Jackson Trucks (Tasmania) Pty Ltd v Rothall

[1988] TASSC 80

Serial No B12/1988

List "B"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Jackson Trucks (Tasmania) Pty Ltd v Rothall [1988] TASSC  80; B12/1988

PARTIES:  JACKSON TRUCKS (TASMANIA) PTY LTD
  v
  ROTHALL, Gregory

FILE NO/S:  363/1986
DELIVERED ON:  30 March 1988
JUDGMENT OF:  Wright J

Judgment Number:  B12/1988
Number of paragraphs:  11

Serial No B12/1988

List "B"

File No: 363/1986

JACKSON TRUCKS (TASMANIA) PTY LTD v GREGORY ROTHALL

REASONS FOR JUDGMENT  WRIGHT J

30 March 1988

1. The plaintiffs allege that by an agreement in writing, dated 30 April 1986, they agreed to supply and deliver to the defendant and the defendant agreed to purchase and accept from the plaintiffs, a White Road Boss motor vehicle, registered number BP 7792 for a purchase price of $42,000. It is further alleged that the defendant refused to accept delivery of the motor vehicle and the plaintiffs now sue him for breach of contract, The defendant admits that he breached the agreement with the plaintiff on or about 28 August 1986 but he contends that the plaintiff is not entitled to the amount claimed, namely, $58,00.00. This sum represents the difference between the agreed purchase price of $42,000.00 and the amount subsequently received upon sale of the motor vehicle by the plaintiff to a third party at the sum of $32,000.00 less the deposit paid of $4,200.00. The defendant does not seek to recover the deposit but he says that the plaintiff is not entitled to an additional sum by way of damages. There are no major issues of credit for me to resolve in this matter and I am pleased to record that all witnesses appeared to me to give frank and honest evidence within the limits of their general recollections.

1. Mr Rodney John Quinn, who was the Sales Manager for the plaintiff Company in April 1986, gave evidence of his negotiations with the defendant. The vehicle in question had previously been traded on a new vehicle sold by Jacksons and had been advertised for sale in the second–hand division of their business at the sum of $65,000.00. It was not sold at that price and was subsequently re–advertised at $56,400.00. It remained unsold at this price also. It was explained by Mr Quinn that the pricing of the vehicle in this way was designed to allow a substantial margin to the plaintiff‘s if it was necessary for them to accept a trade–in upon resale of the White Road Boss. The vehicle had been taken into stock in the plaintiff’s used car business at a nominal stock price of $40,000 plus repairs $2,800, a total of $42,800.00. The vehicle was originally acquired by the plaintiff in January 1986 and attempts were made to sell it during January, February and March of that year. Mr Quinn said that the market at that time was "sick" and difficulties were being experienced in selling vehicles of this kind on the retail market. When Mr Rothall, the defendant, commenced negotiations to purchase, he indicated that it would be a cash purchase and as a consequence the plaintiffs agreed to reduce the price to $42,000.00. The defendant made it plain, however, that he was in no position to finalize the transaction immediately. He paid a deposit of 10% of the purchase price some time after signing the agreement with the plaintiffs. There was no date specified for completion of the transaction and the defendant kept re–assuring the plaintiffs that he would be able to complete within a reasonable period of time. However, by August 1986, it became clear that his expectation of funds could not be realized in the foreseeable future and he repudiated the agreement on or about 28 August 1986. Mr Quinn gave evidence that it was normal Company practice to advertise its wares in the local press, radio, by means of leaflets distributed to potentially interested parties and through the second–hand market on the mainland. Both Mr Quinn and a subsequent witness, Mr Gibson, gave evidence that there are two recognized markets for used trucks in this State. Firstly, there is the retail market which is the primary means whereby dealers seek to sell their vehicles to contractors, hauliers, or other end users for use in their businesses. However, there is also what is known as the wholesale market in which dealers may attempt to sell vehicles, particularly vehicles that they are having difficulties getting rid of on the retail market, to other dealers either within the State or on the mainland. The primary outlet for this market for Tasmanian dealers is to be found on the mainland. Obviously enough, dealers who purchase vehicles in this way from other dealers, seek to do so at a price that will enable them to make a profit upon resale through their own organization.

1. The vehicle now in question was a 1979 model and was agreed by all witnesses to be in good condition at all relevant times. It was apparently a high–powered vehicle suitable for heavy work such as log haulage and in normal conditions it would have been recognized as a "good buy" at $42,000.00. However, it was perceived by Mr Quinn and also Mr Gavin Gibson, now Managing Director of Bender Trucks Sales, but in late 1986 employed as Manager for the plaintiff Company, that due to a combination of economic circumstances, the retail used truck market in Tasmania had dwindled to an alarming extent by June 1986. Apart from the Australia–wide economic downturn that was being experienced at that time, there were two local factors seen by Mr Gibson as having particular importance, namely, the laying off of contractors by the Hydro Electric Commission on the West Coast and secondly, the winding down of its works programme by the Department of Main Roads.

1. It was found by Mr Gibson that the plaintiff Company was only able to sell approximately one used truck per month at this time and with the perception that the bottom had virtually fallen out of the retail used truck market, coupled with the fact that he had been brought into the organization for the specific purpose of re–organizing the used truck segment of its business and clearing some of the excess stock, Mr Gibson determined in early September 1986 to make enquiries of local and mainland dealers with a view to wholesaling the subject vehicle to one of them. He contacted 8 dealers altogether, 5 of whom are on the mainland and 3 of whom operated in Tasmania, 2 in Launceston and 1 in the south of the State. Some of the people to whom he spoke were familiar with the vehicle in question. The highest offer that he was able to attract was one of $32,000.00 from the Raven Trading Company at Kyneton in Victoria. The plaintiffs agreed to sell to Raven at that price. Mr Gibson said, "I am satisfied that it was the best price we could get in the circumstances". Mr Gibson also said,"We applied every endeavour to retail out" speaking of his Company‘s efforts to liquidate stock generally but neither he nor Mr Quinn were able to give specific illustrations or examples of attempts that had been made to sell the subject vehicle on the retail market in Tasmania after 28 August 1986. Specifically, there was no attempt to sell the vehicle by inviting public tenders and there is no evidence to suggest that it was advertised in local newspapers. There was evidence that between April and August 1986, during which time the vehicle was being held on Mr Rothall’s behalf, it was kept at the plaintiff‘s used truck yard in Launceston but in an area apart from the area in which vehicles available for general sale were kept.

1. There is no evidence to suggest that thereafter it was transferred into that area of the used truck yard for display or that any price was affixed to it where this could be observed by the passing public. The weight of the evidence clearly suggests that the plaintiff Company made a considered decision to rid itself of this vehicle as part of its general stock reduction programme at that time and decided to do this by way of exploring the wholesale market. I am unable to find on the evidence that any active steps whatsoever were taken to find a local buyer on the retail market.

1. In the circumstances, this fact takes on some considerable significance because the defendant called two witnesses for the purpose of showing that there were indeed excellent prospects for the disposal of the vehicle to local contractors during the relevant period of time. Mr Bevan Newell Kaye, a grazier and contractor from Devon Hills said that in 1986 he had a contract to supply the Brambles Company with 20,000 yards of sand. For the purpose of discharging his obligations under this contract, it was necessary for him to have appropriate haulage vehicles and he made enquiries at various places in the Launceston area and specifically at the plaintiff’s used truck yard. He said this enquiry took place in late Autumn or early Winter of 1986 and he spoke to Mr Graeme Drury, a salesman employed by the plaintiff Company at the time. He said that he had seen the vehicle advertised previously at the sum of $65,000.00 and was told by Mr Drury that he could have had it for $43,000.00, but for the fact that it had been sold to the defendant. Mr Kaye said that the White Road Boss had the capacity and performance which he required. He said also that he had had considerable experience of purchasing and using trucks during his life and had probably purchased between 50 and 60 such vehicles altogether. He considered the White Road Boss as a very good buy at $43,000.00. He also said that he had the capacity to buy the vehicle at that price at that time. He also said that he told Mr Drury that if Rothall should not exercise his "option" to take the vehicle, he (i.e. Kaye) would be interested in purchasing it. Mr Kaye said that this conversation occurred in approximately May or June 1986 and that he was still looking for a suitable vehicle for his purposes in August and September of that year. He said that his contract with Brambles is still in active existence today and, that when he was unable to find a suitable vehicle, he decided to fulfil his obligations under that contract by employing a sub–contractor to do the job. Mr Kaye said that he frequently looks around to see what vehicles are available and that he subscribes to a mainland newspaper, The Weekly Times, specifically for the purpose of keeping himself abreast of the used truck market. He made it clear that he relied substantially upon newspaper advertising to keep himself informed of this market. I found Mr Kaye to be an impressive witness.

1. Evidence was also given by Mr Terrence Adrian Smith of St. Helens. In 1986 he was a cartage contractor, carting sheepskins for Neale Edwards Pty. Ltd. He was interested at that time in acquiring a new truck for carting logs for Barrett Bros. He approached the plaintiff Company with a view to ascertaining what vehicles of a suitable kind they may have in stock. He saw the subject vehicle in the back yard at those premises. He was told (he did not say by whom) that the vehicle had already been sold for $45,000.00. He said these events occurred about June or July of 1986. He inspected two other vehicles that the plaintiffs had at the yard but they were not particularly suitable for his requirements. He considered the subject vehicle to be a good buy at $45,000.00 and he said, "I would have been interested at that price. If it had been available it would have suited my needs". He said that he was still in the market for such a vehicle in August and September and it was not until October that he purchased another vehicle for the purpose of fulfilling his log cartage agreement with Barrett Bros. This vehicle was a Mack Truck which he purchased for $26,000.00. It was a 1971 model and was not in such good condition as the subject vehicle. I have no reason to doubt Mr Smith‘s evidence and I find him to be a completely acceptable witness. If the White Road Boss had been known by him to be available in August or September 1986, I think it highly likely that he would have purchased it.

1. It was put to me by defence counsel that this was a situation in which s.54(3) of the Sale of Goods Act 1896 should be held to apply but it seems to me after considering the evidence that this is not a case in which the concept of an "available market" applies. In my opinion, the real question for resolution is whether or not the plaintiff failed in its duty to mitigate damages by taking only those steps which it did to dispose of the subject vehicle once the contract had been breached by the defendant. The duty to mitigate is not, of course, an absolute duty but it is one which imposes upon a party seeking damages an obligation to take reasonable steps to minimize its loss. This is not an obligation that it can show it has discharged simply by showing that it is taking steps generally calculated to minimize its trading losses as a commercial organization during the relevant period of time. There is no doubt that Mr Gibson was taking significant and appropriate steps to this end when he decided to dispose of the vehicle to mainland interests as he did. The plaintiff’s obligation in this respect is to the defaulting purchaser. A defaulting purchaser, of course, is not entitled to be minutely critical of steps taken by a party in the position of the plaintiff if it can be shown with the benefit of hindsight that additional or alternative steps may have mitigated the loss even further. The standard of reasonableness that a claimant must demonstrate is therefore not impossibly high. He will not normally be required to investigate every possible avenue of disposal or make every possible enquiry which subsequent investigation reveals may have minimized the loss.

1. It was accordingly urged upon me by counsel for the plaintiff, Mr Jones, that the plaintiff‘s failure to advertise the vehicle in the local press should not be detrimental to his client’s claim because of the experience of Mr Quinn and Mr Gibson that such advertising had only limited success. These are arguments which deserve and have received my serious consideration, but, the fact remains that within Northern Tasmania at the relevant time, there were, at least, two keen potential purchasers. They knew the vehicle in question and their enquiries at the plaintiff‘s yard alerted, or should have alerted, the plaintiff’s staff to their existence even if members of the staff did not follow their normal practice of taking names, addresses and other particulars of prospective purchasers in such circumstances. At least, the plaintiff Company should have been generally aware of interest in the truck and, in my opinion, the possibility of disposing of it on the local market ought reasonably to have been considered and actively pursued.

1. The plaintiff frames no part of its present claim in respect of increased interest costs incurred in holding the vehicle over the months which elapsed from the date of the original contract until its breach. The claim is simply based upon the difference between the agreed sale price to the defendant and the price ultimately received from the Raven Trading Company. Whilst that price was apparently the best price obtainable upon the wholesale market, and whilst it may well have been a reasonable and proper price for the plaintiff to have accepted after testing the local retail market, it did not take this preliminary step.

1. In my judgment, its failure to do so was unreasonable and amounted to a failure to mitigate its loss. It was not put to either Mr Kaye or Mr Smith that they would have been unwilling to pay $42,000.00 or more in August or September 1986 having regard either to their own circumstances or the economic factors which I have already mentioned. This is therefore not a case in which the plaintiff has been able to establish an entitlement to damages at a lower amount than the amount claimed. It is rather a case where damages have not been proved and accordingly there should be judgment for the defendant.