Ezy-Fit Engineering Group Pty Limited v Microm Nominees Pty Limited (No 2)

Ezy-Fit Engineering Group Pty Limited initiated legal proceedings against Microm Nominees Pty Limited (No 2) concerning a dispute over the sale and subsequent malfunction of a machine known as the FTM1000. The case was heard in the Federal Court of Australia. The primary issues that the court had to resolve involved the calculation of lost profits, the entitlement to pre-judgment interest, and the adjustment of rectification costs for inflation.

The court considered whether there was a need for further discounting of the lost profits, which was ultimately resolved by the parties agreeing that no further discounting was necessary. The parties also agreed that Ezy-Fit was entitled to pre-judgment interest on the loss of profits, as provided by section 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth). Another key issue was whether the cost of rectifying the defects in the machine should be adjusted for inflation. The court concluded that while the figures provided were estimates, there was no reasonable basis to infer that the current costs of rectification were higher than the estimated amount, and thus no adjustment for inflation was warranted.

The court found that it was just for FATO HACO to bear a substantially greater responsibility than Ron Mack for Ezy-Fit's loss. FATO HACO was responsible for designing and manufacturing the FTM1000 and was best positioned to prevent the loss from occurring. The representations that led to the loss originated from FATO HACO, even though Ron Mack adopted them for its own commercial benefit. The court noted that Ron Mack had no reason to believe FATO HACO would deliver a machine that did not meet the representations, given their business relationship.

The court ordered that the parties confer and provide a minute of proposed orders by a specified deadline, reflecting the reasons outlined in the decision and the previous case Ezy-Fit Engineering Group Pty Limited v Microm Nominees Pty Limited [2024] FCA 441.