Bailey & 1 Ors v Redebi Pty Limited & 1 Ors [1999] NSWSC 918 | Case summary

Bailey & 1 Ors v Redebi Pty Limited & 1 Ors [1999] NSWSC 918 | Case summary | Zoe

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I Faulkner (Plaintiffs) COUNSEL : G P McNally (First Defendant) R Hunt (Second Defendant) Henry Davis York (Plaintiffs) SOLICITORS : Colin Biggers & Paisley (First Defendant) Corrs Chambers Westgarth (Second Defendant) CATCHWORDS : TORTS - Negligence - Architect's duty of care and its scope - Policy - Building defectively designed with latent defect - internal wall required to act as external wall which collapses in high wind because not sufficiently stabilised - Liability of architect for design, supervision and communication with engineer in particular circumstances - Liability of engineer - Reasonableness of conduct of plaintiff as owner or lessee in relation to later reports by other experts prior to collapse - Relevance of whether if acted upon collapse would have been averted - Causation - intervening cause or novus actus interveniens - Aggravation of damage - Contributory negligence - Mitigation - Relevance of defendant's duty to take care against the same risk as eventuates - tortious recovery in negligence of damages for loss of a chance versus all or nothing LIMITATION OF ACTIONS - Negligence - Onus - Pirelli rule in Australia - Economic loss - When defect discoverable - Allowance for time taken to take reasonable steps - Nominal damage outside limitation period - When is damage sustained if depends on a contingency. ACTS CITED : Limitation Act 1969 (NSW) s14(1) Astley v Austrust Limited (1999) 161 ALR 155; 73 ALJR 403 Bennett v Minister for Community Welfare (1992) 176 CLR 408 Bryan v Maloney (1995) 182 CLR 609 Cartledge v Jopling & Sons Ltd [1960] AC 758 Chappel v Hart (1998) 156 ALR 517; 72 ALJR 1344 Daniels v Anderson (1995) 37 NSWLR 438 Davies v Adelaide Chemical & Fertiliser Company Ltd (1946) 74 CLR 541 Environmental Agency (formerly National River Authority) v Empress Car Co (Abertillery) Ltd [1998] 2 WLR 350 Hawkins v Clayton (1988) 164 CLR 539 Jobbins v Capel Court Corporation Ltd & Or (1989) 25 FCR 226 Jones v Dunkel (1959) 101 CLR 298 Kavanagh v Akhtar (1998) 45 NSWLR 588 Mcauley v London Transport Executive [1957] Lloyd's LLR 500 CASES CITED : McKew v Holland & Hannen & Cubitts (Scotland) Ltd (1970) SC(HL) 20 Magman International Pty Ltd & Ors v Westpac Banking Corporation (1991) 32 FCR 1 Mahoney v J Krusich (Demolitions) Pty Ltd (1985) 156 CLR 522 March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 Naxakis v Western General Hospital & Anor (1999) 73 ALJR 782 Palsgraf v Long Island RR (1928) 248 NY 339 Perre v Apand Pty Ltd ([1999] HCA 36, 12 August 1998, unreported) Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1 Plenty v Argus [1975] WAR 155 (FC) Pullen & Anor v Gutteridge, Haskins & Davey Pty Ltd [1993] 1 VR 27 Reeves v Commissioner or Police of the Metropolis [1999] 3 WLR 363 Sheldon v McBeath (1993) Aust Torts Reports 81-208 CA(NSW) Teachers Health Investments Pty Limited v Wynne (1996) NSW Conv Rep 55-785 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Westward Clothing Co Pty Ltd v Freehill Hollingdale & Page [1999] VSC 266 (Smith J, 30 July 1999, unreported) DECISION : Defendants Architect and Engineer liable in negligence.

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THE CENTRAL ISSUES 1 The owner Mr Bailey and his related lessee company (First and Second Plaintiffs respectively) each claim damages solely in negligence against their architect and their engineer (First and Second Defendants respectively) for loss from the collapse under high winds of an industrial complex of three units at Unanderra. I shall refer to the First Defendant Redebi Pty Limited as "the Architect" and to the Second Defendant Sherson & Associates Pty Limited as "the Engineer". This collapse led to the complete demolition and rebuilding of the complex. Responsibility for the collapse can be attributed at least in a "but for" sense to a wall being erroneously treated by Engineer and Architect in its engineering design and construction as an internal wall. It had to serve structurally as an external wall, due to the construction being staged and the wall was insufficiently stabilised to do so. This staging was known to the Architect and was sufficiently made known to the Engineer. The amount of the damage for consequential economic loss is agreed at $662,680 (plus any further interest). The claim against the Engineer is for failure in design of the structural elements. That against the Architect focuses on the Architect's procurement and supervisory role in relation to engineering design, including an alleged communication failure on the Architect's part vis a vis the Engineer and in allowing the builder to leave the wall as an internal wall. The case throws up the issue of where an architect's responsibility ends and a structural engineer's begins, but in circumstances where it is said that the Architect's role and responsibility as a "design and building consultant" extended at least to the functions just described. 2 The claim is resisted firstly on the basis of the owner's alleged failure to respond reasonably to engineering reports from other sources received before the building collapsed. That alleged failure in turn is relied upon as a novus actus interveniens interrupting causation, or else as aggravating damage or failing to mitigate it, or as the basis for contributory negligence on the owner's part. The owner disputes the adequacy of any warning and the efficacy of the remedial action suggested or recommended in those reports. The Architect but not the Engineer denies any responsibility for that aspect of the design which led to the collapse. The Architect alone pleaded the statute of limitations. The Engineer belatedly sought to do so, but only after evidence had closed and at the conclusion of oral addresses over a month later. That application was refused, for reasons set out in my judgment of 12 August 1999.

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OVERVIEW AND PRINCIPAL CONTENTIONS 3 Mr Stephen Floyd Bailey ("the First Plaintiff") has at all material times been the owner of a piece of land located at 36 Investigator Drive, Unanderra, New South Wales. The First Plaintiff is the managing director of Baileys Diesel Services Pty Limited ("the company"), which is the Second Plaintiff in these proceedings. The company has been the lessee of the premises for seven years and thus at the material time. It was not disputed that the First Plaintiff's actions or inactions could be attributed to the Second Plaintiff. Nor was it contended that the Second Plaintiff was not in contemplation so far as any tortious claim was concerned (including as regards any dealings with the First Plaintiff). 4 This dispute arises following the construction work carried out on the 36 Investigator Drive property commenced in late 1990. Each of the Defendants were earlier engaged for the purpose of designing and advising as consultants for the building of industrial warehouse units on the property. The First Defendant, Redebi Pty Limited, trading as PR Design Co ("the Architect") was a design and building consultant under contract to the First Plaintiff. The Second Defendant, Sherson & Associates Pty Limited, ("the Engineer") was a firm of chartered structural engineers, engaged through (to use a neutral term) the First Defendant. 5 On 6 November 1994 the western wall of the building works the subject of this dispute collapsed under the force of strong winds. As a result, a large part of the rest of the building, being of brick construction with a metal roof, also collapsed. The Plaintiffs bring an action, now solely in tort, against both Architect and Engineer, having abandoned an earlier action in contract against the Architect. 6 The Architect has subsequently brought a cross claim against the Engineer. The Engineer has, in turn, brought two further cross-claims, the first against the Architect and the second against Kenna & Brown Pty Limited (in liquidation), the builder of the subject constructions. 7 The cross-claims as between the Architect and the Engineer were settled. Nor am I concerned with any claim against the builder. Thus if the Architect (or Engineer) is found liable to the Plaintiffs there is no need for the Court to apportion liability between the Architect and the Engineer. The issues originally raised in these proceedings with respect to s92 of the Environmental Planning and Assessment Act 1979 (NSW) do not now need to be dealt with. Nor in the negligence claim is there any longer an issue based on whether the Plaintiffs voluntarily assumed the relevant risk of collapse. This issue has been subsumed in the issues of contributory negligence and mitigation. 8 The relevant action in tort was brought against the Architect on 21 May 1998. The limitation period of six years is measured from the date on which the cause of action first accrues to the Plaintiffs; s14(1) of the Limitation Act 1969 (NSW).

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Factual Background 9 In May 1989 the First Defendant approached the Architect to retain it for the purposes of designing the building development on the 36 Investigator Drive property. It early became a two stage development for budgetary reasons. The total building development was to consist of seven industrial units. They were partly for use by the Plaintiffs for a diesel engine maintenance business and partly for outright rental. The Architect accepted the retainer. Further discussions took place in August, September and November 1989. 10 On 19 January 1990 the Architect, through Mr Rasa, a principal of the Architect lodged a development application with the Wollongong City Council. The development application, then to develop the property by building seven units, was signed by Mr Rasa and by the First Defendant. Earlier on 1 January 1990, based on the recommendation of the Architect (Mr Rasa to Mr Bailey) Sherson & Associates were instructed by the Architect to design the structural engineering component for the overall design of the project. 11 The Architect's plans (DX2) were provided to the Engineer by the Architect around mid-January. By then the development was to be staged, as the Architect would have appreciated. Thus that plan contains upon a dimension line the words "stage 1", for the first three units. Further drawing by the Architect (DX3) similarly identified "stage 1". I am satisfied that this in turn was enough to put the Engineer on notice of the staged construction, whether or not the engineers actually took that in at the time. But in any event later site inspection on 10 December 1990 would have left the Engineer in no doubt; see paras 16 and 17 below. 12 On 2 April 1990 the development application was granted. Between 19 January 1990 and 2 April 1990 there were various communications in respect of the development works between the Architect and the Engineer. 13 On 23 May 1990 the Architect applied for building approval. The approval was granted on 25 October 1990 as an approval for a seven unit development though some of the drawings submitted showed a stage 1, for units 1, 2 and 3. 14 The builder, Kenna & Brown Pty Limited entered into a written building agreement with the First Plaintiff. The agreement was executed on 6 November 1990 for work specifically on "stage 1" of the project and was for a twenty week building period. On 15 February 1991, Wollongong City Council sent a letter to the First Plaintiff confirming that the construction was to be for "stage 1" only, being three units. (The Plaintiffs for financial reasons did not want to proceed with both stages at that time but still wanted the necessary approvals.) 15 The construction works commenced in late 1990 and were completed after the expiry of the 20 week building period prescribed in the building agreement at a time towards the end of 1991. The western wall, being the wall that later collapsed, was designed and built as an internal wall notwithstanding the fact that it had to function as an external wall during such time as the second stage of the building project remained incomplete. The second stage was not embarked upon. It is not seriously disputed that had units 4 to 7 been erected at the same time, there would have been additional lateral stability provided for by the brick walls of those other units. In addition the roof bracing as a whole would have been far more adequate than the roof bracing as it was for just three units. 16 During the term of the construction the Engineer visited the site on at least two occasions. The purpose of the first visit, on or shortly after 10 December 1990, was to inspect the preparation of the footings and to certify the adequacy of preparation. The footings at that stage had only been prepared for the first three units. It was conceded by the Engineer's counsel (T, 9(5)) that the Engineer actually asked the concreter on site "where are the rest" - meaning the other four units. The second visit, to inspect the sewer line, was completed and confirmed by letter from the Engineer to Kenna & Brown Pty Limited dated 1 July 1991. 17 The Engineer, if not earlier then as a result of the site visits, can, I am satisfied, be taken to have become aware that the planned construction was not to be completed to the seven unit stage but only to the three unit stage in the first instance. Thus on 22 August 1991 the Engineer composed a letter to Kenna & Brown Pty Limited. That letter outlines the building faults evident in the construction to that date. Relevantly, the letter refers to the existence of only three units. I conclude that the Engineer was aware certainly as of 22 August 1991 and I am satisfied earlier, during the engineering design phase, that only three of the seven units had been constructed. 18 Towards the end of 1991 the First Plaintiff became concerned as to the adequacy of the elements used to fix the roof supports in place. The Engineer assured the First Plaintiff of the adequacy of roof support in a letter of 27 September 1991 (PX1, 52). However, the First Plaintiff made further inquiries about the roof supports from Lysaght Building Industries, the firm that manufactured the metal components for the roof. Lysaghts reported that "[a]dditional bolts are required at the lap as detailed in [an accompanying drawing]. Attention drawn to lack of fly bracing" (PX1, 36). The results of that inquiry were communicated by the First Plaintiff to the Engineer. The Engineer assured the First Plaintiff that the roof was satisfactory. 19 Early in 1992 a dispute arose between the First Plaintiff and the builder Kenna & Brown Pty Limited with respect to certain aspects of the building work. In the course of that dispute the First Plaintiff engaged solicitors Peedon, Brodie. The matter went to the Campbelltown Local Court on 5 March 1992 but was ultimately resolved through mediation in accordance with s23(3) of the Community Justice Centres Act 1983 (NSW) on 6 April 1993. 20 During that dispute, the First Plaintiff obtained a building consultancy report from Stephen Maber of Building Consultancy Service. The report (PX1, 65) is dated 9 May 1992. It therefore came into existence twelve days earlier than 21 May 1992, the latter being six years from the date (21 May 1998) when the Plaintiffs' present actions were brought. It came to the attention of Mr Bailey "on about 9 May 1992" (T,41(57) to 42(5)). The evidence as to this needs to be more closely considered to determine at what point if at all his awareness centred on the fatal deficiency in the wall, or should have done, taking reasonable steps. This is because of the implications of the six year limitation period as it bears upon any claim in negligence; see paras 69 and following. 21 Thus while Mr Bailey became aware "on about" 9 May 1992 that the wall had been erected as a temporary wall: T, 41(38), at T, 52(1-6) he agreed in cross-examination, that it was in "May '92" that "After you read this report you became aware, didn't you, that there was something wrong with the western wall". [emphasis added] At T, 52(8-14) he agreed that "in 1992" he knew the western wall had been defectively designed in so far as it was an internal wall being used as an external wall. As to anything being defective, except for T, 52(8-14) the questioning did not go further than that after he read the BCS report he "became aware that there might be a problem with the brick wall": T, 41(32). Thus it can be seen that while he acknowledges he had the report on about 9 May 1992, imprecise cross-examination left the time of his awareness of what was in the report to be inferred. This is in circumstances where the onus must be on the defendant who invokes the limitation defence; see para 82 below. 22 Mr Bailey had in that report two statements upon which the Architect, in particular, relies. The first concerns the roof and the second the brickwork of the wall in question: "II. ROOF: - the roof purlins appear to have excessive amounts of deflection. The roof deflects 20mm under a minor impact load of 100kg. With this in consideration, the roof may not withstand the wind forces placed upon it in the future. The roof requires extra bracing and stiffening. The fixing of snap-in purlin stiffeners, as specified by the manufacturers, should be installed. This may reduce the amount of deflection occurring. It is recommended that a full report/investigation by a structural engineer be undertaken for the roof."

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23 It will be appreciated that Mr Bailey is warned to consult a structural engineer for the roof, as the roof "may" not withstand future wind forces and that a wall erected "as a temporary wall" should be checked for stability by a structural engineer" - it is not stated that the wall is unstable at that point. His concessions in cross-examination as to what he knew in "May 1992" or "in 1992", quoted above, do not establish that he knew anything more, immediately before 21 May 1992, than was in the BCS Report of 9 May 1992. Nonetheless, I am satisfied that he did know at that date what was in the BCS report. The BCS report stops short of saying that the building suffered from defective design. 24 In any event, Mr Bailey did check the position with a structural engineer, doing so after 21 May 1992. The wall was checked by Mr Aplin a structural engineer on behalf of KF Williams & Associates Pty Limited and the findings of that inspection were contained in a report ("the first Aplin report") dated 9 July 1992 (PX1, 74). Quoting from that first Aplin report of 9 July 1992 of which para 2 is principally relevant: "1. After design check calculations of the Dead and Wind loads on the roof, the Z20025 purlins are considered adequate for the spans in question provided the bridging is amended to ensure full lateral torsional restraint. (provision of Hook-Lok Bridging). It must be clarified, however that deflection is not dependent upon the provision of bridging. Bridging is to prevent buckling of the purlins due to wind load which causes suction (uplift loading) on the roof. 2. The 230mm thick temporary brick wall at the western end of the factory does not comply with the requirements of the brickwork code in terms of lateral stability and is also considered inadequate for the wind loads imposed on the wall. Engaged brick piers 590 x 230 should be provided at 5 metre cts. to ensure stability of the wall. The tops of these piers are required to be tied laterally to the roof framework. 3. The angle bracing in the plane of the roof, buttressing the top of the engaged brick piers on the Southern wall have been attached to the cross walls in a dissatisfactory manner. Bolts have been placed through the brickwork only and not fixed to the raking angles as is common practice. There is a possibility that with wind load on the bracing angles, the top courses of brickwork may be dislodged."

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Arrangements with Architect 31 It is not in dispute that there existed at the material times from late 1989, a contract for services between the First Plaintiff and the Architects. It is the Plaintiffs' contention that the Engineer was then contractually retained by the Architect pursuant to contractual duties earlier assumed by the Architect in agreement with the First Plaintiff for both design and engineering. That last proposition is disputed by the Architect who contends that there was a separate contract for engineering design between the First Plaintiff and the Engineer, merely effected via the Architect. But as the Plaintiffs now rely solely on tort, this has ceased to be a live issue, save as it may bear on the responsibilities assumed by the Architect for tort purposes. 32 Supporting the Architect's contention, the Engineer admits that, in or about January 1990, it entered into an agreement with the Architect for the provision of certain engineering services [Engineer 3rd Amended Defence para 5]. The letter of 19 January 1990 (PX1, 1) containing an approximate quote by the Engineer for engineering design services in regard to the construction was addressed and directed to the Architects and not to either Plaintiff. The letter did not refer to the Plaintiffs as the clients of the Engineer. 33 The Architect also relied upon the plaintiffs' expert engineer Mr Low agreeing in cross-examination that an engineer has certain expertise in relation to the design of structural elements of a building that an architect may not have (T, 127(15-25). The engineer's input is important because his design goes to ensuring that the building stays up, which is the most important part of the overall design process (T, 127(25-32). He agreed that architects reasonably rely on the experience of engineers in preparing a design that is structurally sound (T, 127(30-45). However while that goes to what an architect may do, by in effect sub-contracting or delegating the engineering design elements to the professional most competent in that area, it begs the question whether the architect still retains ultimate responsibility for an overall building design service which includes the engineering design elements of the structure, albeit co-opting the assistance of a qualified engineer in that task. 34 Relevantly the quoted amount was then contained in a letter from the Architects to the Company dated 31 January 1990 as part of a "Total fee" expressed in the singular (PX1, 3). This gives some support to the Plaintiffs' contention that this total fee was for the Architect inclusive of those engineering services. The letterhead printed on that document describes the Architect as "design & building consultants" (PX1, 3). That suggests that the Architect held itself out as having competence in building and not merely architectural design, thus impliedly embracing those engineering aspects inherent in a building consulting service. 35 Mr Rasa from the Architects furthermore conceded that its architectural business was one where the architect provided "a full service by way of complete design" (Rasa cross-examination T, 168(15)). Mr Rasa's later asserted that in this instance the Architect's retainer was to provide only partial service (T, 168(22)). That partial design service though was concededly only part of the overall service required by the Plaintiffs (Rasa cross-examination T, 168(22)). The Architects rely on having requested that the Company pay the Engineer's fee directly to the Engineer (Rasa cross-examination T, 168(30) and affidavit of Mr Bailey of 4 August 1998, para 11). That still leaves the question whether this was for convenience or rather reflected a direct contractual relationship between owner and engineer bespeaking responsibility directly to the owner. 36 The Architect likewise relied on the fact that the "Memorandum of Fees" of the Engineers dated 16 July 1990 was addressed to "Baileys Diesel Service" (PX1, 10). Further correspondence was also carried out directly between the Plaintiffs and the Engineer including, for example, a letter from the Engineer of 9 August 1991 (PX1, 44) outlining some of the construction faults present in the building. 37 The Architect seeks to emphasise that the First Plaintiff continually contacted the Engineer directly after the Architect's role in preparation of the drawings had concluded. The Architect also contends that the Engineer's visits on site were outside the scope of the architect's retainer, occurred well after that retainer had concluded, and were the subject of a separate contract between Bailey and the Engineer, without notification to the architect. 38 I weigh this evidence, with other relevant matters, in answering the first of the Legal Questions below.

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Given their particular expertise, architects do not undertake a duty of care to the client which extends to an assumed responsibility for specialised aspects of engineering design in the absence of an express undertaking to that effect or which can be properly implied from the circumstances, including the nature of the retainer and any holding out. An analogy can be found in a solicitor's duty of care which would not ordinarily extend to undertaking responsibility for commercial as distinct from legal advice. Thus in Teachers Health Investments Pty Limited v Wynne (1996) NSW Conv Rep 55-785 Beazley JA said: "It is well established that it is no part of a solicitor's function to give commercial or financial advice…" but added the important caveat, relevant here, "unless retained to do so". 45 Thus the scope of the Architect's duty of care here depends upon the responsibility assumed by the Architect for services undertaken to the Plaintiffs having regard to the nature of its retainer. However, just as, for example, an agent solicitor's duty is not confined to doing what it was retained to do as agent solicitor (or what it was specifically asked to do by the principal solicitor) so there is a duty owed to the client to exercise reasonable care and skill in course of its retainer to take all reasonable steps to avoid any real and foreseeable risk of economic loss to the client; Westward Clothing Co Pty Ltd v Freehill Hollingdale & Page [1999] VSC 266 (Smith J, 30 July 1999, unreported). The question is whether that proposition similarly applies here. The Plaintiffs have the onus of establishing that the Architect did in fact assume responsibility for procuring and for supervising engineering design as it affected structural adequacy, including relevant communication with the Engineer as well as overall supervision of the construction. In the present case the Plaintiffs contend that required the Architects at least to ensure, by a proper system of communication between Architect and Engineer, that the western wall be not built or left as an internal wall lacking sufficient structural stability. If indeed the Architect did undertake those functions, then insofar as the Architect failed in carrying them out, that must according to the Plaintiffs give rise to liability in negligence, subject to any defences, for what was a foreseeable risk of damage to the Plaintiffs; they were clients known by the Architect to be relying upon the Architect for the carrying out of that assumed responsibility and vulnerable in the event of failure to do so. Such a duty of care is capable of arising incrementally to the conventional advisory relationship of architect and client, as its salient features are not of themselves such as to preclude a duty of care of that scope; I here adopt the High Court's treatment of duty of care and its scope in Perre v Apand Pty Ltd ([1999] HCA 36, 12 August 1998, unreported) per Gleeson CJ, paras 8 to 14 concurring in the judgment of Gummow J especially at paras 297 to 302. It remains to determine whether the Plaintiffs have satisfied the onus of establishing a duty of care so extending not merely for ordinary architectural design, but embracing additional responsibility for procuring and supervising engineering design, including communication with the Engineer. 46 The Architect contended that the arrangements between it and the First Plaintiff, Mr Bailey, and in turn between it and the Engineers were such that no such duty of care was owed, certainly in this extended form. This was on the basis that the Architect, as was customary and as understood by the Plaintiffs, was in turn relying upon the expertise of the Engineer as regards design of the structural elements of the building and assumed no responsibility for that itself. That is disputed by the Plaintiffs. The Architect relied on Mr Low, the Plaintiff's expert engineer, who accepted that an engineer has certain expertise in relation to the design of structural elements of the building that an Architect may not have (T, 127(15-25)). Thus he acknowledged that the Engineer's input is important because his or her structural design goes to ensuring that the building stays up, which is a most important part of the overall design process (T, 127(25-32)). 47 Mr Low acknowledged that architects do reasonably rely on the experience of engineers in preparing a design that is structurally sound (T, 127(30-45)). 48 Mr Rasa from the Architect gave evidence that in a project of this nature (with no internal supporting columns), the brickwork was the load-bearing component of the building. As such the brickwork forms the structural component of the building and, as he saw it, it is up to the engineer to document it in the way that he sees fit (T, 170(25)). 49 The western wall was a structural wall. Being a structural wall, according to Mr Rasa's evidence, the architect "cannot demonstrate bracing or what needs to be done to keep that wall structurally sound". That he said was the engineer's job "because the load-bearing brickwork is the major structural component of the building" (T, 170(32-35)). 50 The Architect's case was that even though Mr Rasa admitted that it would have been very simple for an architect to have placed on his drawings a notation of "insufficient strength for this external wall", it was not proper to do that in this case because the walls were a structural element and therefore anything of this nature had to be done by the engineer. The Architect's case was that the architect could not comment on structural matters, nor could they make notes of an engineering or structural nature, because they are not structural engineers (T, 177(5-20)). 51 The uncontradicted evidence of Mr Rasa was that the Development Application drawings were sent to the Engineer, being the drawings contained in DX2. These drawings contained a notation of "stage 1". I am satisfied that should have sufficiently alerted the Engineer that this was a staged development. The Engineer was never called to refute Mr Rasa's evidence that those drawings were so sent. Indeed the Engineer gave no evidence, so that it was not in contest that I should infer that any such evidence would not have assisted the Engineer's case. 52 In response to any contention that the Architect had insufficiently advised the Engineer that the development was to be staged, the Architect noted that under cross-examination Mr Low confirmed that the most important thing that the Architect had to do was to advise the Engineer that there was to be a staged development (T, 126(50)). Mr Low agreed that one way to do this was to note it on a plan provided by the Architect to the Engineer (T, 127(1)). Upon being shown DX2, that is to say the plan represented by it, Mr Low acknowledged that the staged development was noted on the plan and that the Engineer should have been aware from that plan that the development was staged. If that were all there was to it, that could be accepted as being sufficient to alert the engineer to the need to do the engineering design accordingly. 53 However, the Plaintiffs put their case against the Architect on a different basis. Essentially it is that the Architect was, or ought to have been aware, that when the Engineer's designs were received back by the Architect from the Engineer, it should have been apparent to the Architect that the Engineer had not designed for a staged construction, though the Architect had referred to "stage 1" in the plans initially sent to the Engineer. The Plaintiffs contend that the Architect's failure to identify and communicate that error to the Engineer was critical and was due to a lack of a basic system of communication, in the absence of which the Architect could not safely proceed. That in turn breached the Architect's responsibility though it was not to be expected that he would carry out the structural design himself. 54 The Plaintiffs' case is that the Architect held himself out as offering a full design service which must at least extend to responsibility for failing to identify to the Engineer that the Engineer had in turn failed to do the necessary design for structural strengthening of the western wall. At that minimum level of responsibility, the Architect was not asked or required to specify the particular structural design steps that should be taken but simply to point out that none had been specified by the Engineer to whom the Architect had passed on the task. 55 Mr Rasa gave evidence that he received the engineering design drawings between April to July 1990. At T, 168(57)-169(6), Mr Rasa was not prepared to deny that, when he received the Engineer's drawing on the first occasion, he was "then aware …. that the Engineer was not designing for a staged construction". He said, it was "hard to recall" and that he was not aware what conversations there had been between others in his office and Mr Sherson, the Engineer (T, 171(14-40)). As to his recollection as to "what was being documented" he said, "…. in honesty I can't recall" (T, 169.42). 56 He agreed, as to the Engineer's drawings, "all drawings show that [western wall] as an internal wall" (T,170(1)), and "it was on our drawings as an internal wall" (T, 170(6)). 57 Finally at T, 170(16) he had to concede: "when you got his drawings in 1990 you knew that he had designed the wall … as an internal wall? - Yes". 58 The cross-examination proceeded as follows (T, 170(21-35)): "Q. By that knowledge you knew that he had not designed that wall for a staged construction, that's correct, isn't it? A. That is not quite correct because in a project of this nature the brickwork was the load bearing component of the building. As such when the brickwork forms the major structural component of the building, it's up to the engineer to document it in the way he sees fit. Now he documented it as stage 2 being carried on fairly shortly afterwards, I would have assumed then that something were to be done about that wall. He would have designed something with that wall to make sure it is okay before stage 2 went ahead because being a structural wall we can't designate bracing, or what needs to be done, to keep that wall structural sound. That is his job because the load bearing brickwork is the major structural component of the building."

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(b) this was never for the Architect to be concerned about because "being a structural wall we can't designate bracing, or what needs to be done to keep that wall structurally sound" and this was "his job because the load-bearing brickwork is the major structural component of the building". 60 Mr Rasa's evidence continued that he agreed that it was important that the engineer be aware that the construction was to be staged (T, 170(44)) and that the engineering drawings did not have "stage 1" on them (T, 170.21) and that he was not able to refer to any communication from the Engineer to show that the Engineer understood that this was to be a staged construction (T, 171(33-57)). At T, 170(33) Mr Rasa conceded that when he received the drawings back from the Engineer "there was nothing, not one thing on those drawings to indicate that the Engineer's understanding equated to your's?". 61 At T, 173(29-38) Mr Rasa agreed that for the wall to stand as an external wall for twenty weeks would be a "usual" construction period for the second stage, even if it had commenced straight away. He agreed that there was no indication on the architectural drawings which would alert the builder to the fact that the western wall was not designed as an external wall, asserting that it would be "obvious" to the builder (T, 173(55)-174(7)). By that logic, the Architect could not deny that this critical deficiency must have been at least as obvious to himself as architect. 62 Thus the Architect and the Plaintiffs join issue on Mr Rasa's view that what occurs in the normal course of a construction was that even if an engineer does not show the bracings necessary on the drawings, the normal state of affairs on the construction site is that the matter will be raised once the engineer is on site and the builder is on site. At the end of stage 1, so the Architect's evidence went, they (the engineer and builder) would decide whether the wall needed to be braced (T, 170(50)) without involving the architect in any way. Mr Rasa relies for support on documents relating to the Wollongong City Council which had the drawings showing "stage 1" and where the building inspector confirmed: "Council recognised that the building was only partially complete and assumed that any required modifications to the structure would have been made by the engineer and/or builder" (PX1, 117). However, Council's expectation is not relevant to determining the Plaintiffs' reasonable expectation of the Architect or the Architect's responsibility. 63 The First Defendant pointed out that there was no expert evidence from any architect to suggest that Mr Rasa's conduct as an architect was negligent, that evidence coming instead from the Engineer, Mr Low, at T, 128(5)-129(5). Mr Low initially conceded that it was reasonable for an architect to assume that if an engineer had been informed of the development was to be staged, then that engineer would have taken into account whether anything extra needed to be done to the western wall during stage 1 of the development. However, importantly, after initially assenting to the above proposition, Mr Low qualified that answer in the following passage (T, 128(6)-129(5)), in my judgment correctly: "Q. It would be reasonable for an architect to assume that if the engineer had been informed that the development was to be staged then he would have taken into account whether or not anything extra needed to be done to the western wall during the stage 1 of the development? …. A. conditional answer to that, the initial answer is yes, however, I think it would be incumbent upon the architect to perhaps satisfy himself that that had been done when he received the engineer's drawings." 64 Significantly, Mr Low also gave evidence to the effect that not many builders would be so experienced as to be in a position to have "a fairly good idea as to whether or not a wall might require bracing during a certain period" (T, 129(10-27)). 65 Summing up, the Architect knew that the construction was to be staged, knew that the western wall was nonetheless designed by the Engineer as an interior wall, can be taken to be aware that the builder was not informed of the latter being an interior wall or had taken no action to remedy matters, yet the Architect took no steps:

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(b) the builder was likewise not informed by the Architect that the western wall should not be left as an internal wall. 66 The Architect was not entitled to assume that adequate "temporary bracing" would occur without following that up with the Engineer. It is true that the Architect could not be expected to know whether the roof bracing sufficed or might lose some of its integrity if it stopped in the centre of the building (T, 176(46)-176a(7)). But that of itself does not exonerate the Architect from its responsibility when on notice to see to it that the Engineer did direct his mind to the consequence of the staged construction for the western wall. I am satisfied that was a shared responsibility with the Engineer. As I have already noted, I do not have to make any apportionment of their respective contributions between the two, as that has already been agreed by them. Lest it be thought that this is to impose an unreasonable burden on an architect lacking expertise in engineering matters, the answer is that an architect with supervisory functions put on notice of the engineer having misunderstood or overlooked a matter as obvious as the use of an internal wall where an external wall was required, cannot eschew responsibility. Indeed, if the matter were as the Architect said "obvious" to the builder it should have been at least as obvious to the Architect (see T, 173(55)-174(7)). 67 There is nothing unfair, unjust or unreasonable as a matter of policy in holding an architect liable for failure to discharge what I am satisfied was the responsibility it undertook. That responsibility extended to procuring the engineer's design and thus required a proper system of communication between architect and engineer. Discharge of that responsibility should have prompted the Architect not only to observe that the western wall was constructed merely as an internal wall without proper support as an external one, but to report that fact to the Engineer so the latter could devise steps to bring about structural stability. The Architect clearly failed to do so and nor did it take the matter up with the builder. Remember too this was an architect whose own letterhead held the First Defendant out as "design and building consultants" who, while claiming in this instance to provide only a partial service, acknowledged that the firm did provide "a full service by way of complete design". And in any event the shortcoming was in procurement and communication concerning an obvious error, not in engineering design itself. That conclusion does not depend upon whether the Architect was at the building in 1994, as Mr Bailey claims. Mr Rasa does not recall being there, but cannot guarantee he was not, relying on reconstruction in support; (T, 177(21)-178(5).

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Is the claim statute-barred against the Architect? 69 We are concerned with a tortious claim in negligence based on economic loss caused by latent defects in a building. That is to be distinguished from cases of physical injury to person or property and from present economic loss directly sustained. We are here considering consequential damages flowing from a latent defect; see Deane J in Hawkins v Clayton (1988) 164 CLR 539 at 587-8 with Mason and Wilson JJ concurring on that aspect at 543, followed by the Appeal Division of the Victorian Supreme Court in Pullen & Anor v Gutteridge, Haskins & Davey Pty Ltd [1993] 1 VR 27. The latter case affirmed that in cases of pure economic loss due to a latent defect, time begins to run when the latent defect first becomes known or manifest. That principle was clearly assumed in Bryan v Maloney (1995) 182 CLR 609 by Mason CJ, Deane and Gaudron JJ at 627. 70 This approach modifies the harshness of the so-called Pirelli Rule applicable in the UK; (Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1). Under that rule, where a building is built so defectively as to be doomed from the start, the cause of action is taken to have accrued as soon as it was built, notwithstanding that the defect may be a latent one not yet known or manifest or discoverable by reasonable diligence on the part of the owner. 71 The way in which that harshness has been alleviated is to be found in the analysis of when consequential economic loss first accrues. Where latent building defects later cause consequential damage to the structure, economic loss does not accrue until the defect is discovered or visible consequential damage occurs. Until then the owner can honestly sell the house for its market value and if the owner did, would suffer no loss; see Pullen & Anor (supra) at 68-9 followed by Handley JA in Sheldon v McBeath (1993) Aust Torts Reports ¶81-208 CA(NSW) at 62,081. 72 Finally, as was said by the Full Federal Court in Jobbins v Capel Court Corporation Ltd & Or (1989) 25 FCR 226 at 228 in a passage later approved in Magman International Pty Ltd & Ors v Westpac Banking Corporation (1991) 32 FCR 1 at 11: "…where the incurring of damage is an essential element of a cause of action, the suffering of some damage (the other elements of the cause of action having already occurred) will, in general, start time running, even although the damage continues to grow. The running of time is not suspended until all the damage which will be suffered has ceased to flow, nor does further damage constitute a fresh cause of action."

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73 However, there are two qualifications to be considered in the present context. First, damage so suffered must be real rather than nominal - what has been described in the context of personal injury diseases of gradual onset as "beyond what can be regarded as negligible" or "not being insignificant"; see Cartledge v Jopling & Sons Ltd [1960] AC 758 in the context of personal injuries and more generally Professor Stapleton, "The Gist of Negligence: Part 1; Minimum Actionable Damage" (1988) 104 LQR 213. There is no reason for not importing that qualification on the stringency of the rule for when time starts to run in personal injury to economic loss as well. 74 Second, a plaintiff can recover compensation only for actual loss or damage, as distinct from potential or likely damage. Thus where, for example, a plaintiff enters into an agreement which proves to be disadvantageous, induced by misleading or deceptive conduct, although detriment, in a contingent sense, is suffered on entering into the agreement, no actionable damage is suffered until the loss becomes actual rather than prospective - in the case in question through fulfilment of a contingency; see Wardley Australia Ltd v Western Australia (1992) 175 CLR 514. 75 The Architect in its limitation defence relies on the proposition that a cause of action for tortious negligence is complete and time starts to run as soon as some damage has occurred, and this even if the plaintiff is not aware of the damage; see Sheldon v McBeath (supra) per Handley JA at 62,081. However, that principle must be read in conjunction with the earlier principles to which I have made reference, insofar as they explain when, in the case of a latent defect giving rise to consequential economic loss, the action is taken to be complete and time starts to run. 76 Here, the Architect claims that the Plaintiffs suffered loss or damage more than six years before the commencement of the proceedings. That damage or loss was said to have been suffered by the Plaintiffs prior to 21 May 1992, being six years prior to the filing of the summons. It was said to arise from the receipt of a defective engineering design, requiring further payment for the retention of a new engineer to redo the work, which the Plaintiffs would have appreciated prior to 21 May 1992. The First Defendant refers to Mr Bailey's evidence in relation to his prior knowledge of the defective nature of the design work and the initial damage that both he and his company is said to have suffered, in these terms: · "Bailey acknowledged that he received and read the BCS (Maber) report on about 9 May 1992 (T, 2.5) · At the time that he received the BCS report, Bailey believed that the western wall had been defectively designed insofar as it was an internal wall that was being used as an external wall (T, 52.10). · The damage that was suffered was, at the very least, the cost of having "…to retain a new engineer who is completely redoing all the engineer's work." (Ex.PX1-p92)"

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77 The Architect then contends that although it may be argued that there were two separate types of damage, namely the initial damage caused by the defective design requiring the re-doing of the engineering work, and the later damage caused by the collapse, such a distinction is of no consequence. The Architect relies upon the principle that where subsequent injury (here the collapse) is consequential upon and governed by the same cause of action (here the negligence) as the earlier damage (the need to rectify the design of the wall), time starts to run from the time the earlier damage is inflicted as regards both the original injury and the consequential injury; Magman International (supra) per Beaumont J at 11, affirming Jobins v Capel Court Corporation Ltd (supra). 78 Thus the Architect contends that by mid-May 1992, the Plaintiffs were aware of the defective design. At that stage the cause of action in tort was said to be complete as some damage, the need to re-do the Engineer's work, had already occurred. The inadequacy of the design (the negligent act) was also known or manifest by mid-May 1992 so that, all of the facts which were material to be proved to entitle the Plaintiffs to succeed in an action against the Architect were known by mid-May 1992. I should at this point observe that there is no evidence as to the precise cost of new engineering drawings, but it can reasonably be inferred as likely to be relatively modest, certainly compared to the agreed figure for damage overall. 79 The Plaintiffs respond by disputing that it has been established by the Architect, who bears the onus of proof (see para 82), that Mr Bailey was relevantly aware of the latent defect concerning the western wall prior to 21 May 1992, there having been no precise cross examination of Mr Bailey to fix the date of his actual awareness. 80 It is convenient that I set out the relevant transcript references as fairly summarised by the Plaintiffs in their written submissions dated 12 July 1999: "Mr Bailey said that he received the BCS document " on about " 9 May 1992: T, 41(57)-42(5). "He became aware "on about" 9 May 1992 that the wall had been erected as a temporary wall: T, 41(38). At T, 52(1-6) he agreed that it was in "May '92" that " After you read this report you became aware, didn't you, that there was something wrong with the western wall". At T, 52(8-14) he agreed that "in 1992" he knew the western wall had been defectively designed in so far as it was an internal wall being used as an external wall. As to anything being defective, except for T, 52(8-14) the questioning did not go further than that after he read the BCS report he "became aware that there might be a problem with the brick wall": T, 41(32). A re-reading of the Transcript page 41-50 reveals that the questioning as to receipt of the BCS report and knowledge of defects did not rise above the fact that it contained a recommendation to have a structural engineer check it for stability. The only evidence as to his appreciation, in May 1992, that there was a defective design was at T, 51(1-14), which was left by the cross-examiner as " in 1992 " and " in May 1992 ". There was no attempt to clarify what was the date " After you read the report " nor when he "became" aware, beyond " May 1992 ", and " in 1992 " " 81 I would conclude that it is more probable than not that Mr Bailey received the BCS document prior to 21 May 1992 and thus can be taken to have been aware of its contents prior to that date also. The real question is whether by virtue of that awareness of the contents of the BCS document, Mr Bailey thereby must be taken to have "discovered" the faults, such that the latent defect "first becomes known or manifest". Pullen & Anor v Gutteridge, Haskins & Davey Pty Ltd at 66-7 and Deane J in Hawkins v Clayton (supra) at 587-8. There Deane J speaks of when a defect is "actually discovered or became manifest, in the sense of being discoverable by reasonable diligence, with the consequence that the damage was then sustained by the then owner". Thus in the case where there is no actual discovery, but the defect could be discoverable by reasonable diligence, the moment when it becomes manifest needs to allow for the time reasonable diligence would take to ascertain the defect. In other words, if the defect has already occurred, but reasonable diligence would take three weeks, then that time should be allowed before the defect could have "became manifest". This is unless the first report was enough of itself for the defect to be actually discovered by Mr Bailey, a conclusion which I reject for reasons later elaborated. 82 It is clear that the onus of establishing a defence under the Statute of Limitations is upon the party invoking the statute, however pleaded; see Pullen & Anor at 71 to 77. 83 A fair reading of the critical passages of the BCS Report of 9 May 1992 is that the wall is described as a temporary wall and the report advises that it should be checked for stability by a structural engineer. There is a similar reference to the roof which it is said "may not withstand the wind forces placed upon it in the future" and the recommendation is for a full report/investigation by a structural engineer. I consider that the Report, by itself, does not put the Plaintiff in the position, without more, that the defect is actually discovered; the question is rather when it could have become manifest, in the sense of becoming discoverable by reasonable diligence. 84 That, I am satisfied, required further reasonable enquiry of a structural engineer to constitute what is necessary for the exercise of "reasonable diligence" in rendering the defect manifest. I am further satisfied on the evidence before me and recognising the onus is on the Defendant, that such an enquiry would reasonably take at least a month and thus would have delayed discovery till after 21 May 1992. In the events that happened, the further enquiry took place and did take around a month, as demonstrated by the fact that the first Aplin report is dated 9 July 1992 - and led to the further report from BCS of 2 August 1992. But I should emphasise that in so concluding I am not at this point determining, either as of 9 July 1999 or as of 2 August 1992, or indeed until the wall did collapse, that:

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(e) Any deficiency of design would not have been discovered just from the first BCS Report but only after the further design work was done by an engineer and that, as I have earlier determined, would necessarily have been after 21 May 1992. 87 The underpinning for these conclusions are fairly put in the Plaintiffs' written submissions of 12 July 1999, quoted below: "(i) The design prepared for Mr Bailey was for construction in two stages; (ii) Mr Bailey intended to build the second stage when he could afford it; (iii) Had the whole project been erected, the subject western wall would have been of sufficient strength as an internal wall, and the roof bracing system as a whole would have been adequate. No one suggests that, upon completion of the whole, the wall would still have been at risk; (iv) The design defect here was the omission of further works, i.e. temporary strengthening of the western wall and temporary stiffening of the roof bracing; (v) Had such temporary bracing and stiffening been carried out by the builder (for example immediately at conclusion of the works under the building contract), the cost thereof would have been an additional cost to the owner - but such additional cost was always necessary. It would have been incurred in a proper design for two stage construction. Such additional cost would not have been expenditure in the nature of damages; (vi) The only possible additional cost in the nature of damages may have been a differential element, i.e. if the cost to do the temporary bracing and stiffening after conclusion of the building contract would have been greater than had such works been done as part of the works under the building contract. But there was no evidence about that; (vii) In Sheldon v McBeath , the footings were faulty as a result of faulty workmanship and inadequate inspection by the architect. Here, the western wall, and roof bracing, were not in themselves faulty. Here, the design defect was failure to provide additional works in the nature of bracing and stiffening; (viii) Here, monies paid away were not paid away for defective works; not enough money was spent."

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(c) the Architect failed properly to supervise and communicate to the Engineer concerning the inadequately stabilised western wall when he should have appreciated that it was constructed as an internal wall but required to function as an external one, while the engineer failed to provide proper engineering design to stabilise that wall in those circumstances. 94 Analysis of causation has been the subject of much judicial exegesis in recent times. The now accepted formulation is to be found in Bennett v Minister for Community Welfare (1992) 176 CLR 408 in the majority judgment of Mason CJ Deane and Toohey JJ at 412-3 emphasising that causation is essentially a question of fact, to be resolved as a matter of common sense. Once however what happened has been explained, what Lord Hoffman emphasises about the attribution of legal responsibility for those events becomes the principal question. Thus he said in Environmental Agency (formerly National River Authority) v Empress Car Co (Abertillery) Ltd [1998] 2 WLR 350 (at 358): "one cannot give a common sense answer for the purpose of attributing responsibility under some rule without knowing the purpose and scope of the rule" and that this is itself a question of law not fact - though it may be more accurate to describe it as mixed fact and law. He returns to that theme in a recent paper: "The reason why courts get the wrong answer on questions of causation is not usually because they have misunderstood the facts or lack common sense but because they have got the law wrong"; "Common Sense and Causing Loss", lecture to the Chancery Bar Association, 15 June 1999. Amplifying what the High Court said in Bennett on causation: 'In the realm of negligence, causation is essentially a question of fact, to be resolved as a matter of common sense. In resolving that question, the "but for" test, applied as a negative criterion of causation, has an important role to play but it is not a comprehensive and exclusive test of causation; value judgments and policy considerations necessarily intrude. The inadequacy of the "but for" test has emerged in cases in which a superseding cause, amounting to a novus actus interveniens , has been held to break the chain of causation which would have otherwise resulted from an earlier wrongful act or omission. In those cases, though the earlier wrongful act or omission may have amounted to an essential condition of the occurrence of the ultimate harm, it was not the true cause or a true cause of that harm.' [footnotes omitted]

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(c) there was no positive duty to take precautions against the happening of the intervening act or that class of act; contrast the finding of the House of Lords in Reeves v Commissioner or Police of the Metropolis [1999] 3 WLR 363 that there was a positive duty of care to guard against that very act - suicide by a prisoner - so precluding any defence based on novus actus interveniens (or volenti ) despite the autonomous nature of the prisoner's decision. 100 For the purpose of novus actus interveniens the Defendants allege that the Plaintiffs' conduct was so unreasonable as to displace any causative effect of the Defendants' own acts or omissions. Such conduct by the Plaintiffs must thus be shown to have been so unreasonable as to be a supervening cause of the loss; see McKew v Holland & Hannen & Cubitts (Scotland) Ltd (1970) SC(HL) 20 at 25 per Lord Reid, approved in Mahoney v J Krusich (Demolitions) Pty Ltd (1985) 156 CLR 522 at 528. I would agree that such conduct can be unreasonable because of omission or failure to act in appropriate circumstances. 101 In the context of aggravation of damage, the Plaintiff's conduct is similarly assessed for unreasonableness by reference to whether, as in the refusal of potentially efficacious medical intervention, the Plaintiff's omission to act, judged by reference to the Defendants' duty of care and its extent, makes the plaintiff the effective cause of his or her own injury. Here an evidentiary onus to negate causation passes to the plaintiff, once the defendant has done enough to raise the issue. Thus Luntz "Assessment of Damages" 3rd edition (Butterworths, 1990) at 105: "Cases where it is alleged that the plaintiff failed to exercise reasonable care may in some instances be more categorised as concerned with 'aggravation' rather than 'mitigation' of damage (cf Bell v Knight [1956] St R Qd 234 (FC), where it was held that the trial judge might properly have reduced the damages on account of evidence that the plaintiff's condition was worse than it would have been if he had not disregarded medical instructions after his discharge from hospital). The only consequence of such categorisation may be that the onus of proving the exercise of reasonable care would fall on the plaintiff."

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(vi) the Plaintiffs contend, based on the expert evidence analysed in more detail below, that had the steps recommended by Mr Aplin and costed by BCS been implemented, it was more probable than not that the building would still have collapsed under the wind conditions experienced, so that it was not unreasonable for the Plaintiffs to have failed to implement the BCS/Aplin proposal, whatever their reasons; the Defendants dispute that conclusion, but in any event contend that even if correct, it does not bear upon the reasonableness or otherwise of the Plaintiffs' conduct, in the circumstances. 107 Turning first to the Plaintiffs' reasons, Mr Bailey's evidence was that he did not recognise that the Aplin report of 9 July 1992 (PX1, 74) indicated that the condition of the building was dangerous, and that it could collapse. It will be recalled that that report did not say that the building would collapse though the Defendants contend that was clearly enough indicated by what was said. What was said was that "the 230mm thick temporary wall at the western end of the factory does not comply with the requirements of the brickwork code in terms of lateral stability and is also considered inadequate for the wind loads imposed on the wall". There follows a recommendation for engaged brick piers at intervals to ensure stability of the wall, to be tied laterally to the rear framework, a recommendation which the Plaintiffs' experts say would not have been effective. 108 Mr Aplin was cross-examined on his report and it is clear that Mr Aplin was of the opinion that the building was in dangerous condition and at risk of collapse, but deliberately chose not to state such opinion in those terms in his report. He was cross-examined about this (T, 190, 191) where the following revealing exchange occurred during cross-examination: "Q. You did not use the word 'collapse'? A. No, I did not. Q. Is that because you had not, at the time, formed the view that it was in danger of collapse? A. No. What I write in the report, and what I actually think are actually two different things, because it is not for me to look at someone else's design and say that that is going to collapse. All I can do is, upon my structural thinking and structural analysis, in conjunction with the code and the requirements for stability, I can only use those but I can't - it is not for me to make the judgment specifically as to whether that structure is going to collapse or not; I may have the thinking, and I probably certainly did have the thinking that the structure would collapse, but I was not going to say that in a report . Q. Equally, you weren't going to say in the report on the same basis that it was in a dangerous condition? A. That would be correct. Q. For the reasons you have just explained? A. Exactly." [emphasis added]

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111 The Second Defendant then contended that as Mr Bailey did not say in his evidence that he took that decision because no express warning was given by Mr Aplin in his report that there was any danger of the wall falling down, no such inference should now be drawn. This was said to be by reason of the evidence by Mr Bailey that he was relying on his own structural engineering expertise. That this was not clarified in re-examination should thus lead to an adverse inference based on that argument. 112 However, a fair reading of Mr Bailey's evidence is not that he professed expertise; rather that he eschewed any structural engineering expertise, not professing more than a lay understanding. His own business was not in that field of structural engineering. He interpreted the report's reference to lateral stability as simply a warning to check for stability to see whether there were cracks, rather than to expect any unforewarned collapse. Although with the wisdom of hindsight, that proved a wrong judgment, Mr Bailey was a layman, and the advice was opaque, guarded and given in the context of a dispute with the builder. There is no suggestion he disregarded the advice of the Defendants whom he had paid to avoid just this sort of risk, when none was forthcoming from them, save that advice which proved deficient. Thus the muddle brought about by Mr Bailey's inadequate appreciation of risk as a layman, coupled with the later engineer's inhibition in commenting on another's work adversely, could fairly be said to be, in the ordinary course of events, "the very kind of thing likely to happen" as a result of the Defendants' negligence. 113 The Plaintiffs engaged and paid for the Defendants precisely to obtain the protection of their advice, with each professing expertise in their respective roles. The point is made cogently be Professor Stapleton in her article "Duty of Care: Peripheral Parties and Alternative Opportunities for Deterrence" (1995) 111 LQR 301 at 308: "In contrast, where a plaintiff who had taken the opportunity to protect himself or herself by paying for just this sort of professional advice sues this adviser, these countervailing reasons against liability fall away because the payment elevates the adviser from peripheral to a principal causal status. We see this in Smith v Eric S Bush where the defendant valuer and the intermediate contracting party had required a contractual structure which prevented the plaintiff securing privity with the defendant whom she had paid to be careful in relation to a house valuation. Despite this fact (or probably because of it) …. she was rightly held to be owed a duty of care by that party in relation to the valuation." 27 [1991] AC 831 114 One may contrast a local authority and what may be called its peripheral status in providing advice to the purchaser of a property and the engaged adviser who has principal causal status because principally relied upon, in circumstances where it is reasonable so to do.

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116 The Court of Appeal went on to conclude that the type of duty that the defendant owes to the plaintiff will affect the degree to which the plaintiff may be said to be contributorily negligent such that in some situations the nature of the defendant's duty may preclude liability at all or reduce it (at 568). However, as the High Court affirmed in Astley v Austrust Limited (1999) 161 ALR 155; 73 ALJR 403, reaffirming Davies v Adelaide Chemical & Fertiliser Company Ltd (1946) 74 CLR 541 a plaintiff can still be guilty of contributory negligence, even where the defendant has breached either a statutory or contractual duty of care to protect the plaintiff from the very loss which the plaintiff has suffered as a result of the defendant's breach of duty. 117 The Defendants contend that for the modest cost of under $10,000 and with a warning so sufficiently explicit, the Plaintiffs at the least failed to take proper care for their own or their property's protection, when they failed to carry out the remedial work recommended by BCS/Aplin. 118 This alleged failure of proper care for their own protection the Plaintiffs first deny, contending that it was expecting too much of the Plaintiffs to act to carry out remedial work on the muted warning given them and they did seek a further engineering opinion. The Defendants however emphasise that the Plaintiffs were then warned by the later report of 9 July 1992 with its reference to non-compliance with the brickwork code in terms of lateral stability and inadequacy for the wind loads imposed on the wall and which was against a background of the earlier warning in the BCS report of 9 May 1992. They contend that in the context of the series of reports received, it was not expecting too much of a laymen to have at least understood the need for taking remedial steps and taken them. To this the Plaintiffs respond in two ways. First, by asserting that the advice in the report was not so explicit as to make it unreasonable for Mr Bailey to act only as he did; see above. Second, they contend that proper care on the Plaintiffs' part for their own protection could not require them to implement the proposal that was put to them, given that it would not have prevented the failure of the building in the conditions that occurred. It is necessary now to turn to the conflict of the expert evidence on that matter. 119 The Plaintiffs' expert, Mr Low, in his final report of 28 April 1999 concludes in these terms. "Although the building would have been considerably strengthened had the works priced by BCS been carried out, in my opinion it is more probable than not that collapse would still have occurred, despite these works. The reasons for this opinion are as follows - 1. Provision of only one column (Item 2A) to brace the western wall is inadequate. There would need to be at least two such columns to satisfy the Masonry Code AS3700 in respect of the brick wall panel strength. 2. In my opinion the proposals do not address the problem of transferring the wind forces from the roof plane into the walls and thence to the ground. For example, the forces in the new members numbered 2B, 4 and 6 cannot be transferred to the ground. 3. The roof tie downs were not installed in accordance with Sherson's drawings, as referred to in paragraph 3.4 of my report dated 3rd July 1998, and Aplin's design does not address this."

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120 In so concluding, he differs from the Second Defendant's expert Mr Hans Jensen who, at para 4.3 of his report of 4 December 1998 states: "Had the owner acted on the findings it is, in my opinion more than likely that the partial collapse of the building would have been avoided." By "findings", he is referring to the "Engineer's details" appended to the quotation to which earlier reference has been made. This provided for a remedial cost of $7,800 based on the construction details provided by Mr Aplin and the costing provided by BCS. However, Mr Jensen, in cross-examination, acknowledged that, as to the BCS proposal at pages 77-80 of PX1, "these documents in my opinion are incomplete so acting on them would not necessarily solve the problems" (T, 197(5)). He agreed that any assumption that the BCS proposal of 8 August 1992 represented the details of the work necessary to make the building safe, would be incorrect; see T, 197(22). He also conceded that the prices contained in the BCS quotation totalling $7,800 "were premature because it could not, could not represent the totality of the necessary work to make the building safe"; T, 197(30). 121 Mr Jensen agreed that, as to the work proposed in the BCS report, it was not possible to protect the buildings' future behaviour should that work be done, T, 197(35-39). 122 Mr Jensen also agreed, from his observations of the drawings and the information provided to him, that the structure as built lacked a viable load path to transfer wind loads to the ground; T, 197(55). 123 Indeed Mr Jensen made a further report of 10 May 1999 in which he said: "When the Jensen Report in 4.3 (last paragraph) refers to remedial work that should have been carried out by the owner to avoid a collapse, it refers to "…the findings of the reports it (the owner) received …". In other words, reference is made to all reports received and not just to BCS's quotation. It is, of course, implicit in the Jensen Report that any redesign to be carried out to upgrade the building would be a design complying with ALL relevant Australian Standards and Codes. Whilst the Low Report concedes that the building would have been "considerably strengthened" had the BCS proposed work been carried out, it still expresses a view that it is more probable than not that the collapse would still have occurred despite the BCS remedial work. Bearing in mind that: (a) the BCS proposed remedial work as set out on its "part plan" provides no sizes to the various structural elements to be added (such as columns, diagonal compression members and the like), and (b) that associated engineering details are not available, I do not believe that an engineer could reasonably express a conclusion as to the building's ability to withstand a design windload. I therefore do not agree with the Low Report's conclusion that one event is more likely to occur than another event."

[87]

125 Thus Mr Jensen shifted his ground from a confident assertion that the BCS proposals would have more likely than not averted the partial collapse of the building to expressing disbelief that an engineer could reasonably express a conclusion as to the buildings' ability to withstand a design wind load. Yet he then put upon the lay owner the responsibility to commission "a professional and complying re-design and associated upgrading of the building". This he said was what acting on the various reports submitted to him entailed. 126 But it is apparent from a reading of the reports that there is no suggestion that the BCS/Aplin proposals were, so far as their authors were concerned, insufficient to carry out the necessary remedial work. Certainly there was no recommendation that proper remediation required a "professional and complying re-design and associated upgrading of the building". 127 The Plaintiffs correctly point out that the Defendants thus shifted their ground from saying that all the owner had to do to avoid the collapse was to carry out building works for about $7,800 to the assertion that Mr Bailey was obliged to "commission a professional and complying design and associated upgrading of the building". 128 The Plaintiffs correctly point out that the Defendants, who have the onus in such a contention, did not attempt to identify what works would be required to satisfy complying design or upgrading nor prepare a specification for such work, nor attempt a costing in order to see whether it would have been reasonable for Mr Bailey to have carried out the work. 129 In answering the question whether Mr Bailey acted reasonably, the issue of expenditure needs to be identified and any concession from Mr Bailey that $7,800 was affordable is rendered nugatory once the ground shifted to requiring a fresh commissioning of remedial work. Mr Bailey in fact was not able to proceed with the second stage of the building because he did not have the funds to do so (T, 38(36-54); T, 40(54)). Therefore the assumption of sufficient funds to carry out such work on a more expensive scale on either his part or his company's, is unwarranted. 130 There was no cross-examination of Mr Bailey as to whether he could afford to do whatever work it was that Mr Jensen had in mind though never specified and thus Mr Bailey had no opportunity to consider and give evidence about and to adduce if necessary expert evidence about this hypothetical and unspecified remedial work proposed by Mr Jensen. No question was put to him in cross-examination about his alleged failure to "commission a professional and complying re-design". 131 The absence of such cross-examination would make it quite unfair for the Defendants to seek to have the Court find that the Plaintiffs' "decision" was unreasonable, when the very matters going to reasonableness had never been put to Mr Bailey. 132 Turning to the evidence of the other experts, it is fair to say that no expert was prepared to say more than that the implementation of the Aplin/BCS proposals would have strengthened the western wall; see Low T, 146(35). The Plaintiffs' other expert, Mr Keighran, said no more than such result was "debatable"; T, 155(25). 133 Mr Aplin's evidence, when pressed, was that such works would have produced only a "lower probability of collapse"; T, 184(27). He could not "categorically say" that such works would be "adequate"; T, 187(23). At T, 186(27) he could not categorically say that "the wall would have been completely stable after that work was done because I mean it is difficult to add piers to a wall that is already constructed. He did not regard such re-design as a "normal situation" and he was plainly uncomfortable at accepting any responsibility for such work; T, 188(28-35). 134 Mr Aplin agreed that the construction of one column in the western wall was insufficient to overcome the problem and that the building would not then comply with the masonry code; T, 189(6-14). He added that it was necessary to have at least two columns; T, 189(41). Mr Jensen as expert for the Engineer, said "at least two" were required; T, 198(8); the BCS/Aplin proposals provided for only one such column. 135 Mr Low, whom I found impressive in his expertise and the fairness with which he gave his evidence, said that the Aplin remedy was not adequate and that other walls suffered the same problems as the western wall; T, 138(5-15). Further, he gave evidence that the large roller door in the northern wall meant that such wall could not be relied upon for support to the western wall; T, 149(46)-150(46) and the plan contained in DX2. He concluded that the Aplin method proposed "for stabilising the western wall would have been ineffective"; T, 140(31). He further concluded that the suggested engaged brick piers were "not in my opinion structurally viable to provide the necessary bracing to that western wall"; T, 140(40). 136 Mr Low pointed out that adequate roof bracing was not part of the Aplin design, and that they "have no means of resisting; they will get a compression force …. But there is no means of removing that force … it can't be resisted"; T, 140(21-26); (30-36). Mr Low said that the roof bridging system was "structurally unviable", the system was "composed purely of tension rods" and no compression force carrying capacity; T, 148(26-40); (33-40). He said that the "bracing became quite useless" and caused the "rotation" in the opposite (eastern) wall; T, 149(16-44). 137 Mr Jensen conceded that, as to the BCS proposal in pages 77-80 of PX1 that "these documents in my opinion are incomplete so acting on them would not necessarily solve the problem". T, 197(5). He agreed that any assumption that the BCS report of 8 August 1992 represented the details of the work necessary to make the building safe, would be incorrect; T, 197(22). He agreed that, as regards PX1 page 80, "that prices in document 80 from the bundle were premature because it was not, could not represent the totality of the necessary work to make the building safe"; T, 197(30) 138 Mr Jensen agreed that, as to the work proposed in the BCS report, it was not possible to predict the building's future behaviour should that work be done; T, 197(35-39). 139 Mr Jensen agreed that, from his observations of the drawings and the information provided to him, the structure as built lacked a viable load path to transfer wind loads to the ground; T, 197(55). 140 Summing up:

[89]

(2) The Defendants have failed to substantiate that it would have been reasonable, taking proper care for the Plaintiffs' own protection, for the Plaintiffs, and in particular Mr Bailey, to "commission a professional and complying design and associated upgrading of the building", having failed to articulate what such complying re-design and associated upgrading of the building would entail both as to specification and cost and in particular having failed to put any such matters to Mr Bailey in cross-examination. 141 The foregoing findings mean that cases such as Plenty v Argus [1975] WAR 155 (FC) are not really to the point. That case held that a defendant need not show on the balance of probabilities that particular remedial medical treatment would have been successful. The evidence need only show that, having regard to the chances of success, a reasonable person in the position of the plaintiff would have attempted this course. If the plaintiff unreasonably failed to undergo the treatment, the damages should be assessed on the basis of the actual condition, discounted by the chance that it would have been improved by the treatment; see Plenty v Argus (supra) at 158-9 per Burt J. 142 However, in determining the reasonableness or otherwise of the Plaintiffs' actions, in accordance with the dicta of Jenkins LJ in Mcauley v London Transport Executive [1957] Lloyd's LLR 500 at 505, the advice and the prospects of success of the proposed operation or treatment must be clearly put to the Plaintiffs so that, as a "reasonable man", he would appreciate that he was being advised that this treatment or operation would put him right. 143 Here, not even the Plaintiffs' expert Mr Jensen, was able or prepared to predict the future behaviour of the building, and this whether one is considering the BCS/Aplin proposals alone or the totality of the various reports; see his report of 10 May 1999, paras 2 and 3, as well as his other evidence to which I have earlier made reference. There is of course no suggestion that Mr Bailey had had explained to him what the prospects of success would likely be if the proposed BCS/Aplin proposals were implemented. Indeed on the Defendants' own expert evidence from Mr Jensen it was not possible to quantify such a chance at all. 144 As a factor not automatically in bar of contributory negligence but relevant to any apportionment of liability and in some circumstances capable of precluding it, is the fact that the Defendants were under a duty respectively to supervise and advise in relation to the very matter of the wall's stability. That factor, in the present circumstances would make it "just and equitable" in the language of Daniels v Anderson (supra) at 568, that the Defendants bear all the damages in the present case. This is so even were there, contrary to my conclusion, a degree of fault as distinct from understandable confusion on the Plaintiffs' part in reacting to the various reports.

[92]

148 Applying the two level enquiry described by Professor Stapleton, one reaches the same result. Thus the first stage factual explanation clearly establishes that both the Architect's and Engineer's failure was at least a "but for" factor materially contributing to the Plaintiffs' loss. This was not a loss which would have occurred even if the Defendants had fulfilled their respective duties; compare Gaudron J in Bennett at 420-1. Second, there was insufficient in the Plaintiffs' conduct or in the relevant circumstances as should prevent the Defendants failure from "making a difference", in terms of their ultimate legal responsibility in negligence; the scope of their respective duties of care covered their failures in relation to the events in question. 149 Clearly enough, the defective engineering design did as a matter of fact and common sense result in increased risk of economic injury to the Plaintiffs which did eventuate when the building collapsed under high winds. Thus the defective design materially contributed to that economic injury. Their respective duties of care was of sufficient scope, as a matter of law, to render both Defendants liable. 150 The Plaintiffs' conduct could not be said to be unreasonable for the reasons earlier stated. It thus could not constitute a novus actus interveniens such as to interrupt the causation otherwise made out. 151 Accepting as Gummow J emphasised in Chappel v Hart the need to temper the application of the "but for" test by the making of value judgments and the infusion of policy considerations (at [62]), here there is nothing in the Plaintiffs' conduct which would justify treating the Defendants as "peripheral actors" in comparison to any role played by the Plaintiffs as regards the injury they suffered. Just as, in Chappel v Hart, particular emphasis was placed by Gummow J upon the fact that the very risk of which the Plaintiffs should have been warned was the risk that materialised (at [67]), here, the very risk which the Plaintiffs sought to avoid by employing a design architect and structural engineer materialised. There is thus no evident basis in policy for denying the Plaintiffs' remedy. 152 As was said by Mason CJ in March v Stramare (supra) at 517-8: "It has been said that the fact that the intervening action was foreseeable does not mean that the negligent defendant is liable for damage which results from the intervening action … But it is otherwise if the intervening action was in the ordinary course of things the very kind of thing likely to happen as a result of the defendant's negligence."

Bailey & 1 Ors v Redebi Pty Limited & 1 Ors

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Judgment (98 paragraphs)

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Legislation Cited (3)

Cases Cited (18)

Cited By (1)