New South Wales Supreme Court CITATION : Great Southern Funds Management Limited v Lysaght Building Solutions Pty Limited trading as Ranbuild & Anor [2009] NSWSC 974 HEARING DATE(S) : 11 September 2009 JURISDICTION : Equity - Commercial List JUDGMENT OF : Bergin CJ in Eq EX TEMPORE JUDGMENT DATE : 11 September 2009 DECISION : Leave granted to file Cross-Claim CATCHWORDS : [PLEADING] - Whether defendant should be precluded from bringing Cross-Claim because of ambit of plaintiff's claim - Where proportionate liability claims - Where cause of damage not yet identified LEGISLATION CITED : Trade Practices Act Alexander v Cambridge Credit (1987) 9 NSWLR 310 CASES CITED : March v E&H Stramare Pty Ltd (1991) 171 CLR 506 Southern Cross Airline Holdings Limited v Arthur Andersen and Co, unreported, FCA, 27 March 1998 PARTIES : D & S Engineering (Second Defendant/Second Cross-Claimant) Ranbuild (First Defendant) FILE NUMBER(S) : SC 50193/07 COUNSEL : I Faulkner SC (Second Defendant/Second Cross-Claimant) D Robinson SC (First Defendant) SOLICITORS : Kennedys Lawyers (Second Defendant/Second Cross-Claimant) Mallesons Stephen Jaques (First Defendant) - 6 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST BERGIN CJ in Eq 11 SEPTEMBER 2009 50193 OF 2007 GREAT SOUTHERN FUNDS MANAGEMENT LIMITED v LYSAGHT BUILDING SOLUTIONS PTY LIMITED TRADING AS RANBUILD & ANOR JUDGMENT 1 This is an application brought by the second defendant for leave to file a Cross-Claim against the first defendant arising out of a claim made by the plaintiff, Great Southern Funds Management Limited, against the first defendant, Lysaght Building Solutions Pty Limited trading has Ranbuild and the second defendant, D & S Engineering Pty Limited. 2 The proceedings have had somewhat of a lengthy history but they have settled down to the point where the plaintiff has filed a Further Amended Summons together with a Further Amended Commercial List Statement and the first defendant has filed an Amended Cross-Claim against the second defendant together with an Amended Commercial List Cross-Claim Statement. 3 The case involves the construction of some chicken sheds that fell down. At the moment it is not clear why they ultimately fell down but the plaintiff sues the first defendant, who was the builder, on a number of fronts, including a claim that it misled and deceived it by reason of some representations that were made about the first defendant's capacity to build the sheds pursuant to the instructions that were given to it. 4 In summary, the plaintiff instructed the first defendant as to what it wanted, the first defendant utilised the services of the second defendant to provide the engineering drawings for the building of the sheds. The case against the second defendant by the plaintiff is a claim under the Trade Practices Act 1974 in respect of the provision of a certification of the design of the poultry sheds dated 27 June 2005. The plaintiff claims that the certification was conduct in trade or commerce and that by providing it to the plaintiff the second defendant made various representations including that "the design satisfied the requirements and principles of structural civil engineering". 5 The "design" is defined as the "26 March design". The 26 March design was a series of drawings for the poultry sheds that the first defendant gave the plaintiff on 26 March 2005. The plaintiff's claim against the second defendant includes allegations that the second defendant represented that the design was in accordance with relevant procedures and codes and in accordance with accepted engineering practice and principles valid for 2005. 6 The certification was in the following terms: I have checked the structural details of the above design for compliance with the current Building code of Australia and all amendments to date, together with the relevant SAA Codes of Practice. SAA Codes used in this design are as follows: AS/NZS 1170 Part 1, AS/NZS 1170 Part 2, (Region A Category 2 farm) AS 3600, AS/NZS 4600, AS 2870, AS 4100 I certify the design satisfies the requirements and principles of structural civil engineering, is in accordance with the relevant SAA Codes of Practice and will meet serviceability requirements. I further certify the proposed steel framed building will be structurally adequate when constructed to good building practices and in accordance with the following drawings: DR17281716a DR17281716b RBDrg. 160505/1 to 4 BWOP2/163643 7 The plaintiff claims that it relied on the certification and provided it to the relevant Council in support of its development application. It claims that the Council granted development approval and that if the Council had not issued the development approval it would not have proceeded with the building of the sheds and it would not have suffered loss and damage. It claims that in reliance on the certification the plaintiff took delivery of and paid for the components of the sheds and undertook the construction and commissioning of the sheds. 8 The first defendant sues the second defendant by Cross-Claim for damages, indemnity, contribution and costs on various bases, including that the second defendant: engaged in conduct that was misleading or deceptive; breached its contract; and breached its duty of care to the first defendant. The first defendant claims that the loss suffered by it includes any damages payable to the plaintiff. 9 The second defendant's proposed Cross-Claim brings a similar claim against the first defendant. It claims that the first defendant engaged in misleading or deceptive conduct by the instructions it gave the second defendant, being the inappropriate specification. The representations proposed in paragraph 8 of the proposed Cross-Claim refer to various aspects of the proposed design with a claim that the first defendant knew and expected the second defendant would rely upon the design and drawings as the complete communication by the first defendant to the second defendant of the plaintiff's requirements. The second defendant claims that but for the misleading or deceptive conduct, or of the breach of contract by the first defendant, it would have designed the sheds to the proper specification as required by the plaintiff and the certification of 27 June 2005 would not have been produced. 10 Mr Robinson, senior counsel for the first defendant, has stressed the importance of the certification. He submits that it cocoons the first defendant from any relevant causal relationship with the second defendant. He submits that the second defendant's claim that it gave it the wrong specification is an irrelevancy. He further submits that the plaintiff sues the second defendant for its negligence in certifying that the design (to the wrong specifiction) complied with the Building Code of Australia which caused the Council to give development approval and it does not matter whether it was the correct specification or the incorrect specification that was put to the Council. The cause of the collapse of the sheds is yet to be identified. It may well have been that had the correct specification been produced the sheds may not have fallen down. On the other hand, it may be that in due course the first defendant is able to demonstrate that it did not matter whether the correct specification was supplied to the second defendant, but that does not seem to me to be a matter to be decided at this pleading stage. 11 I should acknowledge that Mr Robinson relied on Cooper J's decision in Southern Cross Airline Holdings Limited v Arthur Andersen and Co unreported, FCA, 27 March 1998. After summarising the principles in March v E&H Stramare Pty Ltd (1991) 171 CLR 506, Cooper J referred to the decision of the Court of Appeal in Alexander v Cambridge Credit (1987) 9 NSWLR 310 in which Mahoney JA, with whom McHugh JA agreed (Glass JA dissenting), referred to the trial judges's analysis of the principles of causation. That analysis was as follows: If a defendant promises to direct me where I should go and, at a cross-roads, directs me to the left road rather than the right road, what happens to me on the left road is, in a sense, the result of what the defendant has done. If I slip on that road, if it collapses under me, or if, because I am there, a car driving down that road and not down the right road strikes me, my loss is, in a sense, the result of the fact that I have been directed to the left road and not to the right road. But, in my opinion, it is not everything which is a result in this broad sense which is accepted as a result for this purpose in the law. Thus, if, being on the left road, I slip and fall, the fact alone that it was the defendant's direction, in breach of contract, which put me there will not, without more, make the defendant liable for my broken leg. I say 'without more': if there be added to the breach the fact that, for example, the left road was known to be dangerous in that respect I may, of course, be liable. But, in relation to losses of that kind, the fact that the breach has initiated one train of events rather than another is not, or at least may not, be sufficient in itself. It is necessary, to determine whether there is a causal relationship, to look more closely at the breach and what (to use a neutral term) flowed from it. As that trial judge in that case said, "without more" there may not be a liability. However, in this case it will be necessary to analyse the conduct of both the first defendant and the second defendant as there are competing claims including under the Trade Practices Act resulting in alleged damage. There is also a proportionate liability claim which may need to be addressed with more precision in due course but as I apprehend what Mr Robinson has said, but for the point that he raises about the causation question, he does not object to the balance of the proposed pleading. I am not satisfied that at this stage it is appropriate to preclude the second defendant from bringing the Cross-Claim against the first defendant and I intend to allow the second defendant leave to bring its Second Cross-Claim. 12 I grant leave to the second defendant to file and serve a Second Cross-Claim, Second Cross-Summons and a Commercial List Cross-Claim Statement in a form not substantially different from that initialled by me and dated today, by no later than 18 September 2009. 13 I grant leave to the second defendant to file and serve an Amended Response to the Amended Commercial List Cross-Claim by no later than 18 September 2009. 14 The first defendant is to pay the second defendant's costs of today. 15 I grant liberty to restore on one day's notice. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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