Greco, Charles v Bendigo Machinery Pty Ltd

I N THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY	1	No. VG 175 of 1983
1

GENERAL

D I V I S I O N

EX TEMPORE JUDGMENT

BETWEEN :

CHAiLES GRECO and PETER

GUSZLI

Applicants

and. .

-	BENDIGO tACHINERY FTY. LTD. and

ERREST ALFRED SENNINGS

Respondents

J U D G E :

Woodward

DATE:	5 June 1984
-

-	REASONS FOR JUDGNENT

This is one

those unfortunate . czses

- unfortunate ~n

t h a t it

has t o come

be fo re

the cour t s

i n which

a m

s a t l s f l e d

t h a t d e c e n t

and

honest

buslnessmen

have

had

f a l l i n g

o u t

which

d id not involve any

wrong doing on anybody's part, but as a r e s u l t

df it a number of commercial

losses have beerr incur red .

I f they

had been

a b l e t o reach

s o m ~

compromise

so lu t lon

by way of

shar ing

those

losses

they wouL5 not

have

been

too

d i f f i c u l t f o r e i t h e r t o b e a r . I n

the

event,

lcourse, the losses

have been conslderably mcreased

t h e

costs

o f l i t i g a t i o n

and

now have to decide on whose shoulders virtually the whole burden

has to fall; because it is not open to

the court to do anythlny

other than flnd liability or no liabillty, and if liability 1 s found then most of the damages that have been claimed would have

to follow.

%at

1s the task that I now have

to undertake, doing the

best I can with ,the evldence that has been put before me,

including the various accounts of events,

which I am satisfled are

substantially truthful on both sides. Naturally time has created

difficulties about accurate memory, and there 1s no doubt that

some thlngs I have been told are not accurate. There 1 s also, in

a number of areas, room fo r honest dlfference of oplnion as to

causes of events. Not having been there to see them happen, I

lust have

to do the best that

I can on the evidence before me.

It is clear that he applicants purckased the front end

loader ln question from the respondent company

on 25 June 1983, at

a cost of $30,000.

Before that they had had an opportunity

inspect the machine when It was on a low	loader some time earller
in June of last year.

In doing so they notlced that there were some oil leaks

present and these were drawn to the attentlon

of the second-named

respondent. .Mr. Jennings, who no doubt had noticed them hlmself

I am satisfied that he then made a representatlon to the general

effect that the machlne would be thoroughly checked and that on

delivery it

would be in very

good condition.

I do not know exactly what words

were used. He concedes

that he himself believed it to be a really good machlne and he

admits that he wculd at least have said it 'vas, or would be on

delivery, in good cpndition. Counsel have baGT-sald that they see

little. difference between khat and the particular representation

alleged by

the appllcants that the machine was and would be in

'top condition'.

I am satisfied, having listened to

witnesses, that a

representation as to the good quality of the

E s h m e was made, and

it was made with some degree of enthusiasm

on +&e

part of

Mr. Jennings, because that was

his belief.

I think that the

applicants are izAe sort of

people who would have pressed hlm,

particularly beczuse neither of them had any Tmowledge of machines

of this particulzr type, and they would know khat they were not

competent to determine its working capacity Before purchase, and

so I can well imagine that they would have pressed Mr. Jennings

for something amounting to an oral guarantee Q+ its good quality.

I believe that a representation to that effect was given at the

time of

the inspection earller

in June.

- 4 -

I cannot

sure whether it w a s repeated on 25 June

b e f o r e

cheque

w a s

handed

over ,

which

i s

a l l e g e d

b y

t h e

appl icants , and as t o which Mr.

Jenn ings

ays

t ha t

has

recol lec t ion of

that being said, b u t t h e r e was

a good deal of t a l k

, t h a t day.

I am inc l ined on balance t o accept

the

evidence

the

app l i can t s t ha t t he r ep resen ta t ion

was

repeated

tha t day .

Before

the

sale

took

place

2 5 June

there

was

demonstration

for

some

per iod whlch was

c e r t a i n l y upwards

hour, b u t . I think was probab1.y a good d e a l less than

t he

t h ree

hours which

i s rhe upper estimate

tha t has been given.

th ink

i t

probably

lasted

about

one

and

a half

t w o hours ,

dur ing

which

time the machine worked

well, and the s a l e was then consummated.

The following

day,

when the appl lcants came t o make use

the

machine f o r t h e f i r s t

t i m e ,

it worked

for about

one

and

ha l f

hour s

a f t e r

tihich

time

sope

quite

serious

o i l

l e a k s

were

apparent and

t h e

s t e e r i n g

became

i n e f f i c i e n t .

re su l t

o f

t h a t , the applicants stopped using

the machine, contacted

M r .

Jennings,

and,

day

o r

t w o

l a t e r , he

sen t a mechanic

accompanied by h i s (Mr. Jennings' )

18 year old son ,

ou t

the

sand	p i t where t h e machine had been-working.

They d i d what they

could

see

required

doing

by way of

checking

the

l aks

and

replacing

oil

s e a l s

and

l e f t .

S h o r t l y

a f t e r t ha t , pe rhaps the nex t

day,

the appi icants used

the

machme

again and t h e same thing

happened.

After

perhaps

hour

and a

- 5 -

Again ass i s tance was sought from Mr- Jennmgs;

the

same

mechanlc

and Mr. Jennings"

son

c a m e

o u t , a n d a o n g s t o t h e r t h l n g s

they

changed

011

f i l t e r s and -again d id r & a t

appeared

t o be

necessary by way of

rep lac ing ' 0 r i n g s ' or

seaaHs,

as they had done

t h e

f i r s t

o c c a s i o n ,

i n

o r d e r ,

they haped,

t o

p r e v e n t

any

fu r the r s e r ious

o i l leaks.

Shor t ly

a f t e r

t ka t

t h e r e . was

h z i d e n t i n

which

t h e

machine became bogged,

and

a f t e r

had

became

qu l t e

s e r lqus ly

bogged,

an6

a t t e m p t s t o e x t r i c a t e

had

f a f i e5 , t he re

was

again a

s e r i o u s

o i l

l e a k

which,

when

it h i t h o t parts

the

ngine

produced a g rea t dea l o f

smoke and caused the Z2pllcant Mr.

Gusell

t o d e s i s t

from

his

s t r e n u o u s e f f o r t s t o g e t

t k s machine

out of the

bog.

th i s

occas ion ,

. l a t e r

i n

che day, Mr. Jennings came

himself, again

with h i s mechanic and

hls son, and they

managed t o

get t h e machine out. Exactly

how

thar was

accomplished has been

matter of dispute , and is one point

which,

th ink ,

memories

are defec t ive .

However I do not

th ink

it mzt t e r s who

is co r rec t

about that minor issue.

- 6 -

Having got the machine

out, it L=S

worked on agam,

filters -were cleaned, hoses which had becaxe defective

In the

sense that they were rotten or squashy were replaced, and

Mr. Jennings and

his employees left

the scene.

After that the machlne worked for--some three or four hours, but then again started leaking. Once again the applicants complained to Mr. . Jennings and it is obviaE that by this time both sides were exasperated and there izm5 apparently some unpleasantness over the telephone. In spite of that, perhaps a

few days later,

Mr. Jennings agreed to take thz-machine back into

his works

and have it overhauled again,

blfL .he required the

applicants to pay the cost

f transport for thzt purpose.

He kept it for about two weeks.

Kii=n he returned It,

apparently satisfied that

it was in working condition, it was

found by the applicahts to be still unsatisfactory, and this time

they called in an independent company which

they asked to look at

the pumps with which the machine was fLtted. After some communication with Mr. Jennings who agreed ‘m pay for an lnitlal

test

the steering pump, but

not other tests, a report was

received -from thls firm,

known as Oil HydrauLics Pty. Limlted, to

the effect that both the steering. and

the-

lifting pumps were

unserviceable and that they should

be replaced with new pumps.

- 7 -

It is against that background that I have to determine

whether the machine was

in the condition which

it was represented

to be at the time of the sale.

It was sald on behalf of the

respondents that any defects in

the pumps that were found by the

independent expert, as

I find Mr. Gibson to be - Mr. Gibson beiny

the officer of Oil Hydraulics

Pty. Limited who had control of the

test - v7ere caused by mishandling by-the applicants rather than by

the defecdve cpndition of the machins in

the first place.

.I find this a difficult

question. to resolve but

balance I am satisfied that the applicants-' case has been made

out. . I say that for a number of reasons.

In the first place the

pumps were not tested by

the respondents, as tkey mlght have been

had they had the appropriate equlpmenk, either before the sale,

any stage during the time when corc.laints

wsre being made, or

during the final two weeks when they took the machins back into

their works before re-delivering	it to the applicants.
-

It seems, from the evidence

of P-lr. Gibson, it was

clearly not in good working condition at

this last stage and yet

Mr. Jennlngs was content

to pass it back to the applicants as If

it .were in good

working condition.

I see no reason to

differentlate between thar. delivery, after

it had been ln

the

workshop for two weeks, and the origfnal delivery. Secondly,

Mr. Glbson gave expert evidence	to the effect that It would be
very difficult to do any damage	to the pumps by reason of any

mishandling of the front end loader, and

he dLd not believe that

- 8 -

the

condi t lon

that he saw was caused by any such

mlshandling,

although he

s a w some

evidence of over-heating.

I t appeared

t o h i m

t h a t

the

f a l l u r e of

t h e pumps

t o maintain

pressure

was due t o

ordinary wear

and

t e a r

a r i s i n g

o v e r

a per iod of time.

I do not

be l ieve

that

t h e r e was

any

s i g n l f l c a n t m l s u s e by the appl lcants

t h e f r o n t

end

loader, al though

c o n c e d e t h e p s s i b l l i t y t h a t t h a t

occurred.

The

n e x t f a c t

that inf luences me

is t h a t t h e r e

were

two

b reakdowns

immedia t e ly

a f t e r

de l ive ry .

. d h o s e d

t o

t h e

applicants,

which

required

the

attendance

of a mechanlc

even

before the

bogging. incident occurred.

Also, tlr5re were breakdowns

even

a f t e r the

machine

had

been

back

in to

the

respondencs’

workshop.

So you have a c o n s u t e n t h i s t o r y of breaking down a f t e r

several

hours

of operation.

That is n o t

i n c a n s l s t e n t

w i th

the

t e s t ing

o f

t he

machine

Mr.

Jennings before de l ivery and c n

delivery,

because

of the evldence that, a s the use cont inues ,

tne

o i l

c o n t i n u e s

t o

heat

over

per iod

hours

and it of course

becomes

thinner .

Then

l e a k s

t h a t

m a y

not

have

been

apparent

s e r i o u s

e a r l i e r

i n

t h e

d a y

become

f l r s t

a l l

apparent,

then

qui te poss lb ly ser ious ,

the day goes

on.

The next

matter

which

f ind

s lgn iE5cant

1 s

t ha t

both

pumps were

found

t o be

unservlceable by

O i l Hydraullcs

Pty.

Limlted

and

t h e r e

n o t h i n g t o s u g g e s t

t h a t

t h e r e

was

any

usage

by the appl icants

which

could have caused

the

pump whlch suppl l?s

power

t o t h e l i f t i n g

arm

to degenera te .

- 9 -

For all those reasons I -am satisfied that the machlne was not in good order and condition

at the time of sale:

it was

defective in a vital aspect.

I do not think that that fact was

known to the respondents. I think that Mr. Jennings honestly

believed it was in-

good conditlon, and indeed to the extent that

.	he had tested it, he. had no reason to think otherwise. But the

authorities are clear that a representation may

perfectly

innocent, and yet amount to misleading conduct within the meaning

of section 52 of the Trade PraFtices

Ac.t, entitling the applicants

to damages under section

82 of the Act. .

I think that this

is one of those'czses in whlch,

if the

vendor of the machine takes

it upon hlmself to state that the

machine is in good

or very good condition, and then It proves not

to be, he must bear the

loss.

That is to be rontrasted with t-he

case where all the vendor says is

that he has carefully inspected

the machine, and tested it,

it seems to be working well and

he can

find nothing wrong. That

was really the extent of i4r. Jennlngs

. .

knowledge here. If that had been the representation that had been

made, it would not have glven rise to damages, but because the

respondents went beyond that and represented the equipment to be

in good or very good condition,	I must flnd that the case against
them has been made out.

- 10 -

I come then to the question of darages. So far as the

first item of claim

is concerned, the cost 05 400 lrtres of oil,

it may be that the amount actually wasted

was less than that, but

so far as I can tell it may also

have been more. I do not see any

reason to depart from the estimate which the zpplicants have made,

I think honestly, and which was not shown in cross-examination to

be. inaccurate.

So the amount of $470 clabed will be allowed

under that heading.

_L .

-The next item was the

hire of the replacement machine.

I am satisfied that that

was made necessary.

by the fact that

the

front end loader was not working as

it shoula have been. I thrnk

it vas a more efficient machine

that was hire6 than the

one it was

replacing, but in doing that, of course, the zpplicants would only

be mitigating the damages, and

that cannat

a matter for

complalnt.

I accept the evidence that they :+ould

have used the

front end 'loader, if it

had been

- available, ro do the partlcular

work for whrch the scraper was used. AlthouqS.

it would have been

less efficient, it was on the spot, there wauld have been many

times when it-was not required for loading

up deliveries of sand,

and I do not see the applicants

as the sort of people who would

have wilfully spent

$2900 on the hire of anotker machine when they

could have used their	own. So I find thzt item of $2892.50
established.

- 11 -

The next question is the loss of contract sales whlle

the loader was

out of action from time

to time between 26 June and

13 September 1983.

I have looked carefully

zt the amount clalmed,

and the average receipts

of the business

for sand and gravel

delivered, partlcularly in months immediately following the return

of the machine with its new pumps - that is to say, the second

h'alf of September and the months of October and Navember. I have

not had regard

to anything after that period.

I have assumed that

over the period of July, August and the first half. of September

(until the 13th when the repaired vehicle was finally returned by

Oil Hydraulics), In the ordinary cours'e

OZ events, sales would

have .been building up,

the business being a

new one, and would not

have been as great as they became later in	'the year. On the other
hand, there 1s uncontradicted evidence	that the pit was open

during July and August

at a very wet time

when a number of other

competitive pits were closed, and

that this wanld in fact have led

to abnormally high sales. Doing

the best I can, I think that

those two factors cancel each othe-r

out ancf 1 would approach t-he

matter as being one in which I should look 2%

the average sales

for October and November and then assume that those same sales would have been available in July, August and the flrst half of September. I must then, of course, subtracc from any amount so

obtained the sales that actually occurred

in July, August and the

first half of September.

. Having carried out that exercise, I find

that it comes

a sum signiflcantly greater than the amount

claimed of $3,500 and

I therefore allow the claim

of $3;500.

- 12 -

The next item is the loss of use Q€ labour.

Here the

sum claimed was $2500 .

However, I believe sat, if the plt had

been working to full capacity, substantial

w q e costs, either for

the appllcants' own time or for the time of an employee, would have been necessary to earn that sum of $3500 which I have lust

allowed. Those wage costs would

have been z% least as great as

the amount of time which

was lost by the applicants in havlng to

attend to *the difficulties arising from

the faulty machlne, I

therefore belleve that

any allowance for ?heir labour would

introduce an element

of .double counting &ich

would not be

justified. I iherefore disallow entirely

that head of claim.

?he last two items, for the repair to the machine and

the transport for earlier repairs, are in the event not contested

and these amounts of $1562.80 for repairs an6 $600 for transport

will be allowed. All those amounts vrhlch I have found in favour

of the appllcants add up to $9025.30 and there wlll be Judgment

for that amount against

both respondents wlth costs to be taxed.

I. have awarded

~udgment agalnst both respoadents because the

second-named respondent 1s not a mere employee

of the first-named

respondent, he is its managing director, and it seems to me to be appropriate that the judgment should be given agalnst both

respondents as

I have indicated.

I certlfy that this and

the eleven (11)

preceding pages are a true and accurate

copy of the Reasons for Judgment herein of

The -Hon. Mr. Justice Woodward

Dated: 5 June 1984

[1984] FCA 147

5 Jun 1984