Reinhardt v Epsilon Distribution Ministerial Holding Corporation

The plaintiffs are the registered proprietors as joint tenants of semi-rural land on the Hawkesbury River at Cattai. The land is comprised in Folio 1/999046 and is known as 331 Cattai Road. By an amended statement of claim filed on 12 May 2025 the plaintiffs claim damages in trespass for the placement of electric power distribution poles and wires over their property. They also claim an order for the removal of the poles and wires. There are 11 defendants who all maintain that no action by the plaintiffs lies against them on account of the presence and operation of the electrical distribution assets on the plaintiffs’ land. They invoke s 53 of the Electricity Supply Act 1995 (NSW).

Endeavour Energy was constituted as a statutory State owned corporation pursuant to the Energy Services Corporations Act 1995 (NSW). It was created to operate as an energy distributor. The date on which Endeavour Energy was formed and commenced operations is not clear from the evidence. By inference from the date when its name first appeared in Pt 2 of Sch 2 of the Energy Services Corporations Act, it appears to have commenced from 2 March 2011. Endeavour Energy was a successor to earlier public authorities that had owned and operated electricity distribution assets in the wide area for which Endeavour Energy assumed responsibility, including Cattai. From when it commenced to operate as an electricity distributor in the relevant area until 13 June 2017, Endeavour Energy owned and maintained assets such as poles, transmission lines, transformers and switchgear, including the disputed infrastructure on the plaintiffs’ land.

The disputed infrastructure includes four poles erected along the eastern boundary of the plaintiffs’ land, in a line running approximately from south to north. There is a fifth pole standing within the plaintiffs’ block, a few metres in from the eastern boundary. a sixth with pole is located on the western boundary. Those poles carry an 11kVA overhead transmission line from the front of the plaintiffs’ property, on Cattai Road, towards the rear, where the property fronts onto the Hawkesbury River. At the sixth pole, on the western boundary towards the river bank, there is a substation where the power is transformed to 400v. A seventh pole on the plaintiffs’ land carries the 400v line, which then proceeds in a westerly direction supported by further poles on adjoining properties.

Business records tendered by the defendants clearly show that the electricity network assets on the plaintiffs’ land were in place by, at the latest, the beginning of 1969. The records show later dates for some components, indicating replacement, for example where concrete poles were installed as an upgrade from treated timber poles.

The Electricity Network Assets (Authorised Transactions) Act 2015 (NSW) provides in cl 6(1) of Sch 7 that the Treasurer may, by order published in the Gazette, convert an electricity network State owned corporation into a Ministerial Holding Corporation. On 14 June 2017 the Treasurer exercised that power with respect to Endeavour Energy, converting it to Epsilon Distribution Ministerial Holding Corporation (Epsilon Distribution MHC), which is the first defendant.

The Electricity Network Assets (Authorised Transactions) Act also authorised the transfer of electricity network assets to the private sector: s 5(1). By s 13 the power to effect such transfers was conferred on the Treasurer. On 11 May 2017 Endeavour Energy, as the entity was then known, entered into a Sale and Purchase Agreement with the 2nd to 11th defendants. The Agreement provided for the sale of certain assets by Endeavour Energy to the 7th to 11th defendants. Those five proprietary limited companies comprise and are known as the operator partnership. The Agreement also provided for the lease of distribution network land and related assets by Endeavour Energy to the 2nd to 6th defendants, known collectively as the asset partnership.

The Sale and Purchase Agreement was completed on 14 June 2017. On that date the Treasurer promulgated in the Gazette an order by which there were vested in the operator partnership most of the electricity distribution network assets of Endeavour Energy. Schedule 1 to the order identified the vested assets, including, in Section 2 of Sched 1, “Tangible property” specified as, inter-alia, “plant equipment, infrastructure, other facilities and other tangible property”. That description encompasses the power poles, transmission lines, transformer and switchgear that are located on the plaintiffs’ land and that had been utilised for electric power distribution over many years by Endeavour Energy and its predecessors.

A second gazetted order, also effective from 14 June 2017, transferred customer metering assets from Endeavour Energy to the asset partnership. A third such order vested assets, rights and liabilities relating to employees of Endeavour Energy. The transferee of those rights and liabilities was Epsilon Network Management Pty Ltd, a wholly owned subsidiary of the operator partnership.

In further performance of the Sale and Purchase Agreement, on 14 June 2017 Endeavour Energy granted to the five companies in the asset partnership, as tenants-in-common in specified shares, a 99 year lease of a very large number of parcels of real property. The parcels are for the most part the locations of electricity substations. Simultaneously, the asset partnership granted to the operator partnership a 99 year sub lease of a large proportion of those parcels of real property. The lease and sublease transactions with respect to the real property associated with the electricity distribution network are not relevant to the present proceedings. It is common ground that the defendants have no real property interest in the plaintiffs’ land, on which the disputed infrastructure is erected.

It is necessary to identify which of the defendants are responsible for maintaining the presence of that infrastructure on the plaintiffs’ land. There can be no case in trespass against any of the defendants who are not so responsible. With respect to whichever defendants maintain and utilise the disputed infrastructure, it is necessary to determine whether the claimed protection under s 53 of the Electricity Supply Act is engaged.

The plaintiffs have no basis for an action in trespass against the first defendant, Epsilon Distribution MC. That entity has not controlled the disputed distribution assets on the plaintiffs’ land since 14 June 2017. Since that date those assets, together with all other electricity distribution infrastructure in Cattai (amongst many other places), have been vested in and controlled by the operator partnership. Maintaining and utilising the disputed assets, so far as such conduct could constitute a trespass, has been undertaken by that partnership, not by the first defendant. The proceedings were commenced on 10 September 2024 and are only concerned with the presence of the assets on the plaintiffs’ land during the preceding six years, back to 10 September 2018.

The plaintiffs also have no basis for an action in trespass against the 2nd to 6th defendants, comprising the asset partnership. The assets vested in those companies by the authorised transactions of 14 June 2017 do not include the disputed infrastructure, or any other equipment or installations of the electricity distribution network apart from customer metering assets. The five companies of the asset partnership do not control the assets on the plaintiffs’ land and cannot be said to have committed trespass by reason of those assets remaining in place.

The operator partnership has since 14 June 2017 controlled and operated the electricity transmission and distribution system over a large area that includes Cattai, in particular the plaintiffs’ land. The operator partnership is responsible for the presence and utilisation of the disputed assets on that land. Do the five defendants who comprise that partnership have the protection of s 53 of the Electricity Supply Act against the plaintiffs’ action in trespass?

Section 53 provides as follows (extracted so far as relevant to the present case and with defined terms in bold):

The Dictionary to the Electricity Supply Act contains the following definitions that are relevant to the meaning of s 53:

Pursuant to s 12A, a distribution system comprises electricity power lines and associated equipment and electricity structures used to convey and control the conveyance of electricity to wholesale and retail customers and to the rail system. A transmission system consists of any specified power lines and associated equipment and/or structures that are designated as a transition system by an order of the Minister published in the Gazette. The present case is concerned with a distribution system, not a transmission system.

The date referred to in s 53(1) as the commencement of the Electricity Supply Amendment (Protection of Electricity Works) Act 2006 (NSW) is 26 May 2006. However, the operative date for the purposes of s 53 in relation to the present case is 14 June 2017, for the following reasons. Section 30 of the Electricity Network Assets (Authorised Transactions) Act provides that an electricity distribution system that has been transferred to the private sector is referred to in that Act as a “transacted distribution system”. The Endeavour Energy system that was transferred into the control of the operator partnership from 14 June 2017 is a “transacted distribution system”. Section 37(1) of the Electricity Network Assets (Authorised Transactions) Act makes the following provision (wording that is presently irrelevant has been omitted; terms in bold have the same meaning as in the Electricity Supply Act):

For the purposes of the above section, the evidence adduced by the defendant clearly establishes that the “electricity works” constituted by the assets and equipment located on the plaintiffs’ land “form part of [the] transacted distribution system” that has been controlled by the operator partnership since 14 June 2017. Section 53 therefore applies to “electricity works that, immediately before [14 June 2017], were situated in, on or over land not owned by the network operator having control of those works”.

As explained at [3] and [4], the disputed assets and equipment have now been in place for over 50 years and certainly were present on the land immediately before 14 June 2017. For s 53(1) to be engaged, it is a requirement that immediately before 14 June 2017 the assets should have been “situated in, on or over land not owned by the network operator having control of those works”. In that context, I construe “network operator” as referring not to the entity that operated the distribution system immediately before 14 June 2017 but to the current network operator, who might seek to invoke the immunity from claims that is provided for in s 53(2). On that construction, the operation of s 53 is concerned with assets that have been historically located upon land that the current network operator does not own. Clearly the term “network operator” in sub-s (2) refers to the current operator, as it is only the current operator to whom the protection afforded by that subsection could be relevant. I construe the section as a whole on the basis that “network operator” refers to the same entity throughout.

Section 53 is therefore engaged, with the result that, by force of sub-s (2), “no action by [the plaintiffs] lies against the network operator by reason of” the presence of the assets in, on or over the land or the operation or use of those assets. Sub-section (2) provides that the presence of the assets and their operation and use are “taken to be lawful for all purposes”. It follows that s 53 defeats the plaintiffs’ action in trespass against the 7th to 11th defendants.

Further with respect to the position of the first defendant, Epsilon Distribution MC, even if that entity were capable of committing trespass by virtue of being the owner and lessor of the disputed assets post 14 June 2017, it would be entitled to the protection of s 53 of the Electricity Supply Act: see s 31(2)(e) of the Electricity Network Assets (Authorised Transactions) Act. Similarly, even if the asset partnership were to act in cooperation with the operator partnership as a joint controller of the transmission system so as to render itself legally responsible for the presence and utilisation of the poles and power lines on the plaintiffs’ land, the 2nd to 6th defendants would have the protection of s 53 of the Electricity Supply Act. On any view, the plaintiffs’ claim in trespass cannot succeed against any of the defendants.

At the conclusion of the final hearing of the proceedings on 26 March 2026 the following orders were pronounced:

Paragraphs [1]-[21] above are the Court’s reasons for having made orders (1) and (2). The defendants sought that their costs be awarded on an indemnity basis, relying upon an offer of compromise that was made on 2 December 2025. The Court’s decision as to whether the indemnity basis should apply was reserved. The Court has now been provided with a copy of the offer of compromise dated 2 December 2025 and the covering email by which the defendants’ solicitors conveyed that offer to the plaintiffs. The defendants offered to consent to an order that they pay $10,000 “in damages/equitable compensation”, with no order as to costs. The offer was open for 28 days.

Four and a half years before commencement of the proceedings, in a letter to the first plaintiff dated 6 March 2020, the defendants explained to him very clearly that by operation of s 53 of the Electricity Supply Act the presence of the electricity poles and distribution lines on the plaintiffs’ property is lawful and that the network operator is entitled to maintain the presence of those assets without an easement. The plaintiffs thus had ample notice of the legal impediment to this action before initiating it. If they had obtained and heeded sound legal advice they would not have sued. The defendants’ affidavits, sworn on 29 August 2025 and 1 September 2025 respectively, fully set out the facts by which it is established that s 53 is applicable and is a bar to the plaintiffs’ claim. An order was made for service of the defendants’ affidavits by 1 September 2025 and I infer that that was complied with. After receipt of the affidavits, the plaintiffs were as thoroughly informed as anyone could be about the insurmountable bar to their action in trespass. In the defendants’ solicitors’ email of 2 December 2025, enclosing the offer of compromise, they encouraged the plaintiffs to seek legal advice. Regrettably, it appears that no advice was obtained.

As the orders made in final disposition of the case are no less favourable to the defendants than the terms of their offer, by force of r 42.15 of the Uniform Civil Procedure Rules 2005 they are entitled to an order against the plaintiffs for their costs to be assessed on the ordinary basis up to 2 December 2025 and on the indemnity basis from 3 December 2025 onwards. That entitlement is subject to any order of the Court to different effect. I can see no ground upon which, in fairness to the defendants, the Court could deny them their prima facie entitlement under the rule. Therefore, the following additional order is made and will be entered:

At the conclusion of the hearing counsel provided an estimate of the defendants’ costs, namely, $120,000. It is assumed that that is an approximate measure of solicitor and client costs. It is a very large amount for a case of modest proportions. For the purposes of assessment on the ordinary basis up to 2 December 2025, it is relevant that the preparation of the defendants’ affidavits included very bulky real property lease documents that, in my view, were not material. For the assessment of costs associated with the final hearing, it is noted that the hearing occupied only one and a half hours. The defendants’ estimate of two days was unrealistic and was never going to be required. Three personnel of the defendants’ retained solicitors attended during the hearing to instruct counsel, as well as in-house corporate counsel of the 2nd to 11th defendants’ management company, who attended by audiovisual link. Even on an indemnity basis, the nature and duration of the hearing did not warrant any more than one instructor.