Boattime Pty Ltd (ACN 056 554 593) v Westrac Pty Ltd (ACN 009 342 572)
[2013] NSWDC 165
•06 September 2013
District Court
New South Wales
Medium Neutral Citation: Boattime Pty Ltd (ACN 056 554 593) v Westrac Pty Ltd (ACN 009 342 572) [2013] NSWDC 165 Hearing dates: 21 May 2013 - 23 May 2013 Decision date: 06 September 2013 Jurisdiction: Civil Before: Mahony SC DCJ Decision: Verdict for the defendant; for orders see [81]
Catchwords: Breach of contract; misleading and deceptive conduct; unconscionable conduct; misrepresentation. Legislation Cited: Australian Consumer Law
Contracts Review Act 1980
Trade Practices Act 1974 (Cth)
Fair Trading Act 1987Cases Cited: Wright Prospecting Pty Limited v Hammersley Iron Pty Limited [2013] NSWSC 536
Western Export Services Inc v Jireh International Pty Limited (2011) 86 ALJR 1
Codelfa Construction Pty Limited v State Rail Authority (NSW) (1982) 149 CLR 337
Watson v Foxman (1995) 49 NSWLR 315
Helton v Allen (1940) 63 CLR 691
Carrier v Georges [2013] NSWSC 401
Briginshaw v Briginshaw (1938) 60 CLR 336Category: Principal judgment Parties: Boattime Pty Ltd - Plaintiff
Westrac Pty Ltd - DefendantRepresentation: J Ryan - Plaintiff
D J Price - Defendant
Walsh & Blair Lawyers
Curwoods Lawyers
File Number(s): 12/181894 Publication restriction: Nil
Judgment
The Plaintiff's Claim
By an Amended Statement of Claim, the plaintiff claims the sum of $76,583.13 for repairs to a truck purchased by it from the defendant on or about 2 September 2011. The truck was a second-hand caterpillar 730 articulated dump truck, and was a year 2001 model. It was therefore 10 years old at the time of the purchase.
Mr Brian Burgess, a director of the plaintiff company, attended the defendant's premises in Wagga Wagga in August 2011. He spoke to a salesman, Mr Robert Mackay, and told him that the plaintiff needed a fairly late model dump truck in good condition. Mr Mackay told him that he had a truck coming in which was currently on the wharf. Some weeks later, Mr Burgess took possession of the truck on a trial basis. During the trial period Mr Burgess alleged there were a number of problems with the truck. A warning light for the transmission, situated on the dash, kept coming on and the defendant sent mechanics to the plaintiff's premises to fix the problem.
On 2 September 2011 Mr Burgess, on behalf of the plaintiff, signed a contract for sale of the truck. The purchase price was $130,000 plus GST. The contract for sale had attached to it terms and conditions, one of which was in the following terms:
"12 No Used Equipment Warranty
For the avoidance of any doubt, all used equipment is sold by the company to the customer on an "as is where is" basis. This means that the company makes no representations about the state of the equipment it sells to the customer. The company has not warranted that it would be free from defects and material and workmanship. This is normal industry practice and the customer specifically acknowledges acceptance of this term at the time of purchasing the used equipment."
There was no statutory warranty applicable to the vehicle.
The purchase price was not paid by the plaintiff on the date the contract was signed. The plaintiff continued to use the vehicle and various problems with the vehicle were fixed at the defendant's expense.
On or about 28 September 2011 a telephone conversation took place between Mr Burgess and the State Used Equipment Manager of the defendant, Mr Stephen Russell. The content of that phone conversation is the central factual dispute in the case. The plaintiff claims that during that conversation Mr Burgess informed Mr Russell that there were continuing problems with the transmission, and Mr Russell said to him:
"I will fix the truck to your satisfaction. I will make sure that everything is right with the machine."
This is the representation relied on by the plaintiff as the basis on which the terms of the contract were varied, and as the basis of its statutory claims. The following day the plaintiff paid the purchase price in full.
Some time after 25 January 2012 the defendant became aware that there was a problem with the transmission in the truck. Repairs were carried out and those repairs were paid for by the plaintiff.
Later, there were further problems with the transmission. On 5 April 2012 a quotation was prepared by the defendant for the repairs required to be made to the truck. It came to $79,693.45.
A conversation took place at the defendant's premises at that time between Mr Burgess and the Manager, Mr Peter Putland, in which Mr Burgess advised that the defendant would have to pay for the repair in that it was supposed to fix the problem when he purchased the truck. He stated that it was the same problem. After the repairs were carried out, Mr Burgess was informed by Mr Putland that he would have to pay for the repairs or the truck would not be released to him, to which Mr Burgess responded that Mr Russell had told him that if he paid for the machine that the defendant would fix all the problems with it. Subsequently, Mr Burgess paid for the repair and the truck has since operated in good working order.
The plaintiff's claim is brought on the following bases:
(1) As damages for breach of contract.
(2) As damages pursuant to s 236 of the Australian Consumer Law ("ACL") on the basis that the defendant's conduct, namely, the representations made by Mr Russell prior to the purchase price being paid, was conduct that was misleading or deceptive or likely to mislead or deceive and/or was conduct that was unconscionable in breach of ss 18 and 22 of the ACL; and
(3) In breach of ss 54 and 55 of the ACL the truck was not fit for the purpose it was supplied, nor was it of acceptable quality.
(4) That the defendant misrepresented to the plaintiff that it would fix the subject vehicle to its satisfaction and make sure that everything was right with the machine to induce the plaintiff to purchase the truck.
The Defence
By its Amended Defence, the defendant denies that the representation alleged by the plaintiff was made. The defendant relies on Clause 12 of the contract for sale to submit that the plaintiff purchased the truck on a "as is where is" basis with no warranty, and that the repairs, which took place some nine months following the purchase, were the plaintiff's responsibility. No breach of contract had been established, there was no warranty attached to the contract and the plaintiff had brought no claim for review pursuant to the Contracts Review Act 1980.
In respect of the plaintiff's second cause of action pursuant to the ACL, the defendant disputed the factual basis for that claim, and submitted that, in any event, the relief provided pursuant to s 22 of the ACL did not apply to corporations and therefore the claim must fail. Alternatively, it submitted that the defendant was not vicariously liable for the conduct of Mr Russell if his conduct was held to be misleading and deceptive. On the same basis, the claim for relief for unconscionable conduct could not be upheld.
In respect of the third basis of the plaintiff's claim, the defendant submitted that the representation pleaded in paragraph 20(a) of the Amended Statement of Claim was not established on the evidence, was in any event too wide and therefore the claim must fail.
Evidence Relating to the Alleged Representations
The evidence relating to the representations upon which the plaintiff relies in respect of the second and third bases for its claim is of fairly narrow compass. Notwithstanding that Mr Burgess had signed the contract on 2 September 2011, he did not pay for it but continued to have use of the vehicle. His statement, exhibit D, included evidence that during that time the vehicle's transmission light kept coming on, and that the defendant would send mechanics down to his property to test it. On or about 28 September 2011 Mr Burgess received a phone call from the NSW State Used Equipment Manager of the defendant, Mr Stephen Russell. Mr Burgess gave evidence that he was in his own car with his son, Kane Burgess, when he took the phone call on loud speaker. His evidence was that Mr Russell said:
"Look, you will have to pay for that vehicle."
Mr Burgess said:
"We are having a lot of problems with the machine, the transmission light is still coming on."
Mr Russell said:
"Don't worry about the problems you are having, I will fix the vehicle to your satisfaction. I will make sure that everything is alright with the machine. However, you must pay for it."
Mr Burgess' evidence is that on that basis he paid for the machine on 28 September 2011.
In cross-examination, Counsel for the defendant put to Mr Burgess that the conversation included the following:
"Q. Brian, it's my understanding that you've got the 730 Caterpillar that you brought from us, but you haven't yet paid for it?"
A.That's correct.
Q.I please need you to pay the money for the machine.
A.That's right.
Q.The conversation continued with you saying words to the effect, 'Yes that's right Steve, but the problem is that there's a leak in the fan motor of the air conditioning at the front of the truck?'
A.No, that's not correct at all.
Q.I put it to you, Mr Burgess, the same conversation continued to the effect that Mr Russell saying, 'Brian, that doesn't change the fact that you need to pay for the truck, but I'll call Peter Putland at the Wagga branch right now and I'll arrange for him to send someone to you this afternoon or first thing tomorrow to take a look at the air conditioning?'
A. In part that's correct, in other parts that's incorrect."
It was put that Mr Burgess then said:
"Thanks Steve I'll pay the money straight away."
Mr Burgess said that this was correct but after a different conversation.
It was then put to Mr Burgess in cross-examination that on the same day Mr Stephen Russell called Mr Burgess again and said:
"Brian, it's Steve Russell calling again. I've just spoken to Peter Putland at the Wagga branch and he's assured me that he'll send someone to you this afternoon to take a look at the aircon."
A: In part that's correct."
It was then put to Mr Burgess that he said:
"Thanks for that, I'll make the payment later today."
Mr Burgess agreed with that proposition, and also that Mr Russell had said to him, "Thanks Brian that's great".
It was further put to Mr Burgess that on or about 29 September 2011 a third conversation took place between him and Mr Stephen Russell in which Mr Russell said:
"Brian it's Stephen Russell from Westrac. I see you have made your payment for the truck, thanks for that.
Mr Burgess agreed that this telephone call took place and those words were spoken.
It was then put that he said:
"No worries, the service bloke came yesterday and fixed the problem with the aircon. All is good with the truck now."
Mr Burgess denied that part of the conversation.
It was put to him that Mr Russell then said
"Good to hear, thanks again."
Mr Burgess denied that that was said.
In re-examination, Mr Burgess was asked, in respect of the first part of the conversation set out in paragraph 17 above, what was the correct version. He gave the following evidence:
"A: The correct is Steve Russell rang me. He said, 'Brian?' and I said 'Yes'. He then said, 'Brian, you haven't paid for the dump truck that you have got on trial and we need to be paid for it'. I said to Steve, 'That's fine, the trouble being there are some ongoing issues with this truck that I spoke to Steve Mackay about and those issues were fault lights coming on intermittently, air-conditioning not working. Oil leaks that were said to be going to be fixed hadn't even been touched. The actual oil leak that he was referring to was an oil leak in the front of the engine, the actual fan is in the back of the engine for a start. So there were different issues there that were the problem, for a start, plus the fault lights were all intermittently coming on and that was fault lights for air intake.'
His Honour: Q: You said there were fault lights coming on intermittently?
A: That's correct Your Honour.
Q: Yes.
A: And that I wasn't prepared to pay for the truck until these issues were addressed and fixed. He then went on to say, he asked me a little bit about the fault lights and he gave me the opinion. I, in all honesty, I said, 'I don't know what it is" ...
Q: First please tell me words to the effect of what Mr Russell said to you?
A: Right, after I said that I wasn't prepared to pay for it until he fixed the ongoing issues.
Q: Yes. What did Mr Russell say?
A: He asked me what the ongoing issues were and that's when I told him what they were. At that stage he agreed to fix them to my satisfaction. His words were 'I will fix it so you are happy with it and it is to your satisfaction'. That is when this conversation virtually finished, on the first conversation. He did say, 'Yes, I will ring you back'."
Mr Burgess was also asked what the correct version was in respect of the last proposition outlined in paragraph 17 above. When asked what the correct version was he said:
"A: The correct version is he said that he would ring Peter and fix all of the problems, not just the air-conditioning because there was a lot more than just the air-conditioning at stake."
In respect of the conversation set out in paragraph 19 above, Mr Burgess was asked what was the correct version of that conversation and he gave the following evidence:
"A: The correct version is he rang back and he said Peter was going to send someone down to fix the air-conditioning and the ongoing issues we were having with the truck. They couldn't possibly fix them all in one day, but he was going to get started on fixing these issues we were having with them.
Q: Were those issues, apart from the air-conditioning, specifically identified in that conversation?
A: Yes, they were, not specifically, just the issues we spoke of previous, in the previous phone call."
In respect of the conversation set out in paragraph 23 above, Mr Burgess was asked what was the correct version of that conversation and he gave the following evidence:
"A: He thanked me for paying the money, the $100,000 odd into his account and he said that the issues will be addressed over the next few days because it is impossible to fix that many things in half a day or a day.
Q: I'm asking you about that part of the conversation which deals with what you said. It is alleged that you said, 'All is good with the truck now' and you disagree with that?
A: Yes I did. I never said that at all, no.
Q: Do you have a recollection of what you did say?
A: Only to the point where the issues were still ongoing. I said to him, 'Well as long as I get them all fixed I will be happy'. His return was 'Yes, no it'll be alright, we'll fix it'."
In its case in Reply, the plaintiff also relied on the evidence of Kane Burgess, who swore an affidavit on 20 May 2013. In that affidavit he deposed to remembering travelling with his father in his ute in about September 2011. During that journey he deposed to a telephone conversation that he overheard on loud speaker between his father and a person from Westrac. The conversation contained the following:
Brian Burgess: "There are problems with the transmission. You have to fix it so that it's right. You told me you would."
Person from Westrac: "We'll get it fixed for you. Bring it in here. You've got to pay for the truck before it gets fixed."
Mr Stephen Russell gave evidence by way of a witness statement which became exhibit 4 in the proceedings. The relevant conversations are contained in paragraphs 12, 14 and 15 of that statement in the following terms:
"12. On 28 September 2011:
Me: Hi Brian. My name is Steve Russell. I'm the used equipment manager at Westrac.
Brian: Hello Steve. How can I help you?
Me: Brian, it's my understanding that you've got the 730 caterpillar that you bought from us, but you haven't yet paid for it. If that's correct, I please need you to pay the money for the machine.
Brian: Yeah that's right Steve, but the problem is that there's a leak in the fan motor of the air conditioning at the front of the truck.
Me: Brian that doesn't change the fact that you need to pay for the truck, but I'll call Peter Putland at the Wagga branch right now and I'll arrange for him to send someone to you this afternoon or first thing tomorrow to take a look at the air conditioning.
Brian: Thanks Steve. I'll pay the money straight away.
Me: Thanks Brian. I'll call the Wagga guys now and call you right back.
14. A second conversation on the same day:
Me: Brian it's Steve Russell calling again. I've just spoken to Pete Putland at the Wagga branch, and he's assured me that he'll send someone to you this afternoon to take a look at the aircon.
Brian: Thanks for that. I'll make the payment later today.
Me: Thanks Brian. That's great.
15. On the next day, 29 September 2011:
Me: Brian It's Steve Russell calling from Westrac. I see that you've made payment for the truck. Thanks for that.
Brian: No worries. The service bloke came yesterday and fixed the problem with the aircon. All is good with the truck now.
Me: Good to hear. Thanks again."
After the first of those conversations, Mr Russell deposed that he had called Peter Putland at Westrac's Wagga branch and had a conversation to the following effect:
"Me: Peter, it's Steve Russell here. Apparently there's a problem with the air conditioning on the 730 that Brian Burgess has. I please need you to send someone out to look at that aircon this afternoon.
Peter: No worries Steve. I'll send someone out to Brian this afternoon.
Me: Thanks Peter. That's great."
That aspect of Mr Russell's evidence was corroborated by Mr Peter Putland in paragraph 18 of his witness statement, exhibit 3.
Mr Stephen Russell was challenged in cross-examination as to his conversations with Mr Burgess on or about 28 September 2011. It was put to him that Mr Burgess identified another problem, namely, that the transmission light was coming on, which Mr Russell denied. He adhered to his evidence that the second conversation he had with Mr Burgess was limited to air-conditioning.
It was put to Mr Russell that he was giving his evidence two years after the event without the benefit of refreshing his memory from any file note that he made contemporaneously of the conversation. At that time he gave evidence for the first time that he was sure that he had diary notes of the conversation, that he very rarely had to make that type of phone call and he believed he had a written note of it. It was put to him that his recollection was incorrect both in respect of the diary note and the conversation, which he denied.
Kane Burgess was cross-examined on his statement in the plaintiff's case in reply (exhibit E) on the basis first, that he never overheard the conversation in the car, and secondly that if he did, he never heard the word "transmission" spoken. He denied both propositions.
The Balance of the Evidence Relied on by the Defendant
Mr Cameron Stuart was the Used Equipment Co-ordinator for Westrac. His statement was exhibit 1 and included evidence that in 2011, a new truck of the type the subject of the proceedings would have cost between $450,000 to $500,000 inclusive of GST approximately. He had examined the records of the defendant regarding the sale of the subject truck, and the repairs undertaken on that truck by the defendant in 2011 and 2012. The vehicle had repairs carried out on it by Westrac on 24 August 2011, prior to delivery on trial to the plaintiff. The contract for sale was signed on or about 2 September 2011 for a total of $143,000 inclusive of GST. Mr Stuart had sent an email to the Wagga branch of the defendant on 5 September 2011 listing a number of work items that the salesman, Robert Mackay, had requested in respect of the vehicle (annexure F to exhibit 1). None of the items listed related to the truck's transmission.
Mr Stuart's statement annexed seven service reports dated 9 September 2011 which related to work carried out at the defendant's expense on the truck. None of that work related to the truck's transmission. As at September 2011 the truck was approximately ten years old and had done approximately 10,216 hours of operation.
On 29 September 2011 the defendant issued a tax invoice/adjustment note (annexure P to exhibit 1) which contained the following:
"This machine is sold as is with all faults and defects, if any, that the equipment may contain and with no warranties expressed or implied, that the equipment may contain and with no warranties expressed or implied the purchase acknowledges that it has inspected all of the equipment before the purchase or has waived such right of inspection. No guarantees are given as to the accuracy of the machine meter readings or by service and repair history as supplied by previous owners."
That invoice attached terms and conditions of sale relating to used equipment.
Annexure Q to Mr Stuart's statement was a service report dated 25 January 2012. It was the first record of work being carried out on the truck's transmission, for which an invoice was raised on 21 March 2012 in the sum of $2,790.58. The repairs the subject of these proceedings are referred to in annexure S to exhibit 1, in a quotation dated 5 April 2012 in the sum of $79,693.54. The work actually carried out was invoiced on 29 May 2012 in the sum of $76,583.10.
Mr Stuart's evidence was that there was no document in the defendant's records to indicate that the defendant had been notified of any problem with the truck's transmission until 25 January 2012, four months after the plaintiff had purchased the truck.
Mr Stuart was cross-examined about missing work sheets completed by mechanics who carried out work on the truck whilst it was with the plaintiff on a trial basis. He had no personal knowledge of the number of complaints that Mr Burgess had made to the Wagga branch of the defendant, nor any knowledge of the subject matter of any complaints.
Mr Robert Mackay was the sales representative of the defendant who sold the truck to the plaintiff. His statement was exhibit 2, and annexed a number of the defendant's business records. They confirmed the release of the vehicle on 24 August 2011 on trial to the plaintiff and the sale of the vehicle on 2 September 2011. Exhibit 2 annexed also the same service reports that were annexed to exhibit 1 dated 9 September 2011.
In response to the evidence of Mr Brian Burgess (exhibit D), Mr Mackay disagreed with paragraphs 8 and 9 therein. He had no recollection of being notified by Mr Burgess of any problems with the truck's transmission prior to January 2012. Further, none of the defendant's business records indicated that there was a problem with the truck's transmission until 25 January 2012. Mr Mackay referred to an earlier invoice dated 21 March 2012 which was paid by the plaintiff prior to the invoice dated 29 May 2012, the subject of these proceedings.
In cross-examination Mr Mackay, who had previously worked as a diesel mechanic, gave evidence that he would not recommend that a mechanic disconnect the wiring to a transmission and warning light on the dash as the operator may then have no warning about a problem with the transmission. However, he had no liaison with any mechanics who attended the plaintiff's premises to work on the truck. The matters that Mr Burgess complained about according to Mr Mackay concerning the truck, were a leaking fan hub, a leaking brake hose, coolant leaking from the machine and various guards and panels that were either damaged or missing. Those complaints were made in two or three conversations in August or September 2011, and there was no file note or diary entry in relation to them. His evidence was that he had no conversations with Mr Burgess about a transmission light in the relevant trial period.
Whilst Mr Mackay agreed in cross-examination that he had a number of telephone conversations with Mr Burgess after the truck was delivered, he had no recollection of having a conversation with him about the transmission light. He was asked about whether a leaking steering hose problem was documented, but it was not. He was also asked about the use of computers as a diagnostic tool on such vehicles, and agreed that a computer could be used to diagnose a transmission problem with the truck.
Peter Putland was the branch manager of the parts and services division of the defendant in Wagga. His statement became exhibit 3 and annexed the same documents from the defendant's business records as were annexed to the exhibit 1 and 2. As outlined above, he corroborated the evidence of Mr Russell to the extent that he had a conversation by telephone with Mr Russell in late September 2011 about a problem with the air-conditioning on the truck and that he had undertaken to arrange to send a mechanic out that day to look at it.
He denied that Mr Burgess had ever advised him that the transmission problem that had been repaired in April 2012 had been present in the truck at the time of its purchase in September 2011. He further denied that Mr Burgess ever asserted to him that Mr Russell had told Mr Burgess that the defendant would fix all of the problems with the truck.
In cross-examination Mr Putland gave evidence that there were approximately 28 employees of the defendant at its Wagga premises, including a number of mechanics who recorded their work by way of timesheets. Mr Putland was also cross-examined on a number of work orders and in particular work carried out involving oil leaks. He gave the following evidence:
"Q: It would be reasonable to assume that that included the transmission oil, wouldn't it?
A: Yes.
Q: So at an early state it's reasonable to assume that workmen of your company had involvement with the transmission of the vehicle?
A: Yes.
Q: It's entirely possible, given the history of documentation in this matter, that there are other timesheets of workers that you haven't found?
A: We have provided every timesheet that is in reference to these work orders yesterday."
Mr Russell was cross-examined about the expression "as is where is":
"Q: Tell me, if you can, Mr Russell, in your industry, what is meant by the expression "as is where is"?
A: Basically, as it is. Like there's no warranty implied. The truck or the piece of equipment is sold as it stands there, as it is, as you inspected it, as you see it, as you - probably the best way to describe it.
Q: Here the truck was not sold to Mr Burgess on that basis though, was it?
A: Yes it was."
The Plaintiff's Submissions
The plaintiff submitted that the contract for sale of the truck was partly written and partly oral. The written contract was executed on 2 September 2011 and the purchase price was paid on 28 September 2011. It was submitted that the parties, by oral agreement evidenced by their conduct, agreed to vary the term for payment in Clause 5.1 of the Contract.
The plaintiff submitted that the parties further agreed that the defendant would repair defects, at its own cost, which had been brought to its attention by the plaintiff prior to payment of the purchase price. For this contention, the plaintiff relies on the evidence as to the telephone conversations between Mr Brian Burgess and Mr Stephen Russell in late September 2011.
The plaintiff submitted that the defendant carried out work on the truck after the contract had been executed on 2 September 2011, and that that work was carried out by mechanics at the plaintiff's premises. It included work of a diagnostic nature carried out by computer, and the evidence established that one of the mechanics disconnected a warning light referrable to the transmission. It was submitted that that action may have masked transmission problems with the truck.
The plaintiff submitted that the transmission was an ongoing problem almost from the time of delivery and that based on the evidence the Court would readily conclude "that the transmission of the truck was defective for a continuous period from soon after delivery in late August or early September 2011 until the transmission was replaced by the defendant in April or May 2012".
Further, the plaintiff submitted that Mr Russell, on behalf of the defendant agreed that the defendant would rectify the transmission problem at its own expense, relying on the evidence of Mr Brian Burgess and Kane Burgess outlined above. There was no reason to doubt their evidence as there was clear evidence of ongoing transmission problems prior to that time and no dispute that Mr Russell agreed to remedy a problem with the air-conditioning and that work was undertaken. This, it was submitted, was entirely consistent with the conduct of the defendant in carrying out repairs at its own expense.
It was submitted that Mr Russell's lack of recollection about the transmission light is explicable either by the passage of time or his subsequent realisation that the cost of the repairs was significant.
In respect of the claim under the ACL, the conduct complained of said to be in breach of s 18 was the representation alleged to be made by Mr Russell to Mr Burgess in the telephone conversations outlined above. The breach was the defendant's refusal to bear the cost of the repairs to the truck. It was submitted that the conduct of Mr Russell, on behalf of the defendant, was misleading in that it led to Mr Burgess promptly paying the purchase price on an understanding that the known defects would be repaired at the defendant's cost. It was further submitted "that the defendant reneged on the agreement is evidence in itself that the defendant's conduct was misleading and deceptive".
It was further submitted that the defendant's conduct was unconscionable within the meaning of s 22 of the ACL, and the plaintiff suffered loss when the defendant refused to release the truck after it was repaired unless the plaintiff paid for those repairs. On that basis, the plaintiff was entitled to damages under s 236 of the ACL. Similarly, the plaintiff asserted that the same representation made by Mr Russell amounted to an actionable misrepresentation giving rise to an entitlement in the plaintiff to recover damages.
The Defendant's Submissions
The defendant relies upon the Amended Defence filed on 21 May 2013. The defendant submits that the contract for sale of the truck dated 2 September 2011 was subject to a number of important terms and conditions which were also appended to the tax invoice issued by the defendant to the plaintiff on 5 September 2011. The purchase price of $143,000, inclusive of GST, was paid on 28 September 2011.
The defendant submits that the terms of the written contract were unambiguous and the parties are bound by them. The truck was sold without the defendant making any warranty or representation as to its condition, on an "as is where is" basis.
The defendant submits that there is no contemporaneous documentary evidence of any problem with the transmission in or about September 2011. Even if there was, there was no contractual obligation on the defendant to pay for the costs occasioned by the repair of any transmission problem that occurred in or from January 2012.
The content of the various conversations outlined above between Mr Burgess and Mr Russell are disputed. The defendant's case is that there was no breach of contract and therefore the plaintiff's claim for damages for such breach must fail. Further, that the plaintiff has not made out its claims pursuant to the ACL as the Court could not be satisfied that the alleged representations were made, let alone that they were misleading and deceptive or amounted to an actionable misrepresentation, or unconscionable conduct. These submissions were supplemented by detailed written submissions.
Issues to be Determined
The issues to be determined in this matter are as follows:
(1) Whether the written contract between the parties dated 2 September 2011 contained the whole of the terms of their agreement or whether or it was varied by subsequent conversations or conduct.
(2) Whether the plaintiff has established that the defendant breached that contract thereby entitling the plaintiff to damages.
(3) Whether the representations alleged by the plaintiff in paragraph 8 of its Amended Statement of Claim have been established to have been made on the evidence. The alleged representation as pleaded was that Mr Stephen Russell said words to Mr Brian Burgess to the following effect:
"Look I want you to pay for the vehicle. Don't worry about the problems that you are having. I will fix the vehicle to your satisfaction. I will make sure that everything is right with the machine."
(4) If the representation was made, did it amount to misleading or deceptive conduct, or conduct that was unconscionable, so as to give rise to relief pursuant to s 18 and/or s 20 of the ACL.
(5) Whether in the circumstances the truck was fit for the purpose it was supplied and of acceptable quality.
(6) Whether there was an actionable misrepresentation.
Factual Findings
On the whole of the evidence I make the following findings of fact:
(1) As at 24 August 2011 the Caterpillar model 730 truck owned by the defendant was approximately ten years old and had undertaken over 10,000 hours of operation.
(2) At that time, a new vehicle of the same type would cost a purchaser approximately $450,000.
(3) Mr Brian Burgess on behalf of the plaintiff was an experienced business operator of a quarry supplying gravel. As such he had vast experience in the use of earthmoving vehicles and plant and had made enquiries of a salesman at the defendant's Wagga branch for a "fairly late model dump truck in good condition".
(4) The truck was delivered to Mr Burgess on 24 August 2011 on a trial basis.
(5) During that trial period, the truck had work carried out on it by mechanics employed by the defendant. That work included work carried out on various warning lights on the dash of the truck.
(6) On 2 September 2011 Mr Burgess on behalf of the plaintiff executed the contract for sale of the truck, subject to terms and conditions which were annexed to the contract. Those terms included Clause 12 which is outlined in paragraph 3 above.
(7) On 5 September 2011 the defendant issued an equipment tax invoice to the plaintiff for the purchase price which annexed the same terms and conditions of sale.
(8) On the same date the defendant's used equipment coordinator, Mr Cameron Stuart, confirmed by email that the machine had been sold subject to certain work being carried out. None of the items listed in Mr Stuart's email related to the truck's transmission.
(9) A number of service reports were issued by the defendant in respect of work carried out on the machine up until 9 September 2011. None of that work related to the truck's transmission according to those documents.
(10) On 28 September 2011 certain conversations took place between Mr Brian Burgess on behalf of the plaintiff and Mr Stephen Russell on behalf of the defendant. The content of those conversations is disputed and that dispute is dealt with below.
(11) On 29 September 2011 Mr Burgess paid the purchase price and the defendant issued an equipment tax invoice/adjustment note which contained the notation referred to in paragraph 38 above.
(12) It is not disputed that the first written evidence of work being carried out on the truck's transmission was contained in a service report dated 25 January 2012. An invoice was raised on 21 March 2012 for that work in the sum of $2,790.58 which was paid by the plaintiff
(13) The plaintiff had ongoing problems with the truck, and on 5 April 2012 obtained a quotation for further work involving the truck's transmission. That work was carried out and invoiced on 29 May 2012 in the sum of $76,583.10, the amount in dispute in these proceedings.
The Alleged Representation
The central factual dispute in this matter is whether the representation alleged to have been made by Mr Stephen Russell as pleaded in paragraph 8 of the Amended Statement of Claim was in fact made. The plaintiff relies on the statement of Mr Burgess set out in paragraph 15 above, attributing those words to Mr Russell.
Mr Russell has given a different version of that conversation which is referred to in paragraph 17 above. Neither witness acceded to the other's version being correct.
The plaintiff contends that Mr Russell's version is corroborated by the evidence of Mr Kane Burgess, his son, who gave evidence that he overheard the telephone conversation on a loud speaker in the vehicle being driven by his father at the time. His version is referred to in paragraph 29 above. Mr Kane Burgess' evidence of the conversation is in slightly different terms to that of his father.
The Contract
In Wright Prospecting Pty Limited v Hammersley Iron Pty Limited [2013] NSWSC 536 Hammerschlag J said in respect of the meaning of words used in a commercial contract:
"[90] If the words used are unambiguous, the Court must give effect to them. A Court is not justified in disregarding unambiguous language to guide a contract to a more commercial and businesslike operation: Western Export Services Inc v Jireh International Pty Limited [2011] HCA 45; (2011) 86 ALJR 1.
[91] If words used in a contract are ambiguous, the Court can, in determining the objective intention of the parties, have regard to the surrounding circumstances which were known to them at the time of the contract: Codelfa Construction Pty Limited v State Rail Authority (NSW) (1982) 149 CLR 337 at 352.
The words of the contract here were clear and unambiguous, including Clause 12 of the terms and conditions set out in paragraph 3 above. Those terms and conditions were confirmed by the tax invoice issued by the defendant upon sale of the truck.
The only term that was altered was the term for payment which does not effect the operative provisions of the contract between the parties.
Principles
The plaintiff has the onus of proof that the representation alleged by it contained in the evidence of conversations outlined above was made. The determination of that question is a matter not without difficulty, and in Watson v Foxman (1995) 49 NSWLR 315, McLelland CJ in Eq referred to that difficulty in the following terms at pp 318 - 319:
"Where in civil proceedings, a party alleges that the conduct of another was misleading and deceptive ... it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court:
(1) What the alleged conduct was; and
(2) Circumstances which rendered the conduct misleading.
Where the conduct is a speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all), the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to have been relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word of phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
Each element of the cause of action must be proved to the reasonable satisfaction of the Court, which means that the Court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is 'not ... attained or established independently of the nature and consequence of the fact or facts to be proved' including the 'seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding': Helton v Allen (1940) 63 CLR 691 at 712.
Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as a foundation of causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration ..."
His Honour went on to say (page 319) that these considerations were equally applicable to causes of action based on contract. In applying these principles, in Carrier v Georges [2013] NSWSC 401 Nicholas J said at [27]:
"The requisite 'reasonable satisfaction' should not be produced by 'inexact proofs, indefinite testimony, or indirect inferences' (Briginshaw v Briginshaw (1938) 60 CLR 336 per Dixon J, p 362)."
Determination
The question to be determined here is whether Mr Burgess attended to payment of the purchase price for the truck on 28 September 2011 as a result of Stephen Russell representing to him the words outlined in paragraph 8 of the Amended Statement of Claim as follows:
"Look I want you to pay for the vehicle. Don't worry about the problems that you are having. I will fix the vehicle to your satisfaction. I will make sure that everything is right with the machine."
The plaintiff asserts that that representation was made in the context of Mr Burgess advising Mr Russell that he was not happy with the machine, that there were alarms going off and in particular, the transmission and engine alarms, and unless those problems were fixed, he was not prepared to purchase the vehicle.
Each of the witnesses called on behalf of both parties at trial gave their evidence in a straightforward fashion and no witness was demonstrated to be without credit or to embellish their evidence in any way. In particular, both Mr Brian Burgess and Mr Stephen Russell were impressive witnesses who adhered to their testimony. For that reason, I have paid close regard to what was said by McLelland CJ in Eq in Watson v Foxman, supra. In closely examining the evidence I have therefore had regard to any contemporaneous records or other corroboration.
In applying these principles, I do not accept that the representations as alleged by the plaintiff were in fact made for the following reasons:
(1) That Mr Burgess had signed the contract for sale on behalf of the plaintiff on 2 September 2011.
(2) That despite justifiable criticism being made of the defendant in its failure to comply with a subpoena for production served on it in the proceedings until after the trial had commenced, documents produced by the defendant in respect of the service of the truck prior to 25 January 2012 contained no reference to any work being carried out on the transmission, including the warning lights contained in the vehicle.
(3) Other business records of the defendant company, including the email dated 5 September 2011 listing items of work to be carried out on the vehicle and the Service Reports dated 9 September, did not include any reference to any problem with the transmission.
(4) The evidence relied on by the plaintiff in respect of the work carried out on the vehicle at the plaintiff's premises was indefinite to say the least. On the basis of that evidence, I could not be satisfied that the transmission warning light was in fact disconnected and indeed the plaintiff by its Counsel advocated that if it had been, then at the time the relevant conversations took place on 28 September 2011, the light had been reconnected to support his submissions in respect of the context in which the conversation took place as far as Mr Burgess was concerned.
(5) It is inherently unlikely that in respect of a ten year old vehicle, the defendant by its employee would be undertaking to fix what could be major problems with the vehicle for an indefinite period of time. Such an undertaking would be in direct contravention of the terms of the contract. It would also provide an unlimited warranty.
(6) Mr Russell's version of the relevant conversations is supported by the evidence of Mr Putland, to the extent that he directed a mechanic to attend to the air-conditioning on the truck following his conversation with Mr Russell. That indicates that there was no discussion in fact about problems with the transmission on the vehicle in the relevant telephone conversation.
(7) I am not prepared to accept to the requisite degree of persuasion the evidence of Kane Burgess as set out in paragraph 29 above. As outlined above, there are some differences in his recollection of the conversation to that of Mr Brian Burgess. More significantly, he gave evidence that the person from Westrac, who, by inference, was Mr Stephen Russell, told Mr Burgess "We'll get it fixed for you. Bring it in here". That did not subsequently happen and was inconsistent with what in fact did happen, namely, the defendant sending a mechanic to the plaintiff's premises to fix the air-conditioning on the truck. For that reason I find his evidence inherently unreliable. In any event, it does not corroborate the evidence given by Mr Brian Burgess in his evidence in re-examination, outlined in paras 25 and 26 above.
(8) I accept the evidence of Mr Robert Mackay set out in paragraph 44 above to the effect that he had no conversation with Mr Burgess during the relevant period about problems with the transmission.
(9) The problem with the transmission was evident from 25 January 2012. The first repair was paid for by the plaintiff without any complaint whatsoever. It was only when a more significant repair emerged when the plaintiff received a quote for repair to the transmission in the sum of $79,000, did the plaintiff assert for the first time that the alleged representation had been made.
I therefore find that the representations alleged by the plaintiff are not made out. There was therefore no breach of contract by the defendant giving rise to a claim for damages payable to the plaintiff.
Given the factual findings I have made, I find there is no basis for the plaintiff's causes of action pleaded pursuant to s 18 and s 20 of the ACL. Even if there was a basis for such a cause of action, I would not have been satisfied on the evidence before me that there was any causal nexus established in respect of the initial work carried out involving a transmission warning light, if any, and the repair subsequently carried out to the vehicle in May 2012, some nine months later. I do not accept the submission made by the plaintiff set out in para 53 above that the evidence established that the truck's transmission was defective from soon after delivery until it was replaced in May 2012.
Nor am I satisfied that the truck was not fit for the purpose it was supplied or was not of acceptable quality. The truck was over ten years old, and had had extensive use, and was sold without warranty as to its condition.
For the same reasons set out above, I find there was no actionable misrepresentation made by the defendant.
The plaintiff's claims pursuant to the ACL therefore fail. There is no need for me to consider the alternative submissions made by the defendant in respect of those claims.
Orders
I make the following orders:
(1) The plaintiff's claim is dismissed and there will be a Verdict for the Defendant.
(2) The plaintiff to pay the defendant's costs of the proceedings.
(3) The exhibits to be returned forthwith.
(4) Liberty is granted to the parties to apply on 7 days notice for any special costs order.
(5) File to be returned to Wagga Wagga District Court Registry after 28 days.
Decision last updated: 06 September 2013
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