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Liability ------------------f

Professional Liability - Design Professionals

David Kearney, Partner,Phillips Fox Lawyers, Sydney.

INTRODUCTIONDesign professionals, like a large number of other

professionals in modem society, face an increasing numberof claims arising out of the performance of their work.This increase is in this author's view tied not only to thefact that modern society is becoming more inclined tolitigate but also to the ever expanding types of acts forwhich, and parties to which, a design professional can beheld liable.

This article seeks to assist the reader in identifyingthe types of acts for which a design professional is likelyto face some liability exposure and in explaining how anyloss is likely to be quantified. It also identifies some recenttrends in the crucial negligence concept of "proximity" asit applies to design professionals in search of an answer towhether a design professional might be at risk in a claimbrought by a subsequent owner of property for "pureeconomic loss".

SCOPE OF POTENTIAL LIABILITY

ContractThe obvious starting point in any discussion as to

the potential liability of a design professional is the contractfor services the design professional has entered into. Thedefinition of the services for which the design professionalis engaged will assist in determining the limits or extentof any duties owed to other parties. However, in order tofully assess the duties and liabilities of a designprofessional it may also be necessary to review theconstruction contract and consider the role andresponsibility undertaken by the design professionalpursuant to that contract. That contract may impose designliabilities upon the contractor or sub-contractors1.

There are instances in which design professionalswill not be engaged for the entire complement of theirprofessional services. Where the engagement is so limited,attention needs to be given to exactly what the designprofessional has been engaged to do. There may be otherinstances where a design professional is retained to provideservices for more than just the "design stage". If, for

example, a design professional is retained in relation toboth the design and contract administration of a project itmay be that he or she owes a continuing duty to monitorthe design and attend to any defects in it or to at leastwarn of such defects, unless this duty is specificallyexcluded in the contract.

A design professional may remain liable for theoverall design even where specialist consultants have beenengaged and there has been a delegation of designresponsibility. However, where this occurs the consultantwill normally be obliged to indemnify the designprofessional pursuant to the terms of their engagement.

The scope of an architect's potential liability incontract was recently explored by the New South WalesSupreme Court in McBeath v Sheldon2 and later affirmedby the Court ofAppeaP. In that matter the plaintiffengagedthe defendant architect when constructing a house. Thearchitect provided a Certificate of Practical Completionnine months after the foundations were constructed by thebuilder. A short time after the certificate was issued cracksappeared in the house. The plaintiff commencedproceedings against the architect within six years of theissue of the certificate but more than six years after thecompletion of the foundations.

A referee found that the reason for the substantialdefects in the building was due to the fact that a hardfoundation had not been used for the footings of thebuilding although this was required by the engineeringdrawings. In addition, the plans specified isolated brickpiers with reinforced pad footings, yet the piers had notbeen constructed in this way.

The architect had undertaken to provide"supervision of the construction from commencement tocompletion and handover" and, at first instance, Giles Jheld that this undertaking was not limited to contractadministration only. Rather it imposed upon the architectan obligation to inspect vital features of the works such asthe construction of the footings to ensure compliance withthe engineering drawings.

The engineer had designed the footings and told thearchitect that he would inspect them. The architect wasnot subsequently told that the engineer had failed to inspect

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the footings. The architect submitted that he was thereforeentitled to assume that the engineer had approved thefootings and was also entitled to rely on the builder'sstatement that the Council had inspected the footings. Thereferee found that in approving the footings in this way,the architect had acted in accordance with acceptedpractice. However, the Court held that this did not answerthe question of whether the architect had breached hiscontract of engagement, a matter which could only bedecided on the basis of the provisions and effect of thecontract which did not necessarily reflect the generalpractice of architects4

•

Furthermore, the architect's letter of acceptancemade a clear distinction between supervision and contractadministration. There was no subsequent attempt towithdraw from the statement that the architect intended tosupervise the construction from commencement tocompletion and handover and not even the submission thatthe fee charged for the work was insufficient was able toovercome that clear statement of responsibility. The termsof the architect's engagement required that he inspect vitalmatters such as the construction of footings, whether thisinspection take place personally or through another partysuch as the engineer. Although the architect relied uponthe engineer's assurance that he would inspect the footings,it was held that the engineer must have failed to adequatelyconduct the inspection, and the architect was consequentlyin breach of the terms of his contract.

DisclaimersDisclaimers and limitation clauses contained in the

conditions of engagement of a design professional maybe effective in exempting the design professional fromliability. As with any exclusion clause, the wording mustclearly exempt the design professional from liability andclearly cover the act complained of, particularly given thatthese types of clauses are construed against the partyseeking to rely on them.

NEGLIGENCE

Duty of CareDesign professionals owe a common law duty of

care independent of any duty that may be owed in contract.Despite this independence, the terms of the contract maybe referred to in resolving whether the common law dutyis altered or even excluded by the particulars terms.

The definitive case on the liability of architects innegligence is the High Court decision in Voli v InglewoodShire Council & AnorS. In that matter the plaintiff was amember of a tobacco growers association which had hiredthe defendant's hall. The joists which supported theflooring of the stage were not sufficient to carry a largeload and the stage collapsed when a large number ofmembers including the plaintiff attempted to occupy thestage at the same time. Applying the reasoning inDonoghue v Stevenson6

, the Court found that the architecthad negligently designed the stage.

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His Honour, Windeyer J found that an architect owesa duty of care outside its contract of employment whichextends to anyone who could reasonably have beenexpected to be injured by the reasonably foreseeableconsequences of the architect's negligence7

•

Voli's case was cited favourably in Florida HotelsPty Ltd v May08 as follows:

"In Voli's case an architect who designed thestructure was held to owe a duty of care to allpersons who would later use it andfor the purposeof which is was designed. In such a case, if thedesign be defective as a result of the architect'snegligence, and if, because of those defects, thestructure collapses and persons using it in the wayit was contemplated it would be used come to harm,then the architect is liable to them in damages."

A design professional retained to provideprofessional advice may owe a duty of care to third partywho relies on that advice and subsequently suffers propertydamage as a result. In Pantalone v Alaouie9 an engineerhad been engaged by the owner of a block of vacant landto draft drawings in relation to excavation on the land.When the subsequent excavation caused the building onthe adjacent block of land to collapse, its owner sued theengineer on the basis that the engineer had failed to alerthis client to the possibility of endangering the stability ofthe building which collapsed. It was submitted that theengineer's client had no knowledge of engineeringpractice, and therefore was completely reliant on the expertknowledge of the engineer.

In addition to duties owed to "non-contractual thirdparties", there are instances in which the designprofessional may owe a duty of care to a contractor or itsemployees. However, the design professional will not bein breach of any such duty where the contractor conductsits work in an unsatisfactory manner. In Clayton vWoodman & Son (Builders) LtdlO the parties were carryingout construction work which involved the incorporationof an old gable with the new wall of the structure whichwas to house a lift motor. The plaintiff bricklayer hadreservations in relation to the job and suggested to thearchitect that the gable be demolished and a new wall beerected in its place. The architect rejected this suggestionand subsequently the gable collapsed injuring thebricklayer.

The Court of Appeal held that the architect did notowe a duty of care to the bricklayer. In ensuring that thework continued to be carried out in the manner providedby the contract, the architect could not be held responsiblefor the poor work practices of the contractors which causedthe collapse of the gable.

It is important to note the distinction between adesign professional engaged in a supervisory capacity anda design professional not retained to provide supervision.In the latter circumstance, the duty ofcare owed by a designprofessional is much narrower.

Jiawan Holdings Pty Ltd v Design CollaborativePty Ltdll concerned an architect who, was engaged only

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to certify the value of work done and to issue progresscertificates for delivery to a financier. This role was notsufficient to impose a duty of care on the architect toundertake any responsibility for the builders costing ofthe project.

It is not open to a design professional to rely on alow fee to refute the existence of the relevant duty of care.In Brickhill v Cooke12

, the defendant engineers, in breachof their retainer, failed to report structural defects whichwere reasonably apparent. While the fact that a low feehad been charged may have been relevant to the standardof care required of the defendants, the NSW Court ofAppeal held that it was not relevant to the existence of aduty of care.

A design professional engaged by the original ownerof a property may owe a duty of care to subsequent ownersof a property to prevent economic loss due to defects inthe property. Although a number of decisions haveestablished that in England a design professional owes nosuch duty13 where the damage suffered by the subsequentowner is not an injury to his or her personal property, theposition is not settled in Australia. This aspect will bediscussed later in the article.

Standard of CareIn Voli v Inglewood Shire Council & Anor14

, theCourt found that the architect had been negligent indesigning the stage so that it could not support a reasonableload. The architect had failed to comply with therequirements set out in the Council's by-laws and had notgiven proper consideration to the manner in which the stagewas to be supported. In addition, he had incorrectlyassumed that the Public Works Department would correctany defect in the design plans.

In an oft-quoted passage15, Windeyer J. expressed

the standard of care required of an architect as follows 16 :

"An architect undertaking any work in the way ofhis profession accepts the ordinary liabilities ofanyman who follows a skilled calling. He is bound toexercise due care, skill and diligence. He is notrequired to have an extraordinary degree of skillor the highest professional attainments. He mustbring to the task he undertakes the competence andskill that is usual among architects practising theirprofession. And he must use due care. Ifhe fails inthese matters and the person who employed himthereby suffers damage, he is liable to that person.This liability can be said to arise either from abreach ofhis contract or in tort."

The standard against which a design professional'sconduct is assessed is that which prevailed at the time whenthe relevant services were provided and not any higherstandard of knowledge acquired since the performance.However, compliance by a design professional with thegeneral practice in the profession may not necessarily

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establish that he or she has reached the appropriate standardof care. A ruling on the professional's activities must bemade and examined with the benefit of the terms of theengagement. It may be that performance or servicesbeyond that covered by the general practice is expected.

In Florida Hotels Pty Ltd v Mayo & Anor17 theplaintiff owner was extending its hotel and contracted withthe defendant architect to provide supervision andinspection of the work. The relevant contractual provisionread as follows:

"The Architect shall give such periodicalsupervision and inspection as may be necessary toensure that the works are being executed in generalaccordance with the contract; constant supervisiondoes notform part ofthe duties undertaken by him. "

The work involved the construction of a suspendedswimming pool and required the supporting concrete slabto be poured. The reinforcing mesh within the formworkof the slab was incorrectly laid but the architects had notinformed the foreman that they wished to inspect theformwork prior to the concrete being poured. When theowner later removed the formwork prematurely, the slabcollapsed, injuring a workman.

The High Court held that there had been a breachby the architects of their duty to exercise due care andskill in the supervision of the work. The Court recognisedthat the duty owed by the architect was slightly out of theordinary due to the fact that the owner had supplied itsown workmen and its own foreman and the architect wasnot required to provide a certificate to enable the workersto be paid. Nevertheless, the architect was obliged toexercise reasonable care in carrying out the supervisoryduties incumbent upon him. It did not matter whether hewas engaged to supervise the work of an independentcontractor or of the owner's employees. The obligationof the architect remained the same; to exercise reasonablecare in carrying out the duty he had undertaken.

Windeyer J stated in his judgment that this casediffered from Voli's case in the respect that a builder hadnegligently departed from the design specifications. Thenegligence or otherwise of the architect had to be judgedon the basis of his conduct in carrying out his obligationspursuant to the contract. Expert witnesses gave evidenceto the effect that the practice expected of a professionalarchitect was that they be in attendance at the time theconcrete was poured, that they inspect the formwork priorto the pour and that they satisfy themselves that thereinforcing had been properly installed.

The Court held that the issue was whether, in lightof the architect's conduct as a whole, he had been negligent.The architect had failed to make arrangements to inspectthe works, had given no indication to the workers that heintended to make such an inspection and had not directedthat the pour should not take place until he had inspectedthe reinforcing material. Accordingly, his conduct washeld to have been negligent.

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Professional StandardsThe standard of care required of a design

professional may be measured by reference to a code orstandard applicable to the particular element of a projectwhich a design professional undertakes to do. The RoyalAustralian Institute of Architects issues standardConditions of Engagement which prescribe conduct forarchitects such as in respect of contract administration.The Australian Standards Association publishes numerousstandards concerning wide-ranging aspects of the buildingindustry. Generally, the practice or work recommendedin the standards or codes is regarded as representing therequired level of competence expected of the designprofessional.

An example of the application of standards to afinding against a design professional in negligence is Voli'scase. In that case the specifications and drawings fellbelow par in respect of the minimum live load requirementsprescribed by the Australian Standards Association.

Engineers are similarly bound by professionalstandards prescribed by their own professionalassociations. In Carosella v Ginos & Gilbert Pty Ltd18 anengineer was found responsible for negligent design infailing to comply with guidelines for the design of footingspublished by the Institute of Engineers, Australia.

Bearing Of Location On DesignThere are circumstances in which a design

professional will be briefed to provide a plan orspecification for a location at which the design will betested by local factors. A common example is a brief toconstruct an article that is likely to be subjected to abuseor misuse. The standard of care required of the designprofessional in this situation is dependent upon theforeseeability of the particular type of abuse or misusewhich eventually causes the design to ''fail''. In some cases,the likelihood of an assault on the integrity of the designwill be reasonably within the knowledge of the designprofessional.

The decision of the Full Court of the Federal Courtin Introvigne v The Commonwealth19 illustrates this point.In this case, architects were briefed to design flagpoles,one of which was to be erected in the playground of thepublic school at which the plaintiff attended. The plaintiffwas injured while swinging on the halyard of the flagpolewhen the top of the pole was dislodged and struck him inthe head. The plaintiff argued that the architects ought tohave been aware of the location of the flagpole and thelikelihood of mischievous schoolboys subjecting it toabuse. Further, it would have been a simple procedure tosecure the pole against misuse of this kind.

The architects were found not to have beennegligent. The Court held that it was not appropriate toimpose an obligation on the architects to avoid the hazardsof abuse unless those hazards were so. obvious that,irrespective of the body of professional opinion, a higherdegree of care should have been taken20

• The duty of thearchitects may have differed substantially had there beenspecific provision in the contract to adopt special features

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in the design. In this case, however, the direction providedto the architects was simply that one of the flagpoles beerected in the school assembly area near a dais. The Courtconcluded that to assume that ordinary precautions wouldnot be taken by those supervising the schoolboys was toimpose too onerous an obligation on the architects21

•

Advising Prior to ConstructionWhen preparing an estimate as to the cost of

construction, architects and engineers are not expected todisplay absolute precision. However, they must employreasonable skill and care. The design professional maybe held liable for damages due to errors in constructioncost estimates where a client relies upon the advice andconsequently suffers loss. An award of damages in such acase may extend so far as to reimburse a proprietor for theentire loss suffered as a result of a forced sale of theconstruction works22

•

The standard of care required of the designprofessional may require them to consider such mattersas advising on the effect of inflation on construction costsand the advisability of engaging a quantity surveyor inorder to provide a more accurate estimate. If the designprofessional overlooks these issues then, aside from .apotential liability for damages, they may also lose theIrentitlement to render professional fees for the adviceprovided if the construction costs increase by a substantialamount or to a point beyond the client's capacity forabsorption.

Advice Pertaining to DocumentsThe standard of care expected of design

professionals in preparing plans and specifications i~ toavoid negligent errors or omissions that may cause a clIentto incur additional costs. Principally, these errors oromissions may result in additional costs due to thequantities ofmaterials that are purchased in excess of whatwould have been necessary but for the designprofessional's negligence. For example, a miscalculationin relation to the scale on plans may result in a substantialincrease in costs to a client for which the architect is atrisk of being held liable23

• Contractors may also be ableto recover their additional costs incurred as a result of thearchitect's or engineer's negligence particularly where theerror has occurred in the tender documents upon which acontractor relied24

• The scope of the architect's orengineer's potential liability in this situation is likely todepend on the extent of reliance by the client or contractorupon the negligently drafted specifications.

Formulation of the DesignWhether a design professional has breached his or

her duty of care in relation to the design of a particularconstruction will depend upon such factors as exactly whatthey were engaged to do, the degree to which a particulardesign may be "out of the ordinary" and the existence ofany regulations or codes of practice relating to the designissue in question.

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Where a design professional is embarking upon anovel design, the client should be warned of the inherentrisks of the project even if as a result of doing so it becomesclear that the project should be abandoned25 • Generally,where a design project has an inherent element of risk, thedesign professional has an obligation to warn the client ofthat risk. This requires the design professional to considerthe wider implications of their design, such as the aestheticor practical consequences. However, this obligation maybe limited where the terms of their engagement are narrowor where there is another professional with responsibilityfor that particular area.

Where a design project calls for the designprofessional to make a judgment call outside their area ofexpertise, they may be negligent in not engaging theservices of a more qualified individual, such as, forexample a structural engineer26

•

As noted earlier27, there may be a continuing duty

on the designer to review the design until practicalcompletion of the works. In addition, where there is somerisk to occupiers of the completed work, there may be anextension of the designer's duty beyond completion eventhough the risk was not reasonably foreseeable at the timeof the design.

It is not uncommon for an architect or engineer torely upon specialist advice in relation to the selection ofmaterials. However, care must be taken to ensure that allreasonable enquiries are made of the specialist in relationto the material supplied, irrespective of directions givenby the client.

While the architect or engineer is able to rely on theservices of specialists, they are still expected to have anadequate knowledge of relevant legislation, regulations,by-laws and professional codes. Moreover, they arerequired to use this knowledge to adequately advise theclient to ensure the design complies with any suchrequirements. Failure to advise a client of the effect ofregulations upon the design, or even upon neighbouringproperties28

, may render a design professional liable.

Site ConditionsPrior to the commencement of any construction

work, there is likely to be an obligation upon the architector engineer to carry out a site inspection in order todetermine whether, and if so to what extent, a siteinvestigation is warranted. This touches on therequirement of the design professional to engage theservices of more qualified individuals, as he or she mayneed to engage a specialist engineer to provide advice inrelation to the site itself. In any event, the extent of theinvestigation depends on the circumstances of each case29 •

If adequate information is available about a particular site,a design professional might not be expected to carry out adetailed investigation.

Contract AdministrationWhere a design professional is engaged to provide

contract administration services they assume responsibilityfor ensuring that construction takes place within a

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reasonable time frame. The design professional must usetheir professional skill to issue instructions and advice toseek to ensure that construction proceeds according toschedule and within budget.

The reasonableness of the instructions issued by thedesign professional will depend on the circumstances ofthe case and the terms of the contract between the ownerand the head contractor.

One likely role of the design professional as contractadministrator is to issue certificates ofcompliance enablingthe builder to receive payment from the owner. The designprofessional is at risk of some exposure where thecertificates are issued negligently in that either the workdoes not conform with the building contract or the workis over-valued. However, the responsibility of the designprofessional does not extend in this case to situations wherea reasonable inspection would not have disclosed thedefect.

Performance of the Construction WorkWhere a contractor is employed to perform normal

contract administration duties, there is in general noobligation on design professionals to direct the contractorin relation to construction activities such as the way inwhich a building is constructed or the methods employedto build it. In this scenario, it is the role of the designprofessional to simply ensure that the completed workscomply with the contract (see next section). Any attemptof a design professional to direct a contractor as to theway in which works are to be executed may result in someexposure to the design professional for any injury resultingfrom the contractor complying with the designprofessional's directions.

The extent of the design professional's duty in thiscontext is best expressed as being a duty to advise thecontractor when procedures undertaken are unsafe orinadequate. It does not, as outlined above, extend toinclude directions in relation to the way in which work isto be undertaken. However, complicity in allowing unsafepractices in the construction work to continue may leadthe design professional to being exposed for personalinjury suffered as a result of that defective constructionwork30 • This occurred in Florida Hotels v Mayo31.

However, this case was somewhat unusual as there wasno head contractor and the workers were employees ofthe owner.

Supervision & InspectionOne of the obligations of the design professional is

likely to be to ensure that the quality of work being carriedout complies with that required by the contract. Thestandard of inspection required depends on the work beingperformed and the terms of the contract under which thedesign professional is engaged. In any event, the designprofessional should be expected to conduct suchsupervision and inspection as is necessary to ensurecompliance with the contract. While the standard of caredepends on the circumstances of the construction work,

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there is authority to suggest that there are some stages ofconstruction which always require careful inspection,particularly where that work is to be later concealed byfurther work32

•

The duty of the design professional does not usuallyextend to advising the contractor of the need for additionalsafety precautions but such a responsibility may beimposed in circumstances where the design professionalis specifically asked to advise on such matters33 or wherethere is no main contractor34

• In conclusion, it should benoted that the obligation of inspection is likely to be acontinuing duty as stated by the Court ofAppeal in Sheldonv McBeath35 . In that case, it was held that the obligationto inspect the footings ran from the commencement of thearchitect's supervision of the construction to completionand handover.

STATUTORY LIABILITYIn addition to contractual and tortious liability,

design professional can also incur liability under the TradePractices Act 1974 (Cth) and, in New South Wales, theFair Trading Act 1987 (NSW).

The Trade Practices Act will only impose liabilityupon professional practises of architects and engineersconducted by corporations. Relevant to the practise ofdesign professionals are the provisions relating tomisleading and deceptive conduct, false or misleadingrepresentations, misleading conduct in relation to servicesand false representations or other misleading or effectiveconduct in relation to land36

• In addition, the impliedwarranties provided for by Section 74(1) of the TradePractices Act 1974 (Cth) that services will be renderedwith due care and skill and any materials supplied will bereasonably fit for the purpose for which they are supplied,covers building contracts and the services of designprofessionals.

The Trade Practices Act provides remedies forbreaches of its provisions. However, there is a dearth ofreported cases concerning liability under this Act.Historically, the courts have been reluctant to view advicegiven as part of a construction contract as being subject toliability pursuant to section 52 of the Trade Practices Act37.

However, this position changed in Bond CorporationPty Limited v Thiess Contractors Pty Limited38

• In thatcase French J could not find any aspect of the role of theprofessional engineer which took that activity outside theclass of conduct falling within the description "trade orcommerce". In another case, it was held that an architecthad breached the provisions of section 52 when makingrepresentations concerning the cost for which a housecould have been built. More recently the NSW SupremeCourt held that an architect's report was misleading anddeceptive within the meaning of section 52 when it statedthat a building was free of asbestos4o•

The Fair Trading legislation in the various Statesmirrors the provisions of the Trade Practices Act 1974.However, its provisions apply to individuals as well as tocorporations and it extends the meaning of "trade orcommerce" to include "any business or professionalactivity"41.

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IMPACT OF BRYAN V MALONEY

The caseThe issue of whether a builder might be liable in

tort towards subsequent owners of a property for defectscausing diminution of the value of that property (ie pureeconomic loss) came before the High Court of Australiain Bryan v Maloney42. The judgment is important since inreaching their position, the majority judges (Mason CJand Deane and Gaudron JJ in a joint judgment and TooheyJ in a separate judgment; Brennan J dissenting) overcameconsiderable authority to the contrary. Although thedecision concerns a professional builder, it is at leastarguable that it may have some implication on the potentialliability of a design professional.

The facts of the case are straightforward andprobably well known amongst the readers. Bryan was aprofessional builder who constructed a house inLaunceston for his sister-in-law, completing the work inDecember 1979. Despite the family relationship, it wasnever suggested that their business relationship wasanything other than an ordinary commercial transactionbetween a professional builder and his client. The housewas subsequently sold and Mrs Maloney purchased thehouse from the second owners in May 1986. Prior to thepurchase, she inspected the house on three occasions,specifically looking for cracks on the external walls. Shenoticed no cracks or other defects. After six months fromthe date of purchase, the walls began to crack. The fabricof the house suffered extensive damage. The reason forthe cracks and subsequent damage was that the house hadbeen built on footings which were inadequate to withstandthe seasonal changes in the clay soil beneath.

Mrs Maloney brought a negligence action againstBryan and succeeded at first instance. She recovered thecost of remedying the inadequate footings and theconsequential structural damage. Bryan's appeal wasdismissed by the Tasmanian Full Court. He appealed tothe High Court. The sole issue was whether professionalbuilders owe a duty of care to subsequent owners to avoidthe diminution of value suffered when a latent defect in astructure becomes manifest.

The Court, in the leading judgment, emphasised thata duty of care will only arise where there exists arelationship of proximity between the parties with respectto both the relevant class of act or omission and the relevantkind of damage. It had been noted in Sutherland ShireCouncil v Heyman43 that the nature of the damage may berelevant to the existence and scope of a duty of care. Thiswas confirmed in Bryan v Maloney44 where the Courtsought to differentiate between different kinds ofeconomicloss which may arise in a relevant category of case45

• TheirHonours recognised that the builder would be liable to asubsequent purchaser or to anyone who came onto thepremises and suffered injury to personal property as a resultof the builder's negligence. They considered that thedistinction between physical damage to property andeconomic loss in the form of a diminution in the value ofthe house was essentially a technical one and that if

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anything the latter was more readily foreseeable and lessremote than ordinary physical damage46 •

Their Honours considered that the recognition of aduty of care owed by a builder to his client was consistentwith two main policy considerations47

• These were to avoidon "imposition ofliability in an indeterminate amountforan indeterminate time to an indeterminate class"; (alsoknown as the ''floodgates argument") and, secondly, thatin a competitive world one person's legitimate gain canbe another person's loss. They considered that in thecircumstances where the builder was, in any event, undera duty of care to the first owner to avoid physical injury tothe owner's person or property by reason of inadequacyof the footings, there could be no real question ofinconsistency between the existence of a relationship ofproximity with respect to that particular kind of economicloss and the legitimate pursuit by the builder of his or herown financial interests.

Therefore, unless the position was altered by meansof a specific provision in the building contract, buildersowe a duty of care in tort as well as in contract to theirclients. Nevertheless, the existence of a contractualrelationship was not irrelevant to either the extent ofproximity or the nature of the duty of care48 :

"In some circumstances, the existence ofa contractwill provide the occasionfor, and constitute afactorfavouring the recognition of, a relationship ofproximity either between the parties to the contractor between one or both ofthose parties and a thirdperson. In other circumstances, the contents of acontract may militate against recognition of arelationship ofproximity under the ordinary law ofnegligence or confine, or even exclude the existenceof, a relevant duty of care."

Having established this framework, the majorityjudgment then examined the relationship between thebuilder and subsequent owners. In relation to claims forphysical injury or damage, the majority judges stated thatthey considered there was no distinction between therelationship of proximity between the builder and theoriginal owner and the proximity between the builder andsubsequent owners. It was noted49 that Mr Bryan and MrsMaloney would correspond with the architect and theinjured plaintiff in Voli v Inglewood Shire Council50•

In so far as pure economic loss was concerned, theirHonours held51 :

"It is likely that the only connection between sucha builder and such a subsequent owner will be thehouse itself Nonetheless, the relationship betweenthem is marked by proximity in a number ofimportant respects. The connecting link of thehouse itself is a substantial one. It is a permanentstructure to be used indefinitely and, in this country,is likely to represent one of the most significant,andpossibly the most significant, investment whichthe subsequent owner will make during his or herlifetime. It is obviously foreseeable by such abuilder that the negligent construction ofthe house

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with inadequatefootings is likely to cause economicloss ... to the owner of the house at the time whenthe inadequacy of the footings first becomesmanifest ... "

Their Honours reiterated the policy considerationsrelevant to the imposition of liability and noted that bothwere important to the time span in which liability to asubsequent owner might arise. It was said that theresponsibility undertaken by a builder is to erect a structureon suitable footings that will support it for a period oftime during which there are likely to be several subsequentowners. The length of that time span would be limited byreasonableness, damages would have to be foreseeable andthe nature of the duty of care would be determinedaccordingly. In any event, the time span would becomparable to that which applies to the relationship ofproximity which exists in relation to physical injury toperson or property52. .

Another policy reason raised as supportIng therecognition of a relationship of proximity giving rise tothe imposition of a duty of care on Mr Bryan was thesupposed superior knowledge, skill and experience in theconstruction of houses. This meant that the builder wouldbe better qualified and able to avoid, evaluate and guardagainst the financial risk posed by latent defects due tonegligent construction53.

The majority judges were aware that their conclusioncontradicted the views expressed by the House of Lordsin D & F Estates Ltd v Church Commissioners54 andMurphy v Brentwood District Council55

• In the formercase, it was held that no duty of care was owed by a builderto subsequent lessees of a property, while in the latter thisapproach was extended so that a local council was h~ld

not to owe a duty of care to the original home o\vner WIthrespect to the council's assessment and passing of plansfor the foundations. Instead, in their leading judgment,their Honours preferred the view adopted by the Canadian56

and New Zealand57 authorities.Before addressing the ramifications of this decision

on the potential liability ofdesign professionals, it is usefulto examine the judicial treatment that Bryan v Maloney58

has received in other building cases in two jurisdictions.

OTHER CASES

Woollahra Municipal Council v Sved & Ors59

Mr & Mrs Goddard purchased land in Vaucluse,Sydney, in late 1985. They subsequently applied for theconstruction of a two-storey house on the property. Mostof the house was built in 1986 and the Goddards moved inthat year. The construction work was undertaken by MessrsLuigi and Giuseppe Di Blasio ("the builders"). .

Mr Goddard took overall charge of the constructIonand made important decisions in relation to the work atvarious stages. The builders oversaw the work and didmuch of the work through their employees and sub­contractors. From time to time the local council made

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inspections of the construction to ensure compliance withthe plans and specifications.

In May 1987, the Goddards put the property on themarket. On 19 August 1987 it was offered for sale atauction. At that time, a final inspection of the property bythe council revealed that certain matters were outstandingand were required to be completed.

The Sveds were successful at the auction. With theirsolicitor present at the auction, they had persuaded theagent to make changes to the contract immediately priorto the bidding which related to the fact that the councilhad not yet issued the certificate that was then requiredunder section 317A of the Local Government Act 1919.As a result, a clause was added to the contract whichprovided that if a certificate of compliance was not issuedby the council prior to completion then the purchasers wereentitled to rescind the contract.

The purchase was completed on 14 October 1987 atwhich time the certificate was still not available. The Svedschose not to rescind the contract but to proceed in theabsence of the certificate relying on a telephoneconversation with an employee of the council who hadinformed them that the certificate was "in the pipeline."

They moved into the property on 22 October 1987(coincidentally, on the day that the section 317A certificateeventually issued) and it soon became evident that thehouse was defective.

The Sveds made claims against the council (whoinspected the property and issued a certificate in respectof its condition), against the Goddards and against thebuilders. They sued the various parties claiming damagesmeasured by the difference in value between the propertywith the building as constructed and the property as thebuilding should have been constructed. Alternatively, theysought the cost of rectifying the defects.

The Sveds were successful against the council butnot against the Goddards and the builders. The Councilappealed and the Sveds cross-appealed with respect to thedismissal of the claims against the Goddards and thebuilders. The relevance of this decision in the context ofthis paper relates to the liability of the builders.

The liability of the buildersThe claim against the builders was that they owed a

duty of care to Mr & Mrs Sved as subsequent purchasersof the property in a similar manner as Mr Bryan had oweda duty to Mrs Maloney.

At first instance, Giles J was not satisfied that theSveds had established either a specific or general relianceto give rise to duty of care. However, his decision wasprior to the High Court decision in Bryan v Maloney60.

On the question of the liability of the builders, the Courtof Appeal delivered three separate judgments and it isinstructive to consider each in turn.

Clarke JA quoted at length the various passages ofthe leading judgment from Bryan v Maloney61 and saidthat the majority was of the view that the distinctionbetween physical damage and mere economic loss wasessentially technical in the circumstances of that case. Heidentified two factors in the case which pointed in thedirection of allowing the claim as follows:

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the connecting link of the home itself;the causal proximity which in the absence ofany intervening negligence or causative eventexisted between the loss and the builder'snegligence.

Clarke JA explained that because the majority couldfind no significant factor telling against the finding in MrsMaloney's favour they concluded that the requisiteproximity existed to establish a duty of care. The twocrucial factors he identified were "assumption ofresponsibility and known reliance". He noted that themajority referred to the particular kind of loss and thenature of the property as most important factors in theirconclusion so that "the decision is not directly decisive ofthe question whether a relationship ofproximity exists inother categories of case as regards other damage".

Clarke JA limited the effect of the case t062:

"... the liability for economic loss of the builder,who built a permanent residence pursuant to aconstruction contract which contained no termslimiting or excluding its liability, to a subsequentowner arising from the existence of latent defectsdiscovered after the date of purchase of theresidence in circumstances where there was nointervening negligence or other causative event. "

He said that the present case contained a number offeatures distinguishing it from Bryan v Maloney63 asfollows:

It was not accurate to describe the Di Blasiosas the builders of the home, as the owners ofthe home exercised ultimate control over thecontent and quality of some of the work.There was no evidence that the Sveds reliedupon the Di Blasios as they decided to protectthemselves by making completion of thecontract dependent upon the issue of a Section317A Certificate.Bryan v Maloney64 deals with a latent defect.In this case many of the defects would havebeen discovered upon a reasonablycomprehensive inspection.There was a specific reference in Bryan vMaloney65 to the absence of interveningnegligence. In the present case there wasintervening negligence of the Council onwhich Sveds relied.

Cole JA considered that the majority judgment inBryan v Maloney66 established that a duty of care is owedby a builder to subsequent purchasers for pure economicloss arising from defective construction where there is"sufficient proximity" between the parties. Proximity inthat case was based on the permanent nature of thedwelling and the fact that the purchaser intended to use itfor a substantial period.

His Honour categorised the reliance upon a builderby a subsequent purchaser as "general reliance".

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Notwithstanding that there may be instances where apurchaser can establish specific reliance through directenquiry, His Honour found that it was clear that generalreliance can be sufficient to establish the requisiteproximity and a duty of care. His Honour saw no conflictbetween reliance upon a professional builder and a morespecific reliance upon other parties such as a local council.

Cole JA noted that loss suffered by a subsequentpurchaser could be incurred through either the defectivework of the builder or through a certificate produced by acouncil stating that the building complied with relevantordinances etc. Each of these potential sources of losscould create sufficient proximity so as to give rise to aduty of care67

• His Honour held that as a matter ofprinciplethe purchaser should not, merely because of enquiriesmade with the council, be deprived of the relationship ofproximity to the builder as recognised in Bryan vMaloney68

which might give rise to the cause of action from the failureof the builder to perform the work correctly.

However, in the present case His Honour found that"there was no reliance at all, not even general reliance,by Mr and Mrs Sved upon the builders".

Priestly JA (in minority) also did not consider that afinding of actual reliance by the Sveds upon the obtainingof the 317A certificate precluded a finding of generalreliance by the Sveds on the builders. His Honour wassatisfied that for the purpose of the reasoning in Bryan vMaloney69 the owner builders constituted "professionalbuilders". As such, he found that they should have beenaware that a subsequent owner was likely to assume thatthe house had been completely built and that thestormwater drainage system and waterproofingarrangements above the rumpus room were in factadequate. Accordingly, His Honour found the buildersliable to the Sveds.

Zumpano &Anor v Montagnese &Anor70

In 1985 the Zumpanos, who were builders, built ahouse on land that they owned. During the building theyhad a licensed plumber carried out various plumbing work.He did not install a boundary trap. Subsequently the housewas listed for sale and the Zumpano's agent advised theMontagneses, before they bought the property, that thehouse had been built by the Zumpanos and that it was a"builder's own home".

The Montagneses moved into the house in 1987 andthen experienced a few sewerage blockages. In 1991,while their plumber was investigating one such blockage,it was discovered that the boundary trap had not beeninstalled. In 1992, they installed a boundary trap at theirown cost.

The commenced proceedings against the Zumpanosalleging that they owed a duty of care and assumedresponsibility to subsequent purchasers of the property toensure that the works performed by and/or their behalfwere carried out in a proper and tradesmanlike manner, inaccordance with good building practise, the VictorianBuilding regulations and the requirements of theMelbourne Metropolitan Board of Works.

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In the Supreme Court of Victoria Justice Mandiefound that the magistrate had not erred in holding thatsuch duty existed and had been breached. He held thatthe relationship between the Zumpanos and theMontagneses went beyond that of simply vendor andpurchaser because the Zumpanos advertised the house tothe knowledge of the Montagneses as a "builder's ownhome". This gave rise, in the light of Bryan v Maloney71,

to a relationship of proximity on the basis of inferredreliance by the Montagneses and/or of assumption ofresponsibility by the Zumpanos.

However, the Victorian Court ofAppeal overturnedthis decision. It effectively found that the representationthat the house was a "builder's own home" was not relevantin determining either the nature or extent of the duty owedby the Zumpanos at the time of construction. It was toohigh a standard on the Zumpanos to say that they shouldhave inspected the work of the plumber to see whetherthe trap had been installed and that the Zumpanos werenot entitled to rely on the fact that an apparently competentplumber undertook the work and provided a certificate inrelation to the work.

IMPACT FOR DESIGN PROFESSIONALSIn the context of design professionals the question

must be put as to whether the principles enunciated inBryan v Maloney might effect their potential liability. Ithas been said72 that on the widest view of its effect, Bryanv Maloney will impose upon builders who erect or alterany kind of building at least a "prima facie" duty of careto all those who come to own or even only to use or occupya building and that duty will extend to all defects providedonly that they are "latent".

Other views have been expressed as to theimplications of Bryan v Maloney, and perhaps mostpopularly that the High Court decision should be viewedas a finding based upon specific facts rather than oneapplicable to a broad category of cases73.

There are, however, certain sections of the majorityjudgment in Bryan v Maloney and the decisionsconsidering it which suggest that a design professionalmay have a duty to subsequent owners of property toprevent pure economic loss arising from latent defects inproperty.

The majority judgmenC4 noted that Mr Bryan andMrs Maloney would correspond with the architect and theinjured plaintiff in Voli's case75

• Whilst this comparisonwas made in the context of discussing a builder's duty tosubsequent owners in relation to claims for physical injuryor damage, it may ultimately be seized upon to suggestthat the extension the High Court were prepared to makein relation to a builder's duty of care from claims forpersonal injury or damage to claims for pure economicloss might likewise be made in relation to a designprofessional's duty of care. This view is in the author'sopinion strengthened when the comments the majoritymade in relation to the somewhat technical distinctionbetween property damage and pure economic loss are takeninto account.

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The majority judges in Bryan v Maloney were ableto find that a "relationship ofproximity" existed betweena builder and a subsequent owner particularly because ofthe "connecting link" of the house. This "connecting link"will be present in many potential claims against designprofessionals and could, therefore, form part of the basisof a finding that a similar "relationship ofproximity" existsbetween a subsequent owner and a design professional togive rise to a similar duty of care.

The policy considerations raised by the majorityjudges might also in the author's view not necessarily affectthe proposition that a design professional owes a duty ofcare to avoid pure economic loss. The rationale that the"time span" should be comparable to that which appliesto the "relationship ofproximity" which exists in relationto physical injury to person or property would equallyapply to design professionals. Thus the ''flood gatesargument" could conceivably be negated.

The concept of "reliance" is in the author's viewquite significant in the finding of the majority judges inBryan v Maloney. It is also significant in Sved's case inwhich the majority held that reliance by the purchaser ona statutory certificate could prevent the existence ofreliance on the builder which might give rise to a duty ofcare on the part of the builder76• If this is correct, it isconceptually somewhat difficult to foresee how a designprofessional could owe a duty of care to a subsequentowner of property in the normal "construction situation"where there are many parties, including the designprofessional, on who a subsequent owner might rely.However, in the author's opinion, the part of Cole JA'sjudgment in Sved's case at which he suggests that ''just asone can have more than one cause of a loss so can onehave more than one reliance in the purchase ofa dwelling"has much merit and appears to overcome the conceptualdifficulty raised above.

Another important factor in the majority judges'decision in Bryan vMaloney which may effect the potentialliability of a design professional was the absence of anyspecific term in the contract bearing on the relationship ofproximity. Whilst not expressly stated, it is likely thatany form of exclusion clause would be recognised as sucha "specific term". Accordingly, if a design professionalensures that there is an exclusion clause contained withinhis or her contract to provide professional services thenany potential duty of care to subsequent owners may benegated.

In summary, it is impossible to express a view withany certainty as to whether a design professional owes asubsequent owner of a property a duty of care to avoidpure economic loss. However, it is at the very leastarguable that such a duty is increasingly likely to be owedin one or more of the following circumstances:

where there is no specific term in a designprofessional's contract bearing on the"relationship of proximity" such as anexclusion clause;where there is no "intervening negligence"from any other party involved in the

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construction of the building (although ColeJA in Sved's case appears to suggest that thismay not be an important factor);where the "pure economic loss" results froma latent defect;where the construction relates to a dwellinghouse;where the subsequent owner has expressly orimpliedly relied on the work of the designprofessional.

DAMAGES FOR DEFECTIVE DESIGNWhen seeking to quantify any claim against a design

professional regard will need to be had, at least in theory,to whether the claim is being brought in tort or contract.The aim of the Court where a party has breached a contractis to put the innocent party in as good as, or the same,financial position as it would have been in had the guiltyparty not breached the contract.

However, the principal underlying the award ofdamages in tort is, generally speaking, that of restitutiointegrum. In other words, the object is to restore a plaintiffto the position in which he or she would have been placedin if the wrongful act had not been committed77

•

In practice this distinction is of little relevance as agreat majority of cases concerning professional negligenceby design professionals portray that the measure ofdamages has been the cost of making good the defectivework78

•

There may be some difficulty in quantifying a claimbrought against a design professional only in contract, asevidenced by the following comparison. Where a plaintiffcommences proceedings against a builder for breach ofcontract he or she need only prove the builder's contractualobligation to erect a building in accordance with thecontract. If the builder has failed to do so then the plaintiffis entitled to be put, in terms of money, into the sameposition as he or she would have been in if the builder hadduly completed the building. However, where a designprofessional is sued, it is more difficult for a plaintiff toestablish what his or her position would have been if thedesign professional had in fact exercised proper care andskill. For example, the exercise of proper care and skillby a design professional may lead to a situation where anowner may completely abandon all idea of building ormay lead to a situation where there is a substantially highercost in completing the building.

The loss resulting from a negligent design may bethe difference between the value of the building afterconstruction and the value it would have had if builtwithout the negligent design. Alternatively, the measureof damages may be the cost of reinstating the building toits original form after deducting the additional constructioncosts which would have been incurred had there not beena negligent design. Whether the measure of damages isthe cost of reinstatement or the diminution in value is likelyto depend upon "the reasonableness ofthe plaintiff's desirefor reinstatement, having regard to the advantage to theplaintiffofreinstatement and the extra cost to the defendantin having to pay for reinstatement"79.

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Where it is evident that a plaintiff intends to keep aproperty and occupy it for some period of time, then theplaintiff is entitled to the cost ofhaving the work rectified80.

Where it can be shown that the defective work can beremedied without resorting to demolishing and rebuildingthe work, so that the plaintiff obtains substantially whatthey contracted for, a claim for complete demolition andreconstruction will not be successful81 •

In Orlit Pty Ltd v IF & P Consulting Engineers PtyLtd82 the defendant engineering company providedstructural and civil engineering services for thedevelopment of a large number of residential units inBrisbane. Structural damage became evident which theplaintiff developer attributed to foundation movementcaused by changing moisture content in the soil. Testsshowed that the soil was highly reactive. The plaintiffalleged that the design engineer employed by the defendantshould have adopted a stiffened raft design for thefoundation rather than the floating slab design which wasused.

Moynihan J held that the engineers were liable innegligence since the relevant practice of design engineersat the time was to adopt a stiffened raft design83 • On appeal,the damages were reduced by twenty per cent to accountfor the extent to which the negligence was not responsiblefor the loss. The evidence showed that vegetation andcompaction of the soil, for which the engineers were notaccountable, contributed to the problem and Moynihan Jrecognised the possibility that a stiffened raft design maynot have overcome the eventual problems.

The cost of reinstatement may occasionally be themore reasonable measure even from a defendant'sviewpoint. In Auburn Municipal Council v ARCEngineering Pty Ltd84 an engineer was found negligent inthe design of a structure by failing to provide for pilefootings. The Court ofAppeal held that the loss should bemeasured by the cost required to have the contractperformed, rather than by a comparison of values as,otherwise, the plaintiff would receive more than fullindemnity.

In that case, Hutley J A said:"... The engineer whose negligent design caused

the erection of useless structures cannot be heldliable to erect proper structures. His negligence isexhausted when it is necessary to dispense with hisdesign. Ifone ofthe consequences ofhis negligenceis that the respondent's lands are encumbered withuseless structures so that it is necessary that theybe removed ... , that is a natural consequence ofnegligence, but when the land is restored the causaleffect of the negligence is over. By parity ofreasoning, I do not consider that the respondentcan recover the costs ofdesigning a new and moreadequate structure."

Negligence in the performance ofprofessional dutiesmay cause consequential loss which is recoverable unlessthe loss is too remote. In T & S Contractors Ltd vArchitectural Design Associates85 development continued

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for more than one additional year because of negligentdesign. The housing market fell at the same time and theloss of potential sale proceeds was claimed. It was heldthat any permanent loss of sale proceeds was not tooremote and was recoverable.

CONCLUSIONThis article has sought to summarise the main areas

of potential liability arising from the involvement of adesign professional in any construction act~vity.. ~he

starting point for any such analysis must be IdentIfyIngwhat it is the design professional was retained to do andthen seeking to ascertain whether the design professionalreached "the necessary benchmark" in the performanceof this retainer.

However, it is important to recognise that thepotential liability of the design professional i~ terms ofboth the types of acts for which a design profeSSIonal mayhave some exposure and the types of losses for which athird party may be able to seek compensation appears tobe limited only by a small number ofpolicy considerations.The court's development of the notion of proximity shouldbe closely monitored to allow informed advice to beprovided on the potential liability of a design professional.

FOOTNOTES1. RW Miller & Co Pty Limited v Krupp (Australia)

Pty Limited (1992) 11 BCL 74.2. (1993) Aust Torts Reports 81-208.3. Sheldon v McBeath (1993) Aust Torts Reports 81-

209.4. Op cit at 62,051.5. (1963) 110 CLR 74.6. (1932) AC 562.7. (1963) 110 CLR 74 at 84.8. (1965) 113 CLR 588 at 603.9. (1989) 18 NSWLR 119.10. (1962) 1 WLR 585.11. (1990) 102 FLR 272.12. [1984] 3 NSWLR 396.13. D & F Estates limited v Church Commissioners For

England (1989) AC 177; Murphy v BrentwoodDistrict Council (1991) 1 AC 398; Department ofthe Environment (UK) v Thomas Bates and SonLimited (1991) 1AC 499; Caparo Industries PIc vDickman (1990) 2 AC 605.

14. Ibid.15. Also cited in Bryan v Maloney (1995) 182 CLR

609. See later discussion.16. Ibid at p84.17. (1965) 113 CLR 588 at 603.18. (1981) 27 SASR 515.19. (1980) 32ACR251. The subsequent appeal to the

High Court was not decided on the issue of thearchitect's liability.

20. Ibid at 273.21. Ibid at 274.22. Bennetto v Kostromin (1983) 5 BCLRS 377.23. Skinner & Edwards (Builders) Pty Limited v

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Australian Telecommunications Corporation(1992) 27 NSWLR 567.

24. Dillingham Constructions Pty Limited v Downs[1972] 2 NSWLR 46.

25. Pullen v Gutteridge Haskins & Davey Pty Limited[1993] 1 VR 27.

26. Young v Tomlinson [1979] 2 NZLR 441.27. McBeach v Sheldon (1993) Aust Torts Reports 81­

208.28. Pantalone v Alaouie (1989) 18 NSWLR 119.29. Pullen v Gutteridge Haskins & Davey Pty Limited

[1993] 1 VR 27.30. Voli v Inglewood Shire Council (1963) 110 CLR

74.31. Ibid.32. Florida Hotels Pty Limited vMayo (1965) 113 CLR

588; Sheldon v McBeath (1993) Aust Torts Reports81-209.

33. Clay vAJ Crump & Sons Limited [1964] 1 QB 533.34. Florida Hotels Pty Limited vMayo (1965) 113 CLR

588.35. Ibid.36. Trade Practices Act 1974 (Cth), Sections 52, 53,

53A and 55A respectively.37. Westham Dredging Co Pty Ltd v Woodside

Petroleum Development Pty Limited (1983) 66 FLR14.

38. (1987) 14 FCR 215.39. Gordon M Jenkins & Associates Pty Limited v

Coleman (1989) 23 FCR 38.40. Multiplex Constructions Pty Limited v Amdel

Limited (1991) 10 BCL 115.41. For example, Fair Trading Act 1987 (NSW) Section

4(1).42. (1995) 182 CLR 609.43. (1985) 157 CLR 424.44. Ibid.45. Op cit at 623.46. But see reservations ofToohey J at (1955) 182 CLR,

at 657.47. Ibid at 623.48. Ibid at 621.49. Ibid at 624.50. Ibid51. Ibid at 625.52. Ibid at 627.53. Ibid at 628.54. [1989] AC 177.55. [1991] 1 AC 398.56. Winnipeg Condominium Corp No. 36 v Bird

Construction Co Ltd, an unreported decision of theSupreme Court of Canada which did not accept theapproach to the relationship between contract andtort adopted by the House ofLords in D & F Estatesand Murphy but which referred to and adopted thedecision of the Full Court of Tasmania in this case.

57. Bowen v Paramount Builders [1977] 1 NZLR 394;Mt Albert Borough Council v Johnson [1979] 2NZLR 234; Askin v Know [1989] 1 NZLR 248.

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58. Ibid.59. (1996) ATR 81-398.60. Ibid.61. Ibid.62. Ibid at 133.63. Ibid.64. Ibid.65. Ibid.66. Ibid.67. Here, Cole J A cited March v E & MH Stramare

Pty Ltd (1991) 171 CLR 506.68. Ibid.69. Ibid.70. (1997) ATR 81-406.71. Ibid.72. Brooking J A In Zumpano's case at p63, 703.73. Clarke J A in Sved's case at p63, 570.74. At p624.75. Ibid.76. Although note the judgment of Cole J A in which

he found that there can be both general reliance bythe subsequent owner on a professional builder andspecific reliance on others considering the qualityof the building.

77. South Australia v Johnson (82) 42ALR 161 at 169­171.

78. City ofBrantford v Kemp and Wallace-Corruthersand Associates Limited (1959) 21 DLR (2d) 670.

79. Pantalone v Alaouie (1989) 18 NSWLR 119.80. Sved v Council of the Municipality of Woollahra

(1995) Aust Torts Reports 81-328.81. Sheldon v McBeath (1993) ATR 81-209.82. 9 August 1993, Qld Court of Appeal, unreported.83. (1995) 11 BCL 260.84. [1973] 1 NSWLR 513.85. Unreported, 14/10/1992, QB, Rich J.