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By far the greater part of modern buildings is made up of manufactured products, eg bricks, steel, paint, sanitary fittings, particle board, mechanical equipment. Even nominally natural materials, such as timber, are increasingly used in laminated or other treated forms, thus bringing them into the manufactured category.
The subject of liability for the performance of manufactured products is therefore of increasing concern to architects, as well as, of course, to manufacturers. Product liability is a growth area in litigation. It is important that architects have an understanding of the situation so that they can take appropriate measures in the interests of both the client and themselves.
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The author John G. Fleming (The Law of Torts, 1977, Law Book Co. Ltd. Sydney, p. 498) describes product liability as a composition of contracts and torts; negligence, which is founded on fault, and strict liability, which is concerned only with the fact that the product failed and that it caused harm.
A broader definition of product liability is provided by Dr E Beerworth as follows:
‘Product liability refers to legal liability associated with products that arises variously out of the activities of importing products, manufacturing or assembling finished products or component parts, producing raw materials, distributing products, engaging in their advertising or promotion, supplying products, financing a person’s acquisition of products, being in “control” of products — for example, as an owner of products, the occupier of land or premises at which products are situated, and as an employer who makes products available to employees in the course of employment.’ (Dr E Beerworth, 2011, Product Liability Law in Australia, LexisNexis Australia, [1.10]).
As product liability applies broadly across both civil and criminal law, the liability that attaches to the person at fault will vary depending on the facts, the contract, applicable legislation and/or any legal precedents established in case law.
Under statute or common law, product liability may arise if there is an underlying problem with the product such as:
- a defect that occurred during the manufacturing of the product that subsequently causes injury or economic loss to the user of the product or another party;
- a defect in the instructions or other information supplied with the product; and
- misleading or deceptive conduct in relation to the product, such as concerning the performance characteristics of the product.
For certain manufactured building products, implied statutory warranties against defects and consumer guarantees apply under the Australian Consumer Law (the ACL). For the balance of building products that are not covered by the ACL, they will be regulated under the planning and building regulation systems such as the National Construction Code and State and Territory specific Home Building legislation, which applies to residential building contracts.
In the majority of the product liability cases, the proceedings will be heard in a civil jurisdiction, however, product liability may also amount to criminal proceedings. This could occur in a case of gross negligence in the supply of a defective product that causes the death of or serious injury to another person.
Warranties
An early form of product liability that is still important is the warranty A warranty is an undertaking that one's work or product attains a certain standard. If the subject of the warranty is found to be other than as warranted, liability may be either expressed or implied. A warranty involves two parties and applies to the warrantor’s own work or goods. View full glossary . A warranty might not be expressly given by the seller but may be implied.
By way of example, an architect specified cement sheet for use in a manner he described to the supplier. The cement sheet proved totally unsuitable for use in this way, and it buckled. Upon complaining to the supplier, the architect was told, this method of use is no longer recommended. Although the architect (or client) would have had an action against the supplier, the absence of a written warranty would have added to the problem of proof of liability.
Under a warranty the seller's fault or negligence is irrelevant. The seller has warranted to provide a sound product, not to try to simply just provide it. Damages for breach of warranty include the replacement of the product sold, and compensation for injury to the buyer or the buyer's property. Only rarely are damages recoverable when the direct injury is to someone else. The exceptions are where the buyer is entitled to take legal action (eg for loss of services of a spouse or child), or where the buyer has contracted as agent for another or expressly for the benefit of another.
The injured buyer may only look to the seller for redress, but that person may look to the person who sold to the seller, and so forth up the chain of purchase and sale until either the person at fault, or the manufacturer, is reached. If the architect obtains products as agent for the client, it should be made clear to both the seller and the client that the architect is acting as agent. In this way the client will benefit from any express warranties made by the seller to the architect, and the architect will not become part of the 'warranty chain' as a seller to the client.
The architect must ensure the specified product is compliant with Australian Standards and the National Construction Code. For example, an architect, who, acting as agent and specifies cladding for a building, could potentially make the client negligent or the architect themselves negligent if the cladding was non-compliant, and the architect failed to undertake adequate checks.
Even where a supplier is reimbursed, the dispute will involve time, trouble and expense. Implied warranties may be excluded by exemption clauses in contracts, except in cases of hire purchase and consumer sales (where the ACL applies, which can apply to low value business-to-business transactions despite being called consumer sales).
Case study 1
An example of a member of the construction team being caught by a warranty is found in the matter of Young & Marten Ltd v McManus Childs Ltd (9 BLR 86, (1969) 1 A.C. 454). In that case the proprietor's agent requested that roofing tiles known as 'Somerset 13' be used. The roofing subcontractors agreed, and via a subcontractor, supplied the tiles and labour to the proprietors.
Somerset 13 tiles could only be obtained from one manufacturer. A fault in the tiles that was not detectable by inspection caused them to fail. Although the subcontracting company was not guilty of negligence it was held liable. The court held that it had breached the implied warranty that the tiles would be of merchantable quality. It was admitted that there was no warranty that the tiles would be fit for the purpose for which they were used, as the choice was the proprietor's alone, and did not rely upon the skill and judgement of the subcontractor. The subcontractor could not recover from the party that sold the goods to it, in this case the subcontractor, as the time for bringing actions had expired under the Limitation Act.
Case study 2
An example of non-compliant products was raised in the Lacrosse Tower VCAT decision in February 2019 (Owners Corporation No.1 of PS613436T, Owners Corporation No. 2 of PS613436T, Owners Corporation No. 4 PS613436T & Ors v LU Simon Builders P/L, Stasi Galanaos, Gardner Group & Ors [2019] VCAT 286). The key facts of this case were centred on a fire that rapidly spread throughout the 21-storey Lacrosse Apartment Tower in Docklands Victoria. The cause of the fire was attributed to a cigarette butt that was left in a plastic container by a resident, which caught fire and subsequently spread to the external wall cladding.
The application was brought by the owners of the apartments (211 of them) against the builder, four separate consultants, the occupier of an apartment and the negligent resident (who left the cigarette butt).
The tribunal in its findings, held that the external cladding failed to comply with the Building Code of Australia and the Building Regulations 2006 (Vic). In handing down the decision, his Honour Judge Woodward found that the builder was liable to the owners and that a number of parties were proportionately liable as follows:
- the building surveyor and his employer, Gardner Group: 33%
- the architect, Elenberg Fraser Pty Ltd: 25%
- the fire engineer, Tanah Merah Pty Ltd trading as Thomas Nicolas: 39%
- the resident who lit the cigarette, Jean-Francois Gubitta: 3%,
(the concurrent wrongdoers).
The result was that the builder would be reimbursed by the concurrent wrongdoers in the proportions listed above for damages in the sum of $5,748,233.
With reference to the architect, his honour found that the architect had breached their obligations to the builder under their consultant agreement to exercise due care and skill and failed to provide adequate design as their specification listed cladding that was non-compliant, and the substitute cladding, which was Aluminium Composite Panels, was also found to be non-compliant.
This case comes as a reminder of just how important it is to ensure products and materials that are specified in designs are in accordance with building standards and regulations.
The effect on architects
One need not be a seller to incur liability when commenting on a product. If an architect says that a certain product will fulfil a function and it fails (within an unacceptable timeframe, beyond the warranted period), the architect will be liable if the statement has been made negligently. Whenever an architect specifies a product he or she is implicitly stating that it will fulfil a certain function. Notwithstanding any contractual arrangements that an owner or builder has with the architect, at common law, an owner or builder may rely on an express or implied representation made by the architect.
Providing advice on products
Difficulties can occur when the client asks the architect for advice on a certain product, or there is a new product on the market. In the first case, the architect shouldn’t get involved except in the capacity as agent for the client. For example, if the product is something outside the architect's area of expertise, such as an air-conditioning unit which is to be specified by capacity to fulfil its task, the architect should not make comments about its suitability, but should limit comments to passing on the representations of the seller so that the client realises that they are the seller's words and not the architect's.
New products
Where the client or architect wishes to use a new product, special care should be taken. In the area of methods of practice, the law tends to support a conservative view of the way in which professionals should fulfil their tasks. Thus, although failure to adopt a common practice is not proof of negligence, it is often a strong indication of a lack of care.
When a new product is introduced, the architect may be disadvantaged by lack of information concerning performance and interaction with other materials. The architect should seek written information from the manufacturer concerning its limitations, methods of use, and uses with other materials, and should make specific enquiries if the intended use is not clearly included in the printed information distributed by the manufacturer.
If an architect has reservations about the use of a product, these should be expressed to the client. If the client insists that the product be used, it is a wise course for the architect to write to the client expressing any reservations and disclaiming responsibility for failure. Clear records should be kept by the architect whenever a disclosure of concern is provided to the client to ensure the architect is protected from a professional negligence claim.
Refer Acumen note Project records.
Thorough investigations should, of course, be made of any product to be used, but where a product has been used for a long time and has a good track record, the investigations needn’t be quite so rigorous. Notably, the good track record approach has changed considerably since major catastrophic events have occurred in recent years, such as combustible cladding identified throughout Australia and globally. Architects must always undertake due care and skill, adopting a detailed analysis to ensure all specified building products comply with the NCC, standards and applicable legislation.
A precautionary measure
Whenever a supplier gives an oral warranty or advice but is disinclined to confirm it in writing, architects, in adopting best practices, should keep good written records of the conversation and confirm the conversation in a follow up letter or email to the supplier, recounting the supplier’s assertions as accurately as possible. If the architect is acting as agent for a client, this should also be made clear. Although such a letter is not of such great evidential value as a document written by the supplier, if sent promptly after the discussion, and preferably before the purchase, it is of assistance in the event of a subsequent dispute.
Product recalls
If an architect learns of a product recall, consideration should be given to the potential effect on projects.
A product recall is essentially a supply-chain issue which is outside an architect's control. While it is not reasonable that an architect could monitor every product for recalls, once aware of a recall of products that may have been specified or are commonly used, there are some steps that it would be reasonable to undertake to limit risk such as:
- writing to contractors and owners for projects under construction
- checking current specifications and drawings for the recalled product
- requesting further information from manufacturers if the product is commonly used.
A recent example of a product recall with a potentially widespread impact was a plasterboard manufacturer’s recall of commonly used fire-rated plasterboard products in 2022 due to suspected asbestos contamination. In this case, the plasterboard manufacturer acted quickly to widely notify the industry including retailers, builders, and architects. This notification provided an opportunity for architects who were administering building contracts at the time to contact contractors and monitor the required management of the recalled plasterboard products.
Resources
Information on product safety law including a database of recalls in Australia can be found at this website published by the Australian Competition & Consumer Commission.
Related courses - Available via Online CPD
Disclaimer
This content is provided by the Australian Institute of Architects for reference purposes and as general guidance. It does not take into account specific circumstances and should not be relied on in that way. It is not legal, financial, insurance, or other advice and you should seek independent verification or advice before relying on this content in circumstances where loss or damage may result. The Institute endeavours to publish content that is accurate at the time it is published, but does not accept responsibility for content that may or has become inaccurate over time. Using this website and content is subject to the Acumen User Licence.