Australian High Court boosts business owners eyeing nuisance claims against NSW govt

In a significant ruling late 2025, the High Court of Australia has overturned a lower court’s decision to deny damages claims by two Sydney businesses over Sydney Light Rail project delays.[1] The decision considers the extent to which public authorities undertaking infrastructure projects may be liable for private nuisance when things go wrong.

Background

The construction project began in 2016 but was not completed until 2020 – a year behind schedule.

The trial court, the Supreme Court of NSW, found that the claimants’ expert had established the reasonable timeframe within which the works should have been completed, by reference to an amended version of Transport for NSW’s (TfNSW) ‘Initial Delivery Plan’ (IDP) that assumed a greater level of knowledge of the utilities.

Based on this evidence (the amended IDP), the court found that TfNSW had failed to deal proactively or at all with known risks due to underground utilities by building a certain number of delays into the schedule.

The court found that once the delays began, the disruption became unreasonable – and thus an actionable nuisance – and awarded the claimants some $4 million in damages. That decision was overturned by the NSW Court of Appeal in a decision that has now been reversed by the High Court (Australia’s top court).

Significant ruling

The action, a class action led by Hunt Leather, a luxury leather goods retailer, and Ancio, a restaurant, argued that disruption and losses caused by the project became unreasonable after delays extended the timeframe for construction. It is understood there are around 300 class members who may now seek to rely on this decision to seek damages for their own losses.

TfNSW argued the disruption was reasonable, but even if it wasn’t, that the legislation which authorised the project conferred immunity from civil liability upon it.

The justices of the High Court, by a majority decision, found TfNSW’s use of the land – which the court unanimously agreed was a substantial interference with the claimants’ use and enjoyment of their land – was (a) not a ‘common and ordinary’ use of land (per Gordon, Edelman and Jagot JJ), or (b), if it was, that the work was not ‘conveniently done’ (per Beech-Jones J).

TfNSW was therefore liable unless it could establish its fall-back defence of ‘statutory authority’.

TfNSW’s basic argument was that the statute in question enabled not only the Sydney Light Rail project but also the inevitable consequences of undertaking the project. So, sort of a ‘collateral damage’ argument. The High Court had little difficulty dismissing that argument.

The Court found that there is an implicit condition to use statutory power in a manner that is not negligent, meaning to take all reasonable steps to minimise interference with others’ use and enjoyment of their land. The usual interpretation is that absent express permission, Parliament does not authorise a tort (wrongdoing).

TfNSW argued that, under its empowering legislation, it had a duty to perform its functions, including developing transport infrastructure, and that this duty authorised any otherwise actionable interference.

However, the Act used language that implied a power rather than a duty – using ‘may’ instead of ‘must’. And TfNSW failed to prove it exercised its power with all reasonable care – therefore the significant interferences it caused were not an inevitable consequence of exercising that power, and the defence did not apply. This finding chimed with Beech-Jones J’s finding that the work was not conveniently done, meaning TfNSW had not reasonably minimised the extent of the interference with use and enjoyment rights.

What it could mean for New Zealand nuisance claims

Plaintiffs may be encouraged by the High Court’s focus on:

1.      The enjoyment of property rights. There are several formulations of the test for nuisance at common law. In this case, Gageler CJ and Jagot J thought that a plaintiff has to prove an interference which was “substantial and unreasonable”, while Gordon, Edelman and Beech-Jones JJ considered the interference must be substantial and either “not common or ordinary” or “not conveniently done”. However, the justices all found that the focus should be on the interference itself, its character and effect, rather than the reasons for which it was done. The question is not ‘was it reasonable to do the work?’, it is ‘was it reasonable to expect the plaintiff to put up with this interference?’

2.      The need for substantive proof of assertions of ‘reasonableness’ and or ‘incidental’ or ‘inevitable consequences’. The High Court’s ruling highlighted a major flaw in TfNSW’s case: a lack of expert evidence to refute the claimants’ expert evidence. It was not enough to criticise that evidence (as TfNSW did, strenuously, both at trial and on appeal, but without adducing evidence of its own) as that did not undermine the admissibility of the evidence, as opposed to its weight. It followed that the trial judge was entitled to rely on it (as he did) and the NSW Court of Appeal was wrong to interfere.

The case also demonstrates the potential of private nuisance as a cause of action in class action litigation. Nuisance class actions have become a significant legal trend, particularly in Australia, Canada and New Zealand. These actions allow plaintiffs to sue for and on behalf of a group of individuals who share a common interest, often in response to unlawful conduct that causes material injury to property and or significant personal discomfort as a result of dust, fumes, odours, noise and other disruptions.

Many thanks to Emily McLean, solicitor, and Lilian McArthur, law clerk, for help in writing this article.

[1] Hunt Leather v Transport for NSW [2025] HCA 53. See also our note on the first instance decision here Local business owners successful in legal action against NSW government for impacts of construction project — Dalzell Wollerman