Morrison-Knudson International Company Inc

MORRISON – KNUDSEN INTERNATIONAL COMPANY INC & ANOR V

FACTS

The Plaintiffs sued the defendant for a breach of a duty of care in the compilation and communication of certain basic information as to the nature and content of the soils underlying the proposed site of the runways at Tullamarine. The Plaintiffs claimed that the information about the soil and its contents at the site was false, inaccurate and misleading.

The Commonwealth claimed it was protected by an exclusion clause in the tender documents which provided that the contractor acknowledged that it had satisfied itself about the nature and location of the work and that it had examined all contract documents and informed itself about the site and local conditions.

The Commonwealth applied to the High Court for a ruling on whether the exclusion clause barred the claim by the Plaintiffs.

ISSUE

Did the exclusion clause prevent the Plaintiffs suing the Commonwealth for negligence?

FINDING

The Commonwealth had failed to convey to the contractors that “no responsibility was accepted for the basic information” contained in the site conditions’ report and provided by the Commonwealth. Therefore the purported exclusion clause did not bar the Plaintiffs’ negligence claim.

QUOTE

Gibbs J said

“In my opinion it is impossible to hold that the statement set out in sub para (4) amounted to a disclaimer by the Commonwealth of responsibility for the information which it supplied.

The question whether there was such a disclaimer must be considered in the light of all the circumstances and cannot be answered by regarding the statement set out in sub-par (4) as if it had been made in vacuo.

However, even if the statement is considered alone, it purports to disclaim responsibility for any interpretation or conclusion drawn by the tenderer in regard to site conditions based on the information supplied, but does not by itself amount to a disclaimer of responsibility for the information itself.” – pages 270-271 of (1972) 46 ALJR 265

IMPACT

Exclusion clauses must be appropriately worded.

Any information contained in tender documents which are intended to be relied upon or are likely to be relied upon bytenderers must contain information which is as accurate as possible. It is possible that the person requesting tenders may be liable for  negligence if they fail to provide accurate information.

Effective exclusion clauses must clearly and expressly deny responsibility for the information that is contained in the tender documents, and should deny responsibility not just for the tenderers use of the information but also for the actual information itself.