Negligence in design and construction: The impact of the contractual matrix

12 Oct 2016

Introduction

The doctrine of concurrent liability – that is, the potential for the same conduct to found liability in tort and in contract – has been well established in Australia since the High Court decided Astley v Austrust in 1999. That is not to say, however, that the doctrine has not given rise to some controversy. One area of difficulty relates to the impact on tort liability of contractual terms that govern the parties’ relationship or otherwise provide the context for the dispute (often called, for convenience, the “contractual matrix”).

It is trite that the duty of care that the law imposes will be subject to any binding contractual terms that modify or exclude that duty. It is generally accepted that the contractual terms that parties choose to regulate their relationship will “trump” the duty of care that might otherwise arise by operation of the law of tort. Thus, for example, a building contract may contain a clause that limits the builder’s liability for damages for negligence to a particular amount. Provided clear words are used, such terms will generally be enforceable according to their terms.

A more interesting issue is whether – and if so, how – the contractual matrix has the capacity by implication to modify a duty of care or even preclude a duty of care from arising in the first place. This article examines that issue.

The article focuses on duties of care relating to defects in design and construction. Disputes in relation to such defects frequently are fought out against the background of a contractual matrix. This might consist simply of the contract under which the work in question was performed. But it may also include other agreements, such as the contract under which a claimant acquired a defective building.

As the article explains, the High Court’s recent decisions establish two principles reasonably clearly. First, the existence of an opportunity to negotiate contractual terms of the kind referred to above (that is, aimed at protecting a person from the consequences of another’s negligence) can, it seems, prevent a duty of care from arising in the first place. That result can flow even if such protective terms were not in fact put in place. The critical question is whether an opportunity to negotiate protection was available, not whether it was in fact taken up.

Secondly, any contractual limits that apply to the duty owed under the original retainer of an engineer or similar professional will generally also limit the duty owed by that professional to read more

 


Lucas Shipway

Solicitor 1999
Barrister 2009

02 9151 2940

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