Sydney Trains v Argo Syndicate AMA 1200 [2024] NSWCA 101

  

Summary of Case

The Appellant (Sydney Trains) successfully challenged a District Court of New South Wales decision that found it had broken the chain of causation in a personal injury case. A commuter had slipped on wet tiles on a stairway, and the court initially held that Sydney Trains was liable because it reopened the stairway despite knowing the tiles were slippery.

The Appellant argued that the injury resulted from a breach of an implied contractual term by the contractor, as the tiles were not reasonably fit for purpose. The Court of Appeal agreed with the Appellant, determining that the contractor’s public liability insurance policy covered the commuter’s injury.

Issues Addressed

1. Implied Contractual Term: Whether tiles provided by a contractor must be reasonably fit for purpose.
2. Breach of Implied Term: Whether the contractor breached this term by providing tiles that were moderately slippery when wet.
3. Causation: Whether the slipperiness of the tiles contributed to the commuter’s injury.
4. Chain of Causation: Whether the Appellant broke the chain by reopening the stairway despite knowing about the tile risks.
5. Insurance Response: Whether the public liability insurance policy should respond to the injury.

Background

In 2016, Sydney Trains hired a contractor to install tiles on a stairway at Penshurst Railway Station. A commuter slipped on the wet tiles and was injured. Testing had shown a moderate slip risk when wet. In 2018, Sydney Trains was found liable for the injury.

Sydney Trains then sued the contractor’s insurer, alleging a breach of an implied contractual term and claiming the insurance policy should cover the liability. The trial judge found that the contractor had breached the implied term and that Sydney Trains had broken the chain of causation by reopening the stairway.

Decision on Appeal

The Court of Appeal upheld that the contractor breached the implied term that the tiles be fit for purpose, rejecting the argument that it was not proven the tile was wet. The court also found Sydney Trains did not break the chain of causation by reopening the stairway. It ruled that the insurance policy covered the injury liability, and no exclusion clauses applied.

Implications

This case emphasizes that multiple factors can contribute to an injury, and the chain of causation is not automatically broken by immediate causes. The ruling also highlights that courts consider the broader commercial context when interpreting insurance policies.

Note: The article was also published on www.aact.lk

 

S.H.A PREMIER CONSTRUCTIONS PTY LTD v LANSKEY CONSTRUCTIONS PTY LTD No BS1485 of 2019

The case covers a few key issues.

Background: This Australian case relates to the issue of a payment schedule. Under the Security of Payment Act, each payment claim shall be replied to by the CA with a payment schedule within a specified period. Also, CA cannot issue one payment schedule for multiple payment claims. If no payment schedule is issued, C is entitled to get paid for the payment claimed (even if there is no entitlement under the contract). CA issued a payment schedule for the payment claims as the payment due is “NIL”. So, the C trying to establish that the additional work they executed is a separate contract rather than variations, so he should be paid as no payment schedule was issued for the additional work/separate contract.

 

1)Is the additional work a variation or a separate contract?

1.     Contract- All V to be in writing as directed by the CA (Superintendent in this case)

2.     Email dated 29 August 2017- From C to CA:

“We have noticed some changes like additional freezer room; therefore, are we to proceed on this basis, or is this subject to variation approval”.

3.     Email dated 30 August 2017- From CA of the E to C:

“Should this result in a cost or time impost pls submit a variation which will be processed in the normal manner. Work orders will be raised on all approved variations. No work to proceed without work orders.”

The above email is significant due to the following reasons:

·         Work orders will be raised

·         No work to proceed without work orders

·         Issued by the CA(in the contract superintendent)

·         The project was conducted thereafter in accordance with that direction

·         The director was never revoked

 4.     So, the above email is an affirmation of the work order as a confirmation of an approved variation.

5.     CA issues number of Work Orders

6.     Conclusion- None of the work orders constituted separate contracts. Each was an approved variation.

 

2) Is there a waiver?

 1.     E waived the requirement for strict compliance with the variation provisions

““A party may expressly or impliedly give up its right to insist on a contractual condition. On the evidence, the referee found that that was what the plaintiff had done. By its conduct throughout it had waived a right to insist on strict performance of the conditions of the Contract with respect to the making of claims generally…” (Hammerschlag J in Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1163 [110] )

“According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a matter inconsistent with that right.” (Mason CJ in Commonwealth of Australia v Verwayen (1990) 107 CLR 394 at [406]-[407] )

2.     Conclusion - E’s conduct in respect of the approval of the additional work on the contract constituted a waiver of its right based on the following:

·         The email of 23 February 2018 did not direct the first respondent to cease all work

·         E intended the C to continue to make enquiries with respect to the requirements for the roadworks.

 

How to avoid such issues: Make sure the CA issue V only uses a pre-defined format, not via email, etc. As the QS, always ask for the V instruction when certifying the payment.

 

Case: https://archive.sclqld.org.au/qjudgment/2019/QSC19-081.pdf

Note: The article was also published on www.aact.lk

Interpretation of implied terms and importance of having a well-written IP clause in a construction contract.

With reference to Realestate.com.au Pty Ltd v Hardingham RP Data Pty Limited v Hardingham [2022] HCA 39 case

 

When we draft a contract, we shall make clear the intellectual property, copyright, and moral right obligations. Generally, clients are asking to transfer to them the IP rights created under the contract and grant them a license to use the background and third-party IP rights in connection with the contract.

When licensing the rights, one must carefully consider the extent of such transfer. Especially as the Client may transfer the right to a further party whose terms are not known to the contractor (as happened to REMA in the below-addressed case)

The photographer (REMA) entered into verbal agreements with real estate agencies to supply photographs of the properties. There were no written contracts signed. It was known to the parties that the agencies would upload the photos to a well-known real estate website, i.e., Realestate.com.au Pty Ltd (REA). Under the terms of REA, which agencies accept when uploading photos, REA can sub-license the content as it desires. Under that term, REA granted a license to RP Data Pty Limited (RP Data) (data and analytics property platform). RP Data then reproduced REMA’s photos for use on their platform. REMA sued RP Data for copyright infringement. This further proceeded to the High Court following the Federal Court decision.

The High Court states that:

“a reasonable person in the position of the parties would have known that one of the very purposes of REMA providing the photographs and floor plans to the agencies was so that the agencies could provide them to REA and that the agencies had no real choice other than to accept a term requiring them to provide a license to REA to use the photographs and floor plans indefinitely and to provide them to RP Data” (Para 113)

Therefore, the High Court held that the RP Data did not infringe copyright.

The High Court also refers to the grounds to consider the sub-licensable IP right an implied term.

"Apart from being reasonable and equitable, capable of clear expression and non-contradictory of the express terms of the contract, to be implied, a term must be necessary to give business efficacy to the contract (which will not be satisfied if the contract is effective without it), and it must be so obvious that “it goes without saying” (Para 18)

 

Case:39 (hcourt.gov.au)

Image - https://image.slideserve.com/562333/psychosocial-hazards-n.jpg

 

Note: The article was also published on www.aact.lk

Who is liable for a contract, either the personal signed the contract personally liable or his company?

With reference to Xiao v ACT Commercial Builders Pty Ltd [2023] ACTSC 44

 

It depends on the way they execute the contract.  In case of court proceedings, the court will decide it objectively (NOT subjectively), considering the contract document as a whole and on the basis of admissible surrounding circumstances known to the parties

(Objectively??? Subjectively??; ask me the difference if you don’t know as a comment)

Recently (2023), Mr. Xiao was to be liable for a debit to a builder personally but not by the Company he performed as a director.

Let’s understand the way someone should execute a contract to avoid getting into trouble like Mr. Xiao.

·         Make clear under what capacity you sign the contract (on a personal level or for the Company)

·         Details of your capacity must be clearly and consistently mentioned in the contract

If the contract is executed in the capacity of Director, make it clear with reference to the Corporation Act. See the below example with reference to the Corporation Act in Australia.

 

Executed as an Agreement

Executed by ABC Pty Ltd pursuant to Section 127 of the Corporations Act 2001 (Cth):	} } }
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signed by Company Secretary/ Director	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signed by director
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Name	. . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . Name
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Date

 

(Executed as an Agreement??? Executed as a Deed??? What is the difference, let’s ask as a comment so, we can discuss)

 

Now, let’s have a look at how Mr Xiao getting into much trouble.

In the first court, it was held that Mr. Xiao was personally liable for the builder. So, he appealed to the appellate court.

In the subject contract, following were identified and considered by the court when taking the decision:

· Mr Xiao did not write that he was authorised to sign on behalf of another or invoke section 127 of the Corporations Act 2001 (Cth)

·         None of the other directors of the company added their signature to the contract,

·         Even though he wrote down the company address, it was also his personal address.

·         Even though he wrote down the company ABN, he did not identify that number as the company's ABN.

·         He did not even name the company anywhere on the contract,

 “Mr Xiao’s submissions as to the evidence overlooked the objective theory of contract.  The first matter relied upon was the fact that Mr Xiao gave evidence that, when he signed the contract, he understood that he was signing it on behalf of BBSJ Partners Pty Ltd.  In fact, what he said was that he understood he was signing on behalf of “the business”, which is quite different.  In any event, his understanding is irrelevant.  The test is objective.”

 

Case: https://courts.act.gov.au/supreme/judgments/xiao-v-act-commercial-builders-pty-ltd

Note: The article was also published on www.aact.lk

Application of businesslike and common sense to interpret insurance terms.

 Application of businesslike and common sense to interpret insurance terms.

With reference to Acciona Infrastructure Australia Pty Ltd v Zurich Australian Insurance Limited [2023] FCAFC 47 case

 

In a 19.5Km long road construction project, the Client obtained the Works insurance, and it indemnified the Contractor.

The insurance covers the Project Site(19.5Km long road); an exclusion of the insurance is provided below.

Due to the heavy rain, a section of the road was damaged. There were four weather stations located in the region, but only one weather station recorded the heavy rain as a 1-20 event. Even the nearest weather station to the damaged section has not recorded the rain as a 1-20 event.

 (Lesson learned- If multiple weather stations relate to the project, clarify which station you consider.)

 

The contractor argues that “location insured” means the entire Project Site. So, the damages shall be compensated by the insurance policy, as one weather station recorded a 1-20 event.

The insurer contended that; location insured” means the location of the damage. So, the damage shall not be covered under the insurance policy, as the weather station near the “location insured” does not trigger the exception to the exclusion, i.e.1-20 event.

 

The court accepted the insurer’s position, considering a businesslike and common sense approach.

 

“It is common ground that the Project, being road construction, extended over a lengthy geographical area within which the intensity of a single rainfall event might vary considerably from place to place. In these circumstances, it is difficult to see the logic in ascertaining the intensity of the event causing the damage, to which the insurance would apply, by reference to the intensity of the same event obtaining at some distant part of the Project Site.” (para 23)

 

“The “location insured” can sensibly be understood as the location insured in respect of the particular claim, being that location where the damage occurred for which the insurance would be relevant.” (Para 27)

 

Definitions:

Businesslike - happening in a way that is practical and effective.

Common sense - the ability to use good judgment in making decisions and to live in a reasonable and safe way

References:

https://dictionary.cambridge.org/

Case - https://jade.io/article/971281

Image - https://image.slideserve.com/562333/psychosocial-hazards-n.jpg

 

Note: The article was also published on www.aact.lk

The adjudicator shall resolve only the dispute referred to them

 With reference to Downer EDI Works Pty Ltd v Steensma [2022] WASC 396

 

During any Adjudication, a set-off issued before a payment claim shall not form part of a payment dispute unless either it’s the subject of the payment claim or it is stated in the rejection response of the payment claim.

This was held in the Downer EDI Works Pty Ltd v Steensma [2022] WASC 396 case heard by the Supreme Court of Western Australia.

During the adjudication hearing, the adjudicator rejected Downer’s set-off claim, even though it neither formed part of the payment claim subjected to the adjudication nor was stated in their rejection of Steensma’s payment claim.

The Supreme Court decided the case in favour of Downer and held that the adjudicator did not have jurisdiction to determine Downer’s set-off claim and had fallen into jurisdictional error by doing so.

 

I trust that a similar principle will apply to other dispute resolution methods like arbitration. Arbitrators shall resolve only the dispute referred to them.

 

Adjudication - Adjudication is a contractual and statutory means of dispute resolution used largely in the construction industry in countries like Australia and the UK.

 

 

Case - BarNet Jade - Find recent Australian legal decisions, judgments, case summaries for legal professionals (Judgments And Decisions Enhanced)

 

Image - https://image.slideserve.com/562333/psychosocial-hazards-n.jpg

 

#adjudication #aact #qsonline #constructioncaselaw #contractlaw #variations #softskills

 

Note: The article was also published on www.aact.lk

Scottish Court Offers Clear Directions on Extension of Time Evaluation

The Appeal Court ratification of the decision in City Inn v Shepherd Construction [2010] provides clear and concise guidelines for evaluating EOT claims. This will be of interest to all quantity surveyors having to deal with EOT claims.

Introduction

The recent case of City Inn v Shepherd Construction has put a ‘damper’ on the reliance by Architects, Engineers and Planners on set rules of critical path analysis and concurrency in their attempts to defeat Contractors’ claims for extensions of time. By far this appears to be first case that has dealt with such issues and advocated a common sense approach to dealing with delays to a construction operation. In the case under discussion, decided Lord Drummond Young, detailed critical path analysis was rejected instead a sensible approach which is more practical in the assessment of delay events was favoured. Also the manner of “apportionment” of delay between the parties where there was no “dominant cause” of delay was also rejected by Lord Drummond Young. This therefore raises a serious question in apportioning delay due to concurrency in the evaluation of extension of time claims from contractors. Perhaps a deeper examination of the facts of the City Inn v Shepherd case might shed some light on these issues.

 The Facts

The disputed between City Inn, the Employer and Shepherd Construction, the Contractor is in respect of delay in completion of a hotel for City Inn in Bristol, England. The contract was based on an amended JCT standard form of building contract (with quantities), 1980. The contractor had been awarded 9 weeks extension of time (4 weeks by the architect and 5 weeks by the adjudicator). The Employer, City Inn disputed the decisions of the architect and adjudicator and challenged these decisions and sought various orders including a declaration of disentitlement of any extension of time. The Contractor Shepherd counterclaimed for 11 weeks extension of time and associated loss and expense.

The evidence produced at the trial indicated that there were qualifying events and also delays caused by the contractor concurrently with some qualifying events which all contributed towards the delay in completion of the project.

The Court of First Instance Decision

The case in the Court of First Instance was heard by Lord Drummond Young who concluded that the task of the decision maker under clause 25 of the contract was to make a “judgment” and, ultimately, arrive at a “fair and reasonable” decision on an extension of time. Where there was concurrency (that is, the relevant event and the contractor risk-event existing at the same time), irrespective of when the events began (or ended), in the absence of one event being “dominant”, achieving a fair and reasonable outcome may involve an apportionment exercise and that the “but for” test of causation did not apply in the context of clause 25. On the basis of this analysis Lord Drummond Young agreed with the architect and adjudicator and held that the contractor was entitled to an extension of time and that the 9 weeks extension of time granted was fair and reasonable.

The employer, City Inn appealed and the appeal was heard by three judges who all rejected City Inn’s appeal and set out five propositions for a proper approach to the application of clause 25 as follows:

1. Before any claim for an extension of time can succeed, it must be shown that the relevant event is likely to delay or has delayed the works.
2. Whether the relevant event actually causes delay is “an issue of fact which is to be resolved, not by the application of philosophical principles of causation, but rather by the application of principles of common sense”.
3. The decision maker can decide the question of causation (that is, whether the event has caused delay to completion) by the use of whatever evidence he considers appropriate. If demonstrated to be sound, this may take the form of a critical path analysis, but the absence of such an analysis does not mean the claim will necessarily fail.
4. If a dominant cause can be identified in respect of the delay, effect will be given to that by leaving out of account any cause or causes that are not material. If the dominant cause is not a relevant event, the claim will fail.
5. Where there are two causes operating to cause delay, neither of which is dominant, and only one of which is a relevant event, a contractor’s claim for an extension of time will not necessarily fail. Rather, it is for the decision maker “approaching the issue in a fair and reasonable way, to apportion the delay in completion of the works… as between the relevant event and the other event.”

All three judges agreed that a critical path analysis was not essential to carry out the exercise (although it may be relevant). All three judges also disagreed with HHJ Seymour QC’s comments in Royal Brompton Hospital NHS Trust v Hammond & Others (No 7) 2001 76 Con LR 148 to the effect that a relevant event falls to be disregarded if a pre-existing contractor default would nonetheless have caused delay.

How does this decision affect future claims for extension of time?

Before arriving at any conclusion it is essential to understand the approach of the learned judges all of whom appear to place emphasis on the need for a “fair and reasonable” decision on extensions of time. Lord Osborne expressed dissatisfaction at the various attempts (by architects, engineers and planners) at classification of “concurrent delay” or “concurrent delaying events” when he stated that:

“It may not be of importance to identify whether some delaying event or events was concurrent with another, in any of the possible narrow senses described, but rather to consider the effect upon the completion date of relevant events and events not relevant events. For that reason, discussion of whether or not there is true concurrency, in my opinion, does not assist in the essential process to be followed under clause 25.” 

The Appeal Court decision is also a rejection of the insistence by planners that a critical path analysis is essential to demonstrate an extension of time entitlement. However, the court recognised that there is some value in critical path analysis, but it is for the decision maker to decide if such evidence is of assistance. A claim will not necessarily fail in the absence of such evidence. 

How does the decision maker (architect, engineer or planner) apportion delay in the event of concurrency?

A majority of the court supported Lord Drummond Young’s apportionment exercise in the event of concurrency where no cause is dominant, although Lord Osborne does emphasise that it is “open” to the architect to apportion as part of approaching the issue in a fair and reasonable way; he is not compelled to do so.

In my view this is not the end to the question, the question of concurrency, causation and apportionment will continue to dominate the EOT scene. The Shepherd case is based on the JCT 80 form of contract and does not necessarily apply to other forms where clear statements are contained for dealing with extension of time. It must also be pointed out that the rejection of “critical path” analysis in the Shepherd case should not be taken as a precedent where the production of a programme in such format is the requirement in a contract. In the Shepherd case it was found that it was not possible to accurately recreate the critical path. This therefore certainly does not give any licence for contractors to deviate from any contractual requirement for providing electronically generated programmes in critical path format.

As to the application of concurrency in the apportionment of delay, the decision makers must take into account the event of dominant delay and apply a common sense judgement on arriving at a fair and reasonable conclusion. If the dominant delay is attributable to the employer, then the contractor’s delay will not matter (even if concurrent with the qualifying delay) common sense dictates that the contractor will be entitled for an extension of time because it was the dominant event that caused the eventual delay irrespective of the concurrent delay.

References:

CHOAT, R; “Pulling Out all the stops”- RICS Construction Journal (Nov. – Dec. 2010).   

By. Dr. M. Haris Z Deen

(Many thanks for Dr. Haris Deen for providing us with this valuable article)