Boral Ltd v Foley and Bear Pty Ltd trading as J and R Industries; Foley and Bear Pty Ltd trading as J and R Industries v Boral Ltd

[2015] NSWDC 240

District Court

New South Wales

Medium Neutral Citation:

Boral Ltd v Foley & Bear Pty Ltd trading as J & R Industries; Foley & Bear Pty Ltd trading as J & R Industries v Boral Ltd [2015] NSWDC 240

Hearing dates:

23-26 February 2015; 5 March 2015; 4 May 2015

Decision date:

23 June 2015

Jurisdiction:

Civil

Before:

Cogswell SC DCJ

Decision:

(1) In the Local Court proceedings, a finding in favour of Boral Ltd against J & R Industries and Stephen George Bear.
(2) In the District Court proceedings, a verdict and judgment for J & R Industries against Boral Ltd in the amount claimed.

Catchwords:

CIVIL LAW – contract – breach of contract – supply of goods – whether document a credit agreement or supply agreement – terms and conditions incorporated by course of dealings – whether product supplied fit for the purpose for which it was ordered – causation of damages – whether novus actus – whether damages claimed made out – correct measure of damages

 

EVIDENCE – expert evidence on behaviour of concrete

  PROCEDURE – conduct of litigation – whether correct corporate entity sued – resolution of the real issues in proceedings – additional issues raised lacking merit

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 56
Uniform Civil Procedure Rules 2005 (NSW), r 14.14(2)
Sale of Goods Act 1923 (NSW), s 19

Cases Cited:

Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310
Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243
Tabcorp Holdings v Bowen Investments Pty Ltd (2009) 236 CLR 272

Category:

Principal judgment

Parties:

Local Court Proceedings:

 

Boral Ltd (First Plaintiff)
Boral Resources (Country) Pty Ltd (Second Plaintiff)
Foley & Bear Pty Ltd trading as J & R Industries (First Defendant)
Stephen George Bear (Second Defendant)

 

District Court Proceedings:

  Foley & Bear Pty Ltd trading as J & R Industries (Plaintiff)
Boral Ltd (Defendant)

Representation:

Counsel:
C P Locke (Boral Ltd and Boral Resources (Country) Pty Ltd)
B Lloyd (Foley & Bear Pty Ltd trading as J & R Industries and Stephen George Bear)

  Solicitors:
Oliveri Lawyers (Boral Ltd and Boral Resources (Country) Pty Ltd)
Slater and Gordon Lawyers (Foley & Bear Pty Ltd trading as J & R Industries and Stephen George Bear)

File Number(s):

2012/00196212; 2012/00357464

Judgment

Introduction

1. A company was engaged to do an important job for the New South Wales National Parks and Wildlife Service.  The job was to supply and construct pedestrian bridges over the Thredbo River in the Kosciuszko National Park.  To do this job the company needed concrete for the footings and a system to get the concrete into the footings for the bridges.  It contracted with two other companies, one to supply the concrete and the other to pump the concrete into the footings of the bridges.

2. The work went well for a couple of the bridges but there was a major problem with another one of them. The concrete did not flow through the pipes properly and got stuck there.  The pipes were damaged and a lot of expense incurred by the first company and the pumping company in fixing up the damage. The concrete was lost.  A second problem occurred on the second attempt to make the same pour some months later. 

3. The first company did not pay for the concrete so the concrete supplier sued it in the Local Court.  This highlighted the question of who was responsible for the damage. The first company sued the concrete supplier and the pumping company in the District Court for damages.  The first company and the pumping company settled out of Court.  That leaves the issue in this case for me to determine whether the first company has proved that the concrete supplier was responsible for the damage and, if so, to what extent.

4. As litigation lawyers well know, s 56 of the Civil Procedure Act2005 (NSW) provides that the overriding purpose of that legislation and of the rules of Court "is to facilitate the just, quick and cheap resolution of the real issues in the proceedings". To my mind, the real issues in dispute in these proceedings involved what happened on the two days in question and who should pay for any loss. Those issues were the subject of lay and expert evidence and the skilful conduct and argument of the respective cases on behalf of the first company and the concrete supplying company. But there are a number of other issues which were raised by the concrete supply company that appear to me to lack merit. Nevertheless, the argument and resolution of those other issues has generated of good deal of time, effort and paperwork. I will return to those other issues in due course.

Parties

5. First, I should identify the various parties.  What I have referred to as "the first company", the one with the contract with the National Parks and Wildlife Service, is Foley & Bear Pty Ltd.  They trade as J&R Industries.  The concrete supplier is Boral Limited.  The pumping company is Chris Ross Concrete Pumping Pty Ltd.  J&R Industries were represented by Mr B Lloyd of counsel and Boral were represented by Mr C P Locke of counsel.  I repeat that the real issue in dispute in this case was conducted with efficiency and skill both by Mr Lloyd and Mr Locke.

Local Court Proceedings

6. I need to resolve not only the proceedings in the District Court but also the proceedings in the Local Court where Boral sued J&R Industries and its director, Stephen Bear, on the unpaid invoices for the supply of the concrete.  J & R Industries and Mr Bear himself each filed defences.  In substance, each of them raise three defences - 

1. they put Boral to proof of certain allegations in the statement of claim in the Local Court by denying or not admitting those allegations;

2. they assert that if they were indebted at all, the amounts claimed by Boral "are excessive or too remote";

3. they claim the goods supplied were defective, causing them loss which they are entitled to set off against Boral's claims.

7. It is clear to me that the second and third defences raise the issue that is the subject of the District Court proceedings - they raise quantum rather than liability.  J&R Industries and Mr Bear, in any event, cannot plead such defences as defences to liability because they have contracted out of doing so.  Clause 1 - under the heading "Customer Obligations" - in a document which formed part of the terms of the contract between Boral and J&R Industries and Mr Bear, provided that the customer agrees that it will "pay by the due date, without any deduction or set‑off, the price charged" by Boral. Therefore the procedure adopted by J&R Industries and Mr Bear of suing in the District Court is the only one available.  They must sue separately on what they say Boral's liability is to them.  In my opinion, these two pleaded defences, for the reasons I have given, provide no defence to Boral's claim and must fail so far as the Local Court proceedings are concerned. 

8. The remaining defence of substance turned on one point. I will come to that shortly. It is clear to me that J&R Industries and Mr Bear did not otherwise challenge the evidence and arguments offered by Boral to prove the allegations in the statement of claim in the Local Court.  The affidavit of Mr Caligiore went unchallenged as did the submissions of Mr Locke in MFI 17, his initial outline of submissions in paras 1 - 26. Mr Lloyd developed his one point in his closing address.  AT T399 Mr Lloyd argued, as follows -

"If the credit application form [which I quoted the clause from earlier] is the totality of the contract between my client and Boral, then this is not a supply agreement, this is a credit agreement.  In para 6 of the statement of claim it is pleaded that the concrete slurry relevantly was supplied under this agreement.  It is not.  This is a credit agreement, just arranging the terms of credit in which you would pay for the goods if they were supplied under a different agreement."

At T400 Mr Lloyd says that "[t]he pleaded case is that goods were supplied under this document and it is my submission that all this document does is at best it incorporates terms into its supply agreement as to the manner in which payment is to be made."  Mr Lloyd concluded, at T400, as follows –

"So the liability which is pleaded to arise does not arise in the way in which, in my submission, it is pleaded, namely, under this particular agreement."

9. I think the weakness in the argument is that it relies on too narrow an understanding of the "credit agreement" as meaning the written document that is annexure E to Mr Caligiore's affidavit.  It is not so limited as the pleadings are concerned.  Clause 3 of the statement of claim in the Local Court includes the assertion that the "Credit Agreement consisted of a written Confidential Credit Application (the 'Credit Application') and an acceptance of the supply of goods by the Supplier to the First defendant on credit." By alleging in para 6 of the Local Court statement of claim that Boral "supplied goods to the First defendant...under the Credit Agreement" it means, by necessary implication, that Boral supplied goods on credit and those goods were accepted by J&R Industries.  All of that has been proved.  I reject J&R and Mr Bear's challenge to putting Boral to proof of the statement of claim. 

10. Therefore, I am of the opinion that Boral has satisfied me of what they have to prove.  I accept Mr Locke's submissions in this regard and, in my opinion, none of the defences raised in the Local Court succeeds.

11. It follows that I would find in favour of Boral in the Local Court proceedings against J&R Industries and Mr Bear.  I would find against Mr Bear because his only defence turns on the primary liability of his company, J&R Industries.  I will return to the question whether I enter any verdicts and judgments at this stage or not.

District Court Proceedings

12. I now turn to what I regard as the real issue in dispute in the District Court proceedings. There are four accounts of what happened on the morning of the first pour, which was 7 December 2011. Two are witnesses and two are documents.  The witnesses are Mr Reg Bear and Mr Brendan Ross. They were both at the scene.  They were the only two witnesses before me who gave eyewitness accounts of the events that morning.  One of the documents is a report of what happened.  It was prepared by Reg Bear for his company's client, the New South Wales National Parks and Wildlife Service.  It was dated just five days after the incident.  The other document comprises minutes of a meeting on 8 December 2011, the day after the incident.  The main players were present, all represented.  The document does not disclose its author.

13. The two witnesses' accounts were explored in cross‑examination rather than challenged, apart from an issue about an angle in the pipe.  I am aware that the position of each witness is that the problem was not his respective company's fault.  I am also aware that the incident report is prepared by J&R Industries for its customer in circumstances where there had been a significant failure to deliver a product and service for the customer.  The report specifies the cause of failure as "substandard concrete slurry" but neither that report or the minutes were significantly challenged and Mr Locke acknowledged, at para 58 of his outline of submissions (MFI 17), that on any view of the evidence "it could not be said that Foley & Bear were at fault in any way for the events which occurred at the pump site in December 2011 or March 2012". I therefore regard the two documents as likely to be the most accurate accounts available to me being, as they are, reasonably contemporaneous and well before the commencement of the litigation.  I also regard the two witnesses as reliable.  Both qualified their answers when they were not sure and neither appeared overly defensive, nor was either exposed as dishonest or unreliable in cross‑examination.

14. I accept the account provided in the incident report (exhibit SGB4 to exhibit A in the proceedings) and which is set out under the heading "Sequence of Events 07/11/2011". (That obviously should read "07/12/2011".)  I accept that account down to and including the subparagraph on the following page commencing with the words "Note:  it was witnessed...". 

15. Part of the description contained in that passage concerns the flow of slurry.  The sequence of events is stated.  Before concrete is pumped through the pipes a substance (slurry) is pumped through. It serves to prepare the pipes for the pumping of the concrete. The description I have referred to includes an observation from an employee of J&R Industries "that the slurry was flowing like honey and not like paint".  I infer that description was of the slurry as it began to flow into the footing of the bridge.  An experienced observer, who had been at the previous pours, noted that "something had changed".  That observer was the same employee who described the slurry like honey rather than paint.  The context made it clear that something had changed from the previous pours. 

16. Mr Bear's description in the witness box (at T109) is consistent with this observation.  Mr Bear, in cross‑examination, baulked at describing the exit of the slurry as a "flow", preferring to say that "it came out of the other side".  He would not describe the progress of the slurry as being "successfully pumped".  That is consistent with photograph 3 which is part of exhibit C and with para 32 of Mr Bear's affidavit, exhibit A.

17. J&R Industries has satisfied me on the balance of probabilities that the flow of the slurry, from the start, was not as free as it should have been.  That is clear from the two eyewitnesses and the contemporaneous documents.  That description also applies to the period before the introduction of the cement.  When the pipes were opened, the slurry had set hard.  For reasons which I will give when considering the opinion evidence, I find that it was the condition of the slurry that caused it to flow as it did and not as it should have.  The slowed flow contributed to some of the slurry still being in the pipe as it began to set, thereby causing the damage.

18. What then is the explanation for the inadequate condition of the slurry that was in and coming out of the pipes and who should be responsible for it?  This will require consideration of the opinion evidence of two witnesses.  Mr John Franceschini is a director of Sharp and Howles Pty Ltd. He was called for J & R Industries.  Mr Michael van Koeverden is a civil engineer working for a company known as EMS, Engineered Material Solutions, who was called on behalf of Boral.

19. J & R Industries say that it was one or more of three factors - for all of which Boral was responsible - that caused the problem.  The factors are these:  the failure to add a requested retardant to the mix; a failure to add the correct amount of a product called Rheobuild 1000 (which I will refer to as R1000); and the permitting of stone aggregate into the mix.  It is for J & R Industries to satisfy me on the balance of probabilities of its case.

20. Starting with the aggregate, J & R Industries has failed to satisfy me that Boral was responsible for the presence of aggregate that was clearly in the pipes (see exhibit B).  The only source of aggregate for which Boral would be responsible was at the batching plant.  Aggregate, for adding to the mix, was contained in two large three‑sided bins (T168 - 169).  Mr Lloyd explored with Mr Wade Rankin in cross‑examination (T184 - 185) the possibility that some aggregate was mistakenly picked up and included in the mix.  No evidence was forthcoming that satisfies me on the balance of probabilities that such an accident occurred.  Mr Wade Rankin said that he would "highly doubt" the sequence of events that would result in such an accident.  It amounts, in my opinion, to no more than speculation.  I agree also with Mr van Koeverden's evidence (at T34.40) regarding that likelihood.

21. I now turn to the retardant and the R1000.  Brendan Ross was obviously concerned that Boral would get the mix right.  At T126 he said this -

"I just wanted to make sure that there was retardant in the slurry and the concrete, as it was only ‑ we had a different batcher this time so wanted to make sure that everything was going to run smoothly.  I probably annoyed him more than anything on the phone.  I went and visited him at Boral in Jindabyne to make sure that he was comfortable, everything was in line to make sure our job was going to be, run smooth.  So, yeah, just make sure all of the t's were crossed and dots were I'd ‑ I's were dotted, sorry."

Mr Ross specifically asked for the addition of retardant (see T126.40).  A retardant would give them more time to deal with any problems.  At T127 Mr Ross explained what a retardant's purpose was.  He said -

"It's an additive that goes in to slow the concrete, slow the concrete down to give us more time if there is an issue anywhere along the line, just to, so it wouldn't go off, essentially, and we had more time with the concrete."

Going off means hardening.  There were no delays that morning at the "initial commencement" stage of the pumping (T128.15).  "It should have taken about 20 minutes to pump through" (T128.30).

22. Wade Rankin at Boral acknowledged that the conversation he had (no doubt with Mr Brendan Ross) about adding a retardant could have happened and confirmed that he failed to add it (T170).  Mr Wade Rankin also agreed that he failed to follow the batch card’s recommended 6 litres of R1000 and instead added 2 litres after speaking to Mr Peter Hannah, a more senior employee at Boral.  At T172 Mr Wade Rankin said he spoke to Peter Hannah "to see how much I put in it, I suppose, because I wasn't too sure."  He was not sure because "Rheobuild 1000, we normally don't use it" (T172.17).  His custom is to “double‑check with stuff I'm not too sure with" (T172).  He had been doing batching work for "probably six months" (T148) and did other things as well but "mostly batching" (T158).  R1000 was amongst "products I don't really use" (T174 - T176).  Mr Wade Rankin expressed some doubt about whether he added 2 litres or 6 litres (see T183 to 184) but it seems more likely it was 2 litres, and I am so satisfied.

23. J & R Industries and Mr Ross had little confidence in Mr Wade Rankin's experience and skill. In the minutes (at p 2) of the meeting which occurred on‑site on 8 December 2011, the day after the incident, Mr Bear is recorded as saying "Brendan and I have concerns about Wade's experience and have made many phone calls to him.  We are aware there have been problems with Wade's batching.  It was Darren that batched for the previous pours." The question is, what was the consequence of these failures on Boral's part?

24. J&R's expert John Franceschini, whose expertise based on qualifications and experience I accept, explained what he thought the effect of reduced R1000 would have been (at T245).  He was asked by Mr Lloyd to assume that the concrete slurry put together for the pour on 7 December 2011 did not have the recommended amount of R1000 but only had one third of the amount.  He was asked for his opinion about whether that would "have an effect on the way in which the concrete slurry behaved on 7 December 2011".  His opinion was that that was highly likely and that it was "most likely to have changed it to make it less workable".  Asked to explain the expression "less workable" he elaborated by saying "less plastic, stiffer" or "not as runny".  That would explain, in his opinion, why the concrete slurry took over an hour to pour on 7 December 2011.  If the correct amount of R1000 had been added he would have expected (he acknowledged at T246) all of the slurry would have been in the footings much sooner.

25. I should record my finding that the amount of R1000 that Wade Rankin added did not comply with the recommendation in the data sheet, which is exhibit G (see T257.30 and T258.05).

22. Mr Franceschini was also of the opinion that if retardant had been added “it would have taken longer…to set” (T259.22).  If both failures had been avoided it was highly likely, in his opinion, that the slurry would not have set when it did (T262.10).  Basalt aggregate was in the "overwhelming majority" of the cross‑sections of pipe examined by Mr Franceschini (see T264) it would have increased the viscosity of the slurry (T264.50). 

23. Mr Michael van Koeverden confirmed that R1000 does not affect the setting time but the workability of the mix (T305). However additional water would extend the setting time (T306).  As to the (about) 80 litres of water which was added at the site before the pour, he was of the view that it would have made the slurry "more runny so less viscous" (T306).  If R1000 was "under‑dosed… it would be…usually…thicker and less plastic" (T306). Mr van Koeverden agrees on 15 to 20 minutes as an estimate of the time for the slurry to get through the pipeline (T309). 

24. I should add, when talking about time estimates, that I regard estimates of time in the sense of what time of the day events occurred that morning as being too artificial.  These are estimates only and it was not as if anyone was looking at their watch at the time. It was clear that the slurry was not flowing as it should.  I add, in this context, that we have no evidence of the size of the hopper although they are "generally smaller" than 2 cubic metres (T318). I make those observations about time estimates because Mr van Koeverden's opinions are partly dependent upon those assumptions (see T310 - 311; T314 – 315; T316). 

25. Mr van Koeverdan explained that the purpose, indeed the only purpose, for the slurry "is to give you that lubricating coating to remove the friction that would occur through the pipe such that the concrete has its ability to be pumped on its own" (T316). Mr van Koeverden thinks it likely that exhibit B shows a segregated pattern of basalt. (He expressed that view at T340.)  Mr van Koeverden also conceded that the assumption of a 90‑degree flexible bend in the piping represented "part of the reason" why he reached the conclusions that he did. Mr van Koeverden places reliance on a pipeline not fully lubricated. But I find that all sections of the pipeline appeared to be lubricated.  This was the evidence of inspection of about 20 cross‑sections by Mr Franceschini (see T299).  Mr van Koeverden, on the other hand, has seen exhibit B only whereas Mr Franceschini has seen all 20 cross‑sections.

26. Mr van Koeverden makes it clear that it is not that concrete and slurry cannot mix or touch but they have two different roles: slurry lubricates the lines or piping for the concrete (T345 - 346).  Mr van Koeverden's theory of explaining what happened has to do with the idea of segregation, where the aggregate in the concrete separates and proceeds into the slurry.  He thought that segregation was still possible, even if most of the slurry had gone through.  He said (at T345) that it is "the nature of segregation...it will push through".  He observed (at T347) that there is a threshold "when the aggregates start to pull out of the concrete paste themselves".  Slurry, he said, is designed to have a predictable and set behaviour (T353). He says that R1000's role is to "allow you to get a targeted flow using less water" (T356).  If you add it, it will "remain in a more kind of runny state for a longer period" and will "increase workability" (T356).  As the effects wear off it will become "more viscous" (T356) or "thicker" and "regress in its workability" (T356).  If less is put in, the product will be "less runny" (T357).  If you put substantially less R1000 into the mix than the manufacturer's technical data sheet recommends then Mr van Koeverdan acknowledged that it would be "less workable" (at T358).  If R1000 is put in at the end of the mix it would look quite runny once mixed in after several minutes although perhaps with "a little bit less in workability" (T359 - 360).  He agreed that the "slump test" is a very rough guide.

27. There is evidence, which Boral relies on to prove a break in the chain of causation, that 80 litres of water was added at the site before the pour at the request of Mr Brendan Ross.  Mr Lloyd asked Mr van Koeverden in cross‑examination (at T369) the following -

"If the incorrect dose of Rheobuild 1000 had been put into the concrete slurry at the plant, is it the case that by the time it got to the pump site and the pump operator saw it, it might be starting to look thicker than usual, prompting the pump operating to ask for more water?"

Mr van Koeverden agreed that "Yes, that could occur."  But I cannot conclude that that 80 litres of water was enough to counteract the lack of R1000.  Mr van Koeverden said as much at (T367.30).  He agreed that the addition of retardant could have prolonged the setting time as "it's designed for" (T371).  He conceded (at T382) that assuming an incorrect dosage of R1000 and no retardant did not provide a "complete explanation" (T381 - T382).

32. In my opinion, the likely explanation for the inadequate condition of the slurry is the combined effect of the failures on Boral's part to add the requested retardant and to add the prescribed dosage of R1000.  The mix appeared paint‑like at the plant because the R1000 had been added last.  The slump test, which was administered before the pour, was relatively crude.  By the time it reached the site 80 litres of water was added "so dryness wasn't the issue" (see SBG5, p 1 of exhibit A).  Again, that was an explanation for the appropriate consistency to start the pumping.

33. Given the trouble that J & R Industries and Mr Ross went to beforehand and were engaged in on the day (they were senior personnel), it was unlikely that the pumping would start if it was not of adequate consistency.  I am not satisfied that the water added was enough to counteract the deficiency of R1000.  The problem was apparent as it emerged. The lack of a retardant meant that the slurry would set sooner than planned.  The setting time was not controlled by being delayed, as requested.  Hence, the thicker consistency of the R1000‑depleted slurry meant that the pumping was not as easy and therefore slower and the retardant‑depleted slurry set in the pipes. 

34. None of Mr van Koeverden's factors reduces the likely explanation, I have found.  It seems the coating was even.  If not, then the reason was a thickness or viscosity caused by Boral's error.  The pumping conditions or pipe alignment was "better" (see SGB5, exhibit A, p 1). Regardless of whether there was an excessive amount, the problem was apparent early, as it emerged.  If there was segregation, it was later when the concrete was pumped and not earlier when the problem was already apparent.  There was not, in my opinion, a 90‑degree elbow in the pipeline.  Also, in my opinion, the pipes were clean. The evidence of those at the site and the care taken in preparation for the pour convinces me of that.  There was no evidence of delays in pumping. 

35. I cannot explain the aggregate. It was not from Boral nor was it from Brendan Ross Pipes.  I think the most likely explanation is it was segregation from the concrete into thickened or slow‑moving slurry.

36. J & R Industries has satisfied me that the problem on 7 December 2011 was caused by Boral's failure to supply slurry that was fit for its purpose.

37. Turning now to the repeat‑pour on 17 March 2012, again I find the best place to start is with the eyewitnesses.  Mr Bear and Mr Ross were onsite when the pour occurred.  It was a re-pour of the unsuccessful pour of 7 December 2011.  The set‑up was the same (T129.20) but with new pipes to replace the ones damaged in the pour of 7 December 2011 (see exhibit A para 55 and exhibit B para 50).  Mr Bear's account is in his affidavit, exhibit A.  The slurry went through the successfully this time but then a blockage occurred with the concrete.  Mr Bear describes what he saw over paras 60 to 63 of exhibit A -

"[60] I was present when the pipes in these two areas were removed and I observed that the stone aggregate had largely separated from the rest of the mixture, and was blocking the pipe.  I was able to remove the blockage by hitting the outside of the pipes.  I was assisted by Brendan Ross to do this.  The vibration helps to dislodge the blocked stones.

[61] Once these blockages were removed the pipes were refixed and clamped and the pumping recommenced.  Almost immediately, there was another blockage.  This happened approximately forty times, and each time a blockage was removed and the pumping recommenced, another blockage would occur almost immediately.

[62] This continued to occur over a period of the next 3 ‑ 4 hours.  After attempting to pump and experiencing blockages and clearing them over that period, only to have them reoccur in different places along the pipe, it was determined that the concrete was not fit to be pumped and further attempts were abandoned.

[63] I observed on the second incident stone aggregate having separated from the rest of the mix, and forming a blockage in the pipe which was able to be cleared by removing the pipes, hitting them, then re-instating them."

38. Mr Brendan Ross also gives an account in his affidavit, over paras 53 to 58.  He observed that when the first load of concrete was pumping, and soon after it started, he could hear stones grabbing in the pipe.  He saw that the stone aggregate had appeared to have separated from the mix and was clogging the pipe.  He had to remove pipes and hit them with a hammer.  When pumping recommenced it blocked almost immediately.  He said it happened “about at least 30 times, over the next 3 ‑ 4 hours".  He said every time a pipe was cleared another would block. Each time it was the same, the aggregate had separated from the mix and clogged the pipe.  He said -

"This was most unusual ‑ the mix did not appear to be as it usually was ‑ it did not appear to be mixed properly, and the mix wasn't adhering to the aggregate as usual, rather it was like it was overdosed with stone.  It was meant to be a 7/10/14/20 blend.  7mm aggregate, 10mm aggregate, 14mm aggregate and 20mm aggregate.  It looked liked it was wholly 20mm aggregate.  I could see there was very little 7mm, or 10mm, or 14mm aggregate and it looked like it was just not staying together as usual.  It looked like there was 90% or more 20mm aggregate."

39. Significantly, Mr Ross then provides some very valuable observations, bearing in mind that he was a person very experienced in this work.  At T128 to 129 he said the following -

"I personally looking at, going off the last four pours that we had done successfully, I personally think that it, there was a lot more 20 mil stone ‘cause I'm pretty sure it was meant to be a 7/10/14/20 blend.  There didn't seem to be as much of the smaller stone, like it was 90% of it 20, 20 mil stone like was in the mix, I thought, and it just seemed to be, kept running away from the all the fines and getting jammed up."

Mr Ross was not cross‑examined on those observations.

40. The mix was changed for another pour the following day and that was successful. 

41. In my opinion, whatever the mix was supposed to be (which appears at exhibit 8, pp 26 - 27, figures 4 and 5), it contained too much 20‑millimetre aggregate.  That finding is based on the eyewitness account of Mr Ross as well as his experience in the industry.  I cannot explain why this occurred but clearly there was too much 20‑millimetre aggregate.  The 20‑millimetre overwhelmed the other sizes to the extent that it caused what was observed by Mr Ross and Mr Bear.  Once the adjustment was made in the mix the pour, the next day, was successful. 

42. On 17 March 2012 Boral failed to provide a product that was fit for the purpose for which it was ordered.

Other Issues

43. I turn now to the other issues argued on behalf of Boral that I referred to at the beginning of this judgment.  One of the main ones was raised by Mr Locke in his submissions (MFI 17).  He argues that J & R Industries have sued the wrong defendant and that its claim against Boral must fail.

44. J & R Industries pleaded, in its amended statement of claim filed on 7 February 2014, that the contract was between it and Boral Limited and J & R Industries particularised the relationship between Boral Limited and another company, a related company to Boral in a corporate sense.  That allegation was "not admitted" by Boral.  Mr Locke points to documents such as tax invoices or agency agreements which disclose, he argues, the various companies within Boral's corporate family which, he argues, discloses the proper defendant to sue. It is not his client but a related company. 

45. Instead of pleading that point in its defence in accordance with the Uniform Civil Procedure Rules r 14.14(2), so that J & R Industries could amend its statement of claim and fight the real issues in the case with what Boral claimed was the right defendant, Boral did not take the point until after the evidence had closed. It then articulated the point in the written submissions of Mr Locke.

46. The consequence is that I agree with Mr Lloyd’s written submissions that Boral ought not to be allowed to rely on that defence and that it was an unacceptable ambush.  In one of the cases to which Mr Lloyd referred me, Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243, Allsop P (as his Honour then was), made some remarks over [160] – [163] about the conduct of litigation. His Honour emphasised the importance of cooperation between the parties so that the Court is enabled to determine the issues for trial. His Honour said (at [160]) that the "need for clarity, precision and openness as part of this co-operation has been emphasised in the context of ambush or surprise". At [161] his Honour went on to observe -

"The need for clarity, precision and openness in the conduct of litigation and the responsibility of parties and their legal representatives therefore flows most clearly from the statutory duty of a party and his, her or its legal representatives in civil proceedings to assist the Court to further the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in dispute and to participate in the processes of the Court to that end."

His Honour made reference to s 56 of the Civil Procedure Act, which I have referred to earlier.  His Honour went on to say (at [163]) that  "[t]he clear statutory duty to assist the Court, and, in a practical way, to co‑operate to bring forward the real issues in dispute, encompasses the requirement to be clear and precise in the illumination of the issues for trial."  I am guided by those remarks of his Honour in determining this issue.

47. Mr Locke argues that J & R Industries had possession for over a year of documents which revealed the true corporate structure and true defendant.  J & R Industries allowed the documents to be admitted for all purposes.  Mr Locke argues (at para 12 of MFI 20) that it is "readily apparent from those documents that the supplier of subject goods was not the Defendant, but another entity" and goes on to argue (in para 13) that any "prejudice alleged to have been suffered by the Plaintiff is the consequence of its failure to give proper or adequate consideration to the contents of those documents despite having had ample time to do so before the trial."

48. I do not accept those arguments.  It is not appropriate, in my opinion, for a commercial litigant to simply not admit a particularised pleading which it later claims contains a fatal flaw.  Nevertheless, as Mr Lloyd acknowledges (in para 8 of MFI 21), his client must still prove "that it entered into a contract with Boral Limited for the supply of concrete and concrete slurry." 

49. I am satisfied that J & R Industries has proved that it entered into the contract with Boral.  That is apparent from the evidence relied upon by Mr Lloyd at para 9 of his outline of submissions (MFI 21). The evidence of Wade Rankin and David Durant is that they were both employed by Boral Limited, the defendant in these proceedings, and were both engaged in discussions and activities regarding the supply of the product in this particular case.  In addition, I accept Mr Lloyd's reliance on annexure G to exhibit 7. 

50. In my opinion, the claim that the plaintiff in this case has not sued the right defendant is not made out.

51. Another argument put forward on behalf of Boral is to the effect that J & R Industries must prove that the terms and conditions of the arrangements between itself and the pumping company, Chris Ross, were incorporated into the contract between itself and Boral.  Here, I accept Mr Lloyd's submissions again that the terms and conditions were so incorporated.  They were incorporated by a recent course of dealings between J & R Industries and Chris Ross.  They were a course of dealings on very similar projects.  I find that the contractual relations between J & R Industries and Chris Ross included an obligation, on J & R Industries’ part, to pay for the services provided by Chris Ross.  That obligation is clearly acknowledged and understood by Mr Bear (see T78 – 79 and T132 regarding Mr Ross). I accept Mr Lloyd's submissions over paras 18 - 19 of MFI 21. 

52. I also agree with Mr Lloyd about the breadth cl 2 of the terms and conditions between his client and Chris Ross; it should not be read down.  It is a term in a commercial contract applying in circumstances where the contracting parties understood that there will be other people involved than themselves.  The clause simply and reasonably imposes responsibility on the hirer for damage to the company's machinery occurring at the hirer's site.  The hiring company does not want to have to chase a third party whom it may not have any commercial relationship with.  If the hirer contracts with others then the hirer should pursue the third parties who may have contributed to the damage. This is just such a case. Chris Ross was not contractually engaged with Boral.  It wanted to be paid for the damage to its pipes and let J & R Industries pursue those who were responsible.  The clause in the terms and conditions (cl 2) which Mr Locke claims does not reflect that, does in fact reflect that. In my opinion it is quite a reasonable commercial arrangement. 

53. Mr Locke further argues that the causal link has been broken between the supply, by his client, of the mix and the problem which occurred in the pipes.  He argues that there was a "novus actus interveniens."  Mr Lloyd, over paras 19 - 24 of his further outline of submissions (MFI 23), refers to authorities including McHugh JA's judgment (when his Honour was sitting in the New South Wales Court of Appeal) in Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310. His Honour, at 361 [B], said as follows -

"Notwithstanding that a defendant's act or omission has a causal connection with the damage of the person aggrieved, no liability arises if an independent intervening act or event in conjunction with the defendant's act or omission has brought about the plaintiff's damage and the intervening act or event can be treated in a practical sense as the sole cause of the damage."

His Honour later, on the same page (at [G]) referred to an intervening act as needing to be "sufficient to constitute a novus actus interveniens and break the chain of causation".  I agree with Mr Lloyd that the evidence simply does not show that the addition of the 80 litres of water at the site contributed to such an extent that it could be described as having broken the chain of causation or as being the sole cause of the damage.  As Mr Lloyd pointed out, on the contrary, Mr van Koeverden's evidence "was that the addition of 80 litres would, if anything, have retarded the setting of the concrete slurry".  I reject that defence.

54. Mr Locke puts J & R Industries to proof of its claim for damages, arguing that it has not proven any loss in profit. He argues that the claims made by J & R Industries for the wages of their employees engaged in dealing with the damage would have been paid in any event.  There is, he argues, no evidence of loss of profit.  Mr Lloyd, on the other hand (in MFI 23) argues that his claim is not for a loss in profits but a loss of the chance to earn profits.  I think his argument has merit.  Had these events not occurred, the labour force of Mr Lloyd's client would have been effectively paid for at the site by J & R Industries’ client, the New South Wales Parks and Wildlife.  As Mr Lloyd argued, following the damage the "opportunity was lost as J&R Industries' labour force was diverted from the Thredbo River Project to deal with the fallout from the first and second abortive pours."

54. I agree with Mr Lloyd regarding his argument about the correct measure of damages (para 9 of MFI 23).  In my opinion, the damages claimed by his client against Boral are damages which accord with the law for the assessment of damages as a result of a breach of contract. That is conveniently set out in Tabcorp Holdings v Bowen Investments Pty Ltd (2009) 236 CLR 272: "[a] party who sustains a loss as a result of a breach of contract is, so far as money can do, to be placed in the same situation, with respect to damages, as if the contract had been performed." Again, I accept Mr Lloyd's submissions in this regard contained in MFI 23.

55. I should add, returning to the pleadings, that I accept that J & R Industries have proved that there is a contract between themselves and Boral Limited.  It is clear from the evidence of Mr Durant, as well as Mr Ross, that Boral knew what the concrete mix was to be used for that it was supplying to J & R Industries.  I accept that there was implied in the contract a term whereby, in those circumstances, Boral warranted that the goods supplied would be reasonably fit for the purpose and free of any defect. 

56. Mr Locke argues that the amended statement of claim does not contain a specific reference to s 19(1) of the Sale of Goods Act 1923 which is the law regarding such a term being implied in a contract. As Mr Lloyd points out, the pleadings must contain only a summary of the material facts and may raise a point of law. A pleading must include anything that may take an opposing party by surprise. Mr Locke claims the reliance of s 19 of the Sales of Goods Act is an example of an allegation that should have been specifically pleaded.  I do not agree with that submission.  It is abundantly clear from the terms of the statement of claim and its reference (in para 5) to "goods so supplied and delivered would be reasonably fit for its purpose, and free from any defect" that it was a pleading related to or relying upon the Sale of Goods Act.

57. It is clear to me from the evidence of Mr Ross’ and Mr Bear's dealings with Boral beforehand, and from Mr Durant’s and Mr Wade Rankin's evidence, that Boral knew that J & R Industries were relying upon Boral to comply with that term of the contract.  I am of the view that J & R Industries has proved the contract it claims it had with Boral and its terms and the breach of that contract.  I am also satisfied that the damages suffered by J & R Industries are those which are claimed on its behalf and specified in Mr Lloyd's outline of submissions on damages (MFI 22) including documents supporting the claim.

Conclusion

59. For those reasons, I am of the view that there should be a verdict and judgment in the District Court proceedings for J & R Industries against Boral in the amount claimed.

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Decision last updated: 30 October 2015