Timelink Pacific Pty Ltd v Major Engineering Pty Ltd (No2)
[2008] VSC 43
•22 February 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
ADMIRALTY LIST
No. 4122 of 2005
| TIMELINK PACIFIC PTY LTD (ACN 063 714 303) | Plaintiff |
| v | |
| MAJOR ENGINEERING PTY LTD (ACN 005 432 397) | Defendant |
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JUDGE: | BYRNE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6 December 2007 | |
DATE OF JUDGMENT: | 22 February 2008 | |
CASE MAY BE CITED AS: | Timelink Pacific Pty Ltd v Major Engineering Pty Ltd (No.2) | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 43 | |
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CONTRACT – question referred by Court of Appeal – whether the cylinders at the time of failure were subjected to a force of not more than 262kN
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms My Anh Tran | Vadarlis & Associates |
| For the Defendant | Mr A Herskope and Mr Daniel Clough | Kalus Kenny |
HIS HONOUR:
This case concerns a claim by Timelink as the owner of the ocean racing yacht Skandia for damages for breach of contract made between it and Major Engineering whereby Major Engineering was to design, manufacture and sell to Timelink a hydraulic system for the operation of the yacht’s canting keel. The system included two hydraulic cylinders including pistons and connections. It was a term of the contract that this hydraulic system, and in particular the cylinders, be capable of withstanding a static force in operation of 262kN.[1] It was these cylinders which failed to withstand the compressive forces imposed upon them in the course of the 2004 Sydney to Hobart yacht race.
[1]This is a compressive force. All references in reasons to force in this context should be taken to be a reference to a force imposing a compressive load on the cylinders.
I gave judgment for the plaintiff for damages to be assessed on 4 August 2006.[2] On 16 October 2007 the Court of Appeal set aside that judgment and remitted a question for my determination.[3]
[2][2006] VSC 288. These reasons should be read in conjunction with this my earlier judgment. The terminology of that judgment has been used here.
[3][2007] VSCA 228.
The Court of Appeal determined that the contractual obligation of Major Engineering was to provide cylinders which were capable of withstanding a maximum static force in operation of 262kN capacity with no provision for a further factor of safety.[4] The matter has now been remitted to me to determine the following question as formulated by the Court of Appeal:
Whether 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 was not more than 262kN.
The Court of Appeal directed that if I was satisfied on the balance of probabilities that the static force at which the cylinders failed in operation was not more than 262kN I should give judgment for Timelink. If, on the other hand, I am not so satisfied, I should give judgment for Major Engineering.
[4][2007] VSCA 228 at [43].
The keel and the associated hydraulics were designed to operate with a cant of the keel at a maximum of 19.5°. This is the worst case scenario for the cylinders, for it is at this point that they are fully extended and therefore at their weakest. At the time of the incident, the cant was 17°[5] so that the longitudinal dimension of the cylinder was reduced by 51mm from full extension. The evidence showed that a cylinder which would fail at 262kN when fully extended would not fail until subjected to a force of 283kN[6] when extended only for a 17° cant. Accepting that the design specification of 262kN was for the worst case scenario, this would mean that the cylinders were below contract strength if, at 17° cant, they were unable to withstand a force of 283kN. The Court of Appeal, however, was of opinion that the remitted question should not refer to a force other than that of 262kN. Although respectfully unrepentant on this point, I will address the question as formulated.
[5]It may in fact have been 16° but nothing turns on this.
[6]Dr Keays estimated this increased capacity to be 8%.
The force imposed on the cylinders at the time of the incident was not measured or recorded. No witness expressed any opinion as to the number of kilonewtons of force which were imposed upon the cylinders at the time of failure. Indeed, given the complexities of the forces which are imposed upon a yacht by the wind, the sea and its own bulk, this is not surprising.
It is at this point that the terms of the question become important. In fact, it represents two questions rolled into one. The first, the question as to breach, is whether the cylinders had in fact the specified capacity. The second, the question as to causation, is whether, assuming the cylinders were non-compliant, this led to the failure in the circumstances then present.[7]
[7]An examination of the Court of Appeal transcript of the 30 November 2007 upon Timelink’s application to vary the remitted question suggests that it was directed to causation, but I shall consider also the question as to breach since no finding as to this has been made.
The question as to breach was addressed in paragraphs [50] - [88] of my earlier judgment. Having refreshed my recollection of these matters by a reconsideration of the evidence and those paragraphs, and informed by the observations of the Court of Appeal and the submissions of counsel, I am content with the views I there expressed. But they do not, as Nettle JA observed, go as far as I must now venture. It was not there necessary for me to reach a conclusion as to the question whether the cylinders had the capacity to withstand a static force of 262kN in operation because I concluded that Major Engineering was contractually obliged to provide cylinders which met that specification plus a factor of safety. On no view had it done so. Now, with the factor of safety removed, the question is whether the evidence permits me to conclude that the cylinders failed to meet the contract specification.
At this stage it is necessary that I say something about certain technical terms which were used by the experts. Mention was made in the contract specification and in the referred question to “static force”. This was productive of some puzzlement in the experts but, in the end, none of them was troubled by it. It was said by Dr Keays to be either an actual load or an equivalent static load to a dynamic situation.
Other expressions used were “maximum static load” and “working load”. These expressions and the forces which impose those loads refer to the designer’s assessment of the worst case environment in which the cylinders were expected to operate. Another expression for this was “design load”. I treat them all as interchangeable. In the design of Skandia Mr Jones’ assessment, which made its way into the specification, was that the cylinders should be capable of operating when subjected to a force of 262kN in compression, which assessment included an allowance for the loads which he foresaw and measured or estimated, plus a safety factor for those which he did not. This means that under this force the cylinder should be able to perform its functions as part of the hydraulic system.
From an engineering viewpoint the cylinder is seen as a straight column of variable dimensions. When such a column is subjected to a longitudinal compressive force it will resist this load, perhaps with some deflection and, when the load is removed it will return to its original straight condition. As this load is increased the column will reach the point where it becomes subject to uncontrolled deflection when it reaches its elastic limit. This is referred to as “buckling” and the point at which it occurs and the load which causes it are referred to as the “buckling point” and the “buckling load”.
When the buckling point is reached the column is doomed: unless the load is removed it will continue to deflect until the material yields and failure occurs. Paradoxically, because of the interaction of the buckling with the yield of the material, the failure load will never exceed the buckling load and may be less than the buckling load. For present purposes, however, the distinction between the buckling point and the failure point may be ignored and the expert witnesses approached the matter on the basis that at the buckling point the cylinder should be treated as having failed. The distinction, however, between maximum static load, that is, the design load, and buckling load was recognised by the expert witnesses as significant.
For reasons which I have set out in my earlier judgment, I concluded, and still conclude, that, on a theoretical analysis, the cylinders would be expected to buckle at about 230kN.[8] On this basis, then, the cylinders did not have the specified capacity, that is, a capacity sufficient to withstand a static force of 262kN. It should be noted that the theoretical analyses related to the strength of the cylinders at their weakest, that is, at 19.5° cant. This is a matter of importance because in the configuration which they had at the time of the incident, where the cant was only 17°, their capacity would have been greater than this.[9] Adopting the 8% adjustment given by Dr Keays, this theoretical capacity of the cylinders at 19.5° cant translates to a capacity of about 248kN at 17° cant. I conclude from this that the theoretical analyses, which I accept, show that the capacity of the cylinders was less than that specified.
[8][2006] VSC 288 at [64].
[9]This 2.5° difference meant that the length of the cylinder was reduced by 51 mm. In fact, the cylinders at the time of failure were 71 mm shorter than at full extension, but this extra 20 mm difference was said not to be significant.
I turn now to the evidence of the tests. In my earlier judgment I addressed this evidence, not because I was not satisfied with the theoretical analyses, but because I saw my duty as considering the other evidence offered by the parties and deciding the case on the totality of the evidence before me.
I have analysed this evidence in paragraphs [72] - [83] of my earlier judgment. In the course of her submissions on the referral, counsel for Timelink fastened upon the fact that the tests were not conducted in a dynamic environment. The requirement of the specification that the cylinders have a certain capacity “in operation” means that they must have this capacity in a dynamic environment. Furthermore, it was said, since the referred question is directed to the conditions on 28 December 2004, some 12 months after the cylinders were first installed, it is likely that the end connections of the cylinders were less rigid after months of use. It was accepted by the experts that a lower friction at the connections would reduce the buckling load. Accordingly, she argued, the results of the test using new end connections should be discounted for this.
The fact that the tests were conducted in circumstances where the dynamic factors were not replicated was much relied upon by counsel for Timelink. In response, it was put that the specification was expressed in terms of a static load so that the dynamic environment was irrelevant. I do not agree. The use of the word “static” has been identified. The environment in which the capacity was required was that of ocean racing conditions. In the laboratory environment the cylinder in the first test was stable at 262kN[10] when extended to about 19.5° cant. In the second test, the length of the cylinder was reduced to 2096mm[11] which is about its dimension at 16° cant. The cylinder then revealed instability at a pressure in the cylinder of between 3730psi and 3750psi. This translates to load of about 325kN[12] at 17°. This is in excess of the specified working load of 262kN even if adjustment be made to accommodate the shorter dimension.[13]
[10]In fact the test was terminated at 261.8kN.
[11]This figure which was the measured dimension of the cylinders when inspected after the incident, was rounded off to 2095mm in later discussion, but the difference is immaterial.
[12]In fact the reading at the point of failure was 327kN, but this was rounded off to 325kN.
[13]See [2006] VSC 288 at [74].
Professor Joubert, whose experience in these matters was practical as well as theoretical, spoke of the phenomenon of slamming or pounding which is encountered by a yacht at sea. The hull is constantly in motion in a variety of directions. This has the consequence that the cylinders which are not mounted vertically in the hull are themselves subjected to lateral and other forces of differing magnitude. Professor Joubert said, and I accept, that these lateral forces would mean that the cylinders would be less able to support a compressive force such as that imposed in the laboratory tests. He demonstrated that the heel of the boat under sail on a port tack was such that the cylinders would be almost parallel to the water surface. This means that they would be subject to the lateral force of gravity as well as dynamic forces. The professor expressed himself in these terms:
Then the weight of the piston rod adding through the centre of gravity through the cylinder and piston rod is accelerated downwards with – pushed upwards at the ends when the boat suffers an impact load and that increases the compliance or bending, the movement of the piston rod and piston in the end of the cylinder and once you get a small amount of off-set from absolute linearity of the piston rod and cylinder, the buckling load is reduced considerably.
This proposition was not challenged and I accept it to be the case.
A further consideration which might be expected to bear upon the cylinders in operation and which was not present at the testing was the fact that, in operation at sea, the compressive load is imposed suddenly and repeatedly rather than in slow increments. These impact loads, too, would reduce the point of failure.3
Finally, I was pressed with the likely differences between the end connections of the cylinders at the time of the incident and those at the test, to which I have referred.[14] These difference which were identified by Dr Keays were put to Dr Baigent who acknowledged that that he did make allowance for them when the test was set up. He agreed that they might possibly cause the test results to overstate the position as at the time of the incident. I am, however, not minded to place any reliance upon this because no attempt was made to quantify the overstatement and because the representatives of Timelink did not raise this at the time of the testing. If it were a matter of significance I would have expected it to have been drawn to the attention of those responsible for the testing.
[14]See par. [14] above.
In my earlier judgment I mentioned in passing[15] the evidence of measurements taken on Skandia after repairs had been carried out and during the 2005 Sydney to Hobart race. The Skandia sailing master at this time and at the time of the 2004 incident, Mr Taylor, said that this was the first time after repairs that Skandia had sailed in similar conditions to those at the time of the incident. On this occasion the new cylinder for the canting keel was fitted with a gauge to measure pressure. He said that he observed that the pressure fluctuated with the slamming movement of the boat from 800psi to 1200psi with an average of 1000psi. The precise figures are of no present consequence because the configuration of the keel and the hydraulics in the repaired yacht are unknown. The point made, however, and not challenged, was that the fluctuations in pressure caused by slamming were relatively small, plus or minus 20%, in a sea which was comparable. I accept this to be the case.
[15][2006] VSC 288 at [72].
Professor Joubert calculated the force imposed on each piston with the keel at 17° cant and the boat at rest to be of the order of 164kN. Dr Baigent appeared to be content to act upon this figure. It may be, too, that Mr Raymond arrived at much the same conclusion for he calculated the force to be 15,732kgf per ram. This is the equivalent of 154.4kN. What was then said was that this pressure might, in the course of ocean racing, be varied by plus or minus 20% because of slamming in the seas which were present at the time of the incident. This is clearly much less that 262kN so that the failure must have occurred at a load of less than this figure.
I confess myself not to be attracted to this submission. It was not put to any witness and I am not at all certain that it is legitimate to start from the forces which are imposed by gravity upon the hydraulic system at rest and to adjust them as counsel suggested. I will not on this basis reach any conclusion as to the force imposed on the cylinders at the time of the incident.
The Major Engineering technical witnesses, not surprisingly, placed great reliance upon the tests and the fact that buckling did not occur in the second test until the load of about 325kN had been imposed. They accepted, too, as did the plaintiff’s technical witnesses, that in ordinary racing conditions, no force approaching this 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. But it cannot be denied that the cylinders failed in operation. The significance of this, for my present purposes, is that Major Engineering, contending that its cylinders had the capacity to withstand a force of 262kN, and even a force of 325kN, had to provide some explanation for the fact of failure in order to rebut the inference proposed on behalf of Timelink. Various scenarios suggesting that the force at the time of the incident was greater than 325kN were proffered to supply this explanation but I rejected them in paragraphs [94] - [100] of my earlier judgment. I accept the evidence of Mr Taylor and the other witnesses who were on Skandia at the time of the incident that there was at that time nothing untoward or unusual about the conditions in which the yacht was sailing. Absent some other acceptable explanation, attention must return to the starting point of the Major Engineering conclusion: that the test results demonstrate that the capacity of the cylinders under compressive load was such that that they could withstand a force of 325kN, or more importantly, a force of 262kN in operation. I conclude that the tests overstate the capacity of the cylinders in operation; that their capacity was less than 325kN. But there is no evidence as to the extent of this overstatement; it is not possible to conclude from the tests what was their actual capacity.
I can now state my conclusions upon the question as to breach. Upon a theoretical analysis the buckling point of the cylinders at full extension was about 230kN and about 248kN when extended for a cant of 17°. This is less than the force specified. The testing of the replica cylinder shows that the buckling point at full extension was at a force of between something less than 262kN and, when the extension was reduced to that for a 16° cant, at a force of something less than 325kN. How much less, in each case, I cannot say. If the second test had been performed with the cylinder at full extension the buckling point would have been further reduced by 8%. I conclude on the balance of probabilities, that the cylinders supplied by Major Engineering did not have the capacity required by the contract. Major Engineering was in breach of its contract with Timelink.
I turn now to the question of causation. Assuming that the cylinders had insufficient capacity, this says nothing of the force which was in fact applied to them at the time they failed. I am confronted at this point with the submission offered on behalf of Major Engineering that nobody measured this force. The question, being incapable of answer, must inevitably produce the conclusion that Timelink has failed to discharge its burden of proving that the loss and damage was the consequence of the breach. Accepting that Skandia, sailing with under-capacity cylinders, suffered the damage which it did suffer at the point of failure mentioned in the remitted question, this does not entitle me to infer how many kilonewtons force were then applied. All that can be said is that the force must have exceeded their capacity whatever that might have been. I do not accept this submission. I am persuaded by the argument put by counsel for Timelink that, in such a circumstance the load would have been applied progressively, albeit in a very small interval of time. As it was applied the cylinders responded to the point where they buckled. At this point the force was at its maximum given the yield factor. While it is not possible to make a finding as to what was the number of kilonewtons applied at the moment of buckling, the evidence that the capacity of the cylinders was less that specified shows that this must have been less than the 262kN specified.
On the balance of probabilities I conclude from all of this and from the matters set out in my earlier judgment as follows:
(1)The tests cannot be relied upon as establishing that the capacity of the cylinders in operation was to resist a force of 325kN or 327kN or, indeed any particular force. I am satisfied that their capacity was less than 325kN. How much less, the tests do not show. They do not provide support for a finding that the cylinders were capable or incapable of withstanding a force of any specific number of kilonewtons less than 325kN. They do not provide support for a conclusion that the cylinders met the specification.
(2)The sailing of Skandia, in ordinary racing conditions, would not be expected to impose upon the cylinders a force of greater than 262kN. The contractual design specification was directed to this.
(3)The conditions at the time of the incident were ordinary racing conditions.
(4)I do not accept the existence of any of the scenarios which were offered by Major Engineering as producing a circumstance where a force greater than that expected in the design was applied to the cylinders.
(5)The theoretical analyses of the buckle capacity of the cylinders show this to be no greater than 230kN at 19.5° cant. This is the equivalent of 248kN at 17° cant.
I am satisfied on the balance of probabilities that the cylinders were not capable of withstanding a maximum static force in operation of 262kN. Major Engineering is in breach of this term of its contract.
The conditions prevailing at the time of the incident were not such that the sailing of Skandia imposed on the cylinders a force greater than the specified force of 262kN. There being no other accepted reason for the failure, it follows that the failure of the cylinders was due to their incapacity to resist the specified force. Put another way, I find that the breach of contract caused the failure of the cylinders and that which followed.
I return to the remitted question. I bear in mind that the question is directed to the force which was imposed upon the cylinders at the point of failure described in paragraph [29] of the reasons for judgment of Nettle JA and that this includes the fact that the keel was at a 17° cant or thereabouts. I find 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 262kN. Accordingly, there should be judgment for the plaintiff for damages to be assessed.
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