Erwin v Iveco Trucks Australia Ltd

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

CATEGORY:
Principal judgment

CASES CITED:
[<i>Bialkower v Acohs Pty Ltd</i>] [1999] FCA 446; 83 FCR 1
[<i>Certain Lloyds Underwriters v Giannopoulos</i>] [2009] NSWCA 56
[<i>Cheong v Wong</i>] [2001] NSWSC 881; 34 MVR 359
[<i>Council of the Shire of Muswellbrook v Lettice</i>] [2000] NSWCA 359
[<i>Dovuro Pty Ltd v Wilkins</i>] [2003] HCA 51; 215 CLR 317
[<i>Fox v Percy</i>] [2003] HCA 22; 214 CLR 118
[<i>Friend v Brooker</i>] [2009] HCA 21; 239 CLR 129
[<i>Gett v Tabet</i>] [2009] NSWCA 71; 254 ALR 504
[<i>Lanza v Codemo</i>] [2001] NSWSC 72
[<i>McDonald v Girkaid Pty Ltd</i>] [2004] NSWCA 297
[<i>Mercer v Commissioner for Road Transport and Tramways (NSW)</i>] [1936] HCA 71; 56 CLR 580
[<i>New South Wales v Fahy</i>] [2007] HCA 20; 232 CLR 486
[<i>Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd</i>] [2009] NSWCA 263; 168 LGERA 351
[<i>Roads and Traffic Authority of New South Wales v Dederer</i>] [2007]…

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AGLC
Erwin v Iveco Trucks Australia Ltd [2010] NSWCA 113
Case
[2010] NSWCA 113
Decision Date

CaseChat Overview and Summary

In *Erwin v Iveco Trucks Australia Ltd*, the appellant, who was found liable to a plaintiff for negligent maintenance of a semi-trailer's steering mechanism, sought contribution from the respondent, the manufacturer of the semi-trailer. The collision was caused by the failure of the steering mechanism, which had been manufactured 13 years prior to the incident. The appellant's cross-claim against the respondent alleged a faulty design of the steering pinch bolt mechanism and a breach of the *Trade Practices Act 1974* (Cth) due to a defect in the semi-trailer. The appeal concerned the dismissal of this cross-claim by the primary judge.

The court was required to determine whether the respondent, as the manufacturer, had breached its duty of care to the appellant by designing the steering mechanism with a pinch bolt system rather than an alternative welded design, and whether this design constituted a defect under the *Trade Practices Act 1974*. Specifically, the court had to consider whether the design conformed to industry norms, whether the risk of failure was insignificant, and if a reasonable manufacturer would have incorporated additional safety features, such as a fail-safe mechanism. The court also had to assess whether the Act intended to create a right of indemnity for a negligent party against a manufacturer whose defective goods contributed to the same injury.

The court dismissed the appeal, upholding the primary judge's findings. The reasoning was that the respondent had complied with the industry norm by using the pinch bolt system, which was standard practice for universal joints in steering mechanisms at the time of manufacture. While a welded alternative existed that could have entirely obviated the risk of failure, the fact that a risk could have been avoided by a different method did not automatically establish liability. The failure occurred after the vehicle had travelled a significant distance and due to inadequate maintenance, including improper tightening of the pinch bolt and neglect of grub screws. The court found that the respondent was entitled to expect that the vehicle would be maintained appropriately, and that the failure was not a result of a design flaw but rather a consequence of the vehicle's subsequent use and maintenance. The court also noted that there was no evidence that the respondent was aware of prior incidents suggesting a propensity for such failures.

The appeal was dismissed, and the appellant was ordered to pay the respondent's costs of the appeal.

Orders

Orders of the court

(1) Appeal dismissed.

(2) The appellant pay the respondent’s costs of the appeal

Background

Background to the litigation

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Evidence

Evidence Before The Court

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.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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