Lowe v Mack Trucks Australia Pty Ltd
[2008] FCA 439
•4 April 2008
FEDERAL COURT OF AUSTRALIA
Lowe v Mack Trucks Australia Pty Limited [2008] FCA 439
TRADE PRACTICES – Consumer protection – Breach of implied condition of merchantable quality – Breach of implied condition of fitness for purpose – Misleading and deceptive conduct – (CTH) Trade Practices Act 1974 ss 52, 66(2), 71(1), 71(2), 75AD, 82, 87
Evidence – Opinion – Expert evidence – Admissibility – (CTH) Evidence Act 1995 ss 79,135
Trade Practices Act 1974 (Cth) ss 52, 66(2), 71(1), 71(2), 75AD, 82,87
Evidence Act 1995 (Cth) ss 79,135Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220 cited
Crowther v Shannon Motors Co [1975] 1 WLR 30 cited
Jillawarra Grazing Co v John ShearerLtd (1984) ATPR 40-441 cited
Rogers v Parish (Scarborough) Ltd [1987] QB 933 approved
Courtney v Medtel Pty Ltd (2003)126 FCR 219 cited
Medtel Pty Ltd v Courtney (2003) 130 FCR 18 followed
Cavalier Marketing (Australia) Pty Ltd v Rasell (1990) 96 ALR 375 cited
Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307 followed
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 cited
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 cited
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 cited
Henville v Walker (2001) 206 CLR 459 cited
Ting v Blanche (1993) 118 ALR 543 cited
Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46-179 cited
Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1998) ATPR 41-633 cited
Banque Commerciale S A v Akhil Holdings Ltd (1990) 169 CLR 279 cited
General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 cited
Pappas v Soulac Pty Ltd (1983) 50 ALR 231 cited
Sanders v Glev Franchises Pty Ltd [2002] FCA 1332 cited
Hanave Pty Ltd v LFOT Pty Ltd [1998] FCA 1051 cited
Gurdag v Stillwell Ford Pty Ltd (1985) 61 ALR 689 cited
HG v The Queen (1999) 197 CLR 414 applied
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 cited
Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 cited
Hamod v Suncorp Metway Insurance Ltd [2006] NSWCA 243 cited
Allstate Life Insurance Co v ANZ Banking Group Ltd (No 6) (1996) 64 FCR 79 cited
Henscke & Co v Rosemount Estates Pty Ltd (1999) 47 IPR 63; [1999] FCA 1561 cited
Rhoden v Wingate [2002] NSWCA 165 citedArnotts Ltd v Trade Practices Commission (1990 24 FCR 313 cited
Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 123 cited
National Justice Compania Naviera SA v Prudential Assurance Co Ltd [1993] 2 Lloyd’s Rep 68 cited
FGT Custodians Pty Ltd v Fagenblat [2003] VSCA 33 cited
United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2003] NSWSC 870 cited
Austral Pacific Group Ltd (in liq) v Airservices Australia (2000) 203 CLR 136 applied
Arturi v Zupps Motors Pty Ltd (1980) 49 FLR cited
LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 cited
Hadley v Baxendale (1854) 9 Ex 341 cited
AFA Electronics Pty Ltd v Strathfield Group Wholesale Pty Ltd [2001] VCS 289 cited
Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653 cited
Hodgson & Hodgson v Morella Pastoral Co Pty Ltd (1975) 13 SASR 51 cited
NEA Pty Ltd v Magenta Mining Pty Ltd [2005] WASC 106 cited
NEA Pty Ltd v Magenta Mining Pty Ltd [2007] WASCA 70 cited
Kenny & Good Pty Ltd v MGICA(1992) Ltd (1997) 77 FCR 307 applied
Zuvela v Geiger [2007] WASCA 138 citedGRAHAM LOWE AND ERICA LOWE v MACK TRUCKS AUSTRALIA PTY LIMITED
VID 249 OF 1999
KENNY J
4 APRIL 2008
MELBOURNETABLE OF CONTENTS
1. Introduction 2. The applicants’ Further Amended Statement of Claim 3. Mack’s defence 4. Relevant legal framework (A) Conditions as to merchantability and fitness for purpose (B) Misleading and deceptive conduct (C) Were there insurmountable deficiencies in the applicants’ s 52 claim as Mack alleged? 5. The history of the applicants’ operation of the truck (A) Buying the truck (B) The first trip – first problems (C) Ongoing problems (D) Settlement of the Magistrates Court proceeding in November 1998 (E) Unresolved issues (F) Notice of Rescission (G) The truck goes back to work and proceedings are instituted against Mack 6. Assessment of witnesses (A) Mr Lowe (B) Mrs Lowe (C) Wayne Pasfield (D) Wayne Wallace (E) Jon Heironymous (F) Mr Buttignol (G) Mr Kumnick 7. The FORS Report (A) Process (B) FORS Report vibration analysis (C) FORS Report handling quality analysis 8. The experts’ evidence regarding the FORS Report issues (A) Dr Morrison (B) Mr Robert McPherson (C) Status of Mr Lambert’s and Dr McLean’s evidence (i) Dr McLean (ii) Mr Lambert 9. The applicants’ case on liability assessed 10. Damages
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 249 OF 1999
BETWEEN:
GRAHAM LOWE AND ERICA LOWE
ApplicantAND:
MACK TRUCKS AUSTRALIA PTY LIMITED
Respondent
JUDGE:
KENNY J
DATE OF ORDER:
4 APRIL 2008
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The parties file and serve written submissions on costs on or before 4 pm on 16 April 2008.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 249 OF 1999
BETWEEN:
GRAHAM LOWE AND ERICA LOWE
ApplicantAND:
MACK TRUCKS AUSTRALIA PTY LIMITED
Respondent
JUDGE:
KENNY J
DATE:
4 APRIL 2008
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
1. INTRODUCTION
Some years ago now, Mr and Mrs Lowe carried on an interstate transport business in partnership under the name “G & E Lowe”. This proceeding concerns a truck that they bought from Mack Trucks Australia Pty Ltd (referred to hereafter as ‘Mack’) in 1998. The truck was a new Mack CH Elite Highway prime mover (hereafter ‘the truck’ or the ‘Lowes’ truck’), which Mack had manufactured. The Lowes’ case is that Mack assured them that the truck was suitable for their interstate long-haul transport business (hereafter ‘the business’ or ‘the Lowes’ business’), when in fact it was not. They seek damages in respect of the loss allegedly suffered as a result. For the reasons that follow, I find that their claim is not made out.
The Lowes conducted the business from Adelaide, transporting goods by truck from Adelaide to Brisbane, Sydney and other destinations mostly along the east coast of Australia. On 23 March 1998, they entered into a conditional contract with Mack to purchase the truck, for a price of $209,230. Although the Lowes initially contemplated a Freightliner or Western Star model vehicle as a changeover for their then current Mack CHR (which they purchased in 1995), they gave consideration to a new Mack when they were offered a competitive price. Mr Dean Kumnick, a Mack branch salesman in Adelaide, stated that the truck would be suitable for their needs. He knew that the Lowes were involved in the business of interstate long-haul goods transport as truck owner-operators.
On 1 April 1998, Mr Lowe took delivery of the truck from Mack and set out to drive the truck from Adelaide to Brisbane and back, towing a fully loaded Tautliner trailer. Mr Lowe noticed problems with the truck almost immediately. He complained to Mack in Brisbane and, on his return, to Mack in Adelaide.
It was part of the Lowes’ case that “[t]he litany of complaints was so bad” that as early as June 1998, the Lowes asked Mack about the possibility of returning the truck on a walk-away (or no-loss or no-cost) basis. As appears below, the evidence did not establish as much. The evidence did, however, establish that Mrs Lowe enquired about returning the truck on a walk-away basis in October 1998.
In early 1999, the Lowes’ complaints about the truck led to it being included in a group of trucks selected for examination by Roaduser International Pty Ltd (hereafter ‘Roaduser’) as part of an inquiry by the Federal Office of Road Safety (hereafter ‘FORS’) into aspects of long-haulage road transport operation in Australia. Indeed, in an initial “inspect and drive” test organised by Roaduser, Mr John Lambert, who gave evidence at the trial, reported that the truck exhibited characteristics of vibration, wandering and darting. The FORS Inquiry resulted in a Final Report, entitled “Investigation into the Specification of Heavy Trucks and Consequent Effects on Truck Dynamics and Drivers”. In this proceeding, this report was referred to as the ‘FORS Report’. This Report is discussed below.
Throughout the period he drove the truck, Mr Lowe complained about it, especially its rough ride and poor performance. The Lowes claimed that, over the period they operated the truck, these characteristics were made manifest by various things, particularly vibration, inordinate component failures, and the need for constant repairs and parts replacement. The Lowes’ case was that the on-going defects in the truck ultimately led Mr Lowe to ‘park up’ the truck at Rick Cobby’s depot and ‘walk away’ from it. They claimed that they did so “despite the clear and substantial financial ramifications” for them and the business.
The genesis of this proceeding was a class action that began on 17 May 1999. The class action was unable to proceed as such and, by an application and statement of claim dated 11 October 2001, the Lowes elected to continue the proceeding as applicants in their own right against Mack and Australian Guarantee Corporation Limited (referred to below as ‘AGC’), which had financed the truck’s purchase. The proceeding against AGC has been resolved. The matter took some time to be ready for trial, in part because of changes in legal representation.
At trial, the applicants complained of the truck’s rough ride, poor handling and poor performance, which they said was manifest by “vibration, darting and wandering and a litany of breakages, repairs and premature replacement of parts”. The applicants alleged that there was a general design problem with big trucks, such as theirs. In this regard, they relied on the FORS Inquiry and Report, which they said (written submissions, 1.2.2) was a response to industry complaints about poor handling and performance associated with
… the trend to increased variation in the specification combinations of vehicles with larger wheelbases, taller cabins, more powerful engines, loads with higher centres of gravity, airbag suspension and the failure of some manufacturers to adequately test proposed vehicle configurations and use.
Also at trial, the applicants alleged that there was a specific fault in the truck with the application of the panhard rods to the same side of the chassis. This meant, so they said, that the panhard rods in the truck did not fulfil the objective of transverse rods, which was to keep the axles centred laterally. The applicants also claimed (written submissions, 1.2.8) that air bag suspensions contributed to “potential instability in trucks generally” and to “the overall problem whereby each element provides potential feedback to the others”. They relied on the evidence of Mr Lambert to make good this proposition.
As the applicants said, “[a] feature of [their] case” was “the question of the harmonic signature of the vehicle”. In this regard, they relied on the evidence of Mr Lambert and Dr Arnold McLean as to how harmonics work. Mack challenged their evidence on the basis that Mr Lambert and Dr McLean had
… lost all objectivity in respect of … this case and that there are certain personal agendas which both persons have which they wish to further.
I return to this submission hereafter.
2. THE APPLICANTS’ FURTHER AMENDED STATEMENT OF CLAIM
The Further Amended Statement of Claim runs to some 40 pages and asserts numerous causes of action, including breach of contract, negligence, breaches of ss 52, 53(a), 53(aa), 53(ea) and 53(g) of the Trade Practices Act 1974 (Cth) (TPA) and unconscionable conduct contrary to ss 51AA and 51AC of the TPA. The Lowes also relied on the Fair Trading Act 1987 (SA) and the Sale of Goods Act 1895 (SA), but did not suggest that the State Acts would produce a result different from the TPA. Save for a brief discussion in the context of damages, I do not discuss them further. The applicants sought various remedies (see below) but they did not press their claim for personal injuries, or exemplary and aggravated damages.
By the end of the trial, the applicants had effectively abandoned much of their pleaded case. This was confirmed by the applicants’ closing written submissions, which contained a statement of their claims. This was the applicants’ best written statement of the case they sought to make at trial. The applicants did not pursue any matter outside this summary, and they effectively abandoned their claims based on ss 53(a), 53(aa), 53(ea) and 53(g) of the TPA and unconscionable conduct.
The applicants’ summary was as follows:
2.1.1Pursuant to the Further Amended Statement of Claim dated 13 August 2002 the principal allegations may be summarised and paraphrased as:
(a)the Lowes expressly or by implication made known to [Mack] the particular purpose for which the truck was required. That purpose was interstate long-haul transport operations;
(b)the Lowes relied on the skill and judgement of [Mack] in selecting an appropriate vehicle for their purpose; and further
(c)[Mack] made representations or gave warranties including:
(i)the truck was ideally suited for the Lowes’ purpose;
(ii)the truck would provide safe, reliable and efficient service for at least 800,000 kilometres; and
(iii)the truck would provide a very good ride.
2.1.2In these circumstances it is alleged that there are implied conditions of the Contract of Sale that the truck would be:
(a)reasonably fit for the purpose; and
(b) of merchantable quality.
2.1.3These implied conditions arise pursuant to section 71(1) & (2) of the [TPA] ….
2.1.4The definition of ‘consumer’ in the [TPA] includes the purchaser of a commercial road vehicle regardless of price. (See section 4B(1)(a) and (4) of the [TPA]) Section 66(2) of the [TPA] provides a definition of ‘merchantable quality’.
2.1.5Further, it is alleged there are express terms of the Contract of Sale that, inter alia:
(a)the truck was ideally suited for the purpose of interstate long-haul road transport;
(b)the truck would provide safe, reliable and efficient service for at least 800,000 kilometres;
(c)the truck would handle and drive well;
(d)the truck is performance engineered with a perfect blend of reliability, durability and efficiency.
2.1.6In reliance upon various representations and warranties set out in the Amended Statement of Claim, the Lowes purchased the truck from [Mack].
2.1.7Particulars of the defects that establish that the Lowes’ truck was not fit for its purpose are set out in the amendments to paragraph 16 of the Further Amended Statement of Claim and filed in the course of the trial.
2.1.8The defects were caused by:
(a)design and construction failures; and
(b)defective and inadequate examination and testing of the truck and its components.
2.1.9The failure of design and construction are set out in the amendments in paragraph 19A of the Further Amended Statement of Claim filed during the course of the trial. Particulars of the inadequate examination and testing are set out in paragraph 19B.
2.1.10To the extent that the Lowe truck is found:
(a)not to be safe and reliable;
(b)not to be ideally suited or reasonably fit for interstate long-haul transport operations;
(c)not to provide safe, reliable, proper and efficient service for 800,000 kilometres;
(d)not to provide a high standard of drive;
(e)not performance engineered with a perfect blend of reliability, durability and efficiency for a broad range of specific applications including long-haul interstate road transport;
(f)not of merchantable quality;
the Lowes have causes of action including:
(g)For breach of section 71(1) & (2) of the [TPA].
(h)…
(i)For breach of warranty.
(j)For breach of the terms and conditions of the Contract of Sale.
(k)For breach of a duty of care owed to the [Lowes] (as purchasers) giving rise to a cause of action founded in negligence.
2.1.11Pursuant to the Amended Application dated 27 September 2001 the remedies sought principally are:
(a)Damages and/or compensation pursuant to ss 75AD, 82 and 87 of the [TPA];
(b)An order pursuant to s 87(1) & (2) of the [TPA] declaring the whole of the contract between the Lowes and [Mack] void ab initio and/or directing [Mack] to refund to the Lowes the monies paid by them.
(c)Common law damages for breach of contract and negligence.
together with interest and costs.
When this summary and the Further Amended Statement of Claim are compared, it is apparent that many details in the applicants’ pleaded case were not pursued and some causes of action were dropped from their case entirely. In closing, the applicants’ counsel agreed that the key issue in the case was whether or not defects in the Lowes’ truck rendered it unfit for the purpose of interstate long-haul goods transport. Broadly speaking, the applicant’s counsel agreed with the respondent’s counsel that the central issue was whether the Lowes could successfully invoke s 71 of the TPA by establishing that, on account of defects in construction and design, the truck was unfit for this purpose and not of merchantable quality.
At trial, the applicants filed amendments to [16] and [19] of the Further Amended Statement of Claim. The amendment to [16] asserted some 55 defects, which were said to make the truck unfit for purpose, and these included:
rough ride including:
(i) vibration; and
(ii)poor handling characteristics such as excessive bump steer, bogie axle roll steer and drive axle low roll resistance
Further matters were: chassis bowed and bent; cab mounts; top leaf in springs; steer tyre wear; axle camber wrong; rear engine mounts cracked and separated; severe vibration (downhill first, second and third gears); and suspension problems. There were, however, many further matters, which I do not list here. I note that some of them were not the subject of evidence at trial and were not pursued in closing submissions.
The amendment to [19] affirmed that these defects were caused by:
(a)the failure of the design and construction of the truck to meet the requirements of the use of the prime mover for long-haul transport; and
(b)defective or inadequate examination and testing of the truck and its components.
The applicants gave 26 instances of the failure of the design and construction, and again not all of them were actively pursued at the trial. Broadly speaking, they fell into the following categories: (1) incorrect installation and design of the suspension system in that transverse rods were both mounted to the same side of the chassis; (2) uneven distribution of air pressure through the air suspension system and variable airbag pressure; (3) adverse operation of right height control valve; (4) drive line torsional vibrations; (5) cut out of the top and bottom chassis rail flanges; (6) inadequate front engine mounting design; (7) steering mechanism exhibiting excessive bump steer; (8) adverse kinematic geometry in steering column to steering box input shaft; (9) significant outer edge scalloping and uneven wear of steer tyres; (10) vehicle handling erratically and unpredictably due to flexible chassis vibrations, torsional loading and bogie axle roll steer; (11) inadequate design of the driver’s seat mechanism; (12) cyclic twisting of the chassis due to the combination of torsionally rigid trailers with high centre of gravity load; and (13) the harmonic signature of the vehicle being of a frequency too closely matched to external excitation sources such as drive wheels and vehicle pitching and rocking thereby causing adverse frequency phenomena through the vehicle chassis.
Also in these pleading amendments, the applicants introduced a new [19B], which asserted that the defective or inadequate examination and testing of the truck included:
(a)The failure to test the prime mover during its construction so as to ascertain its harmonic signature and its suitability for long haulage interstate high centre of gravity high gross mass loads with a torsionally rigid trailer; and
(b)The failure to test the prime mover once its construction was completed, or a vehicle of like specifications was completed, so as to ascertain the suitability of the prime mover for long haulage interstate high centre of gravity high gross mass loads with a torsionally rigid trailer.
In closing oral submissions, the applicants’ case was further narrowed. Their counsel effectively abandoned any solely contractual cause of action, i.e., not depending on s 71 of the TPA. This was unsurprising, given that the evidence about any relevant contract of sale was limited.
At the time Mr Lowe parked up the truck, he and Mrs Lowe were purchasing the truck by way of a hire purchase agreement with AGC, pursuant to which AGC acquired the truck and hired it to the Lowes. The evidence before the Court included a copy of a Quotation dated 23 March 1998 for the sale of the truck, “New Truck Proposal” for the truck signed by Mrs Lowe on or about 23 March 1998, AGC’s Standard Asset Purchase Agreement Schedule with the applicants, which was dated 27 March 1998 and named Mack as the supplier, as well as a warranty registration form signed and dated 31 March 1998 and “New Vehicle Warranty Information”. The documentary evidence did not include either AGC’s “Standard Conditions” (as referred in AGC’s Schedule) or any particular contract of sale (with AGC or any other person). It is true that Mr Kumnick gave clear evidence of his pre-contractual negotiations with the Lowes. There was, however, little, if any, foundation for a separate cause of action in contract, at least for one independent of s 71 of the TPA; and the applicants’ counsel did not ultimately contend to the contrary.
Moreover, in closing submissions, the applicants accepted that, if they failed to make out their claim based on s 71 of the TPA, then they would fail to make out their negligence claim. Accordingly, I do not hereafter discuss claims in negligence or contract simpliciter (i.e., apart from s 71 of the TPA).
Indeed, apart from the s 71- based claims, in closing oral submissions, counsel for the applicant conceded that the only other remaining claim that the applicants pursued was a limited claim based on s 52 of the TPA. This was a claim based on so-called representations or warranties to the effect that:
·the truck would provide safe, reliable and efficient service for at least 800,000 kilometres; and
·driving the truck was like driving a car.
3. MACK’S DEFENCE
Mack’s defence was comparatively straightforward. Mack admitted that it had sold the truck to the Lowes in the knowledge that Mr Lowe wanted the truck for interstate long distance goods transport. The contest about the representations made at sale was slight. The focus of Mack’s defence was on the vehicle itself, which it said was not defective in any relevant sense. Mack said:
(a)there was no inordinate number of component failures, and it took a conservative approach to complaints in the warranty period, replacing parts whether or not it was strictly necessary to do so;
(b)the FORS Report demonstrated that there was nothing wrong with the truck;
(c)the evidence of Dr Morrison, whom Mack called as an expert witness, fortified the conclusion of the FORS Report;
(d)a number of Mack employees could find nothing wrong with the truck, although they took it for test drives;
(e)after the Lowes parted with the truck, another operator used the truck successfully, without problem for another 600,000 kilometres.
Mack did not ultimately press the suggestion that Mr Lowe’s complaints were consistent with his having driven the truck at excessive speed over rough roads. Mack acknowledged that in the absence of the driver’s log books, this remained no more than speculation. See below for further discussion.
The FORS Report was central to Mack’s defence. It submitted that “the Court should not go past the findings of the FORS Report in determining the issue in this case” (written submissions, 1.8). Mack continued (at 1.9-1.12):
The FORS Report carried out the most comprehensive and detailed analysis of truck behaviour, not only Australia wide but also world wide. It objectively and independently tested the truck …
Most significantly it tested the major complaints of the Applicants being:
(a)vibration;
(b)handling; and also
(c)chassis flex;
(d)air suspension.
The truck, when compared to either benchmark vehicles or other complainant vehicles was either better or comparable to them in every test measurement of the above.
The FORS Report is the only evidence of objective and independent testing done at the relevant time and not only does it conclusively find that the truck was not unfit for purpose, but it finds that it was one of the better trucks when compared against benchmark vehicles.
Mack submitted that the criticisms made by Mr Lambert and Dr McLean were “without foundation” ([1.14]) and that (at [1.15]) the evidence of Dr McLean should be rejected because:
(a)he has no proven expertise in the area, or if he has it should be confined to vibration;
(b)he is not independent but clearly biased.
Mack added that Mr Lambert’s evidence should also be rejected “as he is also clearly involved, emotionally and otherwise, in this proceeding and not at all independent”. If the Court had any doubts about the FORS Report, then, according to Mack, “these doubts are removed by the evidence of Dr Morrison” ([1.18]).
4. RELEVANT LEGAL FRAMEWORK
(A) Conditions as to merchantability and fitness for purpose
Before commencing the following discussion, I would note that the applicants proffered little, if any, assistance in identifying the relevant legal framework. The respondents sought to provide a little more assistance in this respect.
Further, I note, lest it be thought the matter was overlooked, that the applicants proceeded as if there was a contract of sale between them and Mack in respect of the truck: see statement of claim, [3], [4], [10], [12] but see [11]. In its Defence (at [5]), Mack denied this contract of sale, but admitted that Mr Lowe entered into a contract with Mack for the acquisition of the truck, conditional on finance, and an agreement with AGC for the provision of finance. If there is any doubt about the contract between the parties, nothing apparently turns on it. The parties chose to proceed upon the assumption that s 71 of the TPA applied to “the contract for the supply of goods” between them, upon the basis that there was some such contract to which the provision might apply. The parties did not refer to s 73 of the TPA.
The applicants’ claim for damages rested primarily on the conditions that s 71 of the TPA implies in a contract for supply of goods to which the provision applies. Section 71 of the TPA implies into contracts for the supply of goods to a consumer by a corporation in the course of business, a condition that the goods are of merchantable quality and, where the consumer makes known to the corporation the particular purpose for which the goods are being acquired, a condition that the goods are reasonably fit for that purpose. These conditions cannot be excluded: see s 68. Mack did not contest that it was a corporation within the meaning of the TPA, and that it supplied the truck in the course of business to the Lowes as consumers: see ss 4(1) and 4B. Further, Mack did not dispute that the Lowes made known that they required the truck for interstate long-haul goods transport. Mack did not rely on the exceptions in s 71.
Subsections 71(1) and (2) provide:
(1)Where a corporation supplies (otherwise than by way of sale by auction) goods to a consumer in the course of business, there is an implied condition that the goods supplied under the contract for the supply of goods are of merchantable quality, except that there is no such condition by virtue only of this section:
(a)as regards defects specifically drawn to the consumer’s attention before the contract is made; or
(b)if the consumer examines the goods before the contract is made, as regards defects which the examination ought to reveal.
(2)Where a corporation supplies (otherwise than by way of sale by auction) goods to a consumer in the course of a business and the consumer, expressly or by implication, makes known to the corporation or to the person by whom any antecedent negotiations are conducted any particular purpose for which the goods are being acquired, there is an implied condition that the goods supplied under the contract for the supply of goods are reasonably fit for that purpose, whether or not that is a purpose for which the goods are commonly supplied, except where the circumstances show that the consumer does not rely, or that it is unreasonable for him or her to rely, on the skill or judgment of the corporation or that person.
Subsection 66(2) of the TPA provides that goods are of merchantable quality if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as is reasonable to expect having regard to: (1) any description applied to them by the corporation; (2) the price received for them; and (3) all other relevant circumstances. In a case such as this, the ‘relevant circumstances’ are likely to include the nature of the defect, its intractability, and its effect on performance: see, e.g., Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220, at 227-228 per Rougier J; Crowther v Shannon Motors Co [1975] 1 WLR 30 at 33; and Jillawarra Grazing Co v John ShearerLtd (1984) ATPR 40-441 at 45-089 per Toohey J. Goods that are not of merchantable quality are unmerchantable: see Rogers v Parish (Scarborough) Ltd [1987] QB 933 (“Rogers v Parish”) at 946 per Woolf LJ and Courtney v Medtel Pty Ltd (2003)126 FCR 219 (“Medtel”) at 264 per Sackville J; appeal allowed in Medtel Pty Ltd v Courtney (2003) 130 FCR 182 but not on this point. Medtel concerned s 74D of the TPA, but its discussion of ‘merchantable quality’ is relevant in the present context.
Thus, where s 71(1) is invoked, the Court must determine:
· the purpose or purposes for which goods of the relevant kind are commonly bought; and
· whether the goods supplied are as fit for the purpose or purposes so identified as is reasonable to expect, having regard to the factors and circumstances listed.
These issues call for an objective assessment. The focus of the first is the purpose or purposes for which the goods are “commonly bought” as opposed to the particular consumer’s subjective purpose. Further, to quote Cooper J in Cavalier Marketing (Australia) Pty Ltd v Rasell (1990) 96 ALR 375 (“Rasell”) at 400, s 71(1) “requires that all normal purposes for which goods are commonly bought be brought into consideration. Fitness is to be tested against each of those purposes and none are to be excluded”.
Rogers v Parish provides some limited guidance as to an appropriate approach in this context because it too concerned a road vehicle, although not a heavy commercial vehicle. Although roadworthy, the vehicle in question, a Range Rover, misfired at all road speeds, had excessive noise emitting from the gear box and substantial defects in the body work. The judge at first instance held that the vehicle was of merchantable quality because it was roadworthy and capable of proceeding from one place to another. This finding was set aside on appeal. Mustill LJ said at 944:
Starting with the purpose for which ‘goods of that kind’ are commonly bought, one would include in respect of any passenger vehicle not merely the buyer’s purpose of driving the car from one place to another but of doing so with the appropriate degree of comfort, ease of handling and reliability and, one might add, of pride in the vehicle’s outward and interior appearance. What is the appropriate degree and what relative weight is to be attached to one characteristic of the car rather than another will depend on the market at which the car is aimed.
Plainly enough, the purpose for which a commercial vehicle of this kind is commonly bought would include the purpose of being used to transport heavy loads of goods over long distances interstate safely, reliably and efficiently. The loads carried by the truck in this case were not said to be other than within the common range. Indeed, Mack conceded that the interstate long distance haulage of loads of the kind allegedly carried by the truck in the course of the Lowes’ business was a “purpose for which trucks, such as the Lowe truck in question, would commonly be utilised”. Thus, the first issue to arise under s 71(1) was not in dispute.
The contentious issue was whether or not the truck was fit for this purpose “as is reasonable to expect”. In Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307 at 445, Lindgren J (with whom Lee J on this point agreed) held that the words “as it is reasonable to expect” in s 74D are to be considered from the perspective of a reasonable consumer placed in the position of the actual consumer. Put another way, these words require the Court to consider what is objectively reasonable to expect at the time of supply to the consumer: see Medtel Pty Ltd v Courtney (2003) 130 FCR 182, at 205 per Branson J, with whom Jacobson J agreed, and 199 [43] per Moore J. This assessment is to be undertaken in light of the information concerning the goods that is available at the time of trial: see 206 per Branson J.
In this connection too, the observations of Mustill LJ, in Rogers v Parish at 944, though apropos a different kind of vehicle, are helpful:
To identify the relevant expectation one must look at the factors listed in the subsection. The first is the description applied to the goods. In the present case the vehicle was sold as new. Deficiencies which might be acceptable in a secondhand vehicle were not to be expected in one purchased as new. Next, the description ‘Range Rover’ would conjure up a particular set of expectations, not the same as those relating to an ordinary saloon car, as to the balance between performance, handling, comfort and resilience. The factor of price was also significant. At more than 14,000 [pounds] this vehicle was, if not at the top end of the scale, well above the level of the ordinary family saloon. The buyer was entitled to value for his money.
With these factors in mind, can it be said that the Range Rover as delivered was as fit for the purpose as the buyer could reasonably expect? The point does not admit of elaborate discussion. I can only say that to my mind the defects in engine, gearbox and bodywork, the existence of which is no longer in dispute, clearly demand a negative answer.
The critical question is whether the applicants’ truck suffered from some or all of the defects the applicants allege. The outcome of the case very much depends on the answer to this question. For this reason, in this case, s 71(1) and (2) give rise to substantially the same question.
Mack accepts that the applicants made it known to it that they were acquiring the truck for interstate long-haul goods transport. This entitles them to rely on s 71(2), as well as s 71(1). Indeed, Mack accepts that it assured them that the truck was fit for this purpose. It is common ground, therefore, there was an implied condition under the contract for supply that the truck was at the time of supply reasonably fit for this purpose. As noted, Mack did not seek to argue at trial that s 71(2) was unavailable to the applicants because they did not rely on Mack’s skill and judgment or the skill and judgment of Mr Kumnick.
Although the notion of reasonable fitness for purpose is not precisely the same as the concept of merchantability, in this case there is no significant difference. There is here an overlap in the operation of s 71(1) and (2) and, under both, the real question is whether or not the truck was fit for the purpose of interstate long-haul goods transport. At trial the applicants and Mack accepted that this was so, and the applicants relied on the same facts to demonstrate a failure on Mack’s part to meet both s 71(1) and (2).
Of course, even if the applicants establish that the truck was not fit for the purpose of interstate long-haul goods transport, there is a further question whether or not they are entitled to the relief they seek.
(B) Misleading and deceptive conduct
As already noted, besides their unmerchantability or unfitness for purpose claim, the applicants also retained a limited claim under s 52 of the TPA. This was to the effect that Mack’s representations (via its salesman, Mr Kumnick) that:
·the truck would provide safe, reliable and efficient service for at least 800,000 kilometres; and
·driving the truck was like driving a car
were misleading and deceptive, or likely to mislead or deceive, in contravention of s 52 of the TPA. As it happened, there was no great dispute as to whether Mr Kumnick made these statements to the applicants. Mr Kumnick admitted making the second statement and that he said something like the first. Thus, in an affidavit sworn before trial, he said that he told Mr Lowe that the truck should prove to be “safe and reliable” for about 800,000 kilometres. He also told Mr Lowe that the truck would be ideally suited for his purpose of interstate haulage. Mr Kumnick emphasized that he made this latter statement and the observation that the trucks “drive like cars” in the context of talking to an experienced heavy vehicle driver.
Section 52 of the TPA prohibits a corporation from engaging in conduct in trade and commerce that is misleading or deceptive, or that is likely to mislead or deceive. The words “engage in conduct” include the making of representations about a past, present or future matter. It is not in issue that, for the purposes of s 52 of the TPA, the respondent is a corporation engaged in trade and commerce.
The application of s 52 is not restricted to conduct that is intended to mislead or deceive: see Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 (‘Puxu’) at 197 per Gibbs CJ; and Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228 per Stephen J. The conduct complained of must be viewed as a whole: see, e.g., Puxu at 199 per Gibbs CJ.
In order to make out their case under s 52 of the TPA, the applicants need to establish that: (1) the conduct of which they complained occurred; (2) viewed objectively, the conduct was misleading or deceptive; and (3) they relied on Mack’s conduct in the sense that it operated as an inducement for them to enter into arrangements for the acquisition of the truck. In order to be compensated for any loss and damage under s 82(1) of the TPA, they also need to establish a causal connection between this conduct and the loss for which they seek compensation: see, e.g., Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525-526 per Mason CJ, Dawson, Gaudron and McHugh JJ and Henville v Walker (2001) 206 CLR 459 at 469-470 per Gleeson CJ, 480 per Gaudron J, 489 per McHugh J and 509 per Hayne J.
Where a corporation makes a representation with respect to a future matter, and the corporation does not have reasonable grounds for making the representation, s 51A(1) of the TPA deems the representation to be misleading for the purposes of s 52; and s 51A(2) deems a corporation not to have reasonable grounds unless it adduces evidence to the contrary. See Ting v Blanche (1993) 118 ALR 543 at 552 per Hill J and Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46-179 at 54,432 per Goldberg J. Applicants who rely on s 51A do not, therefore, have to establish as part of a cause of action under s 52 of the TPA that the respondent did not have reasonable grounds for making the representation.
(C) Were there insurmountable deficiencies in the applicants’ s 52 claim as Mack alleged?
It is convenient to consider now Mack’s argument that the applicants’ s 52 claim was fundamentally flawed. If accepted, this would constitute the short answer to this part of the applicants’ case. Mack’s position was stated in submissions received, with leave, after closing submissions. In these submissions, Mack stated:
The Respondent’s position on this claim is as follows:
a.the relevant pleading is deficient and therefore the claim ought not be entertained;
b.the claim had not been pursued by the Applicants at trial or in final submissions;
c.the Applicants’ position is that the claim did not add anything to their Section 71 TPA claim;
d.there are only two representations alleged to be relied upon. One of them adds nothing to the claim and the other is mere puffery and was not ever relied upon;
e.the representations were not relied upon. The determining factors in the Applicants’ purchasing the truck was the $40,000 discount and that the truck was suitable for interstate long-haulage work;
f.in any event the representations were not false or misleading in that the ride quality was, objectively, found to be better than average;
g.no damage flowing from the alleged representations have been particularised and/or proved.
In many cases, a court would not reject a claim at this late stage on the basis of pleading deficiencies. This case is, however, different from the majority of cases in this court. The applicant’s pleading has never been very satisfactory, as earlier discussion indicates. At trial the applicants focused on what they, and therefore Mack, perceived to be the key issue: whether or not defects in the truck rendered it unfit for the purpose of interstate long-haul goods transport. This had been identified as the key issue at an earlier court-initiated meeting of experts. Immediately prior to trial, the applicants did not apparently give more than fleeting consideration to any cause of action other than that deriving from s 71 of the TPA. At no point did they make a clear case on any matter other than s 71. Save in answer to my questions, the applicants made virtually no closing written or oral submissions as to the operation and application of s 52 of the TPA having regard to the evidence at trial. In this context, Mack was granted leave to file late submissions. The applicants have not sought to answer them. In these circumstances, if, as Mack says, there is a fundamental defect in the applicants’ s 52 case, Mack is entitled to succeed in having this aspect of the applicant’s case dealt with accordingly.
There has been no application to amend the pleading. I accept that there are at least three significant deficiencies in the applicants’ pleading of their s 52 claim. First, the pleading does not specifically identify the basis upon which sixteen representations, pleaded at [5], including the two that continue to be relied on, were untrue. As noted, the Further Amended Statement of Claim at [20] asserts that, by reason of matters in [16]-[19], the representations were false and that Mack had no reasonable grounds for them. Paragraph [16] pleads that the truck was not fit for the purpose (i.e., of “long distance interstate haulage of semi trailers carrying loads of approximately 42.5 tonnes”) in that within six months of operation it suffered from numerous (identified) defects. Paragraph [17] pleads that the applicants reported the defects to Mack. Paragraph [18] pleads that the defects worsened. As we have seen, [19] is concerned with the cause of the defects. No part of the pleading states precisely in what respect or respects either of the two representations presently relied on was false. At best, the reader is left to trawl through [16]-[19] to work out what matters might be said to support the applicants’ pleading at [20]. It is plain enough that much in these paragraphs is irrelevant to this claim. There is therefore no adequate basis for the pleading at [21] that, by virtue of matters asserted in [6]-[10], [12] and [16]-[20], Mack engaged in misleading and deceptive conduct or conduct likely to mislead or deceive contrary to s 52 of the TPA. Furthermore, this last-mentioned pleading is itself confusing since much of these cited paragraphs can have nothing to do with the matter. A fortiori, there is no adequate basis for the pleading in [35] that by reason of the TPA contraventions (which include the pleaded s 52 breach) they have suffered loss and damage.
Secondly, notwithstanding their apparent invocation of s 51A of the TPA, the applicants did not, at any stage, indicate which of the sixteen representations alleged in [5] of the Further Amended Statement of Claim were representations in respect of future matters. They made no submissions on the issue at trial. Again, the reader is left to guess whether or not they allege that the representations on which they presently rely (for example, the ‘safe, reliable and efficient service’ representation) is to be treated as a representation as to a future matter.
Thirdly, the applicants provided no particulars of the damages that they allege flowed from this supposed misleading and deceptive conduct.
The applicants have not pleaded the facts upon which their s 52 claim would depend with the care and clarity that is called for in such a pleading: compare Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1998) ATPR 41-633 and Banque Commerciale S A v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 per Mason CJ and Gaudron J. What the applicants have done is pick up and rely on their pleading as regards s 71 of the TPA as part of the pleading of a claim based on s 52 of the TPA. This course has left the scope of their s 52 claim a matter for guess work. As I have said, it was a claim scarcely mentioned at trial and all but abandoned in closing submissions, when counsel for the applicants conceded that the s 52 claim added nothing in substance to the s 71 claim. In these circumstances, it is plain enough that the claim was fundamentally flawed at the outset of the trial and remained so. It would be unfair to require Mack to guess at what it meant and therefore how it might be answered. In so far as the applicants sought to retain any part of their s 52 claim, it must fail.
Further, although it scarcely matters, I agree with Mack’s submission that Mr Kumnick’s statement to the effect that driving the truck was like driving a car was in the nature of commendatory puffery and not a representation of an actionable kind. Whether representations made in the course of negotiations such as those for sale are actionable or merely in the nature of puffery depends on the particular facts, considered “in the light of the ordinary incidents and character of commercial behaviour”: see General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164, at 178 per Davies and Einfeld JJ; Pappas v Soulac Pty Ltd (1983) 50 ALR 231 at 234-235 per Fisher J; and Sanders v Glev Franchises Pty Ltd [2002] FCA 1332 at [270]-[274] per Kenny J.
In Pappas v Soulac (1983) 50 ALR 231, Fisher J held that a number of the statements made by the vendor’s agent (a Mr Spencer) to the purchasers of a shopping centre were of this kind. His Honour said, at 234-235:
It is important to appreciate that many of the statements alleged or admittedly made by Mr Spencer were wholly or in part statements of opinion, not capable of being objectively proved to be true or false. They were also essentially the type of introductory comments, in the nature of puffery, made at the start of negotiations for the purpose of attracting the interest of a possible purchaser. As such they became irrelevant or of little, if any significance when detailed information is subsequently given a fortiori, to a potential purchaser with commercial experience. To the extent that they are essentially puffery, it is proper to be reluctant to elevate them to the status of potentially misleading conduct.
His Honour held, at 238, that a statement by Mr Spencer that the shopping centre was a good investment was “the type of puffing which would normally fall from a selling agent and which was incapable of being proved to be correct or incorrect”. See also Hanave Pty Ltd v LFOT Pty Ltd [1998] FCA 1051 (31 August 1998) per Moore J.
The fact was that Mr Lowe was a knowledgeable truck driver, having over 20 years’ truck driving experience involving some 10 trucks, three of which had been Mack trucks. He was also a qualified mechanic, who undertook some of his own servicing. Mr Lowe had also bought this kind of vehicle before and was therefore a relatively experienced purchaser of trucks. It was clear from the evidence that he aware of pricing and comparative specifications and Mr Kumnick knew this. In these circumstances I accept that, as Mack submitted, Mr Kumnick’s statement was in the nature of commendatory puffery. It was a statement of opinion that was incapable of being objectively proved to be true or false. To the extent that this representation was essentially puffery, it should not be elevated to the status of potentially misleading conduct.
In any event, even if Mr Kumnick’s statement that the trucks “drive like cars”, was a representation of material fact, the applicants did not establish any causal connection between the representation and the Lowes’ entry into arrangements to buy the truck. That is, there was no evidence that Mr and Mrs Lowe relied on the representation.
I would not take the same view of the ‘safe and reliable’ representation. Although the applicants gave evidence at trial that a factor influencing their decision to purchase the truck was the matter of price, it is equally clear that they also relied on Mr Kumnick to identify a vehicle suitable for use in their business.
The real difficulty with this aspect of their s 52 claim flowed from the initial pleading failures mentioned above. Save to refer broadly to the unmerchantability/unfitness for purpose claim, the applicants did not state at any stage in what precise respect or respects the ‘safe and reliable’ representation was false. There was no reference at trial to s 51A in connection with this representation. Furthermore, as noted above, the applicants did not attempt to identify the particular damage that flowed from their reliance on this supposed misrepresentation.
Furthermore, I am unable to discern in the evidence anything that might be regarded as proof of damages for this purpose: compare Gurdag v Stillwell Ford Pty Ltd (1985) 61 ALR 689. There is no claim for repairs or loss calculated by reference to the price the applicants paid for the truck and its true worth. As discussed below, the evidence led in connection with loss of profits is fundamentally flawed. There is a claim for loss of time for 73 days, which has not been proved. These observations confirm my conclusion that, as the applicants’ counsel said, this cause of action can in fact add little to the applicants’ primary case.
5. THE HISTORY OF THE APPLICANTS’ OPERATION OF THE TRUCK
(A) Buying the truck
Mr Lowe’s evidence was critical to the applicants’ case. Mr Lowe was forty-nine years of age when he acquired the truck. He was a qualified mechanic and an experienced truck driver. He had more than twenty years’ experience of driving a number of different heavy prime mover vehicles in long-haul interstate transport operations. Mr Lowe and his wife had begun their long-haul goods transport business over twenty years before the purchase of the truck. He had owned and operated numerous different model trucks prior to March 1998, including three Mack trucks. In September 1997, some months before the purchase of the truck in March 1998, he and his wife purchased a new Tautliner semi-trailer. The truck was to be used to transport this semi-trailer, loaded with goods.
On or shortly before Friday, 20 March 1998, Mr Lowe spoke to Mr Kumnick at Mack’s Adelaide office about buying a new truck to replace the Mack CHR he was operating at that time. Mr Lowe and Mr Kumnick had regular dealings with one another at this time. In this circumstance, Mr Kumnick knew that the replacement truck was for use in interstate haulage. Mr Kumnick made an appraisal of Mr Lowe’s Mack CHR and looked into what Mack might offer by way of a replacement.
On the evening of 20 March 1998, Mr Kumnick telephoned the Lowes and told Mr Lowe that the truck – the Mack CH Elite – would “ideally suit his intended use” and that “it should prove to be a safe and reliable vehicle for about 800,000 kms”. When asked in cross-examination about this “ideally suited” statement, Mr Kumnick affirmed that Mr Lowe “understands the spec of trucks just as well as I do”. Mr Kumnick also said:
I can remember making a comment to him that the trucks drive like cars but that was in the context of talking to an experienced heavy vehicle driver …
Mr Lowe gave evidence that he originally told Mr Kumnick that he was not looking to buy another Mack but Mr Kumnick had changed his mind for him. Mr Lowe said that he was looking at trading in his Mack CHR on a new truck that was not manufactured by Mack but that he was attracted to the truck because of the price Mr Kumnick quoted him. His evidence in cross-examination was that the trade-in price Mr Kumnick offered on the evening of 20 March 1998 was what made the truck “very interesting” to him.
Mr Lowe left for Brisbane in his Mack CHR on Saturday, 21 March 1998, having agreed with his wife that, if she thought it was suitable, she would enter into arrangements to purchase the truck. Mr Lowe did not need to see the truck, because he knew what it looked like. Test-driving it was impractical because, as Mr Lowe said, “[t]here is absolutely no point … without a trailer on”. Mr Kumnick substantially agreed that the Lowes were to a large extent reliant on Mack to identify a vehicle that was suitable for their business.
On Monday, 23 March 1998, Mrs Lowe looked at the truck and spoke to Mr Kumnick. She too said, and I accept, that there would have been no utility in her taking the truck for a test drive since she was not a truck driver. Mr Kumnick reiterated that the truck was suitable for what her husband needed. Besides listening to Mr Kumnick, Mrs Lowe also said that she thought the price a good one and that this was an important factor. Furthermore, she liked the look of the truck, observing it “just looked comfortable”. On that day, she signed a ‘New Truck Proposal’ on the applicants’ behalf, which included a trade-in of the Mack CHR and was subject to finance. The finance company gave her verbal approval that day.
On her way out of Mack’s office on 23 March 1998, she picked up and took away a sales brochure, which she later read. Mr Lowe read the brochure before he signed AGC’s finance documents some time after he returned from Brisbane, by which point the Lowes were already committed to the acquisition of the truck.
Mr Kumnick telephoned Mrs Lowe two days later, on 25 March 1998, to clarify the truck’s specifications. On 27 March 1998, Mr and Mrs Lowe visited their finance broker and signed AGC’s ‘Standard Asset Purchase Agreement’ in respect of the truck. On 31 March 1998, they visited Mack’s office and spoke with Mr Kumnick and his superior, Mr Reno Buttignol, and, in Mr Buttignol’s presence, Mr Lowe signed a ‘Retail Sale and Warranty Registration Form’. He also received a document entitled ‘New Vehicle Warranty Information’. Later that day, he insured the truck with the truck insurer, National Transport Insurance (‘NTI’) and took delivery of it. Mr Lowe began to drive the truck on 1 April 1998, when he took it from Adelaide to Brisbane.
(B) The first trip – first problems
At the end of this first trip on 3 April 1998, Mr Lowe said that he complained to Mack in Brisbane about the truck’s rough ride and poor handling. Mr Lowe’s evidence was that the ride was rough and jarring and worsened during the trip. He said that the handling was bad and that the truck darted and dived off course unpredictably. Mr Lowe said that he repeated these complaints on his return to Adelaide when he took the truck in for its first service.
I do not wholly accept this account of Mr Lowe’s first experience with the truck. I accept that he complained to Mack about the rough quality of the ride and mentioned handling issues at this time, since this is consistent with his subsequent complaints about the vehicle. Further, some time in April 1998, Mrs Lowe also raised the ‘rough ride’ issue with Mr Kumnick. I do not accept that his complaints went much beyond this, however, because this is not borne out by the work that Mack undertook shortly thereafter. Mr Lowe conceded in cross-examination that any work done on the truck on 3 April 1998 was relatively minor and that the truck went in for a standard service on 6 April 1998. On this occasion, the Mack workshop rectified a leaking cab valve and replaced broken fuel cap washers.
Further, on 16 April 1998, after 13,487 kilometres, Mack did some more work on the truck. On this occasion, Mr Lowe complained about the front and rear wheels scrubbing, as well as lack of power. The truck was sent off for tests to ensure that its wheels were correctly aligned and the axle correctly cambered. In cross-examination, Mr Buttignol, who was at the time service manager for Mack Adelaide, said that these tests showed that the front axle required minor adjustment. Mr Lowe also conceded that, save for the adjustment, the repairs of 16 April 1998 were relatively minor
(C) Ongoing problems
Mack did further work on the truck in the next six months of 1998, including on 23 April, 14 May, 21 May, 9 June, 17 June, 13 July, 17 July, 17 August, and 2 September.
Johnson’s Truck and Coach Service, Buronga, New South Wales, made further repairs on 14 August 1998. At Johnson’s, Mr Lowe specifically complained about the fact that the truck “rides rough and [was] hard to handle”. Mack job cards for 23 April 1998 and 14 May 1998 recorded Mr Lowe’s complaints of poor or harsh ride and lack of power. A dynamometer test at this time indicated, however, that the power train was performing within specifications and there was no power deficiency.
Also during this time, there were repairs or replacements of such things as shock absorbers and shock absorber rubbers, spring shackles and brushes, bonnet mounts, window seals, and steering covers. There was an issue with the gear stick. In April 1998, work was done on the air bag suspension, by adding quick acting valves, and Mr Lowe conceded that he did not experience problems with the air bag suspension system beyond this time. In July 1998, the transverse cabin rod was replaced.
There is thus some evidence that Mr Lowe complained about handling problems after his first trip and in the first six months of operating the truck. On 10 July 1998 and again, on 14 August 1998, conversations between Mr Lowe and Mr Kumnick touched on this issue. There is also no doubt that Mr Lowe complained about the truck’s ‘rough ride’ during this time. Mack job cards recorded the complaint.
In mid June 1998, Mr Lowe was admitted, mid trip, to Swan Hill hospital, with appendicitis. As a result, Mr Edward Pasfield completed the trip for him. Mr Lowe had known Mr Pasfield for numerous years and had earlier worked with him. As Mr Lowe was still recovering from surgery in late June 1998, he and Mr Pasfield drove as a two-up team on a trip from Adelaide to Cairns. Mr Lowe’s evidence was that, on this occasion, the ride was “so rough that it was almost impossible to sleep in the cab bunk” and “[e]very bump in the road jarred the whole truck and the driver”. He added:
On the Leichardt Highway the ride and handling of the truck was so bad that we had to reduce the speed of the truck to no more than 80 kilometres per hour in places. This was due to the rough ride, instability of the truck and unpredictable handling …
Mr Pasfield sought to corroborate Mr Lowe’s account about the ride on this trip and the truck generally. He also said that “the ride in the truck was extremely rough” on the Cairns trip and the co-driver was unable to sleep in the cabin because it was “too rough”. As to steering problems, he said:
One minute you are going straight and the next thing you are darting off to the side of the road, you would have to turn the wheel three to three and a half inches to correct the truck again.
Mr Pasfield also gave evidence about the poor bonnet mounts and shock absorbers, jamming of the gearbox, a loose bumper bar, broken exhaust framework and vibration. Mr Pasfield also gave evidence that, at some stage, Mr Lowe had offered him a regular job driving the truck. Mr Pasfield said that he had declined the offer because he had never driven a vehicle as difficult to handle as the truck.
For the reasons stated below, I would not regard Mr Pasfield as an entirely reliable witness.
From at least July 1998, relations between Mack and the Lowes were difficult. On 6 July 1998, Mr Kumnick spoke to Mr Lowe, Jon McLean and Mr Buttignol about Mr Lowe’s ‘rough ride’ complaint. Mr McLean was Mack’s branch manager for Adelaide and Darwin. Four days later, Mr Kumnick spoke to Mrs Lowe and Mr Buttignol about the handling and rough ride issues that Mrs Lowe raised on Mr Lowe’s behalf. Three days later again, on 13 July 1998, Mr Kumnick again spoke to Mr Lowe about these issues. These conversations were inconclusive and, on 14 July 1998, Mack issued Magistrates Court proceedings for the non-payment for work done on the truck.
One problem was that Mack employees did not themselves perceive the ‘rough ride’ and handling problems that Mr Lowe complained of. In cross-examination, Mr Buttignol was asked how many times Mack had road tested the truck. His answer was that “it would have been quite a few times”, although he rode in it only once, on 24 August 1998. He said that, though not always recorded, test drives would have been done following repair work. I accept his evidence in this regard. Just as Mr Buttignol said, the repair documents indicated that the truck had been tested on a number of occasions following repairs.
On 24 August 1998, when Mr Lowe took Mr Buttignol for a test drive, they went with a fully loaded trailer, for somewhere between 60 kilometres (according to Mr Buttignol) and 100 kilometres (according to Mr Lowe). Mr Buttignol said that he could not identify any problem with the vehicle and, in particular, he could not detect the rough ride that was the subject of Mr Lowe’s complaints. His evidence was that Mack carried out the standard checks to investigate the rough ride complaint and they did not show the truck to be operating outside specifications. Mr Lowe, on the other hand, said that the problems with the vehicle were “clearly apparent”. In cross-examination about this test drive, Mr Lowe said:
When you are driving along you could pull up, select reverse gear and the whole edges locked solid, bang, the gearbox but that wasn’t a problem [to Mr Buttignol]. On the drive I went up to Kapunda, across to Tarlee; from Kapunda to Tarlee is a rough road. [The problem was] rough ride and wandering.
He did not refer to vibration, although, when asked in cross-examination about this omission, he said it was “there all the time”. Mack tested the gearbox later in 1998 and found it to be fully operational.
For the reasons stated below, I doubt Mr Lowe’s evidence regarding the vibration issue. I accept that he genuinely believed that there were ‘rough ride’ and handling issues, the significance of which fall for determination. I also evaluate Mr Lowe’s evidence in this regard below.
(D) Settlement of the Magistrates Court proceeding in November 1998
In the latter months of 1998, Mack carried out yet further work on the truck, i.e., on 2 September, 9 October, 15 October, 19 October, 22 October, 2 November, 25 November, 30 November (replacement of flat batteries), 14 December and 29 December.
A settlement of the Magistrates Court proceeding was negotiated in October and November 1998. The proceeding was ultimately discontinued on 24 November 1998.
On 12 and 28 October 1998, Mr Kumnick and Mrs Lowe had conversations about the truck. In the latter conversation, Mrs Lowe asked Mr Kumnick whether Mack would buy back the truck. On 29 October 1998, Mr Kumnick spoke to Mr McLean about Mrs Lowe’s proposal and later told her that Mack would not buy the truck back from them. These conversations with Mrs Lowe must be viewed in the context of other conversations at this time and the work then being done by Mack on the truck.
On 19 October 1998 Mr Buttignol told the Lowes that Mack would look at some agreed issues whether covered by warranty or not. The issues were whistling on the external mirrors, replacement of the turbo for the engine brake, replacement of the front spring hangers, rubber fittings to the doors, and engine overheating. There was no specific mention of rough ride, handling or vibration. When the truck came in for service on 19 October 1998, two further items were added to this list – cabin squeak and mirror heater. As at this date, the truck had done 141,160 kilometres.
On 22 October 1998, Mr Buttignol and another Mack employee, Dean Hutchinson, went through the completed work with Mr Lowe. At this stage, Mr Lowe identified only two matters for further attention – an outstanding turbo unit and draft excluding material for the doors. He latter mentioned the replacement of the front bumper bar. Mr Buttignol said that he told Mr Lowe that he would be notified when the turbo unit became available. Mr Buttignol also said (and Mr Lowe did not recall) that, when he telephoned Mr Lowe on 28 October 1998 to confirm his satisfaction, Mr Lowe complained that the engine was still over-heating and the wind was whistling on the side skirts. Mr Buttignol agreed that Mr Lowe should bring the truck in the following week, which Mr Lowe did. The service records show that the truck was inspected on 2 November 1998 and found to be mostly without fault. Notwithstanding this record, Mr Lowe brought the truck in again on 25 November 1998, with a further list of work to be done. According to Mr Buttignol, Mack did the work as requested.
In November 1998, the truck’s steer axle tyres were replaced, having done 105,000 to 110,000 kilometres. This was, so Mr Lowe conceded, “above average”.
Apart from this, there were no major repairs in November 1998 and, as Mr Lowe conceded, nothing that would have indicated handling or other major issues with the truck.
In December 1998, Mack replaced front spring shackle brackets and a cab shock absorber. Mr Lowe described the former as relating to handling issues, and the latter as relating to rough ride. Also in December 1998, the applicants faxed a report form to the FORS, which described “the problem or defect” in the truck as follows:
Rough ride & handling. (Front springs sagged) (3 sets front shockers) (1 set
front spring hangers) These are now shot & to be replaced again. (6 weeks old)
2 sets cab mounts
Radiator mounts
Bonnet mounts
2 Stabiliser barsOn December 1998, Mack closed the Lowes’ credit account.
(E) Unresolved issues
Mack did further work on the truck in January 1999 and on 12, 23 and 27 February 1999. In January 1999, for example, Mack replaced the steering wheel. In mid February 1999, when the truck had travelled about 220,000 kilometres, two steer tyres and eight drive tyres were replaced due to wear. Mr Lowe acknowledged that he had fitted retreads as drive tyres. He also conceded that the original set of tyres had provided adequate service life. Flat batteries were replaced in late February 1999.
In late 1998 or early 1999, the applicants met with Mack’s National Service Manager, Wayne Wallace, to discuss their complaints about the truck. Amongst other things, Mr Wallace was ultimately responsible for all warranty issues throughout Australia. Mr Wallace’s evidence was that he first became aware of issues with the truck around September/October 1998 when Mr Heironymus, at that time Mack’s Zone Service Manager in Brisbane for South Australia, Tasmania and Papua New Guinea, told him about Mr Lowe’s concerns. Mr Wallace said in cross-examination that, whilst rough ride was mentioned by Mr Lowe in this interview, most of the problems were “more technical issues like cab mounts, shackles and those type of things”.
The meeting with Mr Wallace was unsatisfactory from the Lowes’ point of view. Mr Lowe said that they discussed rough ride, cab mounts, tyre wear, the chassis, and the problems of getting warranty work done. Mr Lowe said, and Mr Wallace denied, that Mr Wallace told him that he was not stopping enough to let the cab mounts cool down. Mrs Lowe corroborated Mr Lowe’s account. Mr Wallace said that Mr Lowe “was quite emotional and it was difficult to obtain a coherent list of complaints”. Mr Wallace also said that Mr Lowe provided him with a list of issues and demanded that they be completed within two days. Mr Wallace told him that this was not possible but that Mack would attend to the two or three most important matters and that Mr Heironymus would attend to the rest in Adelaide.
Mr Wallace gave evidence about the repairs that Mack carried out following this meeting. These repairs included the replacement of the front spring shackle, modification of front spring rubbers, rectification of the pyrometer, replacement of rear shock absorbers and rear shock absorber rubbers, refixing of a Mack badge, fixing of a broken brake hose clamp, sealant applied to fix an oil leak at the steering pump, a radio bracket fixed, refitting of air conditioning hose, fixing door to prevent wind penetration, replacement of air compressor, replacement of door trim, modification of mirrors, replacement of insulation rubbers around bunk skirt, and removal and reglueing of fuel tank rubbers.
I accept Mr Wallace’s evidence about Mr Lowe’s demeanour at his first meeting with him. I have little doubt that Mr Lowe was “quite emotional”. I also accept Mr Wallace’s account of the discussion, which is borne out by Mack’s subsequent work on the truck. Notwithstanding the Lowes’ evidence, I do not accept that Mr Wallace said that Mr Lowe was not stopping enough to allow the cab mounts to cool down. I accept that one or other or both of the Lowes may have understood him to say this and that they persuaded themselves in later discussions with one another that he did make these comments. By this time, Mr Lowe’s judgment about the truck was clouded by emotion and Mrs Lowe was embroiled in his concerns.
Mr Wallace subsequently asked Jon Heironymus to obtain a list of complaints from the Lowes. On 11 January 1999, Mr Heironymus telephoned Mr Lowe for a list of items that Mr Lowe considered were defective or deficient. Mr Heironymus repeated this request, this time in writing, on 27 January 1999, stating:
As mentioned during our phone conversation, in order for me to ensure that the issues you raised during our conversation are addressed with the minimum of downtime to your operation, I need your assistance.
I understand that your main issue is the ride of the vehicle, and as I indicated, in order to assess this issue a Mack representative will test drive the vehicle over a suitable section of road.
However, I would also want to ensure that the other issues that you have are also assessed during this test drive.
Could you please provide a list as agreed to during our conversation so I can formulate a plan of action and we can address your issues with a minimum of delay
The applicants responded, through solicitors, by a letter dated 3 February 1999, attaching a list of some 23 items. On 8 February 1999, Mr Wallace responded by fax, commenting that the list “has far from enough detail to complete an accurate investigation” and that some items were no more than “routine maintenance”. In cross-examination, Mr Lowe agreed that there was nothing about handling in this list, apart from the reference to “steering universal joints loose”; and nor was there any specific mention of vibration. Mr Lowe sought, however, to rely on “tyre wear” as further evidence of a handling issue and “rough ride”. The evidence did not, however, establish that the tyre wear was below the expected level.
Also on 8 February 1999, Mr Lowe made an inspection of the truck, as he said, “to try and discover why it was giving so many problems”. He believed he observed bent chassis rails. He telephoned Mr Heironymus the next day and told him that the chassis was bent laterally and sagged. Mr Heironymus, who was a heavy commercial vehicle mechanic by training, looked at the truck in Brisbane on 12 February 1999. The only defect he found was a minor leak in the right shock absorber, although he also saw that “to the unaided eye the rails were not perfectly straight”. He went over the truck with a copy of the solicitors’ list and annotated the list as he went. The list, as annotated, was the basis of a further list that accompanied Mr Wallace’s letter to the Lowes’ solicitors dated 2 March 1999: see below. Also on 12 February 1999, Mr Lowe took Mr Heironymus for a test drive for about 50 kilometres along the Cunningham highway to around Willowbank. Mr Heironymus did not detect anything wrong with the truck and, in particular, did not observe any vibration, shocks, wandering or darting. He did not perceive the rough ride of which Mr Lowe complained.
From March 1999, Mack Adelaide assumed responsibility for Mr Lowe’s vehicle because Mr Lowe notified Mack that he was not intending to take it to Brisbane any longer. On 2 March 1999, Mr Wallace wrote to the applicants’ solicitors stating that Mack wanted to inspect the truck chassis, since Mr Lowe said it was bent. He also attached a list of the work Mack was to do on the vehicle. I set out the list, since it records Mack’s understanding of the vehicle issues as at that date. The attached list read as follows:
1. Rough ride from front This will be assessed during a test drive, this would be best done by a neutral party.
2. Front springs out of shape The springs in this vehicle are normal, however, the bump stops will be changed to items that provide more clearance to the chassis to minimise bump stop to chassis contact.
3. Turbo This turbo has been put aside in Brisbane for Graham and will be fitted when suitable for Graham.
4. Front bumper This issue will be taken up with Adelaide Branch as it is a sales issue and not a service issue.
5. Tyre wear Graham could not provide figures on tyre life as he did not have them at hand. However, the original set of tyres provided adequate service life. We suggest Graham goes back to the tyre manufacturer for assistance in diagnosing his current complaint.
6. Steering universal joint worn This is a warrantable repair and will be corrected as such.
7. Right seat no valve action As agreed to by Graham, a manual style adjusting valve will be fitted to the seat.
8. Right front wheel bearing caps leaks As agreed to by Graham, alternative breathers will be fitted to these hub caps.
9. Front left hand guard warped As agreed to by Graham, there will be nothing done with this item as this is the normal shape of this item. 10. Tank strap rubber All tanks will have rubber fitted to the fuel tank mounting brackets and under the straps.
11. Bunk light U.S. This will be replaced as required.
12. Wind through door lock The correction for this complaint has apparently not worked on Graham’s vehicle and this will have to be looked into further to determine action.
13. Front hub cap missing Although Mack cannot be held responsible for this aftermarket item, a new one will be supplied to Graham.
14. Heat in cab As agreed to by Graham, we will fit thermal blankets to the exhaust under the cab.
15. Radio falls out The mounting bracket requires adjustment to enable the clips to latch into the mounting frame.
16. Power steering hose rubs on pulley The hoses will be adequately restrained to prevent this.
17. Batteries wrong Correct batteries will have to be fitted.
18. Air cleaner pipe to motor found The oil sample results will be monitored to determine the effect of this pipe being loose.
19. Rubber on skirts out again This foam rubber will be adequately secured to the transition panels.
20. Hole rubbed in breather As inspected there was not actually a hole rubbed in the breather. The mark in the breather was caused by the stud for the lower mounting bracket being loose, Graham offered to correct this himself. 21. Air conditioner hose worn The shroud will be fitted with a piece of protective moulding to prevent further wear occurring.
22. Air cleaner tube worn on bonnet Graham accepted that this would be corrected with a simple adjustment and committed to do this himself.
23. Cab leaking water during heaving rain The evacuator valves in the air intake duct were removed to prevent this condition. This was done by Graham during this meeting.
*24. Hose coming loose @ rear of transmission This will be assessed when the vehicle is in the workshop.
*25. Pyrometer not operating This will be repaired as normal warranty.
* Indicates issues that were not on the original list that was supplied and have been added to the list after they were raised by Graham.
Mr Lowe’s evidence was that, by 2 March 1999, when Mr Wallace wrote this letter, he believed the truck to be unsafe. He conceded, however, that Mack substantially addressed the issues that he raised.
Mr Wallace subsequently arranged for Carmello Gentilcore, of All Transport Industries, to do a laser alignment test of the truck chassis. The test, which was completed on 15 April 1999, showed that the chassis was straight. Mr Lowe did not contest the result of this test.
The applicants and two other husband and wife truck owner-operators met Mr Lambert on 24 March 1999, to discuss what was planned for the next day. On 25 March 1999, the applicants met Mr Lambert and Lindsay Pollock (a DECA senior driver) at Rick Cobby’s depot. Later that day, Lambert and Pollock completed an inspect and drive test of the truck for the purpose of selecting vehicles to be examined in the FORS Inquiry.
On 29 March 1999, the applicants received the report and, after reading it, Mr Lowe contacted NTI. This report was compiled after Mr Pollock had driven Mr Lambert on a 183 kilometre round trip through Kapunda (in South Australia). By this time the truck had done about 246,800 kilometres. Some 26 vehicles were taken through the ‘inspect and drive’ stage, but only five vehicles, including the applicants’ vehicle, were ultimately given full instrumental testing. After the ‘inspect and drive’, Mr Lambert Reported that:
This vehicle seemed extremely sensitive to road roughness and undulations. When the road is rough, the ride, wander, and directional stability problems are probably the second worst experienced during the test drive program.
Mr Lowe’s evidence was that following his conversation with NTI, he and Mrs Lowe “agreed that we could not afford to take a risk of driving the CH Elite without insurance cover”. His evidence was in substance that he did not drive the truck at this time because he believed there was a risk that he was uninsured. Mrs Lowe corroborated her husband’s evidence on this issue.
Mr Lowe claimed to telephone Mr Wallace on 30 March 1999, to inform him of this, although Mr Wallace said that he spoke only with Mrs Lowe (and Mr Lambert) this day. According to Mr Wallace (whose evidence I prefer since he kept a contemporaneous record of such conversations) he telephoned Mrs Lowe on 30 March 1999, in order to contact Mr Lowe. In this conversation, Mrs Lowe told Mr Wallace that NTI would no longer insure them and that there were more problems with the truck. Also on 30 March 1999, Mr Wallace and Mr Lambert had a conversation about the truck. A note in Mr Wallace’s handwriting read:
… said on std roads in centre — drives very good on high cambered roads, with dips in roads truck very unstable
Around this time, Mr Lambert wrote Mr Wallace a letter that tended to confirm his adverse assessment of the truck.
The critical question is whether or not the applicants have shown, on the balance of probabilities, that the truck was not fit for the purpose of interstate long-haul goods transport. This calls for an objective assessment of the vehicle, although evidence of subjective impressions may inform this assessment.
The applicants bought a new truck for this purpose. The applicants said (and the respondents did not deny) that it was “top of the range”. The respondent described it as a Mack CH Elite Highway prime mover. In the circumstances, in order to be fit for the purpose of interstate long-haul goods transport, the truck was required to be able to transport the applicants’ loads over long distances safely, reliably and efficiently.
The heart of the applicants’ case was that the truck was not fit for long-haul goods transport because it had vibration and handling problems that made it unsafe, unreliable and inefficient. Vibration problems, in the context of this case, included ‘rough ride’. Handling problems included darting and wandering. The applicants also alleged other defects in the truck. I also discuss them briefly below.
In support of their vibration and handling claims, the applicants relied on the evidence of Mr Lowe, Mr Pasfield and Mr Lambert (and to a lesser extent Mrs Lowe) to the effect that each had experienced rough ride and handling problems. I have already indicated that I would not place any great weight on Mr Pasfield’s evidence and that I would not regard Mr Lowe’s evidence as entirely reliable. As for Mrs Lowe and Mr Lambert, I do no more than refer to my comments above.
I have found that Mr Lowe complained of rough ride and handling problems from the very beginning of his operation of the truck. His complaints about rough ride were persistent. He made fewer complaints about handling, although he (and Mr Pasfield) made some occasional references to ‘darting’.
Notwithstanding Mr Lowe’s complaints, there was little, if any, major work done on the truck in the first months of its operation. There was some work on the air bag suspension system in April 1998, but Mr Lowe conceded that he did not thereafter experience problems with the air bag suspension. There was a good deal of work done on the vehicle in October 1998, but handling and vibration were not expressly mentioned. “Rough ride” headed the list in February 1999, but again there was no specific mention of handling or vibration. The first mention of “severe vibration (downhill 1 2 3 gears)” (as opposed to ‘rough ride’) appeared in the Lowes’ list of 31 March 1999. Bearing this in mind, and for the reasons already stated, whilst I accept that Mr Lowe had an honest belief that his vehicle had vibration problems, I would not accept his evidence as reliable evidence that the vehicle in fact had vibration or handling problems.
I accept that, on the ‘inspect and drive’ test in March 1999, Mr Lambert, then a passenger, considered that he experienced vibration and handling problems. As I have already said, however, his comments at the time were his subjective impression, without the benefit of instrumented testing, and must be considered in the context in which they were made. As I have said, to the extent the observations in the ‘inspect and drive’ report are inconsistent with the later results of the instrumented testing, the latter are to be preferred, because they provide quantifiable comparative data of an objective kind.
Further, as regards subjective impression, it must be recalled that a number of Mack employees took the truck for test-drives, but none could detect the rough ride and handling problems of which Mr Lowe complained. Mr Buttignol and Mr Heironymus were passengers in the vehicle when Mr Lowe took them on test-drives in August 1998 and February 1999. Neither detected any problem with rough ride (or vibration) or handling. Subject to the reservations expressed above, they were both credible witnesses.
Finally, to the extent that it matters, bearing in mind that his use of the truck – for short-haul, high COG loads, and at lower speeds with frequent slowing and stopping – was different from Mr Lowe’s use, the present owner’s experience did not support the applicants’ case. Mr Jenkins, who had purchased the truck from AGC after AGC had repossessed it from the Lowes, made no complaint at all about the truck. Mr Jenkins was an honest and credible witness.
Plainly enough, perceptions about the ride and handling of the Lowes’ vehicle differed markedly. There is ultimately no reason to prefer the evidence of Mr Lowe, Mr Pasfield or Mr Lambert over the evidence of Mr Buttignol or Mr Heironymus. Further, as indicated, there were deficiencies in the applicants’ and Mr Pasfield’s evidence, which caution against too ready acceptance.
The applicants contended that Mr Lowe had a “litany of complaints” about the truck and that they were so unhappy with it, they offered to return it on a walk-away basis. There is no doubt that Mr Lowe made a great many complaints about the vehicle. Also as indicated above, I accept that Mrs Lowe spoke to Mr Kumnick about returning the truck in October 1998. These facts do not, however, establish that there was in fact any defect of the kind alleged. The applicants also argued that the truck had a poor service history, which was consistent with there being undue vibration.
I am not satisfied that the applicants have shown, on the balance of probabilities, that the truck had a poor service history and, even if it did, that this history was due to vibration problems in the truck.
The applicants relied on certain comments of Mr Heironymus and Mr Buttignol in cross-examination. Mr Heironymus’ comments supported them to some extent. Mr Heironymus agreed that the “history [of the truck] would be below average”. He accepted as “fair comment” that the truck had “a history of these little niggly, bad luck, odd things coming up continually”. I do not consider, however, that Mr Buttignol’s evidence is in the same vein. When Mr Buttignol was asked about the service history of the vehicle, he insisted that “every time that truck came in … we rectified those problems, that should have gone out without that problem in the truck”. When asked whether the truck was “close to being perfect”, he answered, “it falls between a range”. There is no objective evidence that would permit me to say which interpretation of the truck’s service history is to be preferred. There are a number of factors that make this evaluation difficult, if not impossible.
During the period of Mr Lowe’s operation of the truck, it completed every trip. In all, in the first year of Mr Lowe’s operation, the truck completed about 250,000 kilometres, which even Mr Lambert conceded was “well above average”. Servicing and repair did not significantly interfere, if at all, with the transportation of goods. For most of the period that Mr Lowe operated the truck, the truck was covered by Mack’s 12 month (unlimited distance) warranty, providing for free-of-charge repair or replacement of vehicle components. The truck was taken in for service and repair on many occasions and for most of the time at no cost to Mr Lowe. He was, as I have already observed, very particular about the truck, and I have no doubt that he took advantage of the warranty cover to ensure his truck was kept in the best condition possible.
Many of the repair or replacement items done by Mack were for comparatively minor items. A proportion of the items were self-evidently for wear and tear on a vehicle travelling great distances and carrying heavy loads. At least some of the repairs were, as Mack said, consistent with normal maintenance and service issues. There were two instances in which Mack did work on the applicants’ vehicle and similar vehicles as part of a program of component upgrading (replacement of bonnet mounts and steel springs). Further, there were numerous occasions when proper assessment showed Mr Lowe’s complaints about the vehicle to be unfounded.
Mr Heironymus gave evidence (which I accept) that Mack's general policy with regard to complaints was to try to keep the customer happy “and if that entailed doing work that we thought would ... help address the complaint, then that is what we did”. He gave evidence in cross-examination that sometimes Mack's service department would perform work on a vehicle to try to address a customer's complaint and not because they knew it would fix a problem, as for example, in the case of replacing alternative shock absorbers. It is difficult to say to what extent this policy accounted for the repairs and replacements on Mr Lowe’s vehicle.
Doubtless, given the mileage, there was on numerous occasions a real need for repair and replacement. Mack worked assiduously, however, to meet Mr Lowe’s complaints about the truck. The FORS Inquiry may have been a factor in the steps Mack took in January to March 1999 to bring the truck up to Mr Lowe’s expectations, but it can have been no more than this, because it is clear that Mack’s repair and replacement work on the truck had been on-going and dated from well before the FORS Inquiry. Whether there were other factors apart from wear and tear (for example, speed) contributing to component or other failure remains a matter for speculation. Mr Lowe was unable to produce relevant driver log books, which may have assisted in this regard.
In the circumstances of this case, it is difficult, if not impossible, on the evidence as it stands, to determine whether or not Mr Lowe’s multiplicity of complaints about the truck in fact reflected an abnormally high level of items requiring mending, replacing or restoring. Even if I were so satisfied, however, there is no evidence that would lead me to conclude that the cause of all these things going wrong was a problem with vibration. As already indicated, Dr McLean’s evidence, even if admissible, would not so persuade me. Nor was I so persuaded by Mr Lambert’s evidence.
The only objective, independent, and contemporaneous testing of the applicants’ vehicle was done in the course and for the purposes of the FORS Inquiry. Roaduser carried out instrumented testing to assess vibration and handling problems (as well as chassis flexibility and airbag suspension issues). Though not perfect, the instrumented testing for vibration and handling was extensive. The measurements have not been shown to be inaccurate. I am not persuaded by the evidence of Mr Lambert (or Dr McLean) that the FORS Inquiry and Report were fundamentally flawed.
I accept that, as the applicants said, the FORS Inquiry and Report were looking at a broader problem than that which arises in this case, because the Inquiry was seeking to identify the possible existence of systemic problems for vehicle manufacturers and road safety authorities, and not to assess fully the trucks involved in the testing procedures. I accept too that the circumstances of the instrumented testing did not precisely replicate the applicants’ use of the truck. The Inquiry replicated the applicants’ use of the truck as nearly as was reasonably practicable having regard to the objects of the Inquiry. The results of the instrumented testing are, however, the only available results of instrumented testing on the applicants’ vehicle. The results are plainly relevant to the applicants’ complaints about their vehicle. In summary, while they may not be the perfect reflection of the vehicle when it was being operated by Mr Lowe, the results set out in the FORS Report constitute the best available evidence. As we have seen, these results do not support the applicants’ case about the ride and handling qualities of the vehicle.
The applicants argued that the fact that a problem did not manifest itself for the purposes of the FORS Inquiry and Report does not lead to the conclusion that there were no problems with the truck. Even if accepted, this observation falls well short of providing a basis for a positive finding that there were in fact problems of the kind they alleged. It is also true that the instrumented testing was principally designed to provide comparative data about the group of vehicles that were subject to the testing. Save for the guidance provided by ISO Standard 2631-1: 1997 or the ATSB-ARRB report, there was no standard for a good, as opposed to bad, truck. It may be that, as the applicants submitted, the comparative data did not establish that their vehicle was good for the purpose of their operation and that the problems with it were manifest at certain times in certain conditions. In the absence of evidence (or sufficient evidence), however, neither of these observations provides a ground for a positive finding that the truck was unfit for their purpose.
The FORS Report findings on vibration provide the only objective assessment of ride quality available to the Court today. There was nothing in the FORS Report to support the conclusion that the ride of the applicants’ vehicle was ‘rough’ in that it was adversely affected by vibration. This is confirmed by the evidence of Mr Morrison and Mr Lambert.
Further, notwithstanding the recommendation in the FORS Report that Mr Lowe be notified of the test results in relation to the increased steering effort required for his vehicle on a sector of the test route, on the critical data regarding drive axle steer angle, the applicants’ vehicle performed better than two benchmark vehicles and all but one of the other complainants’ vehicles. I accept Mr Morrison’s evidence in this regard.
The applicants have not, therefore, satisfied me, that, on the balance of probabilities, the truck suffered from rough ride, vibration or poor handling characteristics. The pleaded defect of “severe vibration (downhill 1st, 2nd and 3rd gears)” is not made out. Mr Lowe’s evidence was that any such problem was manifest only once and was rectified by the replacement of the engine mounts.
As noted early in these reason, the applicants alleged many other defects in the truck. As we have seen, the service history of the truck over time involved work on most, if not all, of these items, as a result of which Mack rectified any item needing repair or replacement. There is no evidence that these items separately or together made the truck unfit for the applicants’ purpose. I note some particular items since the applicants made special mention of them. They are:
1.Chassis bowed and bent – The applicants alleged that the chassis was bowed and bent. This claim is not made out. Mr Lambert’s evidence was that he undertook a test at Rick Cobby’s depot showing the chassis was bent, but he conceded in cross-examination that prior to testing the chassis he had not checked surface flatness and tyre air pressure, which were critical to the integrity of the test. The result of Mr Gentilcore’s chassis straightness test on 15 April 1999 showed that, save for a minor 3 millimetre variation, the chassis was straight. Mr Jon McLean gave evidence of a test on 14 April 1999, which showed a similar result. Mr McPherson stated that he examined the vehicle at around 800,000 kilometres (when it had passed out of the applicants’ hands) and detected no bend. He further stated that once chassis rails are bent, they stayed bent.
2.Axle camber wrong – The applicants alleged that the axle camber was wrong for Australian conditions. I accept the evidence of Mr McPherson and Mr Wallace that the axle is cambered for Australian conditions. There was evidence that the applicants’ vehicle had undergone a very minor or slight corrective adjustment. There was no evidence that this would have affected the operation of the truck in any material way.
The applicants’ case was that the defects in the truck were caused by: (1) the failure of the design and construction of the vehicle to meet the requirements of the use of the vehicle for long-haulage interstate transport; and (2) the defective or inadequate examination and testing of the vehicle and its components. There are evident difficulties with the pleading. At this point, they were difficult to follow and in part circular. Since I have rejected the applicants’ case on the defects, it is strictly unnecessary to deal with this part of their case.
Since the matter occupied some time, however, I set out briefly the evidence concerning the alleged design and construction failures.
1.Torque rods – The applicants relied on the fact that the transverse rods were both mounted to the same side of the chassis. The applicants presented no test data or actual evidence as to the effect of transverse rods being mounted on the same side of the chassis as opposed to one either side. Mr McPherson gave evidence (which I accept) that the movement of the transverse rod is extremely small and that it made little or no difference whether the torque rods were mounted on the one side as opposed to being on either side. Mr Morrison gave evidence to similar effect. I am not persuaded by Mr Lambert’s evidence that the location of the transverse rods on the applicants’ vehicle had any material effect on the vehicle’s stability.
2.Uneven distribution of air pressure – The FORS Inquiry tested the issue of air pressure. The results are set out in Table 36 of the FORS Report and are not indicative of the alleged failure. There is no or no sufficient evidence to substantiate the allegation.
3.Variable air bag pressure – Table 36 of the FORS Report does not support this allegation. The air pressure of the applicants’ vehicle is constant with an almost constant deviation for the Euroa and Nagambie sections. There is no or no sufficient evidence to substantiate the allegation.
4.Adverse operation of right height control valve – There is no or no sufficient evidence to substantiate the allegation.
5.Driveline torsional vibrations contributing to premature component failures – I refer to the discussion above. As already stated, there is no or no sufficient evidence to substantiate the allegation.
6.Deficiency in pneumatic dampening of air suspension system – Table 36 of the FORS Report does not support this allegation. There is no or no sufficient evidence to substantiate the allegation.
7.Adverse periodic phenomena occurring in the sub-harmonic frequency band – There is no or no sufficient evidence to substantiate the allegation.
8.Air suspension system fails to dynamically load share leading to high dynamic wheel loads and high dynamic service loads – Table 36 of the FORS Report does not support this allegation. There is no or no sufficient evidence to substantiate the allegation.
9.Cut-out to the chassis rail top and bottom flanges in the vicinity of the rear engine mounts adjacent to the air compressor thereby diminishing the stiffness of the chassis and lowering the harmonic signature of the prime mover – Even if Dr McLean’s evidence were admissible, the applicants have not provided any empirical evidence as to the effect of the chassis rail cut-outs on the ‘harmonic signature’ or on vehicle behaviour. Mr McPherson gave evidence (which I accept) that cut-outs were commonplace and had no known adverse effect.
10.Inadequate front engine mounting design – There was evidence that Mack rectified a front engine mount and the issue did not arise again.
11.Steering mechanism exhibiting excessive bump steer – Table 30 of the FORS Report showed that the applicants’ vehicle had similar or better results than the benchmark vehicles and the other complainants’ vehicles.
12.Significant out scalloping and uneven wear of steer tyres – The applicants complained about the steer tyres. On the evidence of Mr Lowe, the steer tyres provided average or slightly above average life and the drive tyres provided well above average lifetime.
13.Adverse kinematic geometry – This allegation was not pursued.
14.Vehicle handling erratically and unpredictably and exhibiting excessive response to flexible chassis vibrations, torsional loading and bogie axle roll steer – There was no evidence of such phenomena.
15.Engine and cab sleeper cab mount dynamic parameters inappropriate for vehicle’s harmonic signature – There was no evidence of such a phenomenon.
16.Engine and cab sleeper cab mount dynamic parameters inappropriate for vehicle’s harmonic signature – There was no evidence of such a phenomenon.
17.Inadequate design and operation of drivers seat mechanism – There was no evidence of this.
18.Cyclic twisting of primer mover chassis – There was no evidence of such a phenomenon.
19.Roll centre of front prime mover raised by high centre of gravity engine and cabin affecting efficiency of front shock absorbers – There was no evidence of such a phenomenon.
20.Unequal pressure in suspension – Table 36 of the FORS Report does not support this allegation. There is no other evidence to substantiate the allegation.
21.Poorly matched harmonic signature causing adverse frequency phenomena – I refer to the discussion of Dr McLean’s evidence. Even if his evidence were admissible, there was no evidence to support the allegation or to establish that it resulted in any adverse behaviour in the applicants’ truck. Furthermore, Mr McPherson gave evidence that the issue of the ‘harmonic signature’ or vibration characteristics of a vehicle would be considered in the development of heavy vehicles.
At trial the applicants adduced no evidence to substantiate the allegation that there was defective or inadequate examination and testing of the prime mover and its components. As we have seen, the respondents called Mr McPherson to give evidence of his experience in the testing of prime movers both in Australia and the USA.
It follows from the above discussion that the applicants have not shown that, on the balance of probabilities, the truck was not of merchantable quality and was unfit for the purpose of interstate, long-haul goods transport. They have not shown that the truck was other than as represented to them by Mr Kumnick in March 1998. In particular, they have not established that his statement that the truck would be safe and reliable for at least 800,000 kilometres was misleading or deceptive, or likely to mislead or deceive. If this were a representation with respect to a future matter that attracted s 51A of the TPA, there is no doubt that the respondent adduced more than enough evidence that it had reasonable grounds for making the representation.
I do not consider that anything ultimately turns on the so-called Browne v Dunne points referred to in the applicants’ closing written submissions. The applicants did not elaborate on them in closing address.
10. DAMAGES
It follows that the applicants have not established any entitlement to the relief they seek. I would express briefly my conclusions on the matter of damages in the event that I was wrong.
Had a breach of the condition created by s 71 occurred, would the applicants’ damages claim have been made out? The applicants’ statement of claim sought damages or compensation by reference to various provisions of the TPA, including ss 73, 75AD, 82 and 87. At no stage in the proceeding, however, have the parties referred again to s 73. The authorities are clear that no action for damages lies under s 82 for breach of a condition implied by s 71 of the TPA: see Austral Pacific Group Ltd (in liq) v Airservices Australia (2000) 203 CLR 136 (“Austral”) at 141 per Gleeson CJ, Gummow and Hayne JJ, citing Brennan J in Arturi v Zupps Motors Pty Ltd (1980) 49 FLR 283 at 285-286. Provisions such as ss 75AD and 87 are of no assistance in this context. I accept, however, that the Court may award damages in respect of a breach of a s 71 condition by virtue of s 39B(1A)(c) of the Judiciary Act 1903 (Cth). In Austral, at 141, the joint judgment said:
The claim in contract for damages for breach of obligations imposed by provisions such as ss 71 and 74 of the Trade Practices Act involved obligations that are statutorily created and take effect by a legal fiction, namely that the parties made a contract including the relevant obligations. That is how Brennan J analysed the matter in Arturi v Zupps Motors Pty Ltd. It follows that a party claiming damages for breach of such an obligation asserts a right which owes its existence to federal law thereby, in a State court, attracting the exercise of federal jurisdiction invested under s 39(2) of the Judiciary Act.
If, as the High Court stated, a State court deciding a s 71 claim is exercising federal jurisdiction under s 39(2) of the Judiciary Act, then it follows that a federal court can entertain the same claim under s 39B(1A)(c) because the obligation created by s 71 “owes its existence to federal law”. See also LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575. In any event, the applicants’ s 52 claim would provide an independent basis for jurisdiction over the s 71 claim.
The measure of damages for a breach of an obligation created by s 71 of the TPA is the contractual measure, namely, the estimated loss directly and naturally resulting in the ordinary course of events from the breach. The prima facie measure of that loss is “the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty”: compare Hadley v Baxendale (1854) 9 Ex 341 at 354; (1854) 156 ER 145 at 151; AFA Electronics Pty Ltd v Strathfield Group Wholesale Pty Ltd [2001] VCS 289 at [88], discussing s 59 of the Goods Act 1958 (Vic). Section 52 of the Sale of Goods Act 1895 (SA) is to similar effect. In other words, prima facie, had they succeeded on liability, the Lowes would have been entitled to the difference between the value of a truck fit for the purpose of long-haul goods transportation and the value of the truck they actually received and used in their business. The applicants did not, however, seek damages on this basis. There was no evidence of this amount.
Effectively, the applicants sought damages under the second limb of Hadley v Baxendale for the loss as may reasonably be supposed to have been in the contemplation of the parties, at the time they made the contract, as the probable result of the breach of it. It is on this basis, for example, that they claim damages in respect of loss of earnings: compare Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653 at 667-668; Hodgson & Hodgson v Morella Pastoral Co Pty Ltd (1975) 13 SASR 51 at 66-67; NEA Pty Ltd v Magenta Mining Pty Ltd [2005] WASC 106 at [305] per EM Heenan J, affirmed in NEA Pty Ltd v Magenta Mining Pty Ltd [2007] WASCA 70. A claimant is of course under a duty to take all reasonable steps to mitigate the loss caused by the breach.
In order to be compensated for any loss and damage under s 82(1) of the TPA in respect of a claim under s 52 of the TPA, the applicants needed to establish a causal connection between the respondent’s conduct (here, the alleged misrepresentation) and the loss for which they sought compensation: see, e.g., Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525-526 per Mason CJ, Dawson, Gaudron and McHugh JJ and Henville v Walker (2001) 206 CLR 459 at 469-470 per Gleeson CJ, 480 per Gaudron J, 489 per McHugh J and 509 per Hayne J.
For present purposes, it is sufficient to refer to the Full Court’s discussion in Kenny & Good Pty Ltd v MGICA(1992) Ltd (1997) 77 FCR 307 at 330 (per Wilcox, Branson and Sackville JJ) regarding the general principles governing damages under the TPA. Their Honours said:
Care must be taken to examine the facts of the particular case and not to determine cases by placing them into preconceived categories. However, bearing that caution in mind, the authorities to which we have referred support several general propositions relevant to the present case:
·in assessing damages under s 82 of the TPA Act, the principles applicable to actions for deceit, being closely analogous, provide a useful guide in most cases
·in a case where something is purchased in consequence of a misrepresentation, the prima facie measure of damages is the difference between the price paid and the true value of the thing. But this is not an inflexible rule and is merely illustrative of a more general proposition, namely, that the purchaser is entitled to recover as damages, a sum representing the prejudice or disadvantage he has suffered in consequence of altering his position under the inducement of the respondent’s misrepresentation. That general principle applies to other claims, such as those brought by lenders or mortgage insurers who have entered into transactions in reliance on false or misleading representations
·a person induced to enter a transaction by misrepresentations, generally speaking, must show that the losses claimed are related to the misrepresentation. It is not enough simply to show that the transactions was induced by the representation and the losses would not have occurred but for the transaction. The loss must flow directly from the inducement
·where property acquired in a transaction induced by a misrepresentation subsequently declines in values, damages are not awarded in respect of the decline if it is attributable to an independent, extrinsic or supervening cause
·if the applicant would have entered into the relevant transaction, even if the misrepresentation had not been made, any losses flowing from the transaction as such cannot be said to flow directly from the inducement. In such a case the applicant would have been exposed, in any event, to the precise risk that ultimately eventuated.
See more recently Zuvela v Geiger [2007] WASCA 138 at [41]-[43] per EM Hennan AJA.
Gurdag v BS Stillwell Ford Pty Ltd (1985) 8 FCR 526 is illustrative of these principles in a context similar to the present. Forster J upheld the applicants’ claim in that case that the vendor of a truck had falsely represented its condition to the applicants, who had made known their intention to use the truck for the interstate transport of perishable food. His Honour awarded damages under s 82 of the TPA, comprising: (i) the difference between the purchase price of the vehicle and its true value at the date of purchase; (ii) expenditure reasonably undertaken to rectify faults relating to the misrepresented condition of the vehicle, plus interest thereon, irrespective of whether the rectification work was successful; and (iii) loss of profits for a period of twelve months less the costs of modifying the vehicle to suit the applicants’ intended use. His Honour held that the applicants could not reasonably expect to be compensated for loss of profits indefinitely or for a long period, given the age of the vehicle, even if it had been in the represented condition.
By particulars of damage dated 25 November 2002, the applicants gave particulars of loss and damage as follows:
(a)
loss of actual net income from 1 April 1998 to 21 January 2000
$ 52,632.00
(b)
loss of net income of $75,000.00 per annum from 21 January 2000 to 21 November 2002
$212,500.00
(c)
loss of value of the truck
$ 74,000.00
(d)
loss of future income from 21 November 2002 to 30 March 2003
$ 30,288.51
(e)
loss of future income from 31 March 2003 to 30 March 2014
$426,000.00
$795,420.51
The approach taken by the applicants’ expert accountant, Bruce Wilkinson, was different from that foreshadowed in these particulars. The applicants made no application to amend. Mr Wilkinson’s report was directed mainly to expected profit and loss. For the period 1998-2003, he concluded that loss of income was about $429,996; for 2003-2014, about $73,514; and for 2005-2014, about $330,745. He also noted a figure of $6,627 as increased costs and a $145,000 loss on the sale of the applicants’ house. The respondent relied on the evidence of James Scott, who also prepared an accounting report as “a critique and responsive report to the report of Peter Wilkinson”.
For numerous reasons, I would not accept Mr Wilkinson’s assessment of the applicants’ loss. Broadly speaking, my reasons include that: (1) key assumptions depended on the applicants’ unsubstantiated allegations of fact; (2) key assumptions had no reasonable basis in the evidence or elsewhere; and (3) key assumptions were contrary to the facts even as the applicants alleged them to be.
There was in fact little evidence that repairs on the applicants’ truck had interfered much, if at all, with their business. The evidence at trial failed to establish that the applicants had lost the 73 days between 6 April 1998 and 28 December 1999, as they claimed in their particulars of loss and damage. Claims made in respect of some days were plainly unjustified.
At trial, the applicants included a claim for the alleged loss made on the sale of their house on 31 May 1999. This claim was not a part of their pleadings. I would reject it on the basis that they failed to show that they were compelled to sell the house by reason of Mack’s conduct and/or the defective condition of the truck (assuming, contrary to the case, that they had established their case on liability).
In their particulars of loss and damage, the applicants claimed the loss of value of the truck. The applicants adduced no evidence of this. As indicated earlier, the applicants abandoned a claim for damages in respect of personal injuries. Their general damages claim lacked any satisfactory evidence and was not apparently pursued.
For the reasons stated, I would dismiss the application. I would give the parties an opportunity to file written submissions on costs.
I certify that the preceding two hundred and seventy-nine (279) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. Associate:
Dated: 4 April 2008
Counsel for the Applicant: Mr P Lithgow and Mr J Ribbands Solicitor for the Applicant: Maitland Lawyers Counsel for the Applicant: Mr A T Schlicht and Ms M Schilling
Solicitor for the Applicant: Clayton Utz
Date of Final Submissions: 22 June 2007 Date of Judgment: 4 April 2008
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