BHP Coal Pty Ltd and Ors v O & K Orenstein & Koppel AG and Ors

TORT - ESSENTIALS OF ACTION FOR NEGLIGENCE - DAMAGE - Causation - Whether the collapse of the Bucketwheel Excavator was caused by modification of original design - Whether the collapse of the Bucketwheel Excavator was caused by use outside the operating parameters for which it was designed - Whether the collapse of the Bucketwheel Excavator was caused by the failure of the inspector to examine the entire machine

TORT - ESSENTIALS OF ACTION FOR NEGLIGENCE - DUTY OF CARE -Whether engineer breached duty of care when designing stiffeners to reinforce the machine - Whether engineer should have had regard to the fact that the engineering standard was current but subject to academic and professional review when designing stiffeners

TORT - ESSENTIALS OF ACTION FOR NEGLIGENCE - DUTY OF CARE - SPECIAL RELATIONSHIPS AND DUTIES - Professional persons - Engineer - Duty of skill and care implied into professional services contract - Separate duty of care in tort - Whether these duties are coextensive - Whether engineer was in breach of duty of care in failing to inspect the entirety of the machine

TORT - CONTRIBUTORY NEGLIGENCE - Whether the use of the machine outside the operating parameters for which it was designed contributed to collapse of the machine - Whether the failure to inspect more often contributed to the collapse of the machine - Whether the failure to act immediately prior to collapse contributed to the collapse of the machine

CONTRACT - BUILDING, ENGINEERING AND RELATED CONTRACTS - Contract for the inspection of a Bucketwheel Excavator - Interpretation

CONTRACT - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - In the context of a contract to inspect machinery - Whether it is an implied term that such inspection is limited to that which can be safely seen from walkways

CONTRACT - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - CUSTOM AND USAGE - Incorporation into contract - Whether an instruction verbally given amounts to variation of contract - Whether previous inspections vary the terms of the contract

CONTRACT - CONTRACT IMPLIED FROM CONDUCT OF PARTIES - Whether an instruction verbally given can amount to a variation of contract

CONTRACT - ACCEPTANCE ADDING TO OR VARYING TERMS OF OFFER - Where both parties sought contract on their standard terms

CONTRACT - BUILDING, ENGINEERING AND RELATED CONTRACTS - Implied duty to exercise skill and care in contract for the provision of professional engineer services

DAMAGES - GENERAL PRINCIPLES - MITIGATION OF DAMAGES - PLAINTIFF'S DUTY TO MITIGATE - Where the plaintiffs purchased a shovel/sizer to replace collapsed Bucketwheel Excavator - Whether this was an appropriate effort at mitigation - Whether to purchase the shovel/sizer was reasonable when rebuilding the Bucketwheel Excavator was possible and less expensive

DAMAGES - GENERAL PRINCIPLES - GENERAL AND SPECIAL DAMAGES - Where claims for general, special and "hybrid" damages made - Where those damages are claimed for loss of use of a profit-earning chattel whose contribution to profit cannot be specifically quantified

DAMAGES - MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR TORT - DAMAGE TO CHATTELS - Damages for loss of use of a profit-earning chattel whose contribution to profit cannot be specifically quantified - Whether measured on the cost of repair or replacement - Whether replacement in these circumstances constitutes a betterment

ENERGY AND RESOURCES - COAL - Bucketwheel Excavator used at coal mine - Collapse - Claim in negligence and for breach of contract

TORT - ESSENTIALS OF ACTION FOR NEGLIGENCE - DAMAGE - Where damage is sustained upon joint venturers - Whether joint venturers should have separate or joint verdict

CONTRACT - JOINT AND SEVERAL CONTRACTORS - Where joint venturers contract together - Whether their interests are joint or several - Whether joint venturers should have separate or joint verdict

PROFESSIONS AND TRADES - OTHER PROFESSIONS, TRADES OR CALLINGS - ENGINEERS - Duty of skill and care implied into contracts for the provision of professional services

Schedule 3, Audit Reform and Corporate Disclosure Act 2004 (Cth)

s 1466, Corporations Act 2001 (Cth)

s 5, s 10, Law Reform Act 1995 (Qld)

s 52, s 53, s 53(aa), s 68, s 68A, s 74, s 74(1), s 74(2), s 82, s 82(1B), s 84(2), Trade Practices Act 1974 (Cth)

Admiral Management Services Ltd v Para-Protect Europe Ltd [2002] EWHC 233; [2002] 1 WLR 2722

Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] EWCA Civ 3

AHR Constructions Pty Ltd v Maloney [1994] 1 Qd R 460

Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568

Allstate Life Insurance Co v ANZ Banking Group Ltd Unreported, Federal Court, Lindgren J, 7 November 1994, BC9400129

Atlantis Properties Pty Ltd v Cameron [2005] QCA 97

Australia and New Zealand Banking Group Ltd v Pan Foods Company Importers and Distributors Pty Ltd [1999] 1 VR 1

Australian Securities Ltd v Western Australian Insurance Co Ltd [1929] NSWStRp 62; (1929) 29 SR (NSW) 571

Bachelor v Burke [1981] HCA 30; (1981) 148 CLR 448

Banco de Portugal v Waterlow [1932] UKHL 1; [1932] AC 452

Batiste v State of Queensland [2002] 1 Qd R 119; [2001] QCA 275

Birmingham Corporation v Sowsbery [1970] RTR 84

Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd & Ors [1987] FCA 84; (1987) 14 FCR 215

Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 236 ALR 720

Bradburn v Botfield [1845] EngR 1105; (1845) 14 M&W 559; 155 ER 597

Brickhill v Cooke [1984] 3 NSWLR 396; (1984) Aust Torts Reports 80-685

Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" [1976] HCA 65; (1976) 136 CLR 529

Camm v Salter [1992] 2 Qd R 342

Commissioners for Executing the Office of Lord High Admiral of the United Kingdom v Owners of the Steamship Valeria ("The Valeria") [1922] 2 AC 242

Commissioner for Railways v Luya, Julius Limited [1977] Qd R 395

Cullen v Knowles [1898] 2 QB 380

Darbishire v Warran [1963] EWCA Civ 2; [1963] 1 WLR 1067 (CA)

Davidson v JS Gilbert Fabrications Pty Ltd [1986] 1 Qd R 1

Davies v Taylor [1974] AC 207

Deutz Australia Pty Ltd v Skilled Engineering Ltd [2001] VSC 194

Dixons (Scholar Green) Ltd v J L Cooper Ltd [1970] RTR 222

Equus Financial Services Limited v Glengallon Investments Pty Ltd [1994] QCA 157

Financial Industry Complaint Services Ltd v Deakin Financial Services Pty Ltd [2006] FCA 1805; (2006) 157 FCR 229; (2006) 238 ALR 616

Foley v Addambrooke [1843] EngR 20; (1843) 4 QB 197; 114 ER 872

Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82

Gold Ribbon Accountants Pty Ltd (in liq) v Sheers [2006] QCA 335

Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540

Greer v Alstons Engineering Sales & Services Ltd [2003] UKPC 46

Grincelis v House [2000] HCA 42; (2000) 201 CLR 321

Hampic Pty Ltd v Adams (2000) ATPR 41-737; [1999] NSWCA 455

Hanave Pty Ltd v LFOT Pty Ltd (1999) 43 IPR 545; [1999] FCA 357

Harbutt's 'Plasticine' Ltd v Wayne Tank & Pump Co Ltd [1970] 1 QB 447

Heydon v NRMA [2000] NSWCA 374; (2000) 51 NSWLR 1

Horace Holman Group Ltd v Sherwood International Group Ltd [2001] UKHL 10; [2001] All ER (D) 83

I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109

Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Kendall v Hamilton (1879) 4 App Cas 504

Lord Citrine (Owners) v The Hebridean Coast (Owners) [1961] AC 545

Malec v JC Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638

March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506

Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494

Maxitherm Boilers Pty Ltd v Pacific Dunlop Pty Ltd [1998] 4 VR 559

McCarthy v McIntyre [1999] FCA 784

McDonald v Commonwealth [1945] NSWStRp 36; (1945) 46 SR (NSW) 129

McDonald v Ludwig [2007] QSC 28

McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377

Mersey Docks and Harbour Board v Owners of the SS Marpessa ("The Marpessa") [1907] AC 241

Metropolitan Gas Co v Melbourne Corporation [1924] HCA 46; (1924) 35 CLR 186

Midland Bank Trust Co Ltd & Anor v Hett, Stubbs & Kemp (a firm) [1979] 1 Ch 384

Moloney v Bells Securities Pty Ltd [2005] QSC 013

Moore v State of Queensland [2005] QCA 299

National Insurance Co of New Zealand Ltd v. Espagne [1961] HCA 15; (1961) 105 CLR 569

National Mutual Property Services (Australia) Pty Ltd & Ors v Citibank Savings Ltd & Ors [1995] FCA 1628; (1995) 132 ALR 514

Naxakis v Western General Hospital (1999) 197 CLR 269

Oceanic Crest Shipping Company v Pilbara Harbour Services Pty Ltd [1986] HCA 34; (1986) 160 CLR 626

Owners of the Steamship "Mediana" v Owners, Master and Crew of Lightship "Comet" ("The Mediana") [1900] AC 113

Park v Allied Mortgage Corp Ltd [1993] FCA 286; (1993) ATPR (Digest) 46-105

Peabody v Barron [1884] NSWLawRp 5; (1884) 5 LR (NSW) 72

Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180

Pollock v Mackenzie (1866) 1 QSCR 156

Pritchard v Race Cage Pty Ltd [1997] FCA 27; (1997) 72 FCR 203

R + D Versicherung AG v Risk Insurance and Reinsurance Solutions SA [2006] EWHC 42; [2006] All ER (D) 209

Redding v Lee [1983] HCA 16; (1983) 151 CLR 117

Rickard Constructions Pty Ltd & Anor v Rickard Hails Moretti Pty Ltd & Ors [2004] NSWSC 1041; (2004) 220 ALR 267

New South Wales v Fahy (2007) 236 ALR 406, [2007] HCA 20

Roberts v Holland [1893] 1 QB 665

Rogers v Whittaker [1992] HCA 58; (1992) 175 CLR 479

Sedgworth v Overend (1797) 7 Term Rep 279; [1797] EngR 451; 101 ER 974

Sellars v Adelaide Petroleum NL (1994) 179 CLR 332

Serisier Investments Pty Ltd v English [1989] 1 Qd R 678

Standard Chartered Bank v Pakistan National Shipping Corporation [2001] EWCA Civ 55

Sunley (B) and Company Limited v Cunard White Star Limited [1940] 1 KB 740

Tate & Lyle Food and Distribution Ltd v Greater London Council [1982] 1 WLR 149

Tesrol Joinery Pty Ltd v Cefla Scri [2005] NSWSC 528

The Owners of No 7 Steam Sand Pump Dredger v The Owners of SS "Greta Holme" ("The Greta Holme") [1897] AC 596

Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40

Thompson v Hakewill [1865] EngR 669; (1865) 19 CB (NS) 713; 144 ER 966

Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627

Trendtex Trading Corporation & Anor v Credit Suisse [1982] AC 679

Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514

William Brandt's Sons & Co v Dunlop Rubber Company Limited [1905]

Woodman v Rasmussen [1953] St R Qd 202

Woolcock Street Investments v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515

Wyong Shire Council v Shirt [1980] HCA 12; (1979) 146 CLR 40

Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661

Zappulla v Perkins [1978] Qd R 92

GA Thompson SC and JD McKenna SC with AW Duffy and CM Muir for the plaintiffs

P Morrison QC and DJS Jackson QC with P Roney and G Thomas for the defendants

The case in outline....................................................................

The BWE..............................................................................

Before 1984............................................................................

The 1984 repair......................................................................

Dr Fleischhaker at Goonyella.....................................................

Dr Fleischhaker and welds.........................................................

The stiffeners are attached.........................................................

Which company owed the duty of care?.....................................................

Scope of the duty of care............................................................

To whom was the duty owed?......................................................................

What did Dr Fleischhaker consider?..........................................................

What should have been done?.....................................................................

Supervision....................................................................................................

Causation..............................................................................

The Design Case and Section 52..................................................

The Design Case: outcome on liability..........................................

What constituted the contract?...................................................................

The Trade Practices Act terms.....................................................

What inspection did the contract require?.................................................

The walkways case..................................................................

What did Mr Thiel inspect?.........................................................................

Mirrors..........................................................................

Manboats and cherry pickers................................................

Ladders..........................................................................

Scaffolding......................................................................

The inspector's report..............................................................

Was Krupp negligent?..................................................................................

Was Mr Thiel negligent?..............................................................................

The inspector's report and s 52...................................................

Section 52 and Mr Thiel............................................................

Would a fatigue crack have been seen in 1999?.........................................

Where was the crack in 1999?.....................................................................

Dr Jones' opinion..............................................................

Dr Maddox.....................................................................

Dr Potts..........................................................................

Dr Munz..........................................................................

Conclusions as to crack size.......................................................

What would Mr Thiel have seen?................................................................

Loss of a chance......................................................................

Conclusions on causation...........................................................

The inspection case: outcome on liability......................................

CONTRIBUTORY NEGLIGENCE.............................................

Removal of the gear box......................................................

Safety devices...................................................................

Drop cutting.....................................................................

Teeth and buckets..............................................................

Production rates...............................................................

Reporting systems..............................................................

Maintenance and inspection practices......................................

Finite element analysis........................................................

The alleged mismanagement by the plaintiffs of the 1999 inspection...

The days before the collapse..................................................

Conclusion as to contributory negligence.......................................

Other defences abandoned.........................................................

Introduction..........................................................................

Cost of a rebuild.....................................................................

The shovel/sizer cost - should it be allowed?..............................................

Dismantling and removing the BWE in 2000..............................

Dismantling and removal of damaged BWE................................

Costs of Investigation of the Failure and the Assessment of Replacement and Repair Options............................................

Additional Administrative Costs Incurred as a Result of the Failure...

Cost of Recommissioning Conveyor System................................

System Commissioning and Spreader Shutdown Costs...................

Additional Expenses: Summary.............................................

Damages for loss of use - special damages.....................................

[1] The Goonyella Riverside Mine is a coal mine near Moranbah in Central Queensland. It is an open cut mine, so that the coal is reached by the removal of the earth which is above it. This earth is called the overburden.

[2] The overburden is removed by various kinds of machines. This case concerns one of them, which was called a bucket wheel excavator and which I will call "the BWE" or simply "the machine". It worked at the Goonyella Mine from 1982 until 2000. It was in continuous operation during those 18 years until suddenly, in the early hours of 8 March 2000, it collapsed.

[3] On any view its owners suffered a large loss, which they seek to recover by these proceedings. Subject to some qualifications which I will discuss, the plaintiffs are, and have been the members of the joint venture which, through the first plaintiff as the mine operator, has mined at Goonyella Riverside since the 1970's.

[4] The BWE was not repaired. It was replaced by machinery of a different kind. The plaintiffs claim the cost of that machinery together with other alleged losses, resulting in a total claim of just over $50 million. They have an alternative claim for what they say would have been the cost of a rebuild of the BWE, which taken with other losses, amounts to about $44.5 million. The quantification of each of these alternative claims is strongly disputed. There are many alternative arguments by the defendants as to quantum, but the defendants effectively concede losses of at least $12 million.

[5] The BWE collapsed because of a fracture to its central tower or mast. It is common ground that this was the result of fatigue. A crack developed in a certain part of the tower which then grew with the effect of fatigue upon the structure. Undetected, the crack ultimately grew to a point where the various forces caused that part of the tower to break. Other components supported by the tower then collapsed with it.

[6] The first defendant, which I will call O&K, designed and manufactured the BWE. There is no complaint about that however. The claim against O&K is from what happened a few years after the BWE had been in operation at the mine in late 1984. It then required some repair, and the chief designer of the BWE, O&K's employee Dr Fleischhaker, came from Germany to the mine to assist. Part of his suggested repair involved the addition of lengths of steel, called stiffeners, to be welded on to the main tower. He returned to Germany and a few weeks later that work, including the addition of the stiffeners, was performed. O&K sent another of its employees, a Mr Tiedt, from Germany to the mine to do something in the supervision of that work.

[7] The cracking which led to the collapse originated at the end of one of these stiffeners. In what the parties have called the design case, the plaintiffs allege three things against O&K, which is sued in negligence as vicariously liable for the alleged negligence of Dr Fleischhaker and Mr Tiedt. The first and principal claim is that Dr Fleischhaker negligently designed the stiffeners, and the detail of their welding. Secondly, it is alleged that Mr Tiedt did not properly inspect the affixation of the stiffeners and in particular the welding. Thirdly, it is said that O&K failed to warn of the risk that a crack would develop where it did at the top of a stiffener. The first and second of those breaches is each said to have caused the crack to

develop with the ultimate consequence of the collapse of the machine. The third breach is said to have caused the collapse, by the relevant area not being

inspected often enough to detect the crack before it could grow to the point

it reached in March 2000. They further claim that O&K breached s 52 of the Trade Practices Act 1974 (Cth), by misrepresenting that Dr Fleischhaker's design was the result of reasonable skill and care.

[8] However, the machine was subject to regular inspections. In particular it was inspected every two or three years by the second defendant. Its former name was Krupp Engineering (Australia) Pty Ltd and I shall refer to it as Krupp. It is a member of a group of companies based in Germany. As it happens, O&K is now a member of that group. O&K, Krupp and the third defendant Mr Thiel (a former employee of Krupp) have the same representation in these proceedings.

[9] The case against Krupp and Mr Thiel is what the arguments have called the inspection case. In March 1999 Krupp sent Mr Thiel to the mine to conduct an inspection of the BWE. He conducted an inspection and wrote a report. He saw nothing of a crack developing at the top of the stiffener. But he did not look at that part of the BWE. The plaintiffs say that it was a breach of the contract for this inspection that Krupp failed to inspect the entire machine, and in particular the place where they say this crack would then have been visible. Krupp says that, for various reasons, it was not obliged to inspect the whole machine and that it was not in breach of contract. Krupp and Mr Thiel are also sued in negligence, for which they say that reasonable care was taken in the inspection. They are also said to have contravened or been involved in a contravention of s 52 in that Mr Thiel's report was misleading or deceptive. The plaintiffs say that a proper inspection would have detected the crack and they would then have repaired it and avoided the collapse.

[10] The liability of each defendant is disputed. Further, the defendants say that the plaintiffs have caused or contributed to their loss in many ways. They are said to have misused the BWE in its operation in several respects and to have failed to have it more frequently and thoroughly maintained and inspected. They also say that in the last few days of its life, the BWE was showing unusual movements and the plaintiffs should have stopped its operation to investigate, in which case it would have survived.

[11] Then there are a very many quantum issues. As will be seen, the arguments, like the bucket wheel itself, have left few stones unturned.**

**[12] The BWE was a very large excavator. It weighed about 2,500 tonnes and was about 40 metres high. It travelled on caterpillar-type wheels and above them there was a section (5 metres in height), over which there was a platform which I will call the turntable. It rotated horizontally, as in consequence did every part of the machine which was above it. Above the turntable was the main tower which was more than 30 metres in height but at an angle varying slightly from the vertical. Extending from one side or the other of the main tower were three arms or booms. On what is called the rear side of the tower there was the discharge belt boom. It was about 40 metres long and extended horizontally from the turntable. From a height just above it, but extending from the front side of the tower, was the bucket wheel boom. At the end of this was the bucket wheel itself, which was where the excavator engaged the face of the earth it was digging. The bucket wheel boom appears to have been about 35 metres long. Thirdly, and higher still there was the counter weight boom, which extended from the rear of the tower. From photographs it appears to have been of about the same length as the bucket wheel boom.

[13] The BWE as a whole moved on its caterpillar-type wheels, called crawlers. The bucket wheel boom was moved laterally by the rotation of the turntable. It was moved vertically by a system of ropes. There was a rope support tower, which was a tower branching out from the main tower from about half-way up the front face of the main tower and above the bucket wheel boom. A pair of ropes ran from winches at the end of the counterweight boom, through the top of the main tower to the end of the rope support tower and then back again. An arm connected the rope support tower to the bucket wheel boom, so that as the ropes raised or lowered the rope tower, the bucket wheel boom moved with it.

[14] The bucket wheel was a rotating wheel of about 10 metres in diameter. On the periphery of the wheel were fixed a total of 10 containers or buckets. With the rotation of the bucket wheel, each bucket became a scoop or shovel. The buckets were empty as they rotated through their lower arc towards the face of the earth to be excavated. They then engaged the face, as they moved upwards before rotating through the upper arc at the end of which their contents fell on to a conveyor on the bucket wheel boom. That material was then conveyed towards the main tower where it was dropped on to another conveyor on the discharge belt boom.

[15] From the end of the discharge boom, the excavated material went to another system of conveyor belts which were distinct from the BWE itself. They were free standing belts moved from time to time as the BWE was moved to another pit. This system of conveyors was some kilometres in length. It took the material to another machine called the spreader. As the name suggests, its function was to disperse the material as it reached the end of the conveyor system. The free standing conveyors and the spreader, together with another machine called the tripper car, worked with the BWE in what the plaintiffs' case describes at the BWE system.

[16] The BWE was driven by an operator sitting in a cabin which was at the foot of the main tower on its front side. The operator faced the bucket wheel from this cabin underneath the bucket wheel boom.

[17] The counter weight boom, as the name suggests, was to balance the machine. The combined weight of the bucket wheel and its boom tended to pull the top of the tower towards the bucket wheel, so the counter weight boom was to prevent that from happening by applying a force to the top of the tower in its direction. The result was a downward force through the main tower towards the turntable. I have mentioned that the main tower extended upwards but varying from the vertical. As the main tower rose in height it was angled slightly towards to the rear of the BWE.

[18] In the operation of the BWE, these downward forces produced both tension and compression within the structure of the main tower. On the rear side of the main tower there was compression. On the front side of the main tower there was always tension. The crack which led to the collapse was on the front side of the tower. There are disputes about what caused the initiation of this crack but it is common ground that once it was there it grew as a result of fatigue. Fatigue cracks grow only where steel is in tension, or there is some cycle of tension and no tension. In effect the tension acts to open and further open a crack so it grows. Fatigue cracking does not occur where steel is in compression: there the steel is being compressed, rather than being stretched, so that it will not open up.

[19] The main tower was a welded steel fabrication, consisting of two parallel I-beams. They were about 9.2 metres apart. Each I-beam consisted of a steel plate and a pair of flanges. The plate was called a web and was about 20 millimetres thick. The length of the webs defined the height of the I-beams and thereby the tower. The beams extended almost vertically from the turntable and their width decreased as they became higher. Along the entire length of each web, on each of its edges, was a flange, 490 millimetres wide and 40 millimetres thick. They were perpendicular to the web which joined the flanges half way across their width resulting in a so called "I" beam. The beams were connected to each other by horizontal ties and diagonal braces so that the tower constituted a single rigid structure.

[20] These two beams were called respectively the left-hand side mast and the right-hand side mast. The left and right sides were according to the view looking to the rear of the BWE. So each side of the mast consisted of the web, a flange at its front edge and a flange at its rear edge.

[21] In 1984 eight stiffeners were added to the tower. To each flange two stiffeners were welded perpendicular to it (and thereby parallel to the web). There was a stiffener on each side of the web on each flange. Each stiffener was 40mm thick, 200mm wide and 10.5 metres long. Therefore, the stiffeners did not extend up the full height of a flange. According to the plaintiffs' case, that fact was critical. They say that the stiffeners should have been designed to extend to the full height of the tower, because by having the top of the stiffeners some metres short of the top of the tower, there was a concentration of forces at the top end of the stiffeners on the front side of the tower (the tension side) which made those points especially susceptible to fatigue cracking.

[22] It is common ground that the crack which caused the collapse of the BWE began at the top of a stiffener on that front side. It was a stiffener on the left-hand mast and of the two stiffeners on that flange it was that which was inside the web.

[23] The BWE was designed and built by O&K pursuant to a contract made with Utah Development Company in 1978. O&K had made several bucket wheel excavators. They are not commonly used in Australian mines. Apart from this BWE, their use in Australia has been in brown coal mining in Victoria. They are more commonly used in Germany. O&K was a leading manufacturer of such excavators at its works at Lubeck in what was then the Federal Republic of Germany.

[24] Utah Development Company was the name of the company which is the first plaintiff, now called BHP Coal Pty Ltd and which I will call BHP. The defendants pleaded that it was a different entity, which raised questions as to the effect of certain corporate mergers according to the law of the State of Louisiana. But ultimately the defendants conceded it was the former name of the First Plaintiff. It made that contract for itself and the other then members of the joint venture. I will refer to it as Utah when discussing events when it had that name.

[25] Mr Brian Black is a retired engineer previously employed by Utah/BHP. His involvement with this BWE commenced in 1977-78 when he prepared part of the technical specification for the tender and ultimate purchase of the BWE. He was centrally involved in the 1984 repair by which the stiffeners were added. And after the collapse in 2000, by which time he had retired from BHP, he was brought back as a consultant to advise on the options for replacing or repairing the BWE.

[26] In 1979 he was seconded to O&K at Lubeck to work as Utah's representative in the design of the BWE. O&K's chief structural designer for bucket wheel excavators was Dr Fleischhaker. He had first met him in Australia in about 1978 in connection with this project. Then when Mr Black was at Lubeck he developed a close working relationship with him.

[27] The BWE was commissioned at Goonyella in 1982, by which time Mr Black was working there. He was the operations superintendent until early 1984 when he became the chief mechanical engineer of Utah and based in Brisbane, a position he held until 1994.

[28] In October 1984 the BWE was damaged in what has been described as a "grounding" incident. This involved the bucket wheel boom grounding in the sense that its weight became supported by the ground rather than by the structure of the BWE itself. The result was that the turntable, the counterweight boom, the discharge boom and frame tipped backwards and there occurred severe

structural deformation of some of the main tower. The deformation was on the upper left-hand mast: on some of its web and the flange on its rear side.

[29] Mr Black went to the mine to assist in the rectification of this deformation, or as it has been described, buckling. At Goonyella he worked on this with Mr Tom Raleigh. He is a mechanical engineer who was then employed by Utah in the maintenance department at Goonyella.

[30] Mr Black decided almost immediately to seek the advice of Dr Fleischhaker. Mr Black wrote two faxes which were sent to Dr Fleischhaker at O&K's Lubeck office on 6 November 1984. One was a single page fax under the names of Mr Black and Mr Raleigh which summarised the grounding incident and the deformation. It said that sketches of the deformation would be forwarded to him. The fax concluded as follows:**

"As can be seen we consider we have a serious structural failure and request assistance.

We advise that Utah will meet the costs of a site visit by yourself and would request advice as to your travel arrangements at your earliest convenience. The machine will continue to be shutdown pending your visit."

**The second fax contained three pages of sketches showing the damage.

[31] Mr Black said that he went to Dr Fleischhaker for assistance because he believed that he was the person most able to advise on and design the necessary repairs. He said that he went to him also because O&K, as the original manufacturer, would have "all the necessary technical details, machine background and expertise to provide a permanent engineering repair solution". I accept this evidence. I also accept, as Mr Black said, that when the BWE had been commissioned, very few of the design drawings had been handed over by O&K, apart from drawings which were contained within the operations manuals. I also accept Mr Black's evidence that he was particularly concerned to obtain the expertise of the O&K Lubeck office, as well as that of Dr Fleischhaker, because of Mr Black's experience of that expertise when working there in 1979. I accept that Mr Black believed that the appropriate engineering solution was beyond the scope of the in-house engineering expertise at Utah.

[32] In response to this request for assistance, Dr Fleischhaker came to Australia within a few days. Mr Black met him in Brisbane and they travelled together to the

mine. They inspected the machine and then discussed the damage and what Dr Fleischhaker was proposing as the appropriate repairs. He advised on ways of removing the buckling by what was called a jacking and dogging system. And he further proposed the affixation of the stiffeners. Dr Fleischhaker's evidence is that he first proposed stiffeners for the compression side, in order to "bring out the buckles", (the buckling being on the rear or compression side) and then suggested that if there were to be stiffeners on that side, the same should be installed on the tension side "just to ensure symmetry".

[33] Whilst he was at Goonyella, and according to Dr Fleischhaker on his first night there, he arrived at a "solution", which he then set out in five pages of handwritten notes and sketches which he gave to Mr Black.

[34] First there was a page of notes which Dr Fleischhaker headed "BWE...Final Repair." These were in the form of instructions or advice as to what should be done and they included the following:**

"Straighten the buckled areas by fixing and clamping the new stiffeners (see details).

The pieces of the stiffeners are to be connected by full penetration welding!"

**[35] Then there were three pages of sketches. On one page Dr Fleischhaker drew the stiffeners showing their shape and dimensions. That sketch also depicted a stiffener welded to a flange, but no dimension was there expressed for the distance between the stiffener and the end of the flange or between the stiffener and the web. On another page he sketched another type of stiffener to be affixed somewhere else and which need not be discussed. On a further page he sketched the "clamping" to which his notes had referred. Indisputably Dr Fleischhaker had thereby recommended the addition of the stiffeners and designed their shape and dimensions.

[36] There is also another document which Dr Fleischhaker said that he provided to Mr Black when he was at Goonyella. On an engineering drawing of a section of the tower (part of the drawings prepared for the BWE's manufacture) Dr Fleischhaker had drawn the stiffeners. By this document, Dr Fleischhaker made it clear where the stiffeners were to be affixed relative to the top of the tower. It is common ground that Dr Fleischhaker provided this marked up drawing, although Mr Black thought that he may have received it subsequently in that same month.

[37] Based upon these notes and documents, Utah had stiffeners fabricated and delivered to the site. Dr Fleischhaker approved the grade of steel for the stiffeners. Mr Black says, and I find, that he accepted Dr Fleischhaker's advice as an expert and that Mr Black did not assist or instruct Dr Fleischhaker in the design "or provide input into the measures which Dr Fleischhaker determined." The method of repair and in particular the design of and specifications for the stiffeners came from Dr Fleischhaker. Mr Black has no memory about whether at this time there was any discussion with Dr Fleischhaker about extending the stiffeners to the top of the tower. Nor does he recall otherwise considering that matter.

[38] In essence, the plaintiffs allege that Dr Fleischhaker was negligent in failing to do either of two things, each of which would have avoided the creation of this point at the top of the stiffeners which they say unduly exposed the structure to fatigue failure. They say he should have designed the stiffeners to extend to the top of the tower. Alternatively, he should have specified a certain type of weld at the top of the stiffener, which was a weld that was stronger than that which was used. The plaintiffs allege that the extraordinary concentration of stress at the location of these welds required a particularly strong weld to withstand those stresses and to avoid fatigue cracking. It is undisputed that each of these things would have made the structure significantly stronger. In particular in evidence from Dr Potts, who was called by the defendants, there are calculations showing that the use of the type of weld which the plaintiffs say should have been prescribed by Dr Fleischhaker, would have about doubled the life expectancy of the BWE. However there is a substantial issue as to what, if anything was prescribed by Dr Fleischhaker about welds at the tops of the stiffeners. And there is a further critical issue of what he should have prescribed.

[39] What, if anything, did Dr Fleischhaker prescribe for the welds? In that one page of handwritten instructions, I have set out above, he wrote that the stiffeners were "to be welded by fillet welds". He also wrote that "the pieces of the stiffeners are to be connected by full penetration welding". Fillet welds required the stiffeners to be welded to the flange on each side of the entire length of the stiffener. The question is what, if anything was prescribed for the top of each stiffener, where its 40 millimetre wide end met the flange.

[40] The plaintiffs allege that Dr Fleischhaker made no recommendation about any weld across the top of each stiffener. The defendants allege that by his drawing, Dr Fleischhaker did prescribe a weld, the same weld as he clearly required for the sides of the stiffener.

[41] At that time there was an engineering standard published in The Federal Republic of Germany called BG 60. It was a standard for the design of "large machines in open cut mines", which included bucket wheel excavators. It informed engineers of the relative strengths of different types of welds in such machines. Within BG 60 there were three types of welds which are central to this case. The least strong of them was the FII. An FII weld involves welding at the side of the component, in this case the stiffener, but with no weld across the top of the stiffener. The plaintiffs say that this is what Dr Fleischhaker recommended, by prescribing "fillet welds" but nothing else.

[42] The next in ascending order of strength was the FI. This is the weld which the defendants say was specified by Dr Fleischhaker. In this context, an FI would involve the same welding across the top of the stiffener (and at its other end) as along its sides.

[43] The third type was described as an EI which was stronger still. Like the FI, this required the fillet welds to join by a weld running across the top of the component (here the stiffener). But it further required that that weld be "tooled" and in this context, that the top (and bottom) ends of the stiffeners have a tapered shape. The plaintiffs say that an EI (or its equivalent in another engineering standard) should have been prescribed by Dr Fleischhaker. This is denied by the defendants.

[44] As I will discuss, Dr Fleischhaker has given different versions of what he did in deciding upon his recommendations for these repairs in 1984. Ultimately his evidence was that whilst he was at Goonyella, he performed certain calculations from which he satisfied himself that an FI detail would be strong enough. The plaintiffs allege that he performed no calculations and indeed, that he did not turn his mind to whether the weld should be an FII, an FI or something else.

[45] As it happens, the question of whether Dr Fleischhaker prescribed an FI or an FII is not critical for the outcome of this case. This because I am satisfied that on what engineers know, there was no material difference between the strength of an FI and that of an FII. BG 60, a standard which is no longer current, said otherwise and it quantified such a difference. According to the plaintiffs' witness Professor Fisher and the defendants' witness Dr Maddox, it is now recognised that there is no material difference. Referring to certain research and published data Dr Maddox said that for these stiffeners, it mattered not "whether there (was) a weld around the edge end or not". The defendants do not seem to challenge this, and in their submissions in reply, they addressed only whether this had been disclosed by a text published by a Dr Gurney in 1979.

[46] At the top of the stiffener where this fatigue cracking grew, no weld was applied. There were simply the fillet welds along the sides of the stiffener. In other words, what was applied by the welders here was the equivalent of an FII weld. But as we now know, an FI would have been no stronger. The issue of whether his sketches should have been understood as requiring FI or FII welds is still relevant, because it is related to the question of what thought Dr Fleischhaker did give to the stresses which would exist at the top of these stiffeners. Before going to that, I will discuss what his sketches objectively represented.

[47] On the page of Dr Fleischhaker's sketches on which he depicted the stiffeners and their dimensions, he showed the fillet welds and gave them a dimension. He did not draw a weld across the top of the stiffener. The defendants say that he nevertheless prescribed the use of an FI detail in this way. On the same page, and underneath where he showed the fillet welds, he wrote "see DRG No 259486 sheet 1 989657 sheet 1". As Mr Black said he then understood, they were existing drawings of the BWE. In turn, those drawings showed welded details equivalent to an FI. When

cross-examined Mr Black agreed that at the time, he understood that this

cross-referencing by Dr Fleischhaker to the drawings was to import what was shown in them, including the FI detail. This was not the understanding of Mr Raleigh however. Nor was it the understanding of Mr Graham Smith who worked for the contractor which did this welding. Mr Smith has no recollection of seeing those two drawings and he said he did not have copies of them during the course of the work. But looking at them now, he says that there is no indication to him that "end welds" were required.

[48] It seems therefore that the drawings were not an entirely clear specification of an FI detail. On one view of them, which is Mr Black's view, Dr Fleischhaker effectively incorporated a requirement for "full closing" welds, or in other words an FI detail. I was impressed overall by Mr Black as a witness. He is no longer employed by BHP and is an apparently independent witness. His understanding of these drawings cannot be ignored. I accept that on an objective view, the requirement for an FI detail was conveyed by Dr Fleischhaker's reference to these drawings.

[49] But that is not to say that Dr Fleischhaker had that in mind. The drawings were relevant in other respects. In his first witness statement, Dr Fleischakker did not say that he intended by this reference to the drawings to import what they depicted of an FI detail. But in the same statement he said that he "assumed that any competent welder would have carried out closing welds to the ends of the stiffeners and it would have been completely unreasonable to have carried out the work without that detail. If those closing welds were not carried out, it would have been the first time in my life that I had seen it". If that evidence is true, it strongly suggests that Dr Fleischhaker was not intending to require an FI detail by his

cross references to those drawings. So whilst Mr Black reasonably understood them to incorporate FI welds, I find that this was not what Dr Fleischhaker was intending by his reference to those drawings.

[50] During the design and commissioning phases of the BWE, Mr Lothar Friedemann had acted as an independent structural engineer supervising the work. As at November 1984 he was still to deliver his final report as to the BWE's design and commissioning. The defendants argue that in some way Utah relied upon Mr Friedemann in relation to these 1984 repairs. I accept Mr Black's evidence that Utah did not contact or provide any material to Mr Friedemann about the 1984 grounding incident or the proposed repairs and nor did it ask O&K to do so. Mr Friedemann's report as to the design and commissioning of the BWE was given in 1985. In his evidence, Mr Friedemann said that he did not perform fatigue calculations in relation to the 1984 modifications.

[51] The stiffeners were attached by independent contractors and the work was completed by the end of 1984. By this stage, Dr Fleischhaker had returned to Lubeck. O&K sent Mr Tiedt from Germany to supervise at least some of the repair work. The extent of Mr Tiedt's supervisory role is in dispute. There are different accounts between Mr Tiedt and Mr Raleigh as to the extent to which Mr Tiedt was involved in supervising the installation of the stiffeners and in particular the welding. However, it is unnecessary to resolve that issue. Because, as is now known, there is no difference in strength between the FI and FII details, any failure by Mr Tiedt to see that there was an FI weld at the top of this stiffener (if he had been instructed that this is what Dr Fleischhaker wanted) would have no consequence. At one point the issue may have had another relevance, which was to whether the crack was initiated by what is called a cold crack. Cold cracking results from poor welding practice whereby hydrogen becomes present in the weld. According to some of the expert evidence, if the crack was initiated as a cold crack this has an impact upon the assessment of the likely size and appearance of the crack at the time of the Krupp's 1999 inspection. However, it is common ground that whatever was the originating cause of the crack, its growth was caused by fatigue. So the fact that the crack was initiated by the presence of hydrogen would not affect the design case because that crack propagated and ultimately caused the collapse because of the high stresses at the top of the stiffener as against the strength of the weld at that point. There is no argument by the defendants that it is only a cold crack which could have grown to cause the collapse, and that the only cause of the collapse was that there was cold cracking. The fact or otherwise that this crack began its life as a cold crack is (perhaps) relevant as to the size of the crack at the time of the 1999 inspection.

[52] O&K strongly disputes that Dr Fleischhaker was negligent, but before discussing that question, it is necessary to resolve issues affecting the existence of the alleged duty of care. One is that O&K argues that it is not vicariously liable for any negligence of Dr Fleischhaker, because although he was employed by it, he performed his work for the 1984 repairs under the control of another company which was O&K Australia Pty Ltd. It no longer exists but it was a subsidiary of O&K. It is pleaded that Dr Fleischhaker acted "in the capacity as servant or agent of O&K Australia" and that his participation was with the consent of, but not at the direction of O&K. Another issue is the scope of that duty: O&K pleads that Dr Fleischhaker was to provide only general advice and not "a considered engineering solution". Then there is a third question, although not directly raised by O&K in its pleading, of whether a duty of care was owed only to the then owners of the BWE or also to future owners. Not all of the plaintiffs were joint venturers and thereby owners in 1984.

[53] O&K is sued in negligence and not for breach of contract. Upon the plaintiffs' case, the proof of a contract is unnecessary. Possibly here there was no contract, and any entitlement to be paid for Dr Fleischhaker's services was in restitution. There is evidence of a payment by Utah to O&K Australia for those services. But there is no direct evidence that Utah contracted with O&K Australia. The fact that it was O&K Australia which sent the relevant invoice to Utah could have been simply the result of the way in which the O&K group preferred to record matters in its own accounts.

[54] Significantly, Mr Black went straight to O&K in Lubeck and to Dr Fleischhaker when Utah was seeking this urgent advice. His faxes of 6 November were sent without any prior contact with O&K Australia. He went to Dr Fleischhaker because of his belief in his particular expertise and experience, together with Mr Black's knowledge of the O&K design office at Lubeck and the fact that O&K held many drawings which had not been provided to Utah. And, of course, the BWE had been designed and built only a few years earlier by O&K and specifically under the direction of Dr Fleischhaker. In Mr Black's view, O&K Australia did not have the required expertise or technical information. In these proceedings O&K does not suggest otherwise.

[55] O&K Australia was managed by Mr Kogel. Mr Black did telephone Mr Kogel shortly after the grounding incident. But apparently this was before the extent of the damage, and particularly the buckling, had been noticed, and it was thought by those at Utah that some relatively minor repair would be needed, the parts for which could be ordered through Mr Kogel. Neither Mr Kogel nor his company was asked for advice. Mr Black simply asked him about the price and availability of a certain part for the BWE without explaining why it was required.

[56] Mr Kogel recalls another call from Mr Black on or about 5 or 6 November 1984, in which Mr Black did describe the grounding incident, after which Mr Kogel received a copy of the one page fax of 6 November which Mr Black and Mr Raleigh had sent to Dr Fleischhaker. On that day Mr Kogel sent a telex to O&K, addressed to four people including Dr Fleischhaker. Mr Kogel has provided an English translation of that telex in which he says that he wrote that he had received "from Mr Brian Black confirmation that Dr Fleischhaker is requested as soon as possible to arrive in Goonyella", and that "in accordance with discussion with Brian Black it looks that substantial repair work could be involved". This does not provide particular support for the defendants' argument. The fact that Mr Black was speaking to Mr Kogel about the problem and about his request for Dr Fleischhaker to come to Goonyella does not mean that Utah and its co-owners of the BWE were not relying upon Dr Fleischhaker and O&K. It is consistent with Utah having O&K's Australian representative involved for reasons of convenience with travel arrangements and perhaps with parts. Mr Kogel agreed that one of the purposes for the existence of O&K Australia was to represent O&K here and that it had become difficult for customers of O&K to order parts directly from it in Germany. Within its own ranks it hardly had the engineering expertise to rival that of its parent's Lubeck office. In correspondence earlier in 1984 concerning other matters, O&K Australia had referred to O&K as its "principal".

[57] In 1984 there was a practice whereby for work which it did in Australia, O&K invoiced O&K Australia. An example is an invoice for an inspection by O&K's Mr Schander which was performed on the BWE in April 1984. But that says more of the arrangements within the O&K group than it does of the plaintiffs' case that they sought advice from and relied upon O&K, and it far from indicates that Dr Fleischhaker provided his advice and design for the repair as the servant of O&K Australia.

[58] O&K Australia was in no position to direct Dr Fleischhaker as to how to do his work. There was no semblance of "control" to indicate that he had become the servant of O&K Australia for the time being. The "relevant control" of Dr Fleischhaker remained with his employer, O&K[1].

[59] Dr Fleischhaker remained the employee in all respects of O&K. He did not become effectively employed by O&K Australia whilst he was at Goonyella or otherwise working on the matter of the 1984 repairs. Accordingly, it is O&K which would be vicariously liable for his negligence. Further, it was O&K which owed a duty of care, because it was O&K, not its Australian subsidiary, which was asked to provide assistance in 1984 having regard to its particular resources and its experience and also because it was the employer of Dr Fleischhaker.

[60] As to the plaintiffs' alternative case that there was conduct in connection with this advice and design which contravened s 52 of the Trade Practices Act, the conduct was that of O&K, not O&K Australia.

[61] O&K pleaded that any duty of care which Dr Fleischhaker or it owed for his work in 1984 was very limited. Indeed, O&K denied that Dr Fleischhaker designed any modification to the tower (including the stiffeners) and pleaded that instead he gave "brief advice on the most appropriate method for removing the buckling". It further pleaded that this brief advice was given in relation to advice which Utah had received from Ahden Pty Ltd, which was the contractor which undertook the repairs and affixed the stiffeners. More specifically, in the original defence of O&K it was pleaded that[2]:**

"(ii) ...Dr Fleischhaker did not advise as to the necessity to insert stiffeners on the front flanges in the position alleged in paragraph 30.2 or in any position on the front flanges. Such stiffeners as were inserted were inserted by the contractor of Utah, namely Ahden Pty Ltd at its suggestion. The introduction of stiffeners to the two front flanges was not necessary for the purpose of effecting repairs to any damage since the two front flanges had not been damaged."

**But the repairs, including the stiffeners, were not according to any proposal by Ahden, as O&K later acknowledged by deleting that reference to Ahden from its pleading[3].

[62] Moreover, O&K pleaded that "Dr Fleischhaker was not required to provide a considered engineering solution to repair the damage and did not do so". The second of those facts (that he did not provide a considered engineering solution) is indeed the plaintiffs' case. The plaintiffs allege that he drew and recommended the stiffeners without any or any proper consideration of their effect on the strength of the tower, and in particular, without undertaking the necessary calculations of stress in order to assess the suitable welded detail at the top of the stiffeners. This is consistent with what Dr Fleischhaker said in his letter to the plaintiffs' solicitors in September 2004, when he wrote:**

"Utah did not expect from me to make any calculations etc during my stay in Australia. This would not have been possible on the site. Even after my return to Germany Utah did not request further engineering work to be done by me on this issue."

He wrote also that his "personal involvement was limited to the visit of the Goonyella mine and to the provision of repair advice to the responsible staff of Utah" and that:

"In my recollection my visit to the mine was an emergency mission. Utah did not request from me to provide them with a comprehensive engineering solution, but to:

2. Give them an advice how this damage could be repaired."

"It was only necessary to weld four stiffeners to the rear of the BWE tower frame for removing the bucklings, since only the rear tower frame was damaged. However, the introduction of additional steel at one place of a steel structure can have structural consequences. Utah wanted to strengthen the overall stability of the complete tower structure and that is why it was decided to add the four stiffeners to the front flanges of the tower frame. The addition of these stiffeners caused greater stability of the tower frame. Furthermore, the symmetry of the tower frame was maintained by the introduction of the four front stiffeners."

**[63] Ultimately Dr Fleischhaker testified that he had performed calculations in the course of providing the advice and sketches which he provided to Mr Black at Goonyella. When cross-examined as to the inconsistency between that evidence and his letter of September 2004, and in particular the statement that no calculations had been expected or would have been possible, he said that his letter in those respects was a lie. O&K now argues that Dr Fleischhaker's evidence should be accepted and that I should find that he did perform calculations by which he satisfied himself (and O&K says reasonably) that the welded detail at the top of the stiffeners on the front or tension side would be strong enough to withstand the maximum stress at that point.

[64] He says these calculations related to an FI detail which, as I have mentioned already, he said that he assumed that any competent welder would apply.

[65] In the ultimate submissions for O&K, it appears to be accepted that a duty of care was owed by Dr Fleischhaker and by the company to whom his conduct is to be attributed. There was ultimately no argument that the duty of care did not extend to the provision of "a considered engineering solution". Rather the argument was that Dr Fleischhaker has provided it and with reasonable care. In particular the argument appears to accept, as the plaintiffs plead, that there was a duty to exercise the level of skill and care reasonably to be expected of a competent structural engineer with expertise in the field of design and construction of bucket wheel excavators.

[66] It was Dr Fleischhaker who advised that the stiffeners be placed on the rear side where there had been the buckling, and then on the front side. It was Dr Fleischhaker who prescribed the dimensions of the stiffeners, and their positions on the height of the tower. To ensure that his repair solution was implemented, he sent Mr Tiedt from Germany to supervise at least some of the work. There was no reason for him to think that it was Utah or some other adviser which would check his solution to see whether it was structurally sound. In particular, there was no reason for him to think that someone else would do the work of ensuring that the strength of the welded details by which these stiffeners were to be affixed was sufficient to withstand stresses on the front or tension side of the tower. He should have known that he was being relied upon to do that. More probably than not he did know that. It was Dr Fleischhaker who was to provide a considered engineering solution. In providing that solution, Dr Fleishhaker and O&K were obliged to exercise reasonable care and skill.

[67] The contract for the manufacture of the BWE was made by Utah (the first plaintiff) on behalf of the joint venture of which there were then three other members. The composition of the joint venture had changed by November 1984 and, as I will discuss, it has changed since then. By an amendment to the joint venture agreement in April 1984 it was agreed by the joint venturers that all of what constituted "The Joint Venture Property" (as there defined) should be owned by the joint venturers as tenants in common in proportion to their respective interests in the joint venture. It is admitted that the BWE was part of The Joint Venture Property.

[68] Clearly a duty of care was owed at least to the then owners of the BWE. The defendants do not argue that no such duty could be owed because it would conflict with any contract (save perhaps for their argument as to the role of O&K Australia). Nor do they argue that a duty was owed only to the first plaintiff. In the defendants' ultimate submissions, it is apparently accepted that there was a known reliance by the then owners upon Dr Fleischhaker to exercise reasonable skill and care in his advice and design for the 1984 repair.

[69] As at November 1984 the BWE was owned by the then joint venturers in the following proportions:**

[70] On the day of collapse, 8 March 2000, the owners of the BWE were as follows:

**These were also the respective interests in March 1999, when the events the subject of the inspection case occurred.

[71] The parties have agreed on a statement of facts as to the composition of the joint venture at various times. The plaintiffs submit that on the basis of those facts, the only plaintiff which was not a joint venturer in October 1984 is the seventh plaintiff. However according to that agreed statement of facts, the fourth plaintiff became a joint venturer only on 1 August 2002 when it acquired its 8.5 per cent interest. It was not a joint venturer at the time of the collapse.

[72] The fourth plaintiff claims to be entitled to damages as an assignee of the rights of action against the defendants coinciding with the acquisition of its 8.5 per cent interest in the joint venture. The assignment of the share in the joint venture is admitted by the agreed statement of facts. The assignor was a company originally called General Electric Minerals Inc which held that share from 2 April 1984. However the defendants did not admit that there was an assignment of its rights of action. The plaintiffs do not rely upon the agreed statement of facts and its attachments to prove that assignment. One such attachment is the agreement dated 1 August 2002 by which the fourth plaintiff acquired its share in the joint venture. That agreement does not appear to provide for the assignment of rights of action and the plaintiffs did not argue that it did. Indeed the plaintiffs ultimately made no submission as to the means by which the fourth plaintiff is said to be entitled to any of these rights of action.

[73] On day 39 of the trial the plaintiffs tendered this agreed statement of facts. At the same time counsel for the plaintiffs referred to the "further matter" of this assignment to the fourth plaintiff and then tendered a letter from the plaintiffs' solicitors to the second defendant dated 2 June 2003 together with its enclosures, which were two notices of assignment[4]. Counsel for the defendants then noted that this was not the document by which the alleged assignment was made and that the defendants were yet to be shown such a document. He said he was not objecting to the tender but "pointing out it doesn't seem to prove what's in issue". Counsel for the plaintiffs said that "We'll cure this. We'll tender in due course the document evidencing the assignment". No further document was tendered.

[74] The letter which was tendered was addressed only to the second defendant, Krupp. It was in these terms:**

"We act on behalf of the underwriters of the Central Queensland Coal Associates Joint Venture, a joint venture of BHP and others, in relation to the collapse of the BWE on 8 March 2000.

Please find attached two notices of the assignment of choses in action ("Notice") as required under the provisions of the Property Law Act 1974 (Qld).

Attached to each Notice is a draft statement of claim relating to the matters arising as [a] result of the collapse of the BWE on 8 March 2000. We intend to commence proceedings in this matter in the near future..."

**The first attachment was a purported notice of an assignment to the fourth plaintiff by BHP Queensland Coal Limited (formerly General Electric Minerals Inc) of its "right, title and interest in and to the choses in action against you referred to in the draft statement of claim annexed to this notice". The second notice was in similar terms but in respect of an assignment by the first plaintiff to the seventh plaintiff of "two point one per cent (2.1%) of the assignor's right, title and interest in and to the choses in action against you...". This is apparently related to the assignment of a 2.1 per cent share in the joint venture between those companies which, according to the agreed statement of facts, occurred on 28 June 2001. This purported assignment of rights of action to the seventh plaintiff is not pleaded in the statement of claim or referred to in the arguments. Nor was it referred to when counsel for the plaintiffs tendered this letter and its enclosures. I will not consider it when assessing the seventh plaintiff's loss. Its claims will be assessed upon the basis of its interest in the BWE as at March 2000, which was to the extent of 4.59 per cent.

[75] Returning then to the alleged assignment of rights to the fourth plaintiff, the evidence is deficient in at least two respects. The first is that there is no evidence of the document by which the assignment was made. The statement of claim alleges that the assignment was made on 1 August 2002. Particulars were sought of that allegation and in response the plaintiffs said that they would provide the relevant document. As I have also said it is not the contract by which the share in the joint venture was assigned. As I have said the plaintiffs did not produce that document when this point was taken during the trial. Nor does the notice of that purported assignment refer to such document. Secondly, the notice is addressed only to Krupp and not to O&K or Mr Thiel. It refers only to an assignment of rights of action against Krupp. The draft statement of claim which was attached to the notice has not been tendered. It cannot be inferred from this notice that there was an assignment rights of action against O&K.

[76] Moreover, the right of action against Krupp for damages under s 82 of the Trade Practices Act was not assignable, because the fourth plaintiff is not a person who has suffered loss or damage by Krupp's conduct: Park v Allied Mortgage Corp Ltd[5]; Allstate Life Insurance Co v ANZ Banking Group Ltd[6]; National Mutual Property Services (Australia) Pty Ltd & Ors v Citibank Savings Ltd[7]; Pritchard v Racecage Pty Ltd[8] and Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd[9]. The position with rights of action for damages for breach of contract or negligence is not so clear, and in Australia there is a difference of judicial opinion as to whether Trendtex Trading Corporation v Credit Suisse[10] should be followed.[11] That point need not be considered, however, because the plaintiffs have not proved the pleaded assignment to the fourth plaintiff.

[77] That leaves the seventh plaintiff. The present point then affects its entitlement to damages under the design case.

[78] The plaintiffs concede that at least "on one view" their claim is for economic loss, as in my view it is. The alleged losses are the cost of repairing or replacing the BWE itself together with losses from its unavailability in the mining operation. The collapse of the BWE did not result in damage to other property. The fact that there was physical damage to the BWE itself does not make this claim one which is not solely for economic loss: Woolcock Street Investments Pty Ltd v CDG Pty Ltd[12]; Bryan v Maloney[13].

[79] The plaintiffs argue that there was a sufficient connection between O&K and future owners of the BWE for a duty to be owed to present and future owners as joint venturers as a class. This is put on the basis of these matters:**

**(1) there was a determinate class constituted by the joint venturers as owners of the BWE from time to time, notwithstanding that every member of that class could not be nominated in November 1984[14];

(2) both future and present joint venturers were relevantly vulnerable;

(3) the imposition of liability upon O&K to such a class would not lead to unacceptable consequences in terms of policy. Unlike the position in Woolcock Street Investments, the existence of a duty owed to the then (1984) owners of the BWE to avoid economic losses of this kind is clear; and.

(4) O&K must have known that the structural failure of the BWE was inherently likely to produce economic loss[15].**

[80] It is argued that both existing and future owners of the BWE were relevantly vulnerable in the event that there was a failure to exercise due care and skill because:

**(1) O&K "was better skilled to identify and guard against the risks posed by a failure of the (repairs) to the BWE and to identify the risk of fatigue cracking";

(2) "The plaintiffs did not have the relevant engineering expertise" and in fact relied on O&K;

(3) the repairs were done urgently, with no opportunity for the negotiation of contractual terms which might have protected "the plaintiffs";

(4) there was reliance "by the plaintiffs" on O&K as Dr Fleischhaker knew;

(5) "The plaintiffs" were unable to protect themselves from the consequences of negligence; and

(6) the condition of the stiffeners made it difficult for "the plaintiffs" to inspect them, other than by engaging the second defendant to conduct the type of inspection which is the subject of the inspection case.**

**[81] Further, the plaintiffs argue that the distinction between economic loss and physical damage in the present case is "a very technical one", as they say appears from the fact that personal injury was suffered by an employee of the first plaintiff in the collapse[16].

[82] Apart from that last submission, the plaintiffs' arguments are properly directed to the considerations indicated by the various judgments in Perre v Apand Pty Ltd[17] and Woolcock Street Investments Pty Ltd v CDG Pty Ltd[18]. In the plaintiffs' favour is that the extension of the duty to future owners, as participants in the operation of this mine would not result in the duty being owed to an indeterminate class. The potential losses would be confined to those suffered by owners of the machine from its damage or destruction and its unavailability at this mine.

[83] The plaintiffs' arguments as to vulnerability are not as persuasive. The matters to which they refer are relevant in demonstrating the vulnerability of the owners as at November 1984. The position of future joint venturers is different. Apart from the suggested difficulty in inspecting the critical part of the BWE, none of the matters advanced by the plaintiffs seems to be directed to the vulnerability of them. The difficulty of an inspection is relevant. As I will discuss in relation to the inspection case, it was possible to inspect this critical area at the top of this stiffener. But it was relatively difficult to do so because for the inspector, there was no direct line of sight to that part of the tower from a position standing on the tower's walkway.

[84] When acquiring its share in the joint venture, the seventh plaintiff might have sought a warranty as to the condition of the mine's plant and in particular the BWE. Alternatively, the seventh plaintiff might have conducted its own inquiries and taken its own professional advice as to the plant. No evidence was led by the plaintiffs as to why these were not realistic means for the protection of subsequent owners. And it was open to the seventh plaintiff to seek an assignment of any rights which the seller of this share may have had against third parties in respect of any defects in the plant. (As already discussed, there is no pleaded or agreed case that the seventh plaintiff took an assignment.)

[85] In Woolcock Street Investments, Gleeson CJ, Gummow, Hayne and Heydon JJ said that[19]:**

"Since Caltex Oil, and most notably in Perre v Apand Pty Ltd, the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed."

In Perre v Apand Pty Ltd, McHugh J said[20]:

"If the plaintiff has taken, or could have taken steps to protect itself from the defendant's conduct and was not induced by the defendant's conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss."

**The seventh plaintiff has not proved, or sought to prove, that it could not have taken steps to protect itself from O&K's conduct. In my conclusion, the duty of care owed to the joint venturers as at 1984 was not owed also to subsequent joint venturers and to the seventh plaintiff.

[86] However, the position of the seventh plaintiff in the claim against O&K for damages under s 82 of the Trade Practices Act is a different question, and this is considered below.

[87] Dr Fleischhaker provided two witness statements. The first was dated

8 February 2007. The second was dated 19 August 2007, just a few days

before he gave his oral evidence. In his first statement he said that he did "a rough calculation of the static loads whilst I was at Moranbah" on which he "spent approximately two hours". He said he did this:**

"because I'd chosen a limit on the end of the stiffener in the area where I expected the stresses would be rather low, but I wanted to know whether I was right about where the stiffeners ought end. I was satisfied with my conclusion. I do not remember the figures but I recall that they had been small enough to be reasonable."

"My assessment of the effect on fatigue resistance involved a consideration of the operational loads which applied to the tower. I considered the likely maximum and minimum stresses which would be found in the area of the upper ends of the terminations of the stiffeners. I first considered this issue when I was at the Goonyella site looking at the repairs. I did the calculations on paper although I believe that no complete copy has been kept of this material. I believe I expected that on my return to Lubeck that a more comprehensive analysis of this would occur by my staff, however it appears that this did not occur ... I believe the assessment that I did on site gave a reasonable indication of what the stress range was and I was satisfied that the introduction of the stiffeners did not have any significant consequences for fatigue."

[88] His second statement was somewhat different. Rather than not being able to remember the figures, in his second statement and in his oral evidence he purported to recall some figures and to reconstruct others, in discussing what calculations he did. Further, in his second statement, he did not say that he considered the minimum stresses but instead that:

"Theoretically one would then need the minimum stress. This wasn't able to be calculated on site..."

**[89] As already noted each of these accounts of doing calculations, to satisfy himself that the introduction of the stiffeners would not have any significant consequence is inconsistent with his assertion in his September 2004 letter, that he performed no calculations because he could not have done so at Goonyella. They are also inconsistent with his assertion in the 2004 letter, effectively repeated in O&K's pleading, that he was not asked for a comprehensive engineering solution. On his evidence, Dr Fleischhaker made his calculations broadly according to the German standard BG 60. It is necessary to go now to its relevant provisions.

[90] The exercise of reasonable care required Dr Fleishhaker to consider the ability of what was being added to the tension side of the tower to withstand the likely stresses. In particular it required a consideration of the strength of the alternative welded details. BG 60 instructed engineers how to calculate the ability of certain welded details to withstand those stresses. That standard had been generally applied in the original design of this BWE. The contract had required the BWE to be constructed according to BG 60. But it had also provided, in Appendix 1 of the specification, as follows:**

"The Load Assumptions stated in [BG60] shall be used except where modified by the specification and the following...

Where the BG and related Codes and Standards are under revision during the Contract the Contractor shall draw the attention of the Purchaser to any provisions of the proposed revisions which could have a significant effect on the strength stability and ground pressure of the excavator; but the Contractor shall not use any parts of the proposed revisions in his design and construction with-out the prior written approval of the Independent Expert (IE) and the Engineer."

**[91] BG 60 was a standard which had been used in the Federal Republic of Germany since 1960. As at November 1984 the standard was under review there by a committee which included Dr Fleischhaker. Some members of the committee then considered that BG 60 was unreliable and that in several respects it should be changed. It was changed, but not until 1986 by the publication of the standard BG 86.

[92] BG 60 required the designing engineer to calculate the maximum stress and the minimum stress at the relevant point. The level of stress was referred to by the Greek letter sigma. So the maximum stress was described as σmax. The minimum stress was described as σmin. The ratio of one to the other was described by the Greek letter kappa. The so called stress ratio, known also as the kappa factor (κ), was thereby calculated thus:**

**By 1984 the use of this kappa factor had been abandoned in the engineering standards of some countries, and most notably in the United States of America, where the relevant codes for steel structures were on the basis that the critical factor was not the proportion of the minimum stress to the maximum stress, but the "stress range", that is to say difference between the two.

[93] To be satisfied that a certain welded detail would be strong enough to withstand the stresses from the operation of a machine the engineer would measure the maximum allowable stress of that proposed weld. Under BG 60, that involved a calculation according to the data and formulae set out in the standard. One factor in that calculation was the kappa figure. Another was the so called probability factor which was called "W". The calculation of "W" was also defined within the standard.

[94] Once the engineer had calculated the maximum allowable stress of a certain welded detail at a certain point of the structure, that figure was compared with the maximum stress which was expected in the operation of the machine (σmax). If it was less than σmax it was not strong enough. If it was greater than σmax, in theory it would be an adequate welded detail to be employed, although there could be a judgment required of the engineer as to whether, in all the circumstances, it was safe enough. Dr Fleischhaker said that he would not have used a welded detail where the maximum allowable stress (or strength) of the detail exceeded σmax but by less than ten per cent.

[95] As noted already, in his first statement Dr Fleischhaker said that he considered the "likely maximum and minimum stresses which would be found in the area of the upper ends of the terminations of the stiffeners" (the likely σmax and σmin). But in his second statement he said that the minimum stress was not able to be calculated on site but that he knew from his "memory...that the kappa at the approximate position of the stiffener end was .7", so that "it was then a simple calculation to come to the allowable stress which under BG 60 was 215MPa [215 megapascals]".

[96] In his second statement he was a little more specific saying that he was able to assess the σmax at 163MPa and to calculate the maximum allowable stress of an FI detail at that point as 215MPa and he provided a handwritten reconstruction of his calculations. But when cross-examined, and shown that the dimensions used by him to arrive at his 163MPa were incorrect, he conceded that his calculations should have resulted in a figure for σmax of 208MPa. Overnight during his

cross-examination, he was allowed the opportunity to look at drawings and to revisit his evidence about his calculations. He then produced another calculation, again a purported reconstruction of what he had done at Goonyella, which resulted in a σmax of 171MPa. Then it was pointed out to him, by further cross-examination, that he had made another error. Before the next day of his cross-examination he therefore attempted a further reconstruction of his 1984 calculations, this time reaching a σmax of 219MPa. But then he said that he had not applied the probability factor, W, and that allowing for this the allowable fatigue strength of an FI weld at this point of the structure was 229MPa, which being more than his σmax of 219MPa showed that the strength of the FI would have been sufficient. But even so, the margin for error was less than ten per cent and the problem with this evidence was that in his second statement he had said "If the allowable stresses had been closer, for example ten per cent, I would have considered moving up to the class EI".

[97] Then he added another qualification to his calculation of 219Mpa, saying that it could be reduced because, he now recalled, in 1984 he had taken into effect the nearby bracing on the tower, and that when that is done, his 219MPa becomes 186MPa. This is a matter to which he had not referred in his evidence until then, and in particular, in his witness statements, where he had purported to reconstruct his calculations or in his attempts over several days of oral evidence to show how he could have arrived at a figure under BG 60 with the information which he had at Goonyella.

[98] Of course it must be remembered that Dr Fleischhaker was being asked to reconstruct what he said had been the calculations which he performed more than 20 years ago. That was always going to be difficult, assuming that he had performed those calculations. Nevertheless the fact that his evidence changed several times about this makes it even less persuasive. And what is significant is that after several attempts, made over several days, he was unable to show how, with the means and information available to him at Goonyella, he was able to measure the strength of an FI detail at this point of the tower by a calculation according to the formulae in BG 60. Probably because he recognised that, he claimed (in cross-examination) that when he returned to Lubeck, he had his

"co-workers" check his calculations and "they confirmed it". There is no support for this from other evidence and it is inconsistent with his witness statements. As noted already, in his February 2007 statement he said that:**

"I believe I expected that on my return to Lubeck that a more comprehensive analysis of this would occur by my staff, however it appears that this did not occur..."

**[99] O&K pleaded that "calculations as to the stresses, as a consequence of the stiffener terminations, on the tensile and compression members of the tower" were performed by another of its employees, a Mr To Baben. In his second statement Dr Fleischhaker suggested that Mr To Baben had checked Dr Fleischhaker's calculations. He said that he did not receive any report of the result of

Mr To Baben's checking, but that he was not concerned because he was satisfied that his own analysis had been correct. Clearly Mr To Baben did make some calculations after Dr Fleischhaker's visit to Goonyella. However they were not calculations checking calculations by Dr Fleischhaker and more generally, in relation to fatigue or the strength of the upper stiffener terminations and the welds.

[100] It was conceded ultimately by O&K that Mr To Baben had not made any calculation in relation to this part of the tower and that his calculations had been of the static strength of the tower at a much lower and presently irrelevant point. I find that there was no work by way of calculations or checking calculations in relation to the point of these stiffener terminations by O&K after Dr Fleischhaker's visit to the mine. Significantly, however, according to Dr Fleischhaker's evidence, O&K could have done so.

[101] In my conclusion, it is more probable than not that Dr Fleischhaker did not calculate the strength of an FI detail at the stiffener terminations. His reconstructions of calculations effectively acknowledged that it was not then possible for him to perform the calculations required by BG 60 whilst he was at Goonyella. That is consistent with the evidence of Mr Friedemann, who said that he did not believe it would have been possible for Dr Fleischhaker to have conducted an assessment of the impact on the fatigue resistance of these stiffeners. Dr Fleischhaker could have attempted only some less precise and therefore less reliable calculation. As is shown by the evidence of other witnesses, such as Professor Hulsmann called by the plaintiffs or Dr Potts called by the defendants, a precise calculation of the adequacy of an FI detail would have required more time and data than Dr Fleischhaker had available to him in his couple of days at Goonyella. Precisely calculated according to BG 60, it would have been necessary for Dr Fleischhaker to apply the probability factor, which he could have calculated only by knowing the various load combinations which would provide the figures from which probability factor was to be calculated under the equation set out on pages 12 and 13 of BG 60, and he does not suggest that he had all of this information on hand at Goonyella. He did not say that he had used the probability factor (W) in his calculations. The submission that I should find that he did use it, and from a memory of what it had been in his design of the BWE itself, has no basis in the evidence.

[102] So whilst his duty was to provide a considered engineering solution, he did not do so at Goonyella, at least in respect of the strength of the upper terminations of these stiffeners was concerned. As his evidence acknowledges, he could have had O&K perform that analysis upon his return but that did not happen.

[103] The plaintiffs argue that upon those facts, that Dr Fleischhaker was negligent and that in consequence, there was an undue risk of fatigue cracking which would result in the structural failure of the tower, as did occur in 2000. They say that those facts are sufficient to make O&K, as vicariously liable for Dr Fleischhaker's negligence, responsible for the damage from the collapse of the BWE.

[104] However, the plaintiffs must go further. They must prove not only what O&K did or did not do, but also what a reasonably careful and competent engineer in Dr Fleischhaker's position would have done. It is necessary to inquire further into the facts to identify "with some precision, what a reasonable person in the position of the defendant would do by way of response to the reasonably foreseeable risk", as Gummow and Hayne JJ said in Graham Barclay Oysters Pty Ltd v Ryan[21], where their Honours cited the observation of Isaacs A-CJ in Metropolitan Gas Co v Melbourne Corporation[22] that:**

"[no] conclusion of negligence can be arrived at until, first, the mind conceives affirmatively what should have been done."

**[105] As the defendants' case ultimately accepted, Dr Fleischhaker was obliged to assess the fatigue strength of this weld detail. They say that this required no more than the application of BG 60. So if upon a proper analysis, an FI detail would have proved sufficient according to BG 60, no more was required of the engineer.

[106] The plaintiffs argue that the reasonable engineer was required to go further than simply the application of BG 60. They say that the reliability of BG 60 was then the subject of considerable professional doubt, as Dr Fleischhaker knew or should have known, such that no reasonable engineer in his position could have simply applied that standard. The reasonable response which was required was either the prescription of a stronger welded detail, and in particular the equivalent of an EI under BG 60, or the design of the stiffeners so that they extended to the top or near the top of the tower, where the stress at the stiffener terminations would have been far less.

[107] Applying only BG 60, an FI weld at the top of this stiffener would have been adequate. That was the evidence of Professor Hulsmann, called by the plaintiffs, and Dr Potts called by the defendants. Professor Hulsmann's opinion about that was expressed in his report of July 2007. By then, this trial had been underway for some months when the plaintiffs, apparently as a result of that report, obtained leave to amend their case. The amendments were in the form of further particulars, the first draft of which were produced on 23 July 2007 and which in final form are dated 3 August 2007. Until then there was no specific plea that a reasonable engineer in Dr Fleischhaker's position would have gone beyond BG 60. At least once Professor Hulsmann had made his calculations which showed that an FI would have sufficed according to BG 60, the plaintiffs had to allege that Dr Fleischhaker knew or ought to have known that BG 60 may have overstated the fatigue strength of the FI detail.

[108] Professor Hulsmann undertook two sets of calculations, one involving a beams model and the other a finite element analysis. The beams model used a program which his firm, Schippke & Partners, had acquired and which he knew to be the same as that used by O&K in 1984 and earlier when it had designed this BWE. He undertook the finite element analysis to make a better comparison with the calculations undertaken by Dr Potts' firm (AMOG). As appears from his July 2007 report, there is little difference between his finite element analysis figures and those of Dr Potts. Professor Hulsmann calculated on the finite element basis the σmax at 210.4MPa and the strength of an FI detail for this stiffener end at 223.9MPa, with the result that the weld was strong enough according to BG 60. According to the AMOG calculations, the maximum stress was 191.1MPa and the strength of the detail was 219.8MPa. Professor Hulsmann's calculations using the beams model resulted in a maximum stress of 216.1MPa against a strength of the FI of 226MPa. This is the more relevant calculation because the beams model calculation is that which would have been performed in 1984.

[109] So on Professor Hulsmann's calculations, the maximum stress was more than

90 per cent of the fatigue strength of the FI detail. Dr Fleischhaker said that had his (alleged) calculations produced a maximum stress within that range of the strength of the FI, he would have prescribed a stronger detail.

[110] Should the reasonable engineer with the results according to Professor Hulsmann's calculations, have chosen a stronger detail than an FI? This 10 per cent margin for safety was not suggested by the text of BG 60 itself. Nor was it suggested by Professor Hulsmann, upon the assumption that BG 60 was a reliable standard. Perhaps Dr Fleischhaker did have a practice of allowing for that margin for safety, although it is just as likely that he falsely claimed that he had this practice in order to represent that he had a conservative approach to these things. But whether he had such practice, I would not conclude that any reasonable engineer must have applied it. And it is not part of the plaintiffs' pleaded case that if BG 60 was otherwise reliable, such a margin should have been allowed.

[111] Accordingly, it is necessary for the plaintiffs to prove that any reasonable engineer in Dr Fleischhaker's position ought to have thought that BG 60 was unreliable and that some more conservative solution should be designed in case BG 60 overstated the strength of the FI detail.

[112] The plaintiffs' case in this respect, as set out in the particulars of 3 August 2007, is as follows:**

"B. Alternatively, if the welded detail designed by the First Defendant was intended by Dr Fleischhaker to be an FI detail under standard BG 60, which is denied by the Plaintiffs, Dr Fleischhaker knew or ought to have known at the time the welded detail was designed that:

[1] BG 60 overstated the fatigue strength of the FI welded detail and that maximum stress in the region of the termination exceeded the fatigue strength of the FI welded detail;

[2] further or in the alternative, there was a body of engineering opinion (including the papers and text particularised in (III) below) to the effect contained in the codes and standards and particularised in (IV) below which indicated that BG 60 may have overstated the fatigue strength of the FI welded detail and there was a risk that the maximum stress in the region of the termination might exceed the fatigue strength of the FI welded detail.

Particulars of the facts or matters by reason of which Dr Fleischhaker knew or ought to have known at the time the welded detail was designed that BG60 overstated the fatigue strength of the FI welded detail and that maximum stress in the region of the termination exceeded the fatigue strength of the FI welded detail, are:

(I) Dr Fleischhaker participated in a committee which reviewed the adequacy of BG 60 from in or about 1976 to until BG 86 came into force in 1986;

(II) in January 1984 that committee produced a draft of the standard that later became BG 86, which treated fatigue strength of welded details equivalent to the FI detail in BG 60 as having a lower fatigue strength than the maximum stress in the region of the stiffener termination;

(III) that experimental fatigue data indicating that the calculation of the fatigue strength of welded details by reference to a stress ratio, such as the method by which the fatigue strength of welded details was calculated under BG 60, might overstate the fatigue strength of welded details had been referred to in the following published papers and texts:

(IV) the method by which the fatigue strength of welded details was calculated under BG 60 (by calculating a stress ratio κ and applying a probability factor) had not been followed or adopted in standards introduced after 1978, that is AASHTO (1983), ISO 5049 (1980), DIN 15018 (1984) and DS 804 (1983), Sia 161 (1979), BS 5400 (1978), AS 1250 (1981) and Exhibit 401;

(V) an FI welded detail at the stiffener termination would not have had sufficient fatigue strength under any of those standards;

(VI) by reason of Dr Fleischhaker's position as head of the department for design and development at the First Defendant in Lubeck and by reason of his membership of the committee referred to in (I), he ought to have been aware of the matters referred to in (III) to (V) above;

(iv) The matters referred to in paragraph 25(a)(i) to (iii) above would have been recognised by a reasonable [sic] competent structural design engineer."

**[113] BG 60 had been used in the design of bucket wheel excavators in The Federal Republic of Germany for more than 20 years by 1984. With some qualifications, it had been used in the design of this BWE. It prescribed "principles of calculations" for "large machines in open cut mines". As would be expected of such a standard, it was the product of considerable professional expertise and practical experience. And it was a standard specifically referable to machines such as these and the conditions in which they were expected to operate, rather than having a more general application, such as a standard for cranes. It did not have the force of law in The Federal Republic of Germany or elsewhere, but professionally it was for many years considered to be authoritative and reliable.

[114] However the plaintiffs say that by November 1984 BG 60 had been discredited. Professor Hulsmann recalled that there had been some accidents involving the structural failure of bucket wheel excavators in The Federal Republic of Germany leading up to 1984 which he believed were significant in causing the reconsideration of BG 60. But nothing of that kind is alleged within the particulars. Undoubtedly BG 60 was being reconsidered by the relevant professional body in 1984 but apart from Professor Hulsmann, there appears to be no evidence that this was the result of the structural failure of machines. I accept that he has some recollection that there were accidents of the kind he described, but not surprisingly given the passage of time, his recollection was very general. He was unable to recall the particular cause of the incidents and what they indicated in particular about BG 60.

[115] BG 60 was being reviewed by a professional committee in The Federal Republic of Germany of which Dr Fleischhaker was a member. It was under review at least by January 1984, when a draft of a proposed new standard was produced and provided to the committee for its consideration. That draft was not produced

by the committee itself (as the particulars allege) but by one of its members, Professor Kaufmann. Professor Hulsmann was aware of the committee's review of BG 60, and of at least some of the suggested changes to it, through his working with Professor Kaufmann at the time. The committee was made up of academic engineers and people such as Dr Fleischhaker, who represented leading manufacturers. Its members included Mr Friedemann and Dr Kowalewski, each of whom gave evidence.

[116] Professor Kaufmann was advocating a change from the kappa based analysis of fatigue strength to one based on stress range. His January 1984 draft included that change. Another change he proposed was in the measurement of the relevant loads on a machine. BG 60 did not require that "dynamic loads" be taken into account. Broadly speaking these are loads resulting from the movement of the machine. As is now known, the disregard of dynamic loads had led to an understatement of the stress condition at points of these structures. Accordingly, as is now known, this was one respect in which BG 60 required amendment. The revision of BG 60 culminated in the publication of a new standard in 1986, called BG 86. This new standard brought dynamic loads into account.

[117] Mr Friedemann had questioned the appropriateness of the loads under BG 60, suggesting that the loads which it assumed were too low. The load assumptions under BG 86 were higher then as a result of the inclusion of dynamic loads and, according to Dr Fleischhaker, research as to loads which had been done by Mr Friedemann.

[118] The committee caused tests to be undertaken to assess the proposals of Mr Friedemann and Professor Kaufmann, the results of which showed that their proposals could not be immediately accepted and that there was much further work to be done. However, those tests were not conducted until 1985, and the plaintiffs' argument is that, as Dr Fleischhaker conceded in cross-examination, the position in late 1984 was "inconclusive". Dr Fleischhaker's evidence was that according to the then opinions of Mr Friedemann and Professor Kaufmann, many machines designed to BG 60 by then should have broken, suggesting that they were wrong. But if that was so, it was not apparent by the end of 1984.

[119] Had an engineer calculated the fatigue strength of an FI detail for this stiffener termination on the BWE using the 1984 draft standard, an FI would have been insufficient according to that draft. That is shown by Professor Hulsmann's calculations. There was some dispute between the experts as to what detail within the 1984 draft was the equivalent of an FI under BG 60. But that need not be resolved. On any of the relevant possibilities under this draft, an equivalent of an FI would not have been strong enough, according to AMOG's calculations. And the plaintiffs do not argue that the reasonable engineer should have applied the then untested 1984 draft standard. It could not be said that any reasonable engineer must have applied this draft rather than the BG 60 which still stood. Indeed, because in November 1984 the relevant tests had not been conducted in relation to the draft, and it had not otherwise received the consideration which necessarily would have preceded its adoption, the application of the draft then would have been unreasonable. But rather than arguing that an engineer should have used the draft standard, the plaintiffs argued that the draft suggested such a departure from BG 60 that overall the reliability of BG 60 should not have been assumed.

[120] Mr Friedemann was called by the defendants. He gave his evidence by video link from Germany from where he had been unable to travel because of ill health. He described the regulatory regime in The Federal Republic of Germany for the approval of machinery in the mining industry, under which the regulatory authority would engage a so called independent expert to examine a machine and to analyse its design and construction. The expert would report to the authority on whether the machine was safe for its operations to be permitted. For many years Mr Friedemann worked as such an independent expert and his experience and expertise in relation to bucket wheel excavators was well established. He has written independent expert's reports in relation to more than 20 bucket wheel excavators in Germany and elsewhere, as well as such reports on other heavy mining equipment such as other excavators, spreaders and reclaimers. He has written similar reports outside The Federal Republic of Germany although a similar regulatory regime in requiring the report of an independent expert, was not in place. He provided reports on certain machinery for the State Electricity Commission of Victoria, and on its recommendation he was introduced to Utah to advise it in relation to the then proposed BWE in 1978. He was engaged by Utah in that year to review the structural design of the main load frames and preliminary approval of drawings for the BWE, spreader and transfer conveyor. Subsequently he was engaged to provide an independent expert's report concerning the BWE and its ancillary equipment in accordance with the German practice. He delivered this report to Utah in 1985.

[121] Mr Friedemann was not told of the 1984 grounding before the repairs, involving the stiffeners, were effected. He became aware of the grounding when Dr Fleischhaker telephoned him after the repairs had been carried out. He later received some written material about the incident from O&K.

[122] In his witness statement, Mr Friedemann said that he had "been called upon to propose a method to repair this tower in 1984 I would not have done it any differently". He said:**

"At that point in time [his 1985 report] I was not focussed on the fact that the welding around the ends of the stiffeners was not presented in detail. I don't believe that anyone would have paid attention to a detail like that, considering that no information was available about any extent of strain that may have been present there. It was clear that the forces present in that location were not relevant, assuming the dredger [the BWE] was used in accordance with the regulations. The ends of the stiffeners were at that point in time not of great significance."

**Further, he said that he would "not have thought it appropriate to have the stiffeners extended any further than they were dimensioned in this repair". He also wrote that he did not believe it would have been possible "in the given time frame to conduct an assessment of the impact on fatigue resistance of these modifications" and that he would not have been able to do so. By "given time frame" as he explained in his oral evidence, he meant that that those calculations would have required "another four months or so" whereas he understood that the damage had to be repaired "as soon as possible".

[123] In two respects this evidence seems at odds with the case for the defendants. First there is the statement that "the forces present in that location weren't relevant, assuming the dredge was used in accordance with the regulations." However Mr Friedemann was discussing his own position in writing his 1985 report, rather than the position of Dr Fleischhaker in designing the modifications. Understandably Mr Friedemann would be defensive, having vouched for the safety of the BWE in his 1985 report without having considered the fatigue strength of what had been added to the load carrying structure of the BWE in the 1984 repairs. In that way he was not an independent witness. But more importantly, it was not ultimately the defendants' case that no one would have considered the forces at the top of these stiffeners or "paid attention to a detail like that". Instead the defendants sought to demonstrate that Dr Fleischhaker had done so, by his evidence of calculations which he said he performed in the course of his producing his suggestions for repair. So upon the final arguments, it is common ground that the reasonable engineer would have considered those forces and made or caused to be made some assessment of the strength of the detail to withstand them.

[124] Secondly there is Mr Friedemann's point that calculations would have taken "another four months or so". That was not Dr Fleischhaker's evidence. Mr Friedemann was apparently referring to a finite element calculation which in 1984 could not be performed as quickly as it can be now. Importantly O&K does not argue that the appropriate calculations could not have been performed within any time limit imposed by Utah. At the foot of their written submissions in reply, the defendants suggested that the "pressure was on" and there was an "urgency", but that is no submission that there was insufficient time for a proper design.

[125] Remarkably, Mr Friedmann was not examined or cross-examined about the work of the committee reviewing BG 60 and in particular his contribution to it. The likely explanation for this is that Mr Friedemann was called on 12 June 2007, before the plaintiffs amended their case to allege that Dr Fleischhaker ought to have gone beyond BG 60. Mr Friedemann was not recalled.

[126] Professor Kowalewski, also called by the defendants, did give evidence on this matter. His evidence-in-chief was by a witness statement given in September 2007 and his oral evidence was by telephone from Germany. He has had a long career in engineering both in academic and manufacturing work. From 1969 to 1974 he was a professor at a university in The Federal Republic of Germany before becoming head of the structural department of the mining machinery division of a manufacturer from 1974 to 1983, during which he supervised the design of and strength calculations for numerous bucket wheel excavators and other heavy mining equipment. In that period he was involved with bucket wheel excavators which were sent to mines in Germany, Spain, India and Turkey. In 1983 he was appointed as an independent expert by the West German regulatory authority for surface mining equipment. He has assessed bucket wheel excavators in Indonesia, Germany and one operated by the State Electricity Commission of Victoria. He has also worked as a consultant on numerous reconstructions and refurbishments of mining equipment including bucket wheel excavators. He retired last year.

[127] During his work in the design of bucket wheel excavators, which was from 1974 to 1983, he said that the stress calculations were performed according to BG 60.

[128] He referred to articles published in 1972 by Professor Kaufmann who had questioned whether BG 60 was up to date in comparison with other German standards. His recollection was that Professor Kaufmann had then concluded that BG 60 remained "a safe code and he (Professor Kaufmann)

proposed only minor amendments". He referred to the committee which was appointed to review BG 60, and Professor Kaufmann's January 1984 draft standard. Professor Kowalewski said that this draft had no "official status" and did not "represent the state of the art as agreed or endorsed by the committee". He said that until the issue of BG 86, BG 60 "was the applicable code and was the code according to which I designed the structure of bucket wheel excavators and modifications to bucket wheel excavators". To his knowledge this was the practice of other designers of bucket wheel excavators in Germany. As to this the plaintiffs point out that Professor Kowalewski had no involvement in the design of bucket wheel excavators after 1983, from which they argue that his evidence as to engineering practice in 1984 is of no moment. However that is not a complete answer to his evidence. If it is accepted, then this evidence is inconsistent with the plaintiffs' case that there was a growing body of professional opinion against the use of BG 60, for it is unlikely to have been the case that this emerged only after 1983 but before the November 1984 repairs.

[129] Professor Kowalewski said that the January 1984 draft was very different from what the committee later agreed should be the new standard in 1986. In his view the draft would not have been "a sound or practical basis upon which to design a bucket wheel excavator". He said that "[i]n the process of finalising BG 86, it was calibrated against a number of machines that had been designed to BG 60 in order to derive comparable solutions" and that when these machines, which had been operating successfully for more than 20 years, were assessed under the proposed BG 86 loading conditions, they were "shown to have a comparable fatigue life of the BG 86 permissible fatigue stress ranges." This appears to have been well after November 1984 however, because I infer that BG 86 in draft was produced later than the testing in 1985 of Professor Kaufmann's January 1984 draft.

[130] Each of the parties led extensive evidence about codes or standards published after 1984 and about what these codes would have required for a welded detail at the end of this stiffener. The plaintiffs apparently did this to demonstrate that BG 60 was out of date by 1984 and that later codes have been more demanding of what welds are required. The defendants led evidence, mainly through Dr Potts and his report number 13, written in August 2007, that these subsequent codes were not so demanding compared with BG 60. At times the respective cases seemed to lose sight of the ways in which such evidence was or was not relevant.

[131] As to the question of what the reasonable engineer would have done in 1984, evidence of the requirements of subsequent codes was of little relevance. Its only relevance to that issue could have been that the publication of a subsequent code, such as BG 86, could tend to prove, in conjunction with other evidence, the existence of a process of review of BG 60 being undertaken in November 1984. But that fact is uncontroversial. At one stage some of this evidence appeared to be relevant to another issue, which is causation. The standard or code which is now current might show what is now known to be the strength of certain welded details as against the stress range to be experienced on such machines. So if the equivalent of an FI detail would not be strong enough according to the current code, this might assist in the proof that the use of an FI (or an FII, which is now known to be no weaker than an FI) contributed to the fatigue cracking which caused the collapse of this BWE. However, as I discuss below, there is other and more direct evidence as to the effect of an FI or FII upon the life expectancy of the BWE. In particular there is the evidence of Dr Potts that with an EI weld, the BWE's life expectancy would have been twice that which it had with its welded detail.

[132] BG 86 has some relevance in showing that the January 1984 draft had not been accepted by the committee because in several respects it differed from the draft. But the plaintiffs do not suggest otherwise. Rather their case ultimately relied upon what Dr Fleischhaker said was the inconclusive position in the review of BG 60 as at late 1984. That fact is not disproved by evidence that subsequently there was published a code, and in particular BG 86, having requirements which may have been no more demanding than those of BG 60.

[133] Professor Kowalewski also referred to other codes or standards, existing in 1984, which are pleaded by the plaintiffs as indicators of the unreliability of BG 60. He was aware in 1984 of the standard DIN 15018 which was used for the design of cranes. As Dr Fleischhaker accepted, this standard specified a lower fatigue strength for an equivalent of the FI detail than according to BG 60, although he said that DIN 15018 was "a standard for cranes which classifies things completely differently".

[134] Professor Kowalewski was not then familiar with the East German codes pleaded by the plaintiffs[23]. He said he had no reason to refer to those codes as the design of bucket wheel excavators in The Federal Republic of Germany was done in accordance with the West German code (BG 60) which he believed was "largely applied to bucket wheel excavators around the world". He said that he had:**

"no cause, nor saw a need, to make reference to other codes e.g. bridge design codes (for example AASHTO or BS 5400) which do not take care of the special operating and loading conditions of bucket wheel excavators."

[135] Of the code ISO5049, he said that this was:

"a standard that has been adopted from a document prepared by the FEM (Federation Europeene de la Manutention). It deals with the design of equipment for continuous handling of bulk materials and is not suited for design of bucket wheel excavators digging solid soil or in situ lignite."

**[136] He said, and I accept, that at no stage did the committee issue any warning or notice as to any inadequacy in the design provisions of BG 60, including the FI and FII details.

[137] In his witness statement, he said of Dr Fleischhaker's sketches and his "final repair" document that:**

"The type of stiffener and profile used by Dr Fleischhaker ... was one which was commonly used not only on bucket wheel excavators but also on other mining machinery."

"If designing the modifications in accordance with BG 60, this type of detail would have corresponded with FI detail if it had an all around closing weld of the same size as the fillet welds. If the structural stresses at that location detail met at the permissible stresses for the FI detail under BG 60, I would see no reason not to have used it."

In cross-examination Professor Kowalewski was taken to part of his witness statement in which he had said that:

"In consequence of measurements on bucket wheel excavators, or excavators and spreaders in operation, additional load assumptions for dynamic effects have been included in BG 86."

He agreed that the "measurements" to which he referred were those made by Mr Friedemann in the late 1970s and that they had indicated that the maximum stresses in operation were higher than those calculated under BG 60 because it made no allowance for dynamic loads. He also agreed that he was aware of Mr Friedemann's calculations when he was a member of the committee in 1984, this being "part of the information the committee had to consider". He accepted that the committee received Professor Kaufmann's January 1984 document which he said contained:

"sections which had been agreed by the committee already, sections that were still under discussion and sections which had not been discussed at all",

**and he confirmed his written evidence that there had been no discussion of the draft's tables for allowable stress. He agreed that it was likely that he read the document as a whole in 1984.

[138] When cross-examined he referred to the assessment of machines which had been designed according to BG 60 to assess the effect of adding the dynamic loads which Mr Friedemann had identified, and said that the result of this was:**

"that the permissible stresses of the BG 60 were over stepped. Because these machines had been operating for 30 years without a major fatigue damage, it was concluded that the permissible stresses had to be increased."

**The defendants submit that he was referring to some assessment prior to 1984. As I understood from subsequent answers he agreed that in 1984 the committee was still considering Mr Friedemann's data and more generally whether and if so, what changes needed to be made to BG 60. Dr Fleischhaker was clear that the committee's assessment occurred after 1984.

[139] In cross-examination, he conceded that in 1984, he would have taken dynamic loads into account, but then said that he would also have considered that there were machines which had survived for decades although designed under BG 60. This shows that he would not have simply and faithfully applied BG 60.

[140] The plaintiffs' submissions strongly attack the credibility of Professor Kowalewski, saying that his evidence has been tailored to support Dr Fleischhaker who they suggest is a friend. He said that Dr Fleischhaker was not a personal friend but that they were on friendly terms when they met at meetings or social events.

[141] Professor Kowalewski made a short statement at the request of the plaintiffs which is dated 11 July 2007 and I infer, immediately provided by them to the defendants. It simply identifies some articles which he had written. But two days later Dr Fleischhaker rang him with "a few technical questions related to my statement and the attached articles". Professor Kowalewski volunteered this exchange to the plaintiffs' lawyers by an email of 15 July 2007, in which he added "I would have

preferred to tell Dr Fleischhaker beforehand of my statement because I am on friendly terms with him". His witness statement, tendered by the defendants, is dated 25 September 2007 and he gave his oral evidence on 1 October. After that statement had been provided to the plaintiffs' lawyers, they contacted him and arranged a telephone conference, but shortly prior to that conference Professor Kowalewski sent an email cancelling it. He sent a copy of his email to the defendants' lawyers. He said that he cancelled the conference because he was afraid that it would "become very complicated and very uncomfortable". He said that in his conversation with Dr Fleischhaker, he had been told that none of the other terminations had fatigue cracks and that "the crack started at a point where the welding had not been conducted properly - carried out properly". Apparently from then on, he decided he would not speak to the plaintiffs' side.

[142] He was re-examined about these matters and emails between him and a solicitor acting for the defendants were tendered. That solicitor had told him that he was under no obligation to speak to the plaintiffs' lawyers but was free to do so if he wished. There is, however, some cause for concern about this exchange. In his email to the defendants' lawyers, he referred to their recent conference and wrote: "I would be grateful if you would help me remembering who was your partner yesterday who fairly helped me realising your points and finding agreeable solutions for several paragraphs of the statement in question". The defendants' solicitor replied that "the participants at the telephone conference last night were myself, Mr Andrew Potts and Mr Uli Priester". This is the same Dr Potts of AMOG, an expert through whom reports were tendered. He should not have been participating in that conference and, in particular, helping another witness to find "agreeable solutions" for a witness statement. However, as also emerged from this re-examination, when Professor Kowalewski was interviewed by the plaintiffs' lawyers in July 2007, he was asked questions by the plaintiffs' expert witness Professor Fisher.

[143] I am not persuaded that Professor Kowalewski was dishonest. But I have the impression that he was sympathetic to Dr Fleischhaker's position, which is not surprising given his long professional association with him and also perhaps because it seems that Dr Fleischhaker had given him a certain side of the story by suggesting that this was all the product of poor work by those who did the welding. As appears from his email, he received what he thought was some considerable assistance in the completion of his witness statement, and this much detracts from its weight. Further, the standard of English in his witness statement was quite different from that of his oral evidence. Indeed prior to the commencement of that evidence, counsel for the defendants argued that he should have the assistance of interpreters because of the standard of his English. Clearly enough he has been greatly assisted by others, including those with technical expertise, in the preparation of this witness statement.

[144] The plaintiffs argue that in 1984, BG 60 did not represent the state of the art in the assessment of fatigue and that it was out of date in at least five ways, each of which was subsequently addressed in BG 86 and had been addressed in the January 1984 draft. First, BG 60 did not require dynamic loads to be taken into account. Second, the probability factor "W" under BG 60 is said to have been "an arbitrary figure, wrongly inflating the allowable maximum fatigue". This probability factor was not used in BG 86. Third, BG 60 distinguished between steel strengths but the plaintiffs say it had been established by analysis of experimental data that the strength of the steel made no material difference to the fatigue strength of the detail. Fourth, BG 60 applied the kappa concept and not the stress range concept. Lastly, it is said that BG 60 overstated the allowable fatigue strength of welded details by comparison with more current standards but published by 1984, such as DIN 15018 and ISO 5049.

[145] It is one thing to say that there were these elements of BG 60 which were not retained in BG 86. It is another to say that by November 1984, the relevant branch of the engineering profession in which Dr Fleischhaker worked had accepted that those elements were wrong and that BG 60 was out of date.

[146] So going to the first of them, Dr Fleischhaker knew that Mr Friedemann, for one, was advocating the relevance and need for allowance for dynamic loads. But the plaintiffs have far from demonstrated that there was a prevalent opinion held by engineers that this should be done.

[147] The probability factor "W" is not proved to have been rejected by the profession by 1984. Nor is it proved that it was, or is, an arbitrary figure. On the contrary, as would be expected, it was within BG 60 as the result of some considerable professional consideration. It did not reappear in BG 86 but, as several witnesses explained, BG 86 was not simply a repetition of the elements of BG 60 absent the probability factor. There was quite a different means of calculating the adequacy of a welded detail, but built into the figures which would result from the application of BG 86 was a multiple of 1.4. Several witnesses explained that the committee which drafted BG 86 considered it necessary to multiply by 1.4 what would otherwise be the fatigue strength of a weld because otherwise machines which had been operating successfully for years would have been unsafe according to that standard.

[148] As to steel strengths, whilst many may have believed that this was not material, again it is not proved that in 1984 that this had become the prevalent professional opinion. Nor is it demonstrated that by 1984 the use of the stress ratio (kappa) was regarded as out of date and unreliable. For example the East German code published in 1982 used kappa as did ISO 5049. Professor Fisher was strongly critical of use of kappa, having developed the stress range concept to replace it, in his work in the United States in the late 1960s and early 1970s. But as at 1984, the stress range concept had not been employed within codes in Europe with the exception of a code in Switzerland (to which Professor Fisher contributed) and in what he described as the Euro code, which is not pleaded by the plaintiffs. The crane code, DIN 15018, used the kappa concept.

[149] I have mentioned already Professor Kowalewski's evidence as to that crane code. The plaintiffs have far from established that its content, even considered with other evidence, would have demonstrated to an engineer in 1984 that BG 60 was out of date. It suggested a lower fatigue strength of welded details by comparison with BG 60. But BG 60 was expressed to be relevant to large machines in open cut mines whereas DIN 15018 was in relation to cranes.

[150] The plaintiffs' argument in reliance upon ISO 5049 is stronger because that standard was expressed to apply to bucket wheel excavators. ISO stands for International Standards Organisation which is an association of national bodies responsible for formulating engineering standards. ISO 5049 is dated March 1981 but it recited

that it was first presented to its member corporations in 1978. It also recited

that 15 of those countries, including the Federal Republic of Germany, had approved it although three had rejected it "for engineering reasons", they being the United Kingdom, Denmark and Australia.

[151] Under the heading "Regulations for the Calculation of Structural Elements", this ISO standard said this:**

These international standards shall be applied to mobile continuous handling equipment for bulk materials; spreaders and bucket wheel loaders with their conveyors, bucket wheel excavators and bucket chain excavators for open cut mines, ship loading equipment and ship unloading equipment etc."

**It went on to make particular provision for what were described as "storage yard machines", which it distinguished for some purposes from other machines such as excavators and more generally machines "in which the digging resistance is mainly uncertain".

[152] I point to these references to stockyard machines as well as to things such as bucket wheel excavators because of evidence given by a current employee of the Krupp group, Dr Schneider. In his witness statement (dated 3 September 2007) Dr Schneider argued that ISO 5049 was too conservative in its assessment of the structure of a bucket wheel excavator. He wrote that because an excavator works in natural soil, which is not homogenous material, its drive has to provide sufficient reserves to cope with harder material whereas in contrast a machine such as a reclaimer operating in a stockyard, and moving materials which have already been excavated, has a more continuous application resulting in a different spectrum of digging forces compared with an excavator. He said, in effect, that ISO 5049 was apt for the stockyard machines but not for the bucket wheel excavators operating in a pit. Dr Schneider said that this had been recognised by subsequent amendments to the ISO standard and in particular in the 1994 edition of ISO 5049.

[153] However, on its face the 1981 edition of ISO 5049 was clearly expressed to apply to, amongst other things, bucket wheel excavators. If it is now thought to have limited application to them, nevertheless it was a standard published only a few years prior to November 1984 and was approved by several countries including The Federal Republic of Germany. Dr Fleischhaker was aware of it and he accepted that he knew in 1984 that it specified lower allowable fatigue strengths than BG 60. In Dr Fleischakker's first witness statement (dated 8 February 2007) he wrote:**

"17. Until my involvement at the Goonyella excavator, the codes which were applied to these designs were in all cases either the BG 60, or FEM, (otherwise known as ISO 5049). One or other of these standards was specified in each contract for any excavator in which I was involved. These were the only codes applied by my professional colleagues.

1. In 1992 Krupp ... took over the business of O&K Germany. Previously those two companies had been in competition. The only designers and suppliers of this kind of excavating equipment in the world until then were O&K Germany and Krupp outside of the East German states, and Takraf in East Germany. ... Therefore the only persons experienced in the design of such equipment were those who had worked for either of those three organisations. I was familiar with the design practices which were used by O&K Germany and Krupp. O&K Germany and Krupp always applied, with one exception to which I shall refer later, either FEM, or BG 60 to the exclusion of any other standard of any kind. ...

1. Subsequently the design codes applied were invariably either BG 86 (otherwise known as DIN 2261) once it came into operation in 1986 or the FEM as subsequently modified."

**So according to that, ISO 5049 did apply to bucket wheel excavators, and O&K and Krupp used it in that context. That witness statement, of course, was made prior to the plaintiffs widening their case to include this allegation that BG 60 should not have been followed, and to rely in that on the more conservative requirements of ISO 5049.

[154] In his second statement (dated 19 August 2007) Dr Fleischhaker again referred to ISO 5049 as being "specifically for the design of bucket wheels". He said that he was invited to join the committee which developed that standard and that he appointed a delegate to attend and participate on his behalf in that committee's deliberations, from which he followed the progress of its work. He went on to say that the ISO code used the kappa concept and not the stress range concept, as an apparent rebuff to Professor Fisher. Yet in his oral evidence he denied that ISO 5049 applied to bucket wheel excavators, saying that instead it was "established for materials handling". By another answer in cross-examination, he asserted that to his knowledge "nobody ever has ordered a bucket wheel excavator constructed by this ISO norm or an FE norm - FEM norm". That evidence cannot be reconciled with his written evidence. As it happens there is evidence from Krupp's Mr Scheid showing that in about 1992, Krupp designed and manufactured a bucket wheel excavator by the application of ISO 5049-1. And this was at a time when Dr Fleischhaker was employed as the head of Krupp's design office at Lubeck. Perhaps Dr Fleischhaker had forgotten about this machine and its design. Regardless of that, the design of that machine adds to the evidence, which comes from the terms of the code itself, that ISO 5049 as published in 1981 was regarded by relevant engineers, including, I find, by Dr Fleischhaker, as a code applicable to bucket wheel excavators being used, as was the BWE, in a pit. And as he conceded, he knew that it specified lower allowable fatigue strengths than did BG 60.

[155] It is not the plaintiffs' case that the 1984 repairs should have been designed simply according to ISO 5049. Rather it is their case that this code should have alerted Dr Fleischhaker to the risk that BG 60 overstated the fatigue strength of the FI detail. I accept that argument. ISO 5049 was then a relatively recent code, the product of considerable international research and specifically applicable to bucket wheel excavators. At the same time BG 60 was under review. The committee undertaking that review was investigating its adequacy and the position in November 1984 was "inconclusive". The other codes pleaded in the plaintiffs' case are not of the same relevance. But ISO 5049 should have alerted an engineer to the risk of using only BG 60.

[156] In his report number 13, Dr Potts compared the requirements of BG 60 with those of other codes published before and after 1984. He concluded that**

"Whilst BG 60 has higher permissible stress ranges than ISO 5049..., it is not inherently unconservative when compared with other codes [such as DIN 15018 (1974) and TGL 13500 (1972 and 1982), the East German codes] taking into account the consideration of the usage spectrum".

**The defendants say that this analysis was not seriously challenged and that I should conclude from it that the reasonable engineer in 1984 would not have been concerned about the application of BG 60, because that engineer would have understood that it was not at odds with other relevant codes. I accept the factual correctness of Dr Potts' calculations within the report. I accept also that there is a plausible basis for a comparison of the requirements of these codes which is set out in that report. But it does not put paid to the plaintiffs' argument based upon ISO 5049, because as appears from this report, ISO 5049 was far more conservative than BG 60 for the equivalent of an FI detail. Dr Potts' explanation for that difference was that ISO 5049 assumes "uniform load duty", or in other words that "the ultimate stress occurs almost always for the repetition cycles on which the lifetime of the appliance is based." The implicit suggestion within his report is that if ISO 5049 had not made that assumption, it would have been less conservative and its requirements would have been closer to those of BG 60. Be that as it may, ISO 5049 did make that assumption, and this was a code published only a few years prior to 1984 with specific reference to bucket wheel excavators. Dr Potts' report does not lead to the conclusion that the reasonable engineer could disregard ISO 5049. I am unable to see how the reasonably careful engineer could have disregarded it and gone simply to BG 60, especially when BG 60 was being challenged by some and officially reviewed.

[157] Some of the codes or standards pleaded by the plaintiffs are not in evidence. They are DS 804 (1983) and Sia 161 (1979). The others which are AASHTO (1983), BS 5400 (1978) and AS 1250 (1981) are not as important because they were not specifically referable to bucket wheel excavators. If as Dr Potts suggests, these codes were not more conservative than BG 60, that is of little moment because unlike ISO 5049, they were not specifically referrable to bucket wheel excavators.

[158] Another point argued by the plaintiffs was that the reasonable engineer would have brought into account what is described as the significant "eccentricity" introduced by this detail. Professor Fisher was strongly critical of Dr Fleischhaker's repair solution in many respects. One was that there was a "massive eccentricity" which increased the global stresses to which this particular stiffener termination was subjected. This was because the stiffeners were on one side of the flange but with no corresponding stiffener on its other side, with the result that the centroid of the force travelling the length of the flange was redirected towards the stiffeners so that the stress became higher still on the stiffener side of the flange, concentrating at the point of the end of a stiffener. Professor Fisher did not purport to calculate the effect of this eccentricity and nor had he referred to it in his reports. But in his oral evidence he claimed to have "difficulty thinking that an engineer would not think of this". It is unnecessary to discuss the detailed response by Dr Potts to this eccentricity argument. I am not persuaded by Professor Fisher's oral evidence about this to hold that any reasonable engineer in Dr Fleischhaker's position would have not relied upon BG 60, absent some other reason for not doing so, because

BG 60 would not have allowed for this eccentricity factor. Other witnesses such as Professor Hulsmann and Dr Jones accepted that there was some eccentricity. But apart from Professor Fisher, no witness seemed to say that any reasonable engineer would have disregarded BG 60 for this factor if it was otherwise reliable.

[159] The plaintiffs' case is not much advanced by the publications pleaded in the particulars. I accept that the effect of these publications would have been to suggest the unreliability of BG 60. But I do not accept that a reasonable engineer would have been obliged to disregard a long-standing code (BG 60), if otherwise considered to be reliable merely because some engineers, however eminent, were publishing an opinion suggesting otherwise. The fact of this engineering opinion is demonstrated by the formation by the relevant authority of the committee to review BG 60 and the contributions being offered by Professor Kaufmann and Mr Friedemann.

[160] In all of this, of course, the benefit of hindsight must be kept in mind. What must be considered is that which was or should have been known or understood by an engineer in Dr Fleischhaker's position in November 1984. I am not satisfied that such an engineer should have thought that BG 60 overstated the fatigue strength of an FI detail. Some engineers in his position might reasonably have thought that it did so. But that is not to say that any reasonable engineer must have held that view.

[161] However, any reasonable engineer in his position should have doubted the reliability of BG 60. After all there was a review of BG 60 which had been put in place by the relevant West German authority. A review committee had been constituted, made up of leading engineers from the major manufacturers and academics. Some eminent members of that committee had undertaken substantial research. Mr Friedemann had compiled a large database from his research. All of this amounted to more than a professional opinion being ventilated occasionally in published journals or seminars. This was an official process for the review of the code, not as a matter of routine, but because some leading engineers were providing substantial reasons for its necessity. The outcome of that review was unknown and could not have been safely predicted as of November 1984, as Dr Fleischhaker effectively conceded. And as he knew, the inclusion of dynamic loads as advocated by at least Mr Friedemann and by Professor Kaufmann in his January 1984 draft, would affect the stress condition of relevant parts of an excavator and thereby the ability of certain welded details to withstand that stress. The position was then "inconclusive". In the midst of that review the reasonable engineer in Dr Fleischhaker's position could not have said to himself at the same time that BG 60 was reliable.

[162] Had Dr Fleischhaker or some other engineer at O&K performed calculations according to BG 60, as Professor Hulsmann did, and thereby arrived at Professor Hulsmann's figures (or figures very close to them) he or she would have seen that the strength of an FI detail, according to BG 60, was very close to the maximum stress at the point of this termination. In his Report no 11, Dr Potts challenged Professor Hulsmann's FEA calculations as to BG 60, and suggested certain corrections. They are to his FEA calculations. The changes to the FEA analysis by Professor Hulsmann, if accepted, are not significant. Under Professor Hulsmann's calculations, the maximum stress (210MPa) was 94 per cent of the strength (223.9MPa). As changed by Dr Potts, the percentage was

87 per cent. Because BG 60 was unreliable, that margin for error should not have been accepted as reasonable. And if the engineer had not performed calculations either according to BG 60 or to ISO 5049, it is difficult to see how he could have been satisfied that the FI detail was strong enough.

[163] Without being able to be satisfied that an FI detail was adequate, what would the reasonable engineer have done?

[164] The plaintiffs argue that the exercise of reasonable care required Dr Fleischhaker either to design the stiffeners to be much longer, so that they extended to the top or near the top of the tower, or to prescribe a stronger welded detail such as the EI under BG 60.

[165] In his first witness statement, Dr Fleischhaker said that if the stiffeners had been four or five metres longer, so as to extend to or near to the top of the tower, they would have been impossible to attach. The stiffeners which he designed were

10.5 metes long and very heavy and he said that it would have been too difficult to weld them given the limited space. He claimed that he gave considerable thought to this at the time but his solution "had to take account of practicalities". Further, he said that it was simply impossible to extend the stiffeners to the upper most tower frame because they could not have been manoeuvred into position and they could not have been extended through the rope support at the top of the tower. At one point in his oral evidence he seemed to suggest that there was another reason for not having longer stiffeners which was "that you had to expect the machine to collapse at any minute", although when pressed he was unable to explain that.

[166] There was some cross-bracing which would have affected the extension of the stiffeners further up the tower which was about 2.3 metres (from its centre line) from the top of the stiffeners as installed. Mr Platzer, an engineer from Schippke & Partners, gave unchallenged evidence that the stiffener in question could have been extended approximately 2.1 metres up the tower without interfering with the

cross-bracing between the two webs. On the other side of the web, that is on the outside of the web, of course there was no cross-bracing inhibiting the extension of the stiffeners. Mr Platzer performed some calculations from which he concluded that an extension of the stiffeners by 2.1 metres would have had the effect that the stress at their terminations would have been less than the permissible stress for an FII detail under BG 60 (assuming that it accurately stated the fatigue strength of that detail) and its equivalents under the 1984 draft code (if relevant) and under BG 86. And on the assumption that BG 86 accurately stated the fatigue strength of the equivalent of an FI detail, Mr Platzer said that it would have been necessary to extend the stiffener only a little more than one metre before the stress condition became less than the fatigue strength of such a detail. None of this was ultimately challenged.

[167] Professor Hulsmann said that there would have been no imbalance created by extending the stiffeners higher, or by extending the outside stiffeners higher than the inside stiffeners (if their extension was impeded by the cross-bracing). He added that an extension of the inside stiffeners was not impeded by the cross-bracing because any interference with the cross-bracing to make way for the stiffener would not have affected "the stability of the machine", but would have been merely a "problem from construction". Nevertheless the cross-bracing might have seemed a significant impediment to a reasonably careful engineer considering this in 1984.

[168] Ultimately the defendants did not appear to argue that the extension of the stiffeners at least to that cross-bracing as discussed by Mr Platzer, would have been impracticable. But they say an engineer could have been reasonably satisfied with that solution only by deciding that the stress condition at that point would have been met by the fatigue strength of a certain welded detail. This would have taken the engineer back to BG 60 and to a judgment of what margin should be allowed for the prospect that BG 60 overstated that fatigue strength.

[169] Alternatively, the plaintiffs say that a stronger welded detail should have been prescribed. Again, the defendants do not appear to argue that this was impracticable. They argue that an FI detail was strong enough and they say that if the engineer was not to rely upon BG 60, there was no logical means of measuring the adequacy of some alternative detail.

[170] Dr Fleischhaker accepted that a stronger detail could have been selected and claimed that he would have done so if what he said were his calculations had revealed that the fatigue strength was within 10 per cent of the maximum stress. As I have said, that would have been the position had Dr Fleischhaker made the calculations which Professor Hulsmann made. That was not the result of Dr Potts' calculations, although his were performed by a finite element analysis rather than the beam model which was available in 1984.

[171] An EI detail according to BG 60 was considerably stronger. Consistently with Professor Hulsmann's calculations for FI and FII details (in his July 2007 report), and from the English version of BG 60, the maximum allowable stress of EI at this location can be calculated as follows:**

**Dr Potts criticised Professor Hulsmann's calculation, and would make the same criticism of this one. But it is valid in illustrating the difference between the F1 and the E1. And without calculations as performed by Professor Hulsmann, the engineer would still have seen that the EI detail was much stronger than the FI detail. So as Dr Jones confirmed when cross-examined, at an assumed kappa of 0.6, and without any allowance for the probability factor "W", BG 60 indicated a maximum allowable stress for an FI detail of 187MPa[24] and for an EI detail a comparable figure of 227MPa. So even without calculating the amount of the probability factor, the engineer would then have known that according to BG 60 an EI would have had a maximum allowable stress considerably higher than 227MPa.

[172] Whilst BG 60 was unreliable as providing a means of safely calculating the precise strength of a weld at a particular location, there appears to have been no professional doubt cast upon the proposition that the detail depicted as an EI weld in that standard was much stronger than an FI detail. The precise difference in that strength, according to BG 60 was not so important: what would have mattered to the careful engineer was that the EI was obviously so much stronger that it could be safely used.

[173] The defendants say that it is critical that no evidence has been called "from any practitioner in the category of Dr Fleischhaker, that is to say a designer of bucket wheel excavators, to suggest that Dr Fleischhaker's approach was wrong" and that the evidence called from Mr Friedemann, Professor Kowalewski and another of their witnesses, Dr Dittrich, provides "cogent evidence that the subject conduct was not in breach of the practitioner's duty of care". They cite what was said by Muir J in McDonald v Ludwig[25] and argue that the significance of the lack of evidence from a practitioner saying that he would not have applied BG 60 appears from Atlantis Properties Pty Ltd v Cameron[26]. However, this is a factual question, and care must be taken in the use of statements made in other factual contexts. This was a particularly specialised expertise which was being called upon by Utah and the other owners in seeking Dr Fleischhaker's assistance. They were entitled to expect that he would exercise due care and skill, having regard to what he knew. Dr Fleischhaker knew of the work of the committee of which he was a member and knew that the substantial challenges which had been made by some members of that committee to the accuracy of BG 60 raised critical questions which were then unanswered, and for which Dr Fleischhaker does not claim that he then had his own answer. It is in these particular circumstances, of course taken with others such as the relatively demanding requirements of the other relevant standard (ISO 5049), that Dr Fleischhaker could not reasonably have relied only upon BG 60. This is not a case in which the assessment of the reasonableness of a defendant's conduct can be made simply against some long established professional practice. Further, it cannot be suggested that any prevalent professional practice should dictate the outcome of a professional negligence claim: Rogers v Whitaker[27].

[174] As the defendants appeared to accept, a reasonable engineer in Dr Fleischhaker's position should have foreseen that his design of these stiffeners and their welds involved a risk that if the design was deficient, the structure could crack with fatigue, with the ultimate consequence of the destruction of, or serious damage to, the BWE. In considering what should have been done in response to that risk, the magnitude of the risk and the degree of probability of its occurrence, along with the expense, difficulty and convenience of taking alleviating action and any other conflicting responsibilities which the engineer may have had, must be considered: Wyong Shire Council v Shirt[28]. Neither the extension of the stiffeners, at least to the cross-bracing, nor the use of an EI weld would have been problematic. There was sufficient time to have O&K undertake the necessary calculations according to BG 60 as Professor Hulsmann has done by his beam model. Those calculations would have shown a very large margin for error if the EI detail was chosen or if the stiffeners were extended. A combination of the two could have been employed with yet more confidence. However with the benefit of such calculations, one of those courses could have been taken, and should have been taken in the exercise of reasonable care. The same applies if it is assumed that the engineer's calculations resulted in the AMOG figures as set out in the Schippke report of July 2007. The unreliability of BG 60 should have made the engineer adopt one or other, if not both, of these courses. Alternatively, if those calculations could not have been done in the time available again, the reasonable response would have been to minimise the risk of fatigue failure by both extending the stiffeners at least to the cross-bracing and prescribing what could have been reasonably assumed to be the much stronger EI detail.

[175] The potential consequences from a structural failure should have been obvious and even putting to one side the risk to the persons working on or near the machine, the avoidance or reduction of the risk of economic loss from the structural failure of the machine warranted at least the stronger detail of the EI or extension of the stiffeners. Because neither was required or recommended by Dr Fleischhaker in his design, there was negligence.

[176] There is a further argument of negligence in that there is an alleged failure to warn of the prospect of fatigue cracking. Dr Fleischhaker agreed that he did not give any specific advice or warning about fatigue cracking in this area of the upper termination of the stiffeners. But overall this argument adds little to the plaintiffs' case, because the longer stiffeners or EI detail was reasonably required of this design, and as I am about to discuss, either measure would have made a difference. The owners knew that they should have the machine regularly inspected to detect, amongst other things, fatigue cracking. They needed a specific warning only if the engineer had doubts about the strength of the tower at this part of it. If he was entitled to rely on BG 60, he would have had no such doubts. Nor should he have had doubts if he had extended the stiffeners or prescribed an EI.

[177] There is the further allegation that there was a negligent failure to supervise the welding of the stiffeners. As I have found, there was no material difference between the strength of an FI and an FII weld. Accordingly, a complaint that Mr Tiedt should have supervised the welding to ensure that the detail was an FI and not an FII is inconsequential.

[178] O&K's pleading still contains a denial that the structural failure was a consequence of a fatigue crack "on the basis that the structural failure was the consequence of the propagation of a cold crack..." As already discussed, cold cracking is no longer a causation issue. It is not argued that if this originated as a cold crack, that broke the chain of causation. The structural failure occurred because of fatigue cracking which was the result of the relevant stress conditions exceeding the strength in the region of the stiffener terminations.

[179] The plaintiffs argue that it is sufficient for them to establish that the defendant's conduct increased the risk of a failure occurring and that the risk eventuated. For this they cite Batiste v State of Queensland[29], Moore v State of Queensland[30], Gold Ribbon (Accountants) Pty Ltd (in liq) v Sheers[31] and Seltsam Pty Ltd v McGuinness[32]. They refer also to what was said by McHugh J in Chappel v Hart[33] as follows:**

"If a wrongful act or omission results in an increased risk of injury to the plaintiff and that risk eventuates, the defendant's conduct has materially contributed to the injury that the plaintiff suffers whether or not other factors also contributed to that injury occurring."

**That passage was referred to with approval in Naxakis v Western General Hospital[34] by Gaudron J[35] and Callinan J[36].

[180] However, these passages guide the determination of what is a factual issue, and in each case there must be an assessment of the evidence relevant to that issue in deciding whether the plaintiff has discharged its onus. So in Gold Ribbon, Keane JA said[37]:**

"It must be emphasised that the approach of McHugh J is one of logical inference of a causal link, not of a legal presumption which obviates the need for proof of a casual link. As McHugh J himself said in Commissioner of Main Roads v Jones, the approach to causation which he explained in Chappel v Hart is appropriate to cases 'where the only evidence concerning causation was that the defendant had breached his duty of care and that the injury that occurred was within the scope of the risk of injury arising from the breach of duty'. The inference of causation is a deduction which may logically be made in a case where the risk created or increased by the defendant's breach of duty may operate, either alone or with other risks attending particular action or enterprise, to produce the loss. But it is not a logical deduction where the evidence, either shows that the removal of the risk created by the defendant's breach of duty would not have prevented the occurrence of the loss by reason of the operation of the other attendant risks, or gives reason to regard the possibility of such a result as equally probable." [footnotes omitted]

**[181] Here there is other evidence relevant to causation. In particular there is evidence from Dr Potts' report number 11, the effect of which is that the life expectancy of the BWE would have been twice as long with an EI detail at the end of this stiffener.

[182] In that report Dr Potts was examining the likelihood that an EI detail would have failed because of the manner in which the BWE is said to have been operated outside its "design operating parameters" or DOP. Under the heading "Assessment of Adequacy" Dr Potts set out in table 4 the results of his calculations of "calculated fatigue life" comparing the FI and the EI details. Upon the assumption that the BWE was operated by "exceeding DOP" (in the respects which the defendants had instructed Dr Potts to assume), he calculated that the "design life" of the BWE with an FI detail was six years, but that with an EI detail it was 12 years. On the same assumption he calculated that the "expected life" of the BWE with an FI was 16 years, whereas with an EI it was 32 years. The design life was calculated in each case upon a three per cent probability of failure whereas the expected life was upon a 50 per cent probability of failure. In other words, with an FI detail there was a three per cent chance of failure within six years and a 50 per cent failure within 16 years. With the EI detail there was a three per cent chance of failure within 12 years and a fifty per cent chance of failure within 32 years. From this it follows that more probably than not, and operated as AMOG had been asked to assume, the BWE was not going to last more than 16 years with the FI detail or more than 32 years with the EI detail. It also follows that more probably than not, the BWE would have lasted almost 32 years with an EI, even assuming it was operated as AMOG was asked to assume. Dr Potts pointed out that this expected life of 16 years with the FI corresponded with what happened here: the BWE failed at just over 15 years from the installation of the stiffeners.

[183] His table 4 also showed his calculations for operating the BWE within its DOP, in which case its design life with an FI was 41 years and with an EI was 84 years, and its expected life with an FI was 114 years and with an EI was 232 years. In his view this indicated that under what he regarded as the expected operating regime, the FI detail "would have ample factor of safety against fatigue failure at 41 years of life".

[184] On its face, this is evidence that the life expectancy of the BWE would have been about doubled by the use of the EI detail. It would also prove that the particular operation of the BWE was a cause of its failing when it did. But nevertheless it would prove that the use of an FI detail (or what is now known to be its equivalent, the FII), rather than an EI detail was also a cause of that. It appears to prove that the negligent failure to require the EI detail caused the collapse.

[185] In response to that proposition, counsel for the defendants argued that this evidence was not relevant in that way. Their argument is difficult to summarise. But for this point first it is necessary to explain an issue on which some of the experts differed, involving the interpretation of BG 86 and the current German code for bucket wheel excavators, which is DIN 22261-2:2006.

[186] Professor Hulsmann calculated under BG 86 the adequacy or otherwise of what he saw as the equivalent of the FI detail. On a page which is numbered sheet 47 of that code, there is a table which depicts what all relevant witnesses seem to say was the equivalent of the FI detail under BG 60. However, in that table there are four subcategories, each having a different strength. According to Professor Hulsmann, the category into which an FI would fall was "NBT4". According to the defendants, and in particular their witness Dr Potts, it would be "NBT2". The table directs the reader to another table which is numbered 10.1 on sheet 30. Professor Hulsmann said that a reference to that table shows that an FI under BG 60 would be a NBT4. The defendants argue that it is a NBT2 because reference must be made also to another document[38] which differentiates between NBT1, 2, 3 and 4 details when providing for different testing and inspection requirements. An NBT2 requires more testing and inspection than an NBT 4. Under BG 86 the NBT4 is weaker than the NBT2. The plaintiffs say that it is BG 86 itself, and by its table 10.1, which shows that the equivalent of an FI under BG 60, was for BG 86, an NBT4.

[187] It is probably unnecessary to resolve that debate, but my view is that the plaintiffs' argument, based upon Professor Hulsmann's evidence, is more likely to be correct. As the plaintiffs say, it would be unusual if a weld could be regarded as stronger, not because of any physical quality, but because it was subject to a more detailed assessment after it was executed. And the defendants' argument did not appear to be able to explain away the fact that BG 86 differentiated between the different categories expressly by reference to table 10.1, rather than by reference to the document upon which the defendants rely. Dr Potts seemed to acknowledge that on its face, BG 86 has effect as interpreted by Professor Hulsmann, but said that this was "anomalous" and the mistake had not been repeated in the standard DIN 2261 (2006).

[188] Then Professor Kowalewski said that for a detail to be an NBT2 the designer must give an instruction on the drawing. So, absent such an instruction in anything which Dr Fleischhaker provided (even if he required an FI rather than an FII detail), his design did not require the equivalent of an NBT2. On the basis of these matters, I would find that the equivalent of what was required by Dr Fleischhaker's drawings (assuming that they required an FI) under BG 86 would be the NBT4. If so, it is undisputed that it would have been inadequate under BG 86. (It is also undisputed that it would have been adequate had it been an NBT2.)

[189] There is not an English language version of the current standard, DIN 22261 (2006) in evidence, and Professor Hulsmann was not asked about DIN 22261.

[190] I return then to the defendants' submission about Dr Potts' calculations of life expectancy, comparing the FI with the EI detail. Dr Potts' report seemed to make the comparison clearly enough as follows:**

"The assessment indicates that under the recorded operations the design life of the machine, representing a 3% probability failure, would be exhausted for the FI category after only six years, and for the EI category after 12 years. The mean life, representing a 50% probability of failure, would be exhausted after 16 years for the FI category. This indicates that under the recorded operation of the machine, the expected life of the machine predicts with a reasonable accuracy the actual life of the machine. Furthermore, under the recorded operation, an end termination detail in the EI category would not have a reasonable factor of safety against fatigue failure beyond 12 years."

**[191] In saying that "the expected life ...predicts with a reasonable accuracy the actual life", Dr Potts was commenting on the fact that there was a 50 per cent probability of failure at 16 years and that this coincided (approximately) with the actual point of failure, providing some support for his calculations.

[192] So faced with the prospect that their evidence might be used in the plaintiffs' favour to prove causation, the defendants developed an argument along these lines. It was submitted that what had to be remembered was that, as it happened, the quality of welding at this stiffener termination was poor, because there was no all round weld. Accordingly, this would fit into the weakest of the FI categories under the more modern codes. Dr Potts had done his calculations upon the hypothesis of an NBT2, not an NBT4. The weaker category NBT4, corresponding with what was actually welded on to this stiffener, it should be thought would not have had the life expectancy represented by his table. Instead, it would have had a life expectancy of about the design life shown in that table. In the same way, so it was asserted, a correspondingly poor execution of an EI weld would have meant that it had a lower life expectancy than shown by his table, again approximating its design life of 12 years rather than its expected life of 32 years.

[193] In plainer terms, the submission was that a specification of an EI detail would not have made a difference, because it would have been poorly executed and had a life expectancy indeed of less than the 16 years for which the machine survived.

[194] There are at least two problems with this argument. The first is that it sets up a comparison, between a poorly executed FI detail and a poorly executed EI detail, which is not the comparison made by Dr Potts. It is a comparison which is said could be derived from Dr Potts' report. But the precise evidentiary foundation for it is far from clear. For example, it is not clear from the evidence that a poorly executed EI detail, whatever exactly that means, would have had a certain strength from which there could be calculated a certain life expectancy. This is not the comparison which Dr Potts saw fit to make. The comparison which he did make within table 4 was introduced as follows:**

"This assessment addresses the issue as to even whether the UST [upper stiffener termination] end detail had fabricated as an EI, was there a likelihood that it too would have failed due to the manner in which the BWE was operated."

**Had Dr Potts made a comparison between a poorly executed FI and a poorly executed EI, the life expectancy of the FI would have been far less than 16 years, and it seems to follow from this argument that it was highly improbable that the machine lasted as long as it did.

[195] Secondly, the argument assumes that had Dr Fleischhaker prescribed an EI detail, that prescription would not have been followed, and instead there would have been a poorly executed weld. The basis for such an assumption is not apparent. Of course there is always the prospect of human error and there is a chance that an EI detail, if prescribed, nevertheless would not have been applied. But I do not see why it should be inferred that this would have occurred. An EI detail would have required a much more specific prescription by Dr Fleischhaker than is said to have been his prescription of an FI. Had that occurred, more probably than not an EI weld would have been applied which met the requirements for such a detail. That is the hypothesis which Dr Potts saw fit to address in his report. And had that occurred, it follows from his report that more probably than not the BWE would have survived almost twice as long as it did. The result is that the defendants' attempt to explain away the impact of this part of Dr Potts' evidence is unpersuasive.

[196] The plaintiffs do not entirely accept Dr Potts' analysis which is summarised in his Table 4. But whilst they would challenge the particular quantification within this comparison, they accept that it demonstrates that the additional strength of an EI detail would have made a significant difference to the likely life of the BWE. In my view it is established by this evidence that the failure to use an EI detail on the stiffener was a cause of the failure of the BWE at this point in its life.

[197] More generally there is no dispute as to the proposition that the EI detail was far stronger, from which it is likely that the life expectancy with that detail would have been years longer than with the FI detail. Dr Potts sought to make the point that the design life of the machine, if it was to be operated in the way in which he assumed it was operated, would still have been too low with an EI detail. Put another way the prescription of an EI detail would not have put paid to an undue risk (a probability of failure of more than three per cent) of structural failure by the time at which the BWE did fail (on his assumptions about operations outside the DOP). But if that is so, causation is not thereby disproved. Causation is assessed on the balance of probabilities. According to his calculations, on the balance of probabilities this machine would have survived until at least 2015 with an EI detail, whereas it was likely to fail when it did with an FI detail.

[198] This Table 4 in Dr Potts' report does not affect what I have said about whether the reasonable engineer would have prescribed the EI detail. There is no suggestion that the engineer would have undertaken the analysis represented by Table 4 and would have rejected the EI detail.

[199] Then there is the alternative that longer stiffeners should have been prescribed. Had that occurred, the weakness at this stiffener termination would have been removed. There is no similar analysis by Dr Potts as to the life expectancy of the machine on that hypothesis. But by designing this stiffener to end at the point on the tower stipulated by Dr Fleischhaker, an undue risk of failure was created, and what occurred in 2000 was within the scope of the risk which arose from that negligence.

[200] In summary, the plaintiffs have proved that Dr Fleischhaker's negligent design was a cause of the structural failure of the BWE and the losses which arose as a result.

The Design Case and Section 52

[201] The plaintiffs plead that O&K engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth). They plead that O&K impliedly represented that it had exercised appropriate care and skill in designing the 1984 modifications and that:**

"there was no aspect of that design of which the [joint venture] participants ought to have been informed which might:

**_(a) introduce a welded detail having a low fatigue strength;

(b) introduce additional stresses into the front flange of the tower frame;

(c) concentrate stresses at the point of the upper terminations of the stiffeners;

(d) have the effect that the stress range to which the front flange was exposed exceeded its fatigue strength;

(e) cause fatigue cracks to develop at the upper weld toe terminations of the fillet welds attaching the stiffener and the front flange plate of the left tower frame in the location of the upper termination of that stiffener;

(f) give rise to a risk of structural failure of the BWE tower;

(g) diminish the operational life of the BWE or the BWE tower."_**

**[202] Each of those representations is alleged to have been false on the basis of what the plaintiffs plead in their negligence case. Further, they plead that the design was misleading by the fact that it was not accompanied by any qualification.

[203] Further or in the alternative, the plaintiffs plead that the same representations were false representations that the design services provided by O&K had been undertaken with appropriate care and skill, so that the representations contravened s 53(aa) of the Act.

[204] Then they plead that "by reason of the conduct of O&K in contravention of

ss 52 and 53(aa) of the TPA the plaintiffs have suffered and are likely to suffer loss and damage", the particulars of which are those pleaded in the negligence case.

[205] Accordingly, the case under the Trade Practices Act appears to closely follow the negligence case. Upon my conclusions that Dr Fleischhaker and O&K owed a duty of care which was breached, it would appear to follow that O&K misrepresented that, through Dr Fleischhaker or otherwise, it had exercised appropriate care and skill in this design. O&K itself owed a duty of care. And by reason of s 84(2), Dr Fleischhaker's conduct is deemed to have been engaged in also by O&K because, as I have found, it was conduct engaged in on its behalf by one of its servants.

[206] O&K admits that it was a corporation within the Act. It does not admit that if the conduct was its conduct (as opposed to the conduct being that of O&K Australia) it was conduct in trade or commerce. That non-admission is not explained. Ultimately there was no argument in support of it. The fact that the conduct involved the provision of the professional services of an engineer does not take it outside conduct in trade or commerce; see for example, Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd & Ors[39]. The conduct here was in trade or commerce. But O&K makes a number of arguments as to why this alternative case under the Act should fail even if the negligence case should succeed.

[207] The first of those arguments focuses upon what is pleaded as the relevant conduct. At paragraph 37 of their statement of claim, the plaintiffs plead that there were those implied representations "by the design referred to in paragraph 25.2". That paragraph pleads as follows:**

25.1 ...

25.2 Designed modifications to the tower frames (the 1984 modifications)

The design for the 1984 modifications was contained in hand dimensioned sketches and a construction drawing of the tower frames."

[208] The plaintiffs say that there is a critical limitation upon the s 52 case by its reference only to paragraph 25.2 because:

"no part of the plaintiffs' case relies upon any other conduct on the part of Dr Fleischhaker, or anyone else on the O&K side. Nor is the pleaded case one which seeks to characterise a piece of conduct by reference to other conduct or extraneous circumstances".

**O& K argues that "the sketches and the drawing by themselves could hardly convey those implied representations" and that all that they do is "show the shape, dimensions, weight and location of the stiffeners". It is said that they say nothing as to whether this was a proper design or anything about the care and skill involved in their production, nor it is argued, do they say anything about stresses, fatigue, cracks or how the work was to be done.

[209] This is too restricted a view of the pleaded case, and O&K cannot have been under any understanding of the s 52 case which corresponds with its submission. Where there is an alleged contravention of s 52, the subject of the complaint must be some conduct of the defendant. The conduct here involved the design, by Dr Fleischhaker on behalf of O&K, of the 1984 modifications as depicted in those documents. But of course, that conduct involved more than his production of those documents. As O&K would always have realised, the alleged conduct involved also his providing them to Utah. It was by O&K's conduct in the circumstances that the alleged representations were made. The question is whether the plaintiffs had to plead particulars of those circumstances. But the plaintiffs have pleaded those matters elsewhere, and it was unnecessary to repeat them in the paragraph which alleged the fact that the representations were made. It is clear that the plaintiffs were relying upon the facts in their negligence case, and in particular those facts from which they alleged the existence of a duty of care, to allege that there were implied representations that appropriate care had been exercised. There was no room for surprise in any of this and no surprise is apparently claimed. In my conclusion, the plaintiffs have proved that O&K impliedly represented that its repair solution was the product of a professional opinion reached with appropriate care and skill.[40]

[210] The next point relates to the terms of the plaintiffs' pleading of the falsity of the representations. By paragraph 38 the plaintiffs plead that each was false and that the particulars of that are "the matters particularised in paragraphs 31 and 35", together with the absence of any adequate qualification of the representations. O&K says that paragraphs 31 and 35 are each expressly tied to the allegation of design in paragraph 30, which describes a detail without an end weld, and therefore an FII detail, as that designed by Dr Fleischhaker. In effect, the argument is that there is no pleaded case under the Trade Practices Act upon the alternative factual premise that what Dr Fleischhaker designed was an FI detail.

[211] Again that argument unrealistically confines the plaintiffs' pleading in a way which O&K and those conducting its case could not have thought to be so. Paragraphs 30 and 35 are the subject of extensive particulars. They include the particulars dated 3 August 2007, by which the plaintiffs set out their case as to why an FI detail would not have involved the exercise of reasonable care. That was an amendment introduced by particulars and more correctly it should have appeared within the body of the statement of claim itself. But just as that matter of form did not prejudice O&K in its defence of that case, nor is O&K prejudiced by it on this alternative case under the Trade Practices Act. It should have been clear, and I infer that it was clear to O&K, that it had to meet a case under the Act which was advanced on the alternative premise that Dr Fleischhaker had, knowingly or otherwise, prescribed an FI detail. Consistently with my findings as to negligence, I find that O&K misrepresented that it had exercised reasonable care in arriving at its recommended repairs, and it thereby breached s 52.

[212] It is argued that there is a further difficulty for the plaintiffs in that "there is no pleading of reliance upon the alleged implied representations" and that "there is no allegation that the plaintiffs altered their position in any way as a consequence of the implied representation". O&K argues that it is not sufficient for the plaintiffs to plead, as they have in paragraph 41, that "by reason of the conduct", they have suffered loss. The plaintiffs' pleading in this respect accords with the terms of s 82 which provides that a person who suffers loss or damage "by" the conduct of another person that was done in contravention of a provision of Part V may recover the amount of that loss or damage. In Wardley Australia Ltd v Western Australia[41], Mason CJ, Dawson, Gaudron and McHugh JJ said[42] that the word "by" in s 82 expresses the notion of causation without defining or elucidating it, and it

should be understood as "taking up the common law practical or

commonsense concept of causation recently discussed by this Court in March v

[213] The plaintiffs must prove that they have suffered loss by this conduct, that is to say by the making of the misrepresentations. In this there is a potential difference between the position of those plaintiffs who were Joint Venturers in 1984, and that of the seventh plaintiff. For the moment I shall not include it in referring to the plaintiffs. Mr Black said that Utah relied solely on O&K in relation to the 1984 modifications. Mr Raleigh said that he regarded these drawings as final in the sense that they could be used for the repair. When challenged about his reliance on Dr Fleischhaker's design, given that he had done some calculations of his own, Mr Raleigh said that he expected that Dr Fleischhaker had performed calculations and he relied upon Dr Fleischhaker as to "the way the repair was to be done". I accept their evidence that they did rely upon Dr Fleischhaker's design and upon that design having been produced with the skill and competence to be reasonably expected of Dr Fleischhaker.

[214] It has always been the plaintiffs' case that modifications which were made would not have been made absent Dr Fleischhaker's design. That fact is established and it is by that installation that there was created this weakness in the structure from which the fatigue crack grew. That is so regardless of whether the design was for an FII or an FI detail because, as is now known, a FI detail would not have been materially stronger. I infer that absent the making of these representations, Utah would have required an engineering design for the necessary repairs which was a design undertaken with due care and skill. After all, that is why Dr Fleischhaker was asked to come from Germany to Goonyella when repairs were required. It is inconceivable that, as O&K now suggests, the plaintiffs would have gone ahead with this design whether or not the implied representations were made. Had Dr Fleischhaker said to Mr Black and Mr Raleigh when providing this design that he had not exercised the appropriate care and skill for which they had gone to him and procured his visit to Australia, there would have been no serious possibility that they would have installed these modifications and not required O&K, or if necessary someone else, to provide a design which they had reason to believe had been made with appropriate care and skill. It is not necessary for the plaintiffs' witnesses to swear to the facts that the conduct had that effect. Such direct evidence is common but is not required in every case. As Kiefel J said in Hanave Pty Ltd v LFOT Pty Ltd[44]:**

"The question of causation can sometimes be resolved not by direct evidence as to what part a misrepresentation played... but by a court determining what effect must be taken to have resulted. Indeed this course may sometimes be preferable to one which rested solely on evidence later given on the point."

**[215] Accordingly, there was reliance upon the alleged representations and in particular upon the represented fact that Dr Fleischhaker had exercised appropriate care and skill in his design. The plaintiffs' losses were caused by at least that misrepresentation because the provision of this design absent that implied representation would have resulted in the design not being accepted by Utah and its procuring a further design which was the result of due care and skill.

[216] I return to the position of the seventh plaintiff. As a part owner of the BWE when it collapsed, it undoubtedly suffered losses of the same kind as those suffered by its co-venturers and for which they are entitled to be compensated pursuant to s 82 of the Act. There was no argument by the defendants that the seventh plaintiff is not entitled to damages under s 82 if its co-venturers are so entitled but the point must be considered. The question is whether the seventh plaintiff is a person which suffered loss or damage by the conduct of O&K which breached s 52. That

conduct was in the nature of a misrepresentation but the seventh plaintiff was

not a representee. However that need not be fatal. In Janssen-Cilag Pty Ltd v Pfizer Pty Ltd[45] Lockhart J said:**

"Section 82 is the vehicle for the recovery of loss or damage for multifarious forms of contravention of the provision of Pts IV and V of the Trade Practices Act. It is important that rules laid down by the courts to govern entitlements to damages under s 82 are not unduly rigid, since the ambit of activities that may cause contravention of the diverse provisions of Pts IV and V is large and the circumstances in which damage there from may arise will vary considerably from case to case.

What emerges from an analysis of the cases (and there are many of them) is that they do not impose some general requirement that damage can be recovered only where the applicant himself relies upon the conduct of the respondent constituting the contravention of the relevant provision.

Also, a perusal of the provisions of Pts IV and V, the contravention of which gives rise to an entitlement to an applicant for compensation for loss or damage, points to the conclusion that the applicants may claim compensation when the contravener's conduct caused other persons to act in a way that led to loss or damage to the applicant."

This passage was cited with approval by Gummow J in Marks v GIO Australia Holdings Ltd[46] and has been applied in many cases: see e.g. Hampic Pty Ltd v Adams[47] and McCarthy v McIntyre[48]. In Australia and New Zealand Banking Group Ltd v Pan Foods Company Importers and Distributors Pty Ltd[49], Winneke P, referring to Janzen-Cilag, said that the burden of proving the causative link between the conduct and the loss is not as easily discharged where the claimant is not an entity which has relied to its detriment upon misleading representations made directly to it. In McCarthy v McIntyre, the Full Court of the Federal Court said that[50]:

"All that is necessary, in our opinion, is that there be a sufficient and direct link (ie causation) between the loss or damage alleged to have been suffered by the claimant and the misleading or deceptive conduct."

**[217] The notion of causation within s 82 is "to be understood by reference to the statutory subject, scope and purpose" as Gummow, Hayne and Heydon JJ said in Allianz Australia Insurance Ltd v GSF Australia Pty Ltd[51]. An order under s 82 is made "in order to give effect to a statute with a discernible purpose; and that purpose provides a guide as to the requirements of justice and equity in the case": per Gleeson CJ in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd[52] cited in Allianz Australia Insurance Limited v GSF Australia Pty Limited[53].

[218] In the case of the seventh plaintiff, it is unlikely that anyone on its behalf knew of the 1984 repairs or of O&K's conduct in relation to them. Unlike the other plaintiffs, the seventh plaintiff does not claim to have acted in some way, or not acted in some way, in reliance upon the exercise of due care and skill in O&K's design of the repair solution. Nevertheless the connection between the conduct and the loss suffered by the seventh plaintiff is relatively close. The immediate consequence of O&K's misleading conduct was, as I have found, that the then owners did not procure a careful repair solution and the BWE thereafter had an undue structural weakness. It was susceptible to a sudden and catastrophic collapse which is exactly what happened in 2000. When that occurred, the nature of the seventh plaintiff's loss was identical to that suffered by the other plaintiffs. It is difficult to see that the statutory purpose would be served by compensating those other plaintiffs but not the seventh plaintiff. It has suffered an identical loss because its co-owners relied upon advice which was misleading or deceptive. Its loss is thereby from a reliance upon that conduct, although the reliance was not its reliance. Accordingly, the seventh plaintiff is entitled to damages against O&K pursuant to s 82.

[219] I have earlier set out the differing composition of the joint venture at relevant

times. O&K is liable to the first, second, third, fifth and sixth plaintiffs in negligence, and to those plaintiffs as well as the seventh plaintiff under s 82 of the Trade Practices Act.

[220] Those six plaintiffs suffered losses by reason of their ownership of the BWE when it collapsed and, it is argued, from its unavailability for operations in their mine in the two or three years following the collapse. The plaintiffs claim the same losses as damages for negligence and damages under s 82. And for O&K it is not argued that if it is liable under s 82, there should be a different assessment from the negligence case.

[221] The plaintiffs owned the BWE in common in proportion to their respective participating interests in the Joint Venture. Because the BWE was owned in common, rather than jointly, each plaintiff has suffered its own loss and has a distinct cause of action. There is no claim for breach of contract in the design case as there is in the inspection case. As I discuss in the inspection case, the position in that respect is different because a contractual promise made to two or more persons jointly as in the contract for the 1999 inspection, creates but one obligation and its breach creates but one cause of action.

[222] Little consideration was given by the parties to these points. Within the

written submissions of the defendants, nothing is said of them. In their

oral argument the plaintiffs referred me to the judgment of Finkelstein J in Financial Industry Complaint Services Ltd v Deakin Financial Services Pty Ltd[54]. Finkelstein J there summarises the position in presently relevant respects in terms which I respectfully adopt[55]:**

"[67] The "legal rules" regarding claims and contract are as follows: joint claims cannot be "split" because a promise made to two or more persons jointly creates only one obligation: King v Hoare (1844) 13 M&W 495; Kendall v Hamilton (1879) 4 App Cas 504; Foley v Addambrooke [1843] EngR 20; (1843) 4 QB 197; 114 ER 872. Accordingly, a joint promisee has no several right of action: Australian Securities Ltd v Western Australian Insurance Co Ltd [1929] NSWStRp 62; (1929) 29 SR (NSW) 571; Peabody v Barron [1884] NSWLawRp 5; (1884) 5 LR (NSW) 72; Cullen v Knowles [1898] 2 QB 380...

[68] The position regarding actions in tort is not so clear, but appears to be the same as in contract, in my opinion. Thus persons who suffer a joint loss have a single cause of action. A V Dicey in his treatise "A Treatise on the rules for a selection of the parties to an Action", J Cockcroft & Co., New York, 1870 at p 380 writes that "persons who have a joint interest must sue jointly for an injury to it". He gives an example (at p 382) of joint owners of a chattel - and partners generally - whom he says must join in an action for injury to their common property. See also Foley v Addambrooke, above. It is different if the injury is to a separate and distinct interest, as for example in the case of a chattel that is owned in common. Then each owner in common may bring a separate action for injury to his individual interst: Sedgworth v Overend (1797) 7 Term Rep 279; [1797] EngR 451; 101 ER 974; Roberts v Holland [1893] 1 QB 665."

**[223] So each plaintiff (other than the fourth plaintiff who has no standing) has a several cause of action in tort under the design case, and for the same reasons, under the inspection case. In the same way each of those plaintiffs has its own cause of action under the Trade Practices Act: its loss is several because its interest in the BWE and in the profits of the joint venture was in common.

[224] The outcome is that apart from issues of contributory negligence, the plaintiffs (other than the fourth plaintiff) are severally entitled to judgments in differing amounts according to their respective proportions in the joint venture as at March 2000. At that date there was another joint venturer which is not a plaintiff. It was the company formerly called General Electric Minerals Inc

which merged into Utah Queensland Coal Limited, the former name of

BHP Queensland Coal Limited. It assigned its 8.5 per cent interest to the fourth plaintiff. So it suffered a loss in March 2000, to the extent of 8.5 per cent of the overall loss from the collapse and unavailability of the BWE. But because it is not a plaintiff and because the rights of the plaintiffs are several and not joint, it follows that the total liability of O&K to the various plaintiffs is 91.5 per cent of the losses suffered by the then owners.

[225] On the plaintiffs' case, the terms of the contract for the 1999 inspection were in writing. On the defendants' case, the terms were partly written and partly oral. But the alleged oral terms of the contract (before an alleged variation) are inconsequential. They relate only to payment for the inspector's accommodation and they were not part of the original terms because the alleged conversation

post-dates the inspection and the inspector's report.

[226] The substantial disputes concern what constituted the relevant writing,

whether an exclusion clause relied upon by the defendants was an agreed term,

and if so, whether it excluded the implication of warranties under s 74 of the

Trade Practices Act 1974 (Cth). There are issues about the proper interpretation of the terms which defined the scope of the inspector's duties. And there is an argument by the defendants that the agreed scope was varied, by a conversation during the course of the inspection.

[227] Before going to these questions, I should mention one point pleaded by the defendants which was not argued. They had denied that Krupp made the contract with the joint venturers, rather than with BHP alone. An explanation for that denial was not pleaded. It is clear that BHP did contract on behalf of its joint venturers as its coowners of the equipment. It does not matter whether that agency was disclosed within the contractual documents or at all.

[228] As discussed in the design case, the fourth plaintiff was not an owner of the BWE at any material time. Its owners were the other plaintiffs together with the company which assigned its 8.5 per cent share to the fourth plaintiff in August 2002. The joint venturers' rights to the BWE were as owners in common. But it does not follow that Krupp's promise to inspect the machine was made to them severally, rather than jointly. It is implicit in the plaintiffs' case that Krupp's promises were made to the then joint venturers as joint promisees, and there is no argument to the contrary. Indeed there is no argument at all by the defendants as to whether for any of the claims in these proceedings, there is one cause of action to which the plaintiffs are jointly entitled, or several causes of action.

[229] The question of whether the promisees are joint promisees, meaning that there is but one promise made to them jointly, or several promisees, meaning that there is a promise made to each of them severally, depends upon the wording of the contract and on the interest of the parties in enforcing it[56]. In this case the joint venturers had the same interest in the performance of the contract although they had separate interests in the property which was affected. The position is analogous to a covenant to repair given by a tenant in favour of a number of lessors who hold the reversion as tenants in common, for which it has been held that the lessors are jointly entitled to performance: Bradburne v Botfield[57]; Thompson v Hakewill[58]. Joint promisees do not have several rights of action. Their (one) cause of action will merge when it is pursued to judgment[59]. Ordinarily all persons who are jointly entitled to the relief sought by a plaintiff must be parties to the proceeding[60], however an action will not fail for want of parties and it is apparently conceded that the absence of one of the then joint venturers should not preclude recovery by the others for breach of contract[61]. There is then but one cause of action and one award of damages which can be made upon it, in which case the defendants are protected by that cause of action merging in the judgment. Accordingly, if the plaintiffs[62] establish that Krupp breached its contract and is liable for damages, the amount of the damages is not to be reduced because one of the three joint venturers is not a party.

[230] On the plaintiffs' case, the contract was contained in these documents:

• BHP Purchase Order No L77359 dated 19 February 1999;

• an attachment to that fax entitled "Comprehensive Inspection Service", which I will call the "scope document";

• BHP's Contractor/Supplier General Onsite Conditions No F001 (Revision 4 1998); and

• BHP's General Order Terms and Conditions RBSU 100/4.

[231] The defendants say that the relevant writing consists of:

• a further attachment to that fax entitled "General Conditions for Service Contracts"; and

• such of the BHP's Onsite Conditions and General Order Terms and Conditions as were not excluded by that last mentioned attachment.

[232] Accordingly, the substantial contest concerns Krupp's "General Conditions for Service Contracts", which I will call the Service Conditions. Undoubtedly they were attached to Krupp's fax of 22 February 1999. But the plaintiffs say that these conditions, or at least the warranty and exclusion clauses within them, did not become part of the contract.

[233] The defendants rely upon earlier dealings between the parties, including their contract for the inspection of the same equipment in 1996, as affecting the proper interpretation of this 1999 contract. I will return to those matters after discussing the effect of the 1999 documents.

[234] BHP sent a fax to Krupp on 19 February 1999, attaching the BHP Purchase Order, which described the required work as:**

"Krupp Engineering Personnel to carry out a complete inspection of the bucketwheel, tripper and spreader forwarding a report on all repairs required."

**BHPC said that its order would be governed by BHP's General Onsite Conditions and its General Order Terms and Conditions. But the order did not specify a price. The fax asked Krupp to do that, by a fax to be sent to BHP's Mr Nixon.

[235] On 22 February 1999 Krupp's Mr Reiter sent a fax to Mr Nixon. It consisted of a front sheet and two annexures. On the front sheet, Mr Reiter advised that Krupp's price was $27,000 for "on site inspection, induction, travel time, report preparation, accommodation, airfare and car hire" with the provision that "any time delay will incur an additional charge of $95 per hour". He wrote that Krupp's "earliest starting date" would be 16 March 1999 and asked whether that was suitable. The front page referred to the attachments as follows:**

"Attached is our inspection service scope and conditions.

Also attached are our General Conditions for Service Contracts."

**Consistently with that, what was attached was the scope document and the Service Conditions.

[236] However, in the scope document, which it is common ground became part of the contract, one of the expressed terms was:**

"1. All conditions pertaining to and associated with the work shall be as per our Standard Conditions of Sale and Contract for Inspections and Servicing of Machinery and Equipment No SCI0989 (copy attached)."

**These conditions were not the same as the Service Conditions. Instead, they were conditions which, at least on Krupp's understanding, had been part of the contract for Krupp's previous inspection of the BWE, which was in 1996. I will call them the Inspection Conditions.

[237] A further complication is that on the following day, 23 February 1999, Krupp sent another fax to BHP but with yet a further set of conditions. This fax, although also addressed to Mr Nixon, was sent to a different number and was intended for Mr Grant at BHP. It comprised the same front page of the fax of the previous day and the scope document, but in lieu of the Service Conditions (to which the front page still referred), it attached what were entitled "General Conditions for Supply Contracts", which I will call the Supply Conditions.

[238] BHP made no specific response to those faxes. In particular, it said nothing about whether it accepted all or any part of Krupp's Service conditions, its Inspection conditions, or its Supply conditions. Possibly someone from BHP rang Krupp to confirm that the inspection would go ahead, but there is no direct evidence of that. What apparently happened next was that on 11 March 1999, Krupp sent a fax to Mr Grant advising that Mr Thiel would be arriving to start the inspection on 16 March 1999. Mr Thiel arrived on that date and after talking to Mr Grant, went to work.

[239] In these circumstances, the defendants say that the plaintiffs must be taken to have agreed that Krupp's Service conditions would be part of the contract. The plaintiffs deny that on several grounds.

[240] First, they say that Krupp's faxes were at least ambiguous in what was said about the conditions upon which Krupp was prepared to contract. The scope document specified another set of conditions, the Inspection Conditions, which were just as likely to have been intended by Krupp (on an objective view), because they were expressed to be Krupp's conditions for inspections of machinery and equipment and they had been the only conditions which Krupp had included or purported to include in the 1996 contract. Accordingly, BHP should not have understood Krupp's reference to these Inspection conditions to be an error: it was at least equally likely that the error was in attaching the Service Conditions and (on the next day) the Supply Conditions, an impression which would be fortified by the difference between those two.

[241] Secondly, the plaintiffs argue that BHP had shown an intention to contract

only upon its standard conditions, which were those identified in the

BHP Purchase Order. So in that context, BHP's silence in response to Krupp's faxes, and its subsequent conduct should not have been understood as an acceptance of Krupp's conditions.

[242] Thirdly, they say that the Service Conditions, and in particular the exclusion clause upon which Krupp relies, were so inappropriate to the provision of the service of an inspection, and so unreasonable if applied as Krupp now argues, that Krupp could not have reasonably assumed that BHP had agreed to them.

[243] Further, the plaintiffs say that those provisions of the Service Conditions upon which Krupp relies, if agreed, would be void as inconsistent with warranties implied by s 74 of the Trade Practices Act.

[244] The Service Conditions included the following:**

Krupp's liability for the Services shall be limited to the rectification of deficiencies in the Service. Krupp shall make good by repair within a reasonable time after notification by the Purchaser, defects which appear in the Services, arising from Krupp's faulty design, material or workmanship, provided always that:

• The equipment on which the Services have been performed has been properly handled and used and has been properly operated and maintained; and
• Such deficiencies are not caused by incorrect use of operational material or lubricants, faulty civil or mechanical work, unsuitable soil conditions and all other chemical, electrochemical and/or electrical influences which have not been provided for in the Contract; and
• Such defects (whether apparent or not) occur within a warranty period of six (6) months after the risk has been transferred to the Purchaser
• Krupp is notified in writing within seven (7) days of the alleged defect occurring; and
• The Purchaser has fulfilled his Contractual obligations.

For repaired or replaced supplies of Krupp which form part of Services a new warranty period of six (6) month shall begin after finalisation of the remedial action.

However, Krupp's warranty obligations shall expire at the latest twelve (12) month after the risk has been transferred to the Purchaser.

If Krupp fails to remedy a defect for which it is solely responsible under this clause within a reasonable time, the Purchaser may determine in writing a reasonable time for remedying the deficiency. If Krupp then fails to fulfil its obligations, the Purchaser may carry out the work himself or by qualified others and shall then to the exclusion of other rights be entitled to recover from Krupp all reasonable direct costs.

Krupp shall not be liable for goods of a consumable nature, goods having a low rated service life, goods or part of goods which are subject to wear and tear and where any unauthorised repair or alteration to the Services has been performed by the Purchaser.

This express warranty is in lieu of any rights that would otherwise be conferred on the Purchaser under statute and law save that this express warranty does not exclude any conditions of warranties implied into this Contract by the provisions of the Trade Practices Act 1974 or by any other Federal or State Laws to the extent that such conditions or warranties may not be excluded by express agreement.

Subject to clause 5.0, paragraph 3 Krupp shall not be under any liability whether in Contract, tort or otherwise from any cause whatsoever, whether occasioned by negligence or otherwise, for any injury, damage or loss, including indirect and/or consequential damages or losses whether to persons or property, arising out of this Contract or the Services performed pursuant hereto including any defects therein or anything connected therewith or any other work related thereto. Krupp does not assume any liability for equipment, parts, tools etc. or labour provided to Krupp by the Purchaser. Any liability of Krupp shall expire at the end of the warranty period."

**[245] The evident intention in the drafting of these conditions was to have clause 13 limit Krupp's liability to the discharge of Krupp's obligations under the warranty provision, cl 12: hence the last sentence of cl 13.

[246] The Service Conditions defined "Services" widely as "the work to be performed by Krupp under this contract". But the terms of cl 12 appear to be apt only for services in the nature of something which is done to the equipment or machinery: something which physically affects the equipment, rather than an inspection of it. More generally, the Service Conditions appear to have been drafted with that kind of work in mind. For example, in cl 5.0 headed "Date for completion", it was provided that the Services should be deemed to be completed on the earliest of several alternative dates, one being "one calendar month after it has been put into commercial use." Clause 8.0 provided that Krupp would:**

"insure at the Purchaser's expense the plant on which the Services are to be performed in the joint names of Krupp and the Purchaser ... for its full value against damage or destruction ... from the date of commencement of the Services until completion,"

**and that "all moneys received under any such policy shall be applied in or towards the replacement or repair of the Services lost, damaged or destroyed ...". Clause 11.0 provided that absent some express payment terms specified in an offer, there should be progress payments according to the percentage of the "completion period" which had elapsed.

[247] Krupp argues that the Service Conditions were intended to apply to a variety of contexts, so that the fact that some of these provisions appear to be intended for the provision of services by way of work done to a machine does not mean that they cannot apply to a service such as this inspection and the inspector's report. Perhaps some of these conditions could be sensibly applied to this service. I go now to whether cl 12 is one of them.

[248] Clause 12 began by limiting Krupp's liability "to the rectification of deficiencies in the Services". It continued:**

"Krupp shall make good by repair within a reasonable time after notification by the Purchaser, defects which appear in the Services, arising from Krupp's faulty design, material or workmanship ..."

[249] I shall endeavour to summarise Krupp's argument as to how these words could be applied to the present context. The essence of Krupp's argument is that the "defects" are those "which appear in the services, not the object of the service". The argument proceeds:

"This can contemplate a circumstance in which what is observed is the defective character of the service, in which case Krupp can be notified and it can remedy the defect. Alternatively the defect in the services might become apparent by some physical characteristic which might be the subject of repair. ...The reference is to 'defects which appear in the services', not to 'defects which result from Krupp's breach of liability [sic] and provision of the services'."

[250] As to what Krupp must do under cl 12, its submission is that a "defect" in the [inspection] service

"could be rectified by the re-supply of services and/or the further provision of services, independently of whether any repair is required to any physical defects."

Alternatively, if there was "some physical manifestation of the consequences of the defective service", then

"a defective inspection could indeed be made good by a repair, or alternatively by some other means which falls within the description of 'rectification of the deficiencies'."

[251] As those submissions indicate, it is very difficult to explain how the words of cl 12 could be construed in a way in which it could operate in the context of a contract such as this one. The essential reason for that is that the services in this case are in the nature of professional advice and they did not involve anything being done which physically affected the machine. For this service, things such as rectification, making good by repair, defects and faulty workmanship have no logical place. Upon Krupp's premise that the "deficiencies" or "defects" are things which were wrong with the services themselves, rather than things that went wrong with the machine in consequence, the end point of the argument is that cl 12 limited Krupp's liability to the supply or re-supply of its services: in other words that Krupp's liability would be limited, in the first place, to the performance of an inspection and the provision of a report as the contract had already required. I say in the first place because cl 12 provides that:

"if Krupp fails to remedy a defect for which it is solely responsible under this clause within a reasonable time...the Purchaser may carry out the work himself or by a qualified others and shall then to the exclusion of other rights be entitled to recover from Krupp all reasonable costs."

**So consistently with Krupp's argument, if it failed to inspect or properly inspect and report on this machine, the customer's remedy was to conduct the inspection itself or have others do so at Krupp's cost. It hardly seems apt, in the context of a contract for an independent engineer's inspection of equipment, including for its structural soundness, that the customer's remedy should be to itself inspect the equipment.

[252] In my view the words "deficiencies" and "defects", which are apparently used synonymously, cannot be read as referring to some shortcoming in the provision of a service, rather than as the physical consequences of Krupp's performance or

non-performance. That is fortified by, for example, the second of the provisos within cl 12, which is that:**

"such deficiencies are not caused by incorrect use of operational material or lubricants, faulty civil or mechanical work, unsuitable soil conditions and all other chemical, electrochemical and/or electrical influences which have not been provided for in the Contract".

Similarly there is the next proviso which presents a particular difficulty in Krupp's argument. The proviso is that:

"such defects, whether apparent or not, occur within a warranty period of six (6) months after the risk has been transferred to the purchaser.

**And the further proviso is that "Krupp is notified in writing within seven (7) days of the alleged defect occurring". Upon Krupp's interpretation, the defect is in the provision of the service so that the occurrence of the defect would be when the service was provided or purportedly provided. It is nonsensical then to speak of a "defect" in this sense occurring or not occurring within a further six months. It is also nonsensical to suggest that Krupp was not liable unless within a week of its non-performance it was notified of such.

[253] Krupp does not argue that where a crack went undetected by an inspection, the crack itself was a "defect which appear[ed] in the Services" so that Krupp was obliged to "repair it". That would not be a defect "in the Services", but rather a

pre-existing defect which the services should have detected.

[254] Accordingly, cl 12 could not be interpreted in a way which would make it applicable for the provision of the services required by this contract. If upon an objective view BHP must be taken to have accepted the inclusion of the Service Conditions, it does not follow that cl 12 could be interpreted so as to have any effect upon this contract. If BHP accepted an offer which included the Service Conditions, it accepted only so much of those conditions as could be applied to this contract. As the defendants submit, the Service Conditions are drafted for many contexts so that some of them might have no operation in some contracts.

[255] That has consequences for the operation or otherwise of cl 13. Clauses 12 and 13 were evidently intended to operate together. Absent the operation of cl 12, the effect of cl 13 would be absolve Krupp from any responsibility for not performing its contract. So if BHP is to be taken to have accepted the Service Conditions, again it has accepted only those which could be read as applying in this context. Absent cl 12, cl 13 could not be applied without having the effect that Krupp could breach its contract as it pleased.

[256] The defendants also rely upon these clauses of the Service Conditions:**

"18.0 ... The Purchaser's right to sue Krupp shall expire at the latest six months after expiration of the warranty period.

These express rights and remedies of the Purchaser shall be lieu of any rights that would otherwise be conferred on the Purchaser under statute and law save that those rights and remedies do not exclude any conditions or warranties implied into this contract by the provision of any Federal or State statutes except to the extent that such conditions or warranties may not be excluded by express agreement."

**"These express rights and remedies of the Purchaser" is a reference to those under the warranty provision, cl 12. Absent cl 12, these provisions would have no sensible operation.

[257] Some of the Service Conditions, at least considered alone, might be thought to be capable of application to such an inspection contract. But none of them expressly refers to the service of an inspection, or indeed to any "service" which does not involve something being done to the equipment. Consequently, Krupp's attachment of the Service conditions to the fax of 22 February, on an objective view, could have appeared as a mistake, considered also with the fact that a different set of conditions was referred to within the scope document. And Krupp's difficulty is compounded by the fact that on the next day, Krupp sent a different attachment, comprising the Supply Conditions.

[258] The question is not whether the parties should be taken to have agreed to include the Inspection Conditions or the Supply Conditions, because Krupp has no alternative case which relies upon them.

[259] As the plaintiffs argued, the inclusion of the Service Conditions would be inconsistent with the terms of the BHP General Order Terms and Conditions, of which condition 1 provides, in part as follows:**

"(c) Orders when accepted by the Supplier, shall constitute the entire contract with reference to the subject matter and subject to the following terms and conditions shall not be altered, amended, supplemented or cancelled without written approval of the Supplier and company. Either supplier's written acceptance of the order or the delivery of any article or commencement of performance hereunder shall constitute acceptance of the order and no contrary or additional terms or conditions shall apply, notwithstanding any oral or written statement made by the Supplier."

**Krupp admits that these BHP conditions were part of the contract. So the plaintiffs say that the parties could not be thought to have agreed to the addition of other terms and in particular Krupp's Service Conditions. Krupp argues that after receipt of BHP's order, Krupp said in effect, that it was prepared to contract but only on its terms, so that BHP should be understood to have accepted Krupp's terms by going ahead with the inspection.

[260] The fact that BHP said it would contract only on the BHP conditions did not prevent the parties reaching a different agreement by what they subsequently wrote or did in relation to each other. But in my view that fact makes it more difficult to accept, that without anything being said by BHP about the Service Conditions, BHP did agree to them.

[261] Under the payment provisions of the Service Conditions, an initial payment of 10 percent of the price would be payable "within ten (10) days after confirmation of the order". That was an event described in cl 2 of the Service Conditions as follows:**

"Unless previously revoked by written notification to the Purchaser, Krupp's offer shall remain valid for the period as stated in the offer or, where no such period is stated, for ninety (90) days from the date hereof.

... Krupp reserves the right to decline any order which includes deviations from Krupp's offer. An order shall only be deemed to be accepted after Krupp has submitted to the purchaser a written order confirmation."

**So according to the Service Conditions, there was not to be a contract unless the Purchaser had "ordered" the services in response to an offer containing those conditions, and Krupp had "accepted" that order by a written "confirmation". But there was nothing by Krupp in the nature of "a written order confirmation". This makes it yet more difficult to accept that on an objective view, the parties agreed to include the Service Conditions.

The Trade Practices Act terms

[262] Section 74 of the Act provides in part as follows:**

"(1) In every contract for the supply by a corporation in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill and that any materials supplied in connexion with those services will be reasonably fit for the purpose for which they are supplied.

(2) Where a corporation supplies services (other than services of a professional nature provided by a qualified architect or engineer) to a consumer in the course of a business and the consumer, expressly or by implication, makes known to the corporation any particular purpose for which the services are required or the result that he or she desires the services to achieve, there is an implied warranty that the services supplied under the contract for the supply of the services and any materials supplied in connexion with those services will be reasonably fit for that purpose or are of such a nature and quality that they might reasonably be expected to achieve that result, except where the circumstances show that the consumer does not rely, or that it is unreasonable for him or her to rely, on the corporation's skill or judgment."

**[263] The plaintiffs were "consumers" because the price of the services did not exceed the prescribed amount of $40,000[63]. Accordingly, and subject to its possible exclusion by a provision which would engage s 68A, there was a warranty of due care and skill in terms of s 74(1).

[264] The plaintiffs also rely upon s 74(2). They say that by implication from the documents which contained the contract, they made known to Krupp a particular purpose for which the services were required or a result which they wished to achieve, which was the detection of any cracks in the structure of the BWE. So they say there was an implied warranty that the services would be reasonably fit for that purpose and of such a nature and quality that the services might reasonably be expected to achieve that result. As I will discuss, Krupp's scope document required Krupp to carry out a visual inspection to check for the presence of cracks. But because not every crack is visible, Krupp did not promise to find every crack. The implication from the documents was that the services were required for the detection of any cracks which were able to be detected by a visual inspection. And within that qualification was the circumstance that some parts of the structure would be relatively difficult to see at close range. But with that qualification, I accept that by implication such a purpose was known to Krupp.

[265] However, s 74(2) does not apply where the services are of a professional nature provided by a qualified engineer. That was the case here. The contract expressly required the inspection to be conducted by an engineer. And the report of the inspector was likely to have required the specialist advice of an engineer on such matters as the relative urgency of remedial work and the detail of that work. The plaintiffs argue that the exception in s 74(2) operates only where the services are provided "by persons carrying on the profession of architect or engineer" and that "the second defendant did not carry on that profession". But the exception applies according to the nature of the services and the qualifications of the natural person through whom the corporation supplies them. The exception applies here because the services were of a professional nature supplied through Mr Thiel as a qualified engineer. So no warranty was implied by s 74(2).

"Application of provisions not to be excluded or modified

(1) Any term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) that purports to exclude, restrict or modify or has the effect of excluding, restricting or modifying:

(a) the application of all or any of the provisions of this Division;

(b) the exercise of a right conferred by such a provision;

(c) any liability of the corporation for breach of a condition or warranty implied by such a provision; or

(2) A term of a contract shall not be taken to exclude, restrict or modify the application of a provision of this Division or the application of section 75A unless the term does so expressly or is inconsistent with that provision or section."

If contrary to my conclusion, the parties had agreed in terms of the Service conditions, then subject to s 68A, each of cl 12, cl 13 and cl 18 would have been void by s 68(1), because it would have had the effect of excluding, restricting or modifying Krupp's liability for breach of the warranty implied by s 74(1). Section 68A provides, in part, as follows:

"(1) Subject to this section, a term of a contract for the supply by a corporation of goods or services other than goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption is not void under section 68 by reason only that the term limits the liability of the corporation for a breach of a condition or warranty (other than a condition or warranty implied by section 69) to:

(a) in the case of goods, any one or more of the following:

(i) the replacement of the goods or the supply of equivalent goods;

(iii) the payment of the cost of replacing the goods or of acquiring equivalent goods;

(iv) the payment of the cost of having the goods repaired; or

(ii) the payment of the cost of having the services supplied again.

(2) Subsection (1) does not apply in relation to a term of a contract if the person to whom the goods or services were supplied establishes that it is not fair or reasonable for the corporation to rely on that term of the contract."

**Krupp ultimately argued that s 68A(1) was engaged by the warranty in cl 12. But cl 12 could not be thought to have been agreed, because on any rational interpretation, it could have no operation in this contract. Because cl 12 was not a term, it follows that cl 13 and cl 18, if otherwise agreed, would be void by s 68, because they would not engage s 68A.

[267] The result is that a term of due care and skill was implied by s 74(1). And because this was a contract for the provision of the professional services of an engineer, an equivalent term was also implied by the common law[64].

[268] This was defined by the scope document. The plaintiffs also rely upon their Purchase Order which described the work as "a complete inspection of the bucketwheel ... forwarding a report on all repairs required", which although relevant, adds nothing to the effect of the scope document.

[269] Under its heading, which described the inspection service as "comprehensive", the scope document began by describing the inspection as an assessment of the condition of the plant by way of a structural inspection and a mechanical inspection. Then followed descriptions of what those inspections should involve. Under "Structural" was this:**

"The structural inspection would be done visually for the entire primary load carrying structure to check for the following :

• Damaged, loose or missing structural members
• Firm fit of bolts in their connections
• Missing and corroded bolts
• Soundness of welds
• Slippage of joints
• Visible changes in cross sectional area of joints and members due to corrosion or wear
• Condition of the corrosion protection system
• Presence of cracks in sections and plates

Structure of a secondary nature including handrailing, walkways and ladders would be assessed for damage and corrosion."

**It is common ground that the main tower and the stiffeners were part of "the primary load carrying structure".

[270] After a description of what the mechanical inspection should involve was this note:**

"Any structural and/or mechanical defects shall be clearly marked by the Krupp Engineer using coloured spray paint or marking pen. In the event that structural cracking is detected, more detailed NDT inspection may be required. As the extent to which this may be required cannot be assessed at this stage, we have not allowed for ultrasonic/magnetic particle testing in this proposal."

[271] The document then described what was required of the inspector's report as follows:

All fault descriptions, locations and routine repair procedures will be fully detailed in an Inspection Report for the plant item.

The report format includes separate sections that deal with each of the structural and mechanical assemblies. Photographs will be incorporated where necessary for fault location and clarification.

All faults will be assigned a priority level with regard to urgency of repair, based upon the nature and location of each fault.

Any repair procedures of an extraordinary nature which may involve detailed investigation and design, computations, machine trestling and off-loading, and critical structural member replacement shall be dealt with as additional work on a cost plus basis.

The Inspection Report will be compiled and written as a document capable of clear interpretation for fault rectification work."

[272] That was followed (again within the Scope document) by some 10 conditions which it is necessary to set out in full:

1. All conditions pertaining to and associated with the work shall be as per our Standard Conditions of Sale and Contract for Inspections and Servicing of Machinery and Equipment No SCI 0989 (copy attached).

1. If machine access cannot be provided, a standby rate of $94.00/hour applies.

1. Prior to arrival of the Engineer on site and the commencement of inspection work, the structure of each plant item must be cleaned to allow proper identification of defects.

1. To enable inspection of all elevated structure not serviced by walkways, you need to provide (free of charge) an elevating platform ("cherry picker") and operator as required by the Engineer during the inspection period.

1. We would require your assistance in the provision of fitters and electricians to remove cover plates and housings as may be required by the Engineer for inspection purposes.

1. All electrical drives on the plant shall be isolated under permit conditions during the inspection period in accordance with standard procedures.

1. To prepare reports, we require all necessary drawings and technical manuals which are not in Krupp's possession.

1. Any other equipment which may be required during the course of inspection shall be made available to the Engineer, [for example]:

• Scrapers and brushes for cleaning
• Spray paint for fault marking
• Crack testing compounds
• Extension ladders
• Battery torch
• Lead lights
• Safety harness and lanyard

1. We have made no provision in our proposal for NDT such as ultrasonic, radiograph etc, nor for diagnostic techniques such as shock pulse monitoring, spectrometric oil analysis etc, as the extent to which these may be required cannot be assessed.

1. Krupp will submit duplicate copies of the Inspection Report within four calendar weeks after the inspection period.

You will be notified during the inspections of any faults of a serious nature that require immediate repair or other actions."

[273] The defendants' case is that the inspector was not obliged to leave the walkways, accessways or ladders which were affixed to the BWE (which I will call the walkways). Although the "entire primary load carrying structure" was to be inspected, they say that if some part of it could not be seen from the walkways, it was not to be inspected and nothing had to be written about it in the inspector's report. The relevance of this is that the defendants say that the likely location of the crack at the time was such that it was not visible from the walkways.

[274] As I will discuss, it would have been possible for Mr Thiel to look at what the defendants say was the location of the crack, without his leaving the walkways, but with the use of a mirror. But first I will discuss the arguments that the contract originally, or by a variation, contained this qualification.

[275] The scope document required a visual inspection of the entire primary load carrying structure. It was not in terms which required the inspector to stay on the walkways. It expressly provided to the contrary. Condition 4 provided that "to enable inspection of all elevated structure not serviced by walkways", BHP had to provide an elevating platform and an operator as required by the inspector. Condition 8 provided that any other equipment required by the inspector should be made available to him and it gave as examples extension ladders and a safety harness and lanyard. Had the inspector required such an item of equipment to inspect part of the structure, and had BHP not made it available, the inspector would have been relieved of the obligation to inspect that part. And as the plaintiffs concede, the contract did not require the inspector to do anything which was not reasonably safe. In particular, he was not obliged to leave the walkways unless he had available to him some reasonably safe means of doing so. But with these qualifications, the express terms of the contract are inconsistent with the defendants' "confined to the walkways" case.

[276] For this argument the defendants rely upon what happened in Krupp's 1996 inspection of the BWE. Although that inspection was subject to identical terms so far as the scope document is concerned, the defendants point to the fact that on that occasion, as in 1999, Mr Thiel did not leave the walkways. To this they add the faxes exchanged by Mr Grant and Mr Reiter in December 1997, some fourteen months prior to the 1999 contract. Mr Grant faxed to Mr Reiter on 8 December 1997 in these terms:**

It is that time again BUDGET time. Can you please forward me a quote to have the Bucketwheel, Spreader and Tripper examined by one of your engineers as part of its 2 yearly inspection the same as Frank did the last time."

We wish to advise that the price for the inspection will remain as per your last order No L02362, $25,600.

We thank you for the enquiry and will be pleased to carry out the inspections for you when required. Please advise us one month prior to inspections so that we can schedule Frank's workload."

**The defendants argue that the contract made in February 1999 has to be read subject to those faxes in 1997: the 1999 documents are to be understood as requiring "the same as Frank [Thiel] did last time".

[277] On their face, the 1997 faxes were not intended to conclude a contract or to have any contractual effect. As Mr Grant's fax made clear, BHP's interest was in knowing, for budgetary purposes, the likely cost of the next inspection. He described the proposed inspection as "the same as Frank did the last time" apparently to assist Mr Reiter to provide an estimate. In referring to what was done "last time", he should not have been understood as indicating something less than what had been the agreed inspection in 1996. The exchanges were on the basis that what had been required by the contract in 1996 would be again required. Consistently with that, Mr Reiter gave the same price.

[278] It may be accepted that BHP knew that Mr Thiel had not used equipment such as a cherry picker or a harness and lanyard in 1996. But it is not demonstrated that BHP, and specifically Mr Grant, knew that in 1996 Mr Thiel had been unable to inspect from the walkways the entire primary load carrying structure.

[279] In the crossexamination of Mr Grant, it was suggested that he had told the Mining Warden's inquiry into the BWE collapse that he knew that the critical area at the top of this stiffener could not be seen from the nearby walkway. He did not agree that he had said that and his evidence to the Warden's inquiry was not tendered in this trial. He was involved in the investigative process undertaken by BHP after the collapse but he said here that he remained unsure as to whether the critical area would have been visible from the walkway. I accept that evidence. I find that in 1999 he did not have any particular belief about the visibility of the end of this stiffener.

[280] Mr Grant agreed with the suggestion that in the 1996 inspection he told Mr Thiel "to stay on the walkways and ladders". He also agreed that in 1996 he had "no expectation that Thiel would go outside the walkways if he was on the tower if the machine was operating". When it was put to him that he had "no expectation that he would go outside the walkways and ladders on the tower without a harness", he agreed, saying "correct, he would need to have a harness, yes". At that point there was a further question in which this was put: "and in fact, your expectation was exactly the opposite; you'd expect him not to do that, not to go outside?" to which Mr Grant answered "that's correct". But in context this meant that Mr Grant had not expected him to go outside the walkways without something such as a harness. It was not an admission of an expectation that he would not leave the walkways at all. At about the same point in his crossexamination, Mr Grant said that "if (Mr Thiel) needed any equipment or any assistance, he needed to ask myself, the operators or the operations supervisor". A little further on in the crossexamination occurred this exchange:**

"All right. You see, I want to suggest to you that as with '96, so with '99, in this respect at least, that he was told, "Stay on the stairways" - "on the walkways and ladders"?-- The instructions would have been the same as in 1996, to stay within the walkways and ladders.

And your expectation of what he would do was even stronger in '99 because of the way safety changes had gone in the three years since '96. That is to say, you didn't expect him to go off the walkways or ladders when the machine was operating at all. So you see the - while the machine's operating, not off the walkways, ladders at all?-- The expectation was that he would do all his work from the handrails and walkways."

And a little further on in the crossexamination was this:

"All right. And your anticipation or your expectation of what Mr Thiel had actually done during his inspection was, can I ask you to agree with me, if you do, that he had followed what you'd said, namely, he hadn't gone outside the walkways and ladders?-- Correct."

In his statement tendered as evidence-inchief, Mr Grant said:

"[47] I can recall I specifically told Mr Thiel that he should not stray from the walkways and ladders of the BWE. I also told Mr Thiel that if he needed to work outside these constraints and needed access, I could arrange this, as he needed to have a safety harness. The Mine's safety motto had changed from "if it is not safe - don't do it" to "if it is not safe - make it safe" and I believe I told Mr Thiel this as part of his induction. I recall also mentioning to Mr Thiel that if he needed to talk to an operator about when the BWE would be down for the day he could do so.

[58] Mr Thiel has full access to the BWE, it was entirely up to him how the inspection was to be undertaken."

**[281] Two things should be said about the evidence of Mr Grant's expectations. The first is that any expectation, or more generally his state of mind, as to what Mr Thiel would do is not relevant to the interpretation of the terms of the 1999 contract, although it may be relevant to other issues, such as whether Mr Thiel's report was misleading or deceptive. Secondly, from this evidence taken as a whole it can be seen that it was not his expectation that Mr Thiel would stay on the walkways, if leaving the walkways was reasonably safe, such as with a harness, and was necessary for an inspection of the entire structure. It was not that he thought that Mr Thiel would in no circumstances leave the walkways or ladders, but rather that he would do so only with the necessary equipment and when the machine was not operating.

[282] Then there is a conversation between Mr Grant and Mr Thiel in the course of the 1999 inspection upon which the defendants rely, in the alternative, as amounting to some variation or waiver. On this occasion, Mr Thiel was climbing from a walkway to stand on top of a hand rail to see some part of the structure. At this point, his feet were on the top of the hand rail, his hands were holding on to another part of the structure and he was not wearing a harness or other safety device. The machine was operating. Mr Grant called out to him words to the effect of "Stay on the stairways and platform walkways. Stay on them". I accept Mr Thiel's evidence in that respect. Mr Grant does not recall the incident but does not deny that it occurred.

[283] The defendants argue that this incident had an impact on the contract. They say that at least from that time, the contract required the inspector to keep to the walkways and that the provisions about cherry pickers and other equipment such as a harness became irrelevant. I do not accept the argument. On no objective view could the parties be understood to have been varying their contract by what Mr Grant called out to Mr Thiel. Nor in this was there any waiver by BHP of its entitlement to an inspection of the entire structure. The incident was simply an instruction that Mr Thiel was not to leave the walkways and ladders as he had done: without safety equipment and while the machine was operating. It should not have been understood as saying anything about the use of equipment provided for by the scope document.

[284] The defendants also argue their walkways case in the language of an estoppel by convention. They plead that the plaintiffs, Krupp and Mr Thiel had these common assumptions, from which the plaintiffs should be estopped from now departing:**

"(i) that the inspection carried out [in 1999] was that which was requested by the Plaintiffs;

(ii) that the inspection carried out [in 1999] was one which was carried out in accordance with contract, duty and statute;

(iii) that the Plaintiffs did not require the inspection on the BWE itself to be performed otherwise than visually and from walkways, access ways, and ladders;

(iv) that the Plaintiffs did not require the stiffeners to be inspected more than they had been;

(v) that the Plaintiffs did not require any further inspection performed."

**According to my findings concerning Mr Grant's state of mind, the defendants have not proved the factual foundation for this estoppel. It may be accepted that at the time BHP believed that the 1999 inspection had been carried out in accordance with the contract and any other legal obligation, and for that reason, did not ask Krupp to do anything further. But to establish an estoppel by convention which alters the effect of the express terms of a contract, a party must prove more than that each party believed on the basis of the facts known to or assumed by that party and according to its own understanding of the contract's requirements, that the contract had been performed. To establish this estoppel, the defendants must show that the parties acted in this transaction upon an agreed and certain premise. In whatever form, this estoppel case requires a common premise that an inspection from the walkways was sufficient, whether or not the entire structure had been inspected. Mr Thiel may have thought that but BHP, and Mr Grant in particular, did not. So that was not commonly assumed and quite apart from any legal difficulty of such an argument in the face of the express terms of the contract[65], the argument fails on the facts.

[285] In summary, I reject the defendants' walkways case. The contract obliged Krupp to inspect the entire structure, if that could be done safely and if the necessary equipment was made available by BHP. Krupp was obliged to ask for that equipment if the inspector was not able to see part of the structure, or to see it well enough to detect any apparent cracking.

[286] The answer appears from Mr Thiel's own evidence which in this respect is unchallenged. As to the structural inspection of the tower, he first went to the top of the tower to look at the sheaves and the wear on the ropes. These were at the very top of the tower where there was a platform alongside the ropes running across the rear of the tower. He then inspected some mechanical parts before returning to the tower. This time he walked slowly up the stairways and ladders looking at structural parts. His structural inspection took him about three days, of which he spent about four hours inspecting what he describes as "the structural aspects of the tower". He says he walked up the stairway very slowly "looking at all the areas that I could get access to". When he reached the top, he looked down both sides of the tower as far as he could and on his way down he again looked at whatever he could see.

[287] He was able to inspect the full length of the outer stiffener (the stiffener on the same flange as the critical stiffener but on the outside of the web) and the weld affixing that stiffener to the flange. He was so close to this that he could touch it. As to the critical stiffener and its equivalent on the right hand side of the tower, he said that**

"The only way I could see the inside stiffeners was from the counterweight boom level. I could touch the bottom end of the inside stiffeners from the counterweight pivot level platform. I was approximately eight metres away from the top of the inside stiffener at that point i.e. at the counterweight boom level. I could not see the top of the inside stiffeners from the walkways at the top of the tower as the walkway was too far from the flange and the stiffeners were hidden by the flange."

[288] I accept that Mr Thiel looked up from the counterweight boom platform as he described. The defendants argue that this constituted an inspection of the area which is where the top of the stiffener met the flange. But it was no such thing, because standing on the counterweight platform Mr Thiel could not have seen most of it and whatever view he had of the rest of it was of no use. This explains why he endeavoured to inspect the area from a walkway near the top of the tower. This appears from his evidence in crossexamination:

"And you couldn't see the top of the inside stiffeners from that location? [the counterweight platform]-- You can see the top but not the top where the weld is.

All right. So you can see up along the side of them?-- The side. Right to the top.

Nor could you see that area, I suggest to you, between the stiffener and the web?-- Partly you can. Down near the bottom end, maybe, but not right at the top.

No. Because in fact along the web there's a bracket or a stiffener-----?-- That's right.

So the area that you couldn't see from that location at the counterweight boom was across the top of the stiffener, and then that further distance across to where the flange intersected with the web at that level?-- Mmm. But only up near the top. Mainly near the top.

Yes. Sorry, what do you mean 'mainly near the top'?-- Because at the bottom I could see it, I could even touch it."

**With the benefit of other evidence, it is clear that from the counterweight boom platform, Mr Thiel could not have seen the top of the stiffener, the welding (if any) between the end of that stiffener and the flange or the adjacent area on the flange. As is now known, this was the critical area because the crack which caused the collapse grew from where the top of the stiffener met the flange, and as it grew it extended along the flange in each direction from the stiffener: towards the web and (in the other direction) towards the end of the flange. There is an issue as to whether by March 1999 it had grown to the end of the flange.

[289] So most of the critical area was simply not seen and therefore not inspected. Accepting that Mr Thiel had a direct line of sight to some part of the critical area, he was in no position to inspect it, because what little he could have seen of that part from so far away and at such an awkward angle, (as he stood almost directly beneath it looking up eight metres,) was not sufficient to enable him to say anything reliable about the soundness of the weld at the top of the stiffener or the presence or absence of cracks. That this was not an inspection of the critical area was effectively conceded by Mr Thiel in this evidence:**

"This area at the top of the stiffener on the inside of the tower was an area where you couldn't tell if there were any indications of cracking? You couldn't see if there was any rust marks, or paint cracking, that's correct, isn't it?-- I couldn't see that end, no.

No. So the position was that you were not in a position to form any view about whether or not in that location there were features which might call for a closer inspection?-- No, because I could not see that area."

**[290] There was a series of ladders or steps on the left hand side of the tower and running up the outer face of that web. They led to a walkway which linked the left hand side to the right hand side of the tower. The walkway passed immediately in front of the tower and underneath the ropes which were between the tower and the rope support tower. Mr Thiel said that to move along this walkway which I will call the relevant walkway, and beneath these ropes, he had to move on his knees.

[291] I have the benefit of what the parties agree is an accurate scale model of the top of the tower, including most of the length of the stiffeners, the relevant walkway and other parts of the structure, including the supports of that walkway which extended horizontally underneath it from each side of each web. From the model, it appears that the ropes were not above the relevant walkway for its entire length, so that there were several metres at each end on which Mr Thiel would have been able to stand up. That includes the part of the relevant walkway which was closest to the critical area.

[292] A person standing at that point would be close to the critical area because, as the parties seem to agree, the top of the critical stiffener was about 1.3 metres below the platform of the walkway. The walkway had a steel handrail of a metre or perhaps a little more above the platform with another rail beneath it at about half that height. The handrail did not obscure the view below.

[293] The difficulty was that the view from the relevant walkway of the critical area was blocked by the flange. The walkway was on the front side of the flange and the stiffener was on its other side. So the front of the flange and its side or edge could be seen from the walkway but not the stiffener side.

[294] Mr Thiel says that from the relevant walkway, he looked at the edge of this flange from about one and a half metres away. He says that he knelt on the platform and looked "as far as I could but I couldn't see anything". He believes that had there been a crack 15mm long or more on that edge of the flange (as some evidence suggests), he would have seen it.

[295] Clearly then Mr Thiel did not see that part of the flange against which was welded the top of the stiffener. Nor did he see the welds connecting the stiffener to the flange at or near the top of the stiffener.

[296] According to the evidence of several experts, it is likely that by then there was a fatigue crack of at least 100mm in length in a horizontal line across the flange at the top of the stiffener, and that it was this crack which continued to grow to where it caused the fracture of the tower and the collapse of the BWE within a year.

[297] I will come to the question of whether an inspection of the critical area was likely to have detected that crack. But from Mr Thiel's own account, it is proved that he did not "check...the soundness of (all) welds" or inspect "the entire primary load carrying structure".

[298] According to the contract, the entire structure had to be inspected if that could be done safely and with the necessary equipment which BHP was to provide at the inspector's request. Mr Thiel made no such request. He was obliged to do so unless the use of that equipment would have been futile or unsafe.

[299] Before going to those matters however, two points which occupied some considerable time in the evidence should be mentioned. The first concerns whether the inspector was obliged to give priority to certain parts of the structure, even if that compromised the inspection of other parts. The defendants' case seemed to be that Mr Thiel was told to concentrate on an inspection of other parts of the machine, so that he could be excused for not inspecting all of it and the critical part in particular. But in that respect there was nothing proved which involved any variation or waiver of BHP's entitlement to an inspection of the entire primary load carrying structure. Moreover, it is clear from Mr Thiel's evidence that he intended to inspect this part of the structure and would have done so had he been able to see it from where he tried to see it on the relevant walkway. As he said, he regarded it as something which he should inspect if possible.

[300] The second point concerned whether Krupp, and specifically Mr Thiel, should have realised that the top of this stiffener was especially vulnerable and particularly warranted an inspection. This involved a debate about what an inspector should study and know about the equipment and its history, and what he should be told about that by its owner. This point also extended to a debate about the appropriate level of experience and qualifications of an inspector, such as whether the engineer required by this contract should have been a structural engineer. For the breach of contract case, these are irrelevant issues because the contract required the inspector to inspect the entire load carrying structure. And any duty of care owed by Krupp or Mr Thiel was surely to be consistent with that contractual obligation. Again, Mr Thiel well understood that it was important to inspect the top of this stiffener if possible. He said it was his practice when conducting a visual inspection to check any areas prone to stress or failure, including welds and joints between sections and plates, and between members. He said that he understood the difference between the tension side and the compression side so far as the chance of fatigue cracking was concerned. The reason why he did not inspect the critical area was not that he had to do other things or that he did not know what to inspect.

[301] Some inspectors use mirrors to look at things which are not within a direct line of sight. These are mirrors with either a fixed length or a telescopic handle attached to the mirror face by a pivot.

[302] Mr IR Newnham is the principal engineer at a firm which provides engineering consultancy services for the operation, maintenance and development of large bulk handling and continuous mining equipment. He carries an inspection mirror in his toolkit for inspecting such equipment. Inspection mirrors are also kept in his firm's workshop. He says that inspection mirrors are available for purchase in a variety of sizes with the mirror itself ranging from 30 to 54mm in diameter and the handle from 300 to 450mm. His firm has used them for the past 15 years.

[303] Another inspector, Mr Cheney, says that his firm (CCI Pope Pty Ltd) uses mirrors on inspections and he has recently purchased another one. It cost $30. He has seen inspection mirrors with faces 70mm x 130mm and handles of 750mm to 1 metre.

[304] The defendants called Mr Russell, from CW Pope & Associate Pty Ltd, who undertook an inspection of some parts of the BWE later in 1999. He said that it was not unusual for inspectors to carry mirrors so that they can see around and behind pieces of steel and other obstructions. During the cross-examination of Mr Russell the plaintiffs tendered an inspection mirror which he agreed was an example of extendable mirrors he had seen carried by inspectors. It has a telescopic handle extending to about 90cm and a rectangular mirror pivoting at the end of the handle which is about 90mm x 50mm.

[305] Dr Dittrich, also called by the defendants, said that he has used inspection mirrors although he would use a mirror only if there was**

"solid indication of any risk at a particular site point, or if my experience showed that there was a high risk there, and that would be the case for an FII detail".

**He was not critical of Mr Thiel for not using a mirror because he said there was no particular indication to Mr Thiel that there might be a crack in the critical area. But as I have said Mr Thiel understood that he should inspect the critical area if possible.

[306] Another German engineer but with extensive experience in Australia, Mr Haberler, said that he was aware of the availability of extension mirrors although he "would not consider them to have any particular use in the machine inspection context." He did not use them and he said that they gave the risk of producing a deceptive or misleading impression.

[307] Mr Schander was the inspector, who from O&K and later Krupp, conducted the 1984, 1986, 1990 and 1994 inspections of the BWE. He said that he had never seen mirrors used for inspections of bucket wheel excavators although he agreed that they could be used.

[308] BHP's Mr Grant had no recollection of the use of mirrors save for a conversation with someone at CCI Pope who said that they could be used to look at various parts of the machine. The defendants say that it is significant that he appears to have had no experience with the use of mirrors by mine staff. Apparently the point here is that if the use of mirrors was so obvious, someone within BHP would have thought of it.

[309] So undoubtedly in 1999 some inspectors used such mirrors and some did not. They were readily available and inexpensive. The present question is not whether any competent engineer should carry an inspection mirror. It is whether the use of such a mirror was a realistic means of inspecting the critical area, as Krupp was obliged to do if that could be done safely.

[310] No witness was called to provide precise dimensions of the distance between the platform of the relevant walkway or the height of its handrail and the top of the stiffener. The plaintiffs' witness Mr Platzer calculated a distance of 1.32 metres from the top of the stiffener to another stiffener running horizontally along the web. The defendants say that this horizontal stiffener was "below and supports" the relevant walkway. But as I understand Mr Platzer's evidence, he was referring to a horizontal stiffener which is below the top of the (vertical) stiffener on the flange, and his measurements do not assist on this point. Yet looking at the model of the tower, which it is agreed is on the scale of 1:20, 1.3 metres seems to be a fair estimate of the distance from the platform of the walkway to the top of the stiffener. As already mentioned, the handrail seems to have been about 1 metre or a little more above the platform. There was another rail below it at about half that height. The top of the stiffener would have been almost directly underneath one edge of the walkway platform. These matters are helpfully represented in images within Dr Potts' report no 1[66], one of which is below. As that indicates, an inspection mirror of the dimensions of that which was tendered would not have provided a reliable view of the top of the stiffener if held by an inspector who was standing upright on the walkway because the critical area would have been too far below him.

[311] In a written statement tendered in chief, Mr Thiel said that he would not have been prepared to lie down on the walkway with any part of him outside the railings or to lean out over or through the handrails, because of "the risk of the handrail failing or one stumbling or falling, or evening losing one's hardhat and endangering others below". He there wrote that "lying on the walkway necessarily involves altering the body's attitude from upright to lying down, which involves the risk of slipping and falling, either when getting down, or when getting up again. In addition, there is nothing to grip onto when lying down, unlike when one is upright and able to use the handrails, and therefore there is risk of falling off if the machine moved". In oral evidence, he also said that he would not have been prepared to "support himself on the bracket that is the support for the walkway". This was in response to a suggestion that he could have climbed over or through the handrails and stood on the bracket which extended horizontally from the web to support the walkway. He said that this would have been unsafe because "any horizontal surface under the sheaves is likely to have grease spatter on it and the risk of slipping is high".

[312] In my view the risk of the handrail failing was not significant, at least as long as most of the inspector's weight was still on the walkway platform. Nor was there a significant risk of someone being injured by a falling hard hat. After all, the inspector was already walking around this machine, and crawling along the relevant walkway, whilst he carried things such as a notebook, binoculars and a camera. I accept that without any safety harness, the inspector should not have been expected to stand and lean between the handrails so that his upper body was outside them. The image from Dr Potts' report (the Figure above) represents an inspector in that very position, but contrary to a submission for the plaintiffs, Dr Potts was not offering a considered opinion about the safety of that. However, with the use of a properly secured safety harness, in my view this would not have been unsafe. But had that been done, I am not satisfied that the mirror, with a handle of 900mm to 1 metre long, would have been sufficient to give the inspector a reliable view.

[313] Had the inspector used the mirror, not from a standing but from a kneeling or crawling position, the mirror would have provided a reliable view. This would have required the inspector to kneel on the walkway and to have at least his head and his arm holding the mirror outside the handrails, between the lower rail and the platform, but with his body inside the handrails and his weight entirely upon the walkway platform. With a properly secured harness, that would not have involved an undue risk. Not everyone would be comfortable doing this but then not everyone would be comfortable working at this height on a structure like the tower of the BWE. Mr Thiel described how he crawled along this walkway to pass underneath the ropes for a distance of what must have been at least 5 metres each way and, according to his evidence, at least twice. And he described his attempts to see the top of the stiffener as he knelt on the walkway platform. That was no more safe than the position I have described when it is considered that he could have used a safety harness.

[314] The defendants say that it would have been unsafe to have attached a harness to the handrail because the handrail was not strong enough. This is said to come from something within BG 60, although it was not explored with any witness. At cl 2.4 of BG 60, it was provided that**

"staircase, landings and walkways must be assessed for an individual load of 300kg...and top rails or balustrades for a horizontal force of 50kg".

**But I accept, as the plaintiffs say, that the harness could have been attached to something else, such as the bracket supporting the walkway. In this position the inspector would have been almost directly above that bracket. The defendants argued nothing against that. As already discussed, the inspector was entitled to a harness if required. I accept Mr Grant's evidence that a harness would have been provided if requested. BHP had provided a harness to Mr Schander.

[315] Mr Cheney, who was called by the plaintiffs, said that he would not have been prepared to lean out over the rails or to lean out from a position lying on the walkway, in order to look behind the flange, although he was not asked to say whether his attitude would have been different with the use of a safety harness. Mr Cheney also said that he would not lie on a walkway and put his head outside the balustrade using an inspection mirror. But again as I understood that evidence it did not assume the use of a harness.

[316] Krupp's previous inspector, Mr Schander, was described by the defendants as one of the most experienced inspectors ever to have practised in this field. According to his witness statement his practice on the BWE was as follows:**

"54. No one from Utah BHP ever asked me to pay any particular attention to the tower or the flanges on the tower nor anyone from ThyssenKrupp or O&K Germany. I would inspect from the walkways or possibly leave the walkways and improvise a little. There was a possibility that one could use a safety rope and improvise to some degree. So you could get a metre or 2 metres away from the walkway if one wanted to look down the corner for example. You would lean over the handrail with a safety rope attached.

1. That would only be done if there was down time with the machinery. I always specified that I needed a certain number of days downtime and so many other days for inspection during operation. I never had any problems with the machine being stood down for that part. Additionally I sometimes make use of a short ladder where there is ease of access to a certain point simply by climbing up. I always adopted that practice in inspecting the tower of any BWE. I did not use binoculars for my inspections at Goonyella."

**[317] Mr Schander also said that he "did not climb through the tower or access the upper stiffener area either with or without a harness and it would have been both unsafe and impossible for me to do so." But that is not the exercise which I have described. The extracts which I have set out show that Mr Schander felt safe enough using a safety rope "to improvise to some degree", such as by leaning over the handrail or leaving the walkways for a metre or two.

[318] Mr Newnham said that harnesses "have been used fairly frequently now to access areas off walkways" compared with his earlier experience where there were less safe practices of leaving walkways without a harness. He said that**

"that doesn't necessarily mean that everybody else does it, but I have a harness which will hook on to a walkway. So if I want to go over a handrail and inspect something over there, I can do that safely."

**Looking at the model of the tower, he said that he would not have been prepared to leave the walkway with a harness and walk along a horizontal bracket which extended from the tower and supported the walkway. But his evidence as to his confidence in the use of harness is relevant for what is now being considered, which is an inspector who is still on the walkway.

[319] Looking at the model Mr Russell said that**

"one would get a fairly clear view of the edge of the flange in the vicinity of the top termination of the stiffener, that is the side part of the flange",

**from a position lying on the walkway. He would not have been prepared to lean out and support himself on the bracket which supported the walkways. He was not asked whether the rear side of the flange in the area of the top of the stiffener could have been seen from that position. Nor was he asked whether it could have been seen from the position with the aid of a mirror. But significantly he expressed no reservation about lying on the walkway, even without a safety harness.

[320] I am satisfied that the critical area could have been safely inspected with a mirror by an inspector lying or kneeling on the walkway and secured by a safety harness. It follows that at least for this reason, Krupp breached the contract, even if Mr Thiel was to keep to the walkways.

[321] Mr Haberler said in crossexamination that if an inspector has to move outside the walkways, scaffolding is one means and a cherry picker is "a good one" which he used extensively. Whilst he agreed that there were some cherry pickers which could be used at this height, his view was that the inspector would be "better off with a crane lift" by which he meant "a manbox and a crane". This is a box suspended from a crane in which "one is lowered from the top down into the area of investigation".

[322] Mr Thiel's evidence on the use of cranes or cherry pickers was inconsistent. In his witness statement signed in March 2007 he said:**

"It was my practice, when conducting structural inspections, unless specifically directed otherwise by the client, to use the following methodology: ...

(b) My observations, especially in elevated areas, would be made from designated walkways. I would only call for special equipment, such as a crane or cherrypicker, to inspect particular inaccessible or unobservable parts of the machine structure if there was a specific reason to do so and it was shown to be safe and legal to do so. Such reasons might include the presence of rust, peeling paint, deformation or other damage to a particular area. A man boat had never been required for such areas."

**However in his further statement signed in September 2007, he said that he had never used such equipment or seen other inspectors using it, which he repeated in oral evidence. The more recent version is more likely to be true, because it provides something of an explanation, but not an excuse, for his not asking for such equipment to be made available.

[323] In crossexamination Mr Thiel asserted that an inspector using a manboat would not have been close enough to the top of the stiffener to get a reliable view. Had he used a manboat, Mr Thiel said it would have been lowered behind the rear side of the main tower and he said that he would have been no closer than "three or three and a half metres". With the benefit of the scale model, it appears that the distance would have been more than that, perhaps about six metres. But Mr Thiel could have used the binoculars which he said he carried in his inspector's bag. As mentioned, he had used these binoculars to look some eight metres up the tower from the bottom of the stiffeners. From a manboat he would have had a direct line of sight and he would have been looking at the critical area from the same height. A cherry picker would have provided him with yet a better view because it could have moved him sideways from the rear of the tower closer to the stiffener. I infer that this would have brought him at least two metres closer and perhaps Mr Thiel had this position in mind when he gave his estimate of three or three and a half metres.

[324] Had Mr Thiel told BHP that it was necessary to have a manboat or a cherry picker to view parts of the load bearing structure, and in particular the welds at the tops of the two inside stiffeners on the front side of the tower, it is more probable than not that BHP would have provided one or other device. The submissions for the defendants were critical of Mr Grant for not offering things such as a harness or a manboat but they do not seem to challenge his evidence that these things would have been provided had Mr Thiel asked for them. A crane and manboat were provided to Mr Russell for an inspection of part of the BWE which he undertook in August 1999.

[325] Mr Patroni is a former employee of the mine. He left in January 2000 and had no involvement with the BWE system after early 1999. But during the 1996 inspection he was Mr Grant's supervisor and he was then responsible for overseeing all aspects of the maintenance and operation of the BWE system. He says that if a crane had been needed, it would have been arranged, together with a dogman and a crane operator.

[326] As several witnesses say, the use of a cherry picker or manboat would have required some organisation. Mr Patroni said that it could not have been provided on the day it was requested. But there seems to be no suggestion that after some planning, a cherry picker or manboat could not have been used and safely. Several witnesses said that a "risk assessment" would have been necessary but not that these things would have been unsafe.

[327] So had Mr Thiel not been able to see the end of this stiffener otherwise, he should have requested a cherry picker or manboat, again because the contract required Krupp to inspect the entire structure. And as to the implied contractual duty to take care, Mr Thiel should have known that an inspection could have revealed cracking even from three to six metres away.

[328] The plaintiffs' argument that Mr Thiel could have used an extension ladder to climb from the counterweight boom is less persuasive. Mr Schander said it would have been impossible to use a ladder to inspect the stiffener ends because of the required length of the ladder and the difficulty of securing it. Mr Schander was not challenged about that. Mr Thiel said in crossexamination that "maybe a means (of securing the ladder) would have been found" and that "probably" he and Mr Grant could have found a safe way to secure it. Mr Haberler said no more than a general comment that an extension ladder can be used in some cases if it is properly secured. There was no evidence called by the plaintiffs to explain how an extension ladder could have been secured and how it would have been reasonably safe for an inspector to have climbed a ladder of at least eight metres in height, without any protective railings behind him. Despite Mr Thiel's concession, I am not satisfied that the extension ladder would have been a reasonably safe alternative.

[329] Undoubtedly, scaffolding could have been erected in a way which enabled Mr Thiel to see this area at close range.

[330] The defendants complain that there is no pleaded case that a gantry or scaffold should have been requested by Mr Thiel. I accept that this explains why these matters were not explored with many relevant witnesses, although by the time Mr Thiel gave evidence, the scaffold argument must have been anticipated because he addressed it in his evidenceinchief, when he said that he had not used scaffolding or seen it used by other inspectors, although he agreed that it could have been built.

[331] Mr Habeler has used scaffolding on inspections, although the defendants say for an "engineering audit or inspection" and not a "general condition inspection", a distinction of little moment in the context of this contract.

[332] The defendants argue that having regard to the time and cost likely to have been involved, it is improbable that BHP would have built scaffolding had Mr Thiel requested it. Mr Haberler said that the use of scaffolding would take a machine out of operation for three or four days in "complex areas". I accept that BHP would not have built scaffolding if there was another means of inspecting the critical area. So BHP would not have erected scaffolding without first providing Mr Thiel with the use of a manboat or cherry picker.

[333] As I have found, BHP would have provided a manboat or cherry picket if requested. Had this occurred, and had Mr Thiel seen some indication of cracking in the critical area (such as rust marks) but not been able to properly diagnose the problem in order to provide the required advice about its repair, then the contract effectively obliged Krupp to use scaffolding, unless BHP declined to erect it. More likely than not, in those circumstances BHP would have erected the scaffolding. The reason is that this would have been the sensible course. This was a machine which had been continuously used by the mine for many years, and at this time it was proposed that its output would be increased. And after all, BHP had requested this inspection for which it was paying at least $27,000, and from which it was to be given professional advice as to any required repairs. Faced with a request for scaffolding, to more closely inspect signs of fatigue cracking on the tension side of the main load carrying structure, it would have been irrational for BHP to have refused it.

[334] It follows that Krupp breached its contract because it did not inspect the entire primary load carrying structure and in particular the critical area. It was obliged by an express term to inspect all of the structure, subject to the necessarily implied qualifications that it would be reasonably safe to do so and that BHP had provided the necessary equipment. It was for the inspector to request what equipment he required. Because he failed to require the necessary equipment which would have provided him with a means of inspecting this part of the structure with reasonable safety, Krupp cannot claim that it was relieved of its obligation to inspect the entire structure. It is no answer for Krupp to say that the use of such equipment was not specifically proposed by BHP.

[335] Its services were not rendered with due care and skill, contrary to the warranty implied by s 74(1), because Mr Thiel knew that he had not inspected or indeed seen part of the structure which he knew should be inspected. His attempt to look at the critical area from eight metres below on the counterweight boom platform did not constitute an inspection of that area. He had no good reason to believe that he should stay on the walkways rather than requiring a harness and (if necessary) a manboat or cherry picker.

[336] The report was signed by Mr Thiel and commenced with this executive summary:**

"The accompanying report is in response to the BHP Coal Pty Ltd, Goonyella Riverside Mine order for Krupp Engineering (Australia) Pty Ltd to carry out an independent inspection of Excavator 1367.

This report lists the major and medium defects found, together with recommended remedial measures required. Very minor defects have not been commented on as this would not be of any assistance.

Defects reported in the 1996 report that have not been repaired are listed under 1.4 Inspection Report 1996 and have not been detailed again in this report.

In our opinion, the Excavator does not have any major defects which would prevent the operation of the machine."

**[337] Section 2.1 of the report contained four pages containing a description with drawings and photographs of a buckled web plate on the right hand tower and near the counterweight boom. This was the only fault found in the tower.

[338] Krupp was obliged to report on the inspection required by the contract, which was an inspection of the entire structure. Krupp's report was of an inspection of part of the structure. Thus Krupp failed to provide the report which the contract required. Further, the report was in breach of the term implied by s 74. Again, Mr Thiel knew that he had not inspected part of the main load carrying structure which ought to have been inspected. He should have known that his report would convey the impression that he had inspected the entire structure. If he had not inspected the critical area, reasonable care required him to say so in his report, because otherwise there was at least a risk that the reader would understand that he had inspected it and that it contained no visible defect.

[339] The defendants argue that the reader, and in particular Mr Grant, must have known that the whole structure had not been inspected so there was no need for that to be said in the report. As I have found, Mr Grant and more generally BHP did not know that fact. And Mr Thiel had no good reason to think that it was so. Mr Thiel could not have reasonably assumed that Mr Grant or BHP knew what was visible from the walkways, or that Mr Thiel had not used an inspection mirror. So the fact that some important part of the structure had not been inspected was not so obvious that it went without saying.

[340] The plaintiffs plead that Krupp and Mr Thiel owed a duty to them "to exercise a level of skill and care:

• reasonably to be expected of those [defendants];

• alternatively, reasonably to be expected of a competent structural engineer with expertise in the field of inspecting bucketwheel excavators."

[341] In substance there appears to be no difference between those two alleged duties, or between them and Krupp's contractual duty of due care and skill from the warranty implied by s 74(1). The defendants did not argue that no concurrent duty of care was owed by Krupp. Nor did they argue that no duty of care was owed by Mr Thiel to the then owners.

[342] It follows that Krupp was negligent in the respects in which its inspection and report were in breach of the term implied by s 74(1). As against Krupp, the negligence case seems to add nothing to the contract case. It was the contract which defined what Krupp had to do, and with reasonable care and skill. If a concurrent common law duty of care was owed, it is difficult to see how it could have affected the scope of what Krupp had to do. Much of the evidence and some of the arguments on the inspection case seemed at times to ignore the contract. It is not to the point to look at what inspectors, under different contracts and in some cases, under different laws, consider to be "prudent inspection practices" unless this can be related to the specific requirements of this contract. Evidence of inspection practices was potentially relevant to what could or could not have been done to inspect the critical area. But reference to the practices of other inspectors cannot affect the scope of the duties owned by Krupp here, according to the unambiguous terms of the scope document. And it was not Krupp's pleaded case that the terms of the contract had some particular meaning, from accepted inspection practices, which was different from their ordinary meaning.

[343] Mr Thiel's position, of course, must be considered separately.

[344] The content of Mr Thiel's duty of care was affected by the contract, although he was not a party to it. Mr Thiel may not have understood the extent of Krupp's obligations. As it happened, he had signed one of the faxes to BHP which had enclosed the scope document. He said he did not recall whether he read the enclosures or simply signed the document. I am not prepared to infer that he read and understood the scope document. But if he did not, he ought to have read it, because it defined clearly and concisely, the work he was to do on Krupp's behalf.

[345] Mr Thiel knew that he had not inspected the critical area. He well knew that whatever view he had gained from looking up from the discharge boom was inadequate to provide any basis for an opinion. He understood that the critical area was something which should be inspected and in particular that there were welds there.

[346] I do not accept that he thought he was bound to keep to the walkways. In one of his statements tendered in chief[67] he said: "I understood that I was entitled under the contract that we had with the mine operator to request that I be provided with a manboat". In his oral evidence he said that he understood that the inspection contract contained conditions to the effect of 4 and 8. Yet he says that he was told by Mr Reiter, and later by Mr Grant, to stay on the walkways. I have discussed already the incident with Mr Grant upon which he relies. That could not have provided any reasonable basis for thinking that he should not request such equipment as was necessary for him to inspect from outside the walkways. It is unlikely that he believed that to be the case. Nor do I accept that he went to the site in 1999 believing, as a result of something Mr Reiter had said, that he was not to leave the walkways although the contract entitled him to request the necessary equipment. It is unlikely that Mr Reiter would give such an instruction to Mr Thiel, which was inconsistent with the contract and which Mr Reiter had not discussed with Mr Grant or anyone else at BHP. And the necessary equipment was to be provided by BHP at its cost according to the relevant conditions of the scope document.

[347] It was not his practice to use an inspection mirror. But many inspectors do use such mirrors. Whether reasonable care requires their use depends upon the circumstances of a particular case. As I have found, an inspection mirror, at least if used by an inspector wearing a harness, would have provided a ready means of inspection of the critical area.

[348] In my conclusion, he failed to exercise reasonable care by not following any of the courses which I have said would have provided him with a sufficient vantage point for inspection of the critical area. The foreseeable consequences of an undetected fatigue crack were very serious and the taking of one or more of these steps to endeavour to inspect the area would not have occasioned any expense to his employer.

[349] As he had not inspected the entire structure, there was no reasonable basis for the opinion which he expressed. Objectively his report conveyed the opinion that from a visual inspection of the entire structure only the things specified in the report required attention. He may have understood that the report did not convey that opinion or represent that he had inspected everything. But the reasonable engineer would not have written in these terms. If he had not inspected the entire structure, reasonable care required that he express that in his report. He ought not to have thought that his report would be understood as referring only to what he had inspected rather than the entirety of the structure.

[350] In my conclusion, he breached his duty of care.

[351] The report represented that there had been an independent inspection of the BWE. In context it was a representation that the inspection had included a structural inspection of the entire primary load carrying structure including all welds on that structure. That was not true because not all of the structure had been inspected.

[352] The defendants say that it was not misleading and deceptive, or likely to mislead and deceive, because of what Mr Grant knew. BHP, and in particular Mr Grant, must be taken to have known that Mr Thiel had not used any equipment such as a harness, a manboat and crane or a cherry picker because BHP had not been asked to make it available. But as already discussed, BHP, and specifically Mr Grant, did not know that Mr Thiel had been unable to inspect the critical area by standing on the nearby walkway. According to my findings of what was known and not known by Mr Grant, there was nothing to qualify the effect of what was represented by the inspection report. I accept Mr Grant's evidence that he expected and assumed that Mr Thiel would and had inspected the entire structure. The contents of his report contributed to that assumption.

[353] The report also contained an express statement of an opinion, which was that the BWE did not have any major defects which would prevent the operation of the machine. That statement is relevant to the representation that the entire structure had been inspected because it would fortify the impression of the reader that the whole had been inspected. Further, this express statement was misleading and deceptive, because, in the circumstances, it impliedly represented that there was a reasonable basis for that opinion. It was not a representation of fact that there were no such defects. But it was a representation that the defendants held the opinion that there were no major defects, and that this was a considered professional opinion which had been reached in a reasonable way. Because Mr Thiel had not inspected the critical area, and insofar as he had seen any of it, he had been unable to make any reliable assessment about defects, there was no reasonable basis for this opinion. For this reason also the report contravened s 52.

[354] The defendants submitted that "there may be cases in which a provision of an opinion may convey a representation that the opinion is based on reasonable grounds but there is no basis for such a conclusion here". In my conclusion, the expression of this opinion in the circumstances, did convey a representation that it had a reasonable basis. After all, Krupp was engaged as an independent professional adviser with a vast experience in machinery of this kind and in particular bucket wheel excavators. It is nonsensical to treat Mr Thiel's statement of opinion as simply a representation of what he thought, without any indication that the opinion was worth anything.

[355] Of course, this question of reasonable basis does not arise in relation to the representation that the entire structure had been inspected. That was a misrepresentation of fact.

[356] I should note that there was no submission that if cl 12 of the Service Condition was a term of the contract for the inspection, it affected the plaintiffs' rights against Krupp under s 82 of the Trade Practices Act for a report in contravention of s 52, or against Mr Thiel in any respect.

Section 52 and Mr Thiel

[357] The plaintiffs claim damages pursuant to s 82 of the Trade Practices Act against both Krupp and Mr Thiel. He is alleged to be a person who was involved in the contravention (by Krupp) and thereby liable for it.

[358] The plaintiffs plead that he was "knowingly concerned in or a party to" Krupp's contravention and thereby rely upon s 75B(1)(c). They plead that this follows from matters earlier pleaded within a certain three paragraphs of the statement of claim. The first of those simply pleads the price of the inspection and report, a matter of relevance to the implication of the s 74 warranty but of no relevance to this point. The second is the paragraph alleging that Mr Thiel did not inspect the critical area. The third is the paragraph alleging that Krupp and Mr Thiel breached common law duties of care in the inspection and report, and in particular by a failure to inform the plaintiffs that the purported inspection was incomplete and inadequate to detect the presence of fatigue cracking. In none of these paragraphs was there any allegation about Mr Thiel's state of mind.

[359] The written submissions for the plaintiffs upon this claim against Mr Thiel are simply in these terms:**

"444 Mr Thiel knew what was expected by the contract and knew that he had not done it. He knew that when the report said that there were no defects, that he had not in fact inspected at least the critical area in question.

1. He had the requisite knowledge of the elements of the contravention such as to satisfy (s 75B)."

[360] In Yorke v Lucas[68] Mason ACJ, Wilson, Deane and Dawson JJ said of subparagraph (c) of s 75B(1)[69]:

"There can be no question that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention."

**The plaintiffs do not plead, as they should have pleaded, that Mr Thiel knew of the necessary elements of Krupp's contravention and, if they proposed to prove that knowledge by inference, the facts from which that knowledge is to be inferred[70]. The plaintiffs argue that his knowledge was sufficient, because he knew what the contract required, what he had and had not inspected and what he had written in his report. The second and third of those matters are established. The first is not established and in any case, knowledge of that would not be sufficient. The plaintiffs must prove that he knew that his report conveyed the relevant representations and that they were misrepresentations.

[361] The report represented that the entire structure had been inspected because that is what the contract had required. Absent that requirement, the case that the report contained that representation would not be as strong. I am not prepared to infer that Mr Thiel understood that his report contained that representation when it is not established that he understood what the contract required. Of course he knew what he had written, but that is not to say that he knew of the fact that it contained that representation. Nor is it established that Mr Thiel knew that he had not exercised reasonable skill and care, so that it is not established that he knew it had misrepresented that matter. Accordingly, the plaintiffs have not proved that he was aware of the elements of Krupp's contravention of s 52. He is not liable under the Act.

[362] In broad terms, there are two questions here. The first involves the likely size and location of the crack in March 1999. The second is whether such a crack would have been seen had Mr Thiel inspected that part of the tower.

[363] This question occupied much of the trial. It was the subject of complex opinion evidence, given by engineers of very high standing. For the most part, it involved the application of the science of fatigue crack growth analysis. Three of these witnesses made calculations of the likely length and location of the crack. They are Dr Jones, who was called by the plaintiffs, and Dr Maddox and Dr Potts, who were called by the defendants.

[364] Professor Fisher gave evidence going to the likely location of the crack, which whilst not involving any fatigue crack growth calculations of its location, was to the effect that the crack was further advanced in 1999 than was suggested by any of those who had made calculations. Professor Fisher did not claim to have experience or expertise in such calculations and indeed at one point he seemed to suggest that such calculations were unreliable. Professor Fisher closely examined the fractured remains of the tower and placed particular reliance upon what was revealed by his study of their surfaces. These revealed striations, which are marks on the surface not visible to the naked eye and which record the steps by which the crack had advanced. He made a qualitative judgment that probably the crack would have been through the entire thickness of the flange and apparent on the front side of the flange, i.e. the side facing Mr Thiel on the walkway.

[365] However the plaintiffs did not seek a finding to that effect. Ultimately they argued that there is a range of likely crack locations, which is effectively defined by the evidence of Dr Jones, Dr Maddox and Dr Potts, and that the crack was somewhere within that range. None of these three witnesses said that the crack would have been entirely through the thickness of the flange so that it would have appeared on the front face of the flange. Mr Thiel said that had there been a crack even halfway along the edge of the flange he believes he would have seen it and that when he was looking at the flange edge from the walkway "there was definitely nothing there". This evidence indicates at least that the crack had not reached the front of the flange. Had the crack reached the front of the flange it would have been visible not only because of its location but also because by then it would have broken the paint and had obvious corrosion.

[366] There is no dispute between these three engineers as to the path in which the crack grew. They agree that this crack began its life as two cracks: one around each corner of the top of the stiffener. They disagree as to the initiating cause of these cracks. Dr Potts and Dr Maddox (adopting the view of his colleague Mr Pargeter) said that the cause was probably hydrogen (cold) cracking. Dr Jones did not agree but said that it did not matter. All agreed that what happened after the initiation of this crack is that it grew as a result of fatigue. Its origin would not then have affected its rate of growth as a fatigue crack. But cold cracking would have made for a relatively larger initial crack, providing something of a head start, and said Dr Jones, resulting in a relatively more advanced crack as at March 1999.

[367] This pair of cracks grew in depth, from the rear or stiffener side of the flange towards the front side, and in length, along the surface of that rear side. Eventually the two cracks coalesced. The engineers agree that this occurred when the crack depth was part way through the 40mm thickness of the flange, that is, before the crack tip had reached the front side of the flange, and before the length on the surface of the rear side had reached the edge of the flange.

[368] Thereafter the crack continued to grow horizontally through the flange towards its front face, and along the rear side of the flange. Its shape was semi-eliptical. Along the rear face of the flange it grew at the same rate at each end, as those ends grew away from the stiffener. One end, of course, was growing towards the web, and the other towards the end of that side or edge of the flange. Where the rear side of the flange reached the edge, I will describe as "the corner". When the crack reached the corner, its length on the rear face of the flange was 120mm, because its middle point was half way along the top of the stiffener, which had a width of 40mm, and there was 40mm from the side of the stiffener to the edge of the flange.

[369] After then, the crack tip continued its advance through the flange towards its front side, the crack continued to grow along the rear side towards the web and at the other end, having turned the corner, it became a crack moving along the 40mm edge of the flange towards its front side. As I will discuss, there is some evidence, particularly from Dr Jones, that the crack had progressed this far by March 1999. The relevance of that would be in the possibility that the crack was evident to an inspector looking at the edge of the flange. Even from a position of standing on the relevant walkway, Mr Thiel would have had a direct line of sight to the edge of the flange. According to other evidence, the crack had not turned the corner by then, so that it would have been visible, if at all, only on the rear side of the flange.

[370] After penetrating the full thickness of the flange, the direction of its growth changed. It made a right turn and grew along the flange towards the outside of the tower. It spread towards and past the web and also branched sideways into the web.

[371] His approach was to apportion the crack growth over the life of the stiffener, which was 15.3 years, to the period prior to the 1999 inspection (14.3 years) and the period after it (1 year). He assumed that the crack length at the commencement of the life of the stiffener was nothing or effectively nothing. And the point to which the crack had grown by the time of the collapse of the BWE is known. So that there is a length of crack growth which he was able to apportion in order to find its location in March 1999. He assumed that the machine had been operated in effectively the same way throughout those 15.3 years so that there was a uniform imposition of load cycles and stresses. On that assumption it was unnecessary for him to arrive at figures which were in fact the stresses which would have resulted from the operation of the BWE, and in particular what are called stress cycles and the stress intensity range. Whatever had been the number of stress cycles over the 15.3 years were effectively apportioned as a result of his calculations.

[372] The apportionment exercise was not simply a matter of taking the total crack growth and multiplying it by 14.3 over 15.3 (years). The rate of crack growth varies over time, even assuming that the loads and stresses to which the structure is subjected are uniform. The crack itself has a stress raising effect: the stresses are intensified at and near the tip of a crack. The extent to which this occurs is a function of the length of the crack. The further the crack grows, the more the stresses are intensified and accordingly, the faster is the crack growth at any point. So as each of Dr Jones, Dr Maddox and Dr Potts agree, the rate of growth was very much higher late in the life of the crack and most of the crack growth occurred after Krupp's 1999 inspection.

[373] As discussed in the design case, the tower of the BWE was subjected to considerable stress from its operations. As also discussed, the more modern standards or codes recognise that the relevant measure of stress is the range of stress, that is to say the difference between maximum and minimum stress. It is that alternation between high and low stress which contributes to fatigue crack growth. These events of alternating high and low stress are called stress cycles, and in the day to day operation of the BWE they occurred very often. For example, Dr Jones calculated a total of 11.2 million stress cycles over the 15.3 years in question.

[374] A widely used measure for calculating the rate of crack growth is the

Paris-Erdogan Law. It calculates the crack growth rate according to a stress intensity range together with two constants. The stress intensity range is effectively a function of the stress range, the difference between maximum and minimum stress and the length of the crack. The constants are derived from databases based upon the results of laboratory fatigue tests. There are several sources from which different figures for those constants can be derived, as appears from Dr Potts' first report, and each of the engineers who undertook these calculations adopted different figures for them.

[375] The Paris-Erdogan crack growth equation permits a calculation of the incremental crack growth per cycle. Proceeding from the premises of certain crack growths at certain locations of the flange, Dr Jones was able to calculate, by using the equation to work backwards, the number of cycles which would have produced that amount of growth. That first required a calculation of a crack growth rate, which was different according to what was its then size and location. So he divided the growth of this crack from its commencement to its ultimate position (upon collapse) into five stages. Three were within the phase when it was a semi-elliptical crack growing through the thickness of the flange. Two were when it was a crack advancing along the length of the flange in the direction of the outside of the tower. In the first phase the crack depth grew from 0 to 4mm, in the second from 4 to 13mm and in the third from 13 to 40mm (the thickness of the flange). Once the crack was through the flange, and it had thereby changed direction as it advanced towards the outside of the tower, its depth was measured by the distance between the inside edge of the flange and the crack tip. As it began this advance, that distance was 130mm according to Dr Jones. So his fourth phase was from a crack depth of 130mm growing to 260mm. His fifth and last phase was from 260mm to 340mm which is where the crack was when the BWE collapsed. He calculated for each stage the number of cycles which had caused that defined amount of crack growth. Those calculations gave him what he described as his time-line. On the assumption that the incidence of stress cycles was effectively uniform throughout the life of the BWE, he was then able to apportion those cycles between the period to the March 1999 inspection and the period after it. Then on the basis of his calculations of the number of load cycles in those stages, he was able to calculate the crack depth at various times but most importantly as at March 1999.

[376] He calculated that as at 24 March 1999, the crack had a depth of 28mm and a surface length along the rear face of the flange of 112mm. But his opinion was that the surface length of the crack must have been somewhat longer than he had calculated. He reached that opinion by reference to what are called beach marks. These are marks left behind on the surfaces of the fractured remains of the tower. In his first report Dr Jones worked from photographs of them but subsequently he worked from an examination of the pieces themselves. These beach marks indicate the path which the crack took as it grew. Importantly, they also indicate the shape of the crack. So when the crack was the semielliptical crack progressing through the thickness of the flange, it made beach marks which show certain surface lengths at certain crack depths. The standard crack growth calculation is a calculation of the growth in crack depth (called a), which in this case is relevantly the depth of the semi-elliptical crack through the flange. As Dr Jones explained, his calculations of the crack surface length for a certain crack depth resulted in an understatement. This was because the shape of the crack, as evidenced by the beach marks, was different from that which was the basis for his calculations of the surface length corresponding to a certain crack depth. So he revised his opinion about the surface crack length by reference to what the beach marks showed for his calculated crack depth of 28mm. In consequence he thought that the surface crack length was 125mm in March 1999, so that the crack had turned the corner and was progressing along the edge of the flange. In the same way he assessed its length along that edge at 15mm.

[377] In a later report, Dr Jones revised these calculations, not for any reason of principle, but because of an algebraic error which he had discovered. His revised calculations resulted in a calculated crack depth at 14.3 years of 31mm and a calculated crack surface length of 118mm. But again by reference to the beach marks, the surface crack length corresponding to that depth was assessed as 127mm and the crack had progressed along the edge of the flange, not by 15mm but by 28mm.

[378] At the same time he calculated the depth and length upon alternative hypotheses involving cold cracking and drop cutting. On the hypothesis that the crack began as a 2mm cold crack, its calculated depth at March 1999 was 33mm, its calculated surface length was 121mm and its "observed" length (i.e. its length by reference to the beach marks) was 128mm on the rear side of the flange with a length along its edge of 32mm. On the hypothesis of an activity known as "drop cutting" occurring, but only within the final year of operation (as Dr Potts had hypothesised), the numbers were reduced but only slightly. The calculated crack depth became 29mm, the calculated crack length 114mm, the observed crack length 125mm and the length along the flange edge became 22mm. Dr Jones' use of the beach marks to revise his calculations of crack length from a certain crack depth was persuasive. According to Dr Jones' evidence then, the crack had turned the corner and was at least half way along the edge of the flange.

[379] Dr Maddox had the same approach as Dr Jones, which was to apportion a certain crack growth to the periods before and after the inspection. In his first report he undertook six alternative fracture mechanics growth calculations.

[380] The first assumed that the crack grew from something which was "nominally defectfree". He said that:**

"as is well established ... even defectfree welds in steel contain minute flaws at the weld toe and these provide the sites for fatigue crack initiation. They are a consequence of welding and range in depth up to 0.4mm, with an average (based on the rather limited data available) of 0.15mm. Such inherent flaws are not detectable and therefore it is necessary to assume their size in fracture mechanics calculation. For the purpose of the present analysis, an initial depth of 0.15mm with a surface length of 2c = 0.5mm was assumed."

**As Dr Maddox thereby explained, this fatigue cracking need not have resulted from an initial defect in the stiffener weld, although his opinion, based upon the work of his colleague Mr Pargeter (who gave evidence to this effect), was that this crack began as a cold crack.

[381] For this first case he assumed a nominal stress range[71] of 40N/mm2, equivalent to 40MPa compared with Dr Jones' assumed 50MPa. And Dr Maddox explained a difference in what are called the stress intensity factors assumed in their respective calculations. The stress intensity factor is a parameter which quantifies the stress intensity in the region of the crack tip which is a function of the applied stress and the crack length. In turn the stress intensity range, used in the Paris-Erdogan Law, is a function of the stress intensity factor. Dr Jones used a technique which I will describe as the Taylor technique to meet the difficulty in calculating a reliable stress intensity factor for the early period when the crack has not grown far from the initiation site. To meet that difficulty, Dr Maddox used what he described as established solutions which he derived from a British Standard BS 7910. As I will discuss, another engineer called by the defendants, Dr Munz, was particularly critical of Dr Jones' use of the Taylor technique. It is unnecessary to discuss other differences between the Jones and Maddox calculations, only some of which result in differences in the calculated results which are potentially significant.

[382] Dr Maddox said that he was more closely following available experimental data and it was ultimately submitted by the defendants that Dr Maddox had applied "accepted fracture mechanics principles" from which Dr Jones, it was said, had departed.

[383] The results of the Maddox calculation for this "base case" of a defectfree weld with an applied stress of 40MPa was that in March 1999, the crack depth was 15mm and the surface length was 103mm.

[384] His second calculation was upon the same assumed applied stress but with an initiating defect (from cold cracking) of 1mm x 10mm. This resulted in a crack depth of 29mm and a surface length of 122mm. The same figures were said to come from a third calculation which was the same as the second but with the initiating crack being 2mm rather than 1mm.

[385] The three other calculations were on the premise of there having been

"drop cutting" in the final year of operation, for which there were certain assumptions as to the number of cycles and their MPa, amongst another number of the cycles from the BWE's other operations, and an assumed applied stress of 40MPa. Under the first of these "drop cut alternatives", the weld was assumed to be defectfree and the results were a depth of 15mm and a surface length of 103mm. Under the second, a 1mm initiating crack was assumed resulting in a depth of 29mm and a length of 122mm. Under the third, the initiating crack was assumed to be 2mm, resulting in a depth of 30mm and a surface length of 125mm. Drop cutting is a type of operation of the BWE which is described below[72] in relation to allegations of contributory negligence. It is said to have placed especially high stresses upon the tower and contributed to fatigue. Upon one of the defendants' arguments, its practice was particularly heavy in the last year of the BWE's life.

[386] In his second report[73] Dr Maddox revised those calculations. This involved some concession of the correctness of Dr Jones' approach to an issue concerning the stress concentration effect of the stiffener, although Dr Maddox remained of the view that Dr Jones had underestimated that matter. And as he there detailed, there continued to be some differences between them as to how these calculations should be made. Dr Jones had been critical of his first set of calculations because they did not accord with the shape of the growing crack as indicated by the beach marks. Dr Maddox said that his revised calculations "very closely" matched the beach marks.

[387] Yet he agreed that the calculated lengths could be adjusted to accord with the shapes demonstrated by the beach marks, and he explained that the calculations would tend to underestimate the surface length "since one side of the crack is close to or at the flange edge and ... this is not taken into account in the assumed stress intensity factor solution". He concluded that "overall the agreement between calculated and actual crack sizes add support to the present analysis".

[388] His recalculations involved the same six alternatives. The defectfree weld had a depth of 22mm and a length of 95mm and the same result with drop cutting. The calculations for a 1mm initial crack resulted, in each case, in a depth of 23mm and a length of 96mm. Those for a 2mm initial crack resulted in a depth of 26mm and a surface length of 98mm.

[389] There appears to be an error here in that the calculations result in the same crack sizes with or without drop cutting. Yet as Dr Maddox explained in the text of each report, if there had been drop cutting but only in the final year, the crack size at the commencement of that year would have been less than with no drop cutting (because the crack growth in the last year would have been higher). The level of drop cutting assumed for his second report was greater than that for his first, and there were other differences in the calculations as Dr Maddox explained in his second report. It is surprising that his calculated depth and length should be the same with or without an assumption of drop cutting only in the last year.

[390] But as I find below, there was no significant difference between the incidence of drop cutting before and after the 1999 inspection, so that calculations such as these which are upon the premise of this significant drop cutting only within the last year are not so relevant. More generally, the assumption that the manner and extent of the operations of the BWE over the 15.3 years was consistent is reasonable.

[391] There was effectively no exploration of these calculations in the crossexamination of Dr Maddox, no doubt because by then the plaintiffs were content to rely upon them as part of the proof of their case of the likely range of crack sizes. I do not see any basis for questioning Dr Maddox' figures under the "no drop cutting" calculations. Because drop cutting was not limited to the last year of operations, its incidence does not affect the "time line" method which underlies the calculations of both Dr Maddox and Dr Jones.

[392] In his second report, Dr Maddox then compared those calculated sizes with the beach marks. For his first case, the beach marks indicated that for the crack depth of 22mm the actual surface length was 108mm. The next beach mark was at a crack depth of 31mm (giving a surface length of 128mm). Thus from his report, it can be inferred that if there was a cold crack of 1mm or 2mm, with a calculated depth of 23 or 26mm, the actual surface length would have been a little longer than 108mm but perhaps not as long as 120mm.

[393] Dr Potts had quite a different approach from the "timeline" approach of Dr Jones and Dr Maddox. Instead of apportioning a certain amount of crack growth to a certain time period, he calculated the crack growth over that time period. He calculated backwards from the position of the crack at 15.3 years, by using the standard crack growth rate equation with certain alternatives for the appropriate stress range, the number of cycles and the crack growth relation factor. This meant that he was not concerned with the rate of growth before March 1999 and did not have to meet the difficulties addressed by Dr Jones and Dr Maddox in calculating the rate of growth when the crack was very small. But necessarily the results of his calculations are a function of his assumptions and opinions about cycles and stress range.

[394] His initial calculations involved some eight different calculations but effectively four different factual scenarios. The differences in the factual scenarios are in the assumed number of slews per terrace and the amount of operational uptime, which is the percentage of any given time for which the BWE was actually digging. Later in relation to drop cutting as alleged contributory negligence, I discuss the methods of excavation used in the operation of the BWE. Although the use of the BWE was much the same from year to year, some drivers had different practices from others in some ways. There are other variables, such as the relative hardness of the material. Recognising that, Dr Potts chose alternatives according to the number of slews per terrace. The bucket wheel was slewed as it cut into the face of the overburden, and it progressed by cutting the overburden in terraces. Before going to those alternatives and the calculations for them, it should be noted that there are several assumptions common to all scenarios. One is that drop cutting commenced from 14.3 years and particular assumptions were then made as to the incidence of that drop cutting.

[395] Scenario number one involved 24 slews per terrace and an uptime of 45 percent. This calculation used mean crack growth parameters, or what is called the "mean line" of an SN graph. SN graphs plot the endurance or life of a structure against a stress range. Scenario number two involved no difference to the assumed facts but the calculation by Dr Potts was based on the so called "design line" of the SN graph. The mean SN curves represent the fatigue test data obtained from experiments without any added safety margin, or in other words the mean life expected at different levels of stress, those levels being measured by the stress range (the difference between maximum and minimum stress). The design SN curves are lower in terms of stress range for a given life, so that in practice designers can avoid failures by designing conservatively.

[396] Dr Potts was not challenged for using the mean SN curves but the plaintiffs say that it was inappropriate to alternatively use the design SN curves. It appears that Dr Potts presented these alternative calculations based on the design curve in order to represent what he described as the "lower bound" of the scatter. However the use of parameters from the design SN curve would misrepresent a realistic range. The mean SN curve informs of the mean life from a certain stress range: that there is a 50 per cent probability of survival to that life. The design curve shows the (lower) life for which there is about a 97 per cent probability of survival at that stress range[74]. Therefore, the design curve results in parameters according to which the structure is treated as very much weaker, so that the crack growth rate is very much faster. Working back from the crack size at the collapse, the calculated growth in the final year would be much higher, and the size of the crack at March 1999, much lower. When challenged in crossexamination, Dr Potts said that "you might expect that the mean value is the more probable, but it doesn't preclude that within the scatter band that the others could occur". Of course where this BWE actually was within that scatter could never be discovered. But in determining where this crack was most likely to have been in March 1999, it is logical to calculate by reference to the mean SN curve rather than the design curve.

[397] The third scenario was for 24 slews per terrace but with 60 percent uptime, the fifth scenario for 8 slews per terrace with 45 percent uptime and the seventh scenario for 8 slews with 60 percent uptime. Each of those calculations was on the mean SN curve. Scenarios four, six and eight corresponded respectively with three, five and seven but were calculations on the design SN curve. The results ranged from a crack depth of 7.8mm and surface length of 18.2mm for scenario four to a depth of 37mm and surface length of 129mm for scenario five. The lowest involving the mean SN curve was scenario three with a depth of 21mm and a surface length of 108.6mm.

[398] In his report number eight, Dr Potts revised the calculations for each of those scenarios. The lowest was still scenario four, with a depth of 19.6mm and a length of 51.6mm and the highest was scenario five with the same dimensions as previously. The lowest of the calculations using the mean SN curve was still scenario three but the result of the revised calculations was a depth of 29.8mm and a length of 119mm. The three other calculations using the mean SN curve resulted in a crack length which had the crack as having turned the corner.

[399] In that same report, Dr Potts undertook further alternative calculations. One

was to employ, as Dr Maddox had suggested, what is described as the

Hobbacher parametric solution which demonstrated that this had no impact upon Dr Potts' calculations because the impact of the Hobbacher solution is on the early stages of crack growth and Dr Potts, working backwards from the position of the crack in 2000, was not much concerned with those stages.

[400] Perhaps more relevantly, in report number 8 he made some calculations to represent the effect of small stress cycles. Professor Fisher and Dr Jones had challenged the load duty spectrum used in his earlier reports as simplistic by not taking into account small stress cycles. In essence their point was that in practice, there is a variable load spectrum involving many different stress cycles and that once there is fatigue growth from the larger cycles, there is a further contribution to fatigue growth from the smaller cycles which, operating alone, would not have had that impact. So in this report Dr Potts made some calculations which endeavoured to take into account the effect of small stress cycles. He said that because the actual magnitude of such cycles was unknown and difficult to quantify, he considered three alternatives, which were small stress cycles with stress ranges respectively of 50 per cent, 25 per cent and 10 per cent of the normal slew operational stress range. Using his scenario three, the calculations including the effect of these cycles showed that the size of the crack in 1999 reduced in its surface length from 119mm (for scenario three without small cycles) to 117.2mm (cycles of 10 per cent of normal), 111.6mm (cycles of 25 per cent of normal) or 93.4mm (cycles of 50 per cent of normal)[75].

[401] Also in his report number eight, Dr Potts looked at the effect of assuming drop cutting, but not limited to the last year of operations but instead occurring throughout the life of the machine. Again by his scenario three, and upon this alternative premise of drop cutting, nevertheless he reached the same size for the crack in 1999. (What changed was the calculated initial crack size, that is, at the commencement of the 15.3 years[76].)

[402] In his report number 12, Dr Potts made calculations of further alternatives. The first of these resulted from his correcting two errors in his previous assessments. He had assumed that the distance from the relevant stiffener to the edge of the flange was 35mm (as indicated by an O & K drawing) instead of the 40mm as built. Secondly, he had assumed that the longitudinal weld leg was 14mm whereas in fact it was 10mm. He recalculated for his scenarios four and five, which he chose because they had provided what he said were the "lower and upper bound predicted crack sizes respectively". For scenario four, the result was to increase the calculated depth from 19.6mm to 21mm and the length from 51.6mm to 101.6mm. For scenario five the result was to decrease the depth from 37mm to 35.9mm and the length from 129mm to 120.8mm. For scenario five this still involved the crack turning the corner but its length along the edge of the flange was thereby decreased from 19.6mm to 4.1mm.

[403] Also within report number 12, he revisited the effect of small stress cycles and drop cutting throughout the 15.3 years. But the small stress cycles used in these calculations were different from those assumed previously. In this report he said that in the light of his further investigations on the dynamic loading experienced by the BWE, it was more realistic to work from a certain number of small stress cycles per slew with certain stress ranges for those cycles depending upon the relative hardness of the material. As for drop cutting, Dr Potts thought that he should revise his calculations, explaining why drop cutting throughout the entire life might be a significant variation from an assumption that it occurred only in the last year. He then recalculated his scenario three to give effect to these assumptions of small stress cycles and drop cutting. The effect was to change his calculated crack depth to 21.8mm and his calculated crack length to 100.8mm.

[404] The result is that the lower bound of his calculations is scenario three with a depth of 21.8mm and a length of 100.8mm, and the upper bound is his scenario five, with a depth of 35.9mm and a length of 120.8mm. And for that crack depth of 21mm it would be appropriate to make the adjustment which Dr Jones and Dr Maddox each made to take account of what was demonstrated by the beach marks. The effect would be to increase Dr Potts' surface crack lengths. But regardless of the beach marks, it can be seen that there is a fair correlation between the results from the respective calculations of Dr Jones, Dr Maddox and Dr Potts. Of course in one sense a difference of a few millimetres in crack depth or length is substantial because at that stage of its development the crack would take some time to grow that few millimetres. But for present purposes, which is to assess whether the crack would have been visible had Mr Thiel inspected the critical area, such differences are unlikely to be significant.

[405] The defendants argue that from Dr Potts' evidence there is a prospect of a smaller crack, of a depth of 15mm. In their written argument they contend that Dr Potts' calculations:**

"arrive at a crack depth of 21mm under scenarios four and five in no.8, or two thirds (15mm) of that using their most reasonable parameters after reanalysis taking into account the adjusted weld leg dimensions, and the distance between the stiffener and the flange edge on the basis that the asinstalled stiffener was 40mm from that edge, rather than the 35mm asdesigned figure".

**But this misstates the evidence. As already discussed, in report number 12, Dr Potts recalculated his scenarios four and five to take into account those very matters, and I have set out the results of those recalculations. It is wrong to say that they result in a crack depth of 15mm. In that same submission, the defendants rely upon some oral evidence given by Dr Potts, where Dr Potts referred to his "lower bound values" as being "about a third less" than other values. But he was not saying that his 21mm calculation, or any other calculation, should in turn be reduced by a third. Instead, he was there referring to the difference between his calculations based on the mean SN curve compared with those on the design SN curve for which the difference was, for each of his scenarios, roughly onethird.

[406] Dr Dietrich Munz, who was called by the defendants, wrote two reports and gave extensive oral evidence about the calculations by Dr Jones and, to a lesser extent, the calculations by Dr Maddox and Dr Potts. Dr Munz did not offer calculations of his own as to the crack length as at March 1999. He expressed the opinion that more probably than not the crack had not reached the edge of the flange and that otherwise it is "not possible to make a reliable statement about the location of the crack at the 1999 inspection". In that last respect, his evidence effectively challenged the opinions of each of the three engineers who had made such a statement. The defendants argue that I should reject the evidence of Dr Jones but they do not make the same argument based on the evidence of Dr Munz about Dr Maddox and Dr Potts who, of course, were called in their case.

[407] Dr Munz described the two approaches taken to calculate the crack size in 1999, the first being that of Dr Jones and Dr Maddox and the other that of Dr Potts. I have described that difference already. Dr Munz explained that each approach has advantages and disadvantages.

[408] The advantages of the first approach were that it was independent of the selection of a certain stress range, the constant factor of crack growth relation or a certain number of cycles over any period. As Dr Jones explained, a change to the components of stress range and the constant factor of crack growth relation would result in his calculations producing a different number of stress cycles over the 15.3 years, but it would not affect the relativity of one period of growth to another: his time line approach. A higher or lower number of cycles overall would be apportioned in the same way.

[409] Dr Munz said that the disadvantages were that the number of cycles for crack initiation has to be known, the crack growth rate for small crack sizes cannot be properly calculated by lineal elastic fracture mechanics principles, what he described as the magnification factor has to be in some way quantified and the difficulty in quantifying a proper stress intensity factor for the crack in its various shapes as it travels through what he described as phases one and two. Dr Munz described phase one as when the crack depth was 019mm, phase two from 1940mm (i.e. until it was to front side of the flange) and phase three, the final stage, where the crack was progressing towards and past the web.

[410] He described the advantage of Dr Potts' approach as being that it is not necessary to have any information about phase one. He said that because phase one had the most uncertainties, the results from this approach should be more reliable than by the first approach. The disadvantages are that the results depend upon an assumed stress range, a number of cycles per year and an assumed crack growth relation factor.

[411] As already mentioned, the plaintiffs ultimately rely not only on Dr Jones but upon the calculations of Dr Maddox and Dr Potts. They say that the evidence of these three presents a range within which was the location of the crack. The defendants ultimately argued that "a conclusion cannot be reached on the state of the evidence as to the probable state of the crack", which appears to go past the evidence of their witnesses Dr Maddox and Dr Potts and to rely upon the evidence of Dr Munz. But I do not understand Dr Munz to have said that none of the evidence of any of these three was relevant. Instead, in providing his opinion that more likely than not the crack had not reached the flange edge, Dr Munz was making use of at least some of these calculations. That opinion was expressed in a report as follows[77]:**

"Allowing for all the incomplete information about stress intensity factors, stress cycles and cycles in one year and considering the information and calculations of the different experts I can make the following statement:

If one considers all this information in a qualitative way, the probability that the crack has extended to the edge of the flange, so that it could have been seen during the inspection in 1999, is less than 50 percent."

Similarly in his oral evidence, in answer to the question "Where was the crack at the 99 inspection?" Dr Munz said:

"First of all, I don't know exactly. However, if I consider all these unknown or not accurately enough [sic] facts such as stress intensity factor, number of cycles in one year and stress ranges, and if I take into account the calculations made by Dr Jones, by (Dr Potts), by (Dr Maddox) and my own calculations, and to take into account in a qualitative way these unknown facts, then I come to the conclusion that the probability that the crack has not penetrated the edge of the flange is less than 50 percent."

**Those calculations of his own were based upon various calculations by Dr Jones and Dr Potts. They were done to demonstrate the effect of certain variables. He did not put them forward as showing where the crack was in March 1999.

[412] Dr Munz was strongly critical of Dr Jones' work in many respects, contending that Dr Jones had made errors in principle in his calculations. He did not make the same criticism of the work of Dr Maddox or Dr Potts. Of their work, he described the limitations on the reliability of their results because of the many variables or inputs which would affect the calculated result. But he was not saying that the calculations by Dr Maddox and Dr Potts did not provide some indicative range or as Dr Potts described it, "the bounding of what the likely outcomes would be". With that observation I will discuss the evidence of Dr Munz in relation to each of Dr Jones, Dr Maddox and Dr Potts.

[413] I will start with the work of Dr Potts. As already mentioned, Dr Munz said there were disadvantages in his approach because it depended upon an assumed stress range, an assumed number of cycles per year and the adoption of a certain crack growth relation. I accept that in theory they qualify the reliability of any calculations under this approach.

[414] Dr Potts did provide alternatives as to the number of cycles, by his different scenarios. Of course there are many other alternatives which he could have adopted but Dr Munz did not suggest that those used by Dr Potts were likely to produce some misleading result. The method by which these alternative scenarios were chosen and the cycles were calculated under each of them was set out in Dr Potts' first report and appears to be thorough and persuasive (putting on one side his alternative calculations for the scenarios based upon the design SN curve). Dr Potts said of his chosen scenarios[78]:**

"Since there is no machine log detailing the exact way in which the machine was operated over its lifetime, it is prudent to assume some variability in the parameters and key assumptions used for crack growth assessments. Table 36 describes the various scenarios considered in the crack growth assessments. Bounded solutions, which take into consideration variability in the assumptions made on the operational behaviour of BWE, for both initial and likely crack sizes at the time of inspection will be presented in the ensuing section."

**In his first report, Dr Munz referred to the Potts estimate of the number of cycles, and described them as more reliable than those of Dr Jones or Professor Fisher "because they are based on the operational conditions of the excavator".

[415] In his report no 1, Dr Potts had calculated on the basis of a stress range of 40MPa for the load cycles involving changes in the stresses between slews of the bucketwheel. This was not simply an assumed figure. It was reached after extensive analysis. Dr Potts' firm had obtained a stress range by a finite element calculation and from BG 60 resulting in a stress range of 57.21MPa which was reduced to 75 percent or 43MPa by a judgment which Dr Munz described as "realistic". After further analysis, then Dr Potts settled on 40MPa and 125MPa for drop cutting. Again Dr Munz suggests no error in any of the calculations or the professional judgments which were involved in reaching those figures. Clearly, there were in his analysis instances of judgment by Dr Potts so that the precise accuracy of these figures cannot be assured.

[416] Dr Munz[79] agreed with Dr Jones that:**

"this (Potts) approach contains so many uncertainties that the results could well be in error by an order of magnitude. In practice, there are many different stress ranges and frequencies, and deriving these from the assumed duty of the BWE would be a complex task ... the only feasible way to obtain an accurate remote spectrum for the flange is to attach strain gauges to the surface, and log data over a period of time while the BWE is in operation. Even then, there are practical and theoretical difficulties in determining the average crack growth rate from a complex stress spectrum."

**[417] Dr Munz said there was a further problem with load cycles and stress ranges which he said affected the calculations of all three engineers. It was that they had not included the effect upon fatigue of smaller stress cycles. As several witnesses confirmed, the stress spectrum was complex involving many different causes of stress, each involving different stress ranges. And as Dr Munz emphasised, as did Professor Fisher and Dr Jones, these smaller stress cycles can have an impact when added to the impact of the larger load cycles although they would not have had that impact upon fatigue if operating alone. Now under the Jones/Maddox approach, Dr Munz agreed that there was an advantage in not having to assume a particular stress range. However, Dr Munz went on to say that this particular effect of smaller stress cycles occurred only in relatively larger cracks. Accordingly, because it does not have an effect over the entire "timeline", it had to be considered even under the Jones/Maddox approach.

[418] Dr Potts did allow for small stress cycles. As already discussed, he did so first in his report no 8. This was written in March 2007, after the Munz first report and before the subsequent Munz report (May 2007), wherein Dr Munz offered no criticism of Dr Potts' treatment of the effect of small cycles in report no 8. In his oral evidence he referred to what Dr Potts had said in report no 8 about small stress cycles (apparently without criticism). Then in his report no 12, Dr Potts revised his calculations for the effect of small stress cycles. He assessed the effect of

small stress cycles from vibrations, that is, from "boom resonance vibration"

caused by the oscillation of the bucket boom. So it seems that Dr Potts has met Dr Munz's concern about the inclusion of small stress cycles. I do not have the opinion of Dr Munz about the Potts report no 12, because it was written a few days after the completion of the oral testimony of Dr Munz. Presumably, the defendants tendered this evidence because it was thought to answer Dr Munz's concerns in this respect. Ultimately, what Dr Munz said about the limitations in the Potts approach by the adoption of certain stresses does not mean that the Potts' analysis provides no valuable indication of the crack sizes.

[419] Next there is the crack growth relation factor. Dr Munz is clearly correct in saying that a disadvantage of the Potts' approach is that it requires the selection of the crack growth parameters, to be used in the application of the Paris-Erdogan Law. But what is the significance of that uncertainty? In his report no 1, Dr Potts set out the results of his survey of various publications revealing a range of these ParisErdogan constants recommended for an assessment for this type of steel. Dr Munz does not suggest that the range is unrepresentative or that there are others which should have been included. Nor does he suggest that Dr Potts did not make a reasonable selection from that range. As it happened, Dr Potts' selections were the highest in that range, with the consequence that they would result in a faster crack growth rate and, on his approach of working backwards from the crack size at the collapse, a relatively smaller crack size in 1999. The range of possible crack growth parameters thereby indicate that the Potts' calculations might understate the crack size, but it does not make the calculations unreliable.

[420] In summary, I accept that there are these uncertainties in the Potts approach, but the ways in which Dr Potts addressed those matters is logical and those uncertainties do not detract rom the value of his calculations. They have probative value and are unlikely to overstate the crack size in 1999.

[421] I turn then to what Dr Munz has said of the approach of Dr Jones and Dr Maddox. In the evidence of Dr Munz, led by the defendants, he not surprisingly directed his attention to Dr Jones' work. There seemed to be no particular criticism of the Maddox calculations, except to the extent that the Jones/Maddox "timeline" approach had inherent limitations.

[422] The first of those was related to the initiation of the crack. Because a fatigue growth analysis is concerned with the growth of a crack, Dr Munz says that it does not assist with the question of how much of the 15.3 years was taken up with the initiation of the crack. If, as the defendants sought to prove, these cracks were originally cold (hydrogen cracks), then none of that 15.3 years was taken up with crack initiation. But it is unnecessary to determine whether there was cold cracking, because assuming there was none, still it would be probable that there were some small cracks from the outset, as Dr Maddox said. In crossexamination, Dr Munz was shown publications by the International Institute of Welding and by an eminent engineer in fracture mechanics, Dr Gurney[80], which were to the effect that the crack initiation phase could be ignored in fracture mechanics analysis because either the majority of fatigue cracks develop from cracks existing from the outset or because any initiation phase is very small compared to the life of the welded joint. Faced with this material, Dr Munz accepted that what he had said about the crack initiation phase would be "confined to exceptionally a small number of cases". Accordingly, it is of little weight here.

[423] The next uncertainty, said Dr Munz, was as to the crack growth rate for very small crack sizes. Dr Jones said that this difficulty could be met by a crack modelling technique described as the Taylor method. Dr Munz was strongly critical of Dr Jones in that respect. Dr Munz said that the Taylor method was not yet accepted professionally and had been published in only two papers. However during his crossexamination, it was demonstrated that it was more widely published, which he was prepared to accept. Dr Munz said also that the Taylor method is "only accurate within 20 to 30 percent", which he derived from one of the papers he had seen. When other publications were put to him in crossexamination, he effectively agreed that the 20 to 30 per cent figure was not representative of all data, but was more confined to a particular case. Also in crossexamination, he was forced to withdraw his assertion that the Taylor method "has never been applied for fatigue crack growth calculations". In his oral evidenceinchief, given by reference to what he described as his powerpoint presentation, Dr Munz had made made two further points in criticism of the use of the Taylor method. But as he conceded in crossexamination, one of those had been effectively disavowed by him in his second report, where he had said that "because it is so small ... it doesn't make sense to discuss this point further". His other point was that the Taylor method depended upon the selection of a range of distances from the point of crack initiation. But when it was suggested to him that this would not have a significant effect on the result, Dr Munz could say only this:**

"I don't know, because I didn't try out this method. But there is some arbitrary [sic] in this method and so far I could see, Taylor did not say - or give any hint where these two values (maximum and minimum distance from the point of crack initiation) should be ... and therefore, you can maybe adjust his values just to get a good agreement."

**In all, Dr Munz's criticism of the Taylor method and its use by Dr Jones was unpersuasive and has no weight.

[424] As mentioned earlier, Dr Maddox did not use the Taylor method but instead used what he described as "the established solutions available in BS 7910". He said that there was "good agreement" between these two solutions when the crack depth was very small. No particular criticism was offered by Dr Munz of Dr Maddox other than to say that there was an uncertainty involved in measuring the growth of very small cracks.

[425] Next there was the uncertainty involved in the socalled magnification factor. This involves a complication which results from the effect of the stiffener on the stress intensity range in the area in the flange close to the stiffener. In his first report, Dr Munz saw fit to plot the different magnification factors then used by Dr Jones, Dr Maddox, Professor Fisher and a line of his own. It appeared that he was there adopting a magnification factor somewhat higher than Dr Jones was then using but less than that of Dr Maddox or Professor Fisher. Then in his oral evidence he asserted that all of these lines, including his own plotted magnification factor, were wrong, because none of them had been based upon a proper understanding of the relevant stress distribution. Yet none of Dr Jones, Dr Maddox or Dr Potts had a difficulty in this respect. Each felt able to bring this magnification effect into account (although for Dr Potts the point was less important because of his different approach). I am not persuaded that this factor significantly affects the reliability of the respective calculations of Dr Jones and Dr Maddox.

[426] Then there is the Dr Munz's point that the crack changes shape before it is in his phase three, although the calculations have been made on the basis of a semielliptical shape. He pointed out that it is not semielliptical during the transition period from two cracks to one. Secondly, after the crack turned the corner and was extending along the edge of the flange but before its tip reached the front of the flange, it was no longer semielliptical. Thirdly, he pointed to the period of its transition from a surface crack to an edge crack, that is to say a crack advancing towards the web and beyond. He said that all experts had neglected:**

"the special situation when the surface crack penetrates the end of the flange (interaction with the end of the flange) and the complicated shape, when the crack size has penetrated the end of the flange".

**He said that these different shapes result in different stress intensity factors. He does not suggest that they can be calculated. Nor did he offer an estimate of the likely effect of these changes in shape. For example, whilst he said that there would be some cycles taken up with the coalescence of the two cracks, he said this was something that he took "qualitatively" into account, adding that "it hasn't had a major effect (on) my mind (as) to the critical crack size, but I just would like to have mentioned it".

[427] In his final report Dr Jones said that the effect of the crack changing in shape as it reached the end of the flange and in turn from a curved to a straight edge crack would be insignificant. The interaction between the crack and the edge of the flange would result in a small decrease in the number of fatigue cycles, and the change from a curved to a straight edge crack would result in a small increase. The two effects, he said, would tend to "cancel one another out to a certain extent". To investigate their effects, he modelled his analysis by using a three times faster crack growth rate for a crack depth in the range of 27 to 40mm and inserted an additional 10mm of crack growth at the start of the edge crack phase (to estimate the additional cycles required to rotate the crack into a straight edge crack). The result was a 1999 crack depth of 27mm, a crack length on the flange rear face of 122mm and a crack length on the flange edge of 15mm. I am persuaded that these points of Dr Munz as to crack shape do not have any significance for what is indicated by the Jones calculations.

[428] Dr Munz said that linear elastic fracture mechanics "breaks down for small cracks less than 5.3mm". This was not supported by another witness and I am not persuaded to accept it. His point was that the plastic zone around the crack tip affects the rate of growth and he said that this would distort the result of linear elastic fracture mechanics when the crack depth is either very small or is relatively close to being through the steel through which it is growing. In crossexamination he was directed to a paper by Dr Maddox which suggested a correction factor which can be applied to allow for crack tip plasticity and which suggested that the correction factor was very small. Dr Munz seemed to have no effective response to what Dr Maddox had there written. Further, when directed to something Dr Jones had written in his first report relevant to this, he agreed that it would bring down his limit of 5.3mm "to a small value, and that then maybe in the lower part of linear elastic fracture mechanics maybe not give a large error".

[429] There are other matters on which Dr Munz was critical of one or more of the reports of Dr Jones. I have discussed the points which Dr Munz offered as criticism of the approach taken by Dr Jones and Dr Maddox, because Dr Munz was not otherwise critical of what had been done by Dr Maddox, and the plaintiffs do not submit that I should find that the crack was the size calculated by Dr Jones rather than by Dr Maddox.

[430] Clearly there is no means of precisely calculating the size and location of this crack as at March 1999. But I am persuaded that the application of the principles of fracture mechanics, by each of Dr Jones, Dr Maddox and Dr Potts, is able to provide a probative approximation of its size and location. Two eminent engineers in this field, called by different sides of the case, saw fit to adopt the same approach and expressed confidence in the reliability of their results. The third engineer, Dr Potts, had quite a different approach but yet reached results which I do not see as significantly different from the others. Of his results, the more useful are those upon the mean SN curve because they represent the most probable result.

[431] The respective results of the calculations of these engineers are not so far apart. Dr Jones reached a surface length of 120mm and a crack along the surface of the flange edge of 28mm (with some alternatives for cold cracking). His and others' calculations upon the premise of drop cutting, but only in the last year of operations, are not useful because as I find below, drop cutting was not confined to the last year. Dr Maddox reached a range (like Dr Jones with the benefit the beach marks) for the surface length of between 108mm and 120mm. Dr Potts' alternatives suggest a range from about 105mm to about 130mm (with a length on the flange edge of more than 32mm in that event), again once the beach marks are considered.

[432] From this evidence it would be unrealistic to make a finding about the precise crack size and location. More probably than not, the crack had progressed beyond the stage of coalescence of the two original cracks and was at least halfway through the thickness of the flange. At the half-way point, its depth was 20mm and by the beach marks, its surface length would have exceeded 100mm.

[433] I accept, as many witnesses have said, that a visual inspection will not detect every fatigue crack. As Dr Potts said, detection is affected by, amongst other things, the ability of the inspector to have close access to the location of the crack, the illumination of the surface, the cleanliness of the structure in that location, the size of the defect and whether the crack is "open", which can occur under certain loading conditions. Dr Maddox identified the same matters in his first report.

[434] There would have been no problem with illumination here. As to the cleanliness of the structure, this should not have presented a significant obstacle to detection for at least two reasons. The first is that the contract entitled Krupp to require the machine to be cleaned if that was necessary for its inspection. Mr Habeler and Mr Newnham each said that if a machine was not clean enough, an inspector asked for it to be cleaned. The contract expressly required that the structure of each item be "cleaned to allow proper identification of defects". Secondly, Mr Thiel said that dust was not a problem for inspecting the tower above the counterweight pivot because dust did not accumulate there. Consistently with that, Mr Thiel did not ask for the tower or any part of it to be cleaned. Other witnesses (Mr Clews, Mr Wood, Mr Grant and Mr Newnham) said that this part of the structure was clean, although another witness, Mr Allen suggested otherwise. The defendants suggest that I find there was dust from some photographs. The more likely position is that Mr Thiel is correct about this point, supported as he is by those other witnesses. At one point it also seemed to be suggested by the defendants that grease dropping from the ropes might have been at the top of the stiffener and affecting the visibility of the crack. But the critical area was not directly underneath the ropes. The possibility that there was grease is not significant. Overall, the relative cleanliness of this part of the tower was unlikely to have affected the detection of the crack.

[435] Several witnesses said that the crack would have "opened up" because of the load on the structure as a result of the tensile dead loads. In Dr Jones' view, because the stress on the stiffener side of the flange was greater than the stress on the front of the flange, the opening of the crack at the surface would have been relatively wide. He said that a crack of a surface length as Dr Maddox had calculated in his first report would have been revealed as a "gaping toe crack". In his most recent report Dr Jones wrote:**

"... because the centre of the ligament is offset from the centre of the cross section of [the] whole strip, the point of application of the applied load is offset from the point of application of the reacting load in the remaining ligament. In turn, this 'load eccentricity' applies a bending movement to the ligament, and this tends to move the crack faces apart like a pair of scissors being opened - the crack faces rotate around the crack tip (the hinge pin in the scissors), and the mouth of the crack gapes open (the outer ends of the scissors moving apart). In addition to this hinging movement, the crack faces are also pulled apart in a parallel manner by the applied tensile load. Overall, the crack surfaces move apart with a combination of both hinging and parallel movements."

**[436] Professor Fisher wrote that "the tension flange cracks were all subject to high dead load stresses which would open them and make them easy to see".

[437] Dr Maddox seemed to agree in this passage from his crossexamination:**

"Now, in relation to this particular detail on the bucketwheel excavator where you can see we've got a model in Court, the detail was located on the front flange of the bucketwheel tower?-- Right.

And it was under a dead load of somewhere around about 180 megapascals, is that your understanding?-- Stress, that is. Right.

And crack closure was not occurring, do you agree with that?-- It's circumstances where you might expect crack closure not to be occurring.

Yes. And the dead load condition, I suggest to you, would have had the consequence that the crack surfaces would have been open?-- If the cracks don't close, they would be open."

**In reexamination he said that whilst "there's more chance of seeing them if they're open than if they're closed", nevertheless "cracks could be open by a fraction of a millimetre which, in terms of visibility, doesn't make a lot of difference, really."

[438] The size of the crack affects its visibility not simply because something large is easier to see. It is also because the crack is more likely to fracture the paint as it becomes larger. A fractured painted surface makes for a more apparent crack, and what follows shortly after the fracture of the paint is the onset of corrosion which would clearly signal a problem. All of that seems common ground but the question then is: what would be the size of the crack before it would fracture the paint?

[439] Professor Fisher provided answers to that question in an instruction manual he wrote for inspectors employed by the United States Federal Highway Administration. Professor Fisher has given courses to inspectors instructing them in the detection of fatigue cracks and still gives those courses occasionally although he has retired from his university. In this manual, which is entitled "Inspecting Steel Bridges for Fatigue Damage", he wrote:**

"The usual and most reliable sign of fatigue cracks are the oxide or rust strains that develop after the paint film has cracked....Experience has shown that cracks have generally propagated in depth to between one fourth and one half the plate thickness before the paint film is broken, permitting the oxide to form. Smaller cracks are not likely to be detected visually unless the paint, mill scale, and dirt are removed by blast cleaning the suspect area. Furthermore, at weld terminations, very small cracks are very difficult to detect by other non-destructive inspection techniques, unless the crack depth is between 1/8 in and 1/4 in."

"There are several levels of inspection that can be carried out. A visual examination can be made of the suspect details often from the ground. It is recommended that binoculars be used to see the details focusing on the location where cracks will be likely to grow....cracks can often be identified from the oxide (rust) lines that form after the paint film has broken. Only large cracks will be detected at this level of inspection.

The next level of inspection is a close visual inspection of the detail. Careful attention should be given to the weld toe of attachments to the flange or web ... Generally any visual crack will likely be several inches long and at least 1/4 in [about 6mm] deep in order to break the paint film."

**[440] Therefore Professor Fisher has given a few measures for correlating the size of the crack and the breaking of the paint film. One is that the crack depth is between onefourth and onehalf of the plate thickness. As found above at paragraph [432] it is likely that the crack depth was at least half of the plate (flange) thickness. The second is that the crack depth was at least onequarter of an inch deep. Here it was much deeper. The third was that its length was "several inches" as was the case here. At more than 100mm, it would have been at least four inches long.

[441] The basis for these measures does not appear from the manual or other evidence. Nevertheless Professor Fisher wrote this manual from his considerable experience in the investigation of the effects of fatigue on steel structures. His high qualification in this area is illustrated by the fact that he is the author of this manual of which he says 20,000 copies or so have been distributed throughout the United States. Importantly the defendants did not suggest that this information was out of date or otherwise unreliable. Professor Fisher was crossexamined in a way which suggested an acceptance of the correctness of this information. He gave some answers during that crossexamination to the effect that the paint would have fractured earlier in this case because of the particular stress conditions and because these are transfer seal welds which would have cracked relatively quickly. He said that "it would have been detectable. There's no question in my mind that it wouldn't be detectable". This and some other general statements in his oral evidence have limited value, at least because Professor Fisher was probably premising those remarks upon the existence of a much larger crack than, say,

one of 100mm. Perhaps not surprisingly for someone of his eminence and achievements, Professor Fisher was very sure of his own opinions. His answers were often given in emphatic terms which could give the impression of exaggeration. I found his evidence in the design case to be of less weight than that of some other witnesses. Probably because he had pioneered the changes to the strength assessment of steel structures at least in his own country, he was particularly critical of the use of BG 60.

[442] However, what Professor Fisher wrote in his instruction manual has considerable weight. It was, of course, not written for this litigation and, as already mentioned, the defendants appeared not to challenge it. I do not see that Professor Fisher in this manual was saying that there was a precise mathematical relationship between, say, a certain crack depth and the paint being broken. But these passages from the manual provide a strong indication that a crack which was about halfway through the flange and at least about four inches long would have broken the paint film and that, with the prompt onset of corrosion, it would have been seen in 1999.

[443] In his first report Dr Potts wrote at some length on the subject of the detection of fatigue cracks. Under the heading "Effect of Crack Size upon Detectability" Dr Potts wrote:**

"The ability of the naked eye to detect a crack in its early stages is very difficult, whereas other forms of NDT (nondestructive testing) can to a better degree, depending on the technique employed, the quality of the equipment and the operator's skill. The figure below presents the measured range of the probability of detection (POD) of a defect offered by the Magnetic Particle Inspection (MPI) NDT technique in comparison with Visual Inspection as a function of defect size (ie crack length)."

**He then presented a graph plotting the purported probabilities of the detection of a crack by a visual inspection and an inspection using the magnetic particle inspection technique. The origin of this graph and of the information conveyed by it was not identified. The graph specifies particular probabilities and crack lengths and represents, as he discussed, that there is a 75 percent probability of detecting by visual inspection a crack of a length of 17mm. He said that this particular graph was not "universally applicable" but that it illustrates that "any visual inspection offers a significant probability of crack detection only when the crack has propagated along a relatively large distance". By reference to the graph it can be seen that by this he meant a distance of about 10mm. This hardly assists the defendants' case or detracts from Professor Fisher's evidence on this question.

[444] In the same report, Dr Potts extensively discussed the results of a study by the United States Federal Highway Administration's Nondestructive Evaluation Validation Centre published in 2001. After reference to the results of that study, Dr Potts said that the study:**

"... indicates that whilst visual inspection is a commonly used technique for assessing the condition of large welded steel plate structures, including the intent to detect weld defects such as cracks, the process is inherently unreliable, even for experienced inspectors and qualified engineers". He added that "this finding is not intended to suggest that visual inspection should not be undertaken, but that the expectations from such an inspection should not be one of 100% detection of weld defects."

**I accept those propositions but otherwise the results of that US study are of little value here. The study no doubt indicates the limitations upon the value of visual inspections which is to say that had Mr Thiel looked at the critical area, it is not 100 per cent certain that he would have detected the crack. But that is not the question.

[445] Dr Potts then referred to his various scenarios and possibilities for the crack size before concluding that "these analyses suggest that the assertion that a crack of a visually detectable size must have been present a year prior to the failure is flawed". Since his first report, his range of crack sizes has been recalculated, as I have discussed, and the lower end of that range has tended to become higher. His conclusion in that first report, under the heading "Overall likelihood of crack detection during 1999 BWE Inspection" was that "it is doubtful that a competent inspector could have reasonably detected the crack". And this was an opinion affected by the premise that the inspector had been restricted to the walkways and lacked a line of sight to the critical area.

[446] In his second report, Dr Maddox concluded that "the chances of detection would have been either zero or very small". But that conclusion was reached as follows:**

"In the present context, the crack size and its visibility at the time of the last inspection in 1999 is of particular relevance. It is not possible to state with any certainty how easy it is to detect a fatigue crack in a real structure. Detection will depend on many things, including the crack size, the extent to which it opens under cyclic loading, the surface condition of the steel, the distance from the observer, the lighting and of course whether or not the view of the relevant area is obstructed. As a general comment, many years of experience testing welded steel components in the laboratories at TWI confirms that, even for relatively clean surfaces, fatigue cracks are extremely difficult to see without the aid of a microscope or penetrant testing. Further, if (Dr Potts') estimate of the areas that could be viewed during the 1999 inspection ... is correct, the inner surface of the flange was completely obscured. Consequently, the cracking state that is most likely to have been visible is the presence of a crack that extends right through the flange thickness and across to the edge of the flange. According to the present fracture mechanics analyses this was effectively the state at the end of stage two, when the semielliptical crack growing through the flange thickness changed into an edge crack. On this basis it will be evident from [his calculations] that the proportion of the total fatigue life remaining was very small, ranging from around 2.3% for the case of a 2mm deep defect [at the outset] to under 2% for the defectfree case. These proportions may be compared with a proportion of the actual life remaining at the time of the inspection in 1999, namely 6.5%. In fact, according to the results of the fracture mechanics analyses, the fatigue crack that led to failure was still less than 65% of the way through the flange thickness one year before failure, and had not reached the flange edge. Thus depending on whether or not the flange surface was obscured ... the chances of detection would have been either zero or very small".

**[447] In context, his opinion as to the chance of detection was upon the two premises that probably the crack had not turned the corner and started to move along the edge of the flange and that it was impossible to see a crack on the stiffener side of the flange. This was consistent with his calculations set out in that report, where under each of his alternatives, the calculated crack length would not have resulted in the crack being then on the edge of the flange. Accordingly, the assessment of the chances of detection by Dr Maddox does not assist, because he was not asked to address the chances of detecting a crack (of the order of his calculations) on the premise that the inspector had looked at the place where that crack would have been.

[448] The defendants argue that the invisibility of the crack is indicated by the facts that Mr Thiel did not see it when looking up to the top of the stiffener with his binoculars from the counterweight level and that no other person had seen it. As to Mr Thiel, I accept that as he says in his supplementary statement, he stood on the counterweight level and used his binoculars to look at the "area" of the top of the stiffener and the welds at the length of the stiffener. But from that angle and some eight metres or so below the top of the stiffener he could not have seen all of the surface where a crack of, say, 100mm would have been. The fact that he did not see from that angle and distance any sign of corrosion does not strongly suggest that it was not present. No doubt it was because Mr Thiel realised that his view from the counterweight level was not sufficient to assess the top of the stiffener and the welds at that point, that he tried to see it, as he described, by kneeling onto the walkway platform and looking as far as he could.

[449] The fact that others did not notice cracking or corrosion at the top of this stiffener is not significant unless any of them had been in a position to see the top of the stiffener. Mr Russell from CW Pope undertook an ultrasonic inspection of all pivot points and pins on the BWE during 1999 and after Mr Thiel's inspection. Most of the pins could be inspected by him from the walkways but there were some at the top of the tower which did not have adequate access, so he used a crane and a manboat to get close enough to them. He arranged with BHP for these to be available a week or so prior to his inspection. But he used the manboat only to inspect these pins at the top of the tower and he did not at the same time undertake an inspection of the BWE frame and in particular the critical area. He performed a visual inspection and magnetic particle inspection on the BWE frame structure. He says he then conducted a visual inspection as far as he could from the walkways and saw no cracking. So the fact that he did not detect this crack does not give any strong indication that it was not visible in March 1999 by the use of a mirror, cherry picker or manboat. Mr Newnham went up the tower in 1999 looking for cracks. The context was that he was visiting the site endeavouring to persuade BHP to retain his firm for his inspection services. His journey up and down the tower was not in the course of an inspection. He did not leave the walkways.

[450] Ultimately I am persuaded that had Mr Thiel used a mirror, a cherry picker or a manboat as I have discussed, it is more probable than not that he would have detected the presence of this crack. Of course there are many uncertainties and possibilities, including those involving the size and location of the crack. But more probably than not, it was at least 20mm deep and 100mm long. I am persuaded that what appears in the manual written by Professor Fisher provides a reliable basis for assessing the relative probability that a crack of that order would have cracked the paint. The visibility of the crack is also indicated by the evidence of Dr Jones and Dr Potts. I conclude that more probably than not, this is a crack which would have been seen had Mr Thiel inspected its location.

[451] An alternative argument by the plaintiffs was that this was a loss of a chance case, so that they did not have to prove that on the balance of probabilities, the performance of the contract or the discharge of the defendants' alleged duties of care would have revealed the crack. The argument is that they were denied the chance of the crack being detected and repaired, for which they should be compensated in the amounts claimed but discounted according to the relative probability that the crack would have been detected.

[452] I was asked to consider this argument only if I was not satisfied on the balance of probabilities that the crack would have been detected and repaired. In my view, that would not have been a legitimate approach. If this is a loss of a chance case, then it remains so whether or not the relative probability is more or less than 50 percent.

[453] The defendants complained that this point was not pleaded. But they also argued that there were many contingencies affecting the relative probability of detection of the crack and the avoidance of the collapse of the BWE.

[454] By this alternative argument, the plaintiffs say that what must be proved on the balance of probabilities is not that the crack was visible, but that it was present. The detection of that crack was a possibility, affected by the relative probability that it was visible. It is said that the failure to inspect the stiffener termination, and the failure to tell Mr Grant that it had not been inspected, deprived the plaintiffs of "a valuable chance to detect the crack and to repair it, and to avoid the loss which was suffered as a consequence of the collapse of the machine". The argument seeks to rely in particular on passages from Sellars v Adelaide Petroleum NL[81] and Naxakis v Western General Hospital[82].

[455] In my view this is an incorrect characterisation of the plaintiffs' claim and the issues which it raises. In substance the plaintiffs' claim is that their BWE was

effectively or partially destroyed because of the defendants' defaults. It is

artificial to characterise this as a claim for compensation for the deprivation of a chance or business opportunity. In rejecting the loss of a chance argument in Chappel v Hart[83], Gummow J said[84]:**

"... However, this is not a case in which Mrs Hart seeks damages for the loss of an opportunity or chance to acquire or receive a benefit with the value to be ascertained by reference to the degree of probabilities or possibilities. As is explained in Sellars v Adelaide Petroleum NL, in Australia this generally is what is involved in the "loss of a chance" cases. Similarly, in Athey v Leonati the Supreme Court of Canada observed:

'The [loss of chance] doctrine suggests that plaintiffs may be compensated where their only loss is the loss of a chance at a favourable opportunity or of a chance of avoiding a detrimental event.'

Rather, Mrs Hart claimed damages for the injuries she sustained." [footnotes omitted]

[456] In this context it is necessary to distinguish between past events and events which allegedly would have occurred or might occur. In Malec v JC Hutton Pty Ltd[85], Deane, Gaudron & McHugh JJ said[86]:

"When liability has been established and a common law court has to assess damages, its approach to events that allegedly would have occurred, but cannot now occur, or that allegedly might occur, is different from its approach to events which allegedly have occurred. A common law court determines on the balance of probabilities whether an event has occurred. If the probability of the event having occurred is greater than it not having occurred, the occurrence of the event is treated as certain; if the probability of it having occurred is less than it not having occurred, it is treated as not having occurred. Hence, in respect of events which have or have not occurred, damages are assessed on an all or nothing approach. But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration of proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring."

Their Honours there cited Davies v Taylor[87] where Lord Reid said[88]:

"When the question is whether a certain thing is or is not true - whether a certain event did or did not happen - then the court must decide one way or the other. There is no question of chance or probability. Either it did or it did not happen. But the standard of civil proof is a balance of probabilities. If the evidence shows a balance in favour of it having happened, then it is proved that it did in fact happen. ... You can prove that a past event happened, but you cannot prove that a future event will happen and I do not think the law is so foolish as to suppose that you can. All you can do is to evaluate the chance."

The distinction here is described in McGregor on Damages (17th Edition) at 8029:

"With matters past, therefore, the court has to determine on the balance of probabilities whether the defendant's act caused the claimant's loss, and if the answer is in the affirmative there is full recovery, while if in the negative there is none. We are in the realm of causation and liability, not in the realm of chance and quantification."

**[457] The existence of the crack is a past event in this sense. But so too is its location and its visibility. Those matters are facts although the evidence relevant to them is complex and does not consistently provide a single answer. I have found that in fact, the crack was then visible. It follows that an inspector who had looked at the critical area by any one of the available means should have detected the crack. On the other hand, had I not found that the crack was visible, it would have followed that it would not have been seen by an inspector doing what was required of him.

[458] By the contract, Krupp was obliged to inspect the entire structure and the welds. It failed to do so. Had it inspected the critical area the crack would have been detected. As I discuss below, in that event the crack would have been repaired and the collapse avoided. So this breach of contract was a cause of the plaintiffs' losses from the collapse.

[459] There is the further case that Krupp breached its contract by breaching the term implied by s 74(1), which was that it would inspect with due care and skill. I have found that it breached that term just as it and Mr Thiel breached their common law duties to exercise reasonable care. These duties were breached by failing to inspect the critical area. So again, in consequence of a breach of contract, and also in consequence of negligence for which Krupp and Mr Thiel are liable, the crack was not repaired and the collapse and consequent losses followed.

[460] The negligence by the terms of the report raises a different question. It is the same question which arises in the s 52 case. Had the report not represented that the entire structure and relevant welds had been inspected, what would BHP have done? I accept Mr Grant's evidence that he expected and assumed that Mr Thiel would and had visually inspected the entire structure. I accept also that had he known before the collapse that Mr Thiel had not inspected the entirety, he would have taken this up with Mr Thiel or someone else from Krupp and he would have insisted that a full inspection occur. It is inherently likely that this is so, because I see no reason why Mr Grant would wish to take the risk of an inspection of only part of the machine. At least some of the potential consequences for BHP and its joint venturers from a structural failure of the BWE would have been appreciated by him. The performance of an entire inspection would not have been unduly disruptive. And it was for an entire inspection that the agreed price was to be paid. Further, the inspector's report was not only for Mr Grant's use. It is likely that someone from BHP would have demanded that the entire structure be inspected on reading that it had not been, and accordingly, that nothing could be said of the soundness of part of it. It is indicative that BHP provided a crane and a manboat to Mr Russell for his inspection in 1999. And the evidence shows also that there was considerable downtime in the operations of the BWE during the period when Mr Thiel was there in 1999, putting paid to the suggestion that the BWE was too busy to undergo a proper inspection.

[461] It follows that in consequence of Krupp's negligence, its contravention of s 52 and Mr Thiel's negligence constituted by the terms of the inspection reports, BHP did not cause the entire structure to be inspected within the year prior to its collapse. Had it been inspected, this crack would have been detected.

[462] The defendants argue that BHP was unlikely to have repaired this crack had Mr Thiel identified it. They submit that "this was not a mine in which there was a culture or history of identified and significant defects on the BWE structure being repaired in a timely way or at all."

[463] The evidentiary basis for this argument is what they say was BHP's failure to remedy several matters identified by earlier inspectors' reports. There is evidence within the sequence of Mr Schander's reports which, on its face at least, shows that cracks which were identified in a report were still present at the time of subsequent reports. Witnesses for the plaintiffs such as Mr Raleigh and Mr King said that they believed that these cracks had been remedied but had reappeared. Their evidence was strongly challenged and was criticised for an absence of documentary support. It must be remembered however that these were events, in some cases, of more than 20 years ago.

[464] It is more relevant to look at BHP's response to inspection reports in the years close to 1999. This is especially so because it was from 1995 that Mr Grant, in his position as BWE system maintenance planner, was responsible for the maintenance and long term planning of the BWE system. But the defendants are critical of BHP's response to Krupp's 1996 report, upon which they heavily rely in this argument.

[465] In the 1996 report by Mr Thiel, there were 10 items relating to the structure for which repairs were advised. None of them was said to require immediate repair, but seven required repair within three months and the others within 12 months. In the 1999 report, four of those 10 were shown as still not repaired and two of those four were within the three month category. One was a missing bolt in the bucket wheel boom about which Mr Grant said that it was not critical. The other was an item in the operator's cabin support. This was not the cracking in that area which was also identified in the 1996 report. As to that crack, Mr Thiel wrote in his 1999 report that "the crack reported in the previous two inspection reports had been repaired but has now reappeared". I find that it had been repaired, accepting as I do Mr Grant's evidence as to that, which is supported by that reference by Mr Thiel to it in 1999. Another of the four structural items said to be unrepaired was fault no 2.1.7.1. However no such item appeared in the 1996 report.

[466] There were three items in the 1996 report which involved cracking in the structure. None of those reappeared in the 1999 report, supporting Mr Grant's evidence that they were repaired. Mr Grant engaged Preventative Maintenance Services to address the defects identified by Mr Thiel in his 1996 report. It also appears from a memorandum by Mr Grant to other mine staff in 1997 that BHP was then attending to the list of outstanding work identified in the 1996 report. These documents demonstrate that the 1996 report was indeed taken seriously. The fact that there were some matters still unrepaired by 1999 is relevant. But overall BHP appears to have accepted Mr Thiel's recommendations. Importantly each of the items of cracking was repaired.

[467] Further, there is the fact that in 1999 BHP engaged G&S Engineering and CW Pope to perform various maintenance and inspection services under a regime which strongly indicates that BHP did not have the "culture" which the defendants now attribute to it. Mr Russell performed some structural inspections in the middle of 1999.

[468] Had Mr Thiel identified this crack in 1999, the inspection contract required him to assign "a priority level with regard to urgency of repair", based upon its nature and location. In this case that would have required him to recommend its urgent repair or at the very least its repair within three months. That repair would have been costly but it would have been irrational for Mr Grant and others to ignore such a recommendation. And after all, BHP had commissioned this inspection. It was not obliged by law to do so. It was wanting to be advised as to the condition of the machine so that the necessity for repairs, particularly urgent repairs, could be identified and those repairs effected.

[469] Had the crack been detected, the tower would have been repaired and the collapse avoided. Professor Fisher and Dr Jones said that the crack could have been repaired and their evidence in that respect was not contested. Nor do the second and third defendants plead that it could not have been repaired. Instead, they plead that the repair would have cost $160,000, of which they provided particulars by reference to an expert report of RWE Power International, which is in evidence. The plaintiffs' Reply admits that cost.

[470] In summary, I find that the breach of contract by the second defendant, the negligence of the second and third defendants and the second defendant's contravention of s 52, caused the tower to go unrepaired and in consequence the collapse occurred.

[471] Krupp is liable to the plaintiffs (save for the fourth plaintiff) for damages for breach of contract. That is upon one cause of action to which they are jointly entitled and the award is not to be reduced for the absence in these proceedings of another joint venturer.

[472] Krupp is liable for damages for negligence and damages under s 82. Mr Thiel is liable for damages for negligence. They are several liabilities to the plaintiffs (again save for the fourth plaintiff), so that each plaintiff is entitled to a judgment in differing amounts according to its interest in the joint venture as at March 2000. Because the principal claim against Krupp was for the one judgment in favour of the plaintiffs jointly, and because that will be in an amount which exceeds the aggregate of the several awards to which the plaintiffs are alternatively entitled against Krupp, there will be one judgment against Krupp in favour of the plaintiffs.

[473] There will be several judgments for those plaintiffs against the third defendant.

[474] The defendants plead in answer to the design and inspection cases that the matters alleged against them, if established, were not causes of the collapse of the BWE, on the basis that the cause was the operation of the BWE outside its design operating parameters or "DOP". The same matters are pleaded as part of the contributory negligence case raised against both the design and the inspection cases. As the matter was ultimately argued for the defendants, it is only in relation to contributory negligence that these matters were pressed. That concession was rightly made, because if the BWE was operated outside its DOP in all the respects alleged, nevertheless the negligence, breach of contract or s 52 misconduct attributable to a defendant was at least a cause of the collapse. Accordingly, the case in relation to the DOP is relevant only, if at all, to contributory negligence. As I will discuss, there are additional matters pleaded by the defendants as contributory negligence.

[475] However, before going to those factual issues the relevance of any contributory negligence must be addressed. Undoubtedly contributory negligence can be raised in response to the plaintiffs' claims in negligence against O&K, Krupp

and Mr Thiel. However, each of O&K and Krupp is liable under s 82 of the

Trade Practices Act and Krupp is liable for breach of contract.

[476] Contributory negligence is pleaded in response to the claims under the Trade Practices Act. By s 82(1B), contributory negligence can now be raised in response to a claim for s 82 damages. But it does not assist the defendants because in neither case did the cause of action under s 82 accrue after 26 July 2004[89]. Absent the application of s 82(1B), contributory negligence cannot reduce an award of damages under s 82: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd[90]. Because O&K is liable for damages under s 82, contributory negligence cannot reduce its liability. Nor can it reduce Krupp's liability under s 82.

[477] Damages for breach of contract in some cases can be reduced for the plaintiffs' contributory negligence. Section 10 of the Law Reform Act 1995 (Qld) provides as follows:**

"10 Apportionment of liability in case of contributory negligence

(1) If a person (the claimant) suffers damage partly because of the claimant's failure to take reasonable care (contributory negligence) and partly because of the wrong of someone else -

(a) a claim in relation to the damage is not defeated because of the claimant's contributory negligence; and

(b) the damages recoverable for the wrong are to be reduced to the extent the court considers just and equitable having regard to the claimant's share in the responsibility for the damage."

The term "wrong" is defined by s 5 as follows:

(a) gives rise to a liability in tort for which a defence of contributory negligence is available at common law; or

(b) amounts to a breach of a contractual duty of care that is concurrent and coextensive with a duty of care in tort."

**Krupp was in breach of a contractual duty of care which it owed by the implication of the term from s 74(1) of the Trade Practices Act. In my view that was concurrent and coextensive with its duty of care in tort and neither party suggested otherwise. But it was also in breach of its contract by failing to inspect the entire structure. In my view that did not amount to a breach of such a contractual duty of care.

[478] In some cases the dividing line between a contractual promise to do something and a promise to do it with reasonable care will be a fine one. That dividing line was discussed by Oliver J (as his Lordship then was) in Midland Bank Trust Co Ltd & Anor v Hett, Stubbs & Kemp (a firm)[91] as follows:**

"The classical formulation of the claim in this sort of case as 'damages for negligence and breach of professional duty' tends to be a mesmeric phrase. It concentrates attention on the implied obligation to devote to the client's business that reasonable care and skill to be expected from a normally competent and careful practitioner as if that obligation were not only a compendious, but also an exhaustive, definition of all the duties assumed under the contract created by the retainer and its acceptance. But, of course, it is not. A contract gives rise to a complex of rights and duties of which the duty to exercise reasonable care is but one.

If I employ a carpenter to supply and put up a good quality oak shelf for me, the acceptance by him of that employment involves the assumption of a number of contractual duties. He must supply wood of an adequate quality and it must be oak. He must fix the shelf. And he must carry out the fashioning and fixing with the reasonable care and skill which I am entitled to expect of a skilled craftsman. If he fixes the brackets but fails to supply the shelf or if he supplies and fixes a shelf of unseasoned pine, my complaint against him is not that he ahs failed to exercise reasonable care and skill in carrying out the work but that he has failed to supply what was contracted for."

**[479] Because Krupp failed to inspect the entire structure this crack was not detected and the collapse occurred. Had the critical area been inspected, there is a possibility that by carelessness the crack would not have been detected, although having regard to my findings as to its visibility that is a very small possibility. In that event, the breach of contract would not have been a "wrong" as defined. In my view the breach constituted by a failure to inspect the critical area should not be characterised as simply a breach of a contractual duty of care, notwithstanding that the obligation to inspect was one to be discharged with the exercise of reasonable care. Accordingly, s 10 does not apply to this breach of contract and contributory negligence could not be raised in response to it.

[480] Contributory negligence is available in relation to each defendant's liability in tort, and on my findings, it could assist only the third defendant Mr Thiel. For that reason, and in case the other defendants are not liable under s 82 or in contract, I go now to the extensive case of contributory negligence.

[481] In July 1999 the gear box of the BWE was removed. It was then walked without its gear box for a distance which various witnesses estimated as between 30 and 70 metres. The gearbox had been removed because of the failure of the main bearing, and Krupp's Mr Armstrong was sent to the site to supervise the replacement of the bearing. Not a little time was spent on exploring with the relevant witnesses whether Mr Armstrong actually watched whilst the BWE was walked without its gearbox. But in any case there appears to have been no objection by Mr Armstrong to this course, who was aware at least that it had occurred, and more generally, there was nothing said about it by Krupp at the time.

[482] Originally, the defendants' point deemed to have been that this would have damaged the structure, by the BWE being imbalanced through the loss of its gear box. But there is no basis for concluding that this had some causative effect on the collapse of the BWE. Ultimately the defendants simply argued that "it is almost certain that it had a contributing affect", whilst conceding that none of the experts, including their witness, Dr Potts, had been able to quantify that contribution. Indeed it appeared that Dr Potts had done some modelling and calculations in 2004 to investigate whether this walking incident contributed to the collapse and that the exercise established nothing to support this allegation.

[483] Further, the plaintiffs' walking the BWE without its gearbox on this occasion is not proved to have been negligent. The defendants' argument went no further than saying that "the description of the machine shaking and rocking (during the walking) and the absence of any suggestion in the operating manual that such a course was recommended or permitted, strongly suggests the inappropriateness of what was done." As that submission shows, the operating manual contained no instructions to the user that this was not to be done. I am not satisfied that the evidence about its "shaking and rocking" demonstrates that the plaintiffs were negligent.

[484] The bucket wheel boom was raised and lowered by two ropes extending from the rear end of the counter-weight boom through the top of the main tower to the rope support tower and back again. One end of each of the ropes was connected to a winch so that there were two parallel winches at that end of the counter-weight boom. The other end of each rope was connected to an hydraulic cylinder. The two cylinders were connected so that the pressure in each cylinder could be kept the same. Devices called manometers monitored the pressure in the cylinders. When the pressure reached a set high point or a set low point, that triggered an electrical device which automatically limited the movement of the bucket wheel boom. In particular, if the pressure was measured by the manometer at higher than the set limit, then further hoisting or raising of the bucket wheel boom would be prevented. Similarly if the pressure fell below the set low point, further lowering of the bucket wheel boom would be prevented. In each case the boom could still be slewed but the manometers and the associated electrical components acted as a safety measure to prevent the bucket wheel boom from suddenly falling and grounding.

[485] The defendants allege that by some means the operation of the manometers was compromised. They say that this was done to facilitate "drop cutting", which is a practice which they say was a negligent operation of the BWE and which greatly shortened its life. The suggestion is that operators of the BWE found that their work was being unduly inconvenienced by the frequent intervention of the safety system when they were drop cutting. It is said that the drop cutting resulted in a "partial grounding" of the bucket wheel boom, which would affect the loads on the ropes and thereby the pressure in the cylinders as measured by the manometers, and that had they been calibrated and operating correctly, the set limits would have been reached and the safety system of brakes on the winches would have been engaged. The defendants say that the operators then did something to negate the operation of the manometers to avoid the inconvenience of the interruption from this braking, and to enable them to engage in drop cutting as they pleased.

[486] The ultimate relevance of all of this is in relation to the case that the drop cutting itself was contributory negligence. What was allegedly done to the manometers is really a particular of that case. It is said that it proves the high incidence of drop cutting, although as I will discuss, it is clear that drop cutting was a regular practice with this BWE. But if this interference with the manometers had to occur to facilitate the drop cutting which was undertaken, then this would support the defendants' case that the operators knew or ought to have known that they should not be drop cutting. Operators should have realised that they were not using the machine in the manner for which it was designed, if they had to interfere with a safety device.

[487] There is no direct evidence that the operation of the manometers was deliberately interfered with in any way. The defendants argue that an inference of that should be drawn from the following facts.

[488] First, there was an incident in March 1993 in which there was a grounding of the bucket wheel boom. The ball race began lifting out of its normal position, causing another switch to activate and to cut power. This was a safety switch which had been placed on the ball race in 1984 after the grounding in that year (which led to the repair with the stiffeners). It appears that the manometers did not operate to cut out power in this 1993 incident. The defendants suggest that this was because the operation of the manometers had been compromised in some way. An internal report of the incident[92] said that the rope tension had been checked and that the "pointer was below [the] bottom red line which indicated low rope tension". This indicates that the manometers were showing that the pressure was below the minimum set level and is thereby inconsistent with one of the defendants' theories, which is that the manometers were compromised by operators changing the set limits, so that they were not exceeded. The same report referred to the remedial steps as including the raising of hydraulic pressure for the rope tension to "bring indicator back into centre of the two (2) red lines. This brought ropes back to normal tension." This seems to have been a resetting of the appropriate hydraulic pressure as then measured by the manometers, with its two red lines marking the upper and lower set limits. This is inconsistent with another of the defendants' theories, which is that the oil line to the manometers had been closed (by shutting the oil line isolation valve) which would have prevented the manometers from measuring the pressure in the cylinders.

[489] The defendants called Mr Brady, who was the operator of the BWE in this 1993 incident. In his witness statement he described how it occurred as follows:**

"On maintenance day the hoist controls had been turned off by the electricians, so that the position of the bucket was fixed at about 1.5 metres from the ground. I was walking the BWE backwards over a slight decline. When the BWE went over the ledge the bucket wheel was grounded to a considerable degree. The machine shut down after walking a few metres with the bucket wheel on the ground. As a result, two of the buckets on the bucket wheel were damaged and had to be replaced. On this occasion, the light on the control panel which would indicate that the manometers had shut the machine down did not come on."

**The defendants argue that this shows that the manometers were "not effectively operational at the time", although Mr Brady did not say so. What he said was that the hoist controls (an apparent reference to the hoisting of the bucket wheel boom) had been turned off by the electricians. It is not known what else had been turned off by them and whether the operation of the manometers was on that day affected by the fact that the machine was in a certain condition for the purposes of maintenance. What the evidence appears to show is that this grounding did not occur because of some sudden loss of tension in the ropes causing the bucket wheel boom to fall. Rather it seems that the BWE grounded because of its operation by Mr Brady.

[490] Then in their written submissions, the defendants rely upon another part of Mr Brady's statement, in which he had said that one of the jobs of the attendant assisting the BWE operator was that if the manometers caused the machine to be shut down, the attendant would "adjust the ropes, pump up the settings and reset the manometers to enable the BWE to resume working". That evidence would not assist the defendants' case because it is consistent with the manometers being in operation and occasionally shutting the machine down, rather than the manometers being made inoperative according to one of the defendants' theories. But as it happened, that part of his statement was objected to by the plaintiffs and the defendants conceded that it should be ruled out, and so it was[93]. So that part of the statement must be disregarded.

[491] Next the defendants rely upon an incident in October 1996, about which the plaintiffs then sought assistance from Krupp, who engaged a Mr Edinger. He wrote as follows:**

"The following is a brief description of the problems experienced by the customer [BHP]. The customer's main concern was the consequences if failure of the hoist rope tension cylinder occurred. The boom would then drop, and catastrophic damage would result."

"The left-hand side cylinder (looking to the front of the machine) piston is against the retainer, and the piston rod is fully extended. This condition cannot be permitted because it has lost its hydraulic cushion effect. The right-hand cylinder is in normal condition. The piston rod is 50 per cent (approximately 600 millimetres) extended.

A second problem is being experienced by the customer in that they have to readjust the system pressure continually to stay above the operational lower point of the hoist function."

**In that last sentence, "the operational lower point of the hoist function" is an apparent reference to the set lower limit on the manometers. This is inconsistent with the defendants' theory that the settings themselves were being changed: rather the problem was that the pressure was falling below the lower setting and it was the pressure, and not the set limits, which was being "readjusted". It is also inconsistent with the theory that the manometers were being isolated so that they were not actualling measuring the pressure.

[492] Mr Edinger also referred to the "maximum set point of 113 bars" and to increasing the system pressure up to that maximum. Again, this is inconsistent with each of the theories which I have mentioned. Yet the defendants say that that there is some significance in this reference to a maximum of 113 bar, because photographs of the manometers in 2000 appear to show a maximum of something just under 110 bar. But this hardly suggests that the operators were changing the settings to give them more scope in their operations, because on this theory the maximum was reduced. In any event, the degree of change (from 113 to 110) seems inconsequential.

[493] Of more significance is that Mr Edinger did not report any interference with the safety devices. And after all, as Mr Edinger wrote, it was because of concerns by BHP that he was brought in to investigate, which seems inconsistent with the notion that BHP was causing the problem by compromising the safe operation of the machine by affecting the operation of the manometers.

[494] Next there is a reference to the ropes in Mr Thiel's inspection report of 1999 (the subject of the inspection case). Mr Thiel did not report that any safety devices had been switched off or not working. But he wrote that:**

"The RH cylinder and rope are slack and vibrate freely, while the LH cylinder and rope are very tight. It would appear that the two cylinders are not equally loaded as they should be.

Readjust the cylinder to rope connections so that both cylinders are approximately mid-extension. This may need to be done more frequently than is the case up to the present."

**Mr Thiel said that he found one cylinder fully extended and, he assumed, bottomed out against the end of the cylinder and its rope was so slack that he could shake it. It is submitted that this suggests that the manometers were not then operating. Mr Grant said that when it was brought to his attention, the problem was fixed the following day.

[495] Mr Thiel said that the manometer needles were then at the "12 o'clock position". This would have put them beyond the maximum pressure point. Again this is inconsistent with the theory that the preset limits had been extended by the operators. It also appears inconsistent with the theory that the manometers were unable to record the pressure, and in particular that the isolating valve had been shut.

[496] The defendants called Mr Grayson, who was from General Electric, which had been a subcontractor of O&K for the initial installation of the safety devices and which had remained involved in providing services for the BWE in its electrical components. Mr Grayson was personally involved from 1984 to 2000, frequently attending Goonyella and having responsibility for other General Electric employees who went there. Over all of that time, he saw no evidence of any interference with the safety devices and nor, to his knowledge, did anyone else from his company.

[497] In his first witness statement, tendered when he was called by the defendants, he referred to the effect of one cylinder reaching the end of its travel and, in turn, both cylinders doing so. Where there was one cylinder in that condition, he said that "one rope could end up taking more load than the other" and that once both reached that point, "the manometer pressure would drop to zero". In other words, according to this statement, whilst only one of the cylinders had become fully extended, there would still be oil pressure within the system and the manometers, if operating correctly, would measure that pressure as if both cylinders were under pressure. Put another way, having one cylinder in that condition with one slack rope, whilst the machine continued to operate, would not be inconsistent with the continued working of the manometers. It was when both cylinders were allowed to reach the end of their travel that the oil pressure would fall to zero. If both cylinders did so, and the machine still operated, this would indicate that something had been "bridged out somewhere in order for the machine to work like that."

[498] Mr Grayson made a supplementary witness statement, also tendered in his evidence-in-chief, in which he corrected some matters from his first statement. Relevantly he changed what he had said about the interaction between the two cylinders, by saying that it was not necessary for both cylinders to be fully extended "before the pressure will start to reduce in the system", so that whilst there would be "for a short period" pressure in the cylinder which had not fully extended (where the other had), "as soon as any oil that leaks from the pressure side of the RAM to the non-pressure side, the pressure in that cylinder will quickly drop", with the result that the system would be "unable to equalise, with the rope attached to the fully extended cylinder taking all the tension of the bucket wheel boom and the other rope taking none of the tension and becoming slack." In cross-examination he was not entirely consistent on this issue but ultimately he seemed to hold to the view in his supplementary statement. And that view was supported by the evidence of Mr Bovell, an employee of Krupp, and by the evidence of Mr Black and Professor Hulsmann.

[499] Mr Bovell suggested three ways in which the operation of the manometers could have been negated, two of which have already been mentioned. One was by closing the isolation valve while the pressure within the manometers was within the operating range. He explained that this would maintain the then pressure within the manometers no matter what became of the pressure in the cylinders. A second was to adjust the upper and lower limits of pressure on the manometers. The third, not yet mentioned, was by some electrical bridging of the contacts at some location in the circuitry, so that the manometers would not be in contact with the braking system for the ropes.

[500] The defendants called another witness named Brian Black, Mr BH Black. He worked at the mine from 1971 until 2000 in various positions, and for a long time as an operator of the BWE. From the early 1990's he trained other operators but still about half of his time was spent operating the BWE. He said he was familiar with the safety devices on the BWE, including the manometers, as to which he said:**

"As a matter of course, I checked the manometers almost every shift when I was working on the BWE. I would often need to adjust the rope tension to bring them within the correct limits on the gauges. This was done by pressing the buttons on the pump until the tension was corrected and the needles on the gauges were in the middle of the set limits."

**Mr Bovell referred to this evidence and explained that the buttons to which Mr Black was referring were those which filled or drained oil in the cylinders. According to that evidence of Mr Black then, he would regularly adjust the rope tension by pumping oil with a consequent effect on the readings shown by the manometers. This seems to be inconsistent with Mr Bovell's theory that the manometers had been isolated from the rest of the system.

[501] Mr Max Clews worked at the mine from 1978 until the collapse of the BWE. From 1985 he worked as an operator of the BWE and in the following years he gained extensive experience in the operation of the entire BWE system. He was ultimately responsible for the training and assessing of many operators and crew members on that system. He was called in the plaintiffs' case and was cross-examined over many days. As I discuss below, he gave significant evidence as to the nature and extent of drop cutting. He was an impressive witness. He was independent in the sense that he had left the mine's employ. It might be said that he had some underlying interest in defending the manner of operation of this machine, but this defensiveness was not apparent. I accept his evidence that he had never seen anyone make any adjustments to the manometers and that there was no alteration of the set limits. I also accept his evidence that he had only ever seen the machine shut down perhaps three times from the operation of the manometers, although that is a point which, on one view, might be thought to assist the defendants.

[502] I am unpersuaded that the manometers were interfered with by the first or second methods raised by Mr Bovell: the closing of the isolation valve or the resetting of the limits. Indeed more probably than not, neither occurred. That leaves the possibility that the electrical circuitry was changed. If that occurred it was not by some deliberate decision by somebody higher up than an operator. In the defendants' favour is the record by Mr Thiel in his 1999 report about the ropes. As I have discussed, many witnesses seem to think that this was not possible, consistently with the continued operation of the machine, if the manometers were doing their work. But ultimately I am unpersuaded that they were interfered with in this way, or at all.

[503] If the manometers were not working during Mr Thiel's 1999 inspection, there may be many reasons for that. Mr BH Black recalled that "there was a lot of bridging out of electrical circuits on the BWE system" which:**

"was done by the electricians when there was an electrical fault because it was quicker than investigating the problem and fixing it, and allowing the BWE to get back to digging more quickly",

"often present when the electricians were working in electrical cupboards on the BWE and I saw the wires hanging from the circuits, which I knew to be bridging wires."

**So on the occasion of Mr Thiel's inspection, there is room for speculation, for example, that there may have been some temporary bridging out of the circuits connected to the manometers, not because this had to be done to facilitate drop cutting, but because of some electrical fault.

[504] From the evidence of Mr Clews and Mr BH Black, it does not appear that there was any stage at which the operation of the machine was being constantly interrupted by the operation of the manometers, which would then have made it likely that an operator would see fit to disengage them. Had there been such a constant shutting down by the manometers so that it was seriously affecting the work programme of the BWE system, it is likely that operators would have discussed that with one another, and that Mr Clews or another operator would recall it. And had there been some bridging out of the circuits attached to the manometers, or some other interference with their operation as suggested by Mr Bovell, it would be unlikely that none of the operators, called by one or the other side here, would know of it.

[505] The defendants argue for a finding that the manometers "were regularly by-passed", suggesting that sometimes they were in operation and sometimes not. It is quite possible that at some time or times they were not working, given that the period in question exceeded 15 years. It is another thing to say that they were deliberately interfered with so that drop cutting could occur.

[506] The defendants argue that given the evidence of Mr Clews and others as to the frequency of drop cutting, it is likely that the manometers were "by-passed" because of the likely instance of a "partial grounding during drop cutting, that always ran the risk of creating enough of a slack rope situation that the manometers would trip". But as that written submission appears to accept, it was not inevitable that drop cutting would cause such an interference with the rope tension that the manometers would shut down the operation of the boom. It far from appears that any drop cutting required the manometers to be by-passed in some way. As I will discuss, drop cutting was practised constantly over the entire life of the BWE. Consistently with the defendants' argument, there was a need to isolate the manometers from the outset, and to keep them isolated. This makes it more remarkable that there is no direct evidence that it happened.

[507] Some witnesses distinguished between different types of drop cutting. But in essence drop cutting involves the bucket wheel engaging a horizontal ground surface, rather than an (almost) vertical face.

[508] The BWE excavated "blocks" of overburden. A block was the term for a mass of earth, extending from the natural ground surface to a depth of 25 metres. Any block was defined, of course, by the excavation of the earth which had been next to it. As one block was excavated, the face of the next block became exposed. A block was about 40 metres wide, depending upon the arc of the bucket wheel as it slewed from side to side into the face. The face of the block would be divided into four or five terraces (or "benches"[94]). The block with its terraces is represented in this figure[95].

[509] The operator would start at the top terrace and slew the bucket wheel across its face; the BWE would then move forward (by about a metre or less depending on the hardness of the material) and slew back across the face. This would be repeated in the top terrace until the BWE could advance no further because of the position of its wheels next to the foot of the lowest terrace. The BWE would then reverse and the bucket wheel boom would be lowered to the level of the next terrace, where that would be dug, and then the next terrace and so on. Throughout the bucket wheel was always turning but of course not always digging.

[510] Mr Clews gave a detailed description of the use of drop cutting. His evidence as to this is apparently uncontroversial and I accept it. One situation in which drop cutting occurred, he said, was at the start of a new terrace (which he called a bench). When moving from one terrace to the next below it, the machine would be reversed to position the bucket wheel over that terrace, and whilst the boom was then being lowered, its wheel would begin to dig. This would involve a cut of about one metre or less before the BWE would commence its slewing action. Mr Clews described this downward cut as involving a "slice" of less than one metre into the face of the lower terrace. This was different from what he said was the usual method of operation which was to walk the machine back completely clear of the face of the lower terrace and then lower the boom before advancing into the (vertical) face to start slewing. As to how often this drop cutting might have occurred, Mr Clews estimated that during a 12 hour shift, there would be a maximum of about six terrace changes, that is a change about every two hours. He said that if there was drop cutting on each terrace change, there would have been no significant saving in time or increase in production. And drop cutting of this first kind could not have been used on the highest terrace, he said, because the wheel would not extend high enough to do so.

[511] The second situation was where the machine could not be reversed a sufficient distance to start a new terrace by the usual advance into the vertical face. This might occur, for example, if there was insufficient room between the face and a conveyor belt behind the machine. But this would occur only at the start of a new "strip". The BWE worked in a direction parallel to a conveyor belt behind it. A "strip" or "pass" was completed when the BWE had travelled the length of that conveyor belt. So this second situation, Mr Clews said, could occur only about every three months. Over the years, he said he had to use drop cutting in this situation "on several occasions".

[512] The third situation was when the lowest terrace was being cut by the BWE and it had to cut to a certain ground level. To achieve this precision, the operator sometimes had to lift or lower the boom slightly (a matter of inches) as it slewed.

[513] Mr Clews also recalled a few occasions (three or four over his entire 16 years or so with the BWE system) when there was an electrical drive fault on the crawlers so that the machine could not be walked backwards. On these occasions a drop cut method was used for a short period of no more than an hour or so.

[514] Mr Clews also described in cross-examination another context of drop cutting, which was where there was a cut in order to put in a drainage sump.

[515] In cross-examination he also recalled seeing drop cutting where the operator dropped the wheel into the new terrace as the machine was being walked back before coming forward again to start digging it. He said that he "had seen one or two operators that did do that".

[516] There was also drop cutting if and when the BWE cut below the ground level on which it then stood. This was when it was excavating behind itself, that is to say, in the opposite direction form its usual (in the case of this mine) easterly path across the mine site. The conveyor system would remain in position but the bucket wheel would dig to the west of the conveyor. This was described in a report by Dr Hofmann and Dr Dittrich as a "deep cut in drop cut method". Cutting at this lower level, they explained, "starts as a fully drop cut". There was some excavation by the BWE of this kind, late in its life. Mr BH Black recalled that when it was trialled in 1999, and also that in an earlier trial about ten years earlier, this "shook the whole machine...[there was] a lot of shaking and bouncing", which he attributed to the "tighter" and "harder" earth at that depth.

[517] So of those situations, it is only the first, which some witnesses called an "initiating drop cut", which could have involved drop cutting to any substantial extent. Mr Clews said that some operators more than others preferred the initiating drop cut. As a trainer of operators, he probably demonstrated the initiating drop cut as an option "to save a little bit on production time but that this depended on the material being dug and so forth." Mr Clews said that this initiating drop cutting occurred from the "first three or four years of (the BWE's) operation" and was "carried on throughout". Drop cutting of the second situation would have occurred "from day one" as did the third type.

[518] It appears to have been left to operators to decide if and when they would drop cut. Mr Clews said that operators "were really left to make up their own minds about how they would operate the excavator on any given shift" in this respect.

[519] The defendants suggested that the frequency of drop cutting became greater in later years. This was the evidence of Mr BH Black who said it occurred because it meant that "a slightly faster overall digging rate could be achieved"; and that it occurred "just about every bench coming down", although he did not use the drop cut.

[520] Mr Bowater has been a fitter and turner employed by the plaintiffs since 1980. He was called by the defendants and in evidence-in-chief said that

drop cutting in itself was "not really a problem done properly", but that some operators "did not know what they were doing". He then gave a description of what they were doing which is not easy to comprehend, but which seemed to describe a practice which occurred throughout the life of the machine. His evidence, on what was or was not "proper drop cutting" is of relatively little weight because at no time was he an operator.

[521] It was suggested to Mr Clews that the frequency of drop cutting increased in late 1998 or early in 1999, with the introduction of the automation of the hopper car system. This involved a device which measured the distance between the BWE's discharge conveyor and the hopper car into which its contents were emptied. If a certain distance was exceeded, then a switch prevented the BWE from walking until the discharge conveyor was automatically re-aligned, which took five or ten seconds. Mr Clews said that this probably resulted in "a slight increase in the amount of drop cutting" but it would not have been "very significant".

[522] Mr Brian Black, (the engineer) was asked about drop cutting and in particular the initiating drop cut. He knew of it but said "I don't think you would drop very far". When asked about the loads likely to be transmitted from drop cutting he said in effect that he did not know because he did not "claim to be an expert".

[523] Mr Graham Wood is an electrician employed at Goonyella since 1976. He was involved in the electrical maintenance of the BWE system from when it was commissioned until early 1985 and he later became supervisor of the system from 1998 until its collapse. He supervised operators of the BWE, the spreader and the conveyors. He attended the operator's cabin on a daily basis. He said that drop cutting was "not encouraged but there were some incidents where it was done". He instanced the commencement of a new "cut", which was at the end of a complete pass. Otherwise it was not "part of everyday operation". In my view, this understated the likely extent of drop cutting. And Mr Woods' views about its desirability are of relatively little weight given that his expertise is as an electrician.

[524] From this evidence several matters should be noted. The first is that drop cutting undoubtedly occurred and for effectively the entire life of the machine. Secondly, the significant context was the first situation, the initiating drop cut. Thirdly, whilst some operators such as Mr Clews did not see the benefit of it, other operators did see some point in the initiating drop cut, believing that it made some difference to productivity. Fourthly, apart from the somewhat difficult descriptions given by Mr Bowater and apart from the trials of digging the harder material below 25 metres as described by Mr BH Black, this drop cutting does not seem to have resulted in a particularly unusual or alarming movement of the machine.

[525] The defendants' case is that the use of drop cutting was largely responsible for the BWE's demise. They rely upon detailed modelling and analysis by Dr Potts. On his evidence, drop cutting involved the effect of a "partial grounding", by which some of the weight of the machine was taken off the bucket wheel boom, with the consequence that substantial vertical forces were transmitted up the tower, causing significant stress and substantially contributing to the growth of the crack.

[526] Dr Potts was the only expert to undertake such a detailed analysis of the effects of drop cutting. Professor Fisher was adamant that there had been no drop cutting, or at least nothing of significance. Indeed he said that had it occurred the machine would have failed long before it did. His evidence as to this cannot be accepted consistently with the evidence which the plaintiffs themselves called from Mr Clews as to the extent of drop cutting. The same applies in relation to Dr Jones who argued in one of his reports that:**

"AMOG [Dr Potts' firm] produced no evidence to support the use of drop cutting [and] had drop cutting been used, and had it produced a significant upward force on the wheel, then the mast would have failed by a single overload earlier than 15.3 years."

**Professor Hulsmann said that in drop cutting there was something which was the equivalent of a "ten per cent grounding", whereas Dr Potts' modelling assumed various possibilities of between 30 and 70 per cent grounding, for which therefore the stresses would have been higher.

[527] Whilst the nature and incidence of the drop cutting which did occur is known, the extent to which this resulted in an increase in stress in the main tower is far from clear. I accept Dr Potts' evidence that in principle, a partial grounding (if any) caused by drop cutting would have resulted in vertical forces extending up the tower resulting in stress. But the quantification of those forces and in turn the additional stress is difficult, at least because it requires an assumption that the postulated drop cutting involved some particular extent of partial grounding. It is difficult to accept that for each and every occasion on which this wheel engaged the horizontal face of a terrace there was consistently a partial grounding and of a certain extent.

[528] Was this drop cutting, and most importantly the initiating drop cutting, negligent? Should those operating the BWE or those instructing them have realised that there was such a risk of damage to the structure that drop cutting should not be performed?

[529] Remarkably for the case which they now advance, neither O&K nor Krupp ever warned or advised the plaintiffs about drop cutting. The plaintiffs had no experience of a bucket wheel excavator apart from this one. The use of bucket wheel excavators in coal mines in this country had been limited to those used in the La Trobe Valley. There was hardly an established practice or body of experience in Australia which would have made it reasonably clear that drop cutting was to be avoided. And the conditions in Victoria were not in all respects comparable because the material there was much softer than at Goonyella. So it was not so obvious without saying that the plaintiffs were not to drop cut. The machine was capable of drop cutting, and someone without the benefit of the engineering evidence which I have heard may have thought that he was doing no harm operating the BWE in that way. And this was something done by an operator no more than a few times within his shift, if at all.

[530] Save perhaps in one respect which I will explain, the written operating instructions provided by O&K with the BWE said nothing about drop cutting. That fact is at the heart of the defendants' argument. They contend that because the instructions said nothing about drop cutting, the reader should have understood that he was not to do it.

[531] In my view that was not how any reasonable person should have understood the instructions. The drop cutting in question was not a significant means of actually excavating. The initiating drop cut, when used, was merely something done at the very commencement of the slewing of a bench. The fact that O&K's instructions described the slewing process, but did not mention the initiating drop cut, need not have suggested to the reader that the drop cut was to be avoided. The operating instructions endorsed the practice of slewing below the level of the ground on which the BWE was standing, which involved the so called "deep cut drop cut". In his 1981 article about this machine, Dr Fleischhaker said that it was designed for a "deep cut" of 2.5 metres, apparently referring to this digging below the level on which the machine was standing.

[532] Moreover, it would have been surprising had O&K warned the user against all drop cutting, because as the evidence demonstrates, drop cutting was considered to be an acceptable practice.

[533] In a report by Dr Hofmann and Dr Dittrich, tendered by the defendants, they wrote that:**

"Drop cut method is a frequently used operation method in all the mines over the world. Animations in this report show how it is used in German mines.

Drop cuts - especially in a wrong application - have to be observed carefully to avoid big machine vibrations."

**They referred to some pictures of the BWE and the mine site immediately after the collapse and described as "not really understandable and not explainable" the facts of "a drop cut in the second terrace face" and a "bogged dropped cut" in the ground. The translation from their native German in this report is awkward but in effect, their evidence was that drop cutting of itself is not dangerous and it is a frequently used method with bucket wheel excavators, but that it must be done carefully.

[534] In a well known text by Dr Durst and Professor Vogt entitled "Bucket Wheel Excavator" (published 1988), instructions are given as to several methods of operation including not only the "terrace cut" and the "deep cut" (cutting below the level of the tracks) but also the "drop cut". Dr Durst was formerly the chief of the design department at O&K and Dr Fleischhaker's superior. He had some early involvement with the design of this BWE. Drop cutting is also the subject of instruction in an earlier text by Rasper.

[535] Then there is the fact that O&K itself offered to train operators at Goonyella in drop cutting. In a letter dated 20 May 1981 from O&K to Utah, O&K proposed a training program with the BWE which would include instruction as to:**

**[536] Mr Kogel was an employee of O&K in Germany until he came to Australia in May 1980 to act as project manager for the supply, construction, commissioning and handing over of the BWE. He remained employed by O&K. He was based in Brisbane and went to Goonyella monthly, and when O&K Australia commenced business in July 1981 he became its managing director remaining in that position until 1991. He confirmed that the term "dropping cut" is synonymous with drop cutting. And when asked about an initiating drop cut and whether a dropping cut can be used in that context, he replied, "You can". Faced with this evidence, the defendants submitted, without any further evidence, that O&K might have been offering to train operators not to drop cut, rather than how to drop cut. I do not accept this submission.

[537] So far as Australian experience is concerned, Mr Newnham ranks highly. He is an engineer who has been involved with the bucket wheel excavators used in the La Trobe Valley, where equivalent machines are sometimes referred to as dredgers. He was responsible for managing the repair of these machines and their operating procedures. From 1980 to 1983 he was employed at the Yallourn Mine as the mechanical maintenance superintendent, and was there responsible for maintenance of a wide range of equipment which included bucket wheel/bucket chain excavators. From 1983 to 1991 he held various positions at the Loy Yang Mine and then the Loy Yang Power Station in the employ of the State Electricity Commission of Victoria. In 1990 and 1991 he was the manager, mine improvements for the SECV, which provided engineering support for the Commission's La Trobe Valley coal mines. For the next three years he was principal engineer of another group which provided plant design and support services to the La Trobe Valley coal mines and then from 1994 he has been in his own business, WBM Pty Ltd.

[538] He discussed drop cutting as a common practice and referred to its reference in "Experience with Bucket Wheel Excavators in Australian Brown Coal" by Mr HCG Rodgers. He also referred to the publication by Rasper. Mr Newnham wrote in one of his reports as follows:**

"Personally, I am unaware of any direction or caution by machine manufacturers, warning against the use of the dropping cut technique. Documentation for Dredgers 9 and 13 in La Trobe Valley depicts the drop cutting technique."

**[539] It may be the case that the drop cutting with this BWE, or some of it, was a cause of its early demise. It may also be the case that O&K, and in particular Dr Fleischhaker, had not anticipated either the extent of that drop cutting or its impact given the particular conditions at Goonyella. Especially having regard to the evidence as to German practices, some drop cutting should not have surprised them. It is quite another thing to say that the owners of the machine should have understood that there was to be no drop cutting, and in particular none of the "initiating" kind. Not only was there no warning or instruction against it, O&K offered to train operators in drop cutting. It cannot be said that drop cutting of itself was obviously wrong.

[540] It may be that the overburden in which some drop cutting was undertaken was damaging to the BWE and that the individual operator should have known that he was then working the machine too hard. But that is mere speculation, and it is not proved that such drop cutting occurred.

[541] The fact of contributory negligence is not proved by Dr Potts' extensive modelling and analysis. That evidence goes to the causative effect of drop cutting. It cannot be fairly used to reason to a conclusion of contributory negligence. And necessarily in his analysis Dr Potts had to make numerous assumptions. In particular he assumed an incidence of drop cutting which was not borne out completely by the evidence and in particular by that of Mr Clews.

[542] In my conclusion, it is not shown that the drop cutting which did occur involved the absence of reasonable care.

[543] The defendants plead that the plaintiffs negligently "caused or permitted teeth of an improper or inadequate design to be used on the buckets", with the consequence that vertical loads were increased which imposed loads outside "the parameters of

BG 60" and unduly increased the stresses on the tower.

[544] They further plead that the plaintiffs "failed to adequately act upon the expressed view of Dr Fleischhaker to the effect that the teeth being used were the wrong shape and were imposing excessive vertical forces".

[545] Thirdly, they plead that the plaintiffs wrongly "caused or permitted the BWE to be operated for periods with teeth missing from the buckets, and with buckets missing from the bucket wheel".

[546] That second allegation is really a particular of the first allegation: that the wrong teeth were used.

[547] On each of the buckets were several metal protrusions, which would engage the earth ahead of its encounter with the bucket itself. These were its teeth. There were 160 teeth, eight on each of the 10 buckets and eight on each of the pre-cutters. (Originally the pre-cutters had six teeth but this was changed to fit the teeth in the same configuration as on the buckets.) Each tooth was attached to the wheel by an adaptor.

[548] In essence the defendants' case is that the plaintiffs used teeth which were too blunt and that this resulted in higher loads and stresses than those for which the machine had been designed. This is said to have contributed to the fatigue cracking which caused the collapse.

[549] The BWE was supplied by O&K with teeth which it had designed and manufactured. But very soon they proved to be unsatisfactory. According to Mr Michael King, who was formerly employed as the mechanical maintenance superintendent at the mine, the O&K teeth failed within the first 25 hours of operation. So in conjunction with Mr Raleigh and a Mr Stahl, Mr King set about finding a solution. Many different types of teeth were trialled. O&K was involved to some extent in that process as were two other suppliers of teeth, which were Esco and Hensley. According to the defendants' particulars, the plaintiffs' use of both the Esco and the Hensley teeth was negligent.

[550] Mr Gemballa was an employee of O&K who was at the mine site when the BWE was commissioned and for about 10 months afterwards. He had some involvement in this trialling of other teeth. Mr King recalls that when Mr Gemballa left the site he took with him a couple of the Hensley teeth.

[551] While this trialling was occurring Utah was fast running out of O&K teeth. In about the middle of 1983, Utah started trialling Hensley teeth, firstly with tungsten carbide tips and later with other tips.

[552] Dr Fleischhaker was well aware of the problems with the O&K teeth and of the search by Utah for substitutes. And he was well aware of what teeth were being used, as appears from, for example, an article about this BWE which he published in 1985. He sent a draft of that article to Mr Black in January 1985. In the published article he wrote of the performance of the BWE, detailing its output and the conditions in which it worked. Under the heading "Lifetime of Teeth" he wrote:**

"Looking at the experience of about 30 months, it seems to be a question of economics whether or not extremely hard material should be preblasted.

[Utah] has conducted some experiments with various teeth. They have used:

Hensley teeth - tungsten carbide mounted on cast steel

The lifetime depends on the hardness of the material (ratio of minimum to maximum lifetime about 1:3) and on the position of the teeth in the bucket (ratio of minimum to maximum lifetime about 1:8)."

[553] In 1989 Dr Fleischhaker wrote to Mr Black about teeth as follows:

As you will remember we are doing some trials to develop better wear resistant teeth for heavy duty operation. We have installed some special teeth in Bukit Asam, Indonesia, and we would like to ask you to do some other trials in your Goonyella mine.

If you could agree we would like to ask you for 4 teeth of your Australian fabrication (Hensley supply?). Please send them by airfreight , we will pay the bill. We will modify these teeth (another kind of wear resistant cover) and send them back to you. They should be installed on one bucket to observe their lifetime.

Hopefully we will achieve some good results for the future.

**[554] At no time did Dr Fleischhaker or anyone else from O&K write in terms which expressed any concern as to the teeth on this BWE. More particularly at no time did he or any other person suggest that the teeth which were being used could damage the structure, or that some engineering assessment of that risk (if any) should be undertaken.

[555] There was nothing about teeth or missing buckets as part of the defendants' original pleadings of contributory negligence. O&K pleaded these matters only by an amendment allowed at the commencement of the trial. And they were raised for the first time by parts of Dr Fleischhaker's witness statement of February 2007. The lateness in the addition of this case about teeth is not satisfactorily explained. If, as Dr Fleischhaker says, he had always been concerned about teeth, it is remarkable that O&K did not plead this case earlier. Yet Dr Fleischhaker's evidence is that he did warn against the use of these teeth, by "what was said to Black and Shepherd between 1982 and 1984, in Brisbane, and said to Black in November 1984 at Goonyella".

[556] In his first statement, Dr Fleischhaker sought to explain the unsuccessful O&K teeth as follows:**

"...The responsibility for developing and specifying the shape of the teeth used in the bucket wheel itself was left to the mechanical department [of O&K]. In 1978, it was not as fully appreciated as it has become, that the shape of the tooth may be critical to where the vertical loads were being imposed upon the bucket wheel in its ordinary use."

**This suggests that there was some engineering advance which occurred after the design of the bucket wheel, although that is not otherwise indicated by the evidence.

[557] In the same statement Dr Fleischhaker said that:**

"It would have been inappropriate for the tooth specified for this excavator for use in hard material to have a tungsten tip because the result of that is that the tooth is not permitted to wear in a manner which is described as underwear. By this process, the teeth are quickly sharpened by the wearing process, and it is the sharpened edges which form the effective cutting task. If the teeth are not shaped in this way, it is possible for vertical loads to be imposed upon it."

**In this he appears to have been referring to the Hensley tooth, which had a cutting edge of tungsten carbide. But on Mr King's evidence, which I accept, when the machine was first commissioned the O&K teeth were tungsten with carbide inserts. On the O&K teeth these inserts shattered or broke out and then the adaptors began to fail and break off. Mr King explained that with the Hensley tooth there were not the same tungsten carbide failures because a softer grade of tungsten carbide was used which avoided fractures.

[558] Then in the same statement he said that when he was at the mine in October 1984, he discussed with Mr Black his "concern that the type and inclination of the teeth were wrong and that they were imposing vertical forces". He continued:**

"The geological conditions on the site required a special shape of teeth on the buckets to ensure the correct angle and the digging process. Although this was not known at the time of the original design, after my investigation on site following the distortion to the tower in October 1984, I formed the view that part of the explanation was that the wrong type and inclination of the teeth, which resulted in the operator of the machine in having a problem being unable to dig into the ground but just sliding on the surface with the result that vertical forces were increased."

"Between 1982 and 1984 I told Mr Black and Mr Shepherd in Brisbane that the teeth they were using were the wrong shape. I informed them that immense forces were needed to bring these teeth through the hard material. I said that unless O&K designed teeth were used, the life of the machine would be significantly shortened and that the O&K teeth were specially designed for this process. One of those occasions I believe was a mining conference in Brisbane."

**He claims that he had no success in persuading them that they should come back to the O&K teeth, or teeth shaped like the O&K teeth.