Erwin v Iveco Trucks Australia Ltd - [2010] NSWCA 113

NEW SOUTH WALES COURT OF APPEAL

CITATION:
ERWIN v IVECO TRUCKS AUSTRALIA LTD [2010] NSWCA 113
This decision has been amended. Please see the end of the judgment for a list of the amendments.

FILE NUMBER(S):
2009/40163

HEARING DATE(S):
23 March 2010

JUDGMENT DATE:
18 May 2010

PARTIES:
Alan John Erwin (Appellant)
Iveco Trucks Australia Limited ACN 004 065 061 (Respondent)

JUDGMENT OF:
Basten JA Campbell JA Sackville AJA

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
SC 2006/20238

LOWER COURT JUDICIAL OFFICER:
Harrison J

LOWER COURT DATE OF DECISION:
5 March 2009

LOWER COURT MEDIUM NEUTRAL CITATION:
[Middleton v Erwin] [2009] NSWSC 108

COUNSEL:
R R Bartlett SC; J Gooley (Appellant)
R A Cavanagh; A Bowen (Respondent)

SOLICITORS:
TL Lawyers (Appellant)
Moray & Agnew Lawyers (Respondent)

CATCHWORDS:
NEGLIGENCE—collision between car driven by plaintiff and semi-trailer driven by appellant—semi-trailer manufactured by respondent 13 years earlier—collision caused by failure of semi-trailer's steering mechanism—appellant found liable to plaintiff by reason of negligent failure to maintain the steering mechanism—appellant cross-claims for contribution from respondent on ground that the steering pinch bolt mechanism had a faulty design—whether evidence showed design conformed to industry norm—whether breach of duty established because respondent did not incorporate fail-safe mechanism in design—whether risk of failure was insignificant—whether a reasonable manufacturer would have incorporated additional safety features
TRADE PRACTICES—appellant cross-claims on ground that semi-trailer when manufactured had a defect within the meaning of s75AE(1) of the [Trade Practices Act 1974] (Cth)—whether s75AE(1) is intended to create a right of indemnity in a party whose negligence caused injuries to an individual against a manufacturer whose defective goods have also caused the same injuries—whether semi-trailer had a defect

LEGISLATION CITED:
[Trade Practices Act 1974] (Cth), ss 52, 75AC, 75AD, 75AE, 75AI, 75AK, 75AN, 75AO, 75AR, 82; Pt VA
[Trade Practices Amendment Act 1992] (Cth)
[Civil Liability Act 2002] (NSW), ss 5B, 5C
[Law Reform (Miscellaneous Provisions) Act 1946] (NSW), s 5
[Supreme Court Act 1970] (NSW), s 75A
Uniform Civil Procedure Rules 2005 (NSW), rr 14.7, 14.14

CATEGORY:
Principal judgment

CASES CITED:
[Bialkower v Acohs Pty Ltd] [1999] FCA 446; 83 FCR 1
[Certain Lloyds Underwriters v Giannopoulos] [2009] NSWCA 56
[Cheong v Wong] [2001] NSWSC 881; 34 MVR 359
[Council of the Shire of Muswellbrook v Lettice] [2000] NSWCA 359
[Dovuro Pty Ltd v Wilkins] [2003] HCA 51; 215 CLR 317
[Fox v Percy] [2003] HCA 22; 214 CLR 118
[Friend v Brooker] [2009] HCA 21; 239 CLR 129
[Gett v Tabet] [2009] NSWCA 71; 254 ALR 504
[Lanza v Codemo] [2001] NSWSC 72
[McDonald v Girkaid Pty Ltd] [2004] NSWCA 297
[Mercer v Commissioner for Road Transport and Tramways (NSW)] [1936] HCA 71; 56 CLR 580
[New South Wales v Fahy] [2007] HCA 20; 232 CLR 486
[Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd] [2009] NSWCA 263; 168 LGERA 351
[Roads and Traffic Authority of New South Wales v Dederer] [2007] HCA 42; 234 CLR 330
[Rogers v Whitaker] [1992] HCA 58; 175 CLR 479
[Rosenberg v Percival] [2001] HCA 18; 205 CLR 434
[Suosaari v Steinhardt] [1989] 2 Qd R 477
[Warren v Coombes] [1979] HCA 9; 142 CLR 531
[Wyong Shire Council v Shirt] [1980] HCA 12; 146 CLR 40

TEXTS CITED:
Heydon J D, [Cross on Evidence], 8th Aust ed (2010)

DECISION:
(1) Appeal dismissed.
(2) The appellant pay the respondent’s costs of the appeal

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40163 of 2009
SC 20238 of 2006
BASTEN JA
CAMPBELL JA
SACKVILLE AJA
18 May 2010

ALAN JOHN ERWIN v IVECO TRUCKS AUSTRALIA LIMITED
ACN 004 065 061

Judgment

BASTEN JA: I agree with Sackville AJA that, for the reasons he gives, the appeal should be dismissed with costs.
In relation to the claim under the Trade Practices Act 1974 (Cth), s 75AE, the primary judge, Harrison J, dismissed the claim on the basis that the mechanism on the truck which failed, causing the accident, did not constitute a “defect” for the purposes of ss 75AC and 75AE: Middleton v Erwin [2009] NSWSC 108 at [82]. Had it been necessary to consider that matter, I would have upheld his Honour’s conclusions, for the reasons he gave. On the approach which other members of this Court adopt (and I accept) that point is not reached because s 75AE is not available to the appellant.
In addition to the authority referred to at [102] below, in relation to the approach to an appeal under s 75A of the Supreme Court Act 1970 (NSW), I would add a reference to Gett v Tabet [2009] NSWCA 76; 254 ALR 504 at [14]-[16].
I also agree with the additional observations of Campbell JA.
CAMPBELL JA: I have had the advantage of reading the judgment of Sackville AJA. I agree with it. I wish to make some brief additional observations about the pleading of the case under s 75AE Trade Practices Act.
There were only two references to the Trade Practices Act in the cross-claim that the Appellant made against the Respondent. The first arose through a statement that the Respondent “repeats against the first cross-defendant those matters referred to in the Second Amended Statement of Claim.” The only mention of the Trade Practices Act in the Second Amended Statement of Claim that was thereby incorporated by reference in the cross-claim was that the particulars of negligence alleged against the Appellant included:
“(e)Further, the Plaintiff relies on s 75AD of the Trade Practices Act (1974) in that the Plaintiff suffered injury arising out of a defect in goods manufactured by the Second Defendant”.
The second reference to the Trade Practices Act in the cross-claim was a statement that:
3.The First Cross-Claimant relies on section 75AD and 75AE of the Trade Practices Act (1974) in that the plaintiff suffered injury arising out of a defect in goods manufactured by the first cross-defendant and in such circumstances, if the cross claimant is liable as a defendant to the plaintiff, will suffer loss to the plaintiff by reason of the cross-defendant's defective goods causing the plaintiff's injuries."
As Sackville AJA has said, the Appellant does not (and cannot) seek to rely on s 75AD. What is relevant for present purposes is that these pleadings are quite inadequate to expose the issues that are involved in bringing a case under s 75AE.
First, the incorporation in the cross-claim of the allegations made in the statement of claim is not enough to plead a valid claim of the Appellant against the Respondent under s 75AE. Sections 75AD and 75AE each create a statutory obligation to compensate either the injured person (s 75AD) or another person (s 75AE) in certain circumstances when a person suffers injury because of a defect in goods that were manufactured and supplied by a corporation. That statutory obligation arises in the circumstances articulated by the Trade Practices Act itself, and is not dependent on the law of negligence. Thus, the plaintiff’s inclusion of a reference to s 75AD as a particular of negligence was inapt. In any event, the plaintiff’s reference to s 75AD did not identify all the matters that would be needed to properly plead a claim under s 75AD. Further, even if the plaintiff had properly pleaded a valid claim against the Respondent under s 75AD, the repetition in the cross-claim of the allegation made in the statement of claim concerning liability of the Respondent to the plaintiff under s 75AD would not suffice to allege the facts that the Appellant needed to make out to show that the Appellant had a valid claim against the Respondent under s 75AE.
Second, in so far as the cross-claim purported to make its own pleading of a case under s 75AE, the criterion for what facts should be pleaded to found a claim under s 75AE is to be found in the UCPR pleading rules. UCPR 14.7 requires that “a party’s pleading must contain only a summary of the material facts on which the party relies”. UCPR 14.14 requires that “the plaintiff must plead specifically any matter that, if not pleaded specifically, may take the defendant by surprise.” How much detail should be gone into in the pleading will depend on the particular case that the claimant will seek to make. A minimum requirement is that a litigant who seeks to recover under s 75AE (a “claimant”) should, in its pleading, identify the "defect" that is alleged to exist in the goods. That is necessary for the opposite party to be informed of the nature of the case that the claimant will seek to make to claim a remedy under s 75AE. In some factual contexts, that might require identification of more than the characteristic of the goods that is said to amount to a defect - it might require specification of, for instance, any facts that need to be proved to show why it is that the goods are not of a standard that persons generally are entitled to expect, such as facts concerning the type of matters identified in s 75AC(2). It may also be necessary to plead any facts that will need to be proved to show that it is "because of" the defect that the "individual" has suffered injuries, and any facts that will need to be established to show that it is "because of" the injuries sustained by that individual that the claimant has suffered loss. The pleading in the present case did none of those things. It is for these reasons that I agree with the statements that Sackville AJA has made in paras [131]–[133] of his judgment.
I agree with the orders proposed by Sackville AJA.
SACKVILLE AJA: The appellant was the owner and driver of an International Transtar F4670 prime mover and semi-trailer (“Truck”). The respondent, previously known as International Harvester and International Trucks, was the manufacturer of the Truck.
On 21 November 2002 the Truck, which was being driven by the appellant, collided with a car driven by Mr Middleton, the plaintiff in the proceedings (“the plaintiff”). The collision occurred on the Bogan Road near Parkes in New South Wales, when the Truck crossed onto the incorrect side of the Bogan Road in the path of Mr Middleton’s vehicle. The plaintiff, who was travelling to work at the time, sustained serious injuries in the collision. He sued both the appellant and the respondent.
There was ultimately no dispute at the trial that the crash was caused by the failure of the steering mechanism of the Truck. The plaintiff did not persist with his pleaded case that the crash was caused by the appellant’s negligent driving.
The respondent manufactured the Truck in 1989. The appellant acquired the Truck in 1999, when he purchased it second hand from a dealer. By that time, the Truck had travelled well over one million kilometres. Between the time he purchased the Truck in 1999 and the crash in 2002, the appellant maintained the Truck himself, but never undertook preventative maintenance. He never asked anyone to service, maintain or inspect the steering system.
The steering mechanism employed a pinch bolt system, otherwise known as a clamp bolt system or a clamp and bolt universal assembly. The evidence at trial established that the pinch or clamping bolt in the universal joint holding the intermediate steering shaft had become loose, in the sense that it had not been tightened to the specified torque. This resulted in fretting wear between the bolt and the shaft, with the result that the shaft ultimately came away from the universal joint. This was the immediate cause of the failure of the steering mechanism.
The plaintiff’s case against the appellant was that he breached his duty by failing to properly inspect or maintain the Truck. In particular, the plaintiff alleged that the appellant had failed to maintain the steering mechanism and associated mechanical parts, or to inspect them in a way that should have revealed whether or not the clamping bolt in the universal joint had been adjusted to the appropriate torque setting. On the plaintiff’s case, proper servicing or inspection would have prevented the intermediate steering shaft from becoming detached from the universal joint, thus averting the loss of braking control.
The plaintiff’s case against the respondent was that it had negligently designed the Truck. Specifically, the design rendered the steering mechanism liable to become disengaged, either as a result of a loose universal joint clamping bolt or loose bearing grub screws attached to a bearing on the intermediate shaft of the steering column, or both. No claim was made that the Truck had been constructed or assembled poorly, as opposed to having been designed in a manner that created an unreasonable risk of brake failure.
The appellant claimed contribution from the respondent under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (“1946 Act”), alleging that the respondent’s negligence had contributed to the plaintiff’s loss. The appellant also relied in his cross-claim on ss 75AD and 75AE of the Trade Practices Act 1974 (Cth) (“TP Act”). The appellant pleaded in his cross-claim that the plaintiff had suffered injury arising out of a defect in goods manufactured by the respondent and that, if the appellant was liable to compensate the plaintiff; he would suffer loss by reason of the respondent’s defective goods. The respondent filed a corresponding cross-claim against the appellant, although it did not rely on the statutory causes of action.
The quantum of the plaintiff’s damages was agreed on the first day of the trial at $2,380,000. The issues remaining for determination by the primary Judge were therefore limited to the liability of the appellant and of the respondent (if any) to the plaintiff and to the resolution of the cross-claims filed by the appellant and respondent against each other.
The primary Judge found (Middleton v Erwin [2009] NSWSC 108, at [25]) that the plaintiff’s injuries were caused by the appellant’s breach of the duty owed to the plaintiff in failing to maintain the steering mechanism of the Truck in the ways alleged by the plaintiff. However, his Honour also found (at [77]) that the steering did not fail as the result of any absence of reasonable care by the respondent in the manufacture or design of the Truck. While his Honour accepted that another design, incorporating a system that welded the intermediate shaft to the universal joint, would have obviated the risk of this particular kind of steerage failure, that fact did not establish that the respondent had breached its duty of care to the plaintiff. The primary Judge also rejected the appellant’s cross-claim, insofar as it was based on ss 75AD and 75AE of the TP Act.
The appellant challenges the findings and conclusions of the primary Judge and asks this Court to enter judgment in his favour on the cross-claim against the respondent. If judgment is entered pursuant to his entitlement under s 75AE of the TP Act, he seeks judgment on the cross-claim in the sum of $2,380,000. If judgment is entered on the ground that the respondent breached its duty of care to the plaintiff, the appellant asks this Court to apportion responsibility between the appellant and respondent for the damage sustained by the plaintiff. Alternatively, the appellant seeks an order that the matter be remitted for determination of the apportionment of liability between the respondent and himself.

THE STEERING MECHANISM AND ITS FAILURE

The primary Judge commenced his judgment by explaining the operation of the steering system in the Truck and the mechanism of its failure. That explanation is assisted by the diagram attached to the report of Mr Anderson, a consulting automotive engineer, who provided expert reports on behalf of the plaintiff and who was one of four experts who gave evidence at the trial. The diagram is reproduced below.
The primary Judge found (at [6]) that the events leading to the loss of steering included the disengagement of the clamped connection between the universal joint (14) connecting the intermediate shaft (11) and the upper shaft of the steering system (10). The universal joint was located within the cabin of the Truck encased in a removable housing attached by six screws. The universal joint was situated immediately below the steering wheel (5), in a position between the driver’s legs. The lower shaft assembly (12), which comprised two universal joints and a sliding coupling, was in sound working condition.
The primary Judge explained (at [7]) how the shaft was secured within the universal joint (14):
“The universal joint comprised two yokes connected by a central spider. The end of each yoke consisted of a split, splined housing designed to accommodate a splined shaft. This was, in lay terms, a circular opening into which the splined end of the intermediate shaft was inserted. The splines on the shaft mated with the splines in the opening. The shaft was fixed into the universal joint by inserting the matching splined splint housing of the yoke and placing a pinch bolt (sometimes called a clamp bolt or clamping bolt) into a clearance hole in the joint so that the bolt intruded into the groove of the splined shaft. The bolt was secured in place by means of a nut. The bolt passing through the hole to a corresponding hole on the opposite side was to be tightened to a specified torque of between 45Nm [newton metres: a newton metre is a force of one newton applied perpendicularly at a distance of one metre from the point around which the turning occurs] to 50Nm. In that configuration the shaft was secured in its position within the universal joint by mechanical force exerted upon the joint by the tightened bolt and the marrying of splines on the end of the intermediate shaft with corresponding grooves upon the inner surface of the opening in the universal joint.”

In order to measure whether a bolt is tightened to a specified torque, a mechanic uses a gauge wrench.

When properly adjusted to the specified torque the bolt required a force of approximately one tonne to release it. Road vibrations or other effects from normal use of the Truck would be insufficient to cause this to occur. If, however, the bolt was not properly adjusted to the specified torque, it could lead to wear sufficient to cause the clamping mechanism to fail (as ultimately occurred in this case).
His Honour found that prior to the collision, the locking of the splined shaft into the universal joint had been compromised by progressive loss of the bolt volume due to wear of that part of the bolt within the groove. Eventually, the bolt became ineffective in locking the intermediate shaft to the lower yoke of the universal joint. The assembly, consisting of the universal joint, the steering column and the steering wheel, separated from the shaft.
The attachment of the upper yoke of the universal joint to the steering column was achieved in the same way as with the lower yoke. On examination the pinch bolt connection to the joint was intact, but axial sliding could be effected over a distance of about two millimetres. This indicated that the securing bolt was not producing a snug fit in the groove of the splined shaft. Wear had commenced in the region contacting the surface of the groove in the splined shaft. There was also other wear produced by relative motion between the bolt and the shaft. One of the experts described the condition of this bolt as a “snapshot” of the condition of the failed bolt at an earlier stage of wearing.
The primary Judge found (at [11]) that:
“Fretting wear was the main mechanism of failure. The essential feature of fretting is the presence of small amplitude vibrations in a nominally stationary joint. The upper and lower universal joints that respectively connected the steering column assembly and the splined steering shaft to the yokes of the universal joint were subject to vibratory forces during normal use of the truck by transmission from the engine and the wheels. Slip or relative motion between the mating surfaces resulted in adhesive wear due to micro welding and factures of asperities on the surfaces of the mating steel components. As wear progressed, the amplitude of the movement also increased, producing significant slackness in the joint. In addition to increased sliding contact, impact loading of the joint components is also likely to have occurred. This would have increased the rates of wear caused by both adhesion and abrasion. The key cause of the failure in the present case was the relative motion between the bolt and the splined shaft.”

The reason for the motion was insufficient tightening (or “torquing”) of the locking or pinch bolt.

The primary Judge also made findings concerning the state of the intermediate shaft as it passed through the firewall of the cabin into the engine bay, in a housing for a flangette and its filled bearing (13). The shaft was located axially to the bearing by two grub screws, which rotated together when turned. After the collision, one of the grub screws was missing and the other was partially unscrewed. The bearing itself had seized. Marks within the shaft at this location demonstrated that the shaft rotated within the bearing instead of with it. This had been caused by the missing or ill-fitting grub screws. Rotation of the shaft continued notwithstanding that the bearing had seized.

CONCLAVE OF EXPERTS

The four experts who gave evidence addressed a series of questions in a conclave. The answers upon which the experts agreed (subject to the qualifications recorded below) included the following:

Quest No Text of Question Response of Conclave

4

If it is considered that a cause of the collapse of the steering column is that the shaft disengaged from the universal joint resulting in the column giving way:

…

     (e) If due to fretting wear, did it include the bolt and splined region of the shaft and, if so, to what extent? Yes. The fretting produced sufficient wear to allow the shaft to move some 20 mm axially, allowing disengagement of the joint.

…

6   (a)
Does the original design contain a sensitivity to a combination of a loose universal joint clamp bolt and loose bearing grub screws and that whenever this combination of conditions occurred there existed a real risk that the steering intermediate shaft may become disengaged? Yes.

     (b) Does the revised design, namely the “shaft assembly column upper” in which the clamped spline connection has been replaced by a welded connection, eliminate the failure mode experienced by the vehicle in the subject collision? Yes.

     (c) Would it have been possible to incorporate this fail safe feature in the original design? Yes.

7   (a) Should the subject universal joint as designed and provided in the vehicle as manufactured be the subject of regular maintenance to check for axial play or to periodically re-tighten or replace the high tensile bolts? Yes.

     (b) If so, should this be advised in the Owner’s Manual? Yes, refer to answer 6.

8 Was regular inspection and/or maintenance of the steering (including the whole of the steering column) required given the nature of the materials used, the design and the magnitude of the consequences of a steering failure? Yes.

9    (a) Is it likely that the grub screws (or either of them) fitted at the lower end of the steering shaft were loose or missing at the time of the accident? Yes.

     (b) If both grub screws were in place and tightened would the steering column have failed as it did in this accident? [Three experts answered “No”. One was unsure whether or not disconnection of the universal joint required missing or loose grub screws.]

10 (a) Was the bearing at the lower end steering shaft seized at and prior to the accident? Yes.

     (b) If so, does this indicate that such part of the steering system was not properly maintained? Yes.

     (c) Is it likely the shoulder sat approximately 5 millimetres proud of the bearing at the lower end of the steering shaft? The shoulder on the intermediate shaft was originally located about 40 mm away from the bearing inner race. Axial movement under fretting of about 20 mm was necessary for disengagement to occur. At the point of disengagement, the gap was reduced to no more than 20 mm.

     (d) If so, was it necessary to have this 5 millimetre movement to allow the steering shaft to drop away from the universal joint and thus cause the steering failure? See answer to 10 (c)

     (e) If the said bearing was seized would it be expected to be accompanied by stiff or noisy steering;

        (i)          if the grub screws were positioned in place and properly tightened? Yes

        (ii)          if the grub screws were loose or missing? No. [However, one expert believed] it may have been accompanied by some noise.

11 (a) Was the access to the upper steering column universal joint which failed located inside the cabin enclosed by a light plastic cover held in place by four small screws? Yes but there are 6 screws locating it.

     (b) If “yes” did this enable easy access for inspection on removal of the said screws? Yes.

12 What, if any, design strategies were capable of being implemented to reduce fretting wear and what would be the approximate cost (as at 1989) of implementing such design strategies in the manufacture of the vehicle? The only guaranteed method is to eliminate all movement so as to remove all possibility of fretting. Fretting wear is an inherent feature of this type of joint.

13 What, if any, design strategies were capable of being implemented which would have prevented the giving way of the universal joint?
1. In anticipation of the event that the clamp bolt and grub screws all become loose, fretting wear could be reduced by limiting the axial movement of the intermediate shaft through the bearing at the firewall to, say, no more than 3 mm. This would ensure that 17 mm of spline length of the universal joint would remain engaged and could be achieved by, eg:

(a) having a design condition where the shoulder on the shaft is located 3 mm (not 25 mm) away from the bearing. If there are significant build dimensional variations with the truck, this may require the use of selective spacers and a checking procedure on assembly. The cost would be small – possibly 10 minutes additional assembly time.

(b) limiting the travel in the sliding joint of the lower (in the engine bay) shaft. This could be achieved by fitting a sleeve over the male sliding element and would not affect the assumed commonality that this shaft has with truck models having a tilting cab. Again the cost would be small.

2. Adopt a non bolted design.

14 Would a design strategy of replacing the clamp splined connection with a welded connection eliminate the failure mode of the steering column as experienced by the vehicle in the accident? Yes.

15 Would a design strategy incorporating a shoulder at the lower end of the intermediate shaft which would abut the bearing at the fire wall after 1 or 2 millimetres of travel have prevented the failure of the steering system if the column shaft came free from the universal joint? See response to Question 13

16 Should vehicle design be subject to “Failure Mode and Effects Analysis” and, if a mode is identified that might result in catastrophic results, should design action be taken? Yes or an equivalent process should be adopted.

…

29
If there was a loose universal joint clamp bolt and loose bearing grub screws, would that create a risk of the steering intermediate shaft becoming disengaged? Yes.

30 Does the use of a welded connection eliminate the risk of loose joints, provided that the welding is done properly? The welded joint will eliminate the type of failure, experienced in this case.

FACTS

The following account is based on the findings of the primary Judge.
As I have noted, the Truck was manufactured by the respondent in 1989. The respondent manufactured that model throughout the period 1987 to 1990. It purchased components from other suppliers, including overseas suppliers. The model was originally built with the pinch bolt universal assembly linking the top shaft to the intermediate shaft, as already described. As part of a number of changes in 1990, the respondent commenced installing a welded joint/shaft in the steering column of this model. This, however, was not done for reasons of safety, but essentially to reduce manufacturing costs. The respondent did not make the same changes to other models it manufactured and it continued to use the pinch bolt mechanism for those models.
The Operator’s Manual (“Manual”) for the Truck contained a section dealing with steering, as follows:
“Be alert to any change of feel in steering when driving. For example increased steering effort, unusual sounds when turning, excessive wheel play, change in normal position of steering wheel when driving in straight ahead, vehicle pulling to either side, increased feed back of road shocks to steering wheel.
These unusual movements in steering signal the need to stop for immediate inspection. Check the rod and drag link end clamp bolts, they must be tight. Ask your service mechanic to examine steering mechanisms. Minor adjustments could head of [sic] further problems.
Check front spring for possible main leaf fracture at eye. Check power steering system for leaks or hose chafing, repair at once. Maintain proper steering gear and power steering pump lubricant levels. Regularly inspect all steering linkages particularly for body to chassis clearance”. (Emphasis added.)
The appellant purchased the Truck in April 1999 from a second hand truck dealer in Albury. Before selling the Truck, the dealer carried out work on the steering mechanism. As a consequence of this work (so the primary Judge found at [57]), the pinch bolt was left loose: that is, it was not correctly adjusted to the specified torque of 45 Nm to 50 Nm.
The appellant was not provided with the Manual at the time of purchase. He proceeded to drive the Truck for the purposes of his business, travelling approximately 120,000 to 150,000 kilometres each year. Thus he had travelled approximately 500,000 kilometres in the Truck prior to the crash in November 2002.
The appellant had no formal training as a mechanic, but had learned about repair and maintenance of vehicles as he grew up on the family farm. He performed repairs, maintenance and servicing of the Truck himself or with the assistance of mechanics he employed.
The appellant replaced the engine of the Truck over a point of some weeks in 2001. At that time he purchased a workshop manual. However, at no time during his ownership did he ask any of the people who worked on the Truck to inspect the universal joint linking the top shaft with the intermediate shaft in the steering mechanism. Indeed he accepted that he had never carried out preventative maintenance on the Truck. The Roads and Traffic Authority of New South Wales inspected the Truck annually for registration purposes, but that inspection apparently did not include the steering mechanism.
The appellant’s approach contrasted with that of the previous owner, Mr Lewis, who had the Truck fully serviced every 20,000 to 25,000 kilometres. Mr Lewis said that he was a strong believer in the concept of preventative maintenance. He also said that he had never experienced any problems with the steering mechanism.
On the day of the crash, the appellant drove the Truck for some 40 minutes without incident. His evidence, accepted by the primary Judge, was that he had never previously experienced problems with the steering. The crash occurred as the Truck was travelling at 90-95 kph up a slight gradient. The steering “went light and the truck yielded right”, travelled on to the wrong side of the road, colliding with the plaintiff’s vehicle.

THE PRIMARY JUDGMENT
The Plaintiff’s Case Against the Appellant

The primary Judge recorded (at [25]) that the appellant’s senior counsel had conceded that the appellant had been in breach of his duty of care to the plaintiff in failing to maintain the steering mechanism of the Truck. His Honour characterised the concession as “uncontroversial”. He pointed not only to the evidence of Mr Lewis’ practice concerning servicing of the Truck, but to the evidence of Mr Anderson, the plaintiff’s expert, that he would expect:
“a planned maintenance schedule … to include a thorough inspection by an experienced technician at the 26,000 kilometre intervals with more detailed inspections annually, giving more opportunities for the impending failure to be identified and corrected.”
The appellant contended, however, that the plaintiff had not established a causal relationship between his admitted breach of duty and the failure of the steering mechanism.
The primary Judge considered (at [29]) that the answers to questions 7(a) and 8 in the conclave ([31] above) clearly indicated that preventative maintenance would have revealed the incipient problem with the pinch bolt in the universal joint that the experts had identified as the cause of the failure. Further, in their concurrent evidence, the experts agreed that, although visual inspection would be unlikely to reveal that the bolt was loose (unless there was other evidence such as polishing marks), routine preventative maintenance using a spanner would have revealed what was happening to the shaft by reason of the bolt not having been adjusted to the appropriate torque. His Honour found (at [30]) that:
“The very problem was slow but progressive axial movement of the intermediate shaft from its designed location within the opening in the universal joint. That is what should have been looked for and that is what should have been detected.”
The primary Judge rejected the appellant’s submission that the Manual did not require anything other than visual inspection of the steering mechanism which, on the appellant’s case, would not have revealed the axial slip of the intermediate shaft. In his Honour’s view (at [33]), the Manual was clear and unambiguous:
“There is little, if any, scope for doubt about the meaning of the words ‘regularly inspect all steering linkages’. The truck had travelled over 1,000,000 kilometres when the [appellant] acquired it and he drove it at least 500,000 kilometres and possibly more. The conditions encountered by the truck when driven by him as a grain haulier on country roads and properties in rural Australia would undoubtedly have included the road conditions of the type to which the manual draws specific attention. Service and maintenance of the truck in these circumstances if properly carried out would in my opinion have extended to checking the status of the pinch bolts in the steering column universal joints. Such an inspection by a competent technician would have revealed that the pinch bolt was wearing and that there was progressive axial slip of the intermediate shaft. Recognition of this condition at an appropriate stage would have led to suitable adjustment or repair that would have avoided the collapse.”
The primary Judge then addressed the plaintiff’s contention that the appellant had negligently failed to inspect and maintain the bearing that housed the steering column. The plaintiff’s case on this issue was that a failure of the universal joint would leave the intermediate shaft unrestrained unless the grub screws locating the shaft to the bearing were in position and properly adjusted.
His Honour observed (at [35]) that only one of the experts (Mr Simpson, an industrial and automotive engineer called on behalf of the appellant) had expressed doubt as to whether the grub screws locating the intermediate shaft to the inner circumference of the bearing would have been capable of restraining the axial collapse of the intermediate shaft following failure of the universal joint. (This was a reference to the answers to question 5 by the conclave of experts.) However, his Honour also pointed out (at [36]) that the answer to question 6(a) by the conclave merely recognised the possibility that the properly adjusted grub screws might have maintained the intermediate shaft in position so as to prevent the collapse of the steering column.
His Honour said (at [38]-[39]) that even if the appellant’s denials that he had interfered with the grub screws was accepted, that did not establish that the crash was causally unconnected to his breach of duty:
“The fact is that the failure of the universal joint led to the steering collapse that resulted in the collision. The issue of what inspection or maintenance of the bearing should have been carried out by the [appellant] or whether any inspection would have revealed a problem is in the first instance a matter of no consequence in a consideration of the plaintiff’s case against the [appellant].
…
The simple fact is that the state of the bearing and the grub screws, of which the [appellant] was on his case ignorant and for the state of which he was on his case not liable, was such that it facilitated the collapse of the steering mechanism following failure of the universal joint for which he is liable. The role played by the state of the bearing and the grub screws and the [appellant’s] connection to them are neutral events in the plaintiff’s principal claim against him. They are not factors that permit the [appellant] somehow to argue that his breach of duty in relation to the universal joint is causally unrelated to the accident. … [T]he grub screws were not a clamping device and there is no evidence that they were intended to maintain the integrity of the steering column in the event of a failure of the universal joint.”
The primary Judge rejected (at [40]-[42]) a “secondary proposition” by the appellant that if the grub screws, when properly adjusted, would have prevented the collapse then he could not be held responsible for the fact that they were either missing or not property adjusted. His Honour found that the conclave’s affirmative answer to question 10(b) established that proper inspection and maintenance required more than visual inspection of the bearing and should have revealed whether the grub screws had loosened or the bearing had seized. In his Honour’s view (at [42]), there was:
“an irreconcilable tension between the view of the experts on the one hand and the [appellant’s] submission that the problem would not have been discovered in the normal course of routine maintenance on the other hand.”
The primary Judge stated (at [43]) his conclusion in relation in the case against the appellant, as follows
“The [appellant] was aware of the potentially catastrophic consequences of a steering failure in a vehicle of this type. The [appellant] breached his duty to the plaintiff in that he failed properly or adequately, and in some respects at all, to maintain the steering mechanism of the truck. Proper inspection would have included inspection of the universal joint at the upper end of the intermediate shaft and adjustment of the pinch bolt that secured that shaft within the joint. Proper inspection would have revealed, at a point before it failed, that the shaft was in an incipient state of separation from the universal joint and would have prevented it from occurring. The [appellant’s] failure to inspect and maintain that universal joint was the cause of the collision that injured the plaintiff.”

The Plaintiff’s Case Against the Respondent

The plaintiff’s case against the respondent was that wear in the universal joint that retained the intermediate shaft amounted to, or was evidence of, a design fault in the steering mechanism. The plaintiff did not contend that the pinch bolt became loose as a result of a faulty design, since vibrations or other effects from the normal use of the Truck would be insufficient to loosen a properly adjusted pinch bolt. Nor did the plaintiff contend that the bolt was loose when it left the respondent’s control.
Rather, the plaintiff’s contention was that if the bolt was not properly adjusted, for whatever reason, it could lead to wear sufficient to cause the clamping mechanism to fail. That propensity, so it had been argued, was the function of a faulty design. In support of his argument, the plaintiff relied on the conclave’s answers to questions 4(e), 12, 13, 14 and 30. These answers showed that the risk would be eliminated by a non-bolted design. Specifically, a welded joint would have eliminated the type of failure experienced in this case.

The primary Judge found (at [61]) that the respondent had manufactured 14,500 vehicles since 1994, all of which used the pinch bolt system. During the same period in Europe, the corresponding number was 450,000. In his Honour’s view (at [68]-[70]):
“To hold the [respondent] to the standard of conduct for which the plaintiff presently contends would be to enforce standards that do not reflect the common experience of the relevant community. The [respondent] complied with what was ordinary practice. The evidence was that a pinch bolted universal joint was the industry norm. There is to my mind no persuasive reason for concluding that the common practice of producing universal joints in the steering mechanism of the truck in this case fell short of what reasonable care required.
…
The undisputed evidence was that a reasonably available welded alternative would have obviated this risk entirely. However the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done and the subsequent taking of action does not of itself give rise to or affect liability in respect of a risk.
The plaintiff's case was that the [respondent] should have designed the universal joint so that it would never fail. In the events that occurred, the joint failed following inappropriate adjustment, which inadequate maintenance failed to detect. This occurred over a relevant service life in the custody of the [appellant] of something in excess of 500,000 kilometres and as much as 600,000 kilometres. The pinch bolt was not correctly tightened and the grub screws had been readjusted or neglected. The failure that led to the collision, therefore, did not take place in the course of what a reasonable manufacturer might similarly have anticipated would be the normal use of the vehicle. The steering system was only as strong as its weakest link and the weakest link was not the fault of the [respondent].” (Emphasis added.)
The primary Judge noted the evidence of three of the experts that the intermediate shaft would have been retained in position if located to the bearing by the grub screws. This, however, was purely a matter of “happenstance” as the bearing was not intended as a safety feature of this steering system. Nonetheless, the respondent (at [71]):
“was entitled to anticipate that this truck would have been maintained in a way that would have detected both the universal joint in a state of incipient failure and the fact that the intermediate shaft was not fixed to its bearing. The suggestion that the [respondent] should have produced a welded joint that would not have failed is an approach spawned by the wisdom of hindsight. The universal joint, properly adjusted and maintained, was effectively not subject to failure. This is a case in which it was appropriate for the [respondent] to do no more than it did.”
His Honour found (at [72]) that there was no evidence to suggest that the respondent was on notice from prior incidents that failures might occur. There was one report of a vehicle being returned because the locating bolt to the universal joint was loose. The bolt was then correctly adjusted. In a second incident, in April 1998, a nut was missing from the retaining bolt and the bolt had worked out. Again, the problem was identified and rectified.
In his Honour’s opinion (at [74]):
“This does not amount to evidence that would suggest that a reasonably competent designer of a motor vehicle should reasonably have had regard to the prospect of the occurrence of the two events that combined in this case to produce the accident that injured the plaintiff. Section 5B [of the Civil Liability Act 2002] requires that the risk be not insignificant. There is no evidence in this case that supports a contention or a finding that this risk was not insignificant. For all this case has produced, it may be that this event has never previously occurred. It would be surprising if it had. The steering was manufactured according to the industry norm and still is. Not one piece of the evidence and none of the expert opinions suggests otherwise.”
Finally, the primary Judge referred (at [75]) to the fact that the intermediate shaft had a shoulder located above the bearing in the flangette at the firewall. This had been created as the result of the machining of the shaft to reduce its diameter to fit the internal dimensions of the bearing. If the shaft were to collapse, as it did here, it could slip no further than the point where the shoulder reached the bearing.
His Honour noted a “faint suggestion” that the design of the Truck was faulty because the shoulder had not been engineered to sit lower down closer to the bearing and at a distance less than the length of the splined upper section of the intermediate shaft that was fitted into the pinch bolted universal joint above it. If it had been so engineered, according to the argument the shoulder would have engaged the bearing before the upper shaft parted company with the universal joint and the failure would not have occurred.
His Honour considered (at [76]) this to be a prime example of “impermissible retrospective reasoning”:
“There was no evidence to suggest that the shoulder had been designed and engineered as a secondary safety feature in the first instance and its potential elevation to that status appears to me to be the product of the experts' detailed consideration and reconstruction in hindsight of the cause of the steering collapse. It falls in my view to be assessed in terms similar to the contentions concerning the welded joint. It did not amount to a failure by the [respondent] to design the steering mechanism in conformity with its duty of care as a prudent manufacturer.“
The primary Judge expressed (at [77]) his conclusion as follows:
“In my view the steering did not fail as the result of any absence of reasonable care by the [respondent] in the manufacture or design of the truck. It was not required to design a vehicle that would continue to be safe for use after two million or so kilometres and be accident proof in the face of no servicing to the steering mechanism for at least three years and where there has been independent conduct by a third party inappropriately adjusting the universal joint pinch bolt to allow for abrasive and adhesive wear to occur and to compromise the effectiveness of the joint. The availability of another, different design that would have obviated the risk is not automatically or necessarily co-extensive with the existence, or a finding, of a breach of duty. The [respondent] did not breach the duty that it owed to the plaintiff.”

Appellant’s Cross-Claim Against the Respondent

The primary Judge held (at [78]) that the appellant’s cross-claim against the respondent, insofar as it was based on the same allegations of negligence as the plaintiff had relied on, failed “for obvious reasons”.
The primary Judge also rejected the appellant’s cross-claim insofar as it was based on ss 75AD and ss 75AE of the TP Act. (His Honour apparently understood that the appellant was relying on both ss 75AD and 75AE; the appellant was in fact relying only on s 75AE.) His Honour held (at [82]) that the relevant goods, the universal joint and the flange bearing assembly, did not have a “defect” within the meaning of s 75AC of the TP Act:
“Their safety was entirely what persons generally are entitled to expect. The evidence in this case establishes that both items had seen something in the order of 2,000,000 kilometres of use in the truck with no maintenance from the [appellant] for the whole of the time that he owned it. My findings about these items in the context of the [respondent’s] alleged breach of duty to the plaintiff effectively foreclose upon the contention that the items were defective within the terms of the relevant provisions.”
In any event, so his Honour held (at [85]), the loss in respect of which the appellant sought recovery under ss 75AD and 75AE of the TP Act was a loss “in respect of which an amount has been, or could be, recovered under a law of … a State … that … relates to workers’ compensation”. The effect of s 75I of the TP Act, in such circumstances, was to exclude the operation of ss 75AD and 75AE and thus preclude the appellant from relying on these provisions. His Honour pointed out that the plaintiff was in the course of a journey to his work and was paid benefits in respect of the injuries he sustained:
“The words ‘in respect of which an amount has been paid’ are wide and contextually unconstrained. They extend to cover the payment of workers’ compensation benefits to the plaintiff in this case.”
Accordingly, his Honour dismissed the appellant’s cross-claims.

SUBMISSIONS
Appellant’s Contentions
Breach of Duty

The appellant submitted that the primary Judge did not properly consider his argument that the respondent had breached its duty of care owed to the plaintiff. In summary, the argument was as follows:
•a total failure of the steering mechanism of the Truck clearly would have had potentially catastrophic results;
•if the securing pinch bolt was not tightened to the specified torque, fretting wear could ultimately cause the lower part of the steering shaft to come free;
•there was no engineering back-up in case the pinch bolt was insufficiently tightened;
•since the Truck had a fixed cab, there was no need for the steering column to be manoeuvrable, as would be the case with a flexible cab;
•the experts gave evidence that the risk of potentially catastrophic failure would have been avoided had a welded connection been used (as had occurred in this model from 1990, although not for safety reasons);
•other simple engineering means were available as alternatives to eliminate the risk, such as providing for a shoulder in the shaft to prevent sufficient axial slipping for disengagement of the shaft or the inclusion of a sleeve-over device which would similarly limit slippage of the intermediate shaft;
•the experts had recognised that the risk of pinch bolt failure was sufficiently high to warrant safeguards;
•the need for safeguards was made even clearer by the fact that failure of the steering column in the circumstances of the present case could occur without warning; and
•the Manual gave only a general direction to “[r]egularly inspect all steerage linkages” and did not specify how the inspection should take place.
In oral argument, Mr Bartlett SC, who appeared with Mr Gooley for the appellant, identified the design defect in the steering mechanism as follows:
“The design defect was merely to use a pinch bolt universal joint to secure the upper end of the intermediate part of the steering column into place without any other means, engineering means, to secure the integrity of the steering column. That was a defect in design because if what occurred here that the nut on the joint, the nut securing the bolt of the universal joint or the pinch bolt universal joint which held the top of the intermediate steering column into place, although giving the appearance of being tight, and had been for some three years prior to the accident, could enable such fretting and wearing away that the joint, the universal joint fails, and this is what occurred, it failed to secure the upper section of the intermediate steering column into place so that the steering column totally collapsed. That part on axial displacement moved down and came free. It was necessary for it to move at least 20 mm for it to detach.”
Mr Bartlett contended that a reasonable designer/manufacturer of trucks in 1989 would have incorporated a mechanism to secure the steering column in the event of loosening of the pinch bolt and subsequent wear. In particular, he submitted that the respondent should have anticipated that the Truck would have a long working life and that there could be occasions when maintenance or repairs were done and the pinch bolt was not tightened to the prescribed torque. The respondent should also have anticipated that some owner-operators would be satisfied with “less than ideal maintenance processes”. It was foreseeable that an owner-operator might not undertake any other than a visual inspection of the steering column, which would not have revealed the loosening of the pinch bolt.
Mr Bartlett identified three mechanisms available to the respondent to eliminate the risk, all of which were identified by the conclave of experts (question 13):
•         the welded connection in lieu of the universal joint;
•         locating the shoulder on the shaft some 3 mm away from the bearing (rather than 40 mm); or
•         limiting travel in the sliding joint of the intermediate shaft by fitting a sleeve over the male sliding element.
According to Mr Bartlett SC, the primary Judge erred by assuming that once the bolt was tightened to the required torque by the manufacturer, there would be no relevant risk. His Honour had failed to give appropriate weight to the grave consequences of failure of the steering system in determining what reasonable care required of a manufacturer.
In his submissions, Mr Bartlett specifically challenged two factual findings made by the primary Judge. These were:
• the finding (at [68]) that the respondent complied with the usual practice of manufacturers in 1989 by using a pinch bolt universal joint; and
• the finding (at [74]) that there was no evidence supporting a finding that the risk of failure of the steering mechanism was not insignificant.

TP Act s 75AE

The appellant contended that the primary Judge had erred in dismissing the claim for indemnity under s 75AE of the TP Act. Mr Bartlett challenged the primary Judge’s finding (at [82]) that the relevant goods did not have a “defect” within the meaning of s 75AE of the TP Act at the time they were supplied. Mr Bartlett accepted that s 75AE applied in this case only if the defect was present at the time the Truck was supplied. However, he submitted that persons using or in the Truck and those on or near roads where the Truck was being driven were entitled to expect that the steering column would be designed so that it would not collapse during normal driving operations. Subsequent events could demonstrate that a defect was present at the time of supply.
The appellant also contended that s 75AI of the TP Act, which provides that s 75AE does not apply to a loss in respect of which an amount could be recovered under a State workers’ compensation law, could not preclude the appellant’s claim. That was because s 75AE related to a loss other than that sustained by the injured individual. In this case, the loss sustained by the appellant was his liability to compensate the plaintiff and that loss was not recoverable under a workers’ compensation law.

Respondent’s Submissions
Breach of Duty

Mr Cavanagh, who appeared with Mr Bowen for the respondent, supported the reasoning of the primary Judge. Mr Cavanagh submitted that the mere fact that the expert evidence demonstrated that the shaft could have been designed in a different way, did not establish that the respondent had breached its duty in the design of the steering mechanism. To hold otherwise, so he argued, would be inconsistent with principle because it would involve the impermissible application of hindsight.
According to Mr Cavanagh, the respondent was obliged only to exercise reasonable care in the design of the steering mechanism, not “to implement a failsafe method”. Mr Cavanagh emphasised that, on the primary Judge’s findings, the steering mechanism conformed to the industry norm. Moreover, the experts had not been asked to address whether a reasonable manufacturer in 1989 should have incorporated additional or alternative safety measures in the design of the steering mechanism. In addition, his Honour had correctly found that, having regard to the combination of circumstances required to produce a failure of the steering mechanism, the appellant had not shown that the risk was “not insignificant” for the purposes of s 5B(1)(b) of the Civil Liability Act 2002 (“CL Act”).

TP Act s 75AE

The respondent submitted that the appellant’s reliance on s 75AE of the TP Act was misplaced. The appellant was not a person who had “suffer[ed] loss because of … the injuries” to the plaintiff, within the meaning of s 75AE(1)(d). According to Mr Cavanagh, s 75AE is intended to provide a remedy to a third party who suffers loss because of the injuries sustained by an individual in consequence of a defect in the goods. It is not intended to apply to a person who becomes liable to the plaintiff by reason of that person’s own negligence. The liability is not a “loss because of … the injuries”.
If the threshold objection did not succeed, the respondent sought to uphold the primary Judge’s reasoning, including his Honour’s reliance on s 75AI of the TP Act.
In addition, the respondent submitted that the relevant defect was the slippage of the intermediate shaft from the pinch bolt. That defect did not exist at the time of manufacture and supply of the steering mechanism. Accordingly, s 75AK(1)(a) of the TP Act provided a defence.
Mr Cavanagh recognised that the respondent had not specifically pleaded a defence based on s 75AK(1). However, he pointed out that at the trial the plaintiff had abandoned his claim under s 75AD of the TP Act. The appellant in his cross-claim had merely repeated the language of s 75AE. Accordingly, the appellant had never pleaded or particularised the precise defect upon which he relied.
Mr Cavanagh submitted that if the defect was as the appellant had argued, the result would be that the “defect” would have been present in every truck manufactured in accordance with the industry norm over many years. All those trucks and perhaps many other vehicles had the potential, given a certain combination of unlikely circumstances, for fretting wear to occur and, ultimately, for the steering column to collapse. This, so Mr Cavanagh contended, could not have been the intention of Parliament.

REASONING: BREACH OF DUTY
Principles

There was no dispute as to the principles to be applied in determining, for the purposes of the appellant’s cross-claim, whether the respondent breached its duty to the plaintiff to exercise reasonable care in the design of the Truck to avoid defects that could lead to injury to road users. The argument revolved around whether the primary Judge had correctly applied the principles and whether his Honour had erred in making the critical factual findings that led him to conclude that the respondent had not breached its duty of care.
The starting point is the CL Act. Sections 5B and 5C of the CL Act provide as follows:
“5B General principles
(1)A person is not negligent in failing to take precautions against a risk of harm unless:
(a)the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and
(b)the risk was not insignificant, and
(c)in the circumstances, a reasonable person in the person’s position would have taken those precautions.
(2)In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things):
(a)the probability that the harm would occur if care were not taken,
(b)the likely seriousness of the harm,
(c)the burden of taking precautions to avoid the risk of harm,
(d)the social utility of the activity that creates the risk of harm.
5C Other principles
In proceedings relating to liability for negligence:
(a)the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and
(b)the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and
(c)the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk.”

Section 5B of the CL Act operates against the backdrop of the law of negligence. As Campbell JA said in Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd [2009] NSWCA 263; 168 LGERA 351, at 395 [172], s 5B is not a self-contained statement of the circumstances in which a liability for negligence will arise. Section 5B(1) sets out three pre-conditions that must be satisfied before a person can be found to be “negligent in failing to take precautions against a risk of harm”. Section 5B(2) specifies the matters that are to be taken into account, among other relevant considerations, in determining whether a reasonable person would have taken precautions against a risk of harm.
It has been accepted that the matters set out in s 5B(2) of the CL Act are, in substance, a reiteration of the well-known analysis of Mason J in Wyong Shire Council v Shirt [1980] HCA 12; 146 CLR 40. Mason J (with whom Stephen and Aickin JJ agreed) said this (at 47-48):
"[T]he tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position.
The considerations to which I have referred indicate that a risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far-fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors.”
Mason J’s test remains an authoritative statement of the position at common law, despite the disapproval of the test expressed by Callinan and Heydon JJ in New South Wales v Fahy [2007] HCA 20; 232 CLR 486, on the ground (at 551 [216]) that:
“it is … not reasonable to say, acting as courts do, in hindsight, that everything falling short of the far-fetched or fanciful should have been foreseen.”

See Roads and Traffic Authority (NSW) v Refrigerated Roadways, at 346 [178]-[179], per Campbell JA. Of course, any reconsideration by the High Court of the test in Wyong SC v Shirt would not necessarily affect the construction of s 5B of the CL Act.

In Roads and Traffic Authority of New South Wales v Dederer [2007] HCA 42; 234 CLR 330, Gummow J (with whom Heydon J agreed) restated (at 337-338 [18]) what his Honour described as “basic and settled matters of legal principle”:
“First, the proper resolution of an action in negligence depends on the existence and scope of the relevant duty of care. Secondly, whatever its scope, a duty of care imposes an obligation to exercise reasonable care; it does not impose a duty to prevent potentially harmful conduct. Thirdly, the assessment of breach depends on the correct identification of the relevant risk of injury. Fourthly, breach must be assessed prospectively and not retrospectively. Fifthly, such an assessment of breach must be made in the manner described by Mason J in Wyong Shire Council v Shirt.”
In this area of discourse, it is also necessary to bear in mind what the approach in Wyong SC v Shirt and, more importantly, s 5B of the CL Act requires. Speaking of the “Shirt calculus”, Gummow J in NSW v Fahy (at 505 [57]) said that the:
“description may be convenient but it may mislead. Reference to ‘calculus’, ‘a certain way of performing mathematical investigations and resolutions’, may wrongly be understood as requiring no more than a comparison between what it would have cost to avoid the particular injury that happened and the consequences of that injury. Shirt requires a more elaborate inquiry that does not focus only upon how the particular injury happened. It requires looking forward to identify what a reasonable person would have done, not backward to identify what would have avoided the injury.” (Footnote omitted.)

See also at 491 [6], per Gleeson CJ (dissenting).

An important element in the primary Judge’s reasoning in the present case was the finding that the manufacture in 1989 of the steering mechanism in the Truck conformed to the industry norm at that time. Subject to legislation, the general principle remains that stated by Latham CJ in Mercer v Commissioner for Road transport and Tramways (NSW) [1936] HCA 71; 56 CLR 580, at 589:
“The mere fact that a defendant follows common practice does not necessarily show that he is not negligent, though the general practice of prudent men is an important evidentiary fact. A common practice may be shown by evidence to be itself negligent.”
It follows that evidence of adherence to common practice in an industry, although important, is not necessarily determinative of whether a breach of duty has occurred: Council of the Shire of Muswellbrook v Lettice [2000] NSWCA 359, at [8]-[9], per Meagher JA (with whom Stein and Heydon JJA agreed); Lanza v Codemo [2001] NSWSC 72, at [169], per Wood CJ at CL; Rogers v Whitaker [1992] HCA 58; 175 CLR 479, at 487, per Mason CJ, Brennan, Dawson, Toohey and McHugh JJ; Rosenberg v Percival [2001] HCA 18; 205 CLR 434 (cf CL Act, s 5O, dealing with the standard of care owed by a person practising as a professional).
It is, however, important to bear in mind the observations of McHugh J (with whom Gummow and Heydon JJ agreed on this point) in Dovuro Pty Ltd v Wilkins [2003] HCA 51; 215 CLR 317. In that case the question was whether a supplier of imported canola seeds had breached its duty of care to a Western Australian farmer by not disclosing the presence of weed seeds in the canola. There was no evidence that at the time the seeds were supplied the particular weeds were regarded as presenting a danger to Western Australian agriculture.
McHugh J said (at 329 [34]):
“If negligence law is to serve any useful social purpose, it must ordinarily reflect the foresight, reactions and conduct of ordinary members of the community or, in cases of expertise, of the experts in that particular community. To hold defendants to standards of conduct that do not reflect the common experience of the relevant community can only bring the law of negligence, and with it the administration of justice, into disrepute. That is not to say that a defendant will always escape liability by proving that his or her conduct was in accord with common practice. From time to time cases will arise where, despite the common practice in a field of endeavour, a reasonable person in the defendant’s position would have foreseen and taken steps to eliminate or reduce the risk that caused harm to the plaintiff. But before holding a defendant negligent even though that person has complied with common practice, the tribunal of fact had better first make certain that it has not used hindsight to find negligence. Compliance with common practice is powerful, but not decisive, evidence that the defendant did not act negligently. And the evidentiary presumption that arises from complying with common practice should be displaced only where there is a persuasive reason for concluding that the common practice of the field of activity fell short of what reasonable care required.”

See also McDonald v Girkaid Pty Ltd [2004] NSWCA 297, at [217], per McColl JA (with whom Beazley JA and Young CJ in Eq agreed).

The Industry Norm Finding

The finding by the primary Judge that the respondent complied with the industry norm in manufacturing the steering mechanism for the Truck rested on his acceptance of the evidence of Mr Perkins, a product engineer who had been employed by the respondent since 1979. Mr Perkins had been employed in the engineering department throughout his career. In 1989, Mr Perkins was not working in the product group responsible for the manufacture of the Truck, although it appears that he was involved in the assembly of other trucks at that time.
Mr Perkins gave evidence on the third day of the trial. He was called by the respondent and gave his evidence in chief orally. It appears that no objection was taken to Mr Perkins giving evidence without having first providing an affidavit or written statement. Mr Perkins was cross-examined both by senior counsel for the plaintiff and by Mr Bartlett on behalf of the appellant.
Mr Perkins’ evidence in chief included the following passage:
“Q.         Over the period since the 1980s to the current time does [the respondent] generally manufacture the component parts or does it source the component parts from suppliers?
A.           A mixture. It mainly sources components from suppliers.
Q.           With regard to the steering shaft assembly, does it manufacture those components parts or does it, I’m talking about back in 1989 now, did it source those component parts from suppliers?
A.           The majority would be sourced from suppliers.
…
Q.           I think it is common ground in respect of this particular vehicle which you know to be a Transtar 4670, the original steering shaft assembly was purchased by Iveco from ZF?
A.           Yes components were procured from ZF.
Q.           Now, back in the period the late 1980s did Iveco assemble a number of different types or models of trucks?
A.           Yes.
Q.           How many approximately?
A.           Oh, there was Acco which we still make today, there was T Line, then there was two Iveco models that we assembled, one was called Turbotech, one was called Turbostar. There was also S series monitored truck which was assembled at that time.
…
Q.           How many of the models identified on that document [Exhibit 2D-1, showing production volumes of various models of trucks in Australia and Europe from 1993] used the pinch bolt system, that is the pinch bolt system of connecting the top and intermediate shaft by way of a universal joint?
A.           Connection to the steering column in all those models is via pinch bolt connection.
Q.           Has that always been the case with all those models?
A.           Yes, yes, that’s, it is an industry norm.
Q.           Going back to 1989, we know that this particular vehicle was manufactured in 1989, that is assembled by Iveco. I think you have already said Iveco assembled a number of different models of trucks at that time?
A.           (Witness nodded).
Q.           How many of those models used the pinch bolt system back in 1989, that is the models that were being assembled in 1989?
A.           Oh, they all did except for the S series.
Q.           The S series?
A.           Yes, the Acco used a pinch bolt connection, the T-line used a pinch bolt connection, the Turbotech, the Turbostar, all used pinch bolt connections.
Q.           Back in 1989 did a number of other manufacturers of trucks use the pinch bolt system?
A.           Yes, it is, it was the industry norm and still is today.
Q.           Can you name some of those manufacturers?
A.           Oh, Kenworth, Volvo, Scandia, Freightliner.
…
Q.           The steering shaft assembly I think you have already said was a component purchased from ZF in respect of this particular vehicle?
A.           Yes, the upper shaft and the universal joint.
Q.           And so ZF supplied the upper shaft with the universal joint?
A.           Yes.
Q.           What about the intermediate shaft?
A.           The intermediate shaft was our design.
Q.           And at the time of the manufacture of this vehicle or assembly of this vehicle in 1989 then the vehicle was assembled using a top shaft, an intermediate shaft which were affixed to the universal joint by means of a pinch bolt?
A.           Yes”. (Emphasis added.)
The respondent’s complaint about his Honour’s finding was based partly on what was said to be the hearsay nature of Mr Perkins’ evidence. There are two answers to this contention. The first is that although Mr Perkins agreed that he had no personal knowledge of the reasons for the redesign in 1990 of the steering column for the F4670 model, it was never suggested to him in cross-examination that he had no personal knowledge of the design feature of the models he identified or of the industry practice of which he gave evidence. The inference is clearly available from the position he occupied and his long experience with the manufacture of trucks that his evidence was based on his own knowledge of the process for manufacturing steering systems for installation in trucks. The second is that even if Mr Perkins’ evidence was in part hearsay in character (a proposition that has not been established), no objection was taken to it. The primary Judge could give that evidence such weight as it warranted. See generally Cross on Evidence (8th Aust ed), at [1650]. In the absence of any objection, or any attempt by the appellant to identify Mr Perkins’ sources of information, no cogent reason has been given as to why his Honour was not entitled to accept the evidence.
The appellant also complained that the respondent had not called any evidence from engineers who had worked in 1989 in the department responsible for the F4670 model. However, at least one of the engineers identified in the documentation produced by the respondent had left the respondent’s employment in about 1990. Moreover, there was nothing in the evidence to show that other engineers whose names were mentioned in contemporaneous documentation continued to be employed by the respondent. In any event, their absence casts no doubt on the primary Judge’s acceptance of Mr Perkins’ evidence, particularly when none of the experts considered whether the steering system in the Truck had been manufactured in accordance with standard industry practice.
Another complaint was that Mr Perkins gave evidence at the trial without a witness statement from him having previously been provided to the appellant. But no objection to this course was taken by the respondent. Neither Mr Bartlett nor the plaintiff’s senior counsel, sought an adjournment before commencing to cross-examine Mr Perkins. It is difficult to see how the procedure adopted at trial is indicative of any error in the primary Judge accepting Mr Perkins’ evidence as to the industry norm in 1989.
The appellant also submitted that the primary Judge had wrongly assumed that Mr Perkins’ evidence supported a finding that the pinch bolt steering systems in general use in 1989 did not incorporate any other mechanism designed to safeguard against the intermediate shaft becoming detached from the universal joint (such as relocating the shoulder on the shaft). Mr Bartlett contended that, as Mr Perkins had not addressed this issue and as the respondent had not adduced any expert engineering evidence to elaborate on Mr Perkins’ evidence, the primary Judge had erred in finding that the design of the Truck’s steering system conformed to the industry norm in 1989.
It is true that Mr Perkins was not specifically asked, either in his examination in chief or his cross-examination, as to whether the pinch bolt systems used in 1989 relocated the shoulder of the shaft closer to the bearing or fitted a sleeve in order to safeguard against the risk of axial slippage by the intermediate shaft. (No issue arises as to whether the pinch bolt systems in fact utilised fixed welding of the connections, since the two designs are incompatible.) However, it is not correct that Mr Perkins’ evidence was entirely silent on the subject.
Senior counsel for the plaintiff cross-examined Mr Perkins on the effectiveness of relocating the shoulder of the shaft closer to the bearing in the following passage:
“Q.         May I approach with one element of this mechanism? What I have here is the bearing flangette and the intermediate shaft of the subject vehicle?
A.           (Witness nodded.)
Q.           Would you make that assumption for us, please?
A.           Yes.
Q.           In its correct anatomical position, if I may describe it as such, the bearing and flangette sit close to the beginning of the splines at the gear end of the shaft, correct?
A.           Right.
Q.           As I have demonstrated here, leaving a substantial gap between the wheel side of the bearing and the shoulder machined into the shaft, correct?
A.           Right, yes.
Q.           May I suggest to you that if the shoulder in the shaft had been, say, the best part of an inch closer to the wheel side of the bearing, even if there were no grub screws and even if the clamp bolt in the universal joint failed the shaft could not slip forward far enough to disengage?
A.           I suppose that would give you another level of protection but I’m not sure whether tolerances would allow you to design it that close given that everything is in a fixed position.
Q.           But if it were designed in that way you agree with me that that would be another mechanism whereby the failure that occurred here could have been avoided?
A..          Yes.” (Emphasis added.)

The penultimate answer in that passage strongly implies that, to Mr Perkins’ knowledge, pinch bolt mechanism for steering mechanisms being manufactured in 1989 did not locate the shoulder on the shaft close to the bearing. Had he known of any such design feature, his answer to the question could hardly have taken the form it did.

It is perhaps not surprising that Mr Perkins was not asked about whether any of the pinch bolt systems in use in 1989 incorporated a sleeve over the male sliding element as a safeguard to prevent slippage of the intermediate shaft. The plaintiff did not specifically plead that the respondent had breached its duty to him by failing to include a sleeve in the design and the appellant’s cross-claim merely repeated the plaintiff’s particulars of negligence. Despite the reference to the sleeve in answer 13(b) given by the conclave of experts, no reliance seems to have been placed at the trial on the respondent’s failure to incorporate a sleeve into the design of the steering system.
In any event, the appellant bore the onus of proving for the purposes of his cross-claim that the respondent had breached its duty to the plaintiff. The evidence given by Mr Perkins, unless and until it was qualified, was capable of conveying that the standard industry practice in 1989 was to manufacture steering systems using pinch bolt mechanisms of substantially the same design as those used in the manufacture of the Truck. That is, his evidence implied that the pinch bolt mechanisms did not incorporate any additional safeguards to prevent axial slippage of the intermediate shaft. It was therefore a matter for the appellant to cross-examine Mr Perkins or to adduce evidence to counter the inferences to be drawn from his evidence. The appellant did not do so. Accordingly, the appellant has not established any basis for concluding that the primary Judge’s finding was erroneous or against the weight of the evidence.

Breach of duty

The primary Judge’s conclusion that the respondent had not breached the duty of care he owed to the plaintiff was based on two propositions:
• the appellant had not established that the risk of failure of the steering system was not insignificant (at [74]); and
• the appellant had not established that a reasonable manufacturer or designer of trucks in the respondent’s position would have incorporated further safeguards in the design of the steering system to take account of the possibility of failure of the pinch bolt mechanism (at [74], [77]).

Either conclusion, if upheld, would be sufficient to defeat the appellant’s cross-claim: CL Act, s 5B(1)(b), (c).

Neither party addressed in submissions the approach that should be taken by this Court to the appellant’s challenge to these conclusions. In Certain Lloyds Underwriters v Giannopoulos [2009] NSWCA 56, Campbell JA (with whom Giles and Ipp JJA agreed) held that appellate review of a determination as to whether it was just and reasonable to extend the limitation period was to be conducted on the same basis as appellate review of a determination that a party had failed to act with reasonable care. His Honour described the approach to be taken on an appeal under s 75A of the Supreme Court Act 1970 as follows (at [108]):
“When an appellate court is deciding whether a first instance judge has erred in the evaluative task involved in deciding whether established facts amount to a failure to take reasonable care, it is recognised that the appellate court should give respect and weight to the conclusion of the trial judge: Warren v Coombes [[1979] HCA 9; 142 CLR 531] at 551, reiterated in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [25]. Part of the need for that respect and weight arises from the trial judge having the advantage of matters of impression of the evidence and the feel of the trial that it is hard if not impossible fully to articulate in reasons for judgment … Because of that, the finding of the primary facts shades to some extent into their evaluation. It leads to the possibility that, in the inherently evaluative task of deciding whether there has been a failure to take reasonable care in a particular factual situation, the trial judge may have a more acute understanding of the nuances of that factual situation, and thereby have an advantage in evaluating the facts by the legal standard. But the fact that the task is evaluative is not a reason for appellate courts to stand back once they have reached the conclusion that the primary judge’s conclusion was wrong. In Warren v Coombes the majority, at 552, said that in deciding whether there had been a failure to exercise reasonable care they “should have thought that the trial judge can enjoy no significant advantage”. Their Honours did not say that the trial judge has no advantage at all. But the scope for advantage may be small, or on the facts of some cases non-existent. What the appellate judge needs to do is to consider whether the particular case in front of him or her is one where the trial judge had an advantage, if so in what did it lie; and whether, taking account of that advantage, the appellate judge comes to the view that the trial judge’s decision was wrong. If, in those circumstances, the appellate judge comes to the decision that the primary decision is wrong, that is in itself justification for correcting it.

In the absence of any argument that this approach is inappropriate for the purpose of appellate review of the judgments required by s 5B(1)(b) and (c) of the CL Act, I propose to adopt it.

In assessing the appellant’s attack on the conclusions reached by the primary Judge, it is important to appreciate the factual findings made by the primary Judge and the limitations of the expert evidence on which the appellant relied. No challenge has been made to the following findings:
•         if regular preventative maintenance had been carried out on the Truck, the loosening of the pinch bolt would have been detected long before the crash (at [43]);
•         the respondent was entitled to expect, at the time the Truck was manufactured, that the Truck would be maintained in a way that would have detected both the universal joint in a state of incipient failure and the fact that the intermediate shaft was not attached to the bearing (at [71]);
•         once the Truck was manufactured with the pinch bolt set at the correct torque, the bolt could not be loosened except through some form of external intervention (at [53]);
•         the loosening of the bolt in the present case occurred during the course of work carried out by the dealer in 1999 (at [57]);
•         the respondent had not been put on notice from prior failures that the combination of events that resulted in injury to the plaintiff might occur (at [72]);
•         the Manual contained a “clear and unambiguous” direction to inspect regularly all steering linkages (at [33]);
•         the appellant used the Truck for three and a half years and travelled about 500,000 kilometres without any inspection of the steering system before the crash occurred (at [33]); and
•         the failure of the steering system would not occur within a short time of the bolt being loosened so that it was no longer fastened at the specified torque, but would require a long period of wearing between the bolt and the shaft (at [54], [57]).
In addition, the primary Judge found (at [74]) that the design and manufacture of the steering system on the Truck was the industry norm in 1989 and, indeed, continued to be the industry norm. For the reasons I have explained, the appellant’s challenge to those findings fails.
The conclave of experts adopted Mr Anderson’s view, expressed in his Second Supplementary Report, that vehicle design should be subjected to “Failure Mode and Effects Analysis” and that if a mode is identified that might produce catastrophic results, design action should be taken (question 16). However, none of the experts addressed, or was asked, about the significance of the industry norm described by Mr Perkins. Indeed none was asked whether he was aware of industry practice in relation to the manufacture and design of steering systems for trucks in 1989. Nor were the experts asked to consider what precautions, if any, a reasonably prudent manufacturer would have taken in 1989 to safeguard against the risk of steering failure by reason of slippage of the intermediate shaft.
No doubt the appellant was content for the most part to leave the plaintiff to conduct the breach of duty case against the respondent. Nonetheless, the fact remains that the experts were not asked to consider whether, in the circumstances found by the primary Judge, a manufacturer/designer in 1989, exercising reasonable care, would have taken either or both of the additional measures (relocating the shoulder or employing a sleeve) identified by the appellant. It might have been expected that one or more of the experts would have been asked to consider whether, in the light of the industry norm in 1989 and the combination of events required to bring about the failure of the steering system, further safeguards were required. In this respect, it is to be borne in mind that three of the four experts considered that the grub screws provided an independent safeguard against failure, while the fourth was unsure. How that would have influenced their answers is not known.
The answer to question 16 does not determine what a reasonable manufacturer would do. Much less does it determine or even assist in determining what a reasonable manufacturer would have done in 1989 having regard to the particular circumstances of this case and the criteria specified in s 5B of the CL Act.
There can be no disagreement with the appellant’s contention that, viewed prospectively, any failure of the steering system, whether by reason of axial slippage of the intermediate shaft or otherwise, was likely to result in very serious, if not catastrophic harm (CL Act, s 5B(2)(b)). As was said by Cooper J (with whom Connolly and Ryan JJ agreed) in Suosaari v Steinhardt [1989] 2 Qd R 477, at 489, the graver the foreseeable consequences of a failure to take care, the greater the necessity for “special circumspection”. The expert evidence also established that measures could have been taken at relatively little cost by the respondent to incorporate an additional safeguard against failure resulting from loosening of the pinch bolt and consequential wearing of the bolt. The safeguards could have taken the form of switching to a fixed welded system (as was done in 1990, although not for safety reasons) or relocating the shoulder of the shaft to prevent significant axial slippage.
Even so, it was still necessary for the appellant to establish at trial that the respondent had failed to exercise reasonable care in the design of the Truck, which was manufactured in 1989. The risk against which the respondent was required to take reasonable precautions was that the bolt would become loosened from the specified 45 Nm to 50 Nm, leading to wearing of the bolt and, ultimately, axial slipping of the intermediate shaft sufficient to detach it from the universal joint. Looking at the matter prospectively in 1989, the risk could not eventuate simply through driving the Truck, even under the most gruelling conditions over many years of usage. The risk could eventuate only if:
•         someone interfered with or improperly adjusted the steering mechanism of the Truck so that the pinch bolt ceased to be tightened to the specified torque;
•         regular preventative maintenance of the kind the manufacturer was entitled to expect (and which was directed in the Manual) did not take place; and
•         the failure to undertake regular maintenance persisted over a sufficient length of time, measured in years of usage of the Truck and hundreds of thousands of kilometres travelled, to allow the failure to occur.
In addition to these matters, any assessment of the design precautions required of a reasonable manufacturer in 1989 must take into account the fact that the design was the industry norm at that time. While this is not decisive, in the absence of evidence that the industry practice itself was deficient or that potential safety issues had been identified at the time but not acted upon, the respondent’s adherence to the industry norm is a strong indication that a reasonable person in the respondent’s position would not have adopted additional precautions to guard against the risk. Furthermore, on the primary Judge’s findings, the respondent had no reason in 1989 to believe that the risk would or might eventuate. Indeed there was no such indication until the crash occurred in 2002.
When the warning of McHugh J in Dovuro v Wilkins about the dangers of using hindsight to find negligence is borne in mind, it is difficult to disagree with the primary Judge’s assessment that the risk was not shown to be otherwise than insignificant and that the appellant had not established that a reasonable manufacturer/designer in the respondent’s position would have taken one or more of the precautions identified by the appellant when designing the steering system for the Truck. Manufacturers are not necessarily entitled to assume that purchasers or users of their products will invariably follow instructions or act in a prudent and sensible manner. But for this failure of the steering system to occur, there had to be two independent and serious departures from the standards of conduct reasonably to be expected by the manufacturer of the Truck. The first was the failure to adjust the pinch bolt to the prescribed torque in 1999. This was an apparently serious mistake committed not by an owner-operator attempting his or her own maintenance, but by a specialist dealer in trucks. The second consisted of the appellant’s egregious failure, over a period of three and a half years and hundreds of thousands of kilometres of driving the Truck, to undertake basic maintenance of the steering system in defiance of the manufacturer’s directions.
In these circumstances, it cannot be said that the primary Judge was wrong in concluding that the respondent did not breach the duty of care it owed to the plaintiff.

REASONING: CLAIM UNDER THE TP ACT
Part VA of the TP Act

Part VA of the TP Act was introduced by the Trade Practices Amendment Act 1992 (Cth). The Explanatory Memorandum accompanying the Trade Practices Amendment Bill 1992 described the purpose of the legislation as follows:
“1. The purpose of this Bill is to introduce into Australia a strict product liability regime based on the 1985 European Community Product Liability Directive by way of amendment of the Trade Practices Act 1974. It provides a regime of strict liability, whereby a person who is injured or suffers property damage as a result of a defective product has a right to compensation against the manufacturer without the need to prove negligence on the part of the manufacturer.
2. The key concept of the new Part VA inserted by this Bill is that a person who is injured, or whose property is damaged, by a defective product will have a right to compensation against the manufacturer of the product. Goods are ‘defective’ if they do not have the degree of safety which persons generally are entitled to expect in all the circumstances. ‘Manufacturer’ has the same extended definition as currently applies for the purposes of Division 2A of Part V of the Trade Practices Act.
3. The manufacturer can escape liability where it can prove one of a number of defences, the most significant being that the goods were not defective when supplied by the manufacturer or that the goods represented the ‘state of the art’.”
Section 75AC addresses the meaning of the expression “goods have a defect”:
“(1)For the purposes of this Part, goods have a defect if their safety is not such as persons generally are entitled to expect.
(2)In determining the extent of the safety of goods, regard is to be given to all relevant circumstances including:
(a)the manner in which, and the purposes for which, they have been marketed; and
(b)their packaging; and
(c)the use of any mark in relation to them; and
(d)any instructions for, or warnings with respect to, doing, or refraining from doing, anything with or in relation to them; and
(e)what might reasonably be expected to be done with or in relation to them; and
(f)the time when they were supplied by their manufacturer.
(3) An inference that goods have a defect is not to be made only because of the fact that, after they were supplied by their manufacturer, safer goods of the same kind were supplied.”
Section 75AE is headed “Liability for defective goods causing injuries – loss by person other than injured individual”. It provides as follows:
“(1) If:
(a)          a corporation, in trade or commerce, supplies goods manufactured by it; and
(b)          they have a defect; and
(c)          because of the defect, an individual suffers injuries; and
(d)          a person, other than the individual, suffers loss because of:
(i)the injuries; or
(ii)if the individual dies because of the injuries – the individual’s death; and
(e)the loss does not come about because of a business relationship between the person and the individual;
then:
(f)the corporation is liable to compensate the person for the amount of the person’s loss; and
(g)the person may recover that amount by action against the corporation.
(2)          For the purposes of this section:
(a)a profession is taken to be a business; and
(b)a relationship between employer and employee or a similar relationship is a business relationship.”
Section 75AI of the TP Act provides that neither s 75AD nor s 75AE applies to a loss in respect of which an amount has been or could be recovered under a law of a Commonwealth, State or Territory that relates to workers’ compensation.
Section 75AK(1) of the TP Act provides that in an action under s 75AE (among others), it is a defence if it is established that:
“(a)the defect in the action goods that is alleged to have caused the loss did not exist at the supply time; or
…
(c)the state of scientific or technical knowledge at the time when they were supplied by their actual manufacturers was not such as to enable the defect to be discovered”.
Section 75AN(1) of the TP Act provides that if the loss in an action under s 75AD or s 75AE was caused by both an act or omission of the individual who suffers the injuries concerned and a defect in the goods supplied, the amount of the loss is to be reduced to such extent as the court thinks fit, having regard to that individual’s share in causing the loss.
Section 75AO of the TP Act specifies limitation periods for the bringing of a “liability action”, including a claim under s 75AD or 75AE. Section 75AO(2) imposes an absolute limitation period of 10 years from the supply by the manufacturer of the goods whose supply and defect is alleged in the action. However, this limitation period, which would bar the appellant’s cross-claim if it applied, was not introduced until 2004 and applies only to contraventions that occur after the commencement of the amending legislation.
Section 75AR provides that Part VA of the TP Act is not intended to exclude or limit the concurrent operation of any law, whether written or unwritten, in force in a State or Territory.

The Threshold Question

Section 75AE(1) of the TP Act applies where:
•a corporation, in trade or commerce, supplies goods manufactured by it;
•the goods have a “defect” taking into account the matters identified in s 75AC;
•because of the defect, an individual suffers injuries;
•a person, other than the individual, suffers loss because of the injuries; and
•the loss does not come about because of a business relationship between the person and the individual.

If these conditions are satisfied, the corporation is liable to compensate the person for the amount of the person’s loss.

The appellant says that he has suffered loss because of the injuries sustained by the plaintiff, that loss being the liability he incurred to the plaintiff to compensate him for his injuries. In my opinion, it is a very curious use of language to describe the appellant’s liability as a loss suffered by him “because of” the plaintiff’s injuries.
Clearly, the injuries suffered by the plaintiff, of themselves, have not caused the appellant to suffer any loss. The appellant was not, for example, a dependant or employer of the plaintiff and, indeed, had no pre-existing relationship with him at the time of the crash. Nor would the fact that the plaintiff suffered injuries, without more, give rise to any liability in the appellant. Even if the appellant’s conduct caused the plaintiff to suffer injuries, the appellant would not incur a liability to the plaintiff unless the latter could establish a breach of duty or additional facts giving rise to some other cause of action.
If one were asked to identify the cause of the appellant suffering a loss (assuming that his liability to compensate the plaintiff can be described as a “loss”), the answer would be: the appellant is liable because he breached the duty of care he owed to the plaintiff. It is true that the plaintiff would not have a cause of action against the appellant unless the appellant’s breach of duty caused the plaintiff some harm. But it is, at best, a very strained use of language to say that the appellant has incurred a liability because of the injuries sustained by the plaintiff.
The conclusion that s 75AE(1) is not intended to create a right of indemnity (see s 75AE(1)(f)) in a tortfeasor against a manufacturer who has supplied defective goods, where both have contributed to the plaintiff’s injuries, receives support from the statutory context. Section 75AN(1) deals with the case where a loss is caused both by an act or omission of the injured individual and a defect in the goods. In these circumstances, the amount of the loss is to be reduced to such extent (which may be nil) as the court thinks fit, having regard to the individual’s “share in causing the loss”.
The effect of s 75AN(1) is that the liability of a manufacturer to compensate a person injured by a defect in goods supplied by the manufacturer will be reduced to the extent that the injured person’s act or omission caused the injuries. If the appellant’s construction of s 75AE(1) is correct, where an individual’s injuries are caused both by a defect in the goods supplied by the manufacturer and a breach of duty by a third party, the third party can claim a complete indemnity from the manufacturer. This will be so, as Mr Bartlett acknowledged, even if the third party can be regarded as primarily responsible for the injuries sustained by the individual. It hardly seems likely that Parliament should have intended the manufacturer’s liability to be reduced if the injured individual’s own conduct contributed to his or her injuries, but not if a third party’s negligent conduct, no matter how egregious, contributed to the individual’s injuries.

In my view, s 75AE(1) of the TP Act is not intended to create a right of indemnity in a party whose negligence has caused injuries to an individual against a manufacturer who has supplied defective goods which have also caused the same injuries. Any claim for indemnity or contribution by the negligent party would fall to be determined under general principles of law or equity, or under applicable legislation: cf TP Act, s 75AR; Bialkower v Acohs Pty Ltd [1999] FCA 446; 83 FCR 1 (holding that an action for damages under s 82 of the TP Act by reason of a contravention of s 52 is statutory, not tortious, and thus the party liable cannot claim contribution under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946); Friend v Brooker [2009] HCA 21; 239 CLR 129, at 148 [38]ff (explaining the scope of the equitable doctrine of contribution).
If there were any doubt about the proper construction of s 75AE(1), it seems to me to be removed by the Explanatory Memorandum to the Trade Practices Amendment Bill 1992, which led to the insertion of Part VA into the TP Act. The Explanatory Memorandum makes clear (at [33]-[34]) s 75AE(1) is intended to provide a remedy to the dependants of a person who is injured or dies because of defective products:
“The dependants of a person who is injured or dies because of defective goods may also suffer their own loss as a result of that person’s injuries or death. Section 75AE provides such persons with a right to take a separate action to recover such loss, as ‘Lord Campbell’ type actions compensate only in limited circumstances.
Loss which is caused by a business relationship between the injured person and the potential claimant is specifically excluded by paragraph 75AE(1)(e), as the legislation is not intended to create rights of a commercial nature. Losses caused, for example, by the injury of a business partner or injury of a director of a company are therefore excluded. Subsection 75AE(2) makes it clear that, for the purposes of this regime, a profession is a business. It also provides that an employer/employee relationship (or one of a similar nature) is a business relationship.”

It is clear from the Explanatory Memorandum that not only would the appellant’s construction of s 75AE(1) strain the statutory language, but it would be wholly at odds with the intended scope of the provision.

The conclusion I have reached is in accordance with the decision of Grove J in Cheong v Wong [2001] NSWSC 881; 34 MVR 359 at 372 [86]-[87].
It follows that the appellant’s claim founded on s 75AE was correctly rejected by the primary Judge.

Other Issues

Having regard to this conclusion, it is not necessary to consider whether, if the appellant did satisfy s 75AE(1)(d) of the TP Act, the primary Judge was wrong to find that the goods did not have a defect within the meaning of s 75AC and s 75AE(1)(b). In my view, it is also undesirable to undertake this task.
The primary Judge found that the goods in question were the universal joint and the flange bearing assembly. He also found (at [82]) that the goods did not have a defect because their safety was “entirely what persons generally are entitled to expect” (cf s 75AC(1)).
In order to determine whether the finding should be overturned, a number of issues would have to be addressed. The task is not made any easier by the absence in the pleadings, either by the plaintiff or the appellant, of any clear identification of the defect that was alleged for the purposes of their claims, respectively, under s 75AD and s 75AE. The absence of any such pleading makes it difficult to determine whether the goods had the defect at the time of supply, if s 75AE is to be read as imposing such a requirement. The absence of details in the pleading makes the application of s 75AK(1)(a) particularly problematic, especially as the respondent excused its own failure to plead s 75AK(1)(a) by the deficiencies in the appellant’s pleading. Moreover, as his Honour did not have to address the matters identified in s 75AC(2), a reassessment of his finding that the goods did not contain a defect might well involve consideration of matters as to which findings were not made.

CONCLUSION

For the reasons I have given, the orders I propose are as follows:
1. Appeal dismissed.
2. The appellant pay the respondent’s costs of the appeal.
**********

AMENDMENTS:

19/05/2010 - Incorrect judgment date - Paragraph(s) Coversheet

LAST UPDATED:
19 May 2010

Quest No	Text of Question	Response of Conclave
4	If it is considered that a cause of the collapse of the steering column is that the shaft disengaged from the universal joint resulting in the column giving way: …
(e)	If due to fretting wear, did it include the bolt and splined region of the shaft and, if so, to what extent?	Yes. The fretting produced sufficient wear to allow the shaft to move some 20 mm axially, allowing disengagement of the joint.
…
6 (a)	Does the original design contain a sensitivity to a combination of a loose universal joint clamp bolt and loose bearing grub screws and that whenever this combination of conditions occurred there existed a real risk that the steering intermediate shaft may become disengaged?	Yes.
(b)	Does the revised design, namely the “shaft assembly column upper” in which the clamped spline connection has been replaced by a welded connection, eliminate the failure mode experienced by the vehicle in the subject collision?	Yes.
(c)	Would it have been possible to incorporate this fail safe feature in the original design?	Yes.
7 (a)	Should the subject universal joint as designed and provided in the vehicle as manufactured be the subject of regular maintenance to check for axial play or to periodically re-tighten or replace the high tensile bolts?	Yes.
(b)	If so, should this be advised in the Owner’s Manual?	Yes, refer to answer 6.
8	Was regular inspection and/or maintenance of the steering (including the whole of the steering column) required given the nature of the materials used, the design and the magnitude of the consequences of a steering failure?	Yes.
9 (a)	Is it likely that the grub screws (or either of them) fitted at the lower end of the steering shaft were loose or missing at the time of the accident?	Yes.
(b)	If both grub screws were in place and tightened would the steering column have failed as it did in this accident?	[Three experts answered “No”. One was unsure whether or not disconnection of the universal joint required missing or loose grub screws.]
10 (a)	Was the bearing at the lower end steering shaft seized at and prior to the accident?	Yes.
(b)	If so, does this indicate that such part of the steering system was not properly maintained?	Yes.
(c)	Is it likely the shoulder sat approximately 5 millimetres proud of the bearing at the lower end of the steering shaft?	The shoulder on the intermediate shaft was originally located about 40 mm away from the bearing inner race. Axial movement under fretting of about 20 mm was necessary for disengagement to occur. At the point of disengagement, the gap was reduced to no more than 20 mm.
(d)	If so, was it necessary to have this 5 millimetre movement to allow the steering shaft to drop away from the universal joint and thus cause the steering failure?	See answer to 10 (c)
(e)	If the said bearing was seized would it be expected to be accompanied by stiff or noisy steering;
(i)	if the grub screws were positioned in place and properly tightened?	Yes
(ii)	if the grub screws were loose or missing?	No. [However, one expert believed] it may have been accompanied by some noise.
11 (a)	Was the access to the upper steering column universal joint which failed located inside the cabin enclosed by a light plastic cover held in place by four small screws?	Yes but there are 6 screws locating it.
(b)	If “yes” did this enable easy access for inspection on removal of the said screws?	Yes.
12	What, if any, design strategies were capable of being implemented to reduce fretting wear and what would be the approximate cost (as at 1989) of implementing such design strategies in the manufacture of the vehicle?	The only guaranteed method is to eliminate all movement so as to remove all possibility of fretting. Fretting wear is an inherent feature of this type of joint.
13	What, if any, design strategies were capable of being implemented which would have prevented the giving way of the universal joint?	1. In anticipation of the event that the clamp bolt and grub screws all become loose, fretting wear could be reduced by limiting the axial movement of the intermediate shaft through the bearing at the firewall to, say, no more than 3 mm. This would ensure that 17 mm of spline length of the universal joint would remain engaged and could be achieved by, eg: (a) having a design condition where the shoulder on the shaft is located 3 mm (not 25 mm) away from the bearing. If there are significant build dimensional variations with the truck, this may require the use of selective spacers and a checking procedure on assembly. The cost would be small – possibly 10 minutes additional assembly time. (b) limiting the travel in the sliding joint of the lower (in the engine bay) shaft. This could be achieved by fitting a sleeve over the male sliding element and would not affect the assumed commonality that this shaft has with truck models having a tilting cab. Again the cost would be small. 2. Adopt a non bolted design.
14	Would a design strategy of replacing the clamp splined connection with a welded connection eliminate the failure mode of the steering column as experienced by the vehicle in the accident?	Yes.
15	Would a design strategy incorporating a shoulder at the lower end of the intermediate shaft which would abut the bearing at the fire wall after 1 or 2 millimetres of travel have prevented the failure of the steering system if the column shaft came free from the universal joint?	See response to Question 13
16	Should vehicle design be subject to “Failure Mode and Effects Analysis” and, if a mode is identified that might result in catastrophic results, should design action be taken?	Yes or an equivalent process should be adopted.
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29	If there was a loose universal joint clamp bolt and loose bearing grub screws, would that create a risk of the steering intermediate shaft becoming disengaged?	Yes.
30	Does the use of a welded connection eliminate the risk of loose joints, provided that the welding is done properly?	The welded joint will eliminate the type of failure, experienced in this case.