Builder’s obligation to supervise construction works of contractors

Bigby v Kondra & Anor [2017] QSC 37

Daubney J

The plaintiffs’ home was badly damaged in November 2008 as a result of a severe storm. The plaintiffs sued the first defendant, a registered builder, seeking damages for the loss and damage suffered because of the damage to the house.

Relevantly, the first defendant had assigned his rights to indemnity under the insurance policy to the plaintiffs, with the second defendant being given notice of that assignment.

In issue was the liability of the builder and further, the plaintiffs sought a declaration that the second defendant was obliged to indemnify the first defendant in relation to any liability.

Liability

The plaintiffs alleged that the first defendant:

  1. Failed to adequately supervise the construction of the house;
  2. Failed to fix the windows to the jambs in a competent and workmanlike manner; and
  3. Failed to install additional bracing and lateral support above particular window heads.

The first defendant argued, inter alia, that:

  1. Its supervision only extended to work performed by himself, his workers or his subcontractors;
  2. Gateway, the installer of the windows, was contracted directly by the plaintiffs; and
  3. If Gateway was a contractor of the first defendant, the supervision was to a requisite standard and the duty was to exercise reasonable care.

Finding in relation to the first allegation that the first defendant failed to adequately supervise the construction of the house, Daubney J held:

[107] In the circumstances of this case, where the builder had expressly agreed to provide and be remunerated for his supervisory services, it clear that the first defendant owed the plaintiffs a common law duty to exercise due care, skill and diligence in the performance of those supervisory services. That duty was, of course, able to be discharged by the exercise of reasonable care by the first defendant.

[113] In the present case, the first defendant knew that it was important for the windows to be properly installed so as to be able to resist wind loads. Adapting the words of Barwick CJ, this required, at least, that the first defendant had made reasonable arrangements of a reliable nature to be kept informed of the timetable for the installation of these windows, and this should have included clear and express instructions to Gateway that the aluminium fixing frames ought not be obscured by “clipping in” the window frames until the first defendant had inspected, or at the very least had adequate opportunity to inspect, the affixation of the fixing frames.

[114] The fact that the first defendant experienced difficulties in communicating with and obtaining information from the Gateway representative did not relieve him of observance of that duty. If anything, it ought have provided an imperative for him to do what he said he could have, but did not, do, namely instruct Gateway not to commence installation of the subject windows until he was on site to observe.

[116] Due supervision of the installation of these windows would, or ought, have revealed the patent inadequacy of the installation. The windows failed because of the inadequate installation, and this failure was directly causative of the explosive over-pressurisation which destroyed the house.

Daubney J found that the first defendant was negligent under this allegation. While not required to make further findings, his Honour found that in relation to the second allegation there was no negligence because of causation. As to the third allegation, his Honour found that because the plaintiffs failed to address the precautions which a reasonable would have taken, it precluded a finding of negligence:

[145] The amended statement of claim relevantly pleaded an obligation on the first defendant “to avoid foreseeable risks of economic loss, occasioned by reason of defects causing damage to the house and requiring remedial expenses” (para 7), and then asserted that, in those premises, “the first defendant owed the plaintiffs a duty of care to exercise all due care and skill in constructing the house to the standard reasonably to be expected of the builder of domestic residences, including a duty to … use bracing materials of the appropriate width and strength” …

[149] Thus, even assuming in favour of the plaintiffs that the pleaded risk was sufficiently and correctly identified, a necessary inquiry is to identify, with some precision, what a reasonable person in the position of the first defendant would have done by way of response to the reasonably foreseeable risk. A cognate inquiry arises under s 9(1)(c) of the CLA, providing, as it does, that a person does not breach a duty to take precautions against a risk of harm unless, in the circumstances, a reasonable person in the position of the person would have taken the precautions …

Indemnity

Relevantly, the second defendant sought to rely on an exclusion to avoid indemnifying the first defendant. Finding that the property damage happened “as a result of an occurrence in connection with [the first defendant’s] business or product”, Daubney J held:

[167] Rather, in a real and practical sense, the event which directly did the damage was the over-pressurisation event which was of such a magnitude, to paraphrase Mr Fox again, as to have demolished the east wing as though a bomb had gone off …

[168] Accordingly, I find that the relevant “occurrence” for the purposes of this policy was the explosive over-pressurisation event.

As to whether the second defendant could rely on an exclusion, his Honour found:

[179] It is highly relevant, however, that exclusion 15 expressly and unequivocally applies to the construction or erection of any building. This makes it clear, in my view, that the policy ought be read as extending to property damage to a building constructed by the first defendant, provided the contract price did not exceed $500,000. To construe these exclusions otherwise would lead to an unacceptable tension on the face of exclusion 5 and exclusion 15, and render the exception to exclusion 15 completely meaningless.

Judgement was entered for the plaintiffs for the agreed sum of $1,822.490.43, inclusive of interest.

 

David Cormack – Brisbane Barrister & Mediator

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