Currabubula Holdings Pty Limited v Blackwood Hodge (Australia) Pty Limited

[2000] NSWSC 837

CITATION:	Currabubula Holdings Pty Limited v Blackwood Hodge (Australia) Pty Limited [2000] NSWSC 837
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	SC 13291/91
HEARING DATE(S):	12/7/99, 13/7/99, 14/7/99, 15/7/99 16/7/99, 23/8/99, 24/8/99
JUDGMENT DATE:	29 August 2000
PARTIES :	Currabubula Holdings Pty Limited - Plaintiff Blackwood Hodge (Australia) Pty Limited - Defendant
JUDGMENT OF:	Simpson J at 1

COUNSEL :	Mr N Perram - Plaintiff Mr F Lever - Defendant
SOLICITORS:	Gadens - Plaintiff Mark Kennedy & Co - Defendant
CATCHWORDS:	Contract - negligence - Trade Practices Act 1974 - sale of bulldozer - no breach of contract - no negligence - no breach of Trade Practices Act.
LEGISLATION CITED:	Trade Practices Act 1974
CASES CITED:	Currabubula Holdings Pty Limited v Blackwood Hodge (Australia) Pty Limited, NSWSC unreported, 20 October 1997
DECISION:	Statement of claim dismissed

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SIMPSON J

29 August 2000

13291/91

CURRABUBULA HOLDINGS PTY LIMITED v BLACKWOOD HODGE (AUSTRALIA) PTY LIMITED

Judgment

HER HONOUR :

1    In these proceedings the plaintiff, Currabubula Holdings Pty Limited, claims damages from the defendant, Blackwood Hodge (Australia) Pty Limited (now known as Marubeni Mining and Excavation Pty Limited) arising from the purchase and sale of a bulldozer in 1989. The damages claimed include damages for economic loss as a result of the plaintiff’s alleged inability to sew crops on its farming properties during certain years. The defendant cross claims for a relatively small amount, representing an unpaid final instalment of the purchase price of the bulldozer.

2    The present claims come at the end of a rather protracted and somewhat unusual history, and it is convenient to begin by setting out, as succinctly as possible, the relevant detail of that history.

3    The plaintiff is a pastoral company of whom two directors are Mr Anthony Michael Paola and his wife. In 1989 the plaintiff conducted farming enterprises at a property known as Currabubula, in or near the Hunter Valley of NSW, and at a property called Durhambone West, which, so far as the evidence discloses, appears to have been situated somewhere near Tamworth, also in NSW.

4    Early in 1989, acting on behalf of the plaintiff, Mr Paola commenced negotiations with representatives of the defendant in relation to the purchase of a bulldozer. Initially he intended to purchase a machine known as a Fiatallis FA200, and such a machine was in fact delivered to Durhambone in February 1989. It quickly proved unsuitable and was returned. No issue arises in relation to this machine. Mr Paola then agreed to purchase a larger machine, a Fiatallis FD14. The total purchase price of this machine was agreed at $219,000, to be paid by way of trade in another bulldozer amounting to $88,000, the balance, except for $30,000, to be paid on delivery, and $30,000 to be paid by three equal six monthly instalments. The negotiations were conducted by Mr Paola acting on behalf of the plaintiff, and Mr Alan Dwyer, a sales representative on behalf of the defendant. A document entitled “Quotation”, dated 21 February 1989, appears to be the most comprehensive document containing the terms and conditions of the agreement. It will be necessary to mention certain of these terms and conditions at a later point.

5    The FD14 was delivered to Currabubula on 22 March 1989. Staff of the defendant spent at least a day at Currabubula Station, training the plaintiff’s staff in the operation and maintenance of the machine.

6    In about March 1990 the machine was taken to the property Durhambone. The manager of the farming operations at the property at that time was Craig Power. The FD14 was used for root cutting and making dams. Certain problems arose in relation to the use of the machine, which the plaintiff now claims demonstrate that the machine was unsuitable for the purpose for which it was purchased, and which have given rise to the present dispute. The problems fall into three categories. Firstly, some time in 1990, the machine began to overheat after relatively short use. This occurred only after the machine was moved to Durhambone. The evidence concerning the commencement and circumstances of the overheating is controversial and it will be necessary to consider it in more detail below. From September or October the overheating became a significant problem. Secondly, there were problems with the air conditioning; the cabin of the bulldozer was not pressurised and accordingly there was nothing to prevent the entry of fine dust into the operator’s cabin. Thirdly, bolts attaching ram rods to the machine had a propensity to break when a blade was used. This was evident both at Currabubula and at Durhambone.

7    The machine was inspected, and its operators observed, by the defendant’s representatives, on more than one occasion. Despite a number of attempts to rectify the problems, all three continued. A heavy earth moving and machinery consultant, Malcolm Robbins, was engaged from time to time by the plaintiff for the same purpose. Eventually, late in 1992, Mr Robbins stripped, cleaned and re-sealed the transmission and torque converter. Although, even during the course of this operation, he was unable to identify a cause of the overheating, that problem seems to have been cured as a result of his treatment.

8 In 1991 the plaintiff commenced these proceedings against the defendant. It pleaded causes of action in contract and negligence. The defendant filed a defence and cross claim. On 6 May 1998 the plaintiff filed an amended statement of claim, re-pleading the causes of action in contract and negligence, and adding claims under ss 52 and 53(a) of the Trade Practices Act 1974. At that time, it seems, the principal focus of the parties lay on the overheating and its causes. Accordingly, in August 1996, pursuant to SCR Part 72, a referee was appointed to inquire and report as to the causes of the overheating. He was not asked to inquire into or report on either of the other matters. On 17 January 1997 the referee reported. His conclusion was, in summary, that inappropriate operation was the most likely cause of the overheating. He observed that the FD14 is a relatively sophisticated and expensive machine, that operators should have been trained to operate it correctly, and that no evidence had been offered to him that the men who operated the machine had been afforded appropriate training. The referee also considered that certain inappropriate implements had been used with the machine and would have increased the likelihood of the operators overloading machine and causing it to overheat. A good deal of attention was paid, during these proceedings, to the implement which the referee mentioned. I will come back to this.

9    On 17 February 1997, by consent, Hidden J ordered that the referee’s report be adopted. Subsequently, by notice of motion the plaintiff sought orders that Hidden J’s consent order of 17 February 1997 be set aside, and that the matter be remitted to the referee for further consideration, inquiry and report as to the causes of overheating and as to certain of the referee’s conclusions. The plaintiff sought leave to adduce additional evidence in relation to the referee’s conclusion that operator error was the most likely cause of the problems, his observations about training of operators, and his conclusions about the use of inappropriate implements. The basis for the application was the asserted failure of the plaintiff’s former solicitors to place all available material before the referee.

10    On 20 May 1997 Murray AJ dismissed the notice of motion: Currabubula Holdings Pty Limited v Blackwood Hodge (Australia) Pty Limited, unreported, 20 October 1997. His Honour expressed the view that the plaintiff was doing no more than seeking a second chance to litigate matters that were before the referee. He considered that the new material the plaintiff sought to rely on added little, other than an expression of what was already before the referee.

11    In April 1998 the plaintiff again applied to set aside the report, this time alleging breach of the rules of procedural fairness in its preparation. This application came before Hidden J, who refused it. His Honour did, however, grant leave to the plaintiff to amend its statement of claim by adding a plea that the defendant was under, and in breach of, a duty to inform it of the cause of overheating, and to instruct its employees on the correct use of the machine so as to avoid overheating.

12    It is not in dispute that, having regard to the adoption of the report and the two unsuccessful applications to reverse the adoption, this court is bound by the referee’s conclusions. This places a significant constraint upon the avenues that remain open to the plaintiff in relation to this aspect of its case. It is not open to the plaintiff now to contend that the machine suffered from some inherent fault or defect that caused it to overheat. It is for that reason that the plaintiff has recast its case in relation to the overheating, so as to seek to attribute blame to the defendant, not in the provision of a faulty machine, but as a consequence of the advice it agreed, expressly or by implication, to give to the plaintiff when consulted about the overheating. To some extent it will be necessary to refer to allied issues in the determination of the plaintiff’s newly formulated claim.

13 Bearing in mind the meandering course the pleadings in this case have taken, it is now appropriate to set out in some detail the basis on which the plaintiff finally pleads its case. This is to be found in a Further Amended Statement of Claim filed on 14 August 1999. The plaintiff pleads causes of action in contract, negligence, and under ss 52 and 53(a) of the Trade Practices Act.

The contract claim

14    The claim in contract is founded upon an agreement, said to be partly written and partly oral, made on or about 28 March 1989, pursuant to which the plaintiff agreed to purchase and the defendant agreed to sell the FD14. The plaintiff claims that, expressly or by implication, it made known to the defendant that it required the bulldozer for the purposes of heavy earth moving and land clearing and that in this respect, it relied upon the defendant’s skill and judgment. (Presumably, this is intended to convey that the plaintiff relied upon the defendant to advise it in the selection of the appropriate machine, and the selection and inclusion of appropriate fittings); that it expressly made known to the defendant that it required (and the defendant agreed to provide) a bulldozer that included a factory fitted blade capable of tilting each way, and a factory fitted air conditioned cab. The plaintiff alleges that it was a term and condition of the agreement that the defendant would provide a bulldozer that (i) was fit for the stated purposes; (ii) included a factory fitted each way tilt blade; (iii) included a factory fitted air conditioned cab; (iv) was of merchantable quality; (v) would perform to the standard described in written material supplied by the defendant; (vi) would be subject to warranty protection and after-sales service, which would include provision of advice on certain matters, and practical instruction on the operation and maintenance of the bulldozer. The plaintiff further alleges that it was an express or implied term that, in the event of the plaintiff making a claim under the warranty for repairs, the defendant would inform the plaintiff of the cause of the apparent defect. The plaintiff claims that the defendant was in breach of each of these terms and conditions. (Although it does not emerge clearly from the pleadings, as the case was conducted it became plain that the central complaint about the air conditioning was the absence of pressurisation. The plaintiff claimed that pressurisation was expressly required by Mr Paola in the course of discussions with Mr Dwyer.)

Negligence

15    The plaintiff particularises its case in negligence in a variety of ways, which may accurately be summarised as follows:

(i) the bulldozer as supplied was defective in that the blade tilt was inadequate and the air conditioning system also was inadequate, and failed to exclude dust; the principal particular complaint about the air conditioning again was that the cabin was not pressurised: the plaintiff claims that in the light of the defendant’s knowledge of the purpose for which the bulldozer was required, to fail to provide (or advise about the benefits of) pressurisation was negligent;

(ii) post sales service was deficient in the failure to diagnose or advise the plaintiff of the cause of the overheating, failure to warn the plaintiff of potential problems arising from the use of a root rake on the machine, failure to check the operation of the tilt cylinder and the blade, and failure to provide proper advice or instruction on the operation and/or maintenance of the bulldozer.

Trade Practices Act

16    The plaintiff’s case under the Trade Practices Act involves s 52 and s53(a). It alleges the defendant’s conduct was misleading or deceptive in that it failed to inform the plaintiff how to operate the bulldozer so that it would not overheat, that it in fact gave misleading advice as to the causes of overheating; and that the defendant falsely represented that the bulldozer was of a standard equivalent to a Caterpillar D-7 when it was in fact of a lesser standard; and that it would be provided with a factory fitted blade and factory fitted air conditioning when in fact it was not. Once again, having regard to the manner in which the case was conducted, the complaint about air conditioning centres upon the absence of pressurisation of the cabin.

17    Although the various claims are framed in different ways to accommodate the requirements of the particular causes of action pleaded, as the plaintiff’s case was presented and argued, it was reduced to three essential propositions. These were:

(i) that it was an essential term of the contract that the bulldozer would be fitted with an air conditioned cabin that was pressurised, and that the machine supplied was not so fitted;

(ii) that the bolts fitted to the ram were not sufficiently strong to withstand the power generated by the engine, rendering the machine unfit for the purpose for which it was purchased, a purpose that was made known to the defendant; and

(iii) that, when it was notified that the bulldozer was overheating, the defendant’s duty extended to diagnosing the cause or causes of the overheating (even if this did involve identifying operator error) and advising the plaintiff of that cause (or those causes), and that the defendant failed to discharge its duty in this respect.

It is convenient to deal with these propositions in reverse order.

Overheating

18    There is no evidence of any overheating during the year the bulldozer was at the Currabubula property. Overheating began after its transfer to Durhambone.

19    Mr Power, the manager of farming operations at Durhambone at the relevant time, pinpointed “early 1990” as the time the machine began overheating, but said that the real problems began in about September of that year. However, between May and September the machine had limited use.

20    Mr Hancock, who was the other employee who primarily used the machine, also said that he noticed overheating in early 1990 but he added that it was not a significant problem until October of that year. This timing coincides approximately with another event of considerable importance. Sometime in 1990 (just when is not disclosed in the evidence) Mr Paola took delivery of a root rake (also called in the evidence a stick rake) which had been made by local metal fabricators to his own specifications and design. There was available such an implement designed by the manufacturers for use on the FD14; the implement designed by Mr Paola differed from the standard attachment in two material respects. Firstly, it was substantially larger. Secondly, it was made of sheet metal, whereas the fitting designed by the manufacturer was made with teeth or tines. It may be assumed (and there was some evidence to this effect) that this feature affected both the weight, as well as the capacity of implement to allow air, soil, and other substances, to pass through. It does not need an expert to show that the use of this implement could have imposed a greater load upon the bulldozer’s engine than would be imposed by the comparable implement made to the manufacturer’s specifications. That does not, however, inevitably lead to the conclusion that it was the cause of the overheating.

21    It seems reasonably plain that, while overheating did occur when the machine was being used with the root rake attached, it was not only on those occasions that it happened, and overheating occurred at other times as well. This would suggest that the use of the roof rake was not the cause (or was not the only cause) of overheating.

22    The starting point of the consideration of the cause or causes of overheating lies in the conclusions of the referee, and these should now be extracted:

“5.3 Overheating would not necessarily have been caused by the use of unapproved implements. However, these implements would have increased the likelihood of an operator overloading the machine and causing it to overheat. Further, they suggest that an exaggerated view was held by Currabubula Holdings of the capacity of the machine.

…

5.6 While no satisfactory evidence has been offered that there was inappropriate or inadequate setting up of the machine which increased the likelihood of overheating, the referee is not able to rule out this possibility entirely.
5.7 Overheating can be caused by inappropriate operation which causes excessive torque converter clip, even at low ambient temperatures. This is the most likely cause of the problems experienced. Sensitivity to overheating as the result of excessive slip increased at higher ambient temperatures.
5.8 Operators should have been trained to operate the machine correctly. This was a relatively sophisticated and expensive machine, but no evidence was offered of training in its use.”

23    Additional light is cast upon these conclusions by certain passages to be found in the body of the report. The referee wrote:

“What problems should an oversize blade cause? Issues to do with its attachment to the tractor are not the referee’s concern here. How could an oversize blade cause overheating? The blade did not significantly impede the air flow over the radiator, because, as is common in such units, the fan was set up to push air forward through the radiator. A problem might, however, arise if the blade were (sic) so hard to push that it could not be handled by one of the standard gears, and as a result caused significant slippage in the torque converter.
The direct effects of the extra mass and leverage of the custom built rake on the bulldozer ram controls are outside the scope of this reference, but the fact that they may have added to the effects of the overheating problems by reducing the availability of the bulldozer to do the work for which it was purchased, does need to be recognised.
The essential conclusion on this matter seems to be that, although these non-standard implements were capable of substantially increasing the loading on the machine, they do not necessarily cause overheating if used with skill and care. However, if used inappropriately they are certainly capable of overloading the machine and causing overheating, and they are more likely to do so than standard implements. (para 4.3, p35)
…
The transmission pressure relief valve does not seem to have been a factor in overheating. In any case, the hypothesis of clutch slip associated with sticking of this valve is a quite unnecessarily complicated way of accounting for marginal overheating of the bulldozer. The torque converter is designed to provide precisely such slip, without the associated problem of wearing out the parts of the system. (para 4.5, p41)
…
While this proposition, that the operator alone is responsible for the overheating, is, in the referee’s view, essentially correct, it is not appropriate to ignore the question of the suitability of the attachments, particularly the non-standard attachments, and the perception (discussed above) of the high capability of the machine which their fitting implied.
…
In the referee’s opinion, Professor Churches [an expert called by the defendant] clearly demonstrated that overheating could be caused by inappropriate operation giving rise to excessive torque converter slip. …(para 4.7, p44)
…
Perhaps the real question should be more along the lines of: is this machine too sophisticated for this application? Can operators with minimal formal training in the proper use of such a machine reasonably be expected to be aware of the fact that they may be operating the machine inefficiently, with the potential to overload the cooling system, through selecting too high a gear or pushing the machine too hard?
…
Why would a potential owner choose a machine with a torque converter? The main advantage would seem to be its ability to cushion the machine from shock loadings on the drive train. This should increase the mechanical reliability in much the same way as an automobile automatic transmission, except that with the bulldozer the operator retains control of gear selection. How much slip should be accepted? Clearly, the less slip there is, the more efficiently the drive train is operating, but can we look for an operator to be fully aware of and sensitive to this issue? The problem may well be a temptation to overestimate the capability of the machine , thereby pushing the drive train into excessive slip and consequent overheating.
The essential issue here is that, when the torque converter output temperature started to rise, the operator should have recognised that this indicated that the slip in the torque converter was excessive, and taken steps to change the way the machine was being operated so as to reduce the load on the machine. Over time, this does appear to be what has happened in this case. It is difficult to avoid thinking that the main result of all the reports and investigations was to convince the operators to use the machine more appropriately.” (para 4.8, pp 45-46, emphasis in original.)

24    The defendant set out to make a case that the use of the non standard root rake was a primary, if not the only, cause of the overheating. This cannot be supported having regard to the conclusions of the referee, in relation to which both parties, not only the plaintiff, are bound. The referee’s report is not in all respects easy to interpret, but it seems to me that what he concluded was that the use of the larger root rake may have intensified the effects of already unsuitable operation of the machine by the plaintiff’s employees who were inadequately trained, in any event, to manage it. Moreover, the use of the root rake, in the referee’s view, was an indication that the plaintiff’s employees overestimated the capacity of the bulldozer.

25    In this way the use of the root rake must be seen as at least a contributing factor to the overheating. But the principal cause was simply an inadequate appreciation on the part of the plaintiff’s employees of the mechanics and capabilities and sophistication of the machine.

26    Having established the cause of the overheating, it is necessary then to consider what was the extent of the defendant’s duty when consulted by the plaintiff with respect to the problem. The plaintiff’s point is that, the defendant having been consulted for advice about the overheating, its duty extended to identifying the problem and ensuring that the operators were adequately trained in the use of the machine, that it failed to do either, and that its failure amounted to breach of contract and/or breach of duty.

27    It is not clear whether or not the defendant disputes that it was under a duty to identify, and communicate to the plaintiff, the cause of the overheating. In case that is in dispute, I record that I am satisfied that it was under such a duty. I am not, however, satisfied that its obligations extended to incorporating a continuing duty to ensure that the plaintiff’s employees, wherever they were, were properly trained in the use of the bulldozer.

28    The defendant makes two answers to the plaintiff’s propositions. In relation to the use of the root rake, a Mr Allan Hogden, who was a field serviceman for the defendant, travelled to Durhambone in October 1990 specifically for the purpose of investigating the overheating. When he arrived he observed that the bulldozer had a very large blade on the front and a large angled ripper on the back. I infer that the blade on the front was the root rake. Mr Hogden operated the machine with the blades, and found that it heated quickly. He formed the opinion that the overheating was caused by the size of the blade on the front of the unit, together with the root ripping blade at the back. He said that he told the manager that he thought that a direct drive unit would be more suitable for the work being done.

29    There was then a conversation about “the blade”. He was told that originally Mr Paola had wanted an even larger one. To this Mr Hogden replied:

“You’ll break the poor little bugger’s back.”

30    This remark is slightly ambiguous. It may be that Mr Hogden intended to refer to the use of the root rake that was in fact purchased, or it may be that his comment was directed to the (hypothetical) use of an even larger one as had been, apparently, contemplated by Mr Paola. No explanation of Mr Hogden’s intention was given in evidence. In my view it is more likely that he intended to refer to the possibility of using a larger blade. Whichever way the remark is intended, it was capable of conveying to Mr Power Mr Hogden’s view that regard should have been had to the capacity of the machine, and specifically to its limitations.

31    About a week later Mr Hogden returned to Durhambone, cleaned the radiator and worked the machine. He found that when the machine overheated, the temperature decreased if the blades were lifted, and he therefore concluded that the machine was overloaded. According to his statement he said to Mr Power:

“The blade is too big for this machine. How long do you push up and how far do you use your rippers because this machine is not designed for long distance ripping or pushing.”

32    Mr Hogden’s evidence was given in a statement which was marked as Ex 9. Although he was extensively cross-examined on behalf of the plaintiff, it was never suggested that the conversations to which he had attested had not taken place. I accept his evidence. It is therefore clear that, as soon as the defendant became aware that the plaintiff was using the bulldozer with the root rake, the plaintiff was advised of its unsuitability. This was clearly in the context of an investigation into the causes of the overheating. To the extent that the use of the root rake was the cause, or a contributing cause, of the overheating, the defendant discharged its obligations under the contract, and in tort, at the earliest reasonable opportunity. It could not have been expected to anticipate, and warn the plaintiff in advance, against the use of an unsuitable attachment.

33    The plaintiff’s second argument is that the defendant ought to have advised the plaintiff of the prospect of torque converter slip, with or without the use of the root rake, because this constituted an unusual risk in the use of the machine. The plaintiff expressly disclaimed any reliance on an inherent defect of the machine, but relied solely upon its particular characteristics, and its sophistication, to support the proposition that the defendant’s duty, (both in contract and in tort) extended to ensuring that the plaintiff’s operators were properly trained.

34    The clear answer to this argument is to be found in the Quotation given to Mr Paola in February 1989. Under the heading “Service Training” the following appears:

“Full service training for council mechanical staff is available through Blackwood Hodge (Aust.) (Pty.) Ltd, and Fiatallis of Australia. These programmes are available either at our Revesby premises or, if more convenient, at the council’s premises.
This service is provided at no cost to the council with the exception of accommodation expenses should the training be carried out at Revesby.”

35    It was common ground that the reference to “councils” should be taken as a reference to any purchaser, and that the training offered was available to the plaintiff’s employees. Indeed, to an extent, the offer of training was taken up by the plaintiff; the defendant’s representatives travelled to Currabubula, when the machine was delivered there, and trained the operators at that property. It is of no small significance that no overheating problems at Currabubula were evident. The plaintiff suggested that this could be attributed to the problems with the bolts, which, it argued, probably prevented sufficient use of the machine to allow the overheating problem to manifest itself; but I consider it more likely that, the machine having been used without the root rake at Currabubula, and the operators having received training, overheating simply was not a problem at that property. There is no evidence that the plaintiff sought to take advantage of the offer of training for its Durhambone employees after the transfer of the machine. Mr Paola expressed confidence in the skill and ability of his employees at Durhambone, and I infer from the absence of contrary evidence, and from his faith in his employees, that the plaintiff did not consider training necessary, and accordingly, made no request of the defendant for training.

36    The defendant can hardly be criticised for not imposing training upon the plaintiff’s employees at another property, a year after the purchase of the machine, and after its transfer. I am unable to see what more the defendant should reasonably have done.

37    The plaintiff’s claims in relation to overheating fail.

Bolts

38    Within a short time of its delivery to Currabubula, bolts on the tilt ram began to break. Mr Paola asked the defendant’s mechanic the reason, and was told that the rams were not strong enough to withstand the power of the machine when it was used for digging with the corner of the blade. They agreed to try using higher tensile bolts, but the problem continued. This happened before and after the bulldozer was moved to Durhambone. Eventually the defendant replaced the original tilt arm with a fixed arm on the machine. This restricted the use of the machine. Early in 1995 the plaintiff engaged an engineering firm who achieved some, but incomplete, rectification.

39    The breaking bolts were not the subject of report by the referee and the cause remains to be determined. Evidence on which to base such a determination is extremely scanty. In its written submissions, the plaintiff invites the conclusion that:

“The essential reason the bolts broke was because the bolts were too weak or the engine was too strong.”

40    The plaintiff thus invites the further conclusion that the machine was not reasonably fit for the purpose for which it was sold. Mr Malcolm Robbins, a heavy earth moving and machinery consultant who was engaged by the plaintiff, provided a statement, or report, dated 24 September 1998. He wrote:

“The cause of the problem is only apparent when you tilt to maximum either left or right causing the cylinder piston to come against the rod end when the ram is fully extended. The combination of the blade angle & tilt with both rams fitted must contribute a greater force than the bolts are capable of withstanding when the unit is configured with the strut limiting the angle & thus keeping inside of the retaining bolt breaking point.”

41    Mr Ronald Crosthwaite, the defendant’s product manager, expressed the view that incorrect operation of the bulldozer would cause the bolts to break, for example by excessive pressure being imposed on a corner of the blade. He instanced the use of the blade to remove tree stumps with more than normal force as an event that might cause breakage. He went on to say that he had seen an operator do just this at Currabubula, using more force than the blade was designed to handle. He said he told the operator that the unit was not designed for that kind of work. He then repeated this advice to Mr Paola. Mr Crosthwaite also said that the defendant had not encountered similar problems in relation to other machines sold. Evidence of this kind is relevant where, as here, the complaint is not of a defect in the manufacture of a specific item, but of an inherent flaw in the design of the machine. Mr Crosthwaite’s evidence in this respect was unchallenged.

42    In these circumstances the conclusion is inevitable that the fault that gave rise to the bolts breaking lay in the manner in which the machine was operated, rather than its design or construction.

43    This aspect of the plaintiff’s claim also fails.

Air conditioning

44    The final matter concerns the air conditioning. This is principally put on the basis of the express or implied terms of the contract, although some reliance is also placed upon negligence, in that, it was argued, the defendant was aware of the circumstances in which the bulldozer would be used, and its duty therefore extended to ensuring that it was fitted with a pressurised cabin.

45    It is common ground that the bulldozer supplied was equipped with a driver’s cabin with air conditioning. It quickly proved to be unsatisfactory, for two principal reasons. The air conditioning unit shook and vibrated until it was subsequently supported by brackets (attached by contractors other than the defendant). The second, and more important, problem was that dust penetrated the cabin creating discomfort for the operator. This occurred because the cabin was not pressurised.

46    The dispute in relation to the air conditioning is, in essence, whether the plaintiff received what it contracted for although I have not overlooked the subsidiary basis that it was negligent of the defendant not to supply (or advise the plaintiff to purchase) a machine with a pressurised cabin. The plaintiff’s case is that it expressly ordered a factory fitted, pressurised air conditioning unit. The defendant’s case is that no such specification was made and that the bulldozer supplied was in accordance with the agreement between the parties.

47    The high point of the plaintiff’s case in this respect is to be found in what appears to be an internal document of the defendant dated 7 March 1989. The precise provenance of this document was never elucidated. It is a handwritten document, addressed “To workshop”, bearing an illegible signature, and is headed “Fiat Allis FD 14 - work to be carried out”.

48    It appears to contain six instructions relating to matters to be attended to by the workshop staff, including checking of filters and oil and cleaning ready for painting. It is the fourth item which gives comfort to the plaintiff. It reads:

“Install pressurised air condt”.

There was no evidence to explain this note. The plaintiff seeks to have it interpreted as an acknowledgment that, regardless of what was contained in any other records of the agreement, an oral arrangement had been made between Mr Paola and the defendant for the installation of pressurised air conditioning.

49    Mr Paola’s evidence, in an affidavit sworn 25 September 1998, was that, at the negotiation stage, he told Mr Dwyer, the sales representative with whom he dealt, that he would require a lockup cabin and integrated air conditioning and that Mr Dwyer had agreed to the sale on that basis. In cross-examination Mr Paola said this conversation had taken place on 20 February 1989. Mr Dwyer denied the conversation.

50    The quotation, provided on 21 February, does little to assist in the resolution of this question. In it, the equipment to be supplied is identified as:

“One (1) only Fiatallis FD14 crawler dozer, generally to your specifications and delivered to your yard.
And including the following, fully enclosed ROPS cabin, air conditioning, angle blade.”

51    The plaintiff sought to rely on evidence that a pressurised cabin was, by 1999, supplied as part of the standard equipment with Fiatallis bulldozers. This evidence was presented by analogy with evidence, sometimes received in negligence cases, of a change in practice by a defendant, following injury or damage, from which an inference may be drawn that a safer system was, without undue expense, available. The analogy does not work, for a number of reasons. Not least of these is that ten years has elapsed between the date of the sale of this bulldozer, and the current practice on which reliance is placed. Counsel for the plaintiff acknowledged that the greater the distance in time between the event the subject of the claim, and the time of the change in practice or policy, the less weight can be accorded to the evidence. In relation to the supply of mechanical equipment, it is common knowledge that technology is constantly developing and advancing, and that what is “standard” in 1999 or 2000 throws no light on what might have been expected in 1989. There is no evidence that pressurised cabins were readily available, or, if they were, at what cost, in 1989. Certainly the evidence does not assist in the determination of the terms of the contract.

52    The plaintiff also sought to rely on evidence that the defendant was aware of the conditions and circumstances in which the plaintiff proposed to use the bulldozer, and this should have alerted it to the need for a pressurised cabin. This argument, too, went primarily to the claim in negligence.

53    Whatever Mr Paola may have had in his mind at the time of the negotiations with Mr Dwyer, I am satisfied that the need for a pressurised cabin was not communicated by him to Mr Dwyer, and that the Quotation accurately sets out the substance of the negotiations and the agreement between the two. The note to the workshop certainly casts some doubt on this conclusion, and is a significant piece of evidence in the plaintiff’s favour. However, an internal document within the defendant’s organisation, never (apparently) communicated to the plaintiff, and not complied with, does not override the Quotation, which was provided to Mr Paola, and which I take, in effect, to be the written form of contract between the parties.

54    In my opinion the most likely scenario is that Mr Paola did not give any real consideration to the question of pressurisation, perhaps assuming that the cabin would be pressurised, or perhaps unaware of the need for pressurisation to be specified. He ordered, in essence, a standard FD14, with the additional features specified in the Quotation, but otherwise as represented in the defendant’s brochures. This is what the plaintiff received.

55    There was some discussion during the course of evidence about differences between the cabin as depicted in the brochure and the cabin of the machine that was delivered, but these were relatively minor differences and not relevant to the question of whether or not Mr Paola had been led to believe that the cabin would be pressurised.

56    In relation to the claim in negligence concerning the air conditioning, it is sufficient to say simply that the evidence does not establish any duty on the defendant to advise the plaintiff of the benefit of a pressurised cabin, and falls very far short of establishing a duty to supply a machine so equipped.

57    The plaintiff has failed to make out its case in relation to the air conditioning.

Trade Practices Act claims

58    There is no evidence to sustain a conclusion that the defendant’s conduct was in any respect misleading or deceptive or that is made any false representations.

59    The plaintiff has failed to make out any case in contract or tort; and has failed to establish misleading or deceptive conduct, or false representation, on the part of the defendant. Accordingly, the plaintiff’s case will be dismissed.

60    I have considered whether, notwithstanding the conclusion I have reached, it would be appropriate to turn to the assessment of damages to which the plaintiff would be entitled should I have reached a different view on any of the liability questions. I do not think that this is a suitable case to take that course. Should the plaintiff successfully establish error in the conclusions I have reached, it would be possible for the matter to be remitted to me for the assessment of damages.

61    I was told during the course of the hearing that neither party wished me to make a decision on costs at this stage. The parties may relist the matter for that purpose at a convenient time. The only order I make is that the statement of claim is dismissed.

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Last Modified: 09/27/2000