Boral Ltd v Foley & Bear Pty Ltd trading as J&R Industries

HIS HONOUR: By Notice of Motion filed on 3 November 2015, the appellant, Boral Ltd, seeks a stay of a judgment that was entered against it in the District Court in favour of the respondent, Foley & Bear Pty Ltd, pursuant to a judgment of Cogswell DCJ of 23 June 2015 ([2015] NSWDC 240). The amount to which Foley & Bear is entitled, inclusive of interest, is presently about $144,000.

The proceedings in the District Court related to Boral’s supply to Foley & Bear of concrete for footings for pedestrian bridges over the Thredbo River in the Kosciuszko National Park, New South Wales. As the concrete was to be pumped through pipes, the supply also included slurry. Slurry is a viscous material that was to be passed through the pipes before the concrete in order to lubricate them. When the slurry was pumped into the pipes on 7 December 2011, it set too early, blocking the pipes and causing the concrete that followed to become stuck in them. The pipes were damaged, resulting in substantial expense being incurred in rectification.

The primary judge relied principally on the evidence of two witnesses, Messrs Reg Bear and Brendan Ross, to conclude that the slurry was insufficiently viscous. His Honour concluded that this resulted from Boral’s failure to add retardant and the prescribed dosage of a product known as R1000 to the slurry, resulting in the slurry setting sooner than it should have (Judgment [32]-[33]).

A further attempt to pour the concrete on 17 March 2012 also experienced problems. His Honour held that in this instance the problems were caused by an excess of aggregate in the concrete (Judgment [41]). His Honour found that on each occasion Boral supplied a product that was not fit for the purpose for which Foley & Bear ordered it.

The principles applicable to the grant of a stay were conveniently summarised by Gleeson JA in Lawrence v Gunner [2015] NSWCA 322 as follows:

As Gleeson JA indicated, it is appropriate to first consider whether the appellant has arguable grounds of appeal. A detailed examination of the merits of the appeal is neither necessary nor appropriate. Accordingly, I make only the following brief observations concerning Boral’s appeal.

First, Boral contends that the primary judge erred in failing to take into account the evidence of Messrs Gary Turner and Richard Rankin as to the “physical condition of the slurry at the time that the slurry was delivered at the pumping site.” Mr Turner however only gave evidence as to the slurry’s condition at Boral’s plant. Mr Rankin did refer to its condition shortly before it was pumped into the pipes but what his Honour regarded as significant was its condition of such of it as emerged from the pipes. This was important because, on his Honour’s reasoning, the slurry’s deficiencies led to it setting too soon and, in part, whilst in the pipes. Its condition when it entered the pipes was accordingly less significant. In my preliminary view, neither Messrs Turner nor Rankin’s evidence appears to undermine his Honour’s conclusions.

Secondly, Boral contends that the primary judge erred in failing to draw an inference adverse to Foley & Bear from that company’s failure to call evidence from the pump operator. However, contrary to the effect of Boral’s submission, the rule in Jones v Dunkel does not permit an inference “that evidence not called by a party would have been adverse to the party” (Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11, 243 CLR 361 at [64]). It only permits an inference that “it would not have assisted the party” (ibid). As there was other evidence of the condition of the slurry at the relevant time, the absence of the pump operator’s evidence did not harm Foley & Bear’s case. In any event, it is not clear that the pump operator was relevantly in Foley & Bear’s “camp” such that it could have been expected that only Foley & Bear, and not Boral, would have called the pump operator to give evidence.

Thirdly, Boral contends that the primary judge erred in failing to give adequate reasons for his findings. My preliminary view is that this contention has no substance as his Honour’s reasons appear to be adequate.

Fourthly, Boral contends that the primary judge erred in finding that Boral Ltd rather than one of its related companies which was not a party to the District Court proceedings, supplied the products to Foley & Bear. The primary judge addressed this contention in a manner that, at least at first sight, appears to have been satisfactory.

Finally, Boral contends that the primary judge’s assessment of damages was erroneous. Again, Boral’s arguments do not appear to be strong.

In these circumstances, whilst I would not characterise Boral’s appeal as unarguable, my preliminary assessment of it is that it does not have strong prospects of success.

I turn then to consider other relevant matters.

The company search tendered by Boral indicates that Foley & Bear has a small share capital and, at least until recently, was subject to one or more company charges. The only evidence before this Court as to Foley & Bear’s financial position is a bank statement showing a fluctuating balance, being $22,532.18 at 12 November 2015. The company has an overdraft limit of $160,000 on that account. Nothing in the statement suggests that the company is experiencing financial difficulties.

Boral contended that an adverse inference should be drawn against Foley & Bear because, despite Boral’s request, it did not provide it with any further financial information. However, it was open to Boral to require production of such information by subpoena or notice to produce, but it did not do so.

In my view, the evidence does not support a conclusion that Foley & Bear’s financial position is such that it may have difficulty repaying the presently outstanding amount of $144,000 if Boral pays that to it and Boral’s appeal is successful.

In these circumstances, I do not consider that there is any basis for a stay of the judgment below. Boral submitted that, if I was of the view that a general stay was inappropriate, there should at least be a stay of the judgment to the extent of about $65,000, representing the part of Foley & Bear’s damages that it may be liable to pay to the pump operator. In light of my views concerning Boral’s prospects of success on appeal and the evidence, or lack of evidence, of Foley & Bear’s financial position, I do not accept this submission.

For these reasons, Boral’s Notice of Motion is dismissed with costs.