Picture this: Building works in a development project led to movements of the foundation below an adjoining strata scheme causing extensive damage to an apartment building on that land.  The building works involved extensive excavations, a retaining and a shoring wall to support the property.  The cost of rectification to the building was estimated at $5 million and $500,000 to repair the internal structural walls.  The work was estimated to take 66 weeks with residents being required to be relocated to temporary accommodation for the occupants.   If it sounds like a nightmare it was for one strata scheme.

The Owners Corporation made a claim in the New South Wales Supreme Court and the court decided that neither the builder (Southern Cross Constructions) or the structural engineering firm were liable for any of the damage to the building.  The Court did not accept that the builder’s actions could have been said to have caused the relevant damage and evidence did not disclose that the structural engineer’s designs caused any damage.

The Owners Corporation appealed and the decision is known as Owners of Strata Plan No 30791 v Southern Cross Constructions (ACT) Pty Ltd (in liquidation) [2020] NSWCA 199.

Allegations of Negligence

The Owners Corporation alleged that the builder and structural engineer breached their duties of care owed at common law and under the Conveyancing Act 1919 (NSW) and that it suffered damage as a result.  They alleged that the builder was negligent with respect to the excavations and construction of the shoring wall and that the structural engineer was negligent with respect to the structural designs failing to properly accommodate the design of the shoring wall.

Expert Evidence shows the cause of the damage to the Building

A joint expert engineering report indicated that inadequate support of the retaining wall caused movement of the shoring and retaining walls that supported affected property causing  movement of the foundation strata below the affected property.  The contributing factors included inadequate design, removal and replacement of props, additional excavation below general excavation depth and cutting down of the piles in a particular area and inadequate temporary propping of the retaining wall.  The loss of soil material caused by the additional excavation had adverse impacts on the stability of the walls without temporary support.  Inadequate monitoring of the vibration of the walls and the building meant that there was no ability to mitigate or minimise the damage.  The report also noted that the lack of clarity as to the roles of the parties in the construction process was also a contributing factor.


The expert engineers said that they had identified the parties associated with various technical issues but could not allocate any percentage of responsibilities because it was outside their area of expertise.  This was a matter for the court to decide.

Negligence at common law and statute – a causal connection must be established 

To make a claim of negligence at common law a party must prove three elements: first, a duty of care existed between you and the person that is claimed to be negligent; second, that person breached their duty of care and, third that the damage suffered by you was caused by that breach of duty.

The Owners Corporation alleged that the builder and the structural engineer beached their duties owed at common law under section 177 of the Conveyancing Act 1919 (NSW).  This section provides that a person has a duty of care not to do anything in relation to land that removes any support from that land.  This includes the natural surface of the land and subsoil.

Section 5D(1)(a) Civil Liability Act 2002 (NSW) is also relevant and provides ‘that the negligence was a necessary condition of the occurrence of the harm (factual causation).’  This means that there must be evidence to show that be the breach of duty caused the damage (a causal connection).

Section 5E provides that the plaintiff (in this case the Owners Corporation) bears the onus of proving, on the balance of probabilities any fact that is relevant to causation.

The Appeal DecisionThe Builder negligent in part and Hughes not liable

The Appeal Court considered the issues and found at that ‘the primary judge should have found that the builder was negligent’ in directing a subcontractor to conduct excavations near a certain area which was contrary to a written report he had received from an engineering consultant.

The Court concluded that ‘the primary judge ought to have found that the excavation carried out had a relevant causal connection with the damage to the Building.

However, the Court found that the builder was not negligent on any of the other grounds put forward by the Owners Corporation and upheld the primary judge’s decision that Hughes was not liable for the damage to the building.

Article authors: Rhonda Webster and Allison Benson