Damage Control – The High Court considers the duty of care owed by Statutory Authorities

Electricity Networks Corporation v Herridge Parties [2022] HCA 37

Summary

The High Court has held that a statutory authority responsible for maintaining electrical infrastructure owed a duty of care in relation to property damage and personal injury caused by infrastructure that was affixed to private property.

This decision has implications for statutory authorities who are responsible for maintaining infrastructure.

Background

Mrs Campbell owned an electrical pole on her property in Western Australia. A service cable attached to the pole provided electricity to Mrs Campbell’s property via the local electricity distribution system (EDS). In 2014, the pole fell over and caused a bushfire that damaged the neighbouring properties of the plaintiffs.

The plaintiffs commenced proceedings in the Supreme Court of Western Australia for negligence against:

1. Mrs Campbell;
2. Western Power (WP), the statutory authority responsible for the EDS and the service cable;
3. Thiess Services Ltd (Thiess), a contractor engaged by WP to conduct maintenance inspections of the EDS.

The Proceedings below

At first instance, Mrs Campbell and Thiess were apportioned responsibility on a 30/70 basis, and WP was held not to be liable. The Supreme Court of Western Australia found that WP owed a “narrow” duty to inspect the pole to ascertain if it could safely supply electricity and, if not, to ensure the pole was not used. WP had discharged this narrow duty by engaging Thiess to carry out maintenance inspections.

The other defendants appealed to the Court of Appeal, arguing that WP should also be held liable. The Court of Appeal agreed, finding that WP was liable for 50% of the damage.

Significantly, the Court of Appeal found that WP owed a “broad” duty. This required WP, in addition to its obligations under the narrow duty, to conduct regular inspections of privately owned poles and to warn the private owners of those poles of the risks associated with their ageing assets. The Court of Appeal reasoned that WP had breached this broad duty by failing to have a system in place for the periodic inspection of privately owned poles.

WP appealed to the High Court.

The Decision

The key issue on appeal was whether WP owed the broad duty, as found by the Court of Appeal. WP argued it did not because it lacked sufficient control over privately owned poles and any such duty would be inconsistent with the statutory framework.

The High Court unanimously dismissed WP’s appeal, upholding the broad duty.

Reasoning

From the outset, the Court observed there are no freestanding common law rules that fix when a statutory authority will owe a common law duty.  The starting point for analysing such a duty is examining the terms, scope and purpose of the applicable statutory framework: [21]. The Court then proceeded to assess the nature of the duty (if any) that WP owed in 4 steps.

1. Functions

First, the High Court identified the functions of WP: [34]. As a statutory corporation established under the Electricity Corporations Act 2005 (WA) (‘Act), WP’s functions were to undertake, operate, manage and maintain an EDS ([35]) and do other incidental activities: [36].

Those functions were qualified in several ways, including that they must be performed in accordance with prudent commercial principles: [38]. WP’s functions were further informed by rights and obligations it had under other laws: [36]:

1. As a distribution licence holder under the Electricity Industry Act 2004 (WA), WP had a duty to operate an EDS by maintaining any apparatus used to transport electricity: [41];
2. As a distributor under the Electricity Industry (Obligation to Connect) Regulations 2005 (WA) (Regulations), WP was obliged to attach and energise premises to an EDS: [43];
3. As an energy operator under the Energy Operators (Powers) Act 1979 (WA), WP had the right to access assets on any land to perform its functions: [44].

2. Powers

Second, the High Court identified which powers WP had exercised in the performance of its functions (as well as those which WP could have exercised but did not): [21].

These powers included WP’s general powers to perform its functions under the Act, and specific powers to manage or improve any property and to cause WP’s assets to be supported by fixing them to part of any structure: [47].

WP had exercised these powers by fixing its service cable to Mrs Campbell’s pole and then continuing to use the service cable as part of the EDS: [48].

3. Duty

Third, the High Court concluded that the common law would impose a duty on WP in relation to the exercise of its powers because WP, by exercising its powers, had increased the risk of ignition and fire spreading in connection with the delivery of electricity through the EDS: [52].

The Court observed that WP’s submissions regarding its “lack of control” over Mrs Campbell’s poles were misplaced: [53]. WP had the landowner’s deemed consent to enter private property and repair infrastructure, including privately owned poles: [54].

4. Inconsistency

Finally, the High Court found that the imposition of the broad duty was not inconsistent with the relevant statutory framework: [55]. For instance, s 25 of the Electricity Act 1945 (WA) imposed duties on WP to maintain any of its apparatuses that were located on private property, and to take all reasonable precautions to avoid the risk of fire. Such duties were consistent with the broad duty: [56].

Conclusion

Statutory authorities cannot simply deny that they owe a common law duty in relation to infrastructure assets because they are affixed to private property. Regard must be had to the relevant statutory framework of the authority.

Tantalisingly, the High Court did not consider the apportionment of liability between WP and its contractor, Thiess. However, the Court of Appeal’s decision indicates that statutory authorities may bear significant responsibility for damage caused by their infrastructure assets where they fail to prepare adequate maintenance plans, and that it may not be sufficient for authorities to rely on contractors to avoid liability.