Davey v Perpetual Trustees and National Executors of Tasmania Ltd
[1988] TASSC 93
•14 July 1988
Serial No B25/1988
List "B"
COURT: SUPREME COURT OF TASMANIA
CITATION:Davey v Perpetual Trustees and National Executors of Tasmania Ltd [1988] TASSC 93; B25/1988
PARTIES: DAVEY
v
PERPETUAL TRUSTEES AND NATIONAL EXECUTORS OF TASMANIA LIMITED
FILE NO/S: 340A of 1987
DELIVERED ON: 14 July 1988
JUDGMENT OF: Nettlefold J
Judgment Number: B25/1988
Number of paragraphs: 34
Serial No B25/1988
List "B"
File No 340A of 1987
DAVEY v PERPETUAL TRUSTEES AND NATIONAL EXECUTORS OF TASMANIA LIMITED
REASONS FOR JUDGMENT NETTLEFOLD J
14 July 1988
In this action liability has been admitted. The following items of damage have been admitted:–
Pre–accident value of Scania Prime
Mover registered number BP 2096 $20,000.00
Less salvage 4,000.00
16,000.00 $16,000.00
Towage 525.00
Loss Assessor's fees 173.10
$16,698.10
The Scania Prime Mover was a vehicle used in the plaintiff's transport business. He claims that, as a result of the damage to the vehicle, he suffered a loss of profits which amounts to the sum of $24,837.72. The defendant does not admit that loss and puts the plaintiff to proof.
The essential witnesses for the plaintiff are the plaintiff himself and his Accountant. Having regard to the way the case developed the important points from the evidence are the following.
The accident occurred on 22 August 1986. Just prior to that date the plaintiff had acquired a new Prime Mover and Jinker. I gather that these items had a total value of $130,000, or of that order. But he did not expend that amount. He leased this equipment from a financier.
At the time of the acquisition of this very expensive equipment the intention was to expand the plaintiff's business, known as "Cressy Transport" into a business employing the Scania Prime Mover and the new equipment.
The plaintiff said that he had entered into an arrangement with an organization which he described as "Hume and Kerrison" whereby he was to cart their mill logs. He had also arranged to cart logs for a Mr Alan Peck. His idea was that the new equipment would be engaged in the business of log carting. He was going to hire a driver to operate that equipment. He would continue to operate the Scania Prime Mover and the equipment used with it doing all forms of carting other than log carting, although he envisaged at one stage that the Scania Prime Mover might also do some log carting.
His hopes were dashed because, as a result of the accident, the Scania Prime Mover became a "constructive total loss". That is to employ an expression used by insurers but not by him.
Within a few days of the accident he transferred the relevant licence held in respect of the Scania Prime Mover to the new Prime Mover. He set out to work very hard as the operator of that vehicle and the ancillary equipment. His plans for an employee driver were destroyed. He had to revert to a one man one Prime Mover operation. After the accident until the hearing he found himself working seven days per week without any holidays. Some days he worked anything up to 18 hours. In the six months before the hearing he had averaged a working day of 15 – 16 hours. He also said that the period September to the following April was a busy season for farmers and he could be working more than 15 hours per day in that period. The minimum working hours on any day since the accident was 10.
Despite these demanding working hours he was obliged to let out a lot of work to other cartage contractors. The principal reason for this was that he was engaged doing other work. He would get orders for work which he was unable to do. With a view to this case, he made notes of these orders. Some of these orders were to cart grain, work which he did with the Scania Prime Mover. But he could not do this work with the new equipment because it would cost $3,000 to equip the new Prime Mover with pumping gear. It would have been necessary to convert the trailer also. He engaged a Mr Barker to do those jobs. Mr Barker had a truck with pumping gear.
In an attempt to preserve the goodwill of his transport business, the plaintiff would enter into an arrangement to do a carting job for a customer at a given price and then arrange for another cartage contractor to do the job at the same price. The latter would send a bill to the plaintiff. The plaintiff would then send a bill to his customer, naming himself as the person to whom the money was owed, the amount of the charge being precisely the same amount as that demanded of him. He was looking to the future. (In this statement I ignore the immaterial detail that with some jobs the other contractor on some occasions used some of the plaintiff's equipment. There is no adequate reason for thinking that any significant profit resulted to the plaintiff from the use of his equipment).
Speaking of "sub–contract rates" in the business for certain types of work the plaintiff said that the rate was 77 cents per kilometre after the accident in 1986 and for a period in 1987. The rate was then increased to 80 cents per kilometre and, more recently, the figure has reached 85 cents per kilometre.
The plaintiff recorded not only jobs which he passed on to other contractors but also jobs which were lost as he could not arrange for anyone to do them.
The plaintiff contends that, if the Scania Prime Mover had not been destroyed, he would have been able to do all the jobs which he passed on to other carriers and all the jobs which were lost. He would have had two Prime Movers if the Scania had not been destroyed.
The plaintiff intended to pay the new driver $300 – $400 per week, depending on the actual hours of work. He intended to employ the driver on a full time basis. He agreed that the work which he was obliged to pass on to others or forego altogether would not keep a unit and driver working for more than six to nine months. The new unit driven by the employee driver was going to be engaged carting logs. There would be "enough logs all the time". The plaintiff also said that once he got both vehicles on the road he would be able "to chase work". But with one vehicle he is limited in what he can do.
The Scania Prime Mover was 12 years old. The speedometer showed 339,000 kilometres, but it had not been registering during the three years the plaintiff owned the vehicle. The plaintiff hoped to get another three years' work out of the Scania.
The plaintiff did not have a cart licence for the new vehicle at the time of the accident. He had completed an application for a new cart licence about a fortnight before the accident. To the proposition "cart licences are not easy to obtain for a second vehicle" he replied "not necessarily".
During cross–examination the plaintiff said that he was busy after the accident and had as much work as he could handle. Later he said that, if the accident had not occurred, the Scania Prime Mover would have done the general work and the new Prime Mover would have done log carting, having been rigged with the log jinker for that purpose. If the accident had not occurred he would not have been obliged to "knock back" the general freight work he had been offered as the Scania "would have been around to do it". Because of the loss of the Scania, he has been switching from logs to general freight and vice versa, "chopping and changing trailers day and night to do the work". Later he said that, over the two years since the accident, he has been "tending to go for logs" and neglecting general freight because he has not been in a position to do it. He said that over the last six months he has been concentrating mainly on doing the logs "because that is where I can earn my most income from".
The plaintiff said that, if the accident had not occurred, if general freight was quiet, he could have transferred the Scania off general freight and on to logs as well.
The plaintiff claimed that there was a considerable amount of work he could have done with two vehicles. He mentioned that there are a lot of stock sales through the busy time of the year and in the past he had got a lot of turnover out of them. He found himself neglecting them because he had only the one vehicle and there was other work to be done. With the two vehicles he could have carted grain and gravel, but he could not cart either of those commodities with the equipment he had after the accident.
Later the plaintiff repeated that the employee driver was going to be driving the new Prime Mover carting logs full time. Because there was enough work to keep the new truck going full time on the logs, he would have been driving the Scania on the general freight and "it wouldn't have mattered if there wasn't enough work to keep me going all the time because I wouldn't have to worry about paying wages as long as I kept the new truck working all the time and that was earning the wages to pay the driver I'd be right". He said that he did not consider that there would necessarily have been idle time with the Scania but there could be "the odd two or three idle days ...". But "what I intended to do was .... was once I ran out of general freight work I was going to put the bolsters on the trailer and I'd be going to cart a load of logs". Later he said "Once I got them both on the road I'd be in a position to chase work whereas as it is I can't because I'm limited to what I can do now".
The plaintiff called his Accountant, Mr R G McBain, who produced the following figures:–
(1) Net profit lost on work referred to
other contractors or lost altogether
(excluding grain contracts) $21,040.72
(2) Net loss on grain contracts 3,797.00
$24,837.72
The figure of $21,040.72 is simply arrived at in this way:–
(a)The Plaintiff's instructions to Mr McBain are that, if he had done the work personally which he was obliged to give to other contractors or forego altogether, the gross receipts from that work would have been $92,705.72.
(b)On Mr McBain's examination of the plaintiff's accounts and on his consideration of the plaintiff's instructions, he estimates that the additional expenses which would have been incurred in earning that additional sum of $92,705.72 would have been $71,665.00. The latter figure represents 77% of $92,705.72.
(2) Net profit lost on grain contracts which the plaintiff would have performed but for the accident $3,797, made up as follows:–
Gross income lost according to figures
supplied by the plaintiff $16,730.00
Less additional expenses which would
have been incurred had this work
been done, being the figure of 77%
of turnover previously mentioned 12,933.00
$ 3,797.00
The plaintiff's profit and loss accounts for the years ending 30 June 1986 and 30 June 1987 disclose net profit figures of $12,476 and $16,818 respectively.
On that basic material counsel for the defendant made three submissions, each quite limited in scope. They were concerning the grain contracts allegedly lost, whether the plaintiff could have sub–contracted at a profit some of the work which he lost and whether there should be some reduction for contingencies.
In relation to the first point, the lost grain contracts, it was submitted that this loss had not been proved. It was purely speculation. The submission was that there was no acceptable evidence that the plaintiff lost these contracts as a result of his vehicle being destroyed in the accident. Conversely, there was no evidence that he would have been able to perform these contracts if his vehicle had remained on the road. It may have transpired that the contracts would have been granted to some one else in the ordinary course of events. Or, it may have been the fact that, even with two trucks on the road, given all the work the plaintiff has in fact done and all the other work that he says he lost, that he may not have been able to meet these contracts as and when required by the farmers to do so. It was put that it was a matter of what inference was to be drawn on the point. If the inference drawn is favourable to the plaintiff there ought to be some reduction for the contingency that he may not have been able to perform the contracts as and when required.
The second point made by counsel for the defendant really involves the proposition that the plaintiff has failed to mitigate the loss by sub–contracting some of the work he claims to have lost at a small profit.
The final proposition was that two factors should produce a small reduction for contingencies. They were:–
(a)The Scania Prime Mover was an old truck and the likelihood of breakdown was a real likelihood, notwithstanding that the plaintiff had spent a considerable sum of money on the unit in the year or two before the accident, principally on the engine and gear box.
(b)The Plaintiff may not have been granted a second cart licence or may not have been granted one immediately. Cart licences are not granted automatically.
I was impressed by the plaintiff as a witness. I am satisfied that he is an honest, hard working man and, generally speaking, the data he supplied is reliable.
Turning to the submissions of defence counsel, I am satisfied that the plaintiff does have a reasonable claim in respect of the lost grain contracts. He could have got the work if the two Prime Movers had been available. After the destruction of the Scania Prime Mover, the new unit was not equipped to cart grain and sand. And, in any event, the plaintiff was very busy keeping up with his other commitments. However, there is some substance in counsel's submission as we must be careful not to treat two birds in the bush as equal to two birds in hand.
I do not consider that there is any substance in the second point made by defence counsel. I infer that the plaintiff and the other contractors to whom he transferred work were all operating on much the same rates and the people who dealt with them, generally speaking, would have been familiar with those rates. I do not think that there was room to extract from the customers any significant profit margin.
In reaching a final figure for damages for loss of profits, one should have regard to the fact that the Scania was reaching the end of its economic life. The risk envisaged in the submission should be given weight in the final result.
No doubt it is true that second cart licences are not granted automatically. But one is left with precious little material to assess the significance of the relevant contingency.
Inevitably there are many assumptions embedded in the figures. To notionally alter some of them in a way which could be justified on the evidence could make a very big difference in the result. An example is sub–contractors' wages in the Accountant's figures. In the end a just figure can be arrived at only by looking at the material carefully but, to a degree in the round. The figure for loss of profits is fixed at $21,000.
For these reasons there will be judgment for the plaintiff for $37,698.10.
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