McGrath Corporation Pty Ltd v Global Construction
Management Pty Ltd & Ian Vincent Taylor  QSC
The Supreme Court of Queensland recently handed down an
important judgment regarding the proportionate liability of parties
to construction contracts for losses in circumstances where a third
party is directly responsible for the breach.
McGrath Corporation ('MCPL') sought to develop and
construct a twin tower unit
Global Construction ('Global') was engaged as
construction manager for the project
ITF Formwork ('ITF'), was also engaged by McGrath to
install formwork on the project
Given their position as construction manager, Global had
contractual responsibilities to monitor ITF's work and to
notify MCPL of any defects in the event of ITF's failure to
perform the form work to the appropriate standard
ITF failed to complete the work to the standard required
MCPL alleged that Global had breached its contractual
responsibilities by failing to monitor ITF's progress and to
notify them of any defects
This claim was governed by the proportionate liability
provisions of the Civil Liability Act 2003 (QLD).
The Supreme Court of Queensland found that it was ITF who was
actively engaged in the activity causing loss.
Despite this finding, the Court stated that Global was
significantly responsible for the damage arising from their
contractual obligations and their failure to perform duties owed to
McGrath which would have prevented the loss.
In its decision, the Court followed the principle set out in
Yates v Mobile Marine Repairs Pty Ltd  NSWSC 1463
which provides that a court:
'should apportion liability according to considerations
such as (but not limited to) which of the wrongdoers was more
actively engaged in the activity causing loss and which of the
wrongdoers was more able effectively to prevent the loss
It appears that the facts of each case will be critical in
determining how broad the responsibilities of each party to the
contract will be. Here, Global was found particularly responsible
because the failure to report the defects had continued over a
significant period of time during the construction of the
buildings, meaning that the extent of the defective works became
progressively worse as the buildings were further constructed.
Accordingly it was held that both Global and ITF had breached their
obligations and duties.
Global was ordered to bear 50% of the rectification costs and
the direct delay costs, amounting to $557,166 in damages.
On a general level, this case highlights that parties may be
found proportionately liable for losses caused by other parties
where they owe some duty to prevent those losses.
Specifically, the case demonstrates that construction managers
must ensure they carry out their duty to monitor and report any
defects in the construction work. A failure to do so may result in
a damages award being made against the construction manager.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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