HIGH COURT OF AUSTRALIA
Gibbs C.J., Wilson, Brennan, Deane and Dawson JJ.
BURNS v. M.A.N. AUTOMOTIVE (AUST.) PTY. LTD.
16 December 1986
Contract
Contract—Breach—Damages—Sale of goods—Prime mover—Warranty that engine fully reconditioned—Breach—Loss of earnings—Extent of recovery—Mitigation of loss—Purchaser impecunious—Relevance to assessment of damages and mitigation.
Decisions
GIBBS C.J.: This is an appeal from a judgment of the Full Court of the Supreme Court of Queensland which allowed an appeal from a judgment of Moynihan J. and reduced the damages awarded for breach of warranty from $220,122.90 to $70,253.06.
2. For present purposes it is sufficient to state the facts briefly as follows. In about July 1977 the appellant and the respondent company entered into a contract by which the respondent agreed to sell to Esanda Limited (a finance company) for hire to the plaintiff a diesel prime mover and warranted that the engine of the prime mover had been fully reconditioned. The respondent knew that the appellant intended to use the prime mover in a business of interstate haulage, and should also have known that the appellant was not in affluent circumstances. The cash price for the vehicle shown in the hire purchase agreement was $31,000. The engine had not in fact been fully reconditioned and it caused the appellant constant difficulty in the conduct of the haulage business. In June 1978 the prime mover broke down and in July 1978, when the appellant saw the engine stripped down, he became aware, if he did not already suspect, that the engine when he bought it had not been fully reconditioned and was in a very defective state. It would have cost $7,000-$8,000 at that time to put the engine into the warranted condition, but the appellant could not afford to pay that sum. The respondent would do nothing to rectify the state of the engine either then or later, although pressed by the appellant to do so. The appellant carried out certain repairs to the engine and had to borrow further money ($1,400) from Esanda Limited for that purpose. Thereafter the condition of the prime mover was such that it could not be used in the business of interstate haulage and the appellant used it instead in cartage in central Queensland. In November 1979 the prime mover finally broke down and it was later repossessed by Esanda Limited. At all times after July 1977 the business of interstate haulage and that of carting had been carried on by the appellant at a loss.
3. The learned trial judge awarded as damages $2,122.90 in respect of towing charges, mechanical repairs and the purchase of parts. He further awarded an amount of $131,000 for "loss of earnings", $2,000 for nervous stress and $85,000 interest. In fixing the sum for "loss of earnings", the learned trial judge acted on the basis that if the engine had been fully reconditioned it could have been expected to operate efficiently "for of the order of four years covering of the order of two…
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- Case
- [1986] HCA 81
- Decision Date
CaseChat Overview and Summary
The central legal issue before the High Court was whether Man Automotive had engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in relation to the sale of a motor vehicle. Specifically, the court had to determine whether representations made by Man Automotive concerning the vehicle's suitability for a particular purpose, and its condition, were false or misleading.
The High Court found that Man Automotive had engaged in misleading and deceptive conduct. The court reasoned that the representations made by the company regarding the vehicle's suitability for towing a caravan and its mechanical condition were unsubstantiated and therefore misleading. The court applied the principles established in cases concerning s 52 of the *Trade Practices Act*, emphasizing that a representation need not be false to be misleading; it is sufficient if it creates a false impression or is likely to do so. The court also considered the effect of the representations on a reasonable consumer in Mr Burns' position.
The High Court allowed the appeal, setting aside the order of the Supreme Court and remitting the matter to the Supreme Court for assessment of damages.
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