Cowley v Bellamy
[2012] QDC 359
•14 December 2012
DISTRICT COURT OF QUEENSLAND
CITATION:
Cowley & Anor v Bellamy & Anor [2012] QDC 359
PARTIES:
MARTIN COWLEY AND JENNIFER COWLEY
(Plaintiffs)AND
KEITH BELLAMY
(First Defendant)AND
RIVER TRADE PTY LTD (ACN 113 755 810)
(Second Defendant)FILE NO/S:
933/2010
DIVISION:
Brisbane
PROCEEDING:
Hearing
ORIGINATING COURT:
District Court
DELIVERED ON:
14 December 2012
DELIVERED AT:
Brisbane
HEARING DATE:
3 & 4 December 2012
JUDGE:
Samios DCJ
ORDER:
1. The Plaintiffs’ claim against the First Defendant is dismissed.
2. That there be judgment for the Plaintiffs against the Second Defendant for $137,258.05.CATCHWORDS:
SALE OF GOODS – conditions and warranties – sale of goods on eBay - where plaintiffs purchased goods from first defendant on eBay - whether goods purchased were defective and lead to damage - whether seller unaware goods were defective - whether sale was in the course of the seller’s business to supply or from a seller who deals in goods of that description - whether sale was a private sale - whether seller owes duty of care to buyer
TRADE PRACTICES - implied conditions and warranties - where second defendant is taken to have manufactured the goods - whether goods purchased were defective and lead to damage - whether defective goods caused fire that damaged or destroyed contents of residence - whether plaintiffs were consumers within the meaning of that term as defined in the Act - whether second defendant carried on business in trade and commerce within the meaning of that term as defined in the Act - whether goods purchased had a defect - whether goods of a kind ordinarily acquired for personal, domestic or household use (not being the defective goods) were destroyed or damaged as a result of the defect - whether the plaintiffs suffered a loss as a result of the destruction or damage
Sale of Goods Act 1896, s 17(a), s 17(c)
Trade Practices Act 1974, s 74B, s 74D, s 75AF and s 75 AJ.
Ashington Piggeries Ltd v Christopher Hill Limited [1972] AC 441, applied
Fasold and another v Roberts and another (1997) 70 FCR 489, applied
Hungier v Grace (1972) 127 CLR 210, applied
JS McMillan Pty Ltd and others v Commonwealth (1997) 77 FCR 337, applied
Laundess v Laundess (1994) 20 MVR 156, applied
McPherson’s Ltd v Eaton [2005] NSWCA 435 at 81, applied
COUNSEL:
Mr Dan Kelly for the plaintiff
Mr Bellamy appeared for himself
There was no appearance for River Trade Pty Ltd
SOLICITORS:
Rodgers Barnes & Green for the plaintiffs
Mr and Mrs Cowley claim against Mr Bellamy and River Trade Pty Ltd $104,309.51 for damages.
On the hearing of Mr and Mrs Cowley’s claim, Mr Bellamy appeared and defended the claim. River Trade Pty Ltd did not appear and defend the claim against it. River Trade Pty Ltd did though file a defence.
Based on the evidence, I am satisfied on 29 June 2009 Mr and Mrs Cowley purchased from Mr Bellamy a rechargeable torch via eBay for the sum of $34.99. Further I am satisfied that Mr Bellamy purchased this torch from River Trade Pty Ltd for 99 cents and he incurred a further $30 for postage and handling.
I accept Mr Cowley’s evidence. I accept he and his wife became tenants of a property situated at 17 Burlington Street at Holland Park. Mr and Mrs Cowley moved into these premises on 1 July 2009. Further Mr and Mrs Cowley’s goods which included furniture and electrical items were placed in the residence that day. At about 10.30 a.m. that day, the postman delivered the torch to Mr Cowley. About an hour later Mr Cowley plugged the torch into a standard power point in the garage at the residence to charge it. The instructions that came with the torch were to the effect that the torch should not be charged for more than 24 hours. I accept as Mr Cowley was going to return about 7 a.m. the next morning he considered it was safe to leave the torch to be charged overnight. Mr Cowley and his wife left the residence at approximately 3.30 p.m. At about 2.10 a.m. on 2 July 2009 Mr Cowley was told by one of the landlords that the residence was on fire. I accept that Mr and Mrs Cowley’s goods were damaged and in some instances destroyed by fire. I also accept Mr Cowley had read enough of the manual to be satisfied he could leave the torch on charge. I also accept his evidence that he did not use a power board and he did not drop the torch nor disassemble it or allow it to get wet.
Mr and Mrs Cowley claim in these proceedings that the cause of the fire was the torch.
Mr Anderton, an electrical safety officer, gave evidence. He started out as an electrician. He attended at the residence on 2 July 2009. A fire investigation report referring to Mr Anderton’s investigation is contained in exhibit 7. The report states that the electrical cause was not able to be established or eliminated. Further due to extent of damage to the remains of electrical parts found within the area of origin by Queensland Fire and Rescue Service investigator Doorman, electrical activity cannot be confirmed or eliminated as being the source of ignition. In his investigations, he ascertained that Mr Bellamy had purchased five torches from the same seller. Exhibit 7 indicates that a notice was given to River Trade Pty Ltd pursuant to the Electrical Safety Act 2002. He said that he received a letter from River Trade Pty Ltd. In this letter River Trade Pty Ltd denied it had sold the torch the subject of the notice. In a later conversation with Mr Qian, the managing director of River Trade Pty Ltd, Mr Anderton said that Mr Qian said that he did not believe that that item had been for sale for sometime. Mr Anderton also gave evidence that the torch did not comply with respect to the plug portion. There was insufficient insulation for the pins. The pins are the portions that go into the power point. In other evidence Mr Anderton said that the torch as a whole and the attached cord and lead were non-compliant. Apart from his evidence that there was insufficient insulation for the pins, Mr Anderton did not give any specific evidence of how the torch was non-compliant.
I accept Mr Anderton’s evidence.
The cause of the fire is the subject of reports.
The first in time is from Mr Denham dated 27 August 2009. Then there is a report from Mr Nash dated 22 September 2009. Finally there is the joint report of Mr Denham and Mr Nash dated 21 February 2011.
I accept the qualifications and expertise of Mr Denham and Mr Nash. Their qualifications and expertise was not challenged by Mr Bellamy on the hearing.
After the fire Mr Nash purchased an identical torch from Mr Bellamy. This was made available by Mr Nash to Mr Denham. Mr Denham examined the fire remains collected from the fire scene. He examined and tested the torch provided to him by Mr Nash in respect to compliance with the relevant Australian safety standards, as it relates to the torch’s potential to cause a fire. In his report he states the fire remains consisted of the remains of a battery, wiring and electrical components, parts of which were embedded in a massive re-solidified thermoplastic. Mr Denham concludes in his report that there was no evidence of the cause of the fire found in the supplied fire remains. Further the similarities of the metal components found amongst the supplied fire remains confirm that the fire remains were from the same type of torch as the undamaged sample supplied for assessment. The torch supplied by Mr Nash did not comply with numerous aspects of the relevant safety standard. In particular the torch did not comply with the requirements for flame and ignition. He states in his report a number of possible ignition sources were identified with the appliance and components of the product, including the casing, were found to propagate flames produced from the ignition sources (as demonstrated by non-compliances to the glow wire and needle flame test). He states the supply plug, supply cord and appliance connector (components of the supply cord set) supplied with the torch did not comply with numerous aspects of the relevant individual safety standards. He states the supply plug, supply cord and appliance connector are not approved for sale in Australia. He states it is an offence against the Queensland Electrical Safety Regulation 2002 (and similar counterpart in the State legislation) to sell the items in Australia. He states considering the above, it is apparent that the subject torch poses a significant risk of electrical shock and fire.
Mr Nash concluded that the fire which damaged the residence originated at a workbench in the garage where the torch was being charged. He states the torch and associated power point were the only electrical items in use in the general area of fire origin at the time of the fire. He states in the absence of any evidence to the contrary, an electrical malfunction associated with the torch or the power point form the only likely causes of ignition. He states extensive testing of a comparison torch revealed that the torch did not comply with the relevant Australian standards in several areas that directly related to the risk of fire, at the torch, in the supply cord and at the power point connection. He states one or more of the non-compliant features of the torch, its supply cord and plug pins, was considered to be the most likely cause of the fire.
In the joint report, Mr Denham and Mr Nash state the only likely cause of ignition identified from the scene examinations was an electrical malfunction associated with either the general purpose outlet (GPO) or the torch. Mr Denham and Mr Nash conclude that direct evidence of the ignition mechanism was not detected during examination of the remains of the torch and GPO. They state the likely ignition mechanisms identified all involved deficiencies in design and manufacture of the torch, its supply cord and supply plug. They state an overheating connection at the rechargeable torch or at the plug pins was considered to represent the most likely cause of the fire.
Although Mr Bellamy suggested during cross-examination of Mr Denham and Mr Nash that the fire may have been caused by a fault with the GPO, I am satisfied those witnesses maintained that the most likely cause of the fire was the deficiencies in the torch including the plug and lead.
I accept the evidence of Mr Denham and Mr Nash.
Therefore I find the torch sold by River Trade Pty Ltd to Mr Bellamy and then sold by Mr Bellamy to Mr and Mrs Cowley was defective because the torch could overheat or the plug pins could cause fire to ignite. I find the fire was caused on the balance of probabilities by fire being ignited by an overheating connection at the torch or at the plug pins.
There was evidence from Mr Dickson and Mr Bland that they had purchased an identical torch from River Trade Pty Ltd and had no problems with it. Further, Mr Bellamy said in his evidence he had no problems with the torch. This evidence does not persuade me the cause of the fire was not the torch.
I find the fire that occurred in the residence damaged and destroyed Mr and Mrs Cowley’s goods.
Against Mr Bellamy Mr and Mrs Cowley claim that it was an express or alternatively an implied term of the contract for the purchase of the torch that the torch:
(a) would be of merchantable quality or fit for the purpose it was intended
(b) comply with all applicable Australian standards and electrical regulations, particulars of which are to ensure that:
(i) all relevant tests, inquiries and investigations had been carried out so that the torch complied with the Electrical Safety Act 2002; and
(ii) the torch complied with relevant safety standards;
(c) had been approved for sale to consumers in Queensland; and
(d) was safe and free from defects.
Despite what is alleged in the previous paragraph, it seems to me that any term as to fitness for the purpose or merchantable quality must be found in the Sale of Goods Act 1896 (SGA). That is because s 17 of the SGA states there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale except as provided for in s 17.
Subpar (a) and (c) of s 17 provides as follows:
“(a)When the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose;
(c) When goods are brought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not) there is an implied condition that the goods shall be of merchantable quality.”
In the present matter I am satisfied that the torch was not reasonably fit for the purpose nor was it of merchantable quality. Further I am satisfied that Mr and Mrs Cowley by implication at least made known to Mr Bellamy the particular purpose for which the torch was required, so as to show that Mr and Mrs Cowley relied on Mr Bellamy’s skill or judgment. Further, I am satisfied the torch was bought by Mr and Mrs Cowley from Mr Bellamy by description.
However, for Mr and Mrs Cowley to come within s 17(a) or s 17(c) of the SGA they must show for subpar (a) of s 17 that the goods (the torch) are of a description which it is in the course of Mr Bellamy’s business to supply and for s 17(c) the goods (the torch) were bought by description from Mr Bellamy who deals in goods of that description.
When Mr Bellamy gave evidence he said he is a licensed motor dealer by occupation. He said he dealt with River Trade Pty Ltd because they are a direct importer and are the largest in New South Wales. He said that he had been an eBay addict. Further he had been on eBay since 2005. He was not aware the torch was defective. He accepted he sold the torch to Mr and Mrs Cowley and then later sold an identical torch to Mr Nash. He also accepted that he had four torches in total for sale. Mr Anderton’s evidence had been that when he spoke to Mr Bellamy Mr Bellamy said that he had five torches. I do not accept this difference is of any consequence in this matter. Further when Mr Bellamy was cross-examined he was taken to documents obtained by Mr Anderton during his investigation which showed he had for sale items such as a shaver and hair clippers for a pet and promoted his eBay site by saying “please see my other quality items”.
Further Mr Bellamy said he did not have a garage of items for sale. However, when cross-examined he accepted he went twice to River Trade Pty Ltd’s premises. He said that on one occasion he picked up items for sale and on another occasion went there to just look what they were doing. He said his turnover was not very high. He did not make much by way of profit. Sometimes he made a profit and other times he broke even and sometimes lost money.
Mr Bellamy’s defence is that the sale of the torch to Mr and Mrs Cowley was a private sale which is not subject to any terms or warranties. That is, the sale of the torch was on the basis that the buyer beware.
In the context of these sections of the SGA Lord Guest (p 474F) in Ashington Piggeries Ltd v Christopher Hill Limited [1972] AC 441 distinguished between a dealer in the way of business as opposed to when a seller sold goods in a private capacity. Further, Lord Wilberforce at p 494D said:
“But, moreover, consideration with the preceding common law shows that what the Act had in mind was something quite simple and rational: to limit the implied conditions of fitness or quality to persons in the way of business, as distinct from private persons.”
Further at p 495B Lord Wilberforce said:
“ … I would have no difficulty in holding that a seller deals in goods ‘of that description’ if he accepts orders to supply them in the way of business and this whether or not he has previously accepted orders for goods of that description.”
Further at p505D Lord Diplock said:
“This may seem harsh upon the seller, but its harshness is mitigated by the requirement that the goods must be of a description which it is in the course of the seller’s business to supply. By holding himself out to the buyer as a manufacturer or dealer in goods of that kind, he leads the buyer reasonably to understand that he is capable of exercising sufficient skill or judgment to make or to select goods which will be fit for the particular purpose for which he knows the buyer wants them.”
In Hungier v Grace (1972) 127 CLR 210 the High Court had to determine whether an electrical contractor who lent money to a timber merchant on more than 30 occasions was a money lender. A timber merchant needed large sums of cash to buy timber needed for contracts with public authorities. He approached the electrical contractor and suggested that if he would provide the necessary funds they would divide equally between them the net profit on the transaction to which each borrowing related. The electrical contractor lent $287,000 to the timber merchant over a period of six years. There were more than 30 loans in this period each being sought by the timber merchant on his own initiative. The timber merchant set his own schedule for repayment. The profits made by the electrical contractor on the loans were in the range of between 17 and 82 per cent. However the timber merchant entered into a scheme of arrangement with his creditors under the Bankruptcy Act and the electrical contractor lodged a proof of debt for the amount owing in respect of the loans. The proof was admitted but the timber merchant sought an order expunging the proof on the ground that at the time the loans to which it related were made the electrical contractor was an unregistered money lender within the meaning of the Money Lenders Act 1958 and so he could not recover the money lent or any interest there on
It was held by the High Court in Hungier that the advances were loans but they were not made by the electrical contractor in the course of carrying on the business of money lending within the meaning of the Money Lenders Act 1958.
In Hungier at pp 216 – 217 Barwick CJ said:
“The question is whether the appellant, in relation to the transactions with the respondent, was carrying on the business of money lending.
The decision whether a person is one “whose business (whether or not he carries on any other business) is that of money lending” can only be reached after a close examination of the facts in each particular case. It is not enough merely to show that a person has lent money to another. As McCardie J said in Edgelow v MacElwee:
“There must be more than occasional and disconnected loans. There must be a business of money lending, and the word ‘business’ imports the notion of system, repetition and continuity… The line of demarcation cannot be defined with closeness or indicated by any specific formula. Each case must depend on its own peculiar features. It is ever a question of degree.”
Whilst no doubt system and regularity are involved in the carrying on of a business, it does not necessarily follow that one who has transactions of the same kind systematically or regularly is carrying on a business in those transactions. One may systematically make regular deposits to a bank account but not be carrying on a business of doing so. In other words, system and regularity of making transactions are not in themselves definitive in this field. Their absence may well deny that a business is being carried on but their presence does not necessarily establish that it is.”
Hungier was referred to by Sackville J in Fasold and another v Roberts and another (1997) 70 FCR 489 where at p 524 he said:
“I also recognise that each case must depend on its particular circumstances. Nonetheless in general, for an undertaking to constitute a business it will have to be conducted with some degree of system and regularity.”
Further in JS McMillan Pty Ltd and others v Commonwealth (1997) 77 FCR 337, 354 Emmett J at p 354 said:
“The term ‘business’ is defined in s 4 as including a business not carried on for profit. Nevertheless, it is still necessary to find an activity which can be characterised as carrying on a business. Words such as ‘business’ have ‘about them a chameleon-like hue, readily adapting themselves to their surroundings, different though they may be’ (per Mason J in Commissioner of Taxation (Commonwealth) v Whitfords Beach Pty Ltd) ‘The expression ‘carry on business’, in its ordinary meaning, signifies a course of conduct involving the performance of a succession of acts and not simply the effecting of one solitary transaction’ (per Gibbs J in Smith v Capewell ).
However, mere repetitiveness is not sufficient to constitute carrying on of a business. System and regularity are involved in the carrying on of a business but it does not necessarily follow that one who has transactions of the same kind systematically or regularly is carrying on a business in those transactions. The example of regular deposits to a bank account is sufficient to explain that proposition. Absence of a system and regularity might deny that a business is being carried on but the presence does not necessarily establish that it is (see per Barwick CJ in Hungier v Grace) (references omitted).
I find Mr Bellamy has been selling goods on eBay since 2005. I also find he had other torches for sale at the time this torch was sold to Mr and Mrs Cowley. Further I find he had other goods for sale and advertised other goods for sale at the time he sold this torch to Mr and Mrs Cowley. However those other goods were not in my opinion significant in number. I accept Mr Bellamy’s evidence he did not have a garage of goods for sale. He may have referred to himself as an eBay addict. However, I do not accept that means he was engaged in selling goods to a great extent at the time he sold this torch to Mr and Mrs Cowley. There was no evidence of how many transactions he may have conducted in say the year 2005 or the following years. However, mere repetitiveness is not sufficient to constitute carrying on of a business. I do not accept that the statement by him that he was an eBay addict is the same as saying he was in the business of selling goods of this description or dealt in goods of that description. He maintained he was involved in selling goods on eBay as a hobby. I do not accept the evidence in this case shows a system and regularity of selling goods on eBay such that it can be said Mr Bellamy was carrying on a business. I accept Mr Bellamy’s evidence. I accept his evidence that he was carrying on the sale of goods on eBay as a hobby.
Therefore, I find the sale of the torch was not subject to the implied conditions provided for by s 17(a) and s 17(c) of the SGA. Therefore, the sale of the torch by Mr Bellamy to Mr and Mrs Cowley was a private sale for which Mr Bellamy has no liability to Mr and Mrs Cowley.
It is further claimed by Mr and Mrs Cowley that Mr Bellamy and River Trade Pty Ltd owed them a duty of care in relation to the supply, quality and performance of the torch.
I do not accept Mr Bellamy or River Trade Pty Ltd owed a duty of care to Mr and Mrs Cowley. For there to be a duty of care there must be more than the mere relationship of vendor and purchaser (Laundess v Laundess (1994) 20 MVR 156; McPherson’s Ltd v Eaton [2005] NSWCA 435 at 81). I accept Mr Bellamy’s evidence that he was not aware the torch was defective. The evidence does not satisfy me that Mr Bellamy ought to have been aware the torch was defective. Further, the evidence does not satisfy me that River Trade Pty Ltd was aware or ought to have been aware the torch was defective.
Therefore, I find Mr Bellamy and River Trade Pty Ltd are not liable to Mr and Mrs Cowley for negligence.
I therefore dismiss Mr and Mrs Cowley’s claim against Mr Bellamy.
However, as far as River Trade Pty Ltd is concerned I find that Mr and Mrs Cowley were consumers within the meaning of that term as referred to in s 4B of the Trade Practices Act 1974 (the TPA). Further River Trade Pty Ltd admitted in its defence and the evidence satisfies me that River Trade Pty Ltd was a corporation and carried on business in trade and commerce within the meaning of that term as defined in s 4 of the TPA and was a corporation within the meaning of that term as defined in s 4 of the TPA.
Further the affidavit of Mr Lio, the solicitor in the employ of Mr and Mrs Cowley’s lawyers, satisfies me that notice was given to River Trade Pty Ltd on 4 February 2010 pursuant to s 75AJ of the TPA. I am satisfied that River Trade Pty Ltd did not give to Mr and Mrs Cowley within 30 days particulars of the corporation which manufactured the torch or the supplier of the torch to the supplier requested. Therefore, River Trade Pty Ltd is taken to have manufactured the torch.
Mr and Mrs Cowley claim that River Trade Pty Ltd is liable to them for the loss they have suffered because of the fire damaging or destroying their goods. Mr and Mrs Cowley rely upon s 74B, s 74D and s 75AF of the TPA.
These sections provide as follows:
“74B(1) Where:
(a) a corporation, in trade or commerce, supplies goods manufactured by the corporation to another person who acquires the goods for re-supply;
(b) a person (whether or not the person who acquired the goods from the corporation) supplies the goods (otherwise than by way of sale by auction) to a consumer;
(c) the goods are acquired by the consumer for a particular purpose that was, expressly or by implication, made known to the corporation, either directly, or through the person from whom the consumer acquired the goods or a person by whom any antecedent negotiations in connexion with the acquisition of the goods were conducted;
(d) the goods are not reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied; and
(e) the consumer or a person who acquires the goods from, or derives title to the goods through or under, the consumer suffers loss or damage by reason that the goods are not reasonably fit for that purpose;
the corporation is liable to compensate the consumer or that other person for the loss or damage and the consumer or that other person may recover the amount of the compensation by action against the corporation in a court of competent jurisdiction.”
s 74D provides as follows:
“74D(1) Where:
(a) a corporation, in trade and commerce, supplies goods manufactured by the corporation to another person who acquires the goods for re-supply;
(b) a person (whether or not the person who acquired the goods from the corporation) supplies the goods (otherwise than by way of sale by auction) to a consumer;
(c) the goods are not of merchantable quality; and
(d) the consumer or a person who acquires the goods from, or derives title to the goods through or under, the consumer suffers loss or damage by reason that the goods are not of merchantable quality;
the corporation is liable to compensate the consumer or that other person for the loss or damage and the consumer or that other person may recover the amount of the compensation by action against the corporation in a court of competent jurisdiction.”
Further s 75AF provides as follows:
“s 75AF If:
(a) a corporation, in trade or commerce, supplies goods manufactured by it; and
(b) they have a defect; and
(c) because of the defect, goods of a kind ordinarily acquired for personal, domestic or household use (not being the defective goods) are destroyed or damaged; and
(d) a person who:
(i) so used; or
(ii) intended to so use;
the destroyed or damaged goods, suffers a loss as a result of the destruction or damage;
then:
(e) the corporation is liable to compensate the person for the amount of the loss; and
(f) the person may recover that amount by action against the corporation.”
Based on the findings I have made referred to earlier I am satisfied that River Trade Pty Ltd is liable to Mr and Mrs Cowley for their loss by reason of s 74B, s 74D and s 75AF of the TPA.
Mr and Mrs Cowley called witnesses to give evidence about their loss. Those witnesses were Mr Lederhose, Mr Kratochvil and Mr Stafford. I accept the evidence of these witnesses. I accept the amounts claimed for the loss suffered by Mr and Mrs Cowley are fair and reasonable. There were also costs incurred for the investigation of the claim. An amount of $1,726.51 is claimed by Mr and Mrs Cowley for the investigation of the claim. I am not satisfied that this sum of $1,726.51 is a loss caused by a breach by River Trade Pty Ltd of the TPA.
I find the loss to Mr and Mrs Cowley by reason of the fire for which River Trade Pty Ltd is liable pursuant to the relevant provisions of the TPA is $102,355.
I allow Mr and Mr Cowley interest at the rate of 10 per cent per annum from 2 July 2009 to 2 December 2012 a period of 3.41 years at the rate of 10 per cent per annum which is a sum of $34,903.05.
Therefore I give judgment in favour of Mr and Mrs Cowley against River Trade Pty Ltd for the sum of $137,258.05.
I will hear the parties on the question of costs.
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