Tanah Merah Vic Pty Ltd v Owners' Corporation No 1 of PS631436T

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2019 0048

TANAH MERAH VIC PTY LTD (ACN 098 935 490)	Applicant
v
OWNERS CORPORATION NO 1 OF PS613436T and ORS	Respondents

S APCI 2019 0051

GARDNER GROUP PTY LTD (ACN 056 178 262)	Applicant
v
OWNERS CORPORATION NO 1 OF PS613436T and ORS	Respondents

S APCI 2019 0053

ELENBERG FRASER PTY LTD (ACN 081 961 855)	Applicant
v
OWNERS CORPORATION NO 1 OF PS613436T and ORS	Respondents

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JUDGES:	BEACH, OSBORN JJA and STYNES AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	22, 23 and 24 February 2021
DATE OF JUDGMENT:	26 March 2021
MEDIUM NEUTRAL CITATION:	[2021] VSCA 72
JUDGMENT APPEALED FROM:	[2019] VCAT 286 (Judge Woodward)

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BUILDING AND CONSTRUCTION – Applications for leave to appeal on questions of law from a decision of the Victorian Civil and Administrative Tribunal (VCAT) with respect to a domestic building dispute – Claims in respect of property damage and economic loss arising from fire at a multi-level residential building – Use of aluminium composite panels (‘ACPs’) on facades of building a cause of the damage suffered by the owners – Owners’ claims against builder pursuant to statutory warranties concerning the suitability of materials, compliance with the law and fitness for purpose arising under Domestic Building Contracts Act 1995 s-subs 8(b), (c) and (f).

BUILDING AND CONSTRUCTION – Builder’s claim against building surveyor, architect and fire engineer for failure to exercise reasonable care in accordance with consultancy agreements – Whether owners’ claim before VCAT apportionable under Wrongs Act 1958 pt IVAA – Whether builder a concurrent wrongdoer in respect of the consultants for purposes of proportionate liability – Whether builder failed to take reasonable care in selecting and installing cladding – Whether Tribunal failed to consider aspects of the case against the builder alleging failure to take reasonable care – Whether open to contend on application for leave to appeal that Building Act 1993 s 16 imposed a non-delegable duty of care upon the builder with respect to property damage and economic loss – Whether owners’ claim against builder was one ‘arising from a failure to take reasonable care’ – Whether owners’ claim properly characterised as one apportionable claim against all the respondents to the primary proceeding.

BUILDING AND CONSTRUCTION – Whether on the proper construction of the relevant specification the builder was permitted or directed to select and install ACPs which did not comply with the Building Act 1993 and the Building Code of Australia (‘BCA’) – Use of ACP ‘indicative to Alucobond’ – Whether Tribunal erred in finding architect negligent in respect of its inspection and approval of ACP sample – Whether reasonably open to Tribunal to find owners’ loss included an increase in insurance premiums – Whether Tribunal erred in its construction of BCA cl C1.12(f) – Meaning of ‘laminate’ in relevant provision of the BCA.

PROFESSIONAL NEGLIGENCE – Whether building surveyor acted as a member of a profession and in accordance with peer professional opinion – Whether the Tribunal erred in its conclusions with respect to the relevant peer professional opinion having regard to Wrongs Act 1958 s 59(2) – Whether by issuing the stage 7 building permit the building surveyor made a representation to the builder that was misleading and deceptive.

CAUSATION – Whether the building surveyor’s failure to identify and remedy omissions in the description of proposed cladding in the fifth fire engineering report was causative of loss – Whether counter-factual hypothesised to establish causation of loss as a result of building surveyor’s negligence with respect to the fifth fire engineering report was inconsistent with findings of Tribunal as a whole.

APPORTIONMENT – Allocation of responsibility between building surveyor, architect, fire engineer and smoker who started fire – Whether Tribunal failed to consider the degree of departure by the building surveyor from the relevant standard of care in making apportionment findings.

BUILDING AND CONSTRUCTION – Leave to appeal refused with respect to proposed grounds of appeal advanced on behalf of the fire engineer and architect – Leave to appeal granted with respect to proposed ground 3 of the building surveyor’s proposed grounds of appeal concerning the Tribunal’s findings with respect to causation of loss consequent upon negligence with respect to the fifth fire engineering report – Leave to appeal otherwise refused with respect to the further grounds advanced by the building surveyor – Appeal allowed with respect to proposed ground 3 of the building surveyor’s proposed grounds of appeal – Domestic Building Contracts Act 1995 s 8 – Building Act 1993 s 16 – Building Code of Australia cl C1.12(f) – Victorian Civil and Administrative Tribunal Act 1998 s 148 – Wrongs Act 1958 pt IV AA, ss 24AE–24AI, 59 – Toomey v Scolaro’s Concrete Constructions Pty Ltd [No 2] [2001] VSC 279 considered – Selig v Wealthsure Pty Ltd (2015) 255 CLR 661 applied – Hunt & Hunt v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613 applied – Brookfield Multiplex Ltd v Owners — Strata Plan No 61288 (2014) 254 CLR 185 considered – Reinhold v NSW Lotteries Corporation [No 2] (2008) 82 NSWLR 762 considered – Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450 considered – Godfrey Spowers (Vic) Pty Ltd v Lincolne Scott Australia Pty Ltd (2008) 21 VR 84 considered – Perpetual Trustee Company Limited v CTC Group Pty Ltd [No 2] [2013] NSWCA 58 considered – Permanent Custodians Ltd v Geagea (No 4) [2016] NSWSC 934 considered – Bolitho v City and Hackney Health Authority [1998] AC 232 considered – Jones v South Tyneside Health Authority [2001] EWCA Civ 1701 considered.

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APPEARANCES:	Counsel	Solicitors
For Tanah Merah Vic Pty Ltd in all proceedings	Mr T J Margetts QC with Mr J B Waters	Clyde & Co Australia
For the Owners in all proceedings	Mr W Thomas	Wotton & Kearney
For Gardner Group Pty Ltd in all proceedings	Mr C M Caleo QC with Ms V Blidman	DLA Piper Australia
For LU Simon Builders Pty Ltd in all proceedings	Mr P B Murdoch QC with Mr R Andrew	Colin Biggers & Paisley
For Mr A Galanos in proceeding S APCI 2019 0153	Mr C M Caleo QC with Ms V Blidman	DLA Piper Australia
For Elenberg Fraser Pty Ltd in all proceedings	Mr J A F Twigg QC with Mr C F E Dawlings	Clyde & Co Australia

TABLE OF CONTENTS

Introduction

Background facts

The primary decision in more detail

Issue 1–3: Were the Owners’ claims against the respondents apportionable under pt IVAA of the Wrongs Act 1958? Was LU Simon a concurrent wrongdoer in respect of the consultants for the purposes of s 24AH of the Wrongs Act? Did LU Simon fail to take reasonable care?

Did the Tribunal fail to consider part of the case against LU Simon?
Tribunal’s Reasons

Consideration
Did the Tribunal err in relation to the issue of apportionability?
Part IVAA of the Wrongs Act

Consideration

Issue 4: On the proper construction of the T2 Specification and Elenberg Fraser’s drawings, was LU Simon directed and/or permitted to select the product Alucobest or any composite metal cladding product that was contrary to the Building Act 1993 and the Building Code of Australia?

The T2 Specification
The Elenberg Fraser Agreement
Elenberg Fraser’s submissions

Consideration

Issue 5: Did the Tribunal err in finding that Elenberg Fraser was negligent in respect of its inspection and approval of the Alucobest sample?

Elenberg Fraser’s submissions

Consideration

Issue 6: Was it reasonably open to the Tribunal to find that the Owners’ loss included an increase in insurance premiums?

Background

Consideration

Issue 7: Did the Tribunal err in its construction of cl C1.12(f) of the BCA?

The BCA

Consideration

Issue 8: Did the Tribunal err in its conclusion that the ‘peer professional opinion’ was ‘unreasonable’ for the purposes of s 59(2) of the Wrongs Act 1958?

Consideration

Issue 9: By issuing the Stage 7 Building Permit did Gardner Group make a representation to LU Simon that was misleading and deceptive?

Issue 10: Was Gardner Group’s failure to identify and remedy the omission in the Fifth FER causative of any loss?

Issue 11: Did the Tribunal fail to consider the degree of departure by Gardner Group from the relevant standard of care in making apportionment findings?

Conclusion

BEACH JA
OSBORN JA
STYNES AJA:

Introduction

Shortly before 2:23 am on 24 November 2014, a fire broke out on the balcony of apartment 805 of the 21 storey Lacrosse apartment tower in Latrobe Street, Docklands. The source of the ignition of the fire was an incompletely extinguished cigarette butt left in a plastic container by a person staying in the apartment, Jean-François Gubitta. The plastic container was sitting on a table with a timber top on the balcony of the apartment. The fire spread from the plastic container to the table and then to the nearby external cladding of the building.

The cladding to which the fire spread was constructed with an aluminium composite panel (‘ACP’) known as Alucobest, which contained a polyethylene core. Alucobest ACPs had been installed as the external panel cladding on the eastern and western facades of the building.

At 2:23 am, a smoke detector in the hallway just outside the front door of the apartment activated and generated an automatic alarm to the Metropolitan Fire Brigade (‘MFB’). When the first fire crew arrived on the scene at 2:29 am, the fire was travelling rapidly up the cladding and spreading onto the balcony on each level. Six minutes later, the fire had reached the roof of the building.

The damage to the Lacrosse building, caused by the fire, was extensive. Additionally, there was substantial internal property damage. The claimed losses from the fire exceeded $12 million.

In March 2016, proceedings were commenced in the Victorian Civil and Administrative Tribunal (‘VCAT’) in relation to the damage caused by the fire. As ultimately constituted, the proceeding involved 211 applicants, comprising owners’ corporations and the owners of individual apartments in the building (‘the Owners’). At issue in the proceeding was the attribution of responsibility to, and among, eight respondents in the proceeding for the damage caused by the fire and for the replacement cost of cladding which had not been damaged but was now recognised to constitute a significant fire hazard. The eight respondents were:

·the first respondent, the builder, LU Simon Pty Ltd (‘LU Simon’);
·the second and third respondents, respectively the building surveyor, Stasi Galanos, and his employer, Gardner Group Pty Ltd (‘Gardner Group’);
·the fourth respondent, the architect, Elenberg Fraser Pty Ltd (‘Elenberg Fraser’);
·the fifth respondent, the fire engineer, Tanah Merah Pty Ltd, trading as Thomas Nicolas (‘Thomas Nicolas’);
·the sixth respondent, Gyeyoung Kim, the occupier of apartment 805;
·the seventh respondent, Mr Gubitta; and
·the eighth respondent, the superintendent under the building contract, Property Development Solutions (Vic) Pty Ltd (‘PDS’).

The proceeding was heard over five weeks in September and October 2019, by Judge Woodward, sitting in VCAT as a Vice President of the Tribunal. Only the first five respondents took part in the hearing. They were each separately represented, except for the second and third respondents who were jointly represented.

The claims at trial were divided into the Owners’ claims against LU Simon and the other respondents (‘the Owners’ claim’), and LU Simon’s claims against the other respondents (‘LU Simon’s claim’).

On 28 February 2019, the Tribunal delivered reasons for judgment on the Owners’ claim and LU Simon’s claim.[1] In broad terms, the Tribunal upheld the Owners’ claim against LU Simon, holding that LU Simon had breached warranties concerning the suitability of materials, compliance with the law and fitness for purpose implied into its Design and Construct Contract (‘the D&C Contract’) and was therefore primarily liable to pay damages to the Owners.
[1]Owners Corporation No 1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286 (‘Reasons’).

Each of Gardner Group, Elenberg Fraser and Thomas Nicolas (who, for convenience, we will refer collectively to as ‘the consultants’) were found to have breached consultancy agreements to which they were parties with LU Simon, by failing to exercise due care and skill in the provision of their services. Additionally, the Tribunal found that Mr Gubitta breached a duty of care he owed the Owners by failing to ensure that his cigarette was fully extinguished before leaving it in the plastic container.

The failure to exercise reasonable care by each of the consultants and Mr Gubitta was held to be a cause of ‘the harm to LU Simon resulting in its breach of the D&C Contract within the meaning of s 51 of the Wrongs Act 1958’. Moreover, the Tribunal concluded that each of the consultants and Mr Gubitta were concurrent wrongdoers within the meaning of s 24AH of that Act.

Having made those findings, the Tribunal then determined that the damages payable by LU Simon to the Owners were to be apportioned between the consultants and Mr Gubitta pursuant to pt IVAA of the Wrongs Act in the following proportions:

·Gardner Group:      33 per cent;
·Elenberg Fraser:      25 per cent;
·Thomas Nicolas:     39 per cent;
·Mr Gubitta:              3 per cent.

The Tribunal then determined that, because Mr Gubitta had not taken part in the proceeding and no party had sought judgment against him, there would be no order directly affecting Mr Gubitta. Thus, the effect of the Tribunal’s apportionment was that LU Simon would not be reimbursed for 3 per cent of the damages it was liable to pay to the Owners.

On 7 March and 1 April 2019, the Tribunal made orders giving effect to the Reasons it had published on 28 February 2019.

In separate applications, each of Gardner Group, Elenberg Fraser and Thomas Nicolas now seek leave to appeal from the Tribunal’s orders. In the final versions of the three applications there are some 25 proposed grounds of appeal, although there is some overlap between the applications in relation to some of the grounds. Prior to the hearing of the applications, the parties were required to identify the issues they contended were raised by the proposed grounds of appeal and written cases. The parties identified 11 issues that required resolution.[2] The issues are:
[2]For completeness we should say that in oral submissions, Thomas Nicolas abandoned one of its proposed grounds (ground 6.18), and substantially confined the reach of another (ground 6.19). This did not, however, reduce the number of issues previously identified by the parties as needing to be resolved.

1.Were the Owners’ claims against the respondents[3] apportionable claims under pt IVAA of the Wrongs Act 1958?
[3]The respondents to the proceeding in VCAT.
2.Was LU Simon a concurrent wrongdoer in respect of the consultants for the purposes of s 24AH of the Wrongs Act?
3.Did LU Simon fail to take reasonable care?
4.On the proper construction of the T2 Specification[4] and Elenberg Fraser’s drawings, was LU Simon directed and/or permitted to select the product Alucobest or any composite metal cladding product that was contrary to the Building Act 1993 and the Building Code of Australia (‘the BCA’)?
5.Did the Tribunal err in finding that Elenberg Fraser was negligent in respect of its inspection and approval of the Alucobest sample?[5]
6.Was it reasonably open to the Tribunal to find that the Owners’ loss included an increase in insurance premiums?
7.Did the Tribunal err in its construction of cl C1.12(f) of the BCA?
8.Did the Tribunal err in its conclusion that the ‘peer professional opinion’ was ‘unreasonable’ for the purposes of s 59(2) of the Wrongs Act?[6]
9.By issuing the Stage 7 Building Permit[7] did Gardner Group make a representation to LU Simon that was misleading and deceptive?
10.Was Gardner Group’s failure to identify and remedy the omission in the Fifth FER[8] causative of any loss?
11.Did the Tribunal fail to consider the degree of departure by Gardner Group from the relevant standard of care in making [its] apportionment findings?

[4]A specification issued by Elenberg Fraser on 17 April 2008, which formed part of the design of the Stage 7 Building Permit issued on 2 June 2011, and which was also incorporated into the D&C Contract executed in May 2010.

[5]An Alucobest sample was sent by LU Simon to Elenberg Fraser in May 2011, and inspected by David Palmer, who was the project architect.

[6]An issue run before the Tribunal by Gardner Group.

[7]A building permit issued by Gardner Group on 2 June 2011.

[8]The reference to the ‘Fifth FER’ is a reference to the fifth iteration of the Fire Engineering Report prepared by Thomas Nicolas bearing the date November 2010, but finalised on about 9 December 2011.

For the reasons set out below, we have concluded that none of the challenges to the Tribunal’s Reasons which are raised by these issues have any real prospect of success save for the question raised by issue 10.

Before turning to the issues in detail, it is necessary to say something more about the background facts and the Tribunal’s Reasons.

Background facts

The Lacrosse project commenced in 2007. In April of that year, Gardner Group was engaged by the developer to provide regulatory advice and building surveying services. In around October 2008, Mr Galanos was appointed the relevant building surveyor for the project. Gardner Group entered into a formal consultancy agreement in January or February 2010 (‘the Gardner Group Agreement’). On 13 May 2010, it gave notice to the Melbourne City Council, under s 80 of the Building Act 1993, of its appointment as the relevant building surveyor.

In June 2010, the Gardner Group Agreement was novated to LU Simon. Gardner Group was contracted by LU Simon to ensure that the design and materials used in the construction of the building complied with the BCA.

In June 2007, Elenberg Fraser was appointed as the architect for the project. It was initially retained by the developer, having entered into a client and architect agreement dated 12 June 2007. In August 2010, this agreement was novated to LU Simon (‘the Elenberg Fraser Agreement’).

Elenberg Fraser designed the external walls of the proposed building. In what was known as the T2 Specification, and in the relevant architectural drawings, the use of aluminium composite panels, ‘Composite metal panel wall and soffit cladding system indicative to Alucobond manufactured by Alucobond Australia Pty Ltd’, was specified (‘the ACP Specification’). The ACP Specification applied to the external walls of the eastern and western facades of the building, including the relevant wall of the balcony of apartment 805.

In August 2007, Thomas Nicolas was first engaged to provide fire safety engineering services. It was subsequently engaged by the developer during 2010 to provide fire safety engineering services, which included preparing a fire engineering report for the building. It signed a consulting agreement in July 2010 (‘the Thomas Nicolas Agreement’), which was novated to LU Simon at about the same time.

The design of the building proceeded between 2007 and 2010, with the use of ACP to the eastern and western facades first being proposed by Elenberg Fraser in late 2007. The drawings prepared for town planning approval referred to ‘lightweight wall infill’ which later became ACPs in the architectural design.

Early in the design phase of the project, Thomas Nicolas prepared the fire engineering design brief. Later, between 2008 and 2010, it prepared a number of fire engineering reports for the building.

Early in the design phase, Con Nicolas, as the principal of Thomas Nicolas, became aware that the design of the eastern and western facades of the building included ACPs. The Tribunal inferred that Mr Nicolas was aware of the proposed use of the ACPs from about March or April 2008 at the latest. The various fire engineering reports prepared by Thomas Nicolas did not address the presence of combustible ACPs in the design of the building.

There was no evidence that any of the design team raised any questions or concerns at any time about the fact that none of the various iterations of the fire engineering reports referred to infill wall panels or otherwise referenced the ACPs proposed for use on the eastern and western facades of the building.

On 17 April 2008, Elenberg Fraser issued the T2 Specification. The T2 Specification formed part of the design for the Stage 7 Building Permit issued on 2 June 2011. The T2 Specification was also incorporated into the D&C Contract executed in May 2010. At the time the T2 Specification was issued, the term ‘superintendent’ referred to Elenberg Fraser.

As we have already noted, the T2 Specification included details for the ACPs — ‘Composite metal panel wall and soffit cladding system indicative to Alucobond manufactured by Alucobond Australia Pty Ltd’. The expression ‘indicative to’ was defined in cl 1.4 of the General Requirements to mean:

Where used in relation to a manufacturer and/or product reference, this shall demonstrate the level of quality required. The Contractor shall ensure that all products meet the aesthetic and performance requirements specified before commenced on site.

Elenberg Fraser’s obligations under the Elenberg Fraser Agreement included inspecting and approving samples as required in the architectural specification. Clause 4.4 of Section 01-001 headed ‘General Requirements of the T2 Specification’ set out how samples were to be reviewed by the superintendent (Elenberg Fraser).

Section 04-203 of the T2 Specification headed ‘Metal Roof and Wall Cladding’ provided that all elements were required to be non-combustible, or not easily ignitable, with low flame spread characteristics, and that they would not produce excessive quantities of smoke or toxic gases.

Clause 5.14 of Section 01-100 General Requirements specified the ‘Fire Protection’ for the building which included:

A.Fire performance in terms of fire resistance of elements and structure shall be determined in accordance with AS 1530 and the BCA.
B.Internal surfaces and linings that are required to be rated in terms of ‘surface spread of flame’ shall be rated by the method specified in AS 1530 or if required to be Class 0, to the BCA.

Clause 6.9 of Section 01-100 General Requirements provided:

A.All materials, components, equipment and workmanship shall comply with all Statutory Authority codes and regulations, Australian Standards and any other regulations, rules or by-laws applicable to both the design and the execution of the Works.

Callum Fraser, a director of Elenberg Fraser, gave evidence at the Tribunal that the T2 Specification encompassed Alucobond, which contained a 100 per cent polyethylene core.

The tender for the design and construction of the Lacrosse project closed on 16 May 2008. However, the project then stalled. In 2009, the Lacrosse project was split into two stages with the east tower to be built in Stage 1 and the west tower to be constructed in Stage 2. On 17 September 2009, LU Simon submitted a tender for Stage 1.

On 14 May 2010, LU Simon executed the D&C Contract with the then developer, 675 La Trobe Street Pty Ltd. The D&C Contract nominated PDS as the superintendent. PDS was retained by the developer to provide project management and superintendent services for the project.

The largest stage of the construction works was Stage 7. On 15 April 2011, LU Simon applied for the Stage 7 Building Permit. On 5 May 2011, Gardner Group issued a Regulatory Review which raised no issue concerning the proposed use of ACPs. On 18 May 2011, Thomas Nicolas prepared the fifth iteration of its Fire Engineering Report (‘the Fifth FER’). The Fifth FER did not identify the proposed use of ACPs on the external facade of the Lacrosse building or raise an issue in this regard. The Fifth FER was used in support of a building regulation 309 application to the MFB in respect of the project.[9]
[9]Building reg 309 in force at the time required the report and consent of the chief fire officer to an application for a building permit which involved any of a series of specified fire safety matters if those matters did not meet the DTS provisions of the BCA.

On 24 May 2011, LU Simon provided Elenberg Fraser with a sample of the Alucobest ACP it proposed to install on the external eastern and western facades of the building, together with a letter and its sample submission form.

On 24 May 2011, David Palmer of Elenberg Fraser, sent an email to George Vasilakis of LU Simon. The subject line of the email was, ‘Alucobest Sample’. The email provided:

George, Confirming receipt of the Alucobest sample.
The colour of the sample is acceptable. Could you please confirm that the Alucobest composite panel meets the warranty and other requirements of the specification. Pending this information we confirm that the 4mm sample is acceptable. Once I receive it I will return the completed samples submission form. I will bring the sample along to the meeting tomorrow morning along with the façade screen acid etched sample.

Later that day, Mr Palmer received a response from Mr Vasilakis, which stated, ‘David, Just received Alucobest’s Warranty terms which are 15 years in accordance with the specs and Head Contract.’This email confirmed to Mr Palmer that the Alucobest ACPs met the warranty and other requirements of the T2 Specification.

On the same day, Mr Palmer signed a sample submission form and an architect’s advice which approved the Alucobest sample and stated ‘confirming 15 year warranty in line with spec — as advised’. Minutes of a design development meeting on 25 May 2011 recorded that Elenberg Fraser had signed off on the sample of the Alucobest ACP for the building. Mr Galanos, Gardner Group and Thomas Nicolas were not aware that Mr Palmer had approved the sample of Alucobest.

On about 1 June 2011, LU Simon ordered 4708.28m² of Alucobest ACPs. On 2 June 2011, Gardner Group issued the Stage 7 Building Permit, signed by Mr Galanos. At the time, Mr Galanos knew that he was giving approval for LU Simon to construct the building using ACPs with a polyethylene core as part of the external walls of the building.

The building was constructed during 2011 and 2012. Between 18 May 2012 (when Mr Galanos received the application for an occupancy permit) and 14 June 2012 (being the date the occupancy permit was issued), Gardner Group carried out its final inspections of the project as constructed. Mr Galanos undertook the final inspection on 13 June 2012 and issued the occupancy permit on 14 June 2012.

As we have already said, the fire occurred in the early hours of 24 November 2014.

The primary decision in more detail

As we have already noted, the trial at VCAT was divided into the Owners’ claim and LU Simon’s claim. In the Owners’ claim, the Tribunal found against LU Simon, holding that it breached warranties implied into the D&C Contract by ss 8(b), (c) and (f) of the Domestic Building Contracts Act 1995 (‘the DBC Act’). Section 8 relevantly provided:

The following warranties about the work to be carried out under a domestic building contract are part of every domestic building contract —
(b)the builder warrants that all materials to be supplied by the builder for use in the work will be good and suitable for the purpose for which they are used, and that, unless otherwise stated in the contract, those materials will be new;
(c)the builder warrants that the work will be carried out in accordance with, and will comply with, all laws and legal requirements including, without limiting the generality of this warranty, the Building Act 1993 and the regulations made under that Act;
…
(f)if the contract states the particular purpose for which the work is required, or the result which the building owner wishes the work to be achieved, so as to show that the building owner relies on the builder’s skill and judgment, the builder warrants that the work and any material used in carrying out the work will be reasonably fit for that purpose or will be of such a nature and quality that they might reasonably be expected to achieve that result.

The Tribunal found, however, that LU Simon did not fail to exercise reasonable care in the construction of the building by installing the ACPs on its eastern and western facades. As a result, the Tribunal held that the Owners’ claims against LU Simon were not apportionable, and LU Simon was liable for the full amount of the Owners’ loss and damage caused by the fire. In consequence of this finding, the Tribunal did not go on to consider what were described as secondary or contingent claims against the other respondents (or relevantly, for present purposes, the consultants and Mr Gubitta). We will return to this aspect of the Tribunal’s findings below when considering issues 1 to 3.

At the commencement of his Reasons, Vice President Woodward said that ‘for convenience’ references in his Reasons to Gardner Group would include Mr Galanos, unless the context suggested otherwise.[10] Thus, Mr Galanos and Gardner Group were, by and large, dealt with together under the name ‘Gardner Group’. The Tribunal held that Gardner Group breached the Gardner Group Agreement by failing to exercise due care and skill in:

·issuing the Stage 7 Building Permit and, in so doing, approving the ACP Specification, which specification did not comply with the BCA; and
·failing to notice and query the incomplete description of the cladding systems in the Fifth FER.

[10]Reasons [5].

The Tribunal rejected Gardner Group’s defence that it was not negligent because it had acted in a manner that was widely accepted in Australia, by a significant number of respected practitioners in its field, as competent professional practice in the circumstances.[11] The Tribunal concluded that peer professional opinion, supportive of Gardner Group’s defence to the claim of negligence against it, was unreasonable.[12]
[11]Cf s 59(1) of the Wrongs Act.
[12]See s 59(2) of the Wrongs Act.

With respect to Elenberg Fraser, the Tribunal concluded that it breached the Elenberg Fraser Agreement by failing to exercise due care and skill in:

·failing to remedy defects in its design (namely, the ACP Specification and design drawings providing for the extensive use of ACPs on the eastern and western facades of the building, including the balconies) that caused the design to be non-compliant with the BCA and not fit for purpose; and
·failing as head design consultant to ensure that the ACP sample provided by LU Simon was compliant with Elenberg Fraser’s design intent as purportedly articulated by the T2 Specification and the BCA.

With respect to Thomas Nicolas, the Tribunal concluded that it breached the Thomas Nicolas Agreement by failing to exercise due care and skill in:

·failing to conduct a full engineering assessment of the building in accordance with the requisite assessment level dictated within the IFEG[13] and failing to include the results of that assessment in the Fifth FER; and
·failing to recognise that the ACPs proposed for use in the building did not comply with the BCA and failing to warn at least LU Simon (and probably also Gardner Group, Elenberg Fraser and PDS) of that fact, whether by disclosing those matters in the Fifth FER or otherwise.

[13]International Fire Engineering Guidelines.

The Tribunal held that aspects of the conduct of each of Gardner Group and Thomas Nicolas giving rise to the breaches of duty identified, also constituted the making of representations to LU Simon that were misleading and deceptive in contravention of the Australian Consumer Law.

In relation to Mr Gubitta, the Tribunal concluded that he breached a duty of care he owed to the Owners to take care in the disposal of his smouldering cigarette, and to ensure that it was fully extinguished before leaving it in the plastic container. The Tribunal went on to say, however, that it agreed with a submission made on behalf of the Owners that the extent of Mr Gubitta’s responsibility for the loss and damage was ‘minimal’.

In relation to the remaining respondents (Gyeyoung Kim and PDS) the Tribunal concluded that the evidence did not support any finding being made against them.

The Tribunal held that the failure to exercise reasonable care by each of Gardner Group, Elenberg Fraser, Thomas Nicolas and Mr Gubitta was a cause of the harm to LU Simon resulting in its breach of the D&C Contract within the meaning of s 51 of the Wrongs Act, and that each was a concurrent wrongdoer within the meaning of s 24AH of that Act. The Tribunal held that the damages that LU Simon was obliged to pay the Owners for its breaches of the D&C Contract, all arose naturally according to the usual course from the breach of the various consultancy agreements or were within the reasonable contemplation of the parties to those agreements. The Tribunal then apportioned the damages payable by LU Simon to the Owners in the proportions to which we have already referred (Gardner Group, 33 per cent; Elenberg Fraser, 25 per cent; Thomas Nicolas, 39 per cent; and Mr Gubitta, 3 per cent).

Thus, the ultimate result at first instance was that LU Simon was required to pay the Owners damages in full and thereafter be indemnified by Gardner Group, Elenberg Fraser and Thomas Nicolas for 97 per cent of those damages (LU Simon being unable to obtain a reimbursement from Mr Gubitta because no party sought judgment against him).

Issue 1–3: Were the Owners’ claims against the respondents apportionable under pt IVAA of the Wrongs Act 1958? Was LU Simon a concurrent wrongdoer in respect of the consultants for the purposes of s 24AH of the Wrongs Act? Did LU Simon fail to take reasonable care?

The arguments advanced by the parties in relation to issues 1 to 3 were interrelated. It is therefore appropriate to deal with these issues together. The submissions in support of the proposed grounds of appeal covered by these issues were advanced primarily by counsel for Thomas Nicolas and counsel for Elenberg Fraser. Broadly speaking, Thomas Nicolas advanced the following contentions:

(1)The Tribunal erred in failing to consider the claim made against LU Simon that it failed to take reasonable care in selecting Alucobest as the product to be used as external cladding. That claim (which Thomas Nicolas contends was not considered by the Tribunal) was a claim that LU Simon failed to take reasonable care in identifying, checking and confirming that the material it chose (Alucobest) was compliant with the BCA, and the obligations imposed on LU Simon by s 16 of the Building Act.
(2)The Tribunal erred in not considering LU Simon’s defence that the claim against it was apportionable within the meaning of pt IVAA of the Wrongs Act.
(3)The Tribunal failed to apply the correct test and/or misapplied the correct test under pt IVAA in determining whether the Owners’ claim against LU Simon was apportionable.
(4)The Tribunal erred in concluding that the Owners’ claim against LU Simon was not apportionable.

In its written case in this Court, Thomas Nicolas appeared to contend that it was not open on the evidence for the Tribunal to conclude that there was no want of reasonable care on the part of LU Simon. In oral argument, however, counsel for Thomas Nicolas eschewed any such argument and said that its principal complaint was that the Tribunal failed to deal with an important aspect of the case alleging a lack of reasonable care against LU Simon (being the matter referred to in sub-paragraph (1) above), and if that complaint was made out, then the decision of the Tribunal had to be set aside and the matter remitted to the Tribunal for further hearing and determination.

In oral argument, counsel for Elenberg Fraser also made submissions that the Tribunal erred in its failure to determine that claims made by the Owners were apportionable. Like Thomas Nicolas, Elenberg Fraser also contended that the Tribunal erred in arriving at its conclusion that LU Simon had not failed to take reasonable care. The arguments advanced by Elenberg Fraser, however, were not the same as those advanced by Thomas Nicolas.

Elenberg Fraser contended that, at VCAT, each of the Owners made one apportionable claim against all of the respondents. That claim, in the broad or considered against LU Simon separately, was submitted to be apportionable irrespective of whether LU Simon failed to take reasonable care. Elenberg Fraser contended that the Tribunal should have commenced its analysis by identifying the damage or loss that was the subject of the Owners’ claims, and then asked if there was a person other than LU Simon whose acts or omissions also caused that loss or damage. If the loss or damage claimed arose from a failure to take reasonable care by any of the persons identified, then, so it was contended, the whole of the Owners’ claims, against all of those found to have been a cause of the loss and damage, were apportionable.

In relation to the Tribunal’s failure to conclude that there was a want of reasonable care on the part of LU Simon, counsel for Elenberg Fraser, like counsel for Thomas Nicolas, eschewed any complaint that it was not open to the Tribunal to reject such a finding against LU Simon. Elenberg Fraser’s complaint on this issue, again like the complaint of Thomas Nicolas, was confined to a contention that the Tribunal failed to deal with part of the case advanced against LU Simon at trial. Specifically, Elenberg Fraser submitted that the Tribunal failed to consider the question of LU Simon’s selection of Alucobest in the context of its responsibilities as a builder. Elenberg Fraser submitted that there was a case in negligence advanced against LU Simon at trial that even if the T2 Specification permitted LU Simon to select Alucobest, as a builder, LU Simon was negligent because it selected a product that did not comply with the BCA. As it was put by counsel for Elenberg Fraser:

We say the judge [Tribunal] considered the question of the builder’s selection, or rather the specification of this material in the design, in the context of a designer but not in the context of the responsibilities of a builder.

Gardner Group did not advance any submissions of its own in relation to the issue of a lack of reasonable care on the part of LU Simon or the issues concerning apportionability under pt IVAA of the Wrongs Act, although in its written case in this Court it adopted some of the submissions made by Thomas Nicolas on the issue of apportionability.

In light of the way the arguments were put by Thomas Nicolas, it is appropriate to commence the analysis of the present issues with a consideration of issue 3, the question of whether there was any error by the Tribunal in failing to find that there was a want of care on the part of LU Simon.

Did the Tribunal fail to consider part of the case against LU Simon?

As we have already observed, the complaints made in this Court about the Tribunal’s failure to find that there was a want of reasonable care by LU Simon are confined to contentions that the judge did not deal with the whole of the case advanced against LU Simon. In the event that any of these complaints are upheld, the parties submit that it will be necessary to remit the proceeding to the Tribunal so that the entirety of the claim against LU Simon can be fully determined.

Plainly, the question of whether the Tribunal failed to determine some aspect of the case against LU Simon falls to be resolved by a consideration of the Tribunal’s Reasons. Before dealing with the relevant parts of the Reasons however, it is necessary to deal with a question of fact.

At trial, there were issues raised about LU Simon’s possible selection of Alucobond in accordance with the T2 Specification, and its actual selection of Alucobest as being ‘indicative to Alucobond’. That is, first there was a question of whether or not LU Simon could or should have been held to have been negligent if it in fact selected Alucobond, notwithstanding the T2 Specification; and secondly, there was a question of whether LU Simon was in fact negligent in selecting Alucobest and not Alucobond.

The issue of whether LU Simon’s selection of Alucobest over Alucobond was a cause of the fire or its spread was the subject of a joint report prepared by the expert fire engineers whose evidence was tendered at trial. Ultimately, all of the relevant experts agreed that the selection of Alucobest over Alucobond did not contribute to the spread of the fire.

Tribunal’s Reasons

Before we refer to the relevant parts of the Tribunal’s Reasons, we wish to make the following preliminary observations. First, the Tribunal’s Reasons are of an exceptionally high quality. Secondly, the clarity with which, and the detail in which, the Reasons are expressed has made our task of dealing with the present applications considerably easier than it might otherwise have been. And for that we are indebted to the Vice President. We move now to the specifics of the Tribunal’s Reasons.

After setting out matters of background, the Tribunal turned to the relevant contracts entered into by each of LU Simon and the consultants. The Tribunal observed that these contracts were ‘pivotal in ascribing liability for the various claims in the proceeding’.[14] The Tribunal next observed that ‘despite this (or perhaps because of this) each of Elenberg Fraser and Thomas Nicolas sought to deflect attention from their respective Consultant Agreements’.[15] Having made these observations, over the next 36 paragraphs of its Reasons, the Tribunal described the salient features of the various contracts.[16]
[14]Reasons [44].
[15]Ibid.
[16]Ibid [45]–[80].

With reference to the Elenberg Fraser Agreement, the Tribunal noted that the agreement provided that Elenberg Fraser was ‘responsible for the proper coordination and integration of the work of all the other consultants’ and was required to ‘inspect the works during construction for compliance with … all legislative requirements …’.[17]
[17]Ibid [70].

The Tribunal dealt with the issue of whether LU Simon’s choice of Alucobest over Alucobond was in any way causally relevant. In conformity with the expert evidence of the fire engineers to which we have already referred, the judge found that the choice of Alucobest over Alucobond was not causally relevant,[18] saying that, ‘the relevant necessary condition for the ignition of the Alucobest panels and the subsequent spread of the fire, was the installation of an ACP with a 100 per cent polyethylene core, not the choice of the Alucobest product over Alucobond PE (as it came to be known)’.[19] After further discussion, the judge then said:

I have concluded above that the relevant necessary condition for the ignition of the Alucobest panels and subsequent spread of the fire was the installation of an ACP with a 100% polyethylene core, not the choice of the Alucobest product over Alucobond PE. On the submissions of Gardner Group, that still leaves the question whether the choice of Alucobond with the 100% polyethylene core over another product in the Alucobond range (namely Alucobond Plus or Alucobond A2) was a necessary condition for the ignition of the ACP on the balcony of apartment 805 or for the spread of the fire beyond that balcony.[20]

[18]Ibid [191]–[192].

[19]Ibid [192].

[20]Ibid [223].

Next, so far as is relevant to the present issues, the Tribunal dealt with a submission made by Gardner Group about the existence of unsealed penetrations in the Alucobest panels and the issue of whether this ‘contributed negatively to the extent of the spread of the fire’.[21] The Tribunal referred in detail to the evidence relevant to this issue, before concluding that it was not satisfied that the penetrations in the Alucobest panels contributed to the fire spreading more rapidly than it would otherwise have done.[22]
[21]Ibid [235].
[22]Ibid [239].

After analysing a number of other issues, the Tribunal turned to the question of whether LU Simon had failed to take reasonable care. The Tribunal first observed that the elements of the claims against LU Simon for failing to take reasonable care were ‘somewhat elusive on the pleadings’.[23] The Tribunal then identified the claims made against LU Simon in closing submissions as being:

•its selection of Alucobest ACPs in circumstances where those ACPs had insufficient supporting documentation and no test certificate under AS1530.3; and
•its failure to ensure that the ACPs installed by it as part of the external walls of the Lacrosse tower were non-combustible as required by the BCA or otherwise complied with the DTS [deemed-to-satisfy] provisions of the BCA, which failure gave rise to a breach by LU Simon of s 16 of the Building Act.[24]

No party in this Court sought to cavil with the Tribunal’s identification of the claims that had been made against LU Simon at trial.

[23]Ibid [293].

[24]Ibid.

Thomas Nicolas submitted in this Court that it is what the Tribunal said next which is critical, and which demonstrates that the Tribunal did not deal with part of the case advanced against LU Simon. The Tribunal said:

I have found above that the choice of the Alucobest product over Alucobond PE (as it came to be known) was not a necessary condition for the ignition of the Alucobest panels. And in my discussion of the claims against Elenberg Fraser below, I have dismissed the argument that LU Simon was obliged by the D&C Contract (including the T2 Specification) to select a non-combustible ACP notwithstanding the specification of an ACP ‘indicative to Alucobond’. Thus, in simple terms, I am satisfied that LU Simon’s selection of Alucobest ACP’s as ‘indicative to Alucobond’ did not cause the fire or fire spread. It is therefore unnecessary for me to consider the anterior question of whether LU Simon failed to exercise reasonable care in the process of selection of the Alucobest ACPs.
The question whether LU Simon’s installation of non-compliant ACP’s was a failure to exercise reasonable care, is less straightforward.[25]

[25]Ibid [294]–[295].

Thomas Nicolas submitted that the Tribunal’s use of the word ‘installation’ in the second last line of the extract above shows that the Tribunal excluded from its consideration the wider case against LU Simon that it was negligent in selecting an Alucobond product with a polyethylene core.

After identifying the relevant issues so far as the claims against LU Simon were concerned, the Tribunal set out the various submissions of the parties as follows:

Gardner Group submits that LU Simon was the principal contractor with control over the Lacrosse project. Its obligations were contained within a D&C Contract and it was obliged under s 16 of the Building Act to construct buildings that comply with the building permit and which comply with the Building Act, Building Regulations and the BCA. It continues:
Section 16 makes it apparent that a builder does not discharge its obligations merely by building a building in accordance with a building permit (in other words, merely by relying on the work of the [relevant building surveyor]). The builder is independently fixed with liability, pursuant to an offence provision, to construct buildings that comply with the BCA. If liability is established against Gardner Group and Mr Galanos for permitting the use of an ACP containing a 100% polyethylene core on the external façade of the Lacrosse building, then LU Simon must be fixed with liability in respect to the same wrongful conduct.

Similarly, Elenberg Fraser submits that:
As a tier 1 or close to tier one builder, LU Simon is expected to know the material aspects of the BCA relevant to its construction obligations [citing the evidence of the expert building surveyors]. Under the D&C Contract, LU Simon was required to manage the design process and procure the permit to construct and under the T2 Specification it was required to select a compliant design/product. When LU Simon selected the material it ought to have known that ACPs, and in particular the PE core, were combustible ... [Mr Moschoyiannis]^[[26]] may well have relied on the consultants to advise him to the contrary, but he was negligent as a builder not to undertake a more detailed investigation of the materials and design.
[26]Mr Moschoyiannis was a director of LU Simon who had overall responsibility for the Lacrosse project. See Reasons [19].

Thomas Nicolas’ submissions refer primarily to matters relating to the selection of Alucobest, but observe that:
It seems curious that Mr Moschoyiannis claimed to be knowledgeable about PE in the context of HDPE, yet claimed he didn’t know it was a plastic, or combustible when discussing Alucobond (PE). Accordingly, his evidence of his knowledge of PE-cored ACPs must be treated with caution.

After referring to evidence of Mr Moschoyiannis that he did not know that there was any risk with an ACP because ‘it’s protected by aluminium laminate covers’, Thomas Nicolas also observe that: ‘Implicit in this answer is that Mr Moschoyiannis knew that PE posed a fire risk in Alucobond (PE) panels and that from reading the Alucobond brochure, the risk of fire of the PE was protected by the aluminium laminate covers’.
Unsurprisingly, the Owners argue against a finding that LU Simon failed to take reasonable care. Such a finding would open up the possibility of LU Simon being entitled to a reduction in its liability to the Owners as a ‘concurrent wrongdoer’ within the meaning of Part IVAA of the Wrongs Act. The Owners submit that: ‘the evidence in this case does not suggest any failure to take reasonable care on LU Simon’s part’. They argue:
The installation of the Alucobest panels at Lacrosse resulted from a deliberate decision to use those panels for the external cladding. The fact that they did not meet the statutory warranties given by LU Simon, because they were not compliant or fit for purpose, does not of itself constitute a lack of reasonable care. To find that the choice of Alucobest was a failure to take reasonable care would be effectively to open the doors to such an argument in almost every case; as a decision that is subsequently found to be incorrect could almost always be constructively treated as if the decision-maker, by making the wrong choice, had failed to exercise reasonable care.

Dealing first with Thomas Nicolas’ submission urging caution in considering Mr Moschoyiannis’ evidence, that evidence was summarised in LU Simon’s submissions as follows:
Like many other people, Mr Moschoyiannis did not know that polyethylene was a flammable material. Further, Mr Moschoyiannis had seen aluminium composite panels being used in the industry since he graduated from University in the 1980s and had no reason to be concerned about their use. Mr Moschoyiannis was, like so many others in the industry, misinformed by the material which Alucobond published at that time. See also the Alucobond brochure ‘Alucobond — 40 years of excellence — From a Pioneer to the Synonym’. Similar comforting statements were made in the Alucobest brochure …, where in addition to reference to various ASTM test results, it is stated that Alucobest has ‘Outstanding characteristics of fireproofing’ next to an image of a flaming match.[27]

[27]Reasons [295]–[300] (footnotes and internal references omitted, emphasis in original).

The Tribunal accepted LU Simon’s summary of Mr Moschoyiannis’ evidence, saying it accepted that evidence as truthful.[28]
[28]Ibid [301].

The Tribunal then said that LU Simon’s construction of the Lacrosse building using non-compliant ACPs was clearly an error — which error had given rise to a breach of warranty by LU Simon under the DBC Act.[29] The Tribunal then stated that while LU Simon’s breach of warranty rendered it liable to compensate the Owners, it was trite that not every error was negligent.[30]
[29]Ibid [302].
[30]Ibid.

The Tribunal held that despite any breach of its obligations to comply with the BCA, LU Simon had not been shown to have failed to take reasonable care. We summarise the Tribunal’s reasons for this conclusion[31] as follows:
[31]Ibid [303]–[307].

(1) LU Simon was unaware of the fire risks associated with ACPs.
(2) LU Simon acted in furtherance of its obligations under the D&C Contract.
(3)In using combustible ACPs, LU Simon relied upon Elenberg Fraser, Gardner Group and Thomas Nicolas to ensure compliance with the BCA.
(4)LU Simon was not responsible for including ACPs into the design.
(5)LU Simon had no role in the inclusion of the words ‘indicative to Alucobond’ in the T2 Specification.
(6)Given that LU Simon was unaware that the installation of the ACPs in accordance with the D&C Contract posed a fire risk and failed to comply with the BCA, the obvious course for a builder to take in 2010 and 2011 was to use a product that was ‘indicative to Alucobond’.
(7)LU Simon sought and obtained approval for the use of Alucobest from Elenberg Fraser.
(8)Compliance with the BCA in respect of both the design and proposed construction of the building was the responsibility of the building surveyor, especially when assessing whether to issue a building permit.
(9)Gardner Group issued the Stage 7 Building Permit, giving approval for LU Simon to construct the building using ACPs with a polyethylene core as part of the external walls.
(10)The failure of Thomas Nicolas to identify any issue with the use of aluminium composite panels was critical. Mr Moschoyiannis’ evidence was that ‘silence or absence of an alternative solution in the fire engineering report indicate[d] compliance on a deemed-to-satisfy basis’.
(11)There was no evidence that any of LU Simon’s conduct in installing ACPs as required under the D&C Contract and as approved by the Stage 7 Building Permit, involved a failure to take reasonable care. Moreover, there was no expert evidence from any party to the effect that LU Simon did not act reasonably or in accordance with what would be expected of a reasonably competent builder in the circumstances of the case.
(12)While LU Simon bore frontline responsibility to the developer and owner:
for a large and complex project, it has sought to cover acknowledged shortcomings in its own expertise by engaging highly skilled professionals to (in a variety of different ways) direct and supervise its work.[32]

[32]Ibid [307].

With respect to the Tribunal’s twelfth point, the Tribunal elaborated by saying:

That is not to say, of course, that a substantial commercial builder like LU Simon is inoculated against a finding of negligence, so long as it can show that it complied with the specifications and instructions given by other building professionals. Clearly its expertise and experience is such that there will be many instances where it would be reasonable to expect it to identify errors by another building professional. The case law is replete with examples of this. But where (as here) the skill involved is beyond that which can be expected of a reasonably competent builder and there is no actual relevant knowledge, I consider that LU Simon’s relationship with each of the other building professionals is analogous to that between a developer and a building professional. In Berryman v Hames Sharley (WA) Pty Ltd,[33] Hasluck J rejected the architect’s allegation of contributory negligence, finding that the client developer was dependent on the architect’s professional skills.[34]

Consideration

[33](2008) 38 WAR 1, [569].

[34]Reasons [308] (citation in original).

The submission that the Tribunal failed to consider an aspect of the case alleged against LU Simon in respect of its alleged failure to take reasonable care is without substance. Thomas Nicolas’ submission that the Tribunal’s Reasons at [295] show that the Tribunal limited its consideration of the issue to one of installation, without reference to selection, is totally without merit. On any fair reading of the Reasons, the reference at [295] to ‘installation of non-compliant ACPs’ plainly included LU Simon’s selection of those ACPs. The point is made more stark when one remembers that the only claim against LU Simon in relation to the actual installation of the ACPs had already been rejected by the Tribunal earlier in its Reasons.[35]
[35]Ibid [239].

Further, the Tribunal’s recitation of the various submissions made by the consultants on the issue of LU Simon’s exercise of reasonable care discloses that the Tribunal’s reasons for not being satisfied that LU Simon had in fact failed to exercise reasonable care were responsive to the cases that were actually made against LU Simon at trial. If there was any doubt about this, such doubt is eradicated when one notes that the Tribunal had already said that, putting the choice of Alucobest over Alucobond to one side, that still left ‘the question whether the choice of Alucobond … was a necessary condition for the ignition of the ACP’.[36]
[36]Ibid [223].

Similarly, we are unpersuaded by the submissions of Elenberg Fraser that the Tribunal somehow considered the selection process engaged in by LU Simon ‘in the context of a designer but not in the context of the responsibilities of a builder’. To the contrary, the Tribunal’s Reasons which we have already summarised show that the issue of LU Simon’s selection of the ACPs was one that the Tribunal considered in the wider context — taking into account the terms of the D&C Contract and the terms of the consultants’ agreements.

It remains under this heading for us to deal with the submission (advanced by Thomas Nicolas, and supported by Elenberg Fraser) that ‘the judge erred in finding that LU Simon was not a concurrent wrongdoer and/or contributorily negligent’, in circumstances where s 16 of the Building Act imposed a statutory duty on LU Simon, which statutory duty was ‘non-delegable, due to the personal nature of the obligation’.

Having regard to these submissions, it is necessary to set out the terms of s 16 of the Building Act. That section provided:

(1)A person must not carry out building work unless a building permit in respect of the work has been issued and is in force under this Act and the work is carried out in accordance with this Act, the building regulations and the permit.

Penalty: 500 penalty units, in the case of a natural person.
2,500 penalty units, in the case of a body corporate.

(2)Subsection (1) does not apply to building work exempted by or under this Act or the regulations.

In support of the submission that s 16 imposed a statutory duty on LU Simon, Thomas Nicolas placed reliance upon the decision of Eames J in Toomey v Scolaro’s Concrete Constructions Pty Ltd [No 2].[37] In support of the submission that this statutory duty was ‘non-delegable, due to the personal nature of the obligation’, reference was made to the High Court’s decisions of New South Wales v Lepore[38] and Leichhardt Municipal Council v Montgomery.[39]
[37][2001] VSC 279 (‘Toomey’).
[38](2003) 212 CLR 511, 598–600 [254]–[259] (Gummow and Hayne JJ) (‘Lepore’).
[39](2007) 230 CLR 22, 29–30 [9]–[10] (Gleeson CJ) (‘Leichhardt MC’).

The submission that s 16 of the Building Act imposed a non-delegable duty on LU Simon should be rejected, as should the submission that the Tribunal somehow erred in failing to have proper regard to the existence of that alleged non-delegable duty.

First, contrary to Thomas Nicolas’ submission, Toomey is not authority for the proposition that s 16 of the Building Act imposes a statutory duty on a builder. Toomey was a case involving a claim for damages by a seriously injured plaintiff who fell from stairs or a landing at a block of apartments. One of the issues in the case was whether cl D2.16 of the BCA (provisions that required balustrades to be provided in certain circumstances, and which specified certain minimum characteristics of such balustrades) created an enforceable statutory duty, breach of which would sound in damages. While the reasons of Eames J contain a detailed consideration of that issue,[40] his Honour was not called upon to determine, and did not determine, whether s 16 of the Building Act imposed any statutory duty on any party.[41] Nor did he consider a duty of care with respect to damage to property and pure economic loss.
[40]Toomey [2001] VSC 279, [125]–[150].
[41]Although we should note for completeness that Eames J recorded at [142] of his reasons an apparent submission of counsel that s 16 created a statutory duty. His Honour then, however, proceeded to answer the question of whether cl D2.16 (rather than s 16) imposed a statutory duty.

Secondly, insofar as it is contended in this Court that the Tribunal failed to deal with this issue in its Reasons, we would observe that Thomas Nicolas’ submissions at trial in relation to s 16 of the Building Act were limited to a contention that s 16 of the Building Act required LU Simon to carry out work in accordance with the T2 Specification; a submission that the section required LU Simon to comply with the BCA; and a submission that LU Simon was required to satisfy itself that it was constructing the facade in compliance with the BCA. While Toomey was footnoted in Thomas Nicolas’ written closing submissions at first instance, no submission was made to the Tribunal of the kind now made in this Court.

If Thomas Nicolas, or any other applicant for leave to appeal, wished to contend that s 16 of the Building Act imposed a non-delegable statutory duty on LU Simon actionable by way of a claim for damages in respect of damage to property and pure economic loss, this should have occurred before the Tribunal. No such contention was, however, made at first instance.

Moreover, any such contention would need to have been supported by argument, with reference to relevant authorities, additional to Lepore and Leichhardt MC, such as Sovar v Henry Lane Pty Ltd,[42] Byrne v Australian Airlines Limited,[43] Brodie v Singleton Shire Council[44] and AS v Minister for Immigration and Border Protection.[45] No such argument was advanced by any of the applicants for leave to appeal, either at first instance or in this Court.
[42](1967) 116 CLR 397 (‘Sovar’).
[43](1995) 185 CLR 410 (‘Byrne’).
[44](2001) 206 CLR 512 (‘Brodie’).
[45](2016) 312 FLR 67.

In our view, the Tribunal dealt appropriately with the submissions made to it concerning s 16 of the Building Act. There can be no doubt that the Tribunal concluded that LU Simon breached s 16 of the Building Act. So much is made plain by the Tribunal’s conclusion that LU Simon breached the warranty implied by s 8(c) of the DBC Act,[46] and the Tribunal’s identification of the claims made against LU Simon as including LU Simon’s failure to ensure that the ACPs complied with the BCA, ‘which failure gave rise to a breach by LU Simon of s 16 of the Building Act’.[47] Having identified these matters, the Tribunal made further reference to the way in which the consultants put the s 16 issue at trial,[48] before giving its reasons for rejecting the consultants’ contentions.[49]
[46]Reasons [282], [291].
[47]Ibid [293].
[48]Ibid [295].
[49]Ibid [303]–[308].

Noting that there was no argument of the kind now put made to the Tribunal, and no real argument in this Court beyond little more than mere assertion, we do not think it appropriate to conduct a detailed analysis of the issues now sought to be argued. Whilst this Court retains a discretion to permit a new ground to be raised upon an appeal of this type, it is not in the interests of justice to do so in the present case.[50] The parties joined issue on a particular basis after a lengthy hearing and should be held to the grounds raised before the Tribunal.
[50]See Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, 438, quoting Connecticut Fire Insurance Co v Kavanagh [1892] AC 473, 480 (Lord Watson). This principle has been applied in Green v Sommerville (1979) 141 CLR 594, 608; O'Brien v Komesaroff (1982) 150 CLR 310, 319; Coulton v Holcombe (1986) 162 CLR 1, 7–8; Water Board v Moustakas (1988) 180 CLR 491, 497; Banque Commerciale SA v Akhil Holdings Ltd (1990) 169 CLR 279, 284; Whisprun v Dixon (2003) 200 ALR 447, 461 [51]; Botsman v Bolitho (2018) 57 VR 68, 105 [167]; Commissioner of State Revenue v Mondous (2018) 55 VR 643, 661–2 [77]–[79].

That said, we would take leave to doubt that s 16 of the Building Act imposes a statutory duty, breach of which sounds in damages, or that any such duty is non-delegable, either generally, or in the circumstances of this case. Telling against the proposition that s 16 creates a right of action is the fact that s 16 contains its own remedy for a breach of the section (the penalty provisions), and the fact that it is difficult to say that the section exists to protect a limited class of people. As was said by Lord Browne-Wilkinson in X v Bedfordshire County Council:

There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by a private right of action … .[51]

[51][1995] 2 AC 633, 731. See further, Sovar (1967) 116 CLR 397, 405; Byrne (1995) 185 CLR 410, 460; Brodie (2001) 206 CLR 512, 541 [58].

In any event, it follows from what we have said above that those proposed grounds of appeal in which it is contended that the Tribunal erred in its treatment of, or conclusion about, whether LU Simon failed to take reasonable care must be rejected.

Did the Tribunal err in relation to the issue of apportionability?

As we have already observed, the Tribunal found that LU Simon breached warranties implied into the D&C Contract by ss 8(b), (c) and (f) of the DBC Act. It also found that each of the consultants and Mr Gubitta failed to exercise reasonable care and that these failures were a cause of loss to LU Simon. Having determined these issues, the Tribunal turned to the question of proportionate liability and said:

In considering these issues, my task is made easier by my findings above that LU Simon’s breaches of the warranties implied by the DBC Act did not arise from a failure to take reasonable care, but that the breaches by each of Gardner Group, Elenberg Fraser and Thomas Nicolas of the Consultant Agreements, did so arise. I have also found that the claim against Mr Gubitta arises from a failure to take reasonable care. As discussed above, I am therefore largely spared the complex and uncertain analysis admirably engaged in by the learned author of a recent article in the Building and Construction Law Journal.[52] I am also spared consideration of the arguments arising from the various claims against LU Simon and the Owners alleging contributory negligence. Those claims are defeated by my findings that neither of these parties failed to exercise reasonable care.[53]

[52]Grant Lubofski, ‘A Contractual Path Around Proportionate Liability?’, (2018) 34 BCL 5.

[53]Reasons [579] (footnote in original, other citations omitted).

While the Owners’ claims against LU Simon were originally pleaded more widely than those pursued at trial, the Owners’ claim against LU Simon at trial related only to the breaches of warranties to which we have referred. Before the Tribunal, no claim was made by the Owners against LU Simon that LU Simon failed to take reasonable care.

Having found for the Owners against LU Simon on the only claims made by them against LU Simon, the Tribunal then proceeded on the basis that those claims were not apportionable within the meaning of pt IVAA of the Wrongs Act. It did so because the breach of warranty claims which it upheld did not ‘aris[e] from a failure to take reasonable care’[54] by LU Simon. The Tribunal then proceeded to determine LU Simon’s claims for contribution against the consultants (and Mr Gubitta) — all of which claims were apportionable within the meaning of pt IVAA.
[54]See s 24AF(1)(a) of the Wrongs Act.

In its defence at first instance, LU Simon denied any liability for the Owners’ claims against it. In the alternative, it pleaded that each of the consultants and Mr Gubitta[55] were liable as a result of their respective failures to take reasonable care, and that LU Simon (pursuant to the provisions of pt IVAA of the Wrongs Act) was only liable in an amount reflecting that proportion of the loss or damage claimed that the Court considered just, having regard to the extent of LU Simon’s responsibility for the loss and damage.[56]
[55]And the other respondents at trial (Gyeyoung Kim and PDS).
[56]See s 24AI of the Wrongs Act.

In this Court, Thomas Nicolas contended that, on the pleadings, the Tribunal was bound to consider the whole of LU Simon’s defence. Thus, it was submitted, that in respect of the claims made by the Owners against LU Simon and the other respondents to the primary proceeding (relevantly for present purposes, the consultants and Mr Gubitta), the Tribunal erred in failing to determine those claims in their entirety, and then in failing to apportion liability for the Owners’ claims amongst LU Simon and the other respondents who had been found liable.

These submissions are without merit. They ignore the way in which the proceeding was conducted at first instance. The following matters are plain from the opening and closing submissions of the parties before the Tribunal:

(1)The Owners’ primary claim was against LU Simon for breach of the warranties implied by ss 8(b), (c) and (f). While the Owners made alternative claims against the other respondents to the proceeding at first instance, (including the consultants and Mr Gubitta) those claims were secondary and contingent upon the Tribunal determining that the breach of warranty claims were apportionable. As was made clear by the Owners in their opening and closing submissions to the Tribunal, the Owners did not pursue any claim against any other respondent unless the Tribunal held that the breach of warranty claims were apportionable.
(2)No party (and specifically, none of the consultants) objected to the course taken by the Owners before the Tribunal. Moreover, after the Tribunal delivered its Reasons, and called for submissions in relation to the orders that should be made, no party (including the consultants) raised any argument against the Tribunal making an order on the Owners’ claims against LU Simon for the amount of the Owners’ claim — with the claims against the consultants and Mr Gubitta then being dismissed with no order as to costs.

There is simply no basis upon which it can be sensibly suggested that the Tribunal erred in law in not taking a course which no party contended it should have taken at first instance. The position is even more stark in this case because, far from asserting before the Tribunal that it should not take the course that it took, the consultants acquiesced to the course taken by failing to take any objection or make any submission to a contrary effect.

The Tribunal was empowered by s 53 of the DBC Act to make any order it considered fair to resolve the dispute before it. In the circumstances we have identified, the Tribunal acted fairly.

These conclusions are sufficient to dispose of Thomas Nicolas’s submission that the Tribunal erred in not considering LU Simon’s defence that the claim against it was apportionable within the meaning of pt IVAA of the Wrongs Act. Before proceeding to the remaining more fundamental issues agitated by Thomas Nicolas and Elenberg Fraser on the apportionability question, it is necessary to examine more closely the relevant provisions and operation of pt IVAA of the Wrongs Act.

Part IVAA of the Wrongs Act

Part IVAA of the Wrongs Act consists of ss 24AE to 24AS. The expression ‘apportionable claim’ is defined in s 24AE to mean, ‘a claim to which this Part applies’. Section 24AF(1) then specifies the claims to which pt IVAA applies as follows:

(1) This Part applies to—
(a)a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care; and
(b)a claim for damages for a contravention of section 18 of the Australian Consumer Law (Victoria).

Section 24AF(2) contemplates that a proceeding may involve two or more apportionable claims:

(2)If a proceeding involves 2 or more apportionable claims arising out of different causes of action, liability for the apportionable claims is to be determined in accordance with this Part as if the claims were a single claim.

Section 24AH(1) defines a concurrent wrongdoer as follows:

A concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.

Section 24AI(1), then relevantly provides:

In any proceeding involving an apportionable claim —
(a)the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant’s responsibility for the loss or damage;

Section 24AI(2) specifically contemplates that a proceeding may involve both an apportionable claim and a claim that is not apportionable.

Immediately we should say that, by applying well settled rules of construction, the word ‘claim’ in each of these provisions (ss 24AF, 24AH and 24AI) is to be given the same meaning.[57]
[57]Cf Selig v Wealthsure Pty Ltd (2015) 255 CLR 661, 673 [29].

The history and the essential purpose of the statutory scheme containing these provisions was addressed by the majority of the High Court[58] in Hunt & Hunt v Mitchell Morgan Nominees Pty Ltd, as follows:

The Davis Report was not mentioned in the Second Reading Speech or the Explanatory Notes to the Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW), which introduced Pt 4 of the Civil Liability Act. This may be because some seven years had passed since the release of the Davis Report. In the Second Reading Speech it was suggested that the provisions were directed not only to problems regarding insurance but also, as the title to the amending Act suggested, to defining the limits which should be placed on personal responsibility. Nevertheless, there is a clear connection between the Davis Report and Pt 4 of the Civil Liability Act. In 1996, the Standing Committee of Attorneys-General released draft model provisions which reflected the recommendations of the Davis Report. The draft model provisions were eventually adopted, in substantially the same form, in Pt 4 of the Civil Liability Act in New South Wales and by the other States and Territories.
The evident purpose of Pt 4 is to give effect to a legislative policy that, in respect of certain claims such as those for economic loss or property damage, a defendant should be liable only to the extent of his or her responsibility. The court has the task of apportioning that responsibility where the defendant can show that he or she is a ‘concurrent wrongdoer’, which is to say that there are others whose acts or omissions can be said to have caused the damage the plaintiff claims, whether jointly with the defendant's acts or independently of them. If there are other wrongdoers they, together with the defendant, are all concurrent wrongdoers.
The purpose of Pt 4 is achieved by the limitation on a defendant's liability, effected by s 35(1)(b), which requires that the court award a plaintiff only the sum which represents the defendant's proportionate liability as determined by the court. For that purpose, it is not necessary that orders are able to be made against the other wrongdoers in the proceedings. Section 34(4) provides that it does not matter, for the purposes of Pt 4, that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died. Thus under Pt 4 the risk of a failure to recover the whole of the claim is shifted to the plaintiff.[59]

[58]French CJ, Hayne and Kiefel JJ.

[59](2013) 247 CLR 613, 626–7 [15]–[17] (citations omitted) (‘Hunt & Hunt’).

When the majority in Hunt & Hunt observed that the draft model provisions released by the Standing Committee of Attorneys-General were eventually adopted in substantially the same form in pt IV of the Civil Liability Act 2002 (NSW) and by the other States and Territories, their Honours footnoted that observation with references to a number of legislative regimes, including pt IVAA of the Victorian Wrongs Act.

The definition of apportionable claim is directed to a particular class of claims. In order to meet the description of that class, the claim must be a claim which is sustained by findings of fact. It will not be sufficient to simply raise the claim by pleadings.[60]
[60]Godfrey Spowers (Vic) Pty Ltd v Lincolne Scott Australia Pty Ltd (2008) 21 VR 84.

In Reinhold v NSW Lotteries Corporation [No 2],[61] Barrett J analysed the meanings of ‘concurrent wrongdoer’ and ‘claim’ in the NSW equivalent of pt IVAA as follows:

It seems to me clear that a person will be a ‘concurrent wrongdoer’ only if the court makes findings about the existence of ‘loss or damage’ and about which acts or omissions ‘caused’ the loss or damage. It is only when those findings are made that it is possible to identify, as contemplated by s 34(2), each person whose acts or omissions, as found, ‘caused’ the ‘loss or damage’, as found. At that point, and not before, a person can be seen to be a ‘concurrent wrongdoer’.
The relevant ‘claim’ — that is, the claim in relation to which the identified person is a ‘concurrent wrongdoer’ — can only be the claim in respect of which the findings concerning loss or damage and causation are made. That claim is, of necessity, a claim already litigated, not a pending or foreshadowed claim. Its nature and content (and, therefore, its status under s 34(1)) will be discoverable by looking at the findings that cause it to be determined as it is determined. If, on those findings, it is seen that the loss or damage (as established in ‘an action for damages’) arose from a failure to take reasonable care and did not arise out of personal injury, the case will be within s 34(1)(a); and if it is seen that there was a contravention of s 42 of the Fair Trading Act, the case will be within s 34(1)(b). In either such case, the already litigated ‘claim’ will be an ‘apportionable claim’ because of s 34(1) and, if, on the findings made, the acts or omissions of several persons ‘caused’ the ‘damage or loss’ as found, the persons will be ‘concurrent wrongdoers’.

In the present case, the Tribunal concluded that the basis of the relevant practice did not withstand logical analysis. In so doing it addressed by necessary implication the question whether the acceptance of the relevant practice was unreasonable. The critical passage in the Tribunal’s Reasons is as follows:

I have set out above how I consider C1.12(f) should be construed. I have also explained why, in my view, a building surveyor is in a good position to question the logic of the putative alternative construction and can generally be expected to take positive steps to clarify any uncertainty. I consider that the contrary position represented by the Relevant Practice is both irrational and unreasonable. There is no evidence of any of the experts, individually or collectively, subjecting the Relevant Practice to robust scrutiny of the kind discussed by Lord Browne-Wilkinson in Bolitho and, perhaps for this reason, it does not withstand logical analysis.
For the reasons discussed, it is not logical for a provision to so precisely prescribe the thickness of permitted combustible adhesive and completely ignore another equally combustible element that could be more than twice as thick. At an even more general level, it is not logical for a prescriptive exception to a blanket requirement for non-combustibility, to fail entirely to deal with a highly combustible element comprising at least 50% of the product.
The suggested explanation that this combustible element is addressed by C1.12(f)(iv) (the test under AS1530.3), is also not logical. As discussed above, if that test is sufficient to accommodate the potential combustibility of a polyethylene core and thus justify its omission from C1.12(f), why is it not also sufficient to accommodate the potential combustibility of the adhesive, which is also wholly encapsulated by the aluminium layers? As Mr Kip explained:
The — the other thing I would say, coming back to clause C1.12, is that the argument that we would have strict controls about glue thickness, but you could ignore the core — to me defies logic. It’s common in the industry for what are called sandwich panels ... to be up to 250 mil thick. It’s certainly very common to have 75 mil or 100 mil thick panels that are polystyrene or polyisocyanurate or polypropylene — all sorts, with a steel cladding system. And to say that because the steel is there — that steel will help that material pass any 1530 part 3 test — but to say that you can ignore a core of any dimension, but that the glue must be no more than one mil thick — to me defies common sense.

I have suggested above that consulting a fire engineer would have been a reasonable step for a building surveyor to take to confirm or test their reliance on C1.12(f) as a compliance pathway for ACPs. It is worth noting that, had they done so, the evidence is clear about the response they would have received. All of the fire engineers (including Mr Nicolas) considered that ACPs with a 100% polyethylene core did not meet the DTS provisions of the BCA. Even the expert architects disagreed with Mr Galanos and the Gardner Group Experts. Mr Quigley said: ‘Well I would’ve considered [the polyethylene is] one of the laminates, very clearly. I mean you’ve got three materials all laminated together. It’s the core, but it’s one of the laminates’.
Gardner Group submits that I should reject any assertion that the opinion of the Gardner Group Experts and Mr Galanos is unreasonable by reason of ‘at least’ two factors. First, that there is no evidence that they knew ACPs were highly combustible, and it cannot be said that an opinion formed in ignorance of that fact was unreasonable. Second, reasonableness must be assessed in context and ACPs had been used in Australia on high rise buildings for 40 years without incident. Unsurprisingly given my observations above, I reject these submissions.
The evidence of the knowledge of the combustibility of polyethylene among the building surveyors was in fact mixed. Regardless, any failure to ascertain this most basic information about a substantial element of the material under scrutiny, serves to highlight a fundamental deficiency in the process by which the Relevant Practice developed. Similarly, as senior counsel for the Owners submitted, the widespread use of a product over many years without reported serious incident, is hardly a scientific or rational basis for regarding it as safe (citing asbestos as an illustration of this point). Further, as discussed above, the evidence internationally of fire hazards associated with ACPs was developing long before 2010. And concerns over their combustibility were being openly discussed in Australia by then, if not earlier. Even a casual enquiry of fire engineers at around this time is likely to have revealed these concerns.[159]

[159]Reasons [391]–[396] (citations omitted).

The second and third paragraphs quoted above directly address the logic of the opinion upon which Gardner Group seeks to rely. The balance of the passage quoted addresses the reasonableness of that opinion more generally.

The Tribunal concluded for the above reasons that it was satisfied that the relevant practice ‘was unreasonable within the meaning of s 59(2) of the Wrongs Act.’[160] Whilst, as we have said, we accept that s 59(2) is directed to the question whether the acceptance of the relevant practice (being the ‘peer professional opinion’ as defined in s 59(1)) was unreasonable, it follows inexorably from the finding that the relevant practice was unreasonable and the reasons stated for this finding, that the acceptance of that practice was also unreasonable.
[160]Ibid [397].

There is nothing in this proposed ground and the application for leave to appeal in respect of this ground should be refused.

Issue 9: By issuing the Stage 7 Building Permit did Gardner Group make a representation to LU Simon that was misleading and deceptive?

The application for leave to appeal by Gardner Group on ground 4 of its proposed notice of appeal which relates to this issue, is premised upon success with respect to either issue 7 or issue 8. For the reasons we have stated, leave to appeal should not be granted with respect to the proposed grounds of appeal turning on either of these issues. Accordingly, the application for leave to appeal with respect to proposed ground 4 should also be refused.

Issue 10: Was Gardner Group’s failure to identify and remedy the omission in the Fifth FER causative of any loss?

The Fifth FER prepared by Thomas Nicolas did not describe the cladding system on the Lacrosse building in terms which identified the use of ACPs. The Fifth FER was significant because it formed the basis of an application to the MFB seeking approval pursuant to reg 309 of the Building Regulations 2006. The Tribunal described these documents as follows:

The Fifth FER
Mr Nicolas’s witness statement confirms that Elenberg Fraser issued him with a set of architectural drawings by email on 26 August 2010, including a number of drawings ‘that contained a materials legend noting that various parts of the façade were to be clad with “composite wall cladding — silver aluminium composite sheet”’. Mr Nicolas noted that on 13 September 2010, he attended a meeting with the MFB, along with representatives of LU Simon, Elenberg Fraser (including Mr Palmer), Gardner Group (Mr Galanos) and others to discuss the Regulation 309 application. He said that, at the meeting, the MFB raised a number of fire engineering issues that needed to be clarified in an updated fire engineering design report that would accompany the Regulation 309 application.
Thomas Nicolas’s Fifth FER bears the date ‘November 2010’, although Mr Nicolas’s evidence was that this was prepared ‘between 6 and 9 December 2010’. It was circulated to the design team by email from Mr Nicolas dated 9 December 2010. This is the version of the FER that was used in support of the MFB Application, a draft of which was sent to the MFB on 9 December 2010.
MFB Application and MFB R309 Report
By a letter dated 22 February 2011, Thomas Nicolas wrote to the MFB attaching ‘an application with respect to consent per Regulation 309 and Notification together with relevant architectural drawings’. Under the heading ‘A. BUILDING DESCRIPTION’ on the first page of the covering letter, Thomas Nicolas describes the general structure of the building as comprising ‘suspended reinforced concrete floor slabs and reinforced concrete load bearing walls. Precast panel wall systems are proposed for external cladding systems’.
The walls were also incompletely described in the MFB handwritten application form which accompanied this letter. It is Mr Nicolas’s handwriting. In this document, under ‘Details of Construction’ the ‘Walls’ is entered as ‘CONC/MASONRY/DRY WALL’. There is no reference to ACPs.
On 29 March 2011, the MFB provided its ‘Report of the Chief Officer pursuant to regulation 309 of the Building Regulations 2006’ (‘MFB R309 Report’). Mr Nicolas’s incomplete description of the walls in the handwritten application was carried through into the first page of the report, which states: ‘Construction consists of concrete floors, a combination of concrete, masonry and “dry wall” walls, and a concrete/metal roof’. And the incomplete description of the external cladding systems on the first page of the Thomas Nicolas covering letter of 22 February 2010 is repeated on the third page of the MFB R309 Report. On the other hand, the report attached a set of the current architectural drawings, which incorporated references to ‘WP3 Wall Panel Type 3: Composite Panel Cladding’ and ‘V Composite Wall Cladding — Silver Aluminium Composite Sheet’.[161]

[161]Reasons [139]–[143] (citations omitted).

When considering whether Gardner Group’s response to the Fifth FER was negligent, the Tribunal made the following findings (after referring to the relevant contractual documentation):

Thus, Gardner Group’s obligation under the GG Consultant Agreement to perform ‘the Services to that standard of care and skill to be expected of a Consultant who regularly acts in the capacity in which the Consultant is engaged’ expressly extended to ‘Services’ that included liaison with the MFB and the Fire Engineer and ‘coordination of the Fire Engineering design process’ and ‘input into the design process’.
Consistently with those provisions, on 9 December 2010, Mr Nicolas sent an email to various parties attaching the Fifth FER and a draft of his MFB Application. The brief covering email included the following: ‘Gerry/Stasi/Tam — can you also review the attached MFB submission and make any necessary comments/changes etc’. Stasi is Mr Galanos and Tam Ho was a Gardner Group employee assisting Mr Galanos on the Lacrosse project. Mr Galanos agreed in evidence that from 9 December 2010, he was being asked to review and comment on the Fifth FER. Mr Ho responded to this email by email dated 10 December 2010 stating: ‘Have reviewed updated Reg 309 submission, no further comments’.
It follows from this evidence that by about 9 December 2010, Gardner Group had:
• the opportunity to review both the FER and the MFB Application;
•an express contractual obligation to coordinate and provide input on the former document and been expressly asked to review the latter document and provide necessary comments/changes; and
•in fact reviewed both documents.

It is therefore clear that by 9 December 2010 at the latest, Gardner Group read and was aware of the incomplete description of the external cladding systems in both these documents, namely: ‘Precast panel wall systems are proposed for external cladding systems’, as discussed above.
In my view, as the consultant with contractual responsibility for ‘liaison with the MFB’, ‘coordination of the Fire Engineering design process’ and the other ‘Services’ referred to above, it is reasonable to expect that Gardner Group would both notice and query this incomplete description. This is particularly so in circumstances where it knew that the ACPs were a significant component of the cladding system and, unlike a ‘pre-cast panel’, could only be approved for use (on its interpretation of the BCA) by the application of a concession to the requirement under the BCA that external walls must be non-combustible. It is difficult to imagine a more important element of ‘Building Description’ for a fire engineer to be identifying and describing, particularly in a document for submission to the MFB.[162]

[162]Ibid [401]–[405] (citations omitted).

It can be seen that the negligence identified by the Tribunal related to the failure to query the reference to pre-cast panel wall systems when the use of ACPs was proposed. This failure related both to deficiencies in the Fifth FER and the MFB Application.

In addressing the question of causation, however, the Tribunal made findings only with respect to the Fifth FER.

Similarly, I am satisfied that Gardner Group’s failure to identify deficiencies in the Fifth FER was a necessary condition of the relevant harm, although one with considerably less force than the issue of the Stage 7 Building Permit. Had Gardner Group queried with Thomas Nicolas its incomplete description of the cladding system, I consider it is more likely than not that this would have led to an exchange, probably between Mr Galanos and Mr Nicolas, that would have led the latter to share his view that ACPs did not satisfy the DTS provisions of the BCA. This in turn would have led Thomas Nicolas to amend the Fifth FER or otherwise notify the other parties that the proposed use of ACPs required an alternative solution or revision to the T2 Specification and architectural drawings.[163]

[163]Ibid [565].

Gardner Group submits that the counter-factual reasoning postulated by the Tribunal when ascribing causal significance to the negligence it had previously identified, is inconsistent with the Tribunal’s findings elsewhere in its Reasons that Thomas Nicolas was aware that ACPs were proposed as cladding by March or April 2008.

The Tribunal hypothesised that Gardner Group could have queried the failure to refer to ACPs in the Fifth FER and the reference to the use of pre-cast wall panels. As Gardner Group submits however, the Tribunal makes clear in its Reasons that Thomas Nicolas was already aware that ACPs were proposed to be used.[164] In these circumstances it cannot be correct that, had Gardner Group queried with Thomas Nicolas its incomplete description of the cladding system simply by identifying the failure to refer to ACPs, it is more likely than not that this would have led to an exchange, probably between Mr Galanos and Mr Nicolas that would have led Mr Nicolas ‘to share his view that ACPs did not satisfy the DTS provisions of the BCA’. Moreover, as the Tribunal’s findings as a whole make clear, the evidence of Mr Nicolas was that he had assumed that a compliant form of ACPs would be utilised.[165]
[164]See ibid [118], [482]–[483], and [489]–[494].
[165]Ibid [489].

The Tribunal rejected any such assumption as unreasonable.

In my view, the likelihood is that Mr Nicolas in fact gave little or no attention to the proposed use of ACPs referred to in the documents considered by him. The explanation for this is found in his evidence referred to above of how he characterised his role. Put simply, he did not consider the implications of the proposed use of ACPs because he was not asked to do so. This is borne out by his consistent failure to mention them in his description of the building in the FERs (including the Fifth FER) and the MFB Application. But whether he turned his mind to the question or not, any assumption by him that the ACPs proposed were non-combustible, was unjustified and unsound.[166]

Nonetheless it also stands in the way of the simple counter-factual which the Tribunal hypothesises.

[166]Ibid [494].

LU Simon did not directly address or attempt to resolve the causation issue raised by Gardner Group, either in its written case or oral submissions.

In our view, Gardner Group has established the deficiency in the Tribunal’s reasoning for which it contends.

Accordingly, leave to appeal should be granted with respect to Gardner Group’s proposed ground 3 of appeal and that ground succeeds.

Issue 11: Did the Tribunal fail to consider the degree of departure by Gardner Group from the relevant standard of care in making apportionment findings?

Gardner Group submits that in determining the relative culpability of the consultants found by the Tribunal to be liable to LU Simon, the Tribunal was required to assess the departure from the standard of care by the negligent parties as a relevant factor. It is further submitted that the Tribunal should have had regard to the fact that Gardner Group acted in a manner which was consistent with a widely accepted practice amongst building surveyors but that the Tribunal failed to have regard to this factor.

A fair reading of the Tribunal’s Reasons demonstrates that the Tribunal did have regard to Gardner Group’s submissions concerning this issue.

In dealing with the question of apportionment, the Tribunal first set out the relevant principles in terms to which there is no challenge:[167]
[167]Ibid [582]–[583] (citations in original).

Once it has been established that a claim is apportionable, the Tribunal must engage in an ‘exercise of the same kind of judgment as the court exercises in apportioning responsibility as between a defendant sued in tort for negligence and a plaintiff who, by his or her own negligence, has been partly responsible for the injury’.[168] The principles to be followed when conducting that exercise are set out in Podrebersek v Australian Iron & Steel Pty Ltd:[169]
The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, i.e. of the degree of departure from the standard of care of the reasonable man ... and of the relative importance of the acts of the parties in causing the damage ... It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance.

As Elenberg Fraser noted in its written closing submissions,[170] the High Court in Podrebersek[171] referred to Smith v McIntyre[172]. In that case, the court identified considerations that might influence a finding of apportionment, including who created the hazard which ultimately caused the injury, the age, role and position of the person causing the damage and failing to take an obvious and available last opportunity to avoid the damage. The court emphasised the need for a broad discretionary assessment of all the circumstances:[173]
We think the true view is that there is no dichotomy between culpability and causation. A comparison of degrees of fault between two negligent actors requires an examination of the whole conduct of each in relation to the circumstances of the accident. The degree of departure from the standard of the reasonable man on the part of either should not be assessed without considering the extent to which that departure was a contributing cause of the accident. A variety of factors may enter into a judicial determination as to which party has the greater share in the responsibility for the accident. There is no single touchstone of responsibility.

[168]Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463, [93]–[94].

[169][1985] HCA 34; (1985) 59 ALJR 492, 494.

[170]I161 at [209].

[171][1985] HCA 34; (1985) 59 ALJR 492, 494.

[172][1958] TASStRp 11; [1958] Tas SR 36.

[173]Ibid 46.

Reference was then made to cases in which these principles have been applied.[174]
[174]Reasons [584]–[586].

The Tribunal then set out verbatim the submission of Gardner Group:

To the extent that it is found that [Gardner Group and Mr Galanos] failed to exercise reasonable care and skill, such a departure must be viewed as a minor one, predicated upon a mistaken construction of the BCA, in circumstances where the relevant provisions of the BCA were poorly drafted and open to alternative interpretations. That each of the Gardner Group experts, made the same ‘error’ in interpretation indicates that the departure from the standard of care could not have been substantial, given it must have been an error repeated by a number of the leading building surveyors in Victoria. In light of the respective roles of the professional respondents on the project, it is submitted that Mr Galanos and Gardner Group have minimal responsibility for any loss suffered by the Applicants. By contrast, for the reasons that follow, each of the other respondents should be fixed with a significantly higher liability for loss caused.[175]

[175]Ibid [587].

After further setting out Gardner Group’s submissions with respect to the roles of the architect and the fire engineer, the Tribunal responded to Gardner Group’s submissions in the following terms:

In my view, there is considerable force in Garnder [sic] Group’s submissions concerning the role of each of Elenberg Fraser and Thomas Nicolas. Its summary above largely accords with my findings of breach in respect of those parties. But its characterisation of its departure from the standard of reasonable care as ‘minor’, is less persuasive. In particular, in my view, it overlooks:
·the extent to which Gardner Group failed critically and robustly to examine the application of clause C1.12(f) of the BCA to the proposed use of ACPs in the design of the Lacrosse tower; and
·the significance of what Elenberg Fraser described as Gardner Group’s ‘gatekeeper’ role.

By accepting the role of relevant building surveyor, Gardner Group (specifically, Mr Galanos) assumed a special responsibility to ensure that the design and materials complied with the BCA. In that sense, it was engaged by LU Simon under the terms of the GG Consultant Agreement specifically for the purpose of guarding against non-compliance. Its decision to approve the extensive use of ACPs with a 100% polyethylene core, based primarily on a history of similar approvals and without even making the most straightforward inquiry of Thomas Nicolas, points to significant culpability. The fact that this decision manifested in the issuing of the Stage 7 Building Permit and thus the construction of the Lacrosse tower incorporating the ACPs in reliance on that permit, also gives Gardner Group’s role particular causal potency.[176]

[176]Ibid [592]–[593].

The Reasons addressed both the culpability and causal potency of Gardner Group’s negligence.

The Tribunal proceeded by responding to the submissions of Gardner Group, and most importantly in the present context, by identifying matters which those submissions ‘overlooked’. The identification of matters ‘overlooked’ necessarily implies that the Tribunal had regard to the matters stated in the submissions including the factor of common mistake by other building surveyors upon which Gardner Group relies.

The structure of the Tribunal’s Reasons shows that it did not fail to have regard to Gardner Group’s submissions. Further, paragraph [593] of the Reasons specifically refers to a history of similar approvals as a relevant circumstance.

Gardner Group’s real complaint is that the Tribunal failed to accord the weight it should have to the factor of common mistake. Such a complaint is one with respect to the discretionary weighing of elements of a multifactorial complex. It does not give rise to a question of law unless the ultimate exercise of the discretion was not open to the discretion maker. In Podrebersek v Australian Iron and Steel Pty Ltd, the High Court said:

A finding on a question of apportionment is a finding upon a ‘question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds’. Such a finding, if made by a judge, is not lightly reviewed.[177]

[177](1985) 59 ALJR 492, 494 [8] (emphasis added) (citations omitted).

It is presumably because of the difficulties in sustaining such a proposition having regard to the matters identified in paragraphs [592] and [593] of the Reasons, that Gardner Group’s case on this issue is put on the basis that the Tribunal simply failed to have regard to a relevant factor.

For the reasons we have explained however, this challenge must fail and the application for leave to appeal on Gardner Group’s proposed ground 5 should be refused.

Conclusion

None of the proposed grounds of appeal argued by Thomas Nicolas or Elenberg Fraser have any real prospect of success. Their applications for leave to appeal must, accordingly, be refused.

We have come to the same conclusion with respect to Gardner Group’s proposed grounds of appeal, save for proposed ground 3. We would grant Gardner Group leave to appeal with respect to proposed ground 3, and allow the appeal on that ground alone.

We will hear the parties in relation to consequential orders and costs.

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[2021] VSCA 72

26 March 2021