MITCHELL v JA BRADSHAW PTY LTD v MITCHELL SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SAMUELS AP, MAHONEY and HANDLEY JJA 17 June 1991, 17 June 1991 [1991] NSWCA 202 CONTRACT — building contract or management contract — question of fact — reasons of trial judge adopted — no question of principle. Samuels JA We have had some opportunity of considering this appeal from Mr Justice Giles and since we have each come to a firm view as to its disposal there seems to be no reason why we should delay giving judgment. The appeal raises two questions of fact. The first concerns the relationship which existed at the relevant times between the appellant and the second respondent. It was the second respondent's contention that it acted for the appellant as construction manager under a contract the precise terms of which were certainly somewhat obscure. Thus its view was that it was an agent for the appellant as its disclosed principal. The appellant on the other hand contended that there was between him and the second respondent an engagement which seems at least very similar to a lump sum or fixed price building contract. The differences which emerge from these two positions are, I would think, obvious. The learned judge considered with care the evidence which had been led before him, and this was very extensive, and, founding upon his view of the credibility of the principal antagonists and upon such documentary evidence as there was, concluded that the arrangement was that for which the second respondent contended. In my view the learned judge was correct in arriving at this conclusion. I think that there would be little point in my simply recapitulating the evidence that was led before him and then expressing a conclusion which, in all substantial respects, would be congruent with his reasons with which, so far as it may be necessary to do so distinctly, I express my agreement. The second question concerns the responsibility for the casualty, that is for the damage caused by the collapse of the southern wall of the works. The appellant, for whom Mr Fagan has put an earnest and complete argument, asserted that this issue depended upon a short point. I will not repeat all the evidence but, in essence, the point was this. The first respondent, which I call hereafter 'Bradshaw', was represented on the site by Mr Blazley - at least he was the senior of two supervisors. To be more accurate he was the supervisor and Mr Kerr was the site foreman. The representative of the second respondent, whom I call 'DHD', on the site was Mr Clarke. The learned judge found, and I think with respect quite correctly, that, in the ordinary course of his work, Clarke directed Blazley what was to be done and Blazley took his instructions from Clarke. No doubt Bradshaw was under a duty to the appellant, Mitchell, pursuant both to the contract between them and in tort, to carry out the work it was undertaking with reasonable care and skill. It is unnecessary, however, to examine that concept further. There was an engineer, who was Mr Arnott, whose job it was to supervise the technical aspects of the excavation work and to warn if any danger seemed likely to ensue as a result of what was being done. He was, therefore, to maintain some technical engineering restriction upon the extent of the works and to advise, 2 UNREPORTED JUDGMENTS from the engineering point of view, as to how they might best be accomplished. Bradshaw, so the evidence ran, worked under the directions of an engineer on all or at least most of their jobs. They did so on this job. Blazley, from the way in which the work had been carried out and the practice adopted between him and Clarke, took the view that any instructions from Clarke had previously been cleared with the engineer and had his authority. On 29 January 1986 when the wall collapsed Bradshaw was about to excavate at the bottom of the piers which were part of the construction maintaining the integrity of the southern wall. The underlying support for the southern wall was affected by loose soil. Blazley thought that to excavate at that point was, as he put it, "rather dicey". He conveyed that apprehension to Clarke, Clarke told him, in short, to go ahead because the job had to be done. Blazley did so, and the wall came down. He said that he had assumed that Clarke's instruction had the imprimatur of the engineer. The point that is advanced, upon which this part of the case turns, raises the question whether Blazley was reasonably justified in making the assumption he made about the intervention, or advice, of the engineer. It is clear that some days previously, and of course before the southern wall had been reached, or at least before the bottom of the piers at the southern wall had been reached, Blazley had complained to Clarke that that wall was dangerous perhaps that is too strong a word - that work on or below that wall needed care because the piers were honeycombed, or did not reach all the way down to the excavation. Clarke said he would check that with the engineer and on Tuesday, 21 January, when work was resumed, Clarke told Blazley: "The engineer is happy with the back wall. It is safe and does not require any further attention at this stage." He then told Blazley to proceed with the detailed excavation. Eight days or thereabouts went by until the conversation which I have already related took place and, as I also indicated, Blazley, having raised some apprehensions about the condition of the footings along the southern wall, was told by Clarke to get on with it, and did so. It is said by Mr Fagan that there is no evidence that Blazley had seen Mr Arnott on the job between 18 January and 29 January, which is the case, so that he should at once have been on inquiry as to whether Clarke's final instruction had been cleared by the engineer. However, Blazley was not permanently on the site and, accordingly, it was perfectly possible for the engineer to have been there, to have made an inspection, and to have discussed the works with Clarke without Blazley being aware of it. The practice on the job, in my view, was powerful support for the reasonableness of Blazley's assumption. It was also put that it was known that the southern wall might represent difficulty. Indeed there was a notation on one of the drawings to the effect that the engineer would give further final advice about how excavation under the wall should be carried out, or whether - I presume - it should be attempted at all, when the bulk excavation had exposed the bottom of the piers. So it was said with that warning available to him Blazley should have been all the more reluctant to make the assumption he adopted without expressly asking Clarke whether he had spoken to the engineer. To my mind the presence of that endorsement on the drawing and the final instruction from Clarke might very well have appeared to Blazley to be an indication that what the endorsement contemplated had in fact been carried out. The stage had been reached at which the engineer had suggested consultation, URJ MITCHELL v JA BRADSHAW PTY LTD v MITCHELL (Handley JA) 3 and the consultation had taken place. But perhaps more weighty is this consideration. No cross-examination was directed to Blazley to challenge his assumption or the ground upon which it rested. It is certainly true that he was asked generally his reasons for obeying Clarke's instruction, and his answer was that that was the way in which he had been working, that he was required, as he understood it, to obey at least not unreasonable instructions given to him by Clarke. And, of course, Blazley relied on Clarke to consult the engineer where necessary. But the grounds of the assumption were not put to him and it seems to me that he cannot be convicted of negligence in making the assumption unless the basis of it had been explored. This was not done. It may be that if questions of this kind had been put to him he might have offered reasons for the assumption which do not appear in the evidence, which are quite unknown to the court, and which might have amounted to a further powerful justification. At all events I do not consider that the evidence as it stands establishes that Blazley acted without reasonable care in assuming that Clarke's instructions had the backing of the engineer. I should add that the learned judge made it plain that he was not offering the view, the firm view, that Bradshaw was under a duty to the appellant to question "the safety or wisdom of what it was directed to do." Similarly, I will abstain from deciding that matter. In my view the ground which the appellant took at the trial and on the appeal was the most favourable battle field upon which it could have conducted the engagement. It seems to me that, despite Mr Fagan's able argument, the appeal must be unsuccessful and that the learned judge's conclusions upon this aspect of the case were right. I agree with them, and, accordingly, the appeal should be dismissed with costs. Mahoney JA I agree. Handley JA I also agree. The appeal is dismissed with costs. The security fund is to be retained in court until taxation, when there is to be paid out enough to satisfy the taxed bill, any balance to be returned to the appellant's solicitor. Counsel for the Appellant: DJ FAGAN/DM LOEWENSTEIN Counsel for the 1st Respondent: DD FELLER Counsel for the 2nd Respondent: NCOTMAN Solicitors for the Appellant: HEGARTY AND ELMGREEN Solicitors for the 1st Respondent: CORRS CHAMBERS WESTGARTHS Solicitors for the 2nd Respondent: TEECE HODGSON AND WARD