Actew Corporation Limited v Mihaljevic & Ors  ACTSC 23
The Supreme Court of Australian Capital Territory has determined that a utility service provider did not have a claim for economic loss against a building certifier for breach of statutory duty or in negligence, with regard to the approval of certain building plans, allegedly in breach of s34 of the Building Act 1972.
The owners of a property engaged a building contractor to design and build a ground floor extension to their two-storey duplex. One of the owners was terminally ill and needed home care. The builder engaged a draughtswoman to prepare the plans. The plans submitted to the certifier did not show the existence of any sewerage system under the proposed construction. The certifier gave his approval without verifying the accuracy of the plans. Consequently, the extension was constructed over a sewerage line and encroached on a sewerage easement.
The service provider (a government owned corporation responsible for the state sewerage network) commenced proceedings against the builder and certifier to recover the costs of relocating the sewer. The builder settled with the service provider by accepting 25% responsibility for the loss. The claim against the certifier proceeded to trial.
Section 34, relevantly, provides that the certifier shall approve the plans after being satisfied that the plans comply with building requirements and all consultation had taken place. The service provider alleged that the certifier breached this statutory duty and / or was negligent because he failed to ensure consultation with it took place and failed to ascertain the location of the sewer main before approving the plans. It argued it was owed a duty of care because it was in a position of vulnerability. That is to say, it had no way of knowing and preventing the encroachment unless shown in the plans and / or informed by the process of consultation.
The service provider claimed that a consultation would have revealed the encroachment before construction took place.
The following questions fell to be determined: firstly, whether a breach of s34 gave rise to a separate cause of action for damages for breach of statutory duty. Secondly, whether the certifier owed a duty of care to the service provider to avoid pure economic loss.
Decision of the Court
The Court found in favour of the certifier on both questions and dismissed the claims.
His Honour, Gray J, stated that whether a breach of s34 itself gives rise to a civil remedy was a matter of construction. An action for breach of s34 did not require the breach to be either intentional or negligent.
It was found s34 only provided a checking role for the certifier without any obligation as to the contents of the plans. The certifier was entitled to accept the accuracy of the plans and assess whether approval should be granted on that basis. The statutory obligation to ensure the plans showed the easement rested with the builder / designer or owner and not the certifier.
The certifier was only required to ensure that the plans complied with the building regulations and that all required consultations apparent on the face of the documents had been carried out. A consultation would have been necessary if the plans showed the encroachment.
Since there were none, the certifier did not have an obligation to ensure that a consultation with the service provider took place.
The Court also found that the certifier did not owe a duty of care to the service provider.
The service provider's vulnerability, if any, was an important consideration in determining whether the certifier owed a duty to avoid economic loss to it. In this context, vulnerability meant more than the likelihood of the service provider suffering damage if the certifier did not take reasonable care. It included the service provider's inability to protect itself from the consequences of the certifier's want of reasonable care in approving the plans. A duty may also arise if the certifier had assumed responsibility for the accuracy of the information in the approved plans, or if it had known that the service provider would rely on its accuracy.
In the absence of a duty on the certifier to ensure the plans showed the easement, the service provider's contentions of vulnerability could not be maintained. Further, the Court would not impose a duty of care where the service provider had other remedies to protect it. The service provider could have issued a statutory notice to the owners under the Utilities Act 2000 (which protected sewerage networks) to recover the costs of relocation. The service provider had refrained from doing so on compassionate grounds. However, this did not alter the fact that the service provider had an available remedy. The Court was also not satisfied the facts showed an assumption of responsibility or known reliance to make the certifier liable.
This case is significant for the reluctance of the Court to create a separate right of action for breach of statutory duty when s34 did not impose an obligation on the certifier to ensure the accuracy of the plans. Further, the Court was unwilling to impose a duty of care when the service provider had other means of protecting itself.
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