Sprayworx Pty Ltd v Homag Australia Pty Ltd

[2016] NSWSC 51

Supreme Court

New South Wales

Medium Neutral Citation:	Sprayworx Pty Ltd v Homag Australia Pty Ltd [2016] NSWSC 51
Hearing dates:	9 and 10 February 2016
Date of orders:	11 February 2016
Decision date:	11 February 2016
Jurisdiction:	Common Law
Before:	Harrison J
Decision:	The plaintiffs’ application to exclude the evidence of Messrs Duwentäster and Bauersfeld is dismissed.
Catchwords:	EVIDENCE – expert evidence – where defendant’s experts are witnesses of fact in the events that generate the need for their opinions – whether experts unbiased and impartial – whether expert witnesses for the defendant are arguably the source of some of the factual material underpinning their opinions – whether bias or partiality demonstrated in such circumstances
Cases Cited:	Australian Securities and Investments Commission v Rich and Another [2005] NSWSC 149 Wood v The Queen [2012] NSWCCA 21
Category:	Procedural and other rulings
Parties:	Sprayworx Pty Ltd (First Plaintiff) Nelson Pinto (Second Plaintiff) George Kanios (Third Plaintiff) Homag Australia Pty Ltd (Defendant)
Representation:	Counsel: J Lazarus with M Sheldon (Plaintiffs) I M Neil SC with P J Doyle (Defendants)  Solicitors: Tomaras Lawyers (Plaintiffs) Schweizer Kobras (Defendant)
File Number(s):	2012/141255
Publication restriction:	Nil

Judgment

1. HIS HONOUR: Sprayworx Pty Ltd purchased a Bütfering Optimat SCO 313 QCH wide belt industrial sander from Homag Australia Pty Ltd on 8 July 2006. Sprayworx alleges in these proceedings that the machine is defective, was unfit for its purpose and was not of merchantable quality. It alleges further that it purchased the machine upon the basis of representations concerning the capabilities of the machine that were false and misleading or made negligently. For presently relevant purposes, a precise characterisation of the claim is not critical.

2. The evidence upon which the parties rely has in large measure been reduced to affidavits. Homag has served a large number of affidavits that include those from Ludger Duwentäster affirmed on 11 September 2013 and 20 August 2015 and from Ingemar Bauersfeld affirmed on 11 September 2013 and 10 April 2015. Sprayworx objects to these affidavits in whole for the reasons that follow.

3. Mr Duwentäster has since February 2013 been the service manager for Lissmac Maschinenbau GmbH. Between 1999 and October 2012 he was employed at Bütfering, initially as a service technician and later as a technical support manager. Mr Duwentäster had originally undertaken an apprenticeship and qualified as an electrical mechanical engineer in 1986. During his time working for Bütfering his responsibilities included telephone technical support for service technicians of subsidiaries around the world, spare parts identification and the provision of technical support solutions. It was Mr Duwentäster who originally arranged in about September 2007 for Robert Bauer, a Bütfering technician, to attend to some initial problems reported by Sprayworx concerning its sanding machine.

4. Mr Duwentäster’s 11 September 2013 affidavit deposes in some detail to his dealings with Mr Pinto and Mr Kanios and comments as well upon their own affidavits relied upon in the plaintiffs’ case. He deposed, among several others, to a conversation with Mr Pinto in which he complained that the machine was not able to produce consistently good results. Mr Duwentäster said he told Mr Pinto, “Your panels are not prepared well enough and you cannot make chicken salad out of chicken shit.”

5. Mr Duwentäster’s 20 August 2015 affidavit is in the form of what purports to be an expert report. He refers to the Expert Witness Code of Conduct and has agreed to be bound by it. Despite this, Mr Duwentäster’s affidavit is more accurately a recollection of detailed events with which he was personally involved concerning the reported problems with the plaintiffs’ machine, including more detailed recollections of conversations with Mr Pinto in particular. Mr Duwentäster would appear to have made several attempts to rectify the problems with the machine. On any view of the material to which he deposes, Mr Duwentäster was heavily involved over a relatively extended period in unsuccessful attempts to configure the machine in a way that produced finished results with which Mr Pinto was satisfied.

6. Mr Duwentäster offers an opinion concerning the indifferent results produced by the machine. His opinions are necessarily based upon a combination of his personal observations and interactions with Sprayworx personnel on the one hand and his technical expertise as an engineer on the other hand.

7. Mr Bauersfeld was employed between April 2010 and October 2012 as a product manager and later product and export manager at Bütfering Schleiftechnik GmbH, the company that manufactured and supplied the sanding machine purchased by Sprayworx. Mr Bauersfeld completed an apprenticeship as a cabinet maker and acquired tertiary qualifications in woodworking technology in 2004. He has been the product and export manager of Weeke Bohrsysteme GmbH since October 2012.

8. Mr Bauersfeld met Nelson Pinto and George Kanios in Germany in January 2010 when he was working with Karl Heeseman Maschinenfabrik GmbH as an application engineer between August 2004 and April 2010. In due course Mr Bauersfeld joined Bütfering and was coincidentally given the task of assisting to resolve the difficulties that Mr Pinto and Mr Kanios were having with their sanding machine.

9. Mr Bauersfeld’s 11 September 2013 affidavit also deposes in detail to his dealings with Mr Pinto and Mr Kanios and comments as well upon their own affidavits relied upon in the plaintiffs’ case. Mr Bauersfeld has annexed a series of emails that relate to his dealings with Mr Pinto and Mr Kanios to this affidavit. Some of them should be noted.

10. On 2 July 2010 Mr Bauersfeld emailed Mr Ross Campbell in these terms:

“Hello Ross

Luckily I did not yet have a chance to contact Nelson again after your email…

Very obviously there are some differences in what I have discussed with Nelson (and proposed in writing) and what Nelson told you guy.

I am not sure if Nelson really did not understand or if he just pretends to not understand. Please also see my comments to your email of 29 June below.

Please let me know if there is anything we can do to exorcize Nelson.”

11. The 29 June 2010 email to which Mr Bauersfeld referred was sent to him by Mr Campbell. Mr Bauersfeld’s highlighted commentary on that email refers to Mr Pinto as schizophrenic or schizo and queries whether he is “Lord or Beelzebub.” He asks rhetorically, “he has not understood or does not want to understand, or is he simply schizophrenic.”

12. Mr Bauersfeld later provided what purports to be an expert report on behalf of Homag. He also referred to the Expert Witness Code of Conduct and has agreed to be bound by it. Mr Bauersfeld’s Executive Summary and Conclusion in that report is as follows:

“The two main conclusions I came to after inspecting the machine on 23 February 2015 were:

1. It is impossible to operate the machine properly at this point in time. The main cause of the machine’s inoperability on 23 February 2015 was the influence of age and neglect. In my opinion, this was almost certainly the case when Dr Shafaghi carried out his tests in 2013.

2. It is impossible for me or Dr Shafaghi to make any meaningful conclusions about the state of the machine at any earlier point in time.”

13. Sprayworx complains in these circumstances that both Mr Duwentäster and Mr Bauersfeld are partial witnesses whose objectivity as experts is fundamentally and fatally flawed by their close relationship to Homag and their partiality as evidenced by their dealings with Mr Pinto or comments to others about him. While neither man’s technical qualifications are put in issue, their respective ability to offer an objective opinion concerning the reasons why the sanding machine would not operate satisfactorily is said by Sprayworx to be irretrievably compromised.

14. In this respect I have been referred by counsel for Sprayworx to the decisions in Australian Securities and Investments Commission v Rich and Another [2005] NSWSC 149 and Wood v The Queen [2012] NSWCCA 21, in particular at [719] – [729]. Sprayworx essentially complains that neither Mr Duwentäster nor Mr Bauersfeld is independent and that each is apparently influenced by the exigencies of the present litigation and the factual involvement that each has played in the events that have become significant. That submission extends to a contention that each witness cannot be taken to have provided an unbiased opinion in relation to matters within their respective areas of expertise and that to varying degrees each has strayed into the role of an advocate.

15. It is important to observe that I have not yet had the benefit of seeing or hearing Mr Duwentäster or Mr Bauersfeld in the witness box. I am aware that a significant dispute exists about whether or not references by Mr Duwentäster in particular to excessive overspraying of Sprayworx panels is or is not the principal presenting cause of the inability of the sanding machine to produce satisfactory results. It will be apparent that insofar as that issue is considered or commented upon by either Mr Duwentäster or Mr Bauersfeld, it necessarily or at least potentially involves a combination of lay observation and expert opinion. The circumstances of the timing of the emergence of that issue in the scheme of these proceedings will undoubtedly figure prominently in the ultimate resolution of this case.

16. Mr Bauersfeld’s expert opinion is effectively restricted to a comment upon whether the opinion proffered by Sprayworx’s expert is of any value having regard to the date of the inspection upon which it is based. The question of Mr Bauersfeld’s partiality or lack of objectivity does not seem to me to be intimately concerned with his expert views about that limited issue.

17. I also consider that Mr Duwentäster’s somewhat torrid involvement with Mr Pinto in particular is unlikely to derogate from the use to which Homag wishes to put his evidence. I think that a distinction needs in this case to be drawn between Mr Duwentäster’s evidence of the events in which he was actively and practically involved as a lay observer and the opinion about the operation of the machine that he has offered as an expert. To the extent that the former may arguably have infected the latter, his evidence will in due course be exposed to cross-examination in the usual way. I consider that this is a sufficient and adequate protection for Sprayworx in the circumstances. I am also not satisfied upon the material before me that it can be said that Mr Duwentäster’s ability to offer technical opinions based upon his education, training and experience have been so badly compromised that the whole of his evidence should be rejected out of hand. Indeed, evidence about Mr Duwentäster’s involvement as a participant in critical events that have generated this litigation could not legitimately be excluded from the proceedings without occasioning significant prejudice to Homag.

18. The present case can be distinguished from Wood. First, there is no jury in this case so that the prospect that Sprayworx’s arguments may not be understood by the tribunal of fact can readily be reviewed in due course if necessary. Secondly, the suggestion or suspicion that Mr Duwentäster is the author of the excessive overspray theory has clearly emerged in the course of the proceedings, and not merely after the case has been determined.

19. I can see no legitimate forensic reason why these witnesses should not be heard. In my view, the affidavits of both Messrs Duwentäster and Bauersfeld should be admitted, subject only to particular objections to which my attention might in due course be directed.

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Decision last updated: 11 February 2016