Due Diligence Engineering
Richard Robinson17th March 2015
Townsville Regional Group
To outline the concept of due diligence engineering particularly as it applies to engineering design.
Objective
Curragh Boom Drop
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?
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.
Due Diligence
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.”
The ‘Reasonable Person’
J M Feinman (2010). Law 101. Everything You Need to Know About American Law. Oxford University Press. Page 159.
Conceptually, due diligence appears as a manifestation of the ethic of reciprocity or the golden rule, historically prevalent in major philosophies and religions, along the lines that one should treat others as you would like to be treated by them.
Due Diligence Due diligence is about the management of downside risk
businesssafety project
Due diligence (legally) seems to manifest itself in at least two ways:1. As a defence against negligence in common (case)
law, and2. In statute law, especially for fiduciary concerns,
environmental issues, and most recently, health & safety matters.
Due Diligence
How did the concept of due diligence legally arise?
Due Diligence Origins
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.
The Common Law
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HEADING GOES HERE
The case that launched the negligence tide is generally recognised as Donaghue 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.
Negligence
See http://www.bailii.org/uk/cases/UKHL/1932/100.html viewed 17 July 2013
M'ALISTER or DONOGHUE (Pauper) Appellantv.
STEVENSON. Respondent-------------
Lords Present
Lord BuckmasterLord Atkin
Lord Tomlin Lord Thankerton Lord Macmillan
Judgment
See http://www.bailii.org/uk/cases/UKHL/1932/100.html viewed 17 July 2013
Donoghue v. Stevenson
(1932)
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.
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.
Due Diligence
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.
Lord AtkinAn 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.
Negligence
LexisNexis Concise Australian Legal Dictionary (4th Edition)
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.
Due diligence - a common law defence against negligence
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).
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)
Due Diligence in Legislation
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.
NSW Protection of the Environment Act 1997
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.
Model WHS Act/s
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.
Due Diligence Engineering
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.
Due Diligence Engineering is all about aligning the laws of man and nature
Societal objectivesTo be prosperous, safe,
efficient, sustainable and happy
Legal prescriptionsActs of parliament and the
common law
The laws of nature(scientists)
The laws of man(lawyers)
Due diligence(engineers)
Physical realityDon't harm neighbours, either deliberately or inadvertently
Hazard vs precaution
Judicial Scrutiny
TimeDecision re hazard Unwanted Event/s Judgement
Precaution focussed
Hazard focussed
Future uncertainty
Future uncertainty
Technical risk
targets
Safety critical
SFAIRP vs ISO 31000
Risk Management of downside (negative or pure) risk
Hazard identification(Foreseeability)
Implementationof reasonably practicable
precautions
PreventabilityIdentify all practicable
precautions for each critical hazard following the hierarchy
of controls
Reasonableness Determine which practicable precautions are reasonable
based on the High Court established balance (disproportionality)
Hazard analysis and risk calculationprocess to determine the nature of risk
and the level of risk(inherently unrepeatable)
Compare against criteriaprocess of comparing the results of risk
analysis with risk criteria to determine whether the risk and/or its magnitude is acceptable
(may eliminate further consideration of acceptable or tolerable risks)
Selected risk criteriaterms of reference against which the
significance of a risk is evaluated (inherently subjective)
Risk mitigation and management optionsprocess to modify risk.
(may not follow the hierarchy of controls)
Monitoring and Review(Quality assurance)
Due Diligence
SFAIRP approach(precaution based and criticality driven)
ISO31000 approach(hazard based and risk driven)
SFAIRP ALARP
CriticalityEstablish critical
hazards
The point is to ensure that all reasonable practicable precautions are in place, not to achieve an indefensible target level of risk or safety.
Hazard vs precaution
Establish the contextRisk assessment (hazard based):
(Hazard) risk identification(Hazard) risk analysis(Hazard) risk evaluation*
Risk treatment
Establish the contextRisk assessment (precaution based):
Identify credible, critical issuesIdentify precautionary optionsRisk-effort balance evaluation
Risk action (treatment)
Hazard based e.g. AS/NZS ISO 31000
Precaution based Due Diligence
* From the definition in the standard: 2.24 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
Reasonableness
SEVERITY OF HARM UTILITY OF CONDUCT
PROBABILITY OF
OCCURANCE
DIFFICULTY AND
INCONVENIENCE
MAGNITUDE OF
RISKEXPENSE
What is ‘reasonably practicable’ is determined objectively. This means that a duty-holder must meet the standard of behaviour expected of a reasonable person in the duty-holder’s position and who is required to comply with the same duty.
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.
What is ‘reasonably practicable’ is an objective test
INTERPRETIVE GUIDELINE—MODEL WORK HEALTH AND SAFETY ACT THE MEANING OF ‘REASONABLY PRACTICABLE’
INTE R P R E TIVE G UIDE L INE —MODE L WOR K HE AL TH AND S AF E TY AC T
THE ME ANING OF ‘R E AS ONAB L Y P R AC TIC AB L E ’
This document provides guidance on the interpretation and application of the term ‘reasonably practicable’ in considering the standard of health and safety that a person conducting a business or undertaking (the duty-holder) is expected to meet under the Work Health and Safety (WHS) Act and Regulations.
‘Reasonably practicable’ is used to qualify duties to ensure health and safety and certain other duties in the WHS Act and Regulation. This standard and what is required to meet it in relation to a health and safety duty are set out in section 18.
How is ‘reasonably practicable’ defined?
In this context, reasonably practicable means that which is, or was at a particular time, reasonably able to be done to ensure health and safety, taking into account and weighing up all relevant matters including:
(a) the likelihood of the hazard or the risk concerned occurring
(b) the degree of harm that might result from the hazard or the risk
(c) what the person concerned knows, or ought reasonably to know, about the hazard or risk, and ways of eliminating or minimising the risk
(d) the availability and suitability of ways to eliminate or minimise the risk, and
(e) after assessing the extent of the risk and the available ways of eliminating or minimising the risk, the cost associated with available ways of eliminating or minimising the risk, including whether the cost is grossly disproportionate to the risk.
What is ‘reasonably practicable’ is an objective test
What is ‘reasonably practicable’ is determined objectively. This means that a duty-holder must meet the standard of behaviour expected of a reasonable person in the duty-holder’s position and who is required to comply with the same duty.
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.
This approach is consistent with the objects of the WHS Act which include the aim of ensuring that workers and others are provided with the highest level of protection that is reasonably practicable.
Approved or common practice may or may not be reasonable.
Compliance with standards and codes of practice is a starting point, not a goal.
Reasonableness
In an ar2cle in Engineers Australia Magazine of March 2009 -‐ “Engineers cannot avoid liability in negligence or for TPA contraven2on 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.
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.
Reasonableness
Paul Wentworth, Partner, Minter Ellison (28 March 2011) AS/NZS 7000:legal status of standards and relevance to professional liability
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.
R2A’s Approach
R2A’s Due Diligence Approach
SEVERITY OF HARM UTILITY OF CONDUCT
PROBABILITY OF
OCCURANCE
DIFFICULTY AND
INCONVENIENCE
MAGNITUDE OF
RISKEXPENSE
Credible, critical issues
Precautionary options
Precautions QA system
Disproportionality decision making
system
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.
Engineering Due Diligence
Grounding of the ‘Tai Ping’ at Southport
Loss of ControlOutside
operating envelopeTrack, speed, leeway
at channel abort points and in Reach 3.
Preliminary Passage Plan error
Threat Scenarios
Passage Plan error
Helmsmanerror
Loss of visual
nav aids
AgreedPassagePlan error
Vulnerabilities and Escalation Scenarios
PilotExecution
Error
Ship breakdown
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Coffey Geosciences Pty Ltd ACN 056 335 516 Geotechnical l Resources l Environmental l Technical l Project Management
Drawn
Approved
Date
Scale
MH / AJH PJW
21/9/06
NTS
RAILCORP RFP NOs. 26/035 & 630 Lapstone Cuttings 64.100 km to 65.251 km:
Risk Assessment of Natural Slopes and Cuttings. Photograph taken 1920’s? of cut 64.790 km to 65.251 km looking
east from natural slope
FIGURE 5
Job no: S22540/01
Lapstone Cutting c1920s
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HEADING GOES HERE
Coffey Geosciences Pty Ltd ACN 056 335 516 Geotechnical l Resources l Environmental l Technical l Project Management
Drawn
Approved
Date
Scale
MH / AJH PJW
21/9/06
NTS
RAILCORP RFP NOs. 26/035 & 630 Lapstone Cuttings 64.100 km to 65.251 km:
Risk Assessment of Natural Slopes and Cuttings. Photograph showing cut 64.790 km to 65.251 km from east (end of
Governors Drive)
FIGURE 1
Job no: S22540/01
Lapstone Cutting mid 2000s!
Derailment potentials
into the gorge
Rockfall threat-barrier diagram!
Koko
http://www.naturalnews.com/038743_primates_liars_gorilla.html viewed 27feb14
(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."
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.
R2A’s Understanding Exactitude
It is better to be vaguely right than exactly wrong*.
Put another way, do not let probability theory mask your ignorance. You can’t be right all the time but you can always be diligent.
*Carveth Read (1898). Logic, deductive and inductive.
EEA-R2A
WORKSHOP AIM
WORKSHOP OBJECTIVESAt the end of the workshop, participants will be able to
ENGINEERINGDUE DILIGENCE
WORKSHOP
DUE DILIGENCE ENGINEERS
PROUDLY PRESENTED BY
A Workshop forDirectors and
Senior Managers
DATES Brisbane 18-19 March Melbourne 13-14 MayPerth 29-30 JulySydney 12-13 August
R2A Due Diligence Engineers
R2A Pty Ltd Level 155 Hardware LaneMelbourne VIC 3000Australia
P +61 1300 772 333F +61 3 9670 6360E [email protected] www.r2a.com.au
ABN 66 115 818 338