Author: australianindemnity

Claims Examples

Design Construct Builders

Case A

A building surveyor was engaged to issue a building permit and the required certificates, including the final Certificate of Occupancy for a residential construction. Some years after completion of the house, the owners noticed significant movement and cracking. The owners sued the building surveyor and the home warranty insurer. The building surveyor then joined engineers, the manufacturer of the footing system, the installer of the footings and the building company.
The allegations against the building surveyor were that he was negligent in issuing the permit and certificates because he should have recognised the deficiencies in the various engineering plans, designs and computations. He asserted that it was not the role of a building surveyor to check such documentation, rather, his duty was to certify that the steps required under the Building Act had been carried out by the appropriate registered building professionals.
The building surveyor had also obtained a compliance certificate prior to the consultation and was therefore granted statutory immunity.
Responsibility for the design flaw was passed to the building company who alleged that the flaw in design was caused by the engineers.
The building company had no insurance for design issues and could therefore not continue to fund the legal costs proving it was the engineers fault.
After four years of litigation the claim settled for over $1million plus legal costs, with a substantial contribution from the building company.

Case B

Design Errors in Bridges & Personal Injuries
Arthur & Co (“Arthur”) is an engineering company whose business includes the design, fabrication and supply of steel bridges. A product commonly sold by Arthur is a bolted steel truss bridge, which it describes generically as a unit construction bridge (UCB). Arthur would sell these steel bridges specifically designed for various projects and arrange for their construction. In May 2006, the New South Wales Government commissioned Arthur to design, fabricate and construct three steel bridges for the government. The contract between the parties specifically provided that Arthur warrants the safety of the bridges and their suitability for the purposes for which they were built.
In November 2007, Arthur discovered that the steelwork structure for a UCB supplied by them to the government of Western Australia and erected in Perth five years ago had become unstable and had partially collapsed. Three people were seriously injured during this incident. The Western Australian Government is making a claim against Arthur for the loss following the partial collapse of the bridges designed and constructed by Arthur and also for the cost of remedial works. The government is also seeking indemnity from Arthur for liability claims being made against them by the three injured persons.
In view of what took place in Western Australia, Arthur had to review the design and construction of their bridges, including the UCB’s which had been erected, or were due to be erected, for the New South Wales government project. The review disclosed serious design errors, in which certain fairly basic miscalculations had been made. Two bridges had already been erected whilst the third one was due to be erected in September 2008. The two bridges that had been erected had to be replaced and redesign works had to be carried out on the remaining bridge.
The New South Wales Australia government is also making a claim against Arthur for all remedial and redesign works to be carried out on the bridges. The costs for the remedial and redesign works amount to over $1.5 million.

Case C

Inadequate Designs & Misleading Statements
Consortium XYZ had a project to design, construct and install an underwater observatory in Brisbane. In its tender documents, ABC Constructions (“ABC”) made certain claims in relation to its previous experience in designing and building such projects and provided estimated costs for the project. ABC was ultimately the successful tenderer and was engaged to carry out the design and construction works for the project.
ABC in turn entered into a consultancy agreement with an engineering firm called MNO. Under the consultancy, MNO was to manage the project including the design requirements and to ensure that the works were suitable, appropriate and adequate for the purposes of the proposed project.
Prior to the commencement of construction, ABC discovered that the marine ground anchors connecting the underwater observatory to the sea bed were inadequate, resulting in extensive design changes and increased construction costs of $2 million.
Consortium XYZ is now claiming the increased construction costs against ABC. It is also suing ABC for, amongst other things, misleading and deceptive conduct on the basis that the eventual costs of the project far exceeded the estimated costs provided by ABC and that ABC’s claim to previous experience in projects of this sort was grossly exaggerated.

Case D

A personal injury claim made against the managing agent of a residential strata complex. A visitor of a tenant allegedly injured herself when she tripped on a crack in the driveway of the property. The building company was joined in the action after thecourt found that the design of property was flawed in that it did not allow for sufficient earth movement.

In the end the case was settled for $200,000 as the injury sustained by the client was less than 7% total body impairment.

The building company’s Professional Indemnity Insurers paid this claim.

Case E

The Plaintiff entered into a contract with a builder to renovate her house. The renovation works included the re-stumping of the house. The builder sub-contracted the re-stumping of the house. The re-stumper requested the Surveyor to provide a building permit in relation to the re-stumping.
The Plaintiff claimed that the re-stumping works were defective and had to be replaced. The Plaintiff sued the builder. The Builder had no insurance covering inadequate design of stump holes. The builder joined the re-stumper and the Surveyor to the proceedings in their defence.
The case settled as the builder ran out of money and went into liquidation. The re-stumper was found to have no insurance and no money. The Surveyor’s PI Insurer contributed $20,000 on the basis that they may not have adequately checked the depth of the stump holes for the re-stumping of the house.