ERWIN v IVECO TRUCKS AUSTRALIA LTD [2010] NSWCA 113 | Case summary

"In my view the steering did not fail as the result of any absence of reasonable care by the [respondent] in the manufacture or design of the truck. It was not required to design a vehicle that would continue to be safe for use after two million or so kilometres and be accident proof in the face of no servicing to the steering mechanism for at least three years and where there has been independent conduct by a third party inappropriately adjusting the universal joint pinch bolt to allow for abrasive and adhesive wear to occur and to compromise the effectiveness of the joint. The availability of another, different design that would have obviated the risk is not automatically or necessarily co-extensive with the existence, or a finding, of a breach of duty. The [respondent] did not breach the duty that it owed to the plaintiff." Appellant's Cross-Claim Against the Respondent 60 The primary Judge held (at [78]) that the appellant's cross-claim against the respondent, insofar as it was based on the same allegations of negligence as the plaintiff had relied on, failed "for obvious reasons". 61 The primary Judge also rejected the appellant's cross-claim insofar as it was based on ss 75AD and ss 75AE of the TP Act. (His Honour apparently understood that the appellant was relying on both ss 75AD and 75AE; the appellant was in fact relying only on s 75AE.) His Honour held (at [82]) that the relevant goods, the universal joint and the flange bearing assembly, did not have a "defect" within the meaning of s 75AC of the TP Act: "Their safety was entirely what persons generally are entitled to expect. The evidence in this case establishes that both items had seen something in the order of 2,000,000 kilometres of use in the truck with no maintenance from the [appellant] for the whole of the time that he owned it. My findings about these items in the context of the [respondent's] alleged breach of duty to the plaintiff effectively foreclose upon the contention that the items were defective within the terms of the relevant provisions." 62 In any event, so his Honour held (at [85]), the loss in respect of which the appellant sought recovery under ss 75AD and 75AE of the TP Act was a loss "in respect of which an amount has been, or could be, recovered under a law of … a State … that … relates to workers' compensation". The effect of s 75I of the TP Act, in such circumstances, was to exclude the operation of ss 75AD and 75AE and thus preclude the appellant from relying on these provisions. His Honour pointed out that the plaintiff was in the course of a journey to his work and was paid benefits in respect of the injuries he sustained: "The words 'in respect of which an amount has been paid' are wide and contextually unconstrained. They extend to cover the payment of workers' compensation benefits to the plaintiff in this case." 63 Accordingly, his Honour dismissed the appellant's cross-claims. SUBMISSIONS Appellant's Contentions Breach of Duty 64 The appellant submitted that the primary Judge did not properly consider his argument that the respondent had breached its duty of care owed to the plaintiff. In summary, the argument was as follows: - a total failure of the steering mechanism of the Truck clearly would have had potentially catastrophic results; - if the securing pinch bolt was not tightened to the specified torque, fretting wear could ultimately cause the lower part of the steering shaft to come free; - there was no engineering back-up in case the pinch bolt was insufficiently tightened; - since the Truck had a fixed cab, there was no need for the steering column to be manoeuvrable, as would be the case with a flexible cab; - the experts gave evidence that the risk of potentially catastrophic failure would have been avoided had a welded connection been used (as had occurred in this model from 1990, although not for safety reasons); - other simple engineering means were available as alternatives to eliminate the risk, such as providing for a shoulder in the shaft to prevent sufficient axial slipping for disengagement of the shaft or the inclusion of a sleeve-over device which would similarly limit slippage of the intermediate shaft; - the experts had recognised that the risk of pinch bolt failure was sufficiently high to warrant safeguards; - the need for safeguards was made even clearer by the fact that failure of the steering column in the circumstances of the present case could occur without warning; and - the Manual gave only a general direction to "[r]egularly inspect all steerage linkages" and did not specify how the inspection should take place. 65 In oral argument, Mr Bartlett SC, who appeared with Mr Gooley for the appellant, identified the design defect in the steering mechanism as follows: "The design defect was merely to use a pinch bolt universal joint to secure the upper end of the intermediate part of the steering column into place without any other means, engineering means, to secure the integrity of the steering column. That was a defect in design because if what occurred here that the nut on the joint, the nut securing the bolt of the universal joint or the pinch bolt universal joint which held the top of the intermediate steering column into place, although giving the appearance of being tight, and had been for some three years prior to the accident, could enable such fretting and wearing away that the joint, the universal joint fails, and this is what occurred, it failed to secure the upper section of the intermediate steering column into place so that the steering column totally collapsed. That part on axial displacement moved down and came free. It was necessary for it to move at least 20 mm for it to detach." 66 Mr Bartlett contended that a reasonable designer/manufacturer of trucks in 1989 would have incorporated a mechanism to secure the steering column in the event of loosening of the pinch bolt and subsequent wear. In particular, he submitted that the respondent should have anticipated that the Truck would have a long working life and that there could be occasions when maintenance or repairs were done and the pinch bolt was not tightened to the prescribed torque. The respondent should also have anticipated that some owner-operators would be satisfied with "less than ideal maintenance processes". It was foreseeable that an owner-operator might not undertake any other than a visual inspection of the steering column, which would not have revealed the loosening of the pinch bolt. 67 Mr Bartlett identified three mechanisms available to the respondent to eliminate the risk, all of which were identified by the conclave of experts (question 13): o the welded connection in lieu of the universal joint; o locating the shoulder on the shaft some 3 mm away from the bearing (rather than 40 mm); or o limiting travel in the sliding joint of the intermediate shaft by fitting a sleeve over the male sliding element. 68 According to Mr Bartlett SC, the primary Judge erred by assuming that once the bolt was tightened to the required torque by the manufacturer, there would be no relevant risk. His Honour had failed to give appropriate weight to the grave consequences of failure of the steering system in determining what reasonable care required of a manufacturer. 69 In his submissions, Mr Bartlett specifically challenged two factual findings made by the primary Judge. These were: o the finding (at [68]) that the respondent complied with the usual practice of manufacturers in 1989 by using a pinch bolt universal joint; and o the finding (at [74]) that there was no evidence supporting a finding that the risk of failure of the steering mechanism was not insignificant. TP Act s 75AE 70 The appellant contended that the primary Judge had erred in dismissing the claim for indemnity under s 75AE of the TP Act. Mr Bartlett challenged the primary Judge's finding (at [82]) that the relevant goods did not have a "defect" within the meaning of s 75AE of the TP Act at the time they were supplied. Mr Bartlett accepted that s 75AE applied in this case only if the defect was present at the time the Truck was supplied. However, he submitted that persons using or in the Truck and those on or near roads where the Truck was being driven were entitled to expect that the steering column would be designed so that it would not collapse during normal driving operations. Subsequent events could demonstrate that a defect was present at the time of supply. 71 The appellant also contended that s 75AI of the TP Act, which provides that s 75AE does not apply to a loss in respect of which an amount could be recovered under a State workers' compensation law, could not preclude the appellant's claim. That was because s 75AE related to a loss other than that sustained by the injured individual. In this case, the loss sustained by the appellant was his liability to compensate the plaintiff and that loss was not recoverable under a workers' compensation law. Respondent's Submissions Breach of Duty 72 Mr Cavanagh, who appeared with Mr Bowen for the respondent, supported the reasoning of the primary Judge. Mr Cavanagh submitted that the mere fact that the expert evidence demonstrated that the shaft could have been designed in a different way, did not establish that the respondent had breached its duty in the design of the steering mechanism. To hold otherwise, so he argued, would be inconsistent with principle because it would involve the impermissible application of hindsight. 73 According to Mr Cavanagh, the respondent was obliged only to exercise reasonable care in the design of the steering mechanism, not "to implement a failsafe method". Mr Cavanagh emphasised that, on the primary Judge's findings, the steering mechanism conformed to the industry norm. Moreover, the experts had not been asked to address whether a reasonable manufacturer in 1989 should have incorporated additional or alternative safety measures in the design of the steering mechanism. In addition, his Honour had correctly found that, having regard to the combination of circumstances required to produce a failure of the steering mechanism, the appellant had not shown that the risk was "not insignificant" for the purposes of s 5B(1)(b) of the Civil Liability Act 2002 ("CL Act"). TP Act s 75AE 74 The respondent submitted that the appellant's reliance on s 75AE of the TP Act was misplaced. The appellant was not a person who had "suffer[ed] loss because of … the injuries" to the plaintiff, within the meaning of s 75AE(1)(d). According to Mr Cavanagh, s 75AE is intended to provide a remedy to a third party who suffers loss because of the injuries sustained by an individual in consequence of a defect in the goods. It is not intended to apply to a person who becomes liable to the plaintiff by reason of that person's own negligence. The liability is not a "loss because of … the injuries". 75 If the threshold objection did not succeed, the respondent sought to uphold the primary Judge's reasoning, including his Honour's reliance on s 75AI of the TP Act. 76 In addition, the respondent submitted that the relevant defect was the slippage of the intermediate shaft from the pinch bolt. That defect did not exist at the time of manufacture and supply of the steering mechanism. Accordingly, s 75AK(1)(a) of the TP Act provided a defence. 77 Mr Cavanagh recognised that the respondent had not specifically pleaded a defence based on s 75AK(1). However, he pointed out that at the trial the plaintiff had abandoned his claim under s 75AD of the TP Act. The appellant in his cross-claim had merely repeated the language of s 75AE. Accordingly, the appellant had never pleaded or particularised the precise defect upon which he relied. 78 Mr Cavanagh submitted that if the defect was as the appellant had argued, the result would be that the "defect" would have been present in every truck manufactured in accordance with the industry norm over many years. All those trucks and perhaps many other vehicles had the potential, given a certain combination of unlikely circumstances, for fretting wear to occur and, ultimately, for the steering column to collapse. This, so Mr Cavanagh contended, could not have been the intention of Parliament. REASONING: BREACH OF DUTY Principles 79 There was no dispute as to the principles to be applied in determining, for the purposes of the appellant's cross-claim, whether the respondent breached its duty to the plaintiff to exercise reasonable care in the design of the Truck to avoid defects that could lead to injury to road users. The argument revolved around whether the primary Judge had correctly applied the principles and whether his Honour had erred in making the critical factual findings that led him to conclude that the respondent had not breached its duty of care. 80 The starting point is the CL Act. Sections 5B and 5C of the CL Act provide as follows: " 5B General principles (1) A person is not negligent in failing to take precautions against a risk of harm unless: (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things): (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm. 5C Other principles In proceedings relating to liability for negligence: (a) the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and (b) the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and (c) the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk." 81 Section 5B of the CL Act operates against the backdrop of the law of negligence. As Campbell JA said in Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd [2009] NSWCA 263; 168 LGERA 351, at 395 [172], s 5B is not a self-contained statement of the circumstances in which a liability for negligence will arise. Section 5B(1) sets out three pre-conditions that must be satisfied before a person can be found to be "negligent in failing to take precautions against a risk of harm". Section 5B(2) specifies the matters that are to be taken into account, among other relevant considerations, in determining whether a reasonable person would have taken precautions against a risk of harm. 82 It has been accepted that the matters set out in s 5B(2) of the CL Act are, in substance, a reiteration of the well-known analysis of Mason J in Wyong Shire Council v Shirt [1980] HCA 12; 146 CLR 40. Mason J (with whom Stephen and Aickin JJ agreed) said this (at 47-48): "[T]he tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position. The considerations to which I have referred indicate that a risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far-fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors." 83 Mason J's test remains an authoritative statement of the position at common law, despite the disapproval of the test expressed by Callinan and Heydon JJ in New South Wales v Fahy [2007] HCA 20; 232 CLR 486, on the ground (at 551 [216]) that: "it is … not reasonable to say, acting as courts do, in hindsight, that everything falling short of the far-fetched or fanciful should have been foreseen." See Roads and Traffic Authority (NSW) v Refrigerated Roadways, at 346 [178]-[179], per Campbell JA. Of course, any reconsideration by the High Court of the test in Wyong SC v Shirt would not necessarily affect the construction of s 5B of the CL Act. 84 In Roads and Traffic Authority of New South Wales v Dederer [2007] HCA 42; 234 CLR 330, Gummow J (with whom Heydon J agreed) restated (at 337-338 [18]) what his Honour described as "basic and settled matters of legal principle": "First, the proper resolution of an action in negligence depends on the existence and scope of the relevant duty of care. Secondly, whatever its scope, a duty of care imposes an obligation to exercise reasonable care; it does not impose a duty to prevent potentially harmful conduct. Thirdly, the assessment of breach depends on the correct identification of the relevant risk of injury. Fourthly, breach must be assessed prospectively and not retrospectively. Fifthly, such an assessment of breach must be made in the manner described by Mason J in Wyong Shire Council v Shirt ." 85 In this area of discourse, it is also necessary to bear in mind what the approach in Wyong SC v Shirt and, more importantly, s 5B of the CL Act requires. Speaking of the "Shirt calculus", Gummow J in NSW v Fahy (at 505 [57]) said that the: "description may be convenient but it may mislead. Reference to 'calculus', 'a certain way of performing mathematical investigations and resolutions', may wrongly be understood as requiring no more than a comparison between what it would have cost to avoid the particular injury that happened and the consequences of that injury. Shirt requires a more elaborate inquiry that does not focus only upon how the particular injury happened. It requires looking forward to identify what a reasonable person would have done, not backward to identify what would have avoided the injury." (Footnote omitted.) See also at 491 [6], per Gleeson CJ (dissenting). 86 An important element in the primary Judge's reasoning in the present case was the finding that the manufacture in 1989 of the steering mechanism in the Truck conformed to the industry norm at that time. Subject to legislation, the general principle remains that stated by Latham CJ in Mercer v Commissioner for Road transport and Tramways (NSW) [1936] HCA 71; 56 CLR 580, at 589: "The mere fact that a defendant follows common practice does not necessarily show that he is not negligent, though the general practice of prudent men is an important evidentiary fact. A common practice may be shown by evidence to be itself negligent." 87 It follows that evidence of adherence to common practice in an industry, although important, is not necessarily determinative of whether a breach of duty has occurred: Council of the Shire of Muswellbrook v Lettice [2000] NSWCA 359, at [8]-[9], per Meagher JA (with whom Stein and Heydon JJA agreed); Lanza v Codemo [2001] NSWSC 72, at [169], per Wood CJ at CL; Rogers v Whitaker [1992] HCA 58; 175 CLR 479, at 487, per Mason CJ, Brennan, Dawson, Toohey and McHugh JJ; Rosenberg v Percival [2001] HCA 18; 205 CLR 434 (cf CL Act, s 5O, dealing with the standard of care owed by a person practising as a professional). 88 It is, however, important to bear in mind the observations of McHugh J (with whom Gummow and Heydon JJ agreed on this point) in Dovuro Pty Ltd v Wilkins [2003] HCA 51; 215 CLR 317. In that case the question was whether a supplier of imported canola seeds had breached its duty of care to a Western Australian farmer by not disclosing the presence of weed seeds in the canola. There was no evidence that at the time the seeds were supplied the particular weeds were regarded as presenting a danger to Western Australian agriculture. 89 McHugh J said (at 329 [34]): "If negligence law is to serve any useful social purpose, it must ordinarily reflect the foresight, reactions and conduct of ordinary members of the community or, in cases of expertise, of the experts in that particular community. To hold defendants to standards of conduct that do not reflect the common experience of the relevant community can only bring the law of negligence, and with it the administration of justice, into disrepute. That is not to say that a defendant will always escape liability by proving that his or her conduct was in accord with common practice. From time to time cases will arise where, despite the common practice in a field of endeavour, a reasonable person in the defendant's position would have foreseen and taken steps to eliminate or reduce the risk that caused harm to the plaintiff. But before holding a defendant negligent even though that person has complied with common practice, the tribunal of fact had better first make certain that it has not used hindsight to find negligence. Compliance with common practice is powerful, but not decisive, evidence that the defendant did not act negligently. And the evidentiary presumption that arises from complying with common practice should be displaced only where there is a persuasive reason for concluding that the common practice of the field of activity fell short of what reasonable care required." See also McDonald v Girkaid Pty Ltd [2004] NSWCA 297, at [217], per McColl JA (with whom Beazley JA and Young CJ in Eq agreed). The Industry Norm Finding 90 The finding by the primary Judge that the respondent complied with the industry norm in manufacturing the steering mechanism for the Truck rested on his acceptance of the evidence of Mr Perkins, a product engineer who had been employed by the respondent since 1979. Mr Perkins had been employed in the engineering department throughout his career. In 1989, Mr Perkins was not working in the product group responsible for the manufacture of the Truck, although it appears that he was involved in the assembly of other trucks at that time. 91 Mr Perkins gave evidence on the third day of the trial. He was called by the respondent and gave his evidence in chief orally. It appears that no objection was taken to Mr Perkins giving evidence without having first providing an affidavit or written statement. Mr Perkins was cross-examined both by senior counsel for the plaintiff and by Mr Bartlett on behalf of the appellant. 92 Mr Perkins' evidence in chief included the following passage: "Q. Over the period since the 1980s to the current time does [the respondent] generally manufacture the component parts or does it source the component parts from suppliers? A. A mixture. It mainly sources components from suppliers. Q. With regard to the steering shaft assembly, does it manufacture those components parts or does it, I'm talking about back in 1989 now, did it source those component parts from suppliers? A. The majority would be sourced from suppliers. … Q. I think it is common ground in respect of this particular vehicle which you know to be a Transtar 4670, the original steering shaft assembly was purchased by Iveco from ZF? A. Yes components were procured from ZF. Q. Now, back in the period the late 1980s did Iveco assemble a number of different types or models of trucks? A. Yes. Q. How many approximately? A. Oh, there was Acco which we still make today, there was T Line, then there was two Iveco models that we assembled, one was called Turbotech, one was called Turbostar. There was also S series monitored truck which was assembled at that time. … Q. How many of the models identified on that document [Exhibit 2D-1, showing production volumes of various models of trucks in Australia and Europe from 1993] used the pinch bolt system , that is the pinch bolt system of connecting the top and intermediate shaft by way of a universal joint? A. Connection to the steering column in all those models is via pinch bolt connection . Q. Has that always been the case with all those models ? A. Yes, yes, that's, it is an industry norm . Q. Going back to 1989, we know that this particular vehicle was manufactured in 1989, that is assembled by Iveco. I think you have already said Iveco assembled a number of different models of trucks at that time? A. (Witness nodded). Q. How many of those models used the pinch bolt system back in 1989, that is the models that were being assembled in 1989 ? A. Oh, they all did except for the S series . Q. The S series? A. Yes, the Acco used a pinch bolt connection, the T-line used a pinch bolt connection, the Turbotech, the Turbostar, all used pinch bolt connections. Q. Back in 1989 did a number of other manufacturers of trucks use the pinch bolt system ? A. Yes, it is, it was the industry norm and still is today . Q. Can you name some of those manufacturers? A. Oh, Kenworth, Volvo, Scandia, Freightliner. … Q. The steering shaft assembly I think you have already said was a component purchased from ZF in respect of this particular vehicle? A. Yes, the upper shaft and the universal joint. Q. And so ZF supplied the upper shaft with the universal joint? A. Yes. Q. What about the intermediate shaft? A. The intermediate shaft was our design. Q. And at the time of the manufacture of this vehicle or assembly of this vehicle in 1989 then the vehicle was assembled using a top shaft, an intermediate shaft which were affixed to the universal joint by means of a pinch bolt? A. Yes". (Emphasis added.) 93 The respondent's complaint about his Honour's finding was based partly on what was said to be the hearsay nature of Mr Perkins' evidence. There are two answers to this contention. The first is that although Mr Perkins agreed that he had no personal knowledge of the reasons for the redesign in 1990 of the steering column for the F4670 model, it was never suggested to him in cross-examination that he had no personal knowledge of the design feature of the models he identified or of the industry practice of which he gave evidence. The inference is clearly available from the position he occupied and his long experience with the manufacture of trucks that his evidence was based on his own knowledge of the process for manufacturing steering systems for installation in trucks. The second is that even if Mr Perkins' evidence was in part hearsay in character (a proposition that has not been established), no objection was taken to it. The primary Judge could give that evidence such weight as it warranted. See generally Cross on Evidence (8th Aust ed), at [1650]. In the absence of any objection, or any attempt by the appellant to identify Mr Perkins' sources of information, no cogent reason has been given as to why his Honour was not entitled to accept the evidence. 94 The appellant also complained that the respondent had not called any evidence from engineers who had worked in 1989 in the department responsible for the F4670 model. However, at least one of the engineers identified in the documentation produced by the respondent had left the respondent's employment in about 1990. Moreover, there was nothing in the evidence to show that other engineers whose names were mentioned in contemporaneous documentation continued to be employed by the respondent. In any event, their absence casts no doubt on the primary Judge's acceptance of Mr Perkins' evidence, particularly when none of the experts considered whether the steering system in the Truck had been manufactured in accordance with standard industry practice. 95 Another complaint was that Mr Perkins gave evidence at the trial without a witness statement from him having previously been provided to the appellant. But no objection to this course was taken by the respondent. Neither Mr Bartlett nor the plaintiff's senior counsel, sought an adjournment before commencing to cross-examine Mr Perkins. It is difficult to see how the procedure adopted at trial is indicative of any error in the primary Judge accepting Mr Perkins' evidence as to the industry norm in 1989. 96 The appellant also submitted that the primary Judge had wrongly assumed that Mr Perkins' evidence supported a finding that the pinch bolt steering systems in general use in 1989 did not incorporate any other mechanism designed to safeguard against the intermediate shaft becoming detached from the universal joint (such as relocating the shoulder on the shaft). Mr Bartlett contended that, as Mr Perkins had not addressed this issue and as the respondent had not adduced any expert engineering evidence to elaborate on Mr Perkins' evidence, the primary Judge had erred in finding that the design of the Truck's steering system conformed to the industry norm in 1989. 97 It is true that Mr Perkins was not specifically asked, either in his examination in chief or his cross-examination, as to whether the pinch bolt systems used in 1989 relocated the shoulder of the shaft closer to the bearing or fitted a sleeve in order to safeguard against the risk of axial slippage by the intermediate shaft. (No issue arises as to whether the pinch bolt systems in fact utilised fixed welding of the connections, since the two designs are incompatible.) However, it is not correct that Mr Perkins' evidence was entirely silent on the subject. 98 Senior counsel for the plaintiff cross-examined Mr Perkins on the effectiveness of relocating the shoulder of the shaft closer to the bearing in the following passage: "Q. May I approach with one element of this mechanism? What I have here is the bearing flangette and the intermediate shaft of the subject vehicle? A. (Witness nodded.) Q. Would you make that assumption for us, please? A. Yes. Q. In its correct anatomical position, if I may describe it as such, the bearing and flangette sit close to the beginning of the splines at the gear end of the shaft, correct? A. Right. Q. As I have demonstrated here, leaving a substantial gap between the wheel side of the bearing and the shoulder machined into the shaft, correct? A. Right, yes. Q. May I suggest to you that if the shoulder in the shaft had been, say, the best part of an inch closer to the wheel side of the bearing, even if there were no grub screws and even if the clamp bolt in the universal joint failed the shaft could not slip forward far enough to disengage? A. I suppose that would give you another level of protection but I'm not sure whether tolerances would allow you to design it that close given that everything is in a fixed position . Q. But if it were designed in that way you agree with me that that would be another mechanism whereby the failure that occurred here could have been avoided? A.. Yes." (Emphasis added.) The penultimate answer in that passage strongly implies that, to Mr Perkins' knowledge, pinch bolt mechanism for steering mechanisms being manufactured in 1989 did not locate the shoulder on the shaft close to the bearing. Had he known of any such design feature, his answer to the question could hardly have taken the form it did. 99 It is perhaps not surprising that Mr Perkins was not asked about whether any of the pinch bolt systems in use in 1989 incorporated a sleeve over the male sliding element as a safeguard to prevent slippage of the intermediate shaft. The plaintiff did not specifically plead that the respondent had breached its duty to him by failing to include a sleeve in the design and the appellant's cross-claim merely repeated the plaintiff's particulars of negligence. Despite the reference to the sleeve in answer 13(b) given by the conclave of experts, no reliance seems to have been placed at the trial on the respondent's failure to incorporate a sleeve into the design of the steering system. 100 In any event, the appellant bore the onus of proving for the purposes of his cross-claim that the respondent had breached its duty to the plaintiff. The evidence given by Mr Perkins, unless and until it was qualified, was capable of conveying that the standard industry practice in 1989 was to manufacture steering systems using pinch bolt mechanisms of substantially the same design as those used in the manufacture of the Truck. That is, his evidence implied that the pinch bolt mechanisms did not incorporate any additional safeguards to prevent axial slippage of the intermediate shaft. It was therefore a matter for the appellant to cross-examine Mr Perkins or to adduce evidence to counter the inferences to be drawn from his evidence. The appellant did not do so. Accordingly, the appellant has not established any basis for concluding that the primary Judge's finding was erroneous or against the weight of the evidence. Breach of duty 101 The primary Judge's conclusion that the respondent had not breached the duty of care he owed to the plaintiff was based on two propositions: o the appellant had not established that the risk of failure of the steering system was not insignificant (at [74]); and o the appellant had not established that a reasonable manufacturer or designer of trucks in the respondent's position would have incorporated further safeguards in the design of the steering system to take account of the possibility of failure of the pinch bolt mechanism (at [74], [77]). Either conclusion, if upheld, would be sufficient to defeat the appellant's cross-claim: CL Act, s 5B(1)(b), (c). 102 Neither party addressed in submissions the approach that should be taken by this Court to the appellant's challenge to these conclusions. In Certain Lloyds Underwriters v Giannopoulos [2009] NSWCA 56, Campbell JA (with whom Giles and Ipp JJA agreed) held that appellate review of a determination as to whether it was just and reasonable to extend the limitation period was to be conducted on the same basis as appellate review of a determination that a party had failed to act with reasonable care. His Honour described the approach to be taken on an appeal under s 75A of the Supreme Court Act 1970 as follows (at [108]): "When an appellate court is deciding whether a first instance judge has erred in the evaluative task involved in deciding whether established facts amount to a failure to take reasonable care, it is recognised that the appellate court should give respect and weight to the conclusion of the trial judge: Warren v Coombes [[1979] HCA 9; 142 CLR 531] at 551, reiterated in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [25]. Part of the need for that respect and weight arises from the trial judge having the advantage of matters of impression of the evidence and the feel of the trial that it is hard if not impossible fully to articulate in reasons for judgment … Because of that, the finding of the primary facts shades to some extent into their evaluation. It leads to the possibility that, in the inherently evaluative task of deciding whether there has been a failure to take reasonable care in a particular factual situation, the trial judge may have a more acute understanding of the nuances of that factual situation, and thereby have an advantage in evaluating the facts by the legal standard. But the fact that the task is evaluative is not a reason for appellate courts to stand back once they have reached the conclusion that the primary judge's conclusion was wrong. In Warren v Coombes the majority, at 552, said that in deciding whether there had been a failure to exercise reasonable care they "should have thought that the trial judge can enjoy no significant advantage" . Their Honours did not say that the trial judge has no advantage at all. But the scope for advantage may be small, or on the facts of some cases non-existent. What the appellate judge needs to do is to consider whether the particular case in front of him or her is one where the trial judge had an advantage, if so in what did it lie; and whether, taking account of that advantage, the appellate judge comes to the view that the trial judge's decision was wrong. If, in those circumstances, the appellate judge comes to the decision that the primary decision is wrong, that is in itself justification for correcting it. In the absence of any argument that this approach is inappropriate for the purpose of appellate review of the judgments required by s 5B(1)(b) and (c) of the CL Act, I propose to adopt it. 103 In assessing the appellant's attack on the conclusions reached by the primary Judge, it is important to appreciate the factual findings made by the primary Judge and the limitations of the expert evidence on which the appellant relied. No challenge has been made to the following findings: o if regular preventative maintenance had been carried out on the Truck, the loosening of the pinch bolt would have been detected long before the crash (at [43]); o the respondent was entitled to expect, at the time the Truck was manufactured, that the Truck would be maintained in a way that would have detected both the universal joint in a state of incipient failure and the fact that the intermediate shaft was not attached to the bearing (at [71]); o once the Truck was manufactured with the pinch bolt set at the correct torque, the bolt could not be loosened except through some form of external intervention (at [53]); o the loosening of the bolt in the present case occurred during the course of work carried out by the dealer in 1999 (at [57]); o the respondent had not been put on notice from prior failures that the combination of events that resulted in injury to the plaintiff might occur (at [72]); o the Manual contained a "clear and unambiguous" direction to inspect regularly all steering linkages (at [33]); o the appellant used the Truck for three and a half years and travelled about 500,000 kilometres without any inspection of the steering system before the crash occurred (at [33]); and o the failure of the steering system would not occur within a short time of the bolt being loosened so that it was no longer fastened at the specified torque, but would require a long period of wearing between the bolt and the shaft (at [54], [57]). 104 In addition, the primary Judge found (at [74]) that the design and manufacture of the steering system on the Truck was the industry norm in 1989 and, indeed, continued to be the industry norm. For the reasons I have explained, the appellant's challenge to those findings fails. 105 The conclave of experts adopted Mr Anderson's view, expressed in his Second Supplementary Report, that vehicle design should be subjected to "Failure Mode and Effects Analysis" and that if a mode is identified that might produce catastrophic results, design action should be taken (question 16). However, none of the experts addressed, or was asked, about the significance of the industry norm described by Mr Perkins. Indeed none was asked whether he was aware of industry practice in relation to the manufacture and design of steering systems for trucks in 1989. Nor were the experts asked to consider what precautions, if any, a reasonably prudent manufacturer would have taken in 1989 to safeguard against the risk of steering failure by reason of slippage of the intermediate shaft. 106 No doubt the appellant was content for the most part to leave the plaintiff to conduct the breach of duty case against the respondent. Nonetheless, the fact remains that the experts were not asked to consider whether, in the circumstances found by the primary Judge, a manufacturer/designer in 1989, exercising reasonable care, would have taken either or both of the additional measures (relocating the shoulder or employing a sleeve) identified by the appellant. It might have been expected that one or more of the experts would have been asked to consider whether, in the light of the industry norm in 1989 and the combination of events required to bring about the failure of the steering system, further safeguards were required. In this respect, it is to be borne in mind that three of the four experts considered that the grub screws provided an independent safeguard against failure, while the fourth was unsure. How that would have influenced their answers is not known. 107 The answer to question 16 does not determine what a reasonable manufacturer would do. Much less does it determine or even assist in determining what a reasonable manufacturer would have done in 1989 having regard to the particular circumstances of this case and the criteria specified in s 5B of the CL Act. 108 There can be no disagreement with the appellant's contention that, viewed prospectively, any failure of the steering system, whether by reason of axial slippage of the intermediate shaft or otherwise, was likely to result in very serious, if not catastrophic harm (CL Act, s 5B(2)(b)). As was said by Cooper J (with whom Connolly and Ryan JJ agreed) in Suosaari v Steinhardt [1989] 2 Qd R 477, at 489, the graver the foreseeable consequences of a failure to take care, the greater the necessity for "special circumspection". The expert evidence also established that measures could have been taken at relatively little cost by the respondent to incorporate an additional safeguard against failure resulting from loosening of the pinch bolt and consequential wearing of the bolt. The safeguards could have taken the form of switching to a fixed welded system (as was done in 1990, although not for safety reasons) or relocating the shoulder of the shaft to prevent significant axial slippage. 109 Even so, it was still necessary for the appellant to establish at trial that the respondent had failed to exercise reasonable care in the design of the Truck, which was manufactured in 1989. The risk against which the respondent was required to take reasonable precautions was that the bolt would become loosened from the specified 45 Nm to 50 Nm, leading to wearing of the bolt and, ultimately, axial slipping of the intermediate shaft sufficient to detach it from the universal joint. Looking at the matter prospectively in 1989, the risk could not eventuate simply through driving the Truck, even under the most gruelling conditions over many years of usage. The risk could eventuate only if: o someone interfered with or improperly adjusted the steering mechanism of the Truck so that the pinch bolt ceased to be tightened to the specified torque; o regular preventative maintenance of the kind the manufacturer was entitled to expect (and which was directed in the Manual) did not take place; and o the failure to undertake regular maintenance persisted over a sufficient length of time, measured in years of usage of the Truck and hundreds of thousands of kilometres travelled, to allow the failure to occur. 110 In addition to these matters, any assessment of the design precautions required of a reasonable manufacturer in 1989 must take into account the fact that the design was the industry norm at that time. While this is not decisive, in the absence of evidence that the industry practice itself was deficient or that potential safety issues had been identified at the time but not acted upon, the respondent's adherence to the industry norm is a strong indication that a reasonable person in the respondent's position would not have adopted additional precautions to guard against the risk. Furthermore, on the primary Judge's findings, the respondent had no reason in 1989 to believe that the risk would or might eventuate. Indeed there was no such indication until the crash occurred in 2002. 111 When the warning of McHugh J in Dovuro v Wilkins about the dangers of using hindsight to find negligence is borne in mind, it is difficult to disagree with the primary Judge's assessment that the risk was not shown to be otherwise than insignificant and that the appellant had not established that a reasonable manufacturer/designer in the respondent's position would have taken one or more of the precautions identified by the appellant when designing the steering system for the Truck. Manufacturers are not necessarily entitled to assume that purchasers or users of their products will invariably follow instructions or act in a prudent and sensible manner. But for this failure of the steering system to occur, there had to be two independent and serious departures from the standards of conduct reasonably to be expected by the manufacturer of the Truck. The first was the failure to adjust the pinch bolt to the prescribed torque in 1999. This was an apparently serious mistake committed not by an owner-operator attempting his or her own maintenance, but by a specialist dealer in trucks. The second consisted of the appellant's egregious failure, over a period of three and a half years and hundreds of thousands of kilometres of driving the Truck, to undertake basic maintenance of the steering system in defiance of the manufacturer's directions. 112 In these circumstances, it cannot be said that the primary Judge was wrong in concluding that the respondent did not breach the duty of care it owed to the plaintiff. REASONING: CLAIM UNDER THE TP ACT Part VA of the TP Act 113 Part VA of the TP Act was introduced by the Trade Practices Amendment Act 1992 (Cth). The Explanatory Memorandum accompanying the Trade Practices Amendment Bill 1992 described the purpose of the legislation as follows: "1. The purpose of this Bill is to introduce into Australia a strict product liability regime based on the 1985 European Community Product Liability Directive by way of amendment of the Trade Practices Act 1974 . It provides a regime of strict liability, whereby a person who is injured or suffers property damage as a result of a defective product has a right to compensation against the manufacturer without the need to prove negligence on the part of the manufacturer.

ERWIN v IVECO TRUCKS AUSTRALIA LTD

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Judgment (37 paragraphs)

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Cases Cited (20)

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