Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority (No 2)

Aquatec-Maxcon Pty Ltd, the subcontractor, brought an action against Barwon Region Water Authority, the principal, seeking damages for defective design. The dispute arose from a design and construct contract for an underground sewerage tank. The case was heard in the Supreme Court of Victoria. The subcontractor argued that the tank was a building and that the principal, as the party higher in the contractual hierarchy, owed a duty of care to ensure the design was fit for purpose. The principal, on the other hand, argued that the subcontractor had assumed the risk of the design defects and that the principal was not liable for the subcontractor's design errors.

The court had to determine whether the subcontractor could hold the principal liable for the defective design under the design and construct contract. The court also needed to decide whether the principal's liability was released by the deed of novation and whether there was an estoppel preventing the principal from denying the assumed state of fact. Additionally, the court had to consider whether the principal owed a duty of care to the subcontractor and whether the subcontractor could recover damages for the defective design.

The court found that the tank was not a building and that the subcontractor could not bring a building action against the principal. However, the court held that the principal owed a continuing duty of care to the subcontractor to ensure the design was fit for purpose. The court also found that the subcontractor had not assumed the risk of the design defects, and therefore, the principal was liable for the defective design. The court rejected the principal's argument that the deed of novation released the principal from liability for the defective design. The court found that the subcontractor had not assumed a state of fact that the principal was not liable for the defective design, and therefore, the principal could not rely on the doctrine of conventional estoppel.

The court held that the principal was liable for the defective design and that the subcontractor was entitled to recover damages. The court ordered that the principal pay the subcontractor damages for the defective design. The court also ordered that the principal and the subcontractor be jointly and severally liable in damages and that the judgment be apportioned to reflect the responsibility for the loss of the subcontractor.