Blackpool Rock Co Pty Ltd and Blue Waters Pty Ltd T/a O'Connor Patternmakers v by Design Group Pty Ltd T/a Bdg Machine Tools

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: BLACKPOOL ROCK CO PTY LTD AND BLUE WATERS PTY LTD t/as O'CONNOR PATTERNMAKERS -v- BY DESIGN GROUP PTY LTD t/as BDG MACHINE TOOLS [2006] WADC 138

CORAM: CRISFORD DCJ

HEARD: 2-3 MARCH & 26-27 JUNE 2006

DELIVERED : 6 SEPTEMBER 2006

FILE NO/S: CIV 1317 of 2004

BETWEEN: BLACKPOOL ROCK CO PTY LTD AND BLUE WATERS PTY LTD t/as O'CONNOR PATTERNMAKERS
Plaintiffs
AND
BY DESIGN GROUP PTY LTD t/as BDG MACHINE TOOLS
Defendant

Catchwords:

Contract - Sale of goods - Breach of implied terms - Turns on own facts

Torts - Negligence - Whether breach of duty of care

Legislation:

Civil Liability Act 2002
Civil Liability Amendment Act 2003
Sale of Goods Act (WA) 1895

Result:

Judgment for plaintiffs in sum of $103,400

Representation:

Counsel:

Plaintiffs: Mr P Mendelow
Defendant: Mr I R Freeman

Solicitors:

Plaintiffs: Jarman McKenna
Defendant: Bennett & Co

Case(s) referred to in judgment(s):

Baldry v Marshall [1925] 1 KB 260
Clark v Esanda Ltd [1984] 3 NSWLR 1
Courtney v Medtel Pty Ltd [2003] FCA 36
Grant v Australian Knitting Mills Ltd & Anor [1936] AC 85
Lambert v Lewis [1982] AC 225
Salter v Finning Ltd (1996) 3 All ER 398

Case(s) also cited:

Alexander v Cambridge Credit Corp Ltd (1987) 9 NSWLR 310
Anchor Products Ltd v Hedges (1966) 115 CLR 493
Astley v Austrust Ltd (1999) 197 CLR 1
Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220
BP Refinery (Westernport) Pty Ltd v Shire Council Hastings (1977) 180 CLR 266
Cavallaro & Ors v National Transport Insurance Limited [1999] WADC 90
Cavelier Marketing (Aust) Pty Ltd v Rasell & Anor (1990) 96 ALR 375
Courtney v Medtel Pty Ltd [2003] FCA 36
Davis Australia Co Pty Ltd v Fibreglass Engineering Industries Pty Ltd, unreported; SCt of NSW; Library No BC9002277; 27 June 1990
Neal v CSR Limited & Anor, unreported; FCt SCt of WA; Library No 8279; 31 May 1990
George Wills & Co Ltd v Davids Pty Ltd (1957) 98 CLR 82
Grant v Australian Knitting Mills [1936] AC 85
Henville v Walker [2001] HCA 52
Jones v Dunkell (1959) 101 CLR 298
Miller v Karaman Pty Ltd [2003] WASCA 249
NEA Pty Ltd v Magenta Mining Pty Ltd [2005] WASC 106
Partridge v BMW Australia Ltd & Ors [1999] NSWCA 252
Rolfe v Katunga Lucerne Mill Pty Ltd [2005] NSWCA 473
Slater v Finning Ltd [1996] 3 All ER 398
Suosaari v Steinhardt [1989] 2 Qd R 477
The Queen v Stuart Trevor Boyle, unreported; SCt of Vic Appeal; BC9604462; 12 September 1996
Zorba Structural Steel Co Pty Ltd v Watco Pty Ltd (1993) 115 FLR 206

CRISFORD DCJ: The plaintiffs are proprietary limited companies carrying on business under the name O'Connor Patternmakers. The defendant is also a proprietary limited company carrying on business under the name BDG Machine Tools ("BDG"). The defendant designed and manufactured a five axis computer numeric controlled ("CNC") router. The model, relevantly here, became known as a ShapeMaker.
The parties entered into a contract whereby BDG would design, manufacture and supply a ShapeMaker to O'Connor Patternmakers. The ShapeMaker was duly supplied in May 2003.
On 22 November 2003 the ShapeMaker was damaged by an internal fire. It was repaired by the defendant at a cost to the plaintiffs of $103,400. The plaintiffs now seeks to recover from the defendant the cost of these repairs.
O'Connor Patternmakers alleges that the catalyst for the fire causing the damage to the ShapeMaker was a failure of a rope within the ShapeMaker.
O'Connor Patternmakers alleges that BDG knew the purpose for which the ShapeMaker was required, namely to produce industrial patterns. It supplied it on the basis that it would be reasonably fit for that purpose. It says BDG was in the business of supplying the ShapeMaker and by implication provided it on the basis it was of merchantable quality. Further, O'Connor Patternmakers pleads that BDG was negligent. It failed in its duty of care in that the design of the ShapeMaker was unsafe. It also failed to adequately maintain the ShapeMaker. Additionally, there was no adequate warning to users of the ShapeMaker of any unsafe feature. It thus alleges both breach of contract and a breach of duty of care.
BDG admits that the ShapeMaker was provided to O'Connor Patternmakers but says it was supplied on the basis that it was a new design and would require on site adjustments, modifications and development. It says that O'Connor Patternmakers knew that this was the first time such a machine had been designed, manufactured and supplied by it. It was supplied at a substantially reduced price so that such adjustments and modifications could be carried out. Training in its use was provided by the defendant. It says that the director of the defendant regularly attended the premises of O'Connor Patternmakers and monitored the progress of the machine, doing repairs and modifications as and when required. It says the machine was appropriate in all respects. It denies breach of contract or a breach of duty of care.
BDG accepts that damage was done to the machine by an internal fire but denies that the fire was as a result of any defect in the machine or any failure on its part. Rather it was caused or contributed to by the negligence of O'Connor Patternmakers in that, inter alia, it was left operating whilst unattended.
The only issue for this Court is that of liability. It is not disputed that the machine was repaired at a cost to the plaintiffs of $103,400.

Facts relevant to the questions in issue

Paul Zuvela ("Zuvela") a director of Blackpool Rock Co Pty Ltd and John Butter ("Butter") a director of Blue Waters Pty Ltd trade together under the name O'Connor Patternmakers. The business is that of engineering pattern making.
It produces models, patterns and moulds for a variety of different industries. Until the purchase of the ShapeMaker it utilised a manual fabrication method to make these patterns and moulds. Such a process is very labour intensive.
Butter and Zuvela wished to move to a more automated process on the basis that this would improve production and thus profits.
Zuvela and Butter each holds a certificate as a tradesman in engineering pattern making. Neither is qualified as an engineer.
Mark Pivac ("Pivac") is the director of BDG and was instrumental in the design and building of the ShapeMaker.
He holds a Bachelor of Engineering in Aerospace. He also describes himself as a design engineer. He gave evidence of his extensive experience in CNC machines, both in manufacture and design, with BDG since 1995.
Zuvela and Butter gave evidence of prior dealings with Pivac which were of a satisfactory nature. It was clear from their evidence that they respected his innovation and thought highly of his designs and ability to invent machines. However, this CNC router was new and Zuvela and Butter proceeded with care.
Between March 2002 and August 2002 Zuvela and Butter met frequently with Pivac to discuss the replacement of the manual fabrication method with an automated system which would assist in achieving O'Connor Patternmakers' aims of a more efficient, profitable and accurate pattern making service.
An offer to provide the machine was made by correspondence of 9 July 2002 by BDG to O'Connor Patternmakers.
The letter of 9 July 2002 stated that the offer was of a new design of machine. The letter attached certain specifications. O'Connor Patternmakers was offered a "very special and once off deal for the first machine" and it was asked that the price be kept very confidential:
"This first machine is to be to production standard but we do expect to do significant development with it (at our cost and working around your production requirements) so that we can both get the maximum benefit from it."
Zuvela gave evidence that he wanted Pivac:
"to produce a machine that would adequately perform the task we had asked him."
He gave evidence that he and Butter were totally reliant on Pivac's expertise in designing, manufacturing, building and supplying the machine. The evidence of Zuvela was that he viewed the machine as a prototype. It was the first of its kind and he was aware that significant development was to be done. Butter gave evidence that the machine was not so much a prototype but a machine that would do what the company wanted it to do. He expected there would be some teething issues.
On 12 August 2002 an order was placed by O'Connor Patternmakers with BDG for the machine.
The ShapeMaker was installed on 6 May 2003 at O'Connor Patternmakers.
A CNC machine uses a computer program to control a cutting tool which moves to specific locations on a work board and shapes a specific work piece. It takes a piece of material, eg timber or fibreglass, and turns it into a finished shape. The actual cutting tool is enclosed within a support carriage which is moved up and down by a vertical movement feed screw attached to another mechanism which can slide horizontally by means of a transverse screw feed. The weight of the carriage and cutting head is partially supported by a rope passing over a pulley located between two gas struts which are behind the support carriage. The two gas struts and rope system supplement the vertical travel mechanism. The gas struts apply the force. The rope supports a considerable weight. The exact weight was unknown.
The control system for the machine is housed in a cabinet at one end. Access can be gained by means of a large door. The actual routing mechanism is located centrally in the cabinet. A curtain protects the feed mechanisms from dust generated by the cutting of a work piece.
The machine installed was not exactly the same as indicated in the specifications attached to the letter of 9 July 2002. As an example, internal ducting for dust extraction was not supplied. There was no port for such equipment. Pivac gave evidence that he showed the plaintiffs how to put a hose to the machine to reduce dust levels inside the machine. Zuvela gave evidence that he regularly asked Pivac for a port to be installed but was simply told that the machine was a work in progress. It was not supplied and that remained so even at the date of the trial. After each process settled swarf covered every thing and was vacuumed from the work area by the plaintiffs.
Pivac's evidence was that certain brochures or documents were supplied with the machine but accepted that there was no single written instruction or operator's manual. Zuvela and Butter gave evidence that there was no warning sign or instructions on the ShapeMaker itself. In particular there was no written warning that the machine was not to be operated whilst unattended.
Pivac gave evidence that he supervised the unloading and installation of the ShapeMaker. He directed the electrician to connect the machine and he trained the operator Soren Christensen ("Christensen"), an employee of the plaintiffs to use the machine. This training commenced prior to delivery of the machine and continued after delivery. Such training included Christensen and Pivac doing jobs together. The directors gave evidence that Christensen was a good employee who reported to them daily. He was quiet and conscientious and kept to himself.
Christensen did not give evidence at trial. He was living in Tasmania. His contact details were available to both parties. Each party made contact with him yet neither party took steps to call him to give evidence. I formed the view that he was unlikely to assist either side.
There were minor teething problems with the machine. Some of these related to the tool changer. Pivac attended frequently. Butter gave evidence that any problems were rectified quickly and the machine was soon up and running again.
On 9 July 2003 the ShapeMaker experienced a malfunction. The rope which provided assistance to the vertical travel mechanism failed and the cutting head plunged unexpectedly into a work piece. The ShapeMaker stopped and did not continue to cut the work piece.
As a result of this malfunction Pivac attended the same day and the rope was replaced.
The initial rope had been of a four millimetre diameter and this was replaced with a rope of an eight millimetre diameter. The pulley over which the rope travelled was not changed. Pivac gave evidence that he had incorrectly judged the length of service life of the rope. Both ropes were of pre‑stretched synthetic material with two cores – an outer sheath and an inner core. Pivac said the eight millimetre rope had a breaking strain of some 1,700 kilograms. At first he said the vertical travel column and associated equipment was approximately 85 kilograms. He then said:
"I have never weighed it and, as far as I know, no one else has, and that's from our design calculations which didn't include the weight of cables and various other equipment which has been fitted onto the vertical columns. So the weight, in fact, may be a little higher than that. I don't believe that it would be 100 kilograms, but it may be."
The original four millimetre rope had worn out and broken by 9 July 2003. Pivac was of the view that the particular ropes provided good wear resistance and high strength.
Both ropes were yachting braids called Yachtmaster XS and were made by Donaghys. They were double braided polyester consisting of an open weave braided polyester core with a tightly woven braided polyester cover. The specification sheets from the manufacturer indicate that:
"Yachtmaster XS is the result of prolonged development to establish extra strength and ease of splicing…
·Use as/with – sheets, halyard tail, spinnaker sheets and guys, down hauls, reefing and furling systems."
The minimum breaking load of an eight millimetre diameter rope was stated to be 1,450 kilograms.
On 20 October 2003 the ShapeMaker experienced further difficulties. The rope jumped off the pulley it travelled over again causing the ShapeMaker to break down. The ShapeMaker stopped and did not continue to cut the work piece.
Again Pivac attended, reinstated the rope and on this occasion installed a metal guide designed to prevent the rope from leaving the pulley as it travelled over it. It was explained that when the rope is at the extreme limits of the travel of the gas struts there may be some looseness due to the fact that the gas struts slow down a little. The guide was installed to contain any such looseness at the top of the travel and thus keep the rope in place.
Pivac accepted the rope could rub against the guide and that the rope itself undergoes varying forces of tension during the machine's operation. The rope experienced some fuzzing which was consistent with it being in contact with a pulley or some other object. However, Pivac saw the rope fuzzing as simply being a sign of normal wear and tear.
Pivac was unsure whether he had installed the guide in a horizontal position or indeed an upright or vertical position at the top of the pulley. He accepted that it would be better engineering design practice if it had been installed in a vertical position. It was found, after the fire, to be in a horizontal position. He could not explain this.
The rope was again changed. The eight millimetre rope was replaced with a new eight millimetre rope. Pivac accepted that part of the reason he changed the rope then was there was some wear and tear on it.
Zuvela said that as a result of the July and October rope failures he gained the impression that if the cutting mechanism was overloaded for any reason the machine would automatically stop.
Pivac gave an explanation as designer of the machine as to why it may not have continued to cut the work piece after the work malfunction in July 2003. He said that if the motor was overloaded the machine should stop. He was also of the view that if the cutter was out of position the machine should stop. Thirdly, operator intervention can cause the motor to stop.
Pivac gave evidence that he attended the premises on or about 20 October 2003 after the second failure. After fixing the guide and replacing the rope he had a discussion with the directors. Neither of the directors remembered this occurring. Pivac said there was a conversation during which Butter and Zuvela expressed some concern about the reliability of the rope. Pivac indicated to them that there was nothing to be concerned about. However, they broached the issue of wanting to move to the machine functioning without staff being present during any overnight operation. There was a general discussion about this but Pivac gave evidence his view was that it was not a good idea because all sorts of things could go wrong, such as program error.
Both directors were very open in their evidence about leaving the machine unattended and did not in any way try to hide that fact that this was the general practice of the business. It was unattended and unsupervised by staff for the last cutting operation which appeared to coincide with the factory closing for the evening. This meant it would continue running into the night and when it had completed its manoeuvres it would stop on its own. The directors gave evidence there were no problems with this course of action. It was a deliberate policy based on economic considerations. Christensen was instructed to operate it on this basis by the directors. The last cutting operation was simply a finishing cut, the earlier main cutting operation or roughing cut having been completed during the day whilst the factory was attended.
Both directors indicated that they would have heeded any warning, had it been given, that it was unwise to leave the machine unattended or unwise to leave it operating without a staff member present. The ShapeMaker had been a costly investment for them and they wished to protect and preserve it.
On Friday 21 November 2003 Pivac attended at the premises to undertake some work on the spindle motor. There had been a problem with one of the drive mechanisms for a period of several weeks. On this Friday the machine had been re‑assembled. As Christensen had left for the afternoon Pivac gave evidence he wrote a note to him outlining the work done and instructing him to keep an eye on the particular job and to supervise the entire process. Pivac also spoke to Zuvela at the factory before he left.
There is nothing to indicate the content of the note was ever passed on to Zuvela. Neither of the directors said he was aware that a note had been left. Neither had seen the note nor been told about the note. The note was neither discovered by the plaintiffs nor said to be in existence by the plaintiffs. No request to the plaintiffs for its particular discovery was made by the defendant. Notification of the fact of this note was made by the defendant, in the context of the proceedings, very late in the day.
The following day, Saturday 22 November 2003, the machine was working on the rear section of a boat mould. This comprised fibreglass cloth bonded to a polystyrene foam shape and covered by a surface layer of glass filled epoxy. The ShapeMaker was cutting the epoxy filler cover to give a smooth finish. It was executing a finishing cut. This work piece was attached to a medium density fibre (MDF) base board which covered the aluminium cutting table. Both directors gave evidence they were sure that the ShapeMaker had previously cut such material and there had been no problems in the past. There had been no problems with combustibility. Christensen had started the cutting during the course of the day and had left the factory prior to completion of the final cut as was the business practice. Butter had left the factory after Christensen and was responsible for the locking of the factory. At that time the cutting was proceeding without problems.
The machine malfunctioned and the ShapeMaker was damaged by an internal fire. The cutter went through the MDF work surface and embedded into the aluminium work table.
The ShapeMaker was damaged by fire and the end result was the machine was a blackened charred mess.

O'Connor Patternmakers pleads:
"10.The fire was caused by a third failure of the rope which provided assistance to the vertical travel mechanism ('the third rope failure'), as a consequence of which the complete vertical travel assembly and cutting head overcame the vertical travel stepper motor allowing the cutting head to fall down. Extreme friction resulted in the MDF base board as the router descended into it. This friction ignited sawdust which in turn ignited the polystyrene work piece."
BDG Machine Tools subsequently carried out repairs on the ShapeMaker. The rope was replaced with a support chain and a single vertical gas strut positioned outside the path of the vertical carriage. A warning sign was placed on the machine providing, inter alia, that the machine was not to be left unattended while in operation. Pivac stated that the changes were made because he saw a better way of doing things.
The evidence at trial was that since this change from rope to a chain the travel mechanism had not experienced any further malfunction. The plaintiffs, since the fire, has not left the machine to operate on an unattended basis.
The defendant denies that any rope failure was the cause of the fire. It is not in a position to explain the cause of the fire but simply says the Court cannot be satisfied on the balance of probabilities that the fire and subsequent damage to the machine was as a result of any action or failure to act by it, in particular the breaking of the rope.

Expert evidence as to the cause of the fire

The experts spent a lot of time answering questions in relation to what was, essentially, timing. Was the rope cut first and as a result a fire started or did for some reason a fire start in the work piece and burn the rope thereafter.

(a) Martin Eric Simms

Mr Simms was called by the plaintiffs. He held a Bachelor of Applied Science (Mechanical Engineering). He had over 17 years experience in private practice as an independent consulting engineer. He inspected the fire damaged router at the plaintiffs' premises on 25 November 2003. His instructions were to ascertain the cause of the fire. He took photographs at the time of that inspection and these were included in his written reports.
His overall view of the likely cause of the machine failure and subsequent fire was that the rope had failed. This allowed the gas struts to expand in an uncontrolled manner and as a result any support contribution of the struts was lost as a result and the cutting head had plunged downwards and pierced through the work piece. The cutter was still moving sideways and backwards but without the vertical travel which was assisted by the rope. In moving on a horizontal plane it cut through the MDF base board into the aluminium and in doing so, generated a considerable amount of friction and heat. This heat coupled with the presence of saw dust or swarf, ignited the polystyrene work piece and caused the fire which destroyed the machine.
Simms gave a number of reasons to support his conclusion that the rope was cut in the material place rather than being burned.
He said there were clear signs of rope abrasion. There was obvious fuzzing on the rope surface near the cut which indicated wear and tear consistent with abrasion. The signs of abrasion suggested that the rope was cut and not burnt.
There was evidence of wear on the right handed gas strut which was quite significant. This led him to the view that the gas strut and also the rope were more or less certainly rubbing on the back of the carriage, again having an abrading effect.
There was a failure in the rope surface over a short region. The failure was localised. This was a common characteristic of cutting. He also gave evidence that in his experience when this sort of rope was cut the outer jacket of the rope would be cut through first and withdraw leaving some protruding parts of the inner core. He observed this phenomena here. It was a two‑stage failure consistent with cutting as opposed to burning.
He was also of the view that the rope was likely to have been subject to added abrasion because the pulley over which it ran was of a small size relative to the diameter of the rope. The machine had originally been constructed to accommodate a four millimetre rope. This had been changed to an eight millimetre rope. However, the pulley had not been changed and although the rope did sit in the pulley, Simms was of the view that because it was a small pulley size, the larger diameter rope, as it went over it, was being bent through quite a tight radius. As the rope had some inherent stiffness in it, this would accelerate wear and tear. He summarised this as meaning the rope had a predisposition to jump because of the small diameter of the pulley, the highly dynamic movement of the rope and the inherent stiffness of the rope.
After the fire the guide installed by Pivac in October 2003 was photographed in a horizontal position. Simms thought it likely it was actually installed in a vertical position, the correct position, but with the rope rubbing it, it is likely it was pulled down to the horizontal. The rope was not actually charred as would be expected if it had snapped through burning.
He was also of the opinion that the cutting head had kept moving and machining for some time after the rope failure. He was of the view that if the fire had happened prior to the rope failure then it would be logical to expect the wiring in the motor would have burnt out and the motor would have shorted before the fire actually reached the rope.
He observed friction burns on the MDF. MDF does not ignite easily. It had a charred surface which supported the cutting head generating a considerable amount of heat after the rope had broken. The extreme friction in the MDF ignited the swarf which ignited the polystyrene work piece and the fire started.
He observed a piece of the curtain had attached to the snapped or cut‑end of the rope. After the rope had been cut, it fell forward and down and the upper curtain then attached to it whilst it continued to burn. Some of the curtain melted onto the end of the rope in such a position to suggest, logically, after it snapped. This part of the rope showed no sign of heat damage. It had simply adhered to a small patch of curtain. The end of the rope suffered very little melting and an examination of it shows that there is a frayed area which according to Simms showed a breakage in the rope.
He was asked to comment on other possible causes of the fire. The defendant had not pleaded any positive possible cause of the fire but its position was that Simms had not considered that there may, indeed, be another cause or causes for the fire apart from the rope breaking.
Simms addressed the alternatives put forward by the defendant's expert including a static spark igniting the swarf. He was of the view that such a spark is extremely unlikely to have sufficient energy to create enough heat to ignite something. Even if it did occur which was reasonably unlikely it would be very unlikely to ignite the material.
In cross-examination when asked to comment about the possibility of static electricity being the cause he described that possibility as "vanishingly small". In relation to friction generated heat causing the fire he saw that as "fanciful".
He did not accept that the cutter was overloaded and on that basis should have shut the machine down. He examined the cutter at the time of the fire and the only damage to it was where it had plunged into the aluminium base plate. The unchipped edges were sharp with no signs of overload. The depth of cut being made at the time would not have overloaded the cutter in any event in his view.
He was questioned about the function of a servo‑motor such as the router had. He accepted that if the machine was not tracking on a pre‑computerised course the motor should shut down automatically. The underlying polystyrene foam had previously been machined using the same programme. The finishing cut was simply in relation to the coating on the foam and required such a small computer adjustment of some six millimetres that Simms was of the view it was highly unlikely that any malfunction was due to a "computer programming error". He conceded it was not impossible.

(b) William Jack Apgar

Mr Apgar was called for the defendant and was a qualified engineer and scientist with 30 years experience. He referred to himself as a consulting engineer. He received instructions from Pivac to investigate the cause of the fire in October 2005. Given the late instructions he did not inspect the machine. He did not see the rope in situ and was reliant by and large on photographs taken by Simms. He did inspect the rope on 31 January 2006.
The main thrust of his evidence was that it was very difficult to pinpoint the cause of the fire as there were a number of possibilities. He was not of the same view as Simms that the rope had broken or been cut prior to the fire. He identified one piece of rope as being badly heat damaged. He simply could not say what initiated the fire.
Apgar accepted one break in the rope was localised, that is it occurred around the entire rope. He accepted the rope could have been cut but he was of the view there was melting to another area as well. He did not accept there was any evidence of a major abrasive event.
In relation to the pulley guide he was of the view that it was preferable, as in the photograph produced, for it to have been installed in an horizontal position. This did not accord with the evidence of either Pivac or Simms.
He accepted his conclusion that there was no evidentiary support for the likely cause of the fire being a rope failure had been made before the rope was examined. After he had the opportunity of physically examining the rope, he said that he saw evidence that was "contraindicated". This was not explained.

Conclusion on expert evidence as to cause of the fire

Overall I prefer the evidence and conclusions of Simms. I do so for the following reasons:
·Whilst there were some general errors or defects in his evidence he made appropriate concessions about these and was willing to re‑express his views based on the correct information. In any event it seemed to me that few of his errors made any substantial difference to his conclusions.
·He was in a position to examine the router a few days after the fire. He was able to take photographs and view the rope and machine in situ. Apgar was not so fortunate in this regard. His instructions were received much later and he did not actually see the rope until January 2006. Despite this he did prepare a summary of evidence and form conclusions without having the benefit of actually viewing the rope segments. I accept what Simms had to say about which segment of rope was the cause of the problem.
·It was relatively easy to understand the line of reasoning behind his conclusions. He did not shy away from addressing other possible alternatives for the cause of the fire and dealt with these. I found Apgar more willing to speculate about any likely cause for the fire starting.
·The guide over the pulley was found to be in a horizontal position after the fire. Having carefully considered the evidence of Pivac in that regard I formed the view it was highly likely, in accordance with good engineering practice, the guide was placed in a vertical position. However, most likely, due to the action of the rope it came into a horizontal position. The original installation of the guide by Pivac is likely to have been in the correct position. I found Apgar unlike Simms unwilling to consider this possibility. Simms was not shy of giving credit to Pivac where credit was due.
·It seemed to me his overall outlook and conclusions were more objective.

Operation of the machine on an unattended basis

The fire started when there was no one present in the factory. The router had been left to complete its finishing cut. The directors and Christensen had left the factory.
Pivac gave evidence that he counselled the directors in October 2003 that it was "not a good idea" for no‑one to be present in the factory overnight when the machine continued to operate. The directors had no such recall and denied such a comment had been made. Pivac accepted there had been no general verbal instruction as he saw it as self‑evident that a machine should not be left unattended. There was no instruction on the machine to suggest that it should not operate unattended and there was no instruction manual.
Pivac gave evidence that he left a note on 21 November 2003 for Christensen to keep an eye on the entire process. I find that if such a note had been left it was either not seen by Christensen or not complied with. It was the practice of the directors to allow the machine to operate unattended.
The experts had different views about the issue of leaving the machine unattended and its impact on the damage done. As a result of my conclusions I take this matter no further.

Causation

I am satisfied, on the balance of probabilities, that the catalyst for the fire was the rope breaking rather than for any other reason or reasons.
Whilst I accept, based on the evidence of Butter, Zuvela and Simms that overall this machine was innovative and well thought out I formed the view that Pivac exhibited some lack of care or rather lack of attention to detail on a practical level. Of particular relevance, the use of yachting rope despite its supposed durability appeared to me, in all the circumstances, to be somewhat risky. It was difficult to understand the basis upon which he considered the choice of a rope of this nature to be suitable for use in an industrial machine in a factory.

Relevant legislation and legal principles

The plaintiffs' claim has a number of different bases. Any claim under the Trade Practices Act 1974 (Cth) was abandoned at trial.

Breach of contract and a claim in negligence

The plaintiffs rely on the contract having implied terms as to fitness for purpose and merchantable quality under the Sale of Goods Act (WA) 1895. It is accepted the contract is made up of the letter between the parties of 9 July 2002 and the order for the machine of 12 August 2002. There were pre-contractual discussions for several months prior to this.
Section 14 of the Sales of Goods Act (WA) 1895 provides:
"Subject to the provisions of this Act and to any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows;
(i)Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not) there is an implied condition that the goods shall be reasonably fit for such purpose; provided that in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose;
(ii)Where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality: provided that if the buyer has examined the goods there shall be no implied condition as regards defects which such examination ought to have revealed:
. . ."
There are a number of issues to be dealt with within that section.
O'Connor Patternmakers claims that it was an implied term of the contract pursuant to s 14(i) of the Sales of Goods Act and by operation of law, that the ShapeMaker was suitable to produce industrial patterns. That term is alleged to be implied by virtue of the contract entered into between the parties and also by virtue of the pre‑contractual negotiations between March and August 2002.
The malfunction happened some six months after the delivery of the machine.
In Clark v Esanda Ltd [1984] 3 NSWLR 1 at 8‑9 the Full Court of the Supreme Court of New South Wales adopted with approval what was stated in Lambert v Lewis [1982] AC 225 at 276 per Lord Diplock:
"The implied warranty of fitness for a particular purpose relates to the goods at the time of delivery under the contract of sale in the state in which they were delivered. I do not doubt that it is a continuing warranty that the goods will continue to be fit for that purpose for a reasonable time after delivery, so long as they remain in the same apparent state as that in which they were delivered, apart from normal wear and tear. What is a reasonable time would depend upon the nature of the goods…"
It is necessary to take into account that the rope had been the cause of two previous malfunctions which could not simply be attributable to normal wear and tear. The rope simply was not capable of enduring for any reasonable period.
The goods in question were for use in a pattern making factory. It was industrial equipment.
Section 14(1) of the Sale of Goods Act implies the term of reasonable fitness for the purpose supplied where the buyer makes known to the seller the purpose for which the goods are required so as to show that the buyer relies on the seller's skill or judgment and the goods are of the description which it is in the course of the seller's business to supply. The subsection contains a proviso that the term is not implied in the case of a contract for the sale of a specified article under its patent or other trade name. The mere fact that a contract includes the trade name of the goods sold will not prevent the term being implied if the buyer makes known to the seller the purpose for which the goods are purchased, shows that the buyer is relying on the seller's skill or judgment and the goods are of a description that are in the course of the seller's business to supply: Baldry v Marshall [1925] 1 KB 260; Grant v Australian Knitting Mills Ltd & Anor [1936] AC 85.
The ShapeMaker was in the course of the seller's business to supply. BDG had been involved in this business since 1995. O'Connor Patternmakers purchased the router from the defendant because it was going to assist it by automating its method of pattern making and assisting it to become a "more efficient, profitable and accurate pattern making service". The directors were aware from previous dealings with Pivac that he had the necessary skill. He had the qualifications and experience and the evidence is they were totally reliant on his skill and judgment. I formed the view there was a careful lead up to the order being placed.
There is no doubt that between May and November 2003, by and large, the machine functioned and despite some teething problems produced a more efficient, profitable and accurate pattern making service. Although there was a reduction in cost price the plaintiffs had been promised a machine to production standard.
The price of the router was discounted and there was to be ongoing development at the defendant's expense. Despite this the contract stated and the expectation was the machine was to production standard.
Leeway was given by the plaintiffs to BDG when the machine failed in a fairly fundamental way in July and October 2003. Leeway was also given when no internal ducting was available for dust extraction, the tool changer caused problems and the spindle motor experienced backlash. Modification and development was done and little if no time was lost in the ability of the machine to make patterns for the plaintiffs. However, the rope problem was not solved despite attempts and clearly on 22 November 2003 the machine, for a final time showed that it was not of production standard. The partial rope support system was fundamental to the cutting function of the machine. The end result was that the router was not reasonably fit for its purpose of cutting patterns.

Even if a product appears to be functioning appropriately it may still be unfit for purpose if it has a defect which unacceptably increases the likelihood of its failure, here the use of the rope. (Courtney v Medtel Pty Ltd [2003] FCA 36).
It is my view that the term of fitness for purpose is implied into this contract by the Sale of Goods Act It is clear from the evidence that in the negotiation phase there were drawings and specifications of the ShapeMaker provided to the plaintiffs. The provision of the drawings and specifications confirm my view that the plaintiffs were reliant on the skill of the defendant. The directors were qualified as pattern makers not as design engineers as was the defendant's director.
I am satisfied on the balance of probabilities that there has been a breach of the implied condition as to fitness for purpose. Liability under s 14(i) of the Sale of Goods Act is strict, irrespective of negligence. Lord Steyn stated in Salter v Finning Ltd (1996) 3 All ER 398 at 408 commenting in relation to the equivalent English statutory provision:
"While the implied condition that the goods are reasonably fit is inherently a relative concept it is well established that the liability under s 14(3) is strict in the sense that the sellers liability does not depend on whether he exercised reasonable care".

Contribution

The relevant provisions of the Civil Liability Act 2002 and Civil Liability Amendment Act 2003 do not apply. The commencement date, relevantly here, of proportionate liability, even if it was found to be applicable, is 1 December 2004.

Conclusion

In conclusion, given my findings in relation to s 14(i) of the Sales of Goods Act (WA) 1985 I find I need take the matter no further. There will be judgment for the plaintiffs in the amount of $103,400.

[2006] WADC 138

6 September 2006