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Slivak v Lurgi Australia

SLIVAK V LURGI AUSTRALIA PTY LTD [1999] SASC 254

Full Court of the Supreme Court of SA – 18 June 1999

FACTS

BHP engaged Lurgi under a design and construct contract to build a fume extraction and dust disposal facility. Lurgi designed the works and then engaged Lucon to work on the construction stage.

Slivak , an employee of Lucon was injured while positioning steel plates. The trial judge found that Lucon had not followed Lurgi’s design and was responsible for the accident.

ISSUES

Did Lurgi owe a duty of care to Slivak to design the steel plates to ensure the plate could not be constructed without supports?

Was Lurgi an occupier of the building site and therefore owed a duty of care to Slivak?

Did Lurgi as a project manager owing a duty of care to ensure a safety working system?

FINDING

Lurgi owed a duty of care to ensure that the steel plates were designed to the standard expected of a competent engineer. There was no evidence to suggest that Lurgi failed to meet this standard of care.Lurgi was not an occupier as Lucon was the occupier of the premises when the accident occurred.

A Project Manager may owe a duty of care to a worker if it was involved in or controlled the construction work. There was to evidence that Lurgi had any role in the procedure for constructing or installing the steel plates.

QUOTE

Doyle CJ Said:

“Putting the matter a little differently, the appellant needed a finding that a competent engineer would not have designed the support structures and cell plates as Lurgi did, because a competent engineer would realise that there was a real risk of the design tolerances being exceeded, in the process of construction and erection resulting in the overlap of the cell plate over the supporting structures being so slight that there was an unacceptable risk of something happening that could give rise to a loss of support on two adjacent sides. The appellant needed a finding that the prudent to such an extent that this would result.” – paragraph 28 of [1999] SASC 254

“In my opinion that case would support a finding of liability in the present case only if there was evidence that Lurgi had, in some way, involved itself in establishing the procedures to be followed in the erection and positioning of the cell floor plate. There was no such evidence.” – paragraph 49 of [1999] SASC 254

IMPACT

In some States the Workers Compensation laws now provide that the employee not sue their employer for negligence. Instead the employee must rely on the compulsory workers compensation insurance scheme.

There is a common perception that the employee could recover higher damages if they could sue someone for negligence. In this case the employee decided to sue the Project Manager instead of the employer.

The court acknowledged that a Project Manager can owe a duty of care to contractor’s employees. Therefore ProjectManagers, Superintendents, and Contract Managers should follow their contractual responsibilities but also refrain from directing  contractors when they have no duty or obligation to direct the contractor.

Better Sprinkler Systems v Koussidis

BETTER SPRINKLER SYSTEMS PTY LTD V KOUSSIDIS [1999] SASC 291

Full Court of the Supreme Court of SA – 5 July 1999

FACTS

Koussidis ran a building business which over the years operated as a partnership or a company.

Before 1985 he had maintained a personal account with the Premier Service Station in Adelaide. In 1985, Better Sprinkler purchased the service station and the personal account with Koussidis was maintained.

During the following years employees of Koussidis, including his son, purchased petrol using the personal account. The building company controlled by Koussidis which had been paying the accounts went into liquidation. Better Sprinkler sued

Koussidis for $30,000 owing for petrol sold to Koussidis and his employees and son.

Koussidis claimed that the original contract between Better Sprinkler and Koussidis had been novated to the company in liquidation and the outstanding balance was owed by that company.

ISSUES

Had the contract between Better Sprinkler and Koussidis been novated so that the company was the debtor?

FINDING

There was no conclusive evidence to prove that Better Sprinkler agreed to a novation of the contract between it and Koussidis to the company.

An implied novation may occur where a new contract is substituted for the original contract and both parties consent to this arrangement.

QUOTE

Bleby J said:

“I am not persuaded that the necessary inference against the plaintiff which can be drawn from any individual fact to which I have referred or from those facts taken collectively.

The one recurring feature throughout the whole period of the account is that it remained in the name of the defendant personally, that throughout that period he continued to sign the statements on delivery of goods and services to him, that he was aware of others using the account and that he never suggested to the plaintiff that the account was maintained in an incorrect name.

For these reasons I would dismiss the appeal.” – paragraph 42 of [1999] SASC 29

IMPACT

When a party to an existing contractual relationship it is important to make sure the proper parties to the contract are clearly identified. If a new entity is to take responsibility another person’s obligations under a contract then the other party must be notified and consent to the change of the party.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com