Ideal Polyurethane v GWH Building Pty Ltd

CATCHWORDS: TORTS - Negligence - Defective concrete slabs in an industrial building - Economic loss - Design and construct contract with builder - Retention by builder of a civil engineer to prepare engineering drawings and to inspect works for for purpose of issuing compliance certificates - Liability of engineer to occupier of premises - Absence of contract between engineer and occupier - Reliance - Vulnerability - Damages - Causation - Proportionate liability

Civil Liability Act 2002, ss 5D(1), 34(1)(a), 34(2), 34(4), 35(1), 35(4) and Pt 4 LEGISLATION CITED: Corporations Act 2001 (Cth), s 440D(1) Environmental Planning and Assessment Act 1979, s 109ZJ

Bryan v Maloney (1995) 182 CLR 609 Cattle v Stockton Waterworks (1875) LR 10 QB 453 Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 New South Wales v Bovis Lend Lease Pty Ltd [2007] NSWSC 1045 CASES CITED: Nguyen v Cosmopolitan Homes [2008] NSWCA 246 Perre v Apand Pty Ltd (1999) 198 CLR 180 Ruddock v Taylor (2003) 58 NSWLR 269 Voli v Inglewood Shire Council (1963) 110 CLR 74 Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515

Ideal Polyurethane Pty Limited - Plaintiff PARTIES: GWH Building Pty Limited (Under Administration)- First Defendant Geoffrey Robert Craig - Second Defendant

Ms J Oakley for the Plaintiff COUNSEL: No appearance for the First Defendant Mr HJA Neal for the Second Defendant

Osborne Bricknell Howell for the Plaintiff SOLICITORS: Landerer & Company for the First Defendant Colin Biggers & Paisley for the Second Defendant

JUDGMENT 1 The construction of a factory complex of three units on an industrial estate at Morisset on the Central Coast of the State led to faults appearing in the concrete slab on which the buildings were erected. There was no issue that the faults, widespread cracking with spalling and abrading resulting in a powdery surface on the slab, were such that the appropriate remedial action was to lift and replace the concrete slab but which involved the temporary re-location of a business operating in one of the units while the work was done. The alleged causes of the faults concerned the use of understrength concrete, inadequate reinforcing steel mesh and the shallow depth of the saw cuts in the slab. It was agreed that the quantum of loss was $315,156.45 made up of $161,931.45 for removal expenses in the re-location and $153,225.00 for rectification costs. The issues in the proceedings were the existence of a duty of care, breach of any duty and causation of the particular loss in respect of the party so responsible and liable for such loss as was quantified. Background facts 2 The plaintiff, Ideal Polyurethane Pty Limited, operated from about 1995 a business manufacturing polyurethane product from premises at Seven Hills and in 2003 decided to re-locate it to the Central Coast. The principals of the plaintiff, Phillip John deal and Noleen June Deal, located the subject site in Accolade Avenue at Morisset and arrangements were made by them for Deal Pty Limited, as trustee for the Deal Unit trust, to purchase it; occupation was thereupon granted to the plaintiff to develop the site for its business purposes, presumably by lease or licence. Mrs Deal assumed responsibility for making enquiries with builders for the design and construction of the factory units. Ultimately, the plaintiff selected GWH Building Pty Limited, the first defendant, to build the factory being of three units with the plaintiff to occupy one unit and the other two to be rented. On 1 December 2003 the plaintiff entered into a building contract with first defendant under which the first defendant was to design and construct the works on the site for the lump sum amount of $414,400.00 plus 10 per cent GST, a total of $455,400.00 - it was a contract, in the usual course, styled as a "Design & Construct Contract - Lump Sum."

3 Prior to the making of the building contract, and as part of its quote which subsequently formed part of the contract as to the scope of the works, the first defendant on 23 June 2003 prepared architectural drawings which, relevantly, contained an endorsement that "all work to be carried out in accordance with the requirements of the principal certifying authority and BCA (Building Code of Australia) 1996" and that "all concrete footings, floor slabs, columns & timber roof framing to structural engineer's detail." The drawings and plans were to be read in conjunction with "engineers plans and specifications" and "in accordance with the specifications and requirements of the Council." The concrete slab was noted as being "150 mm thick reinforced concrete floor slab."

4 The first defendant sub-contracted the structural and engineering design for the project to Geoff Craig & Associates Pty Limited (GCA), consulting engineers and project managers, the principal of which company was Geoffrey Robert Craig, the second defendant. On 21 October 2003, Mr Geoffrey Craig was provided with architectural drawings by Jonathan Craig (his son), who was a project manager with the first defendant and with whom Mrs Deal had most of the dealings concerning the proposed construction work, to produce structural engineering drawings. The second defendant allocated within GCA the work to Shane Morrissey, a structural engineer, with drawings to be prepared by Steven Edgar; the second defendant undertook to, and did, check and approve the plans when they were finalised. Such engineering drawings were completed by GCA on 29 October 2003 and which was project approved by the second defendant on 7 November 2003. The second defendant was a qualified professional civil engineer and a member of Engineers Australia (formerly the Institution of Engineers, Australia).

5 The concrete floor slab concerned was designed by GCA and approved by the second defendant in accordance with the Cement and Concrete Association publication entitled "Industrial Floor Slabs" and was for a light industrial slab assuming a 2-tonne forklift load as a maximum. The engineering drawings in the general notes stated the concrete component and quality to be 25 MPa (megapascals) at 28 days being, as the second defendant said, the recommended concrete strength for floors and pavements subject to light traffic in light to medium industrial and commercial premises. With a 150 mm thick slab, the second defendant took the view that it was a design thickness appropriate for a 2-tonne forklift load. As to the reinforcing steel, the engineering drawings specified SL82 mesh; that is 8 mm diameter steel rods. The saw cuts in the slab were specified as 30 mm deep. The notes indicated that "all slab concrete to be cured in an approved manner for a minimum of 7 days."

6 In the meantime, on 4 July 2003 the first defendant made a Development Application (DA) to Lake Macquarie City Council supported by the architectural drawings. On 14 October 2003, the Council determined the DA by granting consent to the proposed development subject to conditions which, in relevant respects, required compliance with the BCA and building inspections to be certified by a qualified consulting engineer that the works conform to the design prior to the issue of the Occupation Certificate.

7 As part of the construction process consistent with the requirements of the DA, the first defendant retained GCA to undertake inspections and to issue engineering certificates relating to foundations, reinforcement and a final certificate for the structural and drainage works. Of course, as it was the second defendant personally who was the qualified consulting engineer it was he who issued the certificate concerned even though he did so on GCA letterhead and purportedly for it.

8 On 4 December 2003, John Goldsmith of Dix Gardner Pty Limited, building certifiers, notified the Council of the appointment of Lyall Ernest Dix as the Principal Certifying Authority for the subject development and a Construction Certificate was granted. It was anticipated that work on the site would commence within 48 hours and it duly did in accordance with the building contract earlier made between the plaintiff and the first defendant on 1 December 2003.

9 The works were completed during April 2004 and in early-May 2004 the plaintiff moved into and occupied the new facility. Curiously, perhaps, Mr Dix of Dix Gardner did not issue the Occupation Certificate until 24 September 2004. Up to that point, Mrs Deal arranged for the plaintiff to make progress payments to the first defendant and by occupation the contract lump sum was paid other than for $10,000 which was withheld on the faults in the concrete slab appearing; the first defendant did not press to recover that $10,000. Development of faults in the concrete slab 10 The week before occupation in May 2004, Mr and Mrs Deal inspected the completed building with Mr Jonathan Craig and the building foreman. As Mrs Deal observed - "…problems with the finish of the concrete slabs in all of the units… the surfaces of the slabs were powdery…the concrete scuffed easily under my feet…I found cement powder on my fingertips." The problems were pointed out to Mr Jonathan Craig and the foreman but no arrangements were made to address them. After about three weeks of occupancy in the new premises, Mrs Deal noticed a crack in the surface of the internal concrete slab which "ran from the join in the concrete at the front roller door entrance of the unit to a join in the slab which was located approximately one-third of the entire length of the unit." She added that the initial fine hairline crack became wider over the next week or so and the edges of it began to flake; in the following two years the crack continued to widen and, as Mrs Deal said, "branched out across the slab. The cracking still exists in the slabs and in some places the cracking is several millimetres wide." Mr Deal affirmed the nature of the problems with the powdery surface of the slab and the cracking, but he left it to his wife to attend to those issues with the first defendant builder.

11 As a result of complaints by Mrs Deal to the first defendant through Mr Jonathan Craig and another employee, Wayne Brown, about the state of the concrete slab the first defendant had Coffey Geosciences Pty Limited carry out strength testing on 3 September 2004 by using core samples from four locations in the slab. The results showed corrected compressive strengths in the samples ranging from 15.5 MPa to 21.0 MPa, with a mean of 17.4 MPa being considerably less than that specified; two of the samples showed the presence of reinforcing steel mesh 6 mm in diameter (that is, SL62 mesh product) - those results plainly were below the standard specified in the engineering drawings approved by the second defendant of respectively 25 MPa and 8 mm SL82 reinforcing rods. Shortly thereafter, Mrs Deal said Mr Brown provided her with the sample results and he admitted to a problem with the concrete and undertook to fix it. However, Mr Brown did not advise Mrs Deal how the problem would be fixed and since then there has been no contact from Mr Brown or anyone else from the first defendant with the plaintiff.

12 The plaintiff in early-2005 engaged a consulting structural engineer, WG Scott, to inspect and report upon the problems. In a report dated 13 April 2005, Mr Scott stated examination revealed: "1.Rather extensive cracking of the floor slabs, which I am informed, was evident one (1) month after the placement of the concrete. Cracking is up to 1mm wide and is spalling in numerous areas.

2.There is very slight lifting of the floor slab on one (1) side of cracking in the intermediate unit.

3.The floor slabs have been topped with a mixture of cement and sand; which is lifting off the body of concrete.

4.The surface of the floor slabs displays a very uneven patchy finish.

5.A wall brace to the front of the rear unit has been omitted, so that a window could be fitted in that location.

6.The front left hand corner area of the rear unit appears to be on backfilling material.

7.The fixing of the steel toggle plates clamping the wall panels to the steel columns does not fulfill the requirements of the Building Code of Australia."

13 Mr Scott, after reviewing the engineering drawings and plans prepared by GCA and approved by the second defendant, the concrete compression core test results found by Coffey Geosciences and other analytic reports, expressed the following opinion: "a) The strength of the concrete, as reported in the Coffey core test results does not fulfill the requirements of Section 4, Table 4.7 of Australian Standard AS 3600 - 2001, "Concrete Structures Code", inasmuch, that the Code specifies a strength of 25 MPa at 28 days.

b) The reinforcing fabric was revealed in core nos 2 and 3 to have a diameter of 6 mm, which would indicate that the mesh is SL62 in lieu of the SL82 mesh, which is specified on the engineer's drawing no 033905 - 04 and is also the minimum requirement of Section 9 of AS 3600-2001.

c) Either the concrete was supplied ex plant under the specified strength (25 MPa), or, the strength was diluted by the addition of water at the site, or, a combination of both ie supplied as 20 MPa with water added at site.

d) It is considered that the setting of the concrete occurred prior to final "working", of the concrete by the concretors, and consequently, in order to present an acceptable surface, a topping mix was applied to the body of the concrete.

e) I am of the opinion that the cracking in the floor slabs is the result of shrinkage, which has probably been caused by the addition of water to the concrete prior to placement, and the lack of a curing procedure which was specified in Note C18 on the engineer's drawing no 08/1.

f) Both Phil and Tom Deal commented that the concrete cores dropped up to 50 mm into a cavity under the floor slabs when the Coffey operator completed drilling, and further, that the operator advised them that he had not observed such happening before. The dropping of the cores indicates that the water used during the core drilling washed out the sub-floor sand layer, or alternatively, there were voids under the slabs due to bad preparation of the sub-floor materials.

Obviously, to restore the building to satisfy the requirement of the Building Code of Australia and Australian Standard AS 3600 - 2001++, it would be necessary to remove and replace the concrete floor slabs and underpin the internal floor beams with continuous footings. This could be achieved by the removal of the floor slabs in each unit to a line close to the walls, followed by removal of foundation strata under the walls and then the formation and pouring of footings under the existing floor beams.

The new infill slabs reinforced with a layer of SL82 fabric with top cover of 40 mm and concrete of 25MPa strength could then be dowelled to the stubs of the existing slabs.

It is possible that the builders may intend to only replace the concrete floor slabs along the cracked areas. However, the owners would still be left with a building not in accordance with the Building Code of Australia and AS 3600 - 2001.

…" 14 No rectification work has yet taken place and the concrete slabs remain in the condition specified. Construction phase 15 The first defendant proceeded with the construction work. As stated earlier, GCA was retained by it to undertake inspections and to issue engineering certificates of compliance, under the hand of the qualified civil engineer the second defendant. He confirmed in evidence that the pavement was designed for a light industrial slab assuming a two-tonne forklift load in accordance with the Cement & Concrete Association publication entitled "Industrial Floor Slabs." However, it emerged in evidence that that publication, current as at 1985, had been amended in 1997 and subsequently reflected in AS 3600 - 2001, relating to the specified strength of concrete for abrasion resistance as being 32 MPa in the present situation but remaining at 25MPa for concrete strength. Apparently, abrasion is the scuffing of the surface caused by tyres and metal objects without affecting the body of the concrete and can be treated with a coating surface. Thus, in terms of abrasions the second defendant accepted that the slab was underdesigned but for strength it was overdesigned.

16 In fulfilling the duty to inspect and certify during the construction period, the second defendant agreed he was taking responsibility for the engineering drawings as the person giving "project approval" and that reliance would be placed on that approval by others, such as the local Council, the Principal Certifying Authority and the owners of the building. He agreed also that those persons would rely on the certificates issued by him during construction as to compliance with the work as specified.

17 The second defendant accepted also that the specified saw cuts of 30 mm depth in the engineering drawings was not in accordance with the Industrial Floor Slabs standard publication which laid down a depth of one-quarter of the thickness of the slab, that is here 37.5 mm.

18 As to inspections generally during the construction phase, the second defendant conceded he did not himself visit a site but relied on employees of GCA to do so and report to him the result. If all was said to be in order he would then sign a compliance certificate on behalf of GCA. On the present works, two employees of GCA, James Werbowyj and Shane Morrissey, were involved in this inspection procedure leading to the second defendant issuing certificates. It is to be noted that neither of those persons gave evidence in the proceedings even though the second defendant said they were available to do so - Mr Werbowyj, an experienced civil engineering inspector of 25 years' standing, had retired but was still in contact with GCA and Mr Morrissey, a structural engineer with GCA since 1999, was still employed. The second defendant said that both of those persons were competent employees on whom he relied in issuing the relevant certificates for the subject works. However, other than timesheets covering some of the relevant period during the construction phase, there were no records kept by GCA or the second defendant of what, when and with what result inspections were carried out. Indeed, the timesheet for Mr Werbowyj for the week ending 26 March 2004 showed for Thursday 25 March 2004 that he visited the subject site for 1.5 hours and that was the only record of any attendance at the site before that date; there was no timesheet showing any later attendances. Specifically, the second defendant said no employee of GCA or himself was present at the site when the concrete was poured and the concrete finishing process undertaken.

19 Initially, the second defendant thought he personally inspected the piers but later conceded that after a discussion with Mr Morrissey he was now not certain if he had done so as Mr Werbowyj may have done it. Even so, on 25 March 2004 he issued a certificate to the first defendant in terms that "we inspected the excavation for bored piers and found them to be even bearing and in accordance with the details depicted" on the engineering drawings.

20 As to the reinforcement for the slab, the second defendant said he believed the inspection occurred on 25 March 2004, consistent with Mr Werbowyj's timesheet and not earlier, as the reinforcement was laid after the piers had been formed. He thought Mr Werbowyj carried out the reinforcement inspection on 25 March 2004 following which the second defendant issued a certificate dated 29 March 2004 to the first defendant to the effect that "We inspected the reinforcement for the slab on ground on 18 (sic?) March, 2004 and found it to be in accordance with the details depicted on [the engineering drawings]. Permission was given to pour concrete."

21 It is to be noted, however, that OneSteel Reinforcing issued a tax invoice on 17 March 2004 to the first defendant for the delivery of "SL82 Reinforcing Mesh 6.0 x 2.4 m" and on 24 March 2004 in Progress Claim No 1 the first defendant claimed from the plaintiff $66,000 for "concrete works" being 75 per cent of such works completed. There was no documentary or other evidence when the concrete was actually delivered to site.

22 However, in his affidavit, by reference to an affidavit of a Scott Fuller (apparently an employee of GCA but not read into evidence), the second defendant said the concrete pour dates for the internal slabs were on 19 and 26 March 2004 but no employee of GCA was present at the pours.

23 For completeness, it is to be observed that the second defendant considered that the person issuing a compliance certificate had to be a member of Engineers Australia as a chartered professional engineer and on the National Professional Engineers Register - at the time, he was the only person in GCA with such qualifications but now Mr Morrissey was also so qualified.

24 On or about 23 June 2004, the second defendant said he inspected the site and on the same day he issued a final certificate in terms that "we inspected the abovementioned development and found it to be constructed generally in accordance with the structural details depicted on [the engineering drawings of GCA]." He said at the time there was no indication of the slab being "powdery" but there were non-structural small shrinkage cracks. Otherwise, he said he could not remember much about the actual detail seen. This evidence emerged from him: "Q. Did you meet anybody on site? A. I can't remember. I don't believe so.

Q. I see. How did you -? A. And I don't usually - I don't usually - and I don't usually do it. I mean -. Q. I'm sorry, what do you mean you don't usually? A. I don't usually impose myself on people who are already operating. I might just stick my head in, have a look around. I don't - I don't turn over it with a microscope. I mean the fact that people - that it was being occupied would've assumed to me that everything - things might have been - might have been reasonable and there wouldn't have been a - there wouldn't have been a defective slab.

Q. Well, the purpose of your visit was to certify that the engineering work had been conducted in accordance with your design? A. That's correct.

Q. And you know and you acknowledged that one of the people who was relying on you to do that job properly was the occupier of the building, you agree? A. Mm.

Q. So the purpose of you going there was to go over it with a fine tooth comb, wasn't it? A. Perhaps so.

Q. Because that was the purpose of you giving the certificate. You were saying - A. But yeah, I hear what you say but I mean people had been to the site before. We'd seen things go up, we'd seen the framework, we'd seen everything else. I mean the - the - it was more than likely we'd seen the slab beforehand, you know, I mean other people had been to the site. It wasn't as if it was the first time we'd been there and everything appeared to be fine.

Q. Well, you were the person taking responsibility for saying that everything was fine, weren't you? A. That's right.

Q. And I suggest to you that you had an obligation to check it out before you gave that certificate? A. Mm.

Q. And from what you say I suggest to you that you took that responsibility very lightly? A. I don't - I don't believe it was lightly. I believe - I believe it was - it was well informed because of the fact that I have been looking at those sorts of things for many, many years."

The claim and defences 25 The claim against the first defendant was brought for breach of the building contract in failing to meet the express term to exercise care, skill and diligence in the construction and design of the development in relation to the concrete slab; it was pleaded that the slab was inadequate as not meeting the Australian Standard for loadings and was installed with reinforcement mesh and concrete strength less than that specified in the engineering drawings. However, at the commencement of the hearing of this action on 21 September 2009 the Court was advised by the first defendant's solicitor, Ms Z Bojanac of Landerer & Company, that it had been placed into voluntary administration on 17 September 2009. Accordingly, pursuant to s 440D(1) of the Corporations Act 2001 (Cth), an order was made staying the proceeding against the first defendant until further order. Ms Bojanac was granted leave to withdraw. 26 Counsel for the plaintiff , Ms J Oakley, then indicated that her client wished to continue the proceedings against the second defendant; the hearing thus continued.

27 As to the second defendant, Mr Geoffrey Craig, the action was brought in negligence for alleged failures by him: first, in not exercising reasonable care and skill in preparing the engineering drawings for a concrete slab suitable for use as an industrial building in that the design of the slab strength was inadequate to take a two-tonne forklift axle load and the saw cuts specified were too shallow; and, second, in carrying out inspections of the slab and certifying compliance with the engineering drawings when it did not and, specifically, that the slab had been constructed with inadequate reinforcing, inadequate finish and inadequate strength of concrete.

28 The second defendant's basic defence was that it was not him personally who was retained by the first defendant builder to prepare engineering drawings and specifications for the development but rather it was GCA of which he as a director did so for and on its behalf and approved such drawings. The existence of a duty of care to the plaintiff to exercise reasonable care and skill in preparing the engineering drawings was denied but, in any event, any negligence in doing so was denied. The second defendant similarly denied the plaintiff's claims concerning his alleged duty of care in inspecting the development and certifying that construction was in accordance with the engineering drawings. He also denied that the plaintiff suffered any loss or damage by reason of any negligence by him.

29 Further, the second defendant pleaded that the plaintiff's claim was an apportionable claim pursuant to Pt 4 of the Civil Liability Act 2002 so that the first defendant and the company who supplied the concrete were concurrent wrongdoers thus limiting its liability to an amount considered as just having regard to the extent of its responsibility for any damage or loss. Alternatively, the second defendant relied on s 109ZJ of the Environmental Planning and Assessment Act 1979 for similar result in that the first defendant and the concrete supplier were contributing parties.

Expert evidence 30 Each of the parties qualified a consulting structural engineer to inspect the subject concrete slab and to prepare reports. Vincent Cubis of Cardno (NSW) Pty Limited did so for the plaintiff in two reports of 5 June 2007 and 15 September 2009 and Robert Herbertson of Wellstructured and an Adjunct Professor at The University of Sydney in structural design for the second defendant reported in five reports of 31 March, 19 May, 18 August, 16 September and 18 September 2009. Both of those persons gave oral expert evidence.

31 Mr V Cubis: An inspection of the concrete slab at the subject premises was made by Mr Cubis on 30 June 2006 and again on 20 August 2009 to report on structural damage to the building, the most likely cause of the damage and the work required to rectify the damage. He was provided with the GCA engineering drawings, the Coffey Geosciences concrete core compression test results, the first defendant's quotation and architectural drawings and other analyses relied on by Coffey Geosciences.

32 From the first inspection, Mr Cubis observed extensive cracking with frayed edges in each of the three units of the factory complex of a width from one to three millimetres; a number of areas of the slab had a delaminated concrete surface and finished with varying colours; and localised spalling at each of the cracks on either side had occurred with a powdery slab surface. On the second inspection, Mr Cubis said the cracks had widened to three to four millimetres with extensive and severe spalling on the edges in the areas of heavy vehicular traffic.

33 Mr Cubis concluded that the concrete slab relevantly had the following deficiencies: "1.The minimum concrete strength under AS3600 for the slabs on ground should be 32 MPa rather than the 25 MPa specified, based on the building being typical of those classified as 'factory, workshop and similar building' or 'warehousing and storage' …

2. We are of the opinion that the saw cut depth should be a minimum of a quarter of the depth of the concrete slab rather than a fifth as per the GCA details.

3. The saw joint doesn't detail curtailing of the reinforcement across the joint as commonly detailed for such joints. A number of cracks in the floor slab have occurred adjacent to the saw joints. 4. The time for installation of saw joints after finishing of the concrete slab could not be found on the drawings during our review of the documents. The timing of the saw cut is critical in the effectiveness of the joints. Saw cuts should installed as soon as practicable after finishing of the concrete without the saw blades discarding the concrete aggregate. We do not know how soon the saw cuts were installed after the concrete was finished…. 5. The reinforcement used in the concrete slab was measured in two of four cores to be 6 mm in diameter. The reinforcement specified was SL82 mesh which includes 7.6 mm bars at 200 mm centres forming the centre bars of mesh with perimeter 5.4 mm diameter bars. It is unlikely that the mesh in the slab is the specified SL82 due to the core results. 6. …."

34 Specifically as to the low strength of the concrete, determined from Coffey Geosciences tests at a mean of 17.4 MPa with a characteristic strength of 15.5 MPa, Mr Cubis considered it to be caused by the supply of concrete of inadequate strength, interference with the concrete mix before placement by the addition of water (a not uncommon practice so as to make the concrete easier to work but contrary to good building practice) and poor finishing of the concrete.

35 In his second report as to the concrete strength, Mr Cubis noted: "The concrete strength is determined at a time of 28 days after batching. The Coffey testing time was carried out some 6 months after batching and the results would have been greater than the 28 day strength i.e., characteristic strength would have been less than 13 MPa compared to the 25 MPa characteristic strength specified."

36 In his second report also, Mr Cubis commented on the reinforcing mesh in the way: "We acknowledge that the Industrial Pavements Guidelines of Design …indicates that SL62 mesh would be appropriate for a 150 mm thick slab. However we consider that, in our experience, SL72 or SL82 mesh would be generally used in a slab of 150 mm thickness as a minimum. As a general reference guide only AS3727 (Residential Pavements) recommends F82 mesh where joints in slabs are at a maximum of six meters. The subject slab is 150 mm thick and has joints at up to 6.5 meters.

We do not consider that the extent of cracking in the slabs is acceptable and had the documented reinforcement been installed the extent of the cracking, in our opinion, would have been reduced.

We note that if the reinforcement is of significantly smaller area (SL62 rather than SL82 - 60% of the specified weight) then we are of the opinion that the reinforcement should not be considered to be in accordance with the design by GCA. We are of the opinion reinforcement is in accordance with 'means' the reinforcement is the same as'."

37 In the result, Mr Cubis said that the only option which would not result in a compromise in the building elements would to be demolish and reconstruct the floor slab.

38 Professor R Herbertson: On 11 December 2008, Professor Herbertson visited the site and inspected the subject concrete slab. He was provided with the building contract documents (quotation from the first defendant, design and construct contract, architectural drawings and approved DA application), engineers document (engineering drawings and inspection certificates) and the first report of Mr Cubis. In his first report, Professor Herbertson concluded: "The floor slab was designed in accordance with relevant codes applicable at the time of design.

The floor slab as documented was adequate for a general industrial building in accordance with AS Loading Code AS/NZ 1170.1:2002

The slab as documented was adequate to accommodate the front axle load of a pneumatic tyred 2 tonne rated capacity forklift.

The apparent absence of detail , note, specification of other reference in relation to the time for saw cutting the slab joints has not had a detrimental structural consequence in this case.

The depth of the saw cut nominated has not had a detrimental structural consequence in this case.

The slab has been constructed with inadequate strength and finish. Achieving these are Builder's responsibilities. These inadequacies contributed to the damage recorded in the Cardno report [of Mr Cubis].

The slab has been constructed with adequate reinforcement.

The slab appears to have been constructed with adequate subgrade.

It was appropriate that the four certificates be issued by the engineer.

On the basis of slab performance, it can be concluded that of the damage referred to in the Cardno report, only slab finish and lower than designated concrete strength are structurally significant. Achieving these are Builder's responsibilities.

Of the rectification options proposed by Cardno, only their Option 1 (removal and replacement of the slabs) is reasonable."

39 However, in his fifth and final report Professor Herbertson, in view of comment made in the second report of Mr Cubis, agreed that for a pneumatic tyred 2 tonne forklift with front axle load of around 4.6 tonnes (as was the case here) a slab concrete strength of 32 MPa, rather than his original view that 25 MPa was specified in the Australian Standard, was the correct standard. He frankly admitted an error in reading the relevant table in the standard by not taking into account the amendments. Like Mr Cubis, of course, the 32 MPa level was only required for abrasion resistance so that otherwise for concrete strength 25 MPa was adequate. Even so, and by reference to Mr Cubis' second report, Professor Herbertson gave the corrected characteristic (28 day) strengths of the slab concrete here as tested ranging between 13.31 MPa and 17.68 MPa, that is, between 53% and 70 % of the 25 MPa specified on the GCA drawings. Thus, Professor Herbertson accepted that for compliance with the Australian Standard a concrete strength of 32 MPa would be required.

40 As to the size of the reinforcement mesh, Professor Herbertson concluded that the slab cores referred to in the Coffey Geosciences test results appeared to have been adjacent to the edges of the slabs where it is more likely that the 6 mm diameter mesh sheet side edge bars would be located in placing SL82 mesh. This is to be seen in light of the fact, accepted by Mr Cubis, that SL82 mesh with 8 mm bars also has two rows of 6 mm bars at both sheet side edges. Thus, Professor Herbertson's view that it was likely the cores detected 6 mm side edge bars but in an SL82 configuration as was specified in the engineering drawings. Of course, it is to be recalled that Mr Cubis accepted for these works that SL62 mesh complied with the standard even though commonly SL82 or SL72 mesh was designed. 41 In his third report of 18 August 2009, Professor Herbertson attended to the much debated issue here about a principal consulting engineer relying on inspections by his employees for the purposes of issuing compliance certificates and the related issue of whether it would be usual for an engineer to attend a concrete pour. As to the former issue, Professor Herbertson reasoned from industry practice that it was reasonable for the second defendant to rely on Mr Werbowyj as an experienced senior civil inspector to issue the compliance certificate. As to the latter issue, Professor Herbertson thought from industry practice that it would be quite unusual for an engineer to attend the pour of a concrete slab as it would be left to the builder and concreting sub-contractor to be responsible for the placing and finishing of the concrete.

42 This evidence then emerged: "Q. Now, Mr Herbertson, you've given some evidence about engineer certificates? A. I have.

Q. And engineer certificates are important documents, aren't they? A. They are.

Q. To your knowledge they are relied upon by building owners and occupiers? A. Absolutely.

Q. They're relied on by PCAs, prescribed certifying authorities? A. Yes.

Q. They're relied on by both councils? A. Where relevant, yes.

Q. And they may very well be relied on by subsequent owners of buildings? A. Yes. …

Q. You've said that the body that's now known as Engineers Australia has given guidance to it members and members of the profession generally that graduate engineers should have achieved chartered status before giving certificates? A. That's true. It's a requirement of councils in fact that those signing certificates that are submitted to council in any case be corporate members of an institution and the first grade of corporate membership is to be a full member rather than a graduate.

Q. …when an appropriately qualified engineer signs one of these certificates he's not expressing confidence in members of his staff who might carry out the work, he's actually expressing his own opinion, isn't he? A. Yes, he is.

Q. … if a suitably qualified engineer signs a certificate without having conducted the necessary inspections himself, but instead relies on members of staff, he takes the risk that the staff members get it wrong, doesn't he? A. yes, he does.

Q. … Is it your view that it is appropriate for suitably qualified engineers to issue such certificates for work that they have not inspected, notwithstanding that they have no permanent record of who in fact carried out the inspection and when? A. I believe that what occurred here can - it is reasonable - it is possible if imprudent for such a situation to exist, yes.

Q. My question was whether you considered it in your professional opinion appropriate? A. Mine, no. I don't think it's appropriate."

43 As to the saw cut issue, Professor Herbertson acknowledged that according to the Cement and Concrete Association publication the saw cut depth here should have been specified as 37.5 mm instead of 30 mm. However, he reasoned "slab cracking here is not severe, indicating that neither the depth of the saw cut nor the timing was a critical factor on this project as constructed. The sawn joints appear to be succeeding in achieving their purpose."

44 Overall view of the expert evidence: There was consensus between the two experts that the condition of the slabs was such that they required removal and replacement and that would mean vacation of the units while the work was done.

45 In summary form, the views of the experts in principal respects were - • As to concrete strength, the Australian Standard required 32 MPa for abrasion resistance and otherwise 25 MPa after 28 days so that the 25 MPa specified in the engineering drawings was underdesigned. • The concrete actually poured to form the slabs was at a characteristic strength of 15.5 MPa from the Coffey Geosciences test results with a mean of 17.4 MPa from tests carried out about six months after batching; after 28 days the strength would have been less - Mr Cubis calculated it at less than 13 MPa and Professor Herbertson said the range was from 13.31 MPa to 17.68 MPa.

• As to reinforcement steel mesh, SL82 (8 mm) mesh was specified in the engineering drawings but for a 150 mm thick slab the Industrial Pavements Guideline for Design indicates SL62 (6 mm) would be appropriate so that the specified mesh complied with the standard.

• The mesh actually used, based on the Coffey Geosciences core samples, was unlikely to be SL82 as specified but rather SL62 according to Mr Cubis; Professor Herbertson thought the 6 mm bars shown in the core samples were side edge bars, which was normal for an SL82 configuration.

• The timing for making the saw cuts was critical as it should be done as soon as possible after laying the slabs but not so as to dislodge the concrete. When it was done on this work was not known. Here, in any event, the 30 mm saw cuts were less than the required standard of 37.5 mm for a 150 mm thick slab.

• The understrength concrete poured during these works was probably caused by the addition of water during the pour or the supply of understrength concrete or both.

• It was general practice for engineers to issue compliance certificates even though reliance was placed on civil inspectors to actually visit the site, although it was not appropriate to do so in the absence of a record as to who inspected, when and with what result.

• Compliance certificates had to be issued by chartered engineers who were members of Engineers Australia.

46 Conclusions on the expert evidence: It seems to me that the expert evidence leads to the result that the primary cause of the defective concrete slabs was the use of significantly understrength concrete which led to widespread cracking, spalling and a powdery finish. The cracking would have been less extensive if adequate reinforcement mesh had been used and the saw cuts at the expansion joints had been deeper to address spalling and chipping at the edges of the cracks. In other words, I think the reinforcement, less than it may have been as specified on the engineering drawings, would have been more effective but for the understrength concrete in the slabs; the same may be said of the saw cuts being less than the specified standard.

47 The issuing of progress certificates and the final certificate indicating compliance with specifications for the works is an important aspect on which affected persons will rely. In particular, as here, the issue of a certificate that approval is given for the pour of the concrete slabs shows, to me, that the foundation work of the bored piers and the reinforcement steel mesh were suitable and ready for the pour - they are key aspects before the critical process of actually laying the concrete.

48 The likelihood, in my view, is that SL62 reinforcement mesh was laid, even though the engineering drawings required SL82 mesh. However, and notwithstanding the importance of inspections, the evidence did not establish that an inspection of the mesh occurred prior to the concrete pour. Certainly, as the second defendant said, neither he nor anyone else from GCA was present during the pour and there were no records, inappropriate as Professor Herbertson considered, dealing with this aspect. On Professor Herbertson's evidence, and given that only a chartered engineer such as the second defendant could issue compliance certificates, the general practice adopted by the second defendant and followed by him in this case was so informal and superficial so as to be wholly inadequate. Indeed, I would regard the certificates issued by him as being quite misleading to the point of being of no value.

49 It may be accepted, in order for a final compliance certificate to be issued, that the second defendant would have put in place steps to ascertain the mesh used and the strength of the concrete, given, of course, that testing of the concrete from samples taken of it could not occur for 28 days to measure. Plainly, he did not do so before issuing the final certificate of compliance on 23 June 2004.

50 The concrete slabs are deficient in the respects stated and need to be replaced. The quantum of the cost to do so has been agreed in the total amount of $315,156.45. It remains to determine who is liable.

Liability 51 The parties were wide apart on this issue, in terms of both fact and law. The plaintiff's position is plainly made more difficult by the first defendant builder, with whom it had a "design and construct" contract, being placed into administration and the necessary stay of proceedings against it. The plaintiff had no contract with GCA because the first defendant, in satisfying its duty under the building contract, itself engaged GCA to prepare the engineering drawings, to inspect the work for compliance with specifications and to issue certificates to that effect. GCA was not sued by the plaintiff, rather the second defendant was sued as the chartered engineer and approving authority but where, it seems plain, the first defendant retained GCA and not the second defendant personally to do so. Further, it was emphasised that the plaintiff did not own the building or the premises on which it stood so that there was an issue that it could not relevantly suffer any loss - thus, the question of causation loomed large in that as the true or primary cause of the faults was the understrength concrete it was solely the responsibility of the first defendant builder. In disentangling those issues, the existence of a duty of care between the plaintiff and the second defendant is fundamental.

52 Duty of care: Counsel for the plaintiff, Ms J Oakley, put the basic submission that "there can be no legitimate dispute that the second defendant, Mr Craig, owed the plaintiff a duty of care in preparing the engineering design of the building… there was clearly a relationship of proximity between them "as he knew the building was not being designed for the builder but for the plaintiff as was shown on the architectural drawings. Counsel referred to Voli v Inglewood Shire Council (1963) 110 CLR 74 at 85 where Windeyer J (with whom Dixon CJ and Owen J agreed) held: "…neither the terms of the architect's engagement, nor the terms of the building contract, can operate to discharge the architect from a duty of care to persons who are strangers to those contracts. Nor can they directly determine what he must do to satisfy his duty to such persons. That duty is cast upon him by law, not because he made a contract, but because he entered upon the work. Nevertheless his contract with the building owner is not an irrelevant circumstance. It determines what was the task upon which he entered. If, for example, it was to design a stage to bear only some specified weight, he would not be liable for the consequences of someone thereafter negligently permitting a greater weight to be put upon it."

53 Ms Oakley accepted that this case fell squarely within the type of case involving pure economic loss so that it was within the majority finding in Bryan v Maloney (1995) 182 CLR 609 at 619 as giving rise to a duty to take reasonable care to avoid causing mere economic loss as involving "an identified element of known reliance (or dependence) or the assumption of responsibility or a combination of the two." That case concerned the construction of a dwelling house by a builder for a landowner and it was held that the builder owed a subsequent purchaser, the third owner since the house was built, a duty to take reasonable care in the construction of the house and was liable to that subsequent purchaser in damages for economic loss in relation to cracks beginning to appear in the walls due to inadequate footings. Their Honours directly relied on Voli (at 85), a personal injury case, in acknowledging the existence of a relevant relationship of proximity to establish a duty of care which could not be discharged by the building contract or the architect's engagement to which the wronged plaintiff was a stranger: see Bryan v Maloney (at 624) where the existence of a duty of care for pure economic loss of the type here was said to depend upon considerations of responsibility, reliance and proximity and, importantly, equating the responsibilities which the builder owed to the first owner with those owed to a subsequent owner.

54 Mr HJA Neal, counsel for the second defendant, in denying a duty of care to the plaintiff put that "in the absence of a contract, those involved in the design and construction of commercial premises do not owe a duty of care to prevent pure economic loss to the first owner of the premises." Counsel, for this proposition, relied on the obiter dicta of McHugh J in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 at [37]; (2004) 216 CLR 515 at 534-535 as follows: "The question in this appeal is whether it is a principle of the Australian law of torts that those involved in the design or construction of commercial premises owe a duty to subsequent purchasers of the premises to take reasonable care to ensure that the building is free from defects so as to prevent pure economic loss to those purchasers. In my opinion, the Australian law of torts imposes no such duty. Moreover, although the point does not arise directly for decision, it must follow that, in the absence of a contract, those involved in the design or construction of commercial premises do not owe such a duty in tort to the first owner of the premises. Where there is a contract between the first owner and those involved in the design or construction of the building, notions of assumption of responsibility and reliance may be sufficient to create a duty in tort as well as obligations in contract. Without re-introducing the discarded doctrine of proximity, no distinction can be drawn between the case of a first owner and the case of a subsequent purchaser in the absence of a contract with the defendant."

55 Mr Neal submitted that "there is no logical reason why the position of the plaintiff is any different to the position of the owner of the premises. There is no reason why McHugh J's dicta would not apply with equal force to the plaintiff, which did not have a contract with either GCA or the second defendant." Counsel emphasised that he would not be making that submission if the loss or damage claimed resulted from personal injury, the situation in Voli, as distinct from here pure economic loss from defects in a commercial building.

56 Woolcock concerned a claim by the subsequent purchaser of a warehouse and office complex for damages arising from structural distress caused by settlement of the foundations. The engineering company which designed the foundations and one of its employees who acted as the project manager for the design and construction were sued for negligent design and supervision of the construction. The majority (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ) held (headnote at 515) "that neither the engineering company nor its employee owed a duty of care to the purchaser to avoid damage the economic loss the purchaser alleged it had incurred." Their Honours in Woolcock (at [14]; 527) distinguished Bryan v Maloney on the basis, as I have indicated, that liability of the builder to a subsequent owner "depended upon the anterior step of concluding that the builder owed the first owner a duty of care to avoid economic loss of that kind." Thus, it seems to me, the critical point concerns the existence of a relationship. Here, the plaintiff, who I think may be equated to the original owner, had no relationship with the second defendant (or with GCA) but only with the first defendant builder. The evidence was that Mr and Mrs Deal relied solely on the first defendant as the builder for the construction works and they had never met or had any dealings with the second defendant or any of the employees of GCA before the works were completed. 57 The rationale of the proposition that, certainly in the absence of a contract as McHugh J observed in Woolcock (at [37]; 535), was stated in the joint judgment in Woolcock (at [21]; 529-530) as follows: " Claims for damages for pure economic loss present peculiar difficulty. Competition is the hallmark of most forms of commercial activity in Australia. As Brennan J (in dissent) said in Bryan v Maloney (at 632) 'If liability were to be imposed for the doing of anything which caused pure economic loss that was foreseeable, the tort of negligence would destroy commercial competition …sterilise may contracts and, in the well-known dictum of Chief Judge Cardozo ( Ultramares Corporation v Touche (1931) 255 NY 170 at 179; 174 NE 441 at 444), expose defendants to potential liability 'in an indeterminate amount for an indeterminate time to an indeterminate class'.'

That is why damages for pure economic loss are not recoverable if all that is shown is that the defendant's negligence was a cause of the loss and the loss was reasonably foreseeable."

58 However, the general rule that damages are not recoverable for economic loss which was not consequential upon injury to person or property - see Cattle v Stockton Waterworks (1875) LR 10 QB 453 - has been subject to exceptions. For instance, in Woolcock at [23]; 530) their Honours referred to the vulnerability of a plaintiff as an important consideration in cases where a duty of care to avoid economic loss has been held to have been owed in this way: " 'Vulnerability', in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, 'vulnerability' is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant."

59 In New South Wales v Bovis Lend Lease Pty Ltd [2007] NSWSC 1045, Einstein J considered the duty of care in cases of pure economic loss by reference, in particular, to concepts of vulnerability and reliance. His Honour recited (at [37]) the following extract, and which was referred to with approval in the joint judgment in Woolcock (at [23]; 530), from what McHugh J said in Perre v Apand Pty Ltd (1999) 198 CLR 180 at [118]: "If the plaintiff has taken, or could have taken, steps to protect itself from the defendant's conduct and was not induced by the defendant's conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss."

60 In the present case, and although suffering the consequences of any default by the second defendant, I do not think it could be said that the plaintiff was "vulnerable" for what he did or did not do in the sense that it had the ability to protect itself against such conduct. What it did was to enter into a "design and construct" contract with the first defendant and to rely on its skill and expertise for carrying out the works. It was always open to the plaintiff itself to separately obtain engineering drawings and to itself retain supervision of the builder's work - it did not do so. It must follow, it seems to me, that the plaintiff was not "vulnerable" in the relevantly understood sense to the second defendant's conduct In the circumstances as they occurred, it is to the first defendant builder to whom the plaintiff should look for relief. 61 In the result, I find that the second defendant did not owe the plaintiff a duty of care for the avoidance of the pure economic loss it has suffered. Concepts of reliance and vulnerability, on the facts of this case, do not operate to create exceptions to the general rule against the liability of the second defendant . It is solely to the first defendant builder, pursuant to the "design and construct" contract, that the plaintiff may look for relief.

Consequences if a duty of care existed 62 It is common ground that the plaintiff has suffered loss and damage by reason of the defective concrete slabs. It is perhaps unfortunate that the first defendant as the builder has been placed into administration and the proceedings against it necessarily stayed. However, that situation cannot affect the position of the second defendant. Even so, it is appropriate if my finding on the duty of care be wrong to address the other issues argued in the case. I propose to do so with some economy as shortly as I can.

63 Breach of duty: From the findings earlier made in these reasons, the second defendant committed the following defaults - • Specifying in the engineering drawings a concrete strength of 25 MPa when it should have been 32 MPa, but accepting that that was so for abrasion purposes only but where otherwise 25 MPa was adequate. • Specifying in the engineering drawings saw cuts to a depth of 30 mm when they should have been 37.5 mm; critically, there was not mention in the drawings of the time when such cuts should have been made.

• Failing to inspect, or have inspected, the reinforcement steel mesh delivered and laid to ensure it was SL82 as specified, when it was not, thereby approving the concrete pour with only SL62 mesh.

• Failing to put in place a system to ensure water was not added to the batched concrete when being laid and to arrange a testing procedure 28 days after the pour to ensure it was at least 32 MPa so as to enable a meaningful final compliance certificate to be issued.

• Failing to properly inspect the completed works thereby leading to an incorrect final compliance certificate that the concrete slabs were in accordance with the engineering drawings.

64 Causation of damage: The primary cause of the damage to the slabs leading to the need to demolish and relay them was the use of significantly understrength concrete of about 13 MPa leading to widespread cracking, spalling and a powdery finish. Such damage would have been significantly less if adequate reinforcement had been used and the saw cuts had been made deeper at the appropriate time. Even so, as Professor Herbertson said, it would still have been necessary to demolish and rebuild the slabs because of the understrength concrete and there was no evidence that the shallow saw cuts and/or inadequate reinforcement in themselves would have required the replacement of the slabs.

65 The second defendant's failure to ensure water was not added during the pour, consistent with the second defendant's duty to issue a final compliance certificate, was a most important omission and led to the primary cause of the defective concrete as laid.

66 Section 5D(1) of the Civil Liability Act requires in determining causation that there be both "factual causation" and "scope of liability" within the wrongdoers duty. As McHugh J observed in Henville v Walker [2001] HCA 52 at [126]; (2001) 206 CLR 459 at 500 - "the search for a causal connection between damage and the breach of a legal norm requires consideration of the events that have happened and what would have happened if there had been no breach." In Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [70], McDougall J (with whom McColl JA and Bell JA agreed) relied on Ruddock v Taylor (2003) 58 NSWLR 269 at 286; [89] for the proposition that "the principles embodied in s 5D of the Civil Liability Act 'are in accord with common law'."

67 In the present case on the facts found, I am satisfied that had the second defendant ensured a system to prevent the addition of water to the concrete during the pour to enable him to issue a true final compliance certificate, including as to the use of the correct grade reinforcement mesh, which was expressly within the scope of his duty under the retainer with the first defendant (scope of liability) then the concrete would have been laid at the correct strength. It follows that if his breaches had not occurred then there would be no need to replace the defective slabs (factual causation).

68 Proportionate liability: Reliance was placed by counsel for the second defendant on Pt 4 of the Civil Liability Act. Mr Neal submitted that the claim against the second defendant was "clearly an 'apportionable claim'." Given the nature and extent of the faults against him, counsel put that "the builder must bear the lion's share of responsibility" so that even if the second defendant be liable his responsibility was no more than 5 per cent.

69 Ms Oakley for the plaintiff did not take any real issue with the application of the statutory proportionate liability scheme in this case. However, counsel submitted that the second defendant should be wholly liable for the damage because he certified the builder's work.

70 I accept that Pt 4 of the statute applies to this case to make the plaintiff's claim "apportionable" as a claim for economic loss or damage to property: see s 34(1)(a). I accept also that both the first defendant and the concretor sub-contractor who laid the slabs are "concurrent wrongdoers" whose acts jointly with the second defendant caused the claimed loss: see s 34(2). It does not matter for the purposes of Pt 4 that the first defendant is in administration: see s 34(4).

71 Although the first defendant has the benefit of a stay of the claim against it and the concretor is not a party to the proceedings, where an apportionable claim is involved then the liability of a defendant who is a concurrent wrongdoer is limited to an amount being the proportion of the damage claimed considered to be just having regard to the defendant's responsibility for the damage: see s 35(1) and (4).

72 There may be no doubt as to the first defendant's responsibility as the builder for the damage caused as it had duties to properly execute the works under the design and construct contract. However, it did retain GCA to prepare engineering drawings approved by the second defendant and to issue progress and final compliance certificates by the second defendant as a chartered engineer. The concretor had a responsibility to supply and lay concrete as specified by the builder, no doubt in accordance with the strength specified in the contract but as to which there was no evidence as to what strength of concrete the first defendant ordered or the concretor actually supplied from the batch.

73 As to the second defendant, I regard the duty to specify the correct strength of concrete and to issue compliance certificates, which necessarily here involved inspecting the site of the pour and with a system to ensure the proper pouring of concrete without the addition of water to enable a true final compliance certificate to be issued, as of major importance. However, that is to be tempered by the fact of the possibility, perhaps somewhat slight , that it was understrength concrete which was supplied as being the cause and where in fact water was not added during the pour.

74 On balance, I would assess the second defendant's proportion of the damage as 40 per cent.

75 Quantum of damages: This was agreed in the total sum of $315, 156.45. If otherwise it had been found that the second defendant had a duty of care to the plaintiff then it would have been liable to an amount of 40 per cent thereof, that is, $126,062.58.

Conclusion 76 I find that the second defendant did not owe a duty of care to the plaintiff in relation to the defective concrete slabs in the factory building at Morisset. The second defendant is not liable for the pure economic loss suffered by the plaintiff in the absence of a contract or a special exception to the general rule, such as arising from reliance and vulnerability. 77 If otherwise liability had been found in the second defendant, I would assess its proportionate liability at 40 per cent of the damage, that is, $126, 062.58.

Orders 78 The second defendant is entitled to a verdict against the plaintiff. I see no reason why costs should not follow the event in the ordinary way but I will hear the parties on this before making final orders. Counsel addressed on costs 79 In the determination of this matter I make the following orders - (1) Verdict and judgment for the second defendant against the plaintiff.

(2) Plaintiff to pay the second defendant's costs of the action on the ordinary basis in an amount as agreed or assessed.

(3) Note the order made on 21 September 2009, pursuant to s 440D(1) of the Corporations Act 2001 (Cth), that the proceedings be stayed against the first defendant until further order.

01/12/2009 - Layout - Paragraph(s) Whole Judgment

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