The Queensland Court of Appeal has recently upheld the operation of an exclusion of liability clause in an engineering contract.
The decision in The Thistle Company of Australia Pty Ltd v Bretz & Anor  QCA 6 (Thistle v Bretz) reinforces the position taken by courts in previous cases involving exclusion clauses in design professional contracts.
The original proceedings in the Bundaberg District Court regarded a tripping case. An elderly man sued the Thistle Company (Thistle) in negligence for tripping over a raised section surrounding a petrol pump at a service station that Thistle owned. Clear yellow markings on the plinth had been painted over in black and the previously sloped edge was transformed into a right angle.
The Court at first instance found that Thistle had breached its duty of care to the injured man.
Thistle claimed that the engineering firm engaged to renovate the station had designed the platform negligently and in breach of contract. They claimed that the engineering firm had breached its duty to the injured man and should be liable as tortfeasor. The trial judge denied this application.
Thistle sought leave to appeal on the grounds that, amongst other things, the trial judge had erred in finding that an exclusion clause in the contract between Thistle and the engineering firm was effective and thereby dismissing the third-party proceedings.
The contract between Thistle and the engineering firm contained an exclusion clause, which stated that:
“After the expiration of one (1) year from the date of invoice in respect of the final amount claimed by [the engineering firm]…, [the engineering firm] shall be discharged from all liability in respect of the services whether under the law of contract, tort or otherwise.”
Leave to appeal was unanimously denied by the Court. Philippides J stated that the exclusion clause applied because, despite the contentions of Thistle:
- The final invoice issued had expired more than twelve months prior in 2010; and
- The services provided in renovating the platform constituted the agreed upon services, in accordance with the design specified by Thistle, meaning that the contract had not been breached.
Thistle v Bretz follows a long line of cases since Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500, where exclusion clauses have been read with their ordinary meaning in the context of the contract rather than made subject to special rules. These cases demonstrate that such clauses can be dealt with simply and without presumptions.
Businesses should be aware that the terms of a contract can greatly limit their liability in tort or contract if it causes injury to a third party. Tortious liability can completely fall on one party if an exclusion clause exists in a contract. Thistle v Bretz provides a good example of this occurring in a building and design context.