Adams, R. v Classic Autocraft (Australia) Pty Ltd

Re: RONALD ADAMS
And: CLASSIC AUTOCRAFT (AUSTRALIA) PTY LIMITED
NSW G.197 of 1984
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Wilcox J

CATCHWORDS

Trade Practices - Misleading or deceptive conduct - Restoration of classic car on 'do and charge' basis - Estimate of cost furnished by respondent to applicant - Decision to embark upon restoration project induced by estimate - Actual restoration cost exceeding value of vehicle - Recoverability of moneys paid for work performed to date.

Trade Practices Act 1974 ss.52, 82, 87.

HEARING

SYDNEY
#DATE 15:8:1985

ORDER

Judgment be entered in favour of the applicant against the respondent for damages assessed at Twenty-two thousand dollars ($22,000.00).
The contract between the applicant and the respondent in respect of the performance by the respondent on behalf of the applicant of work involving the restoration and repair of the applicant's motor vehicle, being a 1966-1967 Mercedes Benz 300SE coupe motor car, be varied so as to release the applicant from liability for the payment of any further moneys in respect of such work.
The respondent return to the applicant upon demand being made, and delivery taken, by the applicant the said motor vehicle and each and every usable part thereof, whether original or whether purchased by the respondent on behalf of the applicant for use in such vehicle.
The cross-claim be dismissed.
The respondent pay to the applicant his costs of the proceedings.
AND THE COURT DIRECTS
That the exhibits be handed out at the expiration of 21 days unless in the meantime a Notice of Appeal shall have been filed.

JUDGE1

This case is concerned with the restoration of a 1966-1967 Mercedes Benz 300 SE coupe motor car, a vehicle which the parties agree may properly be described as a "classic car". A classic car is one which, because of its quality and rarity, is of interest to connoisseurs of motor cars and which has a tendency to appreciate, rather than depreciate, in value with the passage of time. Mr Adams purchased the car from a gentleman resident in Adelaide, who was the brother-in-law of Mr David Lee, a friend of Mr Adams. Mr Lee had himself previously owned the car and he had continued to take an interest in it. The consideration for the purchase was the payment of $500 in cash together with the delivery by Mr Adams to the vendor of a 1963 model 3.8 Jaguar. It is not clear whether the money value of the Jaguar was at the time discussed between the parties to the exchange but it is accepted by both parties to this litigation that the total value of the consideration given was about $7,000. This may be taken as the purchase price.

Mr Lee drove the car from Adelaide to the home of Mr Adams -- which was on St Hubert's Island near Woy Woy on the New South Wales Central Coast -- in about January 1982. He formed the view en route that the car was in good mechanical condition but there were obvious signs of rust to the bodywork and the interior trim was damaged. Mr Adams -- with the active encouragement of Mr Lee -- decided to seek advice about the restoration of the vehicle to first class condition. The two men had some local conversations but eventually contacted Classic Autocraft (Australia) Pty Limited, the respondent, which carried on business in the Sydney suburb of Mortlake. Mr Adams had heard of Classic Autocraft from several sources. The company apparently enjoyed a wide reputation as a leading restorer and repairer of classic cars. It had a reputation for achieving a very high standard of workmanship. There is no evidence in this case to suggest that this reputation was other than deserved.
Mr Adams and Mr Lee took the car to the premises of Classic Autocraft. The evidence does not establish the precise date of this event but it was probably in late January 1982. They met Mr Stephen Sulis, the managing director of Classic Autocraft. Mr Sulis inspected the vehicle. There is a dispute between the parties as to the extent of the inspection. The three men had a conversation as a result of which the vehicle was left with the respondent to be restored. The terms of that conversation are in dispute. Mr Adams alleges that Mr Sulis made a statement to the effect that, having regard to the condition of the vehicle at that time, the reasonable cost of restoring the bodywork, interior and suspension of the vehicle to first class condition would not exceed $14,000. He does not allege a firm contract to do that work for that price. He agrees that he left the vehicle with the respondent on the basis that work would be performed on a "do and charge" basis but he says that the representation constituted misleading or deceptive conduct in contravention of s.52 of the Trade Practices Act 1974. He also says that the representation as to maximum cost was made negligently and, in the alternative, sues for negligent misrepresentation. Mr Sulis denies that he quoted the figure of $14,000, or any other figure, and, accordingly, the respondent denies any liability, in respect of both s.52 and the tort of negligent misrepresentation. Counsel agree that the critical question in the case is the terms of this initial interview between Mr Adams, Mr Lee and Mr Sulis. Each of these three gentlemen has given his version in evidence before me. I will return to the conversation in due course.
It is common ground that, at the initial interview, Mr Adams agreed to forward to Classic Autocraft the sum of $2,000 each month on account of the cost of the work. Mr Sulis says that the monthly payments were to be made in advance, he making it clear that work would be progressed until each payment had been expended and that work would then cease until a further payment was made; Mr Adams being free at any time to terminate the arrangement by taking the car away. Mr Adams denies that payments were to be made in advance. He says that he merely agreed to send $2,000 each month.
In the event work on the car started in advance of any payment being made. The first $2,000 instalment was paid on 12 March 1982. By that time, according to the ledger record of the job, $363.50 was owing. There remained a small credit balance on 14 April 1982 when the second payment of $2,000 was made. No payment was made in May but $4,000 was paid on 28 June 1982. In the meantime numerous debit entries had been made. An error was made on the ledger record, a credit of $1,061.50 being erroneously treated as a debit of that amount, so that, when the June payment arrived, the ledger was showing a debit of $9,183.28. In actual fact the amount should have been $7,050.28. Upon any view the situation was quite different from that which, according to Mr Sulis, had been agreed. Mr Adams paid $2,000 on 19 July 1982 and $4,000 on 10 August 1982. Very little work was done during these months so that, even according to the still uncorrected ledger, there was then a small credit balance. The August payment brought the total amount which had been paid to $14,000.
Mr Adams said in evidence that in June 1982 he had visited Classic Autocraft in company with Mr Lee. They spoke to Mr Sulis and inspected the vehicle which was on blocks in the workshop in a stripped condition. Mr Lee, who -- according to Mr Adams -- was much better informed than himself on technical matters, had a long "technical" talk to Mr Sulis and took the engine and chassis numbers of the vehicle so that he could ascertain from the Mercedes Benz company the original colour of the car. According to Mr Adams, at about that time he was being asked by Classic Autocraft to specify the colour in which the car was to be repainted. Sometime after the June visit, on Mr Adams' version, he nominated navy blue and silver. He was then asked to call in and look at a colour chart. He did this in September. There is a conflict in the evidence as to whether Mr Adams inspected the car on his September visit but it is clear that, to his knowledge, the restoration was still incomplete; indeed, the car was still in a stripped condition. Notwithstanding that fact, and that $14,000 had already been paid, Mr Adams continued his monthly payments. Classic Autocraft received four more instalments, each of $2,000, made respectively on 9 September 1982, 15 October 1982, 15 November 1982 and 14 January 1983. Mr Adams said in evidence that each of the payments, like those before 10 August, were made in response to telephone calls to him by Mr Sulis or by somebody else from Classic Autocraft. During those calls he asked about progress and was always assured that work was proceeding satisfactorily. He conceded that further detail was usually given, although there is some dispute as to its extent. Mr Adams also said that he was given several assurances that the car would be finished by Christmas and that, on the strength of these promises, he planned his holidays in January upon the basis that he could use the car.
Christmas 1982 came and went; but the car was not ready. Mr Adams does not appear to have pressed any complaint at that time but he did express dissatisfaction some time in late January or early February 1983. On 8 February Mr Sulis wrote him a letter -- he says in anticipation of a meeting to discuss the then situation; Mr Adams says in response to his complaint that the job was not finished and his request for a statement of the position -- in which he described the work which had been done and referred to the next step to be taken. Relevantly, it read:

"As you can see by the list of parts, almost all the exterior body panels have been replaced due to extensive corosion (sic). The front sub frame assembly, as I indicated before, had a reasonable amount of old accident damage and the rails and front tie rail assembly were nearly 2 inches out of square. The skirts in this area were also affected by corosion and a number of new panels have been made and fitted. The rear sub frame assembly and wheel arches were also badly coroded, and as I think I pointed out to you previously, the greater part of both wheel arch assembleys (sic) were replaced as was a section of the boot floor and beaver panel assembly. All new panels have been fitted and total body assembly is under primer.

As far as mechanical work is concerned, all the suspension componants that needed replacing, as well as a total strip, cad plate and repaint where necessary, all componants

(sic) are presently ready for refitting. The motor and gearbox is as yet untouched and we are waiting on your instructions regarding this area.

The next step, should you wish to continue, would be to decide on colour, and paint the body sections necessary to the refitting of suspension assemblies, loom, and engine assemblies if you are wishing to leave it in it's present condition."

There was enclosed with the letter a summary of costs, showing a total of 804 hours labour -- at a total cost of $18,579.75 -- and $6,348.91 for parts; a total debit of $24.928.66. After giving credit for the payments received, totalling $22,000.00, Mr Sulis claimed that $2,928.66 remained owing.

Shortly after the receipt by Mr Adams of the letter of 8 February, he and Mr Lee went to the premises of Classic Autocraft. They say that they had a conversation with a Mr George Goodare, and that Mr Sulis was not present. Mr Goodare had acquired an interest in the respondent with a view to taking over the company entirely. In the meantime he had become involved in the running of the business. Initially he confined his activities to financial and administrative matters but by early 1983 he appears to have taken over responsibility for the supervision of a number of the restoration jobs on hand. Mr Goodare agreed that he was primarily involved in this conversation, although he thought that Mr Sulis may have joined it near the end. Mr Sulis said that he came in about half way through. I do not think that anything turns upon the question whether, or for how long, Mr Sulis was present. It is clear that Mr Goodare spoke for the company at this meeting.
Mr Adams said that he complained to Mr Goodare about the fact that the work was not completed, notwithstanding that he had paid $22,000. He told Mr Goodare that Mr Sulis had quoted the sum of $12,000-$14,000 plus $6,000 if the motor needed to be done up. He told Mr Goodare, he says, that if the cost had been greater than this he would not have had the work done or left the car with Classic Autocraft. Mr Adams asked how much money the company wanted to finish the job. Mr Goodare and Mr Lee had a long discussion about pricing and Mr Goodare promised to do some calculations. Subsequently, Mr Adams received a further letter, dated 21 February 1983 and signed by Mr Goodare. The letter referred to the sum of $2,928.66 claimed to be owing and went on:

"As we discussed, Classic Autocraft (Aust) will complete the car for a further twenty two thousand dollars. This amount includes painting the car to your colour specifications, reassembling mechanical componants, (sic) rebuilding of engine and gearbox, auto electrical work, and to refurbish the interior of the car.

To enable us to complete the car as detailed above, we would require a mutually agreed payment system which would keep the cash flow in line with the work completed. I enclose a photocopy of a letter from a Finance company who may be able to give you some assistance financially.

Hoping to hear from you in the near future."

There was enclosed with the letter a letter from a finance company to Mr Goodare announcing the availability of its services to clients of Classic Autocraft.

Mr Adams did not accept the suggestion that he pay a further $22,000 to have the work completed. He instructed his solicitors to contact Classic Autocraft. There was one later telephone conversation between Mr Sulis and Mr Adams but the matter was not resolved and, on 21 June 1984, an Application was filed by Mr Adams, claiming damages. The respondent has cross-claimed to recover the alleged debt of $2,928.66 together with storage charges.
The applicant called an experienced motor vehicle auctioneer and valuer, Mr S S Jacklin, to give evidence as to the value of the subject car, in its various manifestations. Counsel for the respondent accept the accuracy of Mr Jacklin's evidence and, indeed, they rely upon that evidence to some extent in their submissions. It is therefore, convenient -- before moving to more contentious ground -- to summarize what he had to say.
Mr Jacklin saw the car at the respondent's premises a few weeks before the hearing. It was still in a stripped condition. He assessed its auction value, in that condition, at about $2,000-$3,000. If it were re-assembled, fully restored to a first class condition, it would bring at auction about $18,000. These values he described as "conservative", meaning that they would readily be obtainable at auction. But "on a very good day" the car, fully restored, might fetch $24,000-$25,000. Mr Jacklin said that he did not think that the vehicle would be worth that much, but some people "might conceivably pay that for it". Mr Jacklin agreed that it was a common experience to find that the owner of a classic car had spent on its restoration a sum greater than its value after restoration.
The applicant called evidence from four witnesses, each expert in facets of vehicle restoration and repair, in respect of the likely cost of the work which Classic Autocraft had agreed to undertake. Each of these gentlemen had recently inspected the stripped vehicle but, with one exception, they laboured under the disadvantage of not having seen it before the commencement of the respondent's work.
The first expert witness was Mr R C Turner, a licensed loss adjuster. Mr Turner is a qualified panel beater and spray painter who worked as a panel beater for about 15 years during which time he had experience in the restoration of sports cars, but not classic cars. He then became a loss assessor, apparently about 12 years ago, and has carried on that occupation in his own business for the last 5 years. I formed the opinion that Mr Turner was highly experienced and knowledgeable. He was also very fair, being ready to concede his inability to make accurate estimates in relation to some aspects of the subject job.
Mr Turner had inspected copies of the job cards kept by Classic Autocraft in relation to Mr Adams' vehicle and the letter of 8 February 1983 itemizing the work performed. From those sources he prepared a list of the work which he estimated had needed to be performed when the vehicle was taken to the respondent's premises, that is including both work already performed and work yet to be done. That list became ex.D in these proceedings. It showed 23 items of work, mostly being the removal and replacement of particular parts of the vehicle, but including also steam cleaning, the stripping to base metal of the old paint and the respraying of the vehicle. He calculated that these items would involve 239.3 hours of labour. He valued the labour at $24 per hour -- a rate which Mr Sulis had quoted to Mr Adams -- and reached $5,733.20. To this sum he added $400 for the hire of paint materials, making a total of $6,133.20. However, that list was intended only to show likely labour costs; it did not include the cost of new parts supplied to the job. Moreover, Mr Turner noted on his list that it would be necessary to add the cost of repairing any further dents or rusts of which he was not aware -- he was not aware of any damage or rust to the interior structure -- and also the cost of replacing interior trims and worn mechanical parts. In relation to the replacement of parts he assumed that all necessary parts would be available from the Mercedes Benz company; he made no allowance for the labour involved in fabricating parts, such as body panels, on site. He said that to make up panels dies have to be pressed "and the cost would just run away exorbitantly". Mr Turner agreed that the standard of finish which he had assumed was that which might be expected on a family sedan but he did not accept that such a standard would be less than that appropriate for a classic car. There would be no time difference whether the joints were filled with plastic or lead.
The times allowed by Mr Turner for the various items were, he said, standard hours in the industry. Although no challenge was made to Mr Turner's general experience or to his integrity, the respondent did suggest that it was inappropriate to apply standard hours, as used in the panel beating industry generally, to the time involved in restoring a classic car. In cross-examination of other expert witnesses called by the applicant, counsel for the respondent elicited estimates of the time required for some items in Mr Turner's list which were considerably in excess of the figures he had listed. More significantly, as Mr Turner conceded at the beginning, he had made no allowance for internal rust because he did not know of any. He also conceded the possibility that some other items of work -- examples of which were suggested to him -- may have been required. I think that Mr Turner's figure is likely to understate the actual cost of the labour required for the job.
When Mr Sulis gave evidence there was tendered a list prepared by him (ex.7) which took the various items in ex.D and which set out seriatim Mr Sulis' estimate of the appropriate number of hours likely to be required. They totalled 672 hours which, at $24 per hour, would total $16,128 in labour costs. To this figure would have to be added paint materials and parts.

A part of the difference between the totals of ex.D and ex.7 is that Mr Sulis attributed hours to various items which Mr Turner had been unable to estimate but there are significant differences in respect of itmes for which both men had made an estimate. Although it appears that some of Mr Turner's figures may be too low, I am far from satisfied as to the accuracy of Mr Sulis' estimates. I find myself quite unable to reconcile the figures which have emanated from the respondent. Mr Sulis made it clear that he did not put forward ex.7 as a comprehensive list of the labour items involved in the total job. He described the list as "an indication of the sort of time or the sort of operations that are actually involved". He said that it was "a sample only" of the total work; "somewhere near only half". But he gave no indication of what work, other than that included in the list, had been done or would be required to be done before the job was completed. Looking at the list, and bearing in mind that it was prepared after the car was dismantled and all rust was removed, I am unable to guess what may be missing from it or even to see that anything is missing. If the hours listed on ex.7 constitute about one half of the whole, this would suggest that the total work required will be about 1350 hours. According to the annexure to the letter of 8 February 1983, 804 hours has been spent so far; but this figure is said to include all the work needed to cope with the rust problem, including the hand manufacture of various body panels. It was not explained in the evidence why the re-assembly of the vehicle might account for about a further 550 hours. Moreover, at $24 per hour, 550 hours labour would account only for $13,200 out of the $22,000 cost quoted in the letter of 21 February 1983. Mr Sulis claims to have already expended $6,348.91 in parts and, as the car is said now to be ready for re-assembly, it seems unlikely that the purchase of parts -- even allowing for some new parts for the motor and gearbox -- would account for the remaining $8,800. Even if labour was assessed at $27 per hour the gap would be over $7,000. In short, I am left with an impression that Mr Sulis' recent "estimates" owe more to fantasy than to calculation and with the opinion that Mr Turner's total figure, although too low an estimate of the work which has in fact proved to be necessary, nonetheless furnishes some guidance as to the labour cost which an experienced estimator might have attributed to the job at first inspection.
The second restoration expert called by the applicant was Mr C J Boys, a licensed panel beater and spray painter, who had been in the trade for about 35 years. During the last 25 years he has carried on business on his own account, now at Gosford. He perused the job cards and inspected the Mercedes Benz, in its stripped conditon, shortly before the hearing. He said that he "went over it thoroughly with the lead light and checked it for repairs from top to bottom". He prepared a document (ex.E) in which he set out all of the panel beating work which he thought had been done on the vehicle up to the present time. His list -- which includes the making up of panels to replace rusted portions of the bodywork -- totals 320 hours; at $24 per hour, $7,680. He claimed to be able to detect from welding marks what new panels had been inserted. The work also included the repair of both doors, the squaring of the front chassis rail -- said to have been out of alignment -- and the removal and replacement of all parts claimed to have been purchased.
I was favourably impressed with the evidence of Mr Boys. He has had considerable experience in carrying out car restoration for clients, including the restoration of two classic cars. He said that in his ordinary work he does exactly the same standard of work, in welding, painting and finish, as would be appropriate for classic cars. He revealed a very detailed knowledge of the work which had been carried out by the respondent on the applicant's car. There was no suggestion to him of any missed item. I think that he inspected the car very carefullly indeed and that his evidence was honestly given and very fair to the respondent; perhaps even generous because he seems to have allowed extended times in respect of any doubtful items.
Mr Boys was followed in the witness box by Mr R D Bradley, a spray painter of 29 years' experience and the proprietor of a spray painting business at Kariong, near Gosford. He has had experience painting classic cars. Mr Bradley was the expert who had seen the car before it was taken to Classic Autocraft; Mr Adams having brought it to him for an approximate assessment of the cost which would be involved in repairing the visible rust damage and painting the car. He apparently mentioned a figure at that time; but he was not asked in his evidence to say what it was. More recently he had inspected the vehicle at the premises of the respondent and had prepared a list of the painting work -- including paint preparation work and priming -- done to date by that company. He estimated the number of hours required for each item. They totalled 83 hours; at $24 per hour, $1,992.
Finally, in regard to independent expert witnesses, Mr P C Harris, an experienced motor mechanic who runs a business at Gosford concerned mainly with classic cars, was called to give his estimate of the time expended to date in relation to mechanical work. The work he referred to did not include any overhaul or repair of the motor or gearbox but rather the mechanical work involved in the dismantling of the vehicle. His itemised estimate totalled 27.4 hours.
In the result, adding together the estimates of Mr Boys, Mr Bradley and Mr Harris, it would appear that a total of the reasonable time so far expended amounts to 430.4 hours; as against the 804 hours claimed by Mr Sulis in his letter of 8 February 1983. At $24 per hour, the value of that labour would be $10,330.
The job cards relating to the respondent's vehicle were put into evidence but these cards merely show the names of persons said to have worked on the car in a particular week and the hours said to have been devoted to that work. No information is given as to the actual work claimed to have been performed. For this information one must turn to the work sheets upon which the various workmen have recorded -- in relation to each day -- the work performed on various vehicles. In some cases the work is specified with particularity; in other cases it is not. Unfortunately, the panel beater Manuel Ojola -- who accounts for 322 out of the 804 hours claimed by Mr Sulis and is said not to have a great command of the English language -- was particularly cryptic in his work sheet report. His work sheets contain numerous days -- sometimes amounting to whole weeks -- in respect of which the work performed is identified merely as "fit body and panel". It is impossible to gain any feeling of confidence, from the job cards and work sheets, in the accuracy of the 804 hours claimed. For the purposes of the case, Mr Sulis attempted a reconstruction of the hours spent on particular items but I would give no weight to a reconstruction made three years after the event, in reliance primarily on his memory of the detail of one out of about 15 then current jobs, by a party to the proceedings.
In considering the job cards and work sheets, I note that it was suggested by counsel for the respondent, by their questions, that the various tradesmen who worked on the vehicle did so upon a sub-contract basis, charging Classic Autocraft an agreed figure per hour. If that suggestion is well-founded, there would be no incentive for those people either to maximise the speed of their work or to understate the hours claimed.
This is not a claim for work and labour done or a claim for a refund of an overpaid amount. Notwithstanding, I have referred at some length to the evidence given in relation to hours worked. I have done so for two reasons. In the first place it has seemed to me that an understanding of the actual extent of the job so far casts some light -- allowing for the possibility of an incautious estimate or unexpected rust or damage -- upon the likelihood that Mr Sulis would offer an estimate of a maximum figure of $14,000 for bodywork and interior trim. Secondly, if the conclusion should be reached that the actual number of hours necessary to do that which has so far been done is markedly lower than the number in relation to which payment is claimed by Mr Sulis, this fact must affect his credit in relation to the conflict of evidence about the critical initial conversation between Mr Adams, Mr Lee and Mr Sulis. I now turn to the evidence of each of these three gentlemen in respect of that conversation.
Mr Adams deposed that he and Mr Lee were together throughout the whole of the conversation with Mr Soulis, Mr Lee taking a leading role in relation to technical matters. Mr Adams said that he told Mr Sulis that he had brought the Mercedes for Classic Autocraft to look at, to see what they thought about restoration. Mr Sulis inspected the vehicle thoroughly, the inspection occupying about an hour. He looked inside and underneath the vehicle, under the bonnet and in the boot. Mr Lee discussed with him aspects of the condition of the vehicle during this inspection. At the end of the inspection Mr Adams asked whether the vehicle was worth restoring. Mr Sulis replied "In my opinion it certainly is". He added that there was some rust around the sill and guards that would need more specialised inspection but that the car was certainly not in any state of repair that was not worth doing. There was further technical discussion between Mr Lee and Mr Sulis. Mr Lee asked Mr Sulis whether he could estimate the cost of repair, to restore the vehicle to first class condition. Mr Sulis said: "We only do first class work" and he made some calculations in an area adjacent to his office and then replied: "I would estimate the repairs to cost about $12,000-$14,000, that is for the car, the inside, the outside, the complete body, the air bags, suspension and interior but that does not include anything for the engine". Mr Adams said he asked that the motor be inspected whilst it was out of the vehicle and any necessary work be done. Mr Adams asked Mr Sulis to estimate the cost of repairs to the motor, if any were necessary, and he replied that if the engine needed to be fully repaired it should not cost in excess of $6,000. Mr Adams responded that, if he could have the work done for that price, he felt that he would go ahead with the restoration because he could not buy another car that would be as nice as this for around that price. He said: "Rather than buy a Holden or something like this for $20,000 I feel that I would be prepared to spend up to $20,000 on this car and then I would know I would have a nice vehicle", but he added that he would discuss the matter with his wife and let Mr Sulis know in a few days. He then enquired how long the job would take, explaining that he had already a quote from another firm, which quoted about the same figure but would not give a time to do the job. Mr Sulis replied, he said, that he estimated six to eight months and in any case well before Christmas. There was then a conversation about the monthly payments and the two men left. Mr Adams said that they were at the respondent's premises for about two to two and a half hours. A few days later Mr Adams took the car back to the workshop and left it there.
In cross-examination Mr Adams agreed that he had spoken to Mr Sulis on the telephone before his first visit to the respondent's premises. It was suggested to him that during this conversation he had informed Mr Sulis of an unhappy experience in relation to the repair of a Jaguar; especially the time which the job had taken. It was further suggested that Mr Sulis had said: "We would only be interested in doing the job if you're willing to carry it on at a reasonably fast rate of progress" and that he had replied that this was his intention. Mr Adams agreed that he had had this discussion but he said that it had been during the visit to the respondent's premises. He further agreed that Mr Sulis had stated that his company only worked upon an hourly rate basis and that this was because of the nature of the work which was involved. He said that this statement was made in explanation of the fact that two figures -- $12,000 and $14,000 -- were mentioned. Mr Adams denied that Mr Sulis had said: "My only guarantee is that the job will be done properly" and he said that, if he had not had an estimate of cost, he would not have left the vehicle with the respondent.
Mr Lee gave a version of this conversation which differed from that of Mr Adams in several respects. Most of those differences are inconsequential but reliance was placed upon the fact that Mr Lee denied that the word "estimate" was used. At one point, during cross-examination, he said: "We went there for a quotation, not an estimate" but this has to be put into the context of his full version, in his evidence in chief, that Mr Adams had asked Mr Sulis: "What is it going to cost to put the vehicle into something like first class condition?" and Mr Sulis had replied: "$12,000-$14,000 for the body repairs, rust repairs, interior repairs and suspension" and then -- asked about mechanicals -- he said: "I believe it would not be more than $6,000". Whatever description Mr Lee may employ, this is evidence of an estimate rather than of a quotation.
Mr Sulis gave evidence that his first contact with Mr Adams was by telephone when Mr Adams rang to arrange an appointment. According to Mr Sulis, he asked Mr Adams what sort of work he wished his company to do. Mr Adams mentioned bodywork, trim, paint work and possibly mechanical work. After reference to other matters, he said, Mr Adams asked him "the sort of money that would be involved in restoring it". Mr Sulis said that he replied that "the only way I would have any indication of the sort of trouble involved in restoring it was to look at it in person, to look at it on site". The appointment was then made.
Mr Sulis said that when the car was brought to him he had only a "cursory" inspection but he conceded that he looked in all of the locations mentioned by Mr Adams and by Mr Lee. He also said that Mr Adams sought his opinion as to whether the car "was a worthwhile subject for restoration". He assured Mr Adams that it was; the reason being the limited number of this particular model of car. He said that Mr Adams asked what the job would cost. He mentioned $24 per hour for labour. In response to a request to give a "final figure" or a "figure for the restoration", he explained that it was impossible to do that because of the nature of the job.
It is clear that Mr Sulis did not give to Mr Adams a firm quotation, in the sense of specifying a precise figure in return for which his company would carry out the required work. But the applicant does not allege that he did. The case put by the applicant -- as alleged in the further amended Statement of Claim filed during the course of the hearing -- is that the respondent, by Mr Sulis, represented that, having regard to the condition of the vehicle at that time, the reasonable cost of restoring the bodywork, interior and suspension of the vehicle to a first class condition would not exceed $14,000. The applicant does not plead a promissory representation; if he did, it would be difficult for him to bring the case within s.52 of the Trade Practices Act: see Bill Acceptance Corporation Limited v G W A Limited (1983) 50 A.L.R. 242 especially at p.249. The applicant pleads a representation as to an existing fact, that is as to the extent of work necessary to be done -- expressed in money terms -- to restore the vehicle from its then condition to a first class condition. He says that, upon the respondent's own case, the reasonable cost of restoration was more than $14,000 (or a total of $20,000 with mechanicals). However, there exists an element of paradox in his position. If one totals the money already paid ($22,000), the money claimed to be owing ($2,928.66) and the quotation to finish the job ($22,000), it follows that, upon the respondent's case, the amount reasonably necessary to be expended upon the project, at that time and whether or not the respondent knew or should have known the fact, was just on $47,000. But whilst this figure, if accepted, makes out the applicant's claim that the reasonable amount exceeded $14,000 (or $20,000), the applicant does not embrace the total of $47,000; because such a gross discrepancy makes it much more difficult to accept that an estimate of $14,000 (or $20,000) would ever have been given in the first place. The applicant, therefore, is content to put the matter upon the basis that the reasonable cost of the work is less than $47,000 but that it does exceed $14,000 (or $20,000). His counsel relies upon his evidence that, but for the estimate, he would not have left the vehicle with the respondent and argues that, under those circumstances, the applicant should recover all loss or damage sustained by the making of the representation.
The first -- and critical -- matter for me to decide is whether I accept the evidence of Mr Adams and Mr Lee that Mr Sulis gave to them estimates, being the range of $12,000-$14,000 excluding mechanicals and $6,000 maximum for mechanicals. I do accept that evidence, for a number of reasons. First, it is obvious that Mr Adams was keen to obtain some indication of maximum cost. Mr Sulis said that Mr Adams asked for an estimate in the initial telephone conversation. As Mr Sulis had not then seen the car he could not then give an estimate but Mr Sulis did not say that this would be impossible after inspection. On the contrary, he referred to the need to inspect. Upon Mr Sulis' own account, Mr Adams went to the respondent's premises in the belief that an indication could be given after inspection. Secondly, it is common ground that Mr Adams sought Mr Sulis' opinion as to whether the car was worth restoring. Any discussion of worthwhileness necessarily involves a balancing of cost against result. It is difficult to see how Mr Sulis could address that question without forming some view as to the likely maximum cost of the project. It would be impossible, for example, to say that the car was worth restoring if the restoration cost might be as great as $47,000. Such a figure implies an all up cost to Mr Adams, with initial purchase price, of $54,000; and this for a vehicle which Mr Jacklin thought would be worth no more than $24,000-$25,000. Even according to Mr Sulis the vehicle, fully restored, would bring only between $30,000-$40,000. It is true that Mr Jacklin said that people often spend more upon the restoration of classic cars than is justified having regard to their post-restoration value. Perhaps they do so deliberately, perhaps incautiously. That fact would not excuse Mr Sulis in giving an affirmative answer to the question whether this car was worth restoring if the actual reasonable cost of restoration was a figure greater than its resultant value. And if Mr Sulis had no opinion as to the likely range of cost it was misleading for him to offer any assurance at all.
Next, I note that -- whilst in his evidence in chief Mr Sulis stated that he mentioned only one figure, the hourly rate of $24 -- Mr Sulis did agree that Mr Adams sought from him an indication of the total cost and that "it is possible" that he mentioned a figure for total cost. He said that such a figure would possibly have been stated in the form of a range of figures although "it certainly would have been a lot wider than $12,000-$14,000". This last statement must be evaluated in the light of his agreement that the only major areas of difficulty in estimation upon first inspection would have been concealed rust and mechanical repairs.

Both parties agreed that the duration of the job was discussed, and was of importance to each of them. Mr Adams was anxious to avoid a repetition of his experience with the Jaguar. Mr Sulis said that he had a space problem and "it was my point to make sure that Mr Adams was intent on getting the car done as quickly as he could". Whether or not the monthly payments were to be made in advance and whether or not the work was to be limited strictly to the value of the current credit, there was plainly a correlation between the payment of moneys on account and the performance of the work. The parties agreed on $2,000 per month. I have difficulty in seeing how they could have settled on that, or any other, amount without some mutual understanding of the likely total cost. For $47,000, of course, that rate implies 24 months and I think that it is certain that neither man would have been happy about that proposal. To my mind it makes sense to conclude that Mr Sulis did give an estimate, in a range and expressly disclaiming a firm price, the range being a sum which -- at the agreed rate -- would be paid within a maximum of 7 to 10 months, depending upon the extent of mechanical work required. Although it is now clear that a figure of $14,000 (or $20,000) was an underestimate of the reasonable cost of the necessary work, that figure is not so disproportionate to the true cost, as revealed by the expert evidence in this case, as to make it unlikely that Mr Sulis would have quoted the figure. I think that this case furnishes an example of the situation Mr Sulis described in his evidence in relation to the problem of estimating concealed rust: "We invariably get caught by what we think is a small job that develops into a major job".
The strongest point in the respondent's favour, in relation to this issue, is the fact that Mr Adams went on making payments after he had exceeded the figure of $14,000, and even $20,000. He conceded that he did not protest until February 1983. By that time he had paid $2,000 more than the highest figures in the alleged estimated range and he knew that the job was still incomplete. It was suggested that it was most unlikely that the applicant, who is apparently not inexperienced in business matters, would take that course.
This argument is a powerful one. It has caused me to hesitate in accepting the applicant's evidence. His course of conduct was odd. It would have been logical for Mr Adams to have slowed his payments, and complained at an earlier stage; one would have thought that he would not have gone above $20,000. But, whatever his capacity in other business affairs, I have formed the view that the applicant suffers from some naivete and lack of self-confidence when it comes to dealing with car restoration. It seems to be clear that he was not well informed upon the technical aspects of the operation; he relied very heavily upon Mr Lee who was apparently living in Melbourne at the time. Even at the trial of this matter Mr Adams was prepared to accept that it was legitimate for the respondent to have exceeded the estimated maximum in an amount representing the cost of new mudguards although, upon any normal interpretation of his own evidence, he would have been entitled to insist that this cost must be met within the stated range. The applicant may have been a victim of that combination of optimism and mysticism which seems to surround the restoration of classic cars. But he seemed to me an honest person. He had been "bitten" before and I do not think that he would have left the car with Classic Autocraft without first obtaining from Mr Sulis some understanding of the likely total cost. And had he been inclined to do so, I think that Mr Lee -- whom I thought also to be an honest witness, but much more assertive and knowledgeable in this area -- would have been quick to repair the omission. Notwithstanding Mr Adams' subsequent behaviour, I am satisfied that an estimate was given.
I do not think that Mr Sulis intended to mislead Mr Adams but it is not necessary for the applicant to prove fraud. Mr Sulis knew that Mr Adams was seeking a reliable estimate of cost for the purpose of making a decision whether to embark upon the restoration project. Under those circumstances for him to furnish, even innocently, an estimate which was significantly low was to engage in conduct in trade or commerce, on behalf of the respondent, of a misleading or deceptive nature.
Upon the evidence it is not possible to be precise about the actual reasonable cost of the work which needed to be done. Upon the respondent's case, one would say $47,000 but -- as I have indicated -- I have no confidence in these figures. The total labour cost to date, according to the estimates of Messrs Boys, Bradley and Harris, is $10,330. Parts worth $6,348.91 have been purchased, no criticism being made of that expenditure. This suggests about $16,700 so far and the cost of bodywork still to be performed will clearly run into several thousands of dollars. One might perhaps hazard a guess of an all up cost for the bodywork of about $25,000. No criticism has been made of the $6,000 estimate for mechanicals. So perhaps the total reasonable cost, in the light of present knowledge of the extent of the necessary work, was of the order of $30,000. But the precise figure does not matter; it is clearly well above the estimate made by Mr Sulis, the making of which induced Mr Adams to embark upon restoration. The claim of contravention of s.52 is made out.
The assessment of damages furnishes little difficulty. The applicant is entitled to recover the loss or damage suffered by him as a result of the conduct of the respondent: see s.82 of the Trade Practices Act. The making of an erroneously low estimate will not necessarily cause a loss. A person may be induced by such an estimate to embark upon a project which is nevertheless financially worthwhile. One may even imagine cases in which the receipt of the erroneous estimate was the cause of a decision to proceed with a project which has turned out to be profitable, but which would otherwise have been rejected as too expensive. Sometimes, even if the person would have gone ahead in any event, the expenditure will have resulted in good value being obtained without any resultant loss. That would be this case if it appeared that Mr Adams would be likely to recoup, on sale after restoration, the whole of the money outlaid to carry out the restoration necessary in February 1982. But it does not so appear. Upon the contrary, it appears that, ignoring the respondent's own greater figure and adopting the most optimistic view of the evidence of the applicant's experts, it is highly unlikely that Mr Adams could ever sell the car for a figure sufficient to recoup his outlay. He was led into an uneconomic project by Mr Sulis' wrong estimate.
Counsel for the applicant claims on behalf of his client damages in the sum of $26,000; the $22,000 already paid plus $4,000 for the difference between the price of the car and its value in its present dismantled condition. He further seeks an order under s.87(2)(b) of the Act varying the contract between the parties so as to permit his client to escape liability for the claim of $2,928.66 or, alternatively, that this amount be added to the assessment of damages.
There is no evidence that Mr Adams intends to sell the car in its present condition. Although it is not possible precisely to estimate the cost of restoration from the existing condition of the vehicle, it would appear to be an economic proposition for him to take that step provided that he is able to take delivery of the vehicle, including all usuable parts, whether original or purchased on his behalf by the respondent. I do not therefore propose to allow any item in respect of the difference between purchase price and present value. On the other hand I do think that it is proper to allow the full sum of $22,000 so far spent. Upon my findings this is money which Mr Adams would not have spent in the absence of the misleading statement of Mr Sulis. It is money unlikely to be recovered upon sale of the vehicle. I think that it may accurately be characterized as loss or damage flowing from the misleading conduct of the applicant.
Counsel for the respondent argue that any damages should be limited to $14,000. They say that, in continuing to make payments after that sum had been paid, Mr Adams acted in breach of his duty to mitigate his damages. I do not accept that submission. Mr. Adams was being pressed for payment by the respondent, which made it clear that continued work upon the vehicle depended upon further payments. Whatever may be the evidentiary significance of payments continuing beyond the $14,000 mark, I do not think that Mr. Adams was under a duty to precipitate a cessation of work and, probably, litigation rather than to continue payments for a time. And it must be remembered that he had always contemplated the possibility that mechanical expenses would take the total cost to $20,000.
I propose to enter judgment in the action in favour of the applicant for damages assessed at $22,000. I will order that the contract between the applicant and the respondent be varied so as to release the applicant from any further liability to the respondent in respect of the cost of work done by the respondent on behalf of the applicant to date. Pursuant to s.87(2)(c) there will be an order that the respondent return to the applicant the subject motor vehicle together with all usable parts, whether original or purchased by the respondent on behalf of the applicant. The cross-claim will be dismissed. The respondent must pay the costs of the applicant.

[1985] FCA 393

15 AUGUST 1985