Major Engineering Pty Ltd v Timelink Pacific Pty Ltd - [2007] VSCA 228

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No 4122 of 2005

MAJOR ENGINEERING PTY LTD

(ACN 005 432 397)

Appellant

TIMELINK PACIFIC PTY LTD

(ACN 063 714 303)

Respondent

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JUDGES:	BUCHANAN, NETTLE and NEAVE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	24 September 2007
DATE OF JUDGMENT:	16 October 2007
MEDIUM NEUTRAL CITATION:	[2007] VSCA 228

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CONTRACT – Contract for the supply of hydraulic cylinders – Terms – Express term – Hydraulic cylinders required to withstand maximum static force of 262 kN – Implied term – Whether cylinders required to have “safety margin” to withstand static force greater than 262 kN – Whether “safety margin” required to be not less than informed expert opinion may consider reasonable – Requirement not so obvious as to go without saying – Codelfa Construction Pty Ltd v State Rail of New South Wales (1982) 149 CLR 337; Byrne v Australian Airlines Ltd (1995) 185 CLR 410, applied.

APPEAL – Leave to appeal – Judgments, orders and declarations – Appeal from judgment for breach of contract with damages to be assessed – Leave to appeal not required – Hall v Busst (1960) 104 CLR 206, applied; City of Camberwell v Camberwell Shopping Centre Pty Ltd [1994] 1 VR 163, followed.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr R Merkel QC with Mr A Herskope and Mr D B Clough	Kalus Kenny Lawyers
For the Respondent	Dr G Griffith AO QC with Ms M A Tran	Vadarlis & Associates

BUCHANAN JA:

I agree with Nettle JA.

NETTLE JA:

This is an appeal from a judgment given in the Admiralty Division. It concerns the failure of hydraulic cylinders supplied by the appellant (‘Major Engineering’) to the respondent (‘Timelink’) to power the canting keel of the racing yacht Wild Thing. The judge held that Major Engineering had breached its contract with Timelink by providing cylinders that lacked the capacity to withstand a working force of 262 kN, and that the breach caused the cylinders to fail while the yacht was racing in the 2004 Sydney Hobart yacht race (causing damage to the yacht). His Honour gave judgement in favour of Timelink for damages to be assessed.

Leave to appeal

There is a preliminary issue as to whether Major Engineering needs leave to appeal. Major Engineering contends that the judge’s order was a final order so that leave is not required. Out of an abundance of caution, however, it applied for leave to appeal in advance of the hearing of the appeal and that application was adjourned to be heard by this court at the same time as the appeal.

There is some debate about whether a judgment for damages to be assessed is an interlocutory order or a final order. Commonsense suggests that it should be regarded as a final order. As Sir John Donaldson MR said in White v Brunton:[1]
[1][1984] QB 570, 572.

It is plainly in the interests of the more efficient administration…

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: [2007] VSCA 228
Decision Date: 16 October 2007

CaseChat Overview and Summary

The dispute between Major Engineering Pty Ltd and Timelink Pacific Pty Ltd involved the supply of hydraulic cylinders under a contract. The crux of the matter was whether the cylinders were required to have a "safety margin" to withstand a static force greater than the specified 262 kN, and if so, whether this "safety margin" needed to be at least as much as an informed expert might consider reasonable. This case was heard and determined in the Supreme Court of Victoria.

The legal issues before the court revolved around the interpretation of the contract and the possible implication of a term regarding the safety margin. The primary question was whether such a term was so obvious that it went without saying, or if it was necessary to be expressly stated. The court considered the relevant legal principles established in cases such as Codelfa Construction Pty Ltd v State Rail of New South Wales and Byrne v Australian Airlines Ltd. The court had to determine if the requirement for a safety margin was something that could be implied based on the circumstances or if it was an explicit term that needed to be clearly articulated.

The Supreme Court found that the term requiring a "safety margin" was not so obvious as to be considered implicit in the contract. The court held that such a term needed to be expressly stated or implied based on expert opinion. The court rejected the argument that the safety margin requirement was self-evident. Instead, the court relied on the precedent set in the aforementioned cases to conclude that the term could not be implied as a matter of course. The court's decision was that the contract did not include an implied term requiring a safety margin greater than the specified force.

The court also addressed the issue of leave to appeal the decision. It was determined that leave to appeal was not required under the relevant legal principles, as outlined in Hall v Busst and City of Camberwell v Camberwell Shopping Centre Pty Ltd. The court upheld the lower court's judgment for breach of contract and ordered that damages be assessed.

Orders