In a class action relating to the development of
the Sydney Light Rail (SLR) network, the NSW
Supreme Court found there had been "significant and
unreasonable" interference with local small businesses,
resulting in economic loss.
While the Court acknowledges the development will invariably result in some impact on business within the area, it found that the impact had become significant and unreasonable due to foreseeable, and therefore avoidable, delays in the completion of work.
Although the successful plaintiffs were particularly susceptible to the effects of the construction activities, with expectations that there could be up to 3,500 further class members, the Court warned that the proceedings would not make for a "particularly apt vehicle" for the class action given the nuances of the facts.
Between December 2014 and March 2020, proceedings commenced for persons said to have been affected by the development and construction of the SLR between Circular Quay, Randwick and Kingsford in Sydney.
The claim was made against Transport for NSW (TfNSW), which conducted the planning and procurement process between 2011 and 2014, with the project deed being signed in December 2014.
The matter was led by four plaintiffs, consisting of a retail leather goods business (Hunt Leather), its CEO, a trustee of a unit trust that operated a restaurant business (Ancio), and its sole director.
Hunt Leather and Ancio pursued causes of action in both private (interference with the use of someone's land which they own or reside in) and public nuisance. The CEO and director claimed in public nuisance (interference with the common rights of the general public).
Private nuisance claim
It was alleged that as a result of TfNSW's actions in relation to the construction of the SLR, Hunt Leather and Ancio were subject to substantial and unreasonable interferences with the rights, enjoyment and occupation of their properties.
It was argued that private nuisance had occurred as a result of both the nature of the alleged activities and the prolonged length of time that the activities were conducted.
The alleged activities involved the use of heavy construction machinery resulting in vibrations, noise and dust, the presence of hoardings and the general restriction of pedestrian and vehicular movement in the vicinity of their premises (construction work).
It was argued that although the construction work was not undertaken by TfNSW, as the authority that planned and developed the work, it was responsible for the nuisance that arose from it. Moreover, it was alleged that the nuisance arose as a result of failures pre-construction, in the planning, design and contracting phase of the work. These failures were said to prolong the work, resulting in extended interferences with the plaintiff's businesses. The core arguments were that there was a failure to:
- finalise agreements with key stakeholders before entering the project deed, namely those with utility providers and local councils that concerned the handling of utility assets, leading to a delay of over two years due to changes in the project scope
- effectively plan the project, leading to the contractor encountering multiple unknown utilities during construction, leading to further delays
- allocate risk in respect of unknown utilities, allowing the contractor to claim time and cost relief when they were encountered, leading to further delays.
The Court found that the interference was not inevitable due to the nature of the work, finding that prior to entering into the project deed:
- Ausgrid had warned that the plans regarding the cost and timing in dealing with the utilities were likely to be significantly underestimated and unlikely to be achievable
- there was awareness of the risk posed by the construction work to the business owners along the SLR route
- there was awareness that not all utilities had been determined along the SLR route, that there would be unknown activities, and that these issues could lead to delays
- there was awareness that no agreements were in place with the major utility service providers regarding how the providers' assets could be treated
- no statement had been made that the significant risks posed by the utilities had been somehow reduced
- no effective strategies were in place to avoid stages of the work being performed concurrently, to reduce risk to business owners along the route.
Public nuisance claim
The claim proceeded on a similar basis to the private nuisance claim. The substantial and unreasonable disruption or inconvenience to the public in the exercise of their public rights was alleged to comprise the damage to and obstruction of roadways and footpaths, road closures, and the presence of hoardings.
However, the claims of public nuisance were found to be barred by section 141 of the Roads Act 1993 (NSW), which provides that where consent is provided under Division 3 of the Roads Act, carrying out an action in accordance with that consent is not considered a public nuisance.
Loss and damage
Expert evidence showed significant downturn in business performance during the period of construction work, leading the Court to conclude that the loss must have been suffered by the plaintiffs as a result of the proven nuisance. The Court has not yet determined quantum.
It remains to be seen how the decision will affect other class members, given the Court's warning that the action was not a particularly apt vehicle.
In terms of wider implications, the success of the private nuisance claim will create significant focus for infrastructure principals as they plan and establish projects, engage with stakeholders and allocate risk. The actions in the project planning phase for construction activity has rarely seen such attention and inquiry and we can expect an even greater emphasis in a project risk control matrix.
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