Did Western Power have a duty of care to protect persons and property near its distribution system?

Electricity Networks Corporation v Herridge Parties [2022] HCA 37 (7 December 2022)

Intro:-

This is an appeal from the Supreme Court of Western Australia relating to claims made by a number of plaintiffs for loss and damage resulting from a bushfire in Parkerville, Western Australia. The fire was caused when a jarrah pole on the land of the fourth respondent, to which the electrical cable and other apparatus of Electricity Networks Corporation (trading as Western Power) were attached, fell to the ground and ignited dry vegetation. The main issue in the case was whether Western Power owed a common law duty of care to persons in the vicinity of its electricity distribution system to take reasonable care to avoid or minimise the risk of injury to those persons and damage to their property. The trial judge found that Western Power owed a duty to take reasonable care, but that it had discharged that duty. The Court of Appeal upheld the trial judge's finding that Western Power owed a duty of care, but held that Western Power had breached that duty by failing to have a system for the periodic inspection of wooden PA poles. The High Court of Australia will determine the applicable principles for determining the existence of a common law duty of care allegedly owed by a statutory authority and the content of the broader duty imposed on Western Power.

Issue: The issue in this case is whether Western Power, a statutory authority responsible for operating and maintaining the electricity distribution system, owed a duty of care to prevent the risk of harm from the ignition and spread of fire in connection with the delivery of electricity through its electricity distribution system to a property owner, Mrs. Campbell.

Rule: There is no freestanding common law rule which fixes whether and when a common law duty of care upon a statutory authority might, or might not, arise. The starting point for analysis of any common law duty of care that might be owed by any statutory authority must always be the particular statutory framework within which the statutory authority operates. When a statutory authority has entered into the exercise of its statutory powers, the question is whether the relationship between the statutory authority and a class of persons affected by the manner of exercise of the power was such as to give rise to a duty of care. The common law imposes a duty in tort which operates alongside the rights, duties and liabilities created by statute. A duty cannot arise where it would be inconsistent or incompatible with the statutory powers or duties imposed on the statutory authority or it would be incoherent with the statutory framework.

Application: Western Power had stepped into the arena and exercised specific statutory powers in performing its statutory functions of undertaking, operating, managing, and maintaining the electricity distribution system, which was essential for providing electricity distribution services. Western Power had connected Mrs. Campbell's premises to its distribution system and energized those premises. Western Power exercised those powers continuously, creating a relationship between it and all other persons within the vicinity of its electricity distribution system. The critical feature of that relationship was that Western Power exercised those powers in a manner which created or increased the risk of harm to those persons. The common law imposed a duty in tort on Western Power, which operated alongside the rights, duties, and liabilities created by statute.

Conclusion: Western Power had a duty to take reasonable care in the exercise of its powers, and the content of that duty required it to avoid or minimize the risk of injury to those persons, and loss or damage to their property, from the ignition and spread of fire in connection with the delivery of electricity through its electricity distribution system. The broader duty was not inconsistent or incompatible with the statutory functions and powers imposed on it. Western Power had ample power to discharge its duty of care. The application for special leave to cross-appeal filed by the Herridge Parties and the IAG/Allianz Parties was refused with costs, and the appeal was dismissed with costs.

Detailed Analysis

Facts:-

This appeal arises from claims made by a large number of plaintiffs for loss and damage resulting from a bushfire in Parkerville, Western Australia. The fire started on 12 January 2014 when a jarrah pole on the land of the fourth respondent ("Mrs Campbell"), to which the electrical cable and other apparatus of the appellant, Electricity Networks Corporation (which traded as Western Power) ("Western Power"), were attached, fell to the ground causing electrical arcing and igniting dry vegetation around the base of the pole. The pole is referred to as a "point of attachment pole" or "PA pole", being a pole at which an electricity distribution system is attached to the consumer mains.

The PA pole that fell was installed on Mrs Campbell's property by her late husband and was in place since at least 1983. It was made of jarrah and was 5.5m tall above the ground and embedded 1.1m into the ground. At the time of the fire, it was approximately 21cm in diameter at ground level tapering to 16cm in diameter at the tip. The PA pole failed below the ground line due to fungal decay and damage by termites.

Western Power operated the electricity distribution system called the South West interconnected system ("SWIS"), which was used to deliver electricity to Mrs Campbell's property. The link by which the distribution system delivers electricity to individual consumers is called a "service cable" when above ground. The service cable is owned by Western Power. In suburban areas, the service cable typically runs from the nearest distribution pole to the front eave of the consumer's house. In regional and subregional areas, the service cable often runs from the nearest network distribution pole (a "termination pole") across the property boundary to a privately owned PA pole. From there, electricity will run to the consumer's residence, either underground or above ground.

The fifth respondent, Ventia Utility Services Pty Ltd (formerly known as Thiess Services Ltd) ("Thiess"), carried on a business of, among other things, constructing and maintaining electricity distribution system installations and was contracted by Western Power to construct, maintain and manage aspects of Western Power's distribution system. The relationship between Western Power and Thiess was one of principal and independent contractor. Thiess was contracted by Western Power to undertake works in the vicinity of Mrs Campbell's PA pole in July 2013 ("the July 2013 works"). Those works, part of a broader series of works, included replacing Western Power's termination pole adjacent to Mrs Campbell's property from which its service cable ran across her property boundary to the PA pole. Replacement of the termination pole required removing and replacing the service cable between the termination pole and the PA pole.

Trial judge's decision

The trial judge found that industry practice required steps to be taken before performing works like the July 2013 works, including inspecting and sounding (striking with a hammer, axe or solid bar) the PA pole to identify signs of deterioration, as well as digging around the base of the pole to allow detection of one or both of surface decay and termite attack in the below ground critical zone. Thiess' leading hand did not perform a sounding test on the PA pole in accordance with industry standards: he did not perform the necessary hammer test adequately and he did not adequately dig around the base of the PA pole.

The main issue at trial was the defendants' liability, if any, for the failure and collapse of the PA pole and the subsequent fire and damage. The trial judge found Thiess and Mrs Campbell liable to the plaintiffs in negligence and nuisance, and apportioned liability between them as 70 per cent to Thiess and 30 per cent to Mrs Campbell.

All claims against Western Power were dismissed. The trial judge found Western Power owed the plaintiffs a duty of care – the "pre-work inspection duty of care": that before undertaking works on the PA pole and when undertaking those works, Western Power had a duty to take reasonable care to inspect the PA pole to ascertain whether it was in a safe and fit condition for use in the supply of electricity and if, when undertaking a pre-work inspection, or when undertaking works on the PA pole, Western Power identified that the PA pole was not in a safe and fit condition for use in the supply of electricity, a duty not to use the PA pole in or in connection with the supply of electricity. The trial judge, however, rejected the contention that Western Power had breached that duty of care by failing to supervise Thiess' line crew or otherwise ensure that the line crew inspected the PA pole in accordance with industry practice and by failing to implement systems for training or instructing the line crews to conduct pre‑work pole inspections in accordance with industry practice.

The trial judge concluded that Western Power had taken reasonable precautions to ensure that qualified and competent personnel carried out the work, including the pre-work inspections of wooden poles, by retaining a competent, reputable and experienced contractor, namely Thiess, to carry out the work under a contract which required Thiess to engage personnel to perform the work who were competent, had all the necessary skills, training and qualifications to carry out the work in accordance with the contract, and had been inducted by Thiess and were able to perform the work without the supervision of Western Power's personnel. In sum, the trial judge found Western Power had discharged its pre‑work inspection duty of care by engaging and instructing Thiess to carry out the relevant work, including the inspection of the PA pole. The trial judge was not satisfied that a reasonable person in the position of Western Power would have taken any additional steps to implement systems for training or instructing line crews to conduct pre-work pole inspections in accordance with industry practice. The trial judge rejected the plaintiffs' contention that the pre-work inspection duty of care was non‑delegable.

Court of Appeal's decision

All parties, other than Western Power, appealed or cross‑appealed to the Court of Appeal of the Supreme Court of Western Australia. Western Power did not appeal the trial judge's finding that it owed the plaintiffs the pre‑work inspection duty of care. The reasons for decision of the Court of Appeal were detailed and addressed many issues. It is necessary to deal only with those aspects of the Court of Appeal's reasons relevant to Western Power's appeal to this Court and to the applications for special leave to cross‑appeal filed in this Court by the Herridge Parties and the IAG/Allianz Parties in respect of whether the pre-work inspection duty of care was non-delegable.

First, the Court of Appeal held that Western Power owed to persons in the vicinity of its electricity distribution system a duty to take reasonable care to avoid or minimise the risk of injury to those persons, and loss or damage to their property, from the ignition and spread of fire in connection with the delivery of electricity through its electricity distribution system. That duty of care was broader than the duty found by the trial judge in two ways: it was broader in its temporal scope and it was not limited to occasions when work was to be, or was being, done. The Court of Appeal held that Western Power breached that broader duty of care by failing to have a system for the periodic inspection of wooden PA poles owned by consumers and used to support live electrical apparatus forming part of Western Power's electricity distribution system.

Second, the Court of Appeal upheld the finding of the trial judge that Western Power's pre-work inspection duty of care was not a non-delegable duty. If Western Power was successful in its appeal to this Court, the Herridge Parties and the IAG/Allianz Parties sought special leave to cross-appeal against that finding. Given that Western Power is unsuccessful in its appeal, and that the Herridge Parties and the IAG/Allianz Parties chose to make that application for special leave conditional, it is inappropriate to grant those parties special leave to cross-appeal in relation to non‑delegability and those applications are refused with costs. It is unnecessary to address that issue further.

Issues:-

1) What are the the applicable principles for determining the existence or otherwise of a common law duty of care allegedly owed by a statutory authority?

2) What is the existence and content of the broader duty imposed on Western Power, by reference to the terms, scope and purpose of the statutory framework and, in that context, the statutory functions and powers which Western Power in fact exercised.

Principles

There is no freestanding common law rule which fixes whether and when a common law duty of care upon a statutory authority might, or might not, arise. Statutory authorities take many forms and have different functions and powers. It is wrong to treat all statutory authorities alike.

The starting point for analysis of any common law duty of care that might be owed by any statutory authority must always be the particular statutory framework within which the statutory authority operates:-

"The existence or otherwise of a common law duty of care allegedly owed by a statutory authority turns on a close examination of the terms, scope and purpose of the relevant statutory regime. The question is whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence."

And in formulating a common law duty, it is important to keep in mind the distinction between the existence and content of the duty (who owes the duty, whom do they owe the duty to, and what kind of risks of harm must they take reasonable care to minimise or avoid?) and questions of breach (what were the reasonable precautions required in the circumstances, and did the person discharge the duty?).

The two propositions – that there is no freestanding common law rule which fixes whether and when a common law duty of care upon a statutory authority might, or might not, arise, and that the starting point for the analysis of any such duty is the terms, scope and purpose of the applicable statutory framework – require first that the functions of the statutory authority are identified and, second, that the statutory powers that the statutory authority in fact did exercise in performance of those functions (as well as those which it could have exercised but did not) are identified.

Generally speaking, a statutory authority which is under no statutory obligation to exercise a power comes under no common law duty of care to do so: "[t]he common law does not superimpose such a duty on a mere statutory power".

This appeal is concerned with the existence and content of a duty of care that is owed in the exercise of statutory powers. But although this appeal does not concern a failure by a statutory authority to exercise particular statutory powers – powers that the statutory authority had, and which it could have exercised but did not – that does not mean that those powers that were not exercised are irrelevant. As explained below, in determining the existence and content of a duty of care arising from the statute, the whole statutory regime must be considered, including powers which have not been exercised but are interconnected with powers which have been exercised.

When a statutory authority has entered into the exercise of its statutory powers, the question is whether the relationship between the statutory authority and a class of persons affected by the manner of exercise of the power was such as to give rise to a duty of care. The focus of the analysis is upon the relevant legislation – the powers that have been exercised in the performance of the authority's statutory functions – and the positions occupied by the parties. If such a relationship is created, then "the common law imposes a duty in tort which operates alongside the rights, duties and liabilities created by statute". A duty cannot arise where it would be inconsistent or incompatible with the statutory powers or duties imposed on the statutory authority or it would be incoherent with the statutory framework.

Where a statutory authority which, consistent with its express functions, in fact "ent[e]r[s] into the field" of exercising specific powers in the discharge of its functions, the exercise of power is sometimes also described in terms of "control": the assumption of control; the taking "advantage of ... control"; or the "control exercised". However described, it is the identification of the statutory authority's powers that it in fact exercised that is critical because it is the manner of the exercise of those powers to which a common law duty of care may attach. Having identified the powers that were in fact exercised by the statutory authority in the performance of its functions, the question is: does the common law impose on the statutory authority a duty of care as to the manner of its exercise of those statutory powers (or performance of its statutory duties)? And in answering that question, it is often helpful to ask whether the statutory authority has exercised its powers to "intervene in a field of activity" in a manner which has increased the risk of harm to persons whom it had the power to protect.

Put in different terms, a statutory authority which enters upon the exercise of statutory powers with respect to a particular subject matter may place itself in a relationship to others where a common law duty of care attaches to the manner of the exercise of those powers.

As has been observed, a statutory authority which enters upon the exercise of its statutory powers with respect to one of its functions may be subject to a common law duty to exercise those powers with reasonable care.

These reasons speak of the common law imposing a duty of care on a statutory authority. That language recognises that the common law and statute interact and operate concurrently. As these reasons emphasise, the starting point of any inquiry about whether or when a statutory authority owes a common law duty to take reasonable care will be the statute and, where the authority has entered the field, what statutory powers it has exercised and in what circumstances. Holding that the statutory authority in this case owed a common law duty to exercise those powers in the discharge of its functions with reasonable care is consistent with and required by the principles of negligence that apply more generally, whether to natural persons, bodies corporate or other commercial enterprises. Here, we are concerned with a statutory authority which has exercised its statutory powers in the discharge of its statutory functions and in so doing has created relationships which give rise to a common law duty of care.

It is the functions and powers of Western Power, in the context of the terms, scope and purpose of the statutory framework, that are addressed next.

Statutory framework and Western Power

The Electricity Networks Corporation, trading as Western Power, was established in 2006 as a statutory corporation by s 4(1)(b) of the Electricity Corporations Act 2005 (WA). Pursuant to an interconnected statutory framework, Western Power undertook, operated, managed and maintained the SWIS electricity distribution system, which was used to deliver electricity to consumers' premises, including Mrs Campbell's property.

In sum, Western Power was a statutory corporation, a commercial body with a profit making purpose and with no policy making functions, which was required to act on prudent commercial principles endeavouring to make a profit from its prescribed statutory functions, including, relevantly, that of undertaking, operating, managing and maintaining the SWIS electricity distribution system as well as any works, system, facilities, apparatus or equipment required for those purposes.

Western Power's powers in the discharge of its statutory functions

The critical feature of this appeal is that Western Power stepped into the arena; it exercised specific statutory powers in performing its statutory functions of undertaking, operating, managing and maintaining the SWIS electricity distribution system as well as any works, system, facilities, apparatus or equipment required for those purposes, and had attached Mrs Campbell's premises to Western Power's distribution system and energised those premises.

So, what were the statutory powers that Western Power had in fact exercised in performing its statutory functions of undertaking, operating, managing and maintaining the SWIS electricity distribution system as well as any works, system, facilities, apparatus or equipment required for those purposes?

Under s 59(2) of the Electricity Corporations Act, Western Power was given all the powers it needed to perform its functions under the Electricity Corporations Act – including, relevant to this appeal, s 41 of the Electricity Corporations Act – or any other written law. And for the purpose of performing any function, Western Power was also given specific power, among other things, to acquire, hold, manage, improve, develop and dispose of any real or personal property; to enter into any contract or arrangement; to appoint agents or engage persons under contracts for services to provide professional, technical or other assistance to it; and to carry out any investigation, survey, exploration or boring. These specific powers did not limit the general powers of Western Power under s 59(2) or the other powers of Western Power under the Electricity Corporations Act or any other written law. Finally, it had specific power under s 49(d) of the Energy Operators (Powers) Act relevantly to "cause any distribution works or service apparatus or related things to be supported by affixing or annexing them to or against any part of a house, building or other structure".

In sum, Western Power connected Mrs Campbell's premises to its distribution system by affixing elements of its system (namely, its service cable, fuses and meter) to the PA pole, and energised her premises. In order to perform those acts, Western Power exercised statutory powers pursuant to its functions to undertake, operate, manage and maintain its distribution system, which was essential for the broader purpose of Western Power providing electricity distribution services. Western Power affixed its apparatus to the PA pole at various points, and continued to use those apparatus, pursuant to broad powers to perform its functions and specific powers to cause its distribution system to be supported by affixing it to or against any structure and its duty to connect and energise premises with power. Put in different terms, Western Power exercised its powers in the performance of its functions. It had to enter into the field or step into the arena – it had the responsibility to undertake, operate, manage and maintain the SWIS electricity distribution system, and it did.

But that is not all. The statutory framework expressly recognised that Western Power required access to land or premises to perform its functions of undertaking, operating, managing and maintaining the SWIS electricity distribution system. Western Power was therefore given the power to enter and re‑enter land or premises on which any works, apparatus or system (including any meter, fitting or connection) used by Western Power for the purpose of distributing energy to a consumer were lawfully situated.

In direct terms, Western Power exercised its powers in performing its statutory functions of undertaking, operating, managing and maintaining the SWIS electricity distribution system and any works, system, facilities, apparatus or equipment required for those purposes. In the exercise of those powers, Western Power's service cable, fuses and meter were on Mrs Campbell's land and, in particular, attached to her PA pole and those apparatus remained there as Western Power exercised its powers in performing its statutory functions of undertaking, operating, managing and maintaining the SWIS electricity distribution system. Western Power exercised those powers continuously.

Western Power's exercise of those powers therefore created a relationship between it and all other persons within the vicinity of its electricity distribution system. And a critical feature of that relationship was that Western Power exercised those powers in a manner which created or increased the risk of harm to those persons – persons it had the power to protect. The PA pole only posed the risk that it did because Western Power had attached its live electrical apparatus to it. Identification of the precise point at which Western Power's transportation of electricity using its distribution system was made to, or received by, the consumer, Mrs Campbell, was and is not determinative or necessary.

Western Power had a duty to take reasonable care in the exercise of its powers, and the content of that duty relevantly required it to avoid or minimise the risk of injury to those persons, and loss or damage to their property, from the ignition and spread of fire in connection with the delivery of electricity through its electricity distribution system – an electricity distribution system which it undertook, operated, managed and maintained in the discharge of its functions and powers by placing its apparatus on Mrs Campbell's land. The common law imposed that duty in tort on Western Power which operated alongside the rights, duties and liabilities created by statute.

Next, contrary to Western Power's contentions, the broader duty was not inconsistent or incompatible with the statutory functions and powers imposed on it. It is not necessary to that finding of duty to point to the numerous other powers which Western Power could have exercised, but did not, to take reasonable precautions to prevent the risk of harm from the ignition and spread of fire in connection with its electricity distribution system. Those powers went to questions of breach which were not in issue in this appeal. It is, however, important to consider the other powers in asking whether that duty of care was incoherent with the broader statutory framework. It was not.

On the question of coherence of the duty of care with the statutory framework, Western Power had ample power to discharge its duty of care. Some of those powers have been addressed. Examples of other powers included: the power to enter land or premises and improve works and maintain undertakings and facilities if requisite, advantageous or convenient to the exercise of Western Power's functions; the power to enter any land, premises or things not under Western Power's control or management without consent where notice has been given; the power to enter land, premises or things, relevantly, to maintain any supply system, undertaking or things; the power to do all things necessary, relevantly, for maintaining or repairing any supply system, undertaking or related works; the power to enter land without notice to clear or remove vegetation if Western Power was of the opinion that an occupier of land had not complied with their duty to do so; and the power, relevantly, to require a consumer to make adjustments to the manner of operating electrical equipment if in Western Power's opinion the consumer's operation of that equipment would interfere with supply to other consumers.

Conclusion and orders:-

For those reasons, the applications for special leave to cross-appeal filed by the Herridge Parties and the IAG/Allianz Parties, seeking to contend that the pre‑work inspection duty of care was a non‑delegable duty, are refused with costs. The appeal is dismissed with costs.