Australia: Allianz Australia Insurance Limited v Roads and Traffic Authority of New South Wales; Kelly v Roads and Traffic Authority of New South Wales [2010] NSWCA 328

Insurance Update
Last Updated: 12 January 2011
Article by Samantha Kelly and Michael Down

The recent decision of the NSW Court of Appeal in the matters of Allianz Australia Insurance Ltd v Roads and Traffic Authority of New South Wales; Kelly v Roads and Traffic Authority of New South Wales [2010] NSWCA 328 considered section 43A of the Civil Liability Act 2002 (NSW) (CLA), a key provision for determining the liability of public authorities which have exercised a special statutory power.

Mr Mark Kelly (the deceased) was driving westward along the Riverina Highway, a State Highway under the control of the Roads and Traffic Authority (RTA), when his vehicle lost traction on a water hazard or fjord on the highway.  The deceased's vehicle collided with a truck approaching from the opposite direction.  Both the deceased and his passenger were killed and another passenger travelling with the deceased and the driver of the other vehicle were seriously injured.

At first instance in the Supreme Court of New South Wales, a number of parties had claimed and cross-claimed against the RTA on the basis it had, by erecting a warning sign 924 metres away from the water hazard, breached its duty of care.  His Honour Hoeben J held that the RTA had in fact breached its duty, stating that the sign should have been located approximately 150-300 metres from the water hazard, significantly closer than it had been positioned.  Nonetheless, Hoeben J found that it was not the RTA's distant sign that caused the accident but the deceased's negligence in travelling at excessive speed and failing to keep a proper lookout.  The claims and cross-claims against the RTA were thus dismissed.

The Appeal

On appeal, the appellants claimed that Hoeben J had erred in holding the deceased liable, arguing that it was the RTA's breach of duty which caused the accident.  On the contrary, the RTA contended that the trial judge had erred in stating the RTA had breached its duty of care, given the standard required under section 43A of CLA.  The Court of Appeal upheld the RTA's contention and agreed that it was the deceased's negligence which caused the accident, as outlined below.

In the Court of Appeal, Giles JA (McColl JA & Sackville AJA agreeing) discussed section 43A in depth.  Section 43A provides:

43A Proceedings against public or other authorities for the exercise of special statutory powers

  1. This section applies to proceedings for civil liability to which this Part applies to the extent that the liability is based on a public or other authority's exercise of, or failure to exercise, a special statutory power conferred on the authority.
  2. A special statutory power is a power:
    • that is conferred by or under a statute, and
    • that is of a kind that persons generally are not authorised to exercise without specific statutory authority.
  3. For the purposes of any such proceedings, any act or omission involving an exercise of, or failure to exercise, a special statutory power does not give rise to civil liability unless the act or omission was in the circumstances so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power.
  4. In the case of a special statutory power of a public or other authority to prohibit or regulate an activity, this section applies in addition to section 44.

His Honour discussed several elements of the case separately, which can be broken down into the following broad categories: (i) the particular context; (ii) the 'unreasonableness' standard of s 43A; (iii) whether the RTA's actions or inactions were unreasonable under s 43A.

(i)  The Context

The Court of Appeal believed the trial judge placed unnecessary weight on unstable factual assertions, some of which had not even been accepted in evidence.  In fact, the expert evidence suggesting that a warning sign should have been around 150-300 metres from the water hazard was, as one expert put it, more the stuff of an 'ideal world'.  In fact, there was no Australian Standard dealing with distances between road signs and potential hazards.  On the facts and given the road was a highway where a vehicle would travel between the warning sign and the hazard in around 30 seconds, Giles JA held that the sign was enough to make the ordinarily careful driver 'conscious that within a further distance he or she might encounter water over the road being the water of which he or she was being warned'.

(ii)  An 'Unreasonableness' Standard of Section 43A

The most important aspect of the case is the meaning the Court of Appeal drew from both the text and the purpose of s 43A of the CLA.  On the face of the text, the key words in s 43A(3) are: 'so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of its power'.  His Honour noted that the words were clearly modelled on the administrative law principle of Wednesbury unreasonableness which derives from the English Court of Appeal decision in Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223.  Rather than take the words at face value, Giles JA looked to the purpose of the section, which he argued had the clear 'intention of raising the bar for plaintiffs in proof of breach of duty of care by an authority in the exercise of a special statutory power'.
Although his Honour acknowledged that an administrative law context differs in substance from a personal injury context, he visited a number of decisions dealing with the administrative principle of Wednesbury unreasonableness.  In those administrative law decisions, the unreasonableness standard has at times been 'an abuse of power' [1], 'perverse' [2], and even 'so outrageous in its defiance of accepted moral standards that no sensible person who applied his mind to the question could have arrived at it' [3].  Giles JA held that no matter what terminology has been used, 'a constant is that Wednesbury unreasonableness must be at a high level'.  Given that the same words appear in section 43A, his Honour noted that the same high-level test applies when determining the liability of public authorities.  The standard involves making judgments about both the 'reasonableness and properness' of a public authority's action or inaction.

(iii) The RTA's Actions Were Reasonable Under Section 43A

Giles JA accepted the grounds set out above as setting the standard to be met, and noted that pursuant to recent decisions such as Firth v Latham [2007] NSWCA 40 the onus is on the Plaintiff to prove that the authority's action or inaction was unreasonable.  As noted above, his Honour disagreed with the first instance finding that the RTA had breached its duty.  On the contrary, the RTA 'could, and could properly consider placing the...sign where it was placed a reasonable exercise of its special statutory power'.  Expressed according to the wording of s 43A, when the RTA erected the warning sign 924 metres away from the water hazard, taking into account the context discussed above, it was not so unreasonable that no authority in a like position would have considered it a reasonable exercise of the power.


In upholding the RTA's notice of contention and dismissing the claims against the RTA, the Court of Appeal reiterated a number of factors to be considered when determining public authorities' liability pursuant to their exercise of a special statutory power.  Briefly, the most important factors to consider are:

  • The context in which the action or inaction occurred;
  • Whether the Plaintiff in court proceedings has, on the balance of probabilities, established enough proof that the action or inaction was prima facie unreasonable; and
  • Whether the authority's action or inaction is so grossly unreasonable that it satisfies the test set out above, following the high level of unreasonableness and impropriety required to establish Wednesbury unreasonableness.
In the case of local councils and road authorities, special statutory powers include erecting signage, maintaining public spaces and approving applications of various kinds.  Following Allianz Australia Insurance Ltd v Roads and Traffic Authority of New South Wales; Kelly v Roads and Traffic Authority of New South Wales [2010] NSWCA 328, it seems the protection afforded to authorities by section 43A of the CLA has been increased, and authorities such as the RTA in that case have a little more room to breathe.

[1] Attorney-General of New South Wales v Quin (1990) 170 CLR 1 at 36 (per Brennan J).

[2] McVeigh v Willara Pty Ltd (1984) 6 FCR 587 at 597 (per Toohey, Wilcox & Spender JJ).

[3] Council of Civil Service Unions v Minister for the Civil Service (1985) AC 374 at 41 (per Diplock LJ).

© DLA Phillips Fox

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This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

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