Articles

By Adjunct Professor Kim Lovegrove MSE, RML Founder, Lovegrove & Cotton – Construction and Planning Lawyers

After a fire occurs any actor that has been involved in the design of or maintenance of the fire systems will be called to account. Fire engineers and regulators will descend upon the scene of the fire in force and little money will be spared in getting to the bottom of the cause of the fire and the actors responsible for its genesis. Vigorous post-fire forensic examination is a given.

Simply put if the cause of the fire is of a negligent design or workmanship persuasion then designers and the constructors and the ‘approvers’ will find themselves called to account.

If the fire emanates from a failure on the part of a property owner to comply with Essential Safety Measure (ESM) obligations, then the owner will be called to account and this may implicate facilities managers, body corporate committees and in circumstances where fire systems maintenance contractors have been remiss in the discharge of their functions then they too, of course will be called to account.

The liabilities for building practitioners and contractors may be in contract, tort or a combination of the two. Further the liabilities may culminate in economic damages or awards for public liability in circumstances where there is death or injury.

The above being the case this paper will concern itself with the fundamentals of contract law and tort law in so far as they pertain  to fire maintenance contractors.

In circumstances where there is a failure on the part of owners to comply with their ESM requirements and fines are visited upon the owners, if the owners can establish that an ESM maintenance contractor failed to properly maintain a component of a system that culminated in a censure being brought to bear upon the property owner, then the owner will not doubt seek to recover the amount of that fine by law suit from the contractor. In the case of a body corporate the highest fine is $96714, which occurs in circumstances where a breach of conditions of an occupancy permit transpires.

When the writer sought to find cases pertaining to Fire System Maintenance Contractors and liabilities, little that is informative presented itself; there was very little case law on point. One does not suggest that it is virgin territory, but it would be fair to say that this is an area of liability where information is not readily accessible.

Notwithstanding, standard insurance policies (such as contractors’ all risk policies) provide indemnification for liabilities that exist in this domain. Typically CWI (Contractors and Risk) will provide indemnification for damages caused by contractors emanating from damage to property that is caused by problematic workmanship along with indemnification of the likes of loss of rent, holding costs, faulty installation and so forth. Commonly, builders, tradesmen and subcontractors carry such cover.

So by virtue of the fact that CWI is an established and common form of insurance cover, liabilities emanating from problematic discharge of obligations for services rendered that are of a maintenance derivation are an established realm of insurable risk.

Having said this, mindful of the risk-ridden fire-related damage arena, insurers will be having a very close look at any type of insurance practices that require them to provide indemnification for negative fire-related construction or maintenance outcomes.

Many insurance companies are refusing to underwrite construction scenarios that require indemnification for compromised fire retardant outcomes. Hence, building surveyors and fire engineers are finding it very difficult to obtain cover that provides for indemnification for combustible cladding.

It follows that it is a matter of time before insurers generate exclusions for any type of indemnification that flows from negligent fire checks and negligent fire maintenance activities. Hence, there is every chance that fire maintenance contractors very shortly will find themselves running bare in respect of the insurability of tasks that were very much run-of-the-mill and were implicit within their vocation.

As many Western countries are still reeling from the flow-on effects of Grenfell, a higher level of risk paranoia has seized the fire contracting paradigm.

The recent Lacrosse decision, a very carefully worded decision, is most salutary in its unambiguous demands for high levels of professionalism that are visited upon building surveyors, fire engineers and architects. This ethos i.e. the high level of professionalism ethos will trickle down, or should I say ‘cascade down into’, the purveying of any type of remunerated services that assume dominion in the fire regulatory ecology.

No actors will be immune, least of all fire system checkers and maintenance contractors. The Lacrosse decision has eloquently and clearly articulated the spheres of liability that are visited upon construction actors. Although these areas of liability are not novel, they are binary in that they come under two heads, namely: contractual, and tortious.

The table in Schedule 8 of the Building Regulations 2018 is extensive and covers a number of ‘essential safety measures’, including:-

• Wall-wetting sprinklers;
• Fire doors;
• Fire windows;
• Solid core doors and associated self-closing, automatic closing and latching mechanisms;
• Fire protection associated with construction joints, spaces and the like in and between building elements required to be fire-resisting with respect to integrity and insulation;
• Paths of travel to exits;
• Exits (including fire-isolated stairways and ramps, non-fire-isolated stairways and ramps, stair treads, balustrades and handrails associated with exits, and fire-isolated passageways)
• Signs (Exit signs; Signs warning against the use of lifts in the event of fire; etc.)
• Emergency lighting
• Fire hydrant systems;
• Sprinkler systems;
• Smoke hazard management systems;
• Smoke and heat alarm systems; and
• Building occupant warning systems.

This list is derived from Schedule 8 – Essential Safety Measures, and is not a verbatim and exhaustive copy of the measures listed in that schedule. It is also noteworthy that neither is the table in Schedule 8 exhaustive, and particular regard ought to be had to umbrella measures such as Item 1: “building elements required to satisfy prescribed fire-resistance levels”, Item 2: “materials and assemblies required to have fire hazard properties”, and Item 3: “elements required to be non-combustible, provide fire protection, compartmentation or separation”. It follows that these items leave open a range of measures that fit within their ambit.

Without having sighted an industry contractual template, one would assume that maintenance checkers do in fact have careful regard to ensuring the operationality of the above systems and components when they carry out maintenance checks.

The Medical Doctor Analogy

Just like a doctor who is called upon to do a standard or routine annual check-up will analyse the results of the blood test, he or she will look at the cholesterol levels, the prostate reading, sugar levels and liver function. The doctor will not be cursory or casual in the examination, and the doctor will probably check blood pressure. Further, once the check-up is concluded the doctor will either say ‘clean bill of health’ or not and in the case of not, the doctor will in plain language state that which is wrong and that which must be looked into further. If the doctor fails to carry out the due diligence with reasonable care and there is a prejudice to health, then it may be found that a negligent act may well have occurred.

This is not dissimilar to an ESM inspector, the inspector is checking on the health of the fire ‘inhibitors’ if you will. Everything must be checked thoroughly and carefully. That which is found to be dysfunctional must be reported to the property owner in writing and the report should be garnered with suitable recommendations

Contractual Liability:

Actors that enter contracts for the performance of the above services regardless of whether they are building surveying, fire engineering or fire system checking and maintenance are contractually obligated to discharge the tasks enunciated in their contracts of engagement – that is axiomatic i.e. self-evident.

It is assumed that most fire maintenance contractors enter into written contracts that define the scope of the duties that they contract to perform. Alas, it is a common industry practice for contractors in the building industry to have ‘take it or leave it’ contracts visited upon them; the import of which is that if they do not execute what are frequently draconian and onerous template contracts, then they will not get the job. This was always a risky process but a great many service providers enter into such arrangements for fear of not being able to put food on the table in the event that they avoid contracts that by their very nature park an appalling level of risk with the service provider.

It is axiomatic that if a contractor enters into a contract that is onerous and one-sided, then they are embarking upon a journey that is fraught with risk. The Courts are unsentimental when called upon to examine contractual breaches that are perpetrated by those whom signed contracts that clearly enunciate that which is considered to be in accordance with the contract vis-a-vis that which is not. Courts are not endowed with a remit to deviate from the literal and plain English connotations of a party’s contractual obligations.

More generic maintenance contracts of engagement

Some contracts spread the risk evenly rather than concentrating the risk in one party’s liability neighbourhood. Regardless, the contractor will have to ensure that he or she complies with the letter of the contract to avoid being in breach of contract. But by the same token the contract in many respects at law will be the instrument in incarceration. If the contractor fails to adhere to a contractual term in circumstances where there is a negative fire-related outcome, to state the obvious, very little judicial largess will find its way to the recalcitrant; such, for fear of labouring the point, is the conservatism of the judicial eye that bears down on the analysis of contractual interpretation.

All actors that perform the services in the fire vocation space must now maintain a heightened state of vigilance because a great deal is expected of them with respect to the discharge of their vocational services. This has always been the case – it’s just that the Lacrosse decision has hammered home the obvious.

For anyone who thought that they could adopt a less-than-professional approach to the carrying out of their retainer, they had been ‘asleep at the wheel’ as it were. It follows that it is absolutely paramount for any contractor, building professional, or practitioner intermediary to have very careful regard to their contractual obligations. Contractual provisions that are too general, cryptic or open-ended will give rise to unintended consequences

A surgeon-like discipline must be deployed in terms of demanding precision as regards the contractual menu of functions and tasks that the contractor undertakes. Great care must be taken in respect of the crafting of the contractual provisions to ensure that anything that can and should be excluded in the terms of engagement are indeed captured.

To use surgeon vernacular, the contractor must ‘quarterise’ their contractual offerings to that which the provider clearly is capable of undertaking vis-a-vis that which falls outside the provider’s scope of vocation offerings. Do not operate outside your professional comfort zone.

The concept of general conditions, which is well-known contractual parlance in some respects, is a vexed term in that the contractual conditions must be very specific, rather than general in terms of their import. The specific conditions, for fear of labouring the point, must in non-ambiguous fashion succinctly spell out the parameters of the contractual undertaking. Disciplined vetting rigours must be deployed when a contractor is given a ‘maintenance and services’ contract to execute. Prior to entering into the contract, a risk appraisal must be undertaken and negotiations must ensue with regards to the jettisoning of unconscionable and ‘un-doable’ contractual services and tasks.

Work practices undertaken by the contractor must also precisely gel with the ‘job description’, if you will, of the contractual duty statement. If the contractor does not discharge all of those duties, or alternatively if the contractor goes beyond those duties, then the contractor may well end up being ‘clobbered’.

The contractor must also ascertain whether any of the available insurance policies that continue to exist for the indemnification of any type of dereliction do not include exclusion policies that fail to underwrite compromised contractual outcomes that present themselves in the fire domain.

When dealing with the question of how the Fire engineering agreement should be construed in the Lacrosse decision His Honour Justice Woodward noted in the judgment, Owners Corporation No.1 of PS613436T v LU Simon Builders Pty Ltd ( Building and Property) [2019] VCAT 286;

The “Agreement should be construed in accordance with the “well established principles of contractual construction as restated in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited”, discussed above.726 They also submit that “the contractual standard of care is subject to a criterion of reasonableness, not cast in absolute terms, nor perfection”.727………. is to be construed as co-extensive with the common law duty to exercise reasonable care.  [474]

Tort

The above passage is informative in that it recognises that contractual and tortious liabilities can be ‘coextensive’ and the tortious duty is to at all times exercise a reasonable standard of care, be the purveyor of services a lawyer, a doctor, a building surveyor or a fire system maintenance contractor. Just because the contract may be light on regarding what is expected of the contractor in terms the application of the checking and testing regime, does not in itself absolve the contractor from liability if, in the discharge of those tasks, the contractor is careless and lacking in the deployment of reasonable care.

The essential elements of the law of tort or negligence are not hard to grasp

There has to be a:-

• Duty of care owed to a class of persons to which the plaintiff belongs
• A breach of that duty
• Causation and a nexus between the breach and the outcome
• And the outcome will be an injury, be it economic, physical or mental

Maintenance contractors insofar as they are being remunerated and engaged to carry out work in the fire mitigation space clearly owe a duty of care. It behoves them to discharge their vocational responsibilities competently rather than carelessly to ensure that there is no loss or harm that is consequential of their carelessness or vocational dereliction.

To put it simply, if one is paid to do a job, and the job is to use all reasonable endeavours in one’s checking and due diligence regime to minimise the risk of fire, then it behoves one to make sure that the rigour brought to bear is that which would resonate with venerated peers of good repute. It is no defence to apply rigours that are consistent with standard industry practices in circumstances where those practices would not hold up to the blow torch of judicial scrutiny that will insist that a reasonable care will be required at all times. In the Lacrosse decision one of the defences raised by one of the respondents that regard was had to established industry practices pertaining to the use of ACPs. Evidence was given that there was a divergence of opinion amongst the experts as regards what was considered being acceptable rather than unacceptable and the upshot was that this defence got little traction with the Judge.

The take out is this, just because someone else or many others approach their duties in a particular way does not mean that it will be considered to be of a standard that can connote the application of reasonable care. Always have at the back of your mind, “what would a judge think, what would a venerated expert witness for the aggrieved think?” Whose expert testimony is going to be believed on the day of reckoning? Am I discharging my functions in a way that peers of good repute would approach the task or am I adopting a lowest common denominator approach?

Have regard to the fact that the tortious duty of care is owed to those whom will be proximate and vulnerable to and foreseeably affected by a professional dereliction of duty that causes a fire that culminates in loss or injury or death. It is not too much of a stretch to realise that property owners and utilisers of buildings, whether they be renters or transients come within this class.

No one in the fire vocation space can be blasé or nonchalant about the discharge of their duties in light of a spate of well-publicised fires that have punctuated many parts of the globe in recent years. Compromised fire outcomes have caused deaths in nightclubs (as in Brazil), government housing (Grenfell), super tall high rises (in the middle east), and buildings even on our own shores. A serial dimension of fire calamity makes one think of the line in Jaws, “is it safe to go back out into the water?” – Not really… particularly if one is the type of contractor that fails to grapple with the seriousness of a job such as fire system maintenance and checking. There is no point in saying “why me?” if one fails to discharge one’s obligations under a contract to the letter or if one fails to carry out one’s tasks with an appropriate and reasonable level of professionalism.

Prudent steps to deploy henceforth

• Without further ado review your contracts of engagement, seek professional advice to determine whether your contractual terms are precisely and carefully crafted.
• Check to see that your contract conditions don’t place you in a position where you are biting off more than you can chew. If you over promise in terms of contractual offerings and under deliver in terms of not delivering upon those KPIs there will be little cheer.
• Ensure that your exclusions are carefully vetted and if a given contractual offering is uninsurable be mindful of the fact that there will be no insurance indemnification for a related and compromised outcome
• Review your insurance policies to ascertain that which you are covered for vis-a-vis that which you are not.
• Make sure that the lawyer you deploy for the review task is a specialist construction lawyer well versed in contract law and building regulations, for a generalist may not have the skill sets.

Lovegrove & Cotton Lawyers to the building industry

For thirty years, Lovegrove & Cotton have represented builders, building surveyors and building practitioners in Melbourne, Canberra, Sydney and Queensland. Justin Cotton is a leading Australian construction lawyer and widely respected in the building fraternity as evidenced by his appointment as Chairperson of the HIA Industrial Relations and Legal Services Committee, and member of the Regional Executive Committee, for HIA Victorian Chapter. Lovegrove & Cotton can help practitioners resolve any type of building dispute and are preeminent in the area of building practitioner advocacy. If you wish to engage the firm, feel free to contact us via our website or by emailing enquiries@lclawyers.com.au.

Disclaimer

This article provides general information and is not legal advice. For specific legal guidance, contact Lovegrove & Cotton Lawyers.