I. INTRODUCTION
4.1 This chapter examines the arguments for and against the abolition of the nonfeasance rule. The arguments in favour of abolition were set out in the Commission’s consultative paper, distributed to highway authorities and other interested groups in September 1986.1 The responses received to that paper are discussed below. After assessing the opposing arguments the Commission remains convinced that the arguments in favour of abolition are sound in principle.
4.2 Most opposing abolition of the rule did not take issue with the legal arguments in favour of abolition. Rather they argued that there are considerations which outweigh these matters of principle. These relate to the economic impact that abolition of the rule would have on highway authorities, in particular on the local councils. These economic arguments are discussed in the second section of this chapter and have been taken into account by the Commission in framing its recommendations for reform, particularly in the recommendation that claims against highway authorities be included in the Transcover scheme (see para 5.28).
II. THE CASE FOR ABOLITION
A. The Immunity is Anomalous
4.3 The nonfeasance rule confers on highway authorities an immunity not enjoyed by any other public authority. It is a clear exception to the application of general principles of negligence.2 The result is that highway authorities can never be liable for nonfeasance, no matter how unreasonable their failure to act in a given situation.
4.4 It has been suggested that this special treatment of highway authorities is justified by the unique nature of their responsibilities and the sheer size of the task of maintaining the highway system.3 In its submission to the Commission, the Shire Council of Bourke said:
A public road is different to many other public facilities. Most facilities can be simply closed or their use altered if maintenance funding becomes inadequate. Alternatively, the risk of failure of some facilities is very low or they are not used in a manner likely to generate injury or property loss. A road on the other hand is forever under repair and traditionally people have accepted the risk associated with travelling along a road whose conditions may vary with time in return for the social and economic benefits of the journey.
Similarly, Bland Shire Council argued:
The Council submits that while it may have a choice of whether or not to provide many services or facilities it does not have such a choice in relation to roads. Roads once open to the public cannot be closed without the approval of the State Government and this factor alone is one distinction between roads and other facilities and services provided by the Council.
Similar views were expressed in the submission received from the Commissioner for Main Roads.
4.5 The Commission does not accept that these arguments justify a total immunity. Other public authorities in charge of public areas such as parks owe a duty of care to their users. Other public authorities are also charged with the maintenance of vast public utilities, for example the gas, water, sewerage and electricity systems.4 In these circumstances, as discussed in Chapter 3, the nature and range of the authorities’ responsibilities are taken into account when the standard of care expected of them is determined. The same would be true in relation to highway authorities after abolition of the nonfeasance rule. In view of this, the absolute immunity cannot be justified. The Commission believes that where a highway authority’s performance is below the required standard of care, even after full consideration is given to the magnitude of its task, it should be liable to compensate a person injured as a result.
4.6 Although the power to close public roads permanently is limited and the procedures complex, highway authorities do have power to close roads temporarily to effect repairs and to take measures for the protection of the public from accidents.5 There is therefore some flexibility in the way highway authorities can arrange their repairs. It is the Commission’s view that any limitation on the powers of highway authorities to close roads permanently is more properly regarded as an element in determining whether or not they have acted negligently in a particular situation.
B. The Hardship Created
4.7 At present the rule operates to deny recovery to injured persons6 even in circumstances where a highway authority’s failure to act is clearly unreasonable. Application of the ordinary principles of negligence would mean that highway authorities would be liable for nonfeasance provided fault can be shown. The inability to recover damages imposes unacceptable financial hardship on accident victims and their dependents. A person might be left severely incapacitated, or a family deprived of its sole source of income, without receiving any financial compensation. A rule which leads to such consequences on the basis of what, to those affected, must appear to be a mere technicality can only bring the law into disrepute. The niceties of legal argument on the question of whether in borderline cases the defendant authority’s wrongful conduct constitutes misfeasance or nonfeasance provide no sound basis on which to deny compensation.
4.8 In the consultative paper the Commission stated:
There seems no reason why the traditional reasons for assigning liability [the fault principle] should not apply to highway authorities. They are in the best position to avoid or reduce the risk to users of the highways and to insure against them. Redistribution of loss, from the victim to the highway authority, allows the loss to be borne by the whole community which is in a better position to bear it.
This statement attracted comment from a number of respondents to the paper. A number of local councils questioned whether the fact that some members of the public suffer loss without compensation is any reason for reform. They criticised what they saw to be a general trend in the law of negligence “that every time someone is involved in an accident, someone must be blamed and compensation must be paid”7 and argued that abolition of the nonfeasance rule would remove the incentive for individuals to take care for their own safety. The Commission is not persuaded by these arguments. Although the fault principle is not an ideal means of adjusting the social costs of accidents, while it persists there seems no reason why individuals who can show fault on the part of a highway authority should be denied compensation. Nor does the Commission accept that the prospect of the payment of compensation will remove the incentive to guard against personal injury. This argument may have some force in regard to the avoidance of property damage, but even there the Commission finds it difficult to accept. The right to compensation depends on proof of negligence in the authority and is liable to a reduction for contributory negligence in cases where the plaintiff is also at fault. Meanwhile, abolition of the nonfeasance rule may provide added incentive for highway authorities to guard against accidents caused by factors within their control.
4.9 A number of respondents took issue with the view that transfer of the loss from the victim to a highway authority allows redistribution of the loss to the whole community. Several local councils argued that a distinction must be made between “the whole community” and “the local community” made up of a ratepayers, and the point was made that many rural councils have very small rate bases.8 It is the Commission’s view that highway authorities do provide a reasonably fair avenue for loss distribution and certainly a fairer one than leaving the loss to be borne by the individual. Most people pay rates, either directly or indirectly through rent and, in any event, road costs are met not only through rate revenue but through Commonwealth and State grants. To a great extent it is the members of the local community who use and benefit from local roads and it is fair that they should meet the costs of these roads. Where roads are important not only for local use but for through traffic, it is the policy of the State Roads Act 1986 that partial and in some cases total responsibility for maintenance should pass to the Commissioner for Main Roads,9 thus allowing the costs associated with these roads to be distributed more widely to the general body of taxpayers.
C. Ambiguities in the Existing Law
4.10 Abolition of the nonfeasance rule would remove the need to make the nebulous distinctions that characterise application of the rule. These distinctions and the difficulties surrounding their application are described at paras 2.6 to 2.18. As noted in para 2.6, the complexity and uncertainty introduced into the law by the need to make these distinctions is itself a strong argument for reform. This argument might be answered if it could be shown that the distinctions were of some value in determining the situations in which highway authorities should be exposed to liability. However, in the Commission’s view, the distinctions are without merit for this purpose. Consider the central distinction made between nonfeasance and misfeasance. A highway authority can never be liable for nonfeasance, yet a highway authority’s failure to act in a given situation might be just as culpable as negligent action. What should be at issue is the reasonableness in all the circumstances of the case of the highway authority’s conduct, whether founded in action or inaction. Similar arguments can be made in respect of the distinction made between public authorities acting in their capacity as highway authorities or in some other capacity and the distinction between artificial structures and the fabric of the highway itself. There is no reason to suppose that local councils have or should have less regard for public safety in the maintenance of highways than they have in the maintenance of other public amenities or that highway authorities themselves distinguish between artificial structures and the highway itself in assessing whether repair work is to be done.
4.11 In its submission to the Commission, the Local Government and Shires Associations sought to justify the non-feasance/misfeasance distinction in the following way:
Where a road authority elects to carry out work on a particular section of a road under its control it is in a good position to examine what the consequences of that work will be. Thus, if a consequence is that a dangerous situation is created and damage could be expected it would reasonably be held liable for that damage. In this way the liability under the common law for misfeasance can be justified.
However, we say that a highway authority, with scarce resources, cannot be expected to be liable for all situations which potentially may arise on all sections of the roads under its control in the event that certain works, whatever they may be, are not carried out by it. Thus there is equal justification for the existing common law immunity for nonfeasance.
We would submit that while resources for roadworks remain limited, road users must continue to recognise that repairs may not be effected on all areas of road and they must be prepared to regulate their driving accordingly. On the other hand, we accept that road users are entitled to be protected against traps created by road authorities or arising from works undertaken.
In the Commission’s opinion, the Associations’ argument is flawed. It is not correct to say that because a highway authority cannot be expected to be liable in all situations that may arise, it should never be held liable. Application of ordinary principles of negligence would not impose an absolute liability. The Associations’ argument does not support the proposition that highway authorities should be immune from liability even where, taking into account all the circumstances of the case, they have behaved negligently in failing to act.
D. The Rule Provides an Incentive Not to Repair
4.12 In theory the nonfeasance rule provides a disincentive for highway authorities to undertake repair works. If they undertake the work, or attempt partial repairs, they risk liability for misfeasance. If they do nothing they are safe. While there is no evidence to suggest that highway authorities succumb to this temptation, it is undesirable that the temptation exists.10 Conversely, if the rule were abolished, there would be an incentive for highway authorities to carry out maintenance and to take other measures aimed at preventing accidents in order to reduce their exposure to liability. This would provide a much more satisfactory basis for the law.
III. THE COST TO HIGHWAY AUTHORITIES OF ABOLITION OF THE RULE
4.13 Against the arguments in favour of the abolition of the rule must be weighed the effect that abolition would have on the financial position of highway authorities and on the ratepayers and taxpayers who fund their operations. In this calculation, the benefits to those individuals who are compensated must be weighed against the cost to society as a whole. In making this assessment it must also be remembered that there are other more general benefits which might arise from the abolition of the nonfeasance rule. For example, the removal of the rule might prompt highway authorities to spend more money on road maintenance and accident prevention. This would help not only to reduce the number of accidents causing loss to individuals, it would confer the wider social and economic benefits flowing from the provision of a safer and more efficient road system. Payment of compensation to accident victims will be of benefit to society as a whole in reducing their need to be maintained through social security payments.
4.14 In their submissions to the Commission, highway authorities argued that the abolition of the nonfeasance rule would impose a substantial, and some said intolerable, financial burden on them. The main areas identified in which extra costs would be incurred were:
- compensation payments and insurance premiums;
- road maintenance; and
- administrative and legal costs in processing claims.
A. Compensation Payments and Insurance Premiums
4.15 Following abolition of the nonfeasance rule, highway authorities would be liable to compensate accident victims who could show negligent inaction on the part of the authority. In general, highway authorities appear to have taken the view that the standard of care expected of them would be unrealistically high and that in practice they would be liable to compensate virtually all accident victims who could show some connection between their accident and the condition of the highway. They also commented on the high level of the awards made in personal injury claims and pointed out that the possibility of insurance provided little solace as premiums would necessarily reflect the level of their liability and would be beyond their means. Some local councils expressed doubts as to whether insurance would be available at any price.
4.16 The Commission believes that on the whole highway authorities have taken an unduly pessimistic view of the extent of liability that would be imposed. Reference is made to the examination of this area in Chapter 3. Nevertheless, it is beyond doubt that additional liability for negligence would result from abolition of the rule and the Commission has framed its recommendations for reform with a view to keeping the level of this liability within reasonable grounds.11 The problem of obtaining insurance has also been addressed.12
B. Road Maintenance Costs
4.17 Road maintenance costs would increase if highway authorities chose to spend more money on maintenance and accident prevention strategies in order to reduce the risk of common law claims. A number of local councils, particularly those in the western areas of the State, stated that because of funding constraints in the past their roads were in very poor condition and that major expenditure on maintenance would be needed if the rule were abolished.
4.18 In response the Commission points out that the standard of reasonableness that would arise upon abolition of the nonfeasance rule would be directed at the relevant highway authority’s conduct in the light of the circumstances of the case and not directly at the standard of its roads. The quality of care and supervision expected will vary with the type of road (see para 3.26) and will be dictated in part by the budgetary constraints under which the highway authority operates. Moreover, abolition of the rule will not necessarily require any extra expenditure on maintenance. Highway authorities could choose simply to meet the cost of claims. However, as pointed out above, there would be an incentive for councils to carry out works of maintenance or take other preventative measures to reduce their exposure to common law liability. In theory, a highway authority will only take action to prevent accidents if the cost of taking that action is less than (or equal to) the cost of claims it would experience if it did nothing. The result should be that expenditure on maintenance will tend towards an economically efficient level such that the total cost of road works and personal loss through accidents is minimised.
C. Administrative and Legal Costs
4.19 Abolition of the nonfeasance rule would lead to more claims being made against highway authorities and accordingly to additional administrative and legal costs in processing and defending them. A number of local councils expressed concern at the level of nuisance and fraudulent claims that might arise, particularly in respect of property damage to vehicles. Of course, these sorts of problems are not unique to highway authorities. They are a feature of the existing fault-based system of accident compensation. However, they are of particular concern in that, unlike the other heads of expenditure identified above, expenditure incurred in defending and processing claims produces no tangible benefit. Again, the Commission has taken these matters into account in framing its recommendations for reform.13
D. Experience in England and Canada
4.20 The nonfeasance rule has been abolished by statute in England and has never been applied in most Canadian Provinces. In its consultative paper the Commission stated that:
It is difficult to estimate the likely increase in cost on abolition of the rule. Experience in England and Canada would seem to indicate that the increased burden will not be intolerable. In those jurisdictions the statutory liability imposed on highway authorities is more onerous than would be imposed by the common law following abolition of the nonfeasance rule14 and yet there is no evidence that these authorities have encountered major difficulties in meeting their commitments.
A number of local councils and the Local Government and Shires Associations disputed whether the position in England and Canada could be compared with that in Australia. This was based on the far greater length of roads per head of population in Australia, on the fact that a comparatively high percentage of roads in Australia are unsealed and on the high level of awards for personal injury made in Australia. The Commission acknowledges these points and the fact that experience in England and Canada provides at best only a rough guide. Nevertheless, the experience in these jurisdictions lends more support to the view that the abolition of the nonfeasance rule in this State would not be an intolerable burden on highway authorities than it does to the contrary view.
FOOTNOTES
1. The consultation program is described at paras 1.6-1.10.
2. These principles and the way in which they would apply to highway authorities if the rule were abolished are discussed in Ch 3.
3. Such an argument was considered by the Law Reform Commission of Western Australia Report on the Liability of Highway Authorities for Non-Feasance. (Project 62, 1981) at paras 7.22-7.26 and was also raised in submissions received from the Department of Main Roads and a number of local councils.
4. The Commissioner for Main Roads. submitted that the responsibilities of other authorities are not truly comparable to those of a highway authority because of the varying standard of construction of highways, the pace at which highways deteriorate, the many external factors affecting highways and the constant public use of highways. While the Commission appreciates the force of these arguments, it again expresses the view that these are factors to be taken account in determining the standard of care to be expected of highway authorities and do not justify total immunity from liability.
5. Local Government Act 1919 s250; State Roads Act 1986 s29.
6. The rule also causes hardship to those who are denied a claim for compensation for damage to their property. For example, when a car is damaged due to a pot-hole in the road. However, as is discussed at para 5.36, the need for compensation is, by and large, less pressing in such cases.
7. Submission of Junee Shire Council.
8. Submission of the New South Wales Farmers’ Association.
9. See generally paras 2.21-2.23.
10. The incentive not to repair would appear to be greater than ever after the recent decision of Clarke J in Marr v Holroyd Shire Council, discussed at para 2.10. In that case the Council was found liable even though it had done nothing more than repair a pot-hole inefficiently, its repairs had not created a new or additional danger.
11. See Ch 5.
12. This problem has been addressed by the recommendation for inclusion of actions against highway authorities in the Transcover scheme, see paras 5.26 and 5.27.
13. See paras 5.26 and 5.27.
14. See paras 5.6 and 5.7.
