The Statute Stands Paramount: The Common Law Duty of Care of Statutory Authorities in Electricity Networks Corporation v Herridge Parties

By Alicia Hill, Principal, and Darsh Chauhan, Law Clerk

Summary

On 7 December 2022, the High Court of Australia delivered judgment in Electricity Networks Corporation v Herridge Parties,[1] in which it unanimously dismissed an appeal from a decision of the Court of Appeal of the Supreme Court of Western Australia. The Court held that Electricity Networks Corporation (‘Western Power’) owed a duty of care to prevent or minimise injury to people affected by its assumption of statutory powers.

Background

A Mrs Campbell (‘Campbell’) lived on a property upon which a pole was affixed. That pole was attached to an electricity distribution system owned and operated by Western Power, which is a for-profit statutory authority in the business of operating electricity systems.

A company formerly known as Thiess Services Ltd (‘Thiess’) had been independently contracted by Western Power to install part of the distribution system and perform periodic maintenance works on the pole.

On 12 January 2014, the pole caught fire and damaged the adjoining properties, whose owners brought claims in negligence or nuisance against Western Power, Thiess, and Campbell.

Procedural History

At Trial

The claimants succeeded at trial against Thiess and Campbell, who were found to have owed and breached their respective duties of care relating to minimising the possibility of damage caused by any mishaps arising from the performance of the pole. The claimants did not succeed against Western Power because the trial judge held that their duty of care was limited to pre-work inspection, which they had sufficiently discharged by engaging Thiess’ services.

On Appeal

The Court of Appeal held that Western Power’s duty of care was broader than what the trial judge had contended because it consisted in a responsibility to take reasonable care to minimise the risk of injury to people and property in the vicinity of its electricity distribution system, including injury arising from the spread of fire. Accordingly, it held that Western Power had been in breach of that duty by failing to periodically inspect the pole.

Issue

Western Power were granted special leave to appeal to the High Court.

The sole issue was whether the Court of Appeal was correct to broaden the scope of the duty of care owed by Western Power.

Decision

The High Court delivered a single joint judgment in which it dismissed the appeal and found against Western Power.

The nature and extent of the duty of care had been correctly stated by the Court of Appeal.

Reasons for Judgment

Principles

The legal principle with which the appeal was concerned was circumstances in which a statutory authority is taken to owe a duty of care at common law. The Court held that the starting point in resolving that question is the statutory framework governing the operation of the authority.

More precisely, the exercise of power by such a body is capable of enlivening a duty of care where that conduct has the effect of assuming a responsibility on the part of the body. Whether a duty of care actually thereby arises does not depend on abstract notions of ‘control’ exerted by the statutory authority or ‘reliance’ on the authority by the subjects of its powers. It instead turns on whether the specific exercise of the body’s statutory powers creates a common law duty of care vis-à-vis the claimants in circumstances where the effect of that exercise is to increase the risk of loss or damage to a person whom it had the power to protect. In other words, after first identifying the statutory regime governing the operation of the body, the second step is to determine whether it has exercised its powers in a manner affecting people to which that exercise relates.

Application

In the present case, Western Power’s statutory functions were principally to operate and manage electricity transmission and distribution services and to undertake the works required to effect that role. Importantly, those functions were expressed in the language of power rather than duty — it had the ability (albeit also the purpose) rather than responsibility to manage electricity systems. Any action it took which purportedly gave effect to its role amounted to an assumption of a responsibility — it could not be said to be discharging a duty which it was compelled to fulfil because it had decided itself to ‘step into the arena’.[2]

One of the powers exercised by Western Power was its ability to enter contracts and/or appoint agents to provide assistance to it. Another was the power to effect its electricity distribution system by affixing its elements to others’ houses, being Campbell’s in this case, in order to do which it was permitted to enter and re-enter land. In the course of continuously operating and maintaining the pole which eventually caught fire, Western Power was therefore exercising powers conferred upon it by statute. In so doing it formed a relationship with the people within the vicinity of Campbell’s land, and because its conduct increased or had the ability to increase the risk of harm to those people. As a result, it owed a duty of care to those people in the terms held by the Court of Appeal — to minimise the risk of injury to those people, or damage to their property, in the course of exercising its statutory powers in order to manage the electricity distribution system.

The Court also held that the imposition of that duty was not, contrary to Western Power’s argument, inconsistent with the legislative framework. The duty of care at common law operates concurrently with the statute.

Takeaways

This case is a lesson in the primacy and paramountcy of the statute. The content of a duty of care owed at common law is determined by having reference to the legislative framework within which a statutory authority operates and discharges its powers. It is a significant case because the Court offered crucial guidance in the analytical process which needs to be undertaken in ascertaining whether a statutory body will owe a duty of care. That process, which demands regard to whether the body has assumed a responsibility in discharging its powers, will be helpful to litigants or prospective litigants who have been aggrieved by a purported exercise of power by statutory bodies.

If you have any questions regarding this decision or any matters raised by it, please feel free to get in contact with Alicia Hill of the MST Dispute Resolution and Litigation team on (03) 8540 0200, or by email at alicia.hill@mst.com.au.

[1] [2022] HCA 37.

[2] Ibid [48].