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Supreme Court of New South Wales |
Last Updated: 20 December 2019
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Supreme Court New South Wales
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Case Name:
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Sydney Advanced Plumbing Pty Ltd v Smoothflow Australia Pty Ltd
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Medium Neutral Citation:
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Hearing Date(s):
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20 November 2019
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Date of Orders:
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20 December 2019
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Decision Date:
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20 December 2019
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Jurisdiction:
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Common Law
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Before:
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Harrison AsJ
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Decision:
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The Court orders that:
(1) The appeal is dismissed. (2) The decision of his Honour Magistrate Richardson dated 26 March 2019 is affirmed. (3) The amended summons filed 18 June 2019 is dismissed. (4) The first plaintiff is to pay the defendant’s costs on an ordinary basis. |
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Catchwords:
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APPEAL – Local Court Magistrate – Whether the Magistrate failed
to provide sufficient reasons – Whether the Magistrate
denied the first
plaintiff procedural fairness – Where the decision was delivered ex
tempore – Appeal dismissed
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Legislation Cited:
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Cases Cited:
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Acuthan v Coates (1986) 6 NSWLR 472
Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Beale v GIO (1997) 48 NSWLR 430 Bradley v Matloob [2015] NSWCA 239 Carlson v King (1947) 64 WN (NSW) 65 Carr v Neill  [1999] NSWSC
1263  Commissioner for ACT Revenue v Alphaone Pty Ltd [1994] FCA 1074; (1994) 49 FCR 576 Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Jorgensen v Fair Work Ombudsman (2019) 371 ALR 426; [2019] FCAFC 113 Jung v Son [1998] NSWCA 120 Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 Pettitt v Dunkley [1971] 1 NSWLR 376 Public Service Board of NSW v Osmond (1986) 159 CLR 656 RL & D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; (2006) 228 CLR 152 Wang v Yamamoto [2015] NSWSC 942 |
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Category:
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Principal judgment
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Parties:
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Sydney Advanced Plumbing Pty Ltd (First Plaintiff)
Mourtada El-Reda (Second Plaintiff) Smoothflow Australia Pty Ltd (Defendant) |
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Representation:
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Counsel:
E Doyle-Markwick (First Plaintiff) D D Knoll AM with D J McDonald-Norman (Defendant) Solicitors: One Group Legal (First Plaintiff) Kioussis Lawyers (Defendant) |
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File Number(s):
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2019/169629
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Publication Restriction:
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Nil
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Decision under appeal:
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Court or Tribunal:
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Local Court – Campbelltown
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Jurisdiction:
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Civil
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Date of Decision:
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26 March 2019
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Before:
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Richardson LCM
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File Number(s):
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2017/140548
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JUDGMENT
Appeals generally
Grounds of appeal
Extension of time
“ ...The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v National Trustees Executors and Agency Co. of Australasia Ltd [1978] VicRp 27; [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott [1986] FCA 365; (1986) 12 FCR 187 at 194-5. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VicRp 113; [1967] VR 871 at 872; Hughes, at 263-4; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has ‘a vested right to retain the judgment’ unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v Cumarasamy [1965] 1 WLR 8 at 12; [1964] 3 All ER 933 at 935:
‘The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.’”
Sydney Advanced Plumbing’s submissions
Explanation for delay
Smoothflow’s submissions
Consideration
The Local Court proceedings
The pleading of the cross claim and defence to the cross claim
“11. In breach of the agreement, some of the goods sold by the cross-defendant to the cross-claimant were not fit for the installation as part of the Fire Prevention Systems and/or were not of merchantable quality by reason of the fact that the goods failed, thereby causing the Fire Prevention System to either fail or require repairs.
(a) Item No: MTEQ32 in Tax Invoice 17670 dated 25 May 2016;
[Galvanized Malleable Equal Tee – 32mm]
(b) Item No: MTEQ40 in Tax Invoice 17670 dated 25 May 2016;
[Galvanized Malleable Equal Tee – 40mm]
(c) Item No: SCV-65 (9 of 10 items defective) in Tax Invoice 18640 dated 12 September 2016;
[65NB sprinkler control value]
(d) Item No: MTER252515 (approximately 50% of Tees) in Tax Invoice 19028 dated 21 October 2016;
[Galvanized Malleable Hexagon Reducing Tee]
(e) Item No: MNIP25 (approximately 50% of Nipples) in Tax Invoice 19028 dated 21 October 2016;
(f) Item No: FPS380-65-160-HE in Tax Invoice 18954 dated 1 November 2016;
[Diesel plump]
(g) Item No: JP-LVR1-15 in Tax Invoice 18954 dated 1 November 2016; and
[Tacking pump]
(h) Item No: FPS80x50-250-22.0 in Tax Invoice 19072 dated 3 November 2016.
[Electric pump]
[the description of the items were added in handwriting]
(Defective Goods)
The Defective Goods failed resulting in:
(a) water damage being caused to the premises in which the Fire Prevention Systems were installed;
(b) the Fire Prevention Systems (in the premises where the Defective Goods were installed) failing;
(c) the fire alarm forming part of the Fire Prevention System (in the premises where the Defective Goods were installed) being triggered despite their being no fire;
(d) water leaks in the Fire Prevention System installed in various premises; and
(e) the first defendant having to either directly, or through contractors, carry out rectification or repair work to the Fire Prevention Systems, which the Defective Goods formed part of.
13. By reason of the cross-defendant’s breach of the agreement, the cross-claimant had to carry our rectification and/or repair works to the Defective Goods and the Fire Prevention Systems totalling $45,727.00.”
The hearing in the Local Court
The Magistrate’s decision
“Tawfik’s evidence and Schaffer’s evidence is where I turn to now. I will go to the affidavits first and then I will go to the transcripts. I will deal with Schaffer first because Tawfik is a rebuttal report. Schaffers report in his affidavit, he says that he was required to investigate three elbows, three tees and two landing valves, if you look at the evidence carefully, it’s not clear that that’s right because that’s seven items and if you, other parts of his report and some other parts of his evidence, he refers to fewer items than that. Nevertheless, he did have these items and he was required to test them. He sets out his qualifications and the rest, his summary of the case and what he was given. Reference is made to the Australian Standards and that’s on page 14 and these are his conclusions:
‘On fittings. The microstructure of the fittings did not comply with the microstructure of requirements of theoretic malleable iron as outlined in ASTM A47-49. The presence of large interconnected graphic flakes in the interdendritic would have significantly reduced the duct ability of the fittings making them prone to cracking. The presence of perlite at the outer selvage of fittings indicated that the incorrect atmosphere was used in the furnace during the annealing heat treatment. The chemical composition of the fittings was consistent with the chemistry of Ferritic Malleable iron.
Valves, 1.4.2. Corrosion at the thread interface between the stem and the morlet led to the seizure of the valves. The corrosion resulted in higher contact stresses between the threads and consequently increased the friction between these two component parts. These caused threads to seize. The material used to produce the stem did not comply with the material requirements of AS2419.2. The material used to produce the stem had inferior corrosion resistance compared to the minimum grade outlined in AS2419.2.’
So those are his conclusions and he sets out in 2.1.5 the metallography that he engages in. Then he talks about the scanning of electron microscopy, chemical analysis, the metallography. This is on page 2.2.4. Then on page 3:
‘Fittings. It is my opinion the microstructure requirements for the Ferritic Malleable iron is outlined in ASTM A47 were not meant for the fittings.’
He quotes that that standard says
3.1.2:
‘The mottled graphic flakes observed in microstructure elbow 2’, only one elbow,
‘indicated that the casting procedure used to produce the fittings was not carried out correctly.’
3.1.3:
‘It is my opinion that the chemical composition of the fittings did not contribute to the cracking.’
Chemical composition of the fittings did not contribute to the cracking. 3.2.2:
‘In my opinion corrosion at the interface between the stem and
bonnet threads resulted in the seizure of the value. This is due to incorrect material being used to produce the stem which did not
meet the material requirements of AS2419.2.’
Then there is a whole lot of photographs. So that’s what he says....”
“...Then you look at what Dr Tawfik says. This is a rebuttal report. He does not [do the] testing. He doesn’t go to the sites. He relies very much on what is contained in the materials given to him. He is provided with materials which are in my view, probably are not admissible, including the Mill certificates. They are not authenticated. The authors of those reports are not before the Court and in my view Mill certificates would not be admissible in these proceedings. But he goes on and says this:
‘It is my opinion that the malleable iron fittings are likely to have cracked under irregular installation conditions ascribed to excessive tightening of the threaded pipes, the significant crack opening and level of mechanical defamation observed on the fittings were associated with the clamping force employed to secure the pipe fitting using a wrench to counteract the excessive screwing force applied by threaded pipe work to the fitting. The screwing force of the pipe during installation exerted excessive tensile stress levels on the threaded fitting causing it to yield and crack. Dr Schaffer has not properly considered whether the low levels applied by the tightening procedure were excessive to cause the cracking.’
Further on:
‘Inconsistencies were detected with the relative level of perlite microstructure reported by Dr Schaffer between the new pipefitting and the failed elbow 1 and elbow 2. I disagree with the claims made in Dr Schaffer’s report with respect to the amount of perlite present in the new tee fitting. It is my opinion that the micrograph of the new tee exhibit similar and comparable amounts of perlite contained in the micrograph of elbow 1 and 2 despite the disparity in magnification levels employed. The amount of perlite in elbow 1 was not considered as excessive for Ferritic Malleable iron pipe fittings considering the hardness levels remain below the maximum requirement limits ASTM A47.’
Then he goes on:
‘Dr Schaffer’s report is not properly considered or examined the mechanical properties in the failed malleable fittings. To support his claim I have reduced material ductility due to the presence of excessive mottled graphic flakes indicated in elbow 2. Dr Schaffer has not qualified or validated through mechanical testing the deductibility of fittings and conformity against the limits of table 1 of ASTM A47.’
Then he talks about the tensile testing and the test bars. That part of his report I guess again is material that I don’t think is admissible in these proceedings. Then he goes on talking about the fire hydrant landing valves:
‘There was no direct evidence to indicate that the inferior of corrosion resistance to the stem caused the galling.’
Then he goes on:
‘It is my opinion Dr Schaffer did not consider the potential contributing factors of hardness and tightening low levels that could cause significant contact stresses and eventually to seizing of the landing values.’
Then he goes on talking about the affidavit of Choi. He says, this is at 2.5. He has got some hypothesis material in 2.5 which he is really theorising there, but:
‘It is my opinion that the significant crack opening and localized defamation observed on the elbow fitting was associated with clamping force employed by screwing the fitting and counter act the excessive screwing force applied by threaded pipework to the fitting. The screwing force exerted excessive tensile stress levels on the threaded fitting causing it to crack.’
His evidence, and he is referring to Choi, then he refers to Mohamed El-Reda and he refers to Schaffer, it’s the way in which the pipes and items were assembled. Excessive tightening, irregular tightening he says that caused the defect and caused the pipes to crack. He says and this is also, he agrees with this and Schaffer says the same thing, he doesn't believe that the operating pressure or that is that the water operating pressure has caused the problems. They both agree that the hemp escaping through the cracks of the pipes could have been exacerbated by water pressure. They both agree with that. But that is about as far as their agreement goes.
The material issues that are in dispute here are the subject of disagreement between Drs Schaffer and Tawfik. For example:
‘I disagree the claims made in Dr Schaffer’s report with respect to the amount of perlite present in the new tee fittings under microscopic examination. It is my opinion that the micrograph of the new tee exhibits similar and comparable amounts of perlite distribution as the micrograph of elbow 1 and elbow 2 dispute the disparity in magnification levels. It is my opinion that the amount of perlite in elbow 1 was not excessive according to the standards of ASTM A47.’”
“Then [Dr Tawfik] goes on about Dr [Schaffer]’s postulations. He says:
‘I believe the microstructural analysis is insufficient. It is difficult to quantify the ductility of characteristics of the malleable iron cast fitting purely on the metallographic inspection considering the chemical composition cooling rate during solidification, heat treatments. Section thickness will also have contributing effects to the mechanical properties.’
Then he talks about the test bar specimens and other such matters which he tried to say that they relate to things that Schaffer has said but I don’t think those tests are admissible in these proceedings.
So that is what he says and then you go to the hot tubbing exercise. The attack made by Tawfik on Schaffer to do with magnification. What does Schaffer say about that? There are questions about magnification. This is the micrographs. They were incorrect. So they weren’t comparing apples with apples to use words used elsewhere. But on page 6 of the transcript, transcript of 6 September 2018 he says: ‘The magnifications of my micrographs, the allegation that they’re incorrect is wrong. They are 100% correct.’ That’s what he says at the bottom of that page. Then we go on, this is again Dr Schaffer when he is asked about certain things. He is asked by Mr Ayache:
‘“And I ask you to assume that normal titling processes were used. Would you agree that the damage appearing on page 70 and or depicted on page 70 would have occurred?” “Yes, I believe so,” says Schaffer. “Just to clarify” says Ayache, “Is it the case that the parts that you examined and I will use layman terms, was structurally unsound in their composition?” “Based on the microstructures I saw they were susceptible to cracking, in my view.” Ayache, “Would it be fair to say that if a micro crack did occur, once the fire systems were charged with high pressure water, those micro cracks could develop into larger cracks?” “They could grow under pressure, yes.”’
The two witnesses agree on that, about one of the only things they do agree. Then he says on page 14: ‘If the parts were structurally sound I wouldn’t expect cracking during installation.’ That’s what he says. Then he goes on about parts being susceptible to cracking. He is talking about the elliptical shape. This is on page 15:
‘Would that be indicative of over tightening during installation?’ He says, ‘I don’t believe so.’ He says then later on, he says, ‘I believe that reduced the ductility of the fittings made them susceptible to cracking.’
So he means ‘I believe that the reduced ductility of the fittings’ made them susceptible to cracking. So he’s going into the latent or patent defects in the products provided by Smoothflow. That’s what he says it’s all about. It’s not to do with the tightening. Levels of perlite. So he says this is to do with the magnification where Dr Tawfik is saying that he’s got it wrong. He says, ‘Yes the assumption by Mr Tawfik’, he calls him as Dr Tawfik, is that I have the magnifications are wrong and therefore actually the level of perlite is comparable between the new fittings that I investigated.’ Then he says, ‘I think it’s yeah the elbow 1 and tee 1.’ He has also compared in figure 7. ‘The magnification is the same in all three images’ he says, so he is responding to that. So there is a dispute between them on this. So he is saying that the magnification is consistent and that's not the view of the other expert. He then goes to say, ‘The presence of perlite is a red flag. It’s a red flag and it points to problems.’ Page 17 of the transcript. Then he goes, ‘Inadequate testing.’ So it is put to Mr Schaffer that Professor Tawfik, Dr Tawfik says he hasn’t done sufficient investigation and Schaffer says, ‘Well I make the statement that the ductility of the castings is reduced due to the model graphic so these large graphic flakes which essentially reduce the ductility and make it susceptible to cracking.’ Also he, that is Tawfik, states that:
‘I haven’t quantified the effect though some sort of mechanical testing. I thought about doing this of course but there was some challenge with doing this and unfortunately based on the size and geometry of these fittings, you can’t actually take a sample big enough to have like a nice straight piece of material to test so I based my conclusions on microstructural effects I have seen.’
A very important piece of evidence that, in this case because it shows the weakness of the Schaffer analysis in my opinion.
‘So you had to rely on microstructural examinations?’ ‘Yes.’ ‘And the microstructural feature that I'm talking about, the ASTM Standard actually states that this phase or these graphic flakes are not permitted at all in the microstructure.’
Then he is talking about the landing values and then the corrosion. The corrosion that is between the stem and bonnet which caused galling. Then he says this; ‘It would corrosion when it occurs it’s like oxide layer that’s thicker on the surface so oxygen added it becomes less dense which will change essentially the dimensions of the material. So if you have two surfaces that are in contact, then you start corroding between them, there is a higher frictional force between them when you go to turn them then.’ Then I asked him, ‘Dr Tawfik said you didn’t consider the contributing factors of harvest levels and timing loads that can cause significant stress.’ ‘I did but maybe it’s not explicit in my report.’ Then he explains what he means by that. Then he is asked about the landing valves and he says, it is an interesting answer of were the landing valves defective, ‘I wouldn’t say defective but it wasn’t the right material.’ Page 23, that’s Schaffer.
Then Tawfik is asked questions and on page 24 he is talking about the gripping marks that can be seen. Now Tawfik never goes to the site. He is just a rebuttal witness. He is just commenting on Schaffer’s findings as he sees them and he has given other material that in my view, is inadmissible such as the Mill Certificates and the like, which I just don’t think are relevant because they are not admissible. But he is talking about the photographs and the affidavits that he has seen and he is talking about hemp that was lodged in the crack that can be seen in the evidence. ‘It is my opinion that the hemp material can be lodged during the tightening process. It can also be exacerbated by the fact that water emanating out of there can also push it but l believe there is no evidence to rule out that the hemp material itself cannot have entered there by just water. So it is also plausible it can actually be lodged in there by tightening.’ Well they both agree these experts, on water and the impact it might have on the hemp material and the cracks in these pipes.
Then we go on, then he says, ‘Dr Schaffer hasn’t done any fracture mechanics to substantial the fact that these cracks had actually opened from water pressure testing. In fact, Dr Schaffer indicates that he does not believe that the water pressure causes the failures, the point I’ve just made. My opinion, I don’t think the water pressure caused this cracks to open any further and this is qualified by the fact that what we have is the water pressure which operates, was reported to be 900 kPa, then that would apply some circumferential stress to the pipe fittings.’ Then the disparities in magnification. Tawfik says there were disparities in magnification. Schaffer says there were not disparities in magnification. Then Tawfik talks about the metallurgical reports, generally speaking. He talks about some of the science associated with that. He goes on and makes the observation on page 27 that Dr Schaffer does not make any reference to ASTM A247 which standard is in the evidence and is of course important. Then he is asked by Mr Gulpers on this point, ‘The document requires you to when undertaking metallurgical practise to adopt a method that is referred to in A247, is that right’ and Schaffer says, ‘Not 100% correct. It says it’s recommended.’
And Mr Gulpers questions him about that. And then he asks him:
Q. But you didn’t follow the standard, did you, A247?
A. No not in this instance.
Q. You don’t see that as a shortcoming?
A. No I don’t.
And then Tawfik says on 29 the chemical analysis undertaken by Dr Schaffer which is under the table description Elbow 1 Tee 1 he is talking about the scrutinization of the test bars, i withdraw that, I do not regard that as relevant because of the inadmissibility of that kind of evidence and the mill certificates.
And then Dr Tawfik’s talking about de-ductility characteristics of the malleable iron fittings - this is page 30. And he talks about another test report that could have been done.
And then there is a very important piece of evidence on page 31. This is talking about ASTM847 and he is asked a question by Mr Gulpers about that and he says this:
A. It highlights to me the mechanical properties of the fittings. With the tightening procedure that was applied for the cracks to occur it would have to exceed the mechanical properties of these fittings to cause it to crack. So Dr Schaffer and I we agree that tightening caused the cracking. The question was, was the cracking caused by the deficiency in the material ..(not transcribable).. or was it used to excessive load levels?
And then he talks about these mill certificates which tends to support his contention because the findings and the mill certificates are much the same as the findings scientifically derived by Dr Schaffer.
So then we go on. And then the perlite issue which is the magnification microstructures, page 35:
‘It is my opinion excessive perlite in the microstructures presented in figures 6 and 7 of Dr Schaffer’s report is construed as excessive. I deem it as acceptable.’
So he disagrees with Schaffer on the perlite. Then he goes on:
‘The hardness ..(not transcribable).. scrutinized by Dr Schaffer for conformity. If there’s an excessive amount of perlite the hardness levels would have exceeded the requirements of ATSM847.’
And it was found to be compliant and that was confirmed by Dr Schaffer’s report. So he is saying that whilst he has not done any primary work himself, any research himself he is saying as an expert commenting on what Schaffer’s done, he's saying that in his view there was a compliance with the standard. And then he disagrees with Schaffer on page 36, he disagrees about the mottled graphic flakes,
‘The presence of mottled graphic flakes reduced the ductility and contributed to the cracking of the fittings, Without taking into consideration--’
says Dr Tawfik--
‘--the mechanical properties and the deform of the fittings it does not appear to be consistent with what we're observing.’
And then he is talking again about these issues of the mottled flakes. And then when he is asked questions by Mr Ayache he concedes he did not do any site inspections, he was relying on material provided to him. His quite extensive questions about his observations about the bent pipe and he says he is just relying on photographs. He is asked questions about the mill certificates and the like. Quite extensively cross-examined. And then he is asked about the mill certificates. I think the mill certificates are not admissible in these proceedings. Then he talks about - further about the mill certificates. But the cross-examination by Mr Ayache is fairly penetrating. The clamping marks on the items he is referred to on page 60:
‘It possible that could have occurred not just during installation’ he says – ‘but also removal.’
And Schaffer’s asked about these indentations, he says:
‘I can't say whether the indentations are made during installation or removal. I think we discussed earlier in my (as said) hearing that a crack like this will change the shape of any of the fitting and it may make it more difficult to remove it and therefore you need a higher clamping force to remove it.’
And then Schaffer talks about:
‘I didn’t include an image of complete graphic flack region unfortunately in my report, but this snapshot of the graphic region in the image or figure 18 is showing this interconnected graphite which should not be in the microstructure of the malleable fittings.’
And then Tawfik then goes on and says:
‘The whole point is you want to avoid graphic flakes.’
And Schaffer’s then talking about the dots in the images and Tawfik’s coming back at that, page 53. And then on page 54 Dr Tawfik says that:
‘Dr Schaffer has only analysed and only detected that a problem with Elbow 1, none of Elbow - Elbow 2, I withdraw that. None of Elbow 1 Tee 1 or Tee 2 were actually found to have any evidence of micrographs and of graphic flakes.’
And I asked Schaffer:
Q. Do you agree with that?
A. Yes I agree, I did not find any graphic flakes and other components.
So they are in agreement for once. Then on page 50, line 15 right down basically to the bottom he is talking about the mechanical properties of these items:
Q. Do you believe that the investigations you carried out were sufficient to support the conclusions you have reached? A. I believe so.”
“So the evidence of the expert is they contradict each other on just about every point of materiality. I would say about this though the following and say this. The evidence of Dr Tawfik is so far as it relates to how he concludes that installation process is caused the defects is in my view evidence that offends the [principle in Makita (Aust) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705] because he gives absolutely no reasoning as to how he comes to that conclusion. The fact that that part of his report and that part of his evidence is inadmissible does not mean that the rest of his evidence is inadmissible because he is an expert and he’s entitled to evoke questions about Dr Schaffer's evidence which is effectively what he does. But in regard of this issue of installation, his opinion is not reasoned and because of that it’s of little – it’s certainly of little value and it is probably on that point, inadmissible.
But what Mr Ayache wishes me to do is to dismiss Dr Tawfik’s evidence altogether and I am not prepared to do that because on other points where he is effectively engaging Dr Schaffer and questioning the voracity of the process as engaged by Dr Schaffer to found the conclusions he has, he has made some salient points and they do resonate and Dr Schaffer agrees. He agrees that it would have been desirable to do more testing than he did do. He says it was not feasible because of the size of some of the products. But he does not deny that it would have been preferable to engage in further testing, he just did not do it because A) because he was unable to do it because of the size of the products. And B) because of other constraints that existed.
So before coming to or wrapping this thing up within the next five minutes, I would say this, I do agree with Mr Ayache that the failure to put to Mr Choi the assertions as to the installation and the workmanship and the failures in the workmanship does offend the rule in Browne and Dunn. I would also agree with Mr Gulpers’s submission that the failure to call AN Fawad(?) who was the SAP's business manager on 1 August 2016 when the first complaints were made about these products. Failure to call him to give evidence, not explained, does offend the rule in Jones and Dunkel. And yes it is permissible to draw an inference that what he might have said would not have supported the first defendant's case. So I agree with all that. And in my view dealing with the issues there were complaints made. There were on numerous occasions non-compliance made by the first defendant and Mr Choi with the express terms of the contract between the supplier and the purchaser of these goods. None of the witnesses in the case - leaving aside the comment I made about Mr Choi - what Mr Ayache would say about that I agree with Mr Gulpers may have a different view on that but what I say about all of them Cameron, Choi, El-Reda, Mourtada, Mohamed is none of their evidence takes us anywhere because their opinions are not admissible as proof of the content of what they say, they are just observations and we all know that the products failed. It is why they failed that is relevant.
So none of their views really assist in resolving this issue. What you can say is, the experts agree that the cracking to the component parts was caused by the way - by the assemble systems failing, but they do not agree as to what caused the units to crack. Schaffer says the components were defective and this caused the cracking. Tawfik says it was the manner installation that caused the components to crack. No agreement between them. Schaffer was engaged to undertake primary analysis. It could be five or seven components he took from the site, he tested them. He found the Tees fittings and Elbows and landing values had mechanical defects. Tawfik’s report, Dr Tawfik’s report as an expert rebuffs the research done by Dr Schaffer. He concedes he made no observations himself, he did not go to the site, he did not do any primary research, but he is entitled to criticise Dr Schaffer’s work, he is himself an expert. And he says in his opinion installation caused the cracks, the pipes to crack. I have expressed a view about that. But he based his rebuttal of Dr Schaffer’s expert evidence on materials and photographs provided to him and on the data contained in Dr Schaffer’s report.
So on lots of points they are in disagreement. Magnification, testing, hardness levels, perlite. And these are all issues of contention. So Dr Tawfik questions the advocacy of the work done by Schaffer. Whether some of the testing was done properly. And he also and it is also pointed out that some of the conclusions expressed by Dr Schaffer appear to be based on inadequate research by him which may affect the admissibility of some of the things he says. Well I am not going to go there because I do not think it is necessary.
In my opinion the evidence in this case is such on the cross-claim as not to persuade this Court on the balance of probabilities that the defects which everybody agrees occurred were the result of failures in the component parts provided by Smoothflow to the first defendant SAP. So in my view based on that and it is because the expert evidence is contradictory, it is because Dr Tawfik raises some good questions about the adequacy of Dr Schaffer’s research. It is because of those factors that in my view the cross-claim in this case should be dismissed, And that being my view, it is not necessary for me to make any rulings in regard to the defence to the cross-claim because whilst I have made observations about Tawfik’s view, it is the defence to the cross- claim becomes otiose. It is for the defendant and cross-claimant to establish that the failings here occurred because of defects in the products.
So just to wrap this up. We do have a contract. It is encapsulated in agreement 31 July 2015. It is a credit account agreement. There were 106 purchase orders, They were fulfilled. The goods were supplied. I made a finding of issue number 1 which I will not repeat. Alleged that the goods were defective, not fit for purpose, not of merchantable quality. I must say that when it comes to merchantable quality just as a side there is absolutely no evidence before me that would suggest other than they were of merchantable quality, I make that observation. Fitness for purpose is what this case was about as far as I can deduce from the evidence. Made findings that the prior terms exist. I made findings they are not inconsistent with the express terms. I have made findings that the first defendant and the second defendant and Mr Choi did not avail themselves of the remedies available in the express terms of the contract. Mr Gulpers makes a number of observations about what would be available under the clauses that I have referred to in the express terms of the contract. And he makes the point that they will be different to the remedies that are being sought. Yes I agree with that. But the fact is, these goods were not inspected and the provisions in the contract to which I have made reference, were not followed up in a timely fashion by the first defendant.
So my reasons for basically dismissing the cross-claim is that - and this is my first reason - is that i do not think there is evidence that is such as to persuade this Court on the balance of probabilities that these goods were defective.
Secondly, the way in which is case has pleaded, if you look at the cross-claim it is pleaded by reference to invoices and there is no correlation made in the evidence between any defects detected by Dr Schaffer and particular items identified in the invoices. And there is basically no evidence before this Court at all in relation to the invoice that is in dispute raised in the cross-claim the import being that whilst paid for the products themselves were defective. There is absolutely no evidence before the Court in my view that points to that and indeed if there is evidence that may have been relevant to that, it has not been made explicit to the Court what that evidence is. So you have a problem here where you have got people on site, plaintiffs, witnesses and defence witnesses expressing opinions which are no more than opinions. You have got contradicted expert evidence. No agreement except on a few points. So very difficult to use that evidence to determine the outcome. It is clear to me that Dr Tawfik’s challenge of Dr Schaffer's testing and that it was not sufficient is a valid criticism and indeed Doctor Schaffer whilst he does not acknowledge that it is a valid criticism, he does acknowledge that more could have been done than what he did do.
The items found by Dr Schaffer which could be five or seven items that he tested were found by him to be defective where in no way correlated with the goods supplied by Smoothflow pursuant to the invoices that are subject to the pleadings in the cross-claim, So he makes findings, but then the allegation is that these invoices related to goods that were defective, there is no correlation between them. The express terms of the contract were not pursued by the first defendant and its agents in regard to the delivery of the goods, the inspection of the goods, the lodging of complaints. Yes I take the point that some of the defects - should they have existed - may have been latent. And then I have made the observations about the application of the mill certificates to this case, I just do not think the mill certificates are admissible, their origins are dubious, they are not authenticated and the authors of those reports are not before the Court.
So the reasoning goes in different ways, but at the end of the result it is for the cross-claimant to make its case. And in my view the cross-claimant has not made its case. That being the situation, I guess I would reiterate what my primary reason for that is, is the correlation between the defects identified by Schaffer and the invoices specified in the cross-claim and there are other reasons, but that is a primary reason why this claim will fail.
And secondly, the evidence as to whether the goods supplied by Smoothflow were defective is just not sufficient to meet the standard albeit more probable than not standard as described by me earlier on.”
Ground 1 – obligation to provide sufficient reasons
[1999] NSWSC 1263 and RL & D Investments Pty Ltd v
Bisby [2002] NSWSC 1082; (2002) 37 MVR 479.Sydney Advanced Plumbing’s submissions
Smoothflow’s submissions
“the evidence in this case is such on the cross-claim as not to persuade this Court on the balance of probabilities that the defects which everybody agrees occurred were the result of failures in the component parts provided by Smoothflow to the first defendant [Sydney Advanced Plumbing]. So, in my view based on that and it is because the expert evidence is contradictory, it is because Dr Tawfik raises some good questions about the adequacy of Dr [Schaffer]’s research. It is because of those factors that in my view the cross-claim in this case should be dismissed.”
Consideration
“... [I]t is the duty of a court of first instance, from which an appeal lies to a higher court, to make, or cause to be made, a note of everything necessary to enable the case to be laid properly and sufficiently before the appellate court if there should be an appeal. This includes not only the evidence, and the decision arrived at, but also the reasons for arriving at the decision. The duty is incumbent, not only upon magistrates and District Courts, but also upon this Court...”
“If it can be established that a judge failed or declined to give any reasons for his decision in circumstances where there was a judicial duty express or otherwise to do so, then, as with other errors in the judicial process, I think he has erred in law.”
“Another way in which this has been put is that the judge must engage with, or grapple or wrestle with, the cases presented by each party... This is not adequately done by setting out the evidence adduced by one side, setting out the evidence on the other side, and saying that the judge prefers one body of evidence to another...”
“[17] It is well established that where there is a real conflict in the evidence, it is necessary to “engage with, or grapple or wrestle with the cases presented by each party”: see for example Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [116], Coote v Kelly [2013] NSWCA 357 at [39]- [52] and Keith v Gal [2013] NSWCA 339 at [109]- [119]. As was said in Redbro Investments Pty Ltd v Ceva Logistics (Australia) Pty Ltd [2015] NSWCA 73 at [53], the point of the metaphor of ‘grappling’ is that it is not sufficient to set out the conflicting evidence and conclude, without analysis, that the judge prefers one body to another: Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187; 66 NSWLR 186 at [28]. There are two overlapping reasons for this. The first appears from the often quoted statement by McColl JA in Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [66]:
‘Where it is apparent from a judgment that no analysis was made of evidence competing with evidence apparently accepted and no explanation is given in the judgment for rejecting it, it is apparent that the process of fact finding miscarried.’
[18] The second emerges from the opening paragraph of the joint reasons of Mason P, Ipp and Tobias JJA in Whalan v Kogarah Municipal Council [2007] NSWCA 5 at [1]:
‘[J]udges duties to give reasons are ... designed to ensure that a judge wrestles adequately with the issues in the case, to enable appellate accountability and to provide basic fairness to the losing party.’”
“So you had to rely on microstructural examinations?” “Yes.” “And the microstructural feature that I'm talking about, the ASTM Standard actually states that this phase or these graphic flakes are not permitted at all in the microstructure.”
“Dr Schaffer was engaged to undertake primary analysis. It could be five or seven components he took from the site, he tested them. He found the tees fittings and elbows and landing values had mechanical defects. Tawfik’s report, Dr Tawfik’s report as an expert rebuffs the research done by Dr Schaffer. He concedes he made no observations himself, he did not go to the site, he did not do any primary research, but he is entitled to criticise Dr Schaffer’s work, he is himself an expert. And he says in his opinion installation caused the cracks, the pipes to crack. The Magistrate expressed a view about that. But he based his rebuttal of Dr Schaffer’s expert evidence on materials and photographs provided to him and on the data contained in Dr Schaffer’s report.
So on lots of points they are in disagreement. Magnification, testing, hardness levels, perlite. And these are all issues of contention. So Dr Tawfik questions the advocacy of the work done by Dr Schaffer. Whether some of the testing was done properly. And he also and it is also pointed out that some of the conclusions expressed by Dr Schaffer appear to be based on inadequate research by him which may affect the admissibility of some of the things he says. Well I am not going to go there because I do not think it is necessary.”
Ground 2 – denial of procedural fairness
“HIS HONOUR: Is it your contention then that the fittings and the valves were provided pursuant to the agreement?
AYACHE: Yes.
HIS HONOUR: You can prove that, can you?
AYACHE: Yes. And that’s not an issue in dispute.
HIS HONOUR: It’s not in dispute.”
Sydney Advanced Plumbing’s submissions
Smoothflow’s submissions
Consideration
Costs
The Court orders that:
(1) The appeal is dismissed.
(2) The decision of his Honour Magistrate Richardson dated 26 March 2019 is affirmed.
(3) The amended summons filed 18 June 2019 is dismissed.
(4) The first plaintiff is to pay the defendant’s costs on an ordinary basis.
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