Major Engineering Pty Ltd v Helios Electroheat Pty Ltd - [2006] VSCA 107

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 3793 of 2004

MAJOR ENGINEERING PTY LTD
	Appellant
v.
HELIOS ELECTROHEAT PTY LTD	Respondent

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JUDGES:	CHERNOV, ASHLEY, JJ.A. and MANDIE,A.J.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	31 January 2006 and 1 February 2006
DATE OF JUDGMENT:	16 May 2006
MEDIUM NEUTRAL CITATION:	[2006] VSCA 107

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Contract – Manufacture and supply of goods for specified purpose – Whether goods fit for purpose – Whether goods of merchantable quality – Goods incapable of operating in specified environment – Adequacy of reasons – Competing expert evidence – Credit not in issue – Whether reason for preference of expert evidence apparent – Whether trial judge failed to address adequately competing critical evidence – Counter-claim for the costs of repair to goods – Whether causal link between breach by supplier and earlier damage sought in counter-claim by purchaser – Goods Act 1958, ss.19, 89, 90.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr M. Dreyfus, QC Mr A. Klotz	Kalus Kenny
For the Respondent	Mr P.J. Riordan, SC Ms S. Gatford	Lewis Holdway

CHERNOV, J.A.:

The appellant, Major Engineering Pty Ltd (“Major”), appeals against the decision of a judge of the County Court, made on 29 October 2004, whereby his Honour ordered that judgment be entered against Major in favour of the respondent, Helios Electroheat Pty Ltd (“Helios”), in the sum of $27,728.89, inclusive of interest. His Honour also ordered that Major’s counter-claim be dismissed and made other consequential orders. It was Major’s case on appeal that the decision should be set aside primarily because his Honour failed to give adequate reasons for the decision and to take into account uncontroverted expert evidence on material issues. It was also said that, in any event, the decision was made against the evidence, or alternatively, the weight of the evidence. It was submitted for Major that if we set aside his Honour’s decision we should proceed to determine the dispute between the parties, including Major’s counter-claim, on the material before us.

Contractual relationship between the parties

Before considering the competing arguments of the parties, it is necessary to set out briefly the circumstances leading to the litigation. As its name suggests, Major is an engineering company. In May 2001 it entered into an agreement with Hawker de-Havilland (“HDH”), an aircraft manufacturer, to design, supply, install and commission one large and one small salt bath for use in the heat treatment of aluminium aircraft parts, such as parts of a wing. The parts were to be placed in the bath in a solution that was made up predominantly of salt, the temperature of which was to be raised to, and maintained at, a specific level. So far as is relevant, the specification of HDH for the large salt bath[1] provided:
[1]For purposes of convenience, it is generally necessary to deal only with matters relating to the large salt bath because the issues relevant to it, and their resolution, apply also to the small salt bath.

“…
9.2 Temperature…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] VSCA 107
Decision Date: 16 May 2006

CaseChat Overview and Summary

The dispute between Major Engineering Pty Ltd and Helios Electroheat Pty Ltd was brought before the court over issues concerning the manufacture and supply of goods, specifically whether the goods supplied were fit for the specified purpose and of merchantable quality. The goods in question, which were incapable of operating in the specified environment, became the focal point of the case. Major Engineering, the purchaser, alleged that Helios, the supplier, had failed to provide goods that met the contractual specifications and statutory requirements under the Goods Act 1958. The court was tasked with determining whether the trial judge had adequately addressed the competing critical evidence presented by both parties and whether the judge's reasons for preferring one set of expert evidence over another were apparent and justified.

The legal issues before the court involved the adequacy of the trial judge's reasons for preferring the expert evidence of one party over the other and whether there was a failure to address adequately the competing critical evidence. The court needed to examine if there was a discernible rationale for the trial judge's decision to credit one set of expert testimony and whether this rationale was sufficient to support the conclusion reached. Furthermore, the court had to consider whether the trial judge had erred in failing to sufficiently address the competing evidence, which could have influenced the outcome of the case.

The court found that the trial judge's reasons for preferring the expert evidence of Major Engineering were apparent and adequate. The reasoning was deemed sufficient to support the conclusion that the goods supplied by Helios were not fit for the specified purpose and not of merchantable quality. The court held that there was no error in the trial judge's consideration of the competing expert evidence, as the rationale for the preference was clearly articulated and based on the evidence presented. Additionally, the court dismissed the counter-claim for the costs of repair, finding that there was no causal link between the breach by the supplier and the earlier damage sought by the purchaser.

The final orders of the court upheld the decision of the trial judge, affirming that Helios was liable for the breach of contract and that Major Engineering was not required to pay for the costs of repair to the goods. The counter-claim was dismissed, and the primary claim was upheld in favour of Major Engineering.

Orders