Nablus Ltd owns 95% of the shares of Yata Ltd. The Managing Director of both companies is Ms Lourdes Del Monte. Nablus Ltd designs and develops software used in the construction business. Yata Ltd uses the software in a variety of projects. The product development is carried out by Nablus Ltd with extensive input from Yata Ltd. New products by Nablus Ltd are tested by Yata Ltd and the result of the tests are shared with Nablus Ltd to enhance quality before the products are commercialised.

One of Yata Ltd's clients, Tublas Ltd, is a large property developer. It complains that a high-rise building built by Yarta has significant design problems. The result is that the developer is unable to lease many of the units.

Nablus Ltd hears about the James Hardie case and requests your advice.

a) Assess if, under the above-mentioned circumstances, whether there is a serious risk that Nablus Ltd will be liable for losses in the event of litigation by Tublas Ltd.

b) Identify the principles at issue.

c) Offer a reasoned answer.