ESB could face huge bill over UCC flood damage

The ESB could face a huge damages bill after the Supreme Court ruled it was guilty of negligence concerning extensive flood damage to buildings on the campus of University College Cork (UCC) in 2009.

UCC’s action over the damage against the semi-State company is among about 400 sets of proceedings initiated against the ESB arising from the flooding in Cork.

The finding of negligence by four of the five judges has implications for those cases – and wider implications for the ESB’s liability arising from its management of hydroelectric dams in the State.

Four of the five Supreme Court judges concluded that the ESB had a liability on the basis the case was an exception to the general principle that an individual did not owe a duty of care to prevent harm to another caused by actions of a third party.

Dissenting, Mr Justice Donal O’Donnell said the flooding was caused by the River Lee, not any positive act by the ESB, and there was “no compelling reason” why the cost of flooding to UCC “should be shifted from insurers who had agreed to be responsible for that very risk and placed upon the ESB and its customers”.

A High Court hearing to assess damages for UCC will proceed, though a date is yet to be fixed. The extent of damages will depend on the Supreme Court’s decision on a cross-appeal, yet to be heard, concerning whether there was contributory negligence by UCC in relation to the extent of the flood damage.

In a subrogated claim on behalf of its insurer Aviva, UCC claimed the ESB’s management of water releases from two hydroelectric dams on the River Lee led to significant unnecessary additional flooding causing substantial damage to 29 buildings on its campus in 2009.

Aviva sought €20 million damages for losses at UCC, plus another €14 million for losses suffered by other property owners.

The ESB denied liability and argued the existence of the dams had reduced the level of water that came down to UCC.

The Supreme Court judgments concerned appeals taken after the Court of Appeal overturned findings by the High Court’s Mr Justice Max Barrett of 60 per cent liability on the ESB’s part and of 40 per cent contributory negligence on UCC’s part.

The Supreme Court had decided it should first determine whether the ESB had a liability.

The majority concluded on Wednesday that the ESB was, on the facts and the law, guilty of negligence.

The judgments addressed important issues, including the liability of a dam operator in respect of persons downstream, the law relating to duty of care and the liability of statutory undertakings.

Management regime

The main judgment, by Chief Justice Frank Clarke and Mr Justice John MacMenamin, noted the High Court had found a different management regime of the Lee dams by the ESB would have reduced flooding downstream, including at UCC, and in light of the conditions that applied in the immediate run-up to the flooding and the relevant water forecasts, the ESB was negligent in not operating a different management of the Lee dams.

On the other hand, the evidence made clear the management of the dams had not made things worse but might be said to have failed to make things better, they said.

This meant the central legal issue was whether the legal obligation of the ESB extended to an obligation to manage the dams, in at least some circumstances, in a manner designed to improve conditions downstream.

They found this case came within one of the relatively limited types of situation where the law imposes a duty to confer a benefit, in this case to downstream landowners and occupiers, by the ESB managing the dams in a way that would give rise to less flooding than would have occurred if the dams were not there.

The ESB, as a party with a special level of control over a danger, even though that danger was not of its making, does, subject to certain limitations, owe such a duty of care and was in breach of that duty, the two judges held.

Mr Justice Peter Charleton, in a concurring judgment, said the findings of fact by Mr Justice Barrett were the ESB had warnings of a storm, knew the ground was sodden and could have released water earlier to make room in the dam systems for the danger reasonably predicted.

He added two caveats which might impact on damages. The first was the ESB’s duty under statute is to generate electricity and its liability depends not just on managing the waterway but taking reasonable precautions consistent with the need to create power.

The second was, by releasing water earlier to cope with very heavy rain forecast, the ESB may well have flooded UCC and Cork city to some degree which, on the evidence, would have been less than the major flood ultimately caused. Any future damages would be assessed on the difference in the damage of the two floods, he said.

Ms Justice Elizabeth Dunne agreed with the majority.