18 April, 2016
In the recent case of Thiess Pty Ltd and John Holland Pty Ltd v Parsons Brinckerhoff Australia Pty Ltd  NSWSC 173, the Supreme Court of New South Wales considered the liability of the geotechnical engineer in relation to the collapse of a section of the Lane Cove Tunnel. The Court found that the geotechnical engineer breached its contractual obligation.
The geotechnical engineer argued that any breach of its contractual obligations would have had no causal effect. However, the Court rejected this argument and stated that the geotechnical engineer had a primary commercial obligation to ensure that all design requirements were met.
The court apportioned a third of the liability for damages to the geotechnical engineer in the amount of $6,898,333.00.
The Lane Cove Tunnel Project (the Project) involved the construction of road tunnels under the Pacific Highway at Artarmon, New South Wales. At approximately 1:40am on 2 November 2005, a roof in a section of the tunnel (known as the MCAA) partly collapsed, which resulted in serious loss of property and property damage.
The plaintiffs, Thiess Pty Ltd and John Holland Pty Ltd (TJH) were jointly responsible for the design and construction of the tunnel and commenced proceedings on the basis that the four defendants were negligent in exercising their respective roles.
The four defendants were:
- Parsons Brinckerhoff Australia Pty Ltd and ACN 006 475 056 Pty Ltd (formerly Parsons Brinckerhoff International (Australia) Pty Ltd) (together PB), who were responsible for the structural design of the works;
- ACN 061 447 621 Pty Ltd (formerly Pells Sullivan Meynink Ltd (in liq)) (PSM), the geotechnical engineer responsible for monitoring ground conditions in the tunnels; and
- URS Australia Pty Ltd (URS), the Independent Verifier appointed to verify the first and second defendant’s designs.
During the course of the proceedings, TJH settled all claims against PB and URS. However, TJH claimed that PSM breached its contractual obligations by failing to review and report on the suitability of PB’s designs in the changing conditions of the tunnels.
PSM denied these allegations and alleged that the damage was caused through a combination of PB’s inadequate designs and TJH’s negligent construction of the tunnels. Furthermore, PSM argued that the construction, especially the rockbolting and shotcreting were deficient, which caused the collapse.
The Court held that PSM had breached its contractual obligations in reviewing and reporting on the suitability of PB’s designs in the changing conditions of the tunnels. PSM’s obligations were found to extend far beyond the assessment of ground conditions,1 they extended to the recommendation of adequate supporting mechanisms for the relevant ground conditions that were encountered and then recording this through tunnel mapping procedures.2
In apportioning liability, His Honour found that not only did PSM fail in its assessment and recommendation for alternative designs; it also failed to communicate changing ground conditions to PB.3 Had PSM assessed the design whilst taking into consideration the changing ground conditions, it should have raised with PB the adequacy of the design.4 Had PSM done so, it is likely that PB would have reviewed the design and implemented alternative and adequate design measures, which may have prevented the collapse.5
His Honour stated that:
‘The observational approach to design was an essential feature of the project. It was intended to ensure that the support design chosen at any given point was and remained suitable having regard to the ground conditions actually encountered. It was, in a very real sense, intended to guard against what happened in this case: namely, the ongoing utilisation of a support design that was inappropriate to the conditions in which it was applied’.6
The Court dismissed PSM’s allegation that TJH was solely or partially responsible for the collapse. It found that TJH had not acted negligently in any relevant way in its construction of the tunnels as it could not be shown that TJH departed from the design in the MCAA downdrive.7
Ultimately, the Court found that although PB had primary responsibility, the breaches of PSM were significant.8 Therefore, the Court held that the responsibility should be apportioned two thirds to PB and a third to PSM. PSM was ordered to pay damages amounting to $6,898,333.00.
What this means for you
This case illustrates the importance of parties understanding their roles and responsibilities under a construction contract. In this case, the geotechnical engineer’s obligations extended far beyond the assessment of ground conditions. Its responsibility encompassed an assessment of the design, whilst taking into account the changing ground conditions and communicating all of this information to the designers.
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Michael Pryse, Partner, Herbert Smith Freehills