Public liability still an issue for local government

The Local Government Association of Queensland’s Annual Conference held in September 2004 called for continued action to discourage speculative public liability claims against councils. Resolutions dealing with various issues relating to public liability claims have also been passed at each of the Association’s conferences in recent years. These resolutions are the result of local government having been thrust into the very centre of Australia’s public liability insurance crisis.

Councils are directly involved in many aspects of people’s daily activities. This involvement flows from provision of essential infrastructure such as roads, footpaths, malls, parks, airports, and recreational facilities. Councils also provide an enormous range of services such as refuse collection, local planning control, sewerage, water supply, health care and the list goes on.

Because of the enormous scope of its role, local government has a potential public liability exposure every day to virtually every member of the community.

Over the last 30 years, courts have progressively moved the common law duty of care to the point where the duty of care owed by Councils in relation to their control of roads, footpaths and vast areas of public land was considered to be the same as that owed by a shop owner towards persons entering their premises. It is relevant to note that by doing this the courts very creatively found ways around some well established principles that mitigated development of unrealistic common law duties. While lawyers have expertly and some would say, ruthlessly exploited the common law system, it was the system itself that brought local government’s public liability exposure to crisis point. 

It is of course physically and economically impossible for a council to “occupy” and control the areas it has responsibility for in the same way that is possible with private premises such as a shop. The extent of public access rights to infrastructure and facilities, and competing demands on limited council funds could never allow levels of expenditure capable of satisfying the required duty of care in all instances (an issue subsequently addressed in the Ipp review of the laws of negligence ). The floodgates had been opened and local government became a primary target of liability litigation. In 1992 the best available actuarial estimate of the annual cost to insurers of liability claims against Queensland councils was approximately $3 million. By the height of the public liability crisis in 2002 that figure had increased by more than 450 per cent to approximately $17 million.

By that time local government had taken steps to address the explosion in costs. The reluctance of insurers to cover ever-expanding local government risk exposures led to development of self-insurance arrangements and State Governments were requested to establish realistic liability boundaries. But there is no doubt that many involved in the legal system did not see a problem because public liability insurance (supplemented in the case of local governments by public funds) was considered to be a bottomless pit that would deal with the cost outcomes of common law litigation.

That view was shattered when insurers of not-for-profit groups either withdrew from the market or increased premiums to levels that were unaffordable or at least posed a serious threat to financial viability. The insurers had come to the view that many groups were facing the same unmanageable common law duties as councils. Newspaper front pages reported cancellation of ANZAC Day marches and many other events that had become part of the fabric of local communities.

Governments were forced to act and a process of legislative reform designed to rein in some of the excesses of the common law system commenced. Around that time it was also noticeable that a number of court decisions placed greater emphasis on the responsibility of claimants for their own safety. Councils won cases that would have been seen as having poor prospects for success only a year or so earlier.

The fact that some of the decisions pre-dated legislative reforms is interesting and very relevant to the earlier observation concerning courts working their way around well established principles. At the risk of stating the obvious, courts have considerable capacity to adjust the course of the law of negligence despite what may be considered at any particular point as the established direction. Legislative reforms have provided councils with new avenues for defending themselves against liability claims but there is no paranoia involved in stating that lawyers will be methodically probing the legislative reforms for weaknesses. They have too much at stake not to. As the focus on the public liability crisis begins to fade the response of courts to such pressure must be closely monitored. It is essential that State Governments, in particular, demonstrate a commitment to preserving the integrity of recent legislative reforms.

Local government does not seek to deny the rights of injured parties to seek reasonable compensation where a council is genuinely at fault. However, it will continue to strongly oppose a fault-based common law compensation system, which relies on unrealistic concepts of negligence, to effectively assume what are social policy roles relating to financial support of injured parties and allocation of public funds. These are issues for elected governments. Where inadequacies in social policy outcome are identified, governments - not the courts - should address them.