Byass v Energy Power Systems Australia Pty Ltd
[2002] WASC 181
BYASS -v- ENERGY POWER SYSTEMS AUSTRALIA PTY LTD & ORS [2002] WASC 181
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 181 | |
| Case No: | CIV:1017/2001 | 6 & 24 JUNE 2002 | |
| Coram: | MASTER BREDMEYER | 9/07/02 | |
| 29 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | BRIAN BYASS ENERGY POWER SYSTEMS AUSTRALIA PTY LTD (ACN 055 274 514) WESTRAC EQUIPMENT PTY LTD (ACN 009 342 572) CATERPILLAR INC GERALDTON BOAT BUILDERS PTY LTD (ACN 009 097 063) CATERPILLAR OF AUSTRALIA LTD (ACN 004 332 469) |
Catchwords: | Pleading Statement of claim Leave to amend |
Legislation: | Trade Practices Act 1974, s 52 |
Case References: | Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 Morgan v Banning (1999) 20 WAR 474 Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASC 255 Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 Wardley Australia Ltd & Anor v State of Western Australia (1992) 175 CLR 514 Allstate Life Insurance Co & Ors v ANZ Banking Group Ltd & Ors (1995) 57 FCR 360 Associated Leisure Ltd v Associated Newspapers Ltd [1970] 2 QB 450 Barclays Bank v Cole [1967] 2 QB 738 Bater v Bater (1951) P 35 Beach Petroleum v Johnson (1993) 115 ALR 411 Burton v President of the Shire of Bairnsdale (1908) 7 CLR 76 Christie v Christie (1873) LR 8 Ch App 499 Davey v Garrett (1877) 7 Ch D 473 Dye v Griffin Coal Mining Co Ltd (1998) 19 WAR 431 Hornal v Newberger Products Ltd [1957] 1 QB 247 Jingellic Minerals NL V Abigroup Ltd (1992) 7 WAR 566 Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986 Krakowski v Eurolynx Properties Ltd (1995) 130 ALR 1 Legal Practice Board v Said, unreported; SCt of WA; Library No 940003; 12 January 1994 Millington v Loring (1880) 6 QBD 190 Neat Holdings Pty Ltd v Karagan Holdings Pty Ltd (1992) 110 ALR 449 Nocton v Lord Ashburton [1914] AC 932 Overmeire & Anor v National Commercial Banking Corp of Australia, unreported; SCt of WA; Library No 6316; 29 May 1986 Palmdale Insurance Co (In Liq) v L Grollo & Co Pty Ltd [1986] VR 408 Piermay Shipping Co SA & Brandts v Chester (1979) 2 Lloyds Rep 1 Ronex Properties Ltd v John Lainge Constructions Ltd [1983] QB 398 United Bank Ltd v Hussein, Civil Practice Law Reports [2000] 3 270, CA |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ENERGY POWER SYSTEMS AUSTRALIA PTY LTD (ACN 055 274 514)
First Defendant
WESTRAC EQUIPMENT PTY LTD (ACN 009 342 572)
Second Defendant
CATERPILLAR INC
Third Defendant
GERALDTON BOAT BUILDERS PTY LTD (ACN 009 097 063)
Fourth Defendant
CATERPILLAR OF AUSTRALIA LTD (ACN 004 332 469)
First Third Party
(Page 2)
Catchwords:
Pleading - Statement of claim - Leave to amend
Legislation:
Trade Practices Act 1974, s 52
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : Ms P A Saraceni
First Defendant : Mr S F Popperwell
Second Defendant : Mr S F Popperwell
Third Defendant : Ms L Hunt
Fourth Defendant : Mr H W Dixon
First Third Party : Ms L Hunt
Solicitors:
Plaintiff : Cocks Macnish
First Defendant : Pynt McKay
Second Defendant : Pynt McKay
Third Defendant : Mallesons Stephen Jaques
Fourth Defendant : Machlins Lawyers
First Third Party : Mallesons Stephen Jaques
Case(s) referred to in judgment(s):
Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599
Morgan v Banning (1999) 20 WAR 474
Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASC 255
(Page 3)
Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233
Wardley Australia Ltd & Anor v State of Western Australia (1992) 175 CLR 514
Case(s) also cited:
Allstate Life Insurance Co & Ors v ANZ Banking Group Ltd & Ors (1995) 57 FCR 360
Associated Leisure Ltd v Associated Newspapers Ltd [1970] 2 QB 450
Barclays Bank v Cole [1967] 2 QB 738
Bater v Bater (1951) P 35
Beach Petroleum v Johnson (1993) 115 ALR 411
Burton v President of the Shire of Bairnsdale (1908) 7 CLR 76
Christie v Christie (1873) LR 8 Ch App 499
Davey v Garrett (1877) 7 Ch D 473
Dye v Griffin Coal Mining Co Ltd (1998) 19 WAR 431
Hornal v Newberger Products Ltd [1957] 1 QB 247
Jingellic Minerals NL V Abigroup Ltd (1992) 7 WAR 566
Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986
Krakowski v Eurolynx Properties Ltd (1995) 130 ALR 1
Legal Practice Board v Said, unreported; SCt of WA; Library No 940003; 12 January 1994
Millington v Loring (1880) 6 QBD 190
Neat Holdings Pty Ltd v Karagan Holdings Pty Ltd (1992) 110 ALR 449
Nocton v Lord Ashburton [1914] AC 932
Overmeire & Anor v National Commercial Banking Corp of Australia, unreported; SCt of WA; Library No 6316; 29 May 1986
Palmdale Insurance Co (In Liq) v L Grollo & Co Pty Ltd [1986] VR 408
Piermay Shipping Co SA & Brandts v Chester (1979) 2 Lloyds Rep 1
Ronex Properties Ltd v John Lainge Constructions Ltd [1983] QB 398
United Bank Ltd v Hussein, Civil Practice Law Reports [2000] 3 270, CA
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1 MASTER BREDMEYER: This is an application by the plaintiff by chamber summons dated 13 March 2002 for leave to amend a statement of claim. It is opposed by the defendants. When the application was lodged, leave was sought to amend the statement of claim in terms of a minute of amended statement of claim dated 5 March 2002. In an attempt to meet some of the defendants' objections, the plaintiff filed a further minute of amended statement of claim of 6 June 2002. I heard argument on that minute on 6 June. At the conclusion of that argument, the plaintiff's counsel, Ms Saraceni, offered to produce a further minute in order to meet some of the objections. She did that and that minute is dated 13 June 2002. It does not satisfy all the objections. When I refer to the pleading, I will be referring to that minute of 13 June 2002 unless otherwise stated. Leave to amend a statement of claim should be refused if it is in a form which is objectionable and liable to be struck out under O 20 r 19 as disclosing no reasonable cause of action or being embarrassing, or an abuse of process, or otherwise offending our pleading rules.
2 By way of background, I summarise the following facts from the latest statement of claim. The plaintiff is a fisherman and is the owner of two commercial rock lobster vessels, the "Shark Raider II" and the "Lady Dorian". The first and second defendants are distributors of Caterpillar marine engines. The third defendant is the American company which manufactured the engines. The fourth defendant is a company which designed and built the two vessels at the request of the plaintiff.
3 The pleading against the first and second defendants, in broad outline, is as follows. The second and third defendants are the sellers of Caterpillar engines. Between 22 April and 13 May 1994, their Mr Rick Finch represented to the plaintiff that the Caterpillar engine model 3408E rated to 800 hp was suitable for use in a commercial rock lobster vessel operating in rock lobster fishery in WA. The representation was that this engine was reliable and efficient and was most suitable for use in those vessels, that there was effective after-sales service, that these engines had been successfully used in fishing vessels in the rock lobster industry without any significant problems. In reliance on these representations, the plaintiff agreed to purchase two of these engines, one to be installed in each vessel. This took place in April or May 1994. The engines were installed in the vessel by the fourth defendant, the boat builder, in or about October or November 1994 and the vessels then commenced operating in the WA rock lobster fishery, the season extending from approximately 15 November to 30 June each year.
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4 Shortly after commissioning the engines until early 2000, the engines began to experience performance problems, including lack of power and lack of response to throttle control, excessive fuel consumption, emission of black smoke and overheating. Those problems were caused by the poor design and/or manufacturing defects of the engines. Those defects are set out at par 19 of the minute and are referred to as "the Inherent Defects".
5 The first defendant arranged for the second defendant to undertake repairs in a bid to rectify the problems. The engines were repaired on numerous occasions which are detailed at par 20 of the pleading. Although extensive repairs were made on the engines, which at times required their removal from the vessels and replacement supplied for long periods, the inherent defects remained and was a source of loss and grievance to the plaintiff. The repair works are referred to in the pleading as "the Works".
6 Despite those repairs, the engine in the "Shark Raider II" failed again on 6 March 2000 and was replaced by the plaintiff with a Fiat V8 engine previously purchased. Considerable repairs were carried out on the "Lady Dorian". They, too, failed to cure the defects and the engine in that vessel was replaced in or about early 2002.
7 The causes of action pleaded against the first and second defendants arising out of these facts are breach of contract, breach of terms implied in a contract by the Sale of Goods Act, misrepresentation, negligence, and misleading and deceptive conduct.
8 In addition, the plaintiff pleads fraud, or fraudulent concealment, against these two defendants. This cause relates to representations made by these defendants after the sale and installation of the engines. These representations were that there was nothing wrong with the performance of the engine on the "Shark Raider II", that the engine was well-suited for a commercial fishing boat, that the problems complained of had been rectified and that there was no need to replace the engine. These representations are said to constitute fraud, or fraudulent concealment, because it is said that the first and second defendants knew at that time of the defects and that nine other fishing vessels had had similar problems with the same engine.
9 I will consider now the objections of the first and second defendants to the pleading in the minute of amended statement of claim of 13 June 2002.
(Page 6)
10 Paragraph 7: the objection is that it is not clear whether this is a plea of express or implied term. I think it clear enough that this is a plea of an express oral term of the contract. Particulars of who spoke those words are given sufficiently in par 6(b).
11 Paragraph 19(d) reads:
"The excessively high combustion temperatures caused the engines' valves to fail as a result of poor design."
- The objection is whether this is properly a particular of poor design and/or of manufacturing defect. It is said that surely the particular is as set out in 19(c). I consider this plea is adequate. It should be read with (c). It is, as stated, a particular of poor design.
12 Paragraph 19(e) pleads:
"The electronic engine management system was unreliable and caused or contributed to the extremes of combustion temperature."
- I agree with the objection that this plea is inadequate. It does not say why the electronic management system was unreliable. It should be deleted or repleaded.
13 Paragraph 19(h) pleads:
"The design and construction of the engines rated at 800 hp was inadequate to sustain full load operation over an extended period in accordance with the Caterpillar design rating without excessive fuel consumption."
- This is said to be inadequate because it does not identify in what respect the design and construction of the engines were inadequate. I consider it is adequate. It is saying that the design and construction of these engines rated at 800 hp at 2300 rpm (see par 18(i)) was inadequate to sustain full load operation over an extended period without excessive fuel consumption.
14 Paragraph 22(b) pleads:
"At no time was the plaintiff advised by the first, second and third defendants that the Problems were caused by the Inherent Defects."
(Page 7)
- The objection is that there is no plea that either the first or second defendants were aware of the alleged inherent defects. See also the defendants' comments on par 35. Mr Popperwell says that, in order to sustain a plea of fraud, the first and second defendants need to have known of the defects. I agree with that submission. They need to have known of the defects and deliberately, or recklessly, failed to advise the plaintiff of them. Paragraph 22(b) is part of the plea of fraudulent concealment which culminates in par 29. The plea in 22(b) that the first and second defendants failed to advise the plaintiff that the problems were caused by the inherent defects, is picked up in pars 26 and 27. In par 27, it is pleaded that the first and second defendants failed to disclose to the plaintiff the inherent defects and the similar problems with the same model of engines in other vessels.
15 The elements of the tort of fraud as found in Bullen & Leake & Jacobs "Precedents of Pleadings", 13th ed at 425, are as follows:
"(i) there must be a representation of fact made by words or conduct …
(ii) the representation must be made with knowledge that it is false, ie it must be wilfully false or at least made in the absence of any genuine belief that it is true;
(iii) the representation must be made with the intention that it should be acted upon by the plaintiff … in the manner which resulted in damage to the him;
(iv) it must be proved that the plaintiff acted upon the false statements; and
(v) it must be proved that the plaintiff has sustained damage by so doing."
16 There should be a plea that the first and second defendants knew that the problems were caused by the inherent defects. These defendants may well have known of the problems because they carried out all the repairs listed as Works in par 20 and these defendants may have known that the problems were caused by the inherent defects because they knew that nine other vessel owners had similar problems with this model of Caterpillar engine. This needs to be stated. I know that par 25 does plead that the first and second defendants were aware of industry-wide problems with this model of Caterpillar engine in other fishing vessels. But that plea is not linked to the inherent defects. It does not state that the first and
(Page 8)
- second defendants knew that the problems with the plaintiff's engines were caused by the inherent defects. The similar problems in the other vessels may be that source of knowledge, but there is no plea that these defendants knew the problems with the plaintiff's engines were caused by the inherent defects.
17 Paragraph 23 is the plea of the post-sale representations. The plea covers three pages. The representations were made orally at meetings and also in letters and facsimile transmissions. The objection is, however, that at no point in the pleading do particulars of the falsity of the representations in connection with this plea appear. For example, it is alleged in pars 24 and 28 that the plaintiff relied on those representations not to replace the engines earlier than he did. The plaintiff must identify some deliberate falsity inherent in the representations. It should state, "The representations were false in that … ".
18 That is how it is done in Bullen & Leake & Jacobs, "Precedents of Pleadings", 13th ed, form 273. In that form, pleading fraud, pars 4 and 5 set out the representations made by the defendants to induce the plaintiff to buy certain shares. The pleading then goes on:
"6. The said representations were, and each of them was, false and untrue. In particular [set out details]."
19 The plea could be brief. The factual material is already there in other paragraphs. Presumably, the numerous times the vessels were put in for repairs, detailed in par 20, demonstrates the falsity of the earlier representations that there was nothing wrong with the engines, or their performance. Further, the fact that other vessels were having similar problems with the same engine model suggests the representations were false.
20 Paragraph 23, after pleading post-sale representations in (a) to (l), goes on to plead particulars of omission. Two pleas are then made, (m) and (n), which are not said to be representations. The second of these, (n), pleads:
"The first and second defendants failed to disclose to the plaintiff that the Engines were not fit for the Intended Use as a result of the Inherent Defects."
21 Mr Popperwell's objection is that no particulars are provided. In what respect were the engines not fit for the intended use as a result of the inherent defects? I do not agree with that objection. It is clear that
(Page 9)
- adequate particulars are given in other paragraphs. For example, par 18 lists the problems of the two engines; lack of power, lack of response to throttle control, excessive fuel consumption, emission of black smoke and overheating. Those problems are elaborated on in par 19 where it says they were caused by poor design and that elaboration is summarised as the Inherent Defects.
22 I am troubled by the two particulars of omission at par 23(m) and (n). The opening words of par 23 refer to representations made by the first and second defendants to the plaintiff "orally and by their acts and omissions as follows … ". There can be a representation by an omission, ie, a representation by silence, yet it is only pars (a) to (l) which are classified as "post-sale representations". That being so, the two particulars of omission in pars (m) and (n) seem to fall outside the opening words of par 23. Yet, I note in par 24, which is the plea of reliance, the plaintiff relied on all the matters pleaded in par 23, as dissuading him from removing the engines and replacing them with another make and model. I consider that (m) and (n) in par 23 should come under the opening words and should be included in "the post-sale representations", albeit they are representations by omission.
23 Paragraph 23, as I have stated, sets out a number of post-sale representations by the first and second defendants. Some of those representations are contained in letters and faxes. Mr Popperwell has taken me to three of those documents as not supporting the plea. I am entitled to refer to any document mentioned in the pleading. Paragraph 23(b) refers to a letter dated 7 July 1995 from Rick Finch, of the first defendant, stating that "the "Shark Raider II" met all of the Caterpillar's performance parameters and that the first defendant was "100 per cent confident of the developed power of the engine", meaning that the engine was, in all respects, fit and suitable for the intended use. Mr Popperwell says the letter does not support that plea. I have read the letter. I consider the plea is arguable. The words used in the letter arguably implies, as pleaded, that the engine was in all respects fit and suitable for its intended use. The first and second defendants can plead in response, if they want to, that the letter does not imply that.
24 Mr Popperwell also took me to par 23(f) which refers to a facsimile from David Collinson of the first defendant to the plaintiff dated 23 October 1995. The plea states that in that fax, Collinson advised the plaintiff that the engines are in accordance with the "ordered requirements; that the first defendant had met its contractual obligations,
(Page 10)
- and that the first defendant would continue to provide product support to the plaintiff in respect of the engines". Again, I think the plea is arguable.
25 Mr Popperwell referred me to par 23(h) which refers to a fax from David Collinson to the plaintiff of 30 October 1995 in which it is said that Collinson represented that the first and second defendants had fulfilled their contractual obligations as the engines were operating correctly. I think the plea is arguable. The letter does say that the defendants had "fulfilled and demonstrated our contractual obligations".
26 Paragraph 24 is the plead of the plaintiff's reliance on the defendants' representations in par 23. The defendants asked if, in addition to the matters pleaded in par 23, the plaintiff relied on some other conduct in dissuading them from removing the engines and installing replacement engines. The answer is "No" and the plaintiff has suggested amendments which make this clear. As amended, it reads:
"The first and second defendants by virtue of the matters pleaded in paragraph 23 above, and in particular 23(j) and (k) (words deleted) by their conduct dissuaded the plaintiff from removing the Engines and installing replacement engines of another make or model leading the plaintiff to believe that this would be unnecessary as the problems would be rectified without any significant loss of fishing time, upon which Representations the plaintiff relied."
27 Paragraph 26 is the plea of the first and second defendants' duty to disclose to the plaintiff information concerning the Similar Problems and the Inherent Defects and to advise the plaintiff that the engines were unfit or not suitable for the intended use and should have been replaced by an alternative model or make. The duty is said to arise on each occasion works - meaning repair works - were performed.
28 Mr Popperwell states that the duty alleged does not arise out of the same facts, or substantially the same facts, as the cause of action in respect of which relief has already been claimed. This clause claims that the first and second defendants failed to disclose matters not the subject of this action before this date. The duty is said to arise on each occasion repair works were performed. Putting to one side the question whether there is a separate cause of action in respect of each time a repair was undertaken, he says the cause of action in respect of the works pleaded in pars 20(a), (b), (c), (d) and (e) would be statute-barred if the amendments were not allowed and the plaintiff chose to issue new proceedings. He
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- says, in any event, the claims insofar as they relate to the works pleaded in pars20(a), (b) and (c) will be statute-barred whether granted or not. For these reasons, the amendment ought not to be allowed. The works pleaded in par 20(a) to (c) cover the period 22 November 1994 to 3 October 1995. The writ was issued on 5 January 2001. So, the six-year limitation period precludes a cause of action which commenced prior to 5 January 1995.
29 Order 21 r 5(5) permits an amendment to be allowed, even if the effect of the amendment is to add or substitute a new cause of action, if the new cause of action arises out of the same facts, or substantially the same facts, as a cause of action in respect of which relief has already been claimed. According to Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 at 241, 242, it is no objection to an amendment under subr (5) that some of the facts out of which the new cause of action arises are peculiar to it and that some of the facts out of which the old cause of action arises are peculiar to it. It is enough if the overlap is so great that the new cause of action can fairly be said to arise out of substantially the same facts as the old cause of action.
30 It is true that these pleas were not raised in the statement of claim prior to the plaintiff's present application and that they may be statute-barred. Prior to the present application of 13 March 2002, the pleading did not plead any cause of action arising out of the repairs to the vessels, or arising at the time of the repair of the vessels. Do these new causes of action arise substantially out of the same set of facts in the old statement of claim? The question is not an easy one to answer. A number of factors favour allowing an amendment and permitting the plaintiff to plead fraud. Firstly, the old statement of claim of 21 March 2001 at pars 14(d) and 26(d) did plead that the first and second defendants failed to warn the plaintiff of inherent defects, weaknesses in and/or operating characteristics of the engines which may have rendered them less suitable for use in the vessels and unmerchantable. Those pleas relate to the time, or prior to the time, when the engines were purchased. The timing is different, but that plea, of a failure to warn of inherent defects, etcetera, is similar to the plea alleged here, the duty here said to have arisen each time the vessel was put in for repairs. Secondly, the repairs themselves are mentioned in a table set out in par 18 of the earlier plea in the context of being particulars of loss and damage and fishing time lost due to the defective design of the engines. This is not far removed from the current plea of the inherent defects which became known after the installation of the engines.
(Page 12)
31 Thirdly, the High Court in Wardley Australia Ltd & Anor v State of Western Australia (1992) 175 CLR 514 at 533 warns lower courts on deciding limitation questions in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases and this is not one of the clearest of cases. Certainly, the plaintiff was aware of the defects in the engines - called here the Inherent Defects - when the engines were repeatedly put in for repairs. It must have been an increasing awareness of their defects. But he was not aware that other vessel owners were experiencing similar problems with the same engine in their vessels until obtaining discovery of the documents of the first and second defendants in the latter part of 2001.
32 Fourthly, where the fraud is concealed, the limitation period does not run until the fraud has been discovered, or could with reasonable diligence have been discovered. I quote a little from Dr Peter Hanford's "Limitation of Actions" at par 120 in vol 5, Laws of Australia, Civil Procedure 5.7.5.11:
"An action based on fraud is one in which fraud is an essential element of the cause of action … With regard to fraudulent concealment, it must be shown that facts relevant to the right of action were concealed, and that the concealment was fraudulent. Fraud here is being used in the equitable sense: it must be shown that the defendant's conduct is unconscionable. Merely to establish ignorance of the right of action is insufficient. There is no need to show that active measures were taken to prevent detection, if the way in which the defendant has acted is itself sufficient concealment. Failure to inform is a concealment when there is a duty of disclosure; no fiduciary relationship is necessary.
In these cases the limitation period does not begin to run until the fraud is discovered, or could with reasonable diligence have been discovered. Reasonable diligence means what an ordinary prudent person would do having regard to all the circumstances." (Footnotes omitted)
33 An amendment, duly made, with or without leave, takes effect not from the date when the amendment is made, but from the date of the original document which it amends and the rule applies to every successive amendment of whatever nature and whatever stage the amendment is made. But UK O 18 r 7(1) applies to writs and pleadings as well as other documents and this permits the court to impose a term that
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- an amendment shall take effect from a date specified in the order later than the issue date of the writ. (Supreme Court Practice (UK) (1991 ed) 20/5-8/2. Note the UK O 18 rr 5 and 7 is equivalent to our O 21 rr 5 and 7). Mr Popperwell is happy with that in relation to breaches of duty alleged when repairs were carried out as stated in par 20(a), (b) and (c). He says those pleas will be statute-barred even if leave is granted. But the plaintiff may be able to get around that on the basis of concealed fraud in relation to the defendants' non-disclosure of the inherent defects. In relation to pars 20(d) to (l), if leave to amend is granted, Mr Popperwell would like me to order that leave be granted with effect, say, from the date of the plaintiff's application of 13 March 2002 to preserve his portended limitation argument at trial. He says that course is open to me and has referred me to Morgan v Banning (1999) 20 WAR 474. In that case, I, as Master at first instance, allowed an amendment to a pleading under O 21 r 5(5), but said the date of the amendment was to take effect from the date of the order. Owen J in the Full Court at 478 said:
"The Master exercised the discretion in favour of the amendment but on a condition that it not be backdated. In so doing he proceeded on an erroneous view of the effect of the limitation problem. On this basis I think the discretion miscarried and the court should intervene."
35 The next matter raised by Mr Popperwell, and by Ms Hunt, for the third defendant, is that the plea in par 26, and indeed the plea of concealed fraud, falls outside the indorsement of claim on the writ, which reads:
"INDORSEMENT OF CLAIM
The Plaintiffs claim against the Defendants is for damages for negligent advice and misrepresentation concerning the suitability, merchantability and performance characteristics of
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- Caterpillar engines 3408 manufactured by the Third Defendant and supplied by the First and/or Second Defendant to or for the Plaintiff for installation into the Plaintiffs commercial rock lobster vessels 'Shark Raider II' and 'Lady Dorian' ('the Engines'), negligent design, manufacture, and supply of the Engines which were defective, not suitable for their intended purpose for operation in commercial fishing vessels, and were not of merchantable quality contrary to the Sale of Goods Act, misleading and deceptive conduct in contravention of Section 52 of the Trade Practices Act and/or the Fair Trading Act, breach of implied contract and breach of warranty between the Plaintiff and the Defendants, together with interest thereon at the rate of 8 per centum per annum pursuant to Section 32 of the Supreme Court Act or at such other rate and from such date as this Honourable Court shall deem meet, and costs."
36 It is true that that indorsement does not refer to post-sale representations, or post-sale representations by omission, or to fraud. Order 21 r 5(5) applies to an amendment of the writ equally to an amendment of the statement of claim. I will not permit an oral application to amend the writ. It needs to be a formal application. Similar considerations apply as to the application to amend the writ. I should think if leave is granted to make the amendments to the writ under O 21 r 5(5), leave should also be granted to amend the writ. And vice versa if leave to amend is refused.
37 To return to the statement of claim, I consider that the plea of misleading and deceptive conduct in relation to the post-sale representations is probably time-barred. The post-sale representations pleaded in par 23(a) to (k) occurred repeatedly in the period 4 July 1995 to 29 October 1997. The period of limitation under the Trade Practices Act was at that time three years. So, that period expired progressively over the period 4 July 1998 to 29 October 2000. The writ issued on 5 January 2001. It is not clear when the post-sale representations of omission, particularised in par 23(m) and (n), were made. They may have been made over the whole period 4 July 1995 to 6 March 2000 in the case of the "Shark Raider II's" engine or between 4 July 1995 and early 2002 in the case of the "Lady Dorian's" engine. Representations by silence amounting to misleading and deceptive conduct in the period 5 January 1998 to 5 January 2001 would not be time-barred.
38 Paragraph 27 complements par 26. The former is the plea of the duty to disclose to the plaintiff the similar problems and the inherent defects in
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- the engines and the latter is the plea of the breach of that duty, thereby deceiving the plaintiff into believing that the engines were fit and proper and suitable for their intended use. It is said that this failure to disclose was done with the intention of dissuading the plaintiff from removing the faulty engines and replacing them with alternative engines. The first and second defendants contend that this latter plea is not arguable in the light of the correspondence referred to in connection with par 23, and particularly the facsimile from Collinson dated 30 October 1995. In the light of that correspondence, their counsel asks, "How can the plaintiff reasonably contend that the first or second defendant dissuaded him from replacing the engines?" In that facsimile the first defendant's Mr Collinson says:
"I am also told that you intend to change the engine out. This is entirely your decision as the engine in your property. I reiterate our previous advice that we are not able to meet your request to buy back the engines, having fulfilled and demonstrated our contractual obligations."
That facsimile is an item of evidence in favour of the defendants on this point. It will be weighed up at trial with the plaintiff's evidence as pleaded in pars 20, 23 and 25. On many occasions when the engines were put in for repairs, the defendants represented that there was nothing wrong with them, that they met all the Caterpillar's performance parameters, that they produced horsepower in accordance with the manufacture's specifications, that the repropping of the vessel would allow the vessel to reach its rated revolutions per minute, that the engine was doing what it was supposed to do, that it was operating correctly and that the problems with it could be resolved. These defendants also failed to reveal that at least nine other vessels were having similar problems with the same engine. In the light of all this evidence, it is arguable that they deceived the plaintiff into thinking that the engines were fit, proper and suitable for their intended use and to dissuade the plaintiff from replacing the engines for alternatives, despite Collinson's letter of 30 October 1995. The engine in the "Shark Raider II" was replaced in March 2000, and in the "Lady Dorian" in early 2002.
39 The plea is also said to be defective because there is no plea that the first and second defendants were aware of the alleged similar problems at the time of the alleged representations. Particulars of awareness and knowledge on the part of the first and second defendants of the similar problems are given in par 25. For example, it is said at (b) that "the first and second defendants attended meetings with the owners and/or
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- operators of the fishing vessels … with a view to endeavouring to resolve the problems". I do not think the dates of this awareness are crucial at this stage of the pleadings. The plea is that this duty to disclose was breached repeatedly, every time the vessels were repaired and those repairs continued at least until March 2000. Further and better particulars of exactly when the first and second defendants became aware of the similar problems in the nine listed vessels can come after further discovery has been obtained from these defendants. I do not agree with Mr Popperwell's contention that the plaintiff must contact these other vessel owners and ask them when their engines experienced similar problems. I consider it is practical, and not wrong, for the plaintiff to get that information, by what I think will be the easier method of discovery from these defendants. As Mr Popperwell said, the documents relating to the defects in these other engines and the meetings which the defendants held with owners and operators to try and solve the problems, are discoverable. They relate to issues which are pleaded.
40 Paragraph 29 is the concluding paragraph of the plea of fraudulent concealment on the part of the first and second defendants. It refers to a number of earlier paragraphs. With reference to par 27A, counsel for these two defendants says that 27A suffers in that it pleads that the first and second defendants "ought to have known" of the inherent defects. In such circumstances, a fraud cannot arise. He says that he does not understand the role in this plea of the allegations in pars 26, 27 and 28.
41 I agree with the contention that the words "ought to have known" should be struck out. I refer back to the elements of the common law action of deceit, quoted from Bullen & Leake & Jacobs above. The second element is that the representation must be made with knowledge that it is false, ie, it must be wilfully false or at least made in the absence of any genuine belief that it is true. I consider that putative knowledge plays no part in this. I agree also with Mr Popperwell's second submission that par 27A does not fit in well with the plea of fraud. I think it is not intended to. I note that par 29, which is the culmination of the plea of fraud, refers expressly to pars 26, 27 and 28, but not par 27A. Paragraph 27A may be relevant to the plea of misleading and deceptive conduct.
42 Paragraph 30 is part of the plea of misleading and deceptive conduct. Counsel for the first and second defendants says that the cause pleaded in reliance on the post-sale representations is statute-barred. I will not repeat what I have said on this above.
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43 Paragraph 31 is a plea that the first and second defendants were under a duty of care to the plaintiff and is part of the plea of negligence against these defendants. It refers to the circumstances pleaded in pars 2(c), (d), (e), 6, 7, 16, 17, 20, 25, 26 and 27. Counsel for the first and second defendants says that the reference to pars 26 and 27 is erroneous because they, in turn, plead a duty to disclose to the plaintiff information concerning the similar problems and the inherent defects in the engines. He says that a duty cannot arise from a duty.
44 I agree with that submission. Paragraph 26, which is a plea in connection with concealed fraud, pleads a duty in the first and second defendants to disclose to the plaintiff the similar problems and the inherent defects. A similar duty is pleaded in par 31(d). (I refer here to the second of the two pars 31(d).) As part of the plea of negligence against these two defendants, I think it can stand as each relates to a different cause of action. Paragraph 26 adds a little in that it states that on each occasion when these defendants undertook repairs on the vessel, they owed the duty to disclose to the plaintiff the similar problems experienced by other vessels and the inherent defects of the engines. Paragraph 31(d) only refers to the similar problems.
45 The words in par 34 that these defendants were under a duty to take reasonable care to "ensure that the Works were undertaken with reasonable skill and care" are probably an idle plea, because there is no plea of breach. There is no plea that the repair works were not carried out with reasonable skill and care. They are merely introductory words, and I think unnecessary words, to the real duty relied on by the plaintiff - that these defendants had a duty "to correctly diagnose and advise the plaintiff of the problems and the inherent defects". I say that by way of obiter dicta as no argument was addressed to me on this.
46 Paragraphs 34 and 35 introduce a new cause of action of negligence arising out of the post-sale representations. On the defendants' argument given earlier, these amendments should be refused because the claim is wholly or in part statute-barred. Paragraph 34 is a plea that the first and second defendants were under a duty to take reasonable care to ensure that the works were undertaken with reasonable care and skill and to correctly diagnose and advise the plaintiff of the cause of the problems and the inherent defects. Paragraph 34 is a plea that, in breach of that duty, these defendants failed to exercise reasonable care in effecting the works and failed to correctly diagnose the cause of the inherent defects as pleaded in pars 18 and 19 above.
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47 This plea is unlikely to be time-barred. Six years prior to 5 January 2001 (the date of issue of the writ) refers to 5 January 1995. The engines were installed only in October and November 1994. The inherent defects almost undoubtedly surfaced after that date. The discovery of the similar problems will be known after discovery of documents in this matter.
48 I have said above that the knowledge of these defendants of these two matters needs to be pleaded. Mr Popperwell says that to plead knowledge of those matters in one part of the pleading and then not to plead that knowledge in the latter part breaches the pleading rule against departure: see O 20 r 11. I agree with that. Knowledge of the similar problems and the inherent defects is essential to the plea of fraud. To avoid infringing the rule against departure, the plea of negligence should be expressed as an alternative plea.
49 The plea of negligence in par 34 is "as a result of the matters pleaded in paragraphs 20 and 23". Paragraph 20 pleads the works and par 23 pleads the post-sale representations. They are two of the matters underpinning the plea of fraudulent concealment in par 29. The representations need to be falsified to plead negligence or negligent misrepresentation. I consider that they falsified in par 38. I think the objection is a good one in relation to after-sales service and support pleaded in par 38(e). The plaintiff needs to plead in what ways the second defendant failed to provide effective after-sales service and support. If the only sting of the particular in par 38(e) is that the second defendant failed to adequately diagnose the inherent defects, then the words "after-sales service and support" should be deleted. I consider that that part of the plea - that the second defendant failed to adequately diagnose the inherent defects - is adequate. I have already referred to other paragraphs in which the second defendant said many things to lead the plaintiff to believe that the engines were satisfactory and could be repaired, and, by inference, that there was no need to replace them. Whereas, as stated in other paragraphs of the minute, and which will be elaborated by particulars of knowledge to come, the second defendant was aware from the repairs to the plaintiff's engines and from the similar problems encountered with the engines of other owners, that the defects of this model was industry-wide. The defects were truly inherent defects.
50 Paragraph 36 is another plea of negligence against the first and second defendants based on the duties set out in par 31. They include a duty to warn the plaintiff of the similar problems. Objection is taken to par 36(b) which pleads that the first and second defendants made "false and misleading or deceptive representations" to the plaintiff as to the
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- suitability, capability and merchantability of the engines as pleaded in par 23 above. The objection is that those representations are not falsified. That is true. In negligent misstatement, or misrepresentation, the representation needs to be falsified: see Bullen & Leake & Jacobs "Precedents of Pleadings" (13th ed) 694 and form 441 par9. The plaintiff says it has falsified the representation in par 38. I think that is correct, subject to what I say on par 38 below.
51 I have a problem with par 36(b) which was not raised in argument, so I mention it by way of obiter dicta. Paragraph 36 is a plea of negligent misstatement or negligent misrepresentation, a well-known cause of action. Why complicate that straight-forward plea by introducing the words "misleading or deceptive", from another context, in the phrase:
"… making false and misleading or deceptive representations to the plaintiff."
52 Paragraph 38 is a plea that the pre-sale and post-sale representations were false or misleading or deceptive or likely to mislead or deceive. Then follow nine particulars of falsity. Particular (c) is that "the 3408E engines were not superior to other makes or models". This is said to be embarrassing because it does not state the other makes or models. I think the objection is a good one. The pre-sale representation is pleaded in par 2(d)(ii) that "the Caterpillar model 3408E was … superior to other makes or models". The plaintiff could have ignored that as mere sales puffery, but has chosen not to do so and to plead it as a misrepresentation. I therefore consider it behoves the plaintiff to give more particulars of falsity is to say that it was false in relation to the Fiat V8 engine, or whatever. It should not be too hard to do. I note in par 21 that the Caterpillar 3408E engine in the "Shark Raider II" was replaced with a Fiat V8 engine. I note further in par 25(a) that another vessel, "The Power of One", replaced its Caterpillar 3408E marine engine with a Caterpillar 3412. I note further that in par 25(d) and (e) the two vessels named there replaced their Caterpillar 3408E marine engines in each case with a MAN engine. It behoves the plaintiff to give better particulars here to avoid evidence being led at trial comparing the subject Caterpillar engine with a host of other engines.
53 Particular (d) of par 38 says that "the 3408E engines did not have sufficient power for the vessels or the intended use". The objection is that this, too, is embarrassing as lacking particulars. I do not agree with that. Elsewhere, there are particulars about the engine's lack of power; eg,
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- par 18 under the heading "Particulars of low power and lack of response"; also par 19(h).
54 Paragraph 38(e) states that the second defendant failed to provide effective after-sales service and support and failed to adequately diagnose the inherent defects. Counsel for these defendants says that this plea is embarrassing because it does not detail the failure. The inherent defects are set out in eight sub-points in par 19.
55 I agree with those objections regarding "failure to provide effective after-sales service". What are the particulars? Is it said that the repairs were not carried out or were carried out badly? Hitherto in the pleading, this has not been alleged. The complaint has been that these defendants failed to disclose the inherent defects, that the engines were not fit for their intended purpose and the similar problems.
56 Why also does the pleader introduce a new phrase "fail to adequately diagnose the Inherent Defects"? Hitherto, the plea had been that these defendants failed:
"… to disclose to the plaintiff that the engines were not fit for their intended use."
- (par 23(n)).
57 Paragraph 38 of the minute at page 28 contains a heading "Particulars of falsity, misleading and deceptive conduct on the part of the first and second defendants". Objection is taken to that as unnecessary. That point is conceded and that heading and the next line has been struck out.
58 Paragraph 43 is a plea of breach by the first and second defendants of their duty of care as pleaded in par 31, inter alia, in that these defendants failed to advise or warn the plaintiff of the inherent defects in the engines and the similar problems which rendered them unsuitable for the intended use. I agree with the counsel for the first and second defendants that this plea of breach is a duplication of the plea of breach of duty found in par 36. In that paragraph it states that "the first and second defendants breached their duty of care to the plaintiff pleaded in paragraph 31 above … ". Paragraph 36(d), as a particular of that breach, says that these defendants failed to warn the plaintiff of the similar problems and the inherent defects in the engines which rendered them less suitable for their intended use, etcetera. I consider par 43 should be struck out in relation to the first and second defendants as a duplicate of par 36.
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59 Paragraph 44 pleads, in relation to the first and second defendants, that their failure to warn pleaded in par 43 constitutes negligence, fraudulent concealment and conduct that was misleading or deceptive or likely to mislead or deceive contrary to s 52 of the Trade Practices Act, etcetera. I consider that plea, too, should be struck out in relation to the first and second defendants as duplication. The plea of negligence by the failure of the first and second defendants to warn the plaintiff of the inherent defects and the similar problems is pleaded adequately in par 36. The plea of fraudulent concealment is pleaded in a number of paragraphs culminating in par 29. The plea of misleading and deceptive conduct is a duplication of that plea in par 30 which, in turn, refers to the post-sale representations found in par 23, which, at par 23(m) and (n), plead the first and second defendants' failure to advise the plaintiff of the similar problems experienced with the engines by other boat owners and that the engines were not fit for their intended use. I consider par 44 should also be struck out in relation to the first and second defendants.
The objections of the third defendant
60 I turn now to the arguments of the third defendant. The third defendant is the American manufacturer of the Caterpillar engines which were installed in the plaintiff's two vessels. The pleas against the third defendant are less extensive than those against the first and second defendants. The plaintiff's first plea is that it purchased the engines from the first and second defendants. In par 9 there is an alternative plea that it purchased the engines from the third defendant. In par 15, it is pleaded that the third defendant had, for some years, manufactured and marketed the Caterpillar 3408E engine for installation and use in commercial in rock lobster fishing vessels, including those operating in the WA rock lobster industry. The third defendant was aware of operational requirements of vessels operating in that industry. The plea of breach of the sales contract against the first and second defendants is maintained in the alternative against the third defendant. Damages for breach of contract are claimed against the third defendant. The defects of the engines are pleaded in par 18; eg, low power, lack of response to throttle control, excessive fuel consumption, emission of black smoke and overheating. The particulars of these failures on a matter of numbers are set out as a failure to perform in accordance with the third defendant's specifications as set out in a brochure referred to at par 2(e)(ii). For example, the engines failed to perform in accordance with the specifications set out in the plaintiff's brochure in that they did not
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- consistently and reliably develop 800 hp at 2300 rpm while under load, or at all.
61 In par 19, it is pleaded that the problems were caused or contributed to by the poor design and/or manufacturing defects by the third defendant and the technical details of that are set out in par 19.
62 Negligence is pleaded against the third defendant. The duty of care is pleaded in par 19. One of those duties was to warn the plaintiff of the inherent defects and the similar problems with the other engines. In par 43, it is pleaded that the third defendant failed to warn the plaintiff of the inherent defects and the similar problems which rendered these engines unsuitable for their intended use. That conduct is said to constitute the tort of negligence in par 44. The same facts relied on in those paragraphs are also said to constitute fraudulent concealment and misleading and deceptive conduct under s 52 of the Trade Practices Act.
63 Paragraph 45 is an alternative plea that the inherent defects were solely caused or contributed to by the negligence of the third defendant. Two particulars of that negligence are given.
64 Breach of contract is pleaded against the third defendant in par 45. Paragraph 49 and following plead loss and damages flowing from that breach of contract.
65 In summary, the causes of action pleaded against the third defendant are breach of contract, negligence, fraudulent concealment and misleading and deceptive conduct.
66 I will now consider the third defendant's objections primarily as set out in its solicitor's written outline of submissions of 21 June. I consider that some of the objections in the prior submissions of May 2002 which were argued on 6 June have now been met by the repleading. The first major objection is against the plea of fraudulent concealment. The objection is that the plea is not particularised and generalised allegations of dishonesty or impropriety are not permitted: Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASC 255 at [41], [93].
67 Paragraphs 43 and 44, which I have struck out against the first and second defendants, plead causes of action against the third defendant in negligence, fraudulent concealment, and misleading and deceptive conduct. I will consider first the plea of fraudulent concealment. It is said in par 43 that, in breach of the third defendant's duties pleaded in par 32, it failed to advise or warn the plaintiff of the inherent defects and similar
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- problems which rendered the engines unsuitable for their intended use. Paragraph 44 states it is this failure to warn as pleaded in par 43 which constitutes negligence, fraudulent concealment and misleading and deceptive conduct. To go back a bit, it is pleaded in par 19 that the inherent defects in the engine, and there are eight of them, were caused or contributed to by the poor design and manufacturing defects of the third defendant. Paragraph 20 goes on to plead the numerous times the vessels were put on the slipway for repair works to rectify the problems. These repairs are referred to as the works. It is not pleaded that the third defendant was aware of those works. In par 22, it is pleaded, inter alia, that at no time did the third defendant tell the plaintiff that the problems were caused by the inherent defects.
68 Paragraph 32 is a plea that this defendant was under a duty to exercise care in relation to the design and manufacture of the engines and to warn the plaintiff of the inherent defects and the similar problems in the engines, of which it knew, or ought to have known. Paragraphs 43 and 44 plead that the third defendant breached its duty of care to warn the plaintiff of the inherent defects and that constituted fraudulent concealment. Because this is a plea of fraud, then, as previously stated, it is necessary to plead that this defendant, the third defendant, knew of these defects.
69 I have previously referred to the elements of the cause of action as found in Bullen & Leake & Jacobs at 425. Fraud is normally constituted by a representation and the representation must be made by the defendant with knowledge that it is false, or reckless as to whether it is true or false. The representation in this case is by omission. It is by a failure to warn. In order for that to be deceitful, I consider it is essential that the third defendant knew of the inherent defects in the design of the engine and knew of the similar problems suffered by other engine owners. I understand that the plaintiff has some evidence of the third defendant's knowledge of these two matters. I refer here to the affidavit of Mr Hopwood of 11 April 2002. I understand from discovered documents annexed to that affidavit, that in mid-1995 one of the third defendant's American staff came to Australia to meet with engine owners and boat builders and try and ascertain the cause of the problems with this engine. During that time, histogram data for a typical crayfishing boat was taken to try and establish the load factor and the duty cycle for fishing operations. It is not necessary for me to look at that evidence in any detail because I am considering a pleading matter. But it is essential, I consider, for the plaintiff to plead that the third defendant knew of the inherent defects in these engines and of the similar problems. Unless it knew, I
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- consider it had no duty to warn the plaintiff of the inherent defects and of the unsuitability of the engines. I propose to strike out pars 43 and 44 from this minute, in relation to the third defendant, but with liberty to replead.
70 I consider now the plea of negligence against the third defendant. The plea is, in par 19, that the engines were designed by the third defendant with certain inherent defects. It is pleaded at par 32 that the third defendant was under a duty to the plaintiff to exercise reasonable care in the design and manufacture of the engines, to properly diagnose the cause of the inherent defects and problems, to ensure the engines were of merchantable quality and to warn the plaintiff of inherent defects in the engines and to advise the plaintiff of the inherent defects and the similar problems of which it knew or ought to have known.
71 Of those duties, two are said to have been breached. At par 22(b) it is said that at no time was the plaintiff advised by, inter alia, the third defendant that the problems were caused by the inherent defects. Paragraph 43 says that the third defendant, inter alia, failed to advise or warn the plaintiff of the inherent defects and the similar problems. Paragraph 44 pleads that the third defendant was guilty of negligence.
72 A key part of the plea of negligence against the third defendant is that in par 32(d) it had a duty to warn the plaintiff of the inherent defects and similar problems in the engines. I consider that plea is arguable in relation to the inherent defects. But I do not consider it arguable in relation to the similar problems. It would only be in certain circumstances that a manufacturer of an engine, several years after the sale of the engine, might have a duty to advise the owner of similar problems experienced with other engines. The position of the manufacture is different from that of the second defendant, the repairer, who had the engine brought back to it repeatedly for repairs. I consider it is essential, to make this plea arguable, for the plaintiff to plead that the third defendant had knowledge of these similar problems.
73 I will not give leave to the plaintiff to plead negligence against the third defendant in its present form.
74 The third cause of action against the third defendant is breach of the Trade Practices Act and that cause depends on the same paragraphs as the cause in negligence. Ms Hunt has reminded me that allegations of breaches of the Trade Practices Act are sufficiently analogous to allegations of fraud as to require quite specific particulars: Idoport Pty
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- Ltd v National Australia Bank Ltd [2000] NSWSC 599 at [43]. She says that par 44, in effect, introduces a new plea of misleading and deceptive conduct based on a breach of par 32. Paragraph 32 alleges that the third defendant failed to advise and warn the plaintiff of the inherent defects and similar problems. Insofar as the plea relates to the alleged similar problems, Ms Hunt says that, due to the lack of particulars as to the timing when the similar problems arose, the third defendant was unable to ascertain whether the plea relates to the substratum of facts as previously pleaded. She states that par 44 of the minute does not provide any particulars of the new plea of failure to warn of the inherent defects and similar problems and does not identify the conduct which is alleged to be false and misleading. She says silence, in the absence of a representation, cannot be misleading. She also says that the similar problems fall outside the scope of the indorsement on the writ. She says that the lack of particulars does not allow the third defendant to know the claim it will have to meet at trial. There is no indication as to the basis for the claim of falsity and as such the plea is scandalous, irrelevant and embarrassing.
75 The plea of misleading and deceptive conduct which culminates in par 44 is based on the third defendant's breach of its duty to warn the plaintiff of the inherent defects and similar problems, which duty is pleaded in par 32. Under s 52 of the Trade Practices Act, silence can, in some circumstances, constitute a representation. How did the third defendant know of the inherent defects and of the similar problems? The manufacturer would know of the performance capabilities of the engine. It would have tested the engines prior to its manufacture and release world-wide. But would it know of the excessive high temperatures produced as pleaded in par 19(a) unless someone told it? Would it know that the engines had a starting fault and regularly stalled and shut down immediately or shortly after start-up? How would it know that unless one of its agents or one of its customers told it? How would it know that, although the engines were rated at 800 hp, they were inadequate to sustain full load operation in a rock lobster fishing vessel over an extended period at 2300 rpm without excessive fuel consumption?
76 Likewise, how did the third defendant know of the similar problems with the same engine in other vessels? The plea of awareness in par 25 is against the first and second defendants. They were aware of those problems. There is no plea that the third defendant was aware of them. So, in those circumstances, I do not think it arguable that the defendant has a duty to disclose to the plaintiff the inherent defects and the similar problems. Contrast the position of the first and second defendants. They may well have that duty. The engines are repeatedly coming back into the
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- workshop for repairs. The plaintiff is incurring costs in having those engines repeatedly repaired.
77 This plea will not be allowed in its present form.
The objections of the fourth defendant
78 The pleas against the fourth defendant, the designer and builder of the plaintiff's two vessels, in the minute of amended statement of claim of 13 June 2002 are as follows. Paragraph 4(a) pleads that the fourth defendant is a designer and manufacturer of marine vessels for, inter alia, the Western Australian rock lobster fishery. Paragraph 4(b) pleads that the fourth defendant, through its servant or agents, including Mark Schiller, held itself out to the plaintiff as an expert in the design and construction of commercial fishing vessels for operation in the rock lobster fishery of WA. Paragraph 5 pleads that from or about 22 April to 13 May 1994, the fourth defendant, by its agent Mark Schiller, orally advised the plaintiff that the Caterpillar 3408E engines were the most suitable choice of engines for the vessels. This is referred to as the fourth defendant's representations.
79 Paragraph 10 pleads that in about April or May 1994 the plaintiff and the fourth defendant entered into a contract for the design and construction and commissioning of the two vessels. Paragraph 11 pleads some express or implied terms in that boat building contract. These include that the engines were of merchantable quality and that they were suitable for their intended use in the rock lobster fishery. In par 17, the plaintiff pleads that pursuant to that contract the engines were supplied and installed in the vessels in October or November 1994 and the vessels commenced operating in the WA rock lobster fishery, the season extending from 15 November to 30 June of the next year. Paragraph 18 pleads that the engines suffered from a number of problems referred to as "the problems".
80 Paragraph 30 pleads, as against the fourth defendant, that its representations were made in trade and commerce and that they constituted misleading and deceptive conduct under s 52 of the Trade Practices Act. That is a new plea in relation to the fourth defendant. It did not appear in the minute of amended statement of claim of 5 March 2002: see par 8 of that minute.
81 Paragraph 33 pleads a duty of care against the fourth defendant owed to the plaintiff to ensure that the vessels were designed and constructed to
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- be suitable for their intended use and that the vessels were designed and constructed in such a manner that the engines once installed would perform at their rated specifications. That, too, is a new plea. It did not appear in the minute of 5 March 2002.
82 Paragraph 46 is a plea of breach of contract and/or negligence against the fourth defendant. It states that, in breach of the terms of the boat building contract pleaded in par 10, and the fourth defendant's duty of care pleaded in par 33, the design and construction of the vessels was defective in that the vessels were constructed with insufficient engine room ventilation to provide an environment which permitted the engines to function properly with dependable service life.
83 Paragraph 51 is the plea of loss and damage suffered by the plaintiff as a result of the fourth defendant's breach of contract and/or breach of duty as pleaded in par 46. The loss and damage suffered is the same as that pleaded against the other defendants as set out in par 50.
84 The prayers for relief are several. The one under the Trade Practices Act for misleading and deceptive conduct is against the first, second and third defendants only.
85 Mr Dixon, for the fourth defendant, addressed me briefly on his objections to the amended statement of claim at the hearing on 6 June. I then excused him from further attendance to avoid him incurring unnecessary costs on behalf of his client, as the major opponents to the plaintiff's pleading were the counsel for the first, second and third defendants. Thus, Mr Dixon, rightly, was not present at the further hearing on 24 June. However, after I had excused Mr Dixon on 6 June from further attendance, at the end of that day, it was agreed that the plaintiff could bring in a new minute in the hope that it would meet some or all of the objections of the major defendants. As it so happened, this new minute raised some new pleas against the fourth defendant on which I have not had the benefit of Mr Dixon's argument. Nevertheless, I think I can rule on these matters without unfairness to him.
86 Mr Dixon's first objection is that the boat building contract is not pleaded with sufficient particularity. It is pleaded with greater detail in pars 10 and 11 of the minute of 13 June 2002 than it was in pars 4B and 4C of the minute of 5 March 2002. I consider the plea is adequate. It tells the fourth defendant that the contract was partly oral and partly written. It also implies some terms into the contract. I do not think any further particularity is necessary at this time. The fourth defendant has not
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- pleaded yet to the statement of claim. I consider it is unlikely that the fourth defendant would deny that it entered into a contract with the plaintiff to build the two vessels. It may dispute one or two of the terms of it. If and when it pleads a defence, it could seek further particulars.
87 A further objection was that the implied terms in the earlier draft did not give particulars of why they were implied. That has not been corrected. Reference is made to the Sale of Goods Act. Paragraph 5 of the latest minute is the plea of the fourth defendant's representations. The content is the same as in par 4C of the earlier minute. Mr Dixon's objection to this plea is that it is not stated that the plaintiff acted on that advice. In those circumstances, he says it cannot be relied upon as an allegation to found a duty of care. I think that objection is a good one. I do not see that it is cured in the latest minute. Paragraph 33 pleads the fourth defendant's duty of care owed to the plaintiff to see that the vessels were designed and constructed to be suitable for their intended use and so that the engines, once installed, could perform at their rated specification. Although par 33 mentions par 5 inter alia it is not a plea of negligent misrepresentation. As I understand it, par 33 is a plea of negligence arising out of the contract.
88 Paragraph 30 is the plea of misleading and deceptive conduct against the fourth defendant. As previously stated, this is a new plea against the fourth defendant and expressly relies on the fourth defendant's representations made in par 10. I consider it is probably time-barred. I do not know precisely when the plaintiff became aware that the Caterpillar engine was not a suitable choice for the vessel. But according to par 20, it put the engines in for repairs on numerous occasions between November 1994 and May 1998.
89 The limitation period at that time under s 82 of the Trade Practices Act was three years. The writ was issued on 5 January 2001. So, the cause of action had to accrue after 5 January 1998. If the misleading and deceptive conduct occurred in the period 5 January 1998 to 5 January 2001, it would not be time-barred. The representation was in par 4(c) of the minute of 5 March 2002. The plea of misleading and deceptive conduct against the defendants is new, but I consider it arises substantially out of the earlier plea.
90 Paragraph 33 is a plea of the duty of care owed by the fourth defendant to the plaintiff, said to arise from earlier paragraphs. Although it is a new plea, I consider it arguably arises substantially out of the facts contained in the other plea.
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91 Paragraph 46 is the plea of breach of contract and breach of the duty of care. It is a brief plea, but I consider it is adequate. It says that the design and construction of the vessels was defective in that the vessels were constructed of insufficient engine room ventilation to provide an environment which permitted the engines to function properly. I do not accept the fourth defendant's objection that it is necessary to plead out in separate paragraphs the breach of contract and the breach of negligence. There is in this case a complete overlap of negligence, as a term of a contract, and negligence as a tort. I consider this plea is adequate.
92 The plea is said to be time-barred. I do not wish to rule on this finally because I propose to give the plaintiff leave to prepare a further minute. In that further minute there may be more precise dates which will enable the Court to more clearly see whether these claims are time-barred or not. For tort and contract the limitation period is six years. Six years prior to 5 January 2001 is 5 January 1995. The engines were installed in October and November 1994. It is hardly likely that the defectiveness of the engines, and, hence the breach of contract and the fourth defendant's negligence, was apparent prior to January 1995. Any earlier repairs to the engines might have been reasonably considered as teething problems. I do not consider that these claims are time-barred.
93 I will not grant leave to the plaintiff to amend in terms of the minute of 13 June 2002. I will allow the plaintiff to produce a further minute - possibly after discovery of documents relating to the similar problems.
94 I will hear the parties on the orders and costs.
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