NT GAS PTY LTD v G SA INDUSTRIES LTD t/as PIPELINE SUPPLIES OF AUSTRALIA [1990] NSWCA 132

NT GAS PTY LTD v G SA INDUSTRIES LTD t/as PIPELINE SUPPLIES OF AUSTRALIA

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

GLEESON CJ, SAMUELS JA and CLARKE JA 4 April 1990, 15 June 1990

[1990] NSWCA 132

CONSTRUCTION OF CONTRACT — contract for supply of pipeline fittings — dispute as to meaning of two expressions as to dimensions of fittings — HELD (Gleeson CJ dissenting) — the trial judge was in error in the meaning he gave to the relevant stipulations

Gleeson CJ This appeal involves a dispute as to the meaning of certain stipulations in a Purchase Order placed in respect of the supply of certain items for use in a gas pipeline. The appellant was building a pipeline to carry natural gas from Basin to Darwin. The Engineer and Project Manager for the pipeline, on behalf of the appellant, issued the Purchase Order in question. The Purchase Order was addressed to the respondent and required the supply of "Steel Pipeline Fittings for use on the Amadeus to Darwin Pipeline".

Before coming to a consideration of the nature of the dispute it is convenient to set out certain features of the background to the contract.

Piping systems of the kind here in question are fabricated from lengths of straight pipe and "fittings". The term "fitting" is a generic term which is used to cover most of the components which are not straight pipe. Pipe systems are assembled by welding the ends of pipes and fittings after they have been suitably prepared.

This case concerns two particular kinds of fitting, one described as a "Tee, Reducing", and the other described as a "Reducer, Concentric". A "Tee" is a fitting used at the junction between a straight length of pipe and a branch pipe which is connected, often at an angle of ninety degrees, to the straight length of pipe.

If the branch pipe is the same size as the straight length of pipe the fitting in question is called a "Straight Tee" or an "Equal Tee". If the branch pipe is smaller than the straight pipe the fitting is called a "Reducing Tee" or a "Reducing Outlet Tee". A "Reducer" is a fitting used between two pipes of different diameter. In the present case the "Concentric Reducer" was for use in connecting two lengths of pipe, of different diameter, running in the same direction. The "Reducing Tee" in question has three apertures or ends, two of them being in a straight line with each other, and being of the same dimensions, each connecting to the same length or "run" of pipe, the other, of smaller dimension, being at right angles to the run of pipe and connecting to a branch pipeline. The "Concentric Reducer" has two apertures or ends, each in a straight line with the other, and each connected with a straight length or run of pipe. One end is smaller than the other, the difference in dimension being what achieved the relevant reduction. It permitted a smaller pipeline to be connected, in a straight line or run, to a larger pipeline.