45 Degrees North Pty Ltd v The Promotions Factory (Aust) Pty Ltd
[2003] FMCA 365
•28 August 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| 45 DEGREES NORTH PTY LTD v THE PROMOTIONS FACTORY (AUST) PTY LTD | [2003] FMCA 365 |
| TRADE PRACTICES – Sale of goods – breach of product safety standard – economic loss only, no personal injury – whether Respondent could be liable for economic loss only – breach of term implied by Goods Act – damages for breach of product safety standard – damages for breach of contract. |
Trade Practices Act 1974
Acts Interpretation Act 1901
Goods Act 1958 (Vic)
| Applicant: | 45 DEGREES NORTH PTY LTD |
| Respondent: | THE PROMOTIONS FACTORY (AUST) PTY LTD |
| File No: | MZ 947 of 2001 |
| Delivered on: | 28 August 2003 |
| Delivered at: | Melbourne |
| Hearing date: | 24 June 2002 |
| Judgment of: | Phipps FM |
REPRESENTATION
| Counsel for the Applicant: | Mr R Miller |
| Solicitors for the Applicant: | Kliger Partners |
| Counsel for the Respondent: | Mr M Ravech |
| Solicitors for the Respondent: | Fetter Gdanski |
ORDERS
There be judgment for the Applicant against the Respondent for $35,606.45.
Liberty to apply in respect of interest and costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 947 of 2001
| 45 DEGREES NORTH PTY LTD |
Applicant
And
| THE PROMOTIONS FACTORY (AUST) PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant’s business is organising and coordinating marketing, promotional and other special events for its clients. One of its clients manufactures products for Cottees. In June 2001, Cottees decided to have a promotion for its products based on a banana flavour with the theme “Go Bananas”.
The Applicant was retained by Cottees to arrange for the purchase of 2,050 blow-up banana pool toys to be used as prizes in the promotion. The Applicant, in turn, ordered the bananas from the Respondent. Whether and when the Respondent knew that the bananas were intended to be used as pool toys is an issue.
The Applicant alleges that the bananas supplied did not comply with Australian Standard AS 1900, applicable to blow-up pool toys at the time. Cottees rejected the bananas. The Applicant, in the meantime, had paid the Respondent $33,472.50. Cottees had paid a 50 percent deposit of $16,184.75 plus GST on 5 July 2001 and then the balance; a total of $33,606.45.
The Applicant claims damages of the amount of $33,472.50 paid to the Respondent plus loss of profit on the re-supply to Cottees.
The evidence
Evidence for the Applicant was given by the Managing Director, Ms McLennan, and a Marketing Assistant, Ms Nunns.
Ms Nunn's task was to contact suppliers to obtain information and costings for components, including the bananas for the promotion. She contacted a number of suppliers and obtained costings and any available samples.
Ms Nunns spoke to Ms Guirguis of the Respondent prior to 13 June 2001. There was then an exchange of emails by which a quotation was given for different size bananas, and a further quotation for printing on the bananas. These culminated in an order dated 18 June 2001, signed by Ms McLennan for the Applicant, to the Respondent for (2,050) 1.5m inflatable bananas for a price of $14.79 per unit; a total of $33,051.45 (including $3031.95 GST). The order contained the following statement:
“45 Degrees North Pty Ltd will require a production sample of printed logos in position on a banana for sign off prior to commencement of printing 2,050.”
On the 22 June 2001, there was an exchange of emails between Ms Nunns and Ms Guirguis. It commenced with one from Ms Nunns as follows:
“We actually need some form of safety confirmation for the bananas quite urgently (before our client signs the design off). Could you get that to me ASAP?”
Ms Guirguis asked for advice on the sort of safety instructions their client needed. Ms Nunns replied:
“Firstly, we just wanted something in writing which we can show the client that says the bananas are suitable and certified for children to use. Secondly, we were hoping a sheet of safety instructions/restrictions or similar would come packaged with the bananas to avoid any liability when they are sent out to the children who win them.”
Ms Nunns said she found a warning on a sample inflatable banana she had received from another supplier and she sent an email to Ms Guirguis:
“I just found another banana sample that someone sent us (but was not as good as the ones from you) but it is printed on the banana and the packet that it comes in:
‘Warning:
-- this is not a life preserver
-- used only in water depth which is within the user’s swimming ability and under competent supervision
Instructions:
Age -- 7 years and over
1. Inflate air chamber. 2/3 full is normally sufficient. For best results use hand/foot pump. Seal valve with stopper and push in inflation valve.
2. Mount banana at steps or in shallow water. Maintain balance and drift off.
3. Wash down after use and store out of direct sunlight.’
Hope this helps!”
Later that day, Ms Guirguis responded confirming that these instructions would be printed on the bananas.
On the 25 June 2001, Ms Nunns sent an email to Ms Guirguis:
“Will all that writing be printed on the actual banana and if so where? (because it would need to be small). Is that also the correct wording because I just copied that from another banana and its packet. I just need to send the client a copy of exactly what will be where so they can approve it.”
Ms Guirguis replied on the same day:
“The printing can be either on the banana or on an instruction paper packed with the banana. The wording is standard, that is, put on most inflatables. Please let me know where you want the printing to be, also, I need artwork today urgently.”
A number of email messages passed between Ms Nunns and Ms Guirguis concerning the artwork and then on 28 June 2001, Ms Nunns sent an email which stated:
“Just wondering when we can expect a production sample of the printed banana because the next thing we're supposed to be getting onto is organising a photo shoot with the banana at a pool!”
On 9 July 2001, Ms Guirguis sent Ms Nunns an email attaching a JPEG file of the banana. One of the illustrations showed the warning which read:
“WARNING:
-this is not a life preserver
-use only in water depth which is within the user’s
swimming ability and under competent supervision for a…”
On 23 July 2001, Ms Nunns sent Ms Guirguis an email which stated:
“Just spoke with Cottees and they confirmed the order. They have finally approved the sample so please proceed as per our order. Thanks very much.”
Ms Nunns gave evidence of receiving advice that the bananas had arrived and various messages about where they were stored and dates for starting the consumer promotion.
Ms Nunns said that in her initial conversation with Ms Guirguis, she had told her that the bananas were intended as pool toys. Ms Guirguis disputed this.
Ms McLennan gave evidence of her part in the early part of the arrangements. She gave evidence of paying the Respondent’s tax invoice for $33,472.50 on 27 August 2001.She gave evidence of being paid a 50 percent deposit by Cottees on 5 July 2001; an amount of $16,184.75 plus GST. She said that she sent an invoice on 6 August 2001 for the balance of $16,184.75 plus GST. That amount was paid on 22 August 2001.
At the end of August, she had been advised by the Cottee's Representative that the promotion was about to go ahead. Then, on a date in September 2001, she said that someone from Cottees questioned whether the labelling on the bananas complied with the relevant Australian Standard. She raised this issue with Ms Guirguis. On 1 October 2001, she received an email from Ms Corbett of the Respondent which said that the banana complied with the Australian Toy Standard AS 1647.2-1992 constructional requirements.
Ms McLennan gave evidence about a series of emails and telephone conversations which culminated in Cottees stating that it would not accept the bananas and required a refund of the money it had paid. The reason for this was that Cottees said that the bananas did not comply with the relevant Australian Standard. The relevant Standard was AS 1900 -1991, referred to in AS 1647.2-1992 as the Standard for flotation toys. Cottees said the printed warning was not as required by the Standard and the bananas did not meet the required pressure test.
A series of emails and conversations took place between Ms McLennan and Representatives of the Respondent. The Respondent arranged for testing of the bananas. On 16 October 2001, Ms McLennan received a fax from Mr Strapp of the Respondent:
“Further to a conversation earlier today, we confirm the inflatable bananas have been tested by Intertek Testing Services in Hong Kong in accordance with the Australian Standard AS 1900.
Test results indicate the inflatable did not pass on the basis of markings and certain general requirements regarding pressure capacity.
We have discussed these issues in detail with the supplier in Hong Kong and they have advised the inflatables can be modified to meet all the requirements of AS 1900.
Please advise a suitable time for us to collect the inflatables and we will arrange to have the warning changed and pressure capacity increased. We estimate this will take approximately eight weeks. No cost will be incurred for this service and we apologise for any inconvenience.
Should you have any queries please do not hesitate to contact me on 9520 1111.”
The Respondent did not maintain this approach. In October, Ms McLennan received a fax from Mr Hilton of the Respondent. It stated:
“It is not normal practice for us to do a child safety test on an item that has no sharp edges or does not have the potential to be swallowed by a child.”
The letter then referred to a number of clauses in AS 16472.2-1992 and went on:
“None of these were applicable to the inflatable. Though should you require, we can have this done at a cost of $400.00 and it will take one week.”
A further fax was received from Mr Strapp of the Respondent dated
2 November. It stated:
“Further to our fax of 16 October 2001, we have reason to believe the tests conducted by Intertek Testing Services in Hong Kong were not performed in accordance with AS 1900.
We are currently arranging to have further tests conducted on the product and ask that you please forward ten samples to our office as soon as possible.
Should you have any queries please do not hesitate to contact me on 9520 1110.”
Ms McLennan said that early in 2002 she forwarded a credit note to Cottees for the whole amount paid, the intention being that work done for Cottees would be debited against the credit note. Eventually, in May 2002, the Applicant repaid the whole amount to Cottees.
Evidence for the Respondent was given by Ms Guirguis and Mr Strapp. In addition, Ms O'Brien, Manager Product Safety for the Australian Consumer and Competition Commission was called.
Ms Guirguis gave evidence of her dealings with Ms Nunns. Much of this evidence related to the exchange of the emails and other documents already described. She said that she was not told by Ms Nunns that the bananas were to be used as pool toys or in water. She said that the Respondent had previously sold inflatable items which were used for advertising purposes or “Point of Sale” merchandise. She considered that the bananas were to be used for display purposes. The bananas had a loop at one end and a piece of fishing line which was to permit them to be used for display purposes. She said that when the question of the warning came up, she thought she did not take it that the bananas were to be used as inflatable pool toys. She thought the issue was that children might throw them into water.
Mr Strapp said he became involved in October 2001 after the inflatable bananas had been delivered to Cottees. He said he contacted Ms McLennan after receipt of her email of 4 October 2001 and wrote on
5 October 2001 by email advising that they were reviewing the requirements of the relevant Australian Standard.
He sent an email in which he said he believed that the inflatable bananas complied with the Standard in all respects other than the warning statement. He made inquiries about having testing done in Australia and was unable to find anyone who would do it. He was able to arrange to have the testing done by a Hong Kong firm, Intertech Testing Services.
On 16 October 2001 he received test results. They showed that the bananas had failed tests in accordance with Australian Standard AS 1900-1991. He advised Ms McLennan by fax of this. The bananas had failed the pressure test. He also advised her that the Respondent’s Hong Kong supplier had advised that the bananas could be modified to meet the Standard and requested they be returned. He advised that this will take eight weeks and there would be no cost.
On 31 October 2001, the Respondent received a fax from the Applicant’s solicitors stating that the promotion was due to commence on 4 November 2001. It also alleged a breach of section 65C of the Trade Practices Act, demanding a refund of the sum of $33,472.45 and demanding a written undertaking that the bananas had been destroyed.
He said that this was the first time he had been advised of a date that the promotion was to commence or a date by which the bananas had to be available other than the initial supply date stated in the order. He said that between 16 October 2001 and 2 November 2001 he left approximately three messages for Ms McLennan on her mobile answering service. One of those messages, he said, was to the effect that the warning contained on each of the inflatable bananas could be modified locally, so that the inflatable bananas could be collected and returned to her within two weeks with the warning changed and string removed from the packaging.
He said that his company supplied a lot of inflatable products and that they were always used as promotion items, not to be used in a pool. He acknowledged that the bananas were delivered in a state which did not comply with the Inflatable Pool Toys Standard. He said that the manufacturer was prepared to modify them.
Subsequently, he came to the view that it might not be possible for pool toys generally to comply with the Standard so far as the 20 kpa pressure test was concerned.
Ms O'Brien gave evidence that she was familiar with AS 1900-1991. It is a mandatory Standard. She said that the over pressure test had been examined prior to 2001. She said the commission took the view that the over pressure test was not to be applied so far as the Commission's enforcement went.
She said that a committee was examining the Australian Standard. A number of members took the view that the over pressure test was too high.
Insofar as the question of whether something was a flotation toy, she took the view that the test was designed to provide buoyancy. One of the bananas had been tendered in evidence and she accepted that the hooks indicated some use other than in water.
Issues
The Applicant claims damages under section 80 of the Trade Practices Act 1974, alleging a breach of section 65C, breach of contract and negligence.
Section 65 C. provides:
(1)A Corporation shall not, in trade or commerce, supply goods that are intended to be used, or are of a kind likely to be used, by a consumer if the goods are of a kind:
(a)in respect of which there is a prescribed consumer product safety standard and which do not comply with that standard.
Prescribed consumer product safety standards are provided for in section 65E:
(1)The Minister may, by notice in writing published in the Gazette, declare that, in respect of goods of a kind specified in the notice, a particular standard, or a particular part of a standard, prepared or approved by Standards Australia International Limited or by a prescribed association or body, or such a standard or part of a standard with additions or variations specified in the notice, is a consumer product safety standard for the purposes of section 65C or a consumer product information standard for the purposes of section 65D.
(2)Where a notice is so published, the standard, or the part of the standard, referred to in the notice, or the standard or part of a standard so referred to with additions or variations specified in the notice, as the case may be, shall be deemed to be a prescribed consumer product safety standard for the purposes of section 65C or a prescribed consumer product information standard for the purposes of section 65D, as the case may be.
(3)Subsection (1) does not authorise the publication of a notice in relation to goods of a particular kind if the standard or the part of the standard referred to in the notice, or the standard or the part of the standard so referred to with additions and variations specified in the notice, is inconsistent with a standard prescribed in relation to goods of that kind by regulations made for the purposes of section 65C or 65D.
The relevant notice under section 65 is “Consumer Protection Notice No 4 of 1992, Consumer Product Safety Standards – Children’s’ Flotation Toys And Swimming Aids.” The particulars of goods provided in division 1 of the schedule is:
Flotation toys and swimming aids likely to be used by children of not less than 15 years in recreational activities or to assist in swimming tuition, including but not limited to:
i)rings, partial rings, armbands, and kick boards which are inflatable, hollow moulded or made substantially from expanded foam;
ii)inflatable toy boats having fewer than three separate chambers, or having a length and width the sum of which is less than 3 metres;
iii)swimming vests and flotation bubbles;
Division 2 prescribed the standard:
Australian Standard AS 1900-1991: ‘Children's flotation toys and swimming aids’, published by the Standards Association of Australia on 16 September 1991.
The notice set out in division 3 that the Standard was varied by deleting clause 1.1. Clause 1.1 set out the scope of the Standard, and plainly was replaced by the Particular of Goods set out in Division 1 of the notice and reproduced above.
Two parts of the Standard are relevant; Clause 2.1.2 and section 8. Clause 2.1.2 provides:
Overpressure: When inflated to a pressure of 20 kpa. via the mouthpiece at ambient temperature, the inflatable air chamber shall not burst, nor shall any seam fail.
Section 8 provided for marking of articles. Clause 8.1.2 provides:
Flotation toys: Any flotation toys, including all inflatable novelty shapes, inflatable toy boats and all flotation rings but excluding kick boards, shall be legibly and indelibly marked, in a colour contrasting with the background, with the following words, in block capital is not less than 6 mm in height:
FLOTATION TOY
WARNING
USE ONLY UNDER
COMPETENT SUPERVISION
There is no dispute, that, if the Standard applied to the bananas, the warning was not as required. There is an issue about the over pressure test.
There is an issue whether the circumstances meant that the Standard applied to the bananas. This depends on whether the bananas were all intended to be flotation toys.
Discussion and findings
The Applicant’s order sent on 19 June 2001 ordered 1.5m inflatable bananas (as sample provided). The date required was stated to be
23 July 2001. A production sample of printed logos in position on the bananas for sign off was required prior to the commencement of printing. There can be no doubt that by the end of Friday 22 June 2001, all involved knew that the bananas were intended for use by children, and for use in water. The exchange of emails on that date made that clear. Ms Guirguis said in her oral evidence that the bananas were, to her mind, intended as “Point of Sale” promotions. She thought the warnings might be necessary because children might throw them into water.
Ms Guirguis’ interpretation of the emails cannot be correct. The reference to children and the nature of the proposed warning makes it clear that at least one intended use for the bananas was pool toys.
Clause 8.1.2 of the Standard prescribes the warning. It refers to “any flotation toy, including all inflatable novelty shapes”. The bananas meet this description.
The bananas, as supplied, did not comply with the Standard. The warning was not as required and the over pressure test was not met. Failure to meet the over pressure test was admitted by the Respondent through the evidence of Mr Strapp.
The prohibition in section 65C is absolute. The evidence showed that the commission was not enforcing the over pressure test and that a committee of the Australian Standards Association was reconsidering the standard. The fact that the standard was unreasonable does not limit the operation of the section.
Even if reasonableness was relevant, it is understandable why Cottees would reject the bananas even if the failure to meet the over pressure test was the only breach of the Standard. Cottees intended using the bananas for marketing and advertising. It would not want to risk publicity that inflatable pool toys, which it had supplied as prizes in the promotion, did not meet mandatory requirements designed for the protection of children. It would not want to risk being put in a position where it would have to attempt to refute such publicity by saying that the requirement breached was not being enforced or that it was unreasonable. It is understandable, even in circumstances where it meant abandoning all or part of a proposed promotion.
The breach of the Standard was not only in circumstances where children would be using the bananas. It was in circumstances where the bananas were, as well, intended for marketing and advertising purposes.
Once, it is accepted that the bananas breach the Standard, a finding of breach of S65C follows. The Respondent is a trading Corporation. The bananas were goods supplied in trade or commerce. They were intended to be used or likely to be used by consumers, in this case, uses of Cottee's products who won the prizes in the competition.
Section 65C(8) provides:
Where:
(a)the supplying of goods by a Corporation constitutes a contravention of this section by reason that the goods do not comply with a prescribed consumer product safety standard;
(b)a person suffers loss or damage by reason of a defect in, or a dangerous characteristic of, the goods or by reason of not having particular information in relation to the goods; and
(c)the person would not have suffered the loss or damage if the goods had complied with that Standard;
the person shall be deemed for the purposes of this Act to have suffered the loss or damage by the supplying of the goods.
It was argued for the Respondent that on the proper interpretation of section 65C(8) the Applicant could not recover damages, even if there was a breach of section 65C(1). The argument is that damages can only be recovered under section 65C by a natural person. Section 65C(8) uses the word “person”. Section 22 of the Acts Interpretation Act 1901 provides that unless the contrary intention appears, expressions used to denote persons generally such as “person” includes a body politic or corporate as well as an individual. The contrary intention appears in section 65C, it was argued.
Reliance was placed on that the wording of subsection 65C(2), which provides for regulations prescribing Consumer Product Safety Standards consisting of certain requirements reasonably necessary to prevent a reduced risk of injury to any person. The person there could only be a natural person. The injury referred to must be personal injury. A Corporation cannot suffer an injury. Reference was also made to the term, “consumer” in subsection 65C(1). It was argued that this was another indication that natural persons were those to whom the section was meant to apply.
It may be that subsection 65C(2) and (8) referred only to natural persons and personal injury. That does not affect the claim here. Subsection 65C(8) is not the section which establishes the Applicant’s right to damages. That is section 82, subsection 65C(8) provides a causal link in circumstances where it would not otherwise have existed. The Applicant does not have to rely on that subsection. The causal link between the breach of subsection 65C(1) and the Applicant’s loss exists without the need to rely on the deeming provision.
Subsection 82(1)provides:
A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
Subject to some arguments which I deal with below the Applicant has suffered damages by conduct of the Respondent done in contravention of a provision of Part V. The cause of action, the entitlement to damages, is established by section 82. A necessary part of that cause of action is a breach of subsection 65C(1). There need only be a breach of the subsection. The Applicant does not have to be the consumer involved. Once the breach is established there has to be loss suffered by the Applicant and a causal link between the breach and the loss. That is established here. The loss suffered by the Applicant is the amount it has not been able to recover from Cottees (because it has had to repay). The cause of that loss is the breach by the Respondent.
The Applicant cannot recover the cost of the bananas from Cottees because subsection 65C(1) prohibited the Applicant from supplying the bananas to Cottees. The breach of the subsection is the same. It is not necessary to investigate the contract between the Applicant and Cottees. Even if it was a question of whether it was reasonable for the Applicant to refund the payments to Cottees, I would find that it was. Ms McLennan said that she felt compelled to give Cottees a credit note because of her commercial relationship. Apart from that, the prospect of the Applicant successfully defending a claim by Cottees was negligible. To avoid the situation where instead of there being two-party litigation, there would be three party litigation was be reasonable.
It was submitted that the Applicant had suffered no damages because the Respondent had offered to have the bananas altered so that they complied with the Standard. This was to take eight weeks. That did not satisfy Cottees. Its promotion would not wait that long.
The order form dated 18 June 2001 gave 23 July 2001 as the date required. In fact, the bananas arrived early in August. On any view, the delay date for delivery after repair was well beyond any contractual date, even allowing for time not being of the essence. All involved knew right from the start that they were needed as part of a promotion planned by Cottees. The offer to fix the bananas was made in a facsimile from Mr Strapp to Ms McLennan on 16 October 2001. The facsimile said it would take approximately eight weeks. That means that the bananas would not be available until mid-December, well beyond any date which could be regarded as reasonable.
The Respondent relied on an estoppel argument, that is, that the Applicant had advised that the proposed warning was acceptable. For the estoppel argument to succeed against the statutory claim there would have to have been a representation that the warning proposed complied with the law. This representation was not made. In fact, Ms Nunns, in an email to Ms Guirguis on 25 June 2001, specifically asked if it was the correct wording. The reply on the same date was that the wording is a standard that is put on most inflatables. Subsequently, the logos and printing were approved by Cottees, and that information was passed on by the Applicant. That was in the context of the email exchange on 25 June 2001. If any representation was made about the correctness of the warning, it was made by the Respondent.
The Applicant relies upon breach of agreement. Plainly, a contract was entered into between the Applicant and Respondent. The Applicant alleges an agreement, partly written, partly oral and partly implied, to be entered into on or about 25 June 2001. The agreement could not have been partly oral. Any conversation which took place which might have relevance was followed by an email. If there was any difference between what was said in the conversation and what is in the following email, then the email must supersede the conversation.
The nature of the agreement is such that it has potential for implied terms. Since it is a contract for sale of goods, any implied terms will be governed by the relevant provisions of the Trade Practices Act or the Goods Act 1958 (Vic).
I consider that a contract was entered into on 19 June 2001 when Ms Nunns sent Ms Guirguis the Applicant’s order for (2,050) 1.5m inflatable bananas. The contract was then varied by an agreement constituted by the exchange of emails on 25 June 2001 that the bananas were to have a warning printed on them.
The Applicant alleges a term of the contract that the bananas would comply with the relevant Standards. There cannot be any express term of the contract which will assist the Applicant’s claim. The only express term could be that the warning was to be the one which was placed on the bananas.
The implied terms in subsections 70 and 71 Trade Practices Act cannot apply because the Applicant is not a consumer. Apart from anything else, the goods were acquired for re-supply and so are excluded from the definition of consumer in section 4B. If anything applies, it is section 19 of the Goods Act 1958 (Vic). It provides:
19. Implied conditions as to quality or fitness:
Subject to the provisions of this Part and of any Act in that behalf there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows--
(a)where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller's skill or judgment and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not) there is an implied condition that the goods shall be reasonably fit for such purpose: Provided that in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose;
(b)where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not) there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods there shall be no implied condition as regards defects which such examination ought to have revealed;
(c)an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade;
(d)an express warranty or condition does not negative a warranty or condition implied by this Part unless inconsistent therewith.
The section excludes implied warranties other than those set out. As I have already found, the Applicant expressly made known to the Respondent the particular purpose for which the goods were required, for use as pool toys. This culminated in her email of 25 June 2001, Ms Nunns said:
“Is that also the correct wording because I just copied that from another banana and it’s packet”.
Ms Guirguis replied:
“The wording is a standard that is put on most inflatable”.
The exchange of emails shows that the Applicant relied on the Respondent’s skill and judgment.
The evidence shows that it was part of the Respondent’s business to sell inflatable items. These were generally used for advertising or “point of sale” purposes. Mr Hilton’s fax referred to in paragraph 23 above shows the Respondent was aware that such items could be used as toys. I consider that in this case, the goods are of a description which it was in the course of the Respondent’s business to supply. The description of the goods here is inflatable 1.5m bananas. As part of its normal course of business, the Respondent supplied goods of this description. I consider that all the requirements for the implied warranty have been satisfied. The buyer expressly made known to the seller the particular purpose for which the goods were required, that is Ms Nunns made known to Ms Guirguis that the goods were required as pool toys. This was done so as to show that the buyer was relying on the seller's expertise. That is, Ms Nunns made known to Ms Guirguis that she was relying on her to make sure the warning was the correct one. And finally, the goods were of a description which it was part of the normal course of the Respondent to supply, that is, that they were inflatable bananas capable of being used as toys. The obvious use was in a pool.
The implied term was not pleaded expressly in terms of section 19(1) of the Goods Act. But it was pleaded in terms of a requirement to comply with the relevant applicable Standard. That is, a sufficient indication of the nature of the particular claim being made by the Applicant.
The implied condition or warranty is that the goods would be reasonably fit for the purpose. They were not. To be reasonably fit for the purpose they must comply with the Standard. It was a requirement required by law.
The Applicant’s damages are the amount re-paid to Cottees, the amount of $35,606 45. This is more than the amount paid to the Applicant. It includes the amount of the Applicant’s mark up, and is part of the damages because it is an amount that the Applicant would have received if there had not been a breach by the Respondent.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate: Kwong S
Date: 28 October 2003
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