1. Engineering Due Diligence
The Connected World
Engineering Due Diligence
Richard Robinson
Director
R2A Due Diligence Engineers

2. Objective
To outline the concept of due diligence engineering particularly as it applies to engineering design.

3. Curragh Boom Drop
0:58
Curragh Boom Drop

4. The Plan 1. What is due diligence? 2. How did the concept arise?
3. What is due diligence engineering?
4. How is it applied in design?

5. Due Diligence
Due diligence is a legal concept. It represents an aspect of moral philosophy, that is, how the world ought to be and how humanity should behave in order to bring this about.
It is forensically tested by our courts with the advantage of hindsight, for example, using the ‘reasonable person’ test.

6. The ‘Reasonable Person’
The reasonable person is not any particular person or an average person… The reasonable person looks before he leaps, never pets a strange dog, waits for the airplane to come to a complete stop at the gate before unbuckling his seatbelt, and otherwise engages in the type of cautious conduct that annoys the rest of us… “This excellent but odious character stands like a monument in our courts of justice, vainly appealing to his fellow citizens to order their lives after his own example.”
J M Feinman (2010). Law 101. Everything You Need to Know About American Law. Oxford University Press. Page 159.

7. Due diligence is about the management of downside risk
safety
business
project

8. Due Diligence
Due diligence (legally) seems to manifest itself in at least two ways:
1. As a defence against negligence in common (case) law, and
2. In statute law, especially for fiduciary concerns, environmental issues, and most recently, health & safety matters.

9. Due Diligence Origins
How did the concept of due diligence legally arise?

10. The Common Law According to (Sir) Tony Robinson (aka Baldric):
The common law particularly flows from King Henry II (circa 1266) and a desire to extend the influence of the King’s justice by sending Lord Judges on circuits, consistently applying the ‘common’ laws observed in the various feudal fiefdoms, thereby superseding the justice systems of the local aristocracy and enhancing the power of the king.

11. HEADING GOES HERE
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12. Due Diligence
The case that launched the negligence tide is generally recognised as Donoghue vs Stevenson (1932). Essentially this tested the responsibility of a drinks 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 fell ill.
See viewed 17 July 2013

13. Lord Macmillan Judgment
Due Diligence
M'ALISTER or DONOGHUE (Pauper) Appellant v. STEVENSON. Respondent Lords Present Lord Buckmaster
Lord Atkin
Lord Tomlin
Lord Thankerton
Lord Macmillan Judgment
See viewed 17 July 2013

14. Due Diligence
Interestingly, it was a split decision by the 5 judges in the UK House of Lords as to whether or not the case could 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.

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

16. Lord Atkin
The rule that you are to love your neighbour becomes in law you must not injure your neighbour; and the lawyer's question "Who is my neighbour?" receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who then in law is my neighbour? The answer seems to be persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.

17. Negligence
An action in tort law, the elements of which are: the existence of a duty of care; breach of that duty; and reasonably foreseeable damage as a consequence of the breach of duty....
Whether the defendant has breached this duty of care is determined by considering the standard of care a reasonable person would have exercised in the circumstances, including taking reasonable precautions to avoid the risk of harm....
The type of damage, not its extent, must be foreseeable.
LexisNexis Concise Australian Legal Dictionary (4th Edition)

18. Due diligence - a common law defence against negligence
Where it is possible to guard against a foreseeable risk, which, though perhaps not great, nevertheless cannot be called remote or fanciful, by adopting a means, which involves little difficulty or expense, the failure to adopt such means will in general be negligent.
Chief Justice Sir Harry Gibbs. Turner v. The State of South Australia (1982) (High Court of Australia before Gibbs CJ, Murphy, Brennan, Deane and Dawson JJ).

19. Due Diligence in Legislation
Some examples:
Commonwealth Corporations Act (2001)
Model Work Health and Safety Act/s (2011)
Rail Safety National Law Act/s (2012)
NSW Protection of the Environment Act (1997)

20. NSW Protection of the Environment Act 1997
118  General defence for tier 1 offences
It is a defence in any proceedings against a person for an offence under this Part if the person establishes:
(a)  that the commission of the offence was due to causes over which the person had no control, and
(b)  that the person took reasonable precautions and exercised due diligence to prevent the commission of the offence.

21. Model WHS Act/s 27 Duty of officers
(1) If a person conducting a business or undertaking has a duty or obligation under this Act, an officer of the person conducting the business or undertaking must exercise due diligence to ensure that the person conducting the business or undertaking complies with that duty or obligation.

22. Due Diligence Engineering
Due diligence engineering is the reverse engineering of the decisions of our courts. That is, discovering the technological principles of court decisions through analysis of their structure, logic and argument.
This can be problematic for new legislation for which no test cases are apparent as, in such circumstances, convergent, pre-event legal opinion is unavailable.

23. Due Diligence Engineering is all about aligning the laws of man and nature

24. Hazard vs precaution

25. xxx

26. Hazard vs precaution Hazard based e.g. AS/NZS ISO 31000
Precaution based Due Diligence
Risk treatment
Risk action (treatment)
The point is to ensure that all reasonable practicable precautions are in place, not to achieve an indefensible target level of risk or safety.
* From the definition in the standard: risk evaluation process of comparing the results of risk analysis (2.21) with risk criteria (2.22) to determine whether the risk (2.1) and/or its magnitude is acceptable or tolerable

27. Reasonableness

28. Mason J. of the High Court of Australia
The perception of a reasonable man’s response calls for a consideration of the magnitude of the risk and the degree of probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have.
Mason J. of the High Court of Australia
Wyong Shire Council vs Shirt (1980) 146 CLR 40.

29. What is ‘reasonably practicable’ is an objective test
There are two elements to what is ‘reasonably practicable’. A duty-holder must first consider what can be done - that is, what is possible in the circumstances for ensuring health and safety. They must then consider whether it is reasonable, in the circumstances to do all that is possible.
This means that what can be done should be done unless it is reasonable in the circumstances for the duty-holder to do something less.
INTERPRETIVE GUIDELINE—MODEL WORK HEALTH AND SAFETY ACT THE MEANING OF ‘REASONABLY PRACTICABLE’

30. Reasonableness
Approved or common practice may or may not be reasonable.
Compliance with standards and codes of practice is a starting point, not a goal.
In an article in Engineers Australia Magazine of March “Engineers cannot avoid liability in negligence or for TPA contravention by simply relying on a current or published standard or code”. (Page 38) Leigh Duthie is a partner and Phillipa Murphy and Angela Sevenson are senior associates of Baker & McKenzie in Melbourne.

31. Reasonableness
Engineers should remember that in the eyes of the court, in the absence of any legislative or contractual requirement, an Australian Standard amounts only to an expert opinion about usual or recommended practice. Also, that in the performance of any design, reliance on an Australian Standard does not relieve an engineer from a duty exercise his or her skill and expertise.
Paul Wentworth, Partner, Minter Ellison (28 March 2011)
AS/NZS 7000:legal status of standards and relevance to professional liability

32. R2A’s Approach
Defensible risk management or due diligence engineering.
That is, aligning the laws of man with the laws of nature.
In terms of safety, managing the laws of nature is logically prior to managing the laws of man.

33. R2A’s Due Diligence Approach
Credible, critical issues
Precautionary options
Disproportionality decision making system
Precautions QA system

34. Engineering Due Diligence
1. Completeness check - argument to establish all credible critical issues.
2. Identification of all possible practicable precautions for each issue.
3. Determination of the reasonableness of the practicable precautions - in the circumstances.
4. Implementation of a QA system to ensure that’s what’s been agreed is implemented and sustained.

35. Lapstone Cutting c1920s
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36. HEADING GOES HERE Lapstone Cutting mid 2000s
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Lapstone Cutting mid 2000s

37. Derailment potentials into the gorge

38. Due Diligence

39. Koko
(Natural News) Koko the Gorilla, celebrated for her 1000-word sign language vocabulary, is known for her affinity toward cats. After she learned how to communicate with her caretakers at the Gorilla Foundation in Northern California, she asked for a kitten to have as a pet.
The cat came in handy on one particularly destructive day. When no one was around, Koko managed to rip a sink out of the wall in her habitat. When the humans returned, they asked Koko who ripped out the sink.
Koko signed, "The cat did it."
viewed 27feb14

40. R2A’s Understanding
If due diligence has been arguably demonstrated to a common law due diligence standard (the balance of the probabilities test) then being successfully prosecuted under statute law (beyond reasonable doubt test) is most unlikely.
That is, that provided something is not prohibitively dangerous, to ensure that all reasonable practicable precautions are in place for all foreseeable, credible, critical issues.

41. On Exactitude It is better to be vaguely right than exactly wrong.
*Carveth Read (1898). Logic, deductive and inductive.

42. R2A Due Diligence Engineers
ABN
R2A Pty Ltd
Level 1
55 Hardware Lane
Melbourne VIC 3000
Australia P F E W