Alami v Langov

[2008] NSWSC 812

CITATION:	Alami v Langov & Ors [2008] NSWSC 812
HEARING DATE(S):	29.07.08; 30.07.08; 31.07.08
JUDGMENT DATE :	11 August 2008
JUDGMENT OF:	Nicholas J
DECISION:	Par 75
CATCHWORDS:	CONTRACTS - sale of laser machine - scope of contract - whether breach of contract - whether plaintiff entitled to damages - TRADE PRACTICES - misleading conduct - whether contravention of Fair Trading Act 1987 s 42 and Trade Practices Act 1974 (Cth) s 52 - turns on facts, no question of principle
LEGISLATION CITED:	Fair Trading Act 1987 Sale of Goods Act 1923 Therapeutic Goods Act 1989 (Cth) Trade Practices Act 1974 (Cth)
CATEGORY:	Principal judgment
CASES CITED:	Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 General Newspapers Pty Ltd v Australian & Overseas Telecommunications Corporation Ltd (1993) 40 FCR 98 In Re United Railways of the Havana and Regla Warehouses Ltd [1960] Ch 52 Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 Pappas v Soulac Pty Ltd (1983) 50 ALR 231
PARTIES:	Linda Alami - plaintiff Lupco Langov – first defendant Troy Salmela – second defendant Amazing Laser Inc – third defendant
FILE NUMBER(S):	SC 20374/06
COUNSEL:	B Zipser - plaintiff V R Gray – first defendant No appearance – second defendant No appearance – third defendant
SOLICITORS:	Advance Legal - plaintiff Corporate & Civil Legal – first defendant No appearance- second defendant No appearance – third defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Nicholas J

11 August 2008

20374/06 Alami v Langov & Ors

JUDGMENT

1 His Honour: These proceedings concern the plaintiff’s claims against the first defendant, Dr Lupco Langov, the second defendant, Mr Troy Salmela, and the third defendant, Amazing Laser Inc (the company) arising out of the purchase by the plaintiff from Mr Salmela and the company of a laser machine known as a Candela Gentlelase Plus (the machine).

2 Until 2004 the plaintiff carried on business as a beautician at Bass Hill, New South Wales providing nail and beauty services and training to clients. In early 2005 she proposed to open a clinic where she would operate a laser machine for the treatment of clients. Machines of this kind are used by beauticians and some medical practitioners for the removal of body hair, and the repair of various skin conditions and ailments.

3 Dr Langov is a medical practitioner who at all material times operated a skin cancer and laser clinic at Sutherland, New South Wales. Mr Salmela was at all material times the vice-president of the company, a corporation which carried on business as a laser clinic operator under the name MD Solutions. Mr Salmela was a resident of, and the company was incorporated in, Austin, Texa in the United States of America.

4 On 7 December 2006 the Court granted leave to the plaintiff under Pt 11, r 11.4 Uniform Civil Procedure Rules to proceed against Mr Salmela and the company. At the hearing before me the plaintiff provided evidence which established service upon each of these defendants of the statement of claim, the amended statement of claim, the terms of interlocutory orders and directions made from time to time for the management and conduct of the proceedings, and of notification of the dates fixed for the hearing. Neither a notice of appearance nor a defence was filed on their behalf, and they did not appear at the hearing which, accordingly, proceeded in their absence.

5 In early 2004 Dr Langov imported from the United States of America the machine the subject of these proceedings and used it at his clinic to treat patients. During April and May 2005 he negotiated with and, ultimately, agreed to sell the machine to, Mr Salmela. Shortly after agreeing to buy the machine from Dr Langov, Mr Salmela made an agreement with the plaintiff to sell it to her. It was arranged that she should take delivery of the machine direct from Dr Langov at his clinic. This she did on about 31 May 2005.

6 The plaintiff claims that after using the machine for a short time she discovered that it was defective and not in good working order. She also claims that neither Dr Langov nor Mr Salmela provided her with the manufacturer’s certificate of conformity or EC certificate without which she was unable to enter the machine on the Australian Register of Therapeutic Goods. As it is unlawful under the Therapeutic Goods Act 1989 (Cth) to operate the machine whilst it is unregistered, she claims that as she is unable to use it, it is of no value, and is unfit for the purpose for which she bought it.

7 As against Dr Langov, the plaintiff claims damages under s 68 Fair Trading Act 1987 (the Act) on grounds that he engaged in misleading conduct in breach of s 42(1) and/or that he made false or misleading representations in trade or commence in breach of s 44(a), s 44(e) and/or s 44(h) of the Act. The claim for breach of contract as pleaded in pars 4 to 12 inclusive of the further amended statement of claim was abandoned during final submissions.

8 As against Mr Salmela and the company, the plaintiff claims damages for breach of warranty, misleading conduct in trade or commerce in breach of s 42 of the Act and/or s 52 Trade Practices Act 1974 (Cth), and/or for breaches of express and implied terms of the agreement for the sale and purchase of the machine.

Background

9 Much of the following history was common ground and, in any event, I find it was established on the evidence. Most is taken from the documentary evidence which principally consisted of emails between the parties.

10 On about 5 February 2005 Mr Jim Norman carried out a service of the machine for Dr Langov. He was unable to complete the annual preventative maintenance schedule in that further re-calibration was required to enable the accurate display of the energy output when in operation.

11 Dr Langov continued to use the machine for the treatment of patients until about March 2005 when he bought a Cutera Xeo which had a wider range of functions.

12 In early April 2005 Dr Langov advertised the machine for sale on a USA internet site. The machine was described as a “2001 Gentlelase Plus” with “only 80,000 pulses on the laser head”. Its condition was described as “Excellent”. The price was US$35,000.

13 In early April 2005 the plaintiff contacted Mr Salmela and told him of her interest in purchasing a second hand Gentlelase Plus machine. He offered to find her a suitable one with low shots, which had been well maintained. During April 2005 they exchanged emails in which several lasers were put to the plaintiff for consideration.

14 In his email of 29 April 2005 to Dr Langov, Mr Salmela offered to buy the machine for US$25,000. In reply on or about the same day, Dr Langov advised that he was in negotiation with other parties, but would consider the offer although he felt it was low. He said the machine was in excellent condition. Subsequently, in a telephone conversation with Mr Salmela, Dr Langov agreed to sell it for US$24,000 excluding delivery costs in the expectation that it was to be sent to the United States of America.

15 On about 30 April 2005 the plaintiff agreed with Mr Salmela to buy a 2001 Candela Gentlelase Plus for US$35,000. The company’s invoice of that date described the condition of the laser as “Excellent”, and stated that it carried a “90 day warranty”.

16 On 2 May 2005 the plaintiff transferred to the company’s bank account in Austin, Texas the amount of US$35,000 (AUD$45,249.64).

17 On 5 May 2005 representatives of the Therapeutic Goods Administration visited Dr Langov’s surgery. They informed him that his lasers, including the machine, were not registered with the Australian Register of Therapeutic Goods and, absent registration, their use was unlawful.

18 In his email of 12 May 2005 to the plaintiff, Mr Salmela responded to some of her questions about the laser she had bought, and said he was packing it next morning. During the same day emails were exchanged between Mr Salmela and Dr Langov about details of the machine.

19 On 13 May 2005 Mr Salmela telephoned the plaintiff. He told her that he had found a machine in Australia which he would sell at the same price as the other. He said that she would not have to pay tax and shipping costs to Australia, and that he had been told it was in excellent condition, and he would give a 90 day warranty on it. The plaintiff said she would take it. He confirmed this by email the same day.

20 On about 18 May 2005 Mr Salmela telephoned Dr Langov. He said he was a laser dealer in the United States of America and asked about the machine. Dr Langov told him it was up for its yearly preventative maintenance, and had a pulse count of 85,000. He said he was selling it because he did not do much hair removal, and had a Cutera Xeo laser. Either in that conversation or one shortly thereafter, Mr Salmela asked Dr Langov to calibrate the laser so he could hear it over the telephone. Dr Langov agreed, and stated that it had been partly serviced and calibrated and had to be finished off. Dr Langov then put the telephone handpiece next to the speaker on the machine, pressed the calibration button, and pulsed the machine which “beeped as normal”. Mr Salmela then said he was happy, and would transfer the funds.

Later that day, Dr Langov sent Mr Salmela an invoice for the machine and cryogen bottles in the amount of US$24,120.

21 By email of 19 May 2005 to the plaintiff Mr Salmela advised that the funds had been sent, and of Dr Langov’s contact details.

22 On 25 May 2005 funds in payment of Dr Langov’s invoice in the sum of AUD$31,530.40 were transferred to the nominated account.

23 On 31 May 2005 the plaintiff arranged a carrier to collect the machine from Dr Langov’s surgery and to deliver it to her premises at Bass Hill. Shortly afterwards she operated the machine on herself under guidance over the telephone from Mr Salmela.

24 Between about 8 June to 19 June 2005 the plaintiff attended a training course for the operation of lasers similar to the machine in question at Mr Salmela’s clinic in Austin, Texas.

25 On 4 July 2005 the plaintiff had a telephone conversation with Dr Langov during which he informed her the machine required servicing and calibration. He asked if Mr Salmela had given her the machine’s EC certificate, and told her of the need to register the machine with the Therapeutic Goods Administration.

26 In her email of 5 July 2005 to Mr Salmela, the plaintiff relayed the matters raised by Dr Langov and her concerns about them. She demanded that he arrange to remedy the problems, and referred to the 90 day warranty. She pointed out that if she could not register the machine it would be legally unusable, and if the problems were not fixed she would ask for her money back.

27 In his email of 6 July 2005 to the plaintiff, Mr Salmela included details of Dr Langov’s advertisement. He said he was told the machine was in excellent condition, and had not been told about the need for an EC certificate.

28 In her email sent on or about 7 July 2005 to Mr Salmela, the plaintiff asserted her need to have the machine thoroughly checked by a serviceman, and to be able to register it. On 7 July 2005 Mr Salmela replied saying he would fly over and check the machine.

29 During the later part of July 2005 emails passed between the parties relating to the plaintiff’s complaints, but no resolution was achieved.

30 On 26 August 2005 a technician named Stefan, apparently at the direction of a Mr David Gibson of Scanmedics Pty Ltd, inspected the machine. He informed the plaintiff that it needed calibration as its power output was greater than the amount shown on the screen. Subsequent correspondence came to nothing.

31 During August 2005 the plaintiff unsuccessfully attempted to obtain an EC certificate to enable registration of the machine. The machine remains unregistered, and thus unable to be lawfully used by her in her business.

32 On 10 August 2007 Mr Scott Cannon, a senior field service engineer then employed by Cutera Australia Pty Ltd, inspected the machine at the plaintiff’s premises. He was accepted as an expert in the servicing of lasers. He found that the machine was not presently in working order but that all that was required to put it into safe working order was re-calibration and possible replacement of items which could accurately be described as routine maintenance.

The case against Dr Langov

33 The plaintiff claims that Dr Langov, in trade or commerce, engaged in misleading conduct in breach of s 42(1), and/or made false or misleading representations in breach of s 44(a), s 44(e) and s 44(h) of the Act. Her case was pleaded in pars 17 and 18 of the further amended statement of claim. On each count it was alleged that Dr Langov, (a) sent an email dated 29 April 2005 to Mr Salmela in which he said of the machine “This system is in excellent condition”, and (b) in about late April 2005 he posted on a website an advertisement for the sale of the machine in which its condition was described as “Excellent”.

34 It was alleged that at the time Dr Langov knew that the machine was not in excellent condition in that it was firing over twice the amount of power as displayed.

35 Relevantly, the Act provides:

“42 Misleading or deceptive conduct
(TPA s 52)
(1) A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
…
44 False representations
(TPA s 53)
A person shall not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(a) falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use,
…
(e) represent that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have,
…
(h) make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods …”

36 By s 68(1) a person who contravenes these provisions may be liable to another person for the amount of loss or damage suffered by such conduct.

37 The plaintiff submitted that it was misleading conduct to describe, and it was false to represent the condition of the machine as excellent when, in fact, at the time it required calibration so that the machine would accurately display the amount of energy being emitted, and that it was unsafe to operate until the calibration had been adjusted. It was accepted (T p 126) that, in context, the description “excellent” would be understood to mean “in good working order”.

38 The principles which govern the determination of questions of allegedly misleading conduct were recently reviewed in Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592. It was said that a plaintiff who claims monetary relief must establish a causal link between the impugned conduct and the loss claimed (par 37). Justice McHugh (par 109) said:

“109. The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself . . It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct . . Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole . . The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document.”

39 Justice McHugh proceeded to point out (par 152) that, depending on the circumstances, other related conduct may have the effect of modifying or erasing whatever is misleading in the conduct complained of.

40 It is well-recognised that in the ordinary course of commercial dealings a certain degree of puffing or exaggeration is to be expected. For example, statements which are essentially introductory comments made at the start of negotiations for the purpose of attracting the interest of a purchaser may become irrelevant or of little significance when detailed information is subsequently given, and would not ordinarily be found to be potentially misleading conduct (General Newspapers Pty Ltd v Australian & Overseas Telecommunications Corporation Ltd (1993) 40 FCR 98; Pappas v Soulac Pty Ltd (1983) 50 ALR 231).

41 The evidence established that in early 2005 Dr Langov advertised the machine for sale and included in its description the representation that its condition was “Excellent”. The text of the advertisement was included in Mr Salmela’s email of 29 April 2005 to Dr Langov in which he offered “25K”. On or about the same day Dr Langov replied by email which included the following:

“At the moment I am in negotiations with a few other parties.
I will consider your offer, however I feel it is quite low. This system is in excellent condition with a new fibre valued at $900, distant gauges, gogles [sic], windows, and marketing kit. Comparable systems are $40 plus.”

42 Dr Langov gave evidence of conversations with Mr Salmela in which the sale was negotiated. I accept his evidence as truthfully given. He was unshaken in cross-examination, and no basis was established for rejecting it. He said that during a conversation about the end of April 2005 Mr Salmela agreed to buy the machine for US$24,000. He heard no more until 12 May 2005 when he received an email from Mr Salmela requesting pictures of the machine, its pulse count, and its year. Dr Langov sent these pictures.

43 On about 18 May 2005 there were conversations between Dr Langov and Mr Salmela the details of which are set out in par 20 above. Dr Langov was not challenged in cross-examination on the content of these conversations, or his evidence that Mr Salmela listened to the machine and thereupon proceeded with the transaction.

44 The evidence supports the finding, which I make, that the agreement between Dr Langov and Mr Salmela was made on 18 May 2005. It was on 19 May 2005, following receipt of Mr Salmela’s email disclosing Dr Langov’s contact details, that the plaintiff first spoke to Dr Langov.

45 With respect to the condition of the machine, it was Dr Langov’s evidence, which I accept, that it was performing satisfactorily when he ceased using it in March 2005. He said that although it required further calibration and completion of the annual preventative maintenance schedule it was in good working order and he had used it to treat patients without mishap. He said that was its condition at the time he spoke to the plaintiff in July 2005.

46 Upon consideration of all of the circumstance in which Mr Salmela agreed to buy the machine, the plaintiff’s claims that Dr Langov acted in contravention of either s 42(1) or s 44 of the Act must be rejected. In my opinion, the submissions for Dr Langov that the description of the condition of the machine in the advertisement and subsequent email, when considered in context, was mere puffery made at the start of negotiations for its sale should be accepted. The submission that it was highly probable that any misleading quality of the description was probably negated or erased by subsequent communications should also be accepted. I am entirely unpersuaded that, as a matter of common sense, in the circumstances, there was any likelihood that Mr Salmela, being a dealer in lasers, would be misled as the plaintiff alleged.

47 The evidence, in my opinion, contradicts the plaintiff’s case in that it demonstrated that Mr Salmela by the pictures, and from Dr Langov’s statement on 18 May 2005 as to the requirements for calibration and servicing, was provided with substantially truthful information about the machine’s condition. I also infer from Mr Salmela’s readiness to proceed after listening to the machine’s performance that, in truth, he relied on his own skill and judgment in agreeing to buy it.

48 Accordingly, I find that Dr Langov’s description of the condition of the machine as excellent was not conduct which was misleading under s 42(1), and was not a false representation under s 44 of the Act. Furthermore, it is appropriate to express my opinion that there was no evidence which established a causal link between the conduct alleged against Dr Langov and the loss claimed by the plaintiff.

49 I propose to order that the claims against Dr Langov be dismissed.

The case against Mr Salmela and the company

50 As earlier indicated the plaintiff claims damages against Mr Salmela and the company under the contract and also on counts of misleading conduct in trade or commerce in breach of s 42 of the Act and/or s 52 Trade Practices Act 1974 (Cth).

51 I turn first to the claims under the contract which embrace the claim for breach of warranty and of express and implied terms. The preliminary question is to ascertain the content of the agreement under which the plaintiff purchased the machine.

52 The evidence relied on by the plaintiff included her oral and affidavit evidence, and the email correspondence with Mr Salmela. I found her to be an honest witness, and generally accept the evidence she gave of her negotiations and dealings with Mr Salmela.

53 At the commencement of their dealings in early April 2005, Mr Salmela told the plaintiff he was the proprietor of the business carried on under the name “MD Laser Solutions”. The true position was that the company, of which he was the vice president, traded under that name, as its invoice of 30 April 2005 to the plaintiff shows.

54 The evidence demonstrated that the plaintiff sought, and Mr Salmela agreed to provide, a Candela Gentlelase Plus machine which would be suitable for use in her business, and which had low shots, and had been well maintained. In the exchange of emails from 22 April 2005 the plaintiff expressed concern about servicing requirements to which Mr Salmela responded that servicing would not be a problem and he would fly to Sydney himself for that purpose.

55 On or about 30 April 2005 an agreement was made between the plaintiff and Mr Salmela on behalf of the company for the sale and purchase of this laser. The company’s invoice and the preceding emails evidence that its express terms included a term that the laser was in excellent condition, and that the company provided a 90 day warranty. On 2 May 2005 the plaintiff paid the company the agreed price being the sum of US$35,000 (AUD$45,249.64).

56 On 13 May 2005 there was a telephone conversation between the plaintiff and Mr Salmela to the following effect (plaintiff’s affidavit 4 June 2007, par 13):

“Troy: Linda, I have some very exciting news. This must be a God thing. I have found you a machine and it is in Australia. It has done almost half the pulses as the machine you have bought from the United States. It is younger. And you don’t have to pay tax and shipping fees to Australia.
Me: Where is the machine in Australia? Who is selling the machine and why?
Troy: I will find out where the machine is. A doctor is selling the machine. He told me that he is selling the machine because he is not doing much hair removal. The doctor said the machine is in excellent working condition. Even though this is a better and younger machine, I am happy to sell you the machine at the same price. I will find out where the machine is. In the meantime, please think about this proposal. I won’t get the machine unless you want it. Also, I will pay for the freight cost from the doctor to you. Also, I will give you 90 days warranty on this new machine from the day you receive it.
Me: I will take it.”

57 By email of the same day Mr Salmela informed the plaintiff that the machine was in Sydney, was like new with “97K pulses”, and that he would warrant it for 90 days.

58 I find that the effect of this conversation and the email was that a new agreement was made between the parties on the same terms as the earlier agreement, but in respect of the machine the subject of these proceedings. As a result, the parties were no longer concerned with the other laser.

59 Unsurprisingly, the parties did not advert to the law of the contract. Having regard to the circumstances at the time, including the place of business of the plaintiff, the location of the machine when sold, and the common intention that the machine was to be used in the plaintiff’s business, I find that the transaction had its closest and most real connection with the system of law which operates in New South Wales. In accordance with well-settled principle (e.g. as explained InRe United Railways of the Havana and Regla WarehousesLtd [1960] Ch 52, p 91) it follows that the agreement in this case is governed by the general and statute law of New South Wales.

60 Objective analysis of the whole of the evidence enables ascertainment of the scope of the company’s obligations under the agreement. It undertook to provide a machine in excellent condition which, reasonably understood, meant one in good working order, and safe and suitable for use in the plaintiff’s business i.e. one which did not require servicing including calibration to render it fit for such use.

61 The effect of the warranty, in my opinion, was of a contractual undertaking by which it was intended that Mr Salmela on behalf of the company would arrange for and/or personally undertake servicing if required during the 90 day period. It also extended to ensuring during that period that the machine was one which the plaintiff could lawfully operate in Australia. In this case, discharge of the obligation required provision to the plaintiff of the EC certificate which was necessary for the registration of the machine with the Therapeutic Goods Administration. In addition, in my opinion, the evidence established the basis for an implied term that the machine when sold to the plaintiff was one which she could lawfully operate and, hence, complied with the requirements of the Therapeutic Goods Act 1989 (Cth). On the evidence, I find that the conditions necessary to ground such a term, as explained in Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, p 374, are fulfilled.

62 The agreement also included the conditions implied under s 19(1) and s 19(2) Sale of Goods Act 1923 to the effect that the machine was reasonably fit for the purpose for which the plaintiff required it, and was of merchantable quality.

63 In this context it will be remembered that on 18 May 2005 Dr Langov informed Mr Salmela of the need for calibration and completion of the preventative maintenance schedule, which information, although material, was not conveyed to the plaintiff by Mr Salmela. Mr Salmela had the opportunity to do so, at least at the time he sent his email to the plaintiff of 19 May 2005 advising of Dr Langov’s contact details, but failed to take it.

64 Shortly after taking delivery of the machine the plaintiff learned from Dr Langov of the need for calibration and servicing, and that it was unlawful to operate it whilst unregistered. Although I have found on Dr Langov’s evidence that the machine was in good working order, it has always been the case that calibration was required by a skilled serviceman to render it safe for the range of uses contemplated by the parties. I find that at the time of the sale the machine was not in a safe and suitable condition for use by the plaintiff, and that the plaintiff, despite reasonable attempts, has been unsuccessful in having the necessary work done to enable her to use it. The plaintiff’s requests to Mr Salmela for service have been ignored. His representation on 7 July 2005 that he would fly over for that purpose has not been fulfilled. I take it to be an acknowledgement of liability under the agreement that he should do so.

65 Furthermore, during July and August 2005, the combined efforts of the plaintiff, Dr Langov and Mr Salmela failed to produce the relevant EC certificate with the consequence that the machine remains unregistered and unusable by the plaintiff.

66 In short, the plaintiff has been left with a machine which, since the agreement, has been of no use to her. In my opinion, her situation is the direct result of the breach by the company of the express and implied terms, including the statutory terms, of the agreement which I have identified. On these issues, I generally accept the plaintiff’s submissions. Accordingly, the plaintiff is entitled to damages from the company for the loss of her bargain.

67 Furthermore, I find that the plaintiff’s claim under s 68 of the Act against Mr Salmela and the company for loss suffered by reason of his misleading conduct during the negotiations must succeed. The relevant conduct which attracts the application of s 42(1) of the Act is evidenced by his statements in the conversation, and in his email, of 13 May 2005. On those occasions he represented that the machine was in excellent working condition, was better and younger than the other, and that he would give a 90 day warranty from the date she received it. The plaintiff said, and I accept, that she relied on these representations. I find that they were calculated to induce her to agree to buy the machine, and had that effect.

68 I infer from the failure to honour the 90 day warranty, and to arrange or undertake servicing as requested by the plaintiff that the probability is that at the time the representations were made there was never an intention to fulfil them. Support for this conclusion is found in the failure of Mr Salmela to inform the plaintiff of the requirement for calibration and service when made aware of it by Dr Langov on 18 May 2005.

69 Accordingly, on the ground of contravention of s 42(1) of the Act I uphold the plaintiff’s claim for damages against both Mr Salmela and the company pursuant to s 68. For the same reasons I uphold the plaintiff’s claim against the company pursuant to s 82 Trade Practices Act 1974 (Cth) in respect of misleading conduct under s 52(1) of that Act.

Damages

70 Under s 68 of the Act the amount of damages to which the plaintiff is entitled is that which will most fairly compensate her for the wrong suffered. (The relevant authorities are reviewed in Miller’s “Annotated Trade Practices Act” 29th Ed, p 798ff.) In this case, in circumstances where the machine became of no use to the plaintiff in its unserviced and unregistered state, she should be compensated for the economic loss suffered as a result of agreeing to buy it from Mr Salmela and the company. Entitlement to the items claimed was established on proving that each was a loss consequential upon the contravention, and the breach of the agreement.

71 I record that during final submissions the plaintiff did not press claims for $646 for food in Texas, or for $133 for the registration of the plaintiff’s business name. A claim for $3,329 as the fare for a return flight from Sydney to Austin, Texas was rejected on the basis that it was the fare applicable on 8 June 2008. There was no evidence of the cost of such a fare in June 2005 when the plaintiff made her trip.

72 Of the several items originally claimed I find that the plaintiff has proved her entitlement to an award which includes the following components:

(1) Refund of the sum of $45,249 for the purchase of the machine.

(2) The plaintiff claimed an amount of $10,000 for interest actually paid and incurred in circumstances where she borrowed money from her bank to buy the machine. With regard to the principles considered in Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 I accept that such a claim is open. The bank statements of St George Bank show that she drew on a line of credit for funds to purchase the machine on 2 May 2005. Liability for interest ceased in February 2008. The average interest rate over the period was claimed to be 8 per cent. The amount claimed was calculated on a principal sum of $50,000. In my opinion it is reasonable to allow the amount of $9,000 for this item.

(3) Between 8 June and 19 June 2005 the plaintiff attended a training course at Mr Salmela’s premises in Austin, Texas. The purpose of the trip was to train her in the operation of the machine. I accept her evidence that she would not have incurred the related costs and expenses had she not bought the machine. The evidence established that the following items were actually incurred, and were reasonable. I allow them.

(a) travel insurance: $133;
(b) payment for the training course: $1,550;
(c) fare for flight from Sydney to Melbourne to connect with flight to Los Angeles, California: $111;
(d) accommodation at La Quinta Inn, Austin, Texas from 8 June to 18 June 2005 (US$862.50): $1,114
(e) purchase from the company of accessories for the machine under invoice of 29 April 2005 for (US$1,320): $1,705


(4) On 8 August 2005 the plaintiff paid the sum of $500 as a deposit on the purchase of an electric treatment table package from Centurian Tables Pty Ltd, Leichhardt, New South Wales for use in connection with the machine. As she was unable to use it, the plaintiff did not proceed with this purchase, and the deposit was not refunded. I allow this item.

(5) Purchase in early June 2005 from Dr Langov of accessories for the machine: $1,100.

73 Accordingly, there will be an award of damages to be paid by Mr Salmela and the company to the plaintiff in the total amount of $60,462.

74 Consistent with principle, my prima facie view is that the plaintiff should be ordered to pay the first defendant’s costs of these proceedings. In any event, I propose to order that the second and third defendants pay the plaintiff’s costs of the proceedings which concerned the claims against them. Failing agreement, the plaintiff and the first defendant should be given the opportunity to address me in relation to the question of costs insofar as it concerns them. Arrangements should be made with my associate by 4pm 15 August 2008 for the re-listing of this matter.

75 I make the following orders:

(1) The plaintiff’s claim against the first defendant be dismissed.

(2) The second and third defendants pay to the plaintiff damages in the sum of $60,462.

(3) The second and third defendants pay the plaintiff’s costs of so much of the proceedings as concern her claims against them.

**********