B & K Plastics Pty Ltd v Sand Queensland Pty Ltd [2014] QCAT 285

CITATION: B & K Plastics Pty Ltd v Sand Queensland Pty Ltd [2014] QCAT 285 PARTIES: B & K Plastics Pty Ltd ACN 091 289 986 (Applicant) v Sand Queensland Pty Ltd ACN 111 445 204 (Respondent) APPLICATION NUMBER: MCDO51179/13 MATTER TYPE: Other minor civil dispute matters HEARING DATE: 5 March 2014 HEARD AT: Southport DECISION OF: Adjudicator Trueman DELIVERED ON: 5 June 2014 DELIVERED AT: Southport ORDERS MADE: 1. The Respondent must pay to the Applicant the sum of $13,828.09 within 14 days. CATCHWORDS: Minor Civil debt – payment of invoices for supply of goods – provision of pontoon hinges supplied to respondent – where defence is allegation pontoon hinges failed, were not manufactured to specification & unfit for purpose – weight of expert evidence – misleading and deceptive conduct. Queensland Civil and Administrative Tribunal Act 2009 Competition and Consumer Act 2010 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Bradley Coleman, Director RESPONDENT: Mr William Bourke, Director -- 1 of 9 -- 2 REASONS FOR DECISION [1] The applicant Company, B & K Plastics Pty Ltd (“B&K”) file a claim for minor civil debt on 28 October 2013 seeking the payment of various invoices from Sand Queensland Pty Ltd in the sum of $13,134.00 plus costs and interest. [2] Sand Queensland Pty Ltd filed a response on 5 December 2013 seeking orders from the tribunal to dismiss the claim and or in the alternative to transfer the proceedings to the District Court of Queensland. HISTORY [3] B&K stated that they supplied pontoon hinges to Sand Queensland Pty Ltd which trades as Pacific Pontoon & Pier (“PPP”). The hinges were provided to PPP on various dates and were detailed in invoices1 that were provided to the tribunal. The invoices were for: Invoice Date Invoice Number Amount 1.2.2013 67712 $3,465.00 1.2.2013 67713 $4,389.00 6.3.2013 67813 $2,508.00 12.3.2013 67822 $2,772.00 [4] B&K conduct a business in supplying polyurethane hinges for use in pontoons and marinas. B&K stated that they provided the hinges pursuant to work orders2 provided to them by PPP. [5] B&K stated that for the invoices numbered 67712, 67813 and 67822 whereby they supplied pontoon hinges, that they were manufactured and supplied according to the specific requirements of PPP. That is, the hinges were manufactured using 2 x 16mm steel plates moulded in a mount. That each steel plate had 4 x 22mm holes with 2 of the holes to be used to bolt the mount to the pontoon and the remaining 2 holes to allow for greater bonding of the urethane to the steel plates. The steel plates were sand blasted before being moulded by Cooper & Ward Metal Fabrications. B&K stated that after sand blasting all steel plates were primed with Chemlock 213 by N&M Elastomers. They described how the moulds for the hinges were specifically made for the hinges and which where prepared with mould release and cleaned before each pour. They claim that the polyurethane used was Adiprene L100 which has a superior chemical make up and that 1 in every 20 hinges were skin tested using an acceptable methodology. They allege that the hinges were manufactured in accordance with PPP specifications. 1 Pages 11,12,13,14 in bundle of documents marked ‘Exhibit 1’. 2 Pages 17,18,19,20 in bundle of documents marked ‘Exhibit 1’. -- 2 of 9 -- 3 [6] B&K stated that the hinges for invoices 67712, 67813 and 67822 were delivered to Mr Coleman personally and that there had not been any complaint about the hinges. Those invoices are alleged to remain unpaid. [7] B&K conceded that the hinges that were delivered pursuant to invoice 67713 in the sum of $3,990.00 were for the supply of 35 new style black pontoon hinges. B&K acknowledged that when the hinges were manufactured they appeared to be defective in that the polyurethane had not properly hardened. B&K stated that they requested the return of the hinges and replaced all 35 hinges at its own cost. The replacement hinges were then delivered and there has not been any further complaint about the hinges by PPP. [8] B&K seeks full payment for the pontoon hinges that have been delivered to PPP. [9] PPP agree that they were a customer of B&K and were engaged in a series of transactions since about September 2001. They allege that each transaction was for a batch of polyurethane hinges of differing quantities suitable for use in the construction of marinas and pontoons designed by PPP that were ordered pursuant to work orders placed from time to time. [10] PPP stated that the hinges were described as to the manufacturing process which included that they be ‘two 16mm steel plates moulded into a mount with four 22mm diameter holes in each steel plate, with two holes to be used to bolt the mount to the pontoon assembly and the remaining two holes to allow greater bonding of the urethane to the steel plates’. [11] PPP claimed that the process of primer and sand blasting were detailed and that the polyurethane for the hinges was to ‘be Erapol E93A’. They state that ‘one in every twenty mounts to be tested’. [12] PPP allege that the agreement between the parties was a ‘continuing agreement that was never varied as to the required process for manufacture of the hinges’. [13] PPP explained that if the sand blasting of the hinge before priming was not carried out that the adhesion of Erapol E93A to the steel plates was lessened and the strength of the hinge was materially reduced. They claim that the sand blasting of the hinge prior to priming was a fundamental term of the agreement. [14] PPP state that B&K were aware of the use and purpose of the hinges and that they were aware that PPP relied on the skill and judgement of B&K in the moulding of the hinge and particularly in relation to adhesion of the polyurethane to the steel plates. [15] PPP allege that the importance of the use of Erapol E93A has due to it being a ‘high performance polyether based urethane elastomer and it being abrasion resistant, capable of bearing high loads, had excellent low temperature flexibility and was UV stabilised’. -- 3 of 9 -- 4 [16] PPP stated, that they were not aware, that in or around May 2009 B&K engaged a third party to manufacture the hinges they ordered from time to time. They claimed that from 1 May 2009 they made at least 30 separate orders for hinges to be manufactured pursuant to the specification agreement they had. PPP claim that at no time prior to March 2013 did B&K advise them that the hinges supplied to them had not been manufactured by B&K or in the manner agreed between the parties. [17] PPP allege that Mr Coleman has engaged in misleading or deceptive conduct and has breached their agreement. PPP claim that as a result of the breach of agreement that the improper manufacturing of the hinges supplied by B&K and the hinges used by PPP in the construction of pontoons and piers has failed and do not comply with the design requirements. [18] PPP allege that as a result of the faults in the pontoon hinges they have ‘been required to undertake repair work in the amount of $146,565.87 and are liable to undertake rectification work in the amount of $566,286.33 in order to replace all remaining defective hinges supplied by B&K currently in use’. [19] PPP foreshadowed a claim in the District Court for damages due to breach of contract against B&K and requested the claim be transferred to the District Court for all matters to be determined together. As at the date of the hearing PPP had not commenced or filed any District Court action. The claim for transfer was refused on that basis and the tribunal determined it had jurisdiction to hear the matter on quantum and as a minor civil dispute. LEGISLATION [20] The tribunal has jurisdiction to hear and decide a minor civil dispute3. This matter is a claim by B&K to recover a debt or liquidated demand of money from a company to whom the debt is owed or money is payable.4 [21] The tribunal can not make an order or decision that would purport to require payment of an amount more than the prescribed amount.5 This claim is for the sum of $13,134.00 and therefore within the prescribed amount of the civil jurisdiction limit for minor civil debt matters of $25,000.00. [22] B&K claim interest on the debt matter. The tribunal can award interest for a minor civil dispute 6 for a claim to recover a debt or liquidated demand of money. 7 3 Queensland Civil and Administrative Tribunal Act 2009 s 11. 4 Ibid s 12(4)(a). 5 Ibid s 13(3)(a). 6 Ibid s 14. 7 Ibid s 14(1). -- 4 of 9 -- 5 [23] The tribunal can order that there be included in the amount payable under a tribunal's order8 a sum of interest at the rate the tribunal considers appropriate for all or part of the amount9 for all or part of the period between the date when the dispute arose and the date the tribunal makes its order.10 EVIDENCE [24] B&K provided the tribunal with evidence from Mr Clifford Ward from Cooper Ward Metal Fabrications by way of a statutory declaration sworn on 31 January 2014.11 Mr Ward deposes that B&K are a client of his company and undertakes sand blasting works for them. He states that ‘the 16mm steel plates used in the manufacture of the hinges were delivered to him and that they were sand blasted in accordance with B&K’s instructions’. He stated that following sandblasting they were ‘delivered to B&K in accordance with their directions’. [25] B&K provided evidence from Shane Arndell by way of a statutory declaration sworn on 30 January 2014. Mr Arndell deposed that he was ‘an employee of N&M Elastomers Pty Ltd and that B&K is a client of theirs that undertakes plastic moulding work for them’. He stated that N&M undertook the moulding work for the hinges subject to the disputed invoices and that the hinges were manufactured to the following process:  Hinges were manufactured using 2 x 16mm steel plates moulded in a mount  Each steel plate had 4 x 22mm holes with 2 of the holes to be sued to bolt the mount to the pontoon and the remaining 2 holes to allow for grater[sic] bonding of the urethane to the steel plates  The steel plates were sand blasted before being moulded by Cooper & Ward Metal fabrications  After sand blasting all steel plates were primed with Chemlock 213 by N&M  The mould for the hinges was prepared with mould release and cleaned before each pour  The polyurethane used by N&M was a polyether elastomer from 90-93 shore A hardness  1 in every 20 hinges was skin tested using an acceptable methodology 8 Ibid s 14(3). 9 Ibid s 14(3)(a). 10 Ibid s 14(3)(b). 11 Page 39 in bundle of documents marked ‘Exhibit 1’. -- 5 of 9 -- 6 [26] B&K stated that they have never agreed to have the hinges tested for peel and chalkiness as to do so would mean that they needed to be destroyed and PPP never supplied surplus steel plates for this testing. The claim that they only agreed to undertake skin testing. [27] B&K provided to the tribunal evidence of photos of the hinges12 and product technical information regarding Chemlock213, Chemlock218 and AdipreneL 10013. [28] The tribunal was provided with evidence that the hinges that B&K provided to PPP were defective and an expert reports from Structural Testing Services (STS) prepared a test report conducted by Wayne Crowell dated 14 March 201314. The report notes B&K as the client and appears to provide evidence about a ‘Load testing of Urethane hinges’. [29] The report stated that the testing was conducted on polymer hinges under particular conditions. A tension test was undertaken and the peak load was 19.54 per kN. A peel test was performed and a peak load of 68.02 per kN. Photographs were attached to the report showing the tensions and peel test setup and the failure mode for both tests. The report did not draw any conclusions regarding the findings, but PPP state that the desired outcome of the peak load tests should be 61.5 for tension test and 37.0 for peel test. [30] B&K stated that they agreed with PPP that a batch of hinges had failed under testing. They stated that the hinges that did not meet the requisite standard and the only bath that was defective was replaced at no cost to PPP. B&K provided a prior test result undertaken by Fibre Composites Design and Development conducted at the faculty of Engineering and Surveying at the University of Southern Queensland. The report contained test results for polymer hinge testing dated 15 November 2001. The report stated that the hinge was placed under load testing and that ‘the hinge displayed no obvious failures and there was not audible cracking of the internal steel/elastomer bond’. B&K provide a further test report that was alleged to be a current test. The further report from Fibre Composites Design and Development conducted at the faculty of Engineering and Surveying at the University of Southern Queensland was undated15 but the parties agreed it reflected recent test results. The results of testing the urethane hinges in the report indicated the hinges for tension test had a peak load at 61.5 kN, shear test a peak load of 70.2 kN and a peel test with peak load of 37.0 kN which were all deemed ‘acceptable peak loads’. [31] B&K claim that they do test the hinges as part of their usual business practice and that it was a part of their agreement with PPP. B&K stated that they had not had any evidence that their hinges had ever failed in the 12 Pages 15 & 16 in bundle of documents marked ‘Exhibit 1’. 13 Pages 41-102 in bundle of documents marked ‘Exhibit 1’. 14 Exhibit 4. 15 Exhibit 5. -- 6 of 9 -- 7 past until the identification of a defective hinge on or around February/March 2013. They agreed the hinges provided in invoice 67713 dated 1 February 2013 were hinges that were tested and found to be defective. T hey claimed that the 35 hinges supplied were a ‘new style pontoon hinge black’, and that PPP used what were called “new’ and “old” hinges from time to time. B&K stated that the hinge that failed or was defective was the hinges in an urgent order of 44 hinges, where 20 were new style and 24 old styles. That was confirmed in an email between the parties dated 22 February 201316. B&K allege that the one lot of defective hinges that were identified were replaced at no cost to PPP and that there is no evidence that any of the other many number of hinges they have provided to PPP are defective in any way. REASONS & FINDINGS [32] I find that the expert evidence does suggest that the hinges subjected to testing in February 2013 were defective. I accept that the defective hinges have been replaced and that there was expert evidence and test results that confirm that prior and subsequent testing of the hinges support a finding that the hinges supplied by B&K were not defective and were fit for purpose. There was insufficient evidence for a finding to be made that all hinges provided to PPP over the period of their lengthy business relationship were also defective or require replacement. There may be other hinges that have been used by PPP that could be defective but no evidence was presented to the tribunal to support that contention. In their response PPP claimed that they had paid for defective works for repairs allegedly due to the defective hinges in the sum of more than $146,000.00. However, no evidence was provided to the tribunal to support that contention and I therefore do not accept and reject that evidence. [33] PPP allege that B&K have engaged in deceptive and misleading conduct17 in that they have provided to them hinges that did not comply with the agreed manner of manufacture and that B&K represented to them that the product was fit for purpose and not defective when it was found some hinges were defective. On the evidence provided to the tribunal I cannot make any findings that B&K engaged in deceptive and misleading conduct. PPP disputed that B&K were not permitted to subcontract the manufacture of the hinges to a third party, although I could not conclude that the agreement between the parties bound B&K to actually manufacture them. The agreement merely provided that the hinges were manufactured under certain conditions and in a particular manner. I am satisfied that B&K arranged for the proper manufacture of the hinges, although from the evidence there was a “hiccup” when a batch of hinges were manufactured with deficiencies that rendered the hinges defective. The only evidence that the tribunal had was that this event occurred on one occasion. Unless all the hinges that B&K supplied to PPP were tested 16 Page 19 in bundle of documents marked ‘Exhibit 1’. 17 Pursuant to section 18 of the Competition and Consumer Act 2010. -- 7 of 9 -- 8 it is impossible to draw and inference that all the hinges B&K supplied were defective. [34] I find that the defective hinge was not a matter that B&K could have been aware of and only when the hinges were tested did the result reveal the defect. The hinges were subcontracted to various companies for various works, including, sandblasting services18 from one company and moulding19 work by another. In the circumstances it would be impossible for B&K to be able to guarantee 100% the works performed by their subcontractors to the hinges. I accept that the only process that B&K can rely upon for monitoring the quality of the workmanship from their subcontractors and to be certain the hinges are not defective is their commitment to the “1 in 20” testing regime. I am satisfied that B&K undertake such testing as they produced past results that indicate a commitment to quality control. The fact that a batch of hinges were found to be defective, I find that the resultant action by B&K to replace them immediately and undertake further testing of the hinges batched after the defective lot is again a commitment by them to produce hinges of the highest quality and that they are committed to quality control. I find there is no evidence to persuade me that B&K or its Director, Mr Coleman, has engaged in misleading or deceptive conduct. [35] For the reasons articulated, I find that the claim by B&K for payment of hinges supplied pursuant to work orders from PPP to have merit and that there is no evidence to support a finding that PPP should be relieved from paying the invoices for the pontoon hinges that they ordered and which were delivered to them. There is no evidence to suggest that the hinges supplied were defective and all have been used by PPP in the construction of pontoons and appear fit for purpose. [36] B&K claims for the payment of unpaid invoices and cost of filing the claim. They costs claimed are for $421.09, which include a filing fee of $284.60, a bailiff’s service fee of $42.40, a Search fee of $80.00 and a CITEC transaction fee of $14.09. I am satisfied that as the claim by B&K has been wholly successful that their costs and interest should be paid. [37] Interest is claimed by B&K on the unpaid invoices and they claim interest ‘pursuant to section 14 of the QCAT Act’. The QCAT Act allows the awarding of interest in minor civil matters where as in this case the claim involves the recovery of a liquidated demand of money or debt. Interest is awarded at the discretion of the Tribunal. The Tribunal can set the rate and the period for interest to be paid. In this case I find that interest should be paid but only from the date the claim was filed on October 2013 up til the date of the hearing. That is rounded to a period of 5 months. Interest is calculated at 5% per annum. The sum of interest for the relevant period is therefore $273.00 ORDERS 18 Cooper & Ward Metal Fabrications Pty Ltd. 19 N & M Elastomers Pty Ltd. -- 8 of 9 -- 9 1. THAT the Respondent must pay to the Applicant the sum of $13,828.09 within 14 days. -- 9 of 9 --