Northbuild Constructions Pty Ltd v Napier Blakely Pty Ltd

[2006] QSC 133

[2006] QSC 133

SUPREME COURT OF QUEENSLAND
CIVIL JURISDICTION

BYRNE J

No 437 of 2005

NORTHBUILD CONSTRUCTION PTY LTD (ACN	First Plaintiff
011 063 764)
and
BODDINGTON INVESTMENTS PTY LTD (ACN	Second Plaintiff
050 578 133) AS TRUSTEE FOR THE NORTHBUILD (IH) UNIT TRUST
v.
NAPIER BLAKELY PTY LTD (ACN 006 382	First Defendant
278)
and
RICHARD CURTIS	Second Defendant
BRISBANE ..DATE 05/05/2006
JUDGMENT

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05052006 D.1 T16/MBL (Byrne J)

HIS HONOUR: This is an application to strike out as not	1
disclosing an arguable cause of action paragraphs of a pleading which materially make a claim for damages in tort. The principal claim is by a builder against persons alleged to have acted in the role of a certified quantity surveyor under a building contract between the builder and a principal.	10
The claim which remains for decision today relates to a contention that, in view of allegations made earlier in the pleading, a duty was owed to the builder by the quantity surveyor. The duty is alleged to be:	20

"A tortious duty of care being a duty to exercise
reasonable skill and care in or about the provision of

the quantity surveying services."

The duty, expressed in that way, is not as it ought to have

30

been, "Stated in reference to the kind of damage" that the plaintiff has allegedly suffered, (see Cole v. South Tweed Heads Rugby League Football Club Limited (2004) 217 CLR
469, at 472). But it is said for the builder the precise

content of the duty can be reformulated in a way which would leave the essential contention arguable. No doubt the claim is susceptible of reformulation in a way which might define	40
the alleged duty with the precision which would be necessary
for it to be the subject of adjudication. I therefore
propose to deal with the application to strike out on the
50
basis that (by some presently unspecified amendment) the
claimed duty can be more appropriately defined.

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The issue therefore is whether the kind of duty alleged is	1
sufficiently arguable to justify refusal of the relief sought.
This is not the trial of a separate question. Rather, it is an interlocutory proceeding which requires attention to be given to the prospects of success of an allegation of the kind of duty that will be alleged when reformulated.	10
Many significant considerations have been urged in the comprehensive and considered submissions placed before me on both sides. I trust that I will not be doing any disservice to the very considerable labours and intellectual effort applied on both sides to the arguments by the way in which I propose to deal with disposing of this application.	20
30
At the forefront of the arguments against the existence of the kind of duty for which the builder will eventually contend are considerations that relate to the particular form of contract
into which the builder entered with the principal.
40
The contract envisaged interim payments, to be assessed on progress claims made periodically.
By clause 10.2.1 the certifying quantity surveyor:

"Must reasonably and fairly assess the request for

assessment." 50

The clause goes on to provide:

"For the time within which the claim is to be advanced
and the level of detail which is required to be included

in or submitted with it."

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The contract also contains elaborate provisions designed to	1
secure a prompt determination of any dispute concerning the accuracy of a decision by the surveyor on a progress claim.
It is unnecessary to dwell upon the detail. It suffices for present purposes to observe that the elaborate procedures in place appear to provide a readily accessible mechanism for the prompt determination of complaints about the accuracy of the surveyor's certificates.	10
20
In this case, the complaints concerning the valuations made by the quantity surveyors fall into two classes. First, it is said that the surveyor ought to have appreciated that contentions by the principal that variation orders ought to be valued and deducted from the moneys otherwise payable to the builder was a claim without foundation in law. The second relates to contentions that particular variation orders ought not to have been permitted because, for example, they related to works already completed or because the contract works did not include the work referred to in the variation orders.	30
40
The upshot is that the plaintiff's case is that admitting
variation orders against the progress claims was contrary to
law or, alternatively, was (in respect of some of the
individual claims) inappropriate, resulting in significant
50
loss.

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05052006 D.1 T16/MBL (Byrne J)

Is there an arguable claim in these circumstances that the	1
quantity surveyor is liable in tort for negligence at the suit of the builder?
The way in which the proposed duty of care is likely to be expressed would bring it into broad conformity with the obligation which, according to clause 10.2.1, the surveyor bore - namely, reasonably and fairly to assess a progress claim. There is nothing to show that the quantity surveyor made a promise in those terms; and I mention this only because it may be thought that, if the nature of the duty alleged to exist in tort closely mirrors the duty which the quantity surveyor may have assumed, that would suggest that the contractual relations between all the parties, including the quantity surveyor, may not be at odds with the tortious duty of care to be proposed.	10
20
30
In John Holland Construction and Engineering Proprietary
Limited v. Majorca Projects Proprietary Limited and Bruce
Henderson Proprietary Limited (1996) 13 BCL 235, Byrne J (in
40
the Supreme Court of Victoria) considered whether, having
regard to the contractual arrangements actually put in place
there, a tortious obligation was owed by the certifying
architect to the contractor to act fairly and impartially.
That is not, it may be observed, the allegation currently
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proposed to be advanced against the quantity surveyors here.
But his Honour's decision is of assistance in identifying the
kinds of considerations - derived from the terms of the
contract and others external to it - likely to influence a

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05052006 D.1 T16/MBL (Byrne J)

decision whether such a duty of care exists in particular	1
circumstances.
In that case, his Honour considered that several considerations tended against the duty contended for. They included (what was characterised as) a deliberate distancing between the architect and the builder from each other, so that no relation of "proximity" was intended; particular provisions of the building contract stipulating for remedies of the builder for acts and decisions of the architect; that "none of the parties to the project was a tyro", his Honour saying that the builder was an experienced building contractor and lawyers had been involved. Against that background, his Honour held that it was not appropriate to seek to engraft upon the contractual relations the tortious obligation contended for by the builder.	10
20
30
This conclusion is consistent with a decision of the Court of
Appeal of England and Wales in Pacific Associates and Baxter
[1990] 1 QB 993, where two considerations appear to have been
40
decisive against the imposition upon a superintendent engineer
of an obligation owed to the contractor of the kind contended
for here. The contractual provisions which were thought to
require that conclusion were, principally, one that
stipulated for the resolution of any dispute or difference by
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a mechanism by independent determination, for which
comprehensive provision was made in the contract. In that
sense, it is similar to the elaborate provisions in the
contract between the principal and builder here. Secondly, a

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clause stipulated that neither the engineer nor any member of	1
his staff was to be in any way personally liable for acts or obligations under the contract. That was thought to pose a difficulty for the imposition of a duty of care upon the engineer under the general law, Lord Justice Purchas, remarking at (page 1022):	10

"In accepting the invitation to tender with the complete
contractual framework including the disclaimer in PC86
(which was the clause concerning the exemption of
liability for engineers), it would, in my judgment, be
impossible either to support the contention that the

engineer was holding himself out to accept a duty of care	20
with the consequential liability for pecuniary loss outside the provisions afforded to the contractor under the contract, or to support the contention that the contractor relied in any way on such an assumption of responsibility on the part of the engineer in any way to bolster or extend its rights."

The Lord Justice went on to say that:

30

"Even if (the exemption of liability provision for the
engineer) were not included in the contract, the dispute
resolution provisions (to which I have referred) would
have been effective to exclude the creation of any direct

duty on the engineer towards the contractor."

40

Lord Justice Ralph Gibson reached the same conclusion, considering it unlikely that the engineer could reasonably have foreseen the contractor suffering a loss as a result of any want of care on his part because of the dispute mechanism provisions.

50

However, the decision in Pacific Associates, which is broadly
consistent with the approach taken in John Holland

Construction, was not inevitable. At page 1018 to 1019,

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reference is made to several decisions which tended to suggest	1
that a duty of care of the kind proposed to be alleged in this case did exist and the breach give rise to a claim for compensation in tort.

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The reasoning in those cases, although plainly disapproved of by the Court of Appeal suggests that, in Australia at any rate, the last word has not been heard on this topic.

Moreover, some at least of the considerations that persuaded Byrne J in John Holland Constructions (after a trial) that the somewhat differently expressed duty contended for before his Honour did not exist, are not present in this case.	20
All considered, it is arguable that the kind of duty proposed to be contended for here may exist.	30
Of course, the builder might have negotiated for rights for
compensation against the certifier in the event of error,
negligent or otherwise, or might have secured, if clause
40
10.1.2 does not provide it, a contractual promise from the
principal to compensate for loss attributable to error by the
certifier. The choice made, however, was to accept the
business risks associated with settling for the remedies for
which the contract and the general law otherwise provided. As
50
I have said, the contract contains elaborate dispute
resolution procedures calculated to lead to fair, prompt,
independent adjudication upon disputed progress claims.

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05052006 D.1 T1/MJA (Byrne J)

Considerations of that sort bear upon "vulnerability" issues:	1
see Woolcock Street Investments Pty Ltd v. CDG Pty Ltd (2004) 216 CLR 515, especially at 533.
In other cases, there have been attempts to obtain summary determinations that such a duty of care as is here alleged does not exist. They have not resulted in determinations that	10
claim is unarguable. For example, in P & E Phontos Pty Ltd v.
McConnell Smith and Johnson Pty Ltd (1993) 9 BCL, Cole J (at
Page 262-3) identified considerations which are as relevant
20
now as they were 13 years ago. There too the superintendent
of a firm of architects was alleged to have owed a duty of care to a building contractor rendering the superintendent liable in negligence for economic loss suffered by the
contractor. There too the superintendent sought to resist the
30
contention in reliance, among other things, upon a dispute
resolution clause contained within the building contract.
Cole J drew attention to difficulty in this area of law of
negligence in identifying precisely the outcome of a contest
concerning the suggested duty. His Honour said:
40

"Further in circumstances where there has not been a
determinative statement by the High Court in relation to the existence or non-existence of a duty of care between a superintendent administering a contract on behalf of a proprietor and a building contractor where the loss
alleged is pure economic loss the Court should be
hesitant to strike out a statement of claim which might
deny the plaintiff the right to test the existence of the
alleged duty in the High Court. It is also important to

recognise that each contractual relationship between the	50
superintendent and the building contractor may contain different ingredients which may promote or reduce the likelihood of a Court finding as a matter of fact that there existed such a relationship of proximity between them as to give rise to a duty of care."

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05052006 D.1 T1/MJA (Byrne J)

This decision has been referred to with approval: see, for	1
example, Christiani v. Goliath Portland Smith Company (1993) 2 Tas R 122.
There is academic support, albeit now about 20 years old, supporting the notion that a liability in tort for a certifier to a contractor may exist (see John Dorter (1985) Building and Construction Law 230 at 245 entitled, "The Superintendent", and John Tyrill, "Role of the Superintendent (1986) Building and Construction Law Journal 316."	10
20
The point must be regarded, therefore, as sufficiently arguable not to warrant summary determination against it.
I gather that there is to be some repleading of aspects of the claim.	30
I will hear the parties with respect to the form of the order.
I think the costs should be costs in the cause. careful attention is given to it. Otherwise, it will likely provoke another application to strike out on the footing that it is hopeless.	40
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