Surfstone Pty Ltd & Anor v Morgan Consulting Engineers
Pty Ltd  QCA 213
A structural engineering firm incorporated terms limiting
liability in its retainer with the architect by reference to usual
Associate of Consulting Engineers of Australia
(ACEA) terms by reference to them in the
Therefore the owners of the building could not pursue the
structural engineer for damages due to movement in a concrete floor
in their distribution centre which occurred six years later.
The appellants were owners of a distribution centre. The owners
commissioned an architect to design their distribution centre.
The architect retained a civil and structural engineer to
provide design services, and to inspect and certify aspects of the
Some six years after the engineer had been retained, the
distribution centre had issues with the concrete floor caused by
deflection and rotation following settlement of compressible clay
beneath the floor.
The engineer defended the owners' claim on the basis that
liability was excluded by a term of the agreement which
"The consulting engineer shall be deemed to have been
discharged from all liability in respect to the services...on the
expiration of 1 year for the completion of the services, and the
[owners] shall not be entitled to commence any action or claim
whatsoever against the consulting engineer in respect of the
services after that date."
The question for the Court was whether the exclusion of
liability clause had been incorporated into the contract between
the owner's architect and the engineer.
The engineer's retainer consisted of a letter providing the
scope of works and the fee structure and stating "the
commission would be generally in accordance with the ACEA Guideline
Terms of Agreement".
The Queensland Court of Appeal confirmed the usual test is that
the contract is to be constructed using an objective assessment of
the terms of the contract and the context in which the contract was
formed, as well as taking commercial approach to resolve any
uncertainties in the language, and to give meaning to words where
possible, without being unduly pedantic.
The Court of Appeal agreed with the Court at first instance that
a reasonable person would read the engineer's proposal as
meaning that it was an offer to perform their works on the basis
that the contract would be governed by the usual ACEA terms.
This conclusion was inescapable given that the architect
admitted in evidence that he was aware that the ACEA terms were a
standard set of contractual terms for engaging engineers and that
he knew they would form part of the contract.
The next ground of appeal was that whether the engineer was
obliged to bring the exclusion clause to the attention of the
The Court of Appeal agreed with the Court at first instance
which found that the evidence of the expert architects provided
ample evidence that such a clause might be expected in such a
contract. This is because the ACEA had been in existence for many
years and civil engineering firms commonly put them in their
proposals. It was also common practice for the ACEA terms simply to
be referred to in a fee proposal without being quoted.
Therefore the Court found that the clause was not unusual or
Parties retaining professional service providers should
carefully consider acceptance of the professional's standard
terms to ensure reasonably foreseeable losses are not
This may result in the professional charging more to cover
their insurance premium, but that additional cost would be easily
justified given the substantial losses which may otherwise
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A lessee will need to demonstrate that the genuine interests of the lessor will be protected if relief is granted.
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