Ehrman B Mitchell Jr, Romaldo Giurgola, Paul Broches, Fred L Foote, Steven M Goldberg, Harold S Guida, Jan Keane, Rollin La France, John Q Lawson and Richard Thorp practising as Mitchell/Giurgola & Thorp Architects v Borkenhagen Forbes & Associates Pty Ltd and David Joseph Heffer and Helen Elizabeth Heffer [1999] ACTSC 5 (19 February 1999)

Last Updated: 17 June 1999

EHRMAN B MITCHELL JR, ROMALDO GIURGOLA, PAUL BROCHES, FRED L FOOTE, STEVEN M GOLDBERG, HAROLD S GUIDA, JAN KEANE, ROLLIN LA FRANCE, JOHN Q LAWSON AND RICHARD THORP practising as MITCHELL/GIURGOLA & THORP ARCHITECTS v BORKENHAGEN FORBES & ASSOCIATES PTY LTD and DAVID JOSEPH HEFFER AND HELEN ELIZABETH HEFFER [1999] ACTSC5 (19 February 1999)

CATCHWORDS

CONTRACT - Breach of - Subcontractor engaged as technical consultants by plaintiff - Subcontractor engaged third party as specialist technical consultant - Whether subcontractor in breach of contractual obligation or duty to plaintiff to provide technical specifications - Whether third party in breach of contractual obligation to subcontractor to provide technical specification - No breach found - No issue of principle.

BREACH OF CONTRACT - Settlement - Contractor admitted liability in earlier proceedings - Whether contractor entitled to be indemnified for settlement sum as against its subcontractor - Indemnity in settlement amount permitted only where settlement sum is reasonable - No issue of principle.

No. SC 785 of 1990

Coram: Higgins J

Supreme Court of the ACT

Date: 19 February 1999

IN THE SUPREME COURT OF THE )

) No. SC 785 of 1990

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: EHRMAN B MITCHELL JR, ROMALDO GIURGOLA, PAUL BROCHES, FRED L FOOTE, STEVEN M GOLDBERG, HAROLD S GUIDA, JAN KEANE, ROLLIN LA FRANCE, JOHN Q LAWSON AND RICHARD THORP practising as MITCHELL/GIURGOLA & THORP ARCHITECTS

Plaintiffs

AND: BORKENHAGEN FORBES & ASSOCIATES PTY LTD

Defendant

AND: DAVID JOSEPH HEFFER AND HELEN ELIZABETH HEFFER

Third Parties

ORDER

Judge Making Order: Higgins J

Where Made: Canberra

Date of Order: 19 February 1999

THE COURT ORDERS THAT:

1. There be judgment for the defendant against the plaintiffs.

2. There be judgment for the third parties against the defendant on the third party claim.

1. On 3 April 1981 the plaintiffs entered into an agreement with an entity created by the Federal Parliament in relation to the construction of the new and permanent Parliament House on Capital Hill. That entity was called the Parliament House Construction Authority (PHCA). The plaintiffs, having won a competition for the design of the House, were engaged to provide all necessary architectural services. They were not, however, responsible for the engagement of builders or their subcontractors. They were responsible for engagement of various engineering and technical consultants. The identity of any such consultant, their fees and disbursements and the scope of their engagement, required the prior approval of the PHCA (see cl.2.03(v) and (vi) of the Agreement).

2. Part of the architectural brief was the design of, and specifications for, the construction of the internal fit-out of the Chambers of the Parliament.

3. The plaintiffs had decided upon a concept currently reflected in the Chambers involving fabric wall cladding which matched proposed seating coverings in the galleries and which gradually changed in shade towards the upper levels to represent, in the House of Representatives, the shades of forests - deep green at floor level, light green on the top. In the Senate Chamber, red would be used fading up to beige, representing the desert colours.

4. In August 1983, the defendant wrote to the plaintiff indicating its interest, inter alia, in investigating "possible new ways to engineer a textile for wall cladding". That, following earlier explanatory correspondence commencing June 1981.

5. Eventually, on 5 December 1983, the plaintiffs wrote to the defendant offering to accept the defendant as a technical consultant, subject to the approval of PHCA.

6. On June 29, 1984 the defendant proposed the "scope of work" it would undertake. In relation to wall fabrics, Mr David Forbes, on behalf of the defendant, described that as, inter alia:

"Involvement with H of R and Senate Chambers

1. Develop the weave structure and all technical details concerning the fabric to be located on the front walls with industry."

7. It will be apparent that, so far as the plaintiffs were concerned, the defendant proposed to undertake the contractual obligation to produce the design and performance specifications for the wall fabrics including those relevant to these proceedings.

8. The plaintiffs then corresponded with the PHCA requesting approval for the engagement of the defendant as a consultant for the development of the fabrics and textiles to be used for interior finishes.

9. The defendant, in turn, with the approval of the plaintiffs, engaged the third parties as specialist consultants on the technical aspects of wall fabrics. The defendant understood that the plaintiffs did not, at that stage, wish to propose the third parties to the PHCA separately as consultants. Mr David Heffer was the person with whom the defendant dealt.

10. In my view, nothing turns on this. It simply does not matter why the defendant chose to engage the third parties as subcontractors to it.

11. The result was that on 9 October 1984 the defendant forwarded to the plaintiffs a letter of advice relating to the wall fabrics. It reflected, almost word for word, a prior letter of advice from the third parties.

12. It included, in both cases, "general fabric construction specifications". The defendant, in passing on the third parties' advice, repeated Mr Heffer's note that, as to the attached specifications:

"A more precise construction specification would be prepared once particular submissions had been made and found to be acceptable."

13. Express mention was made of flammability testing of fabrics. Whilst no final decision had then been made that the wall fabrics would be woollen, the identity of the recommended fabric manufacturers make it clear that wool was highly likely to be the approved fabric.

14. It is apparent that the attached sample specifications, whilst they referred expressly to "wool or wool blend, not less than 60% wool", made no reference to the need for insect proofing.

15. This correspondence coincided with approval from PHCA for the engagement by the plaintiffs of the defendant as a technical consultant in textiles.

16. Later, by letter dated 11 October 1984, Mr David Heffer, on behalf of the third parties, wrote to Mr David Forbes, the principal representative of the defendant. He stated, inter alia, in enclosing additional specifications:

"I have not had Fabric Specification 1 (Seating Fabric) or Fabric Specification 2 (Wall Covering) retyped as these documents may have required revision by you..."

"When it is time to discuss fabric manufacture with the potential manufacturers, please advise me of any amendments or additions which have been made to the Proposal for Tendering and Tender Documents, including the Fabric Specifications."

17. The additional specifications and Mr Heffer's advice concerning the special difficulty of producing a wall covering answering the plaintiff's aesthetic requirements were passed on to Mr David Stafford, the responsible employee of the plaintiffs, by Mr Forbes. He did not pass on the request referred to above.

18. Mr Stafford, following Mr Forbes' advice, proceeded to make enquiries of various woollen fabric mills. As Mr Heffer predicted, the concept proved to be a difficult one for local manufacturers to translate into a suitable fabric.

19. On 26 October 1984 the defendant submitted an account for its work to date. It was described as:

"Further meetings with David Stafford regarding Chamber textiles finalisation of report on potential textile suppliers and transmittal of draft specifications..."

20. As it happened, the eventual contractor was `NORWELLAN' (North Western Woollen Mills Pty Ltd). On 29 November 1984, it had advised Mr Stafford that, although the fabric required could not be woven in Australia, its associates in Switzerland could do so. It ended by saying:

"If this suggestion is of interest to you, then our company is interested in going to the next stage and preparing a design brief for both our design office in Stawell and our associates in Switzerland."

21. Mr Stafford, on 11 December 1984, accepted that advice.

22. Investigations and negotiations continued. On 19 December 1984 there was a meeting between Mr Stafford and Mr Forbes. They agreed "fine wool" was preferable to linen for the wall fabrics. The significance of that preference, for the purpose of these proceedings, is that linen is not subject to insect attack whereas wool and wool blends are.

23. On 28 December 1984, Mr Forbes sent a further memorandum of fees to the plaintiff. This referred to the "Chamber textiles outline fabric specifications."

24. It is common ground that there were a number of Australian standards relating to wool fabrics. An article tendered by the defendant, published in "Design World" (No. 6, 1984), referred to eighteen standard tests for wool fabrics. The eighteenth is "Moth resistance - AS2001.6 1-1980; (Performance) - Class A max. weight loss of 10 milligram".

25. Throughout January and February 1985 various sample fabrics were developed and discussed between the various representatives of the parties. The defendant and the third parties developed a report covering various performance requirements for whatever fabrics were ultimately chosen. No reference was made to moth-proofing. That is not surprising. The focus of all parties at this time was on the performance and appearance of the fabrics. To those characteristics, moth-proofing was not relevant. In any event, linen or linen union fabrics remained a live option, though wool remained the preferred option.

26. There were further consultations between Mr Forbes and Mr Stafford during March 1985.

27. The focus of these discussions was further to develop the scope of works and the performance and appearance requirements of the fabric for the various areas where it was required.

28. Further consultations took place during April 1985. A joint meeting was held between Messrs Stafford, Forbes and Heffer. It was Mr Stafford's intention to seek proposals from tenderers on 4 May 1985. Those proposals were to be more in the nature of expressions of interest than tenders.

29. Before that time, though it seems that Mr Stafford was not aware of it, the plaintiffs had developed a unit co-ordinated by a Ms Catriona Forbes (not related to Mr David Forbes) known as "Fabrics MGT". Mr Stafford was also unaware that part of Fabrics MGT's task was to develop a "Fabrics Manual". The Manual was described as:

"A Guide to the Selection of Fabrics, New Parliament House, Canberra".

30. The "Guide", relevantly, advised the reader to "...consult with Hal Guida or Catriona Forbes as selections and specifications are nearing determination". Part F of the Guide referred to "The Specification of Fabrics". Annexed to that part was the Australian Wool Corporation's (AWC) standard specifications dated May 1983.

31. Those specifications, both AWC/A138 for upholstery fabric and AWC/A139 for curtains, refer to "insect resistance" tests. The relevant tests are referred to as "Woolmark Specification 2". The AWC required all woollen fabrics to be insect-proofed to those standards.

32. It was suggested to Mr Stafford in cross-examination that Mr Forbes had told him as early as 19 October 1984, that he, Mr Forbes, had got the Heffer specification and gave him the "AWC specification I got in September". Mr Stafford did not agree with those suggestions.

33. Mr Guida, however, wrote to the PHCA on 31 May 1985 concerning wall fabrics. At page two, he made reference to "Appropriate Finishing". He stated:

"There are more than two dozen typical finishing processes which are applied as required to attain the end product: a particular type of fabric.

In finishing for specific serviceability several steps will be taken: shower proofing or waterproofing to enhance soil and stain resistance; mothproofing; mildew proofing; and possible shearing or cropping to remove surface fuzz or pile to produce a smooth fabric.

The above characteristics can be identified with fabric manufacturers in terms of normal production and custom runs. We will recommend testing for performance(s) to Australian Standards of [sic] recommended for untested fabrics."

34. That indicates to me that Mr Guida was aware of Ms Catriona Forbes' Guide, at least in draft form. He was certainly aware of, and promised on behalf of, the plaintiffs that all fabrics would, inter alia, be moth-proofed.

35. It seems that the final specification was sent out for prospective tenderers to consider without Mr Stafford adverting to the lack of reference therein to insect or moth-proofing. Nor at any time thereafter, were Mr Forbes or Mr Heffer asked to consider, and advise upon, the terms of the specifications which the manufacturer of the relevant wall fabrics should be required to conform to.

36. Although there is no direct evidence on the point, it seems that most Australian manufacturers, if using a wool fabric, would have applied the ACW moth-proofing standard or, at least, as no woolmark was to be applied for in this case, raised the question as to whether it was required. In fact, the fabric was woven in Switzerland.

37. On 9 December 1985, Ms Catriona Forbes wrote directly to Mr Heffer concerning "fabric specifications". She asked Mr Heffer to advise:

"...if we need to nominate other tests that should be included in the specifications for particular fabric applications."

38. The draft specifications she forwarded made express reference to compliance with Woolmark Specification 2 for "Insect Resistance", for both "Fabric covering" and "Upholstery". Those for "Wall Covering" and "Curtains" did not refer to it.

39. On 12 December 1985, Mr Heffer is recorded by Ms Forbes as responding to her request, inter alia:

"Insect resistance only apply to wool fabrics."

40. Thereafter, it seems, Ms Forbes sought to make arrangements to have Mr Heffer separately approved as a consultant "Textile Technologist".

41. It is not suggested that the dealings Ms Forbes had with Mr Heffer had any direct connection with the wall coverings for the Chambers. However, as it was not until June 1986 that a quotation was submitted by NORWELLAN, it was open to the plaintiffs to have checked the final specifications sent, inter alia, to NORWELLAN and to have recommended the addition of a requirement for insect resistance.

42. Although it is not directly relevant, the plaintiffs' claim is against the defendant, not the third parties. In any event, however, there was nothing in Ms Forbes' communication with Mr Heffer which would have put him on notice that insect resistance had been overlooked in respect of the Chambers' wall fabric. Still less was there any reason for Mr Forbes to have drawn such a conclusion.

43. Ms Catriona Forbes, of course, had not been consulted by Mr Stafford, or whoever else in the plaintiffs' organisation wrote or settled the final specification for the relevant wall fabrics. Even if she had been aware that the relevant final specifications were being developed, it would not necessarily have occurred to her that insect resistance had not been addressed, particularly when her unit's Guide had drawn express attention to it. The requirement for moth-proofing had, after all, already been expressly noted by Mr Guida, one of the plaintiffs, before tenders were received, inter alia, from NORWELLAN.

44. NORWELLAN was nominated by PHCA as "the manufacturer" to Kell & Rigby (Builders) Pty Ltd on 4 March 1986 on the advice of the plaintiffs.

45. Shortly thereafter, Ms Forbes, on 30 June 1986, was assuring the PHCA that:

"All woollen fabrics, as selected, are of the woolmark or woolblend certification, with a higher percentage being woolmark."

46. That would have incorporated the AWC standard for insect resistance.

47. PHCA would have drawn additional comfort from Ms Forbes' final paragraph:

"We draw your attention to the House and Senate Chambers where extensive fabric panelling has been specified. As the fabric for these panels is one off and will not be released on the market for sale, the fabric has not been submitted for woolmark specification. However, the fabric is one hundred (100%) percent Australian wool and has been tested against various Australian Standards."

48. Panels were duly made, delivered and installed. The appearance of them conformed to the design requirements.

49. Mr David Forbes stated in his evidence that at no time did he envisage that the specifications developed as a draft by Mr Heffer would be used as if they were final specifications. I accept that evidence. It is consistent with the correspondence and with the evidence of Messrs Stafford and Guida and of Ms Forbes. If it was otherwise, of course, it would make no difference that Mr Forbes personally lacked relevant expertise. He had Mr Heffer available to consult if required. Nor did it make any relevant difference that Mr Stafford was aware that Mr Forbes lacked expertise in relation to fabric performance specifications. He knew that Mr Forbes was consulting with Mr Heffer who had such expertise.

50. Mr Forbes conceded to Mr Whitelaw, counsel for the third parties, that he did not expressly pass on to Mr Stafford the advice from Mr Heffer that the specifications for the wall panels forwarded to him were not "full and complete", nor that Mr Heffer wished to be kept advised of the process for the further development thereof.

51. However, it seems to me that Mr Forbes had no reason to suppose that the plaintiffs, with all their collective expertise and experience, would have assumed that the advice from the defendant had provided a full and final specification, particularly in the absence of any express request to do so, and given Mr Forbes' express warning to the contrary at the outset.

52. Mr Heffer gave evidence that, had he been certain that wool was to be used for the wall panels, or had he been given the task of consultation to develop the final specification with a manufacturer, he would have considered that the need for moth-proofing should be discussed. If it had been, of course, it is highly unlikely, even unthinkable, that the plaintiffs would have rejected moth-proofing for the Chambers' fabrics.

53. The view that it was reasonable to assume that the plaintiffs would have been aware of the need to address the issue of moth-proofing finds confirmation in Mr Guida's evidence. He was well aware in 1985 that wool fabrics should be moth-proofed.

54. The evidence of Mr Leonard Hyde supported the view that moth-proofing was then usual for woollen textiles. He is a well qualified textile consultant. He viewed the documents prepared by Mr Heffer, and forwarded through Mr Forbes to Mr Stafford, as lacking the detail required for a performance specification. That is a reasonable conclusion. However, it is also apparent that those documents were intended and designed only to serve as a basis for the development of expressions of interest, before the stage when tenders would be called for and the final specifications developed. Had the defendant been asked to approve the final documents and failed to include moth-proofing, that would have produced a defective specification. Some ground would then exist for finding the defendant responsible for that defect.

The moth attack

55. Both before and after the opening of the New Parliament House on 9 May 1988, there was an invasion of Bogong moths. Some months after the second wave, in 1989, holes began to appear in the fabric covering the walls of the House of Representatives Chamber. Moth attack was suspected.

56. Enquiries of the manufacturer are reported in the documentary records of the plaintiffs as revealing that whilst Australian manufacturers would moth-proof automatically, that was not the case in Europe. The specifications had not called for moth-proofing. Therefore, they did not do it. It seems to me likely that that was the truth of the matter.

57. Dr Ian Russell, a CSIRO scientist, inspected the damage. He found that forty to fifty of the panels in the House of Representatives Chamber were damaged beyond repair. He found large numbers of Bogong moth carcasses in the area. The fabric-covered panels had been designed to be sound absorbent. The backing boards had small holes drilled through them for that purpose. In the cavities thus formed there were many deceased Bogong moths.

58. However, it was not the Bogong moth that ate the wool. That was done by the Webbing or Clothes moth. These moths will lay eggs in the carcasses of moths such as the Bogong. The larvae, when hatched, will feed on the carcasses of their host and then on wool, if available. Dr Russell concluded that the damage had been caused by Clothes moth attack.

59. Tests performed by Dr Russell did not establish directly that there had been no attempt at moth-proofing. However, tests showed the fabric was equally vulnerable to moth attack as was fabric that was known to be untreated.

60. The red coloured fabric used in the Senate betrayed no apparent damage. That, Dr Russell attributed, possibly, to chance. The Bogongs had concentrated more in the House of Representatives Chamber. The Clothes moths first began to breed there. It could have been that the red dye had some slight natural repellent effect. There was also in the Senate Chamber a layer of foam between the cloth and the backing board. That would have protected the back of the fabric to some extent, though the face of the panel would have been equally vulnerable to attack.

61. In the light of the response from NORWELLAN, I have no doubt that Dr Russell's opinion that no moth-proofing of the fabric in either Chamber had been attempted was correct.

62. I further accept Dr Russell's evidence that, to be effective, moth-proofing should be included in the manufacturing process. That provides protection for the life of the fabric. Dr Russell did advise that there could be in situ treatment to prevent further attack. It would be difficult. It would require repeated treatments every two years or so. The substances used for in situ insect-proofing could provide unpleasant odours or stickiness leading to dust soiling.

63. In Dr Russell's view, replacement of the untreated cloth was the appropriate solution.

The liability of the plaintiffs to PHCA

64. There was little doubt that the moth damage occurred as a result of the failure of the plaintiffs to specify moth-proofing. They were aware of the need for woollen fabrics to be moth-proofed. They had developed a Guide which included the AWC standard for moth-proofing. Mr Guida, one of the plaintiffs, had expressly represented, as early as 31 May 1985, that all woollen fabrics would be treated for moth-proofing.

65. It may be assumed that most, if not all, Australian mills would, as a matter of course, have assumed that moth-proofing would be required. The plaintiffs failed to inquire of the Swiss mill to be used by NORWELLAN if they moth-proofed woollen fabrics routinely. It seems likely that, if they had, there would have been a negative response. No doubt they would have then requested the manufacturer to include moth-proofing.

66. Given the overwhelming evidence that the failure of the plaintiffs to ensure moth-proofing had resulted in a product relevantly defective, irrespective of whether a massive invasion of Bogong moths could have been foreseen, the plaintiffs could have offered little effective resistance to the PHCA's claim for damages against them.

67. The PHCA (and its successor, the Commonwealth) were entitled to that which the plaintiffs had promised to ensure would be provided. The only question open to argument was whether that entitlement could be met without replacement of the untreated fabrics.

68. After the PHCA handed over the building, the Joint House Department assumed the administration of the rights and liabilities of PHCA on behalf of the Commonwealth.

69. Dr Russell had been asked to inspect the damage, not so much to assess the extent of it, but more to offer suggestions for its rectification and, in areas not yet affected, prevention of further damage.

70. He was pessimistic about the effectiveness of in situ spraying. It had a short-term effect (one to two years). It would increase the risk of soiling. He recommended replacement. However, the alternatives of removal and treatment of existing cloth or in situ spraying were also canvassed.

71. By 18 July 1989, Dr Russell had refined and improved an alternative treatment program to enable in situ treatment of undamaged panels.

72. The plaintiffs were consulted by Mr John Fowler of the PHCA with a view to arriving at an agreed settlement of this and other claims against them.

73. On 5 October 1989, PHCA wrote to the plaintiffs canvassing those various claims, including the present one. The replacement cost of the untreated woollen fabrics was estimated at $1,000,000.

74. On 20 July 1990, a writ was issued against the plaintiffs for damages for various alleged breaches of their agreement with the PHCA. The statement of claim alleged that the "actual costs" of rectification were then $75,029. The "further estimated costs" were alleged to be $734,899.

75. Ultimately, in October 1990, a Deed of Settlement was agreed upon. In that deed, $400,000 was apportioned to "the moths dispute and proceedings".

76. It is that sum, plus interest and the costs of these proceedings, which the plaintiffs now seek to recover against the defendant. In these proceedings it is necessary for the plaintiffs to satisfy me that this settlement is reasonable before they can seek indemnity in that sum from the defendant. Otherwise, they are entitled only to that portion which is reasonable.

77. The reasonableness of the settlement was supported by one of the solicitors for the plaintiffs, Mr Robert Clynes. He had assessed the total legal costs of the PHCA disputes at $51,833.93 (including disbursements). The costs of alternative dispute resolution processes had been $79,798.50. As there were five areas of dispute, he considered a 20% apportionment to the moths dispute to be fair. He had regarded the settlement of $400,000 including costs to be fair and reasonable.

78. Mr John Fowler, Chief Executive of the PHCA between April 1989 and December 1990, also gave evidence. He had personally identified the costs of rectification and examined proposals for longer term rectification. That had resulted in the claim as particularised in the writ.

79. The actual settlement figure, he said, was the least he was prepared to recommend to the PHCA.

The contentions of the parties

80. Mr Williams QC, for the plaintiffs, conceded that his clients had an obligation to vet the specifications before they went out for final tender. He also accepted that neither Mr Forbes nor Mr Heffer had been asked to vet the specifications to be sent to the identified tenderers.

81. However, he contended that Mr Stafford, knowing that Mr Forbes was acting on the advice of Mr Heffer, a known expert on such matters, was entitled to assume that the draft specification contained all essential terms. It was, he submitted, irrelevant whether Mr Heffer was later engaged directly as a consultant, or whether the defendant was merely a conduit for Mr Heffer's expertise. The contract for advice as "technical consultant" was with the defendant.

82. Mr Tomasetti, for the defendant, pointed to Mr Stafford's evidence conceding that he was aware the document provided by the defendant was a draft specification and clearly not a final tender document. It was to be used only for the preliminary phase of inviting expressions of interest. That was done on 23 October 1984.

83. The actual documents sent out to tenderers, Mr Tomasetti submitted, addressed issues not referred to in Mr Heffer's draft. The plaintiffs' own Guide had required consultation before a final specification issued. It also drew attention to the need for moth-proofing of woollen fabrics. It is clear that neither Mr Stafford, nor the specification writer, Mr Major, consulted either the Guide, Ms Catriona Forbes, Mr Guida, the defendant or Mr Heffer before, not less than 6 months later, issuing the tender package including the final form, as it happened, of the specifications to interested tenderers.

84. This, Mr Tomasetti contended, represented a clear break in any supposed chain of causation between the failure of Mr Heffer and/or Mr Forbes, if there was any, to draw to the attention of Mr Stafford that moth-proofing should be included in any woollen fabric specification.

85. Mr Whitelaw, for the third parties, pointed out that the case, as pleaded against the defendant, was that it had failed, on 9 October 1984, to advise inclusion of moth-proofing. However, specifications were further discussed on 11 April 1985. In any event, Mr Whitelaw submitted, it is clear that Mr Heffer was not asked to address the question. If he had been asked to look at Mr Major's draft specification he would have, in all probability, noticed the lack of reference to moth-proofing.

86. In reply, Mr Williams QC made the following points. First, that Mr Stafford was never expressly told that the performance specifications submitted by Mr Forbes were "drafts", though they were not said to be in final form either. Second, that Mr Heffer's advice to Mr Forbes to come back to him for further advice when the specifications were further developed with manufacturers, was not passed on by Mr Forbes to Mr Stafford.

Findings

87. In my view, the contentions of the defendant and the third parties are to be preferred.

88. From Mr Heffer's perspective, he was not asked either by Mr Forbes or Mr Stafford to advise upon, or vet, final specifications. Indeed, he would have advised consultations thereon, even after agreement in principle with a preferred tenderer, before the final contract was entered into.

89. He did ask Mr Forbes to get back to him later in the process. Mr Forbes did not. He, in turn, was not asked to do so by the plaintiffs.

90. In the circumstances, given the preliminary nature of Mr Heffer's documentation, it seems to me that he did not fail to respond competently with whatever advice he was asked to give, at the time, and at the stage, of the process he gave it.

91. As to Mr Forbes, his lack of personal expertise is not relevant, but neither he nor Mr Heffer were engaged to write, or approve, the final specification for the wall fabrics.

92. It is true that he did not label Mr Heffer's work "draft only". It is true that he did not expressly tell Mr Stafford to seek further advice from him or Mr Heffer before sending out final documentation to tenderers. Nevertheless, he did, on 9 October 1984, inform Mr Stafford that "a more precise specification" would need to be prepared after "submissions" from prospective tenderers.

93. He was aware, as was Mr Stafford, that the plaintiffs had a large and varied pool of expertise available to them. He was aware that, though wool was preferred, it had not then been identified as technically feasible.

94. Perhaps most significantly, the identity and nationality of the manufacturer had not been identified. Indeed, the assumption then was that it would be an Australian manufacturer.

95. Whether or not, as he says he did, Mr Forbes passed on an AWC standard specification to Mr Stafford, it is clear that Mr Guida, the responsible partner, was aware, as was anybody with more than elementary knowledge of the performance requirements for woollen fabrics, that in the final document to go to tenderers, insect resistance would need to be specified. It would have been obvious to Ms Forbes, as her Guide noted, that woollen fabrics should be moth-proofed. If it was necessary to do so, I would, in any event, have concluded that Mr Forbes' recollection is more likely than not to be more accurate than that of Mr Stafford.

96. In those circumstances, it seems to me there was no contractual or other duty cast on the defendant to remind the plaintiffs of what they, in fact, already knew. There was no request to the defendant to advise upon, or vet, the proposed final specification. I have no doubt that it did not refer to moth-proofing, not because of any failure on the part of the defendant or Mr Heffer, but because neither Mr Stafford nor Mr Major adopted the prudent course of consulting Mr Guida or Ms Catriona Forbes before issuing the final specifications. That is not to doubt Mr Stafford's evidence that he was unaware of the need to consult either of those persons. However, he should have been made aware of that need by the plaintiffs. It was not a task to be assumed by the defendant.

97. I therefore conclude that the plaintiffs have failed to demonstrate any breach of contract or other duty or any causal link between the actions performed by the defendant, including the omission of reference to moth-proofing, and the damage suffered by the plaintiffs. It was the plaintiffs who were the sole cause of their own misfortune.

98. It follows that there is no foundation for any claim by the defendant against the third parties.

99. There will be judgment for the defendant on the claim and for the third parties against the defendant on the third party claim.

100. I will hear the parties as to costs.

I certify that this page and the eighteen (18) preceding pages are a true copy of the Reasons for Judgment herein of his Honour, Justice Higgins.

Associate:

Date: 19 February 1999

Counsel for the plaintiffs: Mr R E Williams QC

Instructing solicitors: Minter Ellison

Counsel for the defendant: Mr P C Tomasetti

Instructing solicitors: Snedden Hall & Gallop

Counsel for the third parties: Mr C J Whitelaw

Instructing solicitors: Barker & Barker

Dates of hearing: 2, 3 & 4 March; 28 & 29 September;

1 October 1998

Date of judgment: 19 February 1999