Australia: Court of Appeal defines test for unreasonable conduct of public authority under Section 43(A) of the Civil Liability Act

Allianz Australia Insurance Ltd v Roads & Traffic Authority [2010] NSWCA 328
Last Updated: 15 December 2010
Article by Ty Hickey

Court of Appeal defines test for unreasonable conduct of public authority under Section 43(A) of the Civil Liability Act

Judgment date: 9 December 2010

Allianz Australia Insurance Ltd v Roads & Traffic Authority; Kelly v Roads & Traffic Authority of NSW [2010] NSWCA 328

New South Wales Court of Appeal1

In Brief

  • Section 43(A) of the Civil Liability Act 2002 (the CL Act) requires an objective assessment of the public or other authorities' conduct;
  • The unreasonableness of an authority's conduct under s 43(A) of the CL Act must be of a high level, to the extent that the act was so unreasonable that no authority having the same special statutory power could properly consider the act a reasonable exercise of that power.


The case relates to a motor vehicle accident that occurred at approximately 6:25 pm on 4 February 2005 when the insured vehicle, driven by Mr Mark Kelly, collided with an oncoming truck on the Riverina Highway outside a large farm property. The incident occurred between the towns of Howlong and Cowra. It was common ground that at the time of the accident water was flowing across the roadway. It was also common ground that Mr Kelly's vehicle was travelling at a speed when it encountered the water, causing it to aquaplane so that he lost control and collided with the oncoming truck. As a result of the collision Mr Kelly and a fellow passenger, Mr Dennison, were killed whilst another passenger, Mr Wheeler, and the driver of the oncoming truck, Mr Rickard, suffered serious injuries.

Prior to the accident a local Howling resident had contacted the Cowra Council, at approximately 4:15 pm, to report seeing water on the roadway at the accident location. In turn the Council, having used all its road signs, contacted the RTA Maintenance Works Supervisor for assistance, reporting the water and requesting a team be sent to inspect the roadway. A team was despatched and arrived at the site at approximately 5:20 pm. Following a survey of the area, and confirmation of the presence of water on the roadway, the RTA team proceeded to place a "Water Over Road" sign on the southern side of the road facing westbound traffic, approximately 924 metres from the site of the water.

Both Allianz and Woolworths, the owner of the subject vehicle, cross-claimed against the RTA for indemnity or contribution for failure to erect any signs warning motorists of the danger caused by water running across the Highway. Ms Christine Kelly claimed directly against the RTA on substantially the same basis.

Supreme Court

At first instance, extensive evidence was adduced from experts regarding the optimum distance that a warning sign of that type should be placed from a hazard. The evidence was that the sign should be placed far enough away from the hazard to enable an approaching driver sufficient time to react, but close enough so that the driver would recognise the hazard when he or she came to it.

The trial judge, Hoeben J, found that the "Water Over Road" sign should have been placed 150 to 300 metres to the east of the accident site, and that the RTA had breached its duty of care in not so placing it. Justice Hoeben considered that the water was a hazard known to the RTA and that the placing of the sign 924 metres east of the hazard was not an appropriate response in the sense set out in Wyong Shire Council v Shirt. He also considered that breach of duty had been established in accordance with s 5B of the CL Act.

In turning to the defence raised by the RTA under s 43(A) of the CL Act, His Honour adopted a two step approach as suggested by Campbell JA in Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Limited. The approach required:

  1. A finding of negligence against the RTA; and
  2. An objective determination that the decision to place the sign was so unreasonable that no authority having the necessary power would have properly considered it reasonable to so place the sign.

Justice Hoeben held that in placing warning signs, the RTA was exercising a special statutory power and found that its acts or omissions were unreasonable, in the sense required by s43(A) of the CL Act. However, His Honour concluded that the breach of duty of care was not causative of the accident.

Court of Appeal

The Appellants appealed on the basis that the trial judge had erred on the issue of causation. The RTA filed a Notice of Contention that the trial judge had erred in finding that it had breached its duty of care, and, furthermore, that His Honour ought to have found that its acts or omissions did not give rise to civil liability by reason of s 43(A) of the CL Act.

Giles JA delivered the unanimous judgment of the Court of Appeal. He noted that Hoeben J had correctly identified that Section 43(A) required an approach of objectivity in assessing the RTA's conduct and considered that His Honour had erred in placing emphasis on the decision maker's subjective thought process. Giles JA noted that there was a danger in framing the relevant question as whether the decision was irrational because this tended to focus on the subjective thought process despite a requirement that it be objectively determined.

The court considered that s 43(A) was modelled on the administrative language of Wednesbury2 unreasonableness with the intention of raising the bar for plaintiffs in proof of breach of duty of care. Following a review of the relevant case law Giles JA noted that "a constant is that Wednesbury unreasonableness must be at a high level". The court held that irrationality was not necessarily an equivalent test in private law of reasonable response to foreseeable injury. Giles JA considered that in the circumstances the RTA's actions did not constitute an act so unreasonable that no authority having the RTA's special statutory power to erect warning signs could properly consider it to be a reasonable exercise of that power.

On the issue of causation the court referred to sections 5D and 5E of the CL Act. Giles JA noted that s 5E placed an onus on the plaintiff, in the current case Allianz and Woolworths, to prove, on the balance of probability, any fact relevant to the issue of causation. The court confirmed that the "necessary condition" test in s 5D(1)(a) takes up the "but for" test of the common law, whereby if it could not be concluded on the balance of probabilities that the harm would not have happened but for the negligence, then it could not be concluded that the harm was caused by the negligence.

The Court considered that, on the circumstances presented, Mr Kelly's driving was unlikely to have changed if the warning sign were placed 150 to 300 metres closer, and, accordingly, causation was held not to be proved on the balance of probabilities.

It should also be noted that the court, in obiter, questioned whether the trial judge's assessment of a two step approach to Section 43(A) was in fact correct, making reference to the decision in Refrigerated Roadways3 where it was said that the preferable reading of s 43(A) was that it "either replaces or supplements" the pre-existing standard for liability.


The decision confirms the view that a high level of unreasonableness will be required to be shown when seeking to implicate liability on a public or other authority under s 43(A) of the CL Act. In assessing claims against public, or other authorities, it is essential to take an objective view of the entirety of the facts surrounding the claim, whilst also bearing in mind the high cross-bar that must be met by the plaintiff (or a cross-claimant).

The decision highlights the danger associated with framing the relevant question under s 43(A) of the CL Act as whether the decision taken was irrational, which focuses on the decision makers subjective thought process. It is important that the process of assessment remains an objective one, although a decision maker's subjective thought process can help to inform the objective determination required under s 43(A).

The decision leaves open the question of whether the two step approach taken by Hoeben J is the correct approach to be taken in relation to s 43(A) of the CL Act. The Court also left open the question of whether s 43(A) should be seen as re-stating an authority's liability or as providing a statutory defence.

The decision also confirms that the appropriate test for causation under s 5D(1) of the CL Act is taken in line with the "but for" test at common law as stated in Adeels Palace Pty Ltd v Moubarak4.

1. Giles JA; McColl JA and Sackville AJA

2. Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223

3. Ibid at 352

4. Adeels Palace Pty Ltd v Moubarak [2009] HCA 48

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