Dawson, Peter James v World Travel Headquarters Pty Ltd

[1981] FCA 103

Re: PETER JAMES DAWSON
And: MOTOR TYRE SERVICE PTY. LIMITED
Nos. WA G2-3 of 1981
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Fisher J.

CATCHWORDS

Trade Practices - misleading and deceptive conduct - oral and written statements in the supply of goods and services - motor vehicle repairs - onus and standard of proof in prosecutions.

Trade Practices Act 1974 ss.53(f), 79(1)(b), 163(4)(b), 85(1)(a).

HEARING

ADELAIDE

#DATE 17:7:1981

ORDER

1. The informations relating to both charges G2 and 3 of 1981 be dismissed.

2. The Prosecution to pay to the Defendant its costs with respect to the informations, the same to be taxed if not agreed.

JUDGE1

These two prosecutions are brought for alleged contraventions by the defendant of the provisions of s.53(f) of the Trade Practices Act 1974 ("the Act"). That section so far as relevant to these proceedings is in the following terms:

"53. A Corporation shall not in trade or commerce in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services:-

(a) . . .

(c) . . .

(f) make a false or misleading statement concerning the need for any goods or services, or

(g) . . .

By his information instituting proceedings No.2 of 1981 the prosecutor contended that the defendant -

"being a Corporation in trade or commerce and trading as Goodyear Tyre Services did contrary to the provisions of paragraph (b) of sub-section (1) of Section 79 of the Trade Practices Act 1974 contravene the provisions of paragraph (f) of Section 53 of the said Act in that it did, in connexion with the possible supply or services to one Brian Alexander Argus in respect of his Chrysler Sigma Motor Vehicle Registered Number XXI.884, by its servant, orally make a misleading statement to the said Brian Alexander Argus concerning the need for such services in respect of the said motor vehicle."

The information in respect of proceedings No. 3 of 1981 was in exactly similar terms except that in the latter proceedings the alleged misleading statement was made "in a document entitled 'Lower Half Vehicle Safety' 'Quotation Form'".

The particulars to the summons in proceedings No.3 of 1981 identify the conduct alleged to constitute the contravention and were as follows:

"1. On 18 February 1980 Brian Alexander Argus (Argus) took his Chrysler Sigma Motor Vehicle (Registered No. XXI 884) (the vehicle) to the Defendant's premises at Midland and requested the Defendant through its employee Gary Wayne Dufall (Dufall) to balance the wheels of the vehicle as some vibration was being experienced.

2. Dufall after examining the vehicle in the presence of Argus said to Argus words to the following effect:-
'There is a lot of work needed on the suspension. It is pointless balancing the wheels until the work has been done. Can I give you a quote on what needs to be done?'

3. Dufall after going into the office on the premises handed to Argus a document entitled 'Lower Half Vehicle Safety Quotation Form' numbered 78 and dated 18 February 1980. This document will be referred to by the Prosecutor at the hearing for its full terms meaning and effect.

4. The work and services referred to in paragraph (2) hereof and comprised in the document referred to in paragraph (3) hereof were not needed and the statements contained therein were accordingly misleading.

5. The statements referred to in paragraph (2) hereof and contained within the document referred to in paragraph (3) hereof were made in connexion with the possible supply by the Defendant of the services specified in the document referred to in paragraph (3) hereof."

In fact the Registered Number of the Chrysler Sigma vehicle in question was XXI 844 but no point was taken on this score. Nor did the defendant dispute that it was a relevant corporation and that it did in trade or commerce, did in connexion with the possible supply of services, make in the document, as identified, or orally the alleged misleading statement. The sole issue was whether the statement was in the circumstances misleading.

It was further not disputed that the relevant Minister had pursuant to s.163(4)(b) consented in writing to the proceedings.

The defendant contended that neither the oral statement nor the statement contained in the document was in the circumstances misleading but if they or either of them were misleading it relied on the defence provided by s.85(1)(a) of the Act, namely:

"(1) Subjection to subsection (2), in a prosecution under this Part in relation to a contravention of Part V, it is a defence if the defendant establishes -

(a) that the contravention in respect of which the proceeding was instituted was due to reasonable mistake.

(b) . . .
(c) . . ."

The facts which I find can now be set out in narrative form.

Argus was in February 1980 the owner of the Chrysler Sigma vehicle in question. He had purchased it new in April 1978 and had only used it for his own personal business. Argus agreed that the vehicle had been something of a problem ever since he had had it, having tail shaft and re-assembly problems, a number of tyre problems and a problem with vibration and with noise in the differential. He said that he did not always notice the vibration himself but that it took a passenger to notice it. In February 1980 the vehicle had travelled approximately 40,000 kilometres. In early February 1980 he took the vehicle to Leederville Chrysler for routine service at which time he was having trouble with vibration and also the tyres. He said that he previously had trouble with the tyres on the vehicle. Leederville Chrysler advised him to contact "Goodyear" concerning his tyre problem. Argus said that at the time he was experiencing quite a solid vibration all through the car, mainly through the steering wheel but that the whole car was affected by it. He said that he omitted to ask Leederville Chrysler to balance his wheels but that when he reached home after the service he removed the faulty tyre and replaced it with his spare tyre.

Upon approaching the head office of "Goodyear" concerning his tyres he was advised to go to the Midland branch of that organization. The faulty tyre which he said was in a bad way, with the steel belt coming through the tyre and with wear around almost two thirds of its circumference, was replaced at that branch. Argus said that as a consequence of the tyre being replaced, the vibration which he had felt beforehand was not there though there was still a vibration. He therefore decided to return to Midland to have his wheels balanced as he hoped that would correct the vibration problem.

It was on 18 February 1980 that he took the car back to the defendant at Midland, asked for a wheel balance and told the mechanic of the problem with vibration. It was not disputed that the mechanic whom Argus saw was one Dufall, but Dufall has no memory of seeing the vehicle or Argus on that day, although he agrees that he gave the quotation which contains the statement in question and that he signed the quotation document. He can not deny that he made the oral statement alleged against him. Argus says that Dufall in company with another employee put his vehicle on a hoist and both examined it. Whilst the examination was taking place Argus went into the main office. He said that he saw the mechanics examining the steering components underneath the vehicle, one having a lever in his hand and that they were manipulating the parts at the front end of the car and "working" the tyres. The examination took about 15 minutes. One of the mechanics then came to Argus and said that they had some bad news for him, that it was necessary for a certain amount of work to be done on the front assembly and that it would be pointless to do a wheel balance until that work had been carried out. He was told that the work would cost approximately $300 and that he could be given a quote, Argus said that he would like a quote, which he was given and which was headed "lower half vehicle safety" and contained the following details:

"Tie Rod Ends/Inner R.H.S. Replace 21.50
Tie Rod Ends/Outer L.H.S. Replace 21.50
Idler Arm/Idler Bush Replace ? 45.00
Shocks-Front Replace H/Duty Struts 135.00
Shocks-Rear Replace 39.50
Wheel Alignment-Front Adjust
Pitman Arm Replace ? 50.00

________ $312.50" ________

Dufall signed the quote as the person having carried out the inspection and he placed the two question marks on the document.

Argus was then taken to the car, which was still on the hoist, at the suggestion of the mechanics to see the parts referred to in the quote. He said that he was taken under the car and shown some of the steering arms with movement in them. He says he was told that the movement should not be there and that was why the work was required. The mechanics were able to twist the tie rods and move the front tyres up and down. Argus said that he only had a small knowledge of motor vehicles and that he relied mainly on the judgment of the mechanics but that he definitely noticed movement. The mechanics also indicated oil stains on the strut of the front right hand shock absorber and said that these stains indicated that the shock absorber was leaking and needed replacing. They also said that the two rear shock absorbers were not functioning and that they should be replaced.

Mr. Argus said that he was "a bit upset" to discover that his vehicle required this amount of work performed on it so shortly after service being done by Leederville Chrysler. Thus the first thing that he did after receiving the quote was to telephone William Noel Griggs the Manager of Leederville Chrysler to tell him that "we appeared to have a problem with the car and I wanted to have a discussion with him about it and see what it was all about". In fact it was the following day 19 February 1980, that Argus took the vehicle and the quote to Griggs. Argus said that the discussion with Griggs was not very friendly and that he put it to Griggs that he was concerned how it came about that the vehicle had been serviced most of its life by Leederville Chrysler and the need for the work quoted had not been picked up. Griggs acknowledged that Argus was rather upset.

It was in this atmosphere that Griggs made his inspection, which was performed by Griggs using a floor jack to lift the front of the vehicle about one foot above the ground and examining the relevant parts. Griggs did not get under the vehicle. Argus said that Griggs informed him that as far as he could tell there was nothing wrong with the vehicle, that the parts which had movement should have movement when the vehicle was jacked up but that there was no movement when the vehicle was on the road. Griggs agreed that the rear shock absorbers did need replacing, and during the inspection a mechanic adjusted the left front wheel bearing and the damper on the steering box. Argus said that Griggs told him that in order to satisfy him completely that no work was needed he would arrange for the vehicle to be inspected by the Royal Automobile Company at no cost to him. Griggs said that he saw the oil on the front shock absorbers which he considered came from a spillage and he wiped it off later.

Griggs described in some detail the tests that he made for the purpose of checking the movement in the lower ball joints, namely by grasping the wheel of the vehicle on the hoist at what was described as 12 o'clock and 6 o'clock and also at 3 o'clock and 9 o'clock and moving the wheel in the horizontal phase. He said that thereby an indication could be obtained whether the wheel bearings and the lower balls on the front suspension were loose or needed adjusting. The idler arm and pitman arm were also checked by the movement of the wheel whilst holding it at the 3 o'clock and 9 o'clock positions. He also checked the recoil of the shock absorbers by bouncing the vehicle. Griggs' opinion after conducting his tests was that apart from the rear shock absorbers the work quoted was not necessary.

Griggs said that at the end of his tests Argus was still somewhat apprehensive and that he was not satisfied that Argus was "behind him" and accepted his opinion. For that reason, he said he offered personally to take the vehicle to the Royal Automobile Company to have an independent inspection to satisfy Argus that what he was telling him was the actual fact.

The vehicle was taken to the Royal Automobile Company by Griggs where it was inspected by one Neville Lindsay Campbell, Campbell was given a copy of the quotation prepared by Dufall and he gave a detailed description of the tests which he performed. As it is not necessary for me to make an objective determination of what are the appropriate tests and whether such tests were properly carried out and produced the correct results, I need not refer in great detail. It would only be if mistakes were established as having been made or the tests or judgments were utterly unreasonably arrived at or held that such pronouncements would be necessary or appropriate. I am not required to rule on whose opinion is correct but only whether Dufall's opinion was reasonably held.

Campbell gave on 26 March 1980 a written report to Griggs upon the results of his tests in the following words:

"Today we inspected front suspension and steering components on above vehicle and found no abnormal wear in the following:

Idler arm bush
Front suspension legs
Pitman arm
Tie rod ends

Replacement of these components is not considered necessary."

Campbell was firmly of opinion that the wear to the tie rod ends was only normal wear in the circumstances of the vehicle's mileage and was not abnormal. The check that he made of the front end section of the vehicle was done without assistance and was the same check as the Royal Automobile Company performs as a pre-purchase check. He acknowledged that a pre-purchase check was "necessarily superficial", which comment he said would apply to his check of Argus' vehicle. He also agreed that nothing was reported to him of the history of the vehicle's troubles and that such a report would properly influence a mechanic's check and judgment. Another mechanic, he agreed, could reasonably react differently. Moreover it was his opinion that the tie rod ends could not possibly be out of specification after 60,000 kilometres and if they were it was indicative of rough usage of the vehicle or sub-standard parts.

On 8 May 1980 the branch of the Trade Practices Commission in Perth wrote to the defendant advising it of the contention that there had been a contravention of the Act. Thereafter a number of further tests and inspections were made of the vehicle, some of them being routine service work and others were tests by independent experts. The examination which was the most significant for the purpose of determining the reasonableness of Dufall's opinion that the tie rod ends were worn was that carried out by Griggs on 24 March 1981 when he made measurements in the presence of a representative, the area Service Manager, of the Manufacturer, Chrysler (now Mitsubishi) Corporation. This was performed with a vernier by which was measured both the compressed length and the free length of the ball joint. The difference in the two readings indicated the actual movement, which if less than 1.524 millimetres would be within permissible tolerance as laid down by the manufacturer. Griggs interpreted the result of his tests as being that the movement of each joint was well within that tolerance, the greatest movement being .18mm and the least being .11mm. However under cross-examination he acknowledged that he had misread the measurement, which in truth were in the range of 1.8mm and 1.1mm. Thus approximately 20,000 kilometres and twelve months after Dufall's examination, the movement of only one joint was within tolerance, and the other three, on the manufacturer's recommendation, required replacement.

The defendant's witnesses were Dufall and the Service Manager of the Company, McKinlay and two outside experts. Both Dufall and McKinlay satisfied me that they were competent and conscientious and there was not the slightest indication that either of them, and Dufall in particular deliberately represented the unnecessary work was required. The two outside experts were respectively Douglas John Costello ("Costello") the principal of the Carlisle Technical College, which was described as the State's foremost automotive training College for tertiary students and apprentices and William Ernest Lowe ("Lowe") who was head of Stirlin Adjusters Pty. Ltd. a company acting as consultants to the insurance and automotive industry. Its primary activity was to determine the cause, effect of and cure for vehicle problems.

Both were impressive witnesses who criticised the tests of Griggs and Campbell and who were of the opinion that Dufall's judgment of the need for the relevant work was probably reasonably held.

In the context of such conflicting views from so many experienced technicians it is as well to reiterate the issue before me as I see it, namely whether I can be satisfied beyond reasonable doubt that the quoted work or some part thereof was not needed. It is axiomatic and indeed accepted by both parties that there is no obligation upon the defendant to establish that any of that work was necessary. The need for the work was a matter of judgment and in the circumstances of this case not capable of positive proof one way or the other. The prosecutor must discharge the onus of establishing to the relevant degree of certainty that the fact that the work was not needed was the only judgment or opinion which reasonably could be held. Any reasonable doubt must be resolved in favour of the defendant. Furthermore I accept the submission of counsel for the defendant that work which is desirable or preferable is "needed". This construction is consistent with Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 A.L.R. 77 at 82 and the text book writers. Services may be "needed" even though it is not imperative or essential that they be performed forthwith.

Coming down to the facts of this matter Dufall expressed a view as to the need for the work. Is that a view, a judgment or an opinion which no reasonable man could in good faith have held? This is a matter for objective determination by me based upon and in the light of the opinions expressed in evidence. I have no reason to doubt the honesty, the competence or the truthfulness of any of the witnesses, all of whom were experienced and conscientious. Nor did I detect any attempt on the part of any witnesses to cover up for possible past neglect or oversight. However, unless I can find that the evidence in particular of the defendant's outside witnesses is unacceptable or discredited in cross-examination, there must remain a doubt whether the prosecutor can discharge his onus.

As the prosecutor and his witnesses carry the obligation to establish the positive case, it is appropriate to assess that case by reference to the opinions of Costello and Lowe. Both of these witnesses heard all the evidence concerning the examinations of the vehicle by Dufall (as related by Argus), Griggs and Campbell Counsel for the prosecution did not suggest any ground upon which I could or should discount their evidence. Rather he submitted I should, approach the tests of Dufall and the quote he tendered as having been done contrary to Argus' instructions. I discuss this submission later. Both Costello and Lowe were of the opinion that Dufall and his assistant were more thorough in their examination and they attached much significance to the fact that the examination was performed and the work recommended in the light of their knowledge of the vibration problem. This problem was not brought to the attention of Griggs and Campbell when they made their examinations. Both Costello and Lowe were critical of these examinations. Furthermore they drew attention to the fact that both Griggs and Campbell not only were unassisted at the time of examination but each acknowledged that they were influenced by the relatively low mileage of the vehicle in arriving at their conclusions. Their opinion that Dufall might reasonably have determined as a matter of judgment that the work was necessary in 1980 was confirmed by the measurement tests in 1981, whereas the results of such tests did not support and in fact denied Griggs' opinion in March 1981 that replacement of parts was not necessary even at that time. With the benefit of hindsight each of them was of positive opinion that at least some parts of the quoted work was probably needed in February 1980. Furthermore Costello agreed that different tests often produced different results and that it was quite possible for different mechanics to differ reasonably as to the need for the replacement of parts. In general therefore I cannot see that I can be satisfied to the requisite degree of certainty that the work quoted or some part of it was not needed in February 1980. The submission of counsel for the prosecution however requires me to take the matter somewhat further.

In the first instance he submitted that I should be considering the need for the work in the light of Argus' request for a wheel alignment. He contended that for the purposes of a wheel alignment there was no need for the work and that a wheel alignment was established by subsequent events to be all that was necessary. On this score the contrary case from the defendant was that the need for the work must be viewed in the light of the acknowledged vibration problem. Such an approach receives support from the prosecutor's particulars in support of the summons where it was stated that Argus "requested the defendant through its employee Gary Wayne Dufall (Dufall) to balance the wheels of the vehicle as some vibration was being experienced" (emphasis added). There is no doubt that the evidence established that the vehicle had a vibration problem and that Argus was concerned about that problem throughout the relevant time and even as late as March 1981 when he spoke about it to McKinlay. There is likewise no doubt on Argus' evidence that he drew Dufall's attention to this problem and the inference can readily be drawn that the latter took it into account when making his examination and recommendation. If it was a wheel alignment alone that Argus wished and if he had not at least by implication sought assistance on the vibration problem he surely would have said so expressly after Dufall told him that it was a waste of money doing a wheel alignment. Instead he accepted Dufall's invitation to view the allegedly defective parts and to be given a quotation for replacement thereof. In my opinion there is no justification for restricting the "need" to the work involved in a wheel balance rather than what was needed generally. Furthermore there was evidence from Costello to the effect that if vibration occurs at all speeds (as it did in the present instance) his "teaching and practice" is that the problem is more than wheel balance and that steering wear could well be a factor. In my opinion it is proper to consider the matter of need in the way in which it is stated by the particulars, namely a request for a wheel balance as "some vibration was being experienced".

It is also necessary to determine whether the prosecution has established that in respect of any particular item of work there was no need for it to be performed in February 1980. Separate consideration must be given to each item or class of items. In the quotation Dufall recommended replacement of the Inner Tie Rod End on the right-hand side of the vehicle and the Outer Tie Rod End on the left-hand side thereof, in each instance at a cost of $21.50. Such a need would doubtless, on the evidence, have been determined as a result of his tests and in the light of the complaint of vibration at all speeds. The tests carried out by Griggs and Campbell have been compared unfavourably with those conducted by Dufall and his assistant and without the knowledge of the vibration problem. Subsequently in March 1981 three of the four are shown by measurement to be worn beyond manufacturer's tolerance. I can not say in the circumstances that the tests conducted by Griggs and Campbell and their opinions based on such tests satisfies me beyond reasonable doubt that the work recommended was not needed.

Dufall referred next in his quotation to the need to replace the Idler Arm/Adler Bush at a cost of $45.00. He accompanied this recommendation with a question mark. The recommended replacement of the Pitman Arm can be considered with the Idler Arm/Idler Bush as it also is accompanied by a question mark and the cost was $50.00. The same comments and criticisms can also be made on the tests of Griggs and Campbell in respect to this item as again the vibration problem has relevance. Each of them Costello and Lowe attached significance to the fact that the vibration occurred at all speeds and said that while wheel alignment might be the problem it frequently was much more. Both agreed that a mere wheel alignment was a waste of time and that it was reasonable of Dufall to suspect wearing in those items. I am not satisfied that the prosecutor has made out his case in respect of these two items.

The next disputed items are the "Front Shocks" and the "H/Duty Struts" which were alleged to require replacement at a cost of $135.00. They were identified as being McPherson Struts. Lowe in his evidence was of opinion that the vibration problem could be linked with trouble in the McPherson Struts particularly as all witnesses agreed that Dufall's recommendation for replacement of the Rear Shock Absorbers was correct. It is again reasonable to assume that the former recommendation was made in reliance upon the vibration complaint as well as the presence of oil stains on one of the struts. Such oil stains were not visible at the time of the inspection by Campbell and he does not describe them as McPherson Struts but as Front Suspension Legs. Both Costello and Lowe agreed that the presence of oil stains was a matter of significance and that the only other test was that of bouncing the vehicle. A combination of these two tests, presence of oil and bouncing, would indicate to a mechanic whether the shock absorbers were working properly. Lowe was of opinion that the defective rear shock absorbers could affect the performance of the McPherson Struts, that the oil thereon could only have come from the Struts and that it was possible for a Strut to leak a small amount of oil on one occasion only. He further stated that if one Strut was defective it was desirable to replace both. Costello agreed with these opinions of Lowe, and Campbell acknowledged that in most cases oil on a McPherson Strut could only have come from the Strut and that the defective rear shock absorbers could affect the front suspension. Campbell also agreed in respect of this item as well as the other items that another mechanic could reasonably reach conclusions different to his.

It is my opinion that in respect of each of these items the prosecutor has not established on the evidence either that the work was not necessary or that Dufall could not have reasonably reached the conclusion that it was necessary. The prosecution must fail in respect of both the written and the oral statements and each information must be dismissed with costs to be taxed if not agreed.