MORISON v PECK AEROFAKO BV v PECK SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY JA, CLARKE JA, CRIPPS JA 25 and 26 August 1992, 3 September 1992 [1992] NSWCA 163 SALE OF GOODS — motor bike rider buys puncture repair product from storekeeper — on facts of case trial judge holds implied condition of sale that product reasonably fit for purpose — bike tyre deflates almost immediately after product used — bike crashes — question of cause of crash — bike rider brings proceedings against both storekeeper and manufacturer of product. PRODUCT LIABILITY — in proceedings against manufacturer trial judge holds failure to give adequate warning that product could behave in the way that it did — finds crash caused by deflation of tyre caused by product — finds both storekeeper and supplier liable. CAUSALITY — on appeal submitted that judge wrong on facts about cause of accident — held, no basis for disturbing his findings. REASONS — on appeal submitted judge's reasons insufficient and therefore error of law — held, reasons sufficiently disclosed basis of decision. DAMAGES — on appeal, challenge to assessment of future economic loss — held, amount within appropriate range. INTEREST ON PAST GENERAL DAMAGES — interest rate used by judge too high — parties agree on lower figure. Priestley JA Motor bike accident. On 4 October 1982 Mark Peck, ('the plaintiff'), then aged twenty, was injured while riding his motor bike on the Dungowan Road between Dungowan and Tamworth. Going around a left hand bend his bike went across the road and struck some posts in a safety fence. This happened while the plaintiff was testing a repair just made to a puncture in the bike's rear tyre. The tyre had gone flat shortly before as he and other bike riders and friends riding pillion, were getting close to Dungowan. There he had bought a can of a product called Finilec and, with the help in particular of one of his friends named Ryan, used it to reflate the tyre. On one side of the Finilec can there was descriptive material, part of which said: "Mends that puncture and inflates the tyre without a wheel change". On the other side of the can there were instructions about how the product was to be used. The plaintiff with the help of Mr Ryan followed the instructions. The last instruction on the can was: "IMPORTANT - IMMEDIATELY drive at least 5-10 km to allow Finilec to spread in tyre and mend the puncture... " The plaintiff had ridden about 1.5 kilometres from Dungowan in carrying out this instruction, had turned and was on his way back, when the accident happened. He suffered serious and permanent injury. Bike rider starts proceedings. In 1988 the plaintiff commenced proceedings against James and Lynda Morison, who were the proprietors of the store at Dungowan where he had bought the Finilec, as first defendant, and Aerofako by, a Dutch company which manufactured the product, as second defendant. 2 UNREPORTED JUDGMENTS The plaintiff's statement of claim alleged against the Morisons that in the circumstances in which the plaintiff bought the Finilec it was an implied condition of the sale that the Morisons warranted that the can of Finilec should be reasonably fit for the purpose of inserting the contents into the plaintiff's punctured bike tyre. It was then alleged that the can of Finilec was not reasonably fit for that purpose and that the unfitness had caused the plaintiff's accident and injuries. The plaintiff's statement of claim alleged against Aerofako that it had manufactured the can of Finilec with the intention it should be used without any intermediate or previous examination by the person or persons to whom it was supplied or the person or persons who used it, knowing that in the absence of reasonable care on Aerofako's part damage or injury would or might result in the course of its use. The plaintiff then alleged that his accident and injury were caused by negligence on Aerofako's part. The statement of claim did not clearly state the case eventually made by the plaintiff at the trial of the proceedings. First instance decision. The proceedings were heard by Sharpe J in July 1990. He decided them in favour of the plaintiff on 5 November 1990, and directed entry of judgment against both the Morisons and Aerofako in the sum of $550,000. On 6 December 1990, following a further phase of the proceedings, Sharpe J entered judgment on a cross-claim by the Morisons against Aerofako in the full sum of $550,000 for which judgment had been entered in favour of the plaintiff. Appeal. Aerofako appealed against the judgment against it in favour of the plaintiff. When that appeal came on for hearing the Morisons were granted an extension of time for filing an appeal by them also against the judgment in favour of the plaintiff. At the hearing of the appeal they relied on the same arguments as those put on behalf of Aerofako. These principally related to the issues concerning the causal connection, if any, between the use of the can of Finilec and the plaintiff's accident. The Morisons raised no questions relating to the implied term found against them under the Sale of Goods Act, or the facts associated with that aspect of the case. I will therefore only refer to such matters very cursorily. Basic facts on liability before trial judge. In the plaintiffs case before Sharpe J there was evidence of the following factual matters: 1. The rear tyre on the plaintiff's bike became fully deflated not far from Dungowan. 2. At Dungowan a can of Finilec was bought from the Dungowan store. 3. When buying the can of Finilec the plaintiff made known that he wanted it for the purpose of reflating his punctured tyre and that he relied upon the sellers' skill and judgment. 4. Selling the can of Finilec was in the course of the Morisons' business. 5. The can of Finilec was used to reflate the plaintiff's rear tyre, in accordance with the instructions on the can. 6. The instruction earlier set out, to drive immediately after using the Finilec to reflate the tyre, was obeyed by the plaintiff. He rode about 1.5 kilometres along the Dungowan Road and then turned around to head back towards Dungowan. 7. As the plaintiff did a U-turn to head back towards Dungowan Mr A Beresford was driving his car towards Dungowan. He saw the plaintiff, between himself and Dungowan, at first approaching him, and then turning around and starting up again so that they were now both going in the same direction. 8. When Mr Beresford saw the plaintiff turning in front of him he slowed down from about 100 kilometres per hour to eighty; he then maintained a constant distance from the bike which went out of sight around a bend. 9. As Mr Beresford URJ MORISON v PECK AEROFAKO BV v PECK (Priestley JA) 3 got to this first bend there was another small bend up ahead just before a sharp dogleg. He saw the plaintiff's bike again, very briefly, at the small bend, and saw the flash of its tail light. 10. Mr Beresford had slowed as he approached the first bend and when he saw the plaintiff's tail light the bike then was still the same distance ahead of Mr Beresford's car as it had been before, indicating that it had similarly reduced speed. 11. Mr Beresford did not notice anything abnormal, unusual or untoward about the way in which the bike was being ridden. 12. When Mr Beresford got to the dog-leg bend he saw that the bike had gone off the road to its right. The plaintiff was lying up against part of a guide post, through the safety fence. 13. There were no skid marks, scuff marks or any other marks on the bitumen surface of the road that could be related to the plaintiff's bike. 14. At the time the day was fine and the bitumen surface of the road was dry and roadworthy. 15. The plaintiff was conscious after the accident and spoke to Mr Beresford. There was however no evidence before the trial judge of what, if anything, the plaintiff said about the cause of the accident. 16. About ten minutes after the plaintiff had set off on the test ride Mr Ryan went to see if anything had happened to him. He came upon Mr Beresford standing near the plaintiff. 17. Mr Ryan first did what he could for the plaintiff. He then noticed that two guide posts from the safety fence had been pushed over and a third was "on a bit of an angle". 18. About ten or fifteen minutes before an ambulance arrived (twenty minutes to half an hour after Mr Ryan) Mr Ryan looked at the rear tyre. It was deflated, there was still some pressure in it, but not much. He estimated that the pressure then was between five and ten psi. 19. Mr Ryan estimated that it was safe to travel through the bend where the accident happened at 100 to 110 kilometres per hour. There was no evidence from the plaintiff about how the accident happened because, although he apparently did not lose consciousness at the time, in hospital the following day he suffered a fat embolism. It was from this that the worst of his disabilities came. One of the consequences was that he then lost consciousness for some time. Another was that he became subject to retrograde amnesia permanently and lost all memory of the accident. Expert evidence at trial in support of plaintiff's case on liability. Major issues at the trial were whether the plaintiff had established on the balance of probabilities that (a) the rear wheel of his bike became or had become deflated at the time he was going into the dog-leg bend to such an extent as to cause the bike to become unstable and thus cause the accident and (b) whether such deflation of the rear tyre resulted from the Finilec not having effected a permanent seal to the puncture. The way Finilec works is set out in a brochure of the second defendant which was admitted in evidence. Finilec consists of rubber, liquid and gas brought together so that a thin-flowing matter, resembling milk, is formed which has a considerable vapour pressure and is kept in an airtight pressurised can. The can is attached to the tyre valve by means of a small tube. The brochure describes what then happens as follows: "The liquid in the container, which is forced into the tyre through the valve in a matter of seconds, expands under the spontaneous formation of a white foam of rubber particles which fills the whole tyre and raises its pressure to the correct level. At the location of the puncture the foam will try to force its way out, and friction will cause the spontaneous coagulation of the rubber components. The clotted rubber is deposited inside the puncture hole and prevents the Finilec foam from flowing out of the tyre." 4 UNREPORTED JUDGMENTS Mr Williams gave expert evidence for the plaintiff. He had worked for the Goodyear Tyre and Rubber Company from 1969 to 1983, for Pirelli Tyres Australia between 1983 and 1987, then for Nissan Motor Company as Experimental Engineer concerned with tyres, and from 1988 for Dunlop and Olympic Tyres where he was still working at the time of the trial. In all of these jobs he dealt with tyres and their working effectiveness. He also held a diploma in mechanical engineering and was a member of the Society of Automotive Engineers and of the Institute of Engineers of Australia. As well as giving evidence at the trial he had earlier provided the solicitors for the plaintiff with a report (dated June 1990) which became an exhibit. In this report he stated the results of his inspection on 30 May 1990 of the tyre and the tube which had been on the rear wheel of the plaintiff's motor bike at the time of the accident. (It was accepted at the trial that despite the long interval since the accident, they could still safely be used as reliable evidence.) As to the tyre, Mr Williams said: "The tyre was in reasonably good condition with no evidence of penetration, impact failure or run-flat damage. The inner liner surface of the tyre displayed evidence of sealing solution corresponding to the indicated positioning of the tube splice. " As to the tube: "The tube and valve were in generally good condition with no indications of run-flat operation or abuse. However, it was noted ' flaking " of the rubber had occurred on both sides of the tube at what has been judged to be the splice. (During manufacture, the round tube section is extruded into lengths and then splice-joined to form the circle.) A split in the rubber through one of those flakes in the radial direction indicated it was a splice failure rather than fitting damage. (Tyre levers would have cut the tube in a circumferential direction.) Evidence of sealant from the pressurised can indicated that leakage had occurred through this area of the tube." The last section of the report was as follows: "CONCLUSIONS DRAWN FROM THE INSPECTION a. The tyre itself displayed no damage, penetration or under inflation characteristics. b. There is evidence that a faulty splice in the tube had caused an air leak to develop initially that required rectification. c. There is no evidence to suggest an external impact or internal disintegration of the tyre or tube had caused a rapid or instantaneous deflation. d. There is evidence on the outside of the tube and inside of the tyre that sealant leaked through the faulty tube splice. Some leakage is inevitable until the sealant takes effect. Based on my inspection, I cannot say whether the sealant initially sealed the tube splice and then failed suddenly, or whether it failed to seal at all and the pressure provided by the aerosol slowly leaked away. However, I can find no other path for the tube to deflate except through the splice defect." The two instances of "flaking", one on each side of the tube at the splice, were taken up by counsel for Aerofako in cross-examination of Mr Williams at the trial. Counsel asked whether those two damaged portions of the tube were consistent with some force having been applied to the tube so as to cause them to come together. Mr Williams maintained his opinion that they were the result of a splicing failure. Counsel then asked: "MR BRANSON: Q. But is it possible that given the relative positions of these two areas of damage that it could have occurred by contact with a sharp object, a bump or a pothole or something like that - a stone? A. There is very little strength in the tyre itself, in the tube itself and I feel just to make a flaking effect on the tube would be more in line with the splicing of the tyre rather than impacts. URJ MORISON v PECK AEROFAKO BV v PECK (Priestley JA) 5 Q. But can I just be clear about this, you cannot totally exclude the possibility that there was some impact that caused the tyre to come together at the point of these two areas here (indicated)? A. If they are impacts they are exactly at the same spot, where the splice is in the tyre. HIS HONOUR: Q. You say that would be very coincidental? A. 95, 96, something like that percentage that, coincidentally in that spot." Counsel was seeking answers from the witness to support the theory that it was not deflation of the tyre that had caused the accident, but the impact of the accident which caused the deflation of the tyre later noticed by Mr Ryan. Counsel returned to this topic later, and in view of the submission which has been pressed on this court, I set out one very material extract: "Q. You see, I would like to suggest that to you and that the contact made with the other guide post was at a speed of something like 50 to 60 km per hour. Now with that sequence of events, I suggest to you that that is the very sort of impact that could have caused partial deflation of an already inflated inner tube, do you agree with that? A. Not really. Q. Well it must be so Sir, mustn't it? A. Why is that? Q. It is a severe impact? A. If it had have happened on impact, that tube would not have done any further mileage and if it was subject to an impact force, it would have cut that tube to cause the deflation. Q. But Sir, what I am suggesting is this, that the solution was applied, the Finilec; there was a seal and that the motorcycle, the rear wheel, came severely into contact with the wooden guide post and I am suggesting to you that that sort of an impact could have caused deflation of pressure in the inner tube now that is a perfectly reasonable proposition Sir? A. No. Q. What, you totally exclude that as a possibility? A. Well, if there was going to be an impact, there must be a fracture in the tube. HIS HONOUR: Q. If there is going to be a sudden deflation through impact? A. Yes. Q. There has got to be evidence in the tube? A. Yes. I don't see any evidence of that cut or impact to cause that sudden deflation. MR BRANSON: Q. Well, what we do know about the tube is that there are two areas of damage to it, through one of which you observed there to be presently a gradual leakage of air, is that not so? A. That's correct. Q. Then I don't understand Sir why it is that, given the present state of the tube, that you say that it is just not possible that a severe impact such as I am describing to you, could have forced air to be expelled through that very hole marked with the white circle? A. But a severe impact would do damage to the tube, that's what I am saying and I don't see the evidence on the tube. Q. Sir, isn't this the situation, that you have got a tyre that is solid; it is a hard tyre, wouldn't you agree? A. A tyre is a flexible membrane air container, it is not a solid. Q. It would be compressed at impact? A. Correct. Q. As would be the inner tube? A. That's correct. Q. I suggest to you Sir that it is not every time that a tyre of this kind with an inner tube inflated to, say, 20-30 psi, that hits an object at 50 to 60 kmh, could not expel air; I mean, that is just not a feasible proposition, is it? A. With due respect Sir, I inspect quite a few of those impact fracture tyres in the course of my profession and in every instance if there is an impact failure on the tyre you can see it on the cords of the tyre being cut, the inner liner being opened out or the tube being split. " 6 UNREPORTED JUDGMENTS At the end of the cross-examination, counsel made what could have been a little headway: "MR BRANSON: Q. You see, this is the position, Mr Williams, as we understand it thus far, the motorbike took up that 28-30 psi; it was observed after the accident to have only 5 - 10 psi in the inner tube and it travelled 2.3 km and it performed the manoeuvres have described to you. Now assuming those matters, do you regard that as a slow leak or a sudden or significant or other rate of deflation; how do you categorise such an event or series of events? A. These events probably would have taken place, what, in ten minutes? HIS HONOUR: A lot less than that. It is only driven 2.3 km, that is probably 2.3 minutes or less. WITNESS: Well, to drop to, what, 5-6 psi in that time..? MR BRANSON: Q. 5-10 was the estimate, Sir? A. 5-10. Q. Yes? A. Would be quite a moderately, you could say quick deflation. HIS HONOUR: Q. Moderate to quick? A. Not a blowout, but if it is losing air, 2-3 minutes would be a fairly fast loss of air. MR BRANSON: Q. And if that was happening over the duration of the journey and assuming it had been happening throughout the journey, it is something that you would expect that the rider of the motorcycle to observe well before the conclusion of the 2.3 km? A. I would feel that finishing up with that low pressure would be evident to the rider. Q. And it would be particularly evident if, after having ridden 1.6 km he slowed down to perform the U turn and then accelerated away to 80 kmh, it would be even more evident, wouldn't it? A. Generally in a straight ahead condition it is not that evident but once you start to manoeuvre in cornering and turns, it would become obvious that the tyre has lost its inflation. Q. I would like to suggest to you Sir that it is inconceivable that if there had been a progressive rate of deflation over a couple of minutes in about 1.6 km to the point where the rider did a U turn, it is inconceivable that he would fail to notice the deflated condition of the rear tyre at that point, isn't it? A. Say at the mid point of his little journey? Q. On his U turn; you see, he has driven 1.6 km out to where he did the U turn? A. So the tyre would be down to something like 15 to 18 psi; it still would be evident to a reasonably experienced motorcycle rider. Q. As he did the U turn? A. Yes. HIS HONOUR: Q. This is all assuming that the escape is at the same rate? A. Yes. " Further evidence on this aspect of the case was given by Mr Osman whose rather impressive list of academic and other qualifications as a consulting engineer included his directorships of two motor racing organisations and his capacity as a steward at motor racing meetings where he had the role of supervising the scrutineers and overseeing their work. It also came out later in his evidence that he had started riding motor bikes in 1930, raced them from 1933 to 1939, ran an advanced despatch rider's school in the Australian Army between 1943 and 1945 and still occasionally rode a motor bike. In his evidence in chief he said he had taken a particular interest in tyres amongst other things. He described the way sealants such as Finilec work and then was led to the particulars of the instant case: "Q. In order to create a seal, if there is a lesion in the tyre, is it necessary for some gas to escape? A. Yes. Q. Why is that? A. Because if some gas does not escape, then the other material cannot escape with it and so - Q. By that you mean the sealant? A. The sealant and the solvent, so that the sealant can then clog or fill the damaged portion of the tube. Q. We know that that happened in this case? A. Yes. Q. Because some of the sealant is on the outside of the tube? A. Yes, and on the inside of the tyre. URJ MORISON v PECK AEROFAKO BV v PECK (Priestley JA) 7 Q. In the course of that process, is it possible to say when, in the course of the test or whatever it is, the seal would be complete or if it will be complete? A. No, it's not. Q. Is it possible for the sealant to seal, unseal and reseal, for example, in the course of the process? A. Yes, in the process of running a tyre on the road, under normal load conditions, there is flexing within the rubber of the tyre and the rubber of the tube which may occur in unison or not and there is the possibility that a seal could be made and then the seal could be broken by the operation of the tyre. Q. If the seal is broken, is it possible to say how quickly the gas would escape? A. Not as far as I know. Q. During the course of such a test or whatever it is, this process of riding or of driving the machine, what happens to the air pressure in the tyre? A. The air pressure within the tyre will initially reduce from the amount that was filled at the time of applying the contents of the can until such time as that defect or lesion in the tube is blocked and then it should stop filling at that point. Q. What about the effect of heat in the course of the running of the tyre? A. Depending upon how much pressure was in the tyre to start with and how much has been released in the initial release of gas to cause the seal to occur, the tyre pressure will fall a certain amount and as a result of a lower tyre pressure, there will be flexing in the tyre, flexing in the tube and raising of the temperature as a result of the flexing of the parts of the tyre in the tube and a tendency, and say tendency advisedly, to increase the pressure within the tube." A little later Mr Osman was asked by plaintiff's counsel at what point, if a tyre was deflating, would that fact become obvious to a rider. An objection to this question was disallowed. Mr Osman's answer was: "A. If the vehicle to which the tyre is fitted is a motorcycle supported on two wheels and travelling at a uniform speed or comparatively uniform speed in a straight line then a considerable reduction in pressure could be tolerated before it would become markedly noticeable. Q. Considerable? A. About half the - around 60% to 50% of the inflation pressure. Q. If the vehicle then went into a sharp bend what would be likely to happen? A. Then that would become more noticeable at a higher pressure than the 50 to 60% and this may be in the range 70 to 80%. Q. Would the effect on the stability of the motorcycle be dramatic after the first third of pressure was gone? A. Yes, once the first third of the filling pressure had been dispersed it would become quite dramatic and; Q. If the vehicle is not going straight? A. Yes." There is a passage from Mr Osman's cross-examination which also think useful to set out at length, again because of the submissions pressed on behalf of Aerofako in this court. "Q. You see, the evidence before the Court is this, Mr Osman, that it is estimated by the gentleman, Mr Ryan, who in fact supplied [presumably "applied" was intended] the product, that he achieved approximately 28-30 psi pressure in that rear wheel and that relevantly the instructions on the can were complied with and that Mr Peck, the rider, was seen to proceed off and we know covered a distance of at least 1.5 or 1.6 kilometres before he did the U-turn? A. Yes. Q. And we know that it is approximately 700 metres from where he did the U-turn to the scene of the accident. Now if we were to assume that there was no under-inflation at the point where he did the U-turn? A. Yes. Q. Based upon his apparent non-awareness of that or recognition of it, and that the accident took place 700 metres up the road, and we can calculate exactly how long that could take at 80 kilometres per hour, but there may have been some slowing down for the taking of one bend and then the subject bend, is it more likely that if there was 8 UNREPORTED JUDGMENTS loss of pressure in the rear wheel as he went 'round the bend where he had the accident, it was sudden or gradual? A. There is no way of knowing exactly how long it would take and the degree of reduction in pressure within the tyre would determine the starting point for any relative movement between the tube and the inside of the tyre and the rim and the wheel upon which it is located. Q. I understand that sir. A. And that could happen within a few seconds or within half a minute or a minute. Q. Within, say, the 15 or 20 seconds that it may have taken him to travel the 700 metres from the point of the U-turn, do we assume that there was no noticeable under-inflation to the scene of the accident - is it more likely that there was a gradual loss of pressure or a sudden loss of pressure, are you able to say? A. It would be a comparatively sudden loss of pressure following the U-turn but would not necessarily have been a complete loss of pressure at the U-turn. Q. A sudden loss of pressure of what order, are you able to say? A. It could be anything of a few seconds upwards; I can't say. Q. In terms of time? A. I can't say. Q. You see, there is another piece of evidence in this Court. A Mr Beresford was driving in the opposite direction to which the motorcycle was proceeding before the U-turn and he observed the rider to do the U-turn, apparently safely and in a safe fashion, and to accelerate up to approximately 80 kmh from virtually a standing start and to negotiate a left hand bend and he saw him again just as he was going into the subject bend, that is to say, about 700 metres up the road and there was nothing in Mr Beresford's observation of the manner in which that bike was being ridden to suggest that there were any problems with the rider handling it? A. Yes. Q. With that additional information, are you able to say whether or not it is more likely that, contemporaneously with the rider going around the subject bend, there was a sudden loss of pressure or a gradual loss of pressure in the rear wheel of the vehicle? A. There would be a gradual loss of pressure, then topped off then by a sudden loss of pressure in that bend (my italics). Q. What would cause the sudden loss of pressure? A. The flexing of the tyre on the tube. Q. That information which you have been supplied with is how you understand the sequence of events to have occurred, if indeed there was a sudden loss of pressure in the tyre? A. Yes. Q. Of course, there are other possibilities, are there not, if the motorcycle left the highway? A. Yes, a number. Q. Excessive speed, do you agree? A. Yes. Q. Just inability of the rider to take the corner at the right angle? A. Yes. Q. There does not appear to be anything about the weather or the light or the condition of the road that affects the matter. Have you been out to the scene? A. No. Q. If, consistent with one view that you have, there was a gradual deflation after the rider performed the U-turn? A. Yes. Q. And then a sudden deflation at or about the subject bend where he came to grief, you would expect to find, would you not, some evidence of damage to either the tyre wall or to the tube, given that he travelled about 700 metres during that part of the journey? A. No, not necessarily, unless the tyre had been deflated for that distance. Q. There are obviously two extreme positions, one is that there was a gradual deflation soon after the U-turn was completed? A. Yes. Q. And the other being the gradual deflation commenced just at the end of the 700 metres? A. Yes. Q. Somewhere in between those two extremes, if there had been a gradual deflation, over 700 metres, you would expect to find some evidence both on the tube and the tyre of it having been run in that condition? A. Yes. Q. But there is no such evidence, is there? A. That's correct. Q. So more likely than not I suggest that if URJ MORISON v PECK AEROFAKO BV v PECK (Priestley JA) 9 there was deflation in the tube that it was a sudden deflation on or about the subject bend? A. Yes. Q. And that there was no gradual deflation more likely than not before the subject bend? A. No, I think that is open to question. There may or may not have been. " There was (very brief) evidence from Mr Williams, detailed evidence from Mr Osman and brief but specific evidence from Mr Simpson, an expert engineer called in Aerofako's case, that the Finilec can should have carried a warning that a comparatively low speed should be maintained by a vehicle carrying out the immediate test drive recommended in the directions on the Finilec can. There was also evidence that such a warning was particularly necessary in regard to motor bikes, in view of their inherent lesser stability than motor cars. Final version of plaintiff's case. I mentioned earlier that the plaintiff's statement of claim did not clearly state the case it eventually made at the trial. Indeed, it seems that it was not until the hearing was under way that it finally emerged. In particulars given before the hearing the plaintiff had asserted that the deflation of the tyre happened suddenly. Aerofako's legal representatives seem to have thought a blow-out was being alleged. In the course of the expert evidence the case changed to one of gradual deflation followed by a comparatively more rapid deflation. Counsel for Aerofako drew the court's attention to the departure from the original particulars, and sought to reserve the right to obtain an adjournment, if necessary, to deal with the change in the plaintiff's approach. In the event, no application for adjournment was made, and no point was taken in the appeal concerning the different case made by the plaintiff at the trial from that indicated prior to the hearing. Trial judge's reasons: basic facts. In his reasons for judgment, Sharpe J began by outlining the facts and the way that the plaintiff's case had been presented and then turned to what he called the threshold question of what caused the motor bike to run off the road. He mentioned the evidence of Messrs Williams and Osman and referred particularly to Mr Osman's opinion (italicised at p16 above) that there had probably been a "gradual loss of pressure, then topped off by a sudden loss of pressure in the bend". He referred also to Mr Osman's agreement in cross-examination that the two "flaking" defects in the tube may, as a matter of possibility, have been caused by the impact of the bike's rear wheel and the guide post. He indicated that this suggestion stretched the bounds of credibility. Sharpe J then briefly noted some of the things said by Messrs Simpson and Wingrove, the experts called in Aerofako's case. He referred to their theories that the deflation of the rear tyre could have been caused by the accident itself rather than the reverse, and to Mr Wingrove's alternative theory that the original puncture had been no larger than pin prick size, had been successfully sealed by the Finilec application, that the second deflation had happened as a result of the accident and that the resulting new puncture had been subsequently sealed by the Finilec. Sharpe J also noted that Mr Wingrove had conceded as a possibility in cross-examination that the Finilec could effect a temporary seal within the first few minutes, could then break and could then seal again. Finally he noted that these two witnesses agreed with Mr Osman that the two flaking defects had probably been caused during the fitting process. 10 UNREPORTED JUDGMENTS Sharpe J then made a number of specific findings. He accepted the evidence of Mr Ryan, whom he described as "most reliable and plausible". He also accepted that he was qualified by his experience as an expert on motor bikes. I take this to refer, inter alia, to his evidence that it was safe to ride a bike through the dog-leg bend at 100 to 110 kmph. Sharpe J also made it clear that he accepted Mr Beresford's evidence. The findings concerning Messrs Ryan and Beresford meant that of the nineteen numbered factual matters earlier set out under the heading "Basic facts on liability" which were not already common ground, all were accepted by the trial judge. From his acceptance of Mr Beresford's evidence Sharpe J drew the inference that as the plaintiff disappeared around the second bend (that is, the mild bend before the sharper bend at which the accident happened) he was not travelling at an excessive speed, nor, (to use slightly different language from his Honour) was he riding in a way that suggested negligence. Trial judge's reasons: expert evidence. In regard to the experts' evidence concerning the cause of the accident, Sharpe J accepted Mr Williams on two points: a. the two flaking defects were caused by the splicing of the tube rather than by being "pinched" at a later stage, as Messrs Osman, Simpson and Wingrove all thought; b. those two defects were not caused by impact damage at the time of the accident. His Honour then found: "The Plaintiff followed these directions, and whilst performing the suggested initial 5-10 km had travelled only 2.3 km when there was a relatively sudden loss of pressure resulting in the cycle becoming difficult to control. This instability, occurring just prior to or in a fairly tight left curve caused the Plaintiff to lose control whereupon the cycle crossed to its incorrect side and collided with guide posts and a safety fence." In his argument in this court counsel for Aerofako described the first of the above two sentences as the critical finding in the case. The final step so far as the liability of Aerofako was concerned was his Honour's finding that the expert evidence in the case had shown that during the test drive which the directions on the Finilec can told the user to make immediately after application of the product there could be a temporary sealing, then an escape of the Finilec which could lead to partial deflation, before it again made a seal. His Honour went on to point out that such a happening might not be critical in a four wheeled vehicle travelling at a moderate speed but in regard to a motor bike such loss of pressure could lead to dangerous instability particularly in curves. He concluded: "Some cautionary advice should have been available with the written instructions directed to motor cyclists warning of the danger, during the 5-10 km test drive to proceed at a slow speed (eg 20-30 kph) and if possible on a relatively straight thoroughfare, since some pressure may be lost through the puncture hole during this test drive." Trial judge's conclusions. On the basis of his findings that the product Finilec had been a material cause of the deflation of the rear tyre of the plaintiff's bike and that this had caused the accident, and that Aerofako had failed to give appropriate warning to users of Finilec of the risks it could cause, Sharpe J found Aerofako guilty of negligence and responsible to the plaintiff for the damage he had suffered. He went on to assess damages under the following heads: Out of pockets $12,617.60 URJ MORISON v PECK AEROFAKO BV v PECK (Priestley JA) 11 Past economic 49,000.00 loss Future 300,000.00 economic loss General 135,000.00 damages Interest 60,160.00 Total $556,777.64 In regard to damages only two of the above five heads were challenged at the hearing of the appeal, the further matters that had been foreshadowed being abandoned. The two points pursued concerned general damages and interest. In regard to interest all parties agreed that the figure of $60,160 should be reduced by $21,600. This left the figure for general damages as the only matter to be considered by the court. Aerofako's appeal. In that part of the notice of appeal dealing with liability Aerofako listed as "grounds" a very detailed list of his Honour's findings which were said to be wrong, together with assertions that other findings should have been made. Aerofako's written submissions followed a somewhat similar pattern, traversing and analysing virtually the whole of the fact finding and reasoning concerning liability and arguing, on what Aerofako contended was a proper approach to the evidence, that the judge could not have found that, on the probabilities, the accident happened for the reason he said it did or that the way the Finilec had worked had caused the accident. As the oral argument for Aerofako progressed it became apparent that the various submissions fell under two heads. These were: 1. that on a proper understanding of the evidence it was either not open to the judge to find, or alternatively that he should not have found, that it was more probable than not that the accident had happened for the reason he stated; and 2. that he had failed to give reasons for arriving at certain conclusions critical to his final opinion to such an extent that the lack of reasons amounted to an error of law. These two heads overlapped and in dealing with head 1. I will touch upon some of the matters relevant to head 2. Submission that trial judge wrong on probabilities. The argument for the appellant began with an assertion that there were eleven possible causes of the accident. The next step was that there was evidence from Aerofako's experts which showed that some of the possibilities were at least as likely as the cause for the accident which the trial judge had found established as a matter of probability. Coupled with the claims about the effect of this evidence was a submission that the trial judge had not given adequate reasons for saying why he had not accepted it. The eleven possibilities proposed by Aerofako as causes of the accident were: 1. the speed of the bike as the plaintiff began to negotiate the bend; 2. the speed of the bike at some other (unknown) time as the plaintiff proceeded into and across the bend; 3. the camber of the road; 4. a pot hole or indentation in the surface of the road; 5. the fading or bad light just prior to dusk; 6. inattention of the plaintiff; 7. failure of the plaintiff to keep a proper lookout; 8. mechanical or other failure causing loss of control of the bike; 9. evasive action taken to avoid an animal crossing the road; 10. failure of the tube at the point where it was 12 UNREPORTED JUDGMENTS spliced during manufacture by reason of stretching at the splice when inflated; 11. the nature and extent, in particular the sharp angle, of the dog-leg bend. On the basis of the evidence of Messrs Ryan and Beresford accepted by the trial judge, I do not think it was open to him to infer as a matter of probability that possibilities 1, 2, 6 or 7, caused the accident. At most they may have been possibilities for the judge to take into account although even this seems to me to be too favourable a way of stating the matter from Aerofako's point of view; it seems to me the trial judge was entitled to reject these as possibilities upon his view of the evidence. As to possibilities 3, 4, 8, 9 and 11, there was no evidence at all before the judge from which he could have drawn an inference that any of these theoretical possibilities may have caused the accident. As to possibility 5, all witnesses agreed that the accident happened in daylight, not long before dusk. Mr Wallace, then a police constable, went to the scene of the accident, and in the evening of the same day filled out a traffic accident report later tendered in evidence. Mr Wallace also gave oral evidence but had no recollection of anything relevant to the accident beyond what was contained in the traffic accident report. All other documentation which then came into existence had been destroyed. In the report Mr Wallace recorded that the accident happened at 5.50 pm and that the weather was fine. A box in the traffic accident form said "Visibility, (a) period, (b) view". The "period" part of this box contained four sub-boxes for "dawn", "daylight", "dusk" and "darkness". Mr Wallace had ticked "daylight". The "view" part of this box contained sub-boxes for "open" and "obscure". Here Mr Wallace had ticked "open". These are matters of which he would have had direct contemporaneous personal knowledge and the report accordingly was admissible evidence of those matters at the trial. As to possibility 10, there was not so far as I can see, any expert evidence at the hearing directed to it. There was some evidence that the tube had been inflated in the course of testing by the experts in preparation for the trial. Had there been any force in possibility 10 this kind of testing should have yielded evidence to support it but no such evidence was relied on. There were three people at the scene of the accident, in addition to the plaintiff, shortly after it happened, these being Messrs Beresford, Ryan and Wallace. The plaintiff was then conscious. Two features of the evidence which reinforce the view that at best the eleven possible causes of the accident listed by Aerofako were theoretical possibilities only were that Mr Ryan noticed that the rear tyre was deflated as earlier mentioned and that Mr Wallace wrote in his report that "tyre deflated whilst negotiating left hand bend causing rider to lose control", and that no police action was proposed "due to tyre deflating rapidly". This part of his report does not have the same evidentiary status as the "visibility" details earlier set out; in recording what I have just quoted he must have depended on what he was told by some other person. This part of his report thus cannot be evidence of the fact. It is evidence of what he thought at the time, and there is evidence from Mr Ryan showing that he too had the same opinion at the time. I do not think that either opinion can be taken as any evidence of the fact. I do think however that it is possible (and proper) to reach a negative inference from the fact that that opinion was held by two people, one unconnected with the plaintiff in any way, on the scene very soon after the accident happened. That inference is that neither of them saw or heard anything at the scene or from the plaintiff causing either of them to think that any one of Aerofako's eleven possibilities could have been a cause of the accident. URJ MORISON v PECK AEROFAKO BV v PECK (Priestley JA) 13 Stated shortly, there was no material before the trial judge to suggest that any of Aerofako's eleven possibilities was more than a theoretical possibility. Against this was the fact of the deflation of the rear tyre being noticed very shortly after the accident. Aerofako's criticisms of the findings made about the deflation of the rear tyre. Aerofako's detailed written submissions, in para8, picked out from the evidence of the experts any excerpts which could be used in support of an argument that the evidence as a whole either supported a conclusion different from that arrived at by the trial judge or that there was a possible explanation of the accident of at least equal strength with that arrived at by the trial judge. The written submissions then asserted that the trial judge had not sufficiently stated his reasons for not drawing the conclusions contended for by Aerofako from these excerpts. Complaint was also made that some of the excerpts were not mentioned at all in his Honour's reasons. These same submissions were put in various ways in the oral argument. Having considered these submissions and read the evidence referred to in them, I do not think that they have much weight. Some of the submissions are simply incorrect: for instance, para8.5a is contradicted by the trial judge's findings: see the first sentence under the heading "Trial judge's reasons: expert evidence" at p20 above; again para8.6f says Mr Osman conceded a fact, but the reference given for this assertion shows that he did no more than concede a possibility. Some of the submissions are irrelevant: para8.5c; 8.6c. Others are answered merely by reading his Honour's reasons. Para8.6g says there is no reference to Mr Osman's view that a relevantly safe speed for taking the dog-leg bend would have been between 55 and 75 kph. Mr Ryan had given evidence that at the time of the trial he had been virtually a daily rider of motor bikes for fifteen or sixteen years, that he knew the dog-leg bend, that he had ridden a motor bike through it half a dozen times or more and that "You can get through there at 100 kilometres an hour, 110 kilometres, easy". The judge accepted Mr Ryan as " most reliable and plausible". Mr Osman had not been to the scene of the accident before giving his evidence (AB 133K). The trial judge also accepted Mr Beresford's evidence concerning the speed at which the plaintiff entered the dog-leg. This involved making findings 8 and 10 listed under "Basic facts on liability before trial judge" above. These findings clearly justified his Honour's conclusion (AB 330P) that the plaintiff was not travelling at an excessive speed immediately before the accident. In these circumstances the submission that the trial judge should have referred but did not refer to Mr Osman's view about safe speed at the dog-leg seems to me to lack any weight at all. The comments in the preceding paragraphs relate only to a few of Aerofako's detailed criticisms on this aspect of the case. Those I have chosen to give reasons for rejecting are those which can be dealt with most shortly. I think all the other criticisms can be similarly dealt with, but because that would involve going at considerable length into explanations which seem to me to be relatively obvious I will not do so. The outstanding features of the case on causality are those that I have already referred to, in particular by earlier setting out lengthy passages from Sharpe J's reasons, and indicating how he made use of them in reaching his conclusion. 14 UNREPORTED JUDGMENTS Towards the end of the oral argument, counsel for Aerofako recognised that the principal matter he had to contend with was the fact found by the judge of the deflation of the rear tyre within a very short time after the accident. If the judge's finding that the tyre had been deflated before the accident could not be disturbed, then it would seem to me, as it seemed to the trial judge, that on the probabilities of the case it was that deflation which had caused the accident and further that it was the way in which the Finilec had worked that had caused the deflation. On the other hand, if counsel could show the judge should not have been satisfied on the probabilities that the tyre was deflated before the impact of the accident, then it would not have been open to the judge to make what counsel had characterised as the critical finding in the case. Counsel sought to attack the finding that the deflation had happened before the accident in several ways. First, there was his reliance on part of the evidence given by Aerofako's own expert witnesses. For reasons I have already given I think the trial judge was entitled to rely on that part of the expert evidence already set out and dealt with to the exclusion of that relied on by Aerofako. Second, he sought to persuade the court that the evidence supporting the fact of deflation observed after the accident should not be accepted. I think the trial judge's acceptance of Mr Ryan's evidence puts this submission out of the question. The trial judge does seem to have relied, in coming to this particular conclusion, on the statement in the traffic accident report which I have earlier discussed. For the reasons earlier given I agree with Aerofako's submission that the references in the report to the tyre being deflated as a cause of the accident must be based on hearsay, so that to the extent the trial judge relied on them for this purpose he was acting on inadmissible evidence. But it seems clear to me that he was primarily relying on Mr Ryan's evidence for this particular finding of fact and, in the circumstances of the case, there is no basis for this court to interfere with that finding. The third way in which counsel sought to attack this factual finding focussed on the time that passed between the accident and Mr Ryan's looking at the tyre. He had set off about ten minutes after the plaintiff had gone on the test ride. He found him about 800 metres away. The ambulance arrived about twenty minutes to half an hour after Mr Ryan did. He looked at the tyre and saw that it was deflated about ten or fifteen minutes before the ambulance arrived. If a minute is allowed for the time it took Mr Ryan to get from his starting point to the scene of the accident, then on his estimates of time he looked at the tyre anywhere between sixteen and thirty-one minutes after the accident. The tyre was then deflated to between five and ten psi as compared to the approximate 28 psi he had estimated when the Finilec had been inserted. Counsel submitted that the tyre could have gone down in the interval between the accident and Mr Ryan's noticing the deflation. That was obviously a possibility. However, if it were the fact that the tyre had not significantly deflated until the accident, an immediate question was what caused it to go down then. In submissions to this court several possibilities were suggested, but the only one that was persisted in was that it was the impact of the accident itself. This suggestion had been made to Mr Williams in one of the passages of cross-examination earlier set out. The trial judge was fully entitled to accept that Mr Williams' theoretical and practical experience qualified him to state the firm opinion to the contrary which he did to the court. The trial judge specifically accepted his evidence on this point. There is no basis on which this court can say he was wrong in doing so. URJ MORISON v PECK AEROFAKO BV v PECK (Priestley JA) 15 Thus this court, in considering the appeal, must do so on the footing that there is no plausible explanation to support Aerofako's submission that the judge should have found the tyre was not deflated until the impact. That being so, the case comes back to being one in which the plaintiff had set off on the test run with the tyre to the observation of himself and Mr Ryan satisfactorily inflated, his journey proceeding uneventfully to the time when Mr Beresford lost sight of him around the second bend, the accident happening almost immediately thereafter and prior to its happening the tyre being deflated. These are the broad outlines of the matter and when the further detail is considered which his Honour was both entitled to accept and did accept it seems to me that his conclusion about the cause of the accident is one that can not be successfully challenged in this court. In my opinion on the factual and expert evidence before Sharpe J, it was open to him to arrive at the conclusion which he came to and there is no sufficient basis for this court to come to any other conclusion. Trial judge's finding that warning needed. Although it was submitted at some length that the trial judge was not entitled to conclude that some cautionary advice should have been available with the written instructions directed to motor cyclists warning of the danger during the test drive and to proceed at a relatively slow speed because pressure might be lost through the puncture hole during the test drive, I do not think I need do more in dealing with the submission than say that on the conclusions his Honour reached upon the evidence, the finding concerning the warning was well open, and one with which I agree. The submission that the trial judge's reasons were insufficient. Based on such decisions as Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 and BTR Engineering (Australia) Ltd v Miseski (Court of Appeal, unreported, 18 October 1991) it was submitted that it is incumbent upon a trial judge in a case such as the present to undertake an analysis of the expert evidence such as reveals conclusions of fact lying at the heart of the dispute and to give an adequate explanation of why various theories or possibilities advanced were accepted or rejected. For Aerofako it was accepted that this submission was subject to the qualification that the trial judge did not have to notice every argument or demolish every theory and that ordinarily the giving of broad outlines and constitutive facts would suffice. Making the assumption in Aerofako's favour that the foregoing submission accurately set out the present state of the law, it seems to me that Sharpe J's reasons fully complied with the requirements. If his reasons were to be looked at in complete isolation from what happened at the trial it seems to me there would be some foothold for Aerofako's argument although even then I would not think it strong enough to warrant acceptance. Once the full course of what happened at the trial is taken into account however, it seems to me that any plausibility the argument might possess disappears. Had judgment been delivered immediately at the close of the submissions I do not think any representative of the defendant then present could have had the slightest doubt of the course of the judge's reasoning, why it was he accepted the evidence that he did and why it was that he did not think it necessary to describe any more fully the matters that Aerofako had been relying on in trying to resist the conclusion to which he came. The submission made, very elaborately, by Aerofako was that there was much expert evidence that Sharpe J did not refer to, that it required explicit consideration, and that by not giving it that consideration, he erred in law. I have just given one reason why I do not accept that submission. An associated reason, 16 UNREPORTED JUDGMENTS which I have earlier tried to make clear, is that the expert evidence relied on by Aerofako does not, on examination, have such strength as to warrant detailed discussion when the judge's positive findings make sufficiently clear the evidence he was accepting and these findings entail rejection of the evidence relied on by Aerofako. It seems to me that the criteria asserted by Aerofako as being the ones the trial judge was required to comply with in stating his reasons were in fact complied with by him. Conclusion on liability. In my opinion no ground has been shown for disturbing the trial judge's finding of liability, either of Aerofako or the first defendant. Damages. The only head of damage in issue in the appeal was that of future economic loss. Sharpe J arrived at his figure for this head on the basis of his opinion that the plaintiff was unemployable for practical purposes, and that the fact that he had held a job with the State Rail Authority for a considerable time, and was still holding it, was because the Authority was, in his case, a most humane and sympathetic employer. He also expressed the opinion that governments, both State and Federal, appeared set on cutting costs by staff reductions in public authorities. He therefore took into account the risk that the plaintiff would at some future time lose his job with the State Rail Authority, in which case he was of opinion he would in all probability not again succeed in obtaining a sheltered employment situation. For Aerofako it was submitted that this was an erroneously over-gloomy view of the plaintiffs future. It was also submitted that his Honour was not entitled to take into account, in the absence of evidence at the trial, that governments had a policy of staff reductions which he referred to. I do not agree with these submissions. On the material before him I think his Honour was entitled to come to the conclusions to which he came and to take into account the possibility that the plaintiff might lose his job in the future, particularly bearing in mind what is presently common knowledge about cuts in staffing of public services, and that his disabilities would then mean he could not get another one. On the basis of the matters taken into account about the plaintiffs future, predictions about his future necessarily being a matter of opinion about which reasonable minds may differ, I think the figure the trial judge arrived at for future economic loss was within appropriate limits. In my opinion, therefore, this ground of appeal fails. As mentioned earlier, it was agreed that the interest figure arrived at by his Honour should be reduced by $21,600. To do this it will be necessary to set aside the judgment entered by Sharpe J and in its place order that judgMent be entered for $535,177. As the amount requiring this procedure was never relevantly in dispute by the plaintiff the setting aside of one judgment and the ordering that a different one be entered will have no bearing on the costs order to be made. Conclusion. In my opinion to enable the interest to be adjusted, the judgment below should be set aside, and in its place judgment should be entered for $535,177 as at 5 November 1990. The defendants must bear the plaintiff's costs of the trial and of the appeal. Clarke JA I agree with Priestley JA. Cripps JA I agree with Priestley JA. URJ MORISON v PECK AEROFAKO BV v PECK (Cripps JA) 17 1. Judgment below (for $556,777) set aside; in its place, judgment for $535,177, as at 5 November 1990, to be entered. 2. Appellants to bear respondent's costs of trial and appeal. 5 Counsel for the Appellant (MORISON): A PUCKERIDGE QC / D JENKINS Instructed by: MCMAHON and BROADHURST (TAMWORTH) Counsel for the Appellant (AEROFAKO): C BRANSON QC / JT KEARNEY 10 Instructed by: MCMAHONS (SYDNEY) Counsel for Respondent: Js COOMBS QC/CK HICKEY Instructed by: EVERINGHAM SOLOMONS and Co