Zurich Bay Holdings Pty Ltd v ATM Enterprises Pty Ltd [No 2] - [2011] WADC 48

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: ZURICH BAY HOLDINGS PTY LTD -v- ATM ENTERPRISES PTY LTD [No 2] [2011] WADC 48

CORAM: SCOTT DCJ

HEARD: 17-19 AUGUST & 13 DECEMBER 2010

DELIVERED : 31 MARCH 2011

FILE NO/S: CIV 1899 of 2006

BETWEEN: ZURICH BAY HOLDINGS PTY LTD
Plaintiff
AND
ATM ENTERPRISES PTY LTD
First Defendant
MURRAY PADDISON
Second Defendant

Catchwords:

Concurrent claims under Competition and Consumer Act 2010 (Cth), Fair Trading Act 1987 and in contract - Defective design and manufacture - Damages - Mitigation

Legislation:

Competition and Consumer Act 2010 (Cth), s 51A, s 52, s 75B, s 87
Fair Trading Act 1987, s 9, s 10, s 68, s 77
Sale of Goods Act 1895, s 14

Result:

Judgment for plaintiff against first defendant for $18,474.34 plus interest
Plaintiff's claim against second defendant dismissed

Representation:

Counsel:

Plaintiff:     Mr T H F Caspersz
First Defendant             :     Mr M T S Rennie
Second Defendant         :     Mr M T S Rennie

Solicitors:

Plaintiff:     Jackson McDonald
First Defendant             :     HFM Legal
Second Defendant         :     HFM Legal

Case(s) referred to in judgment(s):

Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470
Bowler v Hilda Pty Ltd (1998) 80 FCR 191
Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653
Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217
Gate Gourmet Australia Pty Ltd (in liq) v Gate Gourmet Holding AG [2004] NSWSC 149
Gates v City Mutual Life Assurance Society Ltd (1983) 68 FLR 101
Hatt v Magro (2007) ATPR 42‑169
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546
HTW Valuers (Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54
McGrath v Australian Naturalcare Products Pty Ltd (2008) 165 FCR 230
NRMA Ltd v Morgan [1999] NSWSC 407
Quinlivan v Australian Competition and Consumer Commission (ACCC) (2004) 160 FCR 1
Serrata Investments Pty Ltd v Rajane Pty Ltd (1991) 6 WAR 419
Tabcorp Homes Pty Ltd v Bowen Investments Pty Ltd [2009] HCA 8
Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679

SCOTT DCJ:

Background

The plaintiff trades as Mine Site Construction Services (MSCS) and is and was at all material times an incorporated company carrying on business in mining, earthmoving and civil engineering.
The first defendant (ATM) is and was at all material times an incorporated company carrying on business as a supplier of design, engineering, fabrication and testing services and products for heavy engineering, construction and other industries.
The second defendant (Mr Paddison) was at all material times a director of ATM.
In or about December 2004 MSCS acquired a Caterpillar model D3G bulldozer which was a low ground pressure (LGP) model (bulldozer). The bulldozer was fitted with extra wide crawler tracks which had the effect of distributing the weight of the bulldozer over a larger track area.
Pursuant to an agreement made between MSCS and ATM, ATM agreed to design, manufacture and install a cabin to the bulldozer.
By 14 March 2005 ATM designed, manufactured and installed the cabin and the bulldozer was made available for delivery to MSCS on that date.
Within a short period after delivery the cabin experienced excessive movement which resulted in ATM undertaking repair work including the installation of two additional mounts by which the cabin was attached to the bulldozer.
MSCS alleges that the cabin was not:
(a)in all respects suitable for use with a Caterpillar D3 bulldozer;
(b)capable of withstanding the rigours of the uses to which a Caterpillar D3 bulldozer was put; and
(c)manufactured and installed in a proper and workmanlike manner.
MSCS says that it has suffered loss and damage, being the cost of a replacement cabin, transportation costs during repairs being undertaken and the loss of opportunity to earn income from the bulldozer.
The claim is made pursuant to the Competition and Consumer Act 2010 (Cth) (CCA), the Fair Trading Act 1987 (WA) (FTA) and in contract.

Plaintiff's claim

CCA/FTA claims

In its amended substituted statement of claim (statement of claim) MSCS claims that:
(a)on or about 1 November 2004 it requested a quotation from Mr Paddison on behalf of ATM for the manufacture and installation of the cabin;
(b)ATM by Mr Paddison caused a quotation dated 31 January 2005 to be forwarded to MSCS by which ATM offered to design, manufacture and install the cabin for the sum of $20,900 inclusive of GST (price);
(c)by that conduct each of ATM and Mr Paddison represented to MSCS that the cabin would:
(i)be in all respects suitable for use with a Caterpillar D3 bulldozer;
(ii)be capable of withstanding the rigours of the uses to which a Caterpillar D3 bulldozer was put; and
(iii)be manufactured and installed in a proper and workmanlike manner;
(representations)
(d)each representation was a representation as to future matters to which s 51A of the CCA and s 9 of the FTA applied;
(e)induced by and in reliance upon the representations, by purchase order dated 1 February 2005 MSCS accepted the offer of ATM to design, manufacture and install the cabin (agreement).
Further, MSCS claims that by manufacturing and installing the cabin to the bulldozer and making the bulldozer available for delivery to it ATM represented as a present or existing fact the matters the subject of the representations (further representations). MSCS says that it was induced by and relied upon the further representations in that it took delivery of the bulldozer and paid the sum of $10,450 on or about 27 April 2005 and $13,769.25 on or about 25 August 2005 which sum included the price and the cost of alterations to the cabin.

Contract claim

MSCS says that the agreement contained terms implied pursuant to s 14 of the Sale of Goods Act 1895 (WA) (SGA) and at law namely that the cabin would be:
(a)in all respects suitable for:
(i)use with a Caterpillar D3 bulldozer; and
(ii)capable of withstanding the rigours of the uses to which a Caterpillar D4 bulldozer was put
being the uses to which MSCS had expressly made known to ATM;
(b)of merchantable quality;
(c)manufactured and installed in a proper and workmanlike manner.
MSCS's claim for damages against ATM is founded upon an alleged breach of s 52 of the CCA, s 10 of the FTA and/or the implied terms of the agreement in that the cabin was not:
(a)in all respects suitable for use with a Caterpillar D3 bulldozer;
(b)capable of withstanding the rigours of the use to which a Caterpillar D3 bulldozer was put;
(c)of merchantable quality; and
(d)manufactured and installed in a proper and workmanlike manner;
by reason that the cabin experienced excessive movement resulting in cabin seals failing prematurely, cabin mount failure, cabin doors not closing, broken cabin glass and damage to the cabin air conditioner.
The claim against Mr Paddison is founded upon an allegation that he was knowingly concerned in or a party to ATM's alleged contraventions of the CCA (by s 75B) and the FTA (by s 68).

Defendants' case

As to MSCS's claim pursuant to the CCA and/or the FTA, ATM and Mr Paddison in their defence deny that preparing and forwarding the quotation to MSCS constituted the representations, deny the further representations and say that if any representations were made then the representations were limited to the use to which the bulldozer was usually put, that is working in swampy or soft ground.
ATM and Mr Paddison say further that the agreement contained a term that ATM warranted that the cabin would be free of defects concerning workmanship and materials for 90 days from the date of delivery and that the implied terms upon which MSCS relied were negatived or excluded by the terms of that warranty.
ATM and Mr Paddison admit that initially the cabin experienced excessive movement, but that in or about June 2005 ATM installed two extra mounts on the cabin which rectified the problem of excessive movement and say that, subject to minor modification and repair, the cabin was in all respects suitable for use on the bulldozer and capable of withstanding the rigours to which the bulldozer was put. They assert that the cost of those repairs and modifications is no more than $3,000. There was some variation in that estimate during the trial.
ATM and Mr Paddison further say that if MSCS has suffered any loss of opportunity to earn income from the operation of the bulldozer it has failed to mitigate its loss because it failed to undertake repairs to the cabin when it could reasonably have done so viz, August 2006.

Issues

The issues which fall for determination in this case are:
1.The use to which the bulldozer, as an LGP model, was usually put, i.e. for work on any terrain from virgin ground to rough terrain as MSCS contends, or restricted to swampy or soft ground as ATM and Mr Paddison contend and the use to which the bulldozer was put.
2.Whether the representations or further representations alleged by MSCS were made and relied upon by MSCS.
3.If any of the alleged representations or further representations were made, whether they constituted conduct which was misleading and/or deceptive or likely to mislead or deceive contrary to s 51A/s 52 of the CCA and/or s 9/s 10 of the FTA.
4.Whether Mr Paddison bears accessorial liability for any of the alleged representations or further representations.
5.The terms (including implied terms) of the agreement.
6.Whether the implied terms contended by MSCS were excluded or modified by the warranty.
7,Whether there were any breaches of the agreement.
8.In the event that ATM and/or Mr Paddison are liable to MSCS, the quantification of damages.
9.Whether MSCS has failed to mitigate by not replacing/repairing the cabin in or about August 2006.

Evidence

Salvatore Rossi

Mr Rossi is a mechanical engineer whose qualifications and expertise were admitted by ATM and Mr Paddison.
He wrote two reports the first of which was dated 26 November 2007 (exhibit 1.1) and the second was dated 11 March 2008 (by typographical error the date on the report was 11 March 2007).
In his report of 26 November 2007 Mr Rossi said that he had been instructed that the cabin developed problems with failures at the mounting points that is, the four points at which it was mounted on the bulldozer chassis.
He said that the cabin was immediately behind the engine cowling and over the cabin there was a rollover protective structure (ROPS). The cabin was the black structure inside the ROPS. The cabin had windows and doors. He said that the cabin had a skeletal frame clad with 3 mm sheet metal. It was fitted with an air conditioning unit.
The ROPS was secured to the bulldozer chassis by four foot plates for which there was a bolt holding the ROPS in place.
The cabin was then secured to each of the four foot plates by what was commonly known as a flexible mounting immediately adjacent to each of the four ROPS mounting points and in addition two flexible mountings on the engine cowling of the bulldozer.
Mr Rossi said that, on his instructions, after a short operating time of approximately 400 hours problems had developed with failures at the mounting points. His opinion was that the failures resulted from the high inertial forces applied to the cabin when the bulldozer was operating over rough terrain because the mounting points were not sufficiently robust to cope with the loads.
He explained in his evidence that an inertial force is a force that needed to be applied to change the motion of an object. He said that the centre of gravity of the cabin was at a relatively large distance from the pitch and roll axis during operation and large accelerations were produced which manifested themselves as significant forces on the cabin.
He said that the forces would have been applied to the cabin structure through the mounting points. The movement from the bulldozer was transmitted into the cabin through the cabin mountings because that was the connection between the bulldozer and the cabin. When referring to the movement of the bulldozer he said that he was referring to any change in direction which would generate an inertial force.
In his second report Mr Rossi said (in par 15.3(b)) that the mountings had been modified by drilling a hole through the centre and a bolt fitted. He said that this modification rendered the flexible mounting [as] rigid and hence had no cushioning effect.
He said that flexible type mountings were designed to take deflection and mainly to alleviate vibration. He said that the mount would be semi‑rigid because the bolt would still allow a little bit of bounce in a vertical direction.
With respect to the two additional mounting points which were added at the front of the cabin he said that they consisted of three components. One was a U‑shaped bracket welded to the engine cowling, then the flexible rubber element and then another U‑shaped bracket welded to the cabin. Diagrams of those two mountings are exhibit 2.
Mr Rossi said in his second report that the bulldozer was capable of operating on any rough terrain including rocky to sandy terrains and on high gradients.
He said he had depicted in exhibit 2 the mounting from the cabin to the bulldozer chassis. The upper bracket (bracket 2) was affixed to the outer skin of the cabin and bracket 1 was welded to the bulldozer with the flexible mount in between.
He said that the cabin structure was the skeletal frame of the cabin to which the outer skin was attached externally.
He said that in his view the four original mounts and the two additional mounts without a central bolt would not have been adequate to rectify excessive movement because there had initially been a problem with excessive movement of the cabin structure and to add two additional mounts would not have increased the stiffness significantly.
Mr Rossi said that with respect to the two additional mounts the lower bracket was welded to the engine cowling and the upper bracket was welded to the outside of the cabin being the skin of the cabin, not any structural member of the cabin. In his view the bracket ought to have been attached to the actual skeletal frame of the cabin as opposed to the skin of the cabin which was not designed to carry load.
Mr Rossi said that in his opinion good engineering practices had not been taken into account in designing the attachment of the cabin to the bulldozer. By that he meant that an engineer in undertaking the design properly would cater for the worst possible scenario. That is taking into account all of the loadings which may be encountered whether inertial or static. He said that a static loading is where a joint is already loaded because for example, of a misalignment and when one attempted to bolt down that mount there would be stresses already applied to the joint before it was bolted down which added to the stress on that joint during the operation of the bulldozer.
He said that in designing the mount an engineer should take into account all possible scenarios that may be encountered and then apply a fairly high safety factor just to make sure that there would not be a failure.
He said that the fact that a bolt was inserted through the mount was an indication to him that the initial design philosophy had failed.
Insofar as the two additional mounts were concerned he did not consider that good engineering practices had been taken into account in their design – especially given that the upper portion of those two brackets were welded straight onto the skin of the cabin which was only 3 mm thick, rather than being attached to the skeletal structure.
He said that the fatigue cracking would be likely to occur with respect to the left front mounting bracket with further use. He would not be confident that repairs could be carried out because the general strength of the cabin was not up to the task and repairs would be extensive and unsightly. He said that what he meant by that was that the original design was to have a flexible type mounting so that if the cabin was designed on that basis one would probably not have considered that there would be fairly high forces because the philosophy would have been that the flexible mountings would have absorbed the forces and that would determine the strength of the cabin itself and how stiff one would make it.
If that philosophy was changed to make the mountings rigid then there would be greater forces thrown onto the cabin and perhaps the cabin would not then be up to the task because it was designed to be on flexible mountings.
Mr Rossi said that if the mounts were sufficiently flexible then the skeletal frame of the cabin might be suitable because the flexible mounts would provide a degree of damping of the forces. But if the mounts were rigid then the existing cabin structure might not accommodate the rigidity.
Insofar as the nature of any repairs was concerned his opinion was that it might be that further brackets would need to be added to the structure to stiffen it and to look at redoing the six mounting points.
He said that there would need to be in his view an appropriate engineering appraisal undertaken to work out what sort of forces were involved and in which directions those forces were acting before he could express a view as to the nature of the repair work which would be necessary to result in a structure which he would be prepared to say was appropriate.
He had not undertaken that appraisal or done those calculations.
He said that in his opinion it would not be a matter of redoing the six mounting points but it may be appropriate to consider multiple mounting points. He said he had seen other bulldozers where the cabin was fully rigidly mounted with multiple bolting directly onto the structure of the bulldozer.
He had sighted the report of Mr Jack Apgar, the expert engaged by the defendants. He agreed with Mr Apgar that the fatigue crack in the right front mount affixed to the cowling could be readily repaired by welding over the crack but said that that may throw the failure onto the next mount being the one on the front left hand side of the bulldozer.
He said that if the crack was repaired by simply being welded over and nothing else changed then it would crack again about which he had no doubt.
Mr Rossi agreed with the observation made by Mr Apgar (just before line 120 in Mr Apgar's report) that the absence of compliance would be expected to increase the fatigue loading placed on the support brackets.
Mr Rossi said that the difference between him and Mr Apgar was in respect to Mr Apgar's proposed method of rectification which Mr Apgar detailed in par 7 of his report.
Mr Rossi said that this repair involved applying the U‑bracket to the skin of the cabin. But the U‑bracket tore away from the skin initially. He said that in his view what was needed was to have that (new) bracket attached onto the skeletal structure, (the framework of the cabin).
As to Mr Apgar's proposal that all compliant mounting elements be replaced Mr Rossi said that he could not see what that would achieve because as far as he was aware there were six compliant mountings installed and that proved to be inadequate because the cabin movement was still excessive.
Mr Rossi said that even if the two front mounts were attached to the structure (as opposed to the skin), if compliant mounts were used there may be excessive movement of the cabin as there was originally. In the event that the mounting components were bolted there would still be no guarantee that those connections were capable of taking the loads.
If there was no central bolt he said it would still allow movement in the cabin which had been the problem all along.
He said that he had not been able to locate in his research any rubber mounts that were specifically for cabins. He said that the rubber that had been used in these mounts was more of an engine mounting type isolating rubber.

He agreed in cross‑examination that the level of cracking around the right hand front mount had not become worse between the date upon which he first viewed the cabin and about eight weeks prior to the trial.
He agreed that apart from a small crack appearing on the front left mount none of the other mounts had cracked in the area of affixation.
He agreed with Mr Apgar's observation in his report that the cracks around the right hand front mount were minor. He said that the openings in the cabin included pedal openings and conduits. He said there was no perfect seal.
He agreed that even with a pressurising fan there would always be dust and grease in the cabin because there were all sorts of openings in a cabin. Mr Rossi agreed that he had not had direct experience with bulldozer cabins but had seen three or four bulldozers with cabins each of which had multiple bolted cabins. They were bulldozers at MSCS's premises.
He was asked whether those bulldozers had any dust in the cabs and he said that they all had dirt in them.
He agreed that rubber utilised in flexible mountings had different duro ratings and that a higher duro rated mount would increase the stiffness to the cabin. He said that it would be possible in repairing the cabin to use Mackay high duro rated mounts.

Athel Kim Major

Mr Major was employed as a parts sales coordinator with Westrac Pty Ltd.
In April 2010 he was asked to prepare a quotation for a replacement cabin group 203-4400 on a Caterpillar D3G for MSCS and shortly after the request was changed to 'an entire ROPS arrangement 203-4401'. That is an integrated ROPS cabin.
In accordance with that request he prepared five separate workshop parts quotes for an entire ROPS arrangement 203‑4401.
He said he provided a break down of the quotation into a number of groups which would comprise that arrangement.
One of those groups was for an alternator (00E059111) in the sum of $740.25. Mr Major agreed that if the existing alternator was working then this alternator may not be required.
Mr Major was referred to the air-conditioning arrangement break down (00E059109) in which the sum of $10,855.34 was quoted and again agreed that if there was an existing cabin fitted with an air conditioner that component may not be necessary.

Bradley Justin Jones

Bradley Justin Jones was a sales representative for Westrac responsible for parts and service sales for the heavy construction market. In his statement Mr Jones attached a copy of an email to Matthew Caruso of 4 June 2010 on the cover of which was attached the complete cost of the parts for a D3G cabin (W0E059114) which included:
•00E059109 (air con arrangement break down in the sum of $10,855.34);
•00E059111 – alternator breaks down in the sum of $740.25;
•00E059112 – platform enclosure break down in the sum of $3,592.80;
•00E059113 – side and rear brush guards break down in the sum of $2,963.86;
•00E059114 – ROPS arrangement break down (which included the upper half of the cabin which was the enclosed rollover protection structure. The lower half was 00E059112) in the sum of $34,531.13.
Those quotations were attachment BJJ8 to Mr Jones' statement (exhibit 11).

James Lim

Mr Lim made two statements (exhibits 12.1 and 12.2).
Mr Lim attached business records of MSCS relating to:
(a)the site record referable to the work for which the bulldozer was engaged which showed that the bulldozer last worked at Port Hedland on 16 August 2006 (JL3);
(b)the wet hourly rate at the Eneabba West mine site of $86 per hour excluding GST (JL3); and
(c)the owning and operating costs of a bulldozer of $61 per hour (JL4).
From those figures he calculated the loss of profit per hour (net) at $25 excluding GST.
The loss of profit per week of $1,250 excluding GST was calculated by him based on a 10‑hour day, five day working week.
In his supplementary statement (exhibit 12.2) he said that between June 2005 and March 2006 the bulldozer did not accrue any clock hours.
Attachment JL9 was the job machine report summary for the bulldozer for the period 25 January 2006 to 26 August 2006. That record showed that in that period the bulldozer was in work at Burswood for 157 hours and at FMG for 905 hours.
He said that on or about 16 December 2005 he took photographs of the bulldozer in MSCS's yard. One of these photographs is JC10 (which is also MC18 to the statement of Mr Caruso).

Matthew Caruso

He said that in late 2004 MSCS made enquiries about purchasing a Caterpillar D3 bulldozer from Japan which had an open-style canopy which was designed for weather shielding purposes only and would not protect the operator in the event of rollover.
MSCS was looking to purchase a bulldozer to replace its existing D3C bulldozers which only had open ROPS. He said that the bulldozer was to be used on mine sites and in dusty conditions.
MSCS needed a bulldozer with an enclosed ROPS so that it could be operated in dusty conditions.
In about October 2004 he contacted Mr Paddison and told him that MSCS was buying a bulldozer and that it needed an enclosed ROPS cabin installed to which he said Mr Paddison responded that ATM specialised in supplying and manufacturing ROPS, that it had been doing so for a long time and was one of the only places in WA that manufactured and certified ROPS. He was satisfied with the response and did not make enquiry from anyone else.
MSCS purchased the bulldozer in December 2004. During that month he said he met Mr Paddison and they inspected the bulldozer during which meeting he told Mr Paddison that the bulldozer would be going on to WA mine sites.
After Mr Paddison had viewed the bulldozer, he said he told Mr Paddison that MSCS wanted him to quote to design, fabricate and install a rubber mounted air conditioned ROPS cabin for the bulldozer and Mr Paddison agreed to do so.
On 31 January 2005 MSCS received a quotation from Mr Paddison for an enclosed ROPS cabin for the bulldozer. The quotation stated that ATM would manufacture and install the cabin in accordance with AS 2294 (attachment MC3 to his statement).
Whilst he gave instructions that a purchase order be prepared he could not recall whether that purchase order was forwarded to ATM by facsimile. He said that had he not been satisfied with the quotation he would have obtained another quotation.
The bulldozer was delivered to ATM's premises on or about 1 February 2005 and he said that on about 15 March 2005 the bulldozer was collected from ATM's yard.
He said that based upon his review of MSCS's operational records (MC10), the bulldozer was used for the metro rail project between 7 April 2005 and 16 June 2005 during which time it was used on wet and soft terrain.
While the bulldozer was being used on the metro rail project, the radio fell out in the cabin, the door latches were not working and one of the doors became jammed. When the radio fell out he realised the cabin was moving too much when the bulldozer was operating.
He said that in accordance with arrangements he made with Mr Paddison the bulldozer was transported from the metro rail project to ATM's premises on or about 20 June 2005 where between 21 June 2005 and 8 August 2005 ATM fitted two additional cabin mounts to the bulldozer and replaced and relocated door wipers, relocated door latches and replaced glazing.
By reference to MC10 he said that on or about 26 October 2005, MSCS started work on the Burswood project utilising the bulldozer to 31 October 2005. The bulldozer was used in boggy and sandy conditions.
From his observation the cabin, he said, was still experiencing excessive movement causing cabin seals to fail, cabin mount failure, cabin doors not closing, broken cabin glass and damage to the air conditioner. The air conditioner leaked because a fitting had worked loose.
On about 4 November 2005, he completed one of MSCS's warranty claim notification forms and sent it to ATM noting that the RHS door latch did not catch, the LHS door latch was hard to open from the outside, cabin seal u/s‑dust entering cabin and excessive cabin movement while operating (MC14).
On or about 7 November 2005 ATM arranged for the bulldozer to be taken to HGV, a company he understood was associated with ATM. MSCS's repair history report is MC16. He said that the repair history recorded repairs being undertaken.
He said that on or about 30 November 2005 MSCS arranged for the bulldozer to be transported from ATM's Beckenham premises to MSCS's storage yard in Edward Street. He said that he asked Mr Paddison what had been done to fix the machine to which Mr Paddison responded that the mounts had been replaced with a harder compound rubber, the mounting hardware had been replaced and two additional mounts had been installed to the front of the cabin.
He said that on or about 16 December 2005 he asked Mr Lim to take a couple of photographs of the bulldozer in MSCS's yard. Copies of those photographs appear in attachment MC18. He said that they showed that a central bolt had been inserted through the rubber mounts. He said that MSCS did not insert the central bolts.
In attachment MC10 he said it was recorded that the bulldozer worked on the Burswood third and fourth fairway project from about 30 January 2006 to 4 March 2006.
During February and March 2006 he said he informed ATM of further problems with the cabin and in particular air conditioning defects, broken door glass and excessive cabin movement. He said he telephoned Mr Paddison and told him of the problems being experienced and said (inter alia) that even with the two additional mounts installed the cabin was still insufficiently secured to its anchor points.
He said that Mr Paddison attended Burswood during February or March 2006, inspected the bulldozer and told him that ATM would organise the original air conditioning supplier to attend the site and repair the evaporative unit and in relation to the cabin mounts and broken glass, ATM would fix it.
He said that on or about 3 March 2006, MSCS arranged for the bulldozer to be transported from Burswood to MSCS's Welshpool premises, and ATM had a glazier repair the broken door glass and Mr Paddison inspected the bulldozer at MSCS's Welshpool yard. He said he told Mr Paddison that the cabin was moving around way too much and the excessive movement was cracking the glass.
He said that on about 7 March 2006 he prepared a list of defects on an MSCS internal repair estimate form (MC23). The bulldozer was transported to the ATM/HGV yard at Beckenham.
He said that Mr Paddison told him that ATM would replace the cabin mounts with a higher duro rated rubber mount. He said he inspected the bulldozer after work had been carried out by ATM and it appeared to him that the mounts looked over-torqued because they looked very squashed and one of them was physically twisted.
He said that by reference to MC10, after 29 March 2006 when ATM finished carrying out further repair works to the cabin the bulldozer was used by MSCS on the Anderson Point project in Port Hedland from about 3 April 2006 to 28 July 2006 and 12 August 2006 to 16 August 2006 during which time it was used for general bulldozing on Tidal Coast flats in soft ground.
He said that on or about 31 July 2006, he completed an MSCS document titled 'warranty claim notification' which he emailed to ATM in which he stated that the cabin mounts were cracking and attached photographs (MC24).
He said that on 23 August 2006 he forwarded attachment MC24 to Adrian Collis of ATM stating that the right hand front cabin mount had failed due to excessive cabin movement and weakness of design. The email to Mr Collis is attachment MC25.
He said that on 24 August 2006 Mr Collis sent an email to him stating that ATM believed that the damage in the photographs (MC24 and MC25) were not as a result of poor design but as a result of the severe conditions the machine operated in and that it would provide a quotation to repair the damage and to perform operations to strengthen the cabin further. From that email it was clear to him that ATM would not take responsibility for the damage to the bulldozer.
He said that on or about 4 June 2010 he received a five part quotation from Westrac for a replacement cabin to be fitted. The total cost quoted was $52,683.38.
On about 28 May 2010 he arranged for Regal Transport to transport the bulldozer from Port Hedland to MSCS's yard at Welshpool at a cost of $1,650.
He said the bulldozer had been allocated to be used on the Eneabba west mine site commencing in or about August 2006 and he anticipated that it would be used on that mine site until at least May 2007. It was not used at Eneabba west mine site because of ATM's refusal to rectify the damage to the bulldozer and MSCS issued proceedings in September 2006. The cabin of the bulldozer was not replaced or repaired.
In cross‑examination he said that in 2004 and 2006 MSCS had about 60 tracked bulldozers from D3s to D11s. In 2003/4 he did have Caterpillar machines which had cracks in the cabin. MSCS had two D3 bulldozers working at Eneabba without cabins. The bulldozer, when it was purchased by MSCS, had 1,067 engine hours on it.
He said that when he first spoke with Mr Paddison he told Mr Paddison that he wanted to have a cabin on the bulldozer which would look close to the Caterpillar cabin look and Mr Paddison told him that ATM could build something similar. He agreed that he said something similar to the effect that he was sick of dozer cabs cracking.
He said he told Mr Paddison that he wanted the cabin to be designed in the same style as Caterpillar including mounting it like Caterpillar did on rubber mounts.
He said that he recalled Mr Paddison telling him that ATM had recently built a resilient mounted ROPS cabin for use at the Willowdale mine site.
He did not recall Mr Paddison saying that it had been mounted on the back of a truck or that it was a remote controlled cabin or that the bulldozer that the person in the cabin was operating, was working in very rough, rocky ground.
He said he did not recall Mr Paddison telling him that an enclosed ROPS cabin could not be rubber mounted and had to be bolted to the machine.
He said that Mr Paddison told him that a ROPS had to be bolted to the machine, not an enclosed ROPS cabin. When the ROPS was a separate structure from the cabin itself, that had to be bolted directly to the bulldozer.
He said he did not recall Mr Paddison saying to him at the first meeting that if ATM used too many rubber mounts or if the mounts were of a too high duro rating then the cabin would be too rigid and that it would defeat the purpose of rubber mounts leading to the old problem of cracking.
Mr Caruso was referred to par 58 of his statement in which he said that on or about 7 November 2005 ATM arranged for the bulldozer to be taken to HGV in Beckenham and he confirmed that he believed that statement was true.
Mr Caruso denied that the work referred to in MC16 on 8 November 2005 was carried out by somebody other than ATM and perhaps MSCS itself.
It was put to Mr Caruso that the only complaint he had in February and March 2006 related to a broken window – not problems with the cabin, particular air conditioning defects, broken door glass, and excessive cabin movement. He denied that that was the case and said that the problems were experienced because the cabin was moving too much.
It was put to him that Mr Paddison did not inspect the bulldozer at MSCS's yard in March 2006. Mr Caruso said that he believed he did inspect the bulldozer at that time.
Mr Caruso was referred to MC23 (page 118) dated 7 March 2006 headed 'Internal Repair Estimate'.
He said that on or about 7 March 2006 he prepared a list of defects on that form. He said that Mr Paddison inspected the cabin in March 2006 and it was then transported to the ATM/HGV Engineering yard in Beckenham where the repairs were undertaken.
In cross‑examination he said that the initials 'SR' which appeared next to a number of the works the subject of the internal repair estimate stood for Shaun Rappertone who was an apprentice mechanic employed by MSCS.
He agreed that those initials indicated that Mr Rappertone did some or all of the work there described namely:
•Rear cabin seal to be replaced and shims placed under cabin mounts. Replace cabin mounting bolts with stainless steel bolts.
•R & R RHS door seal.
•Replace RHS headlight lense.
•Brake LHS track in preparation for boilermaker repairs.
•Replace RHS segments.
•Straighten LHS carrier roller support.
•Touch up track frames.
•Tint windows.
•Lower rear window seal area starting to rust.
•Sand back prime and paint.
He agreed that the only items which had 'ATM' next to them were:
•Replace LHS glass due to crack – warranty.
•Evac air conditioning system and re‑gas.
Mr Caruso agreed that there was no reference on the form to excessive cabin movement.
I note that Mr Rappertone did not give evidence. His evidence may have been helpful to explain where the bulldozer was when work was done to it and what work was undertaken by him and ATM.
In MC10 he said that the engine hours were recorded under the heading 'SMU'. The term 'docket hours' referred to the number of hours that an operator put on his docket or time sheet or on dockets rendered to a client for payment.
The column 'oper hours' related to machine operator hours.
He was referred to page 67 of MC10 to the machine hours. It was put to him that there were some clear errors in the recording of those hours. For example, on 21 March 2006, the hours recorded were 1,552 but on 22 March 2006, the hours recorded were 1,529 being 23 hours less than the day before.
Further, on 4 March 2006, the operator hours were recorded at 1,517. On that day, there were 3 1/2 operator hours however the next entry on 21 March 2006, appeared as 1,552 hours. He agreed that it may be the case that that figure was more likely to be 1,522.
The SMU reading on 29 March 2006 was 1,551 hours so that assuming that on 21 March 2006 the hours ought to have been recorded as 1,522 (not 1,552) there were then 29 hours recorded in the seven day period between 21 March 2006 and 29 March 2006 plus 175 litres of fuel during that time.
In his statement Mr Caruso (par 75) said that it was recorded in attachment MC10 that the bulldozer was at ATM's Welshpool workshop until about 29 March 2006 which, it was put to him, could not be correct having regard to the machine hours over that period of seven days ending on 29 March 2006 during which time there appeared not to have been any billable (docket) hours recorded.
Further Mr Caruso said that MC10 recorded that between 21 March 2006 and 29 March 2006 the bulldozer was at '60 Welshpool'.
Mr Caruso said that there being no billable hours could possibly reflect that the bulldozer was either in the workshop and they were testing hours or it was on another job where the machine was not being charged out.
He agreed that there may have been errors in the SMU hours in MC10 and that when the bulldozer first started work the SMU was likely to have been 1,067 hours.
He was then referred to attachment MC25 being an email from him to ATM dated 23 August 2006 with photographs of the cracking around the right front mount.
He denied that that was the first occasion upon which he complained about cracking because he tried to contact ATM on numerous occasions before that date regarding the cracking without response but conceded that he did not make reference to those numerous attempts in his statement.
It was put to him that in the email from him of 23 August 2006 to ATM he stated that the cabin was installed at SMU 1,647 hours with the then current SMU of 2,045 hours - the difference being 398 hours of machine operation. It was put to him that the figure of 1,647 hours was more likely to be 1,067 hours resulting in the bulldozer having worked close to 1,000 hours rather than 398 hours with which he agreed.

He agreed that notwithstanding by that email he informed ATM that if a formal response was not received by close of business on 24 August 2006 MSCS would arrange for a contract repairer to effect the repairs and back charge ATM, repairs were not effected.
Mr Caruso agreed that in MC16 (page 109) the engine hours recorded as at 31 March 2010 were 2,868 meaning that up to 31 March 2010 the machine had done about 1,800 hours.
He said that by August 2006 work had finished at Port Hedland and between August 2006 and May 2007 the bulldozer did not work.
Mr Paddison was referred to exhibits 9 and 10. Exhibit 10 was a quotation for parts from Westrac to MSCS dated 24 August 2006 for a 3G cabin totalling $16,891.84. Exhibit 9 was an email from Westrac to MSCS dated 25 August 2006 in which the estimated labour cost to install the cabin was $1,522.50 plus $422 and parts if the air conditioning unit needed a re‑gas.
As to the quotations from Westrac comprising MC38 dated 4 June 2010 Mr Caruso said that he did not know whether all the parts referred to were required for the bulldozer. He relied on Westrac to provide the correct information.
He said that neither Brad Jones nor Athel Major from Westrac inspected the bulldozer.
As to the availability of work after August 2006 he said that the bulldozer would have been allocated to an operating site or a new job site because MSCS was in the business of putting bulldozers to work.
He said from August 2006 he thought that MSCS had two jobs running. In particular there were discussions that the bulldozer was to be allocated to the Eneabba West mine site. He agreed that they were only discussions.
He said the bulldozer could have been sent as a standby machine ie, in case it was needed.
He said he did not know what the arrangement with Iluka was as to payment for a bulldozer which was on standby.
He said it could have been on standby and could quite possibly have gone to work.
The other available work was general bulldozing work at the Beckenham premises of MSCS but he could not recall whether there would be payment for general bulldozing work.
He said that MSCS had had a number of bulldozers working at the Iluka mine at Eneabba for several years. He said that he was aware that there was a proposed closure or rehabilitation of the Eneabba West site in 2006.
He said that the bulldozer was bought for use at Eneabba West, however by August 2006 it had not been sent to Eneabba.

Defendant's case

William Jack Apgar

Mr Apgar is a qualified engineer/scientist and gave evidence as the defendants' expert. In his report, (exhibit 3) Mr Apgar said that the only damage which was visible to the cabin on the bulldozer was minor corrosion near the roof and cracking around the left front mount. That cracking had the characteristic appearance of fatigue cracking which had occurred progressively over time.
He noted that all six compliant mounts supporting the cabin had bolts placed through them from top to bottom which would provide a solid mounting rather than a compliant mounting. He described the damage he observed as being minor and readily repairable. The cracking of the cabin near the right front mounting bracket was fatigue cracking due to the poor design, he said, of the bracket and its attachment detail.
He said that the bracket had a vertical dimension of only 80 mm which was too short. This, combined with the transverse weld at the bottom of the bracket had caused high stresses and a stress riser which initiated a fatigue crack.
A properly designed bracket should be made of thinner material which was closer to the thickness of the base material. A bracket made from 4 mm steel, as opposed to 6 mm steel would be adequately strong and would be more compatible with the 3 mm material of the cabin. He said that the bracket should be redesigned so that it had a significantly greater vertical dimension with tapers top and bottom and no transverse weld and that would allow for a gradual transfer of stresses from one material to the other.
He noted that all of the mounting brackets contained compliant mounting components which had a bolt through their middle which would reduce if not eliminate compliance. He said that the absence of compliance would be expected to increase the fatigue loading placed on the support brackets.
He said that the base structure of the bulldozer was such that it must flex in order to handle the stresses that were placed on it. It was likely made from high tensile material in order to be structurally efficient. High tensile material flexed more than lower strength material when carrying high loads. As a result the cabin, constructed from mild steel which had a relatively low strength, must be fitted with compliant mounts so that it was not forced to flex as much as the high strength material.
He said that the front brackets could be easily repaired. Both original front brackets should be removed and any cracked material repaired. He said it would be prudent to place a doubler over the area where the bracket would mount so as to better transfer stresses into the base material. The doubler should be no more than 4 mm thick and should have pointed ends in order to reduce stress concentrations.
In his conclusion he said that:
(1)the damage to the right front mounting brackets was due to poor design which caused stress concentrations which led to fatigue cracking;
(2)the placing of bolts through compliant mounts would have aggravated this problem;
(3)the damage was minor and readily repairable;
(4)repairs could be made by:
(a)removing the front mounting brackets and repairing the base material with full penetration welds which should then be ground flush;
(b)installing doublers in the area where the new mounts were to be installed;
(c)installing redesigned mounts on the doublers;
(d)replacing all compliant mounting elements;
(e)repainting as required.
Mr Apgar said that the idea of a compliant mount was to allow relative movement between the base and the item being supported. He said it was like the suspension on a car. It supported the load but allowed some movement.
He said that the mounts were designed to allow some relative movement between the components. Normally one would expect the cabin to be able to move about vertically, horizontally and rotate slightly with the compliant mounts.
If a bolt was put through them the compliance was taken out and that could increase the loading on the mounting components.
Mr Apgar said that if one had acceleration of a mass one gets an inertial force.
In this environment there was vibration. By that he meant that there was a big diesel engine making a lot of vibration, there was a lot of contact with the ground making vibration, there was moving machinery making vibration and there was a cabin which had a mass in that it was trying not to move. He said that by there being an isolation (compliant) mount one could allow the movement underneath to create relatively low stresses into the structure (cabin). Whereas if there were no isolation movements, the stresses would go into the structure (cabin).
Mr Apgar agreed with Mr Rossi that the consequence of those forces was that the cabin structure was subject to forces transmitted through the mounting points.
He said that from looking inside the cabin the skin of the cabin and the structure were virtually the same thing. He said it basically was a piece of formed steel so that the main column as near as he could tell was part of the structure.
He agreed with Mr Rossi that the two front brackets welded to the cowling should have been attached to the skeletal structure of the cabin.
Mr Apgar said that he agreed that to avoid further cracking the mount needed to be redesigned and the compliant mounts needed to be put back in.
He agreed with Mr Rossi that if there was a repair undertaken to the right hand front mount that might result in a failure to the left hand mount. He said that as part of the repair it would be necessary to re‑gusset the left hand mount to help transfer the loads.
With respect to Mr Rossi's evidence that the front brackets were attached to the skin of the cabin rather than the skeletal structure he said that his understanding was that the structure was fairly integrated and that he would hardly call 3 mm a skin. It was structural. He said that a properly designed bracket mounted on the structure of a thickness of 3 mm should outlast the bulldozer.
Mr Apgar said that with respect to accelerations and mass there was another major source of force on the bracket and that was the fact that the substructure of the bulldozer itself flexed. If the cabin was bolted down without any compliance onto that structure and that structure was moving and flexing, and it probably could because it was constructed of a high yield material then that would induce forces on brackets which could be large.
He commented on Mr Rossi's evidence which was that with the compliant mounts without the bolt through them there could still be excessive movement of the cabin when the bulldozer was operating. He said that he did not observe the bulldozer in operation. He said that compliant mounts could allow quite a lot of movement. He said that the reason for allowing movement was to reduce the actual forces.
He said that if one made things too tight and they flexed when there were accelerations and vibration then the actual forces experienced could be larger.
He said that the reason for putting in compliant mounts was to create an isolation for vibration because rubber absorbed energy as it flexed.
So although there would be more movement he would expect the stresses to be substantially less and particularly the peaks associated with the vibration to be damped out and that was why isolation mounts were so good.
Mr Apgar did not offer any opinion on the suitability of the Mackay M200055 mounts for this structure. Nor did he say why it was that the replacement of those mounts would not result in excessive movement of the cabin as had previously occurred.

Murray Clive Paddison

Mr Paddison is and was a director of ATM. He said ATM built ROPS frames and ROPS cabins for earthmoving machinery and trucks. He said that a ROPS frame may have a cabin underneath it. A ROPS cabin which had a ROPS frame built into it was generally known as an EROPS – being an integrated ROPS.
He said that in about August 2004 he received a call from Ms Mitchell of MSCS who said that MSCS wanted ATM to quote for the installation of an air conditioned cabin on a Caterpillar D3 dozer. He met with Ms Mitchell who showed him a D3 dozer which was fitted with a ROPS frame that had no cabin. He said the ROPS frame had been built by Engineered Structures Australia Pty Ltd, a company of which he was formerly a director and shareholder.
He said he told her that ATM could not build a cabin under an existing ROPS frame and that it would need an EROPS.
He prepared a quote dated 29 September 2004 and faxed it to Ms Mitchell who then rang him in late October and told him that the bulldozer was going to be used for landscaping and spreading mulch where the conditions were dusty. As a consequence he recommended that in addition to an air conditioner the cabin be fitted with a pressurising fan to keep the dust out.
On 1 November 2004 he prepared a further quote which included a provision for a pressurising fan.
In late 2004/early 2005 he met with Mr Caruso of MSCS at MSCS's yard. He did not recall viewing a D3 bulldozer and was reasonably certain that Mr Caruso told him that MSCS had ordered another D3 without a ROPS frame or cabin.
Mr Caruso told him that he wanted a ROPS cabin built for the D3 bulldozer and that he wanted one to look like the later model Caterpillar bulldozer cabins.
Mr Caruso told him words to the effect that he was sick of bulldozer cabins cracking and he wanted the cabin to be rubber mounted.
He said he told Mr Caruso words to the effect that a ROPS cabin could not be rubber mounted and had to be bolted to the machine. He said he told Mr Caruso that ATM had recently built a resilient mounted ROPS cabin for use by a client at the Willowdale mine site and that that cabin was mounted on the back of a truck and that the operator sat in the cabin and remotely controlled a bulldozer which worked on very rocky, rough ground.
He said that he told Mr Caruso that whilst it was a novel idea ATM could try a similar set-up being a resilient mounted cabin and a fixed ROPS frame on the bulldozer. He said to Mr Caruso that if ATM used too many rubber mounts or if the mounts were of too high a duro rating the cabin would be too rigid thus defeating the purpose of rubber mounts and leading to the old problem of cracking.
He said he told Mr Caruso that he proposed installing four rubber mounts, two at the rear of the cabin and two at the mid‑point and said that it may not be rigid enough and may need two extra mounts at the front depending on how it went in the field.
He said that the mounting system was based on the Willowdale design.
He agreed in cross‑examination that it was a very different situation to mount a cabin on a bulldozer than mounting a cabin on a truck.
He said that he then had no contact with Mr Caruso until he met him at MSCS's yard in late December 2004/early January 2005. To the best of his recollection the bulldozer was not there and he did not recall Mr Caruso saying anything about the bulldozer going to WA mine sites for operations. His impression was that the new bulldozer was to be pushing mulch on the freeway extensions.
He said that he would have been surprised if Mr Caruso had told him that the bulldozer was going to work on mine sites, because being an LGP model it generally would not have been used on mine sites but on swampy grounds.
Mr Caruso sought a quotation and on or about 31 January 2005 he sent an estimate to MSCS. It did not provide for a cabin pressuriser because after he sent the quotation on 1 November 2004 he was told that MSCS did not want an air pressuriser. The estimate was attachment E to his statement of 12 August 2010 (exhibit 20).
He received a verbal confirmation from someone whose name he did not recall and also verbally received an order number being 03479. He said ATM had no record of receiving a written purchase order from MSCS. Be that as it may, there is no issue between the parties that an agreement was entered into.
In February 2005 MSCS caused the bulldozer to be delivered to ATM's workshop.
He said that he was aware from previous experience that it was important for those who operated the bulldozer to be able to see the corner tips of the blade and it was therefore important that the door and door hardware did not obscure the operator's view of the corner tips.
Mr Caruso and Mr Zelko selected the position for the door hardware.
The work was finished and an invoice was rendered to MSCS dated 14 March 2005. The bulldozer was collected shortly thereafter.
In or about April 2005 Mr Caruso telephoned him and told him that the left hand door locks had failed, the right hand door glass had broken and the cabin was lifting at the front allowing dust intrusion. Adrian Collis and he inspected the bulldozer with Mr Caruso.
They viewed the bulldozer when it was operating at the metro rail extension works. He said that the cabin had too much movement at the front and he said he agreed with Mr Caruso that ATM would at its cost install two additional mounts on the front of the cabin.
Mr Caruso agreed that MSCS would pay for the modifications to the doors and supply the door hardware and it was agreed that the repairs and modifications would be undertaken when the bulldozer had completed work at the current site. The bulldozer was delivered to ATM's workshop in June 2005.
ATM then modified the doors to relocate the handles, had the door glass replaced, fabricated brackets and mounts at the front of the cabin and installed Mackay M2200055 mounts at the front of the cabin which were the same as the four mounts which had initially been used.
MSCS collected the bulldozer on or about 9 August 2005.
He said that the bulldozer did not come into the ATM or HGV workshop in November 2005. He disputed the assertion that the cabin had excessive movement after August 2005. He accepted that a warranty claim notification (MC14) was received from MSCS in which complaint was made about continued excessive cabin movement.
He said that in or about February or March 2006 ATM received a further complaint from MSCS about broken glass in one of the doors on the D3 dozer. He said he had reservations about the cause of the broken glass. It appeared to him that the front of the door catches was out of alignment and that could cause, upon the door being slammed, glass to break. Alternatively, the bulldozer was working at Burswood golf course and the window could have been hit by a golf ball. Be that as it may he agreed to pay for the replacement of the glass. He said that the contractor went to Burswood to change the glass.
He said in March 2006 the bulldozer did not come into ATM/HGV's yard. He said that in March 2006 ATM and HGV operated from 29 Clapham Street, Beckenham.
He denied meeting with Mr Caruso at Burswood or having any conversation with Mr Caruso at or about that time in which Mr Caruso said that the cabin was still moving way too much. Nor did he tell Mr Caruso that ATM would replace the cabin mounts with a higher duro rated rubber mount.
He denied that ATM/HGV inserted the central bolts.
He said that it was only after this legal action was commenced that it became apparent to him that someone had placed bolts through the rubber mounts on the cabin and put a nut and washer on each bolt.
He said that the central bolts were Allen head bolts and that ATM had never had occasion to use Allen head bolts as far as he was aware. Further the bolts through the mounts were uncoated steel and at the time ATM almost always used zinc coated bolts.
In his supplementary statement dated 21 September 2010 Mr Paddison relevantly said:
(a)As to Mr Rossi's evidence that repairs could not be effected without removing the cabin and ROPS frame, he agreed with Mr Apgar that the repairs could be undertaken without removing the cabin. He gave an estimate of the work required to do so which he said was in conformity with the work proposed by Mr Apgar, He said that he estimated 28 hours work for a boilermaker would be ample at the current charge out rate of ATM of $110 per hour namely, $3,080.
He said that there would be six Mackay M200055 isolators in respect to which Mr Andrews of Flexible Drive Agencies Pty Ltd gave evidence that they would cost $245.30 each.
(b)The cost for all nuts and bolts, steel and paint would be no more than $50.
(c)Should the cabin and ROPS frame need removing as indicated by Mr Rossi the work required was that specified in par 18 of his supplementary statement in respect to which there would be 10 hours at a retail cost of $1,100 plus the cost of de‑gassing and re‑gassing the air conditioner which would be between $300 and $400.
He said that the total cost of repair would be at most:
Labour cost as per repairs proposed by Mr Apgar      $3,080.00
6 McKay M200055 isolators$ 1,471.80
Nuts and bolts, steel and paint  $    50.00
Plus (should the cabin and ROPS
frame need removing - labour)  $1,100.00
De-gas and re‑gas air conditioner  $   400.00
He agreed that MSCS did not hold itself out as having expertise in the design of cabins and accepted that it relied on ATM's skill and judgment.
Mr Paddison said that the two front mounts that were installed were the same as the original four compliant mounts and that there were a large range of different types of mounts in the Mackay range and from other suppliers.
He agreed that the selection of a particular mount depended on a number of factors including the weight to be supported by each mount and perhaps the vibration frequency of the machine.

Damages were claimed against the second defendant by reason of his alleged accessorial liability under the TPA and FTA and for breach of his duty of care.
Counsel for the plaintiff relied upon the schedule of damages dated 28 June 2007 which he said particularised the plaintiff's claim as at the date of the institution of the proceedings. The damages claimed were:
(a)$18,474.34 for a replacement cabin;
(b)the value of the loss of opportunity to earn income from the date that the cabin failed until the installation of a new cabin at the rate of $1,250 per week;
(c)$18,782.16 for replacement forks and materials handling arm for the IT38G tool carrier; alternatively, $4,855.50 for modification costs and the value of the loss of opportunity to earn income during the period of repair and rectification of $780 per day;
(d)$4,400 for the cost of freighting the IT38G tool carrier from Port Hedland to Perth.
(paragraphs (c) and (d) are referred to as the Caudo Claim)
Counsel for the plaintiff said that proceedings were also instituted against Caudo Pty Ltd with respect to the sum sought in the Caudo claim and that those proceedings were subsequently settled.
The plaintiff increased the claim for replacement costs of the cabin on a number of occasions such that by trial the sum claimed was $65,058.38. Relevantly, however, as at the date of institution of these proceedings the sum which the plaintiff claimed under this head was $18,474.34.
The claim for the value of loss of opportunity to earn income at the rate of $1,250 per week was not particularised in the schedule of damages dated 28 June 2007 and was not the subject of any calculation until 16 July 2010 when amended particulars were filed in which that value was claimed to be $1,250 per week from August 2006 to about May 2007 and during periods of repair being 21 June 2005 to 8 June 2005 and 7 November 2005 to 30 November 2005.
The plaintiff says that the period August 2006 to May 2007 was the period during which it contended that the bulldozer was out of work because of the need for the cabin to be replaced. At $1,250 per week the sum under this head would exceed $45,000
Counsel for the plaintiff submits that even leaving aside the Caudo claim at the date the action was commenced, the plaintiff reasonably expected that the claim would exceed the sum of $50,000.
Counsel for the defendants submitted that by the date upon which the proceedings were instituted the plaintiff was well aware of the prospects of successfully recovering loss of income referable to the alleged defective cabin and that for the reasons to which I referred in my judgment there was, as the plaintiff must have well known, not to have been any reasonable prospect of the claim both for past loss and future loss being made out.
To that end, putting aside the Caudo claim, defence counsel submits that the claim which the plaintiff could reasonably have considered might be successful would not have exceeded the jurisdictional limit of the Magistrates Court.
In the reasons published by me I found that the plaintiff did not prove any loss of income prior to August 2006 and that it had failed to mitigate its loss by failing to replace the cabin in or about August 2006. To that end I found that the cabin could have been replaced by 30 September 2006.
As a consequence the only recoverable income losses after August 2006 would have been for the period expiring 30 September 2006.
The plaintiff pursued its claim at trial for the value of a lost opportunity to earn income between August 2006 and May 2007. Even though I found that the plaintiff had failed to mitigate its loss and I found that I was not satisfied that the plaintiff had made out its claim for loss of income I do not consider that the plaintiff might not reasonably have expected to recover that sum or a significant part of that sum at trial.
The fact that it was not successful in doing so is not to the point. The question falls to be determined at the date upon which the proceedings were instituted.
Even without the Caudo claim the sum sought by the plaintiff was substantially in excess of the jurisdictional limit of the Magistrates Court.
Insofar as the Caudo claim is concerned I cannot make any firm determination as to the plaintiff's reasonable expectation.
It was not a claim which was dealt with at trial. However I have sighted the statement of claim in which the Caudo claim is pleaded. Counsel said that that claim was being pursued but was the subject of a settlement direct by Caudo Pty Ltd.
In all I am satisfied that when the proceedings were instituted in this court the plaintiff might reasonably have been expected to recover an amount in excess of $50,000.
Further it was always open to the defendants if they took the view at any stage during the course of these proceedings that the sum to which the plaintiff might at best be entitled would not exceed the jurisdiction of the Magistrates Court, to make an application for an order that this action be remitted to the Magistrates Court.
Of course, before making such an application a defendant may need to be fully appraised of the ambit of the plaintiff's case and have considered all the relevant documentation and other relevant materials relating to it.
Nonetheless it is a course which is open to a defendant.
In the premises it is appropriate that any costs awarded to the plaintiff be taxed on the Supreme Court scale.

Plaintiff unsuccessful on issues – claim against second defendant dismissed

During the course of oral submissions on 26 May 2011, counsel for the parties agreed that rather than the orders encompass an order for costs:
(a)in favour of the plaintiff;
(b)in favour of the first defendant (if any) with respect to issues which the plaintiff failed to prove; and
(c)in favour of the second defendant.
there ought to be a percentage order for recovery in favour of the plaintiff which would deal with all of these issues given that the second defendant was the managing director of the first defendant.
That is a course which is a practical one. It is a course which has been referred to with approval in cases such as Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133(S); R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] 206(S) and Lampropoulos v Kolnik [2010] 193(S).

Issues not proved by plaintiff

The defendants say that the plaintiff was unsuccessful in its claim against the first defendant with respect to two issues being:
(a)the claim for loss of opportunity both before and after August 2006; and
(b)the claim for the cost of a replacement cabin based upon Westrac's quotation of 4 June 2010.
The first defendant in its supplementary submissions says that insofar as the loss of opportunity claim is concerned the evidence was given by James Lim (total time of his evidence being 43 minutes) and to a much lesser extent, Matthew Caruso (total time of his evidence being 30 minutes).
With respect to the replacement cost of a new cabin, counsel for the first defendant said that the evidence of Mr Major and Mr Jones (for Westrac) totalled 67 minutes.
The first defendant submits that the evidence and submissions approximated 2.5 hours out of a total time for trial of approximately 20 hours or 12.5% of the trial time.
Insofar as preparation time is concerned with respect to these issues of quantum, counsel for the first defendant estimated (conservatively), five hours.
The plaintiff on the other hand submitted that the plaintiff should not be deprived of its costs in respect of a particular issue simply because it failed in respect of that issue.
In Mercer v Western Australian Planning Commission [2008] WASC 124(S) [45] Jenkins J said:
Having found that the plaintiffs should generally have their costs, I would not deprive them of costs in respect to a particular issue simply because they failed in respect to it. It is to be expected that even a successful party will fail in respect to some issues which it raised during the course of proceedings: Cretazzo v Lombardi (1975) 13 SASR 4, 12.
In that case her Honour was critical of a valuation methodology upon which the plaintiffs relied and noted that the combined evidence referable to that valuation took approximately four and a half days out of a total of five and a half days of evidence in the plaintiff's case.
As a consequence her Honour significantly discounted the costs to which the plaintiff was entitled.
In Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40‑748, 136-48137 Toohey J held that where a litigant had succeeded only upon a portion of his claim, the circumstances might make it reasonable that he bear the expense of litigating the portion upon which he failed. His Honour referred to the decision of Jacobs J in Cretazzo [16] to the effect that such an order should be made with caution as the ultimate ends of justice might not be served if a party was dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.
In Jamal v Secretary, Department of Health (1988) 14 NSWLR 252, 271 Kirby P said that the ordinary rule that costs follow the event should only be departed from if the increase in costs relating to the issue on which the successful party was unsuccessful was of 'sufficient significance to warrant a special order'.
In this case I am of the view that there should be no reduction in the costs awarded to the plaintiff by reason of its failure to recover the sum sought by it at trial for the replacement cost of the cabin, calculated as at 4 June 2010.
The plaintiff was successful in recovering damages for the cost of replacing the cabin but I awarded damages calculated as at August 2006.
The evidence referable to the cost of replacement of the cabin be it August 2006 or June 2010 comprised, principally, evidence by quotations from Westrac which were exhibited by consent.
The claim for loss of profit is, in my view of a different category. It was a discrete issue and one which required a close examination of a number of relevant documents and cross‑examination of both Mr Lim and Mr Caruso.
In my view a percentage reduction ought to be afforded to the first defendant to take into account the costs incurred by it and the costs incurred by the plaintiff which it ought not recover.

Claim against second defendant dismissed

In the first defendant's submissions on costs the first defendant does not make any claim with respect to the failure by the plaintiff to prove its claim for damages against the first defendant based upon the alleged breaches of the Competition and Consumer Act 2010 (Cth) (CCA) and the Fair Trading Act 1987 (FTA).
Counsel does submit however that with respect to the second defendant the costs incurred in dealing with the accessorial claim against the second defendant would amount to no more than three hours' work.
The practical approach, as I said earlier, is to award the plaintiff a percentage of its costs rather than make discrete orders in favour of the first and second defendants.
To that end having regard to the time spent at trial and a reasonable estimate of time in preparation and the costs incurred by the plaintiff which it ought not recover the appropriate course is to allow the plaintiff 85% of its costs to take into account the loss of opportunity issue in which it failed and its failure to prove its claim against the second defendant.
Consequently the plaintiff should be entitled to 85% of its costs and disbursements allowable on taxation with there being no order for costs in favour of the second defendant.

Cost of transcript

The defendants do not say that a transcript was not reasonably necessary during the course of this trial. That is a proper concession to make given the fact that the trial was adjourned part heard and was heard over a number of days.
The defendants say however, that they made a proposition to the plaintiff in December 2010 that they would share the costs of the transcript ordered by the plaintiff on a 50/50 basis but that offer was refused resulting in the defendants having to pay the cost of a transcript direct.
The defendants' counsel said that it was a practice for parties to share costs in the manner the subject of their counsel's proposal and that the refusal on the part of the plaintiff was, in all the circumstances, unreasonable.
I can sympathise with the submissions made by counsel for the defendants. I cannot see any reasonable basis for the plaintiff to take that position. Parties to litigation should be encouraged to take reasonable steps to reduce costs.
During the course of oral submissions reference was made to copyright issues which may arise in the event that the transcript obtained by the plaintiff was then copied.
The heading on the transcript is in the following terms:
Copyright in this document is reserved to the State of Western Australia. Reproduction of this document (or any part thereof, in any format) except with the prior written consent of the Attorney General is prohibited. Please not that under s 43 of the Copyright Act 1968 copyright is not infringed by anything reproduced for the purposes of a judicial proceeding or of a report of a judicial proceeding.
The matter was canvassed in Computer Accounting and Tax Pty Ltd (S) where Simmonds J said:
I agree that it is desirable parties confer with a view to sharing costs where such cost sharing is reasonably possible. … [54].
At [57] his Honour made reference to the provisions of s 43 of the Copyright Act 1968 (Cth) and said:
However, the copyright warning carried on transcript that is made available to a party on payment of the relevant fee would in my view make it reasonable for a party not to consider sharing the transcript with the other party by copying it, at least in the absence of an approach by the other party. It was common ground there had been no such approach here.
In my view there was not likely to be a breach of copyright by the costs of the transcript being shared in the manner proposed by counsel for the defendants. In exercising my discretion I am of the view that the approach taken by the plaintiff was an unreasonable one.
In the circumstances the disbursement item for transcript will be limited to 50% of the cost, to the plaintiff.

Summary

The costs orders which are to be made are that the first defendant pay 85% of the plaintiff's costs and disbursements to be taxed. There be no costs order in favour of the second defendant.
The parties ought to submit a minute of the formal costs orders reflecting this determination.