, 6, 7 and 8 turn on questions of fact. Grounds 2(a) and 4 turn on questions of law, as do the grounds concerning s 43A.
2. Ground 1 challenged the finding that Hunt Leather and Ancio suffered an interference which was both substantial and unreasonable for which TfNSW was responsible, primarily because it was not open to his Honour to have regard to the IDP (or the amended IDP) as a reasonable estimate. Ground 2(b) was that the primary judge erred in finding that TfNSW did not use reasonable care "to protect the interests of the business owners" along the Sydney Light Rail route. Ground 3 was that the primary judge failed to give adequate reasons for finding that construction activities took substantially longer than planned. Ground 5 maintained that the primary judge erred in concluding that the use of the roads along the route for the purpose of constructing the Sydney Light Rail was an "exceptional" rather than a "common and ordinary" use of the roads. Ground 6 was that the primary judge erred in finding that TfNSW failed to show that any nuisance caused by the construction of the SLR for which TfNSW would otherwise be liable was inevitable. Ground 8 was that the primary judge erred in finding that the construction activities took substantially longer than planned because of the discovery of previously unknown utilities and the time taken to reach agreement with utility providers, as well as "the issues surrounding Modification 25", and also erred in finding that there was a sufficient evidentiary basis to conclude that the nuisance commenced on 1 November 2016 and 3 September 2017 in respect of Hunt Leather and Ancio respectively, based on the amended IDP.
3. Ground 2(a) was that the primary judge failed to treat as determinative whether TfNSW had taken reasonable care in connection with the construction activity. This ground amounted to the proposition that because the construction of the SLR was a means to an end, and was a legitimate endeavour, it could not constitute an actionable nuisance, at least so long as TfNSW was exercising reasonable care. Ground 4 complained of error in finding that TfNSW bore the onus of proving that it took all reasonable care in connection with the construction along the route of the SLR project.
4. Ground 7 concerned the calculation of damages, and challenged the allowance in the calculation of damages given for a 12 month "recovery period" after the cessation of the occupation of the fee zones.

The main issue of fact

1. The primary judge found that insofar as construction took longer than the timeframes identified in the amended IDP, it was actionable nuisance. Ground 1 challenged the factual premise of that reasoning. For the reasons which have been anticipated in the foregoing, this ground is made out.
2. The IDP could not on its face be regarded as anything like a reasonable estimate of construction time in any particular fee zone. It made no allowance for inclement weather. It made no allowance for the discovery of unknown utilities and their treatment. It made no allowance for various other contingencies. It may well have been the basis for the media release, but if so it was not a reasonable basis for any estimate of construction time in any particular fee zone.
3. The "amended IDP" increased the time each fee zone would be occupied by construction for a few months, to address deficiencies apparent to Mr Griffith on the face of the original IDP, such as lack of allowance for bad weather and certain contingencies. However, the amended IDP proceeded on the basis that no construction would commence until there was complete knowledge of the thousands of sub-surface utilities along the route.
4. It was not established that it was possible, and if so how long it would take and whether that too would amount to a substantial interference with the enjoyment of the plaintiffs' land, to obtain complete knowledge of the unknown utilities. These points are developed below.
5. Fee zone 5 was a single block - George St between King and Market Streets. So too were many other of the fee zones in the Sydney CBD (fee zone 6 was George St between Market and Park Streets; fee zone 7 was George St between Park and Bathurst Streets, fee zone 8 was George St between Bathurst and Liverpool Streets, and so on). It is in the order of 230-250m long. Before construction work commenced, 67 utilities were identified, and a further 55 utilities were identified during construction. That is an average of a utility every couple of metres.
6. The utilities identified in advance of construction along the Sydney Light Rail route were extremely numerous. Mr Griffith's report stated in Attachment 6: I have identified that the Fee Zones and intersections are potentially impacted by 2,942 individual known Utility Services. Of these, based on Schedule F8, the Contract requires work on 2,456 Services.

Ground 2(b) - did the primary judge err in finding that TfNSW did not use reasonable care

1. On the view taken by the primary judge, this issue did not arise. His Honour introduced this short section of his reasons as follows: 812 I have found this question a difficult one to answer because: (1) the plaintiffs do not plead the existence of a duty of care or any breach thereof; (2) the plaintiffs say in their Reply that proving that the defendant failed to take care is not part of their case; (3) the plaintiffs do not say that proving negligence is any part of Cases A, B or C as identified in their closing submissions; and (4) the defendant says that it is not obliged to prove that it did take care but says that, in any event, the plaintiffs have not proved that it failed to take care. 813 In my view, establishing that the defendant failed to take care is not essential …
2. The primary judge also noted that, as the issue was pressed by TfNSW, he would consider it. That approach accorded with the general principle that a trial judge should determine all issues in order to assist the appeal process and obviate the need for a retrial, and was especially apt in circumstances where there was a long and factually intensive trial in an area where the law is not free from doubt: see the authorities considered in PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312 at [15] and Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd [2024] NSWCA 174 at [129]-[131].
3. The primary judge was also conscious, because of the way the issue arose, that certain difficulties stood in the way of the determination of this issue. The plaintiffs had disavowed establishing a failure to take reasonable care, and their case was advanced accordingly. His Honour noted at [815] that: I have also found the question a difficult one to answer because the failures identified by the plaintiffs in the Statement of Claim are particularised in the context of the delay, rather than a breach of any duty of care. Normally, when an allegation of a breach of duty of care by a statutory authority is made, there would be quite specific particulars in the Statement of Claim. I can only look at the evidence and make a determination based on the expert evidence as well as the planning documents.
4. Thereafter, his Honour explained why he was unsatisfied that TfNSW had established that it had used reasonable care. His Honour's reasons were attuned to the way in which the issue arose, and (contrary to the way this ground is formulated) fall short of a finding that TfNSW did not use reasonable care. There is of course a difference between the two. The circumstances are unusual, because normally a plaintiff will seek to establish a failure to take reasonable care, and it is sufficient for a defendant to resist that finding, rather than to seek and obtain a finding that it did exercise reasonable care.

Grounds 3 and 8 - adequacy of reasons and cause of delay

1. These grounds were addressed concurrently. Insofar as these grounds are based on the difficulties of using the amended IDP to determine when the actionable nuisance began, they have been addressed above.
2. Insofar as ground 3 complains of a failure to give reasons, nothing turns on it. TfNSW did not seek a retrial. Whether or not there was a failure to give reasons, this Court will conduct a real review of the trial. Even if there was a failure to give reasons, if the plaintiffs were correctly found to be entitled to judgment, the appeal will be dismissed, and if they were not entitled to judgment, the appeal will be allowed. These points were made in Housman v Camuglia (2021) 104 NSWLR 615; [2021] NSWCA 106 at [33]-[34] by reference to earlier authority: In the foregoing I have refrained from expressing a conclusion whether the reasons were inadequate. That is because in an appeal such as the present, which is not confined to questions of law, and which proceeds by way of rehearing, and where there are no issues of credibility, the adequacy or inadequacy of reasons is usually not to the point. As was said by this Court in Stephenson v Santos [2020] NSWCA 262 at [24]: "[E]ven if there were a deficiency in the reasons, this Court would not intervene unless it were persuaded that the finding could not stand. This appeal is by way of rehearing, and there is no need for Ms Stephenson to establish error of law. For the reasons given under the heading 'Inadequacy of reasons as separate ground' in Shellharbour City Council v Rhiannon Rigby [2006] NSWCA 308, which have subsequently been followed in NSW Police Force v Winter [2011] NSWCA 330 at [89]-[90], these grounds were not of themselves sufficient to make out an appeal." The same point was made in Capilano Honey Ltd v Dowling (No 2) [2018] NSWCA 217 at [41]: "If the reasons provided addressed an issue, it is open to the unsuccessful party to challenge the reasoning on appeal. If they did not address an issue, it is open to the unsuccessful party to contend that the matter was not considered by the trial judge and, if materiality is established, the omission demonstrates error on that basis. The reasons given are the judge's actual reasons for deciding a point. Usually the appeal court can address the substance of the matter and will not remit because the reasons were 'inadequate'."

Ground 5 - "exceptional" as opposed to "common and ordinary" use

1. This ground maintained that the primary judge erred in finding that the use of roads for the purpose of construction was "exceptional". It is a relatively minor ground, described in TfNSW's submissions as one of the "miscellaneous errors".
2. The primary judge said: 655 The defendant's position is that carrying out construction activity on a road is a common and ordinary use of the land, as roads are regularly altered and maintained. That would be correct if the defendant had merely been carrying out roadworks. However, that description of the work being undertaken during construction of the SLR route is perhaps too simple and rather ignores the context in which the work was being done. I say this for the following reasons: (1) firstly, the defendant was not a roads authority. It was a statutory agency with the powers and functions set out in the TA Act, which included the development and administration of public transport systems; and (2) secondly, roadworks do not normally involve the laying of rail tracks on a road, the excavation of the road surface and the erection of platforms or stations along some of Sydney's busiest streets. 656 In the end, I do not consider that the use of the roads - that is, George Street and the other roads comprising the SLR route for the purposes of constructing the light rail - was a common and ordinary use of those roads. It was exceptional.
3. This ground's relative insignificance is reflected in the observation made by the primary judge in the immediately following paragraph, that "such a finding does not have the significance that the plaintiffs suggest", and the statements that in his Honour's view, it was "merely a factor to be assessed in considering the reasonableness of the interference" and "does not lead to the imposition of a form of strict liability". His Honour was there referring to the submission advanced by the plaintiffs, and recorded at [648] that "the use of the roads constituting the light rail route was not common and ordinary and, as such, it is only necessary to establish that the interference with the plaintiffs' land was substantial in order to succeed".
4. Fearn v Board of Trustees of the Tate Gallery [2024] AC 1; [2023] UKSC 4 holds that a "common and ordinary use", which is "conveniently done", is not actionable, even if causing material discomfort or inconvenience, while conversely uses which are not "common and ordinary" result in liability even if the defendant conducted itself reasonably. These converse propositions find support in Lord Leggatt's reasons at [25]-[28]. However, as the primary judge noted at [650], Lord Sales, dissenting, favoured a broader approach, holding that while whether the defendant's conduct was common or ordinary according to the standards of the locality was "highly relevant" (at [235]) or "highly significant" (at [236]), it was not sufficient for a plaintiff merely to point to a substantial interference with the enjoyment of land by reason of conduct which was not a common or ordinary use of the land, and instead other facts came into play in assessing the conduct against an objective standard of reasonableness: at [234]-[237]. The primary judge said at [651] that it seemed to him that Lord Sales' observations were more consistent with the law as it had developed in Australia.

Ground 6 - was any nuisance caused by TfNSW inevitable?

1. This ground proceeded on the basis that the primary judge had correctly found at [828] that "if [TfNSW] can establish that the interference with the plaintiffs' property (which might otherwise give rise to an action in nuisance) was an inevitable consequence of carrying out the work, then the plaintiffs would not succeed". We did not understand the respondents to contend to the contrary.
2. It was accepted that TfNSW was authorised by statute to construct the Sydney Light Rail, and as McLure P explained in Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287; [2012] WASCA 79 at [122]-[123]: In considering whether a nuisance is inevitable it is necessary to distinguish between statutory provisions that require a specified activity to be carried out and provisions that permit, but do not require, a specified activity to be carried out. In the former case there is no separate requirement of inevitability; any nuisance resulting from the activity will be authorised unless it is caused by negligence on the part of the person conducting the activity. All that is required is that the specified activity be executed (performed) with reasonable care. See Trindade, Cane and Lunney, The Law of Torts in Australia (4th ed) [4.1.6.3]. Where the statute permits the specified activity to be carried on, it must be shown that what the legislation authorised could not be done without creating a nuisance and that the nuisance was not caused by negligence. The inevitability limb focuses attention, not on the execution of the specified activity, but on the decisions relating to whether, when or how to undertake the authorised activity. Thus, if the creation of a nuisance could have been avoided by the proper exercise of the statutory power (i.e. one that was consistent with its scope and purpose(s)), the defence will fail even in the absence of negligence: Melaleuca Estate Pty Ltd v Port Stephens Council [2006] NSWCA 31 at [48]-[57].
3. That understanding of "inevitability" was recently adopted by the Supreme Court of the United Kingdom in The Manchester Ship Canal Company Ltd v United Utilities Water Ltd (No 2) at [18]-[20] and [94].
4. The primary judge addressed this, as follows: 831 The defendant says that, as the plaintiffs have not established that an alternative delivery model would have produced a better outcome, the actual outcome must be viewed as inevitable. That is, despite everything that happened in the planning stage and the defendant's pronouncements about the construction being staged to avoid disruption to businesses, it was inevitable that the work would continue in the fee zones for very lengthy periods. On that approach, it would seem that all of the defendant's planning and negotiating was always doomed to fail. The insertion of an incentive clause (or any such clause) was never going to achieve anything. The IDP must have embodied nothing more than hope. The Occupation Schedule was unlikely to ever be satisfied. 832 I do not accept this. The idea that such an extended period of substantial interference with the businesses along the SLR route was inevitable seems contrary to everything said by the defendant during the planning stage and ALTRAC/OpCo's agreement to the Occupation Schedule. No evidence was adduced from the D&C contractor, Ausgrid, or ALTRAC/OpCo on this issue, but the defendant maintains that the nuisance was inevitable because the plaintiffs have not proved that the project could have been done through an alternative delivery model. 833 The onus is not on the plaintiffs to prove that the nuisance was not inevitable. I reject the defendant's submission that I should accept that the nuisance was inevitable based on what the plaintiffs have not proved. In my view, the defendant has not established its defence. The very existence of the fee zone strategy and the Occupation Schedule detracts from that which the defendant asserts. 834 I do not accept that the nuisance was the inevitable consequence of the exercise of the statutory authority by the defendant.

Grounds 2(a) and 4 - reasonable care and onus

1. Ground 2(a) challenges the rejection by the primary judge of TfNSW's submission that because construction was a legitimate activity, done for the end of establishing a light rail service, then there could be no nuisance if TFNSW showed that it was using reasonable care. This ground does not strictly arise for two reasons: first, because of TfNSW's success based on the insufficiency of the amended IDP as a basis for the judgment against it, and secondly because of the rejection of ground 2(b) above.
2. Ground 4 is related. It is that the primary judge erred in finding that TfNSW bore the onus of establishing that it took reasonable care in connection with the construction of the Sydney Light Rail. It is convenient to address both grounds together, and to do so concisely since they are non-dispositive.
3. The first submission is contrary to authority. When determining whether a claim of private nuisance has been made out, it is necessary to ask whether a particular use is "reasonable according to the ordinary uses of mankind living in society, or more correctly in a particular society": Elston v Dore (1982) 149 CLR 480 at 488; [1982] HCA 71, citing Sedleigh Denfield v O'Callaghan [1940] AC 880 at 903-904. It does not follow from the fact that a defendant has established that a use is being undertaken with reasonable care that there can be no nuisance. As much was rejected by Sir George Jessel MR in Broder v Saillard (1876) 2 Ch D 692 at 701-702: [A] man is entitled to the comfortable enjoyment of his dwelling-house. If his neighbour makes such a noise as to interfere with the ordinary use and enjoyment of his dwelling-house, so as to cause serious annoyance and disturbance, the occupier of the dwelling-house is entitled to be protected from it. It is no answer to say that the Defendant is only making a reasonable use of his property… . The test, therefore is whether the stables are unluckily so situated as that the noise from the horses, not being uncommon horses in any way, materially disturbs the comfort of the plaintiffs' dwelling-house, and prevents the people sleeping at night.
4. In Munro v Southern Dairies Ltd [1955] VLR 332 at 336, Sholl J said: It is no answer to say that the defendant is only making a reasonable use of his property, because there are many trades and many occupations which are not only reasonable, but necessary to be followed, and which still cannot be allowed to be followed in the proximity of dwelling-houses, so as to interfere with the comfort of their inhabitants.

Ground 7 - damages - timing issues

1. This ground turns on an element of the claims for damages. For the reasons already given, it does not arise. It was addressed only briefly in oral submissions. It will be addressed concisely in these reasons.
2. The primary judge assessed damages based not merely upon the period when the substantial interference with the enjoyment of the plaintiffs' land was taking place, but also, in the case of Hunt Leather, for a further 12 month "recovery period".
3. The assessment of damages took place in circumstances where it was accepted that that construction would in the best case occupy some months, and that the turnover and potential profitability of a neighbouring occupier's business would not bounce back to pre-construction levels on the day after that construction ceased. There is a measure of artificiality in this aspect of the claim, because the position is different following the completion of construction from the position which obtained before construction started. Formerly, each group member with premises on George St faced a busy street congested with traffic, which was replaced with a mostly pedestrianised street with a light rail service. But that may be put to one side for the purpose of addressing this ground.
4. TfNSW appeared to submit in writing that since there would always be a recovery period, whether the construction took place in a way that amounted to actionable nuisance or otherwise, no recovery period was applicable for the purposes of the calculation of damages. That is a little too simplistic. The certainty of some recovery period does not mean that the recovery period will be the same after a period of construction which has taken so long that it amounts to actionable nuisance compared with a much shorter period of construction. The real question posed by the concept of a "recovery period" as a component of damages is whether, by reason of the time the roadway and footpaths were occupied by construction exceeding the period identified as non-actionable, there was some additional recovery period over and above the inevitable recovery period which would arise even if the construction took place in a way which did not give rise to any nuisance.
5. The only answer to this ground advanced in the respondents' written submissions was that leave should not be granted to advance this ground, which is contrary to what was put at trial. There, senior counsel for TfNSW squarely accepted that there would be a recovery period of some length. That submission reflects a response to the more extreme submission advanced in writing by TfNSW, but is no answer to the point made in the previous paragraph.

Grounds 9, 10, 11 - section 43A of the Civil Liability Act

1. TfNSW relied on s 43A of the Civil Liability Act 2002 (NSW), which provides: 43A Proceedings against public or other authorities for the exercise of special statutory powers (1) This section applies to proceedings for civil liability to which this Part applies to the extent that the liability is based on a public or other authority's exercise of, or failure to exercise, a special statutory power conferred on the authority. (2) A special statutory power is a power - (a) that is conferred by or under a statute, and (b) that is of a kind that persons generally are not authorised to exercise without specific statutory authority. (3) For the purposes of any such proceedings, any act or omission involving an exercise of, or failure to exercise, a special statutory power does not give rise to civil liability unless the act or omission was in the circumstances so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power. (4) In the case of a special statutory power of a public or other authority to prohibit or regulate an activity, this section applies in addition to section 44.
2. The phrase "civil liability to which this Part applies" refers to Part 5 of the Act and, particularly, to section 40(1) of the Act, which indicates that "This Part applies to civil liability in tort". It is uncontroversial that TfNSW is a "public or other authority" for the purposes of section 43A(1).

The reasons of the primary judge and the parties' submissions

1. The primary judge considered that s 43A had no application, because s 43A did not operate as a defence, and there was no occasion for applying the attenuated standard of care: at [705]-[706]. The primary judge went on to consider the position if, contrary his view, s 43A could apply. In that case, it would be necessary for TfNSW to establish the preconditions to the section, namely, that liability was "based on" the exercise of, or failure to exercise, a particular power, and that the power was a "special statutory power".
2. At [709], the primary judge distinguished between "a liability based on the exercise of (or failure to exercise) a special statutory power and an act or omission involving an exercise of (or failure to exercise) such a power" (emphasis added). That distinction was significant to his Honour's reasoning. As was the case in Gales Holdings Pty Ltd v Tweed Shire Council (2013) 85 NSWLR 514 at [197], it is not sufficient to point to an element of public power in the facts constituting the nuisance; what his Honour required was that the complaint be directed to the public authority's choice to exercise or not exercise that power.
3. In response, TfNSW said that s 43A was never intended to be so confined. The appellant took issue with the primary judge's understanding of a key passage in Basten JA's judgment in Curtis v Harden Shire Council (2014) 88 NSWLR 10; [2014] NSWCA 314 at [244], where his Honour appeared to distinguish between liability "based on" the exercise of a statutory power and liability merely "involving" such an exercise. To the contrary, TfNSW submitted that Basten JA cast the question as whether the liability is one "involving an exercise of, or failure to exercise, a special statutory power". On that view, the relevant question was whether there is a "sufficient connection between the liability of the appellant (properly characterised) and its exercise of a special statutory power". But the respondents drew attention to decisions which seemed in terms to draw the distinction to which the primary judge adverted, including in Weber v Greater Hume Shire Council (2019) 100 NSWLR 1; [2019] NSWCA 74 at [47], which distinguished between activities that could be "undertaken in accordance with the general law" as opposed to special statutory powers "reliant for their lawfulness on a statutory power".

Consideration

1. Once again, these grounds do not arise in light of what has been said above as to the principal challenge to the finding of fact, and we address these grounds concisely.
2. First, as the primary judge noted at [692], s 43A does not provide, strictly, for a "defence". "That characterisation obscures the true operation of the section", as Basten JA said writing for this Court in Della Franca v Lorenzato; Burwood Council v Lorenzato [2021] NSWCA 321 at [8], [107], [147]. Rather, s 43A(1) imposes an altered standard of care, attenuating the standard of care required to be proved when establishing the "civil liability in tort" to which s 40(1) refers.
3. Secondly, it is no part of a claim for nuisance to show that the defendant failed to take reasonable care. The fact that a defendant who creates, adopts or continues a nuisance may be found liable demonstrates as much. And the same is true even when the defendant causes the interference directly. "Nuisance is a term used to cover a wide variety of tortious acts or omissions and in many negligence in the narrow sense is not essential": Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty Ltd [1967] 1 AC 617 at 639. It follows that s 43A has no operation.
4. Thirdly, and consistently with the above, in Gales Holdings Pty Limited v Tweed Shire Council (2013) 85 NSWLR 514; [2013] NSWCA 382 this Court rejected reliance on s 43A in answer to a claim in nuisance. The correctness of this decision was not challenged. Emmett JA observed at [196]-[197] that: A clear distinction is drawn in the legislation between a liability that is based on the exercise of, or failure to exercise, a special statutory power, and an act or omission involving an exercise or failure to exercise such a power (see Precision Products (NSW) Pty Ltd v Hawkesbury City Council [2008] NSWCA 278; 74 NSWLR 102 at 173). Gales' claims are not based on any allegation that the Council failed to exercise a particular statutory power or that it exercised a particular power negligently or unreasonably. Rather, Gales sues in nuisance, not for breach of statutory duty, in relation to the continuing operation of the Council's stormwater drainage network. It is a misconception to suggest that Gales' claim is based on the Council's exercise of any particular statutory power. Accordingly, s 43A has no application to the proceedings.

The cross-appeal - should damages include the funder's 40% fee?

1. For the reasons already given, the appeal must be allowed. Turning to the cross-appeal, whether or not the partial costs order made by the primary judge and noted at [4] above discloses reviewable error is entirely arid, because the order will in any event be set aside. Likewise, the question whether damages should include a litigation funder's fee does not arise. However, unlike the exercise of the discretion as to the costs of this particular trial, the question concerning the recoverability of the funder's fee was the subject of full submissions, is a question of principle, and one which will recur in other cases. It is addressed below.

The cross-appellants' submissions

1. At trial and on appeal, the cross-appellants submitted that the award of damages should include compensation for the litigation funder's commission. The litigation funding agreement with International Litigation Partners No 16 Pte Ltd provided, relevantly, that the funder would pay all legal costs and disbursements, meet any adverse costs orders, provide any security for costs, provide "litigation management services", and upon receipt of a "Resolution Sum" would be entitled to reimbursement of the costs it had paid, plus a "Funder's Commission". The amount of the commission principally depended on when the resolution was reached, and ranged between 25% and 40%. In the circumstances which led to the judgments being obtained in favour of Hunt Leather and Ancio, the fee was 40%.
2. Common question 10 asked whether the cross-appellants were entitled to claim as a head of damages their reasonable litigation funding costs without needing to show that it was TfNSW's nuisance which rendered them impecunious, that they would have pursued the claim without litigation funding had they the means, or that they negotiated over the terms of the litigation funding agreement. Common question 11 asked, assuming common question 10 was answered in the affirmative, what a reasonable rate of recoverable litigation funding costs would be.
3. The primary judge found against the cross-appellants on this point, holding that litigation funding costs were not recoverable as a head of damages: Hunt Leather Pty Ltd v Transport for NSW (No 4) [2024] NSWSC 140. His Honour found that reasonable foreseeability was not a sufficient criterion to extend legal responsibility for loss, and considered that the claimed loss was too remote: at [100]-[102]. His Honour considered that the loss was not caused by the cross-respondent's nuisance but rather by the cross-appellants' decision, made freely and willingly, to enter into a litigation funding agreement: at [103]-[111]. Further, the primary judge did not consider it appropriate to extend legal responsibility for the loss to the cross-respondent: at [112]-[122]. Common question 11 did not arise.
4. On appeal, the cross-appellants submitted that the loss and damage suffered by the group members included the cost of obtaining the funding necessary to bring the present proceeding, and that the trial judge erred in concluding otherwise. Necessarily, in light of his Honour's reasons, they contended that the primary judge had erred in holding that the loss was too remote, that there was a break in the chain of causation, and that it was not appropriate for the cross-respondent to be responsible for the obligation to pay the litigation funder.

TfNSW's submissions

1. In response, TfNSW observed that the primary judge's view that the litigation funding was not litigation finance was not of decisive significance in his Honour's reasoning, and that in any event, the funding was more than simply passive litigation finance, as it rewarded the funder for the risk it assumed and provided remuneration for management services.
2. TfNSW also submitted that reasonable foreseeability is not the sole restriction upon the recoverability of damages, and that remoteness principles and normative considerations also apply. Further, they submitted that they could not have reasonably been expected to foresee the events which transpired - specifically, the litigation and this type of funding. They noted that the scope of their obligation in issue was to avoid substantial and unreasonable interference with the use of the land, and that litigation funding was not within the scope of risk created by the nuisance. They submitted that the cross-appellants entered into the funding agreement independently of TfNSW's conduct, breaking the chain of causation, and that it cannot be the case that litigants can deliberately choose to increase their loss. They also submitted that allowing this cost to be recoverable would advantage funded plaintiffs over others, and that it was not appropriate for the scope of a defendant's liability to extend to payments made for the purposes of enabling litigation against that defendant.

Consideration

1. The primary judge was correct to dismiss this aspect of the plaintiffs' claim, for the following reasons, which substantially overlap with those given by his Honour.
2. First, there can be no doubt that the entry into the funding agreements was a voluntary act by some group members. Moreover, the premise of common question 10 was that no assumption was to be made that the group member was impecunious or that any impecuniosity was brought about by the tortious conduct of the defendant, thereby serving to emphasise the voluntariness of the group member's decision. Their decisions to do so, or to choose not to do so, might be attended by very different considerations. A supermarket which is a franchisee and a supermarket which is a branch of a major listed Australian company might both be affected in similar ways by the construction of the Sydney Light Rail, but each might have quite different approaches as to how they would approach the decision to enter into the funding agreement.
3. Those and similar considerations suggest that there are difficulties in treating the cost of the funding agreement as a component of the damages for which TfNSW would be liable. It seems decidedly odd that TfNSW would be liable for 40% more to a franchisee who entered into a funding agreement, than to a public company which operated a similarly sized and similarly affected supermarket next door.
4. The group members who entered into funding agreements have chosen to bargain away the risk of being exposed to an adverse costs order and a liability to pay security for costs, as explained by the primary judge: 109 What the plaintiffs have really done is enter into a bargain with a third party, by which they agreed to give the third party an amount of money in return for the third party taking the risk on the litigation. The loss arises from the plaintiffs' own conduct or decision to pursue the litigation on a risk free basis. Without reference to the defendant, the plaintiffs have increased "their loss" by 40% so as to ensure that they did not bear any costs associated with the litigation. They have not otherwise reduced their loss of profits flowing from the defendant's conduct. They have agreed to "take a loss" on the amount they actually recover from the defendant by way of actual losses caused by the defendant, so as to enable them to not only pursue the litigation but to do so on a risk free basis. 110 The funder's commission is different from litigation finance provide by a third party to a plaintiff to enable the plaintiff to pay its legal costs. The funder's commission represents the funder's return on its investment. The funder did not lend money to the plaintiffs. It agreed to pay the plaintiffs' expenses in return for a slice of the damages. 111 In those circumstances, the causal chain between the defendant's conduct and the loss has been broken. The plaintiffs' conduct in entering into such an agreement was an intervening act which broke the causal chain between the tortious conduct and the so called loss. I do not accept that the defendant caused the claimed loss, being the funder's commission.

Conclusion and orders

1. For those reasons, the appeal should be allowed, the orders made by the Court at first instance in favour of Hunt Leather and Ancio should be set aside, and in lieu thereof, judgments should be entered in favour of TfNSW. TfNSW did not suggest that any of the answers to the common questions given by the primary judge needed to be set aside. The cross-appeal should be dismissed. There is no reason of which the Court is presently aware for costs not to follow the event, both at first instance and in this Court, but that will not prevent any party from making an application within the time stated in UCPR r 36.16.
2. The Court makes the following orders:
3. Appeal allowed.
4. Cross-appeal dismissed.
5. Set aside each of (i) order 1 made in the Common Law Division on 3 August 2023, (ii) the judgment in favour of Hunt Leather Pty Ltd entered on 15 December 2023, (iii) the judgment in favour of Ancio Investments Pty Ltd entered on 8 February 2024, and in lieu thereof, order that (i) the proceedings be dismissed and (ii) the plaintiffs are to pay the defendant's costs.
6. Order the respondents/cross-appellants to pay the appellant's/cross-respondent's costs of the appeal and cross-appeal.

Amendments 20 September 2024 - changed order of counsel in coversheet 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: 20 September 2024