Liability for water flows - liability regime comparison: Water Act 1989 and Water Bill 2014

In 2012, the Minister for Water, Peter Walsh, appointed an expert Advisory Panel to oversee a review of Victoria's water laws. The Panel reviewed current legislation, including the Water Act 1989 and Water Industry Act 1994, and guided the drafting of a new Water Bill¹ . Maddocks has previously provided an update on the water law reforms in Victoria, which is available here,² and a summary of the main elements of the Water Bill Exposure Draft, which is available here.³

On 24 June 2014, the Minister for Water introduced the Water Bill 2014 (Water Bill) into the Legislative Assembly of the Parliament of Victoria. The Water Bill clarifies and extends the existing statutory liability regime set out in sections16 and 157 of the Water Act 1989 (current Act) for injury, damage or economic loss arising out of the flow of water. The liability regime has been amended to reflect changes in government policy and relevant VCAT and Supreme Court decisions since 1989⁴. Maddocks has previously provided an update on recent developments in relation to the liability of public authorities for water flows, which is available here.⁵ This article sets out some of the key differences between the liability regimes in current Act and the Water Bill.

The current Act

Section 16 sets out the liability regime for flows of water from the land of a person. Section 16(1) provides that if there is an unreasonable flow of water from the land of a person onto any other land, and the water causes injury, damage or economic loss, the person who caused the flow is liable to pay damages. Section 16(2) provides that if a person interferes with a reasonable flow of water onto any land, or negligently interferes with an unreasonable flow of water, and the water causes injury, damage or economic loss, the person who interfered with the flow is liable to pay damages. Section 20 sets out the matters to be taken into account in determining whether a water flow is unreasonable.

Section 157 sets out the liability regime for a flow of water from the works of an Authority. Section 157 imposes liability on an Authority where a flow of water from the works of an Authority causes damage, injury or economic loss as a result of intentional or negligent conduct.

Local councils are not an 'Authority' under the current Act. The current Act defines 'Authority' as 'a water corporation or a Catchment Management Authority'. This means that councils are subject to the strict liability regime of s16.

The Water Bill

The Water Bill now sets out three categories of liability:

• Liability of a person
• Liability of an Authority
• Liability of a council.

Liability of a person

Sections 718 and 719 govern the liability of a person in respect of injury, economic loss and damage caused by a flow of water or the interference with a flow of water. A person will be liable to pay damages in respect of that injury, damage or loss if:

• there is a flow of water from the land of a person to any other land and the flow is not reasonable
• a person interferes with a reasonable flow of water to or from any land
• a person, by negligent conduct, interferes with a flow of water to or from any land which is not reasonable.

Section 720 set out matters to which regard is to be had in determining whether the flow is reasonable or not reasonable. The Water Bill includes two new matters, not included in the current Act, to which regard is to be had:

• whether infrastructure that gave rise to the causing of, or the interference with, the flow was maintained to a reasonable standard
• whether or not the flow was natural.

Section 721, which is not included in the current Act, specifies the matters to which regard must be had in relation to public infrastructure. This section applies in respect of infrastructure of which a public statutory body (including an Authority) owns or manages, and which interferes (or may interfere) with the reasonable flow of water. In determining whether that infrastructure should be continued, removed or modified, regard must be had to all the circumstances, including:

• the state of scientific knowledge and knowledge of local conditions at the time the infrastructure was constructed or installed
• the nature and position of the infrastructure
• the likely effects and costs of continuing, removing or modifying the infrastructure
• the nature of any interest in land affected by the infrastructure.

Liability of an Authority

Section 722 of the Water Bill sets out the liability regime for a flow of water onto land from the infrastructure of an Authority. The Water Bill defines an 'Authority' as 'a water corporation or a catchment management authority'. Section 722 provides that, if, as a result of intentional or negligent conduct on the part of an Authority, a flow of water occurs to any land from its infrastructure, the Authority is liable to pay damages in respect of any injury, damage or loss. The Water Bill also clarifies that this regime includes flows from the vicinity of blocked stormwater infrastructure.⁶

Liability of a council

Unlike the current Act, the Water Bill expressly extends the liability regime to councils in relation to flows of water from their stormwater infrastructure and infrastructure identified in a water management scheme that is implemented by a Council.⁷ Councils are presently subject to the strict liability regime set out in s16 of the current Act. In its review, the Panel advised that the liability of councils with respect to flows of water from stormwater or water management scheme infrastructure should not be different from that of Authorities.⁸

Section 723 provides that, if, as a result of intentional or negligent conduct on the part of a Council, a flow of water occurs to any land from its infrastructure, the council is liable to pay damages in respect of injury, damage or loss.

The Water Bill provides additional guidance for determining whether or not a flow of water occurred as a result of negligent conduct on the part of an Authority or council.⁹ Section 724 provides that in determining whether or not a flow of water occurred as a result of negligent conduct, regard must be had to all the circumstances. Circumstances include any omission or failure (in the planning, design, construction, installation, maintenance or operation of infrastructure) to provide reasonable standards of capacity or efficiency, or exercise reasonable care or skill, having regard to:

• the following matters:
  • the state of scientific knowledge and knowledge of local conditions at any relevant time
  • the nature and situation of the infrastructure
  • the service to be provided by the infrastructure
• the circumstances and cost of:
  • the infrastructure
  • the maintenance and operation of the infrastructure
  • infrastructure which it would have been necessary to construct or install to avoid the occurrence of any relevant injury, damage or loss
• the following principles:
  • the functions required to be exercised by the Authority or council are limited by the financial and other resources that are reasonably available to it for the purpose of exercising those functions
  • the functions required to be exercised by the Authority or council are to be determined by reference to the broad range of its activities (and not merely by reference to the matter to which the proceeding relates)
  • the Authority or council may rely on evidence of its compliance with the general procedures and applicable standards for the exercise of its functions as evidence of the proper exercise of its functions in the matter to which the proceeding relates.

These principles are based on section 83 of the Wrongs Act 1958, which apply to public authorities in determining whether a public authority has a duty of care or has breached a duty of care.¹⁰

The proposed new liability regime

The proposed amendments to the liability regime under the Water Bill include welcome clarification, particularly in relation to the possible exposure of councils to liability for flows of water from council infrastructure. Importantly, the Bill clarifies that the exposure of liability of councils with respect to flows of water from stormwater or water management scheme infrastructure is not essentially different from that of water authorities in relation to the water infrastructure for which they are responsible.

If the Bill is passed, the new Act will commence on 1 January 2016.