Standard of care is a crucial component of a negligence claim, along with duty of care, breach of duty, and causation. In any negligence claim, one of the first aspects a court will look at, is what relevant standard applies.

Common law and Legislative standard

The leading case on an architect’s duty of care is Voli v Inglewood Shire Council (1963) 110 CLR 74 and the formulation from that case has been applied to other professionals outside of the architectural industry. This is further supported by the Hight Court case of Rogers v Whitaker (1992) HCA 58.

The High Court in Rogers v Whitaker upheld the standard, one of a duty to exercise reasonable care and skill in the provision of professional advice provided.

The common law standard is mirrored in statute law. Civil liability legislation across the states, sets the legislative standard. Section 5O(1) of the Civil Liability Act 2002 (NSW), for example, specifically states that an architect, engineer or other professional will not be liable for negligence arising out of the provision of professional services if it is established that the professional:

“acted in a manner that (at the time the service was provided) was widely accepted in Australia by peer professional opinion as competent professional practice”.

Whether one is an architect, engineer or other professional, this is the standard that applies in the case of a dispute.

Contract clauses can increase standard of care

The key issue when it comes to contracts and contractual agreements, is parties can contract to perform their services to a standard above the standard “at law”, which parties are not obliged to do.

For example, parties can agree to be an “expert” or carry out their services to “the highest level of skill”. In the event of a dispute, this is the standard that services will then by judged to.

So despite adhering to the law, and not liable under the “common law” standard, professionals can be found to be liable in contract, solely because of their agreement to a particular higher standard clause in a contract.

Excluding Professional Indemnity Cover

The further issue is it is common for professional indemnity policies to exclude cover for liability arising from claims where an insured has “assumed liability” which exceeds that which is imposed at law.

An example of a clause exceeding the common law standard is Clause 4 of the standard AS4122-2010 contract, which includes “or such higher standard as the Consultant has represented in writing to the Client in relation to this Contract”. This will in turn risk imposing uninsured professional liability.

The Lacrosse Judgment

The significant decision in the Lacrosse Tower Fire judgment (Owners Corporation No.1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 286), which was almost entirely upheld by the Victorian Court of Appeal, provided further guidance as to the standard of care for various professionals in ACP claims, apportionment and the peer professional opinion defence.

The Building Surveyor relied on s 59 of the Wrongs Act, which provides a defence to a professional to a claim of negligence if it is established that the professional acted in a manner that was widely accepted in Australia, by a significant number of respected practitioners in the field as competent professional practice. However, the peer professional opinion cannot be relied on to defend a claim in negligence if the Court determines that the opinion is unreasonable. While finding that a practice of issuing building permits for the use of aluminium composite panels with a combustible polyethylene core was widely accepted among building surveyors at the time the relevant work was done, the trial judge determined that this practice was itself “irrational and unreasonable” (see paragraphs 356, 379, 391 and 397). On that basis, the Building Surveyor’s peer professional opinion defence was rejected, and the Building Surveyor was found partly liable for the loss arising from the Lacrosse Building fire. The Court of Appeal upheld the Tribunal’s decision in this regard.

For a more in-depth discussion on this case see our article here: The Lacrosse Judgment – Part 1

Conclusion

Standard of care clauses are hidden risk clauses in contracts. Often when assessing the risks within contractual obligations, standard of care clauses receive less attention than more obviously troublesome clauses such as warranties and indemnities.
It is imperative for professionals including architects and engineers to check that any standard of care clauses are in line with the common law standard of care.

Johanna Lawlor
Contracts Advisor

Disclaimer

This article is only general advice in respect of risk management. It is not tailored to your individual needs or those of your business, nor is it intended to be relied upon as legal or insurance advice. For such assistance you should approach your legal and/or insurance advisors.