Origins of the Legal Concept of Due Diligence in the model WHS act

November 20, 2013

The case that launched the negligence tide is generally recognised as Donoghue vs Stevenson (1932). Essentially this tested the responsibility of a drink’s manufacturer for a stomach ache resulting from a late discovered decomposed snail in an opaque soft drink bottle, purchased by one of two friends to share.  Until that time, the liability for a bad product rested with the contractual arrangement between the seller and buyer, not a third party friend with whom the drink was shared and who subsequently fell ill.

Interestingly, it was a split decision by the 5 judges in the UK House of Lords as to whether or not the case should proceed at all since the potential liability to the manufacturer lay outside the existing buyer-seller contract. The minority was concerned that a finding for the plaintiff would launch an uncontrolled avalanche of negligence claims in common law jurisdictions, a concern that has pretty much eventuated.

The majority decision favoured to adopt the golden rule of most major philosophies and religions.  This is usually expressed in the Christian tradition, as: love your neighbour as yourself meaning do unto others as you would have done unto you.  That is, it was felt that the soft drink manufacturer owed a duty of care to any reasonably foreseeable consumer (or neighbour), not just the one who purchased the soft drink.

In statutory terms due diligence has mostly been about compliance.  In common law terms due diligence (or care) has been a defence against negligence.  And whilst there has always been some legislation like the Victorian Wrongs Act 1958 which incorporated these negligence concepts, it has really been the model WHS act and the Rail Safety National law that have enshrined due diligence (as a defence against negligence) into statute law in Australia. It is interesting that it took 8 centuries for the golden rule to be incorporated into the common law (nominally institutionalised by King Henry II in the 13th century), but it only took 8 decades to have it elevated into statute law in Australia.

R2A has always been focussed on due diligence as a common law obligation.  Indeed we changed our name from risk to due diligence engineers before any inkling of the model WHS act and Rail Safety National law became apparent as we believed that it was always prudent (and morally sound) to satisfy both statutory compliance requirements and common law obligations.  The fact that these have now aligned has actually made life simpler in some ways.

In legal terms (at least with regard to demonstrating due diligence under the provisions of the model WHS act), an arguable case on a common law basis (which is proved on the balance of probabilities) means the likelihood of being successfully prosecuted under a statutory law (which needs to be proved on a beyond reasonable doubt basis) is, well, virtually nil.  At least, this is the unanimous opinion of the many lawyers R2A has briefed over the years.

So, if you are wondering if all reasonable practicable precautions are in place for all credible, critical, foreseeable issues and hazards for a project or operation especially in an essential services industry, need to satisfy directors, tax payers, shareholders, workers or regulators, then call R2A.  Engineering due diligence is what we do.

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