Drake v Mylar Pty Ltd & Anor

Supreme Court of NSW|2011-12-15|Before: Adamson J

Introduction 1The plaintiff's case is that, on 26 March 2005, when he was constructing a carport, he fell from a height of 2.4m when a joist, on which he rested his right foot to steady it, failed, causing him to fall to the ground. He had bent down and was carrying a nail gun which he proposed to use to attach the joist to a top plate. The precise cause and mechanism of the fall is in issue. It is accepted that he was injured in the fall and that therefore he suffered loss and damage. 2It is accepted that the joist was labelled Machine Graded Pine 10 ( MGP 10 ), which indicates that it has been graded by reference to AS 1748. The wood was delivered to the property where the plaintiff was constructing a carport for a client of the Company's ( the Owner ) in March 2005. The wood was manufactured by the second defendant and sold by the first defendant. The invoice for the supply of the wood nominated SSS Innovations Pty Limited ( the Company ) as the customer. The plaintiff's wife was both director and secretary of the Company. 3The proceedings have been resolved in so far as the first defendant is concerned. 4Although several causes of action were pleaded, the only ones pressed by the plaintiff at the conclusion of the hearing were his claims for damages under s 80 and s 82 of the Trade Practices Act 1974 (Cth) ( the TP Act ) for breaches of s 52 and s 53 of the Act on the basis that the subject joist was not of MGP 10 standard. 5The plaintiff also claimed damages under s 75AD of the TP Act on the basis that his injuries had been caused by a defect in the wood. The second defendant relies on three defences: first, s 75AI on the basis that the plaintiff is an employee and is therefore entitled to recover under a law relating to workers' compensation; secondly, s 75AK on the basis that the state of scientific or technical knowledge was not such as to make the defect discoverable; and thirdly, s 75AN on the basis that the plaintiff's damages should be reduced by reference to his contribution to his loss. The second defendant submitted that 70 per cent would be an appropriate deduction. 6Because of other matters that had been agreed or conceded, which are set out in more detail in these reasons for judgment, the principal issue in the case is whether the joist failed because of a defect or whether it was not defective and failed merely because of the force of the impact applied to it. 7Subject to one matter, it is common ground that if the accident happened in the way the plaintiff described it, the joist must have been defective since MGP 10 timber is designed to bear considerably greater weight than the plaintiff's. In this event, the joist was a 'rogue board', being one that had been allowed to pass through the process of grading notwithstanding its defect. The qualification is that if the plaintiff fell onto the board from a height of 2m, there would be sufficient force from the impact to cause a non-defective piece of MGP 10 to fail. 8If the plaintiff succeeds in persuading me that the subject joist was defective, then he is entitled to succeed in his claim for damages under s 80 and s 82 of the TP Act for breach of s 52 and s 53. The second defendant did not contend that, in that event, it had any defence available to it which would extinguish, or diminish, the quantum of the plaintiff's damages.

Relevant provisions of the TP Act 9All of the provisions of the TP Act that have been sued upon were repealed with effect from 1 January 2011, but the parties agree that the present case should be decided by reference to the TP Act as it stood as at March 2005. The relevant provisions of the TP Act as at that date are set out below. "52 Misleading or deceptive conduct (1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in the succeeding provisions of this Division shall betaken as limiting by implication the generality of sub-section (1). 53 False or misleading representations A corporation shall not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services: (a) falsely represent that goods are of a particular standard, quality, value, grade, ... ; ... 75AC Meaning of goods having defect (1) For the purposes of this Part, goods have a defect if their safety is not such as persons generally are entitled to expect. (2) In determining the extent of the safety of goods, regard is to be given to all relevant circumstances including: (a) the manner in which, and the purposes for which, they have been marketed; and (b) their packaging; and (c) the use of any mark in relation to them; and (d) any instructions for, or warnings with respect to, doing, or refraining from doing, anything with or in relation to them; and (e) what might reasonably be expected to be done with or in relation to them; and (f) the time when they were supplied by their manufacturer. (3) An inference that goods have a defect is not to be made only because of the fact that, after they were supplied by their manufacturer, safer goods of the same kind were supplied. (4) An inference that goods have a defect is not to be made only because: (a) there was compliance with a Commonwealth mandatory standard for them; and (b) that standard was not the safest possible standard having regard to the latest state of scientific or technical knowledge when they were supplied by their manufacturer. 75AD Liability for defective goods causing injuries - loss by injured individual If: (a) a corporation, in trade or commerce, supplies goods manufactured by it; and (b) they have a defect; and (c) because of the defect, an individual suffers injuries; then: (d) the corporation is liable to compensate the individual for the amount of the individual's loss suffered as a result of the injuries; and (e) the individual may recover that amount by action against the corporation; and (f) if the individual dies because of the injuries - a law of a State or Territory about liability in respect of the death of individuals applies as if: (i) the action were an action under the law of the State or Territory for damages in respect of the injuries; and (ii) the defect were the corporation's wrongful act, neglect or default. ... 75AI No liability action where workers' compensation or law giving effect to an international agreement applies Section 75AD, 75AE, 75AF or 75AG does not apply to a loss in respect of which an amount has been, or could be, recovered under a law of the Commonwealth, a State or a Territory that: (a) relates to workers' compensation; or (b) gives effect to an international agreement. ... 75AK Defences (1) In a liability action, it is a defence if it is established that: ... (c) the state of scientific or technical knowledge at the time when they were supplied by their actual manufacturer was not such as to enable that defect to be discovered; or ... . 82 Actions for damages (1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. ... (1B) Despite subsection (1), if: (a) a person (the claimant) makes a claim under subsection (1) in relation to: (i) economic loss; or (ii) damage to property; caused by conduct of another person (the defendant ) that was done in contravention of section 52; and (b) the claimant suffered the loss or damage: (i) as a result partly of the claimant's failure to take reasonable care; and (ii) as a result partly of the conduct referred to in paragraph (a); and (c) the defendant: (i) did not intend to cause the loss or damage; and (ii) did not fraudulently cause the loss or damage; the damages that the claimant may recover in relation to the loss or damage are to be reduced to the extent to which the court thinks just and equitable having regard to the claimant's share in the responsibility for the loss or damage."

The history of these proceedings 10These proceedings were commenced in the District Court by statement of claim filed on 17 March 2008, within three years of the subject accident. The proceedings were transferred to this Court by order made on 18 May 2009.

The construction of the carport 11The carport was to be erected between the Owner's house and the boundary between the Owner's property and the neighbour's property. It was to be 9m long and it was to be constructed, at least partly, of wood. 12When the wood was delivered on 17 March 2005, it was placed on the verge outside the Owner's property, before being moved to his driveway, where it remained for some days before it was required for the construction of the carport. From the time of delivery until the time of the fall, the plaintiff did not notice anything about the wood which gave him any concern about its condition or suitability. Although the second defendant raised the possibility that the joist was materially damaged between its leaving the mill and the time of the accident, there is no evidence to indicate any defect in the wood that might have happened in transit. 13The plaintiff tendered in evidence the two pieces of the joist from which he fell. These pieces were examined by the experts (see below) and also subjected to Scan Electron Microscopy ( SEM ). Photographs were taken to depict its appearance under SEM. 14A wooden "wall plate", made of the same MGP 10 as the joists, was dyna-bolted, in sections, to the brick wall of the house at a height of 2.4m. 22 joists were then attached to the wall plate using metal "horseshoe brackets", which held the joists on edge. The plaintiff gave evidence that he installed the wall plate with the assistance of a mobile scaffolding platform known as an "instant snappy". 15Along the other side of the driveway, several pillars supported a metal frame, on top of which an MGP 10 "top plate" was affixed. The 22 joists were fastened to the wall plate with metal brackets known as horseshoe brackets. The brackets contained predrilled holes through which nails could be driven. The joists were placed in position, with one end resting in the bracket and the other on the top plate. Before the plaintiff began securing the joists to the top plate, he first completed the task of nailing all 22 joists into the brackets attached to the wall plate. 16The distance between the metal frame and the boundary of the Owner's property was in the order of 900mm. 17Although it is only of marginal relevance for present purposes, the plaintiff gave evidence that after all the ceiling joists had been affixed to the plate, a hanger was to be installed over the ceiling, which would effectively halve the span of the ceiling. Once installed, rafters would then be attached to the hanger. The rafters were also to be MGP 10.

The circumstances surrounding the fall 18Of greatest significance for present purposes is the technique that the plaintiff employed to nail each joist to the top plate. The plaintiff gave evidence that, because of the thickness of the joist, it was necessary to skew the nail at an angle of 45 degrees so that it would fasten the joist to the plate. The plaintiff used a pneumatic nail gun which was connected by a long hose to a compressor on the ground. The nails are loaded into it and therefore do not need to be carried separately. It was the plaintiff's usual practice to drive at least two, and no more than four, nails into each joist to affix it to a top plate. 19The plaintiff explained that he had to be virtually on top of the joist in order to fire the nail in the right direction. He gave evidence that most of his weight was in his left foot, which rested on the top plate. He used his right foot to steady the joist. He explained that he had to keep most of his weight on his left foot because that would give him the best position from which to put the nails into the joist at an angle. He put a nail in each side of the joist beginning with the side which had the pencil mark indicating where the joist should be affixed, and then did the other side. He would need to change position once he had done one side to do the other side. 20His left foot was placed along the top plate, perpendicular to the street, but, in order to position himself to insert the nails, he rotated his body such that he was facing parallel to the street and placed his right foot on the joist before he started to insert the nails. 21The plaintiff agreed that the only thing that provided him with any security or stabilisation was the support provided by his right foot which was on the joist itself. Although the plaintiff said that most of his weight was in his left foot, there was some weight in the right foot to hold the joist in position otherwise it "would just skid". 22The plates on either side of the ceiling of the carport were pieces of MGP 10 which measured 90mm x 45mm. The surface on which the plaintiff stood when he skew-nailed the joists was accordingly 90mm wide. The nails were 90mm long. Because the joist was on edge, the surface on which the plaintiff put his right foot was 45mm wide. The plaintiff was wearing work boots at the time. 23The plaintiff had already nailed six joists to the top plate and was positioning himself above the seventh of the 22 joists in order to nail it to the top plate when he fell. According to the plaintiff, the seventh gave way before he had put a single nail in. 24The plaintiff said that he had "always" used the same system described above for the past 25 years and had used it on the six joists which he had fastened before the seventh joist gave way. The seventh joist gave way before he had even put one nail into it. He said: "At the joist, I went to put my foot on the joist, as I had the other ones, and just went straight through it. There was no resistance. I just ended up on the ground." 25He agreed that he must have put enough weight on his right foot for him to lose his balance when the joist under it gave way. 26It was put to the plaintiff in cross-examination that he could have used the mobile scaffold to nail the joists to the top plate instead of climbing onto the structure. The plaintiff disagreed and said that the mobile scaffolding was not sufficiently high for that to occur safely and that only his head and shoulders would be above the level of the joists if the mobile scaffolding was extended to its full height. 27The plaintiff did, however, agree that there was an inherent risk in his balancing on a plate that was 90mm wide to perform work. He agreed that there should be some form of fall restraint if one is working at a height of 2400mm. In re-examination he gave evidence that he considered the ceiling joists themselves to be a fall restraint because the spacing between them was only 450mm, and that fall restraints were provided on one side by the Owner's house and on the other side by the fence with the neighbouring property. The plaintiff said that he did not consider there to be any other fall restraint that he could put in without damaging surfaces. 28I record these findings, which go to s 75AN of the TP Act, for completeness but these are not material in light of my finding that the second defendant's defence under s 75AK defeats the plaintiff's claim under s 75AD. 29In his statement, the plaintiff estimated that his weight at the time of the accident was between 80-85kg. However he had had a stent inserted into his heart the month before the accident and it was put to him in cross-examination that the hospital had recorded his weight as being 90kg. The plaintiff did not accept this. The hospital record was not tendered. Accordingly, I accept the plaintiff's evidence that his weight at the time of the fall was 80-85kg, although the distinction is, for the reasons that appear below, immaterial. 30The first defendant's counsel put to the plaintiff that the accident did not happen the way he described, that he simply lost his balance, fell and hit the ground and that the fall was not caused by the broken joist, although the force of the fall may itself have broken the joist. He put further that for the wood to be so deficient as to give way at the slight pressure of the plaintiff's right foot, the deficiency would have been apparent when the plaintiff moved the wood from the verge to the driveway and then lifted the joist so as to install it between the plates to form the roof of the carport. The plaintiff did not accede to any of these propositions but adhered to his version of the way in which the accident had occurred. 31The plaintiff did, however, agree that if the accident occurred in the way he described, the joist would simply fall straight down.

Other evidence of the accident 32The Owner gave evidence, in the form of a statement that was unchallenged, as follows: "I was alerted to Mr. Drakes [sic] accident by this noise and calling out. I found Mr. Drake on the ground. There was a piece of timber shattered next to him and the other broken piece was still attached to the carport roof. I could see Mr. Drake has serious injuries to his left wrist and feasible [sic] head injury. I assisted him to obtain medical attention and to be taken to the Hospital." 33Photographs were tendered of the scene of the accident, which depicted the half-constructed carport, and the longer part of the subject joist hanging from the wall plate.

Professor Crews' evidence about the mechanism of the fall 34Professor Crews was relied upon by the second defendant. He was a structural engineer by training and, since 1993, he has been an active member of various Australian Standards committees that have produced the standards relevant to these proceedings. He was amply qualified to give opinion evidence on the matters in issue. His evidence is relevant to a number of issues in the case, the first of which is the mechanism of the fall. 35His evidence was necessarily circumstantial and was based on his observation of the failed joist and in particular the area of the wood where the joist failed. 36It was his opinion that it was much more likely that the subject joist had failed because of impact, rather than because of a defect. He pointed to a number of factors to support his view, his evidence of which is set out in more detail below: (1) The appearance of the subject joist, which was inconsistent with a defect such as to cause a failure; (2) He had never heard of a rogue board failing in that way before; and (3) The extreme statistical unlikelihood of such a board failing in that way, having regard to the mechanical stress grading to which it had been subjected. 37Professor Crews examined the two pieces of the joist that failed. He opined: "... the most probable cause of the fracture is a sudden impact load - possibly applied about its minor axis (or on flat). In this case, a sudden impact force of sufficiently large magnitude to fracture the timber in this manner could possibly have been generated by a 100 kg object falling approximately 2 ms and landing on the point of failure." 38This calculation was performed by reference to a piece of wood that met the structural requirements for MGP 10. Accordingly this calculation is of limited relevance since the wood in the calculation was sound and met the standards of MGP 10 and it is in issue whether the subject joist was sound, or whether it contained a defect which made it more susceptible to failure. 39Professor Crews opined that: "The mode and appearance of the failure is not consistent with that caused by gently applied loads to timber. However, the appearance of the wood surfaces at the location of the failure is consistent with that seen when timber is impacted by a falling object that has sufficient momentum to fracture the timber. The impact force generated by such a load is a function of the object mass and the distance it falls." 40He considered the appearance of the broken edge of the subject joist to be inconsistent with the plaintiff's version of how the accident occurred. He said: "... I have been unable to detect defects, for want of a better term, in this piece of timber that would justify that this has failed under the load as claimed by the Plaintiff." 41Professor Crews agreed that there was compression wood in the subject joist proximate to (40mm from) the area of failure and that the presence of compression wood meant that there was a higher probability of failure occurring with a lower load. However, he did not consider that the compression wood went through the whole of the section and that there was sound wood in the area of the failure. He opined that the wood did not exhibit any characteristics that would suggest that it was inherently weaker. Professor Crews considered that the SEM photographs that Mr Beckett, the plaintiff's expert, had taken showed some differences in cell wall behaviour which would indicate some localised damage, which was possibly a combination of impact damage and compression wood but he could also see cells that appeared to be quite normal. 42He also said that he has, since 1993, been involved with the company that wrote the relevant standard and he has never heard of a failure like this occurring with compression wood. There were figures quoted by him as to the extreme statistical unlikelihood of a rogue board with that defect passing through the grading system and failing as the plaintiff alleged that it had. Although I consider this evidence to be valuable, it is not decisive. Statistical analysis has difficulties in circumstances that arise in courts, where additional facts are known ( Saint-Gobain Abrasives Pty Limited v McPherson [2009] NSWCA 214, at [55] per Basten JA, with whom Campbell JA and Simpson AJA agreed). Commonly, as in the instant case, a plaintiff's evidence as to the way something occurred needs to be weighed in the balance against the weight of such statistical analysis. 43Professor Crews gave oral evidence that because of the length of the joist it was possible for the unsecured end to move, even though the other end was nailed to the bracket. He postulated the following hypothesis of how the damage to the subject joist could have occurred: "... if this joist was not secured at the time and if he lost his balance because the joist moved and rolled, then you have a scenario where he could have lost his balance and toppled ..." 44Ultimately, although Professor Crews considered it to be highly unlikely, he accepted that it was possible that the accident occurred in the way the plaintiff described it.

Findings as to the way in which the accident occurred 45There was no evidence adduced of any attempt by either party to investigate whether the nature of the plaintiff's injuries shed any light on the mechanism of the fall. Nor was there any suggestion that the plaintiff had not fallen from the height while he was constructing the carport. Furthermore, the hypothesis that the failure could have occurred when a 100 kg object fell two metres does not easily fit into any permutation of facts put to the plaintiff, or which would otherwise explain the fall. 46The hypothesis put by Professor Crews in his oral evidence (which is set out above) that the joist may have moved and rolled, thereby causing the plaintiff to fall is an apparently attractive one. This hypothesis may explain why a joist that bore no particular sign indicating weakness, apart from the presence of compression wood which was thought to be insufficient to affect its structural strength, could fail from impact damage notwithstanding that it was sound. It may be that the joist could have failed had the plaintiff fallen on top of it when it hit the ground. However, I do not consider that it is open to me to take this possibility into account since it was not put to the plaintiff. 47Because of its importance to my determination in this case, I propose to set out extracts of what was, relevantly, put to the plaintiff: "Q. Mr Drake I put this to you, whilst you were bending over to fix a joist you were working on at the time you were injured you lost your balance and you fell, do you agree with that? A. Yes. Q. And I suggest that you as you lost your balance and fell that your body crashed down onto the joist, agree with that? A. No. Q. And I think apart from injury to your wrist you injured your head did you not? A. Yes." (T45.44-T57.5) "Q. And on your case you say you were standing there keeping most of your weight on your left foot and you simply put your right foot on top of that piece of timber and it simply snapped in half, correct? A. Yes. Q. I suggest that did not happen and that you simply lost your balance and fell, do you agree or disagree with that? A. I disagree with that. Q. That if the piece of timber broke it broke as part of the whole mechanism of your fall, that is it ended up broken after you fell and hit the ground but you are not sure how that occurred? A. Can you repeat that please? Q. I will. What I am suggesting is if the timber got broken as part of your fall that occurred after you had already lost balance and were falling? A. No. Q. And that it simply ended up broken after you hit the ground? A. No." (T59.21-T59,40) "Q. I put the proposition Mr Drake, that did not happen that way, and that in fact you simply lost your balance and fell. Do I understand you disagree with that proposition? A. Yes." (T64.15-T64.18) 48What was not put to the plaintiff was that he lost his balance because the joist, one end of which was not fixed, had moved and was no longer adequately supported by the top plate, which caused him to lose his balance and fall. 49Although the first defendant's counsel, who conducted the cross-examination on behalf of both defendants, fulfilled the requirements of Browne v Dunn (1893) 6 R 67, he did little more to challenge the plaintiff's version than put a hypothesis to the plaintiff, which the plaintiff rejected, that he had lost his balance and fallen on the joist, and that the force of the fall was what had caused it to rupture. This hypothesis did not correspond with Professor Crews' theory, since, even had the plaintiff fallen as put by the defendant's counsel, the force which such a fall would have imposed on the joist would not have been sufficient to cause the joist to fail if it had met the relevant structural requirements, unless, as I have postulated above, the plaintiff fell on the joist when it was on, or close to, the ground. 50The plaintiff's evidence as to the way in which the accident occurred is set out above. The only substantial basis on which the second defendant submits that I ought not accept the plaintiff is Professor Crews' evidence that it was extremely unlikely that it could have happened that way, having regard to the unlikelihood of rogue boards and the appearance of the joist in question. The plaintiff's credit was, however, not challenged sufficiently to cause me to doubt his version, otherwise than by reference to Professor Crews' evidence. 51Professor Crews ventured, in the following passage from his oral evidence, that the shock of the trauma could have affected the plaintiff's recollection of events: "But no other witnesses have seen what happened I am sure because of the trauma attached to this sort of accident a lot of things would have happened very quickly for the plaintiff and the order in which things happened it may or may not be as he recalled." It was almost certainly outside Professor Crews' experience to express such an opinion. In any event, this evidence was not of assistance since its substance was not put sufficiently to the plaintiff. 52I have some reservations about the plaintiff's description of how the accident occurred and whether, in particular, he put his right foot lightly on the joist or whether his weight was more evenly distributed than he deposed. Nonetheless I am satisfied that his fall was probably caused by a defect in the joist. I accept that he fell as a result of the failure of the joist, rather than that his fall caused the joist to fail. 53However, even if it was his fall that caused the joist to fail when the joist was still in place between the plates, rather than the other way around, it does not matter, since on either scenario the MGP 10, if it had performed as it was supposed to, would have been, on the basis of Professor Crews' evidence, more than adequate to take his weight.

Finding of defect 54For the reasons given above, I find that the subject joist had a defect, which caused it to fail. The plaintiff has suffered injuries as a result of the defect, since it was the failure of the joist which caused him to fall to the ground from a height of 2.4m.

Sections 52 and 53 55The representation alleged to have been made in respect of the joist was that it was MGP 10. It bore a black line which signified this. As the evidence set out above establishes, MGP 10 is a grading standard. Although the subject joist was graded according to the standard, it was, as I have found above, defective, and did not have the structural qualities of MGP 10 timber. 56I am satisfied that the black line signifies MGP 10 wood and that the second defendant, by applying the black line and allowing the timber to leave its mill was representing to the world at large, including the plaintiff, not only that it had been graded, but that it met the MGP 10 standards and was suitable for structural uses. This was accepted by the second defendant. 57The second defendant accepts that, if I find the joist to be defective, it was guilty of misleading and deceptive conduct pursuant to s 52 and a breach of s 53. It also accepts that, in this event, the plaintiff suffered damage as a result of reliance on the representation that the wood was MGP 10. 58I have found that the subject joist was defective. Accordingly the labelling of the joist as MGP 10 was in breach of s 52 and s 53 of the TP Act. I find that the plaintiff suffered injury as a result of his reliance on the labelling and therefore causation for the purposes of a claim for damages pursuant to s 82 of the TP Act has been established. 59The second defendant did not contend that it has any available positive defence to such claim, nor that it is entitled to any reduction for contributory negligence for damages under s 82. 60Notwithstanding the second defendant's position referred to above, I have considered whether s 82(1B) assists it in reducing the plaintiff's claim. Section 82(1B) applies where a person makes a claim under s 52 "in relation to economic loss". Academic commentators have regarded these words as meaning "pure economic loss" and inapplicable to damages for personal injury which include a component for economic loss, or loss of earning capacity: Rohan Price and Lynden Griggs, "Causation, contributory negligence and misleading and deceptive conduct - a modest proposal for change" (2010) 18 Competition and Consumer Law Journal 93, at 102. Furthermore, s 82(1B) applies only to a claim under s 52 and not to one under s 53. As I have found that the plaintiff succeeds under both sections 52 and 53, even if s 82(1B) did apply to the damages recoverable for breach of s 52, the damages recoverable under s 53 would be relevantly undiminished. 61Had the question arisen for determination I would have been disposed to reduce the plaintiff's damages by 60 per cent by reason of his failure to take reasonable care by undertaking the task at a height of 2.4m without adequate fall restraints, or other means of support (such as would have been provided had the plaintiff availed himself of a scaffolding platform that was higher than the one he employed). 62However, I am satisfied that the second defendant's concession is properly made and there is no basis on which to diminish the plaintiff's damages by reason of any failure on his part to take reasonable care: either because s 82(1B) does not apply to a claim for damages for personal injury, or because it does not apply in terms to a claim for damages under s 82 for breach of s 53. 63By reason of my decision that the plaintiff is entitled to undiscounted damages under s 82 for breaches of sections 52 and 53 of the TP Act, it is not necessary for me to determine the plaintiff's claim under s 75AD. However, I shall do so, lest it become relevant to costs or on any appeal.

Section 75AD 64For the reasons given above the plaintiff's cause of action under s 75AD has been established, subject to defences, since he has established that the second defendant supplied the joist, which was manufactured by it, it had a defect and the plaintiff suffered injuries because of the defect. 65The second defendant has raised two defences in the whole of the claim under s 75AD: s 75AK and s 75AI. It also alleges that if the other defences are not established any damages ought be reduced by reason of s 75AN.

Section 75AI: recovery under a law relating to workers' compensation 66The defence under s 75AI is a complete defence to the claim under s 75AD and does not relate solely to damages for economic loss: Lanza v Codemo [2001] NSWSC 72 at [187] per Wood CJ at CL. To make out this defence, the second defendant must establish that the loss claimed by the plaintiff is a loss in respect of which an amount has been, or could be, recovered under a law of the Commonwealth, a State or a Territory that relates to workers' compensation. The effect of this provision is that the second defendant must establish that the plaintiff was an employee, since only employees have a right to workers' compensation. 67The plaintiff gave evidence that his wife was the owner of the Company and that he had not made any claim for compensation against the Company in respect of the accident. He had, however, made a claim on an income protection policy. 68The plaintiff had been a builder since 1984, gave instructions for and supervised various jobs for SSS Innovations. No one had ever given him instructions about what work he was to perform and how he was to perform it, but he had done so in respect of others. 69The plaintiff said that he was not paid a wage by the Company but that he drew money from the Company's funds from time to time. The Company paid for materials and equipment for the work he was doing. Half a dozen people had been working with him for SSS Innovations from the time the job started until the accident, although on the day of the accident the plaintiff was the only person working on the site. 70The plaintiff agreed in cross-examination that he had filed income tax returns in which he declared that he had earned income from the Company. He was asked whether he ever received a group certificate from the Company but he answered that he did not know. No such certificate was tendered. 71There is no evidence before me apart from that given by the plaintiff as to the means by which he was remunerated. His remuneration appears to have comprised drawings from the funds of the Company and gifts from his wife, whom I infer obtained the wherewithal to make such gifts from payments made to the Company by clients for whom it had performed building jobs. The plaintiff was not subject to any direction or control of the Company. Indeed, he appeared to be in charge, or at least in a position to supervise and instruct others in the performance of their duties for the Company. 72For these reasons I do not consider that the defendants have established that the plaintiff was an employee of the Company or that he could otherwise recover the loss he has suffered under a law that relates to workers' compensation. 73Accordingly the defence under s 75AI fails.

Section 75AK: state of scientific or technical knowledge at the time 74The second defendant submitted that the state of scientific or technical knowledge as at March 2005 was not such as to enable the defect, if there be found to be one in the subject joist, to be discovered. 75While it has not been necessary for me thus far to determine the precise nature of the defect, since it was sufficient for the s 52 and s 53 claims that the wood did not conform to MGP 10, it is necessary for some consideration to be given to the nature of the defect in the subject joist for the purposes of the s 75AK defence. 76A substantial amount of expert evidence was given by two experts: Professor Crews, who was instructed by the second defendant's solicitor and to whom reference has already been made, and Mr Beckett, who was instructed by the plaintiff's solicitor. They gave concurrent evidence in the course of the hearing. 77In a joint statement the experts agreed on two matters of significance: (1) the physical appearance of the wood in the zone of failure could be described as a "brash" fracture; and (2) the SEM undertaken by Mr Beckett confirms the presence of damage to the cell walls in a zone approximately 40mm away from the fracture. 78The subject joist was graded MGP 10, in accordance with AS 1748. This process of grading did not detect the defect in the wood which caused it to fail. 79Mr Beckett said that the defect could have been detected by visual inspection. In summary, the second defendant's evidence, based on Professor Crews' opinion, was that the 'state of the art' in 2005 was machine stress grading, that this was what was done, and this did not enable the defect to be discovered. 80For the reasons that appear below, I prefer Professor Crews' evidence to that of Mr Beckett. 81Professor Crews gave evidence that machine stress grading (such as that to which the failed joist was subjected) is a non-destructive process that uses a machine to bend each piece of timber (generally about its minor axis). The machine measures the stiffness of the board and uses a loose correlation between stiffness and strength to assign a strength grade. Professor Crews gave evidence that MGP 10 is a descriptor of a product that has a parcel of statistically derived properties formulated through destructive testing by the CSIRO of some 10,000 pieces of timber. The properties of MGP 10 are published in the Timbers Structures Code AS 1720, Part 1. 82The leading and trailing ends of the timber (700mm from each end) are not graded by the machine because the machine is unable to measure the deflection of the leading and trailing ends. However, they are subject to some testing because the loads are applied to the ends in the course of the grading process. They are also subject to visual inspection. 83The relevant grading standard for MGP 10 is AS 1748, and was developed concurrently with MGP 10. It grades according to the modulus of elasticity ( MOE ), which is concerned with deflection. The MOE is to be distinguished from the modulus of rupture ( MOR ) which is the actual fracture of the material. It also makes provision for visual inspection in s 6, which provides as follows: " 6 PHYSICAL REQUIREMENTS - STRENGTH CONSIDERATIONS 6.1 General The limitations on visual characteristics listed in this Clause are required in order to meet strength considerations. 6.2 Limitations for softwood species All characteristics passed by the machine shall be permitted in a piece of softwood except the following, to the limits given: (a) Resin streaks, resin pockets, bark pockets Extending from one surface to the opposite surface, and individually longer than the width of the piece. (b) Heart shakes Exceeding 3 mm in width or extending from one surface to the opposite surface. (c) Cross shakes, splits other than end splits Of any length. (d) End splits Aggregate length at each end exceeding the lesser of twice the width or 200 mm; length individually exceeding half the width." 84Professor Crews gave evidence that machines such as the Metriguard machine in use at the second defendant's mill was the only commercially available technology for grading radiata pine for the purposes of MGP 10 in Australia in 2005 with respect to its structural qualities. 85Mr Beckett gave evidence that there were other techniques available for non-destructive testing of timber in 2005. Professor Crews agreed that there were such techniques available. However, his evidence was: "What we have to talk about is whether they are available and whether they are actually useful because there were trials already undertaken in Australia on some of these techniques prior to 2005 and they were found to be unreliable and inconsistent. So to answer your question yes a number of these techniques were being investigated overseas and there were some pilot projects being undertaken overseas but in terms of what represented the state of the art the machine grading process was the state of the art at that point of time." 86Whether there were other methods for grading or testing radiata pine in Australia in 2005 is a large question. But the one that I have to decide is a much more confined question: would the particular defect in the subject joist that failed and caused the plaintiff to fall have been detected by any available technology in Australia in 2005? 87It was accepted by both experts that the joist that failed contained compression wood, which had at least the potential to affect its structural strength. It was not, however, accepted that compression wood per se is a defect. Professor Crews said, and Mr Beckett reluctantly agreed, that all radiata pine contains compression wood to some extent. Compression wood is, accordingly, a characteristic of wood, rather than necessarily a defect. It will only amount to a defect where, as here, it materially affects the structural strength of the wood. 88Accordingly, it is necessary to determine whether there was commercially available technology for detecting not only the presence of compression wood in radiata pine in 2005, but also compression wood that would materially affect the structural strength of the wood, since that is the relevant defect in the subject joist. 89In addition to the expert evidence referred to above, there were two substantial documents tendered by the plaintiff on this question. The first was a research paper prepared in 2005 by Mr Duff with funding from J.W. Gottstein Memorial Trust Fund, the National Educational Trust of the Australian Forest Products Industries ( the Duff paper ). The second was a report prepared by Bailleres, Hopewell and Boughton in 2009 for Forest & Wood Products Australia, entitled "MOE and MOR assessment technologies for improving graded recovery of exotic pines in Australia" ( the Bailleres report ). 90The plaintiff relied on these two documents to counter the opinion expressed by Professor Crews that scientific or technological knowledge at the relevant time was not such as to enable the defect to be detected. 91According to Professor Crews, whose evidence on this matter was not challenged, the Duff paper contains four references to "compression wood". The first reference appears in the context of mechanical stress graders, of which the Metriguard machine is one. The words appears in the following context: "The microfibril angle (MFA) is another characteristic that affects strength and stiffness. The MFA can only be determined at high magnification of the wood fibre walls - and is therefore impossible to directly measure in a production sense. The MFA refers to the 'mean helical (spiral) angle that the fibrils of the S2 layer of the fibre wall make with the longitudinal axis of the fibre' (Jozsa & Middleton, 1994). Mature wood is characterised by a small microfibril angle, while juvenile and compression wood have higher microfibril angles . In the case of juvenile wood, Jozsa & Middleton conclude 'these large fibril angles in juvenile wood have been correlated to lower strength and stiffness in lumber products where these lower values could not be attributed to appreciable differences in density'. As with slope of grain, by measuring stiffness directly, mechanical grading machines are also responding to the effects of MFA." [Emphasis added] 92I do not consider this reference to provide any support for the plaintiff's expert's contention that there were machines commercially available that would have been able to detect the particular defect in the subject joist. Rather, the passage demonstrates that the Metriguard machine measures stiffness which is an effect of the slope of grain to be found in compression wood. 93The first reference establishes, in my view, that the Metriguard machine used by the second defendant was the industry standard. It had the capacity to detect defects, but not all defects. It did not have the capacity to detect compression wood per se, although if the presence of compression wood gave rise to a structural weakness at any part of the length apart from the ends, it would be likely that that would be detected in the mechanical stress grading process. 94The second reference appears in the context of the tracheid effect, which "... relies on the principle that wood fibres act like optical conductors. The parallel wood fibres in softwood are known as tracheids - the tracheid effect measures the ability of these fibres to scatter laser light. Nystrom (2002) describes this technique: 'when a narrow beam of light strikes a wood surface, a part of the light penetrates into the outermost layers of tracheid fibres where it is scattered and conducted, better in the direction of fibres than across them'. ... The tracheid effect can be employed to assist in the classification of a number of characteristics, including: Sound knots - where the wood fibre deviates significantly around the knot Decay Juvenile wood and compression wood Bark" [Emphasis added] 95Professor Crews explained that this system works by applying a sensor at one end of the timber and an imp act at the other. The signal is timed and gives an average which correlates with the average density of the board. It is to be contrasted with the Metriguard machine, which loads the timber boards continuously with a view to discarding boards by reference to the weakest stiffness in the board. 96The contents of the Duff report do not enable me to conclude that a device that uses this tracheid effect would have been able to detect the defect that caused the joist to fail. 97The third reference appears in the context of a description of a machine called BoardMaster NT. It uses between three and five PCs to manage the image processing and optimising data that can amount to between 10MB and 30MB per board. The more PCs, the greater the production capacity of the system. " Grading Modules The BoardMaster NT provides classification of the following characteristics: Knots Split Rot and red stain Blue stain Bark and resin pockets Wane Warp - bow, spring, twist FinScan acknowledge that there are a number of characteristics that are still very difficult to detect and classify. Compression wood is o ne of these ." [Emphasis added] 98Professor Crews gave evidence that the obstacle delaying getting machines such as BoardMaster NT into commercial production has been the availability of computing power. He said that it was only in relatively recent years that there has been computing power available at a speed capable of doing these assessments and analyses in real time. 99I accept Professor Crews' evidence that this machine was not commercially available at the relevant time. In any event, even had it been, I could not be satisfied that it could detect the defect that caused the joist to fail, because of the difficulties referred to in the passage extracted above of using this technique to detect and classify compression wood. 100The fourth reference appears in the context of a grading modulus which predicts board strength by working out the density of wood. The resolution of this measurement is around 2.54mm across the board. It is said to allow certain characteristics to be identified due to their effect on density, including compression wood and knots. 101Professor Crews gave evidence, which I accept, that the grading modulus had a heavy dependence on computer power which was not available at the relevant time for commercial applications. Professor Crews said: "There are eight characteristics identified, one of which is compression wood, and the algorithm works on the basis of identifying density. So the problem that the machine still faces that it may pick up a knot, which may not be any problem at all, it may pick up a small amount of compression wood, and the density may be the same. So it's not distinguishing between compression wood." 102Ms Norton, for the plaintiff, put to Professor Crews certain categories of devices that were addressed in the Duff report. Professor Crews rejected the proposition that any of these machines were commercially available and also opined that they would not, in any event, have picked up the defect in the subject joist. He adhered to his evidence, which I accept, that the Metriguard machine and visual inspection were the 'state of the art' technology in March 2005, and that they were not capable of detecting the subject defect. 103I do not consider there to be anything in the Bailleres Report that undermines Professor Crews' evidence. 104Accordingly, I find that the second defendant has established its defence under s 75AK. It is therefore not necessary for me to determine whether the plaintiff's damages should be reduced by reference to s 75AN of the TP Act. Had I considered that they should be reduced by reference to s 75AN, I would have, for the reasons earlier given, reduced them by an amount of 60 per cent. Although s 75AN does not in terms incorporate the principles of contributory negligence, it has been held to be analogous to such common law concepts: Glendale Chemical Products Pty Ltd v Australian Competition & Consumer Commission [1998] FCA 1571, per Wilcox, Tamberlin and Sackville JJ.

Reasons for preferring Professor Crews' evidence to that of Mr Beckett 105In areas where they disagree, I prefer the evidence of Professor Crews to Mr Beckett. This is, in part, because of Professor Crews' extensive experience in, and involvement with, the development of standards. He gave evidence, largely from his own experience, but substantiated it, in some instance, by the literature identified in his statement or in oral evidence. He was also prepared to make concessions, in circumstances where such concessions were adverse to the second defendant. I have in mind his concession that it was possible that the joist failed in the way the plaintiff said it did if it did not comply with MGP 10 structural characteristics. 106I did not find Mr Beckett to be a particularly helpful witness. I considered that he was reluctant to make appropriate concessions in the course of concurrent evidence. He was, at times, dogmatic and unresponsive. However, the matter which caused me to prefer Professor Crews' evidence over that of Mr Beckett was that the latter's evidence was substantially based on documents produced by others, which he purported to paraphrase. 107This was particularly so with respect to the Duff report. Mr Beckett's report contained the following paragraph: "He [Mr Duff] concludes that: the occurrence of compression wood and its potential for causing sudden catastrophic failure to the ends of structural beams where the shear forces are at maximum, remains a major concern for the management of risk in timber production and distribution ." 108The first point to be made about this evidence is that it indicates, incorrectly, that the indented part is a quotation. No such passage appears in Mr Duff's report. The second defendant put to Mr Beckett that it had been indented in order to mislead the Court about the contents of Mr Duff's report. I am not satisfied that it was done with this intention, but the paragraph is obviously misleading in so far as it suggests that the words indented were Mr Duff's words and that it was a direct quotation from the Duff report. 109However, more importantly for present purposes, the conclusion said to be Mr Duff's does not emerge from Mr Duff's report. Rather, it is Mr Beckett's conclusion, which does not appear to me to be substantiated by what is contained in the Duff report.

Orders 110The parties have asked me to reserve the question of costs for further argument if agreement cannot be reached. 111I make the following orders:

Judgment for the plaintiff against the second defendant pursuant to s 82 of the TP Act, with the quantum of damages to be assessed in a separate hearing.
Costs reserved.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 December 2011

Trade Practices Act 1974(Cth)

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