Engineer Negligence and Compensation in Australian Construction Law

Introduction

To begin the research for this case and the argument that follows, one must first examine the case and determine what is essential. It is assumed that the engineer was negligent because he should have known about the circular advising that further structural support would be required for the type of building he was constructing. It is not enough to rely upon twenty years of experience in the field, because situations change in ways that may negate that experience. Thus, this does not appear to be a legitimate argument for the engineer. It could be argued that the engineer was never made aware of the circular and that the negligence lay with whoever filed the document before he had seen it. Unfortunately, this would seem to be immaterial, because it is the engineer's responsibility to stay abreast of important changes within the industry — not that of anyone else. The fact that he had not encountered the contents of the circular within a six-month period is difficult to explain for someone who is well-regarded in his field. It would therefore be difficult for the engineer to find a legitimate excuse for his actions.

Two other facets of the case remain. First, how is the building owner to be compensated for this mistake? Since the engineer performed the work in good faith with the knowledge he possessed, it could be argued that his failure was not one of incompetence and that the entire cost should reside with the owner. However, this argument has already been refuted. Most likely it will be found that the owner of the building should be fully compensated for the cost of reconstruction. Since the current building is completely unusable and another could be constructed on the same site with adequate structural support, the owner should be permitted to have a correctly constructed building built at that site if that is his wish, with all additional costs borne by the engineer. The second issue concerns the amount of compensation. The fact that land has dropped in value should not affect the cost of constructing a new building, and the projected cost of the new building has already been established.

The role of the advisor in this case is to examine legal precedent and determine what the likely outcome of the case will be, then discuss that assessment with the client. This analysis is based on current law and the particulars of the case, taking into account the three separate items identified above as pertinent.

Engineer's Culpability

This is the main thrust of the case. Under established case law, it does not matter that the engineer was originally performing the work as a favour for a friend at a reduced rate (Brickhill v Cooke, 1984). What is important to the case is that the two parties had a contract for the building. The engineer agreed to do the work for a lower price as a gesture of goodwill, but the owner would still have expected the work to be completed to a standard that allowed him to conduct business on the premises. The court therefore cannot take into account that the work was performed at a lower price due to the parties' friendship.

The primary problem is the relative incompetence of the engineer, and there is precedent in Australian courts and legislation that addresses this issue directly. As Chris Lenz (2012) states, "Construction lawyers and their plaintiff clients are confronted with having to identify the likely cause or causes of construction defects. Therefore the onus of determining the cause of the issue is with the lawyer and complainant." In this particular case, all that the lawyer and plaintiff need to do is refer to the circular discussed in the case study. The circular reportedly advised all relevant personnel that a certain type of construction required additional structural support. The case states that the building was unique — meaning it was likely a type the engineer had not constructed before — which should have prompted him to pay even closer attention to any new knowledge available before taking on the job. His failure to do so indicates incompetence in this particular matter.

Whether the engineer had previously managed other successfully completed projects is also immaterial. Because this was a unique construction undertaking, the engineer should have recognised the need to consult recent documentation that would have given him a better understanding of the project. The fact that such a document had actually been sent to his office is deeply problematic: it demonstrates that he conducted no prior research but relied solely on knowledge acquired during previous jobs. The unique nature of this construction did not appear to prompt any effort to seek additional guidance.

The building that the engineer designed failed. The case states that workers could not safely use it, rendering the building condemned. The fact that a new building designed and constructed by an engineer with a "sound reputation" is nonetheless unsafe to occupy strongly suggests that the engineer was incompetent and culpable in this instance.

Relevant precedent also exists for this type of situation. In Carosella v Ginos & Gilbert Pty Ltd (1981), an engineer was held liable for failing to keep his professional knowledge up to date. The critical point in the present case is that the circular — which contained the knowledge necessary to design and construct the project safely — had been sent to the engineer's office six months before the project commenced. This demonstrates that the engineer did not work to keep his knowledge current, and that this failure was a major cause of the building's structural inadequacy. In accordance with Carosella v Ginos & Gilbert Pty Ltd (1981), the engineer can therefore be held liable for the damage caused by his negligence. For further context on professional negligence standards applicable to engineers and other professionals, academic and legal commentary consistently confirms that practitioners have a duty to remain informed of developments in their field.

Compensation Type

The owner of the building acted in good faith, relying on his knowledge of his friend's standing as an engineer and expecting that the work would be performed in accordance with best professional practices. Since the owner bore no culpability for the building's failure, he will be compensated in full. In NJF Holdings Pty Ltd v De Pasquale Bros Pty Ltd (2000), the judge found that "the loss is economic where damage consists of a defect in the structure itself arising from inadequate design or building so that the value of the structure is diminished and it may require remediation." This and other precedents establish that, because the engineer designed the building without exercising due diligence to ensure it would perform as intended, the engineer is fully culpable and must make restitution for the building.

Conclusion

The crux of the case is that the engineer performed the job in a faulty manner because he did not use knowledge that was available to him. It does not matter that he had not personally read the memo when it was distributed by the Institution of Engineers, because it had been sent to his office and was accessible. Had he conducted the necessary research, he would surely have found the document. Instead, he proceeded on the assumption that twenty years of experience in the engineering and construction fields would be sufficient to complete a unique type of structure — an assumption that proved to be unfounded. He should be held accountable for his disregard of the new construction requirements imposed by this unique project.

The question of where the new building should be constructed is moot. The original contract specified a building at the original site, and it is entirely understandable that the owner would wish the new building to be constructed there. The additional cost of building at the original site is equally moot. Because the owner's suppliers charge more to deliver to a more distant location, relocating the building would impose ongoing costs that outweigh any savings in construction. In any case, this is irrelevant: the original contract specified construction at a particular site so that the owner could conduct his business from that location. Since he is unable to do so because of the incompetence of his friend the engineer, the owner is entitled to full compensation. The engineer's friendship with the owner, and the fact that he charged a reduced rate, are not relevant to this determination. What is relevant is the contract, the breach, and the remedy required to make the owner whole.

For those interested in the broader legal framework governing construction law and professional liability, established principles in this area consistently support the conclusion that professionals who fail to exercise reasonable care — including keeping their knowledge current — bear liability for the consequences of that failure.

References

Brickhill v Cooke (1984) 3 NSAWLR 396.

Carosella v Ginos & Gilbert Pty Ltd (1981) 27 SASR 515.

Hadley v Baxendale (1854) 9 Exch. 341, 156 Eng. Rep. 145.

Lenz, C. (2012). Guide to identification of construction defects. Retrieved from

NJF Holdings Pty Ltd v De Pasquale Bros Pty Ltd (2000) 16 BCL 116 at 127.