Major Engineering Pty Ltd v Timelink Pacific Pty Ltd (No 2)
[2009] VSCA 83
•30 April 2009
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No 3741 of 2008
| MAJOR ENGINEERING PTY LTD | |
| Appellant | |
| v | |
| TIMELINK PACIFIC PTY LTD | Respondent |
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JUDGES: | ASHLEY, REDLICH and DODDS-STREETON JJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 15 and 24 October 2008 | |
DATE OF JUDGMENT: | 30 April 2009 | |
MEDIUM NEUTRAL CITATION: | [2009] VSCA 83 | |
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CONTRACT – Contract for supply of hydraulic cylinders for canting keel of racing yacht capable of withstanding maximum static force of 262 kN – Where finding of breach of contract by supplier overturned on appeal – Remitted question – Whether finding that cylinders failed at static force of not more than 262 kN open on evidence.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr B N Caine SC | Kalus Kenny Lawyers |
| Mr A Herskope | ||
| Mr D B Clough | ||
| For the Respondent | Mr M F Wheelahan SC | Vadarlis & Associates |
| Mr J A F Twigg |
ASHLEY JA:
I have had the advantage of reading the reasons for judgment of Dodds-Streeton JA in draft. For the reasons which follow, I agree with her Honour that the appeal should be allowed.
The contractual terms found by the learned trial judge were that the cylinders –
(b)would have a working capacity to withstand a compression force of up to 262 kN in ocean racing conditions;
(c)would be designed and supplied so that the piston rods would not buckle or fail under compression when they were subjected to a working compression force of up to 262 kN in ocean racing conditions;
The meaning of those terms was affected by two considerations: Mr Jones’ email to Mr Petty of 4 June 2002; and the fact that 262 kN was calculated by reference to the position at which the cylinder assemblies were most vulnerable –19° cant.
As to the first of those matters, in his email of 4 June Mr Jones referred to ‘the maximum static loads (i.e. in the locked condition) shared by the two cylinders’. The load figures were later increased; but the concept of ‘maximum static loads’ remained.
The meanings of ‘static load’, ‘maximum static load’ and ‘static forces’ were addressed by a number of the witnesses. Mr Jones said that ‘static load’ meant ‘if the thing is just simply sitting there, it would be the steady load under those conditions’. Professor Joubert contrasted ‘the steady load’ on a piston with ‘suddenly imposed loads,’ and ‘slamming’. Dr Keays described the term ‘static load’ as ambiguous – it could be an actual load or an equivalent static load to a dynamic situation. In the present case he took it to be referring to a design load. Dr Baigent gave evidence that he understood the ‘maximum static load’ to be the ‘worst loading condition calculated’.
In light of the evidence which I have just mentioned, reference to ‘a compression force of up to 262 kN in ocean racing conditions’ and ‘a working compression force of up to 262 kN in ocean racing conditions’ were understood by this Court, when the matter was previously before it, to mean a static force – or load - of up to 262 kN.
In a practical sense, this involved an unrealistic assumption – that loads imposed upon the keel in ocean racing conditions, and thus upon the cylinder assemblies, would be steady. It was, as Dodds-Streeton JA says, common ground that a lateral or impulse load suddenly applied to a cylinder assembly would cause it to fail at a lower magnitude of force than a load applied steadily and progressively. Nonetheless, forces of the former kind were to be treated as if they involved the imposition of static force.
At the time of failure, the cylinder assemblies were not being subjected to a steady load. These were the dynamic effects of which witnesses gave evidence. But the focus must be upon the maximum load imposed, however it came to be imposed.
There are two corollaries of what I have just said. First, if it could be established that the piston rods failed at less than the contractually specified threshold because of a sudden imposition of force, although they would not have done so had the same amount of force been applied by steady progression, the respondent would be entitled to succeed. Second, the fact that the yacht was subjected to dynamic conditions means that, converted to static load, the situation would have been constantly changing. Since, as I apprehend it, the evidence tended to show not only that a sudden imposition of force below the specified threshold might have a disproportionate effect, but also that dynamic forces might exceed the threshold, the task for the respondent of establishing that failure was caused by a load less than the threshold was rendered more difficult.
I turn to the second matter affecting the meaning of the contractual terms as found. The terms, by their language, were directed to the capacity of the cylinder assemblies to withstand a compression force – that is, a static force or load - regardless of the extent of cant. Nonetheless, the figure of 262 kN was evidently intended to address the situation of greatest vulnerability, when the keel was at 19° extension cant (conveniently, ‘19° cant’). It was common ground that, when the pistons were not at full extension, their ability to withstand load would increase. An ability to withstand a load of 262 kN at 19° cant would imply an ability to withstand a load in excess of 262 kN at 17° cant. The contractual terms, in my opinion, required the cylinder assemblies to withstand 262kN static force, or load, at 19° cant; and the question remitted by this Court on the earlier occasion needed to be understood and answered with such an understanding.
The keel was in fact canted at 17° when the piston rods failed.
If it could be said that, however the load was imposed (that is, steadily and progressively, or by dynamic forces), the cylinder assemblies could not have withstood 262 kN whatever was the extent of cant, then the fact of failure would mean that the respondent would establish breach. But in my opinion it would not follow, simply because the static load exceeded 262kN at time of failure at 17° cant, that breach would be established. It would all depend upon whether that load converted to less than 262kN assuming 19° cant.
Mr Jones’ evidence, at its highest, supported a conclusion that the cylinder assemblies failed at less than a static force of 262kN because, via the keel, they would not have been exposed to any greater force in ocean racing conditions. Alternatively, if his evidence should be understood to mean that the cylinder assemblies must have been incapable of withstanding a force of 262kN at 19° cant, then it followed that they must have failed either at less than 262kN, or at least less than 262 kN adjusted upwards to allow for the keel being not fully canted.
In his calculation of the maximum force to which the cylinder assemblies would be exposed, Mr Jones built in a smallish safety factor.
Each of the other relevant witnesses, as Dodds-Streeton JA shows, considered that an additional – and generally substantial – safety factor should be applied to the maximum static load as calculated in order to give protection against the variable conditions which can be encountered at sea. Those conditions could be of two kinds. First, the effect of a suddenly imposed load rather than a steadily applied load. Second, simple magnitude of load – this disputing Mr Jones’ proposition that in ocean racing conditions a force exceeding 262 kN would not be imposed upon the cylinder assemblies (whether that be taken to mean at all, or rather at their position of greatest vulnerability).
It can be said that the conditions in which the piston rods failed were not, as described, the extreme conditions which a safety factor is particularly designed to address. But that is distinct from the question whether the evidence justified a conclusion that the load imposed upon the cylinder assemblies in ocean racing conditions would never exceed 262 kN, or at least never exceed 262kN at their position of greatest vulnerability. As Dodds-Streeton JA shows in her analysis, only Mr Jones went so far; and his evidence revealed that in arriving at that figure he had allowed a safety factor which was much less than those proposed by the other witnesses. It was not correct for the learned trial judge to conclude that Mr Jones’ opinion was relevantly ad idem with the opinions of the other relevant witnesses. Rather, it was idiosyncratic, and poorly justified.
Absent that path of reasoning to a conclusion favourable to the respondent, the question is whether evidence otherwise considered entitled a conclusion, on balance of probabilities, that the piston rods in fact failed when subjected to a static load which was equivalent to less than 262 kN at full extension.
In every case, determination of disputed questions turns upon consideration of all the relevant evidence. The finder of fact is not taken hostage to experts only because a question involves a matter of expertise. Nonetheless, proper respect must be accorded expert evidence, being evidence which is beyond the knowledge and experience of lay persons.
In an extreme case, science may present a ‘blank negation’. That is, it does not provide any answer to a question posed. In such a case, a court may choose to rely upon an apparently persuasive sequence of events.[1]
[1]Adelaide Stevedoring Co Ltd v Forst (1940) 64 CLR, 538, 564 (Rich ACJ), 573-574 (McTiernan J).
I have given consideration to whether this case presented such a feature. The theoretical exercises and the practical tests failed to provide a clear answer to the critical question – that is, what static load was being applied to the cylinder assemblies when the piston rods failed – because none of exercises or tests replicated sailing conditions. On the other hand, the authors of the exercises and tests averred that their results could be applied to determine the probable static load at which the assemblies would fail. It was thus not a question of no answers being given by the experts; rather one of the reliability of the reasoning underlying the various answers.
But even if the scientific evidence had been no more than a blank negation, I consider that the respondent would not have been assisted by a Forst analysis. That is because there was no apparently persuasive sequence of events or series of facts showing, more probably than not, that the load being imposed on the cylinders at the critical time was less than the equivalent of 262 kN at 19°cant.
So it comes back, as I see it, to consideration of all the evidence.
First, there is the fact that the cylinders failed at 17° cant in the sailing conditions described by the learned trial judge[2] and by Nettle JA when the proceeding was earlier in this Court.[3]
[2]Timelink Pacific Pty Ltd v Major Engineering Pty Ltd [2006] VSC 288 [8].
[3]Major Engineering Pty Ltd v Timelink Pacific Pty Ltd [2007] VSCA 228 [29].
Second, the keel, and hence the cylinder assemblies, were being subjected to lateral and impulse loads at the critical time. Such loads may cause a cylinder to fail at a lower magnitude of force than would happen if the same force, or load, was applied steadily and progressively. So it cannot be said, insofar as theoretical exercises or practical tests suggested that the pistons could have withstood a steadily applied load in excess of 262 kN at 19° cant, that they would do so when confronted by lateral or impulse loads of less than 262 kN.
Third, on the other hand, any calculation which suggested that the load imposed upon the cylinders would never exceed 262 kN in ocean racing conditions was suspect because such calculations did not replicate conditions in the water.
Fourth, there is then the fact that the calculations which yielded the various estimates of maximum load were made upon the assumption of a yacht lying horizontal, though static, with the entire weight of the keel horizontal and with a tendency to fall to the vertical. Nothing like that extreme situation was being encountered when the piston rods failed. But, as against that, the various calculations did not allow for the particular kinds of impact imposed by ocean racing,
Fifth, there is to be considered the evidence of the experts with respect to adding on a ‘safety factor’. Mr Jones added on a safety factor represented by the difference between 218 and 262 kN. Other experts suggested that larger safety factors should be allowed, although they began from different starting points. Their evidence certainly implied not only that the maximum load arrived at by calculations might be exceeded in sailing conditions but that the calculated maximum load might be much exceeded. The highest safety factors proposed, of 4 and 5, were presented by or through a witness for the respondent.
Dr Keays spoke of the safety factor being added to the ‘once in a lifetime load’ which was the design load. But Professor Joubert, Dr Baigent and Mr Raymond all considered that the safety factor addressed the unpredictable effects of lateral and slamming loads.
Sixth, the yacht’s canting keel was at least recent technology. It provided additional reason why a substantial safety factor was required. The effect of the dynamic forces to which the keel and the cylinder assemblies would be exposed at sea was less confidently predictable than with a keel of long-established design.
Seventh, as against a conclusion that the effect of slamming was such as to much increase the load to which the cylinders were subjected was the evidence of Mr Taylor, sailing master of the yacht, that in the 2005 Sydney to Hobart race, in similar sailing conditions, a pressure gauge fitted to the refurbished vessel demonstrated that slamming had a plus or minus 20 per cent effect – 800 to 1200 psi, with an average of 1000 psi.
It is true, as Dodds-Streeton JA says, that the witness’s comparison of conditions in 2004 and 2005 was impressionistic, and that there was no evidence as to the configuration of the keel or hydraulics in 2005. I note also Professor Joubert’s reservations about the usefulness of statistical data pertaining to measurement of pressure and accelerations. Again, I accept that there was difficulty, as the evidence stood, in simply grafting Mr Taylor’s evidence onto a steady load calculation at 17° cant. But the witness’s evidence seems to me nonetheless to have merited considerable attention Whatever its limitations, it gave some indication that slamming had small effect upon this vessel, in racing conditions, on this stretch of water, and in what were stated by an experienced yachtsman to be similar conditions to those which had prevailed in 2004.
But in the end, even if weight was attributed to Mr Taylor’s evidence and it could be concluded that the effect of slamming was unlikely to have been great at the critical time, the question remains whether the respondent established that the piston rods failed when the actual load was below the equivalent of 262 kN at 19° cant.
Upon that question, I consider that the respondent failed to prove its case. Implicit in all that I have thus far said is the fact that no one can say, as a matter of record, what load was in fact being imposed upon the piston rods at the time of their failure, at least because no measurements were then being taken. Then, even if 262 kN at 19° cant was a supportable calculation of the maximum static load to which the cylinder assemblies would be exposed when a modest allowance for safety was superadded, in my opinion the burden of the expert evidence was that such a calculation made no sufficient allowance for the safety factor which, according to the direct evidence of other expert witnesses and their reference to the statements of
authorities, was necessary in order to address the lateral and impulse forces which are at work to greater or lesser degree, when a yacht is at sea. Whilst it is possible that the piston rods failed because a force less than the equivalent of 262 kN at 19° cant was suddenly – rather than steadily – applied, it seems to me no less likely that the piston rods failed because a force greater – perhaps significantly greater - than 262 kN equivalent was applied, a force in respect of which provision had not been made by incorporating a sufficient safety factor. The respondent’s evidentiary difficulties were the greater, I consider, because of the difficulty of assessing at an instant in time the load imposed by ever-changing dynamic forces, notwithstanding that the load must be characterised as static. In short, in my opinion, the respondent failed at the point of onus – just as the appellant would have done had it carried the onus of proof.
I should add this: If I was wrong in saying that the true question was whether the respondent proved that the cylinder assemblies failed at less than the equivalent of 262kN at 19° cant, and if the question was whether the respondent proved that the failure occurred at less than 262kN (that is, regardless of the extent of cant), I consider that the respondent would still fail to satisfy the evidentiary onus. The difficulties for the respondent to which I referred in the preceding paragraph would continue to have application.
REDLICH JA:
I have had the considerable benefit of reading in draft both the reasons of Dodds-Streeton JA and those of Ashley JA. Although they differ in their approach to the question which must be resolved, I agree for the reasons that they give that the respondent failed to discharge the onus of establishing a breach of the condition with the consequence that the appeal should be allowed. I agree with the orders that Dodds-Streeton JA proposes.
DODDS-STREETON JA:
The issue in this appeal is whether the appellant, Major Engineering Pty Ltd (‘Major’), is liable to pay damages for breach of its contract to supply the respondent, Timelink Pty Ltd (‘Timelink’) with a pair of hydraulic system cylinders, each capable of withstanding a compressive force of 262 kiloNewtons (‘kN’), to operate the canting keel of Timelink’s ocean going yacht. The piston rods of the two cylinders supplied by Major and installed in the yacht failed and broke off while it was competing in the 2004 Sydney to Hobart Yacht Race. Although no lives were lost, the canting keel became detached. The yacht capsized and suffered considerable damage.
The central question in the proceeding below was a straight forward, albeit technically complex, claim for breach of contract. The history of the proceeding, however, is complicated.
History of the proceeding
Following a trial in July 2005 (‘the trial’), a judge of the Trial Division held, for reasons delivered on 4 August 2006 (‘the first judgment’) that Major was liable in damages to Timelink for breach of contract. He found an implied term that each of the hydraulic cylinders would have the capacity in operation to withstand a compression force of 262 kN together with an added safety factor of not less than two, that equated to a capacity of not less than 524 kN or greater. His Honour did not consider that the cylinders had that capacity or critical failure load. He had received expert evidence of the failure load based on both theoretical analyses and practical tests. In the first judgment, his Honour, on one view, did not wholly accept any of the theoretical analyses and rejected some of them, due to the difficulties of evaluation, appearing to prefer instead the practical tests conducted by Major on a replica cylinder, which indicated that the cylinders would fail at 309 kN. His Honour appeared to conclude that even if the results of that practical test were accepted, when the additional safety factor of not less than two was taken into account, breach of contract was established, as no theoretical calculation or practical test suggested that the cylinders had a capacity of at least 524 kN.
His Honour did not expressly determine whether the cylinders each had a ‘maximum static working load’ of not less than 262 kN, presumably because that was unnecessary to establish breach of the implied term he had found.
Major appealed from the first judgment.
The Court of Appeal on 16 October 2007[4] held, in essence, that the trial judge had erred in implying a term that a safety factor must be added. Nettle JA (with whom Buchanan and Neave JJA agreed) held that the contractual requirement was to supply cylinders each capable of resisting a maximum static force of up to 262 kN, rather than a static force of a multiple of 262 kN by reference to a safety factor. The Court of Appeal considered that the trial judge had made no finding that the cylinders had failed in operation at a static force of less than 262 kN. It remitted for determination by the trial judge ‘the sole issue of whether the static force at which the cylinders failed in operation was not more than 262 kN’.
[4]Major Engineering Pty Ltd v Timelink Pacific Pty Ltd [2007] VSCA 228 (Unreported, Buchanan, Nettle and Neave JJA, 16 October 2007).
On 30 November 2007, on the application of Major, the Court of Appeal reformulated the remitted issue as follows:
Whether the static force at which the cylinders failed at the point of failure described in paragraph 29 of the reasons for judgment of Nettle JA was not more than 262 kN.
Paragraph 29 of the reasons for judgment of Nettle JA described ‘the point of failure’ as follows:
At the point of failure, Wild Thing (by that time renamed Skandia), was on port tack heading in a south westerly direction towards the Tasmanian coast. She was about 70 nautical miles east of the Eddystone Lighthouse at the north-eastern tip of Tasmania. The wind was blowing a gale at between 30 and 40 kNots south-south-west and the prevailing swell was from the port bow, and thus from the south. The depth of the water was approximately 3,000 m. The majority of waves were four to six metres high and the yacht was following what was said to be a conservative sail plan. The yacht came off a wave which was larger than those then prevailing and the two piston rods failed and broke off. This meant that the keel head was no longer laterally restrained and thus, despite efforts of the crew to lash it down, it swung within the hull causing damage to surrounding components. The vessel was abandoned when it appeared that the keel might come away altogether and so cause the yacht to capsize. The crew were rescued. Their apprehensions were fulfilled. The keel became detached and the yacht capsized and suffered considerable damage.
On remittal, the trial judge heard further submissions. In a judgment delivered on 22 February 2008 (‘the second judgment’), he held that ‘the static force at which the cylinders failed at the point of failure described in paragraph 29 of the reasons for judgment of Nettle JA was not more than 262 kN’. His Honour gave judgment for Timelink for damages to be assessed.
By a Notice of Appeal dated 7 March 2008, Major appealed from the second judgment given on 22 February 2008 on the following grounds:
1. The learned trial judge, on the evidence before him, could not reasonably or properly have found that the respondent had discharged the onus on it to establish that, on the balance of probabilities, the static force at which the cylinders failed at the point of failure described in paragraph 29 of the reasons of judgement of Nettle JA in [2007] VSCA 228 was not more than 262 kN.
2. On the evidence before him the learned trial judge should have found that the Respondent had not discharged the onus to establish that, on the balance of probabilities, the static force at which the cylinders failed at the point of failure described in paragraph 29 of the reasons of judgment of Nettle JA in [2007] VSCA 228 was not more than 262 kN
3. The learned trial judge erred in fact and law in finding that:
a. the ocean conditions at the point of failure described in paragraph 29 of the reasons of judgment of Nettle JA in [2007] VSCA 228 subjected the cylinders to a static force of not more than 262 kN;
b. the cylinders failed when subjected to a static force of not more than 262 kN;
c. the respondent’s loss and damage was caused by the cylinders failing by being subjected to a static force of not more than 262 kN
By a Notice of Contention dated 18 August 2008, the respondent made certain contentions, considered in detail below.
Background to appeal
The background to the appeal is as follows.
In 2002, Timelink, a company controlled by Grant Wharington, a well-known yachtsman, engaged Donald Jones, a yacht designer and design engineer, to design a new, 30 metre ‘cutting edge’ clean racing yacht to compete in the Sydney to Hobart Yacht Race and other major ocean yacht races. As the yacht was intended to compete in international races, it had to satisfy certain requirements, including those of the American Bureau of Shipping Guide for Building and Classifying Offshore Racing Yachts 1994 (‘ABS Guide’). The yacht was initially called ‘Wild Thing’, but its name was subsequently changed to ‘Skandia’.
Mr Jones decided, inter alia, that the yacht should have a canting keel, which was a fairly innovative feature. Unlike a conventional keel, which is fixed, a canting keel can move sideways. Timelink consequently required a pair of hydraulic cylinders to move and restrain the keel head.
Timelink’s designer, Mr Jones, entered discussions with Mr Petty, the sales manager of Major, in relation to the supply of the hydraulic cylinders. Mr Jones had previously had satisfactory dealing with Mr Petty, whom he knew and respected. Major was the agent for Parker Cylinders (‘Parker’), an American cylinder manufacturer, and also commissioned equipment from a local manufacturer.
In the course of the dealings between Mr Jones and Mr Petty, Mr Jones’ requirements for the capacity of the cylinders to withstand force increased.
On 4 June 2002, Mr Jones sent Mr Petty a critical email which stated:
The cylinder arrangement I have decided on for WILD THING’s canting keel includes two 5" x 930 mm stroke cylinders, one with a cylinder end as in the “Infinity Pin Eye Series Style R” with pin diameter 1.25" and a spherical bearing rod end for a 1.75" diameter pin. Oil connections are to be in the “Position 3” (Parker Hannifin). The other cylinder is to have spherical bearings for 1.75" diameter pins at both ends and oil connections at “Position 1”.
Based on the data you gave me I am assuming 2" rod diameter and a retracted length for both cylinders of 1241 mm.
The maximum static loads (i.e. in the locked condition) shared by the two cylinders will be 44500 kg push force and 38267 kg pull force. Would you please check that my assumptions are OK and forward a quotation.
…
It is undisputed that the maximum static loads expressed in kilograms required to be borne by each cylinder equated to 218kN (push, or compression) and 188kN (pull, or tension).
Mr Petty did not respond to Mr Jones in relation to the two assumptions he was asked to check and Mr Jones took his silence as confirmation that they were correct.
In June or July 2002, Messrs Jones and Petty had further discussions about the required capacity of the hydraulic system. Nothing was said to cast doubt on the adequacy of a 2 inch cylinder shaft. The maximum pressure to be borne by each cylinder was, however, now increased by Mr Jones to 3,000 psi (which was the equivalent of a maximum compression force of 262 kN and a maximum tension force of 220 kN).
On 25 July 2002, Major submitted a quote of $1,604 per cylinder plus GST, which Timelink accepted on 25 July 2002.
The cylinders were manufactured to the order of, and supplied by, Major. The canting keel which was ultimately constructed was attached to the bottom of the yacht’s hull on a pin running ‘fore’ and ‘aft’, allowing the bulb of the keel to be swung laterally. It ran through the yacht’s hull so that force could be applied to the side of the keel head to move it sideways to a desired angle (‘cant’) and hold it there. The maximum extension was to an angle of 19°, while the maximum racing extension angle was 17°. The keel head was moved and restrained by the pair of hydraulic cylinders supplied by Major, to which pumps delivered oil at the required pressure. The cylinders were fixed in parallel to the head of the keel at one end and to the port (left) side of the yacht’s hull at the other end. The cylinders were at their weakest, and had their lowest failure point, when fully extended. At racing extension, they could withstand greater pressure.
The cylinders operated satisfactorily throughout the 2003 sailing season and for some of the 2004 sailing season, but failed during the 2004 Sydney to Hobart Yacht Race at 1.15 am on 28 December 2004 at the racing extension angle of 17°.
The point of failure was described thus by the primary judge:
At the time of the incident, the yacht was on a port tack. This meant that the keel was canted to port and the keel head to starboard, held in place by the two extended pistons. What then happened was that, when the yacht came off the large wave, the forces applied to the keel were transferred to the keel head and then to the pistons which were in compression. Both pistons failed; the piston shafts buckled and snapped off, leaving the keel head unrestrained.[5]
[5]Timelink Pacific Pty Ltd v Major Engineering Pty Ltd [2006] VSC 288 (Unreported, Byrne J, 4 August 2006) [8].
In January 2005, Timelink issued a proceeding against Major seeking damages for breach of contract and negligence. The claim in negligence was not pursued at trial.
The Trial
At trial, it was common ground that Major had entered into a contract to supply two hydraulic cylinders to Timelink. Major denied, however, a number of terms alleged by Timelink, including terms that the hydraulic cylinders supplied:
(a)would be reasonably fit for the purpose of controlling the canting keel on ‘Skandia’ in ocean racing conditions;
(b)would have a working capacity to withstand a compression force of up to 262 kN in ocean racing conditions;
(c)would be designed and supplied so that the piston rods would not buckle or fail under compression when they were subjected to a working compression force of up to 262 kN in ocean racing conditions; and
(d) …
(e)would comply with the guide contained in the Parker Industrial Cylinder Products (Hydraulic and Pneumatic Cylinders) Catalogue (‘the Parker Catalogue’) in relation to required piston rod size selection for metric hydraulic cylinders based upon the required thrust (push) application.
The trial judge found that Major held itself out as a long established enterprise capable of providing technical consulting and other services in hydraulic systems, was an agent for Parker and similar suppliers and that Mr Petty was very experienced. Moreover, the calculation of the critical diameter of the piston rods was beyond the capacity of all but the most qualified specialists in buckling failure, and perhaps even them. His Honour concluded that, although Timelink had its own design engineer, it was entitled to rely on the accuracy of the expert advice of Major about technical aspects of the proposed hydraulic system.
The trial judge rejected term (a), because he did not consider that Major had assumed a general responsibility to ensure that the cylinders would cope with whatever forces might be imposed during ocean racing; and term (e), because he concluded that Mr Jones was not given, and did not see, the relevant Parker catalogue. He held that it was unnecessary to deal with term (d), as it had not been breached.
His Honour held that the contract contained terms (b) and (c).
His Honour concluded:
I therefore conclude that the agreement between Timelink and Major contained a term that the hydraulic cylinders including the pistons would, in operation, have a capacity to withstand a compression force of 262 kN. I accept the term pleaded in paragraph 4(b) of the statement of claim.
For similar reasons I accept suggested term (c).[6]
[6]Ibid [46]-[47].
His Honour’s reasons for the acceptance of terms (b) and (c) were as follows:
Term (b) depends upon the requirement of Timelink that the cylinders be capable of withstanding a compressive [sic] force of 262 kN. Major Engineering recommended to Timelink’s design consultant that Parker cylinders would be appropriate and provided him with material from the manufacturer which suggested that the piston rods should have a two inch diameter. Mr Jones made known to Major Engineering his requirement as to the capacity of the cylinders to withstand a certain force. The email of 4 June gives this requirement as a total of 44,500 kg in compression. This translates to 218 kN for each cylinder. The higher figure of 262 kN is derived from the capacity of the cylinder to withstand 3,000 psi which Mr Jones required.
It is apparent from my summary of the dealings between the parties that both the maximum pressure within the cylinder and the maximum working load to be imposed on the rod were discussed. In the abstract, the two are not related because there are many factors which might bear upon the thrust which is produced by a piston in a cylinder subjected to a pressure of 3000 psi. In the present case, however, these factors, or possibly the more significant factors,[7] were known to the two men. For practical purposes, Mr Petty knew that the five inch cylinder at 3000 psi would generate a thrust of 262 kN through the piston so that, in operation, the hydraulic cylinder assembly including the piston shaft must be capable of operating in this environment. His conduct prior to the delivery of the Major Engineering quotation and its acceptance shows that he accepted that this was so and, further, that Mr Jones understood this and that he relied upon it.
I was for a little while troubled by the thought that, properly construed, the email of 4 June, which is on any view a very significant document, fixed the performance capacity of the cylinders in compression at only 218 kN. On reflection, I think this is not correct. The subsequent conversations make this clear. Furthermore, Major Engineering, both at this time and on 5 January immediately after the incident and, indeed, at trial, appeared to accept that, if there was a performance specification, it was by reference to a 262 kN working load.[8]
[7]Mention in evidence was also made of the impact of friction in the bearings and of the impact of an off-centre valve in this cylinder, but these were not said to be significant.
[8]Timelink Pacific Pty Ltd v Major Engineering Pty Ltd [2006] VSC 288 (Unreported, Byrne J, 4 August 2006) [44]-[46].
At trial, the judge heard all issues, other than quantum, over 10 hearing days. Nine witnesses were called and cross-examined. Timelink called three factual witnesses (Messrs Wharrington, Taylor and Oxley), one factual/expert witness (Mr Jones) and two expert witnesses (Professor Joubert and Dr Keays). Major called one factual witness (Mr Petty) and two expert witnesses (Mr Raymond and Dr Baigent).
Theoretical Analyses
Timelink submitted that the cylinders did not have a working capacity of 262 kN in operation. Both parties adduced expert evidence on that question, based on both theoretical analyses and practical tests.
The expert witnesses agreed that the compression force which would cause a column to fail could be calculated by the ‘Eulers’ formula, and the more complex case of a stepped column or extended cylinder with two overlapping non-rigid parts (such as the cylinders) could be calculated by reference to the ‘Roark’ formula.
There were five theoretical analyses in evidence. They produced a range of results.
Timelink’s expert witnesses, Professor Joubert and Dr Keays, each performed two analyses which produced a total of four different theoretically calculated failure loads for the cylinders.
Major’s expert witness, Dr Baigent, performed a single theoretical analysis which produced one theoretically calculated failure load.
First, Professor Joubert, in his independent analysis (‘Professor Joubert’s independent analysis’) applied the Roark formula to the cylinders extended to 2,171 mm (as they would be when the keel canted 19.5° to port). That produced a critical failure point of 194 kN under a compression load. Professor Joubert conceded, however, that his calculation was not precise and that if he had used more accurate cylinder dimensions, the failure load would have been greater.
Secondly, Professor Joubert adopted a calculation (‘Professor Joubert’s Brown analysis’) made by his colleague, Dr Brown, to produce a more sophisticated theoretical estimation of the critical failure point for the cylinders of 260 kN at full extension. Dr Brown did not give evidence. Professor Joubert, while adopting Dr Brown’s calculation, maintained that it should be reduced, due to the connection between the cylinder and the shaft.[9] He did not indicate the extent of the required reduction. Because Dr Brown’s calculation was based on the cylinders at full extension (their weakest position), when adjusted by 8% for racing extension, the failure point would be about 283 kN (as counsel for Timelink conceded on the remittal hearing) or, as the appellant submitted, more accurately, 281.5 kN.
[9]Ibid [59].
Thirdly, Dr Keays calculated a critical failure point of 236 kN at full extension[10] by applying the US standard ANSI (NFPA) formula T 3.6.37-199 (‘Dr Keays’ ANSI analysis’). When adjusted for racing extension, the failure point on that analysis would be 233 kN.
[10]Ibid [62].
Fourthly, Dr Keays used a computer program called ‘Strand’, which had been devised by one of his students, to make a further calculation (‘Dr Keays’ Strand analysis’). That produced a different result, being a critical failure load of 195 kN (with 3.2mm initial crookedness) or 233 kN (with 0.8mm initial crookedness) at 17° (ie: racing extension at which the cylinders failed).[11] In his first report, in order to adjust for yielding and crookedness, Dr Keays reduced the maximum buckling load at racing extension to 194 kN, but in his second report, he accepted Dr Baigent’s criticism that his figure for crookedness was inappropriate.
[11]Timelink Pacific Pty Ltd v Major Engineering Pty Ltd (No. 2) [2008] VSC 43 (Unreported, Byrne J, 22 February 2008) [4].
Fifthly, Dr Baigent, Major’s expert witness, used a table of values calculated by Young and Budynas from Roark’s work to calculate a critical failure force on the basis of three different variations of the ratio of the incremental inertia between the thicker and thinner parts of the calculus. Dr Baigent produced an asymmetric curve and determined from it the critical failure force for a calculus with the ratio for the actual cylinders in question. That produced an estimated critical failure point for the cylinders of 320 kN at full extension, (‘Dr Baigent’s analysis’).[12] When adjusted to allow for racing extension, the failure point would be 345.6 kN. Professor Joubert and Dr Keays criticised Dr Baigent’s approach. They considered that his calculation for the ratio of infinity was erroneous.
[12]Timelink Pacific Pty Ltd v Major Engineering Pty Ltd [2006] VSC 288 (Unreported, Byrne J, 4 August 2006) [60].
In the first judgment, the trial judge expressly rejected some of the theoretical calculations.
He rejected Dr Baigent’s analysis, on the basis that the criticisms of Professor Joubert and Dr Keays were justified.
He rejected Professor Joubert’s independent estimate, as the witness himself had conceded its imprecision.
That left Professor Joubert’s Brown analysis of 260.6 kN, Dr Keays’ ANSI analysis of 236 kN, and Dr Keays’ Strand analysis of 233 kN at full extension. At race extension, those figures were 281.6 kN, 255 kN and 233 kN respectively.
His Honour observed: ‘it is not easy for me to evaluate these various theoretical analyses depending as they do upon complicated and technical concepts and difficult mathematics’.[13]
[13]Ibid [64].
However, on one reading, in the first judgment his Honour accepted Professor Joubert’s Brown analysis and Dr Keays’ ANSI and Strand analyses, although observing that all were likely to be too high, because they were based on fixed connections and he assumed that the ANSI-based calculation had an inbuilt safety factor. His Honour observed that the calculations varied from 281 kN to a figure of less than 260 kN.
His Honour stated ‘I conclude that, on this basis, the critical failure point of the cylinders would be no higher than 230 kN’.[14]
[14]Ibid [64].
The Practical Tests
His Honour then considered the practical tests of the capacity of the cylinders performed by Major, under the direction of Dr Baigent, on a replica cylinder built to the same specifications as the failed cylinders.
The first practical test was performed on 11 October 2005. Pressure was applied to the replica cylinder increasing to 3000 psi (262 kN) at full extension, which was its weakest state, yet it did reach buckling point at 262 kN. The test was not continued to the point of failure. The second practical test was performed on 21 June 2006 on the replica cylinder, this time at both a full extension and at the racing extension of 17°, at which it had failed at sea. The test cylinder did not buckle at racing extension (at which it is able to withstand more force than at full extension) until a compression force of 325 kN was applied. It did not buckle at full extension until a force of 299 kN was applied.
Dr Baigent concluded from the second practical test that the buckling load of the cylinders was 325 kN.
The trial judge accepted that Dr Baigent concluded from the second practical test that the cylinder had a buckling load at full extension of 309 kN (as the load of 325 kN ought to be reduced by 8% to take into account the increased length of the cylinder at full extension).[15]
[15]Ibid [74].
In the first judgment, the learned trial judge rejected many criticisms of the practical tests advanced by Timelink.[16] They related to the connection to, and age of the spherical bearings, the presence of lateral force, the lack of a Southwell plot of deflection against load and non-conformity with AS 4100 – 1998 Steel Structures. However, the judge accepted that the following two criticisms (made by Professor Joubert) might have greater force:
(a)the set up of the test rig and application of compressive forces lacked the constant and often violent movement of the vessel as it travelled through the waves; and
(b)the compressive forces imposed on the cylinders in operation were not constant or constantly increasing, as in the practical test. In operation, the changing forces acting on the keel were transmitted to the cylinders as impulse (sudden) loads. (The learned trial judge added that such differential forces were noted and recorded on the yacht some time after the incident, and were not observed to be great.) [17]
[16]Ibid [75]-[81].
[17]Ibid [82].
The trial judge stated that he had no way of knowing whether those criticisms would invalidate the reported results and he preferred to bear them in mind when he came to compare the test results with the theoretical analyses and other relevant evidence.[18]
[18]Ibid [83].
The Safety Factor
His Honour then appeared to hold that pursuant to the contract, the pistons in operation must have a capacity to withstand not only a compression force of 262 kN, but must also include an extra allowance for a safety factor.
His Honour found that Mr Jones had formed a view of the ‘worst case scenario’ for the conditions in which the keel would operate. Mr Jones assessed the worst case working compressive load to be 218 kN and had added to it, ultimately specifying a compressive working load of 262 kN.
His Honour observed that although the working compression load was 262 kN, it was ‘generally accepted’ that a working load and a critical failure load were not the same, because a column was not expected to work at its ultimate point of failure. The difference between the two points was referred to as a safety factor to cope with the uncertainties of operation. It was expressed as a ratio of one measurement to another (for example, buckling load to maximum calculated load).
The factor of safety depended on the circumstances, including ‘the confidence in the estimated maximum working load, the reliability of the structure and the consequences of failure.’ The safety factor was, his Honour found, ‘a matter for the designer’s judgement rather than a mathematical ratio’.[19]
[19]Ibid [69]
His Honour considered that, in the present case, the designer would estimate the worst possible circumstances in which the keel would operate, and the supplier would add its own safety factor to the worst case scenario.
His Honour observed that there were various figures for the appropriate safety factor. They were as follows:
5
Parker
4
Professor Joubert
not less than 2
ABS Guide
2 for an unconventional structure; or
1.67 if a dead load
Dr Keays
1.25
Dr Baigent
Evidence of Mr Jones on worst case scenario and safety factors
In cross-examination, Mr Jones said that although the ABS Guide dealt expressly only with fixed keels and did not refer to canting keels, he had regard to it in designing the yacht, including the keel.
Mr Jones testified that conformity with the ABS Guide was a ‘bureaucratic’ requirement for entering, for example, the Sydney to Hobart Yacht Race. He complied by doing ‘everything specified in the book’ and then, if dealing with a novel feature, he complied with the relevant rules. Nevertheless, Mr Jones did not consider that a canting keel was a novel feature.
Mr Jones testified that his calculation of 44,500 kg, if converted into kiloNewtons, produced 436 kN for both cylinders, and divided by two to give the load for each cylinder, it produced a 218 kN push force and a 188.2 kN pull force.
Mr Jones said that the static load meant ‘if the thing is just simply sitting there it would be the steady load under those conditions.’
Mr Jones had required ‘the components to be good for 3000 psi’ by which –
I was merely telling [Mr Petty] in these particular conditions what the loads were under those conditions. In other words, although I was saying I wanted the cylinders capable of 3000 psi, these were in fact the maximum static forces that the cylinder would be expected to have to deal with.
He agreed that this meant that ‘the load could not exceed 262 kN with 3000 psi’.
In cross-examination, the following exchange occurred:
Can you tell me what safety factor you incorporated into the design of the keel?
It depends on what aspect of the keel that one is talking about.
Mr Jones then explained that the calculation of ‘the grounding moment’ did not relate to safety factors. He continued:
What I have to do in order to work out what happens in the boat is take the operating conditions in the boat and do separate mathematics in the operating conditions, in other words with the boat sailing along through the water under different conditions and consider different wave patterns and so on, and I have to then calculate what is the maximum moment on the keel … because it is the moment on the keel that transmits the forces on to the cylinders or on to other parts of the structure and that moment has several main components.
Mr Jones explained that these were:
(1)The static component (which related to the angle of the keel in relation to the vertical in relation to the earth).
(2)Buoyancy forces.
(3)The fin going through the water creating a lift and a side force and the boat coming off a wave more vertically.
(4)The dynamic loading, applied as a factor to the static loading of the keel at such an angle.
Mr Jones stated:
Then you calculate the total loading by adding those four things together, some of them are positive and some of them are negative and you get a total figure.
Mr Jones testified that, in his experience, the total was less than ‘the statistic (static) and when the boat’s out at an angle’ and ‘the calculation for ABS turns out to be bigger by a substantial margin than the sum of the other four items, it is therefore … why, I believe ABS is generally the requirement because it is simply the worst case and you consider that.’
He stated that the forces other than the static load were difficult to calculate – for example, the side force on the keel due to the water could be calculated by computer programs ‘but they are the things that determine part of the loading.’
As such, in Mr Jones’ opinion, ‘the ABS calculation is the more difficult one to meet’ and he only made the other relevant calculations after he had sent the critical email on 4 June 2002.
The following exchange occurred in cross-examination:
Is the safety factor included in what you describe as these maximum static forces – Yes.
What is that safety factor. The safety factor would be such that I would not be exceeding the yield stresses which are required under ABS …
The trial judge questioned Mr Jones as follows:
What figure did you arrive at when you brought into account all these dynamic forces. Well, it obviously depends on which particular regime you are talking about at the time.
HIS HONOUR: You made a calculation you said on a worst case scenario – on a worst case scenario my recollection is that I would have probably not [have] found a case where the combined loading was more than say 70 per cent of the loading provided for by ABS.
So that’s a safety factor, if you adopt the ABS of what, 50 per cent – 30 per cent, is it – Yes.
130 I mean.
Mr Jones reiterated that the total load (taking into account the dynamic impulse loads etc), was ‘never more than the static load as calculated by ABS, that’s what I’m saying and therefore the ABS calculation is a worst case, …’.
Immediately after the incident on 28 December 2004, Mr Jones sent Mr Petty an email which stated, inter alia, ‘The pressure impulse caused when the boat fell off the wave must have been large compared with the design pressure which was, as I recall, about 3000 psi.’ When questioned by the trial judge, Mr Jones testified that he did not now consider that the force on the cylinders had exceeded 262 kN but that at the time of sending the email, he had ‘no reason at that stage to suspect the cylinder rods …’.
The following exchange occurred between the trial judge and Mr Jones:
HIS HONOUR: Can I ask a question before re-examination. You’ve said, I think on a number of occasions, just baldly stated, that the forces that were imposed upon this vessel at the time it slid off the wave and suffered the incident we have heard so much about, could not have exceeded 262 kN on the head of the keel?---On the cylinders, yes.
MR JONES: Yes?---Yes.
HIS HONOUR: An thereby compression into the cylinders?---Yes.
HIS HONOUR: Given the fact you weren’t there, given the fact that they are very complex activities and forces operating on the vessel at the time, why do you say that?
MR JONES: ---Well the calculations led me to believe that.
HIS HONOUR: Which calculations?
Mr Jones replied that he had calculated four sets of forces, some negative and some positive, but had never calculated forces in normal sailing conditions which were greater than about 70% of the ABS calculation.
When again asked why he asserted that the forces operating on the yacht when it slid off the wave could not have exceeded 262 kN, Mr Jones replied that although there could be very high slamming loads and very big accelerations up in the bow area, ‘in the middle of the boat – and the keel is obviously fairly close to the centre of gravity … the accelerations are not that great at all … ‘
His Honour put to Mr Jones the evidence of Professor Joubert (in his third report) that, when designing a keel, the ABS Guide should be used to work out the various forces and a factor of safety should then be applied on top of that. (emphasis added). Mr Jones stated ‘I don’t agree with that’.
Mr Jones explained that Professor Joubert was mistakenly treating the ABS Guide as if it were the design or working load of the boat ‘which it simply isn’t’. Mr Jones said that the ABS Guide was merely a hurdle to be got over in order to enter the race.
Mr Jones stated that he had made ‘lots of calculations’ of the forces which would be operating on the cylinders, but no longer had them and there would be no way of checking whether his conclusion was right or wrong, other than for a measurement of the actual pressures on the cylinders in the ocean.
When the trial judge questioned Mr Jones about his retention of engineering computations, Mr Jones reiterated ‘I cannot produce those.’ His Honour asked ‘what you are really saying to [counsel] and ultimately to me, well, you did the work, ‘The figures were right, trust me’? Mr Jones responded ‘That is what I am saying, yes’.
The trial judge then questioned further Mr Jones about safety factors.
Mr Jones testified that he calculated a pressure of 3000 psi (which was a bit more than 44,500 kg) and was a small addition over and above the ABS Guide loading.
He could not recall the figure he calculated for the kiloNewtons operating on the head of the keel, but reiterated that his calculation of forces, including dynamic forces, were less than the ABS Guide loading. His figure of 262 kN had a safety factor built in, over and above his ‘worst case’ calculation which was the transverse load case assessed on the basis of the ABS Guide.
Mr Jones testified that ‘I only apply that factor of safety calculation to the loads associated with the weights, in other words to the – taking the column and ballast weight and the other thing – and working out what the load and what the moment on that is and then I multiply that by a factor to allow for dynamic loads.’
Mr Jones, nevertheless testified that when he specified 262 kN to Mr Petty, he would have expected him to add a substantial margin between operation and ultimate failure.
That accorded with his witness statement, in which Mr Jones stated that he -
provided Major … with details of the maximum static loads for push and pull forces which I required the cylinders to accommodate, including a potential working capacity in compression of 262 ie … obviously there would need to be an appropriate safety factor or reserve which would have to be built into the cylinders. I provided details of the working loads on the cylinders. It was up to the manufacturer and supplier to ensure an appropriate factor of safety to meet the designated working loads.
Professor Joubert
Professor Joubert prepared three reports. In his first report, he recognised that the cylinders initially worked satisfactorily for quite some time and the yacht completed the 2003 race without keel problems, but in the 2004 race ‘some quite severe weather was experienced and a particular pounding may have imposed a peak load sufficient to cause a buckling failure. The piston rod and cylinder had no safety margin.’
In his first report, Professor Joubert calculated the steady load on a single piston due to the bulb and keel weight at 17° as 16.73 tonnes (equivalent to 164 kN). That was based on his acceptance of Dr Brown’s calculation. Professor Joubert also stated that:
As the failing load on the pistons is about 26 tonnes then it is clear that normal sailing will not produce such loads. The extra momentary load of about 10 tonnes per piston must have been created by the slamming.
The loads due to slamming are difficult to estimate and equally difficult to measure.
Nevertheless it is my opinion that slamming could produce the kind of extra loading required to reach the failing load of about 26 tonnes per piston.
Professor Joubert further stated:
The compressive force on the piston at the time of failure was calculated to be 260.6 kN. The steady load … was 164 kN. The extra load was caused by slamming.
In my opinion the prior successful operation of the hydraulic system occurred because:
The piston rods were not extended as far when the keel was canted to only 14%. The shorter length of exposed piston increased the buckling load.
The yacht did not suffer from suddenly imposed pounding loads to the same extent as occurred in the 2004 Sydney-Hobart race.
Professor Joubert stated that there was a gale during the 2004 race, but gales were often experienced and not especially dangerous. Pounding of yachts was also a regular experience.
While in his first report Professor Joubert assumed that the failure point of the pistons was about 26 tonnes or about 260.6 kN (based on the correctness of Dr Brown’s calculation), he nevertheless acknowledged that ‘it is usual for a vital component of a swing keel to have a substantial safety margin’. He referred to and appeared to enclose a relevant authority, Timoshenko, who held that ‘in the case of suddenly applied or variable loads – a large factor of safety (larger than 2) becomes necessary’.
Professor Joubert estimated the steady working compressing force (highest steady force) on the cylinders when the keel was horizontal at 24.97 tonnes (c/f Mr Jones’ requested 26.7 tonnes), but he noted that when sailing (as distinct from when the yacht was horizontal in the transverse load case), the loads in the pistons from the weight of the bulb and the keel would be reduced, and even further reduced by buoyancy forces to 164 kN.
Given that pistons failed (and Professor Joubert assumed that their failure point was 260 kN, as Dr Brown estimated) he attributed the extra loading which caused the failure to be due to slamming.
In contrast to Mr Jones, Professor Joubert considered a canting keel to be a novel feature. He stated ‘you’ve got to be careful with your safety factors on new designs’ and noted that the ABS Guide assumed that the yacht was on its side to establish loadings for design features supporting the ballast keel. However, it made no allowance for slamming or impulse loads.
Professor Joubert stated that he would not rely simply on the ABS Guide in designing a racing yacht. He considered that the ABS Guide was too weak in relation to the safety factor. He recollected incidents in which ABS Guide compliant keels had not withstood ‘a black night, in a strong gale … in big seas, not enormous, not mountainous, just big seas …’.
In cross-examination, Professor Joubert stated that he would design a canting keel for a racing yacht thus:
ABS have got some good grounding rules, I would certainly follow that and I would make it a bit stronger like in a knock down case.
Professor Joubert initially testified that he would add a safety factor of two, because ‘I don’t want to drown, that’s why’. Professor Joubert then revised the safety factor up to four. He stated that although two was normal for steel work, extra attention to the safety factor was necessary when dealing with a novel item like a canting keel. While two was a reasonable safety factor in normal conditions, Professor Joubert stated:
In the case of a yacht where you have suddenly imposed loads which have a much more severe effect on a structure than one that’s built up in little bits and where you may have side loads, then you’ve got to have a reasonable safety factor. Many of these things are difficult to estimate. You keep talking about slamming, well, there’s a can of worms for you. If you are up in the bow of the boat you get a big deceleration. If you are halfway back down the boat, nothing like what you get on the bow.
In his second report (responsive to Dr Baigent’s practical experiments), Professor Joubert was critical of Dr Baigent’s safety factor, of which he considered inadequate, as a factor of 2 was the minimum for experimental designs. He stated:
Even with a factor of 2, in my opinion, this is too low as it makes no allowance for yachting conditions. As noted in my final report … Timoshenko suggested a factor of 3.5.
Professor Joubert explained that:
On the ocean in wave the steady loading may well be below the design load … but as the yacht goes over the wave, every so often it pounds (slams) and the loading, in a fraction of time, suffers a large increase. A suddenly applied load can have a different effect to one applied in a slowly increasing manner especially when there are side forces as well as longitudinally compression force imposed by the pounding.
Professor Joubert concluded that the factor of safety is obtained by multiplying such factors together.
As to slamming loads, Professor Joubert stated that:
…a slamming load, including lateral forces (side loads), increased the tendency for the cylinder to bend and lowered the buckling load dramatically.
In cross-examination, the following exchange occurred:
Professor Joubert, do you remember this morning we were talking about safety factor of four – Yes
And we arrived at that figure of 981 kN – Yes
That was on a worst case scenario – You can always think of something that’s even worse than the one you’ve thought about but ---
When asked if he would accept 750 kN as ‘the sort of force to be taken into account’, Professor Joubert stated that he would ‘go back and look at the loading from some of the experimental things that one has done at the university and work out what sort of result …’
Professor Joubert was asked: ‘When you are addressing this safety factor, it’s not what’s known that is the problem, it’s the risk of the unknown and that’s why you come up with the four, so it’s these very sort of impacts that you are going to have to take into account, are they not?’ Professor Joubert stated ‘Yes, they are part of the problem, part of it.’
As to large waves, Professor Joubert said that it was not the size of the wave that mattered, but its shape which determined the impact load.
Professor Joubert was asked about Mr Raymond’s report, which envisaged the yacht falling 2.4 metres at 3 G forces. When asked if that were a realistic scenario, he replied ‘Sounds a bit high to me but from all the work I’ve done – I’ve written about four or five papers on loads on yacht hulls and slamming; it’s a difficult subject. It’s not simple.’
As to the sea conditions on the day of the incident (which he had seen on video) Professor Joubert stated: ‘I didn’t think it was anything to worry about. Its just a normal – it might have been a gale. The motor boat that came out to rescue them was having no trouble at all in handling the seas.’
Professor Joubert did not consider that Mr Jones could be criticised for failing to include an allowance for impulse loads in his design process. In his third report he stated that instead:
the allowance for extra loads such as:
(i) impulse loads;
(ii) side loads;
(iii) imperfections in materials and manufacture,
are allowed for by the safety factor applied AFTER the steady load.[20]
[20]Emphasis in original.
In his oral testimony, Professor Joubert reiterated that ‘the request for a working compressive force of 262 kN by Mr Jones in the circumstances ‘was perfectly reasonable in line with the common practice of naval architects as ‘an adequate working force for the operation of the cylinders’. Professor Joubert made clear that this did not mean that he thought 262 kN was the maximum force that could be encountered by the cylinders in the yacht in ordinary racing conditions, because, as the following exchange reveals, he expected the safety factor to be added to it:
When you add safety factor considerations, when are they taken into consideration? – afterwards.
You mean by the manufacturer of the cylinder, is that what you are getting at – Well that’s what one expects, or what I would expect, anyhow.
Dr Keays
In the first report, Dr Keays dealt with the ABS Guide for designing a yacht keel and associated fixtures and fittings which provided ‘an indication of the magnitude of loads’ for racing yachts.
Dr Keays explained that the ABS Guide required, relevantly, a transverse load for the design of the keel and its attachments to the hull. The transverse load was based on the yacht lying flat in the water with the keel out of the water.
Dr Keays calculated that in the present case, when the cylinder rod was fully extended, the compression force would be 220 kN. He determined a buckling point of 240 kN at the racing cant of 17°, but said that the effects of yielding and crookedness would produce a lower failure load.
He acknowledged that there was also transient dynamic force on the keel which, according to his ‘rough analysis’, was similar to that of the design load. He did not, however, present the ‘rough analysis’ and the trial judge held that because it could not be tested, that evidence should not be accepted.
Further, Dr Keays ultimately considered that it was necessary to add to the design load ‘an associated safety factor’, which reflected ‘the consequences of a failure and the confidence the code writers have in the calculation process leading to the design load or material capacity.’
In cross-examination, Dr Keays did not dispute Professor Joubert’s assertion that the ABS Guide was too weak. Rather, he stated ‘I can’t form an opinion as to that because my expertise on this is not as wide as his and it’s certainly not – in the matter of yacht design for dynamic loads.’ Dr Keays asserted that he had used the safety factor of two in the ABS Guide as a reference. He stated:
You must calculate the load in accordance with the ABS Guide which says that the yacht on its side, then you calculate from that action what the loads are on the various components and if you use the ABS Guide, it suggests that everything should be designed with a safety factor of two.
Dr Keays ultimately did not, in terms, disagree with Professor Joubert’s safety factor of four. He stated that when designing an unusual structure, he would use the ABS Guide as one reference, then employ other references to suggest a safety factor. He concluded ‘I may well come up with say, let’s work to 2½, three, four’ and would then do a further analysis.
Dr Keays acknowledged that his calculation of the transverse load case of 222 kN, based on the ABS Guide, did not include any impulse loads. It was simply the design load calculated from the ABS Guide.
In relation to the maximum static load requested by Mr Jones in the email of 4 July 2002, Dr Keays said a ‘static load’ was ambiguous – it could mean either an actual load or an equivalent static load to a dynamic situation, depending on context – but in the particular context of the email, Dr Keays stated that it referred to ‘a design load and I would be looking up design charts’.
Dr Keays was questioned in cross-examination as follows:
You respond by saying “By my simple estimate the design working force in the piston rods would be about 220 kN. I consider the requirement of 262 kN working load as reasonable. This design load is the once in a lifetime load and could be expected in ocean racing in Bass Strait” … do you mean “once in a lifetime load” as being inclusive of safety factor – No.
So the safety factor is on top – of the once in a lifetime load.
Yes. For instance, if your once in a lifetime load happened the first day that you took the car out of the garage you would break your rear axle … and if it happens once in a lifetime it could happen in the first five minutes or the last five minutes of a lifetime.
Dr Keays opined that, by the reported state of the sea ‘the race conditions were not extraordinary … The sea state, there were waves there but I hadn’t any evidence to suggest that they were extreme or extraordinary’.
Dr Baigent
Dr Baigent prepared two reports. In his first report, Dr Baigent reported on the first practical test. He concluded that the critical buckling load of the cylinders was well in excess of the maximum static load specified by Mr Jones, based on both his theoretical analysis and the experiment.
In the supplementary report, Dr Baigent reported on the second test.
He also referred to the ABS Guide, which did not consider canting keels, but indicated that a designer should independently research the peculiarities of novel features. For the keel connection case, the ABS Guide had a safety factor of two. (That meant that the keel connection must be capable of supporting a load which was twice that of the weight at the keel bulb). Dr Baigent said that for the transverse load (the weight of the keel acting at its centre of gravity) when the yacht was on its side, there was an inherent factor of safety of 1.5.
Dr Baigent concluded that the cylinder forces calculated by Mr Jones:
…are similar to the transverse loading on the keel, described in the ABS Guide … . However the loads do not have any factors of safety applied to them … . It is my opinion that the ABS Guide requires the keel attachment which in this case is the hydraulic cylinders (and the keel pin), to have a load factor of 2. That would mean, that for design purposes, the pair of cylinders would need to support a total load of 89006 kg compression and 76706 kg tension.
Dr Baigent added:
It is apparent that Mr Jones has not taken into account any impulse loads in his calculations.
Dr Baigent considered that Mr Jones made no concession for the fact that the load applied to the cylinders at the time of failure could have been significantly greater than 262 kN by reason of impulse loading. He stated:
It is my opinion that the impulse loading is precisely the reason why the cylinder rods failed. Furthermore, it is my opinion that the impulse loading applied loads that were significantly greater than those calculated by Mr Jones.
Dr Baigent considered that the transverse loading case envisaged in the ABS Guide could be applied to a canting keel, but the yacht designer should take into account an appropriate factor of safety.
Dr Baigent disputed Dr Keays’ calculation that (on the basis that impulse loads are equivalent to 1 G only), the maximum load in the cylinder when the yacht crashed off the wave was about 220 kN. Dr Baigent thought that loads in excess of 2 G should be considered, due to the non-conventional canting keel.
Dr Baigent stated that he agreed with Professor Joubert that quite severe weather may have produced a peak load, which caused the failure of the cylinders. He also agreed with Professor Joubert that the canting keel and its connections should have a substantial safety factor, such as the 3.5 endorsed by Timoshenko.
Dr Baigent agreed with Professor Joubert that loads imposed by normal sailing conditions would not cause the failure of the cylinders and what had caused them was impulse loads, resulting in a significantly higher loading than that calculated by Mr Jones.
Whilst Professor Joubert assumed a failure point of 260.6 kN, Dr Baigent believed it to be 325 kN (331 tonne), but he concluded:
I do agree with Professor Joubert that other events could produce extra loading. In particular I believe that the impulse load on the keel resulting from the yacht falling off a wave would produce significant extra loading.
Dr Baigent stated that it was inevitable that the yacht would be subject to impulse loadings and the designer should have taken account of the increased loadings in the design.
Dr Baigent stated that the cylinders could only have buckled had loads of at least the magnitude of 325 kN been applied.
He concluded:
It is my opinion that there was a fundamental failure to adequately determine all of the force that would be applied to the canting mechanism … Mr Jones failed to consider that the keel and the canting mechanism could be subjected to significant impulse loading … . It would appear that impulse forces of at least 3 G should have been considered in the design of the canting mechanism.
Dr Baigent testified that if the [design] load was 262 kN and the collapsed load was 325 kN, the yacht designer would have to assess whether there was an adequate safety factor. In cross-examination, he confirmed that the static working load was not the failure point but the worst calculated loading condition, to which a safety factor was added ‘on top’ as a margin, before any failure would occur.
Dr Baigent conceded that he had not studied the effect of slamming forces on yachts or the impulse loads to which the keel might have been subject. He agreed that the ABS Guide did not specifically require allowance for impulse loads due to slamming.
Dr Baigent identified the load case of 44,500 kilograms as ‘purely a static equivalent load of the weight of the keel bulb and the weight of the keel post’.
Dr Baigent understood ‘maximum static load’ to mean the maximum working load. He explained that it was the worst loading condition calculated, to which, however, a safety factor ‘on top’ would be added to reach failure point. He gave his evidence on the basis that there must always be an appropriate safety factor added to the maximum static load specified.
Dr Baigent stated that the buckling load and the failure load were the same. He testified that he could not directly answer what safety factor should be incorporated, as that depended ‘on the certainty of the working load which has been specified’. He considered that a 20% safety factor should have been added to a specified load of 262 kN to produce a cylinder with a capacity of 314 kN.
Mr Raymond
In his report, Mr Raymond stated that the static forces likely to occur during a ‘knockdown’ (that is, the transverse load case) are simply the beginning of the design process. To those forces must be added ‘the acceleration and deceleration loads likely to occur in bad weather’.
Mr Raymond further stated:
There is nothing in any of Mr Jones’ calculations to indicate that he took any dynamic loads into account.
Mr Raymond also observed that ‘Mr Jones did not specify what factor of safety he required … Nor does he give any indication of what dynamic loads might be encountered in ocean racing conditions’. Mr Raymond concluded that:
[Major] would be entitled to assume that the total loads quoted by Mr Jones were the maximum he expected to see in operation. We assume that loadings in excess of the static loads were not discussed and quantified.
Mr Raymond concluded that the buckling of the rods must have been due to the fall off the abnormal wave.
In cross-examination, Mr Raymond made clear that he did not mean a wave like a tsunami, but rather, an abnormal wave caused by major geographical events far away.
Mr Raymond stated that when a working load was specified, an adequate safety margin should also be specified. He did not view the buckling load and the working load of the cylinders as the same thing. His evidence was that safety margins varied and were added on to the specified working load. The safety factor was ‘a factor of ignorance’. In Mr Raymond’s view, the figure of 44,500 kilograms was not the worst case load for the cylinders. Rather, it was the case that only occurred in static conditions where there was no momentum or differential momentum between the yacht and the keel bulb. He stated: ‘So in a perfectly still situation, that is the load case’. In contrast, if the yacht moved relative to the keel bulb, the loads in the cylinder would increase, perhaps ‘as much as 3 G over the static case of the yacht lying on its side’.
Thus, Mr Raymond considered that if the forces were about 164 kN ‘purely in the static situation, with the ‘fluctuations in momentum between the two, you could in fact multiply that by three … in a large slamming situation where we get significant differentiation in the change in momentum you would get forces of 3 G applying’.
Judge’s conclusions on critical failure point – first judgment
His Honour concluded:
If it were necessary for me to reach a conclusion as to the critical failure point of the cylinders which Major Engineering ought to have provided under the contract, it would be arrived by the application of a factor of safety of not less than 2. This means that the cylinders in question should have had a critical failure load of not less that 524 kN or greater. The breach has been established.[21]
[21]Ibid [88].
The trial judge, in the first judgment, preferred Mr Jones’ evidence to that of Mr Petty in relation to a specific issue (his receipt of the Parker catalogue). He expressed serious reservations, however, about Mr Jones’ evidence of his calculations in 2002 of the actual forces he expected to be applied in the ocean to the keel.
He found Mr Jones evidence that he made ‘lots of calculations’ unconvincing. He observed that Mr Jones no longer retained the calculations in accordance with normal engineering practice, so that Major was denied the chance to check them.
His Honour stated:
I make now some general observations upon the reliability of these two principal witnesses. … Mr Jones … was forthright, confident and intelligent but with a tendency to arrogance.[22] There were, however, a number of matters that caused me to approach his evidence with some caution. I have already referred to his evidence of the calculations made by him in 2002 of the actual forces which he expected to be applied to the keel. His evidence that he made "lots of calculations", I found unconvincing. He said that he no longer had these calculations and he has made no attempt to identify them or to replicate them. In this way he denied to Major Engineering the chance to check his calculations. When directed by Court order to produce them, he produced only an ABS Guide calculation, which calls into question his evidence that me made "lots of calculations". My criticism of him or his working methods goes further. It is apparent that his initial calculation in terms of the ABS Guide contained errors of detail. Moreover, in any event, it is normal for an engineer to prepare and preserve the calculations which underlie the structure which has been designed. These are to permit another to undertake a check calculation and to expose the theoretical basis for the structure in case further or remedial work is required. Even accepting that Mr Jones is retired from his profession and that the Skandia project may not have been undertaken with the formality of a professional retainer, it is surprising that there is no set of design calculations in existence. All we have is a notebook which he referred to, perhaps accurately, as a "scrap book". All of this suggests that this project was handled by him with a degree of informality which is not consistent with the image of the careful and cautious design engineer which he sought to present. [23]
[22]By way of example I mention his reference in his calculation provided to the Court to a principle as being "school boy physics".
[23]Timelink Pacific Pty Ltd v Major Engineering Pty Ltd [2006] VSC 288 (Unreported, Byrne J, 4 August 2006) [40].
Nevertheless, his Honour accepted Mr Jones’ calculation of the worst case imposed by lateral forces on a keel which is horizontal and out of water. He considered that Mr Jones had properly used the ABS Guide to calculate it. He considered that Dr Keays and Professor Joubert endorsed that use of the ABS Guide. He rejected any contrary view of Major’s expert witness, Mr Raymond, and expressly rejected Major’s submission that the ABS Guide was inadequate because it did not include a canting keel.
His Honour also concluded:
On the balance of probabilities, I accept the accuracy of Mr Jones’ assessment of the worst case scenario which the yacht might be expected to encounter in racing conditions.[24]
[24]Ibid [93].
His Honour rejected several alternative explanations for the failure of the cylinders proffered by Major, including a collision with a sun fish, an encounter with a rogue wave, and a movement of the yacht into mid-air.
His Honour concluded that there was no satisfactory explanation for the failure of the hydraulic cylinders in ‘not abnormal conditions’ of forces which were not precisely known, but for which Mr Jones’ design assessment was accepted as accurate. He observed that it had been demonstrated on a theoretical basis that the cylinders could not withstand the specified 262 kN force and their capacity was very much less than the manufacturer (Parker) recommended. The second practical test indicated that the test cylinder had a critical failure point of about 309 kN fully extended. His Honour assumed that the test was accurate, but stated that would mean that they had a safety factor very much less than any expert witness thought sufficient. He concluded that ‘it was this insufficiency which was the effective cause of the failure.’[25]
[25]Ibid [102].
His Honour stated:
I find, therefore, that Major Engineering is in breach of its contract with Timelink to provide hydraulic cylinders with the capacity to withstand a working force of 262 kN and that this breach was the cause of the failure of the cylinders and the consequent damage to the yacht. It follows from this that Major Engineering is liable in damages to Timelink. The quantum of such damages remains to be determined. [26]
[26]Ibid [103].
The first appeal
Major appealed from the first judgment. The Court of Appeal held that the trial judge erred in holding that it was an implied term of supply that the maximum designed compression force of the cylinders should incorporate a safety factor of not less than that suggested by Dr Baigent or (perhaps), at least two.[27]
[27]Major Engineering Pty Ltd v Timelink Pacific Pty Ltd [2007] VSCA 228 (Unreported, Buchanan, Nettle and Neave JJA, 16 October 2007) [56].
The Court of Appeal rejected the view that a working capacity to withstand a compression force of up to 262 kN must incorporate a reasonable safety margin or safety factor, so that if the cylinders lacked that (even if they had a buckling point of greater than 262 kN), they would not comply with the terms of the contract.[28]
[28]Ibid [57].
Nettle JA (with whom Buchanan and Neave JJA agreed) thought that the trial judge probably considered that it ‘went without saying’ that a safety factor or margin was required, but there was no explanation or proper basis for fixing, as he did,[29] on the factor of ‘more than 1.18’.
[29]Ibid [61].
Indeed, Nettle JA observed that Mr Jones had calculated 262 kN as including a worst case scenario allowing for dynamic loads (emphasis added), with the safety factor built in. Mr Jones’ evidence was that the maximum static pressure in operation would be well less than 3,000 psi, so he did not think it possible that the maximum static force could exceed 262 kN. The only safety factor Mr Jones required was one enough to ensure that the yield load and ultimate failure load sufficiently exceeded the maximum static force of 262 kN, so as to enable the cylinders to function in operating conditions of up to a worst case maximum static force of 262 kN.
Nettle JA did not think that, in his first judgment, the trial judge considered that the theoretical calculations were an accurate reflection of reality or justified much weight. Rather, in Nettle JA’s view, the trial judge was unable readily to evaluate the reliability of the theoretical analyses, and therefore turned to the practical tests conducted under the direction of Dr Baigent.
Nettle JA thought that the trial judge accepted those practical tests as accurate, or ‘not shown to be inaccurate’.[30] He took the trial judge to have accepted that the buckling point force was 309 kN, as shown in the second practical test, so that (absent the erroneous view that a safety factor must be added) he would not have found a breach of contract. Further, on the assumption that the practical tests were accurate, Nettle JA stated that the trial judge could not possibly have been satisfied on the balance of probabilities that the cylinders failed at, or at less than, 262 kN.
[30]Ibid [68].
Nettle JA observed that both of Dr Baigent’s practical tests indicated a buckling point and ultimate failure point of more than 262 kN.
Nettle JA considered that his Honour was not satisfied, on the basis of Mr Jones’ design assessment and the cylinders’ failure in not abnormal conditions, that the cylinders could not have been subjected to a static force of more than 262 kN in operation and therefore failed in operation at a static force of not more than that amount.
Rather, in Nettle JA’s view, the trial judge considered that, if it were necessary to reach a view, the cylinders failed at less than 524 kN, and that therefore, breach had been established. Nettle JA thought that the trial judge seemed to accept that the test cylinder (fully extended) had a critical failure point of 309 kN and the breach of contract was due to the insufficiency of the safety factor.
Nettle JA considered that the trial judge accepted that the cylinders may have failed at a static force in operation greater than 262 kN, but was not satisfied that it was less, or else he deliberately avoided reaching a conclusion on that question.
On Nettle JA’s analysis of the first judgment, it was unnecessary for the trial judge to decide that point, because he determined the case on the basis that, with a safety factor, the cylinder must withstand a force in operation greater than 524 kN, but had failed to do so.
Nettle JA stated:
I add, however, that if I were wrong about that, I would take leave to doubt that Mr Jones’ ‘design assessment’ may be relied upon as establishing that the static force to which the keel was subjected in operation could not have exceeded 262 kN.[31]
[31]Ibid [74].
Nettle JA doubted the reliability of Mr Jones’ assessment because he calculated it by using the ABS Guide (which incorporated a safety factor of two). The evidence of Mr Raymond, however, was that it could require more than that, because it was necessary to add ‘pulse loads’ that occur in bad weather.
Although rejected by the trial judge, Mr Raymond’s view was, Nettle JA observed, supported by the weight of expert opinion that a safety factor of two was not enough to arrive at the worst case scenario.
Nettle JA concluded that the trial judge had not reached a view as to whether the cylinders failed in operation at a static force of not more than 262 kN.
The Court of Appeal allowed the appeal. It considered that the sole issue to be remitted was whether the static force at which the cylinders failed in operation was not more than 262 kN, and, if the judge were so satisfied, judgment for Timelink would follow.
Application to vary question
In a subsequent application to the Court of Appeal, counsel for Major submitted, and the Court of Appeal appeared to accept, that the inclusion of the words ‘in operation’ in the remitted question amounted to an oblique licence to resuscitate the safety factor argument which it had rejected. Major submitted that it would be required to address ‘all sorts of dynamic loads or lateral forces’. It was concerned that the respondent would argue that in order for the cylinders to withstand a force of at least 262 kN in operating conditions, there must be a safety factor above 262 kN, although the trial judge had expressly rejected any suggestion that Major had undertaken to meet whatever forces might be imposed in ocean racing conditions.
The remitted question was amended to:
The issues of whether the static force at which the hydraulic cylinders supplied by the appellant failed at the point of failure described in paragraph 29 of the reasons for judgment of Nettle JA was not more than 262 kilonewtons, and the liability for the costs of the trial as to liability, are remitted to be determined by the trial Judge on the basis of the evidence already adduced in the trial as to liability.
The trial judge’s conclusion on remitted question
Following remission to the trial judge, his Honour, in a judgment delivered on 22 February 2008, was satisfied on the balance of probabilities that the static force at which the cylinders failed in operation was not more than 262 kN.
It is apparent that his Honour thought that the figure of 262 kN should refer to the force to be withstood when the cylinder was at its most extended (and hence weakest) and that, as it could withstand more when less extended, the question might better have been directed at the 17° cant at which the cylinders failed, in order to determine whether they could withstand 262 kN at 19° cant.
As his Honour noted, the force operating the cylinder in the ocean at the time of failure was not measured and no witness expressed an opinion on that question.
The judge interpreted the remitted question as essentially a ‘roll up’ of the questions of breach and causation.
His Honour stated that he was content with his earlier views expressed on the question of breach, but was now required to decide whether (with the safety factor removed) the cylinders failed to meet the contract specification.
Whereas Nettle JA had assumed that his Honour had dismissed the theoretical analyses and preferred the practical tests, his Honour now made clear that he had adverted to the practical tests not because he had rejected all of the theoretical analyses, but in order to consider the totality of the evidence. While, in the first judgment, his Honour rejected some criticisms of the practical tests and did not unequivocally accept any of them, he now accepted the criticism that they were not conducted in a dynamic environment comparable to that in which the cylinders failed at sea.
His Honour accepted Professor Joubert’s evidence that, when racing in the ocean, the yacht would encounter pounding and slamming at sea, and lateral and other forces, due to the movement of the hull, and the cylinders would be less able to support a compressive force such as that imposed in laboratory tests.
Causation
His Honour considered that all the technical witnesses, including those of Major, agreed that in ordinary racing conditions the force would not approach the magnitude of 325 kN, (which the cylinder had withstood in the second practical test). They considered Mr Jones’ design load of 262 kN sufficient for those conditions.
His Honour stated:
The Major Engineering technical witnesses, not surprisingly, place great reliance upon the [practical] tests and the fact that buckling did not occur in the second test until the load was 325kN had been imposed. They accepted that, as did the plaintiff’s technical witnesses, that in ordinary racing conditions, no force approaching that magnitude might be expected to be applied to the cylinders. Their view was that Mr Jones’ design load of 262kN would be sufficient for those conditions. [32]
[32]Timelink Pacific Pty Ltd v Major Engineering Pty Ltd (No. 2) [2008] VSC 43 (Unreported, Byrne J, 22 February 2008) [22].
His Honour, however, observed that because the cylinders undeniably failed in operation, the onus fell on Major to rebut the inference raised by Timelink, by providing some explanation for why cylinders (which were supposed to have a capacity to withstand a force of 262 kN or even 325 kN) had in fact failed. No credible explanation alternative to the failure of the cylinders at a force below the contractual specification was, however, advanced. That led his Honour to conclude that the practical tests overstated the capacity of the cylinders.
The appeal
The appellant, by a notice of appeal dated 7 March 2008, appealed from the second judgment.
Before us, the appellant relied on three principal arguments. First, it contended that the trial judge erred in preferring the results of some theoretical analyses to those of the practical tests and erred by averaging some of the results of the theoretical analyses. Secondly, it contended that the trial judge had erroneously concluded that all other expert witnesses supported Mr Jones’ assessment of the highest magnitude of force to be encountered in ordinary racing conditions and erroneously accepted Mr Jones’ evidence on that issue. Thirdly, it submitted that his Honour erroneously adopted a narrow and artificial, rather than a common sense, approach to causation, assuming without evidence that the load was applied to the cylinders progressively at the time of failure which was therefore caused by a force of 248 kN and not a greater force.
At the initial hearing of the present appeal, it became apparent that its determination would require this Court to make its own detailed assessment of significant aspects of the evidence given at trial. The hearing was therefore adjourned for a week in order to enable the parties to prepare further submissions identifying the relevant evidence.
The terms of the remitted question formulated by the Court of Appeal created a new focus which had not received great attention at trial. As no further evidence was led following the first appeal, it was necessary for both the trial judge and this Court to approach the remitted question by reference to the evidence, including the expert evidence, already given. Much of that evidence appeared to be directed at the extent of any additional safety factor required and which party, if any, was obliged to provide it under the contract. No expert witness other than Mr Jones directly addressed the specific question (important to the resolution of the remitted question) of the maximum possible force which could be encountered in ordinary ocean conditions. Given, however, that nothing turned on the credit of the expert witnesses, this Court was in as good a position as the trial judge to evaluate their evidence, including not only positive assertions but also their implications when taken in context, and what was not said.
Theoretical analyses vs. practical tests
First, the appellant submitted that his Honour erred in preferring certain of the theoretical analyses to the practical tests, or at least in failing to take some account of the practical tests, rather than rejecting them absolutely.
In the second judgment, his Honour rejected the practical tests for two reasons, the first of which was express and the second implied.
First, he discounted them for the express reason that they were conducted in laboratory conditions, rather than modelling for a dynamic environment. The bench tests results were therefore not applicable to the ‘maximum static force in operation’ referred to in the contractual term.
The appellant argued that it was illogical to reject the practical tests or at least fail to take them into account because the laboratory conditions did not model for or replicate the dynamic forces encountered at sea, because the theoretical analyses were subject to the very same limitation. They too analysed the application of static, rather than dynamic, force. Further, each of the theoretical analyses involved variables which rendered comparisons difficult and, as the trial judge acknowledged in the first judgment, many imponderables and complexities which rendered them difficult to evaluate. The appellant therefore contended that the practical tests were more reliable and so relatively probative that they should have been preferred.
Secondly, and alternatively, the appellant submitted that the trial judge erred in his treatment of those theoretical analyses he accepted. The appellant submitted, that his Honour’s conclusion that the cylinders would buckle at about 230 kN at full extension (and therefore at about 248 kN at racing extension) was clearly based on an unacknowledged averaging of the results of the analyses he did not specifically reject. If not the product of such averaging, the basis of his Honour’s conclusion was not apparent.
The appellant primarily submitted that averaging was not a legitimate approach. Its legitimacy was neither put to, nor endorsed by, any expert witness, and the subject-matter of the analyses (where variations within a fine compass were significant) rendered its validity inherently improbable.
As an alternative and subsidiary submission the appellant alleged that, even if averaging were legitimate, his Honour’s application of it was flawed on two bases. First, he included inconsistent or erroneous integers. Rather than selecting all the racing extension or all the full extension figures, he had averaged two examples of full extension and one example of racing extension from Dr Keays’ Strand analysis of 195 kN (rather than the correct figure of 216 kN) thus distorting the final result. Secondly, the appellant argued that the trial judge had failed to add the result of Dr Baigent’s second practical test to the averaging process which (if incorporated with the correct figure from Dr Keays’ Strand analysis) would have produced a figure of 273 kN at racing extension. The appellant argued that if (contrary to its principal submission), averaging were permissible, there was no rational basis for excluding the result of the second practical test, given that the only acknowledged criticism of its validity applied equally to the theoretical analyses.
The respondent disputed that his Honour had averaged the results of the theoretical analyses, contending that an accurate averaging of the alleged integers would produce a figure of 230.36 kN recurring, rather than 230 kN. The trivial inaccuracy does not, however, reduce the likelihood that his Honour performed the averaging alleged by the appellant. No witness arrived at or referred to the figure of 230 kN. If it were not produced by averaging, there is no apparent basis for his Honour’s conclusion. In my opinion, it was probably the result of averaging.
The respondent also contended that his Honour’s preference for, and treatment of, the theoretical analyses, (including the adoption of a failure point of 230 kN), and his rejection of the practical test results, were justifiable as a qualitative assessment of the evidence.
The respondent relied in that context on Transport Industries Insurance Co Ltd v Longmuir (‘Longmuir’)[33] which established that in a circumstantial case, the proper approach is to consider the weight of the combination of facts proved, and then determine whether the combined weight of the facts and circumstances supported the inference as a matter of probability, rather than dividing the process into stages and applying the burden of proof at each stage.[34]
[33][1997] 1 VR 125.
[34]Ibid 130 (Winneke P).
In Longmuir, Tadgell JA stated:
(That aside), it should be said that, to assess the evidence in a case like this by reference to various individually-pleaded particulars, as though running through items on a check list, is apt to mislead. The evidence is to be evaluated as a whole in order fairly to consider whether the party bearing the onus of proof has established what is ultimately sought to be proved. The object of the exercise of evaluation is to discover whether the evidence paints a picture reflecting real life, rather than to place a tick or a cross against paragraph after paragraph of torpid pleading. A true picture is to be derived from an accumulation of detail. The overall effect of the detailed picture can sometimes be best appreciated by standing back and viewing it from a distance, making an informed, considered, qualitative appreciation of the whole. The overall effect of the detail is not necessarily the same as the sum total of the individual details: cf. Hall (Inspector of Taxes) v Lorrimer [1992] 1 W.L.R. 939 at 944; Shepherd v R. (1990) 170 C.L.R. 573 at 579-80.[35]
[35]Ibid 141.
In my opinion, the Longmuir principle requiring regard to the whole of the evidence, so that ‘a true picture [may] be derived from an accumulation of detail’, did not authorise the adoption of a precise figure for the failure point of the cylinders on the basis of averaging individual results, or the application of an otherwise unidentified process to highly complex, competing theoretical calculations, where the validity of the outcome was vulnerable to a slight degree of variation; no expert testified that averaging was a permissible or reasonable approach; inconsistent integers were selected; and many imponderables and variables bedevilled the validity of each theoretical calculation. While, as the respondent contended, many assumptions or aspects of the competing theoretical analyses were not challenged in cross-examination, their inherent difficulties and uncertainties remained.
The practical tests were not found to be inaccurate, they were more readily comprehended and they did not involve the same imponderables as the theoretical analyses (such as the fixing of the ends). They were, however, as his Honour ultimately accepted, subject to the criticism that they did not model for the effect of dynamic impulse (slamming) or lateral loads, such as would be encountered in the ocean. Rather, the practical laboratory tests involved the progressive, steady application of static force. The consequence of the failure to model for dynamic forces was that the practical tests would tend to overestimate the failure load.
Because, as was common ground, a lateral load or an impulse (slamming) load applied to the cylinder would cause it to fail at a lower magnitude of force than a load applied steadily and progressively, it did not necessarily follow that because the cylinders did not fail at 262 kN applied steadily and progressively in the laboratory, they would not fail at 262 kN in the ocean. As Dr Baigent conceded, the cylinders would break at a lower force applied as an impulse or lateral load, although it was not possible to calculate how much lower.
Because dynamic impulse and lateral loads are an expected incident of ocean sailing, the results of the practical tests could not be applied without qualification to the ocean context. The theoretical analyses were, however, subject to precisely the same limitation. They too did not model for dynamic impulse or lateral loads or other forces encountered in the ocean.
Taken in isolation, then, his Honour’s rejection of the practical tests due to a limitation shared by the theoretical analyses (the only express reason assigned by his Honour) would appear arbitrary and unjustified. Given, however, that the failure point of the cylinders would be reduced when impulse or lateral loads were applied, the failure loads arrived at by both the practical tests and the theoretical analyses would be reduced in the dynamic conditions of the ocean, albeit there was no evidence of the degree of the reduction.
In my opinion, in the absence of compelling considerations to the contrary, the absolute rejection of the results of the practical tests and the preference of some theoretical analyses would be unjustified.
Further, while the complexities of the theoretical analyses did not, in my opinion, preclude the acceptance of the results of some of them, his Honour’s ultimate conclusion was not based on the identifiable result of any of those analyses and, in my view, the principles of Longmuir did not licence an averaging unsupported by expert evidence or an otherwise unexplained adoption of a precise figure for the failure load.
Mr Jones’ estimate of maximum forces in ordinary racing conditions
It is apparent, however, that his Honour’s preference for the relevant theoretical analyses was not based on a comparison of the analyses with the practical tests in isolation.
Rather, as Redlich JA observed in the course of the hearing before us, his Honour’s rejection of the practical test results was almost certainly subordinate to, and dictated by, his antecedent acceptance of Mr Jones’ evidence (which he took to be unanimously supported by all the other expert witnesses) that the greatest magnitude of force which could be exerted on the cylinders in the ocean in ordinary racing conditions could not exceed 262 kN.
Once that evidence were accepted, extraordinary events (such as a collision with a sun fish or a rogue wave) were excluded, and the analyses and tests were viewed in combination with Mr Jones’ opinion as to the greatest force likely to be exerted, the theoretical analyses accepted by his Honour were more compatible with the most significant aspect of the evidence. Further, while neither the practical tests nor the theoretical analyses modelled for the dynamic forces of the ocean, those forces would lower the failure points they produced. Although the appropriate degree of reduction was not established, the fact that both the analyses and the practical tests would overstate the cylinders’ capacity in the ocean must have fortified his Honour’s conclusion.
His Honour’s acceptance of Mr Jones’ evidence on the maximum forces to be encountered in the ocean in ordinary racing conditions was thus, in my opinion, crucial to his conclusion, based on the whole of the evidence, that the cylinders failed when subjected to a force of less magnitude than the contractual specification of 262 kN.
The appellant submitted that his Honour erred in accepting that evidence and further, in accepting that the technical witnesses of both parties shared the view that a design load of 262 kN would be sufficient for ordinary racing conditions.
The appellant principally relied, in that context, upon the impact of the safety factor recommended by the ABS Guide and by each of the technical experts.
The appellant contended that the other expert witnesses selected a higher safety factor, which implicitly undermined their acceptance of Mr Jones’ estimate of the maximum forces to be encountered, because the safety factor selected constituted a reliable (albeit indirect) guide to the maximum magnitude of force each expert would expect to be applied to the cylinders in the ocean in ordinary racing conditions.
If the safety factor recommended by the ABS and other expert witnesses functioned as the appellant submitted, the trial judge was in error in viewing their evidence as a unanimous endorsement of Mr Jones’ worst case scenario.
The respondent, however, submitted that the safety factor adopted by each expert was not an indirect indicator of the worst case scenario or the anticipated maximum force expected to be applied to the cylinders in ordinary ocean racing conditions.
The respondent submitted that the appellant fundamentally misconceived the significance of the safety factor. It argued that the ABS Guide’s reference to a safety factor was simply directed at the strength of the material to be used to accommodate the ‘compliance, imperfections in the material side loads and impulse loads’.
Counsel for the respondent also submitted that the application of a load as a slamming or lateral load, rather than progressively, did not increase the load, but simply decreased the capacity of the cylinders to bear any particular load. In counsel’s words, such loads ‘affected only the load bearing capacity of the structure and don’t increase the load’.
The appellant did not dispute that a load applied laterally or as an impulse load could reduce the buckling point of the cylinders, but contended that an impulse load could also exert an additional load or greater force, which the safety factor suggested in the ABS Guide or by the individual experts accommodated.
In my opinion, the effect and weight of the expert evidence set out above support the appellant’s submissions.
Indeed, the respondent, in its written submissions, referred to Professor Joubert’s estimate of a steady pressure on the cylinders at 17° cant of 164 kN and stated that ‘any additional loading would have to be caused by impulse loads’.
The evidence of Professor Joubert, Dr Baigent, Mr Raymond and ultimately Dr Keays, when read in its totality and in context, indicated that they did not accept that Mr Jones’ design load of 262 kN represented the maximum forces which may be encountered in ordinary racing conditions in the ocean, because they viewed 262 kN as the design load, working load or steady load to which a safety factor would be added to accommodate the additional forces which could be generated by such phenomena as impulse loads, slamming and coming at unusually large waves, albeit not necessarily ‘in extreme or dangerous conditions’. Further, their evidence does not support the conclusion that a sudden or impulse load would not impose an additional force on the cylinders.
Rather, all the experts considered that impulse or suddenly applied loads which could be encountered in ocean racing could impose a load additional to the static or steady load or working compressive load. Dr Joubert and Dr Baigent agreed that the additional load of an impulse load caused the failure of the cylinders, although they did not agree on the estimation of the load at the point of failure.
Although it was common ground that the application of impulse loads would reduce the buckling point, that is not inconsistent with the imposition of impulse loads in the ocean additional to the steady load increasing the magnitude of the total load.
Further, it is clear that all the experts agreed that in ordinary racing conditions (which could include gales and rough weather) sudden or impulse loads could occur.
Dr Joubert considered that the shape, rather than the size of a wave could dictate the force of the impulse load it exerted. Dr Joubert had made an extensive study of the estimation and measurements of impulse loads and considered them to be very difficult and elusive, indeed, a ‘can of worms’. Mr Jones also conceded that impulse loads were difficult to estimate or measure.
All the experts considered that after the design case was estimated, it was then necessary to add ‘on top’ a safety factor. All of them (other than Mr Jones) considered that in the case of the canting keel, the safety factor should be substantial. Dr Joubert considered a factor of four would be appropriate. Despite Dr Keays’ initial view that the design case as calculated by Mr Jones using the ABS Guide made sufficient allowance for the dynamic forces, he subsequently modified his opinion and the ultimate effect of his evidence was that he might add to the design case a safety factor of 2 ½ or three, using the ABS Guide as one reference.
Dr Baigent also considered that a safety factor sufficient to cope with 3 G forces due to impulse loads should have been added to the steady load case.
Dr Joubert expressly corrected the assumption that he thought that 164 kN was the maximum load which could be exerted on the cylinders. He made clear that 164 kN was simply the calculation of the maximum steady load.
While the other experts did not disagree with Mr Jones’ use of the ABS Guide to calculate the design or steady load case unlike Mr Jones, who viewed the ABS Guide design case alone as sufficient, although he ultimately increased it to some extent, they all thought that a safety factor should be added to it to increase the magnitude of force the cylinders could withstand to cope with impulse loads encountered in ocean racing. The experts differed in their selection of the appropriate safety factor or the range thereof. They also differed on whose task it was to add the safety factor. Dr Joubert considered that it was the manufacturer’s obligation. Dr Baigent considered that it was the task of the yacht designer, Mr Jones.
Therefore, contrary to his Honour’s finding, Mr Jones’ assessment of the greatest magnitude of force to be encountered in the ocean was not unanimously supported by the expert evidence of both parties. Properly understood, that evidence was contrary to Mr Jones’ assertion. His Honour’s assumption of the expert witnesses’ unanimity about the ceiling on the greatest force to be expected in ordinary ocean racing conditions emanates from the conflation of, on the one hand, the design load only with, on the other hand, the design load coupled with a safety factor.
The quality of Mr Jones’ evidence on the issue was itself thin and, as his Honour acknowledged, unsatisfactory in a number of respects. In my opinion, it was not reasonably open to his Honour, given the quality of Mr Jones’ evidence, reflected in his own expressed reservations, to accept it when it was contrary to the evidence of the other expert witnesses of both parties, including Professor Joubert, Dr Baigent, Mr Raymond and ultimately, Dr Keays.
In my opinion, his Honour’s absolute rejection of the results of the practical tests, and his conclusion that, on the basis of certain of the theoretical tests, the failure load was not more than 230 kN was founded on the erroneous basis that Mr Jones ‘worst case scenario’ was unchallenged. Once it be accepted that the weight of expert evidence was to the contrary, and did not establish on the balance of probabilities that the force applied to the cylinder at the time of their failure could not have exceeded 262 kN, the basis for preference of the relevant theoretical analyses must fall away. In my opinion, it was not open to his Honour to find on the evidence that on the balance of probabilities the cylinders failed in operation at not more than 262 kN.
Notice of contention
It remains to consider the impact of the evidence of Mr Taylor, which is the subject of the respondent’s Notice of Contention.
The respondent’s Notice of Contention dated 18 August 2008 stated:
1. The learned trial judge erred in deciding ([2008] VSC 43 at [21]) that he would not, on the basis of unchallenged observations of fluctuations in pressure made during the 2005 Sydney to Hobart race, reach any conclusion as to the force imposed on the cylinders at the time of the incident.
2. Accordingly, the learned trial judge should have taken into account that the force imposed on the piston, in the course of ocean racing, was plus or minus 20% of 164kN in inferring that the static force at which the cylinders failed was not more than 262kN.
Before us, counsel sought to amend paragraph 2 by deleting the words after ‘20%’ so that it contended merely that his Honour should have taken into account the fact of such a degree variation in reaching his ultimate conclusion.
Mr Taylor, the sailing master of the Scandia, was present on the yacht both at the time of the 2004 incident and the 2005 Sydney to Hobart Yacht Race. The yacht had been repaired by the time of the 2005 race, and a gauge had been fitted, by which Mr Taylor checked the pressure fluctuations due to the slamming movement of the yacht. He observed variations of plus or minus 20% (800 psi to 1200 psi with an average of 1000).
His Honour accepted Mr Taylor’s unchallenged evidence that the sailing conditions were similar to those at the time of the 2004 incident and that ‘the fluctuations in pressure caused by slamming were relatively small, plus or minus 20%, in a sea which was comparable’.[36]
[36]Timelink Pacific Pty Ltd v Major Engineering Pty Ltd (No. 2) [2008] VSC 43 (Unreported, Byrne J, 22 February 2008) [19].
His Honour declined, however, to add the variation of plus or minus 20% due to slamming at the time of the incident to Professor Joubert’s calculation (apparently accepted by Dr Baigent) of the steady load of 164 kN on the piston at 17° cant with the boat at rest (or Mr Raymond’s similar calculation at 154.4 kN) in order to conclude that failure must have occurred at a load of less than 262 kN. He considered that the legitimacy of adjusting the forces imposed by gravity on the hydraulic system at rest by reference to such variations was not put to any witness and was uncertain. His Honour identified a number of factors which led to the conclusion that Mr Taylor’s evidence should be given little weight. Mr Taylor had no expertise in the area. There was a different keel assembly and he had no knowledge of the configuration of the moving parts or their weight.
The Notice of Contention assumes that his Honour did not take Mr Taylor’s evidence into account in reaching his conclusion.
While his Honour did not accept the legitimacy of making direct use of, or expressly relying on the evidence of the slight degree of variation due to slamming in drawing the inference, it appears that his Honour took it into account as an aspect of all of the evidence, as he stated ‘I conclude from all of this and from the matters set out in my earlier judgment …’.[37] Thus, I am not persuaded that the assumption in the first paragraph of the Notice of Contention is soundly based.
[37]Ibid [25].
Nevertheless, whether or not his Honour took account of Mr Taylor’s evidence, in my view, it does not merit very substantial weight, given the impressionistic nature of Mr Taylor’s comparison of conditions, the absence of any evidence as to the configuration of the keel and hydraulics in the repaired yacht and, most importantly, Professor Joubert’s evidence that ‘the loads due to slamming are difficult to estimate and equally difficult to measure. It is a subject which I have studied for many years.’ Professor Joubert went on to refer to papers he had authored on the subject and observed that ‘other experimenters who have tried to measure pressure and accelerations on a real yacht in a seaway end up with a mass of statistical data from which it is difficult to draw useful conclusions’.
The significance of Mr Taylor’s evidence about the degree of variation depended on an antecedent determination of the likely magnitude of force to which the variations he observed might properly be added or subtracted.
Having regard to the limited weight that could be attached to his observations it could not undermine the preponderance of the evidence of the expert witnesses, who each required a higher safety factor to be added to the design load of 262 kN to accommodate, inter alia, the additional force of impulse loads. Mr Jones’ estimation of the maximum magnitude of force was unpersuasive and his Honour erred in accepting it. The absolute rejection of the practical tests, largely dictated by the erroneous acceptance of Mr Jones’ worst case scenario, was also, in my opinion, in error.
Conclusion
It follows that, in my opinion, the appellant’s principal complaints are established. In my view, the conclusion that on the balance of probabilities the cylinders failed at no more than 262 kN at the point of failure, described in the judgment of Nettle JA, contrary to contractual specification, was not reasonably open on the basis of the evidence. Breach of the contract was not established. It also follows that as the magnitude of the force that was in fact applied may have been in excess of 262 kN, the respondent failed to establish that breach of the condition (had it been established) was a cause of the damage suffered.
In my opinion, the appeal should be allowed.
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