Gratrax Pty Ltd v T D & C Pty Ltd

This matter before the Court of Appeal concerned the application of the requirements of the Civil Liability Act in relation to the issue of causation.  In particular, it involved the issue of s 11(1)(b) of the Act concerning whether or not the it was appropriate to extend liability to the defendant.  The circumstances were that the defendant, a road designer, had negligently specified a grade of road base when designing a road for the plaintiff.  There was no doubt that the plaintiff had suffered loss in acquiring the inferior grade road base.  However, in the usual course of road building, once the base had been laid it ought to have been tested and inspected by the local authority before proceeding further.  It was not and the plaintiff proceeded to complete construction of the road.  As a result, once the defective road base was identified, the plaintiff was required to expend substantially more money in dismantling the constructed road.  It seems to have been accepted that had the road base been tested and inspected before work on the road continued the inferior quality of the road base would have been detected and could have easily been replaced. The trial judge held that the loss sustained by the construction of the road after the road base had been put in place and the subsequent deconstruction of the road was not caused by the defendant’s negligence but was brought about by the defendant’s own conduct.  That decision was upheld on appeal.  In discussing the application of s 11(1) of the Act Fraser JA (with whom Morrison JA and Wilson J agreed) made the following points:

•Section 11 is not concerned with concurrent tortfeasors or wrongdoers.  It “concerns the effect upon the necessary causal connection between the breach of duty and the claimant’s loss of a supervening act or decision of the claimant which is a more immediate cause of the claimant’s loss than the wrongdoer’s breach of duty”.

•The methodology which s 11(1)(b) requires for determining a scope of liability issue, is to be applied in the resolution of any matter regardless of the methodology at common law, even if the methodologies applied at common law might be useful guides.

•The relevant distinction found in s 11(1) is that s 11(1)(a) is concerned with factual causation (being the application of the “but for” test, whereas s 11(1)(b) requires a normative determination of whether or not it is appropriate for the scope of the negligent person’s liability should extend to the harm which has been sustained.  See Wallace v Kam (2013) 87 ALJR 648. 

•In relation to the issue of legal liability the normative question is determined, in an established class of case, by reference to precedent and, in a novel case, by reference to the criteria provided for by the section.  Within the scope of this question, the liability for the consequences of negligence is often co-extensive with the duty of the negligent party.

•In determining whether or not a defendant should be liable for losses which have been sustained in circumstances where there was an intervening act by the plaintiff, it is appropriate to consider the reasonableness of the action of the plaintiff and that serious conduct such as fraud is not required.