Lend Lease Infrastructure Services Pty Ltd v Whitehorse Trucks Pty Ltd
[2014] VCC 782
•12 June 2014
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted |
AT Melbourne
COMMERCIAL LIST
EXPEDITED DIVISION
Case No. CI-10-00796
| LEND LEASE INFRASTRUCTURE SERVICES PTY LTD | Plaintiff | |
| v. | ||
| WHITEHORSE TRUCKS PTY LTD and HERCULES ENGINEERING PTY LTD | Defendants | |
JUDGE: | HIS HONOUR JUDGE ANDERSON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5-9, 12-14, 19 and 27 May 2014 | |
DATE OF JUDGMENT: | 12 June 2014 | |
CASE MAY BE CITED AS: | Lend Lease Infrastructure Services Pty Ltd v Whitehorse Trucks Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 782 | |
REASONS FOR JUDGMENT
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Catchwords: Contract – Supply of two trucks to cart fly-ash waste – Tipper connection failed after two months of operation – Mechanism of failure – Whether supplier liable in contract – Whether tipper body manufacturer a concurrent wrongdoer – Liability of the sub-contractor to the plaintiff in negligence – Whether “vulnerability” established – Apportionment of responsibility for plaintiff’s loss – Quantum of loss and damage.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W. Alstergren QC with Mr D. Briggs | Norton Rose Fulbright |
| For the First Defendant | Mr M. Roberts QC | Moray & Agnew |
| For the Second Defendant | Mr R. Andrew | Wotton & Kearney |
HIS HONOUR:
1 Bilfinger Berger Services Pty Ltd (“Bilfinger”) is now known as Lend Lease Infrastructure Services Pty Ltd (“Lend Lease”). In 2008, Bilfinger won a contract with Delta Energy at the Wallerawang Power Station west of Sydney for the carting and dumping of the dust and ash by-products of coal burning to generate electricity. The contract included the transporting of fly ash from a hopper to a dumping site approximately two to three kilometres away. This required about a 20 minute round trip largely on a private road.
2 To carry out this work, in late 2008, Bilfinger purchased from Whitehorse Trucks Pty Ltd (“Whitehorse”) two Mercedes Benz trucks, each of which was to be fitted with an aluminium tipper body and hoist. The tipper body was designed, manufactured and fitted to the trucks by Hercules Engineering Pty Ltd (“Hercules”) as a sub-contractor of Whitehorse. The trucks were delivered in early March 2009 and went into operation at Wallerawang soon afterwards.
3 On 9 May 2009, one of the trucks (registration number BA76NH (“truck no. 1”)) failed. The driver was dumping a full load at the dump site. As the tipper body was raised, it fell to the driver’s side and came to rest beside the truck. The connection between the truck and the tipper body (“the connection”) was broken.
4 Soon after, the second truck (registration number BA75NH (“truck no. 2”)) was inspected. Truck no. 2 was found to have cracking in the connection in the vicinity where the failure had occurred in truck no. 1. Truck no. 2 was also taken out of service and replacement trucks were hired. There was disagreement as to who was responsible for the failure of the trucks, and the consequences. In about July 2009, Bilfinger ordered two replacement trucks; Volvo trucks with Sloane bodies, from a different supplier. These trucks went into service in October 2009.
Causes of action
5 Lend Lease makes a claim against Whitehorse:
a. in contract, for breach of an agreement to supply trucks suitable to carry fly ash at Wallerawang;
b. in negligence, for a similar breach;
c. for misleading and deceptive conduct, by reason of the failure of the trucks to meet the representations made as to the trucks’ capabilities.
6 Lend Lease claims against Hercules in negligence and for misleading and deceptive conduct, in similar manner as the claims against Whitehorse. Whitehorse makes claims for contribution and indemnity against Hercules at common law and pursuant to s 23B of the Wrongs Act 1958 (Vic), and further and alternatively in contract and negligence.
7 Hercules alleges in its defence to Lend Lease’s claim against, it that Lend Lease was responsible for its own loss “due to the conduct, negligence, contributory negligence, fault or misleading or deceptive conduct of the plaintiff”:
a. by its failure to properly maintain the trucks by adequately greasing the connection, and by subjecting the vehicles to a “washing down process”.
b. by its failure to advise Hercules of the operating conditions of the trucks, “in which case the bearings of the tippers would have been differently designed”.
8 It is likely that Lend Lease can only succeed:
a. in its claims against Whitehorse in negligence and under the Trade Practices Act 1974 (Cth), if it were also to succeed in its contract claim;
b. in its claims against Hercules, if it were also to succeed in its claims against Whitehorse.
9 If Lend Lease were to succeed in its claims against Whitehorse, the Court would need to consider whether the claim is an apportionable claim and Hercules a concurrent wrongdoer. If Hercules were found by its acts or omissions to have also caused the same loss or damage claimed against Whitehorse, the liability of Whitehorse and Hercules to Lend Lease would be limited to the extent of each party’s responsibility for the loss and damage.
10 If Lend Lease were successful against Whitehorse, but Hercules were not found to be a concurrent wrongdoer, Whitehorse might nevertheless succeed in its claim for contribution or indemnity against Hercules, probably on the basis of the contractual relationship between them.
Issues for determination in the proceeding
11 The present dispute involves a consideration of the following issues:
a. the relationship between the parties and specifically the obligations and responsibilities of Whitehorse and Hercules;
b. the mechanism of failure of truck no. 1, and whether it was due to:
i. Bilfinger’s use of the trucks for a purpose which might not reasonably have been anticipated by Whitehorse and/or Hercules;
ii. Bilfinger’s failure to properly maintain the trucks by providing adequate grease to the connection bushes;
iii. defects in the design or manufacturing of the tipper bodies, particularly the connection of the tipper bodies to the trucks;
c. any loss and damage to which Lend Lease is entitled as a consequence of a failure of the trucks and the connection;
d. whether Whitehorse and Hercules are concurrent wrongdoers for the purposes of Part IVAA of the Wrongs Act1958 (Vic) and, if so, the proportions in which each should bear responsibility for the loss and damage;
e. whether Whitehorse should succeed in its claim for contribution or indemnity against Hercules.
Supply of the trucks and tipper bodies
12 In about early October 2008, Mr Terry Bickerton, Bilfinger’s Group Fleet Manager contacted Mr Alex Duncan, Whitehorse’s General Manager, seeking a quotation for two trucks to cart fly ash produced at the Wallerawang power station to a dump site. Mr Bickerton said he told Mr Duncan these details and that the distance between the hopper and the dump site was short. Mr Duncan agreed in evidence that in early October he had received a phone call from Mr Bickerton who said that, “they [Bilfinger] had won a contract to cart fly ash…somewhere in New South Wales…and they need a couple of trucks…could I organise a couple of quotations”.
13 Mr Duncan said Mr Bickerton had specified that the volume of the tipper body should be 32 cubic metres and that the material it would be carting was “fly ash”. Mr Duncan said that, “on this occasion the weight wasn’t an issue, it was mainly the volume and material that it was carting”.
14 On 8 October 2008, Mr Bickerton emailed Mr Duncan to ask, “How is my quote going?”. Mr Duncan replied to Mr Bickerton on the same day providing details of two truck quotes for prime movers and trailers and, on 10 October 2008, a quote for servicing the trucks.
15 On 13 October 2008, Mr Bickerton sent an internal email to Mr Mark Delmonte (Bilfinger’s General Manager, Power Generation) and Mr Brett Lowry (Bilfinger’s Project Manager at Mt Piper and Wallerawang) with the pricing for prime movers and trailers. The email included details regarding maintenance costs and other information. Mr Bickerton agreed that at this time, “the Bilfinger staff were putting together effectively a proposal for the tender [to Delta Energy] so [we] were interested to work out costs of all the pieces of equipment so [we] could work out what was a fair thing to quote”.
16 Mr Duncan gave evidence that the requirements subsequently changed and, as “the outgoing contractor was having difficulty manoeuvring their vehicles”, it was determined by Bilfinger that a new configuration was required “so that’s how it moved from a prime mover and trailer configuration to a rigid”. On 16 October 2008, Mr Duncan emailed Mr Bickerton “the abbreviated costing of the 8x4 rigids”. Mr Duncan gave evidence that what were eventually delivered were 8x8 rigids.
17 At about this time, Mr Duncan said he arranged a quotation from Hercules for the tipper body. He confirmed that the quote was provided to him by Mr McNabb on behalf of Hercules. The quote from Hercules referred to a volume of 32 cubic metres, which Mr Duncan confirmed was part of the requirement that Mr Bickerton had specified. He said the main criteria outlined by Mr Bickerton was the “material that they are carting, the volume that they will look to cart and how much weight they are looking to move”.
18 Mr Duncan said, “It was stressed that it had to be 32 cubic metres…the 32 cubic and the material were a critical component in their calculations”. He also said that he told Mr McNabb “right at the beginning when the quotation was called for” that fly ash was to be carried. Mr Duncan said Mr McNabb “didn’t say anything” about that fact that fly ash was going to be carted.
19 Mr McNabb said that at the time of the quotation he “had no idea what was going…in” the tipper body. He said he was asked to do a body of 32 cubic metres but he did not recall Mr Duncan telling him “26 tonnes and it’s going to carry fly ash when [he] sought the initial quote”. He said, “Mr Duncan never mentioned the word “fly ash” to me at all”. In relation to the fly ash he said, “I didn’t hear that from Mr Duncan, I heard that from Mr Bickerton when he came in”. He also said Mr Bickerton “said it wasn’t a huge distance” from the power station to the dumpsite.
20 On 18 November 2008, Mr Duncan and Mr Bickerton corresponded regarding the lead time on the Mercedes trucks. Mr Bickerton advised Mr Delmonte via email that “they are confident that it should be on the road by the beginning of Feb 09”. Mr Bickerton said in evidence that, “there was some slowing of the sign off of the contract by Delta Energy and obviously given we had a start date on a time and I could not proceed with purchase without a signed contract, certainly the lead time between delivery of trucks and start of contract was narrowing”.
21 On 26 November 2008, Mr Duncan wrote to Mr Bickerton via email enclosing a quote. The email stated that “the two vehicles which arrive in December are 8x8s not 8x4s and are 4444s not 4441s. Both differences obviously come at a cost…the original quotes are still valid, but would not be here until March/April now”. The quote of 26 November 2008 included a quote for a body which Mr Bickerton confirmed was to be manufactured by Hercules. Mr Bickerton agreed that he “did not talk to Hercules before that”. He said he first spoke to Hercules “after we had done some initial discussions with Whitehorse. I believe they engaged Hercules to produce some drawings for them so we could understand load capacity on the truck”.
22 Mr Bickerton gave evidence that after he received the quote, “the costings [were] prepared as part of the tender for finalisation…we would have produced a Capex [capital expenditure] requirement which was then submitted to the financial department of Bilfinger”. Mr Bickerton gave evidence that, “once I received that capital expenditure requisition we would provide a purchase order to them”.
23 On 1 December 2008, Mr Bickerton sent an internal email to Mr Alistair Luckas (Bilfinger’s General Manager), Mr Delmonte and Mr Brett Lowry. Mr Bickerton gave evidence that, “the detail that appears … is an extract from the quote that Mr Duncan gave [Mr Bickerton] for the Mercedes Benz truck”. In the email, Mr Bickerton requested Mr Lowry to “double check” the truck specification provided in the email and tipper body specification attached to the email. Mr Bickerton said that he was “sending this document to Mr Lowry to satisfy himself what was being proposed by Hercules was satisfactory”.
24 Mr Bickerton gave evidence that, by this time, he “knew who Hercules were” and “knew they were a specialised subcontractor that specialised in manufacturing these types of tipper bodies…I had heard of them before and I had dealt with them many, many years in the past”.
25 Mr Lowry conceded that the email dated 1 December was sent to him but said he was “not even sure I responded back to him”. When asked whether he did satisfy himself as to the specifications of the truck he said, “it wasn’t my job to satisfy myself that the truck was – I didn’t, no”. He gave evidence that he could not “recall doing it…I don’t know if I did or didn’t but it’s just too long ago to remember”. He said, he did not agree with the suggestion that he “received these documents…checked them and…looked at the documents…to satisfy [himself] that what was being ordered was what [he] wanted”.
26 On 5 December 2008, Mr Bickerton signed a Whitehorse New Vehicles Buyers Order. In signing this document, Mr Bickerton said he “knew [Whitehorse] would be supplying a cab/chassis as per quotation 26 November 2008” and “that the tipper body was coming from Hercules”. Mr Bickerton said, “I was relying on Whitehorse Trucks to provide me a completed unit which included a Hercules body”. Shortly before Christmas, Mr Bickerton said he “got the go ahead in total to go ahead with this job”. On 17 December 2008, Mr Duncan emailed “Hercules – Sales” stating, “I have received an order today on the two 8x8 tippers you quoted me”.
27 Mr Duncan said that he had organised for the two Mercedes Benz trucks to be delivered to Hercules before Christmas 2008. However, Mr Bickerton gave evidence that he saw the trucks at Whitehorse’s storage yard apparently in early 2009. Mr Bickerton said he was taken there by Whitehorse’s salesman Mr Colin De Gee. Mr Bickerton gave evidence that on 19 January 2009, he sent Mr Brett Lowry an email with photos of the trucks that Mr Bickerton had viewed at the warehouse. The email was read out by Hercules’ counsel, Mr Andrew to Mr Bickerton in cross-examination. The email apparently reads, “Hi Brett. Here is the photo of the Mercedes trucks that have arrived late last week”. The delivery of the trucks to Hercules seems more likely to have been in January rather than prior to Christmas.
28 On 19 December 2008, Mr Duncan emailed Mr Bickerton asking, “Is the rear tailgate to be a single acting one the same as in these pictures, or it may be an idea for Hercules to talk to your man on site to ensure everything gets covered”. Mr Bickerton said that email, “provoked a meeting that happened early in the new year…with Mr McNabb and Mr Duncan”. Mr Bickerton said that, “before the upper tipper bodies were constructed at Hercules [he] attended a meeting with both Mr McNabb and Mr Duncan at the office of Hercules to ensure that Hercules was aware of exactly what was being ordered…and to finalise the details for the tipper bodies”.
29 Mr McNabb said that he did not return to work after the Christmas shutdown at Hercules until mid-January 2009 and he could not have met with Mr Bickerton and Mr Duncan until later in January.
30 Mr Bickerton said that he visited Hercules twice. He recalled that “the first time [was] at the invitation of Alex Duncan to meet the body builder that was providing the bodies for these trucks as a precursor to the supply, and the second time was whilst Brett Lowry and Mark Delmonte from the facility at Wallerawang were visiting to see the semi-finished product ready for delivery to ensure there was nothing that they needed to add on and so forth but there was only the two occasions”. Mr Bickerton said he spoke to Mr Duncan “numerous times chasing down delivery schedules and progress reports on the vehicles”. He said he spoke to Mr McNabb twice “physically”.
31 Mr Bickerton said that “the only requirement he passed on to [Mr McNabb]… in conjunction with Whitehorse was some feedback on the previous trucks where the internal corners needed to be round and not a sharp point and we fed back via Brett Lowry, the gentleman on site, the height dimensions for the hoppers that were to be filled”. He said that “apart from that, he did not give any other specifications [as] to how the body should be built”.
32 Mr Bickerton gave evidence that during the course of the first meeting at Hercules, he “stated on a number of occasions the tipper bodies would carry fly ash…[and]…at no stage throughout the course of that meeting or subsequently did Mr McNabb ever raise any issue about the fact that ash was to go into the back of the truck”.
33 When cross-examined by Mr Andrew, Mr Bickerton conceded that he did not know what the chemical composition of fly ash was and he did not “ask anyone for technical information about the fly ash to get the composition of it”. Further, Mr Bickerton said that no one from Delta Energy warned him that fly ash was a corrosive product.
34 Mr Bickerton conceded that, “at no stage during the meeting or subsequently did [he] say to anybody in addition to having to carry ash these trucks would also be subjected to effectively a detailed water deluge”. Mr Bickerton said, “I wasn’t aware there was a deluge wash on site. I believe[d] they were to be manually washed or hand washed at some stage but that would be in line with normal process on that type of plant”. Mr Bickerton said he was not aware that on every occasion the trucks “would be subjected to a detailed under chassis very heavy spray wash”.
35 Mr Duncan agreed that, at the meeting with Mr Bickerton and Mr McNabb, the purpose for which the trailers were going to be used was discussed and that “it was going to be carting fly ash and again it was stressed that it had to be 32 cubic metres…so the 32 cubic metres and the material were – I said at the beginning, were a critical component in the calculations on what they were doing”. Mr Duncan said, “fly ash was the word that was used…that was the word that Terry [Bickerton] told me when he initially asked for the quotation and that was the exact word that was passed on…it wasn’t actually written but verbally over the telephone and again, when the three of us were there”. Mr Duncan said that Mr McNabb “didn’t say anything” about the fact that fly ash was going to be carted.
36 Mr Duncan said that Mr Bickerton and Mr McNabb “gave each other their business cards at the first meeting” and he was aware “that there was numerous meetings thereon after” but that was “the final occasion that [he] accompanied Bilfinger and Hercules”.
37 Mr McNabb said he did not recall the discussions held at the meeting with Mr Bickerton and Mr Duncan but that the matters discussed “would have been the specification of the body and what was required”. He agreed that “the purpose of the meeting was to finalise the details of the tipper bodies”. He said that he “would have gone through the specification at the time, what they wanted on the truck, and I would have written it down”. He said it was “normal practice” to make sure the manufacturer and the client “were at one about what the trailer would be”. Mr McNabb said he did not recall Mr Bickerton stating “on a number of occasions that the tipper bodies would carry fly ash from the Wallerawang Station pursuant to a contract that Bilfinger had been successful at”.
38 On 3 February 2009, Mr Bickerton emailed Hercules with a copy to Mr Duncan regarding the height of the hopper. This had implications as to the “highest fixed point” the vehicle could not exceed and the placement of the tarpaulin and indicator lights. Mr Bickerton said that, “an email dated on 3 February 2009, which I sent to Andrew McNabb and copied to Alex Duncan reflects some of the conversations I had with both Alex Duncan and Andrew McNabb relating to the specifications required”.
39 A second meeting between Mr Bickerton and Mr McNabb took place at Hercules. Mr Bickerton said he took Mr Lowry and Mr Delmonte to inspect the vehicles. From an email between Mr Bickerton and Mr Duncan dated 24 January, it was suggested by Mr Andrew that the meeting took place on about 2 or 3 February as in response to an email from Mr Duncan that “we need to go up [to] Hercules and confirm details on Tuesday if we can”, Mr Bickerton said that, he “would be in Perth until Friday [30 January]”. When the email was put to Mr Bickerton, he denied that the “meeting with Mr McNabb on site at Hercules [was] on or about 3 or 2 February in 2009 to discuss those issues”.
40 Mr Bickerton said that when he and Mr Lowry went to Hercules, “one body was completed on a complete chassis, the second truck…had the body mounted but wasn’t complete”. He and Mr Lowry inspected the vehicles with a foreman from Hercules. Mr McNabb did not accompany them on the inspection. Mr Bickerton gave evidence that he, Mr Lowry and Mr Delmonte “were on site going around looking at the specification of the trucks” and that Mr Lowry told the foreman of the need to have radiusing put in. At the time, one truck was completed, probably with radiusing of the corners. It is likely that this requirement had been communicated to Hercules before Mr Bickerton’s second visit to Hercules.
41 The vehicles were delivered to Mt Piper (adjacent to Wallerawang) by Hercules in about early March 2009. The pre-registration check and the registration of the vehicles had been completed by Whitehorse prior to delivery. Mr McManus, Bilfinger’s plant operator and supervisor at the ash dump at Wallerawang, said that when the trucks were delivered to site, the drivers were trained in the operation of the trucks before they commenced in service on 9 March 2009.
Failure of the tipper body connection on truck no. 1
42 The two trucks were primarily responsible for carrying the fly ash to the dump site, although occasionally it seems that an additional hire vehicle was required. Bilfinger’s obligation was to dispose of the waste material from the hopper, as it was produced. If power generation at the station was interrupted or cut back, the amount of waste product might be reduced. Conversely, if power generation at the station was at higher levels, the amount of resulting waste product may increase.
43 To cope with the demand, the two trucks operated in two shifts from 7am to 10pm, seven days each week. There was an overlap between the shifts to enable the drivers to change over. The trucks operated continuously from 9 March to 9 May 2009, although on 27 April 2009 the two trucks each had a 5,000km service at West Orange Motors.
44 On 9 May 2009, Mr Ian Downey was driving truck no 1. He was on the second shift for the day. At about 7.20pm he was dumping a load at the dumpsite. In a statement prepared shortly after the incident, Mr Downey described what happened as follows:
“While unloading ash with hoist half up I heard a noise. Looked through mirror did not notice anything then truck started to tilt sideways then another bang and the bin of the truck fell to the ground”.
45 Mr McManus said that on 9 May 2009 he observed that the truck “had fallen off and broken off”, and that the “tipping pins” had “snapped off the mounting brackets”. The brackets on either side of the chassis were also examined. Mr McManus said that, in relation to the passenger side the plates could be rocked by hand “backwards and forwards”. In relation to the driver’s side, Mr McManus gave evidence that he tried to move the plate “but it felt like it had tension on it because it was bent”. Neither of the bearings on this side were able to be moved by Mr McManus.
46 The connection between truck and tipper body was severed. It is important to describe the detail of the connection. Below is a sketch of the connection included by the second defendant’s expert, Mr Trevor Rowlands, in his report dated 29 January 2014:
47 The two passengers’ and two drivers’ side bushes, either side of the chassis rail bearing, were designed to move around the pivot bar during the tipping process. There was a 0.8mm differential between the diameter of the pivot bar and the circumference of the inside of the bushes. Each bush contained a grease nipple for lubricating the inside of the bush and the gap between the surface of the bush and the pivot bar. The outboard bush was restrained from lateral movement by a lock at each end of the pivot bar. The inboard bushes were not restrained and could move along the bar. Welded to the bushes were plates connecting to the underside of the tipper body. The plates were made of 8mm un-stiffened steel and contained a bend which flared the plates to connect to the bushes on either side of the chassis rail bearing.
48 The chassis rail bearings on both the passenger’s and driver’s side of the assembly were also slotted onto the pivot bar. However, they did not in fact operate as bearings and no provision was made for lubricating the inside surfaces. At the end of the chassis rail bearing was a hole in which a high tensile steel screw was inserted. This screw acted as a set screw. The screw was aligned with a hole in the pivot bar. When the screw was inserted in the chassis rail bearing, it was screwed through into the hole in the pivot bar. This locked the chassis rail bearing into position and apparently was designed to prevent the chassis rail bearing from rotating on the pivot bar. The set screw was a critical feature of the theory for the failure of the connection advanced by Mr Rowlands.
49 The damage to the connection to truck no. 1 on 9 May 2009 was as follows:
a. the plates welded to the bushes separated from the bushes, although the experts were unable to say with any degree of certainty in which order the bushes failed;
b. the pivot bar was bent in the vicinity of the driver’s side bushes and chassis rail bearing.
Events following the failure of truck no. 1 on 9 May 2009
50 Following the failure of truck no. 1, truck no. 2 was inspected on 11 May 2009 and “crack marks around the pivot points” were identified. The report by Austpower Engineering Pty Ltd dated 11 May 2009 noted that, “A Magnetic Particle Test (MT) was conducted on the rear hinges truck tipper body [and] a further 50mm long crack was detected on the left hand side, inside hinge block”. The report recommended that “defects should be referred to the original suppliers and designers of the body and attachment for necessary repairs”. Truck no. 2 was taken out of service on 20 May 2009, after Mr Ronnie Bird, a Hercules engineer, emailed Bilfinger’s supervisor, Mr Tod Walsh at Wallerawang, “Suggest you take this unit out of service until further notice”.
51 Mr Darren Muskett took over from Mr Bickerton as Fleet Manager at Bilfinger in April 2009. Mr Muskett had no involvement in the purchase of the two Mercedes tipper trucks from Whitehorse. Mr Muskett said that, on 11 May 2009, Mr Russell Briggs (Bilfinger’s Finance Manager) “forwarded me an email with some pictures that the site had sent him saying that the truck had failed”. Mr Muskett said he telephoned Mr De Gee at Whitehorse, who suggested that Mr Muskett contact Mr Bird at Hercules “as they built the body”.
52 On 11 May 2009 at 10.37am, Mr Muskett sent an email to Mr Bird at Hercules. The email read, “Please find attached the pictures of the weld failures for the tipper at Mt Piper. The other tipper body has also got cracks. Please advise what course of action is going to take place going forward as we are currently hiring trucks to replace these whilst they are down. Look forward to a prompt response and repair”.
53 Shortly after, at 10:52am, Mr Muskett emailed Mr De Gee and Mr Duncan of Whitehorse. The email stated: “As you can see we have had a fairly major incident with these tippers which has resulted in the tipper body breaking off at the poorly welded pivot plates. Whatever assistance you can give to help get your products back on the road would assist greatly”. Mr Muskett gave evidence that the details included in the email “would have been information or phone call probably from the site from …Russell Briggs or Brett Lowry”.
54 On 12 May 2009, Mr Muskett emailed Mr Bird with a copy to Whitehorse and Bilfinger. The email asked for “an update and what plans are in place to have the trucks repaired to a safe and workable condition”. Mr Muskett noted in the email that “some fill in trucks on wet hire” were being used on site “costing them $72,400 per week”. The email continued, “I require a couple of things from Hercules in regards to their Quality Assurance systems and what procedures you have in place in regards to quality control for materials and workmanship. Has the new replacement body started to be built yet?”. Mr Muskett said he received no response to his enquiries.
55 On 18 May 2009, Mr Muskett sought a “progress report” from Whitehorse. Mr De Gee emailed Mr Muskett, with a copy to others including Mr Bird at Hercules, advising that following an inspection by Hercules at Wallerawang, truck no. 2 would be repaired on site and truck no. 1 returned to Hercules’ factory for assessment and rectification.
56 Mr Briggs forwarded a copy of the Whitehorse email internally to Mr Lowry and Mr Firmin (Bilfinger’s General Manager) on 18 May 2009. In the email he said, “In my opinion, we need to ensure a full replacement body for BA76NH” (truck no. 1 that failed). Mr Lowry responded on 19 May, raising the issue of whether the trucks’ dimensions satisfied the specified volumetric capacity of 32 cubic metres. Mr Muskett agreed that by this date, “an issue had come up about the size of the bodies that had been built”. Correspondence on this issue followed. Mr Briggs passed this concern onto Whitehorse who in turn notified Hercules.
57 On 21 May 2009, Mr Muskett “went out to Hercules and inspected the truck”. Mr Muskett gave evidence that the inspection and the email were “12 days after the event”. He said he inspected the truck when it “got transported from site down to Hercules’ workshop site over in Kilsyth…a week or so later”. Mr Muskett said he met with Mr De Gee from Whitehorse, Mr Bird and Mr Michael Hammel, Hercules’ Managing Director. Mr Muskett said he “commented on the quality of the welding of the truck…[that] the weld penetration was very poor and there was a lot of weld splatter around the area”. He also said that, “when I saw it in the flesh it was very dry and unlubricated”.
58 After the inspection, he sent an email to Mr Briggs and others at Bilfinger on 21 May as follows:
“I have been out to have a look at this truck and I think we need to be very careful going forward as I need from the site… a copy of their daily prestart checks and something to show that the operators are greasing the grease points of the trucks. When do they get washed as the fly ash is starting to eat into the body and equipment. I have attached a few pictures to show you what I saw this morning which is of the rear pivots on the tipper”.
59 Mr Andrew took Mr Muskett to the photographs, as he did with other witnesses and other photographs. The photographs obviously represent the state of the equipment at the time the particular photograph was taken. I found it difficult, however, to draw much more from the photographs about critical issues, such as the sufficiency of the greasing of the bushes during the operation of the trucks on or before 9 May 2009.
60 Shortly after his email on 21 May, Mr Muskett was sent copies of the pre-start checks “to show that they were doing what they said they were doing [and that] the operators daily greased the grease points on the truck so I was quite comfortable that that’s what they were doing”. Mr Muskett said that, “According to our records and their records, the truck was serviced by Orange Mercedes Benz truck dealership eight days before it failed so there would have been some sort of lubrication from them as well”.
61 On 21 May 2009, a letter of demand from Bilfinger to Whitehorse stated that, “the trucks were not fit for their intended purpose”. The letter noted that, “the trucks have been out of service whilst we improve and remedy the design of the tipper body”. The letter also raised the issue of the tipper bodies not having the “internal capacity of at least 32 cubic metres”.
62 Mr Duncan said on receipt of this letter, he “passed it on to head office in South Australia”. He said he “made a couple of calls” to Caroline Wilson (one of Bilfinger’s in-house lawyers) “to explain to her…that we were endeavouring to get the body rectified, put it back on the chassis and get it back to them”.
63 Mr Duncan gave evidence that, during this time he spoke with Mr Hammel at Hercules “and the feedback was that there was a deluge wash that was involved in the process on site up in New South Wales and they believed that because of the water interacting with the fly ash that it was corrosive and would fatigue the metal”. He said, “They [Hercules] have obviously looked at the state of the body underneath and could see high levels of corrosion”.
64 On 27 May 2009, Mr Muskett emailed Mr De Gee at Whitehorse asking whether “Hercules sent you the report yet”. Mr Muskett said that the report he was referring to was “an insurance assessment report…on what caused the tipper to fail and what they were going to do to remedy the problems”. Mr De Gee replied the next day by email which stated, “I just spoken to Hercules regarding their report and they have not had the report returned from their insurance company. Michael [Hammel] will advise us by COB [close of business] on the report status”.
65 On 29 May 2009, Mr Muskett again emailed Mr De Gee asking, “When will we see the report?” Mr De Gee replied the same day as follows:
“I have been pulling out my hair requesting the report. Michael Hammel is not at work and Hercules has not been sent the report. I have spoken to Hercules & they believe the hold up is the insurance waiting for the metal report to be returned to them in order for the final analysis to be carried out. I am sorry it is taking this long but we at Whitehorse Truck Centre cannot push them any harder. I will keep calling Hercules till we get our answer. I believe work has commenced on the tipper”.
66 A second letter of demand was sent to Whitehorse trucks on 29 May asking “effectively [for Whitehorse] to take responsibility for the failure of the bodies”. Mr Duncan said, “as soon as the letters came in, I forwarded them on to head office and was instructed to pass no comment”.
67 On 1 June 2009, an email was sent from Hercules to Mr De Gee and copied to Mr Muskett. The email noted that, “The insurance assessor received report from their principal research scientist on Thursday and have passed it on to our insurance companies solicitors. They will contact you ASAP”. On the same day, Mr Muskett emailed Hercules and asked, “Can we get a copy of the report?” to which Hercules replied, “Have forwarded your request to our insurer”. On 1 June 2009, Mr Muskett sent an email to Hercules with a copy to Mr Briggs enquiring as to, “What stage are the repairs at”.
68 Mr Duncan gave evidence that, “after the truck and the body came back to Hercules' yard, we organised Colin De Gee and Darren Muskett to go up to Hercules' premises and inspect the failed body...the feedback that I got, was that we were going to fix it, we were going to get the thing back on the road again… and I think there is another e-mail there yesterday that states that the action that Bilfinger had taken in sending the letters, Darren Muskett knew nothing about it and Darren Muskett at that time was our only contact after Terry Bickerton's departure”.
69 Mr Muskett agreed that “all the letters of demand were going to Whitehorse” and that he was not “aware of any legal letters of demand being sent to Hercules at that time”.
70 On 2 June 2009, Bilfinger sent a letter of demand to Hercules. There is in evidence an undated letter from Hercules to Whitehorse in response to Bilfinger’s letter of demand of 2 June which relevantly reads, “We are prepared to repair two trucks upon receipt of your order confirming agreement to pay the cost of repairs…Hercules has no responsibility. Hercules complied with the terms of its agreement with Whitehorse and it supplied two aluminium tipper bodies and hoist to the agreed specification…”.
71 On 10 June 2009, Hercules’ solicitors replied to the letter of demand from Bilfinger dated 2 June 2009 stating, “We are instructed to deny liability for the claim. This is because an inspection of both vehicles indicates that the failures occurred on account of the failure by Bilfinger to maintain the pivot bushes. These had not been lubricated and as a result they had become contaminated and damaged by fly ash. In the circumstances Hercules is not responsible for any costs claimed”.
72 A further letter of demand was sent by Bilfinger to Whitehorse on 17 June. On 18 June, Whitehorse’s solicitors responded, stating that Hercules “is the rightful respondent to this claim…as the party that designed, manufactured and installed the tipper body”, although the letter “strongly” denied “that the tipper bodies were defective”. The letter also referred to the allegation by Hercules “that the cause of the fault was due to the inadequate maintenance of the truck by your client”.
Experts’ opinions on the mechanism of failure
73 Four experts who were engaged by the parties to provide opinions on the mechanism of failure gave evidence at the trial:
a. Mr Trevor Booth, a mechanical engineer, was engaged on behalf of Bilfinger/Lend Lease in about July 2009;
b. Dr Andrew Baigent, a structural engineer, was engaged on behalf of Bilfinger/Lend Lease in about August 2012;
c. Mr Dick Coldham, a principal materials engineer, was engaged on behalf of Whitehorse in about July 2012;
d. Mr Trevor Rowlands, a principal materials engineer, was engaged on behalf of Hercules in about August 2013. Mr Rowlands was engaged because a previous expert, Dr Peter Haberecht, a materials engineer, was unable to participate further in the proceeding because of ill-health.
74 The four experts participated in a court-ordered conference on 6 February 2014. The questions the experts were to consider at the conference had been drafted by the parties and settled by the Court. The conference was facilitated by Mr Toby Shnookal QC. A joint report of the conference dated 21 February 2014 is in evidence. It sets out the matters of agreement and disagreement between the experts.
75 There was agreement between the experts that:
e. “the precise chronology of the mechanism of failure of the first tipper“ was that “the pivot mechanism failed as the tipper was raised and the tipper fell to the right hand side. All the experts agree it was not relevant which weld failed first, and all say they are not particularly wedded to a particular sequence of failure of the welds. All the experts agree the mechanism of failure was high strain low cycle fatigue” (Joint Report paragraph 47);
f. “repeated high strain on the welds which, through fatigue, caused cracking to develop and failure to occur over a relatively low number of cycles” (Joint Report paragraph 48);
g. “That the loading of the welds is complex…because of misalignment in fabrication of the tipper body of truck [no.] 1 applied a point contact to the chassis bearing…[so] that tensile stresses would have been present on the welds even when the truck was at rest, and stress would increase when laden…and in motion stresses would be generated in the welds due to cornering, braking, acceleration, road conditions, chassis flexure and so on” (Joint Report paragraphs 20, 22-23);
h. design defects “relevant to the failure” included the bend in each of the plates connecting the tipper body to the four bushes which “leads to high stresses in the welds at the plate bush connections” (Joint Report paragraph 30). The bend in the plates also “greatly reduced fatigue life” (Joint Report paragraph 40).
i. manufacturing defects “relevant to the failure” included the following matters which produced “higher stresses and reduced fatigue life”:
i. “The welding as carried out was not anywhere an 8mm thickness weld as is shown on the drawings…the welding varied from no weld or from 1mm to 6mm thickness” (Joint Report paragraph 33B);
ii. “The welding was not continuous on the back of the plates as shown on the drawings” (Joint Report paragraph 34);
iii. “The welding lacked penetration, fusion, contained porosity, contained significant undercut and did not comply with the Australian Standard for welding” (Joint Report paragraph 35);
iv. “the misalignment in fabrication that caused a point contact to the chassis bearing from the tipper … was a defect in manufacture” (Joint Report paragraph 36).
76 The experts disagreed on “the root cause of failure”. In summary, the different views were as follows:
a. Mr Booth, Dr Baigent and Mr Coldham (“the three agreeing experts”) were of the opinion that “failure would have eventually occurred at the welds because of their defects” (Joint Report paragraph 50) and because the plate connecting the tipper body to the bushes was unsuitable as the stresses that would be experienced were beyond the capability of the plate;
b. Mr Rowlands was of the opinion that the bushes had seized due to inadequate lubrication and the ingress of water resulting in a build-up of corrosion. The seizing of the bushes caused the welds to crack and the tipper body to displace during the tipping process.
77 Mr Rowlands’ opinion was that the failure of the truck involved the following process:
a. the bushes were inadequately lubricated as insufficient greasing of the bushes was undertaken;
b. this allowed moisture to enter the bushes, accelerated by the trucks travelling through a spraywash with strong pressure nozzles directed at the underbody of the truck;
c. corrosion built up on the pivot bushes. The internal surfaces of the bushes were pitted from corrosion and chemical reaction from the presence of fly ash;
d. this caused the bushes to seize or be “restrained by high friction in them” (Joint Report paragraph 25);
e. “the frictional forces of the corroded/seized pivot bushes” due to the tipping action generated “localised tensile stresses in the welds” (Joint Report Paragraph 45A);
f. the increased stresses at the welds was “sufficient to initiate fatigue which led to the eventual failure” (Joint Report paragraph 51).
78 Mr Rowlands said that his observations of what had happened to the set screw in the chassis rail bearing confirmed his opinion as to the process of failure of the truck. There was no dispute that:
a. the set screw restrained the pivot bar from rotating in the chassis rail bearings;
b. if the set screw sheared or broke, the pivot bar could rotate within the chassis rail bearings, although the rotation would be limited by the extent of rotation through the tipping cycle.
79 Mr Rowlands made the following observations in relation to the set screws on truck no. 1:
a. the set screws were hardened and tempered steel;
b. the set screws had sheared off with the head of the screws remaining in situ in the chassis rail bearing;
c. a groove had been created around the circumference of the bar at the location of the stop hole in the pivot bar;
d. the groove indicated that after the set screw had sheared, the broken end of the set screw must have rotated around the whole circumference of the pivot bar;
e. this rotation would only have occurred if the bushes had seized onto the pivot bar causing the pivot bar to rotate and score against the end of the set screw;
f. this would most likely only have happened in the circumstances outlined by Mr Rowlands as the mechanism of failure.
80 Mr Rowlands reported that the set screws on truck no. 2 had also sheared. He had only observed this in the week prior to giving evidence. Dr Baigent had observed that the set screw on truck no. 2 was in place in a chassis rail bearing although by that stage the bearing was not attached to the pivot bar.
81 Mr Booth, Dr Baigent and Mr Coldham disagreed with Mr Rowlands’ theory as to how truck no. 1 had failed. They made the following comments:
a. they said “there was no evidence of the bushes having frozen and they were not badly corroded when inspected” (Joint Report paragraph 52);
b. Mr Coldham “saw evidence of corrosion in the bushes and the pivot bar. The depth of corrosion pits was 0.1mm on truck no. 1 by his measurement”. He considered that, “the corrosion was not severe and was consistent with the service and subsequent storage of the components” (Joint Report paragraph 57);
c. Mr Coldham said that the CSIRO analysis of the surfaces of “passenger inboard and outboard and the mating sections of the pivot bar” did not “confirm the presence of fly ash” (Joint Report paragraph 59). His opinion was that, in any event, fly ash is essentially alkaline and would not react to create an acidic environment or to increase any corrosion;
d. “even if the bushes seized over every night over the 62 days of service, they would be freed on the first operation the next day and not show high coefficients of friction for the rest of the day” (Joint Report paragraph 52);
e. “the friction if relevant, would generate sheer stress in the weld that would lead to cracking at 45 degrees to the weld, but the cracking observed was parallel to the weld” (Joint Report paragraph 52);
f. the torque to break the set screws “was very low and much less than the failure modes of the welds if they had been constructed in accordance with design documents” (Joint Report paragraph 53 - Dr Baigent);
g. Mr Coldham examined “all the bushes on the pivot bar other than the passenger outboard bush three years after the failure of truck no. 1 in the yard at Hercules and they were all free to move” (Joint Report paragraph 53);
h. the set screws would probably have broken very soon after the truck went into operation and were not relevant to the later failure;
i. Dr Baigent provided explanations as to the mechanism by which:
i. the lack of a cross member between the truck chassis rails at or near the pivot centre would lead to "torsional rotation of the chassis section” which “would apply additional large stresses to the pivot plates and welds” (Joint Report paragraph 33A) and “would allow the chassis rail to flex and increase the load on the pivot assembly” (Joint Report paragraph 46A); and
ii. the pivot bar would rotate within the bushes and chassis rail bearings following the failure of the set screws;
j. Dr Baigent observed damage to the pivot bar of truck no. 2 consistent with this explanation. Mr Booth and Mr Coldham concurred with Dr Baigent’s explanation.
Analysis of the experts’ reports
82 I do not consider that it is necessary or appropriate to examine in detail the reports of the experts who participated in the joint conference. The conference and the process adopted at the trial for the experts to give concurrent evidence were undertaken in order for the real matters in issue to be identified and fully explored.
83 I propose, nevertheless, to briefly summarise the evidence contained in the experts’ reports, particularly those matters which are relevant to an issue which only became obvious during Mr Andrew’s final submissions, namely the weight carrying capacity of the tipper bodies.
84 Mr Trevor Booth: Prior to November 2009, Mr Booth inspected the trucks but only the tipper body of truck no. 2. Mr Booth’s opinion was that the rear pivot assembly and the trucks’ sub chassis were defective. He considered, as a result of the following observations, that the rear pivot assembly defects “were caused by the design employed and the construction methods of those components”:
a. the nature of the side plates of the pivot assembly being angled outwards which effectively increased the load on the welds;
b. the design of the pivot assembly which relied on the strength of the welding rather than the welding performing a location role and the parent metal carrying the load;
c. the method of assembly which appeared to be such that critical welding was carried out “in situ”, the result being poor quality welding and/or no welding;
d. the welding methods employed in the construction of the rear pivot assembly and sub chassis on the trucks did not conform to Australian Standards.
85 In relation to greasing, Mr Booth concluded that the prestart procedure indicated that the trucks were greased on a regular basis, although Mr Booth had not been provided with any maintenance manuals to indicate greasing requirements for the rear pivot assembly at the time of writing his report. He stated that there was “no evidence to support the claim by Whitehorse that lack of greasing by [Bilfinger] caused the failure”.
86 Dr Andrew Baigent:Dr Baigent’s examination of the welds on the failed pivot assembly during inspections in May, July and September 2012, revealed:
a. the welds were not continuous;
b. the welds were generally of poor quality. There was poor penetration of the weld in the parent metal of the bush. The welds would not comply with the requirements of AS1554 with respect to weld penetration;
c.the pivot plates were not welded fully on both sides. Dr Baigent considered that access to the location for the welding to occur as specified in the design documents could have been “extremely difficult” and “was the reason for the lack of welding” on the back surface of some of the pivot plates;
d. the welds were not 8mm in size as required by the design documents;
e. the detailing of the welded connection between the pivot plate and bush was poor;
f. many welds were only 2mm or 3mm in size or not the full length.
87Dr Baigent contended that despite these errors, an 8mm fillet weld to the pivot plates would have been sufficient to transfer the load of the tipper body from the pivot plate to the bush, and as such the failure of the weld was not related directly to any fundamental deficiency in the design or calculations by Hercules. Dr Baigent found that had the weld provided for in the calculation by Hercules (a continuous 8mm weld) been provided, the failure would not have occurred.
88Dr Baigent concluded that the failure of the pivot assembly was a direct result of design and workmanship deficiencies on the part of Hercules. The specified weld (an 8mm continuous weld) was not provided and did not comply with AS1554. Specifically, Dr Baigent found two major deficiencies responsible for the failure:
a. the design of the weld between the pivot plate and bushes was deficient in that it was inevitable a continuous fillet weld could not be placed in an adequate manner; and
b. the welds which were placed did not comply with the design documents or AS1554.
89Dr Baigent also suggested that the failure by Hercules to carry out any quality assurance procedures in an adequate manner further contributed to the failure. Quality assurance inspections would have revealed that the welding did not comply with design document requirements.
90In response to Dr Haberecht’s report, Dr Baigent found that the failure was “not in any way related to seizure of bushes”. He found that even if the bushes had been welded to the pivot bar to prevent rotation, the tipper body could still rotate because the shaft was passed through and was able to rotate freely within the pivot casting.
91Dr Baigent was asked to prepare a supplementary report to consider the findings in the reports of Mr Coldham, Mr Rowlands and VIPAC Engineers Pty Ltd.
92The second report corrected Dr Baigent’s description of the assembly contained in the first report. Dr Baigent noted that he had assumed that the pivot bar was able to freely rotate within the pivot bar casting welded to the end of the chassis rails. Because of this assumption, Dr Baigent concluded that even if the bushes had been welded (or seized) to the pivot bar, the pivot bar could still rotate freely as the pivot bar had been fitted with a grease nipple for the express purpose of allowing the bar to rotate freely.
93In the second report, Dr Baigent stated that, despite now knowing that the grease nipple has been substituted with a set screw, this had not “changed my view that the pivot bar would still rotate freely because the hydraulic cylinder would simply overcome the relatively insignificant friction force between the set screw and the pivot bar”.
94Dr Baigent concluded in his second report that as a result of further investigation into this matter, his opinions expressed in his first report “remain unaltered”. In addition, Dr Baigent disagreed with Mr Rowlands that the failure of the pivot assembly was caused by the lack of maintenance, and in particular, a failure to grease the bushes. Dr Baigent stated his opinion that Mr Rowlands had failed to adequately consider the poor design and the deficient welding as the cause of the excessive tensile stresses in the welds. Dr Baigent confirmed his initial finding that it was “these two issues which [were] the fundamental cause of failure”.
95Mr Dick Coldham: Mr Coldham concluded in his reports in August and December 2012 that the failure occurred in the tray pivot assembly when the welds on all four support plates fractured. Mr Coldham stated that the fracture had developed as a result of high strain-low cycle fatigue. A finite element stress analysis had confirmed that excessively high stresses developed in the welds during tipping operations and the stresses, concentrated at the weld toe, were in excess of the yield strength of the steel specified for the plates in the assembly. The local stresses were thus sufficient to cause plastic deformation and were consistent with the stresses necessary to cause fatigue cracking and failure in the accrued number of tipping cycles.
96Mr Coldham suggested that the damage to truck no. 1 was the result of relative lateral movement and rubbing between the plate-side and the bush-side of a crack while under high load during repeated tipping operations. The damage developed during multiple tipping cycles as cracking progressed circumferentially along the welds between the support plate and bush during the time leading up to the failure.
97In addition, Mr Coldham found that the welds responsible for load carrying between the support plates and the bushes were “of very poor quality”, showing signs of porosity, undercutting and lack of fusion and in several instances, were undersize according to the relevant Australian standard. Mr Coldham highlighted that the welds were, “at best”, partial penetration welds and that, for a significant and critical part of the joint, the welding had only been made from one side of the plate.
98This greatly increased the stress experienced at the weld toe and at the 12 o’clock position. Mr Coldham concluded that the poor quality of the welds may have accelerated the failure, although he stated that the stresses that develop during tipping are so high that even with a quality full-penetration weld, cracking (and then presumably fracture) would occur over time.
99Mr Coldham concluded there was no evidence that there had been an accumulation of ash-derived material within the bushes or that this had led to the seizing of the tipping assembly. He commented that the suggestion that there had been significant frictional forces resiting the bush rotation on the pivot during tipping thereby increasing the stresses at welds, was not a significant contributor to the failure.
100Mr Coldham had arranged for finite element stress calculations to be undertaken. These showed that the maximum tensile stresses at the weld resulting from flexing of the support plate were well in excess of the yield stress of the welds, even for a continuous, full-penetration weld. As a result, Mr Coldham concluded that the general design of the assembly was inadequate and, even if the welding was to specification, fatigue cracking would have eventually developed.
101In response to Dr Baigent’s first report, which, in Mr Coldham’s words, “seems to discount the possibility of fatigue as the failure mechanism”, Mr Coldham stated:
“I am not entirely certain that this is what was meant. In my opinion fatigue is definitely the mechanism of failure. The presence of cracks that were observed in Truck #2 welds is consistent with fatigue. I am not aware of any other damage mechanism that could explain the development of weld cracks, and I am confident the cracking has developed in service rather than representing manufacturing defects”.
102 Mr Coldham also concluded that:
“Operational logs suggest that the pivot assembly was regularly greased; however, there has been corrosion and pitting within the bushes. There is evidence that there has been significant frictional forces resisting the bush rotation on the pivot bar during tipping and this might increase the stresses at welds. I do not believe that this is a significant contributor to the failure. There was no evidence that indicated to me that there was an accumulation of ash-derived material within the bushes or that this had led to seizing of the tipping assembly”.
103Mr Joel Di Battista: The finite element stress calculations were prepared by Mr Di Battista of HRL Technology Pty Ltd in December 2012. His report is titled “Calculation of Stresses in Truck Tipper Bracket”. The report “presents the results of finite element analysis to determine the stresses in tipper tray pivot assembly and an assessment of the fatigue life” to determine “the integrity of the brackets” (the four brackets connecting the tipper tray via the bushes to the rear pivot).
104The analysis identified “two separate problems with the bracket”. One was that the bracket “bends considerably when loaded, resulting in high stress”. The other problem was the poor quality and penetration of the bracket to bush welding. Mr Di Battista contended that the effect of not using good quality full penetration welding was “a drastic reduction in the stress at the weld”. However, even with this standard of welding, “the stress in the bracket to bush weld is above the material yield strength”. As a result, Mr Di Battista concluded that “the design is not adequate for its intended purpose”.
105Mr Di Battista analysed the finite element models using a linear-elastic stress-strain relationship which assumed that the material was “infinitely strong and will not deform and tend to redistribute the stresses”. In the case of the relatively low strength Grade 250 steel used for the brackets (or plates) to connect the chassis to the pivot bar via the bushes, “when the stresses are greater than 250 to 300 MPa the regions where the stress is most concentrated will yield and the associated deformation will redistribute the stresses –and reduce the maximum stresses achievable”. The effect is that “the stresses higher than the material yield strength will result in localised yielding and low-cycle fatigue if the loading is repetitive”.
106From this analysis, the report’s conclusions included that:
a. the bracket is subject to large cyclic stresses each time the tray is tipped;
b. the largest stress occurs when the tray is 20 degrees from horizontal, causing the maximum bending stress to occur at the plate to bush weld;
c. with a 32 tonne load of ash, the highest linear-elastic stress in the partial penetration weld model is 1,155 MPa. This cyclic stress is well above the yield strength of the grade 250 material, meaning localised yielding and low-cycle fatigue will occur.
107Mr Trevor Rowlands: Mr Rowlands agreed that the mechanism of failure of the pivot assembly involved “fatigue cracking” initiated at the welds traversing through the weld fillet to a point where the cracking had continued into the brackets.
108Mr Rowlands found that the design of the angled bracket on the pivot system exerted “greater force on the welds connecting the bracket to the pivot bush”, describing the design as “not optimal”. The angle produced a “complex state of stress with elements of tension, shear and torsion when the ram is engaged”. However, the “exact state of stress at the welds” could not be easily determined.
109Mr Rowlands emphasised that he was “in agreement” with the consensus in the expert reports provided to him that “the welds are not of satisfactory quality”, and that they did not meet the requirements of the Australian Standards. Mr Rowlands asserted that “it is the responsibility of the designer to determine if the weld assembly is required to meet the requirements of this standard”.
110Examination of the pivot pin and bush assemblies in late 2013 revealed “uniform corrosion covering all mating surfaces [and]…a very fine rust coloured powdery residue” covering all surfaces. Mr Rowlands suggested that this was a “finely ground corrosion product” but could also be contamination from external sources. He stated that the powder was “at least in part” a result of being crushed and ground between the mating surfaces of the pivot pin and bushes when the bushes had rotated around the pin.
111Mr Rowlands also observed circular marks on the outside diameter of the bushes. Mr Rowlands stated that it was apparent that this was where the locator bolt (i.e. the set screw) was engaged onto the pin to stop or minimise rotation of the pivot pin during tipping. The circular marks indicated friction between the bushes was greater than the friction required to rotate the pivot pin against the two locator bolts. Mr Rowlands considered that “under well lubricated conditions only relative motion between the bushes and pivot pin would occur”.
112Further testing of the passenger outboard and inboard pivot pin and bush assemblies inidcated “no excessive wear” and that the wear present was “probably within the tolerance of the design for these components”.
113Mr Rowlands concluded that the likely overall failure mechanism was the insufficient lubrication of the pivot bushes during service resulting in corrosion at the bush and pin interfaces. The corrosion was “likely to have been accelerated by regular spray washing each time the truck transported a load of fly ash”.
114Mr Rowlands concluded that after the formation of fresh corrosion that bonded the mating surfaces together, each time the ram on the tipper was engaged, greater force was required to rotate the bush around the pivot pin. This was the source of the peak loads that initiated the low cycle fatigue.
115Mr Rowland’s September 2013 report suggested that whilst an absence of any physical barrier such as lubricating grease would be expected to increase the rate of ingression of fly ash, he could not state the rate at which this would occur. This was because fly ash tended to “stick to and become embedded in any grease that has exuded from the mating interfaces, which could then be sheared into and around the mating interfaces via the grease when the tipper was activated”. If the grease is subsequently depleted due to regular washing and irregular re-application, it would “be expected that the majority of grease-embedded fly ash would also be removed”. The fly ash traces detected on the subject surfaces were therefore suggested to be “probably the residue of any that was not removed when the grease was removed by attrition”.
116Mr Rowlands, in his January 2014 report, concluded that his opinion of the root cause of the failure of the tipper mechanism had not changed. He stated that he was still “of the opinion that tensile stresses [had] been generated at the welds caused by corrosion in the mating components, sufficient to initiate fatigue cracking”.
117Mr Rowlands stated that the investigations he had conducted in preparing the latest report “reinforce[d] my opinion” that the friction between the pivot bushes and pivot bar was so great that the two locating bolts sheared instead of the pivot bushes rotating around the pivot bar. Subsequent operation of the tipper with the resistive pivot system had propagated the fatigue cracks until overload failure through the welds and then the pivot plates occurred, causing the tipper to separate from the chassis.
118Mr Rowlands commented that whilst he agreed with Dr Baigent that tensile stresses can be generated at the welds on the concave side of the pivot plate and bush assembly, he disagreed with Dr Baigent as to normal operating stresses causing the fatigue cracking due to the geometry of the pivot plate design and the sub-standard welding. Mr Rowlands concluded that Dr Baigent had “failed to recognise the significance of the effect of operating under non-lubricated and corroded conditions” when the evidence of cracking in all welds in compression suggested failure due to corrosion.
Conclusions as to the likely cause of failure
119 I accept that the theory advanced by the three agreeing experts as to the cause of failure of truck no. 1 is far more probable than the theory advanced by Mr Rowlands. It is accepted by all the experts that significant aspects of the design and manufacture of the tipper connection were defective. In my view, it is more probable that these were the matters which were the cause of failure.
120 :Failure by Bilfinger to maintain the trucks Mr Rowlands assumed that Bilfinger had not properly maintained the trucks by regularly greasing the bushes on the pivot bar. This failure, he said, resulted in the ingress of moisture and the build-up of corrosion which caused the bushes to seize. Mr Rowlands, when asked how often he believed the bushes were greased, replied “once a week comes into mind for the greasing”. When Lend Lease’s senior counsel, Mr Alstergren QC, raised the issue in subsequent cross-examination, Mr Rowlands stated, “Look, I said weekly, I know I have come across it somewhere but I obviously have forgotten the timeframe”.
121 The evidence in relation to the maintenance of the pivot assembly is as follows:
a. when the trucks were delivered to Wallerawang, Mr Kerry Mcmanus said that there was a “meeting with all the drivers that were going to drive [the trucks], went through all the controls and that again, the greasing areas [including the] four across the back”, Mr McManus said that the greasing “may not have been directed as daily but it was expected daily”;
b. daily service log forms called Prestart 103 checks were required to be prepared each day. There was conflicting evidence as to whether the checks were performed by the drivers at the start of each eight hour shift or simply were completed each morning. The log was completed for both shifts each day by the different operators;
c. the log required the driver on the first shift to indicate the servicing tasks that were performed each morning before the trucks were operated, including whether the truck had been “serviced/greased”;
d. the logs refer to truck no. 1 as “unit no. 2” and truck no. 2 as “unit no. 1”;
e. the log sheets for truck no. 1 disclose that the “serviced/greased” requirement was ticked on every day from 9 March to 9 May 2009. Most logs for the period show a “cross” against the item for the second of the two logs completed by the operators, although in many instances, particularly during April, the second log was also ticked against the item. In my view, this variation in the completion of the forms makes it less likely that the forms were completed without regard to whether the actual work was carried out.
f. the evidence of the drivers, Mr Ian Downey, Mr Steven Broome and Mr McManus confirmed that the greasing of the bushes on the connection was carried out by the drivers at least on the morning shifts;
g. on 27 April 2009, although the truck was serviced by North Orange Motors on that day, the log records the “103 check” service as having been carried out;
h. Mr Broome, who operated truck no. 1 on the morning shift of 9 May 2009, confirmed that he had greased the bushes. Mr Downey, who was driving the truck on 9 May 2009 later in the day when the incident occurred, apparently did not complete a log in respect of truck no. 1 that day;
i. Mr McManus said that “once a week” he checked the trucks and “would grease all the…grease nipples [which would] include the pivot bar”;
j. there are also in evidence “operating log action sheets”, which were completed daily by the drivers. The document appears designed to record anything out of the ordinary that might have happened during the operation of the truck that day. “Reporting items” included “103s” and “mobile plant defects”. Under these entries, on the dates 9, 23 and 30 March, 4, 13, 18 and 23 April 2009, there are notes to the effect “truck no. 1 and no. 2 greased and washed by operators”;
k. Mr McManus agreed to the suggestion by Mr Alstergren that “there were also occasions as well where the truck drivers actually did another wash and grease”. Mr McManus said, “It could have been low ash volumes and nothing for them to do so they would clean the trucks and do stuff to them as well”;
l. on 27 April 2009, a 5,000km service was carried out for both trucks by North Orange Motors. The service records noted that work completed included “Lubricating work…grease gun, kingpins, propeller shafts, brake shaft (drum brakes), suspension bushes, trailer hitch, fifth wheel”.
122 Immediately after the incident on 9 May 2009, photographs were taken in situ of the damaged truck and the tipper connection. The evidence disclosed:
a. material, identified by Mr McManus as grease, on the passenger outboard bush but not on “the right-hand side”;
b. Mr Lowry said that he saw grease “just in the side of the bushing areas”. It was clarified that he was referring to the left hand bush. Mr Lowry said that he was “not 100 per cent”. It is not entirely clear, but it seemed that this statement referred to his recollection of seeing grease;
c. Mr McManus said that after the damaged truck and tipper body had been inspected by Bilfinger personnel they were moved from the ash dump and mounted up on drums. He said, “We got rid of all the ash and that out of the body and cleaned it up so everyone could have a look at it”.
123 Immediately after the incident, Hercules investigated the matter:
a. Mr Bird from Hercules inspected the damaged truck and tipper body at Wallerawang on 14 May 2009. He did not give evidence at the trial and therefore there is no direct evidence of what he observed. As later reported by Mr Hammel to Mr Duncan, the principal concern seemed to be that the deluge wash had reacted with the fly-ash to cause corrosion at the connection;
b. Mr Duncan from Whitehorse said that soon after Mr Bird had returned from Wallerawang, he was told by Mr Hammel that “because of the water [from the deluge wash] interacting with the fly ash that it was corrosive and would fatigue the metal. They [Hercules] believed – at that particular point in time that’s what they said was the cause of the failure”;
c. Mr Bird apparently held the opinion that the accumulation of fly ash on the tipper connection was a problem that should have been dealt with by Bilfinger as part of its operating procedures. It was also thought that the truck wash operating at that time, was capable of affecting the supply of grease to the brushes.
d. on 19 May 2009, Mr Hammel stated in an email to Mr Duncan, “Please note the unit at out premises have no grease in the rear pivot”;
e. responding to a letter of demand from Bilfinger’s lawyers dated 2 June 2009, Hercules in an undated letter to Whitehorse stated:
“…Our investigations of the vehicles since delivery indicates that the failure occurred due to seizure of the outboard pivot bushes which had not been lubricated as required by Bilfinger. No maintenance appears to have been conducted on the load bearing surfaces of the pivot bushes and with the use of the tipper at a very high rate, it appears that Bilfinger has allowed the pivot bushes to become contaminated with fly ash…
In the circumstances Hercules cannot be responsible for the costs of repair of the two aluminium tippers…”
f. Similar statements were made by Hercules’ solicitors in their letter dated 10 June 2009 responding to Bilfinger’s letter of demand dated 2 June 2009.
124 It was submitted by Mr Andrew that Bilfinger must have believed there had been inadequate greasing of the connection after an inspection by Mr Muskett on about 20 May 2009. Mr Muskett took photographs which showed the extent of fly ash. In his email to others at Bilfinger on 21 May 2009, he referred to fly ash that was “starting to eat into the body and equipment”. Mr Muskett asked the Wallerawang site to advise “what course of action is going to take place going forward”. Mr Muskett said that he wanted to ensure that proper servicing procedures were being undertaken so that no further incidents occurred. This he did by calling for the service records. He said that the records satisfied him that the vehicles had been appropriately maintained.
125 Mr Andrew did not suggest to any of the experts that greasing the bushes more often than once each day was necessary. I have referred to Mr Rowlands’ belief that the greasing was only undertaken weekly. The possibility of “hourly” greasing was not raised until Mr Muskett was cross-examined by Mr Andrew. Mr Muskett responded that this would depend on any routine maintenance schedule provided by the manufacturer.
126 The email correspondence between the parties, and the expert reports of Mr Rowlands asserted, or assumed, a lack of “regular maintenance” of the trucks rather than that Bilfinger had adopted a servicing procedure (for example, once each morning) which was not sufficient in the circumstances.
127 Mr Muskett said that, from his experience dealing with suppliers like Whitehorse and Hercules that:
a. the suppliers would make enquiries of the specific use to which the equipment would be put including the materials to be carted and whether the vehicle would operate off-road;
b. if necessary, the supplier would provide a servicing schedule, including instructions as the regularity the bearings should be greased;
128 The effect of the frequent truck washings: The procedures at Wallerawang provided that after every load was dumped, the truck would proceed through the truck wash onsite. A document prepared by Bilfinger and titled “Fly Ash Haulage Procedure” describes this process as, “proceed through to truck wash” shortly after the load of fly ash is deposited at the dumping site. The wash is located on an access road. Between March and May 2009, there were two truck washes – a red wash and a yellow wash, although only the red wash was in service at that time. The operation of the red wash was shown on a DVD played to the Court at the start of the trial, and was apparently also viewed by the experts.
129 Mr Downey said that the yellow truck wash was not in service at the time the Mercedes Benz trucks were operating. The red wash was described by Mr Rowlands as “highly aggressive”.
130 Mr Booth gave evidence that, “Even on [the] highway, trucks these days have to be washed. You are not allowed to cart dirt out on to the road and leave a trail of mud up the road as you leave a construction site. They have in a lot of construction sites washing plants where the trucks drive through. These days it's a common occurrence”.
131 It was suggested by Hercules that the regularity of the truck washings would have diminished the effectiveness of the greasing of the bushes causing them to “seize” onto the pivot rod. It was also suggested that the fly ash contained chemicals which, when exposed to moisture, might generate acids which would exacerbate corrosion. Mr Rowlands referred to this matter, relying upon a CSIRO report to support his view. I have previously referred to Mr Coldham’s statement refuting this interpretation of the CSIRO findings.
132 There was evidence of rusting of the components of the connection. It was agreed that exposure to moisture, even for a period of 24 hours, will cause corrosion of the metal surfaces.
133 Mr Duncan gave evidence that “Mike Hammel [of Hercules] had done some investigation and said that when it’s mixed with water it’s [the fly ash’s] corrosive and they have obviously looked at the state of the body underneath and could see high levels of corrosion”. Mr Hammel and Mr Bird did not give evidence at the trial.
134 Mr Coldham measured the difference between the diameter of the pivot bar and the internal diameter of the bushes, as 0.8mm. When Mr Coldham measured the extent of the corrosion on the inside of the bushes, some years after the incident, it was no more than 0.1mm. It is unlikely therefore that the extent of corrosion necessary to cause the bushes to seize onto the pivot rod would have been present during the daily operation of the trucks between 9 March and 9 May 2009.
135 Conclusions: I am satisfied on the evidence, including the expert evidence, that:
a. it is more likely than not that Bilfinger regularly greased the bearings on the pivot bar at least once each day and on other more random occasions. There is no reason to doubt the servicing records including the daily logs;
b. no evidence was advanced that more regular greasing of the bearings would have prevented the failure of the connection;
c. it was incumbent upon Whitehorse and Hercules, being aware that the trucks were to be used for carting fly ash, to have specified a more rigorous greasing schedule or a more limited washing of the trucks, if that was considered necessary to maintain the proper operation of the connection;
d. there are other explanations for the shearing of the set screw and the grooving of the pivot bar which do not involve the mechanism of failure advanced by Mr Rowlands;
e. the obvious defects of design and manufacture were capable of resulting in the failure of the connection in a direct way which does not involve making the less likely assumptions necessary to found Mr Rowlands’ opinion.
Lend Lease’s claim against Whitehorse in contract
136 In its Second Further Amended Statement of Claim dated 16 September 2013 (“the Latest Statement of Claim”), Lend Lease claims that the agreement between Bilfinger and Whitehorse for the supply of two trucks, each “to be fitted with an aluminium tipper body and hoist”, comprised the Whitehorse quotation dated 26 November 2008, which incorporated the Hercules quotation no. Q4340, and Bilfinger’s purchase order no. 811FOO63.
137 Whitehorse’s further defence and counterclaim to the amended statement of claim dated 2 August 2013 (“Whitehorse’s Latest Defence”) agreed that the agreement was, generally, to the effect alleged by Lend Lease. It alleged, however, that in addition to the Whitehorse and Hercules quotations, the “agreement was contained in…the new vehicle buyers order dated 5 December 2008 signed on both sides for or on behalf of both parties”.
248 From Whitehorse’s perspective, Mr Duncan said that, when the failure occurred in May 2009, Whitehorse was anxious to resolve the problems. It considered that this was best achieved by Hercules repairing the tipper bodies, as it had offered to do. Whitehorse did not make any independent offers to Bilfinger to repair the trucks and did not accept that it had any responsibility to do so.
249 Whitehorse did not, at that time, carry out any independent investigation of the cause of the failure of the tipper body connection. Mr Duncan suggested that, in fact, Whitehorse accepted, from what it had been told by Hercules, that some or all responsibility for the damage to the trucks may rest with Bilfinger because of their failure to properly maintain the trucks by adequately greasing the bushes on the pivot connection.
250 On 20 May 2009, Mr Hammel of Hercules emailed Mr Duncan, “The body dimensions built as requested are 6320 x 2420 x 2120mm internally which equates to 32.42cm less the hoist well leaving a 32cm. Please note the unit at our premises have no grease in the rear pivot”.
251 Hercules relied upon the expert evidence of Mr Lambert, a mechanical engineer, who, in preparing his report as to quantum, was “asked to assume that the mechanism of failure was seizing of the pivots”. I have not accepted that this was the mechanism of failure.
252 Mr Lambert was asked for his opinion as to whether “the repairs described and quoted by Hercules were reasonable and appropriate in order to return the trucks to the condition they had been in when supplied”. Mr Lambert’s report noted that the body of the damaged trailer “had been largely repaired” when it was inspected by Mr Lambert, making it “necessarily difficult for [Mr Lambert] to fully understand the degree of damage to the body”.
253 On the question of whether the repairs described and quoted by Hercules were reasonable and appropriate, Mr Lambert concluded that “the costs shown on the Hercules engineering quote [were] realistic and reasonable”. Mr Lambert noted that given the “hundreds of trailers produced by Hercules engineering…their unit costs for aluminium, steel and other components will be at a significant discount to normal retail prices”.
254 Mr Lambert’s report does not accept that there were problems with the design or manufacture of the tipper body connections or that any testing was necessary in order to ascertain the extent of the appropriate remedial work. I consider that the opinions expressed by the three agreeing experts, which I have accepted, must lead to a conclusion that the repairs proposed by Hercules in June 2009 were unlikely to satisfactorily resolve the problems with the trucks. It was probable that, under the working conditions at Wallerawang, the tipper body connection would again fail. Therefore, to simply “return the trucks to the condition they had been in when supplied”, as Mr Lambert suggested, would be inadequate.
255 Truck no. 1 had failed in circumstances where the truck itself may have tipped over, putting the driver at risk of personal injury. All experts agreed, although Mr Rowlands to a lesser degree, that there were serious design and manufacturing faults. Truck no. 2 also showed “crack marks around the pivot points”, indicating similar problems with the probable risk of the connection failing within a relatively short time.
256 In May 2009, Hercules carried out investigations as to the cause of the failure to truck no. 1 and the problems with truck no. 2. Hercules, in correspondence, blamed these matters on Bilfinger’s lack of appropriate maintenance. In early June 2009, Hercules quoted for the works it said were necessary to repair the trucks. It required those repairs to be carried out at someone else’s cost, presumably either Bilfinger or Whitehorse.
257 Bilfinger, by Mr Muskett’s email dated 12 May 2009, made it clear that what Bilfinger required was the “replacement” of the tipper bodies. It seems likely that around 10 June 2009, Bilfinger’s insurer directed Hercules to carry out the repairs to the trucks pursuant to the amended quotation. At some stage, probably at about 15 June 2009, Bilfinger made it clear that Bilfinger would only accept replacement of the tipper bodies and repair work was stopped.
258 Two new replacement tipper bodies were purchased by Bilfinger from Sloane Trucks at a total cost of $107,090.90 exclusive of GST, (or $117,800 inclusive of GST). This figure compares with the quoted price for the two tipper bodies in Hercules’ original quotation dated 16 October 2008 of $38,250 ($76,500 for two, exclusive of GST) or $42,075 ($84,150 for two, inclusive of GST). The Sloane tipper bodies were 6730 x 2135 x 2495 (compared to the Hercules’ bodies which were, according to Mr Silinis’ measurements, 6325 x 2415 x 2105mm). The relative volumes are 35.85 cubic metres and 32.15 cubic metres, without allowance for the hoist. The Sloane bodies are approximately 11% larger. The connection of the tipper body on the truck was heavier duty.
259 No evidence was given to explain the substantial increase in the cost of the tipper bodies apart from the provision of the additional volume and the heavier duty connection. In the circumstances, it is difficult to be satisfied that the cost was reasonable to supply the replacement tipper bodies, and that the cost was a direct result of the failure of the tipper body connection. I am satisfied that the tipper bodies required replacement and not simply the repairs proposed by Hercules. I propose to add 15% to the total cost of the original Hercules’ bodies to cover the additional costs of Sloane rectifying any damage to the connections to the trucks themselves, providing a tipping connection fit for purpose and the fact that the works were carried out a number of months later than the supply of the Hercules tipper bodies. I will allow this additional amount as part of the plaintiff’s damages. This will be the sum of $87,975 (exclusive of GST).
260 Cost of collecting the truck bodies from Hercules: The tipper bodies were taken to Hercules for assessment and repair. That did not eventuate as Whitehorse and Hercules did not offer to replace the tipper bodies with appropriately designed and manufactured equipment. Mr McManus was required to travel to Hercules’ premises in Melbourne to pick up the trucks to return them to New South Wales.
261 The sum claimed of $835.68 is made up as follows:
incl GST excl GST Air ticket – Sydney to Melbourne $322.50 $293.18 Late fee for flight $50.00 $50.00 Taxi from airport $130.00 $130.00 Petrol 186.69 $169.90 Petrol $220.98 $200.90 TOTAL $910.17 $843.98
I consider that these sums were appropriately expended by Bilfinger and I will allow the sum claimed of $835.68.
262 Non-destructive testing: There is no dispute that the invoice of Austpower Engineering Pty Ltd for the sum of $445 (excluding GST) for the testing of truck no. 2 on 11 May 2009 is a reasonable cost and appropriately expended.
263 Hire of equipment to meet shortfall in capacity of 1.8 cubic metres: Lend Lease asserts that it should have been supplied tipper bodies with a total capacity of 32 cubic metres. It says that the tipper bodies supplied had a capacity of 30.2 cubic metres as measured by the surveyor Mr Petras Silinis on 6 July 2009. Lend Lease claims $14,163.40 as the cost of hiring additional vehicles during the period the two trucks were operating between 9 March and 9 May 2009.
264 The matters for determination in relation to this issue are as follows:
a. what was meant by the specification of a volumetric capacity of 32 cubic metres;
b. what was the correct measurement of the volumetric capacity of the tipper bodies;
c. whether Lend Lease suffered any loss and damage as a result of the failure by Whitehorse and Hercules to supply tipper bodies with a volumetric capacity of less than 32 cubic metres;
d. what is fair compensation for any breach of obligation by Whitehorse or Hercules.
265 On 19 May 2009, Mr Lowry emailed Mr Briggs and Mr Firmin with a copy to Mr Muskett regarding “the specification of the body size”. In that email he said, “The Whitehorse specification states an internal body capacity of 32 cubic metres. A volumetric measurement of the existing bodies is approximately 28.6 cubic metres. A 0.6 cubic metre estimate for the hoist well gives a carrying capacity of only 28 cubic metres. Given a 4 cubic metre loss per load, at 8 loads per hour over a 16 hour day, this gives a 512 metre disadvantage per day”.
266 Later that day, Mr Briggs emailed Mr De Gee about the capacity issue raised by Mr Lowry. In the email, Mr Briggs said, “This is a matter of real concern that BBS [Bilfinger] expect resolution from Whitehorse. Please advise why there is such a variance in carrying capacity”.
267 Also on 19 May 2009, Mr Muskett emailed Mr De Gee asking, “Is this information true, that the track [truck] body is smaller than what was requested (what was size requested and by whom)”. Mr De Gee replied soon after, “Body was built to spec ordered. We are following up with supplier & will have an answer in the morning”. Mr Musket replied, “Have you a copy of the spec?” to which Mr De Gee wrote, “I will have all the paperwork on my desk tomorrow morning & I will call you”.
268 On 20 May 2009, Mr Muskett emailed Mr De Gee advising that, “the paperwork and dimensions look fine it is the actual size of the truck that is the problem and need resolving it is undersized compared to the request”. Mr Muskett gave evidence that he meant “on paper…the dimension were all what they were meant to be, but the actual truck was incorrect”.
269 The internal measurements of the tipper bodies have been verified by:
a. Mr Silinis, a registered land surveyor, of 16 years’ experience on behalf of Bilfinger;
b. Mr Stephen Watt, a licensed surveyor, with assistance from Mr Travis Hansen, a graduate surveyor, on behalf of Hercules.
270 The surveyors used different equipment, although their results are very similar, as follows:
Mr Silinis Mr Watt Internal capacity to the underside of the lip (excluding the hoist cover) 30.2m3 30.378m3 Internal capacity to the top of the lip 31.61m3 Internal capacity to the top of the lip including the arced plate beneath the tarp. 31.95m3
271 In my view, it is not obvious that the reference to: “volume: 32 cubic” metres (in the Hercules quote) or to “capacity – 32m3” on the Hercules’ drawing meant that the appropriate measurement was to the underside of the lip. Filling the tipper body any higher would risk spillage and fouling the tarpaulin assembly. However, the “volume” of the tipper seems more appropriately measured to the top of the body, including the lip.
272 I consider, however, that even if the contractual requirement had not been substantially met, that Lend Lease has not established that it suffered any loss or damage as a consequence of the failure by Whitehorse or Hercules to supply tipper bodies with a volumetric capacity of 32 cubic metres I refer to the following matters:
a. the Hercules quotation specified dimensions of 6620 x 2420 x 2000mm (32.83 cubic metres) and the Hercules drawing attached to Bilfinger’s Official Purchase Order showed the dimensions of 6400 x 2420 x 2120mm (32.04 cubic metres) and showed the capacity as 32 cubic metres.
b. the Whitehorse new truck specification requirement referred to a “maximum estimated legal payload capacity” of 32.58 tonnes, plus or minus 3%. Excluding the weight of the tipper body and hoist of 1.66 tonnes, leaves 30.92 tonnes. Applying the 3% allowable variation, this would provide the tipper bodies with a weight carrying capacity of between 30.01 and 31.83 tonnes;
c. there was debate as to the likely weight of fly ash. Mr Lowry said that “typically, the fly ash has a specific gravity of 1:1”; one cubic metre of material would weigh one tonne. Mr Lowry, in cross-examination by Mr Andrew, said that he believed that “the density of the ash or dust after it’s been conditioned by water” as it comes “out of the hoppers from the ESP” [electrostatic precipitator] was “around the 1 mark, plus or minus 10 per cent”, and not 1:3;
d. Mr Lowry, when taken by Mr Andrew to a document relating to the purchase of a Komatsu HM400 off-road dumper at Mt Piper, agreed that he had corrected a memo from Mr Walsh to Mr Bickerton to read as follows, “The figures below for fly ash are maximum dry density of 1.3. The density of fly ash from the conveyor discharge is .85 to .9”. Mr Lowry said “the 1.3, the maximum dry density is through a compacted compressed absolute maximum; that’s a laboratory test where every bit of air is pushed out of it and you end up with a DDR, dry density ratio, and subsequent invert for tonnage per cubic metre”.
e. the registered gross vehicle mass of each vehicle was a total of 44 tonnes. Allowing for the weight of the truck 11.5 tonnes, and the weight of the tipper body 1.66 tonnes, this would leave a maximum load of 30.84 tonnes.
f. In these circumstances, there was little possibility of increasing the actual carrying capacity beyond the specified range.
273 The cost claimed is the total of invoices for the hire of extra vehicles between 9 March and 9 May 2009 to carry out Bilfinger’s obligations at Wallerawang, as follows:
CB Hirer Dates Rate excl GST incl GST 1858 Earth Civil 31 Mar - 4 May $125 $5,375.00 $5,912.50 1863 Earth Civil 31 Mar - 4 May $125 $5,375.00 $5,912.50 1864 Conneq 1 Apr - 4 May labour $5,472.86 $6,020.15 1859 Bulktrans 1 - 8 May $150/175 $2,793.75 $3,073.13 1860 Bulktrans 1 - May $150 $649.50 $714.45 1861 Bulktrans 2 & 3 May $175 $918.75 $1,010.63 1862 Bulktrans 5 & 8 May $150 $1,200.00 $1,320.00 $21,784.86 $23,963.36
274 I do not propose to allow this claim, for the following reasons:
a. There is no evidence that the extra vehicles were not required because of over production of waste product at the power station during this period rather than the anticipated volume of material;
b. iI do not consider that this cost is reasonably claimed by Lend Lease because the carrying capacity of the tipper bodies was within the specified range.
275 Hire of replacement trucks: Lend Lease has claimed the sum of $545,372.50 as the total cost of hiring replacement trucks for the period from 11 May to October 2009 on both a “wet hire” and “dry hire” basis.
276 Mr Muskett gave evidence that from 11 May 2009, “There were replacement trucks being hired on site”. He said that as a result of the Mercedes Benz trucks being out of service, Lendlease had to “hire trucks from an external source to fulfil the contract”. Invoices from Bulktrans show truck hire from 11 May 2009 to 22 May 2009. Mr Muskett confirmed in evidence that these dates accorded with his memory of hiring trucks locally from Bulktrans.
277 The issues for determination in relation to the hire of replacement trucks are:
a. was the period of hire reasonably necessary, or were there delays whilst Bilfinger:
i. assessed the suitability of the Sloane bodies as replacements; and
ii. finalised its order with Sloane;
b. was it reasonable to continue hiring replacement trucks at daily hire rates and on a “wet hire” basis (with driver) for an extended period.
278 Reasonableness of the period of hire: Following the failure of truck no. 1 on 9 May 2009, the truck was returned to Hercules and truck no. 2 was taken out of service. Thereafter, Bilfinger took steps to order replacement bodies from Sloanebuilt Trailers.
279 The relevant dates, as can be discerned from the documents and other evidence, are as follows:
a. on 29 May 2009, Bilfinger had not received a response from Whitehorse to its letter of demand dated 21 May 2009 requiring the “replacement of the tipper bodies”. It was from this time that Bilfinger should have been starting to consider its options for replacing the tipper bodies through another supplier;
b. after a letter of demand from Bilfinger to Hercules dated 2 June 2009, Hercules sent a repair quotation with an undated letter indicating that Hercules would not bear the cost of repairs itself;
c. on about 10 June 2009, an amended quotation was accepted by Bilfinger’s insurer;
d. on about 15 June 2009, at Bilfinger’s request, the insurer directed Hercules to cease work on the repairs, which were then partially or substantially complete;
e. this is the date from which Bilfinger rejected the option of repairs through Hercules (as also had Whitehorse, who were simply relying on Hercules to solve the problem without expense to it);
f. in mid-July, Mr Briggs said that he and Mr Lowry had preliminary discussions with Sloanebuilt Trailers about the ordering of replacement bodies. Mr Lowry thought it was in late July they “approached Sloan” although later in his evidence, Mr Lowry said that it was on 24 June 2009 that Bilfinger were “arranging replacement trucks from Sloane”;
g. on 31 July 2009, drawings of the replacement body were prepared by Sloanebuilt. Also, invoices were sent by Sloanebuilt, which were apparently received by Bilfinger on 10 August 2009;
h. on 5 August 2009, the drawings were amended to include an “incr. body length”. Also, a document prepared by Sloanebuilt headed “Order no. Bilfinger/Berger 8W” was apparently faxed to Mr Lowry. The document comprised a specification of the tipper body and associated equipment Sloanebuilt was to supply, including certain “extras”. The document provided a box beside each item. Bilfinger was asked to “please indicate acceptance by ticking approval box”;
i. on 25 August 2009, Mr Briggs signed one of the Sloanebuilt drawings with the notation, “I approve the following Eight Wheeler Body unit for production and confirm that the details supplied are correct”;
j. the tipper bodies were installed on the Mercedes Benz trucks and delivered to site in early October 2009.
280 The period of time between the ordering of the tipper bodies by Bilfinger from Sloanebuilt on 31 July 2009 (the date of the invoice), or the date Mr Briggs accepted the amended drawing on 25 August 2009, to the date of delivery on say 1 October 2009 (the day after the last hire of replacement vehicles) was between about 5 and 9 weeks.
281 In relation to the original order from Whitehorse and Hercules, Bilfinger ordered the trucks and tipper bodies on 5 December 2008. Whitehorse informed Hercules of the order on 17 December 2008. It appears, however, that the Mercedes Benz trucks were still at the Whitehorse premises in late January 2009 although Mr Lowry inspected the tipper bodies (one assembled on a truck) on a date that was probably in February 2009. The completed units were delivered to Bilfinger at Mr Piper on 3 March 2009.
282 The time between ordering (on 5 or 17 December 2008) or the making available of the trucks to Hercules (in late January or early February 2009, say 1 February 2009) and delivery to the site on 3 March 2009, was between 90, 78 and 33 days. I consider that it is appropriate to allow the period from say 1 January 2009, at least 2 weeks before mid January 2009 when Hercules returned to work after the Christmas break to 3 March 2009 (about 9 weeks) as the actual time taken for the completion of the design, manufacture, installation and supply of the Hercules tipper bodies. In the circumstances, it is not unreasonable that a similar period should be allowed in relation to the supply of the replacement tipper bodies.
283 Accordingly, in the absence of any real evidence by Bilfinger to explain the delays, Bilfinger should have finalised its order with Sloanebuilt Trailers no later than 1 July 2009 about 7 weeks after the incident and more than 2 weeks after it directed its insurer to cancel the repairs) and it should have taken no longer than a further 9 weeks for the replacement tipper bodies to have been manufactured, installed and delivered to site.
284 The requirements for trucks to carry out the work at Wallerawang were quite specific. Manoeuvrability at the dumping site required a tipper and it was considered that a European truck rather than an American truck was necessary to manage the work. In these circumstances, the use of similar trucks and tipper bodies to those on hire after 9 May 2009 seemed an obvious choice. I do not accept, however that Bilfinger delayed obtaining replacement tipper bodies whilst it prolonged the period of hire in order to further “try-out” the Sloane bodies.
285 Accordingly, I will allow for the hire of replacement vehicles calculated as follows:
a. 7 weeks from 9 May to 1 July 2009 to order the replacement tipper bodies;
b. About 9 weeks from the date of the order as the reasonable time for delivery to site of the vehicles.
In the circumstances, the delays experienced by Bilfinger after 1 September in receiving the replacement tipper bodies appear to me to be unreasonable and accordingly it is appropriate that the hire charges for the period after 1 September 2009 be disallowed.
286 Reasonableness of the hire charges: Trucks were hired by Bilfinger from 10 May 2009 after truck no. 1 could no longer operate. A second vehicle was hired soon afterwards. A summary of the relevant invoices is as follows:
CB Hirer Dates Rate excl GST incl GST 1888 Bulktrans 10-May $175 $2,100.00 $1,320.00 1889 Bulktrans 11 - 15 May $150 $13,800.00 $15,180.00 1890 Bulktrans 12 - 15 May $110 $3,520.00 $3,872.00 1891 Bulktrans 16 & 17 May $175 $5,425.00 $5,967.50 1892 Bulktrans 18 - 22 May $150 $18,637.50 $20,501.25 1893 Bulktrans 23 - 24 May $175 $5,250.00 $5,775.00 1894 Bulktrans 23 - 24 May $175 $2,800.00 $3,080.00 1895 Bulktrans 21 - 29 May $150 $20,700.00 $22,770.00 1896 Bulktrans 30-May $175 $1,050.00 $1,155.00 1897 Forrest 21-May $150 $1,200.00 $1,320.00 1868 Henry Plant Hire 22 - 31 May $150 $11,932.50 $13,125.75 1905 Forrest 22 & 26 May $150 $1,387.50 $1,526.25 1875 Forrest 31-May $110 $11,220.00 $12,342.00 1897 Forrest 1 - 5 Jun $150 $11,700.00 $12,870.00 1899 Forrest 8-Jun $175 $1,575.00 $1,732.50 1898 Forrest 9 - 12 Jun $150 $4,800.00 $5,280.00 1878 Forrest 1 - 10 Jun $110 $22,110.00 $24,321.00 1880 Forrest 11 - 30 Jun $110 $53,900.00 $59,290.00 1901 Forrest 15 - 19 Jun $150 $12,000.00 $13,200.00 1902 Forrest 22 - 26 Jun $150 $7,125.00 $7,837.50 1903 Forrest 29-Jun $150 $1,200.00 $1,320.00 1905 Forrest 30-Jun $150 $1,200.00 $1,320.00 1876 Forrest 1 - 15 Jul $110 $45,190.00 $49,709.00 1877 Forrest 16 - 31 Jul $121 $58,790.00 $64,669.00 1904 Forrest 6 - 10 Jul $150 $7,125.00 $7,837.50 1879 Forrest 1 - 15 Aug $121 $55,690.00 $61,259.00 1881 Forrest 16 - 31 Aug $121 $19,025.00 $20,927.50 1882 Forrest 16 - 31 Aug $121 $32,230.00 $35,453.00 1883 Forrest 31-Aug $121 $5,940.00 $6,534.00 1884 Forrest 1 - 21 Sep $121 $72,490.00 $79,739.00 1885 Forrest 1 - 30 Sep $121 $25,860.00 $28,446.00 $536,972.50 $589,679.75
287 The defendants submitted that the quantum of the claim was excessive because Bilfinger should have hired the replacement trucks at cheaper rates:
a. if the trucks were hired on a longer term basis;
b. if trucks were not “wet hired” with a driver, rather than utilising the Bilfinger drivers;
c. if trucks had been hired from other suppliers from elsewhere in New South Wales or interstate.
288 Evidence was led by the plaintiff from:
a. Mr James Wilkins, who had been the transport manager at Bulktrans for 24 years until early 2014, gave evidence via a telephone link-up;
b. Mr Carl Forrest of C & A Forrest, by the tendering of a written statement without any oral evidence.
289 Mr Wilkins had hired a vehicle to Bilfinger between May and October 2009. He said that, at that time, a vehicle with “the biggest capacity I could get” was hard to get hold of and he needed to hire from another company. Mr Wilkins said, “That vehicle is very rare, it has the big capacity bin”.
290 Mr Wilkins said he “sourced this vehicle on short notice”. He charged $150 per hour because he “couldn’t capitalise the product”. This would require “a minimum of…a 12 month term.” Mr Wilkins had previously hired semi-trailers to Bilfinger to cart fly-ash In May 2009, those vehicles were not available as they were “under contract…on full-time carting coal”.
291 Mr Wilkins was unaware of the availability of the other semi-trailers for hire “elsewhere in New South Wales”. He said that the semi-trailers “used to get bogged on the dump because of the articulation”.
292 Mr Forrest gave similar evidence in his statement tendered in evidence. Mr Forrest stated that he would only hire trucks on an hourly basis, even if the person hiring had committed to a 12 month hire period. There was no evidence from Mr Wilkins or Mr Forrest that “dry hire” of the vehicles was available.
293 The plaintiff submitted that, “None of Lend Leases’ witnesses were cross-examined on the inquiries they made in respect of the potential for hire. No evidence was provided by either defendant to indicate that cheaper alternatives were available to Lend Lease. Given the rarity of the trucks required, there was limited, if any, scope for Lend Lease to negotiate or obtain cheaper vehicles. It was not put to Mr Wilkins that the hire fees were not market rate and the defendants did not seek to cross-examine Mr Forrest. Both these witnesses had extensive experience in the industry”.
294 In the circumstances, I accept that Bilfinger was obliged to hire the vehicles at the going rates in order for it to be able to perform its obligations at the power station. I will allow as the plaintiff’s damages the actual costs Bilfinger paid during the period I have determined was reasonable namely, prior to 1 September 2009. Accordingly, Bilfinger will recover the whole of its hire costs prior to 1 September 2009, which on my analysis of the documents is $438,722.50, excluding GST.
295 Preparing tippers for transportation: Lend Lease has claimed the sum of $2,242.87 as the cost of preparing the tipper body for truck no. 1 for transportation, including removal of ash, moving tipper from depository area and washing down the tipper body prior to loading. Some similar work was performed for truck no. 2. The sum of $2,242.87 is the total of the following invoices, which I consider is appropriately claimed by Lend Lease:
CB Hire Company Invoice no. Details excl GST incl GST 1869 Coates Hire 6033041 Hire of water cart 26 May 2009 $181.82 $200.00 1870 Turner Crane Hire 20111510 Hire of 20 tonne Franna 11 May 2009 $445.50 $490.05 1871 Turner Crane Hire 20111514 Hire of 20 tonne Franna (plus dogman/rigger) 18 May 2009 $521.25 $573.38 1873 Turner Crane Hire 00001108 Lift truck, remove tyres, place body on trailer, pick up tyres and auto trailer
Hire of 20 tonne Franna (plus dogman/rigger) 20 July 2009$324.30 $356.79 2156 Clann Enterprises 00878421 Hire of bobcat and operator (recovery of truck body from ash repository) 10 May 2009 $770.00 $847.00 $2,242.87 $2,467.22
296 Refit reversing cameras: Lend Lease has claimed the sum of $799 (excluding GST) as the cost of refitting reversing cameras to the trucks. No evidence was led as to the need for this item as a consequence of the failure of the trucks.
297 Summary of damages allowed:I propose to allow damages as follows (all amounts are exclusive of GST):
a. cost of purchasing replacement tipper bodies $87,995.00;
b. cost of collecting trucks from Herclues $835.68
c. non-destructive testing $445.00
d. equipment hire to cover shortfall in 32m3 capacity Nil
e. hire of replacement trucks after 11 May 2009 $438,722.50
f. preparing tippers for transportation $2,242.87
g. refit reversing cameras Nil
Total damages $530,141.05
Proposed Orders
298 The orders I propose are that there shall be judgment for the plaintiff:
a. against the first defendant, that the first defendant pay to the plaintiff the sum of $106,028.21.
b. against the second defendant, that the second defendant pay to the plaintiff the sum of $424,112.84.
299 Before pronouncing any orders I will allow time for the parties to check my calculations and to ensure that all relevant invoices have been properly accounted for. I will also hear further from the parties in relation to questions of interest and costs.
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Certificate
I certify that these 77 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 12 June 2014.
Dated: 12 June 2014
Olivia Bramwell
Associate to His Honour Judge Anderson
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