CONSTRUCTION LAW UPDATE – No. 603
Injured Site Visitors
Superintendent's Responsibilities and Indemnity Clauses
Introduction
The recent
ACT Supreme Court case of Sebastian v ACT & Others
(February 2006) is a timely reminder of contracting parties' responsibilities
for an unsafe construction site.
Background
John
Sebastian (then an infant) was injured at a partly completed gross pollution
trap at Tuggeranong Creek in the ACT.
The first contractor engaged by the ACT to build the trap had become
defunct and the works stopped. The
Superintendent (Willing and Partners) agreed to continue its involvement in the
project and to document the partly completed project with a view to calling
tenders for its completion. Tenders were
called.
On
18 December 1990, National Capital Earthmovers Pty Ltd
entered into an agreement with the ACT to complete the works and Willing was
appointed Superintendent once again.
Nine days
later, on 27 December 1990, young John Sebastian entered the
site and ducked under a barrier. A
construction reinforcement rod that was left bent and exposed struck his
eye. At the time of the injury, National
Capital had not commenced work on site.
The ACT
admitted liability for the injury and sought contribution from the
Superintendent and from National Capital as the contractor.
The contractor and the principal
The
contract between the ACT and National Capital contained the usual terms – in
summary providing that:
In
addition, the contract included a requirement that National Capital indemnify
the principal (ACT) in relation to injury arising from the construction or
maintenance of the works.
The ACT
claimed that National Capital had been granted possession of the site on
20 December 1990 and had failed to protect John Sebastian by
allowing him access to the site. It also
claimed that National Capital was liable to pay compensation to Sebastian by
reason of the indemnity under the contract.
National
Capital said that it was not liable under the contract because the contract
required it to produce insurance certificates to the superintendent before it
was permitted to access the site. It had
not provided the insurance details until 7 January 1991.
It said
that, not withstanding that it had inspected the site when it prepared its
tender, it was under no duty to ACT to warn as to the unsafe conditions until
after it had provided the insurance details.
The Court agreed with the contractor, National Capital. It noted that the Superintendent had written
to the contractor on 20 December 1990 informing it that it could not
commence on site until the insurance details were provided.
As to the
indemnity clauses, National Capital said that because it had not done any work
on the site prior to the injury date, the injury could not have "arisen"
from the construction or maintenance of the works. Again, the court agreed with National Capital
and dismissed the claim against it.
The Principal and the Superintendent
In relation
to the claim against the Superintendent, the outcome was very different. The Superintendent had entered into an agreement
with the National Capital Development Authority in which it gave indemnities to
the ACT. The Superintendent indemnified
the ACT against all claims (widely defined) as a consequence of any breach of
the agreement, or any negligent act. The
indemnities extended to claims for personal injury.
The
Superintendent's role extended to the giving of directions to the defunct
contractor in the event that unsafe conditions existed on the site. The Superintendent had inspected the site to
document the outstanding works after the financial failure of the first
contractor and had charged fees for that work.
The court found that the Superintendent had breached this requirement of
its agreement by failing to give the directions to either the first contractor
or to National Capital.
The court
found that the indemnity offered by the Superintendent could be relied upon by
the ACT, resulting in a finding that the Superintendent was 100% liable for the
compensation to be paid to John Sebastian.
Notably,
the court said that, if the claim had been based in negligence, it would have
been inclined to find the principal and the superintendent each 50% liable for
the damage that had been caused.
Conclusion
The case is
a reminder to contracting parties of the need to:
Contributor: Tom Grace
Tom is a
former engineer who ran his own construction company for 20 years before
becoming a construction lawyer. He has
wide experience in the engineering and construction fields and specialises in
the resolution of commercial disputes.
Contact Details:
Tom Grace – Partner
Ph. (08) 8110 8004
Jeanie Elliott – Partner
Ph. (08) 8110 8006
March 2006
This publication is not legal advice. It is for general interest. You should not rely on it without obtaining
legal advice.
Fenwick
Elliott Grace is a law firm that specialises in providing legal services to the
construction and engineering industry.
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