Thiess Pty Ltd and John Holland Pty Ltd v Parsons Brinckerhoff Australia Pty Ltd [2016] NSWSC 173

Legal Directions

Introduction

On 2 November 2005, a section of Sydney’s Lane Cove Tunnel collapsed, resulting in significant property damage. Following a decade-long dispute between the building professionals involved in this construction project, a decision in the Supreme Court of New South Wales on 4 March 2016 has settled the question of apportionment of blame.

The proceedings were brought by the joint venture companies responsible for the construction of the tunnel against:

  • The first and second defendants, who were responsible for the structural design of the works
  • The third defendant, the geotechnical engineer responsible for monitoring ground conditions in the tunnels
  • The fourth defendant, the independent verifier appointed to verify the first and second defendants’ designs.

The plaintiffs settled their claims against the first, second and fourth defendants during the course of the hearing. However, the plaintiffs’ claim against the third defendant remained to be decided by the Court. In doing so, the Court was required to consider the other defendants’ respective responsibilities in circumstances where the third defendant had raised apportionment defences against them pursuant to section 35 of the Civil Liability Act 2002 (NSW) (‘the Act’).

Background

In 2004, the plaintiffs entered into separate contracts with each defendant which set out their respective roles and responsibilities.

On 2 November 2005, while building works were underway, the roof unexpectedly collapsed. While no one was killed or injured, significant property damage was sustained.

The plaintiffs’ submissions

The plaintiffs contended that the collapse occurred principally because the support design prepared by the first and second defendants was inadequate, having regard to the known geological conditions.

Further, the plaintiffs contended that the other defendants also bore some responsibility for the collapse and submitted that had the third and fourth defendants carried out their contractual duties properly, they would have realised the support designs prepared by the first and second defendants were inadequate.

The defendants’ submissions

The defendants submitted that the sole, or at least primary, cause of the collapse were manifest deficiencies in the construction procedures adopted by the plaintiffs.

In particular, the third defendant relied on section 5O of the Act which provides a defence of ‘widely accepted competent professional practice’, and submitted that the claim against it was apportionable such that any liability attributed to it was limited to an amount reflecting the extent of its responsibility for the damage or loss pursuant to section 35 of the Act.

Decision

The Court found in favour of the plaintiffs and awarded judgment against the third defendant for $6,983,333 plus interest. In doing so, it considered that the first, second and third defendants departed in a very significant way from the standard imposed upon them by their contracts, each of which were of sufficient ‘causal potency’ to result in the loss.

In reaching its decision, the Court rejected the third defendant’s defence of ‘widely accepted competent professional practice’ on the basis that its expert evidence was held to be incapable of demonstrating what might be considered competent professional practice widely accepted by peer professional opinion in Australia in the context of the third defendant’s specific contractual obligations.

The independent verifier was found not liable because there was no evidence presented to support the argument put forward by the third defendant’s expert that it failed to take reasonable care to satisfy itself that the design had been prepared in an inadequate way. Hence, it was not established that it breached its contractual obligation of verification.

As to their respective apportionments, the Court held that primary responsibility should be attributed to the first and second defendants (two thirds), who were responsible for producing designs which were not appropriate for the conditions. One third of the balance was attributed to the third defendant, who was obliged to monitor the designs and consider whether they were appropriate.

Implications of this decision

This decision provides an interesting example of the Court’s application of apportioning liability between defendants. It highlights the fact that courts are generally more inclined to attribute the ‘lion’s share’ of responsibility to the designer – rather than the entities responsible for checking the designs – in circumstances where a plaintiff’s loss is considered to have been caused by design defects rather than building defects.

Authored by Jodie Potts, Partner and Margarita Ntostas, Associate


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