One of Sydney’s new trams derailed on Sunday after being struck by a motorist who police allege drove through a red light.

The collision between the tram and a car temporarily shut down a busy Sydney street on Australia Day. South Dowling Street at Surry Hills was closed in both directions for about 90 minutes following Sunday’s accident, which occurred just before 5pm.

Police said the 37-year-old hatchback driver will be given a notice to attend court for failing to stop at a red light.

The Paddington motorist and his wife escaped injury in the collision, although their car was badly damaged.

New South Wales police said there were no other reports of injuries after they were called to the scene along with the NSW Fire and Rescue Service about 4.45pm.

The L2 light rail service was temporarily suspended between Central and Moore Park, with replacement buses put on during the clean-up.

On Sunday night the service resumed after the accident was cleared.

The light rail service had already been suspended between Circular Quay and Town Hall because of safety concerns due to Australia Day celebrations.

The $2.9bn line between Circular Quay to Randwick was finally opened to passengers in December after a cost blowout that took the project’s price tag to $2.9bn – almost twice its initial projected cost.