Double J Smallwoods Ltd v Gisborne District Council  NZHC 1284
A fire caused damage to Smallwoods’ sawmilling operation. The fire was deliberately started by an unauthorised person in vegetation on ‘lot 3’ near a rail corridor in Gisborne. Embers were spread by the wind over a creek igniting vegetation in ‘lot 2’. The embers also blew into the sawmill, causing damage to plant and stock, partial loss of a mill building and total loss of a storage shed. Lots 2 and 3 were both owned by Gisborne City Council and were covered in tall pampas, a very dry and highly flammable grass. Smallwoods brought a claim against Gisborne City Council in the High Court alleging strict liability, nuisance and negligence.
The Strict Liability Claim
The rule in Rylands v Fletcher (1868) LR 3 HL 330 (HL) allows a plaintiff to claim damages for a loss caused by a single accidental escape of something harmful from a defendant’s land.
This claim against the Council, based on this rule, failed. The Judge reasoned that the growing of pampas and other vegetation on lot 3 was a natural use of the land. Even though pampas is recognised as flammable it was not “exceptionally dangerous or mischievous.” Growing vegetation on the land could not be considered extraordinary or unusual and in any event, it was the embers that escaped the land which caused the fire to spread, not the vegetation. Moreover the Judge was satisfied on the balance of probabilities that the fire was deliberately lit by a third party and therefore the defence of “act of a stranger” applied.
The Nuisance Claim
Where a nuisance proceeds from a state of affairs on another person’s land created by an unauthorised person over whom the landowner has no control, or if the nuisance arises from natural causes, the owner is not strictly liable. However where the owner knows, or ought to know, of the existence of the nuisance on the land and does not take prompt steps to remove or abate the nuisance, they are said to have ‘adopted’ the nuisance and they will be liable.
Smallwoods argued that the Council knew the pampas was growing on Council land and they had the ability to remove it but failed to do so. Therefore the Council had adopted the nuisance. The Council argued that it was the fire, not the pampas that caused the nuisance, it had no time to intervene or stop the fire before it spread and therefore the Council had not adopted it.
On this point the Judge decided that the case of spread of fire started by a third party was better considered in the context of negligence.
The Negligence Claim
The Privy Council recognised in Goldman v Hardgrave  1 AC 645 PC that “a landowner owes a duty of care to his or her neighbour to ensure no hazards occurring on the land (whether natural or man-made) cause foreseeable loss or harm.” This duty places an obligation on the landowner to take reasonable steps to reduce or remove hazards recognised by the owner. It depends on knowledge of the hazard and the ability to foresee the consequences of not dealing with it. The Judge therefore considered that the issue was whether the Council as landowner acted reasonably in all the circumstances by not taking active steps to remove the pampas.
Smallwood's argument was that the Council knew the pampas on lot 3 posed a significant fire hazard and being aware of this, was subject to a reasonable care duty to remove the pampas so as to reduce the fire hazard. This argument was supported by evidence that the Council had been aware of previous fires in the railway corridor bordering the land and had approached the railway company to have the pampas removed from the corridor. The Council had sent a letter noting “this type of overgrowth is dangerous, particularly when near a timber yard” and had even threatened to use its statutory powers to ensure removal.
The Council’s position was that it was reasonable to leave the vegetation on its land to mitigate the risk of erosion of the bank into the creek and improve water quality, and that the Council believed the creek created a natural fire break. However the Council’s position was undermined by the fact that Council land adjoining both lots 2 and 3 were clear of vegetation, and there was no documentation provided to support the erosion argument.
Considering all the evidence, the Judge concluded that the Council breached its duty by failing to take reasonable steps to prevent or minimise a known fire risk. It was more likely than not that had the Council removed the pampas from lot 3, a fire would likely not have started and, if it had, it was unlikely the fire would have spread to lot 2 and the timber yard. The Council was found to be negligent as the loss to the timber yard was foreseeable.
The Council put forward an affirmative defence of contributory negligence. This defence considers the degree of negligence of a reasonable person with the characteristics of the claimant (i.e. Smallwoods).
On this point the Judge found Smallwoods did not adopt reasonable risk management practices given the fire hazard on the Council’s land and adjoining railway line. For example, only after the fire did Smallwoods install a solid boundary fence, remove vegetation off its site and buildings, and place barriers around the mill’s sawdust pile which was moved away from the boundary. The Judge was satisfied with expert evidence that “the presence and location of vegetation and combustible material on the property played a material part in the spread of the fire and the ignition of buildings.” For this reason Smallwoods was found to be 50% contributorily negligent.
Smallwoods’ losses were duly quantified at $1,616,155.27. However due to the finding of contributory negligence the damages awarded to Smallwoods were reduced by 50%. The total damages awarded were $875,254.68 (which also included the Council’s share of a boundary fence that the Council had agreed to pay for).
“The fact that a council had to pay the best part of a million dollars for having failed to cut vegetation on council land will be of great concern to councils throughout New Zealand,” says partner Craig Langstone. “Whilst the application of the relevant legal principles to the facts was to a large degree straight-forward, councils will now need to assess what reserve and other council land ought to be cleared of vegetation to avoid further claims of this nature in the future. This is likely to be a huge task for most councils.”