BNMB Transport Pty Ltd v Mercedes-Benz Australia Pacific Pty Ltd & Anor
[2016] FCCA 2047
•11 August 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BNMB TRANSPORT PTY LTD v MERCEDES-BENZ AUSTRALIA/PACIFIC PTY LTD & ANOR | [2016] FCCA 2047 |
| Catchwords: EVIDENCE – No direct evidence of manner in which vehicle driven – no direct evidence of cause of suspension collapse – inferential evidence that collapse caused by harsh driving. INFERENCES – When available – review of authorities. GUARANTEES AND FINANCE FACILITIES – Borrower liable for sum financed. |
| Legislation: Competition and Consumer Act 2010 (Cth), Sch.2 – The Australian Consumer Law, ss.54, 55 |
| Cases cited: Ashby v Slipper [2014] FCAFC 15 |
| Applicant: | BNMB TRANSPORT PTY LTD |
| First Respondent: | MERCEDES-BENZ AUSTRALIA/PACIFIC PTY LTD (ACN 004 411 410) |
| Second Respondent: | MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD (ACN 074 134 517) |
| File Number: | MLG 1021 of 2013 |
| Judgment of: | Judge Wilson |
| Hearing date: | 10 – 11 May 2016 |
| Date of Last Submission: | 3 June 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 11 August 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr T. Sowden |
| Solicitors for the Applicant: | Drakulic Lawyers |
| Counsel for the Respondents: | Mr P. Miller |
| Solicitor for the Respondents: | Sarah Manning (corporate counsel) |
ORDERS
ON THE CLAIM:
The application filed 8 July 2013 is dismissed.
The applicant pay the costs of the first and second respondents of the proceeding.
ON THE CROSS-CLAIM
Within 30 days of the date of this order, the respondents to the
cross-claim pay the applicant to the cross-claim the sum of $91,718.78.
The respondents to the cross-claim pay the costs of the applicant to the cross-claim of the proceeding.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1021 of 2013
| BNMB TRANSPORT PTY LTD |
Applicant
And
| MERCEDES-BENZ AUSTRALIA/PACIFIC PTY LTD (ACN 004 411 410) |
First Respondent
| MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD (ACN 074 134 517) |
Second Respondent
REASONS FOR JUDGMENT
Introduction
By application filed 8 July 2013, BNMB Transport Pty Ltd
(“the applicant”) sought orders for compensation and damages against the first respondent, Mercedes-Benz Australia/Pacific Pty Ltd (“MBAP”) and the second respondent, Mercedes-Benz Financial Services Australia Pty Ltd (“MBFS”) (collectively “the respondents”) for contravention of Sch.2 to the Competition and Consumer Act 2010 (Cth) (The Australian Consumer Law (“ACL”)) as well as other relief. The case concerned a high performance Mercedes-Benz E55 AMG 211 motor vehicle (“the vehicle”) that the applicant purchased in
May 2011. The applicant contended that very shortly after purchasing the motor vehicle and after normal use, the rear suspension of the vehicle collapsed rendering the vehicle useless.
Each party called evidence that addressed the reason for the failure of the vehicle’s suspension.
Synopsis
For the reasons that follow, in my judgment the vehicle’s suspension failure was, on the balance of probabilities, caused by improper use while the vehicle was in the care and control of one or more officers of the applicant. I am not satisfied that the applicant made out its case for compensation or damages. Conversely, I am satisfied that the respondent discharged the onus upon it pursuant to the provisions of the ACL. I dismiss the claim brought by the applicant against the respondents and on the cross-claim I make orders for the payment of monetary amounts.
Factual setting of this dispute
At all relevant times the applicant carried on business in the transport industry. Its principal officer was one Mr Bojan Govedarica.
In May 2011, Mr Govedarica was keen to purchase the vehicle that MBAP offered for sale. On behalf of the applicant, on 20 May 2011
Mr Govedarica executed an order form for the purchase of the vehicle. The applicant entered into a hire purchase agreement with MBFS in order to complete the acquisition of the vehicle.
On 19 May 2011, the day before the applicant entered into the contract to purchase the vehicle, the vehicle had passed a roadworthy check performance conducted by one Mr Scott Kelly of MBAP, who gave evidence in this litigation.
MBAP delivered the vehicle to the applicant on 23 May 2011.
The applicant returned the vehicle to MBAP on 1 June 2011 reporting minor defects. Those were repaired under warranty. In July 2011
the vehicle’s rear suspension collapsed rendering the vehicle unusable.
The issue in this case was whether MBAP complied with the statutory obligations under the ACL imposed upon it in relation to the vehicle.
The roadworthy certification of the vehicle
Chronologically, the narrative in this case commenced with the activities of Mr Kelly, the supervisor responsible for all roadworthy and pre-delivery operations with MBAP. Mr Kelly gave evidence that in 2011 he worked as a supervisor and workshop foreman of MBAP. He said he was familiar with the characteristics of the vehicle.
He described the vehicle as a “very powerful car”.[1] Mr Kelly said he was also familiar with the sale of the vehicle to the applicant in this case.
[1] Transcript of Proceedings, 11 May 2016 at p.125.
Mr Kelly impressed me as a very experienced, technically astute man with a highly developed understanding of the mechanical and technical workings of the vehicle.
Mr Kelly gave evidence that he participated in the process of certifying the vehicle for roadworthiness prior to the vehicle being sold to the applicant. He said the vehicle was subjected to a roadworthy safety check involving checking of lights, the braking system, the steering, the suspension and tyres, the interior and engine mountings. So far as the roadworthy safety check referable specifically to the suspension of the vehicle was concerned, Mr Kelly gave evidence that such a check involved the checking of all ball joints or control arms and rubber bushings for wear and movement. The suspension heights were checked for sagging, that is to say, that there were no deviations from ride height specifications. So far as a roadworthy check on the tyres of the vehicle was concerned, Mr Kelly gave evidence that it involved inspection for cuts and bulges or sidewall damage. It involved assessing the tread, especially for evidence of tread wear indicators.
Mr Kelly said the tread wear indicator needed to reach a minimum of between 1.5 to 1.8mm. However, Mr Kelly stated that Mercedes-Benz had a reputation that it lived up to fiercely. He said Mercedes-Benz ordinarily sent a vehicle out on the road with a new customer with between 50% and 60% of tyre tread.
Mr Kelly signed the roadworthy certificate on behalf of MBAP on
19 May 2011. Mr Kelly gave evidence that with normal driving, new tyres fitted to that particular type of vehicle would be expected to last for 30,000km of use. For tyres having 50% of new tyre capacity,
they would be expected to last 50% of the new tyre capacity, therefore 15,000km.
Mr Kelly said the tyres on the vehicle were made of a “very soft compound” that was “very sticky and very soft”.[2] He said tyres driven under harsh conditions would not last very long. Mr Kelly said if the vehicle was driven while skidding with the traction control off, the tyres would only last a matter of minutes.
[2] Transcript of Proceedings, 11 May 2016, at p.128.
Mr Kelly gave evidence that he expected the suspension of the vehicle to last a lifetime with normal use. He said that if the vehicle was driven with harsh acceleration, meaning wheel spinning, “throwing the car around sideways”,[3] putting the accelerator flat to the floor, turning the traction control off, then the suspension could fail in extreme conditions.
[3] Transcript of Proceedings, 11 May 2016, at p.129.
When asked whether such a high-performance vehicle was destined to withstand serious acceleration, Mr Kelly said the vehicle was a passenger vehicle, not a race vehicle and while it was designed to be a
high-performance vehicle, it was a passenger vehicle nonetheless that was not built like a racing vehicle. Mr Kelly said the vehicle was a road passenger vehicle with performance features in it.
Mr Kelly also gave evidence that he conducted brake decelerator testing, in the process of subjecting the vehicle to a very sudden stop, so as to ensure that the vehicle braked in a straight line. Once satisfied that all gauges and dashes functioned perfectly, the vehicle was steered aggressively, and then examined on the hoist.
The suspension was subjected to road testing. In that phase technicians listened for unusual noises, tested for loose movement and evidence of suspension issues when brakes were applied hard. They tested for sideways movement of the vehicle. Mr Kelly said the body and chassis were also examined and any concerns relating to the structural integrity of the vehicle were, if relevant, addressed by MBAP’s panel shop.
Importantly, Mr Kelly stated that MBAP only kept “the best of the best”[4] in used vehicles, selling to the wholesalers vehicles that did not meet that designation.
[4] Transcript of Proceedings, 11 May 2016, at p.131.
The Malkoutzis theory
Chronologically, Mr Govedarica’s negotiations for the purchase of the vehicle logically must be considered next. However, an issue relevant to the physical condition of the vehicle was raised by
Mr William Malkoutzis that must be next narrated.
Mr Malkoutzis was at all relevant times the proprietor of a business known as ‘Talk Torque Automotive’ (“TTA”). He provided a report dated 23 March 2015.[5] The recipient of the report, that is to say the person entitled to it was Mr Govedarica. Uncharacteristically for a document that was intended to stand as an expert’s report, the report from Mr Malkoutzis did not have attached to it any letter of instruction or set of facts and assumptions that Mr Malkoutzis was asked to accept or make. No evidence was directed to the circumstances in which
Mr Malkoutzis was retained to write his report.
[5] Exhibit D, Talk Torque Automotive report prepared by William Malkoutzis dated 23 March 2015.
Be that as it may, Mr Malkoutzis gave evidence that he first met
Mr Govedarica at a McDonald’s restaurant near Essendon.
Mr Malkoutzis said he did not take notes during that meeting. He gave evidence that he detected the presence of coarse grain sand on the underside of the vehicle when he examined the vehicle during an inspection conducted by him on 25 July 2012. Mr Malkoutzis stated in his report, at page 6, that the presence of sand on the underside of the vehicle strongly suggested (his words) the high likelihood (again, his words) that the vehicle had been driven on a regular basis on corrugated roads.
In that report Mr Malkoutzis went further by concluding that the vehicle was a statutory write-off in its present form. As for the reason for that, he said the following –
… it can be clearly concluded that the failure [the suspension collapse] was an ongoing fatigue type failure due to a repeated and ongoing vibration oscillation of load on the studs …
Based on the authors (sic) experience with rough road durability testing … this type of failure is often associated with ongoing use of the vehicle on rough road usage (sic) i.e. bumpy or corrugated roads.[6]
[6] Exhibit D, Talk Torque Automotive report prepared by William Malkoutzis dated 23 March 2015 at p.7.
Before later addressing whose expert evidence I have preferred in this case, it is important to identify at once the theory postulated by
Mr Malkoutzis. In essence, he inspected the vehicle on 25 July 2012 and spoke to Mr Govedarica about the vehicle. He proceeded, apparently on the information given by Mr Govedarica, that the vehicle was in good order at the time of purchase. Mr Malkoutzis appears to have applied his acquired knowledge derived from rough road durability testing so as to reach what he described as the clear conclusion that the suspension failure in the vehicle was attributable to ongoing use of the vehicle on rough road conditions.
That theory became a focal point of MBAP’s defence in this case.
Mr Malkoutzis’s theory was predicated upon prolonged use of the vehicle on rough roads, meaning bumpy or corrugated roads.
No evidence was adduced in this case about the use of the vehicle prior to the applicant’s purchase of it.
Much more importantly for the purposes of Mr Malkoutzis’s evidence was his remarkable concession shortly into his cross-examination.
Mr Miller, counsel for MBAP, pursued Mr Malkoutzis about the sand theory and the possibility of the suspension collapse being explained by the combination of sand penetrating the workings of the vehicle while the vehicle was driven on corrugated roads.
The following exchange took place –
MR MILLER: So your conclusion that the vehicle was driven on a corrugated dirt road because of the sand is purely speculative; is that right?
MR MALKOUTZIS: I would agree with that. Yes. Yes. I have to agree with that.[7]
[7] Transcript of Proceedings, 10 May 2016 at p.63.
When pressed about any investigations he made so as to test his theory about the presence of sand in the workings of the vehicle,
Mr Malkoutzis gave the following disarmingly frank concession –
HIS HONOUR: Were you told very much about the history of this car? ‑‑‑ It was difficult to trace, your Honour. I actually tried to trace it through VicRoads to find out where it came from and the region it came from.
Hang on a second. I was asking you whether you were told very much. Normally ‑ ‑ ‑ ? ‑‑‑ No, I was not.
Did you make an inquiry about what you said the car had been put ‑ ‑ ‑ ? ‑‑‑ Once I had seen the sand I asked the question of the owner, “Have you driven it over dirt roads or whatever?” I think that was in the discussion once you got involved.
…
And then based on – that evidence, I then started asking questions. “Where has this vehicle been driven? Do you know the history? Do you know – the owner is?” And I did actually try to trace that, but was unable to do it.
Did you know very much about the owner prior to this ‑ ‑ ‑ ? ‑‑‑ No.[8]
[8] Transcript of Proceedings, 10 May 2016 at p.65.
Naturally, I recognise that it is within the province of an expert to offer a theory about the likelihood of a particular event occurring. An expert is even permitted to offer admissible evidence, based on the expert’s relevant expertise, that an event occurred by reason of a particular phenomenon. However, pure speculation of the sort in which
Mr Malkoutzis admitted to having engaged was of no use to me in the determination of issues in this case. On top of that, Mr Malkoutzis’s willingness to engage in pure speculation of the sort to which he admitted caused me to critically assess whether he was a witness on whose evidence I could rely. When Mr Malkoutzis admitted to engaging in pure speculation I formed the view that I should proceed in this case examining with utmost care anything Mr Malkoutzis said because of his willingness to engage in pure speculation. He was not a careful witness.
The negotiations and the purchase
Returning to the chronological sequence of events, on 14 May 2011, Mr Govedarica attended at MBAP’s premises where he met
Mr Dennis Meehan of MBAP. At the time, Mr Meehan was the AMG manager for MBAP. Mr Govedarica gave evidence that Mr Meehan told Mr Govedarica that the vehicle came from a wealthy
South Australian family. Mr Govedarica said he “fell in love with the vehicle” so he “left a deposit, and that’s how it all started”.[9]
When asked by his counsel, Mr Sowden, for further details of his conversation with Mr Meehan prior to the applicant’s purchase of the vehicle, Mr Govedarica said “[h]e has just told me how the vehicle is very fast, how good it is. Like, the vehicle looked awesome in the showroom”.[10]
[9] Transcript of Proceedings, 10 May 2016 at p.31.
[10] Ibid.
Mr Govedarica gave evidence that he left a deposit of $2,000.00 with MBAP on 14 May 2011. MBAP’s order form that became Exhibit A in this proceeding supported Mr Govedarica’s evidence that he paid a deposit of $2,000.00 in return for which MBAP provided receipt 5995.
Before going further with the evidence of Mr Govedarica, I should point out that Mr Govedarica gave evidence by video link and over the whole of the hearing, he observed the proceeding by that video link. While on video link Mr Govedarica sat at a desk. Around him were three flags. Above his head and behind him was a sign that read “Fulham Correctional Centre”. No one asked why Mr Govedarica gave evidence and observed from the Fulham Correctional Centre.
Mr Govedarica’s evidence recited above went nowhere near the pleaded representations that MBAP allegedly made during
pre-purchase discussions between Mr Govedarica and Mr Meehan.
In paragraph 6 of the applicant’s statement of claim filed 8 July 2013, the applicant asserted that prior to the applicant’s purchase of the vehicle MBAP represented six separate matters that allegedly induced the applicant to purchase the vehicle. The representations pleaded were as follows –
(a) “There is the beast”;
(b)“The car has three months warranty but if there is ever anything wrong come and see us: I’ll still look after you”;
(c)“It had been necessary to register the vehicle in Victoria because it comes from South Australia where it belonged to a wealthy family there”;
(d)“I cannot believe someone would trade it in. It’s a collector’s item”;
(e)You have come to the right place because this car was $264,000 new”; and
(f) “Mid-80’s will buy this car”.[11]
[11] Statement of Claim filed 8 July 2013, p.3 at [6].
From the narration given thus far of the first discussions between
Mr Meehan and Mr Govedarica, it will be immediately apparent that Mr Govedarica did not give evidence about the representations pleaded above. So far as the allegation in paragraph 6(b) was concerned,
Mr Govedarica gave evidence that Mr Meehan told him that
“there was three months warranty and, also, in the case of any problems in the future, longer future, just to come and see him and he will look after me”.[12]
[12] Transcript of Proceedings, 10 May 2016 at p.31.
In so far as paragraph 6(c) was concerned, the full representation as pleaded was not given in evidence. The vehicle having been owned by a wealthy South Australian family was stated by Mr Govedarica.
That was the totality of the evidence.
On the applicant’s own case, almost no evidence was led of the representations alleged in paragraph 6 of the statement of claim.
But for one issue, that may have sufficed to dispose of so much of the case as may be premised on the fact of express representations having been made.
In the dying phases of the evidence-in-chief given by Mr Govedarica, Mr Sowden returned to the pre-contractual representations allegedly made on behalf of MBAP. The exchange unfolded in the following manner –
Right. Now, are you able to say – you gave evidence right at the outset that you were told by Mr Meehan that the vehicle came from South Australia. A wealthy ‑ ‑ ‑? ‑‑‑ From a wealthy family; that’s what he ‑ ‑ ‑
Yes? ‑‑‑ ‑ ‑ ‑ mentioned.
Yes. Can you tell the court what else you were given, or information you were provided, regarding the history of that vehicle? ‑‑‑ By Dennis Meehan?
By anyone from Mercedes? ‑‑‑ Well, that’s all he told me; it comes from a wealthy family that traded it in, so it was – it was brought to Melbourne to be sold. And, yes, it’s an awesome vehicle. It’s a good everything, like, it comes with the three months warranty, but not to worry. If I have any issues, just to contact him and, yes, even afterwards, they will look after me.[13]
[13] Transcript of Proceedings, 10 May 2016 at p.44.
Two issues relating to the representation aspects of this case must be addressed. First, in his evidence-in-chief, Mr Meehan gave his response to those representations allegedly made by him. He prefaced his remarks by stating that in the days when he sold Mercedes-Benz AMG vehicles, he sold around 120 vehicles each year and that he had no precise recollection of conversations that preceded each sale.
He also prefaced his evidence by stating that when he spoke to
Mr Govedarica, he would have highlighted the features and benefits of the vehicle, the advantages of that vehicle over a vehicle offered by the opposition and the fact that the vehicle was priced very attractively given that it was a pre-owned authorised Mercedes-Benz AMG vehicle.
Mr Meehan denied having made the representation in paragraph 6(b) of the applicant’s statement of claim. Mr Meehan put it more graphically when he said the following –
… there’s two things I would never tell a customer, one, that [MBAP] can do anything outside the warranty of the car and the second thing, that they be entitled to tickets as Mercedes-Benz guest at the Australian Grand Prix. They’re two things that just do not happen.[14]
[14] Transcript of Proceedings, 11 May 2016 at p.112.
Mr Meehan did not address the representation in paragraph 6(c) of the applicant’s statement of claim.
As to the representation in paragraph 6d) of the statement of claim,
Mr Meehan stated he had no recollection of saying the words alleged. However he did say that the vehicle was to this day a very popular vehicle.
Mr Meehan said he had no recollection of speaking about the price of $264,000.00 for a new vehicle, as was alleged in paragraph 6(e) of the statement of claim.
Mr Meehan also said he had no recollection of discussions about the price of the vehicle being around $85,000.00.
Mr Meehan’s evidence, largely responsive, was not as important in relation to the representations as was Mr Govedarica’s evidence about the representations. Mr Govedarica did not prove, let alone swear up to the pleaded representations asserted in paragraph 6 of the applicant’s statement of claim.
At all events, returning to the narration of events as they unfolded chronologically, the applicant borrowed funds from MBFS and agreed to pay the sum of $133,231.20 by 60 equal monthly instalments, each in the sum of $2,220.52.
MBAP delivered the vehicle to the applicant on 23 May 2011.
The applicant’s contentions about defects
According to the applicant, two days after purchasing the vehicle
Mr Govedarica heard a knocking sound. He said he reported that to MBAP. Mr Govedarica said someone (he did not say who) told him that the vehicle would be inspected and that it would take up to
six weeks to order a part from Germany. He said they (I assume MBAP) took the vehicle then returned the vehicle to him.
Mr Govedarica said the next day the vehicle “felt like a boat”.[15]
[15] Transcript of Proceedings, 10 May 2016 at p.37.
That evidence was very general and imprecise. I did not find that it was particularly probative. However, Mr Govedarica addressed events in the day or days after he took delivery of the vehicle.
MBAP’s version of events - as given by Mr Geoffrey Graetz
The events were not as Mr Govedarica swore to, according to
Mr Geoffrey Graetz of MBAP. He gave evidence from his own recollection of events as well as from his inspection of documents that were exhibited in this case. Mr Graetz traced the history of the return of the vehicle after the applicant’s purchase of it stating that the vehicle was delivered on 19 May 2011 then returned to MBAP on 1 June 2011 “with some issues”.[16] Mr Graetz stated that the vehicle was returned to MBAP with an electrical issue and drive shaft issue. On 1 June 2011 or thereabouts MBAP replaced a drive shaft bush.
[16] Transcript of Proceedings, 11 May 2016 at p.139.
Mr Graetz said that on 1 June 2011 no one at MBAP was able to drive the vehicle as the rear tyres were completely bald, the vehicle having travelled 1,300km since the vehicle had been delivered to the applicant.
Mr Graetz said in evidence that not only were the rear tyres completely bald but on the inside of the rear guards was the presence of burnt rubber.
Mr Graetz said that in June 2011 he was the service manager for MBAP in Melbourne, having worked with Mercedes-Benz vehicles for 28 years. He said he was a qualified mechanic and since qualifying,
he had served as a service manager for an MBAP dealership in Melbourne and in Adelaide as well as for Porsche and SAAB for
30 years. Mr Graetz said he had raced motocross and speedway
semi-professionally for a very long time, having been Australian Champion in each. He said he had been a team technician and tyre technician and he had been regularly involved in speed comparison, held at the Australian Grand Prix each year.
Mr Graetz said he was familiar with the vehicle in question in this case, describing it as a V8 four-door sedan with rear-wheel drive. He said the vehicle’s performance characteristics included a tuned engine management system and tuned transmission to suit the vehicle.
Mr Graetz said the horsepower was in the vicinity of 480 – 500.
He said the vehicle accelerated quickly. Mr Graetz said the vehicle was equipped with MBAP’s version of traction control known as ESP, being electronically controlled allowing for maximum acceleration and adhesion of the rear tyres to the road surface with a minimum amount of slip. Mr Graetz said ESP was an acronym for ‘electronic suspension prevention’.
Mr Graetz said the vehicle’s traction control could be turned off manually. He said that if the vehicle’s traction control was turned off, the vehicle’s rear wheels spun and the driver needed to ensure the vehicle was driven and managed in a controllable manner. Mr Graetz said that even if the traction control had been turned off, the vehicle could be driven normally but it could also be driven in a manner that involved harsh acceleration leading to a phenomenon known in the automotive industry as “light(ing) the rear wheels up”.[17] That meant the rear wheels spun completely causing strain on the rear suspension, immediate wear and the reduction of control, according to Mr Graetz. He said driving the vehicle under those circumstances resembled driving on a wet road when the vehicle was “very difficult to control [in] a wet-road situation”.[18]
[17] Transcript of Proceedings, 11 May 2016 at p.138.
[18] Ibid.
Mr Graetz addressed specifically the roadworthiness of the vehicle.
He said “[i]t was a hundred per cent roadworthy before it was sold”.[19] Mr Graetz said the suspension of the vehicle passed roadworthy certification.
[19] Ibid.
Mr Graetz said that on 1 June 2011 when he saw the burnt rubber on the inside of the wheel arches, the vehicle was unroadworthy by reason of the bald tyres. He said there was no issue with the suspension but there was an issue with the engine mount and drive shaft coupling.
Mr Graetz said that once the rear tyres were replaced on 1 June 2011, the vehicle was returned to the applicant on 3 June 2011.
The discovery in mid-July 2011
Precisely how the applicant used the vehicle in the period between
3 June and mid-July 2011 was the subject of unsatisfactory evidence.
I say “unsatisfactory evidence” because no sensible version of events was given to explain how the vehicle left the care of MBAP on
3 June 2011 in a safe working condition and returned to MBAP on a tow truck in mid-July 2011.
Mr Graetz gave evidence that the vehicle’s rear suspension had failed. Mr Graetz said Mr Govedarica was present when the vehicle was returned and was very agitated, swearing and making threats.
Mr Graetz gave evidence that the police intervened. He stated that he told Mr Govedarica that Mr Govedarica should find a mechanical engineer so as to give a factual and solid opinion about the cause of the vehicle’s suspension failure. Mr Graetz gave evidence that MBAP was unable to take any further action until it ascertained the cause of the failure. He said MBAP was concerned to investigate whether the suspension failure was a warranty matter or whether it had been caused by what Mr Graetz called “outside influence”.[20]
[20] Transcript of Proceedings, 11 May 2016 at p.149.
In the period between early June 2011 when the vehicle was returned to Mr Govedarica’s possession and six weeks later or thereabouts,
it was common ground that Mr Govedarica drove the vehicle.
His version of the vehicle’s suspension failure suggested that events unfolded without any trauma to the vehicle. When comparing other evidence to what Mr Govedarica said about the events immediately preceding the vehicle’s suspension failure, it occurred to me that it was necessary for me to very closely examine in considerable detail just how Mr Govedarica said the vehicle’s suspension actually failed.
Mr Govedarica gave evidence that shortly after the vehicle had been returned to his possession following the warranty items having been addressed, he drove the vehicle to a location “the second street from my house, that’s when it happened”.[21] He said the sensor light came on indicating that the vehicle was too low. Mr Govedarica said he pulled over and got out of the vehicle. He then said that “[t]he car was all up in the air, jacked up. The airbag suspension went up. That’s when they rip the bolts out”.[22]
[21] Transcript of Proceedings, 11 May 2016 at p.38.
[22] Ibid.
When Mr Sowden pressed for further information, Mr Govedarica said the following –
Right? ‑‑‑ And that’s how the – in the – the report, I understand as well. I read through and that’s what caused it to actually come apart. Why did that cause it? I don’t know what was wrong or what was faulty. The sensor, if there is some mentioning of faulty sensor or not, I’m not sure. I don’t know.
So what did you do when that happened? ‑‑‑ I called them, Mercedes-Benz. I told them. They told me to send the car there on a tow truck, and I did.[23]
[23] Transcript of Proceedings, 11 May 2016 at p.39.
Mr Govedarica said after the vehicle was taken to MBAP on a
tow truck, a representative of MBAP told him to contact his insurer as, so he said, MBAP told him MBAP could not get involved because there was no accident. Mr Govedarica said he was told a few days later MBAP would not repair the vehicle so MBAP put the vehicle on a tow truck and returned the vehicle to the applicant. After that,
Mr Govedarica said he involved TTA, and Mr Malkoutzis in particular.
In his evidence-in-chief, Mr Govedarica was asked whether he received a speeding infringement when driving the vehicle, in answer to which he said he had not. He later admitted that he received a couple of speeding fines.
Mr Sowden asked Mr Govedarica whether he had ever turned off the traction control and then driven the vehicle. Mr Govedarica said “[m]aybe I did sometimes, I don’t know”.[24] His imperfect recollection about the point in that answer was the subject of cross-examination by Mr Miller on the subject of Mr Govedarica’s rapid acceleration and his turning off of the traction control. Mr Govedarica’s answers emerged in the following way –
MR MILLER: You would accelerate that vehicle from a stationary position to a very high speed in a short space of time, wouldn’t you? ‑‑‑ I don’t think so because I was not paying attention on that.
You say “I don’t think so” ‑ ‑ ‑? ‑‑‑ Like, I – I wasn’t paying attention on that. I was just using it, driving it normally.
[24] Transcript of Proceedings, 11 May 2016 at p.41.
You drove the vehicle with the traction control off, didn’t you? ‑‑‑ Maybe sometimes. I – I can’t remember. Sometimes I was, maybe sometimes I wasn’t.
And you drove the vehicle with the traction control off in order to increase the accelerating capacity of the vehicle, didn’t you? ‑‑‑ No, I didn’t. Well, I wasn’t taking it off because that – that, I believe, doesn’t actually help. I don’t know.
Mr Govedarica, you just gave evidence that sometimes you took the traction control off and his Honour asked you why you might turn the traction off, what reason you would have, and now you’re saying that you didn’t take the traction control off. Is that – am I understanding that right? ‑‑‑ Well, maybe sometimes I did.
I don’t know. Like, I wasn’t paying attention on that, that – that matters anything, anyway.
HIS HONOUR: What’s involved in taking the traction control off; what do you have to do to achieve that end? ‑‑‑ There’s a button, I believe, there just to press.
MR MILLER: Did you know where the button was? ‑‑‑ From what I can remember, it was next to the gear knob where the suspension buttons are and all the other ones, was it?
And you pressed that button, didn’t you? ‑‑‑ And sometimes maybe I did, yes.[25]
[25] Transcript of Proceedings, 11 May 2016 at pp.48-49.
In the passages of these reasons for judgment that follow, I have addressed not only what evidence Mr Govedarica gave but also the manner with which he gave his evidence. That was important to my conclusion about whether I accepted his evidence. The exchange that I have set out immediately above became important in the context of this litigation. The likely use of the vehicle by Mr Govedarica was a matter on which MBAP’s expert evidence focused. Naturally, Mr Govedarica did not admit to having driven the vehicle inappropriately.
The vehicle’s suspension collapse was set against a backdrop in which the vehicle travelled for no more than 1,365km while in the applicant’s possession, custody and control. Mr Govedarica said that the vehicle’s suspension collapse made no sense as the vehicle while in his care was not subjected to impact or accident and that he drove the vehicle normally.
Agreed facts
On 9 May 2016, the parties executed a statement of agreed facts.[26] Aside from the critical issue in this case about the cause of the suspension failure, the agreed facts helpfully recorded agreement to other non-controversial matters.
[26] Exhibit 3, Agreed Statement of Facts dated 9 May 2016.
Dr Robert Casey’s evidence
Dr Robert Casey gave expert evidence on behalf of MBAP and MBFS.
Dr Casey said he held a first-class honours undergraduate degree in mechanical engineering, a masters degree in engineering science and a doctorate in engineering. He held academic postings to universities in Japan, Queensland and New South Wales and he had spent over
20 years as a director of entities involved in the practice of engineering or as a consultant to those entities. Dr Casey was a widely-published author in international journals and had presented at conferences to professional bodies. He had investigated over 1500 heavy vehicle accidents, crashes, fires and failures, having worked extensively in the field of automotive forensic investigations since March 1993. He said he had been involved in accident reconstructions, in the calculations of speed and of distance, and in the calculations of lines of sight and geometric constraints. Specifically, in the course of his work he had been involved in activities associated with automotive hydraulics, air brake systems, engine failures, tyres, gearbox transfer cases and differentials and bearing failures. Dr Casey had given evidence in most intermediate and superior courts in Australia and in the
United Kingdom.
Dr Casey said he had been previously involved in over 400 commercial testing and evaluation projects on matters that included, relevantly –
a)impact control causation, stability and failure scenarios for tyres;
b)compliance testing, load rating, dynamic stress and fatigue, stability and destructive load testing for suspensions; and
c)fatigue life and failure load on tow couplings.
By reason of his very considerable study in the fields within his stated expertise and by reason of his very considerable practical experience in the fields of his stated expertise, I had no hesitation in receiving
Dr Casey’s evidence as an expert witness, properly so-called, according to principles espoused in Makita (Australia) Pty Ltd v Sprowles[27] and Dasreef Pty Ltd v Hawchar.[28]
[27] (2001) 52 NSWLR 705.
[28] (2011) 277 ALR 611.
Self-evidently, Mr Malkoutzis had no comparable academic distinction or expertise-specific training as did Dr Casey.
Dr Casey provided a report dated 9 July 2015.[29] He gave viva voce evidence and he was a co-author with Mr Malkoutzis of a joint report dated 19 August 2015.[30]
[29] Exhibit 1, Report on Suspension Sub-Frame Mounting Nut Failure prepared by Dr R.T. Casey dated 9 July 2015.
[30]Unlike Mr Malkoutzis, Dr Casey annexed to his report a letter of instruction from MBAP’s internal solicitors dated 17 June 2015.
Dr Casey was requested to make three assumptions, namely –
a)when the applicant purchased the vehicle it was about seven years old with 61,173km on the odometer and the vehicle had satisfied all criteria for the provision of a roadworthy certificate;
b)on 1 June 2011 the applicant alleged a knocking noise from the vehicle, when the vehicle’s odometer stood at 62,538km which MBAP repaired at no cost to the applicant; and
c)on 28 July 2011 the applicant presented the vehicle to MBAP stating that the suspension had collapsed.[31]
[31] Exhibit 1, Report on Suspension Sub-Frame Mounting Nut Failure prepared by Dr R.T. Casey dated 9 July 2015.
Dr Casey was requested to determine the cause of damage to the vehicle’s rear suspension K frame unit and mounting points.
Dr Casey’s executive summary of his report dated 9 July 2015 was in the following terms –
The two nuts securing the rear sub-frame in place on a
Mercedes Benz E55 AMG, failed via fatigue.
The directionality of this fatigue is consistent with this occurring due to harsh acceleration.
There is a lack of long-term indicia on these two fracture surfaces which is consistent with the fact that the fatigue cracking occurred relatively recently to the final failure.[32]
[32] Exhibit 1, Report on Suspension Sub-Frame Mounting Nut Failure prepared by Dr R.T. Casey dated 9 July 2015.
Dr Casey found in paragraph 5.4 of his report that there had been a failure of the rear sub-frame’s mounting bolts. In explaining the technical expressions he used, Dr Casey said that modern vehicles generally do not have rigid frames that run the full length of the vehicle. Dr Casey said there are many frames typically at the front of a vehicle to hold the engine and front suspension in place as well as at the back to hold the rear suspension in place. He said this case concerned the rear mini-frame, typically called a sub-frame. Dr Casey said the sub-frame is then bolted on to the vehicle. The rear sub-frame appeared more or less in the shape of a capital letter “K” with the straight section located near the rear wheels (corresponding to the straight line of the K) and the non-straight section (being more curved resembling a wide “U” shape or horseshoe) facing the front of the vehicle. Four bolts affix the sub-frame to the vehicle, one at either end of the straight section and one at either end of the curved section.
Dr Casey said he inspected the four bolts. He said he found there had been failure of the two rear bolts. He said the bolts themselves were still intact. However, he said the nuts into which the rear bolts had been screwed had fractured away from the rest of the vehicle. Dr Casey said the rear bolts ordinarily passed up through the sub-frame and into the nut which held the sub-frame onto the underside of the vehicle.
Dr Casey said the left-hand side rear bolt and fractured nut were still in place inside the sub-frame. He said he was unable to remove it without destroying the bolt. Dr Casey said he left it in place. The rear right-side bolt and nut were not in position (as was the left rear bolt) and instead was loose. Dr Casey said he inspected the bolt and nut. He ascertained that the nut had fractured by reason of fatigue.
Dr Casey explained fatigue. He said it was a tensile phenomenon.
Dr Casey said that with fatigue, a small crack is first generated and it progresses in a stepwise fashion. Dr Casey said that fatigue was the mechanism often used to break a coat hanger wire when bent back and forth so that the crack is propagated a little further each time the wire is bent back until the remaining material is not strong enough to sustain the load and so the remaining material fails in one final cycle.
Dr Casey said in paragraph 5.11 of his report that he saw a set of parallel striations on the fracture surface, hallmarks of fatigue. He said fatigue fractures ordinarily produce smooth, planar surfaces, factors present on the vehicle. Dr Casey said he observed a coarse granular section to the fracture surface representing the last remaining material that failed in overload when there was insufficient metal to support the load after the fatigue crack had propagated around most of the perimeter. Dr Casey said there was little doubt the nut failed in fatigue, a matter on which he and Mr Malkoutzis agreed.
Dr Casey said he inspected the areas where the two rear sub-frame nuts had been torn away. He said he was able to determine the direction of the forces that caused the fatigue, namely the presence of fracture surfaces on both sides of a fracture plane. He said in this case the fatigue was generated by bending. He said he reached that conclusion because he saw indicators only on one half of the fracture surface
(the tensile side), the hallmark of bending. Dr Casey said the direction of the bending would cause tension on the fatigue faces when the bottoms of the bolt were pulled towards the front of the vehicle.
He said cracks grew when that occurred.
Dr Casey described in significant and valuable detail how the rotation of the sub-frame that he saw evident was consistent with rotation. When listening to his evidence given from the witness box, reading his report and comparing his views to the theory advanced by
Mr Malkoutzis, I was left with no doubt whatsoever that Dr Casey’s theory was to be preferred over the sand and corrugated roads theory advanced by Mr Malkoutzis.
Dr Casey said the fractures evident at the front of the sub-frame remained in place. By that he was referring to two portions of the widened “U” shaped (or horseshoe shaped) aspect of the sub-frame.
He said the front of the sub-frame acted as a pivot line. Dr Casey said the rear of the sub-frame was rotated downward and forward in a manner that was opposite to the wheels accelerating forward, a phenomenon aligned to Newton’s third law of motion.
Dr Casey said the wheels being forced in that direction was consistent with acceleration.
Dr Casey said it was possible to link the bolt motion to the force that caused that. He said four steps were involved –
a)first, the bottom of the rear bolts bending forward to the front of the vehicle can only happen if the rear sub-frame is rotated;
b)second, this rotation would have to have been such that the rear sub-frame was rotating about the front bolts;
c)third, to generate tension on the rear bolts, the back of the rear sub-frame would have to rotate downwards and forwards; and
d)fourth, the back of the rear sub-frame rotating downwards and forwards was consistent with the notion that it was the result of the vehicle’s acceleration.
Dr Casey said in paragraph 5.16 of his report that he was unable to find any evidence of a defect, flaw, impact mark or other feature that may have acted as an initiation point. Dr Casey concluded that in the absence of any such initiation point, it was more likely than not that the two nuts fractured via fatigue after they had been subjected to some overstress that started the fatigue process in the first place.
Dr Casey concluded that it was possible that an acceleration force caused the crack to initiate in the first place.
Dr Casey said in paragraph 5.18 of his report that he had never seen this type of failure before on a road-registered sedan, although he said he had seen it on trucks and racing cars. He said the magnitude of the acceleration forces must have been high in order to have generated enough force to cause the two rear nuts to fail. Dr Casey said the nuts failed due to harsh acceleration. He said fatigue was a stepwise mechanism where the crack would step forward a very small amount each time the vehicle was accelerated harshly. Dr Casey said if the harsh acceleration was on a very regular basis then the total time needed to make the nuts fail could have been short. As there was no rust present on the fracture surfaces, Dr Casey concluded that it was more likely than not that the fatigue cracking had not been taking place from a very long time prior to the final failure.
Dr Casey was cross-examined during which he was asked about the striation pattern on the fracture surface. Dr Casey emphasised in his answers to questions put in cross-examination that the directionality of the bending was consistent with acceleration forces. Mr Sowden asked Dr Casey to explain what he said in layman’s terms. In answer,
Dr Casey said the vehicle was accelerated so hard that eventually a small crack started on each of the bolts and then continued to propagate under the same force. Dr Casey was pressed on the subject of the vehicular acceleration. He agreed the vehicle was accelerated in an extreme way and in a harsh way.
Dr Casey disagreed with the theory postulated by Mr Malkoutzis that the initiation of the fatigue could have been caused by driving on a corrugated road. Over several pages of transcript he explained the basis of his disagreement emphasising the rotation of the sub-frame.
Dr Casey also disagreed with the theory introduced by Mr Malkoutzis in their joint report that over-tightening of bolts could have caused the fatigue initiation.
Dr Casey’s cross-examination was conducted as if he was giving evidence in examination-in-chief. Dr Casey elaborated upon his opinions or theories, he was permitted to volunteer ways of denouncing the concept offered by Mr Malkoutzis and in many instances he corrected errors embedded in the cross-examiner’s questioning.
That seemed to me to be a strange way for the cross-examination of a person as qualified as Dr Casey to have been undertaken.
I found Dr Casey to have been an extremely impressive witness.
Closer examination of Mr Govedarica’s evidence
Based on the evidence given by Dr Casey about the
objectively supported physical manifestations observed upon his examination of the vehicle, I carefully assessed several subsequent times the totality of the evidence given by Mr Govedarica, especially his evidence about how he drove the vehicle. I paid particular attention to Dr Casey’s evidence about the rotation of the vehicle’s rear sub-frame having been caused by harsh acceleration. I also paid attention to
Dr Casey’s evidence about the absence of rusting on the bolts and nuts, indicating that fatigue was a recent phenomenon. It struck me that that evidence stood in stark contrast with the evidence of Mr Govedarica that he drove the vehicle “normally”.
Mr Govedarica was asked whether he accelerated the vehicle from a stationary position to a very high speed in a short space of time.
The answer he gave was not credible. I do not accept it. He said
“I don’t think so because I was not paying attention on that”(sic).[33]
Mr Govedarica was pressed on his answer. Mr Miller asked “[y]ou say “I don’t think so””, to which Mr Govedarica said “[l]ike, I – I wasn’t paying attention on that (sic). I was just using it, driving it normally”.[34]
[33] Transcript of Proceedings, 10 May 2016 at p.48.
[34] Ibid.
Mr Govedarica’s answers set out above bordered on the ridiculous.
He said he did not pay attention to whether he accelerated from stationary to a very high speed in a short space of time. Yet molten rubber was found on the inside of the rear-wheel arches. The tyres were bald when the vehicle was first returned to MBAP and had to be replaced. Dr Casey said the directionality of the bending on the rear sub-frame was consistent with acceleration forces. Dr Casey said the vehicle was accelerated so hard that small cracks started on each of the bolts then the cracking continued to propagate under the same force.
Dr Casey agreed with the question put, remarkably under
cross-examination, “[s]o you’re saying that it was accelerated at - in an extreme way, is that right?” to which Dr Casey said “[h]arsh way, yes”.[35] Then, the proposition was emphasised - “[s]o it doesn’t have to be extreme acceleration?” to which Dr Casey said “[i]t would have to be very harsh, yes”.[36]
[35] Transcript of Proceedings, 10 May 2016 at p.88.
[36] Transcript of Proceedings, 10 May 2016 at p.89.
Mr Govedarica’s memory failure on driving the vehicle in a harsh manner indicated to me that he was falsely denying the only explanation reasonably open about the cause of the sub-frame failure.
Mr Malkoutzis’s explanation of prolonged driving over corrugated roads missed the point about the absence of rusting on the bolts that would have been evident had the point any forensic merit.
No direct evidence of cause of sub-frame failure
It must be said that the only person to speak of harsh acceleration was Mr Govedarica. He denied it. Dr Casey gave contradictory evidence. Yet it also must be said that Dr Casey’s evidence, conclusions and theories about the issues in his report as well as his viva voce evidence was an ex post facto construction of events. That construction was a deduction of what, on the balance of probabilities, probably happened rather than what actually happened in fact. Equally, the construction given by Mr Malkoutzis was based on his deduction of certain pieces of information. That said, he admitted to speculating.
In reaching findings of fact, as I must in this case, I am entitled to take into account not only direct evidence of certain things but also I am entitled to take into account the inferences that are to be drawn from certain things.
So far as direct evidence was concerned, it was limited to the physical state of the vehicle prior to the applicant taking possession of the vehicle as well as the physical state of the vehicle in mid-July 2011 upon the applicant returning the vehicle to MBAP. The direct evidence also included Mr Govedarica’s account of his driving of the vehicle while he had possession of it.
Inferences
While no one gave eyewitness evidence of seeing harsh acceleration,
the consequence of harsh acceleration was in evidence, so long as I was permitted in this case to draw the inference that the damaged and distorted sub-frame was due to harsh acceleration. That in turn depended on whether the opinion proffered by Mr Malkoutzis was any more than conjecture and whether the opinion proffered by Dr Casey was any different.
I mean no disrespect to either Mr Malkoutzis or Dr Casey in referring to their opinions as conjecture. That phrase came from the speech to the House of Lords of Lord Robson in Richard Evans & Co Ltd v Astley[37] (“Richard Evans”). His Lordship’s speech was embraced by the High Court of Australia in Bradshaw v McEwans Pty Ltd[38] (“Bradshaw”). There, the High Court famously held as follows –
Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence while the latter you need only circumstances raising a more probable inference in favour of what is alleged.
In questions of this sort where direct proof is not available it is enough if the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture (see per Lord Robson, Richard Evans & Co Ltd v Astley [1911] AC 674 at 687). But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise.[39][37] [1911] AC 674, 687.
[38] (1951) 217 ALR 1.
[39] (1951) 217 ALR 1 at 5.
That passage was later adopted by the High Court in Luxton v Vines[40] (“Luxton”). In that case, the High Court pointed out that the evidence gave rise to no more than conflicting conjecture of equal degrees of probability where no affirmative inference of fault could reasonably be drawn.
[40] (1952) 85 CLR 352.
Inferences from actual facts that are proved are just as much part of the evidence as are those facts themselves. Citing Lord Robson’s speech in Richard Evans, the High Court so held in Holloway v McFeeters[41] (“Holloway”), a case concerning a claim to damages arising from personal injuries the plaintiff sustained in a motor vehicle collision. In that case, the High Court held that it was reasonably open to the jury to find that the death of the deceased was caused wholly or in part by the negligence of the driver of an unidentified vehicle.
[41] (1956) 94 CLR 470.
The 1982 decision of the High Court in Girlock (Sales) Pty Ltd vHurrell[42] (“Girlock”) applied earlier High Court authority in Bradshaw, Holloway and Jones v Dunkel.[43] In Girlock, the High Court held that in civil cases (as is this case) where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference and the circumstances must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is not a mere matter of conjecture.
[42] (1982) 149 CLR 155.
[43] (1959) 101 CLR 298.
The notion of “circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability”[44] was stated about 10 years ago by the High Court in Trustees of the Property of Cummins (a bankrupt) v Cummins.[45] There, the High Court approved of the statements about inferences in Bradshaw, Luxton, Jones
v Dunkel and Girlock. Those authorities were drawn together by Collier J in the context of a takeover in Tinkerbell Enterprises Pty Ltdv Takeovers Panel and Ors.[46][44] (1951) 217 ALR 1 at 5.
[45] (2006) 227 CLR 278.
[46] [2012] FCA 1272.
In slightly more strident terms but in a manner nevertheless impeccably reasoned, Justice Pagone more recently put the matter in the following terms in J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd[47] (“Vaughan Super”) –
Inferences require facts from which an inference is capable of being drawn. That requires that the facts relied upon bear probatively upon those inferences which are sought to be drawn.[48]
[47] [2014] FCA 581.
[48] [2014] FCA 581 at [19].
A court must not draw an inference where it is but a choice among rival conjectures. Justice Wigney of the Federal Court of Australia so held in in The Matter Of Petrolink Pty Ltd, Re; Smith v Bone.[49] A court must not rely on circumstances that do no more than give rise to conflicting inferences of equal degrees of probability. The Federal Court of Australia has said as much in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (ACCC).[50]
[49] [2014] FCA 1024 at [17].
[50] (2007) 162 FCR 466.
In Lithgow City Council v Jackson,[51] Crennan J of the High Court held that the inferential process may fall short of certainty but a court is not authorised to choose between guesses, even on the ground that one guess seems more likely than another. A similar proposition was upheld by the Full Court of the Federal Court of Australia in Australian Competition and Consumer Commission v Metcash Trading Ltd.[52] Those authorities and others were surveyed by the Full Court of the Federal Court of Australia in Ashby v Slipper.[53]
[51] (2011) 244 CLR 352 at [94].
[52] (2011) 198 FCR 297 at [31].
[53] [2014] FCAFC 15 at [71]–[78].
Among the more important matters arising from that review of the authorities bearing upon inferences are -
a)inferences from actual facts that are proved are just as much part of the evidence as are those facts themselves (Holloway);
b)
if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought,
then though the conclusion may fall short of certainty, it is not to be regarded as mere conjecture or surmise (Richard Evans);
c)it is enough if the circumstances appearing in evidence give rise to a reasonable and direct inference (Girlock); and
d)
a court is not authorised to choose between guesses, even on the ground that one guess seems more likely than another
(Lithgow City Council).
Applying those principles to the facts of this case, I must first examine the evidence on which any inferences are to be drawn.
Dr Casey’s evidence of the examination of the rear sub-frame was compelling, especially in relation to the rotation of the frame and the consequences of that rotation on the bolts and nuts. I have accepted his version on point without reservation. Another fact which I have accepted and upon which I have proceeded was the presence of rubber on the inside of the rear wheel arches. Another fact was the existence of bald tyres on the vehicle brought to MBAP on the first occasion.
Those three pieces of evidence were largely accepted by the applicant. At least, no cross-examination was directed to challenging those matters. Mr Govedarica himself led evidence that he paid for replacement tyres so the baldness of the tyres requiring replacement was an accepted fact. The question then became what caused the –
a)rear sub-frame to rotate;
b)tyres to be bald given that the tread was of acceptable depth when the vehicle was delivered to the applicant; and
c)the presence of rubber on the inside of the wheel arches.
In my view, the cause of each of those three factual physical phenomena was, as Dr Casey said, harsh acceleration. To my mind, reaching such conclusion is very far from guessing at conflicting conjecture. No conjecture is involved in reaching that conclusion.
For that matter, such a conclusion is the result of the application of a reasonable and definite inference of the type mentioned in Girlock.
To use the wording of Justice Pagone in Vaughan Super, the facts relied on bear probatively on the inferences to be drawn. Expressed slightly differently, it can be properly inferred that the presence of rubber on the wheel arches, the bald tyres and the rotation of the sub-frame with associated fracturing of the sub-floor nuts was caused by harsh acceleration. Each of those physical facts was logically and probatively explained by harsh acceleration. Mr Govedarica did not need to agree to those propositions put to him on those three issues before the inferences could be drawn.
I am willing to proceed on the inferred basis that Mr Govedarica drove the vehicle in a manner that involved harsh acceleration.
On the balance of probabilities, I find that such harsh acceleration caused or propagated fractures to the rear nuts on the sub-frame.
Once fracturing became manifest, continued harsh acceleration of the vehicle further propagated the fracturing to the point that the rear
sub-frame failed.
Based on the foregoing construction of the lay and expert evidence,
I find that the vehicle’s suspension failed by reason of harsh acceleration while the vehicle was in the possession of the applicant, its servants and agents.
Embedded in the applicant’s contention was the proposition that the vehicle was a high-performance vehicle, well capable of withstanding the forces generated by driving the vehicle in the manner a
high-performance vehicle should have been driven. While superficially attractive, that submission overlooked the fact that the vehicle was nonetheless a road sedan. It was not a racing vehicle. As Dr Casey said,
the vehicle was capable of acceleration but it was not necessary for there to have been an extraordinary level of acceleration, nor even extreme acceleration, before very harsh acceleration caused the vehicle’s sub-frame to fail. In addition, the fact of the vehicle being a
high-performance vehicle did not mean its driver could drive it to the point of failure expecting the manufacturer or vendors to meet the financial consequences of driving the vehicle to point of failure.
The ACL
The applicant claimed in this proceeding that MBAP breached the statutory guarantee incorporated into the sale of the vehicle pursuant to s.54 of the ACL. The relevant statutory guarantee on which the applicant relied was one as to fitness for any disclosed purpose, as was provided for by s.55 of the ACL.
By way of defence, MBAP and MBFS contended that the damage to the vehicle occurred after the vehicle was supplied to the applicant and the damage arose from the applicant’s misuse of the vehicle.
The respondents relied on s.54(3)(b) and (c) of the ACL. The applicant claimed for the reduction in the value of the vehicle, alternatively the cost of the repair of the vehicle as well as for consequential loss.
The applicant contended that the onus was on the respondents to make out the statutory defence on the balance of probabilities. That much was common ground.
On behalf of the respondents, Mr Miller submitted that the key issue in this case was whether the applicant’s use of the vehicle was abnormal or amounted to misuse.
In my judgment the applicant’s use of the vehicle amounted to misuse and was abnormal. I say that for several reasons –
a)
first, as a matter of common human experience, vehicle owners
(rally or racing drivers aside) rarely, if ever, drive their vehicles in such manner that the tyres become so hot as to disintegrate and to propel molten pieces of rubber tyre to the inside of the wheel arch, as happened in this case;
b)second, the vehicle was in a perfectly acceptable state when sold, as Mr Kelly and Mr Graetz said in their evidence;
c)third, the vehicle passed roadworthiness testing prior to its sale to the applicant;
d)fourth, the vehicle’s tyres were intact when sold, then they were bald when the vehicle was first returned after the vehicle had been driven for relatively few kilometres by the applicant’s servants or agents; and
e)fifth, Mr Govedarica’s explanation of his use of the vehicle and the manner of his driving was unsatisfactory, although he bore no onus of proof for the purposes of the reverse onus.
I am satisfied that the vehicle, as sold, functioned perfectly satisfactorily and was sold in good order and condition. I am also satisfied the vehicle was damaged by harsh driving while in the possession of the applicant. In my judgment, MBAP made out the statutory defences.
I dismiss the applicant’s claim against MBAP.
The claim against Mr Govedarica and the guarantors
MBFS brought a claim against the applicant, Mr Govedarica and a man called Mr Milivoje Govedarica in which it sought payment of money borrowed by the applicant and guaranteed by Mr Govedarica and
Mr M Govedarica.[54]
[54] Notice of Cross-Claim filed 30 July 2013.
All financing documentation went into evidence without protest including the guarantees given by Mr Govedarica and
Mr M Govedarica. On behalf of MBFS, Ms Bronwyn Mary Wilkie gave evidence in her capacity as manager of collections and loss recoveries for MBFS. Ms Wilkie gave evidence that when the shortfall amount reached $91,718.78, the loan was closed and all interest charges were frozen at that point in time. She said that was the total amount owing on the loan in this case. MBFS proved to my satisfaction that a notice of default had been served upon the applicant,
Mr Govedarica and Mr M Govedarica and that each had defaulted in meeting or otherwise complying with its or his obligations under the various finance agreements between it and him and MBFS.
In my judgment, MBFS is entitled to an order that judgment in the monetary sum of $91,718.78 be entered in favour of MBFS against
Mr Govedarica and Mr M Govedarica.
I certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of Judge Wilson
Date: 11 August 2016
Exhibit 2, Joint Expert Report prepared by Mr William Malkoutzis and Dr Robert Casey dated
19 August 2015.
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