King, A v Bridge Auto Sales & Service Pty Ltd

[1987] FCA 375

.

LIMITED DISTRIBUTION ONLY

NORTHERN

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__

TERRITORY

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- - __ -

DISTRICT

REGISTRY

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)

No. NTG 4 of 1986.

)

BETWEEN: ARTHUR KING - - - - - -

Appllcant

AND: BRIDGE AUTO SALES AND

~ E ~ v i C ~ P ~ ~ ~ ~ f i . ~ a & ~ as

- - BRIDGE - - AUTOS - - - - TOYOTA - - - - -

Responden t

JUDGE MAKING ORDER : BEAUMONT J.

DATE OF ORDER	9 July 19117
WHERE MADE	Darwln

MINUTE OF ORDER

THE COURT ORDERS :

1. The app l l ca t lon IS dlsmlssed.

2. The app l l can t to pay respondent 's costs.

No te : Se t t l emen t and en t ry of o r d e r s IS dea l t w l th In Orde r 36

of theFede ra l Cour t Ru les .

IN THE FEDERAL COURT	OF	AUSTRALIA	)
)

NORTHERN TERRITORY DISTRICT REGISTRY _ _	)	No.	NTG	4 of 19x6.
)
GENERAL DIVISION	)

BETWEEN: ARTHUR KING

A p p h c a n t

AND: BRIDGE AUTO SALES AND

t. PT Y. LTD. tradlng as

BRIDGE AUTOS TOYOTA

Respondent

CORAM:	BEAUMONT J.
DATED :	9 July 1987

REASONS FOR JUDGMENT

In August 1983, the appl lcant purchased a motor vehlc le f rorn the

respondent . He now sues the respondent for damages pursuant to s.82 of t h e

T r a d e P r a c t l c e s A c t - 1974 ("the Act") clalrnlng to h a v e s u f f e r e d loss o r d a m a g e

by reason of the respondent ' s rn l s leadlng conduct In lnduclng hlm to e n t e r I n t o

t h e t r a n s a c t l o n (see s.52 of the Act ) . In e s s e n c e , h l s c l a m IS t h a t I t was

r e p r e s e n t e d to h l m t h a t t h e v e h i c l e , a T o y o t a C o r o n a CS sedan , was a "new"

vehlcle whereas , In fact, I t was not "new". A l t h o u g h t h e c l a m IS a relatively

s m a l l o n e , t h e m a t t e r h a s a co rnp l l ca t ed h l s to ry and the pa r t l e s a re at ISSUC

on mos t of the Impor t an t ques t lons of fact whlch arlse.

On Sa tu rday 13 August 19x3, t h e s p p l l c a n t w m t to the r e sponden t ' s

p remlses at Darwm. The respondent IS a m o t o r d e a l e r d e a h n g In both new and

used ca r s , bu t t he app l l can t p roceeded to t h a t p a r t of the respondent ' s p remlser

o n w h l c h n e w c a r s w e r e o f f e r e d f o r s a l e . T h e a p p l ~ c a n t l n q u l r e d a b o u t the

2.

posslble purchase of a new car and lndlcated that he would wlsh to trade-ln

a used Ford utlllty owned by hlm. Although a transactlon was ultlrnately entered

Into, the respectlve verslons of the dlscusslons at the tlme dlffer slgnlflcantly.

Accordlng to the appllcant's evldence, the appllcant Informed the

respondent's representatlves that he wanted a new car. He rnentloned that hc

had seen an advertlsement on televlslon offerlng a rebate of $500.00 cash of f

the retall prlce of any Toyota vehlcle purchased before 30 August. He sald

that Mr. Frankenfeld suggested a "new" Corona CS to hlm. The appllcant

Inspected the vehlcle but dld not drlve It. It appeared to hlrn to be new.

Prlces, the value of the trade-ln and the appllcant's need to obtain flndncc wcre

dlscussed. A prlce of $12,500.00 and a trade-ln value of $6,500.00 were agreed.

Some documents were slgned, lncludlng an appllcatlon for flnance. It was

agreed that when the appllcant returned home - he hved at Borroloola about

1,000 kms. from Darwln - he would rernlt $500.00 In cash to the respondent

on account of the purchase prlce. He then took possesslon of the vehlcle and

drove It to Borroloola. At the tlme, he did not notlce that the odorneter

lndlcated (as was the fact) that the vehlcle had then travelled more than

16,000 kms. Thls,	he sald, was	polnted out	to hlm	by a frlend In Rorroloola
on the following day.

Mr. Frankenfeld, who was lnvolved In the flnanclal and

admlnlstratlve aspects of the respondent's buslness, gave a very dffferent

verslon of the events. He sald that the appllcant was Interested In acqulrlng

a four wheel drlve vehlcle but, because of the applicant's llrnlted resources

and modest Income, he explalned to the appllcant that he could not afford

3.

a vehlcle of that klnd. Mr. Frankenfeld sald that he suggested to thc

appllcant that he conslder purchaslng a CS Corona vehlcle owned by thc

respondent used as a "demonstrator" and also used by Mr. Frankenfeld as

hls personal car. Accordmg to Mr. Frankenfeld, the appllcant was tahen

on a test drlve of the car by Mr. Matham, one of the respondent's sales

representatlves. A number of posslble ways of flnancmg a sale of the car

were explored byMr. Frankenfeld wlth the appllcant. Inltlally, Mr. Frankenfeld

offered a prlce of $11,300.00, made up of $9,620.00 as the retall 1Ist prlcc

of a new vehlcle, together wlth exfras of $1,680.00 as follows:

$808.00	Alr-condltlonlng
120.00	Seat covers
260.00	Pre-dellvery
185.00	Reglstratlon
122.00	Xntlng wmdows
--	122.00	Stamp duty on transfer

$1,680.00

A t thls stage, Mr. Frankenfeld proposed to offer $5,000.00

by way of allowance for the trade-ln of the utlhty. It appears that thc

value, In the trade, of thls vehlcle was only $2,500.00 but the appllcanr

was offered a further sum of $2,500.00 as a "dlscount" off the retall prlcc

of the car.

Later, Mr. Frankenfeld proposed that both the purchase prlce

and the amount allowed on the trade-ln be	Increased by $l,ZOO.OO, J.C. to
$12,500.00 and $6,200.00 respectlvely.

4.

It w ~ l l be necessary, later, to deal wlth the confllcts In the evldcncc

of the appllcant on the one hand and Mr. Frankenfeld on the othcr. Beforc

attemptlng thls, I should refer to the documentatlon which	was generated by the
transactlon.

The flrst document IS a prlnted form headed “Offer to Purchase”. It

contalns detalls of the transactlon and was executed by the appllcant on 13 August.

It was as follows (I set out the front page only. The second page, also executed

by the appllcant, contamed prmted terms	and condltlons none of whlch appear to
be relevant for our purposes).

1 .

CUSTOMER'SNAME 4a-a EL r r ~ \ A OCCUpATlON

s u n w c IHu.mmh.r ca l ld Ih Cullom.rl C H R l S l U N N M E S

PRIVATEADDRESS	? h L Q	wRa-h	PHONE No
BUSINESSADDRESS	PHONE No

MAKE 6- BODY M P € 6zIpd ENGlNENo M*+-$

MODEL TRANS '5 e BODYCOLOUR % REGNO 246- to

I hereby offer to purchase from the Company the motor vehocle descrlbed hereunder subject to the

overleaf

I cenlfy that I em l 8 years of age or older

l PURCHASE ' 4 t r s w r t ~ d Q <

PRICE CASH OF UNIT e /25"QA

R.go Stamp Duty $

R e ~ o Transfer Fee $

Duty S	Stamp	Fsnance
Flnance Guarantor Duty Stamp $

Name

Address

DateP/O apphesto

Acc No

ICM No Date l

W/B T/I S

NIL ~ 1

TO AOREE WITH TOTAL PURCHASE PRICE $

TRADE IN

FINANCE TRANSACTION

NameofCmpany

DateApproved

Flnance Company

Perwnnal

Extras

.I declare that the Motor Vehlcle belng traded-In IS my

property solely and free from debt byvlrfue of Hlre Purchase

Agreement or Mongage or any other

Date \3- c -vs

ACCEPTANCE BY THE COMPANY

A ,

6 .

There were also executed by the appllcant two documents addressed

to the fmance company, Esanda Llmlted. Flrst was a credlt request and offer of

chattel mortgage showmg a "cash prlce" of $12,500.00, a "dealcr's trade-In

allowance" of $6,200.00 and $5,898.00 as the amount of the loan requlred.

Next was a chattel mortgage dated 16 August slgned by the appllcsnt In whlch

a detalled descrlptlon of the vehlcle appeared. Under the prmted headlng "new or

used" appeared.m handwrltmg, the words:

"Demo

New"

The appllcant's llablhty to Esanda was guaranteed by Mr. A.T. Shaw,

a dlrector and shareholder of the respondent. Mr. Shaw had had a prevlous

sportlng contact wlth the appllcant.	Mr. Shaw was	present durlng	some of
the dlscusslons on 13 August.

It appears that Toyota dld not pay the appllcant the advertlsed

rebate of $500.00. Nor dld the appllcant pay the respondent the sum of

$500.0C he owed. In January 1984, Mr. Shaw wrote to the appllcant:

7.

THE BRIDGE AUTO GROUP

18th January, 1984

I

Mr. Arthur Xlng,

Dulu Camp,

B0RROU)OI.A N.T.

Dear Arthur ,

When purchaslng the Toyota Corona Sedan, Reglstratlon No. 246-103, the

net purchase prlce was	$9,398.00.	Payment of thls amount was to be
provlded by:

res urces own you from Cash $ 500.00

Cash from Toyota Bonus 500.00

Esanda Flnance	5.898.00
Trade-In Value	2,500.00

$9,398.00

You were aware at the t m e of purchase, the vehlcle was a demonstratlon

model and you promlsed to pay the $500.00 from your own resources

together wrth the ToyOta rebate cheque. Unfortunately, because of the

tlme delay, TOyOta have not lssued the rebate cheque, and in vlew of

our promlse thrs would be avarlable, we have deducted thls amount	fr m
your account.

The balance of $500.00 1s now overdue and as you can see from a copy of

the pdgement attached, you must pay thls amount mmedlately, as

we

have already requested actlon vla the Sherlff.

Yours farthfully,

A.T. SHAW

DIRECTOR

Encl.

I

i , Y . , Mobil

1 COMMERCIAL PASSENGER

X.

The apphcan t d ld no t r e spond to th ls le t te r . Subsequent ly , the

r e s p o n d e n t s u e d t h e a p p h c a n t f o r t h e d e b t of $500 .00 a n d o b t a m e d d c f a u l t

~ u d g m e n t . T h e a p p h c a n t p a i d t h e ~ u d g m c n t d e b t .

In Aprll 1984, t h e a p p h c a n t s u e d t h e r e s p o n d e n t In t h e L o c a l

C o u r t c l a l m l n g d a m a g e s f o r b r e a c h of c o n t r a c t . H e a l l e g e d t h a t I t w a s a

t e r m of t h e c o n t r a c t t h a t t h e c a r b e a "new" vehlcle. In an a f f ldav l t sworn

In these proceedlngs , Mr. S h a w d e n l e d h a b l l l t y b u t a d m l t t e d t h a t t h e v a l u c

of the t rade- In was $6 ,200 .00 . The proceedlngs were d lscontmued because ,

I was to ld , t he fo rum was though t to be "not approprlate".

In hls s t a t e m e n t of c l a lm m t h l s a c t l o n , t h e a p p l l c a n t a l l e g c s

b r e a c h e s of ss.52 a n d 53 of t h e A c t as follows:

"13. The r e sponden t was In b reach of 5.52 of t h e T r a d e P r a c t l c c s

Act by engaglng	m	conduc t t ha t was mls l ead lng and decep t lve .
- Par t l cu la r s
( a ) Represen tmg	to	t h e a p p h c a n t t h a t t h e T o y o t a C o r o n a

w a s a new motor vehlcle .

(b) Represent lng to t h e a p p h c a n t t h a t t h e T o y o t a C o r o n a

w a s a cur ren t model .

( c ) R e p r e s e n t l n g t h a t t h e p r o p e r p r l c e of a new Toyota Corona

w a s $12,500.00.

(d ) Represen tmg tha t I t was a l lowlng a trade-In value of

$6 ,20C.00 .

( e ) R e p r e s e n t m g t o E s a n d a L l m l t e d t h a t t h e T o y o t a C o r o n a

was wor th $12 ,500 .00 .

14. A l t e r n a t l v e l y t h e r e s p o n d e n t w a s m b r e a c h of 5.53 of t h c s a l d

A c t b y -

(a ) Fa lse ly represent lng tha t the Toyota Corona was new.

(b ) Fa l se ly r ep resen t lng tha t t he Toyo ta Corona was the

cur ren t model .

9.

(c) Maklng a false or mlsleadlng statement In relatlon to

the proper prlce of the Toyota Corona.

(d)	Falsely advertlslng	that	the rebate	of	$500.00 applled
to new cars only."

On behalf of the appllcant crltlclsm was levelled at the respondent's

conduct, and that of Mr. Frankenfeld In partlcular, In several respects. Much was

sought to be made of the process of lnflatlon of the prlce of the car and of the

allowance offered on the trade-ln of the utlllty. I thlnk there IS some force In these

CrltlcIsms. The objective facts, as we now know them, are as follows:

(I) The car was manufactured In Australia In December 1981, although

It was s t d l the current "model" In August 1983.

( 2 )	I t was acquired by the respondent from the dlstrlbutor In Aprd	1982
and was flrst registered In May of that year.

(3) Unti l I t s sale to the appllcant, the vehlcle was used by the

respondent both as a demonstratlon model and as a car available

to Mr. Frankenfeld for hls personal use.

(4)	By 13 August 1983, the vehlcle had been drlven approxlmately
16,500 kms.

(5) At that date, It "owed" the respondent approxmately $8,689.00 -

belng $7,444.00 paid as purchase prlce to the dlstrlbutor,

sales tax, extras and reglstratlon. The respondent wanted to sell

the vehlcle and Mr. Frankenfeld declded that If a prlce of $8,800.00

were achleved, I.e. a nommal "proflt", no questlons would be asked

by senlor management. The appllcant's ut l l l ty was worth only

$2,500.00 so that the dlfference or, In Mr. Frankenfeld's terms,

the "changeover" flgure, was $6,300.00. Whllst It would have been

theoretlcally posslble to express the transactlon In these flgures.

the appllcant would not have obtalned flnance on such a deal

10.

because flnance companles usually requlred thc prospectlve purchaser to

contribute In cash, or Its equlvalent, one-half of the purchase prlce. Hence

the declslon to Inflate both the prlce and the allowance for the trade-m. The

fmance company was glven the Impression, flrst, that the appllcant was

purchaslng a car of the retall value of $12,500.00, whereas, In fact, the

respondent was prepared to sell It for $8,XO0.00; and secondly that the

appllcant was tradlng-ln a utlllty of the value of $6,200.00. I t s true value

was $2,500.00, or, as Mr. Shaw put It, the utl l l ty was "overtraded" by

$3,700.00. In the result, Esanda was prepared to lend; the respondmt

acqulred the utlhty (whlch I t later sold for $2,500.00); and the rcspondcnt

was to recelve $6,300.00 together wlth the three addltlonal Items

mentloned In the offer to purchase ($11.00 (stamp duty);	$347.00 (Insurance
premlum); $240.00 (personal accldent premlum)).

Esanda may have been mlsled by the respondent's actlons. But

It does not follow that the appllcant was mlsled or decelved or Ilhely to be so.

I t IS accepted on hls behalf, correctly I thlnk, that he can succeed here only I f

he can establlsh that the respondent, through Mr. Frankenfeld, represented to

hlm that lt was offermg hlm a "new" car.

The course of authorlty deallng wlth the lnterpretatlon and appllcatlon

of s.52 In the present type of case tells us that, In lnqulrlng whether a contraventlon

of the statute has occurred, the respondent's conduct must be looked a t a5 a

whole. In the end, the questlon here 15 one of fact: has the respondent by 11s

actlons, VIZ. the words of Mr. Frankenfeld, made a false representatlon to the

appllcant that the CS sedan was a "new" veh1cle7

11.

At the outset, the case for the appllcant must face thc dlfflculty

that the meanlng of the adlectlve "new" IS Itself somewhat uncertaln. The

problem, In the present type of case, was dlscussed by Frank1 J. In Annand jc

Thompson W. Ltd. V. ___ TrdPractlces Commlsslon (1979) 25 A.L.R. 91 at pp.94-95:

"The meanlng of the word 'new', partlcularly In relatlon to motor

vehlcles, has been consldered several tlmes In the courts. It

seems there are at least flve posslble meanlngs whlch the word

may bear when used to descrlbe a vehlcle. They are:-

(I) That the vehlcle has not been prevlously sold by retall,

that It IS not a second-hand vehlcle.

(2)	That the vehlcle	IS a current and not a superseded model.
(3)	That the vehlcle	lhas not suffered slgnlflcant deterloratlon

or been used to any slgnlflcant extent.

(4)	That the vehlcle	IS of recent orlgln.
(5)	That the vehlcle	IS one whlch has suffered a measure of

damage but thls damage has been qulte effectlvely repalred, or any damaged part replaced, and the vehlcle IS otherwise new In every respect.

Conslderatlon has been glven to the meanmg of 'new" In relatlon to a

motor vehlcle In at least the followlng cases:-

(a) Marcus Clark (VIC) L td v. Brown (1928) 4 0 CLR 5 4 0 where, at

549, reference was made to the difference between new and

second-hand cars and also to the posslblllty of a car not belng

second-hand but belng used, by, for example, the motor dealer

Itself: see also h r r l s Motors.- v. u e y (1959) I WLR 1184;

(1959) 3 A l l ER 737; Morris Motors __ L td v. Phelan (1960) RPC

209; (1960) 2 All ER 20811, and Standard Motor C o - a v.

Grantchester Garage L g (1960) RPC 211."

In Marcus C lark supra, Knox CJ., Isaacs and Powers JJ. sald

(at p.549):

"'Secondhand' may mean slmply used so as to destroy I t s character

as new - used, that IS, not slmply for experrment or demonstratlon

for selllng purposes, but for what may tecalled the consumer's

purpose, that for whlch the artlcle was made."

In John McGrath .- Motors (Canberra) Pty. Lti. v. Agplebee (1964)

110 C.L.R. 656, Kltto, Taylor and Owen JJ. sald (at p.659):

12.

"It IS unnecessary to express a concluded oplnlon on the

meanlng to be glven to the words 'new car' In the context In whlch they were used, but there IS much to be sald for

the vlew that the partles	understood It to mean 'not second-
hand'."

In the present case, the vehlcle was the current model. It had

not suffered slgnlflcant deterloratlon. On the other hand, It had been used

to a slgnlflcant extent as a demonstrator and as Mr. Frankenfeld's personal car.

It follows, In my oplnlon, that If I were to accept the appllcant's evldence, a

contraventlon of s.52 would be made out. That IS to say, I f Mr. Frankenfeld

slmply represented to the appllcant that the vehlcle was "new" wlthout any other

explanatlon, the apphcant would have been mlsled: he could not reasonably

have been expected to appreclate that the car had been used to a slgnlf~cant

extent as a demonstrator and as the personal car of a	member of the respondent's
staff.

On the other hand, I f Mr. Frankenfeld's verslon of the dlscus~on

IS accepted, an entlrely dlfferent plcture emerges. It w ~ l l be remembered that,

accordlng to Mr. Frankenfeld, It was explalned to the appllcant that the vehlcle

was a demonstrator and had been used by Mr. Frankenfeld. If thls explanatlon

was glven, the apphcant's clalm must fall.

The respectlve verslons of the conversatlon are contradlctory.

There 1s no lntermedlate posltlon and no way that one verslon can be accommodated

or reconclled wlth the other.	It becomes a questlon of the	credlbhty of edch
verslon.

In my oplnlon, It IS Inherently Improbable that the dlscusslon took

the form alleged by the apphcant. For one thlng, It 15 unllkely that d motor

dealer would even attempt such a clumsy fraud.: no attempt wd5 made t ~ , W I I , ~

13.

b a c k t h e o d o m e t e r o r to concea l I t f r o m t h e a p p l l c a n t . O n t h e c o n t r a r y ,

Mr. F rankenfe ld mus t have r ea l l s ed tha t I t was h lghly l lke ly tha t the appl lcant

wou ld s lgh t t he r ead lng on the odomete r as soon as h e sat In t h e d r l v e r ' s scat.

A n y a t t e m p t to m l s r e p r e s e n t t h e c a r as slmply a "new" car would be lmmedmte ly

exposed . More Impor tan t , the conduct of the app l l can t when , acco rd lng to hls

ev ldence , I t w a s f l r s t p o m t e d o u t to h lm tha t t he veh lc l e had been d r lven some

17 ,000 kms., IS t e l l i ng . On the app l l can t ' s case, the re was po ln ted ou t to h lm on I4 Augus

a fact w h l c h c o u l d o n l y m e a n t h a t h e h a d b e e n c h e a t e d a n d d e f r a u d e d t h e

prevlous day. As a r e su l t of tha t " f raud" , he had under takcn a c o m m l t m e n t to

Esanda In excess of $6,000.00. As has been sa ld , t he app l i can t had v l r tua l ly

no assets and only a modest Income. Exposure to a c o m m i t m e n t of w c h a

re l a t lve ly l a rge amoun t mus t have been of c o n s l d e r a b l e s ~ g n ~ f ~ c a n c e to hlrn.

I f , In fact, t h e a p p l l c a n t h a d n o t u n t l l t h a t p o l n t of t l m e a p p r e c m t e d t h a t t h c

vehlc le had t rave l led such a substant la l dls tance, one would have expected 5ome

reac t lon f rom h lm. One wou ld have though t t ha t he wou ld have a t l e a s t m a d e

s o m e a t t e m p t to c o n t a c t t h e r e s p o n d e n t a n d a s s e r t , as he now does , t ha t he

had been seriously mlsled. Instead, the apphcant dld nothing. In my vlew, hls

l ack of reac t lon when, on h ls ev ldence , I t w a s f l r s t p o m t e d o u t to h l m t h a t t h e

vehlcle had been s lgnlf lcant ly used, IS slgnlf lcant . I t means, In my VICW, t h a t

t h e r e a r e r e a l d l f f l c u l t l e s In accept lng h ls vers lon of t h e e v e n t s as plausible.

Whl ls t the appl lcant ' s fa l lure to respond to t h e l n f o r m a t l o n t h a t t h e v e h l c l e

had been dr lven subs tan t la l d i s tances IS lnconsls tent wlth hls own verslon of w h a t

was sald, hls lack of r e a c t l o n IS consistent wl th Mr. F r a n k e n f e l d ' s r c c i h l of

the l r dea lmg . On t he who le , t he ve r s lon g lven by Mr. Frankenfcld 15, I th lnh,

t he more I lke ly . I mus t p re fe r h l s ev ldence to t h a t of the app l l can t . I r e j e c t

t he app l l can t ' s ve r s lon as Inherently Improbable.

14.

In my opmon, no contraventlon of s.52 has been made out. It

must follow that no breach of s.53 has occurred.

The appllcant has also sued m fraud and neglrgence undcr the

general law. It IS accepted, correctly, by the appllcant that, unless he can

make out a mlsrepresentatlon	of the krnd requlred to demonstrate a contravcntlon
of s.52, he must fal l here also.

The appl~catron IS dlsmlssed wlth costs.

1 hereby certlfy that thls and the

precedlng 13 pages are a true	copy
of the ~udgment of hls Honour

, w~ ~

Assoclate to Beaumont J.

Dated: 9 July 1987