Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd

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This decision has been amended. Please see the end of the decision for a list of the amendments.

Court of Appeal

New South Wales
Case Title: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd
Medium Neutral Citation: [2014] NSWCA 158
Hearing Date(s): 29 - 30 October 2013 and 17 December 2013 (on the papers)
Decision Date: 21 May 2014
Before: Ward JA at [1];
Emmett JA at [2];
Gleeson JA at [18]
Decision:

1. Appeal allowed in part.

2. Cross-appeal allowed in part.

3. Vary orders 1 and 2 made by the primary judge on 27 February 2013 by amending the reference to "the plaintiffs" to read "the second plaintiff" and by inserting the figure of "$216,424.32" in place of "$254,468.80".

4. Set aside order 2 made by the primary judge on 18 April 2013 in respect of the amount of interest on the judgment from 1 March 2005 to 27 February 2013.

5. Direct the parties to agree upon and provide to the Court the calculation of interest required by order 2 made on 27 February 2013, as varied, by order 3 above.

6. Vary order 6 made by the primary on 27 February 2013 by inserting the words "s 101(4)" in place of "s 100".

7. The respondents' notice of motion filed 14 November 2013 be dismissed with costs.

8. Direct the parties to file within 14 days agreed short minutes of order giving effect to these reasons.

9. In default of agreement:

(a) the appellants file and serve within 14 days proposed short minutes of order, together with brief written submissions in support;

(b) the respondents file and serve within a further 14 days their proposed short minutes of order, together with brief written submissions in support.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: COSTS - Challenge to costs orders - ss98, 100, 101 Civil Procedure Act 2005 - Failure to demonstrate House v R error in exercise of discretion
DAMAGES - General Principles - Mitigation of Damages - Plaintiff's duty to mitigate - Whether there was a failure to mitigate or causation of loss on the part of the respondent - Onus of proof - Relevance of respondents' conduct to their claim for lost profits - Whether the Court erred in reducing awardable damages
DAMAGES - General Principles - Part VIA Trade Practices Act 1974 and Part 4 Civil Liability Act 2002 - Proportionate Liability - Concurrent Wrongdoers - Apportionable Claim - Whether a duty of care was owed - Legislation only applies if civil liability arose before 26 July 2004
DAMAGES - Calculation of Damages - Loss of Profits Claim
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Details
Case
[2014] NSWCA 158
Decision Date

CaseChat Overview and Summary

The appeal concerned a dispute between Doppstadt Australia Pty Ltd (appellants) and Lovick & Son Developments Pty Ltd (respondents) regarding the purchase of a shredder. The primary judge had entered judgment for the respondents for $254,468.80, awarded interest, and ordered the appellants to pay 40% of the respondents' costs. Both parties appealed aspects of this decision. The respondents had purchased a Doppstadt AK430K shredder in February 2004 after Mr Lovick investigated various suppliers and had discussions with Doppstadt Australia representatives between October 2003 and February 2004, during which he alleged certain representations were made about the machine's suitability, reliability, and performance.

The court was required to determine whether the primary judge erred in their findings on liability, damages, interest, and costs. Specifically, the appeal and cross-appeal raised issues concerning misleading or deceptive conduct under the *Trade Practices Act 1974* and *Fair Trading Act 1987*, representations as to future matters, the duty to mitigate damages, the calculation of lost profits, the application of proportionate liability provisions, and the proper exercise of discretion regarding costs orders. The court also considered whether a *Jones v Dunkel* inference should have been drawn from the failure to call a witness or tender certain documents, and whether additional evidence should be admitted.

The court allowed the appeal in part and the cross-appeal in part. It varied the primary judge's orders by amending the reference to "the plaintiffs" to "the second plaintiff" and reducing the judgment sum from $254,468.80 to $216,424.32. The court also set aside the order regarding the amount of interest on the judgment from 1 March 2005 to 27 February 2013, directing the parties to agree on the calculation of interest. Furthermore, an error in the costs order, referencing section 100 of the *Civil Procedure Act 2005* instead of section 101(4), was corrected. The respondents' notice of motion to adduce additional evidence was dismissed with costs.

Orders

Orders of the court

1. Appeal allowed in part.

2. Cross-appeal allowed in part.

3. Vary orders 1 and 2 made by the primary judge on 27 February 2013 by amending the reference to "the plaintiffs" to read "the second plaintiff" and by inserting the figure of "$216,424.32" in place of "$254,468.80".

4. Set aside order 2 made by the primary judge on 18 April 2013 in respect of the amount of interest on the judgment from 1 March 2005 to 27 February 2013.

5. Direct the parties to agree upon and provide to the Court the calculation of interest required by order 2 made on 27 February 2013, as varied, by order 3 above.

6. Vary order 6 made by the primary on 27 February 2013 by inserting the words "s 101(4)" in place of "s 100".

7. The respondents' notice of motion filed 14 November 2013 be dismissed with costs.

8. Direct the parties to file within 14 days agreed short minutes of order giving effect to these reasons.

9. In default of agreement:

(a) the appellants file and serve within 14 days proposed short minutes of order, together with brief written submissions in support;

(b) the respondents file and serve within a further 14 days their proposed short minutes of order, together with brief written submissions in support.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

A further hearing on the questions of interest and costs took place in February 2013 and judgment was given on 27 February 2013: Lovick & Son Developments Pty Ltd & Anor v Doppstadt Australia Pty Ltd & Anor (No 3) [2013] NSWSC 135 (Judgment No 3). The result of the proceedings was that the primary judge ordered that:(1)judgment be entered for the respondents for $254,468.80;(2)interest be paid to the respondents on that sum from 1 March 2005 to 27 February 2013. (Note: following agreement between the parties as to the calculation of interest the Court gave judgment on 18 April 2013 for interest in the sum of $183,046.69); (3)the appellants pay 40% of the respondents' costs of the proceedings, as agreed or assessed; and(4)the appellants pay interest at the rates prescribed under Civil Procedure Act 2005 (NSW), s 100 on amounts of costs actually paid by the respondents. (Note: the reference in the orders to "s 100" was an error. It should have been "s 101(4)": see [410] below.) The appellants have appealed against each of the judgments in respect of liability, damages, interest, and costs. The respondents have cross-appealed against the judgments on damages and costs. Commencing in August 2003 Mr Lovick investigated the purchase of a "shredder" or "grinder" from a number of different suppliers - Peterson, Vermeer, and Van Gelder. Mr Lovick was seeking such a machine to expand Engineering's contracting business to process green waste for local councils to a finer end product suitable for sale as horticultural mulch, which is resaleable by local councils. Mr Lovick inspected a Peterson machine at a dealership at Albury and was impressed with what he saw, but was informed that there was a six-month waiting list for delivery. Following a recommendation by an officer of a local council he made contact with Doppstadt Australia on 31 October 2003. Between that date and the first week of February 2004 Mr Lovick met or communicated with representatives of Doppstadt Australia, including Mr Davis, on at least five occasions. He claimed that certain representations were made to him orally and in writing in relation to the suitability, reliability, and performance of a Doppstadt AK430K high-speed shredder. Ultimately, Developments purchased such a shredder, serial number 371, from Doppstadt Australia in February 2004. The primary judge explained the operation of mechanical shredders, such as the Doppstadt shredder, in the following terms in Judgment No 1:"45 Mechanical shredders of green waste generally require the use of other ancillary machinery to aid their operations. An excavator is required to shear oversized material into smaller sized pieces and then load the sheared and other material into the shredder. The extent to which mechanical shredding requires pre-shearing is one of the issues in these proceedings. At the end of the shredding process the shredding-product must be taken away by a truck or conveyor. Except for tracked vehicle shredders such as the AK430K, shredders can only be moved with the assistance of other powered transport vehicles. 46 The centre of any grinder or shredder is a hammermill which is a rotating steel cylinder from which hard faced steel hammers protrude and which strike the material to be ground, reducing it to a mulch. The particle size of the product is controlled by varying the screen through which the material is pushed at the end of the process, acting like a sieve. 47 Doppstadt Australia distributed Doppstadt shredders described as 'horizontal end-feed grinders'. Such shredders are essentially designed as a large open topped bin into which the green waste can be dropped by tractor or excavator at one end. The bottom of the bin has a travelling floor that moves from that end to the other. This floor draws the material towards a compression roller which compacts it, so it can then be struck and reduced by the rotating cylinder with its metal hammers. Then the machine feeds the end-product onto a conveyor belt and discharges it into stockpiles. Even this description of the process makes clear it requires high amounts of energy, and large horsepowered engines. The shredding machine's chassis is subjected to high mechanical stress. Although there are only a limited number of moving parts, the conveyor, the compressor, the hammer, they too are subjected to considerable mechanical stress. 48 The AK430K, as with most other mechanical shredders of green waste, was controlled by electrical and hydraulic systems and was diesel powered. The problems Mr Lovick described with the AK430K in this case, covered most of the components and operating systems, just described."

Ratio Decidendi

Legal Principle Established

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