Murrumbidgee Irrigation Limited v Goodwood Services Pty Limited [2011] NSWSC 3 (31 January 2011)

Last Updated: 9 March 2011

Supreme Court New South Wales

Case Title:	Murrumbidgee Irrigation Limited v Goodwood Services Pty Limited
Medium Neutral Citation:	[2011] NSWSC 3
Hearing Date(s):	6 December 2010
Decision Date:	31 January 2011
Jurisdiction:
Before:	Hislop J
Decision:	1. The notice of motion filed on 30 September 2010 is dismissed. 2. The costs of the notice of motion as between the plaintiff and the first defendant are to be costs in the cause.
Catchwords:
Legislation Cited:
Cases Cited:
Texts Cited:
Category:	Principal judgment
Parties:	Murrumbidgee Irrigation Limited (Plaintiff) Goodwood Services Pty Limited (1st Defendant) Hydro-Clean (Griffith) Pty Limited t/as Applied Packing and Machinery (2nd Defendant)
Representation
- Counsel:	S. Goldstein (Plaintiff) A.M. Gruzman (1st Defendant) A. Gorney (2nd Defendant)
- Solicitors:	Thompsons Lawyers (Plaintiff) Cappello Rowe (1st Defendant) Mills Oakley and McKay (2nd Defendant)
File number(s):	2009/297889
Publication Restriction:

Judgment

Introduction

1	The first defendant, by notice of motion filed on 30 September 2010, sought the following orders:

"1. An order pursuant to UCPR Rule 14.28 that paragraphs 6 to 13 of the Statement of Claim be struck out and the claim dismissed.

2. An order pursuant to UCPR rule 13.4 that the claim against the First Defendant be dismissed.

3. Alternatively, an order pursuant to s 67 Civil Procedure Act, 2005 that the claim against the First Defendant be permanently stayed."

2	The application was opposed by the plaintiff. An appearance was announced for the second defendant but it played no role in the application.

Background

3	It was common ground for the purposes of this application that:

(a) the plaintiff owned and operated a series of regulator gates which were installed on the Murrumbidgee River at Bundidgerry and used to regulate water flow;
(b) on or about 27 June 2003 the plaintiff and the first defendant entered into a contract for the manufacture and supply by the first defendant to the plaintiff of all steel work and associated items for new replacement regulator gates at Bundidgerry (the contract also included replacement gates for Narrandera but that is of no relevance to this application);
(c) the contract provided that the first defendant would provide to the plaintiff the first gate (including frame and associated steel work) for Bundidgerry in accordance with the specification and drawings to be used as a pattern or jig in the manufacture of four further gates for Bundidgerry;
(d) the first gate for Bundidgerry was provided by the first defendant to the plaintiff. The welding on that gate had been performed by the second defendant pursuant to a contract with the first defendant;
(e) the contract provided, inter alia, that all welding of the steel should conform to the requirements of Australian Standard 1554;
(f) fully fabricated steel work for the four remaining gates was provided by the first defendant to the plaintiff. The plaintiff assembled the gates. The welding of the four remaining gates was performed by the second defendant pursuant to a contract between it and the plaintiff.

4

The plaintiff in its statement of claim filed on 21 September 2009 has sought damages in excess of $1million from the defendants in respect of alleged deficiencies in the gates which rendered them unfit for purpose and required their replacement. The plaintiff, in its statement of claim [para 10], asserted that the first defendant breached the provisions of its contract with the plaintiff and its duty of care to the plaintiff in that

(a) the steel for each gate was not fabricated in accordance with accepted practice,
(b) contrary to the specification and the drawings, the welds on each of the gates, including the jig, were contrary to accepted industry practice, the contract, the specification and drawings, including a failure to comply with the relevant Australian Standard; and
(c) there was a failure to adequately instruct and supervise the second defendant in respect of the welding on the jig so as to ensure compliance with the contract and accepted industry practice.

5	The first defendant sought further and better particulars of the statement of claim including further and better particulars identifying the jig. No satisfactory response was received to the request for further and better particulars in the latter regard.
6	On 25 August 2010 Price J made an order, in effect, that the plaintiff within 14 days:

"specify precisely:

(a) the identity of each of the alleged series of regulator gates (by some unique identifying feature)"

7	By letter dated 13 September 2010 the solicitor for the plaintiff purported to comply with his Honour's order. After referring to his Honour's order, the letter continued:

"We now provide those particulars using your paragraph numbering:

5.1(a) For the purposes of these proceedings, our client has labelled each of the regulator gates by marking them with the numbers 1 to 5 and writing those numbers on them in paint. Our client, however, is unable to identify which of gates 1 to 5 is the jig. This is because:

(i) all 5 gates are of an identical design and size with no unique identifying features existing at the time of manufacture or installation;

(ii) although the jig was completed first, all five gates, including the jig, were delivered to [the plaintiff] at the same time for installation;

(iii) on manufacture and installation no record was kept of which gate was the jig as at the time that was irrelevant."

8	The plaintiff on this application, unlike when the matter was before Price J, relied upon a series of affidavits. They were as follows:

Geoffrey John Beard, 15 October 2010 -

"1. I am employed by Murrumbidgee Irrigation Limited (MI) as the Assets Manager. In my role I have access to the books and records of MI. I have been working at MI since 19 January 1981 although I was on leave from MI from August 2004 to July 2005.

6. To the best of my knowledge and belief MI does not and would not have kept records of which gate was the jig that had been manufactured by Goodwood and which gates had been manufactured by APM.

7. I have reviewed the books and records of MI and there is no record which would indicate which gate was the jig at Bundidgerry.

8. In or about September 2010, I had a conversation with Graham Looby, Field Workers - Welder, in words of the following effect:

Me: 'Graham, we need to identify which one of the gates at Bundidgerry was the jig. Is there any way of finding out?'

Graham: 'No, I don't think there is any way of telling.'

9. To the best of my knowledge and belief, there are no other tradesmen still working at MI who were involved in the installation of the gates other than Graham Looby."

Graham Patrick Looby, 15 October 2010 -

"5. I recall that originally, one of these gates was completed before any of the others and that gate was delivered to MI. Sometime later this gate was sent back so that the rest of the gates could be manufactured using that gate as a template or 'jig'.

6. In or about mid-June 2004, five gates were delivered to the site at Bundidgerry. At the time when I inspected the five gates upon delivery, I observed that the gates appeared to be identical and that they were not numbered or marked in any way. At the time, I was unable to tell which of the five gates had been was [sic] the jig.

7. In or about July 2004 I installed the five gates along with a crane driver and a number of other MI employees. As the gates were all identical and there was no way of determining which of the gates was the jig, I did not keep any records which identified which gate was installed in a particular location."

Howard John Howard (the plaintiff's solicitor), 19 October 2010 -

"4. Following receipt of the letter from the first defendant at annexure 'A', I had a conversation with Russell Webb of the plaintiff on 21 April 2010 in which he said words to the following effect:

'We don't know which gate is the jig. The regulator had five gates in a row. I don't know which slot the jig came from. I will try and find out. Why is it relevant? They are all the same and have the same problems.'

5. On 30 April 2010 I received an email from Russell Webb which stated, in part: 'I attended the site this morning to visually describe the gates but was unsuccessful. The gates were stacked and weather tainted and it was difficult to inspect the gates fully. I have requested staff to separate and pressure wash with a view to reinspecting on Friday of next week (7 th May)...

6. I was instructed that the plaintiff was still not able to identify the jig as at the time of the hearing of the first defendant's notice of motion on 30 July 2010.

7. On 11 August 2010 I received an email from Brett Tucker, the Managing Director of the plaintiff which stated, in part, 'I have spoken to our engineers again. The template gate was sent to APM and all gates, once manufactured, arrived on site in the same load. Given that they were all manufactured at the same time, my engineers are saying they are unable to determine which one was the template and which ones were the copy.' '...

8. I am informed by and believe that Sonya Parsons of Thomsons Lawyers, the solicitor with day to day carriage of the matter for the plaintiff, has spoken to employees of the plaintiff to try and ascertain whether they can identify the jig, but the jig has not been able to be identified. In that regard Graham Looby and Geoffrey Beard of the plaintiff have affirmed and sworn affidavits in these proceedings."

Stephen Gillespie (an expert engineer retained by the plaintiff) in his report dated 18 October 2010 stated:

"4. 1) Visual inspection of the 5 Bundidgerry regulator gates conducted on 20 July 2010 by SKM has shown all gates to be nominally of the same construction. There were no outstanding features visible that could identify any gate as conclusively being the first manufactured gate (the jig) , including evidence of sections removed for macro testing of extension piece welds."

9	The witnesses were not cross examined. I am satisfied by their evidence that the plaintiff has supplied the best particulars that it can and that there is no reasonable prospect that any better particulars can be obtained identifying the jig.
10	Mr Gillespie, who inspected the gates for the plaintiff, concluded:

"In summary, in my opinion although there are minor differences in the extent of defects between gates, the defects are of the same nature on all gates with butt welds showing lack of penetration that does not meet Australian standards. The substandard welding has consequently resulted in cracking of the butt welds under in-service loads.

Lack of weld penetration, particularly with extension piece butt welds, has resulted in welds which are not compliant with the regulator gate technical specification and the relevant Australian Standard in terms of weld qualification and the level of imperfection allowed for the weld category. Lack of weld penetration has been identified to affect welds on all gates. The degree of lack of weld penetration (depth and affected weld length) and associated code non compliance indicates the weld types used in the gate fabrication are not suitable for structural load carrying applications, due to the reduced cross sectional area and reduced load carrying capacity of the weld. The reduced cross sectional area results in increased stresses in the welds and the increased likelihood of cracking due to tensile overload and for premature fatigue crack development. Cracking of some of the welded joints on the gates will result in load redistribution to other joints to some degree, which then results in further increases in stress and further increased likelihood of tensile overload or fatigue cracking. This process may continue until a gate is substantially damaged through cracking of a large number of joints and ultimately may be unable to fulfil its intended purpose due to structural deformation."

11

The first defendant contended that there was a difference between the welds on the various gates. This was based upon an inspection of plans (Exhibit 2) which, it is alleged, appeared to indicate, at least to the untrained eye, a difference in the weld cracking of one of the gates as compared to the weld cracking in the remaining four gates.

Submissions

12

The first defendant submitted that its liability to the plaintiff for deficiencies in the welding, if any, related only to the jig. The plans (Exhibit 2) indicated there were differences in the welding deficiencies in the gates and accordingly it was necessary that the jig be identified so that the first defendant could identify and assess the case which it had to meet. The first defendant would be prejudiced by a failure to identify the jig as it would be put to the trouble and expense of testing all of the gates. The first defendant is unable to identify the gate alleged to be the jig from the information and particulars provided by the plaintiff. It is apparent no better particulars will be forthcoming. In those circumstances the orders sought in the notice of motion should be made.

13

The plaintiff submitted that there was no material difference in the deficiencies in the welding of all gates, including the jig. This was the opinion of the expert, Mr Hawkins, and the plaintiff's Mr Webb (see the affidavit of Mr Howard at para 4). In these circumstances the identity of the jig was irrelevant as the first defendant's liability would extend to all of the gates. In any event, the first defendant would be required to examine each of the gates in order to meet the claim in respect of the deficiencies in the fabrication of the steel. The plaintiff had taken extensive steps to provide the particulars sought. It had provided the best particulars it could. It should not be precluded at an interlocutory stage from prosecuting a claim for significant damages against the first defendant.

Determination

14	I accept the plaintiff has supplied the best particulars of the jig available to it and there are no reasonable prospects that any better particulars can be obtained identifying the jig.
15	I accept the particulars and information supplied by the plaintiff to the first defendant do not enable the jig to be identified.
16	I accept that in the absence of an identified jig the first defendant may be put to the trouble and expense of testing all the gates.
17	I find that there is a triable issue as to whether there are material differences in the deficiencies in the welding on the gates, including the jig. If there are no material differences, then the identification of the jig is irrelevant.
18	In my opinion, it would be inappropriate for that issue to be determined on an interlocutory application.
19	It is probable that to some extent at least it would be necessary for the first defendant to test all the gates, even if the jig was identified.
20	The power to strike out or permanently stay proceedings should be exercised only in plain and obvious cases. This is not a plain and obvious case.
21	It would be contrary to the dictates of justice that the plaintiff's claim should be dismissed on an interlocutory application in circumstances where the manufacturer of the jig itself has failed to make provision for its identification and seeks to use that as a means of avoiding potential liability.
22	In all the circumstances, I do not consider it appropriate to make the orders sought by the first defendant.
23	The notice of motion will be dismissed. In my opinion, the appropriate costs order between the plaintiff and the first defendant in respect of the application is costs in the cause. No costs were sought by the second defendant of its appearance on the application.
24	I note that the notice of motion before this Court is not that which was before Price J. The present notice of motion raises different issues and is the subject of different evidence, the tender of which was not objected to. In my opinion, Price J's judgment creates no impediment to the determination of this notice of motion.

Orders

25	I make the following orders:

1. The notice of motion filed on 30 September 2010 is dismissed.
2. The costs of the notice of motion as between the plaintiff and the first defendant are to be costs in the cause.
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